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
o
|
|
|
Check the appropriate box:
|
|
|
|
o
Preliminary Proxy Statement
|
|
o
Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
|
|
x
Definitive Proxy Statement
|
|
o
Definitive Additional Materials
|
|
o
Soliciting Material Pursuant to §240.14a-12
|
ROCHESTER MEDICAL CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|
|
|
x
No fee required.
|
|
o
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:
|
|
|
|
o
Fee paid previously with preliminary materials.
|
|
|
|
o
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.:
|
ROCHESTER
MEDICAL CORPORATION
One Rochester Medical Drive
Stewartville, Minnesota 55976
Telephone
(507) 533-9600
December 18, 2009
Dear Shareholders:
You are cordially invited to join us for our 2010 Annual Meeting
of Shareholders, which will be held on Thursday,
January 28, 2010, at 3:30 p.m. (Central Time) in the
Rochester Room, at the Minneapolis Hilton and Towers Hotel, 1001
Marquette Avenue, Minneapolis, Minnesota 55403. Holders of
record of our common stock as of December 11, 2009, are
entitled to notice of and to vote at the 2010 annual meeting.
The Notice of Annual Meeting of Shareholders and the proxy
statement that follow describe the business to be conducted at
the annual meeting. We also will report at the meeting on
matters of current interest to our shareholders.
Your vote is important, and we hope you will be able to attend
the annual meeting. Whether or not you attend the meeting, we
encourage you to vote your shares promptly to ensure that they
are represented at the annual meeting. You may submit your proxy
vote by telephone or Internet as described in the following
materials or by completing and signing the enclosed proxy card
and returning it in the envelope provided. If you decide to
attend the annual meeting and wish to change your proxy vote,
you may do so automatically by voting in person at the annual
meeting.
We look forward to seeing you at the annual meeting.
Sincerely,
Anthony J. Conway
Chairman of the Board, Chief Executive Officer
and President
ROCHESTER
MEDICAL CORPORATION
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
|
|
|
Date and Time:
|
|
Thursday, January 28, 2010 at 3:30 p.m., Central Time
|
|
Place:
|
|
Minneapolis Hilton and Towers Hotel Rochester Room 1001
Marquette Avenue Minneapolis, Minnesota 55403
|
|
Items of Business:
|
|
1. The election of five directors to serve until the next
Annual Meeting of Shareholders.
|
|
|
|
2. A proposal to approve the Rochester Medical Corporation
2010 Stock Incentive Plan.
|
|
|
|
3. The ratification of the selection of Grant Thornton LLP
as our independent auditor for the fiscal year ending
September 30, 2010.
|
|
|
|
4. Any other business that may properly be considered at
the Annual Meeting of Shareholders or any adjournment of the
meeting.
|
|
Record Date and Quorum:
|
|
You may vote at the meeting if you were a shareholder of record
at the close of business on December 11, 2009. The holders
of a majority of the common stock entitled to vote shall
constitute a quorum for the transaction of business at the
annual meeting. If such quorum shall not be present or
represented at the annual meeting, the shareholders present or
represented at the annual meeting may adjourn the meeting from
time to time without notice other than announcement at the
meeting until a quorum shall be present or represented.
|
|
Voting by Proxy:
|
|
If you cannot attend the annual meeting in person, you may vote
your shares by telephone or Internet by no later than
12:00 p.m. Central Time on January 27, 2010 (as
directed on the enclosed proxy card), or by completing, signing
and promptly returning the enclosed proxy card by mail. The
persons named as proxies in the enclosed form of proxy will vote
the common stock according to the instructions given therein or,
if no instruction is given, then in favor of all nominations and
proposals. A person giving a proxy may revoke it before it is
exercised by delivering to our Corporate Secretary a written
notice terminating the proxys authority or by duly
executing a proxy bearing a later date. A shareholder who
attends the annual meeting need not revoke his or her proxy and
vote in person unless he or she wishes to do so.
