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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CLINTRIALS RESEARCH 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:
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CLINTRIALS RESEARCH INC.
20 BURTON HILLS BOULEVARD
SUITE 500
NASHVILLE, TENNESSEE 37215
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of ClinTrials Research Inc.:
The Annual Meeting of Stockholders of ClinTrials Research Inc., a Delaware
corporation (the "Company"), will be held at SunTrust Center, 5th Floor
Auditorium, 424 Church Street, Nashville, Tennessee, at 9:00 a.m. Central
Daylight Time, on Monday, May 12, 1997 for the following purposes:
(1) To elect five (5) directors, to hold office for the ensuing year
or until their successors have been duly elected and qualified; and
(2) To approve an amendment to the Company's Restated Certificate of
Incorporation increasing the number of Common Stock shares authorized
thereunder to 50,000,000; and
(3) To transact such other business as may properly come before the
meeting, or any adjournment or postponement thereof.
The proxy statement and form of proxy accompanying this Notice are being
mailed to stockholders on or about April 7, 1997. Only stockholders of record at
the close of business on March 14, 1997 are entitled to notice of and to vote at
the meeting or any adjournment or postponement thereof.
Your attention is directed to the Proxy Statement accompanying this notice
for a more complete statement regarding the matters to be acted upon at the
meeting.
We hope very much that you will be able to be with us. If you do not plan
to attend the meeting in person, you are requested to complete, sign and date
the enclosed proxy and return it promptly in the enclosed addressed envelope,
which requires no postage if mailed in the United States.
By Order of the Board of Directors
William C. O'Neil, Jr.
Chairman of the Board, President
and Chief Executive Officer
April 7, 1997
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CLINTRIALS RESEARCH INC.
20 BURTON HILLS BOULEVARD
SUITE 500
NASHVILLE, TENNESSEE 37215
---------------------
PROXY STATEMENT
---------------------
This Proxy Statement and enclosed Proxy are being furnished to stockholders
of ClinTrials Research Inc., a Delaware corporation (the "Company"), in
connection with the solicitation of proxies by the Board of Directors of the
Company for use at the Annual Meeting of Stockholders (the "Annual Meeting") of
the Company to be held at 9:00 a.m. Central Daylight Time on Monday, May 12,
1997 at SunTrust Center, 5th Floor Auditorium, 424 Church Street, Nashville,
Tennessee and at any adjournments or postponements thereof. The cost of
soliciting proxies in the accompanying form will be borne by the Company. The
persons named as proxies were selected by the Board of Directors of the Company
and are executive officers of the Company.
This Proxy Statement and enclosed Proxy were initially mailed or delivered
to stockholders on or about April 7, 1997. The Company's Annual Report,
including financial statements for the fiscal year ended December 31, 1996, is
being concurrently mailed or delivered with this Proxy Statement to stockholders
entitled to vote at the Annual Meeting. The Annual Report is not to be regarded
as proxy soliciting material.
The Company has fixed the close of business on March 14, 1997 as the record
date for determining the holders of its common stock, $.01 par value (the
"Common Stock") who will be entitled to notice of and to vote at the meeting. On
that date, the Company had issued and outstanding 17,871,017 shares of Common
Stock which are the only outstanding shares of capital stock of the Company.
Holders of the Company's Common Stock are entitled to one vote for each share
owned of record. A majority of shares entitled to vote constitutes a quorum. A
share, once represented for any purpose at the meeting, is deemed present for
purposes of determining a quorum for the meeting (unless the meeting is
adjourned and a new record date is set for the adjourned meeting), even if the
holder of the share abstains from voting with respect to any matter brought
before the meeting.
If properly executed and returned in time for the Annual Meeting, the
enclosed Proxy will be voted in accordance with the choices specified thereon.
Where a signed Proxy is returned, but no choice is specified, the shares will be
voted "for" the election of each director nominee, "for" the amendment to the
Charter, and in the discretion of the proxies on such other matters as may
properly come before the meeting. Any stockholder who executes and returns a
Proxy may revoke it in writing at any time before it is voted at the Annual
Meeting by executing and delivering a later-dated proxy, or by appearing at the
meeting and voting in person. Abstentions and broker non-votes will not be
counted as affirmative votes on matters to be voted upon, but will be counted
for purposes of determining the presence or absence of a quorum. They have no
legal effect on the election of directors, which are elected by a plurality of
votes. On matters requiring a majority vote for approval, abstentions have the
effect of negative votes.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Company is authorized to issue 30,000,000 shares of Common Stock. As of
December 31, 1996, there were 17,864,258 shares issued and outstanding.
