SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ____)
Filed by the Registrant [X]
Filed by Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss 240.14a-11(c) or ss 240.14a-12
---------------------------
AETRIUM INCORPORATED
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
---------------------------
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[X] No fee required.
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1 Title of each class of securities to which transaction applies:_______
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or the Form or Schedule and the date of its filing.
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PRELIMINARY PROXY STATEMENT
AETRIUM INCORPORATED
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 19, 1998
The Annual Meeting of the Shareholders (the "Annual Meeting") of Aetrium
Incorporated, a Minnesota corporation (the "Company"), will be held at the
Company's corporate headquarters at 2350 Helen Street, North St. Paul,
Minnesota, beginning at 4:00 p.m. on Tuesday, May 19, 1998, for the following
purposes:
1. To elect six (6) persons to serve as directors until the next Annual
Meeting of the Shareholders or until their respective successors shall
be elected and qualified;
2. To consider and act upon a proposal to amend the Company's Restated
Articles of Incorporation to increase the number of the Company's
authorized shares of common stock, $.001 par value, from 16,000,000 to
30,000,000 shares; and
3. To transact such other business as may properly come before the
meeting.
The record date for determination of the shareholders entitled to notice of
and to vote at the meeting and any adjournments thereof is the close of business
on March 26, 1998.
Whether or not you expect to attend the Annual Meeting in person, please
complete, sign, date and promptly return the enclosed proxy in the envelope
provided, which requires no postage if mailed in the United States.
By Order of the Board of Directors
Darnell L. Boehm
CHIEF FINANCIAL OFFICER AND SECRETARY
April 1, 1998
North St. Paul, Minnesota
PRELIMINARY COPY
AETRIUM INCORPORATED
2350 HELEN STREET
NORTH ST. PAUL, MINNESOTA 55109
(612) 770-2000
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
MAY 19, 1998
INTRODUCTION
The Annual Meeting of the Shareholders of Aetrium Incorporated, a Minnesota
corporation (the "Company"), will be held at the Company's corporate
headquarters at 2350 Helen Street, North St. Paul, Minnesota, beginning at 4:00
p.m. on Tuesday, May 19, 1998.
A proxy card is enclosed for your use. YOU ARE SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS TO SIGN AND RETURN THE PROXY CARD IN THE ACCOMPANYING
ENVELOPE. No postage is required if mailed within the United States. The cost of
soliciting proxies, including the preparation, assembly and mailing of proxies
and soliciting material, as well as the cost of forwarding such material to the
beneficial owners of the Common Stock of the Company, will be borne by the
Company. Directors, officers and regular employees of the Company may, without
compensation other than their regular compensation, solicit proxies by
telephone, telegraph or personal conversation. The Company may reimburse
brokerage firms and others for expenses in forwarding proxy materials to the
beneficial owners of Common Stock.
Any shareholder giving a proxy may revoke it at any time prior to its use
at the Annual Meeting either by giving written notice of such revocation to the
Secretary of the Company, by filing a duly executed proxy bearing a later date
with the Secretary of the Company, or by appearing at the Annual Meeting and
filing written notice of revocation with the Secretary of the Company prior to
use of the proxy. Proxies will be voted as specified by shareholders. Proxies
that are signed by shareholders but that lack any such specification will be
voted in favor of the proposals set forth in the Notice of Meeting and in favor
of the election as directors of the nominees for directors listed in this Proxy
Statement. Abstentions from such proposals are treated as votes against such
proposals. Broker non-votes on such proposals (I.E., a card returned by a broker
because voting instructions have not been received and the broker has no
discretionary authority to vote) are treated as shares with respect to which
voting power has been withheld by the beneficial holders of those shares and,
therefore, as shares not entitled to vote on such proposals.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE APPROVAL OF THE
PROPOSALS SET FORTH IN THE NOTICE OF MEETING.
The Company expects that this proxy material will be first mailed to
shareholders on or about April 1, 1998.
OUTSTANDING SHARES
Only holders of Common Stock of record at the close of business on March
26, 1998 will be entitled to vote at the Annual Meeting. On March 26, 1998 the
Company had [8,800,153] outstanding shares of Common Stock, each such share
entitling the holder thereof to one vote on each matter to be voted on at the
Annual Meeting. The holders of a majority of the shares entitled to vote and
represented in person or by proxy at the Annual Meeting will constitute a quorum
for the transaction of business at the Annual Meeting. In general, shares of
Common Stock represented by a properly signed and returned proxy card will be
counted as shares present and entitled to vote at the meeting for the purposes
of determining a quorum, without regard to whether the card reflects an
abstention (or is left blank) or reflects a broker non-vote on a matter. Holders
of shares of Common Stock are not entitled to cumulate voting rights.
