SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
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VASCULAR SOLUTIONS, INC.
(Name of Registrant as Specified in its Charter)
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[LOGO] VASCULAR
SOLUTIONS
Dear Fellow Shareholder:
You are cordially invited to attend the 2002 annual meeting of
shareholders of Vascular Solutions, Inc., which will be held at the Minneapolis
Club, 729 Second Avenue South (the corner of Second Avenue and Eighth Street in
downtown Minneapolis, Minnesota) beginning at 3:30 p.m. on Tuesday, April 16,
2002.
This booklet contains your official notice of the 2002 annual meeting
of shareholders and a proxy statement that includes information about matters to
be acted upon at the annual meeting. Officers and directors of Vascular
Solutions, Inc. will be on hand to review the company's operations and to answer
questions and discuss matters that may properly arise.
Whether or not you plan to attend the annual meeting, please complete,
sign, date and mail the enclosed proxy card promptly. If you attend the annual
meeting, you may revoke your proxy and vote in person if you wish, even if you
have previously returned your proxy card.
I sincerely hope that you will be able to attend our annual meeting to
review the past year and our future plans.
Sincerely,
/s/ Howard C. Root
Howard C. Root
Chief Executive Officer
VASCULAR SOLUTIONS, INC.
2495 XENIUM LANE NORTH
MINNEAPOLIS, MINNESOTA 55441
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 16, 2002
The 2002 annual meeting of the shareholders of Vascular Solutions,
Inc., a Minnesota corporation, will be held at the Minneapolis Club, 729 Second
Avenue South, Minneapolis, Minnesota, beginning at 3:30 p.m. on Tuesday, April
16, 2002 for the following purposes:
1. To elect six directors to serve on the Board of Directors for
a term of one year and until their successors are duly elected
and qualified.
2. To ratify the appointment of Ernst & Young LLP as Vascular
Solutions, Inc.'s independent auditor for 2002.
3. To transact such other business as may properly come before
the meeting or any adjournment thereof.
The Board of Directors recommends that an affirmative vote be cast in
favor of all nominees and for ratification of the independent auditor.
Only holders of record of common stock at the close of business on
February 20, 2002 will be entitled to notice of and to vote at the annual
meeting or any adjournment thereof.
It is important that your shares of common stock be represented at the
annual meeting. You are urged to complete, sign and date the accompanying proxy
card, which is solicited by the Board of Directors of Vascular Solutions, and
mail it promptly in the enclosed envelope. Your proxy will not be used if you
attend and vote at the annual meeting in person.
By order of the Board
of Directors
/s/ Michael Nagel
Michael Nagel
Secretary
March 26, 2002
IMPORTANT: PLEASE RETURN EACH PROXY CARD SENT TO YOU.
PROXY STATEMENT
This proxy statement is provided in connection with the 2002 annual
meeting of shareholders of Vascular Solutions, Inc. and any adjournment or
postponement of the meeting. The accompanying proxy is solicited by the Board of
Directors of Vascular Solutions. This proxy statement is dated March 26, 2002.
This proxy statement, the accompanying form of proxy and Vascular Solutions'
annual report are first being sent or given to shareholders beginning on or
about March 26, 2002.
RECORD DATE; SHAREHOLDERS ENTITLED TO VOTE; QUORUM
Holders of record of the shares of Vascular Solutions common stock at
the close of business on February 20, 2002, will be entitled to vote on all
matters at the annual meeting. Each share of common stock will be entitled to
one vote. On February 20, 2002, a total of 13,337,002 shares of common stock
were outstanding. A majority of the voting power of the outstanding shares of
common stock entitled to vote, represented in person or by proxy, will be
required to constitute a quorum for the annual meeting.
VOTING YOUR SHARES
The Vascular Solutions Board of Directors is soliciting proxies from
the Vascular Solutions shareholders. By completing and returning the
accompanying proxy, you will be authorizing Howard Root and Michael Nagel to
vote your shares. If your proxy is properly signed and dated it will be voted as
you direct. If you attend the annual meeting in person, you may vote your shares
by completing a ballot at the meeting.
CHANGING YOUR VOTE BY REVOKING YOUR PROXY
Your proxy may be revoked at any time before it is voted at the annual
meeting by giving notice of revocation to Vascular Solutions, in writing, by
execution of a later dated proxy or by attending and voting at the annual
meeting.
