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
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<Table>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</Table>
Theragenics Corporation(R)
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In 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:
------------------------------------------------------------------------
THERAGENICS CORPORATION(R)
5203 BRISTOL INDUSTRIAL WAY
BUFORD, GEORGIA 30518
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------------
You are cordially invited to attend the Annual Meeting of Stockholders of
Theragenics Corporation(R) (the "Company") to be held at 10:00 A.M., New York
time, on Tuesday, May 7, 2002, at the Metropolitan Hotel, 569 Lexington Avenue,
New York, New York, 10022, for the following purposes:
1. To elect three directors;
2. To consider and vote on a proposal to ratify the appointment of Grant
Thornton LLP as independent public accountants.
The Board of Directors has fixed the close of business on March 14, 2002,
as the record date for the determination of the stockholders entitled to notice
of, and to vote at, the meeting.
Sincerely,
/s/ BRUCE W. SMITH
Bruce W. Smith,
Secretary
Buford, Georgia
March 27, 2002
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING OF STOCKHOLDERS, YOU
ARE REQUESTED TO FILL IN AND SIGN THE ENCLOSED FORM OF PROXY AND MAIL IT IN THE
ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IT
IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. IF YOU DO ATTEND THE MEETING AND
DECIDE THAT YOU WISH TO VOTE IN PERSON, YOU MAY WITHDRAW YOUR PROXY.
A TICKET MUST BE PRESENTED IN ORDER TO GAIN ADMISSION TO THE ANNUAL MEETING
OF STOCKHOLDERS. IF YOU ARE PLANNING ON ATTENDING THE MEETING, PLEASE COMPLETE
AND RETURN THE ENCLOSED ADMISSION TICKET REQUEST FORM IN ORDER TO RECEIVE YOUR
ADMISSION TICKET. YOU WILL NOT BE MAILED AN ADMISSION TICKET. YOUR TICKET WILL
BE AVAILABLE AT THE REGISTRATION TABLE ON MAY 7, 2002.
THERAGENICS CORPORATION(R)
5203 BRISTOL INDUSTRIAL WAY
BUFORD, GEORGIA 30518
---------------------
PROXY STATEMENT
---------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Theragenics Corporation(R) (the "Company")
to be voted at the Annual Meeting of Stockholders of the Company to be held on
Tuesday, May 7, 2002, at the Metropolitan Hotel, 569 Lexington Avenue, New York,
New York, 10022, at 10:00 A.M., New York time, for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders.
The Board of Directors has fixed the close of business on March 14, 2002,
as the record date for the determination of stockholders entitled to receive
notice of, and to vote at, the forthcoming Annual Meeting of Stockholders or any
adjournment thereof. Any person giving a Proxy in the form accompanying this
statement has the power to revoke it at any time prior to its exercise. A Proxy
may be revoked by attending and voting at the meeting, by giving a later proxy
or by written notice to the Secretary of the Company received at the Company's
offices at 5203 Bristol Industrial Way, Buford, Georgia, 30518, prior to the
date of the Annual Meeting.
When proxies are returned properly executed, the shares represented thereby
will be voted as directed in the executed Proxy. If the Proxy is signed and
returned but no choice is specified therein, it will be voted FOR the election
of the nominees named therein and FOR each of the listed proposals.
You will need a ticket to attend the Annual Meeting of Stockholders. If
your shares are registered in your name and not in the name of a bank, broker or
other third party, you may request an admission ticket by completing and
returning the enclosed Admission Ticket Request Form. You will not be mailed an
admission ticket. Your ticket will be available at the registration table on May
7, 2002.
If your shares are not registered in your own name, please advise the bank,
broker or other institution that holds your shares that you plan to attend the
Annual Meeting of Stockholders. That firm must provide you with documentation
showing that you owned your shares of the Company as of the record date March
14, 2002. This documentation may be either a copy of an account statement that
shows you owned the shares on the record date or a letter from the firm that
confirms you owned the shares on that date. Please include that documentation
when you return the enclosed Admission Ticket Request form to the Company in
order to receive an admission ticket.
The expenses for soliciting proxies for the forthcoming Annual Meeting of
Stockholders are to be paid by the Company. Directors, officers and employees of
the Company, who will not be specially compensated for such services, may make
solicitation of proxies by means of personal calls upon, or telephonic or
telegraphic communications with, stockholders or their personal representatives.
The Company will reimburse brokers and other nominees for their reasonable
expenses incurred in forwarding soliciting material to beneficial owners. It is
anticipated that this Proxy Statement and enclosed Proxy will first be mailed to
stockholders entitled to notice of and to vote at the Annual Meeting on or about
March 27, 2002.
VOTING SECURITIES AND PRINCIPAL SECURITY HOLDERS
As of March 14, 2002, there were 29,737,882 shares of Common Stock, par
value $.01 per share ("Common Stock") outstanding and entitled to vote at the
Annual Meeting.
The holders of Common Stock are entitled to vote as a single class and to
one vote per share, exercisable in person or by Proxy, at all meetings of
stockholders. Holders of Common Stock do not have cumulative voting rights.
Abstentions and "broker non-votes" are counted for purposes of determining the
presence or absence of a quorum for the transaction of business but are not
counted in determining the numbers of shares voted for or against any nominee
for director or any proposal.
The following table sets forth the ownership of the Company's Common Stock
as of March 14, 2002, by each person known to the Company to be the beneficial
owner of more than 5% of the outstanding Common Stock, by each executive officer
and director and by all executive officers and directors as a group. Unless
otherwise indicated, the address for each person listed is c/o Theragenics
Corporation, 5203 Bristol Industrial Way, Buford, Georgia 30518.
