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 a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [ ] Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as permitted by
[_] Definitive Additional Materials Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to
(ss.)240.14a-11(c) or (ss.)240.14a-12
CRYOLIFE, INC.
(Name of Registrant as Specified In Its Charter)
N/A
------------------------------------ ----
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
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4) Date Filed:
[Logo of CryoLife, Inc. Appears Here]
[LOGO] 1655 ROBERTS BOULEVARD, N.W.
KENNESAW, GEORGIA 30144
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF CRYOLIFE, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
CRYOLIFE, INC. will be held at the Sheraton Suites Galleria-Atlanta, 2844 Cobb
Parkway, SE, Atlanta, Georgia 30339, on May 17, 2001 at 10:00 a.m., Atlanta
time, for the following purposes:
1. To elect seven directors to serve until the next Annual Meeting of
Shareholders or until their successors are elected and have been
qualified.
2. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The proxy statement dated April 4, 2001 is attached.
Only record holders of CryoLife's common stock at the close of business on
March 16, 2001 will be eligible to vote at the meeting.
Your attendance at the annual meeting is very much desired. However, if
there is any chance you may not be able to attend the meeting, please execute,
complete, date and return the proxy in the enclosed envelope. If you attend the
meeting, you may revoke the proxy and vote in person.
By Order of the Board of Directors:
/s/ Steven G. Anderson
STEVEN G. ANDERSON,
Chairman of the Board and President
Date: April 4, 2001
A copy of the Annual Report of CryoLife, Inc. for the fiscal year ended
December 31, 2000 containing financial statements is enclosed.
[Logo of CryoLife, Inc. Appears Here]
[LOGO] 1655 ROBERTS BOULEVARD, N.W.
KENNESAW, GEORGIA 30144
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
This proxy statement is furnished for the solicitation by the Board of
Directors of proxies for the Annual Meeting of Shareholders of CryoLife, Inc. to
be held on May 17, 2001, at 10:00 a.m., Atlanta time, at the Sheraton Suites
Galleria-Atlanta, 2844 Cobb Parkway, SE, Atlanta, Georgia 30339. The sending in
of a signed proxy will not affect a shareholder's right to attend the meeting
and vote in person. A signed proxy may be revoked by the sending in of a timely,
but later dated, signed proxy. Any shareholder giving a proxy may also revoke it
at any time before it is exercised by giving oral or written notice to Ronald D.
McCall, Secretary of CryoLife, or Ms. Suzanne Gabbert, Assistant Secretary, at
the offices of CryoLife. Oral notice may be delivered by telephone call to Ms.
Gabbert, at the offices of CryoLife, at (770) 419-3355.
Holders of record of CryoLife's common stock at the close of business on
March 16, 2001 will be eligible to vote at the meeting. CryoLife's stock
transfer books will not be closed. At the close of business on March 16, 2001,
CryoLife had outstanding a total of 18,750,704 shares of common stock, excluding
a total of 1,340,530 shares of treasury stock held by CryoLife, which are not
entitled to vote. Each such share will be entitled to one vote, non-cumulative,
at the meeting.
Other than the matters set forth herein, management is not aware of any
other matters that may come before the meeting. If any other business should
properly come before the meeting, the persons named in the enclosed proxy will
have discretionary authority to vote the shares represented by the effective
proxies and intend to vote them in accordance with their best judgment.
This proxy statement and the attached proxy were first mailed to security
holders on behalf of CryoLife on or about April 4, 2001. Properly executed
proxies, timely returned, will be voted and, where the person solicited
specifies by means of a ballot a choice with respect to any matter to be acted
upon at the meeting, the shares will be voted as indicated by the shareholder.
If the person solicited does not specify a choice with respect to election of
directors, the shares will be voted for management's nominees for election as
directors. In addition to the solicitation of proxies by the use of the mails,
directors and officers of CryoLife may solicit proxies on behalf of management
by telephone, telegram and personal interview. Such persons will receive no
additional compensation for their solicitation activities, and will be
reimbursed only for their actual expenses incurred. The costs of soliciting
proxies will be borne by CryoLife.
VOTING PROCEDURES AND VOTE REQUIRED
The Secretary of CryoLife, in consultation with the judges of election,
who will be employees of CryoLife's transfer agent, shall determine the
eligibility of persons present at the Annual Meeting to vote and shall determine
whether the name signed on each proxy card corresponds to the name of a
shareholder of CryoLife. The Secretary, based on such consultation, shall also
determine whether or not a quorum of the shares of CryoLife, consisting of a
majority of the votes entitled to be cast at the Annual Meeting, exists at the
Annual Meeting. Both abstentions from voting and broker non-votes will be
counted for the purpose of determining the presence or absence of a quorum for
the transaction of business.
Nominees for election as directors will be elected by a plurality of the
votes cast by the holders of shares entitled to vote in the election. Since
there are seven directorships to be filled, this means that the seven
individuals receiving the most votes will be elected. Abstentions and broker
non-votes will therefore not be relevant to the outcome.
There are no rights of appraisal or similar dissenters' rights with
respect to any matter to be acted upon pursuant to this proxy statement.
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RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of CryoLife recommends a vote "FOR" the election of
each of the nominees named below for election as director.
ELECTION OF DIRECTORS
The proxy holders intend to vote "FOR" election of the nominees named
below, who are currently members of the Board, as directors of CryoLife, unless
otherwise specified in the proxy. Directors of CryoLife elected at the Annual
Meeting to be held on May 17, 2001 will hold office until the next Annual
Meeting or until their successors are elected and qualified.
Each of the nominees has consented to serve on the Board of Directors, if
elected. Should any nominee for the office of director become unable to accept
nomination or election, which is not anticipated, it is the intention of the
persons named in the proxy, unless otherwise specifically instructed in the
proxy, to vote for the election of such other person as the Board may recommend.
The individuals listed below as nominees for the Board of Directors were
directors of CryoLife during all of 2000. The name and age of each nominee, and
the period during which such person has served as a director, together with the
number of shares of CryoLife's common stock beneficially owned, directly or
indirectly, by such person and the percentage of outstanding shares of
CryoLife's common stock such ownership represented at the close of business on
March 16, 2001, according to information received by CryoLife, is set forth
below:
Shares of
CryoLife Stock
Beneficially Owned Percentage of
Service as at Outstanding Shares
Name of Nominee Director Age March 16, 2000(1) of CryoLife Stock
- --------------------------------- -------------- ------ --------------------- ---------------------
Steven G. Anderson Since 1984 62 1,757,167(2) 9.36%
John M. Cook (4) Since 1999 58 60,750(3) *
Ronald C. Elkins, M.D.(4)(5) Since 1994 64 159,619(6) *
Virginia C. Lacy(4)(5) Since 1997 59 672,079(7) 3.56%
Ronald D. McCall, Esq.(5) Since 1984 63 242,763(8) 1.29%
Alexander C. Schwartz, Jr.(4) Since 1999 68 41,250(9) *
Bruce J. Van Dyne, M.D.(5) Since 1999 59 41,550(9) *
- ---------------
* Ownership represents less than 1% of outstanding shares of CryoLife common
stock.
(1) Except as otherwise noted, the nature of the beneficial ownership for all
shares is sole voting and investment power.
