UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
___________________
FORM
10-K/A
(Mark One)
x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
fiscal year ended December 31,
2007
OR
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
transition period from _____________ to _____________
Commission File Number
000-14879
|
(Exact
Name of Registrant as Specified in Its
Charter)
|
|
|
|
|
|
|
(State
or Other Jurisdiction of
|
|
(I.R.S.
Employer Identification No.)
|
|
|
Incorporation
or Organization)
|
|
|
|
|
|
|
|
|
|
650
College Road East, Suite 3100
|
|
|
|
|
Princeton,
New Jersey
|
|
08540
|
|
|
|
|
|
|
|
(Address
of Principal Executive Offices)
|
|
(Zip
Code)
|
|
Registrant's
telephone number, including area code:
|
(609)
750-8200
|
Securities
registered pursuant to Section 12(b) of the Act:
|
|
|
|
Name
of Each Exchange on
which
Registered
|
Common
Stock, $0.01 par value per share
|
|
The
NASDAQ
|
|
|
Stock
Market LLC
|
|
Securities
registered pursuant to Section 12(g) of the
Act:
|
|
Preferred
Stock Purchase Rights, $0.01 par value per
share
|
Indicate
by check mark if a registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes ¨ No x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes ¨ No x
Indicate
by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yesx
No¨
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.x
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
Large
Accelerated Filer ¨
|
Accelerated
Filer ¨
|
Non-
Accelerated Filer ¨
(Do
not check if a smaller reporting company)
|
Smaller
Reporting Company x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).
Yes ¨ No x
The
aggregate market value of the registrant's voting shares of Common Stock held by
non-affiliates of the registrant on June 30, 2007, based on $1.95 per share, the
last reported sale price on the NASDAQ Global Market on that date, was
$69,075,531.
The
number of shares of Common Stock, $.01 par value, of the registrant outstanding
as of March 27, 2008 was 35,570,836 shares.
EXPLANATORY
NOTE
Cytogen Corporation (“we”, “our” and
“us”) is filing this Amendment No. 1 on Form 10-K/A to its Annual Report on Form
10-K for the year ended December 31, 2007 filed on March 14, 2008 to furnish the
information required in Part III (Items 10, 11, 12, 13 and 14). This
report is limited in scope to the items identified above and should be read in
conjunction with the Form 10-K. This report does not reflect events
occurring after the filing of the Form 10-K and, other than the furnishing of
the information identified above, does not modify or update the disclosure in
the Form 10-K in any way.
|
|
|
|
|
|
|
|
PART
III
|
|
|
|
|
Directors,
Executive Officers and Corporate Governance
|
|
2
|
|
|
|
|
|
Executive
Compensation
|
|
5
|
|
|
|
|
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
|
19
|
|
|
|
|
|
Certain
Relationships and Related Transactions and Director
Independence
|
|
22
|
|
|
|
|
|
Principal
Accounting Fees and Services
|
|
22
|
|
|
|
|
PART
IV
|
|
|
|
|
Exhibits
|
|
24
|
|
|
|
|
|
|
|
25
|
This
Annual Report on Form 10-K/A contains forward-looking statements, which can be
identified by the use of forward-looking terminology such as, "believe,"
"expect," "may," "plan," "estimate," "intend," "will," "should," "potential" or
"anticipate" or the negative thereof, or other variations thereof, or comparable
terminology, or by discussions of strategy. No assurance can be given
that the future results covered by such forward-looking statements will be
achieved. The matters set forth in Item 1A. Risk Factors
of the Annual Report on Form 10-K filed on March 14, 2007 constitute cautionary
statements identifying important factors with respect to such forward-looking
statements, including certain risks and uncertainties that could cause actual
results, events or developments to differ materially from those indicated in
such forward-looking statements. We do not undertake to update any
forward looking statements.
We
maintain www.cytogen.com to provide information to the general public and our
stockholders on our products, as well as general information on Cytogen and its
management, strategy, career opportunities, financial results and press
releases. Copies of our most recent Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q, and other reports filed with the Securities and
Exchange Commission, or the SEC, can be obtained, free of charge as soon as
reasonably practicable after such material is electronically filed with, or
furnished to the SEC, from our Investor Relations Department by calling
609-750-8213, through the Investor Relations page on our website at
www.cytogen.com or directly from the SEC's website at www.sec.gov. Our
website and the information contained therein or connected thereto are not
intended to be incorporated into this Annual Report on Form
10-K/A.
PART
III
Information
about our Board of Directors
Our
current directors are as follows:
Name
|
|
Age
|
|
Served as a
Director Since
|
|
Positions
with
the Company
|
James
A. Grigsby
|
|
65
|
|
1996
|
|
Chairman
of the Board
|
|
|
|
|
|
|
|
John E. Bagalay, Jr.
|
|
74
|
|
1995
|
|
Director
|
|
|
|
|
|
|
|
Allen
Bloom
|
|
64
|
|
2003
|
|
Director
|
|
|
|
|
|
|
|
Stephen
K. Carter
|
|
70
|
|
1998
|
|
Director
|
|
|
|
|
|
|
|
Robert F. Hendrickson
|
|
75
|
|
1995
|
|
Director
|
|
|
|
|
|
|
|
Dennis
H. Langer
|
|
56
|
|
2005
|
|
Director
|
|
|
|
|
|
|
|
Kevin
G. Lokay
|
|
51
|
|
2001
|
|
President,
Chief Executive Officer and Director
|
|
|
|
|
|
|
|
Joseph
A. Mollica
|
|
67
|
|
2005
|
|
Director
|
The
principal occupations and business experience, for at least the past five years,
of each nominee are as follows:
James A. Grigsby has served
on our Board of Directors since May 1996 and has served as Chairman of the Board
since June 1998. Mr. Grigsby currently serves as the principal of the
Accelerated Leadership Group, providing interim management and other consulting
services to new and emerging companies. He also serves as President
and principal owner of Grigsby & Smith, a financial planning and investment
management firm located in Pittsfield, MA, since January 2002. Previously, Mr.
Grigsby was President of Cancer Care Management LLC, a consulting firm providing
consulting services regarding cancer disease management issues. From 1989 to
1994, Mr. Grigsby was President of CIGNA Corporation’s International Life and
Employee Benefits Division, which operated in over 20 countries worldwide, and
prior to that period he also served as the head of CIGNA’s national health care
sales force. Prior to that period, since 1978, he held a number of executive
positions with CIGNA Corporation. Mr. Grigsby received a B.A. degree in
Mathematics from Baylor University and is a Fellow of the Society of
Actuaries.
John E. Bagalay, Jr. has
served on our Board
of Directors since October 1995. Dr. Bagalay was our interim
President and CEO from January 1998 to September 1998 and our Chief Financial
Officer from October 1997 to September 1998. He has been Chairman of
Wave Systems Corp. since June 2003, a provider of trusted computing applications
and services. He is also Executive-in-Residence, Euro US Ventures
LLC. He was Director of Special Projects in the Life Sciences in the
Technology Commercialization Institute at Boston University from November 2004
until November 2005. He was Senior Advisor to the Chancellor, Boston
University from January 1998 until November 2004. He was the Managing
Director of the Community Technology Fund, the venture capital affiliate of
Boston University, from September 1989 until January 1998. During his
tenure at Boston University he served variously as director, CEO and CFO of
companies in which the University had investment interests. Dr.
Bagalay holds a Ph.D. degree from Yale University and a J.D. degree from the
University of Texas.
Allen Bloom has served on our
Board of Directors since June 2003. Dr. Bloom is currently a business
development consultant. Dr. Bloom, a patent attorney, was a partner
at the law firm Dechert LLP, from 1994 until his retirement in December 2003 and
is now Of Counsel. He was Co-Chair of the Intellectual Property Group and headed
a patent practice group which focused on biotechnology, pharmaceuticals and
medical devices. For the nine years prior to that, he was Vice President,
General Counsel and Secretary of The Liposome Company, Inc., a biotechnology
company. His responsibilities there included management of patent, regulatory
and licensing activities. Dr. Bloom also serves on the Board of Directors of
Unigene Laboratories, Inc. Dr. Bloom holds a Ph.D. degree in Organic Chemistry
from Iowa State University, a J.D. degree from New York Law School and a B.S. in
Chemistry from Brooklyn College.
Stephen K. Carter has served
on our Board of Directors since September 1998. Since 1997, Dr. Carter has been
a consultant to the pharmaceutical industry. Dr. Carter was Senior Vice
President of Research and Development at Boehringer Ingelheim Pharmaceuticals,
Inc. from 1995 to 1997. Prior to joining Boehringer, Dr. Carter was Senior Vice
President of Worldwide Clinical Research and Development at Bristol-Myers Squibb
Company. From 1976 to 1982, Dr. Carter served as
Director
of the Northern California Cancer Program. Dr. Carter was also appointed to
President Clinton’s panel for AIDS drug development. Dr. Carter is a director of
Alfacell Corporation, Emisphere Technologies, Inc., Callisto Pharmaceuticals,
Inc., Tapestry Pharmaceuticals, Inc., Vion Pharmaceuticals Inc. and Celator
Pharmaceuticals, Inc. Dr. Carter received an A.B. in History from Columbia
College and an M.D. degree from New York Medical College. He completed a medical
internship and residency at Lenox Hill Hospital.
Robert F. Hendrickson has
served on our Board of Directors since March 1995. Since 1990, Mr. Hendrickson
has been a consultant to the pharmaceutical and biotechnology industries on
strategic management and manufacturing issues. Prior to his retirement in 1990,
Mr. Hendrickson was Senior Vice President of Manufacturing and Technology for
Merck & Co., Inc. He is currently a trustee of the Carrier Foundation and a
member of the board of directors of Unigene Laboratories, Inc. Mr.
Hendrickson previously served as a director of a number of other public
biotechnology companies including The Liposome Company, Inc. and Envirogen, Inc.
Mr. Hendrickson received an A.B. degree from Harvard College and an M.B.A.
degree from the Harvard Graduate School of Business Administration.
Dennis H. Langer has served
on our Board of Directors since June 2005. Dr. Langer has served as a
Managing Partner of Phoenix IP Ventures, a venture capital firm, since August
2005. Prior to joining Phoenix IP Ventures, he was President, North
America, of Dr. Reddy’s Laboratories Limited, a pharmaceutical company,
from January 2004 to July 2005. From September 1994 to January
2004, Dr. Langer held several high-level positions at GlaxoSmithKline plc,
a pharmaceutical company, and its predecessor, SmithKline Beecham, including
most recently as Senior Vice President, Project and Portfolio Management of
Research and Development from December 2000 to January 2004. Dr.