<Table>
<Caption>
AMOUNT AND
NATURE OF PERCENTAGE OF
NAME OF BENEFICIAL COMMON STOCK
BENEFICIAL OWNER OWNERSHIP(1) OUTSTANDING(2)
- ---------------- ------------ --------------
FMR Corp.
Fidelity Management &
Research Company(3)...................................... 2,009,100(4) 6.8%
Otis W. Brawley, M.D..................................... 140,000(5) *
Orwin L. Carter, Ph.D.................................... 130,500(6) *
Earnest W. Deavenport, Jr................................ 42,000(7) *
Patrick L. Flinn......................................... 42,333(8) *
John V. Herndon.......................................... 72,000(9) *
M. Christine Jacobs...................................... 563,000(10) 1.9%
Philip A. Incarnati...................................... 16,000(11) *
Peter A.A. Saunders...................................... 109,500(12) *
Bruce W. Smith........................................... 257,435(13) *
All Directors and Officers............................... 1,372,768(14) 4.4%
as a Group (nine persons)
</Table>
- ---------------
* Less than 1%
(1) Each person named in the table has sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by him or
her, unless otherwise noted.
(2) The percentage of shares of Common Stock is calculated assuming that the
beneficial owner has exercised any conversion rights, options or other
rights to subscribe held by such beneficial owner that are currently
exercisable or exercisable within 60 days and that no other conversion
rights, options or other rights to subscribe have been exercised by anyone
else.
(3) 82 Devonshire Street, Boston, Massachusetts 02109.
(4) Amount based solely on schedule 13G filed February 14, 2002 by FMR Corp.,
the parent of Fidelity Management & Research Company. Fidelity Management &
Research Company ("Fidelity"), a wholly owned subsidiary of FMR Corp.
("FMR") and an investment adviser, is the beneficial owner of 2,009,100
shares as a result of acting as investment adviser to various registered
investment companies (the "funds"), including the Fidelity Low Priced Stock
Fund.
Edward C. Johnson 3d, FMR's Chairman, through its control of Fidelity, and
the Funds each has sole power to dispose of the 2,009,100 shares owned by
the Funds. Neither FMR nor Mr. Johnson has the sole power to vote or direct
the voting of the shares owned directly by the Funds, which power resides
with the Funds' Boards of Trustees. Fidelity carries out the voting of the
shares under written guidelines established by the Funds' Boards of
Trustees.
Members of the Edward C. Johnson 3d family are the predominant owners of
Class B shares of common stock of FMR, representing approximately 49% of
the voting power of FMR. Mr. Johnson owns 12.0% and Abigail P. Johnson, a
Director of FMR, owns 24.5% of the voting stock of FMR. The Johnson family
group and all other Class B shareholders have entered into a shareholders'
voting agreement under which all Class B shares will be voted in accordance
with the majority vote of Class B shares. Through their ownership of voting
common stock and the shareholders' voting agreement, members of
2
the Johnson family may be deemed, under the Investment Company Act of 1940,
to form a controlling group with respect to FMR.
(5) Includes 140,000 shares purchasable by Dr. Brawley within 60 days upon
exercise of options.
(6) Includes 96,000 shares purchasable by Dr. Carter within 60 days upon
exercise of options.
(7) Includes 32,000 shares purchasable by Mr. Deavenport within 60 days upon
exercise of options.
(8) Includes 41,333 shares purchasable by Mr. Flinn within 60 days upon
exercise of options.
(9) Includes 63,000 shares purchasable by Mr. Herndon within 60 days upon
exercise of options.
(10) Includes 480,105 shares purchasable by Ms. Jacobs within 60 days upon
exercise of options.
(11) Includes 16,000 shares purchasable by Mr. Incarnati within 60 days upon
exercise of options.
(12) Includes 96,000 shares purchasable by Mr. Saunders within 60 days upon
exercise of options.
(13) Includes 116,000 shares purchasable by Mr. Smith within 60 days upon
exercise of options.
(14) Includes 1,080,438 shares purchasable by all executive officers and
directors as a group within 60 days upon exercise of options.
PROPOSAL NUMBER ONE
ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into three classes (Class
I, Class II and Class III) with three directors in Class I, two directors in
Class II and three directors in Class III. One class of directors is elected
each year for a three-year term. Three directors, representing the Class I
Directors, are to be elected at the Annual Meeting. These Class I Directors will
serve until the Annual Meeting of Stockholders in 2005 or until their successors
shall have been elected and qualified. The current Board of Directors has
selected, and will cause to be nominated at the meeting, Patrick L. Flinn, John
V. Herndon and Peter A. A. Saunders, who upon election will comprise the Class I
Directors of the Board of Directors.
Provided that a quorum of stockholders is present at the meeting in person
or by proxy, directors will be elected by a plurality of the votes cast at the
meeting. Abstentions and "broker non-votes" will have no effect on the election
of the directors. The persons named on the enclosed proxy card or their
substitutes will vote all of the shares that they represent for the above-named
nominees unless instructed otherwise on the proxy card. If at the time of the
Annual Meeting of Stockholders any nominee is unable or declines to serve, the
discretionary authority provided in the proxy will be exercised to vote for a
substitute. Management has no reason to believe that a substitute nominee will
be required.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES
NAMED IN THIS PROPOSAL.
