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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant toss.240.14a-12
EXELIXIS, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box)
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
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2. Aggregate number of securities to which transaction applies:
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3. Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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4. Proposed maximum aggregate value of transaction:
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5. Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
6. Amount Previously Paid:
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7. Form, Schedule or Registration Statement No.:
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8. Filing Party:
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9. Date Filed:
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EXELIXIS, INC.
170 HARBOR WAY
SOUTH SAN FRANCISCO, CA 94080
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 22, 2001
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TO THE STOCKHOLDERS OF EXELIXIS, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Exelixis,
Inc., a Delaware corporation (the "Company"), will be held on Tuesday, May 22,
2001 at 8:00 a.m., local time, at the Company's offices located at 170 Harbor
Way, South San Francisco, California 94080 for the following purposes:
1. To elect two Class II directors to hold office until the 2004 Annual
Meeting of Stockholders.
2. To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants of the Company for the year ending December 31, 2001.
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy Statement
accompanying this Notice.
The board of directors has fixed the close of business on March 23, 2001,
as the record date for the determination of stockholders entitled to notice of
and to vote at this Annual Meeting and at any adjournment or postponement
thereof.
By Order of the Board of Directors
/s/ Glen Y. Sato
Glen Y. Sato
Secretary
South San Francisco, California
April 16, 2001
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ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN
PERSON. WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE,
DATE, SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO
ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING. A RETURN ENVELOPE (WHICH IS
POSTAGE PREPAID IF MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE.
EVEN IF YOU HAVE GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND
THE ANNUAL MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD
BY A BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE ANNUAL MEETING,
YOU MUST OBTAIN FROM THE RECORD HOLDER A PROXY ISSUED IN YOUR NAME. YOU MAY ALSO
BE ABLE TO SUBMIT YOUR PROXY OVER THE INTERNET OR BY TELEPHONE, PLEASE REFER TO
THE INFORMATION PROVIDED WITH YOUR PROXY CARD.
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EXELIXIS, INC.
170 HARBOR WAY
SOUTH SAN FRANCISCO, CA 94080
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PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 22, 2001
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INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the board of directors of
Exelixis, Inc., a Delaware corporation ("Exelixis" or the "Company"), for use at
the Annual Meeting of Stockholders to be held on Tuesday, May 22, 2001, at 8:00
a.m., local time (the "Annual Meeting"), or at any adjournment or postponement
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting. The Annual Meeting will be held at the Company's offices located
at 170 Harbor Way, South San Francisco, California 94080. The Company intends to
mail this proxy statement and accompanying proxy card on or about April 16,
2001, to all stockholders entitled to vote at the Annual Meeting.
SOLICITATION
Exelixis will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
card and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses, fiduciaries
and custodians holding in their names shares of the Company's common stock
("Common Stock") beneficially owned by others to forward to such beneficial
owners. The Company may reimburse persons representing beneficial owners of
Common Stock for their costs of forwarding solicitation materials to such
beneficial owners. Original solicitation of proxies by mail may be supplemented
by telephone, telegram or personal solicitation by directors, officers or other
regular employees of the Company. No additional compensation will be paid to
directors, officers or other regular employees for such services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on March
23, 2001 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on March 23, 2001, the Company had outstanding and entitled to
vote 46,797,585 shares of Common Stock.
Each holder of record of Common Stock on such date will be entitled to one
vote for each share held on all matters to be voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for the
Annual Meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
VOTING VIA THE INTERNET OR BY TELEPHONE
FOR SHARES REGISTERED IN THE NAME OF A BROKER OR BANK
Most beneficial owners whose stock is held in street name receive voting
instruction forms from their banks, brokers or other agents, rather than the
Company's proxy card. A number of brokers and banks are participating in a
program provided through ADP Investor Communication Services that offers the
means to grant proxies to vote shares by means of the telephone and Internet. If
your shares are held in an account with a broker or bank participating in the
ADP Investor Communications Services program, you may grant a proxy to vote
those shares telephonically by calling the telephone number shown on the
instruction form received from your broker or bank, or via the Internet at ADP
Investor Communication Services' web site at (www.proxyvote.com).
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Submitting your proxy via the Internet or by telephone will not affect your
right to vote in person should you decide to attend the Annual Meeting.
THE TELEPHONE AND INTERNET VOTING PROCEDURES ARE DESIGNED TO AUTHENTICATE
STOCKHOLDERS' IDENTITIES, TO ALLOW STOCKHOLDERS TO GIVE THEIR VOTING
INSTRUCTIONS AND TO CONFIRM THAT STOCKHOLDERS' INSTRUCTIONS HAVE BEEN RECORDED
PROPERLY. STOCKHOLDERS VOTING VIA THE INTERNET SHOULD UNDERSTAND THAT THERE MAY
BE COSTS ASSOCIATED WITH ELECTRONIC ACCESS, SUCH AS USAGE CHARGES FROM INTERNET
ACCESS PROVIDERS AND TELEPHONE COMPANIES, THAT MUST BE BORNE BY THE STOCKHOLDER.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. Your proxy may be revoked by filing
with the secretary of the Company at the Company's principal executive office,
170 Harbor Way, South San Francisco, California 94080, a written notice of
revocation or a duly executed proxy bearing a later date. Your proxy may also be
revoked by attending the Annual Meeting and voting in person. Attendance at the
Annual Meeting will not, by itself, revoke your proxy.
STOCKHOLDER PROPOSALS
The deadline for submitting a stockholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 2002 annual
meeting of stockholders pursuant to Rule 14a-8 of the Securities and Exchange
Commission is December 18, 2001. Stockholders wishing to submit proposals or
director nominations that are not to be included in such proxy statement and
proxy must do so not earlier than February 21, 2002 and not later than March 23,
2002. Stockholders are also advised to review the Company's bylaws, which
contain additional requirements with respect to advance notice of stockholder
proposals and director nominations.
PROPOSAL 1
ELECTION OF CLASS II DIRECTORS
The Company's amended and restated certificate of incorporation and bylaws
provide that the board of directors shall be divided into three classes, each
class consisting, as nearly as possible, of one-third of the total number of
directors, with each class having a three-year term. In March 2001, following
the decision by Edmund Olivier de Vezin to decline to stand for re-election, the
board of directors reduced the size of the board of directors to nine members.
Vacancies on the board may be filled only by persons elected by a majority of
the remaining directors. A director elected by the board to fill a vacancy
(including a vacancy created by an increase in the number of directors) shall
serve for the remainder of the full term of the class of directors in which the
vacancy occurred and until such director's successor is elected and qualified.
There are two directors in Class II, the class whose term of office expires
in 2001. Each of the nominees for election to this class is currently a director
of the Company. If elected at the Annual Meeting, each of the nominees would
serve until the 2004 annual meeting of stockholders and until his or her
successor is elected and has qualified, or until such director's earlier death,
resignation or removal.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the Annual Meeting. Shares
represented by executed proxies will be voted, if authority to do so is not
withheld, for the election of the two nominees named below. In the event that
any nominee should be unavailable for election as a result of an unexpected
occurrence, such shares will be voted for the election of such substitute
nominee as management may propose. Each person nominated for election has agreed
to serve if elected, and management has no reason to believe that any nominee
will be unable to serve.
Set forth below is biographical information for each person nominated and
each person whose term of office as a director will continue after the Annual
Meeting.
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 2004 ANNUAL MEETING
Jason S. Fisherman, M.D., age 44, has been a Director since March 1996. Dr.
Fisherman has been a partner of Advent International Corporation, a global
private equity and venture capital investment firm, since 1994. From 1991 to
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1994, Dr. Fisherman served as Senior Director of Medical Research at Enzon,
Inc., a biopharmaceutical company, where he managed clinical programs in
oncology, genetic diseases and blood substitutes. Dr. Fisherman serves on the
board of directors of Crucell N.V., ILEX Oncology, Inc., Mediconsult.com, Inc.,
Oridon Systems Ltd. and several private companies. Dr. Fisherman holds a B.A. in
Molecular Biophysics and Biochemistry from Yale University, an M.D. from the
University of Pennsylvania and an M.B.A. from the Wharton Graduate School of
Business.
