SCHEDULE 14A

(Rule 14a-101)

 

INFORMATION REQUIRED IN PROXY STATEMENT

 

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No.  )

 

Filed by the Registrant x

 

Filed by a Party other than the Registrant o

 

Check the appropriate box:

 

 

NOVEN PHARMACEUTICALS, 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):

 

 

o  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

April 29, 2008

Dear Stockholder:

     The 2008 Annual Meeting of Stockholders of Noven Pharmaceuticals, Inc. will convene at 11:00 a.m. on Thursday, June 5, 2008. The meeting will be held at the Nasdaq MarketSite, 4 Times Square, New York, NY 10036. Details regarding the business to be conducted at the meeting are described in the accompanying Notice of Annual Meeting and Proxy Statement.

     Your vote on these matters is important. Whether or not you plan to attend the meeting, I hope you will vote as soon as possible. Most of you may now vote your shares over the Internet, as well as by telephone or by mailing a traditional proxy card. Voting over the Internet, by telephone or by written proxy will assure that your shares are voted if you do not attend in person. Please review the instructions on the enclosed proxy card or voting instruction card regarding which of these options is available to you, and how to vote your shares.

     We hope you will participate in your Annual Meeting, if not in person, then by proxy. To attend the meeting, you will need an admission ticket and we ask that you request one by following the procedure on page 1 of the Proxy Statement. We appreciate your continued support.

Sincerely yours,

WAYNE P. YETTER
Chairman of the Board

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TIME		11:00 a.m. on Thursday, June 5, 2008
PLACE		Nasdaq MarketSite, 4 Times Square, New York, NY 10036
ITEMS OF BUSINESS		1. To elect eight members to the Board of Directors. 2. To ratify the appointment of Deloitte & Touche LLP as Noven’s independent registered public accounting firm. 3. To transact such other business as may properly come before the meeting and any adjournment thereof.
RECORD DATE		You are entitled to vote if you were a Noven stockholder at the close of business on April 25, 2008.
ANNUAL REPORT		Noven’s 2007 Annual Report, which is not a part of the proxy soliciting material, is enclosed.
PROXY VOTING		If you own shares of record, you will find enclosed a proxy card or cards and an envelope in which to return the card(s). Whether or not you plan to attend this meeting, please sign, date and return your enclosed proxy card(s) as soon as possible so your shares can be voted at the meeting in accordance with your instructions. Any proxy may be revoked in the manner described on page 3 in the accompanying Proxy Statement at any time prior to its exercise at the meeting. If you hold your shares in street name, you may instruct your broker or nominee to vote your shares by following instructions that the broker or nominee provides you.

Jeff T. Mihm
Vice President, General Counsel
& Corporate Secretary

This Proxy Statement and accompanying proxy card are being distributed on or about May 5, 2008.

TABLE OF CONTENTS

		Page
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING			1
PROPOSAL 1 – ELECTION OF DIRECTORS			6
Governance of the Company			8
Related Party Transactions			14
Stockholder Communication with Directors			16
Director Compensation			17
Executive Compensation			19
Compensation Discussion and Analysis			19
Summary Compensation Table			32
Grants of Plan-Based Awards in 2007			35
Outstanding Equity Awards at 2007 Year-End			36
Option Exercises and Stock Vested in 2007			38
Non-qualified Deferred Compensation in 2007			38
Change of Control and Termination Payments			40
Employment Agreement for Peter C. Brandt			45
PROPOSAL 2 – RATIFICATION AND APPROVAL OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			46
OTHER INFORMATION			50
Share Ownership of Certain Beneficial Owners and Management			50
Compliance with Section 16(a) of the Securities Exchange Act of 1934			52
Delivery of Voting Materials			52

QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS
AND THE ANNUAL MEETING

Q:		Why am I receiving these materials?
A:		The Board of Directors (the “Board”) of Noven Pharmaceuticals, Inc. (“Noven”) is providing these proxy materials to solicit your proxy in connection with Noven’s annual meeting of stockholders, which will take place on June 5, 2008. You are invited to attend the meeting and are requested to vote on the proposals described in this Proxy Statement.
Q:		What information is contained in these materials?
A:		The information included in this Proxy Statement relates to the proposals to be voted on at the meeting, the voting process, the compensation of directors and Noven’s most highly paid officers, and other required information. We are also sending Noven’s 2007 Annual Report with these materials, but it does not constitute part of our proxy soliciting material.
Q:		How can I attend the annual meeting of stockholders?
A:		A stockholder who wishes to attend in person must have a ticket of admission. Each stockholder may request one ticket either by mail addressed to the Corporate Secretary in care of Noven Pharmaceuticals, Inc., 11960 SW 144th Street, Miami, Florida 33186 or by e-mail to abowman@noven.com. If you forget to bring your admission ticket, you can attend the Annual Meeting only if you are a stockholder on the Company’s records and offer satisfactory identification. If you hold your shares of Common Stock through a broker, bank or nominee, you will need a voting instructions card from your broker as proof of ownership. All stockholders will be required to present valid picture identification prior to admittance.
Q:		What proposals will be voted on at the meeting?
A:		There are two proposals scheduled to be voted on at the meeting:
		•    Election of eight directors; and
		•    Ratification of the appointment of Deloitte & Touche LLP as Noven’s independent registered public accounting firm.
		We will also consider and vote upon any other proposal properly brought before the meeting and any adjournment thereof.
Q:		What are the Board’s voting recommendations?
A:		The Board recommends that you vote your shares:
		•    “For” each of the nominees named herein to the Board; and
		•    “For” the ratification of the appointment of Deloitte & Touche LLP.

Q:		What shares can I vote?
A:		You may vote all shares that you owned as of April 25, 2008, which is the record date. These shares include (1) those held directly in your name as the stockholder of record and (2) those held for you as the beneficial owner through a stockbroker, bank or other nominee. Each share of Noven’s common stock outstanding as of the close of business on April 25, 2008, the record date, is entitled to one vote at the annual meeting. On the record date, approximately 24,830,902 shares of common stock were issued and outstanding.
Q:		What is the difference between holding shares as a stockholder of record and as a beneficial owner?
A:		Stockholder of Record
		If your shares are registered directly in your name with Noven’s transfer agent, American Stock Transfer and Trust Company, you are considered the stockholder of record for those shares and we are sending these proxy materials, which includes a proxy card which you may use, directly to you. As the stockholder of record, you have the right to grant your proxy directly to the individuals named in the enclosed proxy card or to vote in person at the meeting.
		Beneficial Owner
		If you hold shares in a stock brokerage account or through a bank or other nominee, you are considered the beneficial owner of shares held in street name and your broker or nominee is forwarding these proxy materials to you. Your broker or nominee is considered, with respect to those shares, the stockholder of record. As the beneficial owner, you have the right to direct your broker on how to vote, but since you are not the stockholder of record, you may not vote these shares in person at the meeting unless you obtain a signed proxy from the record holder giving you the right to vote the shares. As a beneficial owner, you are, however, welcome to attend the meeting. Your broker or nominee has enclosed a voting instruction card for you to use.
Q:		How can I vote my shares in person at the meeting?
A:		You may vote shares you hold directly in your name as the stockholder of record in person at the annual meeting. If you choose to do so, please bring the enclosed proxy card or proof of identification. Even if you plan to attend the annual meeting, we recommend that you also submit your proxy as described below so that your vote will be counted if you later decide not to attend the meeting.
		If you hold your shares in street name, you must obtain a signed proxy from the record holder in order to vote these shares in person at the meeting.

Q:		How can I vote my shares without attending the meeting?
A:		Whether you hold shares directly as the stockholder of record or beneficially in street name, you may direct your vote without attending the meeting. If you hold your shares directly, you may vote by granting a proxy. If you hold your shares in street name, you may instruct your broker or nominee to vote your shares by following instructions that the broker or nominee provides for you. Most brokers offer voting over the Internet, by telephone or by mail. Please refer to the instructions included on your proxy card or, for shares held in street name, the voting instruction card included by your broker or nominee.
Q:		May I change my vote?
A:		Yes, you may change your proxy instructions at any time prior to the vote at the annual meeting. If you are a stockholder of record, you must (1) file with Noven’s Corporate Secretary a written notice of revocation or (2) timely deliver a valid, later-dated proxy. For shares you own beneficially, you may change your vote by submitting new voting instructions to your broker or nominee. Your attendance at the meeting will not revoke your previously granted proxy unless you give written notice of revocation to Noven’s Corporate Secretary before the vote at the meeting or you vote by written ballot at the meeting.
Q:		How are votes counted?
A:		In the election of directors, you may vote “FOR” all of the nominees or your vote may be “WITHHELD” with respect to one or more of the nominees. For the other proposals, you may vote “FOR”, “AGAINST” or “ABSTAIN”. If you “ABSTAIN”, it has the same effect as a vote “AGAINST”. If you sign your proxy card or broker voting instruction card with no further instructions, your shares will be voted in accordance with the recommendations of the Board.
Q:		What is the voting requirement to approve each of the proposals?
A:		In the election of directors, each director requires the affirmative “FOR” vote of a plurality of those shares represented, in person or by proxy, and entitled to vote at the meeting. The ratification of the appointment of Deloitte & Touche requires the affirmative “FOR” vote of a majority of those shares represented, in person or by proxy, and entitled to vote at the meeting.
Q:		What happens if I do not provide voting instructions to my broker?
A:		If you are a beneficial owner and do not provide the stockholder of record with voting instructions, your broker or other nominee, in its discretion, may either leave your shares unvoted or vote your shares on routine matters. The election of directors and the proposal to ratify the appointment of Deloitte & Touche LLP should be treated as routine matters. If your broker or other nominee does not vote your shares, your shares will constitute broker non-votes, as described in “What is the quorum requirement for the meeting?” below. In tabulating the voting result for any particular proposal, shares which constitute broker non-votes are not considered represented at the meeting.

