SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the registrant [x]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Protein Design Labs, Inc.
(Name of Registrant as Specified in Its Charter)
Protein Design Labs, Inc.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[x] No filing fee required.
[ ] 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 transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
_______________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of
its filing.
(1) Amount previously paid:
(2) Form, schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
PROTEIN DESIGN LABS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
June 19, 1998
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to
the annual meeting of stockholders of Protein Design Labs, Inc., a
Delaware corporation (the "Company"), to be held on June 19, 1998 at
8:00 a.m. at the principal offices of the Company, located at 2375
Garcia Avenue, Mountain View, California 94043, for the following
purposes:
1. To elect three Class III directors to hold office for a thr
year term and until their respective successors are elected and qualifi
2. To ratify the appointment of Ernst & Young LLP as the indep
auditors of the Company for the fiscal year ending December 31, 1998.
3. To transact such other business as may properly come before
meeting.
Stockholders of record at the close of business on April 22, 19
entitled to notice of, and to vote at, this meeting and any
continuation or adjournments thereof. For ten days prior to the
meeting, a complete list of stockholders entitled to vote at the
meeting will be available for examination by any stockholder for any
purpose relating to the meeting during ordinary business hours at the
principal office of the Company.
By Order of the Board of
Directors
Douglas O. Ebersole
Secretary
Mountain View, California
May 5, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE
URGED TO SIGN AND PROMPTLY MAIL THE ENCLOSED PROXY IN THE RETURN
ENVELOPE SO THAT YOUR STOCK MAY BE REPRESENTED AT THE MEETING
TABLE OF CONTENTS
Page
VOTING RIGHTS 1
NOMINATION AND ELECTION OF DIRECTORS 2
Meetings of the Board of Directors 4
APPOINTMENT OF INDEPENDENT AUDITORS 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 5
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 6
EXECUTIVE COMPENSATION AND OTHER MATTERS 7
Executive Officers 7
Compensation of Executive Officers 8
Stock Options Granted in Fiscal 1997 9
Option Exercises and Fiscal 1997 Year End Values 10
Compensation of Directors 10
Change of Control Arrangements, Termination of Employment
Arrangements 10
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION 12
Compensation Policies 12
Compensation Components 12
Chief Executive Officer's Compensation 13
COMPARISON OF STOCKHOLDER RETURNS 14
SECTION 16(a) REPORTING 15
STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING 15
TRANSACTION OF OTHER BUSINESS 15
PROXY STATEMENT
1998 ANNUAL MEETING OF STOCKHOLDERS
PROTEIN DESIGN LABS, INC.
2375 Garcia Avenue
Mountain View, California 94043
(650) 903-3700
This Proxy Statement is furnished in connection with the solici
by the Board of Directors (the "Board") of PROTEIN DESIGN LABS, INC., a
Delaware corporation (the "Company"), of Proxies for use at the annual
meeting of stockholders to be held on June 19, 1998, or any adjournment
thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting. This Proxy Statement and accompanying Proxy are first
being sent to stockholders on approximately May 5, 1998. The cost of
the solicitation of Proxies will be borne by the Company. The Board
may use the services of the Company's directors, officers and others to
solicit Proxies, personally or by telephone. The Board may also
arrange with brokerage houses and other custodians, nominees and
fiduciaries to forward solicitation material to the beneficial owners
of the stock held of record by such persons, and the Company may
reimburse them for the reasonable out-of-pocket expenses incurred in so
doing. The Annual Report to Stockholders for the fiscal year ended
December 31, 1997, including financial statements, is being mailed to
stockholders concurrently with the mailing of this Proxy Statement.
VOTING RIGHTS
The voting securities of the Company entitled to vote at the an
meeting consist of shares of Common Stock. Only stockholders of record
at the close of business on April 22, 1998 are entitled to notice of
and to vote at the annual meeting. On that date, there were 18,512,081
shares of Common Stock issued and outstanding. Each share of Common
Stock is entitled to one vote. The Company's Bylaws provide that a
majority of all of the shares of the stock entitled to vote, whether
present in person or by proxy, shall constitute a quorum for the
transaction of business at the meeting. If an executed Proxy is
submitted without any instruction for the voting of such Proxy, the
Proxy will be voted in favor of the proposals described.
All shares represented by valid Proxies received prior to the a
meeting will be voted and, where a stockholder specifies by means of
the Proxy a choice with respect to any matter to be acted upon, the
shares will be voted in accordance with the specifications so made. A
stockholder who signs and returns a Proxy will have the power to revoke
it at any time before it is voted. A Proxy may be revoked by filing
with the Secretary of the Company a written revocation or duly executed
Proxy bearing a later date, or by appearing at the annual meeting and
electing to vote in person.
PROPOSAL ONE
NOMINATION AND ELECTION OF DIRECTORS
The Company has a classified Board of Directors (the "Board")
consisting of two Class I, two Class II and three Class III directors
who will serve until the annual meetings of stockholders to be held in
1999, 2000 and 1998, respectively, and until their respective
successors are duly elected and qualified. At each annual meeting of
stockholders, directors are elected for a term of three years to
succeed those directors whose terms expire as of that annual meeting.
