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
Filed
by
the Registrant
x
Filed
by
a Party other than the Registrant
o
Check
the
appropriate box:
o
Preliminary Proxy Statement
o
Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
x
Definitive Proxy Statement
o
Definitive Additional
Materials
o
Soliciting Material Pursuant to Section
240.14a-11(c) or Section 240.14a-12
NEXMED,
INC.
(Name
of
Registrant as Specified in its Charter)
(Name
of
Person(s) Filing Proxy Statement if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
x
No fee
required.
o
Fee computed on table
below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1)
Title
of each class of securities to which transaction applies:
2)
Aggregate number of securities to which transaction applies:
3)
Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4)
Proposed maximum aggregate value of transaction:
5)
Total
fee paid:
o
Fee paid previously
with preliminary materials.
o
Check box if any part of the fee is
offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing
for
which the offsetting fee was paid previously. Identify the previous filing
by
registration statement number, or the Form or Schedule and the date of its
filing.
1)
Amount
Previously Paid:
2)
Form,
Schedule or Registration Statement No.:
3)
Filing
Party:
4)
Date
Filed:
NEXMED,
INC.
89
Twin Rivers Drive
East
Windsor, NJ 08520
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
Our
Stockholders:
Notice
is
hereby given to all of the stockholders of NexMed, Inc. (the Company) that
the
Annual Meeting of Stockholders of the Company (the Annual Meeting) will be
held
on Monday, June 9, 2008 at 11:00 a.m., local time, at the Company’s headquarters
located at 89 Twin Rivers Drive, East Windsor, New Jersey 08520, for the
following purposes:
|
(1)
|
To
elect two persons to the Board of Directors of the Company to serve
a
three-year term, or until a successor is elected and
qualified.
|
|
(2)
|
To
consider and vote upon a proposal to approve and adopt an amendment
to the
NexMed, Inc. 2006 Stock Incentive Plan to increase the number of
shares
authorized thereunder from 3,000,000 to 5,000,000 shares of the Company's
common stock.
|
|
(3)
|
To
consider and vote upon a proposal to ratify the appointment of Amper,
Politziner & Mattia, PC, as the Company’s independent registered
public accounting firm for the year ending December 31,
2008.
|
The
enclosed Proxy Statement includes information relating to these proposals.
Additional purposes of the Annual Meeting are to consider and act upon such
other business as may properly come before this Annual Meeting or any
adjournment or postponement thereof.
All
stockholders of record of the Company's common stock, par value $0.001 per
share
(the Common Stock) at the close of business on April 11, 2008 are entitled
to
notice of and to vote at the Annual Meeting or any adjournment or postponement
thereof. At least a majority of the outstanding shares of Common Stock of the
Company entitled to vote, represented either in person or by proxy is
required for a quorum.
By
Order
of the Board of Directors
/s/
Mark Westgate
|
Mark
Westgate
|
Assistant
Secretary
|
April
18,
2008
East
Windsor, New Jersey
THE
BOARD OF DIRECTORS APPRECIATES AND ENCOURAGES YOUR PARTICIPATION IN THE
COMPANY'S ANNUAL MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING,
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED. ACCORDINGLY, PLEASE SIGN,
DATE
AND PROMPTLY RETURN THE ENCLOSED PROXY CARD BY MAIL IN THE POSTAGE-PAID ENVELOPE
PROVIDED, OR VOTE THESE SHARES BY TELEPHONE AT (800) 560-1965 OR BY INTERNET
AT
http://www.eproxy.com/nexm/. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY REVOKE
YOUR PROXY IF YOU WISH BY VOTING YOUR SHARES IN PERSON. YOUR PROXY IS
REVOCABLE IN ACCORDANCE WITH THE PROCEDURES SET FORTH IN THE ACCOMPANYING PROXY
STATEMENT.
Mailed
to Stockholders
on
or about April 18, 2008
NEXMED,
INC.
89
Twin Rivers Drive
East
Windsor, New Jersey 08520
PROXY
STATEMENT
General
Information
We
are
furnishing this Proxy Statement in connection with the solicitation of proxies
for use at our Annual Meeting of Stockholders (the Annual Meeting) to be held
on
Monday, June 9, 2008, at 11:00a.m., local time, at our headquarters located
at
89 Twin Rivers Drive, East Windsor, New Jersey, and any adjournment or
postponement thereof.
Revocability
of Proxies
Any
proxy
given pursuant to this solicitation may be revoked by the person giving it
at
any time before it is exercised by delivering to us (to the attention of Mark
Westgate, the Company's Assistant Secretary) a written notice of revocation
or a
properly executed proxy bearing a later date.
Solicitation
and Voting Procedures
This
proxy is solicited on behalf of the Board of Directors of NexMed, Inc. The
solicitation of proxies will be conducted by mail and we will bear all attendant
costs. These costs will include the expense of preparing and mailing proxy
materials for the Annual Meeting and reimbursements paid to brokerage firms
and
others for their expenses incurred in forwarding solicitation material regarding
the Annual Meeting to beneficial owners of our common stock, par value $.001
per
share (the Common Stock). We may use the services of Wells Fargo Shareowner
Services and The Altman Group in soliciting proxies and, in such event, we
expect to pay approximately $15,000, plus out-of-pocket expenses, for such
services. We may conduct further solicitation personally, telephonically or
by
facsimile through our officers, directors and regular employees, none of whom
will receive additional compensation for assisting with the
solicitation.
The
presence at the Annual Meeting of a majority of the outstanding shares of our
Common Stock entitled to vote, represented either in person or by proxy, will
constitute a quorum for the transaction of business at the Annual Meeting.
The
close of business on April 11, 2008 has been fixed as the record date (the
Record Date) for determining the holders of shares of Common Stock (the
Stockholders) entitled to notice of and to vote at the Annual Meeting. Each
share of Common Stock outstanding on the Record Date is entitled to one vote
on
all matters. As of the Record Date, there were 83,148,089 shares of Common
Stock
outstanding.
Stockholder
votes will be tabulated by the persons appointed by the Board of Directors
to
act as inspectors of election for the Annual Meeting. Shares of Common Stock
represented by a properly executed and delivered proxy will be voted at the
Annual Meeting and, when the Stockholder has given instructions, will be voted
in accordance with those instructions. If no instructions are given, the shares
will be voted FOR the election of the nominees for directors named below and
FOR
Proposals No. 2 and No. 3.
PROPOSAL
NO. 1
ELECTION
OF DIRECTORS
Our
Amended and Restated Articles of Incorporation, as amended to date (the Articles
of Incorporation) divide our Board of Directors into three classes. The term
of
office for each class is arranged so that the term of office of one class
expires at each successive Annual Meeting of Stockholders. The Board of
Directors currently consists of six members as follows: Class I directors,
Vivian H. Liu and Martin R. Wade, III, whose terms expire in 2010; Class II
directors, Richard J. Berman and Arthur D. Emil, Esq., whose terms expire in
2009, and Class III directors, Leonard A. Oppenheim, and David S. Tierney,
MD,
whose terms expire in 2008 and, if re-elected at the Annual Meeting, in 2011.
At
the
Annual Meeting, the Stockholders will elect two directors to serve as Class
III
directors. Each of the Class III directors who is elected at the Annual Meeting
will serve until the Annual Meeting of Stockholders to be held in 2011, and
until such director’s successor is elected or appointed and qualifies or until
such director’s earlier resignation or removal. Unless otherwise
marked, the proxies will be voted "FOR" the election of each of the
director nominees named below. The Board of Directors believes that nominees,
Leonard A. Oppenheim and David S. Tierney, MD, will stand for election and
will,
if elected, serve as Class III directors. However, with respect to each nominee,
in the event such nominee is unable or unwilling to serve as a Class III
director at the time of the Annual Meeting, the proxies may be voted for any
substitute nominee designated by the present Board of Directors to fill such
vacancy or the Board of Directors may be reduced to no less than three members
in accordance with the Articles of Incorporation.
Our
Corporate Governance/Nominating Committee has reviewed the qualifications of
the
nominees for Class III director and has recommended such nominees for election
to the Board of Directors.
Nominees
for Director
The
following information was furnished to the Company by the nominees.
Leonard
A. Oppenheim
,
is and
has been a director since 2004, and a member of the Audit Committee since
January 2006 and Finance Committee since June 2006. Mr. Oppenheim served as
the
Chairman of the Board from June 2006 through June 18, 2007. His current term
as
a member of the Board of Directors expires in 2008, and if re-elected at the
Annual Meeting, in 2011. Mr. Oppenheim retired from business in 2001 and has
since been active as a private investor. From 1999 to 2001, Mr. Oppenheim was
a
partner in Faxon Research, a company offering independent research to
professional investors. From 1983 to 1999, Mr. Oppenheim was a principal in
the
Investment Banking and Institutional Sales division of Montgomery Securities.
Prior to that, he was a practicing attorney. Mr. Oppenheim graduated from New
York University Law School in 1976.
David
S. Tierney, MD
,
is and
has been a director since January 2007, and a member of the Executive
Compensation Committee and Corporate Governance/Nominating Committee since
June
2007. His current term as a member of the Board of Directors expires in 2008,
and if re-elected at the Annual Meeting, in 2011. From August 2000 to April
2007, Dr. Tierney served as President and Chief Executive Officer of Valera
Pharmaceuticals, Inc. (Nasdaq:VLRX). Prior to joining Valera, Dr. Tierney was
President of Biovail Technologies, a division of Biovail Corporation. While
there, Dr. Tierney had responsibility for all of Biovail’s research and
development, regulatory and clinical activities. Prior to Biovail, he spent
three years at Roberts Pharmaceutical Corporation as Senior Vice President
of
Drug Development with responsibility for all research and development
activities, and overall responsibility for drug development, medical affairs,
worldwide regulatory affairs and chemical process development, as well as being
part of the executive management team. Prior to joining Roberts, Dr. Tierney
spent eight years at Elan Corporation in a variety of management positions.
Dr.
Tierney received his medical degree from the Royal College of Surgeons in
Dublin, Ireland and was subsequently trained in internal medicine. He currently
serves on the Board of Directors of Catalyst Pharmaceutical Partners, Inc
(Nasdaq: CPRX) and Bioject Medical Technologies Inc., (Nasdaq:
BJCT).
Required
Vote and Recommendation of Board of Directors
Under
Nevada law, where NexMed is incorporated, shares of Common Stock as to which
there is an abstention or broker non-vote shall be deemed to be present at
the
meeting for purposes of determining a quorum. However, because pursuant
to Nevada law, the nominees for the election of directors must be
elected by a plurality of the votes cast at the election, abstentions and broker
non-votes will have no effect on the outcome of this vote.
THE
BOARD RECOMMENDS A VOTE
FOR
THE ELECTION
OF
THE NOMINEES NAMED ABOVE.
DIRECTORS
Set
forth
below is certain information as of the Record Date regarding our
directors.
Name
|
|
Age
|
|
Title
|
|
|
|
|
|
Richard
J. Berman
|
|
65
|
|
Chairman
of the Board of Directors
|
|
|
|
|
|
Arthur
D. Emil, Esq.
|
|
83
|
|
Director
|
|
|
|
|
|
Vivian
H. Liu
|
|
46
|
|
Director,
President & Chief Executive Officer
|
|
|
|
|
|
Leonard
A. Oppenheim
|
|
61
|
|
Director
|
|
|
|
|
|
David
S. Tierney, MD
|
|
44
|
|
Director
|
|
|
|
|
|
Martin
R. Wade, III
|
|
58
|
|
Director
|
Biographical
information concerning each of the director nominees is set forth above under
the caption “Proposal No. 1 – Election of Directors.” Biographical
information concerning the remaining directors of the Company is set forth
below.
Richard
J. Berman
has
served on the Board of Directors since June 2002, as Chairman of the Board
since
June 2007, and on the Finance Committee since June 2002. From January 2006
to
June 2007, Mr. Berman served as our President and Chief Executive Officer.
He
also served as a member of the Audit Committee, Executive Compensation
Committee, and Corporate Governance/Nominating Committee of the Board of
Directors between June 2002 and January 2006. Mr. Berman currently serves as
Chairman of National Investment Managers, a public company in pension
administration and investment management (OTC: NIVM.OB); Chairman of Fortress
Technology Systems (homeland security), and Chairman of Morlex, Inc. (internet)
(OTC: MORX.OB). Mr. Berman is a director of eight public companies: NexMed,
Inc., Morlex, Inc., National Investment Managers, Broadcaster, Inc. (OTC:
BCSR.OB), Easylink Services International, Inc. (Nasdaq: ESIC), (OTC: NIVM.OB),
Advaxis, Inc. (OTC: ADXS.OB), NeoStem, Inc (ASE: NBS), and Fortress Technology
Systems (listed on the Frankfurt Exchange). From 1998-2000, he was employed
by
Internet Commerce Corporation (now Easylink Services International, Inc.) as
Chairman and CEO. Previously, Mr. Berman worked at Goldman Sachs; was Senior
Vice President of Bankers Trust Company, where he started the M&A and
Leveraged Buyout Departments; created the largest battery company in the world
by merging Prestolite, General Battery and Exide to form Exide Technologies
(NASDAQ: XIDE); helped create what is now Soho (NYC) by developing five
buildings; and advised on over $4 billion of M&A transactions. He is a past
Director of the Stern School of Business of NYU where he obtained his BS and
MBA. He also has U.S. and foreign law degrees from Boston College and The Hague
Academy of International Law, respectively.
