MERIDIAN DIAGNOSTICS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held January 25, 1996
Dear Shareholder:
We are pleased to invite you to attend our Annual
Shareholders' Meeting at The Phoenix, 812 Race Street,
Cincinnati, Ohio on January 25, 1996 at 3:00 p.m. Eastern Time.
The purposes of this Annual Meeting are:
1. To establish the number of directors to be elected at
five;
2. To elect five directors to serve for the next year;
3. To amend the Articles of Incorporation to increase the
authorized Common Shares from 25,000,000 to 50,000,000
shares;
4. To adopt the 1996 Stock Option Plan to provide 200,000
Common Shares as available for grant under such plan;
5. To ratify the appointment of Arthur Andersen LLP as the
Company's independent public accountants for fiscal
year 1996; and
6. To transact such other business as may properly come
before the meeting or any adjournment thereof.
After the formal meeting, we will discuss the Company's
operations during the last fiscal year and our plans for fiscal
1996 and answer your questions regarding the Company. Board
members and executive officers will also be available to discuss
the Company's operations with you.
Yours truly,
William J. Motto
Chairman of the Board of
Directors
Dated: December 21, 1995
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE VOTE, SIGN
AND PROMPTLY RETURN YOUR PROXY CARD IN THE ENCLOSED ENVELOPE.
PROXIES MAY BE REVOKED BY WRITTEN NOTICE OF REVOCATION, THE
SUBMISSION OF A LATER PROXY, OR BY ATTENDING THE MEETING AND
VOTING IN PERSON.
MERIDIAN DIAGNOSTICS, INC.
3471 River Hills Drive
Cincinnati, Ohio 45244
Telephone (513) 271-3700
_________________________________________
P R O X Y S T A T E M E N T
Annual Meeting of Shareholders
January 25, 1996
INTRODUCTION
The Board of Directors of Meridian Diagnostics, Inc. is
requesting your Proxy for use at the Annual Meeting of
Shareholders on January 25, 1996, and at any adjournment thereof,
pursuant to the foregoing Notice. The approximate mailing date
of the Proxy Statement and the accompanying Proxy Card is
December 21, 1995.
VOTING AT ANNUAL MEETING
General
_______
Shareholders may vote in person or by proxy at the Meeting.
Proxies given may be revoked at any time by filing with the
Company either a written revocation or a duly executed Proxy Card
bearing a later date, or by appearing at the meeting and voting
in person. All shares will be voted as specified on each
properly executed Proxy Card. If no choice is specified, the
shares will be voted as recommended by the Board of Directors in
favor of Items 1, 3, 4 and 5 and "FOR" the nominees for directors
named herein. Except as otherwise provided herein, abstentions
and shares not voted for any reason, including broker non-votes,
will have no effect on the outcome of any vote taken at the
meeting.
As of December 1, 1995, the record date for determining
shareholders entitled to notice of and to vote at the meeting,
Meridian had 14,241,474 shares of Common Stock outstanding. Each
share is entitled to one vote. Only shareholders of record at
the close of business on December 1, 1995 will be entitled to
vote at the meeting.
Principal Shareholders
______________________
The following persons are the only shareholders known by the
Company to own beneficially 5% or more of its outstanding Common
Stock as of December 1, 1995:
Name of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership (1) of Class
- ---------------- ____________________ ________
William J. Motto 4,712,416(2) 33.0%
Jerry L. Ruyan 2,613,914(3) 18.3%
The business address of Messrs. Motto and Ruyan is
3471 River Hills Drive, Cincinnati, Ohio 45244.
(1) Messrs. Motto and Ruyan are parties to an agreement
with the Company pursuant to which they must offer their shares
for sale to the Company, and if it declines to purchase, to the
other individual, based on the current market price, if either of
them desires to sell more than 1% of the Company's Common Stock
in any three-month period.
(2) Includes 80,226 shares owned by Mr. Motto's three
children in their individual capacities and 462,873 shares owned
as trustees. Mr. Motto disclaims beneficial ownership of all
shares held by his children in their individual capacities. Also
includes 67,146 shares of Common Stock held by the William J.
Motto Charitable Remainder Unitrust. Also includes 44,838 shares
subject to options exercisable within 60 days.
(3) Includes 115,765 shares held by Mr. Ruyan as Trustee of
the Ruyan Family Charitable Remainder Unitrust and 3,181 shares
held as custodian for his son. Also includes 44,838 shares
subject to options exercisable within 60 days.
Election of Directors
_____________________
The Company's Code of Regulations requires that the Board of
Directors consist of at least three members with the exact number
to be established by shareholders. At the 1995 meeting, the
number was established at five and five directors were elected.
The Board is recommending that the number of directors be
continued at five. The affirmative vote of a majority of shares
voting at the meeting is required to adopt this proposal.
The Board is nominating for re-election all of the current
directors, namely William J. Motto, Jerry L. Ruyan, James A.
Buzard, Ph.D., Gary P. Kreider and Robert J. Ready.
Proxies solicited by the Board will be voted for the
election of these nominees. All directors elected at the Annual
Meeting will be elected to hold office until the next annual
meeting.
In voting to elect directors, shareholders are entitled to
cumulate their votes and to give one candidate a number of votes
equal to the number of directors to be elected multiplied by the
number of shares held by the shareholder, or to distribute their
votes on the same principle among as many candidates as the
shareholder sees fit. In order to invoke cumulative voting,
notice of cumulative voting must be given in writing by a
shareholder to the President, a Vice President or the Secretary
of the Company not less than 48 hours prior to the meeting. The
proxies solicited include discretionary authority to cumulate
votes.
Should any of the nominees become unable to serve, proxies
will be voted for any substitute nominee designated by the Board.
Nominees receiving the highest number of votes cast for the
positions to be filled will be elected.
Amendment of the Articles of Incorporation
to Increase the Authorized Shares
___________________________________________
The Articles of Incorporation authorize the issuance of
25,000,000 Common Shares. At December 1, 1995, the Company had
14,241,474 Common Shares outstanding, with an additional
1,631,235 shares (assuming Shareholder adoption of Proposal 4 of
this Proxy Statement) reserved for the Company's Stock Option
Plans. Therefore, of the 25,000,000 shares authorized by the
Articles of Incorporation, 9,127,291 are available for issuance
for general corporate purposes.
