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 toss.240.14a-11 orss.240.14a-12
MEDICAL ACTION INDUSTRIES INC.
(Name of Registrant as Specified in its Charter)
RICHARD G. SATIN, ESQ.
VICE PRESIDENT & GENERAL COUNSEL
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:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of filing.
(1) Amount previously paid:
-------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
-------------------------------------------------------------------------
(3) Filing party:
-------------------------------------------------------------------------
(4) Date filed:
-------------------------------------------------------------------------
MEDICAL ACTION INDUSTRIES INC.
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AUGUST 14, 2003
---------------------
To the Stockholders of
MEDICAL ACTION INDUSTRIES INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of MEDICAL
ACTION INDUSTRIES INC. will be held on Thursday, August 14, 2003 at the NASDAQ
MarketSite, 4 Times Square, 43rd Street & Broadway, New York, New York 10036 at
9:00 a.m. (the "Annual Meeting"), for the following purposes:
1. To elect two directors to serve in Class I until the Annual Meeting of
Stockholders in 2006;
2. To consider and act upon a proposal to approve an amendment to the
Company's 1994 Stock Incentive Plan to increase the number of shares
issuable thereunder from 1,350,000 to 1,850,000;
3. To consider and act upon the ratification of Grant Thornton LLP as
independent certified public accountants of the Company for the fiscal
year ending March 31, 2004; and
4. To consider and act upon such other business as may properly come before
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on Friday, June 20,
2003 as the record date for the determination of stockholders entitled to
receive notice of, and to vote at, the Annual Meeting and any adjournments or
postponements thereof. All stockholders of the Company are cordially invited to
attend the Annual Meeting in person. However, whether or not you plan to
attend, PLEASE PROMPTLY SIGN, DATE AND MAIL THE ENCLOSED PROXY CARD IN THE
ENCLOSED RETURN ENVELOPE, which requires no postage if mailed in the United
States. Alternatively, you may vote electronically via the Internet or
telephone as described in greater detail in the Proxy Statement. Returning your
proxy card does not deprive you of your right to attend the Annual Meeting and
vote your shares in person.
By Order of the Board of Directors,
Richard G. Satin
Vice President of Operations
and General Counsel
Dated: Hauppauge, New York
June 27, 2003
EVEN THOUGH YOU MAY PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE VOTE BY
TELEPHONE OR THE INTERNET, OR COMPLETE AND EXECUTE THE ENCLOSED PROXY CARD AND
MAIL IT PROMPTLY. A RETURN ENVELOPE (WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES) IS ENCLOSED FOR YOUR CONVENIENCE. TELEPHONE AND INTERNET VOTING
INFORMATION IS PROVIDED ON YOUR PROXY CARD. SHOULD YOU ATTEND THE ANNUAL
MEETING IN PERSON, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON.
MEDICAL ACTION INDUSTRIES INC.
800 PRIME PLACE
HAUPPAUGE, NEW YORK 11788
---------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 14, 2003
---------------------
This Proxy Statement is furnished to stockholders of MEDICAL ACTION
INDUSTRIES INC., a Delaware corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
Annual Meeting of Stockholders to be held at the NASDAQ MarketSite, 4 Times
Square, 43rd Street & Broadway, New York, New York 10036, on Thursday, August
14, 2003 at 9:00 a.m., New York time, including any adjournments thereof, for
the purposes set forth in the accompanying Notice of Meeting. This Proxy
Statement and the accompanying proxy are first being sent or given to
stockholders on or about July 1, 2003.
INSTEAD OF SUBMITTING YOUR PROXY WITH THE PAPER PROXY CARD, YOU MAY BE
ABLE TO VOTE ELECTRONICALLY BY TELEPHONE OR VIA THE INTERNET. IF YOU VOTE BY
TELEPHONE OR INTERNET, IT IS NOT NECESSARY TO RETURN YOUR PROXY CARD. See
"Voting Via the Internet or By Telephone" on page 14 of this Proxy Statement,
or the instructions on the proxy card, for further details. Please note that
there are separate Internet and telephone voting arrangements depending upon
whether your shares are registered in your name or in the name of a broker or
bank.
A stockholder who returns the accompanying proxy may revoke it at any time
before it is voted by giving notice in writing to the Company, by granting a
subsequent proxy or by appearing in person and voting at the meeting. Any
stockholder attending the Annual Meeting and entitled to vote may vote in
person whether or not said stockholder has previously submitted a proxy. Where
no instructions are indicated, proxies will be voted for the nominees for
Directors set forth herein and in favor of the other proposals described
herein. Those voting via the Internet, or by telephone may also revoke their
proxy by attending the Annual Meeting or by voting again, at a later time, via
the Internet, by telephone, or by submitting the proxy in accordance with the
instructions thereon.
VOTING RIGHTS AND VOTES REQUIRED
At the close of business on June 20, 2003, the record date (the "Record
Date") for the determination of stockholders entitled to vote at the Annual
Meeting, the Company had outstanding, approximately 9,950,542 shares of its
Common Stock, par value $.001 per share ("Common Stock"). The holders of such
Common Stock are entitled to one vote for each share held on the Record Date.
Directors will be elected by a plurality of the votes cast by the holders
of the shares of Common Stock voting in person or by proxy at the Annual
Meeting. Thus, abstentions will have no effect on the vote for election of
Directors. However, approval of any other matters to come before the Annual
Meeting will require the affirmative vote of the holders of a majority of the
shares of Common Stock of the Company present in person or by proxy at the
Annual Meeting. Broker non-votes occur when a broker or other nominee holding
shares for a beneficial owner does not vote on a proposal because the
beneficial owner has not checked one of the boxes on the proxy card and are not
considered to be shares "entitled to vote" (other than for quorum purposes).
Accordingly, abstentions will have the same effect as votes against these
matters, while non-votes will not be included in vote totals and will have no
effect on the outcome of these matters.
Management is not aware at the date hereof of any matter to be presented
at the Annual Meeting other than the election of directors and the other
proposals described in the attached Notice of Annual Meeting of Stockholders.
If any other matter is properly presented, the persons named in the proxy will
vote thereon according to their best judgment.
The expense of soliciting proxies for the Annual Meeting, including the
cost of preparing, assembling and mailing the notice, proxy and Proxy
Statement, will be paid by the Company. The solicitation will be made by use of
the mails, through brokers and banking institutions, and by officers and
regular employees of the Company. Proxies may be solicited by personal
interview, mail, telephone or facsimile transmission.
