UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
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|_| Preliminary Proxy Statement
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14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-12
ENZO BIOCHEM, 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)
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|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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number, or the Form or Schedule and the date of its filing.
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 23, 2007
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To the Shareholders of Enzo Biochem, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Enzo
Biochem, Inc., a New York corporation (the "Company"), will be held at The Yale
Club, 50 Vanderbilt Avenue, New York, New York 10017, on January 23, 2007, at
9:00 a.m., local time (the "Annual Meeting"), for the following purposes:
1. To elect Shahram K. Rabbani and Irwin C. Gerson as Class I Directors for
a term of three (3) years or until their respective successors are
elected and qualified;
2. To ratify the appointment of Ernst & Young LLP as the Company's
independent registered public accounting firm for the Company's fiscal
year ending July 31, 2007; and
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The close of business on November 27, 2006 has been fixed as the record
date for the determination of shareholders entitled to notice of and to vote at
the Annual Meeting. The transfer books of the Company will not be closed.
All shareholders are cordially invited to attend the Annual Meeting.
Please note that you will be asked to present valid picture identification, such
as a driver's license or passport, in order to attend the Annual Meeting. The
use of cameras, recording devices and other electronic devices will be
prohibited at the Annual Meeting.
Whether or not you expect to attend, you are requested to sign, date and
return the enclosed proxy promptly. Shareholders who execute proxies retain the
right to revoke them at any time prior to the voting thereof by filing written
notice of such revocation with the Secretary of the Company, by submission of a
duly executed proxy bearing a later date or by voting in person at the Annual
Meeting of Shareholders. Attendance at the Annual Meeting will not in and of
itself constitute revocation of a proxy. Any written notice revoking a proxy
should be sent to Enzo Biochem, Inc., 527 Madison Avenue, New York, New York
10022, Attention: Shahram K. Rabbani, Secretary. A return envelope which
requires no postage if mailed in the United States is enclosed for your
convenience.
By Order of the Board of Directors,
Shahram K. Rabbani, SECRETARY
New York, New York
December 4, 2006
ENZO BIOCHEM, INC.
527 MADISON AVENUE
NEW YORK, NEW YORK 10022
(212) 583-0100
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PROXY STATEMENT
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ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 23, 2007
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Enzo Biochem, Inc., a New York corporation (the
"Company"), of proxies in the enclosed form for the Annual Meeting of
Shareholders to be held at The Yale Club, 50 Vanderbilt Avenue, New York, New
York 10017, on January 23, 2007, at 9:00 a.m., local time (the "Annual
Meeting"), and for any adjournment or adjournments thereof, for the purposes set
forth in the preceding Notice of Annual Meeting of Shareholders. The persons
named in the enclosed form of proxy will vote the shares for which they are
appointed in accordance with the directions of the shareholders appointing them.
In the absence of such directions, such shares will be voted FOR Proposals 1 and
2 listed in the preceding Notice of Annual Meeting of Shareholders and, in their
best judgment, will be voted on any other matters as may come before the Annual
Meeting. Any shareholder giving a proxy has the power to revoke the same at any
time before it is voted by timely filing written notice of such revocation with
the Secretary of the Company, by timely submission of a duly executed proxy
bearing a later date or by voting in person at the Annual Meeting. Attendance at
the Annual Meeting will not in and of itself constitute revocation of a proxy.
Any written notice revoking a proxy should be sent to Enzo Biochem, Inc., 527
Madison Avenue, New York, New York 10022, Attention: Shahram K. Rabbani,
Secretary. A return envelope that requires no postage if mailed in the United
States is enclosed for your convenience.
The expense of the solicitation of proxies for the meeting, including
the cost of mailing, will be borne by the Company. In addition to mailing copies
of the enclosed proxy materials to shareholders, the Company may request
persons, and reimburse them for their expenses with respect thereto, who hold
stock in their names or custody or in the names of nominees for others, to
forward copies of such materials to those persons for whom they hold stock of
the Company and to request authority for the execution of the proxies. In
addition to the solicitation of proxies by mail, it is expected that some of the
officers, directors and regular employees of the Company, without additional
compensation, may solicit proxies on behalf of the Board of Directors by
telephone, telefax and personal interview.
The principal executive offices of the Company are located at 527
Madison Avenue, New York, New York 10022. The approximate date on which this
Proxy Statement and the accompanying form of proxy will first be sent or given
to the Company's shareholders is December 4, 2006.
VOTING SECURITIES
Only holders of record of shares of common stock, par value $.01 per
share (the "Common Stock"), of the Company as of the close of business on
November 27, 2006 are entitled to vote at the Annual Meeting (the "Record
Date"). On the Record Date there were issued and outstanding 32,361,768 shares
of Common Stock. Each outstanding share of Common Stock is entitled to one (1)
vote upon all matters to be acted upon at the Annual Meeting. The holders of a
majority of the outstanding shares of Common Stock as of the Record Date must be
present in person or by proxy at the Annual Meeting to constitute a quorum for
the transaction of business at the Annual Meeting.
1
The election of a nominee for director requires a plurality of votes
(i.e., an excess of votes over those cast for an opposing candidate) in the
event that more than one candidate is running for a vacancy. Shareholders may
either vote "for" or "withhold" their vote for the director nominees. A properly
executed proxy marked "withhold" with respect to the election of one or more
directors will not be voted with respect to the director or directors, although
it will be counted for purposes of determining whether there is a quorum. The
ratification and approval of Proposal 2 will require the affirmative vote of the
majority of the votes cast by holders of shares of Common Stock present in
person or represented by proxy at the Annual Meeting and entitled to vote on
such proposals. Abstentions and broker non-votes are not counted as votes cast
on any matter to which they relate and will have no effect on the outcome of the
vote with respect to any matter. A broker non-vote occurs when a broker or other
nominee does not have discretionary authority and has not received instructions
with respect to a particular proposal. Proxy ballots are received and tabulated
by the Company's transfer agent and certified by the inspector of election.
HOUSEHOLDING OF ANNUAL MEETING MATERIALS
Some brokers and other nominee record holders may be participating in
the practice of "householding" proxy statements. This means that only one copy
of the proxy statement may have been sent to multiple shareholders in a
shareholder's household. The Company will promptly deliver a separate copy of
the proxy statement to any shareholder who contacts the Company's investor
relations department at (212) 583-0100 or at the Company's principal executive
offices at 527 Madison Avenue, New York, New York 10022 requesting such copies.
If a shareholder is receiving multiple copies of the proxy statement at the
shareholder's household and would like to receive a single copy of the proxy
statement for a shareholder's household in the future, shareholders should
contact their broker, other nominee record holder, or the Company's investor
relations department to request mailing of a single copy of the proxy statement.
STOCK OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
Set forth below is information concerning stock ownership of all persons
known by the Company to own beneficially 5% or more of the shares of Common
Stock of the Company, the executive officers named under "Compensation of
Directors and Executive Officers," all directors, and all directors and
executive officers of the Company as a group based upon the number of
outstanding shares of Common Stock as of the close of business on the Record
Date. Except as otherwise indicated, each of the persons named has sole voting
and investment power with respect to the shares shown.
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) OF CLASS (2)
------------------- ------------------------ ------------
Elazar Rabbani, Ph.D 2,257,277 (3) 6.9%
Shahram K. Rabbani 2,189,740 (4) 6.7%
Barry W. Weiner 1,445,301 (5) 4.4%
Dean Engelhardt, Ph.D 253,429 (6) *
Norman E. Kelker, Ph.D 172,233 (7) *
John J. Delucca 82,824 (8) *
Irwin C. Gerson 57,190 (8) *
Melvin F. Lazar, CPA 70,393 (9) *
John B. Sias 176,660 (10) *
2
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) OF CLASS (2)
------------------- ------------------------ ------------
J. Morton Davis 2,926,769 (11) 9.1%
CAM North America, LLC, Smith 4,215,738 (12) 13.1%
Barney Fund Management LLC,
Salomon Brothers Asset
Management Inc.
All directors and executive officers 7,087,134 (14) 20.6%
as a group (15 persons) (13)
* Less than 1%.
(1) Except as otherwise noted, all shares of Common Stock are beneficially
owned and the sole investment and voting power is held by the persons
named, and such persons' address is c/o Enzo Biochem, Inc., 527 Madison
Avenue, New York, New York 10022.
(2) Based upon 32,361,768 shares of Common Stock of the Company outstanding
as of the close of business on the Record Date.
(3) Includes (i) 523,342 shares of Common Stock issuable upon the exercise
of options which are exercisable within 60 days from the date hereof,
(ii) 3,469 shares of Common Stock held in the name of Dr. Rabbani as
custodian for certain of his children, (iii) 2,168 shares of Common
Stock held in the name of Dr. Rabbani's wife as custodian for certain of
their children, and (iv) an aggregate of 5,100 shares of Common Stock
held in the name of Dr. Rabbani's children. Includes 4,216 shares of
Common Stock held in the Company's 401(k) plan.