HOW PROXIES ARE COUNTED
If you return a signed and dated proxy card but do not indicate how the
shares are to be voted, those shares will be voted FOR each of the nominees and
the listed proposals. Votes cast by proxy or in person at the annual meeting
will be tabulated by the election inspectors appointed for the annual meeting.
Shares voted as abstentions on any matter (or a "withhold vote for" as
to directors) will be counted for purposes of determining the presence of a
quorum at the annual meeting and treated as unvoted, although present and
entitled to vote, for purposes of determining the approval of each matter as to
which a shareholder has abstained. If a broker submits a proxy that indicates
the broker does not have discretionary authority as to certain shares to vote on
one or more matters, those shares will be counted for purposes of determining
the presence of a quorum at the meeting, but will not be considered as present
and entitled to vote with respect to such matters.
The Board of Directors knows of no other matters to be presented for
action at the annual meeting other than those set forth herein. If any other
matters properly come before the annual meeting, however, the persons named in
the proxy will vote on such other matters and/or for other nominees in
accordance with their best judgment. This includes a motion to adjourn or
postpone the annual meeting to solicit additional proxies.
COST OF SOLICITATION
All expenses in connection with this solicitation will be paid by
Vascular Solutions. Officers, directors and regular employees of Vascular
Solutions, who will receive no extra compensation for their services, may
solicit proxies by telephone or electronic transmission.
PROPOSAL 1:
ELECTION OF DIRECTORS
Six directors have been nominated for election to our Board of
Directors at the 2002 annual meeting of shareholders to hold office for a term
of one year and until their successors are duly elected and qualified (except in
the case of earlier death, resignation or removal). In the unlikely event that
the nominees are not candidates for election at the annual meeting, the persons
named as proxies will vote for such other persons as the Board of Directors or
proxies may designate.
Information regarding the nominees to the Board of Directors is set
forth below.
PAUL O'CONNELL, age 49, joined our Board of Directors in January 2002.
Mr. O'Connell has been Vice President of the Vascular Interventional Products
Group of B. Braun Medical, an international medical device company, since July
2001. From 1999 through 2001, Mr. O'Connell provided marketing and technical
support consulting services to medical device companies. Mr. O'Connell was the
owner of Sablier, a medical device company, from 1998 through 1999 where he
developed new technologies for the treatment of thromboembolic diseases and for
distal protection during carotid endartorectomy. From 1993 through 1998, Mr.
O'Connell was Vice-President and General Manager of the Vena Tech division of B.
Braun Medical, a medical device business he originally co-founded in 1988 and
sold to B. Braun Medical in 1993.
JAMES JACOBY, JR., age 39, has served on our Board of Directors since
February 1999. Mr. Jacoby has been a Managing Director of the Life Sciences
Group of the Corporate Finance Department of Stephens Inc., an Arkansas-based
investment banking firm, since December 1999 and previously was Vice President,
Corporate Finance Department of Stephens Inc. since 1994. From 1990 through
1994, Mr. Jacoby was Vice President, Mergers and Acquisitions Department of
Chemical Banking Corporation in New York and London.
MICHAEL KOPP, age 45, has served on our Board of Directors since
November 2000. Mr. Kopp has over twenty years experience in the medical device
industry. He has been a private investor and industry consultant since September
1999. From April 1995 to August 1999, Mr. Kopp was President and CEO of
IsoStent, Inc., an interventional medical device company that was acquired by
Johnson and Johnson. From January 1994 to March 1995 Mr. Kopp was President and
CEO of Devices for Vascular Intervention, Inc., an interventional medical device
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company that was acquired by Eli Lilly and Company. Mr. Kopp has served as a
director of Prolifix, Inc. since October 1996 and has served as a director of
Spiration, Inc. since October 1999.
GERARD LANGELER, age 51, has been a member of our Board of Directors
since February 1997. Mr. Langeler has been a General Partner of OVP Venture
Partners, an operating venture capital company, since 1992. Prior to joining OVP
Venture Partners, Mr. Langeler was an officer and co-founder of Mentor Graphics,
a manufacturer of software for computer-aided design of electronics.
RICHARD NIGON, age 54, has been a member of our Board of Directors
since November 2000. Mr. Nigon has been Director of Equity Corporate Finance for
Miller Johnson Steichen Kinnard, an investment banking firm, since February
2001. From February 2000 to February 2001, Mr. Nigon served as the Chief
Financial Officer of Dantis, Inc., an Internet hosting company. Prior to joining
Dantis, Mr. Nigon was employed by Ernst & Young since 1970, serving as a partner
since 1981. While at Ernst & Young, Mr. Nigon served as the Director of Ernst &
Young's Twin Cities Entrepreneurial Services Group and was the coordinating
partner on several publicly-traded companies in the consumer retailing and
manufacturing industries. Mr. Nigon is also a director of Stockwalk Group, Inc.