The directors and director nominees have supplied the Company with the
following information concerning their age, principal employment, other
directorships and positions with the Company:
<Table>
<Caption>
DIRECTOR/NOMINEE PRINCIPAL OCCUPATION AND OTHER INFORMATION
- ---------------- ------------------------------------------
CLASS I DIRECTOR NOMINEES
Patrick L. Flinn Since 1996, Mr. Flinn has been a private investor
Director since 1998 and consultant to various businesses and non-profit
Age: 60 organizations. From July 1991 to January 1996, Mr.
Flinn was Chairman, President and Chief Executive
Officer of Bank South Corporation. Mr. Flinn is also
a director of IRT Property Company, a real estate
investment trust that is an owner, operator and
redeveloper of neighborhood and community shopping
centers.
</Table>
3
<Table>
<Caption>
DIRECTOR/NOMINEE PRINCIPAL OCCUPATION AND OTHER INFORMATION
- ---------------- ------------------------------------------
John V. Herndon Mr. Herndon joined the Company in April 1987, as
Director since 1987 Executive Vice President and in July 1989, was
Age: 61 appointed President, Chief Executive Officer and
Chairman of the Board of Directors of the Company.
In August 1993, Mr. Herndon relinquished his role as
Chief Executive Officer while retaining his position
as Chairman of the Board of Directors of the
Company. Mr. Herndon stepped down as Chairman of the
Board in December 1994, and currently serves as a
Director and Advisor-to-the-President.
Peter A.A. Saunders, Prior to his retirement, Mr. Saunders was
F.R.S.A. (Fellow of Owner/Chairman of PASS Consultants from 1988 to
Royal Society of Arts) 1997, a marketing and business consultancy company
Director since 1989 based in the United Kingdom. From 1992 to 1994 he
Age: 60 served as managing director of United Artists
Communications (London-U.K.) Ltd. and from 1975 to
1988 Mr. Saunders held various executive and
directorship positions with Allders Department
Stores in the U.K. From 1993 to 1998, Mr. Saunders
was a non-executive director of Mayday University
Hospital, a 700-bed hospital in London.
CLASS II DIRECTORS
Otis W. Brawley, M.D. Dr. Brawley is a board certified Medical Oncologist.
Director since 1995 He is a Professor of Medicine and Oncology at the
Age 42 Emory University School of Medicine and Professor of
Epidemiology at the Emory University Rollins School
of Public Health. He is also Associate Director for
Cancer Control at the Winship Cancer Institute of
Emory University. Dr. Brawley was previously Senior
Investigator and Assistant Director of the National
Cancer Institute. He currently serves on several
governmental scientific advisory boards and has
designed a number of clinical trials. He is
especially interested in cancer prevention and
cancer epidemiology. He has authored more than sixty
peer reviewed publications and serves as associate
editor and reviewer for several prestigious
scientific publications. In August 2001, Georgia
Governor Roy Barnes named Dr. Brawley a Georgia
Cancer Coalition Eminent Scholar.
Earnest W. Deavenport, Jr. Prior to retirement, Mr. Deavenport was the Chairman
Director since 2000 of the Board and Chief Executive Officer of Eastman
Age: 64 Chemical Company, a global chemical company with a
broad portfolio of chemical, plastic, and fiber
products. He joined Eastman in 1960, and was named
President in 1989. He also served as Group Vice
President of Eastman Kodak Company from 1989 through
1993. Mr. Deavenport is a member of the boards of
directors of AmSouth Bancorporation, Milliken &
Company and King Pharmaceuticals. He has served as a
Chairman of the American Plastics Council and the
National Association of Manufacturers and The
American Chemistry Council, on the Board of Trustees
of the Malcolm Baldridge National Quality Award
Foundation, on the policy committee of the Business
Roundtable and the Board and Executive Committee of
the American Chemistry Council.
</Table>
4
<Table>
<Caption>
DIRECTOR/NOMINEE PRINCIPAL OCCUPATION AND OTHER INFORMATION
- ---------------- ------------------------------------------
CLASS III DIRECTOR
Orwin L. Carter, Ph.D. Dr. Carter is currently providing licensed
Director since 1991 consulting services in the areas of insurance and
Age: 59 financial services. Dr. Carter previously served as
Vice President of Finance and Administration for
Hamline University. Dr. Carter was employed by
Hamline from 1996 to 1999. From March 1995 to August
1997, Dr. Carter served as a consultant with INCSTAR
Corporation, a manufacturer of in vitro diagnostic
test kits and an affiliate of Sorin Biomedica. From
1989 to September 1994, Dr. Carter served INCSTAR in
various capacities including Chairman, Chief
Executive Officer and President. Dr. Carter also
currently serves on the Board of Directors of
Lifecore Biomedical, Inc., a manufacturer and
marketer of medical and surgical devices.
M. Christine Jacobs Since 1992, Ms. Jacobs has been President and Chief
Director since 1992 Operating Officer of the Company, and in August
Age: 51 1993, Ms. Jacobs was promoted to the position of
Chief Executive Officer while retaining the position
of President. In 1997 Ms. Jacobs was elected
Co-Chairman and in 1998 she was elected Chairman.
Ms. Jacobs is also a member of the McKesson/HBOC
Board of Directors and serves on the Compensation
and Governance Committees. She is also on the Board
of Directors of the Atlanta Cardiovascular Research
Institute, a non-profit medical research institute,
and Landauer, Inc., a publicly traded provider of
radiation monitoring services. She is serving a
three-year term on the Listed Company Advisory
Committee to the NYSE and is serving a second
three-year term on the Board of Councilors of the
Carter Center in Atlanta. Ms. Jacobs is a Board
member of the Georgia State University Foundation
and sits on the Editorial Advisory Board for
Business to Business magazine.