The following table sets forth as of December 31, 1996, information with
respect to the beneficial ownership of the Company's outstanding Common Stock by
(i) each director of the Company, (ii) each of the executive officers named in
the Summary Compensation Table, (iii) all directors and executive officers of
the Company as of a group, and (iv) each stockholder known by the Company to be
the beneficial owner of more than 5% of the Company's outstanding Common Stock.
Except as otherwise indicated, the persons or entities listed below have sole
voting and investment power with respect to all shares of Common Stock owned by
them, except to the extent such power may be shared with a spouse.
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SHARES
BENEFICIALLY OWNED(1)
----------------------
NAME AND ADDRESS NUMBER PERCENT
- ---------------- ---------- --------
Irwin B. Eskind, M.D.**..................................... 1,714,007 9.6%
541 Jackson Blvd.
Nashville, TN
Richard J. Eskind**......................................... 1,709,632 9.6
104 Lynnwood Blvd.
Nashville, TN
Herbert J. Schulman, M.D.***................................ 1,355,745 7.6
109 Westhampton Place
Nashville, TN
William C. O'Neil, Jr.(2)**................................. 1,235,717 6.8
20 Burton Hills Blvd.
Suite 500
Nashville, TN
AIM Management Group Inc.(3)................................ 1,274,300 7.1
11 Greenway Plaza
Suite 1919
Houston, TX 77046
American Century Companies, Inc.(3)......................... 1,056,300 5.9
4500 Main Street
P.O. Box 418210
Kansas City, MO 64141
Pilgrim Baxter & Associates, Ltd.(3)........................ 930,250 5.2
1255 Drummers Lane
Suite 300
Wayne, PA 19087
Thomas G. Cigarran**........................................ 123,965 *
Edward G. Nelson(4)**....................................... 78,711 *
Albert J. Siemens(5)........................................ 56,924 *
Paul J. Ottaviano(6)........................................ 41,249 *
John W. Robbins(7).......................................... 25,313 *
Joseph J. Colatuno(8)....................................... 9,000 *
All directors and executive officers as group (9
persons)(9)............................................... 4,994,518 27.2%
- ---------------
* Less than 1%
** Director
*** Dr. Schulman resigned as a director of the Company during 1996 and is not
seeking nomination.
(1) Based on 17,864,258 shares of Common Stock outstanding. Pursuant to the
rules of the Securities and Exchange Commission, certain shares of the
Company's Common Stock which a beneficial owner has the right to acquire
within 60 days of December 31, 1996 pursuant to the exercise of stock
options are deemed to be outstanding for the purpose of computing the
percentage ownership of such owner but are not deemed outstanding for the
purpose of computing percentage ownership of any other person.
(2) Includes 84,467 shares owned by Mr. O'Neil's wife. Mr. O'Neil disclaims
beneficial ownership of these shares. Also includes 378,750 shares issuable
upon the exercise of vested options.
(3) Share ownership data obtained solely from Schedule 13G filed as of December
31, 1996.
(4) Includes 3,000 shares owned by Mr. Nelson's wife. Mr. Nelson disclaims
beneficial ownership of such shares. Also includes 65,964 shares held by
Nelson Capital Corp. and certain of its affiliates, beneficial
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ownership of which Mr. Nelson disclaims. Mr. Nelson is the principal
stockholder and president of Nelson Capital Corp.
(5) Includes 45,000 shares issuable upon the exercise of vested options.
(6) Includes 41,249 shares issuable upon the exercise of vested options.
(7) Includes 25,313 shares issuable upon the exercise of vested options. Mr.
Robbins resigned his position effective February 21, 1997.
(8) Includes 9,000 shares issuable upon the exercise of vested options.
(9) Includes 499,312 shares issuable upon the exercise of vested options.
PROPOSAL 1. ELECTION OF DIRECTORS
All directors hold office until the next Annual Meeting of the Company's
stockholders and until their successors are duly elected and qualified. The
Company's executive officers are appointed annually by the Board of Directors
and serve at the discretion of the Board.
It is intended that proxies received in response to this solicitation will
be voted in favor of the election of the nominees named herein to be directors
of the Company until the next Annual Meeting and until their successors are
elected and qualified, unless authority to vote is withheld.
If any of the nominees should become unable to accept election or declines
to serve, neither of which the Board anticipates, it is intended, in the absence
of contrary direction, that the proxies will be voted for the balance of those
named below and for substitute nominee(s) as the Board may designate, unless the
Board has taken prior action to reduce its membership. The proxies will in no
event be voted for a greater number of nominees than five.
During 1996, the Board of Directors held twelve meetings. Each incumbent
director attended at least 75% of the aggregate of (i) the total number of
meetings of the Board of Directors and (ii) the total number of meetings held by
all committees on which the individual director served. There are two committees
of the Board of Directors which assist the Board in discharging its
responsibilities. These committees, their members and functions are discussed
below.
