UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

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Amicus Therapeutics, Inc.

(Name of Registrant as Specified in its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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April 28, 2010

 

Dear Stockholder:

 

We are pleased to invite you to attend our 2010 Annual Meeting of Stockholders to be held at the offices of Amicus Therapeutics, Inc., located at 6 Cedar Brook Drive, Cranbury, New Jersey 08512 on Tuesday, June 15, 2010, at 9:00 a.m. Eastern Daylight Time.

 

Enclosed are the following:

 

 

The accompanying notice of the 2010 Annual Meeting and Proxy Statement describe the business we will conduct at the meeting and provide information about Amicus Therapeutics, Inc. that you should consider when you vote your shares.

 

Your vote is important. When you have finished reading the Proxy Statement, please promptly vote your shares by marking, signing, dating and returning the proxy card in the enclosed envelope or vote via telephone or internet according to the instructions in the Proxy Statement. If you attend the Annual Meeting, you may vote your shares in person even though you have previously voted by proxy if you follow the instructions in the Proxy Statement. We encourage you to vote by proxy so that your shares will be represented and voted at the meeting, whether or not you can attend in person.

 

Sincerely,

 

John F. Crowley
Chairman, President and Chief Executive Officer

 

April 28, 2010

 

NOTICE OF 2010 ANNUAL MEETING OF STOCKHOLDERS

 

To our Stockholders:

 

The 2010 Annual Meeting of Stockholders of Amicus Therapeutics, Inc. will be held at the offices of Amicus Therapeutics, Inc., located at 6 Cedar Brook Drive, Cranbury, New Jersey 08512 on Tuesday, June 15, 2010 at 9:00 a.m. Eastern Daylight Time. The purpose of this meeting is to vote on the following:

 

 

These items of business are more fully described in the Proxy Statement accompanying this Notice.

 

The record date for the 2010 Annual Meeting is April 23, 2010. Only stockholders of record at the close of business on that date are entitled to notice of and to vote at the meeting or any adjournment thereof.

 

BY ORDER OF THE BOARD OF DIRECTORS

 

Geoffrey P. Gilmore
Senior Vice President, General Counsel and Secretary

 

Cranbury, New Jersey

April 28, 2010

 

You are cordially invited to attend the meeting in person. Whether or not you expect to attend the meeting, please complete, date, sign and return the proxy card or vote by telephone or the internet as instructed in the accompanying materials as promptly as possible in order to ensure your representation at the meeting. You can revoke a proxy at any time prior to its exercise by following the instructions in the proxy statement. Please note, however, that if your shares are held of record by a broker, bank or other nominees and you wish to vote at the meeting, you must provide a valid proxy issued in your name from that record holder.

AMICUS THERAPEUTICS, INC.
6 Cedar Brook Drive, Cranbury, New Jersey 08512
(609) 662-2000

 

PROXY STATEMENT FOR THE AMICUS THERAPEUTICS, INC.
2010 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
JUNE 15, 2010

 

GENERAL INFORMATION ABOUT THE ANNUAL MEETING

 

Why Did You Send Me this Proxy Statement?

 

We sent you this Proxy Statement and the enclosed proxy card because the Board of Directors (the “Board”) of Amicus Therapeutics, Inc. (sometimes referred to as “Amicus” or the “Company”) is soliciting your proxy to vote at the 2010 Annual Meeting of Stockholders (the “Annual Meeting”) and any adjournments of the meeting to be held at the offices of Amicus Therapeutics, Inc., located at 6 Cedar Brook Drive, Cranbury, New Jersey 08512 on Tuesday, June 15, 2010 at 9:00 a.m. Eastern Daylight Time. This Proxy Statement along with the accompanying Notice of Annual Meeting of Stockholders summarizes the purposes of the meeting and the information you need to know to vote at the Annual Meeting. You are invited to attend the Annual Meeting to vote on the proposals described in this Proxy Statement. You do not need to attend the Annual Meeting to vote your shares. Instead you may simply complete, sign and return the enclosed proxy card, or follow the instructions on the enclosed proxy card to submit your proxy by telephone or on the internet.

 

We intend to mail this Proxy Statement, our 2009 Annual Report on Form 10-K, the attached Notice of Annual Meeting and the enclosed proxy card to all stockholders entitled to vote at the Annual Meeting on or about April 28, 2010.

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL MEETING TO BE HELD ON JUNE 15, 2010.

 

THE PROXY STATEMENT FOR OUR 2010 ANNUAL MEETING OF STOCKHOLDERS AND OUR ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2009 ARE AVAILABLE

AT: www.sec.gov, through the Investor Relations section of our web site at www.amicustherapeutics.com or at

http://www.amstock.com/ProxyServices/ViewMaterial.asp?CoNumber=15417.

 

Who Can Vote?

 

Only stockholders of record at the close of business on April 23, 2010 are entitled to vote at the Annual Meeting. On this record date, there were 27,638,818 shares of our common stock (“Common Stock”) outstanding and entitled to vote. Each share of Common Stock is entitled to one vote. The Common Stock is our only outstanding class of voting stock.

 

Stockholder of Record: Shares Registered in Your Name

 

If, on April 23, 2010, your shares were registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, then you are a stockholder of record. As a stockholder of record, you may vote in person at the Annual Meeting or vote by proxy. Whether or not you attend the Annual Meeting, we urge you to fill out and return the enclosed proxy card or follow the instructions on the proxy card to submit your vote by telephone or internet to ensure your vote is counted.

 

Beneficial Owner: Shares Registered in the Name of a Broker or Bank

 

If, on April 23, 2010, your shares were held, not in your name, but rather in an account at a brokerage firm, bank, dealer, or other similar organization, then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have

the right to direct your broker or other agent on how to vote the shares in your account. A number of brokers and banks enable beneficial owners to give voting instructions via telephone or the internet. Please refer to the voting instructions provided by your bank or broker. You are also invited to attend the Annual Meeting. However, since you are not the stockholder of record, you may not vote your shares in person at the meeting unless you provide a valid proxy from your broker, bank or other custodian.

 

What am I voting on?

 

There are four matters scheduled for a vote:

 

 

How Do I Vote?

 

Whether you plan to attend the Annual Meeting or not, we urge you to vote by proxy. Voting by proxy will not affect your right to attend the Annual Meeting.

 

Stockholder of Record:  If your shares are registered directly in your name, you may vote:

 

 

Beneficial Owner:  If your shares are held in “street name” (held in the name of a bank, broker or other nominee), you must provide the bank, broker or other nominee with instructions on how to vote your shares and can do so as follows:

 

 

How Many Votes do I have?

 

Each share of Common Stock that you own as of April 23, 2010, entitles you to one vote on each matter to be voted on at the Annual Meeting.

What if I return a proxy card but do not make specific choices?

 

If you return a signed and dated proxy card without marking any voting selections, your shares will be voted “For” the election of all five nominees for director, “For” the Amended and Restated 2007 Equity Incentive Plan, “For” the Amended and Restated 2007 Director Option Plan, and “For” ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2010. If any other matter is properly presented at the Annual Meeting, your proxy (one of the individuals named on your proxy card) will vote your shares using his best judgment.

 

Will My Shares be Voted if I Do Not Return My Proxy Card?

 

If your shares are registered in your name, they will not be voted if you do not return your proxy card by mail or vote at the meeting as described above under “How Do I Vote?” If your shares are held in street name and you do not provide voting instructions to the bank, broker or other nominee that holds your shares as described above under “How Do I Vote?,” the bank, broker or other nominee has the authority to vote your unvoted shares only for Proposal 4 if it does not receive instructions from you. The broker, bank or other nominee will not be permitted to vote on the other Proposals without your voting instructions. We encourage you to provide voting instructions. This ensures your shares will be voted at the meeting in the manner you desire. If your broker cannot vote your shares on a particular matter because it has not received instructions from you and does not have discretionary voting authority on that matter or because your broker chooses not to vote on a matter for which it does have discretionary voting authority, this is referred to as a “broker non-vote”.

 

May I Revoke My Proxy?

 

If you give a proxy, you may revoke it at any time before the Annual Meeting. You may revoke your proxy in any one of the following ways:

 

 

What if I Receive More Than One Proxy Card?

 

You may receive more than one proxy card or voting instruction form if you hold shares of our Common Stock in more than one account, which may be in registered form or held in street name. Please vote in the manner described under “How Do I Vote?” for each account to ensure that all of your shares are voted.

 

How Does the Board of Directors Recommend That I Vote on the Proposals?

 

The Board of Directors recommends that you vote as follows:

 

 

If any other matter is properly presented, the proxy card provides that your shares will be voted by the proxy holder listed on the proxy card in accordance with his best judgment. At the time this Proxy Statement was printed, we knew of no matters that needed to be acted on at the Annual Meeting, other than those discussed in this Proxy Statement.

What Vote is Required to Approve Each Proposal and How are Votes Counted?

 

 

How are votes counted?

 

Votes will be counted by the inspector of election appointed for the Annual Meeting, who will separately count “For” and “Withhold” and (with respect to proposals other than the election of directors) “Against” votes, abstentions and broker non-votes. Shares represented by abstentions and broker non-votes will be counted in determining whether there is a quorum for the Annual Meeting. Abstentions will have no effect on Proposal 1 but

will have the effect of a vote against Proposals 2, 3 and 4. Broker non-votes will not be counted towards the vote total for any proposal.

 

Who Will Pay the Costs of Soliciting these Proxies and How Are They Being Solicited?

 

We will pay all of the costs of soliciting these proxies. Our directors and employees may solicit proxies in person or by telephone, fax or email. We will pay these employees and directors no additional compensation for these services. We will ask banks, brokers and other institutions, nominees and fiduciaries to forward these proxy materials to their principals and to obtain authority to execute proxies. We will then reimburse them for their expenses.

 

What Constitutes a Quorum for the Meeting?

 

The presence, in person or by proxy, of the holders of a majority of the issued and outstanding shares of our Common Stock is necessary to constitute a quorum at the meeting. Votes of stockholders of record who are present at the meeting in person or by proxy, abstentions and broker non-votes are counted for purposes of determining whether a quorum exists.

 

How can I find out the results of the voting at the Annual Meeting?

 

Preliminary voting results will be announced at the Annual Meeting. Final voting results will be published in a Current Report on Form 8-K within four business days after the Annual Meeting.

 

When are stockholder proposals due for next year’s Annual Meeting?

 

If you wish to submit a proposal to be considered for inclusion in next year’s proxy materials or nominate a director, your proposal must be in proper form according to Securities and Exchange Commission (“SEC”) Regulation 14A, Rule 14a-8 and received by the Secretary of the Company no later than December 29, 2010. Proposals received after that date will not be voted on at the Annual Meeting. If a proposal is received before that date, the proxies that management solicits for the meeting may still exercise discretionary voting authority on the proposal under circumstances consistent with the proxy rules of the SEC. To be timely, stockholder notice of any such proposal must be received by us not earlier than November 29, 2010 and not later than December 29, 2010; provided, however, that in the event that the date of the Annual Meeting is more than thirty (30) days before or more than sixty (60) days after the anniversary date of the preceding year’s Annual Meeting, notice by the stockholder to be timely must be delivered not earlier than the close of business on the ninetieth (90) day prior to such Annual Meeting and not later than the close of business on the later of the sixtieth (60th) day prior to such Annual Meeting or the tenth (10th) day following the day on which we make a public announcement of the date of such meeting. All stockholder proposals should be marked for the attention of Secretary, c/o Amicus Therapeutics, Inc., 6 Cedar Brook Drive, Cranbury, New Jersey 08512.

 

Attending the Annual Meeting

 

The Annual Meeting will be held at the offices of Amicus Therapeutics, Inc., located at 6 Cedar Brook Drive, Cranbury, New Jersey 08512 on Tuesday, June 15, 2010 at 9:00 a.m. Eastern Daylight Time. When you arrive at Amicus, signs will direct you to the appropriate meeting rooms. You are not required to attend the Annual Meeting in order to vote.

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT FINANCE

 

The following table sets forth certain information with respect to the beneficial ownership of our Common Stock as of March 31, 2010 for (a) the executive officers named in the Summary Compensation Table contained in this Proxy Statement, (b) each of our directors and director nominees, (c) all of our current directors and executive officers as a group and (d) each stockholder known by us to own beneficially more than 5% of our Common Stock. Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities.

