SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
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DUSA Pharmaceuticals, Inc.
(Name of Registrant as Specified in Its Charter)
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[DUSA PHARMACEUTICALS LOGO]
DUSA PHARMACEUTICALS, INC.
25 UPTON DRIVE
WILMINGTON, MASSACHUSETTS 01887
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 13, 2002
TO THE SHAREHOLDERS OF
DUSA PHARMACEUTICALS, INC.
YOU ARE HEREBY NOTIFIED that the Annual Meeting of Shareholders of DUSA
Pharmaceuticals, Inc. will be held on Thursday, June 13, 2002, at 11:00 a.m. at
the Omni Parker House located at 60 School Street, Boston, Massachusetts to
consider and act upon the following matters:
(1) Election of five (5) directors;
(2) Ratification of Deloitte & Touche LLP as the Company's
independent auditors for the fiscal year 2002; and
(3) Transaction of any other business that may properly
come before the meeting or any adjournments thereof.
Only shareholders of record at the close of business on April 17, 2002 are
entitled to notice of, and to vote at the meeting, or any adjournment or
adjournments thereof.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE FILL IN, DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. THE PROMPT
RETURN OF YOUR PROXY WILL ASSIST US IN PREPARING FOR THE ANNUAL MEETING. THE
PROXY DOES NOT REQUIRE ANY POSTAGE IF IT IS MAILED IN THE UNITED STATES OR
CANADA.
By Order of the Board of Directors,
/s/ Nanette W. Mantell
Nanette W. Mantell, Esq.
Secretary
Dated: April 26, 2002
DUSA PHARMACEUTICALS, INC.
PROXY STATEMENT
The accompanying proxy is solicited on behalf of the Board of Directors of
DUSA Pharmaceuticals, Inc. ("DUSA" or the "Company"). If properly signed and
returned, and not revoked, the proxy will be voted in accordance with the
instructions it contains. The persons named in the accompanying proxy will vote
the proxy for the Board of Directors' slate of directors and for the other
matters listed on the proxy as recommended by the Board of Directors unless
contrary instructions are given.
The Company, a New Jersey corporation, maintains principal executive
offices at 25 Upton Drive, Wilmington, Massachusetts. This proxy statement and
the accompanying form of proxy are being mailed to shareholders on or about
April 26, 2002. DUSA's Annual Report for 2001, including financial statements
for the year ended December 31, 2001, is being mailed to shareholders at the
same time.
SHAREHOLDERS ENTITLED TO VOTE.
Holders of record of shares of DUSA common stock at the close of business
on April 17, 2002 are entitled to notice of and to vote at the annual meeting
and at any and all adjournments or postponements of the meeting. On the record
date there were 13,865,390 shares of common stock without par value ("Common
Stock") outstanding and entitled to vote. These shares were the only shares
outstanding of the Company. Each share entitles its owner to one vote. The
holders of one-third of the shares that are outstanding and entitled to vote at
the annual meeting must be present, in person or represented by proxy, in order
to constitute a quorum for all matters to come before the meeting.
Other than the vote for the election of directors, which requires a
plurality of the votes cast, each matter to be submitted to the shareholders
requires the affirmative vote of a majority of the votes cast at the meeting.
For purposes of determining the number of votes cast with respect to a
particular matter, only those votes cast "For" or "Against" are included.
Abstentions and broker non-votes are counted only for purposes of determining
whether a quorum is present at the meeting. A broker "non-vote" occurs when a
nominee holding shares for a beneficial owner does not vote on a particular
proposal because the nominee does not have discretionary voting power with
respect to that item and has not received voting instructions from the
beneficial owner. The nominees may vote the shares only on matters deemed
routine, such as the election of directors and ratification of the selection of
the auditors. The Company's management currently owns less than one percent of
the Company's outstanding Common Stock.
HOW TO VOTE.
If you are a shareholder of record (that is a shareholder who holds shares
in his/her own name), you can vote by signing, dating and returning your proxy
card in the enclosed postage-paid envelope. If you sign and return your proxy
card but do not give voting instructions, the shares represented by that proxy
will be voted "FOR" Proposals 1 and 2 and will be voted in the proxy holder's
discretion as to other matters that may come before the annual meeting.
If your shares are held in the name of a bank, broker or other holder of
record (that is, "street name"), you will receive instructions from the holder
of record that you must follow in order for your shares to be voted.
CHANGING YOUR VOTE.
You may change your vote at any time before the proxy is exercised, by
executing and delivering a timely and valid later-dated proxy, by voting by
ballot at the annual meeting or by giving written notice to the Secretary of the
Company. Attendance at the meeting will not have the effect of revoking a proxy
unless you give proper written notice of revocation to the Secretary before the
proxy is exercised or you vote by written ballot at the annual meeting.
REDUCE DUPLICATE MAILINGS.
The Company is required to provide an Annual Report and proxy statement to
all shareholders. If you are a shareholder of record and have more than one
account in your name or at the same address as other shareholders of record, you
may authorize the Company to discontinue mailings of multiple proxy statements,
Annual Reports and other information statements. To do so, please mark the
designated box on each proxy card for which you wish to discontinue to receive
duplicate documents. Your consent to cease delivery of the Annual Report, proxy
statements and other information statements shall be effective for five (5)
years or until you revoke your consent. You may revoke your consent at any time
by contacting Ms. Shari Lovell, in writing, at the Company's office located at
181 University Avenue,
Suite 1208, Toronto, Ontario M5H 3M7 Canada, or by calling 1-800-607-2530.