|
By Order of the Board of Directors,
David A. Jonas
Chief Financial Officer, Treasurer and Secretary
December 18, 2009
PROXY
STATEMENT
TABLE OF
CONTENTS
|
|
|
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
2
|
|
|
|
|
2
|
|
|
|
|
2
|
|
|
|
|
2
|
|
|
|
|
3
|
|
|
|
|
3
|
|
|
|
|
3
|
|
|
|
|
3
|
|
|
|
|
4
|
|
|
|
|
4
|
|
|
|
|
4
|
|
|
|
|
5
|
|
|
|
|
5
|
|
|
|
|
5
|
|
|
|
|
5
|
|
|
|
|
6
|
|
|
|
|
7
|
|
|
|
|
8
|
|
|
|
|
8
|
|
|
|
|
10
|
|
|
|
|
10
|
|
|
|
|
10
|
|
|
|
|
11
|
|
|
|
|
12
|
|
|
|
|
12
|
|
|
|
|
13
|
|
|
|
|
14
|
|
|
|
|
14
|
|
|
|
|
14
|
|
|
|
|
21
|
|
|
|
|
21
|
|
|
|
|
23
|
|
i
|
|
|
|
|
|
|
|
25
|
|
|
|
|
26
|
|
|
|
|
26
|
|
|
|
|
29
|
|
|
|
|
29
|
|
|
|
|
29
|
|
|
|
|
30
|
|
|
|
|
31
|
|
|
|
|
31
|
|
|
|
|
31
|
|
|
|
|
32
|
|
|
|
|
34
|
|
|
|
|
34
|
|
|
|
|
34
|
|
|
|
|
34
|
|
|
|
|
36
|
|
|
|
|
36
|
|
|
|
|
37
|
|
|
|
|
37
|
|
|
|
|
38
|
|
|
|
|
38
|
|
|
|
|
39
|
|
|
|
|
39
|
|
|
|
|
39
|
|
|
|
|
40
|
|
|
|
|
40
|
|
|
|
|
Appendix A-1
|
|
ii
PROXY STATEMENT
2010 ANNUAL MEETING OF
SHAREHOLDERS
TO BE HELD ON JANUARY 28,
2010
The Board of Directors of Rochester Medical Corporation is
soliciting proxies for use at the Annual Meeting of Shareholders
to be held on January 28, 2010, and at any adjournment of
the meeting. This proxy statement and the enclosed proxy card
are first being mailed or made available to shareholders on or
about December 18, 2009.
QUESTIONS
AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
What is
the purpose of the annual meeting?
At our annual meeting, shareholders will act upon the matters
outlined in the Notice of Annual Meeting of Shareholders and
described in this proxy statement. These matters include the
election of directors, the approval of a new stock incentive
plan, and the ratification of the selection of our independent
auditor. Also, management will report on our performance during
the last fiscal year and, once the business of the annual
meeting is concluded, respond to questions from shareholders, as
time permits.
Please read this proxy statement carefully. You should consider
the information contained in this proxy statement when deciding
how to vote your shares at the annual meeting.
Who is
entitled to vote at the annual meeting?
The Board of Directors has set December 11, 2009, as the
record date for the annual meeting. If you were a shareholder of
record at the close of business on December 11, 2009, you
are entitled to vote at the annual meeting.
As of the record date, 12,192,867 shares of our common
stock were issued and outstanding and, therefore, eligible to
vote at the annual meeting.
What are
my voting rights?
Holders of our common stock are entitled to one vote per share.
Therefore, a total of 12,192,867 votes are entitled to be cast
at the annual meeting. There is no cumulative voting.
How many
shares must be present to hold the annual meeting?
In accordance with our bylaws, shares equal to a majority of all
of the shares of our outstanding common stock entitled to vote
as of the record date must be present at the annual meeting in
order to hold the meeting and conduct business. This is called a
quorum. Your shares are counted as present at the annual meeting
if:
|
|
|
|
|
you are present and vote in person at the meeting; or
|
|
|
|
you have properly and timely submitted a proxy vote by mail,
telephone or Internet.
|
If a quorum is not present or represented at the annual meeting,
the shareholders and proxies entitled to vote will have the
power to adjourn the annual meeting, without notice other than
an announcement at that time, until a quorum is present or
represented.
How do I
vote my shares?
If you are a shareholder of record as of the record date, you
can give a proxy to be voted at the annual meeting in any of the
following way
s
:
|
|
|
|
|
over the telephone by calling a toll-free number;
|
|
|
|
electronically, using the Internet; or
|
|
|
|
by completing, signing and mailing the enclosed proxy card.
|
The telephone and Internet procedures have been set up for your
convenience. We encourage you to reduce corporate expense by
submitting your vote by telephone or Internet. The procedures
have been designed to authenticate your identity, to allow you
to give voting instructions, and to confirm that those
instructions have been recorded properly. If you are a
shareholder of record and you would like to submit your proxy by
telephone or Internet, please refer to the specific instructions
provided on the enclosed proxy card. If you wish to submit your
proxy by mail, please return your signed proxy card to us before
the annual meeting.
If you hold your shares in street name, you must
vote your shares in the manner prescribed by your broker or
other nominee. Your broker or other nominee has enclosed or
otherwise provided a voting instruction card for you to use in
directing the broker or nominee how to vote your shares.
Telephone and Internet voting are also encouraged for
shareholders who hold their shares in street name.
If you are the beneficial owner, submitting your proxy will not
affect your right to vote in person if you decide to attend the
annual meeting. See
Can I vote my shares in person at
the annual meeting?
below.
What is a
proxy?
It is your designation of another person to vote stock you own.
That other person is called a proxy. If you designate someone as
your proxy in a written document, that document also is called a
proxy or a proxy card. When you designate a proxy, you also may
direct the proxy how to vote your shares. Two of our executive
officers have been designated as proxies for our annual meeting.
These executive officers are Anthony J. Conway and David A.
Jonas.
What is a
proxy statement?
It is a document that we are required to give you, or provide
you access to, in accordance with regulations of the Securities
and Exchange Commission (the SEC), when we ask you
to designate proxies to vote your shares of our common stock at
a meeting of our shareholders. The proxy statement includes
information regarding matters to be acted upon at the meeting
and certain other information required by regulations of the SEC
and rules of the Nasdaq Stock Market (Nasdaq).
