UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/ Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12.
KENDLE INTERNATIONAL INC.
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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(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:.....................................................
[Kendle logo]
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 11, 2006
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TO THE SHAREHOLDERS OF KENDLE INTERNATIONAL INC.:
The Annual Meeting of Shareholders of Kendle International Inc. (the
"Company") will be held Thursday, May 11, 2006, at 9:30 a.m. Eastern Time in
the Green Room at the Aronoff Center for the Arts, 650 Walnut Street,
Cincinnati, Ohio for the following purposes:
1. To elect eight directors to hold office for the ensuing year or until
their respective successors are elected and qualified;
2. To ratify the appointment of Deloitte & Touche LLP as the Company's
registered public accounting firm for 2006; and
3. To consider and act upon any other matters that may properly come
before the meeting or any postponement or adjournment thereof.
The Board of Directors of the Company has designated the close of
business on March 23, 2006, as the record date for the determination of
shareholders entitled to receive notice of, and to vote at, the meeting or
any postponement or adjournment thereof. Only shareholders of record of the
Company's Common Stock at the close of business on that date will be
entitled to vote.
You are cordially invited to attend the Annual Meeting. Whether or not
you plan to be personally present at the meeting, please complete, date and
sign the enclosed proxy card and return it promptly in the enclosed
envelope. If you later desire to revoke your proxy, you may do so at any
time before it is exercised.
By Order of the Board of Directors,
/s/ Karl Brenkert III
Karl Brenkert III
Secretary
DATED: APRIL 3, 2006
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WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE VOTE, SIGN AND
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PROMPTLY RETURN YOUR PROXY CARD IN THE ENCLOSED ENVELOPE. A PROXY MAY BE
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REVOKED BY WRITTEN NOTICE OF REVOCATION, BY SUBMISSION OF A LATER PROXY OR
BY ATTENDING THE MEETING AND VOTING IN PERSON (ALTHOUGH PRESENCE AT THE
ANNUAL MEETING WILL NOT IN AND OF ITSELF CONSTITUTE REVOCATION OF THE
PROXY).
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PAGE>
[Kendle Logo]
1200 CAREW TOWER
441 VINE STREET
CINCINNATI, OHIO 45202
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
INTRODUCTION
Kendle International Inc. (the "Company"), on behalf of its Board of
Directors, is requesting your proxy for use at the Annual Meeting of
Shareholders on May 11, 2006, and at any postponement or adjournment thereof
(the "Annual Meeting"), pursuant to the foregoing Notice. This Proxy Statement
and the accompanying proxy card are being mailed to shareholders with the
Company's 2005 Annual Report to Shareholders on or about April 7, 2006.
VOTING AT THE ANNUAL MEETING
RECORD DATE
As of March 23, 2006, the record date for determining shareholders entitled
to notice of and to vote at the Annual Meeting, the Company had 14,270,698
shares of Common Stock, no par value ("Common Stock"), issued and outstanding.
Only shareholders of record at the close of business on March 23, 2006, will be
entitled to vote at the Annual Meeting.
QUORUM FOR THE MEETING
A quorum is necessary to conduct business at the Annual Meeting. To reach a
quorum at the Annual Meeting, at least a majority of the outstanding shares of
Common Stock eligible to vote must be represented either in person or by proxy.
Abstentions from voting and broker non-votes (described below) will be included
in determining the presence of a quorum, but, as described below, will not count
for voting purposes.
VOTES REQUIRED
Each share is entitled to one vote. Shareholders may vote in person or by
proxy at the Annual Meeting. As a shareholder, you may receive more than one
proxy or voting card depending on how you hold your shares. Shares registered in
your name are covered by one card. If you hold shares through someone else, such
as a broker, you may get material from them asking how you want to vote. With
the exception of the election of directors, for which a plurality is required,
the vote required on all matters to be voted upon is a majority of shares
actually voted. Shareholders are not entitled to cumulate votes. Shares of
Common Stock represented by properly executed proxies received in the
accompanying form will be voted in accordance with the instructions contained in
those proxies. In the absence of contrary instructions, such shares will be
voted: (1) to elect the director nominees named in this Proxy Statement; and (2)
to ratify the appointment of Deloitte & Touche LLP as the Company's registered
public accounting firm. If any other matters properly come before the Annual
Meeting, each proxy will be voted at the discretion of the individuals named as
proxies on the proxy card.
In the event a broker, bank, custodian, nominee or other record holder of
shares indicates on a proxy that it does not have discretionary authority to
vote certain shares on a particular matter(s) (a "broker non-vote"), those
shares will be considered as present for the purposes of determining a quorum
but not entitled to vote with respect to the matter(s).
REVOKING OR CHANGING YOUR VOTE
Proxies given may be revoked at any time prior to the Annual Meeting by
filing with the Company's Secretary, Karl Brenkert III, either a written
revocation or a duly executed proxy card bearing a later date, or by
appearing at the Annual Meeting and voting in person (although presence at
the Annual Meeting will not in and of itself constitute revocation of the
proxy). If your shares are held in the name of a bank, broker or other
holder of record, you must obtain a proxy, executed in your favor, from the
institution that holds your shares to be able to vote at the Annual Meeting.
PRINCIPAL SHAREHOLDERS
The following shareholders are the only persons known by the Company to own
beneficially at least five percent (5%) of its outstanding Common Stock as of
March 3, 2006:
AMOUNT AND NATURE OF
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS(1)
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Common Stock Candace Kendle(2)........................... 1,072,638 7.5%
1200 Carew Tower
441 Vine St.
Cincinnati, OH 45202
Common Stock Christopher C. Bergen(3).................... 987,793 6.9%
1200 Carew Tower
441 Vine St.
Cincinnati, OH 45202
Common Stock Thompson, Siegel & Walmsley, Inc.(4)........ 793,560 5.7%
5000 Monument Avenue
Richmond, VA 23230
Common Stock Nicholas Applegate Capital Management
LLC(5).................................... 721,304 5.1%
600 West Broadway, 29th Floor
San Diego, CA 92101
<FN>
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(1) For each of Dr. Kendle and Mr. Bergen, percentages for each such owner
are based on the following: (i) 14,236,272 shares of Common Stock
issued and outstanding as of March 3, 2006; plus (ii) shares of Common
Stock that such owner has the right to acquire within 60 days of March
3, 2006, pursuant to the exercise of stock options. For the other
beneficial owners listed in the table, the percentages listed reflect
disclosures in the Schedule 13G filed by each respective beneficial
owner.
