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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant ¨
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o Preliminary Proxy Statement
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o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Soliciting Material Pursuant to §240.14a-12 |
Emisphere Technologies, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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TABLE OF CONTENTS
EMISPHERE
TECHNOLOGIES, INC.
240 Cedar Knolls Road
Suite 200
Cedar Knolls, NJ 07927
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 24,
2011
Cedar
Knolls, NJ
April 13, 2011
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders (the Annual Meeting) of Emisphere
Technologies, Inc., a Delaware corporation (the
Company or Emisphere), to be held on
Tuesday, May 24, 2011 at 10:00 AM EDT at Park Avenue
Club, 184 Park Avenue, Florham Park, NJ for the following
purposes:
1. To consider the election of two members of the Board of
Directors for a term expiring at the third succeeding annual
meeting of stockholders after their election;
2. To hold an advisory vote on executive compensation;
3. To hold an advisory vote on the frequency of holding an
advisory vote on executive compensation;
4. To transact such other business as may properly come
before the meeting or any adjournments or postponements thereof.
In addition, at the Annual Meeting, the Companys
management will discuss the Companys 2010 performance and
its current activities.
Only those stockholders of record at the close of business on
Thursday, March 29, 2011 will be entitled to receive notice
of, and vote at, the Annual Meeting. A list of stockholders
entitled to vote at the Annual Meeting will be open for
examination by any stockholder during the ten (10) days
prior to the Annual Meeting at our principal offices located at
240 Cedar Knolls Road, Suite 200, Cedar Knolls, NJ 07927.
The Board of Directors appreciates and encourages stockholder
participation in our Annual Meeting and looks forward to your
attendance. It is important that your shares be represented,
whether or not you choose to attend the meeting. Registered
stockholders can vote their shares (a) via the Internet; or
(b) by using a toll-free telephone number; or (c) by
promptly completing, signing, dating and mailing a Proxy card
using the enclosed envelope; or (d) by voting your shares
at the meeting in person. Instructions for using these
convenient services appear on the notice mailed to stockholders
of records, as well as on the Internet and on the Proxy card.
Proxy votes are tabulated by an independent agent appointed by
the Company, and reported at the Annual Meeting. You may revoke
your Proxy at any time prior to its exercise. Your prompt
attention to the Proxy will be of assistance in preparing for
the Annual Meeting. Your cooperation related to this matter is
appreciated.
By order of the Board of Directors,
Michael R. Garone
Interim Chief Executive Officer,
Chief Financial Officer, Corporate Secretary
EMISPHERE
TECHNOLOGIES, INC.
240 Cedar Knolls Road
Suite 200
Cedar Knolls, NJ 07927
GENERAL
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
What is
the purpose of this Proxy Statement?
This Proxy Statement (the Proxy Statement) and the
Proxy Card (the Proxy Card) are made available and
furnished to all stockholders of record of Emisphere
Technologies, Inc., which we sometimes refer to as the
Company or Emisphere, as of the close of
business on March 29, 2011 in connection with the
solicitation of Proxies on behalf of the Board of Directors for
use at the Annual Meeting of Stockholders on Tuesday,
May 24, 2011 (the Annual Meeting).
This Proxy Statement and form of Proxy will be available to be
mailed to stockholders at their request on or about
April 14, 2011. It will also be available for review on the
Internet. The information included in the Proxy Statement
relates to the proposals to be voted on at the Annual Meeting,
the voting process, the compensation for directors and our most
highly paid executive officers, and other required information.
Copies of our 2010 Annual Report to Stockholders and the
Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010 (the 2010
Fiscal Year) are also available on the Internet and will
be mailed at the request of a stockholder with a copy of this
Proxy Statement, but are not incorporated herein by reference
and should not be deemed to be part of the Proxy Statement.
Who can
attend the Annual Meeting and who is entitled to vote?
All stockholders of the Company as of March 29, 2011 (the
Record Date), their authorized representatives and
guests of Emisphere will be able to attend the Annual Meeting.
All holders of record of Emispheres common stock,
$0.01 par value per share (Common Stock) on the
Record Date will be entitled to vote at the Annual Meeting. Each
share of Common Stock is entitled to one vote on each matter
properly brought before the meeting.
What
proposals will be voted upon at the Annual Meeting?
The Annual Meeting has been called to consider and take action
on the following items:
1. The election of Mark H. Rachesky, M.D. and Michael
Weiser, M.D. (the Director Nominees) as
directors for a term expiring at the third succeeding annual
meeting of stockholders after their election (Class III
Directors);
2. To hold an advisory vote on executive compensation;
3. To hold an advisory vote on the frequency of holding an
advisory vote on executive compensation;
4. The transaction of such other business as may properly
come before the meeting or any adjournment or postponement
thereof.
What are
the Board of Directors voting recommendations with respect
to the proposals to be voted at the Annual Meeting?
The Board of Directors recommends a vote:
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FOR the election of the Class III Director
Nominees as directors for the term expiring at the third
succeeding annual meeting of stockholders after their election.
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FOR the approval of, on an advisory basis, the
compensation of the named executive officers.
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FOR the approval of, on an advisory basis, the
option of once every year as the frequency with which
stockholders are provided with an advisory vote on executive
compensation.
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If any other matter is properly presented at the Annual Meeting
or any adjournments or postponements thereof, your Proxy will be
voted in accordance with the discretion of the person holding
the Proxy. At the time this Proxy Statement went to press,
Emisphere knew of no matters that needed to be acted on at the
Annual Meeting other than those discussed in this Proxy
Statement.
One
Page Notice of Internet Availability of Proxy
Materials
Pursuant to rules adopted by the U.S. Securities and
Exchange Commission (the SEC), we have provided
access to our Proxy materials over the Internet. Accordingly, we
are sending a Notice of Internet Availability of Proxy Materials
(the Notice of Internet Availability) to our
stockholders. All stockholders will have the ability to access
the Proxy materials on a website referred to in the Notice of
Internet Availability or request to receive a printed set of the
Proxy materials. Instructions on how to access the proxy
materials over the Internet or to request a printed copy may be
found in the Notice of Internet Availability. In addition,
stockholders may request to receive Proxy materials in printed
form by mail.
How do I
vote in person?
If you plan to attend the Annual Meeting on May 24, 2011,
please bring proof of identification and the enclosed Proxy
Card. However, if your shares are held in the name of your
broker, bank or other nominee, you must bring a Proxy executed
by the broker, bank or other nominee that owns the shares of
record for your benefit, authorizing you to vote the shares.
How do I
vote by Proxy?
If you are a registered holder as of the Record Date, you can
vote your Proxy via the Internet, by telephone, by mail or in
person at the Annual Meeting on May 24, 2011.
If you are a beneficial stockholder, you have the right to
direct your broker or nominee on how to vote your shares. You
should complete a voting instruction card which your broker or
nominee is obligated to provide you. If you wish to vote in
person at the Annual Meeting, you must first obtain from the
record holder a Proxy issued in your name.
How do I
vote via the Internet?
If you wish to vote via the Internet, follow the Internet voting
instructions enclosed with the Notice of Internet Availability.
A control number, located on the mailing, is designated to
verify your identity and allow you to vote the shares and
confirm that the voting instructions have been recorded properly.
How do I
vote via telephone?
If you wish to vote via telephone, use the toll-free telephone
number enclosed with the Notice of Internet Availability and
follow the voting instructions located on the mailing. A control
number, located on the Proxy Card, is designated to verify your
identity, allow you to vote the shares and confirm that the
voting instructions have been recorded properly.
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How do I
vote my shares on the Proxy Card?
If you are a registered stockholder, you can specify how you
want your shares voted on each proposal by marking the
appropriate boxes on the Proxy Card. Please review the voting
instructions on the Proxy Card and read the entire text of the
proposals. Please review the recommendations of the Board of
Directors in the Proxy Statement prior to marking your vote.
If your Proxy Card is signed and returned without specifying a
vote or an abstention on a proposal, it will be voted according
to the recommendations of the Board of Directors on that
proposal. That recommendation is shown for each proposal on the
Proxy Card.
What
constitutes a quorum?
As of the Record Date, 52,076,602 shares of Common Stock
were outstanding. A majority of the total number of our
outstanding shares present or represented by Proxy constitutes a
quorum for the purpose of adopting proposals at the Annual
Meeting. If you submit a properly executed Proxy, then you will
be considered part of the quorum.
Who
counts the vote?
Tabulation of Proxies and the votes cast at the meeting are
conducted by an independent agent appointed by Emisphere and
certified by an independent inspector of elections.
May I
revoke my Proxy?
You may revoke your Proxy at any time before it is voted at the
Annual Meeting by: (i) giving timely written notice of the
revocation to the Secretary of the Company; (ii) executing
and delivering a Proxy with a later date; or (iii) voting
in person at the Annual Meeting. Attendance at the Annual
Meeting will not in and of itself constitute revocation of a
Proxy.
What vote
is required to approve each proposal?
A plurality of the votes cast at the Annual Meeting is required
to elect the Director Nominees.
The option of one year, two years or three years that receives
the highest number of votes cast at the Annual Meeting regarding
the frequency of holding an advisory vote on executive
compensation will be the frequency for the advisory vote on
executive compensation that has been selected by stockholders.
At the Annual Meeting, abstentions will be counted as votes cast
on proposals presented to stockholders, but broker non-votes
will not be considered votes cast and the shares represented by
broker non-votes with respect to any proposal will be considered
present but not eligible to vote on such proposal. Withheld
votes and broker non-votes will have no effect on the election
of the Director Nominees, which is by plurality vote.
Who bears
the cost of soliciting the Proxies?
We will pay all costs of preparing, assembling, printing and
distributing the Proxy materials. We may solicit Proxies on
behalf of the Board of Directors through the mail, in person,
and by telecommunications. We will, upon request, reimburse
brokerage firms and others for their reasonable expenses
incurred for forwarding solicitation material to beneficial
owners of stock.
Where are
Emispheres Executive Offices?
Our principal executive offices are located at 240 Cedar Knolls
Road, Suite 200, Cedar Knolls, NJ, 07927 and our telephone
number is
(973) 532-8000.
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How can I
get additional information about Emisphere?
We will, upon written request of any stockholder, furnish
without charge a copy of this Proxy Statement and our Annual
Report on
Form 10-K
for the 2010 Fiscal Year, as filed with the SEC. Please address
your requests to Emisphere Technologies, Inc., 240 Cedar Knolls
Road, Suite 200, Cedar Knolls, NJ, 07927 Attention:
Investor Relations. Electronic copies of this Proxy Statement
and the Companys Annual Report on
Form 10-K
for the 2010 Fiscal Year are located within the Investor
Relations section of our website at www.emisphere.com and
are also available at the SECs website at
www.sec.gov. The contents of our website are not
incorporated herein by reference and the website address
provided in this Proxy Statement is intended to be an inactive
textual reference only.
If you are a beneficial owner and your shares are held in a
stock brokerage account or by a bank or other nominee, please
refer to the information provided by your broker, bank or
nominee for instructions on how to elect to access future Proxy
Statements and Annual Reports on the Internet. Most beneficial
owners who elect electronic access will receive an
e-mail
message next year containing the Internet address for access to
the Proxy Statement and Annual Report.
Emisphere is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the Exchange
Act), which require that the Companys Annual Report
on
Form 10-K,
the Proxy Statement and other information be filed with the SEC.
These filings may be inspected and copied at the public
reference facilities of the SEC. Call (800) SEC-0330 for
more information regarding public reference facilities. Copies
of the material may also be obtained upon request and upon
payment of the appropriate fee from the Public Reference Section
of the SEC, 100F Street N.E., Room 1580, Washington, DC
20549. In addition, the SEC maintains a website at
www.sec.gov that contains reports, Proxy and information
statements, as well as other information regarding registrants,
including Emisphere, which file electronically with the SEC.
Householding
of Annual Meeting Materials
Some banks, brokers and other nominee record holders may be
participating in the practice of householding Proxy
Statements and Annual Reports. This means that only one copy of
our Notice of Internet Availability may have been sent to
multiple stockholders in each household. We will promptly
deliver a separate copy of the Proxy Materials and Annual Report
to any stockholder upon written or oral request made to our
Investor Relations Department, Emisphere Technologies, Inc., 240
Cedar Knolls Road, Suite 200, Cedar Knolls, NJ, 07927,
telephone:
(973) 532-8000.
Any stockholder who wants to receive separate copies of the
Notice of Internet Availability of Proxy Materials or any
stockholder who is receiving multiple copies and would like to
receive only one copy per household must make an election on the
Internet, telephone or Proxy card or contact the
stockholders bank, broker, or other nominee record holder.
Stockholders may also contact us at the above address and phone
number with their election.
DIRECTORS
AND EXECUTIVE OFFICERS
Our business is overseen by the Board of Directors. It is the
duty of the Board of Directors to oversee the Chief Executive
Officer and other senior management in the competent and ethical
operation of the Company on a
day-to-day
basis and to assure that the long-term interests of the
stockholders are being served. To satisfy this duty, our
directors take a proactive, focused approach to their position,
and set standards to ensure that the Company is committed to
business success through maintenance of the highest standards of
responsibility and ethics. The Board of Directors is kept
advised of our business through regular verbal or written
reports, Board of Directors meetings, and analysis and
discussions with the Chief Executive Officer and other officers
of the Company.