No person has been authorized to give any information or to make any
representation other than those contained in this Proxy Statement and, if given
or made, such information or representation must not be relied upon as having
been authorized by the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of the Record Date certain information
with regard to beneficial ownership of the Company's Common Stock (i) by each
beneficial owner of five percent or more of the Company's Common Stock known by
management; (ii) each Director; (iii) each executive officer of the Company;
and (iv) all executive officers and Directors of the Company as a group. For a
description of the method used to determine such beneficial ownership, see
footnote (2) to the following table.
AMOUNT AND NATURE PERCENT OF CLASS
NAME AND ADDRESS OF BENEFICIAL OWNERSHIP (1)(2) IF MORE THAN 1.0% (2)
OF BENEFICIAL OWNER COMMON STOCK COMMON STOCK
- ----------------------- ------------------------------ ---------------------
FMR Corp. 1,382,275 (3) 13.9%
82 Devonshire Street
Boston, Massachusetts
02109
Paul D. Meringolo 994,250 (4)(5)(6) 9.9%
800 Prime Place
Hauppauge, New York
Richard G. Satin 323,855 (4) 3.3%
800 Prime Place
Hauppauge, New York
Daniel F. Marsh 232,500 (4) 2.3%
800 Prime Place
Hauppauge, New York
Eric Liu 287,500 (4) 2.9%
800 Prime Place
Hauppauge, New York
Dr. Philip F. Corso 53,000 --
475 Algonquin Road
Fairfield, Connecticut
Dr. Thomas A. Nicosia 22,000 --
1615 Northern Boulevard
Manhasset, New York
2
AMOUNT AND NATURE PERCENT OF CLASS
NAME AND ADDRESS OF BENEFICIAL OWNERSHIP (1) (2) IF MORE THAN 1.0% (2)
OF BENEFICIAL OWNER COMMON STOCK COMMON STOCK
- ----------------------- ------------------------------- ---------------------
Bernard Wengrover 56,000 --
100 Jericho Quadrangle
Jericho, New York
Directors and executive 1,969,105 19.1%
officers as a Group
(7 Persons)
- ------------
(1) Unless otherwise indicated, the stockholders identified in this table
have sole voting and investment power with respect to the shares
beneficially owned by them.
(2) Each named person and all executive officers and Directors as a group are
deemed to be the beneficial owners of securities that may be acquired
within 60 days through the exercise of options. Accordingly, the number
of shares and percentage set forth opposite each stockholder's name in
the above table include the shares of Common Stock issuable upon exercise
of presently exercisable stock options under the Company's stock option
plans, both with respect to the number of shares of Common Stock deemed
to be beneficially owned and the adjusted percentage of outstanding
Common Stock resulting from such right of exercise. However, the shares
of Common Stock so issuable upon such exercise by any such stockholder
are not included in calculating the number of shares or percentage of
Common Stock beneficially owned by any other stockholder.
(3) According to Schedule 13G, dated February 14, 2003, filed with the
Securities and Exchange Commission jointly by FMR Corp., Edward C.
Johnson 3d and Abigail P. Johnson, Mr. Johnson is chairman and Ms.
Johnson is a director of FMR Corp. and may be deemed to be members of a
controlling group with respect to FMR Corp. The Schedule 13G indicates
that at December 31, 2002 (i) Fidelity Management & Research Company
("Fidelity"), a wholly-owned subsidiary of FMR Corp. was the beneficial
owner of 784,475 shares of Common Stock in its capacity as investment
advisor to various registered investment companies (the "Fidelity Funds")
(the power to vote such shares resides solely with the boards of trustees
of the Fidelity Funds, while the power to dispose of such shares resides
with Mr. Johnson, FMR Corp., Fidelity and the Fidelity Funds); and (ii)
Fidelity Management Trust Company, a bank that is wholly-owned by FMR
Corp., was the beneficial owner of 597,800 shares of Common Stock.
(4) Does not include 55,818 shares, 25,126 shares, 38,292 shares and 11,106
shares acquired by Paul D. Meringolo, Richard G. Satin, Daniel F. Marsh
and Eric Liu, respectively, pursuant to the Medical Action Industries
Inc. 401(K) Retirement Plan as of March 31, 2003.
(5) Includes 14,985 shares owned by Mr. Meringolo's children, as to which he
disclaims beneficial ownership.
(6) Includes the right to acquire an additional 300,000 shares pursuant to an
option granted by the Company's former Chairman of the Board. These
options may be exercised on or before October 22, 2007 at $5.00 per
share.
3
MANAGEMENT
OFFICERS OF THE COMPANY
The Company's executive officers are as follows:
NAME AGE POSITION HELD WITH THE COMPANY
- ---- --- ------------------------------
Paul D. Meringolo 45 Chairman of the Board (Chief Executive Officer) and President
Richard G. Satin 48 Vice President of Operations, General Counsel and Corporate
Secretary
Daniel F. Marsh 45 Vice President of Sales and Marketing
Eric Liu 43 Vice President of International Operations
All of the executive officers of the Company hold office at the pleasure
of the Board of Directors.
Mr. Daniel F. Marsh, has been employed by the Company for more than the
past ten years in various sales and marketing positions. Mr. Marsh was
appointed Vice President of Sales and Marketing in February 1994 and for the
period between April 1, 1993 until February 1994 was Vice
President-International.
Mr. Eric Liu, has been employed by the Company for more than the past ten
years in various positions relating to the international procurement of raw
materials and the manufacture of certain of the Company's products. Mr. Liu was
appointed Vice President of International Operations in June 1998. Mr. Liu
received a Bachelor of Science degree from The National Taiwan Marine
University and a Master of Science degree in Transportation Management from the
State University of New York.
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation provides that the Board of
Directors shall consist of between three and eleven members, as determined from
time to time by the Board, divided into three classes as nearly equal in number
as possible. The size of the Board has currently been set at five. The
Directors named below in Class I are presently Directors of the Company and
have been nominated for election as a Director of the Company until the Annual
Meeting of Stockholders in 2006 or until their successors are chosen and
qualified. Shares represented by executed proxies in the form enclosed will be
voted, unless otherwise indicated, for the election as Directors of the
aforesaid nominees, unless either shall be unavailable, in which event such
shares may be voted for a substitute nominee designated by the Board of
Directors. The Board of Directors has no reason to believe that either nominee
will be unavailable or, if elected, will decline to serve. The following table
sets forth the Directors of the Company.