Delivery of individual copies of the documents shall resume within thirty (30)
days of our receipt of your request.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
Five (5) directors will be elected to hold office until the next Annual
Meeting of Shareholders and/or until their successors have been duly elected and
qualified. The persons named on the accompanying proxy will vote all shares for
which they have received proxies for the election of the nominees named below
unless contrary instructions are given. In the event that any nominee should
become unavailable, shares will be voted for a substitute nominee unless the
number of directors constituting a full board is reduced. Directors are elected
by plurality vote.
NOMINEES
Set forth below is certain information about the nominees for election to
the DUSA Board of Directors. The name, age and current position with the Company
of each director is listed below, followed by summaries of their backgrounds and
principal occupations. Except for Mr. Bartash, all of the nominees were elected
to the Board of Directors at the last annual meeting and all are currently
serving as directors of the Company. On November 16, 2001, James P. Doherty, BSc
retired from the Board of Directors. On that same date, the Board appointed
David M. Bartash to fill the position vacated by Mr. Doherty and Mr. Bartash has
been serving as a director of the Company since that time.
DATE
NAME AGE POSITION ELECTED
---- --- -------- -------
D. Geoffrey Shulman, MD, FRCPC........ 47 Chairman of the Board, President, Chief
Executive Officer and Director 9/05/91
John H. Abeles, MD(1)................. 57 Director 8/02/94
David M. Bartash(1)(2)................ 59 Director 11/16/01
Jay M. Haft, Esq(1)(2)................ 66 Director 9/16/96
Richard C. Lufkin, SB, MBA(1)......... 55 Director 1/27/92
----------------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
D. Geoffrey Shulman, MD, FRCPC, is the Company's founder. Dr. Shulman, a
dermatologist, was the President and a director of Draxis Health Inc. from its
founding in October 1987 until May 1990, was Co-Chairman from October 1990 to
April 1993, and Chairman of the Board from April 1993 until March 1996. Since
October 2001, he has served on the board of Miza Pharmaceuticals, Inc., a
privately-held pharmaceutical contract manufacturing company based in Toronto,
Canada. Dr. Shulman also participates, on a limited basis, in a private
dermatology practice.
John H. Abeles, MD, is the President and founder of MedVest, Inc. which,
since 1980, has provided consulting services to health care and high technology
companies. He is also the Chief Executive Officer of InfoMedica, Ltd., a
provider of medical educational services and materials. Dr. Abeles is a member
of the Boards of Directors of I-Flow Corporation, Oryx Technology, Inc., Pharma
Print Corp., Molecular Diagnostics Inc. and Encore Medical Corporation.
David M. Bartash, is the President and founder of Bartash and Company, a
consulting company which, since 1990, has been providing consulting services for
the healthcare industry, including research for the healthcare investment
community and support services for venture start-ups.
Jay M. Haft, Esq., is a strategic and financial consultant for growth-stage
companies. He was a senior corporate partner of the law firm of Parker, Duryee,
Rosoff & Haft from 1989 to 1994 and is currently of counsel to Reed Smith LLP
following a merger with Parker, Duryee. Mr. Haft is a member of the Boards of
Directors of Robotic Vision Systems, Inc., Isotope Solutions, Inc., Thrift
Management, Inc., Oryx Technology, Inc. and Encore Medical Corporation.
Richard C. Lufkin, SB, MBA, is the principal and founder of Enterprise
Development Associates, a proprietorship formed in 1985 which provides
consulting and venture support services to manage and finance early stage
technology-based companies. These services currently include serving as an
officer and director of two privately held development stage firms, Linguagen
Corp. and Synectiq Corporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH NOMINEE.
2
DIRECTOR COMPENSATION
Directors who are employees of the Company receive no cash compensation for
their services as directors or as members of committees. Outside directors
receive $25,000 per year, as annual compensation, regardless of the number of
meetings they attend. Directors serving on the Audit Committee receive an
additional $5,000 per year. Also, directors are paid out-of-pocket expenses
related to their attendance. Directors are awarded options to purchase 15,000
shares of common stock on June 30th of their first year of service as a member
of the Board of Directors, and options for 10,000 shares of common stock on June
30th of each year following their reelection.
MEETINGS AND COMMITTEES OF THE BOARD
During the year ended December 31, 2001, there were six meetings of the
Board of Directors. Except for David Bartash, each incumbent director attended
at least 75% of the meetings of the Board and its committees. Mr. Bartash
attended 100% of the meetings of the Board and its committees since his
appointment to the Board in November, 2001. The Board has established an Audit
Committee, a Nominating Committee, and a Compensation Committee.
The Audit Committee currently consists of all the outside directors: Mr.
Haft, Mr. Lufkin, Dr. Abeles and Mr. Bartash. The Audit Committee provides
oversight of the Company's accounting functions and acts as liaison between the
Board of Directors and the outside independent auditors. The Committee reviews
with the independent auditors the unaudited quarterly financial statements, the
planning and scope of the audits of the financial statements, the results of
those audits and the adequacy of internal accounting controls, and monitors
other corporate and financial policies. The Audit Committee met five times
during 2001.
