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.___)
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[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission
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[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
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ALTEON INC.
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Name of Registrant as Specified in Its Charter
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ALTEON INC.
170 WILLIAMS DRIVE
RAMSEY, NEW JERSEY 07446
To Our Stockholders:
You are most cordially invited to attend the 2003 Annual Meeting of
Stockholders of Alteon Inc. at 9:00 A.M., local time, on June 4, 2003, at the
Sheraton Crossroads Hotel, One International Boulevard, Mahwah, New Jersey
07430.
The Notice of Meeting and Proxy Statement on the following pages describe
the matters to be presented at the meeting.
It is important that your shares be represented at this meeting to assure
the presence of a quorum. Whether or not you plan to attend the meeting, we hope
that you will have your stock represented by signing, dating and returning your
proxy as soon as possible in the enclosed envelope, which requires no postage if
mailed in the United States. Your stock will be voted in accordance with the
instructions you have given in your proxy.
Thank you for your continued support.
Sincerely,
KENNETH I. MOCH
Chairman of the Board
President and Chief Executive Officer
ALTEON INC.
170 WILLIAMS DRIVE
RAMSEY, NEW JERSEY 07446
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 4, 2003
The Annual Meeting of Stockholders of Alteon Inc., a Delaware corporation,
will be held at the Sheraton Crossroads Hotel, One International Boulevard,
Mahwah, New Jersey 07430, on June 4, 2003, at 9:00 A.M., local time, for the
following purposes:
(1) To elect two directors to serve until the Annual Meeting to be held in
2006 and until their successors have been duly elected and qualify;
(2) To ratify the appointment of KPMG LLP as our independent accountants
for the fiscal year ending December 31, 2003; and
(3) To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on April 8, 2003, are
entitled to vote at the meeting, or at any adjournment of the meeting. A
complete list of those stockholders will be open to the examination of any
stockholder at our principal executive offices at 170 Williams Drive, Ramsey,
New Jersey 07446, for a period of 10 days prior to the meeting. The meeting may
be adjourned from time to time without notice other than by announcement at the
meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER OF
SHARES YOU HOLD. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE
ENCLOSED RETURN ENVELOPE. THE PROMPT RETURN OF PROXIES WILL INSURE A QUORUM AND
SAVE ALTEON THE EXPENSE OF FURTHER SOLICITATION. EACH PROXY GRANTED MAY BE
REVOKED BY THE STOCKHOLDER APPOINTING SUCH PROXY AT ANY TIME BEFORE IT IS VOTED.
IF YOU RECEIVE MORE THAN ONE PROXY CARD BECAUSE YOUR SHARES ARE REGISTERED IN
DIFFERENT NAMES OR ADDRESSES, EACH SUCH PROXY CARD SHOULD BE SIGNED AND RETURNED
TO ASSURE THAT ALL OF YOUR SHARES WILL BE VOTED.
By Order of the Board of Directors
ELIZABETH A. O'DELL
Secretary
Ramsey, New Jersey
April 23, 2003
ALTEON'S 2002 ANNUAL REPORT ACCOMPANIES THE PROXY STATEMENT.
ALTEON INC.
170 WILLIAMS DRIVE
RAMSEY, NEW JERSEY 07446
PROXY STATEMENT
We are furnishing this Proxy Statement in connection with our Annual
Meeting of Stockholders to be held on June 4, 2003, at the Sheraton Crossroads
Hotel, One International Boulevard, Mahwah, New Jersey 07430, at 9:00 A.M.,
local time, and at any adjournment or adjournments thereof. Stockholders of
record at the close of business on April 8, 2003, will be entitled to vote at
the meeting and at any adjournment of the meeting. As of April 8, 2003, there
were 35,900,841 shares of common stock issued and outstanding and entitled to
vote. Each share of common stock is entitled to one vote on any matter presented
at the meeting.
You may vote in person at the meeting or by proxy. We recommend you vote by
proxy even if you plan to attend the meeting. You can always change your vote at
the meeting.
Alteon's Board of Directors is asking for your proxy. Giving us your proxy
by properly signing and returning the accompanying proxy card means you
authorize us to vote your shares at the meeting in the manner you direct. You
may vote for both, one or neither of our director candidates. We will vote as
you direct.
If you properly sign and return the enclosed proxy card but do not specify
how to vote, we will vote your shares (i) FOR the election of the nominees named
below as directors; (ii) FOR the ratification of the appointment of KPMG LLP to
serve as our independent accountants for the fiscal year ending December 31,
2003; and (iii) in the discretion of the persons named in the enclosed form of
proxy, on any other proposals which may properly come before the meeting or any
adjournment of the meeting.
You may receive more than one proxy or voting card depending on how you
hold your shares. Shares registered in your name are covered by one card.
However, if you hold shares through someone else, such as a stockbroker, you may
receive material from them asking how you want to vote. Each proxy card should
be signed and returned to assure that all of your shares are voted.
You may revoke your proxy any time before it is voted by submitting a new
proxy with a later date, by voting in person at the meeting or by notifying
Alteon's Secretary in writing. However, your mere presence at the meeting does
not revoke the proxy.
In order to carry on the business of the meeting, we must have a quorum.
This means the holders of at least a majority of our common stock must be
represented at the meeting, either by proxy or in person. Votes that are
withheld and broker non-votes will be counted for purposes of determining the
presence or absence of a quorum.
Directors are elected by a plurality vote, which means that the two
nominees receiving the most votes will be elected to fill the seats on the
Board. All other actions considered at the meeting, including an adjournment,
may be taken upon the favorable vote of a majority of the votes present in
person or represented by proxy at the meeting. Only votes cast "for" a matter
will constitute affirmatives votes. Votes withheld or abstentions, because they
are not cast "for" a particular proposal, will have the same effect as negative
votes or votes cast "against" such proposal. Proxies submitted by brokers that
do not indicate a vote for some of the proposals because such brokers do not
have discretionary voting authority on those proposals and have not received
instructions from their customers on those proposals (i.e., broker non-votes)
are not considered to be shares present for the purpose of calculating the vote
on such proposals and will not affect the outcome of such proposals.
This Proxy Statement, together with the related proxy card, is being mailed
to you on or about April 23, 2003. Our Annual Report to Stockholders for the
year ended December 31, 2002, including financial statements, is being mailed
concurrently with this Proxy Statement to all stockholders of record as of April
8, 2003. In addition, we have provided brokers, dealers, banks, voting trustees
and their nominees, at our expense, with additional copies of the Annual Report
so that they may supply the material to beneficial owners as of April 8, 2003.
1
ELECTION OF DIRECTORS
At the meeting, two directors are to be elected to hold office until the
Annual Meeting of Stockholders to be held in 2006 and until their successors are
elected and qualify. The nominees for election to the Board of Directors are
David McCurdy and Mark Novitch, M.D. Their biographies appear below.
