def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-12
STEMCELLS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ No fee required.
o Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
o Fee paid previously with preliminary materials.
o Check box if any part of the fee is offset
as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by
registration statement number, or the Form or
Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
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SEC 1913 (02-02)
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Persons who are to respond to the collection of
information contained in this form are not required to
respond unless the form displays a currently valid OMB
control number. |
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TABLE OF CONTENTS
STEMCELLS,
INC.
3155 Porter Drive
Palo Alto, CA 94304
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on June 29, 2009
To the Stockholders of STEMCELLS, INC.
Notice is hereby given that the Annual Meeting of Stockholders
of StemCells, Inc. (StemCells or the
company) will be held on Monday, June 29, 2009,
at 2 p.m., local time, at 3155 Porter Drive, Palo Alto, CA
94304 for the following purposes:
1. to elect the two Class III directors named in the
accompanying proxy materials to serve until the 2012 Annual
Meeting of Stockholders;
2. to consider and vote upon a proposal to ratify the
selection of Grant Thornton LLP as independent public
accountants for the company for the fiscal year ending
December 31, 2009; and
3. to transact any and all other business that may properly
come before the meeting.
The Board of Directors has fixed the close of business on
Thursday, April 30, 2009, as the record date for
determining those stockholders who are entitled to notice of,
and to vote at, the annual meeting of stockholders and any
postponements or adjournments thereof. The stock transfer books
will not be closed between the record date and the date of the
meeting.
Representation of at least a majority of all outstanding shares
of common stock of StemCells is required to constitute a quorum.
Accordingly, it is important that your shares be represented at
the meeting.
This year, we are taking advantage of Securities and Exchange
Commission rules that allow issuers to furnish proxy materials
to their stockholders on the Internet. We believe these rules
allow us to provide our stockholders with the information they
need, while lowering the costs of delivery and reducing the
environmental impact of our Annual Meeting.
Please read the proxy materials carefully. All stockholders are
invited to attend the Annual Meeting. Your vote is important,
and the company appreciates your cooperation in considering and
acting on the matters presented.
By Order of the Board of Directors,
Kenneth B. Stratton
Secretary
April 30, 2009
Palo Alto, California
PROXY
STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
OF
STEMCELLS, INC.
The accompanying proxy is solicited on behalf of the Board of
Directors of StemCells, Inc. (the company) for use
at its annual meeting of stockholders (the Annual
Meeting) to be held on Monday, June 29, 2009, at
2 p.m., local time, at the companys headquarters at
3155 Porter Drive, Palo Alto, California 94304. The company will
bear the cost of solicitation of proxies. Directors, officers
and employees of the company may solicit proxies by telephone,
facsimile or in person for no additional compensation. The
company will reimburse banks, brokerage firms, proxy solicitors,
and other custodians, nominees and fiduciaries for reasonable
expenses incurred by them in sending proxy materials to the
beneficial owners of shares.
The Board has fixed the close of business on Thursday,
April 30, 2009, as the record date for determining
stockholders entitled to notice of, and to vote at, the Annual
Meeting or at any postponement or adjournment thereof. There
were 103,198,126 shares of our common stock, $.01 par
value, outstanding on April 30, 2009, each of which is
entitled to one vote for each share on the matters to be voted
upon.
Shares of our common stock represented by proxies in the form
enclosed that are properly executed and returned to us and not
revoked will be voted as specified in the proxy by the
stockholder. In the absence of contrary instructions, or in
instances where no specifications are made, the shares will be
voted:
(i) FOR the election as directors of the nominees as
described herein under Proposal Number 1
Election of Directors;
(ii) FOR ratification of the selection of accountants as
described herein under Proposal Number 2
Ratification of Selection of Independent Public
Accountants; and
(iii) in the discretion of the named proxies as to any
other matter that may properly come before the Annual Meeting.
Any stockholder signing and delivering a proxy may revoke it at
any time before it is voted by delivering to the companys
corporate secretary a written revocation or a duly executed
proxy bearing a date later than the date of the proxy being
revoked. Any stockholder attending the Annual Meeting in person
may revoke his, her or its proxy and vote his, her or its shares
at the Annual Meeting.
Our 2009 Proxy Materials are Available on the
Internet. This year we have elected to provide
access to our proxy materials over the Internet in accordance
with rules adopted by the Securities and Exchange Commission.
Accordingly, we are sending a Notice of Internet Availability of
Proxy Materials (the Notice) to our stockholders of
record and beneficial owners, which will instruct them as to how
they may access and review all of the proxy materials on the
Internet and how they may submit their proxy on the Internet.
Any stockholder wishing to receive a paper copy of our proxy
materials can request them from us by following the instructions
found in the Notice for requesting such materials or by calling
1
(800) 579-1639.
How to
vote shares at our 2009 Annual Meeting.
This year company stockholders may cast their vote in any of the
following ways:
Vote by Internet. Any stockholder can vote
over the Internet at www.proxyvote.com by following the
instructions on the Notice or proxy card.
1
Vote by Mail. Any stockholder that receives
proxy materials by mail can vote by mail by signing, dating and
mailing the enclosed proxy card in the postage-paid envelope
provided. If the envelope is missing, such a stockholder can
mail the completed proxy card or voting instruction card to
StemCells, Inc.,
c/o Broadridge,
51 Mercedes Way, Edgewood, NY 11717. The completed card must be
received no later than June 28, 2009.
Voting at the Annual Meeting. All company
stockholders are invited to attend the Annual Meeting in person.
Any stockholder that attends the meeting in person may deliver a
completed proxy card in person or vote by completing a ballot,
which will be available at the meeting. However, each
stockholder intending to vote in person at the Annual Meeting
should note that if his, her or its shares are held in the name
of a bank, broker or other nominee, such stockholder must obtain
a legal proxy, executed in his, her or its favor, from the
holder of record to be able to vote at the Annual Meeting.
Stockholders should allow enough time prior to the Annual
Meeting to obtain this proxy from the holder of record, if
needed.
The shares voted electronically or represented by the proxy
cards received, properly marked, dated, signed and not revoked,
will be voted at the Annual Meeting. Internet voting facilities
for stockholders of record will be available 24 hours a day
and will close at 11:59 p.m. (EDT) on June 28, 2009.
2
QUORUM,
REQUIRED VOTES AND METHOD OF TABULATION
Consistent with Delaware law and the companys amended and
restated by-laws, a majority of the votes entitled to be cast on
a particular matter, present in person or represented by proxy,
constitutes a quorum as to such matter. The company will appoint
one or more election inspectors for the meeting to count votes
cast by proxy or in person at the Annual Meeting.
Election of directors by stockholders will be determined by a
plurality of the votes cast by the stockholders entitled to vote
at the election that are either present in person or represented
by proxy. The approval of the proposal to ratify the selection
of accountants will require a majority of the votes properly
cast to be affirmative.
The election inspectors will count shares represented by proxies
that withhold authority to vote for a nominee for election as a
director or that reflect abstentions and broker
non-votes (i.e., shares represented at the meeting held by
brokers or nominees as to which (i) instructions have not
been received from the beneficial owners or persons entitled to
vote and (ii) the broker or nominee does not have
discretionary voting power on a particular matter) only as
shares that are present and entitled to vote on the matter for
purposes of determining the presence of a quorum, but neither
abstentions nor broker non-votes have any effect on the outcome
of voting on the election of directors or the selection of
accountants.
Management does not know of any matters to be presented at this
Annual Meeting other than those set forth in this proxy
statement and in the notice accompanying this proxy statement.
If other matters should properly come before the meeting, the
proxy holders will vote such matters in their discretion. Any
stockholder has the right to revoke his, her or its proxy at any
time before it is voted.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table shows the number of shares of our common
stock beneficially owned, as of April 1, 2009, by
(i) each stockholder known by us to beneficially own more
than 5% of our outstanding common stock, (ii) each of our
directors, (iii) each of our named executive officers, and
(iv) our directors and executive officers as a group. In
general, Beneficial Ownership refers to shares that
an individual or entity has the power to vote or dispose of, and
any rights to acquire common stock that are currently
exercisable or will become exercisable within 60 days of
April 1, 2009. Unless otherwise indicated, we believe that
each person named below, based on information furnished by such
owners, holds sole investment and voting power with respect to
such shares, subject to community property laws where
applicable, and that there are no other affiliations among the
stockholders listed in the table. We calculated percentage
ownership in accordance with the rules of the SEC using the
total number of shares outstanding as of April 1, 2009, as
well as shares deemed to be outstanding because of outstanding
rights to acquire common stock that are currently exercisable or
will be exercisable within 60 days of April 1, 2009.
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Shares
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Percentage of
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Beneficially
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Class
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Name and Address of Beneficial Owner*
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Owned
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Owned
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Eric H. Bjerkholt(1)
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60,000
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**
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Ricardo Levy(2)
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112,165
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**
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Martin McGlynn(3)
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1,581,120
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1.51
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%
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Roger M. Perlmutter(4)
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133,503
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**
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John J. Schwartz(5)
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123,000
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**
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Ann Tsukamoto(6)
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613,709
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**
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Irving Weissman(7)
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849,107
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**
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Rodney K.B. Young(8)
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558,695
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**
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Stewart Craig(9)
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2,812
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**
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Kenneth Stratton(10)
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94,322
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**
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All directors and executive officers as a group
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4,128,423
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3.93
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%
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* |
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The address of all persons listed in the table is
c/o StemCells,
Inc., 3155 Porter Drive, Palo Alto, California 94304. |
3
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(1) |
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Includes 60,000 shares issuable upon exercise of stock
options exercisable within 60 days. |
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(2) |
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Includes 112,165 shares issuable upon exercise of stock
options exercisable within 60 days. |
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(3) |
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Includes 1,548,345 shares issuable upon exercise of stock
options exercisable within 60 days. Includes
32,775 shares included in Mr. McGlynns 401(k)
plan. |
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(4) |
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Includes 133,503 shares issuable upon exercise of stock
options exercisable within 60 days. |
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(5) |
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Includes 123,000 shares issuable upon exercise of stock
options exercisable within 60 days. |
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(6) |
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Includes 552,399 shares issuable upon exercise of stock
options exercisable within 60 days. Includes
38,476 shares included in Dr. Tsukamotos 401(k)
plan. |
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Includes 210,292 shares issuable upon exercise of stock
options exercisable within 60 days. Includes
14,511 shares held in trust for Dr. Weissmans
children as to which he disclaims beneficial ownership. |
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(8) |
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Includes 551,457 shares issuable upon exercise of stock
options exercisable within 60 days. Includes
1,038 shares included in Mr. Youngs 401(k). |
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(9) |
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Includes 2,812 shares included in Dr. Craigs
401(k) plan. |
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(10) |
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Includes 84,375 shares issuable upon exercise of stock
options exercisable within 60 days. Includes
9,947 shares included in Mr. Strattons 401(k). |
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as
amended (the Exchange Act), requires our executive
officers, directors, and persons who own more than 10% of a
registered class of our equity securities, to file with the SEC
reports of ownership of our securities and changes in reported
ownership. Executive officers, directors and greater than 10%
stockholders are required by SEC rules to furnish us with copies
of all Section 16(a) reports they file.
Based solely on a review of the copies of such forms furnished
to us, or written representations from the reporting persons
that no Form 5 was required, we believe that, during the
fiscal year ended December 31, 2008, all Section 16(a)
filing requirements applicable to our officers, directors and
greater than 10% beneficial owners have been met, except that
(i) two executive officers, Mr. Stratton and Dr.