The Nominating Committee consists of the entire Board acting as a Committee
of the Whole. The Nominating Committee reviews all matters concerning the
selection of candidates as nominees for election as directors. The Nominating
Committee met once during 2001 to consider candidates to fill the vacancy being
created by Mr. Doherty's planned retirement. Shareholders who wish to suggest
qualified candidates should write to: Administrator, Nominating Committee, DUSA
Pharmaceuticals, Inc., 25 Upton Drive, Wilmington, Massachusetts 01887 stating,
in detail, the qualifications of such persons for consideration by the
Nominating Committee.
The Compensation Committee currently consists of Mr. Haft and Mr. Bartash.
The Compensation Committee considers executive compensation of the Company's key
officers and compensation of directors. The Committee also considers employee
benefits which may be appropriate as the Company grows, and develops policies
and procedures. The Compensation Committee normally meets annually. It met twice
in 2001 and in February 2002 to establish compensation for the year and to award
bonuses for 2001.
PROPOSAL NO. 2 - RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has appointed Deloitte & Touche LLP as the
independent auditors for the Company for the fiscal year 2002. Shareholder
ratification of the appointment is not required under the laws of the State of
New Jersey, but the Board has decided to ascertain the position of the
shareholders on the appointment. The Board of Directors will reconsider the
appointment if it is not ratified. A majority of the votes cast, in person or by
proxy, at the annual meeting is required for ratification. A representative of
Deloitte & Touche LLP will be present at the meeting to answer questions from
shareholders and will have the opportunity to make a statement on behalf of the
firm, if he or she so desires.
AUDIT FEES
The aggregate fees billed by Deloitte & Touche LLP for professional
services rendered for the audit of the Company's annual financial statements for
the fiscal year ended December 31, 2001, and for the reviews of the financial
statements included in the Company's Quarterly Reports on Form 10-Q during the
fiscal year were $128,474.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
There were no fees billed by Deloitte & Touche LLP for professional
services rendered for information technology services relating to financial
information systems design and implementation for the fiscal year ended December
31, 2001.
3
ALL OTHER FEES
The aggregate fees billed by Deloitte & Touche LLP for services rendered to
the Company, other than for the services described above under "Audit Fees" and
"Financial Information Systems Design and Implementation Fees" for the fiscal
year ended December 31, 2001, were $90,806.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
BOARD AUDIT COMMITTEE REPORT(1)
The Audit Committee assists the Board of Directors by providing oversight
of the Company's financial reporting process and the independent auditors.
Management is responsible for preparing the Company's financial statements and
the Company's independent auditors are responsible for auditing those financial
statements. The Audit Committee is responsible for overseeing the conduct of
these activities by the Company's management and the independent auditors. A
brief description of the responsibilities of the Committee is set forth above
under the caption "Meetings and Committees of the Board".
During 2001, the Audit Committee was composed of four non-employee
directors: Mr. Abeles, Mr. Haft, Mr. Lufkin and Mr. Doherty. Following Mr.
Doherty's retirement in November 2001, Mr. Bartash joined the Audit Committee in
December 2001. The Audit Committee operates under a written charter adopted and
approved by the Board of Directors. Each Committee member is independent as
defined by NASD listing standards. A copy of the Audit Committee Charter was
attached to the Company's proxy statement for the 2001 Annual Meeting of
Shareholders.
The Committee has reviewed and discussed the audited consolidated financial
statements for the fiscal year ended December 31, 2001 with management. The
Committee also discussed with Deloitte & Touche LLP, the independent auditors,
the matters required to be discussed by Statement on Auditing Standards No. 61,
"Communication with Audit Committees." In addition, the Committee received from
Deloitte & Touche the written disclosures and the letter required by
Independence Standards Board Standard No. 1, "Independence Discussions with
Audit Committees," and the Committee discussed with the independent auditors
their independence from the Company and its management. Additionally, the
Committee considered whether their provision of services to the Company beyond
those rendered in connection with their audit and review of the Company's
consolidated financial statements was compatible with maintaining their
independence and the fees and costs billed and to be billed for those services
as shown on page 4 of this proxy statement.
Based on its review, and the discussions with the Company's management and
its independent auditors, the Committee recommended to the Board of Directors
that the Company's audited consolidated financial statements for the fiscal year
ended December 31, 2001 be included in the Company's Annual Report on Form 10-K.
The Committee has also recommended the selection of the Company's independent
auditors, and, the Board has selected, Deloitte & Touche LLP as the Company's
independent auditors for the fiscal year ended December 31, 2002.
John H. Abeles, MD
David M. Bartash
Jay M. Haft, Esq.
Richard C. Lufkin, SB, MBA
------------------------------------
(1)The material in the Audit Committee Report, Compensation Committee
Report, and under the caption "Performance Graph" are not "soliciting material,"
are not deemed filed with the SEC and are not to be incorporated by reference in
any filing of the Company under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, whether made before or after the
date of this report and irrespective of any general incorporation language
therein.
4
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION(1)
The Compensation Committee of the Board of Directors (the "Committee") is
composed of two (2) non-employee directors. The Committee is responsible for
setting and administering the policies which govern annual executive salaries
and cash bonus awards, and recommends participants and amounts of stock option
awards to the Company's Board of Directors. The Committee evaluates, on a yearly
basis, the performance, and determines the compensation of, the executive
officers of DUSA. The Committee evaluates compensation based upon the
achievement by the individual of corporate goals, and the performance of
individual responsibilities. DUSA's President and Chief Executive Officer, Dr.
D. Geoffrey Shulman, is not a member of the Committee, however, the Committee
seeks input from Dr. Shulman regarding the performance of DUSA's Vice
Presidents, as well as his recommendations for their compensation. Dr. Shulman
is present, at the invitation of the Committee, at its meetings.
