SCHEDULE 14A
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 Section 240.14a-12
BIOMET INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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 its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
[BIOMET, INC. LETTERHEAD]
To the Shareholders of Biomet, Inc.:
You are cordially invited to attend our Annual Meeting of Shareholders on
Saturday, September 21, 2002, at 1:30 p.m., local time, at Biomet's Corporate
Headquarters located at 56 East Bell Drive, Warsaw, Indiana. Information
regarding the matters to be voted upon at the Annual Meeting can be found in the
accompanying Notice and Proxy Statement.
We hope you are planning to attend the Annual Meeting and look forward to seeing
as many of you as possible. The vote of each shareholder is of utmost
importance. For that reason, we urge you to vote promptly, whether or not you
plan to attend the Annual Meeting.
On behalf of the Board of Directors and management of Biomet, Inc., I would like
to extend our appreciation for your continued support and confidence.
Sincerely,
BIOMET, INC.
/s/ DANE A. MILLER
Dane A. Miller, Ph.D.
President and Chief
Executive Officer
[BIOMET, INC. LETTERHEAD]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 21, 2002
TO THE SHAREHOLDERS OF BIOMET, INC.:
The Annual Meeting of Shareholders of Biomet, Inc. will be held on Saturday,
September 21, 2002, at 1:30 p.m., local time, at Biomet's Corporate Headquarters
located at 56 East Bell Drive, Warsaw, Indiana, for the following purposes:
(1) To elect five directors to serve for terms of three years each.
(2) To ratify the selection by the Board of Directors of Ernst & Young LLP as
independent accountants for the fiscal year ending May 31, 2003.
(3) To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Shareholders of record as of the close of business on July 12, 2002 are entitled
to receive notice of and to vote at the Annual Meeting. We urge you to vote your
shares promptly, even if you hold only a few shares and regardless of whether or
not you expect to be present at the Annual Meeting in person.
By order of the Board of Directors,
/s/ DANIEL P. HANN
Daniel P. Hann, Secretary
August 21, 2002
Warsaw, Indiana
YOUR VOTE IS VERY IMPORTANT. PLEASE VOTE YOUR PROXY PROMPTLY.
[BIOMET, INC., LETTERHEAD]
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 21, 2002
GENERAL INFORMATION
This Proxy Statement is furnished to the shareholders of Biomet, Inc. in
connection with the solicitation by the Board of Directors of Biomet of proxies
to be voted at the Annual Meeting of Shareholders to be held at Biomet's
Corporate Headquarters located at 56 East Bell Drive, Warsaw, Indiana, on
Saturday, September 21, 2002, at 1:30 p.m., local time, or any adjournment
thereof. This Proxy Statement and the accompanying form of proxy were first
mailed to shareholders on or about August 21, 2002. The following is important
information in a question-and-answer format regarding the Annual Meeting and
this Proxy Statement.
WHAT AM I VOTING ON?
You are voting on the following matters:
- The election of five directors (C. Scott Harrison, M.D.; Kenneth V.
Miller; Niles L. Noblitt; Marilyn Tucker Quayle; and L. Gene Tanner)
for three-year terms.
- The ratification of the selection of Ernst & Young LLP as independent
accountants for the fiscal year ending May 31, 2003.
WHO IS ENTITLED TO VOTE?
Only those persons who own Biomet Common Shares at the close of business on the
record date, July 12, 2002, are entitled to receive notice of and to vote at the
Annual Meeting, or any adjournment of the meeting. Each shareholder is entitled
to one vote for each Biomet Common Share owned as of the close of business on
July 12, 2002.
HOW DO I VOTE?
It is important that you vote each proxy you receive. If your proxy does not
indicate your voting preference, we will vote FOR the two proposals on your
behalf. This year there are two convenient voting methods.
VOTING BY INTERNET. We encourage you to vote by using the Internet at
www.proxyvote.com. Please refer to the voting information on the proxy ballot
and on the website for directions on the manner in which to transmit your voting
instructions. Voting on the Internet has the same effect as voting by mail. The
deadline for Internet voting is 11:59 p.m. Eastern Time, Friday, September 20,
2002. Internet voting is available 24 hours a day. If you vote by the Internet
you should NOT return your proxy card by mail. If you are a beneficial owner,
or you hold your shares in "street name," please check your voting instruction
card to determine whether you will be able to vote by Internet.
VOTING BY MAIL. If you choose to vote by mail, please mark, sign and date each
proxy ballot you receive and return it as soon as possible in the postage-paid
envelope provided.
WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A SHAREHOLDER OF RECORD AND AS
A BENEFICIAL OWNER?
If your shares are registered directly in your name with our transfer agent you
are considered to be the "shareholder of record" with respect to those shares.
This Proxy Statement, the Annual Report to Shareholders and the proxy ballot
have been sent directly to you.
If your shares are held in a stock brokerage account, by a bank or other
nominee, you are considered to be the "beneficial owner" of the shares held in
street name. This Proxy Statement and the Annual Report to Shareholders have
been forwarded to you by your broker, bank or nominee, who is considered to be
the shareholder of record with respect to those shares. As the beneficial owner
of the shares, you have the right to direct your broker, bank or nominee how to
vote your shares by using the voting instruction card included in the mailing.
WHAT IS "HOUSEHOLDING" AND HOW DOES IT AFFECT ME?
In an effort to reduce printing and postage costs, Biomet has adopted a process
for mailing the Annual Report to Shareholders and Proxy Statement known as
"householding." Householding has been approved by the Securities and Exchange
Commission and permits Biomet to mail only one copy of the Annual Report to
Shareholders and Proxy Statement to shareholders who share the same last name
and address, unless we receive contrary instructions from any shareholder at
that address.
If you prefer to receive multiple copies of the Annual Report to Shareholders
and Proxy Statement at the same address, additional copies will be provided to
you promptly upon request. You may contact the Investor Contact in writing at
Biomet, Inc., P.O. Box 587, Warsaw IN 46581-0587, or by telephone at
574.372.1514. If you are receiving multiple copies of the Annual Report to
Shareholders and Proxy Statement and would prefer to receive a single copy,
please contact us at the address and phone number provided above.
2
WHAT DOES IT MEAN IF I GET MORE THAN ONE PROXY BALLOT?
It means you have shares registered in more than one account. Please vote ALL
proxy ballots to ensure that all of your shares are counted.
WHO CAN ATTEND THE ANNUAL MEETING?
All shareholders as of the close of business on July 12, 2002, or their duly
appointed proxy holders, may attend the Annual Meeting. Each shareholder may be
accompanied by one guest. However, seating will be limited. Admission to the
Annual Meeting will be on a first-come, first-served basis. Registration will
begin at 1:00 p.m.
WHAT TIME IS THE ANNUAL MEETING?
