SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Under Rule
[_] Confidential, For Use of the 14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
BIO-REFERENCE LABORATORIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
1) Amount previously paid:
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BIO-REFERENCE LABORATORIES, INC.
481 EDWARD H. ROSS DRIVE
ELMWOOD PARK, NEW JERSEY 07407
201-791-2600
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
-----------------
JULY 22, 2010
-----------------
The annual meeting of the stockholders of Bio-Reference Laboratories, Inc.
(the "Company") will be held at the Sheraton Crossroads Hotel, Crossroads
Corporate Center, Route 17 North, Mahwah, New Jersey 07495-0001, on Thursday,
July 22, 2010 at 9:00 A.M. local time, for the purpose of considering and acting
on the following matters:
1. Election of two directors to the Company's Board of Directors, each
to serve for a term of three years and until his successor is duly
elected and qualified (Proposal One).
2. Such other business as may properly be brought before the meeting or
any adjournment thereof.
Pursuant to the provisions of the By-Laws, the Board of Directors has
fixed the close of business on Monday, June 7, 2010 as the record date for
determining the stockholders of the Company entitled to notice of, and to vote
at the meeting or any adjournment thereof.
Stockholders who do not expect to be present in person at the meeting are
urged to date and sign the enclosed proxy and promptly mail it in the
accompanying postage-paid envelope.
By Order of the Board of Directors
Marc D. Grodman
President
Dated: June 9, 2010
PLEASE COMPLETE AND PROMPTLY RETURN YOUR PROXY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE. THIS WILL NOT PREVENT YOU FROM VOTING IN PERSON AT THE
MEETING BUT WILL, HOWEVER, HELP TO ASSURE A QUORUM AND AVOID ADDED PROXY
SOLICITATION COSTS.
BIO-REFERENCE LABORATORIES, INC.
481 EDWARD H. ROSS DRIVE
ELMWOOD PARK, NEW JERSEY 07407
201-791-2600
-----------------
PROXY STATEMENT
-----------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 22, 2010
-----------------
This Proxy Statement of Bio-Reference Laboratories, Inc., a New Jersey
corporation (the "Company") is first being mailed to Stockholders on or about
June 17, 2010 in connection with the solicitation of proxies by the Company's
Board of Directors to be used at the Annual Meeting of Stockholders of the
Company to be held on Thursday, July 22, 2010 at 9:00 A.M. (local time) at the
Sheraton Crossroads Hotel, Crossroads Corporate Center, One International
Boulevard, Route 17 North, Mahwah, New Jersey 07495-0001. Accompanying this
Proxy Statement is a Notice of Annual Meeting of Stockholders, a form of Proxy
for the meeting and a copy of the Company's 2009 Annual Report containing
financial statements and related data.
All proxies which are properly filled in, signed and returned to the
Company prior to or at the Meeting will be voted in accordance with the
instructions thereon. A proxy may be revoked by any stockholder giving the same
prior to the exercise thereof by (a) written notice addressed to the Company's
Chief Information Officer and delivered to the Company's principal offices prior
to the commencement of the Meeting, (b) providing a signed proxy bearing a later
date, or (c) appearing in person and voting at the Meeting. The Company intends
to vote executed but unmarked proxies in favor of Proposal One. The Board has
fixed the close of business on Monday, June 7, 2010, as the record date for the
determination of stockholders who are entitled to notice of, and to vote at the
meeting or any adjournment thereof.
The expenses of preparing, assembling, printing and mailing the form of
proxy and the material used in solicitation of proxies will be borne by the
Company. In addition to the solicitation of proxies by use of the mails, the
Company may utilize the services of some of its officers and regular employees
(who will receive no additional compensation therefore) to solicit proxies
personally, and by telephone. The Company has requested banks, brokers and other
custodians, nominees and fiduciaries to forward copies of the proxy material to
their principals and to request authority for the execution of proxies and will
reimburse such persons for their services in doing so. The cost of such
additional solicitation incurred otherwise than by use of the mails is estimated
not to exceed $10,000.
On April 7, 2010, the Company announced a two-for-one split of its Common
Stock, .01 par value (the "Common Stock") payable to stockholders of record at
the close of business on April 19, 2010. Throughout this Proxy Statement, the
number of shares of Common Stock reflects post-split shares. At the record date,
the Company had 27,797,772 shares of its Common
Stock, issued and outstanding, the holders of which are each entitled to one
vote per share. The presence in person or by proxy of at least a majority of the
outstanding Common Stock is necessary to constitute a quorum at the meeting.
Broker nonvotes (that is, proxies from brokers or nominees indicating that such
persons have not received instructions from the beneficial owners or other
persons entitled to vote shares on a particular matter as to which the broker or
nominee does not have discretionary authority) will be counted for purposes of
determining a quorum for the transaction of business at the Annual Meeting but
will not be considered as votes for purposes of determining the outcome of a
vote. Election of directors (Proposal One) requires the affirmative vote of a
plurality of the votes cast on the Proposal by the holders of Common Stock
present in person or by proxy at the meeting.
The following table sets forth information as of June 7, 2010 with respect
to the ownership of Common Stock by (i) each person known by the Company to be
the beneficial owner of more than 5% of its outstanding Common Stock, (ii) each
director of the Company, (iii) each executive officer of the Company, and (iv)
all directors and executive officers as a group.
Name and Address of Shares of Common Stock Percentage
Beneficial Owner Beneficially Owned(1) Ownership
------------------------ ---------------------- ----------
DIRECTORS AND
EXECUTIVE OFFICERS*
Marc D. Grodman(2) 2,777,200 10%
Howard Dubinett 430,138 2%
Sam Singer(3) 87,232 -
Joseph Benincasa -0- -
Harry Elias -0- -
Gary Lederman 30,400 -
John Roglieri 10,000 -
Executive Officers 3,334,970 12%
and Directors as a group
(seven persons)(2)(3)
OTHER GREATER THAN 5%
BENEFICIAL OWNER
Black Rock, Inc.(4) 1,877,438 7%
40 East 52nd Street
New York, NY 10022
- ----------
* The address of all of the Company's directors and executive officers is
c/o the Company, 481 Edward H. Ross Drive, Elmwood Park, New Jersey 07407.
(1) Except as otherwise noted, each holder named in the table has sole voting
and investment power with respect to the shares of Common Stock shown as
beneficially owned.
2
(2) Includes 2,323,666 shares owned directly. Also includes 347,134 shares
owned by Dr. Grodman's wife, Pam Grodman, and 106,400 shares owned by
their children. Dr. Grodman disclaims beneficial ownership of these
453,534 shares.
(3) Includes 68,032 shares owned directly, and 19,200 shares owned by children
who share Mr. Singer's household. Mr. Singer disclaims beneficial
ownership of these 19,200 shares.
(4) According to a Schedule 13G dated January 20, 2010 filed with the
Securities and Exchange Commission, Black Rock, Inc. through its
acquisition of Barclays Global Investors from Barclays Bank PLC, is deemed
the beneficial owner of these 1,877,438 shares which were acquired and are
held in the ordinary course of business; were not acquired for the purpose
of and do not have the effect of changing or influencing the control of
the Company; and were not acquired in connection with or as a participant
in any transaction having such purpose or effect.
The Company's executive officers and directors and members of their
immediate families owning and having the right to vote an aggregate 3,334,970
shares (12%) of the Company's outstanding Common Stock have stated their
intention to vote their shares FOR the nominees proposed for election as
directors (Proposal One).
ACTION TO BE TAKEN AT THE MEETING
ELECTION OF DIRECTORS
(PROPOSAL ONE)
The number of directors on the Company's Board of Directors is currently
fixed at seven. The Company's Certificate of Incorporation divides the Board of
Directors into three classes. The members of each class of directors serve for
staggered three-year terms. The Board is comprised of two Class I directors (Dr.
Grodman and Mr. Dubinett), two Class II directors (Mr. Singer and Mr. Elias) and
three Class III directors (Mr. Benincasa, Mr. Lederman and Dr. Roglieri), whose
terms expire upon the election and qualification of their successors at
successive Annual Meetings to be held in 2010 (the Class I directors), in 2011
(the Class II directors) and in 2012 (the Class III directors). At each Annual
Meeting of Stockholders, the directors comprising one of the classes are elected
for a full term of three years.