Pursuant to our Restated Certificate of Incorporation, the Board of
Directors is divided into three classes, each of which serves a term of three
years. Class A consists of Ms. Breslow, Mr. Dalby and Mr. Moore, whose terms
will expire at the Annual Meeting of Stockholders in 2004. Class B consists of
Mr. Moch, Dr. Bransome and Dr. Naimark, whose terms will expire at the Annual
Meeting of Stockholders in 2005. Class C consists of Mr. McCurdy and Dr.
Novitch, whose terms will expire at the meeting.
Proxies solicited by the Board will be voted for the election of the
nominees named above, unless otherwise specified in the proxy. All of the
persons whose names and biographies appear below are at present directors of
Alteon. In the event a nominee should become unavailable or unable to serve as a
director, it is intended that votes will be cast for a substitute nominee
designated by the Board of Directors. The Board of Directors has no reason to
believe that the nominees named will be unable to serve if elected. The nominees
have consented to being named in this Proxy Statement and to serve if elected.
The current Board of Directors, including the nominees, is comprised of the
following persons:
SERVED AS A
NAME AGE DIRECTOR SINCE POSITIONS WITH ALTEON
---- --- -------------- ---------------------
Kenneth I. Moch................... 48 1998 Chairman of the Board,
President and Chief Executive Officer
Edwin D. Bransome, Jr., M.D. ..... 69 1999 Director
Marilyn G. Breslow................ 59 1988 Director
Alan J. Dalby..................... 66 1994 Director
David McCurdy(1).................. 53 1997 Director
Thomas A. Moore................... 52 2001 Director
George M. Naimark, Ph.D. ......... 78 1999 Director
Mark Novitch, M.D.(1)............. 71 1994 Director
--------------------
(1) A nominee for election to the Board of Directors.
The principal occupations and business experience, for at least the past
five years, of each director are as follows:
Kenneth I. Moch, our Chairman of the Board, President and Chief Executive
Officer, joined Alteon in February 1995, as Senior Vice President, Finance and
Business Development and Chief Financial Officer. Mr. Moch became President,
Chief Executive Officer and a director of Alteon in December 1998. In June 2001,
he was named Chairman of the Board. From 1990 to 1995, Mr. Moch served as
President and Chief Executive Officer of Biocyte Corporation, a cellular therapy
company that pioneered the use of cord blood stem cells in transplantation
therapy. Mr. Moch was a founder and the Managing General Partner of Catalyst
Ventures, a seed venture capital partnership, and was a founder of The Liposome
Company, Inc. in Princeton, New Jersey, where he served as Vice President from
1982 to 1988. Previously, he was a management consultant with McKinsey &
Company, Inc. and a biomedical technology consultant with Channing, Weinberg &
Company, Inc. Mr. Moch received an A.B. in Biochemistry from Princeton
University, and an M.B.A. with emphasis in Finance and Marketing from the
Stanford Graduate School of Business.
Edwin D. Bransome, Jr., M.D., has been a Director of Alteon since July
1999. He is a Professor of Medicine and Physiology Emeritus at the Medical
College of Georgia. He retired as Chief of the Section of Endocrinology and
Metabolism in 2000, and is the Past President of the United States
Pharmacopoeial Convention and has been a member of the USP Board of Trustees
since 1990. He served on the Georgia Department of Medical Assistance (Medicaid)
Drug Utilization Board from 1992 to 2000 and was its first Chairman. Currently,
Dr. Bransome is in medical practice as a consultant in Endocrinology and is
Medical
2
Director of the Diabetes Treatment Center at the Aiken, South Carolina Regional
Medical Center. He is a member of the editorial board of the journal, Diabetes
Care. Dr. Bransome has had faculty positions at the Scripps Clinic and Research
Foundation, MIT and the Harvard University School of Medicine. He received his
A.B. in 1954 from Yale University and received his M.D. from Columbia University
College of Physicians and Surgeons in 1958. His post-graduate training in
Internal Medicine and Clinical Endocrinology fellowship was at the Peter Bent
Brigham Hospital in Boston and in Biochemistry at Columbia University College of
Physicians and Surgeons.
Marilyn G. Breslow has been a Director of Alteon since June 1988. She has
been a Portfolio Manager/ Analyst for W.P. Stewart & Co., Inc., the research
subsidiary of W.P. Stewart & Co., Ltd., an investment advisory firm, since 1990,
and is President of the New York office of WPS, Inc. She was a General Partner
of Concord Partners and a Vice President of Dillon, Read & Co., Inc. from 1984
to 1990. Prior to Dillon, Read & Co., she worked at Polaroid Corporation from
1973 to 1984 and was with Peat, Marwick, Mitchell and Company from 1970 to 1972.
Ms. Breslow holds a B.S. degree from Barnard College and an M.B.A. from the
Harvard Graduate School of Business Administration.
Alan J. Dalby has been a Director of Alteon since December 1994. He is the
former Chairman of Reckitt Benckiser plc, a household products company, and
former Chairman, Chief Executive Officer and a founder of Cambridge
NeuroScience, Inc. He was Executive Vice President and member of the Board of
Directors for SmithKline Beckman Corporation, retiring in 1987. Mr. Dalby is a
Director of Acambis plc.
Dave McCurdy has been a Director of Alteon since June 1997. He is currently
the President of EIA (Electronic Industries Alliance), the premier trade
organization representing more than 2,100 of the world's leading electronics
manufacturers. Before becoming President of EIA in November 1998, Mr. McCurdy
was Chairman and Chief Executive Officer of the McCurdy Group L.L.C., a business
consulting and investment firm focused on high-growth companies in the fields of
healthcare, high technology and international business, which he formed in 1995.
Prior to forming the McCurdy Group, Mr. McCurdy served for 14 years in the U.S.
House of Representatives from the fourth district of Oklahoma. He held a
commission in the United States Air Force Reserve attaining the rank of major
and serving as a Judge Advocate General (JAG). A 1972 graduate of the University
of Oklahoma, Mr. McCurdy received his J.D. in 1975 from Oklahoma's Law School.
He also studied international economics at the University of Edinburgh,
Scotland, as a Rotary International Graduate Fellow.
Thomas A. Moore has been a Director of Alteon since October 2001. He is
President and Chief Executive Officer of Biopure Corporation, a leading
developer, manufacturer and marketer of oxygen therapeutics for the treatment of
anemia and other applications. Prior to joining Biopure in 2002, Mr. Moore was
President and Chief Executive Officer of Nelson Communications Worldwide, one of
the largest providers of healthcare marketing services globally. Mr. Moore was
President of Procter & Gamble's worldwide prescription and over-the-counter
healthcare products business, and Group Vice President of the Procter & Gamble
Company. He is Chairman of the Institute for Cancer Prevention, a non-profit
organization that researches the nutritional and environmental factors in cancer
and other diseases. Mr. Moore holds a B.A. in History from Princeton University.
