SCHEDULE I
INFORMATION STATEMENT PURSUANT TO SECTION 14(F) OF THE
SECURITIES EXCHANGE ACT OF 1934 AND RULE 14F-1
THEREUNDER; CERTAIN INFORMATION CONCERNING
DIRECTORS AND OFFICERS OF THE COMPANY
This Information Statement is being mailed on or about March 20, 1998 as
part of the Solicitation/ Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") to holders of the common shares, without par value (the
"Shares"), of International Murex Technologies Corporation, a British Columbia
company (the "Company"). Capitalized terms used and not otherwise defined herein
shall have the meaning set forth in the Schedule 14D-9. This information is
being furnished in connection with the possible designation by Parent, pursuant
to the Acquisition Agreement, of persons to be selected or appointed to the
Company's Board of Directors following the consummation of the Offer. Pursuant
to the Acquisition Agreement, the Company will adopt a resolution appointing
certain designees of AAC Acquisition Ltd., a British Columbia company
("Purchaser") and an indirect wholly-owned subsidiary of Abbott Laboratories, an
Illinois corporation ("Parent"), as directors of the Company's Board of
Directors upon the conditions set forth in the Acquisition Agreement with
respect to the designation of directors of the Company by Parent. At such time
and from time to time thereafter, subject to Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder, Parent shall be entitled to designate up
to that number of directors of the Board as will make the percentage of the
Company's directors designated by Purchaser (the "Purchaser Designees") equal to
the aggregate voting power of the Shares then held by Purchaser or any affiliate
of Purchaser (rounded up to the next whole number), provided that there remain
at least two directors who were directors as of the date of the Acquisition
Agreement and who are not designees, shareholders, affiliates or associates of
Parent ("Continuing Directors"). Parent and Purchaser agreed, prior to the
Effective Time, not to seek greater representation on the Board. Upon the
consummation of the Offer, it is expected that C. Robert Cusick, President and
Chief Executive Officer of the Company, and F. Michael P. Warren, Chairman of
the Board of the Company, will be the Continuing Directors.
None of the executive officers or directors of Parent currently is a
director of, or holds any position with, the Company. The Company has been
advised by Parent that, to the best of Parent's knowledge, none of its directors
or executive officers or any of their associates beneficially owns any equity
securities, or rights to acquire any equity securities, of the Company or have
been involved in any transactions with the Company or any of its directors,
executive officers or affiliates which are required to be disclosed pursuant to
the rules and regulations of the Securities and Exchange Commission (the
"Commission").
The information contained herein concerning Parent, Purchaser and the
Purchaser Designees has been furnished to the Company by Parent. The Company
assumes no responsibility for the accuracy or completeness of such information.
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INFORMATION REGARDING THE COMPANY
VOTING SECURITIES
As of March 12, 1998, there were 16,826,599 Shares outstanding, all of one
class and, each of which entitles the holder to one vote. The Company has no
voting securities outstanding other than the Shares.
BENEFICIAL OWNERSHIP OF SECURITIES
SHARES HELD BY DIRECTORS AND EXECUTIVE OFFICERS. The following table sets
forth the beneficial ownership, as of March 12, 1998, of the Company's Shares
(i) by each director of the Company and (ii) by all directors and executive
officers of the Company as a group:
NUMBER OF SHARES PERCENTAGE OF
NUMBER OF ACQUIRABLE UPON OUTSTANDING SHARES IF
OUTSTANDING PERCENTAGE OF EXERCISE OF ALL OPTIONS OWNED OR
SHARES OUTSTANDING OPTIONS OWNED OR CONTROLLED ARE
NAME AND LOCATION OWNED(2) SHARES CONTROLLED(2) EXERCISED(1)
- --------------------------- ------------- ----------------- ------------------ -----------------------
George Brazier ............ 0 0 0 0
Vancouver, British
Columbia
C. Robert Cusick .......... 82,847 0.5% 261,750 2.0%
Pittsburgh, Pennsylvania
J. Trevor Eyton ........... 0 * 20,000 0.1%
Toronto, Ontario
Thomas L. Gavan ........... 0 * 60,000 0.4%
Bay Village, Ohio
Norbert J. Gilmore ........ 1,500 * 60,000 0.4%
Montreal, Quebec
Jay A. Lefton ............. 800 * 60,000 0.4%
Toronto, Ontario
Hartland M. MacDougall .... 0 * 20,000 0.1%
Toronto, Ontario
Stanley E. Read ........... 5,500 * 60,000 0.4%
Toronto, Ontario
Victor A. Rice ............ 25,000 0.1% 60,000 0.5%
Buffalo, New York
F. Michael P. Warren ...... 336,544(4) 2.0% 261,750 3.5%
Anguilla, BWI
All Executive Officers and 525,901 3.1% 1,000,600(3) 5.6%
Directors as a Group (14
persons).................
- --------------
* Less than 0.1%
(1) The stock ownership information is based upon the number of Shares
outstanding and the number of Shares which may be acquired upon the exercise
of outstanding options (as applicable) as of 60 days after March 12, 1998.
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(2) Unless otherwise indicated, each person has sole voting and investment
powers with respect to the Shares specified opposite his name.
(3) Does not include 34,300 Shares which may be acquired upon the exercise of
unvested options.
(4) Includes 109,715 Shares owned of record by Proteus BioResearch Corporation,
of which Mr. Warren is entitled to 18,286 Shares; 23,900 Shares owned of
record by Hygeia Diagnostics Corporation, of which Mr. Warren owns one-half
of the outstanding common shares; and 158,284 shares owned of record by QGB
Investments Limited, of which Mr. Warren is entitled to 22,421 Shares.
