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

 

Check the appropriate box:

PHARMATHENE, 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):

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May 8, 2014

Dear Stockholder:

You are cordially invited to attend the 2014 Annual Meeting of Stockholders of PharmAthene, Inc., to be held on Wednesday, June 11, 2014 at 10:00 a.m. (Eastern Time) at the offices of Dentons US LLP at 1301 K Street, NW, Suite 600, East Tower, Sixth Floor, Washington, DC 20005. Details of the business to be conducted at the Annual Meeting are given in the attached Notice of Annual Meeting of Stockholders and Proxy Statement.

We hope that you will be able to attend the Annual Meeting. Whether or not you attend the Annual Meeting, it is important that your shares be represented and voted at the meeting. Therefore, we urge you to submit your proxy by signing, dating and returning the enclosed proxy card in the envelope provided at your earliest convenience. If you decide to attend the Annual Meeting, you will be able to vote in person, even if you have previously submitted your proxy card.

On behalf of PharmAthene, I would like to express our appreciation for your support and continued interest in the affairs of the Company. We look forward to seeing you at the Annual Meeting.

Sincerely,
 

Eric I. Richman
President and Chief Executive Officer

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
 
TO BE HELD JUNE 11, 2014

To our Stockholders:

You are cordially invited to attend the 2014 Annual Meeting of Stockholders (the “Annual Meeting”) of PharmAthene, Inc. to be held on Wednesday, June 11, 2014 at 10:00 a.m. (Eastern Time) at the offices of Dentons US LLP at 1301 K Street, NW, Suite 600, East Tower, Sixth Floor, Washington, DC 20005. The purpose of the Annual Meeting will be to consider the following proposals:

You are entitled to notice of and to vote at the Annual Meeting and at any adjournments or postponements of the Annual Meeting, if you were the holder of record of any shares of our common stock at the close of business on April 17, 2014, the record date for the Annual Meeting fixed by the Board.

Our Board recommends that our stockholders vote FOR each of the nominees for Director named in the proxy statement, and FOR proposal 2. Our stockholders may also be asked to consider and act upon any other business that may properly come before the Annual Meeting or any adjournment or postponement thereof. The vote of each stockholder is important to us. If you do not expect to attend the meeting in person and desire to have your shares represented and voted at the meeting, please fill in, sign, date and promptly return the enclosed proxy card in the accompanying envelope. No postage is necessary if mailed in the United States. Please see the instructions on your proxy card. If you attend the Annual Meeting, you may revoke your proxy and vote in person.

A copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, which is not part of the proxy soliciting material, is enclosed. This Notice of Annual Meeting of Stockholders and the accompanying proxy materials are first being mailed out to stockholders on or about May 9, 2014.

By Order of the Board,
 

Eric I. Richman
President and Chief Executive Officer
Annapolis, Maryland
May 8, 2014

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PHARMATHENE, INC.
  
Proxy Statement for the 2014 Annual Meeting of Stockholders
to be held June 11, 2014
  
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General Information and Questions and Answers about the Proxy Materials and Voting			1
PROPOSAL 1 Election of Directors			5
Director Nominees			5
Votes Required			7
Recommendation			7
Corporate Governance; Board of Directors			8
Corporate Governance Guidelines			8
Code of Ethics and Business Conduct			8
Director Independence			8
Board Leadership Structure			8
Board Oversight of Risk Management			8
Board Meetings			9
Director Attendance at Annual Meeting			9
Board Committees			9
Process for Communicating with Board Members			11
Director Compensation			11
General Policy Regarding Compensation of Directors			12
Audit Committee Report			13
Executives and Executive Compensation			15
Executives			15
Compensation Committee Interlocks and Insider Participation			16
Compensation Discussion and Analysis			16
Summary Compensation Table			22
Grants of Plan-Based Awards			23
Outstanding Equity Awards at Fiscal Year-End			24
Option Exercises and Stock Awards Vested			27
Employment Agreements			27
Potential Payments upon Termination or Change of Control			31
Equity Compensation Plan Information			33
Certain Relationships and Related Transactions			34
Section 16(a) Beneficial Ownership Reporting Compliance			34
Security Ownership of Certain Beneficial Owners and Management			34
PROPOSAL 2 Ratification of Independent Registered Public Accounting Firm			37
General			37
Audit Fees, Audit-Related Fees, Tax Fees and Other Fees			37
Pre-Approval of Audit and Permissible Non-Audit Services			37
Votes Required			38
Recommendation			38
Other Information			39
Annual Report on Form 10-K			39
Reports Filed with the U.S. Securities and Exchange Commission			39
Stockholder Proposals for 2015 Annual Meeting			39
Householding			39

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PHARMATHENE, INC.
One Park Place, Suite 450
Annapolis, Maryland 21401

Proxy Statement
2014 Annual Meeting of Stockholders
to be held June 11, 2014
 
General Information and Questions and Answers about the Proxy Materials and Voting

Purpose of this proxy statement

This proxy statement is furnished in connection with the solicitation of proxies by the Board of PharmAthene, Inc., a Delaware corporation (“PharmAthene,” the “Company,” “we,” “us” or “ours”), for the 2014 Annual Meeting of Stockholders of PharmAthene (the “Annual Meeting”) to be held on Wednesday, June 11, 2014, and any adjournments or postponements thereof, for the purposes set forth in the attached Notice of Annual Meeting of Stockholders and more fully described in this proxy statement. This proxy statement, the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, and the accompanying proxy card (including voting instructions) are first being mailed to stockholders on or about May 9, 2014.

Time and place of Annual Meeting

The Annual Meeting will be held on Wednesday, June 11, 2014 at 10:00 a.m. (Eastern Time) at the offices of Dentons US LLP at 1301 K Street, NW, Suite 600, East Tower, Sixth Floor, Washington, DC 20005.

Lists of stockholders

In accordance with Delaware law, lists of our stockholders who are entitled to vote at the Annual Meeting will be available for inspection by any stockholder present at the Annual Meeting and, for ten days prior to the Annual Meeting, by any stockholder, for purposes germane to the meeting, at our offices located at One Park Place, Suite 450, Annapolis, Maryland 21401 and at the offices of Dentons US LLP in Washington, D.C. Any inspection of these lists prior to the Annual Meeting must be conducted between 9:30 A.M. and 4:30 P.M. (Eastern Time). Please contact our Corporate Secretary before going to conduct any inspection prior to the Annual Meeting.

What is being voted on?

The following proposals are expected to be considered and voted upon at the Annual Meeting:

Who can vote and on which proposals may I vote?

If you owned any shares of our common stock on April 17, 2014, as reflected in our stock register, you may vote at the Annual Meeting on the proposals listed above.

What number of shares are outstanding?

At the close of business on April 17, 2014, 54,276,233 shares of common stock were outstanding. Each share of common stock is entitled to one vote.

Who is a record holder?

You may own common stock either (1) directly in your name, in which case you are the record holder of such shares, or (2) indirectly through a broker, bank or other nominee, in which case such nominee is the record holder and your shares are referred to as being held in “street name.”

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If your shares are registered directly in your name, we are sending these proxy materials directly to you. If the record holder of your shares is a broker, bank or other nominee, you will receive proxy materials from such record holder.

What is a quorum?

A quorum is the number of shares that must be represented in person or by proxy in order for business to be transacted at the Annual Meeting. A quorum will be present at the Annual Meeting if holders of a majority of the shares of our common stock entitled to vote at the Annual Meeting are present in person or by proxy. Abstentions will count as present for the purpose of establishing a quorum, while broker non-votes will not. If a quorum is not present or represented by proxy, the holders of a majority of the shares entitled to vote at the Annual Meeting who are present in person or represented by proxy may adjourn the Annual Meeting to another date.

What are “broker non-votes”?

Broker non-votes occur when a beneficial owner of shares held in “street name” does not give instructions to the broker, bank or nominee holding the shares as to how to vote on matters deemed “non-routine.” Generally, if shares are held in street name, the beneficial owner of the shares is entitled to give voting instructions to the broker, bank or nominee holding the shares. If the beneficial owner does not provide voting instructions, the broker, bank or nominee can still vote the shares with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. The election of Directors is considered to be a “non-routine” matter; as such, if you hold your shares in street name and do not give voting instructions to the broker, bank or nominee holding your shares, your shares will not be voted with respect to this proposal. This is what is referred to as a “broker non-vote.”

How many votes are required to approve a proposal?

A Director Nominee is elected to our Board if he receives the favorable vote of a plurality of the votes cast by the shares of our common stock that are entitled to vote and are present in person or represented by proxy at the Annual Meeting. Thus, a Director Nominee may be elected even if the Director Nominee receives votes from less than a majority of the shares represented at the meeting.

The proposal to approve the ratification of the selection of our independent registered public accounting firm requires the favorable vote of a majority of the shares of our common stock that are entitled to vote and are present in person or represented by proxy at the Annual Meeting.

How do I vote?

Record holders:  You may vote in person at the Annual Meeting or you may give us your proxy. We recommend you vote by proxy even if you plan to attend the Annual Meeting, as you can always change your vote at the Annual Meeting.

Shares held by brokers, banks or other nominees:  If your shares are held by a broker, bank or other nominee, you will receive instructions from such nominee that you must follow in order to have your shares voted.

If you plan to attend the Annual Meeting and vote in person, you will need to contact the broker, bank or other nominee to obtain evidence of your ownership of common stock as of April 17, 2014.

If you hold your shares in “street name,” your shares may be voted even if you do not vote or attend the Annual Meeting. However, your broker, bank or other nominee cannot vote your shares with respect to non-routine proposals without specific instructions from you. If you do not provide instructions with your proxy with respect to the election of Directors, your broker, bank or other nominee must deliver a proxy card expressly indicating that it is NOT voting your shares; this indication that a broker, bank or other nominee is not voting your shares is referred to as a “broker non-vote.” Broker non-votes will not count for purposes of determining the number of votes cast. You should instruct your broker, bank or other nominee to vote your shares in accordance with directions that you provide.

The method by which you vote will in no way limit your right to vote at the Annual Meeting if you later decide to attend in person.

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How are my shares of common stock voted if I give you my proxy?

If you give us your proxy to vote your shares of common stock, we will be authorized to vote your shares of common stock, but only in the manner you direct. You may direct us to vote for all, some or none of the Director Nominees. You may direct us to vote your shares of common stock for or against the proposal to ratify and approve the appointment of E&Y as our independent registered accounting firm for the fiscal year ending December 31, 2014. You may also abstain from voting.

If you give us your proxy with instructions to vote your shares of common stock and do not withhold authority to vote for the election of any of the Director Nominees, all of your shares of common stock will be voted for the election of each Director Nominee. If you withhold authority to vote your shares of common stock for any Director Nominee, none of your shares of common stock will be voted for that candidate, but all of your shares of common stock will be voted for the election of each Director Nominee for whom you have not withheld authority to vote.

As to the proposal to ratify and approve the appointment of E&Y as our independent registered accounting firm for the fiscal year ending December 31, 2014, if you give us your proxy to vote your shares of common stock but do not specify how you want your shares voted, your shares of common stock will be voted in favor of this proposal.

If you give us your proxy to vote your shares of common stock and any additional business properly comes before our stockholders for a vote at the Annual Meeting, the persons named in the enclosed proxy card will vote your shares of common stock on those matters as instructed by our Board or, in the absence of any express instructions, in accordance with their own best judgment. As of the date of this proxy statement, we were not aware of any other matter to be raised at the Annual Meeting.

How can I revoke my proxy or change my vote?

You can revoke your proxy at any time before it is exercised by timely delivery of a properly executed, later-dated proxy (by any method available for giving your original proxy), by sending us a written notice of your desire to revoke your proxy at the following address: PharmAthene, Inc., One Park Place, Suite 450, Annapolis, Maryland 21401, c/o Corporate Secretary, or by voting in person at the meeting. However, your proxy will not automatically be revoked merely because you attend the Annual Meeting.

What happens if a nominee becomes unavailable?

If any of our Director Nominees becomes unavailable for any reason before the election, we may reduce the number of Directors serving on our Board or a substitute candidate may be designated. We do not anticipate that any nominee will be unable to stand for election, but if that happens, a proxy will be voted in favor of another Director nominated by the Board.

Why did I receive more than one proxy card?

You may receive more than one proxy card depending on how you hold your shares. If you hold your shares through someone else, such as a broker or a bank, you may receive materials from them asking you how you want your shares voted.

Who will pay the expenses of proxy distribution?

