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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. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement. [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2)).
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Rule 14a-12
Northfield Laboratories
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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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.
(1) Amount Previously Paid:
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NORTHFIELD LABORATORIES INC.
1560 Sherman Avenue, Suite 1000
Evanston, Illinois 60201-4800
----------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held
on August 31, 2001
----------------------------
TO THE STOCKHOLDERS OF NORTHFIELD LABORATORIES INC:
The Annual Meeting of the stockholders of Northfield Laboratories Inc. (the
"Company") will be held on Friday, August 31, 2001, at 2:00 P.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 approve the appointment of KPMG LLP as independent auditors of the
Company to serve for the Company's 2002 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 19, 2001 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 3, 2001
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.
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NORTHFIELD LABORATORIES INC.
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PROXY STATEMENT
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This document is being furnished to holders of the common stock of
Northfield Laboratories Inc. in connection with the solicitation of proxies for
use at Northfield's annual meeting of stockholders to be held on Friday, August
31, 2001, commencing at 2:00 P.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 3, 2001.
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
19, 2001, the record date for the annual meeting, are entitled to notice of and
to vote at the annual meeting. As of July 19, 2001, there were 14,265,875 shares
of common stock outstanding and entitled to be voted at the annual meeting.
QUORUM
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 the
stockholders at the annual meeting. 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.
If a stockholder withholds its vote for the election of directors or abstains
from voting on the other proposals to be considered at the annual meeting, the
shares owned by that stockholder 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
The affirmative vote of a majority of the votes cast at the annual meeting
will be required to approve the proposals with respect to the election of
directors and the appointment of independent auditors. Withheld votes and
abstentions will be considered as votes cast with respect to these proposals and
will have the same effect as a vote against these proposals.
If any nominee for director fails to receive the affirmative vote of a
majority of the votes cast 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.
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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.
ANNUAL REPORT
A copy of our Annual Report on Form 10-K for our 2001 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 the election of the nominees
for election as directors and FOR approval of the appointment of KPMG LLP as
independent auditors for Northfield's 2002 fiscal year.
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ITEM 1. ELECTION OF DIRECTORS
Directors elected at the annual meeting will hold office until the next
annual meeting or until their earlier resignation or removal. In the event any
of the nominees should become unavailable for election, the Board of Directors
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.
DIRECTOR OF
NORTHFIELD PRINCIPAL OCCUPATION AND
NAME SINCE OFFICE BUSINESS EXPERIENCE
---- ----------- ------ ------------------------
Richard E. DeWoskin............ 1985 Chairman of the Board of Mr. DeWoskin, age 53, is a founding
Directors and Chief member of Northfield's scientific
Executive Officer team and has served as Chairman of
Board of Directors and Chief
Executive Officer of Northfield since
its inception in 1985. Prior to 1985,
Mr. DeWoskin served as the Assistant
Director of Surgical Research and as
a business advisor to the Department
of Surgery at Michael Reese Hospital
and Medical Center in Chicago,
Illinois. In 1979, Mr. DeWoskin
founded and operated Medalease, Inc.,
a medical billing business based at
Michael Reese. From 1973 to 1977, Mr.
DeWoskin served as the Assistant
Administrator of Surgical Research at
the Hektoen Institute of Cook County
Hospital in Chicago, Illinois. Mr.
DeWoskin received his B.S. degree
from Roosevelt University.
Steven A. Gould, M.D. ......... 1993 President and Director Dr. Gould, age 54, is a founding
member of Northfield's scientific
team and has served as President and
a director of Northfield since July
1993. 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. 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.
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DIRECTOR OF
NORTHFIELD PRINCIPAL OCCUPATION AND
NAME SINCE OFFICE BUSINESS EXPERIENCE
---- ----------- ------ ------------------------
Gerald S. Moss, M.D. .......... 1989 Director Dr. Moss, age 66, is a founding
member of Northfield's scientific
team and has served as a director of
Northfield since 1989. Since 1989,
Dr. Moss has been the Dean of the
University of Illinois College of
Medicine. From 1977 until 1989, Dr.