Craig, inadvertently failed to file their initial Form 3s
in a timely manner, (ii) two executive officers,
Mr. Stratton and Dr. Craig failed to timely file their
Form 4s to report, respectively, the use of company shares
to pay certain withholding taxes upon the exercise of RSUs and
the issuance of options, and (iii) one Form 4, which
reported an annual option grant, was filed on behalf of
Dr. Weissman one day late.
INFORMATION
CONCERNING DIRECTORS OF THE COMPANY
Board of
Directors; Committees
We currently have six directors serving on our Board of
Directors. Since July 2008, our Board has been composed of
Drs. Ricardo Levy, Roger Perlmutter, John Schwartz, and
Irving Weissman and Messrs. Eric Bjerkholt and Martin
McGlynn. Because we have a classified board, with each of our
directors serving a staggered three-year term, only two of our
directors are expected to stand for reelection at our 2009
Annual Meeting. The following table shows the composition of the
three classes of our Board:
Class I Directors (terms scheduled to expire in 2010):
Eric Bjerkholt
John J. Schwartz, Ph.D.
Class II Directors (terms scheduled to expire in 2011):
Ricardo B. Levy, Ph.D.
Irving Weissman, M.D.
4
Class III Directors (terms scheduled to expire in 2009, but
standing for reelection at our Annual Meeting):
Martin M. McGlynn
Roger Perlmutter, M.D., Ph.D.
Below are the name, age and principal occupations for the last
five years of each of the companys directors, as of
April 1, 2009.
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Eric H. Bjerkholt
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49
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Eric H. Bjerkholt was elected to the Board of Directors in March
2004. Mr. Bjerkholt joined Sunesis Pharmaceuticals, Inc., in
2004 as Senior Vice President and Chief Financial Officer. Since
February 2007, he has served as Senior Vice President, Corporate
Development and Finance, and Chief Financial Officer. From 2002
to 2004, Mr. Bjerkholt was Senior Vice President and Chief
Financial Officer at IntraBiotics Pharmaceuticals, Inc.
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Ricardo B. Levy, Ph.D.
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64
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Ricardo B. Levy, Ph.D. was elected to the Board of
Directors in September 2001. He currently serves on several
boards of directors.
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Martin M. McGlynn
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62
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Martin M. McGlynn was elected to the Board of Directors in
February 2001. He is President and Chief Executive Officer of
the company, a position he has held since January 2001.
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Roger Perlmutter, M.D., Ph.D.
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56
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Roger M. Perlmutter, M.D., Ph.D., was elected to the
Board of Directors in December 2000. He is Executive Vice
President, Research and Development, of Amgen, Inc., a position
he has held since January 2001.
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John J. Schwartz, Ph.D.
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74
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John J. Schwartz, Ph.D., was elected to the Board of
Directors in December 1998 and was elected Chairman of the Board
at the same time. He is currently President of Quantum
Strategies Management Company.
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Irving Weissman, M.D.
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69
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Irving L. Weissman, M.D., was elected to the Board of
Directors in September 1997. He is the Virginia and Daniel K.
Ludwig Professor of Cancer Research, Professor of Pathology and
Professor of Developmental Biology at Stanford University.
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The independent members of our Board, as determined by the Board
of Directors in accordance with the existing Nasdaq Marketplace
rules, are Mr. Bjerkholt and Drs. Levy, Perlmutter and
Schwartz. The Board of Directors held four regular meetings and
five special meetings during the fiscal year ended
December 31, 2008; the non-employee directors met in
executive session at each of the regular meetings of the Board.
Each of the directors attended more than 75% of the meetings of
the Board of Directors and of the committees on which they
served.
During 2008, the Board had three standing committees
the Compensation and Stock Option Committee (the
Compensation Committee), the Corporate Governance
and Nominating Committee (the Corporate Governance
Committee), and the Audit Committee as well as
a single-member committee established under the companys
2001, 2004 and 2006 equity incentive plans. In addition,
effective January 2009, the Board established an ad hoc
committee called the Strategic Transactions Committee with
direction to consult with management and advise the full Board
on various corporate initiatives, such as the acquisition of
substantially all of the operating assets of Stem Cell Sciences
Plc, which the company completed on April 1, 2009. All
members of the Compensation Committee, the Corporate Governance
Committee and the Audit Committee are, and are required by the
charters of the respective committees to be, independent as
determined under Nasdaq Marketplace rules.
5
Since July 2008, the Compensation Committee has been composed of
Dr. Schwartz and Mr. Bjerkholt. The Compensation
Committee held two meetings in 2008 and has held four meetings
in 2009. The Compensation Committee makes recommendations to our
Board and management concerning salaries in general, determines
executive compensation and, except to the extent that such
decisions have been delegated to, and made by, the single-member
committee, approves incentive compensation for our employees and
consultants. The Compensation Committee acts pursuant to a
written charter which is available through our website at
www.stemcellsinc.com.
The Corporate Governance Committee is composed of
Drs. Levy, Perlmutter and Schwartz. The Corporate
Governance Committee held no meetings in 2008 and has held no
meetings in 2009. It oversees nominations to the Board and
considers the experience, ability and character of potential
nominees to serve as directors, as well as particular skills or
knowledge that may be desirable in light of the companys
position at any time. The Corporate Governance Committee may
identify potential candidates through any reliable means
available, including identification by a search firm and
recommendations of past or current members of the Board from
their knowledge of the industry and of the company. Potential
candidates recommended by security holders will be considered as
provided in the companys Policy Regarding
Shareholder Candidates for Nomination as a Director, which
sets forth the procedures and conditions for such
recommendations. This policy is available through our website at
www.stemcellsinc.com. The Corporate Governance Committee
operates pursuant to a written charter, a copy of which is also
available through our website at www.stemcellsinc.com. The
members of the Corporate Governance Committee approved the
nomination of the Class III directors standing for
reelection at the Annual Meeting.
The Audit Committee is composed of Mr. Bjerkholt and
Drs. Schwartz and Levy. The Audit Committee held four
meetings in 2008 and has held one meeting in 2009. The primary
function of the Audit Committee is to assist our Board in
fulfilling its oversight responsibilities. The committee does
this primarily by reviewing our financial reports and other
financial information as well as the companys systems of
internal controls regarding finance, accounting, legal
compliance, and ethics that management and the Board have
established. The committee also assesses our auditing,
accounting and financial processes more generally. The Audit
Committee meets quarterly, and at such other times as it finds
necessary. It recommends to our Board the appointment of a firm
of independent auditors to audit the financial statements of the
company and meets with such personnel of the company to review
the scope and the results of the annual audit, the amount of
audit fees, the companys internal accounting controls, the
companys financial statements contained in this proxy
statement and other related matters. Each of the members of the
Audit Committee is independent, and the Board has determined
that Mr. Bjerkholt is an audit committee financial
expert, as defined in SEC rules. The Audit Committee acts
pursuant to a written charter which is available through our
website at www.stemcellsinc.com.
The following table shows the members of our three standing
Board committees:
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Corporate
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Compensation
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Governance
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Audit
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Director
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Independent
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Committee
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Committee
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Committee
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Eric H. Bjerkholt
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Yes
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ü
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Chair
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Ricardo B. Levy, Ph.D.
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Yes
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Chair
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ü
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Martin M. McGlynn
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No
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Roger Perlmutter, M.D., Ph.D.
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Yes
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ü
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John J. Schwartz, Ph.D.
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Yes
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Chair
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ü
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ü
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Irving Weissman, M.D.
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No
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Since January 2009, the members of our ad hoc Strategic
Transactions Committee have been Messrs. Bjerkholt and
McGlynn and Dr. Levy, serving as Chairman.
Stockholders who wish to communicate with our Board of Directors
or with a particular director may send a letter to our corporate
secretary at the following address: StemCells, Inc., 3155 Porter
Drive, Palo Alto, California 94304
(c/o Legal
Department). Any communication should clearly specify that it is
intended to be made to the entire Board of Directors or to one
or more particular director(s). Our corporate secretary will
review all such correspondence and forward to our Board of
Directors a summary of all such correspondence and copies of all
correspondence that, in the opinion of the secretary, deals with
the functions of the Board of Directors or committees
6
thereof or that he otherwise determines requires their
attention. The secretary maintains a log of all correspondence
received by us that is addressed to members of the Board of
Directors, and any director may at any time review and request
copies of any such correspondence.
Concerns relating to accounting, internal controls or auditing
matters will immediately be brought to the attention of the
chairman of the Audit Committee and handled in accordance with
established procedures, which are set out in the Audit
Committees Policy on Receipt, Retention and Treatment of
Complaints Regarding Accounting, Internal Controls and Auditing
Matters. A copy of this policy is available through our website
at www.stemcellsinc.com.
Director
Compensation
Non-employee directors receive quarterly retainers of $4,500
($8,750 for the chairman) for Board service. The chairs of the
standing committees also receive quarterly stipends of $1,000
(Audit Committee) or $500 (Compensation and Corporate Governance
Committees). Non-employee directors also receive $1,500 for each
board meeting, and $1,000 for each standing committee meeting,
attended in person or by videoconference ($500 for each meeting
attended by telephone). The non-employee directors serving on
the Strategic Transactions Committee receive $1,200 per meeting
attended in person ($500 for each meeting attended by
telephone), but the chair of the Strategic Transactions
Committee does not receive a quarterly stipend. All dollar
amounts are paid in cash. Non-employee directors receive an
initial option to purchase 20,000 shares, with one third of
these option shares vesting on each of the three anniversaries
following the grant, and an option to purchase
10,000 shares upon each anniversary of their appointments,
vesting one year after issuance, each exercisable at the fair
market value of the stock on the date of the respective grant.
Directors are reimbursed for their expenses in attending
meetings of the Board of Directors and meetings of committees of
the Board of Directors.
The following table summarizes compensation paid to our
non-employee directors, including annual Board and committee
retainer fees and meeting attendance fees, for the year ended
December 31, 2008:
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Fees Earned
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Stock
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or Paid
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Option
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All Other
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in Cash
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Awards(1)
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Compensation
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Total
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Name
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($)
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($)
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($)
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($)
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Eric Bjerkholt
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34,000
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(2)
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14,670
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(3)
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48,670
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Ricardo Levy, Ph.D.
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31,000
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(4)
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14,847
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(5)
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45,847
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Roger Perlmutter, M.D., Ph.D.
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26,000
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(6)
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13,308
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(7)
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39,308
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John Schwartz, Ph.D.
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51,000
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(8)
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14,944
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(9)
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65,944
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Irving Weissman, M.D.
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25,500
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(10)
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14,238
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(11)
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50,000
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(12)
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89,738
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(1) |
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These amounts reflect expense recognized by us in 2008 for a
portion of the current and prior year option awards to
directors. Reference is made to Note 7 Stock-Based
Compensation to the companys audited financial
statements for the fiscal year ended December 31, 2008
included in the companys Annual Report on
Form 10-K,
which identifies assumptions made in the valuation of option
awards in accordance with Financial Accounting Standards
No. 123R (SFAS 123R). The companys stock-based
compensation expense recognized under SFAS 123R reflects an
estimated forfeiture rate of 13.23% in 2008. The values
recognized in the Option Awards column above do not
reflect such expected forfeitures. Since September 2004, each
non-employee director is granted, after an initial grant of an
option to purchase 20,000 shares upon appointment, with one
third of these option shares vesting on each of the three
anniversaries following the grant, and an option to purchase
10,000 shares upon each anniversary of their appointments,
vesting one year after issuance. The exercise price is the
closing price of the stock on the grant date or, if the Nasdaq
Global market is not open on that date, the closing price on the
last preceding market day. Prior to September 2004, each
non-employee director was granted, after an initial grant of an
option to purchase 20,000 shares upon appointment, an
option for 15,000 shares upon each three-year re-election
to the Board. Each of these options vested in equal portions
over three years on the anniversaries of the respective grants. |
7
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(2) |
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Includes an annual retainer of $18,000, a fee for
Mr. Bjerkholts role on the Audit Committee of $4,000,
and additional fees of $12,000 for Board and committee meetings
attended. Also includes $9,000 earned in 2008 but paid in 2009. |
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(3) |
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Mr. Bjerkholt was granted an option to purchase
10,000 shares of common stock on March 1, 2008. The
grant date fair value of this option computed in accordance with
SFAS 123R was $13,384. As of December 31, 2008,
Mr. Bjerkholt had options outstanding for the purchase of
60,000 shares. |
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(4) |
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Includes an annual retainer of $18,000, a fee for
Dr. Levys role on the Corporate Governance Committee
of $2,000, and additional fees of $11,000 for Board and
committee meetings attended. Also includes $8,000 earned in 2008
but paid in 2009. |
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(5) |
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Dr. Levy was granted an option to purchase
10,000 shares of common stock on September 26, 2008.