ELECTION OF DIRECTORS
NOMINATION
The Company's Bylaws provide that the number of directors that shall
constitute the Board of Directors (the "Board") shall be at least one or such
other number as may be determined by the Board or the Company's shareholders. At
the 1997 Annual Meeting of the Shareholders of the Company, six directors were
elected. By resolution of the Board adopted at the meeting held on February 18,
1998, the Board resolved to nominate the same six persons to stand for election
at the 1998 Annual Meeting of the Shareholders. Directors elected at the Annual
Meeting will hold office until the next regular meeting of shareholders or until
their successors are duly elected and qualified.
All of the nominees are currently members of the Board. The election of
each director requires the affirmative vote of a majority of the shares of
Common Stock represented in person or by proxy at the Annual Meeting, provided
that a quorum consisting of a majority of the voting power of the Company's
outstanding shares is represented either in person or by proxy at the Annual
Meeting. The Board recommends a vote FOR the election of each of the nominees
listed in this Proxy Statement. The Board intends to vote the proxies solicited
on its behalf (other than proxies in which the vote is withheld) for the
election of each of the nominees as directors. If prior to the Annual Meeting
the Board should learn that any of the nominees will be unable to serve by
reason of death, incapacity or other unexpected occurrence, the proxies will be
cast for another nominee to be designated by the Board to fill such vacancy,
unless a shareholder indicates to the contrary on his or her proxy.
Alternatively, the proxies may, at the Board's discretion, be voted for such
fewer nominees as results from such death, incapacity or other unexpected
occurrence. The Board has no reason to believe that any of the nominees will be
unable to serve.
INFORMATION ABOUT NOMINEES
The following table sets forth certain information as of March 20, 1998
which has been furnished to the Company by the persons who have been nominated
by the Board to serve as directors for the ensuing year.
NOMINEES DIRECTOR
FOR ELECTION AGE PRINCIPAL OCCUPATION SINCE
------------ --- -------------------- -----
Joseph C. Levesque 53 Chairman of the Board, President and 1986
Chief Executive Officer of the Company
Darnell L. Boehm 49 Chief Financial Officer and Secretary of the Company 1986
Terrence W. Glarner 54 President of West Concord Ventures, Inc. 1990
Andrew J. Greenshields 60 President of Pathfinder Ventures, Inc. 1986
Douglas L. Hemer 51 President of the San Diego Division of the Company 1986
Terrance J. Nagel 43 Chairman of the Board and Chief Executive Officer 1996
of NOW Technologies, Inc.
OTHER INFORMATION ABOUT NOMINEES
JOSEPH C. LEVESQUE has served as President, Chief Executive Officer and
Chairman of the Board of Directors of the Company since 1986. From 1973 to 1986,
Mr. Levesque served in various capacities and most recently as Executive Vice
President of Micro Component Technology, Inc., a manufacturer of integrated
circuit testers and test handlers. Mr. Levesque was also a director of Arden
Industrial Products, Inc., a public company, until it was acquired in August
1997. Mr. Levesque is also a director of TSI Inc., a publicly held maker of
measurement and instrumentation equipment, and serves on its compensation
committee.
DARNELL L. BOEHM has served as Chief Financial Officer, Secretary and as a
director of the Company since 1986. From December 1994 until July 1995, Mr.
Boehm had also assumed executive management responsibilities for the Company's
San Diego Division. Mr. Boehm is also the principal of Darnell L. Boehm &
Associates, a management consulting firm. From October 1988 to March 1993, Mr.
Boehm served as the Acting President of Genesis Labs, Inc., a manufacturer of
medical diagnostic products. Mr. Boehm is also a director of Rochester Medical
Corporation, a public company, and serves on the audit and compensation
committees of such company. Mr. Boehm is also a director of Versa Companies, a
privately-held company and serves on its compensation and audit committees.
TERRENCE W. GLARNER has served as a director of the Company since March
1990. Since February 1993, Mr. Glarner has been President of West Concord
Ventures, Inc. and has been a consultant to North Star Ventures, Inc. ("North
Star"), and Norwest Venture Capital. From 1988 to February 1993, Mr. Glarner was
President of North Star and North Star Ventures II, Inc. ("North Star II"), an
affiliate of North Star. Mr. Glarner is also a director of CIMA Labs, Inc., FSI
International, Inc., Datakey, Inc. and Premis Corporation, all of which are
public companies. Mr. Glarner also serves on the compensation committee of each
of these four companies.
ANDREW J. GREENSHIELDS served as a director of the Company from July 1984
to October 1985 and has served continuously as a director since October 1986.
Mr. Greenshields has been President of Pathfinder Ventures, Inc. ("Pathfinder"),
an investment company, since September 1980. Mr. Greenshields is also a partner
of Pathfinder Partners II and Pathfinder Partners III, the general partners of
Pathfinder Venture Capital Fund II and Pathfinder Venture Capital Fund III,
respectively, each a Minnesota limited partnership ("Pathfinder II"). Mr.
Greenshields also has been a general partner of Spell Capital Partners since
November 1997. Pathfinder is also the management company for
Pathfinder II. Mr. Greenshields is also a director and member of the
compensation committee of CNS, Inc., a public company.
