SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
THE MEDICINES COMPANY
(Name of Registrant as Specified in Its Charter)
(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)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(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):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] 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.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
[THE MEDICINES COMPANY LOGO]
May 5, 2003
To Our Stockholders:
We are pleased to invite you to our 2003 annual
meeting of stockholders. The meeting will take place
on Thursday, May 29, 2003 at 10:00 a.m., local time,
at our principal executive offices, located at 8
Campus Drive, Parsippany, New Jersey 07054. Annual
meetings play an important role in maintaining
communications and understanding among our
management, board of directors and stockholders, and
we hope you will join us.
On the pages following this letter you will find the
notice of our 2003 annual meeting of stockholders,
which lists the matters to be considered at the
meeting, and the proxy statement, which describes the
matters listed in the notice. We have also enclosed a
proxy card and our annual report to stockholders for
the year ended December 31, 2002, as well as our
annual report on Form 10-K filed with the Securities
and Exchange Commission, which contains audited
consolidated financial statements and other
information of interest to our stockholders.
The ability to have your vote counted at the meeting
is an important stockholder right. Regardless of the
number of shares you hold, and whether or not you
plan to attend the meeting, we hope that you will
cast your vote. If you are a stockholder of record,
you may vote by mailing the enclosed proxy card in
the envelope provided. You will find voting
instructions in the proxy statement and on the
enclosed proxy card. If your shares are held in
"street name" -- that is, held for your account by a
broker or other nominee -- you will receive
instructions from the holder of record that you must
follow for your shares to be voted.
Thank you for your ongoing support and continued
interest in The Medicines Company.
Sincerely,
/s/ Clive A. Meanwell /s/ David M. Stack
CLIVE A. MEANWELL DAVID M. STACK
Executive Chairman President and Chief Executive
Officer
THE MEDICINES COMPANY
8 CAMPUS DRIVE
PARSIPPANY, NEW JERSEY 07054
NOTICE OF 2003 ANNUAL MEETING OF STOCKHOLDERS
TIME AND DATE................. 10:00 a.m., local time, on Thursday, May 29,
2003
PLACE......................... 8 Campus Drive, Parsippany, New Jersey 07054
ITEMS OF BUSINESS............. At the meeting, we will ask you and our other
stockholders to:
(1) elect four class 3 directors for terms to
expire at the 2006 annual meeting of
stockholders;
(2) ratify the appointment of Ernst & Young LLP
as our independent auditors for the year
ending December 31, 2003; and
(3) transact any other business as may properly
come before the meeting or any postponement
or adjournment of the meeting.
The board of directors has no knowledge of any
other business to be transacted at the annual
meeting.
RECORD DATE................... You may vote if you were a stockholder of
record at the close of business on April 15,
2003.
PROXY VOTING.................. It is important that your shares be represented
and voted at the meeting. Whether or not you
plan to attend the meeting, please mark, sign,
date and promptly mail your proxy card in the
enclosed postage-paid envelope. You make revoke
your proxy at any time before its exercise at
the meeting.
By order of the Board of Directors,
/s/ Steven H. Koehler
STEVEN H. KOEHLER
Secretary
May 5, 2003
Parsippany, New Jersey
TABLE OF CONTENTS
INFORMATION ABOUT THE ANNUAL MEETING........................ 1
Who may vote?............................................. 1
How may I vote?........................................... 1
May I vote if my shares are held in "street name?"........ 2
How may I change my vote?................................. 2
What constitutes a quorum?................................ 2
What vote is required to approve each matter?............. 2
How will votes be counted?................................ 3
How does the board of directors recommend that I vote?.... 3
Will any other business be conducted at the annual
meeting?............................................... 3
Who pays for the solicitation of proxies?................. 3
How and when may I submit a proposal for the 2004 annual
meeting?............................................... 3
DISCUSSION OF PROPOSALS..................................... 4
Proposal One: Election of Class 3 Directors............... 4
Proposal Two: Ratification of Appointment of Independent
Auditors............................................... 7
INFORMATION ABOUT CORPORATE GOVERNANCE...................... 8
Corporate Governance...................................... 8
Board and Committee Meetings.............................. 8
Compensation of Directors................................. 9
Report of the Audit Committee of the Board of Directors... 10
Certain Relationships and Related-Party Transactions...... 11
INFORMATION ABOUT OUR EXECUTIVE OFFICERS.................... 11
Our Current Executive Officers............................ 11
Compensation of Our Executive Officers.................... 12
Executive Employment Agreements........................... 15
Report of the Compensation Committee on Executive
Compensation........................................... 16
Compensation Committee Interlocks and Insider
Participation.......................................... 18
OTHER INFORMATION........................................... 18
Principal Stockholders.................................... 18
Comparative Stock Performance............................. 21
Section 16(a) Beneficial Ownership Reporting Compliance... 21
Householding of Annual Meeting Materials.................. 21
i
THE MEDICINES COMPANY
8 CAMPUS DRIVE
PARSIPPANY, NEW JERSEY 07054
PROXY STATEMENT
FOR OUR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 29, 2003
The Medicines Company, a Delaware corporation (often referred to as "we" or
"us" in this document), is sending you this proxy statement and the enclosed
proxy card because our board of directors is soliciting your proxy to vote at
our 2003 annual meeting of stockholders. The annual meeting will be held on
Thursday, May 29, 2003, at 10 a.m., local time, at our principal executive
offices at 8 Campus Drive, Parsippany, New Jersey 07054. If the annual meeting
is adjourned for any reason, then the proxies may be used at any adjournments of
the annual meeting.
This proxy statement summarizes information about the proposals to be
considered at the meeting and other information you may find useful in
determining how to vote. The proxy card is the means by which you actually
authorize another person to vote your shares in accordance with your
instructions.
We are mailing this proxy statement and the enclosed proxy card to
stockholders on or about May 5, 2003. In this mailing, we are also including
copies of our annual report to stockholders for the year ended December 31,
2002.
OUR ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2002, AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND INCLUDING FINANCIAL
STATEMENTS, IS INCLUDED IN THIS MAILING AND IS ALSO AVAILABLE FREE OF CHARGE ON
OUR WEBSITE AT WWW.THEMEDICINESCOMPANY.COM OR THROUGH THE SEC'S ELECTRONIC DATA
SYSTEM AT WWW.SEC.GOV. TO REQUEST AN ADDITIONAL PRINTED COPY OF OUR FORM 10-K,
WHICH WE WILL PROVIDE TO YOU FREE OF CHARGE, EITHER: WRITE TO INVESTORS
RELATIONS, THE MEDICINES COMPANY, 8 CAMPUS DRIVE, PARSIPPANY, NEW JERSEY 07054,
OR EMAIL INVESTOR RELATIONS AT INVESTOR.RELATIONS@THEMEDCO.COM.
INFORMATION ABOUT THE ANNUAL MEETING
WHO MAY VOTE?
Holders of record of our common stock at the close of business on April 15,
2003 are entitled to one vote per share on each matter properly brought before
the meeting. The proxy card states the number of shares you are entitled to
vote.
A list of stockholders entitled to vote will be available at the meeting.
In addition, you may contact our Secretary, Steven H. Koehler, at our address as
set forth above, to make arrangements to review a copy of the stockholder list
at our offices, for any purpose germane to the meeting, between the hours of
8:30 A.M. and 5:00 P.M., local time, on any business day from May 19, 2003 up to
the time of the meeting.
HOW MAY I VOTE?
You may vote your shares at the meeting in person or by proxy:
- to vote IN PERSON, you must attend the meeting, and then complete and
submit the ballot provided at the meeting.
- to vote BY PROXY, you must mark, sign and date the enclosed proxy card
and then mail the proxy card in the enclosed postage-paid envelope. Your
proxy will be valid only if you complete and return the proxy card before
the meeting. By completing and returning the proxy card, you will direct
the designated persons to vote your shares at the meeting in the manner
you specify in the proxy card. If you complete the proxy card but don't
provide voting instructions, then the designated persons will vote your
shares FOR the election of the nominated directors and FOR ratification
of the appointment of Ernst & Young LLP as our independent auditors for
2003.
MAY I VOTE IF MY SHARES ARE HELD IN "STREET NAME?"
If the shares you own are held in "street name" by a bank or brokerage
firm, your bank or brokerage firm, as the record holder of your shares, is
required to vote your shares according to your instructions. In order to vote
your shares, you will need to follow the directions your bank or brokerage firm
provides you. Many banks and brokerage firms also offer the option of voting
over the Internet or by telephone, instructions for which would be provided by
your bank or brokerage firm on your vote instruction form.
Under the rules of The NASDAQ Stock Market, if you do not give instructions
to your bank or brokerage firm, it will still be able to vote your shares with
respect to certain "discretionary" items, but will not be allowed to vote your
shares with respect to certain "non-discretionary" items. In the case of non-
discretionary items, the shares will be treated as "broker non-votes." "Broker
non-votes" are shares that are held in "street name" by a bank or brokerage firm
that indicates on its proxy that it does not have discretionary authority to
vote on a particular matter.
If you wish to come to the meeting to personally vote your shares held in
street name, you will need to obtain a proxy card from the holder of record
(i.e., your brokerage firm or bank).
HOW MAY I CHANGE MY VOTE?