(2) Includes 157,999 shares held of record by Ms. Ann B. Anderson, Mr.
Anderson's spouse. Also includes options to acquire 27,000 shares of common
stock which are presently exercisable or will become exercisable within 60
days after the date of this proxy statement.
(3) Includes 19,500 shares which are held by CT Investments, LLC of which Mr.
Cook owns 90% of the membership interests. Includes options to acquire
41,250 shares of common stock which are presently exercisable or will
become exercisable within 60 days after the date of this proxy statement.
(4) Member of the Audit Committee.
(5) Member of the Compensation Advisory Committee.
(6) Includes options to acquire 125,250 shares of common stock which are
presently exercisable or will become exercisable within 60 days after the
date of this proxy statement.
(7) Includes 358,450 shares held as beneficiary of three trusts, and 165,879
shares held as beneficiary of an IRA, of Ms. Lacy's deceased spouse.
Includes 22,500 shares held as administrator of a pension plan. Includes
125,250 shares subject to options which are presently exercisable or will
become exercisable within 60 days after the date of this proxy statement.
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(8) Includes 16,000 shares of common stock owned of record by Ms. Marilyn B.
McCall, Mr. McCall's spouse. Includes options to acquire 114,750 shares
of common stock which are presently exercisable or will become
exercisable within 60 days after the date of this proxy statement.
(9) Includes options to acquire 41,250 shares of common stock which are
presently exercisable or will become exercisable within 60 days after the
date of this proxy statement.
Steven G. Anderson, a founder of CryoLife, has served as CryoLife's
President, Chief Executive Officer and Chairman of the Board of Directors since
its inception. Mr. Anderson has more than 30 years of experience in the
implantable medical device industry. Prior to founding CryoLife, Mr. Anderson
was Senior Executive Vice President and Vice President, Marketing, from 1976
until 1983 of Intermedics, Inc. (now Guidant Corp.), a manufacturer and
distributor of pacemakers and other medical devices. Mr. Anderson is a graduate
of the University of Minnesota.
John M. Cook has served as a Director of CryoLife since August 1999. Mr.
Cook is Chairman and Chief Executive Officer of The Profit Recovery Group
International, Inc., an international, publicly held audit recovery firm
operating in 36 countries, with 2000 revenues exceeding $297 million. Mr. Cook
has served as Chief Executive Officer of The Profit Recovery Group since its
founding in January 1991. Prior to The Profit Recovery Group, he served in a
number of top financial and management positions in the retail industry,
including Senior Vice President and Chief Financial Officer of Caldor Stores and
Senior Vice President of Finance and Controller of Kaufmann's Department Stores,
both May Department Stores affiliates. He holds a B.S. degree in accounting from
Saint Louis University, where he serves as a member of the Board of Trustees and
holds a seat on the Executive Advisory Board of the University's School of
Business and Administration.
Ronald C. Elkins, M.D., has served as a Director of CryoLife since January
1994. Dr. Elkins is Professor and Chief, Section of Thoracic and Cardiovascular
Surgery, University of Oklahoma Health Science Center. Dr. Elkins has been a
physician at the Health Science Center since 1971, and has held his present
position since 1975. Dr. Elkins is a graduate of the University of Oklahoma and
Johns Hopkins Medical School.
Virginia C. Lacy has served as a Director of CryoLife since August 1997.
Ms. Lacy received her BA degree from Northwestern University in 1963. Ms. Lacy
is the Administrator of The Jeannette & John Cruikshank Memorial Foundation,
which provides housing assistance to those in need throughout the greater
Chicago area. Since 1974, Ms. Lacy has served as Secretary-Treasurer and Chief
Financial Officer of Precision Devices Corporation, a distributor of medical
devices. She was one of the founders of the company and serves as the Chairman
of the Board of Directors. She has also served as the Chief Financial Officer of
A.I. Industries, a manufacturer of identification cards for the health care
industry. As an elected member of the Board of Education of District 203 of the
State of Illinois, she served on its budget committee, which was responsible for
planning and reviewing the spending of $100,000,000 in public funds each year in
a school district having 2,500 employees. Ms. Lacy also provided leadership in
State Education by serving on committees that analyzed state funding for
education. She continues to keep abreast of new financial strategies through
participation in American Management Association classes.
Ronald D. McCall, Esq. has served as a Director of CryoLife and as the
Secretary and Treasurer of CryoLife since January 1984. From 1985 to the
present, Mr. McCall has been the proprietor of the law firm of Ronald D. McCall,
Attorney at Law, based in Tampa, Florida. Mr. McCall was admitted to the
practice of law in Florida in 1961. Mr. McCall received his BA and JD degrees
from the University of Florida.
Alexander C. Schwartz, Jr. has served as a Director of CryoLife since
September 1999. Mr. Schwartz retired from Prudential Securities in 1996 after 33
years of service. While at Prudential Securities he held various positions,
including co-head of the Investment Banking Division, Managing Director of the
firm's International Division and Managing Director of the Health Care Group. As
co-head of the Investment Banking Division he was in charge of due diligence
teams reviewing and analyzing corporate finances. Mr. Schwartz was responsible
for the review of financial and accounting records of corporations and the
presentation of the corporations' financial performance in connection with
initial public offerings, debt offerings, leveraged buyouts, mergers and
acquisitions. Mr. Schwartz is a graduate of Columbia University, where he
received a B.S. Degree in Economics. Mr. Schwartz has served on the Boards of
Directors of several public and privately held companies and is currently a
private investor.
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Bruce J. Van Dyne, M.D. has served as a Director of CryoLife since August
1999. Dr. Van Dyne is a board-certified neurologist and has been in private
practice in Minneapolis, Minnesota since 1975. He has served in numerous
advisory positions, including as an Examiner in Neurology for the American Board
of Psychiatry and Neurology and as previous Chairman of the Department of
Neurology for Park Nicollet Medical Center in Minneapolis. He is a graduate of
Northwestern University Medical School and is the author of numerous medical
publications in the field of neurology.
INFORMATION ABOUT THE BOARD OF DIRECTORS
AND COMMITTEES OF THE BOARD
Meetings of the Board of Directors--During 2000, there were five meetings
of the Board of Directors.
Director Compensation--All non-employee directors of the Board of Directors
of CryoLife are paid $1,500 for each Board meeting attended. In addition,
directors are reimbursed for expenses incurred in connection with their services
as a director. In December 1997, CryoLife adopted the CryoLife, Inc. Amended and
Restated Non-Employee Directors Stock Option Plan, which replaced CryoLife's
1995 Non-Employee Directors Plan. Pursuant to this plan, options to purchase
7,500 shares of common stock were granted to each of Drs. Elkins and Van Dyne,
Messrs. Cook, McCall and Schwartz and Ms. Lacy immediately following the 2000
Annual Meeting of Shareholders. The Amended and Restated Non-Employee Directors
Stock Option Plan provides that an annual grant will be made each year
immediately following CryoLife's Annual Meeting of Shareholders of an option to
purchase 7,500 shares of common stock to each individual elected, reelected or
continuing as a non-employee director of CryoLife. All options granted pursuant
to this plan are granted at a purchase price equal to the last closing price of
CryoLife's common stock on the New York Stock Exchange on the day immediately
prior to the grant of the option and vest and become exercisable on the option's
grant date. No option granted pursuant to this plan may be exercised later than
five years following the date of grant. Also, on May 26, 2000, each of Drs.
