Offer to Exchange and, with respect to options
granted under the 2000 Plan, is provided in the summary plan description below. This information is a brief summary only and reference is made to the
Internal Revenue Code of 1986, as amended, and the regulations and interpretations issued thereunder, for a complete statement of all relevant federal
tax consequences.
Participation in the Option Exchange Program
Because the decision whether to participate in the
Option Exchange Program is completely voluntary, we cannot predict which employees, if any, will participate, how many options any particular group of
employees will elect to exchange, nor the number of replacement options that may be granted. As noted above, our non-executive directors, our president
and chief executive officer, and non-employee service providers are not eligible to participate in the Option Exchange Program. Executive officers who
are eligible to participate hold collectively as a group 2,085,000 options which, if exchanged in full, would entitle them to 1,063,500 replacement
options. Of the outstanding options held by eligible employees as of November 3, 2004, the maximum number of shares of Common Stock underlying options
which could be exchanged is 4,847,581 and the maximum number of shares of Common Stock underlying the replacement options which could be issued in
accordance with the exchange ratios described above under Option Exchange ProgramDetails of the Option Exchange ProgramExchange
Ratios, would be approximately 2,576,365.
Effect on Shareholders
To enhance long-term shareholder value we must
implement and maintain competitive employee compensation, incentive and retention programs. Stock options continue to be an important component of
these programs. The terms of the Option Exchange Program are intended to strike a balance between shareholder and employee interests. Using the
Black-Scholes model to calculate the value of the options that could be surrendered and the expected value of the replacement options, the exchange
ratios for the exchange of currently outstanding options for replacement options were established so that, on an aggregate basis, the value of the
surrendered options is expected to be greater than the value of the replacement options. The board of directors believes that the Option Exchange
Program should, on balance, be beneficial to shareholders because, if the Offer to Exchange is accepted with respect to a significant number of
currently outstanding options, the value of our stock option program as a means of rewarding, retaining and motivating our employees will be
substantially revitalized which, in turn, should result in increased shareholder value.
In addition, to the extent option holders accept the
Offer to Exchange, there will be fewer shares of Common Stock subject to outstanding options held by such participants, and the potential dilution to
shareholders will be reduced. However, the shares underlying options originally granted under the Stock Incentive Plans which are surrendered pursuant
to the Option Exchange Program will be returned to the 2000 Plan and will be available for future grants of options and other awards under the 2000
Plan. In addition, while our non-executive directors and our president and chief executive officer are not eligible to participate in the Option
Exchange Program, these individuals and many employees eligible to participate in the Option Exchange Program are expected to receive year-end stock
option grants.
Notwithstanding the view of the Compensation
Committee and the board of directors that the Option Exchange Program should, on balance, be beneficial to shareholders, we cannot predict the precise
economic impact the Option Exchange Program will have on shareholders because we cannot predict how many option holders will exchange their options,
which options will be exchanged, what the future market price of the Common Stock will be on the date of the grant of replacement options or thereafter
or the precise compensation cost that will be recorded by the Company as a result of the Option Exchange Program. If all options eligible for exchange
are exchanged under the Option Exchange Program, a total of approximately 2,576,365 replacement options will be issued. Assuming, solely as an example, that all
eligible options are exchanged and replacement options are granted at an exercise price equal to the fair market value (as calculated in accordance
with the 2000 Plan) of the Companys Common Stock as of November 3, 2004 and that replacement options granted to our executive vice president and
senior vice presidents will vest four years
8
from the date of grant, under SFAS Nos. 123/148 the Company would incur
compensation cost totaling approximately $13 million relating to the Option
Exchange Program, which would be recognized as expense over the
vesting period of the replacement options. We would begin recognizing this
compensation cost in the first quarter of 2005 in each of the categories of
expense in the Companys Statement of Operations.
The 2000 Long-Term Incentive Plan
Description of the Material Terms of the 2000 Plan
General. The Company
adopted the 2000 Plan effective June 9, 2000 and the 2000 Plan has been subsequently amended to increase the total number of shares of Common Stock
available for issuance under the plan to an aggregate of (i) 18,500,000 plus (ii) shares previously reserved for issuance under the Companys 1990
Long-Term Incentive Plan but which remained unissued as of June 14, 2002 and any shares of Common Stock underlying awards granted under such plan which
are forfeited, expire or cancelled without delivery of shares of Common Stock. In addition, the 2000 Plan was amended to adjust the date of award of
the automatic grants of options made to non-employee directors.
As of November 3, 2004, 9,253,339 shares remained
available for issuance under the 2000 Plan and 9,390,229 of shares were subject to outstanding awards (including options eligible to participate in the
Option Exchange Program). The 2000 Plan is scheduled to remain in effect until the close of business on April 24, 2010, unless earlier terminated by
the board of directors. Awards granted under the 2000 Plan (including awards that are issued under the Option Exchange Program) may remain in effect
following the expiration of the term of the plan in accordance with the award terms. Currently, all regular employees and directors are eligible to
receive grants under the 2000 Plan.