Even if you complete and return a proxy card, you may revoke it at any time
before it is exercised by taking one of the following actions:
- send written notice to Steven H. Koehler, our Secretary, at our address
above;
- send us another signed proxy with a later date; or
- attend the meeting, notify our Secretary that you are present, and then
vote by ballot.
WHAT CONSTITUTES A QUORUM?
In order for business to be conducted at the meeting, a quorum must be
present. A quorum consists of the holders of a majority of the shares of common
stock issued, outstanding and entitled to vote at the meeting, that is, at least
23,352,386 shares.
Shares of common stock represented in person or by proxy (including "broker
non-votes" and shares that abstain or provide no voting instructions with
respect to one or more of the matters to be voted upon) will be counted for the
purpose of determining whether a quorum exists.
If a quorum is not present, the meeting will be adjourned until a quorum is
obtained.
WHAT VOTE IS REQUIRED TO APPROVE EACH MATTER?
PROPOSAL ONE -- ELECTION OF DIRECTORS
Directors will be elected by a plurality of the shares of common stock
voting at the meeting. In other words, the four nominees for director receiving
the highest number of votes FOR election will be elected as directors,
regardless of whether that number represents a majority of the votes cast.
You may vote FOR all of the nominees, WITHHOLD your vote from all of the
nominees or WITHHOLD your vote from any one or more of the nominees.
PROPOSAL TWO -- RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The affirmative vote of a majority of the shares of common stock voting on
the matter is needed to ratify the appointment of Ernst & Young LLP as our
independent auditors.
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HOW WILL VOTES BE COUNTED?
Each share of common stock will be counted as one vote. Shares will not be
voted in favor of a matter, and will not be counted as voting on a matter, (1)
if the holder of the shares either withholds authority in the proxy to vote for
a particular director nominee or nominees, or abstains from voting on a
particular matter, or (2) if the shares are broker non-votes. As a result,
withheld shares, abstentions and broker non-votes will have no effect on the
outcome of voting at the meeting.
HOW DOES THE BOARD OF DIRECTORS RECOMMEND THAT I VOTE?
Our board of directors recommends that you vote:
- FOR proposal one -- elect our four nominees to the board of directors
- FOR proposal two -- ratify the appointment of Ernst & Young as our
independent auditors
WILL ANY OTHER BUSINESS BE CONDUCTED AT THE ANNUAL MEETING?
Our board of directors does not know of any other business to be conducted
or matters to be voted upon at the meeting. Under our by-laws, the deadline for
stockholders to notify us of any proposals or nominations for director to be
presented for action at the annual meeting has passed. If any other matter
properly comes before the meeting, the persons named in the proxy card that
accompanies this proxy statement will exercise their judgment in deciding how to
vote, or otherwise act, at the meeting with respect to that matter or proposal.
WHO PAYS FOR THE SOLICITATION OF PROXIES?
We will bear the costs of soliciting proxies. In addition to solicitations
by mail, our directors, officers and regular employees, without additional
remuneration, may solicit proxies by telephone, facsimile, email, personal
interviews, and other means. We will also request brokerage houses, custodians,
nominees and fiduciaries to forward copies of the proxy materials to the persons
for whom they hold shares and request instructions for voting the proxies. We
will reimburse the brokerage houses and other persons for their reasonable
out-of-pocket expenses in connection with this distribution.
HOW AND WHEN MAY I SUBMIT A PROPOSAL FOR THE 2004 ANNUAL MEETING?
If you are interested in submitting a proposal for inclusion in the proxy
statement for our 2004 annual meeting, you need to follow the procedures
outlined in Rule 14a-8 of the Securities Exchange Act of 1934. We must receive
your proposal intended for inclusion in the proxy statement at our principal
executive offices, 8 Campus Drive, Parsippany, New Jersey 07054 Attention:
Steven H. Koehler, Secretary, no later than January 6, 2004.
If you wish to present a proposal at the 2004 annual meeting, but do not
wish to have the proposal considered for inclusion in the proxy statement and
proxy card, you must also give written notice to us at the address noted above.
We must receive this notice at least 60 days, but not more than 90 days, prior
to May 29, 2004. However, if the date of the 2004 annual meeting is prior to May
9, 2004 or after July 28, 2004, your notice must be received no earlier than the
90th day prior to the 2004 annual meeting and no later than the close of
business on the later of the 60th day prior to the 2004 annual meeting and the
10th day following the date on which notice of the date of the meeting was
mailed or public disclosure was made, whichever occurs first. If you fail to
provide timely notice of a proposal to be presented at the 2004 annual meeting,
the proxy holders designated by the board of directors will have discretionary
authority to vote on that proposal.
3
DISCUSSION OF PROPOSALS
PROPOSAL ONE: ELECTION OF CLASS 3 DIRECTORS
Our board of directors is divided into three classes and currently consists
of three class 1 directors (William W. Crouse, T. Scott Johnson and David M.
Stack), three class 2 directors (Robert J. Hugin, M. Fazle Husain and Clive A.
Meanwell) and four class 3 directors (Leonard Bell, Armin M. Kessler, Robert G.
Savage and James E. Thomas). The term of each class of directors is three years,
and the terms of the three classes are staggered so that only one class is
elected each year. At each annual meeting of stockholders, directors are elected
to serve for a three-year term to succeed the directors of the same class whose
terms are then expiring. The class 1, class 2 and class 3 directors were elected
to serve until the annual meeting of stockholders to be held in 2004, 2005 and
2003, respectively, and until their respective successors are elected and
qualified.
Messrs. Crouse, Hugin and Savage joined our board of directors in April
2003. On the same date, Stewart J. Hen and Nicholas J. Lowcock resigned as
directors of our company. Messrs. Lowcock and Hen were originally nominated to
serve as directors by Warburg, Pincus Ventures, L.P. pursuant to the terms of a
stockholders' voting agreement that we entered with certain of our stockholders
in connection with the sale of shares of preferred stock prior to our initial
public offering. Warburg, Pincus no longer holds any rights to nominate
directors.
Our board of directors, on the recommendation of our nomination committee,
has nominated Leonard Bell, Armin M. Kessler, Robert G. Savage and James E.
Thomas for election as class 3 directors. The persons named in the enclosed
proxy card will vote to elect each of these nominees as a class 3 director,
unless the proxy is marked otherwise. Each class 3 director will be elected to
hold office until the 2006 annual meeting of stockholders and until his
successor is elected and qualified. Each of the nominees is presently a
director, and each has indicated a willingness to serve as director, if elected.
If a nominee becomes unable or unwilling to serve, however, the proxies may be
voted for substitute nominees selected by our board of directors.
Our board of directors recommends a vote FOR each of the nominees.
DIRECTOR NOMINEES
Set forth below are the names of each nominee for class 3 director, the
year in which each first became a director, their ages as of April 1, 2003,
their positions and offices with us, their principal occupations and business
experience during the past five years and the names of other public companies
for which they serve as a director.
LEONARD BELL
Age: 44
Leonard Bell, M.D. has been a director since May 2000. Since January 1992,
Dr. Bell has served as the Chief Executive Officer, Secretary and Treasurer of
Alexion Pharmaceuticals, Inc., a pharmaceutical company. From January 1992 to
March 2002, Dr. Bell also served as the President of Alexion Pharmaceuticals,
Inc. Since 1993, Dr. Bell has served as an Adjunct Assistant Professor of
Medicine and Pathology at the Yale University School of Medicine. From 1991 to
1992, Dr. Bell was an Assistant Professor of Medicine and Pathology and
co-Director of the Program in Vascular Biology at the Yale University School of
Medicine. From 1990 to 1992, Dr. Bell was an attending physician at the Yale-New
Haven Hospital and an Assistant Professor in the Department of Internal Medicine
at the Yale University School of Medicine. Dr. Bell was the recipient of the
Physician Scientist Award from the National Institutes of Health and
Grant-in-Aid from the American Heart Association. Dr. Bell is the recipient of
various honors and awards from academic and professional organizations and his
work has resulted in more than 45 scientific publications, invited presentations
and patent applications. Dr. Bell is an invited Member of the State of
Connecticut Governor's Council on Economic Competitiveness and Technology and a
director of Connecticut United for Research Excellence, Inc. He also served as a
director of the Biotechnology Research and Development
4
Corporation from 1993 to 1997. Dr. Bell currently also serves as a director of
Alexion Pharmaceuticals, Inc. Dr. Bell received an A.B. from Brown University
and an M.D. from the Yale University School of Medicine.
ARMIN M. KESSLER
Age: 65
Armin M. Kessler has been a director since October 1998. Mr. Kessler joined
us after a 35-year career in the pharmaceutical industry, which included senior
management positions at Sandoz Pharma Ltd., Basel, Switzerland, United States
and Japan (now Novartis Pharma AG) and, most recently, at Hoffmann-La Roche,
Basel where he was Chief Operating Officer and Head of the Pharmaceutical
Division until 1995. Mr. Kessler currently also serves as a director of Spectrum
Pharmaceuticals, Inc. and Gen-Probe Incorporated. Mr. Kessler received degrees
in physics and chemistry from the University of Pretoria, a degree in chemical
engineering from the University of Cape Town, a law degree from Seton Hall and
an honorary doctorate in business administration from the University of
Pretoria.
