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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
Northfield Laboratories Inc.
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(Name of Registrant as Specified In Its Charter)
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SEC 1913 (02-02)
NORTHFIELD LABORATORIES INC.
1560 Sherman Avenue, Suite 1000
Evanston, Illinois 60201-4800
----------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held
September 21, 2004
----------------------------
TO THE STOCKHOLDERS OF NORTHFIELD LABORATORIES INC:
The Annual Meeting of the stockholders of Northfield Laboratories Inc. (the
"Company") will be held on Tuesday, September 21, 2004 at 10:00 A.M., local
time, at the Third Floor, 1560 Sherman Avenue, Evanston, Illinois 60201-4800,
for the following purposes:
1. To elect six directors to hold office until the next Annual Meeting of
the stockholders of the Company;
2. To ratify the appointment of KPMG LLP as independent auditors of the
Company to serve for the Company's 2005 fiscal year; and
3. To transact such other business as may properly come before the Annual
Meeting.
The Board of Directors has fixed the close of business on July 26, 2004 as
the record date for determination of stockholders entitled to notice of and to
vote at the Annual Meeting or any adjournment or postponement thereof.
Stockholders are requested to complete and sign the enclosed Proxy, which
is solicited by the Board of Directors, and promptly return it in the
accompanying envelope.
By Order of the Board of Directors
JACK J. KOGUT
Secretary
Evanston, Illinois
August 16, 2004
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE ANNUAL MEETING REGARDLESS
OF THE NUMBER OF SHARES YOU HOLD. PLEASE COMPLETE, SIGN AND MAIL THE ENCLOSED
PROXY IN THE ACCOMPANYING ENVELOPE EVEN IF YOU INTEND TO BE PRESENT AT THE
ANNUAL MEETING. RETURNING THE PROXY WILL NOT LIMIT YOUR RIGHT TO VOTE IN PERSON
OR TO ATTEND THE ANNUAL MEETING, BUT WILL ENSURE YOUR REPRESENTATION IF YOU
CANNOT ATTEND. THE PROXY IS REVOCABLE AT ANY TIME PRIOR TO ITS USE.
NORTHFIELD LABORATORIES INC.
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PROXY STATEMENT
-------------------------------------------------
This document is being furnished to holders of the common stock of
Northfield Laboratories Inc. in connection with the solicitation of proxies by
our board of directors for use at Northfield's annual meeting of stockholders to
be held on Tuesday, September 21, 2004, commencing at 10:00 A.M., local time, at
the Third Floor, 1560 Sherman Avenue, Evanston, Illinois 60201-4800, and at any
adjournment or postponement thereof, for the purpose of considering and acting
upon the matters set forth in the accompanying Notice of Annual Meeting of
Stockholders.
This document is first being mailed to holders of common stock on or about
August 16, 2004.
Our principal executive offices are located at 1560 Sherman Avenue, Suite
1000, Evanston, Illinois 60201-4800. Our telephone number is (847) 864-3500. We
also maintain an Internet Web site at www.northfieldlabs.com. The information
contained on our Web site is not deemed to be soliciting material and is not
incorporated by reference in this document.
VOTING AND RECORD DATE
Only holders of record of common stock as of the close of business on July
26, 2004, the record date for the annual meeting, are entitled to notice of and
to vote at the annual meeting. As of July 26, 2004, there were 21,404,439 shares
of common stock outstanding and entitled to be voted at the annual meeting.
QUORUM
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of common stock entitled to vote at the annual meeting is
necessary to constitute a quorum at the annual meeting. Shares that are present
and entitled to vote on any of the proposals to be considered at the annual
meeting will be considered to be present at the annual meeting for purposes of
establishing the presence or absence of a quorum for the transaction of
business.
REQUIRED VOTE
Each holder of record of shares who is entitled to vote may cast one vote
per share held on all matters properly submitted for the vote of our
stockholders at the annual meeting. The affirmative vote of a majority of the
shares present at the annual meeting will be required to approve each of the
proposals to be considered at the annual meeting. Shares that are present and
entitled to vote, but which withhold their votes or abstain from voting on a
proposal, will have the effect of votes against the proposal.
If any nominee for director fails to receive the affirmative vote of a
majority of the shares present at the annual meeting, the majority of the
directors then in office will be entitled under our certificate of incorporation
and bylaws to fill the resulting vacancy in the board of directors. Each
director chosen in this manner will hold office for a term expiring at our next
annual meeting of stockholders.
PROXIES
All shares entitled to vote and represented by properly executed proxies
received and not revoked prior to the annual meeting will be voted at the annual
meeting in accordance with the instructions indicated on those proxies. If no
instructions are indicated on a properly executed proxy, the shares represented
by that proxy will be voted as recommended by the board of directors.
If any other matters are properly presented at the annual meeting for
consideration, including, among other things, consideration of a motion to
adjourn the annual meeting to another time or place, the persons
named in the enclosed form of proxy will have discretion to vote on those
matters in accordance with their best judgment to the same extent as the person
signing the proxy would be entitled to vote. It is not currently anticipated
that any other matters will be raised at the annual meeting.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. A proxy may be revoked by filing with
Northfield's Corporate Secretary, at or before the taking of the vote at the
annual meeting, a written notice of revocation or a duly executed proxy, in
either case later dated than the prior proxy relating to the same shares. A
proxy may also be revoked by attending the annual meeting and voting in person,
although attendance at the annual meeting will not itself revoke a proxy. Any
written notice of revocation or subsequent proxy should be sent so as to be
delivered to Northfield Laboratories Inc., 1560 Sherman Avenue, Suite 1000,
Evanston, Illinois 60201-4800, Attention: Corporate Secretary, or hand delivered
to the Corporate Secretary, at or before the taking of the vote at the annual
meeting.
We will bear all of the expenses of this solicitation. In addition to
solicitation by mail, our directors, officers and employees may solicit proxies
personally and by telephone, internet and telegraph, all without extra
compensation.
ANNUAL REPORT
A copy of our Annual Report on Form 10-K for our 2004 fiscal year,
including financial statements, has been sent simultaneously with this document
or has been previously provided to all stockholders entitled to vote at the
annual meeting.
RECOMMENDATIONS OF THE BOARD OF DIRECTORS
The board of directors recommends a vote FOR each of the proposals to be
considered at the annual meeting.
2
ITEM 1. ELECTION OF DIRECTORS
The number of directors comprising our full board of directors is currently
fixed at six. All of our directors stand for election each year at our annual
meeting. Directors elected at this year's annual meeting will hold office until
the next annual meeting or until their earlier resignation or removal.
Northfield's board of directors, based on the recommendation of its
nominating and corporate governance committee, has nominated the following
current directors for reelection at the annual meeting. In the event any of the
nominees should become unavailable for election, the nominating committee may
designate substitute nominees, in which event shares represented by all proxies
returned will be voted for the substitute nominees unless an indication to the
contrary is included on the proxies. The board of directors recommends a vote
FOR the election of each of the following director nominees.
DIRECTOR PRINCIPAL OCCUPATION AND
NAME SINCE OFFICE BUSINESS EXPERIENCE
---- -------- ------ ------------------------
Steven A. Gould, M.D. ...... 1993 Chairman and Dr. Gould, age 57, is a founding member of
Chief Executive Northfield's scientific team and has served
Officer as the Chairman and Chief Executive Officer
of Northfield since July 2002. From July
1993 to July 2002, Dr. Gould served as
President and a director of Northfield.
Prior to that time, Dr. Gould served as a
Consultant and Principal Investigator for
Northfield's clinical trials. From 1989 to
1993, Dr. Gould served as Chief of the
Department of Surgery of Michael Reese
Hospital. Since 1990, Dr. Gould has also
served as Professor of Surgery, nonsalaried,
at the University of Illinois College of
Medicine. From 1979 through 1989, Dr. Gould
was Assistant Professor and then Associate
Professor in the Department of Surgery at
The University of Chicago School of
Medicine. Dr. Gould has been involved in
development of national transfusion policy
through his participation in the activities
of the National Heart Lung Blood Institute,
the National Blood Resource Education Panel,
the Department of Defense, the American
Association of Blood Banks, the American
College of Surgeons and The American Red
Cross. Dr. Gould received his M.D. degree
from the Boston University School of
Medicine in 1973.
John F. Bierbaum............ 2002 Director Mr. Bierbaum, age 60, has served as a
director of Northfield since September 2002.
Mr. Bierbaum has since March 2003 served as
the Executive Vice President of Pohlad
Companies. Prior to that, Mr. Bierbaum
served as a senior officer of PepsiAmericas,
Inc. and its predecessors. Mr. Bierbaum is a
C.P.A. and received his B.S. degree from the
University of Minnesota in 1967.
