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 [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
MERIDIAN MEDICAL TECHNOLOGIES, INC
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(Name of Registrant as Specified in Its Charter)
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(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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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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MERIDIAN MEDICAL TECHNOLOGIES, INC.
10240 OLD COLUMBIA ROAD
COLUMBIA, MARYLAND 21046
November 13, 2001
Dear Stockholder:
We are pleased to enclose your Notice of Annual Meeting and Proxy
Statement for the Annual Meeting of Stockholders of Meridian Medical
Technologies, Inc. (the "Company") to be held on Thursday, December 6, 2001, at
9:30 a.m., local time, at Linden Hall, 4765 Dorsey Hall Drive, Ellicott City,
Maryland 21042.
The Board of Directors hopes that you will be able to attend this
stockholders' meeting. We look forward to meeting each of you and discussing
with you significant events that have occurred during the Company's last year
and its current prospects. If you are unable to be present in person or to be
otherwise represented, please execute the enclosed proxy and return it at your
earliest convenience in the enclosed envelope. You are urged to read the
enclosed Proxy Statement, which contains information relevant to the actions to
be taken at the meeting.
Very truly yours,
/s/ James H. Miller
James H. Miller
Chairman, President and
Chief Executive Officer
MERIDIAN MEDICAL TECHNOLOGIES, INC.
10240 OLD COLUMBIA ROAD
COLUMBIA, MARYLAND 21046
(410) 309-6830
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of
MERIDIAN MEDICAL TECHNOLOGIES, INC.:
Notice is hereby given that the Annual Meeting of Stockholders of
Meridian Medical Technologies, Inc. (the "Company") will be held on Thursday,
December 6, 2001, at 9:30 a.m., local time, at Linden Hall, 4765 Dorsey Hall
Drive, Ellicott City, Maryland 21042, for the following purposes:
(1) To elect two directors each for a term of three years or until a
successor has been elected and qualified;
(2) To consider and vote upon the ratification of the selection by
the Board of Directors of Ernst & Young LLP as independent
auditors of the Company for the current fiscal year; and
(3) To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on October 22, 2001
are entitled to notice of and to vote at the meeting or any adjournment or
adjournments thereof.
By Order of the Board of Directors,
/s/ Tiffany Roebuck
Tiffany Roebuck
Assistant Corporate Secretary
Columbia, Maryland
November 13, 2001
MERIDIAN MEDICAL TECHNOLOGIES, INC.
10240 OLD COLUMBIA ROAD
COLUMBIA, MARYLAND 21046
(410) 309-6830
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
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INTRODUCTION
The Board of Directors of Meridian Medical Technologies, Inc. (the
"Company"), the executive offices of which are located at 10240 Old Columbia
Road, Columbia, Maryland 21046, hereby solicits your proxy in the form enclosed
for use at the Annual Meeting of Stockholders to be held on Thursday, December
6, 2001, at 9:30 a.m., or any adjournment or adjournments thereof ("Annual
Meeting"). The expenses of soliciting your proxy will be borne by the Company.
This Proxy Statement and the accompanying form of proxy are first being released
for mailing to the stockholders on or about November 13, 2001.
At the Annual Meeting, stockholders will be asked to elect two directors
of the Company, each to serve a three-year term, and to ratify the selection of
Ernst & Young LLP as independent auditors of the Company for the current fiscal
year.
We urge you to date, sign and return your proxy in the enclosed envelope
promptly to make certain that your shares will be voted at the Annual Meeting.
The principal executive offices of the Company are located at 10240 Old
Columbia Road, Columbia, Maryland 21046, telephone (410) 309-6830.
MEETING INFORMATION
DATE, TIME AND PLACE
The Annual Meeting will be held on Thursday, December 6, 2001, at 9:30
a.m., local time, at Linden Hall, 4765 Dorsey Hall Drive, Ellicott City,
Maryland 21042.
RECORD DATE; VOTING RIGHTS
Only stockholders of record at the close of business on October 22, 2001
will be entitled to vote at the Annual Meeting. On October 22, 2001, there were
3,212,255 outstanding shares of Common Stock, each of which is entitled to one
vote. The presence in person or by proxy at the Annual Meeting of the holders of
a majority of the outstanding shares of Common Stock and entitled to vote will
constitute a quorum for the transaction of business.
With respect to Proposal 1, the nominees for election as directors who
receive the greatest number of votes cast at the Annual Meeting, assuming that a
quorum is present, will be elected as directors. A withheld vote will not have
any effect on the outcome of the vote for election of the directors.
With respect to Proposal 2, approval will require the affirmative vote
of a majority of the total votes cast on the proposal in person or represented
by proxy at the Annual Meeting. An abstention will not be considered a vote cast
on the proposal.
Brokers who hold shares of Common Stock in street name may not have the
authority to vote on certain matters for which they have not received
instructions from beneficial owners. Such broker non-votes (arising from the
lack of instructions from beneficial owners), although present for quorum
purposes, will not change the number of votes cast for or against Proposal 2.
VOTING AND REVOCATION OF PROXIES
If the enclosed form of proxy is properly executed and returned to the
Company in time to be voted at the Annual Meeting, the shares of Common Stock
represented thereby will be voted in accordance with the instructions marked
thereon. Executed but unmarked proxies will be voted "FOR" the nominees proposed
by the Board of Directors and "FOR" the ratification of the selection of
auditors. The duly appointed proxies may, in their discretion, vote upon such
other matters as may properly come before the Annual Meeting.
Any proxy may be revoked at any time before it is exercised by giving
written notice of such revocation or delivering a later dated proxy to the
Assistant Corporate Secretary of the Company prior to the meeting, or by the
vote of the stockholder in person at the meeting.