Arthur
D. Emil, Esq.,
is and
has been a director and a member of the Audit Committee, Executive Compensation
Committee and the Corporate Governance/Nominating Committee of the Board of
Directors since June 2003. Mr. Emil has been a practicing attorney in New York
City for over forty years, including with Kramer Levin Naftalis & Frankel
from 1994 to 2002 and with Cohen Tauber Spievack & Wagner from 2003 to
present. Mr. Emil is a principal owner and chairman of Night Sky Holdings LLC,
a
company which owns several restaurants now operating in the New York area,
which
included Windows on the World, and operated the Rainbow Room from 1986 until
December 1998. Mr. Emil is the founding principal and shareholder of two real
estate development firms with commercial, residential and mixed-use properties
in Connecticut, New York and Ohio. Mr. Emil has served as trustee for various
non-profit organizations including The American Federation of Arts and the
Montefiore Medical Center. Mr. Emil received his LLB from Columbia University.
Mr. Emil serves on the Board of Directors of
National
Investment Managers
(OTC:
NIVM.OB)
.
Vivian
H. Liu
,
is, and
has been a director and President and Chief Executive Officer of the Company
since June 2007, and Secretary since 1995. Ms. Liu served as our Vice President
of Corporate Affairs from September 1995 until December 2005, Acting Chief
Executive Officer from December 2005 until January 2006, Executive Vice
President and Chief Operating Officer from January 2006 to June 2007, Chief
Financial Officer from January 2004 until December 2005, Acting Chief Financial
Officer from 1999 to January 2004 and Treasurer from September 1995 through
December 2005. In 1994, while we were in a transition period, Ms. Liu served
as
Chief Executive Officer. From 1985 to 1994, Ms. Liu was a business and
investment adviser to the government of Quebec and numerous Canadian companies
with respect to product distribution, technology transfer and investment issues.
Ms. Liu received her MPA in International Finance from the University of
Southern California and her BA from the University of California,
Berkeley.
Martin
R. Wade III
is, and
has been a director and a member of the Audit Committee, Executive Compensation
Committee, and Finance Committee of the Board of Directors since June 2003,
and
a member of the Corporate Governance/Nominating Committee since January
2004. His current term as a member of the Board of Directors expires in
2010. Mr. Wade is the Chief Executive Officer of Broadcaster, Inc.
(BCSR.OB), an internet entertainment firm, and since 2000, has also served
as
the Chief Executive Officer of Bengal Capital Partners, LLC, a merger and
acquisition firm. From 2000 to 2001, Mr. Wade was director and Chief
Executive Officer of Digital Creative Development Corp. From 1998 to 2000,
Mr. Wade was Managing Director of Prudential Securities Inc. From 1975 to
1998, Mr. Wade served in various executive positions at Salomon Brothers Inc.,
Bankers Trust Company, Lehman Brothers and Price Waterhouse Company. Mr.
Wade serves on the Boards of Directors of several companies, including Alliance
One International (NYSE: AOI) and BCSR. Mr. Wade holds an MBA from the
University of Wyoming.
There
are
no family relationships among the directors or executive officers of the
Company.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth information with respect to the beneficial ownership,
as of the Record Date, of Common Stock by (a) each person known by management
to
be the beneficial owner of more than 5% of our outstanding voting securities,
(b) our directors and executive officers, individually, and (c) our directors
and executive officers as a group as of March 31, 2008.
Name, Position and Address of Beneficial Owner (1)
|
|
Number of Shares Beneficially Owned (2)
|
|
Percent of Class
(%)
|
|
|
|
|
|
|
|
Vivian
H. Liu
President
& Chief Executive Officer (3)
|
|
|
1,945,284
|
|
|
2.32
|
%
|
|
|
|
|
|
|
|
|
Hemanshu
Pandya
Vice
President & Chief Operating Officer
|
|
|
300,000
|
|
|
*
|
|
|
|
|
|
|
|
|
|
Mark
Westgate (4)
Vice
President & Chief Financial Officer
|
|
|
331,591
|
|
|
*
|
|
|
|
|
|
|
|
|
|
Richard
J. Berman
Chairman
of the Board (5)
|
|
|
1,320,781
|
|
|
1.57
|
%
|
|
|
|
|
|
|
|
|
Arthur
D. Emil, Esq.
Director
(6)
|
|
|
387,173
|
|
|
*
|
|
|
|
|
|
|
|
|
|
Leonard
A. Oppenheim, Esq.
Director
(7)
|
|
|
783,950
|
|
|
*
|
|
|
|
|
|
|
|
|
|
David
S. Tierney, MD
Director
|
|
|
133,432
|
|
|
*
|
|
|
|
|
|
|
|
|
|
Martin
R. Wade, III
Director
(8)
|
|
|
224,548
|
|
|
*
|
|
|
|
|
|
|
|
|
|
Southpoint
Capital (9)
c/o
Southpoint Capital Advisors LLC
623
Fifth Avenue, Suite 2503
New
York, NY 10022
|
|
|
14,041,002
|
|
|
16.11
|
%
|
|
|
|
|
|
|
|
|
FMR
Corp (10)
82
Devonshire Street
Boston,
MA 02109
|
|
|
12,427,739
|
|
|
14.95
|
%
|
|
|
|
|
|
|
|
|
Jacob
May (11)
4525
Harding Road
Nashville,
TN 37205
|
|
|
5,599,325
|
|
|
6.73
|
%
|
|
|
|
|
|
|
|
|
Loeb
Partners Corporation (12)
61
Broadway
New
York, NY 10006
|
|
|
6,081,369
|
|
|
7.28
|
%
|
|
|
|
|
|
|
|
|
All
Executive Officers and Directors as a Group (eight persons) (13)
(14)
|
|
|
5,426,759
|
|
|
6.30
|
%
|
*
less
than 1%
1)
The
address for each of the executive officers and directors of the Company
is 89
Twin Rivers Drive, East Windsor, New Jersey 08520.
2)
Except
as
otherwise indicated herein, all shares are solely and directly owned, with
sole
voting and dispositive power.
3)
Includes
544,284 shares issuable upon exercise of stock options exercisable within 60
days of the Record Date.
4)
Includes
177,273 shares issuable upon exercise of stock options exercisable within 60
days of the Record Date.
5)
Includes
1,150,000 shares issuable upon exercise of stock options exercisable within
60
days of the Record Date.
6)
Includes
120,000 shares issuable upon exercise of stock options exercisable within 60
days of the Record Date.
7)
Includes
500,000 shares issuable upon exercise of stock options exercisable within 60
days of the Record Date.
8)
Includes
100,000 shares issuable upon the exercise of stock options exercisable within
60
days of the Record Date.
9)
Except
for percentage information, this information is based upon a Schedule 13F filed
with the Securities and Exchange Commission on 12/31/07.
10)
Except
for percentage information, this information is based upon a Schedule 13G filed
with the Securities and Exchange Commission on 12/21/07.
11)
Except
for percentage information, this information is based upon a Schedule 13F filed
with the Securities and Exchange Commission on 12/31/07.
12)
Except
for percentage information, this information is based upon a Schedule 13F filed
with the Securities and Exchange Commission on 12/31/07.
13)
Includes
2,591,557 shares issuable upon exercise of stock options exercisable within
60
days of the Record Date.
14)
No
shares
owned by any of our officers and directors were pledged as
security.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934, as amended, (the Exchange Act)
requires our executive officers, directors and persons who beneficially own
greater than 10% of a registered class of its equity securities to file certain
reports with the Securities and Exchange Commission with respect to ownership
and changes in ownership of the Common Stock and our other equity securities.
Based
solely on its review of the copies of such reports furnished to us and written
representations that no other reports were required, our officers, directors
and
greater than ten percent stockholders complied with these Section 16(a) filing
requirements with respect to the Common Stock during the fiscal year ended
December 31, 2007 except for the following which were not filed in a timely
manner at the time of issuance: Form 4 for Richard Berman, Martin Wade, David
Tierney, Arthur Emil and Leonard Oppenheim for 10,227 shares received in
December 2007 for each director’s fourth quarter 2007 compensation. The Form 4’s
were subsequently filed on February 28, 2008. Additionally, Form 4 for Vivian
Liu and Mark Westgate for 100,000 and 80,000 stock options, respectively,
awarded in August 2006 were not filed at the time of the awards. The Form 4’s
were subsequently filed on April 10, 2008.
DIRECTOR
COMPENSATION
In
2001,
the Board of Directors adopted a stock option and cash compensation package
for
its non-employee directors. Upon joining the Board, each new non-employee
director receives a stock option and/or restricted stock package issued pursuant
to the NexMed, Inc. Recognition and Retention Stock Incentive Plan, (the
Recognition Plan) which expired in 2006, or the NexMed, Inc. 2006 Stock
Incentive Plan (the 2006 Plan) which generally vests over a period of several
years from the date of grant based on continuous and uninterrupted service
to
NexMed. Prior to 2007, the Company granted each director a stock option grant
equal to 20,000 options, vesting immediately, upon commencement of their initial
term. Additionally, upon commencement of each three year term, each director
received an option to purchase 60,000 shares of common stock which vest equally
on the first, second and third anniversaries of the date of the grant. This
approach was designed to align the interests of the directors with those of
the
Stockholders over the long-term since the full benefits of the stock option
compensation package cannot be realized unless stock price appreciation occurs
over a number of years.
Beginning
in 2007, the Board of Directors modified the stock and cash compensation package
for its non-employee directors such that each non-employee director receives
a
grant of restricted stock rather than stock options. Each non-employee director
receives a stock grant equal to 10,000 shares of Common Stock, vesting
immediately, upon commencement of his initial term. Additionally, upon
commencement of his initial term, each director receives a restricted stock
grant of 10,000 shares for each year of his term with 10,000 shares vesting
on
the date of each annual stockholder’s meeting during his term. Dr. David
Tierney, who was appointed in 2007, is the only director who has received such
grant of restricted stock. All other directors were compensated with stock
option grants as discussed in the previous paragraph. Each non-employee director
also receives compensation in shares of our common stock worth $3,000 per month
which during 2007, was calculated based on
the
average of the closing price of our common stock over five consecutive trading
days, commencing on January 2, 2007 ($0.88) (the Price)
.
The
number of shares is calculated based on the amount of cash the Director would
have received for service on the Board, or $3,000 per month divided by the
Price.
As
such,
each non-employee director received 3,409 shares per month in 2007, issued
quarterly. In addition, each non-employee director who served as the Chairman
of
a committee of the Board of Directors received 5,000 shares in September 2007
for his service during 2007.
Additionally,
in 2007, the Board established a Scientific Advisory Board (SAB) and appointed
Dr. David S. Tierney to serve as the Chairman of the SAB. The Board approved
a
stock grant of 20,000 shares of the Company’s Common Stock to Dr. David S.
Tierney, pursuant to the 2006 Plan for services rendered.
In
2006,
the Board approved two stock option grants to Leonard A. Oppenheim, Esq. The
first grant to purchase 200,000 shares of our common stock at $1.05 per share
pursuant to the Recognition Plan was awarded in March 2006 upon Mr. Oppenheim’s
election as Lead Director. This grant vested in two equal installments on March
7, 2006 and June 5, 2006. The second grant to purchase 200,000 shares of our
common stock at $0.67 per share pursuant to the 2006 Plan was awarded in June
2006 upon Mr. Oppenheim’s election as Chairman of the Board. This grant vested
in four equal installments at the end of each calendar quarter beginning with
September 30, 2006.
Total
non-employee director compensation for 2007 was as follows:
NON-EMPLOYEE
DIRECTOR COMPENSATION FOR 2007
Name
(10)
|
|
Stock
Awards ($)
(1)
|
|
|
Option
Awards ($)
(1)
|
|
|
Total
($)
|
|
(a)
|
|
(c)
|
|
|
(d)
|
|
|
(h)
|
|
Richard
J. Berman
|
|
$
|
18,000
|
(2)
|
|
|
—
|
(11)
|
|
$
|
18,000
|
|
Arthur
D. Emil, Esq.
|
|
$
|
49,000
|
(9)
|
|
$
|
50,302
|
(3)
|
|
$
|
99,302
|
|
Leonard
A. Oppenheim
|
|
$
|
69,000
|
(4)
|
|
$
|
63,167
|
(5)
|
|
$
|
132,167
|
|
David
S. Tierney, MD
|
|
$
|
84,666
|
(6)
|
|
|
—
|
|
|
$
|
84,666
|
|
Martin
R. Wade, III
|
|
$
|
62,000
|
(8)
|
|
$
|
10,200
|
(7)
|
|
$
|
72,200
|
|
(1)
|
Market
values for stock awards of $3,000 per month were calculated based
on
the
average of the closing price of our common stock over five consecutive
trading days, commencing on January 2, 2007
.