The terms of the current Class III directors will expire on the
of the upcoming annual meeting. Accordingly, three persons are to be
elected to serve as Class III directors of the Board at the meeting.
Management's nominees for election by the stockholders to those three
positions are Jurgen Drews, M.D., Laurence Jay Korn, Ph.D. and Max
Link, Ph.D., the current Class III members of the Board. If elected,
the nominees will serve as directors until the Company's annual meeting
of stockholders in 2001 and until their successors are duly elected and
qualified. If any nominee(s) declines to serve or becomes unavailable
for any reason, or if a vacancy occurs before the election (although
the Company knows of no reason to anticipate that this will occur), the
Proxies may be voted for such substitute nominee(s) as the Board may
recommend in place of such nominee(s).
If a quorum is present and voting, the three nominees for Class
directors receiving the highest number of votes will be elected as
Class III directors. Abstentions and shares held by brokers that are
present but not voted because the brokers were prohibited from
exercising discretionary authority, i.e., "broker non-votes", will be
counted as present in determining if a quorum is present.
Certain information concerning the current directors as of Dece
31, 1997, including the Class III nominees to be elected at this
meeting, is set forth below.
Nominee/Director Positions with the Company
- --------------------------- -----------------------------------------
Class III directos nominated for election at the 1998 Annual Meeting of
Jurgen Drews.M.D. Director
Laurence Jay Korn, Ph.D. Chief Executive Officer,
Chairperson of the Board
Max Link, Ph.D. Director
Class I directors whose terms expire at the 1999 Annual Meeting of Stoc
George M. Gould, Esq. Director
Jon S. Saxe, Esq. President, Director
Class II directors whose terms expire at the 2000 Annual Meeting of Sto
Stanley Falkow, Ph.D. Distinguished Investigator
(consultant), Director
Cary L. Queen, Ph.D. Senior Vice President and
Vice President, Research,
Director
Jurgen Drews, M.D., has been a director of the Company since
February 1997. Dr. Drews served as President, Global Research and as a
member of the Executive Committee of the Roche Group from January 1996
to December 1997. From January 1991 to December 1995, Dr. Drews served
as President, International Research and Development and as a member of
the Executive Committee for the Roche Group. Prior to that time, Dr.
Drews served as Chairman of the Research Board and member of the
Executive Committee for F. Hoffmann-La Roche Ltd. from April 1986 to
December 1990. Dr. Drews served as Head of International Pharmaceutica
Research and Development for Sandoz Ltd. from January 1982 to July 1985
Stanley Falkow, Ph.D., has been a director of the Company since
December 1991, a consultant to the Company since 1987 and a
Distinguished Investigator for the Company since 1991. Dr. Falkow has
served as a Professor of Microbiology, Immunology and Medicine at the
Stanford University School of Medicine since 1981. Dr. Falkow is a
recipient of the Bristol-Myers Squibb Award for Distinguished
Achievement in Infectious Disease Research, the Paul Erlich Prize from
the German Federal Republic and the Squibb Award of the Infectious
Diseases Society of America and is a member of the U.S. National Academ
of Sciences and the American Academy of Arts and Sciences. Dr. Falkow i
also a director of GalaGen Inc.
George M. Gould, Esq., has been a director of the Company since
October 1989. Since June 1996, Mr. Gould has served as of counsel to
the law firm Gibbons, Del Deo, Dolan, Griffinger & Vecchione (formerly
Crummy, Del Deo, Dolan, Griffinger & Vecchione). From May 1996 to
December 1996, Mr. Gould was also a Senior Vice President of
PharmaGenics, Inc. Prior to that time Mr. Gould served as Vice
President, Licensing & Corporate Development and Chief Patent Counsel
for Hoffmann-La Roche Inc. ("Roche") from October 1989 to May 1996.
Laurence Jay Korn, Ph.D., has been a director and Chairperson of
the Board since July 1986 and has served as Chief Executive Officer
since January 1987. Previously, Dr. Korn headed a research laboratory
and served on the faculty of the Department of Genetics at the Stanford
University School of Medicine from March 1981 to December 1986. Dr. Kor
received his Ph.D. from Stanford University and was a Helen Hay Whitney
Postdoctoral Fellow at the Carnegie Institution of Washington and a
Staff Scientist at the MRC Laboratory of Molecular Biology in Cambridge
England, before becoming an Assistant Professor at Stanford.
Max Link, Ph.D., has been a director of the Company since June 199
Dr. Link served as the Chief Executive Officer of Boehringer Mannheim -
Therapeutics from October 1993 to May 1994 and as the Chief Executive
Officer of Corange Ltd. from May 1993 to May 1994. Dr. Link served as
the Chairman of Sandoz Pharma Ltd. from April 1992 to April 1993. Dr.
Link served in various management positions at Sandoz Ltd. and Sandoz
Pharmaceuticals Corporation from October 1971 to April 1992. Dr. Link i
also a director of Access Pharmaceuticals, Inc., Alexion Pharmaceutical
Inc., Cell Therapeutics, Inc., CytRx Corp., Discovery Laboratories,
Inc., Human Genome Sciences, Inc. and Procept, Inc.