Members of the Board of Directors bring to us a wide range of
experience, knowledge and judgment. Our governance organization
is designed to be a working structure for principled actions,
effective decision-making and appropriate monitoring of both
compliance and performance.
The Board of Directors has affirmatively determined that
Mr. John D. Harkey, Jr., Dr. Mark H. Rachesky,
Mr. Timothy G. Rothwell, and Dr. Michael Weiser are
independent directors within the meaning of Rule 4200 of
the NASDAQ Marketplace Rules. The independent directors meet in
separate sessions at the conclusion of Board meetings and at
other times as deemed necessary by the independent directors, in
the absence of Mr. Michael V.
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Novinski, the sole non-independent director. Dr. Carter
resigned from the Board of Directors effective April 30,
2009. Mr. Berger resigned the Board of Directors effective
October 23, 2009. Mr. Moch resigned from the Board of
Directors effective November 10, 2009. On February 28,
2011, Michael V. Novinski resigned as a director of the Company
and from his position as President and Chief Executive Officer
of the Company. None of the members of the Board of Directors
currently serve as Chairman; leadership of the Board is provided
through consensus of the directors. Matters are explored in
Committee and brought to the full Board for discussion or action.
The Board of Directors has established an Audit Committee, a
Compensation Committee and a Governance and Nominating
Committee. Each of the committees of the Board of Directors acts
pursuant to a separate written charter adopted by the Board of
Directors.
The Audit Committee is currently comprised of Mr. Harkey
(chairman), Mr. Rothwell and Dr. Weiser.
Mr. Rothwell became a member of the Audit Committee on
January 6, 2010. All members of the Audit Committee are
independent within the meaning of Rule 4200 of the NASDAQ
Marketplace Rules. The Board of Directors has determined that
Mr. Harkey is an Audit Committee financial
expert, within the meaning of Item 401(h) of
Regulation S-K.
The Audit Committees responsibilities and duties are
summarized in the report of the Audit Committee and in the Audit
Committee charter which is available on our website
(www.emisphere.com).
The Compensation Committee is currently comprised of
Dr. Weiser (chairman) and Dr. Rachesky. All members of
the Compensation Committee are independent within the meaning of
Rule 4200 of the NASDAQ Marketplace Rules, non-employee
directors within the meaning of the rules of the Securities and
Exchange Commission and outside directors within the
meaning set forth under Internal Revenue Code
Section 162(m). The Compensation Committees
responsibilities and duties are summarized in the report of the
Compensation Committee and in the Compensation Committee charter
also available on our website.
The Governance and Nominating Committee is currently comprised
of Dr. Weiser (chairman) and Dr. Rachesky. All members
of the Governance and Nominating Committee are independent
within the meaning of Rule 4200 of the NASDAQ Marketplace
Rules. The Governance and Nominating Committees
responsibilities and duties are set forth in the Governance and
Nominating Committee charter on our website. Among other things,
the Governance and Nominating Committee is responsible for
recommending to the Board the nominees for election to our Board
of Directors and the identification and recommendation of
candidates to fill vacancies occurring between annual
stockholder meetings.
The table below provides membership information for each
committee of the Board of Directors during 2010:
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Governance
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Board
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Audit
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Compensation
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and Nominating
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Michael V. Novinski(1)
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Mark H. Rachesky, M.D.(2)
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Michael Weiser, M.D.(2)
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John D. Harkey, Jr.(3)
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Timothy G. Rothwell(3)
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Chair |
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On February 28, 2011, Michael V. Novinski resigned as a
director of the Company and from his position as President and
Chief Executive Officer of the Company. |
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Class III directors: Term as director is expected to expire
in 2011. |
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Class I directors: Term as director is expected to expire
in 2012. |
Board
Involvement in Risk Oversight
Our Board of Directors is responsible for oversight of the
Companys risk assessment and management process. We
believe risk can arise in every decision and action taken by the
Company, whether strategic or operational. Our comprehensive
approach is reflected in the reporting processes by which our
management
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provides timely and fulsome information to the Board of
Directors to support its role in oversight, approval and
decision-making.
The Board of Directors closely monitors the information it
receives from management and provides oversight and guidance to
our management team concerning the assessment and management of
risk. The Board of Directors approves the Companys high
level goals, strategies and policies to set the tone and
direction for appropriate risk taking within the business.
The Board of Directors delegated to the Compensation Committee
basic responsibility for oversight of managements
compensation risk assessment, and that committee reports to the
Board on its review. Our Board of Directors also delegated tasks
related to risk process oversight to our Audit Committee, which
reports the results of its review process to the Board of
Directors. The Audit Committees process includes a review,
at least annually, of our internal audit process, including the
organizational structure, as well as the scope and methodology
of the internal audit process. The Governance and Nominating
Committee oversees risks related to our corporate governance,
including director performance, director succession, director
education and governance documents.
In addition to the reports from the Board committees, our Board
periodically discusses risk oversight.
Meetings
Attendance
During the 2010 fiscal year, our Board of Directors held 5
meetings. With the exception of Mr. Harkey, who attended 3
of 4 Audit Committee meetings held during 2010, each director
attended 100 percent of the aggregate number of Board of
Directors meetings and committee meetings of which he was a
member that were held during the period of his service as a
director.
The Audit Committee met 4 times during the 2010 fiscal year.
The Compensation Committee met 1 time during the 2010 fiscal
year.
The Governance and Nominating Committee met 1 time during the
2010 fiscal year.
The Company does not have a formal policy regarding attendance
by members of the Board of Directors at the Companys
annual meeting of stockholders, although it does encourage
attendance by the directors.
Code of
Conduct for Officers and Employees and Code of Business Conduct
and Ethics for Directors
The Company has a Code of Conduct that applies to all of our
officers and employees as well as a Code of Business Conduct and
Ethics that applies specifically to the members of the Board of
Directors. The directors are surveyed annually regarding their
compliance with the policies as set forth in the Code of Conduct
for Directors. The Code of Conduct and the Code of Business
Conduct and Ethics for Directors are available on the Corporate
Governance section of our website at www.emisphere.com. The
contents of our website are not incorporated herein by reference
and the website address provided in this Proxy Statement is
intended to be an inactive textual reference only. The Company
intends to disclose on its website any amendment to, or waiver
of, a provision of the Code of Conduct that applies to the Chief
Executive Officer, Chief Financial Officer, or Controller. Our
Code of Conduct contains provisions that apply to our Chief
Executive Officer, Chief Financial Officer and all other finance
and accounting personnel. These provisions comply with the
requirements of a company code of ethics for financial officers
that were promulgated by the SEC pursuant to the Exchange Act.
Stockholder
Communications
We have an Investor Relations Office for all stockholder
inquiries and communications. The Investor Relations Office
facilitates the dissemination of accurate and timely information
to our stockholders. In addition, the Investor Relations Office
ensures that outgoing information is in compliance with
applicable securities laws and regulations. All investor queries
should be directed to our internal Director of Corporate
Communications or our Corporate Secretary.
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Compensation
Committee Interlocks and Insider Participation
The current members of the Compensation Committee are
Dr. Weiser and Dr. Rachesky. No member of the
Compensation Committee is or has ever been an executive officer
or employee of our company (or any of its subsidiaries) and no
compensation committee interlocks existed during
fiscal year 2010.
ELECTION
OF DIRECTORS
The Governance and Nominating Committee identifies director
nominees by reviewing the desired experience, mix of skills and
other qualities to assure appropriate Board composition, taking
into consideration the current Board members and the specific
needs of the Company and the Board. Among the qualifications to
be considered in the selection of candidates, the Committee
considers the following attributes and criteria of candidates:
experience, knowledge, skills, expertise, diversity, personal
and professional integrity, character, business judgment and
independence. Although it has no formal policy our Board
recognizes that nominees for the Board should reflect a
reasonable diversity of backgrounds and perspectives, including
those backgrounds and perspectives with respect to business
experience, professional expertise, age, gender and ethnic
background.
Our Board is comprised of accomplished professionals who
represent diverse and key areas of expertise including national
and international business, operations, manufacturing, finance
and investing, management, entrepreneurship, higher education
and science, research and technology. We believe our
directors wide range of professional experiences and
backgrounds, education and skills has proven invaluable to the
Company and we intend to continue leveraging this strength.
Nominations for the election of directors may be made by the
Board of Directors or the Governance and Nominating Committee.
The committee did not reject any candidates recommended within
the preceding year by a beneficial owner of, or from a group of
security holders that beneficially owned, in the aggregate, more
than five percent (5%) of the Companys voting stock.
Although it has no formal policy regarding stockholder nominees,
the Governance and Nominating Committee believes that
stockholder nominees should be viewed in substantially the same
manner as other nominees. Stockholders may make a recommendation
for a nominee by complying with the notice procedures set forth
in our bylaws. The Governance and Nominating Committee will give
nominees recommended by stockholders in compliance with these
procedures the same consideration that it gives to any Board
recommendations. To date, we have not received any
recommendation from stockholders requesting that the Governance
and Nominating Committee (or any predecessor) consider a
candidate for inclusion among the committees slate of
nominees in this Proxy Statement.
To be considered by the committee, a director nominee must have
broad experience at the strategy/policy-making level in a
business, government, education, technology or public interest
environment, high-level managerial experience in a relatively
complex organization or experience dealing with complex
problems. In addition, the nominee must be able to exercise
sound business judgment and provide insights and practical
wisdom based on experience and expertise, possess proven ethical
character, be independent of any particular constituency, and be
able to represent all stockholders of the Company.
The committee will also evaluate whether the nominees
skills are complementary to the existing Board members
skills, and the Boards needs for operational, management,
financial, technological or other expertise; and whether the
individual has sufficient time to devote to the interests of
Emisphere. The prospective Board member cannot be a Board member
or officer at a competing company nor have relationships with a
competing company. He/she must be clear of any investigation or
violations that would be perceived as affecting the duties and
performance of a director.
The Governance and Nominating Committee identifies nominees by
first evaluating the current members of the Board of Directors
willing to continue in service. Current members of the Board
with skills and experience that are relevant to the business and
who are willing to continue in service are considered for
re-nomination, balancing the value of continuity of service by
existing members of the Board with that of obtaining a new
perspective. If any member of the Board does not wish to
continue in service, or if the Governance and Nominating
Committee or the Board decides not to nominate a member for
re-election, the Governance and Nominating Committee identifies
the desired skills and experience of a new nominee and discusses
with the Board suggestions as to individuals that meet the
criteria.
7
Compensation
of Non-Employee Directors
A director who is a full-time employee of the Company receives
no additional compensation for services provided as a director.
It is the Companys policy to provide competitive
compensation and benefits necessary to attract and retain high
quality non-employee directors and to encourage ownership of
Company stock to further align their interests with those of
stockholders. The following represents the compensation of the
non-employee members of the Board of Directors:
|
|
|
|
|
Prior to June 24, 2009, each non-employee director
received, on the date of each regular annual stockholders
meeting, a stock option to purchase 7,000 shares of our
common stock under the 2007 Plan. The stock options vest on the
six month anniversary of the grant date provided the director
continuously serves as a director from the grant date through
such vesting date. Notwithstanding the foregoing, any director
who holds any stock options granted before April 1, 2004
which remain unvested was ineligible to receive the annual
7,000-share stock option grant described in this paragraph
unless and until all such prior options had vested. Stock
options granted in 2009 have a stated expiration date of ten
years after the date of grant, and are subject to accelerated
vesting upon a change in control of Emisphere. If the holder of
an option ceases to serve as a director, all previously granted
options may be exercised to the extent vested within six months
after termination of directorship (one year if the termination
is by reason of death), except that, after April 1, 2004
(unless otherwise provided in an option agreement), if a
director becomes an emeritus director of Emisphere
immediately following his Board service, the vested options may
be exercised for six months after termination of service as an
emeritus director. All unvested options expire upon
termination of service on the Board of Directors.
|
|
|
|
On May 15, 2009, in recognition of the roles and
responsibilities of the Board of Directors and current market
data, the non-employees members of the Board of Directors
compensation was revised to include a special one-time grant of
50,000 options to purchase shares of common stock granted on
May 15, 2009, an annual retainer of $35,000, payable
quarterly in cash, and an annual stock option grant of 40,000
options to purchase shares of common stock. The annual stock
option grants are granted each year on the date of the annual
meeting of stockholders of the Company. The director must be an
eligible director on the dates the retainers are paid and the
stock options are granted. The options subject to the special
one-time stock option grant and annual stock option grant would
vest over three years in equal amounts on each anniversary of
the grant date provided the director continuously serves as a
director from the grant date through such vesting date, subject
to accelerated vesting upon a change in control of Emisphere.