The Company will pay the expenses of the preparation of the proxy materials and the solicitation of proxies. Proxies may be solicited on behalf of the Company by Directors, officers or employees of the Company, who will receive no additional compensation for soliciting, in person or by telephone, e-mail or facsimile or other electronic means. In accordance with the regulations of the U.S. Securities and Exchange Commission (the “SEC”) and the NYSE MKT, we will reimburse brokerage firms and other custodians, nominees and fiduciaries for their expenses incurred in sending proxies and proxy materials to beneficial owners of the Company’s common stock.

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Are proxy materials available on the internet?

Yes. Please see the notice below:

Important notice regarding the availability of proxy materials
for the Annual Meeting of Stockholders to be held on June 11, 2014:
  
Our Proxy Statement and Annual Report on Form 10-K for the fiscal year ended December 31, 2013 is available on the following website under “SEC Filings”: http://ir.pharmathene.com

Who can help answer my questions?

If you have questions about any of the proposals, you may write or call PharmAthene, Inc. at One Park Place, Suite 450, Annapolis, Maryland 21401, (410) 269-2600, Attention: Linda L. Chang, Corporate Secretary.

You may also obtain additional information about the Company from documents filed with the SEC by following the instructions in the section entitled “Other Information.”

Other business

Our Board knows of no other matters to be presented for stockholder action at the Annual Meeting. If other matters are properly brought before the Annual Meeting, the persons named as proxies in the accompanying proxy card intend to vote the shares represented by them in accordance with their best judgment or as recommended by the Board.

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PROPOSAL 1
  
ELECTION OF DIRECTORS

The Company’s Directors are elected at each Annual Meeting of Stockholders and hold office until the next Annual Meeting of Stockholders and until their successors have been elected and qualified. Our Bylaws provide that the number of Directors constituting the entire Board shall be neither less than one nor more than nine as determined by resolution of the Board.

The Board has nominated as Director Nominees John M. Gill, Brian A. Markison, Joel W. McCleary, Eric I. Richman, Jeffrey W. Runge, M.D., Mitchel B. Sayare, Ph.D., Derace L. Schaffer, M.D. and Steven St. Peter, M.D. to serve until our 2015 Annual Meeting of Stockholders and until their successors have been elected and qualified. All Director Nominees are currently Directors of the Company. Each Director Nominee has indicated to the Company that he will serve if elected. We do not anticipate that any Director Nominee will be unable to stand for election, but if that happens, a proxy will be voted in favor of another Director nominated by the Board.

Director Nominees

Set forth below is information regarding each Director Nominee.

Name		Age		Position
John M. Gill*		62		Director
Brian A. Markison*		54		Director
Joel W. McCleary*		65		Director
Eric I. Richman		53		Director, President and Chief Executive Officer
Jeffrey W. Runge, M.D.*		58		Director
Mitchel B. Sayare, Ph.D.*		66		Chairman of the Board
Derace L. Schaffer, M.D.*		66		Director
Steven St. Peter, M.D.*		47		Director

John M. Gill.  Mr. Gill has served as a member of the Board since August 2007 and from February 2004 to August 2007 served as a member of the Board and as Chairman of the Audit Committee of our predecessor, privately-held PharmAthene (“Former PharmAthene”). From 2003 to 2013, Mr. Gill served as the President, Chief Executive Officer, co-founder and a Director of TetraLogic Pharmaceuticals Corporation, a public biopharmaceutical company. He is also an advisor or Director of other private companies, the Kimmel Cancer Center at Thomas Jefferson University, and other non-profit community organizations. Mr. Gill has previously held positions at 3-Dimensional Pharmaceuticals and SmithKline Beecham. Mr. Gill earned a B.A. from Rutgers University. Mr. Gill was chosen to serve as a Director of the Company because of his executive and Board experience in the pharmaceutical industry and his substantial financial knowledge and expertise.

Brian A. Markison.  Mr. Markison has been a Director since September 2011. He is a healthcare industry advisor to the private equity firm, Avista Capital Partners, Inc. He was President and Chief Executive Officer, and member of the Board, of Fougera Pharmaceuticals, Inc. from 2011 to 2012. Mr. Markison has more than 30 years of experience in the pharmaceutical industry. He formerly served as Chairman (from May 2007 through February 2011) and President and Chief Executive Officer (from July 2004 through February 2011) of King Pharmaceuticals, which he joined as Chief Operating Officer before being promoted to President and Chief Executive Officer and elected Chairman. Prior to King Pharmaceuticals, Mr. Markison held various senior leadership positions at Bristol-Myers Squibb, including President of Oncology/Virology and Oncology Therapeutics Network; President, Neuroscience/Infectious Disease and Dermatology; and Senior Vice President, Operational Excellence and Productivity. Mr. Markison serves on the Board of Directors of public companies Alere Inc., Immunomedics, Inc. and Rosetta Genomics, Ltd., where he also serves as Board Chairman. He also serves on the Board of Directors for the Komen Foundation for South/Central New Jersey and the privately held company, Lantheus MI Holdings, Inc. Since December 2013, Mr. Markison has served

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as Executive Director of Vertical Pharmaceuticals, LLC. Mr. Markison earned a B.S. from Iona College. Mr. Markison was chosen to serve as a Director of the Company because of the experience and broad industry knowledge he gained as a Director of, and in a variety of executive leadership positions in, public healthcare companies.

Joel W. McCleary.  Mr. McCleary has served as a member of the Board since August 2007 and from inception to August 2007 was Chairman of the Board of Former PharmAthene. Mr. McCleary is a founding member of Four Seasons Ventures LLC founded in 2005. Mr. McCleary is the founder and chairman of Q Global International, an organization which provides close protection services for global leaders against the threat of assassination or incapacitation from chemical, biological and radiological threats. Prior to 2005, Mr. McCleary served as a White House Aide, Treasurer of the Democratic Party, President of the Sawyer-Miller Group International, and President of the Institute for Asian Democracy. He has served as a consultant to the Department of State, to the Department of Defense and to the Department of Homeland Security. He is a co-founder and former Board member of Raydiance Inc. In 2012, Mr. McCleary joined the Board of advisors of Guggenheim International, a subsidiary of Guggenheim Partners LLC, a global diversified financial services firm. Guggenheim International is an organization dedicated to building cross-border strategic partnerships and providing solutions to sovereign, institutional, corporate, and high-net-worth clients. Mr. McCleary earned a B.A. from Harvard University. Mr. McCleary was chosen to serve as a Director of the Company primarily because of his impressive public service record in a variety of governmental and quasi-governmental organizations, enabling him to offer valuable guidance to the Board and the Company with respect to our government strategy.

Eric I. Richman.  Mr. Richman was appointed our President and Chief Operating Officer in March 2010, our interim Chief Executive Officer in May 2010 and our Chief Executive Officer in October 2010. He became a Director of the Company in May 2010. Prior to his March 2010 appointment, Mr. Richman was our Senior Vice President, Business Development and Strategic Planning since August 2003. Prior to joining the Company, Mr. Richman held various commercial and strategic positions of increasing responsibility over a 12 year period at MedImmune, Inc. from its inception and was Director, International Commercialization at that company. Mr. Richman previously served as Director of Lev Pharmaceuticals (until its acquisition by ViroPharma Incorporated in 2008) and American Bank and currently serves as Director of ADMA Biologics, Inc. Mr. Richman earned a B.S. in biomedical science from the Sophie Davis School of Biomedical Education (CUNY Medical School) and a M.B.A. from the American Graduate School of International Management. Mr. Richman was chosen to serve on the Board because of his years of experience as executive officer at the Company and his experience in the areas of business development and commercialization. As our Chief Executive Officer, Mr. Richman provides the Board with critical insight into the day-to-day operations of the Company.

Jeffrey W. Runge, M.D.  Dr. Runge has served as a member of the Board since December 2009. Dr. Runge is a Principal at The Chertoff Group, a firm providing advisory services in business risk management, homeland security and homeland defense. He is also the President and founder of Biologue, Inc., which provides consulting in biodefense, medical preparedness and injury prevention and control. From 2001 through August of 2008, Dr. Runge served in the Bush administration, first as the head of the National Highway Traffic Safety Administration, and, beginning in September 2005, as the Department of Homeland Security’s (DHS) first Chief Medical Officer. Dr. Runge founded the DHS Office of Health Affairs in 2007 and was confirmed by the Senate as DHS’s first Assistant Secretary for Health Affairs in December of 2007. Dr. Runge also served as Acting DHS Undersecretary for Science and Technology from February through August 2006. In his role at DHS, Dr. Runge oversaw the operations of the department’s biodefense activities, medical preparedness and workforce health protection, including managing DHS’ role in Project BioShield, working with the various federal departments on medical countermeasure assurance. Prior to joining DHS, Dr. Runge was Assistant Chairman of the Department of Emergency Medicine at the Carolinas Medical Center in Charlotte, North Carolina, from 1984 through 2001. Dr. Runge earned a M.D. from the Medical University of South Carolina and his undergraduate degree from the University of the South. Dr. Runge was chosen to serve as a Director of the Company because of his invaluable background in the public sector, particularly his experience in the Bush administration as a founder of the DHS Office of Health Affairs, as well as his practical experience in the medical field.

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Mitchel B. Sayare, Ph.D.  Dr. Sayare has been a member of the Board since April 2010 and was appointed Chairman of the Board in July 2011. Until 2010, Dr. Sayare served as the Chairman of the Board of public company ImmunoGen, Inc. (a position he had held since 1989). In addition, he served as ImmunoGen’s Chief Executive Officer from 1986 to December 31, 2008, and as its President from 1986 to 1992, and from 1994 to July 2008. Prior to joining ImmunoGen, he served as Vice President of Development of Xenogen from 1982 to 1985. Prior to that he was Assistant Professor of Biophysics and Biochemistry at the University of Connecticut. Dr. Sayare earned a Ph.D. in biochemistry from Temple University School of Medicine. Dr. Sayare is a Director of Cymogen Dx, Inc. and Isabella Products, Inc., both privately-held companies. Dr. Sayare was chosen to serve as a Director because of his substantial experience as a Board member and executive officer of biotechnology companies.

Derace L. Schaffer, M.D.  Dr. Schaffer previously served as Vice Chairman and Chief Executive Officer of Healthcare Acquisition Corp. from April 2005 to August 2007. Dr. Schaffer is the founder and Chief Executive Officer of The Lan Group, a venture capital firm specializing in healthcare and high technology investments. He has served as Chairman of several healthcare companies, including Radiologix, Inc. when it was private, and he has been an active investor for approximately twenty years on a variety of healthcare companies. Dr. Schaffer is the founder of Radiologix. Dr. Schaffer served as Chief Executive Officer and Chairman of the Board of Ide Imaging Group, P.C. from 1980 to 2001. Dr. Schaffer has served as a Director on many healthcare Boards of directors, including several health systems and more than twenty healthcare services and technology companies. Dr. Schaffer received his postgraduate radiology training at Harvard Medical School and Massachusetts General Hospital, where he served as Chief Resident. He also serves as a Director of Archermobile, Inc. and has previously served as Director of American CareSource Holdings, Inc., Radiologix, King Pharmaceuticals, Inc. and of Allion Healthcare, Inc. (each a public company). Dr. Schaffer serves as a Director of the private Boards of Innovolt, Inc. and Medical Tracking Solutions, Inc. Dr. Schaffer is a member of Alpha Omega Alpha, the national medical honor society. Dr. Schaffer currently is also a Clinical Professor of Radiology at Weill Cornell Medical College. Dr. Schaffer was chosen to serve as a Director of the Company because of his substantial experience as an executive, Board member and investor in the healthcare and technology industries and his practical experience in the medical field.

Steven St. Peter, M.D.  Dr. St. Peter has served as a member of the Board since August 2007 and from October 2004 to August 2007 was a member of the Board of Former PharmAthene. Dr. St. Peter is President, CEO and Director of Aratana Therapeutics, an animal health company, a position he assumed in September 2012. Dr. St. Peter was employed by MPM Capital from 2004 to May 2012, and he was a Managing Director based in the Boston office. His investment scope included both venture and buyout transactions across the pharmaceuticals and medical technology industries. He has previous investment experience from Apax Partners and The Carlyle Group. Dr. St. Peter was previously an assistant Clinical Professor of Medicine at Columbia University. He completed his residency and fellowship at the Hospital of the University of Pennsylvania. Prior to his medical training, he was an investment banker at Merrill Lynch. His previous Board experience includes Omrix Biopharmaceuticals, Helicos Biosciences Corporation, EKR Therapeutics, Inc., Proteon Therapeutics, Inc., Rhythm Pharmaceuticals, Inc., Syndax Pharmaceuticals, Inc. and Xanodyne Pharmaceuticals, Inc. Dr. St. Peter earned a M.D. from Washington University, M.B.A. from the Wharton School of the University of Pennsylvania and a B.A. in chemistry from the University of Kansas. Dr. St. Peter was chosen to serve as a Director of the Company because of his diverse background as a venture capital investor, investment banker, professor of medicine and Director of several healthcare companies, which provides him with a unique perspective in serving on our Board.