Jean-Francois Formela, M.D., age 44, has been a Director since September
1995. Dr. Formela has been a principal of Atlas Venture, a venture capital firm,
since 1993. From 1989 to 1993, Dr. Formela served at Schering-Plough
Corporation, most recently as Senior Director, Medical Marketing and Scientific
Affairs, where he had biotechnology licensing and marketing responsibilities.
Dr. Formela serves on the board of directors of BioChem Pharma, Inc., Ciphergen
BioSystems, Inc., DeCode Genetics, Inc., Variagenics, Inc. and several private
companies. Dr. Formela holds an M.D. from Paris University School of Medicine
and an M.B.A. from Columbia Business School.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
CLASS III DIRECTORS CONTINUING IN OFFICE UNTIL THE 2002 ANNUAL MEETING
Stelios Papadopoulos, Ph.D., age 52, has been a Director since December
1994 and Chairman of the Board since January 1998. Dr. Papadopoulos has been an
investment banker at SG Cowen since February 2000. Prior to this, Dr.
Papadopoulos was an investment banker at PaineWebber from April 1987 to February
2000, and Chairman of PaineWebber Development Corp., a PaineWebber subsidiary,
from June 1998 to February 2000. Dr. Papadopoulos is a member of the board of
directors of Diacrin, Inc. and several private companies. Dr. Papadopoulos holds
a Ph.D. in Biophysics and an M.B.A. in Finance, both from New York University.
George A. Scangos, Ph.D., age 52, has served as our President and Chief
Executive Officer since October 1996 and as a Director since October 1996. From
September 1993 to October 1996, Dr. Scangos served as President of Biotechnology
at Bayer Corporation, a pharmaceutical company, and was responsible for
research, business and process development, manufacturing, engineering and
quality assurance. Dr. Scangos is a member of the board of directors of Onyx
Pharmaceuticals, Inc. and a private company. Dr. Scangos holds a B.A. in Biology
from Cornell University and a Ph.D. in Microbiology from the University of
Massachusetts. Dr. Scangos was a Post-Doctoral Fellow at Yale University and a
faculty member at the Johns Hopkins University. Dr. Scangos currently holds an
appointment as Adjunct Professor of Biology at Johns Hopkins University.
Peter Stadler, Ph.D., age 55, has been a Director since April 1998. Dr.
Stadler has been President and Chief Executive Officer of Artemis
Pharmaceuticals, GmbH since June 1998. From 1987 to 1997, Dr. Stadler was head
of pharma-biotechnology at Bayer AG. From 1986 to 1987, Dr. Stadler served as a
visiting scientist at the University of Munster, Germany and the Massachusetts
Institute of Technology in the area of biotechnology. Dr. Stadler holds a Ph.D.
in Organic Chemistry and Biochemistry from the University of Hamburg.
Lance Willsey, M.D., age 39, has been a Director since April 1997. Dr.
Willsey has been a Founding Partner of DCF Capital, a hedge fund focused on
investing in the life sciences, since July 1998. From July 1997 to July 1998,
Dr. Willsey served on the Staff Department of Urologic Oncology at the Dana
Farber Cancer Institute at Harvard University School of Medicine. From July 1996
to July 1997, Dr. Willsey served on the Staff Department of Urology at
Massachusetts General Hospital at Harvard University School of Medicine, where
he was an urology resident from July 1992 to July 1996. Dr. Willsey holds a B.S.
in Physiology from Michigan State University and an M.S. in Biology and an M.D.
from Wayne State University.
CLASS I DIRECTORS CONTINUING IN OFFICE UNTIL THE 2003 ANNUAL MEETING
Charles Cohen, Ph.D., age 50, has been a Director since November 1995.
Since July 2000, Dr. Cohen has been the Chief Executive Officer of CellZome, a
post-genomics biopharmaceutical company. Prior to this, Dr. Cohen co-founded
Creative BioMolecules, Inc., a biotechnology company, in 1982 and was a director
and its Chief Scientific Officer. In July 2000, Creative BioMolecules, Inc.
merged with Ontogeny, Inc. and Reprogenesis, Inc. and formed Curis, Inc. Dr.
Cohen serves on the board of directors of several private companies. Dr. Cohen
holds a B.A. from State University of New York at Buffalo and a Ph.D. in Basic
Medical Sciences from New York University School of Medicine.
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Jurgen Drews, M.D., age 67, has been a Director since July 1998. Dr. Drews
has been Chairman of the Board of International BM Biomedicine Holdings, Inc.,
an investment firm, since October 1997. Since January 2001 Dr. Drews has been a
managing partner with the Bear Stearns Health Innoventure Fund LLC. From 1996 to
1997, Dr. Drews served as President of Global Research for Hoffmann-La Roche
Inc., a pharmaceutical company, and also served as a member of the Corporate
Executive Committee of the Roche Group. From 1991 to 1995, Dr. Drews served as
President of International Research and Development and as a member of the
Corporate Executive Committee for Roche. Dr. Drews is Chairman of the Board of
Directors of Genaissance Pharmaceuticals, Inc. and is also a director of GPC
Biotech AG, Human Genome Sciences, Inc., MorphoSys AG and Protein Design Labs,
Inc. Dr. Drews holds an M.D. in Internal Medicine and Molecular Biology from the
University of Heidelberg.
Geoffrey Duyk, M.D., Ph.D., age 41, has served as our Chief Scientific
Officer since April 1997 and as a Director since April 1998. From 1994 to 1997,
Dr. Duyk served at Millennium Pharmaceuticals, Inc., a genomics company, most
recently as Vice President of Genomics. From 1992 to 1994, Dr. Duyk was an
Assistant Professor in the Department of Genetics at Harvard Medical School and
an Assistant Investigator of the Howard Hughes Medical Institute. While at
Harvard Medical School, Dr. Duyk was a co-principal investigator in the
NIH-funded Cooperative Human Linkage Center. Dr. Duyk holds a Ph.D. and M.D.
from Case Western Reserve University and completed his residency and
post-doctoral training at University of California, San Francisco.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended December 31, 2000, the board of directors held
nine meetings. The board has an Audit Committee and a Compensation Committee.
Our Audit Committee was established in January 2000 in connection with our
initial public offering to oversee our internal accounting controls and consult
with, and review the services provided by, our independent accountants. The
Audit Committee meets with the Company's independent accountants at least
quarterly to review the results of the quarterly review and annual audit and
discuss the financial statements, recommends to the board the independent
accountants to be retained and receives and considers the accountants' comments
as to controls, adequacy of staff and management performance and procedures in
connection with audit and financial controls. The audit committee is composed of
three non-employee directors: Drs. Fisherman, Formela and Papadopoulos. The
audit committee met three times during the fiscal year ended December 31, 2000.
All members of the Audit Committee are independent (as independence is defined
in Rule 4200(a)(15) of the National Association of Securities Dealers' listing
standards). The audit committee has adopted a written audit committee Charter
that is attached hereto as Appendix A.
Our Compensation Committee was established in January 2000 in connection
with our initial public offering and reviews and recommends to the board the
compensation and benefits of all our officers, establishes and reviews general
policies relating to compensation and benefits of our employees that also
includes executive officers and performs such other functions regarding
compensation as the board may delegate. The Compensation Committee also
administers the issuance of stock options and other awards under our stock
plans. The Compensation Committee is currently composed of two non-employee
directors: Drs. Cohen and Papadopoulos. The Compensation Committee met once
during the fiscal year ended December 31, 2000.
During the fiscal year ended December 31, 2000, all directors except for
Drs. Drews and Willsey attended at least 75% or more of the aggregate of the
meetings of the board and of the committees on which they served, held during
the period for which they were a director or committee member, respectively.
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PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The board of directors has selected PricewaterhouseCoopers LLP as the
Company's independent accountants for the fiscal year ending December 31, 2001,
and has further directed that management submit the selection of independent
accountants for ratification by the stockholders at the Annual Meeting..