(2) Dr. Kendle's beneficial ownership includes: (i) 13,870 shares for which
Dr. Kendle holds options exercisable within 60 days of March 3, 2006;
and (ii) restricted stock awards in the amount of 20,000 shares of
Common Stock, 6,666 of which have not vested. This total amount does
not include: (i) 987,793 shares of Common Stock beneficially owned by
Mr. Bergen, Dr. Kendle's husband; (ii) 18,236 shares held directly by
Hazel Kendle, Dr. Kendle's mother; and (iii) 561,250 shares of Common
Stock held in trust by the Kendle Bryan and Mark Brettschneider
Irrevocable Stock Trusts, under which the children of Dr. Kendle are
beneficiaries. Dr. Kendle does not exercise voting or investment
control over either trust.
(3) Mr. Bergen's beneficial ownership includes: (i) 13,620 shares for which
Mr. Bergen holds options exercisable within 60 days of March 3, 2006;
and (ii) restricted stock awards in the amount of 9,500 shares of
Common Stock, 3,332 of which have not vested. This total amount does
not include: (i) 1,072,638 shares of Common Stock beneficially owned by
Dr. Kendle, Mr. Bergen's wife; and (ii) 561,250 shares of Common Stock
held in trust by the Kendle Bryan and Mark Brettschneider Irrevocable
Stock Trusts, under which the children of Dr. Kendle, Mr. Bergen's
wife, are beneficiaries. Mr. Bergen does not exercise voting or
investment control over either trust.
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(4) This information is taken from a Schedule 13G filed by the beneficial
owner(s) with the Securities and Exchange Commission to report Common
Stock ownership as of December 31, 2005. In this Schedule 13G, the
beneficial owner(s) reported having sole voting power with respect to
545,180 shares, sole dispositive power with respect to 793,560 shares
and shared voting power with respect to 248,380 shares.
(5) This information is taken from a Schedule 13G filed by the beneficial
owner(s) with the Securities and Exchange Commission to report Common
Stock ownership as of December 31, 2005. In this Schedule 13G, the
beneficial owner(s) reported having shared voting power with respect to
266,904 shares and sole voting and sole dispositive power with respect
to 454,400 shares.
ELECTION OF DIRECTORS
(ITEM 1 ON THE PROXY CARD)
The Board is nominating for election the following directors: Dr. Candace
Kendle, Mr. Christopher C. Bergen, Mr. Robert R. Buck, Dr. G. Steven Geis, Dr.
Donald C. Harrison, Dr. Timothy E. Johnson, Dr. Frederick A. Russ and Mr. Robert
C. Simpson. Each of these nominees served as a member of the Company's Board of
Directors in 2005. All of the nominees, except Dr. Kendle and Mr. Bergen, are
independent directors as defined by Nasdaq listing standards and in accordance
with the Company's Independence Standards. All directors elected at the Annual
Meeting will be elected to hold office until the next Annual Meeting or until
their successors are elected and qualified.
During 2005, the Board of Directors held five meetings and acted by
unanimous written consent on three occasions. The independent directors are
required to hold at least two executive sessions per year under the Company's
Policy Statement for the Board of Directors (the "Board Policy Statement").
However, the Board's practice has been to hold executive sessions after every
quarterly Board meeting, and the Board did so in 2005. Under the Board Policy
Statement, the Chairman of the Nominating and Corporate Governance Committee
serves as Chairman of these executive sessions. In addition to meetings and
executive sessions, the Board members participate with the Company's executive
officers in a quarterly meeting that precedes each of the Company's quarterly
earnings releases. Directors are expected to attend the Annual Meeting of
Shareholders and all Board of Directors meetings and meetings of committees on
which they serve. During the last fiscal year, each director attended at least
seventy-five percent (75%) of the aggregate of the total number of meetings of
the Board of Directors and all committees on which he or she served. Seven of
the eight current directors and nominees attended the 2005 Annual Meeting of
Shareholders.
Proxies will be voted in favor of election of the nominees named herein
unless authority to vote is withheld. If any of the nominees becomes 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 above and for substitute nominee(s) as the
Board may designate. The proxies will in no event be voted for a greater number
of nominees than eight. The eight nominees receiving the highest number of votes
will be elected.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE
NOMINEES.
INFORMATION ABOUT NOMINEES
CANDACE KENDLE, PHARM.D., 59, co-founded the Company in 1981 and has served
as Chief Executive Officer since its incorporation. Dr. Kendle has been Chairman
of the Board since 1991. From 1979 through 1981, she served as Clinical
Associate Professor of Pediatrics at The University of Pennsylvania School of
Medicine; Clinical Assistant Professor at Philadelphia College of Pharmacy and
Sciences; and Director, Department of Pharmacy, The Children's Hospital of
Philadelphia. She serves as a director of H. J. Heinz Company, a food products
manufacturer. She has published more than 15 scientific articles. She is the
wife of Christopher C. Bergen, President and Chief Operating Officer of the
Company.
3
CHRISTOPHER C. BERGEN, 55, co-founded the Company in 1981 and since its
incorporation has served as a director and its President and Chief Operating
Officer. From 1977 to 1981, Mr. Bergen served in various capacities at The
Children's Hospital of Philadelphia, most recently as Associate Vice
President. He is the husband of Candace Kendle, Chairman and Chief Executive
Officer of the Company.
ROBERT R. BUCK, 58, has served as a director of the Company since June 2003
and formerly served as a director of the Company from 1998 through August 2002.
Mr. Buck currently serves as President and Chief Executive Officer of Beacon
Roofing Supply, Inc. and as a member of its Board of Directors. From 1982
through January 2003, he served in a number of management and senior management
positions with Cintas Corporation, most recently as President of its Uniform
Rental Division. He serves as a director of Multi-Color Corporation, a provider
of decorating solutions and packaging services.
G. STEVEN GEIS, PH.D., M.D., 54, has served as a director of the Company
since November 2002. Now retired, Dr. Geis served in a number of management and
senior management positions with Pharmacia & Upjohn Company from 1985 to July
2002. He most recently served as Group Vice President: Arthritis, Cardiovascular
and Oncology Clinical Development from March 2001 to July 2002 and Vice
President: Arthritis Clinical Development from August 1998 through March 2001.