Phillip A. Incarnati Philip Incarnati has served as President and Chief
Director since 2001 Executive Officer of McLaren Health Care Corporation
Age: 48 since 1989. Mr. Incarnati began his health care
career in 1977, and has held top-level executive
positions with the Wayne State University School of
Medicine, Detroit Receiving Hospital and University
Health Center, and Horizon Health System prior to
joining McLaren Health Care Corporation in 1989.
McLaren Health Care Corporation is one of Michigan's
largest health care delivery systems generating
annual revenues in excess of 1.5 billion dollars and
employing over 13,000 people. Mr. Incarnati holds
bachelors and masters degrees in management and
finance from Eastern Michigan University. He was
appointed to the Eastern Michigan University (EMU)
Board of Regents in 1992 by Michigan Governor John
Engler. He has served as Chairman of the EMU Board
of Regents since January of 1995. Mr. Incarnati also
holds seats on several other Boards of Directors,
including Provider Healthnet Services, Inc., Dallas,
Texas; Michigan Health & Hospital Association; and
Flint Cultural Center Corporation.
</Table>
5
The Board of Directors held four meetings during 2001. All members
participated in all meetings. The Board of Directors has established three
standing committees and has assigned certain responsibilities to each of those
committees.
The Audit Committee met four times during 2001. The Audit Committee
maintains direct lines of communications between the Board of Directors, the
external auditors and the Company's financial management; monitors the adequacy
and effectiveness of the external audit function and the financial management of
the Company, and; understands, assesses and monitors the control environment and
reporting to stockholders. The Audit Committee is composed of Dr. Carter, Mr.
Flinn, Mr. Saunders, and Mr. Deavenport each of whom attended all meetings.
The Compensation Committee met three times during 2001. The Compensation
Committee administers the Company's stock option plans, determines the
conditions and amounts of options granted under these plans, and makes
recommendations concerning remuneration of the Company's Chief Executive
Officer. The Compensation Committee is composed of Mr. Flinn, Dr. Brawley and
Mr. Deavenport, each of whom attended all meetings. Prior to August 2001, a
separate Stock Option Committee, composed of Dr. Brawley, Dr. Carter, Mr. Flinn
and Mr. Saunders, administered the Company's stock option plans.
The Nominating Committee met once during 2001. The Nominating Committee
evaluates and makes recommendations as to individuals believed to be best
qualified and willing to fill vacancies on the Board of Directors. The
Nominating Committee is composed of Mr. Flinn, Mr. Herndon and Ms. Jacobs.
EXECUTIVE OFFICERS
The executive officers of the Company and their age, position with the
Company and business experience for the past five years are set forth in the
table below.
<Table>
<Caption>
EXECUTIVE OFFICER OFFICE AND OTHER INFORMATION
- ----------------- ----------------------------
M. Christine Jacobs President and Chief Executive Officer since 1993. See
Age: 51 information above under Class III Directors.
Bruce W. Smith Mr. Smith has served as Executive Vice-president of
Age: 49 the Company since 1998. Mr. Smith joined the Company
in 1987, and has served as the Company's Chief
Financial Officer, Secretary and Treasurer since 1989.
Mr. Smith serves as a director of the Georgia
Biomedical Partnership, a 501(c)(3) organization.
</Table>
6
REMUNERATION AND OTHER MATTERS
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid by the Company for
services rendered during the years indicated to each of the Company's executive
officers whose total salary and bonus exceeded $100,000 during fiscal 2001.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG-TERM
COMPSENSATION-
ANNUAL COMPENSATION OTHER SECURITIES ALL
NAME AND -------------------- ANNUAL UNDERLYING OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS COMPENSATION OPTIONS COMPENSATION(4)
- ------------------ ---- --------- -------- ------------ -------------- ---------------
M. Christine Jacobs(2).............. 2001 $399,817 $315,000 (3) $7,949
President & Chief................. 2000 $375,924 $189,475 (3) -- $2,859
Executive Officer................. 1999 $346,646 $181,470 (3) 180,000 $ 660
Bruce W. Smith...................... 2001 $210,370 $ 17,000 (3) $4,708
Secretary, Treasurer.............. 2000 $186,047 $ 10,000 (3) -- $2,342
Chief Financial................... 1999 $145,655 $ 25,000 (3) 50,000 $ 696
Officer & Executive Vice-
President
</Table>
- ---------------
(1) Includes amounts deferred under the 401(k) feature of the Company's Employee
Savings Plan.
(2) For Ms. Jacobs, 1999, 2000 and 2001 salary includes $35,000 payable annually
for use in producing retirement income, in accordance with her employment
contract.
(3) Ms. Jacobs and Mr. Smith had no Other Annual Compensation in excess of
$50,000 or 10% of annual salary and bonus.
(4) All Other Compensation includes premiums on term life insurance policies and
Company matching contributions under the Company's 401(k) plan.
Options. No stock options were granted to Ms. Jacobs or Mr. Smith during
fiscal 2001. The following table sets forth information concerning options
exercised during 2001 and the value of unexercised options as of December 31,
2001, held by Ms. Jacobs and Mr. Smith. No stock appreciation rights have ever
been issued by the Company.