The Board of Directors believes that it should have at all
times authorized Common Shares equal to approximately 2 1/2 times
the number of shares that are outstanding or committed to
issuance. This authorization would enable the Company to have
additional shares authorized for issuance from time to time in
sales for cash, acquisitions, option or other incentive plans,
stock splits, stock dividends or similar occurrences. The
issuance of additional Common Shares through stock dividends or
splits will not affect the percentage ownership of shareholders.
Issuance for stock options and other benefit plans, and for
acquisitions would affect the percentage of stock ownership, but
their effect upon earnings per share would depend upon the
earnings realized from the cash received or business acquired in
such stock issuances. There are no plans, understandings, or
arrangements calling for issuances of Common Shares by the
Company other than those discussed above.
The Board of Directors has approved the amendment to the
Articles of Incorporation to increase total authorized Common
Shares to 50,000,000 and recommends a vote in favor of this
proposal. The affirmative vote of the holders of two-thirds of
the outstanding Common Shares is required for approval of this
Amendment to the Articles of Incorporation. The failure to vote,
abstentions, and broker non-votes will have the same effect as a
vote against the proposal.
Adoption of the 1996 Stock Option Plan
______________________________________
The Company has utilized a Stock Option Plan for employees
since 1986. That Plan will expire by its terms in April 1996 and
no more options may be granted after that date from that Plan.
The Board of Directors believes that stock option grants have
proven to be an important factor in enabling the Company to
attract, retain and motivate its employees. Accordingly, on
November 14, 1995, the Board of Directors unanimously adopted,
subject to shareholder approval, a new Stock Option Plan to be
designated the 1996 Stock Option Plan. The Plan provides for
200,000 Common Shares to be the subject of options which may be
granted to employees. The Company presently has approximately
160 employees.
The provisions of the 1996 Plan are essentially the same as
those of the 1986 Plan. The following is a summary of the 1996
Stock Option Plan which is qualified in its entirety by the full
text which is set forth in Appendix A.
The 1996 Stock Option Plan provides that options may be
granted either as incentive stock options or as nonqualified
stock options. Options may be granted for varying periods of
from one to ten years. Employees who own 10% or more of the
Company's outstanding Common Shares may be granted incentive
stock options only for terms of five years or less. Options do
not become exercisable until at least one year from the date of
grant. Thereafter, the right to exercise options vests at a
schedule determined at the time of grant, which generally shall
be at a rate of 25% per year. The right to exercise options is
cumulative to the extent not utilized in prior periods. The
Committee determines the exercise prices of all options that are
granted. However, an incentive stock option may only be granted
with an exercise price at least equal to the market value of the
Common Shares on the date of grant. In addition, in the case of
employees who beneficially own more than 10% of the Company's
Common Shares, an incentive stock option may be granted only if
the option price is at least 110% of the market value of the
Common Shares on the date of grant.
There are no federal income tax consequences to either the
Company or the recipient of an option upon the grant or exercise
of an incentive stock option. If a person sells or otherwise
disposes of stock acquired upon the exercise of an incentive
stock option within one year of the date of exercise or two years
from the date of grant, the gain equal to the excess of the
amount realized over the amount paid for the stock will be taxed
as ordinary income. The Company will be entitled to an income
tax deduction to the same extent. If the shares are held for
more than one year following the date of exercise and two years
from the date of grant, any gain realized thereafter will be
taxed as a capital gain, in which case the Company will not be
entitled to any deduction.
With respect to non-qualified stock options, there are no
federal income tax consequences upon the grant of an option. A
person exercising a non-qualified stock option will recognize
ordinary income to the extent of the difference between the
exercise price and the fair market value of the Common Shares on
the date of exercise, and the Company will be entitled to a
corresponding deduction. Upon any sale of that stock, the
difference between the amount realized and the fair market value
on the date of the exercise will be treated as a capital gain or
loss.
In the event of any changes in the outstanding Common Stock
by way of a stock dividend, split-up, recapitalization,
combination or exchange, the number and class of shares of Common
Stock authorized to be the subject of options under the 1996 Plan
and the number and class of Common Stock and option price for
each option which is outstanding shall be correspondingly
adjusted by the Committee. The Committee shall also make
appropriate adjustments to reflect any spin-off of assets,
extraordinary dividends or other distributions to shareholders.
In the event of the dissolution or liquidation of the
Company or any merger, consolidation or combination in which the
Company is not the surviving corporation or in which the
outstanding common shares of the Company are converted into cash,
other securities or other property, each outstanding option shall
terminate as of a date fixed by the Committee provided that not
less than 20 days' written notice of the date of expiration shall
be given to each holder of an option. Each such holder shall
have the right during such period following notice to exercise
the portion of the option which is vested at the time of such
notice.
On December 1, 1995, the closing price of the Company's
Common Shares was $10.75 per share.
The Compensation Committee of the Board of Directors, which
consists of Messrs. Buzard, Kreider and Reading, shall administer
the 1996 Plan. Subject to the express provisions of the Plan,
the Committee shall have the authority to establish the terms and
conditions of option agreements, which need not be uniform.
The affirmative vote of the holders of a majority of shares
of Common Stock voting on the matter at the meeting is required
to approve the increase. Abstentions, but not broker non-votes,
shall have the effect of being considered as having voted against
the proposal.
Ratification of Appointment of Accountants
__________________________________________
The Audit Committee of the Board of Directors appointed
Arthur Andersen LLP as its independent public accountants for the
fiscal year ending September 30, 1996. Arthur Andersen LLP has
been the independent accounting firm for the company since 1986.
Although not required by law, the Board is seeking shareholder
ratification of this selection. The affirmative vote of a
majority of shares voting at the meeting is required for
ratification. If ratification is not obtained, the Board intends
to continue the employment of Arthur Andersen LLP at least
through fiscal 1996. Representatives of Arthur Andersen LLP are
expected to be present at the Shareholders' Meeting and will be
given an opportunity to comment, if they so desire, and to
respond to appropriate questions that may be asked by
shareholders.
Other Matters
_____________
Any other matters considered at the Meeting including
adjournment will require the affirmative vote of a majority of
shares voting.