He has authored or co-authored numerous journal articles covering several
therapeutic areas.
DONALD C. HARRISON, M.D., 72, has served as a director of the Company since
November 2001. Dr. Harrison is Senior Vice President and Provost for Health
Affairs Emeritus at University of Cincinnati. He formerly served as the Senior
Vice President and Provost for Health Affairs at University of Cincinnati from
1986 through 2002 and also served as the Chief Executive Officer of the
University of Cincinnati Medical Center. He serves as a director of AtriCure,
Inc., a medical device company. He also is a practicing cardiologist on a
part-time basis and since 2004 has been a general partner in Charter Life
Sciences, a California-based venture capital firm for which he manages the
Cincinnati office. His professional experience includes 26 years at Stanford
University School of Medicine and Stanford University Hospital, where he was
Chief of Cardiology from 1967 to 1968. He is past national President of the
American Heart Association and has served as a director for several
not-for-profit organizations. He also serves as a director for start-up,
privately owned medical device and biotechnology companies, including UMD, Inc.,
Medical Education and Consultation Inc. and EnteroMedics, Inc.
TIMOTHY E. JOHNSON, PH.D., 63, has served as a director of the Company since
November 2002. Dr. Johnson is a financial and investment consultant and has
served as President of Johnson Investment Counsel, Inc. since 1965. Johnson
Investment Counsel, Inc. is a registered investment adviser and manages
portfolio assets for endowments, foundations, corporations, individuals and
pension and profit sharing plans. He also serves as a Professor of Finance at
University of Cincinnati where he has taught since 1970. He serves as a director
or trustee for several civic and nonprofit organizations. He has written several
articles on investment and financial management.
FREDERICK A. RUSS, PH.D., 61, has served as a director of the Company since
November 2002. Dr. Russ has served as the Senior Vice Provost for University of
Cincinnati since October 1, 2004. From 1994 through September 2004, he served as
the Dean of the College of Business Administration at University of Cincinnati.
He serves on the Board of Directors of Charles & Colvard, Ltd., a manufacturer
and supplier of specialty jewelry, and formerly served as its non-executive
Chairman of the Board. He also serves as a director for the Economics Center for
Education & Research. He has co-authored three textbooks and has written
numerous articles on marketing strategy and the behavior of consumers and sales
personnel.
ROBERT C. SIMPSON, 74, has served as a director of the Company since July
2001. Now retired, Mr. Simpson has more than 40 years of global drug development
experience. Most recently, he was Group President and Director of West
Pharmaceutical Services, Inc., a manufacturer of specialty packaging products
for the healthcare industry. He worked for West Pharmaceutical from 1978 to
1991. Prior to 1978, he spent 20 years with Pfizer Inc., serving in a number of
senior management positions, including Executive Vice President of European
Operations.
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COMPENSATION OF DIRECTORS
Directors who are employees of the Company are not separately compensated
for serving as directors. Directors who are not employees of the Company receive
compensation in the form of cash retainers, shares of Common Stock and options
to purchase shares of Common Stock, all of which are described in more detail
below.
Non-employee directors are paid retainers of $3,000 for each Board meeting
attended and $1,500 for each committee meeting attended. Their compensation is
paid quarterly, in arrears, in the form of cash and shares of Common Stock in
lieu of cash under the 2003 Directors' Compensation Plan. This plan specifies
that non-employee directors will receive cash for fifty percent (50%) of the
total retainer owed and shares of Common Stock in lieu of cash for the balance
of the retainer owed.
In addition to compensation under the 2003 Directors' Compensation Plan,
directors are eligible to receive non-qualified, immediately exercisable options
to purchase shares of Common Stock under the Company's 1997 Stock Option and
Stock Incentive Plan. Under this plan, each non-employee director is granted an
option to purchase 5,000 shares of Common Stock on the date of the director's
first election or appointment to serve on the Board. Upon each annual election
to the Board thereafter, a director will receive an option to purchase such
number of shares of Common Stock, if any, as determined by the Board. In 2005,
the Board approved a grant of options to purchase 5,000 shares of Common Stock
to each non-employee director who was elected to the Board at the 2005 Annual
Meeting of Shareholders. The exercise price for these options is the fair market
value of Common Stock on the grant date.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has established three committees that assist the
Board in discharging its responsibilities. These committees, their members and
functions are discussed below. The Board of Directors does not have an executive
committee.
MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
The Management Development and Compensation Committee (the "Compensation
Committee") is responsible for monitoring the performance of executive officers,
reviewing the Company's compensation plans and policies, and administering the
Company's stock-related benefit plans and succession plans for senior
management. The Compensation Committee's specific responsibilities and duties
are set forth in its Charter, which is available on the Company's Web site at
www.kendle.com. During 2005, the Compensation Committee met one time and took
action by unanimous written consent six times. Frederick A. Russ and Robert C.
Simpson served on the Compensation Committee during all of 2005, and G. Steven
Geis has served as Chairman of the Compensation Committee since February 2005.
Each of the Compensation Committee's members is an independent director as
defined by the Nasdaq listing standards and in accordance with the Company's
Independence Standards. The Compensation Committee's report is set forth below.
MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
-------------------------------------------------
REPORT ON EXECUTIVE COMPENSATION
--------------------------------
The Company's executive compensation program is designed to align executive
compensation with the achievement of strategic business goals that promote the
long-term financial growth of the Company. This program is designed to attract
and retain the highest caliber executive officers, to maximize shareholder value
and to provide a compensation package that recognizes individual contributions
as well as overall Company performance. The Management Development and
Compensation Committee (throughout this report, the "Committee") reviews the
executive compensation program annually in relation to the Company's annual
financial goals and performance.
5
Performance Tracking
Under the direction of the Company's Chief Executive Officer, the Company
implemented a performance tracking system to track the Company's performance
against corporate imperatives in four areas - finance, sales and marketing,
operations and personnel - and several indicator metrics within each of these
imperatives. Under the tracking system, each of the Company's operating and
primary support units, as well as the Chairman and CEO, maintains a scorecard to
monitor the Company's performance for which the appropriate officer is
accountable. The Board, as well as the Committee, regularly reviews these
scorecards to determine performance of the officers against the Company's
imperatives. In 2006, the Company expects to implement performance scorecards
for employees throughout the organization as part of a Kendle Performance System
that updates the current employee evaluation system. The Kendle Performance
System will assess individual employee performance and make bonuses available to
employees subject to both individual and Company performance.