George M. Naimark, Ph.D., has been a Director of Alteon since July 1999. He
is President of Naimark & Barba, Inc., a management consultancy, since September
1966, and Naimark & Associates, Inc., a private healthcare consulting
organization, since February 1994. Dr. Naimark has more than 30 years of
experience in the pharmaceutical, diagnostic and medical device industries. His
experience includes management positions in research and development, new
product development and quality control. In addition, Dr. Naimark has authored
books on patent law, communications and business, as well as many articles that
appeared in general business, marketing, scientific and medical journals and was
the editor of a medical journal. He received his Ph.D. from the University of
Delaware in 1951, and received a B.S. and M.S. from Bucknell University in 1947
and 1948, respectively.
Mark Novitch, M.D., has been a Director of Alteon since June 1994. He
retired as Vice Chairman and Chief Compliance Officer of the Upjohn Company in
December 1993. Prior to joining Upjohn in 1985, he was Deputy Commissioner of
the U.S. Food and Drug Administration. Dr. Novitch is a Director of Guidant
3
Corporation, a supplier of cardiology and minimally invasive surgery products;
Neurogen Corporation, a biopharmaceutical firm focused on central nervous system
disorders; Calypte Biomedical, a developer of urine-based diagnostics; and Kos
Pharmaceuticals, Inc., a developer of pharmaceutical products for cardiovascular
and respiratory conditions. He graduated from Yale University and received his
M.D. from New York Medical College.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE NOMINEES
FOR THE BOARD OF DIRECTORS.
COMMITTEES AND MEETINGS OF THE BOARD
The Board of Directors has a Compensation Committee, which reviews salaries
and incentive compensation for employees of and consultants to Alteon, a
Nominating Committee, which reviews the qualifications of candidates and
proposes nominees to serve as directors on our Board of Directors and nominees
for membership on Board committees, and an Audit Committee, which reviews the
results and scope of the audit and other services provided by our independent
accountants. The Nominating Committee does not consider nominees recommended by
stockholders. In 2002, the Audit, Nominating and Compensation Committees were
comprised of Marilyn G. Breslow, Alan J. Dalby, Edwin D. Bransome, Jr., M.D.,
David McCurdy, Thomas A. Moore, George M. Naimark, Ph.D., and Mark Novitch, M.D.
All of the members of the Audit Committee are independent, as such term is
defined by Section 121A of the American Stock Exchange listing standards. The
Audit Committee, Nominating Committee and Compensation Committee each held two
meetings during the year ended December 31, 2002. There were six meetings of the
Board of Directors in 2002. With the exception of Marilyn Breslow, each of the
incumbent directors attended at least 75% of the aggregate of (1) the total
number of meetings of the Board of Directors (held during the period for which
he or she was a director) and (2) the total number of meetings held by all
committees of the Board on which he or she served during the periods that he or
she served. We have adopted a written charter for the Audit Committee.
COMPENSATION OF DIRECTORS
All of the directors are reimbursed for their expenses for each Board and
committee meeting attended. Directors who are not compensated as Alteon
employees receive $1,500 per meeting attended in person and $1,000 for each
meeting attended by telephone for their service to the Board. Non-compensated
directors also receive, upon the date of their election or re-election to the
Board and on the dates of the next two Annual Meetings of Stockholders (subject
to their continued service on the Board of Directors), a stock option to
purchase 20,000 shares of common stock (subject to adjustment if they received
stock options upon appointment to the Board between Annual Meetings of
Stockholders to fill a vacancy or newly created directorship) at an exercise
price equal to the fair market value of the common stock on the date of grant.
Each of these options will vest and become exercisable on the date of Alteon's
first Annual Meeting of Stockholders following the date of grant, subject to the
director's continued service on the Board.
4
EXECUTIVE OFFICERS
The following table identifies our current executive officers:
IN CURRENT
NAME AGE CAPACITIES IN WHICH SERVED POSITIONS SINCE
---- --- -------------------------- ---------------
Kenneth I. Moch............... 48 Chairman of the Board June 2001
President and Chief Executive December 1998
Officer
Robert C. deGroof, Ph.D.(1)... 58 Senior Vice President March 2000
Scientific Affairs
Judith S. Hedstrom(2)......... 46 Senior Vice President February 2002
Corporate Development
Elizabeth A. O'Dell(3)........ 42 Vice President, Finance, October 1993
Secretary and Treasurer
--------------------
(1) Robert C. deGroof, Ph.D., joined Alteon as Senior Vice President,
Scientific Affairs, in March 2000. From April 1990 to February 2000, he
was the President of Keystone Scientific Management. Dr. deGroof
previously served as Director of Regulatory Affairs, World Wide
Development Operations, for Bristol-Myers Squibb from July 1987 to
March 1990. From October 1984 to July 1987, he was the Assistant
Director of Regulatory Affairs at McNeil Consumer Products. Prior to
joining the industry, Dr. deGroof was an Assistant Professor of
Pharmacology at Jefferson Medical College, Thomas Jefferson University,
was the recipient of a National Institutes of Health postdoctoral
fellowship at the University of Pennsylvania and was a Grass Fellow in
Neurophysiology at the Marine Biological Laboratory, Woods Hole. Dr.
DeGroof received his B.S. at the University of Florida in 1967 and his
Ph.D. in Physiology and Pharmacology from Duke University in 1973.
(2) Judith S. Hedstrom joined Alteon as Senior Vice President, Corporate
Development, in February 2002. From January 1996 to February 2002, she
was a leader of the Pharmaceuticals and Medical Products Practice at
McKinsey & Company, a global consulting firm, where she provided
strategic advice on R&D, marketing, sales and business development
matters to many biotechnology and pharmaceutical clients. Prior to
that, she was Vice President of Business Development at APACHE Medical
Systems from April 1993 to January 1996. From June 1988 to April 1993,
she was a Senior Consultant with The Wilkerson Group, formerly a
leading healthcare consulting firm. Ms. Hedstrom received her B.A. and
M.B.A. degrees from the University of Chicago.
(3) Elizabeth A. O'Dell has been Vice President, Finance, Secretary and
Treasurer since October 1993. She served as Alteon's Director of
Finance from February 1993 to September 1993 and as Controller of
Alteon from February 1992 to February 1993. Ms. O'Dell was the
Controller of Radiodetection Corporation from November 1991 to January
1992. From March 1987 to November 1991, she held various positions at
Kratos Analytical, Inc. Prior to that, she served for five years in
public accounting at PricewaterhouseCoopers LLP and Deloitte & Touche
LLP. Ms. O'Dell received her B.B.A. and M.B.A. from Pace University.
She is also a CPA in New Jersey.
