SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CONMED CORPORATION
................................................................................
(Name of Registrant as Specified in Its Charter)
N/A
................................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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4) Date Filed:
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CONMED CORPORATION
310 BROAD STREET
UTICA, NEW YORK 13501
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
CONMED Corporation (the "Company") will be held at the Holiday Inn, 1777
Burrstone Road, New Hartford, New York on Tuesday, May 18, 1999, at 3:30 P.M.
(New York time), for the following purposes:
(1) To elect six Directors to serve on the Company's Board of
Directors;
(2) To appoint independent accountants for the Company for 1999;
(3) To approve the adoption of the Company's 1999 Long-Term Incentive
Stock Plan;
(4) To approve an amendment to the Company's Restated Certificate of
Incorporation to increase to 100,000,000 the number of authorized
shares of Common Stock; and
(5) To transact such other business as may properly be brought before
the meeting or any adjournment thereof.
The shareholders of record at the close of business on March 31, 1999
are entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
Even if you plan to attend the meeting in person, we request that you
mark, date, sign and return your proxy in the enclosed self-addressed envelope
as soon as possible so that your shares may be certain of being represented and
voted at the meeting. Any proxy given by a shareholder may be revoked by that
shareholder at any time prior to the voting of the proxy.
By Order of the Board of Directors,
Thomas M. Acey
Secretary
April 16, 1999
CONMED CORPORATION
310 BROAD STREET
UTICA, NEW YORK 13501
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 18, 1999
The enclosed proxy is solicited by and on behalf of the Board of
Directors of CONMED Corporation (the "Company") for use at the Annual Meeting of
Shareholders to be held on Tuesday, May 18, 1999, at 3:30 P.M. (New York time),
at the Holiday Inn, 1777 Burrstone Road, New Hartford, New York, and any
adjournment thereof. The matters to be considered and acted upon at such meeting
are described in the foregoing notice of the meeting and this proxy statement.
This proxy statement, the related form of proxy and the Company's annual report
to shareholders are being mailed on or about April 16, 1999 to all shareholders
of record on March 31, 1999. Shares of the Company's Common Stock, par value
$.01 per share (the "Common Stock"), represented in person or by proxy will be
voted as hereinafter described or as otherwise specified by the shareholder. Any
proxy given by a shareholder may be revoked by the shareholder at any time prior
to the voting of the proxy by delivering a written notice to the Secretary of
the Company, by executing and delivering a later-dated proxy or by attending the
meeting and voting in person.
The persons named as proxies are Eugene R. Corasanti and Robert E.
Remmell, each of whom is presently a director and an officer of the Company. The
cost of preparing, assembling and mailing the proxy, this proxy statement and
other material enclosed, and all clerical and other expenses of solicitations,
will be borne by the Company. In addition to the solicitation of proxies by use
of the mails, directors, officers and employees of the Company and its
subsidiaries may solicit proxies by telephone, telegram or personal interview.
The Company also will request brokerage houses and other custodians, nominees
and fiduciaries to forward soliciting material to the beneficial owners of
Common Stock held of record by such parties and will reimburse such parties for
their expenses in forwarding soliciting material. The total amount of such
reimbursement of expenses is anticipated to be approximately $30,000.
Votes at the 1999 Annual Meeting will be tabulated by a representative
of Registrar and Transfer Company, which has been appointed by the Company's
Board of Directors to serve as inspector of election.
VOTING RIGHTS
The holders of record of the 15,201,913 shares of Common Stock
outstanding on March 31, 1999 will be entitled to one vote for each share held
on all matters coming before the meeting. The holders of record of a majority of
the outstanding shares of Common Stock present in person or by proxy will
constitute a quorum for the transaction of business at the meeting. Shareholders
are not entitled to cumulative voting rights. Under the rules of the Securities
and Exchange Commission (the "SEC"), boxes and a designated blank space are
provided on the proxy card for shareholders if they wish either to abstain on
one or more of the proposals or to withhold authority to vote for one or more
nominees for director. In accordance with New York State law, such abstentions
are not counted in determining the votes cast at the meeting. With respect to
Proposal 1, the director nominees who receive the greatest number of votes at
the meeting will be elected to the Board of Directors of the Company. Votes
against, and votes withheld in respect of, a candidate have no legal effect.
Proposals 2 and 3 require the affirmative vote of the holders of a majority of
the votes cast at the meeting in order to be approved by the shareholders.
Proposal 4 requires the affirmative vote of the holders of a majority of the
outstanding shares of Common Stock in order to be approved by the
shareholders. When properly executed a proxy will be voted as specified by the
shareholder. If no choice is specified by the shareholder, a proxy will be voted
"for" all portions of items (1), (2), (3) (except as stated in the next
paragraph) and (4), and in the proxies' discretion on any other matters coming
before the meeting.
Under the rules of the New York Stock Exchange, Inc., which effectively
govern the voting by any brokerage firm holding shares registered in its name or
in the name of its nominee on behalf of a beneficial owner, Proposals 1, 2 and 4
are considered "discretionary" items upon which brokerage firms may vote in
their discretion on behalf of their clients if such clients have not furnished
voting instructions within ten days prior to the Annual Meeting (shares held by
such clients, "broker non-votes") and Proposal 3 is considered "non
discretionary" and brokers who have received no instructions from their clients
do not have discretion to vote on this item. The broker non-votes will be
treated in the same manner as votes present.
ANNUAL REPORT
The annual report for the fiscal year ended December 31, 1998,
including financial statements, is being furnished herewith to shareholders of
record on March 31, 1999. The annual report does not constitute a part of the
proxy soliciting material and is not deemed "filed" with the SEC.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of March 31, 1999, by each
shareholder known by the Company to be the beneficial owner of more than 5% of
its outstanding Common Stock, by each director and nominee director, by each of
the Named Executive Officers (as defined below) and by all directors and
executive officers as a group.
AMOUNT AND NATURE
OF BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER* OWNERSHIP OF CLASS
- ------------------------- ----------------- --------
William W. Abraham(1) 170,152 1.07%
Eugene R. Corasanti(2) 586,402 3.70%
Joseph J. Corasanti(3) 49,225 (4)
Bruce F. Daniels(5) 7,875 (4)
Joseph B. Gross(6) 25,700 (4)
William D. Matthews(7) 11,500 (4)
Robert E. Remmell(8) 4,950 (4)
Stuart J. Schwartz(9) 2,350 (4)
Robert D. Shallish, Jr.(10) 64,875 (4)
Directors and executive officers as a group
(9 persons)(1)(2)(3)(5)(6)(7)(8)(9)(10)(11) 923,029 5.83%
-2-
AMOUNT AND NATURE
OF BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER* OWNERSHIP OF CLASS
- ------------------------- ----------------- --------
Bristol-Myers Squibb Company(12)
345 Park Avenue
New York, NY 10154 1,000,000 6.17%
Fenimore Asset Management, Inc.(13)
Thomas O. Putnam
118 North Grand Street
P.O. Box 310
Cobleskill, New York 12043 1,281,584 8.43%
Neuberger Berman, LLC(14)
Neuberger Berman Management Inc.
605 Third Avenue
New York, New York 10158-3698 795,200 5.23%
- --------------------
* Unless otherwise set forth above, the address of each of the above listed
shareholders is c/o CONMED Corporation, 310 Broad Street, Utica, New York
13501.
(1) Includes 152,052 shares subject to options, exercisable within 60 days.
(2) Includes 360,502 shares subject to options, exercisable within 60 days.
Also includes 42,525 shares owned beneficially by the wife of Eugene R.
Corasanti. Eugene R. Corasanti disclaims beneficial ownership of these
shares.
(3) Includes 22,300 shares subject to options, exercisable within 60 days.
Joseph J. Corasanti is the son of Eugene R. Corasanti.
(4) Less than 1%.
(5) Includes 4,500 shares subject to options, exercisable within 60 days. Also
includes 3,375 shares owned beneficially by the wife of Bruce F. Daniels.
Mr. Daniels disclaims beneficial ownership of these shares.
(6) Includes 25,700 shares subject to options, exercisable within 60 days.
(7) Includes 1,500 shares subject to options, exercisable within 60 days.
(8) Includes 4,500 shares subject to options, exercisable within 60 days.
(9) Includes 850 shares owned beneficially by the wife of Stuart J. Schwartz.