Administration. The 2000
Plan is administered by the Compensation Committee of the Board of Directors. Each member of the Compensation Committee is a non-employee
director (within the meaning of Rule 16b-3 promulgated under Section 16 of the Securities Exchange Act of 1934, as amended) and an outside
director (within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended). In general, awards granted under the 2000 Plan
become exercisable or otherwise vest at the times and upon the conditions that the Compensation Committee may determine, as reflected in the applicable
award agreement. The Compensation Committee has the authority to accelerate the vesting and/or exercisability of any outstanding award at such times
and under such circumstances as it, in its sole discretion, deems appropriate (for instance, upon a Change in Control of the Company, as
defined in the 2000 Plan). Awards under the 2000 Plan (other than annual grants to non-employee directors described under Non-employee Director
Awards below) are generally made in the discretion of the Compensation Committee. Consequently, except as described in the New Plan Benefits
table set forth below (which contains information regarding replacement options that are anticipated to be awarded in connection with the Option
Exchange Program), the recipients and size of future awards under the 2000 Plan are not presently determinable.
Types of Awards. There are
generally four types of awards that may be granted under the 2000 Plan: Stock options (including both incentive stock options (referred to as ISOs)
within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended and nonqualified stock options (referred to as NQSOs), which are
options that do not qualify as ISOs), Restricted Stock, Phantom Stock, and Stock Bonus awards. In addition, the Compensation Committee in its
discretion may make other awards valued in whole or in part by reference to, or otherwise based on, Common Stock.
Adjustment of Shares; Certain
Restrictions. All of the shares reserved for issuance under the 2000 Plan are generally subject to equitable adjustment upon the
occurrence of any stock dividend or other distribution, recapitalization, stock split, reorganization, merger, consolidation, combination, repurchase
or share exchange, or other similar corporate transaction or event. The maximum number of shares of Common Stock that may be the subject of awards
to a participant in any year is 1,000,000, except that such number is 1,500,000 with respect to an employees initial year of employment with the
Company.
9
Stock Options. Options
entitle the holder to purchase shares of Common Stock during a specified period at a purchase price specified by the Compensation Committee (but in the
case of an ISO, at a price not less than 100% of the fair market value of the Common Stock on the day the ISO is granted). Each option granted under
the 2000 Plan may be exercisable for a maximum period of 10 years from the date of grant. Options may be exercised, in whole or in part, by the payment
of cash of the full option price of the shares purchased, by tendering shares of Common Stock with a fair market value equal to the option price of the
shares purchased, or by other methods in the discretion of the Compensation Committee. The 2000 Plan provides that, unless otherwise determined by the
Compensation Committee, an option shall vest with respect to 20% of the option on the first anniversary of the date of grant and with respect to an
additional 20% on each of the next four anniversaries thereof. In 2001, the Compensation Committee determined that, beginning in 2001, options granted
under the 2000 Plan would vest ratably over four years, with 25% of the option vesting on each of the first four anniversaries of the date of grant.
Options which are granted pursuant to the Option Exchange Program, other than options granted to our executive vice president and senior vice
presidents, ordinarily will also vest ratably over a four year period, with 25% of the option vesting on each of the first four anniversaries of the date of
grant. Each replacement option granted to our executive vice president and senior vice presidents will ordinarily vest with respect to all the shares underlying
such option if both (i) the Companys products have achieved gross sales of at least $100 million during any consecutive
twelve-month period (either directly by the Company or through its licensees) and (2) the specific senior or executive vice president has
remained employed by the Company for at least three years from the date of grant. Options that are exercisable as of the date of a participants
termination of service with the Company may be exercised after such date for the period set forth in the option agreement or as otherwise determined by
the Compensation Committee. In the event of the death of a participant, any unexercised options held by such participant are exercisable in accordance
with their terms by the participants heirs or personal representatives. Options held by a participant upon termination from the Companys
service for cause immediately expire (whether or not then exercisable). The Compensation Committee may provide that a participant who delivers shares
of Common Stock to exercise an option will automatically be granted new options for the number of shares delivered to exercise the option (referred to
as Reload Options). Reload Options will be subject to the same terms and conditions as the related option (except that the exercise price generally
will be the fair market value of the Common Stock on the date the Reload Option is granted). Options with reload rights that are surrendered in the
Option Exchange Program will be replaced with options which also have such reload rights.
Restricted
Stock. Restricted Stock awards under the 2000 Plan consist of a grant of shares of restricted Common Stock. The Compensation
Committee may determine the price, if any, to be paid by a participant for each share of Restricted Stock subject to an award. A holder of Restricted
Stock may vote and, if the participant remains in the service of the Company throughout the Restricted Period as defined in the 2000 Plan,
he or she may generally receive all dividends on all such shares. However, such holder may not transfer such shares during the Restricted Period. If
for any reason during the Restricted Period a holder of Restricted Stock ceases to be in the service of the Company, the holder may (and if the
termination is on account of cause, shall) be required to transfer to the Company such Restricted Stock together with any dividends paid thereon.
Consistent with Section 162(m) of the Internal Revenue Code, the 2000 Plan provides that (i) restrictions on Restricted Stock may, in the sole
discretion of the Compensation Committee, lapse upon the achievement of certain pre-established performance goals and (ii) the maximum number of such
performance-based Restricted Stock awards that may be granted to an employee in any year is 200,000.
