UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
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
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the appropriate box:
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Preliminary Proxy Statement.
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Confidential, for use of the Commission Only (as permitted by Rule 14a-6(e)(2)).
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Definitive Proxy Statement.
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Definitive Additional Materials.
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Soliciting Material Pursuant to §240.14a-12.
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ANGIOTECH PHARMACEUTICALS, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if
Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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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):
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(4)
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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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.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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Dear Angiotech Shareholders:
On behalf of the Board of Directors, we are pleased to deliver our Proxy Statement for our annual and special general meeting of shareholders. At the meeting, shareholders are being asked to:
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fix the size of the Companys board of directors at seven and elect directors for the ensuing year;
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appoint the auditors for the ensuing year and authorize the directors to fix the remuneration to be paid to the auditors;
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approve an ordinary resolution reconfirming the Companys Shareholder Rights Plan with minor technical amendments to such plan;
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approve a special resolution authorizing an amendment to the Companys Articles to increase the quorum requirement for meetings of shareholders to comply with
NASDAQs quorum requirements; and
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transact such further or other business as may properly come before the meeting and any adjournments or postponements thereof.
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YOUR VOTE IS VERY IMPORTANT.
Our
common shares are listed on the NASDAQ Global Select Market under the trading symbol ANPI and on the Toronto Stock Exchange under the trading symbol ANP. On September 25, 2008, the closing sale price of our common shares was
$0.78 per share on the NASDAQ and CDN$0.86 per share on the TSX.
The annual and special general meeting of shareholders will be held on
October 30, 2008 at 8:30 a.m. Pacific Time at the Sheraton Vancouver Wall Centre, 1088 Burrard Street, Vancouver, British Columbia V6Z 2R9. Only shareholders of record of our common shares at the close of business on September 30, 2008 are
entitled to notice of and to vote at the annual and special general meeting of shareholders.
Your vote is very important, regardless of
the number of shares you own. Whether or not you plan to attend the annual and special general meeting of shareholders, please take the time to vote by completing and mailing the enclosed proxy card or voting instruction card and returning it in the
pre-addressed envelope provided.
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David T. Howard
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Chairman of the Board of Directors
of Angiotech
Pharmaceuticals, Inc.
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ANGIOTECH PHARMACEUTICALS, INC.
1618 Station Street, Vancouver, British Columbia, Canada V6A 1B6
NOTICE OF MEETING
NOTICE IS HEREBY GIVEN THAT the 2008 annual and special general meeting (the Meeting) of the shareholders of Angiotech
Pharmaceuticals, Inc. (the Company) will be held at 8:30 a.m., Pacific Time, on October 30, 2008 at the Sheraton Vancouver Wall Centre, 1088 Burrard Street, Vancouver, British Columbia V6Z 2R9 for the following purposes:
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1.
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to receive and consider the report of the directors and the financial statements of the Company, together with the auditors report thereon, for the fiscal year ended
December 31, 2007;
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2.
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to fix the size of the Board of Directors at seven and elect directors for the ensuing year;
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3.
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to appoint the auditors for the ensuing year and to authorize the directors to fix the remuneration to be paid to the auditors;
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4.
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to consider, and if thought fit, to approve an ordinary resolution, with or without amendment or variation, reconfirming the Companys Shareholder Rights Plan with minor
technical amendments, as described in the attached Proxy Statement, the full text of which resolution is set out as the Shareholder Rights Plan Resolution in Appendix A to the Proxy Statement accompanying this notice;
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5.
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to consider, and if thought fit, to approve a special resolution, with or without amendment or variation, amending section 11.3 of the Companys Articles to increase the quorum
for meetings of shareholders to comply with NASDAQs quorum requirements as described in the attached Proxy Statement, the full text of which resolution is set out as the Quorum Resolution in Appendix A to the Proxy Statement accompanying this
notice; and
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6.
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to transact such further or other business as may properly come before the Meeting and any adjournments or postponements thereof.
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These items of business are more fully described in the Proxy Statement accompanying this Notice.
The Board of Directors recommends shareholders vote
FOR each of the proposals.
If you owned common shares of the Company on September 30, 2008, the record date, you are
entitled to attend and vote at the Meeting.
It is important that your shares be represented and that your wishes be made known. Whether or
not you expect to attend the Meeting, please complete the enclosed form of proxy as indicated and return it by fax, mail or hand delivery to the office of Computershare Investor Services Inc., or provide voting instructions to Computershare Investor
Services Inc. through its internet or telephone voting services, set out in the accompanying form of proxy. In order to be valid for use at the Meeting,
the form of proxy must be duly completed, signed and deposited at the office of Computershare
Investor Services Inc., as set out in the
form of proxy, by 8:30 a.m. (Pacific Time) on October 28, 2008 or, if the Meeting is adjourned or postponed, no later than 48 hours excluding Saturdays, Sundays and holidays before the time to which
the Meeting is adjourned or postponed, in either case unless the Chair of the Meeting elects to exercise his or her discretion to accept proxies received subsequently.
Your proxy is revocable and will not affect your right to vote in person at
the Meeting. An undated proxy will be deemed to be dated the date the proxy is mailed by management or its agent to the registered shareholder.
DATED this 26
th
day of September, 2008.
BY ORDER OF THE BOARD OF DIRECTORS
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K. Thomas Bailey, Chief Financial Officer
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Table of Contents
iii
ANGIOTECH PHARMACEUTICALS, INC.
PROXY STATEMENT
This Proxy Statement is furnished in connection with the
solicitation by management of Angiotech Pharmaceuticals, Inc. (the Company) of proxies to be voted at the annual and special general meeting of shareholders of the Company to be held at 8:30 a.m., Pacific Time, on October 30, 2008 at the
Sheraton Vancouver Wall Centre, 1088 Burrard Street, Vancouver, British Columbia V6Z 2R9, together with any adjournment or postponement of that meeting (the Meeting). Any registered shareholder of the Company holding common shares of the
Company as at September 30, 2008 will be entitled to vote at the Meeting.
The Companys principal executive office of the Company is
located at 1618 Station Street, Vancouver, British Columbia, Canada V6A 1B6. The Companys website address is www.angiotech.com. The registered and records office of the Company is located at Suite 1200, 200 Burrard Street, Vancouver, British
Columbia, Canada, V7X 1T2.
All references to currency in this Proxy Statement are in United States (U.S.) dollars, unless otherwise
indicated.
The date of this Proxy Statement is September 26, 2008, and it is first being sent to shareholders on or about October
3, 2008.
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QUESTIONS AND ANSWERS
What is being voted on at the Meeting?
The matters
to be considered and voted upon at the Meeting are as follows:
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Election of Directors:
To fix the size of the Board of Directors at seven and elect seven members of the Board of Directors for the ensuing year (Proposal No. 1).
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2.
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Appointment of Auditors:
To appoint the auditors for the ensuing year and to authorize the directors to fix the remuneration to be paid to the auditors (Proposal No. 2).
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3.
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Reconfirmation of the Shareholder Rights Plan:
To consider, and if thought fit, approve an ordinary resolution reconfirming the Companys Shareholder Rights Plan with
minor technical amendments (the Shareholder Rights Plan Resolution) (Proposal No. 3).
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4.
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Amendment of Articles:
To consider, and if thought fit, approve a special resolution authorizing an amendment to section 11.3 of the Companys Articles to increase the
quorum for meetings of shareholders to comply with NASDAQs quorum requirements (the Quorum Resolution) (Proposal No. 4).
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Other Business:
To consider and transact such other business as may properly come before the Meeting.
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At the time this Proxy Statement was printed, the Company was not aware of any other matters to come before the Meeting.
Why is the proposed transaction with Ares and New Leaf not on the agenda for the meeting?
The Company has advised Ares Management and New Leaf Venture Partners that it does not believe it will be able to satisfy the condition in the note
purchase agreement, dated as of July 6, 2008 (the Note Purchase Agreement), by and among Angiotech Pharmaceutical Interventions, Inc., a newly formed subsidiary of the Company (API), Ares Corporate Opportunities Fund III,
L.P., New Leaf Ventures I, L.P., New Leaf Ventures II, L.P. and, solely with respect to Article II, III, IV and V, the Company, and the subsidiary guarantors party thereto, with respect to the minimum level of cash and cash equivalents. In
addition, the Company has not received the required consent from the Ares and New Leaf parties to certain actions taken by the Company with respect to its business and operations which it has determined are necessary in light of current
circumstances. There also can be no assurance that the Company can satisfy the other conditions to closing set forth in that agreement. The Company, Ares and New Leaf are in discussions with respect to the terms on which the parties would be
prepared to proceed with a transaction. Since there can be no assurance that a transaction will be completed, we believe it is the best course for the Company to hold the Meeting and allow its shareholders to vote on the other items of business,
including the election of directors. If a determination is made to proceed with a transaction subject to a shareholder vote, the Company will set a separate meeting date for that proposal.
How do I vote?
Registered Shareholders
By Proxy. A registered shareholder has the right to appoint a person other than the persons designated in the accompanying form of proxy (and who need
not be a shareholder) to attend and act for him or her and on his or her behalf at the Meeting. To exercise this right, the registered shareholder may insert the name of the desired person in the blank space provided in the form of proxy, or may
submit another proxy in a form acceptable to the Chair in his or her discretion.
It is important that your shares be represented and
that your wishes be made known. Whether or not you expect to attend the Meeting, please complete the enclosed form of proxy as indicated and return it by fax, mail or hand delivery to the office of Computershare Investor Services Inc., or provide
voting instructions to Computershare Investor Services Inc. through its internet or telephone voting services, set out in the
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accompanying form of proxy. In order to be valid for use at the Meeting,
the form of proxy must be duly completed, signed and deposited at the office of
Computershare Investor Services Inc., as set out in the form of proxy, by 8:30 a.m. (Pacific Time) on October 28, 2008 or, if the Meeting is adjourned or postponed, no later than 48 hours excluding Saturdays, Sundays and holidays before the time to
which the Meeting is adjourned or postponed, in either case unless the Chair of the Meeting elects to exercise his or her discretion to accept proxies received subsequently
. An undated proxy will be deemed to be dated the date the form of proxy
is mailed by management or its agent to the registered shareholder.
In Person.
A registered shareholder may attend the Meeting and
vote in person. Attending the Meeting will not automatically revoke your prior proxy. You must comply with methods set forth below under May I revoke my proxy? in order to revoke your proxy.
Beneficial Shareholders
The information set out
in this section is important to many shareholders as a substantial number of shareholders do not hold their common shares in their own name.
Persons who hold common shares through their brokers, agents, trustees or other intermediaries (such persons, Beneficial Shareholders) should note that only proxies deposited by registered shareholders whose names appear on the
share register of the Company may be recognized and acted upon at the Meeting. If common shares are shown on an account statement provided to a shareholder by a broker, then in almost all cases the name of such shareholder will not appear on the
share register of the Company. Such common shares will most likely be registered in the name of the broker or an agent of the broker. In Canada, the vast majority of such shares will be registered in the name of CDS & Co., the
registration name of CDS Clearing and Depositary Services Inc., and in the United States, the vast majority will be registered in the name of Cede & Co., the registration name of the Depository Trust Company, which entities act
as nominees for many brokerage firms. Common shares held by brokers, agents, trustees or other intermediaries can only be voted by those brokers, agents, trustees or other intermediaries in accordance with instructions received from Beneficial
Shareholders. As a result, Beneficial Shareholders should carefully review the voting instructions provided by their intermediary with this Proxy Statement and ensure they communicate how they would like their common shares voted in accordance with
those instructions.
Beneficial Shareholders who have not objected to their intermediary disclosing certain ownership information about
themselves to the Company are referred to as NOBOs. Those Beneficial Shareholders who have objected to their intermediary disclosing ownership information about themselves to the Company are referred to as OBOs. In accordance
with National Instrument 54-101 of the Canadian Securities Administrators and Rule 14a-13(a) under the U.S. Securities Exchange Act of 1934, as amended (the Exchange Act), the Company has distributed copies of the Notice of Meeting, this
Proxy Statement and the form of proxy to the clearing agencies and intermediaries for onward distribution to Beneficial Shareholders.
Intermediaries will frequently use service companies to forward the Meeting materials to Beneficial Shareholders. Generally, a Beneficial Shareholder who has not waived the right to receive Meeting materials will either:
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(a)
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be given a form of proxy which (i) has already been signed by the intermediary (typically by a facsimile, stamped signature), (ii) is restricted as to the number of shares
beneficially owned by the Beneficial Shareholder, and (iii) must be completed, but not signed, by the Beneficial Shareholder and deposited with Computershare Investor Services Inc. by the proxy delivery deadline; or
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(b)
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more typically, be given a voting instruction form (VIF) which (i) is not signed by the intermediary, and (ii) when properly completed and signed by the
Beneficial Shareholder and returned to the intermediary or its service company, will constitute voting instructions which the intermediary must follow.
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VIFs should be completed and returned in accordance with the specific instructions noted on the VIF. The
purpose of this procedure is to permit Beneficial Shareholders to direct the voting of the common shares which they beneficially own.
Please return your voting instructions as specified in the VIF. Beneficial Shareholders should carefully follow the instructions set out in the VIF, including those regarding when and where the VIF is to be delivered.
Although Beneficial Shareholders may not be recognized directly at the Meeting for the purpose of voting common shares registered in the name of their
broker, agent, trustee or other intermediary, a Beneficial Shareholder may attend the Meeting as a proxyholder for a registered shareholder and vote common shares in that capacity. Beneficial Shareholders who wish to attend the Meeting or have
someone else attend on their behalf, and indirectly vote their common shares as proxyholder for the registered shareholder should contact their broker, agent, trustee or other intermediary well in advance of the Meeting to determine the steps
necessary to permit them to indirectly vote their common shares as a proxyholder.
The Meeting materials are being sent to both registered
shareholders and Beneficial Shareholders of common shares. If you are a Beneficial Shareholder, and the Company or its agent has sent these materials to you, your name and address and information about your holdings of securities have been obtained
in accordance with applicable securities regulatory requirements from the intermediary on your behalf.
Who is soliciting proxies and who pays the cost
of soliciting proxies?
This Proxy Statement is furnished in connection with the solicitation of proxies by the management of the
Company for use at the Meeting
. The solicitation will be conducted by mail and may be supplemented by telephone or other personal contact to be made without special compensation by officers and employees of the Company. Additionally, the Company
has retained The Altman Group, Inc., a proxy solicitation firm. The Company has agreed to pay The Altman Group, Inc. a fee of $13,500 and to reimburse The Altman Group, Inc. for reasonable out-of-pocket expenses incurred in connection with the proxy
solicitation. In addition, the Company has agreed to pay to The Altman Group, Inc. additional amounts based on calls to shareholders, receipt of telephone proxy votes, directory assistance usage, telephone line charges and data processing. The
Company has agreed to indemnify The Altman Group, Inc. against certain losses, costs and expenses. The Company estimates that it will pay The Altman Group, Inc. a fee of approximately $23,500. The additional costs of solicitation, which are not
determinable at present, but in any event are not material to the Company, will also be borne by the Company.
How will proxies be voted?
The persons named as proxyholders in the enclosed form of proxy are directors or officers of the Company.
A registered shareholder may direct the manner in which his or her common shares are to be voted or withheld from voting by marking the form of proxy
accordingly. The proxyholders designated in the enclosed form of proxy will vote or withhold from voting the common shares represented by proxy in accordance with the instructions of the registered shareholder on any ballot that may be called for,
and if the registered shareholder specifies a choice with respect to any matter to be acted upon, the common shares will be voted accordingly.
Where no instruction is specified by a registered shareholder on a resolution shown on the form of proxy, or where the instructions are uncertain, the proxyholders designated in the enclosed form of proxy will vote the common shares
FOR the resolution.
May I revoke my proxy?
Any registered shareholder returning the enclosed form of proxy may revoke the same at any time insofar as it has not been exercised. In addition to revocation in any other manner permitted by law, a proxy may be
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revoked by instrument in writing executed by the registered shareholder or by his or her attorney authorized in writing or, if the registered shareholder is
a corporation, under its corporate seal or by an officer or attorney thereof duly authorized, and deposited at the registered office of the Company, at any time up to and including the last business day preceding the day of the Meeting or with the
Chair of the Meeting prior to the commencement of the Meeting. The registered office of the Company is 1200200 Burrard Street, Vancouver, British Columbia, Canada V7X 1T2.
How many votes may be cast at the Meeting?
Based on the number of common shares outstanding as of
September 25, 2008, up to 85,121,983 votes may be cast on any matter.
How many common shares must be represented at the Meeting to constitute a
quorum?
Pursuant to Rule 4350(a)(1) of the NASDAQ Stock Market, Inc.
Marketplace Rules, the Company previously relied on an exemption from Rule 4350(f) of the Marketplace Rules, requiring that each NASDAQ- quoted company have in place a minimum quorum requirement for shareholder meetings of 33
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% of the outstanding shares of the companys voting common stock. The Companys Articles currently provide that a quorum
is met if two persons are present who are, or who represent by proxy, shareholders who, in the aggregate, hold at least 5% of the issued shares entitled to be voted at the Meeting. At the Companys 2007 annual meeting of shareholders, holders
of 60.13% of the common shares were present or represented by proxy at the meeting.
As of March 31, 2008, the Company ceased to qualify as a foreign private issuer as a result of changes in the location of the holders of a majority of its outstanding common shares. At the Meeting, the Company will impose a 33
1
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% quorum requirement and will request that shareholders approve the Quorum Resolution to amend the Companys articles to
comply with the NASDAQs quorum requirements thereafter.
Abstentions will be counted as present for the purposes of
determining the presence of quorum for purposes of the matters to be voted on, but will not be counted as votes cast. Broker non-votes (shares held by a broker or nominee as to which the broker or nominee does not have the authority to vote on a
particular matter) will not be counted as present for purposes of determining the presence of a quorum for purposes of the matters to be voted on and will not be voted. Accordingly, neither abstentions nor broker non-votes will have any effect on
the outcome of the votes on the matters to be acted upon at the Meeting.
How many votes do I have?
Every registered shareholder who is present in person and entitled to vote at the Meeting, shall have one vote on a show of hands, and on a poll shall
have one vote for each common share of which the shareholder is the registered holder, and such shareholder may exercise such vote either in person or by proxy.
How many votes are required for each of the proposals?
Proposal 1: Election of Directors
The size of the Board of Directors must be fixed, and directors must be elected, by an affirmative vote of a simple majority of the votes cast at the
Meeting on this Proposal.
Proposal 2: Appointment of Auditors
The appointment of the auditors for the ensuing year and the authorization of the directors to fix the remuneration to be paid to the auditors requires the affirmative vote of a simple majority of the votes cast at
the Meeting on this Proposal.
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Proposal 3: Reconfirmation of the Shareholder Rights Plan
Reconfirmation of the Companys Shareholder Rights Plan with minor technical amendments requires the affirmative vote of a simple majority of the
votes cast at the Meeting on this Proposal.