Q:		What does it mean if I receive more than one proxy or voting instruction card?
A:		It means your shares are registered differently or are in more than one account. Please provide voting instructions for all proxy and voting instruction cards you receive.
Q:		Where can I find the voting results of the meeting?
A:		We will announce preliminary voting results at the meeting and publish final results in Noven’s quarterly report on Form 10-Q for the second quarter of 2008.
Q:		What happens if additional proposals are presented at the meeting?
A:		Other than the two proposals described in this Proxy Statement, we do not expect any matters to be presented for a vote at the annual meeting. If you grant a proxy, the persons named as proxy holders will have the discretion to vote your shares on any additional matters properly presented for a vote at the meeting. If for any unforeseen reason any of Noven’s nominees is not available as a candidate for director, the persons named as proxy holders will vote your proxy for such other candidate or candidates as may be nominated by the Board.
Q:		What is the quorum requirement for the meeting?
A:		The quorum requirement for holding the meeting and transacting business is a majority of the outstanding shares entitled to be voted. The shares may be present in person or represented by proxy at the meeting. Both abstentions and broker non-votes are counted as present for the purpose of determining the presence of a quorum. Generally, broker non-votes occur when shares held by a broker for a beneficial owner are not voted with respect to a particular proposal because (1) the broker has not received voting instructions from the beneficial owner and (2) the broker lacks discretionary voting power to vote such shares.
Q:		Who will bear the cost of soliciting votes for the meeting?
A:		Noven will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials. However, if you choose to vote over the Internet, you will bear the expenses for your Internet access. In addition to the mailing of these proxy materials, the solicitation of proxies or votes may be made in person, by telephone or by electronic communication by Noven’s directors, officers, and employees, who will not receive any additional compensation for such solicitation activities. We will also reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to stockholders.

Q:		May I propose actions for consideration at next year’s annual meeting of stockholders or nominate for election at next year’s annual meeting of stockholders individuals to serve as directors?
A:		Yes, you may submit proposals for consideration at future stockholder meetings, including director nominations.
		Stockholder Proposals for Presentation at Meeting: Our By-Laws govern the submission of nominations for director or other business proposals that a stockholder wishes to have considered at a meeting of stockholders, but which are not included in Noven’s Proxy Statement for that meeting. Under our By-Laws, nominations for director or other business proposals to be addressed at our next annual meeting may be made by a stockholder entitled to vote who has delivered a notice to the Corporate Secretary of Noven no later than the close of business on March 6, 2009 and not earlier than January 5, 2009, which dates are based on the mailing of this Proxy Statement on May 5, 2008. The notice must contain the information required by the By-Laws.
		These advance notice provisions are in addition to, and separate from, the requirements that a stockholder must meet in order to have a proposal included in the Proxy Statement under the rules of the Securities and Exchange Commission.
		A proxy granted by a stockholder will give discretionary authority to vote on any matters introduced pursuant to the above advance notice By-law provisions, subject to the applicable rules of the Securities and Exchange Commission.
		Stockholder Proposals for Inclusion in Proxy: In order for a stockholder proposal to be considered for inclusion in Noven’s Proxy Statement for next year’s annual meeting, the written proposal must be received by Noven’s Corporate Secretary no later than January 5, 2009. Such proposals also will need to comply with Securities and Exchange Commission regulations regarding the inclusion of stockholder proposals in company sponsored proxy materials.
		Copy of By-law Provisions: You may contact Noven’s Corporate Secretary at Noven’s headquarters for a copy of the relevant By-law provisions regarding the requirements for making stockholder proposals and nominating director candidates.

PROPOSAL 1 — ELECTION OF DIRECTORS

     The eight persons named below were designated by the Board as nominees for election as directors. All of the nominees have served as directors since the last annual meeting with the exception of Mr. Brandt, who was appointed to the Board in April 2008 and Mr. Satow, who was appointed to the Board in August 2007. Information regarding the business experience of each nominee and their service on boards of directors of public companies is provided below. All directors are elected annually to serve until the next annual meeting and until their respective successors are elected.

     The Board recommends a vote FOR the election to the Board of each of the following nominees.

Sidney Braginsky Director since 1992 Age 70		Mr. Braginsky is President and Chief Executive Officer of Atropos Technology Inc. (consulting and venture capital) and Chairman of Digilab LLC (molecular spectroscopy). From 1970 through 1999, Mr. Braginsky served Olympus America, Inc. in a variety of roles, most recently as President and Chief Operating Officer. Mr. Braginsky serves on the board of directors of Diomed Holdings (laser technology), Geneva Acquisition Corporation (acquisitions) and Electro-Optical Sciences, Inc. (medical instruments for early melanoma detection).
Peter C. Brandt Director since 2008 Age 51		Mr. Brandt was appointed to Noven’s Board and to the offices of President and Chief Executive Officer on April 29, 2008. From 1981 until 2007, Mr. Brandt served in a number of executive positions at Pfizer, Inc. (pharmaceuticals). He served as Pfizer’s President – U.S. Pharmaceuticals Operations from August 2006 until January 2007 and as its Senior Vice President – U.S. Pharmaceuticals Operations from January 2006 to August 2006. From 2004 to 2006, Mr. Brandt served as President – Latin America Operations and as Senior Vice President Worldwide Pharmaceuticals – Finance, IT, Planning and Business Development, Pfizer Health Solutions. From 1998 to 2004, he served as Senior Vice President Worldwide Pharmaceuticals, Finance, Planning and Business Development and Pfizer Health Solutions.
John G. Clarkson, M.D. Director since 2000 Age 65		Dr. Clarkson is the Executive Director of the American Board of Ophthalmology and the Dean Emeritus and Professor of Ophthalmology, Miller School of Medicine at the University of Miami. From 1995 to 2006, he served as Professor and Senior Vice President for Medical Affairs and Dean, University of Miami School of Medicine. Dr. Clarkson serves as a director of the American Board of Medical Specialties and as a trustee for the Evelyn F. McKnight Brain Research Foundation.

Donald A. Denkhaus Director since 2004 Age 62		Mr. Denkhaus has, since January 2004, served as the executive chairman of TM Systems, LLC (international language services). Since 2005, he has also served as President and Chief Executive Officer of Integrity Risk Advisors, Inc. (consulting). Mr. Denkhaus was a partner with Arthur Andersen LLP from 1980 to 2002 and served as Arthur Andersen’s audit practice director responsible for Florida and Puerto Rico from 1999 to 2002. For a one-year period in 2002 and 2003, Mr. Denkhaus was employed as a principal with Ernst & Young LLP where he provided audit services and assisted in the transition of Arthur Andersen audit clients and personnel to Ernst & Young.
Pedro P. Granadillo Director since 2004 Age 60		Mr. Granadillo was employed by Eli Lilly and Company (pharmaceuticals) from 1970 until 2004. From 1998 to 2004, he served as Eli Lilly’s Senior Vice President overseeing manufacturing, quality and human resources and from 1993 to 1998, he served as Vice President of Human Resources. Mr. Granadillo serves on the board of directors of Nile Therapeutics, Inc. (biopharmaceuticals) and Haemonetics Corporation (medical devices).
Phillip M. Satow Director since 2007 Age 66		Mr. Satow was appointed to Noven’s Board on August 14, 2007 in connection with Noven’s acquisition of JDS Pharmaceuticals, LLC, the specialty pharmaceutical company that he co-founded. Mr. Satow served as Chairman and Chief Executive Officer of JDS Pharmaceuticals since 2004. From 1985 to 1999, he held a variety of executive positions at Forest Laboratories, Inc. (pharmaceuticals), including as its Executive Vice President and as the President of Forest Pharmaceuticals. Prior to joining Forest Laboratories, he served as Vice President and General Manager of the Wallace Laboratories Division of Carter-Wallace, Inc. Previously, Mr. Satow held a variety of executive positions at Pfizer, Inc. over a 14 year period, including Director of Marketing, Pfizer Laboratories, and Vice President, Pfizer Europe. In addition to serving as a director of Noven, Mr. Satow currently serves on the board of directors of Crucell NV (biotechnology).

Robert G. Savage Director since 2004 Age 54		Mr. Savage has been the President of Strategic Imagery LLC (pharmaceutical consulting) since May 2003. He served as Group Vice President and President – General Therapeutics & Inflammation Business of Pharmacia Corporation from 2002 until its acquisition by Pfizer, Inc. in 2003. From 1996 through 2001, Mr. Savage served Johnson & Johnson in a variety of roles, most recently as Worldwide Chairman of Johnson & Johnson’s Pharmaceutical Group. From 1985 to 1996, he served Roche Holding AG in a variety of marketing, business development and operations positions, most recently as Vice President – Marketing, Hoffmann-La Roche, Inc. Mr. Savage serves as the non-executive chairman of EpiCept Corporation (pharmaceuticals), the presiding director of The Medicines Company, Inc. (pharmaceuticals) and a director of Panacos Pharmaceuticals, Inc. (pharmaceuticals).
Wayne P. Yetter Director since 2001 Age 62		Mr. Yetter has been Chief Executive Officer of Verispan LLC (health care information) since September 2005. From November 2004 to September 2005, he served as the Chief Executive Officer of Odyssey Pharmaceuticals, Inc., the specialty pharmaceutical division of Pliva d.d. From 2003 to 2005, he served on the Advisory Board of Alterity Partners (mergers and acquisitions advisory firm). From September 2000 to June 2003, Mr. Yetter served as Chairman and Chief Executive Officer of Synavant Inc. (pharmaceutical marketing/ technology services). From 1999 to 2000, Mr. Yetter served as Chief Operating Officer at IMS Health, Inc. (information services for the health care industry). From 1997 to 1999, he served as President and Chief Executive Officer of Novartis Pharmaceuticals Corporation (pharmaceuticals). From 1994 to 1997, he served as President and Chief Executive Officer of Astra Merck, Inc. (pharmaceuticals). From 1991 to 1994, Mr. Yetter served as General Manager and then President of Astra Merck, a division of Merck & Co. Mr. Yetter serves on the board of directors of Matria Healthcare, Inc. (disease management), EpiCept Corporation (pharmaceuticals), Synvista Therapeutics, Inc. (pharmaceuticals) and InfuSystem Holdings, Inc. (infusion services).

Governance of the Company

     Pursuant to Noven’s By-Laws and the Delaware General Corporation Law, Noven’s business, property and affairs are managed under the direction of the Board.

     As an important part of its governance of the company, Noven’s Board plans for the succession to the position of Chief Executive Officer. In the second half of 2007, the Board established a special committee to implement a succession plan for the Chief Executive Officer position,

then held by Robert C. Strauss, age 66. In September 2007, the Board elected not to extend the term of Mr. Strauss’ existing employment agreement, which was scheduled to expire at the end of 2007, and began the negotiation of a new employment agreement with Mr. Strauss on terms aligned with the Board’s succession plan. During this process, the parties determined that it was in Noven’s best interest to begin the transition to new senior leadership upon the expiration of Mr. Strauss’ employment agreement. On January 2, 2008, Noven and Mr. Strauss entered into a separation agreement (the terms of which are reviewed in “Compensation Discussion and Analysis” which begins on page 19) and Mr. Strauss retired from his positions as Noven’s Chief Executive Officer, President and Chairman of the Board.