3
DIRECTOR PRINCIPAL OCCUPATION AND
NAME SINCE OFFICE BUSINESS EXPERIENCE
---- -------- ------ ------------------------
Bruce S. Chelberg........... 1989 Director Mr. Chelberg, age 70, has served as a
director of Northfield since 1989. Mr.
Chelberg served from May 1992 through
November 2000 as the Chairman and Chief
Executive Officer of PepsiAmericas, Inc.,
formerly known as Whitman Corporation. Mr.
Chelberg is also a director of First Midwest
Bancorp, Inc., Snap-On Incorporated and
Actuant Corporation. Mr. Chelberg received
his LLB degree from the University Of
Illinois College of Law in 1958.
Paul M. Ness, M.D. ......... 2002 Director Dr. Ness, age 58, has served as a director
of Northfield since September 2002. Dr. Ness
is Professor of Pathology, Medicine and
Oncology at the Johns Hopkins University
School of Medicine and has been Director of
the School's Transfusion Medicine Division
since 1979. Dr. Ness previously served as
Chief Executive Officer, Senior Medical
Director and Scientific Director of the
American Red Cross Blood Services Greater
Chesapeake and Potomac Region. Dr. Ness
served on the Blood Products Advisory
Committee of the Food and Drug
Administration, or FDA, from 1996 to 1998
and has also served on numerous FDA advisory
panels. He was the president of the American
Association of Blood Banks in 1999 and
became Editor of the journal TRANSFUSION in
2003. Dr. Ness received his M.D. degree from
the State University of New York in 1971.
Jack Olshansky.............. 1989 Director Mr. Olshansky, age 75, has served as a
director of Northfield since 1989. Mr.
Olshansky is an independent consultant to
companies in the healthcare industry. From
1983 to July 2000, Mr. Olshansky was a
founding general partner of Montgomery
Medical Ventures, L.P. Prior to that time,
Mr. Olshansky served as President of McGaw
Laboratories, a division of American
Hospital Supply Corporation, and as Vice
President of the Medical Division of Cutter
Laboratories. Mr. Olshansky received his
B.A. degree from Brooklyn College in 1950.
David A. Savner............. 1998 Director Mr. Savner, age 60, has served as a director
of Northfield since April 1998. Mr. Savner
has since April 1998 been the Senior Vice
President and General Counsel of General
Dynamics Corporation. From 1987 to 1998, Mr.
Savner was a senior partner in the law firm
of Jenner & Block. Mr. Savner received his
J.D. degree from Northwestern University Law
School in 1968.
4
COMMITTEES OF THE BOARD OF DIRECTORS
Our board of directors has three standing committees: the audit committee,
nominating and corporate governance committee and compensation committee.
The following directors currently serve as members of these committees:
Audit Committee -- John F. Bierbaum (Chairman)
Bruce Chelberg
Jack Olshansky
Nominating and Corporate -- David Savner (Chairman)
Governance Committee Paul M. Ness
Compensation Committee -- Jack Olshansky (Chairman)
Bruce S. Chelberg
DIRECTOR INDEPENDENCE AND EXECUTIVE SESSIONS
The board of directors has determined that each of the non-management
directors, Messrs. Bierbaum, Chelberg, Olshansky, Ness and Savner, is an
independent director as defined in Rule 4200 of the Nasdaq listing standards
and, therefore, that a majority of our board of directors is independent as so
defined.
The foregoing independence determination also included the conclusion of
the board of directors that each of the members of the audit committee is
independent for purposes of membership on the audit committee under Rule 4350(d)
of the Nasdaq listing standards, which includes the independence requirements of
Rule 4200 and additional independence requirements under SEC Rule 10A-3(b), and
that each of the members of the nominating and corporate governance committee
and compensation committee is independent under the Nasdaq listing standards
applicable for purposes of membership on those committees.
The Nasdaq listing standards require that we implement Nasdaq's recently
revised requirements regarding director independence, independent committees and
regularly scheduled executive sessions at which only independent directors are
present by the date of the annual meeting. It is presently contemplated that
these executive sessions will occur at least twice during our 2005 fiscal year,
in conjunction with regularly scheduled board meetings, in addition to the
separate meetings of the standing committees of the board of directors.
AUDIT COMMITTEE
Meetings. During our 2004 fiscal year, the audit committee met four times.
Each of the audit committee's members participated in all meetings of the
committee.
Charter and Purposes. The charter of the audit committee is attached as
Appendix A to this document and is also available on our Web site as described
below under "Corporate Governance and Web Site Information." The primary
purposes of the audit committee are to oversee on behalf of the board of
directors:
- our accounting and financial reporting processes and the integrity of our
financial statements;
- the audits of our financial statements and the appointment, compensation,
qualifications, independence and performance of our independent auditors;
and
- our internal control over financial reporting.
Members. The board of directors has determined that the members of the
audit committee are independent as described above under "Director Independence
and Executive Sessions." The board of directors has also determined that all of
the members of the audit committee meet the requirement of the Nasdaq listing
standards that each member be able to read and understand fundamental financial
statements, including a company's balance sheet, income statement and cash flow
statement. Additionally, the board of directors has determined that Mr. Bierbaum
meets the requirement of the Nasdaq listing standards that at least one member
of the committee has past employment experience in finance or accounting,
requisite
5
professional certification in accounting, or other comparable experience or
background which results in the individual's financial sophistication.
Audit Committee Financial Expert. The board of directors has not
determined that any of the members of the audit committee is an "audit committee
financial expert" as defined in SEC Regulation S-K Item 401(h). Our board of
directors believes that the current members of its audit committee have
requisite levels of financial literacy and financial sophistication to enable
the audit committee to be effective in relation to the purposes outlined in its
charter and in light of the scope and nature of our company's business and
financial statements. The board of directors accordingly does not believe it is
necessary at this time to recruit a new board member in order to name an audit
committee financial expert.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE AND DIRECTOR NOMINATION PROCESS
Meetings. During our 2004 fiscal year, the nominating and corporate
governance committee met one time. Each of the nominating and corporate
governance committee's members participated in all meetings of the committee.
Charter and Purposes. The charter of the nominating and corporate
governance committee is available on our Web site as described below under
"Corporate Governance and Web Site Information." The primary purposes of the
committee are to:
- select the individuals qualified to serve on the board of directors for
election by our stockholders at each annual meeting of stockholders and
to fill vacancies on the board of directors; and
- develop, assess and recommend to the board of directors corporate
governance policies for our company.
Members. The Board of Directors has determined that the members of this
committee are independent as described above under "Director Independence and
Executive Sessions."
Process for Identifying Director Candidates. The committee's current
process for identifying and evaluating nominees for director consists of general
periodic evaluations of the size and composition of the board of directors with
a goal of maintaining continuity of appropriate industry expertise and knowledge
of our company.
Director Nominations Made by Stockholders. The nominating and corporation
governance committee will consider nominations timely made by stockholders
pursuant to the requirements of our bylaws referred to below under "Procedure
for Submitting Stockholder Proposals and Nominations." The committee has not
formally adopted any specific elements of this policy, such as minimum specific
qualifications or specific qualities or skills that must be possessed by
qualified nominees, beyond the committee's willingness to consider candidates
proposed by stockholders. The committee expects to monitor developments in this
area in the future and may or may not consider adopting a more detailed policy.
COMPENSATION COMMITTEE
Meetings. During our 2004 fiscal year, the compensation committee met two
times. Each of the members of the compensation committee attended all of these
meetings.
Charter and Purposes. The charter of the compensation committee is
available on our Web site as described below under "Corporate Governance and Web
Site Information." The primary purposes of the committee are to:
- review and approve the compensation of our Chief Executive Officer and
other executive officers;
- review the performance of our Chief Executive Officer and other executive
officers; and
- make recommendations to the board of directors with respect to
compensation, incentive compensation plans and equity-based plans
applicable to our executive officers and employees.
6
Members. The Board of Directors has determined that the members of this
committee are independent as described above under "Director Independence and
Executive Sessions."
STOCKHOLDER COMMUNICATIONS TO THE BOARD OF DIRECTORS
The audit committee has undertaken on behalf of the board of directors to
be the recipient of communications from stockholders relating to our company. If
particular communications are directed to the full board, independent directors
as a group, or individual directors, the audit committee will route these
communications to the appropriate directors or committees so long as the
intended recipients are clearly stated. You may send communications intended to
be anonymous by mail, without indicating your name or address, to Northfield
Laboratories Inc., 1560 Sherman Avenue, Suite 1000, Evanston, Illinois
60201-4800, Attention: Chairman of the Audit Committee. Communications not
intended to be made anonymously may be made by mail to the above address,
including whatever identifying or other information you wish to communicate.