INFORMATION ABOUT NOMINEES FOR DIRECTORS
William C. O'Neil, Jr., 62 years of age, founded the Company in September
1989 and has been the Chairman of the Board, President and Chief Executive
Officer of the Company since its organization. He served as President and Chief
Executive Officer of International Clinical Laboratories, Inc., a clinical
laboratory testing company, from 1977 until it was acquired in 1988 by
SmithKline Beckman Corporation. From January 1989 to May 1989, he served as
President and Chief Executive Officer of Biotherapeutics, Inc. (now known as
Response Oncology, Inc.) a cancer services company. Mr. O'Neil serves as a
director of each of ATRIX Laboratories, Inc., a drug delivery company; Sigma
Aldrich Chemical Company, a manufacturer of research chemicals; American
Healthcorp, Inc., a specialty healthcare service company; Advocat Inc., a
long-term care company; and Central Parking Corporation, a parking services
company.
Thomas G. Cigarran, 55 years of age, has served as a director of the
Company since February 1992. From September 1981 through August 1988, Mr.
Cigarran served as President and Chief Operating Officer of American Healthcorp,
Inc. In September 1988, Mr. Cigarran became the Chairman, President and Chief
Executive Officer of American Healthcorp, Inc.
Irwin B. Eskind, M.D., 72 years of age, has been a director of the Company
since February 1992. Dr. Eskind has been engaged in the private practice of
internal medicine since 1954. Dr. Eskind is the brother of Richard J. Eskind,
also a director of the Company.
Richard J. Eskind, 66 years of age, has served as a director of the Company
since February 1992. Mr. Eskind has served since October 1986 as Vice
President -- Investments of A.G. Edwards & Sons, Inc., a broker-dealer firm. Mr.
Eskind is the brother of Irwin B. Eskind, M.D., also a director of the Company.
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Edward G. Nelson, 65 years of age, has been a director of the Company since
November 1990. Mr. Nelson formed Nelson Capital Corp., a merchant banking firm,
in 1984, and has served as the President and Chairman of the Board of such firm
since its organization. Mr. Nelson serves as a director of Osborn Communications
Company, an owner and operator of radio and television stations; Berlitz
International, Inc., a language services company; Central Parking Corporation, a
parking services company; and Advocat Inc., a long-term care company.
COMMITTEES OF THE BOARD OF DIRECTORS
There are two committees of the Company's Board of Directors: the
Compensation and Stock Option Committee and the Audit Committee. The
Compensation and Stock Option Committee, which met once during 1996, is composed
of Dr. Eskind and Mr. Nelson and is responsible for the approval of remuneration
arrangements for executive officers of the Company, the review of the Company's
compensation plans and the general review of the Company's employee compensation
policies. The Audit Committee, which met once during 1996, is composed of Mr.
Cigarran and Mr. Richard Eskind, and is responsible for the engagement of
independent auditors, the review of audit fees, the supervision of matters
relating to audit functions, the review and setting of internal policies and
procedures regarding audit, accounting and other financial controls and the
review of related party transactions.
COMPENSATION OF DIRECTORS
Non-employee directors owning less than 5% of the Company's outstanding
Common Stock (Mr. Nelson and Mr. Cigarran) are compensated $15,000 annually.
Non-employee directors owning 5% or more of the company's outstanding Common
Stock (Dr. Eskind and Mr. Eskind) receive no compensation.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers and directors, and
persons who own more than 10% of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission (the "SEC"). Such executive officers,
directors and greater than 10% stockholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely upon the Company's review of copies of the Section 16(a) forms
furnished to the Company for the fiscal year ended December 31, 1996, the
Company believes that, during such fiscal year, its executive officers,
directors, and greater than 10% stockholders complied with applicable Section
16(a) filing requirements.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE PROPOSED NOMINEES TO THE BOARD OF DIRECTORS. THE AFFIRMATIVE VOTE OF A
PLURALITY OF THE VOTES CAST ON PROPOSAL 1, IN PERSON OR BY PROXY, IS NECESSARY
FOR THE ELECTION OF THE NOMINEES NAMED HEREIN TO BE DIRECTORS OF THE COMPANY.
PROPOSAL II: INCREASE IN AUTHORIZED SHARES OF COMMON STOCK
On March 26, 1997, the Board of Directors unanimously approved and directed
that the shareholders consider an amendment to Article Fourth of the Company's
Restated Certificate of Incorporation. The Amendment to Article Fourth would
increase the number of authorized shares of the Company's Common Stock from
30,000,000 to 50,000,000. To be adopted, this proposal requires the affirmative
vote of the holders of a majority of the outstanding stock entitled to vote. If
this proposal is approved by the stockholders at the Annual Meeting, the
amendment to Article Fourth will become effective upon the filing of a
Certificate with the Delaware Secretary of State, which filing is expected to
take place shortly after the Annual Meeting. The Board of Directors believes
that it is in the best interests of the Company and recommends that all of its
stockholders vote to adopt this amendment.