BENEFICIAL OWNERS OF MORE THAN 5% OF VOTING SHARES. To the knowledge of the
Company, no person beneficially owned, directly or indirectly, or exercised
control or direction over Shares representing more than 5% of the outstanding
Shares of the Company as of March 12, 1998, unless otherwise noted, except the
following:
NUMBER OF OUTSTANDING
SHARES OWNED OR PERCENTAGE OF
NAME AND ADDRESS CONTROLLED OUTSTANDING SHARES
- --------------------------------------------------- --------------------- ---------------------
The Estate of Edward J. DeBartolo, Sr.............. 1,983,013(1) 11.8%
7620 Market Street
Youngstown, Ohio
Edward J. DeBartolo, Jr............................ 2,533,450(1) 15.1%
7620 Market Street
Youngstown, Ohio
Citicorp and its wholly-owned subsidiaries, 1,069,117(2) 6.4%
Citibank, NA(US);................................
399 Park Avenue
New York, New York
University of Notre Dame........................... 1,000,000 5.9%
Notre Dame, Indiana
Oracle Partners, L.P. and Oracle 866,500 5.1%
International Partners, L.P......................
Larry Feinberg, General Partner
712 Fifth Avenue, 45th Floor
New York, New York
- --------------
(1) Based solely upon information furnished to the Company on Schedule 13D,
dated November 12, 1996, Edward J. DeBartolo, Jr. and Marie Denise DeBartolo
York are co-executors of The Estate of Edward J. DeBartolo, Sr. and as such
disclaim beneficial ownership of these Shares except to the extent of their
presently indeterminate pecuniary interest.
(2) Based solely upon information furnished to the Company on Schedule 13G,
dated February 13, 1998, including data as of December 31, 1997.
CHANGE OF CONTROL
The consummation of the Offer and the Completion of the Acquisition pursuant
to the terms of the Acquisition Agreement mentioned herein would result in a
change of control of the Company.
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BOARD OF DIRECTORS AND THE PURCHASER DESIGNEES
THE PURCHASER DESIGNEES
Pursuant to the terms of the Acquisition Agreement, it is expected that the
Purchaser Designees will take office as directors of the Company upon the
consummation of the Offer.
Parent has advised the Company that the Purchaser Designees are Christopher
Bleck, Thomas D. Brown, Peter J. O'Callaghan, Jeffery L. Smith, Gordon T.
Warriner and Miles D. White. The business address of each Purchaser Designee is
set forth as follows:
PURCHASER DESIGNEE BUSINESS ADDRESS
- ----------------------------------------- -----------------------------------------
Christopher Bleck Abbott Laboratories Limited
8401 Trans Canada Hwy
St. Laurent, Quebec
Canada H4S 1Z1
Thomas D. Brown Abbott Laboratories
100 Abbott Park Road
Abbott Park, Illinois
60064-3500
Peter J. O'Callaghan Blake, Cassels & Graydon
Suite 2600, Three Bentall Centre
595 Burrard Street
P.O. Box 49314
Vancouver, British Columbia
Canada V7X 1L3
Jeffrey L. Smith Abbott Laboratories Limited
7115 Millcreek Drive
Second Floor
Mississauga, Ontario
Canada L5N 3R3
Gordon T. Warriner Abbott Laboratories Limited
8401 Trans Canada Hwy
St. Laurent, Quebec Canada
H4S 1Z1
Miles D. White Abbott Laboratories
100 Abbott Park Road
Abbott Park, Illinois
60064-3500
Set forth below is certain information with respect to the Purchaser
Designees.
Christopher Bleck has been the General Manager and President of Abbott
Laboratories Limited since 1997. He was the Vice President of Business
Development, Abbott International from 1995 to 1997, and the Vice President of
Managed Health Care, Pharmaceutical Products Division of Parent from 1993 to
1995. Mr. Bleck was also the Director of Cardiovascular, Business Unit,
Pharmaceutical Products Division from 1991 to 1993. Mr. Bleck is a U.S. citizen
residing in Canada.
Thomas D. Brown, age 49, was named Senior Vice President, Diagnostic
Operations of Parent in 1998, after having served as Vice President Diagnostic
Commercial Operations over the past five years. In 1993, Mr. Brown has served as
Divisional Vice President, Diagnostic Commercial Operations.
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Peter J. O'Callaghan, age 39, has been a partner at the law firm Blake,
Cassels & Graydon since July 1995. From 1989 to 1995, Mr. O'Callaghan was a
partner at the law firm Bull Housser & Tupper. He is a Canadian citizen and a
British Columbia resident.
Jeffrey L. Smith, age 38, has been the General Manager of the Diagnostics
Division of Abbott Laboratories Limited since September 1977 after having served
as the Director, Ross Products Division from September 1994 to September 1997,
was the Business Unit Manager -- Infant Nutrition from November 1991 to
September 1994 and the National Sales Manager -- Infant Nutrition from July 1990
to November 1991. Mr. Smith is a Canadian citizen.
Gordon T. Warriner, has been the Director of Financial Administration and
the Secretary of Abbott Laboratories Limited since December 1978 and a director
thereof since prior to 1993. He is a Canadian resident and citizen.
Miles D. White, age 43, has occupied a number of high level executive
positions at Parent over the last five years. Mr. White is the Executive Vice
President of Parent after having served as the Senior Vice President, Diagnostic
Operations from 1994 to 1998, from 1993 to 1994, he was Vice President,
Diagnostic Systems and Operations after having served as Divisional Vice
President and General Manager, Diagnostic Systems and Operations in 1993.