 

We deem shares of Common Stock that may be acquired by an individual or group within 60 days of March 31, 2010 pursuant to the exercise of options to be outstanding for the purpose of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table. Except as indicated in footnotes to this table, we believe that the stockholders named in this table have sole voting and investment power with respect to all shares of Common Stock shown to be beneficially owned by them based on information provided to us by these stockholders. Percentage of ownership is based on 27,639,038 shares of Common Stock outstanding on March 31, 2010.

 

 

 

 

 

 

 

MANAGEMENT

 

The Board of Directors

 

Our Restated Certificate of Incorporation and Restated By-laws provide that our business is to be managed by or under the direction of our Board of Directors. Our Board is divided into three classes for purposes of election. Generally, one class is elected at each Annual Meeting of Stockholders to serve for a three-year term. Our Board currently consists of ten members, divided into three classes as follows:

 

 

Our Restated Certificate of Incorporation and Restated By-laws provide that the authorized number of directors may be changed only by resolution of the Board. Our Board has authorized that the size of the Board be set at ten members.

 

On April 14, 2010, our Board of Directors, upon the recommendation of the Nominating and Corporate Governance Committee, voted to nominate Messrs. Crowley, Raab and Sblendorio and Ms. McGlynn for re-election as Class III directors and Dr. Barrett for re-election as a Class I director at the 2010 Annual Meeting for a term of three years to serve until the 2013 Annual Meeting of stockholders and one year to serve until the 2011 Annual Meeting of Stockholders, respectively, and until their respective successors have been duly elected and qualified.

 

The Board has determined that each of these director nominees possesses the requisite skills, personal integrity, business judgment, industry experience and willingness to devote adequate time and effort necessary to serve as an effective member of the Board. A description of the background of each, along with other specific experiences, qualifications, attributes or skills that contributed to the Board’s decision to nominate the nominees, is set forth below, followed immediately by like disclosure for our existing directors whose terms of office extend beyond the Annual Meeting.

 

Nominees for Election at the Annual Meeting

 

 

 

 

John F. Crowley has served as Chairman, President and Chief Executive Officer since February 2010 and President and Chief Executive Officer since January 2005, and has also served as a director of Amicus since August 2004, with the exception of the period from September 2006 to March 2007 when he was not an officer or director of Amicus while he was in active duty service in the United States Navy (Reserve). He was President and Chief Executive Officer of Orexigen Therapeutics, Inc. from September 2003 to December 2004. Mr. Crowley was

President and Chief Executive Officer of Novazyme Pharmaceuticals, Inc. from March 2000 until that company was acquired by Genzyme Corporation in September 2001; thereafter he served as Senior Vice President of Genzyme Therapeutics until December 2002. Mr. Crowley received a B.S. degree in Foreign Service from Georgetown University’s School of Foreign Service, a J.D. from the University of Notre Dame Law School, and an M.B.A. from Harvard Business School. Mr. Crowley’s demonstrated leadership in his field, his prior senior management experience in our industry including as Chief Executive Officer of development stage biopharmaceutical companies, his extensive and intimate knowledge of the rare disease community, and his experience as our Chief Executive Officer contributed to our conclusion that he should be re-elected as a director of the Company.

 

James Barrett, Ph.D. has served as a member of our Board of Directors since August 2009. Dr. Barrett currently serves as General Partner of New Enterprise Associates (NEA), where he specializes in biotechnology and works with members of NEA’s healthcare investment group on medical devices, healthcare information systems and healthcare services companies. Prior to joining NEA in 2001, Dr. Barrett served as Founder, Chairman and Chief Executive Officer of Sensors for Medicine and Science (1997 — 2001) where he remains Chairman. Prior to that, he led three NEA-funded companies, serving as Chairman and Chief Executive Officer of Genetic Therapy, Inc. (1987 — 1995), President and Chief Executive Officer of Life Technologies (1985 — 1987), and President and Chief Executive Officer of Bethesda Research Labs (1982 — 1983). He currently serves on the board of directors of several life sciences companies including Inhibitex, Inc. and Targacept, Inc., and previously served on the boards of Iomai Corporation, MedImmune, LLC and YM Biosciences, Inc. Dr. Barrett received a Ph.D. in Biochemistry at the University of Tennessee, his MBA from the University of Santa Clara, and a BS in Chemistry from Boston College. Dr. Barrett’s experience overseeing NEA investments in biotechnology, serving as a member of the board of directors of other public companies, prior senior management experience, including as President and CEO, in biopharmaceutical companies and strong capital markets experience contributed to our conclusion that he should be re-elected as a director of the Company.

 

Margaret G. McGlynn, R.Ph. has served as a member of our Board of Directors since October 2009. Ms. McGlynn served as President, Vaccines and Infectious Diseases of Merck & Co., Inc. from 2005 until her retirement in 2009. Ms. McGlynn joined Merck in 1983, and served in a variety of marketing, sales and managed care roles. Currently, Ms. McGlynn serves as a member of the board of directors for Air Products and Chemicals, Inc. She is also a member of the National Industrial Advisory Committee at the University at Buffalo School of Pharmacy and Pharmaceutical Sciences. Ms. McGlynn holds a B.S. in Pharmacy and a MBA in Marketing from the State University of New York at Buffalo. Ms. McGlynn’s significant leadership experience in the pharmaceutical industry, her service on the board of directors of a Fortune 500 company and her financial expertise gained in senior management positions and through her service on the audit committee of that public company contributed to our conclusion that she should be re-elected as a director of the Company.

 

Michael G. Raab has served as a member of our Board of Directors since 2004. Mr. Raab has served as Chairman and Chief Executive Officer of Ardelyx, Inc. since March 2009. Mr. Raab previously served as a partner of NEA from June 2002 until December 2008. From 1999 to 2002, he was a Senior Vice President, Therapeutics and General Manager, Renagel^® at Genzyme Corporation. Mr. Raab holds a B.A. from DePauw University. Mr. Raab’s prior and current senior management experience in our industry including as Chief Executive Officer of a development stage biopharmaceutical company, prior commercial experience in our industry, prior experience overseeing NEA investments in biotechnology and his knowledge of the rare disease community contributed to our conclusion that he should be re-elected as a director of the Company.

 

Glenn P. Sblendorio has served as a member of our Board of Directors since June 2006. Mr. Sblendorio has served as Chief Financial Officer and Executive Vice President of The Medicines Company since March 2006. Prior to joining The Medicines Company, Mr. Sblendorio was Executive Vice President and Chief Financial Officer of Eyetech Pharmaceuticals, Inc. from February 2002 until it was acquired by OSI Pharmaceuticals, Inc. in November 2005. From July 2000 to February 2002, Mr. Sblendorio served as Senior Vice President of Business Development at The Medicines Company. Mr. Sblendorio received his B.B.A. from Pace University and his M.B.A. from Fairleigh Dickinson University. Mr. Sblendorio’s demonstrated knowledge of financial and financing matters, prior experience in business development matters, ability to serve as a financial expert on our Audit Committee and senior management experience in the pharmaceutical industry contributed to our conclusion that he should be re-elected as a director of the Company.

Directors Whose Terms Do Not Expire This Year

 

 

 

 

Sol J. Barer, Ph.D. has served as a member of our Board of Directors since January 2009. Dr. Barer has been Chief Executive Officer of Celgene Corporation since May 1, 2006, and Chairman since January 1, 2007. He was appointed President of Celgene in 1993, Chief Operating Officer and director in 1994 and is a member of the Executive Committee of the board of directors. He previously served as Senior Vice President, Science and Technology, and Vice President/ General Manager, Chiral Products, from 1991 to 1994, and Vice President, Technology, from 1987 to 1991. Dr. Barer serves on the board of trustees of Rutgers University, board of directors of PhRMA, the board of trustees of the Biotechnology Council of New Jersey and is on the board of trustees of the Brooklyn College Foundation. He has previously served as a Commissioner of the NJ Commission on Science and Technology. Dr. Barer received a Ph.D. in organic chemistry from Rutgers University. Dr. Barer’s significant scientific and executive leadership experience in the pharmaceutical industry, experience as Chief Executive Officer and Chairman of a biopharmaceutical company and service on the board of directors of that publicly-held biopharmaceutical company contributed to our conclusion that he should continue to serve as a director of the Company.

 

Alexander E. Barkas, Ph.D., has served as a member of our Board of Directors since 2004. Since 1997, Dr. Barkas has been a co-founder and served as a managing member of the general partner of a series of Prospect Venture Partners’ funds. Dr. Barkas serves as the chairman of the board of directors of a publicly-held biotechnology company, Geron Corporation, and as a director of several private biotechnology and medical device companies. He previously served on the board of directors of Tercica, Inc. He holds a B.A. from Brandeis University and a Ph.D. from New York University. Dr. Barkas’ experience overseeing Prospect Venture Partners investments in biotechnology, serving as chairman of another publicly-held biopharmaceutical company and strong capital markets experience contributed to our conclusion that he should continue to serve as a director of the Company.

 

Donald J. Hayden, Jr. has served as a member of our Board of Directors since March 2006 and as Lead Independent Director since February 2010. Mr. Hayden served as Chairman from March 2006 until February 2010 and from September 2006 until March 2007 as Interim President and Chief Executive Officer. From 1991 to 2005, he held several executive positions with Bristol-Myers Squibb Company, most recently serving as Executive Vice President and President, Americas. Mr. Hayden holds a B.A. from Harvard University and an M.B.A. from Indiana University. Mr. Hayden’s demonstrated leadership in his field, his prior senior management experience in the pharmaceutical industry and his experience as our Interim Chief Executive Officer contributed to our conclusion that he should continue to serve as a director of the Company.

 

P. Sherrill Neff has served as a member of our Board of Directors since 2005. Mr. Neff is a founding partner of Quaker BioVentures, L.P. and has been with the firm since 2002. Prior to forming Quaker BioVentures, L.P., he was President, Chief Operating Officer, and a director of Neose Technologies, Inc. from 1994 to 2002. Mr. Neff has also previously served as the Senior Vice President, Corporate Development at U.S. Healthcare, Managing Director of Alex, Brown & Son and a corporate attorney at Morgan, Lewis & Bockius. Mr. Neff currently sits on the board of directors of Resource Capital Corporation. Mr. Neff is a graduate of Wesleyan University and the University of Michigan Law School. Mr. Neff’s experience overseeing Quaker BioVentures investments in biotechnology, prior senior management experience at a publicly-held biopharmaceutical company and major healthcare company and

knowledge of our industry and capital markets contributed to our conclusion that he should continue to serve as a director of the Company.

 

James N. Topper, M.D., Ph.D., has served as a member of our Board of Directors since 2004. Dr. Topper has been a partner with Frazier Healthcare Ventures since August 2003, holding the position of General Partner since 2004. Prior to joining Frazier Healthcare, he served as head of the Cardiovascular Research and Development Division of Millennium Pharmaceuticals and ran Millennium San Francisco (formerly COR Therapeutics) from 2002 until 2003. Prior to the merger of COR and Millennium in 2002, Dr. Topper served as the Vice President of Biology at COR from August 1999 to February 2002. He holds an appointment as a Clinical Assistant Professor of Medicine at Stanford University and as a Cardiology Consultant to the Palo Alto Veterans Administration Hospital. Dr. Topper previously served on the board of directors of La Jolla Pharmaceutical Company. Dr. Topper holds an M.D. and a Ph.D. in Biophysics from Stanford University School of Medicine. Dr. Topper’s experience overseeing Frazier Healthcare Ventures investments in biotechnology, prior senior management experience in our industry, significant knowledge of medical and scientific matters affecting our business and his understanding of our industry contributed to our conclusion that he should continue to serve as a director of the Company.

 

Director Independence

 

Our Board has reviewed the materiality of any relationship that each of our directors has with Amicus, either directly or indirectly. Based on this review, the Board has determined that the following directors are “independent directors” as defined by the rules and regulations of The Nasdaq Stock Market LLC (“NASDAQ”): Messrs. Hayden, Neff, Raab and Sblendorio, Drs. Barer, Barkas, Barrett and Topper and Ms. McGlynn.

