SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
ROCHESTER MEDICAL CORPORATION
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Items 22(a)(2) of Schedule A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
ROCHESTER MEDICAL CORPORATION
1500 SECOND AVENUE NORTH WEST
STEWARTVILLE, MINNESOTA 55976
TELEPHONE (507) 533-4203
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 16, 1997
The Annual Meeting of Shareholders of Rochester Medical Corporation (the
"Company") will be held Thursday, January 16, 1997, at 3:30 o'clock p.m.
(Central Standard Time) in the Ball Room East, Radisson Plaza Hotel, 35 South
Seventh Street, Minneapolis, Minnesota 55402 to consider and take action upon
the following matters:
1. To elect six directors to serve until the next Annual Meeting of
Shareholders.
2. To ratify the amendment to the Company's 1991 Stock Option Plan
increasing to 700,000 the number of shares reserved for issuance
thereunder.
3. To consider and vote upon a proposal to ratify the selection of
Ernst & Young LLP as independent public accountants of the Company
for the fiscal year ending September 30, 1997.
4. To act upon any other business that may properly come before the
meeting and any adjournment thereof.
The Board of Directors has fixed the close of business on December 2, 1996, as
the record date for the determination of the shareholders entitled to vote at
the meeting or any adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Anthony J. Conway
Anthony J. Conway,
PRESIDENT AND SECRETARY
Dated: December 19, 1996
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. HOWEVER, WHETHER OR NOT YOU
PLAN TO BE PERSONALLY PRESENT AT THE MEETING, PLEASE MARK, DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. IF YOU LATER
DESIRE TO REVOKE YOUR PROXY, YOU MAY DO SO AT ANY TIME BEFORE IT IS EXERCISED.
ROCHESTER MEDICAL CORPORATION
1500 SECOND AVENUE NORTH WEST
STEWARTVILLE, MINNESOTA 55976
TELEPHONE (507) 533-4203
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
JANUARY 16, 1997
SOLICITATION AND REVOCABILITY OF PROXY
This Proxy Statement is furnished to the shareholders of Rochester Medical
Corporation (the "Company"), in connection with the solicitation by the
Company's Board of Directors of the enclosed proxy for use at the 1997 Annual
Meeting of Shareholders of the Company to be held on January 16, 1997, at 3:30
o'clock p.m. (Central Standard Time) in the Ball Room East of the Radisson Plaza
Hotel, 35 South Seventh Street, Minneapolis, Minnesota 55402, or at any
adjournment(s) thereof (the "1997 Annual Meeting") for the purposes set forth in
the Notice of Annual Meeting of Shareholders. The persons named as proxies in
the enclosed form of proxy will vote the Common Stock according with
instructions given therein or, if no instruction is given, then according to
their judgment. A person giving a proxy may revoke it before it is exercised by
delivering to the Secretary of the Company a written notice terminating the
proxy's authority or by duly executing a proxy bearing a later date. A
shareholder who attends the meeting need not revoke his or her proxy and vote in
person unless he or she wishes to do so.
The Company will pay expenses for solicitation of proxies. Proxies are being
solicited primarily by mail, but, in addition, directors, officers and regular
employees of the Company may solicit proxies personally, by telephone or by
special letter.
So far as the management of the Company is aware, only matters described in this
Proxy Statement will be acted upon at the meeting. If another matter requiring a
vote of shareholders properly comes before the meeting, the persons named as
proxies in the enclosed proxy form will vote on such matter according to their
judgment.
A copy of the Company's Annual Report on Form 10-KSB, including financial
statements, for the fiscal year ended September 30, 1996, is being furnished to
each shareholder with this Proxy Statement.
The principal executive offices of the Company are located at 1500 Second Avenue
North West, Stewartville, Minnesota 55976. The approximate mailing date of this
Proxy Statement and the accompanying form of proxy is December 19, 1996.
RECORD DATE AND VOTING OF SECURITIES
The Common Stock of the Company without par value is the only authorized voting
security of the Company. Only holders of the Company's Common Stock whose names
appear of record on the Company's books on December 2, 1996, are entitled to
receive notice of, and to vote at, the 1997 Annual Meeting. At the close of
business on December 2, 1996, a total of 4,128,500 shares of Common Stock were
outstanding, each entitled to one vote. Holders of Common Stock do not have
cumulative voting rights.
PROPOSAL 1: ELECTION OF DIRECTORS
NOMINEES
The Company's By-Laws provide that the Shareholders or the Board of Directors
may set the number of directors to constitute the Company's Board of Directors.
The Board of Directors has determined to set the number of directors at six.
Each director is elected at the Annual Meeting of Shareholders to hold office
until the Annual Meeting of Shareholders next held after his or her election.