CLASS I CLASS II CLASS III
(TO SERVE UNTIL THE ANNUAL MEETING (TO SERVE UNTIL THE ANNUAL MEETING (TO SERVE UNTIL THE ANNUAL MEETING
OF STOCKHOLDERS IN 2003) OF STOCKHOLDERS IN 2004) OF STOCKHOLDERS IN 2005)
------------------------ ------------------------ ------------------------
Dr. Thomas A. Nicosia Bernard Wengrover Dr. Philip F. Corso
Richard G. Satin Paul D. Meringolo
BIOGRAPHICAL INFORMATION
The following information is submitted concerning each member of the Board
of Directors.
Paul D. Meringolo, a director and Chairman of the Board and Chief
Executive Officer of the Company since October 1997, has been employed by the
Company for more than the past twenty years in various executive positions. He
also serves the Company as President (since November 1992), and previously held
the position of Vice President of Operations from March, 1989 to October 1991
and Senior Vice President (Chief Operating Officer) from October 1991 to
November 1992.
Mr. Richard G. Satin, previously a director of the Company from October
1987 to February 1992, was reappointed to the Board of Directors in February
1993. Mr. Satin has been employed by the
4
Company as Vice President and General Counsel since January 1993 and has been
Corporate Secretary of the Company since October 1991. In February 1994, Mr.
Satin was appointed Vice President of Operations. Mr. Satin, a practicing
attorney in the State of New York for more than the past fifteen years, was
associated with the law firm of Blau, Kramer, Wactlar, Lieberman & Satin, P.C.
from May 1983 to January 1993.
Dr. Philip F. Corso, a director of the Company since March 1984, has been
associated with the Yale University School of Medicine for more than the past
ten years and is presently an Assistant Clinical Professor of Surgery Emeritus.
In addition, Dr. Corso is Senior Attending and Emeritus Chief of Plastic
Surgery at Bridgeport and Norwalk Hospitals in Connecticut. Dr. Corso has also
published numerous articles in professional journals on plastic and
reconstructive surgery. He is a member of numerous national and international
plastic surgery societies.
Dr. Thomas A. Nicosia, a director of the Company since November 1985, has
been a practicing cardiologist for more than the past ten years. Dr. Nicosia is
a fellow of the American College of Cardiology and is affiliated with North
Shore University Hospital in Manhasset, New York and is the former President of
the Medical Staff of St. Francis Hospital in Roslyn, New York.
Mr. Bernard Wengrover, a director of the Company since October 1990, has
been a certified public accountant in the State of New York for more than the
past twenty years. Mr. Wengrover was the Company's independent auditor from
1977 until March 31, 1989.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR DR. THOMAS A.
NICOSIA AND RICHARD G. SATIN AS CLASS I DIRECTORS TO HOLD OFFICE UNTIL THE 2006
ANNUAL MEETING OF STOCKHOLDERS AND UNTIL THEIR SUCCESSORS ARE ELECTED AND
QUALIFIED.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held six meetings during the fiscal year ended
March 31, 2003. All directors attended 75% or more of the aggregate number of
meetings of the Board, except for Dr. Nicosia.
The Board of Directors has established the following committees, all of
which consist of the three non-employee Directors, Mr. Wengrover, Dr. Corso and
Dr. Nicosia, each of whom is independent as defined under the rules of the
Nasdaq Stock Market. Included among the committees are an Audit Committee, a
Compensation Committee and a Stock Option Committee. There is no Nominating
Committee of the Board of Directors.
AUDIT COMMITTEE. This Committee reviews the plan for and the results of the
independent audit and internal audit, reviews the Company's financial
information and internal accounting and management controls, and performs other
related duties. The Audit Committee held two meetings during the last fiscal
year.
COMPENSATION COMMITTEE. This Committee makes recommendations to the Board of
Directors with respect to compensation for the executive officers of the
Company and the Chief Executive Officer. The Compensation Committee met one
time during fiscal year 2003.
STOCK OPTION COMMITTEE. This Committee has reviewed and approved the grant of
options pursuant to the Company's stock option plans for the Company's
directors, officers and employees. The Committee held three meetings during the
last fiscal year.
DIRECTORS' COMPENSATION
DIRECTORS' FEES. Non-employee Directors are currently paid $500 for each
board meeting they attend. In addition, as Chairman of the Audit Committee,
Bernard Wengrover receives $6,000 for each Audit Committee meeting, as the
Chairman and financial expert of such Committee.
STOCK OPTIONS. In August 1996, stockholders approved the 1996
Non-Employee Directors Stock Option Plan, under which all Directors who are not
also employees of the Company will be automatically granted each year at the
Annual Meeting of Stockholders options to purchase 2,500 shares at the fair
market value of the Company's Common Stock on the date of grant. All options
are exercisable from the date of grant.
5
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Securities and Exchange Commission rules now require the Company to
include in its proxy statement a report from the Audit Committee of the Board
of Directors. The following report concerns the Committee's activities
regarding oversight of the Company's financial reporting and auditing process.
-------------------------
The Audit Committee is comprised solely of independent directors, as
defined in the Marketplace Rules of The NASDAQ Stock Market, and it operates
under a written charter adopted by the Board of Directors. The composition of
the Audit Committee, the attributes of its members and the responsibilities of
the Committee, as reflected in its charter, are intended to be in accordance
with applicable requirements for corporate audit committees. The Committee
reviews and assesses the adequacy of its charter on an annual basis.
The purpose of the Audit Committee is to assist the Board of Directors in
its general oversight of the Company's financial reporting, internal control
and audit functions. Management is responsible for the preparation,
presentation and integrity of the Company's financial statements, accounting
and financial reporting principles, internal controls and procedures designed
to ensure compliance with accounting standards, applicable laws and
regulations. Grant Thornton LLP, the Company's independent auditing firm, is
responsible for performing an independent audit of the financial statements in
accordance with generally accepted auditing standards.
Except for Mr. Wengrover, the Audit Committee members are not professional
accountants or auditors, and their functions are not intended to duplicate or
to certify the activities of management and the independent auditor, nor can
the Committee certify that the independent auditor is "independent" under
applicable rules. The Committee serves as a board-level oversight role, in
which it provides advice, counsel and direction to management and the auditors
on the basis of the information it receives, discussions with management and
the auditors and the experience of the Committee's members in business,
financial and accounting matters.