The Annual Meeting will begin at 1:30 p.m., local time. Please note that local
time is Eastern Standard Time, NOT Eastern Daylight Savings Time (i.e., during
this time of year, Warsaw is on the same time as Chicago). There will be tours
of Biomet's facility from 12:00 noon to 1:00 p.m. prior to the Annual Meeting.
WHAT CONSTITUTES A QUORUM?
A quorum is represented by the holders of a majority of the Common Shares
outstanding on the record date and present, in person or by proxy, at the Annual
Meeting. As of the record date, there were 263,286,529 Common Shares of Biomet
issued and outstanding. Proxies submitted by brokers that do not indicate a vote
for the proposal are called "broker non-votes." Broker non-votes and abstentions
will be included in the number of shares considered to be present at the Annual
Meeting.
CAN I CHANGE MY VOTE AFTER I VOTE MY PROXY?
Yes. You may change your vote at any time prior to the tabulation of votes at
the Annual Meeting. To do so, you must (1) deliver to the Secretary of Biomet a
written notice of revocation, or (2) submit a properly executed proxy bearing a
later date in writing or on the Internet. Any proxy will be suspended if you are
a shareholder of record and you elect to vote in person at the Annual Meeting.
HOW MANY VOTES ARE NEEDED TO APPROVE EACH ITEM?
ELECTION OF DIRECTORS. The five nominees receiving the greatest number of votes
will be elected as directors. Abstentions and broker non-votes will not be
counted as votes in favor of any nominee.
OTHER MATTERS. The ratification of the independent accountants and approval of
any other matter that properly comes before the Annual Meeting requires that the
number of votes cast "for" exceed those cast "against." Abstentions and broker
non-votes will not be counted as votes for or against any such matters.
3
WHAT ARE THE BOARD'S RECOMMENDATIONS?
Unless you instruct otherwise on your proxy ballot, the proxy holders will vote
in accordance with the recommendations of the Board of Directors. The Board's
recommendations are set forth with the discussion of each matter. In summary,
the Board recommends the following voting action:
- FOR the election of the nominees for directors.
- FOR ratification of the appointment of Ernst & Young LLP as Biomet's
independent accountants for the fiscal year 2003.
With respect to any other matter that properly comes before the Annual Meeting,
the proxy holders will vote as recommended by the Board of Directors, or in
their own discretion if no recommendation is given.
WHEN ARE SHAREHOLDER PROPOSALS DUE FOR THE 2003 ANNUAL MEETING?
To be considered for inclusion in next year's Proxy Statement, shareholder
proposals must be submitted in writing by April 23, 2003, to the Secretary of
Biomet, P.O. Box 587, Warsaw IN 46581-0587.
WHO PAYS FOR THE COSTS ASSOCIATED WITH THIS PROXY STATEMENT?
Biomet will pay for all expenses in connection with the solicitation of proxies.
We will also provide to all brokers, dealers, banks and voting trustees, and
their nominees, copies of this Proxy Statement, the accompanying form of proxy
ballot and the Annual Report to Shareholders for mailing to beneficial owners
and, upon request, will reimburse such record holders for their reasonable
expenses in connection with such activities. Biomet expects to solicit proxies
primarily by mail, but directors, officers and employees of Biomet may also
solicit proxies in person or by telephone.
4
STOCK OWNERSHIP
WHO ARE THE OWNERS OF THE GREATEST AMOUNT OF BIOMET'S COMMON SHARES?
The following table sets forth certain data with respect to those persons known
by Biomet to be the beneficial owners of more than 5% of the issued and
outstanding Common Shares of Biomet as of July 12, 2002. Except as otherwise
indicated in the notes to the table, each shareholder has sole voting and
investment power with respect to the shares indicated.
NAME AND ADDRESS AMOUNT AND NATURE PERCENT
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS
------------------- ----------------------- --------
State Farm Mutual Automobile 18,869,359(1) 7.2%
Insurance Company and related
entities
One State Farm Plaza
Bloomington, Illinois 61710
FMR Corp. 13,441,767(2) 5.1%
82 Devonshire Street
Boston, Massachusetts 02109
(1)According to information contained in a Schedule 13G filing made by State
Farm Mutual Automobile Insurance Company and related entities ("State Farm")
dated February 1, 2002, State Farm acquired these shares for investment purposes
in the ordinary course of its business.
(2)According to information obtained in a Schedule 13G filing made by FMR Corp.
("FMR"), dated February 14, 2002, FMR acquired these shares for investment
purposes in the ordinary course of its business.
5
HOW MANY COMMON SHARES DO BIOMET'S DIRECTORS AND EXECUTIVE OFFICERS OWN?
The following table sets forth the beneficial ownership of Common Shares as of
July 12, 2002 by each director, each executive officer named in the Summary
Compensation Table herein, and by all directors and executive officers of
Biomet as a group. Unless otherwise stated, the beneficial owners exercise sole
voting and/or investment power over their shares.
<Table>
<Caption>
OPTION
NUMBER SHARES TOTAL NUMBER
OF SHARES BIOMET'S 401(k) PROFIT EXERCISABLE OF SHARES
NAME OF BENEFICIALLY EMPLOYEE STOCK SHARING AND WITHIN BENEFICIALLY PERCENT
BENEFICIAL OWNER OWNED (1) BONUS PLAN (2) TRUST (3) 60 DAYS (4) OWNED OF CLASS
- --------------------------- ------------ -------------- ------------- ----------- ------------- --------
Garry L. England 197,318 22,758 32,354 34,967 287,397 0.1%
Jerry L. Ferguson 3,183,135 3,308 -- -- 3,186,443 1.2%
Daniel P. Hann 70,929 10,278 2,418 34,968 118,593 *
C. Scott Harrison, M.D. 699,523 -- -- 35,537 735,060 0.3%
M. Ray Harroff 47,990 -- -- 16,250 64,240 *
Thomas F. Kearns, Jr. 10,151 -- -- 2,000 12,151 *
Dane A. Miller, Ph.D. 7,947,075 31,564 22,386 -- 8,001,025 3.0%
Jerry L. Miller 3,981,574 -- -- 16,250 3,997,824 1.5%
Kenneth V. Miller 9,501 -- -- 16,250 25,751 *
Charles E. Niemier 759,780 27,252 35,624 46,498 869,154 0.3%
Niles L. Noblitt 4,712,904 32,166 52,009 -- 4,797,079 1.8%
James R. Pastena 103,838 11,767 10,823 41,576 168,004 *
Marilyn Tucker Quayle 21,310 -- -- 5,000 26,310 *
Prof. Dr. Bernhard Scheuble 0 -- -- 2,000 2,000 *
L. Gene Tanner 119,249 -- -- 2,000 121,249 *
Other Executive Officers 405,356 29,706 31,184 83,998 550,244 0.2%
- -----------------------------------------------------------------------------------------------------------------------
All Directors and Executive
Officers as a Group
(18 persons, including
the foregoing) 22,962,524 8.7%
*Represents less than 0.1% of Biomet's issued and outstanding Common Shares.