Voting by Proxy
_______________
All Proxy Cards properly signed will, unless a different
choice is indicated, be voted "FOR" establishing the number of
directors at five, "FOR" election of all nominees for Directors
proposed by the Board of Directors, "FOR" amendment of the
Articles of Incorporation to increase the authorized Common
Shares up to 50,000,000 shares, "FOR" adoption of the 1996 Stock
Option Plan, and "FOR" ratification of the selection of
independent public accountants.
If any other matters come before the Meeting or any
adjournment, each proxy will be voted in the discretion of the
individuals named as proxies on the card.
Shareholder Proposals
_____________________
Shareholders who desire to have proposals included in the
Notice for the Shareholders' Meeting to be held in 1997 must
submit their proposals in writing to Meridian, Attention
Secretary, at its offices on or before August 21, 1996.
MANAGEMENT
Directors and Executive Officers
________________________________
The following is information concerning Meridian's directors
and executive officers as of December 1, 1995:
Common Stock
Beneficially Owned
________________________
Name and Age Position Amount (1) Percentage
___________________ _______________ __________ __________
William J. Motto(2) Chairman of the 4,712,416 33.0%
54 Board of
Directors, Chief
Executive
Officer
Jerry L. Ruyan(2) Secretary and 2,613,914 18.3%
49 Director
James A. Buzard, Director 12,490 *
Ph.D. (3)(4)
68
Robert J. Ready Director 13,746 *
(3)(4)
55
Gary P. Kreider Director 28,454 *
(3)(4)
57
John A. Kraeutler President, Chief 57,111 *
47 Operating Officer
Gerard Blain Vice President, 6,907 *
55 Chief Financial
Officer and Treasurer
Ching Sui Arthur Vice President, 23,859 *
Yi, Ph.D. Research and
49 Development
Antonio A. Interno Vice President 351,553 2.4%
45
Christina A. Meda Vice President, 38 *
47 Marketing
All Executive -- 7,820,488 53.3%
Officers and
Directors as a
Group (10 Persons)
___________________________________
(1) Includes exercisable stock options for Mr. Motto of 44,838
shares, Mr. Ruyan of 44,838 shares, Mr. Buzard of
11,239 shares, Mr. Ready of 13,746 shares, Mr. Kreider of
8,733 shares, Mr. Kraeutler of 53,392 shares, Mr. Blain of
5,407 shares, Dr. Yi of 18,925 shares, Mr. Interno of
229,236 shares, and Ms. Meda of 38 shares.
(2) See description of Common Stock ownership contained under
"Principal Shareholders".
(3) Audit Committee Member
(4) Compensation Committee Member
* Less than 1%
William J. Motto is a founder of the Company, and has been
its Chairman of the Board since March 1977 and its Chief
Executive Officer since May 1995. From March 1977 until June
1986, Mr. Motto served as President. He previously served as
Chief Executive Officer from June 1986 until September 1989.
Mr. Motto has been involved in the pharmaceutical and diagnostic
products industries for more than 25 years. Before forming
Meridian, Mr. Motto served in various capacities for Wampole
Laboratories, Analytab Products, Inc., a division of American
Home Products Corp., and Marion Laboratories, Inc.
Jerry L. Ruyan, also a founder of the Company, has been a
Director since March 1977 and Secretary of the Company since
March 1994. He served as Chief Executive Officer from July 1992
through April 1995. Prior to serving as Chief Executive Officer,
he served as President of the Company, holding the position from
June 1986 to July 1992. From June 1986 through January 1992, Mr.
Ruyan served as Chief Operating Officer, and from March 1977
through June 1986, Mr. Ruyan served as Vice President. Mr. Ruyan
has been involved in the diagnostic product and medical
industries for more than 20 years. Prior to forming Meridian,
Mr. Ruyan served as a technical representative for Analytab
Products, Inc., and prior to that as a Senior Microbiologist for
Henry Ford Hospital, Detroit, Michigan.
James A. Buzard, Ph.D. has been a Director of the Company
since May 1990 and serves as Chairman of the Compensation
Committee. From March 1981 until December 1989, he was an
Executive Vice President of Merrell Dow Pharmaceutical, Inc.
From December 1989 until his retirement in February 1990, he was
Vice President of Marion Merrell Dow. Since retirement, he has
been a business consultant.
Robert J. Ready has been a Director of the Company since May
1986 and serves as Chairman of the Audit Committee. In 1976, Mr.
Ready founded LSI Industries, Inc., Cincinnati, Ohio, which
manufactures and sells outdoor lighting systems, and has served
as its President and Chairman of the Board of Directors since
that time.
Gary P. Kreider has been a Director since February 1991.
For over five years Mr. Kreider has been a Senior Partner of the
Cincinnati law firm of Keating, Muething & Klekamp, which is
counsel to the Company.
John A. Kraeutler joined the Company as Executive Vice
President and Chief Operating Officer in January 1992. In July
1992, Mr. Kraeutler was named President of the Company.
Mr. Kraeutler has over 20 years of experience in the medical
diagnostics industry, having most recently served with a division
of Carter-Wallace, Inc. as Vice President, General Manager from
October 1990 until joining Meridian and as Vice President of
Marketing from August 1985 until October 1990. Prior to that
time, he held key marketing and technical positions with Becton
Dickinson & Company and Organon, Inc. Mr. Kraeutler has an
undergraduate degree in biology and graduate degrees in biology
and marketing.
Gerard Blain has been Vice President, Treasurer and Chief
Financial Officer of the Company since March 1994. Mr. Blain has
29 years of experience in the pharmaceutical industry. From
December 1989 until joining Meridian, Mr. Blain had been Vice
President and Controller of Marion Merrell Dow, Inc., Kansas
City, Missouri. From March 1981 to December 1989, Mr. Blain was
Controller of Merrell Dow Pharmaceuticals, Inc. He held various
positions, including Controller and Director for the predecessor
company, Merrell National Laboratories, during the period 1966 to
1981.
Ching Sui Arthur Yi, Ph.D., has been with Meridian as Vice
President, Research and Development since August 1989. From May
1986 until he joined the Company, he was Director of Product
Development of Cambridge BioScience Corporation. He was a
partner of BioClinical System Inc. from July 1983 to April 1986;
Manager of Research and Development, Terumo Medical Corporation
from March 1982 to June 1983; and Senior Scientist of Leeco
Diagnostics from August 1979 to February 1982.