(4) Includes (i) 523,342 shares of Common Stock issuable upon the exercise
of options which are exercisable within 60 days from the date hereof,
(ii) 1,354 shares of Common Stock held in the name of Mr. Rabbani's son
and (iii) 1,671 shares of Common Stock that Mr. Rabbani holds as
custodian for certain of his nephews. Includes 4,180 shares of Common
Stock held in the Company's 401(k) plan.
(5) Includes (i) 523,342 shares of Common Stock issuable upon the exercise
of options which are exercisable within 60 days from the date hereof and
(ii) 3,642 shares of Common Stock that Mr. Weiner holds as custodian for
certain of his children. Includes 4,223 shares of Common Stock held in
the Company's 401(k) plan.
(6) Includes 72,386 shares of Common Stock issuable upon the exercise of
options which are exercisable within 60 days from the date hereof.
Includes 5,442 shares of Common Stock held in the Company's 401(k) plan.
(7) Includes 58,365 shares of Common Stock issuable upon the exercise of
options which are exercisable within 60 days from the date hereof.
Includes 4,132 shares of Common Stock held in the Company's 401(k) plan.
(8) Includes 2,500 shares of restricted Common Stock vesting on January 19,
2007. The remaining shares represent Common Stock issuable upon the
exercise of options which are exercisable within 60 days from the date
hereof.
(9) Includes 28,644 shares of Common Stock issuable upon the exercise of
options which are exercisable within 60 days from the date hereof.
Includes 26,249 shares of Common Stock owned by Mr. Lazar's wife and
6,300 shares of Common Stock held in the name of a defined benefit plan
for which Mr. Lazar is the sole trustee and beneficiary. Includes 5,000
shares of restricted Common Stock vesting on January 19, 2007. Includes
4,200 shares in an Individual Retirement Account.
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(10) Includes 89,897 shares of Common Stock issuable upon the exercise of
options which are exercisable within 60 days from the date hereof.
Includes 2,500 shares of restricted Common Stock vesting on January 19,
2007.
(11) Mr. Davis' address is D.H. Blair Investment Banking Corp., 44 Wall
Street, New York, New York 10005. Includes (i) 30,525 owned directly by
Mr. Davis, (ii) 1,419,345 shares of Common Stock owned by D.H. Blair
Investment Banking Corp. of which Mr. Davis is the sole shareholder,
(iii) 800,670 shares owned by Rosalind Davidowitz, Mr. Davis' wife, (iv)
663,446 shares of Common Stock owned by Engex, Inc., a close-end
registered investment company of which Mr. Davis is the Chairman of the
Board of Directors, and (v) 12,733 shares owned by an investment advisor
whose principal is Mr. Davis. This information is based solely on
Amendment No. 4 to a Schedule 13G filed on February 7, 2006.
(12) The address of each entity in the group is 399 Park Avenue, New York,
New York 10022. This information is based solely on a Schedule 13G filed
on January 10, 2006.
(13) The total number of directors and executive officers includes six (6)
executive officers who were not named under "Compensation of Directors
and Executive Officers."
(14) Includes 2,135,473 shares of Common Stock issuable upon the exercise of
options which are exercisable within 60 days from the date hereof.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company has three (3) staggered classes of Directors, each of which
serves for a term of three (3) years. At the Annual Meeting, the Company's Class
I Directors will be elected to hold office for a term of three (3) years or
until their respective successors are elected and qualified. Unless otherwise
instructed, the accompanying form of proxy will be voted for the election of the
below-listed nominees all of whom currently serve as Class I Directors, to
continue such service as Class I Directors. Management has no reason to believe
that any of the nominees will not be a candidate or will be unable to serve as a
director. However, in the event that the nominees should become unable or
unwilling to serve as directors, the form of proxy will be voted for the
election of such persons as shall be designated by the Class II and Class III
Directors.
Effective November 8, 2006, the total cumulative length of time that any
Outside Director (a member of the Board who is not an officer or employee of the
Company) may serve on the Board shall be limited to a maximum of three
three-year terms, whether consecutively or in total, plus any portion of an
earlier three-year term that such Outside Director may have been appointed to
serve.
CLASS I DIRECTOR NOMINEES TO SERVE UNTIL
THE 2010 ANNUAL MEETING, IF ELECTED:
CLASS I: NEW TERM TO EXPIRE IN 2010
NAME AGE YEAR FIRST BECAME A DIRECTOR
---- --- ----------------------------
Shahram K. Rabbani 54 1976
Irwin C. Gerson 76 2001
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE
ELECTION OF THE ABOVE-NAMED NOMINEES. PROXIES SOLICITED BY THE BOARD OF
DIRECTORS WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY IN THEIR PROXIES A
CONTRARY CHOICE.
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DIRECTORS WHO ARE CONTINUING IN OFFICE:
CLASS II: TERM TO EXPIRE IN 2008
NAME AGE YEAR FIRST BECAME A DIRECTOR
---- --- ----------------------------
Barry W. Weiner 56 1977
John J. Delucca 63 1982
Melvin F. Lazar, CPA 67 2002
CLASS III: TERM TO EXPIRE IN 2009
NAME AGE YEAR FIRST BECAME A DIRECTOR
---- --- ----------------------------
Elazar Rabbani, Ph.D. 62 1976
John B. Sias 79 1982
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are identified in
the table below. Each executive officer of the Company serves at the pleasure of
the Board of Directors.
YEAR BECAME A
DIRECTOR OR
NAME AGE EXECUTIVE OFFICER POSITION
---- --- ----------------- --------
Elazar Rabbani, Ph.D. 62 1976 Chairman of the Board of
Directors and Chief
Executive Officer
Shahram K. Rabbani 54 1976 Chief Operating Officer,
Treasurer Secretary, and
Director
Barry W. Weiner 56 1977 President, Chief Financial
Officer and Director
Carl Balezentis, Ph.D 49 2006 President, Enzo Life
Sciences, Inc.
Gary C. Cupit, Pharm.D. 59 2006 President, Enzo
Therapeutics, Inc.
Dean Engelhardt, Ph.D. 66 1981 Executive Vice President
Norman E. Kelker, Ph.D 67 1981 Senior Vice President
Andrew R. Crescenzo 50 2006 Senior Vice President of
Finance
Herbert B. Bass 58 1995 Vice President of Finance
Barbara E. Thalenfeld, Ph.D. 66 1995 Vice President, Corporate
Development
David C. Goldberg 49 1995 Vice President, Business
Development
John J. Delucca 63 1982 Director
John B. Sias 79 1982 Director
Irwin C. Gerson 76 2001 Director
Melvin F. Lazar, CPA 67 2002 Director
BIOGRAPHICAL INFORMATION REGARDING DIRECTORS AND EXECUTIVE OFFICERS
DR. ELAZAR RABBANI (age 62) Enzo Biochem's founder has served as the
Company's Chairman of the Board of Directors and Chief Executive Officer since
its inception in 1976. Dr. Rabbani has authored numerous scientific publications
in the field of molecular biology, in particular, nucleic acid labeling and
detection. He is also
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the lead inventor of many of the Company's pioneering patents covering a wide
range of technologies and products. Dr. Rabbani received his Bachelor of Arts
degree from New York University in Chemistry and his Ph.D. in Biochemistry from
Columbia University. He is a member of the American Society for Microbiology.
SHAHRAM K. RABBANI (age 54) Chief Operating Officer, Treasurer,
Secretary and Director, is a founder and has been with the Company since its
inception. He is also President of Enzo Clinical Labs. Mr. Rabbani serves on the
New York State Clinical Laboratory Association, a professional board. He
received a Bachelor of Arts Degree in Chemistry from Adelphi University, located
in Long Island, New York.
BARRY W. WEINER (age 56) President, Chief Financial Officer and
Director, is a founder of Enzo Biochem, Inc. He has served as the Company's
President since 1996, and previously held the position of Executive Vice
President. Before his employment with Enzo, he worked in several managerial and
marketing positions at the Colgate Palmolive Company. Mr. Weiner is a Director
of the New York Biotechnology Association. He received his Bachelor of Arts
degree in Economics from New York University and a Master of Business
Administration in Finance from Boston University.