Langer was also President and Chief Executive Officer of Neose Technologies,
Inc. and held positions at G. D. Searle & Co., Abbott Laboratories and Eli
Lilly & Co. Dr. Langer is also a director of
Myriad Genetics, Inc., and is also a Clinical Professor, Department of
Psychiatry, at Georgetown University School of Medicine. Dr. Langer
holds a J.D. degree, cum
laude, from Harvard Law School, an M.D. degree from Georgetown University
School of Medicine, and a B.A. degree in Biology from Columbia
University.
Kevin G. Lokay has served on
our Board of Directors since January 2001 and has served as our President and
Chief Executive Officer since November 2007. Mr. Lokay was a consultant to the
pharmaceutical and biotechnology industries from April 2007 through October
2007. He was previously Vice President, Oncology and Acute Care
Business Unit at GlaxoSmithKline Pharmaceuticals through March 31, 2007. Prior
to joining GlaxoSmithKline in 1997, Mr. Lokay spent 16 years with Merck &
Co., where his most recent assignment was Vice President, Worldwide Sales,
Marketing and Development in Merck’s Vaccine Division. Mr. Lokay joined Merck in
1981 as a sales representative, and progressed through numerous positions of
increasing responsibilities in sales, market research, advertising, product
management, and business development, while gaining experience in a wide variety
of therapeutic areas, including antihypertensives, antiarrythmics, antibiotics,
analgesics/anti-inflammatories, psychotherapeutics, vaccines, and
gastro-intestinal products. Mr. Lokay is a director of the University of
Sciences, Philadelphia, Pennsylvania. He holds an M.B.A. degree with a
concentration in Marketing from the Krannert School of Management at Purdue
University, and a B.A. degree in Economics from Lafayette College.
Joseph A. Mollica has served
on our Board of Directors since June 2005. Dr. Mollica has served as
the Chairman of the Board of Pharmacopeia Drug Discovery, Inc. since
April 2004 and as a member of the board of directors of Pharmacopeia since
April 2002. Dr. Mollica also served as the President and Chief
Executive Officer of Pharmacopeia from April 2002 to August 2004 and Chairman of
the Board of Directors and Chief Executive Officer of Accelrys, Inc., the
former parent of Pharmacopeia, from February 1994 to April 2004. He served as
President of Accelrys from August 1996 to April 2004. From 1987 to
December 1993, Dr. Mollica was employed initially by the DuPont Company and then
by The DuPont Merck Pharmaceutical Company, most recently as President and Chief
Executive Officer. From 1966 to 1986, he served in a variety of positions of
increasing responsibility with Ciba-Geigy, rising to Senior Vice President of
Ciba-Geigy’s Pharmaceutical Division. Dr. Mollica is also a
director of Neurocrine BioSciences, Inc. Dr. Mollica holds Masters of Science
and Ph.D. degrees in Pharmaceutical and Physical Chemistry from the University
of Wisconsin and a B.S. degree and ScD, h.c. from the University of Rhode
Island.
All
directors will hold office until our next annual meeting of stockholders and
until their successors shall have been duly elected and qualified or until their
earlier resignation or removal. None of our directors are related to any other
director or to any of our executive officers.
Audit
and Finance Committee
The Audit
and Finance Committee currently consists of John E. Bagalay, Jr., who serves as
Chairman, Robert F. Hendrickson, Stephen K. Carter and Joseph A.
Mollica. The Board of Directors has determined that John E. Bagalay,
Jr. is an “audit committee financial expert” as defined in Item 401(h) of
Regulation S-K.
Code
of Business Conduct and Ethics
We have
adopted a written Code of Business Conduct and Ethics that applies to our
Directors, officers and employees, including our principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions. We have posted the Code of Business
Conduct and Ethics on our website, which is located at www.cytogen.com. In addition,
we intend to disclose on our website any amendments to, or waivers from, any
provision of the Code of Business Conduct and Ethics that applies to our
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act requires our directors, executive officers and
stockholders who beneficially own more than 10% of any class of our equity
securities registered pursuant to Section 12 of the Exchange Act, to file
initial reports of ownership and reports of changes in ownership with respect to
our equity securities with the Securities and Exchange Commission. All reporting
persons are required by SEC regulation to furnish us with copies of all reports
that such reporting persons file with the SEC pursuant to Section
16(a).
Based
solely on our review of the copies of such forms received by us, during 2007,
each such reporting person has filed all of their respective reports pursuant to
Section 16(a) on a timely basis.
Information
about our Executive Officers
Our
current executive officers and their respective ages and positions with us are
as follows:
Name
|
|
Age
|
|
Capacities
In Which Served
|
|
In
Current Position Since
|
|
|
|
|
|
|
|
Executive
Officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin
G. Lokay(1)
|
|
51
|
|
President, Chief Executive
Officer
and Director
|
|
November
2007
|
|
|
|
|
|
|
|
Kevin
J. Bratton
|
|
59
|
|
Senior Vice President,
Finance, and Chief Financial Officer
|
|
November
2006
|
|
|
|
|
|
|
|
William
F. Goeckeler
|
|
52
|
|
Senior
Vice President,
Operations
|
|
December
2003
(Vice
President, Operations from January 2003 to December 2003; Vice President
of Research and Development from June 2001 to January
2003)
|
|
|
|
|
|
|
|
Stephen
A. Ross
|
|
43
|
|
Senior
Vice President Sales and
Marketing
|
|
July
2007
|
(1)
|
Mr.
Lokay’s biographical information appears above. See
“Information about our Board of
Directors”.
|
Kevin J. Bratton joined us in
November 2006 as our Senior Vice President, Finance and Chief Financial Officer.
Before joining Cytogen, Mr. Bratton was chief financial officer at Metrologic
Instruments, Inc., a global technology company. During his tenure at Metrologic,
Mr. Bratton directed the company's finance operations during a period of
significant growth in sales, net income, cash flow from operations, and working
capital. Previously, Mr. Bratton worked at The JPM Company, where he served as
chief financial officer from 2000 to 2002 and as director of external reporting
from 1999 to 2000. The JPM Company filed a
Chapter 11 petition in the United States Bankruptcy Court for the District of
Delaware on March 1, 2002. Prior to joining JPM, Mr.
Bratton worked for more than 20 years in the healthcare sector. He was vice
president finance and treasurer for the biotechnology company IGI, Inc., and
corporate controller for the specialty medical company Delmed, Inc. Mr. Bratton
began his career with the public accounting firm Touche Ross & Co. (now
Deloitte & Touche LLP). He has a B.S. in business and accounting from
Northeastern University.
William F. Goeckeler was
promoted to our Senior Vice President, Operations in December 2003. Previously,
he served as Vice President, Operations since January 2003 and Vice President of
Research and Development since June 2001.
He joined
us in March of 1994 as the Assistant Director, Pharmaceutical Development. In
1995, he was promoted to Associate Director, Technical Support Operations and in
June 1997 became our Director, Pharmaceutical Development, a position he held
until June 2001. Before joining us, Dr. Goeckeler spent nine years as a
scientist in the Bioproducts Laboratory of Central Research and Development at
The Dow Chemical Company. Dr. Goeckeler did his undergraduate and graduate work
at the University of Missouri where he received his Ph.D. in Radiochemistry for
research that involved the discovery of QUADRAMET and other skeletal targeting
radiopharmaceuticals.
Stephen A. Ross joined us in
July 2007 as our Senior Vice President Sales and Marketing. Mr. Ross
joined Cytogen from GlaxoSmithKline (GSK) where for 15 years he progressed
through positions of increasing responsibility in sales and
marketing. Most recently, he served as Vice President, Specialist
Business Units, GSK UK and was responsible for sales and marketing of GSK
hospital and specialty product portfolios in the United Kingdom, which had 2006
sales of more than GBP 500 million. From September 2002 to September
2005, Mr. Ross served as Vice President and General Manager of GSK
Ireland. Mr. Ross received a M.B.A. in marketing and finance from the
Wharton School of the University of Pennsylvania and a B.A. degree in Economics,
magna cum laude, from Brigham Young University.
None of
our executive officers or directors is related to any other of our executive
officers or directors. Our executive officers are elected annually by the Board
of Directors and serve until their successors are duly elected and
qualified.
Compensation
Discussion and Analysis
This
Compensation Discussion and Analysis discusses the principles underlying the
Company’s compensation policies and decisions and the principal elements of
compensation paid to its executive officers during the 2007 fiscal
year. The Company’s Chief Executive Officer (the “CEO”) and the other
executive officers included in the Summary Compensation Table below will be
referred to as the “named executive officers” for purposes of this discussion.
In general, the compensation paid to the Company’s named executive officers is
similar to that paid to all our other officers.
Compensation Objectives and
Philosophy
The
Compensation Committee (the “Committee”) of Board of Directors is responsible
for reviewing and approving the compensation payable to the Company’s officers,
including executive officers. As part of such process, the Committee seeks to
accomplish the following objectives with respect to the Company’s executive
compensation programs:
|
·
|
Motivate,
recruit and retain executives capable of meeting the Company’s strategic
objectives and building long-term shareholder
value;
|
|
·
|
Provide
incentives to ensure superior executive performance and successful
financial results for the Company;
and
|
|
·
|
Align
the interests of executives with the long-term interests of
shareholders.
|
|
The
Committee seeks to achieve these objectives
by:
|
|
·
|
Establishing
a compensation structure that is both market competitive and internally
fair;
|
|
·
|
Linking
a substantial portion of compensation to the Company’s achievement of
financial objectives and the individual’s contribution to the attainment
of those objectives;
|
|
·
|
Providing
risk for underachievement and rewards for overachievement of
goals;
|
|
·
|
Encouraging
executives to manage the Company from the perspective of owners of the
Company; and
|
|
·
|
Providing
long-term equity-based incentives and encouraging direct share ownership
by executives.
|
Setting
Executive Compensation
It is the
Committee’s objective to target the total annual compensation of each executive
officer at the 50th
percentile for comparable positions at competitive peer group
companies. However, in determining the compensation of each executive
officer, the Committee also considers a number of other factors, including
recent Company and individual performance, the CEO’s recommendations, and
internal pay equity. There is no pre-established policy for
allocation of compensation between cash and non-cash components or between
short-term and long-term components. Instead, the Committee
determines the mix of compensation for each executive officer based on its
review of the competitive data and its subjective analysis of that individual’s
performance and contribution to the Company’s financial
performance.