5
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the annual
and long-term compensation for the fiscal years ended December 31, 2002, 2001
and 2000, of our Chief Executive Officer and three other highly compensated
executive officers of Alteon who were serving as executive officers at December
31, 2002, or who served as executive officers during the fiscal year ended
December 31, 2002 (collectively, the "Named Officers"):
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION STOCK
---------------------------- OPTION AWARDS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (NUMBER OF SHARES) COMPENSATION
--------------------------- ---- -------- -------- ------------------ ------------
Kenneth I. Moch................. 2002 $340,000 -- 100,000 $ 2,750(2)
President and 2001 326,025 $100,000(1) 500,000 2,625(2)
Chief Executive Officer 2000 310,500 100,000(1) 325,000 2,625(2)
Robert C. deGroof, Ph.D.(3)..... 2002 $225,750 -- 175,000 $43,514(4)
Senior Vice President 2001 215,000 $ 50,000(1) 75,000 35,253(5)
Scientific Affairs 2000 166,666 -- 325,000 25,125(6)
Judith S. Hedstrom (7).......... 2002 $188,125 $ 15,000(1) 275,000 $ 2,750(2)
Senior Vice President
Corporate Development
Elizabeth A. O'Dell............. 2002 $170,000 -- 30,000 $ 2,750(2)
Vice President, Finance 2001 150,800 $ 15,000(1) 11,667 2,625(2)
Secretary and Treasurer 2000 145,000 -- 127,500 2,625(2)
---------------
(1) Represents a deferred performance bonus.
(2) Represents matching 401(k) contributions we paid on behalf of the executive
officer.
(3) Dr. deGroof began serving as Senior Vice President, Scientific Affairs, in
March 2000.
(4) Includes a housing allowance of $30,000, medical premiums of $10,514 and
matching 401(k) contributions of $3,000.
(5) Includes a housing allowance of $30,000, medical premiums of $2,628 and
matching 401(k) contributions of $2,625.
(6) Includes a housing allowance of $22,500 and matching 401(k) contributions of
$2,625.
(7) Ms. Hedstrom began serving as Senior Vice President, Corporate Development,
in February 2002.
6
The following table sets forth certain information concerning grants of
stock options during the fiscal year ended December 31, 2002, to the Named
Officers:
OPTION GRANTS IN LAST FISCAL YEAR
PERCENTAGE
OF TOTAL POTENTIAL REALIZABLE VALUE
NUMBER OF OPTIONS AT ASSUMED ANNUAL RATES
SECURITIES GRANTED TO OF STOCK PRICE APPRECIATION
UNDERLYING EMPLOYEES EXERCISE OR FOR OPTION TERM(1)
OPTIONS IN FISCAL BASE PRICE EXPIRATION ---------------------------
NAME GRANTED 2002 PER SHARE DATE 5% 10%
---- ---------- ---------- ----------- ---------- ----------- -------------
Kenneth I. Moch............. 100,000 13.5% $1.95 12/18/12 $109,603 $ 209,030
Robert C. deGroof, Ph.D. ... 75,000 10.2% $1.95 12/18/12 $ 82,202 $ 217,522
100,000 13.5 1.87 12/18/12 117,603 298,030
Judith S. Hedstrom.......... 200,000 27.1% $4.38 02/13/12 $550,912 $1,396,118
75,000 10.2 1.95 12/18/12 82,202 217,522
Elizabeth A. O'Dell......... 30,000 4.1% $1.95 12/18/12 $ 36,790 $ 93,234
---------------
(1) The dollar amounts under these columns are the result of calculations
assuming that the price of common stock on the date of the grant of the
option increases at the hypothetical 5% and 10% rates set by the Securities
and Exchange Commission ("SEC") and therefore are not intended to forecast
possible future appreciation, if any, of our stock price over the option
term of 10 years.
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
NUMBER OF
SHARES SECURITIES UNDERLYING VALUE OF UNEXERCISED
ACQUIRED UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ON AT DECEMBER 31, 2002 AT DECEMBER 31, 2002(1)
EXERCISE VALUE --------------------------- ---------------------------
NAME (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
Kenneth I. Moch............... -- -- 403,641 568,334 $392,115 $77,167
Robert C. deGroof, Ph.D....... -- -- 178,750 396,250 $ 2,500 $23,000
Judith S. Hedstrom............ -- -- 25,000 250,000 $ 2,500 $ 5,000
Elizabeth A. O'Dell........... -- -- 325,833 63,334 $213,490 $ 2,000
---------------
(1) Based on the closing price on the American Stock Exchange at December 31,
2002 ($2.05).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The persons who served as members of the Compensation Committee of the
Board of Directors during 2002 were Alan J. Dalby, Edwin D. Bransome, Jr., M.D.,
Marilyn G. Breslow, David McCurdy, Thomas A. Moore, George M. Naimark, Ph.D.,
and Mark Novitch, M.D. None of the members of the Compensation Committee was an
officer, former officer or employee of Alteon.
7
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
General Policies
The Compensation Committee (the "Committee") of the Board of Directors is
responsible for establishing and monitoring the general compensation policies
and compensation plans of Alteon, as well as the specific compensation levels
for executive officers. The Committee also acts as the Administrator under
Alteon's Amended and Restated 1987 Stock Option Plan and Amended 1995 Stock
Option Plan, and, from time to time, grants options under such Plans.
Under the supervision of the Committee, Alteon has developed and
implemented compensation policies, plans and programs which (1) provide a total
compensation package which is intended to be competitive within the industry so
as to enable Alteon to attract and retain high-caliber executive personnel, and
(2) seek to align the financial interests of Alteon's employees with those of
its stockholders by relying heavily on long-term incentive compensation that is
tied to performance.
The primary components of executive compensation include base salary and
long-term equity incentives in the form of stock options. Alteon relies on
long-term incentive compensation (i.e., stock options) to motivate the executive
officers and other employees. This allows Alteon to retain cash for research and
development projects. In determining the size of stock option grants to
individual executives, the Committee considers a number of factors, including
the following: the level of an executive's job responsibilities; the executive's
past performance; the size and frequency of grants by comparable companies; the
executive's salary level; the need to provide incentive for the purpose of
retaining qualified personnel in light of our current conditions and prospects;
the size of any prior grants; and the achievement of designated milestones by
the executive. The Committee assigns no specific weight to any of the foregoing
(other than achievement of designated milestones by the executive in cases where
the executive's employment agreement provides for a grant of a specific size
upon achievement of the milestone) when making determinations as to the size of
stock option grants.
Executive officers are also eligible to earn an annual cash incentive
award, the amount of which is based upon (1) the position level of the executive
officer, and (2) the attainment of specific individual non-financial performance
objectives. The Committee sets the performance objectives at the beginning of
the fiscal year.