During the last five years, none of the above persons, to the best knowledge
of Parent, has been convicted in a criminal proceeding (excluding traffic
violations and similar misdemeanors) or was a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was, or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting activities subject to, federal or
state securities laws or finding any violation of such laws.
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The directors and executive officers of the Company as of March 13, 1998 are
set forth below.
GEORGE BRAZIER, age 57, has been a director since March 1998. For more than
the past five years he has been a partner of the firm of DuMoulin Black,
Vancouver, British Columbia. DuMoulin Black has and is currently providing legal
counsel for the Company in British Columbia. He is a director of United Compass
Resources Ltd.
C. ROBERT CUSICK, age 51, has been a director of the Company since February
3, 1989, he has been President and Chief Executive Officer ("CEO") since
December 1, 1996 and Vice Chairman since November 1993, having previously served
as President and CEO from April 1990 to October 1993 and as Chief Financial
Officer from March 1995 to December 1996. He continues to serve in various
executive positions for a number of the Company's subsidiaries. Mr. Cusick is a
certified public accountant and has served in various executive positions in
manufacturing, banking and real estate prior to joining the Company.
THE HONORABLE J. TREVOR EYTON, O.C., age 63, has been a director of the
Company since January 21, 1997. He has served as a member of the Canadian Senate
since September 1990. In addition, Mr. Eyton serves as the Senior Chairman of
EdperBrascan Corporation. From 1962 to 1979 Mr. Eyton was a partner of the law
firm Tory Tory DesLauriers & Binnington of Toronto, Ontario. Mr. Eyton also
serves as a director of other companies such as General Motors of Canada
Limited, M.A. Hanna Company and Noranda Inc.
DR. THOMAS L. GAVAN, M.D., age 68, has been a director of the Company since
April 17, 1990. He has served as the Chairman of the Division of Laboratory
Medicine of Cleveland Clinic Foundation, a medical clinic in Cleveland, Ohio
from 1985 until his retirement on December 31, 1991. He is a member of the Board
of Governors of the College of American Pathologists. He is also a past
President of the National Committee for Clinical Laboratory Standards.
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DR. NORBERT J. GILMORE, PH.D, M.D., age 55, has been a director of the
Company since April 17, 1990. He has been a Senior Physician of the Royal
Victoria Hospital, Montreal, Quebec since 1987, and a member of its division of
Clinical Immunology since 1974 and has been a member of the Faculty of Medicine
at McGill University in Montreal since 1974, a Professor of Medicine since 1994,
and a Member of the McGill Center for Medicine, Ethics and Law since 1986. He
was Chairman of the National Advisory Committee on AIDS from 1983 to 1989,
co-founder of the Canadian Foundation for AIDS Research ("CanFAR"), its
President from 1988 to 1989, and was Chairman of the Expert Committee on AIDS
and Prisons of the Correctional Service of Canada from 1992 to 1994.
JAY A. LEFTON, age 41, has been a director of the Company since December 9,
1991. He has been partner of the firm of Aird & Berlis, Barristers and
Solicitors, Toronto, Ontario since 1986. He is a member of the Ontario
Biotechnology Advisory Board as well as a member of the Board of Governors, the
Commercial Developments Committee and the Technology Transfer and Industrial
Liaison Committee of Mount Sinai Hospital, Toronto, Ontario. Mr. Lefton sits on
the board of directors of various charitable organizations. He is also a member
of the Board of Directors of Sumtra Diversified Inc. and Harley Street Software,
Ltd. Aird & Berlis has and is currently providing legal counsel for the Company
in Ontario.
HARTLAND M. MACDOUGALL, CVO, O.C., age 67, has been a director of the
Company since January 21, 1997. He recently retired as the Deputy Chairman of
London Life Insurance Company and London Insurance Group Incorporated when it
was sold to the Great West Life Assurance Company. He was the former Chairman of
Royal Trust and related companies from 1984 to 1993 when it was sold to the
Royal Bank of Canada. Prior to that, Mr. MacDougall was a career banker with
Bank of Montreal from 1953, serving as a director from 1974 to 1984 and four
years as Vice Chairman.
DR. STANLEY E. READ, PH.D, M.D., age 57, has been a director of the Company
since April 17, 1990. He has been the director of the HIV/AIDS Comprehensive
Care Program since 1988 and the Head of the Division of Infectious Diseases
since 1992 at The Hospital for Sick Children in Toronto, Ontario. He has been
Professor of Pediatrics and Microbiology at the University of Toronto since 1990
and was an Associate Professor of Pediatrics and Microbiology at the University
of Toronto from 1980 to 1990. He was the Director of the Infectious Disease
Training Program at The Hospital for Sick Children, Toronto, Ontario, between
1986 and 1990. He also has been an Associate in the Department of Medicine at
the Toronto General Hospital since 1983 as well as an Adjunct Professor at
Rockefeller University in New York, New York since 1980. He is on the Board of
Directors of CanFAR and has been the Chairman of its Scientific Advisory
Committee since 1992.
VICTOR A. RICE, age 57, has been a director of the Company since April 15,
1994, and had previously served as a director from April 17, 1990 to November
30, 1992. He has been Chief Executive and a director of LucasVarity plc since
1996, having been Chairman and Chief Executive Officer of Varity Corp. from 1980
to 1996. He serves as a director of American Precision Industries, Inc.