Mr. Schwartz disclaims beneficial ownership of these shares.
(10) Includes 61,500 shares subject to options, exercisable within 60 days.
-3-
(11) Includes 634,054 shares subject to options, exercisable within 60 days,
held by William W. Abraham, Eugene R. Corasanti, Joseph J. Corasanti, Bruce
F. Daniels, Joseph B. Gross, William D. Matthews, Robert E. Remmell, Stuart
J. Schwartz and Robert D. Shallish, Jr., directors and executive officers
of the Company. Such 634,054 shares are equal to approximately 4.17% of the
Common Stock outstanding. As of March 31, 1999, the Company's directors and
officers as a group (9 persons) are the record owners of 242,225 shares,
which is approximately 1.59% of the Common Stock outstanding.
(12) A Schedule 13D filed with the SEC by Bristol-Myers Squibb Company ("BMS")
on January 9, 1998, indicates that BMS beneficially owns 1,000,000 shares
of Common Stock by virtue of having sole voting and dispositive power over
such shares pursuant to a warrant to purchase Common Stock, dated as of
December 31, 1997, issued by the Company to BMS in connection with the
acquisition of Linvatec Corporation ("Linvatec") by the Company on December
31, 1997.
(13) An Amendment to a Schedule 13G, filed with the SEC by these entities on
February 5, 1999, indicates that such entities beneficially own 1,281,584
shares of Common Stock by virtue of having shared voting and dispositive
power over such shares through discretionary accounts owned economically by
clients.
(14) A Schedule 13G filed by these entities on February 10, 1999, indicates that
such entities beneficially own 795,200 shares of Common Stock by virtue of
having sole and shared voting and shared dispositive power over such shares
through discretionary accounts owned economically by clients.
On March 31, 1999 there were 2,254 shareholders of record of the
Company's Common Stock.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to regulations promulgated by the Securities and Exchange
Commission, the Company is required to identify, based solely on a review of
reports filed under Section 16(a) of the Securities Exchange Act of 1934, and
furnished to the Company pursuant to Rule 16a-3(c) thereunder, each person who,
at any time during its fiscal year ended December 31, 1998, was a director,
officer or beneficial owner of more than ten percent of the Company's Common
Stock that failed to file on a timely basis any such reports. Based on such
reports, the Company is not aware of any such failure to file on a timely basis
any such reports by any such person that has not previously been disclosed.
-4-
PROPOSAL ONE: ELECTION OF DIRECTORS
At the meeting, six directors are to be elected to serve on the
Company's Board of Directors. The shares represented by proxies will be voted as
specified by the shareholder. If the shareholder does not specify his choice,
the shares will be voted in favor of the election of the nominees listed on the
proxy card, except that in the event any nominee should not continue to be
available for election, such proxies will be voted for the election of such
other persons as the Board of Directors may recommend. The Company does not
presently contemplate that any of the nominees will become unavailable for
election for any reason. The director nominees who receive the greatest number
of votes at the meeting will be elected to the Board of Directors of the
Company. Votes against, and votes withheld in respect of, a candidate have no
legal effect. Shareholders are not entitled to cumulative voting rights.
The Board of Directors recommends a vote FOR this proposal.
The Board of Directors consists of six directors. Directors hold office
for terms expiring at the next annual meeting of shareholders and until their
successors are duly elected and qualified. Each of the nominees proposed for
election at the Annual Meeting is presently a member of the Board of Directors
and has been elected by the shareholders.
The following table sets forth certain information regarding the
members of, and nominees for, the Board of Directors:
NOMINEES FOR ELECTION AT THE 1999 ANNUAL MEETING
SERVED AS
DIRECTOR PRINCIPAL OCCUPATION OR
NAME AGE SINCE POSITION WITH THE COMPANY
- ---- --- ----- -------------------------
Eugene R. Corasanti 68 1970 Chairman of the Board of Directors, President and
Chief Executive Officer of the Company
Robert E. Remmell 68 1983 Member of Steates Remmell Steates & Dziekan
(Attorneys) and Assistant Secretary of the Company
Bruce F. Daniels 64 1992 Executive, retired
William D. Matthews 64 1997 Chairman of the Board of Directors and retired
Chief Executive Officer of Oneida Ltd. and director
of Oneida Financial Corporation and Coyne Textile
Services
Stuart J. Schwartz 62 1998 Physician, retired
Joseph J. Corasanti 35 1994 Executive Vice President/General Manager of the
Company
-5-
DIRECTORS, EXECUTIVE OFFICERS AND SENIOR OFFICERS
EUGENE R. CORASANTI (age 68) has served as President and Chairman of
the Board of the Company since its incorporation in 1970. Mr. Corasanti is also
the Company's Chief Executive Officer. Prior to that time he was an independent
public accountant. Mr. Corasanti holds a B.B.A. degree in Accounting from
Niagara University. Eugene R. Corasanti's son, Joseph J. Corasanti, is a
Director and Executive Vice President/General Manager of the Company.
ROBERT E. REMMELL (age 68) has served as a Director since June 1983 and
as an Assistant Secretary since June 1983. Mr. Remmell has been a partner since
January 1961 of Steates Remmell Steates & Dziekan, Utica, New York, the
Company's corporate counsel. The Company paid approximately $7,400 to Steates
Remmell Steates & Dziekan for services rendered during fiscal year 1998. Mr.
Remmell holds a B.A. degree from Utica College and an L.L.B. from Syracuse
University School of Law.
BRUCE F. DANIELS (age 64) has served as a Director of the Company since
August 1992. Mr. Daniels is a retired executive. From August 1974 to June 1997,
Mr. Daniels held various executive positions with Chicago Pneumatic Tool
Company. Mr. Daniels holds a B.S. degree in Business from Utica College.
WILLIAM D. MATTHEWS (age 64) has served as a Director of the Company
since August 1997. Since 1986 he has been the Chairman of the Board, and from
1986 to his retirement in January 1999 he was the Chief Executive Officer of,
Oneida Ltd. Mr. Matthews holds a B.A. degree from Union College and an L.L.B.
degree from Cornell University School of Law.
STUART J. SCHWARTZ (age 62) has served as a Director of the Company
since May 1998. Dr. Schwartz is a retired physician. From 1969 to December 1997
he was engaged in private practice as an urologist. Dr. Schwartz holds a B.A.
degree from Cornell University and a M.D. degree from SUNY Upstate Medical
College, Syracuse.
JOSEPH J. CORASANTI (age 35) has served as a Director of the Company
since May 1994. He also served as General Counsel and Vice President-Legal
Affairs of the Company from March 1993 to August 1998 at which time he was named
Executive Vice-President/General Manager of the Company. Prior to that time he
was an Associate Attorney with the law firm of Morgan, Wenzel & McNicholas, Los
Angeles, California from 1990 to March 1993. Mr. Corasanti holds a B.A. degree
in Political Science from Hobart College and a J.D. degree from Whittier College
School of Law. Joseph J. Corasanti is the son of Eugene R. Corasanti, Chairman,
President and Chief Executive Officer of the Company.
WILLLAM W. ABRAHAM (age 67) joined the Company in May 1977 as General
Manager. He has served as the Company's Vice President-Manufacturing and
Engineering since June 1983. In November of 1989 he was named Executive Vice
President and on March 24, 1993, he was named Senior Vice President of the
Company. Mr. Abraham holds a B.S. degree in Industrial Management from Utica
College.
ROBERT D. SHALLISH, JR. (age 50) joined the Company as Chief Financial
Officer and Vice President-Finance in December 1989 and has also served as an
Assistant Secretary since March 1995. Prior to this he was employed as
Controller of Genigraphics Corporation in Syracuse, New York since 1984. He was
employed by Price Waterhouse LLP as a certified public accountant and senior
manager from 1972 through 1984. Mr. Shallish graduated with a B.A. degree in
Economics from Hamilton College and holds a Master's degree in Accounting from
Syracuse University.
-6-
THOMAS M. ACEY (age 52) has been employed by the Company since August
1980 and has served as the Company's Treasurer since August 1988 and as the
Company's Secretary since January 1993. Mr. Acey holds a B.S. degree in Public
Accounting from Utica College and prior to joining the Company was employed by
the certified public accounting firm of Tartaglia & Benzo in Utica, New York.