Such options, once vested, remain exercisable through the period
of the option term.
|
|
|
|
All newly appointed directors shall receive an initial stock
option grant on the date of appointment of 50,000 options
to purchase shares of common stock. The options subject to such
initial stock option grant vest over three years in equal
amounts on each anniversary of the grant date provided the
director continuously serves as a director from the grant date
through such vesting date, subject to accelerated vesting upon a
change in control of Emisphere. Such options, once vested,
remain exercisable through the period of the option term.
|
|
|
|
On May 15, 2009, Messrs. Weiser, Harkey and Rachesky
received a one-time special stock option grant of
25,000 shares of common stock and a one-time fee of $10,000
in recognition for their length of service on the Board of
Directors. The options subject to these one-time stock option
grants vest over three years in equal amounts on each
anniversary of the grant date provided the director continuously
serves as a director from the grant date through such vesting
date, subject to accelerated vesting upon a change in control of
Emisphere. Such options, once vested, remain exercisable through
the period of the option term.
|
|
|
|
Additional committee and chairperson fees are paid as follows:
|
|
|
|
|
|
$10,000 audit committee chairperson fee;
|
|
|
|
$2,500 audit committee member fee;
|
|
|
|
$5,000 compensation committee chairperson fee;
|
|
|
|
$1,000 compensation committee member fee;
|
8
|
|
|
|
|
$2,500 governance and nominating committee chairperson
fee; and
|
|
|
|
$500 governance and nominating committee member fee.
|
The director must be an eligible director on the dates such fees
are paid.
Director
Compensation Table 2010
The table below represents the compensation paid to our
non-employee directors during the year ended December 31,
2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
|
|
|
|
|
|
|
|
or Paid
|
|
Stock
|
|
Option
|
|
All Other
|
|
|
|
|
in Cash
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Total
|
Name
|
|
($)
|
|
($)(1)
|
|
($)(1)
|
|
($)
|
|
($)
|
|
John D. Harkey, Jr.
|
|
|
45,000
|
|
|
|
|
|
|
|
36,940
|
|
|
|
|
|
|
|
81,940
|
|
Mark H. Rachesky, M.D.
|
|
|
36,500
|
|
|
|
|
|
|
|
36,940
|
|
|
|
|
|
|
|
73,440
|
|
Timothy G. Rothwell
|
|
|
33,958
|
|
|
|
|
|
|
|
36,940
|
|
|
|
|
|
|
|
70,898
|
|
Michael Weiser, M.D.
|
|
|
45,000
|
|
|
|
|
|
|
|
36,940
|
|
|
|
|
|
|
|
81,940
|
|
|
|
|
(1) |
|
The value listed in the above table represents the fair value of
the options recognized as expense under FASB ASC Topic 718
during 2010, including unvested options granted before 2010 and
those granted in 2010. Fair value is calculated as of the grant
date using the Black-Scholes-Model. The determination of the
fair value of share-based payment awards made on the date of
grant is affected by our stock price as well as assumptions
regarding a number of complex and subjective variables. Our
assumptions in determining fair value are described in
note 12 to our audited financial statements for the year
ended December 31, 2010. |
The following table summarizes the aggregate number of option
awards and stock awards held by each non-employee director at
December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Awards:
|
|
|
|
|
|
|
|
Market
|
|
|
Number of
|
|
Securities
|
|
Number of
|
|
|
|
|
|
Number of
|
|
Value of
|
|
|
Securities
|
|
Underlying
|
|
Securities
|
|
|
|
|
|
Shares of
|
|
Shares or
|
|
|
Underlying
|
|
Unexercised
|
|
Underlying
|
|
|
|
|
|
Units of
|
|
Units of
|
|
|
Unexercised
|
|
Unearned
|
|
Unexercised
|
|
Option
|
|
Option
|
|
Stock That
|
|
Stock That
|
|
|
Options (#)
|
|
Options (#)
|
|
Unearned
|
|
Exercise
|
|
Expiration
|
|
Have not
|
|
Have not
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Options (#)
|
|
Price ($)
|
|
Date
|
|
Vested (#)
|
|
Vested ($)
|
|
John D. Harkey, Jr.
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
|
8.97
|
|
|
|
5/26/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
|
3.76
|
|
|
|
4/20/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
|
3.79
|
|
|
|
8/8/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
50,000
|
(1)
|
|
|
|
|
|
|
0.93
|
|
|
|
5/15/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
(2)
|
|
|
|
|
|
|
1.20
|
|
|
|
9/16/2020
|
|
|
|
|
|
|
|
|
|
Mark H. Rachesky, M.D.
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
|
3.76
|
|
|
|
4/20/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
|
3.79
|
|
|
|
8/8/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
50,000
|
(1)
|
|
|
|
|
|
|
0.93
|
|
|
|
5/15/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
(2)
|
|
|
|
|
|
|
1.20
|
|
|
|
9/16/2020
|
|
|
|
|
|
|
|
|
|
Michael Weiser, M.D.
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
|
8.97
|
|
|
|
5/26/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
|
3.76
|
|
|
|
4/20/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
|
3.79
|
|
|
|
8/8/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
50,000
|
(1)
|
|
|
|
|
|
|
0.93
|
|
|
|
5/15/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
(2)
|
|
|
|
|
|
|
1.20
|
|
|
|
9/16/2020
|
|
|
|
|
|
|
|
|
|
Timothy G. Rothwell
|
|
|
16,666
|
|
|
|
33,334
|
(3)
|
|
|
|
|
|
|
0.70
|
|
|
|
11/5/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
(2)
|
|
|
|
|
|
|
1.20
|
|
|
|
9/16/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
25,000 exercisable as of 5/15/2011 and 5/15/2012, respectively. |
|
(2) |
|
13,333 exercisable as of
9/16/2011
and
9/16/2012,
respectively and 13,334 exercisable as of
9/16/2013. |
|
(3) |
|
16,667 exercisable as of
11/5/2011
and
11/5/2012,
respectively. |
9
SECURITIES
AVAILABLE FOR FUTURE ISSUANCE UNDER EQUITY PLANS
The following table provides information as of December 31,
2010 about the common stock that may be issued upon the exercise
of options granted to employees, consultants or members of our
Board of Directors under our existing equity compensation plans,
including the 1991 Stock Option Plan, 1995 Stock Option Plan,
2000 Stock Option Plan, the 2002 Broad Based Plan, the 2007
Stock Award and Incentive Plan (collectively the
Plans), the Stock Incentive Plan for Outside
Directors and the Directors Deferred Compensation Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
Remaining
|
|
|
|
|
|
|
|
|
|
Available
|
|
|
|
|
|
|
|
|
|
for Future
|
|
|
|
|
|
|
|
|
|
Issuance
|
|
|
|
|
|
|
|
|
|
Under Equity
|
|
|
|
(a)
|
|
|
|
|
|
Compensation
|
|
|
|
Number of
|
|
|
(b)
|
|
|
Plans
|
|
|
|
Securities to be
|
|
|
Weighted
|
|
|
(Excluding
|
|
|
|
Issued Upon
|
|
|
Average Exercise
|
|
|
Securities
|
|
|
|
Exercise of
|
|
|
Price of
|
|
|
Reflected
|
|
|
|
Outstanding
|
|
|
Outstanding
|
|
|
in Column
|
|
Plan Category
|
|
Options
|
|
|
Options
|
|
|
(a))
|
|
|
Equity Compensation Plans Approved by Security Holders
|
|
|
|
|
|
|
|
|
|
|
|
|
The Plans
|
|
|
3,055,866
|
|
|
$
|
3.29
|
|
|
|
1,432,148
|
|
Stock Incentive Plan for Outside Directors
|
|
|
100,000
|
|
|
|
10.24
|
|
|
|
|
|
Directors Deferred Compensation Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Compensation Plans not approved by Security
Holders(1)
|
|
|
10,000
|
|
|
|
3.64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,165,866
|
|
|
$
|
3.51
|
|
|
|
1,432,148
|
|
|
|
|
(1) |
|
Our Board of Directors has granted options which are currently
outstanding for a former consultant. The Board of Directors
determines the number and terms of each grant (option exercise
price, vesting and expiration date). These grants were made on
7/12/2002 and 7/14/2003. |
VOTING
SECURITIES AND PRINCIPAL HOLDERS THEREOF
At the close of business on the Record Date, there were
approximately 52,076,602 shares of Common Stock outstanding
and entitled to vote. The presence, either in person or by
Proxy, of persons entitled to vote a majority of our outstanding
Common Stock is necessary to constitute a quorum for the
transaction of business at the Annual Meeting. Abstentions and
broker non-votes are counted for purposes of determining a
quorum. Abstentions are counted as if they were no
votes in tabulations of the votes cast, whereas broker
non-votes, are not considered as having voted for the purposes
of determining the outcome of a vote. Holders of Common Stock
have one vote for each share on any matter that may be presented
for consideration and action by the stockholders at the Annual
Meeting.
10
COMMON
STOCK OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS AND
PRINCIPAL HOLDERS
Directors
and Executive Officers
The following table sets forth certain information, as of
March 1, 2011, regarding the beneficial ownership of the
common stock by (i) each director who held office during
the last fiscal year, including the Director Nominees;
(ii) each Executive Officer who held office during the last
fiscal year; (iii) all of our directors and Executive
Officers as a group. Applicable percentage ownership is based on
52,076,602 shares of Common Stock outstanding as of
March 1, 2011. The number of shares beneficially owned by
each director or Executive Officer is determined under the rules
of the SEC, and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under these rules,
beneficial ownership includes any shares as to which the
individual has the sole or shared voting power (which includes
power to vote, or direct the voting of, such security) or
investment power (which includes power to dispose of, or direct
the disposition of, such security). In computing the number of
shares beneficially owned by a person and the percentage
ownership of that person, shares of common stock subject to
options, warrants or convertible notes held by that person that
are currently exercisable or convertible into Common Stock or
will become exercisable or convertible into common stock within
60 days after March 1, 2011 are deemed outstanding,
while such shares are not deemed outstanding for purposes of
computing percentage ownership of any other person. Unless
otherwise indicated, all persons named as beneficial owners of
common stock have sole voting power and sole investment power
with respect to the shares indicated as beneficially owned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares
|
|
|
|
|
|
|
Beneficially
|
|
Common Shares
|
|
|
|
|
Owned
|
|
Underlying
|
|
Percent of
|
Name and Address(a)
|
|
(b)
|
|
Options
|
|
Class
|
|
Michael V. Novinski(e)
|
|
|
1,538,000
|
|
|
|
1,498,000
|
|
|
|
2.9
|
%
|
Michael R. Garone(f)
|
|
|
160,000
|
|
|
|
60,000
|
|
|
|
*
|
|
M. Gary I. Riley, DVM, Ph.D.
|
|
|
110,500
|
|
|
|
90,000
|
|
|
|
*
|
|
Nicholas J. Hart
|
|
|
45,000
|
|
|
|
45,000
|
|
|
|
*
|
|
Mark H. Rachesky, M.D.
|
|
|
30,046,645
|
(c)
|
|
|
15,863,420
|
(d)
|
|
|
44.3
|
%
|
Timothy G. Rothwell
|
|
|
16,666
|
|
|
|
16,666
|
|
|
|
*
|
|
Michael Weiser, M.D.
|
|
|
49,775
|
|
|
|
46,000
|
|
|
|
*
|
|
John D. Harkey, Jr.