1
SOLICITATION OF PROXIES
The cost of soliciting proxies in the form enclosed will be borne by the
Company. In addition to the solicitation of proxies by mail, the Company,
through its directors, officers and regular employees, may also solicit proxies
personally or by telephone. The Company also will request persons, firms and
corporations holding shares of Common Stock in their names or in the name of
their nominees, which are beneficially owned by others, to send proxy material
to and obtain proxies from the beneficial owners and will reimburse the holders
for their reasonable expenses in so doing. The Company has engaged the services
of Mellon Investor Services for the purpose of assisting in the solicitation of
proxies at a cost of $6,000 plus reimbursement of certain expenses.
PROPOSAL 1 -- ELECTION OF DIRECTORS
GENERAL
The Company's Amended and Restated By-Laws provide that the number of
members of the Board of Directors shall be fixed and determined from time to
time by resolution of the Board of Directors. The Board of Directors has acted
to fix the number of directors at five. Pursuant to the terms of the Company's
First Amended and Restated Certificate of Incorporation, the Board of Directors
is divided into three classes, as nearly equal in number as reasonably possible,
with terms currently expiring at the upcoming annual meeting of stockholders
("Class II"), the annual meeting of stockholders following fiscal 2002 ("Class
III") and the annual meeting of stockholders following fiscal 2003 ("Class I"),
respectively.
The Board of Directors has nominated Bruce M. Dresner and David L.
Lougee, the incumbent Class II directors, each to serve as a Class II director
for a three-year term expiring at the annual meeting following the Company's
2004 fiscal year or until the election and qualification of a successor.
The proxies solicited hereby, unless directed to the contrary therein,
will be voted for the nominees. The nominees have consented to being named in
this Proxy Statement and to serve if elected. If a nominee for election as a
director becomes unavailable as a candidate or unable to serve, it is intended
that the shares of Common Stock represented by proxies will be voted for such
substitute nominee as the Chairman of the Board of Directors, in his sole
discretion, may designate.
On June 14, 2001, the Board of Directors unanimously approved the
election of Thomas L. Anderson as a director in Class I to fill the vacancy
caused by the death of E. Andrews Grinstead, III.
2
The following table sets forth certain information regarding the
nominees for election to the Board of Directors, whose terms will expire after
fiscal year 2004, and the directors who will continue in office for the
remainder of their terms. Unless otherwise indicated, each director held the
position indicated or another senior executive position with the same entity for
the last five years.
DIRECTOR
NAME AND AGE PRINCIPAL OCCUPATION AND OTHER DIRECTORSHIPS SINCE
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CLASS II DIRECTORS AND
NOMINEES FOR A TERM
EXPIRING FOLLOWING
FISCAL 2004
Bruce M. Dresner Vice President for Investments, Columbia 1985
Age 53 University
David L. Lougee Partner, Mirick, O'Connell, DeMallie & 1996
Age 61 Lougee, LLP (law firm); Director, Genesys SA
(teleconferencing service provider)
CLASS III DIRECTORS
WHOSE TERMS WILL EXPIRE
FOLLOWING FISCAL 2002
James H. Miller Chairman, President and Chief Executive 1989
Age 63 Officer of the Company
Robert G. Foster Chairman, President and Chief Executive 1996
Age 63 Officer, Commonwealth BioVentures, Inc.
(venture capital firm)
CLASS I DIRECTOR WHOSE
TERM WILL EXPIRE
FOLLOWING FISCAL 2003
Thomas L. Anderson Until October 31, 2001, President, ALPHARMA 2001
Age 53 - U.S. Pharmaceuticals Division
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES
NAMED HEREIN.
MEETINGS AND COMMITTEES OF THE BOARD
During the fiscal year ended July 31, 2001 ("fiscal 2001"), the Board of
Directors held seven meetings, three of which were by telephone conference.
During their term, all of the incumbent directors were present for at least 75
percent of the meetings of the Board and the committees of the Board on which
they serve.
The Compensation and Stock Option Committee ("Committee") of the Board
of Directors presently consists of Messrs. Foster and Lougee (Chairman). The
Committee is empowered to administer the Company's 1986 Stock Option Plan ("1986
Plan"), 1997
3
Long-Term Incentive Plan ("1997 Plan") and the 2000 Stock Incentive
Plan ("2000 Plan") which includes the power to grant stock options and stock
appreciation rights and to award restricted stock and incentive shares. The
Committee also is responsible for the determination of the compensation for the
president and chief executive officer. The Committee (or the Board acting as the
Committee) met once during fiscal 2001.
In addition, the Board of Directors has an Executive Committee, whose
present membership consists of Messrs. Foster and Miller (Chairman).
The Board of Directors does not have a nominating committee or committee
performing similar functions. The Board of Directors will consider stockholder
nominations for directors submitted in accordance with the procedure set forth
in Section 2.10(b) of the Company's Amended and Restated By-Laws. The procedure
provides that a notice relating to the nomination must be timely given in
writing to the secretary of the Company prior to the meeting. To be timely, the
notice must be delivered not later than the time permitted for submission of a
stockholder proposal as described under "2002 Annual Meeting of Stockholders."
Such notice must be accompanied by the nominee's written consent to serve if
elected and contain information relating to the business experience and
background of the nominee, and information with respect to the nominating
stockholder and persons acting in concert with the nominating stockholder.