     The Board appointed Jeffrey F. Eisenberg, who previously served as Noven’s Senior Vice President of Strategic Alliances, to serve as Noven’s Executive Vice President and Interim Chief Executive Officer. The search for Mr. Strauss’ permanent successor as Chief Executive Officer was led by the special committee on succession planning, working closely with a national executive search firm. On April 29, 2008, Noven appointed Peter C. Brandt to the offices of Chief Executive Officer and President and to the Board. The terms of Mr. Brandt’s employment agreement are summarized below beginning on page 45. Mr. Eisenberg continues to serve as Noven’s Executive Vice President.

     In connection with its succession planning, the Board separated the roles of Chairman of the Board and Chief Executive Officer. In January 2008, Wayne P. Yetter was appointed Noven’s non-executive Chairman of the Board upon Mr. Strauss’ resignation. Mr. Yetter previously served as Noven’s lead independent director.

     The Board has adopted a Code of Business Conduct and Ethics that applies to all of our directors, officers and employees. The Board has also adopted Corporate Governance Guidelines which, in conjunction with Noven’s Certificate of Incorporation, By-Laws, committee charters and the Code of Business Conduct and Ethics, form the framework for the governance of Noven. Noven’s Corporate Governance Guidelines and the Code of Business Conduct and Ethics are posted in the “Investor Relations-Governance” section of our company website: http://www.noven.com. If, in the future, we should amend our Code of Business Conduct and Ethics or grant a waiver to our Chief Executive Officer, Chief Financial Officer or principal accounting officer with respect to our Code of Business Conduct and Ethics, then we will post the amendment or a description of the waiver in the “Investor Relations-Governance” section of our company website. We did not amend our Code of Business Conduct and Ethics or grant any such waivers during 2007.

     Noven’s Corporate Governance Guidelines provide that the Board should have a significant majority of independent directors and that the expectation of the Board is that the number of employee directors should not exceed two. The Board has determined that all of the directors, other than Messrs. Brandt and Satow, are “independent” as such term is defined by the applicable listing standards of the Nasdaq Global Select Market. The Board based this determination primarily on a review of the responses of the directors to questions regarding their employment, affiliations and family and other relationships.

     The Board held 18 meetings in 2007, and each director who served as a director during 2007 attended more than 75% of the aggregate of the meetings of the Board and the Committees on which he served. Noven typically schedules a Board meeting in conjunction with our annual

meeting and expect that directors will attend the annual meeting, absent a valid reason, such as a schedule conflict. Last year, six of the seven individuals then serving as directors attended Noven’s annual meeting.

     The Board has three standing committees: (1) Nominating and Corporate Governance, (2) Audit and (3) Compensation. The Board has adopted a written charter for each of the three committees. The committee charters are posted in the “Investor Relations-Governance” section of our company website: http://www.noven.com. Under these charters, each of the standing committees has the authority to retain and pay the fees of any advisor it deems necessary to carry out its duties.

     In addition to the three standing committees, the Board may establish such other standing or special committees as it deems necessary or advisable. In 2007, the Board established two special committees. The special committee on succession planning, which consists of Messrs. Yetter, Granadillo and Savage and is responsible for reviewing and making recommendations to the Board on the Chief Executive Officer succession planning process, formally met four times during 2007. The special committee on acquisitions, which consisted of Messrs. Braginsky and Savage and was responsible for initially reviewing Noven’s acquisition strategy and process, formally met four times in 2007. Attendance fees for the meetings of the special committees are paid in the same amounts as meetings of the Board and three standing committees, as described below under “Director Compensation.”

Nominating and Corporate Governance Committee

     The Nominating and Corporate Governance Committee provides assistance to the Board in identifying, screening and recommending candidates to serve as directors of Noven. The Committee also oversees matters of corporate governance and provides advice to the Board with respect to Board organization, membership and function.

     The Nominating and Corporate Governance Committee is responsible for proposing to the Board nominees for election or re-election to the Board, based upon recommendations from the Chairman, the Chief Executive Officer, other Board members, and Noven stockholders. Recommendations from stockholders should be submitted to Noven in accordance with the procedures set forth in the Q&A information on page 5. The Nominating and Corporate Governance Committee is empowered to engage third-party executive search firms to assist it in identifying candidates.

     Board candidates are considered by the Nominating and Corporate Governance Committee on a case-by-case basis using various criteria, such as a candidate’s business and industry experience, personal and professional reputation, professional skill, status as an “independent” director, financial expertise and the current composition of the Board. There are no minimum criteria for nomination to the Board, and there are no separate processes or criteria for evaluating candidates nominated by stockholders. After completing its review of the candidate and conducting in-person or telephone interviews, the Nominating and Corporate Governance Committee recommends which candidate or candidates should be nominated for election to the Board. As a general matter, the Nominating and Corporate Governance Committee believes

that the continuing services of qualified incumbents promotes stability and continuity in the Board, contributing to the Board’s ability to work as a collective body, while giving Noven the benefit of the familiarity and insight into the Company’s affairs that its directors have accumulated during their tenure. Noven has no term limits or mandatory retirement age with respect to its Board members.

     Mr. Satow was appointed to the Board on August 14, 2007 in connection with Noven’s acquisition of JDS Pharmaceuticals, LLC, the specialty pharmaceutical company that Mr. Satow co-founded and served as its Chief Executive Officer. Mr. Brandt was appointed to the Board on April 29, 2008 in connection with his appointment as Noven’s President and Chief Executive Officer.

     In addition to identifying, screening and recommending qualified candidates to serve as directors, the Nominating and Corporate Governance Committee:

	•		reviews potential conflicts of interest involving prospective Board members;
	•		annually reviews and makes recommendations to the Board concerning the Corporate Governance Guidelines;
	•		reviews the structure of the Board and the skills and experience of its members;
	•		studies and makes recommendations to the Board concerning the size, composition, compensation and functioning of the Board; and
	•		reviews and makes recommendations to the Board regarding the composition and responsibilities of Board Committees.

     All of the members of the Nominating and Corporate Governance Committee are “independent” as such term is defined by the applicable listing standards of the Nasdaq Global Select Market.

     Members: Mr. Yetter (Chairperson) and Dr. Clarkson
     Meetings held last year: Three

Audit Committee

     The primary responsibility of the Audit Committee is to oversee Noven’s financial reporting processes and the audits of Noven’s financial statements on behalf of the Board and to report the results of its activities to the Board. The Committee:

	•		is directly responsible for the appointment and termination (subject, if applicable, to stockholder ratification), compensation, evaluation and oversight of the work of the independent registered public accounting firm;
	•		oversees the resolution of disagreements between management and the independent registered public accounting firm in the event that they arise, including resolution of disagreements between management and the auditor regarding financial reporting;
	•		reviews with the individual responsible, if any, for the internal audit function, the independent registered public accounting firm and

			management of Noven the scope of their proposed audits for the current year and the proposed audit procedures to be utilized;
	•		reviews and pre-approves both audit and permissible non-audit services provided by the independent registered public accounting firm and their possible impact on that firm’s independence;
	•		reviews and discusses with the independent registered public accounting firm any relationships between the auditor and Noven that may impact that firm’s independence;
	•		reviews and advises the Board on the selection, performance, compensation and removal of the individual, if any, responsible for Noven’s internal audit function, and the activities, organizational structure, and qualifications of the individuals involved in the internal audit function;
	•		reviews and discusses with management and the independent registered public accounting firm the financial statements of Noven to be included in its periodic filings with the Securities and Exchange Commission and other relevant reports (such as reports of internal control over financial reporting) or financial information submitted by Noven to any governmental body, or the public;
	•		discusses with management and the independent registered public accounting firm the quality, not just acceptability, of the accounting principles (including accounting policies that may be viewed as critical), and the reasonableness of significant judgments, and reviews and considers with the independent registered public accounting firm the matters required to be discussed by Statement of Auditing Standards No. 61, Communication With Audit Committees, as amended by SASs 89 and 90 and Rule 2-07 of Regulation S-X;
	•		discusses with management and the independent registered public accounting firm Noven’s critical accounting policies and confers with management and the independent registered public accounting firm on significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects on the financial statements of alternative methods permitted by generally accepted accounting principles;
	•		discusses with management and the independent registered public accounting firm as appropriate the integrity of Noven’s financial reporting processes and the quality and adequacy of Noven’s internal control over financial reporting and disclosure controls, including Noven’s systems to monitor and manage business risks;
	•		reviews management’s assertion on its assessment of the effectiveness of internal control over financial reporting as of the end of the most recent calendar year, as well as all material issues raised by management’s assessment of internal control over financial reporting;
	•		meets with the independent registered public accounting firm outside the presence of management, and discusses the independent registered public accounting firm’s evaluation of Noven’s financial and accounting personnel and the cooperation that the

			independent registered public accounting firm received during the course of the audit;
	•		reviews and, if appropriate, approves or ratifies “related party transactions”;
	•		establishes procedures for the receipt, retention and treatment of complaints regarding Noven’s accounting, internal accounting controls, or auditing matters; and
	•		sets Noven’s hiring policies with respect to the hiring of current or former partners, principals, or professional employees of the independent registered public accounting firm.

     The Board of Directors, in its business judgment, has determined that each Audit Committee member is “independent” as such term is defined by the applicable listing standards of the Nasdaq Global Select Market and under Section 10A(m)(3) of the Securities Exchange Act of 1934. Noven has identified Donald A. Denkhaus as an “audit committee financial expert” as that term is defined in applicable regulations of the Securities and Exchange Commission.

     Members: Messrs. Denkhaus (Chairperson), Braginsky and Granadillo
     Meetings held last year: Eight

Compensation Committee

     The Compensation Committee provides assistance to the Board in fulfilling its responsibility to oversee and participate in the creation and administration of Noven’s executive compensation programs and practices. The Committee:

	•		reviews and determines the annual salary, bonus, equity compensation and other benefits of the executive officers of Noven;
	•		reviews, approves and, if appropriate, negotiates all employment, termination and other compensation-related agreements with the executive officers of Noven;
	•		reviews the operation of Noven’s executive compensation programs and establishes and reviews policies for their administration; and
	•		administers Noven’s equity compensation plans including approving grants of equity compensation under Noven’s 1999 Long-Term Incentive Plan.

