on Monday announced the immediate resignation of Donald Drakeman as CEO and president -- posts he's held for nearly two decades.
Drakeman, who had the titles since the company's founding in 1987, also resigned from the board. His departure came as the board of directors revealed more information about an internal investigation into stock-options practices going back to 1996.
The investigation found that prior to 2002 Medarex "had a practice, in many instances," of issuing stock-option grants and restricted-stock grants on dates when "the stock price was relatively low, without disclosing the selection in its public filings and without taking a compensation charge."
The board "has not, however, found evidence demonstrating fraud or willful misconduct on the part of the company or its current or former management," Medarex said.
The internal probe was disclosed in June, and two months later, Medarex said it would
restate all quarterly and fiscal-year earnings back to 2000.
After reviewing 3.5 million documents and interviewing more than 50 witnesses, the board said all directors who received improperly dated options should pay back to Medarex any gains and should reprice options to reflect a proper exercise price. The board said the repayment and repricing applies to top officers who were involved in granting options.
"All such directors and senior officers have agreed to do so," Medarex said.
Medarex has been cooperating with an informal investigation by the
Securities and Exchange Commission
that started in May. The company has also received a grand jury subpoena from the U.S. Attorney's Office in New Jersey.
The resignation of Drakeman, 52, who was re-elected to a new three-year board term in May, was accompanied by the resignation of Michael Appelbaum, a board member since 1991. Appelbaum was chief financial officer from July 1991 to October 2000, and he remained as executive vice president until his retirement at the end of 2003.
"Given the issues that have been raised in recent months, the company, Dr. Drakeman and Mr. Appelbaum have agreed that the best way for Medarex to put those issues behind it and to remain sharply focused on its vital mission is for Dr. Drakeman and Mr. Appelbaum to step down from the board, and for Dr. Drakeman to step down as president and CEO," said Irwin Lerner, the company's chairman.
Drakeman will remain an employee until Jan. 4 and serve as a consultant until March 25.
Lerner, 75, will become interim CEO while the Princeton, N.J.-based company searches for a new chief executive. Lerner has been a Medarex board member since September 1995 and chairman since May 1997.
Medarex works at making genetically engineered versions of antibodies into more effective fighters against several types of cancer and inflammatory diseases. Partners using Medarex technology include
Johnson & Johnson
Shares of Medarex rose 73 cents, or 6%, to $12.92.