SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
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NABI
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LOGO
5800 PARK OF COMMERCE BOULEVARD, N.W.
BOCA RATON, FLORIDA 33487
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 29, 1998
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The Annual Meeting of Stockholders of Nabi will be held on Friday, May 29,
1998 at ten o'clock in the forenoon, Eastern Daylight Time, in the Palm
Theater, Embassy Suites Hotel, 661 N.W. 53rd Street, Boca Raton, Florida, for
the following purposes:
1. To elect a Board of Directors to serve for the ensuing year and until
their successors are duly elected and qualified.
2. To consider and act upon such other business and matters or proposals as
may properly come before said Annual Meeting or any adjournment or
adjournments thereof.
The Board of Directors has fixed the close of business on April 14, 1998 as
the record date for determining the stockholders having the right to receive
notice of and to vote at said Annual Meeting.
By Order of the Board of Directors
Constantine Alexander
Secretary
Boca Raton, Florida
April 24, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN,
DATE AND MAIL PROMPTLY THE ENCLOSED PROXY WHICH IS BEING SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS. A RETURN ENVELOPE WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES IS ENCLOSED FOR THAT PURPOSE.
LOGO
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PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
MAY 29, 1998
This Proxy Statement is furnished in connection with the solicitation by and
on behalf of the Board of Directors of Nabi (the "Company") of Proxies for use
at the Annual Meeting of Stockholders of the Company to be held, pursuant to
the accompanying Notice of Annual Meeting, on Friday, May 29, 1998 at 10:00
a.m., and at any adjournment or adjournments thereof (the "Annual Meeting").
Action will be taken at the Annual Meeting to elect a Board of Directors to
serve for the ensuing year.
If a stockholder specifies in the Proxy accompanying this Proxy Statement
(the "Proxy") how it is to be voted, it will be voted in accordance with such
specification, but any Proxy which is signed and returned and which does not
specify how it is to be voted will be voted "for" the election of the nominees
for directors named herein. Any stockholder giving a Proxy in the accompanying
form retains the power to revoke it at any time before it is exercised by
delivering a written revocation to the Secretary of the Company, by executing
and returning to the Company a proxy bearing a later date or by attending the
Annual Meeting and voting his or her shares in person. Any stockholder who
attends the Annual Meeting in person will not be deemed thereby to revoke the
stockholder's Proxy unless such stockholder affirmatively indicates thereat
his or her intention to vote the shares in person.
The Company's principal executive offices are located at 5800 Park of
Commerce Boulevard, N.W., Boca Raton, Florida 33487. The Company mailed this
Proxy Statement and the Proxy on or about April 24, 1998 to its stockholders
of record at the close of business on April 14, 1998.
ANNUAL REPORT AND INDEPENDENT PUBLIC ACCOUNTANTS
The Company's Annual Report to Stockholders for the fiscal year ended
December 31, 1997, including financial statements and the report of Price
Waterhouse LLP thereon, is being mailed herewith to each of the Company's
stockholders of record at the close of business on April 14, 1998.
Representatives of Price Waterhouse LLP are expected to be present at the
Annual Meeting, will have the opportunity to make a statement if they desire
to do so and will be available to respond to appropriate questions.
It has been the practice of the Company's Board of Directors at its first
meeting following the annual meeting of stockholders to approve independent
certified public accountants for the ensuing year.
VOTING SECURITIES
The holders of record of shares of Common Stock of the Company at the close
of business on April 14, 1998 may vote at the Annual Meeting. On that date,
there were outstanding and entitled to vote 34,893,934 shares of Common Stock.
Each stockholder has one vote at the Annual Meeting for each share of Common
Stock held of record on said date. As long as a quorum (a majority of issued
and outstanding shares of Common Stock) is present in person or by proxy at
the Annual Meeting, the Directors shall be elected by a plurality of the votes
cast at the Annual Meeting by the holders of shares entitled to vote thereat.
Votes may be cast in favor of the election of each of the nominees for
director or withheld; votes that are withheld will have no effect on the
outcome of the election of directors.
ITEM I
ELECTION OF DIRECTORS
The Company's By-laws provide that the Board of Directors shall consist of
not less than three nor more than 15 directors, the exact number to be fixed
by the Board of Directors. The Board of Directors has fixed the number of
directors for the ensuing year at nine. In the event that any of the nominees
becomes unavailable (which is not now anticipated by the Company), the persons
named as Proxies have discretionary authority to vote for a substitute. The
Board of Directors has no reason to believe that any of the nominees will be
unwilling or unable to serve if elected. The By-laws provide that, within the
limits above specified, the number of directors may at any time be increased
or decreased by the vote of the Board. No decrease in the number of directors,
however, shall affect the term of any director in office.
Each of the following directors has been nominated for reelection at the
Annual Meeting.
JOHN C. CARLISLE, age 51, has served as Executive Vice President and Chief
Operating Officer since March 1994 and was elected a director in August 1995.