DOUGLAS L. HEMER has served as a director of the Company since 1986 and has
served as the President of the San Diego Division since February 1, 1997. From
May 1, 1996 until February 1, 1997 Mr. Hemer served as the Company's Chief
Administrative Officer. Mr. Hemer was a partner in the law firm of Oppenheimer
Wolff & Donnelly for over 15 years before joining the Company. Oppenheimer Wolff
& Donnelly has provided and is expected to continue to provide legal services to
the Company.
TERRANCE J. NAGEL has served as a director of the Company since June 1996.
Mr. Nagel is also the Chairman of the Board, Chief Executive Officer and
co-founder of NOW Technologies, Inc., a privately held company, a position he
has held since 1988.
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
The business and affairs of the Company are managed by the Board, which met
or took action in writing seven times during the fiscal year ended December 31,
1997. Committees established and maintained by the Board include the Audit
Committee and the Compensation Committee.
The function of the Audit Committee is to review the Company's financial
statements, oversee the financial reporting and disclosures prepared by
management, make recommendations regarding the Company's financial controls, and
confer with the Company's outside auditors. The Audit Committee met once during
the fiscal year ended December 31, 1997. Messrs. Glarner, Greenshields and Nagel
served as members of the Audit Committee in fiscal 1997.
The responsibilities of the Compensation Committee include approving the
compensation for those officers who are also directors of the Company and
setting the terms of and grants of awards under the Company's 1993 Stock
Incentive Plan (the "1993 Plan"). The Compensation Committee met or took action
in writing 11 times during the fiscal year ended December 31, 1997. Messrs.
Glarner, Greenshields and Nagel served as members of the Compensation Committee
in fiscal 1997.
All of the Directors of the Company attended 75% or more of the aggregate
meetings of the Board and all such committees on which they served.
COMPENSATION OF DIRECTORS
DIRECTORS' FEES. Directors of the Company receive no cash compensation for
their services as members of the Board, although their out-of-pocket expenses
incurred on behalf of the Company are reimbursed.
AUTOMATIC OPTION GRANT. In September of 1996, the Board of Directors
amended the 1993 Plan to eliminate the feature providing for the automatic grant
of non-statutory stock options to non-employee directors upon the non-employee
director's initial election to the Board. Prior to this amendment to the 1993
Plan in September 1996, the 1993 Plan provided for the automatic grant of
non-statutory stock options to purchase 30,000 shares of Common Stock to
non-employee directors at an exercise price equal to the fair market value of
the Common Stock on the date of grant upon the non-employee director's initial
election to the Board. Under the 1993 Plan as amended, therefore, there are no
automatic option grants to non-employee directors, although all directors are
eligible for the grant of options under the 1993 Plan. Although the Board is not
obligated to do so, in the future the Board presently intends to grant
non-
statutory stock options to purchase 30,000 shares of Common Stock to
non-employee directors at an exercise price equal to the fair market value of
the Common Stock on the date of grant upon such non-employee director's initial
election to the Board, with such options vesting in 20% increments over five
years.
PRINCIPAL SHAREHOLDERS AND
BENEFICIAL OWNERSHIP OF MANAGEMENT
The table below sets forth information regarding the beneficial ownership
of the Common Stock of the Company as of February 20, 1998, unless otherwise
noted, (a) by each shareholder who is known by the Company to own beneficially
more than 5% of the outstanding Common Stock, (b) by each director, nominee and
executive officer named in the Summary Compensation Table (set forth herein),
and (c) by all executive officers and directors of the Company as a group. The
address for all executive officers and directors of the Company is 2350 Helen
Street, North St. Paul, Minnesota 55109.
SHARES OF COMMON STOCK BENEFICIALLY OWNED (1)
---------------------------------------------
NAME AMOUNT PERCENT OF CLASS
- ---- ------ ----------------
Joseph C. Levesque 202,198 (2) 2.3%
Darnell L. Boehm 40,034 (3) *
Daniel M. Koch 64,264 (4) *
Gerald C. Clemens 8,849 *
Terrence W. Glarner 40,330 (5) *
Andrew J. Greenshields 22,500 (5) *
Douglas L. Hemer 45,806 (6) *
James E. Serley 37,014 (7) *
Terrance J. Nagel 13,000 (8) *
Investment Advisors, Inc. 964,100 (9) 11.0%
3700 First Bank Place
Box 357
Minneapolis, MN 55440
U.S. Bancorp. 840,390 (10) 9.6%
601 Second Avenue South
Minneapolis, MN 55402-4302
Kopp Investment Advisors, Inc. 1,628,464 (11) 18.3%
6600 France Avenue South
Suite 672
Edina, MN 55435
Putnam Investments, Inc. 661,727 (12) 7.5%
One Post Office Square
Boston, MA 02109
All executive officers and
directors as a group 592,719 (13) 6.5%
(15 persons)
- ----------------------
*Less than 1%.