Antonio A. Interno was appointed as a Vice President in
August 1991. He has been Managing Director of the Company's
European subsidiary, Meridian Diagnostics Europe, s.r.l., since
February 1990. Prior to that time, he was the marketing manager
for Diagnostics International Distribution SPA, a major Italian
diagnostic distributor.
Christina A. Meda joined the Company as Senior Director of
Marketing in July 1994. She was appointed Vice President of
Marketing in October 1995. Ms. Meda has 15 years of experience
in the diagnostic industry with Diagnostic Products Corporation,
Los Angeles, California, where she served as Director of Sales
and Marketing from 1991 until joining Meridian. During the
period 1984 to 1991, she held various other management positions
in both sales and marketing at Diagnostic Products Corporation.
Board Actions and Compliance with Section 16 of the Exchange Act
________________________________________________________________
The Board of Directors met 7 times during fiscal 1995 and
took action in writing on 2 occasions.
The Audit Committee, composed of Messrs. Ready (Chairman),
Buzard and Kreider, all of whom are non-employee directors, is
responsible for reviewing the Company's internal accounting
operations. It also recommends the employment of independent
accountants and reviews the relationships between the Company and
its outside accountants. This committee met 3 times during
fiscal 1995.
The Compensation Committee is responsible for establishing
compensation levels for management and for administering the
Company's 1986 Stock Option Plan and 1994 Directors' Stock Option
Plan. The Compensation Committee, consisting of Messrs. Buzard
(Chairman), Kreider and Ready, all of whom are non-employee
directors, met 4 times during fiscal 1995 and took action in
writing on 7 occasions.
The Company does not have a nominating committee or
executive committee.
Directors who are not employees of the Company receive
$10,000 per year for serving as a Director and a member of
committees, plus $1,000 for each director meeting attended and
$300 for each director meeting held by telephone. Committee
members receive $1,000 per committee meeting attended, unless the
committee meeting occurs on the same day as a director meeting,
in which case the committee member will receive only the director
meeting fee. Under the Company's 1994 Directors' Stock Option
Plan, non-employee Directors are granted non-qualified options to
purchase Common Stock at the rate of 2,317 shares each at the
time of annual election or re-election to the Board of Directors.
Directors who are employees of the Company are not separately
compensated for serving as Directors.
The Company is not aware of any instances where any person,
who during fiscal 1995 was required to file a report pursuant to
Section 16(a) of the Securities Exchange Act of 1934, failed to
report any transaction on a timely basis or failed to file any
required report or form, except for: (a) William J. Motto's
untimely reporting of the sale of 3,000 shares of Common Stock
held by him as Trustee for the William J. Motto Family Charitable
Remainder Unitrust; (b) Jerry L. Ruyan's untimely reporting of
his sale of 14,000 shares of Common Stock; (c) John A.
Kraeutler's untimely reporting of his daughter's sale of $8,000
principal amount of the Company's 7 1/4% Convertible Subordinated
Debentures due 2001; and (d) Dr. Ching Sui Arthur Yi's untimely
reporting of his exercise of an option for 4,056 shares of Common
Stock. Upon learning of their failure to report their
transactions on a timely basis, Messrs. Motto, Ruyan, and
Kraeutler and Dr. Yi reported the above transactions.
Executive Compensation
______________________
Compensation paid by Meridian for the last three fiscal
years to its Chief Executive Officer and four most highly
compensated executive officers other than the Chief Executive
Officer is as follows:
Long
Term
Compen-
sation
_______
Annual Compensation Awards
------------------------------------ --------
Other All
Name and Annual Number Other
Principal Compen- of Compen-
Position Year Salary Bonus sation Options sation(2)
________________ ____ ________ _______ ___________ ________ ________
William J. Motto 1995 $275,000 $68,750 (1) 38,625 $ 8,744
Chairman of the 1994 240,000 30,000 (1) 31,827 15,242
Board of 1993 200,000 30,000 (1) 33,418 13,400
Directors, Chief
Executive Officer
John A. Kraeutler 1995 $195,000 $48,750 $25,666(3) 54,075 $ 6,216
President, Chief 1994 170,000 21,250 (1) 23,870 11,265
Operating Officer 1993 140,000 13,000 (1) 25,064 1,809
Gerard Blain (4) 1995 $120,000 $27,000 (1) 3,090 $ 3,550
Vice President, 1994 63,692 7,000 (1) 18,540 3,637
Chief Financial
Officer and
Treasurer
Jerry L. Ruyan 1995 $149,479 $37,370 (1) 15,450 $ 4,939
Secretary 1994 180,000 22,500 (1) 31,827 11,758
1993 150,000 0 $15,163(5) 33,418 8,601
Antonio A. Interno 1995 $165,000 $35,000 (1) 15,450 $ 0
Vice President 1994 150,000 10,000 (1) 7,957 0
1993 144,000 4,000 (1) 16,709 0
(1) Less than 10% of the aggregate of the individual's salary
and bonus for the given year.
(2) All reported amounts indicate vested amounts accrued under
the Company's Savings and Investment Plan. All United
States employees of the Company with one year of service are
entitled to participate in the Plan. Contributions to the
Plan are at the discretion of the Company and vest
proportionately over six years. The Plan permits
participants to contribute to the Plan through salary
deduction. The Company matches on a dollar-for-dollar basis
the first 3% of an employee's salary which is contributed to
the Plan by an employee.
(3) Includes $10,200 accrued pursuant to a deferred compensation
plan, $6,216 from Company matching under its 401(k) plan,
and $9,250 in automobile and professional fee allowances.
(4) Joined the Company in March 1994 at an annual salary of
$115,000.
(5) Includes an automobile allowance, automobile insurance and a
legal and accounting fee allowance.