OPTION EXERCISES IN FISCAL 2001
AND FISCAL YEAR-END OPTION VALUES TABLE
<Table>
<Caption>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS ON IN-THE-MONEY OPTIONS ON
ACQUIRED ON VALUE DECEMBER 31, 2001 DECEMBER 31, 2001
NAME EXERCISE REALIZED(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(2)
- ---- ----------- ----------- ------------------------- ----------------------------
M. Christine Jacobs...... 21,000 $120,261 480,105/60,000 $1,418,553/$10,350
Bruce W. Smith........... -- -- 116,000/50,000 $ 134,460/$26,550
</Table>
- ---------------
(1) 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 amounts contained in the Value Realized column reflect the increase in
the price of Company Common Stock from the option grant date to the option
exercise date. No cash is realized until the shares received upon exercise
of an option are sold.
(2) Based on $9.86 per share, the December 31, 2001, closing price as quoted on
the New York Stock Exchange.
7
EXECUTIVE EMPLOYMENT AGREEMENTS
The Company has an agreement with Ms. Jacobs, dated April 13, 2000, which
provides for her employment for the period commencing April 13, 2000, through
April 13, 2003, subject to automatic renewal each April 13, so that the then
current term will be three years. This agreement provides for an annual base
salary of at least $300,000, subject to review at least annually for possible
increases, (the current rate of Ms. Jacobs' annual base salary is $375,000) plus
an annual bonus determined under a bonus plan established by the Compensation
Committee of the Board of Directors. The Compensation Committee will determine
the amount of the bonus. The agreement also entitles Ms. Jacobs to annual
perquisites of up to $40,000, and $35,000 annually for use in producing
retirement income. In the event Ms. Jacobs employment is terminated without
Cause, she terminates her own employment for Good Reason (as such terms are
defined in the agreement), or the agreement expires because of nonrenewal by the
Company, she is entitled to certain severance benefits in addition to accrued
obligations (as such terms are defined in the agreement). These severance
benefits include a payment of two times the sum of her annual base pay plus
bonus paid in the most recent fiscal year (if the termination is within one year
of a Change in Control of the Company, as defined in the agreement, this amount
is changed to three times the sum of her annual base pay plus the average bonus
in the last three fiscal years), full vesting of all stock options and any other
stock grants, and continuation of other employee benefits for two years from the
date of termination. The agreement provides that if any change in control
payments or benefits are parachute payments subject to excise tax, the Company
will pay an additional amount to Ms. Jacobs to put her in the same after tax
position as if no excise tax had been incurred.
The Company has an agreement with Mr. Smith, dated January 1, 1999, and
amended June 29, 1999 and again on June 15, 2001, which provides for his
employment for the period commencing January 1, 1999 through January 1, 2004,
subject to automatic renewal January 1, 2003, and each January 1 thereafter for
an additional year, so that the term as of each renewal date will be for two
years. This agreement provides for an annual base salary of at least $150,000,
subject to review at least annually for possible increases (the current rate of
Mr. Smith's annual base salary is $210,000), discretionary annual bonuses up to
20% of base salary, and certain other perquisites. In addition, in the event the
Company terminates Mr. Smith's employment without Cause, or Mr. Smith terminates
his employment for Good Reason (as such terms are defined in the agreement), the
Company is obligated to pay Mr. Smith as severance his annual base salary for
two years after termination of employment.
Both Ms. Jacobs' and Mr. Smith's agreements contain provisions, which are
intended to restrict each from competing with the Company by performing similar
services for a competitor, soliciting customers to a competing business, or
soliciting the Company's employees. These provisions apply during the term of
each agreement and for two years after termination.
DIRECTOR COMPENSATION
Directors who are not officers or employees of the Company receive $2,500
per quarter, and $1,000 for attending each Board meeting and $500 for attending
each Committee meeting. In addition to cash compensation, each director who is
not an officer or an employee of the Company will be granted upon his or her
election or reelection to a three-year term as a director, an option to purchase
48,000 shares of Common Stock at an exercise price equal to the fair market
value of the Common Stock as of the date of election or reelection. Each option
shall vest at 16,000 shares at the end of each year of service in the director's
three-year term. Also, medical insurance in the amount of $2,200 is provided for
one director.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION.
The Compensation Committee sets only the compensation of the Chief
Executive Officer. Compensation of other executive officers is set by the Chief
Executive Officer based on a structure similar to that established by the
Compensation Committee for compensation of the Chief Executive Officer. The
Compensation Committee has a policy that a significant portion of the Chief
Executive Officer's pay should be related to the performance of the Company and
the Chief Executive Officer's contribution to that performance. In determining
the amount and type of compensation, the Committee's goal is to provide a
package that is
8
competitive with the marketplace while placing a substantial portion of the
Chief Executive Officer's compensation "at risk" by tying it to both short-term
and long-term measures of the Company's performance.
In determining the Chief Executive Officer's performance bonus for 2001 the
Compensation Committee reviewed the accomplishments of Ms. Jacobs and the
Company for the year. These accomplishments included the following: completed
negotiation of highly favorable contracts with four distributors prior to and
early in 2001, as well as helping to attract and establish highly profitable
house accounts; organized the Partnership for Prostate Health and funded the
Prostate Cancer Awareness Survey, which resulted in a national press conference
at NYSE; actively promoted brachytherapy and TheraSeed(R) in national television
news appearances during the year and personally provided information about
TheraSeed(R) to Rudy Guiliani and supported his decision to use the product;
monitored proposed legislative and regulatory changes throughout the year and
successfully developed relationships with key members of congress and government
officials who participate in the reimbursement process; a milestone in Ms.