What is
the difference between a shareholder of record and a
street name holder?
If your shares are registered directly in your name, you are
considered the shareholder of record with respect to those
shares.
If your shares are held in a stock brokerage account or by a
bank, trust or other nominee, then the broker, bank, trust or
other nominee is considered to be the shareholder of record with
respect to those shares. However, you still are considered the
beneficial owner of those shares, and your shares are said to be
held in street name. Street name
2
holders generally cannot vote their shares directly and must
instead instruct the broker, bank, trust or other nominee how to
vote their shares using the voting instruction form provided
by it.
What does
it mean if I receive more than one set of proxy
materials?
If you receive more than one set of proxy materials, it means
that you hold shares registered in more than one account. To
ensure that all of your shares are voted, please sign and return
each proxy card or voting instruction card you receive or, if
you submit your proxy vote by telephone or Internet, vote once
for each proxy card or voting instruction card you receive.
Can I
vote my shares in person at the annual meeting?
If you are a shareholder of record, you may vote your shares in
person at the annual meeting by completing a ballot at the
meeting. Even if you currently plan to attend the annual
meeting, we recommend that you also submit your proxy as
described above in advance of the annual meeting so that your
vote will be counted if you later decide not to attend the
meeting. If you submit your vote by proxy and later decide to
vote in person at the annual meeting, the vote you submit at the
annual meeting will override your proxy vote.
If you are a street name holder, you may vote your shares in
person at the annual meeting only if you obtain and bring to the
annual meeting a signed letter or other form of proxy from your
broker, bank, trust or other nominee giving you the right to
vote the shares at the meeting.
What vote
is required for a proposal to be approved?
Under Minnesota law, directors are elected by the affirmative
vote of a plurality of the votes cast at the annual meeting.
This means that since the shareholders will be electing five
directors, the five director nominees receiving the highest
number of votes will be elected.
The affirmative vote of the holders of a majority of the shares
of our common stock present in person or by proxy at the meeting
and entitled to vote is required for the approval of the new
stock incentive plan, the ratification of the selection of our
independent auditor, and the approval of any other proposals.
How are
votes counted?
You may either vote FOR or WITHHOLD
authority to vote for each nominee for the Board of Directors.
You may vote FOR, AGAINST or
ABSTAIN on other proposals.
If you properly submit your proxy but withhold authority to vote
for one or more director nominees or abstain from voting on one
or more other proposals, your shares will be counted as present
at the annual meeting for the purpose of determining a quorum.
Your shares also will be counted as present at the annual
meeting for the purpose of calculating the vote on any
particular matter with respect to which you abstain from voting.
If you abstain from voting on a proposal, your abstention has
the same effect as a vote against that proposal.
If you hold your shares in street name and fail to instruct your
broker or other nominee how you want to vote your shares on a
particular matter, those shares are considered to be
uninstructed. New York Stock Exchange rules
determine the circumstances under which member brokers of the
New York Stock Exchange may exercise discretion to vote
uninstructed shares held by them on behalf of their
clients who are street name holders. With respect to the
proposal to ratify the selection of Grant Thornton LLP as our
independent auditor, the rules permit
3
member brokers to exercise voting discretion as to the
uninstructed shares. If the broker, bank or other nominee is not
permitted to exercise discretion, the uninstructed shares will
be referred to as a broker non-vote.
How does
the Board recommend that I vote?
You will vote on the following management proposals:
|
|
|
|
|
Election of five directors: Anthony J. Conway, Darnell L. Boehm,
David A. Jonas, Roger W. Schnobrich and Benson Smith;
|
|
|
|
Approval of the Rochester Medical Corporation 2010 Stock
Incentive Plan; and
|
|
|
|
Ratification of the selection of Grant Thornton LLP as our
independent auditor for the fiscal year ending
September 30, 2010.
|
The Board of Directors recommends that you vote
FOR
the
election of each of the nominees to the Board of Directors,
FOR
the approval of the Rochester Medical 2010 Stock
Incentive Plan, and
FOR
the ratification of Grant
Thornton LLP as our independent auditor for the fiscal year
ending September 30, 2010.
We are not aware of any other matters that will be voted on at
the annual meeting. However, if any other business properly
comes before the meeting, the persons named as proxies for
shareholders will vote on those matters in a manner they
consider appropriate.
What if I
do not specify how I want my shares voted?
If you submit a signed proxy card or submit your proxy by
telephone or Internet and do not specify how you want to vote
your shares, the proxies will vote your shares:
|
|
|
|
|
FOR
the election of all of the nominees for director;
|
|
|
|
FOR
the approval of the Rochester Medical Corporation
2010 Stock Incentive Plan; and
|
|
|
|
FOR
the ratification of the selection of Grant Thornton
LLP as our independent auditor for the fiscal year ending
September 30, 2010.
|
See also,
How are votes counted?
regarding
broker non-votes.