ROBERT G. SAVAGE
Age: 49
Robert G. Savage, M.B.A. has been a director since April 2003. From March
2002 to April 2003, Mr. Savage was Group Vice President, and President for the
General Therapeutics and Inflammation Business, of Pharmacia Corporation, a
research-based pharmaceutical firm acquired by Pfizer Inc. in April 2003. From
September 1996 to January 2002, Mr. Savage held several senior positions with
Johnson & Johnson, including Worldwide Chairman for the Pharmaceuticals Group
during 2001, Company Group Chairman responsible for the North America
pharmaceuticals business from 2000 to 2001, President, Ortho-McNeil
Pharmaceuticals from 1998 to 2000 and Vice President Sales & Marketing from 1996
to 1998. From 1985 to 1996, Mr. Savage held several positions at Hoffmann-La
Roche, Inc., a healthcare firm. He is a Board member of the New Jersey
Neurological Institute and the New Jersey Society of Infectious Disease. Mr.
Savage received a B.S. in biology from Upsala College and an M.B.A. from Rutgers
University.
JAMES E. THOMAS
Age: 42
James E. Thomas, M.Sc. has been a director since September 1996. Since
March 2001, Mr. Thomas has served as a Managing Partner of Thomas, McNerney &
Partners, LLC, a health care private equity investment fund. From 1989 to June
2000, Mr. Thomas served in various capacities, including from 1994 to 2000, as a
Partner and Managing Director, at E.M. Warburg, Pincus & Co., LLC, a private
equity investment firm. From 1984 to 1989, Mr. Thomas was a Vice President of
Goldman Sachs International, an investment banking firm, in London. Mr. Thomas
currently also serves as a director of Transkaryotic Therapies, Inc. and Wright
Medical Group. Mr. Thomas received a B.Sc. in finance and economics from The
Wharton School of the University of Pennsylvania and an M.Sc. in economics from
the London School of Economics.
OTHER CURRENT DIRECTORS
Set forth below are the names of each of our other current directors, the
year in which each first became a director, their ages as of April 1, 2003,
their positions and offices with us, their principal occupations and business
experience during the past five years and the names of other public companies of
which they serve as a director.
5
Directors Whose Terms Expire in 2004 (Class 1 Directors)
WILLIAM W. CROUSE
Age: 60
William W. Crouse, M.B.A. has been a director since April 2003. Since
January 1994, Mr. Crouse has been a Managing Director of HealthCare Ventures, a
venture capital firm with a focus on biotechnology firms. From 1987 to 1993, Mr.
Crouse served as Worldwide President of Ortho Diagnostic Systems, a subsidiary
of Johnson & Johnson that manufactures diagnostic tests for hospitals, and a
Vice President of Johnson & Johnson International. Before joining Johnson &
Johnson, Mr. Crouse was a Division Director of DuPont Pharmaceuticals Company, a
pharmaceutical firm, where he was responsible for international operations and
worldwide commercial development activities. Before joining Dupont, he served as
President of Revlon Health Care Group's companies in Latin America, Canada, and
Asia/Pacific. Mr. Crouse currently also serves as a director of Dendreon
Corporation, which develops targeted therapies for the treatment of cancer. Mr.
Crouse received a B.S. in finance and economics from Lehigh University and an
M.B.A. from Pace University.
T. SCOTT JOHNSON
Age: 55
T. Scott Johnson, M.D. has been a director since September 1996. In July
1999, Dr. Johnson founded JSB Partners, L.P., an investment bank focusing on
mergers and acquisitions, private financings and corporate alliances within the
health care sector. From September 1991 to July 1999, Dr. Johnson served as a
founder and managing director of MPM Capital, L.P., a venture capital firm. Dr.
Johnson received both a B.S. and an M.D. from the University of Alabama.
DAVID M. STACK
Age: 51
David M. Stack has been our President and Chief Executive Officer and a
director since September 2001. From April 2000 to September 2001, Mr. Stack
served as a Senior Vice President. From January 2000 to September 2001, Mr.
Stack also served as President and General Partner of Stack Pharmaceuticals,
Inc., a commercialization, marketing and strategy consulting firm serving
healthcare companies, and, from January 2000 to December 2001, as a Senior
Advisor to the Chief Executive Officer of Innovex Inc., a contract
pharmaceutical organization. Mr. Stack served as President and General Manager
of Innovex Inc. from May 1995 to December 1999. Mr. Stack currently also serves
as a director of BioImaging Technologies, Inc. Mr. Stack received a B.S. in
biology from Siena College and a B.S. in pharmacy from Albany College of
Pharmacy.
Directors Whose Terms Expire in 2005 (Class 2 Directors)
ROBERT J. HUGIN
Age: 48
Robert J. Hugin, M.B.A. has been a director since April 2003. Since June
1999, Mr. Hugin has been the Senior Vice President and Chief Financial Officer
of Celgene Corporation, a pharmaceutical company focused on cancer and
immunological diseases. From 1985 to April 1999, Mr. Hugin held positions with
J.P. Morgan & Co. Inc., an investment banking firm, serving most recently as a
Managing Director. Mr. Hugin also currently serves as a director of Celgene
Corporation. Mr. Hugin received an A.B. from Princeton University and an M.B.A.
from the University of Virginia.
M. FAZLE HUSAIN
Age: 38
M. Fazle Husain, M.B.A. has been a director since September 1998. Since
1987, Mr. Husain has been employed by Morgan Stanley & Co. Incorporated, an
investment banking firm, and is currently a Managing
6
Director. Mr. Husain is also a Managing Director of Morgan Stanley Venture
Capital III, Inc. Mr. Husain focuses primarily on investments in the health care
industry, including health care services, medical technology and health care
information technology. He currently also serves as a director of Allscripts
Healthcare Solutions, Inc., Healthstream, Inc., Cross Country, Inc. and several
privately held companies. Mr. Husain received an Sc.B. degree in chemical
engineering from Brown University and an M.B.A. from the Harvard Graduate School
of Business Administration.
CLIVE A. MEANWELL
Age: 45
Clive A. Meanwell, M.D., Ph.D. has been a director since the inception of
our company in July 1996 and has served as our Executive Chairman since
September 2001. From 1996 to September 2001, Dr. Meanwell served as our Chief
Executive Officer and President. From 1995 to 1996, Dr. Meanwell was a Partner
and Managing Director at MPM Capital L.P., a venture capital firm. From 1986 to
1995, Dr. Meanwell held various positions at Hoffmann-La Roche, Inc., a
pharmaceutical company, including Senior Vice President from 1992 to 1995, Vice
President from 1991 to 1992 and Director of Product Development from 1986 to
1991. Dr. Meanwell currently serves as a director of Endo Pharmaceuticals Inc.
Dr. Meanwell received an M.D. and a Ph.D. from the University of Birmingham,
United Kingdom.
PROPOSAL TWO: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Our board of directors and our audit committee have appointed the firm of
Ernst & Young LLP as our independent auditors for the year ending December 31,
2003. Ernst & Young LLP has been our independent auditors since our inception in
1996. Although stockholder approval of the appointment of Ernst & Young LLP is
not required by law, we believe that it is advisable to give stockholders an
opportunity to ratify this appointment. If this proposal is not approved at the
meeting, our board of directors and our audit committee will reconsider this
appointment.
We expect representatives of Ernst & Young LLP to be present at the annual
meeting. They will have the opportunity to make a statement if they desire to do
so and will also be available to respond to appropriate questions from
stockholders.
Our board of directors recommends a vote FOR this proposal.
INDEPENDENT AUDITORS FEES AND OTHER MATTERS
Aggregate Fees
The following table sets forth the aggregate fees billed to us for the
fiscal years ended December 31, 2002 and December 31, 2001 by Ernst & Young LLP.
2002 2001
-------- --------
Audit Fees.................................................. $373,000 $402,000
Audit-Related Fees.......................................... -- --
Tax Fees.................................................... 29,000 28,000
All Other Fees.............................................. -- --
Audit Fees
Audit fees consisted of fees for professional services rendered in
connection with the audit of our annual financial statements for 2002 and 2001,
respectively, reviews of financial statements included in our quarterly reports
on Form 10-Q and in our registration statements, and accounting consultations
related to the audited financial statements.
7
Audit-Related Fees
No audit-related services were provided by Ernst & Young LLP in 2002 or
2001.
Tax Fees
Tax fees consisted of fees in connection with tax compliance, tax advice
and tax planning, including preparation of annual corporate tax returns.
All Other Fees
No other services were provided by Ernst & Young LLP in 2002 or 2001.
INFORMATION ABOUT CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
We believe that good corporate governance is important to ensure that we
are managed for the long-term benefit of our stockholders. During the past year,
we have been reviewing our corporate governance policies and practices and
comparing them against those identified as best practices by various authorities
in corporate governance and the practices of other public companies. We have
also been mindful of the provisions of the Sarbanes-Oxley Act of 2002, the new
and proposed rules of the SEC, and the proposed new listing standards of the
NASDAQ National Market. We have implemented new practices and procedures over
the past year in response to these developments, and we expect to continue to
review and, when appropriate, further strengthen our corporate governance
procedures over the course of the next year.
BOARD AND COMMITTEE MEETINGS
The board of directors met ten times during 2002, including regular,
special and telephone meetings. Except for Dr. Bell, each director who served as
a director during 2002 attended at least 75% of the aggregate of: (1) the total
number of board meetings held during 2002 and (2) the total number of meetings
held by all board committees on which he served (during the period in which he
was a member of such committees).