DUSA's executive compensation programs consist of base salary, cash bonus
incentives, and stock option awards. The goals of the Company's executive
officer compensation policies are to attract, retain, and reward executive
officers who contribute to DUSA's success, to align executive officer
compensation with DUSA's performance and to motivate executive officers to
achieve the Company's business objectives. The executive officers were evaluated
by the Committee against established goals for 2001 including corporate goals,
the Company's stock performance and individual goals within each executive
officer's area of responsibility.
With regard to base salary, the Committee believes that DUSA's officers
should be compensated at levels comparable to the base salary of executive
officers at similar small public biotechnology or pharmaceutical companies.
During 2000, the Committee received survey data reporting the salaries for
executives of companies in these groups which was prepared by independent
consultants. For 2002, base salaries for DUSA's executive officers will not
increase above 2001 base salaries due to the weak performance of the Company's
first products and the reduction in stock value.
Generally, DUSA's Vice Presidents are eligible to receive up to 30% of
their base salary as a cash bonus award. The Committee concluded that DUSA's
operational performance, particularly implementing the construction of the
Company's new manufacturing facilities and supporting the sales and marketing of
the Company's new products, as well as the strategic analysis and due diligence
concerning the evaluation of new business opportunities, justified favorable
consideration of performance with regard to bonus awards. However, in
establishing the bonus award amounts, the Committee recognized that certain
Company goals for 2001 were not achieved. Accordingly, DUSA's Vice Presidents
received cash bonus awards ranging from approximately 11% to 17% of their base
salaries. These cash awards were paid in 2002.
The Committee also is using the 2000 survey data from independent
consultants to monitor and evaluate the long-term incentive compensation levels
of its officers and directors. The Committee believes that a strong stock
ownership program is essential to the long-term growth of the Company. In 2002,
the Committee intends to grant to DUSA's key executive officers awards of stock
options to emphasize the long-term focus required for success in the
pharmaceutical industry.
COMPENSATION OF THE PRESIDENT AND CHIEF EXECUTIVE OFFICER
Dr. Shulman's base salary and cash bonus award for 2001 were determined
with reference to the same measures used for all DUSA's executive officers, but
with particular emphasis on the maintenance of our financial strength and the
transition from a development-stage company to an operating company. Dr.
Shulman's base salary for 2001 was $340,000. With regard to a cash bonus award,
Dr. Shulman is eligible to receive up to 50% of base salary plus additional
amounts for outstanding performance. For 2001, Dr. Shulman's bonus award was
approximately 25% of his base salary. Dr. Shulman's cash bonus award was paid to
him in 2002. The Committee has determined that for 2002, Dr. Shulman's base
salary shall remain the same. The Compensation Committee exercised its
subjective judgment and discretion in determining the amounts of Dr. Shulman's
base salary, bonus award, and stock option awards for 2001.
Jay M. Haft, Esq.
David M. Bartash
5
PERFORMANCE GRAPH(1)
COMPARISON OF FIVE YEAR CUMULATIVE SHAREHOLDER TOTAL RETURN
AMONG DUSA PHARMACEUTICALS, INC.,
NASDAQ MARKET INDEX AND MG GROUP INDEX
[PERFORMANCE GRAPH]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
01/01/1997 12/31/1997 12/31/1998 12/31/1999 12/31/2000 12/31/2001
DUSA Pharmaceuticals, Inc. 100 164.29 105.36 407.14 240.19 115.00
Drug Manufacturers/Other 100 108.66 113.96 149.97 243.09 216.35
NASDAQ Market Index 100 122.32 172.52 304.29 191.25 152.46
The graph above compares cumulative total shareholder return on our common
stock for the five-year period ended December 31, 2001, with the cumulative
total return on the Nasdaq Market Index and the Media General Drug Manufacturer
Index over the same period. The identity of those corporations included in the
Media General Financial Services Drug Manufacturer Index may be obtained by
contacting Ms. Shari Lovell, Director of Shareholder Services, DUSA
Pharmaceuticals, Inc., 181 University Avenue, Suite 1208, Toronto, Ontario M5H
3M7 Canada.
The graph assumes $100 was invested in DUSA's common stock on January 1,
1997, and in each of the indices, and that dividends were reinvested. The
comparisons in the graph are required by the Securities and Exchange Commission
and are not intended to forecast or be indicative of possible future performance
of DUSA's common stock.
6
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The name, age and position with the Company of each executive officer who
is not a director of the Company is listed below, followed by summaries of their
backgrounds and principal occupations. Executive officers are elected annually,
and serve at the discretion of the Board of Directors.
DATE
NAME AGE TITLE ELECTED
---- --- ----- -------
Mark C. Carota............................ 46 Vice President, Operations 2/18/00
Ronald L. Carroll......................... 53 Vice President, Business Development 5/14/98
Scott L. Lundahl.......................... 43 Vice President, Technology 6/23/99
William R. McIntyre, Ph.D................. 48 Vice President, Regulatory Affairs 1/02/01
Stuart L. Marcus, MD, PhD................. 55 Vice President, Scientific Affairs;
Chief Scientific Officer 10/11/93
John E. Mattern, CPA, MBA................. 53 Vice President, Finance;
Chief Financial Officer 8/01/00
Paul A. Sowyrda........................... 40 Vice President, Product Development
and Marketing 8/01/00
Mark C. Carota has been employed by the Company since October 1999. Prior
to joining the Company, Mr. Carota was Director of Operations from November 1998
to October 1999 for Lavelle, Inc., a privately held manufacturer of orthopedic
instrumentation. From July 1998 to November 1998, Mr. Carota was employed as
Director of Quality Assurance by CGI Inc. Prior to joining CGI Inc., Mr. Carota
was employed by Allergan Inc., from February 1997 to July 1998 where he had
responsibility for quality assurance, engineering and facilities. From June 1991
to February 1997, Mr. Carota was employed by Smith & Nephew, where he managed
the quality function of the firm.