     The Compensation Committee has retained a compensation consultant to assist the Compensation Committee in the design and implementation of various compensation policies and programs for Noven’s executive officers. This consultant, Pearl Meyer & Partners (“PM&P”), reports directly to the Compensation Committee and any new projects undertaken by PM&P on behalf of Noven must be approved by the Chairman of the Compensation Committee.

     Noven’s Chief Executive Officer and Vice President—Human Resources work closely with the Compensation Committee on compensation matters and Noven’s Chief Executive Officer recommends compensation amounts for Noven’s other executive officers to the Compensation Committee. The Compensation Committee meets with the Chief Executive Officer to discuss his performance, but ultimately decisions

regarding his compensation and the terms of his employment agreement are made solely based upon the Compensation Committee’s deliberations. The Compensation Committee has final approval of all compensation amounts and formulas applicable to benefit plans in which executive officers participate.

     All of the members of the Compensation Committee are “independent” within the meaning of the applicable listing standards of the Nasdaq Global Select Market.

     Members: Dr. Clarkson (Chairperson), Messrs. Granadillo and Savage
     Meetings held last year: Eleven

Related Party Transactions

     The Board has adopted a policy and procedures for the review and approval of transactions in which Noven and its directors, executive officers or their immediate family members are participants to determine whether such persons have a direct or indirect material interest and whether Noven should enter into the applicable transaction. The policy covers any related party transaction that meets the minimum threshold for disclosure in Noven’s proxy statement under the relevant Securities and Exchange Commission rules. The Audit Committee is responsible for reviewing and, if appropriate, approving or ratifying any related party transactions.

     In determining whether to approve, disapprove or ratify a related party transaction, the Audit Committee will take into account, among other factors it deems appropriate, (i) whether the transaction is on terms no less favorable to Noven than terms that would otherwise be generally available to Noven if the transaction was entered into under the same or similar circumstances with a party unaffiliated with Noven and (ii) the extent of the interest of the related party in the transaction.

     Set forth below is a description of certain transactions between Mr. Phillip M. Satow and Noven.

     On August 14, 2007 (the “Closing Date”), Noven acquired JDS Pharmaceuticals, LLC (“JDS”), then a privately-held specialty pharmaceutical company which was founded by Phillip Satow and his son Michael Satow. The purchase price for the acquisition was $125.0 million cash paid at closing, subject to certain working capital adjustments (the “Merger Consideration”). On the Closing Date, a portion of the Merger Consideration in an amount equal to $10.0 million was placed in an escrow account to be held until December 31, 2008 to satisfy, among other things, any post-closing indemnity claims by Noven. Noven has recorded a $1.95 million receivable for claims that Noven has made against the amounts held in the escrow account.

     Prior to Noven’s acquisition of JDS, Phillip Satow was JDS’s Chairman and Chief Executive Officer and his son Michael Satow was JDS’s President and Chief Operating Officer. Phillip Satow is a current Noven director and a nominee for director at the 2008 Annual Meeting of Stockholders. In connection with Noven’s acquisition of JDS, Noven entered into a Non-Competition Agreement and a Consulting Agreement with Phillip Satow and a Non-Competition and Employment Agreement with Michael Satow.

     The Non-Competition Agreement (the “Non-Competition Agreement”), dated August 14, 2007, with Phillip Satow restricts Mr. Satow’s ability, during the three-year period which commenced on the Closing Date, to become “associated with” (as such term is defined in the Non-Competition Agreement) any business that is engaged in the acquisition, manufacture, development or sale of pharmaceutical or biotechnology products that compete with any JDS products that are sold or are under active development. During this three-year period, Mr. Satow also agreed not to (1) solicit, call upon or sell, indirectly or directly, to any purchaser (including prospective purchasers) or distributor of Noven’s or JDS’s products, for the purpose of inducing such purchaser or distributor to purchase a product that competes with any JDS product, (2) solicit any person (subject to limited exceptions) to leave the employ of Noven or JDS, or (3) induce any supplier, vendor, consultant or contractor of Noven or JDS to terminate or negatively alter its relationship with Noven or JDS. In accordance with the Non-Competition Agreement, Mr. Satow received on the Closing Date stock-settled stock appreciation rights (“SSARs”) with respect to 44,297 shares of Noven common stock, which reflects an aggregate Black-Scholes value equal to $265,200. All such SSARs fully vest upon grant and are exercisable at an exercise price of $16.67 per share for a period of seven years from the grant date.

     The Consulting Agreement (the “Consulting Agreement”), dated August 14, 2007, with Phillip Satow has a term of one year, which term commenced on the Closing Date. Under the Consulting Agreement, Mr. Satow agrees to provide such consulting services with respect to JDS’s business as may be reasonably requested by Noven. Mr. Satow will be paid a service fee of $250 per hour of consulting services rendered and will be reimbursed for the necessary and reasonable expenses he may incur in the performance of his services. The Consulting Agreement provides that, unless otherwise agreed to by the parties, Mr. Satow is not required to provide consulting services under the Consulting Agreement for more than 20 hours per week during the first three months of the term, 15 hours per week for the next three months of the term, and 10 hours per week for the final six months of the term, in each case not including any travel time. The Consulting Agreement further provides that, regardless of the number of hours actually billed by Mr. Satow, he will generally be paid for a minimum of 10 hours per week during the first three months of the term, 7.5 hours per week for the second three months of the term, and 5 hours per week for the final six months of the term. The Consulting Agreement includes provisions requiring Noven to provide secretarial support for Mr. Satow as well as customary covenants by Mr. Satow regarding confidentiality and proprietary information. Noven has provided Mr. Satow with full-time use of a Noven office in connection with providing the services under the Consulting Agreement.

     Pursuant to the Non-Competition and Employment Agreement (the “Employment Agreement”), dated August 14, 2007, with Michael Satow, JDS agreed to employ Michael Satow for a period of six months, which commenced on the Closing Date (the “Retention Period”), at the same rate of base salary as in effect immediately prior to the Closing Date, which was $265,200 per year. Mr. Satow, who ceased to be a JDS employee at the end of the Retention Period, was paid the following additional amounts under the Employment Agreement for his continued employment through the Retention Period: (i) an annual bonus for JDS’s 2007 fiscal year of $63,000; and (ii) a lump sum payment of $132,600 (together, the “Bonus Payments”). Under the Employment Agreement, Mr. Satow also received a lump sum cash payment of $265,200. In connection with these payments and benefits, the Employment Agreement restricts Michael Satow’s ability, during the two-year period, which commenced on the Closing Date, to become “associated with” (as such term is defined in the Employment Agreement) any business that is engaged in the acquisition, manufacture, development or sale of pharmaceutical or biotechnology products that compete with

any JDS products that are sold or are under active development. During this two-year period, he also agreed not to (1) solicit, call upon or sell, indirectly or directly, to any purchaser (including prospective purchasers) or distributor of Noven’s or JDS’s products, for the purpose of inducing such purchaser or distributor to purchase a product that competes with any JDS product, (2) solicit any person (subject to limited exceptions) to leave the employ of Noven or JDS, or (3) induce any supplier, vendor, consultant or contractor of Noven or JDS to terminate or negatively alter its relationship with Noven or JDS.

     The foregoing descriptions of the Non-Competition Agreement, the Consulting Agreement and the Employment Agreement are qualified in their entirety by reference to the full text of such agreements, which Noven previously filed as exhibits to its reports filed with the U.S. Securities and Exchange Commission.

Stockholder Communication with Directors

     As specified in Noven’s Corporate Governance Guidelines, Noven stockholders who want to communicate with the Board or any individual director may write to:

Noven Pharmaceuticals, Inc.
11960 S.W. 144^th Street
Miami, Florida 33186
Attn: General Counsel

     The letter should include a statement indicating that the sender is a Noven stockholder. The General Counsel will review all stockholder letters to the Board and depending on the subject matter will:

	•		Regularly forward any letter that deals with the function of the Board or committees of the Board (or is otherwise appropriate for Board attention) to the director or directors to whom it is addressed;
	•		Attempt to handle the inquiry directly if it relates to routine or ministerial matters, including requests for information about Noven and stock-related matters; or
	•		Not forward the letter if it relates to an improper or irrelevant topic.

     The General Counsel or another member of management will, at each meeting of the Board, present a summary of all letters received since the last meeting that were not forwarded to the Board and will make those letters available to the Board upon request.

Director Compensation

     The following table provides information on Noven’s compensation and reimbursement practices for non-employee directors. Directors who are employed by Noven do not receive any additional compensation for their Board activities and are not included in this table.

Director Compensation in 2007

																		Change
																		in
																		Pension
																		Value
														Non-				and Non-
														Equity				Qualified
		Fees												Incentive				Deferred				All
		Earned or				Stock				Option				Plan				Compen-				Other
		Paid in				Awards				Awards				Compen-				sation				Compen-
Name		Cash				(1)(2)				(2)(3)				sation				Earnings				sation				Total
Sidney Braginsky		$	48,500			$	100,000			$	0			$	0			$	0			$	0			$	148,500
John G. Clarkson			58,000				100,000				0				0				0				0				158,000
Donald A. Denkhaus			61,500				100,000				0				0				0				0				161,500
Pedro P. Granadillo			68,750				100,000				0				0				0				0				168,750
Phillip M. Satow (4)			25,952				150,000				0				0				0				0				175,952
Robert G. Savage			62,750				100,000				0				0				0				0				162,750
Wayne P. Yetter			56,600				100,000				0				0				0				0				156,600

						Shares of
						Common Stock
						Underlying
		Outstanding				Outstanding
Name		Stock Awards				Option Awards
Sidney Braginsky			10,098				37,500
John G. Clarkson			10,098				15,000
Donald A. Denkhaus			10,098				30,000
Pedro P. Granadillo			10,098				22,500
Phillip M. Satow			8,998				0
Robert G. Savage			10,098				30,000
Wayne P. Yetter			10,098				40,000

          Noven uses a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on the Board. In setting director compensation, Noven considers the significant amount of time that directors expend in fulfilling their duties to Noven as well as the skill-level required by Noven of members of the Board. The Board sets director compensation based on the recommendations of the Nominating and Corporate Governance Committee and Compensation Committee.