The Chief Executive Officer is responsible for the development of the
annual salary plan for executive officers other than himself. The plan is based
on industry and peer group comparisons and national surveys and on performance
judgments as to the past and expected future contributions of the individuals.
To maintain a competitive level of compensation, Alteon targets base salary at
the upper percentiles of a comparative group composed of other biotechnology
companies. Base salary may exceed this level as a result of individual
performance. The Committee reviews the annual plan and makes recommendations to
the Board of Directors, with any modifications it deems appropriate. The
Committee believes it has established executive compensation levels which are
competitive with companies in the industry, taking into account individual
experience, performance of both Alteon and the individual, company size,
location and stage of development.
Compensation of the Chief Executive Officer
Mr. Moch's compensation was determined on the basis of his expertise and
experience, which include over 20 years of experience in the biotechnology and
venture capital fields. Mr. Moch received a base salary of $340,000 in 2002. In
2001, in connection with the extension of his employment agreement to December
2004, Mr. Moch received options to purchase 500,000 shares of Alteon's common
stock at an exercise price of $2.60 per share, which was the fair market value
of Alteon's common stock on the date of grant. Of the total number of shares
underlying this option, 300,000 vest in equal monthly installments over a
thirty-six month period, and 200,000 vest in a lump sum in December 2006,
subject to accelerated vesting on December 14, 2004 in the event that the
average fair market value for Alteon's common stock reaches certain specified
target prices. The Committee believes that Mr. Moch's compensation arrangements
reflect the compensation package necessary to retain his services for Alteon in
light of Alteon's current condition and prospects and is commensurate with his
expertise and experience as well as with compensation offered by comparable
biotechnology companies.
8
Effective January 1, 1994, the Internal Revenue Code does not permit
corporations to deduct payment of certain compensation in excess of $1,000,000
to the chief executive officer and the four other most highly paid executive
officers. All compensation paid to our executive officers for 2002 will be fully
deductible, and the Committee anticipates that amounts paid as cash compensation
will continue to be fully deductible because the amounts are expected to be less
than the $1,000,000 threshold. Under certain circumstances, the executive
officers may realize compensation upon the exercise of stock options granted
under our stock option plans which would not be deductible by Alteon. Alteon
expects to take such action as is necessary to qualify its stock option plans as
"performance-based compensation," which is not subject to the limitation, if and
when the Committee determines that the effect of the limitation on deductibility
warrants such action.
COMPENSATION COMMITTEE
Alan J. Dalby
Edwin D. Bransome, Jr., M.D.
Marilyn G. Breslow
David McCurdy
Thomas A. Moore
George M. Naimark, Ph.D.
Mark Novitch, M.D.
9
AUDIT COMMITTEE REPORT
The Audit Committee's powers and responsibilities and the qualifications
required of each of its members, are set forth in the Audit Committee Charter.
RESPONSIBILITIES
The Audit Committee is responsible for reviewing the results and scope of
the audit and other services provided by Alteon's independent accountants.
Management is solely responsible for the financial statements and the financial
reporting process, including the system of internal controls, and has
represented to the Audit Committee and the Board of Directors that the financial
statements discussed below were prepared in accordance with accounting
principles generally accepted in the United States of America appropriate in the
circumstances and necessarily include some amounts based on management's
estimates and judgments. Alteon's independent accountants are responsible for
auditing these financial statements and expressing an opinion on the conformity
of these financial statements, in all material respects, with accounting
principles generally accepted in the United States of America.
INDEPENDENCE
As part of its responsibilities, the Audit Committee reviews the fees paid
to the independent accountants for non-audit services, if any, and considers the
effect of such services and the related fees on the independent accountants'
independence. As required by Independence Standards Board Standard No. 1, as
currently in effect, Alteon's independent accountants, KPMG LLP ("KPMG"), have
disclosed to the Audit Committee any relationships between it (and its related
entities) and Alteon (and its related entities), which, in its professional
judgment, may reasonably be thought to affect its ability to be independent. In
addition, KPMG has discussed its independence with the Audit Committee and
confirmed in a letter to the Audit Committee that, in its professional judgment,
it is independent of Alteon within the meaning of the Securities Act of 1933 and
the Securities Exchange Act of 1934.
RECOMMENDATION
Acting pursuant to its Charter, the Audit Committee has reviewed Alteon's
audited annual financial statements for the year ended December 31, 2002, and
the related report by KPMG, and has discussed the audited financial statements
and report with management and with the independent accountants. The Audit
Committee has also discussed with management and the independent accountants the
matters required to be discussed by Statement on Auditing Standards 61, as
currently in effect. These matters include significant accounting policies,
management judgments and accounting estimates, management's consultation with
other accountants, and any difficulties encountered in performing the audit,
significant audit adjustment or disagreements with management. Based on the
review and discussions described above, the Audit Committee recommended to
Alteon's Board of Directors that the audited financial statements be included in
Alteon's annual report on Form 10-K for the fiscal year ended December 31, 2002,
for filing with the Securities and Exchange Commission.
AUDIT COMMITTEE
Marilyn G. Breslow
Edwin D. Bransome, Jr., M.D.
Alan J. Dalby
David McCurdy
Thomas A. Moore
George M. Naimark, Ph.D.
Mark Novitch, M.D.
10
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
The following graph compares the cumulative total stockholder return on our
common stock over the five-year period ending December 31, 2002, with the
cumulative total return of the NASDAQ CRSP Total Return Index for the NASDAQ
Stock Market (U.S. Companies) (the "NASDAQ-US"), NASDAQ Pharmaceutical Stocks
Index (the "NASDAQ-Pharm"), the American Stock Exchange U.S. Index ("Amex US")
and the American Stock Exchange Health Products & Services Index ("Amex HP&S").
The graph assumes (i) an investment of $100 in our common stock and in each of
the indices, and (ii) reinvestment of all dividends. No cash dividends have been
declared on our common stock as of December 31, 2002. The stock performance set
forth below is not necessarily indicative of future price performance.
ALTEON INC. RELATIVE STOCK PERFORMANCE
ALTEON INC. NASDAQ US NASDAQ PHARM AMEX US AMEX HP&S
----------- --------- ------------ ------- ---------
31-Dec-97 100.00 100.00 100.00 100.00 100.00
31-Dec-98 10.68 141.09 126.93 107.35 93.42
31-Dec-99 11.96 261.67 239.33 141.64 102.93
31-Dec-00 47.01 157.53 298.54 131.37 122.92
29-Dec-01 62.22 124.97 254.43 122.26 116.05
31-Dec-02 28.03 86.40 164.38 99.87 80.21
The preceding performance graph, the Compensation Committee report and the
Audit Committee report contained in this Proxy Statement are not to be
incorporated by reference into filings we have made or may make under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, that incorporate other filings we have made or may make under those
statutes.