Elkins and Van Dyne, Messrs. Cook, McCall and Schwartz and Ms. Lacy received a
special grant of options to purchase 15,000 shares of common stock.
In addition to the foregoing, Dr. Elkins received approximately $75,000 in
consulting fees and Dr. Van Dyne received approximately $4,500 in consulting
fees from CryoLife in 2000.
Audit Committee--CryoLife's Audit Committee consists of four non-employee
directors: Dr. Elkins, Mr. Cook, Mr. Schwartz and Ms. Lacy. The Audit Committee
met seven times in 2000. The Audit Committee reviews the general scope of
CryoLife's annual audit and the nature of services to be performed for CryoLife
in connection therewith, acting as liaison between the Board of Directors and
the independent auditors. The Audit Committee also formulates and reviews
various company policies, including those relating to accounting practices and
internal control systems of CryoLife. In addition, the Audit Committee is
responsible for reviewing and monitoring the performance by CryoLife's
independent auditors and for recommending the engagement or discharge of
CryoLife's independent auditors.
Compensation Advisory Committee--CryoLife's Compensation Advisory Committee
consisted of four non-employee directors during 2000: Mr. McCall, Ms. Lacy, Dr.
Elkins and Dr. Van Dyne. The Compensation Advisory Committee met three times in
2000. The Compensation Advisory Committee is responsible for evaluating the
performance of officers and setting the annual compensation for all officers,
including the salary and the compensation package of executive officers. A
portion of the compensation package includes a bonus award. The Compensation
Advisory Committee also administers CryoLife's benefit plans, except that the
Compensation Advisory Sub-Committee approves grants of stock options to
executive officers under CryoLife's benefit plans. Currently, the Compensation
Advisory Sub-Committee consists of two non-employee directors: Ms. Lacy and Dr.
Van Dyne. The Compensation Advisory Sub-Committee met three times in 2000.
Nominating Committee--CryoLife does not have a standing nominating
committee of the Board of Directors.
During 2000, no director attended fewer than 75% of the aggregate of the
total number of meetings of the Board of Directors and the total number of
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meetings held by all committees of the Board on which he or she served. Members
of the Board of Directors are appointed to committees at the annual meeting of
directors immediately following the annual meeting of shareholders.
Notwithstanding anything to the contrary set forth in any of CryoLife's
filings under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, that might incorporate other CryoLife filings,
including this proxy statement, in whole or in part, the following Reports and
Performance Graph shall not be incorporated by reference into any such filings.
REPORT OF THE AUDIT COMMITTEE
The Board of Directors maintains an Audit Committee comprised of four of
the Company's outside directors. The Board of Directors and the Audit Committee
believe that the Audit Committee's current member composition satisfies the rule
of the New York Stock Exchange ("NYSE") that governs audit committee
composition, including the requirement that audit committee members all be
"independent directors" as that term is defined by Section 303.01 of the NYSE
Listed Company Manual.
The Audit Committee oversees the Company's financial process on behalf of
the Board of Directors. Management has the primary responsibility for the
financial statements and the reporting process, including the systems of
internal controls. In fulfilling its oversight responsibilities, the Audit
Committee reviewed the audited financial statements in the Annual Report with
management, including a discussion of the quality, not just the acceptability,
of the accounting principles, the reasonableness of significant judgments and
the clarity of disclosures in the financial statements. The Board has adopted a
written Audit Committee Charter, a copy of which is attached as Appendix A
hereto.
The Audit Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, their
judgments as to the quality, not just the acceptability, of the Company's
accounting principles and such other matters as are required to be discussed
with the Audit Committee under generally accepted auditing standards, including
statement on Auditing Standards No. 61. In addition, the Audit Committee has
discussed with the independent auditors the auditors' independence from
management and the Company, including the matters in the written disclosures and
the letter from the independent auditors required by the Independence Standards
Board, Standard No. 1.
The Audit Committee discussed with the Company's independent auditors the
overall scope and plans for their audit. The Audit Committee meets with the
independent auditors, with and without management present, to discuss the
results of their examination, their evaluation of the Company's internal
controls and the overall quality of the Company's financial reporting. The
Company incurred the following fees for services performed by Arthur Andersen
LLP in 2000:
Audit Fees
Fees for the year 2000 audit and the review of Forms 10-Q in 2000 were
$81,750, of which an aggregate amount of $21,000 had been billed through
December 31, 2000.
Financial Information Systems Design and Implementation Fees
Arthur Andersen LLP did not render any services related to financial
information systems design and implementation for the year ended December 31,
2000.
All Other Fees
Aggregate fees billed for all other services rendered by Arthur Andersen
LLP for the year ended December 31, 2000 were $93,125.
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The Audit Committee has not considered whether the payments made to its
independent accountants for non-audit services for 2000 are compatible with
maintaining such auditor's independence.
In reliance on the reviews and discussions referred to above, the Audit
Committee members did not become aware of any misstatement in the audited
financial statements and recommended to the Board of Directors (and the Board
has approved) that the audited financial statements be included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2000 for filing with
the Securities and Exchange Commission. The Audit Committee and the Board have
also approved the selection of the Company's independent auditors.
Audit Committee
VIRGINIA C. LACY, CHAIRMAN
JOHN M. COOK
RONALD C. ELKINS, M.D.
ALEXANDER C. SCHWARTZ, JR.
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REPORT OF THE COMPENSATION ADVISORY COMMITTEE ON
EXECUTIVE COMPENSATION
OVERVIEW
The Compensation Advisory Committee of the Board of Directors of CryoLife,
Inc. is composed of non-employee directors and approves the compensation of
CryoLife's executive officers at least annually. The Committee believes the
actions of executive officers of CryoLife have a profound impact on the
short-term and long-term profitability of CryoLife. Therefore, the Committee
gives significant attention to the design of CryoLife's compensation package.
CryoLife's compensation package consists of three parts and is relatively
simple in design. The three primary parts are a base salary, a cash bonus and
stock-based incentive compensation. No significant perquisites are provided to
executive officers.
BASE SALARY
The Committee believes it is important for executive officers and other
employees of CryoLife to receive acceptable salaries so that CryoLife can
recruit and retain the talent it needs. For several years, the Committee has
obtained a salary survey report. This survey, which is entitled the "Radford
Salary Survey for U.S. Biotech Companies," contains information regarding
salaries paid to various biotech executives in the United States. The Committee
reviews this salary survey primarily for information regarding salaries, as
opposed to bonus and stock incentive information. In setting salaries, the
Committee takes into consideration the individual employee's performance, length
of service to CryoLife, and the information provided by the Radford Survey. The
Committee seeks to set compensation at levels which are reasonable under the
circumstances and near the midrange for U.S. biotech companies. For 2000, the
Compensation Advisory Committee considered it advisable to make significant
increases in salaries in order to provide its executive officers with
compensation in the same range as that of executives employed by other companies
in the industry. Salaries for executive officers were raised by 15.5%, on the
average, as compared to 1999. The range of increases was from 5.8% to 24.8%
including a salary increase for one officer when he was promoted from Controller
to Vice President and Chief Financial Officer in April 2000. The base salary for
each executive officer is set on a subjective basis, bearing in mind an overall
impression of that executive's relative skills, experience and contribution to
CryoLife. The Committee does not attempt to address the relative weight assigned
to the various factors, which are evaluated on a subjective overall basis by
each individual member of the Committee. Salaries of all executive officers are
reviewed annually by the Committee. In accordance with this procedure, the
Committee consults with Mr. Anderson, the President and Chief Executive Officer
of CryoLife, and an appropriate range of base salary, bonus, and stock options
is subjectively considered, based upon the range of compensation received by the
other executive officers and the requirements of the particular positions to be
filled. The Chief Executive Officer negotiates with candidates for employment,
subject to acceptance and ratification by the Committee, and this negotiated
base salary is reflected in each candidate's employment agreement.