Among other matters, the Audit Committee monitors the activities and
performance of the Company's internal and external auditors, including the
audit scope, external audit fees, auditor independence matters and the extent
to which the independent auditor may be retained to perform non-audit services.
The Audit Committee and the Board of Directors have ultimate authority and
responsibility to select, evaluate and, when appropriate, replace the Company's
independent auditor. The Audit Committee also reviews the results of the
internal and external audit work with regard to the adequacy and
appropriateness of the Company's financial, accounting and internal controls.
Management and independent auditor presentations to and discussions with the
Audit Committee also cover various topics and events that may have significant
financial impact or are the subject of discussions between management and the
independent auditor. In addition, the Audit Committee generally oversees the
Company's internal compliance programs.
The Committee has reviewed and discussed the financial statements with
management and the independent auditor, management represented to the Committee
that the Company's financial statements were prepared in accordance with
generally accepted accounting principles, and the independent auditor
represented that its presentations included the matters required to be
discussed with the independent auditor by Statement on Auditing Standards No.
61, as amended, "Communication with Audit Committees."
The Company's independent auditor also provided the Committee with the
written disclosures required by Independence Standards Board Standard No. 1,
"Independence Discussions with Audit Committees," and the Committee discussed
with the independent auditor that firm's independence.
Following the Committee's discussions with management and the independent
auditor, the Committee recommended that the Board of Directors include the
audited consolidated financial statements in the Company's annual report on
Form 10-K for the year ended March 31, 2003.
The Audit Committee
Bernard Wengrover, Chairman
Dr. Philip F. Corso
Dr. Thomas A. Nicosia
6
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation of the Company's Chief Executive Officer ("CEO") and
each of the Company's most highly compensated executive officers (referred to
collectively with the CEO as the "named executives") during the years ended
March 31, 2001, 2002 and 2003.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
----------------------------------------------- -----------------------------------------------
RESTRICTED
STOCK LTIP ALL OTHER
NAME AND PRINCIPAL FISCAL OTHER ANNUAL AWARDS OPTIONS PAYMENTS COMPENSATION
POSITION (1) YEAR SALARY ($) BONUS ($) COMP. ($) (2) ($) (3) (#) (4) ($) (5) ($)(6)(7)
- ---------------------------- ------ ---------- --------- ------------- ---------- ------- -------- ------------
Paul D. Meringolo 2003 388,614 68,500 -- -- -- -- 19,906
Chairman of the Board 2002 351,467 83,500 -- -- 20,000 -- 22,255
and CEO 2001 315,389 95,000 -- -- 20,000 -- 33,418
Richard G. Satin 2003 209,808 65,500 -- -- 30,000 -- 16,076
Vice President of Operations 2002 199,711 80,500 -- -- 20,000 -- 15,998
and General Counsel 2001 184,442 91,500 -- -- 20,000 -- 21,912
Daniel F. Marsh 2003 216,836 74,500 -- -- 30,000 -- 12,389
Vice President of Sales and 2002 206,475 89,500 -- -- 20,000 -- 11,625
Marketing 2001 194,442 95,000 -- -- 20,000 -- 17,249
Eric Liu 2003 189,808 48,300 -- -- 30,000 -- 2,883
Vice President of 2002 179,712 58,100 -- -- 20,000 -- 2,816
International 2001 164,423 50,000 -- -- 20,000 -- 2,106
- --------------------------------------------------------------------------------------------------------------------------------
(1) Includes Chairman of the Board and CEO and the other most highly
compensated executive officers as measured by salary and bonus.
(2) There were no (a) perquisites over the lesser of $50,000 or 10% of the
individual's total salary and bonus for the last year, (b) payment of
above-market preferential earnings on deferred compensation, (c) payments
of earnings with respect to long-term incentive plans prior to
settlements or maturation, (d) tax payment reimbursements, or (e)
preferential discounts on stock.
(3) Represents the dollar value of restricted shares granted during the year
in question, calculated by multiplying the closing market price of the
Company's Common Stock on the date of grant by the number of shares
awarded. No restricted stock was granted in fiscal 2003. The aggregate
number of shares of restricted stock held by each named executive as of
March 31, 2003, together with the value of those shares is as follows:
Mr. Paul D. Meringolo -- 99,500 shares/$1,291,510; Mr. Richard G. Satin
-- 62,000 shares/$804,600 and Mr. Daniel F. Marsh -- 47,000
shares/$610,060. Except for the bonus shares granted to Mr. Marsh in
fiscal 1997 and 1998 and Mr. Satin in fiscal 1998, which vested in two
equal annual installments commencing on the first anniversary of the date
of issuance, the shares of restricted stock vested in four equal
installments (25% increments) on the second, third, fourth and fifth
anniversaries of the date of issuance. Dividends are paid in shares of
restricted stock if and to the extent paid on the Company's Common Stock
generally.
(4) Includes shares subject to options granted to Messrs. Paul D. Meringolo,
Richard G. Satin, Daniel F. Marsh and Eric Liu under the Company's 1994
Stock Incentive Plan and 1989 Non-Qualified Stock Option Plan.
(5) For fiscal 2003, 2002, and 2001, the Company had no long-term incentive
plans in existence. Accordingly, there were no payments or awards under
any long-term incentive plan.
7
(6) The Company has entered into an Employment Agreement with Mr. Paul D.
Meringolo and Change of Control Agreements with Messrs. Paul D.
Meringolo, Richard G. Satin and Daniel F. Marsh that may result in
payments to each of them upon a change of control of the Company. These
arrangements are described under "Management-Employment Agreement" and
"Change of Control Arrangements".
(7) Includes, among other things, matching contributions under the Company's
401(K) Retirement Plan, the cost to the Company of the non-business use
of Company automobiles, interest-free loans and reimbursement of certain
medical expenses which are payable to Mr. Paul D. Meringolo under his
Employment Agreement.