The Audit Committee of the Board of Directors has certain duties
relating to the year-end audit, the Company's interim financial statements, the
Company's internal accounting controls and the Company's relationship with its
independent auditors. The Board of Directors has adopted a written charter for
the Audit Committee. Messrs. Anderson, Dresner (Chairman) and Lougee are the
current members of the Audit Committee. All members of the Audit Committee are
independent as defined by Rule 4200(a)(15) of the National Association of
Securities Dealers' listing standards. The Audit Committee met five times during
fiscal 2001 and, subsequent to the end of fiscal 2001, twice with respect to
fiscal 2001 matters.
AUDIT COMMITTEE REPORT
In discharging its oversight responsibility as to the audit process, the
Audit Committee has reviewed and discussed with management the Company's audited
financial statements included in the Company's Annual Report on Form 10-K for
the year ended July 31, 2001. In addition, the Audit Committee has discussed
with the independent auditors the matters required to be discussed by Statements
on Auditing Standards (SAS) No. 61 "Communication with Audit Committees."
The Audit Committee has obtained from the independent auditors a formal
written statement describing all relationships between the auditors and the
Company that might bear on the auditors' independence consistent with the
Independence Standards Board Standard No. 1, discussed with the auditors any
relationships that may impact their objectivity and independence and satisfied
itself as to the auditors' independence.
4
Based on the review and discussions referred to above in this report,
the Audit Committee has recommended to the Board of Directors that the audited
financial statements be included in the Company's Annual Report on Form 10-K for
the last fiscal year for filing with the SEC.
Thomas L. Anderson
Bruce M. Dresner
David L. Lougee
COMPENSATION OF DIRECTORS
Each of the Company's directors other than Mr. Miller received, during
fiscal 2001, a $10,000 retainer fee payable in quarterly installments, $1,500
for each meeting of the Board personally attended (other than meetings held by
telephone conference as to which no fee is paid). For fiscal 2002, the meeting
fees payable to non-employee directors have been increased to $2,000 for each
meeting personally attended. In addition, the chairman of the Audit Committee
receives an additional annual retainer fee of $4,500, payable in quarterly
installments of $1,125. During fiscal 2001, on the date of the annual meeting,
each non-employee director received an automatic grant of nonstatutory stock
options covering 5,700 shares of Common Stock under the 2000 Plan and
non-employee directors who had served for at least one year and who continued to
serve as directors immediately following the annual meeting received automatic
grants of nonstatutory stock options covering 1,300 shares of Common Stock under
the 1986 Plan. Beginning in fiscal 2002, non-employee directors will receive, on
the date of each annual meeting, one automatic grant of nonstatutory stock
options covering 7,000 shares of Common Stock under the 2000 Plan. Options so
granted have an exercise price equal to the fair market value of the Common
Stock on the date of grant, become exercisable in 25 percent cumulative annual
installments and generally expire 10 years from the date of grant. If a director
is removed from office, all options granted to such director pursuant to the
automatic grants will expire immediately upon such removal.
During fiscal 2001, Messrs. Dresner, Foster and Lougee were each granted
options covering 1,300 shares of Common Stock pursuant to the 1986 Plan at an
exercise price of $10.75 per share. In addition, during fiscal 2001, Messrs.
Dresner, Foster and Lougee were each granted options covering 5,700 shares of
Common Stock pursuant to the 2000 Plan at an exercise price of $10.75 per share.
Mr. Grinstead declined receipt of Board fees and option grants during fiscal
2001. Upon election to the Board of Directors during fiscal 2001, Mr. Anderson
was granted an option covering 6,000 shares of Common Stock pursuant to the 1986
Plan at an exercise price of $11.75 per share.
5
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information for the three fiscal years
ended July 31, 2001 as to compensation paid for services rendered to the Company
by the President and Chief Executive Officer and the four other executive
officers of the Company who were employed by the Company as of July 31, 2001 and
whose total annual salary and bonus for fiscal 2001 exceeded $100,000 (the
"Named Executives").
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LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
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SECURITIES
UNDERLYING ALL OTHER
NAME AND FISCAL SALARY BONUS OPTIONS/SARS COMPENSATION
PRINCIPAL POSITION YEAR ($)(1) ($) (#) ($)(2)
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James H. Miller 2001 395,833 140,000 50,000 29,229
Chairman, President 2000 375,000 210,000 60,000 26,524
and CEO 1999 365,384 - 25,000 29,483
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Peter A. Garbis 2001 143,633 30,000 7,000 6,860
Vice President 2000 134,800 44,800 20,000 6,369
1999 128,654 - 19,600 5,693
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Robert J. Kilgore (3) 2001 165,000 35,000 25,000 35,926
Sr. Vice President 2000 49,231 18,700 35,000 45,314
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Dennis P. O'Brien (4) 2001 162,583 40,000 20,000 7,644
Vice President - 2000 151,462 79,900 45,000 3,390
Finance and Chief 1999 63,269 - - 5,000
Financial Officer
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Gerald L. Wannarka 2001 169,333 40,000 20,000 8,040
Sr. Vice President 2000 157,577 56,400 25,000 5,039
1999 147,154 - 22,900 11,434
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(1) Includes amounts deferred at the election of the Named Executive
under the Company's 401(k) Plan.
(2) Includes Company matching contributions under the Company's
401(k) Plan in the following amounts for fiscal 2001: Mr.
Miller, $5,407; Mr. O'Brien, $5,701; Mr. Garbis, $5,141; Mr.