The board of directors has an audit committee, a compensation committee and
a nomination committee.
AUDIT COMMITTEE
Messrs. Hugin, Husain and Kessler, and Dr. Johnson currently serve on the
audit committee. The audit committee assists our board of directors in its
oversight of:
- the integrity of our financial statements;
- the independent auditor's qualifications and independence; and
- the performance of our independent auditors.
The audit committee has direct responsibility for the appointment,
compensation, retention and oversight of the work of our independent auditors,
Ernst & Young LLP. All audit services, and all non-audit services that are
expected to result in billings to us of more than $15,000, must be approved in
advance by the audit committee.
The audit committee met seven times during 2002. The audit committee,
together with our board of directors, has appointed Ernst & Young as our
independent auditors for the year ending December 31, 2003 and recommended that
the appointment be submitted to our stockholders for ratification.
COMPENSATION COMMITTEE
Messrs. Kessler and Thomas currently serve on the compensation committee.
The compensation committee is responsible for establishing compensation policies
and levels with respect to our executive
8
officers, including our chief executive officers, and directors. The
compensation committee also administers our 1998 stock incentive plan, 2000
employee stock purchase plan, 2000 outside director stock option plan and 2001
non-officer, non-director employee stock incentive plan, and grants stock
options to our executive officers. The compensation committee met seven times
and acted by unanimous written consent on two occasions during 2002.
NOMINATION COMMITTEE
Drs. Bell and Johnson, and Messrs. Kessler and Thomas currently serve on
the nomination committee. The nomination committee identifies individuals
qualified to become board members and recommends to the board the persons to be
nominated by the board for election as directors at the annual meeting of
stockholders. The nomination committee was established in December 2002 and does
not currently have procedures for the consideration of director nominees
recommended by stockholders.
COMPENSATION OF DIRECTORS
FEES AND EXPENSES
During 2002, we paid our non-employee directors $2,500 for each
face-to-face meeting of the board of directors that they attended and $500 for
each telephonic meeting in which they participated. Effective January 1, 2003,
each of our non-employee director who attends, either in person or by telephone,
at least 75% of the meetings of the board held during the time such director is
serving will receive an annual payment of $12,500. In addition, each member of
our audit, compensation and nomination committees who attends, either in person
or by telephone, at least 75% of the meetings of the committee on which he
served during the time in which he served, will receive an additional annual
payment of $12,500. We also reimburse all directors for customary and reasonable
expenses incurred in attending board and board committee meetings.
In addition, we grant our non-employee directors stock options under our
2000 outside director stock option plan, as described below, and we may grant
our non-employee directors stock options and other equity awards under our 1998
stock incentive plan. Since January 1, 2002, we have made the following grants:
- In May 2002, we granted each of Drs. Bell and Johnson, and Messrs.
Husain, Kessler and Thomas a non-statutory stock option under our 2000
outside director plan to purchase 7,500 shares of common stock at an
exercise price of $8.51 per share. The options vest in 48 equal monthly
installments commencing one month after the date of grant.
- In May 2002, we granted each of Messrs. Hen and Lowcock, who were then
serving as directors, a non-statutory stock option under our 2000 outside
director plan to purchase 7,500 shares of common stock at an exercise
price of $8.51 per share. Each of the options ceased vesting upon the
resignations of Messrs. Hen and Lowcock from our board of directors in
April 2003, but may be exercised to purchase 1,563 shares until April 22,
2004.
- In April 2003, we granted each of Messrs. Crouse, Hugin and Savage a
non-statutory stock option under our 2000 outside director plan to
purchase 20,000 shares of common stock at an exercise price of $17.19 per
share. The options vest in 48 equal monthly installments commencing one
month after the date of grant.
2000 OUTSIDE DIRECTOR STOCK OPTION PLAN
Our director plan was adopted by our board of directors on May 15, 2000 and
amended on December 10, 2002. Under the director plan, our non-employee
directors are eligible to receive non-statutory options to purchase shares of
our common stock. A total of 250,000 shares of our common stock may be issued
upon the exercise of options granted under the plan, and as of December 31,
2002, options to purchase 145,000 shares of our common stock were outstanding
under the plan.
Under the terms of the director plan, as amended, each non-employee
director will be granted an option to purchase 20,000 shares of common stock on
the date of his initial election to our board of directors.
9
In addition, beginning with the 2003 annual meeting of stockholders, each
non-employee director will receive an option to purchase 12,500 shares of our
common stock on the date of each annual meeting of our stockholders.
All options granted under the director plan vest in 48 equal monthly
installments commencing one month after the date of grant and have an exercise
price per share equal to the closing sale price of our common stock on the
NASDAQ National Market on the date of grant. An optionee may exercise his option
only while he is a director and for one year after he ceases to be a director.
Unexercised options expire ten years after the date of grant. Options granted
under the director plan are not transferable or assignable other than by will or
the laws of descent and distribution and expire upon an acquisition event, which
is defined to mean (1) any merger or consolidation which results in our
stockholders prior to the transaction holding less than a majority of the voting
power of the surviving or acquiring entity immediately after the transaction,
(2) any sale of all or substantially all of our assets or (3) our complete
liquidation.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The audit committee of the board of directors acts under a written charter
first adopted and approved by the board in May 2000. The members of the audit
committee are independent, as defined by the audit committee's charter and the
listing standards of the NASDAQ National Market.
The audit committee reviewed The Medicines Company's audited financial
statements for 2002 and discussed these financial statements with the company's
management. The Medicines Company's management is primarily responsible for the
financial reporting process, including its system of internal controls, and for
the preparation of consolidated financial statements in accordance with
generally accepted accounting principles. The Medicines Company's independent
auditors are responsible for performing an independent audit of, and issuing a
report on, those financial statements. The audit committee is responsible for
monitoring and overseeing these processes. The audit committee's duties and
responsibilities do not include conducting audits or accounting reviews.
As appropriate, the audit committee reviews and evaluates, and discusses
with management, internal accounting, financial and auditing personnel and the
independent auditors, the following:
- the plan for, and the independent auditors' report on, each audit of The
Medicines Company's financial statements;
- The Medicines Company's financial disclosure documents, including all
financial statements and reports filed with the SEC or sent to
stockholders;
- management's selection, application and disclosure of critical accounting
policies;
- changes in The Medicines Company's accounting practices, principles,
controls or methodologies;
- significant developments or changes in accounting rules applicable to The
Medicines Company; and
- the adequacy of The Medicines Company's internal controls and accounting,
financial and auditing personnel.
The audit committee also reviewed and discussed the audited financial
statements and the matters required by Statement on Auditing Standards 61
(Communication with Audit Committees) with Ernst & Young LLP, The Medicines
Company's independent auditors. This statement requires Ernst & Young to discuss
with The Medicines Company's audit committee, among other things, the following:
- methods to account for significant unusual transactions;
- the effect of significant accounting policies in controversial or
emerging areas for which there is a lack of authoritative guidance or
consensus;
10
- the process used by management in formulating particularly sensitive
accounting estimates and the basis for the auditors' conclusions
regarding the reasonableness of those estimates; and
- disagreements with management over the application of accounting
principles, the basis for management's accounting estimates and the
disclosures in the financial statements.
Ernst & Young provided the audit committee with written disclosure and the
letter required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees). Independence Standards Board Standard No. 1
requires auditors annually to disclose in writing all relationships that in the
auditor's professional opinion may reasonably be thought to bear on
independence, confirm their perceived independence and engage in a discussion of
independence. In addition, the audit committee discussed with Ernst & Young
their independence of The Medicines Company. The audit committee also considered
whether The Medicines Company's independent auditors' provision of certain
other, non-audit related services to The Medicines Company is compatible with
maintaining such auditors' independence.
Based on its discussions with management and the independent auditors, and
its review of the representations and information provided by management and the
independent auditors, the audit committee recommended to the board of directors
that the audited financial statements be included in The Medicines Company's
annual report on Form 10-K for the year ended December 31, 2002. The audit
committee also recommended, subject to stockholder ratification, the appointment
of Ernst & Young as The Medicines Company's independent auditors for the year
ending December 31, 2003.
By the Audit Committee of the Board of Directors
M. Fazle Husain
T. Scott Johnson
Armin M. Kessler
CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS
In August 1996, we entered into a strategic alliance with PharmaBio
Development Inc., a wholly owned subsidiary of Quintiles Transnational
Corporation and an affiliate of QFinance, Inc., one of our 5% stockholders.
Under the terms of the strategic alliance agreement, PharmaBio and any of its
affiliates who work on our projects will, at no cost to us, review and evaluate,
jointly with us, development programs we design related to potential or actual
product acquisitions. The purpose of this collaboration is to optimize the
duration, cost, specifications and quality aspects of such programs. PharmaBio
and its affiliates have also agreed to perform other services with respect to
our products, including clinical and non-clinical development services, project
management, project implementation, pharmacoeconomic services, regulatory
affairs and post marketing surveillance services and statistical programming,
data processing and data management services pursuant to work orders agreed to
by us and PharmaBio from time to time. During 2002, we paid PharmaBio $1.1
million for services rendered under this agreement.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
OUR CURRENT EXECUTIVE OFFICERS
Below is information about each of our executive officers other than Clive
A. Meanwell, our executive chairman, and David M. Stack, our chief executive
officer. The information below includes each officer's age as of April 1, 2003,
his position with us, the length of time he has held each position and his
business experience for at least the past five years. Similar information for
Dr. Meanwell and Mr. Stack, who are also directors, is included under the
caption "Proposal One: Election of Class 3 Directors -- Other Current
Directors." Our board of directors elects our officers annually, and officers
serve until they resign or we or the board terminate their position. There are
no family relationships among any of our directors, nominees for director and
executive officers.