The grant date fair value of this option computed in accordance
with SFAS 123R was $8,990. As of December 31, 2008,
Dr. Levy had options outstanding for the purchase of
122,165 shares. |
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(6) |
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Includes an annual retainer of $18,000, and additional fees of
$8,000 for Board and committee meetings attended. Also includes
$7,000 earned in 2008 but paid in 2009. |
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(7) |
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Dr. Perlmutter was granted an option to purchase
10,000 shares of common stock on December 14, 2008.
The grant date fair value of this option computed in accordance
with SFAS 123R was $9,648. As of December 31, 2008,
Dr. Perlmutter had options outstanding for the purchase of
143,503 shares. |
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(8) |
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Includes an annual retainer of $35,000, a fee for
Dr. Schwartzs role on the Corporate Governance
Committee of $2,000, and additional fees of $14,000 for Board
and committee meetings attended. Also includes $13,250 earned in
2008 but paid in 2009. |
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(9) |
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Dr. Schwartz was granted an option to purchase
10,000 shares of common stock on April 18, 2008. The
grant date fair value of this option computed in accordance with
SFAS 123R was $11,906. As of December 31, 2008,
Dr. Schwartz had options outstanding for the purchase of
211,164 shares. |
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(10) |
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Includes an annual retainer of $18,000 and additional fees of
$7,500 for Board and committee meetings attended. Also includes
$7,000 earned in 2008 but paid in 2009. |
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(11) |
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Dr. Weissman was granted an option to purchase
10,000 shares of common stock on October 1, 2008. The
grant date fair value of this option computed in accordance with
SFAS 123R was $8,641. As of December 31, 2008,
Dr. Weissman had options outstanding for the purchase of
220,292 shares. |
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(12) |
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Dr. Weissman receives $50,000 per year for his services as
a consultant and as the chairman of our Scientific Advisory
Board. |
Code of
Business Conduct and Ethics
We have adopted a Code of Ethics and Conduct that applies to all
of our directors, officers, employees, and consultants. A copy
of our code of ethics is posted on our website at
www.stemcellsinc.com. We intend to disclose any substantive
amendment or waivers to this code on our website. There were no
amendments or waivers to this code in 2008.
8
INFORMATION
CONCERNING EXECUTIVE OFFICERS OF THE COMPANY
Executive
Officers
Following are the name, age and other information for our named
executive officers, as of April 1, 2009. All company
officers have been elected to serve until their successors are
elected and qualified or until their earlier resignation or
removal.
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Martin M. McGlynn,
President and Chief Executive Officer
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62
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Martin M. McGlynn joined the company in January 2001, when he
was appointed President and Chief Executive Officer of the
company and of its wholly-owned subsidiaries. Mr. McGlynn was
elected to the Board of Directors in February 2001.
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Ann Tsukamoto, Ph.D.
Executive Vice President, Research and Development
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56
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Ann Tsukamoto, Ph.D., joined the company in November 1997
as Senior Director of Scientific Operations; was appointed Vice
President, Scientific Operations in June 1998; Vice President,
Research and Development in February 2002; and Chief Operating
Officer, with responsibility for the companys research and
development efforts, in November 2006. In October 2008,
Dr. Tsukamoto was appointed to the newly created position
of Executive Vice President, Research and Development with
responsibility for the companys scientific and clinical
development programs. In March 2009, Dr. Tsukamoto married
one of our outside directors.
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Rodney K.B. Young,
Chief Financial Officer and Vice President, Finance and
Administration
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46
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Rodney K.B. Young joined the company in September 2005 as Chief
Financial Officer and Vice President, Finance. In November 2006
he became CFO and Vice President, Finance and Administration. He
is responsible for functions that include Finance, Information
Technology and Investor Relations. From 2003 to 2005, Mr. Young
was Chief Financial Officer and a director of Extropy
Pharmaceuticals, Inc., a private biopharmaceutical company
focused on developing drugs for pediatric indications.
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Stewart Craig, Ph.D.
Senior Vice President, Development and Operations
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47
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Stewart Craig, Ph.D., joined the company in September 2008
with responsibilities for Development, Manufacturing,
Regulatory, Quality Systems, and Facilities. From 2005 to 2008,
Dr. Craig was Chief Technology Officer and Vice President
of Progenitor Cell Therapy, a contract services provider for
research, development, manufacture, and commercialization of
cell-based therapies, prior to which he has held executive
positions at Xcyte Therapies, Osiris Therapeutics and SyStemix.
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Kenneth Stratton, JD
General Counsel
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40
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Kenneth Stratton, JD, joined the company in February 2007 as
General Counsel, with responsibility for corporate compliance
and legal affairs. In March 2008, he assumed responsibilities
for the Human Resources function. Prior to StemCells, Mr.
Stratton served as Deputy General Counsel for Threshold
Pharmaceuticals and as Senior Legal Counsel for Medtronic,
Inc.s Vascular business unit.
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9
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Our compensation programs are designed to attract and retain
employees and reward them for their efforts toward helping us
achieve our short-term and long-term goals, including leading us
toward profitability and developing stockholder value.
Compensation programs in which our executive officers
participate are designed to be equitable and competitive with
the compensation programs of companies with whom we compete for
high-level scientific and executive personnel and to link pay to
performance.
In seeking to accomplish the objectives of our compensation
policy, the Compensation Committee follows a compensation
program designed, ultimately, to reward increasing stockholder
value. Because achievement of our mission to develop
and commercialize cell-based therapeutics to treat damage to, or
degeneration of, major organ systems is a long and
challenging process, we use the following as, in effect,
surrogate endpoints:
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the achievement of stated corporate goals adopted from time to
time by the Board;
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the effectiveness of leadership an executive officer has shown
in inspiring and marshalling excellent performances in his or
her direct reports;
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the anticipation, identification and successful disposition of
issues and problems that, if not addressed timely and
effectively, might have a deleterious effect on the
company; and
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the speed and effectiveness with which an executive officer
discovers, assesses and, where appropriate, pursues promising
opportunities for the company.
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Compensation elements: We, like most
biotechnology companies, use a combination of base salary,
bonuses and equity awards to compensate our employees, including
our executive officers. As a small company we have
approximately 80 employees in total and only five executive
officers we feel that having so few people in each
cohort makes it inefficient to establish a formulaic allocation
of total compensation among its various elements; we rely,
instead, on our experience and judgment.
In exercising this judgment, we evaluate the range of each
element paid by comparable companies for each position. Each
year, the Compensation Committee considers the performance of
the executive officers during the prior year and determines
their salary and target bonus. Equity compensation is generally
determined by the Board on the recommendation of the
Compensation Committee and awarded at one of the companys
regular Board meetings. We periodically collect and review
information (i) from the Radford Biotechnology
Survey Executive Report; and (ii) from the
proxies of other similar biotechnology companies, including
Maxygen, Inc., Sunesis Pharmaceuticals, Inc., Affymax, Inc.,
Geron Corporation, Cytokinetics, Incorporated, Dynavax
Technologies Corporation, Kosan Biosciences, Incorporated,
Pharmacyclics, Inc., and Sangamo Biosciences, Inc. In the case
of the executive officers who report directly to the chief
executive officer, we also take the recommendation of the chief
executive officer into account in setting compensation. We
integrate all of this information with our evaluation of the
performance of each of our executive officers. While we believe
our officers and other employees are outstanding, we prefer to
set the compensation of our employees at around the
50th percentile paid by comparable companies for similar
positions because the company is at a relatively early stage of
development. From time to time, however, our executive officers
may be paid more or less than at the 50th percentile
because of unique circumstances such as the current economic
environment.
Interaction of compensation elements: The
basic compensation elements base salary, bonuses and
equity awards are, as noted, standard in our
industry. Though not set independently of one other, we use each
element as a portion of total compensation because we believe we
would not otherwise be competitive and because we feel that
together they are the proper components of a balanced
compensation package:
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base salary is compensation for current efforts;
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bonuses, whether in cash or equity, are typically paid for
achievements in meeting stated corporate goals; and
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equity awards are inducements to remain with the company and to
build future value.
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10
Other compensation elements and benefits: We
offer all employees various health and welfare benefit plans.
Our executive officers may participate in these on the same
terms as other employees. We do not have a pension plan nor do
we use non-qualified deferred
compensation.1We
offer employees (again, including executive officers on the same
terms as others) a 401(k) defined contribution plan, and match
employee contributions on a 1:2 basis to a maximum of 3% of the
employees salary, subject to legal limitations; at this
time, our match is made in the form of registered shares of
common stock in the company.
Compensation
of Named Executive Officers
Base salary compensation; target bonuses. We
consider base salary to be a critical component of our executive
officers overall compensation packages. We intend the
salaries of our executive officers to reflect their actual
responsibilities and job scope. We also endeavor to set base
compensation levels so that their salaries are competitive with
salaries paid by similarly situated companies to employees with
similar experience, taking into account the cost of living in
the San Francisco Bay Area. However, as of late, we have
been paying attention to the global economic crisis and the
companys need to conserve cash. As a result, we decided
not to increase the base salaries of our executive officers in
2008, except as provided below. The last company-wide pay action
was in March 2007.
In addition to base salary, each full-time employee of the
company, including each of our named executive officers, is
given a personal target bonus (calculated as a percentage of
base salary), based upon factors such as seniority, job title
and the existing targets of co-workers with comparable job
responsibilities within the company. Bonuses at the company are
discretionary and awarded by the Board in its sole discretion.
But when bonuses are awarded, we use the personal target of each
employee to calculate his or her bonus amount.
With these various principles in mind, we recently took the
following actions with respect to the base compensation and
bonus targets of our executive officers.
From March 2007 through 2008, we maintained the annual base
salary of Mr. McGlynn at $385,000, plus a housing and
transportation allowance. Effective January 2009, we eliminated
Mr. Glynns housing and transportation allowance of
approximately $200,000 and increased Mr. McGlynns
annual base salary from $385,000 to $525,000 and began providing
him a car allowance in the amount of $10,000 per year. The net
effect of these changes was a decrease in
Mr. McGlynns base compensation of approximately 11%.
Concurrent with these changes, we increased
Mr. McGlynns target bonus from 40 percent to
55 percent of his base salary, beginning with the 2009
corporate goals, to reflect the Boards view that
Mr. McGlynns leadership is a major factor in the
achievement of the companys corporate goals and to
increasingly tie his compensation to corporate success.
Since March 2007, we have maintained the annual base salary of
Dr. Tsukamoto at $300,000. Her target bonus rate is
25 percent of her base salary.
Since March 2007, we have maintained the annual base salary of
Mr. Young at $275,000. His target bonus rate is
25 percent of his base salary.