Components of
Compensation
For the
2007 fiscal year, the Company’s executive compensation program included the
following components:
|
·
|
Annual
short-term cash incentives;
|
|
·
|
Long-term
equity incentive awards;
|
|
·
|
Special
benefits and perquisites;
|
|
·
|
Change
in control agreements; and
|
Base
Salary
The
Committee typically reviews the base salary level of each executive officer in
December of each year, with any salary adjustments for the year to be made
effective on or around January 1st of the
next year. The base salary for the executive officers named in the
Summary Compensation Table is determined on the basis of their area and level of
responsibility, experience and individual performance. The individual
performance of each executive officer is measured, in part, based upon the
executive’s performance against an individual plan of action that is agreed upon
by the executive and the CEO (or the non-employee directors in the case of the
CEO) in the first quarter of each year. In setting the base salary of
the executive officers other than the CEO, the compensation committee also
solicits evaluations of their individual performance and recommended salary
increases based on that performance from the CEO. For the 2007 fiscal
year, the salary levels at the end of 2007 for our executive officer group,
including the CEO, ranged from a low of $225,000 to a high of
$400,000. It is the objective of the Committee to bring and maintain
the base salary of named executives to between 70% and 80% of the 50th
percentile of the 2007 Radford Global Life Sciences Survey. The
Committee also must take into consideration market factors for each
position. By maintaining base salaries at such levels, the Committee
continues its longstanding practice of tying the major portion of each executive
officer’s total compensation package to our financial and operational
performance. Accordingly, salary is intended to provide an element of
stability to the executive officer’s total compensation package each
year. We anticipate that the Committee will increase this component
of compensation in the future to maintain salaries approaching the 50th
percentile of the primary market survey, but will also retain
pay-for-performance components as a significant element of the executive
officer’s total compensation package.
For the
2008 fiscal year, the salaries of the named executive officers were increased as
shown in the following table. Such increases reflect an attempt to
bring the salaries of the named executive officers closer to the 50th
percentiles of the primary market survey. The table below shows
annual 2007 and 2008 base salary rates for each named executive
officer:
|
|
|
|
|
|
|
|
|
Kevin
G. Lokay
|
|
President
& CEO
|
|
$400,000
|
|
$400,000
|
|
--
|
Kevin
J. Bratton
|
|
SVP,
Finance & CFO
|
|
$225,000
|
|
$238,500
|
|
6%
|
William
F. Goeckeler
|
|
SVP
of Operations
|
|
$277,156
|
|
$285,471
|
|
3%
|
Stephen
A. Ross
|
|
SVP
Sales and Marketing
|
|
$235,000
|
|
$244,400
|
|
4%
|
Annual
Bonuses
For the
2007 fiscal year, the Committee approved an incentive bonus plan designed to
advance our pay-for-performance policy by focusing the attention of our
executive officers on the attainment of key objectives for the year. The plan
provided all of our employees, except for certain sales personnel who are
eligible for sales incentive programs (“Eligible Employees”), with a direct
financial incentive in the form of a cash bonus award tied to our achievement of
pre-established operational goals. Each year, the Committee
establishes a target award for each named executive officer based on a
percentage of base salary. Annual bonus targets as a percentage of
salary increase with executive rank so that for the more senior executives, a
greater proportion of their total cash compensation is contingent upon annual
performance. It is the Committee’s intention to target annual
incentive awards at or above the 50th
percentile of peer group companies.
The
operational goals were tied to the following measures of our performance for the
2007 fiscal year, weighted as indicated: revenue (30% weighting); expenses (10%
weighting); capital raising (30% weighting); ProstaScint and Quadramet
development objectives (10% weighting); completion of CYT 500 development
objectives (10% weighing); and filing of new patent applications(s) to extend
protection of Quadramet (10% weighing). No bonuses were payable under
the plan for a particular operational goal unless such operational goal was
attained at not less than threshold level. In addition,
the
Committee
reserved the discretion to adjust an executive officer’s actual bonus to reflect
his or her individual performance for the year. At the time the goals were set
in November 2006, we believed that they were attainable at the established
target levels, but substantial uncertainty nevertheless existed as to the actual
attainment of the goals at any of the established levels. The bonus
opportunity set for each executive officer at target level was between 30% and
50% of his total direct compensation for the 2007 fiscal year.
For the
purposes of determining whether the revenue and expenses objectives were met for
the 2007 fiscal year, the Committee used the numbers we reported for financial
statement purposes in accordance with generally accepted accounting principles
in the U.S. (“GAAP”). A total of 89% of our eligible employees will
receive bonuses under the plan. The executive officers did not
receive bonuses for 2007. In December 2007, the Committee determined
that our performance for 2007 was at 30% for operational goals and accordingly
decided to award incentive bonuses totaling $182,000 from the pool to all
eligible employees of the Company. No bonus payments will be made to the
executive officers for the 2007 fiscal year.
The table
below details fiscal 2007 annual bonus targets and actual payouts for each of
the named executive officers.
|
|
|
|
|
|
2007
Target
Bonus
(% Salary)
|
|
|
|
2007
Actual Bonus (% Salary @
Year-End)
|
Kevin
G. Lokay
|
|
President
& CEO
|
|
$ 33,333(2)
|
|
50%
|
|
--
|
|
--
|
Michael
D. Becker
|
|
President
& CEO(1)
|
|
$191,860
|
|
50%
|
|
--
|
|
--
|
Kevin
J. Bratton
|
|
SVP,
Finance & CFO
|
|
$ 67,500
|
|
30%
|
|
--
|
|
--
|
William
F. Goeckeler
|
|
SVP,
Operations
|
|
$110,862
|
|
40%
|
|
--
|
|
--
|
William
J. Thomas
|
|
SVP
& General Counsel(1)
|
|
$ 76,016
|
|
30%
|
|
--
|
|
--
|
Stephen
A. Ross
|
|
SVP,
Sales and Marketing
|
|
$ 41,125(3)
|
|
35%
|
|
--
|
|
--
|
|
(1)
|
Resigned
in November 2007.
|
|
(2)
|
Prorated
based on employment date in November
2007.
|
|
(3)
|
Prorated
based on employment date in July
2007.
|
For 2008,
bonus awards, if any, will be based on achievement of Company objectives and a
subjective review of an executive officer’s performance. Corporate
performance targets will include such measures as revenue, expenses and capital
raising. The table below shows the dollar amount of the 2007 and 2008
annual target bonus for each named executive officer, together with percentage
of base salary represented by that target:
|
|
|
|
|
|
2007
Target
Bonus
(% Salary)
|
|
|
|
2008
Target Bonus (% Salary)
|
Kevin
G. Lokay
|
|
President
& CEO
|
|
$ 33,333
|
|
50%
|
|
$200,000
|
|
50%
|
Michael
D. Becker
|
|
President
& CEO(1)
|
|
$191,860
|
|
50%
|
|
--
|
|
--
|
Kevin
J. Bratton
|
|
SVP,
Finance & CFO
|
|
$ 67,500
|
|
30%
|
|
$ 71,550
|
|
30%
|
William
F. Goeckeler
|
|
SVP, Operations
|
|
$110,862
|
|
40%
|
|
$114,189
|
|
40%
|
William
J. Thomas
|
|
SVP
& General Counsel(1)
|
|
$ 76,016
|
|
30%
|
|
--
|
|
--
|
Stephen
A. Ross
|
|
SVP,
Sales and Marketing
|
|
$ 41,125
|
|
35%
|
|
$ 85,540
|
|
35%
|
|
(1)
|
Resigned
in November 2007.
|
Long-Term
Incentive Equity Awards
We have
structured our long-term incentive program for executive officers in the form of
equity awards under our stock option plans. For many years, stock option grants
were the sole form of our equity awards, and we continue to use stock option
grants in combination with other forms of equity awards available under the 2004
Stock Incentive Plan and the 2006 Equity Compensation Plan to provide long-term
incentives to our executive officers. Generally, the Committee approves the
stock option grants in the first quarter of each year in connection with the
annual review of the performance of our executive officers and other key
employees. Each grant is designed to align the interests of the executive
officer with those of the
shareholders
and to provide each individual with a significant incentive to manage the
company from the perspective of an owner with an equity stake in the business.
Each grant allows the officer to acquire shares of our common stock at a fixed
price per share (the average of the high and low trading prices on the date of
grant under the 2004 Stock Incentive Plan and the closing price on the grant
date under the 2006 Equity Compensation Plan) over a specified period, usually
ten years. Each option vests and becomes exercisable in a series of installments
over a three-year service period, contingent upon the officer’s continued
employment with the Company. Accordingly, each option will provide a return to
the executive officer only to the extent he or she remains employed with us
during the vesting period, and then only if the fair market value of the
underlying shares appreciates over the period between grant and exercise of the
option.
We also
grant restricted stock awards (“RSAs”) as part of our long-term incentive
program. We believe that RSAs are a valuable addition to our long-term incentive
program for several reasons, including ongoing concerns over the dilutive effect
of option grants on our outstanding shares, our desire to have a more direct
correlation between the FAS 123(R) compensation expense we must take for
financial accounting purposes and the actual value delivered to our executive
officers and other employees, and the fact that the incentive effects of RSAs
are less subject to market volatility than stock options. Each RSA
entitles the recipient to one share of our common stock at the time of vesting
without the payment of an exercise price or other consideration. The vesting of
RSAs is tied to continued service with us and is typically in the form of either
cliff vesting after a three-year service period or in a series of installments
over a defined service period.
Upon the
hiring of Mr. Lokay as President and CEO in November 2007, he received a grant
of (i) 350,877 restricted stock units (the “RSUs”) that will vest upon the
successful completion of a performance milestone established by the Compensation
Committee and will expire upon the triggering of the performance milestone event
in section (ii); and (ii) 175,439 RSUs that will vest upon the successful
completion of another performance milestone established by the Compensation
Committee and will expire upon the triggering of the performance milestone event
in section (i).
The
Committee awarded both stock options and RSAs/RSUs to our executive officers
during the 2007 fiscal year. The awards made to the CEO and the other
executive officers named in the Summary Compensation Table are set forth in that
table and the accompanying Grants of Plan-Based Awards table. In
determining the total number of shares to award each executive officer in the
combined form of stock options and RSAs/RSUs, the Committee’s objective was to
bring the total direct compensation (salary, bonus and equity) of each executive
officer to approximately the 50th percentile of the 2006 Radford Global Life
Sciences Survey and comparable positions at competitive peer group
companies.