|
|
|
49,775
|
|
|
|
46,000
|
|
|
|
*
|
|
All directors and executive officers as a group
|
|
|
32,016,360
|
|
|
|
17,665,085
|
|
|
|
48.1
|
%
|
|
|
|
* |
|
Less than 1% |
|
(a) |
|
Unless otherwise specified, the address of each beneficial owner
is
c/o Emisphere
Technologies, Inc., 240 Cedar Knolls Road, Suite 200,
Cedar Knolls, New Jersey 07927. |
|
(b) |
|
The number of shares set forth for each Director and Executive
Officer consists of direct and indirect ownership of shares,
including stock options, deferred common share units, restricted
stock and, in the case of Dr. Rachesky, shares of common
stock that can be obtained upon conversion of convertible notes
and exercise of warrants, as further described in footnotes
(c) and (d) below. |
|
(c) |
|
This number consists of: |
|
|
|
|
|
14,183,225 shares of common stock held for the accounts of
the following entities: |
|
|
|
5,006,013 shares held for the account of MHR Capital
Partners Master Account LP (Master Account) |
|
|
|
680,826 shares held for the account of MHR Capital Partners
(100) LP (Capital Partners (100)) |
|
|
|
2,412,718 shares held for the account of MHR Institutional
Partners II LP (Institutional Partners II) |
|
|
|
6,078,370 shares held for the account of MHR Institutional
Partners IIA LP (Institutional Partners IIA) |
|
|
|
5,298 shares held directly by Mark H. Rachesky, M.D. |
|
|
|
6,923,667 shares of common stock that can be obtained by
the following entities upon conversion of the Convertible Notes,
including 355,653 shares of common stock issuable to the
following entities as payment |
11
|
|
|
|
|
for accrued but unpaid interest on the Convertible Notes since
the most recent interest payment date (December 31,
2010) through the date that is 60 days after
March 1, 2011: |
|
|
|
1,394,202 shares held by Master Account |
|
|
|
190,660 shares held by Capital Partners (100) |
|
|
|
1,517,005 shares held by Institutional Partners II |
|
|
|
3,821,800 shares held by Institutional Partners IIA |
|
|
|
8,900,753 shares of common stock that can be obtained by
the following entities upon exercise of warrants: |
|
|
|
2,122,000 shares held by Master Account |
|
|
|
290,135 shares held by Capital Partners (100) |
|
|
|
1,843,722 shares held by Institutional Partners II |
|
|
|
4,644,896 shares held by Institutional Partners IIA |
|
|
|
7,000 shares of common stock that can be obtained by
Dr. Rachesky upon the exercise of currently vested stock
options at a price of $3.76 per share |
|
|
|
7,000 shares of common stock that can be obtained by
Dr. Rachesky upon the exercise of currently vested stock
options at a price of $3.79 per share |
|
|
|
25,000 shares of common stock that can be obtained by
Dr. Rachesky upon the exercise of currently vested stock
options at a price of $0.93 per share. |
|
|
|
|
|
MHR Advisors LLC (Advisors) is the general partner
of each of Master Account and Capital Partners (100), and, in
such capacity, may be deemed to beneficially own the shares of
common stock held for the accounts of each of Master Account and
Capital Partners (100). MHR Institutional Advisors II LLC
(Institutional Advisors II) is the general partner
of each of Institutional Partners II and Institutional
Partners IIA, and, in such capacity, may be deemed to
beneficially own the shares of common stock held for the
accounts of each of Institutional Partners II and
Institutional Partners IIA. MHR Fund Management LLC
(Fund Management) is a Delaware limited
liability company that is an affiliate of and has an investment
management agreement with Master Account, Capital Partners
(100), Institutional Partners II and Institutional Partners
IIA, and other affiliated entities, pursuant to which it has the
power to vote or direct the vote and to dispose or to direct the
disposition of the shares of common stock held by such entities
and, accordingly, Fund Management may be deemed to
beneficially own the shares of common stock held for the account
of each of Master Account, Capital Partners (100), Institutional
Partners II and Institutional Partners IIA.
Dr. Rachesky is the managing member of Advisors,
Institutional Advisors II, and Fund Management, and, in
such capacity, may be deemed to beneficially own the shares of
common stock held for the accounts of each of Master Account,
Capital Partners (100), Institutional Partners II and
Institutional Partners IIA. |
|
(d) |
|
This number consists of (i) 6,6, 923,667 shares of
common stock that can be obtained by Master Account, Capital
Partners (100), Institutional Partners II and Institutional
Partners IIA upon conversion of the Convertible Notes,
(ii) 8,900,753 shares of common stock that can be
obtained by Master Account, Capital Partners (100),
Institutional Partners II and Institutional Partners IIA
upon exercise of warrants, (iii) 39,000 shares of
common stock that can be obtained by Dr. Rachesky upon the
exercise of currently vested stock options. |
|
(e) |
|
On February 28, 2011, Michael V. Novinski resigned as a
director of the Company and from his position as President and
Chief Executive Officer of the Company. |
|
(f) |
|
On February 28, 2011, Michael R. Garone was appointed as
Interim Chief Executive Officer of the Company. |
12
Principal
Holders of Common Stock
The following table sets forth information regarding beneficial
owners of more than five (5%) percent of the outstanding shares
of Common Stock as of March 1, 2011:
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
Percent of
|
Name and Address
|
|
Beneficially Owned
|
|
Class(a)
|
|
Bai Ye Feng
16A Li Dong Building
No. 9 Li Yuen Street East
Central, Hong Kong
|
|
|
5,014,665(b
|
)
|
|
|
9.36
|
%
|
Mark H. Rachesky, M.D.
40 West 57th Street, 24th Floor
New York, NY 10019
|
|
|
30,046,645(c
|
)
|
|
|
44.3
|
%
|
|
|
|
|
|
Applicable percentage ownership is based on
52,076,602 shares of Common Stock outstanding as of
March 1, 2011. In computing the number of shares
beneficially owned by a person and the percentage ownership of
that person, shares of Common Stock subject to options, warrants
or convertible notes held by that person that are currently
exercisable or convertible into Common Stock or will become
exercisable or convertible into Common Stock within 60 days
after March 1, 2011 are deemed outstanding, while such
shares are not deemed outstanding for purposes of computing
percentage ownership of any other person. Information based on
Amendment Number 3 to
Schedule 13-D
filed with the SEC on February 14, 2008. |
|
|
|
Information based on Mr. Fengs
Schedule 13-G/A
filed with the SEC on February 8, 2011. Mr. Feng
beneficially owns an aggregate of 5,014,665 shares of
common stock, consisting of 3,220,665 shares of common
stock held by Mr. Feng, warrants to purchase up to
1,500,000 shares of common stock held by Mr. Feng, and
294,000 shares of common stock held by Lighthouse
Consulting Limited, a Hong Kong company of which Mr. Feng
is a principal and therefore may be deemed to be the beneficial
holder of the securities held by Lighthouse Consulting Limited. |
|
|
|
Please refer to footnote c in the table under
Directors and Executive Officers (above). |
COMPENSATION
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee operates under a written charter
adopted by the Board of Directors. The Compensation Committee
charter can be found on our website at www.emisphere.com. The
contents of our website are not incorporated herein by reference
and the website address provided in this Proxy Statement is
intended to be an inactive textual reference only.
The Compensation Committee is responsible for the consideration
of stock plans, performance goals and incentive awards, and the
overall coverage and composition of the compensation
arrangements related to executive officers. The Compensation
Committee may delegate any of the foregoing duties and
responsibilities to a subcommittee of the Compensation Committee
consisting of not less than two members of the committee. The
Compensation Committee has the authority to retain, at the
expense of the Company, such outside counsel, experts and other
advisors as deemed appropriate to assist it in the full
performance of its functions. The Companys Chief Executive
Officer is involved in making recommendations to the
Compensation Committee for compensation of Executive Officers
(except for himself) as well as recommending compensation levels
for directors.
Our executive compensation program is administered by the
Compensation Committee of the Board of Directors. The
Compensation Committee, which is composed of non-employee
independent directors, is responsible for reviewing with Company
management and approving compensation policy and all forms of
compensation for executive officers and directors in light of
the Companys current business environment and the
Companys strategic objectives. In addition, the
Compensation Committee acts as the administrator of the
Companys stock option plans. The Compensation
Committees practices include reviewing and establishing
executive officers compensation to ensure that base pay
and incentive compensation are competitive to attract and retain
qualified executive officers, and to provide incentive systems
reflecting both financial and operating performance, as well as
an alignment with stockholder interests. These policies are
based on the principle that total compensation should
13
serve to attract and retain those executives critical to the
overall success of Emisphere and should reward executives for
their contributions to the enhancement of stockholder value.
The Compensation Committee oversees risk management as it
relates to our compensation plans, policies and practices in
connection with structuring our executive compensation programs
and reviewing our incentive compensation programs for other
employees. The committee considered risk when developing our
compensation programs and believes that the design of our
current compensation programs do not encourage excessive or
inappropriate risk taking. Our base salaries provide competitive
fixed compensation, while annual cash bonuses and equity-based
awards encourage long-term consideration rather than short-term
risk taking.
The Compensation Committee has reviewed the Compensation
Discussion and Analysis presented herein with the management of
the Company. Based on that review and discussion, the
Compensation Committee recommended to the Board of Directors
that the Compensation Discussion and Analysis be included in the
Form 10-K
and Proxy Statement of the Company.
The
Members of the Compensation Committee
Michael
Weiser, M.D., Ph.D. (Chairman)
Mark H.
Rachesky, M.D.
AUDIT
COMMITTEE REPORT
The Audit Committee operates under a written charter adopted by
the Board of Directors. The Audit Committee has reviewed the
relevant standards of the Sarbanes-Oxley Act of 2002, the rules
of the SEC, and the corporate governance listing standards of
the NASDAQ regarding committee policies. The committee intends
to further amend its charter, if necessary, as the applicable
rules and standards evolve to reflect any additional
requirements or changes. The updated Audit Committee charter can
be found on our website at www.emisphere.com. The
contents of our website are not incorporated herein by reference
and the website address provided in this Proxy Statement is
intended to be an inactive textual reference only.
The Audit Committee is currently comprised of John D.
Harkey, Jr., (chairman), Timothy G. Rothwell, who was
appointed to the Committee on January 6, 2010, and Michael
Weiser, M.D. All of the members of the Audit Committee are
independent within the meaning of Rule 4200 of the NASDAQ.
The Board of Directors has determined that John D.
Harkey, Jr. is an Audit Committee financial
expert, within the meaning of Item 401(h) of
Regulation S-K.
On January 6, 2010, the Company dismissed
PricewaterhouseCoopers LLP (PwC) as the
Companys independent registered public accountants. This
action was approved on January 6, 2010 by the Audit
Committee of the Board of Directors of the Company. PwCs
audit reports on the Companys consolidated financial
statements as of and for the years ended December 31, 2008
and 2007 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, except that for each of
the years ended December 31, 2008 and 2007 PwCs
reports contained an explanatory paragraph expressing
substantial doubt about the Companys ability to continue
as a going concern. During the Companys fiscal years ended
December 31, 2007 and 2008, in subsequent interim periods
through January 6, 2010, there were no disagreements with
PwC on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure,
which disagreements, if not resolved to the satisfaction of PwC,
would have caused PwC to make reference to the matter in their
reports, and there were no reportable events (as
defined in Item 304(a)(1)(v) of
Regulation S-K).
On January 6, 2010, with the approval of the Audit
Committee of the Company, the Company engaged
McGladrey & Pullen, LLP (M&P) to act
as its independent registered public accounting firm. During the
years ended December 2007, and 2008, respectively, in the
subsequent interim periods through January 5, 2010, neither
the Company nor anyone acting on its behalf had consulted with
M&P on any of the matters or events set forth in
Item 304(a)(2) of
Regulation S-K.
14
Management has primary responsibility for the Companys
financial statements and the overall reporting process,
including the Companys system of internal control over
financial reporting. M&P, the Companys independent
registered public accountants, audit the annual financial
statements prepared by management, express an opinion as to
whether those financial statements fairly present the
consolidated financial position, results of operations and cash
flows of the Company and its subsidiaries in conformity with
accounting principles generally accepted in the United States,
and report on internal control over financial reporting.
M&P reports to the Audit Committee as members of the Board
of Directors and as representatives of the Companys
stockholders.
The Audit Committee meets with management periodically to
consider the adequacy of the Companys internal control
over financial reporting and the objectivity of its financial
reporting. The Audit Committee discusses these matters with the
appropriate Company financial personnel. In addition, the Audit
Committee has discussions with management concerning the process
used to support certifications by the Companys Chief
Executive Officer and Chief Financial Officer that are required
by the SEC and the Sarbanes-Oxley Act to accompany the
Companys periodic filings with the SEC.
On an as needed basis, the Audit Committee meets privately with
M&P. The Audit Committee also appoints the independent
registered public accounting firm, approves in advance their
engagements to perform audit and any non-audit services and the
fee for such services, and periodically reviews their
performance and independence from management. In addition, when
appropriate, the Audit Committee discusses with M&P plans
for the audit partner rotation required by the Sarbanes-Oxley
Act.
Pursuant to its charter, the Audit Committee assists the Board
in, among other things, monitoring and reviewing (i) our
financial statements, (ii) our compliance with legal and
regulatory requirements and, (iii) the independence,
performance and oversight of our independent registered public
accounting firm. Under the Audit Committee charter, the Audit
Committee is required to make regular reports to the Board.
During the 2010 Fiscal Year, the Audit Committee of the Board of
Directors reviewed and assessed:
|
|
|
|
|
the quality and integrity of the annual audited financial
statements with management, including issues relating to
accounting and auditing principles and practices, as well as the
adequacy of internal controls, and compliance with regulatory
and legal requirements;
|
|
|
|
the qualifications and independence of the independent
registered public accounting firm; and
|
|
|
|
managements, as well as the independent auditors,
analysis regarding financial reporting issues and judgments made
in connection with the preparation of our financial statements,
including those prepared quarterly and annually, prior to filing
our quarterly reports on
Form 10-Q
and Annual Report on
Form 10-K.
|
The Audit Committee has reviewed the audited financial
statements and has discussed them with both management and
M&P, the independent registered public accounting firm. The
Audit Committee has discussed with the independent auditors
matters required to be discussed by the applicable Auditing
Standards as periodically amended (including significant
accounting policies, alternative accounting treatments and
estimates, judgments and uncertainties). In addition, the
independent auditors provided to the Audit Committee the written
disclosures required by the applicable requirements of the
Public Company Accounting Oversight Board regarding the
independent auditors communications with the Audit
Committee concerning independence, and the Audit Committee and
the independent auditors have discussed the auditors
independence from the Company and its management, including the
matters in those written disclosures. The Audit Committee also
received reports from M&P regarding all critical accounting
policies and practices used by the Company, any alternative
treatments of financial information used, generally accepted
accounting principles that have been discussed with management,
ramifications of the use of alternative treatments and the
treatment preferred by M&P and other material written
communications between M&P and management, including
management letters and schedules of adjusted differences.