Proposal 4: Amendment of Articles
The amendment of the Companys articles to increase the quorum for meetings of shareholders to comply with NASDAQs quorum requirements requires
the affirmative vote of 75% of the votes cast at the Meeting on this Proposal.
How does the Board of Directors recommend I vote?
The Board of Directors recommends you vote
FOR
each of the proposals.
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VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
The authorized capital of the Company consists of 250,000,000 shares without par value divided into 200,000,000 common shares and 50,000,000 Class I
Preference shares.
As of September 25, 2008, there were 85,121,983 common shares and no Class I Preference shares issued and outstanding.
Holders of common shares as at September 30, 2008 are entitled to receive notice of the Meeting and to attend and vote thereat, but the
failure of any shareholder to receive notice of the Meeting does not deprive the shareholder of the right to vote at the Meeting. Every shareholder who is present in person and entitled to vote at the Meeting shall have one vote on a show of hands,
and on a poll shall have one vote for each common share of which the shareholder is the registered holder as at September 30, 2008, and such shareholder may exercise such vote either in person or by proxy. Accordingly, holders of common shares are
the only class of the Companys securities entitled to vote at the Meeting and, assuming no change in the number of outstanding shares prior to the record date, are entitled to a total of 85,121,983 votes.
Beneficial Owners of More than Five Percent
As at
September 25, 2008, to the knowledge of the directors and executive officers of the Company, no person or group beneficially owns, directly or indirectly, or exercises control or direction over, greater than 5% of the voting rights attached to any
class of voting securities of the Company other than the following:
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Title of Class
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Name and Address of
Beneficial Holder
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Amount and Nature of
Beneficial Ownership
(owned or controlled
or directed, directly or
indirectly)
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% of Class
(1)
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Common
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West Coast Asset Management Inc.
California, USA
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11,145,076
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13.09
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%
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Common
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Franklin Resources
California, USA
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9,074,220
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10.66
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%
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Common
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State of Wisconsin Investment Board
Wisconsin, USA
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8,396,557
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9.86
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%
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Common
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Letko, Brosseau and Associates Inc.
Quebec, Canada
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7,725,205
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9.08
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%
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Notes:
(1)
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In accordance with Rule 13d-3(d)(1) under the Exchange Act, the applicable percentage of ownership for each person is based on 85,121,983 common shares outstanding as of September
25, 2008, plus any securities held by such person exercisable for or convertible into common shares within 60 days after the date of this Proxy Statement.
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Beneficial Ownership of Directors and Named Executive Officers
As at September 25, 2008, the number of common shares beneficially owned by each director and Named Executive Officer (defined below) of the Company, or
over which each director and Named Executive Officer exercises control or direction, directly or indirectly, is set out in the following table:
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Title of Class
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Name and Address of
Beneficial Holder
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Amount and Nature of
Beneficial Ownership
(owned or controlled
or directed, directly or
indirectly)
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% of Class
(1)
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Common
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William L. Hunter, MD, MSc.
British Columbia, Canada
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415,756
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0.49
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%
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Common
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David T. Howard
British Columbia, Canada
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30,800
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0.04
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%
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Common
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Hartley T. Richardson
Manitoba, Canada
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1,176,000
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(2)
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1.38
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%
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Common
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Edward M. Brown
California, U.S.A.
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Common
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Arthur H. Willms
British Columbia, Canada
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30,760
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(3)
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0.04
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%
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Common
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Laura Brege
California, U.S.A.
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Common
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Henry A. McKinnell Jr.
Wyoming, U.S.A.
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50,000
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0.06
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%
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Common
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K. Thomas Bailey
Washington, U.S.A.
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Common
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Rui Avelar, MD
British Columbia, Canada
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9,800
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(4)
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0.01
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%
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Common
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David D. McMasters, ESQ
Washington, U.S.A.
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2,800
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(5)
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Common
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Gary Ingenito, MD, PhD
British Columbia, Canada
(6)
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1,000
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Notes:
(1)
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In accordance with Rule 13d-3(d)(1) under the Exchange Act, the applicable percentage of ownership for each person is based on 85,121,983 common shares outstanding as of September
25, 2008, plus any securities held by such person exercisable for or convertible into common shares within 60 days after the date of this Proxy Statement.
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(2)
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Mr. Richardsons holdings include 1,000 common shares held indirectly through his family and 750,000 shares held indirectly through his company.
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(3)
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Mr. Willms holdings include 260 common shares held indirectly through his wife.
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(4)
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Dr. Avelars holdings include 3,684 common shares held indirectly through his wife.
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(5)
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Mr. McMasters holdings include 2,000 common shares held indirectly through his wife.
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(6)
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Dr. Ingenito ceased employment on February 29, 2008.
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As at September 25, 2008, directors and executive officers of the Company beneficially owned or exercised control or direction over, directly or indirectly, 2,351,632 common shares representing approximately 2.76% of the outstanding common
shares.
Section 16(a) Beneficial Ownership Reporting Compliance
As a result of the Companys status as a foreign private issuer, none of our executive officers or directors was required to file reports under Section 16(a) of the Exchange Act at any point
during the fiscal year ended December 31, 2007. As of March 31, 2008, the Company ceased to qualify as a foreign private issuer as a result of changes in the location of holders of a majority of its outstanding common shares.
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PROPOSAL 1: ELECTION OF DIRECTORS
At the Meeting, shareholders will be asked to approve an ordinary resolution fixing the number of directors at seven and electing seven directors
for the upcoming year. Directors of the Company are elected at each annual general meeting and hold office until the next annual general meeting or until their successors are appointed, unless his or her office is earlier vacated.
In the absence
of instructions to the contrary or where instructions are uncertain, the enclosed proxy will be voted FOR fixing the number of directors at seven and FOR the proposed nominees herein listed.
Management of the Company proposes to nominate each of the following persons for election as a director. Information concerning such persons, as
furnished by the individual nominees, is as follows:
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Name, Age, Province or State
and Country of Residence
and Position
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Principal occupation
during the past 5 years
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Director
Since
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Number of Common
Shares beneficially owned
or controlled or directed,
directly or
indirectly
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William L. Hunter, MD, MSc.
British
Columbia, Canada
President, Chief Executive
Officer and
Director
Age: 45
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September 2002 to presentPresident & CEO, the Company
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1992
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415,756
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David T. Howard
British Columbia, Canada
Chair of the Board,
Director
(1)(2)(3)
Age: 59
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September 2002 to presentChair, the Company
August 2003 to June 2005Chair, SCOLR, Inc.
May 2000 to August 2003President & CEO, SCOLR, Inc.
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2000
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30,800
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Hartley T. Richardson
Manitoba, Canada
Director
(1)(3)
Age: 53
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1998 to presentPresident & CEO, James Richardson & Sons, Limited
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2002
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1,176,000
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(4)
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Edward M. Brown
California, U.S.A.
Director
(2)(3)
Age: 45
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June 2007 to presentManaging Director, TPG Growth
June 2004 to June 2007Managing Director & Co-founder of Healthcare Investment Partners
2000 to June 2004Managing Director, Health Care Investment Banking, Credit Suisse First Boston
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2004
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Arthur H. Willms
British Columbia, Canada
Director
(1)(2)
Age: 68
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1999 to presentIndependent Company Director
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2004
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30,760
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(5)
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Laura Brege, MBA
California, U.S.A.
Director
Age: 51
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2006 to presentExecutive Vice-President & Chief Business Officer, Onyx Pharmaceuticals, Inc.
1999 to 2007General Partner,
Red Rock Management
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2007
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Henry A. McKinnell Jr., MBA, Ph.D.
Wyoming,
U.S.A.
Director
Age: 65
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June 2002 to presentChairman, Accordia Global Health Foundation
2001 to 2006Chief Executive Officer & Chairman of Pfizer Inc. (retired)
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2008
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50,000
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9
Notes:
(1)
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Member of the Companys Audit Committee
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(2)
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Member of the Companys Compensation Committee
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(3)
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Member of the Companys Governance and Nominating Committee
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(4)
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Mr. Richardsons holdings include 1,000 common shares held indirectly through his family and 750,000 shares held indirectly through his company.
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(5)
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Mr. Willms holdings include 260 common shares held indirectly through his wife.
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The following are brief biographies of the Companys nominees.
William L. Hunter,
MD,
MSc
.,
President & Chief Executive Officer, Director
.
Dr. Hunter is a founder of the Company, has been Chief Executive Officer of the Company since 1997, and has been a member of the scientific and
management teams since its inception. He serves as a director of Cardiome Pharma, Corp. and Neuromed Pharmaceuticals, Inc. Dr. Hunter is also an advisory board member for the Biotechnology MBA Program at the University of Western Ontarios
Ivey School of Business and an active member of the Government of British Columbia Premiers Technology Council. Dr. Hunter has been honored with many awards including, most recently, the 2005 BC Innovation Councils Cecil Green Award
for Science and Technology Entrepreneurship and the 2005 Canadian Venture Capital Associations Entrepreneur of the Year. He received his Bachelor of Science Degree from McGill University, Montreal in 1985 and his Masters of Science and Doctor
of Medicine Degree from the University of British Columbia in 1989 and 1992, respectively.
David T. Howard,
Chair of the
Board, Director
. David Howard joined the Board of Directors in March 2000 and became Chair of the Board of Directors in September 2002. Mr. Howard is a director of SemBioSys Genetics, Inc. and Via Pharmaceuticals, Inc.
Previously, he was Chair of the Board, President and CEO of SCOLR, Inc., a biopharmaceutical company located in Redmond, Washington. Prior to this, Mr. Howard served as President and Chief Operating Officer of Novopharm International,
Inc. of Toronto, Ontario and President of Novopharm USA, Inc. Mr. Howards industry experience includes operational and strategic positions with Boehringer Mannheim Canada, where he was Vice President Pharmaceuticals, and
Rhône-Poulenc Pharma in Montreal and Paris, where he was Vice-President Sales and Marketing.
Hartley T. Richardson,
Director
. Hartley Richardson joined the Board of Directors in July 2002. Mr. Richardson is the President and CEO of James Richardson & Sons, Limited, a leading Canadian private company established in 1857 and
headquartered in Winnipeg, Canada. James Richardson & Sons, Limited is a diversified company which, through its subsidiaries, owns and operates businesses in the agriculture, food processing, financial services, real estate and energy
sectors. Mr. Richardson also serves as a Director of Canadian Pacific Railway Ltd. and Neuromed Pharmaceuticals, Inc. He is past-Chairman of the Business Council of Manitoba and Vice-Chairman of the Canadian Council of Chief Executives. Other
affiliations include The Trilateral Commission, the World Economic Forum Global Leaders of Tomorrow and the Young Presidents Organization. He is also actively involved in a number of charitable endeavors and community organizations. The
University of Manitoba conferred upon Mr. Richardson the honorary degree of Doctor of Laws in 2004. Mr. Richardson was appointed to the Order of Canada in 2007 and to the Order of Manitoba in 2008.
Edward M. Brown,
Director
. Edward (Ned) Brown is a Managing Director of TPG Growth, a private equity firm, where he focuses on
private equity investments in healthcare companies. Prior to joining TPG Growth, Mr. Brown was a co-founder of Healthcare Investment Partners (HIP), a private equity firm focused exclusively on healthcare investments. Before HIP,
Mr. Brown was a Managing Director in the Healthcare Group of Credit Suisse First Boston, an investment bank, where he led the firms West Coast healthcare effort and was one of the senior partners responsible for the firms global
life sciences practice. Mr. Brown has over 19 years of experience as a financial advisor and investor in the healthcare industry. Mr. Brown also serves on the Board of Directors of Replidyne, Inc. Mr. Brown graduated Phi Beta Kappa,
Magna Cum Laude with High Honours from Middlebury College with a B.A. Degree in English and received his MBA degree from Anderson Graduate School of Management at UCLA.
10
Arthur H. Willms,
MA, Director
. Arthur Willms is a Director and retired President
and Chief Operating Officer of Westcoast Energy, Inc. where he held senior executive positions for 24 years. Mr. Willms other directorships include Pacific Northern Gas Ltd. and Pristine Power Inc. He is also the Chair of the Board for
the Vancouver Symphony Orchestra. Mr. Willms has been a lecturer in Economics at the University of Calgary and holds a Bachelor of Arts Degree in Education, a Bachelor of Science Degree in Mathematics, and a Masters Degree in Economics from the
University of Calgary. Mr. Willms is a member of two audit committees and is the chair of one of these committees.
Laura Brege,
MBA, Director
. Ms. Brege is currently Executive Vice President and Chief Operating Officer at Onyx Pharmaceuticals, Inc., where she is responsible for Sales and Marketing, Medical Affairs, Legal, Business Development, and
Compliance. Onyx Pharmaceuticals is focused on developing and commercializing innovative cancer treatments. Prior to joining Onyx Pharmaceuticals, Ms. Brege was a General Partner at Red Rock Management, a venture capital firm specializing in
early stage financing for technology companies. Prior to her work at Red Rock Management, she was the Senior Vice President and Chief Financial Officer at COR Therapeutics, a biotechnology company that specialized in drug therapies for
cardiovascular disease. While at COR, Ms. Brege was instrumental in helping the company grow from a research and development start-up to an operations-based enterprise with a commercialized product. Before joining COR, Ms. Brege was Vice
President and Chief Financial Officer at Flextronics, a multi-billion dollar electronics manufacturer. She was also Vice President and Treasurer of The Cooper Companies, a Fortune 500 diversified company with operations worldwide. Ms. Brege
earned her undergraduate degree from Ohio University and has an MBA from the University of Chicago.
Henry A. McKinnell Jr.,
Director
. Dr. McKinnell is the Chairman of the Accorida Global Health Foundation, an organization he co-founded to strengthen academic medical centers in Africa to help in the fight against infectious diseases. He is Chairman
of the Governance and Compensation Committee, is a member of the Audit Committee and serves as the Lead Independent Director of the Board of Directors of Moodys. Dr. McKinnell is the former Chief Executive Officer and former Chairman of
the Board of Directors of Pfizer Inc. Dr. McKinnell joined Pfizer in 1971 in Tokyo and over the years, held positions of increasing responsibility around the world, including service as President of Pfizer Asia. In 1984, Dr. McKinnell
relocated to New York, where he served as Vice President-Strategic Planning, Chief Financial Officer, President-Pfizer Medical Device Group, President-Pfizer Pharmaceuticals Group, and President and Chief Operating Officer. He was named Chairman and
Chief Executive officer in 2001 and served in this role until his retirement in the second half of 2006. Dr. McKinnell is the Chairman Emeritus of the Business Roundtable, an association of the CEOs of Americas largest companies, the
Pharmaceutical Research Manufacturers Association, the Food and Drug Law Institute, and the Medical Device Manufacturers Association. He has also served as vice chairman of the World Economic Forum, as a member of the WEF Foundation Board of
Trustees, and served on the Presidents Advisory Council on HIV/AIDS. Dr. McKinnell holds a Bachelors Degree in business from the University of British Columbia, and M.B.A. and Ph.D. degrees from the Stanford University Graduate
School of Business.
For further information on the Board of Directors and any committees thereof and the executive officers of the
Company, see the sections entitled CORPORATE GOVERNANCE and EXECUTIVE COMPENSATION in this Proxy Statement.
11
PROPOSAL 2: APPOINTMENT OF AUDITORS
The firm of PricewaterhouseCoopers LLP, Chartered Accountants, of 250 Howe Street, British Columbia (PWC) served as independent auditors for
the Company for the 12-month period ended December 31, 2007. PWC was first appointed as independent auditors of the Company on June 8, 2006. The Audit Committee pre-approves all services provided by PWC.
In the absence of instructions to the contrary or where instructions are uncertain, the enclosed proxy will be voted FOR the reappointment
of PWC as the auditors of the Company to hold office for the ensuing year at a remuneration to be fixed by the Board of Directors.
The
Company has been advised that a representative of PWC will attend the Meeting and will have the opportunity to make a statement and respond to appropriate questions from shareholders.
The aggregate fees for professional services rendered by PWC for the Company for the years ending December 31, 2007 and December 31, 2006
totaled $1,643,561 and $1,031,473, respectively, as detailed in the following table. All amounts are in U.S. dollars and have been converted from Canadian dollars using an average foreign exchange rate for the period indicated:
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(in U.S. dollars)
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Year
Ended
December 31,
2007
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Year
Ended
December 31,
2006
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Audit Fees
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$
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1,422,125
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$
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602,050
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Audit-Related Fees
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$
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202,828
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$
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65,123
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Tax Fees
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$
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$
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146,384
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All Other Fees
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$
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18,608
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$
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217,914
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TOTAL
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$
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1,643,561
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$
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1,031,473
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The nature of the services provided by PWC under each of the categories indicated in the foregoing
table is described below.
Audit Fees
Audit fees were for professional services rendered for the audit of the Companys annual financial statements (including internal control over financial reporting requirements under Section 404 of the Sarbanes-Oxley Act of 2002
(SOX)), quarterly reviews of interim financial statements and services provided in connection with statutory and regulatory filings or engagements.
Audit-Related Fees
Audit-related fees were for assurance and related services reasonably related to the performance of the
audit or review of the annual statements and are not reported under Audit Fees above. For each of 2007 and 2006, these services consisted of statutory audits of foreign subsidiaries.
Tax Fees
Tax fees were for tax compliance, tax
advice and tax planning professional services. These services consisted of: tax compliance including the review of tax returns and tax planning and advisory services relating to common forms of domestic and international taxation (i.e. income tax,
capital tax, goods and services tax, value added tax and payroll tax).
All Other Fees
In 2007, All Other Fees relates to services in regards to a registration statement which was not completed. In 2006, All Other
Fees relates to services in regards to the 2014 Notes registration statement and 2013 Notes offering circular.
12
PROPOSAL 3: RECONFIRMATION OF THE SHAREHOLDER RIGHTS PLAN
Introduction
On June 9, 2005, the shareholders
agreed to re-adopt the shareholder rights plan previously adopted by the Company on March 16, 1999 and re-adopted on March 5, 2002 (subject to amending all references of February 10, 1999 to March 5, 2002, and then to
June 9, 2005), on the terms and conditions set out in the amended and restated shareholder rights plan agreement dated as of June 9, 2005 between the Company and a trust company designated as rights agent (the Plan).
The Plan has a term of nine years, subject to reconfirmation by the shareholders at the third and sixth annual meetings following the
Companys annual meeting of shareholders on June 9, 2005, unless the rights to acquire common shares under the Plan (the Rights) are earlier redeemed or exchanged. The Plan provides that it will terminate unless it is
reconfirmed at the Meeting.
At the Meeting, shareholders will be asked to approve the Plan in substantially the same form with minor
technical amendments which are intended to clarify existing provisions of the Plan and will not result in any substantial changes to the Plan. The specific amendments are intended to correct several typographical errors and to ensure that the
adjustment formula, which adjusts the number of shares issuable for each Right and the exercise price in the event there is insufficient authorized capital for the exercise of Rights under the Plan, works correctly in all possible circumstances. If
reconfirmed at the Meeting, the Plan will terminate at the end of the Companys annual general meeting in 2011, unless further extended by shareholders.