11
STEVEN H. KOEHLER
Age: 52
Steven H. Koehler, M.B.A. has been our Vice President and Chief Financial
Officer since April 2002. From March 2002 to April 2002, Mr. Koehler served as
our Vice President, Finance and Business Administration. From July 2001 to March
2002, Mr. Koehler was Vice President, Finance and Chief Financial Officer of
Vion Pharmaceuticals, Inc., a biotechnology company which develops cancer
treatments. From April 1999 to July 2001, Mr. Koehler served as Vice President,
Finance and Administration and as a member of the executive board of Knoll
Pharmaceuticals, Inc., a wholly owned subsidiary of BASF Corporation, the U.S.
subsidiary of a transnational chemical and life sciences company. From June 1997
to April 1999, Mr. Koehler was Vice President, Finance and Controlling for Knoll
AG in Ludwigshafen, Germany, the former global pharmaceutical subsidiary of BASF
AG. From November 1995 to June 1997, he served as Vice President, Value Based
Management for Knoll AG. Mr. Koehler was Vice President, Finance and Treasurer
for Boots Pharmaceuticals, Inc. from 1993 until its acquisition by Knoll in
1995. Mr. Koehler is a Certified Public Accountant. Mr. Koehler received a B.A.
degree from Duke University and an M.B.A. degree from the Kellogg Graduate
School of Management, Northwestern University.
JOHN D. RICHARDS
Age: 46
John D. Richards, D. Phil. joined us in October 1997 and has been a Vice
President since 1999, with a focus on product manufacturing and quality. From
1993 until he joined us in October 1997, Dr. Richards was Director of Process
Development and Manufacturing at Immulogic Pharmaceutical Corporation, a
pharmaceutical company. From 1989 to 1993, Dr. Richards was a Technical Manager
at Zeneca PLC, a pharmaceutical company, where he developed and implemented
processes for the manufacture of peptides as pharmaceutical active
intermediates. In 1986, Dr. Richards helped establish Cambridge Research
Biochemicals, a manufacturer of peptide-based products for pharmaceutical and
academic customers. Dr. Richards received an M.A. and a D.Phil. in organic
chemistry from the University of Oxford, United Kingdom, and has carried out
post-doctoral research work at the Medical Research Councils Laboratory of
Molecular Biology in Cambridge, United Kingdom.
PETER TEUBER
Age: 44
Peter Teuber, Ph.D. has been a Vice President since June 2001 with a focus
on product development. From February 1990 to May 2001, Dr. Teuber held
positions at Roche Pharmaceuticals, Inc., a global pharmaceutical company,
working on product development, strategic marketing and business development. He
led the development and global marketing team working on XELODA(R), an oral
treatment, from the product's first human trials through the initial New Drug
Application filings, two supplemental filings and approval in the United States,
Europe and over 70 other countries. In addition, at Roche Dr. Teuber acted as
the head of project management and served as a member of the global regulatory
management team. Dr. Teuber received a Ph.D., in Pharmacy from the University of
Basel in Switzerland.
COMPENSATION OF OUR EXECUTIVE OFFICERS
SUMMARY COMPENSATION
The following table presents summary information for the years ended
December 31, 2000, 2001 and 2002, for:
- our executive chairman and our chief executive officer;
- our three most highly compensated executive officers who were serving at
the end of the fiscal year; and
- one additional individual, John M. Nystrom, for whom disclosure would
have been required but for the fact that he was not serving as an
executive officer at the end of the fiscal year.
12
These six individuals are referred to collectively as the named executive
officers.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION(1) SECURITIES
----------------------- UNDERLYING ALL OTHER
NAME AND POSITION YEAR SALARY BONUS OPTIONS(#) COMPENSATION($)(2)
----------------- ---- ---------- ---------- ------------ ------------------
Clive A. Meanwell(3)........................................ 2002 $300,000 $180,000 123,000 $ 990
Executive Chairman 2001 $300,000 $ 50,000 15,000 $ 770
2000 $250,000 $ 85,000 424,781 $ 852
David M. Stack(4)........................................... 2002 $265,000 $115,000 204,000 $1,325
President and Chief 2001 $197,917 $ 40,000 215,000 $ 516
Executive Officer 2000 $112,500 $ 45,000 227,500 $ 320
Peter Teuber(5)............................................. 2002 $200,000 $119,986 50,000 $ 420
Vice President
Steven H. Koehler(6)........................................ 2002 $172,689 $ 65,000 250,000 $ 874
Vice President and Chief Financial Officer
John D. Richards............................................ 2002 $150,000 $ 48,000 25,000 $ 450
Vice President 2001 $150,000 $ 30,000 15,000 $ 450
2000 $143,654 $ 42,100 51,591 $ 304
John M. Nystrom(7).......................................... 2002 $198,519 -- -- --
Former Vice President 2001 $185,000 $ 15,000 5,000 $1,651
2000 $165,000 $ 50,000 121,101 $ 580
---------------
(1) Perquisites for the named executive officers did not exceed the lesser of
$50,000 or 10% of total salary and bonus for the respective fiscal years and
have been omitted in accordance with SEC rules.
(2) The dollar amount in the "All Other Compensation" column represents life
insurance premium payments made by us on behalf of the named executive
officer.
(3) Dr. Meanwell served as our President and Chief Executive Officer from 1996
to September 2001. In September 2001, he became our Executive Chairman.
(4) Mr. Stack became our President and Chief Executive Officer in September
2001. Mr. Stack served as a Senior Vice President of our company from April
2000 to September 2001.
(5) Dr. Teuber became a Vice President of our company in June 2001.
(6) Mr. Koehler became a Vice President of our company in March 2002 and our
Chief Financial Officer in April 2002.
(7) Dr. Nystrom served as a Vice President of our company from September 1998 to
July 2002.
OPTION GRANTS IN 2002
The following table summarizes information regarding options granted to
each of the named executive officers during the year ended December 31, 2002.
The exercise price per share of each option was equal to the closing price of
our common stock on the NASDAQ National Market on the date of grant, and unless
otherwise noted, each option becomes exercisable in 48 equal monthly
installments commencing one month after the grant date.
Amounts in the following table represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option term.
The 5% and 10% assumed annual rates of compounded stock price appreciation are
mandated by the rules of the SEC and do not represent an estimate or projection
of our future common stock prices. These amounts represent assumed rates of
appreciation in the value of our common stock from the fair market value on the
date of grant. Actual gains, if any, on stock option exercises
13
are dependent on the future performance of our common stock and overall stock
market conditions. The amounts reflected in the following table may not be
achieved.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS(1)
----------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF AT ASSUMED ANNUAL RATES
SECURITIES PERCENT OF OF STOCK PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED EXERCISE FOR OPTION TERM
OPTIONS TO EMPLOYEES PRICE PER EXPIRATION ---------------------------
NAME GRANTED IN 2002 SHARE DATE(2) 5% 10%
---- ---------- --------------- --------- ---------- ------------ ------------
Clive A. Meanwell...... 123,000 6.3% $15.50 12/10/12 $1,198,988 $3,038,470
David M. Stack......... 100,000 5.1% $10.77 6/26/12 $ 677,320 $1,716,461
104,000 5.3% $15.50 12/10/12 $1,013,778 $2,569,113
Peter Teuber........... 50,000 2.6% $15.50 12/10/12 $ 487,393 $1,235,150
Steven H. Koehler...... 200,000(3) 10.3% $12.82 3/13/12 $1,612,486 $4,086,356
50,000 2.6% $15.50 12/10/12 $ 487,393 $1,235,150
John D. Richards....... 25,000 1.2% $15.50 12/10/12 $ 243,697 $ 617,575
John M. Nystrom........ -- -- -- -- -- --
---------------
(1) The percentage of total options granted to employees in 2002 is calculated
based on options granted to employees under our 1998 stock incentive plan,
as amended, and 2001 non-officer, non-director employee stock incentive
plan.
(2) The options expire on the tenth anniversary of the date of grant.
(3) The option became exercisable with respect to 50,000 shares on March 13,
2003, the first anniversary of the date of grant, and thereafter becomes
exercisable in 36 equal monthly installments.
OPTION EXERCISES IN 2002 AND OPTION VALUES AT DECEMBER 31, 2002
The following table sets forth information regarding options exercised by
each of the named executive officers during the fiscal year ended December 31,
2002 and exercisable and unexercisable stock options held as of December 31,
2002 for each of the named executive officers.
