Full Press Release Details
This is the convening
notice for the annual general meeting of shareholders of Merus N.V. (the Company ) to be held on May 24, 2017 at 8:00 a.m. (CEST) at the Hilton Hotel Amsterdam Airport Schiphol (address: Schiphol Boulevard 701, 1118 BN
Schiphol, the Netherlands) (the AGM ).
The agenda for the AGM is as follows:
No business shall be voted on at the AGM, except such items as included in the above-mentioned
The registration date for the AGM is April 26, 2017 (the Registration Date ). Those who are shareholders of the
Company, or who otherwise have voting rights and/or meeting rights with respect to shares in the Company s capital, on the Registration Date and who are recorded as such in the Company s shareholders register or in the register
maintained by the Company s U.S. transfer agent may attend and, if relevant, vote at the AGM (the Persons with Meeting Rights ).
Persons with Meeting Rights who wish to attend the AGM, in person or represented by proxy, must notify the Company in writing of their identity and intention
to attend the AGM. This notice must be received by the Company prior to the AGM. Persons with Meeting Rights who have not complied with this requirement may be refused entry to the AGM. Persons with Meeting Rights may have themselves represented at
the AGM through the use of a written or electronically recorded proxy. Proxyholders should present a copy of their proxies upon entry to the AGM, failing which the proxyholder concerned may be refused entry to the AGM. A proxy form can be downloaded
from the Company s website (http://www.merus.nl).
EXPLANATORY NOTES TO THE AGENDA
The Company s annual report over the financial year 2016 has been made available on the Company s website (http://www.merus.nl) and
at the Company s office address.
The Company s compensation policy (the Compensation Policy ) is intended to attract, retain and motivate managing
directors with the leadership qualities, skills and experience needed to support and promote the growth and sustainable success of the Company and its business. The compensation structure for managing directors should drive strong business
performance, promote accountability, incentivize managing directors to achieve short and long-term performance targets with the objective of increasing the Company s equity value, assure that the interests of the managing directors are closely
aligned to those of the Company, its business and its stakeholders and ensure the overall market competitiveness of compensation packages for managing directors.
The implementation of the Compensation Policy has been outlined in the Company s annual report over the financial year 2016.
The Company s annual accounts over the financial year 2016 have been made available on the Company s website (http://www.merus.nl)
and at the Company s office address. It is proposed that these annual accounts be adopted.
The Company has formulated a dividend and reservation policy consistent with its current strategy. The Company s policy in this respect is
not to distribute any profits in the near future and to add any such profits to the Company s reserves for purposes such as funding the development and expansion of the Company s business, making future investments, financing capital
expenditures and enhancing the Company s liquidity position. If and when the Company does intend to distribute a dividend, such dividend may be distributed in the form of cash only or shares only, through a combination of the foregoing (cash
and shares) or through a choice dividend (cash or shares), in each case subject to applicable law.
It is proposed that KPMG Accountants N.V. ( KPMG ) be appointed and instructed to audit the Company s annual report and
annual accounts for the financial year 2017. This proposal is based on the positive outcome of a thorough selection procedure performed by the Company and the supervisory board s approval of the terms of engagement proposed by KPMG for these
services (including the scope of the audit, the materiality to be used and compensation for the audit). The main conclusion of the selection procedure is that, because of the importance of
continuity of the audit activities, it is desirable to extend KPMG s current engagement as the Company s external auditor.
It is proposed that the Company s managing directors be released from liability for the exercise of their duties during the financial year
2016. The scope of this release from liability extends to the exercise of their respective duties insofar as these are reflected in the Company s annual report or annual accounts over the financial year 2016 or in other public disclosures.
It is proposed that the Company s supervisory directors be released from liability for the exercise of their duties during the financial
year 2016. The scope of this release from liability extends to the exercise of their respective duties insofar as these are reflected in the Company s annual report or annual accounts over the financial year 2016 or in other public disclosures.
The Company s management board and supervisory board propose a change of the Company s governance structure from a two-tier model (with a management board acting under the supervision of a separate supervisory board) to a one-tier board model (with a unitary board of directors consisting
of one or more executive directors and one or more non-executive directors).