Moss was a Professor in the
Department of Surgery of The
University of Chicago School of
Medicine and Chairman of the
Department of Surgery at Michael
Reese Hospital. Dr. Moss 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 Blood Commission, the
American College of Surgeons and The
American Red Cross. Dr. Moss received
his M.D. degree from the Ohio State
University College of Medicine in
1960.
Bruce S. Chelberg.............. 1989 Director Mr. Chelberg, age 67, 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
Whitman Corporation, now known as
PepsiAmericas, Inc. a principal
stockholder in Northfield. Mr.
Chelberg is also a director First
Midwest Bancorp, Inc., Snap-On
Incorporated, Actuart Corporation and
Nortrox Incorporated. Mr. Chelberg
received his LLB degree from the
University Of Illinois College of Law
in 1958.
Jack Olshansky................. 1989 Director Mr. Olshansky, age 72, 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. Mr.
Olshansky served as vice president of
the Medical Division of Cutter
Laboratories. Mr. Olshansky is also a
director of EndiCor, Inc.,
PrisMedical, Inc., Tandem Medical and
Genetrol. Mr. Olshansky received his
B.A. degree from Brooklyn College in
1950.
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DIRECTOR OF
NORTHFIELD PRINCIPAL OCCUPATION AND
NAME SINCE OFFICE BUSINESS EXPERIENCE
---- ----------- ------ ------------------------
David A. Savner................ 1998 Director Mr. Savner, age 57, 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.
COMMITTEES OF THE BOARD OF DIRECTORS
We currently have two standing committees. The compensation committee,
which met once during the 2001 fiscal year, is composed of Messrs. Chelberg and
Olshansky. The compensation committee has the authority, as delegated by the
Board of Directors, to administer our executive compensation plans and to
determine the salaries and incentive compensation, including the grant of stock
options, to be received by our executive officers and employees.
The audit committee, which met five times during the 2001 fiscal year, is
currently composed of Messrs. Savner (Chairman), Chelberg and Olshansky. The
functions of the audit committee include the review of the planning and results
of our annual audit, the adequacy of our internal accounting controls, and the
auditing and accounting principles and practices to be used in the preparation
of our financial statements. Each of the members of Northfield's audit committee
is an independent director as defined in the applicable listing of standards of
the National Association of Securities Dealers, Inc. Northfield's Board of
Directors has adopted a written charter for the audit committee, a copy of which
is attached as an appendix to this proxy statement.
MEETING ATTENDANCE
During fiscal 2001, the Board of Directors met six times, and no incumbent
director attended fewer than 75 percent of the total number of meetings of the
Board of Directors and the committees of which he was a member, except that Mr.
Chelberg attended four of the six meetings of the Board of Directors held during
fiscal 2001.
COMPENSATION OF DIRECTORS
We compensate outside directors for their participation at Board of
Directors 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 grants of stock options under our Nonqualified
Stock Option Plan for Outside Directors.
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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
---- --------
Richard E. DeWoskin....................... Chairman of the Board of Directors and Chief Executive
Officer
Steven A. Gould, M.D...................... President
Jack J. Kogut............................. Vice President -- Finance, Secretary and Treasurer
John A. Dybas, Jr......................... Vice President -- Regulatory Affairs
Marc D. Doubleday......................... Vice President -- Process Engineering
Robert L. McGinnis........................ Vice President -- Manufacturing Development
-------------------------
A biographical summary of the business experience of Mr. DeWoskin and Dr.
Gould is included under "Election of Directors."
Mr. Kogut, age 54, has served as Vice President -- Finance since 1986. 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. Dybas, age 63, has served as Vice President -- Regulatory Affairs since
January'1996. From 1989 to 1996, he served as Northfield's Director of
Regulatory Affairs. Prior to 1989, Mr. Dybas was a Director of Regulatory
Affairs for the Pharmaceutical Products Division of Abbott Laboratories, Inc.
and was a self-employed consultant. Mr. Dybas received his M.S. degree from
Syracuse University in 1963.