It is intended that the persons named as proxies in the enclosed form of proxy
will vote the proxies received by them for the election as directors of the
nominees named in the table below except as specifically directed otherwise.
Each nominee has indicated a willingness to serve, but in case any nominee is
not a candidate at the meeting, for reasons not now known to the Company, the
proxies named in the enclosed form of proxy may vote for a substitute nominee in
their discretion. Information regarding these nominees is set forth in the table
below.
DIRECTOR
NAME AGE SINCE POSITION
Anthony J. Conway 52 1988 Chairman of the Board, Chief
Executive Officer, President,
Secretary and Treasurer
Philip J. Conway 40 1988 Director, Vice President, Operations
Richard D. Fryar 49 1988 Director, Vice President, Research
and Development
Darnell L. Boehm 48 1995 Director
Peter R. Conway 42 1988 Director
Roger W. Schnobrich 66 1995 Director
ANTHONY J. CONWAY, a founder of the Company, has served as Chairman of the
Board, Chief Executive Officer, President, Secretary and Treasurer of the
Company since May 1988. In addition to his duties as Chief Executive Officer,
Mr. Anthony Conway actively contributes to the Company's research and
development and design activities. From 1979 to March 1988, he was President,
Secretary and Treasurer of Arcon Corporation ("Arcon"), a company that he
co-founded in 1979 to develop, manufacture and sell latex-based male external
catheters and related medical devices. Prior to founding Arcon, Mr. Anthony
Conway worked for twelve years for International Business Machines Corporation
("IBM") in various research and development capacities. Mr. Anthony Conway is
one of the named inventors on numerous patent applications that have been
assigned to the Company, of which to date 11 have resulted in issued United
States patents.
PHILIP J. CONWAY, a founder of the Company has served as Director and as Vice
President of Operations of the Company since May 1988. Mr. Philip Conway is
responsible for overseeing plant design and operation, and is also active in the
Company's research and development and design activities. From 1979 to March
1988, Mr. Philip Conway served as Plant and Production Manager of Arcon, a
company that he co-founded. Prior to joining Arcon, Mr. Philip Conway was
employed in a production supervisory capacity by AFC Corp., a manufacturer and
fabricator of fiberglass, plastics and other composite materials. He is one of
the named inventors on numerous patent applications that have been assigned to
the Company, of which to date 11 have resulted in issued United States patents.
RICHARD D. FRYAR, a founder of the Company, has served as a Director and as Vice
President of Research and Development of the Company since May 1988. Mr. Fryar
is responsible for overseeing the Company's research and development and
regulatory affairs activities. From 1984 to March 1988, Mr. Fryar was employed
by Arcon, a company that he co-founded, in research and development capacities.
From 1969 to 1984, he was employed by IBM in various research and development
capacities. He is one of the named inventors on numerous patent applications
that have been assigned to the Company, of which to date have resulted in issued
United States patents.
DARNELL L. BOEHM has served as a Director of the Company since October 1995.
Since 1986, Mr. Boehm has served as a Director and the Chief Financial Officer
and Secretary of Aetrium, Inc., a manufacturer of electromechanical equipment
for handling and testing semiconductor devices. From October 1988 to March 1993,
Mr. Boehm served as the Acting President of Genesis Labs, Inc., a manufacturer
of medical diagnostic products. He is also the principal of Darnell L. Boehm &
Associates, a management consulting firm.
PETER R. CONWAY has served as a Director of the Company since May 1988. He is a
Director and the Chairman and Chief Executive Officer of Halcon Corporation, a
manufacturer of quality custom office furniture of which he was a co-founder in
1978. From 1979 to 1985 Mr. Peter Conway served as a director of Arcon.
ROGER W. SCHNOBRICH has served as a Director of the Company since October
1995. Mr. Schnobrich is a senior attorney with the Minneapolis, Minnesota,
law firm of Popham, Haik, Schnobrich & Kaufman, Ltd. Mr. Schnobrich serves as
a director of Developed Technology Resource Inc., a company that invests in
business, technology and infrastructure in the former Soviet Union.
Messrs. Anthony J. Conway, Philip J. Conway and Peter R. Conway are brothers.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE NOMINEES
NAMED ABOVE AS DIRECTORS OF THE COMPANY FOR THE ENSUING YEAR.
BOARD MEETINGS
During the fiscal year ended September 30, 1996, the Board of Directors met on 5
occasions and adopted resolutions by unanimous written consent on 14 additional
occasions.
COMMITTEES
The Board of Directors established a Compensation Committee and an Audit
Committee. The Audit Committee has oversight over the process of auditing the
Company's internally prepared financial statements, and is charged with
reviewing any potential conflicts of interest. The Compensation Committee has
power and authority to recommend compensation for the Company's executive
officers. Messrs. Boehm and Schnobrich are members of each committee. Mr.