Cary L. Queen, Ph.D., has been a director since January 1987 and
has served as Vice President, Research, since April 1989 and as Senior
Vice President since June 1993. Previously, Dr. Queen held positions at
the National Institutes of Health from 1983 to 1986, where he studied
the regulation of genes involved in the synthesis of antibodies. Dr.
Queen received his Ph.D. in Mathematics from the University of
California at Berkeley and subsequently served as an Assistant Professo
of Mathematics at Cornell University.
Jon S. Saxe, Esq., has been a director of the Company since March
1989 and has served as President of the Company since January 1995. Mr.
Saxe was a consultant to the Company from June 1993 to December 1994. H
has served as President of Saxe Associates since May 1993. Mr. Saxe
served as the President, Chief Executive Officer and a director of
Synergen, Inc. from October 1989 to April 1993. Mr. Saxe served as Vice
President, Licensing & Corporate Development for Roche from August 1984
through September 1989, and Head Patent Law from September 1978 through
September 1989. Mr. Saxe is also a director of INCYTE Pharmaceuticals
Inc., RiboGene, Inc., and ID Biomedical Corporation. Mr. Saxe received
his J.D. from George Washington University School of Law and his LL.M.
from New York University School of Law.
Meetings of the Board of Directors
During the 1997 fiscal year, the Board held eight meetings
(including actions by unanimous written consent). During that period,
the Audit Committee of the Board held five meetings and the
Compensation Committee of the Board held three meetings (including
actions by unanimous written consent). The Company does not have a
Nominating Committee of the Board. Attendance by the directors at all
meetings of the Board and committees was 100% in the Company's 1997
fiscal year.
The members of the Audit Committee during the 1997 fiscal year
George M. Gould and Stanley Falkow. The functions of the Audit
Committee include (i) recommending the independent auditors to the
Board, (ii) reviewing and approving the planned scope of the annual
audit, proposed fee arrangements and the results of the annual audit,
(iii) reviewing the accounting and reporting principles applied by the
Company in preparing its financial statements, (iv) reviewing the
internal financial, operating and accounting controls and finance and
accounting personnel of the Company with the independent auditors, (v)
overseeing compliance with the Foreign Corrupt Practices Act, (vi)
reviewing the Company's financial press releases with the auditors and
management and (vii) reviewing and approving (or rejecting) any
transaction that may present potential for conflict of interest, such
as with the Company's officers, directors or significant stockholders.
The members of the Compensation Committee during the 1997 fisca
were George M. Gould and Max Link. The functions of the Compensation
Committee include (i) designing and implementating competitive
compensation policies to attract and retain key personnel, (ii)
reviewing and formulating policy and determining or making
recommendations to the Board regarding compensation of the Company's
executive officers with respect to salaries, bonuses, and other
compensation, (iii) administering the Company's 1991 Stock Option
Plan, as amended (the "Option Plan") and granting or recommending
grants of stock options and shares of stock to the Company's executive
officers and directors under the Option Plan and (iv) establishing and
reviewing Company policies in the area of management perquisites.
PROPOSAL TWO
APPOINTMENT OF INDEPENDENT AUDITORS
The Board has selected Ernst & Young LLP to serve as independen
auditors to audit the financial statements of the Company for fiscal
1998. Ernst & Young LLP (or its predecessors) has acted in such
capacity since its appointment for fiscal 1986. Representatives of
Ernst & Young LLP will be present at the annual meeting, will be given
the opportunity to make a statement if they so desire and will be
available to respond to appropriate questions.
THE BOARD RECOMMENDS A VOTE "FOR" THIS PROPOSAL. In the event
ratification by the stockholders of the appointment of Ernst & Young
LLP as the Company's independent auditors is not obtained, the Board
will reconsider such appointment.
The affirmative vote of a majority of the votes cast at the ann
meeting of stockholders, at which a quorum representing a majority of
all outstanding shares of Common Stock of the Company is present and
voting, either in person or by proxy, is required to ratify the
appointment of Ernst & Young LLP as the Company's independent auditors.
Abstentions and broker non-votes will each be counted as present for
purposes of determining the presence of a quorum, but will not be
counted as having been voted on the proposal.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding
beneficial ownership of the Company's Common Stock as of December 31,
1997 by (i) each person who is known by the Company, based on the
records of the Company's transfer agent and relevant documents filed
with the U.S. Securities and Exchange Commission ("SEC"), to own
beneficially more than 5% of the outstanding shares of the Company's
Common Stock, (ii) each member of the Board, (iii) the Chief Executive
Officer of the Company and the four other most highly compensated
executive officers of the Company as of December 31, 1997 ("Named
Executive Officers"), and (iv) all members of the Board and executive
officers of the Company as a group. The address of each named
individual is the address of the Company.
Amount of
Name of Beneficial Owner or Group and Nature Beneficial
of Beneficial Ownership 1 Ownership
- -------------------------------------------------- -----------------
Soros Fund Management, LLC 2 966,400
888 Seventh Avenue, 33rd Floor
New York, NY 10106
LGT Asset Management, Inc. 2 964,300
Chancellor LGT Asset Management,
Inc.