HOWARD ROOT, age 41, has served as our Chief Executive Officer and a
director since he co-founded Vascular Solutions in February 1997. From April
1996 through February 1997, Mr. Root was Vice President of Gateway Alliance,
LLC, a provider of management services to start-up businesses. From 1990 to
1995, Mr. Root was employed by ATS Medical, Inc., a mechanical heart valve
company, most recently as Vice President and General Counsel. Prior to joining
ATS Medical, Mr. Root practiced corporate law, specializing in representing
emerging growth companies, at the law firm of Dorsey & Whitney LLP for over five
years.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH OF THE
NOMINEES.
The affirmative vote of a majority of the shares of Vascular Solutions
common stock present and entitled to vote at the 2002 annual meeting of
shareholders is necessary to elect each nominee. Proxies will be voted in favor
of the nominees unless otherwise specified.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During 2001, the Board of Directors held five meetings. Each director
holding office during the year attended at least 75% of the total number of
meetings of the Board of Directors (held during the period for which they were a
director) and committees of the board on which they served. The Board of
Directors has an Audit Committee and a Compensation Committee, which are
described below. The Board of Directors does not have a Nominating Committee.
The Board of Directors has an Audit Committee composed of Mr. Jacoby,
Mr. Langeler and Mr. Nigon. The Audit Committee's responsibilities include
facilitating our relationship with independent auditors; reviewing and assessing
the performance of our accounting and finance personnel; communicating to our
Board of Directors the results of work performed by and issues raised by our
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independent auditors and legal counsel; and evaluating our management of assets
and reviewing policies relating to asset management. The Audit Committee held
four meetings during 2001.
The Board of Directors has a Compensation Committee composed of Mr.
Langeler, Mr. Jacoby and, during 2001, Dr. Gary Gershony, a former director of
the Company. The Compensation Committee's responsibilities include establishing
salaries, incentives, and other forms of compensation for our directors and
officers; administering our incentive compensation and benefits plans; and
recommending policies relating to such incentive compensation and benefits
plans. The Compensation Committee held one meeting during 2001.
DIRECTOR COMPENSATION
We do not currently pay any compensation to directors for serving in
that capacity, but we reimburse directors for out-of-pocket expenses incurred in
attending board meetings. Each non-employee director receives an option to
purchase 10,000 shares of our common stock on the date of his or her election to
our Board of Directors and the date of each re-election thereafter with an
exercise price equal to fair market value on such date.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee of our Board of Directors is composed of the
following non-employee directors: Mr. Jacoby, Mr. Langeler and Mr. Nigon. Mr.
Jacoby currently serves as the Chairman of the Audit Committee. All of the
members of the Audit Committee are independent for purposes of the Nasdaq
listing requirements. The Audit Committee operates under a written charter
adopted by the Board of Directors. The Audit Committee recommends to the Board
of Directors, and submits for shareholder ratification, the appointment of our
independent auditor Ernst & Young LLP.
Management is responsible for Vascular Solutions' internal controls and
the financial reporting process. Our independent auditor is responsible for
performing an independent audit of our consolidated financial statements in
accordance with generally accepted auditing standards and to issue a report on
our financial statements. The Audit Committee's responsibility is to monitor and
oversee these processes.
In this context, the Audit Committee has met and held discussions with
management and the independent auditor. Management represented to the Audit
Committee that Vascular Solutions' consolidated financial statements were
prepared in accordance with generally accepted accounting principles, and the
Audit Committee has reviewed and discussed the consolidated financial statements
with management and the independent auditor. The Audit Committee discussed with
the independent auditor matters required to be discussed by Statement on
Auditing Standards No. 61 (Communications with Audit Committees).
Our independent auditor also provided to the Audit Committee the
written disclosure required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the Audit Committee
discussed with the independent auditor the auditing firm's independence. The
Committee also considered whether non-audit services provided by the independent
auditor during the last fiscal year were compatible with maintaining the
independent auditor's independence.