CASH BONUSES
Cash bonuses are the next component of executive officer compensation. In
determining the amount to be paid as bonuses to executive officers, the
Compensation Advisory Committee considers the performance of CryoLife in
reaching goals for increased revenues and pre-tax profit as well as the
performance of each executive officer. For 2000, the Compensation Advisory
Committee based its decision that bonuses should be awarded to CryoLife's
executive officers upon its subjective determination that CryoLife's 2000
increases in total revenues together with the achievement of certain goals
justified the granting thereof. During 2000, CryoLife reached significant goals
with regard to the SynerGraft valve and BioGlue products and the sale of the
remaining assets of Ideas for Medicine, Inc. to Horizon Medical, Inc. The amount
of the bonus paid to individual executive officers was determined based upon the
Committee's subjective analysis of the performance of each such officer.
Excluding the cash bonus paid to the Chief Executive Officer, 2000 executive
officer bonuses ranged from $30,000 to $70,000 and were paid in 2001.
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STOCK-BASED INCENTIVES
Stock-based incentives have been a supplemental component of compensation
for CryoLife's executive officers, and certain other employees, since the
formation of CryoLife. CryoLife adopted formal incentive stock option plans in
1984, 1989, 1993 and 1998. CryoLife has also made grants of non-qualified
options under an informal stock option program. The Sub-Committee approves
grants of stock options to executive officers under CryoLife's option plans.
Historically, grants made by CryoLife have generally vested at a rate of
20% per year and have had a term of five and one-half years. These options also
usually expire upon termination of employment, except in the event of disability
or death, in which case the term of the option may continue for some time
thereafter.
The Sub-Committee believes that CryoLife's stock option program has been
effective in focusing attention on shareholder value since the gain to be
realized by executive officers upon exercise of options will change as the stock
price changes. The Sub-Committee also believes that the long-term nature of the
options encourages CryoLife's executive officers to remain with CryoLife.
Finally, the Sub-Committee has found it appropriate to grant options to newly
employed executive officers in order to encourage such officers to identify
promptly with CryoLife's goal of increased shareholder value. The number of
shares to be granted is established utilizing the procedure described above at
"--Base Salary." The Sub-Committee subjectively determines the number of shares
to be granted based on its analysis of the number which would provide an
adequate incentive to the new executive officer to accept a position with
CryoLife.
In general, following initial employment, the granting of stock-based
incentives to executive officers is considered by the Sub-Committee to be
justified when CryoLife's revenues and earnings, coupled with the individual
executive's performance, warrant supplemental compensation in addition to the
salary and bonus paid with respect to a given year. Each of these factors is
weighed subjectively by Sub-Committee members in determining whether or not a
stock-based incentive should be granted, and such incentives are not granted
routinely. Stock-based incentives were granted to six executive officers to
purchase in the aggregate, 127,500 shares during 2000. The Committee thinks it
unlikely that any participants in CryoLife's stock plans will, in the
foreseeable future, receive in excess of $1 million in aggregate compensation
(the maximum amount for which an employer may claim a compensation deduction
pursuant to Section 162(m) of the Internal Revenue Code of 1986 unless certain
performance-related compensation exemptions are met) during any fiscal year, and
has therefore determined that CryoLife will not take any affirmative action at
this time to meet the requirements of such exemptions.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Committee fixed the 2000 salary of Mr. Steven G. Anderson, Chief
Executive Officer of CryoLife, at $520,000 and awarded Mr. Anderson a cash bonus
of $300,000 for his performance and significant service to CryoLife in 2000.
This bonus reflected an increase of $75,000 over the 1999 bonus. This exhibits
the philosophy of the Committee as set forth at "--Base Salary" and "--Cash
Bonuses" above. In 2000, Mr. Anderson was granted stock options to purchase
30,000 shares of common stock. The Committee and Sub-Committee believe the
compensation of Mr. Anderson, a founder of CryoLife, reflects their subjective
opinions that Mr. Anderson has provided superlative leadership and fulfilled the
functions of an executive officer of CryoLife at the highest level.
8
CONCLUSION
The Committee and Sub-Committee believe that the mix of a cash salary and
bonuses and a long-term stock incentive compensation program represents a
balance that has motivated and will continue to motivate CryoLife's management
team to produce the best results possible given overall economic conditions and
the difficulty of predicting CryoLife's performance in the short term.
COMPENSATION ADVISORY
COMMITTEE:
RONALD D. McCALL, CHAIRMAN
VIRGINIA C. LACY
RONALD C. ELKINS, M.D.
BRUCE J. VAN DYNE, M.D.
COMPENSATION ADVISORY
SUB-COMMITTEE:
VIRGINIA C. LACY
BRUCE J. VAN DYNE, M.D.
9
PERFORMANCE GRAPH
Set forth below is a line-graph presentation comparing the cumulative
shareholder return on CryoLife's common stock, on an indexed basis, against
cumulative total returns of the Russell 2000 Index, and a "peer group" selected
by management of CryoLife. The peer group selected for inclusion in this proxy
statement includes Advanced Tissue Sciences, Inc., Osteotech, Inc., Closure
Medical Corp. and LifeCell Corporation. Each of these companies has securities
traded on the Nasdaq Stock Market. Advanced Tissue and Osteotech were selected
because they had been utilized as a basis for comparison with CryoLife in
reports by analysts for each of the two co-managers of CryoLife's initial public
offering. Management selected LifeCell to be included in the peer group based on
the fact that LifeCell, a developer of tissue engineered products, is also a
biomedical company, and selected Closure Medical based on the fact that Closure
Medical markets tissue adhesive products. The returns for the peer group are
weighted according to each issuer's market capitalization. The performance graph
shows total return on investment for the period beginning December 31, 1995 and
ending December 31, 2000.
[GRAPH OMITTED]
ASSUMES $100 INVESTED ON JAN. 01, 1996
ASSUMES DIVIDENDS REINVESTED
FISCAL YEARS ENDING DEC. 31
VALUE OF $100 INVESTED ON DECEMBER 31, 1995 AT:
12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
------------ ------------ ------------ ------------ ----------- ------------
CRYOLIFE $ 100.00 $ 161.29 $ 175.81 $ 153.22 $ 151.61 $ 585.19
PEER GROUP $ 100.00 $ 95.97 $ 160.72 $ 136.00 $ 69.02 $ 101.21
RUSSELL 2000 INDEX $ 100.00 $ 116.61 $ 142.66 $ 138.66 $ 165.82 $ 158.66
Total return assumes reinvestment of dividends.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid or accrued by CryoLife
to CryoLife's Chief Executive Officer and the four other most highly paid
executive officers of CryoLife in 2000 (the "Named Executives"). The information
presented is for the years ended December 31, 2000, 1999 and 1998. All share
amounts have been adjusted to reflect the Company's 3-for-2 stock split
effective on December 27, 2000.