(1) The number of shares shown includes shares that are owned individually or
jointly, as well as shares as to which the individual has shared voting
and/or investment power and, in certain cases, disclaims beneficial
ownership, as follows:
- Mr. Garry England--4,050 shares held in an individual retirement account
("IRA") for Mr. England's benefit as to which he has investment power
but no voting power and 5,136 shares owned of record by Mr. England's
minor children, as to which Mr. England has no voting or investment
power and disclaims beneficial ownership.
- Mr. Jerry Ferguson--278,754 shares owned of record by Mr. Ferguson's
wife and 38,880 shares held in an IRA for her benefit, as to which Mr.
Ferguson has no voting or investment power and disclaims beneficial
ownership; and 58,806 shares held in an IRA for his benefit as to which
Mr. Ferguson has investment power but no voting power.
6
- Dr. Dane Miller--3,812,337 shares owned of record by Dr. Miller's wife
and 44,973 shares held in an IRA for her benefit, as to which Dr.
Miller has no voting or investment power and disclaims beneficial
ownership; and 103,473 shares held in an IRA for the benefit of Dr.
Miller, as to which he has investment power but no voting power.
- Mr. Jerry Miller--3,887,209 shares held in an Estate Planning trust for
the benefit of Mr. Miller, as to which Mr. Miller has shared voting and
investment power.
- Mr. Charles Niemier--143,354 shares owned of record by Mr. Niemier's
wife and 30,573 shares held in an IRA for her benefit, as to which Mr.
Niemier has no voting or investment power and disclaims beneficial
ownership; 71,082 shares held in an IRA for Mr. Niemier's benefit, as
to which he has investment power but no voting power; and 300,348 shares
held in trust for the benefit of Mr. Niemier's children as to which he
has no voting or investment power and disclaims beneficial ownership.
- Mr. Niles Noblitt--2,325,109 shares owned of record by Mr. Noblitt's
wife, as to which Mr. Noblitt holds no voting or investment power and
disclaims beneficial ownership; 20,528 shares owned of record by his
children, as to which Mr. Noblitt has no voting or investment power and
disclaims beneficial ownership; and 20,528 shares owned of record by
his children, as to which he has voting and investment power but
disclaims beneficial ownership.
- Other Executive Officers--125,219 shares held by the spouses of these
executive officers, as to which they have no voting power or investment
power and disclaim beneficial ownership; 4,212 shares held in an IRA
for the benefit of the wife of one of these executive officers, as to
which he has no voting or investment power and disclaims beneficial
ownership; and 4,653 shares held in an IRA for the benefit of one of
the executive officers, as to which he has investment power but no
voting power.
(2) Biomet's executive officers have accounts in Biomet's Employee Stock Bonus
Plan qualified under section 401(a) of the Internal Revenue Code. The
executive officers who hold shares pursuant to the Employee Stock Bonus
Plan have voting power but do not have investment power for these shares.
(3) Biomet's executive officers may elect to participate in Biomet's Profit
Sharing Plan and Trust qualified under Section 401(k) of the Internal
Revenue Code. The officers have no voting or investment power for the
shares held in their accounts in the 401(k) plan.
(4) Reflects the number of shares that could be purchased by the exercise of
options exercisable at July 12, 2002, or within 60 days thereafter.
7
ITEM 1--ELECTION OF DIRECTORS
Biomet's Bylaws divide the Board of Directors into three classes, with one class
to be elected at each Annual Meeting of Shareholders. At the Annual Meeting, the
shareholders will vote to elect five directors in Class I to serve for a
three-year term expiring in 2005, or until their successors are elected and
qualified. Class II Directors and Class III Directors will not be elected at
the Annual Meeting and will continue in office until the Annual Meetings of
Shareholders to be held in 2003 and 2004, respectively. The Board of Directors
has nominated the persons named below for election as Class I Directors. The
name, age, business background and tenure as a director of Biomet of each
nominee and each director continuing in office are set forth below. Jerry L.
Miller and Kenneth V. Miller are brothers. No other family relationship exists
among any of the nominees or continuing directors. Except as otherwise
indicated, the principal occupations of the nominees and continuing directors
have not changed during the last five years. The nominees for director have
consented to serve, if elected, and Biomet has no reason to believe that any of
the nominees will be unable to serve. Should any nominee become unavailable for
any reason, proxies may be voted for an alternate candidate chosen by the Board
of Directors. The five nominees for director receiving the greatest number of
votes will be elected as directors. Withheld votes and broker non-votes (which
are treated as "withheld" votes) are not counted as votes in favor of any
nominee. Unless authority to vote for a nominee is withheld, the accompanying
proxy will be voted FOR the nominees named.
DIRECTORS STANDING FOR ELECTION
NAME, AGE AND BUSINESS EXPERIENCE
THE BOARD RECOMMENDS A VOTE FOR THE NOMINEES.
CLASS I: FOR A THREE-YEAR TERM EXPIRING AT THE 2005 ANNUAL MEETING OF
SHAREHOLDERS
C. SCOTT HARRISON, M.D., age 65 .............................Director since 1994
Member: Executive, Audit and Compensation Committees. Dr. Harrison is the
founder, President and Chief Executive Officer of CURE International
(non-profit organization).
KENNETH V. MILLER, age 54....................................Director since 1979
Member: Executive, Nominating, Audit, Compensation and Stock Option Committees.
Mr. Miller is a self-employed attorney, venture capitalist and a principal in
Havirco, Inc. (private investment management firm). Mr. Miller is a director
and a member of the Compensation Committee of the Board of Directors of AvTech
Laboratories, Inc. (pharmaceutical laboratory) and TEAM Industries, Inc.
(manufacturer of expanded polystyrene products). Mr. Miller is also a director
of Keystone Community Bank.
NILES L. NOBLITT, age 51.....................................Director since 1977
Member: Executive and Stock Option Committees. Mr. Noblitt is one of the four
founders of Biomet and is the Chairman of the Board. Mr. Noblitt is also a
trustee of Rose Hulman Institute of Technology.
MARILYN TUCKER QUAYLE, age 53................................Director since 1993
Ms. Quayle is a director and President of BTC, Inc., a private holding company
and a director of booksfree.com. Prior to 2001, she was also an attorney engaged
in private practice as a partner in the Indianapolis, Indiana law firm of
Krieg, DeVault, Alexander & Capehart.
L. GENE TANNER, age 69.......................................Director since 1985
Member: Audit Committee. Mr. Tanner is Vice Chairman of the Board of NatCity
Investments, Inc. (investment banking firm) and a director of the Indiana
Chamber of Commerce.