Mr. Carlisle joined Nabi in January 1994; previously, from August 1989 to
January 1994 he was President and Chief Executive Officer of Premier
BioResources, Inc. From June 1981 to August 1989 he served as Director of
Plasma Supply for Alpha Therapeutic Corporation (formerly Abbott Scientific
Products) ("Alpha").
DAVID L. CASTALDI, age 58, has been a director of Nabi since July 1994. Mr.
Castaldi currently is acting as a consultant to and an investor in medical
device and life science companies. Since August 1996, he also has been a
consultant to and Chief Executive Officer of Biolink Corporation, a medical
device company. He was one of the founders of BioSurface Technology, Inc., and
served as its President and Chief Executive Officer and as a director from
March 1987 until it was acquired by Genzyme Corporation in December 1994. From
1971 to 1987, Mr. Castaldi was employed by Baxter Travenol Laboratories, Inc.
where he served, from 1977 to 1987, as President of the Hyland Therapeutics
Division, a worldwide manufacturer and marketer of therapeutic biological
pharmaceuticals. Mr. Castaldi also serves on the Board of Directors of Ergo
Science Corp.
JOSEPH C. COOK, JR., age 56, has been a director of Nabi since November
1995. Previously, he had been a director of Univax Biologics, Inc. ("Univax")
from September 1994 until its merger with and into Nabi in November 1995. Mr.
Cook is a founder and principal of Life Sciences Advisors, LLC, a senior level
management consulting firm organized in 1994. Since January 1994, Mr. Cook
also has been President of Cambrian Associates, LLC, a management consulting
firm. In addition, since November 1994, Mr. Cook has served as a director and
Chairman of the Executive Committee of Amylin Pharmaceuticals, Inc, and since
March 1998 he also has served as that company's Chairman and Chief Executive
Officer. Mr. Cook retired as Group Vice President, Global Manufacturing,
Engineering and Corporate Quality at Eli Lilly and Co. ("Lilly"), a
pharmaceutical company, in 1993. Mr. Cook had been Group Vice President at
Lilly since 1992 and, prior to that time, had held various other management
positions at Lilly. Mr. Cook also serves on the Board of Directors of Dura
Pharmaceuticals, Inc. and Personnel Management, Inc.
BRIAN H. DOVEY, age 56, has been a director of Nabi since November 1995.
Prior to November 1995, he had been a director of Univax since February 1991
and Chairman of the Board of Directors of Univax since October 1991. Mr. Dovey
has been a general partner of Domain Associates, a venture capital investment
firm, since 1988. From 1986 to 1988, Mr. Dovey was President of Rorer Group,
Inc., a pharmaceutical company. Mr. Dovey also serves on the Board of
Directors of Connectics Corporation, Creative BioMolecules, Inc., Geron
Corporation, Trimeris Corporation and Vivus, Inc.
GEORGE W. EBRIGHT, age 60, has been a director of Nabi since November 1995.
Previously, he had been a director of Univax since May 1992. Until December
1994, Mr. Ebright was Chairman of the Board of Cytogen Corporation
("Cytogen"), a biopharmaceutical company, which he joined in February 1989 as
President, Chief Executive Officer and director. For 26 years prior to joining
Cytogen, Mr. Ebright held various management
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positions at SmithKline Beecham Corporation, including President and Chief
Operating Officer from 1987 to 1989. Mr. Ebright also serves on the Board of
Directors of The West Company and Arrow International.
DAVID J. GURY, age 59, has served as Nabi's Chairman of the Board, President
and Chief Executive Officer since April 3, 1992. Previously, since May 21,
1984, he was Nabi's President and Chief Operating Officer. He has been a
director of Nabi since 1984. From July 1977 until his employment by Nabi, Mr.
Gury was employed by Alpha as Director of Plasma Procurement (through October
1980), General Manager, Plasma Operations (through October 1981) and Vice
President, Plasma Supply (through May 1984). In these capacities, Mr. Gury had
executive responsibilities for plasma procurement and operation of
plasmapheresis centers.
RICHARD A. HARVEY, JR., age 48, has been a director of Nabi since 1992. He
has been President of Stonebridge Associates, LLC ("Stonebridge"), a Boston
investment banking firm, since January 1996, and was President of BNY
Associates, Incorporated ("BNYA"), Stonebridge's predecessor-in-interest, from
November 1991 to January 1996. Previously, from April 1988 to November 1991,
he was a Managing Director of BNYA, and from April 1980 to April 1988 he was a
Senior Vice President of Shearson Lehman Brothers.
LINDA JENCKES, age 50, has been a director of Nabi since 1997. Ms. Jenckes
has been a principal of Linda Jenckes & Associates, a legislative, media and
public affairs consulting firm which she founded, since February 1995.
Previously, from January 1982 to January 1995, Ms. Jenckes was Senior Vice
President of Health Insurance Association of America, a health and disability
insurance trade association. Ms. Jenckes also serves on the Board of Directors
of John Alden Financial Corporation and Vivus, Inc.
DAVID A. THOMPSON, age 56, has been a director of Nabi since 1990. Mr.