LUKE A. POMILIO (age 34) joined the Company as Controller in September
1995. Prior to his employment with the Company, Mr. Pomilio served for two years
as Controller of Rome Cable Corporation, a wire and cable manufacturer. He was
also employed as a certified public accountant for seven years with Price
Waterhouse LLP where he served most recently as an audit manager. Mr. Pomilio
graduated with a B.S. degree in Accounting and Law from Clarkson University.
DANIEL S. JONAS (age 35) joined the Company as General Counsel in
August 1998 and in addition became the Vice President-Legal Affairs in March
1999. Prior to his employment with the Company he was a partner with the law
firm of Harter, Secrest & Emery, LLP in Syracuse from January 1998 to August
1998, having joined the firm as an Associate Attorney in 1995. Prior to that he
was an Associate Attorney at Miller, Alfano & Raspanti, P.C. in Philadelphia
from 1992 to 1995 as well as an adjunct professor of law at the University of
Pennsylvania Law School from 1991 to 1995. Mr. Jonas holds an A.B. degree from
Brown University and a J.D. from the University of Pennsylvania Law School.
FRANK R. WILLIAMS (age 50) joined the Company in 1974 as Sales Manager
and Director of Marketing and became Vice President-Marketing and Sales in June
1983. In September 1989 he became Vice President-Business Development and became
Vice President-Technology Assessment in November 1995. Mr. Williams graduated
with a B.A. degree from Hartwick College in 1970 as a biology major and did his
graduate study in Human Anatomy at the University of Rochester College of
Medicine.
JOSEPH B. GROSS (age 40) joined the Company as Manager of Manufacturing
Engineering in April 1988 and became Vice President-Operations in May 1992. In
addition, in April 1998 he became the President of Linvatec, a wholly owned
subsidiary of the Company. Prior to his employment with the Company, Mr. Gross
was employed at Oneida Ltd. Silversmiths. Mr. Gross holds a B.S. degree from the
State University of New York-College of Technology and a Master's degree in
Business Administration from Rensselaer Polytechnic Institute.
JOHN J. STOTTS (age 43) joined the Company as Vice President-Marketing
and Sales for Patient Care in July 1993 and became Vice President-Marketing in
December 1996. Prior to his employment with the Company, Mr. Stotts served as
Director of Marketing and Sales for Medtronic Andover Medical, Inc. Mr. Stotts
holds a B.A. degree in Business Administration from Ohio University.
JOHN V. SCIBELLI (age 52) joined the Company as President of Aspen
Laboratories, Inc., a wholly owned subsidiary of the Company, in August 1998.
Prior to his employment with the Company, Mr. Scibelli was employed by Valleylab
Inc. Division of Pfizer for twelve years where he served in a number of senior
management capacities, most recently as President. Mr. Scibelli holds a B.S.
degree from Long Island University and a Ph.D. degree in Chemistry from the
University of Michigan.
ALEXANDER R. JONES (age 42) joined the Company as a Sales
Representative in October 1982 and become Vice President, Sales in November
1998. During his employment with the Company, Mr. Jones has also served as
Canadian Sales Manager, Director-National Accounts, Regional Sales Manager and
National Sales Manager. Mr. Jones holds a B.A. degree from Muhlenberg College.
-7-
The Company's Directors are elected at each annual meeting of
shareholders and serve until the next annual meeting and until their successors
are duly elected and qualified. Eugene R. Corasanti's employment is subject to
an employment agreement which expires December 31, 2001. The Company's other
officers are appointed by the Board of Directors and hold office at the will of
the Board of Directors.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Company's Board of Directors has three standing committees: the
Audit Committee, the Stock Option Committee and the Compensation Committee. The
Company has no nominating committee.
The Audit Committee presently consists of Messrs. Daniels, Matthews and
Remmell. The Audit Committee is charged with evaluating accounting and control
procedures and practices of the Company and reporting on such to the Board of
Directors. The Audit Committee also serves as the direct liaison with the
Company's independent public accountants and recommends the engagement or
discharge of such auditors. The Audit Committee met two times during 1998.
The Stock Option Committee presently consists of Messrs. Daniels and
Remmell and Dr. Schwartz. The Stock Option Committee administers the Company's
employee stock option plans and has authority to grant options to officers and
key employees, as designated by the Stock Option Committee, and to determine the
terms of such options in accordance with such plan. The Stock Option Committee
acted by unanimous written consent on resolutions twelve times during 1998.
The Compensation Committee presently consists of Messrs. Daniels,
Matthews and Remmell. The Compensation Committee is charged with reviewing and
establishing levels of salary, bonuses, benefits and other compensation for the
Company's officers. The Compensation Committee met two times during 1998.
The full Board of Directors met eight times (seven times in person and
once by telephone) and voted by unanimous consent on resolutions once during
1998. Each incumbent director attended or acted upon at least 75% of the total
1998 board meetings or unanimous consents and committee meetings or unanimous
consents held or acted upon during periods that he was a member of the Board or
such committees.
Each Director was paid $1,000 for each of the seven meetings of the
full Board of Directors personally attended and Messrs. Daniels, Matthews and
Remmell, as non-employee directors, were paid $2,500 for each of the four fiscal
quarters of service on the Board of Directors. Dr. Schwartz, as a non-employee
director, received two $2,500 payments for two fiscal quarters of service on the
Board of Directors and $2,000 for his attendance at two meetings of the full
Board of Directors. Harry Cone received $7,000 for his services as a director
until May 19, 1998 (consisting of two $2,500 payments for two fiscal quarters of
service on the Board of Directors and $2,000 for his attendance at two meetings
of the full Board of Directors) when his term in office terminated upon his
decision not to stand for election at the 1998 annual meeting of shareholders.
Mr. Cone did not decline to stand for re-election due to a disagreement with the
Company on any matter. In addition, under the Company's Stock Option Plan for
Non-Employee Directors, each non-employee director (Messrs. Cone, Daniels and
Remmell in 1996 and 1997, Messrs. Daniels, Matthews and Remmell and Dr. Schwartz
in 1998 and, if elected, Messrs. Daniels, Matthews and Remmell and Dr. Schwartz
in 1999) elected, reelected or continuing as a director, receives 1,500 options
with an option price equal to the fair market value of the Company's Common
Stock on the business day following each annual meeting of the shareholders.
-8-
COMPENSATION OF EXECUTIVE OFFICERS
The following information relates to all plan and non-plan compensation
awarded to, earned by, or paid to (i) Eugene R. Corasanti, the Chairman of the
Board of Directors, President and Chief Executive Officer of the Company (the
"CEO") and (ii) William W. Abraham, Robert D. Shallish, Jr., Joseph B. Gross and
Joseph J. Corasanti, the Company's four most highly compensated executive
officers, other than the CEO, who were serving as executive officers of the
Company at December 31, 1998 (the CEO and such officers, the "Named Executive
Officers").
The following information does not reflect any compensation awarded to
or earned by the Named Executive Officers subsequent to December 31, 1998,
except as may otherwise be indicated. Any compensation awarded to or earned by
the Named Executive Officers during 1999 will be reported in the proxy statement
for the Company's 2000 Annual Meeting of Shareholders, unless such compensation
has been previously reported.
SUMMARY COMPENSATION TABLE
The following table sets forth for the Named Executive Officers for
each of the last three fiscal years: (i) the name and principal position of the
executive officer (column (a)); (ii) the year covered (column (b)); (iii) annual
compensation (columns (c), (d) and (e)), including: (A) base salary earned
during the year covered (column (c)); (B) bonus earned during the year covered
(column (d)); and (C) other annual compensation not properly categorized as
salary or bonus (column (e)); and (iv) long-term compensation, including the sum
of the number of stock options granted (column (f)).
-9-
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
--------------------------------------------------- ------------
(a) (b) (c) (d) (e) (f)
Other Annual
Name and Principal Fiscal Salary Bonus Compensation Options
Position Year ($) ($)(1) ($) (#)
------------------ ------ ------ ----- ------------ -------
Eugene R. Corasanti, 1998 300,000 45,000 225,000(2) 55,000
President, Chief 1997 300,000 - 202,000(2) 1,500
Executive Officer and 1996 250,523 - 165,000(2) 62,000
Chairman of the Board
William W. Abraham, 1998 176,557 25,350 - 5,000
Senior Vice President 1997 161,007 10,000 - 20,000
1996 152,107 - - 7,000
Joseph B. Gross, 1998 164,990 24,180 - 35,000
Vice President- 1997 144,957 25,000 - 31,000
Operations and 1996 134,307 - - 7,000
President of Linvatec
Robert D. Shallish, Jr., 1998 158,662 22,893 - 5,000
Chief Financial Officer 1997 144,957 25,000 - 20,000
and Vice President- 1996 134,307 - - 7,000
Finance
Joseph J. Corasanti 1998 133,195 21,843 - 30,000
Executive Vice-President/ 1997 118,995 10,000 - 22,500
General Manager 1996 106,607 - - 7,000
<FN>
- ------------------
(1) Includes cash bonuses in year earned even if paid after the fiscal year end.