Performance Criteria. The
2000 Plan provides that performance goals will be based on one or more of the following criteria: (1) return on total shareholder equity; (2) earnings
per share of Common Stock; (3) net income (before or after taxes); (4) earnings before interest, taxes, depreciation and amortization; (5) revenues;
(6) return on assets; (7) market share; (8) cost reduction goals; (9) any combination of, or a specified increase in, any of the foregoing; (10) the
achievement of certain target levels of discovery and/or development of products, including without limitation, the regulatory approval of new
products; (11) the achievement of certain target levels of sales of new products or licensing
in or out of new drugs; (12) the formation of joint ventures, research or development collaborations, or the completion of other corporate
transactions; and (13) such other criteria as the shareholders of the Company may approve. In
10
addition, such performance goals may be based upon the
attainment of specified levels of Company performance under one or more of the measures described above relative to the performance of other
corporations. To the extent permitted under Section 162(m) of the Internal Revenue Code of 1986, as amended (including, without limitation, compliance
with any requirements for shareholder approval), the Compensation Committee may designate additional business criteria on which the performance goals
may be based or adjust, modify, or amend the aforementioned business criteria.
Phantom Stock. A Phantom
Stock award is an award of the right to receive cash or Common Stock at a future date, subject to such restrictions, if any, as the Compensation
Committee may impose at the date of grant or thereafter, which restrictions may lapse separately or in combination at such times, under such
circumstances (including without limitation a specified period of employment or the satisfaction of the performance goals described above), in such
installments, or otherwise, as the Compensation Committee may determine. The grant of a Phantom Stock award payable solely in cash shall not reduce the
number of shares of Common Stock with respect to which awards may be granted under the 2000 Plan.
Stock Bonus. If the
Compensation Committee grants a Stock Bonus award, a certificate for the shares of Common Stock constituting such Stock Bonus is issued in the name of
the participant to whom such grant was made.
Non-employee Director
Awards. On the first business day after January 1 of each calendar year, each then serving non-employee director of the Company is
granted a NQSO to purchase 15,000 shares of Common Stock at the fair market value of such shares at the time of grant; such NQSOs become exercisable as
to 33-1/3% of the shares covered thereby on each of the first, second, and third anniversaries of the date of grant, and expire (if not earlier
terminated) on the tenth anniversary of the date of grant. In addition, a non-employee director may receive such other awards as are approved by a
majority of the Board.
Other Information. The 2000
Plan may be amended by the Board of Directors, subject to shareholder approval where necessary to satisfy certain legal and regulatory requirements.
The closing price of the Common Stock on November 3, 2004 as quoted by the Nasdaq National Market was $7.88.
Certain Federal Income Tax Consequences
Set forth below is a discussion of certain federal
income tax consequences with respect to Options that may be granted pursuant to the 2000 Plan. The following discussion is a brief summary only, and
reference is made to the Internal Revenue Code of 1986, as amended and the regulations and interpretations issued thereunder for a complete statement
of all relevant federal tax consequences. This summary is not intended to be exhaustive and does not describe state, local, or foreign tax consequences
of participation in the 2000 Plan or in the Option Exchange Program.
Incentive Stock Options. In
general, no taxable income is realized by a participant upon the grant of an ISO. If shares of Common Stock are issued to a participant (Option
Shares) pursuant to the exercise of an ISO granted under the 2000 Plan and the participant does not dispose of the Option Shares within the
two-year period after the date of grant or within one year after the receipt of such Option Shares by the participant (a disqualifying
disposition), then, generally (i) the participant will not realize ordinary income upon exercise and (ii) upon sale of such Option Shares, any
amount realized in excess of the exercise price paid for the Option Shares will be taxed to such participant as capital gain (or loss). The amount by
which the fair market value of the Common Stock on the exercise date of an ISO exceeds the purchase price generally will constitute an item which
increases the participants alternative minimum taxable income. If Option Shares acquired upon the exercise of an ISO are disposed of
in a disqualifying disposition, the participant generally would include in ordinary income in the year of disposition an amount equal to the excess of
the fair market value of the Option Shares at the time of exercise (or, if less, the amount realized on the disposition of the Option Shares), over the
exercise price paid for the Option Shares. Subject to certain exceptions, an ISO generally will not be treated as an ISO if it is
exercised more than three months following termination of employment. If an ISO is exercised at a time when it no longer qualifies as an ISO, such
option will be treated for tax purposes as an NQSO as discussed below.
11
Nonqualified Stock
Options. In general, no taxable income is realized by a participant upon the grant of an NQSO. Upon exercise of an NQSO, the
participant generally would include in ordinary income at the time of exercise an amount equal to the excess, if any, of the fair market value of the
Option Shares at the time of exercise over the exercise price paid for the Option Shares. In the event of a subsequent sale of Option Shares received
upon the exercise of an NQSO, any appreciation or depreciation after the date on which taxable income is realized by the participant in respect of the
option exercise will be taxed as capital gain in an amount equal to the excess of the sale proceeds for the Option Shares over the participants
basis in such Option Shares. The participants basis in the Option Shares will generally equal the amount paid for the Option Shares plus the
amount included in ordinary income by the participant upon exercise of the NQSO described in the immediately preceding paragraph.
New Plan Benefits
The following table sets forth information regarding
the benefits with respect to the options which certain participants and classes of participants in the 2000 Plan are expected to receive under the 2000
Plan pursuant to their participation in the Option Exchange Program. As noted above, awards under the 2000 Plan are made at the discretion of the
Compensation Committee and thus are not generally determinable in advance.
Name and Position
|
|
|
|
Number of Shares Subject to Replacement Options Expected to Be
Granted Pursuant to Option Exchange Program (1)
|
Leonard S.