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Based upon the Audit Committee's discussion with management and the
independent auditor and the Audit Committee's review of the representation of
management and the report of the independent auditor to the Audit Committee, the
Audit Committee recommended to the Board of Directors that the audited
consolidated financial statements be included in Vascular Solutions' Annual
report on Form 10-K for the fiscal year ended December 31, 2001 filed with the
Securities and Exchange Commission.
Members of the Audit Committee
James Jacoby, Jr., Chairman
Gerard Langeler
Richard Nigon
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of our Board of Directors is composed of the
following non-employee directors: Mr. Langeler, Mr. Jacoby and, prior to 2002,
Dr. Gary Gershony. Mr. Langeler currently serves as Chairman of the Compensation
Committee. The Compensation Committee advises the Chief Executive Officer and
the Board of Directors on matters of compensation philosophy and recommends
salaries, incentives and other forms of compensation for our directors, officers
and other key employees. The Compensation Committee has reviewed and is in
accord with the compensation paid to executive officers in 2001.
GENERAL COMPENSATION POLICY
We are committed to attracting, hiring and retaining an experienced
management team that can successfully manufacture and sell our Duett sealing
device and develop new products. The fundamental policy of the Compensation
Committee is to provide our executive officers with competitive compensation
opportunities based upon their contribution to our development and financial
success and long-term shareholder interest, as well as the officers' personal
performance. It is the Compensation Committee's objective to have a portion of
each executive officer's compensation contingent upon overall company
performance as well as upon such executive officer's own level of performance.
Accordingly, the compensation package for each executive officer is comprised of
three elements: (i) base salary which reflects individual performance and is
designed primarily to be competitive with salary levels in the industry; (ii)
bonus payments contingent upon specific corporate and individual milestones; and
(iii) long-term stock-based incentive awards which strengthen the mutuality of
interests between the executive officers and our shareholders.
BASE SALARY
The base salary is established as a result of the Compensation
Committee's analysis of each executive officer's individual performance during
the prior year, our overall performance during the prior year and historical
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compensation levels within the executive officer group. The Compensation
Committee believes executive salaries must be sufficient to attract and retain
key individuals. Salaries are also based on experience level and are intended to
be competitive with salaries paid to comparable executives in similar positions
at other medical device companies of comparable size.
BONUS AWARDS FOR 2001
Bonus awards are provided under a Management Incentive Compensation
Plan. At the beginning of each year certain performance objectives, including
corporate, department and personal goals, are set. At the end of the year
management personnel that are eligible for bonus awards have their performance
measured against these goals. Based upon progress toward meeting these goals,
bonus awards are paid. In December 2001, the Compensation Committee approved
bonuses for executive officers and certain other employees for recognition of
established objectives during 2001.
LONG-TERM INCENTIVE COMPENSATION
Long-term incentives are provided through the grant of stock options.
The grants are designed to align the interest of each executive officer with
those of our shareholders and provide each individual with an incentive to
manage our business from the perspective of an owner with an equity stake in the
business. In general, we view option grants as incentives for future performance
and not as compensation for past accomplishments. Executive officers are granted
a stock option at the time they commence service and are eligible for annual
grants thereafter. In determining the number of shares subject to stock option
grants, the Committee takes into consideration the job responsibilities,
experience and contributions of the individual as well as the recommendations of
the Chief Executive Officer. The options vest over a period of several years and
are generally not exercisable for at least one year after the date of grant.
Each option grant allows the individual to acquire shares of our Common Stock at
a fixed price per share over a ten-year period of time. Executive officers
receive gains from stock options only to the extent that the fair market value
of the stock has increased since the date of the option grant.
CEO COMPENSATION
The Compensation Committee's determination of our Chief Executive
Officer's salary, bonus and stock option grants follows the policies set forth
above for all executive compensation. The Committee seeks to establish a level
of base salary competitive with that paid by companies within the industry which
are of comparable size, and a bonus contingent upon specific corporate
objectives. In addition, a significant percentage of the total compensation
package is contingent upon Vascular Solutions' performance and stock price
appreciation.
During 2001, Mr. Root, the Company's Chief Executive Officer, was paid
a base salary of $200,000. In addition, a bonus of $15,000 was paid in January
2002 based upon the accomplishment of specific milestones in 2001. Those
milestones included: the settlement of the litigation with St. Jude Medical,
Inc., the progress in regulatory approvals, and the commencement of development
of future interventional medical devices. Mr. Root received a stock option grant
for 50,000 shares during 2001. These stock option and bonus awards reflected the
Compensation Committee's judgment as to Mr. Root's individual performance and
the overall performance of Vascular Solutions. The Committee also believes that
stock options granted to Mr. Root to date provide a significant and appropriate
tie between overall compensation and the company's performance over the long
term.