Ronald L. Carroll has been employed by the Company since May 1998. In 1994,
Mr. Carroll co-founded and became President of Lumenetics, Inc., a
privately-owned medical device development company, which, prior to May 1998,
provided the Company with consulting services in the light device technology
area. Prior to forming Lumenetics, Inc., Mr. Carroll had extensive experience as
a new product development executive in the health care industry with positions
in research and development, manufacturing, and marketing. As of February 2001,
Mr. Carroll began working for the Company on a part-time basis.
Scott L. Lundahl has been employed by the Company since May 1998. In 1994,
Mr. Lundahl co-founded and became Vice President of Lumenetics, Inc., a
privately-owned medical device development company, which, prior to May 1998,
provided the Company with consulting services in the light device technology
area.
William R. McIntyre, Ph.D. has been employed by the Company since January
2001. Prior to joining the Company, Dr. McIntyre was employed by Schein
Pharmaceuticals, Inc., where he served in various management positions from
July, 1993 and where he was, at the time of his departure, serving as Vice
President, Regulatory Affairs.
Stuart L. Marcus, MD, PhD has been employed by the Company since October
1993. Prior to joining the Company, Dr. Marcus was Director of the
Hematology/Oncology Department of Daiichi Pharmaceuticals Inc. From April 1987
until October 1992, he was employed by the Medical Research Division of the
American Cyanamid Company. During those years, Dr. Marcus directed photodynamic
therapy clinical development, among other assignments.
John E. Mattern, CPA, MBA has been employed by the Company since July 2000.
Prior to joining the Company, Mr. Mattern served as Interim Chief Financial
Officer for CompuCyte Corporation from March 2000 to July 2000 and for Cybex
International, Inc. from August 1999 to January 2000. Prior to that time, Mr.
Mattern was Chief Operating Officer and Chief Executive Officer of CardioTech
International, Inc. from June 1996 to May 1999. From May 1994 to June 1996, Mr.
Mattern was self-employed as a financial consultant to small and mid-sized
companies providing interim senior financial management services.
Paul A. Sowyrda, has been employed by the Company since April 2000. From
April 1998 to April 2000, Mr. Sowyrda was employed by Aurora Tech, a Division of
Carlo Gavazzi, where at the time of his departure he was serving as President
and Chief Executive Officer. From October 1997 to February 1998, Mr. Sowyrda was
Vice President, Operations of UroMed Corp, Urovation Division. From 1993 to
7
October 1997, Mr. Sowyrda was employed as Executive Director, Engineering and
Program Management by Chiron Diagnostics.
EXECUTIVE COMPENSATION
The following table shows, for the fiscal years ended December 31, 2001,
2000 and 1999, certain compensation paid by DUSA to its executive officers. All
amounts are stated in United States dollars unless otherwise indicated.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
------------------------------------------------
ACTUAL COMPENSATION AWARDS PAYOUTS
----------------------------------- -------------------- -------------------------
RESTRICTED
OTHER ANNUAL STOCK LTIP ALL OTHER
SALARY BONUS COMPENSATION(1) AWARD(S) OPTIONS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
--------------------------- ---- ------- ------- --------------- ---------- ------- ------- ---------------
D. Geoffrey Shulman, MD, 2001 340,000 84,460 -- -- 25,000 -- --
FRCPC Chairman of the Board, 2000 340,000 144,500 -- -- 195,000 -- --
President, and Chief Executive 1999 275,000 206,250 -- -- 160,000 -- --
Officer
Mark C. Carota, 2001 150,731 26,860 -- -- 7,500 -- --
Vice President, Operations(2) 2000 137,154 37,800 -- -- 10,000 -- --
1999 21,192 -- -- -- 20,000 -- --
William R. McIntyre, PhD, 2001 175,827 29,480 -- -- 30,000 -- --
Vice President, 2000 -- -- -- -- -- -- --
Regulatory Affairs(3) 1999 -- -- -- -- -- -- --
Stuart L. Marcus, MD, PhD, 2001 246,055 34,910 -- -- 7,500 -- --
Vice President, 2000 238,000 60,700 -- -- 25,000 -- --
Scientific Affairs 1999 210,000 63,000 -- -- 100,000 -- --
Paul A. Sowyrda, 2001 154,350 26,550 -- -- 7,500 -- --
Vice President, Product 2000 100,231 37,800 -- -- 30,000 -- --
Development and 1999 -- -- -- -- -- -- --
Marketing(4)
----------------------------
NOTES:
(1) No officer had perquisites in excess of $50,000 or 10% of salary and bonus
reported for 2001, 2000 or 1999.
(2) Mr. Carota became Vice President, Operations on February 18, 2000. He was
employed by DUSA as Director of Quality Assurance on October 18, 1999.
(3) Dr. McIntyre joined DUSA as Vice President, Regulatory Affairs on January
2, 2001.
(4) Mr. Sowyrda joined DUSA as Vice President Product Development and Marketing
on April 11, 2000.