(2) Amounts represent deferred compensation and accrued interest for Mr. Corasanti. See the discussion of Mr.
Corasanti's employment agreement, below.
</FN>
Eugene R. Corasanti has a five-year employment agreement (the
"Employment Agreement") with the Company, extending through December 31, 2001.
The Employment Agreement provides for Mr. Corasanti to serve as president and
chief executive officer of the Company for five years at an annual salary, not
less than $300,000, as determined by the Board of Directors. Mr. Corasanti also
receives deferred compensation of $100,000 per year with interest at 10% per
annum, payable in 120 equal monthly installments upon his retirement or to his
beneficiaries at death, and is entitled to participate in the Company's employee
stock option plan and pension and other employee benefit plans and such bonus or
other compensatory arrangements as may be determined by the Board of Directors.
In the event that the Board of Directors should fail to re-elect Mr. Corasanti
as president and chief executive officer or should terminate his employment for
reasons other than just cause, Mr. Corasanti will become entitled to receive the
greater of three years' base annual salary or the balance of his base annual
salary plus the average of the bonuses, deferred compensation and incentive
compensation awarded to Mr. Corasanti during the three years
-10-
prior to such termination for the five-term employment term, and shall continue
to receive other employment benefits, for the greater of three years or the
balance of the Employment Agreement's five-year term. In the event of Mr.
Corasanti's death or disability, Mr. Corasanti or his estate or beneficiaries
will be entitled to receive 100% of his base annual salary and other employment
benefits (other than deferred compensation) for the balance of the Employment
Agreement's term. If, during the term of Mr. Corasanti's employment under the
Employment Agreement and within two years after a Change in Control, his
employment with the Company is terminated by the Company, other than for Cause
or by him for Good Reason (as such capitalized terms are defined in the
Employment Agreement), Mr. Corasanti will be entitled to receive (a) a lump sum
payment equal to three times the sum of (i) his base salary on the date of such
termination or his base salary in effect immediately prior to the Change in
Control, whichever is higher, plus (ii) the average of the bonuses, deferred
compensation and incentive compensation awarded to Mr. Corasanti during the
three years prior to such termination; (b) continued coverage under the benefit
plans in which he participates for a period of two years from the date of such
early termination; (c) a lump sum payment equal to the aggregate amount credited
to his deferred compensation account; and (d) awards for the calendar year of
such termination under incentive plans maintained by the Company as though any
performance or objective criteria used in determining such awards were
satisfied. The Board of Directors has determined that Mr. Corasanti's base
salary will be $320,000 for 1999.
The Company is paying the premiums on three split-dollar life insurance
policies for Eugene R. Corasanti as described under "Board of Directors
Interlocks and Insider Participation; Certain Relationships and Related
Transactions." In 1998, premiums on these policies paid by the Company
aggregated approximately $49,000.
STOCK OPTION PLANS
THE 1992 PLAN
In April 1992, the shareholders approved the CONMED Corporation 1992
Stock Option Plan (as amended and approved by the shareholders on May 21, 1996,
the "1992 Plan"). Under the 1992 Plan, in the discretion of the Stock Option
Committee of the Board of Directors (the "Committee"), options may be granted to
officers and key employees of the Company and its subsidiaries for the purchase
of shares of Common Stock. The Committee presently consists of Messrs. Daniels
and Remmell and Dr. Schwartz.
Options may be granted which are (i) incentive stock options within the
meaning of Internal Revenue Code Section 422 or (ii) options other than
incentive stock options (i.e., non-qualified options). A total of 2,000,000
shares of Common Stock (subject to adjustment for stock splits and other changes
in the Company's capital structure) are reserved against the exercise of options
to be granted under the 1992 Plan. Shares reserved under an option which for any
reason expires or is terminated, in whole or in part, shall again be available
for the purposes of the 1992 Plan. Options relating to 1,639,134 shares of
Common Stock have been granted and not terminated under the 1992 Plan, of which
options relating to 1,353,593 shares of Common Stock are still exercisable.
Options relating to 360,866 shares of Common Stock remain available to be
granted.
-11-
THE 1983 PLAN
In June 1983, the shareholders of the Company approved an employee
stock option plan (the "1983 Plan"), which was subsequently amended and approved
by the shareholders on June 30, 1987 and April 10, 1992. Options may be granted
which are (i) incentive stock options within the meaning of Internal Revenue
Code Section 422 or (ii) options other than incentive stock options (i.e.,
non-qualified options). Pursuant to the 1983 Plan, officers and key employees of
the Company were eligible for grants of stock options at the fair market value
of the Company's Common Stock on the date of grant, exercisable commencing one
year after grant. The 1983 Plan is administered by the Committee.
No additional options may be granted under the 1983 Plan. Options
relating to 1,005,753 shares of Common Stock were granted under the 1983 Plan,
of which options for 108,014 shares of Common Stock are still exercisable.
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
In May 1995, the shareholders of the Company approved the Stock Option
Plan For Non-Employee Directors of CONMED Corporation (the "Non-Employee
Directors Plan"). All members of the Company's Board of Directors who are not
current or former employees of the Company or any of its subsidiaries
("Non-Employee Directors") are eligible to participate in the Non-Employee
Directors Plan. Under the Non-Employee Directors Plan, each Non-Employee
Director (Messrs. Cone, Daniels and Remmell in 1996 and 1997, Messrs. Daniels,
Matthews and Remmell and Dr. Schwartz in 1998 and if elected, Messrs. Daniels,
Matthews and Remmell and Dr. Schwartz in 1999) elected, reelected or continuing
as a director receives 1,500 options (which are non-qualified stock options
under the Internal Revenue Code of 1986) with an option price equal to the fair
market value of the Company's Common Stock on the business day following each
annual meeting of the shareholders.
A total of 75,000 shares of Common Stock (subject to adjustment for
stock splits and other changes in the Company's capital structure) are reserved
against the exercise of options to be granted and not terminated under the
Non-Employee Directors Plan, of which options for 16,500 shares of Common Stock
have been granted and options for 6,000 shares are still exercisable. Options
relating to 58,500 shares of Common Stock remain available to be granted. Shares
issuable under the Non-Employee Directors Plan may be authorized but unissued
shares or treasury shares. Shares reserved under an option which for any reason
expires or is terminated, in whole or in part, shall again be available for the
purposes of the Non-Employee Directors Plan.
-12-
OPTION GRANTS TABLE
The following table sets forth, with respect to grants of stock options
made during 1998 to each of the Named Executive Officers: (i) the name of the
executive officer (column (a)); (ii) the number of securities underlying options
granted (column (b)); (iii) the percent the grant represents of the total
options granted to all employees during 1998; (iv) the per share exercise price
of the options granted (column (d)); (v) the expiration date of the options
(column (e)); and (vi) the potential realizable value of each grant, assuming
the market price of the Common Stock appreciates in value from the date of grant
to the end of the option term at a rate of (A) 5% per annum (column (f)) and (B)
10% per annum (column (g)).