Representatives of PricewaterhouseCoopers LLP are expected to be present at the
Annual Meeting, will have an opportunity to make a statement if they so desire
and will be available to respond to appropriate questions.
Stockholder ratification of the selection of PricewaterhouseCoopers LLP as
the Company's independent accountants is not required by the Company's bylaws or
otherwise. However, the board of directors is submitting the selection of
PricewaterhouseCoopers LLP to the stockholders for ratification as a matter of
good corporate practice. If the stockholders fail to ratify the selection, the
Audit Committee and the board of directors will reconsider whether or not to
retain PricewaterhouseCoopers LLP. Even if the selection is ratified, the Audit
Committee and the board of directors, in their discretion, may direct the
appointment of different independent accountants at any time during the year if
they determine that such a change would be in the best interests of the Company
and its stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to ratify the selection of PricewaterhouseCoopers LLP. Abstentions
will be counted toward the tabulation of votes cast on proposals presented to
the stockholders and will have the same effect as negative votes. Broker
non-votes are counted towards a quorum, but are not counted for any purpose in
determining whether this matter has been approved.
Audit Fees. Fees from PricewaterhouseCoopers LLP for the last annual audit
and preparation of the tax returns were $80,000.
All Other Fees. All other audit related services were $448,000 for the
fiscal year ended December 31, 2000. Audit related services generally include
fees for business acquisitions, accounting consultations and registration
statements filed with the Securities and Exchange Commission.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
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SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of our outstanding Common Stock as of March 15, 2001 by:
o each director and nominee for director;
o each of the executive officers named in the Summary Compensation
Table;
o all executive officers and directors of the Company as a group; and
o all those known by the Company to be beneficial owners of more than
five percent of our Common Stock.
Beneficial ownership of shares is determined under the rules of the
Securities and Exchange Commission and generally includes any shares over which
a person exercises sole or shared voting or investment power. Except as
indicated by footnote, and subject to applicable community property laws, each
person identified in the table possesses sole voting and investment power with
respect to all shares of our Common Stock held by them. Shares of our Common
Stock subject to options currently exercisable or exercisable within 60 days of
March 15, 2001 are deemed outstanding for calculating the percentage of
outstanding shares of the person holding these options, but are not deemed
outstanding for calculating the percentage of any other person. Applicable
percentage ownership in the following table is based on 46,797,525 shares of
Common Stock outstanding as of March 15, 2001. Unless otherwise indicated, the
address of each individual listed in the table is in care of Exelixis, Inc., 170
Harbor Way, P.O. Box 511, South San Francisco, California 94083.
BENEFICIAL OWNERSHIP
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NUMBER OF PERCENT OF
NAME OF BENEFICIAL OWNER SHARES TOTAL (%)
------------------------ ------------------- -------------------
DIRECTORS AND EXECUTIVE OFFICERS
George A. Scangos, Ph.D. (1) 2,230,673 4.7%
Geoffrey Duyk, M.D., Ph.D. (2) 1,419,549 3.0
Lloyd M. Kunimoto (3) 364,687 *
Michael M. Morrissey, Ph.D. (4) 103,806 *
Glen Y. Sato (5) 282,411 *
Stelios Papadopoulos, Ph.D. (6) 478,213 1.0
Charles Cohen, Ph.D. (7) 225,000 *
Jurgen Drews, M.D. (7) 30,000 *
Jason S. Fisherman, M.D. (8) 1,697,997 3.6
Jean-Francois Formela, M.D. (9)(7) 3,765,236 8.0
Edmund Olivier de Vezin (7) 198,190 *
Peter Stadler, Ph.D. (10) 230,000 *
Lance Willsey, M.D.(7) 67,500 *
5% STOCKHOLDERS
Atlas Ventures (9) 3,718,736 8.0
FMR Corp. 2,655,760 5.7
Deutsche Bank A.G. 2,434,700 5.2
Pharmacia & Upjohn AB 2,355,769 5.0
All directors and executive officers as a group 11,680,803 24.1
(18 persons) (11)
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* Less than one percent.
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(1) Includes 90,909 shares held by George A. Scangos, Trustee of The Leslie S.
Wilson Grantor Annuity Trust, 4,875 shares held by George A. Scangos and
Leslie S. Wilson, as Trustees of The Jennifer Wilson Scangos Trust and
4,875 shares held by George A. Scangos and Leslie S. Wilson, as Trustees of
The Katherine Wilson Scangos Trust. Includes 250,000 shares Dr. Scangos has
the right to acquire pursuant to an option exercisable within 60 days of
March 15, 2001, all of which would be subject to repurchase by Exelixis,
and 353,126 shares Exelixis has the right to repurchase within 60 days of
March 15, 2001.
(2) Includes 17,137 shares held by Geoffrey M. Duyk and Ulrike Barbara Wolter,
Trustees of The Duyk 2000 Irrevocable Trust dated 2/21/00, 4,275 shares
held by Geoffrey M. Duyk and Ulrike Barbara Wolter, Trustees of The Charles
Duyk Trust dated 2/21/00, 22,500 shares held by Ulrike Barbara Wolter,
Trustee of The Geoffrey M. Duyk Irrevocable Trust dated 2/21/00 and 75,000
shares held by Geoffrey M. Duyk, Trustee of The Geoffrey M. Duyk Annuity
Trust dated 2/21/00. Also includes 368,750 shares Dr. Duyk has the right to
acquire pursuant to an option exercisable within 60 days of March 15, 2001,
228,125 of which would be subject to repurchase by Exelixis, and 195,315
shares Exelixis has the right to repurchase within 60 days of March 15,
2001.
(3) Consists of 100,000 shares Mr. Kunimoto has the right to acquire pursuant
to an option exercisable within 60 days of March 15, 2001, all of which
would be subject to repurchase by Exelixis, and 150,784 shares Exelixis has
the right to repurchase within 60 days of March 15, 2001.
(4) Includes 83,306 shares held by Michael M. Morrissey and Meghan D.
Morrissey, Trustees of the Morrissey Family Living Trust dated 07/21/94.
Also includes 20,000 shares Dr. Morrissey has the right to acquire pursuant
to an option exercisable within 60 days of March 15, 2001, all of which
would be subject to repurchase by Exelixis, and 56,720 shares Exelixis has
the right to repurchase within 60 days of March 15, 2001.
(5) Includes 30,000 shares held by Generations Trust Bank N.A., Trustee of the
Glen Y. Sato Trust. Also includes 35,000 shares Mr. Sato has the right to
acquire pursuant to an option exercisable within 60 days of March 15, 2001,
all of which would be subject to repurchase by Exelixis, and 152,345 shares
Exelixis has the right to repurchase within 60 days of March 15, 2001.
(6) Includes 10,000 shares held by Fondation Sante, of which Dr. Papadopoulos
is co-trustee. Also includes 30,000 shares Dr. Papadopoulos has the right
to acquire pursuant to an option exercisable within 60 days of March 15,
2001, 19,480 of which would be subject to repurchase by Exelixis.
(7) Consists of 30,000 shares Drs. Cohen, Drews, Formela and Willsey and Mr.
Olivier each has the right to acquire pursuant to an option exercisable
within 60 days of March 15, 2001, 19,480 of which would be subject to
repurchase by Exelixis.
(8) Includes 1,148,983 shares held by Rovent II L.P., 287,245 shares held by
Advent Performance Materials, L.P., 164,141 shares held by Adwest L.P.,
64,014 shares held by Advent Partners L.P. and 3,614 shares held by Advent
International Investors II, L.P. Advent International Corporation, the
venture capital firm that is the manager of the funds affiliated with
Advent International Group, exercises sole voting and investment power with
respect to all shares held by these funds. Dr. Fisherman is a partner of
Advent International Corporation and disclaims beneficial ownership of
these shares except for 16,449 shares that are indirectly beneficially
owned by Dr. Fisherman. Advent International Corporation is located at 75
State Street, Boston, MA 02109. Also includes 30,000 shares Dr. Fisherman
has the right to acquire pursuant to an option exercisable within 60 days
of March 15, 2001, 19,480 of which would be subject to repurchase by
Exelixis.