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS WITH EXECUTIVE
OFFICERS
Kenneth I. Moch entered into a three-year amended and restated employment
agreement with Alteon as of December 15, 1998. By letter agreement dated
December 3, 2001, the term of Mr. Moch's amended and restated employment
agreement was extended for an additional three years to December 15, 2004.
Pursuant to
11
this letter agreement, Mr. Moch received stock options to purchase an aggregate
of 500,000 shares of our common stock. Under the amended and restated employment
agreement, Mr. Moch serves as our Chief Executive Officer and is entitled to an
annual salary of $300,000 (subject to annual review by the Board of Directors)
plus an annual bonus awarded at the discretion of the Board of Directors. Based
on the provisions of his agreement, in December 2001 the Board of Directors
approved an increase in Mr. Moch's base salary to $340,000.
Robert C. deGroof, Ph.D., entered into a three-year employment agreement
with Alteon as of March 14, 2000. Under the employment agreement, Dr. deGroof
received stock options to purchase an aggregate of 250,000 shares of our common
stock. In addition, Dr. deGroof is entitled to an annual salary of $200,000
(subject to annual review by the Board of Directors) plus an annual bonus
awarded at the discretion of the Board of Directors. Pursuant to the agreement,
in December 2001, the Board of Directors approved an increase in Dr. deGroof's
base salary to $225,750.
Judith S. Hedstrom entered into a three-year employment agreement with
Alteon as of February 11, 2002. Under the employment agreement, Ms. Hedstrom is
entitled to an annual salary of $215,000 (subject to annual review by the Board
of Directors) plus an annual bonus awarded at the discretion of the Board of
Directors. Pursuant to the agreement, Ms. Hedstrom received stock options to
purchase 200,000 shares of our common stock.
Elizabeth A. O'Dell entered into a new employment agreement with Alteon as
of October 21, 2000. Under the terms of this agreement, which is due to expire
on December 31, 2003, Ms. O'Dell's salary is subject to annual review by the
Board of Directors. Ms. O'Dell is also eligible, at the discretion of the Board
of Directors, to receive an annual cash bonus. Based on the provisions of her
agreement, Ms. O'Dell received an annual salary of $170,000 for the calendar
year 2002.
In addition to provisions in the above-described agreements requiring each
individual to maintain the confidentiality of our information and assign
inventions to us, such executive officers have agreed that during the terms of
their agreements and for one year thereafter, they will not compete with Alteon
by engaging in any capacity in any business which is competitive with our
business. The employment agreements of Mr. Moch, Dr. deGroof, Ms. Hedstrom and
Ms. O'Dell provide that either party may terminate the agreement upon 30 days'
prior written notice, subject to a salary continuation obligation of Alteon if
it terminates the agreements without cause. Mr. Moch will receive a 12-month
salary continuation and Dr. deGroof, Ms. Hedstrom and Ms. O'Dell will receive a
six-month salary continuation under such circumstances.
All employment agreements between Alteon and its Vice Presidents provide
that all unvested stock options held by such Vice Presidents will vest and
become exercisable immediately in the event of a change in control of Alteon.
CHANGE IN CONTROL SEVERANCE BENEFITS PLAN
In February 1996, we adopted the Alteon Inc. Change in Control Severance
Benefits Plan to protect and retain qualified employees and to encourage their
full attention, free from distractions caused by personal uncertainties and
risks in the event of a pending or threatened change in control of Alteon. The
Severance Plan provides for severance benefits to employees upon certain
terminations of employment after or in connection with a change in control of
Alteon as defined in the Severance Plan. Following a qualifying termination that
occurs as a result of a change in control, officers of Alteon will be entitled
to continuation of (i) their base salary for a period of 24 months, and (ii) all
benefit programs and plans providing for health and insurance benefits for a
period of up to 18 months. In addition, upon a change in control of Alteon, all
outstanding unexercisable stock options held by employees will become
exercisable.
401(k) PLAN
We have a tax-qualified employee savings and retirement plan (the "401(k)
Plan") covering all of our employees. Pursuant to the 401(k) Plan, employees may
elect to reduce their current compensation by up to
12
the statutorily prescribed annual limit ($12,000 in 2003) and have the amount of
such reduction contributed to the 401(k) Plan. The 401(k) Plan does not require
that we make additional matching contributions to the 401(k) Plan on behalf of
participants in the 401(k) Plan. However, in 1998, we began making discretionary
contributions at a rate of 25% of employee contributions up to a maximum of 5%
of their base salary. Contributions by employees to the 401(k) Plan and income
earned on such contributions are not taxable to employees until withdrawn from
the 401(k) Plan. The Trustees under the 401(k) Plan, at the direction of each
participant, invest the assets of the 401(k) Plan.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of March 7, 2003, except as otherwise set forth
below, by each (i) person who is known to Alteon to own beneficially more than
5% of the common stock, and (ii) current director and Named Officer, including
the nominees, and by all current directors and officers as a group:
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP(1) CLASS(2)
--------------------------- ----------------------- ----------
Franklin Resources, Inc..................................... 2,098,350(3) 6.2%
One Franklin Parkway
San Mateo, CA 94403
Charles L. Grimes........................................... 2,000,000(4) 6.0%
P.O. Box 136
Mendenhall, PA 19357
S.A.C. Capital Associates, LLC.............................. 1,905,584(5) 5.6%
72 Cummings Point Road
Stamford, CT 06902
Kenneth I. Moch............................................. 447,430(6) 1.3%
Edwin D. Bransome, Jr., M.D................................. 52,500(7) *
Marilyn G. Breslow.......................................... 142,067(8) *
Alan J. Dalby............................................... 114,998(9) *
David McCurdy**............................................. 86,067(10) *
Thomas A. Moore............................................. 39,000(11) *
George M. Naimark, Ph.D. ................................... 62,337(12) *
Mark Novitch, M.D.**........................................ 374,667(13) 1.1%
Robert C. deGroof, Ph.D. ................................... 193,333(14) *
Judith S. Hedstrom.......................................... 56,250(15) *
Elizabeth A. O'Dell......................................... 351,166(16) 1.0%
All current directors and officers as a group (11
persons).................................................. 1,919,815(17) 5.4%
---------------
* Less than one percent.
** Nominee for election to the Board of Directors.
(1) Beneficial ownership is determined in accordance with the rules of the SEC,
and generally includes voting or investment power with respect to
securities. Shares of common stock subject to stock options and warrants
currently exercisable or exercisable within 60 days are deemed outstanding
for computing the percentage ownership of the person holding such options
and the percentage ownership of any group of which the holder is a member,
but are not deemed outstanding for computing the percentage ownership of
any other person. Except as indicated by footnote, and subject to community
property laws where applicable, 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.
(2) Applicable percentage of ownership is based on 33,600,841 shares of common
stock outstanding.