Amounts shown under the column "Value Realized" represent the difference
between the option exercise price and the closing sale price of our common stock
on the date of exercise. Amounts shown under the column "Value of Unexercised in
the Money Options at December 31, 2002" have been calculated based on the
closing sale price of our common stock on the NASDAQ National Market on December
31, 2002 of $16.02 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.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN THE
OPTIONS AT DECEMBER 31, MONEY OPTIONS AT
SHARES 2002 DECEMBER 31, 2002
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
Clive A. Meanwell...... -- -- 320,731 282,930 $3,607,082 $1,517,560
David M. Stack......... 14,000 $187,335 216,489 416,011 $1,346,321 $1,302,071
Peter Teuber........... -- -- 53,229 136,771 $ 132,006 $ 260,144
Steven H. Koehler...... -- -- -- 250,000 -- $ 666,000
John D. Richards....... 15,500 $156,230 29,951 51,615 $ 278,701 $ 185,892
John M. Nystrom........ 95,320 $800,751 -- -- -- --
14
Our 1998 stock incentive plan provides that in the event of a merger or
other acquisition event, our board of directors will provide that all
outstanding options will be assumed, or equivalent options will be substituted,
by the acquiring or succeeding corporation. If the acquiring or succeeding
corporation does not agree to assume, or substitute for, options outstanding
under the 1998 stock incentive plan, then our board of directors will provide
(1) that all unexercised options will become exercisable in full prior to the
acquisition event and will terminate immediately prior to the consummation of
such acquisition event or (2) for a cash payment in exchange for such options.
Our 1998 stock incentive plan also provides that upon the occurrence of a
change in control, as defined in the 1998 stock incentive plan, a participant's
options will become immediately exercisable in full if within one year following
such event, the participant's employment is terminated without cause or is
terminated by the participant due to a change of more than 30 miles in the
participant's principal business location, a material reduction in participant's
employment responsibilities without cause, a material reduction in the
participant's salary or a significant diminution in the participant's
responsibilities without his or her agreement.
EXECUTIVE EMPLOYMENT AGREEMENTS
Dr. Meanwell serves as our Executive Chairman pursuant to the terms of an
employment agreement dated September 5, 1996. This agreement renews
automatically on a yearly basis unless either party provides written notice of
non-renewal at least 90 days prior to the expiration of the then-current term.
Pursuant to the terms of the agreement, Dr. Meanwell's annual compensation is
determined by our board of directors, subject to a minimum base salary specified
in the employment agreement. If Dr. Meanwell terminates his employment for good
reason, as defined in the agreement, or if we terminate his employment other
than for cause, Dr. Meanwell will be entitled to three months salary and the
same health, disability and other benefits as were provided during his
employment for a period ending upon the earlier of (1) three months after the
date of his termination or (2) the date upon which Dr. Meanwell commences
full-time employment with a new employer. Dr. Meanwell has agreed not to compete
with us during the term of his employment and for a period of one year after his
termination, unless such termination is at our election or at the election of
Dr. Meanwell for good reason.
Mr. Stack serves as our Chief Executive Officer and President pursuant to
the terms of an employment agreement dated November 1, 2001. This agreement
renews automatically on a yearly basis unless either party provides written
notice of non-renewal at least 90 days prior to the expiration of the
then-current term. Pursuant to the terms of the agreement, Mr. Stack's annual
compensation, including his eligibility to receive a bonus of up to 50% of his
base salary, is determined by our board of directors, subject to a minimum base
salary specified in the employment agreement. If Mr. Stack terminates his
employment for good reason, as defined in the agreement, or if we terminate his
employment other than for cause, Mr. Stack will be entitled to three months
salary and the same health, disability and other benefits as were provided
during this employment for a period ending upon the earlier of (1) three months
after the date of his termination or (2) the date upon which Mr. Stack commences
full-time employment with a new employer. Mr. Stack has agreed not to compete
with us during the term of his employment and for a period of one year after his
termination, unless such termination is at our election or at the election of
Mr. Stack for good reason.
Dr. Richards serves as one of our Vice Presidents pursuant to the terms of
an employment agreement dated October 16, 1997. This agreement renews
automatically on a yearly basis unless either party provides written notice of
non-renewal at least 90 days prior to the expiration of the then-current term.
Pursuant to the terms of the agreement, Dr. Richards' annual compensation,
including his eligibility to receive a bonus of up to 35% of his base salary, is
determined by our board of directors, subject to a minimum base salary specified
in the employment agreement. If Dr. Richards terminates his employment for good
reason, as defined in the agreement, or if we terminate his employment other
than for cause, Dr. Richards will be entitled to three months salary and the
same health, disability and other benefits as were provided during his
employment for a period ending upon the earlier of (1) three months after the
date of his termination or (2) the date upon which Dr. Richards commences
full-time employment with a new employer. Dr. Richards has agreed not to compete
with us during the term of his employment and for a period of one year after his
termination, unless such termination is at our election or at the election of
Dr. Richards for good cause.
15
Dr. Nystrom served as one of our Vice Presidents until July 2002 pursuant
to the terms of an employment agreement dated September 29, 1998. Pursuant to
the terms of the agreement, Dr. Nystrom's annual compensation, including his
eligibility to receive a bonus of up to 35% of his base salary, was determined
by our board of directors, subject to a minimum base salary specified in the
employment agreement. Dr. Nystrom has agreed not to compete with us for a period
of one year after his separation from us.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The compensation committee of the board of directors, is responsible for
reviewing and establishing compensation policies and practices with respect to
The Medicines Company's executive officers, including the named executive
officers, and setting the compensation for these individuals. The compensation
committee also administers The Medicines Company's stock plans and grants stock
options to The Medicines Company's employees, including executive officers.
COMPENSATION PHILOSOPHY
The compensation committee seeks to achieve three broad goals in connection
with The Medicines Company's executive compensation programs and decisions
regarding individual compensation. First, the compensation committee structures
executive compensation programs in a manner that the committee believes will
enable The Medicines Company to attract, motivate and retain executives who are
capable of leading The Medicines Company in achieving its business objectives.
Second, the compensation committee establishes compensation programs that are
designed to reward executives for the achievement of specified business
objectives of The Medicines Company as a whole and/or the individual executive's
particular business unit. By tying compensation in part to particular goals, the
compensation committee believes that a performance-oriented environment is
created for The Medicines Company's executives. Finally, The Medicines Company's
executive compensation programs are intended to provide executives with an
equity interest in The Medicines Company so as to link a portion of executives'
compensation with the performance of The Medicines Company's common stock.
The compensation programs for The Medicines Company's executives
established by the compensation committee consist of three elements based upon
the goals described above: base salary, annual cash bonus and a stock-based
equity incentive in the form of participation in the 1998 stock incentive plan.
The compensation committee reviews business objectives of The Medicines Company,
assesses overall performance of The Medicines Company with respect to those
business objectives and considers the performance of individual executives
relative to their own specific objectives in the context of The Medicines
Company's performance. Based on the committee's assessment of performance, it
establishes an annual base salary for each executive and, when appropriate,
designs cash bonus and stock-based equity incentives for executives as a way to
reward good performance and to incentivize continued improvement in performance.
In 2002, the compensation committee engaged the services of an employment
compensation consulting firm to provide advice with respect to the compensation
of The Medicines Company's executive officers and other employees. The
consultants analyzed the compensation levels of executive officers of a peer
group of companies for the most recently completed fiscal years, and then
provided and discussed statistical information with the compensation committee.
The compensation committee considered this information in reviewing executive
compensation for 2002 and, in particular, establishing salaries and bonuses
payable for 2003, in order to advance the compensation committee's philosophy of
compensating The Medicines Company's executive officers at competitive levels.
COMPENSATION IN 2002
Base Salary. The minimum base salaries of our executive officers with
employment agreements are established in those employment agreements. Subject to
these minimums, salary levels of these executives are reviewed and normally
adjusted annually. Base salaries of our executive officers without employment
agreements are also reviewed and normally adjusted annually. In establishing
base salaries for executives, the compensation committee considers the
compensation of executive officers that have comparable
16
qualifications, experience and responsibilities at companies in similar
businesses of comparable size and success, including information provided by
consultants engaged by the compensation committee. The compensation committee
also considers the recommendations of the Executive Chairman and Chief Executive
Officer as to the compensation of the other executive officers, the historic
salary levels of the individual and the nature of the individual's
responsibilities, and compares the individual's base salary with those of The
Medicines Company's other executives. To the extent determined to be appropriate
in establishing base salaries of The Medicines Company's executives, the
compensation committee also considers general economic conditions and The
Medicines Company's financial performance.
Dr. Meanwell served as The Medicines Company's President and Chief
Executive Officer from its inception in July 1996 to September 2001. Dr.
Meanwell currently serves as the Executive Chairman and chairman of the board of
directors. Mr. Stack has served as the President and Chief Executive Officer
since September 2001. In 2002, Dr. Meanwell received an annual base salary of
$300,000, and Mr. Stack received an annual base salary of $265,000. The annual
base salaries of Dr. Meanwell and Mr. Stack were based upon analysis of other
comparable public companies' chief executive officer's compensation and
performance, and our significant accomplishments during 2001.
Performance Bonuses. Although cash bonuses are not based on formulas, the
compensation committee generally links them to the achievement of specified
company and/or business unit performance objectives. The amount of the bonus
paid, if any, varies among the executive officers and key managers depending on
their success in achieving individual performance goals and their contribution
to the achievement of corporate performance goals. The compensation committee
annually reviews and assesses corporate goals and individual performance by
executive officers and key managers. For 2002, and for the forseeable future,
U.S. sales of Angiomax was, and will continue to be, the most important
corporate performance criterion. Other corporate performance criteria that are
considered by the compensation committee include achievements with respect to
development milestones, business development objectives, commercialization goals
and other measures of financial performance, including stock price appreciation.