(9) Consists of 2,481,296 shares held by Atlas Venture Fund II, L.P. and
1,237,440 shares held by Atlas Venture Europe Fund B.V. Atlas Venture Fund
II, L.P. and Atlas Venture Europe Fund B.V. are part of the Atlas Venture,
a group of funds under common control. Dr. Formela is a general partner of
Atlas Venture. No general partner of Altas Venture is deemed to have voting
and investment power with respect to such shares, and Dr. Formela disclaims
beneficial ownership of these shares. Atlas Venture is located at 222
Berkeley Street, Suite 1950, Boston, MA 02116.
(10) Consists of 167,500 shares Dr. Stadler has the right to acquire pursuant to
an option exercisable within 60 days of March 15, 2001, 52,292 of which
would be subject to repurchase by Exelixis.
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(11) Total number of shares includes 5,386,733 shares of Common Stock held by
entities affiliated with directors and executive officers, 1,629,483 shares
issuable upon the exercise of options and warrants within 60 days of March
15, 2001, 1,183,080 of which would be subject to repurchase by Exelixis,
and 920,420 shares that Exelixis has the right to repurchase within 60 days
of March 15, 2001. See footnotes 1 through 10 above.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file
with the SEC initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors and
greater than ten percent stockholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based upon a review of Forms 3 and 4 furnished
to the Company, and written representations of the Company's directors,
executive officers and ten percent stockholders that no other reports were
required to be filed by them, the Company believes that all reports required
pursuant to Section 16(a) with respect to the fiscal year ended December 31,
2000, were timely filed.
EXECUTIVE COMPENSATION
DIRECTOR COMPENSATION
Directors currently are reimbursed for travel expenses but receive no cash
compensation from us for their services as members of the board or for
attendance at committee meetings. In January 2000, we adopted the 2000
Non-Employee Directors' Stock Option Plan (the "Directors' Plan") to provide for
the automatic grant of options to purchase shares of Common Stock to our
directors who are not employees of Exelixis or of any affiliate of Exelixis.
Such options are granted automatically, without further action by the Company,
the Board or the stockholders of the Company. Under the terms of the Directors'
Plan, all non-employee directors shall receive a one-time initial option to
purchase 25,000 shares of Common Stock. In addition, all non-employee directors
shall receive an annual option to purchase 5,000 shares of Common Stock starting
at the 2000 annual meeting of stockholders. Options granted under the Directors'
Plan are not intended by the Company to qualify as incentive stock options under
the Internal Revenue Code of 1986, as amended. The exercise price of options
granted under the Directors' Plan is equal to 100% of the fair market value of a
share of Common Stock on the grant date. Under the terms of the Directors' Plan,
the initial option to purchase 25,000 shares is immediately exercisable but will
vest at the rate of 25% of the shares on the first anniversary of the grant date
and monthly thereafter over the next three years. The annual grants to purchase
5,000 shares are exercisable immediately but will vest monthly over the
following year. If the non-employee director is appointed to the board after the
Annual Meeting, the annual grant will be pro-rated. As long as the optionholder
continues to serve with us or with an affiliate of ours, the option will
continue to vest and be exercisable during its term. When the optionholder's
service terminates, we will have the right to repurchase any unvested shares at
the original exercise price, without interest. All options granted under the
Directors' Plan have a term of ten years, and are set to terminate three months
after a non-employee director's service terminates. In the event of a merger of
the Company with or into another corporation or a consolidation, acquisition of
assets or other change-in-control transaction involving the Company, any
surviving entity will either assume or replace all outstanding options under the
Directors' Plan. Otherwise, the vesting of the options will accelerate.
During the year ended December 31, 2000, the Company granted options
covering 30,000 shares to each non-employee director, at exercise prices ranging
from $13.00 to $47.00. As of March 23, 2001, no options had been exercised under
the Directors' Plan.
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EXECUTIVE OFFICERS
The following chart sets forth certain information regarding the executive
officers of the Company.
NAME AGE POSITION
---- --- --------
George A. Scangos, Ph.D. (1) 52 President, Chief Executive Officer and Director
Christian Burks, Ph.D. 47 Vice President and Chief Informatics Officer
Geoffrey Duyk, M.D., Ph.D. (1) 41 Senior Vice President, Chief Scientific Officer and Director
Matthew G. Kramer 43 General Manager and Vice President of Agricultural Trait
Development, Exelixis Plant Sciences
Lloyd M. Kunimoto 47 Senior Vice President of Business Development
Michael M. Morrissey, Ph.D. 40 Vice President, Discovery Research
Gregory D. Plowman 44 Vice President of Pharmaceutical Research
Glen Y. Sato 42 Chief Financial Officer, Vice President, Legal Affairs and Secretary
Pamela A. Simonton 50 Vice President, Corporate Technology Development
D. Ry Wagner 44 Vice President of Plant Genetics and Biotechnology
---------------
(1) Please see "Proposal 1 - Election of Class II Directors" in this Proxy
Statement for information about this executive officer and director.
Christian Burks, Ph.D., has served as the Company's Vice President and
Chief Informatics Officer since July 2000. From December 1998 to July 2000, Dr.
Burks served as the Company's Senior Director of Informatics and Chief
Information Scientist. From January 1997 to December 1998, Dr. Burks served as
the Company's Director of Bioinformatics. From January 1982 to December 1996,
Dr. Burks served in various positions at Los Alamos National Laboratory,
including Post Doctoral Fellow, Scientific Staff Member, Group Leader and
Program Manager. While at Los Alamos, Dr. Burks was part of the team that
created the global DNA sequence database, GenBank. Dr. Burks also served as
principal investigator for GenBank and Group Leader of the Theoretical Biology &
Biophysics Group, and Laboratory-wide Program Manager for Computational Biology.
Dr. Burks holds a Ph.D. in Molecular Biophysics and Biochemistry from Yale
University.
Matthew G. Kramer has served as the General Manager and Vice President of
Agricultural Trait Development for Exelixis Plant Sciences, a wholly-owned
subsidiary of the Company, since December 2000. Prior to this time, Mr. Kramer
served as a director, and later as Vice President of Product Development, for
Agritope, Inc., now Exelixis Plant Sciences. At Agritope, Mr. Kramer was
responsible for field-testing, product evaluation, regulatory compliance and
intellectual property protection. From 1987 to 1994, Mr. Kramer was the Director
of Production and Product Development at Calgene, Inc., later Calgene Fresh,
Inc., of Davis, California, where he was part of the team that brought the first
genetically engineered whole food to market. Mr. Kramer is the author of
numerous publications, book chapters and invited reviews in the field of
applying the tools and techniques of biotechnology to fruit and vegetable
species. Mr. Kramer received his M.S. degree in Plant Breeding and Genetics from
Montana State University.
Lloyd M. Kunimoto has served as the Company's Senior Vice President of
Business Development since August 1999. From 1997 to 1999, Mr. Kunimoto served
as Vice President of Commercial Development for the Nutrition and Consumer
Products sector of Monsanto Company, a life sciences company. While at Monsanto,
Mr. Kunimoto was responsible for directing Monsanto's genetic engineering
program in the area of food ingredients. From 1996 to 1997, Mr. Kunimoto served
as President and Chief Executive Officer of Calgene, Inc., an agricultural
biotechnology company. From 1995 to 1996, Mr. Kunimoto served as Senior Vice
President of Corporate Development at Calgene, Inc. Mr. Kunimoto holds a B.S. in
Mathematics from Stanford University.
Michael M. Morrissey, Ph.D., has served as the Company's Vice President of
Discovery Research since February 2000. Previously with Berlex Biosciences since
1991, Dr. Morrissey held positions of increasing responsibility, including Vice
President of Discovery Research, Director of Pharmaceutical Discovery and Unit
Head of Medicinal Chemistry. Dr. Morrissey received his Ph.D. in Chemistry from
Harvard University and his B.S. Honors in Chemistry from the University of
Wisconsin.