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The rights of the holders of the Company's Common Stock under the Restated
Certificate of Incorporation would remain unchanged. Article Fourth of the
Restated Certificate of Incorporation, as amended by the proposed amendment is
set forth below:
FOURTH: Classes of Stock. The Corporation shall have two classes of
stock: common stock, par value one cent ($0.01) ("Common Stock"); and
preferred stock, par value one cent ($0.01) ("Preferred Stock"). The total
number of shares of Common Stock which the Corporation shall have authority
to issue is fifty million (50,000,000) shares, and the total number of
shares of preferred stock which the Corporation shall have authority to
issue is one million (1,000,000).
As of December 31, 1996, there were 17,864,258 shares of Common Stock
issued and outstanding. In addition, 559,887 shares of the Company's Common
Stock remain reserved for issuance under the Company's 1989 Stock Option Plan.
Accordingly, at December 31, 1996, a balance of 10,442,565 authorized shares of
the Company's Common Stock were available for future use. As of December 31,
1996, there were no shares of Preferred Stock issued and outstanding.
The Board of Directors considers the proposed increase in the number of
authorized shares of Common Stock desirable because it would give the Company
the necessary flexibility to issue Common Stock in connection with acquisitions,
equity financings, stock dividends and splits, benefit plans, and for other
general corporate purposes. Future issuances would be at the discretion of the
Board of Directors without the expense and delay incidental to obtaining
shareholder approval, except as may be required by applicable law or by the
rules of any stock exchange on which the Company's securities may then be
listed. The Company's Common Stock is presently quoted on the Nasdaq Stock
Market. Holders of Common Stock have no preemptive rights to subscribe to any
additional securities of any class that the Company may issue.
The authorized but unissued shares of Common Stock could be used by
incumbent management to make more difficult a change in control of the Company.
Under certain circumstances such shares could be used to create voting
impediments or to frustrate persons seeking to effect a takeover or otherwise
gain control of the Company. For example, such shares could be privately placed
with purchasers who might side with the Board in opposing a hostile takeover
bid.
The amendment could also have the effect of discouraging an attempt by
another person or entity, through the acquisition of a substantial number of
shares of the Company's Common Stock, to acquire control of the Company with a
view to imposing a merger, sale of all or any part of the Company's assets or a
similar transaction that may or may not be in the best interest of all of the
stockholders, because the issuance of the new shares could be used to dilute the
stock ownership of a person or entity seeking to obtain control of the Company.
The amendment to the Charter is not being proposed in response to any effort
known by management to acquire control of the Company. At the date of this Proxy
Statement, the Company has no plans, arrangements, or understandings with
respect to the issuance of the shares of Common Stock to be authorized. However,
the Company regularly considers equity offerings and acquisitions involving the
issuance of Common Stock.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE OUTSTANDING STOCK
ENTITLED TO VOTE IS REQUIRED TO APPROVE THE AMENDMENT TO THE CHARTER. THE BOARD
OF DIRECTORS RECOMMENDS A VOTE BY THE HOLDERS OF COMMON STOCK FOR THIS PROPOSAL.
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EXECUTIVE OFFICERS
The following table sets forth certain information concerning the executive
officers of the Company, other than Mr. O'Neil, whose information is set forth
above.
NAME AGE POSITIONS
- ---- --- ---------
Paul J. Ottaviano.................................. 50 Executive Vice President -- Worldwide
Operations
Michael F. Ankcorn................................. 54 President, ClinTrials BioResearch Ltd.
Mary A. Chaput..................................... 47 Vice President and Chief Financial Officer
Joseph J. Colatuno................................. 45 Vice President and General Manager -- the
Americas
Barry B. Kanarek................................... 50 Vice President, Medical Operations -- the
Americas
Peter A. S. Motteram............................... 36 General Manager -- Europe
John W. Robbins.................................... 47 Executive Vice President and Secretary
Albert J. Siemens.................................. 53 Executive Vice President
Paul J. Ottaviano was promoted to Executive Vice President -- Worldwide
Operations in December 1995 after serving as Executive Vice President -- U.S.
Operations since July 1992. From May 1989 until joining the Company in July
1992, he was President and Chief Executive Officer of National
Psychopharmacology Laboratories, Inc., a specialty laboratory company. Mr.
Ottaviano was Chief Operating Officer of Med Inc. (later ImageAmerica, Inc.), a
medical imaging company, from April 1988 through May 1989. From July 1987 until
April 1988, Mr. Ottaviano was the Vice President -- Operations and President-ICL
East of International Clinical Laboratories, Inc. From January 1987 until July
1987, Mr. Ottaviano served as a Division President of International Clinical
Laboratories, Inc.