Dr. Grodman, and Mr. Dubinett (current Class I directors) are being
proposed for reelection at this Annual Meeting of Stockholders, each to serve
for a three-year term and until his successor is elected and qualifies. The
shares represented by proxies will be voted in favor of the election as
directors of Dr. Grodman and Mr. Dubinett who are the nominees of the Board of
Directors for election. Management has no reason to believe that any of such
nominees for the office of director will not be available for election as a
director. However, should any of them become unwilling or unable to accept
nomination for election, it is intended that the individuals named in the
enclosed proxy may vote for the election of such other person or persons as the
Board of Directors may recommend.
The following table sets forth certain information as of the record date
with respect to each of the directors and executive officers of the Company.
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Name Age Position
- ----------------------------- --- -----------------------------------------
Marc D. Grodman, M.D. 58 Chairman of the Board, President, Chief
Executive Officer and Director
Howard Dubinett 58 Executive Vice President, Chief Operating
Officer and Director
Sam Singer 66 Senior Vice President, Chief Financial
Officer, Chief Accounting Officer and
Director
Joseph Benincasa(a)(c)(e) 60 Director
Harry Elias(a)(c)(e) 80 Director
Gary Lederman, Esq. (b)(c)(e) 76 Director
John Roglieri, M.D. (a)(d)(e) 70 Director
- ----------------------------------------------------------
(a) Member of the Audit Committee
(b) Chairman of the Audit Committee
(c) Member of the Compensation Committee
(d) Chairman of the Compensation Committee
(e) Member of the Nominating Committee
BACKGROUND
The following is a brief account of the business experience of each
director including each nominee for director of the Company.
Marc D. Grodman, M.D. founded the Company in December 1981 and has been
its Chairman of the Board, President, Chief Executive Officer and a Director
since its formation. Dr. Grodman is an Assistant Professor of Clinical Medicine
at Columbia University's College of Physicians and Surgeons and Assistant
Attending Physician at New York Presbyterian Hospital, New York City. From 1980
to 1983, Dr. Grodman attended the Kennedy School of Government at Harvard
University and was a Primary Care Clinical Fellow at Massachusetts General
Hospital. From 1982 to 1984, he was a medical consultant to the Metal Trades
Department of the AFL-CIO. Dr. Grodman received a B.A. degree from the
University of Pennsylvania in 1973 and an M.D. degree from Columbia University
College of Physicians and Surgeons in 1977. Except for his part time duties as
Assistant Professor of Clinical Medicine and Assistant Attending Physician at
Columbia University and New York Presbyterian Hospital, Dr. Grodman devotes all
of his working time to the business of the Company. Since January 2005, Dr.
Grodman has been a member of the Board of Directors of the American Clinical
Laboratory Association (the "ACLA"). He served as chairman of the ACLA
commencing in April 2008 and since April 2010, has been its vice chairman.
Howard Dubinett has been the Executive Vice-President and Chief Operating
Officer of the Company since its formation in 1981. He became a Director of the
Company in April 1986.
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Mr. Dubinett attended Rutgers University. Mr. Dubinett devotes all of his
working time to the business of the Company.
Sam Singer has been the Company's Vice President and Chief Financial
Officer since October 1987 and a Director since November 1989. He is responsible
for all of the Company's financial activities. Mr. Singer was the Controller for
Sycomm Systems Corporation, a data processing and management consulting company,
from 1981 to 1987, prior to joining the Company. He received a B.A. degree from
Strayer University and an M.B.A. from Rutgers University. Mr. Singer devotes all
of his working time to the business of the Company.
Joseph Benincasa became a Director of the Company in June 2005. Mr.
Benincasa currently serves as the Executive Director of The Actors' Fund of
America, a position he has held since 1989. The Actors' Fund is the leading
national, non-profit human services organization providing comprehensive social
and health care services, employment, training and housing support to the
entertainment profession. It is headquartered in New York City with regional
offices in Chicago and Los Angeles. He is also a director of St. Peter's
University Medical Center and also sits on the boards of directors of Broadway
Cares/Equity Fights AIDS; the National Theatre Workshop of the Handicapped;
Career Transition for Dancers; the Times Square Alliance; the New York Society
of Association Executives; the YMCA of New York City and the Somerset Patriots,
a minor league baseball team. Mr. Benincasa holds a B.A. from St. Joseph's
University and an M. Ed. from Rutgers University. He also attended the Fordham
University Graduate School of Business.
Harry Elias became a Director of the Company in March 2004. Mr. Elias
commenced his employment in sales and marketing with JVC Company of America
("JVC") in 1967, subsequently being appointed as JVC's Senior Vice President of
Sales and Marketing in 1983 and as Executive Vice President of Sales and
Marketing in 1990. In 1995, Mr. Elias was named as JVC's Chief Operating
Officer, a position he occupied until April 2003 when he resigned his positions
upon his appointment as JVC's "Honorable Chairman." JVC, a distributor of audio
and video products headquartered in Wayne, New Jersey is the wholly owned United
States subsidiary of Victor Company of Japan, a manufacturer of audio and video
products headquartered in Japan. In January 2005, after retiring from JVC, Mr.
Elias was appointed Chairman of the Board of and commenced to serve as a
consultant to AKAI USA, the sole distributor in the United States of electronic
products produced by AKAI, a Chinese manufacturer. Mr. Elias retired from AKAI
in 2007 and currently is self-employed as a Business Consultant.
Gary Lederman, Esq. became a Director of the Company in May 1997. He
received his B.A. degree from Brooklyn College in 1954 and his J.D. degree from
NYU Law School in 1957. He was manager of Locals 370, 491 and 662 of the
U.F.C.W. International Union from 1961 to 1985. He is retired from the unions
and has been a lecturer at Queensboro Community College in the field of
insurance. He served on an institutional review board for RTL, a pharmaceutical
drug testing laboratory until his retirement in February 2007.
John Roglieri, M.D. became a Director of the Company in September 1995. He
is an Assistant Professor of Clinical Medicine at Columbia University's College
of Physicians and
5
Surgeons and an Assistant Attending Physician at New York Presbyterian Hospital,
New York City. Dr. Roglieri received a B.S. degree in Chemical Engineering and a
B.A. degree in Applied Sciences from Lehigh University in 1960, an M.D. degree
from Harvard Medical School in 1966, and a Master's degree from the Columbia
University School of Business in 1978. From 1969 until 1971, he was a Senior
Assistant Surgeon in the U.S. Public Health Service in Washington D.C. From 1971
until 1973, he was a Clinical and Research Fellow at Massachusetts General
Hospital. From 1973 until 1975, he was Director of the Robert Wood Johnson
Clinical Scholars program at Columbia University. In 1975 he was appointed
Vice-President, Ambulatory Services at New York Presbyterian Hospital, a
position which he held until 1980. Since 1980, he has maintained a private
practice of internal medicine at Columbia-Presbyterian Medical Center. From 1988
until 1992, he was also Director of the Employee Health Service at New York
Presbyterian Hospital. From 1992 through 1999, Dr. Roglieri was the Corporate
Medical Director of NYLCare, a managed care subsidiary of New York Life
Insurance Company ("New York Life"). Dr. Roglieri was chief medical officer of
Physician WebLink, a national physician practice management company, from 1999
to 2000. Since 2001, he has been a Medical Director for New York Life. He is a
member of advisory boards to several pharmaceutical companies, a member of the
Editorial Advisory Board of the journals Managed Care and Seminars in Medical
Practice, and is a subject of biographical record in Who's Who in America.
There are no family relationships between or among any directors or
executive officers of Bio-Reference Laboratories. The Company's Certificate of
Incorporation provides for a staggered Board of Directors pursuant to which the
Board is divided into three classes of directors and the members of only one
class are elected each year to serve a three-year term.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE TWO CLASS I DIRECTOR NOMINEES
NAMED ABOVE.