F. MICHAEL P. WARREN, age 62, a founder of the Company, has served as
Chairman of the Board since April 1990. He has also served in various executive
positions for the Company's UK and other subsidiaries since February 1992. Mr.
Warren was a partner of the firm of Owen, Bird, Barristers and Solicitors,
Vancouver, British Columbia, from 1970 through January 1992. Mr. Warren also
serves as a Director of Biotechnical Environmental Technologies Corporation.
STEVEN C. RAMSEY, age 49, has served as Chief Financial Officer of the
Company since December 1996 and as Vice President/Controller since March 1995.
From May 1993 until August 1996, he served as Finance Director of the Company's
UK subsidiaries. Mr. Ramsey joined the Company as Vice President, Finance of
Murex Corporation in February 1992. Prior to joining the Company, Mr. Ramsey
served in various management capacities with Sprint and the Molson Companies
Limited.
GUIDO GUIDETTI, age 47, has served as Vice President since December 1996. He
has also served as a Director and General Manager-Commercial Operations for the
Company's UK subsidiaries since
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joining the Company in November 1993. Mr. Guidetti is responsible for the
continued development and management of the Company's worldwide marketing and
distribution network. Mr. Guidetti has over 18 years' experience in the
diagnostic products industry. Prior to joining the Company, Mr. Guidetti was
Director of Commercial Operations-Europe for Syntex's SYVA Diagnostics. Mr.
Guidetti also served in various management capacities at Abbott Diagnostics for
seven years and at Johnson & Johnson for more than eight years.
R. PETER SILVESTON, age 48, has served as Vice President since December
1996. He has also served as a Director and General Manager of the Company's UK
subsidiaries since 1992. Mr. Silveston is responsible for operations, research
and development, information systems and legal and intellectual property
matters. With over 26 years in the health care industry, Mr. Silveston was a
member of the executive management team of Wellcome Diagnostics at the time of
the acquisition of that business by the Company in February 1992. Prior to
joining Wellcome Diagnostics in 1989, he served in various management positions
in the pharmaceutical business of The Wellcome Foundation Limited.
MEETINGS, COMMITTEES AND OTHER INFORMATION
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company holds regular meetings at a minimum of
one meeting each fiscal quarter. During the year ended December 31, 1997, the
Board of Directors held four meetings. Every director, with the exception of
Victor A. Rice, attended an average of 90% of the meetings of the Board and the
committees on which they serve. On four other occasions, the Board unanimously
consented in writing to various resolutions pertaining to the Company's affairs.
COMMITTEES OF THE BOARD
The Board of Directors has two standing committees to assist in carrying out
its obligations. The principal responsibilities of each committee are described
below.
THE AUDIT COMMITTEE. Comprised of three independent directors, the Audit
Committee is primarily concerned with the effectiveness of the Company's
accounting policies and practices, financial reporting and internal controls.
Specifically, this Committee recommends to the Board of Directors the firm to be
appointed as the Company's independent public accountants, subject to
ratification by the shareholders; reviews and approves the scope of the annual
examination of the books and records of the Company and its subsidiaries and
reviews the audit findings and recommendations of the independent public
accountants; considers the organization, scope and adequacy of the Company's
internal audit staff of the Company; and provides oversight with respect to
accounting principles employed in the Company's financial reporting. This
Committee met six times during 1997.
THE COMPENSATION COMMITTEE. Comprised of four non-employee directors, the
Compensation Committee oversees the Company's compensation and executive benefit
policies and programs, including administration of the Amended and Restated 1993
Employee Equity Incentive Plan and the Qualified Employee Stock Purchase Plan.
It also recommends to the Board of Directors annual salaries, bonuses and stock
option awards for officers and certain other key executives. This Committee met
once during 1997 and unanimously consented in writing on three separate
occasions to various resolutions pertaining to Committee affairs.
DIRECTOR COMPENSATION ARRANGEMENTS
In 1997, independent directors of the Company received an annual retainer of
$5,000 and a $1,500 per meeting fee. All directors are reimbursed for
out-or-pocket expenses related to the Company's business. Non-employee directors
are granted annual options to purchase 10,000 Shares as of the
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annual meeting of shareholders under the Employee Equity Incentive Plan, see
"Employee Benefit Plans--Employee Equity Incentive Plan."
In December 1997, the non-employee members of the Board were awarded a lump
sum bonus of $60,000. Based upon survey information obtained regarding director
compensation for companies that are similar in size to the Company and to
properly address and account for the past five years, it was determined that the
existing compensation package to these Board members was inadequate and had been
for several years. The lump-sum payment was made in order to offset inadequate
director fees for service in past years.
OTHER TRANSACTIONS AND CERTAIN RELATIONSHIPS
FILINGS UNDER SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended ("Section
16(a)") requires directors, executive officers and persons, if any, owning more
than ten percent of a class of the Company's registered equity securities to
file reports of holdings and transactions of their Shares with the Commission
and the Nasdaq National Market System.
Based solely upon a review of the copies of the forms furnished to the
Company or written representations that no other reports were required, the
Company believes that during the preceding year filings applicable to executive
officers and directors were met except for the following late filings on Form 4:
Mr. Cusick's open market purchase of 2,500 shares on March 4, 1997 was filed
August 20, 1997; sales from a previous option exercise by Dr. Gavan of 7,500
shares on March 4, 1997, 2,500 shares on March 7, 1997 and 5,000 shares on March
10, 1997 were filed on August 20, 1997; an option exercise and sale by Ms.