8
DIRECTORS CONTINUING IN OFFICE
NAME, AGE AND BUSINESS EXPERIENCE
CLASS II: TERM EXPIRES AT THE 2003 ANNUAL MEETING OF SHAREHOLDERS
JERRY L. FERGUSON, age 61 ...................................Director since 1978
Member: Executive and Nominating Committees. Mr. Ferguson is one of the four
founders of Biomet and has served as Vice Chairman of the Board since December
1997. Prior thereto he served as Biomet's Senior Vice President.
DANIEL P. HANN, age 47 ......................................Director since 1989
Mr. Hann has served as the Senior Vice President, General Counsel and Secretary
of Biomet since June 1999. Prior thereto, he was Vice President, General Counsel
and Secretary of Biomet.
THOMAS F. KEARNS, JR., age 65................................Director since 1983
Mr. Kearns is a retired partner of Bear, Stearns & Co., Inc. (investment banking
firm). Mr. Kearns is a director of PharmaKinetics Laboratories, Inc. (contract
research organization), a trustee of the University of North Carolina
Foundation, a director of Fibrogen Corporation (a biotechnology company) and a
director of the Omega Institute (non-profit organization).
DANE A. MILLER, PH.D., age 56................................Director since 1977
Member: Executive and Stock Option Committees. Dr. Miller is one of the four
founders of Biomet and is the President and Chief Executive Officer. Dr. Miller
is a director of 1st Source Corporation (bank holding company), a trustee of
Kettering University (formerly General Motors Institute), a member of the board
of the University of Chicago Health Systems and serves on the Engineering
Advisory Committee of the University of Cincinnati.
CLASS III: TERM EXPIRES AT THE 2004 ANNUAL MEETING OF SHAREHOLDERS
M. RAY HARROFF, age 62.......................................Director since 1977
Mr. Harroff is one of the four founders of Biomet and is President of Stonehenge
Links Village Development (real estate development company). Mr. Harroff was
also President of Stonehenge Golf Club, Inc. (golf country club) until February
1998. On September 2, 1997, Mr. Harroff filed for protection under Federal
Bankruptcy laws. Also on September 2, 1997, Stonehenge Golf Club and Stonehenge
Links Village Development filed a petition for reorganization pursuant to
Chapter 11 of the United States Bankruptcy Code.
JERRY L. MILLER, age 56......................................Director since 1979
Member: Executive, Nominating, Compensation and Stock Option Committees. Mr.
Miller is a self-employed attorney, venture capitalist and a principal in
Havirco, Inc. (private investment management firm). Mr. Miller is a director
and a member of the Compensation Committee of the Board of Directors of AvTech
Laboratories, Inc. (pharmaceutical laboratory) and TEAM Industries, Inc.
(manufacturer of expanded polystyrene products).
CHARLES E. NIEMIER, age 46...................................Director since 1987
Mr. Niemier is the Senior Vice President - International Operations of Biomet.
Mr. Niemier is a trustee of Valparaiso University, a member of the Board of
Directors of Lakeland Financial Corporation (Lake City Bank), and a member of
the Board of Directors of Kosciusko 21st Century Foundation, Inc. (non-profit
organization).
PROF. DR. BERNHARD SCHEUBLE, age 48..........................Director since 1998
Prof. Scheuble is Chairman and Chief Executive Officer of Merck KGaA
(pharmaceutical company) and has been CEO Pharma, and a General Partner and
Member of the Executive Board of Merck KGaA since April, 1998. From 1996 until
1998, Prof. Scheuble was Head of Pharma Ethicals, Merck KGaA. Prof. Scheuble is
a director of certain subsidiaries of Merck KGaA.
9
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
HOW OFTEN DID THE BOARD MEET DURING FISCAL YEAR 2002?
The Board of Directors met five times during fiscal year 2002. Each director
attended more than 75% of the total number of meetings of the Board and
committees on which he or she served during fiscal year 2002.
BOARD COMMITTEE MEMBERSHIP
Executive Nominating Audit Compensation Stock Option
Name Committee Committee Committee Committee Committee
Jerry L. Ferguson X X
Daniel P. Hann
C. Scott Harrison, M.D. X X X
M. Ray Harroff
Thomas F. Kearns
Dane A. Miller, Ph.D. X X
Jerry L. Miller X X X X
Kenneth V. Miller X X X X X
Charles E. Niemier
Niles L. Noblitt X X
Marilyn Tucker Quayle
Prof. Dr. Bernhard Scheuble
L. Gene Tanner X
The EXECUTIVE COMMITTEE has full authority from the Board of Directors to
conduct business within the limits prescribed by Indiana law. The Executive
Committee met six times during fiscal year 2002.
The NOMINATING COMMITTEE is responsible for, among other things, receiving and
reviewing recommendations for nominations to the Board of Directors,
establishing eligibility criteria and procedures for identifying potential
nominees to the Board of Directors, and recommending individuals as nominees for
election to the Board of Directors. The Nominating Committee will consider for
nomination as directors persons recommended by shareholders provided that such
recommendations are in writing and delivered to: Attn: Secretary, Biomet, Inc.,
P.O. Box 587, Warsaw IN 46581-0587, and delivered to, or mailed and received at,
such address not less than 60 days nor more than 90 days prior to the Annual
Meeting of Shareholders. In the event that less than 70 days' notice or prior
public disclosure of the date of the Annual Meeting is given or made to
shareholders, any notice of nomination by a shareholder must be received not
later than the close of business on the tenth day following the day on which
such notice of the date of the meeting was mailed or such public disclosure was
made. The Nominating Committee met once during fiscal year 2002.
The function of the AUDIT COMMITTEE is to monitor the internal controls and
financial reporting of Biomet and its subsidiaries; to review these matters with
the President and Chief Executive Officer and Biomet's independent accountants;
to review the scope and parameters of the independent accountants' audit of
Biomet's consolidated financial statements; to review the scope and parameters
of the findings of Biomet's internal
10
auditors; to establish policies and make recommendations to the Board of
Directors with respect to approval of transactions between Biomet and its
directors, officers and employees; to review and approve any related-party
transactions; and to make recommendations to the Board of Directors concerning
the annual appointment of Biomet's independent accountants. The Audit Committee
also reviews Biomet's compliance with applicable laws, regulations and internal
procedures. The Audit Committee met nine times during fiscal year 2002.
The COMPENSATION COMMITTEE is responsible for administering the compensation
programs for Biomet's executive officers and employees. The Compensation
Committee met twice during fiscal year 2002.
The STOCK OPTION COMMITTEE administers Biomet's stock option plans. Presently,
no member of the Stock Option Committee participates in any of these plans with
the exception that each of the two non-employee director members, Jerry L.
Miller and Kenneth V. Miller, automatically receives an option to purchase 2,000
Common Shares every year during his service as a non-employee director of Biomet
pursuant to the terms of the Biomet, Inc. 1998 Qualified and Non-Qualified Stock
Option Plan. The Stock Option Committee met four times during fiscal year 2002.