(1) Shares not outstanding but deemed beneficially owned by virtue of the right
of a person or member of a group to acquire them within 60 days are treated
as outstanding only when determining the amount and percent owned by such
person or group. Unless otherwise noted, all of the shares shown are held
by individuals or entities possessing sole voting and investment power with
respect to such shares.
(2) Includes options to purchase 105,116 shares of Common Stock exercisable
within 60 days.
(3) Includes options to purchase 18,938 shares of Common Stock exercisable
within 60 days.
(4) Includes options to purchase 32,188 shares of Common Stock exercisable
within 60 days.
(5) Includes options to purchase 22,500 shares of Common Stock exercisable
within 60 days.
(6) Includes options to purchase 32,656 shares of Common Stock exercisable
within 60 days.
(7) Includes options to purchase 35,625 shares of Common Stock exercisable
within 60 days.
(8) Includes options to purchase 12,000 shares of Common Stock exercisable
within 60 days.
(9) Based solely on a Schedule 13G dated January 30, 1998, Investment Advisers,
Inc. has sole voting and dispositive power over 737,400 shares, and shared
voting and dispositive power over 226,700 shares.
(10) Based solely on a Schedule 13G dated February 9, 1998, includes shares of
Common Stock held by The Regional Equity Fund, a mutual fund of First
American Investment Funds, Inc., an open-end investment company. U.S.
Bancorp (formerly First Bank Systems, Inc.) ("US Bancorp") has sole voting
power over 822,400 shares and shared voting power over 17,590 shares. US
Bancorp has sole dispositive power over 809,800 shares and shared
dispositive power over 17,590 shares.
(11) Based solely on a Schedule 13G dated February 9, 1998, includes 1,398,464
shares of Common Stock held of record by clients of Kopp Investment
Advisers, Inc. ("KIA"), for which KIA has shared dispositive power, 210,000
shares of Common Stock over which KIA has sole dispositive power, 403,000
shares over which KIA has sole voting power and 20,000 shares over which
LeRoy C. Kopp has sole voting and dispositive power. Mr. LeRoy C. Kopp owns
100% of Kopp Holding Company which owns 100% of KIA.
(12) Based solely on a Schedule 13G dated January 16, 1998, includes 640,999
shares of Common Stock held by Putnam OTC & Emerging Growth Fund, a mutual
fund of Putnam Investment Management, Inc. ("PIM"). Putnam Investments,
Inc. ("PI"), a wholly-owned subsidiary of Marsh & McLennan Companies, Inc.
("MMC"), wholly owns two registered investment advisers: PIM (which is the
investment adviser to the Putnam family of mutual funds) and The Putnam
Advisory Company, Inc. ("PAC"). PIM, PAC and PI have shared voting and
dispositive over 661,727 shares.
(13) Includes options to purchase 324,924 shares of Common Stock exercisable
within 60 days.
EXECUTIVE COMPENSATION AND OTHER BENEFITS
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth the cash and non-cash compensation for each
of the last three fiscal years awarded to or earned by the Chief Executive
Officer of the Company and the four other most highly compensated executive
officers of the Company whose salary and bonus exceeded $100,000 in the fiscal
year ended December 31, 1997.
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
NAME AND SECURITIES UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) OPTIONS(#) COMPENSATION($)(2)
- ------------------ ---- --------- ----------- ---------- ------------------
Joseph C. Levesque 1997 $189,000 $ 80,714 -- $ 4,500
PRESIDENT AND CHIEF 1996 187,385 51,640 200,000 4,750
EXECUTIVE OFFICER 1995 174,769 86,975 -- (3) 5,680
Douglas L. Hemer (4) 1997 $125,000 $ 54,750 -- $ 4,662
PRESIDENT-- 1996 80,769 27,500 52,500 --
SAN DIEGO DIVISION 1995 -- -- -- --
James E. Serley 1997 $ 99,800 $ 39,521 15,000 $ 3,908
VICE-PRESIDENT AND 1996 98,669 27,151 -- 3,811
GENERAL MANAGER -- 1995 45,000 21,025 60,000 --
NORTH ST. PAUL DIVISION
Daniel M. Koch 1997 $123,400 $ 62,440 -- $ 4,569
VICE PRESIDENT-- 1996 122,431 21,108 7,500 4,413
WORLDWIDE SALES 1995 114,769 63,105 -- (3) 5,463
Gerald C. Clemens 1997 $112,800 $ 32,261 -- $ 4,139
VICE PRESIDENT-- 1996 111,669 32,068 -- 4,178
RELIABILITY TEST 1995 103,000 44,033 -- 3,799
PRODUCTS
- ---------------------------------
(1) Cash bonuses and sales commissions for services rendered have been included
as compensation for the year earned, even though a portion of such bonuses
and sales commissions were actually paid in the following year. Such
bonuses and sales commissions were payable pursuant to each executive's
individual bonus arrangement, which is based upon the achievement of
certain individual and Company goals.