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COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m)
As a result of Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), which was enacted into law in 1993, we will not be allowed
a federal income tax deduction for compensation paid to certain executive
officers to the extent that compensation exceeds $1 million per officer in any
one year. This limitation will apply to all compensation paid to the covered
executive officers which is not considered to be performance based. Compensation
which does qualify as performance-based compensation will not have to be taken
into account for purposes of this limitation. The Committee believes that
options granted under the Vascular Solutions Stock Option Plan will meet the
requirements for qualifying as performance-based.
Section 162(m) of the Code did not affect the deductibility of
compensation paid to our executive officers in 2001 and is not anticipated to
affect the deductibility of such compensation expected to be paid in the
foreseeable future. The Committee will continue to monitor this matter and may
propose additional changes to the executive compensation program if warranted.
Members of the Compensation
Committee
Gerard Langeler, Chairman
James Jacoby, Jr.
EMPLOYMENT AGREEMENTS
We have entered into employment agreements with each of our executive
officers. The employment agreements provide for employment "at will" which may
be terminated by either party for any reason upon ten working days' prior
written notice. The base salary and any discretionary bonus for each of the
executive officers is determined by the compensation committee of our Board of
Directors. During the term of his or her employment agreement and for a period
of one year after its termination, each executive officer is prohibited from
competing with us in the vascular sealing device field.
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table sets forth all compensation awarded to, earned by
or paid for services rendered to us in all capacities during each of the last
three fiscal years by our Chief Executive Officer and the four other most highly
compensated executive officers whose salary and bonus earned in 2001 exceeded
$100,000.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
--------------
ANNUAL COMPENSATION SECURITIES
NAME AND PRINCIPAL ------------------------------ UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS OPTIONS (1) COMPENSATION (2)
- ---------------------------- -------- --------- --------- -------------- ----------------
Howard Root................. 2001 $ 200,000 $ 15,000 $ 50,000 $ 2,586
Chief Executive Officer 2000 170,000 34,000 -- 2,559
1999 140,000 28,000 200,000 2,046
Michael Nagel............... 2001 175,000 10,938 40,000 7,312
Vice President of Sales 2000 150,000 30,000 -- 6,904
and Marketing and 1999 130,000 25,000 60,000 7,697
Secretary
James Quackenbush........... 2001 135,000 16,875 15,000 7,533
Vice President of 2000 125,000 25,000 -- 6,188
Manufacturing (3) 1999 88,000 20,000 40,000 3,760
Deborah Jensen.............. 2001 137,500 48,594 32,500 7,509
Vice President of 2000 22,917 10,000 -- 852
Regulatory Affairs, Quality
Systems & Clinical
Research (3)
William Sutton.............. 2001 130,000 16,250 15,000 1,676
Vice President of Research 2000 120,000 20,000 10,000 6,428
and Development (3) 1999 5,000 -- 25,000 --
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(1) Represents options granted pursuant to our Stock Option and Stock Award
Plan.
(2) Represents premiums we pay for health insurance benefits and matching
contributions to our 401(k) plan.
(3) Mr. Quackenbush joined us as Vice President of Manufacturing in March
1999. Ms. Jensen joined us as Vice President of Regulatory Affairs,
Quality Systems and Clinical Research in October 2000. Ms. Jensens'
2001 bonus includes delayed payment of a signing bonus. Mr. Sutton
joined us as Vice President of Research and Development in December
1999.
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The following table contains information concerning the grant of stock
options under our Stock Option and Stock Award Plan during 2001 to each of the
executive officers named in the Summary Compensation Table.