Directors Recommendation
The Board of Directors has determined that the Plan is in the best interests of the Company
and its shareholders and unanimously recommends that shareholders vote in favor of the Shareholder Rights Plan Resolution, reconfirming the Plan with minor technical amendments, which is to be reconfirmed at the third annual meeting following the
Meeting.
Background and Purpose of the Plan
The Plan is designed to encourage the fair treatment of shareholders in connection with any
take-over offer for the Company. The Plan provides the Board and the shareholders with more time to fully consider any unsolicited take-over bid for the Company without undue pressure, to allow the Board to pursue, if appropriate, other alternatives
to maximize shareholder value and to allow additional time for competing bids to emerge. Securities legislation in Canada requires a take-over offer to remain open for only 35 days. The Board does not believe that this period is sufficient to
permit the Board to determine whether there may be alternatives available to maximize shareholder value or whether other bidders may be prepared to pay more for the Companys shares than the offeror. Under the Plan, a bidder making a Permitted
Bid (as defined below) for the voting shares of the Company may not take up any shares before the close of business on the 60
th
day after the
date of the bid and unless at least 50% of the Companys voting shares not beneficially owned by the person making the bid and certain related parties are deposited, in which case the bid must be extended for ten business days on the same
terms. The Plan encourages an offeror to proceed by way of Permitted Bid or to approach the Board with a view to negotiation. This is because the Plan creates the potential for substantial dilution of the offerors position if a Permitted Bid
is not made or if the Board does not agree to waive the application of the Plan. The Permitted Bid provisions of the Plan are designed to ensure that, in any take-over bid, all shareholders are treated equally, receive the maximum available value
for their investment and are given adequate time to properly assess the bid on a fully informed basis.
In recent years, unsolicited bids
have been made for the shares of a number of large Canadian companies. Many of these companies had a shareholder rights plan which was used by the targets Board of Directors to gain
13
time to seek alternatives to the bid with the objective of enhancing shareholder value. In most cases, a change of control ultimately occurred at a price in
excess of the original bid price.
Provincial securities regulators have concluded in recent decisions relating to shareholder rights plans
that a target companys board generally will not be permitted to maintain a shareholder rights plan solely to prevent a successful bid. They have affirmed that a rights plan may generally stay in place only for so long as the board is actively
seeking alternatives to a take-over bid and there is a real and substantial possibility that it can increase shareholder choice and maximize shareholder value, subject to limited exceptions.
The Plan was not proposed in response to, or in anticipation of, any acquisition or take-over offer and was not intended to prevent a take-over of the
Company, to secure continuance of current management or the directors in office or to deter fair offers for the voting shares of the Company. The Plan does not inhibit any shareholder from using the proxy mechanism set out in the
Business
Corporations Act
(British Columbia) to promote a change in the management or direction of the Company, including the right of holders of not less than 5% of the issued voting shares to requisition the directors to call a meeting of shareholders
to transact any proper business stated in the requisition. The Plan may, however, increase the price to be paid by a potential offeror to obtain control of the Company and may discourage certain transactions.
The Plan does not affect in any way the financial condition of the Company. The initial issuance of the Rights is not immediately dilutive and will not
affect reported earnings or cash flow per share unless the Rights separate from the underlying common shares and become exercisable. The reconfirmation of the Plan will not lessen or affect the duty of the Board to act honestly and in good faith and
in the best interests of the Company. The Plan is designed to provide the Board with the means to negotiate with an offeror and with sufficient time to seek out and identify alternative transactions on behalf of the Companys shareholders.
Terms of the Plan
The principal terms
of the Plan, after taking into account the minor technical amendments described above, are summarized below. Capitalized terms used, but not defined, in this summary are defined in the Plan. For full particulars, please refer to the text of the Plan
with the proposed amendments, a copy of which is available from Sage Baker, who can be reached by telephone at (604) 221-7676 or by electronic mail at ir@angio.com.
The Plan was implemented by the issuance of one Right in respect of each common share at the Record Time. One Right also will be issued for each additional common share issued after the Record Time and prior to the
earlier of the Separation Time (as defined below) and the Expiration Time. The Rights are not exercisable until the Separation Time. Upon the occurrence of a Flip-in Event (as defined below), each Right will entitle the holder to purchase for $160
voting shares having a market price of $320. In the event there is insufficient capital available to issue such number of shares, under the Plan, holders of Rights will be entitled to buy their pro rata portion of the remaining common shares
available for issuance at a price equal to half of the current market price of such shares.
This issuance of Rights will not change the
manner in which shareholders currently trade their common shares. Shareholders do not have to return their certificates in order to have the benefit of the Rights.
Until the Separation Time, the Rights will trade together with the common shares, will be represented by the common share certificates and will not be exercisable. After the Separation Time, the Rights will become
exercisable, will be evidenced by Rights certificates and will be transferable separately from the common shares.
The Separation Time is
defined in the Plan as the close of business on the eighth Trading Day (or such earlier date as may be determined by the Board) after the earlier of:
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the Stock Acquisition Date, which is the date of the first public announcement that a Person has become an Acquiring Person (defined in the Plan as a Person who has
acquired, other than pursuant to
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14
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an exemption available under the Plan or pursuant to a Permitted Bid Acquisition, Beneficial ownership of more than 20% of the Voting Shares of the Company);
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the date of the commencement of, or first public announcement of an intention to commence a Take-over Bid (other than a Permitted Bid or a Competing Permitted
Bid); and
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the date upon which a Permitted Bid or Competing Permitted Bid ceases to be such.
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A Permitted Bid is defined in the Plan as a Take-over Bid made by a Take-over Bid circular and which also complies with the following requirements:
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the Take-over bid is made to all holders of Voting Shares (other than the Offeror) wherever resident; and
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the Take-over Bid must be open for at least 60 days and more than 50% of the outstanding Voting Shares of the Company (other than shares Beneficially owned by
the Offeror on the date of the bid) must be deposited under the bid and not withdrawn before any shares may be taken up and paid for and, if 50% of the Voting Shares are so deposited and not withdrawn, an announcement of such fact must be made and
the bid must remain open for a further ten-day period.
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The Plan allows for a Competing Permitted Bid to be made while
the Permitted Bid is in existence. A Competing Permitted Bid must satisfy all the requirements of a Permitted Bid except that it may expire on the same date as the Permitted Bid, subject to the statutory requirement that it be outstanding for a
minimum period of 35 days.
If an Offeror successfully completes a Permitted Bid, the Plan provides that the Rights will be redeemed
at $0.0001 per Right.
A Permitted Bid, even if not approved by the Board, may be taken directly to the shareholders of the Company.
Shareholders approval at a meeting will not be required for a Permitted Bid. Instead, shareholders of the Company will initially have 60 days to deposit their shares. If more than 50% of the outstanding Voting Shares of the Company (other
than Voting Shares Beneficially owned by the Offeror on the date of the Take-over Bid) have been deposited and not withdrawn by the end of such 60-day period, the Permitted Bid must be extended for a further period of ten days to allow
initially disapproving shareholders to deposit their shares if they so choose.
If a potential Offeror does not wish to make a Permitted
Bid, it can negotiate with, and obtain the prior approval of the Board to make a bid to all shareholders by a Take-over Bid circular on terms which the Board considers fair to all shareholders. In such circumstances, the Board may waive the
application of the Plan to that transaction, thereby allowing such bid to proceed without dilution to the Offeror, and will be deemed to have waived the application of the Plan to all other contemporaneous bids made by a Take-over Bid circular to
all shareholders. The Board can also waive the application of the Plan in the event that a person has become an Acquiring Person by inadvertence and if an Acquiring Person chooses to reduce its Beneficial ownership so that it ceases to be an
Acquiring Person. All other waivers require shareholder approval.
Under the Plan, a Flip-in Event is any transaction in or pursuant to
which any Person becomes an Acquiring Person. Except as set out below, from and after the close of business on the eighth Trading Day following the Stock Acquisition Date:
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any Rights Beneficially Owned by the Acquiring Person and affiliates, associates and transferees of the Acquiring Person or any person acting jointly or in concert
with the Acquiring Person will become void; and
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each Right (other than Rights which are void) will entitle the holder thereof to purchase common shares having a market price of $320 for $160 (i.e. at a 50%
discount), such price subject to adjustment in certain circumstances.
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15
A Flip-in Event that is not approved by the Board will result in significant dilution to an Acquiring
Person and also to holders of Rights not exercising their Rights upon the occurrence of the Flip-in Event. The Board may, with the approval of holders of common shares or Rights, at any time prior to the occurrence of a Flip-in Event, elect to
redeem all of the outstanding Rights at a redemption price of $0.0001 per Right, such price subject to adjustment in certain circumstances.
Investment advisors (for client accounts), mutual funds and their managers and trustees, trust companies (acting in their capacities as trustees and administrators), statutory bodies managing investment funds (for employee benefit plans,
pension plans, insurance plans or various public bodies), administrators or trustees of registered pension funds, plans or related trusts and Crown agents or agencies acquiring greater than 20% of the Voting Shares are exempted from triggering a
Flip-in Event, provided that they are not making, or not part of a group making a Take-over Bid.
The Company may, from time to time
supplement or amend the Plan to correct clerical or typographical errors or to maintain the enforceability of the Plan as a result of a change in law. All other amendments require shareholder approval.
Shareholders Approval
In order for the Plan to
be reconfirmed as amended, the Shareholder Rights Plan Resolution must be passed by a majority of the votes cast by the holders of common shares who vote in respect thereof. The full text of the Shareholder Rights Plan Resolution reconfirming the
Plan with minor technical amendments is set out in Appendix A to this Proxy Statement.
In the absence of instructions to the contrary
or where instructions are uncertain, the enclosed proxy will be voted FOR the Shareholder Rights Plan Resolution as set out in Appendix A to this Proxy Statement.
16
PROPOSAL 4: AMENDMENT OF ARTICLES
At the Meeting, shareholders will be asked to approve a special resolution authorizing an amendment to the Articles of the Company to increase the quorum
for meetings of shareholders to comply with the NASDAQs quorum requirements. Currently, quorum is met if two persons are present who are, or who represent by proxy, shareholders who, in the aggregate, hold at least 5% of the issued shares
entitled to be voted at the meeting.
Pursuant to Rule 4350(f) of the NASDAQ Stock Market, Inc. Marketplace Rules, a company listed on the
NASDAQ is required to have in place a minimum quorum requirement for shareholder meetings of 33 1/3% of the outstanding shares of the companys voting common stock. The Company has historically relied on an exemption to this rule, which has
ceased to be available to the Company as a result of the Company ceasing to qualify as a foreign private issuer as of March 31, 2008. Accordingly, at the Meeting, shareholders will be asked to approve a special resolution authorizing an
amendment to section 11.3 of the Articles of the Company to increase the quorum for meetings of shareholders from (i) two persons who are, or who represent by proxy, shareholders who, in the aggregate, hold at least 5% of the issued shares
entitled to be voted at the meeting, to (ii) two persons who are, or who represent by proxy, shareholders who, in the aggregate, hold at least 33 1/3% of the issued shares entitled to be voted at the meeting.
Directors Recommendation
The Board of
Directors has determined that the proposed amendment to the Companys Articles is in the best interest of the Company and its shareholders and unanimously recommends that shareholders vote in favor of the Quorum Resolution.
Shareholders Approval
In order for the
proposed amendment to the Companys Articles to be authorized, the Quorum Resolution must be passed by 75% of the votes cast by holders of common shares who vote in respect thereof. The full text of the Quorum Resolution is set out in Appendix
A to this Proxy Statement.
In the absence of instructions to the contrary or where instructions are uncertain, the enclosed form of
proxy will be voted FOR the Quorum Resolution.
17
CORPORATE GOVERNANCE
Good governance is an important factor in the effective operation of the Company. Shareholders expect, and are entitled to, a Board that capably
represents their interests in overseeing management. The Charter of Board Governance and Expectations is attached as Appendix B to this Proxy Statement.
The Companys Board is strongly committed to the corporate governance requirements of the Canadian and United States securities commissions and stock exchanges, including SOX. The Company considers these sources
in reviewing, and revising where necessary, its corporate governance practices. We were compliant with the SOX section 404 internal control over financial reporting requirements for the years ended December 31, 2007 and December 31, 2006.
The following disclosure has been prepared in accordance with the requirements of NASDAQ and the U.S. securities regulators. The
Company believes that it meets or exceeds all applicable corporate governance requirements and will continue to be proactive in complying with new or evolving corporate governance standards.
For each of the past ten years, none or our directors or executive officers has been a director or officer of another issuer which, while that person was
acting in that capacity or within one year of that person ceasing to act in that capacity, became bankrupt or made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangements or
compromises with creditors or had a receiver, manager or trustee appointed to hold its assets.
The Board of Directors
Our Board of Directors currently consists of six independent members and one executive member. The following sets out the identity of our independent and
non-independent directors together with a list of the other reporting issuers of which our directors are also a director.
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Name of Director
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Independent/Non-Independent
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Other Reporting Issuers Of Which Director
Is Also A Director
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William L. Hunter
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Non-Independent
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Cardiome Pharma, Corp; Neuromed Pharmaceuticals, Inc.
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David T. Howard (Chair)
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Independent
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SemBioSys Genetics, Inc.; Via Pharmaceuticals, Inc.
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Hartley T. Richardson
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Independent
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Canadian Pacific Railway Ltd.; Neuromed Pharmaceuticals, Inc.
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Edward M. Brown
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Independent
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Replidyne, Inc.
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Laura Brege
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Independent
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|
None
|
|
|
|
Arthur H. Willms
|
|
Independent
|
|
Pacific Northern Gas Ltd.; Pristine Power Inc.
|
|
|
|
Henry A. McKinnell Jr.
|
|
Independent
|
|
Pfizer Inc.; Moodys Corporation
|
The role of Chair of the Board is assumed by David Howard, an independent director, and is
separate from the role of the Chief Executive Officer. Independent directors also chair the three committees of the Board. The Board has not developed written position descriptions for the Chair or the Chair of each Board committee. The Chair of
each Board committee establishes the responsibilities of the committee as contained in each committees charter and leads the fulfillment of the committees mandate as outlined in each committees charter. The role of the Chair of the
Board is to determine the charter and Board mandate as outlined in the Boards charter and lead the fulfillment of the Boards mandate as outlined in the Boards charter. The Charter of Board Governance and Expectations (attached as
Appendix B to this Proxy Statement) outlines responsibilities of the Companys Board of Directors, and identifies the personal and professional conduct expected of the directors.
18
William Hunter is not independent because of his position as President and Chief Executive Officer of the
Company. The Board has developed a written position description for the Chief Executive Officer of our Company. We believe that while Dr. Hunter is not independent, his knowledge of the operations and business of the Company is beneficial to
the other directors and enhances the effectiveness of the Board. Each director brings unique experiences and skills in providing oversight and governance. All committees consist solely of independent directors.
Under both SOX and the NASDAQ rules, the independence of a director is determined based upon certain criteria which evaluate whether the director has a
relationship with the Company that would interfere with the exercise of the directors independent business judgment. These rules became applicable to the Company on July 31, 2005. At present, if the nominees for election as directors are
approved at the Meeting, six out of seven of the Companys directors would be considered independent under these rules.
The
independent directors excuse the non-independent director and members of management for a portion of each meeting. The independent directors held nine meetings during the year ended December 31, 2007.
Set out below is the attendance record for each of our directors for all board meetings held during the year ended December 31, 2007, including one
special meeting devoted to the Companys corporate strategy and direction:
|
|
|
|
|
|
|
Director
(1)
|
|
Attendance at Board Meetings
|
|
Committee
|
|
Attendance at
Committee Meetings
|
William L. Hunter
|
|
9 of 9 meetings attended
|
|
N/A
|
|
N/A
|
David T. Howard
|
|
9 of 9 meetings attended
|
|
Audit
Compensation
Governance and Nominating
|
|
7 of 7 meetings attended
6 of 6 meetings attended
2 of 2 meetings attended
|
Hartley T. Richardson
|
|
6 of 9 meetings attended
|
|
Audit
Governance and Nominating
|
|
2 of 3 meetings attended
1 of 2 meetings attended
|
Edward M. Brown
|
|
8 of 9 meetings attended
|
|
Compensation
Governance and Nominating
|
|
4 of 6 meetings attended
2 of 2 meetings attended
|
Glen D. Nelson
(2)
|
|
5 of 5 meetings attended
|
|
N/A
|
|
N/A
|
Laura Brege
|
|
2 of 2 meetings attended
|
|
N/A
|
|
N/A
|
Arthur H. Willms
|
|
9 of 9 meetings attended
|
|
Audit
Compensation
|
|
7 of 7 meetings attended
4 of 6 meetings attended
|
Gregory J. Peet
(
3
)
|
|
7 of 7 meetings attended
|
|
Audit
Compensation
|
|
2 of 3 meetings attended
5 of 6 meetings attended
|
Notes:
(1)
|
The overall attendance was 92% at Board Meetings and 84% at Committee meetings.
|
(2)
|
Glen D. Nelson did not stand for re-election at the Companys annual general meeting held June 7, 2007.
|
(3)
|
Gregory J. Peet resigned as a director of the Company effective April 15, 2008.
|
There is no formal policy that requires directors to attend the annual general meeting. However, there is an expectation that each will attend the meeting. All members were present at the Companys 2007 annual
general meeting.
19
Compensation of Directors
Amounts paid to non-executive directors during the year ended December 31, 2007 are presented in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees earned
or paid in
cash
($)
|
|
Stock
awards
($)
|
|
Option
awards
($)
(1)
|
|
Non equity
incentive
plan
compensation
($)
|
|
Change in
pension value
and
nonqualified
deferred
compensation
earnings
|
|
All
other
compensation
($)
|
|
Total
($)
|
David T. Howard
|
|
$
|
155,402
|
|
|
|
$
|
54,778
|
|
|
|
|
|
|
|
$
|
212,041
|
Hartley T. Richardson
|
|
$
|
44,659
|
|
|
|
$
|
54,778
|
|
|
|
|
|
|
|
$
|
99,437
|
Edward M. Brown
|
|
$
|
58,615
|
|
|
|
$
|
52,356
|
|
|
|
|
|
|
|
$
|
110,971
|
Glen D. Nelson
(2)
|
|
$
|
23,260
|
|
|
|
$
|
49,750
|
|
|
|
|
|
|
|
$
|
73,010
|
Arthur H. Willms
|
|
$
|
69,780
|
|
|
|
$
|
54,778
|
|
|
|
|
|
|
|
$
|
124,558
|
Gregory J. Peet
(4)
|
|
$
|
53,963
|
|
|
|
$
|
51,941
|
|
|
|
|
|
|
|
$
|
105,904
|
Laura Brege
(3)
|
|
$
|
15,352
|
|
|
|
$
|
3,177
|
|
|
|
|
|
|
|
$
|
18,529
|
Notes:
(1)
|
Represents the fair value of option awards as per amounts recorded in the 2007 annual financial statements under Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 123(R) (FAS 123(R)) (with the exception of assumptions regarding forfeitures). The fair value presented in the table above includes the carry-forward impact of options granted prior to 2007 but unvested as
at January 1, 2007 (i.e. modified prospective method). Refer to note 16(c) of the Companys consolidated audited financial statements for the year ended December 31, 2007 for assumptions used in determining fair value of
option awards.
|
(2)
|
Mr. Nelson did not stand for re-election at the Companys annual general meeting held June 7, 2007.
|
(3)
|
Ms. Brege joined the Board effective August 2, 2007.
|
(4)
|
Mr. Peet resigned effective April 15, 2008.
|
For the 12-month period ended December 31, 2007, each director who was not an employee (a non-employee director) was paid in quarterly installments as follows:
|
|
|
Chair of the Board retainer
|
|
CDN$50,000 per annum
|
Board member retainer
|
|
CDN$30,000 per annum
|
Committee Chair retainer
|
|
CDN$5,000 per annum
|
Board and Committee attendance fee
|
|
CDN$2,000 per meeting
|
Upon initially being elected or appointed to the Board of Directors, each non-employee director is
typically granted an option to purchase 10,000 common shares of the Company. On a semi-annual basis thereafter, occurring at the time of the annual general meeting of the Company and December 1 of each year, if he or she continues to be a
non-employee director of the Company, he or she is normally granted on each occurrence a further option to purchase 5,000 common shares. Options granted are typically exercisable for a period of five years from the grant date, are granted at market
price and typically vest over a period of 24 months.