Mr. Doubleday, age 42, has served as the Vice President -- Process
Engineering since December 1994. Prior to that time, 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.
Mr. McGinnis, age 37, has served as the 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.
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EXECUTIVE COMPENSATION
The following table summarizes all compensation paid for our last three
completed fiscal years to our Chief Executive Officer and four other most highly
compensated executive officers.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR(1) SALARY BONUS COMPENSATION(2) OPTIONS(#)
--------------------------- ------- ------ ----- --------------- ----------
Richard E. DeWoskin......................... 2001 $268,867 -- $25,838 18,000
Chief Executive Officer 2000 262,309 -- 24,209 --
1999 255,022 -- 22,395 40,000
Steven A. Gould, M.D........................ 2001 285,233 -- 27,554 15,000
President 2000 278,276 -- 26,292 --
1999 270,546 -- 25,594 30,000
Jack J. Kogut............................... 2001 225,266 -- 24,663 12,000
Vice President -- Finance 2000 219,772 -- 22,790 --
1999 213,668 -- 21,197 25,000
John A. Dybas, Jr........................... 2001 174,771 -- 14,650 10,000
Vice President -- Regulatory 2000 167,646 -- 14,741 --
Affairs 1999 162,989 -- 13,961 10,000
Marc D. Doubleday........................... 2001 153,509 15,000 9,841 12,000
Vice President -- Process 2000 143,354 -- 9,617 --
Engineering 1999 139,372 -- 8,217 10,000
-------------------------
(1) Our fiscal year begins on June 1 and ends on May 31. Our 2001 fiscal year
ended May 31, 2001.
(2) The indicated amounts represent life insurance premiums paid by Northfield
and contributions made by Northfield to the indicated executive officer's
401(k) plan account.
The following table sets forth all options granted to our Chief Executive
Officer and other named executive officers during our last completed fiscal
year.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(1)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ----------------------
NAME GRANTED FISCAL YEAR ($/SH) DATE 5% 10%
---- ---------- ------------ -------- ---------- --------- ----------
Richard E. DeWoskin............ 18,000 17% $10.88 1/2/2011 $123,163 $312,119
Steven A. Gould, M.D........... 15,000 14 10.88 1/2/2011 102,636 260,999
Jack J. Kogut.................. 12,000 11 10.88 1/2/2011 82,108 208,079
John A. Dybas, Jr.............. 10,000 9 15.41 9/15/2010 96,913 245,596
Marc D. Doubleday.............. 12,000 11 15.41 9/15/2010 116,295 294,715
-------------------------
(1) The potential realizable value amounts shown illustrate the values that
might be realized upon exercise immediately prior to the expiration of their
term using five percent and ten percent appreciation rates as required to be
used in this table by the Securities and Exchange Commission, compounded
annually, and are not intended to forecast possible future appreciation, if
any, of our stock price. Additionally, these values do not take into
consideration the provisions of the options providing for nontransferability
or termination of the options following termination of employment.
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The following table sets forth information regarding stock option exercises
by our Chief Executive Officer and other named executive officers and the
aggregate value as of May 31, 2001 of unexercised stock options held by these
individuals.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
ACQUIRED VALUE ------------------------- -------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- ----------- ------------------------- -------------------------
Richard E. DeWoskin.......... -- -- 90,000/43,000 $483,450/$235,290
Steven A. Gould, M.D......... -- -- 121,250/33,750 455,338/185,063
Jack J. Kogut................ -- -- 73,750/28,250 465,288/153,373
John A. Dybas, Jr............ -- -- 33,500/17,500 201,605/49,075
Marc D. Doubleday............ -- -- 33,500/19,500 201,605/51,475
-------------------------
(1) These figures are based on a fair market value for our common stock at May
31, 2001 of $16.61 per share, the closing price of the common stock as
reported by the Nasdaq National Market as of that date. May 31, 2001
represents the last trading day in our 2001 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 2001
fiscal year.