 

Committees of the Board of Directors and Meetings

 

Our Board of Directors has an audit committee, a compensation committee, a nominating and corporate governance committee and a science and technology committee, each of which has the composition and responsibilities described below.

 

Audit Committee.  Our Audit Committee met seven times during 2009. The current members of our Audit Committee are Mr. Sblendorio, Ms. McGlynn and Mr. Raab. Ms. McGlynn was appointed to the Audit Committee effective as of January 1, 2010; prior to that time and at all times during 2009, Mr. Neff served on the Committee. Mr. Sblendorio is the chair of the Committee.

 

Our Board has determined that Mr. Sblendorio is an audit committee financial expert within the meaning of Item 407(d)(5) of Regulation S-K and has “accounting or related financial management expertise” within the meaning of the rules and regulations of NASDAQ. Our Audit Committee was established in accordance with Section 3(a)(58) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Our Audit Committee assists our Board in its oversight of the integrity of our financial statements, our independent registered public accounting firm’s qualifications and independence and the performance of our independent registered public accounting firm.

 

Our Audit Committee’s responsibilities include:

 

 

 

All audit and non-audit services to be provided to us by our independent registered public accounting firm must be approved in advance by our Audit Committee.

 

NASDAQ rules require that all members of the Audit Committee be independent directors, as defined by the rules of NASDAQ and the SEC. Our Board has determined that all the members of the Audit Committee satisfy the independence requirements for service on the Audit Committee.

 

A copy of the Audit Committee’s written charter is publicly available on our web site at www.amicustherapeutics.com.

 

Compensation Committee.  Our Compensation Committee met nine times during 2009. Messrs. Neff, Raab and Drs. Barer and Topper are the members of our Compensation Committee. Mr. Neff is the chair of the Committee. Our Compensation Committee assists our Board in the discharge of its responsibilities relating to the compensation of our executive officers. The Committee has retained Towers Watson as its independent executive compensation consultant. Towers Watson reports directly to the Compensation Committee and provides guidance on matters including trends in executive and non-employee director compensation, the development of certain executive compensation programs and other matters as directed by the Committee. Towers Watson does not provide any other services to the Company.

 

Our Compensation Committee’s responsibilities include:

 

 

We believe that the members of our Compensation Committee qualify as independent directors under the rules and regulations of NASDAQ.

 

A copy of the Compensation Committee’s written charter is publicly available on our web site at www.amicustherapeutics.com.

 

Further discussion of the process and procedures for considering and determining executive compensation, including the role that our executive officers play in determining compensation for other executive officers, is included below in the section entitled “Compensation Discussion and Analysis.”

 

Please also see the report of the Compensation Committee set forth elsewhere in this Proxy Statement.

 

Nominating and Corporate Governance Committee.  Our Nominating and Corporate Governance Committee met three times during 2009. Mr. Hayden and Drs. Barkas and Barrett are the members of our Nominating and Corporate Governance Committee. Dr. Barrett was appointed to the Nominating and Corporate Governance Committee effective as of January 1, 2010; prior to that time and at all times during 2009, Mr. Raab served on the Committee. Mr. Hayden chairs the Committee.

 

Our Nominating and Corporate Governance Committee’s responsibilities include:

 

 

 

We believe that the members of our Nominating and Corporate Governance Committee qualify as independent directors under the rules and regulations of NASDAQ.

 

A copy of the Nominating and Governance Committee’s written charter is publicly available on our web site at www.amicustherapeutics.com.

 

Science and Technology Committee.  Our Board formed the Science and Technology Committee in December 2009. This Committee did not meet during 2009. Drs. Topper, Barkas and Barrett are the members of our Science and Technology Committee. Dr. Topper chairs the Committee.

 

Our Science and Technology Committee’s responsibilities include:

 

 

We believe that the members of the Science and Technology Committee qualify as independent directors under the rules and regulations of NASDAQ. A copy of the Science and Technology Committee’s written charter is publicly available on our web site at www.amicustherapeutics.com.

 

Board Leadership Structure

 

In the fourth quarter of 2009, our Board formed a Special Committee to evaluate whether it is in the best interests of the Company to appoint John F. Crowley as Chairman of the Board in addition to his duties as Chief Executive Officer. Following an extensive evaluation process that included interviews with each director of the Company and members of senior management, the Special Committee recommended to the Board that the roles of Chairman and Chief Executive Officer be combined, with Mr. Crowley being appointed to such position. In February 2010, upon the recommendation of the Special Committee, and after careful consideration, the Board elected Mr. Crowley as Chairman of the Board in addition to his role as Chief Executive Officer to succeed Donald J. Hayden, Jr.

 

Simultaneous with Mr. Crowley’s election to Chairman, the Board appointed Mr. Hayden as Lead Independent Director. As Lead Independent Director, Mr. Hayden is responsible for, among other things:

 

 

The Company chose to combine the Chairman and CEO positions because it believes that, at this critical juncture in the Company’s development, Mr. Crowley is best suited to oversee the development and implementation

of the Company’s strategic vision. Mr. Crowley’s appointment as Chairman also reflects the Board’s confidence in his leadership and vision for the Company and recognizes his accomplishments since joining the Company. However, the Company wished to maintain the strong independent leadership provided by Mr. Hayden during his tenure as Chairman. The Company believes that by creating a Lead Independent Director position held by Mr. Hayden, it has designed a governance structure that best advances the objectives of the Company while maintaining proper checks and balances on senior management, and providing the independent members of the Board with open and transparent communication regarding the Company’s strategic planning activities.

 

Risk Oversight Management

 

Our Board provides risk oversight for the Company primarily through the Audit Committee. During 2009, we initiated an Enterprise Risk Management Risk Assessment Action Plan. Under this plan, the Company identified risks throughout our organization utilizing various methodologies, including interviews with senior employees and members of the Board. We then evaluated the identified risks and began implementing procedures and activities designed to manage and mitigate such risks. We presented several reports on this risk identification, management and mitigation process to the Audit Committee throughout 2009, who provided guidance and feedback to senior management. The Audit Committee apprised the Board of our progress throughout the year. The Audit Committee will continue to oversee and monitor senior management’s efforts to identify and manage the Company’s risks.

 

Risk Analysis of Compensation Policies and Practices

 

The Compensation Committee is aware that compensation arrangements, if not properly designed, could encourage inappropriate or excessive risk taking. We believe that our overall compensation program encourages our named executive officers and other employees to focus on both short-term and long-term objectives and does not encourage excessive risk taking. While the value of stock options is inherently tied to the performance of the Company, our stock options vest over multiple years and are not linked to the achievement of defined metrics. In addition, cash incentive bonuses tied to the achievement of Company goals and, for employees below vice president, individual goals, typically make up a small percentage of our employees’ total compensation package. For example, on average, payouts under our cash incentive bonus plan represented approximately 6% of the total compensation awarded to our named executive officers in 2009. Further, as a development stage company, we operate as a single business unit and therefore are not exposed to the risks that may be associated with operating through several segments, such as one business unit being significantly more profitable than another or having a compensation structure that is significantly different than that of other units. The Compensation Committee will continue to review risk as one of the elements it considers in the planning process for executive compensation in the future.

 

Policies Governing Director Nominations

 

Director Qualifications.  Our Nominating and Corporate Governance Committee is responsible for reviewing with the directors from time to time the appropriate qualities, skills and characteristics desired of members of the Board in the context of the needs of the business and the composition of the Board. This assessment includes consideration of the following minimum qualifications that the Nominating and Corporate Governance Committee believes must be met by all directors:

 

 

The Nominating and Corporate Governance Committee also considers numerous other qualities, skills and characteristics when evaluating director nominees, including whether the nominee has specific strengths that would augment existing skills and experience of the Board, such as an understanding of and experience in technology,

accounting, governance, finance or marketing and whether the nominee has leadership experience with public companies or other sophisticated and complex organizations.

 

Process for Identifying and Evaluating Director Nominees.  Our Nominating and Corporate Governance Committee has established a process for identifying and evaluating nominees for director. Although the Nominating and Corporate Governance Committee will consider nominees recommended by stockholders, it believes that the process it uses to identify and evaluate nominees for director is designed to produce nominees that possess the educational, professional, business and personal attributes that are best suited to further the Company’s mission. The Nominating and Governance Committee may identify nominees through the use of professional search firms that may utilize proprietary screening techniques to match candidates to the Committee’s specified qualifications. The Committee may also receive recommendations from existing directors, executive officers, key business partners, and trade or industry affiliations. The Committee will evaluate nominations at regular or special meetings, and in evaluating nominations, will seek to achieve a balance of knowledge, experience and capability on the Board and to address the membership criteria set forth above under “Director Qualifications.” The Board itself is ultimately responsible for recommending candidates for election to the stockholders or for appointing individuals to fulfill a vacancy. Although the Board does not have a policy with regard to the consideration of diversity in identifying director nominees, among the various factors the Nominating and Corporate Governance Committee considers in selecting candidates for nomination to the Board are the benefits to the Company of national origin, gender, race, scientific and pharmaceutical experience and cultural diversity in board composition.

 

Procedures for Recommendation of Director Nominees by Stockholders.  The Nominating and Corporate Governance Committee will consider director candidates recommended by our stockholders. In evaluating candidates recommended by our stockholders, the Nominating and Corporate Governance Committee applies the same criteria set forth above under “Director Qualifications.” Any stockholder recommendations of director nominees proposed for consideration by the Nominating and Corporate Governance Committee should include the nominee’s name and qualifications for Board membership and should be addressed in writing to the Nominating and Corporate Governance Committee, care of: Amicus Therapeutics Inc., 6 Cedar Brook Drive, Cranbury, New Jersey 08512, Attention: Secretary. In addition, our By-laws permit stockholders to nominate directors for consideration at an annual stockholder meeting in accordance with certain procedures described in this Proxy Statement under the heading “Stockholder Proposals and Nominations for Director.”

 

Meeting Attendance.  During the year ended December 31, 2009, there were ten meetings of our Board of Directors, and the various committees of the Board, including the Special Committee discussed above, met a total of thirty-three times. No director attended fewer than 75% of the total number of meetings of the Board and of committees of the Board on which he or she served during 2009. The Board has adopted a policy under which each member of the Board is strongly encouraged to attend each Annual Meeting of our Stockholders. All of the directors attended our 2009 Annual Meeting of Stockholders.

 

Compensation Committee Interlocks and Insider Participation.  None of our executive officers serves as a member of the Board or compensation committee, or other committee serving an equivalent function, of any entity that has one or more of its executive officers serving as a member of our Board or our Compensation Committee. None of the members of our Compensation Committee has ever been an officer or employee of the Company.

 

Stockholder Communications to the Board

 

Any stockholders who wish to address questions regarding our business directly with the Board, or any individual director, should direct his or her questions in writing to the Chairman of the Board, c/o Amicus Therapeutics, Inc., 6 Cedar Brook Drive, Cranbury, New Jersey 08512. Communications will be distributed to the Board, or to any individual director or directors as appropriate, depending on the facts and circumstances outlined in the communications.

Executive Officers

 

The following is a brief summary of the background of each of our executive officers:

 

John F. Crowley, 43, has served as Chairman, President and Chief Executive Officer since February 2010 and President and Chief Executive Officer since January 2005, and has also served as a Director of Amicus since August 2004, with the exception of the period from September 2006 to March 2007 when he was not an officer or director of Amicus while he was in active duty service in the United States Navy (Reserve). He was President and Chief Executive Officer of Orexigen Therapeutics, Inc. from September 2003 to December 2004. Mr. Crowley was President and Chief Executive Officer of Novazyme Pharmaceuticals, Inc., from March 2000 until that company was acquired by Genzyme Corporation in September 2001; thereafter he served as Senior Vice President of Genzyme Therapeutics until December 2002. Mr. Crowley received a B.S. degree in Foreign Service from Georgetown University’s School of Foreign Service, a J.D. from the University of Notre Dame Law School, and an M.B.A. from Harvard Business School.

 

Matthew R. Patterson, 38, has served as Chief Operating Officer since September 2006. From December 2004 to September 2006 he served as Chief Business Officer. From 1998-2004, Mr. Patterson worked in various roles at BioMarin Pharmaceuticals Inc. including Vice President, Regulatory and Government Affairs from 2001 to 2003 and Vice President, Commercial Planning from 2003-2004. From 1993-1998, Mr. Patterson worked at Genzyme Corporation in Regulatory Affairs and Manufacturing. Mr. Patterson received a B.A. in Biochemistry from Bowdoin College.