Gilmer of 2,000 shares on June 6, 1997 was filed on August 7, 1997; sales from a
previous option exercise by Dr. Gilmore of 2,500 shares on March 11, 1997 and of
2,500 shares on June 10, 1997 were filed on August 20, 1997 and September 8,
1997, respectively; an open market purchase by Mr. Guidetti of 1,105 shares on
March 31, 1997 was filed on December 1, 1997; sales from a previous option
exercise by Mr. Lefton of 5,000 shares on March 11, 1997, 2,500 shares on March
12, 1997 and 12,500 shares on March 13, 1997 were filed on August 20, 1997; and
an open market purchase by Mr. Silveston of 2,519 shares was reported on
December 1, 1997.
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COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY OF EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid or accrued by the
Company during the Company's three most recent fiscal years to the Company's
Chief Executive Officer and the four most highly compensated executive officers
during the fiscal year ended December 31, 1997.
SUMMARY COMPENSATION TABLE (1)
LONG TERM
COMPENSATION
AWARDS (2)
ANNUAL COMPENSATION OTHER --------------- ALL
------------------------------------------------ ANNUAL SECURITIES OTHER
BONUS COMPEN UNDERLYING COMPEN-
------------------------ -SATION OPTIONS/SARS SATION
EXECUTIVE OFFICER YEAR SALARY($) CASH (3) NON-CASH (4) ($) (5) (#) ($) (6)
- ----------------------------- --------- ----------- --------- ------------- ----------- --------------- -----------
C. Robert Cusick............. 1997 $ 269,439 $ 927,500 $ 363,236 22,700 $ 20,500
President/CEO 1996 230,625 163,407 250,400 17,216
1995 225,000 20,760
F. Michael P. Warren......... 1997 238,236 833,825 363,236 $ 55,750 22,700 $ 102,853
Chairman 1996 230,625 163,407 56,290 250,400 14,922
1995 225,000
Steven C. Ramsey............. 1997 134,365 375,000 85,073 5,300 $ 18,271
CFO & V.P./Controller 1996 126,034 39,315 31,8000 $ 12,078
1995 121,800 12,180
Guido Guidetti............... 1997 213,851 544,017 133,763 8,400 42,770
Vice President 1996 187,747 67,065 35,200 37,549
R. Peter Silveston........... 1997 167,467 344,804 104,750 6,600 33,493
Vice President 1996 144,822 56,866 31,300 28,964
- --------------
(1) Amount paid in currencies other than U.S. dollars have been converted at
applicable rates.
(2) As of December 31, 1997, there were no shares of restricted stock
outstanding. A portion of the options granted in 1997 are not presently
exercisable, see table entitled "Aggregated Option/SAR Exercises in Last
Fiscal Year and Year-End Options SAR Value."
(3) Amount includes cash payout based on criteria set forth in the Senior
Management Incentive Plan.
(4) Represents the value of a stock bonus awarded by the Compensation Committee
in September 1996 to executive officers and other key managers following the
settlement by the Company of its HCV parent litigation against Chiron
Corporation and Johnson & Johnson/Ortho Diagnostic Systems, Inc. and their
respective affiliates. During the four years of this litigation throughout
Europe and Australia, the executive officers and key managers were under
threat of personal litigation and significant liability in regard to the
matters in dispute exposing them to adverse judgments in damages. For
purposes of this table, the Shares were valued at $6 each based on the fair
market value of the Shares on the date of the award. The underlying Shares
were issued during 1997.
(5) Includes the amount of perquisites and other personal benefits paid in
excess of the lesser of $50,000, or 10% of the aggregate salary and bonus.
(6) Amounts paid by the Company to tax-qualified defined contribution retirement
plan or to UK "Money Purchase" pension scheme.
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OPTION GRANTS AND EXERCISES
OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL
REALIZABLE
VALUE AT
ASSUMED
ANNUAL RATES OF
PERCENT OF SHARE PRICE
TOTAL APPRECIATION
NUMBER OF OPTION/SARS FOR
OPTIONS/ GRANTED TO OPTION TERM
SAR EMPLOYEES IN EXERCISE OR EXPIRATION ---------------
NAME GRANTED (#) FISCAL YEAR BASE PRICE DATE 5.00% 10.00%
- --------------------------- ----------- ------------ ----------- ---------- ------ -------
C. Robert Cusick........... 22,700 7.51% $7.125 3/19/2002 $50,117 $105,597
F. Michael P. Warren....... 22,700 7.51% $7.125 3/19/2002 50,117 105,597
Steven C. Ramsey........... 5,300 1.75% $7.125 3/19/2002 11,701 24,655
Guido Guidetti............. 6,600 2.78% $7.125 3/19/2002 18,546 39,076
R. Peter Silveston......... 22,700 2.18% $7.125 3/19/2002 14,572 30,702
The following table shows the value of all options held by the Chief
Executive Officer and other named executive officers as of December 31, 1997. No
options were exercised by the Chief Executive Officer or the other named
executive officers during 1997.
AGGREGATED OPTION/SAR EXERCISES LAST FISCAL YEAR
AND YEAR-END OPTION/SAR VALUES
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS/SAR AT YEAR-END (#) OPTIONS/SAR AT YEAR-END ($)
--------------------------- ---------------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------- ------------ ------------ ---------------- --------------------
C. Robert Cusick........... 225,200 47,900 1,5$62,325 2$41,506
F. Michael P. Warren....... 225,200 47,900 1,562,325 241,506
Steven C. Ramsey........... 25,900 11,200 179,681 56,500
Guido Guidetti............. 27,600 16,000 191,475 77,400
R. Peter Silveston......... 25,650 12,250 177,947 58,584
EMPLOYMENT AGREEMENTS
No management functions of the Company are performed to any substantial
degree by a person other than a director or executive officer of the Company
listed in the "Summary Compensation Table" and no other executive management
contracts exist, other than those described below.