Option grants for fiscal 1995 for the Executive Officers named in
the Compensation Table are as follows:
OPTION GRANTS DURING FISCAL 1995
________________________________
Individual Grants Potential
___________________________________ Realizable
% of Value
Total at Assumed
Options Rates of
Granted Exer- Stock Price
Number to cise Appreciation
of Employees Price Expir- for Option Term
Options in Fiscal (per ation _________________
Name Granted Year share) Date 5% 10%
__________________ _______ ________ ______ ______ ______ ________
William J. Motto 38,625 20.4 5.70 (1) $ 60,641 $134,415
John A. Kraeutler 54,075 28.6 5.18 (2) 176,284 446,660
Gerard Blain 3,090 1.6 5.18 9/30/2004 10,073 25,523
Jerry L. Ruyan 15,450 8.2 5.70 9/30/1999 24,256 53,766
Antonio A. Interno 15,450 8.2 5.18 9/30/2004 50,367 127,617
(1) 15,450 expire 9/30/1999; 23,175 expire on 10/1/1997 or
9/30/1999. See page 13.
(2) 15,450 expire 9/30/2004; 38,625 expire on 10/1/1997 or
9/30/2004. See page 13.
Options exercised in fiscal 1995 for the Executive Officers
named in the Compensation Table are as follows:
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR ("FY") AND FY-END OPTION VALUES
Number of Value of
Unexercised In-the-Money
Shares Options Options
Acquired at FY-end at FY-end
on Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable
__________________ ________ ________ _______________ _______________
William J. Motto -- -- 44,838/59,032 $ 51,700/116,914
John A. Kraeutler -- -- 53,392/74,681 126,591/203,662
Gerard Blain -- -- 5,407/16,223 9,709/29,132
Jerry L. Ruyan -- -- 44,838/35,857 51,700/61,584
Antonio A. Interno -- -- 229,236/19,745 1,505,499/48,344
Report of the Compensation Committee
The Compensation Committee establishes compensation for
executive officers by setting salaries, establishing bonus plans,
making bonus awards and awarding stock options.
At a meeting held September 15, 1994 the Committee
established salaries for its executives for 1995 as reflected in
the Compensation Table. In making its determination, the
Committee reviewed recommendations of management and took into
account salary levels at comparable companies as well as the
progress made by the Company in the prior fiscal year and the
contribution of its officers to that progress.
At the September 15, 1994 meeting the Company also adopted
an officer compensation performance plan for fiscal 1995 under
which awards are to be based on two factors. The first factor is
based on the Company achieving earnings of from 5% to 30% in
excess of targeted earnings levels. The second factor is a
multiple based on a personal achievement rating whereby
management judges the extent to which individual executive
officers meet individual goals established for them. These
measurements exclude the effects, whether positive or negative,
of acquisitions and extraordinary developments. The Plan
requires that senior management make recommendations to the
Committee regarding the attainment of personal objectives by
executive officers. At the Committee's suggestion, the Plan was
modified so as to allow the Compensation Committee to adjust the
personal achievement multiplier above the range indicated to
account for extraordinary developments.
At the meeting, the Committee determined to grant incentive
stock options on October 1, 1994 at the last sale price reported
on September 30, 1994 to certain of its executive officers as
follows: Messrs. Motto, Ruyan and Kraeutler - 15,450, Mr. Blain
- - 3,090, Dr. Yi - 6,180 and Mr. Interno - 15,450. Messrs. Motto
and Kraeutler received option grants for an additional 23,175
shares and 38,625 shares, respectively. These additional options
may not be exercised prior to October 1, 1997 and will terminate
on such date unless prior thereto, the market price for the
Company's Common Stock exceeds $9.71 per share, subject to any
further antidilution adjustments, for a period of at least 90
consecutive trading days. The option grant amounts and exercise
price appearing immediately above reflect both the 3% stock
dividend paid December 28, 1994 and the three-for-two stock split
effective October 2, 1995.
The Committee met on November 14, 1995 to consider awards
under the Plan based on fiscal 1995 results. The Committee noted
that the Company had reached the third level of targeted earnings
levels under the Plan and awarded the bonuses called for by the
Plan at that level based on the attainment of the personal
objectives as determined by senior management. These bonuses
appear under "Executive Compensation."
Compensation Committee of
the Board of Directors
James A. Buzard, Chairman
Gary P. Kreider
Robert J. Ready
The following graph portrays a comparison of the yearly
percentage change in the Company's cumulative total shareholder
return on its Common Stock (as measured by dividing (i) the sum
of (A) the cumulative amount of dividends, assuming dividend
reinvestment during the periods presented and (B) the difference
between the Company's share price at the end and the beginning of
the periods presented; by (ii) the share price at the beginning
of the periods presented) with the Wilshire 5000 Equity Index and
a Peer Group Index. The Peer Group consists of Diagnostics
Products Corp., Gamma Biologicals, Inc., Hycor Biomedical, Inc.,
INCSTAR Corp. and Immucor, Inc.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG MERIDIAN DIAGNOSTICS, INC., THE WILSHIRE 5000 EQUITY INDEX
AND A PEER GROUP
Measurement
Period
(Fiscal Year Meridian Wilshire Peer
Covered) Diagnostics, Inc. 500 Index Group
_____________ _________________ _________ _____
Measurement
Pt. - 9/30/90 $100 $100 $100
9/30/91 264 134 150
9/30/92 656 148 81
9/30/93 593 174 65
9/30/94 566 179 77
9/30/95 898 230 125
Compensation Committee Interlocks and Insider Participation
___________________________________________________________
Gary P. Kreider, who is a member of the Compensation
Committee, is a senior partner of Keating, Muething & Klekamp,
Cincinnati, Ohio, a law firm which provided legal services for
the Company in fiscal 1995.
OTHER MATTERS
Meridian is not aware of any other matters to be presented
at the meeting other than those specified in the notice.
By order of the Board of Directors
December 21, 1995 Jerry L. Ruyan
Secretary
MERIDIAN DIAGNOSTICS, INC.
PROXY The undersigned hereby appoints WILLIAM J. MOTTO and
FOR JERRY L. RUYAN, or either one of them, proxies of the
ANNUAL undersigned, each with the power of substitution, to vote
MEETING cumulatively or otherwise all shares of Common Stock which
the undersigned would be entitled to vote on the matters
specified below and in their discretion with respect to
such other business as may properly come before the Annual
Meeting of Shareholders of Meridian Diagnostics, Inc. to
be held on January 25, 1996 at 3:00 P.M. Eastern Time at
The Phoenix, 812 Race Street, Cincinnati, Ohio or any
adjournment of such meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS:
1. Authority to establish the number of directors to be
elected at the meeting at five (5).