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Gregory D. Plowman, M.D., Ph.D., has served as the Company's Vice President
of Pharmaceutical Research since October 2000. From December 1997 to September
2000, Dr. Plowman served as Vice President of Molecular Biology at Sugen, Inc.,
a Pharmacia company. From January 1994 to December 1997, Dr. Plowman served as
Director and Senior Director of Molecular Biology at Sugen. At Sugen, Dr.
Plowman was responsible for the identification and validation of therapeutic
targets in oncology, angiogenesis and metabolic disease, with a particular focus
on protein kinases and phosphatases. From January 1988 to December 1993, Dr.
Plowman served in positions of increasing responsibility at Bristol-Myers
Squibb, the last year of which he was Senior Principal Scientist, Oncology Drug
Discovery. Moreover, Dr. Plowman has previous experience with Oncogen and The
Fred Hutchinson Cancer Research Center in Seattle. Dr. Plowman has authored
numerous articles in the cancer field, and is an inventor on nine issued US
patents. Dr. Plowman holds a Ph.D. in Pathology and an M.D., both from the
University of Washington.
Glen Y. Sato has served as the Company's Chief Financial Officer, Vice
President of Legal Affairs and Secretary since November 1999. From April 1999 to
November 1999, Mr. Sato served as Vice President, Legal and General Counsel for
Protein Design Labs, Inc., a biotechnology company, where he previously served
as the Associate General Counsel and Director of Corporate Planning from July
1993 to April 1999. Mr. Sato holds a B.A. from Wesleyan University and a J.D.
and M.B.A. from the University of California, Los Angeles.
Pamela A. Simonton, J.D., L.L.M., has served as the Company's Vice
President of Corporate Technology Development since April 2000. From July 1996
to April 2000, Ms. Simonton served as Vice President, Licensing and Acquisitions
for Bayer Corporation's Pharmaceutical Division. From September 1994 to July
1996, Ms. Simonton served as Vice President of Patents and Licensing for Bayer's
Pharmaceutical Division, North America. Ms. Simonton holds a B.S. in Chemistry,
an M.S. in Physics, a J.D. and L.L.M. in Patent and Trade Regulation.
D. Ry Wagner, Ph.D., has served as the Company's Vice President of Plant
Genetics and Biotechnology since December 2000. From January 2001 to December
1998, Dr. Wagner served as Vice President, Research at Agritope, Inc., now
Exelixis Plant Sciences, Inc. From December 1998 to September 1994, Dr. Wagner
was associate professor of Biology at the Institute of Molecular Biology of the
University of Oregon. He was appointed to the faculty at the University of
Oregon in 1988. From 1985 to 1988, Dr. Wagner served as a National Science
Foundation post-doctoral fellow. Dr. Wagner holds a B.S. degree in Botany and
Plant Science from Michigan State University and a Ph.D. degree in Genetics from
the University of Washington.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation that
we paid during the years ended December 31, 2000 and 1999, to our Chief
Executive Officer and each of the four other most highly compensated executive
officers who earned more than $100,000 during 2000. These individuals are
referred to as the "Named Executive Officers." As permitted by the rules
promulgated by the SEC, no amounts are shown for 1998.
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SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------------- ------------
SECURITIES
OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS
------------------------------------------------- ---- ------ ----- ------------ ------------
George A. Scangos, Ph.D.
President and Chief Executive Officer 2000 $420,000 $252,000 $378 250,000
1999 400,000 250,000 (1) -- 600,000
Geoffrey Duyk, M.D., Ph.D.
Executive Vice President and Chief
Scientific Officer 2000 300,000 107,000 36,385 (2) 200,000
1999 290,000 162,000 (3) -- 375,000
Lloyd M. Kunimoto
Senior Vice President of Business Development 2000 225,000 65,000 378 100,000
1999 87,500 (4) 71,875 -- 262,500
Michael M. Morrissey, Ph.D.
Vice President of Discovery Research 2000 206,250 (5) 56,250 49,455 (2) 102,500
1999 -- -- -- --
Glen Y. Sato
Chief Financial Officer, Vice President of
Legal Affairs and Secretary 2000 210,000 30,000 378 35,000
1999 30,962 (6) -- -- 243,750
(1) Includes a 1998 bonus of $50,000 that was paid in 1999.
(2) Other compensation includes relocation compensation to Dr. Duyk of $36,007
and to Dr. Morrissey of $49,320.
(3) Includes a 1998 bonus of $87,000 that was paid in 1999.
(4) Mr. Kunimoto joined the Company in August 1999. Mr. Kunimoto's annual
salary for 1999 was $210,000.
(5) Dr. Morrissey joined the Company in February 2000. Dr. Morrissey's annual
salary for 2000 was $225,000.
(6) Mr. Sato joined the Company in November 1999. Mr. Sato's annual salary for
1999 was $210,000.
STOCK OPTION GRANTS AND EXERCISES
The Company grants options to its executive officers under its 2000 Equity
Incentive Plan, which was approved by the stockholders on March 15, 2000 and
under which no grants were made prior to our initial public offering. Prior to
April 2000, the Company granted options to its executive officers under the 1997
Equity Incentive Plan and 1994 Employee, Director and Consultant Stock Plan. As
of December 31, 2000, under the 2000 Equity Incentive Plan, 1997 Equity
Incentive Plan and 1994 Employee, Director and Consultant Stock Plan, options to
purchase 4,492,835 shares of Common Stock were outstanding under these plans,
options to purchase 4,683,309 shares of Common Stock had been exercised and
3,790,041 shares remained available for grant under the 2000 Equity Incentive
Plan.
Our 1997 Equity Incentive Plan was terminated for purposes of new option
grants in January 2000. Our 1994 Employee, Director and Consultant Stock Plan
was terminated for purposes of new option grants in September 1997. Each of the
plans remains in effect as to outstanding options granted under that plan.
OPTION GRANTS IN FISCAL YEAR 2000
The following table sets forth each grant of stock options during the
fiscal year ended December 31, 2000, to each of the Named Executive Officers.
The exercise price of each option granted in 2000 was equal to the
estimated fair market value of Common Stock on the date of grant. Prior to our
initial public offering on April 11, 2000, the fair market value was determined
by the board of directors. In determining the estimated fair market value of
Common Stock on the date of grant our board of directors considered many
factors, including:
o the fact that our options involved illiquid securities in a nonpublic
company;
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o prices of preferred stock issued by Exelixis to outside investors in
arm's-length transactions;
o the rights, preferences and privileges of our preferred stock over
Common Stock;
o our stage of development and business strategy; and
o valuations of publicly traded comparable biotech companies.
The exercise price may be paid in cash, promissory notes, shares of Common
Stock valued at fair market value on the exercise date or through a cashless
exercise procedure involving a same-day sale of the purchased shares.
The potential realizable value of our options is calculated based on the
ten-year term of the option at the time of grant. Stock price appreciation of 5%
and 10% is assumed pursuant to rules promulgated by the Securities and Exchange
Commission and does not represent our prediction of our stock price performance.
The potential realizable values at 5% and 10% appreciation are calculated by:
o for shares granted prior to the initial public offering, by
multiplying the number of shares of Common Stock subject to a given
option by the initial public offering price of $13.00 per share;
o for shares granted after the initial public offering, by multiplying
the number of shares of Common Stock subject to a given option by the
grant day exercise price;
o assuming that the aggregate stock value derived from that calculation
compounds at the annual 5% or 10% rate shown in the table until the
expiration of the options; and
o subtracting from that result the aggregate option exercise price.
Percentages shown under "Percent of Total Options Granted to Employees in
2000" are based on an aggregate of 4,992,725 options granted to our employees,
consultants and directors under our stock option plans during 2000.