We
believe that the new long-term incentive program involving a combination of
RSAs/RSUs and stock options will provide our executive officers and other
employees with a competitive and more balanced equity compensation
package. This is particularly important for us, since the total
direct compensation of our executive officers is significantly weighted to the
equity award component. Such a relationship reflects a basic tenet of
our overall compensation philosophy of tying pay to performance. The stronger
the market price of our common stock, the more likely the targeted compensation
levels for this component of compensation will be achieved.
It is the
Committee’s belief that RSA and/or RSU awards are essential to the retention of
the executive officers crucial to the long-term financial successes of the
Company. The RSAs have vesting schedules which provide a meaningful incentive
for the executive officer to remain in the Company’s service. These
equity awards also serve as an important vehicle to achieve the Committee’s
objective of aligning management and shareholder interests. Equity
awards in the form of RSAs or RSUs promote all of these objectives in a manner
which is less dilutive to the shareholders than traditional option grants and
provide a more direct correlation between the compensation cost the Company must
record for financial accounting purposes and the value delivered to the
executive officers.
Executive
Benefits and Perquisites
The
executive officers also are provided with certain market competitive benefits
and perquisites. It is the Committee’s belief that such benefits are
necessary for the Company to remain competitive and to attract and retain top
caliber executive officers, since such benefits are typically provided by
companies in the specialty pharmaceutical industry and with other companies with
which the Company competes for executive talent.
Executive
officers are also eligible to participate in the Cytogen Retirement Savings
Plan, a tax-qualified 401k defined contribution plan. The Company
matches 50% of each participant’s contributions up to 6% of a participant’s
aggregate contributions, within statutory IRS limits. The plan is
open to all employees and officers upon the same terms and
conditions.
All
employees, including executive officers, are eligible to receive standard
health, dental, disability and life insurance. The long-term
disability benefits are higher for officers of the Company as compared to other
employees. In addition, the Company provided our former chief
executive officer with a car allowance for use of a vehicle.
Executive
Severance Agreements
Each of
our officers is currently party to an Executive Change of Control Severance
Agreement with Cytogen. Such agreements provide, generally, for the payment of
12 months’ base salary, a pro-rata portion of such officer’s bonus compensation,
the continuation of all benefits, reasonable Company-paid outplacement
assistance and certain other accrued rights, in the event such officer’s
employment with us is terminated in connection with a change in control as set
forth therein. See our description of Employment Contracts,
Termination of Employment and Change-in-Control Arrangements for a detailed
description of potential severance payments.
Retention
Agreements
We have also entered into certain
executive retention agreements with each of the following executive
officers: Kevin J. Bratton, Senior Vice President, Finance and Chief
Financial Officer; William F. Goeckeler, Ph.D., Senior Vice President,
Operations; and Stephen A. Ross, Senior Vice President, Sales and Marketing; and
the following key employee: Thu Dang, Vice President,
Finance. In an effort to retain our valued executive management team,
the executive retention agreements provide that if (i) a change of control (as
defined in the executive retention agreement) or financing (as defined in the
executive retention agreement) occurs prior to June 1, 2008, the executive shall
be entitled to fifty percent (50%) of the retention bonus (defined in the
executive retention agreement to equal fifty percent (50%) of the executive’s
current base salary); (ii) on each of June 1, 2008 and December 1, 2008, those
executive officers employed by us shall be entitled to fifty percent (50%) of
the retention bonus (defined in the executive retention agreement to equal fifty
percent (50%) of the executive’s current base salary), less any amounts already
paid under the executive retention agreements; and (iii) if the executive’s
employment with us is terminated by us (other than for cause, disability or
death), the executive shall be entitled to (a) a cash payment equal to (1) the
executive’s base salary through the date of termination to the extent not
previously paid and (2) accrued unpaid vacation pay; and (b) the retention
bonus, less any amounts paid under the executive retention agreement (defined in
the executive retention agreement to equal fifty percent (50%) of the
executive’s current base salary). All amounts under the executive
retention agreements shall be paid to the executive by the board of directors,
at its sole discretion, in cash; shares of our common stock (the number of
shares as set by the closing price of our common stock as listed on the NASDAQ
Global Market on the triggering event’s date set forth above); or a combination
thereof.
Compliance
with Internal Revenue Code Section 162(m)
Section
162(m) of the Internal Revenue Code disallows a tax deduction to publicly held
companies for compensation paid to certain of their executive officers to the
extent such compensation exceeds $1.0 million per covered officer in any year.
The limitation applies only to compensation that is not considered to be
performance-based under the terms of Section
162(m). Non-performance-based compensation paid to our executive
officers for 2007 did not exceed the $1.0 million limit per
officer. However, as we continue to increase the level of cash
compensation paid to the executive officers to stay competitive with surveyed
market data and to award service-vesting RSAs as an element of equity
compensation, it is possible that the non-performance-based compensation payable
to the executive officers will exceed the $1.0 million limit in one or more
future years. We believe that in establishing the cash and equity
incentive compensation programs for our executive officers, the potential
deductibility of the compensation payable under those programs should be only
one of a number of relevant factors taken into consideration, and not the sole
governing factor, particularly during periods when such deductions will not
result in immediate tax savings because of operating losses or tax credit
carryforwards. For that reason, we may deem it appropriate to provide
one or more executive officers with the opportunity to earn incentive
compensation, whether through cash bonus programs tied to our financial
performance or through RSAs tied to the executive officer’s continued service,
which together with base salary in the aggregate may be in excess of the amount
deductible by reason of Section 162(m) or other provisions of the Internal
Revenue Code. We believe it is important to maintain cash and equity
incentive compensation at the levels needed to attract and retain the executive
officers essential to our success, even if all or part of that compensation may
not be deductible by reason of the Section 162(m) limitation.
Summary
of Compensation in Fiscal 2007
The
following Summary Compensation Table sets forth information concerning
compensation during the year ended December 31, 2007, for services in all
capacities awarded to, earned by or paid to our Chief Executive Officer at any
time during 2007 and each other of our executive officers as of December 31,
2007 (collectively referred to as the “Named Executives”).
SUMMARY
COMPENSATION TABLE
Name
and
Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)(1)(2)
|
Stock
Awards
($)(3)
|
Option
Awards
($)(3)
|
Non-
Equity
Incentive Plan Compensa-
tion
($)
|
Change
in Pension Value and Nonqualified Deferred Compensa-
tion
Earnings ($)
|
All
Other
Compensation
($)(1)(4)
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
Kevin
G. Lokay(5)
President
and Chief Executive Officer
|
2007
|
46,154
|
--
|
10,953
|
28,146
|
--
|
--
|
82
|
85,335
|
|
|
|
|
|
|
|
|
|
|
Michael
D. Becker(6)
President
and Chief Executive Officer
|
2007
2006
|
361,166
321,423
|
--
181,000
|
115,364
63,974
|
208,522
422,662
|
--
--
|
--
--
|
7,090
6,893
|
692,142
995,952
|
|
|
|
|
|
|
|
|
|
|
Kevin
J. Bratton(7)
Senior
Vice President, Finance and Chief Financial Officer
|
2007
2006
|
225,000
28,558
|
--
20,000
|
56,010
6,375
|
95,170
9,727
|
--
--
|
--
--
|
7,566
121
|
383,746
64,781
|
|
|
|
|
|
|
|
|
|
|
William
F. Goeckeler
Senior
Vice President, Operations
|
2007
2006
|
276,855
229,007
|
--
91,664
|
63,849
32,120
|
114,831
132,369
|
--
--
|
--
--
|
7,377
7,093
|
462,912
492,253
|
|
|
|
|
|
|
|
|
|
|
William
J. Thomas(9)
Senior
Vice President and General Counsel
|
2007
2006
|
241,461
221,032
|
--
66,338
|
42,862
25,300
|
73,527
107,418
|
--
--
|
--
--
|
5,145
4,207
|
362,995
424,295
|
|
|
|
|
|
|
|
|
|
|
Stephen
A. Ross(8)
Senior
Vice President Sales and Marketing
|
2007
|
103,943
|
--
|
5,102
|
9,106
|
--
|
--
|
30,535
|
148,686
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Certain
perquisites or personal benefits are not included herein because they did
not exceed, in the case of each Named Executive, $10,000 in the
aggregate.
|
(2)
|
The
amounts disclosed in this column include bonus payments made to certain of
the Named Executives in cash for fiscal year 2006 and paid in
2007.
|
(3)
|
The
amounts in these columns do not reflect compensation actually received by
the named executive officers. Instead, the amounts reflect the
compensation expense recognized by the Company in 2007 and 2006 for stock
awards and option awards, computed in accordance with FAS
123(R). The compensation expense reflects stock awards and
option awards granted in and prior to 2007 and excludes any reduction in
value due to potential service-based forfeiture
assumptions. Assumptions used in the calculation of the
compensation expense are included in footnote 13 to the Company’s audited
financial statements for each of the fiscal years ended December 31, 2007
and 2006, included in
|
|
the
Company’s Annual Report on Form 10-K filed with the SEC on March 14,
2008. The compensation expense does not correspond to the
actual value that may be realized by the named executive officers with
respect to these awards if and when they vest. Messrs Becker
and Thomas resigned in November 2007 and all of their unvested RSAs and
options have been cancelled. These forfeitures resulted in
reductions to the compensation expense above of $177,181 and $177,664 for
Mr. Becker and $66,345 and $55,660 for Mr.
Thomas.
|
(4)
|
The
amounts disclosed in this column include amounts contributed or accrued by
us in 2007 and 2006 under our Retirement Savings Plan, a defined
contribution plan which consists of a 401(k) contribution portion. In
fiscal year 2007, these amounts were as follows: on behalf of
Mr. Lokay, $0; Mr. Becker, $6,750; Mr. Bratton, $6,633; Dr. Goeckeler,
$6,750; Mr. Thomas, $4,617 and Mr. Ross, $1,356. In fiscal year
2006, these amounts were as follows: on behalf of Mr. Becker, $6,600; Mr.