For the 12-month period ended December 31, 2007, the non-executive directors of
the Company were paid $421,000 (CDN$453,000) in aggregate for their service on the Board of Directors. Non-executive directors of the Company were issued 60,000 stock options in aggregate during the 12-month period ended December 31, 2007.
The compensation of non-executive directors is reviewed annually. The Governance and Nominating Committee provides recommendations to the
Compensation Committee on the structure of directors compensation. The Compensation Committee retained 3XCD and Towers Perrin to provide data on the amount of directors compensation and the market rates for 30 comparable companies with a
similar size capitalization in
20
the U.S. and Canadian biotechnology industries. Based on this information the Compensation Committee provides a report to the Board of Directors recommending
any changes to compensation.
Role of the Board of Directors
The Board of Directors has overall responsibility for the conduct of the business and affairs of the Company and discharges this responsibility both directly and through delegating certain authority to committees of
the Board and to senior management of the Company. The Boards written mandate is set out in the Charter of Board Governance and Expectations attached as Appendix B to this Proxy Statement.
The direct responsibilities of the Board include:
|
|
|
choosing the Companys Chief Executive Officer, who is responsible for all of the Companys day-to-day operations;
|
|
|
|
reviewing and approving the Companys corporate objectives, financial plans and budgets and strategic plan which takes into account an identification of
business opportunities and business risk;
|
|
|
|
monitoring and assessing the Corporations performance in meeting both short and long-term goals established by the Board;
|
|
|
|
directly reviewing and approving major transactions proposed by management;
|
|
|
|
reviewing reports and recommendations from committees of the Board with respect to matters such as succession planning, adequacy of the Companys internal
controls and preparation of financial statements and giving necessary directions to management; and
|
|
|
|
reviewing the content of significant communications with shareholders and the investing public, including this Proxy Statement, annual reports, annual information
forms and quarterly and annual financial statements and related managements discussion and analysis.
|
To ensure
directors exercise independent judgment in considering transactions and agreements in respect of which directors or management have a material interest, the directors or management, with the material interest, do not participate in the negotiations
or approvals process.
In addition, each year the Board (with the assistance of the Governance and Nominating Committee) formally reviews
its own performance, the performance of each committee of the Board, the performance of the Chair of the Board and the performance of the Chief Executive Officer. The performance of individual directors is reviewed annually by the Chair of the
Board. Each director completes a questionnaire that provides both qualitative and quantitative feedback on the performance of the Board and each Committee. The responses are compiled by the Chair of the Board and provided to the Governance and
Nominating Committee. This Committee reviews the responses and submits a report and action plan for board improvement to the Board of Directors. Where necessary the Chair of the Board will perform one-on-one interviews with directors whose
performance is unsatisfactory.
In 2002, we adopted codes of ethics for our Chief Executive Officer, Chief Financial Officer, directors and
officers. In 2006 we also adopted a guide of standards and business conduct for our employees. The codes of ethics and the guide of standards and business conduct are available on the Companys website at www.angiotech.com. Management reports
violations of the codes and any actions it has taken to the Board of Directors.
Orientation and Continuing Education of Board Members
When new directors are appointed to the Board of Directors, they are provided with a directors orientation package. This includes information on
Board organization and membership, meeting schedules, Board and
21
committee charters, Board evaluation and compensation, directors and officers insurance, responsibility of key management and functions,
corporate structure, corporate policies, current annual and quarterly financial statements, recent public disclosure documents and the Companys current strategic plan.
Each director assumes responsibility for keeping informed about the Companys business and relevant developments outside the Company which affect
its business. Management assists directors by providing them with regular updates on relevant developments and other information which management considers of interest to the Board. Continuing education on director governance and education is both
encouraged and funded.
Committees of the Board of Directors
There are currently three committees of the Board of Directors; the Audit Committee, the Compensation Committee and the Governance and Nominating Committee. Current members of these committees are identified in the
following table:
|
|
|
Committee
|
|
Committee Members
|
Audit Committee
|
|
Arthur Willms (Chair), David Howard and Hartley Richardson
|
Governance and Nominating Committee
|
|
Edward Brown (Chair), Hartley Richardson and David Howard
|
Compensation Committee
|
|
David Howard (Chair), Arthur Willms and Edward Brown
|
Each committee operates in accordance with its Board-approved charter. The Board may create a new
committee or disband a current committee whenever it considers it advisable to do so, provided that the Company must always have an Audit Committee. From time to time, the Board will establish ad hoc committees to consider special or unusual
matters.
Committee chairs, in consultation with members, determine the frequency of meetings for each committee, provided that a committee
must at all times comply with its charter. The agenda for each meeting is established by the committee chair in consultation with appropriate members of management. Each committee reports to the full Board with respect to each of its meetings.
Committee members are appointed annually following the Companys annual general meeting. The Governance and Nominating Committee
provides recommendations to the Board in respect of all such appointments.
The following is a description of the composition and mandate
for each of the committees of the Board.
Audit Committee
The charter for the Audit Committee requires that it be comprised of at least three unrelated and independent directors. The Audit Committee is comprised of three membersArthur Willms (Chair), David Howard and
Hartley Richardson. All of the members of the Audit Committee are independent of management (see The Board of Directors for a description of the relationship each member has to the Company). Until his resignation on April 15,
2008, Gregory Peet was a member of the Audit Committee. Mr. Richardson became a member of the Audit Committee on April 15, 2008, following Mr. Peets resignation. All Audit Committee members are required to be financially
literate and at least one member is required to have accounting or related financial management expertise.
Our Board of Directors has
determined that it has at least one audit committee financial expert serving on its Audit Committee. Mr. Arthur Willms has been determined by the board to meet the audit committee financial expert criteria prescribed by the SEC and
is independent, as that term is defined by the NASDAQs listing
22
standards applicable to the Company. The SEC has indicated that the designation of Mr. Willms as an audit committee financial expert does not make him
an expert for any purpose, impose any duties, obligations or liability on him that are greater than those imposed on other members of the Audit Committee and the Board of Directors who do not carry this designation, or affect the duties,
obligations or liability of any other member of the Audit Committee.
Additional information relating to the Audit Committee is contained
under the heading Corporate GovernanceAudit Committee and in Schedule A to the Companys Annual Information Form for the year ended December 31, 2007. The Audit Committee Charter is available on the Companys
website at www.angiotech.com.
Report of the Audit Committee
The following Report of the Audit Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other filing under the Securities Act or the Exchange Act,
except to the extent the Company specifically incorporates this Report by reference therein.
The Audit Committee assists the Board in
fulfilling its oversight responsibility to shareholders, potential shareholders, the investment community and others with respect to the Companys financial statements, financial reporting process, systems of internal accounting and disclosure
controls, performance of the external auditors and risk assessment and management. The Audit Committee has the power to conduct or authorize investigations into any matters within its scope of responsibilities, with full access to all books,
records, facilities and personnel of the Company, its auditors and its legal advisors. In connection with such investigations or otherwise in the course of fulfilling its responsibilities under its charter, the Audit Committee has the authority to
independently retain special legal, accounting, or other consultants to advise it. In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed with management the audited financial statements for the 12-month period
ended December 31, 2007 filed with the Canadian securities commissions and the SEC.
Management is responsible for the Companys
financial reporting process including its system of internal controls, and for the preparation of its consolidated financial statements in accordance with generally accepted accounting principles. The Companys independent registered public
accountants are responsible for auditing those financial statements. The Companys independent auditors are accountable to the Board of Directors and to the Audit Committee. The Board of Directors, through the Audit Committee, has the ultimate
responsibility to evaluate the performance of the independent auditors, and through the shareholders, to appoint, replace and compensate the independent auditors. The Audit Committee pre-approves all services provided by the Companys
independent auditors. The Audit Committee may delegate to one or more independent committee members the authority to pre-approve non-audit services provided that the pre-approval is presented to the Audit Committee at the first scheduled meeting
following such pre-approval.
The Audit Committee has relied on the information provided and on the representations made by management
regarding the effectiveness of internal controls over financial reporting, that the financial statements have been prepared with integrity and objectivity and that such financial statements have been prepared in conformity with generally accepted
accounting principles. The Audit Committee also relies on the opinions of the independent public accountants on the consolidated financial statements and the effectiveness of internal controls over financial reporting. The Audit Committees
oversight does not provide it with an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or policies, or appropriate internal controls and procedures designed to assure compliance
with accounting standards and applicable laws and regulations. Furthermore, its consultations and discussions with management and the independent public accountants do not assure that the Companys financial statements are presented in
accordance with generally accepted accounting principles, that the audit of the Companys financial statements has been carried out in accordance with generally accepted auditing standards or that our Companys independent accountants are
in fact independent.
23
The Audit Committee reviewed with the independent auditors, who are responsible for expressing an opinion
on the conformity of the Companys audited financial statements with United States generally accepted accounting principles, the auditors judgments as to the quality, not just the acceptability, of the Companys accounting principles
and such other matters as are required to be discussed with the Audit Committee under Canadian and United States generally accepted auditing standards. The Audit Committee met and discussed with the independent public accountants the matters
required to be discussed by Statements on Accounting Standards (SAS) No. 61, as currently in effect. In addition, the Audit Committee has discussed with the independent public accountants their independence from the Company and has received the
written letter from the independent public accountants required by Independence Standards Board Standard No. 1, as currently in effect.
The Audit Committee also discussed with the Companys independent auditors the overall scope and plans for their audit. The Audit Committee meets with the independent auditors, with and without management present, to discuss the
results of their examination, their evaluations of the Companys internal controls, and the overall quality of the Companys financial reporting. The Audit Committee held seven meetings during the year ended December 31, 2007.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors (and the Board of
Directors approved) the audited consolidated financial statements for the year ended December 31, 2007.
Audit Committee
|
|
|
|
|
Arthur Willms, Chair
|
|
David Howard
|
|
Hartley Richardson
|
Governance and Nominating Committee
The charter for the Governance and Nominating Committee requires that it be comprised solely of unrelated and independent directors of the Company. The
Governance and Nominating Committee is comprised of three membersEdward Brown (Chair), Hartley Richardson and David Howard. Each of the members of the Nominating and Governance Committee is independent of management (see The Board
of Directors for a description of the relationship each member has to the Company).
The mandate of the Governance and Nominating
Committee is to enhance corporate performance by assessing and making recommendations regarding Board effectiveness and by establishing a process for identifying, recruiting, appointing and re-appointing directors and providing for the ongoing
development of current Board members.
The process by which the Governance and Nominating Committee recommends new candidates for Board
nomination is as follows:
|
|
|
Annually, or as necessary, identify the characteristics and skills required by the Board to meet current and anticipated future requirements of the Board in order
to meet the Board of Directors mandate.
|
|
|
|
Maintain a current Directors skill matrix measured against needs of the Company.
|
|
|
|
Identify, review the qualifications of, approve and recommend to the Board of Directors nominees for election to the Board of Directors at each annual general
meeting.
|
|
|
|
Recommend to the Board directors for appointment to its committees and, as appropriate, recommend removal of directors from Board committees.
|
|
|
|
Identify, review the qualifications of, approve and recommend to the Board of Directors nominees to fill vacancies on the Board of Directors between annual general
meetings.
|
|
|
|
Ensure that there is a process in place for the orientation and education of any new directors.
|
24
The Company does not currently have a policy regarding the consideration of director nominations made by
security holders. As of March 31, 2008, the Company ceased to qualify as a foreign private issuer as a result of changes in the location of the holders of a majority of its outstanding common shares. As such, the Company has not yet considered
the appropriateness of such a policy but currently expects to consider the matter prior to the end of fiscal year 2008.
The Governance and
Nominating Committee reviews and monitors our corporate governance policies and procedures and, where necessary, makes recommendations on improvements to senior management. A copy of the Companys Governance and Nominating Committee Charter is
available on the Companys website at www.angiotech.com. The Governance and Nominating Committee held two meetings during the 12-month period ending December 31, 2007.
Compensation Committee
The Compensation Committee is comprised of three membersDavid Howard
(Chair), Arthur Willms and Edward Brown. Each of the members of the Compensation Committee is independent of management (see The Board of Directors for a description of the relationship each member has to the Company).
The Compensation Committee reviews compensation structures, policies, practices, and overall composition of executive compensation including annual
base salaries, benefit programs, annual incentives, and long-term incentives. Additionally, it reviews the relationship of corporate performance to executive compensation, recommending salary adjustments, annual incentive awards, and administering
stock option grants under the Companys stock option plan. The compensation of the Companys executive officers is determined by the Compensation Committee based upon recommendations made by the Chief Executive Officer and the Vice
President, Human Resources. The Compensation Committee also seeks input and guidance on executive compensation matters from independent external advisors and consultants. The Compensation Committee met six times formally and had several other
discussions during the 12-month period ended December 31, 2007. The Compensation Committee Charter is available on the Companys website at www.angiotech.com.
Shareholder Communications
The Board does not provide a process for shareholders to send
communications to the Board of Directors. As of March 31, 2008, the Company ceased to qualify as a foreign private issuer as a result of changes in the location of the holders of a majority of its outstanding common shares. As such, the Company
has not yet considered the appropriateness of such a process but currently expects to consider the matter prior to the end of fiscal year 2008.
25
Executive Officers
The following sets forth certain information regarding the Companys executive officers as of December 31, 2007 (ages are as of the record date):
|
|
|
|
|
Name, Age, Province or State and
Country and Position
|
|
Position with the Company
|
|
Principal Occupation within the Past Five Years
|
William L. Hunter, MD, MSc.
British Columbia, Canada
Age: 45
|
|
President, Chief Executive Officer, and Director
|
|
September 2002 to presentPresident & CEO, the Company
November 1992 to presentDirector, the Company
|
|
|
|
David M. Hall
British Columbia, Canada
Age: 55
|
|
Chief Compliance Officer
|
|
December 2005 to presentChief Compliance Officer, the Company
March 2002 to December 2005Chief Financial Officer, Corporate Secretary & Treasurer, the Company
|
|
|
|
K. Thomas Bailey
Washington, U.S.A.
Age: 39
|
|
Chief Financial Officer
|
|
December 2005 to presentChief Financial Officer, the Company
January 2004 to December 2005Vice President, Business Development, the Company
January 2003 to January 2004Independent Consultant
|
|
|
|
David D. McMasters, ESQ
Washington, U.S.A.
Age: 49
|
|
Senior Vice President, Legal and General Counsel
|
|
January 2004 to presentSenior Vice President, Legal & General Counsel, the Company
December 2000 to January 2004Vice President Intellectual Property & General Counsel, the
Company
|
|
|
|
Gary Ingenito, MD, PhD
(1)
British Columbia, Canada
Age: 53
|
|
Chief Clinical and Regulatory Affairs Officer
|
|
December 2005 to February 2008Chief Clinical & Regulatory Affairs Officer, Senior Vice President, Product Development, the
Company
February 2005 to December 2005Senior Vice President, Clinical &
Regulatory Affairs, the Company
October 2003 to January 2005Senior Vice
President, SFBC International
1995 to 2003Chief Operating Officer, Otsuka
Maryland Research Institute
|
|
|
|
Rui Avelar, MD
British Columbia, Canada
Age: 46
|
|
Chief Medical Officer
|
|
December 2005 to presentChief Medical Officer, the Company
January 2004 to December 2005Senior Vice President, Medical Affairs & Communications, the Company
January 2003 to January 2004Vice President, Medical Affairs & Communications, the Company
|
|
|
|
Jeffrey P. Walker, MD
British Columbia, Canada
Age: 56
|
|
Senior Vice President, Research and Development
|
|
May 2006 to presentSenior Vice President of Research & Development, the Company
2003 to May 2006Vice President, Advanced Technology/New Ventures, Medtronic Vascular,
Inc.
|
26
|
|
|
|
|
Name, Age, Province or State and
Country and Position
|
|
Position with the Company
|
|
Principal Occupation within the Past Five Years
|
|
|
|
Jonathan W. Chen
British Columbia, Canada
Age: 33
|
|
Senior Vice President, Business Development & Financial Strategy
|
|
January 2008 to presentSenior Vice President, Business Development & Financial Strategy, the Company
September 2005 to January 2008Vice President, Business Development & Financial Strategy,
the Company
September 2000 to May 2005Investment Banker, Credit Suisse First
Boston
|
|
|
|
Chris J.W. Dennis
British Columbia, Canada
Age: 49
|
|
Senior Vice President, Commercial Operations
|
|
May 2008 to presentSenior Vice President, Commercial Operations, the Company
April 2007 to May 2008Senior Vice President, Global Sales & Marketing, the
Company
October 2004 to April 2007Global President, OrthoNeutrogena, a Johnson
and Johnson Company
January 2001 to October 2004Vice President, Marketing &
Sales, Janssen Ortho Inc., a Johnson and Johnson Company
|
|
|
|
Jay Dent
British Columbia, Canada
Age: 49
|
|
Senior Vice President, Finance
|
|
December 2006 to presentSenior Vice President, Finance, the Company
October 2005 to November 2006Vice President, Finance & Accounting, the Company
May 2001 to September 2005Controller, Ballard Power Systems, Inc.
|
|
|
|
Victor Diaz
Illinois, U.S.A.