8
OPTION GRANTS IN 2001
The following grants of stock options were made to the named executive
officers during fiscal year 2001.
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
---------------------------------------------------------- VALUE OF ASSUMED
NUMBER OF PERCENT OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OF FOR OPTION TERM(2)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME GRANTED(1) FISCAL YEAR ($/SHARE) DATE 5% 10%
---- ------------ ---------------- ----------- ---------- ---------- ----------
Dr. D. Geoffrey Shulman 20,000(3) 10.2% $ 12.44 03/19/11 $ 156,400 $ 396,600
5,000(4) 2.5% $ 14.28(5) 06/30/11 $ 44,900 $ 113,800
Mr. Mark C. Carota 7,500(3) 3.8% $ 12.44 03/19/11 $ 58,650 $ 148,725
Dr. William R. McIntyre 30,000(3) 15.3% $ 16.94 01/02/11 $ 319,500 $ 809,700
Dr. Stuart L. Marcus 7,500(3) 3.8% $ 12.44 03/19/11 $ 58,650 $ 148,725
Mr. Paul A. Sowyrda 7,500(3) 3.8% $ 12.44 03/19/11 $ 58,650 $ 148,725
----------------------------
NOTES:
(1) All options in this table have been granted pursuant to the 1996 Omnibus
Plan as amended. The options have exercise prices equal to the fair market
value on the date of the grant.
(2) The potential realizable value is calculated based on the fair market value
of DUSA's common stock on the date of the grant. These amounts only
represent certain assumed rates of appreciation established by the SEC.
There can be no assurance that the amounts reflected in this table or the
associated rates of appreciation will be achieved.
(3) These options were granted as an incentive for continued employment with
the Company and will vest at the rate of 25% each year on the first,
second, third and fourth anniversaries of the date of the grant. The
options expire ten (10) years from the date of grant.
(4) Following his reelection to the Board of Directors on June 14, 2001, Dr.
Shulman's options were granted automatically on June 30th and were
immediately vested. The options expire ten (10) years from the date of the
grant.
(5) Under the 1996 Omnibus Plan, as amended by the shareholders on June 5,
1997, the exercise price of options granted to directors, which include the
5,000 options granted to Dr. Shulman, may be paid in cash, or at the
discretion of the Compensation Committee, by tender of common stock and
cash or through such other means as the Committee determines are consistent
with the 1996 Omnibus Plan, as amended.
AGGREGATED STOCK OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END STOCK OPTION VALUES
The following table provides certain information as to certain stock
options exercisable by the named executive officers for the fiscal year 2001,
and the value of such options held by them at December 31, 2001, measured in
terms of the closing price of the Company's common stock on The Nasdaq Stock
Market on December 31, 2001 which was $8.05 per share.
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
DECEMBER 31, 2001 DECEMBER 31, 2001
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
---- --------------- ------------ ----------------- -----------------
Dr. D. Geoffrey Shulman -- -- 476,250/ $305,943.75/
233,750 $25,218.75
Mr. Mark C. Carota -- -- 12,500/ $0.00/
17,500 $0.00
Dr. William R. McIntyre -- -- 0/ $0.00/
30,000 $0.00
Dr. Stuart L. Marcus -- -- 116,250/ $48,562.50/
68,750 $16,812.50
Mr. Paul A. Sowyrda -- -- 7,500/ $0.00/
22,500 $0.00
9
OTHER COMPENSATION
The Company has employment agreements with each of the executive officers
named in the Summary Compensation Table of this proxy statement, except for Dr.
McIntyre. Pursuant to these agreements, the executive officers are entitled to
receive compensation as determined by the Board of Directors and are eligible to
receive the benefits generally made available to employees of the Company. DUSA
may terminate any employment agreement at any time, with or without cause on
sixty (60) days prior written notice. If an executive officer's employment is
terminated without cause, DUSA shall pay a severance allowance equivalent to one
year of the executive officer's then-current base salary payable in a lump sum,
within sixty (60) days following the date of termination. In addition to the
foregoing, Dr. Shulman's employment agreement also provides that he shall have
the right to exercise, for a period of one year from the date of termination,
all stock options granted to him prior to his termination as to all or any part
of the shares covered by such options, including shares with respect to which
such options would not otherwise be exercisable, subject to restrictions under
U.S. or Canadian law.
In the event an executive officer should die while employed by DUSA, his
heirs or beneficiaries will be entitled to any Company paid death benefits in
force at the time of such death and will also be entitled to exercise any vested
but unexercised stock options which were held by him at the time of his death,
within a period of one (1) year from the date of death.
The employment agreements also provide for certain severance benefits
following a change in control of the Company and termination of employment. Upon
any "change of control," as defined in the agreements, DUSA shall pay to the
executive officer a lump sum payment equal to three (3) times his base salary
for the last fiscal year within five (5) days after such termination.
Under the Company's 1996 Omnibus Plan, as amended, any and all outstanding
options not fully vested shall automatically vest in full and shall be
immediately exercisable upon a "change of control," as defined in the grant
agreements. The date on which such accelerated vesting and immediate
exercisability shall occur shall be the date of the occurrence of the change of
control.
10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of DUSA's common stock as of April 1, 2001 by: (i) each of
our directors; (ii) our named executive officers; (iii) all beneficial owners of
greater than 5% of our outstanding common stock; and (iv) all of our directors
and executive officers as a group.