STOCK OPTION INFORMATION
OPTION GRANT TABLE: The following table sets forth information concerning
individual grants of stock options made to the named executives during the
fiscal year ended March 31, 2003:
INDIVIDUAL GRANTS
POTENTIAL REALIZED VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF STOCK PRICE
OPTIONS OPTIONS GRANTED RANGE OF APPRECIATION FOR OPTION TERM (2)
GRANTED TO EMPLOYEES IN EXERCISE PRICES -----------------------------------
NAME (SHARES) FISCAL 2003 ($/SHARE) 5%($) 10%($)
- ------------------------------------------------------------------------------------------------------------
Richard G. Satin 30,000 9% $12.75 $105,678 $233,520
Daniel F. Marsh 30,000 9% $12.75 $105,678 $233,520
Eric Liu 30,000 9% $12.75 $105,678 $233,520
- ---------------------
(1) All of the options in the above table were non-statutory stock options
awarded under the 1994 Stock Incentive Plan. The stock options were
granted to Messrs. Richard G. Satin, Daniel F. Marsh and Eric Liu on May
31, 2002 and will be exercisable to the extent of 50% one year from the
date of grant and 100% two years from date of grant. The stock options
were granted at the closing price of the Company's Common Stock as
reported in the Wall Street Journal on the date of grant.
(2) The dollar amounts under the 5% and 10% columns in the table are the
result of calculations required by the Securities and Exchange Commission
(the "SEC") and therefore are not intended to forecast possible future
appreciation of the stock price of the Company. Although permitted by the
SEC's rules, the Company did not use an alternate formula for grant date
valuation because the Company is not aware of any formula which will
determine with reasonable accuracy a present value based on future
unknown or volatile factors. No gain on the stock options awarded to the
named executives or other employees is possible without appreciation in
the price of the Company's Common Stock, which will benefit all
stockholders. The real value of the options in this table depends upon
the actual performance of the Company's Common Stock during the
applicable period.
8
AGGREGATE FISCAL YEAR-END OPTION VALUE TABLE: The following table sets
forth, with respect to the named executives, information concerning the
exercise of options during the last fiscal year and unexercised options held as
of March 31, 2003:
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END VALUES
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS
AT YEAR END 2003 AT YEAR END 2003
--------------------------- ---------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------------- ----------- ------------- ----------- -------------
Paul D. Meringolo 25,000 $187,500 110,000 10,000 $836,675 $68,000
Richard G. Satin 25,000 $187,500 110,000 10,000 $836,675 $68,000
Daniel F. Marsh 25,000 $187,500 110,000 10,000 $836,675 $68,000
Eric Liu 35,000 $293,750 110,000 10,000 $836,675 $68,000
- ---------------------
(1) The value realized is the spread between the fair market value of the
underlying shares on the date of exercise and the exercise price.
(2) These values are calculated by subtracting the exercise price from the
fair market value of the Company's Common Stock as of fiscal year end.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Notwithstanding any statement to the contrary in any of our previous or
future filings with the Securities and Exchange Commission, this Board
Compensation Committee Report on Executive Compensation shall not be deemed
"filed" with the Commission or "soliciting material" under the Securities
Exchange Act of 1934, as amended, and shall not be incorporated by reference
into any such filings.
The Compensation Committee of the Board of Directors (the "Compensation
Committee") reviews and approves our executive compensation policies. The
Compensation Committee administers our various incentive plans, including the
1994 Stock Incentive Plan and the 1989 Non-Qualified Stock Option Plan, sets
compensation policies applicable to our executive officers and evaluates the
performance of our executive officers. The compensation levels of our executive
officers for fiscal year 2003, including base salary levels, potential bonuses
and stock option grants were determined by the Compensation Committee at the
beginning of the fiscal year. The following is a report of the Compensation
Committee describing the compensation policies and rationale applicable with
respect to the compensation paid to our executive officers for fiscal year
2003.
GENERAL COMPENSATION PHILOSOPHY
Our philosophy in setting compensation policies for our executive officers
is to maximize stockholder value over time. The primary goal of our executive
compensation program is to closely align the interests of the executive
officers with those of our stockholders. To achieve this goal, we attempt to
(i) offer compensation opportunities that attract and retain executives whose
abilities are critical to our long-term success, motivate individuals to
perform at their highest level and reward outstanding achievement, (ii)
maintain a portion of the executive's total compensation at risk, tied to
achievement of financial, organizational and management performance goals, and
(iii) encourage executives to manage from the perspective of owners with an
equity stake in Medical Action. The Compensation Committee currently uses base
salary, annual cash incentives and stock options to meet these goals.
CASH COMPENSATION
Base salary is primarily used by us as a device to attract, motivate,
reward and retain highly skilled executives. The Compensation Committee
reviewed and approved fiscal 2003 base salaries for our Chief Executive Officer
and other executive officers at the beginning of the fiscal year. Base salaries
were
9
established by the Compensation Committee based on an executive officer's job
responsibilities, level of experience, individual performance, contribution to
the business, our financial performance for the past year and recommendations
from management. The Compensation Committee also takes into account the
salaries for similar positions at comparable companies, based on each
individual member's industry experience. In reviewing base salaries, the
Compensation Committee focuses significantly on each executive officer's prior
performance with us and expected contribution to our future success. In making
base salary decisions, the Compensation Committee exercises its discretion and
judgment based upon these factors. No specific formula is applied to determine
the weight of each factor.
Each Named Executive Officer's bonus is based on qualitative and
quantitative factors and is intended to motivate and reward such Named
Executive Officers by directly linking the amount of any cash bonus to specific
company-based performance targets and specific individual-based performance
targets. Annual incentive bonuses for Named Executive Officers are intended to
reflect the Committee's belief that a portion of the compensation of each Named
Executive Officer should be contingent upon the performance of our company, as
well as the individual contribution of each Named Executive Officer. The
Compensation Committee establishes target bonuses for each Named Executive
Officer. The Named Executive Officer, including Mr. Meringolo, must
successfully achieve these performance targets which are submitted by
management to the Compensation Committee for its evaluation and approval at the
beginning of the fiscal year. The Company-based performance goals are tied to
different indicators of our performance, such as operating results. The
individual performance goals are tied to different indicators of such Named
Executive Officer's performance, such as our financial performance, new product
development and increases in customer base. The Compensation Committee believes
that the bonus arrangement provides an excellent link between our earnings
performance and the incentives paid to the Named Executive Officers.
EQUITY-BASED COMPENSATION
The Compensation Committee provides our Named Executive Officers with
long-term incentive compensation through grants of stock options under our 1994
Stock Incentive Plan and 1989 Non-Qualified Stock Option Plan. The Compensation
Committee believes that stock options provide our Named Executive Officers with
the opportunity to purchase and maintain an equity interest in Medical Action
and to share in the appreciation of the value of our Common Stock. The
Compensation Committee believes that stock options directly motivate an
executive to maximize long-term stockholder value. Such options also use
vesting periods that encourage key executives to remain with Medical Action.