Anthony J. Conway also serves ex officio as a member of each committee. The
Compensation Committee met once during the fiscal year ended September 30, 1996.
The Audit Committee met once in November 1996 with regard to the Company's 1996
fiscal year.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
No director of the Company attended fewer than 75% of all board and committee
meetings.
NOMINATING PROCEDURES
Candidates for election to the Board of Directors of the Company are chosen by
the existing Board after taking into consideration the recommendations of the
Company's executive officers, the Company's investment bankers and the Company's
shareholders.
Shareholders wishing to submit recommendations for nomination should send them
in writing to the attention of the Company's Chairman at the Company's principal
executive office within sixty days after the end of the Company's fiscal year.
COMPENSATION OF DIRECTORS.
No director who is also an employee of the Company receives any separate
compensation for services as a director.
Non-employee directors currently receive reimbursement of out-of-pocket expenses
incurred with respect to their duties as board or committee members.
Non-employee directors also each receive an automatic grant of options to
purchase 1,000 shares of the Company's common stock under the Company's 1991
Stock Option Plan (the "1991 Stock Option Plan"). Under the 1991 Stock Option
Plan, each director who is elected or reelected and who is not an employee of
the Company is entitled to an Automatic Grant of a non-qualified option for
1,000 shares of Common Stock ("Automatic Grant"). Each Automatic Grant has the
following terms: (1) the exercise price is equal to the fair market value (as
defined in the 1991 Stock Option Plan) of the Common Stock on the date of grant;
(2) the exercise price is payable upon exercise in cash or in Common Stock held
at least six months, (3) the term of the option is 7 years, (4) the option is
immediately exercisable and (5) the option expires if not exercised within
twelve months (i) after the optionee ceases to serve as a Director or (ii)
following the optionee's death.
Messrs. Darnell Boehm, Roger W. Schnobrich and Peter R. Conway are the only
non-employee Directors of the Company and therefore the only Directors eligible
to receive the compensation described above. Messrs. Boehm and Schnobrich were
initially elected to the board in October 1995, and each then received an
initial stock grant of 500 shares having a fair market value of $16.00 per
share. In February 1996, Messrs. Boehm, Peter Conway and Schnobrich each were
also granted an option to purchase 20,000 shares of the Company's Common Stock
at the exercise price of $13.00 per share. Each such option vests and becomes
exercisable in an initial increment of 5,000 shares on March 31, 1996, and
thereafter in incremental amounts of 1,250 shares at the end of each succeeding
calendar quarter during which the Optionee continues to be a director of the
Company, commencing with the vesting date of June 30, 1996, until fully vested
and exercisable on March 31, 1999. Each such option is exercisable for such
vested increments at any time, or from time to time, until the earliest of (i)
twelve months after the director ceases to be a director whether by resignation
or failure to be re-elected as a director of the Company, (ii) 12 months after
his death or (iii) 5:00 o'clock p.m. CST on September 30, 2006.
EXECUTIVE OFFICERS
In addition to its executive officers who are also directors of the Company, the
Company employs the following executive officers:
NAME AGE POSITION
Alfred T. Mannino 47 Senior Vice President
Martyn R. Sholtis 37 Vice President, Sales and Marketing
Brian J. Wierzbinski 38 Chief Financial Officer
ALFRED T. MANNINO has served as the Company's Senior Vice President since
August, 1996, and previously as its Executive Vice President from November 1994.
Mr. Mannino is generally responsible for strategic market planning for the
Company's FEMSOFT(TM) female continence insert. From 1991 to 1994 he served as
Vice President of Sales and Marketing of Dacomed Corporation, a company that
produces and sells incontinence and impotence devices and diagnostic equipment.
Mr. Mannino has over 26 years of experience in sales and marketing management of
incontinence related products.
MARTYN R. SHOLTIS has served as Vice President, Sales and Marketing of the
Company since April 1992. Mr. Sholtis' responsibilities include the sales and
marketing of ROCHESTER MEDICAL(R) brand products in international markets and
the management of the Company's private label relationships, including its
strategic alliance with ConvaTec. From 1985 to April 1992 Mr. Sholtis was
employed by Sherwood Medical, a company that manufactures and sells Foley
catheters and a variety of other urologic and hospital-based medical products,
most recently as Regional Sales Manager for the Nursing Care Division, with
responsibility for twelve states in the midwest region.