Age: 47
|
|
Senior Vice President, Global Manufacturing and Supply Chain Management
|
|
2007 to presentSenior Vice President, Global Manufacturing & Supply Chain, the Company
2003 to 2006Vice President, Global Operations, Teleflex Medical
2000 to 2003Vice President, Manufacturing, Tyco Healthcare Respiratory
|
|
|
|
Tammy Neske
British Columbia, Canada
Age: 37
|
|
Senior Vice President, Human Resources
|
|
January 2008 to presentSenior Vice President, Human Resources, the Company
January 2007 to January 2008Vice President, Human Resources, the Company
July 2005 to January 2007Director, Corporate Development, the Company
2000 to 2005Manager, Employment and Compensation, Ballard Power Systems,
Inc.
|
Note:
(1)
|
Mr. Ingenito ceased employment on February 29, 2008.
|
27
EXECUTIVE COMPENSATION
Compensation Discussion & Analysis
Overview of Compensation Program
The Company is a global specialty pharmaceutical and medical device company that
discovers, develops, and markets innovative technologies and medical products primarily for local diseases or for complications associated with medical device implants, surgical interventions and acute injury. The Companys R&D initiatives
focus on enhancements to its existing medical device products and a new and developing industry market of combination medical device and pharmaceutical/biomaterial compounds. This new product development integrates the pharmaceutical and biomedical
device industry sectors. The Company has grown both organically and by way of acquisition, demonstrating its entrepreneurial and innovative business style. At the Company, our employees and leaders are redefining success by striving to create novel
medical solutions that elevate the standard of care and improve peoples lives.
Dr. William Hunter, MD, MSc, is one of the
Companys co-founders and currently serves as President and Chief Executive Officer of the Company. He has led the Company through significant corporate milestones from its initial rounds of private and public financings, to product
commercialization and profitability. The Companys initial lead product, the TAXUS drug-eluting coronary stentwhich was co-developed and is now sold by BSCis implanted in over three million patients worldwide. As a result of his
leadership, the Company is a global leader in the field of drug-device combination products and a major manufacturer of over 5,000 specialty, single-use medical devices and medical device components targeting various surgical and interventional
medical markets.
The Company operates in two segments: pharmaceutical technologies and medical products. The BSC, TAXUS stent business is
responsible for a significant portion of the Companys revenues. The Company has a key mandate to drive growth of other value-added medical products under the Company brand name in the market, thereby reducing its reliance on drug-eluting stent
revenue. This delivery will be accommodated by using our products, production facilities and a new global sales and distribution network to maximize the Companys margins through integrated R&D, product development, manufacturing and
distribution.
The Company competes in a global market for executives and management as well as scientists, sales and marketing,
manufacturing and operations professionals. Many of our professional and management candidates are sought by other attractive employers, such as multi-national medical device companies, private medical device or technology companies, multi-national
pharmaceutical companies and university research institutions. Our employees develop proprietary technologies which include various drug, drug delivery and surface modification technologies and other medical biomaterials. Our strategy is to apply
these various technologies to create and commercialize novel, proprietary medical device, surgical implant and pharmaceutical products that reduce procedure side effects, improve surgical outcomes, shorten hospital stays, or are easier or safer for
a physician to use. In order to fulfill our corporate mission and attain our strategic goals, it is essential that the Company be able to attract, motivate and retain highly talented individuals at all levels and across all functional disciplines of
the organization.
The Compensation Committee (for purposes of this discussion, the Committee) of the Board is charged, on
behalf of the Board, to develop, review and approve compensation policies and practices applicable to executive officers, including determining the benchmarks, criteria and performance metrics upon which executive compensation such as base salary,
annual bonuses, equity compensation and other benefits are based.
28
Compensation Philosophy and Objectives
The Companys objectives for its executive compensation policies, programs, and practices are to:
|
|
|
Attract and retain experienced and talented executive officers;
|
|
|
|
Inspire excellence in the performance of executive officers; and
|
|
|
|
Align shareholder and executive officer interests.
|
To further these objectives, the Committee:
|
|
|
Ensures pay and performance systems reflect the level of job responsibility, incumbent specific considerations, individual performance and the Companys
overall corporate performance;
|
|
|
|
Aligns the Companys compensation programs with those of similarly complex specialty pharmaceutical, biotechnology and medical device companies;
|
|
|
|
Motivates executive performance by aligning pay-for-performance-based compensation programs to the achievement of objectives that will drive future success and
enhance shareholder value; and
|
|
|
|
Links a significant portion of annual awards to overall corporate performance and attainment of specific value enhancing goals.
|
The Committee regularly evaluates both performance and compensation to ensure that the Company maintains its ability to attract and retain high caliber
talented employees in key positions and that compensation provided to our executives remains competitive relative to the compensation paid to executives of our peer companies. To that end, the Committee believes executive compensation packages
provided by the Company should include salary, which provides base compensation, and annual cash bonus and stock-based compensation, which reward performance as measured against established goals.
Role of Executive Officers in Compensation Decisions
The Committee makes all decisions pertaining to the compensation of the Chief Executive Officer. The Committee reviews and approves recommendations for compensation awards to other executive officers presented by the Chief Executive
Officer.
The Chair of the Board and the Committee annually review the performance of the Chief Executive Officer. The Chief Executive
Officer annually reviews the performance of the other executive officers. The conclusions reached and recommendations based on these reviews, including with respect to salary adjustments, bonus awards and stock option awards are presented to the
Committee for review and approval. The Committee can exercise its discretion in modifying any recommended adjustments or awards to executive officers prior to presenting the Committees recommendations to the Board of Directors for approval.
Setting Executive Compensation
Based
on the foregoing objectives, the Committee has structured the Companys compensation programs to motivate executives to achieve the short- and long-term business goals of the Company, and to reward executives for achieving such goals. When
making the compensation decisions described above, the Committee seeks the advice and recommendations of the CEO, CFO and Senior VP, Human Resources and also retains independent compensation consultants to provide advice and data related to
appropriate industry benchmarks and compensation trends.
In the fall of 2006, Angiotech engaged Towers Perrin to provide market data for
executive compensation which included base salaries, bonuses, and equity-based incentives to comprise total direct compensation. The Committee and Towers Perrin developed a market comparator group of companies, with input from management
29
of the Company. The market comparator group consisted of similarly sized biotech, specialty pharmaceutical and medical device companies as measured by assets
and revenue. The companies comprising of the market comparator group were:
|
|
|
Biotechnology Comparables
|
|
Medical Device Comparables
|
Abraxis BioSciences, Inc.
|
|
ArthroCare Corp.
|
Aspreva Pharmaceuticals Corporation
|
|
Edwards Lifesciences Corp.
|
Celgene Corporation
|
|
FoxHollow Technologies, Inc.
|
ICOS Corporation
|
|
Kyphon Inc.
|
KOS Pharmaceuticals, Inc.
|
|
Mentor Corporation
|
The Medicines Company
|
|
Symmetry Medical Inc.
|
PDL Bio Pharma, Inc.
|
|
Ventana Medical Systems, Inc.
|
QLT Inc.
|
|
Sepracor Inc.
|
For comparison purposes, the Companys annual revenues rank the 68th percentile and the total
assets rank the 84th percentile against the market comparator group. The analysis of Towers Perrin revealed that, on average, the Company was positioned above median for base salary relative to the market comparator group. However, competitiveness
declined on a target total cash and target total direct compensation basis.
Also in the fall of 2006, the Committee engaged its own
independent pay-for-performance consulting firm, 3XCD Inc. (3XCD), to opine on the selection of the market comparator group and to conduct performance analysis against this same group of market comparator companies. In addition, 3XCD was
retained by the Committee to provide advice on the competitiveness and appropriateness of compensation programs for the Companys Chief Executive Officer and his direct reports. This advice included, but was not limited to, base salaries,
bonuses, short- and long-term incentives, perquisites, employment terms and change of control provisions. In fulfilling the mandate, 3XCD reviewed the Companys compensation policy (including choice of comparator companies, pay and performance
positioning, performance measurements, etc.), plan designs and pay levels versus the market, and provided observations and recommendations for change solely to the Committee. 3XCD has not been engaged by the Committee to provide additional services.
The Committee generally targets total compensation for executive officers at the 50th percentile of compensation paid to similarly
situated executives within the market comparator group. Variations to this objective may occur based on the experience level of the individual, the complexity of the position and other relevant market factors. The Company does not have specific
policies regarding the mix of fixed vs. variable/at-risk pay, cash vs. non-cash, short-term vs. long-term incentive compensation, or the impact of prior compensation on current compensation. Rather, the Committee relies on the market comparator
data, the performance of the Company, the individual performance of the applicable executive officer and other relevant factors in determining an appropriate mix of compensation.
Stock Ownership Guidelines and Stock Retention Requirements
The Company does not maintain any stock
ownership guidelines or stock retention requirements for its executives.
Adjustment or Recovery of Awards upon Restatement of Financial Results
The Company does not maintain a policy requiring adjustment or recovery of awards from executives upon restatement of financial results.
Accounting of Stock-Based Compensation
Beginning on January 1, 2006, the Company began accounting for stock-based compensation under its long-term incentive plans in accordance with the requirements of FAS 123(R).
30
Policy on Tax Deductibility of Executive Compensation
The Committee does not maintain a policy on the tax deductibility of compensation paid to executives. Section 162(m) of the Code, which provides that
public companies generally may not deduct compensation of more than $1 million of non-performance-based pay paid to Named Executive Officers, did not apply to the Company until this year when the Company ceased to be a foreign private
issuer under U.S. securities laws.
2007 Executive Compensation Elements
For the fiscal year ended December 31, 2007, the principal components of compensation for Named Executive Officers were:
|
|
|
Long-term incentive program;
|
|
|
|
Retirement savings plan; and
|
|
|
|
Benefits programs including health coverage, insurance plans and other perquisites.
|
Annual Base Salary
The Company
provides Named Executive Officers and other employees with base salary to compensate them for services rendered during the fiscal year. The base salary of each executive officer is reviewed annually. During its review of base salaries for executive
officers, the Committee considers the position, responsibilities, demonstrated performance and growth, market comparator group data, and experience and legacy factors. Base salary for most executive positions is within median range of the market
comparator group. The base salaries of several of the Named Executive Officers reflect incumbent specific considerations relative to the pay positioning philosophy. For 2007, executive officers received salary increases ranging from 0% to 8%. Named
Executive Officers received increases ranging from 4% to 6%. In December 2006, the Committee awarded a 4% increase in base salary to Dr. Hunter, increasing his salary to CDN$1,040,000. However on March 1, 2007, Dr. Hunter voluntarily
reduced his annual base salary by CDN$250,000 to CDN$790,000. The Committee awarded a 6% increase in base salary to Mr. Bailey, a 5% increase in base salary to Dr. Avelar and a 4% increase in base salary to Mr. McMasters and
Dr. Ingenito upon the recommendation of Chief Executive Officer.
Annual Bonus Program
The annual bonus program provides a cash incentive to employees and executive officers. The program awards for individual performance that leads to the
achievement of annual corporate objectives. Bonus targets were established by the Committee for each executive at approximately the 50th percentile of the market comparator group. The bonus targets for Named Executive Officers range from 40% to 50%
of base salary. Dr. Hunters bonus target is 75% of base salary. Mr. Baileys bonus target is 50% of base salary. Mr. McMasters, Dr. Ingenitos and Dr. Avelars bonus target is 40% of base salary.
At the beginning of the year, key corporate objectives were set by the Board to represent a broad range of activities that span the
Companys global and complex business. The 2007 corporate objectives are categorized into goal themes (commercial, clinical, research, operations and people). Objectives are set with targets that represent significant stretch goals
for the organization. At the end of the year, performance relative to all of the corporate objectives is measured to determine a corporate result. If all corporate objectives are achieved, the corporate result is 100%. The corporate
result could be higher or lower depending on the extent to which the corporate objectives were achieved. The Board gives consideration to how challenging each goal was and considers other business, commercial and organizational factors that may have
impacted achievement of the goals in arriving at its final assessment of the corporate result.
31
For 2007, the themes objectives and relative achievements of those objectives were:
|
|
|
|
|
Theme
|
|
Objectives
|
|
Result
|
Commercial
|
|
Achieve product vertical revenue target (Surgical, Interventional & Specialties)
|
|
Achieved Interventional and Specialties targets, fell short on Surgical targets; total revenues short of target
|
|
|
|
Clinical
|
|
Complete enrollment of Vascular Wrap AV access trial in U.S.
|
|
Vascular Wrap enrollment accelerating but not completed
|
|
|
|
|
|
Obtain approval for the 5-FU CVC
|
|
Filed 5-FU CVC submission for approval
|
|
|
|
Research
|
|
Complete prototype optimization for new pre-clinical product candidate
|
|
Achieved
|
|
|
|
|
|
Complete GLP preclinical package for a drug-device product
|
|
Priority shifted to medical device product development
|
|
|
|
Operations
|
|
Improve supply chain and accuracy of budgeting, forecasting and reporting
|
|
Achieved 2007 progress milestones
|
|
|
|
|
|
Implement Syracuse, Reading, Puerto Rico, Vancouver Facilities Plan
|
|
Achieved 2007 progress milestones
|
|
|
|
People
|
|
Implement new Goal, Development & Performance Review Form
|
|
Achieved
|
|
|
|
|
|
Recruit key hires
|
|
Achieved
|
The formula for determining the amount each executive officer will receive under the annual bonus
program is as follows:
Base Salary x Bonus Target x Individual Performance Result x Corporate Performance Result
The Individual Performance Result is based on each executives achievement of his functional/personal goals (also set at the beginning of each year)
as assessed by the Chief Executive Officer. The Committee determines the Individual Performance Result of the Chief Executive Officer and may exercise its discretion in the recommendations made by the Chief Executive Officer for other executive
officers.
The Corporate Performance Result is determined by the Board. In determining the corporate performance for 2007, the Board
applied a weighting to each corporate objective. For 2007, the Board assessed the Corporate Performance Result to be 50%.
For 2007, the
Committee and all executive officers, including Named Executive Officers, recommended that the 2007 cash bonus for executive officers be awarded at zero, to align themselves with the Committees assessment of corporate performance and the
market/shareholder perception of the Companys performance. The Board of Directors approved this recommendation.
Long-Term
Incentive Program
The purpose of the Companys long-term incentive awards is to promote the long-term success of the Company by
aligning the interests of the Companys employees with the interests of its shareholders. The awards provide employees and executive officers an equity-based interest in the Company and thereby encourage those people to perform their duties to
the best of their abilities, and to devote their time and effort to further the long-term growth and development of the Company. The awards are also intended to assist the Company in attracting and retaining individuals with superior experience and
ability and providing competitive levels of compensation to such individuals. Subject to the approval of the Board, the plan allows for grants of options and tandem SARs.
32
Award levels are determined based on market comparator group data and vary among participants based on
their position, performance and relative contribution. Historically, option grants were made at or around fiscal year end. In 2007, options were granted following the release of year-end results so that the performance of the Company and each
individual executive could be considered. Awards granted to executive officers in 2007 were generally below the median expected value of long-term incentive grants of the market comparator group. Information about the awards granted in 2007 is set
forth below in the Grant of Plan-Based Awards table.
Options/tandem SARs are awarded at the TSX (for Canadian executives) or NASDAQ (for
U.S. executives) closing price of the Companys common stock on the business day immediately preceding the date of grant. Typically, options/tandem SARs vest 1/48th per month over the first four years of the five-year option term. Vesting
and exercise rights cease immediately upon termination of employment for cause or termination by the award holder. In the case of termination without cause, vesting rights cease upon termination of employment and exercise of previously vested
options/tandem SARs cease after 30 days or expiration of the option, whichever is earlier. In the event of death, disability or retirement, vesting rights cease upon death, disability or retirement and exercise of previously vested cease after 365
days or the expiration of the option, whichever is earlier.
Retirement Savings Plans
In Canada, executive officers receive a Company contribution to an individual Group RRSP (a Canadian tax-qualified plan) in an amount equal to 5% of their
base salary, to the maximums allowable by Canada Revenue Agency. In the United States, executive officers receive a contribution of 5% of base salary by the Company to the Companys 401(k) plan (a U.S. tax-qualified plan), to the maximums
allowable by the IRS. All contributions to the retirement savings plans are fully vested.
Benefits Programs
The Company provides benefits to all employees including the executive officers. Benefits provided at the Companys expense include:
|
|
|
Medical and extended health care insurance;
|
|
|
|
Employee and dependent life insurance;
|
|
|
|
Short- and long-term disability insurance.
|
Executive officers are also eligible to participate in an executive perquisite program. The program allows executives to be reimbursed up to a maximum of $15,000 per year for expenses associated with a car lease, financial planning, tax
advice and preparation, and services of a private healthcare center.
The Company does not have a defined benefit pension plan for any of
its employees, including executive officers.
Employment Agreements
The Company maintains employment agreements with each of the Named Executive Officers. The terms of the executive employment agreements are summarized below in the section of this Proxy Statement entitled
EXECUTIVE COMPENSATIONPotential Payments Upon Termination or Change of Control.
33
Summary Compensation Table for the Fiscal Year Ended December 31, 2007
The following tables contain certain information about the compensation and benefits paid or provided to each of the Chief Executive Officer, the Chief
Financial Officer and the other three most highly compensated executive officers of the Company (determined based on total compensation) as at December 31, 2007 (collectively the Named Executive Officers or NEOs).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All amounts expressed in U.S.
Dollars unless otherwise noted
Name and Principal Position
|
|
Year
|
|
Salary
($)
(1)
|
|
Stock
Awards
($)
|
|
Option
Awards ($)
(2)
|
|
Non-equity
incentive
plan
compensation
($)
(1)(3)
|
|
Change in
pension value
and
nonqualified
deferred
compensation
earnings ($)
|
|
All other
compensation
($)
(4)
(5)(6)(7)(8)
|
|
Total ($)
|
William L. Hunter,
MD, MSc President, Chief Executive Officer and Director
|
|
2007
2006
|
|
$
$
|
735,020
882,000
|
|
Nil
Nil
|
|
$
$
|
956,800
1,248,692
|
|
$
|
Nil
374,850
|
|
Nil
Nil
|
|
$
$
|
88,376
91,693
|
|
$
$
|
1,780,196
2,597,235
|
|
|
|
|
|
|
|
|
|
K. Thomas Bailey
Chief Financial Officer
|
|
2007
2006
|
|
$
$
|
350,000
330,000
|
|
Nil
Nil
|
|
$
$
|
497,983
364,346
|
|
$
$
|
50,000
130,000
|
|
Nil
Nil
|
|
$
$
|
88,663
44,759
|
|
$
$
|
986,646
869,105
|
|
|
|
|
|
|
|
|
|
Rui Avelar,
MD Chief Medical Officer
|
|
2007
2006
|
|
$
$
|
337,039
303,600
|
|
Nil
Nil
|
|
$
$
|
338,654
340,452
|
|
$
|
Nil
99,440
|
|
Nil
Nil
|
|
$
$
|
29,221
27,908
|
|
$
$
|
704,915
771,400
|
|
|
|
|
|
|
|
|
|
David McMasters,
ESQ Senior Vice President, Legal & General Counsel
|
|
2007
2006
|
|
$
$
|
473,000
454,800
|
|
Nil
Nil
|
|
$
$
|
335,636
393,460
|
|
$
|
Nil
150,000
|
|
Nil
Nil
|
|
$
$
|
63,222
66,240
|
|
$
$
|
871,858
1,064,500
|
|
|
|
|
|
|
|
|
|
Gary Ingenito,
MD, PhD
Chief Clinical and Regulatory Affairs Officer
(9)
|
|
2007
2006
|
|
$
$
|
400,400
385,000
|
|
Nil
Nil
|
|
$
$
|
332,832
266,685
|
|
$
|
Nil
125,000
|
|
Nil
Nil
|
|
$
$
|
20,020
110,219
|
|
$
$
|
753,252
886,904
|
Notes:
(1)
|
Amounts paid to Dr. Hunter and Dr. Avelar were paid in Canadian dollars and, for the purposes of this table, converted to U.S. dollars using the average exchange rate of
0.930 and 0.882 for each of the years ended December 31, 2007 and December 31, 2006, respectively.
|
(2)
|
Represents the fair value of option awards as per amounts recorded in the annual financial statements under FAS 123(R) (with the exception of assumptions regarding forfeitures).