Dr. Craig joined the company in September 2008, with an
annual base salary of $275,000. His target bonus rate is
25 percent of his base salary.
Mr. Stratton joined the company in February 2007, with an
annual base salary of $220,000. In February 2008, we increased
Mr. Strattons annual base salary to $250,000 in
recognition of contributions made the prior year and because he
assumed additional responsibilities in early 2008. His target
bonus rate is 20 percent of his base salary.
Bonus compensation. We view periodic bonuses,
whether paid in cash or equity, as an important element of
compensation for several reasons. Bonuses help align individual
employee efforts with overall corporate strategies and
objectives. Bonuses also help us manage salary expense, while
still allowing us to reward successes. By using bonuses as part
of the compensation mix, we have greater flexibility in managing
the timing and amounts of compensation.
Over the past few years, we have awarded bonuses on an annual
basis after considering, among other things, the companys
accomplishments against stated corporate goals adopted by the
Board the prior year. We design these
1 Accordingly,
we omit tables showing pension benefits and non-qualified
deferred compensation.
11
goals to be challenging, so that one would not expect consistent
achievement of all of them. In recent years, we have adopted
annual corporate goals covering such things as advancement of
our clinical strategies for our HuCNS-SC cells, effort towards
fundraising, advancement in cell manufacturing practices, and
advancement of our Liver Program. In any given year, the Board
may grant more than 100% of the bonus pool budgeted for the
year. The Board may also grant less than 100% of the bonus pool
even if all of the corporate goals have been achieved. Actual
bonus levels are influenced to a significant degree by the
progress made towards the accomplishment of the corporate goals,
however the grant of bonuses is not formulaic. The number and
nature of these goals are taken into consideration, with more
important corporate goals typically weighing more heavily in the
consideration process. In determining whether to award a bonus,
the Board also considers such factors as the companys
financial position, the status of its development programs,
clinical progress, corporate development activities, and general
economic factors. This necessarily involves a subjective
assessment of corporate performance by the Compensation
Committee. While the Compensation Committee and the Board as a
whole use the corporate goals as a measure of success, the
amount of any bonus grant, as well as how and when it will be
paid, is completely within the Boards sole discretion.
With these various principles in mind, we recently took the
following actions with respect to corporate bonuses.
In January 2009, as part of its annual year-end review of
performance, the Compensation Committee (with input from the
Chief Executive Officer and other Board members) considered,
among other things, significant company performance
accomplishments in 2008, the companys successes measured
against its 2008 corporate goals, the degree of difficulty in
achieving these goals, as well as other events and circumstances
that impacted performance. The 2008 goals and their relative
weightings, as approved by our Board, consisted generally of the
following: (i) progress in our CNS Program including
activities aimed at initiating clinical trials of our
HuCNS-SC®
proprietary cell-based product in multiple therapeutic
indications (30%), (ii) progress in our Liver Program
including advancement of our collaborative work with a
researcher at Université Catholique de Louvain (20%);
(iii) successful fundraising efforts (25%); and
(iv) corporate development activities (25%). Highlights of
the 2008 accomplishments taken into account by the Compensation
Committee in determining the overall company performance
included:
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In January 2008, we completed enrollment and dosing of a
six-patient Phase I clinical trial of our HuCNS-SC product
candidate as a treatment for infantile and late infantile
neuronal ceroid lipofuscinosis (NCL, also often referred to as
Batten disease) at Oregon Health & Science University
(OHSU) Doernbecher Childrens Hospital.
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In January 2008, we entered into a research collaboration with
OHSU Casey Eye Institute to evaluate our neural stem cells as a
potential treatment for retinal degeneration, a leading cause of
blindness.
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In October 2008, we were awarded a $305,000 grant from the
National Institute of Diabetes and Digestive and Kidney Diseases
to research and develop a potential cell-based therapeutic for
liver disease arising from infection by the hepatitis C
virus.
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In November 2008, we reported that our neural stem cells, when
transplanted into a well-established animal model, can protect
the retina from progressive degeneration and prevent the loss of
visual function. Retinal degeneration leads to loss of vision in
diseases such as age-related macular degeneration and retinitis
pigmentosa.
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In November 2008, we raised approximately $20 million in
gross proceeds through the sale of approximately
13.8 million units at $1.45 per unit. Each unit consisted
of one share of common stock and a warrant to purchase
0.75 shares of common stock at an exercise price of $2.30
per share. We received total proceeds, net of offering expenses
and placement agency fees, of approximately $18.6 million.
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In December 2008, the U.S. Food and Drug Administration
(FDA) approved our IND to initiate a clinical trial of our
HuCNS-SC product candidate to treat Pelizeaus-Merzbacher Disease
(PMD), a fatal brain disorder that mainly affects young
children. This Phase I trial, which is designed to evaluate the
safety and preliminary efficacy of HuCNS-SC cells as a treatment
for PMD, is expected to begin enrolling patients in 2009.
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12
Following this review, the Compensation Committee recommended,
and the Board subsequently approved, a bonus award to all
employees of the company, including our executive officers,
equal to 50 percent of the 2008 bonus pool. The bonuses
were calculated using each employees base wage rate as of
January 1, 2008, and paid in February 2009.
In Mr. McGlynns case, because his base salary on
January 1, 2008 was $385,000 and because his target bonus
was 40%, his 2008 bonus was $77,000. In
Dr. Tsukamotos case, because her base salary on
January 1, 2008 was $300,000 and because her target bonus
was 25%, her 2008 bonus was $37,500. In Mr. Youngs
case, because his base salary on January 1, 2008 was
$275,000 and because his target bonus was 25%, his 2008 bonus
was $34,375. In Mr. Strattons case, because his base
salary on January 1, 2008 was $220,000 and because his
target bonus was 20%, his 2008 bonus was $22,000. In
Dr. Craigs case, because he joined the company in
September 2008 with a base salary of $275,000 and a target bonus
was 25%, he received a prorated 2008 bonus of $10,077.
The base salary and target bonus information presented above may
be summarized as follows:
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12/31/2006
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12/31/2007
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12/31/2008
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Base Salary/Target
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Base Salary/Target
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Base Salary/Target
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Bonus
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Bonus
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Bonus
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Martin M. McGlynn President and CEO
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$365,000/
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$385,000/
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$385,000/
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35% of
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40% of
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40% of
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$324,000
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$365,000
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$385,000
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Ann Tsukamoto, Ph.D. EVP,
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Research & Development
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$275,000/
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$300,000/
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$300,000/
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25% of
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25% of
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25% of
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$275,000
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$275,000
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$300,000
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Rodney K.B. Young CFO
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$250,000/
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$275,000/
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$275,000/
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25% of
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25% of
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25% of
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$250,000
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$250,000
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$275,000
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Stewart Craig, Ph.D. VP, Development &
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$275,000/
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Operations
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25% of
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$275,0000
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Kenneth Stratton, JD General Counsel
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$220,000/
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$250,000/
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20% of
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20% of
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$220,000
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$220,000
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Equity
Compensation general practices:
We believe that equity compensation awards are an important
component of our overall compensation policy because equity
compensation can provide strong inducement to remain with the
company and to build future stockholder value. In order to
achieve these objectives, we believe that equity compensation
awards need to be structured to provide both meaningful value
and a meaningful opportunity to realize that value. Accordingly,
from time to time, we have considered several forms of equity
compensation awards, including stock options, stock appreciation
rights, restricted stock, and restricted stock units, because
each of these have certain advantages and disadvantages relative
to the others with respect to how they might reward effort and
success and how they might help us retain high contributors.
Generally speaking, over the years, we have used stock options
as the most common equity compensation instrument. We have
typically granted company-wide stock option awards to full-time
employees once every year or two. In addition, we have typically
granted stock option awards to newly hired employees, effective
as of their date of hire, and to existing employees upon their
promotion. Both on-hire awards to non-executive officers and
awards upon the promotion of current employees are usually made
by either Mr. McGlynn, acting as the Boards
single-member committee, or by the Compensation Committee.
Awards to executive officers are made by either the Compensation
Committee or by the full Board. Company-wide awards have usually
been made at either a regularly scheduled Board or Compensation
Committee meeting.
13
Unless otherwise specifically noted in the tables herein, all
option awards:
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to our employees, including our executive officers, are intended
to be qualified incentive stock options (ISOs) to the fullest
extent permitted by law;
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have an exercise price set at the closing market price of our
common stock on the grant date, or on an adjacent market trading
date if the market on which we are listed (now the Nasdaq Global
Market) is not open on the grant date; and
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vest over four years, with one quarter of the shares included in
any grant vesting on the anniversary of the grant and the
remainder vesting at 1/48 per month thereafter, always provided
that the grantee remains in the companys employ on the
vesting dates. These awards are time-vesting and do not depend
on performance factors.
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With these various principles in mind, we recently took the
following actions with respect to equity compensation.
In January 2008 and then again in March 2008, the Compensation
Committee, having noted the significant decline in share prices
for biotechnology companies generally and the poor economic and
financial conditions in the United States, met to discuss how
best to provide long-term incentives to key employees of the
company. In particular, the Compensation Committee noted that
most (approximately 90%) of the outstanding employee options at
the end of 2007 had a strike price significantly higher than the
trading price of the companys common stock and that these
options were therefore not likely to provide a strong retention
incentive. The weighted average exercise price of outstanding
employee options at the end of 2007 was $2.36 and the average
closing price for January 2008 was $1.31 per share.
After discussing this with management, the Compensation
Committee determined it was in the companys interest to
grant additional long-term equity compensation to a limited
number of employees considered particularly important to our
long-term success. Consequently, in March 2008, the Compensation
Committee approved the award of 1,650,000 restricted stock units
to certain employees of the company. Each of the restricted
stock grants vests over three years, with one-third vesting on
each of the three anniversaries following the grant. Of this
amount, the executive officers of the company received, in the
aggregate, 907,500 restricted stock units. These restricted
stock units were intended to augment the existing outstanding
options held by employees, including our executive officers, to
provide additional retention incentives and to encourage actions
designed to increase long-term stockholder value.
The following table summarizes the restricted stock units
awarded to our named executive officers in March 2008:
|
|
|
|
|
|
|
Number of
|
|
|
|
Restricted
|
|
|
|
Stock Units
|
|
Name & Principal Position
|
|
Granted
|
|
|
Martin M. McGlynn President and CEO
|
|
|
412,500
|
|
Ann Tsukamoto, Ph.D. Executive VP,
Research & Development
|
|
|
206,250
|
|
Rodney K.B. Young CFO
|
|
|
206,250
|
|
Stewart Craig, Ph.D. SVP, Development &
Operations(1)
|
|
|
0
|
|
Kenneth Stratton, JD General Counsel
|
|
|
82,500
|
|
|
|
|
(1) |
|
Dr. Craig joined the company after the relevant grant date. |
We may grant additional options to current employees, including
our executive officers, in 2009.
Employment,
Severance and
Change-in-Control
Agreements
Employment agreements: Mr. McGlynn joined
the company as our president and chief executive officer on
January 15, 2001. Under the terms of an employment
agreement between Mr. McGlynn and the company, dated
January 2, 2001, as amended, Mr. McGlynn received an
initial annual base salary of $275,000 per year, reviewable
annually by the Board of Directors, and a bonus, in the
Boards sole discretion, of up to 25% of his base salary.