In particular, the compensation committee considered revenue growth in 2002 from
sales of Angiomax, the successful outcome of the REPLACE-2 clinical trial and
efforts relating to the licensing and development of clevidipine. For sales
personnel, achievement of individual performance targets tends to be heavily
weighted in determining bonuses, while for executive officers and other
managers, achievement of corporate objectives tends to be more heavily weighted.
Pursuant to such bonus policy, for 2002, Dr. Meanwell was awarded a cash bonus
of $180,000, Mr. Stack was awarded a cash bonus of $115,000, Drs. Teuber and
Richards were awarded a cash bonus of $119,986 and $48,000, respectively, and
Mr. Koehler was awarded a cash bonus of $65,000. Each bonus was paid in 2003.
Equity-Based Compensation. Stock option grants in 2002 were designed to
link the overall compensation of an executive officer receiving such awards with
his performance, in light of all other current and past compensation received by
such executive officer, including the number and price of options held by the
executive officer. Such grants, as a result of the applicable vesting
arrangements, also serve as a means for The Medicines Company to retain the
services of these individuals. In 2002, Dr. Meanwell was awarded stock options
for the purchase of 123,000 shares of common stock, Mr. Stack was awarded stock
options for the purchase of an aggregate of 204,000 shares of common stock, Drs.
Teuber and Richards were awarded stock options for the purchase of 50,000 and
25,000 shares of common stock, respectively, and Mr. Koehler was awarded stock
options for the purchase of an aggregate of 250,000 shares of common stock.
These option grants were based on the criteria described above, and the exercise
price of these options was equal to the closing sale price for our common stock
on the NASDAQ National Market on the date of grant. All of the options vest in
48 equal monthly installments commencing one month after the date of grant,
except for the option awarded to Mr. Koehler upon commencement of his
employment. That option, for the purchase of 200,000 shares, became vested with
respect to 50,000 shares on March 13, 2003, the first anniversary of the date of
grant, and thereafter vests in 36 equal monthly installments. Vesting of options
granted to executive officers may be accelerated upon a change in control of The
Medicines Company and in other circumstances.
17
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally
disallows a tax deduction to public companies for certain compensation in excess
of $1 million paid to the company's Chief Executive Officer and the four other
most highly compensated executive officers. Certain compensation, including
qualified performance-based compensation, will not be subject to the deduction
limit if certain requirements are met. The compensation committee reviews the
potential effect of Section 162(m) periodically and generally seeks to structure
the long-term incentive compensation granted to The Medicines Company's
executive officers through option issuances under The Medicines Company's plans
in a manner that is intended to avoid disallowance of deductions under Section
162(m). Nevertheless, there can be no assurance that compensation attributable
to awards granted under The Medicines Company's plans will be treated as
qualified performance-based compensation under Section 162(m). In addition, the
compensation committee reserves the right to use its judgment to authorize
compensation payments that may be subject to the limit when the compensation
committee believes such payments are appropriate and in the best interests of
the company and its stockholders, after taking into consideration changing
business conditions and the performance of its employees.
By the Compensation Committee of the Board of Directors
Armin M. Kessler
James E. Thomas
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Kessler, Lowcock and Thomas served on the compensation committee
during 2002. None has ever been an officer or employee of our company or had any
relationship requiring disclosure by us under Item 404 of Regulation S-K
promulgated under the Securities Exchange Act of 1934, as amended. Mr. Lowcock
ceased serving on the compensation committee in April 2003.
None of our executive officers has served as a director or member of the
compensation committee, or other committee serving an equivalent function of any
other entity, one of whose executive officers served as one of our directors or
as a member of our compensation committee.
OTHER INFORMATION
PRINCIPAL STOCKHOLDERS
The following table presents information we know regarding the beneficial
ownership of our common stock as of February 28, 2003 for each person, entity or
group of affiliated persons whom we know to beneficially own more than 5% of our
common stock. The table also sets forth such information for our directors and
named executive officers, individually, and our directors and executive officers
as a group.
Beneficial ownership is determined in accordance with the rules of the SEC.
Except as indicated by footnote, to our knowledge, the persons named in the
table have sole voting and investment power with respect to all shares of common
stock shown as beneficially owned by them. Common stock purchase warrants and
options to purchase shares of common stock that are exercisable within 60 days
of February 28, 2003 are deemed to be beneficially owned by the person holding
such warrants or options for the purpose of computing ownership of such person,
but are not treated as outstanding for the purpose of computing the ownership of
any other person. Applicable percentage of beneficial ownership is based on
46,438,577 shares of common stock outstanding, which represents 40,841,297
shares of common stock actually outstanding as of February 28, 2003 plus
5,597,297 shares of common stock sold in our public offering that closed on
March 19, 2003.
Unless otherwise indicated in the footnotes, the address of each of the
individuals named below is: c/o The Medicines Company, 8 Campus Drive,
Parsippany, New Jersey 07054.
18
NUMBER OF
SHARES PERCENTAGE
BENEFICIALLY BENEFICIALLY
BENEFICIAL OWNER: OWNED OWNED
----------------- ------------ ------------
Wellington Management Company, LLP(1)....................... 5,357,240 11.5%
Biotech Growth N.V.(2)...................................... 3,656,425 7.8%
T. Rowe Price Associates, Inc.(3)........................... 2,996,810 6.5%
Mutuelles AXA(4)............................................ 2,096,430 4.5%
QFinance, Inc.(5)........................................... 2,062,520 4.4%
Clive A. Meanwell(6)........................................ 627,990 1.3%
David M. Stack(7)........................................... 254,364 *
Steven H. Koehler(8)........................................ 60,334 *
John M. Nystrom(9).......................................... 2,205 *
John D. Richards(10)........................................ 28,852 *
Peter Teuber(11)............................................ 66,534 *
Leonard Bell(12)............................................ 15,647 *
William W. Crouse........................................... -- *
Robert J. Hugin............................................. -- *
M. Fazle Husain(13)......................................... 120,113 *
T. Scott Johnson(14)........................................ 84,824 *
Armin M. Kessler(15)........................................ 91,311 *
Robert G. Savage............................................ -- *
James E. Thomas(16)......................................... 67,847 *
All directors and executive officers as a group (13
persons).................................................. 1,417,816 3.0%
---------------
* Represents beneficial ownership of less than 1%.
(1) Includes shares owned by various investors for which Wellington Management
Company, LLP serves as investment advisor with shared power to direct
investments and/or to vote the shares. The shares were acquired by
Wellington Trust Company, NA, a wholly owned subsidiary of Wellington
Management Company, LLP. The address of Wellington Trust Company, NA and
Wellington Management Company, LLP is 75 State Street, Boston,
Massachusetts 02109. This information is based on a Schedule 13G/A filed by
Wellington Management Company, LLP with the SEC on February 12, 2003.
(2) Consists of warrants to purchase 675,925 shares and 2,980,500 shares owned
directly by Biotech Growth N.V. with respect to which BB Biotech AG and
Biotech Growth N.V. share voting and dispositive power. Biotech Growth N.V.
is a wholly owned subsidiary of BB Biotech AG. The address of Biotech
Growth N.V. is Calle 53, Urbanizacion Obarrio, Torre Swiss Bank, Piso 16,
Panama City, Zona 1, Republic of Panama. This information is based on a
Schedule 13G/A filed by BB Biotech AG on behalf of Biotech Growth N.V. with
the SEC on February 14, 2003.
(3) Includes shares owned by various individual and institutional investors for
which T. Rowe Price Associates, Inc. serves as investment advisor with
power to direct investments and/or sole power to vote the shares. For
purposes of the reporting requirements of the Securities Exchange Act of
1934, T. Rowe Price Associates, Inc. is deemed to be a beneficial owner of
such shares; however, T. Rowe Price Associates, Inc. expressly disclaims
that it is, in fact, the beneficial owner of such shares. The address of T.
Rowe Price Associates, Inc. is 100 E. Pratt Street, Baltimore, Maryland
21202. This information is based on a Schedule 13G/A filed by T. Rowe Price
Associates, Inc. with the SEC on February 4, 2003.
(4) Includes 8,000 shares owned directly by AXA Rosenberg Investment Management
LLC, a wholly owned subsidiary of AXA, 1,977,330 shares held by Alliance
Capital Management L.P., a majority-owned subsidiary of AXA Financial,
Inc., on behalf of unaffiliated third-party client discretionary
19
investment advisory accounts, and 111,100 shares owned by The Equitable
Life Assurance Society of the United States, a wholly owned subsidiary of
AXA Financial, Inc. Mutelles AXA, a group of companies consisting of AXA
Conseil Vie Assurance Mutuelle, AXA Assurances I.A.R.D. Mutuelle, AXA
Assurance Vie Mutuelle and AXA Courtage Assurance Mutuelle, is the parent
holding company of AXA. AXA is the parent holding company of AXA Financial,
Inc. For purposes of the reporting requirements of the Securities Exchange
Act of 1934, as amended, Mutelles AXA (and each company of the group
thereof) and AXA are deemed to be beneficial owners of such shares;
however, each expressly disclaims that it is, in fact, the beneficial owner
of such shares. The address of AXA Conseil Vie Assurance Mutuelle, AXA
Assurances I.A.R.D. Mutuelle and AXA Assurance Vie Mutuelle is 370, rue
Saint Honore, 75001 Paris, France. The address of AXA Courtage Assurance
Mutuelle is 26, rue Louis le Grand, 75002 Paris, France. The address of AXA
is 25, avenue Matignon, 75008 Paris, France. The address of AXA Financial,
Inc. is 1290 Avenue of the Americas, New York, New York 10104. This
information is based on a Schedule 13G filed by AXA Conseil Vie Assurance
Mutuelle, AXA Assurances I.A.R.D. Mutuelle, AXA Assurance Vie Mutuelle, AXA
Courtage Assurance Mutuelle, AXA and AXA Financial, Inc. with the SEC on
February 12, 2003.