Components of 2005 Executive Officer Compensation
The key elements of the Company's 2005 executive compensation program
consisted of base salary and bonus. Executive officers also are eligible for
awards under the 1997 Stock Option and Stock Incentive Plan although no such
awards were granted to executive officers in 2005. The compensation of Dr.
Candace Kendle, Chief Executive Officer, consists of these same elements.
o Base Salary
At a meeting held February 17, 2005, the Committee set salaries, effective
March 28, 2005, for certain officers, including the Company's executive officers
who are the Named Executives set forth in the Summary Compensation Table in this
Proxy Statement. In establishing these salaries at the February 2005 meeting,
the Committee reviewed management's recommendations against the pay practices
for executive officers of comparable companies. The Committee's review of
comparable companies included available data from the Company's competitors. In
considering pay practices of comparable companies, the Committee reviewed all
components of compensation, including base pay and total compensation packages,
including cash bonus and other incentives in the form of stock options,
restricted stock and otherwise. After reviewing marketplace data for comparable
companies, the Committee considered corporate profitability, position
responsibility levels and individual qualifications and performance, including a
review of information available from the performance scorecards.
o Bonus
For 2005 performance, the Named Executives received a mid-year bonus and a
year-end bonus. In August 2005 and February 2006, the Board approved payment of
a mid-year and year-end bonus, respectively, that was generally available to all
of the Company's employees for performance during the 2005 fiscal year. The
Board approved these bonuses upon management's recommendation to reward
employees for the Company's performance, which followed the completion of a
corporate restructuring. In connection with the Board-approved bonuses, the
Committee considered, reviewed and approved a mid-year bonus and a year-end
bonus for the Named Executives. The total bonus payments to each of the Named
Executives are set forth in the Summary Compensation Table in the Executive
Compensation section of this Proxy Statement.
In determining bonuses for the Named Executives, including the Chief
Executive Officer, the Committee considered the Company's performance under the
four corporate imperatives and metrics under each of these imperatives. The
Committee also used the Company's 2002 Profit Share Plan for guidance although
the terms of this Plan were not specifically applicable to the Named Executives
in 2005. This plan was approved by the Board for use in 2002 and subsequently
adopted, ratified and approved for use in later years in connection with
Board-approved bonuses. Under the 2002 Profit Share Plan, incentive awards may
be paid to eligible employees of the Company on the basis of achievement of
specified Company financial results, such as revenue and earnings per share
thresholds and targets, or other
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discretionary factors, including a general assessment of an employee's
performance. Under this plan, the Company's employees are assigned target
awards, expressed as a percentage of base salary, that are payable at the
discretion of the Company's management or upon achievement of applicable
performance criteria. The Committee expects increasingly to use the Kendle
Performance System, including individual performance scorecards, as a tool in
considering and structuring bonus awards available to the Named Executives.
o Stock Options, Restricted Stock Awards and Other Performance Awards
Under the Company's 1997 Stock Option and Stock Incentive Plan, the
Committee may grant stock options, restricted and unrestricted stock awards and
other performance awards to the Company's employees, including the Named
Executives. The Committee has granted stock options and restricted stock to
Named Executives in prior years but granted no such awards to the Named
Executives in 2005.
Compensation of the Chief Executive Officer
As Chairman and Chief Executive Officer, Dr. Kendle receives compensation
consisting of the three basic components - salary, bonus and equity compensation
- - discussed above. Effective March 2005, the Committee adjusted Dr. Kendle's
base salary to $344,578. For 2005 performance, Dr. Kendle received a
mid-year bonus of $17,619 and a year-end bonus of $32,551 for a total 2005
bonus of $50,170. The Committee determined this 2005 compensation package on
substantially the same criteria that were used for the other Named
Executives. The Committee reviewed and considered compensation practices of
chief executive officers of comparable companies, including the Company's
competitors. The Committee also reviewed and considered Dr. Kendle's
individual qualifications and performance and the Company's performance
against the four corporate imperatives that are measured by the performance
tracking system.
Policy on Section 162(m)
Under Section 162(m) of the Internal Revenue Code of 1986, as amended, a
public company may not deduct compensation in excess of $1 million paid to any
of its Named Executives, unless such excess amount is performance-based
compensation satisfying certain rules. The Company's 1997 Stock Option and Stock
Incentive Plan is designed to qualify under the compensation requirements of
this provision. However, no assurances can be made in this regard. Due to
current salary levels and anticipated bonus targets, the Committee believes that
it is unlikely that application of Section 162(m) will prevent the Company from
claiming a deduction for the amount of compensation paid to its Named
Executives.
Submitted by the Management Development and
Compensation Committee of the Board of
Directors
G. Steven Geis
Frederick A. Russ
Robert C. Simpson
AUDIT COMMITTEE
The Audit Committee is comprised of Robert R. Buck (Chairman), Timothy E.
Johnson and Robert C. Simpson. During 2005, the Audit Committee met for seven
regularly scheduled meetings and on four other occasions during which the Audit
Committee members met with the registered public accounting firm to discuss
financial statements related to the Company's quarterly and annual reporting.
The Audit Committee also acted by written consent on one occasion. The Audit
Committee is responsible for engagement and oversight of the registered public
accounting firm, supervision of matters related to audit functions and review of
internal policies and procedures regarding audit, accounting and other financial
7
controls. The Audit Committee's specific responsibilities and duties are set
forth in its Charter, which is available on the Company's Web site at
www.kendle.com. The Audit Committee reviews and reassesses the adequacy of the
Charter on an annual basis. Each of the members of the Audit Committee is an
independent director as defined by the Nasdaq listing standards and in
accordance with the Company's Independence Standards. Each Audit Committee
member is able to read and understand fundamental financial statements as
required by Nasdaq listing standards. Mr. Buck has been designated by the Board
as the "Audit Committee financial expert" as defined by SEC rules. The Audit
Committee's report is set forth below.