Communications from employees or agents of our company will not be treated
as communications from our stockholders unless the employee or agent clearly
indicates that the communication is made solely in the person's capacity as a
stockholder. Stockholder proposals and director nominations intended to be
presented at a meeting of stockholders by inclusion in our company's proxy
statement under SEC Rule 14a-8 or intended to be brought before a stockholders
meeting in compliance with our bylaws are subject to specific notice and other
requirements referred to under "Procedure for Submitting Stockholder Proposals
and Nominations." The communications process for stockholders described above
does not modify or relieve any requirements for stockholder proposals or
nominations intended to be presented at a meeting of stockholders. If you wish
to make a stockholder proposal or nomination to be presented at a meeting of
stockholders, you may not communicate such proposals anonymously and may not use
the audit committee communication process described above in lieu of following
the notice and other requirements that apply to stockholder proposals or
nominations intended to be presented at a meeting of stockholders.
CORPORATE GOVERNANCE AND WEB SITE INFORMATION
We believe that we will be in compliance with the corporate governance
requirements of the Nasdaq listing standards as of the date of the annual
meeting, assuming the nominees for director are elected and the absence of
circumstances beyond our control that would adversely affect compliance. The
principal elements of these governance requirements as implemented by our
company are:
- an affirmative determination by the board of directors that a majority of
the directors is independent;
- regularly scheduled executive sessions of independent directors;
- an audit committee, nominating and corporate governance committee and
compensation committee comprised of independent directors and having the
purposes and charters described above under the separate committee
headings;
- specific audit committee authority and procedures outlined in the charter
of the audit committee attached as Appendix A to this document; and
- a code of business conduct and ethics applicable to directors, officers
and employees of our company that meets the definition of a code of
ethics set forth in SEC Regulation S-K Item 406. This code also contains
provisions that constitutes a code of ethics specifically applicable to
our Chief Executive Officer, Chief Financial Officer and other members of
the our finance department based on their special role in promoting fair
and timely public reporting of financial and business information about
our company.
The charters of our three independent board committees, our audit
committee's pre-approval policy for services provided by our auditors and our
code of business conduct and ethics are available without charge on the our Web
site at www.northfieldlabs.com.
7
COMPENSATION OF DIRECTORS
We compensate our outside directors for their participation at board of
director meetings and at committee meetings of the board of directors at a rate
of $1,000 per meeting. Directors are also reimbursed for their expenses for
attending meetings of the board of directors and committees. In addition,
non-employee directors receive an annual grant of 5,000 stock options and the
share equivalent of $15,000 in stock. The stock options provide for an exercise
price equal to the market price of our common stock on the date of grant and are
immediately exercisable. The stock grants are priced at fair market value and
are immediately vested on date of grant.
Dr. Ness has provided consulting services to Northfield relating to FDA
regulatory matters and the sourcing of red blood cells from major blood banking
organizations. Dr. Ness received $60,000 from Northfield as payment for his
consulting services during our 2004 fiscal year.
DIRECTOR ATTENDANCE
We encourage our directors to attend our annual meetings, but we have not
adopted a formal policy requiring attendance. At our 2003 annual meeting four of
our six directors were in attendance.
8
MANAGEMENT
EXECUTIVE OFFICERS
The board of directors will elect our executive officers at its first
meeting following the annual meeting. Our executive officers are as follows:
NAME POSITION
---- --------
Steven A. Gould, M.D. .................... Chairman of the Board of Directors and Chief Executive
Officer
Jack J. Kogut............................. Senior Vice President and Chief Financial Officer,
Secretary and Treasurer
Marc D. Doubleday......................... Vice President and General Manager
Eva C. Essig, Ph.D. ...................... Vice President Regulatory Affairs and Quality
Jay H. Kleiman, M.D., M.P.A. ............. Vice President Clinical Affairs
Robert L. McGinnis........................ Vice President Planning and Resource Development
Sophia H. Twaddell........................ Vice President Corporate Communications
-------------------------
A biographical summary of the business experience of Dr. Gould is included
under "Election of Directors."
Mr. Kogut, age 57, has served as Senior Vice President and Chief Financial
Officer since January 2003. From 1986 to December 2002, Mr. Kogut served as Vice
President Finance. Mr. Kogut has also served as Northfield's Secretary and
Treasurer since January 1994. From 1982 to 1986, he was the Group Controller --
Health Products for Sybron Corporation and also served as President of Sybron
Asia. Mr. Kogut received his M.B.A. degree from Loyola University of Chicago in
1972.
Mr. Doubleday, age 45, has served as Vice President and General Manager
since February 2003. From December 1994 through February 2003, Mr. Doubleday
served as Northfield's Vice President Process Engineering since December 1994.
Prior to December 1994, he served as Northfield's Plant Manager and Senior
Process Engineer. Before joining Northfield in 1988, Mr. Doubleday was employed
in various capacities with Davy McKee, Millipore Corporation and Abbott
Laboratories, Inc. Mr. Doubleday received his M.M. degree from Northwestern
University in 1991.
Dr. Essig, age 39, has served as Vice President Regulatory Affairs and
Quality since September 2003. From 1993 to 2003, Dr. Essig served in various
capacities at Searle-Pharmacia, now Pfizer Inc., with her most recent position
being Director Worldwide Regulatory Affairs with global responsibility for
Celebrex. Dr. Essig received her Ph.D. degree in neuropharmacology from Bristol
University, Bristol, U.K. in 1990.
Dr. Kleiman, age 58, has served as Vice President Clinical Affairs since
August 2003. From 1998 to 2003, Dr. Kleiman served as Medical Director,
Cardiovascular/Metabolic Clinical Research at Searle-Pharmacia, now Pfizer Inc.
Prior to that time, he was Director, Interventional Cardiovascular Services at
St. Joseph Hospital, Chicago. Dr. Kleiman received his M.D. degree from the
University of Michigan in 1971, and an M.P.A. from the John F. Kennedy School of
Government at Harvard University in 1998.
Mr. McGinnis, age 40, has served as Vice President Planning and Resource
Development since February 2003. Prior to that time, Mr. McGinnis served as Vice
President Manufacturing Development since August 1997. From 1995 to 1997, Mr.
McGinnis was a Project Manager for Raytheon Engineering and Construction. Prior
to 1995, Mr. McGinnis was employed by the John Brown division of Trafalgar House
as a Project Manager and Engineer. Mr. McGinnis received his MBA degree from the
University of Chicago in 1995.
Ms. Twaddell, age 52, has served as Vice President Corporate Communications
since January 2003. From 1999 to 2002, Ms. Twaddell was Senior Vice President
and Partner and Global Biotechnology Practice Leader at Fleishman Hillard in
Chicago. Prior to joining Fleishman Hillard, Ms. Twaddell was Vice President
Investment Banking at Prudential Vector Healthcare Group and held various
positions at American Hospital Supply Corporation, Baxter Healthcare Corporation
and Boots Pharmaceuticals, Inc. She received an M.A. degree from Northwestern
University in 1978.
9
EXECUTIVE COMPENSATION
The following table summarizes all compensation paid for our last three
completed fiscal years to our Chief Executive Officer and our four other most
highly compensated executive officers.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
AWARDS
----------------------------
ANNUAL COMPENSATION SECURITIES
--------------------------- OTHER ANNUAL RESTRICTED UNDERLYING
NAME AND PRINCIPAL POSITION YEAR(1) SALARY BONUS COMPENSATION(2) STOCK AWARDS($) OPTIONS(#)
--------------------------- ------- ------ ----- --------------- --------------- ----------
Steven A. Gould, M.D. ....... 2004 318,938 -- 36,541 112,500 100,000
Chairman and Chief Executive 2003 308,465 -- 32,239 -- 100,000
Officer(3) 2002 298,682 147,487 30,830 -- --
Jack J. Kogut................ 2004 253,125 -- 27,940 56,250 50,000
Senior Vice President and 2003 244,124 -- 27,453 -- 50,000
Chief Financial Officer 2002 235,888 116,479 25,052 -- --
Marc D. Doubleday............ 2004 178,869 -- 11,528 11,250 25,000
Vice President and General 2003 171,784 -- 10,454 -- 20,000
Manager 2002 163,604 39,423 11,259 -- 10,000
Jay H. Kleiman, M.D.,
M.P.A. .................... 2004 181,731 30,000 8,475 -- 50,000
Vice President Clinical 2003 -- -- -- -- --
Affairs(4) 2002 -- -- -- -- --
Robert L. McGinnis........... 2004 165,730 20,000 10,113 -- 25,000
Vice President Planning and 2003 159,166 -- 9,102 -- 20,000
Resource Development 2002 151,587 36,527 10,164 -- 10,000
-------------------------
(1) Our fiscal year begins on June 1 and ends on May 31. Our 2004 fiscal year
ended May 31, 2004.