Thompson has been Chairman of the Board and Chief Executive Officer of
Diagnostic Marketing Strategies, a management consulting company which he
founded, since March 1996. In June 1995, Mr. Thompson retired as Senior Vice
President of Abbott Laboratories ("Abbott"). From June 1994 until his
retirement, Mr. Thompson was Abbott's Senior Vice President, Strategic
Improvement Processes. Previously, from August 1983 to June 1994, he was
Senior Vice President and President of Abbott's Diagnostic Division. Prior to
August 1983, Mr. Thompson served in various capacities at Abbott and its Ross
Laboratories Division, including Vice President of Personnel, Vice President
of the Materials Management Division, Vice President of Operations and
Director of Manufacturing and Engineering. Mr. Thompson serves on the Board of
Directors of Hycor Biomedical Incorporated, LifeCell Corporation and NeoPath
Incorporated and on the Technical Advisory Board of Frazier & Company, L.P.
CERTAIN INFORMATION REGARDING DIRECTORS
The Board of Directors of the Company, which held six meetings in 1997, has
formed the following committees:
The Compensation Committee, consisting of Messrs. Thompson, Harvey and
Ebright, whose function is to administer the Company's bonus plans; to
determine the compensation of the Company's Chief Executive Officer and other
executive officers; and to advise the Board of Directors on compensation
matters generally, to the extent the Board requests its advice. The
Compensation Committee met once in 1997.
The Stock Option Committee, consisting of Messrs. Thompson and Ebright,
whose function is to administer the Company's equity incentive plans. The
Stock Option Committee met once in 1997.
The Audit Committee, consisting of Messrs. Bogikes, Castaldi and Cook, whose
function is to make recommendations to the Board of Directors with regard to
the selection of the Company's independent auditors; to review the Company's
financial statements and the results of the independent audit, including the
adequacy of internal controls; and to oversee or conduct special
investigations or other functions on behalf of the Board of Directors. The
Audit Committee met once in 1997.
Each director of the Company attended more than 75% of the aggregate of (i)
all meetings of the Board held during the period for which he or she has been
a director and (ii) all meetings of each committee of which he or she was a
member during 1997.
3
Each non-employee director receives an annual fee of $10,000, and a fee of
$300 for each meeting of the Board or any committee thereof attended by the
director, unless the director participated in any such meeting by conference
telephone, in which case the fee is $100. Each non-employee director, pursuant
to the Company's 1995 Stock Plan for Non-Employee Directors, may elect to
receive his or her annual fee in shares of Common Stock in lieu of cash. Each
non-employee director also receives a stock option covering 5,000 shares of
Common Stock on the date on which he or she initially is elected to serve in
office, and a stock option covering 2,000 shares of Common Stock on the date
of each subsequent annual meeting of stockholders at which he or she is
elected to continue in office. No directors' fees are paid to directors for
attendance at committee meetings which are scheduled in connection with
meetings of the Board of Directors. Directors also are reimbursed for out-of-
pocket expenses incurred in connection with attendance at meetings of the
Board of Directors and its committees.
There are no family relationships among any of the directors or executive
officers of the Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Alfred J. Fernandez, who during the fiscal year ended December 31, 1997 was
Senior Vice President and Chief Financial Officer of the Company, filed a
delinquent report on Form 4 with the Securities and Exchange Commission on
March 12, 1997 reflecting one transaction.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table contains a summary of the annual, long-term and other
compensation of certain of the Company's executive officers, including its
Chief Executive Officer, for each of the Company's fiscal years ended December
31, 1997, 1996 and 1995.
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------- ------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) OPTIONS(#) COMPENSATION($)
- --------------------------- ---- --------- -------- ------------------ ------------ ---------------
David J. Gury............ 1997 439,962 -- 22,226 109,762 55,327(2)
Chairman of the Board, 1996 398,750 286,387 25,305 109,500 58,086
President and Chief 1995 348,750 410,260 25,832 104,444 56,274
Executive Officer
John C. Carlisle......... 1997 247,500 -- -- 53,623 21,064(2)
Executive Vice
President, 1996 236,250 148,930 3,004 56,335 20,864
Chief Operating Officer 1995 216,250 194,625 12,146 55,206 20,266
Alfred J. Fernandez...... 1997 222,004 -- -- 35,829 15,722(2)
Senior Vice President
and 1996 199,985 94,005 51,741 27,771 15,522
Chief Financial Officer 1995 166,327 126,711 4,669 28,271 16,368
Robert B. Naso(3)........ 1997 214,538 -- -- 34,038 12,864(2)
Senior Vice President, 1996 190,205 87,944 -- 27,667 12,864
Research and Development 1995 13,042 1,667 -- -- --
David D. Muth(4)......... 1997 202,692 -- 98,294 32,246 13,537(2)
Senior Vice President, 1996 65,769 46,252 44,393 50,000 12,077
Sales, Marketing and 1995 -- -- -- -- --
Business Development
- --------
(1) Includes $87,494 and $40,793 paid for relocation expenses for Mr. Muth in
1997 and 1996, respectively, and $37,937 paid for relocation expenses for
Mr. Fernandez in 1996.