 

David J. Lockhart, Ph.D., 48 has served as Chief Scientific Officer since January 2006. Prior to joining Amicus, Dr. Lockhart served as President, Chief Scientific Officer and co-founder of Ambit Biosciences, a biotechnology company specializing in small molecule kinase inhibitors, from March 2001 to July 2005. Dr. Lockhart served as a consultant to Ambit Biosciences from August 2000 to March 2001, and as a visiting scholar at the Salk Institute for Biological Studies from October 2000 to March 2001. Prior to that, Dr. Lockhart served in various positions, including Vice President of Genomics Research at Affymetrix, and was the Director of Genomics at the Genomics Institute of the Novartis Research Foundation from February 1999 to July 2000. He received his Ph.D. from Stanford University and was a post-doctoral fellow at the Whitehead Institute for Biomedical Research at the Massachusetts Institute of Technology.

 

S. Nicole Schaeffer, 42, has served as Senior Vice President, Human Resources and Leadership Development since August 2008 and, prior thereto, served as Vice President, Human Resources and Leadership Development since March 2005. From 2001 to 2004, she served as Senior Director, Human Resources, for three portfolio companies of Flagship Ventures, a venture capital firm, and in that capacity she managed human resources for three life sciences companies. Ms. Schaeffer received her B.A. from the University of Rochester and her M.B.A. from Boston University.

 

Bradley L. Campbell, 34, has served as Senior Vice President, Business Operations since January 2010. From May 2007 to January 2010, he served as Vice President, Business Planning and from April 2006 until May 2007, he served as Senior Director, Business Development. Mr. Campbell served as Senior Product Manager and later Business Director of CV Gene Therapy at Genzyme Corporation from 2002 to 2006. Mr. Campbell received his B.A. from Duke University and his M.B.A. from Harvard Business School.

 

John R. Kirk, 53, has served as Vice President, Regulatory Affairs since January 1, 2008. Prior to joining Amicus, Mr. Kirk served as Executive Director, Regulatory Affairs at Aegerion Pharmaceuticals. From 2003 to 2007, Mr. Kirk held positions of increasing responsibility with Esperion Therapeutics which was acquired during this time by Pfizer. From 2000 to 2002, Mr. Kirk was Director, Worldwide Regulatory Affairs for Pfizer Global Research and Development. From 1988 to 2000, Mr. Kirk held various Regulatory positions with Parke-Davis Pharmaceutical Research. Mr. Kirk holds both his M.S. and B.S. from Wright State University in Ohio.

 

Geoffrey P. Gilmore, 44, has served as Senior Vice President, General Counsel and Secretary since March 2008. Prior to joining Amicus, from 2003 to 2008, Mr. Gilmore was in the Law Department at Bristol-Myers Squibb Company, where he most recently served as Vice President and Senior Counsel. From 2002 to 2003, Mr. Gilmore was a Senior Attorney at Wyeth Pharmaceuticals. From 1997 to 2002, Mr. Gilmore held various positions in the law department of Bristol Myers Squibb Company. Prior to joining Bristol-Myers Squibb Company, Mr. Gilmore was

an associate with the law firms Ballard Spahr Andrews & Ingersoll, LLP, where he practiced in the Business and Finance Group, and Montgomery, McCracken, Walker & Rhoads, LLP, where he practiced in the Corporate & Securities Group. Mr. Gilmore received his B.A. from Franklin and Marshall College and his J.D. from University of Michigan Law School.

 

Pol F. Boudes, 53, has served as Chief Medical Officer since January 2009. Prior to joining Amicus, from 2004 to 2009, Dr. Boudes served as Vice President, Global Clinical Development Women’s Health Care US at Bayer HealthCare Pharmaceuticals (formerly Berlex, Inc.). From 1990 to 2004, Dr. Boudes served in positions of increasing responsibility with the Wyeth-Ayerst Research division of Wyeth both in Philadelphia, PA and in Europe, with Hoffmann-La Roche, and with Pasteur Merieux serums & vaccines (now sanofi-aventis). Dr. Boudes received his M.D. from the University of Aix-Marseilles, France, completed his internship and residency in Marseilles and in Paris, France and was an Assistant Professor of Medicine at the University of Paris. Dr. Boudes is specialized in Endocrinology and Metabolic Diseases, Internal Medicine, and Geriatric diseases. Dr. Boudes practiced medicine in this capacity in academic hospitals in France where he also participated in multiple clinical research programs as an investigator.

 

John M. McAdam, 35, has served as Vice President, Finance and Accounting since January 2010 and has also served as Corporate Controller, Principal Financial and Accounting Officer and Treasurer since October 2009. From April 2007 to January 2010, he served as Senior Director of Finance and Accounting and Corporate Controller. From March 2006 to April 2007, he served as Director of Finance and Accounting and Corporate Controller and from March 2006 to September 2006 as the Company’s Interim Principal Financial and Accounting Officer. From 2001 to 2006, Mr. McAdam worked at Quest Diagnostics Incorporated where he served in a variety of financial positions, most recently as Director of Accounting and Reporting. Prior to that, Mr. McAdam served as an audit professional at KPMG LLP. Mr. McAdam is a certified public accountant and received his B.S. in Accountancy from Villanova University and his M.B.A. from Rutgers Business School.

 

COMPENSATION DISCUSSION AND ANALYSIS

 

Executive Summary

 

The Compensation Committee, in consultation with the Board of Directors, is responsible for establishing, implementing and overseeing our overall compensation strategy and policies, including our executive compensation program, in a manner that supports our business objectives.

 

We describe our executive compensation program below and provide an analysis of the compensation paid and earned in 2009 by our “named executive officers” — our President and Chief Executive Officer, Principal Financial Officer and three other most highly compensated executive officers. In 2009, our named executive officers were Messrs. Crowley, Patterson, McAdam and Dentzer and Drs. Boudes and Lockhart. James Dentzer served as our Chief Financial Officer through October 2009 and since then Mr. McAdam has served as our Principal Financial and Accounting Officer.

 

Objectives and Philosophy of Executive Compensation

 

We are a biopharmaceutical company focused on the discovery, development and commercialization of orally administered, small molecule drugs known as pharmacological chaperones. Pharmacological chaperones are a novel, first-in-class approach to treating a broad range of diseases including lysosomal storage disorders and diseases of neurodegeneration. We operate in an extremely competitive, rapidly changing and heavily regulated industry and the long-term success of our business requires a high degree of innovation and adaptability. We believe that the skill, talent and dedication of our executive officers and other executives are critical factors affecting our long-term success. Therefore, our compensation program for our executive officers, including our named executive officers, is designed to attract, retain and motivate the best possible executive talent. Utilizing a pay-for-performance compensation philosophy, we have designed a program that provides the ability to differentiate the total compensation mix of our named executive officers based on their demonstrated performance and their potential to contribute to our long-term success.

Our compensation philosophy is to:

 

 

Our compensation program is designed to reward the accomplishment of our corporate goals in a manner consistent with the Company’s values, which stresses not only results but how those results are attained. In order to meet the objectives of our compensation philosophy, we maintain a robust goal setting and performance management program. Corporate objectives are established at the beginning of each year and are the basis for determining corporate performance for the year. Key strategic corporate, financial and operational goals that are established by our Board include:

 

 

Historically, annual cash incentive bonuses for our named executive officers were determined on the basis of both corporate performance and the individual performance of such executive officers. However, for 2009, the Compensation Committee determined that our named executive officers’ cash bonus should be determined only on the basis of the Company’s performance as defined by the corporate multiplier discussed below. The Compensation Committee believed that by focusing on the accountability of our named executive officers for the Company’s annual performance, our named executive officers’ compensation would be more closely aligned with the interests of our stockholders. In fact, as discussed below, while the Compensation Committee recommended a corporate multiplier of 75%, the multiplier applied in determining the annual cash incentive bonuses for our named executive officers was adjusted to 50% in recognition of the significance of the Company’s decision not to advance Plicera to Phase 3 development after the results of the Phase 2 study did not meet its primary endpoints, the corporate restructuring in the fourth quarter 2009 and the decline in our stock price during the latter part of 2009.

 

The exception to this bonus structure is the amount of cash bonus payable to Mr. McAdam. Because Mr. McAdam did not become a named executive officer until the end of October 2009, his annual cash incentive bonus was calculated based on both the corporate multiplier and an individual multiplier. The individual multiplier for Mr. McAdam was 100% and was determined by reference to his individual performance for the year and other measures discussed below. Also, the corporate multiplier applied in calculating Mr. McAdam’s bonus amount was 75%, as opposed to the corporate multiplier of 50% utilized for our other named executive officers.

 

For 2010, the Compensation Committee has determined that no individual multiplier will be applied in determining our named executive officers’ annual cash incentive bonuses, if any, including any bonus awarded to Mr. McAdam. While the Compensation Committee did not utilize individual accomplishments in determining bonus compensation to the majority of our named executive officers in 2009 and does not intend to do so for 2010, the Committee may decide to include this factor in such determinations in future years.

Compensation Program Elements and Pay Level Determination

 

Each year, the Compensation Committee reviews and determines base salaries, annual cash incentive and long-term incentive awards for all executive officers. For 2009, the base salaries, annual cash incentives and long-term incentive awards determination for all named executive officers, including our Chief Executive Officer, were approved by our Compensation Committee, which is comprised solely of independent directors.

 

As part of the compensation evaluation process, the Chief Executive Officer and the Senior Vice President of Human Resources present to the Compensation Committee a detailed individual assessment of each named executive officer’s performance excluding his own over the prior year, as well as the recommended compensation action for each named executive officer. Based on corporate and individual performance, the Chief Executive Officer makes a compensation recommendation for each officer which includes actions on base salary and long-term incentive grants. As discussed above, recommendations on payouts under our cash incentive plan were based on evaluations of the Company’s performance for the year. The results of the named executive officer’s performance are a determination by his supervisor and Chief Executive Officer with input from other peers, and direct reports as appropriate. The Chief Executive Officer’s performance is assessed by all independent directors under the Leadership of our Lead Independent Director.

 

Individual goals and objectives are established at the beginning of each year and are designed to support the achievement of the corporate goals. All employees participate in annual goal setting as well as mid-year and annual performance reviews.

 

We target our total compensation for our named executive officers and each of its comprising elements — base salary, bonus and long-term incentive awards — at the 50^th percentile of a broad set of companies from the peer group discussed below. Actual compensation levels for each named executive officer depend on factors such as individual performance, Company performance, skills/capabilities, overall impact/contribution, experience in position, criticality of position and internal equity. The Compensation Committee considered all the information presented (including external competitiveness, the performance review, Company performance and internal equity) and applied its collective knowledge and discretion to determine the compensation for each named executive officer.

 

The Compensation Committee, with the help of its independent executive compensation consultant, Towers Watson, established the peer group set forth below to better align target compensation with competitive data. The Compensation Committee, upon advice of Towers Watson, selected the companies that comprise our peer group through a robust screening process that considered publicly traded U.S. biopharmaceutical companies that were similar to Amicus in size, market capitalization and business operating model and operate in geographic locations that generally have similar pay levels. Several companies were removed from the peer group established last year due primarily to acquisitions or other changes in structure or size. The Compensation Committee replaced these entities with ArQule, Enzo Biochem, Enzon Pharmaceuticals and Telik upon the recommendation of Towers Watson. The Compensation Committee intends to continue reviewing and revising the peer group periodically to ensure that it continues to reflect companies of similar size and business model.

 

 

Elements of Compensation

 

Our executive compensation consists of a number of elements, each of which plays an important role in our pay-for-performance philosophy and in achieving our compensation program objectives. For each element of compensation we target an overall executive compensation program that is competitive with market data.