Schleifer, M.D., Ph.D. President and Chief Executive Officer |
|
|
|
Not
Eligible to Participate in Option Exchange Program |
George D.
Yancopoulos, M.D., Ph.D. Executive Vice President, Chief Scientific Officer and President, Regeneron Research Laboratories |
|
|
|
701,000 |
|
Murray A.
Goldberg Senior Vice President, Finance & Administration, Chief Financial Officer, Treasurer and Assistant Secretary |
|
|
|
78,333 |
Randall G.
Rupp, Ph.D. Senior Vice President, Manufacturing and Process Sciences |
|
|
|
58,333 |
Neil Stahl,
Ph.D. Senior Vice President, Preclinical Development and Biomolecular Science |
|
|
|
133,334 |
Executive
Group (7 persons) |
|
|
|
1,063,500 (6 persons eligible to participate) |
Non-Executive
Director Group |
|
|
|
Not
Eligible to Participate in Option Exchange Program |
Non-Executive
Officer Employee Group (511 persons) |
|
|
|
1,512,864 |
(1) |
|
Assumes all eligible employees participate in the Option
Exchange Program with respect to all of their eligible options. The aggregate number of options that will be required to be surrendered in order for
the above-noted groups to receive the number of replacement options pursuant to the Option Exchange Program as set forth in the table are as follows: Executive
Group2,085,000; Non-Executive Officer Employee Group2,762,581. |
12
As the table above indicates, Leonard S. Schleifer,
M.D., Ph.D., our president and chief executive officer, and our non-executive directors, are not eligible to participate in the Option Exchange
Program. However, these individuals and the other executive officers named in that table are expected to receive new annual grants of
options in December 2004 or January 2005.
Options Previously Received Under the 2000 Plan
The following table sets forth information regarding
options that have been granted to the participants and classes of participants set forth in the table pursuant to the 2000 Plan:
Name and Position
|
|
|
|
Number of Shares Subject to Options Previously Granted Pursuant
to the 2000 Plan
|
Leonard S.
Schleifer, M.D., Ph.D. President and Chief Executive Officer |
|
|
|
950,000 |
George D.
Yancopoulos, M.D., Ph.D. Executive Vice President, Chief Scientific Officer and President, Regeneron Research Laboratories |
|
|
|
1,337,000 |
Murray A.
Goldberg Senior Vice President, Finance & Administration, Chief Financial Officer, Treasurer and Assistant Secretary |
|
|
|
225,000 |
Randall G.
Rupp, Ph.D. Senior Vice President, Manufacturing and Process Sciences |
|
|
|
160,000 |
|
Neil Stahl,
Ph.D. Senior Vice President, Preclinical Development and Biomolecular Science |
|
|
|
350,000 |
All Current
Executive Officers as a Group |
|
|
|
3,317,000 |
All Current
Directors who are not Executive Officers as a Group |
|
|
|
1,617,500 |
Each
Associate of any Director or Executive Officer |
|
|
|
100,000 |
Each Person
who has Received 5% or more of the Options Issued Under the 2000 Plan |
|
|
|
3,474,500 |
All Employees
(including Non-Executive Officers) as a Group |
|
|
|
4,455,729 |
13
Equity Compensation Plan Information
The following table shows information with respect
to securities authorized for issuance under the equity compensation plans maintained by the Company as of December 31, 2003.
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
Plan
Category
|
|
|
|
Number
of
securities to be issued
upon exercise of
outstanding options,
warrants and rights
|
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
|
|
Number
of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
|
Equity
Compensation plans approved by security holders (1) |
|
|
|
13,113,299 shares
of Common Stock |
|
$20.38 |
|
1,653,642 shares of
Common Stock (3) |
Equity
compensation plans not approved by security holders (2) |
|
|
|
0
|
|
$ 0.00 |
|
44,246 shares of
Class A Stock |
Total |
|
|
|
13,113,299 shares
of Common Stock |
|
$20.38 |
|
1,697,888 shares of
Common Stock and
Class A Stock |
(1) |
|
The equity compensation plans approved by the security holders
are the 2000 Plan and the Companys 1990 Long-Term Incentive Plan. |
(2) |
|
The equity compensation plan not approved by the security
holders is the Executive Stock Purchase Plan which is described in note 12(b) to the Companys audited financial statements for the year ended
December 31, 2003. |
(3) |
|
There is no restriction on the number of shares that may be
issued under the 2000 Plan in the form of Restricted Stock. |
14
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AS OF NOVEMBER 3,
2004
Set forth below is the name, address, and stock
ownership of each person or group of persons known by the Company to own beneficially more than 5% of the outstanding shares of Common Stock and Class
A Stock as of November 3, 2004.
Name and Address of Beneficial Owner
|
|
|
|
Number of Shares of Class A Stock Beneficially Owned (1)
|
|
Number of Shares of Common Stock Beneficially Owned (1)
|
|
Percentage of Common Stock and Class A Stock Beneficially Owned
(2)
|
Leonard S.
Schleifer, M.D., Ph.D. c/o Regeneron, Inc. 777 Old Saw Mill River Road Tarrytown, NY 10591 |
|
|
|
|
1,769,340 |
(3) |
|
|
1,138,877 |
(4) |
|
|
5.1 |
% |
Novartis
Pharma AG Lichstrasse 35 CH-4002 Basel, Switzerland |
|
|
|
|
0 |
|
|
|
7,527,050 |
(5) |
|
|
13.5 |
% |
FMR Corp.