Cash Compensation Paid to Board Members

          Each non-employee director receives an annual cash retainer of $20,000. The chair of the Audit Committee receives an additional annual retainer of $10,000 and each other committee chair receives an additional annual retainer of $5,000. For his services as Noven’s Non-Executive Chairman of the Board, Mr. Yetter receives an annual retainer of $50,000. The cash retainers are paid following the annual meeting of stockholders on a quarterly basis in advance. Non-employee directors receive attendance fees of $1,500 for each Board and committee meeting attended in person and $750 for each Board and committee meeting attended by telephone. Noven reimburses directors for their expenses incurred related to their Board membership.

Equity Compensation Paid to Board Members

          Under Noven’s current director compensation program, each non-employee director is granted restricted stock valued at $150,000 upon election to the Board and then receives annual grants of restricted stock valued at $100,000 upon re-election to the Board at Noven’s annual meeting. The Board may increase or decrease the value of the awards from time to time based on such factors as the Board deems relevant. The number of shares of restricted stock granted will be determined based on the market price of Noven’s common stock on the date of grant.

Deferred Compensation Program

          Directors can defer receipt of their fees and their restricted stock grants by participating in Noven’s non-qualified deferred compensation plan. A more complete description of the plan is described below on page 38 under “Non-qualified Deferred Compensation in 2007.”

Executive Compensation

Compensation Discussion and Analysis

          This section discusses Noven’s compensation policies and programs applicable to the seven executive officers named in the Summary Compensation Table on page 2 (collectively, these individuals are referred to as the “named executive officers”). Peter C. Brandt, Noven’s President and Chief Executive Officer, is not included in the Summary Compensation Table or in the group of “named executive officers” whose compensation is discussed in this section because he joined Noven after the end of 2007. A summary of the material terms of Mr. Brandt’s employment agreement, dated April 29, 2008, is set forth elsewhere in the Proxy Statement beginning on page 45.

Compensation Philosophy and Objectives

          The core objectives of Noven’s compensation programs are to secure and retain the services of high quality executives and to provide compensation to Noven’s executives that is commensurate and aligned with the company’s performance and long-term stockholder value.

          Noven seeks to achieve these objectives through three principal compensation programs. Each of these programs has a different purpose and is intended to reward achievement of different goals.

Program		Purpose
Base Salary and Benefits		Recruit and retain key employees
Annual Incentive Plan		Reward the achievement of selected financial and non-financial goals
Long-term Incentive Pay		Enhance long-term stockholder value by aligning the interests of executives with those of stockholders

          These compensation programs are designed to reward achievement of annual and long-term objectives. Achievement of annual objectives is rewarded through the annual incentive plan, while long-term incentive pay in the form of equity grants is intended to link a significant portion of compensation to long-term stock price appreciation realized by Noven’s stockholders.

Pay Mix and Levels

          The approximate mix between the three components of Noven’s executive compensation program for the named executive officers over the past two years is shown in the following charts:

For the CEO

For the Other Named Executive Officers

          This mix reflects Noven’s philosophy that a significant percentage of an executive officer’s total compensation should be tied to performance, and therefore be at risk. Noven believes that individuals, such as the CEO, with greater roles and responsibilities associated with achieving Noven’s performance targets should bear a greater proportion of the risk that those goals may not be achieved and receive a greater proportion of the reward if those goals are met or surpassed.

          Noven targets cash compensation (base salary and the annual incentive award) at the median and total compensation between the median and the 75^th percentile of Peer Companies (as discussed below) provided commensurate levels of performance are attained. Noven’s compensation levels have been chosen to attract the talent needed to:

	•		Maintain Noven’s position as a leading transdermal drug delivery company;
	•		Advance the operations of Novogyne Pharmaceuticals, Noven’s joint venture with Novartis;
	•		Advance the operations of Noven Therapeutics, the specialty pharmaceutical company that Noven acquired in 2007; and
	•		Attract executive officers to a geographical location with few other pharmaceutical companies, and retain them as employees.

Benchmarking

          The Compensation Committee has retained a compensation consultant every other year since 2001 to assist in the benchmarking process. In 2007, the Compensation Committee engaged Pearl Meyer & Partners (“PM&P”) to conduct an independent review of Noven’s executive compensation programs. As part of this engagement, PM&P reviewed the list of companies used by Noven for benchmarking purposes. Based on this review, the Compensation Committee has selected the following 21 companies as Noven’s peer companies:

Adams Respiratory Therapeutics*		Enzon Pharmaceuticals*		Nektar Therapeutics*
Albany Molecular Research		Intermune*		Pharmion*
Bentley Pharmaceuticals*		Ligand Pharmaceutical		Salix Pharmaceuticals*
Biomarin Pharmaceutical*		Martek Biosciences		Savient Pharmaceuticals
Bradley Pharmaceuticals		Matrixx Initiatives*		Sciele Pharma
Cubist Pharmaceuticals*		Myriad Genetics*		Techne
Digene		Nabi Biopharmaceuticals		Vertex Pharmaceuticals

* indicates new peer company for 2007

          These companies, which are pharmaceutical-related companies, were chosen primarily on the basis of revenues. To give effect to Noven’s 49% interest in Novogyne (Noven’s joint venture with Novartis, the net revenues of which are not included in Noven’s financial results), Noven’s revenues, for benchmarking purposes, are supplemented with 49% of the revenues of Novogyne. Companies that were added to the list in 2007 are shown with an asterisk in the table above and replaced companies for which information was no longer available (due to acquisitions or bankruptcies) or the revenues of which no longer matched Noven’s revenues. Since not all compensation data is made publicly available by the companies listed in the table, Noven also uses published and private pay surveys for analysis of executive pay for its executive officers at comparably-sized pharmaceutical companies in the benchmarking process. While the Compensation Committee relied on the data points produced in these surveys, it did not predicate its compensation decisions on the specific companies that participated in such surveys. In this report, these companies and those listed in the table above are collectively referred as Noven’s “Peer Companies.”

Base Salary

          Noven targets base salaries for its executive officers based generally on the median base salary of similarly situated officers at the Peer Companies. The Compensation Committee approves each executive officer’s base salary by considering the individual’s responsibility, the individual’s performance and the market data discussed below. Salary levels are typically determined annually at the regularly-scheduled meeting of the Compensation Committee each November, as well as upon appointment, a promotion or other change in job responsibility.

          The results of the 2007 benchmarking study indicated that the base salaries of the named executive officers closely matched the median base salary of the Peer Companies, with six of the seven named executive officers’ base salaries falling within a competitive range (90% to 110%) of the Peer Company median. The 2007 base salary of Mr. Strauss, who retired in January 2008, was 115% of the Peer Company median.

          In determining 2008 base salaries for the named executive officers, the Compensation Committee reviewed the results of five salary budget surveys conducted by third-party compensation sources which indicated that the surveyed companies on average expected to increase executive salaries by 3.5% to 4.2% in 2008. In November 2007, the Compensation Committee reviewed an assessment by Mr. Strauss of the performance of the named executive officers (other than Mr. Strauss) during 2007. Based on the foregoing, the Compensation Committee has approved the following base salaries, effective January 1, 2008, for the named executive officers (excluding Mr. Strauss, Dr. Abrao and Ms. Barrett, who retired at the end of 2007; Mr. Price was a new hire in November 2007 and therefore did not receive a salary increase as of January 1, 2008):

Executive		2008 Base Salary				Increase from 2007
Jeffrey F. Eisenberg		$	332,913				5.75	%
W. Neil Jones		$	266,002				5.0	%
Juan A. Mantelle		$	287,080				3.0	%
Michael D. Price		$	286,000				N/A

          The amount listed in the table above does not include the additional amount of base salary to be paid to Mr. Eisenberg in connection with his appointment in January 2008 as Noven’s Executive Vice President and Interim Chief Executive Officer under his letter agreement, which is discussed in this section below under the heading “Compensation to Interim Chief Executive Officer”.

Annual Incentive Plan

          Noven’s annual incentive plan or AIP is intended to motivate executives by recognizing and rewarding corporate and individual performance. The Compensation Committee believes that performance-based annual incentives, in the form of cash incentives, should represent a meaningful component of Noven’s executive compensation program.

          While the basic framework of the AIP has been similar for the past several years, the Compensation Committee annually reevaluates the parameters of the program based on Noven’s then-current circumstances, as well as the performance and/or goals that the Compensation Committee deems critical for the success of the Company.

Determination of Awards under 2007 AIP

          The determination of awards under the 2007 AIP for the named executive officers was based on three primary factors:

	•	Financial Performance. Noven’s 2007 financial performance compared to pre-established financial measures.
	•	Individual Performance Objectives. An executive officer’s performance in meeting his or her “individual performance objectives”.
	•	Management Team Objectives. Noven’s performance in achieving “management team objectives” approved by the Compensation Committee.

          Of the CEO’s award under the 2007 AIP, 70% was based on Noven’s financial performance, with the remaining 30% based on the Compensation Committee’s assessment of the CEO’s achievement of individual performance objectives selected by the Compensation Committee, which closely aligned with the management team objectives discussed below. For the other named executive officers, 50% of the award was based on Noven’s financial performance, 30% was based on the Compensation Committee’s assessment of the executive officer’s performance in achieving his or her individual performance objectives, and the remaining 20% was based on Noven’s achievement of management team objectives related to the advancement of Noven’s commercialization strategy and to its product development pipeline. The Compensation Committee approved the management team objectives based on the Compensation Committee’s belief that their achievement should result in the creation of long-term stockholder value.

          The Compensation Committee selected target incentive bonus awards as fixed percentages of base salaries for the named executive officers. The 2007 target AIP awards were set at 60% of base salary for the CEO and at 45% of base salary for each of the other named executive officers. These targets were unchanged from 2006. In determining the target AIP awards for the named executive officers, the Compensation Committee considered market data, including the 2007 benchmarking study, which indicated that these target awards approximated the median for similarly situated executives at the Peer Companies.

          The financial measures selected by the Compensation Committee for the 2007 AIP were:

	•		Revenues. Total combined net revenues of Noven and Novogyne adjusted to exclude Noven’s total product revenues from sales to Novogyne.
	•		Pre-Tax Income. Noven’s pre-tax income adjusted to exclude clinical expenses.

For the revenue measure, the Compensation Committee added Novogyne revenues to the calculation because Noven is responsible for the sales and marketing function of the joint venture. For the pre-tax income measure, the Compensation Committee excluded clinical expenses from the calculation given the uncertainties in forecasting the timing and the magnitude of such expenses. Each measure was weighted equally for the purposes of calculating AIP outcomes.