Market
values for other stock awards were determined by multiplying the
number of
shares granted by the closing market price of the Company’s stock on the
grant date in accordance with FAS 123R.
The
value of the option awards was calculated using the Black-Scholes
method
in accordance with FAS 123R. A discussion of the assumptions used
in
calculating the Black-Scholes values may be found in Note 2 and Note
8 of
our audited Consolidated Financial Statements contained in our Form
10-K
for the year ended December 31, 2007 which accompanies the Proxy
Statement.
|
(2)
|
This
amount includes our expense in 2007 for a grant of 3,409 shares per
month
valued at $3,000 as discussed in Note (1) above for six months of
service
as an independent director. Prior to July 2007, Mr. Berman was our
CEO and
all compensation received as CEO appears in The Summary Compensation
Table
in the Executive Compensation section of this proxy statement.
|
(3)
|
This
amount represents our expense in 2007 for 80,000 options with an
exercise
price of $4.94 per share granted to Mr.
Emil in June 2003 which vested in four equal installments in June
2004,
2005, 2006 and 2007. This amount also includes our expense for 60,000
options granted to Mr. Emil in August 2006 which vests in three equal
installments in June 2007, 2008 and 2009.
|
(4)
|
This
amount represents our expense in 2007 for 60,000 options with an
exercise
price of $1.33 per share granted to Mr. Oppenheim in June 2005 which
vests
in four equal installments in June 2006, 2007 and 2008. Also included
in
this amount is our expense for 200,000 options with an exercise price
of
$0.67 per share granted in June 2006 which vested in four equal
installments on September 30, 2006, December 31, 2006, March 31,
2007 and
June 30, 2007.
|
(5)
|
This
amount includes our expense in 2007 for a grant of 20,000 shares
issued to
Mr. Oppenheim in January 2007 as compensation for his services as
Chairman
of the Board during the first half of 2007. This amount also includes
our
expense for 10,000 shares issued to Mr. Oppenheim in September 2007
for
his services as Chairman of the Finance committee and our expense
for a
grant of 3,409 shares per month valued at $3,000 as discussed in
Note (1)
above for twelve months of service as an independent director.
|
(6)
|
This
amount includes our expense in 2007 for 30,000 shares of Common Stock
granted to Dr. Tierney in January 2007
which vests in three installments. 10,000 shares vested immediately,
10,000 shares vested on the date of the 2007 Annual Meeting and 10,000
shares will vest on the date of the 2008 Annual Meeting. This amount
also
includes our expense for 20,000 shares of common stock granted to
Dr.
Tierney in September 2007 for his services as Chairman of the SAB
and our
expense for a grant of 3,409 shares per month valued at $3,000 as
discussed in Note (1) above for twelve months of service as an independent
director.
|
(7)
|
This
amount represents our expense in 2007 for 60,000 options with an
exercise
price of $1.68 per share granted to Mr.
Wade in May 2004 which vested in three equal installments in June
2005,
2006 and 2007. As of December 31, 2007, all of these options remain
outstanding.
|
(8)
|
This
amount includes our expense in 2007 for 20,000 shares issued to Mr.
Wade
in September 2007 for his services as Chairman of the Audit and Executive
Compensation committees and our expense for a grant of 3,409 shares
per
month valued at $3,000 as discussed in Note (1) above for twelve
months of
service as an independent director.
|
(9)
|
This
amount includes our expense for 10,000 shares issued to Mr. Emil
in
September 2007 for his services as Chairman of the Nominating committee
and our expense for a grant of 3,409 shares per month valued at $3,000
as
discussed in Note (1) above for twelve months of service as an independent
director.
|
(10)
|
As
of December 31, 2007: Mr. Berman had no shares of unvested restricted
stock and 160,000 options outstanding which he had received as
compensation for his services as a Director prior to being appointed
CEO
in 2006; Mr. Emil had no shares of unvested restricted stock and
140,000
options outstanding; Mr. Oppenheim had no shares of unvested restricted
stock and 500,000 options outstanding; Dr. Tierney had no options
outstanding and 10,000 shares of unvested restricted stock outstanding
which will vest on the date of the 2008 Annual Meeting; and Mr. Wade
had
no shares of unvested restricted stock and 100,000 options outstanding.
|
(11)
|
No
expense was recorded in 2007 for options issued in previous
years.
|
THE
BOARD AND ITS COMMITTEES
Director
Independence
During
the year ended December 31, 2007,
the
Board
of Directors has determined that each of Mr. Emil, Mr. Oppenheim, Dr. Tierney
and Mr. Wade met the definition of independence under the NASDAQ Capital Market
listing requirements.
Meetings
of the Board of Directors
During
the year ended December 31, 2007, eight meetings of the Board of Directors
were
held. Each director attended at least 75% of the aggregate number of meetings
of
the Board and the Committees of the Board on which they served during the
periods that they served. While we have no policy requiring attendance, in
June
2007, three of the four independent directors were present at our 2007 Annual
Meeting of Stockholders.
Committees
of the Board
The
Board
of Directors currently has four committees: the Executive Compensation
Committee, the Audit Committee, the Finance Committee, and the Corporate
Governance/Nominating Committee.
The
Executive Compensation Committee establishes remuneration levels for our
executive officers and implements incentive programs for officers, directors
and
consultants, including the 2006 Plan and the NexMed Inc. Stock Option and
Long-Term Incentive Compensation Plan (the Stock Plan) and the Recognition
Plan
(the Stock Plan and Recognition Plan both expired in 2006). The Executive
Compensation Committee was formed on February 7, 2000 and met three times in
2007. As of December 31, 2007, the Executive Compensation Committee consisted
of
Arthur D. Emil, Dr. David S. Tierney and Martin R. Wade, III (Chairman), none
of
whom was an employee and each of whom met the independence requirements of
NASDAQ Marketplace Rule 4200 (a)(15). There is currently no charter for our
Executive Compensation Committee. Our independent compensation consultants
as
well as executive officers and management play an important role in making
recommendations and formulating compensation plans for our employees, including
named executives. The Committee may delegate authority for day-to-day
administration and interpretation of the various compensation programs in place,
including selection of participants, determination of award levels and approval
of award documents to our officers. However, the Committee may not delegate
any
authority under those programs for matters affecting the compensation and
benefits of the executive officers. Our CEO, with input from our director of
human resources, gives the committee a performance assessment and compensation
recommendations for the named executives. Our director of human resources
engaged and works closely with our independent compensation consultants, ORC
Worldwide Compensation Consultants, who assist in evaluating our executive
compensation program and were instructed to provide additional assurance that
our program is reasonable and consistent with industry standards for companies
in our peer group. ORC Worldwide Compensation Consultants is a compensation
consulting firm which provides consulting and data services to large and
mid-sized organizations, focusing on compensation programs. We participate
in
SIRS®, a Salary Information Retrieval System, which is a comprehensive U.S.
salary survey with analytical tools and reports, whereby we select approximately
fifty pharmaceutical companies with which we share salary data information
on an
annual basis. This process enables us to benchmark our job functions and job
levels within our specific industry sector, obtain competitive salary data,
and
maintain a competitive salary structure. The recommendations of our CEO and
director of human resources are then considered by the Committee in determining
the total compensation packages for named executives.
The
Audit
Committee periodically meets with our financial and accounting management and
independent auditors and selects our independent auditors, reviews with the
independent auditors the scope and results of the audit engagement, approves
professional services provided by the independent auditors, reviews the
independence of the independent auditors and reviews the adequacy of the
internal accounting controls. The Audit Committee was formed on February 7,
2000
and acts under a written charter first adopted and approved by the Board on
the
same date, and subsequently amended and approved on May 7, 2001, October 29,
2002 and May 24, 2004. A copy of the Amended Audit Committee charter is posted
on the Company’s website at www.nexmed.com. The Audit Committee met five times
in 2007, and as of December 31, 2007, consisted of Arthur D. Emil, Leonard
A.
Oppenheim and Martin R. Wade, III (Chairman), none of whom was an employee
and
each of whom met the independence and experience requirements of Nasdaq Capital
Market listing requirements. The Board of Directors has determined that Mr.
Wade, in addition to being “independent” is an “audit committee financial
expert,” as defined in Item 407(d)(5) of the SEC’s Regulation S-K.
The
Finance Committee makes recommendations to the Board of Directors concerning
financing opportunities and instruments. The Finance Committee was formed on
June 21, 2002. The Finance Committee met one time in 2007, and consists of
Richard J. Berman, Leonard A. Oppenheim and Martin R. Wade, III.
The
Corporate Governance/Nominating Committee makes recommendations to the Board
of
Directors concerning candidates for Board vacancies. The Corporate
Governance/Nominating Committee was formed on February 7, 2000. The Corporate
Governance/Nominating Committee met one time in 2007, and as of December 31,
2007, consisted of Arthur D. Emil (Chairman), Dr. David S. Tierney and Martin
R.
Wade, III. The Corporate Governance/Nominating Committee acts under a written
charter, which is available on our website at
www.nexmed.com
.
As of
December 31, 2007, each of the members of the Committee met the independence
requirements of NASDAQ Capital Market listing standards. We have not paid any
third party a fee to assist in the process of identifying and evaluating
candidates for director. We have not received any nominees for director from
a
Stockholder or Stockholder group that owns more than 5% of our voting
stock.
The
Company’s Corporate Governance/Nominating Committee may consider nominees for
director submitted in writing to the Chairman of the Committee, which are
submitted by our executive officers, current directors, search firms engaged
by
the Committee, and by others in its discretion and, in the circumstances
provided below, shall consider nominees for director proposed by a Stockholder.
Information with respect to the proposed nominee shall be provided in writing
to
the Chairman of the Corporate Governance/Nominating Committee at NexMed, Inc.,
89 Twin Rivers Drive, East Windsor, NJ 08520, at least 120 days prior to the
anniversary of the date of the prior year’s Annual Meeting proxy statement. A
submitting Stockholder shall provide evidence that he, she or it has
beneficially owned at least 5% of our Common Stock for at least one year and
shall provide the name of the nominee, and such other information with respect
to the nominee as would be required under the rules and regulations of the
Securities and Exchange Commission to be included in our Proxy Statement if
such
proposed nominee were to be included therein. In addition, the Stockholder
shall
include a statement to the effect that the proposed nominee has no direct or
indirect business conflict of interest with us, and otherwise meets our
standards set forth below.
Any
other
Stockholder communications intended for our management or the Board of Directors
shall be submitted in writing to the Chairman of the Corporate
Governance/Nominating Committee who shall determine, in his discretion,
considering the identity of the submitting Stockholder and the materiality
and
appropriateness of the communication, whether, and to whom within our company,
to forward the communication.
The
Corporate Governance/Nominating Committee generally identifies potential
candidates for director by seeking referrals from our management and members
of
the Board of Directors and their various business contacts. There are currently
no specific, minimum or absolute criteria for Board membership. Candidates
are
evaluated based upon factors such as independence, knowledge, judgment,
integrity, character, leadership, skills, education, experience, financial
literacy, standing in the community and ability to foster a diversity of
backgrounds and views and to complement the Board’s existing strengths. There
are no differences in the manner in which the Committee will evaluate nominees
for director based on whether the nominee is recommended by a Stockholder.
Review
and Approval of Transactions with Related Persons
The
Board
has adopted a written policy and procedures for review, approval and monitoring
of transactions involving our company and “related persons” (directors and
executive officers or their immediate family members, or Stockholders owning
5%
or greater of the company’s outstanding stock). The policy covers any related
person transaction that meets the minimum threshold for disclosure in the proxy
statement under the relevant SEC rules (generally transactions involving amounts
exceeding $120,000 in which a related person has a direct or indirect material
interest). Related person transactions must be approved by the Board or by
the
Audit Committee of the Board consisting solely of independent directors, which
will approve the transaction if they determine that it is in our best interests.
The Board or Audit Committee will periodically monitor the transaction to ensure
that there are no changes that would render it advisable for us to amend or
terminate the transaction.
There
were no related person transactions entered into in 2007 and there are no
related person arrangements in place from previous years.
EXECUTIVE
COMPENSATION
Compensation
Discussion & Analysis
Introduction
The
objective of our executive compensation program is to link corporate performance
and the total return to Stockholders over the long-term. More specifically,
the
compensation program is designed to reward the achievement of corporate goals
which are set at the beginning of each fiscal year and are communicated to
all
employees by the CEO, retain the executive employees over long-term periods,
and
use performance-based equity awards tied to the corporate goals in order to
retain and reward the executive employees through the achievement of such goals.