BRIAN J. WIERZBINSKI has served as the Company's Chief Financial Officer since
February 1996, with principal responsibility for management of the Company's
financial and administrative affairs. From 1986 until joining the Company in
1996, Mr. Wierzbinski was employed in various financial and financial management
capacities by Ecolab, Inc., most recently as Asia Pacific Vice President,
planning and control. Prior to joining Ecolab, Mr. Wierzbinski was employed for
six years in various audit and audit management capacities by KPMG Peat Marwick.
Mr. Wierzbinski is a certified public accountant and holds a BA degree in
accounting and business administration from St. Johns University, Collegeville,
Minnesota.
The Company's executive officers are employed pursuant to annually renewing
employment agreements which continue until terminated by either the Company or
the employee. Under each respective agreement, employment continues unless
terminated by the employee or by the Company. Each such agreement contains
confidentiality and assignment of invention provisions benefiting the Company,
and the employment agreements with Messrs. Conways and Fryar also contain
non-competition provisions benefiting the Company. Excepting the provision of
certain life and disability insurance benefits to Mr. Sholtis, the Company has
no separate retirement, pension, profit sharing, or insurance plans for its
officers. The Company may in the future adopt such plans and may also adopt a
compensation plan substantially increasing officers' salaries based upon
performance of the Company.
SIGNIFICANT EMPLOYEES
The Company's significant employees who are not executive officers are as
follows:
James T. Grebin, age 31, has served as the Company's Production Manager since
1991. He holds a bachelor of technology degree from the University of Northern
Iowa.
Robert Anglin, age 29, has served as the Company's quality manager since
1991. Mr. Anglin holds a bachelor of science degree in production/operations
management from Winona State University, and a CPIM certification from the
American Production and Inventory Control Society.
Stephan P. Christopher, age 42, has served as the Company's Controller since
September 1995. Prior to joining the Company, he was employed for one year by
Winona Mechanical Inc., as Controller, and for eight prior years by EMD
Associates in various accounting capacities, most recently as Accounting
Supervisor. Mr. Christopher holds a bachelor of arts degree in accounting from
Winona State University.
Mary Wilen, age 48, has served as the Company's Director of Clinical and
Regulatory Affairs since February 1996. Prior to joining the Company, she was
employed in a similar capacity by Urohealth Systems (formerly Dacomed
Corporation) for ten years. Ms. Wilen is a licensed practical nurse, and has
held research positions with the Little Rock Arkansas Veterans Administration
and the University of Arkansas for Medical Sciences, and has co-authored
numerous research publications.
Horst Oeckinghaus, age 68, has served a the Company's Vice President of
International Sales since March 1996. Mr. Oeckinghaus is responsible for
establishing and overseeing the Company's foreign distributor's of Rochester
Medical branded products. From October 1994 through March 1996, Mr. Oeckinghaus
was the owner and principal officer of International Marketing Company which
served as an independent marketing and sales consultant for overseas sales of
technical products, including service to the Company. From 1989 through October
1994, Mr. Oeckinghaus was employed as Vice President International by Osborn
Medical Systems. Mr. Oeckinghaus has over 35 years experience in international
sales. He is a member of the Society of Plastic Engineers and of the American
Society of Tool and Manufacturing Engineers, and he holds a masters of business
administration equivalent degree from the Universities of Bonn and Hamburg.
James Carper, age 45, has served as the Company's Director of Marketing since
August 1995 and, previously, as a regional sales manager from June 1994 to
August 1995. Prior to joining the Company, Mr. Carper was employed for 15 years
in various sales and sales management capacities by Sherwood Medical, most
recently as Marketing Manager for Urology Products. Mr. Carper holds a bachelor
of science degree from Miami University.
David Oates, age 36, has served as the Company's National Sales Manager since
September 1996. Prior to joining the Company, Mr. Oates was National Sales
Manager for four years for Laser Scope, a medical device manufacturer. For five
years previous to his employment by Laser Scope, he was a Regional Sales Manager
for Mentor Corporation. Mr. Oates holds a bachelor of science degree in
marketing from California State University, Fresno, and advanced management
certificates from the University of Michigan and the University of California,
Berkeley.
MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The following
table sets forth, as of December 2, 1996, certain information with respect to
the beneficial ownership of the Common Stock of the Company by (i) each person
who, to the knowledge of the Company, owned beneficially more than five percent
of such stock, (ii) each director, (iii) each executive officer named in the
"Summary Compensation Table" below and (iv) all directors and executive officers
as a group. Unless otherwise noted, shares are subject to the sole voting and
investment power of the indicated person.