Over time, however, we have increased Mr. McGlynns
base salary and target bonus so that they are, respectively,
$525,000 and 55% of his base salary. Pursuant to his January
2001 employment agreement, we granted
14
Mr. McGlynn an option to purchase 400,000 shares of
our common stock with an exercise price equal to the fair market
value of the common stock on the initial date of his employment,
one fourth to vest on the first anniversary of his employment
and the remaining three-fourths to vest in equal monthly
installments during his second through fourth years of
employment. The employment agreement also provided that the
Board could, in its sole discretion, grant Mr. McGlynn a
bonus option to purchase up to an additional 25,000 shares,
which it did. We also agreed to pay Mr. McGlynn a $50,000
relocation bonus and to reimburse him for relocation expenses,
and have done so. Since January 2009, we have been paying Mr.
McGlynn are annual car allowance of $10,000.
Dr. Tsukamoto joined the company in November 1997 and has
served as our Executive Vice President, Research &
Development since September 2008. Under the terms of an
employment agreement between Dr. Tsukamoto and the company,
dated February 2, 1998, Dr. Tsukamoto received an
annual base salary of $130,000 per year and a discretionary
target bonus of up to 10% of her base salary. Over time,
however, we have increased her base salary and target bonus so
that they are, respectively, $300,000 and 25% of her base
salary. Also pursuant to her employment agreement, we provide
Dr. Tsukamoto with $750,000 of term life insurance on an
annual basis during her employment.
Mr. Young joined the company in September 2005 as our chief
financial officer and vice president of finance. Under the terms
of his agreement with the company, dated August 16, 2005,
Mr. Young received an initial annual base salary of
$250,000 per year, with a target bonus of up to 25% of his base
salary. Over time, however, we have increased his base salary to
$275,000. Pursuant to his August 2005 employment agreement, we
granted Mr. Young an option to purchase 450,000 shares
of our common stock. This option will vest over 48 months;
with one-quarter of the shares vesting on the first anniversary
of the date on which Mr. Youngs employment began and
with the remaining shares vesting, subject to his continued
employment by the company, at the rate of 1/48th per month
on the last day of each month during the ensuing 36 months.
In addition, the employment agreement provided for an option to
acquire no fewer than 25,000 shares of our common stock at
the closing price of the stock on the date of grant, the first
anniversary of his employment. The grant of 25,000 shares
was duly made, and will vest in the same manner as his earlier
option grant over 48 months, subject to
Mr. Youngs continued employment by the company.
Dr. Craig joined the company in September 2008 as our
Senior Vice President of Development and Operations. Under the
terms of his agreement with the company, dated July 24,
2008, Dr. Craig receives an annual base salary of $275,000
per year, with a target bonus of up to 25% of his base salary.
Pursuant to his July 2008 employment agreement, we granted
Dr. Craig an option to purchase 200,000 shares of our
common stock. This option will vest over 48 months, with
one-quarter of the shares vesting on the first anniversary of
the date on which Dr. Craigs employment began and
with the remaining shares vesting, subject to his continued
employment by the company, at the rate of 1/48th per month
on the last day of each month during the ensuing 36 months.
Mr. Stratton joined the company in February 2007 as our
General Counsel. Under the terms of his agreement with the
company, dated February 2, 2007, Mr. Stratton
initially received an annual base salary of $220,000 per year,
with a target bonus of up to 20% of his base salary. In February
2008, however, we increased his base salary to $250,000.
Pursuant to his February 2007 employment agreement, we granted
Mr. Stratton an option to purchase 150,000 shares of
our common stock. This option will vest over 48 months,
with one-quarter of the shares vesting on the first anniversary
of the date on which Mr. Strattons employment began
and with the remaining shares vesting, subject to his continued
employment by the company, at the rate of 1/48th per month
on the last day of each month during the ensuing 36 months.
Severance arrangements: Each of our executive
officers, with the exception of Mr. Stratton, has entered
into a severance agreement with the company under which he or
she would receive payments upon termination of his or her
employment by us without
cause2 or
consequent to a change of control or, in the case of
Mr. McGlynn, by virtue of disability.
In the case of Mr. McGlynn, upon termination without cause,
we would continue to pay salary and provide benefits for one
year, at the base wage rate then in effect. If the termination
of Mr. McGlynns employment were associated with a
change of control, the company would pay (in a lump sum)
(i) two years of salary and the reasonably projected cost
of healthcare benefits, (ii) a bonus with respect to the
termination year at 25% of the base salary, pro-rated for the
portion of the year served, and (iii) a tax gross up; in
addition, all unvested stock options
2 Or
termination by the executive officer for good reason, as defined
in the agreement.
15
would vest and all stock options would be exercisable for two
years after termination. If Mr. McGlynns employment
were terminated on account of disability, we would continue to
pay his salary for up to six months (or until he obtained other
employment or became eligible for disability income under a
company plan, if sooner).
In the case of Dr. Tsukamoto, upon involuntary termination
without cause whether or not associated with a change of
control, we would continue to pay Dr. Tsukamotos
salary and provide benefits for 12 months, at the rate then
in effect. Dr. Tsukamotos agreement provides that if
the termination were associated with a change of control, any
unvested options granted pursuant to the companys 1992
Equity Incentive Plan would vest upon termination.
In the case of Mr. Young, upon involuntary termination
without cause, we would continue to pay salary and provide
benefits for six months, at the rate then in effect. If the
termination were associated with a change of control, we would
continue to pay Mr. Youngs salary and provide
benefits (including his share of COBRA, grossing up for the tax
effects, if any) for 12 months; in this event, any unvested
options and any other stock awards held by him would vest upon
termination.
In the case of Dr. Craig, upon involuntary termination
without cause, whether or not associated with a change of
control, we would continue to pay salary and provide benefits
for six months, at the rate then in effect.
If we terminate the employment of any executive officer for
cause, or if the officer resigns without good cause, he or she
would not be entitled to any severance or other benefits.
Potential
Payments Upon Termination or
Change-in-Control
The following table displays the value of what the executive
officers would have received from us had their employment been
terminated on December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated Vesting of
|
|
|
|
|
Officer
|
|
Salary
|
|
|
Bonus
|
|
|
Health
|
|
|
Options*
|
|
|
Total
|
|
|
Martin McGlynn
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terminated without cause
|
|
$
|
385,000
|
|
|
|
0
|
|
|
$
|
14,255
|
|
|
|
0
|
|
|
$
|
399,255
|
|
Terminated, change of control
|
|
$
|
770,000
|
|
|
$
|
96,250
|
|
|
$
|
41,554
|
(1)
|
|
$
|
561,000
|
(2)
|
|
$
|
1,468,804
|
|
Disability(3)
|
|
$
|
192,500
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
192,500
|
|
Other
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Ann Tsukamoto, Ph.D.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terminated without cause
|
|
$
|
300,000
|
|
|
|
0
|
|
|
$
|
11,183
|
|
|
|
0
|
|
|
$
|
311,183
|
|
Terminated, change of control
|
|
$
|
300,000
|
|
|
|
0
|
|
|
$
|
11,183
|
|
|
$
|
280,500
|
(4)
|
|
$
|
591,683
|
|
Other
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Rodney Young
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terminated without cause
|
|
$
|
137,500
|
|
|
|
0
|
|
|
$
|
4,182
|
|
|
|
0
|
|
|
$
|
141,682
|
|
Terminated, change of control
|
|
$
|
275,000
|
|
|
|
0
|
|
|
$
|
8,364
|
|
|
$
|
280,500
|
(5)
|
|
$
|
563,864
|
|
Other
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Stewart Craig, Ph.D.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terminated without cause
|
|
$
|
137,500
|
|
|
|
|
|
|
$
|
5,876
|
|
|
|
|
|
|
$
|
143,376
|
|
Terminated, change of control
|
|
$
|
137,500
|
|
|
|
|
|
|
$
|
5,876
|
|
|
$
|
48,000
|
(5)
|
|
$
|
191,376
|
|
Kenneth Stratton, JD
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terminated, change of control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
112,500
|
(5)
|
|
$
|
112,500
|
|
|
|
|
* |
|
Value shown represents the difference between the closing market
price of our stock on December 31, 2008 of $1.36 per share
and the applicable exercise price of each grant. |
|
(1) |
|
Includes tax
gross-up on
2 years of healthcare costs. |
|
(2) |
|
By agreement, all options vest and remain exercisable for
2 years. |
|
(3) |
|
Payments stop before 6 months if individual obtains other
full-time employment or qualifies for payments under any
disability income plan provided by the company. |
16
|
|
|
(4) |
|
An agreement with Dr. Tsukamoto provided for vesting of her
options issued under an equity incentive plan that did not
provide for 100% automatic vesting on change of control, but
those options have all vested. All of our other equity incentive
plans provide for accelerated vesting of outstanding unvested
options upon a change of control. |
|
(5) |
|
All unvested options issued under the applicable equity
incentive plans vest upon a change of control under the terms of
those plans. |
Compensation
Committee Report
The Compensation and Stock Option Committee has reviewed and
discussed the Compensation Discussion and Analysis required by
Item 402(b) of SEC
Regulation S-K
with management. Based on this review and these discussions, the
Compensation Committee has recommended to the Board of Directors
that the Compensation Discussion and Analysis be included in the
companys proxy statement for 2009.
COMPENSATION AND STOCK OPTION COMMITTEE
John J. Schwartz, Ph.D., Chairman
Eric Bjerkholt
Notwithstanding
anything to the contrary set forth in any of our previous
filings under the Securities Act of 1933, as amended, or the
Exchange Act that incorporate future filings, in whole or in
part, the foregoing Compensation and Stock Option Committee
Report shall not be incorporated by reference into any such
filings.
Executive
Officer Compensation Tables
The following tables set forth information with respect to the
compensation of our executive officers for the fiscal years
ended December 31, 2008, 2007 and 2006.
Because the Stock awards and Option
awards column reflects the dollar amounts recognized for
financial statement reporting purposes in accordance with
SFAS 123(R), these imputed values include amounts from
awards granted from 2002 through 2008.
Summary
Compensation Table for 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
All Other
|
|
|
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Total
|
Name & Position
|
|
Year
|
|
($)
|
|
$(1)
|
|
(2)($)
|
|
(2)($)
|
|
$(3)
|
|
$
|
|
Martin McGlynn
|
|
|
2008
|
|
|
|
385,000
|
|
|
|
77,000
|
|
|
|
140,588
|
|
|
|
565,793
|
|
|
|
229,221
|
(4)
|
|
|
1,397,602
|
|
President and CEO
|
|
|
2007
|
|
|
|
383,019
|
|
|
|
116,800
|
|
|
|
|
|
|
|
748,547
|
|
|
|
213,927
|
|
|
|
1,462,293
|
|
|
|
|
2006
|
|
|
|
357,115
|
|
|
|
90,720
|
|
|
|
|
|
|
|
497,604
|
|
|
|
213,110
|
|
|
|
1,158,549
|
|
Ann Tsukamoto, Ph.D
|
|
|
2008
|
|
|
|
300,000
|
|
|
|
37,500
|
|
|
|
70,294
|
|
|
|
196,039
|
|
|
|
21,591
|
(5)
|
|
|
625,424
|
|
EVP, Research &
|
|
|
2007
|
|
|
|
296,827
|
|
|
|
55,000
|
|
|
|
|
|
|
|
228,721
|
|
|
|
23,562
|
|
|
|
604,110
|
|
Development
|
|
|
2006
|
|
|
|
270,192
|
|
|
|
50,000
|
|
|
|
|
|
|
|
155,008
|
|
|
|
13,650
|
|
|
|
488,850
|
|
Rodney Young
|
|
|
2008
|
|
|
|
275,000
|
|
|
|
34,375
|
|
|
|
70,294
|
|
|
|
561,461
|
|
|
|
21,765
|
(6)
|
|
|
962,895
|
|
CFO
|
|
|
2007
|
|
|
|
271,731
|
|
|
|
50,000
|
|
|
|
|
|
|
|
518,908
|
|
|
|
21,668
|
|
|
|
862,307
|
|
|
|
|
2006
|
|
|
|
250,000
|
|
|
|
50,000
|
|
|
|
|
|
|
|
468,974
|
|
|
|
8,911
|
|
|
|
777,885
|
|
Stewart Craig, Ph.D
|
|
|
2008
|
|
|
|
74,038
|
|
|
|
10,077
|
|
|
|
|
|
|
|
13,755
|
|
|
|
5,187
|
(7)
|
|
|
103,057
|
|
Senior VP Development & Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth Stratton, JD
|
|
|
2008
|
|
|
|
244,962
|
|
|
|
47,000
|
|
|
|
28,118
|
|
|
|
80,094
|
|
|
|
22,794
|
(8)
|
|
|
422,968
|
|
General Counsel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Each employees target bonus is based on his or her salary
as of January 1 of the year to which it applies. For 2008, the
Board awarded 50% of the target bonus for all company employees.