All options granted to Named Executive Officers to date have been granted at
the fair market value of our Common Stock on the date of grant. The
Compensation Committee considers the grant of each option subjectively,
considering factors such as the named executive officer's relative position and
responsibilities, the individual performance of the named executive officer
over the previous fiscal year and the anticipated contribution of the named
executive officer to the attainment of our long-term strategic performance
goals. The Committee also considers stock options granted in prior years. The
Compensation Committee views stock option grants as an important component of
our long-term, performance-based compensation philosophy.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Compensation Committee has considered the potential impact of Section
162(m) of the Internal Revenue Code (the "Code") on the compensation paid to
our named executive officers. Section 162(m) of the Code disallows a tax
deduction for any publicly held corporation for individual compensation
exceeding $1.0 million in any taxable year for any of the Named Executive
Officers. However, certain performance-based compensation is specifically
exempt from the deduction limit. Although the compensation paid to each of the
Company's Named Executive Officers is well below such limit, the Company
intends to take the necessary steps to conform its compensation to comply with
the Code.
10
CEO COMPENSATION
The Compensation Committee meets without the CEO present to evaluate his
performance. When Paul D. Meringolo was elected to the additional posts of
Chairman and CEO, his base salary remained the same, as he is being compensated
pursuant to an employment agreement which presently covers the five year period
ending March 31, 2005. For the fiscal year ended March 31, 2003, Mr. Meringolo
was awarded incentive compensation, which together with his salary is
consistent with the guidelines used for all of the Company's executive
officers.
The Committee has concluded that Mr. Paul D. Meringolo's performance
warrants the compensation for fiscal year ended March 31, 2003 as reflected in
the Summary Compensation table on page 7.
The Compensation Committee
Bernard Wengrover, Chairman
Dr. Philip F. Corso
Dr. Thomas A. Nicosia
11
STOCKHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total return on
the Company's Common Stock against the cumulative total return of the Standard
& Poor 500 Stock Index and Standard & Poor Healthcare (Medical Products and
Supplies) Industry for the period of five years commencing April 1, 1998 and
ending March 31, 2003.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
AMONG MEDICAL ACTION INDUSTRIES, INC., THE S&P 500 INDEX
AND THE S&P HEALTH CARE SUPPLIES INDEX
[GRAPHIC OMITTED]
The line graph assumes that $100 was invested on March 31, 1998 in the
Company's Common Stock, the Standard & Poor 500 Stock Index and Standard & Poor
Health Care (Medical Products & Supplies) Index and that all dividends were
reinvested.
EMPLOYMENT AGREEMENT
In February, 1993, the Company entered into an Employment Agreement with
Mr. Paul D. Meringolo. The Agreement, as amended, presently covers the five
year period ending March 31, 2008 and provides for a salary at an annual rate
of $250,000, together with cost of living increments and the reimbursement of
medical expenses not otherwise covered by the Company's medical plans, up to a
maximum of $5,000. The Agreement further provides that in the event there is a
change in control of the Company, as defined therein, or in any person directly
or indirectly controlling the Company, as also defined therein, Mr. Meringolo
has the option, exercisable within six months of becoming aware of such event,
to terminate his Employment Agreement. Upon such termination, Mr. Meringolo has
the right to receive as a lump sum payment an amount equal to the compensation
remaining to be paid for the balance of the term of the Agreement.
12
1989 NON-QUALIFIED STOCK OPTION PLAN
The 1989 Non-Qualified Stock Option Plan (the "Plan"), which expires
October 24, 2009, was approved by the stockholders in October 1990 and amended
in September 1992, August 1996 and August 1998 and covers 2,150,000 shares of
the Company's Common Stock. Under the terms of the Plan, the purchase price of
the shares subject to each option granted will not be less than 85% of the fair
market value at the date of grant. The date of exercise may be determined at
the time of grant by the Board of Directors, but may not exceed five (5) years
and ten (10) years for options granted after August 1998. During fiscal 2003,
no options were granted under the Plan.
As the Company's principal stock option plan, along with the Stock
Incentive Plan, it is intended to serve as an additional incentive to all
employees and key individuals to devote themselves to the future success of the
Company by providing them with an opportunity to increase their proprietary
interest in the Company through the receipt of options to purchase the
Company's Common Stock.
Subject to the terms of the Plan, the Board of Directors or the Stock
Option Committee may determine and designate those employees, consultants and
Directors who are to be granted stock options under the Plan and the number of
shares to be subject to such options and, as hereinafter described, the nature
and terms of the options to be granted. The Board of Directors or the Stock
Option Committee shall also, subject to the express provisions of the Plan,
have authority to interpret the Plan and to prescribe, amend, and rescind the
rules and regulations relating to the Plan.
PROPOSED AMENDMENTS TO THE COMPANY'S 1994 STOCK INCENTIVE PLAN
At the Annual Meeting there will be presented to stockholders a proposal
amending its 1994 Stock Incentive Plan (the "Incentive Plan") to increase by
500,000 shares to 1,850,000 shares the number of shares eligible to be issued
thereunder. A copy of the proposed amendment is attached hereto in Exhibit "A".
The Incentive Plan was approved by the stockholders in August 1994 and
amended in August 1998 and August 2001. The Incentive Plan increases the
Company's flexibility in structuring equity-based incentive compensation by
broadening the types of incentive awards that may be made, the granting of
incentive stock options, shares of restricted stock and non-qualified stock
options. The Board of Directors believes that a flexible plan is needed to
fashion equity-based incentives consistent with the Company's philosophy of
linking executive compensation to total stockholder returns and the long-term
financial performance of the Company.
During fiscal 2003, options were granted under the Incentive Plan to
purchase 347,000 shares of common stock, of which 90,000 shares were to the
named executives, at an exercise price of $12.75. As of June 15, 2003, 1,000
shares remain available for issuance under the Incentive Plan. The Board of
Directors believes that this amount is insufficient and is therefore of the
view that the allocation of an additional 500,000 shares of the Common Stock of
the Company is well advised. The shares available for issuance under the
Incentive Plan will also be increased to the extent any stock options expire or
terminate unexercised.