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP(1) CLASS
Anthony J. Conway(2)(3)(4) 423,195 10.25%
Philip J. Conway(2)(3)(5) 241,200 5.84%
Richard D. Fryar(2)(6) 183,800 4.45%
Darnell L. Boehm(7) 16,900 *
Peter R. Conway(3)(8) 87,200 2.10%
Roger W. Schnobrich(9) 23,500 *
Alfred T. Mannino(2)(10) 44,000 1.06%
Martyn R. Sholtis(2)(11) 32,050 *
Brian J. Wierzbinski(2) 1,000 *
Invesco PLC(12) 250,000 6.06%
All Officers and Directors
as a group (9 persons) 1,052,845 24.86%
* Less than 1%
(1) Beneficial ownership is determined in accordance with rules of the
Securities and Exchange Commission, and includes general voting power
and/or investment power with respect to securities. Shares of Common Stock
subject to options or warrants currently exercisable or exercisable within
60 days of December 2, 1996, are deemed to be outstanding for the purpose
of computing the percentage of the person holding such options or
warrants, but are not deemed outstanding for computing the percentage of
any other person.
(2) The address of each executive officer of the Company is 1500 Second Avenue
N.W., Stewartville, Minnesota 55976.
(3) Messrs. Anthony J. Conway, Peter R. Conway and Philip J. Conway are
brothers.
(4) Includes 45 shares held for the benefit of Mr. Anthony J. Conway's minor
child.
(5) Includes 1,000 shares held in an IRA for the benefit of Mr. Philip J.
Conway, and 1,000 shares held in an IRA for the benefit of his wife, as to
which he disclaims beneficial ownership.
(6) Includes 4,000 shares held for the benefit of M. Fryar's minor child, and
5,000 shares held of record by his wife, as to which he disclaims
beneficial ownership.
(7) Includes 900 shares held for the benefit of a minor child. Includes also
11,000 currently exercisable options at prices ranging from $13.00 to
$14.75 per share. Mr. Boehm's address is 19330 Bardsley Place, Monument,
Colorado 80132.
(8) Includes 15,000 currently exercisable options at prices ranging from $8.25
to $14.75 per share. Mr. Peter R. Conway's address is 501 Old Territorial
Road, Chatfield, Minnesota 55923.
(9) Includes 12,000 shares held in the Popham, Haik, Schnobrich and Kaufman,
Ltd., Retirement Plan for the benefit of Mr. Schnobrich. Includes also
11,000 currently exercisable options at prices ranging from $13.00 to
$14.75 per share. Mr. Schnobrich's address is 3300 Piper Jaffray Tower,
Minneapolis, Minnesota 55402.
(10) Includes 40,000 currently exercisable options at a price of $8.25 per
share.
(11) Includes 30,000 currently exercisable options at $6.75 per share.
(12) The address of Invesco PLC is 11 Devonshire Square, London EC2M 4YR,
England.
EXECUTIVE COMPENSATION
The Board of Directors determines the level of compensation paid to the
Company's executive officers. 1996 compensation for Messrs. Conways and Fryar
was established upon recommendation of the Compensation Committee based upon the
1993 Ernst & Young "Middle Market Survey" of 750 companies showing the average
executive compensation paid by companies having annual sales ranging from $2
million to $5 million. All compensation paid by the Company for services
rendered during the fiscal years ended September 30, 1994, 1995 and 1996 for
each executive officer is set forth in the following table:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
FISCAL OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY COMPENSATION COMPENSATION
Anthony J. Conway 1996 $ 90,700 -- --
Chief Executive Officer 1995 55,000 -- --
and President 1994 53,000 -- --
Philip J. Conway 1996 $ 79,700 -- --
Vice President of 1995 67,500 -- --
Operations 1994 64,200 -- --
Richard D. Fryar 1996 $ 79,700 -- --
Vice President of Research 1995 67,500 -- --
and Development 1994 64,200 -- --
Alfred T. Mannino 1996 $ 125,100 -- --
Senior Vice President 1995 105,000 $86,500(1)
1994 -- --
Martyn R. Sholtis 1996 $ 124,400 3,942(2)
Vice President of Sales 1995 126,500 7,602(2) --
and Marketing 1994 106,964 7,642(2) --
Brian J. Wierzbinski 1996 $63,500(3) 57,300(4) --
Chief Financial Officer 1995 -- -- --
1994 -- -- --
(1) Includes stock grant of 4,000 shares of Common Stock valued at $35,000 and
relocation benefits of $51,500.
(2) Includes automobile and insurance benefits.
(3) Mr. Wierzbinski joined the Company in February, 1996. His salary is
presently $100,000 per year.
(4) Includes relocation benefits.
OPTIONS/SAR GRANTS DURING LAST FISCAL YEAR
Stock options granted to the Company's executive officers during the fiscal year
ended September 30, 1996, are shown in the following table of Option Grants. The
Company has never awarded any Stock Appreciation Rights.