POTENTION REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
INDIVIDUAL GRANTS STOCK PRICE
--------------------------------------------------------- APPRECIATION
NUMBER OF PERCENT OF FOR OPTION TERM
SECURITIES TOTAL OPTIONS -----------------------
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION
NAME GRANTED (#) 2000(%) SHARE DATE 5% 10%
-------------------------------- ------------ ------------- --------- ---------- ---------- ----------
George A. Scangos, Ph.D......... 250,000 5.00 $18.81 12/05/2010 $2,957,770 $7,495,570
Geoffrey Duyk, M.D., Ph.D....... 200,000 4.00 18.81 12/05/2010 2,366,216 5,996,456
Lloyd M. Kunimoto............... 100,000 2.00 18.81 12/05/2010 1,183,108 2,998,228
Michael M. Morrissey, Ph.D. .... 82,500 1.65 1.33 02/02/2010 1,771,648 2,886,048
20,000 0.40 18.81 12/05/2010 236,622 599,646
Glen Y. Sato.................... 35,000 0.70 18.81 12/05/2010 414,088 $1,049,380
OPTION VALUES AT DECEMBER 31, 2000
The following table sets forth the number and value of securities
underlying unexercised options that are held by each of the named executive
officers as of December 31, 2000.
Amounts shown under the column "Value of Unexercised In-the-Money Options
at December 31, 2000" are based on the December 29, 2000 closing price of
$14.625 per share, without taking into account any taxes that may be payable in
connection with the transaction, multiplied by the number of shares underlying
the option, less the exercise price payable for these shares.
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NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS AT DECEMBER 31, THE-MONEY OPTIONS AT
2001(1) DECEMBER 31, 2000(1)
SHARES ---------------------------- ----------------------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/ EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED (2) VESTED UNVESTED VESTED UNVESTED
-------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
George A. Scangos, Ph.D......... 862,500 $679,999 - 250,000 $ - $ -
Geoffrey Duyk, M.D., Ph.D....... 375,000 240,000 123,046 245,704 1,766,735 656,233
Lloyd M. Kunimoto............... 262,500 240,000 - 100,000 - -
Michael M. Morrissey, Ph.D...... 82,500 - - 20,000 - -
Glen Y. Sato.................... 181,250 169,167 - 35,000 - -
(1) All options are exercisable upon grant, but the underlying shares are
subject to a right of repurchase by Exelixis until vested.
(2) Based on the fair market value of the Common Stock on the date of exercise.
EMPLOYMENT SEVERANCE AND CHANGE OF CONTROL AGREEMENTS
At the time of commencement of employment, our employees generally sign
offer letters specifying basic terms and conditions of employment. In general,
our employees are not subject to written employment agreements. Each officer and
employee has entered into a standard form agreement with respect to confidential
information and invention assignment that provides that the employee will not
disclose any confidential information of Exelixis received during the course of
employment and that, with some exceptions, the employee will assign to Exelixis
any and all inventions conceived or developed during the course of employment.
In September 1996, we entered into an agreement with George Scangos in
connection with his appointment as President and Chief Executive Officer of
Exelixis. The agreement provides that Dr. Scangos' term of employment will be
renewed automatically each year unless either party provides written notice of
its intention not to renew. In the event that Dr. Scangos' employment is
terminated without cause, he may receive up to six months base salary and bonus,
together with all benefits. The agreement also provides that in the event of a
merger or sale of more than 50% of Exelixis' assets, Dr. Scangos' unvested stock
options shall automatically accelerate and vest in full.
In April 1997, we entered into an agreement with Geoffrey Duyk in
connection with his appointment as Chief Scientific Officer and Senior Vice
President of Research and Development. The agreement provides that Dr. Duyk's
term of employment will be renewed automatically each year unless either party
provides written notice of its intention not to renew. In the event that Dr.
Duyk's employment is terminated without cause, he may receive up to six months
base salary and any declared but unpaid bonus as of the date of termination,
together with all benefits. The agreement also provides that in the event of a
change of control, Dr. Duyk's unvested stock options shall automatically
accelerate and vest in full.
In October 1999, we entered into an agreement with Glen Sato in connection
with his appointment as Chief Financial Officer and Vice President of Legal
Affairs. The agreement provides that in the event that Mr. Sato's employment is
terminated without cause, he will receive six months base salary and benefits.
In February 2000, we entered into an agreement with Michael Morrissey in
connection with his appointment as Vice President of Discovery Research. The
agreement provides that in the event Dr. Morrissey's employment is terminated
without cause, he may receive six months base salary and benefits.
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REPORT OF THE AUDIT COMMITTEE(1)
The Audit Committee of the board of directors of Exelixis serves as the
representative of the Board for general oversight of the financial reporting
process of the Company. Each of the members of the Audit Committee is
independent as defined under the Audit Committee Policies of the Nasdaq National
Market.
The Audit Committee maintains a written charter that outlines its
responsibilities, a copy of which is attached as Appendix A to this Proxy
Statement. Exelixis management has primary responsibility for preparing the
Company's consolidated financial statements and establishing the financial
reporting process. PricewaterhouseCoopers LLP, the Company's independent
accountants, are responsible for expressing an opinion on the Company's audited
consolidated financial statements. Based on this background, the Audit Committee
reports as follows:
1. We have reviewed and discussed the Company's audited consolidated
financial statements with management.
2. We have discussed with the independent accountants the matters
required to be discussed by Statement of Auditing Standards No. 61,
"Communication with Audit Committees" (Codification of Statements on Auditing
Standards, AU Section 380).
3. We have received and reviewed the written disclosures and letter from
the independent accountants required by Independence Standards Board Standard
No. 1, Independence Discussions with Audit Committees, and have discussed with
the independent accountants their independence.
4. Based on review and discussion of the matters set forth in paragraphs
(1) through (3) above, we have recommended to the Board (and the Board approved)
that the audited consolidated financial statements referred to above be included
in the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 2000.
The undersigned members of the Audit Committee have submitted this Audit
Committee Report as of this 2nd day of March 2001.
Jason Fisherman
Jean-Francois Formela
Stelios Papadopoulos
REPORT OF THE COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION1
The Compensation Committee of the board of directors was formed in January
2000. The Compensation Committee is responsible for the administration of the
Company's executive compensation programs. These programs include base salary
and annual bonuses for officers as well as long-term incentive compensation
programs. The Company's compensation programs are designed to provide a
competitive level of total compensation and include significant incentive and
equity ownership opportunities directly linked to the Company's performance and
stockholder return.
The Compensation Committee is currently composed of two non-employee
directors: Drs. Cohen and Papadopoulos. During 2000, the Compensation Committee
also included Mr. Olivier. Mr. Olivier served on the Compensation Committee
until his notice of a decision not to stand for re-election for the Company's
board of directors in March 2001.
Compensation Philosophy. The Company's overall executive compensation
philosophy is based on the following principles:
---------------
1 The material in this report is not "soliciting material," is not deemed
"filed" with the Securities and Exchange Commission and is not to be
incorporated by reference into any filing of the Company under the Securities
Act of 1933, as amended, or the Exchange Act of 1934, as amended, whether made
before or after the date hereof and irrespective of any general incorporation by
reference language contained in such filing.
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(a) to provide competitive levels of total compensation which will enable the
Company to attract and retain the best possible executive talent;
(b) to motivate executives to achieve superior results for the Company;
(c) to align the financial interests of executives and stockholders through
equity-based plans; and
(d) to provide a compensation program that recognizes individual contributions
as well as overall business results.
Compensation Program. The Compensation Committee is responsible for
reviewing and recommending to the board the compensation of all officers of the
Company and establishes and reviews general policies relating to compensation
and benefits of employees of the Company. The Compensation Committee is also
responsible for the administration of the 2000 Equity Incentive Plan (the "2000
Option Plan"). There are three major components to the Company's executive
compensation: base salary, potential annual cash bonus and potential long-term
compensation in the form of stock options. The Compensation Committee considers
the total current and potential compensation of each executive officer in
establishing each element of compensation.
1. Base Salary. In setting compensation levels for executive officers, initial
salaries are based on negotiations between the particular executive officer
and the Chief Executive Officer, as approved by the Compensation Committee.