 

Base Salary

 

Base salaries are paid to our named executive officers to provide a level of compensation that is both competitive with the external market and is commensurate with each executive officer’s scope of responsibilities,

past performance, experience and skills. The salary increase from 2008 to 2009 for Mr. Crowley and Dr. Lockhart was 3%, for Messrs. Dentzer and Patterson 3.5%, and for Mr. McAdam 5%. Dr. Boudes did not join the Company until January 2009. For 2010, base salaries for our named executive officers other than Mr. McAdam were increased by 2%. Mr. McAdam’s base salary was increased by 7.6% based largely on his promotion to Principal Financial Officer in October 2009 and to Vice President, Finance and Accounting in January 2010, and the resulting significant increase in his responsibilities.

 

Annual Cash Incentive Plan

 

We maintain an annual cash incentive program to motivate and reward the attainment of annual strategic, operational, financial and individual goals. For all program participants, annual cash incentive opportunities, which are expressed as a percentage of base salary, are targeted at the 50^th percentile of the market. For 2009, these percentages of base salary were determined by level in the organization accordance with our plan as follows:

 

 

For 2009, bonuses awarded under the plan to our named executive officers, other than Mr. McAdam, were determined by reference to a corporate multiplier. As discussed above, Mr. McAdam’s bonus was awarded based on both the corporate multiplier and an individual multiplier because the vast majority of his service during 2009 was not performed as a named executive officer.

 

The corporate multiplier is based upon a determination of how the Company performed against the corporate goals established at the beginning of the year and the other significant corporate activities that occurred during the year. This corporate multiplier may range from 0% to 150%. For Mr. McAdam, the individual multiplier was determined based upon his individual performance year end rating and was set at 100%. For 2009, the corporate multiplier was set at 75%. However, bonuses paid to our named executive officers, other than Mr. McAdam, were calculated using a corporate multiplier of 50% in recognition of the significance of the Company’s decision not to advance Plicera to Phase 3 development, the corporate restructuring in the fourth quarter 2009 and the decline in our stock price during the latter part of 2009.

 

For 2009, in order to determine bonus calculations under the plan, our named executive officers’ target bonus was multiplied by the 50% corporate multiplier. Mr. McAdam’s bonus was determined by first multiplying his target bonus by the 75% corporate multiplier and then multiplying that amount by his individual multiplier. The table on page 24 illustrates further how 2009 awards under the plan were calculated for our named executive officers.

 

The Corporate Multiplier

 

On an annual basis, the Board works with management to set Company goals and objectives that reflect a high degree of difficulty and acceleration of execution of the Company’s strategies commensurate with our short and long-term business plan. The Company’s internal goals and objectives reflect complex assumptions based on internal analyses and projections, and are intended to encourage the Company to pursue its business plan in an expedited, aggressive manner. Once the Company’s goals and objectives have been developed, they are reviewed and approved by the Compensation Committee and finally approved by the full Board.

 

At the time the goals and objectives are set, the Compensation Committee believes that their full attainment will be very difficult and may not be reached, despite great effort, due in part to internal and external factors, many of which may be out of the Company’s control. The objectives are set with the understanding that the Company is in its development stage and the recognition that some objectives, especially those tied to timing of events, may need to be altered as events throughout the course of the year shape the best path for the development of the Company’s product candidates. However, while total achievement of all goals and objectives set at the beginning of the year may not be expected, the Compensation Committee demands that management significantly advance the Company’s general business objectives throughout the year in order to achieve a 100% corporate multiplier.

For 2009, our corporate objectives were as follows:

 

 

In reaching its recommendation on the corporate multiplier, the Compensation Committee reviews the Company’s performance relating to the goals and objectives as a whole. The Compensation Committee does not apply a weighting to the Company’s goals and objectives.

 

In the 2009 plan year, the Company achieved the majority of its 2009 corporate goals; however, not all targets were completely met. Although we completed and announced results of a Phase 2 clinical trial for our product candidate for the treatment of Gaucher disease, the results did not meet the primary endpoints of the study; as a result, the Company decided not to advance the drug candidate into Phase 3 development. We also did not complete a Phase 2 clinical trial for our product candidate for the treatment of Pompe disease, AT2220. As previously disclosed, this trial was suspended and the AT2220 IND remains on partial clinical hold.

 

After reviewing the corporate goals and objectives and the Company’s additional accomplishments during 2009, the Compensation Committee recommended a composite 75% corporate multiplier. The Compensation Committee believed that 75% was an appropriate multiplier given that we did not meet all of our goals and objectives while also taking into account the significant progress the Company made in advancement of its overall business objectives. However, the Compensation Committee determined that the corporate multiplier utilized in calculating annual cash incentive bonuses for our named executive officers for 2009, other than Mr. McAdam, should be reduced to 50% in recognition of the significance of the Company’s decision not to advance Plicera to Phase 3 development based on the Phase 2 results, the corporate restructuring in the fourth quarter 2009 and the decline in our stock price during the latter part of 2009. These recommendations were approved by the full Board of Directors.

 

The Individual Multiplier

 

The Company has historically employed an individual multiplier for each named executive officer as part of the determination of the officer’s annual cash incentive bonus. For 2009, the Compensation Committee determined that an individual multiplier should not be applied when calculating the amount of our named executive officers’ annual cash incentive bonuses. Rather, the Compensation Committee believed that these bonuses should be calculated solely by reference to the corporate multiplier. The Compensation Committee felt that this approach placed more focus on the accountability of our named executive officers for the Company’s annual performance and better aligned the interests of the Company’s stockholders with our named executive officers.

 

Because Mr. McAdam began 2009 as a Senior Director of the Company and did not become a named executive officer until October 28, 2009, his annual cash incentive bonus was calculated based on both the corporate multiplier and an individual multiplier. Mr. McAdam’s individual multiplier was recommended by his supervisor and approved by the Compensation Committee based largely on his (i) role in establishing a capital asset financing facility, (ii) oversight of the Company’s enterprise risk management system, (iii) role in financial due diligence activities for potential business development opportunities, (iv) leadership in our public financial reporting process, (v) his significantly increased responsibilities and strong performance following his appointment to principal

financial officer in October 2009, and (vi) commitment to fiscal discipline. Based on these factors, it was determined that Mr. McAdam met performance expectations and his individual multiplier was set at 100%.

 

Mr. McAdam’s 2009 annual cash incentive target was 20% of his salary, or $42,735. In order to determine Mr. McAdam’s cash bonus for 2009, his target bonus was first multiplied by the 75% corporate multiplier, and then multiplied by his individual multiplier of 100%, resulting in an annual cash incentive payout of $32,051. For 2010, Mr. McAdam’s cash incentive bonus, if any, will be determined solely by reference to the corporate multiplier.

 

Calculation of Annual Cash Incentive Bonuses

 

The calculation of the named executive officer’s individual cash incentive payments for service in 2009, other than Mr. Dentzer, are summarized in the table below. Because Mr. Dentzer was not employed by the Company at the time annual cash incentive bonuses were paid, he did not receive a bonus.

 

 

Generally, employees who are hired after April 1 of the calendar year are eligible for a prorated bonus based upon date of hire and those hired after October 1 are not eligible to receive an annual cash incentive award for that year.

 

Long-term Incentive Program

 

We believe that long-term performance will be achieved through an ownership culture that rewards our executives for maximizing stockholder value over time and that aligns the interests of our employees and management with those of stockholders. Our 2007 Amended and Restated Equity Incentive Plan, or the 2007 Plan, and our 2002 Equity Incentive Plan, or the 2002 Plan, authorize or authorized us to grant stock options or restricted stock. We have historically elected to use stock options as the primary long-term equity incentive vehicle. We typically grant an initial stock option award to new employees and annual performance-based awards as part of our overall compensation program as well as option grants to reflect promotions, as necessary. For the named executive officers, our stock option awards vest over a four year period with 25% vesting one year after the vesting commencement date and the remainder vesting ratably each month thereafter in equal installments over a 3-year period subject to continued employment or association with us, and expire ten years after the date of grant.

 

We expect to continue to use stock options as a long-term incentive vehicle because we believe that:

 

 

As the Company evolves as an organization, we will continue to explore and evaluate the use of alternative long-term incentives vehicles in combination with stock options.

 

Initial Stock Option Awards

 

Executives who join us are awarded initial stock option grants. These grants have an exercise price equal to the closing price of our Common Stock on the date of grant, or the first date of employment, whichever date is later. Our goal is to create a total compensation package for new employees that is competitive with other biotechnology companies and that will enable us to attract high quality people. In 2009, the number of shares of the initial stock option award was determined based on the executives’ position with us and analysis of the competitive practices of our peer group. Dr. Boudes received an initial grant of 100,000 options upon joining the Company in January 2009. None of our other named executive officers received an initial stock option award in 2009.

 

Annual Stock Option Awards

 

Our historical practice has been to make annual stock option awards as part of our overall performance management program to those employees who earn a certain threshold of performance rating or above. These awards are made in the form of incentive stock options within the meaning of Section 422 of the Internal Revenue Code, as amended (the “Code”), to the extent permitted by the Code. The Compensation Committee believes that providing additional option grants beyond the initial grant provides management with a strong link to long-term corporate performance and the creation of stockholder value as well as providing continued retention via long-term vesting.

 

In 2009, we made two stock option grants to our named executive officers — one in February and another in November. The Compensation Committee decided to grant options in November 2009 rather than in February 2010 when we have traditionally granted options in light of the corporate restructuring in October 2009 and associated reduction in force. The Committee believed that electing to make the option grants in November provided our remaining employees with an additional incentive to remain with the Company and ensure their dedication to advancing the Company’s long-term goals. Both grants in 2009 were made in connection with company-wide grants. All of the stock option awards are subject to our standard four year vesting schedule. The 2009 stock option grants are described in the section entitled “Grants of Plan-Based Awards” on page 28.

 

For 2010, we intend to move to a semi-annual option grant cycle. As a result, the Compensation Committee plans to make two stock option grants to our named executive officers — the first grant midway through the year and the second at the end of 2010. Each grant will represent half of the total option grant for the year for the executives. The Compensation Committee believes that moving to a semi-annual grant cycle will spread the incentives of the option grants across a broader time horizon and take into account the volatility of our stock price. These option grants will be made in connection with company-wide grants.

 

Restricted Stock

 

Our 2002 Plan and our 2007 Plan authorize us to grant restricted stock. To date, we granted under our 2002 Plan 13,333 shares of restricted stock to Mr. Sblendorio, our Audit Committee chairman, and 40,000 shares of restricted stock to Mr. Dentzer, our former Chief Financial Officer. While we have no current plans to grant restricted stock under our 2007 Plan, we may choose to do so in order to implement the long-term incentive goals of the Compensation Committee.

 

Other Compensation

 

Consistent with our compensation philosophy, we intend to continue to maintain our current benefits for our named executive officers, including medical, dental, vision and life insurance coverage. All employees receive Company paid term life insurance equal to two times annual base salary, up to a maximum benefit of $1,000,000.

 

Effective January 1, 2008, the Compensation Committee approved the implementation of a Company match for our 401(k) Plan. Executives as all participants are subject to Federal guidelines and plan maximums. We match $1 for each $1 a participant defers into the plan up to 5% of each participant’s salary and bonus paid during the year.

The match vests 25% per year on a cliff vesting schedule over the first four years of employment for each participant.

 

Additional CEO Benefits

 

Our Company is engaged in a highly competitive industry and developing medicines for unique and complicated genetic disorders. As Chief Executive Officer, Mr. Crowley has significant responsibility for leading our Company and managing its progress toward achieving our corporate goals. Mr. Crowley’s compensation reflects this responsibility and takes into account his unique circumstances.

 

As part of his overall compensation, Mr. Crowley receives significant payments and benefits from the Company related to the healthcare and other associated costs incurred by his family. These amounts reflect substantial costs incurred for the treatment of a rare medical condition afflicting two members of Mr. Crowley’s immediate family. Specifically, the Company provides Mr. Crowley with two additional compensation components: (1) certain payments pursuant to his employment agreement, and (2) Company-paid premiums for a supplemental health insurance plan. We describe these benefits below.

 

Employment Agreement Payments:  As outlined in Mr. Crowley’s employment agreement, in 2009 we reimbursed Mr. Crowley the maximum annual amount of $220,000 for medical expenses not covered by any of the Company’s medical insurance plans and made corresponding gross-up payments on behalf of Mr. Crowley to the appropriate federal and state taxing authorities in the amount of $183,078. These payments were made on a quarterly basis during 2009. Effective January 1, 2008, we modified the agreement to (i) make quarterly payments to Mr. Crowley to cover out-of-pocket healthcare associated expenses incurred by Mr. Crowley and his family, and (ii) make corresponding gross-up payments on behalf of Mr. Crowley on a quarterly basis to the appropriate federal and state taxing authorities.