(2) Includes premiums for life insurance in the amounts of $30,127, $864,
$522, $864 and $306 paid by the Company on behalf of, respectively,
Messrs. Gury, Carlisle, Fernandez, Naso and Muth during 1997. Also
4
includes contributions made by the Company under its 401(k) plan in the
amount of $3,200 on behalf of each of Messrs. Gury, Carlisle and Fernandez
and $1,231 on behalf of Mr. Muth during 1997. Also includes premiums for
split dollar life insurance contributions under the Company's Supplemental
Executive Retirement Program in the amounts of $22,000, $17,000, $12,000,
$12,000 and $12,000 on behalf of, respectively, Messrs. Gury, Carlisle,
Fernandez, Naso and Muth during 1997, which premium payments (less $1,052,
$701, $721, $560 and $428, respectively) are recoverable by the Company in
the event of the employee's termination of employment or death.
(3) Mr. Naso became an executive officer in November 1995.
(4) Mr. Muth joined Nabi in August 1996 and became an executive officer in
November 1996.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table contains information with respect to stock options
granted to the Chief Executive Officer and the named executive officers during
1997. The Company has not granted SARs.
INDIVIDUAL GRANTS
--------------------------------------------------
POTENTIAL REALIZABLE VALUE AT
NUMBER OF PERCENT OF ASSUMED ANNUAL RATES OF
SECURITIES TOTAL OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERMS
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION -----------------------------
GRANTED(#)(1) FISCAL YEAR PRICE($/SH) DATE 5%($) 10%($)
------------- ------------- ----------- ---------- -----------------------------
David J. Gury........... 109,762 11.1% $11.125 1/31/2007 767,945 1,946,123
John C. Carlisle........ 53,623 5.4% $11.125 1/31/2007 375,171 950,756
Alfred J. Fernandez..... 35,829 3.6% $11.125 1/31/2007 250,676 635,262
Robert B. Naso.......... 34,038 3.5% $11.125 1/31/2007 238,145 603,507
David D. Muth........... 32,246 3.3% $11.125 1/31/2007 225,608 571,734
- --------
(1) Each option becomes exercisable with respect to 25% of the shares subject
to the option on each of January 31, 1998, 1999, 2000 and 2001. The
Compensation Committee may at any time accelerate the exercisability of
any option. In addition, in the event of a change in control of the
Company (as determined by the Compensation Committee), the Committee may
take such actions with respect to the options as it considers equitable
and in the best interests of the Company. Under the terms of his
employment agreement, if Mr. Gury is terminated without cause (as
defined), one-half of his unvested options will immediately become
exercisable. Under the terms of their employment agreements, if any of
Messrs. Carlisle, Fernandez, Naso or Muth is terminated without cause (as
defined), all of his then-unvested stock options will become exercisable.
5
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table shows certain information concerning the aggregate
number and dollar value of all options exercised during the fiscal year ended
December 31, 1997 and the total numbers of unexercised options held by the
Chief Executive Officer and the named executive officers as of December 31,
1997.
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
UNDERLYING UNEXERCISED THE-MONEY OPTIONS AT
OPTIONS AT DECEMBER 31, DECEMBER 31,
1997(#) 1997($)
SHARES ----------------------- ------------------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
EXERCISE(#) REALIZED($)(1) UNEXERCISABLE UNEXERCISABLE(2)
----------- -------------- ----------------------- ------------------------
David J. Gury........... 45,000 360,975 319,540/263,748 189,111/--
John C. Carlisle........ -- -- 76,808/135,186 -- /--
Alfred J. Fernandez..... 38,000 326,610 124,170/76,826 75,938/--
Robert B. Naso.......... -- -- 80,397/57,258 -- /--
David D. Muth........... -- -- 12,500/69,746 -- /--
- --------
(1) Value is calculated based on the difference between the option exercise
price and the closing market price of the Common Stock on the date of
exercise multiplied by the number of shares to which the exercise relates.
(2) Calculated using the difference between the option exercise prices and
approximately $3.41, the closing price of the Company's Common Stock on
NASDAQ on December 31, 1997. The closing price of the Company's Common
Stock on NASDAQ on April 14, 1998 was $2.88.
EMPLOYMENT AGREEMENTS
The Company has employment agreements with each of the named executive
officers. The employment agreement with Mr. Fernandez was effective on August
1, 1995 and has a term expiring on July 31, 1998. The employment agreement
with Mr. Naso, effective December 1, 1995, also expires on July 31, 1998. The
employment agreement with Mr. Muth was effective on August 19, 1996 and has a
term expiring on July 31, 1999. The employment agreement with Mr. Carlisle,
effective January 1, 1997, expires on December 31, 1999. The base salaries
paid under the employment agreements with Messrs. Carlisle, Fernandez, Naso
and Muth were $250,000, $208,000, $215,000 and $200,000, respectively, through
the one-year period ended March 31, 1998. Under the employment agreements with
Messrs. Carlisle, Fernandez, Naso and Muth (collectively, the "Employment
Agreements"), each of the employees is entitled to receive additional
compensation and annual bonuses as determined by the Compensation Committee,
term life insurance and a monthly automobile allowance, and is eligible to
participate in the Company's benefit plans and programs. Each of the
Employment Agreements provides that it may be terminated by either the
employee or the Company prior to the expiration of its term; however, if any
of Messrs. Carlisle, Fernandez or Naso is terminated without cause (as
defined) he is entitled to receive a severance payment in the amount of 100%
of his then-current annual salary and the continuation of all then-existing
benefits for 12 months following termination. If Mr. Muth is terminated
without cause (as defined) he is entitled to receive a severance payment in
the amount of 50% of his then-current annual salary and the continuation of
all then-existing benefits for six months following termination. In addition,
for a termination without cause, all of these employees' then-unvested stock
options will vest and become exercisable. Each of the Employment Agreements
provides that the employee will not compete with the Company for a period of
one year after his employment terminates. Mr. Fernandez' employment with the
Company terminated without cause on April 1, 1998.