There were no options granted to any of the NEOs in 2006. The fair value presented in the table above includes the carry-forward impact of options granted prior to 2006 but unvested as at January 1, 2006 (i.e. modified prospective
method). Refer to note 16(c) of the Companys consolidated audited financial statements for the year ended December 31, 2007 for assumptions used in determining fair value of option awards.
|
(3)
|
Non-equity incentive plan compensation for Dr. Ingenito for 2006 includes $30,000 annual bonus accrued at December 31, 2006 but not paid until 2007.
|
(4)
|
Amounts included in all other compensation for 2007 for Dr. Hunter include: $45,534 of costs related to reimbursement of family travel costs; $18,069 in auto lease payments
paid by the Company on behalf of the NEO; $18,783 of RRSP contributions made by the Company on behalf of the NEO; and $5,991 of other miscellaneous perquisites. Amounts included in all other compensation for 2006 for Dr. Hunter include: $45,879
of costs related to reimbursement of family travel costs; $17,129 in auto lease payments paid by the Company on behalf of the NEO; $15,876 of RRSP contributions made by the Company on behalf of the NEO; and $12,809 of other miscellaneous
perquisites.
|
34
(5)
|
Amounts included in all other compensation for 2007 for Mr. Bailey include: $44,344 of relocation allowance; $21,632 of rent paid by the Company on behalf of the NEO; $17,500
of 401(k) contributions made by the Company on behalf of the NEO; and $5,187 of other miscellaneous perquisites. Amounts included in all other compensation for 2006 for Mr. Bailey include: $27,201 of rent paid by the Company on behalf of the
NEO; $16,500 of 401(k) contributions made by the Company on behalf of the NEO; and $1,058 of other miscellaneous perquisites.
|
(6)
|
Amounts included in all other compensation for 2007 for Mr. McMasters include: $34,797 of rent paid by the Company on behalf of the NEO; $23,650 of 401(k) contributions made by
the Company on behalf of the NEO and $4,775 of other miscellaneous perquisites. Amounts included in all other compensation for 2006 for Mr. McMasters include: $31,355 of rent paid by the Company on behalf of the NEO; $22,740 of 401(k)
contributions made by the Company on behalf of the NEO; and $12,145 of other miscellaneous perquisites.
|
(7)
|
Amounts included in all other compensation for 2007 for Dr. Ingenito include: $20,020 of 401(k) contributions made by the Company on behalf of the NEO. Amounts included in all
other compensation for 2006 for Dr. Ingenito include: $84,810 of relocation costs paid by the Company on behalf of the NEO; $19,249 of 401(k) contributions made by the Company on behalf of the NEO; and $6,160 of other miscellaneous perquisites.
|
(8)
|
Amounts included in all other compensation for 2007 for Dr. Avelar include: $16,852 of RRSP contributions made by the Company on behalf of the NEO and $12,369 in auto lease
payments paid by the Company on behalf of the NEO. Amounts included in all other compensation for 2006 for Dr. Avelar include: $15,214 of RRSP contributions made by the Company on behalf of the NEO; $7,578 in auto lease payments paid by the
Company on behalf of the NEO; and $5,116 of other miscellaneous perquisites.
|
(9)
|
Dr. Ingenito ceased employment on February 29, 2008 and was provided a severance package that was paid in 2008 and is not reflected in the table above.
|
Grant of Plan-Based Awards
All
amounts express in U.S. Dollars unless otherwise noted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant Date
|
|
Estimated Future Payouts Under
Non-Equity Incentive Plans
|
|
All Other
Option
Awards;
Number of
Securities
Underlying
Options (#)
|
|
Exercise or
Base Price
of Option
Awards
($/Sh)
|
|
Grant Date
Fair Value
of Stock and
Option
Awards
(1)
|
|
|
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
|
|
|
|
|
William L. Hunter
|
|
Feb 5, 2007
|
|
Nil
|
|
Nil
|
|
Nil
|
|
350,000
|
|
CDN$
|
8.90
|
|
CDN$
|
3.07
|
|
|
|
|
|
|
|
|
K. Thomas Bailey
|
|
Feb 5, 2007
|
|
Nil
|
|
Nil
|
|
Nil
|
|
200,000
|
|
$
|
7.65
|
|
$
|
2.37
|
|
|
|
|
|
|
|
|
Rui Avelar
|
|
Feb 5, 2007
|
|
Nil
|
|
Nil
|
|
Nil
|
|
185,000
|
|
CDN$
|
8.90
|
|
CDN$
|
3.07
|
|
|
|
|
|
|
|
|
David McMasters
|
|
Feb 5, 2007
|
|
Nil
|
|
Nil
|
|
Nil
|
|
175,000
|
|
$
|
7.65
|
|
$
|
2.37
|
|
|
|
|
|
|
|
|
Gary Ingenito
|
|
Feb 5, 2007
|
|
Nil
|
|
Nil
|
|
Nil
|
|
100,000
|
|
$
|
7.65
|
|
$
|
2.37
|
Note:
(1)
|
Represents the fair value of option awards as per amounts recorded in the annual financial statements under FAS 123(R) (with the exception of assumptions regarding forfeitures). The
fair value presented in the table above includes the carry-forward impact of options granted prior to 2006 but unvested as at January 1, 2006 (i.e. modified prospective method). Refer to note 16(c) of the Companys consolidated
audited financial statements for the year ended December 31, 2007 for assumptions used in determining fair value of option awards.
|
35
Outstanding Equity Awards at Fiscal Year-End
The table below shows unexercised option awards held NEOs outstanding as of December 31, 2007. All exercise prices are denoted in Canadian dollars
unless otherwise specified.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
Name
|
|
Number of
securities
underlying
unexercised
options (#)
exercisable
|
|
Number of
securities
underlying
unexercised
options (#)
unexercisable
|
|
|
Equity incentive plan
awards: number of
securities underlying
unexercised unearned
options
(#)
|
|
Option
exercise
price ($)
|
|
Option
Expiration date
|
William L. Hunter
|
|
100,000
|
|
|
|
|
|
|
$
|
3.025
|
|
3/15/2009
|
|
|
300,000
|
|
|
|
|
|
|
$
|
4.238
|
|
12/16/2010
|
|
|
300,000
|
|
|
|
|
|
|
$
|
15.625
|
|
9/11/2010
|
|
|
600,000
|
|
|
|
|
|
|
$
|
14.838
|
|
11/30/2010
|
|
|
400,000
|
|
|
|
|
|
|
$
|
21.388
|
|
12/6/2011
|
|
|
400,000
|
|
|
|
|
|
|
$
|
13.468
|
|
12/17/2009
|
|
|
200,000
|
|
|
|
|
|
|
$
|
31.850
|
|
1/21/2009
|
|
|
75,000
|
|
75,000
|
(1)
|
|
|
|
$
|
17.410
|
|
12/1/2010
|
|
|
72,917
|
|
277,083
|
(5)
|
|
|
|
$
|
8.900
|
|
2/4/2012
|
|
|
|
|
|
|
K. Thomas Bailey
|
|
75,000
|
|
|
|
|
|
|
$
|
31.850
|
|
1/21/2009
|
|
|
13,125
|
|
1,875
|
(2)
|
|
|
|
$
|
27.750
|
|
6/9/2009
|
|
|
45,000
|
|
15,000
|
(3)
|
|
|
|
US$
|
18.000
|
|
1/26/2010
|
|
|
25,000
|
|
25,000
|
(1)
|
|
|
|
$
|
17.410
|
|
12/1/2010
|
|
|
41,667
|
|
158,333
|
(5)
|
|
|
|
US$
|
7.650
|
|
2/4/2012
|
|
|
|
|
|
|
Rui Avelar
|
|
200,000
|
|
|
|
|
|
|
$
|
21.388
|
|
12/6/2011
|
|
|
70,000
|
|
|
|
|
|
|
$
|
13.468
|
|
12/17/2012
|
|
|
50,000
|
|
|
|
|
|
|
$
|
31.850
|
|
1/21/2009
|
|
|
30,000
|
|
30,000
|
(1)
|
|
|
|
$
|
17.410
|
|
12/1/2010
|
|
|
38,542
|
|
146,458
|
(5)
|
|
|
|
$
|
8.900
|
|
2/4/2012
|
|
|
|
|
|
|
David McMasters
|
|
700,000
|
|
|
|
|
|
|
$
|
17.500
|
|
10/18/2010
|
|
|
120,000
|
|
|
|
|
|
|
$
|
21.388
|
|
12/6/2011
|
|
|
50,000
|
|
|
|
|
|
|
$
|
13.468
|
|
12/17/2012
|
|
|
60,000
|
|
|
|
|
|
|
$
|
31.850
|
|
1/21/2009
|
|
|
30,000
|
|
30,000
|
(1)
|
|
|
|
$
|
17.410
|
|
12/1/2010
|
|
|
36,458
|
|
138,542
|
(5)
|
|
|
|
US$
|
7.650
|
|
2/4/2012
|
|
|
|
|
|
|
Gary Ingenito
|
|
70,833
|
|
29,167
|
(4)
|
|
|
|
US$
|
17.20
|
|
1/31/2010
|
|
|
50,000
|
|
50,000
|
(1)
|
|
|
|
$
|
17.410
|
|
12/1/2010
|
|
|
20,833
|
|
79,167
|
(5)
|
|
|
|
US$
|
7.650
|
|
2/4/2012
|
Notes:
(1)
|
Vests monthly over 48 months to December 2009
|
(2)
|
Vested monthly over 48 months to June 2008
|
(3)
|
Vests monthly over 48 months to January 2009
|
(4)
|
Vests monthly over 48 months to February 2009
|
(5)
|
Vests monthly over 48 months to February 2011
|
Option Exercises and
Stock Vested in 2007
There were no options exercised by NEOs during the last completed fiscal year.
36
Potential Payments Upon Termination or Change of Control
The tables below reflect the amount of compensation payable to each of the NEOs in the event of termination of such executives employment. The
amount of compensation payable to each NEO upon voluntary termination, involuntary without-cause termination, termination by executive for good reason, termination following change of control and in the event of death of the executive is also shown
below. The amounts shown assume that such termination was effective as of December 31, 2007, and thus includes amounts earned through such time and are estimates of the amounts which would be paid out to the executives upon their termination.
The amounts shown below assume a share price of $3.48 based on the December 31, 2007 closing price of the common shares on the NASDAQ. The actual amounts to be paid out can only be determined at the time of the executives separation from
the Company.
Dr. Hunter
Termination Without Cause or Termination by Dr. Hunter for Good Reason:
|
|
|
Under the terms of his employment agreement, if Dr. Hunters employment is terminated without cause or Dr. Hunter terminates his employment for good
reason, and Dr. Hunter does not enter into a Consulting Agreement (described below), Dr. Hunter will receive a lump sum severance payment equivalent to 12 months salary, plus an amount equal to the average annual bonus payments
received in the previous three years; and monthly payments equivalent to one-half of monthly salary for 24 months, plus an additional amount equivalent to the average annual bonus payments received in the previous three years paid in 24 equal
monthly installments. Health and certain other benefits will also be continued for 24 months, or Dr. Hunter will receive an amount equal to the cost to the Company of providing those benefits. The estimated total of the foregoing payments is
approximately $2.5 million. The Companys obligation to provide the foregoing payments and benefits is conditional on Dr. Hunters compliance with a Confidentiality, Inventions and Non Competition Agreement, which, among other things,
restricts competitive activity for one year following the termination date.
|
|
|
|
Under the employment agreement, cause shall consist of (a) any act or acts which at common law in the Province of British Columbia are just cause
for dismissal; or (b) a material breach of the Code of Ethics adopted by the Board and agreed to by Dr. Hunter, as amended from time to time.
|
|
|
|
Under the employment agreement, good reason means (a) a change in title, (b) a material reduction in authority or responsibility, (c) one
or more reductions, in the cumulative amount of 5% or more, in base salary, (d) notice that Dr. Hunters principal place of work will be relocated by a distance of 80 kilometers or more, or (e) removal of Dr. Hunter from the
Board of the Company for any reason other than termination of his employment agreement.
|
|
|
|
Under the terms of his employment agreement, outstanding vested stock options as of the termination date may be exercised within 30 days of the termination date,
and, if not, will be cancelled.
|
Termination after Change of Control:
|
|
|
Under the terms of his change of control agreement, if Dr. Hunter is terminated for any reason or resigns for good reason within 12 months after a change of
control, Dr. Hunter will receive a lump sum payment equivalent to three years salary, plus an amount equal to three times the average annual bonus payments received in the previous three years. Health and certain other benefits will also
be continued for 36 months. The estimated total of the foregoing payments is approximately $3.5 million.
|
|
|
|
Under the terms of his change of control agreement, good reason means a material reduction in the authority or responsibility of Dr. Hunter, one or
more reductions, in the cumulative amount of 5% or more, in base compensation or any notification to that Dr. Hunters principal place of work will be relocated by a distance of 80 kilometers or more.
|
37
|
|
|
Under the terms of Dr. Hunters change of control agreement, Change of Control means:
|
|
(i)
|
a change in the composition of the Board of Directors of the Company, as a result of which fewer than one-half of the incumbent directors are directors who had been directors of the
Company 12 months prior to such change, with the exception of any such change in the composition of the Board made with the approval of the Board as it was constituted immediately prior to such change; or
|
|
(ii)
|
the acquisition or aggregation of securities by any person pursuant to which such person is or becomes the beneficial owner, directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the Companys then outstanding base capital stock (meaning the securities of the Company ordinarily, and apart from rights accruing under special circumstances, having the right to vote
at elections of directors of the Company), except that any change in the relative beneficial ownership of the Companys securities by any person resulting solely from a reduction in the aggregate number of outstanding shares of base capital
stock, and any decrease thereafter in such persons ownership of securities shall be disregarded until such person increases in any manner, directly or indirectly, his, her or its beneficial ownership of any securities of the Company. Upon a
change of control, any options or rights that Dr. Hunter holds under any employee option plans and executive compensation programs will become fully vested.
|
Consulting Agreement:
|
|
|
If Dr. Hunter retires or resigns from his position as President and Chief Executive Officer, resigns for good reason, or is terminated without cause, the
Company will offer Dr. Hunter a Consulting Agreement to provide services to the Company as a management consultant on a part-time basis for 24 months.
|
|
|
|
If Dr. Hunter enters into a Consulting Agreement, he will receive a lump sum payment equivalent to 12 months salary, plus an amount equal to the average
annual bonus payments received in the previous three years; and monthly payments equivalent to one-half of monthly salary for 24 months, plus an additional amount equivalent to the average annual bonus payments received in the previous three years
paid in 24 equal monthly installments. Health and certain other benefits will also be continued for 24 months, unless ongoing coverage is not permitted under any applicable group insurance plan, in which case the Company will provide, or reimburse
Dr. Hunter for the cost of maintaining, comparable individual coverage. Outstanding but unvested stock options will also be deemed to be vested immediately to the extent those options would have vested within 24 months if Dr. Hunter had
continued to be employed by the Company.
|
|
|
|
The Companys obligations under the Consulting Agreement are conditional on Dr. Hunters compliance with a Confidentiality, Inventions and Non
Competition Agreement, which, among other things, restricts his competitive activity with the Company for one year following termination of employment.
|
|
|
|
If Dr. Hunter enters into a Consulting Agreement following his retirement or resignation, except resignation for good reason, Dr. Hunter is also
restricted from entering into other gainful employment for two years.
|
|
|
|
|
|
|
|
Executive Payments Upon Termination
(in U.S. Dollars)
|
|
Voluntary
Termination by
Executive
Without Good
Reason or For
Cause
Termination
|
|
Without Cause
Termination or
Termination
by Executive
With Good
Reason
|
|
Without Cause
Termination or
Termination by
Executive With Good
Reason Within 12
Months After
a
Change of Control
|
Lump sum severance
|
|
|
|
1,935,455
|
|
2,370,000
|
Bonus
|
|
|
|
355,455
|
|
1,066,365
|
Lump sum compensation for loss of benefits
|
|
|
|
197,702
|
|
21,474
|
Exercise of options
|
|
40,500
|
|
40,500
|
|
40,500
|
|
|
|
|
|
|
|
TOTAL
|
|
40,500
|
|
2,529,112
|
|
3,498,339
|
38
Mr. Bailey, Mr. McMasters, Dr. Avelar and Dr. Ingenito
Under the terms of the executive employment agreements of Mr. Bailey, Mr. McMasters, Dr. Avelar and Dr. Ingenito, if the executive is
terminated without cause or resigns for good reason he will receive:
|
|
|
12 months of base salary plus an additional two months of base salary for each full year of employment completed up to a combined maximum of 24 months of base
salary;
|
|
|
|
Lump sum amount as compensation for loss of any benefits made available during employment in the amount of $24,000 plus an additional $2,000 for each full year of
employment completed up to a combined maximum of $48,000;
|
|
|
|
The balance of any payment due under the bonus plan, including, if applicable, a prorated payment under the bonus plan earned in respect of the fiscal year of
termination;
|
|
|
|
Outstanding vested stock options as of the termination date may be exercised within 30 days of the termination date, and, if not, will be cancelled; and
|
|
|
|
The Companys obligation to provide the foregoing payments and benefits is conditional on the executives ongoing compliance with all applicable
post-employment obligations which, among other things, restricts competitive activity for one year following termination date.
|
Under the terms of the executive employment agreements of Mr. McMasters and Dr. Ingenito, cause means the occurrence of any one or more of the following:
|
|
|
failure by the executive to substantially perform the executives duties or responsibilities under his employment agreement, after the Company has given a
demand to the executive identifying how the executive has failed to perform such duties or responsibilities;
|
|
|
|
misconduct or illegal conduct by the executive causing or likely to cause financial, reputational, or other harm to the Company;
|
|
|
|
the conviction of the executive for, or a plea by the executive of guilty or no contest to, any felony; or
|
|
|
|
a material breach by the executive of his employment agreement, or of any of the Companys written policies or procedures.
|
Under the terms of the executive employment agreement of Dr. Avelar, cause is not defined.