Michael F. Ankcorn has served as President of ClinTrials BioResearch Ltd.
since its acquisition by the Company in August 1996. From 1979 to July 1996 Mr.
Ankcorn served as President and Chief Executive Officer of Bio-Research
Laboratories Ltd. From 1977 to 1979 he served as Assistant Vice President for
the Canada Development Corporation.
Mary A. Chaput joined the Company in December 1996 as Vice President and
Chief Financial Officer. From October 1993 until its merger with PPD, Inc., in
September 1996, Ms. Chaput served Pharmaco International, Inc., a division of
Applied BioScience International, Inc., in a variety of senior financial
assignments with responsibilities ranging from worldwide pre-clinical
operations, including toxicology, analytical laboratories and Phase I, to
European clinical development services. From January 1990 to September 1992 Ms.
Chaput served General Electric Company in Rockville, MD and Schenectady, NY.
Joseph J. Colatuno was promoted to Vice President, General Manager -- the
Americas, in May 1996 after serving as General Manager -- North America since
January 1994. Prior to joining the Company, Mr. Colatuno spent 20 years with the
Upjohn Company.
Barry B. Kanarek, M.D., Ph.D. joined the Company in February 1997 as Vice
President, Medical Operations -- the Americas. From September 1991 to February
1997 Dr. Kanarek served Glaxo Wellcome, Inc. in the United States, most recently
as Vice President, Group Medical Operations. He served as Senior Group Director
in U.S. Medical Affairs for SmithKline Beecham from March 1990 to September
1991. From March 1989 to March 1990 Dr. Kanarek served as Senior Associate
Director, Clinical Research for Wyeth Ayerst Laboratories.
Peter A. S. Motteram has served as General Manager -- Europe since January
1996. From October 1989 to January 1995 he served in several positions
concluding with Director, Business Development, Europe for Quintiles (UK) Ltd.
Prior to October 1989 Mr. Motteram held other management positions in the
research industry.
John W. Robbins was promoted to Executive Vice President and Secretary in
December 1996 after serving as Chief Financial Officer, Vice President and
Secretary of the Company since November 1990. From June 1988 to October 1990, he
was Chief Financial Officer for the southeast region of McCaw Cellular
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Communications, Inc., a cellular communications company. Mr. Robbins resigned
his position with the Company effective February 21, 1997.
Albert J. Siemens, Ph.D. has served as Executive Vice President within the
Business Development group of the Company since 1992 with additional
responsibilities for international development. Dr. Siemens served as President
of Clinical Research International, Inc., from 1986 through 1992. From 1983 to
1986 he was Vice President of Clinical Research for Family Health International,
a non-profit research foundation. Prior to that time, Dr. Siemens was Associate
Director of Clinical Research of Pfizer Inc.
EXECUTIVE COMPENSATION
The following table provides information as to annual, long-term or other
compensation during fiscal years ended December 31, 1994, 1995 and 1996, for the
Company's Chief Executive Officer and the persons who, during 1996, were the
other four most highly compensated executive officers of the Company
(collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
---------------------------------------- SECURITIES
OTHER UNDERLYING
NAME AND PRINCIPAL ANNUAL OPTIONS/SARS ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION (#)(1) COMPENSATION(3)
------------------ ---- -------- ------- ------------ ------------ ---------------
William C. O'Neil, Jr. 1996 $250,000 $50,000 $0 0 $14,291
Chairman of the Board, 1995 230,000 35,000 0 15,000 14,059
President, and Chief 1994 195,000 0 0 0 14,059
Executive Officer
Paul J. Ottaviano 1996 220,000 30,000 0 0 12,135
Executive Vice President -- 1995 190,000 25,000 0 30,000 11,253
Worldwide Operations 1994 170,000 0 0 0 11,419
Albert J. Siemens 1996 190,000 15,000 0 0 12,075
Executive Vice President 1995 175,000 12,000 0 15,000 11,989
1994 165,000 10,000 0 7,500 12,162
Joseph J. Colatuno 1996 160,000 20,000 0 3,000 11,144
Vice President and General 1995 144,000 15,000 0 12,000 10,549
Manager -- the Americas 1994 132,000 2,000 0 15,000 2,595
John W. Robbins(2) 1996 145,000 20,000 0 0 11,246
Executive Vice President 1995 130,000 15,000 0 26,250 9,626
and Secretary 1994 120,000 10,000 0 15,000 9,037
- ---------------
(1) Although the Company's existing Stock Option Plan permits the grant of stock
appreciation rights, no such rights have been granted to date.
(2) Mr. Robbins resigned his position effective February 21, 1997.