The Incentive Plan is administered by a committee of Directors (the
"Committee"), each of whom must be "disinterested" within the meaning of Rule
16b-3 under the Securities Exchange Act of 1934. As a practical matter,
Directors who are employees of the Company will not be eligible to serve as
members of the Committee. The Committee determines the persons to whom, and the
times at which, awards will be granted, the type of awards to be granted and
all other related terms and conditions of the awards, subject to the
limitations described below and set forth in the Incentive Plan. The terms and
conditions of each award are set forth in a written agreement with a
participant or a written program established by the Committee. All officers and
key employees of the Company and its affiliates are eligible to participate in
the Incentive Plan.
The number of shares of Common Stock reserved under the Incentive Plan is
subject to adjustment in the event of stock dividends, stock splits,
recapitalization and similar events.
The per share exercise price of any options may not be less than the fair
market value of a share of Common Stock at the time of grant. Once an option is
granted, the exercise price may not be reduced and an option may not be
exchanged for a new option with a lower exercise price.
13
The Committee shall determine whether stock option awards shall be settled
in cash or in shares of Common Stock valued at fair market value on the date of
payment. The Committee also shall be authorized to accelerate the vesting,
exercisability and settlement of awards and to permit the exercise price on an
option to be paid in cash or by the delivery or withholding of shares.
The Board of Directors may amend or terminate the Incentive Plan without
the approval of the stockholders, but may condition any amendment or
stockholder approval if the Board believes it is necessary or advisable to
comply with any applicable tax or regulatory requirement. No termination or
amendment of the Incentive Plan without the consent of the holder of an award
shall adversely affect the rights of the participant.
The Committee may provide with respect to any award that, in the event of
a Change of Control of the Company (as defined in the Incentive Plan), the
award shall be cashed out in an amount based on the fair market value of the
Common stock without regard to the exercisability of the award or any other
conditions or restrictions.
FEDERAL INCOME TAX CONSEQUENCES
A participant will not recognize income upon the grant of an option or at
any time prior to the exercise of the option. At the time the participant
exercises a non-qualified stock option, he or she will recognize compensation
taxable as ordinary income in an amount equal to the excess of the fair market
value of the Common Stock on the date the option is exercised over the price
paid for the Common Stock, and the Company will then be entitled to a
corresponding deduction.
A participant who exercises an incentive stock option will not be taxed at
the time he or she exercises his or her option or a portion thereof. Instead,
he or she will be taxed at the time he or she sells the Common Stock purchase
pursuant to the option. The participant will be taxed on the excess of the
amount for which he or she sells the stock over the price he or she had paid
for the stock. If the participant does not sell the stock prior to two years
from the date of grant of the option and one year from the date the stock is
transferred to him or her, the gain will be capital gain and the Company will
not get a corresponding deduction. If the participant sells the stock at a gain
prior to that time, the difference between the amount the participant paid for
the stock and the lesser of the fair market value on the date of exercise or
the amount for which the stock is sold, will be taxed as ordinary income and
the Company will be entitled to a corresponding deduction. If the participant
sells the stock for less than the amount he or she paid for the stock prior to
the one or two year periods indicated, no amount will be taxed as ordinary
income and the loss will be taxed as a capital loss. Exercise of an incentive
option may subject a participant to, or increase a participant's liability for,
the federal alternative minimum income tax.
A participant will not be taxed upon the grant of a stock award if such
award is not transferable by the participant or is subject to a "substantial
risk or forfeiture", as defined in the Internal Revenue Code. However, when the
shares of Common Stock that are subject to the stock award are transferable by
the participant and are no longer subject to a substantial risk or forfeiture,
he participant will recognize compensation taxable as ordinary income in an
amount equal to the fair market value of the stock subject to the stock award,
less any amount paid for such stock, and the Company will then be entitled to a
corresponding deduction.
The Incentive Plan is not qualified under Section 401(a) of the Internal
Revenue Code of 1986.
MEDICAL ACTION INDUSTRIES INC. RETIREMENT PLAN
The Company has adopted, effective April 1, 1988, the Medical Action
Industries Inc. Retirement Plan (the "Retirement Plan") for certain employees
pursuant to Section 401(k) of the Internal Revenue Code. All employees of the
Company are eligible to participate in the Retirement Plan. Subject to the
terms and conditions of the Retirement Plan, each eligible employee may
contribute up to 15% of his compensation, as defined therein. Each
participant's contribution vests immediately.
In addition, the Retirement Plan provides for discretionary Company
contributions, up to a maximum of 6% of such participant's compensation. Each
participant's portion of the discretionary contribution vests over a period of
four years.
14
For the fiscal year ended March 31, 2003, contributions under the
Retirement Plan for Messrs. Meringolo, Satin, Marsh and Liu were approximately
$1,750, $2,340, $2,519 and $2,475, respectively, and $9,084 for all officers as
a group.
CHANGE IN CONTROL ARRANGEMENTS
The Company has entered into agreements with three of its executive
officers, Messrs. Paul D. Meringolo, Satin and Marsh, which provide certain
benefits in the event of a change in control of the Company. A "change in
control" of the Company is defined as, in general, the acquisition by any
person of beneficial ownership of 20% or more of the voting stock of the
Company, certain business combinations involving the Company or a change in a
majority of the incumbent members of the Board of Directors, except for changes
in the majority of such members approved by such members. If, within two years
after a change in control, the Company or, in certain circumstances, the
executive, terminates his employment, the executive is entitled to a severance
payment equal to three times (i) such executive's highest annual salary within
the five-year period preceding termination plus (ii) a bonus increment equal to
the average of the two highest of the last five bonuses paid to such executive.
In addition, the executive is entitled to the continuation of all employment
benefits for a three-year period, the vesting of all stock options and certain
other benefits, including payment of an amount sufficient to offset any "excess
parachute payment" excise tax payable by the executive pursuant to the
provisions of the Internal Revenue Code or any comparable provision of state
law.
Prior to a change in control, the rights and obligations of the executive
with regard to his employment by the Company shall be determined in accordance
with the policies and procedures adopted from time to time by the Company. The
agreements deal only with certain rights and obligations of the executive
subsequent to a change in control, and the existence of the agreement shall not
be treated as raising any inference with respect to what rights and obligations
exist prior to a change in control.
RATIFICATION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has selected Grant Thornton LLP, independent
certified public accountants, to examine financial statements of the Company
for the fiscal year ending March 31, 2004. In the absence of contrary
specifications, the shares represented by the proxies will be voted FOR the
ratification of this appointment. If the stockholders fail to ratify this
appointment, the Board of Directors will reconsider its selection.