(2) Represents amounts of matching contributions made by the Company to the
officers' respective 401(k) accounts.
(3) The options received in 1996 by each of Messrs. Levesque and Koch represent
options originally granted to such individuals in 1995 that were repriced
in September 1996.
(4) Mr. Hemer joined the Company in May 1996.
OPTION GRANTS
The following table summarizes option grants during fiscal 1997 to the
executive officers named in the Summary Compensation Table and the potential
realizable value of the options held by such person at December 31, 1997.
OPTION GRANTS IN 1997
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
NUMBER OF PERCENT OF RATES OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM(1)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ------------------
NAME GRANTED(#)(2) FISCAL YEAR ($/SHARE) DATE 5% 10%
- ----- ------------- ----------- --------- ---- -- ---
James E. Serley 15,000 4.2% $16.6250 5/20/02 $68,898 $152,246
- ------------------------------
(1) These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises are dependent upon the future
performance of the Company's Common Stock, overall market conditions and
the executive's continued involvement with the Company. The amounts
represented in this table will not necessarily be achieved.
(2) All options shown reflect the amendment and repricing of existing options.
The 1993 Plan is administered by the Compensation Committee (the
"Committee"). The options set forth above vest in 1/48th increments on the
20th of each month commencing on June 20, 1997. In the event a "change in
control" of the Company occurs, then, if approved by the Committee, all
outstanding options will become immediately exercisable in full and will
remain exercisable for the remainder of their terms, regardless of whether
the participant remains in the employ or service of the Company or any
subsidiary. For purposes of the 1993 Plan, a "change in control" of the
Company will be deemed to have occurred upon (i) a sale or other transfer
of substantially all of the assets of the Company to an entity that is not
controlled by the Company, (ii) a merger or consolidation to which the
Company is a party if, after such merger or consolidation, the Company's
shareholders do not beneficially own more than 80% of the combined voting
power of the surviving corporation's outstanding voting securities, (iii)
any person becoming the beneficial owner of 40% or more of the combined
voting power of the Company's outstanding securities, or (iv) a change in
the composition of the Board such that the individuals constituting the
Board on the effective date of the 1993 Plan cease for any reason to
constitute at least a majority of the Board (with exceptions
for individuals who are nominated or otherwise approved by the current
Board). The payment of an option exercise price may be made either in cash
or, subject to the discretion of the Committee, in shares of Common Stock.
OPTION EXERCISES
The following table summarizes option exercises during fiscal 1997 and the
number and value of options held by the executive officers named in the Summary
Compensation Table as of December 31, 1997.
AGGREGATED OPTION EXERCISES IN 1997 AND 1997 YEAR-END OPTION VALUES
NUMBER OF VALUE OF UNEXERCISED
VALUE UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
SHARES REALIZED DECEMBER 31, 1997(#) AT DECEMBER 31, 1997($)(1)
ACQUIRED ON -------- --------------------- ---------------------------
NAME EXERCISE(#) ($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------ ----------- ------------- ----------- -------------
Joseph C. Levesque 75,000 $1,101,978 80,012 109,375 $688,616 $880,468
Douglas L. Hemer 15,000 179,063 32,656 27,344 280,272 211,916
James E. Serley 7,500 110,156 28,125 24,375 217,969 188,906
Daniel M. Koch 20,000 220,000 28,750 7,500 310,156 70,781
Gerald C. Clemens 35,000 364,063 --- --- --- ---
- --------------------------
(1) Based on the December 31, 1997 closing price of the Common Stock of $18.00.
(2) The "Value Realized" and the "Value of Unexercised In-the-Money Options"
amounts are calculated based on the excess of the market value of the
Common Stock on the date of exercise or December 31, 1997, respectively,
over the exercise price. The exercise price of options may be paid in cash
or in shares of the Company's Common Stock valued at fair market value on
the day prior to the date of exercise. In addition, at the discretion of
the Compensation Committee the exercise price of options granted may be
paid pursuant to a cashless exercise procedure under which the executive
provides irrevocable instructions to a brokerage firm to sell the purchased
shares and to remit to the Company, out of the sale proceeds, an amount
equal to the exercise price plus all applicable withholding taxes.
EMPLOYMENT AGREEMENT
Pursuant to an employment agreement, effective April 1, 1986, between the
Company and Mr. Levesque, the President and Chief Executive Officer of the
Company, Mr. Levesque is entitled to receive six months salary as severance pay
in the event of an involuntary termination (including by reason of death or
disability but excluding termination for cause). In the event of voluntary
termination, the Company may elect to pay Mr. Levesque severance pay for any
portion of the employment period remaining after notice of termination in lieu
of continued employment.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors approves the
compensation for executive officers who are also directors of the Company and
acts on such other matters relating to their compensation as it deems
appropriate. During fiscal 1997, Mr. Levesque, the Company's Chairman of the
Board, President and Chief Executive Officer, Mr. Boehm, the Company's Chief
Financial Officer and Secretary, and Mr. Hemer, the President of the Company's
San Diego Division, were the only executive officers who were also directors of
the Company. The Compensation Committee consists of at least two non-employee
directors and meets at least once per year. The members of the Compensation
Committee during fiscal 1997 were Messrs. Glarner, Greenshields and Nagel. Mr.