 

Additional Health Insurance:  In addition to the basic health insurance plan provided to all employees, we maintain an additional medical insurance plan in which the named executive officers and other executives may participate. As mentioned above, the Company initiated this insurance plan primarily to address significant medical costs incurred by the family of Mr. Crowley. At present, in addition to Mr. Crowley, Mr. Patterson participates and receives benefits under the plan. These executives are entitled to the reimbursement of medical expenses, subject to certain limitations. We continually re-evaluate the levels of benefits currently provided to our executives.

 

In aggregate for 2009, the Company provided Mr. Crowley with other compensation of $1,191,368, which included reimbursements of $403,078 of family medical expenses under his employment agreement and $775,500 for health insurance premiums for Mr. Crowley’s family. The Company expects these premiums to remain stable in 2010 for Mr. Crowley and his family. As part of its responsibilities, the Compensation Committee intends to monitor these costs and continuously review and assess the total mix and structure of Mr. Crowley’s compensation to ensure that it appropriately reflects the value Mr. Crowley brings to the Company.

 

Termination Based Change of Control Compensation

 

Upon termination of employment under certain circumstances, our named executive officers are entitled to receive varying types of compensation. Elements of this compensation may include payments based upon a number of months of base salary, bonus amounts, acceleration of vesting of equity, health care coverage and other similar benefits. We believe that our termination-based compensation and acceleration of vesting of equity arrangements are in line with severance packages offered to named executive officers of other similar companies, including our package for our Chief Executive Officer, based upon the market information we have reviewed. We also have granted severance and acceleration of vesting of equity benefits to our named executive officers in the event of a change of control if the executive is terminated within a certain period of time following the change of control. We believe this “double trigger” requirement maximizes stockholder value because it prevents an unintended windfall to management in the event of a friendly or non-hostile change of control. In addition, this structure is more appropriate than a single trigger acceleration mechanism contingent only upon a change of control because unvested equity awards would continue to encourage our executives to remain with the Company following a change of control. The specifics of each named executive officer’s arrangements are described in further detail below.

Executive Compensation

 

Summary Compensation Table

 

The following table provides information regarding the compensation that we paid to each person serving as our principal executive officer, our principal financial officer and each of our other three most highly compensated executive officers during the years indicated below (collectively, the “named executive officers”).

 

 

 

 

 

Grants of Plan-Based Awards

 

The following table presents information concerning grants of plan-based awards to each of the named executive officers during 2009.

 

 

 

While our Amended and Restated 2007 Equity Incentive Plan authorizes us to grant restricted stock, we did not grant restricted stock during 2009, nor do we currently have plans to grant restricted stock.

Outstanding Equity Awards at Year-End

 

The following table presents the outstanding equity awards held by each of the named executive officers as of December 31, 2009.

 

 

 

 

Option Exercises and Stock Vested at Year End

 

The following table presents certain information concerning the exercise of options by each of the named executive officers during the year ended December 31, 2009.

 

 

 

 

Pension Benefits

 

None of our named executive officers participates in or has account balances in qualified or non-qualified defined benefit plans sponsored by us.

 

Nonqualified Deferred Compensation

 

None of our named executive officers participate in or have account balances in non-qualified defined contribution plans or other deferred compensation plans maintained by us. The Compensation Committee, which is comprised solely of independent directors, may elect to provide our officers and other employees with non-qualified defined contribution or deferred compensation benefits if the Compensation Committee determines that doing so is in our best interests.

Severance Benefits and Change of Control Arrangements

 

We have agreed to provide severance benefits and change of control arrangements to our current executives, as described below.

 

John F. Crowley.  We employ Mr. Crowley as our President and Chief Executive Officer pursuant to an employment agreement. The agreement will continue for successive one-year terms until either Mr. Crowley or we provide written notice of termination to the other in accordance with the terms of the agreement. Upon the termination of his employment by us other than for cause, or if we decide not to extend Mr. Crowley’s agreement at the end of any term, or termination of his employment by him for good reason, Mr. Crowley has the right to receive (i) a severance payment in an amount equal to 18 times his monthly base salary then in effect, payable in accordance with our regular payroll practices, (ii) an additional payment equal to 150% of the target bonus for the year in which the termination occurs, and (iii) continuation of benefits for a comparable period as a result of any such termination. Further, the vesting of all options then held by Mr. Crowley shall accelerate by one year. Mr. Crowley is not entitled to severance payments if we terminate him for cause or if he resigns without good reason. Mr. Crowley is bound by non-disclosure, inventions and non-competition covenants that prohibit him from competing with us during the term of his employment and for one year after termination of employment.

 

If Mr. Crowley resigns for good reason, we or our successor terminate him without cause, or we decide not to extend his employment agreement at the end of any term, in each case within 3 months prior to, or 12 months following a change of control, then Mr. Crowley has the right to receive a severance payment in an amount equal to 24 times his monthly base salary then in effect, payable in accordance with our regular payroll schedule, as well as an additional payment equal to 200% of the target bonus for the year in which the termination occurs. In addition, Mr. Crowley is entitled to the continuation of benefits for a comparable period as a result of any such termination. Further, the vesting of all options then held by him shall accelerate in full, and all repurchase rights that we may have as to any of his stock will automatically lapse. We believe this “double trigger” requirement maximizes stockholder value because it prevents an unintended windfall to management in the event of a friendly or non-hostile change of control. We believe that the severance package for our chief executive officer is in line with severance packages offered to chief executive officers of comparable companies as represented by compensation data we have reviewed.

 

Other Named Executive Officers.  We have entered into severance agreements with the following named executive officers: Matthew R. Patterson, David J. Lockhart, Pol F. Boudes, M.D. and John M. McAdam. If a named executive officer is terminated without cause, then the executive has the right to receive:

 

 

In addition, if any of our named executive officers is terminated other than for cause within six months following certain corporate changes or, if following those changes, the executive resigns for good reason, then the executive has the right to receive:

 

 

 

As previously disclosed, in December 2008, we entered into an amendment to Mr. Crowley’s employment agreement and amendments to our other named executive officers’ letter agreements (other than Mr. McAdam) in order to ensure compliance with regulations promulgated under Section 409A of the Code. These amendments did not change in any way the financial benefits available to Mr. Crowley or the other named executive officers. The changes include, but are not limited to, (i) modification of the definition of “good reason” to comply with Section 409A; (ii) a change in the timing of payments due or potentially due under the agreements, including post-termination payments, and (iii) a “gross up” of payments in the event that any payment upon termination of service with the Company is determined to be subject to penalties imposed by Section 409A.

 

Each named executive officer is bound by non-disclosure, inventions transfer, non-solicitation and non-competition covenants that prohibit the executive from competing with us during the term of his or her employment and for 12 months after termination of employment. We believe that the severance packages for our named executive officers are consistent with severance packages offered to named executive officers of comparable companies as represented by compensation data we have reviewed.

 

Potential Payments Upon Termination Without Cause

 

For each named executive officer other than Mr. Dentzer, the following table sets forth quantitative estimates of the benefits that would have accrued to each of our named executive officers if his employment had been terminated without cause or, in the case of Mr. Crowley, he resigned for good reason, on December 31, 2009. Amounts below reflect potential payments pursuant to the employment agreements for such named executive officers.

 

The amounts described below for Mr. Dentzer reflect the actual payments and benefits he received in connection with the termination of his employment on October 29, 2009. Pursuant to the terms of the restricted stock agreement dated as of March 8, 2007 between Mr. Dentzer and the Company (the “Restricted Stock Agreement”), Mr. Dentzer was entitled to an additional six months vesting in the restricted shares upon his termination. However, as part of his severance package, the Company agreed to allow Mr. Dentzer to fully vest in these restricted shares in accordance with the original vesting schedule and thereby eliminated the risk of forfeiture associated with such shares. This will result in Mr. Dentzer receiving an additional 5,010 shares of our Common Stock that he otherwise would have forfeited under the terms of the Restricted Stock Agreement.

 

 

 

Potential Payments Upon Termination Due to Change of Control

 

The following table sets forth quantitative estimates of the benefits that would have accrued to each of our named executive officers, other than Mr. Dentzer, if his employment had been terminated due to constructive termination upon a change of control on December 31, 2009, assuming that such termination occurred within the period beginning on the first day of the calendar month immediately preceding the calendar month in which the effective date of a change of control occurs and ending on the last day of the twelfth calendar month following the calendar month in which the effective date of a change of control occurs, or, in the case of Mr. Crowley, within three months prior to or twelve months following the date on which the change of control occurs. Amounts below reflect potential payments pursuant to the amended employment agreements for such named executive officers.

 

 

 

 

Confidential Information and Inventions Agreement

 

Each of our named executive officers has also entered into a standard form agreement with respect to confidential information and inventions. Among other things, this agreement obligates each named executive officer to refrain from disclosing any of our proprietary information received during the course of employment and to assign to us any inventions conceived or developed during the course of employment.

 

Director Compensation

 

In June 2006, our Board of Directors adopted a compensation program for our non-employee directors, or the Director Compensation Policy. Pursuant to the Director Compensation Policy, each member of our Board who is not our employee receives the following cash compensation for Board services, as applicable:

 

 

The 2007 Director Option Plan provides that each director shall automatically receive an annual grant of options to purchase 10,000 shares on the date of our Annual Meeting of Stockholders and the grants will vest in full at the next Annual Meeting of Stockholders. The exercise price of each option granted to a non-employee director will be equal to 100% of the fair market value on the date of grant of the shares covered by the option. Options will have a maximum term of 10 years measured from the grant date, subject to termination in the event of the optionee’s cessation of Board service. All of our directors are eligible to participate in our 2007 Equity Incentive Plan.

 

In February 2009 and March 2010, we granted Sol. J. Barer and Margaret G. McGlynn, respectively, options to purchase 30,000 shares of our Common Stock under our Amended and Restated 2007 Equity Incentive Plan in connection with their election to the Board. The exercise price of these options is equal to 100% of the fair market value on the date of grant of the shares covered by the option. Unlike the annual grant to our directors, this initial grant awards vests over a four year period with 25% vesting one year after the vesting commencement date and the remainder vesting ratably each month thereafter in equal installments over a 3-year period subject to continued service as a director. We may in the future make additional initial grants of stock options to new Board members.

Summary Director Compensation Table

 

The following table provides information regarding the compensation that we paid to each of our directors during the year ended December 31, 2009.

 

 

 

 

 

Employment Agreements

 

John F. Crowley.  We employ Mr. Crowley as our Chairman, President and Chief Executive Officer. Under this agreement, Mr. Crowley is entitled to an annual base salary of $425,000. Adjustments to his base salary are in the discretion of our Board of Directors and we have agreed not to reduce his base salary below $425,000. The agreement provides that Mr. Crowley is eligible to receive a cash bonus of up to 50% of his base salary if performance criteria are met for the year in which the bonus is to be paid. The agreement also provides that Mr. Crowley’s compensation and benefits, including health benefits for him and his family, continue in full during the term of any active duty service, and Mr. Crowley received full compensation and benefits during his active duty service from September 2006 to March 2007. The agreement further provides that Mr. Crowley is eligible to

participate in any executive bonus plans established by the Board from time to time. The agreement will continue for successive one-year terms until either Mr. Crowley or we provide written notice of termination to the other in accordance with the terms of the agreement.

 

We have agreed to secure and maintain an executive medical reimbursement contract with a named insurance company covering Mr. Crowley, his spouse and his dependents. Beginning in January 2008, we have agreed to (i) make quarterly payments to Mr. Crowley to cover out-of-pocket healthcare associated expenses incurred by Mr. Crowley and his family, and (ii) make corresponding gross-up payments on behalf of Mr. Crowley on a quarterly basis to the appropriate federal and state taxing authorities. The agreement also provides for severance benefits and change of control arrangements as previously described in detail.