Grant Thornton LLP has been our independent accountants since 1998. A
representative of Grant Thornton LLP will be present at the annual meeting,
will have the opportunity to make a statement if he or she desires to do so and
will be available to answer any appropriate questions.
AUDIT FEES
Grant Thornton LLP billed us approximately $72,721 for the audit of our
financial statements and review of the financial statements included in our
quarterly reports on Form 10-Q for fiscal 2003.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
We did not engage Grant Thornton LLP to provide advice to us regarding
financial information systems design and implementation during fiscal 2003.
ALL OTHER FEES
Grant Thornton LLP billed us approximately $57,315 during fiscal 2003 for
all other non-audit services, which consisted of $43,277 for tax related
services, $8,068 for review of filings with the Securities Exchange Commission
and $5,970 of miscellaneous services.
Our Audit Committee has determined that the provision of services by Grant
Thornton LLP other than for audit related services is compatible with
maintaining the independence of Grant Thornton LLP as our independent
accountants.
15
VOTE REQUIRED AND BOARD RECOMMENDATION
If a quorum is present, the affirmative vote of the holders of a majority
of the shares to be voted will be required to approve this proposal.
Abstentions will have the same effect as a vote against this proposal and
broker non-votes will have no effect on the outcome of the vote with respect to
this proposal. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS OUR INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS.
CERTAIN TRANSACTIONS
From time to time, the Company has made loans to certain of the named
executives. As of March 31, 2003 the aggregate balance of such loans due from
Mr. Meringolo was $545,938, $394,332 for Mr. Satin, $427,630 for Mr. Marsh and
$125,675 for Mr. Liu. Certain loans, which relate to the exercise of stock
options, aggregating approximately $1,009,000, bear interest at 7% and are due
June 2004. The balance of the indebtedness is evidenced by interest free demand
notes and included in the Summary Compensation Table. In addition, Messrs.
Meringolo, Satin, Marsh and Liu have pledged to the Company, shares of Medical
Action Common Stock as further security for the repayment of such indebtedness.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Pursuant to Section 16(a) of the Exchange Act of 1934, directors, certain
officers, and beneficial owners of 10% or more of the Company's Common Stock
("reporting persons") are required from time to time to file with the
Securities and Exchange Commission (the "Commission") reports on Forms 3, 4 or
5, relating principally to transactions in Company securities by such persons.
Based solely upon its review of the copies of such reports furnished to the
Company, or written representations received by the Company that no other
reports were required, the Company believes during fiscal 2003 that the
reporting persons filed on a timely basis the reports required by Section 16(a)
of the Securities Act of 1934.
VOTING VIA THE INTERNET OR BY TELEPHONE
Please note that there are separate Internet and telephone voting
arrangements depending upon whether your Shares are registered in your name or
in the name of a bank or broker. Stockholders voting via the Internet should
understand that there may be costs associated with electronic access, such as
usage charges from Internet access providers and telephone companies, that must
be borne by such Stockholder utilizing such services.
SHARES REGISTERED DIRECTLY IN THE NAME OF THE STOCKHOLDER
Stockholders with shares of Common Stock registered directly with the
Company's transfer agent, American Stock Transfer & Trust Company ("AmStock"),
may vote telephonically by calling 1-800-PROXIES (1-800-776-9437) on a touch
tone telephone, or via the Internet at AmStock's voting site on the World Wide
Web (www.voteproxy.com). A Control Number located on the proxy card will be
utilized to verify your identity, allow you to vote your shares of Common
Stock, and confirm that your voting instructions have been properly recorded.
SHARES REGISTERED IN THE NAME OF A BROKERAGE FIRM OR BANK
A number of brokerage firms and banks are participating in a program that
also offers telephone and Internet voting options. This program is likely
different from the program provided by AmStock for the Company's shares of
Common Stock registered in the name of the stockholder. If your shares are held
in an account at a brokerage firm or bank which participates in an electronic
voting program, you may vote those shares telephonically or via the Internet by
following the instructions provided on your proxy card.
16
ADDITIONAL INFORMATION
The Board of Directors does not intend to present to the meeting any
matters not referred to in the form of proxy. If any proposal not set forth in
this Proxy Statement should be presented for action at the meeting, and is a
matter which should come before the meeting, it is intended that the shares
represented by proxies will be voted with respect to such matters in accordance
with the judgment of the persons voting them.
Stockholder proposals with respect to the Company's next Annual Meeting of
Stockholders must be received by the Company no later than April 1, 2004 to be
considered for inclusion in the Company's next Proxy Statement.
A copy of the Annual Report has been mailed to every stockholder of
record. The Annual Report is not to be considered proxy-soliciting material.
By Order of the Board of Directors,
Richard G. Satin
Vice President of Operations
and General Counsel
Dated: Hauppauge, New York
June 27, 2003
17
EXHIBIT A
PROPOSED AMENDMENT TO THE MEDICAL ACTION INDUSTRIES INC.
1994 STOCK INCENTIVE PLAN
The Medical Action Industries Inc. 1994 Stock Incentive Plan (the
"Incentive Plan") is hereby amended as follows:
1. Section 2.1 is hereby amended and restated in its entirety as follows:
"Subject to adjustment in accordance with Section 5.2, 1,850,000
shares of Stock (the "Maximum Plan Shares") are hereby reserved
exclusively for issuance pursuant to Stock Incentives. At no time
shall the Company have outstanding Stock Incentives subject to Section
16 of the Exchange Act and shares of Stock issued in respect of Stock
Incentives in excess of the Maximum Plan Shares; for this purpose, the
outstanding Stock Incentives and shares of Stock issues in respect of
Stock Incentives shall be computed in accordance with Rule 16b-3(a)(1)
as promulgated under the Exchange Act. To the extent permitted by Rule
16-b3(a)(1) as promulgated under the Exchange Act, the shares of Stock
attributable to the non-vested, unpaid, unexercised, unconverted or
otherwise unsettled portion of any Stock Incentive that is forfeited
or cancelled or expires or terminates for any reason without becoming
vested, paid, exercised, converted or otherwise settled in full shall
again be available for purposes of the Plan."
2. Effective Date. The effective date of this Amendment to the Incentive Plan
shall be August 14, 2003.
A-1