In 2007, the overarching goals were to maintain a low cash “burn rate”, to
continue to advance our NexACT
â
-based
products through our own targeted development activities, and to secure
strategic collaborations and partnerships. Tied to these broad goals were the
following specific initiatives: Novartis alliance management, prepare and
successfully file the New Drug Application in the U.S. (“NDA”), Marketing
Authorization Application in Europe (“MAA”), and New Drug Submission in Canada
(“NDS”) for our topical erectile dysfunction treatment (“ED Product”), develop
two new programs up through the Investigational New Drug Application (“IND”)
stage, continue business development efforts for our products under development
and our NexACT
â
technology , prepare the East Windsor facility for a Pre-Approval Inspection
by
the FDA, maintain compliance with SEC requirements for a public company,
continue to control corporate expenditures by maintaining a monthly cash burn
rate of approximately $500,000 per month, and improve the NexACT
â
permeation enhancer technology.
The
elements of our executive compensation during the last fiscal year for our
executives under employment agreements consisted of base salary, an annual
cash
bonus, and the granting of performance-based and incentive stock and stock
options.
Base
Salaries
The
Executive Compensation Committee approves the salaries of our executives and
exercises oversight over the compensation of the executives. In establishing
2007 salary levels for our named executives (each of which was set forth in
the
employment agreements as described below), the Executive Compensation Committee
placed the most emphasis on retaining the current executive officers and on
recruiting an external executive candidate in order to advance our current
products under development. In addition, competitive pharmaceutical company
market data for these three positions was obtained from ORC Worldwide
Compensation Consultants and was used as a reference point for the salaries.
Bonuses
Cash
bonuses are awarded to our named executives based upon a subjective evaluation
by the Executive Compensation Committee, with recommendations from the CEO,
based on an assessment of the performance of the executives during the year.
In
assessing the performance of the executives, the CEO and the Executive
Compensation Committee prioritize the importance of each of the corporate goals,
assess the individual contributions made by each of the executives, and
determine overall progress achieved. As outlined in the introduction to the
“Compensation Discussion & Analysis” section, the CEO and Board of Directors
determine our corporate goals annually at the onset of the year upon approval
of
the annual budget. Bonuses paid to the named executives were intended to reward
their performance towards achieving the corporate goals for 2007. The Executive
Compensation Committee determined that six of the eight corporate goals for
2007
were achieved. The two goals that were not met were developing two new programs
up through the IND stage and improving NexACT
â
permeation enhancer technology. The Committee nevertheless decided to award
bonuses at the maximum rate as stated in the named executives’ employment
agreements based upon three factors: the overall importance of the six goals
achieved in 2007, a lack of resources to accomplish the two unmet goals, and
the
improved market capitalization of the Company. The six goals that were achieved
were deemed to be of a higher priority than the two that were not, with major
importance being placed upon the top four goals: filing the NDA for the ED
Product, continuing business development efforts by signing Warner Chilcott
as a
U.S. marketing partner for the ED Product, successfully managing the Novartis
alliance in 2007 such that the Phase III trials were successfully initiated,
and
maintaining the cash “burn rate.” Secondly, while not a stated goal at the
outset of the fiscal year, the fact that the Company’s market capitalization
doubled in 2007 was viewed by the Committee as a significant accomplishment
which justified the maximum bonus compensation.
Stock
and Stock Options
Under
the
Stock Plan, which was adopted by the Company in December 1996 and expired in
December 2006, and the 2006 Plan which was adopted on March 7, 2006, the
Company’s employees, including executives, are eligible to receive stock
options, stock appreciation rights, restricted stock, and other stock based
awards. The Executive Compensation Committee, with input from management, is
responsible for approving stock and stock option grants to the Company’s
employees. In determining the size and type of awards, the nature of the
position held as well as individual contributions of the employees toward
achieving our corporate goals for the year and the need to retain key employees
through the completion of critical projects over time were taken into
consideration.
Stock
options and restricted stock awarded under the Stock Plan and the 2006 Plan,
generally vest evenly over a period of three years from the date of grant.
Our
10-year options, granted at the market price on the date of the grant, help
align the interests of the executive officers with those of the Stockholders
over the long term since the full benefits of the compensation package cannot
be
realized unless stock price appreciation occurs over a number of years. In
addition, the options and restricted stock awards help to retain key employees
because they typically cannot be fully exercised until the end of the three
year
vesting period and, if not exercised, are forfeited if the employee terminates
employment with the company. Performance-based stock and stock option awards
vest upon the achievement of specific corporate goals. This approach helps
to
focus employees on specific corporate goals and retain employees who are
integral in achieving such goals.
Compensation
of Chief Executive Officer
Effective
on June 18, 2007, we entered into a three-year employment agreement with Ms.
Liu, pursuant to which she will serve as our President and Chief Executive
Officer. During her employment, Ms. Liu will receive an annual base salary
of at
least $300,000, and is eligible to earn an annual bonus up to 50% of her annual
base salary based upon the achievement by the Company of objective performance
measures established and determined at the beginning of each fiscal year by
the
Board of Directors or the Executive Compensation Committee, in consultation
with
Ms. Liu.
Ms.
Liu’s
agreement provides for grants of stock under the 2006 Plan. The Executive
Compensation Committee determined, based on their analysis of competitive market
data compiled by the director of human resources, that our CEO should have
a
total equity compensation package such that she would achieve an ownership
of
approximately 2% of our outstanding common stock taking into account options
and
restricted stock already held by her at such time. Therefore upon Ms. Liu’s
acceptance of the position as CEO, she was awarded a restricted stock grant
of a
total of 850,000 shares. 100,000 shares vested immediately with the remaining
750,000 shares vesting in three equal installments of 250,000 shares on each
June 18, 2008, 2009 and 2010.
Prior
to
Ms. Liu’s appointment to CEO, she was awarded a restricted stock grant of
150,000 shares in January 2007. The award vests in three equal installments
of
50,000 shares on each December 31, 2007, 2008 and 2009. This award was intended
to retain Ms. Liu in her position as COO while the Board made a decision as
to
whether the Company would recruit an external candidate for either the CEO
or
the COO position in 2007. Additionally, this award was to recognize the progress
made by the Company in 2006, to acknowledge Ms. Liu’s contributions towards that
progress, and to remain competitive with industry compensation standards.
Additionally
,
in
2006
the
Board
approved performance-based stock option grants to all employees, including
Ms.
Liu, which vest in two equal installments upon the filing of the NDA for our
ED
Product and upon the FDA’s acceptance of the NDA for review. Ms. Liu’s option
award is to purchase 100,000 shares of our common stock at $0.81 per share,
the
market price of our common stock at the time of the grant. Our NDA was
successfully filed and accepted for review in the fourth quarter of 2007 and
these options became fully vested.
Ms
Liu
also received an award of 200,000 shares of restricted common stock in April
2006. The award vested on December 31, 2006. This stock grant was awarded as
part of a corporate retention program implemented in April and September of
2006
in order to offer all employees, including named executives, a substantial
monetary incentive to remain employed with us following the substantial lay-off
and restructuring which occurred at the end of 2005 and into 2006.
The
number of shares awarded in the above mentioned stock option and restricted
common stock grants was determined such that Ms. Liu would achieve an ownership
percentage approaching approximately 1% of our outstanding common stock as
COO.
The Executive Compensation Committee determined, based on their analysis of
competitive market data compiled by the director of human resources, that our
named executive officers, other than our CEO, should have a total equity
compensation package in order to achieve such ownership percentage.
Ms.
Liu’s
employment agreement provides that, in the event of termination of her
employment for “Cause” (as defined in the employment agreement), or death and
disability, Ms. Liu would be entitled to receive any earned but unpaid base
salary, bonus and benefits. In the event of the termination of Ms. Liu’s
employment without Cause, by Ms. Liu with “Good Reason” (as defined in the
employment agreement) or upon a change in control (as defined in the employment
agreement), Ms. Liu
would
be
entitled to receive any earned but unpaid base salary, bonus and benefits in
an
amount equal to twelve months of her annual base salary at the time of such
termination. In addition, Ms. Liu’s outstanding but unvested restricted stock
and stock options would vest immediately.
Richard
Berman was our CEO during 2007 until June 18, 2007 when Ms. Liu was appointed
CEO. After the departure of our former Chief Executive Officer in December
2005,
Richard Berman was appointed by the Board of Directors on January 12, 2006
to
serve as our Chief Executive Officer on an interim basis. We did not enter
into
any employment agreement with Mr. Berman. Mr. Berman has served on the Board
of
Directors since June 2002, and was the Lead Director until his appointment
as
our interim Chief Executive Officer. Mr. Berman was our Chief Executive Officer
until June 18, 2007. During 2007, the majority of Mr. Berman’s compensation was
equity-based. In January 2007, the Executive Compensation Committee approved
a
stock award to Mr. Berman based on the progress that we made during 2006, the
contributions made by the executive, and the fact that the executive’s total
compensation was not deemed to be comparable to industry standards. Mr. Berman
received an award of 60,000 shares of stock vesting in four equal installments
on March 31, June 30, September 30, and December 31, 2007. 30,000 of these
shares, which were to vest on September 30 and December 31, 2007, did not vest
and were cancelled when Mr. Berman ended his term as Chief Executive Officer
in
June 2007. Although Mr. Berman resigned on June 18, 2007, vesting of the shares
that were to vest on June 30, 2007 was accelerated since Mr. Berman was our
CEO
for substantially all of the second quarter. In 2006, Mr. Berman received
options to purchase 990,000 shares of our common stock which vested in three
installments through January 31, 2007, and on October 1, 2006, Mr. Berman began
to receive a consulting fee of $3,000 per month. The Executive Compensation
Committee determined that Mr. Berman should receive a monthly fee of $3,000
per
month to act as a stipend to cover any expenses incurred while serving as our
Chief Executive Officer. In addition, Mr. Berman was granted 388,571 shares
of
restricted stock in April 2006, which would vest and the restrictions would
lapse only if we completed a significant business development transaction with a
minimum valuation of $5 million and Mr. Berman remained as Chief Executive
Officer through the completion of such transaction. These shares did not vest
and were cancelled in June 2007 when Mr. Berman resigned as Chief Executive
Officer and no significant business development transaction had occurred during
his term.
Compensation
of Chief Operating Officer
The
decision was made to recruit an external candidate to replace the COO position,
which had become vacant upon the appointment of Ms. Liu as CEO in June 2007.
On
October 31, 2007, we entered into a three-year employment agreement with
Hemanshu Pandya, pursuant to which he would serve as our Vice President. During
his employment, Mr. Pandya will receive an annual base salary of at least
$225,000, and is eligible to earn an annual bonus of up to 50% of his annual
base salary based upon the achievement by the Company of objective performance
measures established and determined at the beginning of each fiscal year by
the
Board of Directors or its Executive Compensation Committee, in consultation
with
Ms. Liu and Mr. Pandya.
Mr.
Pandya’s agreement provides for grants of options to purchase shares of our
common stock under the 2006 Plan. These options are intended to be incentive
stock options to the fullest extent permitted under the Internal Revenue Code.
In October 2007, Mr. Pandya received an option award to purchase a total of
175,000 shares of our common stock at $1.43 per share, the market price of
our
common stock at the time of the grant. The award vests in three installments
of
25,000 options on October 31, 2008, 50,000 options on October 31, 2009 and
100,000 options on October 31, 2010.
Mr.
Pandya’s agreement also provides for grants of stock under the 2006 Plan. On
October 31, 2007, Mr. Pandya was awarded a restricted stock grant of 125,000
shares.
75,000
shares will vest in three equal installments of 25,000 shares each on October
31, 2008, 2009 and 2010. The remaining 50,000 shares will vest only upon the
execution of a licensing/development agreement brought to the Company by Mr.
Pandya valued at over $5 million on or before April 30, 2009.
Mr.
Pandya’s total compensation package (salary, bonus, stock options and restricted
stock) was reviewed and approved by the Executive Compensation Committee after
a
discussion with our human resources director and a review of
competitive
pharmaceutical company market data supplied by ORC Worldwide Compensation
Consultants for his position as COO. It was determined that his total
compensation package is
competitive
with industry
compensation
standards
.
Additionally,
the number of shares awarded in the above mentioned stock option grants and
restricted common stock grants was determined such that M
r
.
Pandya
would
eventually achieve an ownership percentage approaching 1% of the Company as
COO.
The Executive Compensation Committee determined, based on their analysis of
competitive market data compiled by the director of human resources, that our
named executive officers, other than our CEO, should have a total equity
compensation package in order to achieve such ownership percentage.
Mr.
Pandya’s
ownership percentage as of December 31, 2007 is approximately 0.4%.
Mr.