REPORT OF THE AUDIT COMMITTEE
-----------------------------
The Audit Committee, in accordance with its written charter adopted by the
Company's Board of Directors, assists the Board in fulfilling its responsibility
for oversight of the quality and integrity of the accounting, auditing and
financial reporting practices of the Company. During 2005, the Audit Committee
discussed the interim unaudited consolidated financial information contained in
each Quarterly Report on Form 10-Q with the Chief Financial Officer, Controller
and registered public accounting firm prior to the Company's filing of each such
Quarterly Report on Form 10-Q. The Audit Committee also discussed the audited
consolidated financial statements with management.
In discharging its oversight responsibility as to the audit process, the
Audit Committee obtained from the registered public accounting firm a formal
written statement describing all relationships between the firm and the Company
that might bear on the firm's independence consistent with Independence
Standards Board Standard No. 1, "Independence Discussions with Audit
Committees," and discussed with the firm any relationships that may impact its
objectivity and independence and satisfied itself as to the firm's independence.
The Audit Committee has concluded that Deloitte & Touche LLP's provision of
non-audit services was compatible with maintaining independence.
The Audit Committee also discussed with management and the registered public
accounting firm the quality and adequacy of the Company's internal controls. In
a meeting with the registered public accounting firm, the Audit Committee
reviewed the audit plans and audit scope and identified audit risks.
The Audit Committee discussed and reviewed with the registered public
accounting firm all communications required by generally accepted auditing
standards, including those described in Statement on Auditing Standards No. 61,
as amended, "Communication with Audit Committees," and, with and without
management present, discussed and reviewed the results of the registered public
accounting firm's examination of the consolidated financial statements.
The Audit Committee reviewed the audited consolidated financial statements
of the Company as of and for the fiscal year ended December 31, 2005, with
management and the registered public accounting firm. Management has
responsibility for the preparation of the Company's consolidated financial
statements and the registered public accounting firm has responsibility for the
examination of those statements.
Based on the above-mentioned review and discussions with management and the
registered public accounting firm, the Audit Committee recommended to the Board
that the Company's audited consolidated financial statements be included in its
Annual Report on Form 10-K for the fiscal year ended December 31, 2005, for
filing with the Securities and Exchange Commission. The Audit Committee also
reappointed Deloitte & Touche LLP as the Company's registered public accounting
firm for 2006. The Board concurred with both of these recommendations.
Submitted by the Audit Committee of the Board of Directors
Robert R. Buck
Timothy E. Johnson
Robert C. Simpson
8
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
The Nominating and Corporate Governance Committee (the "Nominating
Committee") is comprised of Frederick A. Russ (Chairman), G. Steven Geis and
Donald C. Harrison. Each of the members of the Nominating Committee is an
independent director as defined by the Nasdaq listing standards and in
accordance with the Company's Independence Standards. During 2005, the
Nominating Committee met two times and acted by unanimous written consent on one
occasion.
The Nominating Committee advises and makes recommendations to the Board of
Directors with respect to: (i) director candidates for election by shareholders;
(ii) candidates to fill vacancies on the Board of Directors; (iii) committee
assignments on the Board of Directors; (iv) Board compensation issues; and (v)
other matters related to corporate governance. The Nominating Committee also
oversees the Board's director education policy. The Nominating Committee, in
fulfilling its duties, conducts annual evaluations to assess the effectiveness
of the Board and each of its committees. The Nominating Committee's duties are
described in more detail in its Charter, which is available on the Company's Web
site at www.kendle.com.
The Nominating Committee considers all potential candidates to serve on the
Board, including those potential candidates recommended for nomination by
shareholders. The Nominating Committee identifies candidates through a variety
of sources but generally does not engage third parties to identify and evaluate
candidates. However, the Committee, with Board approval, could engage a third
party to identify and evaluate candidates. Shareholders desiring to submit
recommendations for nominations by the Committee should direct them to the
Chairman of the Nominating Committee in care of the Company at its address shown
on the cover page of this Proxy Statement. Each shareholder may nominate one
candidate for election as a director at next year's Annual Meeting of
Shareholders provided the shareholder (i) is a shareholder of the Company of
record at the time of the giving of notice for the meeting, (ii) is entitled to
vote at the meeting in the election of directors, and (iii) has given timely
written notice of the nomination to the Company's Secretary.
The Nominating Committee will assess the qualifications of all candidates
for the Board on an equal basis. In identifying and considering candidates for
nomination to the Board of Directors, the Nominating Committee considers, among
other factors, quality of experience, the needs of the Company and the range of
talent and experience currently represented on the Board.
9
SECURITIES OWNERSHIP OF MANAGEMENT
The following table sets forth certain information known to the Company with
respect to beneficial ownership of Common Stock as of March 3, 2006, by each
director and Named Executive (defined in the "Executive Compensation" section
below) and by all directors and Named Executives as a group.
NUMBER OF
COMMON OPTIONS
SHARES EXERCISABLE
BENEFICIALLY WITHIN 60 PERCENT OF
TITLE OF CLASS NAME OF BENEFICIAL OWNER OWNED(1) DAYS TOTAL CLASS(2)
- -------------- ------------------------ ------------ ----------- --------- ----------
Common Stock Christopher C. Bergen(3)...... 974,173 13,620 987,793 6.9%
Common Stock Karl Brenkert III(4).......... 4,000 9,000 13,000 *
Common Stock Robert R. Buck................ 8,199 15,000 23,199 *
Common Stock G. Steven Geis................ 11,475 15,000 26,475 *
Common Stock Donald C. Harrison............ 4,032 25,000 29,032 *
Common Stock Simon S. Higginbotham(5)...... 0 0 0 *
Common Stock Timothy E. Johnson............ 33,878 20,000 53,878 *
Common Stock Candace Kendle(3)............. 1,058,768 13,870 1,072,638 7.5%
Common Stock Frederick A. Russ............. 8,357 15,000 23,357 *
Common Stock Robert C. Simpson(6).......... 5,775 25,000 30,775 *
Common Stock All Directors and Named
Executives as a group
(10 persons)................ 2,260,147 15.7%
<FN>
- -------------------
* Less than 1%
(1) The number of shares beneficially owned includes all vested and
unvested restricted shares. The following unvested portions of
restricted stock awards are included in the totals: 3,332 shares of
Common Stock for Mr. Bergen; 2,000 shares of Common Stock for Mr.