(2) The indicated amounts represent life insurance premiums paid by Northfield
and contributions made by Northfield to the indicated executive officer's
401(k) plan account.
(3) Dr. Gould was elected as our Chief Executive Officer in July 2002.
(4) Dr. Kleiman became our Vice President Clinical Affairs in August 2003.
The following table sets forth all options granted to our Chief Executive
Officer and other named executive officers during our last completed fiscal
year.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(1)
OPTIONS EMPLOYEES IN PRICE EXPIRATION -----------------------
NAME GRANTED FISCAL YEAR ($/SH) DATE 5% 10%
---- ---------- ------------ -------- ---------- -- ---
Steven A. Gould, M.D. ......... 100,000 28 7.50 1/16/14 471,671 1,195,307
Jack J. Kogut.................. 50,000 14 7.50 1/16/14 235,835 597,653
Marc D. Doubleday.............. 25,000 7 5.94 11/3/13 93,391 236,671
Jay Kleiman, M.D., M.P.A. ..... 50,000 14 7.43 8/4/13 233,634 592,075
Robert L. McGinnis............. 25,000 7 5.94 11/3/13 93,391 236,671
-------------------------
(1) The potential realizable value amounts shown illustrate the values that
might be realized upon exercise immediately prior to the expiration of their
term using five percent and ten percent appreciation rates as required to be
used in this table by the Securities and Exchange Commission, compounded
annually, and are not intended to forecast possible future appreciation, if
any, of our stock price. Additionally, these
10
values do not take into consideration the provisions of the options
providing for nontransferability or termination of the options following
termination of employment.
The following table sets forth information regarding number of stock
options exercised by our Chief Executive Officer and other named executive
officers during our 2004 fiscal year and the aggregate value as of May 31, 2004
of unexercised stock options held by these individuals.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
ACQUIRED VALUE ------------------------- -------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- ----------- ------------------------- -------------------------
Steven A. Gould, M.D. ........ -- -- 126,250/178,750 444,850/1,297,200
Jack J. Kogut................. 15,000 97,500 96,500/90,500 265,780/596,460
Marc D. Doubleday............. -- -- 60,000/48,000 141,270/303,300
Jay Kleiman, M.D., M.P.A. .... -- -- 0/50,000 0/288,500
Robert L. McGinnis............ -- -- 44,000/48,000 100,900/303,300
-------------------------
(1) These figures are based on a fair market value for our common stock at May
28, 2004 of $13.20 per share, the closing price of the common stock as
reported by the Nasdaq National Market as of that date. May 28, 2004
represents the last trading day in our 2004 fiscal year.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The compensation committee of the board of directors consists of Messrs.
Chelberg and Olshansky. Neither of the members of the compensation committee is
a current or former Northfield officer or employee or was a party to any
disclosable related party transaction involving Northfield during our 2004
fiscal year.
EMPLOYMENT AGREEMENTS
We have employment agreements with Steven A. Gould, M.D., our Chief
Executive Officer, and Jack J. Kogut, our Senior Vice President and Chief
Financial Officer, Secretary and Treasurer. These employment agreements provide
for terms expiring in December 2004. The annual salaries payable during our 2004
fiscal year under the employment agreements with Dr. Gould and Mr. Kogut are
$318,938 and $253,125, respectively. The employment agreements provide that the
salaries of the respective executive officers may be increased but not decreased
from the foregoing amounts at a rate to be agreed by us and the respective
executive officers. The employment agreements also provide for cash bonus
payments of $330,750 and $262,500, respectively, upon the approval by FDA of the
commercial sale of PolyHeme(R) in the United States. Our board of directors may
in its discretion decide to award the respective executive officers additional
cash bonuses from time to time during the term of their respective employment
agreements. No bonuses were paid to Dr. Gould or Mr. Kogut during our 2004
fiscal year. Restricted stock grants of 15,000 and 7,500 shares were made to Dr.
Gould and Mr. Kogut, respectively, during our 2004 fiscal year. The employment
agreements also permit the executive officers to participate in all other
employee benefit plans and programs we make available generally to our
employees.
The employment agreements provide for certain payments following a
termination of employment by the executive officer due to death, disability or
for cause. Additionally, if we terminate the executive officer's employment
other than by reason of death, disability or for cause, or if the executive
officer terminates his employment for good reason, then we generally will be
obligated to make a lump sum payment within five business days after notice of
termination of an amount equal to two times the executive officer's highest
annual base salary in effect at any time during the preceding twelve months,
plus any bonus that would have been payable through the employment term. In
addition, for two years after the notice of termination, the executive officer
will remain eligible to participate in our insurance and similar plans.
11
If following a change in control of our company, we terminate the executive
officer's employment other than by reason of death, disability or for cause or
if the executive officer terminates his employment for good reason, any unvested
stock options held by the executive officer will be fully vested and exercisable
as of the date of termination.
The employment agreements also provide that if the executive officer's
employment terminates at any time after December 31, 2004 for any reason other
than death, disability or termination for cause and an employment offer by us is
not outstanding as of the date of the termination of employment, then we are
obligated to pay his full base salary, determined as of December 31, 2004, until
December 31, 2006. If the executive officer's employment terminates at any time
after December 31, 2004 for any reason other than death, disability or for cause
and an employment offer by us is outstanding as of the date of termination of
employment, then we are obligated to pay his full base salary, determined as of
December 31, 2004, until December 31, 2005.
INDEMNIFICATION AGREEMENTS
We have written indemnification agreements with each of our directors and
senior executive officers. These agreements require us to indemnify our
directors and senior executive officers to the maximum extent permitted by law
and to advance all expenses they may reasonably incur in connection with the
defense of any claim or proceeding in which they may be involved as a party or
witness. The agreements specify certain procedures and assumptions applicable in
connection with requests for indemnification and advancement of expenses and
also require us to continue to maintain directors and officers and fiduciary
liability insurance for a six-year period following any change in control
transaction. The rights provided to our directors and senior executive officers
under their indemnification agreements are in addition to any other rights such
individuals may have under our restated certificate of incorporation or bylaws,
applicable law or otherwise.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
We currently have five equity compensation plans under which shares of our
common stock are authorized for issuance. The following table sets forth certain
information regarding our existing equity compensation plans as of May 31, 2004,
the end of our last completed fiscal year.
EQUITY COMPENSATION PLAN INFORMATION
--------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES NUMBER OF SHARES
TO BE ISSUED WEIGHTED-AVERAGE REMAINING AVAILABLE FOR
UPON EXERCISE OF EXERCISE PRICE OF FUTURE ISSUANCE UNDER
PLAN CATEGORY OUTSTANDING STOCK OPTIONS OUTSTANDING STOCK OPTIONS EQUITY COMPENSATION PLANS
------------- ------------------------- ------------------------- -------------------------
Equity compensation plans
approved by
stockholders............. 261,500 7.15 450,665
Equity compensation plans
not approved by
stockholders............. 942,000 9.06 265,000(1)
--------- ---- -------
Total...................... 1,203,500 8.64
========================= =========================
-------------------------
(1) We do not plan to grant any additional options under our stock option plans
other than the Northfield Laboratories Inc. 2003 Equity Compensation Plan
and the New Employee Stock Option Plan.
Our existing equity compensation plans provide for the grant of stock
options and, in the case of the Northfield Laboratories 2003 Equity Compensation
Plan, restricted stock, stock appreciation rights and other forms of equity
compensation. Individual grants to directors, officers and employees under our
plans have generally been made pursuant to individual grant agreements that
contain additional terms and conditions, such as vesting requirements and
restrictions on exercise of the granted options after termination of employment.
The compensation committee of our board of directors acts as the administrator
of each of our equity compensation plans.
Our Restated Nonqualified Stock Option Plan lapsed on September 30, 1996.
Following termination of this plan, all options outstanding prior to plan
termination continue to be exercisable in accordance with their
12
terms. As of May 31, 2004, options to purchase a total of 6,000 shares of common
stock at a price of $6.38 per share were outstanding under this plan. These
options expire in 2004, ten years after the date of grant.
The Northfield Laboratories Inc. 1996 Stock Option Plan provides for the
granting of stock options to purchase up to 500,000 shares of common stock to
directors, officers, key employees and consultants. As of May 31, 2004, options
to purchase a total of 425,500 shares of common stock at prices between $9.56
and $15.41 were outstanding under the 1996 plan. These options expire between
2006 and 2010, ten years after the date of grant.