10
SUMMARY COMPENSATION TABLE
Long -Term
Annual Compensation Compensation
------------------------- --------------
Securities
Underlying All Other
Name and Salary Bonus Options/SARs Compensation
Principal Position Year ($) (1) ($) (#) (2) ($) (3)
- -------------------------------------- -------- -------------- ---------------
-------------------------
Steven G. Anderson 2000 $ 520,000 $ 300,000 30,000 $ 27,638
Chairman of the Board of 1999 442,750 225,000 0 27,388
Directors, President and Chief 1998 385,000 175,000 58,500 27,361
Executive Officer
Kirby S. Black, Ph.D. 2000 176,165 70,000 22,500 10,912
Vice President, Research and 1999 151,325 50,000 0 11,919
Development 1998 122,850 40,000 0 9,011
Albert E. Heacox, Ph.D. 2000 184,800 60,000 15,000 14,985
Vice President, Laboratory 1999 168,000 50,000 0 7,235
Operations 1998 152,250 42,000 0 7,894
Gerald B. Seery (4) 2000 155,547 30,000 15,000 3,521
Vice President, Marketing 1999 146,975 30,000 0 3,674
1998 131,250 30,000 0 3,268
James C. Vander Wyk, Ph.D. 2000 174,625 60,000 15,000 13,429
Vice President, Regulatory 1999 149,961 48,000 10,000 2,752
Affairs and Quality Assurance 1998 131,250 40,000 0 2,503
- -----------------
(1) Includes base salary earned by the Named Executives for the periods
presented and includes compensation deferred under CryoLife's 401(k)
plan, and amounts such officers elected to apply to CryoLife's
supplemental life insurance program. Amounts for perquisites and other
personal benefits extended to the Named Executives are less than the
lesser of $50,000 or 10% of the total of annual salary and bonus of such
Named Executive.
(2) During the periods presented, the only form of long-term compensation
utilized by CryoLife has been the grant of stock options. CryoLife has
not awarded restricted stock or stock appreciation rights, or made any
long-term incentive payouts. Accordingly, the columns for "Restricted
Stock Award(s)" and "Long Term Incentive Payouts" have been omitted.
(3) Since the inception of CryoLife's 401(k) plan, CryoLife has been matching
contributions to the plan subject to certain limitations and vesting
requirements. In 1992, CryoLife adopted its supplemental life insurance
program for certain executive officers.
(4) Effective March 16, 2001, Mr. Seery ceased serving as Vice President,
Marketing of CryoLife by transferring to the position of President of
AuraZyme Pharmaceuticals, Inc., a wholly-owned subsidiary of CryoLife.
11
The following table sets forth, for each of the Named Executives, the
amount of CryoLife's contributions to the 401(k) plan and the supplemental life
insurance program:
2000 1999 1998
------------------------------------ ----------------------------------- -------------------------------------
SUPPLEMENTAL TOTAL SUPPLEMENTAL TOTAL SUPPLEMENTAL
401(K) LIFE 401(K) LIFE 401(K) LIFE
TOTAL CONTRIBUTION INSURANCE CONTRIBUTION INSURANCE CONTRIBUTION INSURANCE
PROGRAM PROGRAM PROGRAM
-------- ------------ ------------- ------ ------------ --------------- ------- ------------- --------------
Steven G. Anderson $ 27,638 $ 5,250 $ 22,388 $ 27,388 $ 5,000 $ 22,388 $ 27,361 $ 4,973 $ 22,388
Ph.D.
Kirby S. Black, Ph.D. 10,912 1,741 9,171 11,919 2,748 9,171 9,011 2,547 6,464
Albert E. Heacox, 14,985 4,235 10,750 7,235 3,504 3,731 7,894 3,743 4,151
Ph.D.
Gerald B. Seery 3,521 3,521 0 3,674 3,674 0 3,268 3,268 0
James C. Vander 13,429 4,299 9,130 2,752 2,752 0 2,503 2,503 0
Wyk, Ph.D.
Grant of Options. During 2000, options were granted to Steven G. Anderson,
Kirby S. Black, Ph.D., Albert E. Heacox, Ph.D., Gerald B. Seery and James C.
Vander Wyk, Ph.D. No stock appreciation rights (SARs) have been granted by
CryoLife. The following table sets forth information regarding the grants of
options in 2000:
OPTION/SAR GRANTS IN LAST FISCAL YEAR (2000)
Number of
Securities
Underlying % of Total
Options/ Options/SARs
SARs Granted to Exercise Potential Realizable Value
Granted Employees in Price Expiration at Assumed Annual Rates of
Name (#) Fiscal Year ($/Sh)(1) Date(2) Appreciation for Option Term
-----------------------------
5%($) 10%($)
-------------------------------- ---------- --------------- ----------- ---------- -----------------------------
Steven G. Anderson................14,085(3) 3.5 $29.15 12/7/10 $258,210.14 $654,355.19
915(3) 0.2 $29.15 12/7/10 $16,774.03 $42,508.70
15,000(4) 3.7 $11.50 5/26/10 $106,534.32 $272,970.57
Kirby S. Black, Ph.D. ............22,500(5) 5.6 $11.63 11/26/05 $76,785.96 $175,555.28
Albert E. Heacox, Ph.D. ..........15,000(5) 3.7 $11.63 11/26/05 $51,190.64 $117,036.86
Gerald B. Seery...................15,000(6) 3.7 $29.15 6/7/06 $134,547.08 $301,220.05
James C. Vander Wyk, Ph.D. .......15,000(7) 3.7 $29.15 6/7/07 $163,136.94 $375,067.05
- -------------
(1) The exercise price was fixed as the mean of the high and low market
price on the date of grant.
(2) Options are subject to earlier termination in the event of death,
disability, retirement, or termination of employment.
(3) The options vest on January 1, 2010.
(4) As to 8,695 shares, the options vest and become exercisable on January
1, 2009 and as to 6,305 shares, the options vest on January 1, 2010.
(5) The options vest and become exercisable on each anniversary of the
grant date in the amount of 20% of the total shares granted on each
vesting date.
(6) The options vest and become exercisable on each anniversary of the
grant date in the following amounts: as to 2,503 shares, on the first
anniversary, as to 2,504 shares, on the second anniversary, as to 3,450
shares, on the third anniversary, as to 3,432 shares, on the fourth
anniversary and as to 3,132 shares, on the fifth anniversary.
(7) The options vest and become exercisable on each anniversary of the
grant date as follows: as to 805 shares, on the first anniversary, as
to 2,556 shares, on each of the second, third and fourth anniversaries,
as to 3,431 shares, on the fifth anniversary and as to 3,096 shares, on
the sixth anniversary.