Bratton, $0; Dr. Goeckeler, $6,600; and Mr. Thomas, $3,900. The amounts
disclosed also include insurance premiums paid by the Company with respect
to group term life insurance and with respect to fiscal years 2007 and
2006. In fiscal year 2007, these amounts were as follows: on
behalf of Mr. Lokay, $82; Mr. Becker, $340; Mr. Bratton, $903; Dr.
Goeckeler, $627; Mr. Ross, $98; and Mr. Thomas, $528. In fiscal
year 2006 they were as follows: on behalf of Mr. Becker, $293; Mr.
Bratton, $121; Dr. Goeckeler, $493; and Mr. Thomas, $307. The
amounts disclosed in 2007 also include relocation reimbursement of $29,081
paid to Mr. Ross.
|
(5)
|
Mr.
Lokay joined the Company in November 2007 as President and Chief Executive
Officer. Mr. Lokay received, in accordance with our 2006 Equity
Compensation Plan, as amended, a grant of (i) 350,877 restricted stock
units, or RSUs that vest upon the successful completion of a performance
milestone established by the compensation committee of the board of
directors and expire upon the triggering of the performance milestone
event in section (ii); and (ii) 175,439 RSUs that vest upon the successful
completion of another performance milestone established by the
compensation committee of the board of directors and expire upon the
triggering of the performance milestone event in section
(i).
|
|
Mr.
Lokay also received grants of options as follows: (i) options
to purchase 400,000 shares of the Company’s commons stock, in accordance
with the 2004 Stock Incentive Plan, as amended, at an exercise price equal
to the higher of the closing price of the Company’s common stock, as
listed on the NASDAQ Global Market on December 18, 2007 and $0.57 and
vesting at a rate of 25% on each anniversary of the date of grant; and
(ii) options to purchase 100,000 shares of the Company’s common stock, in
accordance with the 2006 Plan, as amended, at an exercise price equal to
the higher of the of closing price of the Company’s common stock, as
listed on the NASDAQ Global Market on December 18, 2007 and $0.57 and
vesting at a rate of 25% on each anniversary of the date of
grant.
|
(6)
|
Mr.
Becker joined the Company in April 2001 and was promoted to President and
Chief Executive Officer in December 2002. In connection with such
promotion, Mr. Becker was granted options to purchase 200,000 shares of
our common stock under our 1995 Plan. The exercise price per share of such
options is $3.54, the fair market value of our common stock on the date of
grant. 50,000 of such options vested immediately upon grant, 50,000
options vested in 2006 upon the achievement of certain performance
milestones pre-established by the Board of Directors, and the remaining
100,000 options were cancelled upon Mr. Becker’s resignation in November
2007 in accordance with the terms of Mr. Becker’s option
agreements. The grant date fair value of the performance
options vested in 2006 in the amount of $152,000 is included in the
“Option Awards” column.
|
(7)
|
Mr.
Bratton joined the Company in November 2006 as our Senior Vice President,
Finance and Chief Financial
Officer.
|
(8)
|
Mr.
Ross joined the Company in July 2007 as our Senior Vice President Sales
and Marketing.
|
(9)
|
Mr.
Thomas resigned in November 2007 as our Senior Vice President and General
Counsel.
|
2007
Grants of Plan-Based Awards
The
following table sets forth information concerning individual grants of stock
options and restricted stock awards made during 2007 to each of the Named
Executives.
GRANTS
OF PLAN-BASED AWARDS TABLE
|
|
Estimated
Future Payouts
Under
Non-Equity Incentive
Plan
Awards
|
Estimated
Future Payouts Under Equity Incentive Plan Awards
|
All
Other
Stock
Awards:
Number
of
Shares
of
Stock
or
Units
(#)
|
All
Other
Option
Awards:
Number
of
Securities
Under-
lying
Options
(#)
|
Exercise
or
Base
Price
of Option
Awards
($/Sh)
|
Grant
Date Fair Value of Equity Awards
($)
|
Name
|
Grant
Date
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
(#)
|
Target
(#)
|
Maximum
(#)
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
D. Becker
|
2/20/07
2/20/07
|
--
|
--
|
--
|
--
|
--
|
--
|
--
58,000
|
144,000
--
|
2.50
--
|
263,714
145,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin
J. Bratton
|
2/20/07
2/20/07
|
--
|
--
|
--
|
--
|
--
|
--
|
--
18,000
|
56,000
--
|
2.50
--
|
102,556
45,000
|
|
|
|
|
|
|
|
|
|
|
|
|
William
F. Goeckeler
|
2/20/07
2/20/07
|
--
|
--
|
--
|
--
|
--
|
--
|
--
20,000
|
63,000
--
|
2.50
--
|
115,375
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin
G. Lokay(1)
|
11/13/07
11/13/07
11/13/07
11/16/07
11/20/07
|
|
|
|
|
|
|
--
--
91,930
129,074
129,873
|
400,000
100,000
--
--
--
|
0.57
0.57
--
--
--
|
156,274
40,362
52,400
85,189
83,119
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen
A. Ross
|
7/09/07
7/09/07
|
|
|
|
|
|
|
20,000
--
|
--
50,000
|
--
1.59
|
31,800
56,967
|
|
|
|
|
|
|
|
|
|
|
|
|
William
J. Thomas
|
2/20/07
2/20/07
|
--
|
--
|
--
|
--
|
--
|
--
|
16,000
--
|
--
50,000
|
--
2.50
|
40,000
91,567
|
(1)
|
Excludes
awards granted to Mr. Lokay in 2007 for his services as a non-employee
director.
|
All
options granted to these executive officers were granted under the 2004 Stock
Incentive Plan or the 2006 Equity Compensation Plan. All options
granted under the 2004 Stock Incentive Plan have an exercise price equal to the
average of the high and low trading prices of our common stock on the date of
grant. All options granted under the 2006 Equity Compensation Plan
have an exercise price equal to the closing price of our common stock on the
grant date. One-third of the shares subject to each option vests and
becomes exercisable on each of the first, second and third anniversary of the
date of grant. All equity awards consist solely of the restricted
stock grants which vest in full on the third anniversary of the date of grant
except for the performance based RSUs granted to Mr. Lokay. Mr. Lokay received a
grant of (i) 350,877 RSUs that vest upon successful completion of a performance
milestone established by the compensation committee of the board of directors
and expire upon the triggering of the performance milestone event in section
(ii); and (ii) 175,439 RSUs that vest upon the successful completion of another
performance milestone established by the compensation committee of the board of
directors and expire upon the triggering of the performance milestone event in
section (i).
Outstanding
Equity Awards at Fiscal Year-End 2007
The
following table sets forth information concerning outstanding equity awards held
by each of the Named Executives as of December 31, 2007.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END TABLE
|
|
|
Name
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number
of Securities Underlying Unexercised Options (#)
Unexer-cisable(1)
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options (#)
|
Option
Exercise Price ($)
|
Option
Expiration Date
|
Number
of Shares or Units of Stock That Have Not Vested (#)
|
Market
Value of Shares or Units of Stock That Have Not Vested
($)(2)
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights
That Have Not Vested (#)
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units of
Other Rights That Have Not Vested ($)
|
|
|
|
|
|
|
|
|
|
|
Kevin
J.
Bratton
|
31,360
1,973
--
|
62,720(3)
3,947(3)
56,000(4)
|
--
--
--
|
2.58
2.59
2.50
|
11/8/2016
11/8/2016
2/20/2017
|
50,000(9)
18,000(10)
|
26,500
9,540
|
--
|
--
|
|
|
|
|
|
|
|
|
|
|
William
F. Goeckeler
|
1,107
1,500
4,000
2,639
7,000
5,000
7,396
30,000
12,000
20,000
|
--
--
--
--
--
--
--
--
6,000(5)
40,000(6)
63,000(4)
|
--
--
--
--
--
--
--
--
--
--
--
|
26.72
29.06
49.60
34.90
3.54
3.53
11.48
11.50
5.15
3.57
2.50
|
12/31/2009
12/19/2010
6/4/2011
12/18/2011
12/17/2012
1/14/2013
10/21/2013
6/15/2014
6/14/2015
4/4/2016
2/20/2017
|
12,000(11)
10,667(12)
15,000(13)
20,000(10)
|
6,360
5,654
7,950
10,600
|
--
|
--
|
|
|
|
|
|
|
|
|
|
|
Kevin
G. Lokay(16)
|
|
400,000(7)
100,000(7)
|
--
--
|
0.57
0.57
|
11/13/2017
11/13/2017
|
91,930
(15)
129,074(15)
129,873(15)
|
48,723
68,409
68,833
|
--
|
--
|
|
|
|
|
|
|
|
|
|
|
Stephen
A.
Ross
|
|
50,000(8)
|
--
|
1.59
|
7/9/2017
|
20,000(14)
|
10,600
|
|
|
(1)
|
Unless
otherwise noted, stock options vest 33.33% per year over three years on
the anniversary of the date of grant. Stock options expire 10 years from
their date of grant.
|
(2)
|
The
closing price of our common stock at December 31, 2007 was $0.53 per
share.
|
(3)
|
Options
with vesting date of November 8, 2008 and November 8,
2009.
|
(4)
|
Options
with vesting dates of February 20, 2008, February 20, 2009 and February
20, 2010.
|
(5)
|
Options
with vesting date of June 14, 2008.
|
(6)
|
Options
with vesting dates of April 4, 2008 and April 4,
2009.
|
(7)
|
Stock
options vest 25% per year over four years on the anniversary of the date
of grant. Options with vesting dates of December 18, 2008,
December 18, 2009, December 18, 2010 and December 18,
2011.
|
(8)
|
Options
with vesting dates of July 9, 2008, July 9, 2009 and July 9,
2010.
|
(9)
|
Restricted
stock award that vests on November 8,
2009.
|
(10)
|
Restricted
stock award that vests on February 20,
2010.
|
(11)
|
Restricted
stock award that vests in equal installments on June 14, 2008, June 14,
2009, June 14, 2010 and June 14,
2011.
|
(12)
|
Restricted
stock award that vests in equal installments on April 4, 2008 and April 4,
2009.
|
(13)
|
Restricted
stock award that vests on October 17,
2009.
|
(14)
|
Restricted
stock award that vests on July 9,
2010.
|
(15)
|
Restricted
stock award will vest upon the completion of certain performance-based
milestones established by the Board of
Directors.
|
(16)
|
Excludes
awards granted to Mr. Lokay for his services as a non-employee
director.
|
|
Employment
Contracts, Termination of Employment and Change-in-Control
Arrangements
|
Effective November 12, 2007, we
entered into a letter agreement with Kevin G. Lokay in connection with his
employment by the Company. Upon becoming president and chief
executive officer, Kevin Lokay was awarded the following compensation
arrangement:
|
·
|
Mr.