KEY PERSONNEL AND CONSULTANTS
The following key personnel and consultants make significant contributions
to the Company's operations.
James Weisberger, M.D. (Age 54) joined the Company in September 2003 as
Vice President, Assistant Chief Medical Officer and Director of Hematopathology.
He is currently employed as a Senior Vice President and as the Company's Chief
Medical Officer. Prior to joining the Company, he was Director of
Hematopathology at IMPATH, Inc. (1999-2003). He is board certified in internal
medicine, anatomic and clinical pathology, and hematopathology. He has a New
York State Department of Health Certificate of Qualification as a Laboratory
Director. He is a Clinical Assistant Professor of Pathology at New York Medical
College, Valhalla, New York. Prior to joining IMPATH, he was an Assistant
Professor of Medicine and Pathology at New York Medical College (1995-1999). He
holds a B.S. degree from Stanford University (1977); an M.S. degree from
Stanford University (1978); and an M.D. degree from the University of
Pennsylvania (1983).
Charles T. Todd, Jr. (Age 59) is a Senior Vice President engaged in Sales.
Mr. Todd was the founder and CEO of GenCare Biomedical Research Corporation
("GenCare"), a
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specialty oncology laboratory that was purchased by the Company in 1995. He
attended Seton Hall University where he received a B.S. degree in Finance in
1974.
Richard Faherty (Age 63) serves as the Company's Chief Information Officer
as well as the chief executive officer of its two informatics operations. Mr.
Faherty provided custom programming and system analysis services to Gencare from
1987 until its acquisition by the Company in 1995. He became a consultant to the
Company in 1995 in the information technology area and an employee in 1999. Mr.
Faherty is a graduate of the University of Notre Dame (1968) and the Fordham Law
School (1975).
John Bennett, M.D., Scientific Advisory Board Chairman, is Professor
Emeritus at the University of Rochester Medical Center, Rochester, New York. Dr.
Bennett has long been recognized as an intellectual force in the treatment and
understanding of leukemias, lymphomas and other cancer-related diseases. He
established the French-American-British (FAB) Leukemia Working Group and is one
of the world's leading authorities on Myelodysplasia. He is founder and Chairman
of the MDS Foundation, as well as Editor of the Journal of Leukemia Research.
Dr. Bennett is currently Professor Emeritus and former Head of the Medical
Oncology Unit at the University of Rochester Medical Center and formerly was a
Professor of Oncology in Medicine, Pathology and Laboratory Medicine at the
University of Rochester Medical School. For nearly four decades, Dr. Bennett has
been honored by the medical community as an expert in the field of oncology as
evidenced by the numerous chairs he has held in prestigious societies and
committees and his authorship of more than 400 publications in peer review
journals, the majority of which are in the area of hematologic malignancies. Dr.
Bennett earned his B.A. from Harvard University and his M.D. from Boston
University. He served his residency in medicine at Beth-Israel Hospital, Boston,
Massachusetts and completed a fellowship in hematology at Boston City Hospital.
He headed the Morphology and Cytochemistry Section of the Clinical Center at the
National Institutes of Health ("NIH") before joining the faculty at the
University of Rochester. Dr. Bennett serves the Company in an advisory capacity
as chairman of its Scientific Advisory Board.
Sherri Bale, Ph.D., FACMG joined the Company in September 2006, when
BioReference Laboratories acquired the operating assets of GeneDx. She received
her M.S. and Ph.D. degrees from the University of Pittsburgh, and her
post-doctoral training in medical genetics at the National Institute of Health
("NIH"). She is an American Board of Medical Genetics-Certified Ph.D. - Medical
Geneticist and Founding Member of the American College of Medical Genetics. She
founded GeneDx with Dr. John Compton, also a long-time NIH scientist, after 16
years at the NIH. For the past six years, she has served as President and
Clinical Director of GeneDx, which specializes in developing and providing
molecular diagnostics tests for rare hereditary disorders. She has authored more
than 125 peer-reviewed papers, book chapters, and books in the field. She serves
on numerous Boards of patient advocacy and non-profit organizations, and is a
member of the Faculty of the Metropolitan Medical Genetics Training Program of
the National Human Genome Research Institute, NIH, in Bethesda, MD. She holds a
second degree black belt in judo.
John Compton, Ph.D., (Age 61) serves as Scientific Director and
Co-President of GeneDx Inc., the operating assets of which were acquired by
BioReference Laboratories in September 2006. He has 25 years experience in the
development and application of molecular
7
biological techniques to answer questions about genetics and epidermal
differentiation, and has authored more than 60 publications in the field. He
holds B.S. degrees in Physics and Biology from MIT, received his Ph.D. from the
University of California, Berkeley in Biophysics, and did his post-doctoral
training in protein-DNA interactions at the Baylor College of Medicine.
Following six years as an independent investigator at the Jackson Laboratory, he
joined the Laboratory of Skin Biology in the National Institute of Arthritis,
Musculoskeletal and Skin Diseases at the NIH in 1991 where he was Staff
Scientist in the Genetic Studies Section until 2000, when he and NIH colleague
Sherri Bale formed GeneDx to develop and provide molecular genetic testing in
rare hereditary disorders. In 2003 they were jointly awarded the Entrepreneur of
the Year award by the Technology Council of Maryland.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Based solely on a review of Forms 3 and 4 and any amendments thereto
furnished to the Company pursuant to Rule 16a-3(e) under the Securities Exchange
Act of 1934, or representations that no Forms 5 were required, the Company
believes that with respect to fiscal 2009, its officers, directors and
beneficial owners of more than 10% of its equity timely complied with all
applicable Section 16(a) filing requirements.
THE BOARD AND ITS COMMITTEES
BOARD MEETINGS
The Board of Directors held four meetings during fiscal 2009. All of the
Company's current Directors attended all of the fiscal 2009 meetings of the
Board of Directors and of the committee meetings which they were eligible to
attend. The Board of Directors has determined that the four non-employee
Directors each meet the definition of "independent" as required by the
applicable listing standards of the Nasdaq Stock Market, Inc. ("Nasdaq Stock
Market").
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has established three standing committees: an Audit
Committee, a Compensation Committee and a Nominating Committee.
AUDIT COMMITTEE
The Audit Committee is comprised of the four non-employee members of the
Board of Directors, Gary Lederman (Chairman), Joseph Benincasa, Harry Elias and
John Roglieri. The Board of Directors deems each such individual as
"independent" as defined by the rules of the Nasdaq Stock Market. The Audit
Committee met five times during fiscal year 2009. The Audit Committee confers
with the Company's auditors and reviews, evaluates and advises the Board of
Directors concerning the adequacy of the Company's accounting systems, its
financial reporting practices, the maintenance of its books and records and its
internal controls. In addition, the Audit Committee reviews the scope of the
audit of the Company's financial statements and the
8
results thereof. The Board of Directors has determined that Gary Lederman is
qualified to serve as the Company's "audit committee financial expert" as
defined in Item 407(d) of Regulation S-K promulgated by the Securities and
Exchange Commission. A copy of the Audit Committee Charter may be found on the
Company's website: WWW.BIOREFERENCE.COM.
COMPENSATION COMMITTEE
The Compensation Committee is comprised of the four non-employee members
of the Board of Directors, John Roglieri (Chairman), Joseph Benincasa, Harry
Elias and Gary Lederman. The Compensation Committee met once during fiscal year
2009.
The Compensation Committee has the primary responsibility of setting the
compensation of the executive officers of the Company as well as adopting the
terms of any Senior Management Incentive Bonus Plan. A copy of the Compensation
Committee's Charter may be found on the Company's website: WWW.BIOREFERENCE.COM.