(3) As set forth in a Schedule 13G, dated December 31, 2002, filed by Franklin
Resources, Inc. ("FRI"), Charles B. Johnson, Rupert H. Johnson, Jr. and
Fiduciary Trust Company International ("FTCI").
13
Includes 2,094,850 shares held by FTCI and 3,500 shares held by Franklin
Advisers, Inc. The shares are beneficially owned by one or more open or
closed-end investment companies or other managed accounts which are advised
by direct or indirect subsidiaries of FRI. Messrs. Johnson each own in
excess of 10% of the outstanding common stock of FRI and are the principal
shareholders of FRI.
(4) As set forth in Schedule 13D/A, dated July 31, 2002, filed by Mr. Grimes
with the SEC.
(5) As set forth in a Schedule 13G/A, dated December 31, 2002, filed by S.A.C.
Capital Advisors, LLC, S.A.C. Capital Management, LLC, S.A.C. Capital
Associates, LLC and Steven A. Cohen. Includes 1,332,846 shares of common
stock and 572,738 shares of common stock underlying warrants. The shares
are held by S.A.C. Capital Associates, LLC. Pursuant to investment
agreements, each of S.A.C. Capital Advisors and S.A.C. Capital Management
share all investment and voting power over the shares. Steven A. Cohen
controls both S.A.C. Capital Advisors and S.A.C. Capital Management. Each
of S.A.C. Capital Advisors, S.A.C. Capital Management and Mr. Cohen
disclaim beneficial ownership of the securities.
(6) Includes 2,023 shares of common stock and 445,307 shares of common stock
subject to options which were exercisable as of March 7, 2003, or which
will become exercisable within 60 days after March 7, 2003, and 100 shares
held by Mr. Moch's sons. Does not include options to purchase 526,668
shares of common stock which will become exercisable more than 60 days
after March 7, 2003, nor options to purchase 1,150,025 shares of common
stock held in trust for Mr. Moch's minor children, for which Mr. Moch's
wife is the trustee and Mr. Moch disclaims beneficial ownership.
(7) Includes 10,000 shares of common stock held directly by Dr. Bransome, 2,500
shares held by his wife and 40,000 shares of common stock subject to
options that were exercisable as of March 7, 2003, or which will become
exercisable within 60 days after March 7, 2003. Does not include an option
to purchase 20,000 shares of common stock which will become exercisable
more than 60 days after March 7, 2003.
(8) Includes 142,067 shares of common stock subject to options that were
exercisable as of March 7, 2003, or which will become exercisable within 60
days after March 7, 2003. Does not include an option to purchase 20,000
shares of common stock which will become exercisable more than 60 days
after March 7, 2003.
(9) Includes 12,467 shares of common stock and 102,531 shares of common stock
subject to options which were exercisable as of March 7, 2003, or which
will become exercisable within 60 days after March 7, 2003. Does not
include an option to purchase 20,000 shares of common stock which will
become exercisable more than 60 days after March 7, 2003.
(10) Includes 86,067 shares of common stock subject to options which were
exercisable as of March 7, 2003, or which will become exercisable within 60
days after March 7, 2003. Does not include an option to purchase 20,000
shares of common stock which will become exercisable more than 60 days
after March 7, 2003.
(11) Includes 24,000 shares of common stock held directly by Mr. Moore and
15,000 shares of common stock subject to options which were exercisable as
of March 7, 2003, or which will become exercisable within 60 days after
March 7, 2003. Does not include an option to purchase 20,000 shares of
common stock which will become exercisable more than 60 days after March 7,
2003.
(12) Includes 5,000 shares of common stock held directly by Dr. Naimark, 4,000
shares held jointly by Dr. Naimark and his wife and 53,337 shares of common
stock subject to options which were exercisable as of March 7, 2003, or
which will become exercisable within 60 days after March 7, 2003. Does not
include an option to purchase 20,000 shares of common stock which will
become exercisable more than 60 days after March 7, 2003.
(13) Includes 5,000 shares of common stock held jointly by Dr. Novitch and his
wife and 369,667 shares of common stock subject to options that were
exercisable as of March 7, 2003, or which will become exercisable within 60
days after March 7, 2003. Does not include an option to purchase 20,000
shares of common stock which will become exercisable more than 60 days
after March 7, 2003.
14
(14) Includes 193,333 shares of common stock subject to options which were
exercisable as of March 7, 2003, or which will become exercisable within 60
days after March 7, 2003. Does not include options to purchase 381,667
shares of common stock which will become exercisable more than 60 days
after March 7, 2003.
(15) Includes 56,250 shares of common stock subject to options that were
exercisable as of March 7, 2003, or which will become exercisable within 60
days after March 7, 2003. Does not include options to purchase 218,750
shares of common stock which will become exercisable more than 60 days
after March 7, 2003.
(16) Includes 20,000 shares of common stock held directly by Ms. O'Dell, 2,000
shares of common stock held by Ms. O'Dell's husband and 329,166 shares of
common stock subject to options which were exercisable as of March 7, 2003,
or which will become exercisable within 60 days after March 7, 2003. Does
not include options to purchase 60,001 shares of common stock which will
become exercisable more than 60 days after March 7, 2003.
(17) Includes 1,832,725 shares of common stock subject to options which were
exercisable as of March 7, 2003, or which will become exercisable within 60
days after March 7, 2003.
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board has appointed, subject to stockholder ratification, KPMG LLP
("KPMG") to serve as our independent accountants for the fiscal year ending
December 31, 2003.
KPMG served as our independent accountants for the fiscal year ended
December 31, 2002.
If the stockholders do not ratify the Board's decision to appoint KPMG, we
may reconsider our selection. The affirmative vote of a majority of the shares
voted at the Annual Meeting is required for ratification.
Representatives of KPMG are expected to be present at the Annual Meeting to
respond to appropriate questions from our stockholders. They will be given the
opportunity to make a statement if they wish to do so.
AUDIT FEES
We were billed aggregate fees of $53,500 with respect to professional
services rendered by KPMG for (i) the audit of our annual financial statements
included in our annual report on Form 10-K for the year ended December 31, 2002,
and (ii) the review of the financial statements included in our quarterly
reports on Form 10-Q for the quarters ended March 31, June 30 and September 30,
2002.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
KPMG did not perform any financial information systems design,
implementation or related services for us during the year ended December 31,
2002.
ALL OTHER FEES
There were no fees billed for any other services rendered to us by KPMG
during the fiscal year ended December 31, 2002.
CHANGE IN ACCOUNTANTS
On May 30, 2002, we dismissed Arthur Andersen LLP ("Andersen") as our
principal independent accountants and engaged KPMG to serve as Alteon's
principal independent accountants for the fiscal year ended December 31, 2002.