Chancellor LGT Trust Company
50 California St., 27th Floor
San Francisco, CA 94111
Cary L. Queen, Ph.D. 3 920,500
Laurence Jay Korn, Ph.D. 4 900,632
Jon S. Saxe 5 175,889
Douglas O. Ebersole 6 81,562
Stanley Falkow, Ph.D. 7 75,534
Daniel J. Levitt, M.D., Ph.D. 8 35,100
George M. Gould 9 27,000
Max Link, Ph.D. 10 23,333
Jurgen Drews, M.D. 11 6,000
All directors and executive officers 2,245,550
as a group (11 persons)3, 4, 5, 6, 7, 8, 9,
10, 11, 12
*Less than 1%
1 Except as indicated in the footnotes to this table, the persons
in the table have sole voting and investment power with respect to
all shares of Common Stock shown as beneficially owned by them,
subject to community property laws where applicable.
2 Based solely on information as filed with the SEC.
3 Includes 183,750 shares issuable upon the exercise of options w
are currently, or which will become, exercisable within 60 days after
December 31, 1997. Also includes 2,600 shares held in trusts for the
benefit of certain of Dr. Queen's relatives with respect to which Dr.
Queen disclaims beneficial ownership.
4 Includes 233,333 shares issuable upon the exercise of options w
are currently, or which will become, exercisable within 60 days after
December 31, 1997. Also includes 6,667 shares held as separate
property by Dr. Korn's spouse with respect to which Dr. Korn
disclaims beneficial ownership.
5 Includes 158,708 shares issuable upon the exercise of options w
are currently, or which will become, exercisable within 60 days after
December 31, 1997.
6 Includes 80,208 shares issuable upon the exercise of options wh
are currently, or which will become, exercisable within 60 days after
December 31, 1997.
7 Includes 30,834 shares issuable upon the exercise of options wh
are currently, or which will become, exercisable within 60 days after
December 31, 1997.
8 Includes 33,333 shares issuable upon the exercise of options wh
are currently, or which will become, exercisable within 60 days after
December 31, 1997.
9 Includes 27,000 shares issuable upon the exercise of options wh
are currently, or which will become, exercisable within 60 days after
December 31, 1997.
10 Includes 5,417 shares issuable upon the exercise of options whi
currently, or which will become, exercisable within 60 days after
December 31, 1997.
11 Includes 6,000 shares issuable upon the exercise of options whi
currently, or which will become, exercisable within 60 days after
December 31, 1997.
12 Except for shares and options held by Fred Kurland, an officer
resigned effective in February 1998, total includes all directors and
officers who served in that capacity as of December 31, 1997 and 779,41
shares issuable upon the exercise of options beneficially owned
by such directors and officers which are currently, or which will
become, exercisable within 60 days after December 31, 1997.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Effective in June 1997, the Company entered into a Sponsored Re
Agreement with Stanford University to provide aggregate funding and
equipment support of up to $3.4 million over a period of 3 years in
support of the laboratory of Dr. Falkow, a Distinguished Investigator
and Director of the Company. In 1997, the Company provided
approximately $1.0 million in funding and equipment support under this
commitment. The funding arrangement provides the Company with certain
exclusive rights to intellectual property resulting from the research
efforts in Dr. Falkow's laboratory during the funding period. The amoun
of annual funding from the Company is subject to reduction in the event
that Dr. Falkow obtains other grants or financial support for his
laboratory. In addition, the Company paid Dr. Falkow approximately
$70,000 in 1997 for services in his capacity as a Distinguished
Investigator for the Company.
EXECUTIVE COMPENSATION AND OTHER MATTERS
Executive Officers
Certain information with respect to the Company's executive off
as of December 31, 1997, except as otherwise noted, is set forth below.
See "NOMINATION AND ELECTION OF DIRECTORS" for information regarding
Drs. Korn and Queen and Mr. Saxe, three of the Company's executive
officers.
Daniel J. Levitt, M.D., Ph.D., has served as Senior Vice Presid
Clinical and Regulatory Affairs of the Company since November 1996. Fro
February 1995 to October 1996 he served as Vice President of Drug
Development and Chief Medical Officer of Geron Corporation. From Januar
until January 1995, Dr. Levitt held various positions at Sandoz Pharma
Ltd., most recently as Worldwide Head of Oncology Clinical Research and
Development. From 1986 to 1990, Dr. Levitt held various positions with
Roche, including Director of Clinical Oncology and Immunology. He
received post-graduate training at Yale-New Haven Hospital and the
University of Chicago Pritzker School of Medicine. Dr. Levitt holds an
M.D. and Ph.D. from the University of Chicago Pritzker School of
Medicine.
William R. Benjamin, Ph.D. has served as the Company's Vice
President, Drug Discovery since July 1997. Prior to joining the
company, from November 1982 to June 1997, Dr. Benjamin was an employee
of Roche most recently serving as Vice President of Inflammation and
Autoimmune Diseases. At Roche, Dr. Benjamin was responsible for leadin
the drug discovery activities of a multidisciplinary research departmen
in the areas of inflammatory and immune-based diseases. From January
1981 to November 1982, Dr. Benjamin was a postdoctoral fellow at the
National Institute of Dental Research at the National Institutes of
Health. Dr. Benjamin received his Ph.D. degree from the University of
South Florida, College of Medicine.