Lokay receives an annual base salary of
$400,000;
|
|
·
|
Mr.
Lokay earns an annual bonus equal to up to 50% of Mr. Lokay’s annual base
salary, subject to achievement of certain performance goals established by
the compensation committee of the board of
directors;
|
|
·
|
Mr.
Lokay is entitled to twelve (12) months of severance in the event he is
terminated without cause;
|
|
·
|
Mr.
Lokay is entitled to payment of up to $75,000 of relocation expenses if he
relocates within an 18 month period;
and
|
|
·
|
Mr.
Lokay is entitled to five (5) weeks of paid
vacation.
|
Additionally,
upon becoming president and chief executive officer, Mr. Lokay, received, in
accordance with our 2006 Equity Compensation Plan, as amended, a grant of (i)
350,877 RSUs that vest upon the successful completion of a performance milestone
established by the compensation committee of the board of directors and expire
upon the triggering of the performance milestone event in section (ii); and (ii)
175,439 RSUs that vest upon the successful completion of another performance
milestone established by the compensation committee of the board of directors
and expire upon the triggering of the performance milestone event in section
(i).
Mr. Lokay also received grants of
options as follows: (i) options to purchase 400,000 shares of the
Company’s common stock, in accordance with the 2004 Stock Incentive Plan, as
amended, at an exercise price equal to the higher of the of closing price of the
Company’s common stock, as listed on the NASDAQ Global Market on December 18,
2007 and $0.57 and vesting at a rate of 25% on each anniversary of the date of
grant; and (ii) options to purchase 100,000 shares of the Company’s common
stock, in accordance with the 2006 Plan, as amended, at an exercise price equal
to the higher of the closing price of the Company’s common stock, as listed on
the NASDAQ Global Market on December 18, 2007 and $0.57 and vesting at a rate of
25% on each anniversary of the date of grant.
Each of
our executive officers is currently party to an Executive Change of Control
Severance Agreement with Cytogen. Such agreements provide, generally, for the
payment of 12 months’ base salary, a pro-rata portion of such officer’s bonus
compensation, the continuation of all benefits, reasonable Company-paid
outplacement assistance and certain other accrued rights, in the event such
officer’s employment with us is terminated in connection with a change in
control as set forth in such agreements.
Potential Payments to Executive
Officers Upon Termination in Connection With a Change in Control
Due to
the number of factors that affect the nature and amount of any benefits provided
upon the events discussed below, any actual amounts paid or distributed may be
different. Factors that could affect these amounts include the timing during the
year of any such event, an executive’s insurance coverage and the executive’s
accrued vacation.
Pursuant
to the Executive Change of Control Severance Agreements with each of our
executive officers, in the event that we terminate any of these executives
without cause in connection with a change in control (as defined in such
agreements), other than due to death or disability, we must:
|
·
|
make
a lump sum payment equal to the sum of the annual salary and a pro-rata
portion of the annual cash bonus;
|
|
·
|
continue
health and life and disability insurance and other benefits for one year
from the date of termination;
|
|
·
|
provide
outplacement services for up to 12
months;
|
|
·
|
pay
any other accrued rights of the
executive;
|
|
·
|
pay
a gross up amount for certain excise taxes imposed by the Internal Revenue
Code; and
|
|
·
|
in
certain circumstances, pay legal fees and costs in the event we wrongfully
refuse to provide the severance
benefits.
|
Assuming
the employment of Messrs. Lokay, Bratton and Ross and Dr. Goeckeler had
been terminated without cause on December 31, 2007 in connection with a
change in control, they would have been entitled to the following
payments:
|
|
|
Kevin
G.
Lokay
|
|
$608,127
|
Kevin
J.
Bratton
|
|
$300,536
|
William
F.
Goeckeler
|
|
$401,711
|
Stephen
A.
Ross
|
|
$333,941
|
(1)
|
Payment
amounts are based on the following
components:
|
|
·
|
base
pay using salary at end of 2007;
|
|
·
|
annual
cash bonus, calculated by taking the 2007 target
bonus;
|
|
·
|
health
and dental benefits, based on current COBRA
rates;
|
|
·
|
life,
disability and long term care insurance premiums, based on current formula
calculations; and
|
|
·
|
accrued
vacation balances.
|
Directors’
Compensation
Director
Compensation for Fiscal Year 2007
The
following table sets forth information regarding the compensation of each
non-employee director of the Company for the fiscal year ended December 31,
2007. For information regarding the compensation of Michael D. Becker our former
President and CEO, and Kevin G. Lokay as President and CEO, see “Executive
Compensation – Summary Compensation Table”.
2007
DIRECTOR COMPENSATION TABLE
Name
|
Fees
Earned or Paid in Cash ($)(1)
|
Stock
Awards ($)(2)
|
Option
Awards ($)(3)
|
Non-Equity
Incentive Plan Compensation ($)
|
Change
in Pension Value and Nonqualified Deferred Compensation
Earnings
|
All
Other Compensation ($)(4)
|
Total
($)
|
|
|
|
|
|
|
|
|
James
A. Grigsby
|
101,000
|
10,953
|
31,818
|
--
|
--
|
--
|
143,771
|
John
E. Bagalay, Jr
|
73,500
|
10,953
|
18,182
|
--
|
--
|
--
|
102,635
|
Allen
Bloom
|
68,000
|
10,953
|
18,182
|
--
|
--
|
--
|
97,135
|
Stephen
K. Carter
|
60,500
|
10,953
|
18,182
|
--
|
--
|
--
|
89,635
|
Robert
F. Hendrickson
|
65,500
|
10,953
|
18,182
|
--
|
--
|
--
|
94,635
|
Dennis
H. Langer
|
49,500
|
10,953
|
22,154
|
--
|
--
|
--
|
82,607
|
Kevin
G. Lokay(5)
|
36,000
|
10,953
|
22,154
|
--
|
--
|
--
|
69,107
|
Joseph
A. Mollica
|
63,000
|
10,953
|
22,154
|
--
|
--
|
--
|
96,107
|
|
(1)
|
Each
non-employee director of the Company may elect to receive all compensation
for services rendered as a member of the Cytogen board, any committees
thereof, and as board or committee chair, in the form of shares of common
stock, in cash or in a combination of shares of common stock and cash,
under the 2004 Non
|
|
Employee
Director Stock Incentive Plan, or the Director Plan, maintained by the
Company. Except as otherwise noted, each non-employee director elected to
receive all of their 2007 compensation in the form of
cash.
|
|
(2)
|
These
amounts do not reflect compensation actually received by the named
directors. Instead, the amounts reflect compensation expense
recognized by the Company in 2007 for stock awards, computed in accordance
with FAS 123(R). The compensation expense reflects stock awards
in 2007 and excludes any reduction in value due to potential service-based
forfeiture assumptions. Assumptions used in the calculation of
the compensation expense are included in Note 13 to the Company’s audited
financial statements. The compensation expense does not
correspond to the actual value that may be realized by the named directors
with respect to these awards when and if they vest. At December
31, 2007, each non-employee director has a restricted share award of
10,000 shares of the Company’s common
stock.
|
|
(3)
|
These
amounts do not reflect compensation actually received by the named
directors. Instead, the amounts reflect compensation expense
recognized by the Company in 2007 for option awards, computed in
accordance with FAS 123(R). The compensation expense reflects
option awards granted in and prior to 2007 and excludes any reduction in
value due to potential service-based forfeiture
assumptions. Assumptions used in the calculation of the
compensation expense are included in Note 13 to the Company’s audited
financial statements. The compensation expense does not
correspond to the actual value that may be realized by the named directors
with respect to these options when and if they vest. In 2007,
our independent directors were eligible to receive a stock option to
purchase 10,000 shares of our Common Stock upon re-election to the
Board at each annual meeting. The Chairman of the Board received an
additional grant of options to purchase 7,500 shares of common
stock. These options vest on the one year anniversary of the
grant date. As of December 31, 2007, our non-employee directors
hold stock options to acquire shares of our common stock, as follows: Mr.
Grigsby: 99,200 shares; Dr. Bagalay: 56,100 shares; Dr. Bloom: 52,000
shares; Dr. Carter: 55,987 shares; Mr. Hendrickson: 55,700 shares; Dr.
Langer: 30,000 shares; and Dr. Mollica: 30,000
shares.
|
|
(4)
|
Unless
otherwise indicated, none of the directors received any
(i) perquisites or personal benefits in an aggregate amount exceeding
$10,000 or (ii) other compensation not otherwise set forth in this
table.
|
|
(5)
|
Mr.
Lokay was appointed as our President and CEO in November
2007. The amounts shown in the above table represent
compensation for his services and stock and option compensation for awards
prior to his appointment as President and
CEO.
|
Annual
Retainers
Each of
our non-employee directors receives an annual retainer of $16,000. In
addition: (i) the Chairman of the Board (who is not an employee of the Company)
currently receives, based upon significant time spent on Company business, an
additional annual retainer of $50,000; (ii) the Chairman of the Audit and
Finance Committee receives an additional annual fee of $10,000; (iii) the
Chairman of each of the other board committees receives an additional annual fee
of $6,000; and (iv) the Co-Chairman of the Research and Development Committee
receives an additional annual fee of $4,000.
Board
Meeting Attendance
Each of
our non-employee directors receives $2,000 for each board meeting attended in
person, and $500 if such participation is by telephone.
Committee
Meeting Attendance
Non-employee
directors receive $2,000 for each committee meeting attended in person on a day
there is no meeting of the Board, $1,000 for each committee meeting attended in
person on a day that coincides with a meeting of the Board, and $500 if such
participation is by telephone, but receive no additional fees for committee
membership.
Equity
Compensation
Pursuant
to our Director Plan, each non-employee director receives an initial grant of
options on the date of appointment equal to a pro-rata portion of 10,000 shares
of our common stock, based upon the number of months remaining from the date of
election until the one year anniversary of the preceding annual meeting. In
addition, on the day following each annual meeting of stockholders, each
individual who is re-elected as a non-employee director is automatically granted
options to purchase 10,000 shares of our common stock. The Chairman of the
Board, unless the Compensation Committee determines otherwise, receives an
additional grant of 7,500 options to purchase shares of our common stock on the
day
following
each annual meeting. Furthermore, each director who, upon conclusion of our 2004
Annual Meeting of Stockholders and the adoption of the Director Plan, was a
non-employee director, was granted options to purchase 10,000 shares of our
common stock. In 2007, each of our non-employee directors (other than Mr.