COMPENSATION OF DIRECTORS
Each director of Biomet who is not an employee receives an annual fee of
$17,000, plus a fee of $1,000 and reimbursement for travel expenses for each
meeting of the Board of Directors attended in person and a fee of $500 for
attending a meeting of the Board of Directors by telephone. Directors who are
employees receive a fee of $750 for each meeting of the Board of Directors
attended in person and a fee of $375 for each meeting of the Board of Directors
attended by telephone. Each member of the Executive Committee of the Board of
Directors who is not a Biomet employee receives an additional annual fee of
$17,000, plus a fee of $1,000 and reimbursement for travel expenses for each
Executive Committee meeting attended in person and a fee of $500 for each
Executive Committee meeting attended by telephone. Each member of the Audit
Committee of the Board of Directors receives an additional annual fee of $9,000,
plus a fee of $1,000 and reimbursement for travel expenses for each Audit
Committee meeting attended in person and a fee of $500 for each Audit Committee
meeting attended by telephone unless such meetings are held in conjunction with
a meeting of the Board of Directors or Executive Committee. Each member of the
Nominating and Compensation Committees of the Board of Directors receives a fee
of $1,000 for each committee meeting attended in person and a fee of $500 for
attending a committee meeting by telephone, unless such meetings are held in
conjunction with a meeting of the Board of Directors or Executive Committee. No
fees are paid for attending meetings of the Stock Option Committee.
Each director who is not a Biomet employee is automatically granted an option to
purchase 2,000 Common Shares every year during his or her service on the Board
of Directors pursuant to the terms of the Biomet, Inc. 1998 Qualified and
Non-Qualified Stock Option Plan (the "1998 Plan"). The 1998 Plan provides that
the purchase price of option shares may not be less than the fair market value
per Common Share on the date of grant and the term of the option may not exceed
ten years from the date of grant.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year 2002, the Compensation Committee was comprised of C. Scott
Harrison, M.D.; Jerry L. Miller and Kenneth V. Miller. None of the members of
the Compensation Committee is now serving or previously has served as an officer
of Biomet or any of its subsidiaries. None of Biomet's executive officers serve
as directors of, or in any compensation-related capacity for, other companies
with which members of Biomet's Compensation Committee are affiliated.
11
EXECUTIVE COMPENSATION
GENERAL
The following Summary Compensation Table sets forth, for the three years ended
May 31, 2002, certain information with respect to the compensation of Biomet's
President and Chief Executive Officer and the four other most highly compensated
executive officers who served in such capacities as of May 31, 2002.
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL INCENTIVE ALL OTHER
FISCAL YEAR COMPENSATION AWARDS COMPENSATION(1)
NAME AND PRINCIPAL POSITION ENDED MAY 31 SALARY ($) BONUS ($) STOCK OPTIONS(#) ($)
- ----------------------------------------------------------------------------------------------------------------------------------
Dane A. Miller, Ph.D. 2002 264,300 230,000 -- 16,875
President and 2001 244,700 207,000 -- 14,850
Chief Executive Officer 2000 230,300 158,500 -- 14,850
Niles L. Noblitt 2002 273,800 230,000 -- 16,875
Chairman of the Board 2001 243,000 210,000 -- 14,850
2000 230,300 162,000 -- 14,850
James R. Pastena 2002 279,700 199,500 15,000 13,500
Vice President of Biomet 2001 248,900 175,000 15,000 11,475
and President of EBI, L.P. 2000 242,800 150,000 22,500 11,475
Garry L. England 2002 246,700 209,000 15,000 13,500
Senior Vice President - 2001 227,200 175,000 7,500 11,475
Warsaw Operations 2000 214,000 152,000 22,500 11,475
Charles E. Niemier 2002 262,100 167,000 15,000 16,875
Senior Vice President - 2001 242,600 170,000 7,500 14,850
International Operations 2000 228,400 144,000 22,500 14,850
(1)Represents the value of Biomet's contribution to the Employee Stock Bonus
Plan and the 401(k) Plan for each of the officers listed, and director fees paid
to Dr. Miller, Mr. Noblitt and Mr. Niemier.
12
STOCK OPTIONS
Options were granted in fiscal year 2002 to the following executive officers
named in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
<Table>
<Caption>
POTENTIAL REALIZABLE VALUE
NUMBER OF AT ASSUMED ANNUAL
SECURITIES PERCENT OF TOTAL RATES OF STOCK PRICE
UNDERLYING OPTIONS GRANTED EXERCISE APPRECIATION FOR OPTION TERM(2)
OPTIONS GRANTED(1) TO EMPLOYEES IN PRICE EXPIRATION -------------------------------
NAME (#) FISCAL YEAR 2002 ($/SH) DATE 5% ($) 10% ($)
- ----- ------------------ ---------------- ---------- ------------ -------------------------------
James R. Pastena 3,750 0.2% $29.0933 July 5, 2008 $44,415 $103,505
3,750 0.2% 29.0933 July 5, 2009 52,090 124,765
3,750 0.2% 29.0933 July 5, 2010 60,150 148,152
3,750 0.2% 29.0933 July 5, 2011 68,612 173,877
Garry L. England 3,750 0.2% $29.0933 July 5, 2008 $44,415 $103,505
3,750 0.2% 29.0933 July 5, 2009 52,090 124,765
3,750 0.2% 29.0933 July 5, 2010 60,150 148,152
3,750 0.2% 29.0933 July 5, 2011 68,612 173,877
Charles E. Niemier 3,750 0.2% $29.0933 July 5, 2008 $44,415 $103,505
3,750 0.2% 29.0933 July 5, 2009 52,090 124,765
3,750 0.2% 29.0933 July 5, 2010 60,150 148,152
3,750 0.2% 29.0933 July 5, 2011 68,612 173,877
</Table>
(1)These options were granted under the Biomet, Inc. 1998 Qualified and
Non-Qualified Stock Option Plan. They were granted at fair market value at the
time of the grant, do not become exercisable until at least one year from the
date of grant and carry with them the right to deliver previously owned shares
in payment of the option price and to satisfy tax withholding requirements.
(2)The dollar amounts shown in these columns are the result of calculations at
the 5% and 10% appreciation rates set by the Securities and Exchange Commission
and are not intended to forecast the actual appreciation, if any, of the
Company's stock price. The Company did not use an alternate formula to determine
potential realizable value because it is not aware of any formula that is able
to determine with reasonable accuracy the potential realizable value based on
future unknown or volatile factors.
13
The following table sets forth the number of shares acquired on exercise of
stock options and the aggregate gain realized on exercise in fiscal year 2002 by
Biomet's executive officers named in the Summary Compensation Table. Dr. Miller
and Mr. Noblitt do not receive stock options from Biomet.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
NUMBER OF UNEXERCISED OPTIONS VALUE OF UNEXERCISED IN-THE-MONEY
SHARES ACQUIRED VALUE AT MAY 31, 2002 (#) OPTIONS AT MAY 31, 2002 ($)(3)
NAME ON EXERCISE (#)(1) REALIZED ($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------------ --------------- ------------ -------------- ------------- -------------
James R. Pastena 0 $ 0 46,076 60,210 $ 804,329 $ 599,275
Garry L. England 25,031 576,604 25,967 44,063 537,466 463,866
Charles E. Niemier 20,530 688,528 37,498 44,063 782,417 463,866
(1) The number of shares acquired has been adjusted to reflect the 3-for-2 split
of the Company's Common Shares announced July 9, 2001.
