UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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| ¨ | Soliciting Material Pursuant to §240.14a-12 | |||
Infinity Pharmaceuticals, Inc. | ||||
| (Name of Registrant as Specified In Its Charter) | ||||
| (Name of Person(s) Filing Proxy Statement, if other than the Registrant) | ||||
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 Supplemental Materials in Support of
Equity Plan Proposal
May 2012 |
 Reasons
to Vote “FOR” the Equity Plan
Proposal
1.
We have a strong track record of aligning executive pay with performance.
2.
We have a broad-based, options-only equity program that optimally aligns
compensation with shareholder return. Moreover, our Citizen-Owners
have demonstrated their belief in the long-term success of our company
by holding their vested, in-the-money options.
3.
Our
burn
rate
from
options
is
well
below
ISS
thresholds,
as
well
as
the
more stringent commitment we made to our shareholders.
4.
We have been extremely successful in funding our clinical development
programs through vehicles other than dilutive equity financings.
This
success has the result of overstating the impact of options when
performing shareholder value transfer (SVT) and voting power dilution
analyses.
In
addition,
recent
appreciation
in
INFI
stock
is
not
reflected
in
ISS analyses.
5.
We do not anticipate requesting additional shares under our equity
incentive plan until at least our 2014 annual meeting.
2 |
 INFI
Aligns Pay with Performance and Shareholder Value Creation
•
“Say on Pay”
proposal received 96% support at our 2011 annual meeting
•
We
score
a
“LOW”
level
of
concern
under
each
of
ISS’s
pay
for
performance tests:
–
Relative Degree of Alignment score of 32.4 –
TSR performance ranking has outpaced
our CEO pay ranking over the combined one and three year periods
–
Multiple of Median –
our CEO pay for the last year was approximately 0.8x of our peer
group median
–
Pay/TSR Alignment score of 4.6% --
TSR performance has trended higher than our
CEO compensation
•
We
have
a
“broad
based,”
“options-only”
equity
program
–
Over 76% of option grants are to non-NEOs –
a higher percentage of grants to non-
officers than our compensation peer group
–
Options-only approach better aligns compensation to shareholder return than
does use of less dilutive, “full value”
awards
Sources: Internal analysis using ISS Compass Model, 24 February 2012; Glass Lewis
Proxy Paper, 22 April 2012 3 |
 Our
Citizen-Owners Share Our Shareholders’
Long-Term Focus
Number
Weighted-Average
Exercise Price
Outstanding stock options
7,992,966
$8.36
Vested stock options
5,037,061
$9.08
Vested and in-the-money stock options
3,624,292
$7.15
Expected term of outstanding stock options
(using internal Black-Scholes valuation model)
6.1 years*
4
Our Citizen-Owners are focused on creating long-term value for shareholders. This
is manifest in their practice of holding their vested, in-the-money stock
options. This practice has the result of magnifying our “overhang”
from stock options.
Calculated as of 3/31/12.
* Our stock options generally vest over 4 years. |
 Our Burn
Rate from Options Is Well Managed ISS Burn Rate Cap –
GIC Code 3520
(Pharmaceuticals, Biotechnology & Life Sciences)
7.49%
INFI 3-year burn rate commitment made upon
approval of 2010 equity incentive plan
7.31%
INFI 1-year burn rate –
FY 2011
4.85%
INFI 3-year average burn rate –
FY 2009-11
4.72%
5 |
 Our
Track Record of Non-Dilutive Financing Overstates the Impact of Stock
Options Date
Shares of INFI Stock Outstanding
December 31, 2011
26,721,739
December 31, 2009
26,238,954
Aggregate Shares Issued in FY 2010-11
482,785
6
Fiscal Year
Non-Dilutive R&D
Funding from Alliance
Partner
Average Closing
Price Per Share
Share Dilution
Avoided
2011
$85,000,000
$7.06
~ 12 million
2010
$65,000,000
$6.11
~ 10.6 million
Total
$150,000,000
~ 22.6 million
Management’s strategy to avoid dilution while enabling robust R&D investment has
provided significant benefits to shareholders. Focusing solely on dilution from stock
options could create a perverse disincentive with respect to seeking non-dilutive
sources of R&D financing in the future. |
 Recent
INFI Stock Appreciation Not Reflected in ISS Calculations Using 12/1/11
Data 7
INFI stock has
appreciated > 45%
since the 12/1/11
data download used
by ISS, and has
substantially
outpaced growth in
the NASDAQ Biotech
Index during this
period. We believe
that this stock price
appreciation, if
considered, would
have a favorable
impact on the results
of ISS’s SVT analysis. |
 Forward-Looking Statements
The foregoing contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements involve
risks and uncertainties that could cause actual results to be materially
different from those expressed or implied by such forward-looking statements.
These risks and uncertainties are described in detail under the caption
“Risk Factors” included in our annual report on Form 10-K for
the year ended December 31, 2011, which we filed with the Securities and
Exchange Commission on March 13, 2012. We expressly disclaim any obligation to
update any forward-looking statements, whether as a result of new information, future
events or otherwise.
8 |