Pandya’s employment agreement provides that, in the event of termination of his
employment for “Cause” (as defined in the employment agreement), or death and
disability, Mr. Pandya would be entitled to receive any earned but unpaid base
salary, bonus and benefits. In the event of the termination of Mr. Pandya’s
employment without Cause, by Mr. Pandya with “Good Reason” (as defined in the
employment agreement) or upon a change in control (as defined in the employment
agreement), Mr. Pandya
would
be
entitled to receive any earned but unpaid base salary, bonus and benefits in
an
amount equal to six months of his annual base salary at the time of such
termination plus one week for every fully completed year of service, up to
one
year. In addition, Mr. Pandya’s outstanding but unvested restricted stock and
stock options would vest immediately.
Compensation
of Chief Financial Officer
On
December 15, 2005, we entered into a three-year employment agreement with Mark
Westgate, pursuant to which he would serve as our Vice President. During his
employment, Mr. Westgate was to receive an annual base salary of $160,000,
and
was to be eligible to earn an annual bonus up to 50% of his annual base salary
based upon the achievement by the Company of objective performance measures
established and determined at the beginning of each fiscal year by the Board
of
Directors or its Executive Compensation Committee in consultation with Ms.
Liu
and Mr. Westgate. On January 1, 2008, the base annual salary of Mr. Westgate
was
adjusted to $235,000 for several reasons: the progress that NexMed made during
2007, Mr. Westgate’s accomplishments during 2007, and the fact that Mr.
Westgate’s salary was not deemed to be comparable to industry standards
according to data supplied by ORC Worldwide Compensation Consultants.
Mr.
Westgate’s employment agreement provides for grants of options to purchase
shares of our common stock under the Stock Plan. These options are intended
to
be incentive stock options to the fullest extent permitted under the Internal
Revenue Code. In December 2005, Mr. Westgate received a total of 75,000 stock
options vesting in three equal installments on December 31, 2006, December
31,
2007 and December 31, 2008.
Mr.
Westgate’s employment agreement also provides for grants of Common Stock under
the 2006 Plan. In January 2007, Mr. Westgate was awarded a restricted stock
grant of 75,000 shares. The award vests in three equal installments of 25,000
shares on each December 31, 2007, 2008 and 2009. This award was intended to
retain Mr. Westgate in his position as CFO, to recognize the progress made
by
the Company in 2006, to acknowledge Mr. Westgate’s contributions towards that
progress, and to remain competitive with industry compensation standards.
Additionally,
in 2006 the Board approved performance-based stock option grants to all
employees, including Mr. Westgate, which vested in two equal installments upon
the filing of the NDA for our Topical ED Product and upon the FDA’s acceptance
of the NDA for review. Mr. Westgate’s option award was to purchase 80,000 shares
of our common stock at $0.81 per share, the market price of our common stock
at
the time of the grant. Our NDA was successfully filed and accepted for review
in
the fourth quarter of 2007 and these options became fully vested.
Mr.
Westgate also received an award of 50,000 shares of common stock in April 2006.
The award vested on December 31, 2006. This stock grant was awarded as part
of a
corporate retention program implemented in April and September of 2006 in order
to offer all employees, including named executives, a substantial monetary
incentive to remain employed with us following the substantial lay-off and
restructuring which occurred at the end of 2005 and into 2006.
The
number of shares awarded in the above mentioned stock option grants and
restricted common stock grants was determined such that Mr. Westgate would
eventually achieve an ownership percentage approaching 1% of the Company as
CFO.
The Executive Compensation Committee determined, based on their analysis of
competitive market data compiled by the director of human resources, that our
named executive officers, other than our CEO, should have a total equity
compensation package in order to achieve such ownership percentage. Mr.
Westgate’s ownership percentage as of December 31, 2007 is approximately
0.4%.
Mr.
Westgate’s employment agreement provided that, in the event of termination of
his employment for “Cause” (as defined in the employment agreement), or death
and disability, Mr. Westgate would be entitled to receive any earned but unpaid
base salary, bonus and benefits. In the event of the termination of Mr.
Westgate’s employment without Cause, by him with “Good Reason” (as defined in
the employment agreement) or upon a change in control (as defined in the
employment agreement), Mr. Westgate
would
be
entitled to receive any earned but unpaid base salary, bonus and benefits in
an
amount equal to six months of his annual base salary at the time of such
termination plus an additional week of base salary for every fully-completed
year of service, for a total salary continuation period not to exceed one year.
In addition, Mr. Westgate’s outstanding but unvested stock and stock options
would vest immediately.
Executive
Compensation Committee Report
The
Executive Compensation Committee evaluates and establishes compensation for
executive officers and is responsible for determining the recipients and the
size of awards under the 2006 Plan. The Executive Compensation Committee has
reviewed and discussed with management the Compensation Discussion and Analysis
found in this Proxy Statement. The Executive Compensation Committee is satisfied
that the Compensation Discussion and Analysis fairly and completely represents
the philosophy, intent, and actions of the Committee with regard to executive
compensation. We recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in this Proxy Statement for filing with
the
Securities and Exchange Commission.
The
Executive Compensation Committee of the Board of Directors
Arthur
D.
Emil, Esq.
David
S.
Tierney, MD
Martin
R.
Wade, III, Chairman
Summary
Compensation Table for 2007 and 2006
As
discussed above in our Compensation Discussion and Analysis, our executives
under employment agreements received base salary, bonuses, stock option awards
and stock grants in 2007 and 2006. The following table sets forth the
compensation paid by NexMed during the years ended December 31, 2007 and 2006
to
the four individuals listed who were serving as executive officers at the end
of
our last two fiscal years (collectively, the “Named Executive
Officers”):
Name
and
Principal
Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)
(2)
|
|
Stock
Awards
($)
(1)
|
|
Option
Awards
($)
(1)
|
|
All Other
Compen-
sation
($)
|
|
Total
($)
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(i)
|
|
(j)
|
|
Vivian
H.
|
|
|
2007
|
|
$
|
273,207
|
|
$
|
150,000
|
|
$
|
210,000
|
(4)
|
$
|
80,670
|
|
$
|
7,325
|
(12)
|
$
|
713,877
|
|
Liu,
CEO (3)
|
|
|
2006
|
|
$
|
200,000
|
|
$
|
125,000
|
|
$
|
124,000
|
|
$
|
71,162
|
|
$
|
7,099
|
(12)
|
$
|
520,162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
J.
|
|
|
2007
|
|
|
—
|
|
|
—
|
|
$
|
30,000
|
(6)
|
$
|
114,840
|
(5)
|
$
|
18,000
|
(7)
|
$
|
162,840
|
|
Berman,
CEO (3)
|
|
|
2006
|
|
|
—
|
|
|
—
|
|
|
—
|
|
$
|
464,309
|
(5)
|
$
|
9,000
|
(7)
|
$
|
473,309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hemanshu
Pandya,
|
|
|
2007
|
|
$
|
32,903
|
(8)
|
$
|
18,500
|
(8)
|
$
|
8,696
|
(9)
|
$
|
15,808
|
(10)
|
$
|
41
|
(13)
|
$
|
75,907
|
|
COO
|
|
|
2006
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
Westgate,
|
|
|
2007
|
|
$
|
198,681
|
|
$
|
100,000
|
|
$
|
25,000
|
(11)
|
$
|
49,446
|
|
$
|
6,425
|
(14)
|
$
|
373,127
|
|
C
FO
|
|
|
2006
|
|
$
|
160,000
|
|
$
|
80,000
|
|
$
|
31,000
|
|
$
|
41,923
|
|
$
|
6,995
|
(14)
|
$
|
312,923
|
|
|
1.
|
Market
values for stock awards were determined by multiplying the number
of
shares granted by the closing market price of the Company’s stock on the
grant date in accordance with FAS 123R. Stock-based compensation
under FAS
123R is recognized as an expense on a straight-line basis over the
required service period of the entire award (generally the vesting
period
of the award). The value of stock option awards was calculated using
the
Black-Scholes method in accordance with FAS 123R. A discussion of
the
assumptions used in calculating the Black-Scholes values may be found
in
Note 2 and Note 8 of our audited Consolidated Financial Statements
contained in our Form 10-K for the year ended December 31, 2007 which
accompanies this Proxy Statement.
|
|
2.
|
2007
Bonuses were accrued in 2007 and paid on March 14, 2008.
|
|
3.
|
Ms.
Liu served as COO from January 2006 through June 18, 2007 at which
time
she was appointed CEO. Mr. Berman served as CEO from January 2006
through
June 18, 2007.
|
|
4.
|
Ms.
Liu was granted 850,000 shares of restricted stock when she was appointed
CEO in June 2007. The shares vest in four installments, the first
installment of 100,000 shares vested on October 3, 2007 upon the
signing
of her employement agreement with the remaining 750,000 shares vesting
in
three equal installments of 250,000 shares on June 18, 2008, 2009
and
2010, respectively. Ms. Liu also received a grant of 150,000 shares
of
restricted stock in January 2007 as compensation for her services
as COO.
The shares vest in three equal installments of 50,000 shares on each
December 31, 2007, 2008, and 2009.
|
|
5.
|
This
amount represents our expense for 990,000 options with an exercise
price
of $0.73 per share granted to Mr. Berman as compensation for his
services
as CEO beginning in January 2006 through June 2007. The award vested
in
three installments through January
2007.
|
|
6.
|
This
amount represents our expense for a grant of 60,000 shares issued
to Mr.
Berman in January 2007 as compensation for his services as CEO during
the
first half of 2007.
The grant vested in
four
equal installments on March 31, June 30, September 30, and December
31,
2007. 30,000 of these shares, which were to vest on September 30
and
December 31, 2007, did not vest and were cancelled when Mr. Berman
ended
his term as Chief Executive Officer in June 2007. Although Mr. Berman
resigned on June 18, 2007, vesting of the shares that were to vest
on June
30, 2007 was accelerated since Mr. Berman was our CEO for substantially
all of the second quarter.
|
|
7.
|
Effective
October 1, 2006, Mr. Berman began receiving a consulting fee of $3,000
per
month.
|
|
8.
|
Mr.
Pandya’s salary and bonus for 2007 were pro-rated for 2 months of
employment in 2007.
|
|
9.
|
Mr.
Pandya was granted 125,000 shares of restricted stock.
75,000
shares will vest in three equal installments of 25,000 shares each
on
October 31, 2008, 2009 and 2010. The remaining 50,000 shares will
vest
only upon the execution of a licensing/development agreement brought
to
the Company by Mr. Pandya valued at over $5 million on or before
April 30,
2009
.
In accordance with FAS123R, compensation expense for the 50,000 shares
will be recorded when these shares vest upon the completion of the
business transaction as stated
above.
|
|
10.
|
Mr.
Pandya was granted an option to purchase a total of 175,000 shares
of our
common stock at $1.43 per share, the market price of our common stock
at
the time of the grant. The award vests in three installments of 25,000
options on October 31, 2008, 50,000 options on October 31, 2009 and
100,000 options on October 31,
2010.
|
|
11.
|
Mr.
Westgate received a grant of 75,000 shares of restricted stock in
January
2007.
The
shares vest in three equal installments of 25,000 shares on each
of
December 31, 2007, 2008, and 2009.
|
|
12.
|
This
amount includes the Company’s profit sharing contribution to the 401k plan
of $6,750 and $6,600 in 2007 and 2006, respectively and life insurance
premiums paid on behalf of the Named Executive of $575 and $499 in
2007
and 2006, respectively as part of the employee benefit plan for all
employees, whereby each employee has a Company paid life insurance
policy
in the amount of each employee’s annual salary.
|
|
13.
|
This
amount represents life insurance premiums paid on behalf of the Named
Executive for his two months of employment in 2007 as part of the
employee
benefit plan for all employees, whereby each employee has a Company
paid
life insurance policy in the amount of each employee’s annual
salary.
|
|
14.
|
This
amount includes the Company’s profit sharing contribution to the 401k plan
of $5,977 and $6,600 in 2007 and 2006, respectively and life insurance
premiums paid on behalf of the Named Executive of $448 and $395 in
2007
and 2006, respectively as part of the employee benefit plan for all
employees, whereby each employee has a Company paid life insurance
policy
in the amount of each employee’s annual
salary.
|
GRANTS
OF PLAN BASED AWARDS FOR 2007
The
compensation plans under which the grants in the following table were made
are
generally described in the Compensation Discussion and Analysis
above:
Name
(a)
|
|
Grant Date
(b)
|
|
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(i)
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(j)
|
|
Exercise or
Base Price
of Option
Awards
(k)
|
|
Grant Date
Fair Value of
Equity
Awards
(1)
(l)
|
|
Vivian
H. Liu,
|
|
|
1/24/2007
|
|
|
150,000
|
|
|
|
|
|
|
|
$
|
150,000
|
|
CEO
|
|
|
10/3/2007
|
|
|
850,000
|
|
|
|
|
|
|
|
$
|
1,360,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
J. Berman,
|
|
|
1/24/2007
|
|
|
60,000
|
|
|
|
|
|
|
|
$
|
60,000
|
|
CEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hemanshu
Pandya,
|
|
|
10/31/2007
|
|
|
|
|
|
175,000
|
|
$
|
1.43
|
|
$
|
189,700
|
|
COO
|
|
|
10/31/2007
|
|
|
125,000
|
(2)
|
|
|
|
|
|
|
$
|
178,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
Westgate,
|
|
|
1/24/2007
|
|
|
75,000
|
|
|
|
|
|
|
|
$
|
75,000
|
|
CFO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Market
values for stock awards were determined by multiplying the number
of
shares granted by the closing market price of our stock on the grant
date
in accordance with FAS 123R. Market values for option awards were
calculated using the Black-Scholes Method. A discussion
of
the
assumptions used in calculating
the
Black-Scholes values may be found in Note
2
and Note 8 of our audited Consolidated Financial Statements contained
in
our Form 10-K for the year ended December 31, 2007 that accompanies
this
Proxy Statement.