During 1997, the Company amended and restated the employment contracts with
Messrs. Cusick and Warren. The agreements each have similar terms and
conditions. The agreements have initial terms of three years with automatic
renewal thereafter unless notification is provided. The base salary for Mr.
Warren was set at his then current base salary of $238,625 per annum. Mr.
Cusick's base salary was set at $265,000, providing an increase of his base
salary based on his assumption of the duties of Chief Executive Officer. Both
agreements allow for cost of living increases equal to the percentage increase
in the Consumer Price Index beginning January 1, 1998. These agreements
incorporate two-year non-competition and non-solicitation provisions of the
Company's customers and employees. If the Company terminates either of these
executives for other than cause, he will be entitled to receive 24 months of his
base compensation. These agreements also include provisions for deferral of
compensation and for compensation pursuant to a change in control as described
below in "Termination of Employment or Change in Control".
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In July 1995, the Company entered into an employment agreement with Mr.
Ramsey. This agreement has an initial one year term with automatic renewal
thereafter unless notification is provided. Under the terms of the agreement,
his base salary was set at $122,960 and will be adjusted annually by an amount
equal to the Consumer Price Index starting January 1, 1996. This agreement
incorporates one-year non-competition and non-solicitation provisions of the
Company's customers and employees. If the Company terminates Mr. Ramsey for
other than cause, he will be entitled to receive an amount equal to his current
annual base salary. Mr. Ramsey's contract also includes provisions for
compensation pursuant to a change in control as described below in "Termination
of Employment or Change in Control".
Messrs. Guidetti and Silveston do not currently have employment contracts.
However, UK employment policies dictate that they are entitled to 12 months pay
in lieu of notice in the event the Company terminates their employment. In the
event that either resigns his position, each is required to provide the Company
with six months notice.
TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL
In addition to the termination provisions of the employment agreements
described above, the Company adopted change of control provisions (the
"Provisions") for its executive officers and certain other key managers in
September 1995 and subsequently amended certain provisions relating to U.S.
executives in November 1997. The Company believes that these Provisions will
protect and enhance the Company's ability to maintain a sound and vital
management team despite a possible change in control. The Provisions guarantee
salary for 299% of the five year annual average of all compensation for Messrs.
Warren and Cusick and other benefits (medical, vacation, disability, etc.) for a
period of 24 months. For Messrs. Ramsey, Guidetti, Silveston and other key
employees the Provisions guarantee base salary and other benefits for 24 months.
In addition, to the extent that the change of control payment amount to a
recipient who is a U.S. taxpayer would exceed the maximum amount to avoid an
excise tax to the recipient under the Internal Revenue Code of 1986, as amended
(the "Code"), the payment amount would be increased to cover the excise tax
liability. The Provisions also incorporate terms that enable an acquiring
company to retain key managers. All of the Provisions have been incorporated
into existing employment agreements and continue with the term of each
agreement. The total amount payable to all participants is to be set aside in
trust to be paid upon a triggering event pursuant to the terms of the
Provisions.
OTHER COMPENSATION MATTERS
Except to the extent set forth herein, no other compensation was paid by the
Company to its executive officers during the 1997 fiscal year, including
personal benefits and securities or property paid or distributed, which
compensation is not offered on the same terms to all full-time employees other
than those covered by a collective agreement. The value of any such other
compensation, paid under terms available to all full-time employees however,
does not exceed the lesser of 10% of the total compensation or $50,000 for any
executive officer named in the Summary Compensation Table, except as disclosed
therein.
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
In February 1997, Drs. Gavan, Gilmore and Read each borrowed $60,000 from
the Company in order to exercise expiring options. Each borrowing was evidenced
by a promissory note and payment of the principal amount and interest was due in
full on December 15, 1997. Interest accrued on unpaid balances at an annual rate
of 8.89%, the Company's current borrowing rate. No balances remained outstanding
as of December 31, 1997.
In December 1997, Mr. Ramsey borrowed $131,250 from the Company in order to
pay the tax liability associated with a bonus payment made in the form of shares
the Company holds in another
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public company. The borrowing is evidenced by a promissory note and payment of
the principal amount and interest is due in full on December 15, 1998. Interest
accrues on unpaid balance at an annual rate of 8.89%, the Company's current
borrowing rate.
EMPLOYEE BENEFIT PLANS
The Company provides a range of benefit plans to all employees throughout
the world. Following is a brief summary of the plans in which executive officers
may participate.
PROFIT SHARING PLANS
The U.S. 401(k) Plan is a tax-qualified, defined contribution plan
administered by an administration committee appointed by the Board of Directors
of a wholly-owned U.S. subsidiary of the Company. Employees are eligible to make
contributions on a pre-tax basis, receive an allocation or employer matching and
profit sharing contributions at the next scheduled enrollment after being
employed for three months. A participant is always fully vested in his own
contributions and investment earnings on those contributions. A participant will
vest in the profit sharing and matching contributions made on his behalf, and
earnings thereon, at the rate of 20% per year beginning after his first year of
service and become fully vested after five years of service. Generally, a
participant will not receive distributions from the U.S. 401(k) Plan until
termination of employment, disability or death.