STOCK OPTIONS GRANTED IN 2001
INDIVIDUAL GRANTS (1)
-------------------------------------------------
PERCENT POTENTIAL REALIZABLE
OF TOTAL VALUE AT ASSUMED
OPTIONS ANNUAL RATES OF
NUMBER OF GRANTED STOCK PRICE
SECURITIES TO EXERCISE APPRECIATION
UNDERLYING EMPLOYEES PRICE FOR OPTION TERM (3)
OPTIONS IN FISCAL PER EXPIRATION -----------------------
NAME GRANTED YEAR (2) SHARE DATE 5% 10%
- ----------------------- ---------- --------- -------- ------------- ---------- ----------
Howard Root............ 25,000 2.8% $ 7.3125 Jan. 22, 2011 $ 114,970 $ 291,355
25,000 2.8 2.51 Oct. 19, 2011 59,375 100,075
Michael Nagel.......... 20,000 2.3 7.3125 Jan. 22, 2011 91,976 223,084
20,000 2.3 2.51 Oct. 19, 2011 47,500 80,060
James Quackenbush...... 10,000 1.1 7.3125 Jan. 22, 2011 45,988 116,542
5,000 0.6 2.51 Oct. 19, 2011 11,875 20,015
Deborah Jensen......... 25,000 2.8 7.3125 Jan. 22, 2011 114,970 291,355
7,500 0.9 2.51 Oct. 19, 2011 17,813 30,023
William Sutton......... 10,000 1.1 7.3125 Jan. 22, 2011 45,988 116,542
5,000 0.6 2.51 Oct. 19, 2011 11,875 20,015
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(1) Each option represents the right to purchase one share of Vascular
Solutions common stock. The options shown in this column are granted
pursuant to our Stock Option and Stock Award Plan. The options vest in
twelve monthly installments beginning three years after the date of
grant. The term of each option is ten years.
(2) In 2001, Vascular Solutions granted employees options to purchase an
aggregate of 879,500 shares of common stock.
(3) The 5% and 10% assumed annual rates of compounded stock price
appreciation are mandated by rules of the Securities and Exchange
Commission and do not represent Vascular Solutions' estimate or
projection of Vascular Solutions' future common stock prices. These
amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises are dependent on the future
performance of the common stock and overall stock market conditions.
The amounts reflected in the table may not necessarily be achieved.
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The following table sets forth information concerning the exercise of
options during 2001 and unexercised options held as of December 31, 2001 by each
of the executive officers named in the Summary Compensation Table.
AGGREGATED OPTION EXERCISES IN 2001 AND YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT DECEMBER 31, 2001 AS OF DECEMBER 31, 2001 (1)
ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------- ----------- -------- ----------- ------------- ----------- -------------
Howard Root .......... -- $ -- 116,211 150,000 $20,912 $ 7,000
Michael Nagel ........ -- -- 71,500 83,500 58,050 5,600
James Quackenbush .... -- -- 19,193 24,681 -- 1,400
Deborah Jensen ....... -- -- 7,500 25,000 -- 2,100
William Sutton ....... -- -- 16,500 33,500 -- 1,400
- ----------------
(1) "Value" has been determined based on the difference between the last
sale price of Vascular Solutions' common stock as reported by the
Nasdaq National Market System on December 31, 2001 ($2.79) and the per
share option exercise price, multiplied by the number of shares subject
to the in-the-money options.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of our common stock as of February 15, 2002 by each person,
or group of affiliated persons, who is known by us to own beneficially more than
5% of our common stock, each of our directors and nominees for director, each of
our executive officers named in the Summary Compensation Table above and all of
our directors and executive officers as a group.
Beneficial ownership is determined in accordance with the rules of the
SEC. In computing the number of shares beneficially owned by a person and the
percentage ownership of that person, shares of common stock under options held
by that person that are currently exercisable or exercisable within 60 days of
February 15, 2002 are considered outstanding. These shares, however, are not
considered outstanding when computing the percentage ownership of each other
person. The number of shares subject to options that each beneficial owner has
the right to acquire within 60 days of February 15, 2002 are also listed
separately under the column entitled "Number of Shares Underlying Options
Beneficially Owned."
Except as indicated in the footnotes to this table, each shareholder
named in the table has sole voting and investment power for the shares shown as
beneficially owned by them. Percentage of ownership is based on 13,337,002
shares of common stock outstanding on February 15, 2002.
NUMBER OF
SHARES
NUMBER OF UNDERLYING
SHARES OPTIONS PERCENT OF
BENEFICIALLY BENEFICIALLY SHARES
NAME OWNED OWNED OUTSTANDING
- ---- ----- ----- -----------
Entities affiliated with Stephens, Inc. (1)........... 2,727,180 20,000 20.4%
James Jacoby, Jr. (1).............................. 2,727,180 20,000 20.4
TGI Fund II, LC (2) 860,642 -- 6.5
Entities affiliated with OVP Venture Partners (3)..... 780,065 -- 5.8
Gerard Langeler (3)................................ 842,426 20,000 6.3
Howard Root........................................... 408,500 132,711 3.0
Richard Nigon (4)..................................... 15,900 10,000 *
Michael Kopp.......................................... 10,000 10,000 *
Paul O'Connell........................................ 10,000 10,000 *
Michael Nagel (5)..................................... 147,300 79,300 1.1
James Quackenbush..................................... 20,629 19,330 *
Deborah Jensen........................................ 10,501 9,500 *
William Sutton........................................ 21,139 19,300 *
All directors and executive officers as a group
(11 persons)....................................... 4,213,575 330,141 31.6
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*Less than 1%
-11-
(1) 1,821,466 of the shares are held by Stephens Vascular Preferred, LLC,
885,714 of the shares are held by Stephens Vascular Options, LLC and
all of the options are held by Stephens Investment Partners III LLC.