Mr. Gury's employment agreement was effective January 1, 1993, and
automatically is continued for successive one-year terms on January 1 of each
year unless at least 180 days' prior notice of termination is given by either
Mr. Gury or the Company. Mr. Gury's base salary under the agreement was
$428,000 through the one-year period ended March 31, 1998, and is subject to
annual increases at the discretion of the Compensation Committee. Mr. Gury is
entitled to participate in bonus plans maintained by the Company for senior
executives and may receive additional bonuses at the discretion of the
Committee. The employment agreement also provides
6
that Mr. Gury shall receive other specified benefits. The Company may
terminate Mr. Gury's employment at any time during the term of the employment
agreement (including any automatic extension thereof). If the termination is
without cause (as defined in the agreement), for three years, Mr. Gury will be
entitled to receive each year an amount equal to his salary at the time of
termination plus his average bonus for the last three fiscal years. In
addition, all restricted stock awarded to Mr. Gury will no longer be subject
to forfeiture or contractual restrictions on transfer and one-half of his
then-unvested stock options will vest and become exercisable. During such
period, Mr. Gury shall continue to receive all benefits that he otherwise is
entitled to receive under the Employment Agreement and professional out-
placement services at the Company's expense. The Employment Agreement also
provides under certain circumstances for severance benefits in the event Mr.
Gury terminates his employment following the initial term of the agreement or
any extension thereof. Mr. Gury's Employment Agreement provides that he will
not compete with the Company during any period in which he is receiving
severance payments.
COMPENSATION COMMITTEE REPORT
Executive compensation levels are based on a compensation program developed
by the Compensation Committee in February 1993.
Management Compensation Program. The Company's Management Compensation
Program (the "Program") was developed by the Compensation Committee with the
assistance of an outside compensation consultant and the Company's Vice
President of Human Resources, and incorporates the results of a study
undertaken by the American Compensation Association of executive compensation
practices. The Program, which is based upon the compensation practices of
comparable companies included in the study, is founded on the following
principles. First, a strong link should be developed between planned
organizational goals and individual compensation. Second, the Company should
assure total compensation opportunities that are above comparable companies
when the Company's performance is superior to theirs and below such
comparators if the Company's performance is inferior to theirs. Third, the
Company's compensation program should allow it to attract and retain
individuals whose performance will enhance the profitability of the Company
and, thus, stockholder value.
The Company uses a comparator group of companies in the
pharmaceutical/healthcare industry (the "Comparator Group") to serve as the
basis for determining the appropriate cash and equity incentive elements of
the Program. The companies in the Comparator Group are selected from the
pharmaceutical/healthcare industry based upon their similarity to the Company
in size, as determined by total revenue, and performance, as determined by
return on equity. The size and composition of the Comparator Group may change
somewhat from year to year. In August 1996 the Compensation Committee decided
to expand the Comparator Group from 12 to 23 companies in order to reflect
better the Company's growth and to obtain appropriate comparative data. The
Comparator Group differed from the group of companies included in the NASDAQ
Pharmaceutical Stock Index used in the Comparative Stock Performance graph
following this report. The NASDAQ Pharmaceutical Stock Index, which consists
of approximately 270 companies, is too unwieldy to use for compensation
purposes because of the large number of companies and their disparate
compensation practices. The Comparator Group is not used in the performance
graph principally because of the need to maintain consistency in the indices
or peer groups used in the graph.
Base salary, annual bonus and long-term incentive compensation, the three
components of executive officers' compensation provided under the Program for
1997, are discussed below. Base salary and long-term incentive compensation
for 1997 were established by the Compensation Committee in early 1997 based
upon prior years' performance and the additional factors discussed below.
Base Compensation. The Program is targeted to establish conservative base
salaries set at 90% of the median salary levels of the Comparator Group. The
completion of the phase-in to the targeted levels was achieved with the
increase in overall executive base salaries in 1997.
7
The Compensation Committee makes salary decisions based upon a structured
annual review with input from the Chief Executive Officer for the other
executive officers as deemed appropriate. Three equally weighted criteria,
budget performance, project/goal performance and management attributes/skills
performance, are the measurement factors used to make base salary decisions.