(2) An individual, upon exercise of an option, does not receive cash equal to
the amount contained in the Value Realized column of this table. Instead, the
"Value Realized" represents the difference between the base (or exercise) price
of the option shares and the market price of the option shares on the date the
option was exercised. It does not include any taxes which may have been owed. No
cash is received until or unless the shares received upon exercise of an option
are sold.
(3)Represents the difference between the base (or exercise) price of the option
shares and a market price of $28.23, which was the closing price of the Common
Shares reported by the Nasdaq Stock Market on May 31, 2002.
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEES
The Compensation Committee and the Stock Option Committee of the Board of
Directors (collectively referred to herein as the "Committee") are responsible
for administering the compensation and benefit programs for Biomet's employees,
including the executive officers. The Committee annually reviews and evaluates
cash compensation and stock option grant recommendations made by the President
and Chief Executive Officer for the executive officers (other than for himself)
along with the rationale for such recommendations. The Committee examines
these recommendations in relation to Biomet's overall objectives and makes
compensation recommendations to the Board of Directors for final approval. The
Committee also sends to the Board of Directors for approval its recommendations
on compensation for the President and Chief Executive Officer, who does not
participate in the decisions of the Board as to his compensation package. The
President and Chief Executive Officer is not a member of the Compensation
Committee. He is a member of the Stock Option Committee, but does not
participate in the Biomet stock option program and has never received a stock
option from Biomet.
WHAT IS BIOMET'S PHILOSOPHY OF EXECUTIVE OFFICER COMPENSATION?
Biomet's current executive compensation policies and practices reflect the
compensation philosophies of Biomet's four founders: Dane A. Miller, Ph.D.;
Niles L. Noblitt; Jerry L. Ferguson and M. Ray Harroff. Biomet is committed to
maximizing shareholder value through performance. The Committee believes that an
essential element to reaching that goal is the superior performance of Biomet's
executive officers and management team. Biomet's practices and policies are
designed to help achieve this objective by accomplishing the following goals:
- Attracting, retaining and rewarding highly-qualified and productive
persons.
- Relating compensation to both Company and individual performance.
14
- Establishing compensation levels that are internally equitable and
externally competitive.
- Encouraging an ownership interest and instilling a sense of pride in
Biomet, consistent with the interests of Biomet's shareholders.
The Committee firmly believes that all Team Members (Biomet refers to its
employees as Team Members) play a critical role in Biomet's success and,
therefore, all Team Members are eligible to participate in Biomet's cash and
equity compensation plans. The Committee continues to believe in one of Biomet's
founding philosophies: that equity incentives in the form of stock options are
an excellent motivation for all Team Members, including executive officers, and
serve to align the interests of Team Members, management and shareholders.
Based on these objectives, the compensation package of the executive officers
consists of four primary elements:
- base salary
- incentive bonuses
- stock options
- participation in employee benefit plans
BASE SALARY. A base salary is set for each executive officer at the beginning of
each calendar year by the Board of Directors, after receiving a recommendation
from the Committee. The Committee recommends to the Board of Directors what it
believes to be an appropriate base salary for each executive officer based on
Biomet's performance, the executive officer's performance, Biomet's future
objectives and challenges, and the current competitive environment. Base
salaries are intended to be relatively moderate, but competitive. During fiscal
year 2002, the base salary of the executive officers as a group increased
approximately 8%.
INCENTIVE BONUSES. A significant portion of each executive officer's annual
compensation is based on the financial performance of Biomet. Approximately
one-half of each executive officer's potential annual cash compensation is based
upon an incentive bonus, which is accrued and paid at the mid-point and the
conclusion of each fiscal year. The potential bonus is determined at the
discretion of the Committee and approved by the Board of Directors at the
beginning of each fiscal year. In exercising its discretion, the Committee takes
into account the growth in revenues and earnings of the operations for which the
executive officer is responsible or plays a significant role, as well as the
goals, objectives, responsibilities and length of service of each officer.
STOCK OPTIONS. Stock options have always been a key element in Biomet's
long-term incentives program. The primary purpose of stock options is to provide
executive officers and other Team Members with a personal and financial interest
in Biomet's success through stock ownership, thereby aligning the interests of
such persons with those of Biomet's shareholders. This broad-based program is a
vital element of Biomet's goal to empower and motivate outstanding long-term
contributions by Team Members within all levels of Biomet. The Committee
believes that stock options help to create an entrepreneurial environment within
Biomet and instill the spirit of a small company. Additionally, the Committee
believes stock options provide broad incentives for the day-to-day achievements
of all Team Members in order to sustain and enhance Biomet's long-term
performance.
The Committee believes that the value of stock options will reflect Biomet's
financial performance over the long term. Because Biomet's employee stock option
program provides for a one-year waiting period before options may be exercised
and an exercise price at fair market value as of the date of grant, executive
officers and other Team Members benefit from stock options only when the market
value of the Common
15
Shares increases over time. Individual executive officer stock option awards are
based on level of responsibility, individual contribution, length of service and
total number of Common Shares owned in relation to other executive officers. All
Team Members are eligible to receive stock options. The current plan provides
that all hourly Team Members of Biomet and its subsidiaries receive a stock
option after just two years of service with Biomet or one of its subsidiaries.
BENEFIT PLANS. The executive officers may also participate in Biomet's 401(k)
and the Employee Stock Bonus Plan ("ESBP"). All Team Members who are at least 18
years of age and have at least 90 days of service are also eligible to
participate in both plans. With respect to the 401(k), each year Biomet, in its
sole discretion, may match 75% of each Team Member's contributions, up to a
maximum amount equal to 5% of the Team Member's compensation, either in cash or
in Common Shares. All contributions to the 401(k) are allocated to accounts
maintained on behalf of each participating Team Member and, to the extent
vested, are distributed to the Team Member upon retirement, death, disability or
termination of service. Historically, the 401(k) has purchased Common Shares
with Biomet's matching contribution. Biomet may make contributions to the ESBP
in the form of Common Shares or cash in such amounts, if any, as it may
determine in its sole discretion, and participating Team Members may make
voluntary contributions to the ESBP in amounts up to 10% of their annual
compensation. The funds accumulated under the ESBP are invested by the trustee
primarily in Biomet Common Shares. Distributions are made to Team Members at
retirement, death, disability or termination of service, in Common Shares or, at
the Team Member's option, in cash. Because a significant portion of the assets
of both of these plans is invested in Biomet's Common Shares, they serve to
further align the interests of Team Members, management and shareholders.