Under the terms of the executive employment agreement of Mr. Bailey, cause means the occurrence of any one or more of the following:
|
|
|
willful and material failure by Mr. Bailey to substantially perform his duties or responsibilities under his employment agreement, after the Company has given
a demand to Mr. Bailey identifying how he has failed to perform such duties or responsibilities;
|
|
|
|
willful misconduct by Mr. Bailey causing material financial, reputational, or other harm to the Company;
|
|
|
|
the conviction of Mr. Bailey for, or a plea by Mr. Bailey of guilty or no contest to, any felony; or
|
|
|
|
a willful and material breach by Mr. Bailey of his employment agreement, the Companys Code of Ethics for its Chief Financial Officer, or any of the
Companys other material written policies or procedures.
|
Under the terms of the executive employment agreement of
Mr. Bailey, Mr. McMasters, Dr. Avelar and Dr. Ingenito good reason means the occurrence of any one or more of the following without the executives written consent:
|
|
|
a material reduction in the executives title, office, authority, or duties or responsibilities of employment;
|
39
|
|
|
one or more reductions in the executives base salary, or in the executives target bonus opportunity under the bonus plan, in the cumulative amount of 5%
or more within a 12-month period, or a material reduction in the executives benefits or perquisites, if such reductions:
|
|
|
|
are not made in conjunction with similar reductions for comparably situated executive employees of the Company, or
|
|
|
|
are made in conjunction with similar reductions for comparably situated executive employees of the Company at the time of, or within 24 months after, a Change of
Control;
|
|
|
|
a change in the executives principal place of employment by a distance of 50 miles or more, unless the new principal place of employment is within 50 miles of
the executives then-current residence;
|
|
|
|
a material breach by the Company of a fundamental term of the executives employment agreement; or
|
|
|
|
an unapproved Change of Control.
|
Under the terms of the executive employment agreements of Mr. Bailey, Mr. McMasters, Dr. Avelar and Dr. Ingenito, Change of Control means the occurrence of any one or more of the following:
|
|
|
a change in the composition of the Board of Directors as a result of which fewer than one-half of the incumbent directors are individuals who were directors 12
months before the change; but excluding any such change in the composition of the Board of Directors made with the approval of the Board of Directors as it was constituted immediately before the change;
|
|
|
|
the acquisition or aggregation by any person, entity, or group of persons or entities acting jointly or in concert (Acquiror) of beneficial ownership or
control of voting securities of the Company (including, without limitation, the power to vote or direct the voting thereof), as a result of which the Acquiror and/or associates and/or affiliates of the Acquiror become entitled to cast or direct the
casting of 50% or more of the votes attached to all of the outstanding voting securities of the Company which may be cast to elect directors (regardless of whether a meeting has been called to elect directors); but excluding a change in the relative
beneficial ownership of the Acquiror in voting securities of the Company resulting solely from a reduction in the aggregate number of the outstanding voting securities of the Company, unless and until the Acquiror increases, in any manner, directly
or indirectly, the Acquirors beneficial ownership or control of Voting Securities (after which the Acquiror and/or associates and/or affiliates of the Acquiror are entitled to cast or direct the casting of 50% or more of the votes attached to
all of the outstanding voting securities of the Company which may be cast to elect directors);
|
|
|
|
the disposition of all or substantially all of the assets or business of Angiotech Pharmaceuticals (US), Inc. (Angiotech (US)) or the Company pursuant
to a merger, consolidation, or other transaction, unless the common shares of the entity or entities that succeed to the business of the Company, and any other shares entitled to vote for the election of directors of such entity or entities, are
beneficially owned or controlled by persons, entities, or groups of persons or entities acting jointly or in concert who held beneficial ownership or control of voting securities of the Company immediately before such merger, consolidation, or other
transaction, in substantially the same proportion as they owned such voting securities;
|
|
|
|
the adoption of a resolution to wind-up, dissolve, or liquidate Angiotech (US) or the Company; or
|
|
|
|
a consolidation, merger, amalgamation, arrangement, or other reorganization or acquisition of Angiotech (US) or the Company, as a result of which the holders of
voting securities of the Company immediately before the completion of such transaction hold less than 50% of the outstanding common shares and other shares entitled to vote for the election of directors of the successor corporation after completion
of the transaction.
|
40
Under the terms of the executive employment agreements, if Mr. Bailey, Mr. McMasters,
Dr. Avelar and Dr. Ingenito are Terminated Without Cause or Resign for Good Reason following a Change of Control they will receive:
|
|
|
24 months of base salary plus an additional two months of base salary for each full year of employment completed up to a combined maximum of 36 months of base
salary;
|
|
|
|
a lump sum amount as compensation for loss of benefits made available during employment in the amount of $48,000 plus an additional $2,000 for each full year of
employment completed up to a combined maximum of $72,000;
|
|
|
|
the balance of any payment due under the bonus plan, including, if applicable, a prorated payment under the bonus plan earned in respect of the fiscal year of
termination;
|
|
|
|
a lump sum amount equal to two times the greater of the average of the payments made to the executive under the bonus plan in each of the two preceding fiscal years
and the amount of executives target bonus opportunity;
|
|
|
|
a lump sum amount equivalent to the amount the executive would have received if he had been able to exercise equity-based incentives in the event that the vesting
of such incentives does not accelerate under the provisions of such plans;
|
|
|
|
in the event that any payment made by the Company to executive is subject to excise tax under Section 4999 of the Code and the reduction of the amounts payable
to the maximum amount that could be paid by the Company without triggering the excise tax would provide executive with a greater after-tax amount than if such amounts were not reduced, then the amounts payable to executive will be reduced to the
safe harbor cap; and
|
|
|
|
in the event that the Change of Control is an unapproved Change of Control, payment subject to excise tax under Section 4999 of the Code will be grossed up by
the sum of the excise tax and the product of any deductions disallowed because of the inclusion of the gross-up payment in executives adjusted gross income and the highest applicable marginal rate of federal income tax for the calendar year in
which the gross-up payment is made.
|
The Companys obligation to provide the foregoing payments and benefits is
conditional on the executives ongoing compliance with all applicable post-employment obligations which, among other things, restricts competitive activity for one year following termination date.
41
The following table shows the potential payments upon termination for Mr. Bailey,
Mr. McMasters, Dr. Avelar, and Dr. Ingenito. Payments upon termination will be calculated in accordance with each executives employment agreement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Voluntary
Termination
by Executive
Without
Good
Reason or
For Cause
Termination
|
|
Without Cause
Termination or
Termination
by Executive
With Good
Reason
|
|
Without Cause
Termination or
Termination
by Executive
With Good
Reason Within
24 Months
After a
Change
of Control
|
|
|
Without Cause
Termination or
Termination
by Executive
With Good
Reason Within
24 Months
After
an
Unapproved
Change of
Control
|
|
Death
|
|
Termination
Resulting
from Loss of
Eligibility to
Work in
Canada/
U.S.
|
K. Thomas Bailey:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lump sum severance
|
|
|
|
525,000
|
|
875,000
|
|
|
875,000
|
|
|
|
525,000
|
Bonus for fiscal year of termination (2007)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lump sum compensation for loss of benefits
|
|
|
|
30,000
|
|
54,000
|
|
|
54,000
|
|
|
|
30,000
|
Further lump sum
|
|
|
|
|
|
350,000
|
|
|
350,000
|
|
|
|
|
Exercise of options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Safe harbor cap adjustment
|
|
|
|
|
|
(163,867
|
)
|
|
|
|
|
|
|
Gross up payment
|
|
|
|
|
|
|
|
|
419,948
|
|
|
|
|
Total
|
|
82,129
|
|
637,129
|
|
1,115,133
|
|
|
1,698,948
|
|
82,129
|
|
637,129
|
Rui Avelar:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lump sum severance
|
|
|
|
724,500
|
|
1,086,750
|
|
|
1,086,750
|
|
|
|
724,500
|
Bonus for fiscal year of termination (2007)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lump sum compensation for loss of benefits
|
|
|
|
34,000
|
|
58,000
|
|
|
58,000
|
|
|
|
34,000
|
Further lump sum
|
|
|
|
|
|
289,800
|
|
|
289,800
|
|
|
|
|
Exercise of options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
62,731
|
|
821,231
|
|
1,497,281
|
|
|
1,497,281
|
|
62,731
|
|
821,231
|
David McMasters
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lump sum severance
|
|
|
|
946,000
|
|
1,419,000
|
|
|
1,419,000
|
|
|
|
946,000
|
Bonus for fiscal year of termination (2007)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lump sum compensation for loss of benefits
|
|
|
|
38,000
|
|
62,000
|
|
|
62,000
|
|
|
|
38,000
|
Further lump sum
|
|
|
|
|
|
378,400
|
|
|
378,400
|
|
|
|
|
Exercise of options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Safe harbor cap adjustment
|
|
|
|
|
|
(53,543
|
)
|
|
|
|
|
|
|
Gross up payment
|
|
|
|
|
|
|
|
|
580,345
|
|
|
|
|
Total
|
|
81,829
|
|
1,065,829
|
|
1,805,857
|
|
|
2,439,745
|
|
81,829
|
|
1,065,829
|
Gary Ingenito
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lump sum severance
|
|
|
|
533,867
|
|
934,267
|
|
|
934,267
|
|
|
|
533,867
|
Bonus for fiscal year of termination (2007)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lump sum compensation for loss of benefits
|
|
|
|
28,000
|
|
52,000
|
|
|
52,000
|
|
|
|
28,000
|
Further lump sum
|
|
|
|
|
|
320,320
|
|
|
320,320
|
|
|
|
|
Exercise of options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Safe harbor cap adjustment
|
|
|
|
|
|
(6,335
|
)
|
|
|
|
|
|
|
Gross up payment
|
|
|
|
|
|
|
|
|
401,407
|
|
|
|
|
Total
|
|
39,540
|
|
601,407
|
|
1,300,252
|
|
|
1,707,994
|
|
39,540
|
|
601,407
|
(1)
|
The total payouts above include each executives accrued but unused vacation in the amount of $82,129 for Mr. Bailey, $62,731 for Dr. Avelar, $81,829 for Mr. McMasters and
$39,540 for Dr. Ingenito.
|
42
Dr. Ingenito
Dr. Ingenitos employment was terminated without cause by the Company, effective February 29, 2008. Under the terms of his employment agreement, described above, Dr. Ingenito executed a release and
waiver of claims in favor of the Company and received severance payments and benefits in the total amount of $630,200, which consisted of the following payments and benefits:
|
|
|
|
12 months Base Salary
|
|
$
|
400,000
|
|
|
2 months Base Salary for each full year worked
|
|
$
|
200,200
|
|
|
Lump sum compensation for benefits
|
|
$
|
24,000
|
|
|
$2,000 for each full year worked
|
|
$
|
6,000
|
In accordance with the terms of his employment agreement, Mr. Ingenitos vested stock
options that were outstanding as of the date of termination remained exercisable for 30 days following termination.
Report
Submitted by the Compensation Committee
|
|
|
|
|
David Howard, Chair
|
|
Edward Brown
|
|
Arthur Willms
|
43
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
Equity Compensation Plan Information
The following table sets out information relating to the Companys equity compensation plans in place at December 31, 2007. The only equity compensation plans the Company has are the 2006 Stock Incentive
Plan (defined below), pursuant to which the Company grants options in Canadian or U.S. dollars and the AMI Stock Option Plan (defined below).
|
|
|
|
|
|
|
|
|
|
Plan Category
|
|
Number of securities to
be issued upon exercise
of outstanding options
and rights
(a)
|
|
|
Weighted-average
exercise price of
outstanding
options and rights
(b)
|
|
Number of securities
remaining available for
future issuance under
equity compensation
plans
(excluding
securities reflected in
column (a)) (c)
|
|
|
Equity compensation plans approved by securityholders:
|
|
|
|
|
|
2006 Stock Incentive PlanCDN$ grants
|
|
7,675,944
|
|
|
CDN$
|
15.55
|
|
4,788,241
|
(1)
|
2006 Stock Incentive PlanU.S.$ grants
|
|
1,051,218
|
|
|
U.S.$
|
9.39
|
|
|
|
|
Equity compensation plans not approved by securityholders:
|
|
|
|
|
|
AMI Stock Option Plan
|
|
433,012
|
(2)
|
|
U.S.$
|
15.44
|
|
Nil
|
|
Total
|
|
9,160,174
|
|
|
|
|
|
4,788,241
|
|
Notes:
(1)
|
Available for future issuance under the 2006 Stock Incentive Plan in either Canadian or U.S. dollars.
|
(2)
|
Represents the number of Angiotech common shares issuable upon the exercise of AMI options.
|
Angiotech Stock Option Plans
As of September 25, 2008, the Company has
outstanding stock options and tandem SARs to purchase 7,873,286 common shares, representing 9.2% of the issued and outstanding common shares of the Company. These options and tandem SARs are all non-transferable and have been granted to employees,
officers and directors of the Company, and persons providing ongoing management and consulting services to the Company. The options and tandem SARs have been granted pursuant to: (a) the Companys current stock option plan (the 2006
Stock Incentive Plan) adopted by shareholders at the June 8, 2006 special general meeting, which superseded the 2004 Stock Option Plan and incorporated all options granted under the Companys 2004 stock option plan (the 2004
Stock Option Plan), (b) the Companys 2004 Stock Option Plan adopted by shareholders at the January 20, 2004 special meeting, which incorporated all shares granted under the Companys previous stock option plan (the
Previous Stock Option Plan) established December 8, 1997, as amended by the shareholders on March 16, 1999, March 20, 2000 and March 6, 2001, (c) the Companys original stock option plan (the
Original Stock Option Plan) established July 2, 1996 and superceded by the Previous Stock Option Plan and (d) directors resolutions dated February 1, 1996 (114,000 common shares).
The 2006 Stock Incentive Plan was established at a special meeting held on June 8, 2006. The 2006 Stock Incentive Plan provides for the issuance of
non-transferable options and tandem SARs to purchase up to 13,937,756 common shares, representing 16.4% of the issued and outstanding common shares, to employees, officers and directors of the Company, and persons providing ongoing management or
consulting services to the Company, with any one person permitted, subject to the approval of the Board of Directors, to receive options and tandem SARs to acquire up to 5% of the issued and outstanding common shares. The exercise price of common
shares under each option and tandem SAR is fixed by the Board of Directors and may be set in either Canadian dollars or United States dollars. Where the grant is in Canadian dollars, the exercise price may not be less than the closing price of the
common shares on the TSX for the last day the common shares were traded prior to the effective date of the option/tandem SAR. Where the grant is in United States dollars, the exercise
44
price may not be less than the closing price of the common shares on the NASDAQ for the last day the common shares were traded prior to the effective date of
the option/tandem SAR. The effective date shall not be a date prior to the date the Board of Directors determines a grant will be made, and unless otherwise specified by the Board of Directors, the effective date shall be the date the Board of
Directors determines an option/tandem SAR grant shall be made. Each option and tandem SAR will expire on the earlier of: (i) the expiration date as determined by the Board of Directors, which date shall not be more than five years from the date
it is granted; (ii) 365 days after the participant dies, retires in accordance with the Companys retirement policy or is permanently disabled; (iii) 30 days after the participant ceases to be a person qualified to receive an option,
if as a result of early retirement or voluntary resignation; (iv) 30 days after the participant being terminated, or receiving notice of termination, other than for cause, subject to an allowance for any blackout period that may occur in that
30-day period; and (v) immediately upon the participant being terminated, or receiving notice of termination, for cause. A blackout period is a period of time where no employee, officer or director may trade because they are deemed to be
in possession of confidential information. The exercisability of an option and tandem SAR may be extended to allow the Company the ability to align the exercise of options and tandem SARs with the time periods of negotiated early retirement and
severance contracts when it is in the best interests of the Company to do so. In no situation would the extension on exercisability be later than the original five-year term of the option and tandem SAR.
The participant shall have the right to elect to exercise either an option or a tandem SAR. If the participant elects to exercise a tandem SAR, the
related option shall be cancelled and the participant shall be entitled to a share or portion thereof with an aggregate value equal to the product of (a) the excess of the market price of a common share on the date of exercise over the exercise
price of the option/tandem SAR, multiplied by (b) the number of tandem SARs exercised. All tandem SARs shall be settled in common shares, and such settlement shall be made by delivery of the aggregate number of common shares having a market
price on the date of exercise equal to the amount so settled.
The options and tandem SARs granted under the 2006 Stock Incentive Plan may
vest over time as determined by the Board of Directors. If a change of control of the Company occurs, the vesting provisions may, in certain circumstances, be deemed to have been satisfied and the options deemed to have been vested. The number of
options and tandem SARs granted may be adjusted if any share reorganization, special distribution or corporate reorganization occurs, subject to the approval of the TSX.
The Board of Directors is entitled to suspend, terminate or discontinue the 2006 Stock Incentive Plan or amend or revise the terms of the 2006 Stock Incentive Plan, subject to the approval, in certain circumstances,
of the TSX and the shareholders of the Company.
Finally, the 2006 Stock Incentive Plan provides for automatic grants of options and tandem
SARs to the Companys independent directors upon their first election to the Board of Directors, and then semi-annually thereafter at the time of the annual general meeting and December 1.
During the year ended December 31, 2007, stock options and tandem SARs to acquire 2,180,000 of the Companys common shares were awarded to 50
employees, officers and directors of the Company.
American Medical Instruments Stock Option Plan
On March 23, 2006, the Company acquired all of the issued and outstanding share capital of AMI. On March 9, 2006, AMI granted 304 stock options
under AMIs 2003 Stock Option Plan (the AMI Stock Option Plan), each of which is exercisable for approximately 3,852 common shares of the Company upon exercise. All outstanding options and warrants granted prior to the March 9,
2006 grant were settled and cancelled upon the acquisition of AMI. No further options to acquire common shares of the Company can be issued pursuant to the AMI Stock Option Plan. Approximately 1,171,092 of the Companys common shares were
reserved in March 2006 to accommodate future exercises of the AMI options.
45
The AMI options included in the above are all non-transferable and were granted to employees, officers
and directors of AMI and persons providing ongoing management and consulting services to AMI. The options are subject to graded vesting over a four-year period after the second anniversary date of the grant date. Each option will expire on the
earlier of (i) ten years from the date it is granted; (ii) 12 months after the participant dies; (iii) six months after the participant is disabled; (iv) 90 days after the participant retires or the participants employment
is terminated, other than for cause; and (v) immediately upon the participant being terminated for cause. AMI options to purchase 408,342 of the Companys common shares were outstanding as of September 25, 2008.
INDEBTEDNESS TO COMPANY OF DIRECTORS AND EXECUTIVE OFFICERS
There is no indebtedness of any individual who is, or was any time during the financial year ended December 31, 2007, a director, executive officer,
proposed nominee for election as a director, or associate of them, to or guaranteed or supported by the Company or any of its subsidiaries, either pursuant to an employee stock purchase program of the Company or otherwise, during the most recently
completed financial year. Within 30 days before September 25, 2008, there is no such indebtedness of any current or former executive officer, director or employee of the Company of any of its subsidiaries.