Christine Booker has served as the Company's Vice President, Qu
and Compliance since February 1996. Prior to joining the Company, from
February 1995 through January 1996, Ms. Booker served as a consultant t
the Company. From August 1994 to July 1996, Ms. Booker served as the
principal consultant for Booker Associates. From March 1992 to October
1994, Ms. Booker served as Director, Quality Assurance for Synergen,
Inc. From October 1980 to February 1992, Ms. Booker served in various
positions at Genentech, Inc., including Associate Director, Technical
Operations. Ms. Booker received her B.S. in Chemistry from DePaul
University.
Douglas O. Ebersole has served as the Company's Vice President,
Licensing, General Counsel and Secretary since July 1992 and in April
1996 was appointed to the additional position of Vice President,
Corporate Services. Prior to joining the Company, he served first as
Associate General Counsel and later as General Counsel at NeXT Computer
Inc.("NeXT"). Prior to joining NeXT in 1989, he was a partner in the co
department of the law firm Ware & Freidenrich. Mr. Ebersole received hi
J.D. from Stanford Law School.
Fred Kurland served as the Company's Vice President and Chief
Financial Officer from February 1996 to February 1998. Prior to joining
the Company, from May 1995 to January 1996, Mr. Kurland served as Vice
President, Chief Financial Officer and Secretary of Applied Immune
Sciences, Inc. From February 1991 to April 1995, Mr. Kurland served as
Vice President and Controller of Syntex Corporation ("Syntex"). From
1981 to February 1991, Mr. Kurland served in various senior financial
positions in corporate and operations functions at Syntex. Mr. Kurland
received his J.D. and M.B.A. degrees from the University of Chicago.
Compensation of Executive Officers
The following table sets forth information concerning the
compensation of the Named Executive Officers, whose salary and bonus
exceeded $100,000 for the fiscal year ended December 31, 1997, during
the fiscal years ended December 31, 1997, 1996 and 1995:
SUMMARY COMPENSATION TABLE
Annual Compensation 1
------------------------------
--------
Other
Annual Restri
Salary Compen- Stoc
Name and Principal Positions Year ($) sation($) ($)
- ---------------------------- --------- --------- ---------- --------
Laurence Jay Korn 1997 377,051 -- --
Chief Executive Officer 1996 356,220 -- --
1995 320,300 -- --
Jon S. Saxe 1997 360,747 -- --
President 1996 339,915 -- --
1995 307,610 32,270 2 --
Cary L. Queen 1997 271,209 -- --
Senior Vice President 1996 256,220 -- --
and Vice President, Research 1995 240,785 -- --
Daniel J. Levitt 1997 262,331 -- --
Senior Vice President, 1996 71,733 -- --
Clinical and Regulatory Affairs 1995 -- -- --
Douglas O. Ebersole 1997 243,214 -- --
Vice President, 1996 224,255 -- --
Corporate Services and 1995 201,905 -- --
Licensing, General
Counsel and Secretary
- ----------------
1 Compensation deferred at the election of the executive officer
the Company's 401(k) Plan is included in the year earned. Includes
life insurance premiums paid by the Company. No bonuses were paid in
1995, 1996 or 1997 to the named individuals and the bonus column is
omitted from the table.
2 Amounts received as compensation in connection with Mr. Saxe's
relocation to the Company's headquarters office.
Stock Options Granted in Fiscal 1997
The following table provides the specified information concerni
grants of options to purchase the Company's Common Stock made during
the fiscal year ended December 31, 1997 to the Named Executive
Officers:
OPTIONS GRANTED IN THE LAST FISCAL YEAR
Individual Grants
- ------------------------------------------------------------------
% of
Total Po
Number of Options V
Securities Granted An
Underlying to Exercise Pri
Options Employees or Base Expir-
Granted in Fiscal Price ation ---
Name (#) 1,2 Year(%) ($/Sh) 3 Date 5
- --------------------- ----------- --------- --------- --------- ---
Laurence Jay Korn -- -- -- --
Jon S. Saxe -- -- -- --
Cary L. Queen -- -- -- --
Daniel J. Levitt -- -- -- --
Douglas O. Ebersole 18,750 4.2 35.125 8/21/07
- ----------------
1 Options granted vest over a four year period at the rate of one
fourth one year after the date specified at the time of grant
(typically the hire date or an anniversary of the hire date) and 1/48
per month thereafter for each full month of the optionee's continuous
employment with the Company. Only vested shares are exercisable.
All outstanding options held by employees have terms of ten years.
The Company has never granted any Stock Appreciation Rights and
references to this security are omitted.
2 Under the Option Plan, the Board retains some discretion to mod
the terms of outstanding options; see "Change of Control
Arrangements, Termination of Employment Arrangements."
3 All options granted to employees were granted at market value o
date of grant.