A one-tier board model is considered to be more consistent with market practice globally and specifically in the United States of America. As the Company continues to expand its operational activities in the United
States of America and with a view to the Company s intentions to conform to global practice in order to advance its ambitions and its business, the Company believes that changing its governance to a
one-tier board model would be in the Company s best interests. In addition, a one-tier board model would allow the Company to integrate the knowledge, experience
and wide range of backgrounds, education and expertise among the current managing directors and supervisory directors into one corporate body. The Company believes that this will improve the quality of its internal processes and decision-making.
In the proposed one-tier board model, the board of directors as a collective (i.e., the executive
directors and the non-executive directors) would be charged with managing the Company s affairs and would be responsible for the general course of affairs of the Company (including the Company s
strategy and financial policy). The executive directors would manage the day-to-day business and operations of the Company and would implement the Company s
strategy. The non-executive directors would focus on the supervision on the policy and functioning of the performance of the duties of all directors and the Company s general state of affairs.
Contingent upon the resolution proposed under agenda item 10 being passed and implemented through
the execution of the Deed of Amendment (as defined below), the Company s Chief Executive Officer ( CEO ), Dr. T. Logtenberg, Ph.D. would become the Company s sole executive director (continuing to be the CEO) and the
Company s supervisory directors would become non-executive directors, with Mr. M.T. Iwicki being granted the role of Chairman of the board of directors.
Upon the implementation of the proposed governance change, the board of directors shall adopt a revised set of internal regulations and
policies reflecting such change and it shall revise the Company s 2016 incentive award plan (the 2016 Plan ). The 2016 Plan as it would read immediately following the execution of the Deed of Amendment, and a redlined
version against the current 2016 Plan, have been made available on the Company s website (http://www.merus.nl).
order to effect the proposed governance change discussed under agenda item 9, it is proposed that the Company s articles of association be amended in accordance with the draft articles of association which has been made available on the
Company s website (http://www.merus.nl) and at the Company s office address. A document containing explanatory notes to the proposed changes has also been made available on the Company s website. If this resolution is passed, each
lawyer, candidate civil law notary and civil law notary of NautaDutilh N.V. shall be authorized to execute the requisite deed of amendment to the Company s articles of association (the Deed of Amendment ).
In addition, if this resolution is passed, Dr. T. Logtenberg, Ph.D. shall be designated as executive director of the Company and each
supervisory director holding office at the time of the AGM (including, subject to their reappointment as described in relation to agenda items 11 and 12, Dr. W. Berthold, Ph.D. and Dr. J.P. de Koning, Ph.D., respectively) shall be
designated as non-executive directors of the Company, in each case with effect from the execution of the Deed of Amendment.
Because the matters discussed above in relation to this agenda item are inextricably connected, they are submitted to the AGM as one single
The Company s supervisory board has made a binding nomination to reappoint Dr. Wolfgang Berthold, Ph.D. as supervisory director of
the Company for a period of two years, ending at the end of the annual general meeting of shareholders of the Company to be held in 2019. The supervisory board has considered the diversity objectives of the Company, such as nationality, age, gender,
education and work background, in the preparation of this proposal.
Dr. Berthold (70) has been a member of the Company s supervisory board since
September 2010. Dr. Berthold has held senior positions at Boehringer Ingelheim, GmbH, and BiogenIdec International, CH (now Biogen, Inc.), where he was responsible for various aspects of manufacturing operations, process development and
facilities and engineering. He has over 30 years of experience in the industry. Since 2011, Dr. Berthold has served as president of Berthold BioPharm Consulting GmbH, Switzerland, a biotechnology consulting company. From February 2000 until
March 2011, Dr. Berthold held positions of increasing seniority at BiogenIdec International, CH, including serving as its chief technology officer. During that time, Dr. Berthold also served on the executive board of BiogenIdec
International GMBH from February 2009 until his retirement in March 2011. Dr. Berthold has served also on a number of Scientific Advisory Boards of Biotech mainly for review of Manufacturing and CMC development strategies and is currently
serving on GSK BioPharm Manufacturing SAB. Dr. Berthold received his Ph.D. in 1975 in biochemistry from the University of London. Dr. Berthold does not hold ordinary shares in the Company s capital.