Can I
change my vote after submitting my proxy?
Yes. You may revoke your proxy and change your vote at any time
before your proxy is voted at the annual meeting. If you are a
shareholder of record, you may revoke your proxy and change your
vote by:
|
|
|
|
|
if you voted over the Internet or by telephone, voting again
over the Internet or by telephone by no later than
12:00 p.m. Central Time on January 27, 2010;
|
|
|
|
if you completed and returned a proxy card, submitting a new
proxy card with a later date and returning it prior to the
annual meeting; or
|
|
|
|
submitting timely written notice of revocation to our Corporate
Secretary at the address shown below.
|
Attending the meeting will not revoke your proxy unless you
specifically request to revoke it or submit a ballot at the
meeting. To request an additional proxy card, or if you have any
questions about the annual meeting or how to
4
vote or revoke your proxy, you should write to Investor
Relations, Rochester Medical Corporation, One Rochester Medical
Drive, Stewartville, Minnesota 55976 or call
(800) 615-2364.
Who will
count the vote?
Representatives of Wells Fargo Shareowner Services, our transfer
agent, will tabulate votes and act as independent inspectors of
election.
Where and
when will I be able to find the results of the voting?
Preliminary results will be announced at the annual meeting. We
will publish the final results in our quarterly report on
Form 10-Q
for the quarter ending March 31, 2010 to be filed with the
SEC.
Who pays
for the cost of proxy preparation and solicitation?
We will pay for the cost of proxy preparation and solicitation,
including the reasonable charges and expenses of brokerage
firms, banks, trusts or other nominees for forwarding proxy
materials to street name holders. Proxies are being solicited
primarily by mail, but, in addition, directors, officers and
regular employees of the company, who will receive no extra
compensation for their services, may solicit proxies personally,
by telephone or by special letter.
What are
the deadlines for submitting shareholder proposals for the 2011
Annual Meeting of Shareholders?
In order for a shareholder proposal to be considered for
inclusion in our proxy statement for the 2011 Annual Meeting of
Shareholders, we must receive the written proposal at our
principal executive offices at One Rochester Medical Drive,
Stewartville, Minnesota 55976, Attention: Corporate Secretary,
on or before August 30, 2010. The proposal must comply with
SEC regulations regarding the inclusion of shareholder proposals
in company-sponsored proxy materials.
Our bylaws provide that a shareholder may nominate a director
for election at the annual meeting if proper written notice is
received by our Corporate Secretary at our principal executive
offices in Stewartville, Minnesota, at least 90 days and
not more than 120 days in advance of the anniversary date
of the prior years annual meeting. A shareholder may also
present from the floor a proposal that is not included in the
proxy statement if proper written notice is received by our
Corporate Secretary at least 90 days and not more than
120 days in advance of the anniversary date of the prior
years annual meeting. For the 2011 annual meeting, notices
of director nominations and shareholder proposals to be made
from the floor must be received on or before October 30,
2010. The notice must contain the specific information required
by our bylaws. You may obtain a copy of the bylaws by writing to
our Corporate Secretary at the address stated below. Shareholder
proposals and director nominations for which notice is received
by us after October 30, 2010, may not be presented in any
manner at the 2011 annual meeting.
5
How can I
communicate with Rochester Medical Corporations Board of
Directors?
Shareholders may communicate with our Board of Directors by
sending a letter addressed to the Board of Directors, all
independent directors or specified individual directors to:
Rochester Medical Corporation
c/o Corporate
Secretary
One Rochester Medical Drive
Stewartville, Minnesota 55976
All communications will be compiled by the Corporate Secretary
and submitted to the Board of Directors or the specified
directors on a periodic basis.
Important
Notice Regarding the Availability of Proxy Materials for the
Shareholder Meeting to be Held on January 28, 2010:
Our proxy statement and 2009 Annual Report are available at
www.rocm.com/ir.
6
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows how many shares of our common stock
were beneficially owned as of December 11, 2009, by:
|
|
|
|
|
each person or group who beneficially owned five percent or more
of our common stock;
|
|
|
|
each of our directors;
|
|
|
|
each of the executive officers named in the Summary Compensation
Table in this proxy statement; and
|
|
|
|
our directors and executive officers as a group.
|
Percentage ownership calculations for beneficial ownership are
based on 12,192,867 shares outstanding as of
December 11, 2009. Unless otherwise noted, the shareholders
listed in the table have sole voting and investment power with
respect to the shares of common stock owned by them, and their
address is
c/o One
Rochester Medical Drive, Stewartville, Minnesota 55976.