Levesque, as the Company's President and Chief Executive Officer, establishes
the compensation of all executive officers who are not also directors of the
Company. The Compensation Committee also administers, with respect to all
eligible recipients, the Company's stock option plans and determines the
participants in such plans and the amount, timing and other terms and conditions
of awards under such plans.
COMPENSATION PHILOSOPHY AND OBJECTIVES. The Compensation Committee is
committed to the general principle that overall executive compensation should be
commensurate with performance by the Company and the individual executive
officers, and the attainment of predetermined corporate goals. The primary
objectives of the Company's executive compensation program are to:
* Reward the achievement of desired Company and individual performance
goals.
* Provide compensation that enables the Company to attract and retain
key executives.
* Provide compensation opportunities that are linked to the performance
of the Company and that directly link the interests of executives with
the interests of shareholders.
The Company's executive compensation program provides a level of
compensation opportunity that is competitive for companies in comparable
industries and of comparable development, complexity and size. In determining
compensation levels, the Compensation Committee considers a number of factors,
including Company performance, both separately and in relation to other
companies competing in the Company's markets, the individual performance of each
executive officer, comparative compensation surveys concerning compensation
levels and stock grants at other companies, historical compensation levels and
stock awards at the Company, and the overall competitive environment for
executives and the level of compensation necessary to attract and retain key
executives. Compensation levels may be greater or less than competitive levels
in comparable companies based upon factors such as annual and long-term Company
performance and individual performance.
EXECUTIVE COMPENSATION PROGRAM COMPONENTS. The Company's executive
compensation program consists of base salary, bonuses and long-term incentive
compensation in the form of stock options. The particular elements of the
compensation program are discussed more fully below.
BASE SALARY. Base pay levels of executives, including the Chief Executive
Officer, are determined by the potential impact of the individual on the Company
and its performance, the skills and experiences required by the position, the
individual performance and potential of the executive and the Company's overall
performance. Base salaries for executives are evaluated and adjusted annually. A
portion of each executive officer's base salary (including the Chief Executive
Officer) is determined based on a formula related to Company revenue, and may be
increased or decreased during the year based upon actual Company revenue levels.
BONUSES. The Company also may pay bonuses to executive officers as part of
its executive compensation program. The purpose of the cash bonus component of
the executive compensation program is to provide a direct financial incentive
for executives who help the Company achieve certain Company financial objectives
and who meet individual performance goals. The Compensation Committee has
determined that potential bonuses in fiscal 1998 will range from 0% to 50% of
base salary (excluding sales commissions) for all executive officers, including
the Chief Executive Officer.
LONG-TERM INCENTIVE COMPENSATION. Stock options are used to enable key
executives to participate in a meaningful way in the success of the Company and
to link their interests directly with those of the shareholders. The number of
stock options granted to executives is based upon a number of factors, including
base salary level and how such base salary level relates to those of other
companies in the Company's industry, the number of options previously granted
and individual and Company performance during the year.
SECTION 162(m). The Omnibus Reconciliation Act of 1993 added Section 162(m)
to the Internal Revenue Code of 1986, as amended (the "Code"), limiting
corporate deductions to $1,000,000 for certain compensation paid to the chief
executive officer and each of the four other most highly compensated executives
of publicly held companies. The Company does not believe it will pay
"compensation" within the meaning of Section 162(m) to such executive officers
in excess of $1,000,000 in the foreseeable future. Therefore, the Company does
not have a policy at this time regarding qualifying compensation paid to its
executive officers for deductibility under Section 162(m), but will formulate a
policy if compensation levels ever approach $1,000,000.
CHIEF EXECUTIVE OFFICER COMPENSATION COMMITTEE
----------------------- ----------------------
Joseph C. Levesque Terrence W. Glarner
Andrew J. Greenshields
Terrance J. Nagel
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee are Messrs. Glarner,
Greenshields and Nagel. On May 1, 1996, Doug Hemer was named the Company's Chief
Administrative Officer, which position he held until February 1, 1997, when he
was named the President of the San Diego Division. Mr. Hemer had served as a
member of the Compensation Committee until he resigned from the Compensation
Committee on March 27, 1996.
STOCK PERFORMANCE GRAPH
In accordance with the rules of the Securities and Exchange Commission, the
following performance graph compares the yearly cumulative total shareholder
return on the Company's Common Stock on the Nasdaq National Market since the
date of the Company's initial public offering, completed in August 1993, with
the yearly cumulative total return over the same period of the Nasdaq Stock
Market (U.S. Companies) Index and of a self-determined group of peer companies
(the "Peer Group"). The Peer Group consists of Electroglas Inc., Aseco
Corporation, Teradyne Inc., Cohu, Inc. and Micro Component Technology, Inc. The
comparison assumes the investment of $100 in Common Stock, the Nasdaq Stock
Market (U.S. Companies) Index and the Peer Group at the beginning of the period
and assumes reinvestment of all dividends.