(5) Consists of shares owned directly by QFinance, Inc. with respect to which
Quintiles Transnational Corp. and QFinance, Inc. share voting and
dispositive power. QFinance, Inc. is a wholly owned subsidiary of Quintiles
Transnational Corp. The address of QFinance, Inc. is c/o Quintiles
Transnational Corp., 4709 Creekstone Drive, Suite 200, Durham, North
Carolina 27703. This information is based on a Schedule 13G/A filed by
Quintiles Transnational Corp. and QFinance, Inc. with the SEC on February
14, 2003.
(6) Includes warrants to purchase 59,143 shares and options to purchase 366,261
shares. Excludes 350,000 shares subject to a pre-paid variable forward
sales contract, pursuant to which Dr. Meanwell pledged 350,000 shares to
secure a future obligation to deliver a maximum of 350,000 shares in
February 2006.
(7) Includes options to purchase 249,364 shares.
(8) Includes options to purchase 58,334 shares.
(9) Includes 1,100 shares held by one of Dr. Nystrom's children. Dr. Nystrom
disclaims beneficial ownership of the shares held by his child.
(10) Includes options to purchase 21,752 shares.
(11) Includes options to purchase 66,459 shares.
(12) Consists of options to purchase 15,647 shares. The address of Dr. Bell is
c/o Alexion Pharmaceuticals, Inc., 352 Knotter Drive, Chesire, Connecticut
06410.
(13) Includes options to purchase 5,001 shares held by Mr. Husain, 93,767 shares
held by Morgan Stanley Venture Partners III, L.P., 8,983 shares held by
Morgan Stanley Venture Investors III, L.P., and 4,102 shares held by The
Morgan Stanley Venture Partners Entrepreneur Fund, L.P. Mr. Husain is a
managing member of Morgan Stanley Venture Partners III, L.L.C., which is
the general partner of each of the Morgan Stanley funds described above.
Mr. Husain disclaims such beneficial ownership except to the extent of his
pecuniary interest therein.
(14) Includes 5,000 shares held by Dr. Johnson as trustee, warrants to purchase
13,744 shares held by Dr. Johnson and options to purchase 5,001 shares held
by Dr. Johnson. The address of Dr. Johnson is c/o JSB Partners, Damonmill
Square 6A, Concord, Massachusetts 01742.
(15) Includes 3,000 shares held by Mr. Kessler's wife, warrants to purchase
33,796 shares held by Mr. Kessler and options to purchase 19,601 shares
held by Mr. Kessler.
(16) Includes options to purchase 15,647 shares. The address of Mr. Thomas is
c/o Thomas, McNerney & Partners, LLC, 375 Park Avenue, Suite 2001, New
York, New York 10152.
20
COMPARATIVE STOCK PERFORMANCE
The following graph compares the cumulative total stockholder return on our
common stock for the period from August 8, 2000, the date of our initial public
offering, through December 31, 2002 with the cumulative total return on the
NASDAQ Stock Market (U.S.) Index and the NASDAQ Biotechnology Stocks Total
Return Index. The comparison assumes $100.00 was invested on August 8, 2000 in
our common stock and in each of the above indices and assumes reinvestment of
dividends.
[PERFORMANCE GRAPH]
8/8/00 12/31/00 12/31/01 12/31/02
------- -------- -------- --------
The Medicines Company $100 $94.52 $53.44 $73.87
NASDAQ Biotechnology Stocks Total
Return Index $100 $93.40 $78.19 $48.59
NASDAQ Stock Market (U.S.) Index $100 $63.74 $50.57 $34.96
In accordance with the rules of the SEC, cumulative total return data for
our common stock is based on the closing sale price of our common stock on the
NASDAQ National Market of $21.69 per share on August 8, 2000, rather than the
initial public offering price of $16.00 per share.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, executive officers and holders of more than ten percent of our common
stock to file with the SEC initial reports of ownership and reports of changes
in ownership of common stock and other equity securities. Based solely on our
review of copies of reports filed by the reporting persons furnished to us, or
written representations from reporting persons, we believe that during 2002, the
reporting persons complied with all Section 16(a) filing requirements, other
than two late filings by each of Drs. Richards and Teuber, and one late filing
by each of Messrs. Koehler and Stack and Dr. Meanwell.
HOUSEHOLDING OF ANNUAL MEETING MATERIALS
Some banks, brokers and other nominee record holders may be participating
in the practice of "householding" proxy statements and annual reports. This
means that only one copy of our proxy statement or annual report may have been
sent to multiple stockholders in your household. We will promptly deliver a
separate copy of either document to you if you call or write us at the following
address or phone number: The Medicines Company, 8 Campus Drive, Parsippany, New
Jersey 07054, Attention: Investor Relations, (973) 656-1616. If you would like
to receive separate copies of the annual report and proxy statement in the
21
future, or if you are receiving multiple copies and would like to receive only
one copy for your household, you should contact your bank, broker, or other
nominee record holder, or you may contact us at the above address and phone
number.
THE BOARD HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING. WHETHER OR NOT
YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE WILL GREATLY
FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION WILL BE
APPRECIATED. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR STOCK PERSONALLY
AFTER DELIVERY OF WRITTEN REVOCATION OF THEIR PROXY TO THE CORPORATE SECRETARY.
By order of the Board of Directors,
/s/ Steven H. Koehler
STEVEN H. KOEHLER
Secretary
May 5, 2003
22
Appendix
THE MEDICINES COMPANY
8 CAMPUS DRIVE
PARSIPPANY, NEW JERSEY 07054
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 29, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) Clive A. Meanwell, David M. Stack and
Steven H. Koehler, and each of them, attorneys or attorney of the undersigned
(the "proxy holders"), with power of substitution in them and each of them, for
and in the name(s) of the undersigned to attend the Annual Meeting of
Stockholders (the "Meeting") of The Medicines Company (the "Company") to be held
at the principal executive offices of the Company, 8 Campus Drive, Parsippany,
New Jersey 07054, at 10:00 a.m. (local time), on Thursday, May 29, 2003, and any
adjourned sessions thereof, and there to vote and act upon the following matters
in respect of shares of common stock of the Company that the undersigned would
be entitled to vote or act upon, with all powers the undersigned would possess
if personally present. Each of the following matters is proposed by the Company,
and none of the matters is related to or conditioned on the approval of any
other matters.
In their discretion, the proxy holders are authorized to vote on such
other matters as may properly come before the Meeting or any adjournment
thereof.
SEE REVERSE CONTINUED AND TO BE DATED AND SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
ADDRESS CHANGE/COMMENTS (MARK THE CORRESPONDING BOX ON THE REVERSE SIDE)
FOLD AND DETACH HERE
PLEASE MARK HERE FOR ADDRESS CHANGE OR COMMENTS [ ]
SEE REVERSE SIDE
1. ELECT FOUR CLASS 3 DIRECTORS
FOR TERMS TO EXPIRE AT THE
2006 ANNUAL MEETING OF FOR all nominees listed WITHHOLD AUTHORITY
STOCKHOLDERS. (except as indicated to vote for all
to the contrary) nominees listed
Nominees:
01 Leonard Bell [ ] [ ]
02 Armin M. Kessler
03 Robert G. Savage
04 James E. Thomas
(Instructions: To withhold authority to vote for one or more individual
nominees, write the name(s) of the nominee(s) on the line provided below.)
______________________________________________
2. RATIFY THE APPOINTMENT OF ERNST FOR AGAINST ABSTAIN
& YOUNG LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE YEAR [ ] [ ] [ ]
ENDING DECEMBER 31, 2003.
MARK HERE IF YOU PLAN TO
ATTEND THE MEETING [ ]
THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED AS DIRECTED BY THE UNDERSIGNED. IF NO
DIRECTION IS GIVEN WITH RESPECT TO ANY OF THE
PROPOSALS SPECIFIED ABOVE, THIS PROXY WILL BE
VOTED "FOR" SUCH PROPOSAL.
Attendance of the undersigned at the Meeting or
at any adjourned session thereof will not be
deemed to revoke this proxy unless the
undersigned shall affirmatively indicate
thereat the intention of the undersigned to
vote said shares in person. If the undersigned
hold(s) any of the shares of the Company in a
fiduciary, custodial or joint capacity or
capacities, this proxy is signed by the
undersigned in every such capacity as well as
individually.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE.
Signature_____________________ Signature_____________________ Date______________
Note: The signature(s) on this proxy should correspond exactly with the
stockholder's name as printed above and to the left. In the case of joint
tenants, co-executors or co-trustees, both should sign. When signing as
attorney, executor, administrator, trustee, guardian or other fiduciary, please
give your full title as such.
FOLD AND DETACH HERE