Votes Required

Each share of our common stock has the right to cast one vote for each of the Director Nominees. A Director Nominee is elected to our Board if he receives the favorable vote of a plurality of the votes cast by the shares of our common stock that are entitled to vote and are present in person or represented by proxy at the Annual Meeting.

Recommendation

OUR BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE ELECTION TO OUR BOARD OF EACH OF JOHN M. GILL, BRIAN A. MARKISON, JOEL

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W. MCCLEARY, ERIC I. RICHMAN, JEFFREY W. RUNGE, M.D., MITCHEL B. SAYARE, PH.D., DERACE L. SCHAFFER, M.D. AND STEVEN ST. PETER, M.D.

Corporate Governance; Board of Directors

Corporate Governance Guidelines

Pursuant to the Delaware General Corporation Law and the Company’s Bylaws, the Company’s business, property and affairs are managed by or under the direction of the Board. Members of the Board are kept informed of the Company’s business through discussions with the Chief Executive Officer and other officers, by reviewing materials provided to them and by participating in meetings of the Board and its committees. We currently have eight members on our Board, all of whom are standing for re-election.

Code of Ethics and Business Conduct

The Company has a Code of Ethics and Business Conduct that applies to all Directors, officers and employees, which can be found on our website, www.pharmathene.com, under the heading “Investors” (see “Corporate Governance — Highlights — Governance Documents”) or by writing to PharmAthene, Inc., One Park Place, Suite 450, Annapolis, Maryland 21401, c/o Corporate Secretary. All of our Directors, officers and employees are expected to be familiar with the Code and to adhere to those principles and procedures set forth in the Code that apply to them. The Company will post any amendments to the Code of Ethics and Business Conduct, as well as any waivers that are required to be disclosed by the rules of either the SEC or the NYSE MKT, on the Company’s web site, www.pharmathene.com.

Director Independence

We use the definition of “independence” under Section 803A of the NYSE MKT Company Guide, as applicable and as may be modified or supplemented from time to time, and the interpretations thereunder, to determine if the members of our Board are independent. In making this determination, our Board considers, among other things, transactions and relationships between each Director and his immediate family and the Company, including those reported in this Proxy Statement under the caption “Certain Relationships and Related Transactions.” The purpose of this review is to determine whether any such relationships or transactions are material and, therefore, inconsistent with a determination that the Directors are independent. On the basis of such review and its understanding of such relationships and transactions, our Board affirmatively determined that our Board was comprised of at least 50% independent Directors.

Board Leadership Structure

To assure effective and independent oversight of management, our Board operates with the roles of Chief Executive Officer and Chairman of the Board separated in recognition of the differences between these two roles in the management of the Company. The Chairman of the Board is an independent, non-management role.

Our Board believes that this leadership structure provides the most effective leadership model for our Company. By permitting more effective monitoring and objective evaluation of the Chief Executive Officer’s performance, this structure increases the accountability of the Chief Executive Officer. A separation of the Chief Executive Officer and Chairman roles also prevents the former from controlling the Board’s agenda and information flow, thereby reducing the likelihood that the Chief Executive Officer would abuse his power.

Board Oversight of Risk Management

Our Board believes that overseeing how management manages the various risks we face is one of its most important responsibilities to the Company’s stakeholders. Our Board believes that, in light of the interrelated nature of the Company’s risks, oversight of risk management is ultimately the responsibility of the full Board; however, it has delegated this responsibility to the Audit Committee with respect to financial risk. The Audit Committee periodically meets with management and the independent registered public accounting firm to review the Company’s major financial risk exposures and the steps taken to monitor and control such exposures. Our Board meets regularly to discuss the strategic direction and the issues and opportunities facing our Company in light of trends and developments in the biodefense industry and general business

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environment. Throughout the year, our Board provides guidance to management regarding our strategy and helps to refine our operating plans to implement our strategy. The involvement of the Board in setting our business strategy is critical to the determination of the types and appropriate levels of risk undertaken by the Company.

Board Meetings

During the fiscal year ended December 31, 2013, the Board held fourteen meetings and the Board Committees held a total of ten meetings. Each incumbent Director attended 75% or more of the total number of meetings of the Board and the Board Committees of which he was a member during the period he served as a Director in fiscal year 2013. The Board met in executive session on three occasions in the fiscal year ended December 31, 2013.

Director Attendance at Annual Meeting

The Company has no specific policy regarding Director attendance at its Annual Meeting. Generally, however, Board meetings are held immediately preceding and following the Annual Meeting, with Directors attending the Annual Meeting. Our Annual Meeting held on June 11, 2013 was attended by all of our Directors.

Board Committees

The Board currently has a separately-designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, the Board has a Governance and Nominating Committee and Compensation Committee. Each Committee consists entirely of independent, non-employee Directors (see “Director Independence” above). The charter of each Board Committee is available free of charge on our website, www.pharmathene.com, under the heading “Investors” (see “Corporate Governance — Highlights — Committee Charters”) or by writing to PharmAthene, Inc., One Park Place, Suite 450, Annapolis, Maryland 21401, c/o Corporate Secretary. Until February 2014, the Board also had a Government Affairs Committee.

The following table below sets forth the committees, current membership of each Committee and the number of Committee meetings held in the fiscal year ended December 31, 2013.

Name

Audit

Governance and Nominating

Compensation

John M. Gill

X*

X

Brian A. Markison

X*

Joel W. McCleary

X

Jeffrey W. Runge, M.D.

X

Mitchel B. Sayare, Ph.D.

X*

X

Derace L. Schaffer, M.D.

X

X

Steven St. Peter, M.D.

X

Total 2013 Meetings

4

1

5

The primary functions of each of the Board Committees are described below.

Audit Committee.  The primary functions of the Audit Committee are to: review the professional services and independence of our independent registered public accounting firm and our accounts, procedures and internal controls; appoint the firm selected to be our independent registered public accounting firm; review and approve the scope of the annual audit; review and evaluate with the independent registered public accounting firm our annual audit and annual consolidated financial statements; review with management the status of internal accounting controls; evaluate problem areas having a potential financial impact on us that may be brought to the Audit Committee’s attention by management, the independent registered public accounting firm or the Board; and evaluate all of our public financial reporting documents.

The current members of our Audit Committee each meet the independence criteria for Directors set forth under the rules of the NYSE MKT and the additional independence criteria for members of audit committees

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specified in Section 803B of the NYSE MKT Company Guide and Rule 10A-3 under the Exchange Act. Each member of our Audit Committee is financially literate under the current listing standards of the NYSE MKT. Our Board has determined that John M. Gill, the chairman of the Audit Committee, qualifies as an “audit committee financial expert,” as such term is defined by SEC rules. See page 13 of this Proxy Statement for the Audit Committee Report.

Governance and Nominating Committee.  The current members of our Governance and Nominating Committee are “independent” as required by Section 804 of the NYSE MKT Company Guide.

The primary functions of the Governance and Nominating Committee are to: review and make recommendations on the range of skills and expertise which should be represented on the Board, and the eligibility criteria for individual Board and Committee membership; review and recommend to the Board the appropriate structure of the Board; identify individuals qualified to become Board members and recommend to the Board the nominees for election to the Board at the next Annual Meeting of Stockholders; implement policy and procedures with regard to consideration of any Director candidate recommended by stockholders; retain and terminate any search firm to be used to identify Director candidates, and to approve the search firm, fees and other retention terms; and review and recommend to the Board the appropriate structure of Board Committees, Committee assignments and the Board Committee chairman.

Among the factors the Governance and Nominating Committee considers when determining persons to be nominated include whether such individuals are actively engaged in business endeavors, have an understanding of financial statements, corporate budgeting and capital structure, are familiar with the requirements of a publicly traded company, are familiar with industries relevant to our business endeavors, are willing to devote significant time to the oversight duties of the Board of a public company, and are able to promote a diversity of views based on the person’s education, experience and professional employment. The Governance and Nominating Committee evaluates each individual in the context of the Board as a whole, with the objective of recommending a group of persons that can best implement our business plan, perpetuate our business and represent stockholder interests. The Governance and Nominating Committee may require certain skills or attributes, such as financial or accounting experience, to meet specific Board needs that arise from time to time.

The Company is of the view that the continuing service of qualified incumbents promotes stability and continuity in the Board room, contributing to the ability of the Board to work as a collective body, while giving the Company the benefit of the familiarity and insight into the Company’s affairs that its Directors have accumulated during their tenure. Accordingly, the process of the Governance and Nominating Committee for identifying nominees reflects the Company’s practice of re-nominating incumbent Directors who continue to satisfy the Governance and Nominating Committee’s criteria for membership on the Board, whom the Governance and Nominating Committee believes continue to make important contributions to the Board and who consent to continue their service on the Board. The Governance and Nominating Committee will identify and/or solicit recommendations for new candidates when there is no qualified and available incumbent.

The Governance and Nominating Committee will consider nominees recommended by stockholders. There are no differences in the manner in which the committee evaluates nominees for Director based on whether the nominee is recommended by a stockholder. Stockholders who would like to have our Governance and Nominating Committee consider their recommendations for nominees for the position of Director, should submit their recommendations, in accordance with the procedures set forth below, in writing to: Corporate Secretary, PharmAthene, Inc., One Park Place, Suite 450, Annapolis, Maryland 21401.

For nominations, a stockholder’s notice must include: (i) as to each person whom the stockholder proposes to nominate for election as a Director, (A) the name, age, business address and residential address of such person, (B) the principal occupation or employment of such person, (C) the class and number of shares of stock of the Company that are beneficially owned by such person, (D) any other information relating to such person that is required to be disclosed in solicitations of proxies for election of Directors or is otherwise required by the rules and regulations of the SEC promulgated under the Exchange Act, and (E) the written consent of the nominee to be named in the Proxy Statement as a nominee and to serve as a Director if elected and (ii) as to the stockholder giving the notice, (A) the name, business address, and residential address, as they appear on our stock transfer books, of the nominating stockholder, (B) a representation that the

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nominating stockholder is a stockholder of record and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice, (C) the class and number of shares of stock of our Company beneficially owned by the nominating stockholder and (D) a description of all arrangements or understandings between the nominating stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the nominating stockholder.

Compensation Committee.  The current members of our Compensation Committee are “independent” as required by Section 805 of the NYSE MKT Company Guide.

The Company’s executive compensation program is administered by the Compensation Committee. Each member of the Committee qualifies as an outside Director within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The primary functions of the Compensation Committee are to: consider, recommend, oversee and implement executive compensation plans, policies and programs; review the performance and determine the compensation of our executive officers and Directors, including the negotiation of any employment agreements with such persons, oversight and administration of the 2007 Long-Term Incentive Compensation Plan, as amended (the “2007 Plan”) and the grant of options and awards under the 2007 Plan. Pursuant to Section 805 of the NYSE MKT Company Guide, compensation of our Chief Executive Officer is determined, or recommended to the Board for determination, by the Compensation Committee comprised solely of independent Directors. The Chief Executive Officer is not present during voting or deliberations. Compensation for all other officers is determined, or recommended to the Board for determination, by the Compensation Committee comprised solely of independent Directors.

Under the Compensation Committee Charter, our Chief Executive Officer and our Chairman of the Board may recommend to the Compensation Committee individual compensation awards for our officers. The Compensation Committee would then have to review the recommendation and make its own recommendation to the Board.

Process for Communicating with Board Members

Interested parties may communicate with any and all members our Board by transmitting correspondence addressed to one or more Directors by name at the following address: PharmAthene, Inc., One Park Place, Suite 450, Annapolis, Maryland 21401, c/o Corporate Secretary. Communications from our stockholders to one or more Directors will be collected and organized by our Corporate Secretary and will be forwarded to the Chairman of the Board or to the identified Director(s) as soon as practicable. If multiple communications are received on a similar topic, the Corporate Secretary may, in his or her discretion, forward only representative correspondence.