OPTION GRANTS IN 1998
Potential Realizable Value
at Assumed Annual Rates
of Stock Price
Appreciation for
Individual Grants Option Term
- ------------------------------------------------------------------------------------- --------------------------
(a) (b) (c) (d) (e) (f) (g)
Number of
Securities
Underlying % of Total
Options Options Granted Exercise or
Granted to Employees in Base Price Expiration
Name (#) 1998 ($/Sh) Date 5% ($) 10% ($)
---- ---------- --------------- ----------- ---------- ------ ---------
Eugene R. Corasanti 50,000 9.83% 21.9375 1/27/08 689,819 1,748,136
5,000 0.98% 22.5000 5/19/08 70,751 179,296
William W. Abraham 5,000 0.98% 22.5000 5/19/08 70,751 179,296
Joseph B. Gross 20,000 3.93% 23.2500 5/4/08 292,436 741,090
5,000 0.98% 22.5000 5/19/08 70,751 179,296
10,000 1.97% 27.2500 11/4/08 171,374 434,295
Robert D. Shallish, Jr. 5,000 0.98% 22.5000 5/19/08 70,751 179,296
Joseph J. Corasanti 5,000 0.98% 22.5000 5/19/08 70,751 179,296
25,000 4.92% 20.6875 9/14/08 325,256 824,264
-13-
AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUE TABLE
The following table sets forth, with respect to each exercise of stock
options during 1998 by each of the Named Executive Officers and the year-end
value of unexercised options on an aggregated basis: (i) the name of the
executive officer (column (a)); (ii) the number of shares received upon
exercise, or, if no shares were received, the number of securities with respect
to which the options were exercised (column (b)); (iii) the aggregate dollar
value realized upon exercise (column (c)); (iv) the total number of securities
underlying unexercised options held at December 31, 1998, separately identifying
the exercisable and unexercisable options (column (d)); and (v) the aggregate
dollar value of in-the-money, unexercised options held at December 31, 1998,
separately identifying the exercisable and unexercisable options (column (e)).
The Company's stock option plans do not provide for stock appreciation rights.
AGGREGATED OPTION EXERCISES IN 1998 AND
DECEMBER 31, 1998 OPTION VALUES
(a) (b) (c) (d) (e)
Number of Securities Value of Unexercised In-
Underlying Unexercised the-Money Options at
Options at 12/31/98(#) 12/31/98($)(1)
------------------------- --------------------------
Shares
Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable
---- --------------- ------------ ------------- -------------
Eugene R. Corasanti 0 0 305,502/55,000 5,886,640/605,625
William W. Abraham 0 0 144,051/8,001 2,962,917/114,272
Joseph B. Gross 5,450 78,244 16,000/67,000 116,000/644,950
Robert S. Shallish 500 13,960 58,000/28,200 1,129,091/266,800
Joseph J. Corasanti 21,600 297,731 15,300/61,200 121,731/729,487
<FN>
- --------------------
(1) Assumes $33 per share fair market value on December 31, 1998.
</FN>
PENSION PLANS
The Company maintains a broadly based defined benefit pension plan (the
"Pension Plan") for all employees. The Pension Plan entitles a participant to a
normal monthly retirement benefit equal to 1 1/2% of the participant's average
monthly earnings over the period of employment times years of service. Eugene R.
Corasanti's deferred compensation is not included in the calculation of his
retirement benefits. Benefits are fully vested after five years of service,
starting from date of hire. Upon reaching normal retirement age, generally age
65 with five years of credited service, participants are entitled to receive
vested benefits under the Pension Plan either in the form of a lump sum payment
or a monthly retirement benefit.
The Pension Plan represents a "fresh start" as of January 1, 1989,
replacing the three pension plans formerly in place. The three former plans have
been merged into the Pension Plan, which is the former broadly based plan with
the benefit formula increased from 1/2% of pay to 1 1/2% of pay. Benefits
accrued by participants under the former plans became fully vested as of
December 31, 1988 and are paid, when due, from this "fresh start" Pension Plan.
Benefits accrued under the former plans are payable from the Pension
-14-
Plan in addition to the benefits to be received under the Pension Plan. During
1996, Mr. William W. Abraham reached normal retirement age under the Pension
Plan and elected to receive a lump sum payment of the actuarial equivalent value
of his accrued benefits, as of October 31, 1996.
As of December 31, 1998, Messrs. E. Corasanti, Abraham, Shallish and J.
Corasanti had three, two, nine and six years of credited service, respectively.
The first table presents information concerning the annual pension payable under
the Pension Plan based upon various assumed levels of annual compensation and
years of service. The benefits listed in the table are not subject to any
deduction for Social Security or other offset amounts.
As of December 31, 1997, the Company acquired Linvatec from BMS. In
connection with the acquisition, the Company established a defined Benefit
Retirement Plan (the "Linvatec Plan") effective January 1, 1998 which provides
the same level of benefits to the Linvatec employees as the BMS plan provided
prior to the acquisition. Assets equal to the present value of the accrued
benefits of the Linvatec employees were transferred from the BMS plan to the new
Linvatec Plan once those figures became available. Participants therefore
continue under the new plan as if nothing had changed.
The Linvatec Plan provides coverage to all employees of the Linvatec
group who have attained the age of 18. The Linvatec Plan provides for benefits
payable to eligible participants in an amount equal to approximately 2% of five
year average earnings less 1/70 of the estimated primary insurance amount
multiplied by the years of service rendered not to exceed 40 years. Benefits are
fully vested after the participant completes 5 years of service. Upon reaching
normal retirement age, generally age 65, participants are entitled to receive
vested benefits under the Linvatec Plan in the form of an annuity payable for
life, or in some other actuarial equivalent option.
As of December 31, 1998, Mr. Gross had eleven years of credited
service. The second table presents information concerning the annual pension
payable under the Linvatec Plan based upon various assumed levels of annual
compensation and years of service. The benefits listed in the table are subject
to any deduction for Social Security or other offset amounts.
CONMED PENSION PLAN
Years of Service
-------------------------------------------------------------------------------------
Average
Pay 15 20 25 30 35
----- ---- ---- ---- ---- ---
$125,000 $28,125 $37,500 $46,875 $56,250 $65,625
$150,000 33,750 45,000 56,250 67,500 78,750
$175,000(1) 36,000 48,000 60,000 72,000 84,000
$200,000(1) 36,000 48,000 60,000 72,000 84,000
$225,000(1) 36,000 48,000 60,000 72,000 84,000
$250,000(1) 36,000 48,000 60,000 72,000 84,000
$300,000(1) 36,000 48,000 60,000 72,000 84,000
$400,000(1) 36,000 48,000 60,000 72,000 84,000
$450,000(1) 36,000 48,000 60,000 72,000 84,000
$500,000(1) 36,000 48,000 60,000 72,000 84,000
-15-
LINVATEC PENSION PLAN
Years of Service
-------------------------------------------------------------------------------------
Average
Pay 15 20 25 30 35
----- ---- ---- ---- ---- ---
$125,000 $33,924 $45,232 $66,540 $67,848 $79,156
$150,000 41,424 55,232 69,040 82,848 96,656
$175,000(1) 44,424 59,232 74,040 88,848 103,656
$200,000(1) 44,424 59,232 74,040 88,848 103,656
$225,000(1) 44,424 59,232 74,040 88,848 103,656
$250,000(1) 44,424 59,232 74,040 88,848 103,656
$300,000(1) 44,424 59,232 74,040 88,848 103,656
$400,000(1) 44,424 59,232 74,040 88,848 103,656
$450,000(1) 44,424 59,232 74,040 88,848 103,656
$500,000(1) 44,424 59,232 74,040 88,848 103,656
<FN>
- ------------
(1) 1998 statutory limits are $130,000 for straight life annuity benefit payable at age 65 and $160,000 for
annual compensation taken into account in determining average pay.
</FN>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's Board of Directors, pursuant to the terms of the
Employment Agreement, establishes the annual salary of Eugene R. Corasanti. The
Compensation Committee establishes the compensation plans and specific
compensation levels for the Company's other officers. The Stock Option Committee
administers the Company's stock option plans. The Compensation Committee is
presently composed of Bruce F. Daniels, William D. Matthews and Robert E.
Remmell. The Stock Option Committee is presently composed of Bruce F. Daniels,
Robert E. Remmell and Stuart J. Schwartz.
The Board of Directors believes that the compensation of Eugene R.
Corasanti, the Company's President and Chairman ("CEO"), should be heavily
influenced by company performance, long-term growth and strategic positioning.
Therefore, although there is necessarily some subjectivity in setting the CEO's
salary, major elements of the compensation package are directly tied to company
performance, long-term growth and strategic positioning. This philosophy is
reflected in Mr. Corasanti's current five-year employment contract, which
provides for a base annual salary of $300,000 and permits the Board of Directors
to determine a higher salary in its discretion.