DR. CARL W. BALEZENTIS (age 49) President, Enzo Life Sciences, Inc., has
held this position since June 2006. Before his employment with Enzo, he was CEO
of Lark Technologies, Inc. from 2000 to 2004, prior to its acquisition by
Genaissance Pharmaceuticals, Inc. Subsequent to the acquisition he held the
positions of President of Lark Technologies, Inc., and Senior Vice President of
Genaissance. From 1998 to 2000 he has held numerous executive positions in the
life sciences industry with companies such as Sigma-Aldrich, Perceptive
Scientific Instruments, Inc., Applied Biosystems, Inc. (now Applera) and Promega
Corporation. Dr. Balezentis holds a Ph.D in Genetics from the University of
Arizona and completed a Post Doctoral Fellowship at M.D. Anderson Cancer Center
in Houston, TX.
DR. GARY C. CUPIT (age 59) President, Enzo Therapeutics, Inc. joined the
Company in October 2006. Dr. Cupit previously held positions as President and
CEO of Sapphire Therapeutics from 2004 to 2006 and Vice President, Global Search
and Evaluation for Novartis Pharmaceuticals from 2000 to 2004. Prior positions
include Business Development at Knoll Pharmaceuticals, Vice President of
Cardiovascular Therapeutics at The Medicines Company and various positions in
sales, marketing and new product development at SmithKline Beecham
Pharmaceuticals. He earned a Bachelor of Science in Pharmacy at the Medical
College of Virginia and a Doctor of Pharmacy degree at the Philadelphia College
of Pharmacy and Science.
DR. DEAN ENGELHARDT (age 66) Executive Vice President has held this
position since July 2000. Since joining the Company in 1981, Dr. Engelhardt has
held several other executive and scientific positions within Enzo Biochem. In
addition, Dr. Engelhardt has authored many papers in the area of nucleic acid
synthesis and protein production and has been a featured presenter at numerous
scientific conferences and meetings. He holds a Ph.D. degree in Molecular
Genetics from Rockefeller University.
DR. NORMAN E. KELKER (age 67) Senior Vice President has held this
position since 1989. Before this, he was the Company's Vice President for
Scientific Affairs. Dr. Kelker has authored numerous scientific papers and
presentations in the biotechnology field. He is a member of American Society of
Microbiology and the American Association of the Advancement of Science. Dr.
Kelker received his Ph.D. in Microbiology and Public Health from Michigan State
University.
ANDREW R. CRESCENZO (age 50) Senior Vice President of Finance for the
Company has held this position since May 2006. Before joining the Company, Mr.
Crescenzo was an Executive Director from 2002 to 2006 and a Senior Manager from
1997 to 2003 at Grant Thornton LLP. From 1993 to 1997 he served as Vice
President and Chief Financial Officer of J. D'Addario & Co, Inc and was employed
at Ernst and Young LLP from 1984 to 1993. Mr. Crescenzo is a Certified Public
Accountant and received his Bachelors of Business Administration from Adelphi
University, located in Long Island, New York.
HERBERT B. BASS (age 58) Vice President of Finance for the Company and
is also Senior Vice President of Enzo Clinical Labs. Before his promotion in
1989 to Vice President of Finance, Mr. Bass served as the Corporate Controller
of the Company. Mr. Bass has been with the Company since 1986. From 1977 to
1986, Mr. Bass held various positions at Danziger and Friedman, Certified Public
Accountants, the most recent of which was audit
6
manager. For the preceding seven (7) years, he held various positions at
Berenson & Berenson, Certified Public Accountants. Mr. Bass received a Bachelor
of Business Administration degree in Accounting from Bernard M. Baruch College,
in New York City
DR. BARBARA E. THALENFELD (age 66) Vice President of Corporate
Development for Enzo Biochem and Vice President of Clinical Affairs for Enzo
Therapeutics. Dr. Thalenfeld has been employed with the Company since 1982. She
has authored numerous scientific papers in the areas of molecular biology and
genetics, and is a member of the American Society of Gene Therapy, the
Association of Clinical Research Professionals, and the Drug Development
Association. Dr. Thalenfeld received her Ph.D. at the Institute of Microbiology
at Hebrew University in Jerusalem, Israel and a Master of Science degree in
Molecular Biology from Yale University. She also completed a Post Doctoral
Fellowship in the Department of Biological Sciences at Columbia University.
DAVID C. GOLDBERG (age 49) Vice President of Business Development for
Enzo Biochem and Senior Vice President of Enzo Clinical Labs has been employed
with the Company since 1985. He has held several managerial positions within
Enzo Biochem. Mr. Goldberg also held management and marketing positions with
DuPont-NEN and Gallard Schlesinger Industries before joining the Company. He
received a Master of Science degree in Microbiology from Rutgers University and
a Master of Business Administration in Finance from New York University.
JOHN J. DELUCCA (age 63) has been a Director of the Company since 1982,
and is Chairman of the Governance Committee. From 2003 to 2004, Mr. Delucca was
Executive Vice President and Chief Financial Officer of REL Consulting Group.
Mr. Delucca was the Chief Financial Officer & Executive Vice President, Finance
& Administration of Coty, Inc., from 1999 to 2002. From 1993 until 1999, he was
Senior Vice President and Treasurer of RJR Nabisco, Inc. Mr. Delucca is a board
member, member of the Compensation Committee of Endo Pharmaceuticals Holdings
Inc. (ENDP: NasdaqGS), and Chairman of the Audit Committees of Endo and
ITC^Deltacom (ITCD.OB). Endo engages in the research, development, sale and
marketing of prescription pharmaceuticals. ITC Deltacom is a provider of
integrated communication services primarily to business customers in the
southeastern United States. Mr. Delucca is also a board member and serves as the
Deputy Chairman of the Audit Committee of British Energy (BEYGF.PK) . Mr.
Delucca holds a BA in Business Administration from Bloomfield College and an MBA
from Fairleigh Dickinson University.
JOHN B. SIAS (age 79) has been a Director of the Company since 1982. Mr.
Sias had been President and Chief Executive Officer of Chronicle Publishing
Company from April 1993 to September 2000. From January 1986 until April 1993,
Mr. Sias was President of ABC Network Division, Capital Cities/ABC, Inc. From
1977 until January 1986, he was the Executive Vice President, President of the
Publishing Division (which includes Fairchild Publications) of Capital Cities
Communications, Inc. Mr. Sias holds a Bachelor's degree in Economics from
Stanford University.
IRWIN C. GERSON (age 76) has been a Director of the Company since May
2001, and is Chairman of the Compensation Committee. From 1995 until December
1998, Mr. Gerson served as Chairman of Lowe McAdams Healthcare and prior thereto
had been, since 1986, Chairman and Chief Executive Officer of William Douglas
McAdams, Inc., one of the largest advertising agencies in the U.S. specializing
in pharmaceutical marketing and communications to healthcare professionals. In
February 2000, he was inducted into the Medical Advertising Hall of Fame. Mr.
Gerson has a Bachelor of Science in Pharmacy from Fordham University and an MBA
from the NYU Graduate School of Business Administration. He was a director of
Andrx Corporation, a NASDAQ listed company which specializes in proprietary drug
delivery technologies until November 2006. From 1990-1999, he was Chairman of
the Council of Overseers of the Arnold and Marie Schwartz College of Pharmacy
and has served as a trustee of The Albany College of Pharmacy and Long Island
University. He was elected President of the Advisory Board of Florida Atlantic
University Lifelong Learning Society in October 2006.
MELVIN F. LAZAR, CPA (age 67) has been a Director of the Company since
August 2002, the Lead Independent Director since October 2005, and is Chairman
of the Audit Committee. Mr. Lazar was a founding partner of the public
accounting firm of Lazar, Levine & Felix LLP from 1969 until October 2002. Mr.
Lazar and his firm served the business and legal communities for over 30 years.
Mr. Lazar is a board member and chairman of the audit committee of Arbor Realty
Trust, Inc. (ABR: NYSE). Arbor is a real estate investment trust (REIT) formed
to invest in real estate related bridge and mezzanine loans, preferred equity
investments and other real estate
7
related assets. Mr. Lazar is a board member and serves as the Chairman of the
Audit Committee of Grubb & Ellis Realty Advisors, Inc. (GAV:AMEX). The company
is a development stage company formed to acquire commercial real estate
properties. Mr. Lazar holds a Bachelor of Business Administration degree from
The City College of New York (Baruch College).
Dr. Elazar Rabbani and Shahram K. Rabbani are brothers and Barry W.
Weiner is their brother-in-law.
John J. Delucca, John B. Sais, Irwin C. Gerson and Melvin F. Lazar
qualify as "independent directors" under the criteria established by the New
York Stock Exchange.
CORPORATE GOVERNANCE
Our Board of Directors and management are committed to responsible
corporate governance to ensure that the Company is managed for the long-term
benefit of its shareholders. To that end, during the past year, as in prior
years, the Board of Directors and management have periodically reviewed and
updated, as appropriate, the Company's corporate governance policies and
practices. During the past year, the Board has also continued to evaluate and,
when appropriate, update the Company's corporate governance policies and
practices in accordance with the requirements of the Sarbanes-Oxley Act of 2002
and the rules and listing standards issued by the Securities and Exchange
Commission and the New York Stock Exchange ("NYSE").