OPTION GRANTS
POTENTIAL
REALIZABLE
INDIVIDUAL GRANTEE VALUE AT
PERCENT OF TOTAL ASSUMED ANNUAL
OPTIONS GRANTED RATES OF STOCK
OPTIONS TO EXERCISE PRICE APPRECIATION
GRANTED EMPLOYEES PRICE EXPIRATION FOR OPTION TERM(1)
NAME (#) IN FISCAL YEAR ($/SH)(2) DATE 5% 10%
Martyn R. Sholtis 15,000(3) 8.43% $14.75 12/31/05 $ 360,400 $ 573,900
Brian J. Wierzbinski 80,000(4) 44.94% $14.375 6/30/06 $1,873,200 $2,982,800
(1) Potential realizable value is based on an assumption that the market price
of the stock appreciates at the stated rate, compounded annually, from the
date of grant until the end of the ten year option term. These values are
calculated based on regulations promulgated by the Securities and Exchange
Commission and do not reflect the Company's estimate of future stock price
appreciation. There is no assurance that the actual stock price
appreciation over the ten year option term will be at the assumed 5% or
10% levels, or at any other defined level.
(2) The exercise price of each option is equal to the market value of the
Common Stock on the date of grant. The exercise price is payable in cash,
or, at the discretion of the Stock Option Committee, in Common Stock of
the Company already owned by the optionee or by promissory note acceptable
to the Company.
(3) The option becomes exercisable for the option shares in three equal and
successive annual installments, commencing March 28, 1997, over optionee's
term of service. The option is subject to earlier termination in the event
of optionee's cessation of service with the Company.
(4) The option becomes exercisable for the option shares in four equal and
successive annual installments over optionee's term of service, subject to
partial earlier vesting in the event of an acquisition or change of
control prior to February 20, 1997. The option is subject to earlier
termination in the event of the optionee's cessation of service with the
Company.
OPTIONS EXERCISED DURING FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
(Fiscal year ended September 30, 1996)
The value of unexercised stock options held by the Company's executive officers
at fiscal year end is set forth in the following table. No stock options were
exercised by any of the Company's executive officers during the past fiscal
year.
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES VALUE SEPTEMBER 30, 1996 SEPTEMBER 30, 1996(1)
ACQUIRED REALIZED
NAME AND PRINCIPAL POSITION ON EXERCISE $(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
Alfred T. Mannino 0 0 40,000 60,000(3) $335,000 $502,500
Senior Vice
President
Martyn R. Sholtis 0 0 30,000 35,000(4) $296,250 $225,625
Vice President
Sales & Marketing
Brian J. Wierzbinski 0 0 0 80,000(5) $ -- $180,000
Chief Financial Officer
(1) An in-the-money option is an option which has an exercise price for the
Common Stock which is lower than the fair market value of the Common Stock
on a specified date. The fair market value of the Company's Common Stock
at September 30, 1996 was $16.625 per share.
(2) Value realized is based on the fair market value of the Company's Common
Stock on the date of exercise minus the exercise price and does not
necessarily indicate that the optionee sold such stock.
(3) Granted September 29, 1994, under the Company's 1991 Stock Option Plan;
exercisable at $8.25 per share.
(4) 50,000 granted June 20, 1994, under the Company's 1991 Stock Option Plan;
exercisable at $6.75 per share. 15,000 granted March 28, 1996 under the
Company's 1991 Stock Option Plan; exercisable at 14.75 per share.
(5) Granted February 1, 1996, under the Company's 1991 Stock Option Plan;
exercisable at $14.375 per share.
LONG TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
The Company made no grants of long term incentive compensation during the fiscal
year ended September 30, 1996.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The following of the Company's Officers and Directors each filed a Form 5 in
October 1996, reporting receipt of options granted by the Company during the
fiscal year ended September 30, 1996: Martyn R. Sholtis, Brian J.
Wierzbinski, Peter R. Conway, Darnell L. Boehm and Roger W. Schnobrich. See
"Compensation of Directors" and "Option/SAR Grants During The Past Fiscal
Year."
MEDICAL ADVISORY BOARD
The Company has established a Medical Advisory Board comprised of individuals
with expertise in fields relevant to the Company. Members of the Company's
management and scientific and technical staff consult from time to time with
members of the Medical Advisory Board. The current members of the Medical
Advisory Board are:
TAMARA G. BAVENDAM, M.D., is an Associate Professor of Urology and director
of the Female Urology Clinic at the University of Washington in Seattle,
Washington. Dr. Bavendam is also a member of the Board of Directors of Help
for Incontinent People, Inc., and the President and a member of Board of
Directors of Women in Urology.
DIANE KASCHAK NEWMAN, R.N.C., M.S.N., is an adult nurse practitioner who has ten
years of experience with the assessment and management of urinary incontinence.