Brenkert; and 6,666 shares of Common Stock for Dr. Kendle.
(2) Percentage of beneficial ownership is based on 14,236,272 shares of
Common Stock outstanding as of March 3, 2006.
(3) Shares of Common Stock beneficially owned does not include the
following: (i) 561,250 shares of the Company's Common Stock held by the
Kendle Bryan and Mark Brettschneider Irrevocable Stock Trusts, and (ii)
18,236 shares of Common Stock held directly by Hazel Kendle, Dr.
Kendle's mother. The children of Dr. Kendle are the trusts'
beneficiaries, and neither Dr. Kendle nor Mr. Bergen exercise voting or
investment control over either trust.
(4) Mr. Brenkert, 58, joined the Company in October 2002 and, upon Timothy
M. Mooney's retirement effective December 31, 2002, was appointed
Senior Vice President, Chief Financial Officer and Treasurer. Mr.
Brenkert was appointed as the Company's Secretary upon Mr. Campbell's
departure in June 2005 and formerly served as the Company's Secretary
from November 2003 until May 2004. Mr. Brenkert served as Treasurer
through September 2005. Prior to Mr. Brenkert's employment with the
Company, he served as Vice President, Finance at Ryobi Technologies,
Inc. in 2001. From 1995 through 2000, Mr. Brenkert served as the Chief
Financial Officer-Public Transportation Services Division at Ryder
Systems, Inc.
(5) Mr. Higginbotham, 45, joined the Company in January 2004 as Vice
President and Chief Marketing Officer. Prior to joining the Company,
Mr. Higginbotham was employed by Quintiles Transnational Corp. from
1998 through 2003 in director-level roles in marketing and new business
development. Prior to joining Quintiles Transnational Corp., Mr.
Higginbotham held senior-level marketing and product management
positions with Proctor & Gamble Pharmaceuticals and Schering
Healthcare, Ltd.
(6) Includes 400 shares of Common Stock held by Mr. Simpson's spouse.
10
EXECUTIVE COMPENSATION
The following table sets forth information regarding compensation paid for
the last three fiscal years to individuals who served as executive officers of
the Company in 2005 (the "Named Executives").
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------ -------------------------
AWARDS
OTHER -------------------------
ANNUAL RESTRICTED SECURITIES ALL OTHER
COMPEN- STOCK UNDERLYING COMPEN-
SALARY BONUS SATION(2) AWARD(S)(3) OPTIONS SATION(4)
NAME AND PRINCIPAL POSITION YEAR ($) (1)($) ($) ($) (#) ($)
- --------------------------- ---- ------- ------ --------- ----------- ---------- ---------
Dr. Candace Kendle................ 2005 344,578 50,170 - - - -
Chairman of the Board and 2004 331,134 - - 83,000 - -
Chief Executive Officer 2003 310,125 43,000 - - 7,500 -
Christopher C. Bergen............. 2005 298,619 38,647 - - - 16,978
President and Chief 2004 286,983 - - 41,500 - 12,934
Operating Officer 2003 268,775 33,000 - - 7,500 16,978
Simon S. Higginbotham(5).......... 2005 219,875 21,344 - - - -
Vice President and Chief 2004 210,777 7,320 37,715 - 15,000 -
Marketing Officer
Karl Brenkert III................. 2005 208,079 20,197 - - - 6,242
Senior Vice President, Chief 2004 198,892 - - 24,900 - 5,967
Financial Officer and 2003 185,016 17,000 - - 15,000 5,304
Secretary
Douglas W. Campbell(6)............ 2005 87,651 - - - - -
Vice President, Secretary and 2004 120,692 8,000 - - 15,000 3,600
Chief Legal Counsel
<FN>
- -------------------
(1) The bonuses paid to Mr. Higginbotham and Mr. Campbell in 2004 reflect
hiring bonuses.
(2) Perquisites or other personal benefits, if any, received from the
Company by any of the Named Executives were substantially less than the
reporting thresholds established by the Securities and Exchange
Commission (the lesser of $50,000 or 10% of the individual's cash
compensation), except for Mr. Higginbotham who in 2004 received
reimbursements for relocation costs in the amount of $26,289 and a car
allowance of $11,426.
(3) Restricted stock awards were granted in October 2002 and May 2004 as
described in the table below. These awards vest over three years with
one-third of the award vesting per year; however, as required by rules
and regulations of the Securities and Exchange Commission, the
compensation reported in the Summary Compensation Table above reflects
compensation from the entire award in the year that it was awarded.
-----------------------------------------------------------------------------------------------------------------
2005
COMPENSATION UNVESTED VALUE OF
OCTOBER 2002 MAY 2004 ATTRIBUTABLE AWARDS AT UNVESTED AWARDS
AWARDS AWARDS TO VESTING 12/31/2005 AT 12/31/2005
-----------------------------------------------------------------------------------------------------------------
Bergen 4,500 5,000 $ 61,351 3,332 $ 85,766
-----------------------------------------------------------------------------------------------------------------
Brenkert 0 3,000 $ 11,820 2,000 $ 51,480
-----------------------------------------------------------------------------------------------------------------
Kendle 10,000 10,000 $131,949 6,666 $171,583
-----------------------------------------------------------------------------------------------------------------
<FN>
Holders of restricted shares are entitled to receive dividends, but the
Company has not paid dividends to date. The value of unvested awards at
December 31, 2005, is based on the closing price of the Company's
shares of Common Stock on December 30, 2005.
11
(4) Compensation paid to Mr. Bergen represents insurance premium payments.
Compensation paid to Mr. Brenkert and Mr. Campbell represents the
Company's contributions to the 401(k) plan in which all Company
employees generally are eligible to participate.
(5) A portion of Mr. Higginbotham's 2004 compensation was paid by a
non-U.S. subsidiary of the Company before he relocated to the United
States and was converted to U.S. dollars for reporting purposes.
(6) The compensation reported in the compensation table for 2004 and 2005
reflects actual compensation paid to Mr. Campbell during the portion of
the respective years in which he was employed by the Company. Mr.
Campbell's employment with the Company began April 26, 2004, and ended
June 17, 2005.