NUMBER OF
SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
NAME OWNED SHARES(1)
---- ------------------ ------------------
John H. Abeles, MD. ...................................... 52,000(2) *
David M. Bartash.......................................... 6,500 *
Mark C. Carota............................................ 16,940(3) *
Jay M. Haft, Esq.......................................... 40,000(4) *
Richard C. Lufkin, SB, MBA................................ 72,100(5) *
Stuart L. Marcus, MD, PhD................................. 149,375(6) 1.1%
William R. McIntyre, PhD.................................. 7,500(7) *
D. Geoffrey Shulman, MD, FRCPC............................ 879,449(8) 6%
Paul A. Sowyrda........................................... 14,375(9) *
All directors and executive officers as a group
(consisting of 12 persons).............................. 1,479,411(10) 9.9%
Royce & Associates, Inc................................... 1,495,500(11) 10.8%
CLSP, L.P. ............................................... 977,400(12) 7.0%
Cooper Hill Partners LLC.................................. 1,792,600(13) 12.9%
Mr. Jeffrey Casdin........................................ 2,167,300(14) 15.6%
Investors Group Inc....................................... 1,056,500(15) 7.6%
----------------------------
* Less than 1%.
11
NOTES:
(1) The percentage of ownership as calculated above includes in the number of
shares outstanding for each individual listed those shares that are
beneficially, yet not directly, owned.
(2) 50,000 of the shares indicated represent shares with respect to which Dr.
Abeles has the right to acquire through the exercise of options.
(3) 16,875 of the shares indicated represent shares with respect to which Mr.
Carota has the right to acquire through the exercise of options. Under
Rule 13d-3 of the Securities and Exchange Act of 1934, as amended, Mr.
Carota disclaims, but may be deemed to be the beneficial owner of, 15
shares of DUSA common stock that are held by his adult son and 50 shares
held by his daughter, both of whom are members of Mr. Carota's household.
(4) All of the shares indicated represent shares with respect to which Mr.
Haft has the right to acquire through the exercise of options.
(5) 70,000 of the shares indicated represent shares with respect to which Mr.
Lufkin has the right to acquire through the exercise of options.
(6) All of the shares indicated represent shares with respect to which Dr.
Marcus has the right to acquire through the exercise of options.
(7) All of the shares indicated represent shares with respect to which Dr.
McIntrye has the right to acquire through the exercise of options.
(8) 300,000 of the shares indicated represent shares with respect to which Dr.
Shulman has the right to acquire through the exercise of his Class B
Warrants which have an exercise price of CDN. $6.79 per Warrant, and
565,000 of such shares represent shares with respect to which Dr. Shulman
has the right to acquire through the exercise of options. Dr. Shulman's
address is 181 University Avenue, Suite 1208, Toronto, ON, M5H 3M7 CANADA.
(9) All of the shares indicated represent shares with respect to which Mr.
Sowyrda has the right to acquire through the exercise of options.
(10) All of the shares indicated, Class B Warrants and options, as the case may
be, as discussed in footnotes (2) through (9) above are included, as well
as 241,322 shares beneficially owned by other executive officers of the
Company, 235,625 shares of which may be acquired through the exercise of
options.
(11) The number of shares beneficially owned, and the percentage of outstanding
shares reported, are based upon information represented to the Company by
Royce & Associates, Inc. as of March 2, 2002. Royce & Associates, Inc.'s
address is 1414 Avenue of the Americas, New York, New York 10019.
(12) The number of shares beneficially owned, and the percentage of outstanding
shares reported, are based upon information disclosed by CLSP, L.P. on a
Schedule 13G/A filed with the Securities and Exchange Commission on
February 14, 2002. CLSP, L.P.'s address is 230 Park Avenue, New York, New
York 10169. See Notes 13 and 14 below.
(13) The number of shares beneficially owned, and the percentage of outstanding
shares reported, are based upon information disclosed by Cooper Hill
Partners, LLC on a Schedule 13G/A filed with the Securities and Exchange
Commission on February 14, 2002, and includes 977,400 shares held by CLSP,
L.P., 306,400 shares held by CLSP II, L.P., 337,900 shares held by
CLSP/SBS I, L.P. and 170,900 shares held by CLSP/SBS II, L.P. Cooper Hill
Partners, LLC is the sole general partner of each entity and has the power
to vote and dispose of the securities owned by each entity. Jeffrey Casdin
is the managing member of Cooper Hill Partners, LLC. Cooper Hill Partners,
LLC's address is 230 Park Avenue, New York, New York 10169.
(14) The number of shares beneficially owned, and the percentage of outstanding
shares reported, are based upon information disclosed by Jeffrey Casdin on
a Schedule 13G/A filed with the Securities and Exchange Commission on
February 14, 2002. In addition to the shares set forth in Notes 12 and 13
above, 374,700 shares held by CLSP Overseas, Ltd. which Cooper Hill
Partners, L.P. has the power to vote and dispose of, are included in the
total shares which may be deemed to be beneficially owned by Mr. Casdin.
Mr. Casdin is the managing member of Casdin Capital, LLC, the general
partner of Cooper Hill Partners, L.P. Mr. Casdin's address is 230 Park
Avenue, New York, New York 10169.
(15) The number of shares beneficially owned, and the percentage of outstanding
shares reported, are based upon information represented to the Company by
Investors Group Inc. as of March 15, 2002. Investors Group Inc.'s address
is One Canada Centre, 447 Portage Avenue, Winnipeg, Manitoba R3C 3B6
Canada.