CORPORATE GOVERNANCE POLICIES AND PRACTICES
-------------------------------------------
The Company has instituted a variety of policies and practices to foster
and maintain responsible corporate governance, including the following:
CORPORATE GOVERNANCE GUIDELINES - The Board of Directors adopted
Corporate Governance Guidelines, which collect in one document many of
the corporate governance practices and procedures that had evolved over
the years. These guidelines address the duties of the Board of
Directors, director qualifications and selection process, Board
operations, Board committee matters and continuing education. The
guidelines also provide for annual self-evaluations by the Board and its
committees. The Board reviews these guidelines on an annual basis. The
guidelines are available on the Company's website at www.enzo.com, and
in print to any interested party that requests them.
CORPORATE CODE OF ETHICS - The Company has a Code of Ethics that applies
to all of the Company's employees, officers and members of the Board.
The Code of Ethics is available on the Company's website at
www.enzo.com, and in print to any interested party that requests them.
BOARD COMMITTEE CHARTERS - Each of the Company's Audit, Compensation and
Nominating/Governance Committees has a written charter adopted by the
Company's Board of Directors that establishes practices and procedures
for such committee in accordance with applicable corporate governance
rules and regulations. The charters are available on the Company's
website at www.enzo.com, and in print to any interested party that
requests them.
LEAD INDEPENDENT DIRECTOR CHARTER - On October 31, 2005, the Board of
Directors voted to create the position of Lead Independent Director of
the Board of Directors, to elect Melvin F. Lazar to serve as Lead
Independent Director and adopted a Lead Independent Director Charter.
See below for a description of the responsibilities of the Lead
Independent Director. The Lead Independent Director Charter is available
on the Company's website at www.enzo.com, and in print to any interested
party that requests them.
DIRECTOR INDEPENDENCE
REQUIREMENTS - The Board of Directors believes that a
substantial majority of its members should be independent,
non-employee directors. The Board adopted the following
"Director Independence Standards," which are consistent with
criteria established by the New York Stock Exchange, to assist
the Board in making these independence determinations.
8
No Director can qualify as independent if he or she has a
material relationship with the Company outside of his or her
service as a Director of the Company. A Director is not
independent if, within the preceding three years:
o The director was an employee of the Company.
o An immediate family member of the director was an
executive officer of the Company.
o A director was affiliated with or employed by a
present or former internal or external auditor of the
Company.
o An immediate family member of a director was
affiliated with or employed in a professional
capacity by a present or former internal or external
auditor of the Company.
o A director, or an immediate family member of the
director, received more than $100,000 per year in
direct compensation from the Company, other than
director and committee fees and pension or other
forms of deferred compensation for prior services
(provided such compensation is not contingent in any
way on continued service).
o The director, or an immediate family member of the
director, was employed as an executive officer of
another company where any of the Company's executives
served on that company's compensation committee of
the board of directors.
o The director was an executive officer or employee, or
an immediate family member of the director was an
executive officer, of another company that made
payments to, or received payments from, the Company
for property or services in an amount which, in any
single fiscal year, exceeded the greater of $1
million or two percent (2%) of such other company's
consolidated gross revenues.
o The director, or an immediate family member of the
director, was an executive officer of another company
that was indebted to the company, or to which the
Company was indebted, where the total amount of
either company's indebtedness to the other was five
percent (5%) or more of the total consolidated assets
of the company he or she served as an executive
officer.
o The director, or an immediate family member of the
director, was an officer, director or trustee of a
charitable organization where the Company's annual
discretionary charitable contributions to the
charitable organization exceeded the greater of $1
million or five percent (5%) of that organization's
consolidated gross revenues.
9
The Board has reviewed all material transactions and
relationships between each director, or any member of his or her
immediate family, and the Company, its senior management and its
independent auditors. Based on this review and in accordance with
its independence standards outlined above, the Board of Directors
has affirmatively determined that all of the non-employee
directors are independent.
BOARD NOMINATION POLICIES AND PROCEDURE
- NOMINATION PROCEDURE - The Nominating/Governance
Committee is responsible for identifying, evaluating, and
recommending candidates for election to the Board, with due
consideration for recommendations made by other Board members,
the CEO, shareholders, and other sources. In addition to the
above criteria, the Nominating/Governance Committee also
considers the appropriate balance of experience, skills, and
characteristics desirable among the members of the board. The
independent members of the Board review the
Nominating/Governance Committee candidates and nominate
candidates for election by the Company shareholders.
Directors must also possess the highest personal and
professional ethics, integrity and values and be committed to
representing the long-term interests of all shareholders. Board
members are expected to diligently prepare for, attend and
participate in all Board and applicable Committee meetings. Each
Board member is expected to ensure that other existing and
future commitments do not materially interfere with the member's
service as a director.
The Nominating/Governance Committee also reviews whether a
potential candidate will meet the Company's independence
standards and any other director or committee membership
requirements imposed by law, regulation or stock exchange rules.
Director candidates recommended to the Committee are subject to
full Board approval and subsequent election by the shareholders.
The Board of Directors is also responsible for electing
directors to fill vacancies on the Board that occur due to
retirement, resignation, expansion of the Board or other reasons
between the Shareholders' annual meetings. The
Nominating/Governance Committee may retain a recruitment firm,
from time to time, to assist in identifying and evaluating
director candidates. When a firm is used, the Committee provides
specified criteria for director candidates, tailored to the
needs of the Board at that time, and pays the firm a fee for
these services. Suggestions for director candidates are also
received from board members and management and may be solicited
from professional associations as well.
BOARD COMMITTEES
- All members of each of the Company's three standing
committees - the Audit, Compensation, and Nominating/Governance
- are required to be independent in accordance with NYSE
criteria. See below for a description of the responsibilities of
the Board's standing committees.
EXECUTIVE SESSIONS OF NON-MANAGEMENT DIRECTORS
- The Board and the Audit, Compensation and
Nominating/Governance Committees periodically hold meetings of
only the independent directors or Committee members without
management present.
LEAD INDEPENDENT DIRECTOR
- The duties of the Lead Independent Director, as set
forth in the Lead Independent Director Charter, among other
things, are to develop the agendas for and serve as chairman of
the executive sessions of the independent directors of the
Company; serve as principal liaison between
10
the independent directors of the Company and the Chairman of the
Board and between the independent directors and senior
management; provide the Chairman of the Board with input as to
the preparation of the agendas for Board meetings; advise the
Chairman of the Board as to the quality, quantity and timeliness
of the information submitted by the Company's management that is
necessary or appropriate for the independent directors to
effectively and responsibly perform their duties; ensure that
independent directors have adequate opportunities to meet and
discuss issues in executive sessions without management present;
if the Chairman of the Board is unable to attend a Board of
Directors meeting, act as chairman of such Board of Directors
meeting; and perform such other duties as the Board of Directors
shall from time to time delegate. On October 31, 2005, the Board
of Directors elected Melvin F. Lazar to serve as the Lead
Independent Director.
BOARD ACCESS TO INDEPENDENT ADVISORS
- The Board as a whole, and each of the Board committees
separately, have authority to retain and terminate such
independent consultants, counselors or advisors to the Board as
each shall deem necessary or appropriate.
COMMUNICATIONS WITH BOARD OF DIRECTORS
- DIRECT COMMUNICATIONS - Any interested party desiring to
communicate with the Board of Directors or with any director
regarding the Company may write to the Board or the director,
c/o Shahram K. Rabbani, Office of the Secretary, Enzo Biochem,
Inc., 527 Madison Avenue, New York New York 10022. The Office of
the Secretary will forward all such communications to the
director(s). Interested parties may also submit an email by
filling out the email form on the Company's website at
www.enzo.com. Moreover, any interested party may contact the
non-management directors of the Board and/or the presiding (or
lead) director.
- ANNUAL MEETING - The Company encourages its directors to
attend the annual meeting of shareholders each year. Messrs.
Delucca, Sias, Gerson and Lazar attended the Annual Meeting of
Shareholders held in January 2006.
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
During the fiscal year ended July 31, 2006, there were six formal
meetings of the Board of Directors, several actions by unanimous consent and
several informal meetings. Currently, the Board of Directors has a
Nominating/Governance Committee, an Audit Committee and a Compensation
Committee. The Nominating/Governance Committee had one formal meeting, the Audit
Committee had four formal meetings and the Compensation Committee had four
formal meetings.