Ms. Newman is the founder and President of DKN & Associates, Inc., Chief
Executive Officer and President of Access to Continence Care & Treatment, Inc.,
and a founder and owner of Golden Horizons, Inc., all three of which are
companies devoted to various aspects of the assessment and management of urinary
incontinence. Ms. Newman is Co-chairperson of the Clinical Practice Guideline of
"Urinary Incontinence in the Adult" of the Agency for Health Care Policy and
Research at the US Department of Health and Human Services. Ms. Newman is also
the Executive Director of the Institute for Health Promotion and Research.
CERTAIN TRANSACTIONS
In connection with his employment by the Company, the Company loaned to Mr.
Alfred T. Mannino in 1994 without interest the amount of $226,000 to permit Mr.
Mannino to purchase a new home located in the Rochester, Minnesota. The loan was
repaid in full during the fiscal year ended September 30, 1996.
George H. Frisch, the Company's corporate legal counsel and a shareholder of the
Company, is the brother-in-law of Anthony J. Conway, Philip J. Conway and Peter
R. Conway, two of whom are officers and all of whom are directors of the
Company. During the fiscal year ended September 30, 1996, the Company paid to
such counsel as fees and expenses approximately $82,800 for general legal
services. Management believes the fees paid for the services rendered to the
Company were on terms at least as favorable to the Company as could have been
obtained from an unrelated party in an arm's length transaction.
During the fiscal year ended September 30, 1996, the Company paid Halcon
Corporation the sum of $86,000 as partial payment of a contract in amount of
$258,000 for the purchase of office furniture for the Company's new office and
manufacturing facility. Halcon Corporation, a manufacturer of office furniture,
is owned and managed by Peter R. Conway, who is a director of the Company and
the brother of Anthony J. Conway and Philip J. Conway, who are each directors
and principal officers of the Company. Management believes the amount paid and
the terms of the agreement for the purchase of office furniture are at least as
favorable to the Company as could have been obtained from an unrelated party in
an arm's length transaction.
PROPOSAL 2: RATIFICATION OF AMENDMENT
TO 1991 STOCK OPTION PLAN
The purpose of the 1991 Stock Option Plan ("1991 Plan") is to advance the
interests of the Company and its shareholders by enabling the Company to attract
and retain persons of ability to perform services for the Company by providing
an incentive to such individuals though equity participation in the Company and
by awarding such individuals who contribute to the achievement by the Company of
its economic objectives.
The 1991 Plan was originally adopted by the Board of Directors of the Company
("Board") on April 21, 1991; amended by them on September 23, 1991; and ratified
as amended by the Company's shareholders on January 30, 1992. The 1991 Plan was
later amended by the Board on October 26, 1994 to increase the number of shares
authorized for issuance thereunder to 300,000 shares, and the amendment was
ratified by the Corporation's shareholders on February 2, 1995.
The 1991 Plan allows eligible employs of the Company to be granted one or more
of the following (i) options to purchase Common Stock that qualify as "incentive
stock options" ("Incentive Options"), within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") and (ii) options to
purchase Common Stock that do not qualify as Incentive Options ("Non-Statutory
Options"). Directors of the Company who are not full time employees of the
Company each receive an automatic grant of a Non-Statutory Option to purchase
1,000 shares of Common Stock upon annual election or reelection by shareholders.
Incentive Options and Non-Statutory Options subject to automatic grant must be
granted at 100% of fair market value at the date of grant. Incentive Options and
Non-Statutory Options are collectively referred to herein as "Options". No
option may be issued under the Plan to any person who, upon exercise of such
option, would own stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation. No more than
700,000 shares of Common Stock may be cumulatively available for issuance under
the 1991 Plan.
The Board may suspend or terminate the 1991 Plan or any portion thereof at any
time. The Board may also amend the 1991 Plan at any time, but such action may
not, without the consent of the affected participants, adversely affect the
rights or obligations of the participants under outstanding Options. The Board
may increase the number of shares of Common Stock that will be available for
issuance under the 1991 Plan, subject to shareholder approval. No amendment or
modification of the 1991 Plan, without approval of the shareholders of the
Company, will be effective if shareholder approval of the amendment is then
required pursuant to Rule 16b(3) under the Exchange Act or any successor rule,
Section 422 of the Code, or the rules of the National Association of Securities
Dealers, Inc. Unless terminated earlier, the 1991 Plan will terminate at
midnight on April 20, 2001. Options outstanding at the time the 1991 Plan is
terminated will continue to be exercisable in accordance with their respective
terms.