The Northfield Laboratories Inc. 1999 Stock Option Plan was established
effective June 1, 1999. The 1999 plan provides for the granting of stock options
to purchase up to 500,000 shares of common stock to directors, officers, key
employees and consultants. As of May 31, 2004, options to purchase a total of
365,500 shares of common stock at prices between $3.62 and $14.17 were
outstanding under the 1999 plan. These options expire between 2011 and 2013, ten
years after the date of grant.
The Northfield Laboratories Inc. New Employee Stock Option Plan was
established effective January 1, 2003. The new employee plan provides for the
granting of stock options to purchase up to 350,000 shares of common stock to
newly-hired employees. As of May 31, 2004, options to purchase a total of 85,000
shares common stock at prices between $3.62 and $7.53 per share were outstanding
under the new employee plan. These options expire in 2013, ten years after the
date of grant.
Our Nonqualified Stock Option Plan for Outside Directors provides for the
granting of stock options to purchase up to 200,000 shares of common stock to
directors who are neither employees of nor consultants to Northfield and who
were not directors on June 1, 1994. As of May 31, 2004, options to purchase a
total of 60,000 shares of common stock at prices between $4.09 and $13.38 per
share were outstanding under this plan. These options expire between 2008 and
2012.
The Northfield Laboratories Inc. 2003 Equity Compensation Plan was adopted
by our board of directors on July 15, 2003 and approved by our stockholders on
September 17, 2003. The 2003 plan provides for the granting of stock options,
restricted stock, stock appreciation rights and other forms of equity
compensation to our non-employee directors, employees and consultants. As of May
31, 2004, restricted stock awards covering a total of 25,500 shares of common
stock were outstanding under this plan. As of May 31, 2004, options to purchase
a total of 261,500 shares of common stock at prices between $5.94 and $15.15 per
share were outstanding under this plan. These options expire between 2013 and
2014.
EMPLOYEE BENEFIT PLANS
We sponsor a defined contribution 401(k) savings plan covering each of our
employees satisfying certain minimum length of service requirements. We make
discretionary contributions to this plan subject to certain maximum contribution
limitations. Our expenses incurred under this plan for the years ended May 31,
2004, 2003 and 2002 were $169,758, $145,307 and $157,294, respectively.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that our
directors, executive officers and persons who beneficially own more than 10% of
our common stock file with the Securities and Exchange Commission initial
reports of beneficial ownership of the common stock and reports of changes in
their beneficial ownership.
To our knowledge, based solely upon a review of copies of reports furnished
to us and written representations that no other reports were required during the
fiscal year ended May 31, 2004, our officers, directors and greater than 10%
beneficial owners complied during our last fiscal year with all applicable
Section 16(a) filing requirements.
13
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report of the compensation committee of the board of directors
discusses our executive compensation policies and the bases for the compensation
paid to our Chief Executive Officer during our last completed fiscal year.
COMPENSATION POLICY
Our policy with respect to executive compensation has been designed to
compensate executive officers fairly and adequately in relation to their
responsibilities, capabilities and contributions to Northfield. We have also
sought to align the interests of senior management with those of our
stockholders with respect to long-term increases in the price of our stock. The
compensation committee considers it essential to our success that the
compensation paid to executive officers remain competitive with similar or
competitive companies in order to attract and retain the talented senior
management necessary to achieve our business objectives.
COMPONENTS OF COMPENSATION
The components of compensation paid for our last completed fiscal year to
our executive officers consisted of base salary, stock option and restricted
stock grants, cash bonuses and certain other benefits. During our last completed
fiscal year, we had employment agreements which provided for specified annual
salaries with Steven A. Gould, M.D., our Chief Executive Officer, and Jack J.
Kogut, our Senior Vice President and Chief Financial Officer, Secretary and
Treasurer. See "Management -- Employment Agreements." The annual salaries
provided in these employment agreements were determined based principally on the
compensation levels for similar or competitive companies, including companies in
the pharmaceutical and biomedical industries, as well as the levels of
responsibility and experience of the individual executive.
During our last completed fiscal year, we granted 250,000 stock options and
made restricted stock grants covering 24,000 shares of common stock to our named
executive officers. These grants were made in recognition of these officers'
significant contributions to the clinical development of PolyHeme. We also paid
cash bonuses to two of our named executive officers during our last completed
fiscal year totaling $50,000. The other benefits provided to our executive
officers consist of enhanced life and disability insurance coverage. Executive
officers are also eligible for coverage under our general medical and life
insurance programs and may participate in our defined contribution 401(k)
savings plan on the same terms as other employees.
CHIEF EXECUTIVE OFFICER COMPENSATION
During our 2004 fiscal year, our Chief Executive Officer, Steven A. Gould,
M.D., received $318,938 in base salary, a grant of 100,000 stock options and a
restricted stock grant covering 15,000 shares of our common stock. Dr. Gould did
not receive a cash bonus during our 2004 fiscal year. The amount and composition
of Dr. Gould's compensation during our 2004 fiscal year were determined based
principally on compensation levels applicable to the chief executive officers of
similar or competitive companies and secondarily on Dr. Gould's prior
contributions to Northfield and his high level of experience and involvement
with the development and clinical testing of PolyHeme.
Members of the Compensation Committee
Jack Olshansky
Bruce S. Chelberg
14
AUDIT COMMITTEE REPORT
Our audit committee has (i) reviewed and discussed our audited financial
statements with management, (ii) discussed with our independent auditors the
matters required to be discussed by SAS 61 (Codification of Statements of
Auditing Standards, AU Section 380), as amended, (iii) received the written
disclosures and the letter from our independent accountants required by
Independence Standards Board Standard No. 1 (Independence Standards Board No. 1,
Independence Discussions with Audit Committees), as amended, and (iv) discussed
with our independent accountants the accountants' independence. Based on the
review and discussions referred to above, the audit committee has recommended to
our board of directors that our audited financial statements be included in its
Annual Report on Form 10-K for the fiscal year ended May 31, 2004 for filing
with the Securities and Exchange Commission.
Members of the Audit Committee
John F. Bierbaum
Bruce S. Chelberg
Jack Olshansky
15
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total return on our common
stock from May 31, 1999 through May 31, 2004 with the CRSP Total Return Index
for the Nasdaq Stock Market (U.S. Companies) and the Nasdaq Pharmaceutical
Index. The total stockholder return assumes that $100 was invested in our common
stock and each of the two indexes on May 31, 1999 and also assumes the
reinvestment of any dividends. The return on our common stock is calculated
using the closing price for the common stock on May 31, 2004, as quoted on the
Nasdaq Stock Market, Inc. Past financial performance may not be a reliable
indicator of future performance, and investors should not use historical trends
to anticipate results or trends in future periods.
[Stock Performance Graph]
NASDAQ PHARMACEUTICALS
STOCKS SIC 2830-2839 US NASDAQ STOCK MARKET (US
& FOREIGN NORTHFIELD LABORATORIES, INC. COMPANIES)
----------------------- ----------------------------- -----------------------
May 28, 1999 100.0 100.0 100.0
May 31, 2000 184.7 92.2 137.0
May 31, 2001 196.4 137.7 85.2
May 31, 2002 134.8 34.2 65.5
May 30, 2003 160.3 53.4 65.1
May 28, 2004 181.4 109.0 80.9
-------------------------
The Report of the Compensation Committee on Executive Compensation, the
Audit Committee Report and the Stock Performance Graph are not deemed to be
soliciting material or to be filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, or Securities Exchange Act of
1934, as amended, or incorporated by reference in any document so filed.
16
SECURITY OWNERSHIP OF PRINCIPAL
STOCKHOLDERS AND MANAGEMENT
The following table sets forth information known to us with respect to the
beneficial ownership of our common stock as of July 31, 2004, for (i) each of
our current executive officers named under "Management -- Executive Officers,"
(ii) each of our current directors, (iii) each other person who is known by us
to be the beneficial owner of more than five percent of our outstanding common
stock and (iv) all of our current directors and executive officers as a group.
Except as otherwise indicated, the address of each person named in the following
table is c/o Northfield Laboratories Inc., 1560 Sherman Avenue, Suite 1000,
Evanston, Illinois 60201-4800.