82 Devonshire Street Boston, Massachusetts 02109 |
|
|
|
|
0 |
|
|
|
6,381,228 |
(6) |
|
|
11.4 |
% |
Kedge Capital
Funds Limited, Special Situations 1 Fund Lord Coutanche House 66-68 Esplanade St. Helier Jersey (Channel Islands) JE4
5YQ |
|
|
|
|
0 |
|
|
|
4,000,000 |
(7) |
|
|
7.2 |
% |
Amgen
Inc. One Amgen Center Drive Thousand Oaks, California 91320 |
|
|
|
|
0 |
|
|
|
3,181,309 |
(8) |
|
|
5.7 |
% |
Aventis
Pharmaceuticals Inc. 300 Somerset Corporate Boulevard Bridgewater, New Jersey 08807 |
|
|
|
|
0 |
|
|
|
2,799,552 |
(9) |
|
|
5.0 |
% |
(1) |
|
We calculated beneficial ownership in accordance with the rules
of the Security and Exchange Commission. The calculation includes shares subject to options held by the person or entity in question that are
exercisable currently or with in sixty days of November 3, 2004. |
(2) |
|
To calculate percentage, number of shares outstanding includes
55,741,696 shares of Common Stock outstanding as of November 3, 2004, plus any shares subject to options held by the person or entity in question that
are currently exercisable or exercisable within sixty days after November 3, 2004. |
(3) |
|
Includes 58,550 shares of Class A Stock held directly by, or in
trust for the benefit of, Dr. Schleifers two sons, of which Dr. Schleifer disclaims beneficial ownership. Excludes 6,500 shares of Class A Stock
held by the Schleifer Family Foundation, a charitable foundation, of which Dr. Schleifer disclaims beneficial ownership. |
(4) |
|
Includes 1,025,380 shares of Common Stock purchasable upon the
exercise of options granted pursuant to the Stock Incentive Plans which are exercisable or become so within sixty days from November 3, 2004 and 2,293
shares of Common Stock held in an account under the Companys 401(k) Savings Plan. Includes 1,800 shares of Common Stock held directly by, or in
trust for the benefit of, Dr. Schleifers two sons, of which Dr. Schleifer disclaims beneficial ownership. Excludes |
15
|
|
10,000 shares of Common Stock held by the Schleifer Family Foundation, a
charitable foundation, of which Dr. Schleifer disclaims beneficial ownership. |
(5) |
|
Based on Schedule 13G filed by Novartis Pharma AG with the
Securities and Exchange Commission on April 8, 2003. |
(6) |
|
Based on Schedule 13G/A filed by FMR Corp. with the Securities
and Exchange Commission on February 14, 2004. |
(7) |
|
Based on Schedule 13G/A filed by Kedge Capital Funds Limited
Special Situations 1 Fund with the Securities and Exchange Commission on February 13, 2004. |
(8) |
|
Based on Schedule 13G/A filed by Amgen Inc. with the Securities
and Exchange Commission on May 5, 2004. |
(9) |
|
Based on Schedule 13G filed by Aventis Pharmaceuticals Inc. with
the Securities and Exchange Commission on September 12, 2003. |
16
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of November 3,
2004, the number of shares of Common Stock and Class A Stock beneficially owned by each of our directors, each of our named executive officers, who
include our Chief Executive Officer, Leonard S. Schleifer, and the four most highly compensated executive officers other than our Chief Executive
Officer, and all directors and executive officers as a group, and the percentage that such shares represent of the total combined number of shares of
outstanding Common Stock and Class A Stock, based upon information obtained from such persons.
Management and Directors Stock Ownership Table as of November 3,
2004
Name and Address of Beneficial Owner (1)
|
|
|
|
Number of Shares of Class A Stock Beneficially Owned (2, 3)
|
|
Number of Shares of Common Stock Beneficially Owned (2, 3)
|
|
Percentage of Common Stock and Class A Stock Beneficially Owned
(4)
|
Leonard S.
Schleifer, M.D., Ph.D. |
|
|
|
|
1,769,340 |
(5) |
|
|
1,138,877 |
(10) |
|
|
5.1 |
% |
P. Roy Vagelos,
M.D. |
|
|
|
|
0 |
|
|
|
2,499,509 |
(11) |
|
|
4.4 |
% |
Charles A.
Baker |
|
|
|
|
62,384 |
(6) |
|
|
110,590 |
(12) |
|
|
* |
|
Michael S.
Brown, M.D. |
|
|
|
|
58,049 |
(7) |
|
|
148,258 |
(13) |
|
|
* |
|
Alfred G.
Gilman, M.D., Ph.D. |
|
|
|
|
76,237 |
|
|
|
168,975 |
(14) |
|
|
* |
|
Joseph L.
Goldstein, M.D. |
|
|
|
|
52,000 |
|
|
|
135,000 |
(15) |
|
|
* |
|
Arthur F.
Ryan |
|
|
|
|
0 |
|
|
|
13,334 |
(15) |
|
|
* |
|
Eric M.
Shooter, Ph.D. |
|
|
|
|
79,911 |
(8) |
|
|
100,000 |
(15) |
|
|
* |
|
George L.
Sing |
|
|
|
|
0 |
|
|
|
172,772 |
(16) |
|
|
* |
|
George D.
Yancopoulos, M.D., Ph.D. |
|
|
|
|
42,750 |
(9) |
|
|
1,319,084 |
(17) |
|
|
2.4 |
% |
Murray A.