4 Potential gains are net of exercise price, but before taxes
associated with exercise. These amounts represent certain assumed
rates of appreciation only, based on the Securities and Exchange
Commission's rules. Actual gains, if any, on option exercises are
dependent on the future performance of the Company's Common Stock,
overall market conditions and the optionholder's continued employment
through the vesting period. Any amounts reflected in this table may
not necessarily be achieved. As an illustration of the effects such
assumed appreciation would have on a stockholder's investment, one
share of stock purchased at $40.00 in 1997 (closing price as of
December 31, 1997) would yield profits of $25.16 per share at 5%
appreciation per year over ten years or $63.75 per share at 10%
appreciation per year over the same period. The "potential
realizable values" in this table are calculated using the exercise
price of the stock options and assuming 5% or 10% appreciation per
year from that price over the ten year term of the options granted.
Option Exercises and Fiscal 1997 Year End Values
The following table provides the specified information concerni
exercises of options to purchase the Company's Common Stock in the
fiscal year ended December 31, 1997, and unexercised options held as of
December 31, 1997, by the Named Executive Officers:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END VALUES 1
Shares Number of Securities
Acquired Underlying Unexercised
on Value Options at 12/31/97 (#)
Exercise Realized ------------------------
Name (#) ($) Unexercisable Exercisabl
- --------------------- --------- ------------ ------------ -----------
Laurence Jay Korn -- -- 90,625 209,37
Jon S. Saxe -- -- 75,625 134,37
Cary L. Queen -- -- 62,500 167,50
Daniel J. Levitt -- -- 72,917 27,08
Douglas O. Ebersole -- -- 46,458 77,29
- ----------------
1 The Company has never granted any Stock Appreciation Rights and
references to this security are omitted.
2 See footnote 1 of the "OPTION GRANTS IN THE LAST FISCAL YEAR" t
for information concerning the vesting provisions of these stock
options.
3 Based on a value of $40.00 which was the closing price of the
Company's Common Stock as of December 31, 1997.
Compensation of Directors
As of December 31, 1997, each director who is not an employee o
Company was authorized to receive cash compensation in the amount of
$3,000 each fiscal quarter, and an additional $3,000 per year for each
committee membership, or such other amount as the Board may approve,
and may be reimbursed for expenses incurred in attending each Board and
committee meeting.
As of December 31, 1997, the Company's Outside Directors' Stock
Option Plan (the "Directors' Plan") provided for the initial automatic
grant of an option to purchase 30,000 shares of the Company's Common
Stock to each director of the Company who is not an employee of the
Company ("Outside Directors"). The Directors' Plan also provides for a
subsequent grant to Outside Directors to purchase 30,000 shares of the
Company's Common Stock on the date five years from the date of the
initial grant; provided, however, that if the director was granted an
option under the Option Plan prior to February 14, 1992 (the date of
adoption of the Directors' Plan), the subsequent grant shall be on the
date five years from the date of such grant. Options under the
Directors' Plan are granted at the fair market value of the Company's
Common Stock on the date of grant and vest as to 1/60 of the shares
subject to the option per month until such time as the optionee ceases
to be a director for any reason. Options granted under the Directors'
Plan to date have terms of either 6 or 10 years from the date of grant.
Change of Control Arrangements, Termination of Employment
Arrangements
Options issued to full-time employees under the Option Plan con
provisions pursuant to which an additional twenty five percent (25%) of
the total number of options subject to vesting under any outstanding
employee stock option agreement will vest if either (a) in connection
with a "transfer of control," an acquiring corporation fails to assume
the outstanding option or to substitute a substantially equivalent
option for the acquiring corporation's stock, or (b) within one year
following a "transfer of control," the option holder is either
terminated by the Company or its successor without cause or resigns fro
employment within a reasonable time following "constructive
termination."
Under the terms of the Directors' Plan, in the event of the sal
dissolution, or liquidation of the Company, or a merger or
consolidation in which the Company is not the surviving or resulting
corporation or in which the stockholders of the Company immediately
before such event beneficially own, directly or indirectly, less than
50% of the voting securities of the surviving corporation immediately
after such event, and if the surviving corporation does not assume or
substitute new options for the outstanding options, the Board may, but
is not obligated to, provide that any unexercisable and/or unvested
portion of the outstanding options shall be immediately exercisable and
vested. Any options which are neither assumed nor substituted for by
the acquiring corporation nor exercised as of the date of the transfer
of control shall terminate effective as of the date of the transfer of
control.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") for 1997 was compo
two non-management directors of the Board of Directors (the "Board").
The Committee is responsible for administering the policies governing
annual compensation of executive officers, and after considering the
performance of the Company's executive officers, granting or
recommending to the Board the grant of stock options to executive
officers under the Company's 1991 Stock Option Plan, as amended, and
granting or recommending to the Board the annual salary component of
each executive officer's compensation.
Compensation Policies
The goals of the Company's compensation policy are to attract,
and reward executive officers who contribute to the overall success of
the Company by offering compensation which is competitive in the
industry, to motivate executives to achieve the Company's business and
scientific objectives and to align the interests of officers with the
long-term interests of stockholders. The Company currently uses salary
and stock options to meet these goals.