(3) Amounts represent life insurance premium payments, profit sharing
contributions at 5% of the participant's base salary and 401(k) plan Company
matching contributions at 33% of participant's voluntary deduction. The
amounts represented by each of those forms of compensation for 1996 are as
follows:
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PROFIT 401(K)
INSURANCE SHARING MATCHING
PREMIUM CONTRIBUTIONS CONTRIBUTION
--------- ------------- ------------
William C. O'Neil, Jr. .................................. $3,656 $7,500 $3,135
Paul J. Ottaviano........................................ 1,500 7,500 3,135
Albert J. Siemens........................................ 1,440 7,500 3,135
Joseph J. Colatuno....................................... 509 7,500 3,135
John W. Robbins.......................................... 861 7,250 3,135
The table below provides certain information with respect to grants of
stock options to the Named Executive Officers pursuant to the Company's 1989
Stock Option Plan during the year ended December 31, 1996.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------------------- VALUE AT ASSUMED
PERCENT OF ANNUAL RATE OF
NUMBER OF TOTAL STOCK PRICE
SECURITIES OPTIONS/SARS EXERCISE MARKET APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE PRICE ON OPTION TERM(2)(3)
OPTIONS/SARS EMPLOYEES IN PRICE DATE OF EXPIRATION --------------------
NAME GRANTED(1) FISCAL YEAR ($/SHARE) GRANT DATE 5% 10%
- ---- ------------ ------------ --------- -------- ---------- -------- ---------
Joseph J. Colatuno........... 3,000 0.81% $22.00 $22.00 7/24/06 $41,507 $105,187
- ---------------
(1) All options granted to the Named Executive Officer are exercisable in four
equal annual installments beginning one year after the date of grant. The
per share exercise price represents the fair market value of the Common
Stock on the date of grant.
(2) Potential realizable value is calculated from a base stock price equal to
the exercise price of the options granted.
(3) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates set by the Commission and, therefore, are not intended to
forecast possible future appreciation, if any, of the Company's Common Stock
price.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF UNDERLYING VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED SECURITIES IN-THE-MONEY
SECURITIES OPTIONS/SARS AT FISCAL OPTIONS/SARS AT FISCAL
UNDERLYING VALUE YEAR-END YEAR-END($)(1)
OPTIONS/SARS REALIZED ---------------------------- ----------------------------
NAME EXERCISED (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------- -------- ----------- ------------- ----------- -------------
William C. O'Neil, Jr. ...... 0 0 378,750 11,250 8,436,875 110,625
Paul J. Ottaviano............ 22,500 648,225 37,499 30,001 605,122 410,953
Albert J. Siemens............ 0 0 41,250 15,000 778,745 201,718
Joseph J. Colatuno........... 2,625 63,625 7,875 19,500 106,937 222,468
John W. Robbins(2)........... 26,250 621,375 17,813 27,187 274,761 375,776
- ---------------
(1) This amount represents the aggregate of the number of options multiplied by
the difference between $22.75, the fair market value of the Common Stock at
December 31, 1996, and the exercise price for that option.
(2) Mr. Robbins resigned his position effective February 21, 1997.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Messrs. O'Neil,
Ottaviano, Ankcorn, and Colatuno, Ms. Chaput, and Drs. Kanarek and Siemens.
The employment agreement for Mr. O'Neil commenced on February 1, 1997 and
ends on January 31, 1999. The employment agreements for Messrs. Ottaviano and
Colatuno and Dr. Siemens commenced on
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February 1, 1997 and end on January 31, 1998. The employment agreement for Ms.
Chaput commenced on November 29, 1996 and ends on January 31, 1998. The
employment agreement for Dr. Kanarek commenced on February 24, 1997 and ends on
February 23, 1999. Each of the agreements are automatically renewed for
additional and successive one year periods unless the Company provides 90 days'
notice prior to any anniversary date to the individual employee of its intent
not to renew the employment agreement. The annual base salary under the
agreement for Mr. O'Neil is $275,000; for Mr. Ottaviano, $240,000; for Ms.
Chaput, $150,000; for Mr. Colatuno, $190,000; for Dr. Kanarek, $245,000; and for
Dr. Siemens, $195,000. These agreements provide for periodic increases in the
base salaries at the discretion of the Board of Directors. The named individuals
are entitled to benefits such as medical insurance, expense reimbursement,
vacation and participation in the Company's 401(k) savings plan. The employment
agreements contain a non-competition clause providing that during the term of
employment, and for six months following the date of the expiration or
termination of employment, each named individual may not, without the prior
express written approval of the Board, directly or indirectly own or hold any
proprietary interest in or be employed by or receive compensation from any party
engaged in the same or any similar business in the same geographic areas in
which the Company does business. As consideration for this non-competition
clause, the individual is entitled to a lump sum payment for his or her current
annual base salary after termination by the Company other than for cause. If the
Company fails to renew the agreement, the individual is entitled to a lump sum
payment for six months of his or her then-current monthly base salary. In the
event there is a "change in control" of the Company and the individual is
terminated as a result, he or she is entitled to a lump sum payment for his or
her then-current annual base salary and any Stock Options granted will be fully
vested upon such change. If the individual terminates the employment agreement
with 90 days' written notice to the Company, he or she is entitled to an amount
equal to one month's base salary, and remains bound by the non-competition
clause.