FOR _______ AGAINST _______ ABSTAIN _______
2. Authority to elect as directors the five (5) nominees
listed below.
FOR _______ WITHHOLD AUTHORITY _______
WILLIAM J. MOTTO, JERRY L. RUYAN, JAMES A. BUZARD, ROBERT J. READY
AND GARY P. KREIDER
WRITE NAME OF ANY NOMINEE(S) FOR WHOM AUTHORITY TO VOTE IS
WITHHELD __________________________________________________
3. Amendment of the Articles of Incorporation to increase
the maximum number of Common Shares which the Corporation is
authorized to have outstanding up to 50,000,000 shares.
FOR ______ AGAINST ______ ABSTAIN ______
4. Adoption of the 1996 Stock Option Plan to provide
200,000 Common Shares as available for grant under such plan.
FOR _______ AGAINST _______ ABSTAIN _______
5. Ratification of the appointment of Arthur Andersen LLP
as independent public accountants for fiscal 1996.
FOR _______ AGAINST _______ ABSTAIN _______
THIS PROXY WILL BE VOTED AS RECOMMENDED BY THE BOARD OF
DIRECTORS UNLESS A CONTRARY CHOICE IS SPECIFIED.
(THIS PROXY IS CONTINUED AND IS TO BE SIGNED ON THE REVERSE SIDE)
PROXY
FOR
ANNUAL
MEETING
(CONTINUED)
Date _________________________________, 19__
_____________________________________________
_____________________________________________
(Important: Please sign exactly as name
appears hereon indicating, where proper,
official position or representative
capacity. In the case of joint holders, all
should sign.)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Appendix A
MERIDIAN DIAGNOSTICS, INC.
1996
Stock Option Plan
ARTICLE 1
OBJECTIVES
Meridian Diagnostics, Inc. ("Meridian") has established this
Stock Option Plan effective November 14, 1995 as an incentive to
the attraction and retention of dedicated and loyal employees of
outstanding ability, to stimulate the efforts of such persons in
meeting the Company's objectives and to encourage ownership of
the Company's Common Stock by employees.
ARTICLE 2
DEFINITIONS
2.1 For purposes of the Plan the following terms shall
have the definition which is attributed to them, unless another
definition is clearly indicated by a particular usage and con-
text.
A. "Code" means the Internal Revenue Code of 1986.
B. The "Company" means Meridian and any subsidiary of
Meridian, as the term "subsidiary" is defined in Section
424(f) of the Code.
C. "Date of Exercise" means the date on which the
Company has received a written notice of exercise of an
Option, in such form as is acceptable to the Committee, and
full payment of the purchase price.
D. "Date of Grant" means the date on which the
Committee makes an award of an Option.
E. "Eligible Employee" means any individual who
performs services for the Company and is treated as an
employee for federal income tax purposes.
F. "Fair Market Value" means the last sale price
reported on any stock exchange or over-the-counter trading
system on which Shares are trading on the last trading day
prior to a specified date or, if no last sales price is
reported, the average of the closing bid and asked prices
for a Share on a specified date. If no sale has been made on
the specified date, then prices on the last preceding day on
which any such sale shall have been made shall be used in
determining Fair Market Value under either method prescribed
in the previous sentence.
G. "Incentive Stock Option" shall have the same
meaning as given to that term by Section 422 of the Code.
H. "Nonqualified Stock Option" means any Option
granted under the Plan which is not considered an Incentive
Stock Option.
I. "Option" means the right to purchase a stated
number of Shares at a specified price. The option may be
granted to an Eligible Employee subject to the terms of this
Plan, and such other conditions and restrictions as the
Committee deems appropriate. Each Option shall be designated
by the Committee to be either an Incentive Stock Option or a
Nonqualified Stock Option.
J. "Option Price" means the purchase price per Share
subject to an Option and shall be fixed by the Committee,
but shall not be less than 100% of the Fair Market Value of
a Share on the Date of Grant in the case of an Incentive
Stock Option.
K. "Permanent and Total Disability" shall mean any
medically determinable physical or mental impairment render-
ing an individual unable to engage in any substantial gain-
ful activity, which disability can be expected to result in
death or which has lasted or can be expected to last for a
continuous period of not less than 12 months.
L. "Plan" means this 1996 Stock Option Plan as it may
be amended from time to time.
M. "Share" means one share of the Common Stock, no
par value, of the Company.
ARTICLE 3
ADMINISTRATION
3.1 The Plan shall be administered by a committee (the
"Committee") designated by the Board of Directors of the Company.
The Committee shall be comprised solely of three or more
directors each of whom shall be (i) a "disinterested person" as
defined under Rule 16b-3 of the Securities and Exchange Act of
1934 (the "Act") and (ii) an "outside director" to the extent
required by Section 162(m) of the Internal Revenue Code ("Section
162(m)"). Notwithstanding the foregoing, to the extent relevant
state law now or hereafter permits, the Committee may be
comprised solely of two or more such directors.
Actions shall be taken by a majority of the Committee.
3.2 Except as specifically limited by the provisions of the
Plan, the Committee in its discretion shall have the authority
to:
A. Determine which Eligible Employees shall be
granted Options;
B. Determine the number of Shares which may be
subject to each Option;
C. Determine the Option Price;
D. Determine the term of each Option;
E. Determine whether each Option is an Incentive
Stock Option or Nonqualified Stock Option;
F. Interpret the provisions of the Plan and decide
all questions of fact arising in its application; and
G. Prescribe such rules and procedures for Plan
administration as from time to time it may deem advisable.
3.3 Any action, decision, interpretation or determination
by the Committee with respect to the application or administra-
tion of this Plan shall be final and binding upon all persons,
and need not be uniform with respect to its determination of
recipients, amount, timing, form, terms or provisions of Options.
3.4 No member of the Committee shall be liable for any
action or determination taken or made in good faith with respect
to the Plan or any Option granted hereunder, and to the extent
permitted by law, all members shall be indemnified by the Company
for any liability and expenses which may occur through any claim
or cause of action.