Kilgore, $1,382 and Dr. Wannarka, $6,055. The Company provides
group accidental death and disability and term life insurance to
all its employees who work more than 30 hours per week. The
death and disability benefit and life insurance benefit under
the Company's plan is up to 200% of the insured person's annual
compensation (as defined in the plan), except in the case of
certain employees, including the Named Executives, with respect
to whom benefits are up to 300% of the insured person's annual
income. Premiums paid attributable to such benefits in fiscal
2001 were as follows: Mr. Miller, $23,822; Mr. O'Brien, $1,943;
Mr. Garbis, $1,719; Mr. Kilgore, $1,521 and Dr. Wannarka,
$1,985. Also includes relocation expenses for Mr. Kilgore in the
amount of $33,023.
6
(3) Mr. Kilgore was named Senior Vice President as of April 1, 2000.
(4) Mr. O'Brien was named Vice President - Finance and Chief
Financial Officer as of March 8, 1999.
STOCK OPTIONS
The following table sets forth further information regarding grants of
options to purchase Common Stock made by the Company during fiscal 2001 to the
Named Executives.
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Option/SAR Grants In Last Fiscal Year
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Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Option Term(1)
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Percent of
Number of Total
Securities Options/SARs
Underlying Granted to Exercise
Options/SARs Employees in Price per Expiration
Name Granted(2) Fiscal 2001 Share Date 5% ($) 10% ($)
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James H. Miller 25,000 27.2% $15.00 9/27/2010 $235,835 $597,653
25,000 $15.00 1/11/2011 $62,765 $322,068
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Peter A. Garbis 7,000 3.8% $15.00 9/27/2010 $66,034 $167,343
------------------------------------------------------------------------------------------------------
Robert J. Kilgore 25,000 13.6% $8.875 4/1/2011 $139,536 $353,612
------------------------------------------------------------------------------------------------------
Dennis P. O'Brien 20,000 10.9% $15.00 9/27/2010 $188,668 $478,123
------------------------------------------------------------------------------------------------------
Gerald L. Wannarka 20,000 10.9% $15.00 9/27/2010 $188,668 $478,123
======================================================================================================
(1) Disclosures of the 5% and 10% assumed annual compound rates of
stock appreciation are mandated by the rules of the SEC and do
not represent the Company's estimate or projection of future
Common Stock prices. The actual value realized may be greater or
less than the potential realizable value set forth in the table.
(2) Consists of stock options granted pursuant to the 1986 Plan, the
1997 Plan and the 2000 Plan. Each option granted vests in
cumulative annual installments of 25%, commencing one year from
the date of grant and expires ten years from the date of grant.
The exercise price of each option granted is equal to or greater
than the fair market value on the date of grant.
7
The following table summarizes certain information regarding outstanding
options held by the Named Executives as of July 31, 2001. No stock options were
exercised by the Named Executives during fiscal 2001.
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AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
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Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARS at Fiscal Year End (#) Options/SARS at Fiscal Year End ($)(1)
------------------------------------------------------------------------------------------------------
Name Exercisable/Unexercisable Exercisable/Unexercisable
------------------------------------------------------------------------------------------------------
James H. Miller 150,000/120,000(2) $232,263/$283,263
------------------------------------------------------------------------------------------------------
Peter A. Garbis 18,964/31,321 $85,362/$132,917
------------------------------------------------------------------------------------------------------
Robert J. Kilgore 8,750/51,250 $41,869/$195,231
------------------------------------------------------------------------------------------------------
Dennis P. O'Brien 16,250/58,750 $83,069/$188,856
------------------------------------------------------------------------------------------------------
Gerald L. Wannarka 22,000/51,000 $98,645/$165,210
======================================================================================================
(1) Value is calculated as the difference between the fair market
value of a share of Common Stock on July 31, 2001 ($11.66 per
share) and the exercise price of the options.
(2) Excludes 148,512 shares underlying exercisable options assumed
by the Company in connection with the 1996 merger. Such options
are exercisable for $.005 per share.
EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS
The Company is party to an employment agreement (the "Employment
Agreement"), effective in fiscal 1997, with James H. Miller. Under the
Employment Agreement, the Company will employ Mr. Miller as President and Chief
Executive Officer. The Employment Agreement has an initial term of three years,
provides for a minimum base salary (currently $420,000) and customary benefits,
and is extended annually to maintain a three-year term. The Company may
terminate the Employment Agreement upon disability or retirement or for "Cause"
(as defined in the Employment Agreement). If the Company terminates the
Employment Agreement for any reason other than disability, retirement or Cause,
or Mr. Miller terminates the Employment Agreement for "Good Reason," as defined
in the Employment Agreement, Mr. Miller will be entitled to receive a lump sum
payment equal to 200% of his base salary for the preceding 12 months and
continued life, disability, accident and health insurance coverage for up to 24
months. In addition, all stock options previously awarded under the Company's
stock option plans would become immediately exercisable and any transfer
restrictions on restricted securities would lapse. The Employment Agreement
further provides that any benefits or payments pursuant to these provisions will
be reduced to the extent that such amounts received (together with any other
amounts received that must be included in such determination) would constitute
an "excess parachute payment" as defined in Section 280G of the Internal Revenue
Code of 1986, as amended ("Code").