NOMINATING COMMITTEE
The Nominating Committee is comprised of the four non-employee members of
the Board of Directors, Harry Elias, Joseph Benincasa, Gary Lederman and John
Roglieri. Pursuant to its charter, a copy of which may be found on the Company's
website: WWW.BIOREFERENCE.COM, the Nominating Committee's role is to establish
criteria for the selection of directors; to identify individuals qualified to be
directors; to evaluate director candidates proposed by stockholders; to
recommend individuals to fill vacancies on the Board and to recommend nominees
for director at each annual stockholder meeting. The Nominating Committee may
consider nominees for director of the Company submitted in writing c/o the
Committee at the Company's executive offices, whether by executive officers of
the Company; current directors of the Company, search firms (if any) engaged by
the Committee, and, in the circumstances provided below, shall consider nominees
for director proposed by a stockholder. Information with respect to the proposed
nominee must be provided in writing by the stockholder addressed to the
Committee at the Company's executive offices, and received not less than 90 nor
more than 120 days prior to the anniversary date of the prior year's annual
meeting, provided that if the current year's annual meeting is not scheduled to
be held within 30 days of the anniversary date of the prior year's annual
meeting, notice from a stockholder shall be considered timely if it is received
not later than the tenth day following the date on which the notice of the
annual meeting was mailed or the date on which public disclosure of the date of
the annual meeting was made, whichever occurs first. The information shall
include the name of the nominee, and such information with respect to the
nominee as would be required under the rules and regulations of the Securities
and Exchange Commission to be included in the Company's Proxy Statement if the
proposed nominee were to be included therein. In addition, the stockholder's
notice shall also include the class and number of shares the stockholder owns, a
description of all arrangements and understandings between the stockholder and
the proposed nominee, a representation that the stockholder intends to appear in
person or by proxy at the meeting to nominate the person named in its notice,
and a representation as to whether the stockholder intends to deliver a proxy
statement to or solicit proxies from shareholders of the Company.
9
The Nominating Committee generally identifies potential candidates for
director by seeking referrals from the Company's management, members of the
Board of Directors and their various business contacts. Candidates are evaluated
based upon factors such as independence, knowledge, judgment, integrity,
character, leadership skills, education, experience, financial literacy,
standing in the community and ability to foster a diversity of backgrounds and
views and to complement the Board's existing strengths. There are no differences
in the manner in which the Committee will evaluate nominees for director based
on whether the nominee is recommended by a stockholder.
The Company does not have an Executive Committee. Officers are elected by
and hold office at the discretion of the Board of Directors.
The Company does not have a policy with regard to attendance by directors
at annual meetings of stockholders. The Company's three executive officers as
well as Messrs. Elias and Lederman were the directors who attended the Company's
last annual meeting of stockholders on July 30, 2009.
Pursuant to the Company's charter and bylaws, the Company has agreed to
indemnify its directors and executive officers to the fullest extent permitted
by law.
CODE OF ETHICS
The Company has adopted a Code of Ethics that applies to its executive
officers and to key financial and accounting personnel. The Company will, upon a
stockholder's written request to Investor Relations, c/o the Company, furnish a
paper copy of the Code of Ethics.
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EXECUTIVE COMPENSATION
The table below summarizes the total compensation paid or accrued by the
Company with respect to the years ended October 31, 2007, 2008 and 2009 to its
three executive officers and to its two other most highly compensated senior
management employees during the period. All of the Company's group life, health,
hospitalization or medical reimbursement plans, if any, as well as the Company's
401(k) plan, do not discriminate in scope, terms or operation, in favor of any
of its officers, senior management members or directors, and are generally
available to all salaried employees.
SUMMARY COMPENSATION TABLE
Change in
Pension Value
Non-Equity and Nonqualified All
Bonus Stock Option Incentive Plan Deferred Other
Name and Fiscal Salary ($)(d) Awards Awards Compensation Compensation Compensation Total
Principal Position Year (b) ($)(c) (1) ($)(e) ($)(f) ($)(g)(2) Earnings ($)(h) ($)(i)(3) ($)(j)
- ------------------------------------------------------------------------------------------------------------------------------------
Marc D. 2007 $ 852,000 -0- -0- -0- $ 85,200 -0- $ 96,230 $1,033,430
Grodman M.D. 2008 910,877 -0- -0- -0- -0- -0- 101,424 1,012,301
President and 2009 965,180 -0- -0- -0- 96,518 -0- 111,090 1,172,788
Chief Executive Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Howard 2007 $ 323,350 -0- -0- -0- $ 32,335 -0- $ 40,070 $ 395,755
Dubinett 2008 362,935 -0- -0- -0- -0- -0- 40,070 403,005
Executive Vice 2009 381,425 -0- -0- -0- 38,143 -0- 40,070 459,638
President and
Chief Operating
Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Sam Singer 2007 $ 323,350 -0- -0- -0- $ 32,335 -0- $ 39,822 $ 395,507
Senior Vice 2008 362,935 -0- -0- -0- -0- -0- 39,739 402,674
President and 2009 381,425 -0- -0- -0- 38,143 -0- 40,240 459,808
Chief Financial
Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Richard Faherty 2007 $ 438,750 -0- -0- -0- $ 43,875 -0- $ 167,187 $ 649,812
Chief Information 2008 486,540 -0- -0- -0- -0- -0- 139,962 626,502
Officer 2009 516,091 -0- -0- -0- 51,609 -0- 118,120 685,820
- ------------------------------------------------------------------------------------------------------------------------------------
Charles T. Todd, Jr. 2007 $ 385,500 -0- -0- -0- $ 38,550 -0- $ 10,184 $ 434,234
Senior Vice 2008 505,237 -0- -0- -0- -0- -0- 13,116 518,353
President - Sales 2009 540,000 -0- -0- -0- 54,000 -0- 9,247 603,247
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Under SEC disclosure rules, the term "bonus" does not include awards that
are performance based. As a result of this definition, payments under the
Company's Incentive Bonus Plan for Senior Management are not considered
"bonuses" and are reported under the column captioned "Non-Equity Incentive Plan
Compensation".
(2) The Senior Management Incentive Bonus Plan adopted by the Compensation
Committee provided for bonuses as a percentage of salary to be paid to
designated members of Senior Management (twelve in total) to the extent the
Company's Total Operating Income equaled certain designated percentages of Total
Net Revenues. The amounts in column (g) reflect the cash awards to the named
officers under the Senior Management Incentive Bonus Plan. No bonuses were
earned under the Plan with respect to fiscal 2008.
(3) The amounts in column (i) All Other Compensation are detailed below.
Personal Use of Company Personal Use of Life Insurance
Name Leased Automobile Company Airplane Premium (a) Other Total
- --------------------------------------------------------------------------------------------------------------
Fiscal Year 2007
- ------------------------
Marc D. Grodman $ 20,900 $ 5,330 $ 70,000 $ -0- $ 96,230
Howard Dubinett 15,070 -0- 25,000 -0- 40,070
Sam Singer 14,822 -0- 25,000 -0- 39,822
Richard Faherty 28,109 1,673 -0- 137,408(b) 167,190
Charles Todd Jr. 9,385 799 -0- -0- 10,184
11
Personal Use of Company Personal Use of Life Insurance
Name Leased Automobile Company Airplane Premium (a) Other Total
- -------------------------------------------------------------------------------------------------------------
Fiscal Year 2008
- ------------------------
Marc D. Grodman $ 23,020 $ 8,404 $ 70,000 $ -0- $ 101,424
Howard Dubinett 15,070 -0- 25,000 -0- 40,070
Sam Singer 14,739 -0- 25,000 -0- 39,739
Richard Faherty 28,021 -0- -0- 111,941(b) 139,962
Charles Todd Jr. 9,937 3,179 -0- -0- 13,116
Personal Use of Company Personal Use of Life Insurance
Name Leased Automobile Company Airplane Premium (a) Other Total
- -------------------------------------------------------------------------------------------------------------
Fiscal Year 2009
- ------------------------
Marc D. Grodman $ 23,783 $ 17,307 $ 70,000 $ -0- $ 111,090
Howard Dubinett 15,070 -0- 25,000 -0- 40,070
Sam Singer 15,240 -0- 25,000 -0- 40,240
Richard Faherty 22,570 -0- -0- 95,550(b) 118,120
Charles Todd Jr. 9,247 -0- -0- -0- 9,247
- ----------
(a) See "Split Dollar Life Insurance" herein
(b) Mr. Faherty rents an airplane to the Company (when the Company's airplane is
unavailable) for corporate flights. Such rentals totaled $95,550 in fiscal 2009,
$71,108 in fiscal 2008 and $55,965 in fiscal 2007. In addition, a separate
corporation of which Mr. Faherty is the majority shareholder provided
networking, data reporting and programming services to the Company in fiscal
2008 and fiscal 2007 for which it received $40,833 and $81,713 in compensation
respectively.