Jacobs' proactive efforts to maintain current reimbursement levels was realized
as coding was obtained for Pd-103-based brachytherapy seeds; directed
contracting with world-class experts in several technical disciplines to
accelerate commission of the PSP; successfully oversaw accomplishment of initial
plasma testing before year-end; identified and formalized working relationships
with several external experts for each current new product direction; oversaw
completion of animal studies of Pd-103 applications in restenosis, and
personally maintained a high level of involvement with scientists and
organizations responsible for conducting this research; directed an effort to
explore external opportunities of diversification including the critical review
of a large number of acquisition/partnership candidates.
Accordingly, the compensation committee awarded Ms. Jacobs a discretionary
performance bonus of $70,000 for the year ended December 31, 2001. In addition,
Ms. Jacobs also received a bonus of $245,000 that was calculated pursuant to a
preestablished formula based solely on the financial results of the Company for
fiscal 2001. The committee believes these bonuses are commensurate with the
contribution of the Chief Executive Officer to the aforementioned
accomplishments, and the impact these accomplishments should have on the
long-term success of the Company.
It is also the Committee's responsibility to address issues raised by
Section 162(m) of the Internal Revenue Code. The revisions to this section made
certain non-performance-based compensation in excess of $1,000,000 to executives
of public companies nondeductible to the companies beginning in 1994. The
Committee has reviewed these issues and has determined that no portion of
compensation payable to any executive officer for 2001 is nondeductible.
Submitted by the Members of the Compensation Committee:
Otis W. Brawley, M.D.
Patrick L. Flinn
Earnest W. Deavenport, Jr.
AUDIT COMMITTEE REPORT
The Audit Committee assists the Board of Directors in its oversight of the
Company's accounting, reporting practices and financial reports. The Audit
Committee's responsibilities are more fully described in its charter, a copy of
which was filed as Exhibit A to the proxy statement for the 2001 Annual Meeting.
Management has the primary responsibility for the preparation and integrity of
the Company's financial statements, accounting and financial reporting
principles and internal controls and procedures designed to assure compliance
with accounting standards and applicable laws and regulations. The Company's
independent auditors, Grant Thornton LLP, are responsible for performing an
independent audit of the consolidated financial statements and expressing an
opinion on the conformity of those financial statements with generally accepted
accounting principles.
9
The Audit Committee reports as follows with respect to the audit of the
Company's 2001 audited financial statements:
- The Committee has reviewed and discussed the Company's 2001 audited
financial statements with its management,
- The Committee has discussed with the independent auditors, Grant Thornton
LLP, the matters required to be discussed by SAS 61, which include, among
other items, matters related to the conduct of the audit of the Company's
financial statements,
- The Committee has received written disclosures and the letter from the
independent auditors required by ISB Standard No. 1 (which relates to the
auditors' independence from the Company and its related entities) and has
discussed with the auditors their independence from the Company, and
- Based on review and discussions of the Company's 2001 audited financial
statements with management and discussions with the independent auditors,
the Audit Committee has recommended to the Board of Directors that the
Company's 2001 audited financial statements be included in the its Annual
Report on Form 10-K.
March 27, 2002
Audit Committee
Orwin L. Carter, Ph.D.
Patrick L. Flinn
Peter A.A. Saunders
Earnest W. Deavenport, Jr.
AUDIT COMMITTEE CHARTER
The Board of Directors has adopted a written charter for the Audit
Committee. The Board of Directors reviews and approves changes to the Audit
Committee charter annually.
INDEPENDENCE OF AUDIT COMMITTEE MEMBERS
The Company's Audit Committee is comprised of Orwin L. Carter, Ph.D.,
Patrick L. Flinn, Peter A.A. Saunders and Earnest W. Deavenport, Jr. Each of
these members meets the requirements for independence as defined by the
applicable NYSE standards.
STOCK PERFORMANCE GRAPH
The following graph compares the performance of the Company's Common Stock
to the performance of (1) the New York Stock Exchange Composite Index, (2) a new
self-constructed peer group of issuers selected by the Company, and (3) the peer
group used in last year's performance graph, which consisted of the issuers
(other than the Company) that then comprised that S&P SmallCap 600 -- Medical
Products and Supplies Sector. The Company is including a new self-constructed
peer group this year because the Medical Products and Supplies Sector of the S&P
SmallCap 600 was eliminated as part of a reorganization of the S&P SmallCap 600.
The Company determined that using a new self-constructed peer group consisting
of the companies identified below would be more appropriate than using the S&P
SmallCap 600 -- Healthcare Sector, which includes issuers in a variety of
healthcare businesses unrelated to the Company's business. The graph assumes
that $100 was invested on December 31, 1996, in the Company's Common Stock and
each of the indices and that all dividends were reinvested.
10
COMPARISON OF FIVE-YEAR -- CUMULATIVE RETURNS
(PERFORMANCE GRAPH)
<Table>
<Caption>
- -------------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001
- -------------------------------------------------------------------------------------
Theragenics
Corporation(R) 100.0 159.1 144.2 80.1 44.2 87.2
NYSE Composite Index 100.0 132.9 159.3 174.1 181.3 167.7
New self-contructed Peer
Group(1) 100.0 109.7 88.4 82.4 119.5 108.5
Prior S&P SmallCap 600
Medical Products and
Supplies Sector (2) 100.0 110.6 98.5 105.7 143.2 172.0
</Table>
- ---------------
(1) Based on information for a new self-constructed peer group consisting of:
Bio Vascular, Inc.; Draxis Health, Inc.; Implant Sciences Corporation;
Isonics Corporation; Mentor Corporation; North American Scientific, Inc.;
Novoste Corporation; Syncor International Corporation; and Uromed
Corporation.