EMPLOYMENT AGREEMENTS
We have employment agreements with Richard E. DeWoskin, our Chief Executive
Officer, Steven A. Gould, M.D., our President, and Jack J. Kogut, our Vice
President -- Finance, Secretary and Treasurer. These employment agreements
provide for terms expiring in December 2002. The annual salaries payable under
the employment agreements with Mr. DeWoskin, Dr. Gould and Mr. Kogut are
$278,048, $294,973 and $232,958, respectively. The employment agreements provide
that the salaries of the respective executive officers may be reviewed annually
by the Board of Directors and may be increased but not decreased from the
foregoing amounts. The employment agreements also provide for cash bonus
payments upon our filing of a Biologic License Application for our PolyHeme(TM)
blood substitute product with the Food and Drug Administration as well as for
the approval of the BLA by the FDA. In addition, the employment agreements
provide for certain payments following a termination of employment occurring
after a change in control of Northfield.
EMPLOYEE STOCK OPTION 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 terms. As of May
31, 2001, options to purchase a total of 77,000 shares of common stock at prices
of $6.38 and $15.19 per share were outstanding under this plan. These options
expire in 2003 and 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, 2001, options
to purchase a total of 493,500 shares of common stock at prices between $9.56
and $13.38 were outstanding under the 1996 plan. These options expire between
2006 and 2010, ten years after the date of grant.
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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, 2001 options to purchase a total of
60,000 shares of common stock at prices of $10.88 and $15.41 were outstanding
under the 1999 plan. These options expire in 2011, ten years after the date of
grant.
STOCK OPTION PLAN FOR OUTSIDE DIRECTORS
The 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, 2001, options to purchase a
total of 30,000 shares of common stock at a prices of $11.18 and $13.38 per
share were outstanding under this plan. These options expire in 2008 and 2011.
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,
2001, 2000 and 1999 were $145,051, $129,496 and $118,167, respectively.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and 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, 2001, our officers, directors and greater than 10%
beneficial owners complied during our last fiscal year with all applicable
Section 16(a) filing requirements, except a report required to be filed in
connection with a stock option grant for David A. Savner was filed after the
applicable filing date.
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 grants, cash
bonuses and certain other benefits. We have employment agreements which provide
for specified annual salaries with Richard E. DeWoskin, our Chief Executive
Officer, Steven A. Gould, M.D., our President, and Jack J. Kogut, our Vice
President -- Finance, Secretary and Treasurer. See "Management -- Employment
Agreements." The annual salaries provided in these
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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 most recent fiscal year, we issued stock options to acquire
67,000 shares of common stock to our Chief Executive Officer and the other named
executive officers. These options were issued in recognition of these officers'
significant contributions to the clinical development of PolyHeme. 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 2001 fiscal year, our Chief Executive Officer, Richard E.
DeWoskin, received $268,867 in base salary pursuant to his employment agreement
and was granted a stock option to acquire 18,000 shares of common stock. The
terms of Mr. DeWoskin's employment agreement and stock option grant were
determined based principally on compensation levels applicable to the chief
executive officers of similar or competitive companies and secondarily on Mr.
DeWoskin's prior contributions to Northfield and his high level of experience
and involvement with the development and clinical testing of our blood
substitute product.
Members of the Compensation Committee
Bruce S. Chelberg
Jack Olshansky
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, 2001 for filing
with the Securities and Exchange Commission.
Members of the Audit Committee
David A. Savner, Chairman
Bruce S. Chelberg
Jack Olshansky
10
13
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total return on our common
stock from May 31, 1996 through May 31, 2001 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, 1996 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, 2001, 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.