Goldberg |
|
|
|
|
0 |
|
|
|
276,108 |
(18) |
|
|
* |
|
Randall G.
Rupp, Ph.D. |
|
|
|
|
0 |
|
|
|
215,391 |
(19) |
|
|
* |
|
Neil Stahl,
Ph.D. |
|
|
|
|
0 |
|
|
|
355,482 |
(20) |
|
|
* |
|
All Directors
and Executive Officers as a Group (15 persons) |
|
|
|
|
2,140,671 |
|
|
|
6,900,692 |
|
|
|
14.7 |
% |
* |
|
Represents less than 1% |
(1) |
|
Unless otherwise stated, the address for each beneficial owner
is c/o Regeneron Pharmaceuticals, Inc., 777 Old Saw Mill River Road, Tarrytown, NY 10591. |
(2) |
|
We calculated beneficial ownership in accordance with the rules
of the Securities and Exchange Commission. The inclusion herein of any Class A Stock or Common Stock, as the case may be, deemed beneficially owned
does not constitute an admission of beneficial ownership of those shares. Unless otherwise indicated, each person listed has sole voting and investment
power with respect to the shares listed. |
(3) |
|
Number of shares includes number of options held by the person
or entity in question that are currently exercisable or excisable within 60 days after November 3, 2004. |
(4) |
|
To calculate percentage, number of shares outstanding includes
55,741,696 shares outstanding as of November 3, 2004 plus any shares subject to options held by the person or entity in question that are currently
exercisable or exercisable within sixty days after November 3, 2004. |
(5) |
|
Includes 58,550 shares of Class A Stock held directly by, or in
trust for the benefit of, Dr. Schleifers two sons, of which Dr. Schleifer disclaims beneficial ownership. Excludes 6,500 shares of Class A Stock
held by the Schleifer Family Foundation, a charitable foundation, of which Dr. Schleifer disclaims beneficial ownership. |
(6) |
|
All shares of Class A Stock are held by a limited
partnership. |
(7) |
|
Includes 2,700 shares of Class A stock held in trust for the
benefit of Dr. Browns daughter. |
17
(8) |
|
All shares of Class A Stock are held in trust for the benefit of
Dr. Shooters children (the Shooter Family Trust). |
(9) |
|
Includes 19,383 shares of Class A Stock held in trust for the
benefit of Dr. Yancopouloss children and excludes 205 shares held by Dr. Yancopouloss wife. Dr. Yancopoulos disclaims beneficial ownership
of all such shares. |
(10) |
|
Includes 1,025,380 shares of Common Stock purchasable upon the
exercise of options granted pursuant to the Stock Incentive Plans which are exercisable or become so within sixty days from November 3, 2004 and 2,293
shares of Common Stock held in an account under the Companys 401(k) Savings Plan. Includes 1,800 shares of Common Stock held directly by, or in
trust for the benefit of, Dr. Schleifers two sons, of which Dr. Schleifer disclaims beneficial ownership. Excludes 10,000 shares of Common Stock
held by the Schleifer Family Foundation, a charitable foundation, of which Dr. Schleifer disclaims beneficial ownership. |
(11) |
|
Includes 1,514,999 shares of Common Stock purchasable upon
exercise of options granted pursuant to the Stock Incentive Plans which are exercisable or become so within sixty days from November 3, 2004 and 851
shares of Common Stock held in an account under the Companys 401(k) Savings Plan. Includes 527,322 shares of Common Stock held in a charitable
trust and 456,337 shares of Common Stock held in three separate grantor trusts. Excludes 203,199 shares of Common Stock held by the Marianthi
Foundation, and 161,443 shares of Common Stock held by the Pindaros Foundation, both charitable foundations, of which Dr. Vagelos disclaims beneficial
ownership. |
(12) |
|
Includes 110,000 shares of Common Stock purchasable upon
exercise of options granted pursuant to the Stock Incentive Plans which are exercisable or become so within sixty days from November 3,
2004. |
(13) |
|
Includes 143,000 shares of Common Stock purchasable upon
exercise of options granted pursuant to the Stock Incentive Plans which are exercisable or become so within sixty days from November 3,
2004. |
(14) |
|
Includes 145,000 shares of Common Stock purchasable upon
exercise of options granted pursuant to the Stock Incentive Plans which are exercisable or become so within sixty days from November 3,
2004. |
(15) |
|
All shares of Common Stock beneficially owned represent shares
of Common Stock purchasable upon the exercise of options granted pursuant to the Stock Incentive Plans which are exercisable or become so within sixty
days from November 3, 2004. |
(16) |
|
Includes 100,000 shares of Common Stock purchasable upon
exercise of options granted pursuant to the Stock Incentive Plans which are exercisable or become so within sixty days from November 3,
2004. |
(17) |
|
Includes 1,255,200 shares of Common Stock purchasable upon
exercise of options granted pursuant to the Stock Incentive Plans which are exercisable or become so within sixty days from November 3, 2004 and 2,266
shares of Common Stock held in an account under the Companys 401(k) Savings Plan. |
(18) |
|
Includes 246,781 shares of Common Stock purchasable upon
exercise of options granted pursuant to the Stock Incentive Plans which are exercisable or become so within sixty days from November 3, 2004 and 2,293
shares of Common Stock held in an account under the Companys 401(k) Savings Plan. |
(19) |
|
Includes 204,000 shares of Common Stock purchasable upon
exercise of options granted pursuant to the Stock Incentive Plans which are exercisable or become so within sixty days from November 3, 2004 and 2,248
shares of Common Stock held in an account under the Companys 401(k) Savings Plan. |
(20) |
|
Includes 340,000 shares of Common Stock purchasable upon
exercise of options granted pursuant to the Stock Incentive Plans which are exercisable or become so within sixty days from November 3, 2004 and 2,211
shares of Common Stock held in an account under the Companys 401(k) Savings Plan. |
18
OTHER MATTERS
When are shareholder proposals due for the 2005 Annual Meeting of
Shareholders?