(2) Based on information for the companies listed below, which together with the
Company previously comprised the S&P SmallCap 600 -- Medical Products and
Supplies Sector, as previously published by Standard and Poor's:
Arthrocare Corp.; Conmed Corporation; Cooper Companies, Inc.; Cygnus, Inc.;
Datascope Corporation; Diagnostics Products Corporation; Hologic Inc.;
Invacare Corporation; Mentor Corporation; Osteotech, Inc.; ResMed, Inc.;
Respironics, Inc.; Sola International, Inc.; SpaceLabs Medical, Inc.;
Sybron Dental Specialties, Inc.; Syncor International Corporation; Varian
Medical Systems, Inc.; and Vital Signs, Inc.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There were no interlocking relationships between the Company and other
entities that might affect the determination of the compensation of the
directors and executive officers of the Company.
The Board of Directors has delegated to the CEO the responsibility to act
on executive compensation matters for executive officers other than the CEO.
11
PROPOSAL NUMBER TWO
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
Stockholders will be asked to vote for a proposal to ratify the appointment
of Grant Thornton LLP as the independent public accountants of the Company for
the fiscal year ending December 31, 2002. Grant Thornton LLP has been the
independent public accountants for the Company since fiscal year 1989. If the
stockholders, by affirmative vote of the holders of a majority of the votes
cast, do not ratify this appointment, the Board of Directors will reconsider its
action and select other independent public accountants without further
stockholder action. Abstentions and broker non-votes will have no effect on
Proposal Two.
A representative of Grant Thornton LLP is expected to be present at the
Annual Meeting to respond to appropriate questions and will be given the
opportunity to make a statement if such representative desires to do so.
Audit Fees. In connection with services rendered for the audit of the
Company's annual financial statements and the review of the Company's interim
financial statements, the Company has estimated that its total audit fees for
fiscal year 2001 were approximately $78,500. This figure is based on an estimate
provided by our accountants, Grant Thornton LLP, and includes fees for services
that were billed to the Company in fiscal year 2002 in connection with the 2001
fiscal year audit.
Financial Information Systems Design and Implementation Fees. The Company
did not retain its principal accountant to perform Financial Information Systems
Design or Implementation services in fiscal year 2001.
Other Fees. During fiscal year 2001, the Company was billed approximately
$23,600 by its principal accountants for services not described above. These
"Other Fees" were primarily for tax compliance services and tax planning.
The Audit Committee has considered the provision of non-audit services by
our principal accountants and has determined that the provision of such services
were consistent with maintaining the independence of the Company's principal
accountants.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS THE INDEPENDENT PUBLIC
ACCOUNTANTS OF THE COMPANY.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, officers,
directors, and beneficial owners of more than ten percent of the outstanding
Common Stock are required to file reports with the Securities and Exchange
Commission reporting their beneficial ownership of the Common Stock at the time
they become subject to the reporting requirements and changes in beneficial
ownership occurring thereafter. Based on a review of the reports submitted to
the Company and written representations from persons known to the Company to be
subject to these reporting requirements, the Company believes that its executive
officers and directors complied with the Section 16(a) requirements during
fiscal 2001.
STOCKHOLDERS PROPOSALS
Stockholders of Theragenics(TM) may submit proposals for inclusion in the
proxy materials. These proposals must meet the stockholder eligibility and other
requirements of the Securities and Exchange Commission. In order to be included
in the Company's 2003 proxy material, a stockholder's proposal must be received
not later than November 27, 2002, at Theragenics Corporation(R) offices, 5203
Bristol Industrial Way, Buford, Georgia 30518, ATTN: Secretary.
In addition, Theragenics(TM)' By-Laws provide that in order for business to
be brought before the Annual Meeting, a stockholder must deliver or mail written
notice to the principal executive offices of the Company,
12
which written notice is received not less than 60 days nor more than 90 days
prior to the date of the meeting. The notice must state the stockholder's name,
address, number and class of shares of Theragenics(TM) stock held, and briefly
describe the business to be brought before the meeting, the reasons for
conducting such business at the Annual Meeting, and any material interest of the
stockholder in the proposal.
The By-Laws also provide that if a stockholder intends to nominate a
candidate for election as a Director, the stockholder must deliver written
notice of his or her intention to the Secretary of the Company. The notice must
be received not less than 60 days nor more than 90 days before the date of the
meeting of stockholders. The notice must set forth the name and address of, and
the number of shares owned by, the stockholder (and that of any other
stockholder known to be supporting said nominee). The notice must also set forth
the name of the nominee for election as a Director, the age of the nominee, the
nominee's business address and experience during the past five years, the number
of shares of stock of the Company beneficially held by the nominee, and such
other information concerning the nominee as would be required to be included in
a proxy statement soliciting proxies for the election of the nominee. In
addition, the notice must include the consent of the nominee to serve as a
Director of Theragenics(TM) if elected.