In 1993, while the Company consummated the $21.8 million acquisition of
certain assets and the business of Medtronic Andover Medical, Inc. from
Medtronic Inc., the Company incurred a net loss of $1.4 million, primarily as a
result of a $5.0 million charge relating to patent infringement litigation. In
1994, the Company returned to profitability, recording net income of $5.4
million, or $0.56 per diluted share. In 1995, the Company acquired Birtcher
Medical Systems, Inc. (in a $21.2 million stock-for-stock exchange) and the
business and substantially all of the assets of The Master Medical Corporation
(in a $10.0 million purchase transaction) and recorded net income of $10.9
million, or $0.94 per diluted share. In 1996, the Company acquired the business
and substantially all of the assets of New Dimensions In Medicine, Inc. in a
-16-
$34.9 million purchase transaction and continued to increase the level of net
income to $16.3 million, or $1.12 per diluted share.
In the light of the foregoing matters, on November 4, 1996, the Board
of Directors approved Mr. Corasanti's current employment agreement, for
employment from January 1, 1997 through December 31, 2001.
In 1997, the Company continued to integrate its completed acquisitions,
recording then record revenues of $138.2 million. The Company also completed two
additional acquisitions to nearly triple the Company's size -- the acquisition
of a surgical suction instrument and tubing product line from the Davol
subsidiary of C.R. Bard, Inc. for a cash purchase price of $24 million and the
acquisition of Linvatec and certain related assets from BMS for a cash purchase
price of $370 million (plus the assumption of net liabilities totalling
approximately $16.6 million) and the issuance of a warrant to purchase one
million shares of the Company's Common Stock at a warrant exercise price of
$34.23. For 1997, excluding unusual charges related to the acquisition of
Linvatec and the closure of the Company's Dayton, Ohio manufacturing facility,
the Company had net income of $17 million, or $1.12 per diluted share.
In 1998, the Company continued to integrate its completed acquisitions,
again recording record revenues of $336.4 million. The Company, through its
wholly owned subsidiary Linvatec, acquired an arthroscopic fluid control product
line from Minnesota Mining and Manufacturing Company for a cash purchase price
of $17.5 million. For 1998, excluding a one-time charge in connection with the
refinancing of the Company's credit facility, the Company had net income of
$19.4 million, or $1.26 per diluted share. The Company's stock price has
increased from $7.22 on December 31, 1992 to $33 on December 31, 1998. In light
of these factors, the Board of Directors awarded Mr. Corasanti 1998 base salary
compensation of $312,277.
The Compensation Committee has adopted similar policies with respect to
compensation of the other executive officers of the Company. The Company's
performance, long-term growth and strategic positioning and the individual's
past performance and future potential are considered in establishing the base
salaries of executive officers. The policy regarding other elements of the
compensation package for executive officers is similar to the CEO's in that the
package is tied to achievement of performance targets. As discussed below, in
1998, the Company granted each of the Company's executive officers, including
Eugene R. Corasanti, stock options.
Stock options are granted to the Company's executive officers,
including Eugene R. Corasanti, primarily based on the executive's ability to
influence the Company's long-term growth and profitability. The number of
options granted is determined by using the same subjective criteria. All options
are granted at the current market price. Since the value of an option bears a
direct relationship to the Company's stock price it is an effective incentive
for managers to create value for shareholders. The Committee therefore views
stock options as an important component of its long-term, performance-based
compensation philosophy. The Committee granted 55,000 stock options to Eugene R.
Corasanti in 1998. In 1998, the Committee granted 174,500 options to executive
officers.
The Board of Directors has not yet adopted a policy with respect to
qualification of executive compensation in excess of $1 million per individual
for deduction under Section 162(m) of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder. The Board of Directors does not
anticipate that the compensation of any executive officer during 1998 will
exceed the limits for deductibility.
-17-
In determining a policy for future periods, the Board of Directors would expect
to consider all relevant factors, including the Company's tax position and the
materiality of the amounts likely to be involved.
Board of Directors Compensation Committee Stock Option Committee
- ------------------ ---------------------- ----------------------
Eugene R. Corasanti, Chairman Bruce F. Daniels Bruce F. Daniels
Joseph J. Corasanti William D. Matthews Robert E. Remmell
Bruce F. Daniels Robert E. Remmell Stuart J. Schwartz
William D. Matthews
Robert E. Remmell
Stuart J. Schwartz
BOARD OF DIRECTORS INTERLOCKS AND INSIDER PARTICIPATION;
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's Board of Directors, which is presently composed of Eugene
R. Corasanti, Joseph J. Corasanti, Bruce F. Daniels, William D. Matthews, Robert
E. Remmell and Stuart J. Schwartz, establishes the compensation plans and
specific compensation levels for Eugene R. Corasanti directly (with Mr.
Corasanti abstaining) and for other executive officers through the Compensation
Committee, and administers the Company's stock option plans through the Stock
Option Committee. As disclosed above, Eugene R. Corasanti, the Chairman of the
Board of Directors, is the President and Chief Executive Officer of the Company
and also serves as an officer of the Company's subsidiaries. Joseph J.
Corasanti, a director of the Company, is the Executive Vice President/General
Manager of the Company, also serves as an officer of several of the Company's
subsidiaries and is the son of Eugene R. Corasanti. Robert E. Remmell is the
Assistant Secretary of the Company and also serves as an officer of several of
the Company's subsidiaries.
The Company pays all premiums on three split-dollar life insurance
policies totaling $3,175,000 for the benefit of Eugene R. Corasanti. Premiums
paid or accrued by the Company in the fiscal year ended December 31, 1998 were
approximately $49,000. Of such premiums, an aggregate of approximately $4,200
has been reflected as compensation to Mr. Corasanti. The remaining amount of
$44,800 is being treated by the Company as a loan to Mr. Corasanti. At December
31, 1998, the aggregate amount due the Company from Mr. Corasanti related to
these split-dollar life insurance policies is $453,000. This amount (and
subsequent loans for future premiums) will be repaid to the Company on Mr.
Corasanti's death and the balance of the policy will be paid to Mr. Corasanti's
estate or beneficiaries.
Robert E. Remmell, Assistant Secretary, director and shareholder of the
Company and an officer of several of the Company's subsidiaries, is a partner of
Steates Remmell Steates & Dziekan, the Company's corporate counsel. The Company
paid approximately $7,400 to Steates Remmell Steates & Dziekan in 1998.
The Company has entered into directors and officers insurance policies
with National Union Fire Insurance Company of Pittsburgh, PA and Chubb Insurance
Company covering the period from January 31, 1999 through January 31, 2000 at a
total cost of $175,000, which covers directors and officers of the Company and
its subsidiaries.
-18-
PERFORMANCE GRAPH
The graph below compares the yearly percentage change in the Company's
Common Stock with the cumulative total return of the Center for Research for
Stock Performance ("CRSP") Total Return Index for the NASDAQ Stock Market and
the cumulative total return of the Standard & Poor's Medical Products and
Supplies Industry Group Index. In each case, the cumulative total return assumes
reinvestment of dividends into the same class of equity securities at the
frequency with which dividends are paid on such securities during the applicable
fiscal year.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG CONMED CORPORATION, THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE S&P HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) INDEX
12/93 12/94 12/95 12/96 12/97 12/98
----- ----- ----- ----- ----- -----
CONMED 100 281 529 434 556 699
CORPORATION
NASDAQ STOCK 100 98 138 170 209 293
MARKET (U.S.)
S&P HEALTH CARE 100 119 200 230 287 413
(MEDICAL PRODUCTS
& SUPPLIES)
*$100 INVESTED ON 12/31/93 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
-19-
PROPOSAL TWO: INDEPENDENT PUBLIC ACCOUNTANTS
The independent accountants for the Company have been
PricewaterhouseCoopers LLP since 1982. The Audit Committee recommended to the
Board of Directors that PricewaterhouseCoopers LLP be nominated as independent
accountants for 1999, and the Board has approved the recommendation.
Unless otherwise specified, shares represented by proxies will be voted
for the appointment of PricewaterhouseCoopers LLP as independent accountants for
1999. Representatives of PricewaterhouseCoopers LLP are expected to be present
at the meeting. Such representatives will have the opportunity to make a
statement if they desire to do so and are expected to be available to respond to
appropriate questions.
The affirmative vote of the holders of a majority of votes cast at the
meeting is necessary for the appointment of PricewaterhouseCoopers LLP as
independent accountants for the Company for 1999.
The Board of Directors recommends a vote FOR this proposal.