ARTICLE 4
SHARES SUBJECT TO PLAN
4.1 The Shares that may be made subject to Options granted
under the Plan shall not exceed 200,000 Shares in the aggregate.
Except as provided in Section 4.2, upon lapse or termination of
any Option for any reason without being completely exercised, the
Shares which were subject to such Option may again be subject to
other Options.
4.2 The maximum number of Shares with respect to which
options may be granted to any employee during each fiscal year of
the Company is 50,000 Shares. If an Option is cancelled, it
continues to be counted against the maximum number of Shares for
which Options may be granted to an employee. If an Option is
repriced, the transaction is treated as a cancellation of the
Option and a grant of a new Option.
ARTICLE 5
GRANTING OF OPTIONS
Subject to the terms and conditions of the Plan, the
Committee may, from time to time prior to November 14, 2005,
grant Options to Eligible Employees on such terms and conditions
as the Committee may determine. More than one Option may be
granted to the same Eligible Employee.
ARTICLE 6
TERMS OF OPTIONS
6.1 Subject to specific provisions relating to Incentive
Stock Options set forth in Article 9, each Option shall be for a
term of from one to ten years from the Date of Grant and may not
be exercised during the first twelve months of the term of said
Option. Commencing on the first anniversary of the Date of Grant
of an Option, the Option may be exercised for 25% of the total
Shares covered by the Option with an additional 25% of the total
Shares covered by the Option becoming exercisable on each
succeeding anniversary until the Option is exercisable to its
full extent. This right of exercise shall be cumulative and
shall be exercisable in whole or in part. The Committee in its
sole discretion may permit particular holders of Options to
exercise an Option to a greater extent than provided herein. The
Committee may establish a different exercise schedule and impose
other conditions upon exercise for any particular Option or
groups of Options.
6.2 The holder of an Option must remain continuously in the
service of the Company as an employee for a period of at least
twelve months. Nothing contained in this Plan or in any Option
granted pursuant to it shall confer upon any employee any right
to continue in the employ of the Company or to interfere in any
way with the right of the Company to terminate employment at any
time. So long as a holder of an Option shall continue to be an
employee of the Company, the Option shall not be affected by any
change of the employee's duties or position.
ARTICLE 7
EXERCISE OF OPTIONS
Any person entitled to exercise an Option in whole or in
part, may do so by delivering a written notice of exercise to the
Company, attention Corporate Secretary, at its principal office.
The written notice shall specify the number of Shares for which
an Option is being exercised and the grant date of the option
being exercised and shall be accompanied by full payment of the
Option Price for the Shares being purchased.
ARTICLE 8
PAYMENT OF OPTION PRICE
8.1 Payment of the Option Price may be made in cash, by the
tender of Shares, or both. Shares tendered shall be valued at
their Fair Market Value on the date of tender.
8.2 Payment through tender of Shares may be made by
instruction from the Optionee to the Company to withhold from the
Shares issuable upon exercise that number which have a Fair
Market Value on the date of tender equal to the exercise price
for the Option or portion thereof being exercised.
ARTICLE 9
INCENTIVE STOCK OPTIONS AND NONQUALIFIED STOCK OPTIONS
9.1 The Committee in its discretion may designate whether
an Option is to be considered an Incentive Stock Option or a
Nonqualified Stock Option. The Committee may grant both an
Incentive Stock Option and a Nonqualified Stock Option to the
same individual. However, where both an Incentive Stock Option
and a Nonqualified Stock Option are awarded at one time, such
Options shall be deemed to have been awarded in separate grants,
shall be clearly identified, and in no event will the exercise of
one such Option affect the right to exercise the other such
Option.
9.2 Any option designated by the Committee as an Incentive
Stock Option will be subject to the general provisions applicable
to all Options granted under the Plan. In addition, the Incen-
tive Stock Option shall be subject to the following specific
provisions:
A. At the time the Incentive Stock Option is granted,
if the Eligible Employee owns, directly or indirectly, stock
representing more than 10% of (i) the total combined voting
power of all classes of stock of the Company, or (ii) a
corporation that owns 50% or more of the total combined
voting power of all classes of stock of the Company, then:
(i) The Option Price must equal at least 110% of
the Fair Market Value on the Date of Grant; and
(ii) The term of the Option shall not be greater
than five years from the Date of Grant.
B. The aggregate Fair Market Value of Shares (deter-
mined at the Date of Grant) with respect to which Incentive
Stock Options are exercisable by an Eligible Employee for
the first time during any calendar year under this Plan or
any other plan maintained by the Company shall not exceed
$100,000.
9.3 If any Option is not granted, exercised, or held pur-
suant to the provisions noted immediately above, it will be con-
sidered to be a Nonqualified Stock Option to the extent that the
grant is in conflict with these restrictions.
ARTICLE 10
TRANSFERABILITY OF OPTION
During the lifetime of an Eligible Employee to whom an
Option has been granted, such Option is not transferable
voluntarily or by operation of law and may be exercised only by
such individual. Upon the death of an Eligible Employee to whom
an Option has been granted, the Option may be transferred to the
beneficiaries or heirs of the holder of the Option by will or by
the laws of descent and distribution.
ARTICLE 11
TERMINATION OF OPTIONS
11.1 An Option will terminate as follows:
A. Upon exercise or expiration by its terms.
B. Except as provided in Subsection 11.1.C, upon
termination of employment for reasons other than cause, the then-
exercisable portion of any Option will terminate on the 60th day
after the date of termination. The portion not then exercisable
will terminate on the date of termination of employment. For
purposes of the Plan, a leave of absence approved by the Company
shall not be deemed to be termination of employment.
C. If an Eligible Employee holding an Option dies or
becomes subject to a Permanent and Total Disability while
employed by the Company, or within 60 days after termination of
employment, for reasons other than cause, such Option may be
exercised, to the extent exercisable on the date of death,
Permanent and Total Disability or termination of employment, at
any time within one year after the date the employment of such
Eligible Employee terminated, by the estate or guardian of such
person or by those persons to whom the Option may have been
transferred by will or by the laws of descent and distribution.