Since 1999, the annual reviews of executive officers have occurred in the
fourth quarter of the year. The Compensation Committee reviews competitive
information relating to compensation levels for comparable positions at
medical product, biotechnology and high technology companies as well as the
compensation levels of other executive officers in the Company.
Historically, the Compensation Committee has relied on general industry
survey information for these companies. In addition, the Compensation
Committee may, from time to time, hire compensation and benefit consultants
to assist in developing and reviewing overall salary strategies. Individual
executive officer base compensation may vary based on seniority in
position, assessment of individual performance, salary relative to internal
and external equity and the significance of the position relative to the
success of the Company.
2. Annual Cash Bonus. The Compensation Committee annually reviews each
executive officer's bonus by executive officer position and the performance
of the Company as well as the individual. Payment of cash bonuses is tied
to the accomplishment of corporate milestones and to each individual
officer's year-end performance review.
3. Long-Term Incentive Program. The Company's 2000 Option Plan provides for
the issuance of stock options to officers and employees of the Company to
purchase shares of Common Stock at an exercise price equal to the fair
market value of such stock on the date of grant. Stock options are granted
to the Company's executive officers and other employees both as a reward
for past individual and corporate performance and as an incentive for
future performance. The Compensation Committee believes that stock-based
performance compensation arrangements are essential in aligning the
interests of management and the stockholders in enhancing the value of the
Company's equity as well as encouraging executives to remain employed by
the Company.
4. Benefits. The Company provides benefits to the executive officers that are
generally available to all employees of the Company. The amount of
executive level benefits and perquisites, as determined in accordance with
the rules of the Securities and Exchange Commission relating to executive
compensation for each executive officer, did not exceed 10% of total salary
and bonus for that individual in the calendar year 2000.
Compensation for the Chief Executive Officer. In determining Dr. Scangos'
salary for 2000, the Compensation Committee reviewed and considered his
historical compensation level, the number and nature of the transactions entered
into by the Company in 2000, the achievement of key scientific and research
goals as well as the compensation levels of other executives in peer companies,
taking into account Dr. Scangos' experience and knowledge. The Compensation
Committee determined that it was appropriate to increase Dr. Scangos' base
salary from $400,000 to $425,000. In addition, for his performance in 2000, the
Compensation Committee awarded Dr. Scangos a bonus of $252,000 as well as a
stock option grant covering 250,000 shares of Common Stock.
Section 162(m) of The Internal Revenue Code Limitations on Executive
Compensation. In 1993, Section 162(m) was added to the United States Internal
Revenue Code of 1986, as amended. Section 162(m) may limit the Company's ability
to deduct for United States federal income tax purposes, compensation in excess
of $1,000,000 paid to the
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Company's Chief Executive Officer and its four other highest paid executive
officers in any one fiscal year. No executive officer of the Company received
any such compensation in excess of this limit during fiscal 2000.
Conclusion. It is the opinion of the Compensation Committee that the
aforementioned compensation policies and structures provide the necessary
incentives to properly align the Company's corporate economic performance and
the interests of the Company's stockholders with progressive, balanced and
competitive executive total compensation practices in an equitable manner.
Respectfully submitted,
The Compensation Committee of
the Board of Directors
Edmund Olivier de Vezin
Charles Cohen, Ph.D.
Stelios Papadopoulos, Ph.D.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of our Compensation Committee has at any time been an
officer or employee of Exelixis. No interlocking relationship exists between our
board of directors or Compensation Committee and the board of directors or
Compensation Committee of any other company, nor has any interlocking
relationship existed in the past.
Drs. Formela, Papadopoulos and Scangos serve as members of the
Shareholders' Committee of Artemis Pharmaceuticals, GmbH, the governing board of
Artemis responsible for compensation decisions. Dr. Stadler, a member of our
Board, is Chief Executive Officer of Artemis.
CERTAIN TRANSACTIONS
Indemnification Agreements. In connection with our initial public offering,
we adopted and filed an amended and restated certificate of incorporation and
restated bylaws. As permitted by Delaware law, our amended and restated
certificate of incorporation provides that no director will be personally liable
to us or our stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability for:
o any breach of duty of loyalty to us or our stockholders;
o acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
o unlawful payment of dividends or unlawful stock repurchases or
redemptions; or
o any transaction from which the director derived an improper personal
benefit.
Our amended and restated bylaws provide that we shall indemnify our
directors and executive officers and may indemnify our other officers and
employees and other agents to the fullest extent permitted by law. We believe
that indemnification under our amended and restated bylaws covers at least
negligence and gross negligence on the part of indemnified parties. Our amended
and restated bylaws also permit us to secure insurance on behalf of any office,
director, employee or other agent for any liability arising out of his or her
actions in such capacity, regardless of whether the amended and restated bylaws
would permit indemnification.
We have entered into agreements to indemnify our directors and executive
officers, in addition to the indemnification provided for in our amended and
restated bylaws. These agreements, among other things, indemnify our directors
and executive officers for certain expenses, including attorneys' fees,
judgments, fines and settlement amounts incurred by any such person in any
action or proceeding, including any action by us, arising out of such person's
services as a director or executive officer with respect to Exelixis, any of our
subsidiaries or any other company or enterprise to which the person provides
services at our request. We believe that these provisions and agreements are
necessary to attract and retain qualified persons as directors and executive
officers.
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Indebtedness of Management. In January 1998, we entered into a loan
agreement with George Scangos, President, Chief Executive Officer and a
director, in the amount of $150,000. The loan has an interest rate of 6.13% and
matures on January 19, 2003. Pursuant to the terms of the loan agreement, the
loan may be forgiven under certain circumstances.
In January 1998, we entered into a loan agreement with Geoffrey Duyk, Chief
Scientific Officer, Senior Vice President of Research and Development and a
director, in the amount of $90,000. The loan has an interest rate of 6.13% and
matures on January 16, 2003. Pursuant to the terms of the loan agreement, the
loan may be forgiven under certain circumstances.
In January 2000, we entered into a loan agreement with Glen Sato, Chief
Financial Officer, Vice President, Legal Affairs and Secretary, in the amount of
$72,500. The loan has an interest rate of 6.5% and matures on the earlier of
January 27, 2004 or the sale of vested shares of Common Stock purchased pursuant
to the note.
In February 2000, we entered into loan agreements with George Scangos,
President, Chief Executive Officer and a director, Geoffrey Duyk, Chief
Scientific Officer, Senior Vice President of Research and Development and a
director, Lloyd Kunimoto, Senior Vice President, Business Development and
Michael Morrissey, Vice President, Discovery Research in the amounts of
$470,000, $260,000, $110,000, and $110,000, respectively. Mr. Kunimoto paid
$20,000 of this loan amount during 2000. Mr Scangos also paid $212,292 of this
loan amount during 2000. The loans have an interest rate of 6.5% and mature on
the earlier of February 3, 2004 or the sale of vested shares of Common Stock
purchased pursuant to the notes.
Artemis. In 1998, we purchased a minority interest in Artemis
Pharmaceuticals GmbH, a genetics company located in Cologne, Germany, focusing
on the study of vertebrate model genetic systems such as mice and zebrafish. As
of March 31, 2001, we owned approximately 15% of the outstanding equity of
Artemis, and, pursuant to a shareholder's agreement, we have appointed three of
the five members of the Artemis shareholders' governing board.
In September 1998, we entered into a five-year cooperation agreement with
Artemis under which we agreed to share technology and business opportunities as
they arise. While either party may terminate this agreement at any time, we
believe that it provides a significant opportunity to access complementary
genetic research. In addition to developing zebrafish and mouse model system
technology, Artemis is studying cartilage biology, angiogenesis and
cardiovascular biology. We and Artemis have developed an integrated research
approach in the field of angiogenesis and are jointly marketing this capability.
Other. Stelios Papadopoulos, a director of the Company, has been a managing
director at SG Cowen Securities Corporation since February 2000. In January,
2000, we engaged SG Cowen Securities Corporation to provide services for the
Company, including providing investment banking and financial advising services
during our initial public offering.