In making its decision to select M&P as Emispheres
independent registered public accounting firm for 2010, the
Audit Committee considers whether the non-audit services
provided by M&P are compatible with maintaining the
independence of M&P.
15
Based upon the review and discussions referenced above, the
Audit Committee, as comprised at the time of the review and with
the assistance of the Companys Chief Financial Officer,
recommended to the Board of Directors that the audited financial
statements be included in our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010 and be filed
with the SEC.
The
Members of the Audit Committee
John
D. Harkey, Jr. (Chairman)
Timothy G. Rothwell
Michael Weiser, M.D.
INDEPENDENT
AUDITOR FEES
The following table presents fees for professional audit
services rendered by M&P for the audit of our annual
financial statements for the years ended December 31, 2010
and December 31, 2009, respectively, and fees billed for
other services rendered by M&P during the respective
periods.
|
|
|
|
|
|
|
|
|
Type of Fees
|
|
2010
|
|
|
2009
|
|
|
Audit Fees(1)
|
|
|
231,000
|
|
|
|
150,000
|
|
Audit-Related Fees(2)
|
|
|
8,000
|
|
|
|
|
|
Tax Fees(3)
|
|
|
23,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
262,300
|
|
|
|
150,000
|
|
|
|
|
(1) |
|
Audit fees for 2010 and 2009 were for professional services
rendered for the audit of the Companys financial
statements for the fiscal year, including attestation services
required under Section 404 of the Sarbanes-Oxley Act of
2002, and reviews of the Companys quarterly financial
statements included in its
Form 10-Q
filings. |
|
(2) |
|
Audit related fees are for services related to our registration
statement on
Form S-1. |
|
(3) |
|
Tax consulting fees. |
The Audit Committee has determined that the non-audit services
provided by M&P during 2010 did not impair their
independence. All decisions regarding selection of independent
registered public accounting firms and approval of accounting
services and fees are made by our Audit Committee in accordance
with the provisions of the Sarbanes-Oxley Act of 2002 and
related SEC rules.
The Audit Committee pre-approves all audit and permissible
non-audit services provided by the independent registered public
accounting firm; these services may include audit services,
audit related services, tax services and other services. The
committee has adopted a policy for the pre-approval of services
provided by the independent registered public accounting firm,
where pre-approval is generally provided for up to one year and
any pre-approval is detailed as to the particular service or
category of services and is subject to a specific budget. For
each proposed service, the independent auditor is required to
provide detailed communication at the time of approval. The
committee may delegate pre-approval authority to one or more of
its members, who must report same to the Committee members at
the next meeting. The Audit Committee, after discussion with
M&P, agreed that any additional audit or tax service fees
could be paid by us, subject to the pre-approval of the Audit
Committee chairman.
The Audit Committee currently intends to select M&P to
serve as independent registered public accounting firm for the
fiscal year ending December 31, 2011. The Company expects
that representatives from M&P (the
Representatives) will be present at the Annual
Meeting, that the Representatives will have the opportunity to
make a statement if they desire to do so and that the
Representatives will be available to respond to
appropriate questions.
16
COMPENSATION
DISCUSSION AND ANALYSIS
Executive
Summary
The discussion that follows outlines the compensation awarded
to, earned by or paid to the named executive officers of the
Company including a review of the principal elements of
compensation, the objectives of the Companys compensation
program, what the program is designed to reward and why and how
each element of compensation is determined.
In general, the Company operates in a marketplace where
competition for talented executives is significant. The Company
is engaged in the long-term development of its technology and of
drug candidates, without the benefit of significant current
revenues, and therefore its operations require it to raise
capital in order to continue its activities. Our operations
entail special needs and risks and require that the Company
attempt to implement programs that promote strong individual and
group performance and retention of excellent employees. The
Companys compensation program for named executive officers
consists of cash compensation as base salary, medical, basic
life insurance, long term disability, flexible spending
accounts, paid time off, and defined contribution retirement
plans as well as long term equity incentives offered through
stock option plans. This program is developed in part by
benchmarking against other companies in the
biotechnology/pharmaceutical sectors, as well as by the judgment
and discretion of our Board of Directors.
Employee salaries are benchmarked against Radford survey
information. Radford is part of the Aon family brands. For more
than 30 years, Radford has been a leading provider of
compensation market intelligence to the high-tech and life
sciences industries. Radford emphasizes data integrity and
online access to data, tools and resources, as well as client
service geared towards life sciences. Radford includes more than
2,000 participating companies globally. Their services offer
full compensation consulting, reliable, current data analysis
and reporting, customized data for competitive insight, and web
access to data via the Radford Network.
Discussion
and Analysis
Objectives of the compensation and reward
program The biopharmaceutical marketplace is
highly competitive and includes companies with far greater
resources than ours. Our work involves the difficult,
unpredictable, and often slow development of our technology and
of drug candidates. Continuity of scientific knowledge,
management skills, and relationships are often critical success
factors to our business. The objectives of our compensation
program for named executive officers is to provide competitive
cash compensation, competitive health, welfare and defined
benefit contribution benefits as well as long-term equity
incentives that offer significant reward potential for the risks
assumed and for each individuals contribution to the
long-term performance of the Company. Individual performance is
measured against long-term strategic goals, short-term business
goals, scientific innovation, regulatory compliance, new
business development, development of employees, fostering of
teamwork and other Emisphere values designed to build a culture
of high performance. These policies and practices are based on
the principle that total compensation should serve to attract
and retain those executives critical to the overall success of
Emisphere and are designed to reward executives for their
contributions toward business performance that is designed to
build and enhance stockholder value.
Elements of compensation and how they are
determined The key elements of the executive
compensation package are base salary (as determined by the
competitive market and individual performance), the executive
long term disability plan and other health and welfare benefits
and long-term incentive compensation in the form of periodic
stock option grants. The base salary (excluding payment for
accrued but unused vacation) for the named Executive Officers
for 2010 ranged from $241,374 for its Vice President and Chief
Financial Officer to $550,000 for its President and Chief
Executive Officer. In determining the compensation for each
named Executive Officer, the Company generally considers
(i) data from outside studies and Proxy materials regarding
compensation of executive officers at companies believed to be
comparable, (ii) the input of other directors and the
President and Chief Executive Officer (other than for his own
compensation) regarding individual performance of each named
executive officer and (iii) qualitative measures of
Emispheres performance, such as progress in the
development of the Companys technology, the engagement of
corporate partners for the commercial development and marketing
of products, effective corporate governance, fiscal
responsibility, the success of Emisphere in raising funds
necessary
17
to conduct research and development, and the pace at which the
Company continues to advance its technologies in various
clinical trials. Our Board of Directors and Compensation
Committees consideration of these factors is subjective
and informal. However, in general, it has determined that the
compensation for executive officers should be competitive with
market data reflected within the
50th-75th percentile
of biotechnology companies for corresponding senior executive
positions. Compensation levels for 2009 were derived from the
compensation plan set in 2006 and were based in part by
information received from executive compensation consultants,
Pearl Myer and Partners, based in New York, N.Y. Compensable
factors benchmarked include market capitalization, head count
and location. While the Company has occasionally paid cash
bonuses in the past, there is no consistent annual cash bonus
plan for named executive officers. When considering the
compensation of the Companys President and Chief Executive
Officer, the Company receives information and analysis prepared
or secured by the Companys outside executive compensation
experts and survey data prepared by human resources management
personnel as well as any additional outside information it may
have available.
The compensation program also includes periodic awards of stock
options. The stock option element is considered a long-term
incentive that further aligns the interests of executives with
those of our stockholders and rewards long-term performance and
the element of risk. Stock option awards are made at the
discretion of the Board of Directors based on its subjective
assessment of the individual contribution of the executive to
the attainment of short and long-term Company goals, such as
collaborations with partners, attainment of successful
milestones under such collaborations and other corporate
developments which advance the progress of our technology and
drug candidates. Option grants, including unvested grants, for
our named executive officers range from 115,000 for our Vice
President, Chief Financial Officer and Corporate Secretary; Vice
President of Non-Clinical Development and Applied Biology; and
Vice President, Strategy and Development, to 1,600,000 for
President and Chief Executive Officer as indicated in the
accompanying tables. Stock option grants to named executive
officers in 2010 were made in connection with the annual
compensation review. With the exception of grants made to the
Companys President and Chief Executive Officer (described
in Transactions with Executive Officers and
Directors), the Companys policy with respect to
stock options granted to executives is that grant prices should
be equal to the fair market value of the common stock on the
date of grant, that employee stock options should generally vest
over a three to five-year period and expire in ten years from
date of grant, and that options previously granted at exercise
prices higher than the current fair market value should not be
re-priced. Once performance bonuses or awards are issued, there
are currently no policies in place to reduce, restate or
otherwise adjust awards if the relevant performance measures on
which they are based are restated or adjusted. The Company has
no policy to require its named executive officers to hold any
specific equity interest in the Company. The Company does not
offer its named executive officers any nonqualified deferred
compensation, a defined benefit pension program or any post
retirement medical or other benefits.
Section 162(m) of the Internal Revenue Code of 1986, as
amended, provides that compensation in excess of $1,000,000 paid
to the Chief Executive Officer or to any of the other four most
highly compensated executive officers of a publicly held company
will not be deductible for federal income tax purposes, unless
such compensation is paid pursuant to one of the enumerated
exceptions set forth in Section 162(m). The Companys
primary objective in designing and administering its
compensation policies is to support and encourage the
achievement of the Companys long-term strategic goals and
to enhance stockholder value. In general, stock options granted
under the Companys 2000 Plan and 2007 Plan are intended to
qualify under and comply with the performance based
compensation exemption provided under Section 162(m)
thus excluding from the Section 162(m) compensation
limitation any income recognized by executives at the time of
exercise of such stock options. Because salary and bonuses paid
to our Chief Executive Officer and four most highly compensated
executive officers have been below the $1,000,000 threshold, the
Compensation Committee has elected, at this time, to retain
discretion over bonus payments, rather than to ensure that
payments of salary and bonus in excess of $1,000,000 are
deductible. The Compensation Committee intends to review
periodically the potential impacts of Section 162(m) in
structuring and administering the Companys compensation
programs.