EMPLOYMENT AGREEMENTS WITH NAMED OFFICERS
Dr. Grodman serves as President and Chief Executive Officer pursuant to a
seven-year employment agreement which expires on October 31, 2011. Dr. Grodman
has the right to elect to cancel the employment agreement effective at the end
of any calendar month commencing October 31, 2008 on not less than 90 days prior
written notice, subject to a six month non-competition restriction. The
employment agreement is automatically renewable for additional two year periods
subject to the right of either party to elect not to renew at least six months
prior thereto. The employment agreement provides Dr. Grodman with minimum annual
base compensation of $750,000 subject to annual percentage increases to the
extent of annual percentage increases in the Consumer Price Index as well as to
increases at the discretion of the Compensation Committee. Dr. Grodman's minimum
annual base compensation for fiscal 2010 as determined by the Compensation
Committee is $1,013,439. The Compensation Committee can but is not required to
increase Dr. Grodman's compensation at the end of any fiscal year based upon his
and the Company's performance. The employment agreement also provides Dr.
Grodman with business use of an automobile leased by the Company and
participation in any fringe benefit and bonus plans available to the Company's
employees to the extent determined by the Compensation Committee. The employment
agreement contains provisions governing in the event of Dr. Grodman's partial or
total disability and provides for termination for cause or in the event of Dr.
Grodman's death. Dr. Grodman has the right to terminate the employment agreement
in the event of a material change in his duties and responsibilities, the
relocation of the Company's principal executive offices from Elmwood Park, New
Jersey to a location more than fifty miles distant or a material breach of the
employment agreement by the Company (including a reduction in Dr. Grodman's
benefits under the agreement). In the event of a Change
12
in Control of the Company, Dr. Grodman can elect to terminate the agreement. In
that event, he will be entitled to be paid a lump sum Severance Payment equal to
2.99 times the average of his annual compensation paid by the Company for the
five calendar years preceding the earlier of the calendar year in which the
Change of Control occurred or the calendar year of the Date of Termination,
subject to the provisions of Section 409-A of the Internal Revenue Code. See
"Split-Dollar Life Insurance" herein as to the Endorsement Split-Dollar Life
Insurance Agreement between the Company and Dr. Grodman.
Mr. Dubinett serves as Executive Vice President and Chief Operating
Officer pursuant to an employment agreement which has been extended through
October 31, 2010. Mr. Dubinett's minimum annual compensation under the extended
agreement is equal to his annual compensation in fiscal 2002 and is subject to
increases based on increases in the Consumer Price Index as well as to increases
at the discretion of the Compensation Committee. Mr. Dubinett's minimum annual
base compensation for fiscal 2010 as determined by the Compensation Committee is
$400,496. The agreement provides for (i) the leasing of an automobile for his
use; (ii) participation in fringe benefit, bonus, pension, profit sharing, and
similar plans maintained for the Company's employees; (iii) disability benefits;
(iv) certain termination benefits; and (v) in the event of termination due to a
Change in Control of the Company, a Severance Payment equal to 2.99 times Mr.
Dubinett's average annual compensation during the preceding five years, subject
to the provisions of Section 409-A of the Internal Revenue Code. See "Split
Dollar Life Insurance" herein as to the Endorsement Split Dollar Life Insurance
Agreement between the Company and Mr. Dubinett.
Mr. Singer serves as Senior Vice President and Chief Financial Officer
pursuant to an employment agreement which has been extended through March 15,
2011. Mr. Singer's minimum annual compensation under the extended agreement is
equal to his annual compensation in fiscal 2002 and is subject to increases
based on increases in the Consumer Price Index as well as to increases at the
discretion of the Compensation Committee. Mr. Singer's minimum annual base
compensation for fiscal 2010 as determined by the Compensation Committee is
$400,496. The agreement provides for (i) the leasing of an automobile for his
use; (ii) participation in fringe benefit, bonus, pension, profit sharing, and
similar plans maintained for the Company's employees; (iii) disability benefits;
(iv) certain termination benefits; and (v) in the event of termination due to a
Change in Control of the Company, a Severance Payment equal to 2.99 times Mr.
Singer's average annual compensation during the preceding five years, subject to
the provisions of Section 409-A of the Internal Revenue Code. See "Split-Dollar
Life Insurance" herein as to the Endorsement Split-Dollar Life Insurance
Agreement between the Company and Mr. Singer.
Mr. Faherty serves as Chief Information Officer and Director of
Information Services pursuant to an employment agreement currently due to expire
on October 31, 2012. Mr. Faherty's initial Base Compensation of $400,000 in
fiscal 2005 is subject to increases based upon management's evaluation of his
and the Company's performance and is also subject to increases based on
increases in the Consumer Price Index. Mr. Faherty's minimum annual base
compensation for fiscal 2010 is $541,010. The agreement provides for (i) the
leasing of an automobile for Mr. Faherty's use; (ii) participation in fringe
benefit and bonus plans available to the Company's employees; (iii) disability
benefits; (iv) certain termination benefits; and (v) in
13
the event of termination due to a Change in Control of the Company, a Severance
Payment equal to 2.99 times Mr. Faherty's average annual compensation during the
preceding five years, subject to the provisions of Section 409-A of the Internal
Revenue Code.
Mr. Todd serves as a Senior Vice President in Sales pursuant to an
Employment Agreement currently due to expire on October 31, 2012. Mr. Todd's
initial Base Compensation of $350,000 in fiscal 2005 is subject to increases
based upon management's evaluation of his and the Company's performance and is
also subject to increases based on increases in the Consumer Price Index. Mr.
Todd's minimum annual base compensation for fiscal 2010 is $580,500. The
agreement provides for (i) the leasing of an automobile for Mr. Todd's use; (ii)
participation in fringe benefits and bonus plans available to the Company's
employees; (iii) disability benefits; (iv) certain termination benefits; and (v)
in the event of termination due to a Change in Control of the Company, a
Severance Payment equal to 2.99 times Mr. Todd's average annual compensation
during the preceding five years, subject to the provisions of Section 409-A of
the Internal Revenue Code.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL AS OF OCTOBER 31, 2009.
The following table sets out the payments that could be paid to each of
the Company's three executive officers and to its two other most highly
compensated senior management employees upon termination of employment due to
death, disability, for Good Reason or a Change in Control, in each case
occurring as of October 31, 2009.
Fiscal Year 2009
Employee Disability (a) Good Reason (b) Death (c) Change in Control (d)
Marc D. Grodman M.D. $1,447,800 $ 1,930,360 $7,836,374 $ 2,376,150
Howard Dubinett 381,425 381,425 1,309550 997,457
Sam Singer 381,425 524,460 743,295 994,495
Richard Faherty 516,091 1,548,273 258,046 1,297,482
Charles Todd, Jr. 540,000 1,620,000 270,000 1,185,273
- ----------
(a) Dr. Grodman's employment agreement entitles him to monthly compensation at
his then current Base Compensation for 18 months in the event of his Total
Disability. The employment agreement of each of the other employees listed in
the table entitles the employee to monthly compensation at his then current Base
Compensation for twelve months in the event of his Total Disability.
(b) "Good Reason" entitling the employee to voluntarily terminate his employment
agreement includes assignment of duties inconsistent with his current duties,
reduction of his Base Compensation, relocation of the Company's principal
executive offices to a location more than 50 miles from the current location and
other breaches by the Company of the employment agreement. In the event of his
voluntary termination for "Good Reason", each of the employees listed in the
table is entitled to be paid his monthly Base Compensation until completion of
his current Employment Period which is as follows: Dr. Grodman - until October
31, 2011; Mr. Dubinett - until October 31, 2010; Mr. Singer - until March 15,
2011; and Messrs. Faherty and Todd - until October 31, 2012.