          The specific revenue and pre-tax income targets approved for the 2007 AIP are summarized as follows:

		Pre-Tax Income								Revenue
		Performance								Performance
		Achieved				Award				Achieved				Award
		(% of				(% of				(% of				(% of
		target)				target)				target)				target)
			< 80	%			0	%			< 85	%			0	%
			80	%			50	%			85	%			50	%
			90	%			75	%			92.5	%			75	%
			100	%			100	%			100	%			100	%
			120	%			120	%			120	%			182	%
			140	%			180	%			141	%			265	%

          The Compensation Committee established the performance matrix for the 2007 AIP in the first quarter of 2007 based on its assessment of the expected difficulty of Noven achieving the performance targets in 2007. There was no limit on the maximum percentage payout for either the pre-tax income or revenue measures.

          Revenue and pre-tax income in 2007 (as adjusted in the manner discussed above) were $192.1 million and $41.0 million, respectively. These amounts do not include the financial results of Noven Therapeutics, which Noven acquired after the performance targets were established. Due to a change in an accounting assumption used to prepare the 2007 AIP performance matrix, the Compensation Committee reduced the pre-tax income and revenue measures by $1.0 million during 2007.

          Based on the foregoing, Noven’s adjusted financial performance for 2007 resulted in an award equal to 91.3% of an individual’s target award under the 2007 AIP, calculated as follows:

		Revenues								Pre-Tax Income
		Performance				Award				Performance				Award
		Achieved				(% of Target)				Achieved				(% of Target)
			100.3	%			100.7	%			92.8	%			81.9	%

          In February 2008, the Compensation Committee assessed each named executive officer’s performance in meeting his or her individual performance objectives based on a combination of objective standards and subjective assessments of performance. Noven’s executive officers received ratings between 92% and 105% in achieving their respective individual performance objectives and the portion of their incentive awards under the 2007 AIP applicable to individual performance objectives were reduced or increased, as the case may be, by a corresponding percentage.

          The Compensation Committee allocated 20% of the 2007 AIP award (other than, as noted above, for the CEO) to the management team objectives as a means to incentivize the management team, as a group, to achieve the strategic objectives noted above. Based on its review of Noven’s performance in 2007, the Compensation Committee determined that the management team objectives were achieved in full and therefore the executive officers received 100% of this portion of the 2007 incentive awards.

          Consistent with prior years, the 2007 AIP gave the Compensation Committee the discretion to increase or decrease performance goals and target awards to reflect changed circumstances. For the 2007 AIP, the Compensation Committee exercised this discretion in determining the awards for Dr. Abrao, Mr. Eisenberg, Mr. Jones and Ms. Barrett. For these officers involved in the integration activities for Noven Therapeutics, the Compensation Committee selected objectives that were designed to promote the integration of the newly-acquired company into Noven. The objectives, which related primarily to Noven Therapeutics’ business objectives and strategic goals, have not been disclosed for materiality and competitive reasons. Based on its review of the Noven Therapeutics’ integration process, the Compensation Committee, in February 2008, increased the awards of the following named executive officers under the 2007 AIP by the following amounts:

Dr. Abrao ($8,976), Mr. Eisenberg ($19,833), Mr. Jones ($7,980) and Ms. Barrett ($12,899). These amounts are included in the 2007 AIP awards that are set forth in the column titled “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table on page 32.

2008 Annual Incentive Plan

          The Compensation Committee has approved an annual incentive plan for 2008. The financial measures (revenues and pre-tax income calculated in the same manner as 2007) for the 2008 AIP are based on Noven’s 2008 budget approved by the Board. For this and other competitive reasons, Noven has not disclosed the specific dollar values of the financial targets under the 2008 AIP.

          The percentage amounts of the performance matrix (award amounts based on performance) for the 2008 AIP are the same as discussed above for the 2007 AIP. Although no assurance can be given, the Compensation Committee believes that it is reasonably likely (although not certain or assured) that Noven will meet the minimum level of performance to trigger some incentive plan payment (i.e., at levels greater than or equal to 50% of target) under the 2008 AIP. The Compensation Committee further believes that achievement of the incentive plan’s financial target performance criteria is substantially uncertain and represents an appropriate challenge for Noven and its executive management team.

          The 2008 individual targets for cash incentives as a percentage of base salary for the named executive officers are unchanged from the 2007 levels discussed above. The 2008 AIP allocates 50% of an executive’s 2008 AIP award based on Noven’s financial performance and 50% to be based on individual performance objectives. To earn an award under the AIP, minimum corporate financial performance thresholds must be met. The Compensation Committee then determines whether each executive officer has met his or her individual performance objectives in determining his or her final award.

Long-Term Incentive Pay

          Long-term incentive pay in the form of equity grants is intended to relate a significant portion of compensation for the named executive officers to long-term price appreciation realized by Noven’s stockholders.

          Starting in 2006, the Compensation Committee began granting stock-settled stock appreciation rights (“SSARs”) in lieu of stock options. A SSAR entitles the holder to receive upon exercise the shares of common stock, on a net after-tax basis, equal in value to the amount by which the underlying stock has appreciated since the right was granted. While SSARs offer participants a similar economic benefit as stock options, the Compensation Committee believes SSARs provide considerable additional benefits to Noven, including reduced share dilution and need for share reserves as compared to stock options.

          It is Noven’s practice to make equity awards to selected employees on an annual basis at the November meeting of the Compensation Committee. The date of the November Compensation Committee meeting is established by the Board each year in advance. Under the 1999 Plan, the exercise price of SSARs (and stock options) may not be less than the closing price of Noven’s common stock on the date of grant.

          The following table shows the dollar value (using the Black-Scholes pricing model) of the equity awards granted to the named executive officers as part of the 2007 annual grant:

Executive		2007
Jeffrey F. Eisenberg		$	350,000
W. Neil Jones			300,000
Juan A. Mantelle			200,000

          The Compensation Committee did not grant SSARs to Ms. Barrett or Dr. Abrao as part of the annual equity grant because of their impending retirement and did not grant SSARs to Mr. Strauss as the terms of his continued employment with Noven in 2008 were under discussion at the time. Mr. Price, who joined Noven as its Chief Financial Officer in November 2007, received an initial grant of SSARs valued at $400,000 on his date of hire, as a result of negotiations between Mr. Price and Noven. In order to attract and incentivize new hires, initial equity grants are typically larger than annual grants.

          The determination of equity grants to the named executive officers in 2007 was made with reference to ranges established based on competitive information obtained as part of the 2007 executive compensation study conducted by PM&P, the executive’s level of responsibility and the recommendation at the time of Mr. Strauss. The Compensation Committee targeted long-term incentive grants at the market 75^th percentile based on the Company’s philosophy of having significant incentives in place that provide value based on increases in shareholder value. The combination of market median cash compensation (salary and annual incentive opportunities) and 75^th percentile equity opportunities provides total compensation between the median and market 75^th percentiles.

          Noven’s insider trading policy forbids hedging or monetization transactions, such as zero-cost collars and forward sale contracts. Noven’s policies do not include share-retention or equity ownership requirements for its executive officers. In 2007, Noven’s Board asked PM&P to benchmark share-retention and equity ownership guidelines for executive officers at the Peer Companies. The results indicated that four of the 21 Peer Companies had implemented share-retention or equity ownership guidelines for executive officers. Based in part on this review in 2007, the Compensation Committee decided not to change Noven’s policy.

          Noven’s current form of equity award agreements contains clawback provisions. Under these provisions, executives who violate any non-competition, confidentiality or other obligation owed to Noven will forfeit any outstanding award as of the date of the violation and will have to return any gains realized in the twelve months prior to such violation. These provisions serve to protect Noven’s intellectual property and business franchise and help ensure that executives act in the best interests of Noven and its stockholders.

Benefits

          Benefits for the named executive officers are established based upon an assessment of competitive market factors and, to a lesser extent, a determination of what is needed to attract and retain talent. Except as described herein, named executive officers are generally entitled to the same benefits provided to all of our employees. In addition, Noven reimburses the following costs for named executive officers: airline club membership, certain financial planning services, executive physical examinations and communication equipment and monthly usage fees.

Compensation to Mr. Eisenberg as Interim Chief Executive Officer

          In January 2008, Noven appointed Mr. Eisenberg as Executive Vice President and Interim Chief Executive Officer. Mr. Eisenberg had been serving as Senior Vice President — Strategic Alliances. With the appointment of Mr. Brandt as Noven’s permanent Chief Executive Officer, Mr. Eisenberg currently serves as Noven’s Executive Vice President. In connection with his appointment as Interim Chief Executive Officer, Noven entered into a letter agreement with Mr. Eisenberg which provides him:

	•		an additional $33,334 per month in base salary for the period from January 2, 2008 until April 29, 2008, the date of the appointment of Mr. Brandt as the permanent Chief Executive Officer; and
	•		a restricted stock award for 7,342 shares of Noven common stock, which had a market value of $100,000 on the date of grant (based on a per share grant value of $13.62), and which vest over a two year period in eight quarterly installments beginning on March 31, 2008.

          Mr. Eisenberg’s cash compensation (base salary as increased by the amounts noted above plus his full year annual incentive opportunity) for his services as Interim CEO was designed to provide him, for his services as Interim Chief Executive Officer, with a total cash compensation package similar to the market median for a Peer Company chief executive officer, as determined in the market comparison performed during 2007 by PM&P. The Compensation Committee decided to include a restricted stock grant to provide a retention incentive for Mr. Eisenberg in the event that he did not become the permanent Chief Executive Officer, as his continued services as Executive Vice President were considered to be critical to Noven’s future success. The Compensation Committee decided on the amount of the restricted stock award based on the assumption that Mr. Eisenberg’s term as Interim Chief Executive Officer would be less than six months and that Mr. Eisenberg should receive an award that constitutes a significant percentage of his regular grant of SSARs. The Compensation Committee chose restricted stock as the instrument because it provides a much greater retention incentive than do SSARs.