18
Summary
Compensation Table 2010, 2009 and 2008
The following table sets forth information regarding the
aggregate compensation Emisphere paid during 2010, 2009 and 2008
to our Principal Executive Officer, our Principal Financial
Officer, and the two other highest paid Executive Officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Total
|
|
Name and Principal Position(1)
|
|
Year
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)(2)
|
|
|
($)
|
|
|
($)
|
|
|
Michael V. Novinski(10),
|
|
|
2010
|
|
|
|
550,000
|
|
|
|
|
|
|
|
|
|
|
|
312,175
|
|
|
|
18,000
|
(4)
|
|
|
880,175
|
|
President and CEO
|
|
|
2009
|
|
|
|
550,000
|
|
|
|
|
|
|
|
|
|
|
|
239,759
|
|
|
|
18,000
|
(4)
|
|
|
807,759
|
|
|
|
|
2008
|
|
|
|
554,231
|
|
|
|
357,123
|
(3)
|
|
|
|
|
|
|
|
|
|
|
18,000
|
(4)
|
|
|
929,354
|
|
Michael R. Garone,
|
|
|
2010
|
|
|
|
241,374
|
|
|
|
|
|
|
|
|
|
|
|
19,445
|
|
|
|
|
|
|
|
260,819
|
|
Chief Financial Officer
|
|
|
2009
|
|
|
|
234,313
|
|
|
|
|
|
|
|
|
|
|
|
10,642
|
|
|
|
|
|
|
|
244,955
|
|
and Corporate VP, Corporate
|
|
|
2008
|
|
|
|
231,794
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
231,794
|
|
Secretary(5)(11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
M. Gary I. Riley DVM, Ph.D.,
|
|
|
2010
|
|
|
|
278,104
|
|
|
|
|
|
|
|
|
|
|
|
19,445
|
|
|
|
|
|
|
|
297,549
|
|
VP of Non-Clinical
|
|
|
2009
|
|
|
|
269,969
|
|
|
|
|
|
|
|
|
|
|
|
10,642
|
|
|
|
8,000
|
(7)
|
|
|
279,011
|
|
Development and Applied
|
|
|
2008
|
|
|
|
267,039
|
|
|
|
40,000
|
(6)
|
|
|
|
|
|
|
|
|
|
|
14,000
|
(7)
|
|
|
321,039
|
|
Biology(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nicholas J. Hart, VP,
|
|
|
2010
|
|
|
|
249,657
|
|
|
|
|
|
|
|
|
|
|
|
19,445
|
|
|
|
|
|
|
|
269,102
|
|
Strategy and Development(8)
|
|
|
2009
|
|
|
|
242,880
|
|
|
|
|
|
|
|
|
|
|
|
10,642
|
|
|
|
|
|
|
|
253,522
|
|
|
|
|
2008
|
|
|
|
104,308
|
|
|
|
16,872
|
(9)
|
|
|
|
|
|
|
173,550
|
|
|
|
|
|
|
|
294,730
|
|
|
|
|
(1) |
|
Only two individuals other than the Principal Executive Officer
and the Principal Financial Officer served as Executive Officers
at the end of fiscal year 2010. As a result, the named executive
officers, as defined in
Regulation S-K,
Item 402(a)(3), of the Company are as follows:
Mr. Novinski, Mr. Garone, Dr. Riley and
Mr. Hart. |
|
(2) |
|
Amounts shown in this column represent the aggregate grant date
fair value of stock option awards granted during the respective
year computed in accordance with Financial Accounting Standards
Board ASC Topic 718. This compares to prior years, during which
amounts in these columns have represented the expensed
accounting value of such awards. The amounts for 2008 and 2009
have been recomputed (along with amounts in the Total column for
such years) using the aggregate grant date fair value of stock
option awards granted during both of those years. For
assumptions used in the valuation of these awards please see
Note 12 to our Financial Statements for the fiscal year
ended December 31, 2010. |
|
(3) |
|
Mr. Novinski was paid a bonus in 2008 for performance in
2007 in accordance with the terms of his employment contract. |
|
(4) |
|
All other compensation for Mr. Novinski represents an
allowance for the use of a personal automobile in accordance
with the terms of his employment contract. |
|
(5) |
|
Mr. Garone was appointed Corporate Secretary effective
October 24, 2008. |
|
(6) |
|
In accordance with the terms of his employment contract,
Dr. Riley received a signing bonus, payable during 2008,
when he joined the Company. |
|
(7) |
|
All other compensation for Dr. Riley represents payments
for relocation expenses. |
|
(8) |
|
Mr. Hart accepted the position as Vice President, Strategy
and Development effective July 28, 2008. |
|
(9) |
|
Mr. Hart received a signing bonus when he joined the
Company. |
|
(10) |
|
On February 28, 2011, Michael V. Novinski resigned as a
director of the Company and from his position as President and
Chief Executive Officer of the Company. |
|
(11) |
|
On February 28, 2011, Michael R. Garone was appointed as
Interim Chief Executive Officer of the Company. |
19
Grants of
Plan-Based Awards 2010
The following table sets forth information regarding grants of
plan-based awards in 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
Option Awards:
|
|
|
|
|
|
|
|
|
Number of
|
|
Exercise or
|
|
|
|
|
|
|
Securities
|
|
Base Price of
|
|
Grant Date Fair
|
|
|
|
|
Underlying
|
|
Option Awards
|
|
Value of Option
|
Name
|
|
Grant Date
|
|
Options (#)
|
|
($/Sh)
|
|
Awards
|
|
Michael V. Novinski(1),
|
|
|
3/10/2010
|
|
|
|
300,000
|
|
|
$
|
1.34
|
|
|
$
|
312,175
|
|
President and CEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael R. Garone, VP,
|
|
|
1/19/2010
|
|
|
|
20,000
|
|
|
|
1.25
|
|
|
|
19,445
|
|
Chief Financial Officer,
Corporate VP and Corporate Secretary(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
M. Gary I. Riley DVM,
|
|
|
1/19/2010
|
|
|
|
20,000
|
|
|
|
1.25
|
|
|
|
19,445
|
|
Ph.D. VP of non-Clinical Development and Applied Biology
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nicholas J. Hart,
|
|
|
1/19/2010
|
|
|
|
20,000
|
|
|
|
1.25
|
|
|
|
19,445
|
|
Vice President, Strategy and Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
On February 28, 2011, Michael V. Novinski resigned as a
director of the Company and from his position as President and
Chief Executive Officer of the Company |
|
(2) |
|
On February 28, 2011, Michael R. Garone was appointed as
Interim Chief Executive Officer of the Company. |
Outstanding
Equity Awards at Fiscal Year-End 2010
The following table sets forth information as to the number and
value of unexercised options held by the Executive Officers
named above as of December 31, 2010. There are no
outstanding stock awards with executive officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Securities
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Underlying
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
Unexercised
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
Unexercised
|
|
|
Unearned
|
|
|
Unexercised
|
|
|
Option
|
|
|
Option
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Unearned
|
|
|
Exercise
|
|
|
Expiration
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Options (#)
|
|
|
Price ($)
|
|
|
Date
|
|
|
Michael V. Novinski(6),
|
|
|
500,000
|
|
|
|
|
|
|
|
|
|
|
$
|
3.19
|
|
|
|
4/6/2017
|
|
President and CEO
|
|
|
500,000
|
|
|
|
|
|
|
|
|
|
|
$
|
6.38
|
|
|
|
4/6/2017
|
|
|
|
|
300,000
|
|
|
|
|
|
|
|
|
|
|
$
|
0.93
|
|
|
|
5/15/2019
|
|
|
|
|
200,000
|
|
|
|
100,000
|
(1)
|
|
|
|
|
|
$
|
1.34
|
|
|
|
3/10/2020
|
|
Michael R. Garone, VP,
|
|
|
45,000
|
|
|
|
30,000
|
(2)
|
|
|
|
|
|
$
|
4.03
|
|
|
|
8/29/2017
|
|
Chief Financial Officer,
|
|
|
5,000
|
|
|
|
15,000
|
(3)
|
|
|
|
|
|
$
|
0.62
|
|
|
|
4/12/2019
|
|
Corporate VP, and
|
|
|
|
|
|
|
20,000
|
(4)
|
|
|
|
|
|
$
|
1.25
|
|
|
|
1/19/2020
|
|
Corporate Secretary(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
M. Gary I. Riley DVM,
|
|
|
75,000
|
|
|
|
|
|
|
|
|
|
|
$
|
4.02
|
|
|
|
11/6/2017
|
|
Ph.D. Vice President of Non-Clinical
|
|
|
5,000
|
|
|
|
15,000
|
(3)
|
|
|
|
|
|
$
|
0.62
|
|
|
|
4/12/2019
|
|
Development and Applied Biology
|
|
|
|
|
|
|
20,000
|
(4)
|
|
|
|
|
|
$
|
1.25
|
|
|
|
1/19/2020
|
|
Nicholas J. Hart,
|
|
|
30,000
|
|
|
|
45,000
|
(5)
|
|
|
|
|
|
$
|
2.71
|
|
|
|
7/14/2018
|
|
Vice President, Strategy
|
|
|
5,000
|
|
|
|
15,000
|
(3)
|
|
|
|
|
|
$
|
0.62
|
|
|
|
4/12/2019
|
|
and Development
|
|
|
|
|
|
|
20,000
|
(4)
|
|
|
|
|
|
$
|
1.25
|
|
|
|
1/19/2020
|
|
|
|
|
(1) |
|
100,000 exercisable as of 12/31/2011 |
|
(2) |
|
15,000 exercisable as of 8/29/2011 and 8/29/2012, respectively |
20
|
|
|
(3) |
|
5,000 exercisable as of 4/12/2011; 10,000 exercisable as of
4/12/2012 |
|
(4) |
|
5,000 exercisable as of 1/19/2011 and 1/19/2012, respectively
and 10,000 exercisable as of 1/19/2013 |
|
(5) |
|
15,000 exercisable as of 7/14/2011, 7/14/2012 and 7/14/2013,
respectively |
|
(6) |
|
On February 28, 2011, Michael V. Novinski resigned as a
director of the Company and from his position as President and
Chief Executive Officer of the Company |
|
(7) |
|
On February 28, 2011, Michael R. Garone was appointed as
Interim Chief Executive Officer of the Company. |
Option
Exercises and Stock Vested 2010
There were no stock options exercised by Executive Officers
during 2010.
TRANSACTIONS
WITH RELATED PERSONS
Employment
Agreement with Michael V. Novinski, Former President and Chief
Executive Officer
On April 6, 2007, the Company entered into an employment
agreement with Michael V. Novinski, setting forth the terms and
conditions of his employment as President and Chief Executive of
the Company (the Novinski Employment Agreement). The
Novinski Employment Agreement was for a term of three years,
renewable annually thereafter. Effective February 25, 2011,
the Company and Mr. Novinski mutually agreed not to renew
the Novinski Employment Agreement, and Mr. Novinski
resigned his employment with the Company. Under the Novinski
Employment Agreement, Mr. Novinski received a base salary
of $550,000 per year, less applicable local, state and federal
withholding taxes. Mr. Novinski was also granted options to
purchase 1,000,000 shares of the Companys common
stock; the exercise price for 500,000 of the shares was $3.19,
the fair market value of the common stock on the date of grant,
and the exercise price for the remaining 500,000 shares is
equal to two times the fair market value of the common stock on
the date of grant. At December 31, 2010, options to
purchase 1,000,000 shares were vested. In addition, he was
eligible for an annual cash bonus up to $550,000 (based on a
full calendar year). In view of the Companys current
liquidity constraints, the Committee determined, and
Mr. Novinski agreed, that he would be paid a $150,000 cash
bonus pursuant to his employment agreement with the Corporation
in respect of the Companys 2009 fiscal year (the
2009 Performance Bonus); additionally
Mr. Novinski received a one-time grant of options to
purchase 300,000 shares in connection with his compensation
for 2009. However, given the Companys current liquidity
constraints, the Compensation Committee, with the consent of
Mr. Novinski, agreed to defer the payment of the cash bonus
until such time as the Companys liquidity has stabilized
and it has sufficient funding to pay it. The Committee also
determined that Mr. Novinski would be paid a special
one-time cash bonus of $150,000 in connection with the
successful completion of a financing during 2009 (the 2009
Financing Bonus). However, in light of the Companys
current liquidity constraints, Mr. Novinski and the Company
also agreed to defer the payment of the $150,000 special cash
bonus until such time as the Companys liquidity has
stabilized and it has sufficient funding to pay it.
In accordance with the Novinski Employment Agreement and the
Separation and Release Agreement by and between the Company and
Mr. Novinski dated as of February 25, 2011 (the
Separation Agreement), the Company paid to
Mr. Novinski the 2009 Performance Bonus and the 2009
Financing Bonus, accrued but unpaid vacation benefits, and the
Company also agreed to pay its portion of
Mr. Novinskis COBRA health benefits for a certain
period of time as further set forth therein. Mr. Novinski
owns incentive stock options to purchase an aggregate of
1,600,000 shares of common stock, of which 1,500,000 have
vested. The Separation Agreement also provides that
Mr. Novinskis 100,000 unvested stock options will
continue to vest in accordance with Mr. Novinskis
underlying option agreements and that Mr. Novinski may
exercise his vested stock options through April 6, 2012.
Under the terms of the Separation Agreement, Mr. Novinski
has agreed to provide consulting services to the Company for a
period of 18 months and has also agreed to release the
Company and certain affiliated parties from all claims and
liabilities under federal and state laws arising from his
relationship with the Company.
21
Agreement
with M. Gary I. Riley, Vice President on Non-Clinical
Development and Applied Biology
The Company has an agreement with M. Gary I. Riley (the
Riley Employment Agreement) by which, in the event
that there is a Change in Control (as defined in the Riley
Employment Agreement) during Dr. Rileys first
twenty-four months of employment at Emisphere resulting in
termination of employment during such twenty-four month period,
a severance amount, equivalent to one years base salary
(excluding bonus and relocation assistance), will be provided to
the executive. In the event there is a Change in Control after
Dr. Rileys first twenty-four months of employment, a
severance amount, equivalent to six months base salary,
will be provided to him.
In addition, in the event that there is a Change in Control
during Dr. Rileys employment at Emisphere resulting
in termination of employment, he shall receive, in addition to
the options already vested and subject to approval by the Board
of Directors, immediate vesting of all remaining options as set
forth in the Plan.
Agreement
with Nicholas J. Hart, Vice President, Strategy and
Development
The Company has an agreement with Nicholas J. Hart (the
Hart Employment Agreement) by which, in the event
that there is a Change in Control (as defined in the Hart
Employment Agreement) during Mr. Harts term of
employment at Emisphere resulting in termination of employment,
a severance amount, equivalent to six months base salary
(excluding bonus) will be provided to Mr. Hart.
In addition, in the event that there is a Change in Control
during his employment at Emisphere resulting in termination of
employment, he shall receive, in addition to the options already
vested and subject to approval by the Board of Directors,
immediate vesting of all remaining options as set forth in the
Plan.
Transactions
with MHR
Mark H. Rachesky, M.D. is a director and member of the
Companys compensation committee and its governance and
nominating committee. Dr. Rachesky is also the managing
member of MHR Fund Management LLC, that is an affiliate of
and has an investment management agreement with MHR Capital
Partners (100) LP (Capital Partners 100), MHR
Capital Partners Master Account LP (Master Account),
MHR Institutional Partners II LP (Institutional
Partners II), and MHR Institutional Partners IIA LP
(Institutional Partners IIA and together with
Capital Partners 100, Master Account and Institutional
Partners II MHR). In every transaction below,
the Company was advised by an independent committee of the
Companys Board of Directors.
June
2010 Notes and Warrants
In connection with the Companys agreement with Novartis
Pharma AG (Novartis) entered into in June 2010 (the
Novartis Agreement), the Company, Novartis and
Institutional Partners IIA entered into a non-disturbance
agreement (the Non-Disturbance Agreement), pursuant
to which Institutional Partners IIA agreed to limit certain
rights and courses of action that it would have available to it
as a secured party under its Senior Secured Term Loan Agreement
and Pledge and Security Agreement with the Company
(collectively, the Loan and Security Agreement).