Annual Bonus. Annual cash bonuses are provided to reward the attainment of
planned operating goals based on revenue and profitability (pretax income as a
percentage of revenue) and specified individual goals, with increased bonus
amounts when performance is above the planned operating goals. When planned
operating goals are attained or exceeded, the executives are eligible to
receive cash bonuses ranging up to 125% of their base salaries. A portion of
these bonuses (20% with respect to the Chief Executive Officer and Chief
Operating Officer and 30% with respect to the other executive officers) are
discretionary and are based upon the achievement of individual goals, such as
production increases, cost control, acquisitions, product development and
market expansion, to name a few. The Compensation Committee considers input
from the Chief Executive Officer when assessing the achievement by other
executive officers of individual goals. Annual bonuses were not awarded for
1997 due to the Company's 1997 performance.
Long-Term Incentive Compensation. Substantial long-term equity incentives,
primarily in the form of stock options, are attainable based upon the
Company's three-year rolling average return on equity ("ROE") in comparison to
the Comparator Group. The primary purpose for this component of compensation
is the enhancement of stockholder value.
The stock option awards granted to the Company's executive officers during
1997 was based upon the attainment of ROE of 197% of the Comparator Group
(22.3% versus 11.3%). The Program limits an award of a stock option to 125% of
the maximum potential award.
Other Compensation. The Compensation Committee is authorized to make
discretionary compensation awards from time to time, including restricted
stock awards.
Chief Executive Officer Compensation. Mr. Gury's 1997 base salary was
approximately 90% of the median level of the base salaries in the Comparator
Group, after an increase from his 1996 base salary. In 1996, Mr. Gury's base
salary was approximately 87% of the median level.
In 1997, an option to purchase 109,762 shares of Common Stock was awarded to
Mr. Gury under the long-term incentive portion of the Program. The Company's
three-year rolling average ROE for the period ended December 31, 1996 was 197%
of the ROE of the Comparator Group. Accordingly, Mr. Gury was awarded 125% of
the targeted potential award under the Program. The 1997 stock option award to
Mr. Gury was based solely upon the Program and did not consider the amount of
his outstanding awards or the amount of awards granted in any previous year.
Respectfully submitted by,
THE COMPENSATION COMMITTEE
David A. Thompson
Richard A. Harvey, Jr.
George W. Ebright
8
COMPARATIVE STOCK PERFORMANCE
The following graph and chart compare during the five-year period commencing
December 31, 1992 and ending December 31, 1997 the annual change in the
cumulative total return on the Company's Common Stock with the NASDAQ Stock
Market (U.S.) and the NASDAQ Pharmaceutical Stock indices, assuming the
investment of $100 on December 31, 1992 (at the market close) and the
reinvestment of any dividends.
[CHART APPEARS HERE]
1992 1993 1994 1995 1996 1997
NABI $100 $117.78 $266.67 $382.22 $311.11 $121.11
NASDAQ STOCK MARKET
(U.S.) INDEX $100 $114.80 $112.21 $158.70 $195.19 $239.53
NASDAQ PHARMACEUTICAL
STOCKS INDEX $100 $89.13 $67.08 $122.72 $123.08 $127.19
9
CERTAIN STOCKHOLDERS
The following table sets forth information as of April 14, 1998 (except as
indicated in Note 15 below) with respect to (i) each director of Nabi, (ii)
the named executive officers, (iii) all officers and directors of Nabi as a
group and (iv) each person who is known by Nabi to be the beneficial owner of
more than five percent of Nabi Common Stock as of such date. This information
has been furnished by the persons listed in the table.
SHARES PERCENT OF
BENEFICIALLY OUTSTANDING
NAME OF BENEFICIAL OWNER OWNED(1) SHARES OWNED
- ------------------------ ------------ ------------
Directors
David J. Gury.................................... 867,389(2) 2.5%
John C. Carlisle................................. 204,908(3) *
Paul Bogikes..................................... 20,379(4) *
David L. Castaldi................................ 14,001(5) *
Joseph C. Cook, Jr............................... 33,290(6) *
Brian H. Dovey................................... 933,967(7) 2.7%
George W. Ebright................................ 32,700(8) *
Richard A. Harvey, Jr............................ 9,000(9) *
Linda Jenckes.................................... 5,000(9) *
David A. Thompson................................ 14,000(10) *
Named Executive Officers
David J. Gury.................................... 867,389(2) 2.5%
John C. Carlisle................................. 204,908(3) *
Alfred J. Fernandez.............................. 315,232(11) *
Robert B. Naso................................... 96,810(9) *
David D. Muth.................................... 21,813(12) *
All officers and directors as a group (15
Persons)........................................ 2,386,892(13) 6.7%
Greater Than Five Percent Stockholders
Abbott Laboratories.............................. 2,000,000(14) 5.7%
One Abbott Park Road
Abbott Park, IL 60064-3500
Chancellor LGT Asset Management, Inc............. 2,005,500(15) 5.7%
1166 Avenue of the Americas
New York, NY 10036
- --------
* Less than 1%.