Grigsby) received options to purchase 10,000 shares of our common stock on June
14, 2007 at an exercise price of $2.00 per share. Mr. Grigsby, as
Chairman of the Board, received options to purchase 17,500 shares of our common
stock on such date. Beginning with the 2007 Annual Meeting of Stockholders, on
the day following each annual meeting of the stockholders, each individual who
is re-elected as a non-employee director is automatically awarded 10,000 (under
the 2006 Equity Compensation Plan) restricted shares of our common stock that
vest on the first anniversary of the date of the award.
Options
granted under the Director Plan are exercisable at a price equal to the average
of the high and low sale prices of the common stock as reported on the NASDAQ
Global Market on the date of grant and vest in full (i.e., first become
exercisable) at the first anniversary of the option grant date.
Each
director’s outstanding options granted under the Director Plan also become
immediately exercisable in full: (i) upon the occurrence of a Corporate
Transaction or Major Event, as defined in the Director Plan; (ii) upon death or
disability of such Director, or if a Director dies within three months following
the date of his or her termination of service on the Board, until the earlier of
the end of the one-year period immediately following the date of termination of
service, or the expiration of the term of the option; or (iii) if the
non-employee director has served as a director of the Company for three years,
upon voluntary resignation or retirement after age 55, until the earlier of the
end of the five year period immediately following the date of the termination of
service, or the expiration of the term of the option.
Each
eligible director may name, from time to time, any beneficiary or beneficiaries
(which may be named contingently or successively) as his or her beneficiary for
purposes of the Director Plan. Each designation shall be on a form prescribed by
the Company, will be effective only when delivered to the Company, when
effective will revoke all prior designations by such director and will be
allowed only to the extent permitted by applicable law. If an eligible director
dies with no such beneficiary designation in effect, such person’s options will
be transferable by will or pursuant to the laws of descent and distribution
applicable to such person.
The
Director Plan also provides that non-employee directors may receive, at the sole
discretion of and after formal action by our Board of Directors, such number of
shares of common stock that is equal to each such director’s cash compensation
(including, but not limited to, annual service fees, fees payable for board and
committee meetings attended and fees for committees chaired), also referred to
as the Cash Component, divided by the fair market value of our common stock as
of the date of issuance of such shares, also referred to as the Compensation
Shares, which date shall be no earlier than the date on which the applicable
Cash Component compensation becomes due and payable by the Company. Compensation
Shares shall not be issued for services not yet rendered by such directors to
the Company.
The
Director Plan also provides that, in the event the Board elects to issue
Compensation Shares, such eligible directors will receive Compensation Shares
until, absent additional Board action, at least such time as: (i) such director
owns 2,000 shares of our common stock, excluding options or other rights to
acquire shares of our common stock, whether exercisable or unexercisable; or
(ii) if fewer than 2,000 shares are so owned, such smaller number of shares has
a fair market value of in excess of $100,000, excluding the value, if any, of
options to purchase common stock, whether exercisable or unexercisable, or other
rights to acquire our common stock. Upon achieving either of such milestones (i)
or (ii) above, each such director may, at his or her option, elect to cease
receiving his or her Cash Component to which he or she is entitled in shares of
our common stock under the Director Plan; provided, however, that such director
must make such election by providing notice of such election to us in a timely
manner. As of the date hereof, all of our current non-employee directors have
satisfied either of the milestones as set forth above, and have elected to
receive their director compensation in cash.
Each
option provided for in the Director Plan and each restricted share award
provided for in the 2006 Equity Compensation Plan is granted automatically and
without further action by us, our Board of Directors or our
stockholders.
Expense
Reimbursement
All
non-employee directors are eligible to be reimbursed for expenses incurred in
connection with their service on the Board of Directors.
Compensation
Committee Interlocks and Insider Participation
During
2007, our Compensation Committee consisted of Robert F. Hendrickson, who served
as Chairman of the Committee, Allen Bloom, Dennis H. Langer and Kevin G. Lokay,
prior to his appointment as President and CEO. There are no, and during 2007
there were no, Compensation Committee interlocks.
Report
of the Compensation Committee of the Board of Directors
The
Compensation Committee has reviewed the Compensation Discussion and Analysis and
discussed that Analysis with management. Based on its review and discussions
with management, the committee recommended to our Board of Directors that the
Compensation Discussion and Analysis be included in this Proxy Statement. This
report is provided by the following independent directors, who comprise the
committee:
|
Robert
F. Hendrickson, Chairman
|
Item 12. Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters
There
were, as of March 27, 2008, approximately 1,900 holders of record and
approximately 25,000 beneficial holders of our common stock. The following table
sets forth certain information that, unless otherwise noted, is as of March 27,
2008, with respect to holdings of our common stock by: (i) each person known by
us to be the beneficial owner of more than 5% of the total number of shares of
our common stock outstanding as of such date, based upon currently available
Schedules 13D and 13G, and other reports, filed with the SEC; (ii) each of our
directors and our Named Executives; and (iii) all directors and executive
officers as a group.
Name
and Address of Beneficial Owner(1)
|
|
Amount and Nature of
Beneficial Ownership(1)(2)
|
|
Percent of Class(3)
|
(i)
Certain beneficial owners:
|
|
|
|
|
|
|
|
|
|
JP
Morgan Chase & Co.
270
Park Avenue
New
York, New York 10017
|
|
4,919,027
|
|
13.83%
|
|
|
|
|
|
Millenco,
L.L.C.
c/o
Millenium Management, L.L.C.
666
Fifth Avenue
New
York, New York 10100
|
|
1,769,410
|
|
4.97%
|
|
|
|
|
|
Orbimed
Advisors(4)
767
Third Avenue, 30th
Floor
New
York, New York 10017
|
|
2,139,800
|
|
5.86%
|
|
|
|
|
|
(ii)
Directors and Named Executives:
|
|
|
|
|
|
|
|
|
|
John
E. Bagalay, Jr.
|
|
48,100
|
|
*
|
|
|
|
|
|
Allen
Bloom
|
|
44,000
|
|
*
|
|
|
|
|
|
Stephen
K. Carter
|
|
47,987
|
|
*
|
|
|
|
|
|
James
A. Grigsby (7)
|
|
88,700
|
|
*
|
|
|
|
|
|
Robert
F. Hendrickson
|
|
48,700
|
|
*
|
|
|
|
|
|
Dennis
H. Langer
|
|
22,000
|
|
*
|
|
|
|
|
|
Kevin
G. Lokay
|
|
46,333
|
|
*
|
|
|
|
|
|
Joseph
A. Mollica
|
|
22,000
|
|
*
|
|
|
|
|
|
Kevin
J. Bratton
|
|
51,999
|
|
*
|
|
|
|
|
|
William
F. Goeckeler
|
|
138,113
|
|
*
|
|
|
|
|
|
Stephen
A. Ross
|
|
--
|
|
*
|
|
|
|
|
|
(iii)All
directors and executive officers as a group (11 persons)
|
|
557,932
|
|
1.54%
|
*
|
Indicates
amount is less than 1%.
|
(1)
|
Except
as set forth in the footnotes to this table and subject to applicable
community property law, the persons and entities named in this table have
sole voting and investment power with respect to all shares. Unless otherwise
indicated, the address of each beneficial owner is c/o Cytogen
Corporation, 650 College Road East, Princeton, New Jersey
08540.
|
(2)
|
Includes
the total of vested shares granted under restricted stock awards and
shares of our common stock which the following persons have the right to
acquire upon the exercise of stock options, within 60 days of March 27,
2008, as follows: Mr. Bagalay: 46,100 shares; Mr. Bloom: 42,000 shares;
Dr. Carter: 45,987 shares; Mr. Grigsby: 81,700
shares;
|
Mr.
Hendrickson: 45,700 shares; Mr. Langer: 20,000 shares; Mr. Lokay: 44,333 shares;
Mr. Mollica: 20,000 shares; Mr. Bratton: 51,999 shares; and Dr.
Goeckeler: 136,975 shares.
(3)
|
Percent
of class for each person and all executive officers and directors as a
group is based on 35,570,836 shares of our common stock outstanding on
March 27, 2008 and includes shares subject to options held by the
individual or the group, as applicable, which are exercisable or become
exercisable within 60 days following such
date.
|
(4)
|
Based
on a schedule 13G/A filed with the SEC on January 30, 2008 by J.P. Morgan
Chase & Co. This reporting entity has sole voting power and
sole dispositive power as to, and beneficially owns, 4,919,027 shares of
our common stock. The notice on Schedule 13G/A was filed on
behalf of J.P. Morgan Chase & Co. and its subsidiaries, J.P. Morgan
Securities Inc. and J.P. Morgan Ventures Corporation. The
Company makes no representation as to the accuracy or completeness of the
information reported.
|
(5)
|
Based
on a Schedule 13D filed with the SEC on May 21, 2007 by Millenco, L.L.C.,
Millenium Management, L.L.C. and Israel A. Englander. These
reporting entities have shared voting power and shared dispositive power
as to, and beneficially own, the following number of shares of our common
stock and warrants to purchase shares of our common stock: (i)
Millenco, L.L.C.: 1,769,410; (ii) Millenium Management,
L.L.C.: 1,769,410; and (iii) Israel A.
Englander: 1,769,410. Millenco, L.L.C. is the
beneficial owner of: (i) 1,681,486 shares of our common stock and (ii)
warrants to purchase 87,924 shares of our common
stock. Millenium Management, L.L.C. is the manager of Millenco,
L.L.C. and may be deemed to be the beneficial owner of the shares
beneficially owned by Millenco, L.L.C. Mr. Englander is the managing
member of Millenium Management and may be deemed to be the beneficial
owner of the shares beneficially owned by Millenco, L.L.C. The
foregoing should not be construed in and of itself as an admission by
Millenium Management, L.L.C. or Mr. Englander as to beneficial ownership
of the shares held by Millenco, L.L.C. The Company makes no
representation as to the accuracy or completeness of the information
reported.
|
(6)
|
Based
on a Schedule 13G/A filed with the SEC on February 14, 2008 by OrbiMed
Advisors LLC, OrbiMed Capital LLC and Samuel D. Isalay. These
reporting entities have shared voting power and shared dispositive power
as to, and beneficially own, the following number of shares of our common
stock and warrants to purchase shares of our common stock: (i) OrbiMed
Advisors LLC: 1,163,100; (ii) OrbiMed Capital
LLC: 976,700; and (iii) Samuel D.