Additionally, Novartis and Institutional Partners IIA entered
into a license agreement pursuant to which Institutional
Partners IIA agreed to grant a license to Novartis upon the
occurrence of certain events and subject to satisfaction of
certain conditions. Institutional Partners IIA also consented to
the Company entering into the Novartis Agreement, which consent
was required under the Loan and Security Agreement, and agreed
to enter into an agreement comparable to the Non-Disturbance
Agreement at some point in the future in connection with another
potential Company transaction (the Future Transaction
Agreement).
In consideration of the agreements and consent provided by
Institutional Partners IIA described in the foregoing paragraph,
the Company entered into an agreement with Institutional
Partners IIA (the MHR Letter Agreement) pursuant to
which the Company agreed to reimburse MHR for its legal expenses
incurred up to $500,000 in connection with the agreements
entered into in connection with the Novartis transaction and up
to $100,000 in connection with the Future Transaction Agreement.
These reimbursements were paid in the form of non-interest
bearing promissory notes for $500,000 and $100,000 issued to MHR
on June 4, 2010. Pursuant to the MHR Letter Agreement, the
Company also granted to MHR warrants to purchase
865,000 shares of its common stock, with an exercise price
of $2.90 per share and an expiration date of August 21,
2014. For a more detailed
22
discussion, please see Notes 8 and 9 to our Financial
Statements included in our Annual Report on
Form 10-K
for the year ended December 31, 2010.
July
2010 Promissory Notes
On July 29, 2010, in consideration for $500,000 in bridge
financing funds provided to the Company, we issued to
Institutional Partners II and Institutional Partners IIA
promissory notes with an aggregate principal amount of $525,000
(the July 2010 MHR Notes). The July 2010 MHR Notes
provided for an interest rate of 15% per annum, and were due and
payable on October 27, 2010. During the quarter ended
September 30, 2010, certain conditions caused the maturity
date of the July 2010 MHR Notes to accelerate, and the July 2010
MHR Notes were accordingly paid off. See Note 8 to our
Financial Statements included in our Annual Report on
Form 10-K
for the year ended December 31, 2010 for further discussion.
August
2010 Financing
On August 25, 2010, the Company entered into a securities
purchase agreement with MHR (the August 2010 MHR
Financing) pursuant to which the Company agreed to sell an
aggregate of 3,497,528 shares of its common stock and
warrants to purchase a total of 2,623,146 additional shares of
its common stock for total gross proceeds of $3,532,503. Each
unit, consisting of one share of common stock and a warrant to
purchase 0.75 shares of common stock, was sold at a
purchase price of $1.01. The warrants to purchase additional
shares are exercisable at a price of $1.26 per share and will
expire 5 years from the date of issuance. On the same date,
the Company also entered into a securities purchase agreement
with certain institutional investors to sell common stock and
warrants for total gross proceeds of $3,532,503 (collectively,
with the August 2010 MHR Financing, the August 2010
Financing).
In connection with the August 2010 Financing, the Company
entered into a waiver agreement with MHR (the Waiver
Agreement), pursuant to which MHR waived certain
anti-dilution adjustment rights under its 11% senior
secured notes and warrants issued by the Company to MHR in
September 2006 that would otherwise have been triggered by the
financings described above. As consideration for such waiver,
the Company issued to MHR a warrant to purchase
975,000 shares of common stock and agreed to reimburse MHR
for 50% of its legal fees up to a maximum reimbursement of
$50,000. The terms of such warrant are identical to the warrants
issued to MHR in the August 2010 MHR Financing transaction
described above. See Item 7 in our Annual Report on
Form 10-K
for the year ended December 31, 2010 for further discussion.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act, and the rules of the SEC
require our directors, Executive Officers and persons who own
more than 10% of common stock to file reports of their ownership
and changes in ownership of common stock with the SEC. Our
employees sometimes prepare these reports on the basis of
information obtained from each director and Executive Officer.
Based on written representations of the Companys directors
and Executive Officers and on confirmation that no Form 5
was required to be filed, we believe that all reports required
by Section 16(a) of the Exchange Act to be filed by its
directors, Executive Officers and greater than ten (10%) percent
owners during the last fiscal year were filed on time with the
exception of Form 4 filings made on behalf of Michael R.
Garone and M. Gary I. Riley on January 21, 2010.
RELATED
PARTY TRANSACTION APPROVAL POLICY
In February 2007, our Board of Directors adopted a written
related party transaction approval policy, which sets forth our
Companys polices and procedures for the review, approval
or ratification of any transaction required to be reported in
our filings with the SEC. The Companys policy with regard
to related party transactions is that all material transactions
non-compensation related are to be reviewed by the Audit
Committee for any possible conflicts of interest. The
Compensation Committee will review all material transactions
that are related to
23
compensation. All related party transactions approved by either
the Audit Committee or Compensation Committee shall be disclosed
to the Board of Directors at the next meeting.
PROPOSAL 1:
ELECTION OF DIRECTORS
(Item #1
on the Proxy Card)
Our Board of Directors is currently comprised of four
(4) members and is divided into three classes with
staggered terms so that the term of one class expires at each
annual meeting of stockholders.
Each of our Class III directors whose term is expiring at
the Annual Meeting has been nominated by the Board of Directors
for election at the Annual Meeting for a term expiring at the
third succeeding annual meeting of stockholders after his
election and until his successor is duly elected and qualified.
At the recommendation of our governance and nominating
committee, Mark H. Rachesky, M.D. and Michael
Weiser, M.D. have been nominated for election.
The Proxies given pursuant to this solicitation will be voted,
unless authority is withheld, in favor of the Director Nominees.
The Director Nominees have consented to be named and, if
elected, to serve. In the event that a Director Nominee is
unable or declines to serve as a director at the time of the
Annual Meeting, the Proxies may be voted in the discretion of
the persons acting pursuant to the Proxy for the election of
other nominees. Proxies cannot be voted for a greater number of
persons than the number of nominees named.
Voting
The Director Nominees receiving a plurality of the votes cast at
the Annual Meeting will be elected as a director.
The Board of Directors deems the election of Mark H.
Rachesky, M.D. and Michael Weiser, M.D. as directors for a term
expiring at the third succeeding annual meeting of stockholders
after their election (Class III Director) to be in the best
interest of Emisphere and its stockholders and recommends a vote
FOR his election.
Information
Concerning Director Nominees, Continuing Directors and Executive
Officers
Information regarding the Director Nominees, those directors
serving unexpired terms, and our current Executive Officers, all
of who are currently serving open-ended terms, including their
respective ages, the year in which each first joined the Company
and their principal occupations or employment during the past
five years, is provided below:
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Year
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Joined
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Name
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Age
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Emisphere
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Position with the Company
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Michael R. Garone(1)(2)
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52
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2007
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Vice President, Interim Chief Executive Officer, Chief Financial
Officer and Corporate Secretary
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M. Gary I. Riley DVM, Ph.D.
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68
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2007
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Vice President of Non-Clinical Development and Applied Biology
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Nicholas J. Hart
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46
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2008
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Vice President Strategy and Development
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John D. Harkey, Jr.
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50
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2006
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Class I Director
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Mark H. Rachesky, M.D.
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2005
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Class III Director
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Timothy G. Rothwell
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60
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2009
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Class I Director
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Michael Weiser, M.D.
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2005
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Class III Director
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(1) |
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On February 28, 2011, Michael V. Novinski resigned as a
director of the Company and from his position as President and
Chief Executive Officer of the Company. |
24
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(2) |
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On February 28, 2011, Michael R. Garone was appointed as
Interim Chief Executive Officer of the Company. |
Michael R. Garone joined Emisphere in 2007 as Vice
President and Chief Financial Officer. Mr. Garone has also
served as the Companys Corporate Secretary since October
2008. Mr. Garone previously served as Interim Chief
Executive Officer and Chief Financial Officer of Astralis, Ltd.
(OTC BB: ASTR.OB). Prior to that, Mr. Garone was with
AT&T (NYSE: T) for 20 years, where he held
several positions, including Chief Financial Officer of
AT&T Alascom. Mr. Garone received an MBA from Columbia
University and a BA in Mathematics from Colgate University. On
February 28, 2011, Michael R. Garone was appointed as
Interim Chief Executive Officer of the Company.
John D. Harkey, Jr. has been a director of the
Company since April 2006. Mr. Harkey is Chairman and Chief
Executive Officer of Consolidated Restaurant Companies, Inc.
Mr. Harkey currently serves on the Board of Directors and
Audit Committees of Leap Wireless International, Inc. (NASDAQ:
LEAP), Loral Space & Communications, Inc. (NASDAQ:
LORL), Energy Transfer Equity, LP (NYSE: ETE), the Board of
Directors for the Baylor Health Care System Foundation and
serves as Chairman of the Board of Regency Energy Partners
(NASDAQ: RGNC). Mr. Harkey also serves on the
Presidents Development Council of Howard Payne University,
the Executive Board of Circle Ten Council of the Boy Scouts of
America and is a member of the Young Presidents
Organization. Mr. Harkey obtained a B.B.A. in honors and a
J.D. from the University of Texas at Austin and an M.B.A. from
Stanford University School of Business. Mr. Harkeys
entrepreneurial background, his qualification as a financial
expert, and his business and leadership experiences in a range
of different industries make him an asset to our Board of
Directors.
Mark H. Rachesky, M.D. has been a director of
the Company since 2005. Dr. Rachesky is the co-founder and
President of MHR Fund Management LLC and affiliates,
investment managers of various private investment funds that
invest in inefficient market sectors, including special
situation equities and distressed investments. Dr. Rachesky
is currently the Non-Executive Chairman of the Board of Loral
Space & Communications Inc. (NASDAQ:LORL), Leap
Wireless International, Inc. (NASDAQ: LEAP) and Telesat Canada
and is a member of the Board of Directors of Lions Gate
Entertainment Corp. (NYSE: LGF) and Nationshealth, Inc.
(formerly quoted on OTCBB: NHRX). He formerly served on the
Board of Directors of Neose Technologies, Inc (NASDAQ: NTEC).
Dr. Rachesky is a graduate of Stanford University School of
Medicine and Stanford University School of Business.
Dr. Rachesky graduated from the University of Pennsylvania
with a major in Molecular Aspects of Cancer.
Dr. Racheskys extensive investing and financial
background, his thorough knowledge of capital markets and his
training as an M.D., make him an asset to our Board of Directors.
Timothy G. Rothwell has been a director since November
2009. Mr. Rothwell is the former Chairman of Sanofi-Aventis
U.S. From February 2007 to March 2009, Mr. Rothwell
served as Chairman of Sanofi-Aventis U.S. From September
2004 to February 2007, Mr. Rothwell was President and Chief
Executive Officer of the company, overseeing all domestic
commercial operations as well as coordination of Industrial
Affairs and Research and Development activities. From May 2003
to September 2004, Mr. Rothwell was President and Chief
Executive Officer of Sanofi-Synthelabo, Inc. and was
instrumental in the formation of Sanofi-Aventis U.S. in
2004. Prior to that, from June 1998 to May 2003, he served in
various capacities at Pharmacia, including as President of the
companys Global Prescription Business. From January 1995
to January 1998, Mr. Rothwell served as worldwide President
of Rhone-Poulenc Rorer Pharmaceuticals and President of the
companys Global Pharmaceutical Operations. In his long
career, Mr. Rothwell has also served as Chief Executive
Officer of Sandoz Pharmaceuticals, Vice President, Global
Marketing and Sales at Burroughs Wellcome, and Senior Vice
President of Marketing and Sales for the U.S. for Squibb
Corporation. Mr. Rothwell holds a Bachelor of Arts from
Drew University and earned his J.D. from Seton Hall University.
He formerly served on the PhRMA Board of Directors, as well as
the Institute of Medicines Evidence-Based Medicine
roundtable, the CEO Roundtable on Cancer, the Healthcare
Businesswomens Association Advisory Board, the Board of
Trustees for the Somerset Medical Center Foundation, the Board
of Trustees for the HealthCare Institute of New Jersey, and as a
Trustee of the Corporate Council for Americas Children at
the Childrens Health Fund. Presently, he is Chairman of
the Board of New American Therapeutics, and he serves on the
Board of Directors of Agenus (NASDAQ: AGEN), the Board of
Visitors for Seton Hall Law School, and the PheoPara Alliance, a
nonprofit 501(c)3 organization. Mr. Rothwells broad
business and leadership experiences in the pharmaceutical
industry and his affiliations with industry, educational and
healthcare related organizations make him an asset to our Board
of Directors.