STOCK OPTIONS
There were no grants of stock options to, or exercises of stock options by,
the Named Executives during the year ended December 31, 2005. The table below
provides fiscal year-end option values for stock options held by the Named
Executives under the Company's stock option plans.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT AT DECEMBER 31,
ACQUIRED ON VALUE DECEMBER 31, 2005(#) 2005($)(1)
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ----------- ----------- ------------------------- -------------------------
Dr. Candace Kendle........... - - 12,370 8,680 201,124 164,689
Christopher C. Bergen........ - - 12,120 8,680 198,196 164,689
Karl Brenkert III............ - - 6,000 9,000 115,470 173,205
Simon S. Higginbotham........ - - 3,000 12,000 54,120 216,480
<FN>
- -------------------
(1) Value is calculated by using the difference between $25.71, the average
of the high and low share price of Common Stock on December 30, 2005,
and the exercise price for the option.
12
PERFORMANCE GRAPH
The following graph compares the five-year cumulative total shareholder
returns of the Company's Common Stock with the Nasdaq Stock Market (U.S.) Index
and the Nasdaq Health Services Index.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
AMONG KENDLE INTERNATIONAL INC., THE NASDAQ STOCK MARKET (U.S.) INDEX,
AND THE NASDAQ HEALTH SERVICES INDEX
[Performance Graph]
The graph assumes that a $100 investment was made on December 31, 2000, and
the reinvestment of all dividends.
DOLLAR VALUE OF $100 INVESTMENT AT DECEMBER 31
---------------------------------------------------------------------
12/00 12/01 12/02 12/03 12/04 12/05
----- ----- ----- ----- ----- -----
Kendle International Inc. ......... 100.00 202.87 88.56 63.80 88.55 259.02
NASDAQ Stock Market (U.S.)......... 100.00 79.08 55.95 83.35 90.64 92.73
NASDAQ Health Services............. 100.00 108.29 92.53 128.80 159.27 172.19
PROTECTIVE COMPENSATION AND BENEFIT AGREEMENTS
The Company has entered into Protective Compensation and Benefit
Agreements with certain employees, including each of the Named Executives of
the Company. These agreements are subject to annual review by the Company's
Board of Directors and, upon their respective termination dates,
automatically will be extended in one-year increments unless cancelled by
the Company. The agreements provide for specified benefits, including two
years' compensation, upon the occurrence of certain events following a
change in control as that term is defined in the agreements.
13
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Management Development and Compensation Committee at
the end of 2005 were G. Steven Geis, Frederick A. Russ and Robert C.
Simpson. None of these members is or was a current or former officer or
employee of the Company or any of its subsidiaries. No Named Executive of
the Company serves as a director or as a member of a committee of any
company of which any of the Company's non-employee directors are executive
officers.
RATIFICATION OF APPOINTMENT OF REGISTERED PUBLIC ACCOUNTING FIRM
(ITEM 2 ON THE PROXY CARD)
The Audit Committee of the Company's Board of Directors reappointed
Deloitte & Touche LLP as the Company's registered public accounting firm for
2006. Although not required by law, the Board of Directors is seeking
shareholder ratification of this appointment. If ratification is not
obtained, the Board of Directors intends to continue the engagement of
Deloitte & Touche LLP at least through 2006. However, the Audit Committee,
in its discretion, may engage a different registered public accounting firm
at any time during the year if the Audit Committee determines that a change
would be in the best interests of the Company. The affirmative vote of a
majority of shares voting at the Annual Meeting is required for
ratification.
Representatives of Deloitte & Touche LLP are expected to be present at
the Annual Meeting and will be given an opportunity to comment, if they so
desire, and to respond to appropriate questions that may be asked by
shareholders.
FEES PAID TO REGISTERED PUBLIC ACCOUNTING FIRM
The Company incurs costs for professional services rendered by its
registered public accounting firm as follows:
o AUDIT FEES - These are fees for professional services rendered by
the Company's registered public accounting firm for its audit of the
Company's consolidated annual financial statements; statutory audits
of the Company's foreign operations; and reviews of the unaudited
quarterly consolidated financial statements contained in the
Quarterly Reports on Form 10-Q filed by the Company during those
years.
o AUDIT-RELATED FEES - These are fees for assurance and related
services that are reasonably related to the performance of the audit
or review of the Company's financial statements. Audit-related
services primarily include audits of the Company's employee benefit
plans.
o TAX FEES - These are fees for services related to tax compliance,
tax advice and tax planning, including compliance, planning and
advice with respect to both domestic and foreign subsidiaries of the
Company.
o ALL OTHER FEES - These are fees for permissible services other than
those in the three categories previously described.
The table below sets forth fees paid by the Company for professional
services billed by the registered public accounting firm for each of the
last two fiscal years. These fees are described in more detail following the
table.
14
2005 2004
---- ----
Audit Fees $783,698 $754,138
Audit-Related Fees $ 12,000 $ 52,900
Tax Fees(1) $ 61,412 $ 64,812
All Other Fees(2) $ 17,250 $ 8,272
-------- --------
Total $874,360 $880,122
======== ========
<FN>
Notes:
- --------------
(1) In 2004 and 2005, tax compliance services comprised $46,517 and $56,126,
respectively, of the tax fees billed.
(2) In 2004, these fees primarily related to services in connection with the
Company's analysis of business expansion into new markets. In 2005,
these fees primarily related to compliance with local requirements for
the Company's non-U.S. subsidiaries.
AUDIT COMMITTEE'S PRE-APPROVAL POLICIES AND PROCEDURES
The Audit Committee pre-approves all audit, audit-related, tax and other
permissible services that will be provided by the registered public
accounting firm. To manage the pre-approval process, the Audit Committee in
2004 adopted a Policy on Approval of Audit and Non-Audit Services Provided
by Outside Auditors (the "Pre-Approval Policy"). One hundred percent
(100%) of services rendered by the registered public accounting firm in 2005
were pre-approved by the Audit Committee.
Under the Pre-Approval Policy, the registered public accounting firm is
required to provide the Audit Committee with detailed documentation about
the specific services that will be provided. In reviewing the request for
pre-approval, the Audit Committee will consider, among other things, whether
the proposed services are consistent with the rules on auditor independence.