For further description of the non-equity incentive plan see
discussion in Compensation Discussion and Analysis
and Compensation of Named Executive Officers, above. |
17
|
|
|
(2) |
|
Reference is made to Note 7 Stock-Based
Compensation in our
Form 10-K
for the period ended December 31, 2008, filed with the SEC
on March 16, 2009, which identifies assumptions made in the
valuation of stock-based awards in accordance with
SFAS 123R. The companys stock-based compensation
expense recognized under SFAS 123R reflects an estimated
forfeiture rate of 13.23% in 2008. The values recognized in the
Option Awards column above do not reflect such
expected forfeitures. |
|
(3) |
|
Amounts include employer contributions credited under our 410(k)
plan. Under the 401(k) plan, which is open to substantially all
of our employees, we make matching contributions based on each
participants voluntary salary deferrals, subject to plan
and Code limits in the form of company common stock. We match
participant contributions on a 1:2 basis up to a maximum of 3%
of the employees salary. Registered stock is valued and
transferred to the employees 401(k) account at the end of
calendar each quarter. |
|
(4) |
|
Includes $6,900 in company contributions under the 401(k) plan,
as well as an allowance for housing and transportation costs
plus a tax
gross-up on
that allowance ($201,406). |
|
(5) |
|
Includes $6,900 in company contributions under the 401(k) plan,
as well as life insurance in addition to the group life coverage
($1,180). |
|
(6) |
|
Includes $6,900 in company contributions under the 401(k) plan. |
|
(7) |
|
Includes $2,073 in company contributions under the 401(k) plan. |
|
(8) |
|
Includes $6,900 in company contributions under the 401(k) plan. |
Grants of
Plan-Based Awards
The following table shows grants of plan-based awards made to
our named executive officers during the fiscal year ended
December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Exercise
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Awards:
|
|
|
or Base
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Price of
|
|
|
Grant Date
|
|
|
|
|
|
|
Shares of
|
|
|
Securities
|
|
|
Option
|
|
|
Fair Value
|
|
|
|
Grant
|
|
|
Stock or
|
|
|
Underlying
|
|
|
Awards
|
|
|
of Option
|
|
Name & Principal Position
|
|
Date
|
|
|
Units #(1)
|
|
|
Options(#)
|
|
|
($/share)
|
|
|
Awards ($)
|
|
|
Martin McGlynn President and CEO
|
|
|
3/10/08
|
|
|
|
412,500
|
|
|
|
|
|
|
|
|
|
|
$
|
519,750
|
|
Ann Tsukamoto, Ph.D. EVP, Research &
Development
|
|
|
3/10/08
|
|
|
|
206,250
|
|
|
|
|
|
|
|
|
|
|
$
|
259,875
|
|
Rodney K.B. Young CFO
|
|
|
3/10/08
|
|
|
|
206,250
|
|
|
|
|
|
|
|
|
|
|
$
|
259,875
|
|
Stewart Craig, Ph.D. Senior VP
Development & Operations
|
|
|
9/15/08
|
|
|
|
|
|
|
|
200,000
|
(2)
|
|
$
|
1.12
|
|
|
$
|
186,460
|
|
Kenneth Stratton, JD General Counsel
|
|
|
3/10/08
|
|
|
|
82,500
|
|
|
|
|
|
|
|
|
|
|
$
|
103,950
|
|
|
|
|
(1) |
|
Restricted stock units granted in 2008 to our named executive
officers were made pursuant to our 2006 equity incentive plan.
These restricted stock units vest over a three-year period from
the date of grant: one-third of the award will vest on each
grant date anniversary over the following three years. |
|
(2) |
|
The option award granted to Dr. Craig was made pursuant to
our 2006 equity incentive plan. The award has a term of
10 years, and vests over a four year period from the date
of grant: 25% vest at the end of the first year, and 75% vest
monthly in equal increments over the remaining three years. |
18
Outstanding
Equity Awards at Fiscal 2008 Year-End
The following table shows equity awards held by our named
executive officers as of December 31, 2008:
|
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|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
SARs Awards
|
|
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
|
Securities
|
|
Number of
|
|
|
|
|
|
|
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
|
|
Underlying
|
|
Securities
|
|
|
|
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
|
|
|
|
Unexercised
|
|
Underlying
|
|
SAR
|
|
|
|
|
Option
|
|
Options
|
|
Options
|
|
Exercise
|
|
Option
|
|
|
|
SARs
|
|
Unexercised
|
|
Exercise
|
|
SAR
|
|
|
Grant
|
|
(#)
|
|
(#)
|
|
Price
|
|
Expiration
|
|
Date of
|
|
(#)
|
|
SARs(#)
|
|
Price
|
|
Expiration
|
Name
|
|
Date
|
|
Exercisable(1)
|
|
Unexercisable(1)
|
|
($/sh)(1)
|
|
Date
|
|
Award
|
|
Exercisable(2)
|
|
Unexercisable(2)
|
|
(2)
|
|
Date
|
|
Martin McGlynn
|
|
|
1/15/2001
|
|
|
|
400,000
|
|
|
|
|
|
|
$
|
2.88
|
|
|
|
1/15/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President and CEO
|
|
|
10/2/2001
|
|
|
|
75,000
|
|
|
|
|
|
|
$
|
2.09
|
|
|
|
10/2/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/12/2002
|
|
|
|
25,000
|
|
|
|
|
|
|
$
|
2.96
|
|
|
|
2/12/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/2/2002
|
|
|
|
25,000
|
|
|
|
|
|
|
$
|
2.01
|
|
|
|
5/2/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/5/2003
|
|
|
|
57,000
|
|
|
|
|
|
|
$
|
0.94
|
|
|
|
2/5/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/2/2004
|
|
|
|
350,000
|
|
|
|
|
|
|
$
|
1.53
|
|
|
|
9/2/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/21/2006
|
|
|
|
406,401
|
|
|
|
266,264
|
|
|
$
|
2.00
|
|
|
|
7/21/2016
|
|
|
|
7/21/2006
|
|
|
|
460,577
|
|
|
|
301,758
|
|
|
$
|
2.00
|
|
|
|
7/21/2016
|
|
|
|
|
8/23/2007
|
|
|
|
149,999
|
|
|
|
300,001
|
|
|
$
|
2.21
|
|
|
|
8/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ann Tsukamoto, Ph.D.
|
|
|
9/1/1999
|
|
|
|
25,000
|
|
|
|
|
|
|
$
|
1.19
|
|
|
|
9/1/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EVP, Research &
|
|
|
10/19/1999
|
|
|
|
3,750
|
|
|
|
|
|
|
$
|
1.28
|
|
|
|
10/19/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development
|
|
|
6/26/2001
|
(3)
|
|
|
12,000
|
|
|
|
|
|
|
$
|
3.10
|
|
|
|
6/26/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/22/2001
|
|
|
|
30,000
|
|
|
|
|
|
|
$
|
2.62
|
|
|
|
10/22/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/7/2002
|
|
|
|
60.000
|
|
|
|
|
|
|
$
|
0.61
|
|
|
|
10/7/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/3/2004
|
|
|
|
225,000
|
|
|
|
|
|
|
$
|
1.53
|
|
|
|
9/3/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/21/2006
|
|
|
|
111,756
|
|
|
|
73,220
|
|
|
$
|
2.00
|
|
|
|
7/21/2016
|
|
|
|
7/21/2006
|
|
|
|
88,132
|
|
|
|
57,742
|
|
|
$
|
2.00
|
|
|
|
7/21/2016
|
|
|
|
|
8/23/2007
|
|
|
|
49,999
|
|
|
|
100,001
|
|
|
$
|
2.21
|
|
|
|
8/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rodney K.B.. Young
|
|
|
9/6/2005
|
|
|
|
365,624
|
|
|
|
84,376
|
|
|
$
|
5.43
|
|
|
|
9/6/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CFO
|
|
|
7/21/2006
|
|
|
|
48,333
|
|
|
|
31,667
|
|
|
$
|
2.00
|
|
|
|
7/21/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/6/2006
|
|
|
|
14,062
|
|
|
|
10,938
|
|
|
$
|
2.28
|
|
|
|
9/6/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/23/2007
|
|
|
|
49,999
|
|
|
|
100,001
|
|
|
$
|
2.21
|
|
|
|
8/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stewart Craig, Ph.D.
|
|
|
09/15/2008
|
|
|
|
|
|
|
|
200,000
|
|
|
$
|
1.12
|
|
|
|
09/15/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior VP, Development and Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth Stratton, JD
|
|
|
02/28/2007
|
|
|
|
68,749
|
|
|
|
81,251
|
|
|
$
|
2.62
|
|
|
|
02/28/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General Counsel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Market Value of
|
|
|
|
|
|
|
Underlying
|
|
|
Securities of
|
|
|
|
|
|
|
Restricted
|
|
|
Restricted
|
|
|
|
|
|
|
Stock units
|
|
|
Stock Units
|
|
|
|
|
|
|
That Have Not
|
|
|
That Have Not
|
|
|
|
|
|
|
Vested (4)
|
|
|
Vested (4)
|
|
Name
|
|
Date of Award
|
|
|
#
|
|
|
$
|
|
|
Martin McGlynn, President and CEO
|
|
|
3/10/2008
|
|
|
|
412,500
|
|
|
$
|
561,000
|
|
Ann Tsukamoto, Ph.D., EVP, Research & Development
|
|
|
3/10/2008
|
|
|
|
206,250
|
|
|
$
|
280,500
|
|
Rodney K.B. Young CFO
|
|
|
3/10/2008
|
|
|
|
206,250
|
|
|
$
|
280,500
|
|
Kenneth Stratton, JD, General Counsel
|
|
|
3/10/2008
|
|
|
|
82,500
|
|
|
$
|
112,200
|
|
|
|
|
(1) |
|
Unless otherwise noted, options are granted at the close of
market price on the grant date (or on an adjacent market trading
day if the Nasdaq Global Market is closed on the grant date);
they vest over a period of four years as follows: twenty-five
percent (25%) of the option vests on the first anniversary of
the grant date and 1/48 of the original grant vests each
additional month of service. |
|
(2) |
|
The terms of the SARs are essentially identical to those of the
options granted on the same date; they have the same vesting
schedule and same exercise price. |
|
(3) |
|
This was one of eight non-qualified, performance-based options
granted by the Compensation Committee on June 26, 2001 to
employees who had been given year-long goals in January 2001.