[Comparison of Cumulative Total Return]
Nasdaq Pharmaceutical Stock Index Northfield Laboratories
May 31, 1996 100.00 100.00
May 30, 1997 90.70 58.50
May 29, 1998 94.10 90.70
May 28, 1999 124.80 71.50
May 31, 2000 230.30 65.90
May 31, 2001 245.00 98.40
Nasdaq Stock Market
May 31, 1996 100.00
May 30, 1997 112.70
May 29, 1998 142.90
May 28, 1999 201.70
May 31, 2000 276.50
May 31, 2001 171.60
-------------------------
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.
11
14
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, 2001, for (i) each
person who is known by us to be the beneficial owner of more than five percent
of the outstanding common stock, (ii) each of our directors, (iii) each of our
executive officers named under "Management -- Executive Compensation -- Summary
Compensation Table" and (iv) all 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)
------------------- --------- ------------
Richard E. DeWoskin......................................... 732,715(2) 5.1%
Steven A. Gould, M.D........................................ 649,700(3) 4.5%
Jack J. Kogut............................................... 138,560(4) *
John A. Dybas, Jr........................................... 49,000(5) *
Marc D. Doubleday........................................... 38,000(6) *
Robert L. McGinnis.......................................... 21,750(7) *
Gerald S. Moss, M.D. ....................................... 589,150 4.1%
c/o UIC College of Medicine
1853 West Polk Avenue
Chicago, Illinois 60612
Bruce S. Chelberg........................................... 5,000(8) *
300 Park Boulevard
Suite 201
Itasca, Illinois 60143
Jack Olshansky.............................................. 33,017(9) *
78305 Sunrise Canyon Avenue
Palm Desert, California 92211-2601
PepsiAmericas, Inc.......................................... 1,502,345(10) 10.5%
60 South Sixth Street
Suite 3880
Minneapolis, Minnesota 55402
David A. Savner............................................. 22,000(11) *
c/o General Dynamics Corporation
3190 Fairview Park Drive
Falls Church, Virginia 22042
All directors and executive officers as a group (ten
persons).................................................. 2,278,892 15.5%
-------------------------
* 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 90,000 shares of common stock which Mr. DeWoskin is entitled to
acquire pursuant to stock options currently exercisable or exercisable
within 60 days. Does not include 43,000 shares acquirable pursuant to stock
options not currently exercisable or exercisable within 60 days.
12
15
(3) Includes 121,250 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 33,750 shares
acquirable pursuant to stock options not currently exercisable or
exercisable within 60 days.
(4) Includes 73,750 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 28,250 shares acquirable pursuant to stock options not
currently exercisable or exercisable within 60 days.
(5) Includes 36,000 shares of common stock which Mr. Dybas is entitled to
acquire pursuant to stock options currently exercisable or exercisable
within 60 days. Does not include 15,000 shares acquirable pursuant to stock
options not currently exercisable or exercisable within 60 days.
(6) Includes 36,500 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 16,500 shares acquirable pursuant to stock
options not currently exercisable or exercisable within 60 days.
(7) Includes 21,750 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 15,250 shares acquirable pursuant to stock
options not currently exercisable or exercisable within 60 days.
(8) Includes 5,000 shares of common stock which Mr. Chelberg is entitled to
acquire pursuant to stock options currently exercisable or exercisable
within 60 days. Does not include 10,000 shares acquirable pursuant to stock
options not currently exercisable or exercisable within 60 days.
(9) Includes 25,000 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.
(10) Based on the information reported in the Schedule 13G filed with the
Securities and Exchange Commission by Whitman Corporation, now known as
PepsiAmericas, Inc.
(11) Includes 20,000 shares of common stock which Mr. Savner is entitled to
acquire pursuant to stock options currently exercisable or exercisable
within 60 days. Does not include 10,000 shares acquirable pursuant to stock
options not currently exercisable or exercisable within 60 days.