8
The Company is party to change of control agreements (the "Change of
Control Agreements") with Peter Garbis, Robert Kilgore, Gerald Wannarka and
Dennis O'Brien (the "Executives"). These Change of Control Agreements each have
a term of three years, beginning in fiscal 2002. Under these Change of Control
Agreements, following the occurrence of both a Change of Control and a
Termination Event (as such terms are defined in the Change of Control
Agreements) (each, a "Trigger Event"), the Company will pay each Executive his
full base compensation as earned through the date of the Trigger Event, any
bonus to which the Executive has become entitled but has not yet been paid to
the Executive, a lump sum cash payment equal to the sum of (i) the Executive's
combined base compensation for the 12 month period preceding the Trigger Event
and (ii) the Executive's Annual Bonus (as such term is defined in the Change of
Control Agreements), and a lump sum cash payment equal to a pro rata portion of
the higher of the Executive's target bonus or the Executive's Annual Bonus. In
addition, the Company will continue to provide life and health insurance
coverage for each Executive for a period of 12 months following the occurrence
of a Trigger Event.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee (the "Committee") advises
the Board of Directors on issues concerning the Company's compensation
philosophy and the compensation of executive officers and other individuals
compensated by the Company. The Committee is empowered to administer the
Company's 1986 Stock Option Plan ("1986 Plan"), 1997 Long-Term Incentive Plan
("1997 Plan") and the 2000 Stock Incentive Plan ("2000 Plan"), which includes
the power to grant stock options and stock appreciation rights and to award
restricted stock and incentive shares. The Committee also is responsible for the
determination of the compensation for the president and chief executive officer
(the "CEO").
GENERAL COMPENSATION POLICY. The Committee's policy is to provide the
executive officers with compensation opportunities that are based upon their
personal performance, the financial performance of the Company and their
contribution to that performance, and that are competitive enough to attract and
retain highly skilled individuals. In addition, the compensation programs should
support the short-term and long-term strategic goals and values of the Company
and should reward individual contribution to the Company's success. Accordingly,
each executive officer's compensation package may be comprised of three
elements: (i) base salary; (ii) annual cash bonuses; and (iii) long-term stock
based incentive awards designed to strengthen the mutuality of interests between
the executive officers and the Company's stockholders.
BASE SALARY. Salary ranges and individual salaries for executive
officers are reviewed annually. In determining individual salaries, the
Committee considers the scope of job responsibilities, individual contribution,
business performance, labor market conditions and current compensation as
compared to market practice. The Company's compensation policy with respect to
executive officers other than the CEO includes position descriptions for all
non-contract employees. Each position is assigned a grade level based
9
on competitive salaries for positions with a similar range of responsibilities
at companies having annual revenues or employee count comparable to those of the
Company.
ANNUAL CASH BONUSES. The Committee may provide for the payment of cash
bonuses to executive officers through awards under the Meridian Medical
Technologies, Inc. Employee Incentive Program (the "Incentive Program") or the
payment of an annual cash bonus. The Incentive Program is designed to assist the
Corporation in attracting, retaining and providing incentives to management
employees (other than the CEO) and to promote the identification of their
interests with those of the Company's shareholders by providing for the payment
of incentive awards subject to the achievement of specified performance goals.
The annual incentive award for each management employee is based on a percentage
of each individual's base salary, but is adjusted to reflect the actual
financial performance of the Company in comparison to the Company's business
plan as well as the individual employee's performance.
The Committee also may make discretionary cash awards in order to reward
outstanding individual performance by the CEO and certain executive officers
during the fiscal year. The amount of the annual cash bonus is within the sole
discretion of the Committee and takes into account the financial needs of the
Company and the Committee's subjective assessment of the CEO's or the executive
officer's performance.
LONG-TERM INCENTIVE COMPENSATION. The Committee believes that stock
options provide a useful incentive for future performance and for retaining
executives of outstanding ability. Stock option grants also serve to link the
interests of the employees and the Company's stockholders because increases in
the value of the stock options are directly tied to increases in stockholder
value. The Committee's philosophy in administering the Company's stock option
plans is to afford a broad group of non-contract employees an opportunity to
share in the ownership of the Company and the Company's success. Accordingly,
the Company historically has not limited grants solely to executive officers.
The CEO has complete authority to administer the 1997 Plan and the 2000 Plan
with respect to all employees other than those subject to Section 16 of the
Securities Exchange Act of 1934, as amended ("Exchange Act").
Each option allows the officer to acquire shares of the Company's Common
Stock at a fixed price per share over a specified period of time. Each option
generally becomes exercisable in installments over a fixed period, contingent
upon the officer's continued employment with the Company. Accordingly, the
option will provide a return to the officer only if he or she remains employed
by the Company during the vesting period, and then only if the market price of
the underlying shares appreciates over the option term.
CEO COMPENSATION. The Board of Directors believes that the Company must
provide a total CEO compensation package that will motivate and retain a CEO of
outstanding ability who is capable of directing the strategic focus of the
Company. The Committee will consider several factors in determining CEO
compensation including job performance, competitive market conditions for
executive compensation, and the actual
10
financial performance of the Company in comparison to the Company's business
plan. The Company's CEO compensation program has three primary components: a
base salary, a discretionary cash bonus and a long-term incentive award.
On October 9, 2001, after discussion and consideration of Mr. Miller's
job performance in fiscal 2001 and a review of competitive compensation
information, the Committee unanimously determined to increase Mr. Miller's
annual salary from $400,000 to $420,000 for fiscal 2002.
On October 9, 2001, the Committee granted Mr. Miller a discretionary
cash bonus in the amount of $140,000. In deciding upon the amount of Mr.
Miller's bonus, the factors considered by the Committee included the following:
Mr. Miller's demonstrated leadership capabilities; increased revenues and
earnings per share; reduction in Company debt; the filing of a 510(k)
application for the PRIME ECG(TM) system; results of business units; the
Company's stock performance return compared to the NASDAQ return; and progress
toward the creation of a specialty pharmaceuticals unit.
On September 27, 2000, the Committee granted Mr. Miller an option
covering 25,000 shares of Common Stock at an exercise price of $15.00 per share
under the 1986 Plan. On January 11, 2001, the Committee granted Mr. Miller an
option covering 25,000 shares of Common Stock at an exercise price of $15.00 per
share under the 2000 Plan. Under the terms of each grant, each option vests in
cumulative annual installments of 25%, commencing one year from the date of
grant and expires ten years from the date of grant. See "Executive
Compensation--Stock Options."