The UK "money purchase" pension scheme (the "UK Plan") has been approved by
the Inland Revenue under Chapter 1, Part XIV of the Income and Corporation Taxes
Act of 1988. All permanent employees are eligible to join the UK Plan on the day
they become employed and are between the ages of 18 and 60. Each participant is
required to contribute an amount equal to 2.5% of his base salary. The Company
contributes 7.5% of base salary to each participant's account. Additional
contributions can be made for which the Company matches up to 2.5% of base
salary. The total contribution paid by the participant cannot exceed the lower
of 15% of annual earnings or a figure determined by Inland Revenue annually. A
participant is always fully vested in his own contributions and investment
earnings on those contributions. A participant will vest in the Company's
matching contributions beginning after his second year as a member of the UK
Plan. Generally, a participant will not receive Company distributions from the
UK Plan unless he reaches retirement age or transfers all amounts to another
qualified plan.
EMPLOYEE EQUITY INCENTIVE PLAN
In May 1993, the Company's Board of Directors adopted the International
Murex Technologies Corporation Employee Equity Incentive Plan (the "1993 Plan")
which was approved by shareholders in June 1993 and further amended by
shareholder approval in June 1994. The purpose of the 1993 Plan is to provide
long-term compensation incentives for superior performance in the interest of
shareholders by key employees of the Company, and its subsidiaries, as well as
equity-based compensation for members of the Board of Directors. The 1993 Plan
is intended to strengthen the Company's long-term financial performance and its
ability to attract and retain management employees and directors upon whose
judgment, initiative and efforts the Company's continued success, growth and
development are dependent. The maximum number of Shares of the Company which may
be issued pursuant to awards under the 1993 Plan is no more than 2,000,000
Shares.
The Compensation Committee determines the terms and conditions of the
options granted under the 1993 Plan, including the type of option and the time
and manner in which each option becomes exercisable. Generally, the exercise
period for any option, including any extension which the Committee may from time
to time decide to grant, may not exceed ten years from the date of grant. The
option price per Share will be determined by the Committee at the time any
option is granted and may not be less than the fair market value or, in the case
of an incentive stock option granted to a 10% shareholder, 110% of the fair
market value, on the date the option is granted.
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As amended in June 1994 and beginning with the 1994 annual meeting of the
Company's shareholders, each non-employee member of the Board of Directors of
the Company in office immediately following such meeting will automatically be
granted an option to purchase 10,000 Shares at a price per Share equal to the
closing price of the Company's Shares on the day prior to grant. Each option
granted to a director is immediately exercisable and expires on the tenth
anniversary of the date of grant.
As of December 31, 1997, the 1993 Plan had 1,640,650 options outstanding to
approximately 46 individuals, of which options held by the executive officers
represent 42% of the outstanding options.
1990 STOCK OPTION PLAN
The 1990 Stock Option Plan (the "1990 Plan") provided that directors,
officers and employees of the Company and its majority owned subsidiaries were
eligible to receive options (or rights) to purchase Shares of the Company within
a fixed period of time and at a specified price per Share, subject to any
necessary regulatory approvals. The 1993 Plan replaced the 1990 Plan and no
additional options or rights will be granted under the 1990 Plan.
As of December 31, 1997, the 1990 Plan had no options outstanding.
QUALIFIED EMPLOYEE STOCK PURCHASE PLAN (ESPP)
The Company's ESPP became effective July 1, 1993 upon approval by the
Company's shareholders. It was amended and restated in 1996. The ESPP, which is
intended to qualify under Section 423 of the Code, is designed to encourage all
eligible employees of the Company and its subsidiaries, where permitted by
applicable law, to acquire an equity interest in the Company through the
purchase of Shares at a price equal to 85% of the closing market price the day
prior to the purchase. The Company believes that employees who participate in
the ESPP will have a closer identification with the Company by virtue of their
ability as shareholders to participate in and benefit from its future growth.
Four executive officers purchased a total of 2,561 Shares by participating in
the ESPP during 1997.
Pursuant to the Acquisition Agreement, the Company's Board of Directors will
adopt such resolutions or take such other actions as are required (i) to suspend
the ESPP and employee contributions thereto effective as of March 16, 1998, (ii)
to terminate the ESPP as of the date that Shares are purchased in the Offer and
(iii) to ratify, for purposes of Section 16(b) of the Exchange Act, the
transactions described in this paragraph. If the date of the consummation of the
Offer occurs prior to the next Investment Date (as defined in the ESPP), then
the ESPP will refund the payroll deductions made by the ESPP participants during
the Offering Period (as defined in the ESPP) immediately preceding that
Investment Date to the participants. If the date of the consummation of the
Offer occurs on or after the Investment Date, then the payroll deductions will
be applied to make purchases of Shares as provided in the ESPP.
Prior to the consummation of the Offer, the Company's Board of Directors
will adopt resolutions or take other actions necessary to ensure that, following
the Effective Time, no participant in any stock option, stock appreciation or
other benefit plan of the Company or any of its subsidiaries will have any right
thereunder to acquire any capital stock of Company.
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COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") is responsible for considering
and approving compensation arrangements for senior management of the Company.
The Committee's objectives for establishing these compensation programs are:
- To strengthen the relationship of senior managements' pay and the
shareholders' investment by emphasizing incentive compensation that is
dependent upon the improvement of shareholder value, and
- To enhance the Company's ability to attract, retain, and motivate
executives upon whom, in large part, the successful operation and
management of the Company depends.
The Committee is comprised of four independent, non-employee directors who
have no "interlocking" relationships, as defined by the Commission.
The Committee approves the design of, assesses the effectiveness of, and
administers executive compensation programs. The Committee has available to it
an outside executive compensation consultant, as well as access to independent
compensation data. The Committee approves all salary arrangements and other
remuneration for executives, evaluates executive performance, and considers
related matters.