12
SHAREHOLDER PROPOSALS
In order to be included in the Board of Directors' proxy statement and
proxy card for the 2003 Annual Meeting of Shareholders, a shareholder proposal
must be received by the Company on or before December 27, 2002. Proposals should
be directed to the attention of Ms. Shari Lovell at the Company's offices
located at 181 University Avenue, Suite 1208, Toronto, Ontario M5H 3M7 Canada,
or to the attention of the Secretary, Nanette W. Mantell, Esq., c/o Reed Smith
LLP, Princeton Forrestal Village, 136 Main Street - Suite 250, Princeton, New
Jersey 08543.
In addition, if a shareholder wishes to present a proposal at the Company's
2003 Annual Meeting which is not intended to be included in the Company's proxy
statement for that meeting, the Company must receive written notice of the
shareholder proposal by March 12, 2003. If DUSA does not receive timely notice
of such a shareholder proposal, the Company will retain its discretionary
authority to vote proxies on such proposals even if it is not specifically
reflected on the proxy card, and shareholders have not had an opportunity to
vote on the proposal by proxy.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Under the securities laws of the United States, the Company's directors,
officers and any person holding more than ten percent (10%) of our common stock
are required to report their ownership of our common stock and any changes in
that ownership to the Securities and Exchange Commission on Forms 3, 4 and 5.
Based on our review of the copies of such forms we have received, DUSA believes
that all of our officers and directors complied with all filing requirements
applicable to them with respect to transactions during fiscal 2001. Other than
Royce & Associates, Inc. and Cooper Hill Partners, LLC/Jeffrey Casdin, the
Company is not aware of any person who holds greater than 10% beneficial
ownership. In making these statements, we have relied on the written
representations of our directors and officers and copies of the reports that
they have filed with the SEC.
OTHER MATTERS
Management knows of no matters other than those described above that are to
be brought before the meeting. However, if any other matter properly comes
before the meeting, the persons named in the enclosed proxy will vote the proxy
in accordance with their best judgment on the matter.
The cost of preparing and mailing the enclosed material will be borne by
the Company. The Company may use the services of its officers and employees (who
will receive no additional compensation) to solicit proxies. The Company intends
to request banks and brokers holding shares of DUSA Pharmaceuticals, Inc. common
stock to forward copies of the proxy materials to those persons for whom they
hold shares and to request authority for the execution of proxies. The Company
will reimburse banks and brokers for their out-of-pocket expenses. The Company
has retained its transfer agent, American Stock Transfer & Trust Company, to aid
in the solicitation, at an estimated cost of under $10,000.
Certain information contained in this proxy statement relating to the
occupations and security holdings of our directors and officers is based upon
information received from the individual directors and officers.
13
DUSA PHARMACEUTICALS, INC.
PROXY FOR 2002 ANNUAL MEETING
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints D. Geoffrey Shulman, MD, FRCPC and Shari
Lovell, or either of them, each with power of substitution, proxies to vote all
shares of common stock which the undersigned would possess if personally present
at the Annual Meeting of Shareholders (including all adjournments thereof) of
DUSA Pharmaceuticals, Inc. (the "Company") to be held on Thursday, June 13,
2002, at 11:00 a.m. at the Omni Parker House located at 60 School Street,
Boston, Massachusetts.
SHAREHOLDERS ARE REQUESTED TO SIGN AND DATE THIS PROXY
AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES OR CANADA.
SEE REVERSE
SIDE
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE
The Board of Directors recommends a vote FOR each of the items listed below.
Unless otherwise specified, the vote represented by this proxy will be cast
FOR Items 1, 2 and 3.
WITHHOLD authority to
FOR all nominees vote for all nominees
listed at right listed at right
1. Election of [ ] [ ] NOMINEES: D. Geoffrey Shulman, MD, FRCPC;
Directors John H. Abeles, MD;
David Bartash;
Jay M. Haft, Esq.; and
Richard C. Lufkin, SB, MBA.
(Mark Only One Box)
INSTRUCTION: To withhold authority to vote for any
individual nominee, write that nominee's
name on the space provided.
1. Election of 2. Ratification of the selection of FOR AGAINST ABSTAIN
Directors Deloitte & Touche LLP as auditors [ ] [ ] [ ]
for the Company for fiscal year
2002.
3. In their discretion, the proxies are authorized to vote
upon such other business as may properly come before the
meeting.
INSTRUCTION: T
i
n
---------------------------------------------------------
PLEASE check the box below if you, and any persons related PLEASE SIGN HERE as your name appears in this Proxy. When
or unrelated to you at the same address, are currently shares are held by joint tenants, each joint tenant should
receiving multiple copies of the Company's proxy statement sign. When signing as attorney, executor, administrator,
and annual report and YOU wish to cease future deliveries of trustee, guardian or other fiduciary, please give your full
the Company's proxy statement and annual report for the title as such. If the signer is a corporation, please sign
shares represented hereby. PLEASE NOTE you will continue to in full corporate name by a duly authorized officer; if a
receive a proxy card and be able to vote the shares partnership, please sign in the partnership name by an
represented hereby and can revoke this consent at any time authorized person.
by following the procedures set forth in the proxy
statement.
[ ] I hereby CONSENT to discontinue delivery of the Date ----------------------------------------------------
Company's proxy statement and Annual Report for the Signature of Shareholder
shares represented hereby. ---------------------------------------
Signature if held jointly
----------------------------------------