The Audit Committee was established by and among the Board of Directors
for the purpose of overseeing the accounting and financial reporting processes
of the Company and audits of the financial statements of the Company in
accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as
amended, The Audit Committee is authorized to review proposals of the Company's
auditors regarding annual audits, recommend the engagement or discharge of the
auditors, review recommendations of such auditors concerning accounting
principles and the adequacy of internal controls and accounting procedures and
practices, review the scope of the annual audit, approve or disapprove each
professional service or type of service other than standard auditing services to
be provided by the auditors, and review and discuss the audited financial
statements with the auditors. The current members of the Audit Committee are
Messrs. Lazar, Delucca and Gerson, and Mr. Lazar is the Chairman. The Board of
Directors has determined that each of the Audit Committee members are
independent, as defined in the NYSE's listing standards and as defined in Item
7(d)(3)(iv) of Schedule 14A under the Securities and Exchange Act of 1934. The
Board of Directors has further determined that Messrs. Delucca and Lazar are
each "audit committee financial experts" as such term is defined under Item
401(h)(2) of Regulation S-K.
11
The Compensation Committee has the power and authority to (i) establish
a general compensation policy for the officers and employees of the Corporation,
including to establish and at least annually review officers' salaries and
levels of officers' participation in the benefit plans of the Corporation, (ii)
prepare any reports that may be required by the regulations of the Securities
and Exchange Commission or otherwise relating to officer compensation, (iii)
approve any increases in directors' fees, (iv) grant stock options and/or other
equity instruments (v) exercise all other powers of the Board of Directors with
respect to matters involving the compensation of employees and the employee
benefits of the Corporation as shall be delegated by the Board of Directors to
the Compensation Committee. The current members of the Compensation Committee
are Messrs. Gerson, Sias and Lazar and Mr. Gerson is the Chairman.
The Nominating/Governance Committee has the power to recommend to the
Board of Directors prior to each annual meeting of the shareholders of the
Corporation: (i) the appropriate size and composition of the Board of Directors;
and (ii) nominees: (1) for election to the Board of Directors for whom the
Corporation should solicit proxies; (2) to serve as proxies in connection with
the annual shareholders' meeting; and (3) for election to all committees of the
Board of Directors other than the Nominating/Governance Committee. The
Nominating/Governance Committee will consider nominations from the shareholders,
provided that they are made in accordance with the Company's By-laws. The
current members of the Nominating/Governance Committee are Messrs. Delucca,
Lazar and Sias and Mr. Delucca is the Chairman.
AUDIT COMMITTEE REPORT
In connection with the preparation and filing of the Company's Annual
Report on Form 10-K for the year ended July 31, 2006:
(1) The Audit Committee reviewed and discussed the audited
financial statements with management;
(2) The Audit Committee discussed with the independent
auditors matters required to be discussed under Statement on
Auditing Standards No. 61, as may be modified or supplemented;
(3) The Audit Committee reviewed the written disclosures and
the letter from the independent auditors required by the
Independence Standards Board Standard No. 1, as may be modified
or supplemented, and discussed with the independent auditors any
relationships that may impact their objectivity and independence
and satisfied itself as to the auditors' independence;
(4) The Audit Committee discussed with the Company's
independent auditors the overall scope and plans for its audit.
The Audit Committee met with the independent auditors, with and
without management present, to discuss the results of their
examinations, their evaluations of the Company's internal
controls, and the overall quality of the Company's financial
reporting. The Audit Committee held four formal meetings during
the fiscal year ended July 31, 2006 and
(5) Based on the review and discussions referred to above,
the Audit Committee recommended to the Board of Directors that
the audited financial statements of the Company be included in
the 2006 Annual Report on Form 10-K.
Submitted by the members of the Audit Committee
Melvin F. Lazar, CPA
John J. Delucca
Irwin C. Gerson
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers, directors and persons who
beneficially own more than 10% of a registered class of the Company's equity
12
securities (collectively, "Reporting Persons") to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of common stock and other equity securities of the Company. Such
executive officers, directors and greater than 10% beneficial owners are
required by Securities and Exchange Commission regulation to furnish the Company
with copies of all Section 16(a) forms filed by such reporting persons.
Based solely on the Company's review of such forms furnished to the
Company and written representations from certain reporting persons, the Company
believes that the Reporting Persons have complied with all applicable filing
requirements, except that Messrs. Delucca, Gerson, Lazar, Sias, Bass and
Goldberg and Dr. Thalenfeld each filed one report late.
CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS
Enzo Clinical Labs, Inc. ("Enzo Lab"), a subsidiary of the Company,
leases a facility located in Farmingdale, New York from Pari Management
Corporation ("Pari"). Pari is owned equally by Elazar Rabbani, Ph.D., Shahram
Rabbani and Barry Weiner and his wife, the officers and directors of Pari. The
lease originally commenced on December 20, 1989, but was amended and extended in
March 2005 and now terminates on March 31, 2017. During fiscal 2006, Enzo Lab
paid approximately $1,337,000 (including $172,000 in real estate taxes) to Pari
with respect to such facility and future payments are subject to cost of living
adjustments. The Company, which has guaranteed Enzo Lab's obligations to Pari
under the lease, believes that the existing lease terms are as favorable to the
Company as would be available from an unaffiliated party.
CODE OF ETHICS
The Company has adopted a Code of Ethics (as such term is defined in
Item 406 of Regulation S-K). The Code of Ethics is available on the Company's
website at www.enzo.com, and in print to any shareholder that requests them. The
Code of Ethics applies to the Company's Executive Officer, Chief Financial
Officer and principal accounting officer or controller, or persons performing
similar functions. The Code of Ethics has been designed to deter wrongdoing and
to promote:
(1) Honest and ethical conduct, including the ethical handling of actual or
apparent conflicts of interest between personal and professional
relationships;
(2) Full, fair, accurate, timely, and understandable disclosure in reports
and documents that the Company files with, or submits to, the Securities
and Exchange Commission and in other public communications made by the
Company;
(3) Compliance with applicable governmental laws, rules and regulations;
(4) The prompt internal reporting or violations of the Code of Ethics to an
appropriate person or persons identified in the Code of Ethics; and
(5) Accountability for adherence to the Code of Ethics.
13
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following summary compensation table sets forth the aggregate
compensation paid by the Company to its chief executive officer and to the
Company's four other most highly compensated executive officers whose annual
compensation exceeded $100,000 for the fiscal year ended July 31, 2006 (each, a
"Named Executive Officer") for services during the fiscal years ended July 31,
2006, 2005 and 2004:
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
AWARDS
------------
NAME AND ANNUAL COMPENSATION
PRINCIPAL POSITION ---------------------- SECURITIES
------------------ UNDERLYING
YEAR SALARY ($) BONUS ($) OPTIONS/SARS (#)
---- ---------- --------- ----------------
Elazar Rabbani, Ph.D., 2006 $458,315 $237,000 -0-
CHAIRMAN OF THE BOARD OF 2005 $442,200 $283,250 50,000
DIRECTORS AND CEO 2004 $430,942 $275,000 78,750
Shahram K. Rabbani, 2006 $420,192 $175,000 -0-
CHIEF OPERATING OFFICER, 2005 $405,423 $267,800 50,000
TREASURER, SECRETARY AND 2004 $395,046 $260,000 78,750
DIRECTOR
Barry W. Weiner, 2006 $420,192 $200,000 -0-
PRESIDENT, CHIEF FINANCIAL 2005 $405,423 $267,800 50,000
OFFICER AND DIRECTOR 2004 $395,046 $260,000 78,750
Dean Engelhardt, Ph.D., 2006 $240,039 $55,000 -0-
EXECUTIVE VICE PRESIDENT 2005 $231,624 $55,000 10,000
2004 $225,737 $55,000 15,750
Norman E. Kelker, Ph.D., 2006 $207,388 $35,000 -0-
SENIOR VICE PRESIDENT 2005 $200,104 $45,000 10,000
2004 $202,476 $45,000 15,750
OPTION/SAR GRANTS IN LAST FISCAL YEAR
There were no stock option/SAR grants to the Named Executive Officers
during the fiscal year ended July 31, 2006.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table sets forth certain information with respect to stock
option exercises by the Named Executive Officers during the fiscal year ended
July 31, 2006 and the value of unexercised options held by them at fiscal
year-end.
14
NUMBER OF
SECURITIES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS/SARS IN-THE-MONEY
OPTIONS AT OPTIONS/SARS AT
FISCAL YEAR-END FISCAL YEAR-END
(#) ($) (1)
---------------- -----------------
SHARES
ACQUIRED ON VALUE
EXERCISE REALIZED EXER- UNEXER- EXER- UNEXER-
NAME (#) ($) CISABLE CISABLE CISABLE CISABLE
---- ----------- -------- ------- ------- ------- -------
Elazar Rabbani, Ph.D. 67,005 $126,170 523,342 -0- $1,051,286 $0
Shahram K. Rabbani 67,005 $126,170 523,342 -0- $1,051,286 $0
Barry W. Weiner 67,005 $126,170 523,342 -0- $1,051,286 $0
Dean Engelhardt, Ph.D. 20,101 $37,850 72,386 -0- $133,670 $0
Norman E. Kelker, Ph.D $119,029 $0
(1) Market value of the underlying securities at fiscal year end minus the
exercise price paid in cash or stock.