Compensation Components
Subject to approval by the Board, salaries and stock option gra
for executive officers are initially set based on negotiation with
individual executive officers at the time of recruitment and taking int
consideration total compensation for comparable positions among
companies in the Company's industry or in industries which employ
individuals of similar education and background to the executive office
being recruited, salaries of and stock option grants to the other
executive officers of the Company, the individual's experience,
reputation in his or her industry and expected contributions to the
Company. Through 1997, performance reviews and salary adjustments were
generally performed for each executive officer at or around the month i
which his or her anniversary date of hire occurred and at such other
times as the Committee became aware of a significant variance in an
executive officer's current compensation from his or her peers in the
Company or similar industries. Beginning in 1998, in connection with
the implementation of a new performance review system for all employees
of the Company, executive officers are reviewed annually following the
end of the preceding calendar year. Thus, the review by the Committee
of the performance of all executive officers for the year ended Decembe
31, 1997 occurred in early 1998. The Company's Human Resources staff
provides the Committee with compensation surveys and other data to
enable the Committee to review the reasonableness of compensation paid
to executive officers of the Company and to compare the Company's
compensation package with compensation awarded by companies in similar
industries. As such, the group of companies used for compensation
comparison purposes is not limited to the biotechnology industry and is
not necessarily the same group of companies that comprise the industry
group index for comparison of stockholder returns.
The size of annual salary adjustments for individual executive
officers are primarily based on the Committee's determination of the
extent to which the Company has achieved its goals and an executive
officer has met or exceeded individual goals, on information concerning
compensation of individuals with comparable responsibilities at
comparable companies in similar industries and on the compensation of
other executive officers of the Company. Individual goals of executive
officers are determined in consultation with management and generally
relate to strategic goals within the responsibility of the executive
officer, such as the identification of new research targets, the
achievement of critical milestones in the Company's development of its
products and capabilities, the ability to enter into new licensing
arrangements using the Company's technology and relationships necessary
to commercialize its products or obtain additional product rights and
the ability to recruit and retain qualified employees. The Chief
Executive Officer's goals also include goals relating to the Company's
financial performance, measured primarily by the adherence to budgeted
expense levels and maintenance of adequate cash reserves.
The Company's policy is that a significant component of the ann
compensation of each executive officer be related to his or her
individual performance and the performance of the Company. The Company
does not award annual cash bonuses tied to such performance. Rather,
the Company believes that the incentive provided by stock ownership and
stock options is currently sufficient to motivate executive officers.
The Committee believes that employee equity ownership is highly
motivating, provides a major incentive to employees in building
stockholder value and serves to align the interest of employees with
stockholders. The Committee generally considered stock option grants t
executive officers upon hiring and, until December 31 1996, every thir
year thereafter. Beginning in 1997, the Company implemented a merit-
based stock option compensation program for all employees of the Compan
pursuant to which the Committee grants or considers recommending stock
option grants to executive officers annually beginning approximately tw
years following the date of hire of an executive officer.
During 1997, the Committee considered and recommended to the Bo
additional stock option grant to the Vice President, Licensing and
Corporate Services, General Counsel and Secretary of the Company, in
accordance with the new program to consider stock option grants
annually. All stock options recommended by the Committee for grant by
the Board had an exercise price equal to the closing price of the
Company's Common Stock as quoted on The Nasdaq Stock Market on or about
the date of grant. The Committee believes that these stock options wil
provide value to the executive officer only when the price of the
Company's Common Stock increases over the exercise price.
Chief Executive Officer's Compensation
The Chief Executive Officer's base salary for 1997 was recommen
the Board of Directors by the Committee based upon the Committee's
subjective weighting and consideration of a number of factors, includin
the degree to which he met his individual goals (which related to the
financial performance of the Company, based substantially on the
Company's budget for 1997, maintenance of adequate cash reserves, the
Company's ability to successfully enter into and maintain collaborative
and licensing relationships with pharmaceutical and biotechnology
companies, the scientific and clinical success of the Company's researc
efforts and the successful recruitment and retention of qualified
individuals as employees of the Company) as reviewed by the Committee,
the relative compensation level of the Chief Executive Officer compared
to the compensation levels of the other executive officers of the
Company and the compensation paid to other chief executive officers of
selected group of biotechnology companies which the Committee believed
to be representative of the industry. The market value of the Company'
stock was not considered in the determination of the Chief Executive
Officer's base salary. The Chief Executive Officer's base salary was
set by the Board of Directors at $375,000 for 1997, an increase from
$355,000 in 1996.
COMPENSATION CO
George M. Gould
Max Link
Comparison of Stockholders Returns
Comparison of Cumulative Total 1 From January 1, 1993 2 to December 31,
[PERFORMANCE GRAPH]
Protein Design Labs (PDL)
AMEX-Biotech (AMEX)
NASDAQ
1/1/93 3/31/93 6/30/93 9/30/93 12/31/93 3/31
--------- --------- --------- --------- --------- -----
PDL $100 64 103 119 204
AMEX $100 68 68 65 68
NASDAQ $100 102 104 113 115
9/30/94 12/31/94 3/31/95 6/30/95 9/30/95 12/31
--------- --------- --------- --------- --------- -----
PDL 164 133 169 175 167
AMEX 53 48 45 53 67
NASDAQ 114 112 122 140 157
6/30/96 9/30/96 12/31/96 3/31/97 6/30/97 9/30
--------- --------- --------- --------- --------- -----
PDL 189 213 307 253 240
AMEX 82 82 85 82 84
NASDAQ 180 186 195 185 219
1 Annual relative change in the cumulative total return on the
Company's Common Stock with the Center for Research in Securities
Prices (CRSP) Total Return Index for The Nasdaq Stock Market (U.S.