PERCENTAGE
NUMBER BENEFICIALLY
NAME OF STOCKHOLDER OF SHARES OWNED(1)
------------------- --------- ------------
Steven A. Gould, M.D. ...................................... 669,700(2) 3.1%
Jack J. Kogut............................................... 183,810(3) *
Marc D. Doubleday........................................... 63,500(4) *
Eva C. Essig, Ph.D. ........................................ 6,250(5) *
Jay H. Kleiman, M.D., M.P.A. ............................... 12,500(6) *
Robert L. McGinnis.......................................... 49,500(7) *
Sophia H. Twaddell.......................................... 6,000(8) *
John F. Bierbaum............................................ 1,519,812_(9) 7.1%
Bruce S. Chelberg........................................... 22,467(10) *
Paul M. Ness, M.D. ......................................... 17,467_(11) *
Jack Olshansky.............................................. 55,484_(12) *
David A. Savner............................................. 39,467_(13) *
PepsiAmericas, Inc. ........................................ 1,502,345(14) 7.0%
60 South Sixth Street
Suite 3880
Minneapolis, Minnesota 55402
SF Capital Partners Ltd. ................................... 1,571,915(15) 7.3%
c/o Stark Asset Management LLC
3600 South Lake Drive
St. Francis, Wisconsin 53235
All current directors and executive officers as a group (12
persons).................................................. 1,143,612 5.2%
-------------------------
* Less than one percent
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of common stock subject
to stock options and warrants currently exercisable or exercisable within
60 days are deemed outstanding for computing the percentage ownership of
the person holding the options and the percentage ownership of any group of
which the holder is a member, but are not deemed outstanding for computing
the percentage ownership of any other person. Except as indicated by
footnote, and subject to community property laws where applicable, the
persons named in the table have sole voting and investment power with
respect to all shares of common stock shown as beneficially owned by them.
(2) Includes 126,250 shares of common stock which Dr. Gould is entitled to
acquire pursuant to stock options currently exercisable or exercisable
within 60 days. Also includes 484,630 shares held in a personal trust and
43,820 shares held in a family trust. Does not include 178,750 shares
acquirable pursuant to stock options not currently exercisable or
exercisable within 60 days.
(3) Includes 96,500 shares of common stock which Mr. Kogut is entitled to
acquire pursuant to stock options currently exercisable or exercisable
within 60 days. Also includes 64,805 shares held in a personal trust. Does
not include 90,500 shares acquirable pursuant to stock options not
currently exercisable or exercisable within 60 days.
17
(4) Includes 59,500 shares of common stock which Mr. Doubleday is entitled to
acquire pursuant to stock options currently exercisable or exercisable
within 60 days. Does not include 42,500 shares acquirable pursuant to stock
options not currently exercisable or exercisable within 60 days.
(5) Includes 6,250 shares of common stock which Dr. Essig is entitled to
acquire pursuant to stock options currently exercisable or exercisable
within 60 days. Does not include 18,750 shares acquirable pursuant to stock
options not currently exercisable or exercisable within 60 days.
(6) Includes 12,500 shares of common stock which Dr. Kleiman is entitled to
acquire pursuant to stock options currently exercisable or exercisable
within 60 days. Does not include 37,500 shares acquirable pursuant to stock
options not currently exercisable or exercisable within 60 days.
(7) Includes 49,500 shares of common stock which Mr. McGinnis is entitled to
acquire pursuant to stock options currently exercisable or exercisable
within 60 days. Does not include 42,500 shares acquirable pursuant to stock
options not currently exercisable or exercisable within 60 days.
(8) Includes 2,500 shares of common stock which Ms. Twaddell is entitled to
acquire pursuant to stock options currently exercisable or exercisable
within 60 days. Does not include 32,500 shares acquirable pursuant to stock
options not currently exercisable or exercisable within 60 days.
(9) Includes 1,502,345 shares of common stock held by PepsiAmericas, Inc.,
also, includes 15,000 shares of common stock which Mr. Bierbaum is entitled
to acquire pursuant to stock options currently exercisable or exercisable
within 60 days. Does not include 5,000 shares acquirable pursuant to stock
options not currently exercisable or exercisable within 60 days. Under the
rules and regulations of the Securities and Exchange Commission, Mr.
Bierbaum may be deemed a beneficial owner of the stock held by
PepsiAmericas, Inc. Mr. Bierbaum disclaims beneficial ownership of the
1,502,345 shares of stock held by PepsiAmericas, Inc.
(10) Includes 20,000 shares of common stock which Mr. Chelberg is entitled to
acquire pursuant to stock options currently exercisable or exercisable
within 60 days.
(11) Includes 15,000 shares of common stock which Dr. Ness is entitled to
acquire pursuant to stock options currently exercisable or exercisable
within 60 days. Does not include 5,000 shares acquirable pursuant to stock
options not currently exercisable or exercisable within 60 days.
(12) Includes 45,000 shares of common stock which Mr. Olshansky is entitled to
acquire pursuant to stock options currently exercisable or exercisable
within 60 days. Does not include 5,000 shares acquirable pursuant to stock
options not currently exercisable or exercisable within 60 days.
(13) Includes 35,000 shares of common stock which Mr. Savner is entitled to
acquire pursuant to stock options currently exercisable or exercisable
within 60 days.
(14) Based on the information reported in the Schedule 13G filed with the
Securities and Exchange Commission by PepsiAmericas, Inc.
(15) Based on the information reported in the Schedule 13G filed with the
Securities and Exchange Commission by SF Capital Partners Ltd.
18
ITEM 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The audit committee of our board of directors has selected KPMG LLP as
Northfield's independent auditors for the fiscal year ending May 31, 2005 and
has further directed that the selection of independent auditors be submitted for
approval by our stockholders at the annual meeting. KPMG has served as
Northfield's independent auditors since 1985. The audit committee believes that
KPMG is knowledgeable about our operations and accounting practices and is
qualified to act in the capacity of our principal independent auditors.
During our fiscal 2003 and 2004 fiscal years, the following fees were
billed to us by KPMG:
2003 2004
---- ----
Audit Fees.................................................. $74,000 $ 79,000
Audit Related Fees.......................................... 4,500 106,100
Tax Fees.................................................... 17,000 17,525
All Other Fees.............................................. -- --
The audit committee considered whether the non-audit services rendered by
KPMG were compatible with maintaining KPMG's independence as auditors of our
financial statements, and concluded that they were. The audit committee has
adopted a written pre-approval policy with respect to the services provided to
us by our auditors. A copy of this policy is available our Web site as described
above under "Corporate Governance and Web Site Information." All of the services
provided to us by our auditors during our 2003 and 2004 fiscal years were
approved by our audit committee.
We expect a representative of KPMG to attend the annual meeting. The
representative will have an opportunity to make a statement if he or she desires
and also will be available to respond to appropriate questions. If the selection
of KPMG is not approved by the stockholders, our board of directors will
consider such a vote as advice to select other independent auditors for the 2006
fiscal year, rather than the 2005 fiscal year, because of the difficulty and
expense involved in changing independent auditors on short notice.
The board of directors recommends a vote FOR ratification of the
appointment of KPMG as independent auditors for fiscal 2005.
PROCEDURE FOR SUBMITTING STOCKHOLDER PROPOSALS AND NOMINATIONS
Stockholders may present proper proposals for inclusion in Northfield's
proxy statement and for consideration at the next annual meeting of our
stockholders by submitting their proposals to us in a timely manner. In order to
be included in our proxy statement for our next annual meeting, stockholder
proposals must be received by us no later than April 18, 2005, and must
otherwise comply with the requirements of the applicable rules of the Securities
and Exchange Commission.
In addition, our bylaws establish an advance notice procedure with regard
to certain matters, including stockholder nominations for director and
stockholder proposals not included in our proxy statement, to be brought before
any annual meeting of stockholders. In general, notice must be received by our
corporate secretary not less than 60 days nor more than 90 days prior to the
date of the annual meeting, except if less than 70 days' notice or prior public
disclosure of the date of the meeting is given or made to our stockholders, in
which event notice by the stockholders to be timely must be received no later
than the close of business on the tenth day following the date on which notice
of the date of the annual meeting was mailed or public disclosure was made. It
is currently expected that our 2005 annual meeting of stockholders will be held
on or about September 20, 2005. Therefore, the deadline under our bylaws for
timely submission of director nominations and stockholder proposals for
consideration at our 2005 annual meeting is currently expected to be July 22,
2005. Stockholder nominations for director are also required under our bylaws to
include certain information regarding the director nominee and the stockholder
making the nomination.
19
All notice of proposals by stockholders, whether or not to be included in
our proxy materials, should be sent to Northfield Laboratories Inc., 1560
Sherman Avenue, Suite 1000, Evanston, Illinois 60201-4800, Attention: Corporate
Secretary.
GENERAL
The board of directors does not know of any other matters to be presented
at the annual meeting. If any additional matters are properly presented, the
persons named in the proxy will have discretion to vote in accordance with their
own judgment on these matters.