|
|
(2)
|
50,000
shares of the total grant vest and restrictions lapse only upon the
execution of a licensing/development agreement brought to the Company
by
Mr. Pandya valued at over $5 million on or before April 30, 2009.
|
OUTSTANDING
EQUITY AWARDS AT DECEMBER 31, 2007
Options
are granted at 100 percent of fair market value on the date of the grant;
they
usually vest in three equal installments over a three year period. More
discussion of our equity compensation programs can be found in the Compensation
Discussion and Analysis. There are no unexercised, unearned options under
an
equity incentive plan.
|
|
Option
Awards
|
|
Stock Awards
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Number of
Shares or
Units of
Stock That
Have Not
Vested (#)
|
|
|
Market
Value of
Shares or
Units of
Stock
That Have
Not
Vested
($)
(1)
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested
(#)
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested
($)
(1)
|
|
(a)
|
|
(b)
|
|
(c)
|
|
|
(e)
|
|
(f)
|
|
(g)
|
|
|
(h)
|
|
(i)
|
|
(j)
|
|
Vivian
H. Liu, CEO
|
|
|
120,000
|
(3)
|
|
60,000
|
|
|
$
|
0.92
|
|
|
12/15/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
105,000
|
(4)
|
|
—
|
|
|
$
|
0.70
|
|
|
12/16/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
114,284
|
(5)
|
|
—
|
|
|
$
|
0.55
|
|
|
12/3/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,000
|
(6)
|
|
—
|
|
|
$
|
4.00
|
|
|
1/19/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(7)
|
|
—
|
|
|
$
|
2.50
|
|
|
12/14/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
(8)
|
|
|
|
|
$
|
0.81
|
|
|
8/3/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
850,000
|
(9)
|
|
$
|
1,300,000
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
J. Berman.
|
|
|
990,000
|
(10)
|
|
—
|
|
|
$
|
0.73
|
|
|
1/16/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hemanshu
Pandya,
|
|
|
—
|
|
|
175,000
|
(11)
|
|
$
|
1.43
|
|
|
10/31/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,000
|
(12)
|
|
$
|
107,250
|
|
|
50,000
|
(2)
|
$
|
71,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
Westgate,
|
|
|
50,000
|
(3)
|
|
25,000
|
|
|
$
|
0.92
|
|
|
12/15/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CFO
|
|
|
5,000
|
(13)
|
|
—
|
|
|
$
|
1.32
|
|
|
1/18/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,273
|
(5)
|
|
—
|
|
|
$
|
0.55
|
|
|
12/3/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(14)
|
|
—
|
|
|
$
|
3.25
|
|
|
3/11/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000
|
(8)
|
|
|
|
|
$
|
0.81
|
|
|
8/3/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
(15)
|
|
$
|
50,000
|
|
|
—
|
|
|
—
|
|
|
(1)
|
Market
values were determined by multiplying the number of shares granted
by the
closing market price of our common stock on the grant
date.
|
|
(2)
|
Stock
vests and restrictions lapse only upon the execution of a
licensing/development agreement brought to the Company by Mr. Pandya
valued at over $5 million on or before April 30, 2009.
|
|
(3)
|
Options
vest in three equal installments on December 31, 2006, 2007 and
2008.
|
|
(4)
|
Options
vested in three equal installments on December 31, 2003, 2004 and
2005.
|
|
(5)
|
Options
vested on July 1, 2003.
|
|
(6)
|
Options
vested in three equal installments on January 19, 2001, 2002 and
2003.
|
|
(7)
|
Options
vested on grant date of December 14,
1998.
|
|
(8)
|
Options
vested in two equal installments on the filing of the NDA for our
ED
Product in September 2007 and the acceptance of the NDA for review
by the
FDA in November 2007.
|
|
(9)
|
750,000
shares vest in three equal installments of 250,000 shares on June
18,
2008, 2009 and 2010. 100,000 shares vest in two equal installments
on
December 31, 2008 and 2009.
|
|
(10)
|
500,000
options vested on the grant date of January 16, 2006. The remaining
490,000 options vested in two equal installments on July 31, 2006
and
January 16, 2007.
|
|
(11)
|
The
option award vests in three installments of 25,000 options on October
31,
2008, 50,000 options on October 31, 2009 and 100,000 options on
October
31, 2010.
|
|
(12)
|
The
award vests in three equal installments of 25,000 shares each on
October
31, 2008, 2009 and 2010.
|
|
(13)
|
Options
vested on the grant date of January 18,
2005.
|
|
(14)
|
Options
vested in three equal installments on March 11, 2003, 2004 and
2005.
|
|
(15)
|
The
award vests in two equal installments on December 31, 2008 and
2009.
|
OPTION
EXERCISES AND STOCK VESTED FOR 2007
No
stock
options were exercised by the Named Executive Officers during 2007.
The
following table indicates restricted stock vested in 2007 for the Named
Executives:
Name and
Principal
Position
|
|
Date of
Vesting
|
|
Number
of Shares
Acquired
on
Vesting
(#)
|
|
Value
Realized on
Vesting
($)
|
|
|
|
|
|
|
|
|
|
Vivian
H. Liu, CEO
|
|
|
10/3/07
|
|
|
100,000
|
|
$
|
160,000
|
|
|
|
|
12/31/07
|
|
|
50,000
|
|
$
|
71,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
J. Berman,
|
|
|
3/31/07
|
|
|
15,000
|
|
$
|
18,600
|
|
CEO
|
|
|
6/18/07
|
|
|
15,000
|
|
$
|
28,050
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
Westgate, CFO
|
|
|
12/31/07
|
|
|
25,000
|
|
$
|
35,500
|
|
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL AT DECEMBER 31,
2007
The
table
below set forth the estimated current value of payments and benefits to each
of
the Named Executive Officers upon a change of control, a qualifying termination,
or resignation for good reason of the Named Executive Officer, in each case
as
defined within the employment agreement for the Named Executive attached
as
Exhibits 10.21, 10.22, and 10.30 to our Form 10-K for the year ended December
31, 2007 filed with the Securities and Exchange Commission on March 12, 2008.
All payments are conditioned upon and subject to the named Executive's first
executing a Confidential Separation Agreement including a general waiver
and
release (and the expiration of any associated revocation period), in such
reasonable and customary form as shall be prepared by the Company, of all
claims
the Named Executive may have against the Company, and related entities and
individuals.
The
value
of accelerated equity awards shown in the table below was calculated using
the
closing price of our common stock on December 31, 2007 ($1.42). The value
of the
options is the aggregate spreads between $1.42 and the exercise prices of
the
accelerated options; if less than $1.42 then the value of the accelerated
options is zero.
Name and
Principal
Position
|
|
Lump
Sum
Cash
Payment
(1)
|
|
Value of
accelerated
stock
options
|
|
Value of
accelerated
restricted
stock
|
|
Total ($)
|
|
|
|
|
|
|
|
|
|
|
|
Vivian
H. Liu, CEO
|
|
$
|
300,000
|
|
$
|
30,000
|
|
$
|
1,207,000
|
|
$
|
1,537,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hemanshu Pandya, COO
|
|
$
|
112,500
|
|
$
|
0
|
|
$
|
177,500
|
|
$
|
290,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
Westgate, CFO
|
|
$
|
138,461
|
|
$
|
12,500
|
|
$
|
71,000
|
|
$
|
221,961
|
|
(1)
Lump
sum cash payments are based on the amount of salary payable at December 31,
2007
per the Named Executives’ employment agreements based on service through such
date. In the case of Ms. Liu, the amount is equivalent to one year’s salary. In
the case of Mr. Pandya and Mr. Westgate, the amount is equivalent to six
month’s
salary plus an additional week of base salary for each fully-completed year
of
service (at December 31, 2007, six weeks for Mr. Westgate and zero weeks
for Mr.
Pandya).
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Arthur
D.
Emil, David S. Tierney and Martin R. Wade, III served on the Executive
Compensation Committee in 2007. As of December 31, 2007, none of these three
directors had ever been an employee of NexMed or its subsidiaries. No NexMed
executive officer served as a member of the Board of Directors or the Executive
Compensation Committee of any company whose executive officers included a
member
of our Board of Directors or Executive Compensation Committee.
AUDIT
COMMITTEE REPORT
We
have
reviewed and discussed with management NexMed’s audited consolidated financial
statements for the year ended December 31, 2007.
We
have
discussed with Amper, Politziner & Mattia, PC, NexMed’s independent
registered public accounting firm, the matters required to be discussed by
Statements on Auditing Standards No. 61, Communications with Audit
Committees, as amended.
We
have
also received the written disclosures and the letter from Amper, Politziner
& Mattia, PC required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, as amended, and have discussed
with Amper, Politziner & Mattia, PC its independence.
Based
on
the reviews and discussions referred to above, we recommended to the Board
of
Directors that the audited financial statements referred to above be included
in
NexMed’s Annual Report on Form 10-K for the year ended December 31,
2007 filed with the Securities and Exchange Commission.
The
Audit
Committee of the Board of Directors
Arthur
D.
Emil
Leonard
A. Oppenheim
Martin
R.
Wade, III, Chairman
PROPOSAL
NO. 2
APPROVAL
AND ADOPTION OF AN AMENDMENT TO THE NEXMED, INC. 2006 STOCK INCENTIVE PLAN
TO
INCREASE THE NUMBER OF SHARES AUTHORIZED THEREUNDER FROM 3,000,000 to 5,000,000
SHARES OF THE COMPANY’S COMMON STOCK
The
Company adopted the 2006 Plan on March 7, 2006. A total of 3,000,000 shares
of
Common Stock were initially reserved for issuance of awards under the 2006
Plan,
of which only 22,223 shares remained available for future grants as of the
Record Date. Our Board of Directors has amended the 2006 Plan, subject to
Stockholder approval, to increase by 2,000,000, to a total of 5,000,000, the
number of shares of Common Stock reserved for issuance of awards under the
2006
Plan.
The
Board
of Directors believes that the approval of this amendment to the 2006 Plan
is in
the best interests of the Company and its Stockholders because the availability
of an adequate number of shares reserved for issuance under the 2006 Plan and
the ability to grant stock options and make other stock-based awards under
the
2006 Plan is an important factor in attracting, motivating and retaining
qualified individuals essential to our success.
Pursuant
to the 2006 Plan, the Company may grant to eligible persons awards of incentive
stock options (“ISOs”) within the meaning of Section 422(b) of the Code,
non-incentive stock options (“NISOs”), restricted stock awards of our Common
Stock and stock appreciation rights (SAR’s”).
The
2006
Plan authorizes the Company to grant options, restricted stock awards and SARs
(together,“Awards”) for an aggregate of up to 3,000,000 shares of Common Stock.
The Board of Directors believes that stock options, restricted stock awards
and
SARs are an integral part of the compensation packages to be offered to the
Company’s executives, directors, employees and consultants and that the grant of
stock options, restricted stock awards and SARs, which align the interests
of
the recipients with those of the stockholders, is an effective method to attract
and retain employees in an industry characterized by a high level of employee
mobility and aggressive recruiting of the services of a limited number of
skilled personnel.
The
following summary of certain features of the 2006 Plan is qualified in its
entirety by reference to the full text of the 2006 Plan, which is filed as
an annex to our Definitive Proxy Statement on Schedule 14A filed with the
Securities and Exchange Commission on April 6, 2006. Attached to this Proxy
Statement as Appendix A is the Instrument of Amendment to the 2006 Plan. All
capitalized terms used but not defined herein have the respective meanings
ascribed to them in the 2006 Plan.
Nature
and Purposes of the 2006 Plan
The
purposes of the 2006 Plan are to facilitate fair, adequate and competitive
compensation and to induce certain individuals to remain in the employ of,
or to
continue to serve as directors of, or as independent consultants to, the Company
and its present and future subsidiary corporations, as defined in section 424(f)
of the Code, to attract new individuals to enter into such employment and
service and to encourage such individuals to secure or increase on reasonable
terms their stock ownership in the company. The Board believes that the granting
of Awards under the 2006 Plan will promote continuity of management, increased
incentive and personal interest in our welfare aid in securing our growth and
financial success.