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature
|
|
|
|
|
Name of Beneficial Owner
|
|
of Beneficial Ownership(1)
|
|
|
Percent of Class
|
|
|
Eagle Asset Management
|
|
|
1,243,337
|
(4)
|
|
|
10.2
|
%
|
Anthony J. Conway
|
|
|
1,086,359
|
(2)(3)(5)
|
|
|
8.8
|
|
Townsend Group Investments, Inc.
|
|
|
718,679
|
(6)
|
|
|
5.9
|
|
Philip J. Conway
|
|
|
569,743
|
(2)(3)(7)
|
|
|
4.6
|
|
David A. Jonas
|
|
|
235,500
|
(2)(8)
|
|
|
1.9
|
|
Roger W. Schnobrich
|
|
|
129,000
|
(9)
|
|
|
1.0
|
|
Benson Smith
|
|
|
126,000
|
(10)
|
|
|
1.0
|
|
Martyn R. Sholtis
|
|
|
122,000
|
(2)(11)
|
|
|
1.0
|
|
Darnell L. Boehm
|
|
|
74,000
|
(12)
|
|
|
*
|
|
James M. Carper
|
|
|
9,250
|
(2)(13)
|
|
|
*
|
|
All directors and executive officers as a group (9 persons)
|
|
|
2,388,202
|
(14)
|
|
|
18.1
|
%
|
|
|
|
*
|
|
Indicates less than 1%.
|
|
(1)
|
|
Beneficial ownership is determined in accordance with rules of
the Securities and Exchange Commission, and includes general
voting power and/or investment power with respect to securities.
Shares of common stock subject to options or warrants currently
exercisable or exercisable within 60 days of
December 11, 2009 are deemed to be outstanding for the
purpose of computing the percentage of the person holding such
options or warrants, but are not deemed outstanding for
computing the percentage of any other person.
|
|
(2)
|
|
The address of each of our executive officers is One Rochester
Medical Drive, Stewartville, Minnesota 55976.
|
|
(3)
|
|
Messrs. Anthony J. Conway and Philip J. Conway are brothers.
|
|
(4)
|
|
We have relied upon information supplied by Eagle Asset
Management (Eagle) in a Schedule 13G filed by Eagle
with the SEC on March 5, 2009. As of that date, Eagle held
sole voting and investment power with respect to
1,243,337 shares of common stock. The address for Eagle is
880 Carillon Parkway, St. Petersburg, FL 33716.
|
|
(5)
|
|
Includes 224,500 shares issuable upon exercise of currently
outstanding options. Also includes 63,755 shares held by
his wife.
|
|
(6)
|
|
We have relied upon information supplied by Townsend Group
Investments, Inc. (Townsend) in a
Schedule 13G/A filed by Townsend with the SEC on
January 21, 2009, reporting beneficial ownership data as of
December 31, 2008. As of that date, Townsend held sole
voting and investment power with respect to
|
7
|
|
|
|
|
88,400 shares of common stock, and shared voting and
investment power with respect to 630,279 shares of common
stock. The address for Townsend is 22601 Pacific Coast Highway,
Suite 200, Malibu, CA 90265.
|
|
(7)
|
|
Includes 166,000 shares issuable upon exercise of currently
outstanding options. Also includes 9,600 shares held in an
IRA for the benefit of Mr. Philip J. Conways wife, as
to which he disclaims beneficial ownership.
|
|
(8)
|
|
Includes 194,000 shares issuable upon exercise of currently
outstanding options.
|
|
(9)
|
|
Includes 104,000 shares issuable upon exercise of currently
outstanding options. Also includes 24,000 shares held in an
IRA for the benefit of Mr. Schnobrich.
Mr. Schnobrichs address is 530 Waycliffe North,
Wayzata, Minnesota 55391.
|
|
(10)
|
|
Includes 126,000 shares issuable upon exercise of currently
outstanding options. Mr. Smiths address is 228
Southern Hill Drive, Duluth, Georgia 30097.
|
|
(11)
|
|
Includes 102,000 shares issuable upon exercise of currently
outstanding options.
|
|
(12)
|
|
Includes 60,000 shares issuable upon exercise of currently
outstanding options. Mr. Boehms address is 19330
Bardsley Place, Monument, Colorado 80132.
|
|
(13)
|
|
Includes 8,750 shares issuable upon exercise of currently
outstanding options.
|
|
(14)
|
|
Includes 1,021,000 shares issuable upon exercise of
currently outstanding options.
|
SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires our executive officers and directors to file initial
reports of ownership and reports of changes in ownership of our
securities with the Securities and Exchange Commission.
Executive officers and directors are required to furnish us with
copies of these reports. Based solely on a review of the
Section 16(a) reports furnished to us with respect to the
fiscal year ended September 30, 2009 and written
representations from the executive officers and directors, we
believe that all Section 16(a) filing requirements
applicable to our executive officers and directors during the
fiscal year ended September 30, 2009 were satisfied, with
the exception of Mr. Anthony Conway who filed one day late
a Form 4 report with respect to a stock option exercise and
subsequent sale of shares.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors of Rochester Medical Corporation is
comprised of five directors who are elected to serve until the
next regular meeting of the shareholders and until each such
directors successor has been duly elected and qualified,
or until the earlier death, resignation, removal or
disqualification of such director.