We believe that all of the transactions set forth above were made on terms
no less favorable to us than could have been obtained from unaffiliated third
parties. All future transactions, including loans, between us and our officers,
directors, principal stockholders and their affiliates will be approved by a
majority of the board of directors, including a majority of the independent and
disinterested directors, and will continue to be on terms no less favorable to
us than could be obtained from unaffiliated third parties.
COMPARISON OF STOCKHOLDER RETURNS
The following graph compares the cumulative total stockholder return on our
Common Stock with the cumulative total return of the Nasdaq National Market,
U.S. Index ("Nasdaq") and the Nasdaq Biotech Index ("Nasdaq-Biotech") for the
period beginning on April 11, 2000, the Company's first day of trading after its
initial public offering, and ending on December 31, 2000.
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COMPARISON OF QUARTERLY CUMULATIVE TOTAL RETURN* AMONG
EXELIXIS, INC., THE NASDAQ NATIONAL MARKET, U.S. INDEX AND
THE NASDAQ BIOTECH INDEX(2)
CUMULATIVE TOTAL RETURN
----------------------------------------------------------------
4/11/00 6/30/00 9/30/00 12/31/00
----------------------------------------------------------------
Exelixis, Inc. $100 $257 $241 $112
Nasdaq 100 98 91 61
Nasdaq Biotech 100 118 128 105
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* Assumes that $100.00 was invested on April 11, 2000 in stock or index -
including reinvestment of dividends. Fiscal year ended December 31.
---------------
2 The material in this report is not "soliciting material," is not deemed
"filed" with the Securities and Exchange Commission and is not to be
incorporated by reference into any filing of the Company under the Securities
Act of 1933, as amended, or the Exchange Act of 1934, as amended, whether made
before or after the date hereof and irrespective of any general incorporation by
reference language contained in such filing.
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OTHER MATTERS
The board of directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the Annual Meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
By Order of the Board of Directors
/s/ GLEN Y. SATO
GLEN Y. SATO
Secretary
April 16, 2001
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 2000, IS AVAILABLE WITHOUT CHARGE UPON WRITTEN REQUEST TO: INVESTOR
RELATIONS, EXELIXIS, INC., 170 HARBOR WAY, P.O. BOX 511, SOUTH SAN FRANCISCO,
CALIFORNIA 94083.
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APPENDIX A
THE AUDIT COMMITTEE CHARTER
EXELIXIS, INC.
AUDIT COMMITTEE CHARTER
(Adopted July 25, 2000)
PURPOSE
The primary purpose of the Audit Committee (the "Committee") is to assist the
Board of Directors (the "Board") in fulfilling its responsibility to oversee
management's conduct of the Company's financial reporting process. This
responsibility includes:
(a) overviewing the financial reports and other financial information
provided by the Company to any governmental or regulatory body, the
public or other users thereof;
(b) reviewing the Company's systems of internal accounting and financial
controls; and
(c) ensuring the annual independent audit of the Company's financial
statements.
In discharging its oversight role, the Committee is empowered to investigate any
matter brought to its attention with full access to all books, records,
facilities and personnel of the Company. The powers of the Committee include the
authority to retain outside counsel, auditors or other experts for this purpose.
The Board and the Committee are in place to represent the Company's
stockholders; accordingly, the independent accountants is ultimately accountable
to the Board and the Committee.
The Committee shall review the adequacy of this Charter on an annual basis.
MEMBERSHIP
The Committee shall be comprised of not less than three members of the
Board, and the Committee's composition will meet the requirements of the Audit
Committee Policy of the Nasdaq Stock Market. Accordingly, all of the members
will be directors who:
(a) have no relationship to the Company that may interfere with the
exercise of their independence from management and the Company; and
(b) are financially literate or who become financially literate within a
reasonable period of time after appointment to the Committee. In
addition, at least one member of the Committee will have accounting or
related financial management expertise.
KEY RESPONSIBILITIES
The Committee's job is one of oversight and it recognizes that the Company's
management is responsible for preparing the Company's financial statements and
that the outside auditors are responsible for auditing those financial
statements. Additionally, the Committee recognizes that financial management, as
well as the outside auditors, have more time, knowledge and more detailed
information on the Company than do Committee members; consequently, in carrying
out its oversight responsibilities, the Committee is not providing any expert or
special assurance as to the Company's financial statements or any professional
certification as to the outside auditor's work.
In general, the common recurring activities of the Committee in carrying out its
oversight function are specified below. These functions are set forth as a guide
with the understanding that the Committee may diverge from this guide as
appropriate under the circumstances.
o The Committee shall meet and review with management and the outside
auditors the audited financial statements to be included in the Company's
Annual Report on Form 10-K and Annual Report to Stockholders and review and
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consider with the outside auditors the matters required to be discussed by
Statement of Auditing Standards No. 61, "Communication with Audit
Committees" ("SAS No. 61").
o As a whole, or through the Committee chair, the Committee shall meet and
review with the outside auditors the Company's interim financial results to
be included in quarterly filings with the Securities and Exchange
Commission and the matters required to be discussed by SAS No. 61; this
review will occur prior to the Company's filing of the Quarterly Reports on
Form 10-Q.
o The Committee shall discuss with management and the outside auditors the
quality and adequacy of the Company's internal controls.
o The Committee shall:
(a) request from the outside auditors annually, a formal written statement
delineating all relationships between the auditor and the Company
consistent with Independence Standards Board Standard No. 1;
(b) discuss with the outside auditors any such disclosed relationships and
their impact on the outside auditor's independence; and
(c) recommend that the Board take appropriate action to oversee the
independence of the outside auditor.
The Committee, subject to any action that may be taken by the full Board,
shall have the ultimate authority and responsibility to select (or nominate for
shareholder approval), evaluate and, where appropriate, replace the outside
auditor.
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EXELIXIS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 22, 2001
The undersigned hereby appoints George A. Scangos and Glen Y. Sato, and
each of them, as attorneys and proxies of the undersigned, with full power of
substitution, to vote all of the shares of stock of Exelixis, Inc. which the
undersigned may be entitled to vote at the 2001 Annual Meeting of Stockholders
of Exelixis, Inc. to be held at the Company's offices located at 170 Harbor Way,
South San Francisco, California 94080 on Tuesday, May 22, 2001 at 8:00 a.m.,
local time, and at any and all postponements, continuations and adjournments
thereof, with all powers that the undersigned would possess if personally
present, upon and in respect of the following matters and in accordance with the
following instructions, with discretionary authority as to any and all other
matters that may properly come before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2 AS MORE SPECIFICALLY DESCRIBED
IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS PROXY WILL
BE VOTED IN ACCORDANCE THEREWITH.
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET.
(CONTINUED ON OTHER SIDE)
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MANAGEMENT RECOMMENDS A VOTE FOR ALL THE NOMINEES NAMED IN PROPOSAL 1.
PROPOSAL 1: To elect two Class II directors to hold office until the 2004 Annual
Meeting of Stockholders.
[ ] [ ]
FOR all nominees listed below (except WITHHOLD AUTHORITY to vote
as marked to the contrary below). for all nominees listed below.
NOMINEES: Jason S. Fisherman, M.D., and Jean-Francois Formela, M.D..
TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S) WRITE SUCH NOMINEE(S)' NAME(S)
BELOW:
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MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL 2.
PROPOSAL 2: To ratify the selection of PricewaterhouseCoopers LLP as independent
auditors of Exelixis, Inc. for its fiscal year ended December 31,
2001.
[ ] [ ] [ ]
FOR AGAINST ABSTAIN
Dated
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SIGNATURE(S)
Please sign exactly as your name appears
hereon. If the stock is registered in
the names of two or more persons, each
should sign. Executors, administrators,
trustees, guardians and
attorneys-in-fact should add their
titles. If signer is a corporation,
please give full corporate name and have
a duly authorized officer sign, stating
title. If signer is a partnership,
please sign in partnership name by
authorized person.
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE
WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.