(1) Unless otherwise noted, the nature of beneficial ownership consists of
sole voting and investment power.
(2) Includes (a) an aggregate of 96,000 shares of Common Stock owned by Mr.
Gury's immediate family and 9,000 shares held by Mr. Gury as trustee
under a trust for the benefit of his mother, as to all of which Mr. Gury
disclaims beneficial ownership, and (b) an aggregate of 366,705 shares of
Common Stock which may be acquired under stock options which are
presently exercisable.
(3) Includes 129,806 shares of Common Stock which may be acquired under stock
options which are presently exercisable.
(4) Consists of (a) 11,379 shares of Common Stock held by a trust of which
Mr. Bogikes is trustee and (b) 9,000 shares of Common Stock which may be
acquired under stock options which are presently exercisable.
(5) Includes 9,000 shares of Common Stock which may be acquired under stock
options which are presently exercisable. Also includes 1,000 shares of
Common Stock owned by Harbus Investors, Inc., a company of which Mr.
Castaldi is President and a director. Mr. Castaldi has voting power over
97 of such shares, and disclaims beneficial ownership with respect to the
remaining shares.
10
(6) Includes 26,281 shares of Common Stock which may be acquired under stock
options which are presently exercisable.
(7) Includes 9,000 shares of Common Stock which may be acquired under stock
options which are presently exercisable. Also includes 919,328 shares of
Common Stock owned by Domain Partners II, L.P. Mr. Dovey is a general
partner of One Palmer Square Associates II, L.P., the general partner of
Domain Partners II, L.P. Mr. Dovey has indirect beneficial ownership of
these shares.
(8) Includes 28,750 shares of Common Stock which may be acquired under stock
options which are presently exercisable.
(9) Shares of Common Stock which may be acquired under stock options which
are presently exercisable.
(10) Includes 9,000 shares of Common Stock which may be acquired under stock
options which are presently exercisable.
(11) Includes 234,288 shares of Common Stock which may be acquired under stock
options held by Mr. Fernandez, all of which are presently exercisable.
(12) Includes (a) 252 shares of Common Stock owned by Mr. Muth's children (as
to which shares Mr. Muth disclaims beneficial ownership), and (b) an
aggregate of 20,561 shares of Common Stock which may be acquired under
stock options which are presently exercisable.
(13) See notes 2 through 10 and 12 above. Also includes 125,506 of Common
Stock which may be acquired under stock options held by executive
officers not named in the table above which are presently exercisable.
(14) See "Certain Transactions" with respect to voting and other agreements
concerning these shares.
(15) Chancellor LGT Asset Management, Inc. ("Chancellor") and Chancellor LGT
Trust Company ("Chancellor Trust Company"), as investment advisers for
various fiduciary accounts, have sole power to vote or to direct to vote,
and sole power to dispose of or to direct the disposition of, all of the
2,005,500 shares. Chancellor Trust Company is a wholly-owned subsidiary
of Chancellor. The information contained in the table is as of February
27, 1998.
CERTAIN TRANSACTIONS
ABBOTT LABORATORIES
In 1992 the Company acquired certain assets from Abbott Laboratories
("Abbott") relating to H-BIG(R), a proprietary FDA-licensed product currently
used to provide passive immunity from exposure to hepatitis B. In
consideration for the acquisition of the assets, the Company issued to Abbott
2,000,000 shares of the Company's Common Stock (which Abbott continued to hold
as of April 14, 1998) and agreed to pay Abbott royalties based upon sales of
H-BIG(R). The Company accrued approximately $2.5 million in 1997 with respect
to this royalty. In addition, the Company accrued approximately $48,000 during
1997 under a manufacturing arrangement with the Company relating to H-BIG(R).
In connection with the H-BIG(R) acquisition, Abbott and the Company entered
into a Shareholder Agreement which governs the rights of Abbott and the
companies Abbott controls (collectively, the "Abbott Group") with respect to
all shares of the Company's Common Stock from time to time held by the Abbott
Group. The Shareholder Agreement requires the Abbott Group to vote its shares
of the Company's Common Stock both for the Company's nominees to the Company's
Board of Directors and, unless the Company otherwise consents in writing or
the stockholders are voting on a "significant event," on all other matters to
be voted on by the Company's stockholders in the same proportion as the votes
cast by the Company's other stockholders. The Shareholder Agreement also
imposes certain restrictions on the right of the Abbott Group to acquire or
transfer any shares of the Company's Common Stock, and provides the Company
with certain repurchase rights and obligations with respect to the shares of
the Company's Common Stock held by the Abbott Group.
The Shareholder Agreement terminates on the earlier of September 30, 2002 or
two years from the date the voting power of the Abbott Group falls below five
percent. Abbott also has demand and incidental registration rights under the
Securities Act of 1933, as amended, with respect to its shares of the
Company's Common Stock, primarily at the Company's expense. These rights
terminate on September 30, 1998.