COMPENSATION PROGRAM OVERVIEW
The Committee believes the overall compensation program plays a key role in
keeping senior management focused on the enhancement of shareholder value. The
primary components of the Company's executive compensation program are:
- Salaries: Pay executives for the base job,
- Annual incentives (bonus): Rewards for favorable annual performance, and
- Stock options: Link executive pay directly to shareholder investment,
The Committee considers all elements of executive compensation when
determining appropriate levels within each pay component. Actual total
compensation levels may be above or below targeted levels based on performance
levels achieved (e.g., performance under the annual incentive plan, share price
appreciation).
Periodically, the Company compares its executive compensation pay practices
to the "market". For this purpose, the market is a cross-section of
similar-sized companies in the drug/medical supply industry. The Committee
believes this criteria provides reasonable pay comparisons, enabling the Company
to assure executives they are being paid fairly, while assuring shareholders
that executive pay levels are reasonable.
The companies used for compensation comparisons are not necessarily the same
companies that comprise the published industry index in the performance graph.
The Committee believes that the most direct competitors for executive talent are
not necessarily the same companies that would be included in a published
industry index for comparing shareholder returns.
SALARIES
Salary levels for the executive officers at the Company are determined
similarly to those of other salaried employees. Guidelines are established
through an external comparison of each position's job content and responsibility
versus similar jobs in the marketplace.
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Initial base salary criteria includes job content and responsibility, prior
experience, job tenure, internal equity issues, and external pay practices.
Subsequent base salary increases, other than those for cost of living
adjustments, are influenced by factors such as:
- Performance against objectives for the year,
- The Company's performance versus financial objectives, and
- The individual's efforts in (a) continuing education and management
training, (b) developing relationships with customers and other employees,
and (c) demonstrating leadership abilities among co-workers.
The Company targets salary levels at the market average (e.g., 50th
percentile). Overall, the Company's executive officer salary levels are at or
near the 50th percentile.
CHIEF EXECUTIVE OFFICER
Mr. Cusick, who assumed the additional positions of President and CEO
effective December 1, 1996, received a salary adjustment in August 1997
retroactively increasing his annual base salary to $265,000. Prior to this
adjustment, Mr. Cusick had received an annual cost of living increase of 2.7% as
set forth in his employment agreement (see "Compensation of Executive
Officers--Employment Agreements").
ANNUAL INCENTIVE OPPORTUNITY
In 1996, the Company adopted the Senior Management Incentive Plan ("SMIP"),
which uses return on capital employed ("ROCE") as the primary measure of
corporate performance. This measure reflects the economic profitability of the
Company, including all charges for the use of capital. The underlying premise is
that if the Company earns more than its total cost of capital, then it has added
to shareholder value. The more capital the Company can employ in this profitable
manner, the more value it will add for shareholders.
The ROCE plan covers all executive officers and certain first line
operational management. It has both short and long-term elements to it. For
example, performance is measured on an annual basis, but payouts are governed by
a "banking concept" that can increase or decrease based on future years'
performance.
CHIEF EXECUTIVE OFFICER
Mr. Cusick earned a cash bonus of $927,500 based on the criteria set forth
in the SMIP.
STOCK OPTIONS
Stock options have been granted to executive officers to help focus efforts
on the creation of shareholder wealth over the long-term. The Company has
encouraged executive officers and other key managers to hold the Shares received
through option exercises to strengthen the tie between their personal pay and
the long-term interests of shareholders.
In 1995, the Compensation Committee developed a method whereby executive
officers and other key managers would be awarded an annual grant of options (the
"Annual Grant Method"). Originally, these grants were awarded based on a formula
using a percentage of the individual's base salary divided by the fair market
value of the Company's Shares at the time of grant.
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CHIEF EXECUTIVE OFFICER.
Mr. Cusick received an option grant of 22,700 Shares on March 19, 1997
having a term of five years and vesting 50% after one year and 50% after two
years.
POLICY WITH RESPECT TO THE $1 MILLION DEDUCTION LIMIT
Section 162(m) of the Code generally limits the corporate deduction for
compensation paid to executive officers named in the proxy to $1 million, unless
certain requirements are met. The Company believes that it is not at risk of
losing deductions and currently is not affected by the limits on deductibility.
CONCLUSION
The Committee will continue to monitor the effectiveness of the Company's
total compensation program to meet strategic business objectives and executive
compensation policies.
THE COMPENSATION COMMITTEE
Victor A. Rice, Chairman
Norbert J. Gilmore, Ph.D., M.D.
Stanley E. Read, Ph.D., M.D.
Hartland M. MacDougall
PERFORMANCE GRAPH
The graph below compares cumulative total return on investment (based on the
change in year-end stock price from the prior year and assuming reinvestment of
all dividends) assuming a $100 investment in the Shares of the Company, the
Russell 2000 Index and a peer group of medical supplies companies for the period
from 1992 to 1997. Total returns exclude trading commissions and taxes.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
INTERNATIONAL MUREX RUSSELL 2000 MEDICAL
TECHNOLOGIES CORPORATION Index Supplies
1992 $ 100.00 $ 100.00 $ 100.00
1993 $ 67.21 $ 118.91 $ 95.11
1994 $ 49.18 $ 116.55 $ 118.27
1995 $ 40.98 $ 149.70 $ 183.49
1996 $ 95.91 $ 174.30 $ 230.72
1997 $ 131.97 $ 213.00 $ 340.96
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