MISCELLANEOUS
THE COMPANY WILL FURNISH WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON FORM
10-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2001, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES, TO ANY RECORD
OR BENEFICIAL OWNER OF ITS COMMON STOCK AS OF MARCH 14, 2002, WHO REQUESTS A
COPY OF SUCH REPORT. ANY REQUEST FOR THE 10-K REPORT SHOULD BE IN WRITING
ADDRESSED TO: DIRECTOR OF INVESTOR RELATIONS, THERAGENICS CORPORATION(R), 5203
BRISTOL INDUSTRIAL WAY, BUFORD, GEORGIA 30518. IF THE PERSON REQUESTING THE
REPORT WAS NOT A SHAREHOLDER OF RECORD ON MARCH 14, 2002, THE REQUEST MUST
INCLUDE A REPRESENTATION THAT SUCH PERSON WAS A BENEFICIAL OWNER OF COMMON STOCK
OF THE COMPANY ON THAT DATE. COPIES OF ANY EXHIBITS TO THE FORM 10-K WILL BE
FURNISHED ON REQUEST AND UPON PAYMENT OF THE COMPANY'S EXPENSES IN FURNISHING
SUCH EXHIBITS.
OTHER MATTERS
Management is not aware of any matters to be presented for action at the
meeting other than those set forth in this Proxy Statement. However, should any
other business properly come before the meeting, or any adjournment thereof, the
enclosed Proxy confers upon the persons entitled to vote the shares represented
by such Proxy discretionary authority to vote the same in respect of any such
other business in accordance with their best judgment in the interest of the
Company.
Buford, Georgia
March 27, 2002
13
PROXY/VOTING INSTRUCTIONS CARD
THERAGENICS CORPORATION(R)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
ANNUAL MEETING OF STOCKHOLDERS - MAY 7, 2002
The undersigned hereby appoints Ms. M. Christine Jacobs and Mr. Bruce W.
Smith, or either of them (the "Proxies"), as the undersigned's Proxy or Proxies,
each with the power to appoint her/his substitute, and hereby authorizes them to
represent and to vote, as designated below, all shares of Common Stock of
Theragenics Corporation(R) (the "Company") which the undersigned is entitled to
vote at the Annual Meeting of Stockholders of the Company to be held on May 7,
2002, or any adjournment thereof.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE.
A ticket must be presented in order to gain admission to the Annual Meeting
of Stockholders. If you are planning on attending the meeting, please complete
and return the enclosed Admission Ticket Request Form in order to receive your
Admission Ticket. You will not be mailed an Admission Ticket. Your ticket will
be available at the registration table on May 7, 2002.
Theragenics Corporation(R)
5203 Bristol Industrial Way
Buford, Georgia 30518
FOLD AND DETACH HERE - IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
Please mark your votes as indicated in this example [X]
1. ELECTION OF DIRECTORS
<Table>
[ ] FOR the nominees listed below [ ] WITHHOLD AUTHORITY to vote for
the nominees listed below
</Table>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
Nominees: Patrick L. Flinn, John V. Herndon, Peter A. A. Saunders
- --------------------------------------------------------------------------------
2. PROPOSAL TO: ratify the appointment of Grant Thornton LLP as the Independent
Public Accountants of the Company for the fiscal year ending December 31,
2002.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies, or either of them, are authorized to vote
upon such other business as may properly come before the meeting or any
adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED IN FAVOR OF PATRICK L. FLINN, JOHN V. HERNDON, AND PETER A. A. SAUNDERS
FOR ELECTION AS DIRECTORS AND FOR PROPOSAL 2.
<Table>
Dated: 2002
---------------------------
--------------------------------------------
Signature(s)
--------------------------------------------
</Table>
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE.
ADMISSION TICKET REQUEST
THERAGENICS CORPORATION(R)
ANNUAL MEETING OF STOCKHOLDERS
10:00 A.M., NEW YORK CITY TIME, TUESDAY, MAY 7, 2002
You will need a ticket to attend the Annual Meeting of Stockholders. If your
shares are registered in your name and not in the name of a bank, broker or
other third party, you may request an admission ticket by completing and
returning the Admission Ticket Request Form printed below. You will not be
mailed an admission ticket. Your ticket will be available at the registration
table on May 7, 2002.
If your shares are not registered in your own name, please advise the bank,
broker or other institution that holds your shares that you plan to attend the
Annual Meeting of Stockholders. That firm must provide you with documentation
showing that you owned your shares of the Company as of the record date March
14, 2002. This documentation may be either a copy of an account statement that
shows you owned the shares on the record date or a letter from the firm that
confirms you owned the shares on that date. Please include that documentation
when you return this Admission Ticket Request form to the Company in order to
receive an admission ticket.
FOLD AND DETACH HERE
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
ADMISSION TICKET REQUEST
THERAGENICS CORPORATION(R)
ANNUAL MEETING OF STOCKHOLDERS
10:00 A.M., NEW YORK CITY TIME, TUESDAY, MAY 7, 2002
IF YOU PLAN TO ATTEND THE 2002 ANNUAL MEETING OF STOCKHOLDERS, WHICH WILL BE
HELD AT THE METROPOLITAN NEW YORK HOTEL, 569 LEXINGTON AVENUE, NEW YORK, NY
10022, YOU MAY REQUEST AN ADMISSION TICKET FOR YOURSELF BY COMPLETING AND
RETURNING THIS FORM. ADMISSION TICKETS WILL BE AVAILABLE AT THE REGISTRATION
TABLE ON MAY 7, 2002.
Shareholder Name (Please Print)
------------------------------------------------
Additional Admission Tickets requested for the following additional family
members:
- -------------------------------------------------------------------------------
Number of shares owned:
--------------------------------------------------------
Address:
-----------------------------------------------------------------------
City: State: Zip Code:
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