The Chairman of the Board will determine whether any communication addressed to the entire Board should be properly addressed by the entire Board or a committee thereof. If a communication is sent to the Board or a Committee, the Chairman of the Board or the Chairman of that committee, as the case may be, will determine whether a response to the communication is warranted.

Director Compensation

The following table sets forth the cash and non-cash compensation of our Directors (other than our Chief Executive Officer, who was not separately compensated for his service on the Board) for the fiscal year ended December 31, 2013. In the paragraph following the table and in the footnotes, we describe our standard compensation arrangement for service on the Board and Board Committees.

For the Fiscal Year Ended December 31, 2013

Name(1)		Fees earned or paid in cash ($)(2)				Option Awards ($)(3)				Total ($)
John M. Gill			58,000				22,614				80,614
Brian A. Markison			52,000				22,614				74,614
Joel W. McCleary			53,000				22,614				75,614

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Name(1)		Fees earned or paid in cash ($)(2)				Option Awards ($)(3)				Total ($)
Jeffrey W. Runge, M.D.			47,500				22,614				70,114
Mitchel B. Sayare, Ph.D.			45,500				22,614				68,114	(4)
Derace L. Schaffer, M.D.			47,500				22,614				70,114
Steven St. Peter, M.D.			42,500				22,614				65,114

General Policy Regarding Compensation of Directors

The following sets forth the annual compensation for non-employee members of our Board effective January 1, 2013:

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No other cash fees are payable to non-employee Board members for their service on the Board.

In addition, every non-employee member of our Board is entitled annually to receive an option to purchase 20,000 shares of our common stock on the date of our Annual Meeting of Stockholders, at an exercise price per share based on the closing price of our common stock on the grant date as reported on the NYSE MKT.

In addition to the above compensation, upon initially joining the Board, a member is entitled to receive an option to purchase 20,000 shares of common stock, at an exercise price per share based on the closing price of the Company’s common stock on the grant date as reported on the NYSE MKT.

Audit Committee Report⁽¹⁾

The Audit Committee has reviewed and discussed the audited financial statements for the fiscal year ended December 31, 2013 with management of the Company and has furnished the following report for inclusion in this Proxy Statement.

The Audit Committee consists of the Directors named below. Each member of the Audit Committee is an independent Director as defined by applicable SEC rules and NYSE MKT listing standards. In addition, the Board has determined that John M. Gill is the “audit committee financial expert” as defined by applicable SEC rules and satisfies the “financial sophistication” criteria under the applicable rules of the NYSE MKT. The Audit Committee operates under a written charter adopted by the Board, which is available free of charge on our website under the heading “Investors” (see “Corporate Governance — Highlights — Committee Charters”), or by writing to PharmAthene, Inc., One Park Place, Suite 450, Annapolis, Maryland 21401, c/o Corporate Secretary.

Management is responsible for the Company’s internal controls and preparing the Company’s consolidated financial statements. The Company’s independent accountants are responsible for performing an independent audit of the consolidated financial statements in accordance with generally accepted auditing standards and issuing a report thereon. The Committee is responsible for overseeing the conduct of these activities and appointing the Company’s independent accountants. As stated above and in the Committee’s charter, the Committee’s responsibility is one of oversight. The Committee does not provide any expert or special assurance as to the Company’s financial statements concerning compliance with laws, regulations or generally accepted accounting principles. In performing its oversight function, the Committee relies, without independent verification, on the information provided to it and on representations made by management and the independent accountants.

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The Audit Committee reviewed and discussed the Company’s consolidated financial statements for the year ended December 31, 2013 with management and the independent accountants. Management represented to the Audit Committee that the Company’s consolidated financial statements were prepared in accordance with generally accepted accounting principles. The Audit Committee discussed with the independent accountants matters required to be discussed by Statement on Auditing Standard No. 61, as amended, Communication with Audit Committees, as adopted by the Public Company Accounting Oversight Board (“PCAOB”). The Committee also reviewed, and discussed with management, management’s report on internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act.

The Company’s independent accountants provided to the Audit Committee the written disclosures and the letter required by applicable requirements of the PCAOB regarding the independent accountants’ communications with the Audit Committee concerning independence, and the Audit Committee discussed with the independent accountants their independence. The Audit Committee concluded that E&Y’s provision of non-audit services, as described in this Proxy Statement, to the Company and its affiliates is compatible with E&Y’s independence.

Based on the Audit Committee’s discussion with management and the independent accountants and the Audit Committee’s review of the representations of management, the written disclosures and the letter from the independent accountants and the report of the independent accountants, the Committee recommended that the Board include the audited consolidated financial statements in the Form 10-K for the year ended December 31, 2013 for filing with the SEC.

SUBMITTED BY THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

John M. Gill, Chairman
Jeff W. Runge, M.D.
Derace L. Schaffer, M.D.

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Executives and Executive Compensation

Executives

The following table sets forth the names, ages and positions of our executive officers and a key consultant:

Name		Age		Office
Eric I. Richman		53		President and Chief Executive Officer
Linda L. Chang		48		Senior Vice President, Chief Financial Officer and Corporate Secretary
Francesca M. Cook		49		Senior Vice President, Policy and Government Affairs
Arthur Y. Elliott, Ph.D.*		78		Acting Chief Scientific Officer
Wayne Morges, Ph.D.		67		Senior Vice President, Regulatory Affairs and Quality

The following are biographical summaries of our executive officers and a key consultant who are not Directors:

Linda L. Chang.  Ms. Chang assumed the position of Senior Vice President, Chief Financial Officer in November 2011 and Corporate Secretary in April 2014. Ms. Chang had been employed for the last 11 years at Human Genome Sciences, Inc., most recently as Senior Director of Finance. Prior to serving at Human Genome Sciences, Ms. Chang was an Associate at Booz Allen & Hamilton. Earlier in her career, Ms. Chang worked at Grant Thornton, LLP and Otsuka America Pharmaceuticals, Inc. Ms. Chang is a Certified Public Accountant (inactive). She earned an M.B.A. as well as a Master of Accountancy degree, from the University of Georgia and a B.S. from the University of California, Riverside.

Francesca M. Cook.  Ms. Cook has been our Senior Vice President, Policy and Government Affairs since March 2010 and in February 2012 took over responsibility for our program management function. Prior to that, she served as our Vice President, Policy and Government Affairs since the merger on August 3, 2007 and from October 2003 through August 3, 2007 held the same position with Former PharmAthene. Prior to that, Ms. Cook served as Vice President, Policy and Reimbursement Services for Guilford Pharmaceuticals, Inc. from March 2001 through October 2003 and Vice President at Covance Health Economics and Outcomes Services, a health care consulting firm, from 1996 through 2001. Additionally, Ms. Cook worked in the U.S. Senate and the U.S. Department of Health and Human Services from 1988 through 1993. Ms. Cook earned a B.A. in biology from Mount Holyoke College and a Master of Public Health degree from Yale University School of Medicine, Department of Public Health.

Arthur Y. Elliott, Ph.D.  Dr. Elliott assumed the role of acting Chief Scientific Officer for the Company in October 2012. He provides his services to the Company as a consultant to the Company. Dr. Elliott had served as a scientific advisor to the Company since June 2011. From 2010 to 2011, Dr. Elliott served as Branch Chief, responsible for the U.S. Government’s Anthrax Vaccine Portfolio within the Chemical, Biological, Radiological and Nuclear (CBRN) division of the Biomedical Advanced Research and Development Authority (BARDA). Between 2006 and 2010, Dr. Elliott led, for the Department of Health and Human Services, the Avian Influenza Pandemic Preparedness Program, a government/industry collaboration between three pharmaceutical companies and four government agencies (the Department of Health and Human Services, National Institutes of Health, Centers for Disease Control, and Food and Drug Administration) to accelerate the production and stockpiling of Pandemic Influenza Vaccine for the United States Strategic National Stockpile. Prior to his government service, from 2000 to 2006, Dr. Elliot served as an on-site consultant to Aventis (Sanofi Pasteur) Pharmaceutical Corporation. From 1994 to 1999, Dr. Elliott served as Chief Operating Officer and Senior Vice President, and starting in 1998 Acting President, at North American Vaccine, Inc. Prior thereto, Dr. Elliott served for 16 years with Merck & Co., Inc., ultimately as Executive Director, Biological Operations, Merck Manufacturing Division. From 1970 to 1978, Dr. Elliott served as an associate professor in the departments of urologic surgery and microbiology at the University of Minnesota. Dr. Elliott earned his Ph.D. in virology from Purdue University, and an M.S. in microbiology and a B.A. in biology, both from North Texas State University.

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Wayne Morges, Ph.D.  Dr. Morges has been our Senior Vice President, Regulatory Affairs and Quality since October 2010 and was previously the Vice President, Regulatory Affairs and Quality from the merger in August 2007 until October 2010, and held the same position with Former PharmAthene from January 2005 through August 3, 2007. Prior to that, Dr. Morges was the Vice President of Global Regulatory Affairs, Vaccines for Baxter Healthcare Corporation from June 2000 to November 2004. Previously, Dr. Morges worked at North American Vaccine Inc., and at Merck holding various positions of increasing responsibility in Merck’s vaccine division, including heading Quality and Regulatory Affairs for licensed biologicals. Dr. Morges earned a Ph.D. in microbiology and immunology from Hahnemann University and a B.S. and M.S. from The Pennsylvania State University.

Compensation Committee Interlocks and Insider Participation

All members of Board committees are independent Directors, and no member is or has been an employee or former employee of the Company. In addition, no Committee member had any relationship requiring disclosure under “Certain Relationships and Related Transactions” on page 34 of this Proxy Statement.

During the fiscal year ended December 31, 2013, none of our executive officers served on any compensation committee (or its equivalent) or the Board of Directors of any entity to the extent that such entity employs an executive officer who served on our Compensation Committee or Board.

Compensation Discussion and Analysis

This section discusses the principles underlying our executive compensation decisions. It provides qualitative information on the factors relevant to these decisions and the manner in which compensation is awarded to our Named Executive Officers (NEOs).

Compensation Objectives

The objectives of the Compensation Committee in establishing the Company’s compensation policy for executive officers and other employees are to:

The market for talented individuals in the biotechnology industry is highly competitive. The committee considers peer groups, survey data and, from time to time, advice from independent compensation consultants when determining the Company’s compensation structure. The committee has structured compensation between base salary and cash bonuses such that approximately 40% of our CEO’s and 25% of our other senior executives’ total cash compensation is at risk. Non-cash compensation for executive officers is structured to provide a reward for corporate and individual performance. The committee believes that this approach provides an appropriate incentive that aligns the executive officer compensation with the Company’s long-term strategic and performance goals, and also retains and motivates key executive officers.

Overview and Role of the Compensation Committee

The Compensation Committee reviews and approves the Company’s compensation policies. The specific roles of the Committee include:

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Compensation Process

The implementation of the compensation philosophy is carried out under the supervision of the committee. The compensation for our President and Chief Executive Officer, Mr. Richman, is approved by the Board after the committee has provided its analysis and recommendation. The compensation for the other executive officers is determined by the committee. Management, under guidelines approved by the committee, makes decisions regarding compensation of non-executive officer employees.

The Compensation Committee charter requires the committee to meet at least once per year, and in practice the committee meets several times per year. Typically late in the fourth quarter or early in the first quarter of the following year, annual executive officer performance reviews and life sciences company survey compensation data are reviewed and base salary adjustments, bonus payouts and annual equity grants approved. Annual performance goals are typically finalized in the first quarter.

Compensation Survey Data, Consultants and Peer Group

The Committee consults publicly available compensation survey data provided by third party vendors, such as Radford, for similarly sized life sciences companies (i.e., with between 50 and 149 employees). To evaluate the Company’s competitive position in the industry related to executive compensation, the committee has historically reviewed and analyzed survey data summarizing the compensation packages, including base salary levels, cash bonus awards and equity awards offered by other similarly sized life sciences companies. The committee believes selection use of these data on an annual basis provides useful long-term trend data for companies that compete with the Company for talent.

