ENCORIUM GROUP INC - 10KSB/A - 20030430 - COMPENSATION
ITEM 10. EXECUTIVE
COMPENSATION
Summary Compensation Table
The following table sets forth the total compensation paid
by the Company to the Chief Executive Officer and the four other most highly compensated individuals who served as executive officers in 2002 and were paid more than $100,000 in salary and bonus for 2002 (the “Named Executive Officers”).
Long-term Compensation
Annual Compensation
Shares Underlying Options (#)
Name and Principal Position
Year
Salary
Bonus
All Other Compensation
Kenneth M. Borow, M.D.
2002
$
262,500
—
—
—
President and Chief Executive Officer
2001
$
261,458
$
55,000
50,000
—
2000
$
248,301
—
500,000
$
19,041
(1)
Brian Dickson, M.D.
(2)
2002
$
230,000
—
50,000
—
Chief Operating Officer and Chief Medical Officer
2001
$
23,590
—
100,000
$
20,000
(7)
Jorge A. Leon
(3)
2002
$
101,522
—
100,000
$
20,000
(7)
Executive Vice President and Chief Financial Officer
John Hall, MB., ChB.
(4)
2002
$
216,418
—
—
$
21,203
(5)
Vice President and Managing Director,
2001
$
199,783
$
15,000
—
$
20,324
International Clinical Operations
2000
$
33,687
—
55,000
$
3,427
Catherine G. Spear
(6)
2002
$
143,663
—
—
—
Vice President Strategic Marketing
2001
$
135,000
$
15,000
—
—
and Communications
2000
$
15,923
—
55,000
—
(1)
In 1999, the Company’s former Chief Executive Officer transferred 12,307 shares of his stock to Dr. Borow. In 2000, the Company paid $19,041 to Dr. Borow to
cover the taxes due on the transfer of shares.
(2)
Dr. Dickson commenced employment with the Company in November 2001.
(3)
Mr. Leon commenced employment with the Company in June 2002.
(4)
Dr. Hall commenced employment with the Company in November 2000.
(5)
Includes Company contributions to a pension plan, $1,823 in 2000, $10,811 in 2001 and $11,278 in 2002, and payments for a car allowance, $1,604 in 2000, $9,513 in
2001 and $9,925 in 2002.
(6)
Ms. Spear commenced employment with the Company in November 2000 and has continued as an employee of the Company in 2003 as a non-executive officer.
(7)
Represents forgivable loans made by the Company to the named officer in connection with commencement of employment in November 2001 and June 2002, respectively,
which are to be forgiven in equal amounts over a 24-month period following initiation of the loan.
-6-
Option Grant Table
The following table provides information about grants of
stock options made during 2002 to each of the Named Executive Officers.
Individual Grants
Name
Number of
Shares
Underlying
Options
Granted
(1)
Percentage of
Total Options
Granted to Employees
Exercise
Price
Expiration
Date
Kenneth M. Borow, M.D.
—
—
—
—
Brian Dickson, M.D.
50,000
12.7
%
$
4.39
4/02/07
Jorge A. Leon
100,000
25.4
%
$
3.90
6/03/07
John Hall, MB., ChB.
—
—
—
—
Catherine G. Spear
—
—
—
—
(1)
Each option has a term of five years from the date of grant and vests 20% on the date of grant with the remainder vesting ratably over a four-year period, beginning
on the first anniversary of the date of grant.
Aggregated Fiscal Year-End Option Values
There were no option exercises by any of the Named Executive Officers during the twelve months ended December 31, 2002. The following table presents certain information with respect to the number and value at December 31, 2002, of
options held by each of the Named Executive Officers. The value actually realized upon future option exercises by the Named Officers will depend on the value of the Common Stock at the time of exercise.
Number of Shares Underlying Unexercised Options
Values of Unexercised
In-The-Money Options
(1)
Name
Exercisable
Unexercisable
Exercisable
Unexercisable
Kenneth M. Borow, M.D.
1,006,111
43,889
$
1,099,500
$
27,375
Brian Dickson, M.D.
50,000
100,000
5,200
7,800
Jorge A. Leon
20,000
80,000
—
—
John Hall, MB., ChB.
38,500
16,500
13,475
5,775
Catherine G. Spear
33,000
22,000
28,050
18,700
(1)
Based on the closing price of $2.85 of the Common Stock on the Nasdaq SmallCap Market on December 31, 2002, net of the exercise price.
Director’s Remuneration
Non-employee directors receive $50,000 per year for their service as
directors paid at the rate of $4,167 per month, and are reimbursed for reasonable expenses incurred in connection with attendance at meetings of the Board. In addition, if the number of Board meetings during the year exceeds eight, the non-employee
directors will receive cash payments for each additional meeting ranging from $250 to $1,000, depending on the length of such additional meeting. Non-employee directors who are members of the Audit Committee receive an initial option grant to
purchase 82,500 shares of Common Stock. All other non-employee directors receive an initial grant to purchase 60,000 shares of Common Stock. The option grant vests quarterly, with the first 25% vesting on the 90
th
day from the date such grant was made.
-7-
Employment
Agreements
We have entered into an employment agreement
(the “Agreement”) with Dr. Borow, as of March 31, 2003. Pursuant to the Agreement, which has a term of three years expiring March 31, 2006, Dr. Borow will receive an annual base salary of $325,000, subject to increases in each subsequent
year tied to increases in the consumer price index. In addition, the Company has paid to Dr. Borow the sum of $4,167 (which is the difference between the base salary actually paid for the period February 1, 2002 through January 21, 2003 and the base
salary he would have been paid had his base salary been equal to $325,000). Pursuant to the Agreement, Dr. Borow is eligible to receive an annual bonus of up to 50% of his base salary, depending upon the Company’s attainment of its operating
goals and his individual performance. Under certain circumstances relating to the termination of Dr. Borow’s employment, the Company may be obligated to pay Dr. Borow severance compensation for up to one year (at a rate equal to his then base
salary) and, in such event, the Company also would be obligated to continue group health coverage for Dr. Borow for a period of one year and, to the extent not already vested, of all of Dr. Borow’s stock options would vest. In addition, if a
“change in control” (as defined in the Agreement) occurs during the term of Dr. Borow’s employment (or within one year thereafter under certain circumstances), the Company would be obligated to pay Dr. Borow a change in control
payment in an amount ranging from one to five times his then base salary, depending upon the growth in stockholder value as reflected by the trading price of the Company’s common stock (or, in certain circumstances, the amount of the
consideration to be received by the stockholders in such transaction).
We do not have employment agreements with any other executive officers.
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