On June 3, 2005 the Board of Directors unanimously approved a resolution
to immediately accelerate the effectiveness of all unvested stock options that
were "out of the money" by $1.50 or more based on the closing price of the
Company's Common Stock on the date of the resolution. As a result of the
acceleration, options to purchase approximately 666,000 shares of the Company's
common stock (which represented approximately 21% of the Company's outstanding
stock options) became exercisable immediately. The total number of options
subject to acceleration included options to purchase 575,000 shares held by
executive officers and directors of the Company. This action was taken to avoid
expense recognition in future financial statements upon adoption of SFAS 123(R).
EMPLOYMENT AGREEMENTS
Each of Mr. Barry Weiner, Mr. Shahram Rabbani and Dr. Elazar Rabbani
(the "Executives") are parties to a employment agreements effective May 4, 1994,
as amended as of July 13, 2000 (the "Employment Agreement(s)"), with the
Company. Pursuant to the terms of their respective Employment Agreements,
Messrs. Weiner and Rabbani and Dr. Rabbani are currently compensated for the
calendar year 2006 at a base annual salary of $427,300, $427,300 and $466,100,
respectively. Each Executive will also receive an annual bonus, the amount of
which shall be determined by the Board of Directors in its discretion. Each
Employment Agreement provides that, in the event of termination of employment by
the Executive for "good reason," or a termination of employment by the Company
without "cause" or, additionally, a nonrenewal, as such terms are defined in the
Employment Agreement, each Executive shall be entitled to receive: (a) a lump
sum in an amount equal to three years of the Executive's base annual salary; (b)
a lump sum in an amount equal to the annual bonus paid by the Company to the
Executive for the last fiscal year of the Company ending prior to the date of
termination multiplied by three; (c) insurance coverage for the Executive and
his dependents, at the same level and at the same charges to the Executive as
immediately prior to his termination, for a period of three (3) years following
his termination from the Company; (d) all accrued obligations, as defined
therein; and (e) with respect to each incentive pay plan (other than stock
option or other equity plans) of the Company in which the Executive participated
at the time of termination, an amount equal to the amount the Executive would
have earned if he had continued employment for three additional years. If the
Executive is terminated by reason of his disability, he shall be entitled to
receive, for three years after such termination, his base annual salary less any
amounts received under a long term disability plan. If the Executive is
terminated by reason of his death, his legal representatives shall receive the
balance of any remuneration due him under the terms of his Employment Agreement.
The term of each of the Executive's Employment Agreement currently expires on
May 4, 2008, which term automatically renews for successive two year periods if
notice to the Company is not given by either party within 180 days of the end of
such successive term.
COMPENSATION OF DIRECTORS
As of November 1, 2005, the Lead Independent Director receives an annual
director's fee of $50,000 and each other person who serves as a director and who
is not otherwise an officer or an employee (such director being classified as an
"Outside Director") of the Company, receives an annual director's fee of
$20,000. For each meeting of the Board of Directors attended in person or by
telephone, the Lead Independent Director and all other Outside
15
Directors receive a fee of $2,000. Additionally, each Outside Director who
serves on a committee of the Board of Directors receives a fee of $1,000 for
each meeting of the committee attended in person or by telephone. In addition to
the $1,000 per committee meeting fee, the Chairman of the Audit Committee
receives an additional fee of $1,000 for each meeting of the Audit Committee
attended in person or by telephone, the Lead Independent Director receives an
additional fee of $500 for each meeting of any Board committee attended in
person or by telephone, and the Chairman of the Compensation Committee and the
Chairman of the Nominating/Governance Committee each receives an additional fee
of $500 for each meeting of the committee attended in person or by telephone.
The Lead Independent Director will receive restricted stock units immediately
following the Annual Meeting, provided such person is a director of the Company
at such time. Each of the other Outside Directors will receive restricted stock
units immediately following the Annual Meeting, provided such person is a
director of the Company at such time. The number of restricted stock units that
the Lead Independent Director and each of the Outside Directors receive will be
determined on an annual basis by the Compensation Committee. Each of the
restricted stock units referred to above shall be subject to a two-year vesting
period; provided that at the time any non-employee director ceases to be a
director of the Company (other than due to such director's resignation), such
non-employee director's restricted stock units shall become fully vested at such
time. The Company reimburses directors for their travel and related expenses in
connection with attending meetings of the Board of Directors and Board-related
activities.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee are Messrs. Gerson,
Sias and Lazar. No member of the Compensation Committee has a relationship that
would constitute an interlocking relationship with the Company's executive
officers or other directors.
COMPENSATION COMMITTEE REPORT
The Company strives to apply a uniform philosophy to compensation for
all of its employees, including the members of its senior management. This
philosophy is based on the premise that the achievements of the Company result
from the combined and coordinated efforts of all employees working toward common
goals and objectives.
The goals of the Company's compensation program are to align
remuneration with business objectives and performance, and to enable the Company
to retain and competitively reward executive officers who contribute to the
long-term success of the Company. The Company's compensation program for
executive officers is based on the following principles, which are applicable to
compensation decisions for all employees of the Company. The Company attempts to
pay its executive officers competitively in order that it will be able to retain
the most capable people in the industry. Information with respect to levels of
compensation being paid by comparable companies is obtained from various
publications and surveys.
During the last fiscal year, the compensation of executive officers
consisted principally of salary and bonus. The Company may grant stock options
and/or other equity compensation to certain of its executive officers, in the
future. The cash portion of such program includes base salary and annual
bonuses, which are awarded in the discretion of the Board of Directors. Salary
levels have been set based upon historical levels, amounts being paid by
comparable companies and performance. The Company's equity-based compensation
consists of the award of discretionary stock options, which are designed to
provide additional incentives to executive officers to maximize shareholder
value. Through the use of extended vesting periods, the option program is
designed to encourage executive officers to remain in the employ of the Company.
In addition, because the exercise prices of such options are typically set at or
above the fair market value of the stock on the date the option is granted,
executive officers can only benefit from such options if the trading price of
the Company's shares of Common Stock increases, thus aligning their financial
interests directly with those of the shareholders.
In consideration for Dr. Elazar Rabbani's services as Chairman of the
Board of Directors and Chief Executive Officer of the Company for the fiscal
year ended July 31, 2006, the Company paid Dr. Rabbani an annual salary of
$458,315 and a bonus of $237,000. Such compensation was determined pursuant to
the Company's employment agreement with Dr. Rabbani and was based on the Board's
view of Dr. Rabbani's successful performance as Chief Executive Officer. See
"Employment Agreements."
16
Submitted by the members of the Compensation Committee
Irwin W. Gerson
John J. Delucca
Melvin F. Lazar
401(K) PLAN
The Company has adopted a salary reduction profit sharing plan which is
generally available to employees of the Company and any subsidiary of the
Company. Officers and directors who are employees of the Company participate in
the Plan on the same basis as other employees.
The Plan permits voluntary contributions by employees in varying amounts
up to 17% of annual earnings (not to exceed the maximum allowable in any
calendar year which is $15,000 for 2006, exclusive of allowed catch-up
contributions, as defined). Employee contributions are made by salary reduction
under Section 401(k) of the Internal Revenue Code of 1986, as amended (the
"Code"), and are excluded from taxable income of the employee. The Company may
also contribute additional discretionary amounts as it may determine.
All employees of the Company who are twenty-one (21) years or older and
have been employed by the Company for a minimum of three (3) months are eligible
to participate in the Plan. Employees, who have more than 500 hours of service
per service year, but less than 1,000 hours per service year, are still
considered members of the Plan, but contribution allocations and vesting will
not increase during such time.
A participant's account is distributed to him upon retirement or
termination of employment for any reason and in certain other limited
situations. The amount of the Plan allocation attributable to the Company's
discretionary contributions will vest in accordance with a schedule. For the
fiscal year ended July 31, 2006, the Company has made contributions of 50% of
the employees' contribution up to 10% of the employees' compensation in Common
Stock of the Company.