Following the recommendation of the Nominating Committee, the
Board of Directors has nominated the five persons named below
for re-election to the Board of Directors at the 2010 Annual
Meeting of Shareholders. It is intended that the persons named
as proxies in the enclosed form of proxy will vote the proxies
received by them for the election of the nominees named in the
table below as directors except as specifically directed
otherwise. Each nominee has indicated a willingness to serve,
but in case any nominee is not a candidate at the meeting, for
reasons not now known to us, the proxies named in the enclosed
form of proxy will vote for a substitute nominee selected by the
Board of Directors. Information regarding these nominees is set
forth in the table below.
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
|
Name
|
|
Age
|
|
Since
|
|
Position
|
|
Anthony J. Conway
|
|
|
65
|
|
|
|
1988
|
|
|
Chairman of the Board, Chief Executive Officer and President
|
Darnell L. Boehm
|
|
|
61
|
|
|
|
1995
|
|
|
Director
|
David A. Jonas
|
|
|
45
|
|
|
|
2008
|
|
|
Director, Chief Financial Officer, Treasurer and Secretary
|
Roger W. Schnobrich
|
|
|
79
|
|
|
|
1995
|
|
|
Director
|
Benson Smith
|
|
|
62
|
|
|
|
2001
|
|
|
Director
|
Under Minnesota law, directors are elected by the affirmative
vote of a plurality of the votes cast at the annual meeting.
Proxies may not be voted for more than five directors. The five
director nominees receiving the highest number of votes will be
elected.
The Board of Directors recommends a vote FOR election of the
five nominated directors. Proxies will be voted FOR the election
of the five nominees unless otherwise specified.
The nominees for election as directors have provided the
following information about themselves.
Anthony J. Conway
, age 65, a founder of Rochester
Medical, has served as Chairman of the Board, Chief Executive
Officer and President of Rochester Medical since May 1988, and
was our Secretary until November 2008 and our Treasurer until
September 1997. In addition to his duties as Chief Executive
Officer and President, Mr. Conway actively contributes to
our research and development and design activities. From 1979 to
March 1988, he was President, Secretary and Treasurer of Arcon
Corporation (Arcon), a company that he co-founded in
1979 to develop, manufacture and sell latex-based male external
catheters and related medical devices. Prior to founding Arcon,
Mr. Conway worked for twelve years for International
Business Machines Corporation in various research and
development capacities. Mr. Conway is one of the named
inventors on numerous patent applications that have been
assigned to Rochester Medical, of which to date 20 have resulted
in issued United States patents and 32 have resulted in issued
foreign patents.
Darnell L. Boehm
, age 61, has served as a Director
of Rochester Medical since October 1995. Since 1986,
Mr. Boehm has served as a Director of Aetrium, Inc.
(Aetrium), a manufacturer of electromechanical
equipment for handling and testing semiconductors, and also
serves on its Audit Committee and Compensation Committee. From
1986 to 2000, Mr. Boehm also served as the Chief Financial
Officer and Secretary of Aetrium. From August 1999 to January
2002, Mr. Boehm served as a Director of ALPNET, Inc., a
supplier of multilingual information services including language
translation, product localization and other services. He is also
the principal of Darnell L. Boehm & Associates, a
management consulting firm.
David A. Jonas
, age 45, has served as a Director of
Rochester Medical since November 2008, and has served as our
Chief Financial Officer since May 2001, our Treasurer since
November 2000, and as our Secretary since November 2008. From
June 1, 1998 until May 2001, Mr. Jonas served as our
Controller. From August 1999 until October 2001, Mr. Jonas
served as our Director of Operations and had principal
responsibility for our operational activities. Since November
2000, Mr. Jonas has had principal responsibility for our
financial activities. Prior to joining us, Mr. Jonas was
employed in various financial, financial management and
operational management positions with Polaris Industries, Inc.
from January 1989 to June 1998. Mr. Jonas holds a Bachelor
of Science degree in Accounting from the University of Minnesota
and is a certified public accountant currently under a
non-active status.
Roger W. Schnobrich
, age 79, has served as a
Director of Rochester Medical since October 1995. Since
September 2004, Mr. Schnobrich has served as a principal of
Waynorth, Inc., a business consulting company.
Mr. Schnobrich served as a partner and then of counsel with
the law firm of Hinshaw & Culbertson from 1997 to
9
September 2004. Prior to joining Hinshaw & Culbertson,
Mr. Schnobrich was a partner in the law firm of Popham,
Haik, Schnobrich and Kaufman Ltd. for more than five years.
Benson Smith
, age 62, has served as a Director of
Rochester Medical since May 2001. Mr. Smith is the founding
partner of BFS and Associates LLC, a company that provides sales
organization consulting and training. From April 2000 to 2006,
Mr. Smith was a lecturer for the Gallup organization. Prior
to joining the Gallup organization, Mr. Smith worked for
several years with C.R. Bard, Inc. (C.R. Bard), a company
specializing in medical devices, serving most recently as
President and Chief Operating Officer. In 1991, Mr. Smith
was elected to the position of Group Vice President, responsible
for C.R. Bards urological product group. He was promoted
to the position of Executive Vice President in 1993 and became a
member of C.R. Bards Board of Directors in 1994. Shortly
thereafter, Mr. Smith was promoted to the position of
President and Chief Operating Officer. Mr. Smith is also a
Director for ZOLL Medical Corporation, a publicly held medical
technology and software company, and Teleflex Incorporated, a
publicly held company that designs, manufactures and distributes
specialty-engineered products.