 

Other Named Executive Officers.  We have entered into employment agreements with Matthew R. Patterson and David Lockhart, Ph.D. These agreements set forth the named executive officer’s position, duties, base salary, benefits, and severance arrangements as described previously in the sections above. Our executive employment agreements with Dr. Lockhart and Mr. Patterson provide for an initial term of two years, and will continue thereafter for successive two-year periods until we provide the executive with written notice of the end of the agreement in accordance with its terms. There are no employment agreements in place for Dr. Boudes or Mr. McAdam, who are employed “at will”.

 

COMPENSATION COMMITTEE REPORT

 

The Compensation Committee is comprised entirely of independent directors. The Compensation Committee of our Board of Directors has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K, which appears in this Proxy Statement, with our management. Based on this review and discussion, the Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and our 2009 Annual Report on Form 10-K.

 

Members of the Amicus Therapeutics, Inc.

Compensation Committee:

 

P. Sherrill Neff, Chairman

Sol J. Barer, Ph.D.

Michael G. Raab

James N. Topper, M.D., Ph.D.

 

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

 

Section 16(a) of the Exchange Act requires our directors, executive officers and persons who own more than 10% of a registered class of our equity securities to file reports of holdings and transactions in our Common Stock with the SEC. Based on our records and other information, we believe that, in 2009, none of our directors, executive officers or 10% stockholders failed to file a required report on time.

 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

 

Our Board maintains a formal policy such that all transactions between us and our officers, directors, principal stockholders and their affiliates must be approved by a majority of the members of the Board, including a majority of the independent and disinterested members of the Board, and that such transactions must be on terms no less favorable to us than those that could be obtained from unaffiliated third parties. We do not intend at this time to adopt specific standards for the approval of these transactions, but instead intend to have our Board review all such transactions on a case by case basis.

March 2010 Registered Direct Offering

 

In March 2010, we sold 4.95 million shares of our Common Stock and warrants to purchase 1.85 million shares of Common Stock in a registered direct offering to a select group of institutional investors. The shares of Common Stock and warrants were sold in units consisting of one share of Common Stock and one warrant to purchase 0.375 shares of Common Stock at a price of $3.74 per unit. The warrants have a term of four years and are exercisable any time on or after the six month anniversary of the date they were issued, at an exercise price of $4.43 per share. The net proceeds of the offering were approximately $17.1 million after deducting the placement agency fee and all other offering expenses. Funds affiliated with Palo Alto Investors, our largest stockholder, participated in the offering and purchased 1.1 million shares of our Common Stock and 412,500 warrants.

 

Investor Rights Agreement

 

Pursuant to a third amended and restated investor rights agreement, dated as of September 13, 2006, by and among entities who held our redeemable convertible preferred stock (which was converted to common stock at our initial public offering) and us, we granted registration rights to all such holders, to Mount Sinai School of Medicine of New York University, or MSSM, and to the holder of a warrant which has since been exercised. Entities affiliated with Prospect Venture Partners II, L.P., New Enterprise Associates, Frazier Healthcare Ventures, Quaker BioVentures and Palo Alto Investors, LLC, each a holder of 5% or more of our voting securities, and their affiliates are parties to this investor rights agreement.

 

Subject to certain limitations, these stockholders may demand that, on up to two occasions, we register all or part of their securities for sale under the Securities Act as long as the aggregate price to the public for the securities to be sold in each instance is $5,000,000 or more. If we are eligible to register any of our Common Stock on Form S-3, these stockholders may make the same demand; provided, however, that we will not be required to register their securities if (i) we have already effected a registration within 90 days prior to the request or have effected two or more registrations on Form S-3 within the preceding 12 month period, or (ii) if the aggregate price to the public for the securities to be sold is less than $2,500,000. Additionally, if we believe that such registration would have a materially detrimental effect on any material corporate event, we may delay the request for up to three months, but not more than once in any twelve month period.

 

These stockholders may also request registration of their shares if we register any of our Common Stock, either for our own account or for the account of other security holders. In such an event, these stockholders are entitled to notice of the registration and to include their shares of Common Stock in such registration. In the case of an underwritten registration, we must use our reasonable best efforts to obtain the permission of the underwriters to the inclusion of the holder’s shares in the offering on the same terms.

 

With specified exceptions, a holder’s right to include shares in a registration is subject to the right of the underwriters to limit the number of shares included in the offering. All fees, costs and expenses of any registrations will generally be paid by us.

 

Mt. Sinai School of Medicine License Agreement

 

We acquired exclusive worldwide patent rights to develop and commercialize our lead products and other pharmacological chaperones pursuant to a license agreement with MSSM. In connection with this agreement, we issued 232,266 shares of our Common Stock to MSSM in April 2002. In October 2006 we issued MSSM an additional 133,333 shares of Common Stock and made a payment of $1.0 million in consideration of an expanded field of use under that license. Under this agreement, to date we have paid no upfront or annual license fees and we have no milestone or future payments other than royalties on net sales. However, on October 31, 2008, we amended and restated this license agreement to, among other items, provide us with the sole right to control the prosecution of patent rights under such agreement. In connection therewith, we agreed to pay MSSM $2.6 million in connection with the $50 million up front payment that we received in November 2007 from Shire Pharmaceuticals Ireland Ltd. as part of our former collaboration agreement and an additional $2.6 million for the sole right to and control over the prosecution of patent rights. This agreement expires upon expiration of the last of the licensed patent rights, which will be in 2019 if a foreign patent is granted and 2018 otherwise, or later subject to any patent term extension that may be granted.

Director Compensation

 

Please see “Management — Director Compensation” for a discussion of options granted and other compensation to our non-employee directors.

 

Executive Compensation and Employment Agreements

 

Please see “Management — Executive Compensation” and “Management — Stock Options” for additional information on compensation of our executive officers. Information regarding employment agreements with our executive officers is set forth under “Management — Employment Agreements.”

 

CODE OF CONDUCT AND ETHICS

 

We have adopted a code of conduct and ethics that applies to all of our employees, including our principal executive officer and principal financial and accounting officer, and our directors. The text of the code of conduct and ethics is posted on our web site at www.amicustherapeutics.com and will be made available to stockholders without charge, upon request, in writing to Secretary, c/o Amicus Therapeutics, Inc. at 6 Cedar Brook Drive, Cranbury, New Jersey 08512. Disclosure regarding any amendments to, or waivers from, provisions of the code of conduct and ethics that apply to our directors, principal executive and financial and accounting officers will be included in a Current Report on Form 8-K within four business days following the date of the amendment or waiver, unless web site posting of such amendments or waivers is then permitted by the rules of NASDAQ.

 

PROPOSAL NO. 1 — ELECTION OF DIRECTORS

 

The Board of Directors has voted to nominate John F. Crowley, Margaret G. McGlynn, R.Ph., Michael G. Raab, and Glenn P. Sblendorio for election at the 2010 Annual Meeting for a term of three years to serve as Class III directors until the 2013 Annual Meeting of Stockholders, and until their respective successors are duly elected and qualified. The Board has also voted to nominate James Barrett, Ph.D. for election at the 2010 Annual Meeting for a term of one year to serve as a Class I director until the 2011 Annual Meeting of Stockholders, and until his successor is duly elected and qualified. In accordance with our by-laws, Dr. Barrett was unanimously elected to the Board by its existing members in August 2009 in order to fill a vacancy created by a past director’s resignation. However, unlike our other Class I directors, Dr. Barrett’s term expires at the 2010 Annual Meeting of Stockholders in order to provide our stockholders with the opportunity to vote on Dr. Barrett’s re-election to the Board as soon as reasonably possible following his election by the Board. The other Class I directors, Alexander E. Barkas, Ph.D. and P. Sherrill Neff, and the Class II directors, Sol J. Barer, Ph.D., Donald J. Hayden and James N. Topper, M.D., Ph.D., will serve until the Annual Meetings of Stockholders to be held in 2011 and 2012, respectively, and until their respective successors have been elected and qualified. Should Dr. Barrett be elected at the 2010 Annual Meeting, his term, like the other Class I directors, will expire at the 2011 Annual Meeting of Stockholders.

 

Unless authority to vote for any of these nominees is withheld, the shares represented by the enclosed proxy will be voted FOR the election as directors of John F. Crowley, James Barrett, Ph.D., Margaret G. McGlynn, R.Ph., Michael G. Raab and Glenn P. Sblendorio. In the event that any nominee becomes unable or unwilling to serve, the shares represented by the enclosed proxy will be voted for the election of such other person as the Board of Directors may recommend in his or her place. We have no reason to believe that any nominee will be unable or unwilling to serve as a director.

 

A plurality of the shares voted at the Annual Meeting is required to elect each nominee as a director.

 

The Board of Directors recommends the vote “FOR” the election of each of John F. Crowley, James Barrett, Ph.D., Margaret G. McGlynn, R.Ph., Michael G. Raab and Glenn P. Sblendorio as a director, and proxies solicited by the Board will be voted in favor thereof unless a stockholder has indicated otherwise on the proxy.

 

PROPOSAL NO. 2 — APPROVAL OF THE AMENDED AND RESTATED 2007
EQUITY INCENTIVE PLAN

 

We are asking our stockholders to approve our Amended and Restated 2007 Equity Incentive Plan (the “2007 Plan”). The Compensation Committee approved the 2007 Plan, subject to approval of the Board and the stockholders, and the Board approved the 2007 Plan, subject to approval of the stockholders. If our stockholders do not approve the 2007 Plan, the existing version of the Amended and Restated 2007 Equity Incentive Plan (the “Existing 2007 Plan”) will remain in effect.

 

The following is a summary description of the 2007 Plan. While the material features of the 2007 Plan are described below, the summary is in all respects subject to the complete text of the 2007 Plan contained in Appendix A.

 

Background and Reason for the Proposal

 

Equity compensation has historically been a key element of our compensation program. The ability to grant stock options and restricted stock has enabled us to attract and retain highly talented employees. Additionally, equity awards have also allowed us to link incentive rewards to Company performance, to encourage employee ownership in our stock and to align the interests of employees with those of our stockholders. Equity based compensation, and specifically stock options, are a common form of compensation in our industry. Without stock options, we would be at a disadvantage against our competitors for recruiting and retaining key talent. We would also be unable to offer competitive total compensation packages necessary to attract, retain and motivate individuals critical to our future success.

 

The purpose of the 2007 Plan is to encourage ownership of our Common Stock by employees, consultants and directors of the Company and to provide additional incentive for them to promote the success of the Company’s business through the grant of awards of shares of the Company’s common stock. Currently, there are only 108,945 shares remaining for issuance under the Existing Plan. In addition, all of the outstanding options issued under the Existing Plan have exercise prices greater than the current market value of our Common Stock, greatly reducing the retention value of our outstanding options. We are therefore seeking approval of the 2007 Plan in order to make an additional 2,000,000 shares of our Common Stock available for issuance. The Board believes that the 2007 Plan will serve a critical role in attracting and retaining officers and employees and in motivating these individuals to strive to meet our goals and that, without the additional shares which may be offered under the 2007 Plan, we would be at a competitive disadvantage to our peers.

 

In addition, in order to better align our equity compensation programs with best corporate governance practices, the 2007 Plan removes a provision in the Existing Plan that permitted the Company to effect a repricing of outstanding options without stockholder approval. We have added a commitment that we will not seek to effect a repricing of outstanding options without stockholder approval.

 

Eligible Participants/Administration

 

The 2007 Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Code, to employees, and non-qualified stock options and restricted and other stock awards to our employees, directors, and consultants. As of April 23, 2010, approximately 94 employees, ten directors and five consultants are eligible to participate in the 2007 Plan. The 2007 Plan will be administered by the Compensation Committee of our Board, provided that the Board may itself exercise any of the powers and responsibilities assigned to the Committee under the 2007 Plan.

 

Subject to the provisions of the 2007 Plan, the Compensation Committee has been granted the discretion to determine when awards are made, which directors, employees or consultants receive awards, the form of an award, the number of shares subject to each award, and all other relevant terms of the award, including vesting and acceleration of vesting, if any. The Compensation Committee also has been granted broad discretion to construe and interpret the 2007 Plan and adopt rules and regulations thereunder.