The committee has the authority to engage the services of independent compensation consultants, and it has done so from time to time in the past. The committee engaged James Reda & Associates as a third-party compensation consultant in late 2013 to assist the Committee in establishing annual compensation for 2014. In connection therewith, the committee referenced a group that consisted of: Arqule Inc., Biocryst Pharmaceuticals Inc., Biota Pharmaceuticals Inc., Biotime Inc., Chimerix Inc., Cleveland Biolabs, Inc. DynaVax Technologies Corp., Emergent Biosolutions Inc., Galena Biopharma Inc., Immunomedics inc.,

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Kalobios Pharmaceuticals Inc., Merrimack Pharmaceuticals, NovaVax Inc., Osiris Therapeutics Inc., Pergrine Pharmaceuticals Inc., Siga Technologies Inc., Sunesis Pharmaceuticals Inc., Targacept Inc., Tetraphase Pharmaceuticals Inc., Threshold Pharmaceuticals, Xoma Corp., Ziopharm Oncology Inc. In 2013, the committee engaged James Reda & Associates as a third-party compensation consultant to assist the Committee in establishing equity compensation awards for 2013. In 2012, the committee engaged James Reda & Associates, to assist it in designing and adopting the change in control compensation policy for executives. Specifically, at that time the committee looked at a peer group that consisted of: Somaxon Pharmaceuticals, Inc., Aelous Pharmaceuticals, Inc., Soligenix, Inc., Neurocrine Biosciences, Inc., Javelin Pharmaceuticals, Inc., SIGA Technologies, Inc., CombinatoRx, Incorporated (now known as Zalicus Inc.), Trubion Pharmaceuticals, Inc., Cypress BioScience, Inc., BioSphere Medical, Inc., Dynavax Technologies Corp., Osiris Therapeutics, Inc., Verenium Corporation, Xoma Ltd., ZymoGenetics Inc., and Emergent Biosolutions, Inc.

Components of Compensation

The Company’s compensation for executives consists of five components: base salary, cash bonuses, equity awards, and retirement benefits as provided under the Company’s 401(k) plan. The President and Chief Executive Officer annually reviews the performance and contributions of each executive officer (other than himself) and reports the results of such reviews to the Compensation Committee. The Board annually reviews the performance and contributions of the President and Chief Executive Officer.

Using significant discretion, the committee considers each executive’s performance, contributions, responsibilities, experience, and qualifications when determining the appropriate compensation level for each executive in light of the relevant compensation survey data. The components of the Company’s executive officer compensation are described below.

Base Salary

The base salary component of compensation is designed to compensate executive officers competitively at levels necessary to attract and retain qualified executives in the life sciences industry. As a general matter, the base salary for each executive officer is based on the scope of each executive’s responsibilities, as well as his/her qualifications, breadth of experience, performance record, and depth and breadth of applicable functional expertise. Base salaries of the executive officers are reviewed by the committee annually in light of personal and Company goal attainment, executive officer performance reviews and compensation survey data. Adjustments to each executive’s base salary are based upon individual performance, changes in the general level of base salaries of persons in comparable positions within the industry, as indicated by compensation survey data, and the average merit salary increase for such year for all employees of the Company established by the committee, as well as other factors the committee judges to be pertinent during an assessment period. In making base salary decisions, the committee exercises its discretion to determine the appropriate weight to be given to each of these factors. Adjustments may be made during the fiscal year for promotions, highly urgent competitive reasons, superior performance in response to changed or challenging circumstances and other special circumstances.

The NEO annualized base salaries for 2013 were as follows: Mr. Richman, President and Chief Executive Officer, $456,187; Mr. Karp, former Senior Vice President and General Counsel, $320,588; Ms. Chang, Senior Vice President, Chief Financial Officer and Corporate Secretary, $318,000; Ms. Cook, Senior Vice President, Policy and Government Affairs, $294,392; and Dr. Morges, Senior Vice President, Regulatory Affairs and Quality, $286,443.

Effective January 1, 2014, the executive officers’ annualized base salaries are as follows: $496,460 for Mr. Richman; $330,720 for Ms. Chang; $303,959 for Ms. Cook; and $295,752 for Dr. Morges. These adjustments to base salaries were established on expected market trends for merit increases and each officer’s base salary relative to his peer group. This resulted in an approximate 5.3 percent increase in base salary for these individuals. Effective February 1, 2014, the annualized base salaries of Ms. Chang, Ms. Cook and Dr. Morges were increased by $10,000 as a result of the elimination of their monthly automobile allowances.

Cash Bonuses

The Compensation Committee has adopted a bonus program (the “Bonus Program”) for our executive officers and other employees to be identified from time to time by the Chief Executive Officer. The Bonus Program was established to provide for the payment to members of management and identified employees of a

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bonus that is linked to achievement of key corporate performance objectives and, in the case of executives, also to the achievement of key personal objectives. The goal of the Bonus Program is to reward personnel by providing further compensation to members of management and identified employees based on the achievement of specified annual goals that the Compensation Committee and the Board believe correlate closely with the growth of long-term stockholder value. We believe that the Bonus Program also promotes greater communication among employees and fosters the appropriate feedback for enhanced productivity and effectiveness.

The Bonus Program is applicable to the following members of management, among other employees: the President and Chief Executive Officer, Senior Vice President, Chief Financial Officer and Corporate Secretary, the Senior Vice President and General Counsel (which position was eliminated on January 30, 2014), the Senior Vice President, Policy and Government Affairs, and the Senior Vice President, Regulatory Affairs and Quality. The Chief Executive reviews and approves the annual performance objectives of each of his senior executives. Annually and based upon the recommendations of the Chief Executive Officer, the Compensation Committee approves (i) a target bonus pool amount, (ii) a target bonus payout for each executive in the Bonus Program, (iii) the corporate achievement percentages and any other one-off bonus adjustments that will be used to determine the corporate performance component of the bonus based upon a comparison of the Company’s financial and operational performance for the fiscal year against the approved financial and operating plan for the fiscal year, and (iv) the relative weight or importance of the corporate performance objectives and the personal performance objectives. Annually, the Compensation Committee reviews the Company’s actual financial and operational performance and each executive’s personal performance to determine the appropriate adjustment to the executive’s target bonus.

Determining the annual target bonus pool.  In each fiscal year, the committee determines a target bonus pool for that fiscal year, how much of that pool should be allocated to executive officers and how much should be allocated to all other personnel. This pool will be a target which may be revised by the committee in its discretion.

For fiscal year 2013, the target bonus pool was equal to the approximate sum of (i) 60% of the base salary for the Chief Executive Officer, (ii) 30% of the aggregate base salary of the other executives and certain other key employees, and (iii) 10% of the aggregate base salary of all other employees of the Company. The target bonus pool for the Chief Executive Officer and other senior executives was based on bonus targets set forth in the employment agreements for those individuals.

The pool was divided among the relevant executives with reference to the achievement of specific personal and corporate performance targets. Generally, the Compensation Committee has the discretion to award more or less than the target bonus payout; and any particular executive or key employee may be awarded a bonus that is greater or less than 30% of their base salary and any non-executive employee may be awarded a bonus that is greater or less than 10% of their base salary. The Board has the discretion to award more or less than the target bonus payout (i.e., 60% of base salary) for the CEO. Finally, the pool may be increased at the discretion of the committee to the extent new executive officers and other employees may be hired during the year.

Determining the annual target bonus payout.  During each fiscal year, the Compensation Committee determines the target bonus payout for each executive in the Bonus Program, taking into account any terms regarding bonuses which may be contained in each executive’s employment agreement. The Board will consider all factors that it deems relevant to such determination, including, but not limited to, the recommendations of our Chief Executive Officer (except with respect to his own bonus), competitive market conditions, and the Board’s assessment of the level of growth reflected in the Company’s financial performance objectives. The executives are not subject to a maximum bonus payout. Generally, bonuses will be paid in cash.

Determining the corporate achievement percentages and corporate performance objectives.  In each fiscal year, the Compensation Committee reviews with the executive team and establishes corporate performance objectives for the fiscal year that will apply to all senior executives, including the chief executive officer, and achievement percentages that will be used to evaluate the portion of the bonus applicable to each executive based upon the Company’s financial and operational performance.

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The Compensation Committee established with management the following corporate performance objectives for 2013, with percentage weighting reflecting the approximate percentage value to be placed upon the achievement of each target in the determination of whether the overall corporate performance objectives have been met:

The committee determined that the Company had achieved 25% of these goals in 2013.

The Compensation Committee established with management the following corporate performance objectives for 2014, with percentage weighting reflecting the approximate percentage value to be placed upon the achievement of each target in the determination of whether the overall corporate performance objectives have been met:

Determining personal performance objectives.  Each executive’s annual personal performance objectives are agreed upon by the executive and approved by our Chief Executive Officer (except with respect to his own personal objectives). The personal performance objectives of our Chief Executive Officer are the corporate performance objectives set forth above.

Determining relative weight of corporate performance objectives and personal objectives.  The Compensation Committee also evaluates the relative weight or importance that will be placed on achievement of the corporate performance objectives and the personal performance objectives.

Measuring performance.  After the end of the fiscal year, the Compensation Committee measures the Company’s actual performance against its corporate performance objectives and considers each executive’s personal performance against his or her personal performance objectives to determine the appropriate bonus allocable to each executive officer from the target bonus pool. The committee considers the executive’s overall contribution to the Company’s success and, in the case of executives other than the Chief Executive Officer, the recommendation of the Chief Executive Officer. In determining the appropriate bonuses, the Compensation Committee also considers other performance considerations related to unforeseen events occurring during the fiscal year. The committee has discretion to award a bonus that is more or less than the amount determined by the procedures outlined above or to award no bonus at all.

Equity Awards

The committee provides the Company’s executive officers with long-term incentive compensation through grants of stock options and/or restricted stock awards (“RSAs”) under the 2007 Plan. The 2007 Plan creates a strong link to the Company’s long term financial and equity market performance, creates an ownership culture, and closely aligns the interests of our executive officers with the stockholders. The committee believes that these grants directly motivate an executive to maximize long-term stockholder value and create an effective tool for incentivizing and retaining those executives who are most responsible for influencing stockholder value. The grants also utilize vesting periods that encourage key executives to continue in the employ of the Company. Among other things, the committee considers individual performance of the executive officer, the anticipated contribution of the executive officer to the attainment of the Company’s long-term strategic performance goals, and retention and motivation of key executives in determining equity awards. The equity awards for each year are set to enable the Company to attract, motivate, and retain highly skilled executives. Long-term incentives granted in prior years may be taken into consideration, but do not play a significant role in current year determinations.

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It has been the Company’s practice to make equity-based awards to our executives on an annual basis. Annual non-qualified stock option awards to executives typically vest over four years and have a ten year term. In addition, from time to time, the Company has granted additional stock options to specific executive officers for promotions, superior performance in response to changed or challenging circumstances and other special circumstances. All stock option awards are priced based upon the closing price of the Company’s common stock on the date of grant, which is also the approval date, by the committee or Board. From time to time the Company has also granted RSAs, with varying vesting periods. The Company does not maintain any equity ownership guidelines for its executive officers.

On January 29, 2014, the Compensation Committee approved stock option awards to the executive officers, other than the CEO, under the 2007 Plan. The Board approved a stock option award to the CEO on January 29, 2014 under the 2007 Plan. The stock option awards were determined based on individual performance and contribution to long-term strategic and performance goals and as well as retention and motivation of the NEOs. The individual grants of stock options to executive officers were: Mr. Richman 320,000 stock options; Ms. Chang 210,000 stock options; Ms. Cook 195,000 stock options; and Dr. Morges 190,000. These stock options vests 25% per year starting on the first anniversary of the date of grant.

Retirement Benefits

The terms of the Company’s 401(k) Savings Plan (the “401(k) Plan”) provide for executive officer and broad-based employee participation on the same general terms. Under the 401(k) Plan, all Company employees were formerly eligible to receive from the Company matching contributions that vested 25% per year over four years. The Company’s basic matching contribution for the 401(k) Plan was suspended September 1, 2010 and subsequently reinstated on July 1, 2013.

Severance Agreements and Other Benefits

Executive officers are eligible to participate in the Company’s employee benefit plans on the same terms as all other full-time employees. These plans include medical, dental and life insurance. In addition to the benefits available to all employees, we provide our executive officers with certain additional benefits that we believe reflect market standards and are reasonable and necessary to attract and/or retain each of our executive officers and allow the executive officers to realize the full benefit of the other elements of compensation we provide. These benefits include eligibility for four weeks of vacation from the date of hire.