CORPORATE
GOVERNANCE
Director
Independence
Our Board of Directors reviews at least annually the
independence of each director. During these reviews, our Board
of Directors considers transactions and relationships between
each director (and his immediate family and affiliates) and our
company and its management to determine whether any such
transactions or relationships are inconsistent with a
determination that the director was independent. This review is
based primarily on responses of the directors to questions in a
directors and officers questionnaire regarding
employment, business, familial, compensation and other
relationships with Rochester Medical and our management. In
November 2009, our Board of Directors determined that no
transactions or relationships existed that would disqualify any
of our directors under Nasdaq Stock Market rules or require
disclosure under Securities Exchange Commission rules, with the
exception of Anthony J. Conway, our President and Chief
Executive Officer, and David A. Jonas, our Chief Financial
Officer, because of their employment relationship with Rochester
Medical. Based upon that finding, the Board determined that
Messrs. Boehm, Schnobrich and Smith are
independent. Each of our Audit, Nominating and
Compensation Committees is comprised only of independent
directors.
Director
Qualifications and Selection Process
The Nominating Committee of the Board of Directors determines
the required selection criteria and qualifications of director
nominees based upon the needs of the company at the time
nominees are considered. Directors should possess the highest
personal and professional ethics, integrity and values, and be
committed to representing the long-term interests of our
shareholders. In evaluating a candidate for nomination as a
director of Rochester Medical, the Nominating Committee will
consider criteria including business and financial expertise;
geography; experience as a director of a public company; gender
and ethnic diversity on the Board; and general criteria such as
ethical standards, independent thought, practical wisdom and
mature judgment. The Nominating Committee will consider these
criteria for nominees identified by the Nominating Committee, by
shareholders, or through some other source.
These general criteria are subject to modification and the
Nominating Committee shall be able, in the exercise of its
discretion, to deviate from these general criteria from time to
time, as the Nominating Committee may deem appropriate or as
required by applicable laws and regulations.
The Nominating Committee will consider qualified candidates for
possible nomination that are submitted by our shareholders.
Shareholders wishing to make such a submission may do so by
sending the following information
10
to the Nominating Committee
c/o Corporate
Secretary at One Rochester Medical Drive, Stewartville,
Minnesota 55976: (1) name of the candidate and a brief
biographical sketch and resume; (2) contact information for
the candidate and a document evidencing the candidates
willingness to serve as a director if elected; and (3) a
signed statement as to the submitting shareholders current
status as a shareholder and the number of shares currently held.
The Nominating Committee makes a preliminary assessment of each
proposed nominee based upon the resume and biographical
information, an indication of the individuals willingness
to serve and other background information. This information is
evaluated against the criteria set forth above and our specific
needs at that time. Based upon a preliminary assessment of the
candidate(s), those who appear best suited to meet our needs may
be invited to participate in a series of interviews, which are
used as a further means of evaluating potential candidates. On
the basis of information learned during this process, the
Nominating Committee determines which nominee(s) to recommend to
the Board to submit for election at the next annual meeting. The
Nominating Committee uses the same process for evaluating all
nominees, regardless of the original source of the nomination.
No candidates for director nominations were submitted to the
Nominating Committee by any shareholder in connection with the
2010 Annual Meeting of Shareholders.
Board
Meetings and Committees
The Board of Directors conducts its business through meetings of
the Board and the following standing committees: Audit,
Nominating and Compensation. Each of the standing committees has
adopted and operates under a written charter. These charters can
be found on the Corporate Governance section of the Investor
Relations page on our website at
www.rocm.com/ir
.
Shareholders may request a free printed copy of any of these
charters by contacting our Corporate Secretary at Rochester
Medical Corporation, One Rochester Medical Drive, Stewartville,
Minnesota 55976. Each of the standing committees has the
authority to engage outside experts, advisors and counsel to the
extent it considers appropriate to assist the committee in its
work.
During the fiscal year ended September 30, 2009, the Board
of Directors met formally on seven occasions, and conducted its
business through nine committee meetings. No director attended
fewer than 75% of all board and committee meetings during the
fiscal year ended September 30, 2009. Members of the Board
and its committees also consulted informally with management
from time to time and acted at various times by written consent
without a meeting during fiscal 2009.