The employment agreement for Mr. Ankcorn commenced on July 31, 1996 and
ends on July 31, 2001. The agreement is automatically renewed for an additional
five year period unless the Company provides six months notice prior to the
fifth anniversary date to Mr. Ankcorn of its intent not to renew the employment
agreement. The annual base salary under the agreement for Mr. Ankcorn is
Canadian $220,000. The agreement provides for periodic increases in the base
salary at the discretion of the Board of Directors. Mr. Ankcorn is entitled to
the standard benefits offered at ClinTrials BioResearch. The employment
agreement contains a non-competition clause providing that during the term of
employment, and for thirty-six months following the date of the expiration of
termination of employment, he may not carry on or be engaged in any endeavor in
competition, in whole or in part, with the Company. As consideration for this
non-competition clause or a "change in control" which results in his
termination, he is entitled for a period of three years to his current annual
base salary and bonus after termination by the Company other than for cause. If
the Company fails to renew the agreement, he is entitled to a lump sum payment
of his most recent annual base salary.
COMPENSATION COMMITTEE REPORT
Recommendations on compensation for the Company's executive officers are
made by the Compensation and Stock Option Committee (the "Committee") to the
Company's Board of Directors. Each member of the Committee is a non-employee
director. It is the responsibility of the Committee to determine whether in its
judgment the executive compensation policies are reasonable and appropriate,
meet their stated objectives and effectively serve the best interests of the
Company and its stockholders.
EXECUTIVE COMPENSATION POLICY
The Committee believes that the primary objectives of the Company's
executive compensation policy should be:
- to attract and retain talented executives critical to both the short-term
and long-term success of the Company by providing compensation that is
highly competitive with compensation provided to executives of comparable
position at companies in the Clinical Research Organization ("CRO") and
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related health services industries, while maintaining compensation levels
that are consistent with the Company's financial objectives and operating
performance; and
- to reinforce strategic financial and operating performance objectives
through the use of appropriate annual incentive programs; and
- to create mutuality of interest between executive officers and
stockholders by providing long-term incentive compensation.
The Committee believes that the Company's executive compensation policy
should be reviewed annually in relation to the Company's financial performance,
annual budgeted financial goals and its position in the CRO industry. The
compensation of individuals should then be reviewed annually by the Committee in
light of its executive compensation policy for that year.
The Committee believes that in addition to corporate performance, it is
appropriate to consider in setting and reviewing executive compensation the
level of experience and responsibilities of each executive as well as the
personal contributions a particular individual may make to the success of the
Company. Such factors as leadership skills, analytical skills and organizational
development are deemed to be important qualitative factors to take into account
in considering levels of compensation. No relative weight is assigned to these
qualitative factors, which are applied subjectively by the Committee.
COMPENSATION OF EXECUTIVE OFFICERS
The Committee believes that the compensation of executive officers should
be comprised of base compensation, annual incentive compensation, and long-term
incentive compensation, and has applied the policy to fiscal 1996 compensation
for executive officers as described below.
Base Compensation. The Committee's approach to base compensation for
executive officers of the Company is to offer competitive salaries in comparison
to local market, CRO industry, pharmaceutical industry and other related health
service industry practices. In determining whether an increase in base
compensation for the executive officers was appropriate for fiscal 1996, the
Committee reviewed salary ranges recommended by management, consulted with the
CEO, and took into account each executive's experience in business generally and
with the Company specifically and what it viewed to be appropriate levels of
base compensation after taking into consideration the contributions of each
executive. The average base salaries for those executive officers which appear
on the Summary Compensation Table, other than Mr. O'Neil, increased 11.8% in
1996 with specific increases ranging from 8.6% to 15.8%. The Committee believes
its executives are compensated in the mid-range of comparable companies. Mr.
O'Neil's increase in base salary is described below under "Compensation of Chief
Executive Officer."
Annual Incentive Programs. The Committee believes that incentive
compensation for the executive officers of the Company should be primarily
linked to operating performance. To achieve this goal, the Committee relies on
cash bonuses. Cash bonuses are awarded to executive officers of the Company
based primarily upon the actual earnings of the Company during the fiscal year
compared to the earnings targets approved by the Board of Directors through the
annual financial budget and subsequent financial projections.