HOW IS BIOMET'S PRESIDENT AND CHIEF EXECUTIVE OFFICER COMPENSATED?
The compensation for Biomet's President and Chief Executive Officer, Dane A.
Miller, Ph.D., is established by the Compensation Committee and approved by the
Board of Directors. Dr. Miller is not a member of the Compensation Committee and
does not participate in decisions of the Board of Directors with respect to his
compensation. Over the years, Dr. Miller has received modest increases in his
cash compensation, notwithstanding Biomet's strong financial results. These
modest increases reflect his cost-conscious management style and belief that the
financial success of management should be closely aligned with shareholder
interests through appreciation in the value of Biomet's stock. Dr. Miller has
never received a stock option and he does not participate in Biomet's stock
option program. Notwithstanding an increase in Biomet's operating income, before
non-recurring items (as discussed in the Company's Fiscal Year 2002 Annual
Report to Shareholders), of 17% for fiscal year 2002, the total compensation
paid to Dr. Miller increased approximately 9.4% during fiscal year 2002.
The Committee believes that the executive compensation programs and practices
described above are conservative and fair to Biomet's shareholders. The
Committee further believes that these programs and practices serve the best
interests of Biomet and its shareholders.
Respectfully submitted,
COMPENSATION COMMITTEE STOCK OPTION COMMITTEE
Kenneth V. Miller, Chairman Kenneth V. Miller, Chairman
C. Scott Harrison, M.D. Dane A. Miller, Ph.D.
Jerry L. Miller Jerry L. Miller
Niles L. Noblitt
16
REPORT OF AUDIT COMMITTEE
The following Report of the Audit Committee does not constitute soliciting
material and should not be deemed filed or incorporated by reference into any
other Company filing under the Securities Act of 1933 or the Securities Exchange
Act of 1934, except to the extent that Biomet specifically incorporates this
Report by reference therein.
The primary function of the Audit Committee, as stated in its written charter
adopted by the Board of Directors, is to assist the Board of Directors in
fulfilling its oversight responsibilities as they relate to the Company's
accounting policies, internal controls and financial reporting practices. The
Audit Committee fulfills this responsibility by reviewing the financial
reporting process, the systems of internal control, the audit process and the
Company's process for monitoring compliance with laws and regulations and with
its code of conduct. In performing its duties, the Audit Committee will maintain
effective working relationships with the Board of Directors, management and the
internal and independent auditors. To effectively perform his role, each
committee member will obtain an understanding of the detailed responsibilities
of committee membership as well as the Company's business, operations and risks.
Members of the Audit Committee are independent non-executive directors and fall
within the definition of "independent director" as set forth by the Nasdaq
Market Rules.
The Audit Committee fulfills its responsibilities through periodic meetings with
the Company's independent auditors, internal auditors and members of Biomet's
management. During fiscal year 2002, the Audit Committee met nine times. In
addition, the chairman of the Audit Committee, as a representative of the Audit
Committee, discussed the interim financial information contained in each
quarterly earnings announcement with management prior to public release.
The Audit Committee has discussed with management, the internal auditors and the
independent auditors the quality and adequacy of the Company's internal
controls. The Audit Committee has considered and reviewed with the internal and
independent auditors their audit plans, the scope of the audit, the
identification of audit risks and the results of the internal audit
examinations.
The Audit Committee has reviewed Biomet's audited financial statements for the
fiscal year ended May 31, 2002, and discussed them with management and the
Company's independent auditors. Management has the responsibility for the
preparation and integrity of the Company's financial statements and the
independent auditors have the responsibility for the examination of those
statements. The Audit Committee's review included discussion with the
independent auditors of matters required to be discussed pursuant to Statement
on Auditing Standards No. 61 (Communication With Audit Committees).
Based upon the review of the financial statements and discussions with
management and the independent auditors, the Audit Committee recommended to the
Board that Biomet's audited financial statements be included in its Annual
Report on Form 10-K for the fiscal year ended May 31, 2002 for filing with the
Securities and Exchange Commission.
The Audit Committee recommended that the Board of Directors appoint Ernst &
Young LLP as the independent accountants for Biomet's fiscal year 2003.
17
The Audit Committee has received and reviewed written disclosures and a letter
from the independent accountants required by the Independence Standards Board
Standard No. 1, entitled "Independence Discussions with Audit Committees," as
amended to date, and has discussed with the independent accountants their
independence from management. The Audit Committee has determined that the
provision of non-audit services to Biomet during the most recently ended fiscal
year by the independent accountants is compatible with maintaining their
independence.
During fiscal year 2002, the Audit Committee reviewed all transactions between
the Company and its executive officers. The Audit Committee believes the terms
of these transactions are no less favorable to Biomet than would have been
available in the absence of the relationship with the executive officer.
It is not the duty of the Audit Committee to plan or conduct audits or to
determine that Biomet's financial statements are complete and accurate and in
accordance with accounting principles generally accepted in the United States.
Those responsibilities belong to management and Biomet's independent auditors.
In giving its recommendations to the Board of Directors, the Audit Committee has
relied on (a) management's representation that such financial statements have
been prepared with integrity and objectivity and in conformity with accounting
principles generally accepted in the United States, and (b) the report of
Biomet's independent auditors with respect to such financial statements.
Respectfully submitted,
Kenneth V. Miller, Chairman
C. Scott Harrison, M.D.
L. Gene Tanner
18
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on Biomet's
Common Shares with the cumulative total return of Standard & Poor's 500 Stock
Index (the "S&P 500 Index") and Standard & Poor's Health Care Equipment Index
(the "S&P Health Care Index") for the five most recent fiscal years ended May
31. The comparison assumes $100 invested on May 31, 1997, and the reinvestment
of dividends, in Biomet's Common Shares and in each of the indices.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG BIOMET, INC., THE S&P 500 INDEX AND THE
S&P HEALTH CARE INDEX
[PERFORMANCE GRAPH]
MAY97 MAY98 MAY99 MAY00 MAY01 MAY02
BIOMET INC 100 155.37166 215.7223499 195.5412574 364.619692 346.6028936
S&P 500 INDEX 100 130.6851387 158.1622645 174.7335241 156.292526 134.6512219
SP500 HEALTH CARE INDEX 100 130.9808074 162.2760778 181.0200208 178.2802621 193.7071677
YEARS ENDING
*$100 INVESTED ON 5/31/97 IN STOCK OR INDEX-INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDED MAY 31.
19
CERTAIN TRANSACTIONS
Dane A. Miller, Ph.D., President and Chief Executive Officer and a member of the
Board of Directors of Biomet, is a majority shareholder in a corporation which
provides the use of an aircraft to Biomet on an as-needed basis. Biomet pays a
flat monthly fee of $39,750, plus sales tax, to that corporation for the use of
the aircraft. During the last fiscal year, Biomet made payments to that
corporation of approximately $500,850 in rental fees and scheduled maintenance
on the aircraft. The Audit Committee of the Board of Directors has reviewed this
relationship and believes the rental rate and other terms of this arrangement to
be no less favorable to Biomet than would have been available in the absence of
the relationship described.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Biomet's directors
and executive officers and persons who own more than 10 percent of a registered
class of Biomet's equity securities to file with the Securities and Exchange
Commission ("SEC") initial reports of ownership and reports of changes in
ownership of Biomet Common Shares and other equity securities. Officers,
directors and greater-than-ten percent shareholders are required by SEC
regulations to furnish Biomet with copies of all Section 16(a) forms filed by
them.