1999 STOCK OPTION PLAN
Under the Company's 1999 Stock Option Plan (the "1999 Plan"), the
Company's Board of Directors may grant incentive stock options ("ISOs") and
non-qualified stock options ("NQSOs") to selected key employees, directors,
executive officers, consultants and advisors of the Company to purchase the
Company's Common Stock. ISOs and NQSOs granted under the 1999 Plan generally
vest no earlier than six (6) months after the date of grant and can be exercised
no later than the tenth (10th) anniversary date of the date of grant. When the
optionee, however, holds more than 10% of all combined voting stock of the
Company, ISOs granted under the 1999 Plan cannot be exercised later than the
fifth (5th) anniversary date of the date of grant. The exercise prices of
options granted under the 1999 Plan are set by the Board of Directors of the
Company, or designated committee. In any event, however, ISOs granted under the
1999 Plan may not be exercisable at a price lower than the fair market value of
the Company's Common Stock on the date such options are granted, and, when the
optionee holds more than 10% of all combined voting stock of the Company, the
exercise prices of such options may not be less than 110% of the fair market
value of the Common Stock of the Company on the date of grant. ISOs granted
under the 1999 Plan to any optionee which become exercisable for the first time
in any one calendar year for shares of Common Stock of the Company with an
aggregate fair market value, as of the respective date or dates of grant, of
more than $100,000 shall be treated as NQSOs. The awards under the 1999 Plan are
subject to restrictions on transferability, are forfeitable in certain
circumstances and are exercisable at such time or times and during such period
as shall be set forth in the option agreement evidencing such option. During the
fiscal year ended July 31, 2006, no options to purchase shares of the Company's
Common Stock were awarded under the 1999 Plan. As of the Record Date, of the
2,187,224 shares of the Company's Common Stock reserved for issuance upon the
exercise of options authorized for grant under the 1999 Plan, 62,308 shares of
the Company's Common Stock remain available for issuance upon the exercise of
options authorized for grant under the 1999 Plan.
17
AMENDED AND RESTATED 2005 EQUITY COMPENSATION INCENTIVE PLAN
Under the Company's 2005 Amended and Restated Equity Compensation
Incentive Plan (the "2005 Plan"), the Company's Board of Directors may grant
incentive stock options ("ISOs"), non-qualified stock options ("NQSOs"), awards
of restricted stock, restricted stock units and dividend equivalents to the
Company's directors, officers, employees and other persons that provide
consulting or advisory services to us and our subsidiaries. Under the 2005 Plan,
the maximum number of shares of common stock that may be subject to stock
options, restricted stock awards and restricted stock unit awards is 1,000,000.
No one participant may receive awards representing more than 200,000 shares of
common stock in any one calendar year.
ISOs and NQSOs granted under the 2005 Plan generally vest no earlier
than six months after the date of grant and can be exercised no later than the
tenth (10th) anniversary date of the date of grant. When the optionee, however,
holds more than 10% of all combined VOTING stock of the Company, ISOs granted
under the 2005 Plan cannot be exercised later than the fifth (5th) anniversary
date of the date of grant. The exercise prices of options granted under the 2005
Plan are set by the Board of Directors of the Company, or designated committee,
however, any options granted under the 2005 Plan may not be exercisable at a
price lower than the fair market value of the Company's Common Stock on the date
such options are granted, and when the optionee holds more than 10% of all
combined voting stock of the Company, the exercise prices of such options may
not be less than 110% of the fair market value of the Common Stock of the
Company on the date of grant. ISOs granted under the 2005 Plan to any optionee
that become exercisable for the first time in any one calendar year for shares
of Common Stock of the Company with an aggregate fair market value, as of the
respective date or dates of grant, of more than $100,000 shall be treated as
NQSOs. The options under the 2005 Plan are subject to restrictions on
transferability, are forfeitable in certain circumstances and are exercisable at
such time or times and during such period as shall be set forth in the option
agreement evidencing such option. Options intended to qualify as incentive stock
options may be granted only to persons who are our employees or are employees of
our subsidiaries which are treated as corporations for federal income tax
purposes. No participant may be granted incentive stock options that are
exercisable for the first time in any calendar year for common stock having a
total fair market value (determined as of the option grant) in excess of
$100,000. The 2005 Plan prohibits repricing of an outstanding option, and
therefore, the administrator may not, without the consent of the shareholders,
lower the exercise price of an outstanding option. Unless provided otherwise in
a participant's stock option agreement and subject to the maximum exercise
period for the option, an option generally will cease to be exercisable upon the
earlier of three months following the participant's termination of service with
us or the expiration date under the terms of the participant's stock option
agreement. The right to exercise an option will expire immediately upon
termination if the termination is for "cause" or a voluntary termination any
time after an event that would be grounds for termination for cause. Upon death
or disability, the option exercise period is extended to the earlier of one year
from the participant's termination of service or the expiration date under the
terms of the participant's stock option agreement.
Awards of restricted stock are rights to acquire or purchase shares of
the Company's Common Stock. A restricted stock award may be subject to payment
by the participant of a purchase price for shares of common stock subject to the
award, and may be subject to vesting requirements or transfer restrictions or
both, if so provided by the administrator. Awards of restricted stock units are
dollar value equivalents of shares that vest in accordance with the terms and
conditions established by the administrator in its sole discretion. Those
requirements may include, for example, a requirement that the participant
complete a specified period of service or that certain performance objectives be
achieved. The typical award of restricted stock or restricted stock units will
vest ratably over a two to four year period (25% to 50% per year). Upon
satisfying the applicable vesting criteria, a participant is entitled to the
payout in accordance with, and at the times specified in, the award agreement.
The administrator may pay earned restricted stock units in cash, shares or a
combination of both.
The 2005 Plan also contains specific performance criteria that the
Compensation Committee may use to establish performance objectives, the
achievement of which may be conditions for certain awards to vest or be issued.
By subjecting the vesting to these performance objectives, the Company is able
to claim income tax deductions for those awards without regard to the deduction
limitations under Section 162(m) of the Code.
18
As of the Record Date, 355,500 shares of the Company's Common Stock have
been reserved for issuance upon the exercise of options granted under the 2005
Plan, inclusive of stock options to purchase 100,000 shares of Common Stock
issued under the 2005 Plan to a consultant during the fiscal year ended July 31,
2006. In addition, as of the Record Date, the Board of Directors has awarded
under the 2005 Plan (a) 10,000 restricted stock units to the Lead Independent
Director, (b) 5,000 restricted stock units to each of the other Outside
Directors, and (c) 55,050 shares of restricted stock to various employees of the
Company.
INSURANCE FOR INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company has in effect, with Darwin Professional Underwriters, Inc.
and XL Specialty Insurance Company under a policy effective February 22, 2006,
and expiring on February 21, 2007, insurance covering all of its directors and
officers and certain other employees of the Company against certain liabilities
and reimbursing the Company for obligations which it incurs as a result of its
indemnification of such directors, officers and employees. Such insurance has
been obtained in accordance with the provisions of Section 726 of the Business
Corporation Law of the State of New York. The annual premium is $360,000.
This report has been provided by the Board of Directors of the Company.
Elazar Rabbani, Ph.D.
Shahram K. Rabbani
Barry W. Weiner
John J. Delucca
Irwin C. Gerson
Melvin F. Lazar, CPA
John B. Sias
PERFORMANCE GRAPH
The graph below compares the five-year cumulative shareholder total
return based upon an initial $100 investment (assuming the reinvestment of
dividends) for Enzo Biochem, Inc. shares of Common Stock with the comparable
return for the New York Stock Exchange Market Value Index and two peer issuer
indices selected on an industry basis. The two peer group indices include: (i)
60 biotechnology companies engaged in the research and development of diagnostic
substances and (ii) 10 companies engaged in the medical laboratories business.
All of the indices include only companies whose common stock has been registered
under Section 12 of the Securities Exchange Act of 1934 for at least the time
frame set forth in the graph.
The total shareholder returns depicted in the graph are not necessarily
indicative of future performance. The Performance Graph and related disclosure
shall not be deemed to be incorporated by reference in any filing by the Company
under the Securities Act of 1933 or the Securities Exchange Act of 1934, except
to the extent that the Company specifically incorporates the graph and such
disclosure by reference.
19
[GRAPHIC OMITTED]
COMPARISON OF CUMULATIVE TOTAL RETURN OF ONE OR MORE
COMPANIES, PEER GROUPS, INDUSTRY INDEXES AND/OR BROAD MARKETS
2001 2002 2003 2004 2005 2006
------ ----- ------ ------ ------ ------
ENZO BIOCHEM, INC. 100.00 55.21 86.51 56.92 73.56 56.51
MEDICAL LABORATORIES 100.00 70.18 74.61 82.01 104.97 130.89
NYSE MARKET INDEX 100.00 80.95 88.81 101.83 120.44 130.75
BIOTECHNOLOGY PEERS 100.00 83.94 100.53 112.03 127.31 138.30
20
PROPOSAL 2
APPROVAL OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors has appointed Ernst & Young LLP, as its
independent registered public accounting firm, to audit the accounts of the
Company for the fiscal year ending July 31, 2006. The Board of Directors
approved the reappointment of Ernst & Young LLP (which has been engaged as the
Company's independent registered public accounting firm since 1983). Ernst &
Young LLP has advised the Company that neither the firm nor any of its members
or associates has any direct financial interest in the Company or any of its
affiliates other than as auditors. Although the selection and appointment of
independent auditors is not required to be submitted to a vote of shareholders,
the Directors deem it desirable to obtain the shareholders' ratification and
approval of this appointment.