In calculating the size of Mr. Miller's stock option awards, the
Committee considered competitive practices among its peers, and determined the
size of the stock option awards with a view to maintaining the Company's
competitive position and keeping pace with marketplace compensation trends.
Robert G. Foster
David L. Lougee
11
BENEFICIAL OWNERSHIP
Set forth below is a table showing certain information with respect to
those persons known to the Company to be the beneficial owners of more than 5%
of the outstanding shares of Common Stock, the Named Executives, each director
of the Company and all executive officers and directors of the Company as a
group as of October 22, 2001.
Number of Shares
Beneficially Owned
Beneficial Owner Directly or Indirectly(1)(2) Percent of Class(3)
---------------- ---------------------------- --------------------
Mylan Laboratories, Inc. 272,229(5)(6) 8.4%
P.O. Box 4310
781 Chestnut Ridge Road
Morgantown, West Virginia 26504
EM Industries, Incorporated 230,276(5)(7) 7.1%
7 Skyline Drive
Hawthorne, New York 10532
Commonwealth BioVentures Entities 223,642(4) 6.8%
4 Milk Street
Portland, ME 04101
Hathaway & Associates Ltd. 211,400(5) 6.6%
119 Rowayton Avenue
Rowayton, CT 06853
Nomura Holding America Inc. 204,770(5)(8) 6.0%
2 World Financial Center, Building B
New York, New York 10281
Internationale Nederlanden 173,848(5)(9) 5.3%
(U.S.) Investment Corporation
135 East 57th Street
New York, New York 10022
Dimensional Fund Advisors, Inc. 166,300(5) 5.2%
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
Thomas L. Anderson 0 *
Bruce M. Dresner 34,975 1.1%
Robert G. Foster(10) 56,788(11) 1.6%
Peter A. Garbis 31,789 1.0%
12
David L. Lougee 23,343 *
James H. Miller 325,680(12) 9.2%
Dennis P. O'Brien 28,713 *
Robert J. Kilgore 8,750 *
Gerald L. Wannarka 41,675 1.3%
All directors and executive officers
as a group (9 persons) 551,713 14.8%
_____________________
* Less than 1%
(1) Unless otherwise indicated, includes shares held directly by the
individual as well as by such individual's spouse, shares held
in trust and in other forms of indirect ownership over which
shares the individual effectively exercises sole voting and
investment power and shares which the named individual has a
right to acquire within sixty days of October 22, 2001, pursuant
to the exercise of stock options or warrants.
(2) Includes the following number of shares of Common Stock issuable
upon exercise of stock options exercisable within 60 days of
October 22, 2001: Mr. Dresner, 33,475; Mr. Foster, 33,475; Mr.
Garbis, 31,735; Mr. Kilgore, 8,750; Mr. Lougee, 22,975; Mr.
Miller, 321,012; Mr. O'Brien, 27,500; Dr. Wannarka, 41,675; and
all directors and executive officers as a group, 520,597.
(3) Based upon 3,212,255 shares of Common Stock outstanding as of
the record date, plus shares of Common Stock issuable within 60
days of October 22, 2001 under option or warrant.
(4) Consists of shares and warrants owned by (i) Commonwealth
BioVentures IV Limited Partnership (6,031 shares and warrants to
purchase 20,484 shares which may be exercised within 60 days);
(ii) Commonwealth BioVentures V Limited Partnership (156,213
shares and warrants to purchase 39,934 shares which may be
exercised within 60 days) (together with Commonwealth
Bioventures IV Limited Partnership, the "Funds"); and (iii)
BioVentures Limited Partnership (826 shares and warrants to
purchase 154 shares which may be exercised within 60 days)
("BPLP"). Robert G. Foster is President and a director, and
David L. Lougee is a director, of Commonwealth BioVentures, Inc.
("CBI"), which is the general partner of BPLP, which, in turn,
is the general partner of each of the Funds. These numbers
exclude certain shares and warrants held by Mr. Foster or Mr.
Lougee, held jointly by Mr. Foster and his spouse or children,
and held by Mr. Foster in a profit sharing plan with CBI. CBI
disclaims beneficial ownership of the shares and warrants owned
by the Funds except to the extent of its 1% beneficial interest
in the Funds. See footnotes 10 and 11.
(5) The information set forth in the table above is derived solely
from a Schedule 13D or 13G or the most recent amendment thereof
filed with the Commission.
(6) Includes 43,556 shares of Common Stock subject to presently
exercisable warrants.
(7) Includes 29,038 shares of Common Stock subject to presently
exercisable warrants.
13
(8) Includes 204,770 shares of Common Stock subject to presently
exercisable warrants.
(9) Includes warrants to purchase Company Common Stock exercisable
for 90,912 shares of non-voting Common Stock, convertible, on a
one-for-one basis, into shares of voting Common Stock.
(10) Mr. Foster, a director of the Company, is the President of CBI,
which is the general partner of BPLP, which, in turn, is the
general partner of each of the Funds. Mr. Foster disclaims
beneficial ownership of all shares held by such entities. See
footnote 4.
(11) Includes 13,619 shares of Common Stock held jointly by Mr.
Foster with his wife or children, 2,900 shares Mr. Foster
disclaims, 4,200 shares held by a profit sharing plan for the
benefit of Mr. Foster, 33,475 shares subject to options
exercisable within 60 days, 1,794 shares subject to warrants
exercisable within 60 days, and 800 shares held by a profit
sharing plan for the benefit of Mr. Foster exercisable within 60
days.