Duration
and Modification
The
2006
Plan will terminate on March 6, 2016, ten years from its approval by the Board
of Directors. The Board of Directors may at any time terminate the 2006 Plan
or
make such modifications to the 2006 Plan as it may deem advisable. The Board,
however, may not, without approval by our Stockholders, increase the number
of
shares of Common Stock as to which Awards may be granted under the 2006 Plan,
change the manner of determining stock option or SAR prices, change the class
of
persons eligible to participate in the 2006 Plan or make other changes to the
2006 Plan which are not permitted without Stockholder approval under Nasdaq
rules.
Administration
of the Plan
The
2006
Plan is administered by the Executive Compensation Committee. The Executive
Compensation Committee shall have discretion to determine the participants
under
the 2006 Plan, the types, terms and conditions of the Awards, including
performance and other earn out and/or vesting contingencies, permit
transferability of Awards to an immediate family member of a participant or
a
trust established on behalf of such immediate family member, interpret the
2006
Plan’s provisions and administer the 2006 Plan in a manner that is consistent
with its purpose.
Eligibility
and Extent of Participation
The
2006
Plan provides for discretionary grants of Awards to all employees, non-employee
directors and consultants to the Company or any of its subsidiaries, or any
corporation acquired by the Company or any of its subsidiaries. As of April
11,
2007, we had 24 full time employees and five non-employee directors who would
be
eligible to participate in the 2006 Plan.
Stock
Options
Under
the
2006 Plan, the Executive Compensation Committee may grant Awards in the form
of
options to purchase shares of Common Stock. The initial per share exercise
price
for an ISO may not be less than 100% of the fair market value of a share of
Common Stock on the date of grant, or 110% of such fair market value with
respect to a participant who, at such time, owns stock representing more than
10% of the total combined voting power of the Common Stock. The initial per
share exercise price for a NISO may not be less than 100% of the fair market
value of a share of Common Stock on the date of grant.
No
option
granted pursuant to the 2006 Plan may be exercised more than 10 years after
the
date of grant, except that ISOs granted to participants who own more than 10%
of
the total combined voting power of the Common Stock at the time the ISO is
granted may not be exercised more than five years after the date of grant.
Any
option granted to a non-employee director of the Company or any of its
subsidiaries shall be 10 years in duration.
Stock
Awards
The
2006
Plan also permits the grant of Awards of shares of Common Stock. A Stock Award
is a grant of shares or of a right to receive shares of Common Stock (or their
cash equivalent or a combination of both) in the future. Each Stock Award will
be subject to conditions, restrictions and contingencies established by the
Executive Compensation Committee. In making a determination regarding the
allocation of such shares, the Executive Compensation Committee may take into
account the nature of the services rendered by the respective individuals,
their
present and potential contributions to the success of the Company and its
subsidiaries and such other factors as the Executive Compensation Committee
in
its discretion shall deem relevant.
Stock
Appreciation Rights
The
2006
Plan also permits the grant of Awards of SARs, which are grants of the right
to
receive shares of Common Stock with an aggregate fair market value equal to
the
value of the SAR. The value of a SAR with respect to one share of Common Stock
on any date is the excess of the fair market value of a share on such date
over
the Base Value of such SAR. The Base Value of any SAR with respect to one share
of Common Stock shall equal the fair market value of a share of Common Stock
on
the date the SAR is granted.
Voting
Rights
Participants
will not have any interest or voting rights in shares covered by their Awards
until the Awards shall have been exercised or restrictions shall have lapsed
and
a certificate for such shares shall have been issued.
Adjustment
of Number of Shares
In
the
event that a dividend shall be declared upon the Common Stock payable in shares
of Common Stock, the number of shares of Common Stock then subject to any Award
and the number of shares of Common Stock available for purchase or delivery
under the 2006 Plan but not yet covered by an Award shall be adjusted by adding
to each share the number of shares which would be distributable thereon if
such
shares had been outstanding on the date fixed for determining the Stockholders
entitled to receive such stock dividend. In the event that the outstanding
shares of Common Stock shall be changed into or exchanged for a different number
or kind of shares of stock or other securities of the Company or of another
corporation, whether through reorganization, recapitalization, stock split-up,
combination of shares, sale of assets, merger or consolidation in which the
Company is the surviving corporation, then there shall be substituted for each
share of Common Stock then subject to any Award, the number and kind of shares
of stock or other securities into which each outstanding share of Common Stock
shall be so changed or for which each such share shall be
exchanged.
In
the
event that there shall be any change, other than as specified directly above,
in
the number or kind of outstanding shares of Common Stock, or of any stock or
other securities into which the Common Stock shall have been changed, or for
which it shall have been exchanged, then, if the Executive Compensation
Committee shall, in its sole discretion, determine that such change equitably
requires an adjustment in the number or kind of shares then subject to any
Award
and the number or kind of shares available for issuance in accordance with
the
provisions of the 2006 Plan but not yet covered by an Award, such adjustment
shall be made by the Executive Compensation Committee and shall be effective
and
binding for all purposes of the 2006 Plan and of each Award.
Change
in Control
Except
as
otherwise determined by the Executive Compensation Committee at the time of
grant, if a Participant’s employment, or directorship, with the Company and its
Subsidiaries is terminated without cause, as defined, or the Participant
terminates his or her employment with, or terminates his or her service as
a
director of, the Company and its Subsidiaries for good reason, as defined,
whether voluntarily or otherwise, within one year after the effective date
of a
Change in Control, as defined, (i) each Option theretofore granted to a
Participant which shall not have theretofore expired or otherwise been cancelled
shall become immediately exercisable in full upon the occurrence of such
termination and shall, to the extent not theretofore exercised, terminate upon
the date of termination specified in such Option; (ii) each SAR theretofore
granted to a Participant which shall not have theretofore expired or otherwise
been cancelled shall become immediately exercisable in full upon the occurrence
of such termination and shall, to the extent not theretofore exercised,
terminate upon the date of termination specified in such SAR; and (iii) any
restrictions applicable to any shares allocated to a Participant in a Stock
Award shall forthwith terminate upon the occurrence of such
termination.
Benefits
to Named Executive Officers and Others
Since
the
incentive awards granted under the 2006 Plan are discretionary, no data can
be
provided regarding planned future grants. Therefore, the following table sets
forth information pertaining to stock options and shares of restricted stock
that were granted in 2007 pursuant to the 2006 Plan to the persons or groups
named below.
Name and Principal
Position
|
|
Total
Number
of
Options
|
|
Dollar
Value
(1)
|
|
Total Number
of Restricted
Shares
|
|
Dollar
Value (2)
|
|
|
|
|
|
|
|
|
|
|
|
Vivian
H. Liu, CEO
|
|
|
—
|
|
|
—
|
|
|
1,000,000
|
|
$
|
1,420,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hemanshu
Pandya, COO
|
|
|
175,000
|
|
$
|
0
|
|
|
125,000
|
|
$
|
177,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
Westgate, CFO
|
|
|
—
|
|
|
—
|
|
|
75,000
|
|
$
|
106,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
J. Berman, CEO
|
|
|
—
|
|
|
—
|
|
|
60,000
|
|
$
|
85,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
non-executive directors as a group
|
|
|
—
|
|
|
—
|
|
|
314,540
|
|
$
|
446,647
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
employees who are not executive officers, as a group
|
|
|
27,100
|
|
$
|
7,000
|
|
|
5,000
|
|
$
|
7,250
|
|
|
(1)
|
These
values are computed by subtracting the option exercise price for
in-the-money options from the closing price of our common stock on
December 31, 2007 ($1.42) and multiplying it by the number of in-the-money
options.
|
|
(2)
|
Value
of restricted shares is calculated by multiplying the closing price
of our
common stock at December 31, 2007 ($1.42) by the total number of
restricted shares.
|
United
States Federal Income Tax Consequences of Issuance and Exercise of Awards
The
following discussion of the U.S. Federal income tax consequences of the granting
and exercise of stock options under the 2006 Plan, and the sale of Common Stock
acquired as a result thereof, is based on an analysis of the Code as currently
in effect, existing laws, judicial decisions and administrative rulings and
regulations, all of which are subject to change. In addition to being subject
to
the Federal income tax consequences described below, an optionee may also be
subject to state and/or local income tax consequences in the jurisdiction in
which he or she works and/or resides. The tax consequences of Awards issued
to
participants outside of the U.S. may differ from the U.S. tax
consequences.
Non-Incentive
Stock Options:
No
income
will be recognized by an optionee at the time a NISO is granted. Ordinary income
will be recognized by an optionee at the time a NISO is exercised, and the
amount of such income will be equal to the excess of the fair market value
on
the exercise date of the shares issued to the optionee over the exercise price.
This ordinary income will also constitute wages subject to the withholding
of
income tax and the Company will be required to make whatever arrangements are
necessary to ensure that the amount of the tax required to be withheld is
available for payment in cash.
Capital
gain or loss on a subsequent sale or other disposition of the shares of Common
Stock acquired upon exercise of a NISO will be measured by the difference
between the amount realized on the disposition and the tax basis of such shares.
The tax basis of the shares acquired upon the exercise of the option will be
equal to the fair market value of the shares on the date of
exercise.
The
Company will be entitled to a deduction for Federal income tax purposes at
such
time and in the same amount as the amount included in ordinary income by the
optionee upon exercise of the NISO, subject to the usual rules as to
reasonableness of compensation and provided that the Company timely complies
with the applicable information reporting requirements.
Incentive
Stock Options:
In
general, neither the grant nor the exercise of an ISO will result in taxable
income to an optionee or a deduction to the Company. For purposes of the
alternative minimum tax, however, the spread on the exercise of an incentive
stock option will be considered as part of the optionee’s income.
The
sale
of the shares of Common Stock received pursuant to the exercise of an ISO which
satisfies the holding period rules will result in capital gain to an optionee
and will not result in a tax deduction to the Company. To receive incentive
stock option treatment as to the shares acquired upon exercise of an ISO, an
optionee must not dispose of such shares within two years after the option
is
granted or within one year after the exercise of the option. In addition, an
optionee generally must be an employee of the Company (or a subsidiary of the
Company) at all times between the date of grant and the date three months before
exercise of the option.
If
the
holding period rules are not satisfied, the portion of any gain recognized
on
the disposition of the shares acquired upon the exercise of an ISO that is
equal
to the lesser of (a) the fair market value of the Common Stock on the date
of
exercise minus the exercise price or (b) the amount realized on the disposition
minus the exercise price, will be treated as ordinary income, with any remaining
gain being treated as capital gain. The Company will be entitled to a deduction
equal to the amount of such ordinary income.
Restricted
Stock Awards:
Restricted
Stock Awards are generally subject to ordinary income tax at the time the
restrictions lapse, unless the participant elects to accelerate recognition
as
of the time of grant. The Company will be entitled to a corresponding Federal
income tax deduction at the time the participant recognizes ordinary
income.
Stock
Appreciation Rights:
The
participant receiving a SAR will not recognize Federal taxable income at the
time the SAR is granted. When the participant receives the appreciation inherent
in the SARs in stock, the spread between the then current market value and
the
Base Value will be taxed as ordinary income to the participant. The Company
will
be entitled to a Federal tax deduction equal to the amount of ordinary income
the participant is required to recognize as the result of exercising the
SAR.
Limits
on Deductions
:
Under
Section 162(m) of the Code, the amount of compensation paid to the chief
executive officer and the four other most highly paid executive officers of
the
Company in the year for which a deduction is claimed by the Company (including
its subsidiaries) is limited to $1,000,000 per person in any year, except that
qualified performance-based compensation will be excluded for purposes of
calculating the amount of compensation subject to this $1,000,000 limitation.
The ability of the Company to claim a deduction for compensation paid to any
other executive officer or employee of the Company (including its subsidiaries)
is not affected by this provision.
The
Company has structured the 2006 Plan so that the Company may claim a deduction
in connection with (i) the exercise of NISOs and/or SARs, and (ii) the
disposition during the the ISO holding period by an optionee of shares acquired
upon the exercise of ISOs, provided that, in each case, the requirements imposed
on qualified performance-based compensation under Section 162(m) of the Code
and
the regulations thereunder are satisfied with respect to such awards. Because
Restricted Stock Awards under the Plan are not deemed to be qualified
performance-based compensation under Section 162(m) of the Code, amounts for
which the Company may claim a deduction upon the lapse of any restrictions
on
such restricted share awards will be subject to the limitations on deductibility
under Section 162(m).
Required
Vote and Recommendation of Board of Directors
Provided
that a quorum is present at the Annual Meeting, the proposal will be approved
only if the number of votes cast in favor of the proposal exceeds the number
of
votes cast in opposition to the proposal. Therefore abstentions and broker
non-votes will have no effect on the outcome of the vote on the
proposal.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR
APPROVAL TO INCREASE THE NUMBER OF SHARES AUTHORIZED UNDER THE 2006 PLAN FROM
3,000,000 to 5,000,000 SHARES OF THE COMPANY’S COMMON
STOCK
PROPOSAL
NO. 3
RATIFICATION
OF APPOINTMENT OF INDEPENDENT
REGISTERED
PUBLIC ACCOUNTING FIRM
The
Audit
Committee has selected Amper, Politziner & Mattia, PC as our independent
registered public accounting firm to audit and report upon our consolidated
financial statements for the 2008 fiscal year and is submitting this matter
to
the Stockholders for their ratification. A representative of Amper, Politzner
& Mattia, PC is expected to be present at the Annual Meeting. The
representative will have an opportunity to make a statement and will be able
to
respond to appropriate questions.