11
In 1992 the Company and Abbott entered into a Plasma Data Management System
License and Lease Agreement under which Abbott agreed to develop for and lease
to the Company a proprietary computer system for managing data from the
Company's testing of blood and blood components. The Agreement expires in
September 2001, and requires monthly lease payments aggregating at least $1.0
million per year (depending upon the number of the Company's facilities using
the system). The Company incurred approximately $1.0 million in payments under
this agreement during 1997.
During 1997, the Company also sold approximately $2.7 million of plasma,
diagnostic and other products and testing services to Abbott and purchased
approximately $14.0 million of reagents, testing supplies and other products
from Abbott.
TRANSACTIONS INVOLVING OFFICERS AND DIRECTORS
Mr. Gury, Nabi's Chairman, President and Chief Executive Officer, borrowed
money from Nabi in October 1997 pursuant to a promissory note. The original
principal amount of the note was $350,000, and the money was used for stock
purchases and tax obligations. The note bears interest at the prime rate
charged from time to time by NationsBank, N.A., and outstanding principal and
interest thereunder is payable in full on October 26, 1998. As of April 14,
1998, the outstanding balance on the note was approximately $363,000.
Mr. Muth, Nabi's Senior Vice President--Sales, Marketing and Business
Development, borrowed money from Nabi in January 1997. The original principal
amount borrowed was approximately $360,000, and the money was used primarily
for real estate-related relocation expenses. The largest aggregate amount of
the debt outstanding during 1997 was approximately $532,000. The debt bears
interest at the prime rate charged from time to time by NationsBank, N.A., and
outstanding principal and interest is payable in full on November 27, 1998. As
of April 14, 1998, the outstanding balance of the debt was approximately
$13,000.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the next annual
meeting of stockholders must be received by the Company at its principal
executive offices by December 23, 1998 for inclusion in the proxy statement
and form of proxy relating to that meeting and must comply with the applicable
requirements of the federal securities laws.
12
OTHER MATTERS
The Board of Directors knows of no business which will be presented for
consideration at the Annual Meeting other than as shown above. However, if any
such other business should come before the Annual Meeting, it is the intention
of the persons named in the enclosed Proxy to vote the Proxies in respect of
any such business in accordance with their best judgment.
The cost of preparing, assembling and mailing this proxy material will be
borne by the Company. The Company may solicit Proxies otherwise than by use of
the mail, in that certain officers and regular employees of the Company,
without additional compensation, may use their personal efforts, by telephone
or otherwise, to obtain Proxies. Such assistance may take the form of
personal, telephonic or written solicitation or any combination thereof. The
Company will also request persons, firms and corporations holding shares in
their names, or in the names of their nominees, which shares are beneficially
owned by others, to send this proxy material to and obtain Proxies from such
beneficial owners and will reimburse such holders for their reasonable
expenses in doing so.
By Order of the Board of Directors
Constantine Alexander
Secretary
April 24, 1998
13
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
ANNUAL MEETING OF STOCKHOLDERS
MAY 29, 1998
The undersigned, having received the
Notice of Annual Meeting of Stockholders
and the Board of Directors' Proxy
Statement (the "Proxy Statement"), hereby
appoint(s) John C. Carlisle and Lorraine
M. Breece, and each of them, Proxies of
the undersigned (with full power of
substitution) to attend the Annual
Meeting of Stockholders of Nabi to be
held May 29, 1998, and all adjournments
thereof (the "Meeting"), and there to
vote all shares of Common Stock of Nabi
that the undersigned would be entitled to
vote, if personally present, in regard to
all matters which may come before the
meeting.
THE PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS, WHICH RECOMMENDS
APPROVAL OF THE PROPOSALS CONTAINED HEREIN.
WITH- FOR ALL
FOR HOLD EXCEPT
[_] [_] [_]
1. For the election of all nominees listed
below (except as otherwise indicated).
John C. Carlisle David L. Castaldi
Joseph C. Cook, Jr. Brian H. Dovey
George W. Ebright David J. Gury
Richard A. Harvey, Jr. Linda Jenckes
David A. Thompson
INSTRUCTION: TO WITHHOLD AUTHORITY TO
VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
"FOR ALL EXCEPT" AND WRITE THAT
NOMINEE'S NAME IN THE SPACE PROVIDED
BELOW.
Please be sure to sign and date
this Proxy in the box below.
Date____________
Stockholder sign above -- Co-holder (if any) sign above
The undersigned hereby confer(s) upon the Proxies,
and each of them, discretionary authority (i) to
consider and act upon such business, matters or
proposals other than the business set forth herein
as may properly come before the Meeting and (ii) with
respect to the election of directors in the event that
any of the nominees is unable or unwilling to serve.
/\ Detach above card, sign, date and mail in postage paid envelope provided. /\
- -------------------------------------------------------------------------------
THE PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER SPECIFIED
HEREIN. IF NO SPECIFICATION IS MADE, THE PROXIES INTEND TO VOTE FOR ALL
NOMINEES FOR DIRECTOR.
In signing, please write name(s) exactly as appearing in the imprint on
this card. For shares held jointly, each joint owner should sign. If signing as
executor, or in any other representative capacity, or as an officer of a
corporation, please indicate your full title as such.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
- -------------------------------------------------------------------------------