13
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ITEM 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected KPMG LLP as Northfield's independent
auditors for the fiscal year ending May 31, 2002 and has further directed that
the selection of independent auditors be submitted for approval by our
stockholders at the annual meeting. KPMG LLP has served as Northfield's
independent auditors since 1985. During fiscal 2001, we paid KPMG LLP the
following fees:
Audit fees $50,900
We expect a representative of KPMG LLP 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. The Board of
Directors recommends a vote FOR ratification of the appointment of KPMG LLP as
independent auditors for fiscal 2002.
PROCEDURE FOR SUBMITTING STOCKHOLDER PROPOSALS
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 6, 2002, 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 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
the 2002 annual meeting of stockholders will be held on or about September 13,
2002. Therefore, the deadline for timely submission of a stockholder proposal
for consideration at the 2002 annual meeting is currently expected to be July
16, 2002.
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.
14
17
APPENDIX A
NORTHFIELD LABORATORIES INC.
BOARD OF DIRECTORS
AUDIT COMMITTEE CHARTER
JUNE 2, 2000
I. AUDIT COMMITTEE PURPOSE
The Audit Committee is appointed by the Board of Directors to assist the
Board in fulfilling its oversight responsibilities. The Audit Committee's
primary duties and responsibilities are to:
- Monitor the integrity of the Company's financial reporting process and
systems of internal controls regarding finance, accounting, and legal
compliance.
- Monitor the independence and performance of the Company's independent
auditors.
- Provide an avenue of communication among the independent auditors,
management and the Board of Directors.
The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct access
to the independent auditors as well as anyone in the organization. The
Audit Committee has the ability to retain, at the Company's expense,
special legal, accounting, or other consultants or experts it deems
necessary in the performance of its duties.
II. AUDIT COMMITTEE COMPOSITION AND MEETINGS
Audit Committee members shall meet the requirements of the Nasdaq
Exchange. The Audit Committee shall be comprised of three or more
directors as determined by the Board, each of whom shall be independent
nonexecutive directors, free from any relationship that would interfere
with the exercise of his or her independent judgment. All members of the
Committee shall have a basic understanding of finance and accounting and
be able to read and understand fundamental financial statements, and at
least one member of the Committee shall have accounting or related
financial management expertise.
Audit Committee members shall be appointed by the Board. If an audit
committee Chair is not designated or present, the members of the Committee
may designate a Chair by majority vote of the Committee membership.
The Committee shall meet at least four times annually, or more frequently
as circumstances dictate. The Audit Committee Chair shall prepare and/or
approve an agenda in advance of each meeting. The Committee shall meet
privately in executive session at least annually with management, the
independent auditors and as a committee to discuss any matters that the
Committee or each of these groups believe should be discussed. In
addition, the Committee shall communicate with management and the
independent auditors quarterly to review the Company's financial
statements and significant findings based upon the auditors limited review
procedures.
III. AUDIT COMMITTEE RESPONSIBILITIES AND DUTIES
REVIEW PROCEDURES
1. Review and reassess the adequacy of this Charter at least annually.
Submit the charter to the Board of Directors for approval and have the
document published at least every three years in accordance with SEC
regulations.
18
2. Review the Company's annual audited financial statements prior to
filing or distribution. Review should include discussion with
management and independent auditors of significant issues regarding
accounting principles, practices, and judgments.
3. In consultation with the management and the independent auditors
consider the integrity of the Company's financial reporting processes
and controls. Discuss significant financial risk exposures and the
steps management has taken to monitor, control, and report such
exposures. Review significant findings prepared by the independent
auditors together with management's responses.
4. Review with financial management and the independent auditors the
Company's quarterly financial results prior to the release of earnings
and/or the company's quarterly financial statements prior to filing or
distribution. Discuss any significant changes to the Company's
accounting principles and any items required to be communicated by the
independent auditors in accordance with Statement on Auditing
Standards 61 Communicating with Audit Committees (SAS 61). The Chair
of the Committee may represent the entire Audit Committee for purposes
of this review.