          The letter agreement with Mr. Eisenberg also provides for severance in the event that, prior to December 31, 2009, he is terminated without “cause” or resigns for “good reason”, in which event he would receive (i) severance equal to one year of his then-current salary, (ii) an amount equal to his target award under the AIP in effect during the applicable fiscal year of the date of termination or resignation, (iii) immediate vesting of the restricted stock outstanding at the date of such termination or resignation, and (iv) an extension of the exercise period for then vested options or SSARs from 90 days to 12 months after the date of such termination or resignation. The severance benefits resulted from the negotiation of Mr. Eisenberg’s letter agreement and were deemed appropriate by the Compensation Committee.

Post-Employment Payments

Mr. Strauss

          In January 2008, Mr. Strauss retired from his roles as the President, Chief Executive Officer, director and Chairman of Noven. In connection with his retirement, Noven and Mr. Strauss entered into a separation agreement, which provided for:

	•	a separation payment of $1,080,597;
	•	an award under the 2007 AIP, to be paid at the same time and in the same manner as Noven’s executive officers;
	•	a grant of 50,000 restricted stock units, which vest in January 2010, provided that Mr. Strauss does not violate certain non-competition, non-solicitation and confidentiality agreements included in his separation agreement; and
	•	an extension of the exercise period for Mr. Strauss’ then vested stock options and vested SSARs from 90 days after the cessation of his employment to two years after the cessation of his employment.

          In arriving at these amounts in negotiation with Mr. Strauss, the Compensation Committee took into account the provisions in Mr. Strauss’ employment agreement that was in effect until December 31, 2007. Mr. Strauss’ employment agreement provided for the payment of two times salary and two times annual incentive opportunity, as consideration for not violating the non-competition, non-solicitation and confidentiality provisions of the employment agreement for a two year period beyond retirement. The separation payment under the separation agreement was in an amount equal to his targeted cash compensation for one year. The separation payment has been reported as compensation in the Summary Compensation Table in 2007 for Mr. Strauss under the “All Other Compensation” column.

          In connection with Mr. Strauss’ separation agreement, Noven recognized compensation expense in 2007 of (i) $524,000 as a result of the extension of the exercise period of his vested stock options and SSARs; and (ii) $681,000 related to the grant of 50,000 restricted stock units. Such amounts have been reported as compensation in the Summary Compensation Table in 2007 for Mr. Strauss under the “Option Awards” column and the “Stock Awards” column, respectively. Mr. Strauss did not receive an annual equity award in November 2007. The value of the 50,000 restricted stock units was selected to approximate the value of the annual equity award to Mr. Strauss in past years. The Compensation Committee agreed to pay Mr. Strauss his annual incentive award from the 2007 AIP because he had been employed for all of 2007. The Compensation Committee decided to extend the exercise period of vested stock options and SSARs to allow Mr. Strauss to benefit from potential future share price increases. The Compensation Committee also decided not to accelerate vesting of Mr. Strauss’ unvested stock options and SSARs. Overall, the separation arrangement described above reduced the cash payments to Mr. Strauss over the amounts that would have been payable under his employment agreement, while providing him with upside potential if Noven’s share price increases over the next two years. Noven did not maintain any supplemental executive retirement plans for Mr. Strauss and does not for any other named executive officer.

Ms. Barrett

          Ms. Barrett retired from Noven on December 31, 2007. In connection with her retirement, Noven and Ms. Barrett entered into a letter agreement in November 2007 which provided Ms. Barrett with the following benefits if she continued her employment through December 31, 2007:

	•	a separation payment of $395,850;
	•	an award under the 2007 AIP, to be paid at the same time and in the same manner as Noven’s executive officers; and
	•	an extension of the exercise period for Ms. Barrett’s then vested stock options and vested SSARs from 90 days after the cessation of her employment to one year after the cessation of her employment.

          The separation payment, which was based on an amount equal to Ms. Barrett’s base salary and annual incentive bonus target, was agreed to in consideration for Ms. Barrett’s agreement to extend her employment through December 31, 2007. The separation payment has been reported as compensation in the Summary Compensation Table in 2007 for Ms. Barrett under the “All Other Compensation” column. The Compensation Committee agreed to pay Ms. Barrett her annual incentive award from the 2007 AIP because she had been employed for all of 2007. The Compensation Committee decided to extend the exercise period of vested stock options and SSARs to allow Ms. Barrett to benefit from future potential share price increases. In connection with Ms. Barrett’s letter agreement, Noven recognized compensation expense of $135,000 in 2007 as a result of the extension of the exercise period of her vested stock options and SSARs. This amount has been reported as compensation in the Summary Compensation Table in 2007 for Ms. Barrett in the “Stock Option” column.

Mr. Jones

          On April 29, 2008, Noven and Mr. Jones entered into a letter agreement with respect to his resignation, effective May 31, 2008, from his role as Vice President — Marketing and Sales. Under his letter agreement, Mr. Jones will receive the following benefits if he continues his employment through May 31, 2008:

	•	a separation payment of $100,000;
	•	an extension of the exercise period for Mr. Jones’ then vested stock options and vested SSARs that have an exercise price of $22.00 per share or less from 90 days after the cessation of his employment to one year after the cessation of his employment.

The separation payment was agreed to in consideration for Mr. Jones’ agreement to extend his employment through May 31, 2008. The Compensation Committee decided to extend the exercise period of certain vested stock options and SSARs to allow Mr. Jones to benefit from future potential share price increases. Noven will recognize compensation expense in 2008 of approximately $31,008 as a result of the extension of the exercise period of his vested stock options and SSARs.

Dr. Abrao

          Dr. Abrao retired from Noven on December 31, 2007. In connection with his retirement, Noven and Dr. Abrao entered into a letter agreement in July 2007 which provided Dr. Abrao with the following benefits if he continued his employment through December 31, 2007:

	•	a separation payment of $284,996;
	•	an award under the 2007 AIP, to be paid at the same time and in the same manner as Noven’s executive officers; and
	•	an extension of the exercise period for Dr. Abrao’s then vested stock options and vested SSARs from 90 days after the cessation of his employment to one year after the cessation of his employment.

          The separation payment, which was based on an amount equal to Dr. Abrao’s base salary, was agreed to in consideration for Dr. Abrao’s agreement to extend his employment through December 31, 2007. The separation payment has been reported as compensation in the Summary Compensation Table in 2007 for Dr. Abrao under the “All Other Compensation” column. The Compensation Committee agreed to pay Dr. Abrao his annual incentive award from the 2007 AIP because he had been employed for all of 2007. The Compensation Committee decided to extend the exercise period of vested stock options and SSARs to allow Dr. Abrao to benefit from future potential share price increases. In connection with Dr. Abrao’s letter agreement, Noven recognized compensation expense of $38,811 in 2007 as a result of the extension of the exercise period of his vested stock options and SSARs. This amount has been reported as compensation in the Summary Compensation Table in 2007 for Dr. Abrao in the “Stock Option” column.

Change of Control Arrangements

          Noven has separately entered into change of control employment agreements with the named executive officers. These agreements, which are more fully described beginning on page 2 of this Proxy Statement, become effective if a change of control occurs during the three-year period that commences on the execution of the agreement. The change of control employment agreements are intended to further the interests of Noven’s stockholders by providing for continuity of management in the event of a change of control of Noven. In 2007, the Compensation Committee renewed these agreements for the named executive officers, which had the effect of extending the three-year term of those agreements to November 2010.

          In the event that any payments made in connection with a change of control under the change of control employment agreements for the named executive officers would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), Noven will “gross-up” the officer’s compensation for all federal, state and local income and excise taxes and any penalties and interest thereon.

          Awards (including SSARs and stock options) granted under the 1999 Plan vest immediately upon a “change of control”. The definition of a “change of control” under these awards is substantially the same as the definition of “change of control” described on page 44 with respect to the change of control employment agreements.

Internal Revenue Code Limits on Deductibility of Compensation

          Section 162(m) of the Code generally disallows a tax deduction to public corporations for compensation over $1,000,000 paid for any fiscal year to the corporation’s chief executive officer and three other most highly compensated executive officers as of the end of any fiscal year. However, the statute exempts qualifying performance-based compensation from the deduction limit if certain requirements are met.

          The Compensation Committee believes that it is generally in Noven’s best interest to attempt to structure performance-based compensation, including stock option grants or performance-based restricted stock or restricted stock unit awards and annual bonuses, to executive officers who may be subject to Section 162(m) in a manner that satisfies the statute’s requirements. However, the Compensation Committee recognizes the need to retain flexibility to make compensation decisions that may not meet Section 162(m) standards when necessary to enable the Company to meet its overall objectives, even if the Company may not deduct all of the compensation. Accordingly, the Compensation Committee may approve compensation arrangements for certain officers that are not fully deductible. Further, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, no assurance can be given, notwithstanding Noven’s efforts, that compensation intended by the Compensation Committee to satisfy the requirements for deductibility under Section 162(m) does in fact do so. All of the executive compensation payments in 2007 were deductible under Section 162(m).

Compensation Committee Report

Notwithstanding anything to the contrary set forth in any of our filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that might incorporate other of our filings, including this Proxy Statement, in whole or in part, the Report of the Compensation Committee below shall not be incorporated by reference into any such filings. This report shall also not be deemed to be “soliciting material,” or to have been “filed” with the Securities and Exchange Commission or subject to Regulation 14A under the Securities Exchange Act of 1934, as amended, or to the liabilities of Section 18 thereof.

          The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

Compensation Committee
John G. Clarkson, M.D., Chairperson
Pedro P. Granadillo
Robert G. Savage

Summary Compensation Table

          The table below and the accompanying footnotes include information regarding 2006 and 2007 compensation for each of the named executive officers. Other tables in this Proxy Statement provide additional detail on specific types of compensation.