Audit
Fees
The
aggregate fees billed or to be billed by Amper, Politziner & Mattia, PC for
2007 were $279,000 and $117,500 for 2006.
Audit-related
Fees
There
were no fees billed or to be billed by Amper, Politziner & Mattia, PC for
each of the last two fiscal years for assurance and related services that were
reasonably related to the performance of the audit or review of our financial
statements and that are not reported under “Audit Fees” above.
Tax
Fees
We
retain
the services of PricewaterhouseCoopers LLP as our tax advisor. The aggregate
fees billed by PricewaterhouseCoopers LLP in each of the last two fiscal years
for professional services rendered for tax compliance, tax advice and tax
planning were $28,000 for 2007 and $23,000 for 2006. The nature of the services
performed for these fees included the preparation of our federal and state
tax
returns.
All
Other Fees
There
were no other fees billed to us by Amper, Politznier & Mattia, PC or
PricewaterhouseCoopers LLP during 2007 and 2006.
Pre-Approval
Policies and Procedures
It
is our
policy that all services provided by Amper, Politziner & Mattia, PC shall be
pre-approved by the Audit Committee. Amper, Politziner & Mattia, PC will
provide the Audit Committee with an engagement letter during the first quarter
of each fiscal year outlining the scope of the audit services proposed to be
performed during the fiscal year and the estimated fees for such services.
Pre-approval of audit and permitted non-audit services may be given by the
Audit
Committee at any time up to one year before the commencement of such services
by
Amper, Politziner & Mattia, PC. Pre-approval must be detailed as to the
particular services to be provided. Pre-approval may be given for a category
of
services, provided that (i) the category is narrow enough and detailed enough
that management will not be called upon to make a judgment as to whether a
particular proposed service by Amper, Politziner & Mattia, PC fits within
such pre-approved category of services and (ii) the Audit Committee also
establishes a limit on the fees for such pre-approved category of services.
The
Chairman of the Audit Committee shall have, and the Audit Committee may delegate
to any other member of the Audit Committee, the authority to grant pre-approval
of permitted non-audit services to be provided by Amper, Politziner &
Mattia, PC between Audit Committee meetings; provided, however, that any such
pre-approval shall be presented to the full Audit Committee at its next
scheduled meeting. The Audit Committee pre-approved all audit and permitted
non-audit services that were provided in 2007 and 2006.
Required
Vote and Recommendation of Board of Directors
Under
Nevada law, shares as to which there is an abstention or broker non-vote shall
be deemed to be present at the meeting for purposes of determining a quorum.
However, because the proposal will be approved only if the number of votes
cast
in favor of the proposal exceeds the number of votes cast in opposition to
the
proposal, abstentions and broker non-votes will have no effect on the outcome
of
the vote on this proposal. If Stockholders do not ratify the selection of Amper,
Politziner & Mattia, PC, the Board of Directors will consider other
independent auditors.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR
RATIFICATION OF THE APPOINTMENT OFAMPER, POLITZINER & MATTIA, PC AS THE
COMPANY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING
DECEMBER 31, 2008.
STOCKHOLDER
PROPOSALS
Stockholder
proposals will be considered for inclusion in the Proxy Statement for the 2009
Annual Meeting in accordance with Rule 14a-8 under the Exchange Act, if
they are received by the Secretary of NexMed, Inc., on or before December 19,
2008.
Stockholders
who intend to present a proposal at the 2009 Annual Meeting of Stockholders
without inclusion of such proposal in our proxy materials for the 2009 Annual
Meeting are required to provide notice of such proposal to us no later than
sixty (60) days nor more than ninety (90) days prior to the one year anniversary
of the date of the 2008 Annual Meeting of Stockholders. The Company reserves
the
right to reject, rule out of order, or take other appropriate action with
respect to any proposal that does not comply with these and other applicable
requirements.
Proposals
and notices of intention to present proposals at the 2009 Annual Meeting should
be addressed to Secretary of NexMed, Inc., 89 Twin Rivers Drive, East Windsor,
New Jersey 08520.
HOUSEHOLDING
OF PROXY MATERIALS
In
some
cases only one copy of this Proxy Statement or our 2007 Annual Report is being
delivered to multiple Stockholders sharing an address
unless NexMed has received contrary instructions from one or more of
the Stockholders. We will deliver promptly, upon written or oral request, a
separate copy of this Proxy Statement or such Annual Report to
a Stockholder at a shared address to which a single copy of the document
was delivered. Stockholders sharing an address who are receiving multiple copies
of proxy statements or annual reports may also request delivery of a single
copy. To request separate or multiple delivery of these materials now or in
the
future, a stockholder may submit a written request to
Secretary
of NexMed, Inc., 89 Twin Rivers Drive, East Windsor, New Jersey
08520
or an
oral request at (609)-371-8123.
OTHER
MATTERS
The
Board
of Directors knows of no other business that will be presented to the Annual
Meeting. If any other business is properly brought before the Annual Meeting,
it
is intended that proxies in the enclosed form will be voted in respect thereof
in accordance with the judgment of the persons voting the proxies.
It
is
important that the proxies be returned promptly and that your shares be
represented. Stockholders are urged to vote. Stockholders are urged to mark,
date, execute and promptly return the accompanying proxy card in the enclosed
envelope or vote these proxies by telephone at (800) 560-1965 or by internet
at
http/www.eproxy.com/nexm/.
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By
Order of the Board of Directors,
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/s/
Mark Westgate
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Mark
Westgate
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|
Assistant
Secretary
|
April
18,
2008
East
Windsor, NJ
[FORM
OF PROXY-FRONT SIDE OF TOP PORTION]
To
Our Stockholders,
You
are cordially invited to attend our Annual Meeting of Stockholders, to be held
at the Company’s headquarters at 89 Twin Rivers Drive, East Windsor, New Jersey,
at 11:00 a.m., local time, on Monday, June 9, 2008.
[Company
logo]
The
enclosed Proxy Statement provides you with additional details about items that
will be addressed at the Annual Meeting. Following consideration of the
proposals set forth in the Proxy Statement, an overview of NexMed, Inc.’s
activities will be presented and we will be available to answer any questions
you may have. After reviewing the Proxy Statement, please sign, date and
indicate your vote for the items listed on the Proxy Card below and return
it by
mail in the enclosed, postage-paid envelope, or vote by telephone by calling
(800) 560-1965 (U.S. only), or by internet at http://www.eproxy.com/nexm/,
whether or not you plan to attend the Annual Meeting.
Thank
you for your prompt response.
Sincerely,
Mark
Westgate
Assistant
Secretary
NexMed,
Inc. 89 Twin Rivers Drive, East Windsor, New Jersey, 08520
(Continued,
and to be signed on reverse side)
[FORM
OF PROXY- REVERSE SIDE OF TOP PORTION]
NEXMED,
INC.
THIS
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The
undersigned hereby appoint(s) Vivian H. Liu and Mark Westgate, or either of
them, the lawful attorneys and proxies of the undersigned, with full power
of
substitution, for and in the name, place and stead of the undersigned to attend
the Annual Meeting of Stockholders of NexMed, Inc. to be held at the Company’s
headquarters on Monday, June 9, 2008 at 11:00 a.m., local time, and any
adjournment(s) or postponement(s) thereof, with all powers the undersigned
would
possess if personally present, and to vote the number of shares the undersigned
would be entitled to vote if personally present.
In
accordance with their discretion, said attorneys and proxies are authorized
to
vote upon such other matters or proposals not known at the time of solicitation
of this proxy which may properly come before the meeting.
This
proxy when properly executed will be voted in the manner described herein by
the
undersigned stockholder. If no instructions are given, the shares will be voted
FOR the election of the nominees for directors named below and FOR Proposals
No.
2 and No. 3. Any prior proxy is hereby revoked.
(Please
detach here)
The
Board of Directors recommends a vote FOR the election of the nominees for
directors named below and
FOR
Proposals No. 2 and No. 3
PROPOSAL
1
:
Election of Directors:
1.
|
Leonard
A. Oppenheim
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2.
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David
S. Tierney, MD
|
|
|
FOR
|
WITHHOLD
|
|
AUTHORITY
|
|
|
o
|
o
|
|
|
To
withhold authority to vote for any indicated nominee,
write the
number(s) of the nominee(s) in the box provided
to the
right.
|
o
|
PROPOSAL
2:
Approval
and Adoption of an Amendment of the NexMed, Inc. 2006 Stock Incentive
Plan
to
increase the number of shares authorized thereunder from 3,000,000 to 5,000,000
shares of
the
Company's Common Stock.
FOR
o
|
AGAINST
o
|
ABSTAIN
o
|
PROPOSAL
3:
Ratification
of the appointment of Amper, Politziner & Mattia, PC as the independent
registered
public
accounting firm of the Company.
FOR
o
|
AGAINST
o
|
ABSTAIN
o
|
Address
Change? Mark Box
¨
Indicate
changes below:
Date:___________________________________
_____________________________________________
_____________________________________________
Signature(s)
in Box
Please
sign exactly as your name appears at the left.
When
shares are held by joint tenants, both should sign.
When
signing as attorney, executor, administrator, trustee
or
corporation, please sign in full corporate name by
president
or other authorized person. If a partnership,
please
sign in partnership name by authorized person.
[FORM
OF PROXY DETACHABLE PROXY CARD]
COMPANY
#
There
are three ways to vote your Proxy
Your
telephone or Internet vote authorizes the Named Proxies to vote your shares
in
the same manner as if you marked, signed and returned your proxy
card.
VOTE
BY PHONE – TOLL FREE – 1-800-560-1965 – QUICK *** EASY ***
IMMEDIATE
|
·
|
Use
any touch-tone telephone to vote your proxy 24 hours a day, 7 days
a week,
until Noon (EST) on Friday, June 6,
2008.
|
|
·
|
Please
have your proxy card and the last four digits of your Social Security
Number or Tax Identification Number
available.
|
|
·
|
Follow
the simple instructions the Voice provides
you.
|
VOTE
BY INTERNET –
http://www.eproxy.com/nexm/
- QUICK *** EASY *** IMMEDIATE
|
·
|
Use
the Internet to vote your proxy 24 hours a day, 7 days a week, until
Noon
(EST) on Friday, June 6,
2008.
|
|
·
|
Please
have your proxy card and the last four digits of your Social Security
Number or Tax Identification Number available
to
obtain your records and create an electronic
ballot.
|
VOTE
BY MAIL
Mark,
sign and date your proxy card and return it in the postage-paid envelope we’ve
provided or return it to NexMed, Inc., c/o Shareowner
Services
SM
,
P.O. Box 64873, St-Paul, MN 55164-0873.
If
you vote by Phone or Internet, please do not mail your Proxy
Card.
Please
detach here
Appendix
A
INSTRUMENT
OF AMENDMENT TO THE
NEXMED,
INC.
2006
STOCK INCENTIVE PLAN
WHEREAS,
NexMed,
Inc. (the “Company”) maintains the NexMed, Inc. 2006 Stock Incentive Plan (the
“Plan”);
WHEREAS,
Section
17(a) of the Plan provides that the Board of Directors of the Company
(the
“Board”) may amend the Plan to increase the number of shares of common stock
of
NexMed, Inc., par value of $0.001 per share (the “Common Stock”), available for
grant or delivery under the Plan, subject to stockholder approval;
WHEREAS,
the
Board
wishes to amend the Plan to increase the number of shares of Common Stock
available for grant or delivery under the Plan from 3,000,000 shares
to
5,000,000 shares (the “Amendment”); and
WHEREAS
,
stockholder approval is being solicited at the Company’s 2008 annual meeting of
stockholders (“Annual Meeting”) on June 9, 2008 to effectuate the
Amendment.
NOW,
THEREFORE,
the
Plan
is hereby amended, effective June 9, 2008 upon stockholder approval of
the
Amendment at the Annual Meeting, and at any adjournment or postponement
thereof,
as follows:
1.
The
first
sentence of Section 2 of the Plan is amended to read in its entirety
as
follows:
“The
maximum number of shares of the common stock, par value of $0.001 per
share (the
“Common Stock”), of the Company with respect to which Options or SARs may be
granted or that may be delivered as Stock Awards to participants
(“Participants”) and their beneficiaries under the Plan shall be five million
(5,000,000).”
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NEXMED,
INC.
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By:
|
/s/
Mark Westgate
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Name:
Mark Westgate
Title:
Vice President and CFO
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Date:
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April
10, 2008
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