PROPOSAL THREE: ADOPTION OF 1999 LONG-TERM INCENTIVE STOCK PLAN
The Board of Directors adopted the Company's 1999 Long-Term Incentive
Plan (the "1999 LTIP") on March 3, 1999, subject to the approval of
shareholders. The Board of Directors believes that the Company's long-term
financial interests, including its growth and performance, are dependent upon
its ability to attract and retain employees and consultants of outstanding
ability. The 1999 LTIP will provide the Company an opportunity to encourage
selected employees and consultants and employees and consultants of its
subsidiaries to acquire an ownership interest in the Company and will help align
their economic interests directly with those of the Company's shareholders. The
1999 LTIP will also provide the Company with flexibility to offer, in line with
competitive practices, compensation packages to selected candidates whose
contributions and skills are important to its long-term success. The present
executive officers of the Company are potential beneficiaries under the 1999
LTIP. The Company historically has declined to reprice options as a matter of
policy. This policy has been incorporated into the 1999 LTIP to ensure that the
interests of employees and consultants who receive options will continue to be
closely tied to the long-term performance of the Company. The following summary
of the principal terms of the 1999 LTIP is qualified in its entirety by
reference to the complete text of the 1999 LTIP set forth in Exhibit A to this
Proxy Statement.
General. Under the 1999 LTIP, the Company may grant employees or
consultants stock options (either incentive stock options within the meaning of
Section 422 of the Code or nonstatutory stock options), performance shares and
restricted stock (collectively, the "awards"). The 1999 LTIP is administered by
the Stock Option Committee (the "Committee" or the "Stock Option Committee"),
which is authorized to select employees of the Company and its subsidiaries and
consultants to receive awards, determine the type, size and terms of awards to
be made, determine the number of shares of Common Stock or share units subject
to any award and determine the other terms and conditions of such awards to the
extent not provided for in the 1999 LTIP. The Committee also has the authority
to interpret the Plan, to establish, amend or rescind any rules and regulations
relating to the Plan and to make all other determinations necessary or advisable
for the administration of the Plan. Subject to limits it may establish, the
Committee may delegate such authority with respect to employees other than those
considered to be Covered Employees under the 1999 LTIP (including the Chief
Executive Officer and employees whom the Committee considers
-20-
likely to be among the four most other highly compensated executive officers for
the year in which an award is made or payable) and other employees who are
subject to Section 16 of the Exchange Act.
All employees of the Company and its subsidiaries and certain
consultants who have entered into consultancy agreements with the Company or any
subsidiary who have demonstrated significant management potential or who have
the capacity for contributing in a substantial measure to the successful
performance of the Company, as determined by the Stock Option Committee, are
eligible to receive awards under the 1999 LTIP. The Stock Option Committee may
also deem other Company or subsidiary employees and consultants eligible to
receive awards of nonstatutory options under the 1999 LTIP. While such criteria
are subjective in nature, the Company currently estimates that approximately 110
employees and consultants are likely to be eligible to receive awards each year
under the 1999 LTIP.
It is not possible to determine the benefits or amounts to be received
under the 1999 LTIP because all amounts to be received will be based solely on
future performance.
The maximum aggregate number of shares of Common Stock which are
available for the grant of awards under the 1999 LTIP shall not exceed 1,000,000
shares of Common Stock, adjusted for any stock dividend or split,
recapitalization, merger or any similar change. Notwithstanding the foregoing,
in no event shall more than 400,000 shares of Common Stock (subject to
adjustment in accordance with the preceding sentence) be available for the
issuance of Common Stock pursuant to performance shares and restricted stock
awards.
On March 31, 1999, the closing price of the Common Stock on the Nasdaq
Stock Market was $31 per share.
Stock Options. Stock options entitle the holder to purchase shares of
Common Stock at a per share price determined by the Stock Option Committee which
price will not be less than the closing price of Common Stock on the Nasdaq
Stock Market (or, if applicable, on the principal securities exchange on which
such shares of Common Stock are traded) on the date of grant ("Fair Market
Value"). Stock options will be exercisable for such period as is determined by
the Stock Option Committee, but in no event may options be exercisable after 10
years from the date of grant. The Stock Option Committee may permit an employee
or a consultant who has received a grant of nonstatutory stock options to
transfer the options, subject to such terms and conditions specified by the
Stock Option Committee, to the employee's or consultant's spouse and issue
(including adopted and step-children) or to a trust for the benefit of the
employee or consultant and such family members. No employee or consultant may
receive stock option grants under the Plan for more than 200,000 shares of
Common Stock in any 12 month period.
Upon the grant or exercise of an incentive stock option, no income will
be realized by the optionee for Federal income tax purposes and the Company will
not be entitled to any deduction. If the Common Stock acquired upon exercise is
not disposed of within the one-year period beginning on the date of the transfer
of the Common Stock to the optionee, nor within the two-year period beginning on
the date of the grant of the option, any gain or loss realized by the optionee
upon the disposition of such shares will be taxed as long-term capital gain or
loss. In such event, no deduction will be allowed to the Company. If the Common
Stock is disposed of within the one-year or two-year periods referred to above,
the optionee will realize ordinary income at the time of disposition in an
amount equal to the excess of the Fair Market Value of the Common Stock on the
date of exercise (or, if less, the net proceeds of the disposition) over the
exercise price, and the Company will be entitled to a corresponding deduction.
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Upon the grant of a nonstatutory option, no income will be realized by
the optionee for Federal income tax purposes, and the Company will not be
entitled to any deduction. Upon the exercise of such an option, the optionee
will realize ordinary income in the amount by which the Fair Market Value of the
Common Stock at the time of exercise exceeds the exercise price, and the Company
will be entitled to a corresponding deduction. The Stock Option Committee may
permit an optionee to satisfy the Company's obligation to withhold required
taxes upon the exercise of a nonstatutory option by having the Company retain
the number of shares of Common Stock, the Fair Market Value of which is equal to
the required withholding amount.
Performance Shares. Performance share awards consist of a grant of
actual shares of Common Stock or share units having a value equal to an
identical number of shares of Common Stock. The number of shares of Common Stock
or share units to which the holder is entitled is based upon performance
conditions of the Company over a performance period (which in no event may be
less than twelve months) as determined by the Stock Option Committee.
Performance share awards may provide the holder with dividends or dividend
equivalents and voting rights prior to vesting. The Stock Option Committee will
determine whether performance shares granted in the form of share units shall be
paid in cash, Common Stock or a combination thereof.
Awards of performance shares to the Chief Executive Officer and the
employees whom the Stock Option Committee considers likely to be among the four
most highly compensated executive officers for the year in which an award is
made or payable shall, except to the extent determined otherwise by the Stock
Option Committee, be subject to performance conditions. The conditions must be
established within 90 days after the start of the performance period and be
based on the achievement by the Company or, if applicable, a business unit of a
specified target operating or net income, earnings per share, return on assets,
return on equity, any combination of the foregoing, or on the achievement of a
targeted shareholder return. The Stock Option Committee may reduce or eliminate
an award of performance shares to such officers, notwithstanding the achievement
of a specified target. The maximum number of performance shares subject to any
award under the Plan to such an officer is 200,000 for each twelve months during
the performance period; to the extent the award is paid in cash, the maximum is
the cash value of such shares at the closing price on the Common Stock's last
trading day on the Nasdaq Stock Market or, if applicable, the principal
securities exchange on which such shares of Common Stock are traded during the
period. If such an officer terminates employment for any reason during the
period, the award will be payable to the extent determined by the Stock Option
Committee if the performance conditions are achieved.
Stock Appreciation Rights. Stock appreciation rights ("SARs") may be
granted under the Plan to provide holders of options granted under the Plan with
an alternative method of realizing the benefits of those options. Upon exercise
of a SAR and surrender of the related option, the Company will pay to the holder
of the SAR an amount equal to 100%, or such lesser percentage as the Committee
may determine, of the excess of (a) the fair market value of the shares of
Common Stock subject to the related option on the date the SAR is exercised over
(b) the exercise price for those shares of Common Stock (the "spread"). This
amount is payable by the Company at the time of exercise in cash, in shares of
Common Stock, or in any combination of cash and shares of Common Stock, as
determined by the Committee. SARs may be exercised only at a time and to the
same extent as the related option is exercisable. Upon exercise of a SAR, the
holder of the SAR must surrender, unexercised, the related option or any
applicable portion thereof.