The exercise price was set at $3.10, which the committee
determined to be approximately equal to the average market price
during January 2001. The grants vested on December 31, 2001
to the extent that the individual goals had been achieved by the
respective employees. It was determined that 12,000 of the
12,500 shares originally covered by the option |
19
|
|
|
|
|
issued to Dr. Tsukamoto had been earned, and the remaining
500 shares were cancelled. In accordance with APB 25, the
company recorded $19,375 of compensation expense in 2001 in
respect of this award. |
|
(4) |
|
Restricted stock units granted under our 2006 Equity Incentive
Plan. These restricted stock units vest over a three-year period
from the date of grant: one-third of the award will vest on each
grant date anniversary over the following three years. |
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Related parties can include any of our directors or executive
officers, certain of our stockholders and their immediate family
members. Each year, we prepare and require our directors and
executive officers to complete Director and Officer
Questionnaires identifying any transactions with us in which the
officer or director or their family members have an interest.
This helps us identify potential conflicts of interest. A
conflict of interest occurs when an individuals private
interest interferes, or appears to interfere, in any way with
the interests of the company as a whole. Our code of ethics
requires all directors, officers and employees who may have a
potential or apparent conflict of interest to immediately notify
our general counsel, who serves as our compliance officer; in
addition, the Corporate Governance Committee of the Board of
Directors is responsible for considering and reporting to the
Board any questions of possible conflicts of interest of Board
members. Our code of ethics further requires pre-clearance
before any employee, officer or director engages in any personal
or business activity that may raise concerns about conflict,
potential conflict or apparent conflict of interest. Copies of
our code of ethics and the Corporate Governance Committee
charter are posted on the corporate governance section of our
website at www.stemcellsinc.com.
In evaluating related party transactions and potential conflicts
of interest, our compliance officer and independent directors
apply the same standards of good faith and fiduciary duty they
apply to their general responsibilities. They will approve a
related party transaction only when, in their good faith
judgment, the transaction is in the best interest of the company.
Dr. Weissman, a member of the Board of Directors, was
retained in September 1997 to serve as a consultant to us.
Pursuant to his consulting agreement, Dr. Weissman provides
consulting services to us and serves on our Scientific Advisory
Board. In return, we pay Dr. Weissman $50,000 per year for
his services and we granted him, in 1997, an option to purchase
500,000 shares of common stock for $5.25 per share. This
option expired in 2007 on the ten-year anniversary of its grant
without being exercised. We also agreed to nominate
Dr. Weissman for a position on the Board of Directors, and
he agreed to serve if elected. Since October 1, 2000, he
has been compensated for this service in the same manner and
amount as other non-employee members of the Board. The
consulting agreement with Dr. Weissman contains
confidentiality, non-competition, and assignment of invention
provisions and is for a term of fifteen years, subject to
earlier termination by either party.
PRINCIPAL
ACCOUNTING FEES AND SERVICES
Audit and
Tax Fees
The Board of Directors, upon the recommendation of the Audit
Committee, has selected the independent accounting firm of Grant
Thornton LLP to audit the accounts of the company for the year
ending December 31, 2009.
The Audit Committee considered the tax compliance services
provided by Grant Thornton LLP, concluded that provision of such
services is compatible with maintaining the independence of the
independent accountants, and approved the provision by Grant
Thornton LLP of tax compliance services with respect to the year
ending December 31, 2008.
20
The Audit Committee received the following information
concerning the fees of the independent accountants for the years
ended December 31, 2007 and 2008, has considered whether
the provision of these services is compatible with independence
of the independent accountants, and concluded that it is:
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
12/31/08
|
|
|
12/31/07
|
|
|
Audit fees(1)
|
|
$
|
454,460
|
|
|
$
|
480,029
|
|
Tax fees
|
|
$
|
30,934
|
|
|
$
|
31,376
|
|
|
|
|
(1) |
|
Audit fees represents fees for the integrated audit of our
annual consolidated financial statements and reviews of the
interim consolidated financial statements, and review of
audit-related SEC filings; also includes fees related to issuing
comfort letter(s) in 2008. |
Audit and tax fees include administrative overhead charges and
reimbursement for out-of-pocket expenses.
Pre-Approval
Policies and Procedures
The Audit Committee has adopted policies and procedures for
pre-approving all services (audit and non-audit) performed by
our independent auditors. In accordance with such policies and
procedures, the Audit Committee is required to pre-approve all
audit and non-audit services to be performed by the independent
auditors in order to assure that the provision of such services
is in accordance with the rules and regulations of the SEC and
does not impair the auditors independence. Under the
policy, pre-approval is generally provided 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. In
addition, the Audit Committee may pre-approve additional
services on a
case-by-case
basis. During 2008 and 2007, all services performed by our
independent auditors were pre-approved.
21
REPORT OF
THE AUDIT COMMITTEE
The Audit Committee oversees our accounting and financial
reporting processes and the audits of our financial statements
on behalf of the Board, and selects an independent public
accounting firm to perform these audits. Management has the
primary responsibility for establishing and maintaining adequate
internal control over financial reporting, preparing the
financial statements, and establishing and maintaining adequate
controls over public reporting. Our independent registered
public accounting firm for fiscal 2008, Grant Thornton LLP, had
responsibility for conducting an audit of our annual financial
statements in accordance with the standards of the Public
Company Accounting Oversight Board (United States) and
expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting
principles.
The Audit Committee oversaw the independent public accounting
firms qualifications and independence, as well as its
performance. The Audit Committee assisted the Board in
overseeing the preparation of the companys financial
statements, the companys compliance with legal and
regulatory requirements, and the performance of the
companys internal audit function. The Audit Committee met
with personnel of the company and Grant Thornton LLP to review
the scope and the results of the annual audit, the amount of
audit fees, the companys internal accounting controls, the
companys financial statements contained in the
companys Annual Report to Stockholders and other related
matters.
The Audit Committee has reviewed and discussed with management
the financial statements for fiscal year 2008 audited by Grant
Thornton LLP, as well as managements report on internal
control over financial reporting, using the criteria set forth
by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control Integrated
Framework. The Audit Committee has discussed with Grant Thornton
LLP various matters related to the financial statements,
including those matters required to be discussed by SAS 114 (The
Auditors Communication with Those Charged with
Governance). The Audit Committee has also discussed with Grant
Thornton LLP its report on internal control over financial
reporting, has received the written disclosures and the letter
from Grant Thornton LLP required by Public Company Accounting
Oversight Board (PCAOB) Ethics and Independence Rule 3526,
Communication with Audit Committees Concerning Independence
(Rule 3526), and has discussed with Grant Thornton LLP
its independence.
Based upon such review and discussions, the Audit Committee
recommended to the Board of Directors, and the Board approved
the recommendation, that the audited financial statements be
included in the companys Annual Report on
Form 10-K
for the fiscal year ending December 31, 2008 for filing
with the SEC.
AUDIT COMMITTEE
Eric Bjerkholt, Chairman
Ricardo B. Levy, Ph.D.
John J. Schwartz, Ph.D.
22
PROPOSAL NUMBER
1
Election of Directors
The number of directors is currently fixed at six. Both our
restated certificate of incorporation, as amended to date, and
our amended and restated by-laws provide for the classification
of the Board of Directors into three classes (Class I,
Class II and Class III), as nearly equal in number as
possible, with the term of office of one class expiring each
year. Unless otherwise instructed, the enclosed proxy will be
voted to elect the nominees named below, who are now
Class III directors, as Class III directors for a term
of three years expiring at the 2012 Annual Meeting of
Stockholders and until their successors are duly elected and
qualified. Proxies cannot be voted for a greater number of
persons than the number of nominees named below. It is expected
that the nominees will be able to serve, but if any are unable
to serve, the proxy will be voted for a substitute nominee or
nominees designated by the Board of Directors.
The nominees for election as Class III directors, and the
incumbent and continuing Class I and Class II
directors, are as follows:
NOMINEES
FOR ELECTION AS CLASS III DIRECTORS TERMS TO
EXPIRE 2012
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Name
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Principal Occupation
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Age*
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Position
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Martin McGlynn
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President and Chief Executive Officer, StemCells, Inc.
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62
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Director,
Executive Officer
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Roger Perlmutter, M.D., Ph.D.
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Executive Vice President, Research and Development, Amgen, Inc.
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56
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Director
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* |
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Ages are as of April 1, 2009. |
Martin M. McGlynn joined the company on January 15,
2001, when he was appointed president and chief executive
officer of the company and of its wholly-owned subsidiary,
StemCells California, Inc. He was elected to the Board of
Directors in February 2001. Mr. McGlynn began his career
with Becton Dickinson, Ireland Ltd., and spent 8 years in
manufacturing operations. He joined Abbott Labs in 1977 where he
held positions as the general manager of Abbott Ireland Ltd.,
the president and general manager of Abbott Canada Ltd. and the
vice president of Abbott International Ltd. In 1990, he joined
the BOC Group as the president of Anaquest, Inc., a company
focused on anesthesia and acute care pharmaceuticals. From 1994
until he joined StemCells, Mr. McGlynn was the president
and chief executive officer of Pharmadigm, Inc., a privately
held company in Salt Lake City, Utah, engaged in research and
development in the fields of inflammation and genetic
immunization. Mr. McGlynn is a native of Dublin, Ireland.
He received a Bachelor of Commerce degree from University
College, Dublin, Ireland in 1968, a diploma in industrial
engineering from the Irish Institute of Industrial Engineering
in 1970, and a diploma in production planning from the
University of Birmingham, England in 1971. He is a former member
of the board of directors of the Confederation of Irish
Industries and the Pharmaceutical Manufacturers Association of
Canada.
Roger M. Perlmutter, M.D., Ph.D., was elected
to the companys Board of Directors in December 2000.
Dr. Perlmutter is the executive vice president of research
and development of Amgen, Inc., a position he has held since
January 2001. Prior to joining Amgen, he was the executive vice
president of worldwide basic research and preclinical
development of Merck Research Laboratories, a division of
Merck & Co., Inc., a position he had held since August
1999. He joined Merck in February 1997 as the senior vice
president of Merck Research Laboratories, from February 1997 to
December 1998 and as its executive vice president from February
1999 to January 2001. Prior to joining Merck,
Dr. Perlmutter was a professor in the Departments of
Immunology, Biochemistry and Medicine at the University of
Washington from January 1991 to January 1997 and served as
chairman of the Department of Immunology at the University of
Washington from May 1989 to January 1997. He also was an
investigator at the Howard Hughes Medical Institute from October
1991 to January 1997. Dr. Perlmutter was a member of the
board of directors of The Irvington Institute for Immunological
Research from 1997 to 2001 and of the Institute for Systems
Biology, where he has been its chairman of the board since 1999.
Dr. Perlmutter is licensed to practice medicine in the
State of Washington. He graduated from Reed College in 1973 and
received his M.D. and Ph.D. degrees from Washington University,
St. Louis, Missouri in 1979.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
FOR THE ELECTION OF THE NOMINEES DESCRIBED ABOVE.
23
INCUMBENT
CLASS I DIRECTORS TERMS EXPIRE 2010
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Name
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Principal Occupation
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Age
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Position
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Eric H. Bjerkholt
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Senior Vice President and CFO, Sunesis Pharmaceuticals, Inc.
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49
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Director
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John J. Schwartz, Ph.D.
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President, Quantum Strategies Management Company
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74
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Director,
Chairman of the Board
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Eric H. Bjerkholt was elected to the Board of Directors
of the company in March 2004. He is senior vice president and
chief financial officer of Sunesis Pharmaceuticals, Inc., a
small molecule biopharmaceutical company in South
San Francisco, CA. Before joining Sunesis,
Mr. Bjerkholt served as the senior vice president and chief
financial officer of IntraBiotics Pharmaceuticals, Inc.