Number of Shares Authorized Under the 2007 Plan

 

The aggregate number of shares of our Common Stock that would be issuable under the 2007 Plan is 2,108,945 shares, subject to adjustment to avoid dilution or enlargement of intended benefits in the event of certain significant corporate events. The aggregate number of shares of Common Stock that may be granted in any calendar year to any one person pursuant to the 2007 Plan may not exceed 50% of the aggregate number shares of our Common Stock that may be issued pursuant to the 2007 Plan. In addition, no more than 300,000 shares of Common Stock may be granted or sold under the 2007 Plan as awards of restricted stock, restricted stock units, stock grants and any other similar awards whose intrinsic value is not solely dependent on appreciation in the price of our Common Stock after the date of grant. If any shares covered by an award granted under the 2007 Plan, or to which such an award relates, are forfeited, or if an award has expired, terminated or has been canceled for any reason whatsoever (other than by reason of exercise or vesting), then the shares covered by such award shall again be, or shall become, shares with respect to which awards may be granted under the 2007 Plan.

 

Term of the 2007 Plan

 

No award may be granted under the 2007 Plan after the tenth anniversary of the effective date of the plan, which is the most recent date on which the 2007 Plan is approved (or reapproved) by our stockholders. Awards granted prior to the expiration of the 2007 Plan shall not expire solely by reason of the termination of the plan.

 

Terms and Conditions of Options

 

Options granted under the 2007 Plan shall be, as determined by the Compensation Committee, non-qualified or incentive stock options for federal income tax purposes, and shall be subject to the foregoing and the following terms and conditions and to such other terms and conditions, not inconsistent therewith, as determined by the Compensation Committee:

 

Option Exercise Price.  The price at which shares of Common Stock may be acquired under each incentive stock option shall not be less than 100% of the fair market value of a share on the date an option is granted; provided, however, that the exercise price of any incentive stock option granted to any participant who, at the time of grant, owns more than 10% of the total combined voting power of all classes of the Company’s stock (a “Ten Percent Holder”) shall be at least 110% of the fair market value of the stock on the date of such grant. The closing price of a share of our Common Stock on April 19, 2010 was $3.26.

 

Exercisability.  Options granted under the 2007 Plan shall be exercisable at such time and upon such terms and conditions as may be determined by the Committee; provided, however, that in no event shall an option be exercisable more than ten years after its grant date or five years after the date it is granted to a Ten Percent Holder. An option may be exercised by a participant providing written notice specifying the number of shares of Common Stock with respect to which the option is then being exercised. The purchase price for the shares as to which an option is exercised shall be paid to the Company pursuant to one or more of the following methods:

 

 

 

 

 

No participant shall be deemed for any purpose to be a stockholder of the Company with respect to any shares of Common Stock issuable pursuant to an option until the participant has given written notice of exercise of the option and has paid in full for such shares.

Terms and Conditions of Restricted Stock

 

Shares of restricted stock may be issued under the 2007 Plan for such consideration, in cash, other property or services, or any combination thereof, as determined by the Compensation Committee. During the period of time in which the shares of restricted stock are subject to a risk of forfeiture (the “Restriction Period”), such shares shall be subject to limitations on transferability and a risk of forfeiture arising on the basis of such conditions related to the performance of services, Company performance or otherwise as the Compensation Committee may determine and set forth in an award agreement. Any such risk of forfeiture may be waived or terminated, or the Restriction Period shortened, at any time by the Compensation Committee on such basis as it deems appropriate. Except as otherwise provided in the 2007 Plan or an applicable award agreement, at all times prior to the lapse of the Restriction Period, the participant shall have all of the rights of a stockholder of the Company, including the right to vote the shares of restricted stock.

 

Terms and Conditions of Restricted Stock Units

 

Each restricted stock unit shall entitle the recipient to a share of Common Stock at the close of a Restriction Period as established by the Compensation Committee and subject to a risk of forfeiture arising on the basis of such conditions related to the performance of services, Company performance or otherwise as the Compensation Committee may determine and set forth in an award agreement. Any such risk of forfeiture may be waived or terminated, or the Restriction Period shortened, at any time by the Compensation Committee on such basis as it deems appropriate. A participant holding restricted stock units shall not be deemed for any purpose to be a stockholder of the Company with respect to any of the shares of Common Stock subject to such restricted stock units except to the extent that the Restriction Period with respect to such restricted stock units shall have closed and a certificate shall have been issued for such shares of Common Stock.

 

Terms and Conditions of Stock Grants

 

Stock grants may be issued under the 2007 Plan for such consideration, in cash or other property or services, or any combination thereof, as determined by the Compensation Committee. Stock grants may be awarded in such circumstances as the Compensation Committee deems appropriate, including in recognition of significant contributions to the success of the Company or in lieu of compensation otherwise already due.

 

Transferability

 

Unless otherwise determined by the Compensation Committee, an award (other than a stock award) shall not be transferable or assignable by a participant otherwise than by will or by the laws of descent and distribution. However, the applicable award agreement or the Compensation Committee may provide that a nonstatutory stock option, shares of restricted stock or restricted stock units may be transferred by the participant to a family member, so long as such transfer is without payment of any consideration.

 

Change in Control

 

Subject to the applicable provisions of the award agreement, in the event of a change of control of the Company after the effective date of the 2007 Plan, the Compensation Committee shall have the discretion to provide for any or all of the following:

 

 

 

Adjustments

 

In the event of any change in the outstanding shares by reason of merger, consolidation, sale of all or substantially all of the property of the Company, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, or other distribution with respect to such outstanding shares, an appropriate and proportionate adjustment will be made in (i) the maximum number and kinds of shares that may be issued under the 2007 Plan, (ii) the numbers and kinds of shares or other securities subject to the then outstanding awards; (iii) the exercise price for each share or other unit of any other securities subject to then outstanding options; and (iv) the repurchase price of each share of restricted stock then subject to a risk of forfeiture in the form of a Company repurchase right.

 

Amendments to the 2007 Plan

 

The Board may at any time terminate or make such amendments or modifications of the 2007 Plan as it shall deem advisable; provided, however, that no such amendment or modification shall be made without the consent of a participant if such change would:

 

 

Section 162(m) of the Internal Revenue Code

 

Section 162(m) of the Code limits the amounts a public company may deduct for income tax purposes in respect of the compensation of certain of its named executive officers. The 2007 Plan is intended to enable stock options granted thereunder to meet the requirements for exemption from the limitations under Section 162(m) of the Code, provided certain other operational requirements are satisfied.

 

Federal Income Tax Consequences Relating to Awards Under the 2007 Plan

 

The current United States federal income tax treatment of awards under the 2007 Plan is generally described below. This description of tax consequences is not a complete description. There may be different income tax consequences under certain circumstances, and there may be gift and estate tax consequences. Local, state and other taxing authorities may also tax awards under the plan. Tax laws are subject to change.

 

Incentive Stock Options

 

There generally are no federal income tax consequences to a participant or to the Company upon the grant of an incentive stock option. A participant will not recognize income for purposes of the regular federal income tax upon the exercise of an incentive stock option. However, for purposes of the alternative minimum tax, in the year in which a participant exercises an incentive stock option the amount by which the fair market value of the shares acquired upon exercise exceeds the exercise price will be included in a participant’s alternative minimum taxable income.

 

A participant will recognize income when he or she sells stock acquired upon exercise of an incentive stock option. If a participant disposes of the shares acquired upon exercise of an incentive stock option after two years from the date the option was granted and one year from the date the shares were transferred upon the exercise of the option, a participant will recognize long-term capital gain or loss in the amount of the difference between the

amount realized on the sale and the exercise price. The Company will not be entitled to any corresponding tax deduction.

 

If a participant disposes of shares acquired upon the exercise of an incentive stock option before satisfying both holding period requirements (a “disqualifying disposition”), a participant’s gain recognized on the disposition will be taxed as ordinary income to the extent of the difference between the fair market value of the shares on the date of exercise (or the amount realized on the disposition, if less) and the exercise price. The Company will generally be entitled to a deduction in that amount. The gain, if any, in excess of the amount recognized as ordinary income will be long-term or short-term capital gain, depending upon the length of time the participant held the shares before the disposition.

 

Nonqualified Stock Options

 

There are generally no federal income tax consequences to a participant or to the Company upon the grant of a nonqualified stock option. Upon the exercise of a nonqualified stock option, a participant will recognize ordinary income in an amount equal to the excess of the fair market value of the shares at the time of exercise over the aggregate exercise price paid. The Company generally will be entitled to a corresponding federal income tax deduction. The participant will have a tax basis in the shares equal to the exercise price plus the amount of income recognized at the time of exercise.

 

When a participant sells shares of stock acquired through the exercise of a nonqualified stock option, the participant will have a capital gain or loss in an amount equal to the difference between the amount realized on the sale and the tax basis in the shares. The capital gain tax rate will depend on a number of factors, including the length of time the participant held the shares prior to selling them.

 

Restricted Stock

 

A participant will generally not recognize federal taxable income when he or she receives a grant of restricted stock, and the Company will not be entitled to a deduction, until the stock is transferable by the participant or is otherwise no longer subject to a substantial risk of forfeiture. When the stock is either transferable or is no longer subject to a substantial risk of forfeiture, a participant will recognize ordinary income in an amount equal to the fair market value of the shares at that time (less any amounts paid for the shares), and generally, the Company will be entitled to a deduction in the same amount. Any gain or loss recognized by the participant upon a later disposition of the shares will be capital gain or loss. A participant’s holding period for purposes of determining whether that capital gain or loss is long-term or short-term will be counted from the date the stock became transferable or ceased to be subject to a substantial risk of forfeiture.

 

A participant may elect to recognize ordinary income in the year when the share award is granted in an amount equal to the fair market value of the shares subject to the award (less any amounts paid for such shares) at the time of grant, determined without regard to any restrictions. This election is referred to as a Section 83(b) election. In that event, the Company will be entitled to a corresponding deduction in the same year. Any gain or loss recognized by the participant upon a later disposition of the shares will be capital gain or loss. A participant’s holding period for purposes of determining whether that capital gain or loss is long-term or short-term will be counted from the date of the original transfer to the participant. The participant may not claim a credit for any tax previously paid on stock that is later forfeited.

 

Restricted Stock Units

 

If a participant is granted a restricted stock unit, he or she will not be required to recognize any taxable income at the time of grant. Upon distribution of shares or cash in respect of a restricted stock unit, the fair market value of those shares or the amount of that cash will be taxable to the participant as ordinary income and the Company will receive a deduction equal to the income recognized by the participant. The subsequent disposition of shares acquired pursuant to a restricted stock unit will result in capital gain or loss (based on the difference between the price received on disposition and the market value of the shares at the time of their distribution). The capital gain tax rate will depend on a number of factors, including the length of time the participant held the shares prior to selling them.

Vote Required

 

The affirmative vote of a majority of shares present in person or represented by proxy at the Annual Meeting and entitled to vote on such matter is required to approve the 2007 Plan.

 

New Plan Benefits

 

If the 2007 Plan is approved by stockholders, awards under the 2007 Plan will be determined by the Compensation Committee in its discretion, and it is, therefore, not possible to predict the awards that will be made to particular officers in the future under the 2007 Plan.

 

Securities Authorized for Issuance under our Equity Compensation Plans

 

 

 

 

The Board of Directors recommends the vote “FOR” the approval of the Amended and Restated 2007 Equity Incentive Plan.

 

PROPOSAL NO. 3 — APPROVAL OF THE AMENDED AND RESTATED 2007

DIRECTOR OPTION PLAN

 

We are asking our stockholders to approve our Amended and Restated 2007 Director Option Plan (the “Director Plan”). The Compensation Committee approved the Director Plan, subject to approval of the Board and the stockholders, and the Board approved the Director Plan, subject to approval of the stockholders. If our stockholders do not approve the Director Plan, the existing version of the 2007 Director Option Plan (the “Existing Director Plan) will remain in effect.

 

The following is a summary description of the Director Plan. While the material features of the Director Plan are described below, the summary is in all respects subject to the complete text of the Director Plan contained in Appendix B.

 

Background and Reason for the Proposal

 

Competition for qualified directors in the pharmaceutical industry is very intense. Attracting and retaining qualified individuals to serve on our Board is a key factor in the current and future success of the Company. The ability to grant stock options to our Board members has helped us to attract and retain highly talented Board members. In addition, stock options have also allowed us to link incentive rewards to Company performance and to