In addition, executive officers are eligible to receive severance benefits in connection with terminations of employment due to death, disability, or termination without cause or constructive termination (including following a change-in-control) as set forth below and more fully described in the sections entitled “Employment Agreements” and “Severance Plan” below. The Compensation Committee believes that the executive severance arrangements reflect current market standards and severance benefits competitive with those provided by our peer group. The Committee believes that to continue to retain the services of our key executive officers, it is important to provide them with some income and benefit protection against an involuntary termination of employment.

In the event that an executive dies or is disabled, the executive has the right to receive the unpaid portion of the base salary as of the date of termination, payment of the executive’s accrued but unpaid amounts and extension of applicable benefits in accordance with the terms of any incentive compensation, retirement, employee welfare or other employee benefit plans or programs of the Company in which the executive is then participating in accordance with the terms of such plans or programs, and reimbursement for any expenses for which the executive shall not have theretofore been reimbursed.

Upon the termination of an executive’s employment without cause or for “Good Reason,” in addition to the payments set forth in the immediately preceding paragraph, the executive has the right to receive base salary continuation for 6 months (12 months in the case of Mr. Richman and 9 months in the case of Ms. Chang). Base salary continuation is conditioned on the executive entering into a general release with terms reasonably satisfactory to the Company.

Under a severance plan adopted in May 2012, as amended, our Board approved the following severance plan for the Company’s executives in the event of termination of an executive’s employment without cause or for “Good Reason” in the event of a “change of control.” For our President and Chief Executive Officer, the

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plan includes: (a) payments equal to 24 months of base salary; (b) two times target annual cash bonus; (c) health and other benefits continuation for 24 months; and (d) an excise tax gross up. For the other executives, the plan includes (a) base salary continuation for 18 months; (b)1.5 times target annual cash bonus; (c) health and other benefits continuation for 18 months; and (d) in lieu of an excise tax gross up, a “best executive choice” provision under which the executive can elect to reduce his or her severance payment to the extent necessary to avoid triggering excise tax on such payment. Our Board can modify or terminate the severance plan at any time.

The committee believes that in order to continue to retain the services of our key executive officers and focus their efforts on stockholder interests when considering strategic alternatives, it is important to provide them with enhanced income and benefit protection against loss of employment in connection with a change-in-control of our Company and thereby align the interests of our stockholders and our executive officers.

Say-on-Pay Vote

Our annual advisory stockholder vote on our executive compensation practices (“say-on-pay”) was held at the 2013 Annual Meeting of Stockholders, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and applicable SEC rules. After consideration of this stockholder vote and given the substantial support received from stockholders (of the votes cast, approximately 90% were cast in favor of our executive compensation program), the Committee continues to apply the same general principles described in this compensation discussion and analysis in its determination of the amounts and types of executive compensation.

Tax Considerations

Section 162(m) Policy

The Compensation Committee has found it unnecessary to consider the applicability of Section 162(m) of the Internal Revenue Code (the “Code”) because no executive officer receives compensation in excess of one million dollars.

Summary Compensation Table

The following Summary Compensation Table sets forth, for the stated fiscal years, all compensation awarded to, earned by, or paid to our NEOs,” i.e., (i) all individuals serving as our principal executive officer or acting in a similar capacity during 2013 (“PEO”), (ii) all individuals serving as our principal financial officer or acting in a similar capacity during 2013(“PFO”), (iii) our three most highly compensated executive officers other than the PEO and the PFO who were serving as executive officers of the Company at December 31, 2013 and who received annual compensation in excess of $100,000, and (iv) up to two additional individuals who would have been included under (iii) above but for the fact that they were not serving as an executive officer of the Company at December 31, 2013.

Name and Principal Position		Year				Salary ($)				Bonus ($)(1)				Stock Awards ($)(2)				Option Awards ($)(2)				Non-equity Incentive Plan Compensation ($)(1)				All Other Compensation ($)				Total ($)
Eric I. Richman President and Chief Executive Officer, Director(3)			2013				456,187				—								455,600				68,428								980,215
			2012				442,900				146,157				—				129,915				—				—				718,972
			2011				435,000				93,560				131,000				225,312				—				—				884,872
Linda L. Chang Senior Vice President, Chief Financial Officer and Corporate Secretary(4)			2013				318,000				—				—				298,988				58,194				9,000				684,182
			2012				300,000				71,100				—				61,695				—				—				432,795
Jordan P. Karp, Esq. Senior Vice President and General Counsel(5)			2013				320,588				20,000				—				—				40,202				12,000				392,790
			2012				309,000				67,671				—				53,469				—				12,000				442,140
			2011				300,000				44,280				44,000				124,818				—				12,000				525,098

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Name and Principal Position		Year				Salary ($)				Bonus ($)(1)				Stock Awards ($)(2)				Option Awards ($)(2)				Non-equity Incentive Plan Compensation ($)(1)				All Other Compensation ($)				Total ($)
Francesca M. Cook Senior Vice President, Policy and Government Affairs(6)			2013				294,392				—				—				277,631				36,917				12,000				620,940
			2012				283,069				67,087				—				53,469				—				12,000				415,625
Wayne Morges, Ph.D. Senior Vice President Regulatory Affairs and Quality(7)			2013				286,443				40,000				—				270,513				35,920				12,000				644,876

Grants of Plan-Based Awards

The following table sets forth information regarding each grant of an award made to each NEO for the fiscal year ended December 31, 2013, but awarded in 2014, under any plan, contract, authorization or arrangement pursuant to which cash, securities, similar instruments or other property may be received.

Name		Grant Date				Number of Securities Underlying Options(1)				Exercise or Base Price of Option Awards ($/sh)(2)				Grant Date Fair Value of Option Awards ($)(3)
Eric I. Richman			01/29/2014				320,000				1.94				455,600
Linda L. Chang			01/29/2014				210,000				1.94				298,988
Francesca M. Cook			01/29/2014				195,000				1.94				277,631
Wayne Morges, Ph.D.			01/29/2014				190,000				1.94				270,513

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All 2013 equity awards were granted under our 2007 Long Term Incentive plan and vest in four equal installments on the first, second, third and fourth anniversaries of the grant date.

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth information concerning the outstanding equity awards of each of the NEOs in the Summary Compensation Table as of December 31, 2013.

As of December 31, 2013
		Option Awards																Stock Awards
Name		Number of Securities Underlying Unexercised Options Exercisable(1)				Number of Securities Underlying Unexercised Options Unexercisable(1)				Option Exercise Price ($)				Option Expiration Date				Number of Shares or Units That Have Not Vested(2)				Market Value of Shares or Units of Stock That Have Not Vested ($)(3)
Eric I. Richman, President and Chief Executive Officer(4)			11,043				—				3.80				1/18/2015	(5)
			4,510				—				3.80				2/22/2016	(6)
			8,282				—				3.80				1/4/2017	(7)
			260,000				—				5.20				10/2/2017	(8)
			30,573				—				2.46				1/21/2019	(9)
			75,000				25,000				1.51				3/25/2020	(10)
			100,000				—				1.48				5/18/2020	(11)
			93,750				31,250				4.20				10/20/2020	(12)
			93,750				31,250				3.34				11/3/2020	(13)
			168,750				56,250				3.91				12/23/2020	(14)
			25,000				—				1.76				9/30/2021	(15)
			75,000				75,000				1.16				12/7/2021	(16)
			91,121				—				1.16				12/7/2021	(17)
			37,500				112,500				1.19				12/12/2022	(18)
Jordan P. Karp, Esq., Senior Vice President and General Counsel			200,000				—				2.37				7/2/2018	(19)
			4,792				—				2.46				1/21/2019	(20)
			37,500				12,500				1.38				5/6/2020	(21)
			56,250				18,750				3.55				12/8/2020	(22)
			25,000				—				1.76				9/30/2021	(23)
			37,500				37,500				1.21				12/1/2021	(24)
			36,900				—				1.21				12/1/2021	(25)
			16,250				48,750				1.13				12/3/2022	(26)
Francesca M. Cook, Senior Vice President, Policy and Government Affairs			8,283				—				3.80				1/18/2015	(27)
			3,222				—				3.80				2/22/2016	(28)
			8,281				—				3.80				1/4/2017	(29)
			140,000				—				5.20				10/2/2017	(30)
			25,737				—				2.46				1/21/2019	(31)
			56,250				18,750				1.38				5/6/2020	(32)
			56,250				18,750				3.55				12/8/2020	(33)
			37,500				37,500				1.21				12/1/2021	(34)
			30,933				—				1.21				12/1/2021	(35)
			16,250				48,750				1.13				12/3/2022	(36)
Linda L. Chang, Senior Vice President, Chief Financial Officer and Corporate Secretary			20,000				—				1.59				11/7/2021	(37)			6,667	(39)			12,401
			75,000				75,000				1.59				11/7/2021	(37)
			18,750				56,250				1.13				12/3/2022	(38)

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As of December 31, 2013
		Option Awards																Stock Awards
Name		Number of Securities Underlying Unexercised Options Exercisable(1)				Number of Securities Underlying Unexercised Options Unexercisable(1)				Option Exercise Price ($)				Option Expiration Date				Number of Shares or Units That Have Not Vested(2)				Market Value of Shares or Units of Stock That Have Not Vested ($)(3)
Wayne Morges, Ph.D., Senior Vice President Regulatory Affairs and Quality			15,184				—				3.80				1/31/2015	(40)
			4,107				—				3.80				2/22/2016	(41)
			4,141				—				3.80				1/4/2017	(42)
			115,000				—				5.20				10/2/2017	(43)
			84,362				—				2.46				1/21/2019	(44)
			56,250				18,750				1.38				5/6/2020	(45)
			56,250				18,750				3.55				12/8/2020	(46)
			37,500				37,500				1.21				12/1/2021	(47)
			25,496				—				1.21				12/1/2021	(48)
			11,250				33,750				1.13				12/3/2022	(49)

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Option Exercises and Stock Awards Vested

The following table sets forth information regarding the vesting of restricted stock awards during the fiscal year ended December 31, 2013 for each NEO on an aggregated basis. There were no exercises of stock options during the fiscal year ended December 31, 2013 by a NEO.

		Stock Awards
Name		Number of Shares Acquired on Vest				Value Realized on Vest(1)
Linda L. Chang			6,666			$	13,799

Employment Agreements

Eric I. Richman

Mr. Richman was appointed our President and Chief Operating Officer on March 25, 2010, our Interim Chief Executive Officer on May 2, 2010, and our Chief Executive Officer on October 20, 2010. On December 23, 2010, we entered into a new employment agreement with Mr. Richman, for the period commencing on January 1, 2011 and ending on the first anniversary of such date. The term of the agreement is automatically extended for an additional year on each anniversary unless 90 days’ prior written notice of non-extension is provided, provided that a nonrenewal by the Company is treated as a termination without cause under the agreement.

Under the agreement, Mr. Richman is paid an annual base salary of $435,000, subject to annual review and increase at the option of the Compensation Committee of our Board. Effective January 1, 2014, Mr. Richman’s base salary was increased to $496,460. Mr. Richman is also eligible for an annual cash bonus, the target of which is no less than 60% of his base salary, based on the achievement of certain corporate objectives. The corporate objectives are determined on an annual basis by the Compensation Committee in consultation with Mr. Richman, while the achievement of such objectives will be determined by the Compensation Committee.

Pursuant to the agreement, as of December 23, 2010, Mr. Richman was granted an option under the Company’s 2007 Long-Term Incentive Compensation Plan, as amended, to purchase 225,000 shares of the Company’s common stock at an exercise price of $3.91 per share, the closing price of the Company’s

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common stock on the NYSE MKT on December 23, 2010. The option, which has a term of ten years, vests over a 4 year period with 25% each vesting on the first, second, third and fourth anniversaries of the grant date. In the event of a change in control during Mr. Richman’s employment period and a termination other than for cause or a termination for good reason occurs on or within twelve months of the consummation of the change in control, all equity issued by the Company held by Mr. Richman and not then vested (except for the restricted stock awards which are treated as described below) will immediately and fully vest.

In accordance with the agreement, Mr. Richman received a cash bonus for 2010 of $105,000. In addition, as of December 23, 2010, Mr. Richman was granted 35,000 shares of restricted stock of the Company under the 2007 Plan, which vested in full on the three month anniversary of the grant date.