To Biomet's knowledge, based solely on the review of the copies of such reports
furnished to Biomet and written representations that no other reports were
required, all Section 16(a) filing requirements applicable to its officers,
directors and greater-than-ten percent beneficial owners were complied with on a
timely basis during the fiscal year ended May 31, 2002.
20
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS (ITEM 2)
In June 2001, PricewaterhouseCoopers LLP ("PWC") advised Biomet that it was
closing its office in South Bend, Indiana, which office has served the Company
since 1980. Upon receipt of this advice, Biomet's Audit Committee and members of
management interviewed several accounting firms, including PWC. On October 29,
2001, the Board of Directors of the Company, on the recommendation of the Audit
Committee, approved the dismissal of PWC and the appointment of Ernst & Young
LLP as the Company's independent accountants for the year ended May 31, 2002.
The reports of PWC on the Company's financial statements for the years ended May
31, 2001 and 2000 did not contain any adverse opinion or disclaimer of opinion
and were not qualified or modified as to uncertainty, audit scope or accounting
principles. In connection with the audits of the Company's financial statements
for the years ended May 31, 2001 and 2000 and through October 29, 2001, there
have been no disagreements with PWC on any matters of accounting principles or
practices, financial statement disclosure, or auditing scope or procedures,
which disagreements, if not resolved to the satisfaction of PWC, would have
caused them to make reference thereto in their reports on the financial
statements for such years.
Subject to ratification by the shareholders, the Board of Directors, upon the
recommendation of the Audit Committee, has selected Ernst & Young LLP (Ernst &
Young) as independent accountants for Biomet for the fiscal year ending May 31,
2003. Biomet has been advised by Ernst & Young that neither it nor any of its
associates has any direct or material indirect financial interest in Biomet.
Representatives of Ernst & Young are expected to be present at the Annual
Meeting. They will have the opportunity to make a statement, if they desire to
do so, and are expected to be available to respond to appropriate questions
concerning the audit for the fiscal year ended May 31, 2002.
21
FEES PAID TO INDEPENDENT AUDITORS
During fiscal year 2002, Biomet retained Ernst & Young to provide services in
the following categories and amounts:
Audit related fees(1).........................................$432,000
Financial information systems design or implementation fees...$ -0-
All other fees(2).............................................$163,000
(1)Audit related services of Ernst & Young during fiscal year 2002 consisted of
professional services rendered in connection with the audit of Biomet's annual
financial statements set forth in the Biomet, Inc. Annual Report on Form 10-K
for the year ended May 31, 2002 and the review of Biomet's Quarterly Reports on
Form 10-Q for the quarters ended November 30, 2001 and February 28, 2002.
(2)Other fees include non-audit related professional services consisting
primarily of certain foreign statutory audits, employee benefit plan audits, tax
compliance services and other consultations. The Audit Committee has advised the
Board of Directors that, in its opinion, the non-audit services rendered by
Ernst & Young during the fiscal year ended May 31, 2002 are compatible with
maintaining the independence of such auditors.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of Biomet has no
knowledge of any matters to be presented for consideration at the Annual Meeting
other than those referred to above. If (a) any matters of which Biomet did not
have notice by June 19, 2002 (45 days prior to August 31, the date of mailing of
proxy materials for last year's Annual Meeting) should properly come before the
meeting; (b) a person not named herein is nominated at the meeting for election
as a director because a nominee named herein is unable to serve or for good
cause will not serve; or (c) any matters should arise incident to the conduct of
the meeting, then the proxies will be voted in accordance with the
recommendations of the Board of Directors of Biomet.
By Order of the Board of Directors,
/s/ DANIEL P. HANN
Daniel P. Hann, Secretary
August 21, 2002
22
[BIOMET, INC. LOGO]
BIOMET, INC.
56 E. BELL DRIVE
P.O. BOX 587
WARSAW, IN 46582
VOTE BY INTERNET - WWW.PROXYVOTE.COM
Use the Internet to transmit your voting instructions and for electronic
delivery of information up until 11:59 P.M. Eastern Time the day before the
cut-off date or meeting date. Have your proxy card in hand when you access the
web site. You will be prompted to enter your 12-digit Control Number which is
located below to obtain your records and to create an electronic voting
instruction form.
VOTE BY MAIL
Mark, sign, and date your proxy card and return it in the postage-paid envelope
we have provided or return it to Biomet, Inc., c/o ADP, 51 Mercedes Way,
Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
BIOMET KEEP THIS PORTION FOR YOUR RECORDS
- ------------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
BIOMET, INC.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL
BE VOTED IN THE MANNER DIRECTED. IF NO
DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED "FOR" MATTERS 1 & 2 BELOW. FOR WITHHOLD FOR ALL To withhold authority to vote, mark "For All
ALL ALL EXCEPT Except" and write the nominee's number on the
ELECTION OF DIRECTORS line below.
[ ] [ ] [ ]
1. NOMINEES: 01) C. SCOTT HARRISON, M.D. ----------------------------------------------
02) KENNETH V. MILLER
03) NILES L. NOBLITT
04) MARILYN TUCKER QUAYLE
05) L. GENE TANNER
VOTE ON PROPOSAL
FOR AGAINST ABSTAIN
2. RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY [ ] [ ] [ ]
FOR THE FISCAL YEAR ENDING MAY 31, 2003.
3. IN THEIR DISCRETION, UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT
THEREOF.
Please sign exactly as your name appears above. When shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Please check box to the right if you plan to attend the annual meeting. [ ]
For address changes and/or comments, please check this box and write them
on the back where indicated. [ ]
- -------------------------------------------------- ---------------------------------------------------
- -------------------------------------------------- ---------------------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
- --------------------------------------------------------------------------------
PROXY
BIOMET, INC.
ANNUAL MEETING OF SHAREHOLDERS - SEPTEMBER 21, 2002, AT 1:30 P.M.
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Dane A. Miller, Ph.D. and Niles L. Noblitt
as proxies, each with the power to act alone and of substitution, and
hereby authorizes them to represent and to vote, as designated on the
reverse side, all the Common Shares of the Company that the undersigned is
entitled to vote at the Annual Meeting of Shareholders to be held on
Saturday, September 21, 2002, or any adjournment thereof.
---------------------------------------------------------------------
Address Changes/Comments:
-----------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
(If you noted address changes or comments above, please check the
corresponding box on the reverse side.)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------