Companies) and the American Stock Exchange Biotechnology Index
("AMEX-Biotech"). AMEX-Biotech is calculated using equal dollar
weighting methodology.
2 Assumes that $100.00 was invested on January 1, 1993, in the
Company's Common Stock at the Company's closing sale price on
December 31, 1992 and at the closing sales price for each index on
that date and that all dividends were reinvested. No cash
dividends have been declared on the Company's Common Stock.
Stockholder returns over the indicated period should not be
considered indicative of future stockholder returns.
SECTION 16(a) REPORTING
Each director and each executive officer of the Company who is
subject to Section 16 of the Securities Exchange Act of 1934 is
required by Section 16(a) of such act to report to the SEC by a
specified date his or her transactions in the Company's securities.
To the best of the Company's knowledge, all reports relating to stock
ownership and such other reports required to be filed during 1997
under Section 16(a) by the Company's directors and executive officers
were timely filed, with the exception of the Initial Statement of
Beneficial Ownership of Securities on Form 3 for Dr. Benjamin in
August 1997, and a Statement of Changes in Beneficial Ownership on
Form 4 for Dr. Drews in or about May 1997, which forms were filed
late.
STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING
Proposals of stockholders intended to be presented at the next
meeting of stockholders of the Company (i) must be received no later
than January 10, 1999 by the Company at its offices at 2375 Garcia
Avenue, Mountain View, California 94043 (through September 30, 1998) or
at its offices at 34801 Campus Drive, Fremont, California 94555
(October 1, 1998 and thereafter), and (ii) must satisfy the conditions
established by the SEC for stockholder proposals to be included in the
Company's Proxy Statement for that meeting.
TRANSACTION OF OTHER BUSINESS
At the date of this Proxy Statement, the only business which th
Board intends to present or knows that others will present at the
annual meeting is as set forth above. If any other matter or matters
are properly brought before the annual meeting, or any adjournment
thereof, it is the intention of the persons named in the accompanying
form of Proxy to vote the Proxy on such matters in accordance with
their best judgment.
By Order of the Board
of Directors
Douglas O. Ebersole
Secretary
Dated: May 5, 1998
Side 1
PROXY
PROTEIN DESIGN LABS, INC.
Proxy for Annual Meeting of Stockholders
Solicited by the Board of Directors
The undersigned hereby appoints Laurence Jay Korn and Douglas O
Ebersole, and each of them, as proxies for the undersigned, with full p
substitution, to represent the undersigned and to vote all of the share
stock in Protein Design Labs, Inc. (the "Company") which the undersigne
entitled to vote at the annual meeting of stockholders of the Company t
held at the Company's principal offices, located at 2375 Garcia Avenue,
Mountain View, California 94043, on Friday, June 19, 1998 at 8 a.m. loc
time, and at any adjournment thereof (1) as hereinafter specified upon
proposals listed on the reverse side and as more particularly described
Company's Proxy Statement, receipt of which is hereby acknowledged, and
their discretion upon such other matters as may properly come before th
meeting.
The shares represented hereby shall be voted as specified, and
specification is made, such shares shall be voted FOR the proposals lis
the reverse side.
The undersigned hereby further confers upon said proxies, and e
them, or their substitute or substitutes, discretionary authority to vo
respect to all other matters which may properly come before the meeting
continuation or adjournment thereof.
Side 2
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMP
Please mark
your votes as
this [X]
1. ELECTION OF DIRECTORS listed below: A vote FOR the following pro
recommended by the Board of
Nominees: Jurgen Drews, M.D. Directors:
Laurence Jay Korn, Ph.D.
Max Link, Ph.D. 2. To ratify the appointment
Ernst & Young LLP as the
Company's independent aud
for the fiscal year endin
December 31, 1998.
FOR ALL WITHHELD FOR AGAINST
(except as AUTHORITY [ ] [ ]
noted below) for all
[ ] [ ]
INSTRUCTION: To withhold authority EVEN IF YOU ARE PLANNING TO
to vote for any individual nominee write THE MEETING IN PERSON, YOU
that nominee's name in the URGED TO SIGN AND MAIL THE
space provided below. IN THE RETURN ENVELOPE SO T
YOUR STOCK WILL BE REPRESEN
___________________________________ AT THE MEETING.
The undersigned hereby acknowledges receipt of (a) the Notice of Annual
Meeting, (b)accompanying Proxy Statement and (c) an Annual Report of th
Company for the fiscal year ended December 31, 1997, and hereby express
revokes any and all proxies heretofore given or executed by the undersi
with respect to the shares of stock represented by this Proxy, and by f
this Proxy with the Secretary of the Company, gives notice of such revo
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOS
ENVELOPE.
Signature(s) _____________________________________ DATE _______________
Please sign exactly as names appear above. When shares are held by joi
tenants both should sign. When signing as attorney, executor, administ
trustee or guardian, please give full titles as such. If a corporation
sign in full corporate name by president or other authorized officer.
partnership, please sign in partnership name by authorized person.