The address is 111 Center Street, Suite 2500, Little Rock, AR 72201.
Mr. Jacoby is a Managing Director of Stephens Inc. and a member of
Stephens Vascular Preferred, LLC and Stephens Vascular Options, LLC.
Stephens Vascular Preferred, LLC, Stephens Vascular Options, LLC and
Stephens Investment Partners III LLC are affiliates of Stephens Inc.
and have contributed their shares of our common stock to a voting trust
pursuant to which the trustee of the trust has sole voting power. The
voting trust is required to vote such shares "for" or "against"
proposals submitted to our shareholders in the same proportion as votes
cast "for" and "against" those proposals by all other shareholders,
excluding abstentions. The voting trust agreement also imposes
substantial limitations on the sale or other disposition of the shares
subject to the voting trust. The voting trust agreement expires in June
2010 or such earlier time as Stephens Inc. ceases to be a market maker
of our common stock. The name and address of the trustee of the voting
trust agreement are: James Sommers, 237 Cherokee Road, Charlotte, North
Carolina 28207. Mr. Jacoby disclaims beneficial ownership of the shares
subject to the voting trust agreement.
(2) An affliate of Tredegar Investments, Inc. and Tredegar Corporation. The
address is 1100 Boulders Parkway, Richmond, Virginia 23225. Disclosure
is made in reliance upon a statement on Schedule 13G/A filed with the
SEC on February 14, 2002.
(3) Includes 451,875 shares held by Olympic Venture Partners IV, L.P., and
328,190 shares held by Olympic Venture Partners III, L.P. The address
of these entities is 2420 Carillion Point, Kirkland, Washington 98033.
Mr. Langeler is a general partner of OVP Venture Partners and possesses
shared voting control of the entities noted above. Mr. Langeler
disclaims beneficial ownership of these shares other than his interest
in the funds.
(4) Includes 500 shares held by Mr. Nigon's wife and 400 shares held in the
name of Mr. Nigon's two minor children. Mr. Nigon disclaims beneficial
ownership of the shares held in the name of his wife or children.
(5) Includes an aggregate of 18,000 shares registered in the name of Mr.
Nagel's three minor children's irrevocable trusts. Mr. Nagel disclaims
beneficial ownership of the shares held in the name of his children.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Vascular
Solutions' executive officers and directors and persons who beneficially own
more than 10% of Vascular Solutions' common stock to file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange
Commission. Such executive officers, directors and greater than 10% beneficial
owners are required by the regulations of the Commission to furnish Vascular
Solutions with copies of all Section 16(a) reports they file.
Based solely on a review of the copies of such reports furnished to
Vascular Solutions and written representations from the executive officers and
directors, Vascular Solutions believes that all Section 16(a) filing
requirements applicable to its executive officers and directors and greater than
10% beneficial owners have been timely met.
-12-
SHAREHOLDER RETURN PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total returns for
our common stock, the Nasdaq Stock Market Index (U.S.) and the Nasdaq Medical
Industry Index (Medical Devices, Instruments and Supplies), assuming the
investment of $100 in our common stock and each index on July 20, 2000 (the date
our common stock began trading) and the reinvestment of dividends, if any.
[PLOT POINTS GRAPH]
July 20, 2000 December 29, 2000 December 31, 2001
- --------------------------------------------------------------------------------
Vascular Solutions $100 $61.46 $23.25
Nasdaq US 100 58.57 46.44
Nasdaq Medical 100 84.28 92.16
-13-
PROPOSAL 2:
RATIFICATION OF APPOINTMENT OF AUDITOR
Our Board of Directors has appointed Ernst & Young LLP as Vascular
Solutions' independent auditor for 2002. A proposal to ratify that appointment
will be presented at the annual meeting of shareholders. Ernst & Young has
served as our independent auditor since our inception. Representatives of Ernst
& Young are expected to be present at the annual meeting of shareholders and
will have an opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions from shareholders.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL
TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS VASCULAR SOLUTIONS'
INDEPENDENT AUDITOR.