Under the terms of the agreement, if Mr. Richman is terminated other than for cause or he resigns for good reason, he is entitled to receive, in addition to unpaid salary and expenses and payment of accrued incentive compensation amounts, (A) severance payments in the form of a continuation of his base salary in effect immediately prior to the termination for a period of 12 months following the termination, (B) a lump-sum payment equal to the accrued portion of his target bonus, including any unpaid portion of the prior year’s bonus, and (C) COBRA coverage, to the extent elected, provided at the same premiums as are charged to active employees for the same level of group health coverage for a period of 12 months following termination, all of which are payable in consideration for and only after he executes a general release containing terms reasonably satisfactory to us. The same provisions apply if Mr. Richman is terminated without cause or if he resigns for good reason within 12 months of a change of control and no new employment agreement has been entered into within 90 days of such change of control, except that Mr. Richman’s severance payment would be made in one lump-sum payment corresponding to 18 months’ salary. He would also receive his target bonus for the year of termination and all equity-based awards held by Mr. Richman would be deemed fully vested as of the date of termination.

The agreement specifies that Mr. Richman’s previous employment agreement with the Company was terminated as of January 1, 2011, other than with respect to provisions that specifically survive a termination thereof and other than with respect to the provision in Amendment No. 1 to his previous employment agreement relating to the grant of options to purchase 100,000 shares of the Company’s common stock, which vested in full on May 2, 2011. Amendment No. 1 to his previous employment agreement had been executed on May 18, 2010 in connection with Mr. Richman’s appointment to the position of President and Interim Chief Executive Officer. Under the amendment, Mr. Richman had been paid an annual base salary of $350,000 effective from May 2, 2010.

The December 23, 2010 agreement requires that during his employment and for a period of 12 months (in some cases 18 months) following termination of the employment, Mr. Richman shall not directly or indirectly engage in the development, production, marketing or sale of products that compete with our products or assist others in a competing business or induce other employees of the Company to terminate their employment with us or engage in a competing business. Mr. Richman is furthermore required to refrain from directly or indirectly disclosing any confidential information obtained while working at the Company.

The agreement further specifies that if Mr. Richman becomes entitled to severance payments, subject to a limited exception in case of adverse tax effects, all salary continuation payments shall be placed in an irrevocable grantor trust, the assets of which are to be used to make the severance payments to the executive or satisfy the claims of the Company’s unsecured general creditors in the event of the Company’s insolvency or bankruptcy. If Mr. Richman is a “specified employee” (as determined in accordance with Treasury Regulation Section 1.409A-1(i) or related Company policy) at the time of termination, the severance payments otherwise payable to Mr. Richman during the first six months following termination (to the extent they constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Internal Revenue Code and the regulations thereunder) will be deferred until the date that is six months after termination of employment (or earlier upon his death).

“Change in Control” is defined in the agreement as (i) an acquisition by any person, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of 30% or more of either (A) the then outstanding shares of common stock of the Company or (B) the combined voting power of the then outstanding voting securities of

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the Company entitled to vote generally in the election of Directors; excluding, however, certain acquisitions from or by the Company or an employee benefit plan sponsored or maintained by the Company; (ii) a merger, consolidation, reorganization or similar corporate transaction, in which outstanding shares of common stock are converted into (A) shares of stock of another company, other than a conversion into shares of voting common stock of the successor corporation (or a holding company thereof) representing 80% of the voting power of all capital stock thereof outstanding immediately after the merger or consolidation or (B) other securities (of either the Company or another company) or cash or other property; (iii) the issuance of shares of common stock in connection with a merger, consolidation, reorganization or similar corporate transaction in an amount in excess of 40% of the number of shares of common stock outstanding immediately prior to the consummation of such transaction; (iv) the (A) the sale or other disposition of all or substantially all of the assets of the Company or (B) a complete liquidation or dissolution of the Company; or (v) the adoption by the Board of a resolution to the effect that any person has acquired effective control of the business and affairs of the Company.

Termination “for good reason” is defined as a termination by the executive for (a) any material breach by the Company of our obligations under the employment agreement; (b) any material reduction in the executive’s duties, authority or responsibilities without the executive’s consent; (c) any assignment to the executive of duties or responsibilities materially inconsistent with the executive’s position and duties under the employment agreement without consent; (d) a relocation of the Company’s principal executive offices or our determination to require the executive to be based more than 25 miles away; (e) depriving the executive of any material benefit plan; (f) non-renewal by the Company of the agreement in accordance with the terms of the agreement; or (g) the failure by the Company to obtain the specific assumption of the employment agreement by any successor or assignee of the Company or any person acquiring substantially all of the Company’s assets. Mr. Richman may not terminate “for good reason” unless he first provides us with written notice specifying the good reason and provides us with 20 days in which to remedy the stated reason.

Termination “for cause” is defined as a termination for (1) willful and substantial misconduct that materially injures us and is not corrected; (2) repeated neglect of duties or failure to act, which can reasonably be expected to materially and adversely affect our business or affairs, after written notice from us; (3) material breach of the confidentiality and related provisions of the employment agreement or of our policies; (4) commission of material fraud with respect to our business and affairs; (5) conviction of, or nolo contendere plea to, a felony; (6) demonstrable gross negligence or (7) habitual insobriety or use of illegal drugs adversely affecting the executive’s duties.

Please also read the disclosure under “— Severance Plan” below with respect to “change of control” events.

Jordan P. Karp, Esq.

On June 30, 2008, we entered into an employment agreement with Jordan P. Karp, Esq. under which Mr. Karp served as our General Counsel, for the period commencing on June 30, 2008 and ending on the first anniversary of such date. The term of the agreement was automatically extended for an additional year on each anniversary unless 90 days’ prior written notice of non-extension is provided.

Under the agreement, Mr. Karp was initially paid an annual base salary of $275,000, subject to annual review and increase at the option of the Compensation Committee. For 2013, Mr. Karp’s annual base salary was $320,588. Mr. Karp was also eligible for an annual cash bonus of up to 30% of his base salary payable at the sole discretion of the Compensation Committee.

The agreement reflects the grant of an option, under the Company’s 2007 Long-Term Incentive Compensation Plan, as amended, to purchase up to 200,000 shares of the Company’s common stock at an exercise price of $2.37 per share, the closing price of the Company’s common stock on the NYSE MKT on the date of grant. The option, which has a term of ten years, vested in four equal installments beginning on the first anniversary of the date of grant.

Under the terms of his agreement, if Mr. Karp was terminated other than for cause or he resigned for good reason, he was entitled to receive, in addition to unpaid salary and expenses and payment of accrued incentive compensation amounts, severance payments in the form of a continuation of his base salary in effect

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immediately prior to the termination for a period of six months following the termination, which were payable in consideration for and only after he executes a general release containing terms reasonably satisfactory to us. The definitions in Mr. Richman’s employment agreement of termination “for cause” and “for good reason” also apply, except that non-renewal by the Company of the agreement in accordance with the terms of the agreement does not qualify as a termination “for good reason” in the employment agreement for Mr. Karp. Please also read the disclosure under “— Severance Plan” below with respect to “change of control” events.

On January 30, 2014, the Company eliminated the position of General Counsel and terminated Mr. Karp as Senior Vice President and General Counsel of the Company. In connection therewith, the Company agreed to pay Mr. Karp an amount equal to six months of salary and to reimburse him for six months of health insurance, among other things. Mr. Karp exercised 136,900 of his 531,692 stock options during the three month period ended March 31, 2014. With the exception of Mr. Karp’s December 3, 2012 award, effective 90 days after Mr. Karp’s termination on January 30, 2014, all of Mr. Karp’s options expired, unless exercised.

Linda L. Chang

On February 7, 2012, we entered into an employment agreement with Linda L. Chang, under which Ms. Chang serves as our Chief Financial Officer, for the period commencing on February 7, 2012 and ending on the first anniversary of her hiring date, November 7, 2012. The term of the agreement is automatically extended for an additional year on each anniversary unless 90 days’ prior written notice of non-extension is provided.

Under the agreement, Ms. Chang is paid an annual base salary of $300,000, subject to annual review and increase at the option of the Compensation Committee. Effective January 1, 2014, Ms. Chang’s base salary was increased to $330,720. Ms. Chang is also eligible for an annual cash bonus of up to 30% of her base salary payable at the sole discretion of the Compensation Committee, and may be eligible for additional bonuses at the option and sole discretion of the Compensation Committee based on the achievement of certain pre-determined performance milestones.

The agreement reflected payment of a $25,000 signing bonus upon her employment with the Company, with the requirement that she repay such amount if she resigns her employment for any reason other than for “good reason” or the Company terminates her employment for “cause” prior to November 7, 2012. The agreement reflected the grant of an option, under the 2007 Plan to purchase up to 170,000 shares of the Company’s common stock at an exercise price of $1.59 per share, the closing price of the Company’s common stock on the NYSE MKT on the date of grant. The option, which has a term of ten years, vests immediately with respect to 20,000 shares, with the remaining 150,000 shares vesting over a 4 year period with 25% each vesting on the first, second, third and fourth anniversaries of the grant date. The agreement also reflected the award of a restricted share grant of 20,000 shares of Company common stock under the 2007 Plan vesting at a rate of 33 1/3^rd% per year starting on the first anniversary of the date of grant.

Under the terms of the agreement, if Ms. Chang is terminated other than for cause or she resigns for good reason, she is entitled to receive, in addition to unpaid salary and expenses and payment of accrued incentive compensation amounts, severance payments in the form of a continuation of her base salary in effect immediately prior to the termination for a period of nine months following the termination, which are payable in consideration for and only after she executes a general release containing terms reasonably satisfactory to us. The definitions in Mr. Richman’s employment agreement of termination “for cause” and “for good reason” also apply, except that non-renewal by the Company of the agreement in accordance with the terms of the agreement does not qualify as a termination “for good reason” in the employment agreement for Ms. Chang. Please also read the disclosure under “— Severance Plan” below with respect to “change of control” events.

Francesca M. Cook

On April 18, 2008, we entered into an employment agreement with Francesca M. Cook, under which Ms. Cook serves as our Vice President, Policy & Government Affairs, for the period commencing on April 18, 2008 and ending on the first anniversary of such date. The term of the agreement is automatically extended for an additional year on each anniversary unless 90 days’ prior written notice of non-extension is provided.

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Under the agreement, Ms. Cook is paid an annual base salary of $294,392, subject to annual review and increase at the option of the Compensation Committee. Effective January 1, 2014, Ms. Cook’s base salary was increased to $303,959. Ms. Cook is also eligible for an annual cash bonus of up to 30% of her base salary payable at the sole discretion of the Compensation Committee, and may be eligible for additional bonuses at the option and sole discretion of the Compensation Committee based on the achievement of certain pre-determined performance milestones.

Under the terms of her agreement, if Ms. Cook is terminated other than for cause or she resigns for good reason, she is entitled to receive, in addition to unpaid salary and expenses and payment of accrued incentive compensation amounts, severance payments in the form of a continuation of her base salary in effect immediately prior to the termination for a period of six months following the termination, which are payable in consideration for and only after she executes a general release containing terms reasonably satisfactory to us. The definitions in Mr. Richman’s employment agreement of termination “for cause” and “for good reason” also apply, except that non-renewal by the Company of the agreement in accordance with the terms of the agreement does not qualify as a termination “for good reason” in the employment agreement for Ms. Cook. Please also read the disclosure under “— Severance Plan” below with respect to “change of control” events.

Wayne Morges, Ph.D.

On August 12, 2008, we entered into an employment agreement with Wayne Morges, Ph.D. under which Dr. Morges serves as our Vice President, Regulatory Affairs and Quality, for the period commencing on April 18, 2008 and ending on April 18, 2009. The term of the agreement is automatically extended for an additional year on each anniversary unless 90 days’ prior written notice of non-extension is provided.

Under the agreement, Dr. Morges is paid an annual base salary of $286,443, subject to annual review and increase at the option of the Compensation Committee. Effective January 1, 2014, Dr. Morges’ base salary was increased to $295,752. Dr. Morges is also eligible for an annual cash bonus of up to 30% of his base salary payable at the sole discretion of the Compensation Committee, and may be eligible for additional bonuses at the option and sole discretion of the Compensation Committee based on the achievement of certain pre-determined performance milestones.

Potential Payments upon Termination or Change of Control

Termination Without Cause/For Good Reason After a Change of Control

Severance Plan

On May 9, 2012, our Board approved the following severance plan (the “Severance Plan”) for our Chief Executive Officer and certain other executives, including our Chief Financial Officer and each NEO (collectively, the “Covered Executives”), which applies in case of a “change of control.” For our President and Chief Executive Officer, the Severance Plan includes: (a) payments equal to 24 months worth of base salary; (b) two times target annual cash bonus; (c) health and other benefits continuation for 24 months; and (d) an excise tax gross up. For the other Covered Executives, the Severance Plan includes (a) base salary continuation for 18 months; (b) 1.5 times target annual cash bonus; (c) health and other benefits continuation for 18 months; and (d) in lieu of an excise tax gross up, a “best executive choice” provision under which the executive can elect to reduce his or her severance payment to the extent necessary to avoid triggering excise tax on such payment. Our Board can modify or terminate the Severance Plan at any time.