The 1991 Plan was further amended by the Board on February 1, 1996, to increase
the number of shares authorized for issuance thereunder to 700,000 shares. The
amendment of February 1, 1996, is expressly subject to the ratification by
shareholders at the 1997 Annual Meeting. If shareholders do not ratify the
amendment at the 1997 Annual Meeting, all options granted thereunder in excess
of 300,000 shares become null and void.
A total of 157,500 options in excess of 300,000 have been issued pursuant to the
1991 Plan since the amendment by the Board in February 1996. These options have
been granted principally in connection with the initial or continuing employment
of financial and marketing officers and significant sales and regulatory affairs
employees.
Should shareholders fail to ratify the amendment to the 1991 Plan, the Company
would likely be required to compensate the employees for the loss of the options
granted under the 1991 Plan in excess of 300,000 in order to retain the
continuation of their services, and the Company would likely be severely
constrained in its ability to attract and retain other employees necessary for
the Company's continuing growth.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR RATIFICATION OF THE
AMENDMENT TO THE 1991 PLAN.
PROPOSAL 3: RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of Ernst & Young LLP to act as
principal independent accountants for the Company for the fiscal year ending
September 30, 1997. This appointment will be submitted to the Company's
shareholders for ratification. This firm has audited the financial statements of
the Company for the fiscal year ended September 30, 1996, and for prior years,
and has advised the Company that neither the firm nor any of its partners has
any direct or indirect material financial interests in the Company, nor have
they had any connection during the past three years with the Company, in any
capacity other than that of independent accountants and auditors. Ernst & Young
LLP will have representatives at the 1997 Annual Meeting who will have an
opportunity to make a statement and will be available to respond to appropriate
questions.
In the event the shareholders do not ratify the appointment of Ernst & Young
LLP, the selection of other independent auditors will be considered by the Board
of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP.
ADDITIONAL INFORMATION
All shareholder proposals intended to be included in the proxy materials for
consideration at the 1998 Annual Meeting of Shareholders must be received by the
Company no later than August 20, 1997. The Company suggests that all such
proposals be sent to the Company by certified mail-return receipt requested.
A copy of the Company's Annual Report on Form 10-KSB for the fiscal year ended
September 30, 1996, as filed with the Securities and Exchange Commission is
furnished with this Proxy Statement. Copies of that Report are also available
without charge upon written request to Rochester Medical Corporation, 1500
Second Avenue NW, Stewartville, MN 55976, to the attention of Anthony J. Conway,
President.
Please mark, sign, date and return promptly the enclosed proxy provided. The
signing of a proxy will not prevent you from attending the meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Anthony J. Conway
Anthony J. Conway,
PRESIDENT
Dated: December 19, 1996
ROCHESTER MEDICAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE MANAGEMENT OF THE COMPANY
The undersigned, having duly received the Notice of Annual Meeting and Proxy
Statement dated December 19, 1996, hereby appoints Anthony J. Conway and
Philip J. Conway as Proxies (each with the power to act alone and with the
power of substitution and revocation) to represent the undersigned and to
vote, as designated below, all Common Shares of Rochester Medical Corporation
held of record by the undersigned on December 2, 1996, at the meeting of
shareholders to be held at the Radisson Plaza Hotel, 35 South Seventh Street,
Minneapolis, Minnesota on January 16, 1997, at 3:30 o'clock p.m. CST, and any
adjournment(s) thereof.
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary). to vote for all nominees listed below.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
DARNELL L. BOEHM ANTHONY J. CONWAY PETER R. CONWAY
PHILIP J. CONWAY RICHARD D. FRYAR ROGER W. SCHNOBRICH
2. PROPOSAL TO RATIFY AMENDMENT TO 1991 STOCK OPTION PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO APPROVE ERNST & YOUNG LLP AS INDEPENDENT AUDITORS OF THE
COMPANY FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon other business
of which the Board of Directors is presently unaware and which may properly come
before the meeting, and for the election of any person as a member of the Board
of Directors if a nominee named in the accompanying Proxy Statement is unable to
serve or for good cause will not serve. In their discretion, the Proxies are
authorized to vote upon such other business as may properly come before the
meeting.
(CONTINUED, AND TO BE SIGNED AND DATED, ON THE REVERSE SIDE)
(CONTINUED FROM THE OTHER SIDE)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY SHALL BE VOTED FOR
THE ELECTION OF ALL NOMINEES FOR DIRECTOR AND FOR THE ADOPTION OF PROPOSALS 2
AND 3.
PLEASE SIGN exactly as name
appears at the left. When
shares are held by joint
tenants, both should sign. If
signing as attorney, executor,
administrator or guardian,
please give full title as
such. If a corporation, please
sign in full corporate name by
president or other authorized
officer. If a partnership,
please sign in partnership
name by an authorized person.
______________________________
______________________________
DATED: _________________, 19__
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.