[PLOT POINTS GRAPH]
Aug-93 Dec-93 Dec-94 Dec-95 Dec-96 Dec-97
------ ------ ------ ------ ------ ------
ATRM $100.00 $115.71 $131.43 $342.85 $227.15 $308.56
Peers $100.00 $ 99.30 $106.69 $168.98 $151.30 $184.91
Nasdaq $100.00 $108.64 $106.19 $150.18 $184.73 $226.68
PROPOSAL TO AMEND THE RESTATED ARTICLES OF INCORPORATION
TO INCREASE THE AUTHORIZED COMMON STOCK OF THE COMPANY
PROPOSAL NO. 2
INTRODUCTION
At present, the Restated Articles of Incorporation of the Company authorize
the issuance of 16,000,000 shares of Common Stock, $.001 par value. As of March
26, 1998, [8,800,153] shares of the Company's authorized shares of Common Stock
were issued and outstanding and [7,199,847] shares were authorized but unissued.
Of the [7,199,847] shares of Common Stock that were authorized and unissued,
[1,008,309] shares are reserved for issuance pursuant to outstanding options and
warrants of the Company. Accordingly, as of March 26, 1998, there were
[6,191,538] shares of Common Stock available for issuance or sale by the Company
other than those issuable as described above.
The Board of Directors has unanimously proposed that the Company amend its
Restated Articles of Incorporation to increase the authorized number of shares
of common stock from 16,000,000 to 30,000,000 shares and that this amendment
should be presented to the Company's shareholders at the Annual Meeting. If this
amendment is approved by the shareholders, [20,191,538] shares of Common Stock
will be authorized for issuance and unreserved immediately after the Annual
Meeting. The number of shares of undesignated shares authorized under the
Restated Articles of Incorporation, which is currently 2,000,000 shares, will
not be changed by this amendment. At the Annual Meeting, the shareholders of the
Company are being asked to approve this amendment.
PURPOSE AND EFFECTS OF THE PROPOSED AMENDMENT
The Board of Directors believes that it is necessary and desirable to
increase the number of shares of Common Stock the Company is authorized to issue
to give the Board additional flexibility to declare stock splits or dividends,
adopt additional future employee benefit plans and make acquisitions through the
use of stock. The Board of Directors has no immediate plans, understandings or
agreements or commitments to issue additional shares of Common Stock for any of
these purposes, except as permitted or required by outstanding options and
additional options which may be granted from time to time under the 1993 Plan.
The flexibility inherent in having the authority to issue shares of Common Stock
will, in the opinion of the Board of Directors, be advantageous to the Company
in any negotiations involving the issuance of such stock. If the shareholders
failed to approve the proposed amendment and authorization of the additional
shares of Common Stock were deferred until a specific need existed, the time and
expense required in connection with obtaining the necessary shareholder action
for each proposed issuance could deprive the Company of flexibility that the
Board of Directors believes will result in the most efficient use of such
shares. If this proposed amendment is adopted, no additional action or
authorization by the Company's shareholders will be necessary prior to the
issuance of such additional shares, unless required by applicable law or
regulation, or unless deemed desirable or advisable by the Board of Directors.
If adopted, the proposal will not, by itself, have any effect on the rights
of holders of presently issued and outstanding shares of Common Stock. Under the
Company's Restated Articles of Incorporation, the shareholders of the Company do
not have preemptive rights with respect to the Common Stock. Thus, should the
Board of Directors elect to issue additional shares of Common Stock, existing
shareholders would not have any preferential rights to purchase such additional
shares of Common Stock.
Although the Board of Directors is proposing this amendment to the
Company's Restated Articles of Incorporation for the reasons stated above, the
amendment could, under certain circumstances, discourage or make more difficult
an attempt by a person or organization to gain control of the Company by tender
offer or proxy contest, or to consummate a merger or consolidation with the
Company after acquiring control, and to remove incumbent management, even if
such transactions were favorable to the shareholders of the Company. Issuance of
shares of Common Stock in a private placement to a person sympathetic to
management and opposed to any attempt to gain control of the Company could make
a change in control of the Company more difficult. Accordingly, this proposal to
amend the Company's Restated Articles of Incorporation may be deemed (under
certain circumstances which may or may not occur) to be an anti-takeover
measure. However, the proposal is not being presented as an anti-takeover
measure.
PROPOSED RESOLUTION
A resolution in substantially the following form will be submitted to the
shareholders at the Annual Meeting:
RESOLVED, That the first sentence of Section 6.1 in Article 6 of the
Company's Restated Articles of Incorporation is amended in its
entirety to read as follows:
"The aggregate number of shares which the corporation shall
have the authority to issue shall be Thirty-Two Million
(32,000,000), $.001 par value per share, of which Thirty
Million (30,000,000) shall be common voting shares and Two
Million (2,000,000) shall be undesignated shares."