12
Options Exercised. The following table sets forth information regarding the
exercise of options in 2000 and the number of options held by the Named
Executives as listed in the Summary Compensation Table, including the value of
unexercised in-the-money options, as of December 31, 2000. The closing price of
CryoLife's common stock on December 29, 2000 used to calculate such values was
$30.25 per share.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR (2000)
AND FISCAL YEAR-END OPTION/SAR VALUES (AS OF DECEMBER 31, 2000)
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARs OPTIONS/SARs
AT YEAR END (#) AT YEAR END ($)
------------------------ ------------------------------
SHARES VALUE
ACQUIRED ON
EXERCISE REALIZED
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------- ------------ --------- ---------- ----------- ---------- -------------
Steven G. Anderson...... 36,000 $ 396,360 18,300 111,450 $ 390,885 $ 1,867,612
Kirby S. Black, Ph.D.... 45,000 618,750 0 22,500 $ 0 $ 418,950
Albert E. Heacox, Ph.D. 45,000 1,262,970 0 15,000 $ 0 $ 279,300
Gerald B. Seery......... 55,000 583,485 3,000 21,000 $ 63,750 $ 144,000
James C. Vander Wyk, Ph.D. --- --- 39,000 36,000 $ 950,130 $ 498,720
........
Long-Term Incentive Plan. On December 19, 1997, the Board of Directors
adopted, subject to approval of shareholders, the CryoLife 1998 Long-Term
Incentive Plan. As amended in 2000, the 1998 Long-Term Incentive Plan provides
for the grant of options, stock appreciation rights and other awards to acquire
up to a maximum of 900,000 shares of common stock, subject to certain
adjustments. As of March 16, 2001, options for 710,250 shares were outstanding
and options for 5,250 shares had been exercised. Options may be granted under
the 1998 Long-Term Incentive Plan to employees, officers or directors of and
consultants and advisors to CryoLife and its subsidiaries. CryoLife estimates
that, as of March 21, 2001, approximately 320 employees (including officers) and
five non-officer directors of CryoLife were eligible to participate in the 1998
Long-Term Incentive Plan. Unless sooner terminated by the Board, the 1998
Long-Term Incentive Plan terminates in May 2008. Stock options granted under the
Plan also usually expire upon termination of employment or shortly thereafter.
In the event of a "change of control transaction" as defined in the 1998
Long-Term Incentive Plan, limitations on exercisability of stock options owned
by executive officers shall be waived, and the limitations on exercisability of
stock options owned by others may be waived in the discretion of the
Compensation Advisory Committee.
CryoLife Amended and Restated Non-Employee Directors Stock Option Plan. The
CryoLife Amended and Restated Non-Employee Directors Stock Option Plan provides
for the grant of options to non-employee directors of CryoLife. This plan
provides for the grant of options to acquire up to a maximum of 262,500 shares
of common stock. At each Annual Meeting of Shareholders, each non-employee
director elected, re-elected or continuing as a non-employee director of
CryoLife receives an annual grant of options to purchase 7,500 shares on the
first business day after such Annual Meeting, which options shall vest and
become exercisable on the date of grant. Except as set forth below, options
granted under this plan are not transferable other than by will or the laws of
descent and distribution. Notwithstanding the foregoing, the optionee may
transfer the option for no consideration to or for the benefit of a member of
the optionee's immediate family (including, without limitation, to a trust or
IRA) subject to such limits as the Board may establish, and the transferee shall
remain subject to all the terms and conditions that were applicable to such
option prior to the transfer. Upon the death of a non-employee director, options
which were exercisable on the date of death are exercisable by his or her legal
representatives or heirs, but in no event may the option be exercised after the
last day on which it could have been exercised by the non-employee director. As
of December 31, 2000, options for 105,000 shares had been granted under this
plan.
Employment Agreements. CryoLife has entered into employment agreements with
each of the Named Executives. Except for Mr. Anderson's agreement, and other
than with respect to position specific terms, such as duties of employment and
compensation, these employment agreements are substantially identical and
provide that employment may be terminated by either party with or without cause
upon 30 days' written notice to the other. The agreements automatically
terminate upon death. Each employee is required to devote his full and exclusive
time and attention to his employment duties, and CryoLife reserves the right to
change the nature and scope of those duties. The agreement conditions employment
and continued employment upon the employee's signing CryoLife's standard Secrecy
and Noncompete Agreement.
13
A new employment agreement with Mr. Anderson was negotiated in February
1999 for a term of five years, which replaces a similar contract negotiated in
1995. The Compensation Advisory Committee approved the inclusion of a provision
in the agreement pursuant to which Ms. Ann B. Anderson, the spouse of Mr.
Anderson, would be provided with health care coverage throughout her life. The
agreement provides that either party may terminate Mr. Anderson's employment by
giving 180 days' written notice to the other. The termination may be with or
without cause. In the event CryoLife terminates employment without cause, Mr.
Anderson will be entitled to be paid for the remainder of his term or for two
years, whichever is greater. If the termination is with cause, after the 180
days' notice period no additional compensation is due.
Compensation Advisory Committee Interlocks and Insider Participation. The
following four directors serve on the Compensation Advisory Committee of
CryoLife's Board of Directors: Mr. McCall, Ms. Lacy, Dr. Elkins and Dr. Van
Dyne. Mr. McCall has been Secretary and Treasurer of CryoLife since 1984.
CryoLife has engaged Ronald D. McCall, P.A., a law firm of which Mr. McCall is
the sole shareholder to perform legal services on an ongoing basis. For the year
ended December 31, 2000, CryoLife paid Ronald D. McCall, P.A. approximately
$76,275 for such legal services, including expense reimbursements. Management
believes that these services were provided on terms no less favorable to
CryoLife than terms available from unrelated parties for comparable services.
See "Information about the Board of Directors and Committees of the Board -
Director Compensation" regarding consulting fees paid by CryoLife to Dr. Elkins
and Dr. Van Dyne during fiscal 2000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires CryoLife's
executive officers and directors and persons who beneficially own more than 10%
of CryoLife's stock to file initial reports of ownership and reports of changes
in ownership with the Securities and Exchange Commission. Executive officers,
directors and greater than 10% beneficial owners are required by SEC regulations
to furnish CryoLife with copies of all Section 16(a) forms they file.
Based solely on its review of copies of forms received by it pursuant to
Section 16(a) of the Securities Exchange Act of 1934 or written representations
from reporting persons, CryoLife believes that with respect to 2000, all Section
16(a) filing requirements applicable to its executive officers, directors and
greater than 10% beneficial owners were complied with except as follows: John M.
Cook, one of CryoLife's directors, filed a delinquent Form 4 in March 2001 to
report four purchases of CryoLife's Common Stock made in March 2000. Such
purchases were made by CT Investments, LLC of which Mr. Cook owns 90% of the
membership interests.