Pursuant to the rules of the Securities and Exchange
Commission, a shareholder wishing to present a proposal at the 2005 Annual Meeting of Shareholders must submit the proposal in writing and be received
by the Company at its principal executive offices at 777 Old Saw Mill River Road, Tarrytown, New York 10591 by January 6, 2005 in order for such
proposal to be considered for inclusion in the Companys proxy statement and form of proxy relating to that meeting.
Under our By-Laws, proposals of shareholders
intended to be submitted for a formal vote (other than proposals to be included in our proxy statement) at the annual meeting of shareholders to be
held in 2005 may be made only by a shareholder of record who has given notice of the proposal to the Secretary of the Company at our principal
executive offices no earlier than 90 days and no later than 60 days prior to the meeting; provided that if less than 70 days notice or public
disclosure of the date of the annual meeting is given or made to shareholders, notice by the shareholder in order to be timely must be received not
less than the close of business on the tenth (10th) day following the day on which such notice of the annual meeting was first mailed or
such public disclosure of the annual meeting was made, whichever first occurs. The notice must contain certain information as specified in our By-Laws.
Assuming our 2005 Annual Meeting will be held on June 10, 2005 in accordance with the Companys past practice, notice of such proposals would need
to be given no earlier than March 12, 2005 and no later than April 11, 2005. Any proposal received outside of such dates will not be considered
timely under the federal proxy rules for purposes of determining whether we may use discretionary authority to vote on such
proposal.
What happens if multiple shareholders share an address?
Applicable rules permit brokerage firms and the
Company to send one Notice of Special Meeting and proxy statement to multiple shareholders who share the same address under certain circumstances. This
practice is known as householding. We believe that householding will provide greater convenience for our shareholders, as well as cost
savings for us by reducing the number of duplicate documents that are sent to your home. Consequently, we have implemented the practice of householding
for shares held in street name and intend to deliver only one Notice of Special Meeting and proxy statement to multiple shareholders
sharing the same address. If you wish to receive a separate proxy statement for the Special Meeting, you may find these materials at our internet
website (www.regeneron.com) or you may stop householding for your account and receive separate printed copies of these materials by contacting our
Investor Relations Department, at Regeneron Pharmaceuticals, Inc., 777 Old Saw Mill River Road, Tarrytown, New York 10591, or by calling us at
914-345-7741 and these materials will be promptly delivered to you. If you hold shares registered in your name (sometimes called a shareholder of
record), you can elect householding for your account by contacting us in the same manner described above. Any shareholder may stop householding for your
account by contacting our Investor Relations Department at the address and/or phone number included above. If you revoke your consent, you will be
removed from the householding program within 30 days of receipt of your revocation and each shareholder at your address will receive individual copies
of our disclosure documents.
Are there any other matters to be addressed at the Special
Meeting?
We know of no matters, other than the proposal to
amend the 2000 Plan to expressly authorize the Option Exchange Program, that may be properly presented at the Special Meeting. If any other matter is
properly presented at the Special Meeting upon which a vote may properly be taken, shares represented by duly executed and timely submitted proxies
will be voted on any such matter in accordance with the judgment of the named proxies.
19
Who will pay the costs related to this proxy statement and the Special
Meeting?
The solicitation of proxies is being made on behalf
of the Company and we will bear the costs of the solicitation. We have engaged Innisfree M&A Incorporated to assist in soliciting proxies for a fee
of approximately $10,000. In addition to the solicitation by use of the mails and by Innisfree M&A Incorporated, our officers, directors,
and employees may, without additional compensation,
solicit the return of proxies by telephone, telegram, or personal interviews. In accordance with the regulations of the Securities and Exchange Commission, we will make
arrangements with brokerage houses and other custodians, nominees, and fiduciaries to send proxies and proxy materials to their principals and will
reimburse them for their reasonable expenses in so doing.
20
Appendix A
AMENDMENT NO. 4
TO THE
REGENERON PHARMACEUTICALS, INC.
2000
LONG-TERM INCENTIVE PLAN
WHEREAS, the Regeneron Pharmaceuticals, Inc. 2000
Long-Term Incentive Plan (the Plan) was adopted by Regeneron Pharmaceuticals, Inc. (the Company) on April 24, 2000 and became
effective as of such date pursuant to the approval of the Companys shareholders; and
WHEREAS, pursuant to Section 19 of the Plan, the
Board of Directors of the Company (the Board) is authorized to amend the Plan; and
WHEREAS, after considering the recommendation of the
Compensation Committee and such other factors as the Board deemed relevant, the Board has determined that an option exchange program upon substantially
the terms and conditions described in the preliminary proxy statement to be filed with the Securities and Exchange Commission (such program, with such
changes to such terms and conditions as the authorized officers of the Company determine to be necessary or appropriate, as conclusively evidenced by
the terms and conditions of such program described in the definitive proxy statement, including any amendment or supplement thereto, to be distributed
to the Companys shareholders in connection with the Special Meeting of Shareholders referred to below, being referred to hereinafter as the
Option Exchange Program) in connection with a proposed special meeting of the Companys shareholders to be convened to vote on the
amendment to the Plan set forth below (the Special Meeting of Shareholders) is in the best interests of the Company and its shareholders;
and
WHEREAS, the Board has determined that it is
appropriate to amend the Plan in the manner set forth in paragraph 1 below (the Amendment).