																										Change
																										in
																										Pension
																						Non-				Value
																						Equity				and Non-
																						Incentive				Qualified
																						Plan				Deferred				All Other
																		Option				Compen-				Compen-				Compen-
Name and Principal										Bonus				Stock				Awards				sation				sation				sation
Position		Year				Salary				(1)				Awards				(2) (3)				(4)				Earnings				(5)				Total
Robert C. Strauss (6)			2007			$	611,251			$	0			$	681,000			$	1,214,492			$	334,813			$	0			$	1,103,212			$	3,944,768
Former President,			2006				587,741				66,121				0				554,231				245,129				0				21,857				1,475,079
Chief Executive Officer & Chairman
Jeffrey F. Eisenberg			2007				314,810				0				0				265,577				151,051				0				21,252				752,740
Executive Vice			2006				302,702				24,902				0				223,116				92,319				0				20,758				663,797
President & Former Interim CEO
Michael D. Price (7)			2007				27,500				10,000				0				12,500				0				0				11,772				51,772
Vice President & Chief			2006				N/A				N/A				N/A				N/A				N/A				N/A				N/A				N/A
Financial Officer
Diane M. Barrett (8)			2007				273,000				0				0				391,874				125,051				0				416,812				1,206,737
Former Vice President &			2006				262,500				21,041				0				223,116				78,005				0				19,394				604,056
Chief Financial Officer
Juan A. Mantelle			2007				278,718				0				0				247,974				111,753				0				19,173				657,618
Vice President & Chief			2006				267,998				20,917				0				210,144				77,543				0				18,407				595,009
Technical Officer
W. Neil Jones (9)			2007				253,334				0				0				251,062				112,053				0				24,393				640,842
Vice President -			2006				243,591				20,142				0				210,144				74,672				0				20,345				568,894
Marketing & Sales
Eduardo G. Abrao (10)			2007				284,966				0				0				252,275				126,044				0				306,098				969,383
Former Vice President -			2006				N/A				N/A				N/A				N/A				N/A				N/A				N/A				N/A
Clinical Development & Chief Medical Officer

		Cash								401(k)
		Separation								Matching				Auto				Life				Other
Name		Payment				Relocation				Contributions				Allowance				Insurance				Perquisites				Total
R. Strauss		$	1,080,597			$	0			$	7,750			$	10,200			$	1,224			$	3,441			$	1,103,212
J. Eisenberg			0				0				7,750				7,200				907				5,395				21,252
M. Price			0				11,000				0				692				69				11				11,772
D. Barrett			395,000				0				7,750				7,200				786				6,076				416,812
J. Mantelle			0				0				7,750				7,200				804				3,419				19,173
N. Jones			0				0				7,600				7,200				732				8,861				24,393
E. Abrao			284,996				0				7,750				7,200				821				5,331				306,098

Grants of Plan-Based Awards in 2007

																														All Other
																														Option/SSAR
																														Awards:				Exercise				Grant Date
																														Number of				or Base				Fair Value of
																														Securities				Price of				Stock and
																														Underlying				Option/				Option/
						Estimated Possible Payouts												Estimated Future Payouts												Options/				SSAR				SSAR
						Under Non-Equity Incentive												Under Equity Incentive												SSARs (2)				Awards				Awards (4)
						Plan Awards (1)												Plan Awards												(#)				(3) ($/Sh)				($)
														Maxi-				Thresh-								Maxi-
		Grant				Threshold				Target				mum				old				Target				mum
Name		Date				($)				($)				($)				(#)				(#)				(#)
Robert C. Strauss (5)			11/13/07			$	183,376			$	366,751				N/A				0				0				0				0				N/A				N/A
Jeffrey F. Eisenberg			11/13/07				70,833				141,665				N/A				0				0				0				52,161			$	14.54			$	350,000
Michael D. Price (6)			11/19/07				N/A				N/A				N/A				0				0				0				62,500			$	13.93			$	400,000
Diane M. Barrett (5)			11/13/07				61,425				122,850				N/A				0				0				0				0				N/A				N/A
Juan A. Mantelle			11/13/07				62,712				125,423				N/A				0				0				0				29,806			$	14.54			$	200,000
W. Neil Jones			11/13/07				57,000				114,000				N/A				0				0				0				44,709			$	14.54			$	300,000
Eduardo G. Abrao (5)			11/13/07				64,117				128,235				N/A				0				0				0				0				N/A				N/A

Outstanding Equity Awards at 2007 Year-End

										Option/SSAR Awards
										Equity Incentive
		Number Of				Number of				Plan Awards: Number
		Securities				Securities				of Securities
		Underlying				Underlying				Underlying
		Unexercised				Unexercised				Unexercised
		Options/SSARs (#)				Options/SSARs (#)				Unearned				Option/SSAR
		Exercisable				Unexercisable				Options/SSARs				Exercise Price				Option/SSAR
Name		(1)				(1)				(#)				($)				Expiration Date
Robert C. Strauss (6)			20,360	(2)			0				0			$	22.83				12/31/2009
			53,704				0				0			$	13.68				12/31/2009
			100,000				0				0			$	22.60				12/31/2009
			80,000				0				0			$	10.45				12/31/2009
			120,000				0				0			$	13.11				09/04/2009
			90,000				0				0			$	15.13				11/05/2008
Jeffrey F. Eisenberg (7)			0				52,161	(2)(3)			0			$	14.54				11/12/2014
			5,882	(2)			17,645	(2)(3)			0			$	22.83				11/13/2013
			15,432				15,432	(3)			0			$	13.68				11/14/2012
			50,000				0	(4)			0			$	22.60				11/10/2011
			12,000				12,000	(5)			0			$	10.45				11/04/2010
			19,099				0	(5)			0			$	13.11				09/04/2009
			50,000				0	(4)			0			$	15.13				11/05/2008
Michael D. Price (8)			0				62,500	(2)(3)			0			$	13.93				11/18/2014
Diane M. Barrett (9)			5,882	(2)			0				0			$	22.83				12/31/2008
			15,432				0				0			$	13.68				12/31/2008
			50,000				0				0			$	22.60				12/31/2008
			12,000				0				0			$	10.45				12/31/2008
			19,099				0				0			$	13.11				12/31/2008
			50,000				0				0			$	15.13				11/05/2008
Juan A. Mantelle			0				29,806	(2)(3)			0			$	14.54				11/12/2014
			5,882	(2)			17,645	(2)(3)			0			$	22.83				11/13/2013
			7,716				15,432	(3)			0			$	13.68				11/14/2012
			50,000				0	(4)			0			$	22.60				11/10/2011
			10,001				10,000	(5)			0			$	10.45				11/04/2010
			10,000				0	(5)			0			$	13.11				09/04/2009
			40,000				0	(4)			0			$	15.13				11/05/2008
W. Neil Jones			0				44,709	(2)(3)			0			$	14.54				11/12/2014
			5,882	(2)			17,645	(2)(3)			0			$	22.83				11/13/2013
			7,716				15,432	(3)			0			$	13.68				11/14/2012
			50,000				0	(4)			0			$	22.60				11/10/2011
			20,000				10,000	(5)			0			$	10.45				11/04/2010
			10,000				0	(5)			0			$	13.11				09/04/2009
Eduardo G. Abrao (10)			5,882	(2)			0				0			$	22.83				12/31/2008
			7,716				0				0			$	13.68				12/31/2008
			25,000				0				0			$	22.60				12/31/2008
			6,668				0				0			$	10.45				12/31/2008
			20,000				0				0			$	11.12				12/31/2008

Option Exercises and Stock Vested in 2007

		Option Awards								Stock Awards
		Number of								Number of
		Shares								Shares
		Acquired				Value Realized				Acquired				Value Realized
		on Exercise				on Exercise (1)				on Vesting				on Vesting
Name		(#)				($)				(#)				($)
Robert C. Strauss			0			$	0				0			$	0
Jeffrey F. Eisenberg			901				13,236				0				0
Michael D. Price			0				0				0				0
Diane M. Barrett			10,901				150,135				0				0
Juan A. Mantelle			7,716				87,345				0				0
W. Neil Jones			15,716				171,343				0				0
Eduardo G. Abrao			0				0				0				0

Non-qualified Deferred Compensation in 2007

     Noven has established a non-qualified deferred compensation plan available to members of the Board and a group of Noven’s officers selected by Noven’s Employee Benefits Committee. The plan permits participants to defer receipt of part of their current compensation to a later date as part of their personal retirement or financial planning. Participants may elect to defer, as applicable, portions of their director fees, base salary, bonus, long-term incentive plan awards, and/or restricted stock grants. Deferral elections are made annually and expire at the end of each plan year. Deferral elections are irrevocable once made. Benefit security for the plan is provided by a rabbi trust.

     Deferrals are subject to minimum and maximum amount requirements, as defined in the plan. An employee participant that elects to participate in the plan in a given plan year must defer at least an aggregate amount of $4,000 from his or her base salary, bonus and/or long-term incentive plan awards; a director participant must defer at least $4,000 of his or her director fees. No minimum deferral is required for restricted stock grants, and a restricted stock recipient may defer up to 100% of a restricted stock grant. Deferring a grant of restricted stock does not alter the timetable for vesting of that grant. An employee participant may defer up to 75% of his or her salary and up to 100% of his or her bonus and/or long-term incentive plan awards; director participants may defer up to 100% of their director fees.

     Commencing in 2007, participants are eligible to receive a “401(k) restoration match” that is intended to address reductions in the amount that participants receive in matching contributions under Noven’s 401(k) Employee Savings Plan as a result of certain limits generally

applicable to 401(k) plans. Contributions made by Noven under the deferred compensation plan in 2007 as a result of the 401(k) restoration match are noted in the table below.

     Participants are at all times 100% vested in their deferral accounts. For cash deferrals, participants may elect one or more measurement funds selected by the Employee Benefits Committee (which are based on certain mutual funds) for the purpose of crediting or debiting additional amounts to a participant’s deferral account balance. Restricted stock deferrals are automatically allocated to a Noven stock unit measurement fund.

     Amounts deferred may be paid out to participants in scheduled distributions, which may not be any sooner than two full plan years after the year to which the deferral election relates. A participant may also elect to receive a distribution if such participant experiences an unforeseeable financial emergency (as defined in the plan) or in the event of a change of control of Noven. Distributions may also be made upon a participant’s retirement, termination, disability or death.

     Noven may terminate the plan at any time; however, upon termination, benefits would be paid as defined in the plan.

     The following table sets forth the amounts deferred in 2007 under the non-qualified deferred compensation plan by the named executive officers.

		Executive				Registrant				Aggregate				Aggregate				Aggregate
		Contributions in				Contributions in				Earnings in 2007				Withdrawals/				Balance at
Name		2007 (1) (2) ($)				2007 ($)				(3) ($)				Distributions ($)				12/31/07 (4) ($)
Robert C. Strauss		$	0			$	1,000			$	0			$	1,000			$	1,000
Jeffrey F. Eisenberg			75,000				1,000				8,043				0				114,511
Michael D. Price			0				0				0				0				0
Diane M. Barrett			0				1,000				0				1,000				0
Juan A. Mantelle			5,908				1,096				2,043				0				26,377
W. Neil Jones			10,000				850				1,091				0				11,941
Eduardo G. Abrao			10,719				1,000				559				12,278				0