The affirmative vote of a majority of the shares of Vascular Solutions
common stock present and entitled to vote at the 2002 annual meeting of
shareholders is necessary to ratify the appointment of Ernst & Young LLP.
Proxies will be voted in favor of ratifying the appointment unless otherwise
specified. If the appointment is not ratified by the shareholders, the Board of
Directors is not obligated to appoint another auditor, but the Board of
Directors will give consideration to an unfavorable vote.
ADDITONAL INFORMATION ABOUT OUR INDEPENDENT AUDITOR
AUDIT FEES
Audit fees billed or expected to be billed to Vascular Solutions by
Ernst & Young LLP for the audit of our financial statements for the fiscal year
ended December 31, 2001 and for reviews of our financial statements included in
our quarterly reports on Form 10-Q for the last fiscal year totaled $43,530.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
No fees were billed or are expected to be billed to Vascular Solutions
by Ernst & Young LLP for services provided during the last fiscal year for the
design and implementation of financial information systems.
ALL OTHER FEES
Fees billed or expected to be billed to Vascular Solutions by Ernst &
Young LLP for all other non-audit services, including tax-related services,
provided during the last fiscal year totaled $35,500.
OTHER MATTERS
As of this date, the Board of Directors does not know of any business
to be brought before the annual meeting of shareholders other than as specified
above. However, if any matters properly come before the meeting, it is the
intention of the persons named in the enclosed proxy to vote such proxy in
accordance with their judgment on such matters.
-14-
PROPOSALS FOR THE NEXT ANNUAL MEETING
Any shareholder proposals to be considered for inclusion in Vascular
Solutions' proxy material for the 2003 annual meeting of shareholders must be
received at Vascular Solutions' principal executive office at 2495 Xenium Lane
North, Minneapolis, Minnesota 55441, no later than November 26, 2002. In
connection with any matter to be proposed by a shareholder at the 2003 annual
meeting, but not proposed for inclusion in Vascular Solutions' proxy material,
the proxy holders designated by Vascular Solutions for that meeting may exercise
their discretionary voting authority with respect to that shareholder proposal
if appropriate notice of that proposal is not received by Vascular Solutions at
its principal executive office by February 9, 2003.
By order of the Board of Directors
/s/ Michael Nagel
Michael Nagel
Secretary
Dated: March 26, 2002
-15-
VASCULAR SOLUTIONS, INC.
ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, APRIL 16, 2002
3:30 P.M.
MINNEAPOLIS CLUB
729 SECOND AVENUE SOUTH
MINNEAPOLIS, MN 55402
VASCULAR SOLUTIONS, INC.
2495 XENIUM LANE NORTH, MINNEAPOLIS, MN 55441 PROXY
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING
ON APRIL 16, 2002.
The shares of stock you hold will be voted as you specify on the reverse side.
IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED "FOR" ITEMS 1 AND 2.
By signing the proxy, you revoke all prior proxies and appoint Howard Root and
Michael Nagel, and each of them, with full power of substitution, to vote your
shares on the matters shown on the reverse side and any other matters which may
come before the Annual Meeting and all adjournments.
SEE REVERSE FOR VOTING INSTRUCTIONS.
[ARROW] PLEASE DETACH HERE [ARROW]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
1. Election of directors: 01 Paul O'Connell 03 Michael Kopp 05 Richard Nigon [ ] Vote FOR [ ] Vote WITHHELD
02 James Jacoby, Jr. 04 Gerard Langeler 06 Howard Root all nominees from all nominees
(except as marked)
___________________________________________
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE, | |
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) |___________________________________________|
2. Proposal to ratify the selection of Ernst and Young LLP as independent
auditor of the Company for the year ending December 31, 2002. [ ] For [ ] Against [ ] Abstain
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
Address Change? Mark Box [ ]
Indicate changes below: Date ___________________________________
___________________________________________
| |
| |
|___________________________________________|
Signature(s) in Box
Please sign exactly as your name(s) appears
on Proxy. If held in joint tenancy, all
persons must sign. Trustees, administrators,
etc., should include title and authority.
Corporations should provide full name of
corporation and title of authorized officer
signing the proxy.