Long-Term Incentive Compensation. The Stock Option Plan is the only plan
currently in place as a long-term compensation incentive for the Company's
executive officers. There are two types of stock options available for grant:
incentive stock options and non-qualified options. Incentive and non-qualified
stock options are generally granted with an exercise price at not less than the
fair market value of the underlying stock at the date of grant. To date there
have been no grants of stock appreciation rights to the executive officers of
the Company. Stock options are granted to executive officers by the Board of
Directors of the Company based primarily upon the financial performance of the
Company as compared to budgeted and projected earnings, as well as actual or
potential contributions to the growth of the Company.
Additionally, the Company has a 401(k) profit sharing plan in which all
employees, including executive officers, have equal participation eligibility.
The Committee annually establishes the Company matching portion of the 401(k)
deposits made to employees' 401(k) accounts. The matching percentage is the same
for
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executive officers and all employees. For 1996, the matching amount was 33% of
the amount withheld by each participant, not to exceed the maximum contribution
allowed under Section 415 of the Internal Revenue Code (the "Code") for a
qualified plan. The profit sharing payments made by the Company to the executive
officer's 401(k) and profit sharing account are a percentage of the officer's
base pay determined annually by the Committee. The percentage is the same for
executive officers and all employees and was 5% of base pay for fiscal 1996.
Section 162(m) of the Code generally disallows a tax deduction to public
companies for executive compensation in excess of $1 million. It is not
anticipated that the Company will pay any of its executives compensation in
excess of $1 million in 1997.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The Committee believes that compensation of the Chief Executive Officer is
consistent with the policies concerning executive compensation and appropriately
reflects the Company's financial objectives and operating performance. Awards of
long-term incentive compensation of the Chief Executive Officer are considered
concurrently with awards to other executive officers.
In reviewing and approving Mr. O'Neil's fiscal 1996 compensation package,
the Committee took into account the 35% increase in 1995 net revenues, income
from operations of $5.5 million in 1995 versus income from operations of $3.5
million in 1994 and earnings per share of $0.26 in 1995 versus $0.16 in 1994.
Mr. O'Neil's 1996 compensation package was subject to the same specific
quantitative performance criteria as other executive officers of the Company.
Mr. O'Neil received a $20,000 base compensation increase to $250,000 in 1996
from $230,000 in 1995, which the Committee determined on a subjective basis to
be appropriate, considering market and competitive compensation levels and the
continued improvement in the performance of the Company.
Edward G. Nelson, Chairman
Irwin B. Eskind, M.D.
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COMPANY PERFORMANCE
The following graph compares the total stockholder return of $100 invested
on November 24, 1993 (the effective date of the Company's initial public
offering) in (a) the Company, (b) the Center for Research in Security Prices
("CRSP") Index for Nasdaq Stock Market (U.S. Companies) ("Nasdaq U.S. Stock
Index") and (c) the CRSP Index for Nasdaq Health Services Stocks ("Nasdaq Health
Services Index"), assuming the reinvestment of all dividends.
LEGEND
CRSP TOTAL RETURNS INDEX FOR: 12/31/91 12/31/92 12/31/93 12/30/94 12/29/95 12/31/96
---------------------------- -------- -------- -------- -------- -------- --------
ClinTrials Research Inc. 136.0 100.0 216.0 364.0
Nasdaq Stock Market (US Companies) 77.2 89.9 103.2 100.8 142.6 175.4
Nasdaq Health Services Stocks 89.1 92.3 106.4 114.2 145.1 145.3
SIC 8000-8099 US & Foreign
NOTES:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighed daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 11/24/93.
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INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Ernst & Young LLP has been selected by the Board of
Directors to serve as the Company's independent public accountants for the
fiscal year ending December 31, 1997. A representative of that firm will be
present at the meeting and will have the opportunity to make a statement if he
so desires and to respond to questions.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1998 Annual
Meeting must be received by the Company not later than January 12, 1998, for
inclusion in its Proxy Statement and form of proxy relating to that meeting. Any
such proposals, as well as any questions relating thereto, should be directed to
Mary A. Chaput, Vice President and Chief Financial Officer, 20 Burton Hills
Boulevard, Suite 500, Nashville, Tennessee 37215.
MISCELLANEOUS
It is important that proxies be returned promptly to avoid unnecessary
expense. Therefore, stockholders who do not expect to attend in person are
urged, regardless of the number of shares of stock owned, to date, sign and
return the enclosed proxy promptly.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1996 MAY BE OBTAINED, WITHOUT CHARGE, BY ANY STOCKHOLDER TO
WHOM THIS PROXY STATEMENT IS SENT, UPON WRITTEN REQUEST TO MARY A. CHAPUT, VICE
PRESIDENT AND CHIEF FINANCIAL OFFICER, 20 BURTON HILLS BOULEVARD, SUITE 500,
NASHVILLE, TENNESSEE 37215.
Date: April 7, 1997.
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