(12) Includes 726 shares of Common Stock subject to presently
exercisable warrants and 3,942 shares of Common Stock, but
excludes 760 shares of Common Stock held by Mr. Miller's
children and grandchildren. Mr. Miller disclaims beneficial
ownership of the shares of Common Stock held by his children and
grandchildren.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who beneficially own more than ten percent of a
registered class of the Company's equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of Common Stock
of the Company. Executive officers, directors and greater than ten percent
stockholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file. To the Company's knowledge, based solely
upon a review of the copies of such reports furnished to the Company and written
representations that no other reports were required during fiscal 2001, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent stockholders were complied with, except, due to a
clerical error, the inadvertent failure to timely report the exercise of a
warrant to purchase shares of Common Stock and the sale of the shares acquired
upon such exercise by Mr. Miller and the inadvertent failure to timely report
the exercise of a warrant to purchase shares of Common Stock and the sale of the
shares acquired upon such exercise by Mr. Foster. In addition, Commonwealth
BioVentures, Inc. and BioVenture Partners Limited Partnership inadvertently
failed to timely report the exercise of warrants to purchase shares of Common
Stock and sales of shares of Common Stock.
14
CERTAIN TRANSACTIONS
The Company is party to a loan agreement providing for a term loan and a
revolving credit facility with Internationale Nederlanden (U.S.) Capital
Corporation ("ING"), which is an affiliate of Internationale Nederlanden (U.S.)
Investment Corporation, which in turn is the beneficial owner of in excess of 5%
of the outstanding Common Stock representing warrants received by ING in
financing transactions with the Company and Common Stock received upon exercise
of warrants. See "Beneficial Ownership." The term loan was in an aggregate
principal amount of $2.75 million at July 31, 2001, and matures on March 31,
2003. The term loan bears interest at a rate of either the Eurodollar loan rate
plus 3.5%; or the greater of the prime rate plus 1.5% (8.25% at July 31, 2001)
or the federal funds rate plus 2.0%. The revolving credit facility has a $6.5
million maximum availability, and the outstanding borrowing was $0 at July 31,
2001. The credit facility bears interest at a rate of either the greater of the
prime rate plus 1.25% (8.00% at July 31, 2001) or the federal funds rate plus
1.75%; or the Eurodollar loan rate plus 3.25%. The Company pays a commitment fee
to ING of 0.5% on the average unused portion of the revolving credit facility.
Nomura Holding America Inc. ("Nomura") owns $15 million aggregate
principal amount of senior subordinated notes issued by the Company. The notes
mature on April 30, 2005 and bear 12% interest, payable quarterly in arrears. In
connection with the issuance of the notes, Nomura received warrants to purchase
in excess of 5% of the Company's outstanding Common Stock at an exercise price
of $11.988 per share. See "Beneficial Ownership." Since their issuance in April
1998, the warrants have been adjusted to reduce the exercise price to $4.625 per
share.
Dey L.P. ("Dey"), an affiliate of EM Industries, Inc. ("EM"), a
beneficial owner of in excess of 5% of the outstanding Common Stock, is the
exclusive distributor of the Company's EpiPen(R) line of auto-injectors. The
Company's contract with Dey extends until the year 2010, so long as certain
minimum quantity requirements are met, and generated revenues of approximately
$29.9 million to the Company in fiscal 2001.
15
PERFORMANCE GRAPH
The following graph shows the cumulative stockholder return on the
Company's Common Stock during the five-year period ended July 31, 2001 as
compared to (i) an overall stock market index, the NASDAQ (U.S.) Index, and (ii)
a peer group index, the S&P Medical Products and Supplies Index. The graph
assumes that $100 was invested on August 1, 1996, and the yearly points marked
on the horizontal axis correspond to July 31 of the indicated year.
[PERFORMANCE GRAPH]
- NASDAQ TOTAL RETURN INDEX
- MMT COMMON STOCK
- S&P MEDICAL PRODUCTS AND SUPPLIES INDEX
===================================================================================================
STOCKHOLDER VALUE AT FISCAL YEAR END
---------------------------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001
---------------------------------------------------------------------------------------------------
NASDAQ (U.S.) Index $100 $148 $174 $248 $353 $190
---------------------------------------------------------------------------------------------------
Meridian Medical Technologies, Inc. $100 $69 $125 $76 $136 $131
---------------------------------------------------------------------------------------------------
S&P Medical Products & Supplies Index $100 $154 $193 $220 $252 $240
===================================================================================================
16
PROPOSAL 2 -- RATIFICATION OF INDEPENDENT AUDITORS
On October 9, 2001, the Board of Directors selected the firm of Ernst &
Young LLP ("Ernst & Young") as independent auditors of the Company for fiscal
year 2002. This nationally known firm has no direct or indirect financial
interest in the Company.
Although not legally required to do so, the Board of Directors is
submitting the selection of Ernst & Young as the Company's independent auditor
for fiscal 2002 for ratification by the stockholders at the Annual Meeting. If a
majority of the shares of Common Stock represented in person or by proxy at the
meeting is not voted for ratification, the Board will reconsider its appointment
of Ernst & Young as independent auditors for the current fiscal year.
A representative of Ernst & Young will be present at the Annual Meeting
and will have the opportunity to make a statement if he desires to do so. It is
anticipated that such representative will be available to respond to appropriate
questions from stockholders.
FEES
Fees for the last annual audit were $120,000 and all other fees were
$96,000, including audit related services of $43,000 and non-audit services of
$53,000. Audit related services generally include fees for pension and statutory
audits, accounting consultations, and SEC registration statements. Non-audit
services generally include tax return preparation and tax consulting services.