Dr. Berthold is being nominated for reappointment in view of his knowledge of the Company and its business, the dedication with which he
has performed his duties as a supervisory director during his previous term of office, his extensive track record as officer of other companies, as set out above, his knowledge and experience in the field of technology and the pharmaceuticals
industry and his academic credentials.
If the resolutions proposed under agenda item 10 and under this agenda item are passed, it is
proposed that Dr. Berthold be designated as non-executive director of the Company with effect from the execution of the Deed of Amendment.
The Company s supervisory board has made a binding nomination to reappoint Dr. John de Koning, Ph.D. as supervisory director of the
Company for a period of two years, ending at the end of the annual general meeting of shareholders of the Company to be held in 2019. The supervisory board has considered the diversity objectives of the Company, such as nationality, age, gender,
education and work background, in the preparation of this proposal.
Dr. De Koning (48) has been a member of the Company s
supervisory board since January 2010. Dr. De Koning has been a partner at LSP (Life Sciences Partners) since January 2006. Previously, Dr. De Koning served on the supervisory boards of BMEYE (acquired by Edwards Lifesciences), Prosensa
(acquired by BioMarin) and Skyline Diagnostics, and as a non-executive director on the boards of argenx (ARGX.BR), Pronota (now MyCartis) and Innovative Biosensors Inc. Dr. De Koning currently acts as
supervisory director or non-executive director on the boards of eTheRNA and G-Therapeutics. Dr. De Koning has a M.Sc. in medical biology from Utrecht University and
a Ph.D. in oncology from the Erasmus University Rotterdam. Dr. De Koning does not hold any ordinary shares in the Company s capital.
As with Dr. Berthold, Dr. De Koning is being nominated for reappointment in view of his
knowledge of the Company and its business, the dedication with which he has performed his duties as a supervisory director during his previous term of office, his extensive track record as officer of other companies, as set out above, his knowledge
and experience in the pharmaceuticals industry and his academic credentials.
If the resolutions proposed under agenda item 10 and under
this agenda item are passed, it is proposed that Dr. De Koning be designated as non-executive director of the Company with effect from the execution of the Deed of Amendment.
The Compensation Policy has been designed to attract, retain and motivate highly qualified individuals with the leadership qualities, skills
and experience needed to support and promote the growth and sustainable success of the Company and its business, thereby contributing to the Company s strategy to create long-term value for its stakeholders. The Company believes that the
compensation structure and package offered by the Company should provide sufficient incentives and, therefore, it is paramount that the overall market competitiveness of the Company s compensation structure and packages be regularly reviewed
and revised when appropriate.
After extensive research among the Company s reference group for compensation of directors, the
Company s supervisory board, at the recommendation of the Company s compensation committee, has decided to propose an amendment to the Compensation Policy in relation to the short term incentive compensation component.
It is proposed that, starting from the financial year 2017, the CEO be eligible for an annual bonus of up to 75% of his annual base salary for
reaching or outperforming his targets and that other members of the Company s management board be eligible for an annual bonus of 50% of their respective annual base salary for reaching or outperforming their respective targets. These bonuses
are, and shall remain, based on pre-determined quantified financial targets, non-financial/personal targets and Company milestones which are set annually for the
relevant financial year by the Company s supervisory board, and which should be assessable and supportive of the long-term strategy and development of the Company. Achievement of the targets shall be measured following the end of the relevant
financial year. The targets are, and shall remain, derived from the Company s strategic and organizational priorities and also include qualitative targets that are relevant for the responsibilities of the relevant managing director.
If the resolutions proposed under agenda item 10 and under this agenda item are passed, it is proposed that the Compensation Policy be further
amended with effect from the execution of the Deed of Amendment to reflect the Company s one-tier board model. The proposed Compensation Policy as it would read immediately following the execution of the
Deed of Amendment, and a redlined version against the current Compensation Policy, have been made available on the Company s website (http://www.merus.nl).
On May 6, 2016, the Company s general meeting of shareholders approved the Company s supervisory board member compensation
program (the SB Compensation Program ). At that time, the annual individual limits for equity awards under the SB Compensation Program (the Annual Limits ) were set at 30,000 ordinary shares