D. Options shall terminate immediately if employment
is terminated for cause. Cause is defined as including, but not
limited to, theft of or intentional damage to Company property,
intentional harm to the Company's reputation, material breach of
the optionee's duty of fidelity to the Company, the use of
illegal drugs, the commission of a criminal act, willful
violation of Company policy, or trading in securities of the
Company for personal gain based on knowledge of the Company's
activities or results when such information is not available to
the general public.
E. If an Eligible Employee holding an Option violates
any terms of any written employment or noncompetition agreement
between the Company and the Eligible Employee, all existing
options held by such Employee will terminate. In addition, if at
the time of such violation the Employee has exercised Options but
has not received certificates for the shares to be issued, the
Company may void the Option and its exercise. Any such actions
by the Company shall be in addition to any other rights or
remedies available to the Company in such circumstances.
11.2 Except as provided in Article 12 hereof, in no event
will the continuation of the term of an Option beyond the date of
termination of employment allow the Eligible Employee, or his
beneficiaries or heirs, to accrue additional rights under the
Plan, or to purchase more Shares through the exercise of an
Option than could have been purchased on the day that employment
was terminated. In addition, notwithstanding anything contained
herein, no option may be exercised in any event after the
expiration of ten years from the date of grant of such option.
ARTICLE 12
ADJUSTMENTS TO SHARES AND OPTION PRICE
12.1 In the event of changes in the outstanding Common Stock
of the Company as a result of stock dividends, splitups,
recapitalizations, combinations of Shares or exchanges of Shares,
the number and class of Shares for all purposes covered by the
Plan and number and class of Shares and price per Share for each
Option and each outstanding Option covered by the Plan shall be
correspondingly adjusted by the Committee.
12.2 The Committee shall make appropriate adjustments in the
Option Price to reflect any spin-off of assets, extraordinary
dividends or other distributions to shareholders.
12.3 In the event of the dissolution or liquidation of the
Company or any merger, consolidation, exchange or other
transaction in which the Company is not the surviving corporation
or in which the outstanding Shares of the Company are converted
into cash, other securities or other property, each outstanding
Option shall terminate as of a date fixed by the Committee pro-
vided that not less than 20 days' written notice of the date of
expiration shall be given to each holder of an Option and each
such holder shall have the right during such period following
notice to exercise the Option as to all or any part of the Shares
for which it is exercisable at the time of such notice. The
Committee, in its sole discretion, may provide that Options in
such circumstances may be exercised to an extent greater than the
number of shares for which they were exercisable at the time of
such a notice.
12.4 All outstanding Options shall become immediately
exercisable in full if a change in control of the Company occurs.
For purposes of this Agreement, a "change in control of the
Company" shall be deemed to have occurred if (a) any "person," as
such term is used in Sections 13(d) and 14(d) of the Act, other
than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company becomes the "beneficial
owner," as defined in Rule 13d-3 under the Act, directly or
indirectly, of securities of the Company representing 30% or more
of the combined voting power of the Company's then outstanding
securities; or (b) during any period of one year (not including
any period prior to the execution of this Agreement), individuals
who at the beginning of such period constitute the Board of
Directors and any new director whose election by the Board or
nomination for election by the Company's shareholders was
approved by a vote of at least two-thirds (2/3) of the Directors
then still in office who either were Directors at the beginning
of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a
majority thereof.
ARTICLE 13
OPTION AGREEMENTS
13.1 All Options granted under the Plan shall be evidenced
by a written agreement in such form or forms as the Committee in
its sole discretion may determine.
13.2 Each optionee, by acceptance of an Option under this
Plan, shall be deemed to have consented to be bound, on the
optionee's own behalf and on behalf of the optionee's heirs,
assigns and legal representatives, by all terms and conditions of
this Plan.
ARTICLE 14
AMENDMENT OR DISCONTINUANCE OF PLAN
14.1 The Board of Directors of the Company may at any time
amend, suspend, or discontinue the Plan; provided, however, that
no amendments by the Board of Directors of the Company shall,
without further approval of the shareholders of the Company:
A. Change the definition of Eligible Employees;
B. Except as provided in Articles 4 and 12 hereof,
increase the number of Shares which may be subject to
Options granted under the Plan.
C. Cause the Plan or any Option granted under the
Plan to fail to (i) be excluded from the $1 million
deduction limitation imposed by Section 162(m) of the Code,
or (ii) qualify as an "Incentive Stock Option" as defined by
Section 422 of the Code.
14.2 No amendment or discontinuance of the Plan shall alter
or impair any Option granted under the Plan without the consent
of the holder thereof.
ARTICLE 15
EFFECTIVE DATE
This Plan shall become effective as of November 14, 1995,
having been adopted by the Board of Directors of the Company on
such date subject to approval by the affirmative vote of the
holders of a majority of the shares of Capital Stock of the
Company voting on the issue, and all Options granted prior to
such approval are expressly conditioned upon such approval being
received. If shareholder approval is not received, within 12
months of the effective date, Options granted pursuant to this
Plan shall be null and void.
ARTICLE 16
MISCELLANEOUS
16.1 Nothing contained in this Plan or in any action taken
by the Board of Directors or shareholders of the Company shall
constitute the granting of an Option. An Option shall be granted
only at such time as a written Option shall have been executed
and delivered to the respective employee and the employee shall
have executed an agreement respecting the Option in conformance
with the provisions of the Plan.
16.2 Certificates for Shares purchased through exercise of
Options will be issued in regular course after exercise of the
Option and payment therefor as called for by the terms of the
Option but in no event shall the Company be obligated to issue
certificates more often than once each quarter of each fiscal
year. No persons holding an Option or entitled to exercise an
Option granted under this Plan shall have any rights or
privileges of a shareholder of the Company with respect to any
Shares issuable upon exercise of such Option until certificates
representing such Shares shall have been issued and delivered.
No Shares shall be issued and delivered upon exercise of an
Option unless and until the Company, in the opinion of its
counsel, has complied with all applicable registration
requirements of the Securities Act of 1933 and any applicable
state securities laws and with any applicable listing
requirements of any national securities exchange on which the
Company securities may then be listed as well as any other
requirements of law.
16.3 This Plan shall continue in effect until the expiration
of all Options granted under the Plan unless terminated earlier
in accordance with Article 14; provided, however, that it shall
otherwise terminate ten years after the Effective Date.