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The following table sets forth the amount of potential payments and value of benefits that each NEO, who was serving as an executive officer on December 31, 2013, would have received if we had terminated the executive officer’s employment on December 31, 2013 following a “change of control” as specified under the Severance Plan:

Name		Cash Payments ($)(1)				Value of Benefits ($)(2)				Value of Options ($)(3)				Excise Tax Gross Up ($)(4)
Eric I. Richman			1,459,798				55,000				136,625				620,263
Jordan P. Karp, Esq.			625,147				55,000				—				—
Francesca M. Cook			574,064				36,000				—				—
Linda L. Chang			620,100				14,000				—				—
Wayne Morges, Ph.D.			558,564				44,000				—				—

Termination without Cause/For Good Reason in the Absence of a Change of Control

The following table sets forth the percentage of base salary and the stated period for continued employee benefits to which each of our NEOs is entitled, if we terminated the executive officer’s employment without cause or if the NEO resigned for good reason on December 31, 2013, as set forth in the relevant employment agreement.

Name		Percentage of Annual Base Salary and Bonus		Stated Period for Continued Employee Benefits
Eric I. Richman		100% of salary for 12 months; lump-sum payment of accrued portion of target bonus and unpaid portion of prior year’s bonus		12 Months
Francesca M. Cook		100% of salary for 6 months		—
Linda L. Chang		100% of salary for 9 months		—
Wayne Morges, Ph.D.		100% of salary for 6 months		—

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The following table sets forth the amount of potential payments and value of benefits that each NEO, who was serving as an executive officer on December 31, 2013, would have received if we had terminated the executive officer’s employment without cause or if the NEO resigned for good reason on December 31, 2013.

Name		Cash Payments ($)(1)				Value of Benefits ($)(2)				Value of Options ($)(3)
Eric I. Richman			456,187				27,500				136,625
Francesca M. Cook			147,196				—				—
Linda L. Chang			238,500				—				—
Wayne Morges, Ph.D.			143,222				—				—

Equity Compensation Plan Information

The following table provides information regarding the number of securities to be issued under our 2007 Plan, the weighted-average exercise price of options issued under the 2007 Plan and the number of securities remaining available for future issuance under the 2007 Plan, in each case as of December 31, 2013:

Plan Category		Number of securities to be issued upon exercise of outstanding options, warrants and rights				Weighted-average exercise price of outstanding options, warrants and rights ($)				Number of securities remaining available for future issuance under equity compensation plans
Equity compensation plans approved by security holders			5,974,039	(1)			2.52				8,559,328	(2)
Equity compensation plans not approved by security holders			—				—				—
Total			5,974,039				2.52				8,559,328

Further information regarding our 2007 Plan is contained in Note 8 to our consolidated financial statements for the fiscal year ended December 31, 2013 contained in our Annual Report on Form 10-K for that year.

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Certain Relationships and Related Transactions

Other than as disclosed pursuant to Item 402 of Regulation S-K in the sections “Director Compensation” and “Executives and Executive Compensation” above, no reportable transactions as described in Item 404(a) of Regulation S-K took place in the year ended December 31, 2013 through the date of this Proxy Statement.

There are no familial relationships among our Directors, nominees and/or executive officers.

The information required by Item 407(a) of Regulation S-K on Director Independence is incorporated herein by reference to “Corporate Governance; Board of Directors” in this Proxy Statement.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our Directors, executive officers, and persons who own more than 10% of our common stock to file reports of ownership and changes in ownership of our common stock with the SEC. Based solely on our review of copies of these reports filed with the SEC, we believe there has been compliance with all Section 16(a) filing requirements applicable to such Directors, executive officers and 10% beneficial owners for 2013.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information, as it was available to the Company on April 17, 2014, except as otherwise indicated, based on information furnished by the persons named below, obtained from our transfer agent and/or obtained from certain beneficial ownership filings made by the persons named below with the SEC, with respect to the beneficial ownership of shares of the Company’s common stock by (i) each person known by us to be the beneficial owner of more than 5% of our outstanding shares of the Company’s common stock (inclusion in this table shall not be deemed an admission of affiliate status), (ii) each Director, nominee for Director and NEO and (iii) all Directors and executive officers as a group. Except as indicated in the footnotes to the table, the persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them.

Name of Beneficial Owner(1)		Number of Shares Beneficially Owned				Percentage of Outstanding Shares(2)
Funds Affiliated with MPM Bioventures III, L.P.(3)			7,168,930				13.00	%
Funds Affiliated with Prescott Group Capital Management, L.L.C.(4)			5,244,835				9.66	%
Steven St. Peter, M.D.(5)**			40,000				*
John M. Gill(6)**			171,104				*
Joel W. McCleary(7)**			306,904				*
Derace L. Schaffer, M.D.(8)**			1,281,043				2.35	%
Eric I. Richman(9)**			1,288,295				2.32	%
Jeffrey W. Runge, M.D.(10)**			137,700				*
Mitchel B. Sayare, Ph.D.(11)**			212,794				*
Brian A. Markison(12)**			60,000				*
Linda L. Chang(13)			143,750				*
Jordan P. Karp, Esq.(14)			446,121				*
Francesca M. Cook(15)			440,582				*
Wayne Morges, Ph.D.(16)			456,808				*
All directors and executive officers as a group (11 persons)***			4,538,980				7.91	%

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PROPOSAL 2
  
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

General

Our Audit Committee has appointed E&Y as our independent registered public accountants for the fiscal year ending December 31, 2014 (the “E&Y Appointment”). Although we are not required to have the stockholders ratify the selection of E&Y as our independent registered public accounting firm, we are doing so because we believe it is a matter of good corporate practice. If the stockholders do not ratify the selection, the Audit Committee will reconsider whether or not to retain E&Y but may retain such independent registered public accounting firm in any event. Even if the selection is ratified, the Audit Committee, in its discretion, may change the appointment at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders.

During the two most recent fiscal years and the interim period preceding the engagement of E&Y, the Company has not consulted with E&Y regarding either: (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements; or (ii) any matter that was either the subject of a disagreement or reportable event identified in paragraph (a)(1)(iv) of Item 304 of Regulation S-K.

Audit Fees, Audit-Related Fees, Tax Fees and Other Fees

The following table sets forth the aggregate fees billed to the Company during the fiscal years ended December 31, 2013 and 2012 by E&Y:

		Fiscal 2013 ($)				Fiscal 2012 ($)
Audit Fees(1)			524,685				493,111
Audit-Related Fees(2)			208,676				84,142
Tax Fees(3)			80,859				73,866
Total Fees			814,220				651,119

Pre-Approval of Audit and Permissible Non-Audit Services

Our Audit Committee has considered whether the provisions of services described in the table above are compatible with maintaining auditor independence. Our Audit Committee requires pre-approval of all audit and non-audit services in one of two methods, and each of the permitted non-auditing services described above has been pre-approved by the Audit Committee. Under the first method, the engagement to render the services would be entered into pursuant to pre-approval policies and procedures established by the Audit Committee, provided (i) the policies and procedures are detailed as to the services to be performed, (ii) the Audit Committee is informed of each service, and (iii) such policies and procedures do not include delegation

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of the Audit Committee’s responsibilities under the Exchange Act to the Company’s management. Under the second method, the engagement to render the services would be presented to and pre-approved by the Audit Committee (subject to the de minimis exceptions for non-audit services described in Section 10A(i)(1)(B) of the Exchange Act that are approved by the Audit Committee prior to the completion of the audit). The Chairman of the Audit Committee has the authority to grant pre-approvals of audit and permissible non-audit services by the independent registered public accounting firm, provided that all pre-approvals by the Chairman must be presented to the full Audit Committee at its next scheduled meeting.

Votes Required

Each share of our common stock has the right to cast one vote on the E&Y Appointment. Ratification and approval of the E&Y Appointment requires the favorable vote of a majority of the shares of our common stock that are entitled to vote and are present in person or represented by proxy at the Annual Meeting. As a result, abstentions from voting on the E&Y Appointment will have the same effect as a vote against the E&Y Appointment. However, broker non-votes are considered not to be present for voting on the E&Y Appointment and, consequently, do not count as votes for or against the E&Y Appointment and are not considered in calculating the number of votes necessary for approval.

Recommendation

OUR BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE RATIFICATION PROPOSAL.

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Other Information

Annual Report on Form 10-K

Our Annual Report on Form 10-K (including financial statements and the financial statement schedules but without exhibits) for our fiscal year ended December 31, 2013 accompanies this Proxy Statement but does not constitute a part of our proxy solicitation materials. We will furnish additional copies of our Form 10-K, without charge, to any person whose vote is solicited by this Proxy Statement upon written request to the following address: PharmAthene, Inc., One Park Place, Suite 450, Annapolis, Maryland 21401, c/o Corporate Secretary. In addition, upon written request, we will furnish a copy of any exhibit to our Form 10-K to any person whose vote is solicited by this Proxy Statement upon payment of our reasonable expenses incurred in connection with providing the copy of the exhibit.

Reports Filed with the U.S. Securities and Exchange Commission

We maintain an internet website at www.pharmathene.com. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendment to those reports, are available free of charge on our website under the heading “Investor Relations” (see “SEC Filings”) immediately after they are filed with or furnished to the SEC.

Stockholder Proposals for 2015 Annual Meeting

In order for a stockholder proposal to be considered for inclusion in our Proxy Statement for the next Annual Meeting pursuant to Rule 14a-8 of the SEC, the proposal must be received at the Company’s offices no later than the close of business on January 9, 2015 (120 days prior to the first anniversary of the date of this Proxy Statement). If we change the date of our 2015 Annual Meeting such that it is more than 30 days from the corresponding date of the 2014 Annual Meeting, then the deadline is a reasonable time before we begin to print and send our proxy materials. Upon any determination that the date of the 2015 Annual Meeting will be advanced or delayed by more than 30 days from the corresponding date of the 2014 Annual Meeting, we will disclose the change in the earliest practicable Quarterly Report on Form 10-Q.

For any proposal that is not submitted for inclusion in next year’s Proxy Statement by the deadline identified above, SEC rules permit management to vote proxies in its discretion if the Company: (a) receives notice of the proposal more than 45 days prior to the anniversary of the date of this Proxy Statement and the Company advises stockholders in next year’s Proxy Statement about the nature of the matter and how management intends to vote on such matter (subject to the right of the proposing stockholder to deliver a Proxy Statement and proxy of its own in compliance with the terms of Rule 14a-4(c)(2) under the Exchange Act and our by-laws), or (b) does not receive notice of the proposal at least 45 days prior to the anniversary of the date of this Proxy statement. If we change the date of our 2015 Annual Meeting by more than 30 days from the date of the 2014 Annual Meeting, then the deadline is a reasonable time before we begin to print and send our proxy materials. In addition, our by-laws provide that stockholders must provide notice and other materials relating to any business to be proposed by stockholders for consideration at our annual meeting of stockholders, including but not limited to the nomination by a stockholder of candidates to stand for election as a member of our Board of Directors, not less than 90 nor more than 120 days prior to the anniversary of the preceding year’s annual meeting of stockholders, with certain exceptions in the event the meeting date changes significantly from the prior year’s meeting date.

Any stockholder who wishes to submit a stockholder proposal should send it to PharmAthene, Inc., One Park Place, Suite 450, Annapolis, Maryland 21401, c/o Corporate Secretary.

Householding

Beneficial owners of common stock who share a single address may receive only one copy of the Notice or the proxy materials, as the case may be, unless their broker, bank or nominee has received contrary instructions from any beneficial owner at that address. This practice, known as “householding,” is designed to reduce printing and mailing costs. If any beneficial owner(s) at such an address wish to discontinue householding and receive a separate copy of the Notice or the proxy materials, as the case may be, or if

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beneficial owners sharing an address who are currently receiving separate copies wish to receive only one copy, they may contact Broadridge, either by calling (800) 579-1639, or by writing to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717.

By Order of the Board,
  
Mitchel B. Sayare, Ph.D.
Chairman

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