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS
Other than as described in this Proxy Statement, no informed person or proposed nominee for election as a director of the Company and no associate or
affiliate of the foregoing persons has or has had any material interest, direct or indirect, in any transaction since the commencement of the Companys last completed financial year or in any proposed transaction which, in either such case, has
materially affected or will materially affect the Company or any of its subsidiaries.
TRANSACTIONS WITH RELATED
PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS
Related-Party Transactions Policy
The Company has not adopted a policy specifically directed at the review, approval or ratification of related-party transactions required to be disclosed.
However, pursuant to our Audit Committee Charter, all transactions greater than $60,000 between us and any of our directors, executive officers or related parties are subject to review by our audit committee.
Certain Relationships and Related Party Transactions
Other than the proposed API 2008 Incentive Plan and transaction award and retention bonus (each as further described in the Companys Current Report on Form 8-K filed with the SEC on July 10, 2008), which will be adopted by API in
connection with the consummation of the transactions contemplated under the Note Purchase Agreement, subject to the future approval of such transactions by the shareholders of the Company, and other than as described in this Proxy Statement, since
January 1, 2007, there has not been, nor is there currently proposed, any transaction or series of similar transactions to which we were or are a party in which the amount involved exceeds $120,000 and in which any director, executive officer
or beneficial holder of more than 5% of any class of our voting securities or members of such persons immediate family had or will have a direct or indirect material interest.
As of September 25, 2008, the Company is not aware of any proceeding or action involving a director, executive officer or nominee which would be adverse
to the Company.
MANAGEMENT CONTRACTS
No management functions of the Company or any of its subsidiaries are performed to any substantial degree by a person other than the directors or
executive officers of the Company.
46
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Other than as described in this Proxy Statement, no person who held a position of director or executive officer of the Company at any time since the
commencement of the last financial year, no proposed nominee for election as a director of the Company and no associate or affiliate of the foregoing persons has any material interest, direct or indirect, by way of beneficial ownership of common
shares or otherwise, in matters to be acted upon at the Meeting.
DIRECTORS AND OFFICERS INSURANCE
The Company maintains insurance for its directors and officers against certain liabilities incurred by them in their capacity as directors
or officers of the Company or its subsidiaries in the aggregate amount of $40 million. The policy governing such insurance is subject to standard exclusions and limitations. During the year ended December 31, 2007, the amount of premiums
expensed in respect of such insurance was $1.2 million.
KEY MANAGEMENT INSURANCE
The Company is the beneficiary under key management insurance policies of CDN$0.5 million on the life of Dr. Hunter. The Company pays the current
annual premium for this policy of CDN$533.
OTHER MATTERS
Management of the Company is not aware of any other matter to come before the Meeting other than as set forth in the Notice of Meeting. If any other
matter properly comes before the Meeting, it is the intention of the persons named in the enclosed form of proxy to vote the common shares represented thereby in accordance with their best judgment on such matter.
ADDITIONAL INFORMATION
This Proxy Statement incorporates by reference important business information about the Company from documents that are not included in or delivered with this Proxy Statement. You may obtain documents that are
incorporated by reference in this Proxy Statement without charge by requesting them in writing or by telephone from the Company at:
Angiotech Pharmaceuticals, Inc.
1618 Station Street
Vancouver, British Columbia, Canada V6A 1B6
(604) 221 7676
Attention: Investor Relations
Please note
that copies of the documents provided to you will not include exhibits, unless the exhibits are specifically incorporated by reference in the documents or this Proxy Statement.
In order to receive timely delivery of requested documents in advance of the Meeting, you should make your request no later than October 22, 2008.
47
SHAREHOLDER PROPOSALS FOR 2009 ANNUAL MEETING
Pursuant to the Business Corporations Act (British Columbia), if you wish to submit a proposal to be brought before the 2009 annual meeting of
shareholders and to be included in our proxy statement for such meeting, we must receive such proposal on or before June 5, 2009, unless the directors of the Company have called the 2009 annual general meeting and sent notice of that meeting in
accordance with Section 169 of the Business Corporations Act (British Columbia) prior to June 5, 2009. Please address your proposals to the Companys registered office at 1200 Waterfront Centre, 200 Burrard Street, P.O. Box 48600, Vancouver,
B.C., Canada V7X1T2.
The deadline for submission of a shareholder proposal for inclusion in our proxy statement for the 2009 annual
general meeting of shareholders under Exchange Act Rule 14a-8 is that such proposal must be received at the Companys registered office at the address above by June 5, 2009. If, however, the date of the 2009 annual general meeting of
shareholders is changed by more than 30 days from the anniversary date of the 2008 annual general meeting, then the deadline under Exchange Act Rule 14a-8 to submit proposals to be included in our proxy statement will be a reasonable time before we
begin to print and send our 2009 annual general meeting proxy materials. We plan to announce the expected date for the 2009 annual general meeting in our future public filings with the SEC to provide shareholders with reasonable notice of the
meeting date.
DATED September 26, 2008.
|
BY ORDER OF THE BOARD
|
|
K. Thomas Bailey
|
Chief Financial Officer
|
48
APPENDIX A
Proposed Text of Resolutions
Shareholder Rights Plan Resolution
BE IT RESOLVED
that:
(a)
|
the reconfirmation of the Companys amended and restated shareholder rights plan (the
Plan
) with minor technical amendments as described in the accompanying
Proxy Statement is hereby approved; and
|
(b)
|
any one director or officer is hereby authorized, on behalf of the Company, to execute and deliver an amended and restated Plan which reflects its reconfirmation and the minor
technical amendments.
|
Quorum Resolution
BE IT RESOLVED
, as a special resolution that:
1.
|
the quorum requirements for general meetings of shareholders of Angiotech Pharmaceuticals, Inc. (the
Company) set out under section 11. 3 of the Articles of the Company be amended by deleting the number 5% and replacing it with 33
1
/
3
%; and
|
2.
|
any one director or officer is hereby authorized, on behalf of the Company, to execute and deliver, and file all additional documents, as may be necessary or advisable in order to
give full effect to the foregoing resolution.
|
A-1
APPENDIX B
Charter of Board Governance and Expectations
ANGIOTECH PHARMACEUTICALS, INC.
Our Charter of Board Governance & Expectations outlines responsibilities of the Companys Board of Directors, and
identifies the personal and professional conduct expected of the directors.
GENERAL BOARD RESPONSIBILITIES
It is the responsibility of the Board of Directors to oversee the direction and management of the Company in accordance with applicable law, the
Companys Bylaws and applicable rules and regulations of the Toronto Stock Exchange and the NASDAQ Stock Market, while adhering to high ethical standards. Specific tasks and actions of the Board in fulfilling these general responsibilities are
as follows:
Strategic Planning & Budgets
|
1.
|
Meet at least annually in an all-day strategy session to review the Companys strategic business plan proposed by management, including a statement of our vision, mission and
values, and to adopt such a plan with such changes as the Board deems appropriate.
|
|
2.
|
Review the Companys corporate objectives, financial plans and budgets proposed by management and adopt the same with such changes as the Board deems appropriate.
|
|
3.
|
In connection with such reviews, the Board shall seek to provide a balance of long-term versus short-term orientation towards the Companys vision, mission and values.
|
Measurement Against Plan
|
1.
|
Review corporate performance against strategic plans, corporate objectives, financial plans and budgets.
|
Risk Management
|
1.
|
Instruct management to regularly advise the Board on the business risks of the Company. Review and discuss with management such risks and the systems designed to monitor and manage
such risks.
|
Communication Oversight
|
1.
|
Review annually the Companys Corporate Disclosure Policy and evaluate Company compliance with the policy.
|
Executive Personnel
|
1.
|
Approve the hiring of senior officers.
|
|
2.
|
Establish, and review annually, job descriptions for executive officers.
|
|
3.
|
Evaluate senior officers performance. Replace where necessary, and evaluate management succession plans.
|
|
4.
|
Confirm with management that all executive officers have current employment, non-competition and confidentiality agreements.
|
|
5.
|
Review major Company organizational and staffing issues.
|
B-1
Systems Integrity
|
1.
|
Confirm with the Audit Committee that it has reviewed and discussed the adequacy of the Companys internal controls and management information systems.
|
|
2.
|
Review and adopt and confirm distribution to appropriate personnel of a Code of Ethics for Directors and Executives and other governing policies. Review and evaluate whether the
Company, and its executives conduct themselves in an ethical manner and in compliance with laws, regulations, audit and accounting principles and the Companys own governing policies.
|
|
3.
|
Ensure that the Board of Directors has free and full access to management regarding all matters of compliance and performance.
|
Material Transactions
|
1.
|
Review and approve any material transactions outside of the corporate budget, including but not limited to long term contracts, licenses or obligations which will outlive an
individuals relationship with the Company.
|
BOARD STRUCTURE & FUNCTION
Composition of the Board of Directors
|
1.
|
Ensure that the majority of Directors are independent, as defined by the highest test set by the Companys governing regulatory bodies.
|
Annual Disclosure of Directors
|
1.
|
Publicly disclose conclusions as to the independence of the directors as defined by the rules of the SEC and the NASDAQ Stock Market.
|
Assessing Directors
|
1.
|
Review and discuss promptly any issues regarding Board membership of any director whose employment or professional status has materially changed.
|
|
2.
|
Review and discuss any issues regarding Board membership of any director who is also a standing director and/or officer of any other public company.
|
Position of Chair of the Board
|
1.
|
Appoint as Chair of the Board an independent director.
|
Board
Evaluation
|
1.
|
At least annually evaluate the Boards own performance in fulfilling its obligations outlined in this charter and any other duties charged to the Board.
|
|
2.
|
Annually review the size of the Board, and any impact of that size on the effectiveness of the Board and whether it is appropriate to reduce or increase the size of the Board.
|
Compensation of Directors
|
1.
|
Annually review the compensation paid to Directors.
|
B-2
Board Committees
|
1.
|
Consider that Board committees should generally consist of outside directors.
|
|
2.
|
Ensure that the majority of directors on all committees be independent and unrelated directors.
|
|
3.
|
Annually review the charter for each committee and consider any changes recommended by such committee or the full Board.
|
Governance and Nominating Committee
|
1.
|
Appoint a Governance and Nominating Committee to annually nominate board members for election by stockholders and recommend new board members to fill any vacancy.
|
|
2.
|
Delegate general responsibility for review and evaluation of corporate governance issues to the Governance and Nominating Committee.
|
|
3.
|
Review annually the Governance and Nominating Committee Charter, and suggest changes to its Charter the committee deems appropriate for consideration by the entire Board.
|
|
4.
|
Undertake orientation for new directors.
|
Audit Committee
|
1.
|
Delegate general responsibility to the Audit Committee to (1) select and provide for compensation of the Companys independent auditors and (2) oversee the audits of
Companys financial statements and its financial reporting and disclosure processes, and (3) evaluate the independence and performance of the Companys independent auditors.
|
|
2.
|
Ensure that all committee members are independent.
|
|
3.
|
Review annually the Audit Committee Charter and suggest changes to its Charter the committee deems appropriate for consideration by the entire Board.
|
|
4.
|
Prepare an annual Audit Committee Report for inclusion in Companys annual Information Circular.
|
Compensation Committee
|
1.
|
Delegate general responsibility to the Compensation Committee for senior executive compensation, including a review of compensation and performance in relation to Corporate
Objectives.
|
|
2.
|
Prepared annually a report on executive compensation for inclusion in Companys annual Information Circular.
|
|
3.
|
Review annually the Compensation Committee Charter and suggest changes to its Charter that the committee deems appropriate for consideration by the entire Board.
|
|
4.
|
Review annually the Companys incentive stock option plan.
|
|
5.
|
Approve all grants under the Companys incentive stock option plan.
|
Outside Advisors for Directors
|
1.
|
Ensure that the Board of Directors and each committee of the Board are permitted to engage outside advisors at the Companys expense as they deem appropriate.
|
Director Succession
|
1.
|
Ensure that there is a succession plan for directors and the Companys independent Chair.
|
B-3
General
|
1.
|
Perform such other functions as prescribed by law and in the Companys By-laws.
|
Amendments to Charter of Director Governance and Expectations
|
1.
|
Annually review this Charter and propose amendments to be ratified by a simple majority of the Board of Directors.
|
PERSONAL AND PROFESSIONAL CHARACTERISTICS OF BOARD MEMBERS
The following characteristics and traits outline the framework for the recruitment and selection of Board of Director nominees.
|
1.
|
Conduct and Accountability
|
|
2.
|
Nominee must demonstrate high ethical standards and conduct in their personal and professional lives, and make and be accountable for their decisions in their capacity as board
members.
|
Judgment
|
1.
|
Nominee must demonstrate to the satisfaction of the Board a capacity to provide sound advice on a broad range of industry and community issues.
|
|
2.
|
Nominee must have or develop to the satisfaction of the Board a broad knowledge base of the Companys industry in order to understand the basis from which corporate strategies
are developed and business plans produced.
|
|
3.
|
Nominee must be able to provide to the satisfaction of the Board a mature and useful perspective as to the business plan, strategy, risks and objectives of the Company.
|
Financial Literacy
|
1.
|
Nominee must demonstrate to the satisfaction of the Board a sound level of financial literacy including the ability to understand financial statements and use financial metrics to
evaluate the financial health and performance of the Company.
|
Teamwork
|
1.
|
Nominee must demonstrate to the satisfaction of the Board that he or she will put Board and Company performance ahead of individual achievements.
|
Communication
|
1.
|
Nominee must demonstrate to the satisfaction of the Board a willingness to listen as well as to communicate their opinions, openly and in a respectful manner.
|
Experience
|
1.
|
Nominee must have demonstrated and continue to demonstrate to the satisfaction of the Board a high level of achievement in their personal and professional lives that reflects high
standards of personal and professional conduct.
|
B-4
Angiotech
Redefining success
Computershare
9th Floor, 100 University Avenue
Toronto, Ontario M5J 2Y1
www.computershare.com
000001
SAM SAMPLE
123 SAMPLES STREET SAMPLETOWN SS X9X X9X
Security Class
COMMON
Holder Account Number
C9999999999 IND
Fold
Form of ProxyAnnual and Special General Meeting to be held on October 30, 2008
This Form of Proxy is solicited by and on behalf of Management.
Notes to proxy
1. Every holder has the right to appoint some other person or company of their choice, who need not be a holder, to attend and act on their behalf at the meeting. If you wish to appoint a person or company other than the persons
whose names are printed herein, please insert the name of your chosen proxyholder in the space provided (see reverse).
2.
If the securities are registered in the name of more than one owner (for example, joint ownership, trustees, executors, etc.), then all those registered should sign this proxy. If you are voting on behalf of a corporation or another individual you
may be required to provide documentation evidencing your power to sign this proxy with signing capacity stated.
3. This
proxy should be signed in the exact manner as the name appears on the proxy.
4. If this proxy is not dated, it will be
deemed to bear the date on which it is mailed by Management to the holder.
5. The securities represented by this proxy will
be voted as directed by the holder, however, if such a direction is not made in respect of any matter, this proxy will be voted as recommended by Management.
6. The securities represented by this proxy will be voted or withheld from voting, in accordance with the instructions of the holder, on any ballot that may be called for and, if the holder has
specified a choice with respect to any matter to be acted on, the securities will be voted accordingly.
7. This proxy
confers discretionary authority in respect of amendments to matters identified in the Notice of Meeting or other matters that may properly come before the meeting.
Fold
8. This proxy should be read in conjunction with the accompanying
documentation provided by Management.
Proxies submitted must be received by 8:30 a.m. (Pacific Time) on Tuesday,
October 28, 2008.
VOTE USING THE TELEPHONE OR INTERNET 24 HOURS A DAY 7 DAYS A WEEK!
To Vote Using the Telephone
Call the number listed BELOW from a touch tone telephone.
1-866-732-VOTE (8683) Toll Free
To Vote Using the Internet
Go to the following web site: www.investorvote.com
If you vote by
telephone or the Internet, DO NOT mail back this proxy.
Voting by mail may be the only method for securities held in the
name of a corporation or securities being voted on behalf of another individual.
Voting by mail or by Internet are the only
methods by which a holder may appoint a person as proxyholder other than the Management nominees named on the reverse of this proxy. Instead of mailing this proxy, you may choose one of the two voting methods outlined above to vote this proxy.
To vote by telephone or the Internet, you will need to provide your CONTROL NUMBER, HOLDER ACCOUNT NUMBER and ACCESS NUMBER
listed below.
CONTROL NUMBER 012450
HOLDER ACCOUNT NUMBER C9999999999
ACCESS NUMBER 99999
ANPQ_PRX_47909/000001/000001
+ SAM SAMPLE
C9999999999 +
IND C01
Appointment of Proxyholder
The undersigned shareholder (Registered Shareholder) of Angiotech Pharmaceuticals, Inc. (the Company) hereby
appoints: Dr. William L. Hunter or, failing him, K. Thomas Bailey,
OR
Print the name of the person you are appointing if this person is someone other than the Management Nominees listed herein.
as my/our proxyholder with full power of substitution and to vote in accordance with the following direction (or if no directions have
been given, as the proxyholder sees fit) and all other matters that may properly come before the Annual and Special General Meeting of shareholders of Angiotech Pharmaceuticals, Inc. to be held at the Sheraton Vancouver Wall Centre, 1088 Burrard
Street, Vancouver, British Columbia on Thursday, October 30, 2008 at 8:30 a.m. (Pacific Time) and at any adjournment or postponements thereof.
VOTING RECOMMENDATIONS ARE INDICATED BY HIGHLIGHTED TEXT OVER THE BOXES.
For Against
1. Fix the Number of Directors
¨
¨
To fix the number of directors at seven.
2. Election of Directors
For Withhold
For Withhold
For Withhold
Fold
01. William L. Hunter
¨
¨
02. David T. Howard
¨
¨
03.
Hartley T. Richardson
¨
¨
04. Edward M. Brown
¨
¨
05. Arthur H. Willms
¨
¨
06. Laura Brege
¨
¨
07. Henry A. McKinnell Jr.
¨
¨
For Withhold
3. Appointment of Auditors
¨
¨
Appointment of PricewaterhouseCoopers LLP as Auditors of the Company for the ensuing year and authorizing the Directors to fix their remuneration.
For Against
4. Approval of the Shareholder Rights Plan Resolution
¨
¨
To approve the ordinary resolution set out as the
Shareholder Rights Plan Resolution in Appendix A to the accompanying Proxy Statement.
Fold
For Against
5. Approval of Quorum Resolution
¨
¨
To approve the special resolution set out as the Quorum Resolution in Appendix A to the accompanying Proxy Statement.
Authorized Signature(s)This section must be completed for your instructions to be executed.
Signature(s)
Date
I/We authorize you to act in accordance with my/our instructions set out above. I/We hereby revoke any proxy previously given with respect to the Meeting. If no voting instructions are indicated above,
this Proxy will be voted as recommended by Management.
99999 047909 1PDIZ AR0 ANPQ +
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