RESOLVED FURTHER, That the appropriate officers of the Company are
authorized and directed to make, execute, acknowledge and file such
certificates and documents as may be required by law with respect to
the foregoing resolutions.
BOARD OF DIRECTORS' RECOMMENDATION
The Board of Directors recommends a vote FOR approval of this amendment.
The affirmative vote of the holders of a majority of shares of Common Stock of
the Company present in person or by proxy at the Annual Meeting, provided a
quorum is present at the meeting in person or by proxy, is necessary for
approval. Unless a contrary choice is specified, proxies solicited by the Board
of Directors will be voted FOR the approval of this amendment.
SELECTION OF AUDITORS
The Company does not intend to request that the shareholders approve the
selection of Price Waterhouse LLP, independent public accountants, for fiscal
1998. The Company has requested and expects, however, a representative of Price
Waterhouse LLP to be present at the Annual Meeting. Such representatives will
have an opportunity to make a statement if they so desire and will be available
to respond to appropriate questions.
SECTION 16(a) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers and all
persons who beneficially own more than 10% of the outstanding shares of the
Company's Common Stock to file with the Securities and Exchange Commission (the
"SEC") initial reports of ownership and reports of changes in ownership of the
Company's Common Stock. Executive officers, directors and greater than 10%
beneficial owners are also required to furnish the Company with copies of all
Section 16(a) forms they file. Based upon a review of the copies of such reports
furnished to the Company and written representations, the Company believes that
for the year ended December 31, 1997, none of its directors, officers or
beneficial owners of greater than 10% of the Company's Common Stock failed to
file on a timely basis the form required by Section 16 of the Exchange Act,
except that the Form 3s for the following persons were filed after their
respective due dates: Kenneth R. Lee, John J. Pollock, Lee A. Schafer and Steven
R. Weisbrod.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Proposals of shareholders intended to be presented in the proxy materials
relating to the next Annual Meeting must be received by the Company at its
principal executive offices on or about December 1, 1998.
OTHER BUSINESS
The Company knows of no business that will be presented for consideration
at the Annual Meeting other than that described in this Proxy Statement. As to
other business, if any, that may properly come before the Annual Meeting, it is
intended that proxies solicited by the Board will be voted in accordance with
the judgment of the person or persons voting the proxies.
MISCELLANEOUS
THE COMPANY WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT ON
FORM 10-K (EXCLUSIVE OF EXHIBITS) FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997,
TO EACH PERSON WHO WAS A SHAREHOLDER OF THE COMPANY AS OF MARCH 26, 1998, UPON
RECEIPT FROM ANY SUCH PERSON OF A WRITTEN REQUEST FOR SUCH AN ANNUAL REPORT.
SUCH REQUEST SHOULD BE SENT TO: AETRIUM INCORPORATED, 2350 HELEN STREET, NORTH
ST. PAUL, MINNESOTA 55109; ATTN.: SHAREHOLDER INFORMATION.
By Order of the Board of Directors
Joseph C. Levesque
CHAIRMAN OF THE BOARD,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Dated: April 1, 1998
North St. Paul, Minnesota
PRELIMINARY COPY
AETRIUM INCORPORATED
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints ______________ and ______________, and each
of them, as Proxies, each with full power of substitution, and hereby authorizes
each of them to represent and to vote, as designated below, all the shares of
Common Stock of Aetrium Incorporated held of record by the undersigned on March
26, 1998, at the Annual Meeting of Shareholders to be held on May 19, 1998, or
any adjournment thereof.
(INSTRUCTION: TO VOTE AGAINST ANY INDIVIDUAL NOMINEE, MARK YOUR VOTE IN THE "FOR
ALL -(EXCEPT NOMINEE(S) WRITTEN BELOW)" OVAL AND WRITE THE NOMINEE'S NAME IN THE
BLANK BELOW.)
1. ELECTION OF DIRECTORS.
[ ] FOR ALL [ ] WITHHOLD ALL [ ] FOR ALL (Except nominee(s)
(except as marked to the written below)
contrary below) ______________________________
JOSEPH C. LEVESQUE ANDREW J. GREENSHIELDS
DARNELL L. BOEHM DOUGLAS L. HEMER
TERRENCE W. GLARNER TERRANCE J. NAGEL
2. PROPOSAL TO AMEND THE COMPANY'S RESTATED ARTICLES OF INCORPORATION TO
INCREASE THE AUTHORIZED SHARES OF COMMON STOCK.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 2 AND FOR ALL NOMINEES NAMED IN PROPOSAL 1 ABOVE. Please sign
exactly as name appears below. When shares are held by joint tenants, both
should sign. When signing as attorney, executor, administrator, trustee 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 authorized person.
Dated:_________________, 1998
________________________________________
Signature
________________________________________
Signature if held jointly
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PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
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