20
CHARTER OF THE AUDIT COMMITTEE OF THE
BOARD OF DIRECTORS OF NORTHFIELD LABORATORIES INC.
PURPOSES
The primary purposes of the Audit Committee (the "Committee") of the Board
of Directors of Northfield Laboratories Inc. (the "Company") are to oversee on
behalf of the Board of Directors:
- the Company's accounting and financial reporting processes and the
integrity of its financial statements;
- the audits of the Company's financial statements and the appointment,
compensation, qualifications, independence and performance of the
Company's independent auditors; and
- the performance of the Company's internal control over financial
reporting.
The Committee also has the purpose of preparing the audit committee report
that the rules of the Securities and Exchange Commission (the "SEC") require the
Company to include in its annual proxy statement.
The Committee's function is one of oversight only and does not relieve
management of its responsibilities for preparing financial statements that
accurately and fairly present the Company's financial results and condition, nor
the Company's independent auditors of their responsibilities relating to the
audit or review of financial statements. Members of the Committee will not be
deemed to have assumed any fiduciary or other duties greater than the other
members of the Board of Directors.
ORGANIZATION
Number of Members
The Committee must consist of at least three directors. The Board of
Directors may designate a Committee member as the chairperson of the Committee.
If the Board of Directors does not do so, the Committee members will appoint a
Committee member as chairperson by a majority vote of the Committee members.
Independence
All Committee members must have been determined by the Board of Directors
to be independent, as defined and to the extent required in the applicable SEC
rules and listing standards of the Nasdaq Stock Market, Inc., as they may be
amended from time to time (the "listing standards"), for purposes of audit
committee membership.
Financial Literacy
Each Committee member must be financially literate upon appointment to the
Committee, as determined by the Board of Directors in accordance with the
listing standards. At all times, there should be at least one Committee member
who, as determined by the Board of Directors, meets any requirement in the
listing standards for finance, accounting or comparable experience or
background. The Board of Directors will also determine whether any member s of
the Committee possess the requisite accounting or financial management
experience and expertise to qualify as an "audit committee financial expert," as
defined by the rules of the SEC, and the Company will make any disclosures
required under the rules of the SEC with respect to such determination.
Appointment
Subject to any requirements of the listing standards, the Board of
Directors may appoint and remove Committee members in accordance with the
Company's Bylaws. Committee members will serve for such
21
terms as the Board of Directors may fix, and in any case at the will of the
Board of Directors, whether or not a specific term is fixed.
INDEPENDENT AUDITORS AND THEIR SERVICES
Overall Authority
The Committee has the sole authority and direct responsibility for the
appointment, compensation, retention, termination, evaluation and oversight of
the work of the independent auditors engaged by the Company for the purpose of
preparing or issuing an audit report or related work or performing other audit,
review or attest services for the Company. The Company's independent auditors
report directly to the Committee. The Committee's authority includes resolution
of disagreements between the Company's management and independent auditors
regarding financial reporting and the receipt of communications from the
independent auditors as may be required under professional standards applicable
to the independent auditors.
Terms of Audit and Non-Audit Engagements
The Committee must pre-approve all audit, review, attest and permissible
non-audit services to be provided to the Company by its independent auditors.
The Committee may establish pre-approval policies and procedures in compliance
with applicable SEC rules.
Annual Quality Control Report and Review
The Committee must obtain and review, at least annually, a report by the
Company's independent auditors describing the firm's internal quality-control
procedures. In addition, the Committee's annual review of its independent
auditors' qualifications must also include the review and evaluation of the lead
partner of the independent auditors for the Company's account, and evaluation of
such other matters as the Committee may consider relevant to the engagement of
the independent auditors, including views of the Company's management and
internal finance employees, and whether the lead partner or auditing firm itself
should be rotated.
Policy on Hiring Employees of the Auditors
The Committee may from time to time establish hiring policies that will
govern the Company's hiring of employees or former employees of the Company's
independent auditors, taking into account possible pressures on the auditors'
personnel who might seek a position with the Company, and report these policies
to the Board of Directors.
ANNUAL FINANCIAL REPORTING
As often and to the extent the Committee deems necessary or appropriate,
but at least annually in connection with the audit of each fiscal year's
financial statements, the Committee will:
Discuss Financial Statements and Internal Control Reports with Management
Review and discuss with appropriate members of management:
- the Company's audited financial statements;
- related accounting and auditing principles and practices; and
- management's assessment of internal control over financial reporting and
the related reports on internal control over financial reporting to be
included in the Company's annual report on Form 10-K (as and when these
reports are required under SEC rules).
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Critical Accounting Policy Report
Review and discuss with the Company's independent auditors the report or
update required pursuant to applicable SEC rules concerning:
- all critical accounting policies and practices to be used;
- all alternative treatments within generally accepted accounting
principles for policies and practices relating to material items that
have been discussed with Company management, including ramifications of
the use of such alternative disclosures and treatments and the treatment
preferred by the independent auditors; and
- other material written communications between the independent auditors
and Company management, such as any management letter or schedule of
unadjusted differences.
SAS 61 Review
Discuss with the Company's independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61, including such matters as:
- the quality and acceptability of the accounting principles applied in the
Company's financial statements;
- new or changed accounting policies, the effect of regulatory and
accounting initiatives, and significant estimates, judgments,
uncertainties or unusual transactions;
- the selection, application and effects of critical accounting policies
and estimates applied by the Company;
- issues raised by any "management" or "internal control" letter from the
Company's independent auditors, problems or difficulties encountered in
the audit (including any restrictions on the scope of the work or on
access to requested information) and management's response to such
problems or difficulties, significant disagreements with management, or
other significant aspects of the audit; and
- any off-balance sheet transactions, and relationships with any
unconsolidated entities or any other persons, which may have a material
current or future effect on the financial condition or results of the
Company and are required to be reported under SEC rules.
MD&A
Review with appropriate members of the Company's management and independent
auditors the intended disclosures under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" to be included in the Company's
annual report on Form 10-K.
SB 1 Disclosure
Receive from the Company's independent auditors a formal written statement
of all relationships between the auditors and the Company consistent with
Independence Standards Board Standard No. 1.
Auditor Independence
Actively discuss with the Company's independent auditors any disclosed
relationships or services that may impact their objectivity and independence,
and take any other appropriate action to oversee their independence.
Recommend Filing of Audited Financial Statements
Recommend whether the Company's annual report on Form 10-K to be filed with
the SEC should include the Company's audited financial statements.
23
QUARTERLY FINANCIAL REPORTING
The Committee's quarterly review will normally include:
Quarterly Review
Review and discuss the quarterly financial statements of the Company and
the results of its independent auditors' review of these financial statements
with appropriate members of the Company's management and independent auditors.
Discussion of Significant Matters with Management
Review and discuss with the Company's management and, if appropriate,
independent auditors, significant matters relating to:
- the quality and acceptability of the accounting principles applied in the
financial statements;
- new or changed accounting policies, and significant estimates, judgments,
uncertainties or unusual transactions;
- the selection, application and effects of critical accounting policies
and estimates applied by the Company; and
- any off-balance sheet transactions and relationships with any
unconsolidated entities or any other persons that may have a material
current or future effect on the financial condition or results of the
Company and are required to be reported under SEC rules.
MD&A
Review and discuss the Company's disclosures under "Management's Discussion
and Analysis of Financial Condition and Results of Operations" to be included in
the Company's quarterly report on Form 10-Q with appropriate members of the
Company's management and independent auditors.
OTHER FUNCTIONS
Annual Review of this Charter
The Committee will review and assess the adequacy of this charter annually
and recommend any proposed changes to the Board of Directors.
Earnings Releases and Other Financial Guidance
The Committee will discuss with management earnings press releases and
other published financial information or guidance provided to analysts and
rating agencies. This may be conducted generally as to types of information and
presentations, and need not include advance review of each release, other
information or guidance.
Compliance
The Committee, to the extent it deems necessary or appropriate, will
periodically review with management the Company's disclosure controls and
procedures, internal control over financial reporting and systems and procedures
to promote compliance with laws.
Risk Assessment
The Committee will periodically:
- inquire of the Company's management and independent auditors about the
Company's major financial risks or exposures;
24
- discuss the steps management has taken to monitor and control such
exposures; and
- discuss guidelines and policies with respect to risk assessment and risk
management.
Code of Business Conduct and Ethics
The Committee will conduct any activities relating to the Company's Code of
Business Conduct and Ethics as may be delegated from time to time to the
Committee by the Board of Directors.
Complaints and Anonymous Submissions
The Committee will establish and maintain procedures for:
- the receipt, retention and treatment of complaints received by the
Company regarding accounting, internal accounting controls or auditing
matters; and
- the confidential, anonymous submission by employees of the Company of
concerns regarding questionable accounting or auditing matters.