25
Michael Weiser, M.D., Ph.D. has been a
director of the Company since 2005. Dr. Weiser is currently
founder and co-chairman of Actin Biomed, a New York based
healthcare investment firm advancing the discovery and
development of novel treatments for unmet medical needs. Prior
to joining Actin Biomed, Dr. Weiser was the Director of
Research at Paramount BioCapital where he was responsible for
the scientific, medical and financial evaluation of biomedical
technologies and pharmaceutical products under consideration for
development. Dr. Weiser completed his Ph.D. in Molecular
Neurobiology at Cornell University Medical College and received
his M.D. from New York University School of Medicine. He
performed his post-graduate medical training in the Department
of Obstetrics and Gynecology at New York University Medical
Center. Dr. Weiser also completed a Postdoctoral Fellowship
in the Department of Physiology and Neuroscience at New York
University School of Medicine and received his B.A. in
Psychology from University of Vermont. Dr. Weiser is a
member of The National Medical Honor Society, Alpha Omega Alpha,
American Society of Clinical Oncology, American Society of
Hematology and Association for Research in Vision and
Ophthalmology. In addition, Dr. Weiser has received awards
for both academic and professional excellence and is published
extensively in both medical and scientific journals.
Dr. Weiser currently serves on the board of directors of
Chelsea Therapeutics International, and Ziopharm Oncology, Inc.
as well as several privately held companies. Dr. Weiser has
an M.D. and a Ph.D., and his scientific, business and financial
experiences, as well as his knowledge of the healthcare
industry, capital markets, pharmaceutical products and
biomedical technology development make him an asset to our Board
of Directors.
Nicholas J. Hart, joined Emisphere in July 2008 as Vice
President, Strategy and Development. Immediately before joining
the Company, Mr. Hart was Leader of the Contraception
Therapy Area and a member of the Corporate Executive Leadership
Team at Organon, part of Schering Plough Corporation. While at
Organon, he served as Senior Director/Executive Director of
Marketing of the Womens Healthcare Franchise; Director of
CNS Marketing, and Associate Director of Specialty Products.
Prior to Organon, Mr. Hart held various marketing and sales
positions with Novartis, Sankyo Parke Davis Pharmaceuticals, and
Bristol-Myers Squibb Company. After graduating from the United
States Military Academy at West Point, Mr. Hart received an
MBA in Finance and International Business from New York
University, Stern School of Business. He also served as a Field
Artillery Officer in the United States Army.
M. Gary I. Riley DVM, Ph.D. joined Emisphere in November
2007 as Vice-President of Nonclinical Development and Applied
Biology. He was previously Vice President of Toxicology and
Applied Biology at Alkermes, Inc., Cambridge, MA, where he spent
14 years working in the field of specialized drug delivery
systems. He holds board certifications in veterinary pathology
and toxicology. He was previously employed as Director of
Pathobiology at Lederle Laboratories and earlier in his career
held positions as a veterinary pathologist in academia and
industry.
PROPOSAL NO. 2:
ADVISORY VOTE ON EXECUTIVE COMPENSATION
(Item #2
on the Proxy Card)
The recently enacted Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010, or the
Dodd-Frank
Act, enables our stockholders to vote to approve, on an advisory
(nonbinding) basis, the compensation of our named executive
officers as disclosed in this Proxy Statement in accordance with
the SECs rules.
This proposal, commonly known as a
say-on-pay
proposal, gives you as a stockholder the opportunity to endorse
or not endorse our executive pay program through the following
resolution:
RESOLVED, that the Companys stockholders approve,
on an advisory basis, the compensation of the named executive
officers, as disclosed in the Companys Proxy Statement for
the 2011 Annual Meeting of Stockholders pursuant to the
compensation disclosure rules of the Securities and Exchange
Commission, including the Compensation Discussion and Analysis,
the 2010 Summary Compensation Table and the other related tables
and disclosure.
Vote
Required
The affirmative vote of a majority of shares present, in person
or represented by Proxy, and voting on the approval of the
executive compensation at our annual meeting is required to
approve the executive compensation as
26
disclosed in this Proxy Statement. Abstentions and broker
non-votes are included in the number of shares
present or represented for purposes of quorum, but are not
considered as shares voting or as votes cast with respect to any
matter presented at the annual meeting. As a result, abstentions
and broker non-votes will not have any effect on the
proposal to approve executive compensation as disclosed in this
Proxy Statement. Because your vote is advisory, it will not be
binding upon the Board. However, the Compensation Committee will
take into account the outcome of the vote when considering
future executive compensation arrangements.
Recommendation
of the Board
Our Board of Directors unanimously recommends that you vote
FOR the approval of this resolution.
27
PROPOSAL NO. 3:
ADVISORY VOTE ON THE FREQUENCY OF AN ADVISORY VOTE ON EXECUTIVE
COMPENSATION
(Item #3
on the Proxy Card)
The Dodd-Frank Act also enables our stockholders to indicate how
frequently we should seek an advisory vote on the compensation
of our named executive officers, as disclosed pursuant to the
SECs compensation disclosure rules, such as
Proposal 2 included on page 26 of this Proxy
Statement. By voting on this Proposal 3, stockholders may
indicate whether they would prefer an advisory vote on named
executive officer compensation once every one, two, or three
years.
After careful consideration of this Proposal, our Board has
determined that an advisory vote on executive compensation that
occurs every year is the most appropriate alternative for the
Company, and therefore our Board recommends that you vote for a
one-year interval for the advisory vote on executive
compensation.
In formulating its recommendation, our Board considered that an
annual advisory vote on executive compensation will allow our
stockholders to provide us with their direct input on our
compensation philosophy, policies and practices as disclosed in
the Proxy Statement every year. Additionally, an annual advisory
vote on executive compensation is consistent with our policy of
seeking input from, and engaging in discussions with, our
stockholders on corporate governance matters and our executive
compensation philosophy, policies and practices. We understand
that our stockholders may have different views as to what is the
best approach for the Company, and we look forward to hearing
from our stockholders on this Proposal.
You may cast your vote on your preferred voting frequency by
choosing the option of one year, two years, three years or
abstain from voting when you vote in response to the resolution
set forth below.
RESOLVED, that the option of once every one year, two
years, or three years that receives the highest number of votes
cast for this resolution will be determined to be the preferred
frequency with which the Company is to hold a stockholder vote
to approve the compensation of the named executive officers, as
disclosed pursuant to the Securities and Exchange
Commissions compensation disclosure rules (which
disclosure shall include the Compensation Discussion and
Analysis, the Summary Compensation Table, and the other related
tables and disclosure).
Vote
Required
The option of one year, two years or three years that receives
the highest number of votes cast by stockholders will be the
frequency for the advisory vote on executive compensation that
has been selected by stockholders. Abstentions and broker
non-votes are included in the number of shares
present or represented for purposes of quorum, but are not
considered as shares voting or as votes cast with respect to any
matter presented at the annual meeting. As a result, abstentions
and broker non-votes will not have any effect on the
proposal regarding the frequency of an advisory vote on
executive compensation. Because this vote is advisory and not
binding on the Board or the Company in any way, the Board may
decide that it is in the best interests of our stockholders and
the Company to hold an advisory vote on executive compensation
more or less frequently than the option approved by our
stockholders.
Recommendation
of the Board
Our Board of Directors unanimously recommends that you vote
FOR the option of once every year as the
frequency with which stockholders are provided an advisory vote
on executive compensation, as disclosed pursuant to the
compensation disclosure rules of the Securities and Exchange
Commission.
28
PROPOSALS OF
STOCKHOLDERS FOR 2012 ANNUAL MEETING
Stockholders may submit proposals on matters appropriate for
stockholder action at our annual stockholder meetings. To be
considered for inclusion in next years Proxy Statement,
stockholder proposals must be received by us at our principal
executive office no later than December 16, 2011.
For any proposal that is not submitted for inclusion in next
years Proxy Statement (as described in the preceding
paragraph), but is instead sought to be presented directly at
next years annual stockholder meeting (the 2012
Annual Meeting), the stockholder must also give Emisphere
written notice of the proposal. Our By-Laws provide that in
order to be timely, a stockholders notice must be received
by Emisphere at the principal executive offices not less than
30 days or more than 60 days prior to the meeting.
Notice of intention to present proposals at the 2012 Annual
Meeting should be addressed to: Corporate Secretary, Emisphere
Technologies, Inc., 240 Cedar Knolls Road, Suite 200, Cedar
Knolls, NJ 07927.
OTHER
BUSINESS
The Board of Directors knows of no other business to be acted
upon at the meeting. However, if any other business properly
comes before the meeting, it is the intention of the persons
named in the enclosed Proxy to vote on such matters in their
discretion.
The prompt return of your Proxy will be appreciated and helpful
in obtaining the necessary vote. Therefore, whether or not you
intend to attend the meeting, please vote your shares by
internet, by phone, or by signing the Proxy and returning it in
the enclosed envelope.
By order of the Board of Directors
Michael R. Garone
Secretary
29
1 1 12345678 12345678 12345678 12345678 12345678 12345678 12345678 12345678 000000000000 NAME
THE COMPANY NAME INC. COMMON 123,456,789,012.12345 THE COMPANY NAME INC. CLASS A
123,456,789,012.12345 THE COMPANY NAME INC. CLASS B 123,456,789,012.12345 THE COMPANY NAME INC.
- CLASS C 123,456,789,012.12345 THE COMPANY NAME INC. CLASS D 123,456,789,012.12345 THE COMPANY
NAME INC. CLASS E 123,456,789,012.12345 THE COMPANY NAME INC. CLASS F 123,456,789,012.12345
THE COMPANY NAME INC. 401 K 123,456,789,012.12345 . x 02 0000000000 JOB # 1 OF 2 1 OF 2 PAGE
SHARES CUSIP # SEQUENCE # THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. KEEP THIS
PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY TO VOTE, MARK BLOCKS BELOW IN BLUE
OR BLACK INK AS FOLLOWS: Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
CONTROL # SHARES 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00001024721 R1.0.0.11699 EMISPHERE TECHNOLOGIES,
INC. ATTN: INVESTOR RELATIONS 240 CEDAR KNOLLS ROAD SUITE 200 CEDAR KNOLLS, NJ 07927 Investor
Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor
Address Line 5 John Sample 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 Investor Address Line 1
Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5
John Sample 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 VOTE BY INTERNET www.proxyvote.com Use
the Internet to transmit your voting instructions and for electronic delivery of information up
until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy
card in hand when you access the web site and follow the instructions to obtain your records and
to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can
consent to receiving all future proxy statements, proxy cards and annual reports electronically
via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions
above to vote using the Internet and, when prompted, indicate that you agree to receive or access
proxy materials electronically in future years. VOTE BY PHONE 1-800-690-6903 Use any
touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day
before the cut-off date or meeting date. Have your proxy card in hand when you call and then
follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the
postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51
Mercedes Way, Edgewood, NY 11717. The Board of Directors recommends you vote FOR Proposal 1: 1.
Election of Directors For Against Abstain 1a. Dr. Mark H. Rachesky 1b. Dr. Michael Weiser The
Board of Directors recommends you vote FOR Proposal 2: For Against Abstain 2. To approve, by
non-binding vote, executive compensation. The Board of Directors recommends you vote 1 YEAR on
Proposal 3: 1 year 2 years 3 years Abstain 3. To recommend, by non-binding vote, the frequency of
executive compensation votes. NOTE: Such other business as may properly come before the meeting
or any adjournment thereof. Please sign exactly as your name(s) appear(s) hereon. When signing as
attorney, executor, administrator, or other fiduciary, please give full title as such. Joint
owners should each sign personally. All holders must sign. If a corporation or partnership, please
sign in full corporate or partnership name, by authorized officer. Yes No Please indicate if you
plan to attend this meeting |
00001024722 R1.0.0.11699 Important Notice Regarding the Availability of Proxy Materials for
the Annual Meeting: The Annual Report, Notice & Proxy Statement is/ are available at
www.proxyvote.com . THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned
stockholder of Emisphere Technologies, Inc., a Delaware corporation (Emisphere), hereby
acknowledges receipt of the Notice of Annual Meeting of Stockholders (Annual Meeting) and Proxy
Statement with respect to the Annual Meeting to be held at the Park Avenue Club, 184 Park Avenue,
Florham Park, New Jersey on Tuesday, May 24, 2011 promptly at 10:00 AM Eastern Time, and hereby
appoints Michael R. Garone as proxy with power of substitution and revocation, and with all powers
that the undersigned would posses if personally present, to vote the Emisphere Common Stock of the
undersigned at such meeting, and at any postponements or adjournments of such meeting, as set
forth below, and in his discretion, upon any other business that may properly come before the
meeting (and any such postponements or adjournments). THIS PROXY WILL BE VOTED AS SPECIFIED OR, IF
NO CHOICE IS SPECIFIED, FOR THE ELECTION OF ALL NOMINEES UNDER PROPOSAL 1, FOR PROPOSAL 2, FOR 1
YEAR FOR PROPOSAL 3 AND BY THE DISCRETION OF THE PROXIES ON SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING, AND AT ANY POSTPONEMENTS OR ADJOURNEMENTS THEREOF. PLEASE MARK, SIGN,
DATE AND RETURN THIS PROXY CARD PROMPTLY, USING THE ENCLOSED ENVELOPE, OR VOTE THORUGH THE
INTERNET OR THE TELEPHONE. IMPORTANT- TO BE SIGNED AND DATED ON REVERSE SIDE |