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Restricted Stock. Restricted stock awards consist of a grant of actual
shares of Common Stock or share units having a value equal to an identical
number of shares of Common Stock. Restricted stock awards may provide the holder
with dividends or dividend equivalents and voting rights prior to vesting. The
Stock Option Committee will determine whether restricted stock granted in the
form of share units shall be paid in cash, Common Stock or a combination
thereof. The conditions and the length of the period for vesting of restricted
stock awards are established by the Stock Option Committee at the time of grant.
A restricted period of not less than three years shall apply to all Common Stock
or share units subject to restricted stock awards, except that a restricted
period of less than three years may apply to such grants with respect to up to
ten percent (10%) of the total shares of Common Stock available for the grant of
awards under the Plan.
Change in Control. In the event of a "Change in Control" (as defined in
the Plan), (i) the restrictions applicable to all shares of restricted stock and
restricted share units shall lapse and such shares and share units shall be
deemed fully vested, (ii) all restricted stock granted in the form of share
units shall be paid in cash, (iii) all performance shares granted in the form of
shares of Stock or share units shall be deemed to be earned in full, (iv) all
performance shares granted in the form of share units shall be paid in cash, and
(v) stock options and SARs that are not exercisable in full shall be deemed
fully exercisable. The amount of any cash payment in respect of a restricted
share unit or performance share unit shall be equal to: (A) in the event the
Change in Control is the result of a tender offer or exchange offer for Common
Stock, the final offer price per share paid for the Common Stock or (B) in the
event the Change in Control is the result of any other occurrence, the aggregate
per share value of Common Stock as determined by the Stock Option Committee at
such time. The Stock Option Committee may, in its discretion, include such
further provisions and limitations in any agreement documenting such awards as
it may deem equitable and in the best interests of the Company.
Consistent with the Company's past practices in respect of awards under
the 1983 Plan and the 1992 Plan, the 1999 LTIP expressly prohibits the repricing
of any of the options or stock appreciation rights that may be granted under the
1999 LTIP, except pursuant to adjustments of and changes in the Common Stock,
all as more fully described in Section 16 of the 1999 LTIP.
The 1999 LTIP or any portion thereof may be amended, suspended or
terminated by the Board of Directors at any time, provided that no amendment
shall be made without shareholder approval if such approval is necessary for the
1999 LTIP to continue to comply with Rule 16b-3 under the Exchange Act. Unless
terminated earlier by the Board of Directors, the term of the 1999 LTIP will
expire on December 31, 2008.
The affirmative vote of the holders of a majority of the votes cast at
the meeting is necessary for adoption of the 1999 LTIP.
The Board of Directors recommends a vote FOR this proposal.
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PROPOSAL FOUR: INCREASE IN AUTHORIZED SHARES OF COMMON STOCK
On March 3, 1999, the Board of Directors authorized and approved,
subject to shareholder approval, an amendment to Article FOURTH of the Company's
Restated Certificate of Incorporation (the "Certificate of Incorporation"),
increasing the number of authorized shares of Common Stock to 100,000,000. It is
contemplated that, if the proposed amendment is approved by the Company's
shareholders, a Certificate of Amendment will be filed in accordance with the
laws of the State of New York so as to become effective as soon as practicable
thereafter.
Of the 40,000,000 shares of Common Stock currently authorized, as of
March 31, 1999 there were 15,201,913 shares issued and outstanding. In addition,
1,441,866 shares were reserved for issuance pursuant to the Company's existing
stock option plans and the warrant issued to BMS in connection with the
acquisition of Linvatec. If the 1999 Plan is adopted at the Annual Meeting as
proposed, an additional 1,000,000 shares of Common Stock would be reserved for
issuance under the 1999 Plan.
The Board of Directors believes it to be in the best interests of the
Company and its shareholders to have additional Common Stock authorized which
would be available for issuance for general corporate purposes, including
raising capital to support business expansion, stock splits, stock dividends,
acquisitions, benefit plans or other developments which might make its issuance
desirable. For example, the Company effected three-for-two stock splits in the
form of stock dividends on December 27, 1994 and November 30, 1995 (issuing an
aggregate of 6,680,000 shares of Common Stock). The Company believes that stock
splits or stock dividends broaden the market for, and the liquidity of, the
Company's Common Stock. In addition, the Company issued 1,590,000 shares of
Common Stock in March 1995 in the acquisition of Birtcher Medical Systems, Inc.
and issued 3,852,000 shares of Common Stock in March 1996 in a registered public
offering to reduce indebtedness incurred in connection with the Company's
acquisitions. The Company issued substantial indebtedness to finance the
Linvatec acquisition. Additional authorized Common Stock would be available for
issuances in registered public offerings to reduce such indebtedness. The
issuance of additional shares of Common Stock could also be used to impede an
unsolicited bid for control of the Company which the Board of Directors believed
was not in the best interests of the Company or its shareholders. The
availability of additional Common Stock as a defensive response to a takeover
attempt was not a motivating factor in the Board's approval of the proposed
amendment to Article FOURTH, and the Board is not aware of any effort to obtain
control of the Company. If authorization of any increase in the Common Stock is
postponed until a specific need arises, the delay and expense incident to
obtaining approval of shareholders at that time could impair the Company's
ability to meet its objectives. The Company does not now have any agreement,
understanding, arrangement or commitment which would result in the issuance of
any of the additional shares to be authorized (other than pursuant to stock
options and the Linvatec warrant) and no assurance can be given at this time
that additional shares will, or as to the circumstances under which such shares
might, in fact be issued. No further action or authorization by the shareholders
would be necessary prior to the issuance of the additional shares unless
applicable laws or regulations or the rules of the Nasdaq National Market or of
any stock exchange on which the Company's securities may then be listed require
such approval.
The additional shares authorized by the proposed amendment will have
the same rights and privileges as the shares of Common Stock currently
authorized and outstanding. Holders of the Company's shares have no preemptive
rights and, accordingly, existing shareholders would not have any preferential
right to purchase any of the additional shares when issued. Issuance of such
shares, depending upon the type of transaction in which the shares are issued,
could have a dilutive effect on the equity and earnings per share
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attributable to present shareholders. Should this Proposal and also Proposal 3
be passed at the Annual Meeting, the Company will have 83,356,221 shares of
Common Stock and 500,000 shares of Preferred Stock unissued and not reserved for
issuance.
The proposed amendment would amend the first paragraph of Article
FOURTH of the Certificate of Incorporation to read in its entirety as follows:
FOURTH. The aggregate number of shares of stock which the
Corporation shall have the authority to issue is 100,500,000, of which
100,000,000 shares of the par value of $.01 per share shall be
designated as Common Stock ("Common Stock"), and 500,000 shares of the
par value of $.01 per share shall be designated as Preferred Stock
("Preferred Stock").
Language deleted by the proposed amendment has been crossed out and
language added by the proposed amendment has been underlined. The rest of
Article FOURTH will remain unchanged.
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock is necessary for approval of the proposed amendment to
the Certificate of Incorporation.
The Board of Directors unanimously recommends a vote FOR this proposal.
OTHER BUSINESS
Management knows of no other business which will be presented for
consideration at the Annual Meeting, but should any other matters be brought
before the meeting, it is intended that the persons named in the accompanying
proxy will vote such proxy at their discretion.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Any shareholder desiring to present a proposal to the shareholders at
the 2000 Annual Meeting, which currently is expected to be scheduled on or about
May 16, 2000, and who desires that such proposal be included in the Company's
proxy statement and proxy card relating to that meeting, must transmit such to
the Company so that it is received by the Company at its principal executive
offices on or before December 11, 1999. All such proposals should be in
compliance with applicable SEC regulations. In addition, shareholders wishing to
propose matters for consideration at the 2000 Annual Meeting or to propose
nominees for election as directors at the 2000 Annual Meeting must follow
specified advance notice procedures contained in the Company's By-laws, a copy
of which is available on request to the Secretary of the Company, c/o CONMED
Corporation, 310 Broad Street, Utica, New York 13501 (Telephone (315) 797-
8375). As of the date of this proxy statement, shareholder proposals, including
director nominee proposals, must comply with the conditions set forth in Section
1.13 of the Company's By-laws and to be considered timely, notice of a proposal
must be received by the Company between February 16, 2000 and March 17, 2000.
By Order of the Board of Directors,
Thomas M. Acey
Secretary
April 16, 1999
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