If the Committee or the Board of Directors so determines, the submission
procedures may also include a method for interested parties to communicate
directly with the Board's presiding director or with the non-management
directors as a group.
Related Party Transactions
It is the Company's policy that the Company will not enter into
transactions required to be disclosed under Item 404 of the SEC's Regulation S-K
unless the Committee or another independent body of the Board of Directors first
reviews and approves the transactions.
Internal Control Over Financial Reporting
The Committee will periodically discuss and review, as appropriate, with
the Company's management and independent auditors:
- the design and effectiveness of the Company's internal control over
financial reporting; and
- any significant deficiencies or material weaknesses in that internal
control, any change that has materially affected or is reasonably likely
to materially affect that internal control, and any fraud, whether or not
material, that involves management or other employees who have a
significant role in that internal control, that have been reported to the
Committee.
Reports from Legal Counsel
The Committee will review and take appropriate action with respect to any
reports to the Committee from legal counsel engaged by the Company concerning
any material violation of securities law or breach of fiduciary duty or similar
violation by the Company or any person acting on its behalf.
Other Reviews and Functions
The Committee, as it may consider appropriate, may consider and review with
the Board of Directors, Company management, internal or outside legal counsel,
the independent auditors or any other appropriate person any other topics
relating to the purposes of the Committee that may come to the Committee's
attention. The Committee may perform any other activities consistent with this
charter, the Company's corporate governance documents and applicable listing
standards, laws and regulations as the Committee or the Board of Directors
considers appropriate.
25
MEETINGS, REPORTS AND RESOURCES
Meetings
The Committee will meet as often as it determines is necessary, but not
less than quarterly. The Committee may also act by unanimous written consent in
lieu of a meeting. The Committee will meet separately and periodically with the
Company's management and independent auditors. In addition, the Committee may
meet with any other persons, as it deems necessary.
Procedures
The Committee may establish its own procedures, including the formation and
delegation of authority to subcommittees, in a manner not inconsistent with this
charter, the Company's Bylaws, the listing standards or SEC rules. The
chairperson or a majority of the Committee members may call meetings of the
Committee. A majority of the authorized number of Committee members constitutes
a quorum for the transaction of Committee business, and the vote of a majority
of the Committee members present at a meeting at which a quorum is present will
be the act of the Committee, unless in either case a greater number is required
by this charter, the Company's Bylaws or the listing standards. The Committee
will keep written minutes of its meetings and deliver copies of the minutes to
the Company's corporate secretary for inclusion in the corporate records.
Reports
The Committee will timely prepare the audit committee report required to be
included in the Company's annual meeting proxy statement, and report to the
Board of Directors on the other matters relating to the Committee or its
purposes, as required by the listing standards or SEC rules. The Committee will
also report to the Board of Directors annually the overall results of its annual
review of the independent auditors' qualifications, performance and independence
and the annual review by the Committee of its own performance. The Committee
also will report to the Board of Directors on the major items covered by the
Committee at each Committee meeting, and provide additional reports to the Board
of Directors as the Committee may determine to be appropriate, including review
with the Board of Directors of any issues that arise from time to time with
respect to the quality or integrity of the Company's financial statements, the
Company's compliance with legal or regulatory requirements or the performance
and independence of the independent auditors.
Committee Access and Investigations
The Committee is at all times authorized to have direct, independent and
confidential access to the Company's independent auditors and to the Company's
other directors, management and personnel to carry out the Committee's purposes.
The Committee is authorized to conduct or authorize investigations into any
matters relating to the purposes, duties or responsibilities of the Committee.
Committee Advisers and Funding
As the Committee deems necessary to carry out its duties, it is authorized
to select, engage (including approval of the fees and terms of engagement),
oversee, terminate and obtain advice and assistance from outside legal,
accounting or other advisers or consultants. The Company will provide for
appropriate funding, as determined by the Committee, for payment of:
- compensation to the Company's independent auditors for their audit and
audit-related, review and attest services;
- compensation to any advisers engaged by the Committee; and
- ordinary administrative expenses of the Committee that are necessary or
appropriate in carrying out its duties.
26
No Assumption of Additional Duties; Reliance on Others
The members of the Committee, through their service on the Committee, will
not be deemed to have assumed any fiduciary duties greater than those applicable
to the other members of the Board of Directors. Nothing in this charter is
intended to preclude or impair the protection provided in Section 141(e) of the
Delaware General Corporation Law for good faith reliance by members of the
Committee on reports or other information provided by others.
Effective: April 15, 2004
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NORTHFIELD LABORATORIES INC.
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DESIGNATION (IF ANY) 000000000.000 ext
ADD 1
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ADD 5 Holder Account Number
ADD 6
C 1234567890 J N T
/ / Mark this box with an X if you
have made changes to your name or
address details above.
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ANNUAL MEETING PROXY CARD
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A ELECTION OF DIRECTORS PLEASE REFER TO THE REVERSE SIDE FOR TELEPHONE AND INTERNET VOTING INSTRUCTIONS.
1. The Board of Directors recommends a vote FOR the listed nominees.
For Withhold For Withhold
01 - Steven A. Gould, M.D. / / / / 04 - Paul M. Ness, M.D. / / / /
02 - John F. Bierbaum / / / / 05 - Jack Olshansky / / / /
03 - Bruce S. Chelberg / / / / 06 - David A. Savner / / / /
B PROPOSALS
The Board of Directors recommends a vote FOR the following proposals.
FOR AGAINST ABSTAIN
2. To ratify the appointment of KPMG LLP as
independent auditors of the Company to serve / / / / / / I plan to attend the meeting in person. / /
for the Company's 2005 fiscal year.
3. In their discretion, to act in any other matters which may properly come
before the Annual Meeting and any adjournment or postponement thereof.
C AUTHORIZED SIGNATURES - SIGN HERE - THIS SECTION MUST BE COMPLETED FOR YOUR
INSTRUCTIONS TO BE EXECUTED.
NOTE: Sign exactly as your name(s) appear hereon. When signing as attorney, administrator, trustee, guardian or
any other representative capacity, please so indicate.
Please sign in the box(s) below to validate this proxy.
Signature 1 - Please keep signature within the box Signature 2 - Please keep signature within the box Date (mm/dd/yyyy)
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/ /
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/ / 1 UPX HHH PPPP 004041 +
001CD40001 00CY0A
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PROXY - NORTHFIELD LABORATORIES INC.
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ANNUAL MEETING OF STOCKHOLDERS - SEPTEMBER 21, 2004
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned stockholder of Northfield Laboratories Inc. hereby appoints Jack
J. Kogut and Carmen Wilcox, and each of them, attorneys and proxies with full
power of substitution, to vote at the Annual Meeting of the Stockholders of
Northfield Laboratories Inc. to be held on Tuesday, September 21, 2004, at 10:00
A.M., local time, at 1560 Sherman Avenue, Evanston, Illinois 60201-4800, and at
any adjournment or postponement thereof, in the name of the undersigned and with
the same force and effect as if the undersigned were present and voting such
shares, on the following matters and in the following manner.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE HEREON. IF NO SPECIFICATION IS MADE, THE SHARES REPRESENTED
BY THIS PROXY WILL BE VOTED BY EACH OF THE ABOVE PERSONS FOR EACH OF THE
PROPOSALS TO BE PRESENTED AT THE ANNUAL MEETING AND FOR SUCH OTHER MATTERS AS
MAY PROPERLY COME BEFORE THE ANNUAL MEETING AS THE ABOVE PERSONS MAY DEEM
ADVISABLE.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(Continued and to be signed on reverse side.)
TELEPHONE AND INTERNET VOTING INSTRUCTIONS
YOU CAN VOTE BY TELEPHONE OR INTERNET! AVAILABLE 24 HOURS A DAY 7 DAYS A WEEK!
Instead of mailing your proxy, you may choose one of the two voting methods outlined below to vote your proxy.
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[PHONE LOGO] To vote using the Telephone (within U.S. and Canada) [COMPUTER MOUSE LOGO] To vote using the Internet
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- Call toll free 1-866-601-0658 in the United States or Canada - Go to the following web site:
any time on a touch tone telephone. There is NO CHARGE to you WWW.COMPUTERSHARE.COM/US/PROXY
for you for the call.
- Follow the simple instructions provided by the recorded message. - Enter the information requested on your computer screen
and follow the simple instructions.
C0123456789 12345
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If you vote by the Internet, please DO NOT mail back this proxy card.
Proxies submitted by the Internet must be received by 1:00 a.m., Central Time, on September 21, 2003.
THANK YOU FOR VOTING