The Company did not pay any financial information systems design and
implementation fees to Ernst & Young during 2001.
The Audit Committee has considered whether Ernst & Young's provision of
other non-audit services to the Company is compatible with maintaining Ernst &
Young's independence.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS AUDITORS FOR FISCAL 2002.
17
OTHER BUSINESS
The Company does not presently know of any matters that will be
presented for action at the meeting other than those set forth herein. If other
matters properly come before the meeting, proxies submitted on the enclosed form
will be voted by the persons named in the enclosed form of proxy in accordance
with their best judgment.
ANNUAL REPORTS
The Company's Annual Report to Stockholders is enclosed with this Proxy
Statement. The Company also has filed with the SEC an Annual Report on Form 10-K
for the fiscal year ended July 31, 2001 (the "Form 10-K"). COPIES OF THE FORM
10-K ARE AVAILABLE UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL
EXECUTIVE OFFICE, 10240 OLD COLUMBIA ROAD, COLUMBIA, MARYLAND 21046, ATTENTION:
ASSISTANT CORPORATE SECRETARY AND ALSO MAY BE ACCESSED ELECTRONICALLY BY MEANS
OF THE SEC'S HOME PAGE ON THE INTERNET AT "HTTP://WWW.SEC.GOV." The Form 10-K
report and Annual Report to Stockholders are not part of these proxy
solicitation materials.
2002 ANNUAL MEETING OF STOCKHOLDERS
It presently is contemplated that the annual meeting of stockholders
following fiscal 2002 will be held on or about December 5, 2002. Under the
current rules of the Securities and Exchange Commission, in order for any
appropriate stockholder proposal to be considered for inclusion in the proxy
materials of the Company for the fiscal 2002 annual meeting of stockholders, it
must be received by the secretary of the Company no later than July 16, 2002.
Stockholders should submit proposals by means, including electronic means, that
permit them to prove the date of delivery. In addition, pursuant to Section 2.10
of the Company's Amended and Restated By-Laws, notice of a stockholder proposal
or of a nomination by stockholders of individuals for election to the Company's
Board of Directors, whether or not such nomination or proposal is proposed to be
included in the Company's proxy materials, must be received by the secretary of
the Company no later than July 16, 2002 and must be accompanied by a written
notice setting forth with particularity the names and addresses of the
proponents and all persons acting in concert with the proponent, the names and
addresses of the proponent and all persons acting in concert with the proponent
as they appear on the Company's books (if they so appear), the class and number
of shares of Common Stock of the Company beneficially owned by the proponent, a
description of the proposal setting forth all material information and other
such information as the Board of Directors reasonably determines is necessary or
appropriate.
In addition, the proxies appointed by the Company may exercise
discretionary authority when voting on a stockholder proposal properly presented
at the Company's 2002 annual meeting of stockholders that is not included in the
Company's proxy statement for such meeting if such proposal is received by the
Company after July 16, 2002. If notice of such a stockholder proposal is
received by the Company on or prior to such date, such proposal is properly
presented at the 2002 annual meeting and is not included in the
18
Company's proxy statement for such meeting, the proxies appointed by the Company
may exercise discretionary authority if, in such proxy statement, the Company
advises stockholders on the nature of such proposal and how the proxies
appointed by the Company intend to vote on such proposal, unless the stockholder
submitting such proposal satisfies certain requirements of the Securities and
Exchange Commission, including the mailing of a separate proxy statement to the
Company's stockholders.
By Order of the Board of Directors,
/s/ Tiffany Roebuck
Tiffany Roebuck
Assistant Corporate Secretary
19
-----------------------------------------------------------------------------------------------------------------------------------
Please mark
your votes as
indicated in [X]
this example
Item 1. - Election of 01 Bruce M. Dresner and 02 David L. Lougee, Item 2- Proposal to ratify the appointment of Ernst
each to a three year term on the Board of Directors & Young, LLP, as auditors for fiscal 2002
FOR WITHHOLD FOR ALL
All nominees AUTHORITY EXCEPT FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ] [ ]
Item 3- In their discretion, on such other matters
as may properly come before the meeting or
adjournment thereof.
-------------------------------------------------------------
Instruction: To withhold authority for either Nominee,
mark the "For All Except" box and write the Nominee's
name on the above line.
Date:
-----------------------------------------
---------------------------------------------
Signature(s)
---------------------------------------------
Signature(s)
Please sign here personally. Signature of stockholder(s)
should correspond directly with name(s) in which shares
are registered. If the stock is registered in more than
one name, each joint owner or fiduciary should sign
personally. Only authorized officers should sign for a
corporation.
PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE
-----------------------------------------------------------------------------------------------------------------------------------
/\ FOLD AND DETACH HERE /\
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
MERIDIAN MEDICAL TECHNOLOGIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 6, 2001
The undersigned hereby appoints Dennis P. O'Brien and Tiffany Roebuck,
and either of them, proxies of the undersigned, with full power of substitution,
to vote all shares of Common Stock of Meridian Medical Technologies, Inc. (the
"Company") that the undersigned is entitled to vote, at the Annual Meeting of
Stockholders of the Company to be held on December 6, 2001, and at any
adjournments thereof with all powers the undersigned would possess if personally
present, as follows on the reverse side of this proxy card.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED IN ITEM
1 AND FOR APPROVAL OF THE PROPOSAL LISTED IN ITEM 2. THIS PROXY WHEN PROPERLY
EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
(Continued on Other side, Please Sign and
Date on Other Side, and Return in Enclosed Envelope)
--------------------------------------------------------------------------------
/\ FOLD AND DETACH HERE /\