Isalay: 2,139,800. OrbiMed Advisors LLC and OrbiMed
Capital LLC hold shares and share equivalents issuable on the exercise of
warrants on behalf of Caduceus Capital Master Fund Limited (501,700 shares
and 382,500 warrants), Caduceus Capital II, L.P. (313,000 shares and
237,500 warrants), UBS Eucalyptus Fund, LLC (348,800 shares and 202,500
warrants), PW Eucalyptus Fund, Ltd. (38,800 shares and 22,500 warrants)
and Summer Street Life Sciences Hedge Fund Investors LLC (92,500
warrants). The Company makes no representation as to the
accuracy or completeness of the information
reported.
|
(7)
|
Includes
2,000 shares of common stock held indirectly by Mr. Grigsby in the
registered name of Mr. Grigsby’s
spouse.
|
Securities
Authorized for Issuance Under Equity Compensation Plans
The
following table provides information about the securities authorized for
issuance under our equity compensation plans as of December 31,
2007.
Equity
Compensation Plan Information
Plan
Category(1)
|
|
Number
of
securities to be
issued
upon
exercise
of
outstanding
options, warrants
and
rights
(a)
|
|
Weighted-average
exercise
price of
outstanding
options,
warrants
and
rights
(b)
|
|
Number of securities
remaining available for
future
issuance under
equity
compensation
plans
(excluding
securities
reflected in
column
(a))
(c)(2)
|
(i) Equity
compensation plans approved by security holders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
Stock Incentive Plan(3)
|
|
1,082,630
|
|
$3.64
|
|
12,704
|
|
|
|
|
|
|
|
2004
Non-Employee Director Stock Incentive
Plan
|
|
390,000
|
|
$6.06
|
|
356,000
|
|
|
|
|
|
|
|
2005
Employee Stock Purchase
Plan
|
|
--
|
|
--
|
|
331,894
|
|
|
|
|
|
|
|
2006
Equity Compensation Plan(3)
|
|
589,920
|
|
$2.01
|
|
289,303
|
|
|
|
|
|
|
|
Other
equity compensation plans(4)
|
|
261,877
|
|
$12.85
|
|
--
|
|
|
|
|
|
|
|
(ii)
Equity compensation plans not approved by security holders
|
|
287,478
|
|
$7.42
|
|
--
|
|
|
|
|
|
|
|
Total
|
|
2,611,905
|
|
$4.97
|
|
989,901
|
(1)
|
Does
not include information related to the stock option plan of our
subsidiary, AxCell BioSciences Corporation, pursuant to which AxCell may
issue options to purchase shares of AxCell’s common stock to employees and
consultants of AxCell. Such plan did not require the approval of Cytogen’s
stockholders.
|
(2)
|
In
addition to being available for future issuance upon the exercise of
options that may be granted after December 31, 2007, all shares available
for issuance under our 2004 Non-Employee Director Stock Incentive Plan may
instead be issued directly to eligible directors thereunder in payment for
services rendered to us.
|
(3)
|
Excludes
82,501 and 620,777 shares of our common stock granted under restricted
stock awards pursuant to the terms of the 2004 Stock Incentive Plan and
2006 Equity Compensation Plan, respectively. Such restricted
shares are subject to future vesting of up to six years and will be issued
upon the satisfaction of such vesting
provisions.
|
(4)
|
We
no longer grant stock options under our: (i) 1988 Non-Employee Director
Plan; (ii) 1989 Outside Consultant Plan; (iii) 1995 Stock Option Plan, as
amended; and (iv) 1999 Non-Employee Director Plan, but stock option grants
exercisable for an aggregate of: 1,160; 5,000; 219,557; and 36,160 shares
of our common stock remain outstanding under those
plans.
|
Equity Compensation Plans Not
Approved by Security Holders
The
following describes the material features of our equity compensation plans that
have not been approved by our security holders, as set forth in the above
table.
We issued
options to purchase 1,000 shares of our common stock outside any of our equity
compensation plans to Kevin G. Lokay, upon his appointment to our Board of
Directors in January 2001. Such options have an exercise price of $61.26 per
share, expire on January 17, 2011 and vested in full on January 17, 2002. Such
options are subject to the same equitable adjustment as are our outstanding
shares of common stock and are not afforded anti-dilution
protection.
We also
have outstanding warrants to purchase an aggregate of 286,478 shares of our
common stock, that have been issued to various entities in consideration for
services rendered by such persons or entities. Such warrants have a weighted
average exercise price of $7.23 per share and are exercisable and expire at
various times through December 2010.
Item 13. Certain Relationships and Related
Transactions, and Director Independence
The
Company’s Code of Business Conduct and Ethics sets forth the Company’s policies
and procedures regarding the identification, review and approval of related
party transactions. Employees must disclose any transaction or
relationship that reasonably could be expected to give rise to a conflict of
interest to the Company’s Legal Department, while executive officers and
directors must disclose such to the Board of Directors who shall be responsible
for determining whether such transaction or relationship constitutes a conflict
of interest. There were no related party transactions in
2007.
Determination
of Independence
Under
current NASDAQ, a director will only qualify as an “independent director” as
defined in Rule 4200 (a)(15) of the NASDAQ Stock Market, Inc. Marketplace Rules
if, in the opinion of our Board of Directors, that person does not have a
relationship which would interfere with the exercise of independent judgment in
carrying out the responsibilities of a director. In making its determination,
our Board of Directors is required to consider certain categorical standards
listed in Rule 4200(a)(15). Our Board of Directors has affirmatively
determined that each of John E. Bagalay, Jr., Allen Bloom, Stephen K. Carter,
James A. Grigsby, Robert F. Hendrickson, Dennis H. Langer and Joseph A. Mollica
are independent.
Our Board
of Directors has determined that all of the members of each of the Board’s four
standing committees – the Audit and Finance Committee, the Compensation
Committee, the Nominating and Corporate Governance Committee, and the Research
and Development Committee – are independent under relevant NASDAQ rules,
including, in the case of all members of the Audit and Finance Committee, the
independence requirements contemplated by Rule 10A-3 under the Securities
Exchange Act of 1934, as amended, or the Exchange Act.
Item 14. Principal Accounting Fees and
Services
Independent
Auditor’s Fees and Other Matters
The
following table summarizes the fees of KPMG LLP, our independent registered
public accounting firm, for each of the last two fiscal years for audit and
other services:
|
|
|
|
|
|
Audit
Fees
|
|
$ |
516,200 |
|
|
$ |
675,400 |
Audit-Related
Fees
|
|
$ |
-- |
|
|
$ |
-- |
Tax
Fees
|
|
$ |
5,000 |
|
|
$ |
51,900 |
All
Other Fees
|
|
$ |
-- |
|
|
$ |
-- |
|
|
|
|
|
|
|
|
Total
Fees
|
|
$ |
521,200 |
|
|
$ |
727,300 |
Audit
Fees
Audit
fees consist of fees for the audits of our consolidated financial statements,
and of management’s assessment of, and the effective operation of, internal
control over financial reporting, the review of the interim financial statements
included in our quarterly reports on Form 10-Q, and other professional services
provided in connection with statutory and regulatory filings or
engagements.
Audit-Related
Fees
Audit-related fees consist of fees for
assurance and related services that are reasonably related to the performance of
the audit and the review of our financial statements and which are not reported
under “Audit Fees”.
Tax
Fees
Tax fees
consist of fees for tax compliance services related to preparation of tax
returns.
Audit
and Finance Committee Pre-Approval Policy and Procedures
The Audit
and Finance Committee has adopted policies and procedures relating to the
pre-approval of all audit and non-audit services that are to be performed by our
independent registered public accounting firm. This policy generally provides
that we will not engage our independent registered public accounting firm to
render audit or non-audit services unless the service is specifically approved
in advance by the Audit and Finance Committee. All engagements entered into with
KPMG LLP subsequent to May 6, 2003 were approved in advance by the Audit and
Finance Committee.
The Audit
and Finance Committee may delegate authority to one or more subcommittees
(including a subcommittee consisting of a single member), as it deems
appropriate from time to time under the circumstances. Any decision of a
subcommittee to pre-approve audit, review, attest or non-audit services shall be
reported to the full Audit and Finance Committee at its next scheduled
meeting.
PART
IV
(a)
Documents filed as part of the report:
(3) Exhibits-
Exhibit No.
|
|
|
31.1
|
|
Certification
of President and Chief Executive Officer pursuant to Rule 13a-14(a) or
15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002. Filed
herewith.
|
|
|
|
31.2
|
|
Certification
of Senior Vice President, Finance and Chief Financial Officer pursuant to
Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed
herewith.
|
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
|
CYTOGEN
CORPORATION
|
|
|
|
|
By:
|
|
|
|
Kevin
G. Lokay,
|
|
|
President
and Chief Executive Officer
|
Date: April
29, 2008
SIGNATURES
AND POWER OF ATTORNEY
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
President
and Chief Executive Officer
|
|
April
29, 2008
|
|
Kevin
G. Lokay
|
|
(Principal
Executive Officer and Director)
|
|
|
|
|
|
|
|
|
By:
|
|
|
Senior
Vice President, Finance,
|
|
April
29, 2008
|
|
Kevin
J. Bratton
|
|
and
Chief Financial Officer
(Principal
Financial and Accounting Officer)
|
|
|
|
|
|
|
|
|
By:
|
|
|
Director
|
|
April
29, 2008
|
|
John
E. Bagalay, Jr.
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
Director
|
|
April
29, 2008
|
|
Allen
Bloom
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
Director
|
|
April
29, 2008
|
|
Stephen
K. Carter
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
Director
and Chairman of the Board
|
|
April
29, 2008
|
|
James
A. Grigsby
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
Director
|
|
April
29, 2008
|
|
Robert
F. Hendrickson
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
Director
|
|
April
29, 2008
|
|
Dennis
H. Langer
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
Director
|
|
April
29, 2008
|
|
Joseph
A. Mollica
|
|
|
|
|
*
|
By
the signature set forth below, the undersigned, pursuant to the duly
authorized powers of attorney filed with the Securities and Exchange
Commission has signed this Amendment No. 1 on Form 10-K/A on behalf of the
person indicated.
|
26