(c) Under Dr. Grodman's employment agreement, his employment terminates in the
event of his death and his beneficiaries would be entitled to the death proceeds
of the insurance policy owned by the Company on his life after deducting the
Company's "Interest in the Policy". In the event of Mr.
14
Dubinett's death or Mr. Singer's death while employed by the Company, the
decedent's beneficiaries would be entitled to the death proceeds of the
insurance policy owned by the Company on his life after deducting the Company's
"Interest in the Policy" plus additional payments equal to six months of his
Base Compensation in effect at the time of his death. See "Split-Dollar Life
Insurance" herein. In the event of Mr. Faherty's death or Mr. Todd's death while
employed by the Company, the decedent's beneficiaries would be entitled to
additional payments equal to six months of his Base Compensation at the time of
his death.
(d) In the event of a termination of employment after a "Change in Control" of
the Company, the employee is entitled to receive a lump sum Severance Payment
equal to 2.99 times the average of his annual compensation paid or payable by
the Company in connection with his employment and included in his gross income
as compensation income for the five calendar years preceding the calendar year
in which the Change in Control occurred, subject to the provisions of Section
409-A of the Internal Revenue Code.
SPLIT-DOLLAR LIFE INSURANCE
Pursuant to the terms of their 1997 employment agreements, the Company had
established split-dollar life insurance programs for each of its three Executive
Officers. As a result of the passage of the Sarbanes Oxley Act of 2002 (signed
into law on July 30, 2002), these three programs were modified. Pursuant to the
modification, each of the three Executive Officers assigned ownership of his
policies to the Company and new policies were issued to replace the prior
policies with annual premiums under the new policies ($70,000 under Dr.
Grodman's policy and $25,000 each under Messrs. Dubinett's and Singer's
policies) being equal to the premiums paid under the replaced policies. The
Company has now executed new "Endorsement Split-Dollar Life Insurance
Agreements" with each of its three Executive Officers. Pursuant to the new
agreements, the Company has agreed to continue to pay the annual premium on the
policy on each officer's life during the period of his full-time employment by
the Company. The Company is the sole owner of the policy and of its net cash
surrender value, and in the event of the officer's death while serving as a
full-time employee of the Company, the Company will be entitled to receive that
amount of the death proceeds equal to its interest in the policy (the aggregate
amount of premiums paid by the Company with respect to the policy less the
amount of any loans, if any, from the Insurer to the Company against the cash
value or policy proceeds, and less the aggregate amount of any premiums paid by
the officer to the Company in reimbursement of premiums paid by the Company) and
the balance of the death proceeds will be paid to the officer's designated
beneficiaries. The premiums paid by the Company on the current policies and the
prior policies aggregated approximately $1,662,000 and $1,542,000 at October 31,
2009 and October 31, 2008, respectively. At those dates, the net cash surrender
value of the three current policies aggregated approximately $1,373,000 and
$1,225,000, respectively and is recorded on the books of the Company at these
values.
STOCK OPTIONS
The following table sets forth as of October 31, 2009, information about
shares of the Company's Common Stock available for issuance under the Company's
2000 and 2003 Employee Incentive Stock Option Plans.
15
Number of shares remaining
Number of shares Weighted average per share available for future issuance
issuable upon exercise exercise price of outstanding under each Plan (excluding
of outstanding options options shares reflected in column (a))
---------------------- ----------------------------- -------------------------------
(a) (b) (c)
2000 Plan
158,400 $4.64 134,436
2003 Plan
406,500 $9.52 748,084
------- ----- -------
TOTAL 564,900 $8.15 882,520
The number of shares issuable as of October 31, 2009 ((a) and (c)) and the
weighted average per share exercise price of outstanding options (b) have been
adjusted to reflect the Company's two-for-one split of its Common Stock,
announced on April 7, 2010 and payable to stockholders of record at the close of
business on April 19, 2010.
See Note 11 of Notes to the Consolidated Financial Statements contained in
the accompanying 2009 Annual Report for further information on the Company's
stock option plans.
OPTION GRANTS TO THE THREE NAMED EXECUTIVE OFFICERS (AND THE TWO OTHER NAMED
MOST HIGHLY COMPENSATED SENIOR MANAGEMENT EMPLOYEES) IN LAST FISCAL YEAR
No options to purchase shares of Common Stock were granted to any of the
Company's three Named Executive Officers or the two other named most highly
compensated senior management employees in fiscal 2009.
OPTION EXERCISES AND STOCK VESTED
At October 31, 2008 and at October 31, 2009, there were no outstanding
options held by the Company's three executive officers, the two other named most
highly compensated senior management employees or any of the Company's
directors.
During Fiscal 2009 no options were exercised by any member of the Board of
Directors.
DIRECTOR COMPENSATION
During fiscal 2009, each director who was not a Company employee was
compensated for his services as a director with a quarterly fee of $13,750. In
addition, Gary Lederman as chairman of the Audit Committee and John Roglieri
M.D. as chairman of the Compensation Committee was each compensated for serving
as a Committee Chairman with an additional quarterly fee of $2,750. No
director's fees were paid to the Company's employee directors.
The following table sets forth the compensation paid to the Company's
directors in fiscal 2009.
Fiscal Year 2009
Director Name: Fees Chairman Fees Other Total
- ---------------------------------------------------------------------------
Joseph Benincasa $55,000 - - $55,000
Harry Elias $55,000 - $ 625 (a) $55,625
Gary Lederman (b) $55,000 $ 11,000 (b) - $66,000
John Roglieri M.D (c) $55,000 $ 11,000 (c) - $66,000
16
- ------------------------------------------
(a) For personal use of Company airplane
(b) Chairman of the Audit Committee
(c) Chairman of the Compensation Committee
COMPENSATION DISCUSSION AND ANALYSIS
BACKGROUND
Through fiscal 2001, the Board of Directors, including the Company's three
executive officers, were responsible for reviewing the compensation paid to the
Company's executive officers, provided that none of the Company's executive
officers could vote with respect to his own compensation package. In fiscal
2002, the Company established a Compensation Committee consisting of three
non-employee directors, Morton L. Topfer (Chairman), Gary Lederman and John
Roglieri. Mr. Topfer resigned as a director and as a member of the Compensation
Committee in February 2004. In March 2004, Dr. Roglieri became the Chairman of
the Compensation Committee and Mr. Elias was elected as a member of the
Committee. Mr. Benincasa was elected as a member of the Committee in June 2005.
In May 1997, the Company executed an employment agreement with Dr. Grodman
which expired on October 31, 2004. Effective November 1, 2004, the Company
executed a new seven year employment agreement with Dr. Grodman, the terms of
which are described above. See "Employment Agreements with Named Officers."
In May 1997, the Company also executed employment agreements with Messrs.
Dubinett and Singer (each expiring on October 31, 2002). During fiscal 2002, the
Compensation Committee authorized extensions of both Messrs. Dubinett and
Singer's contracts for two additional years, with the Company having the option
to extend each agreement for two consecutive one-year periods in addition. In
consideration for Messrs. Dubinett and Singer executing the extension
agreements, the Company agreed that the base compensation during each extension
year would not be less than the total cash compensation paid to such individual
in fiscal 2002. The Company's option to extend Mr. Dubinett and Mr. Singer's
employment agreements was further extended through fiscal 2010. In October 2009,
Mr. Singer's employment agreement was extended through March 15, 2011.
EXECUTIVE COMPENSATION PHILOSOPHY
In view of the fact that the Company's three named executive officers own
substantial equity interests in the Company, the Company's compensation program
for them focuses primarily on base salary, subject to annual increase based upon
a review of the executive's and the Company's performance. In addition, to
further incentivize the executive officers as well as certain other members of
senior management, in 2005, the Compensation Committee established a Senior
Management Incentive Bonus Plan designed to assist in the Company's
profitability. Bonuses under the Plan are earned and paid only to the extent the
Company's Total Operating Income equaled certain designated percentages of Total
Net Revenues. Plan criteria were met with respect to fiscal 2007 and 2009 so
that bonuses were earned and paid, but no bonuses were
17
earned or paid under the Plan with respect to fiscal 2008 as the Plan's targeted
performances were not achieved.