Previously, Mr. Bjerkholt co-founded LifeSpring Nutrition,
Inc., a privately held nutraceutical company, and served as its
chief financial officer, and later as its president and chief
executive officer. From 1990 to 1997, Mr. Bjerkholt was an
investment banker at J.P. Morgan & Co., Inc.
Mr. Bjerkholt holds an M.B.A. from Harvard Business School
and a Cand. Oecon degree in economics and econometrics from the
University of Oslo, Norway. He is a member of the board of
directors of Round Table Pizza, Inc.
John J. Schwartz, Ph.D., was elected to the Board of
Directors of the company in December 1998 and was elected the
chairman of the Board at the same time. He is the former
president and chief executive officer of SyStemix, Inc.
Dr. Schwartz is currently the president of Quantum
Strategies Management Company, a registered investment advisor
located in Palo Alto, California. Prior to his positions at
SyStemix, he served as assistant professor, vice president and
general counsel at Stanford University in California.
Dr. Schwartz graduated from Harvard Law School in 1958 and
received his Ph.D. degree in physics from the University of
Rochester in 1965.
24
INCUMBENT
CLASS II DIRECTORS TERMS EXPIRE 2011
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Name
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Principal Occupation
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Age
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Position
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Ricardo B. Levy, Ph.D.
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Chairman of the Board, Catalytica Energy Systems, Inc.
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64
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Director
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Irving Weissman, M.D.
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Professor, Stanford University
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69
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Director
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Ricardo B. Levy, Ph.D. was elected to the
companys Board of Directors in September 2001.
Dr. Levy is the lead director of Renegy Holdings, Inc. and
has been a member of its board of directors since October 2007.
Dr. Levy served as chairman of the board of Catalytica
Energy Systems, Inc., between 1995 and 2007 when the company
merged to form Renegy. He also served as director of
Catalytica Pharmaceuticals Inc. from 1995 to 2000. Prior to
this, in 1974, Dr. Levy cofounded Catalytica, Inc., a
manufacturing technology and components company. He served as
Catalyticas chief operating officer from 1974 until 1991
and as its president and chief executive officer until December
2000, when Catalytica and Catalytica Pharmaceuticals were both
sold to DSM N.V. Before founding Catalytica, Dr. Levy was a
founding member of Exxons chemical physics research team,
and prior to that he served as the chief executive officer of
Sudamericana C.A. in Quito, Ecuador. He currently also serves on
the board of directors of Accelrys Inc. (formerly Pharmacopeia,
Inc.) and NovoDynamics, Inc. Dr. Levy holds an M.S. from
Princeton University and a Ph.D. in chemical engineering from
Stanford University.
Irving L. Weissman, M.D. was elected to the Board of
Directors of the company in September 1997 and has served as the
chairman of the companys Scientific Advisory Board since
that time. Dr. Weissman is the Virginia and Daniel K.
Ludwig Professor of Cancer Research, Professor of Pathology and
Professor of Developmental Biology at Stanford University. He is
also the director of the Stanford Institute for Stem Cell
Biology and Regenerative Medicine and the director of the
Stanford Comprehensive Cancer Center. Previously,
Dr. Weissman was a cofounder of SyStemix, Inc. and
cofounder and a director of Cellerant Therapeutics, Inc., both
stem cell sciences companies. He has also served on the
scientific advisory boards of several biotechnology companies,
including Amgen, DNAX and T-Cell Sciences. Dr. Weissman is
a member of the National Academy of Science, the Institute of
Medicine of the National Academies, the American Academy of Arts
and Sciences, the American Society of Microbiology, and several
other societies.
PROPOSAL NUMBER
2
Ratification of Selection of Independent Public
Accountants
The company is asking the stockholders to ratify the selection
of Grant Thornton LLP as the companys independent public
accountants for the fiscal year ending December 31, 2009.
The affirmative vote of the holders of a majority of the shares
represented and voting at the Annual Meeting will be required to
ratify the selection of Grant Thornton LLP.
In the event the stockholders fail to ratify the appointment,
the Audit Committee of the Board of Directors will consider it
as a direction to select other auditors for the subsequent year.
Even if the selection is ratified, the Audit Committee of the
Board at its discretion could decide to terminate the engagement
of Grant Thornton LLP and engage another firm at any time if the
Audit Committee determines that such a change would be necessary
or desirable in the best interests of the company and its
stockholders.
A representative of Grant Thornton LLP is expected to attend the
Annual Meeting and is not expected to make a statement, but will
be available to respond to appropriate questions and may make a
statement if such representative desires to do so.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
FOR THE PROPOSAL TO RATIFY THE SELECTION OF GRANT
THORNTON LLP AS THE COMPANYS INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2009.
25
OTHER
MATTERS
Stockholder
Proposals
Stockholders who wish to present proposals for inclusion in the
companys proxy materials for the 2010 Annual Meeting of
Stockholders may do so by following the procedures prescribed in
Rule 14a-8
under the Exchange Act. To be eligible, the stockholder
proposals must be received by our corporate secretary on or
before January 4, 2010.
Stockholders who wish to make a proposal at the 2010 Annual
Meeting of Stockholders, other than one that will be included in
our proxy materials, must notify us no later than March 20,
2010 (see
Rule 14a-4
under the Exchange Act). If a stockholder who wishes to present
a proposal fails to notify us by March 20, 2010, the
proxies that management solicits for the meeting will confer
discretionary authority to vote on the stockholders
proposal if it is properly brought before the meeting.
Stockholder
Nominations of Directors
Stockholders or groups of stockholders that, individually or as
a group, have beneficially owned at least 5% of the
companys common stock for at least one year prior to the
date of such submission (the Nominating Stockholder)
may submit a candidate for nomination for election as a director
at any annual meeting of stockholders in accordance with Board
policy. The submission must be in writing and delivered to
StemCells, Inc., Attn: Secretary, Board of Directors, 3155
Porter Drive, Palo Alto, California 94304, no later than on or
about January 4, 2010 for nominees to be considered for
nomination at the 2010 annual meeting. Submissions must include
the name, address and number of shares of common stock
beneficially owned by each participant in the Nominating
Stockholder group, a representation that the Nominating
Stockholder meets the requirements described in the Board policy
and will continue to meet them through the date of the annual
meeting, a description of all arrangements or understandings
between or among the Nominating Stockholder group (or any
participant in the Nominating Stockholder group) and the
candidate or any other person or entity regarding the candidate,
all information regarding the candidate that the company would
be required to disclose in a proxy statement under SEC rules,
including whether the candidate is independent or, if not, a
description of the reasons why not, the consent of the candidate
to serve as a director, and representations by the candidate
regarding his or her performance of the duties of a director.
Full details may be obtained from the secretary of the Board of
Directors at the address above or on our website at
www.stemcellsinc.com. The Corporate Governance Committee will
consider and evaluate up to two candidates recommended in
accordance with this policy in connection with any annual
meeting. The Corporate Governance Committee will consider and
evaluate candidates recommended by stockholders on the same
basis as candidates recommended by other sources.
In addition, the companys by-laws provide that a
stockholder entitled to vote for the election of directors at a
meeting may nominate persons for election as directors by giving
timely notice thereof in proper written form to the Secretary
accompanied by a petition signed by at least 100 record holders
of capital stock of the company representing in the aggregate 1%
or more of the outstanding shares entitled to vote in the
election of directors, which petition must show the class and
number of shares held by each person. To be timely, such notice
and petition must be received at the principal executive offices
of the company not less than 60 days nor more than
90 days prior to the meeting, except if less than
70 days notice of the date of the meeting is given to
stockholders, in which case the notice and petition must be
received not later than the close of business on the tenth day
following the day on which notice of the date of the meeting was
mailed or public disclosure of such date was made. The
requesting stockholder is required to provide information with
respect to the nominee(s) for director similar to that described
above, as more fully set forth in the companys by-laws.
Form 10-K
The companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008, as filed with
the SEC, is available without charge upon request by writing to
StemCells, Inc. at 3155 Porter Drive, Palo Alto, CA 94304,
Attention: Investor Relations. A copy of this report is also
available through our website at www.stemcellsinc.com or,
alternatively, at www.sec.gov.
26
Householding
of Proxy Materials
The SEC has adopted rules that permit companies and
intermediaries such as brokers to satisfy delivery requirements
for proxy statements with respect to two or more stockholders
sharing the same address by delivering a single proxy statement
addressed to those stockholders. This process, which is commonly
referred to as householding, potentially provides
extra convenience for stockholders and cost savings for
companies. The company and some brokers household proxy
materials, delivering a single proxy statement to multiple
stockholders sharing an address unless contrary instructions
have been received from the affected stockholders. Once you have
received notice from your broker or us that they or we will be
householding materials to your address, householding will
continue until you are notified otherwise or until you revoke
your consent. If, at any time, you no longer wish to participate
in householding and would prefer to receive a separate proxy
statement, or if you are receiving multiple copies of the proxy
statement and wish to receive only one, please notify your
broker if your shares are held in a brokerage account or us if
you hold registered shares. You can notify us by sending a
written request to StemCells, Inc., 3155 Porter Drive, Palo
Alto, CA 94304, Attention: Investor Relations.
Other
Business
The Board of Directors knows of no business that will come
before the meeting for action except as described in the
accompanying Notice of Meeting. However, as to any such
business, the persons designated as proxies will have authority
to act in their discretion.
By Order of the Board of Directors
Kenneth B. Stratton
Secretary
April 30, 2009
27
STEMCELLS, INC.
C/O EQUISERVE TRUSTCOMPANY N.A.
P.O. BOX 8694 EDISON, NJ 08818-8694
VOTE BYINTERNET 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 OFFUTURE 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 BYPHONE 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.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
M14956-P81816 KEEP THIS PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH ANDRETURN THIS PORTION ONLY
STEMCELLS, INC. For Withhold For All All All Except
The Board of Directors recommends that you vote FOR the following:
1. Election of Directors 0 0 0
Nominees:
01) Martin M. McGlynn
02) Roger Perlmutter, MD Ph.D.
To withhold authority to vote for any individual nominee(s), mark For All Except and write the
number(s) of the nominee(s) on the line below.
For Against Abstain
The Board of Directors recommends that you vote FOR the following proposal:
2. To ratify the selection of Grant Thornton LLP as independent public accountants of the
company for the fiscal year ending December 31, 2009. 0 0 0
NOTE: In their discretion, upon such other matters that may properly come before the
meeting or any postponements or adjournments thereof.
For address changes and/or comments, please check this box and write them on the back where indicated. 0
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, by authorized officer.
Signature [PLEASE SIGNWITHIN BOX] Date Signature (Joint Owners) Date |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice
and Proxy Statement and Form 10-K are available at www.proxyvote.com.
M14957-P81816
STEMCELLS, INC.
ANNUAL MEETING OF STOCKHOLDERS, JUNE29, 2009 THIS PROXY IS SOLICITED ON BEHALF OF THEBOARD
OF DIRECTORS
The undersigned stockholder, by completing this card, hereby appoints Martin McGlynn and Kenneth
Stratton, or either of them with power of substitution to each, proxies of the undersigned to
vote at the Annual Meeting of Stockholders of StemCells. Inc. to be held on June 29, 2009 at 3155
Porter Drive, Palo Alto, California at 2:00 p.m., local time, or at any postponements or
adjournments thereof, all of the shares of Common Stock, par value $.01 per share, of StemCells,
Inc. that the undersigned would be entitled to vote if personally present. The undersigned
instructs such proxies or their substitutes to act on the following matter as specified by the
undersigned, and to vote in such manner as they may determine on any other matter that may
properly come before the meeting.
Address Changes/Comments:
(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
Continued and to be signed on reverse side |