14
OWNERSHIP OF PRINCIPAL SHAREHOLDERS, NAMED EXECUTIVES,
AND EXECUTIVE OFFICERS AND DIRECTORS AS A GROUP
The name and address of each person or entity who owned beneficially 5%
or more of the outstanding shares of common stock of CryoLife on March 16, 2001,
together with the number of shares owned and the percentage of outstanding
shares that ownership represents is set forth in the following table. The table
also shows information concerning beneficial ownership by each of the Named
Executives and by all directors and executive officers as a group. The number of
shares beneficially owned is determined under the rules of the SEC, and the
information is not necessarily indicative of beneficial ownership for any other
purpose. Under such rules, beneficial ownership includes any shares as to which
the individual has sole or shared voting power or investment power and also any
shares which the individual has the right to acquire within 60 days after the
date hereof through the exercise of any stock option or other right. Unless
otherwise indicated, each person has sole investment and voting powers, or
shares such powers with his or her spouse, with respect to the shares set forth
in the following table:
Percentage of
Number of Shares of Outstanding
CryoLife Stock Shares of
Beneficial Owner Beneficially Owned CryoLife Stock
- --------------------------------------------------- ---------------------- -----------------
Steven G. Anderson................................. 1,757,167(1) 9.36%
Kirby S. Black, Ph.D............................... 51,388(2) *
Albert E. Heacox, Ph.D............................. 120,396(3) *
Gerald B. Seery.................................... 37,800(4) *
James C. Vander Wyk, Ph.D. ........................ 48,000(5) *
Scudder Kemper Investments, Inc.................... 1,970,100(6) 10.51%
All current Directors and Executive Officers
as a group (14 persons)....................... 3,281,594(7) 16.97%
- ------------------
* Ownership represents less than 1% of outstanding CryoLife common stock.
(1) Includes 157,999 shares held of record by Ms. Ann B. Anderson, Mr.
Anderson's spouse. Also includes 27,000 shares subject to options which are
presently exercisable or will become exercisable within 60 days after the
date of this proxy statement. The business address for Mr. Anderson is: c/o
CryoLife, Inc., 1655 Roberts Blvd., N.W., Kennesaw, Georgia 30144.
(2) Includes 4,500 shares subject to options which are either presently
exercisable or will become exercisable within 60 days after the date of
this proxy statement. Also includes 225 shares held by Dr. Black's minor
children.
(3) Includes 3,000 shares subject to options which are either presently
exercisable or will become exercisable within 60 days after the date of
this proxy statement. Also includes 45,000 shares owned by Dr. Heacox's
spouse as trustee of a living trust and 72,396 shares owned by Dr. Heacox
as trustee of a living trust.
(4) Includes 3,000 shares subject to options which are either presently
exercisable or will become exercisable within 60 days after the date of
this proxy statement.
(5) Includes 39,200 shares subject to options which are either presently
exercisable or will become exercisable within 60 days after the date of
this proxy statement.
(6) The business address of Scudder Kemper Investments, Inc. is: 345 Park
Avenue, New York, New York 10154. Based on Schedule 13G filed with the
Securities and Exchange Commission on February 14, 2001.
(7) See "Election of Directors" for information as to the beneficial ownership
of shares attributed to directors who are not also Named Executives.
Includes 591,199 shares subject to options which are presently exercisable
or will become exercisable within 60 days after the date of this proxy
statement. Includes 117,396 shares held as trustees by an executive officer
and his spouse. Includes 358,450 shares held as beneficiary of three
trusts, and 165,879 shares held as beneficiary of an IRA, of Ms. Lacy's
deceased spouse. Includes 22,500 shares held as administrator of a pension
plan. Includes 173,999 shares held of record by the spouses of executive
officers and directors.
15
INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Arthur Andersen LLP has been the independent
certified public accountants of CryoLife since May, 1999. Approval or selection
of the independent certified public accountants of CryoLife is not submitted to
the shareholders at the Annual Meeting. The Board of Directors of CryoLife has
historically selected the independent certified public accountants of CryoLife
with the advice of the Audit Committee, and the Board believes that it would be
to the detriment of CryoLife and its shareholders for there to be any
impediment, such as selection or ratification by the shareholders, to its
exercising its judgment to select CryoLife's independent certified public
accountants or to remove them if, in its opinion, such removal is in the best
interest of CryoLife and its shareholders.
It is anticipated that a representative from the accounting firm of Arthur
Andersen LLP will be present at the annual meeting of shareholders to answer
questions and make a statement if the representative desires to do so.
On May 27, 1999, at the recommendation of the Audit Committee, the Board of
Directors of CryoLife engaged the accounting firm of Arthur Andersen LLP as
independent auditors for CryoLife. Arthur Andersen LLP replaces the firm of
Ernst & Young LLP, whose engagement expired and was not renewed by CryoLife's
Board of Directors, also based on the recommendation of the Audit Committee,
effective as of May 27, 1999. Ernst & Young LLP was notified that their
engagement would not be renewed on June 1, 1999.
Neither CryoLife nor anyone engaged on its behalf has consulted with Arthur
Andersen LLP since the beginning of CryoLife's fiscal year ended December 31,
1997 with regard to (i) either: the application of accounting principles to a
specified transaction, either completed or proposed; or the type of audit
opinion that might be rendered on CryoLife's financial statements which Arthur
Andersen LLP has concluded was an important factor considered by CryoLife in
reaching a decision as to the accounting, auditing, or financial reporting
issue; or (ii) any matter that was either the subject of a disagreement (as
defined in Item 304(a)(1)(iv) of Regulation S-K) or a reportable event (as
described in Item 304(a)(1)(v) of Regulation S-K).
There were no disagreements between CryoLife and Ernst & Young LLP in
connection with the audits of the two most recent fiscal years ended December
31, 2000 and 1999, on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedures, which
disagreements if not resolved to their satisfaction would have caused Ernst
&Young LLP to make reference in connection with their reports to the subject
matter of the disagreement. In addition, no events of the type referenced in
paragraphs (a) (1) (v) (A) through (D) of Item 304 of Regulation S-K occurred
within CryoLife's two most recent fiscal years or within the subsequent interim
period through May 27, 1999.
The audit reports of Ernst & Young LLP on the consolidated financial
statements of CryoLife as of and for the years ended December 31, 2000 and 1999
did not contain any adverse opinion or disclaimer of opinion, nor were they
qualified or modified as to uncertainty, audit scope, or accounting principles.
On June 8, 1999, CryoLife received a letter of Ernst & Young LLP dated June
7, 1999. This letter was filed with the Securities and Exchange Commission as
Exhibit 16 to CryoLife's Current Report on Form 8-K/A dated May 22, 1999.
SHAREHOLDER PROPOSALS
Appropriate proposals of shareholders intended to be presented at
CryoLife's 2002 Annual Meeting of Shareholders pursuant to Rule 14a-8
promulgated under the Securities Exchange Act of 1934 must be received by
CryoLife by December 5, 2001 for inclusion in its proxy statement and form of
proxy relating to that meeting. In addition, all shareholder proposals submitted
outside of the shareholder proposal rules promulgated pursuant to Rule 14a-8
under the Exchange Act must be received by CryoLife by February 18, 2002, in
order to be considered timely. If such shareholder proposals are not timely
received, proxy holders will have discretionary voting authority with regard to
any such shareholder proposals which may come before the 2002 Annual Meeting. If
the date of the next annual meeting is advanced or delayed by more than 30
calendar days from the date of the annual meeting to which this proxy statement
relates, CryoLife shall, in a timely manner, inform its shareholders of the
change, and the date by which proposals of shareholders must be received.