RATIONALE FOR CURRENT EMPLOYMENT AGREEMENTS WITH THE THREE EXECUTIVE OFFICERS
During the summer of calendar year 2004 with the knowledge that Dr.
Grodman's seven year employment agreement was due to expire in October 2004, the
Compensation Committee commenced negotiations with Dr. Grodman for the terms of
a new employment agreement. In the course of its negotiations, the Committee
took into account among other factors as a barometer of Dr. Grodman's
performance as the Company's chief executive officer, the substantial increase
since 1997 in the Company's net revenues, operating income and the market price
of the Common Stock. Another factor taken into account by the Committee was the
compensation being paid to the chief executive officers of a peer group of nine
other publicly owned clinical testing laboratories including the two major
companies in the industry, Quest Diagnostics, Inc. and Laboratory Corporation of
America Holdings. The terms of Dr. Grodman's "split-dollar" insurance
arrangement with the Company and the fact that the proposed new employment
agreement did not provide Dr. Grodman with additional equity compensation was
also taken into account. After discussion, each of the three members of the
Compensation Committee at the time (Dr. Roglieri, Mr. Elias and Mr. Lederman)
concluded that the terms of the proposed new employment agreement were fair to
and in the best interests of the Company and its stockholders and that the
proposed compensation thereunder was not excessive.
The Compensation Committee has determined that the base salaries paid with
respect to fiscal 2009, and the terms of the extension agreements with Messrs.
Dubinett and Singer, were reasonable in relationship to the services performed,
the responsibilities assumed and the results obtained, and were in the best
interests of the Company. In connection with Dr. Grodman's compensation in
fiscal 2009, the Compensation Committee considered the Company's increase in net
revenues, patients serviced, working capital and shareholders' equity in fiscal
2009 compared with the corresponding period in fiscal 2008. Furthermore, the
compensation paid to Messrs. Grodman, Dubinett and Singer for fiscal 2009
comports with the Compensation Committee's perception of base compensation
levels of principal executives employed by other companies, both public and
private.
BENEFITS AND PERQUISITES
The Company's policy is to provide health benefits as well as access to
its 401(k) Plan to which it contributes a maximum of $500 per employee each
year, to all of its employees including its three executive officers.
The Company leases automobiles for the use by its executive officers but
amounts reflecting their personal use are reported as income to them subject to
tax. Similarly, personal use of the Company airplane by any of the Company's
executive officers is reported as income to them, subject to tax. See Footnote
(3) to the "Summary Compensation Table".
18
CHANGE IN CONTROL BENEFITS
The Company's employment agreements with its three executive officers
provide for substantial Severance Payments to them in the event of a change in
control of the Company. This provision provides an additional level of financial
security for the three executive officers. These executives could well be asked
to evaluate a transaction purportedly expected to maximize shareholder value
while resulting in the elimination of their jobs. The Severance Payment
provision (2.99 times the annual average of the preceding five years of
compensation) could help to minimize the distraction caused by concerns over
personal financial security in the context of a proposed change in control.
STOCK OPTION GRANT PRACTICES
The Company grants stock options at an exercise price at least equal to
the fair market value on the date of the grant. Due to the substantial stock
ownership position of the Company's three executive officers, no stock options
have been granted to them (or restricted stock awarded to them) in the last
three years.
POLICY REGARDING THE ONE MILLION DOLLAR DEDUCTION LIMITATION
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public corporations for compensation in excess of $1,000,000 paid
for any fiscal year to a corporation's chief executive officer and to the four
other most highly compensated executive officers in office as of the end of the
fiscal year. The statute exempts qualifying performance-based compensation from
the deduction limit if certain requirements are met. However, shareholder
interests may at times be best served by not restricting the Compensation
Committee's discretion and flexibility in developing compensation programs, even
though the programs may result in non-deductible compensation expenses.
Accordingly, the Compensation Committee may from time to time approve elements
of compensation for certain officers that are not fully deductible.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 2009, the members of the Company's Compensation Committee
were:
John Roglieri M.D. - Chairman
Joseph Benincasa
Harry Elias
Gary Lederman
No member of the Compensation Committee was an officer or employee of the
Company in fiscal 2009 or was formerly an officer of the Company.
19
COMPENSATION COMMITTEE REPORT
The members of the Company's Compensation Committee hereby state;
(A) We have reviewed and discussed the Compensation Discussion and
Analysis contained in this Proxy Statement and in the Company's
Annual Report on Form 10-K for the year ended October 31, 2009 with
the Company's Management, and
(B) Based on such review and discussions, we recommended to the
Company's Board of Directors that the Compensation Discussion and
Analysis be included in the Company's Annual Report on Form 10-K for
the year ended October 31, 2009 and in this Proxy Statement.
COMPENSATION COMMITTEE
By John Roglieri M.D., Chairman
Joseph Benincasa*
Harry Elias
Gary Lederman
*Mr. Benincasa first became a member of the Compensation Committee in June 2005
and was not a party to the 2004 negotiation of Dr. Grodman's employment
agreement.
AUDIT COMMITTEE REPORT
The Audit Committee oversees the Company's financial reporting process on
behalf of the Board of Directors. It is the responsibility of the Company's
independent auditors to perform an independent audit of and express an opinion
on the Company's financial statements. The Audit Committee's responsibility is
one of review and oversight. In fulfilling its oversight responsibilities:
(1) The Audit Committee of the Board of Directors has reviewed and
discussed with the Company's management the audited financial
statements.
(2) The Audit Committee has discussed with MSPC, Certified Public
Accountants and Advisors, A Professional Corporation ("MSPC"), the
Company's independent auditors, the matters required to be discussed
by Statement on Auditing Standards No. 61, "Codification of
Statements on Auditing Standards, AU Section 380," as modified or
supplemented.
(3) The Audit Committee has also received the written disclosures and
the letter from MSPC required by the Independence Standards Board
Standard No. 1 (Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees), as modified or
supplemented, and has discussed with MSPC. the independence of that
firm as the Company's auditors.
20
(4) Based on the Audit Committee's review and discussions referred to
above, the Audit Committee recommended to the Board of Directors
that the Company's audited financial statements be included in the
Company's Annual Report on Form 10-K for the year ended October 31,
2009, for filing with the Securities and Exchange Commission.
Each of the Audit Committee members is independent, as defined in the
Rules of the Nasdaq Stock Market, Inc.
The members of the Audit Committee are not professionally engaged in the
practice of auditing or accounting and are not experts in the fields of
accounting, auditing, or auditor independence. However, the Board of Directors
has determined that Gary Lederman is qualified to serve as the "audit committee
financial expert" of the Company as defined in Item 407(d) of Regulation S-K
promulgated by the Securities and Exchange Commission. Members of the Committee
rely without independent verification on the information provided to them and on
the representations made by management and the independent auditors.
AUDIT COMMITTEE
Gary Lederman, Chairman
Joseph Benincasa, Member
Harry Elias, Member
John Roglieri, Member
21
STOCK PRICE PERFORMANCE
Set forth below is a line graph comparing the yearly cumulative total
return on the Company's Common Stock for the five fiscal years ended October 31,
2009 based on the market price of the Common Stock as compared with the
cumulative total return of companies in the S&P 500 Composite and with a peer
group of nine publicly owned medical laboratories.