INDEPENDENT AUDITORS
5. The independent auditors are ultimately accountable to the Audit
Committee and the Board of Directors. The Audit Committee shall review
the independence and performance of the auditors and annually
recommend to the Board of Directors the appointment of the independent
auditors or approve any discharge of auditors when circumstances
warrant.
6. Approve the fees and other significant compensation to be paid to the
independent auditors.
7. On an annual basis, the Committee should review and discuss with the
independent auditors all significant relationships they have with the
Company that could impair the auditors' independence.
8. Review, as needed, the independent auditors' audit plan -- discuss
scope, staffing, locations, reliance upon management and general audit
approach.
9. Prior to releasing the year-end earnings, discuss the results of the
audit with the independent auditors. Discuss certain matters required
to be communicated to audit committees in accordance with AICPA SAS
No. 61.
10. Consider the independent auditors' judgments about the quality and
appropriateness of the Company's accounting principles as applied in
its financial reporting.
11. On at least an annual basis, review with the Company's counsel, any
legal matters that could have a significant impact on the
organization's financial statements, the Company's compliance with
applicable laws and regulations, and inquiries received from
regulators or governmental agencies.
OTHER AUDIT COMMITTEE RESPONSIBILITIES
12. Annually prepare a report to shareholders as required by the
Securities and Exchange Commission. The report should be included in
the Company's annual proxy statement.
13. Perform any other activities consistent with this Charter, the
Company's by-laws, and governing law, as the Committee or the Board
deems necessary or appropriate.
14. Maintain minutes of meetings and periodically report to the Board of
Directors on significant results of the foregoing activities.
2
19
NORTHFIELD LABORATORIES INC.
ANNUAL MEETING OF STOCKHOLDERS CONTROL NUMBER
NORTHFIELD LABORATORIES INC.
FRIDAY, AUGUST 31, 2001 - 2:00 P.M. 000000 0000000000 0 0000
0002SA 000000000.000 ext -------
000000000.000 ext A0941
----------------------------------- 000000000.000 ext -------
Barcode 000000000.000 ext
----------------------------------- 000000000.000 ext
MR A SAMPLE 000000000.000 ext
DESIGNATION (IF ANY) 000000000.000 ext
ADD1 000000000.000 ext
ADD2
ADD3
ADD4
ADD5
ADD6
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C1234567890
PLEASE MARK VOTE IN BOX IN THE FOLLOWING MANNER USING DARK INK ONLY. [X] I plan to attend the meeting in person. [ ]
----------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
----------------------------------------------------------------------------
1. ELECTION OF DIRECTORS - Nominees For Withhold For All Mark here for address change noted on revere side. [ ]
All All Except
01-Richard E. DeWoskin 02-Steven A. Gould, M.D.
03-Gerald S. Moss, M.D. 04-Bruce S. Chelberg [ ] [ ] [ ]
05-Jack Olshansky 06-David A. Savner
(please enter the two digit number of the nominee(s) you do not support if -------------- ---------------------------------
you have marked the "for all except" voting box above) Date Signature
[ ] [ ] [ ] [ ] [ ]
-------------- ---------------------------------
Date Signature
For Against Abstain
NOTE: Sign exactly as your name(s) appear hereon. When
2. To approve the appointment of KPMG LLP as signing as attorney, administrator, trustee, guardian
independent auditors of the Company to serve [ ] [ ] [ ] or any other representative capacity, please so
for the Company's 2002 fiscal year. indicate.
Please sign in the box(s) above to validate this
3. In their discretion, to act in any other proxy.
matters which may properly come before the
Annual Meeting and any adjournment or Please write comments for the Chairman in the box
postponement thereof. below.
------------------------------------------------------
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YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED PREPAID ENVELOPE.
20
PROXY NORTHFIELD LABORATORIES INC. PROXY
ANNUAL MEETING OF STOCKHOLDERS - AUGUST 31, 2001
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 Friday, August 31, 2001, at 2:00
P.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.)
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In the case of Corporate Bodies, DATE SIGNATURE
signatories should state their
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