A service pre-approved by the Audit Committee is valid for a term of 12
months unless the Committee considers a different approval term and approves
otherwise. Any services exceeding pre-approved cost levels or budgeted
amounts will require separate pre-approval by the Audit Committee. The
Pre-Approval Policy prohibits the Audit Committee from engaging the
registered public accounting firm to render services that are prohibited by
the Public Companies Accounting Oversight Board or the applicable rules and
regulations promulgated by the Securities and Exchange Commission.
The Pre-Approval Policy permits the Audit Committee to appoint a
designated committee member to approve certain services. A designated
member's pre-approval of services is required to be reported to the Audit
Committee at the ensuing Audit Committee meeting. The Pre-Approval Policy
prohibits the Audit Committee from delegating its pre-approval
responsibilities to the Company's management.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSAL:
RESOLVED, that the Audit Committee's appointment of Deloitte &
Touche LLP as the Company's registered public accounting firm
to conduct the annual audit of the Company's financial statements
for the fiscal year ending December 31, 2006, hereby is ratified
and approved.
OTHER MATTERS
The Board knows of no other matters which will be presented at the
Annual Meeting. If, however, any other matter is properly presented at the
Annual Meeting, it will require the affirmative vote of a majority of shares
voting for approval.
15
OTHER INFORMATION
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers, directors and persons who beneficially own more than ten
percent (10%) of the Company's Common Stock to file reports of ownership
with the Securities and Exchange Commission (the "Commission") and to
furnish the Company with copies of these reports. Based solely upon its
review of reports received, or upon written representation from certain
reporting persons that no reports were required, the Company believes that
during 2005 all filing requirements were met.
SOLICITATION OF PROXIES
The costs of soliciting proxies will be borne by the Company. In
addition to this solicitation by mail, directors, officers and other
employees of the Company may solicit proxies in person or by telephone, make
additional requests for the return of proxies and may receive proxies on
behalf of the Company. Brokers, nominees, fiduciaries and other custodians
will be requested to forward soliciting material to the beneficial owners of
Common Stock and will be reimbursed for their expenses.
SHAREHOLDER COMMUNICATIONS WITH BOARD
Shareholders may communicate with the full Board or individual directors
on matters concerning the Company by mail to the attention of the Company's
Secretary. All mail addressed to a particular Director will be forwarded or
delivered to that Director. Mail addressed to the "Board of Directors"
will be forwarded or delivered to the Chairman of the Board.
SHAREHOLDER PROPOSALS
Shareholders who desire to have proposals included in the notice for the
Annual Meeting of Shareholders to be held in spring 2007 must submit their
proposals in writing by December 5, 2006, to the Company, Attention: Karl
Brenkert III, Secretary, 1200 Carew Tower, 441 Vine Street, Cincinnati, Ohio
45202.
The form of Proxy for this meeting grants authority to the designated
proxies to vote in their discretion on any matters that come before the
meeting except those set forth in the Company's Proxy Statement and except
for matters as to which adequate notice is received. For notice to be deemed
adequate for the 2007 Annual Meeting of Shareholders, it must be received
prior to February 20, 2007. If there is a change in the anticipated date of
next year's Annual Meeting of Shareholders or in the notice deadline by more
than 30 days, the Company will notify you of this change through its Form
10-Q filings.
FINANCIAL STATEMENTS AVAILABLE
The Company's Annual Report to Shareholders for the year 2005 is
enclosed with this mailing. A copy of the Annual Report to the Commission on
Form 10-K is available without charge upon written request to: Investor
Relations, Kendle International Inc., 1200 Carew Tower, 441 Vine Street,
Cincinnati, Ohio 45202. The Company's Annual Report on Form 10-K and certain
other recent filings with the Commission are available at the Company's Web
site at www.kendle.com. The Company's Annual Report on Form 10-K and its
other filings with the Commission are also available at the Commission's Web
site at www.sec.gov. Additionally, these filings may be read or copied at
the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
70549.
By Order of the Board of Directors,
/s/ Karl Brenkert III
Karl Brenkert III
Secretary
April 3, 2006
16
KENDLE INTERNATIONAL INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/
[ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS:
1. Authority to elect as directors the following eight For Withhold For All
(8) nominees: All All Except
01-Candace Kendle, 02-Christopher C. Bergen, / / / / / /
03-Robert R. Buck, 04-G. Steven Geis, 05-Donald
C. Harrison, 06-Timothy E. Johnson, 07-Frederick A.
Russ, & 08-Robert C. Simpson
(INSTRUCTION: WRITE THE NUMBER(S) OF ANY NOMINEE(S)
FOR WHOM AUTHORITY TO VOTE IS WITHHELD.)
--------------------------------------------------
2. To ratify the appointment of Deloitte & Touche LLP For Against Abstain
as the Company's registered public accounting / / / / / /
firm for 2006.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Shareholders dated April 3, 2006 and the Proxy Statement furnished
therewith. Any proxy heretofore given to vote said shares is hereby revoked.
Dated: , 2006
-------------------------------
- ------------------------------------------------------------------------------
(Signature)
- ------------------------------------------------------------------------------
(Signature)
(Important: Please sign exactly as name appears hereon indicating, where
proper, official position or representative capacity. In the case of joint
holders, all should sign.)
- ------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
PLEASE DATE, SIGN AND RETURN PROMPTLY
IN THE ENCLOSED ENVELOPE.
PROXY KENDLE INTERNATIONAL INC. PROXY
1200 Carew Tower
441 Vine Street
Cincinnati, Ohio 45202
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints Karl Brenkert III and Jarrod B. Pontius,
or either of them, proxies of the undersigned, each with the power of
substitution, to vote all shares of Common Stock that the undersigned would
be entitled to vote on the matters specified below and in their discretion
with respect to such other business as may properly come before the Annual
Meeting of Shareholders of Kendle International Inc. to be held on May 11,
2006 at 9:30 A.M. Eastern Time in the Green Room at the Aronoff Center for
the Arts, 650 Walnut Street, Cincinnati, Ohio or at any postponement or
adjournment of such Annual Meeting.
THIS PROXY WILL BE VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS UNLESS A
CONTRARY CHOICE IS SPECIFIED.
PLEASE DATE, SIGN AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
(This proxy is continued and is to be signed on the reverse side.)
- ------------------------------------------------------------------------------
APPENDIX
Page 13 of the proxy statement contains a Performance Graph. The
information contained within the graph is presented in a tabular format
immediately following the graph.