The Board of Directors reviewed whether Alteon should continue the retention of
Andersen in light of then recent events involving Andersen, and following its
review, authorized the engagement of KPMG in lieu of Andersen. Andersen's
reports on Alteon's financial statements for the years ended December 31, 2001
and 2000, did not contain an adverse opinion or a disclaimer of opinion and were
not qualified or modified as to uncertainty, audit scope or accounting
principles. During the years ended December 31, 2001 and 2000, and the period
from December 31, 2001 to the date of dismissal of Andersen,
15
(i) there were no disagreements with Andersen on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure which disagreements, if not resolved to Andersen's satisfaction, would
have caused Andersen to make reference to the subject matter of the
disagreement(s) in connection with its report, and (ii) there were no
"reportable events" within the meaning of the applicable rules of the SEC.
During the years ended December 31, 2001 and 2000, and the period from December
31, 2001 to the date of engagement of KPMG, neither Alteon nor anyone acting on
its behalf consulted with KPMG with respect to the application of accounting
principles to a specified transaction, either completed or proposed, or the type
of audit opinion that might be rendered on Alteon's financial statements or any
matter that was either the subject of disagreement or a reportable event.
Andersen's letter to the SEC stating its agreement with the statements made
herein is filed as an exhibit to our current report on Form 8-K filed with the
SEC on May 30, 2002.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT ACCOUNTANTS.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our officers and directors, and persons who own more than 10% of a registered
class of our equity securities, to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the SEC. Officers, directors and greater than
10% stockholders are required by SEC regulation to furnish Alteon with copies of
all Forms 3, 4 and 5 they file.
Based solely on our review of the copies of such forms we have received and
written representations from certain reporting persons that they were not
required to file Forms 5 for specified fiscal years, we believe that all our
officers, directors, and greater than 10% beneficial owners complied with all
filing requirements applicable to them with respect to transactions during
fiscal 2002.
STOCKHOLDERS' PROPOSALS
Stockholders deciding to submit proposals for inclusion in our proxy
statement and form of proxy relating to our 2004 annual stockholders' meeting
must advise Alteon's Secretary of such proposals in writing by December 25,
2003. In addition, the proxy solicited by the Board of Directors for the 2004
annual stockholders' meeting will confer discretionary authority to vote on any
stockholder proposal presented at that meeting of which notice was untimely. In
accordance with our bylaws, notice of a proposal will be considered untimely,
unless Alteon's Secretary receives written notice of such proposal by March 6,
2004 (but not earlier than February 4, 2004).
OTHER MATTERS
The Board of Directors is not aware of any matter to be presented for
action at the meeting other than the matters referred to above and does not
intend to bring any other matters before the meeting. However, if other matters
should properly come before the meeting, it is intended that holders of the
proxies will vote thereon in their discretion.
GENERAL
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Alteon, whose notice of meeting is attached to this Proxy
Statement, and the entire cost of such solicitation will be borne by Alteon.
In addition to the use of the mails, proxies may be solicited by personal
interview, telephone and telegram by directors, officers and other employees of
Alteon who will not be specially compensated for these services. Alteon has
retained the services of American Stock Transfer & Trust Company to assist in
the proxy solicitation at a fee estimated to be $15,000. We will also request
that brokers, nominees, custodians and other
16
fiduciaries forward soliciting materials to the beneficial owners of shares held
of record by such brokers, nominees, custodians and other fiduciaries. We will
reimburse such persons for their reasonable expenses in connection therewith.
Certain information contained in this Proxy Statement relating to the
occupations and security holdings of directors and officers of Alteon is based
upon information received from the individual directors and officers.
ALTEON HAS FURNISHED, WITHOUT CHARGE, A COPY OF ITS REPORT ON FORM 10-K FOR
THE YEAR ENDED DECEMBER 31, 2002, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES
THERETO BUT NOT INCLUDING EXHIBITS, TO EACH OF ITS STOCKHOLDERS OF RECORD ON
APRIL 8, 2003, AND WILL FURNISH TO EACH BENEFICIAL STOCKHOLDER SUCH REPORT UPON
WRITTEN REQUEST MADE TO THE SECRETARY OF ALTEON. A REASONABLE FEE WILL BE
CHARGED FOR COPIES OF REQUESTED EXHIBITS.
PLEASE DATE, SIGN AND RETURN THE PROXY CARD AT YOUR EARLIEST CONVENIENCE IN
THE ENCLOSED RETURN ENVELOPE. A PROMPT RETURN OF YOUR PROXY CARD WILL BE
APPRECIATED, AS IT WILL SAVE THE EXPENSE OF FURTHER MAILINGS.
By Order of the Board of Directors
ELIZABETH A. O'DELL
Secretary
Ramsey, New Jersey
April 23, 2003
17
ANNUAL MEETING OF STOCKHOLDERS OF
ALTEON INC.
JUNE 4, 2003
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
- Please detach and mail in the envelope provided. -
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS AND
"FOR" PROPOSAL 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [x]
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1. ELECTION OF DIRECTORS
NOMINEES
[ ] FOR ALL NOMINEES ( ) Mark Novitch, M.D.
( ) David McCurdy
[ ] WITHHOLD AUTHORITY
FOR ALL NOMINEES
[ ] FOR ALL EXCEPT
(See instructions below)
INSTRUCTION: To withhold authority to vote for either individual nominee, mark
"FOR ALL EXCEPT" and fill in the circle next to the nominee you
wish to withhold, as shown here: (-)
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To change the address on your account, please check the box at right and [ ]
indicate your new address in the address space above. Please note that changes
to the registered name(s) on the account may not be submitted via this method.
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2. Approval of the proposal to ratify the appointment of KPMG LLP as Alteon's
independent public accountants for the fiscal year ending December 31, 2003.
FOR AGAINST ABSTAIN
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3. In their discretion, the proxies are authorized to vote upon other matters as
may properly come before the Meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1 AND 2.
Please check here if you plan to attend the meeting. [ ]
Signature of Stockholder _______________________________ Date: _________________
Signature of Stockholder _______________________________ Date: _________________
NOTE: This proxy must be signed exactly as the name appears hereon. When shares
are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as
such. If the signer is a corporation, please sign full corporate name by
duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.
REVOCABLE PROXY
ALTEON INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE CORPORATION FOR THE ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby constitutes and appoints Kenneth I. Moch and
Elizabeth A. O'Dell and each of them, his or her true and lawful agents and
proxies with full power of substitution in each, to represent and to vote on
behalf of the undersigned all of the shares of Alteon Inc. (the "Company") which
the undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held at the Sheraton Crossroads Hotel, One International
Boulevard, Mahwah, New Jersey at 9:00 A.M., local time, on Wednesday June 4,
2003, and at any adjournment or adjournments thereof, upon the following
proposals more fully described in the Notice of Annual Meeting of Stockholders
and Proxy Statement for the Meeting (receipt of which is hereby acknowledged).
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
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