The following table sets forth the aggregate fees billed by Ernst &
Young LLP for the years ended July 31, 2006 and 2005 for audit and non-audit
services (as well as all "out-of-pocket" costs incurred in connection with these
services) and are categorized as Audit Fees, Audit-Related Fees, Tax Fees and
All Other Fees. The nature of the services provided in each such category is
described following the table.
----------------------------------- -------------- --------------
2006 2005
---------- ------
----------------------------------- -------------- --------------
AUDIT FEES $702,135 $667,500
----------------------------------- -------------- --------------
AUDIT-RELATED FEES 0 0
----------------------------------- -------------- --------------
TAX FEES 0 0
----------------------------------- -------------- --------------
ALL OTHER FEES 0 0
----------------------------------- -------------- --------------
----------------------------------- -------------- --------------
TOTAL FEES $702,135 $667,500
-------- --------
----------------------------------- -------------- --------------
AUDIT FEES - Consists of fees for professional services necessary to
perform an audit or review in accordance with the Public Company Oversight
Board, including services rendered for the audit of our annual financial
statements (including services incurred with rendering an opinion under Section
404 of the Sarbanes-Oxley Act of 2002) and quarterly reviews of the Company's
interim financial statements. Audit fees also include fees for services
performed by Ernst & Young LLP that are closely related to the audit and in many
cases could only be provided by the Company's independent auditors. Such
services include the issuance of consents related to the Company's registration
statements and capital raising activities, assistance with and review of other
documents filed with the Commission and accounting advice on completed
transactions.
AUDIT RELATED FEES -- There were no professional services rendered by
Ernst & Young LLP that would be classified as audit related fees during the
years ended July 31, 2006 and 2005.
TAX FEES - There were no professional services rendered by Ernst & Young
LLP that would be classified as tax fees during the years ended July 31, 2006
and 2005.
ALL OTHER FEES - There were no professional services rendered by Ernst &
Young LLP that would be classified as other fees during the years ended July 31,
2006 and 2005.
Pre-Approval Policies and Procedures - The Audit Committee has adopted a
policy that requires advance approval of all audit, audit-related, tax services,
and other services performed by the independent auditor. The policy provides for
pre-approval by the Audit Committee of specifically defined audit and non-audit
services. Unless the specific service has been previously pre-approved with
respect to that year, the Audit Committee must approve the permitted service
before the independent auditor is engaged to perform it. The Audit Committee has
delegated to the Chair of the Audit Committee authority to approve permitted
services provided that the Chair reports any decisions to the Committee at its
next scheduled meeting.
In making its recommendations to ratify the appointment of Ernst & Young
LLP as the Company's independent accountants for the fiscal year ending July 31,
2007, the Audit Committee has considered whether the services provided by Ernst
& Young LLP are compatible with maintaining the independence of Ernst & Young
LLP.
21
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting with the opportunity to make a statement if they desire to do so
and are expected to be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2 RELATING TO
THE RATIFICATION OF THE APPOINTMENT OF THE AUDITORS. PROXIES SOLICITED BY THE
BOARD OF DIRECTORS WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY IN THEIR PROXIES
A CONTRARY CHOICE.
22
GENERAL
The Management of the Company does not know of any matters other than
those stated in this Proxy Statement which are to be presented for action at the
meeting. If any other matters should properly come before the meeting, it is
intended that proxies in the accompanying form will be voted on any such matters
in accordance with the judgment of the persons voting such proxies.
Discretionary authority to vote on such matters is conferred by such proxies
upon the persons voting them.
The Company will bear the cost of preparing, assembling and mailing the
Proxy, Proxy Statement and other material which may be sent to the shareholders
in connection with this solicitation. In addition to the solicitation of proxies
by use of the mails, officers and regular employees may solicit the return of
proxies. The Company may reimburse persons holding stock in their names or in
the names of other nominees for their expense in sending proxies and proxy
material to principals. In addition, American Stock Transfer & Trust Company, 59
Maiden Lane, New York, New York 10038, the Company's transfer agent, has been
engaged to solicit proxies on behalf of the Company for a fee, excluding
expenses, of approximately $5,000. Proxies may be solicited by mail, personal
interview, telephone and telegraph.
ENZO WEBSITE
In addition to the information about the Company and its subsidiaries
contained in this proxy statement, extensive information about the Company can
be found on our website located at www.enzo.com, including information about our
management team, products and services and our corporate governance practices.
The corporate governance information on our website includes the
Company's Corporate Governance Guidelines, the Code of Conduct and the charters
of each of the committees of the Board of Directors. These documents can be
accessed at www.enzo.com. Printed versions of our Corporate Governance
Guidelines, our Code of Conduct and the charters for our Board committees can be
obtained, free of charge, by writing to the Company at: 527 Madison Avenue, New
York, New York 10022, Attn: Corporate Secretary.
This information about Enzo's website and its content, together with
other references to the website made in this proxy statement, is for information
only and the content of the Company's website is not deemed to be incorporated
by reference in this proxy statement or otherwise filed with the Securities and
Exchange Commission.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON BEING SOLICITED
BY THIS PROXY STATEMENT, UPON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF
THE ANNUAL REPORT OF THE COMPANY ON FORM 10-K FOR THE YEAR ENDED JULY 31, 2006
(AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION) INCLUDING THE FINANCIAL
STATEMENTS AND THE SCHEDULES THERETO. ALL SUCH REQUESTS SHOULD BE DIRECTED TO
SHAHRAM K. RABBANI, SECRETARY, ENZO BIOCHEM, INC., 527 MADISON AVENUE, NEW YORK,
NEW YORK 10022.
SHAREHOLDER PROPOSALS TO BE PRESENTED
AT THE NEXT ANNUAL MEETING
Shareholder Proposals. Proposals of shareholders intended to be
presented at the Company's 2007 Annual Shareholder Meeting (i) must be received
by the Company at its offices no later than August 6, 2007 (120 days preceding
the one year anniversary of the Mailing Date), (ii) may not exceed 500 words and
(iii) must otherwise satisfy the conditions established by the Securities and
Exchange Commission for shareholder proposals to be included in the Company's
Proxy Statement and form of proxy for that meeting.
Discretionary Proposals. Shareholders intending to commence their own
proxy solicitations and present proposals from the floor of the 2007 Annual
Shareholder Meeting in compliance with Rule 14a-4 promulgated under the Exchange
Act of 1934, as amended, must notify the Company of such intentions before
October 22, 2007 (the first business day following 45 days preceding the one
year anniversary of the Mailing Date). After such date, the Company's proxy in
connection with the 2006 Annual Shareholder Meeting may confer discretionary
authority on the Board to vote.
23
By Order of the Board of Directors
Shahram K. Rabbani, SECRETARY
Dated: December 4, 2006
24
PROXY
ENZO BIOCHEM, INC.
527 MADISON AVENUE
NEW YORK, NEW YORK 10022
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Elazar Rabbani, Ph.D. and Melvin F.
Lazar as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all the shares of
the Common Stock of Enzo Biochem, Inc. held of record by the undersigned on
November 27, 2006, at the Annual Meeting of Shareholders to be held on January
23, 2007 or any adjournment thereof.
PROPOSAL 1. Election of Irwin C. Gerson and Shahram K. Rabbani as
Class I Directors.
|_| FOR all nominees (except |_| WITHHOLDING AUTHORITY
as marked to the (as to all nominees)
contrary below)
(INSTRUCTION: To withhold authority to vote for any individual
nominee, print that nominee's name on the line provided below.)
Withheld for: _____________________________________________
PROPOSAL 2. To ratify the appointment of Ernst & Young LLP as the
Company's independent registered public accounting firm for
the Company's fiscal year ending July 31, 2007.
|_| FOR |_| AGAINST |_| ABSTAIN
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting. This proxy when
properly executed will be voted in the manner directed herein by the undersigned
shareholder. If no direction is made, this proxy will be voted FOR Proposals 1
and 2.
25
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW. WHEN SHARES OF COMMON STOCK
ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN.
Dated:___________________________ , 2006 / 2007 (circle one)
Signature:______________________________
Signature if held jointly: ______________________________
(When signing as attorney, as executor, as administrator, trustee
or guardian, please give full title as such. If a corporation,
please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership
name by authorized person.)
26