NOW THEREFORE, the Plan is hereby amended as set
forth immediately below, subject, however, to the approval of this Amendment by the Companys shareholders at the Special Meeting of Shareholders,
or any postponement or adjournment thereof, and provided that if this Amendment is not so approved by the Companys shareholders, this Amendment
shall be void ab initio.
1. |
|
The Plan is hereby amended to expressly authorize the Option
Exchange Program. |
2. |
|
The Plan is hereby ratified and confirmed in all other
respects. |
IN WITNESS WHEREOF, this Amendment No. 4 has been
duly executed by an authorized officer of the Company as of the 15th day of November, 2004.
REGENERON PHARMACEUTICALS, INC.
Name: Stuart Kolinski
Title: Vice President
& General Counsel
A-1
SPECIAL MEETING OF SHAREHOLDERS OF
REGENERON PHARMACEUTICALS, INC.
December 17, 2004
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible
Please detach and mail in the envelope
provided. |
------------------------------------------------------
- ------------------------------------------------------------------------------------ |
THIS PROXY IS SOLICITED BY THE BOARD OF
DIRECTORS
OF
REGENERON PHARMACEUTICALS, INC.
The undersigned hereby appoints Leonard S. Schleifer, M.D.,
Ph.D. and P. Roy Vagelos, M.D., and each of them individually, as lawful proxies, with full power of
substitution, and hereby authorizes them, and each of them individually, to represent and vote, as designated
on the reverse side of this card, all shares of Common Stock and Class A Stock
of Regeneron Pharmaceuticals, Inc. which the undersigned would possess if
personally present, at the Special Meeting of Shareholders of the Company to be held
on December 17, 2004, or any adjournments or postponements thereof. This proxy revokes all prior proxies
given by the undersigned.
(Continued, and to be marked, dated, and
signed on the reverse side)
REGENERON
PHARMACEUTICALS, INC.
777 OLD SAW MILL RIVER ROAD
TARRYTOWN, NY 10591-6707 |
VOTE BY
INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until
11:59 P.M. Eastern Time on December 16, 2004. Have
your proxy card in hand when you access the web site
and follow the instructions to obtain your records and
to create an electronic voting instruction form.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting
instructions up until 11:59 P.M. Eastern Time on
December 16, 2004. Have your proxy card in hand
when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it
in the postage-paid envelope weve provided or
return to Regeneron Pharmaceuticals, Inc. c/o ADP,
51 Mercedes Way, Edgewood, NY 11717. |
|
PLEASE
SIGN, DATE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS
FOLLOWS: x
|
KEEP
THIS PORTION FOR YOUR RECORDS |
|
DETACH
AND RETURN THIS PORTION ONLY |
|
|
|
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND
DATED
REGENERON
PHARMACEUTICALS, INC. |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE PROPOSAL.
1. |
Proposal to
approve the amendment of the 2000 Long-Term Incentive Plan set forth as Appendix A to the accompanying proxy statement to expressly
authorize the Option Exchange Program described in such proxy statement. |
|
|
|
|
|
|
FOR |
AGAINST |
ABSTAIN |
|
|
o |
o |
o |
|
|
|
|
In their
discretion, the named proxies may vote on such other business as may properly
come before the Special Meeting, or any adjournments or postponements
thereof. |
|
|
|
|
|
|
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING IN
ACCORDANCE WITH THE SHAREHOLDERS SPECIFICATIONS ABOVE. IF YOU SIGN AND TIMELY
RETURN YOUR PROXY CARD BUT DO NOT INDICATE HOW YOUR SHARES ARE TO BE VOTED,
THIS PROXY WILL BE VOTED FOR THE PROPOSAL. THIS PROXY CONFERS DISCRETIONARY
AUTHORITY IN RESPECT TO MATTERS NOT KNOWN OR DETERMINED AT THE TIME OF THE
MAILING OF THE NOTICE OF THE SPECIAL MEETING OF SHAREHOLDERS TO THE
UNDERSIGNED.
Your vote is important. Whether or not you plan to attend the Special Meeting,
please complete, sign and date the accompanying proxy card and return it
promptly in the enclosed postage-prepaid envelope. If you attend the Special Meeting,
you may vote in person if you wish, even if you have previously returned a proxy.
PLEASE DATE, SIGN AND MAIL YOUR PROXY CARD PROMPTLY.
Signature of
Shareholder:________________
|
Date:_______ |
Signature (Joint Owner):________________ |
Date:_______ |
Note: |
Please sign
exactly as your name or names appear on this proxy card. When shares are held
jointly, each holder should sign. When signing as an executor, administrator,
attorney, trustee or guardian, please give full title as such. If the signer
is a corporation, please sign full corporate name by duly authorized officer,
giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person. |
2