16
Upon The Written Request Of Any Record Or Beneficial Owner Of Common Stock
Of CryoLife Whose Proxy Was Solicited In Connection With The 2001 Annual Meeting
Of Shareholders, CryoLife Will Furnish Such Owner, Without Charge, A Copy Of Its
Annual Report On Form 10-K Without Exhibits For Its Fiscal Year Ended December
31, 2000. Request For A Copy Of Such Annual Report On Form 10-K Should Be
Addressed To Suzanne Gabbert, Assistant Secretary, CryoLife, Inc., 1655 Roberts
Boulevard, N.W., Kennesaw, Georgia 30144.
It Is Important That Proxies Be Returned Promptly. Shareholders Who Do Not
Expect To Attend The Meeting In Person Are Urged To Sign, Complete, Date And
Return The Proxy Card In The Enclosed Envelope, To Which No Postage Need Be
Affixed.
By Order of the Board of Directors
/s/ Steven G. Anderson
STEVEN G. ANDERSON, Chairman
of the Board, President and Chief
Dated: April 4, 2001 Executive Officer
17
APPENDIX A
CHARTER
AUDIT COMMITTEE
CRYOLIFE, INC.
ORGANIZATION
There shall be a committee of the board of directors to be known as the
Audit Committee. The Audit Committee shall be composed of at least three
directors who are free of any relationship that, in the opinion of the board of
directors, would interfere with their exercise of independence from management
and the Company as a committee member. In addition, each Audit Committee member
shall be financially literate, as such qualification is interpreted by the
Company's Board of Directors in its business judgment or must become financially
literate within a reasonable period of time after his or her appointment to the
Audit Committee. At least one member of the Audit Committee must have accounting
or related financial management expertise, as the Board of Directors interprets
such qualification in its business judgment.
STATEMENT OF POLICY
The Audit Committee shall provide assistance to the corporate directors in
fulfilling their responsibility to the shareholders, potential shareholders, and
investment community relating to corporate accounting, reporting practices of
the corporation, and the quality and integrity of the financial reports of the
corporation. In so doing, it is the responsibility of the Audit Committee to
maintain free and open means of communication between the directors, the
independent auditors and the financial management of the corporation.
RESPONSIBILITIES
In carrying out its responsibilities, the Audit Committee believes its
policies and procedures should remain flexible, in order to best react to
changing conditions and to ensure to the directors and shareholders that the
corporate accounting and reporting practices of the corporation are in
accordance with all requirements and are of the highest quality.
In carrying out these responsibilities, the Audit Committee will:
1. Review and recommend to the directors the independent auditors to be
selected to audit the financial statements of the corporation and its
divisions and subsidiaries. The accountability of the independent
auditor is to the Audit Committee and the Board of Directors. The
Audit Committee has the responsibility to select, evaluate and
recommend to the Board of Directors the independent auditors. The
Audit Committee is responsible for ensuring auditor independence.
2. Meet with the independent auditors and financial management of the
corporation to review the scope of the proposed audit for the current
year and the audit procedures to be utilized, and at the conclusion
thereof review such audit, including any comments or recommendations
of the independent auditors.
3. Review with the independent auditors, and the financial and accounting
personnel of the Company, the quality and adequacy of financial
statements and financial disclosures and effectiveness of the
accounting and financial controls of the corporation, and elicit any
recommendations for the improvement of such internal control
procedures or particular areas where new or more detailed controls or
procedures are desirable. Particular emphasis should be given to the
adequacy of such internal controls to expose any payments,
transactions, or procedures that might be deemed illegal or otherwise
improper. Further, the committee periodically should review Company
policy statements to determine their adherence to the code of conduct.
4. Obtain and review on a periodic basis statements of the outside
auditor delineating all relationships between the auditor and the
Company and actively engage the outside auditor in a dialogue with
respect to any relationships or services that may impact on the
objectivity and independence of the outside auditor and recommend that
the Board of Directors take appropriate action in response to the
outside auditors report to satisfy itself of the outside auditors
independence.
5. Review the financial statements contained in the annual report to
shareholders with management and the independent auditors to determine
that the independent auditors are satisfied with the disclosure and
content of the financial statements to be presented to the
shareholders. Any changes in accounting principles should be reviewed.
The Audit Committee will notify shareholders in annual proxy
statements that financial statements have been reviewed with
management and the independent auditors and that the Committee has
assessed the auditors independence and recommended the filing of
financial statements with the Form 10K. The Audit Committee will have
discussions with independent auditors concerning the quality of
financial reporting and the fairness of the presentation of financial
statements prior to filing of Form 10K.
6. Provide sufficient opportunity for the independent auditors to meet
with the members of the Audit Committee without members of management
present. Among the items to be discussed in these meetings are the
independent auditors' evaluation of the corporation's financial,
accounting, and auditing personnel, and the cooperation that the
independent auditors received during the course of the audit.
7. Submit the minutes of all meetings of the Audit Committee to, or
discuss the matters discussed at each committee meeting with, the
board of directors.
8. Investigate any matter brought to its attention within the scope of
its duties, with the power to retain counsel for this purpose if, in
its judgment, that is appropriate.
ADOPTED MAY 26, 2000
CRYOLIFE, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR USE AT THE ANNUAL MEETING ON MAY 17, 2001
The undersigned shareholder hereby appoints STEVEN G. ANDERSON and RONALD
D. McCALL, or any of them, with full power of substitution, to act as proxy for,
and to vote the stock of, the undersigned at the Annual Meeting of Shareholders
of CRYOLIFE, INC. to be held on May 17, 2001, and any adjournments thereof.
The undersigned acknowledges receipt of Notice of the Annual Meeting and
Proxy Statement, each dated April 4, 2001, and grants authority to said proxies,
or their substitutes, and ratifies and confirms all that said proxies may
lawfully do in the undersigned's name, place and stead. The undersigned
instructs said proxies to vote as indicated below and on the reverse hereof.
FOR election of REFRAIN FROM
the individuals VOTING FOR
set forth at election of
right (except the nominees
as marked to set forth at
the contrary) right
1. ELECTION OF Nominees: 2. Upon such other matters as
DIRECTORS ----- ----- may properly come before the
Steven G. Anderson meeting.
John M. Cook THE PROXIES SHALL VOTE AS
SPECIFIED ABOVE, OR IF NO
(INSTRUCTIONS): To withhold Ronald C. Elkins, M.D. DIRECTION IS MADE, THIS PROXY
authority to vote for any WILL BE VOTED FOR EACH OF THE
individual nominee(s), write that Virginia C. Lacy LISTED NOMINEES
person's name on the space provided
below Ronald D. McCall, Esq.
- ---------------------------------------
Alexander C. Schwartz, Jr. PLEASE VOTE, SIGN, DATE AND
RETURN THIS PROXY CARD
Bruce J. Van Dyne, M.D. PROMPTLY USING THE ENCLOSED
ENVELOPE.
Signature _________________________ Date__________________
Signature _________________________ Date__________________
NOTE:(Shareholders should sign exactly as name appears on stock. When there is
more than one owner each should sign. Executors, Administrators, Trustees
and others signing in a representative capacity should so indicate.)
(continued on the reverse side)
Please Detach and Mail in the Envelope Provided
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Shareholders of
CRYOLIFE, INC.
May 17, 2001
at
Sheraton Suites Galleria-Atlanta
2844 Cobb Parkway, SE
Atlanta, Georgia 30339
10:00 a.m.
1346348