UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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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Neurocrine Biosciences, Inc.
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May 16, 2007
Dear Investor:
At Neurocrine’s Annual Shareholders Meeting, scheduled to
be held on June 1, 2007, shareholders will vote on the
approval to increase the number of shares of common stock
reserved for issuance under the Company’s 2003 Incentive
Stock Plan from 4,300,000 to 4,800,000 shares. We strongly
believe that the approval of the amendment to the Plan is
critical to our ongoing efforts to build shareholder value.
The Plan is the product of a deliberative process spearheaded by
the Compensation Committee of our Board of Directors. The
Committee reviewed our equity compensation practices to ensure
that they address shareholder concerns and that they
appropriately provide incentives to employees to continue their
efforts to build shareholder value. We also consulted with
several of our institutional shareholders to ensure that we
understood shareholder concerns.
In May of 2006, Neurocrine had a regulatory setback with its
drug for insomnia, indiplon, which resulted in the need
to substantially reduce our work force. The majority of our
employees had stock options with exercise prices that were
significantly above the former and current stock price. In order
to meet our corporate objectives and retain the remaining
employees we implemented a
two-for-one
stock option exchange offer in September 2006, allowing certain
employees to cancel one-half of their options and amend the
exercise price of their remaining options. An additional result
of this
two-for-one
exchange was to reduce our outstanding stock options by
approximately 1 million shares and reduce our stock option
overhang by over 13%.
On September 26, 2006, the Company completed this
two-for-one
exchange offer for holders of outstanding options with an
exercise price in excess of $20.00. The members of the
executive management team and members of the Board of Directors
were not eligible and did not participate in the
Offer. Importantly, to safeguard the
Company’s objective of retaining employees over the long
term, all of the repriced options under the exchange offer are
subject to a three year vesting period that commenced in
September of 2006. We strongly believe that with options vesting
annually by one-third at the end of each year, this plan has key
employee retention value.
For the reasons highlighted below, and more fully discussed in
our proxy statement (available at www.neurocrine.com), our Board
of Directors unanimously recommends that shareholders approve
the amendment to the Incentive Stock Plan.
| • | At Neurocrine, equity awards foster an ownership culture and are a critical tool for driving shareholder value and for recruiting, retaining and motivating employees. The Company operates in an intensely competitive environment, with highly skilled professionals and our continued success is closely correlated with offering an ownership culture and with recruiting and retaining talented employees and a strong management team. | |
| • | We grant annual equity awards to employees as an incentive to retain our work force and remain competitive. | |
| • | The terms of our annual equity awards and our employee policies are designed to align employee and shareholder interests. We grant equity awards to a broad group of employees and such awards constitute a significant component of our employees’ total compensation. Our annual equity awards contain long-term vesting and provisions designed to encourage employees to focus on Neurocrine’s long-term goals and success. |
If our shareholders do not approve the amendment to the
Incentive Stock Plan, we strongly believe that we will be unable
to successfully use equity as part of our compensation program,
as most of our competitors in the industry do, putting our
Company at a significant disadvantage and compromising our
ability to enhance shareholder value.
Please support our efforts to build shareholder value by casting
your vote “FOR” the amendment to the Incentive Stock
Plan at the June 1st Neurocrine Annual Meeting.
If you have any questions, or need assistance in voting your
shares, please contact me at
858-617-7650
or email: glyons@neurocrine.com or please contact our CFO
Tim Coughlin at
858-617-7817
or email: tcoughlin@neurocrine.com.
Very truly yours,
Gary A. Lyons
President and CEO