COMPARISON OF FIVE YEAR TOTAL RETURN
FOR BIO-REFERENCE LABORATORIES, INC.,
S&P 500 COMPOSITE AND
MEDICAL LABORATORY PEER GROUP
[LINE GRAPH]
ANNUAL RETURN PERCENTAGE
YEARS ENDING
COMPANY NAME / INDEX OCT05 OCT06 OCT07 OCT08 OCT09
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BIO REFERENCE LABORATORIES, INC. 34.75 24.63 35.76 -23.35 31.48
S&P 500 INDEX 8.72 16.34 14.56 -36.10 9.80
PEER GROUP 4.80 21.42 5.37 -12.45 15.78
INDEXED RETURNS
BASE YEARS ENDING
PERIOD
COMPANY NAME / INDEX OCT04 OCT05 OCT06 OCT07 OCT08 OCT09
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BIO REFERENCE LABORATORIES, INC. 100 134.75 167.95 228.00 174.77 229.78
S&P 500 INDEX 100 108.72 126.49 144.90 92.60 101.67
PEER GROUP 100 104.80 127.25 134.08 117.39 135.92
The Medical Laboratory peer group consists of the following companies:
Clarion Technologies, Inc., Enzo Biochem Inc., Genomic Health Inc., Genoptix
Inc., Laboratory CP of Amer Holdgs, Medtox Scientific Inc., Neogenomics Inc.,
Orchid Cellmark Inc., and Quest Diagnostics Inc.
AUDITORS
The firm of MSPC, has been selected by the Board of Directors to audit the
accounts of the Company and its subsidiaries for the fiscal year ending October
31, 2010. MSPC and its predecessor firm have served as the Company's auditors
since 1988. Representatives of such firm are not expected to be present at the
July 22, 2010 Annual Meeting of Stockholders.
AUDIT FEES
MSPC billed the Company approximately $254,500 for professional services
rendered in connection with the audit of the Company's annual financial
statements for the fiscal year ended October 31, 2009 and the review of the
financial statements included in its quarterly reports on
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Form 10-Q for such fiscal year compared to approximately $235,100 in billings
for such services for the fiscal year ended October 31, 2008. In addition, MSPC
billed the Company approximately $15,000 in fiscal 2009 for its audit of the
Company's 401(k) Plan for calendar year 2008 as compared to approximately
$17,500 of such fees in fiscal 2008 with respect to calendar year 2007.
AUDIT-RELATED FEES
MSPC billed the Company approximately $1,750 for due diligence services
rendered in relation to certain acquisitions during fiscal 2009 and
approximately $86,500 for Sarbanes-Oxley ("SOX") related audit fees.
TAX FEES
MSPC billed the Company approximately $70,100 for tax services for fiscal
2009 and approximately $72,500 for tax services for fiscal 2008.
ALL OTHER FEES
No other fees were billed to the Company by MSPC with respect to fiscal
2009 or fiscal 2008 other than for the services described above.
AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
The Audit Committee pre-approved each material non-audit engagement for
services performed by the Company's independent auditors in fiscal 2009. Prior
to pre-approving any such non-audit engagement or service, it is the Committee's
practice to first gather information regarding the requested engagement or
service in order to enable the Committee to assess the impact of the engagement
or service on the auditor's independence.
The Audit Committee has considered whether the provision of tax return
preparation and other professional services to the Company by MSPC is compatible
with such firm maintaining its independence and has concluded that such firm is
independent with respect to the Company in its role as the Company's principal
accountant and auditor.
STOCKHOLDER PROPOSALS FOR 2011 ANNUAL MEETING
Under current rules of the Securities and Exchange Commission,
stockholders wishing to submit proposals for inclusion in the Proxy Statement of
the Board of Directors for the 2011 Annual Meeting of Stockholders (expected to
be held in July 2011), must submit such proposals so as to be received by the
Company at 481 Edward H. Ross Drive, Elmwood Park, New Jersey 07407 on or before
March 1, 2011.
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OTHER MATTERS
Management does not know of any other matters which are likely to be
brought before the Meeting. However, in the event that any other matters
properly come before the Meeting, the persons named in the enclosed proxy will
vote said proxy in accordance with their judgment in said matters.
According to Securities and Exchange Commission rules, the information
presented in this Proxy Statement under the captions "Compensation Committee
Report, "Audit Committee Report" and "Stock Price Performance" will not be
deemed to be "soliciting material" or deemed filed with the Securities and
Exchange Commission under the Securities Act of 1933 or the Securities Exchange
Act of 1934, and nothing contained in any previous filings made by the Company
under such Acts shall be interpreted as incorporating by reference the
information presented under said specified captions.
BY ORDER OF THE BOARD OF DIRECTORS
Marc D. Grodman, President
Elmwood Park, New Jersey
June 9, 2010
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BIO-REFERENCE LABORATORIES, INC.
REVOCABLE PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS - JULY 22, 2010
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, a Stockholder of BIO-REFERENCE LABORATORIES, INC. (the
"Company") hereby appoints Marc D. Grodman and Sam Singer or either of them, as
proxy or proxies of the undersigned, with full power of substitution, to vote,
in the name, place and stead of the undersigned, with all of the powers which
the undersigned would possess if personally present, on behalf of the
undersigned, all the shares which the undersigned is entitled to vote at the
Annual Meeting of the Stockholders of BIO-REFERENCE LABORATORIES, INC. to be
held at 9:00 A.M. (local time) on Thursday, July 22, 2010 at the Sheraton
Crossroads Hotel, Crossroads Corporate Center, One Internationl Boulevard, Route
17 North, Mahwah, New Jersey 07495-0001 and at any and all adjournments thereof.
The undersigned directs that this proxy be voted as follows:
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
[GRAPHIC] 14475 [GRAPHIC]
ANNUAL MEETING OF STOCKHOLDERS OF
BIO-REFERENCE LABORATORIES, INC.
JULY 22, 2010
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL:
The Notice of Meeting, Proxy Statement, Proxy Card, Form 10-K
are available at www.bioreference.com
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.
[ARROW] Please detach along perforated line and mail in the envelope
provided. [ARROW]
[GRAPHIC] 20230000000000000000 0 072210
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS AND "FOR" PROPOSAL 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE |x|
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1. To elect two Class I directors, each to serve for a term of | FOR AGAINST ABSTAIN
three years and until his successor is elected and qualified | 2. In their discretion, on all other matters [ ] [ ] [ ]
(Proposal One). | as shall properly come before the meeting
|
NOMINEES: | THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL OF THE
[ ] FOR ALL NOMINEES o Marc D. Grodman M.D. | FOREGOING. UNLESS OTHERWISE SPECIFIED AS ABOVE, THIS PROXY WILL
o Howard Dubinett | BE VOTED "FOR" THE ELECTION OF DIRECTORS (PROPOSAL ONE). IN
| ADDITION, DISCRETIONARY AUTHORITY IS CONFERRED AS TO ALL OTHER
[ ] WITHHOLD AUTHORITY | MATTERS THAT MAY COME BEFORE THE MEETING UNLESS SUCH AUTHORITY
FOR ALL NOMINEES | IS SPECIFICALLY WITHHELD. STOCKHOLDERS WHO ARE PRESENT AT THE
| MEETING MAY WITHDRAW THEIR PROXY AND VOTE IN PERSON IF THEY SO
[ ] FOR ALL EXCEPT | DESIRE.
(See instructions below) |
| PLEASE MARK, SIGN, AND RETURN YOUR PROXY PROMPTLY. NO POSTAGE
| IS REQUIRED IF RETURNED IN THE ENCLOSED ENVELOPE AND MAILED IN
| THE UNITED STATES. RECEIPT OF THE NOTICE OF ANNUAL MEETING OF
| STOCKHOLDERS, THE ACCOMPANYING PROXY STATEMENT OF THE BOARD OF
| DIRECTORS AND THE COMPANY'S ANNUAL REPORT FOR THE YEAR ENDED
| OCTOBER 31, 2009 IS ACKNOWLEDGED.
|
INSTRUCTIONS: To withhold authority to vote for any individual |
nominee(s), mark "FOR ALL EXCEPT" and fill in the |
circle next to each nominee you wish to withhold, |
as shown here: [GRAPHIC] |
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To change the address on your account, please check the box |
at right and indicate your new address in the address space [ ] |
above. Please note that changes to the registered name(s) |
on the account may not be submitted via this method. |
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Signature of Stockholder [_________________] Date: [______________] Signature of Stockholder [____________________] Date: [________]
NOTE: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder
should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership, please sign in partnership name by
[GRAPHIC] authorized person. [GRAPHIC]