The following table reflects the current membership of each
Board committee.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Committee Membership
|
|
Name
|
|
Audit
|
|
|
Nominating
|
|
|
Compensation
|
|
|
Anthony J. Conway
|
|
|
|
|
|
|
|
|
|
|
|
|
Darnell L. Boehm
|
|
|
Chair
|
|
|
|
ü
|
|
|
|
ü
|
|
David A. Jonas
|
|
|
|
|
|
|
|
|
|
|
|
|
Roger W. Schnobrich
|
|
|
ü
|
|
|
|
ü
|
|
|
|
Chair
|
|
Benson Smith
|
|
|
ü
|
|
|
|
Chair
|
|
|
|
ü
|
|
Audit
Committee
The Audit Committee is responsible for assisting the Board of
Directors in monitoring the quality and integrity of our
financial statements, our internal controls, our compliance with
legal and regulatory requirements and the qualifications,
performance and independence of our independent auditors. The
Audit Committee has sole authority to approve, retain and
terminate our independent auditors and is directly responsible
for the compensation and oversight of the work of our
independent auditors. The Audit Committee reviews and discusses
with management and our independent auditors the annual audited
and quarterly financial statements (including the disclosures
under
11
Managements Discussion and Analysis of Financial
Condition and Results of Operations), reviews the
integrity of the financial reporting processes, both internal
and external, reviews the qualifications, performance and
independence of our independent auditors, and prepares the Audit
Committee Report included in our annual proxy statement in
accordance with the rules and regulations of the Securities and
Exchange Commission. The Audit Committee has also established
procedures for the receipt, retention, response to and treatment
of complaints regarding accounting, internal controls or audit
matters.
All of the Audit Committee members meet the existing
independence and experience requirements of the Nasdaq Stock
Market and the Securities and Exchange Commission. Our Board of
Directors has identified Mr. Boehm as an audit committee
financial expert under the rules of the SEC. The Audit Committee
met six times during the fiscal year ended September 30,
2009. The Audit Committee has engaged Grant Thornton LLP as our
independent auditors for fiscal year 2010.
Nominating
Committee
The Nominating Committee is responsible for assisting the Board
by identifying individuals qualified to become Board members and
recommending to the Board the nominees for election as directors
at the next annual meeting of shareholders. The Nominating
Committee also periodically reviews the structure and membership
of the Board and makes recommendations with respect to the size
and composition of the Board, and develops qualification
criteria for Board members. All of the Nominating Committee
members meet the existing independence requirements of the
Nasdaq Stock Market. The Nominating Committee met once during
the fiscal year ended September 30, 2009.
Compensation
Committee
The Compensation Committee is responsible for assisting the
Board by overseeing the administration of our compensation
programs and reviewing and approving the compensation paid to
our executive officers. The Compensation Committee approves
corporate goals related to the compensation of the Chief
Executive Officer, evaluates the Chief Executive Officers
performance and compensates the Chief Executive Officer based on
this evaluation. The Compensation Committee reviews and
discusses with management the disclosure regarding executive
compensation to be included in our annual proxy statement, and
recommends to the Board inclusion of the Compensation Discussion
and Analysis (CD&A) in our annual proxy
statement.
All of the Compensation Committee members meet the existing
independence requirements of the Nasdaq Stock Market. The
Compensation Committee met two times during the fiscal year
ended September 30, 2009. For further information on the
activities of the Compensation Committee, please refer to the
CD&A beginning on page 14 and the Compensation
Committee Report on page 21.
Attendance
at the Annual Meeting
We encourage, but do not require, our Board members to attend
the annual meeting of shareholders. Three of the five then
current directors attended our 2009 Annual Meeting of
Shareholders.
Code of
Business Conduct and Ethics
We have adopted the Rochester Medical Corporation Code of
Business Conduct and Ethics, which applies to all of our
employees, officers and directors. The Code of Business Conduct
and Ethics includes particular provisions applicable to our
senior financial management, which includes our Chief Executive
Officer, Chief Financial Officer, controller and other employees
performing similar functions. A copy of our Code of Business
Conduct and Ethics is available on the Corporate Governance
section of the Investor Relations page on our website at
www.rocm.com/ir.
We intend to post on our website any
amendment to, or waiver from, a provision of our Code of
12
Business Conduct and Ethics that applies to any director or
officer, including our principal executive officer, principal
financial officer, principal accounting officer, controller and
other persons performing similar functions, promptly following
the date of such amendment or waiver.
DIRECTOR
COMPENSATION
To determine director compensation, we periodically review
director compensation information for a peer group of comparably
sized publicly traded medical device companies. Compensation for
our directors is designed to result in compensation for our
directors that is competitive with that provided by the peer
group.
Fees for 2009
. For 2009, our non-employee
directors received the following cash payments:
|
|
|
|
|
Fees for attendance at Board and Committee meetings
|
|
$
|
3,000
|
|
Fees for attendance at Board and Committee meetings by telephone
|
|
$
|
1,000
|
|
No director who is also an employee of Rochester Medical
receives any separate compensation for services as a director.
Non-employee directors can also each receive non-qualified stock
options under our 2001 Stock Incentive Plan. Each grant
typically has the following terms: (1) the exercise price
is equal to the fair market value (as defined in the 2001 Stock
Incentive Plan) of the common stock on the date of grant;
(2) the exercise price is payable upon exercise in cash or
in common stock held at least six months; (3) the term of
the option is 10 years; (4) the option is immediately
exercisable; and (5) the option expires if not exercised
within twelve months (i) after the optionee ceases to serve
as a director or (ii) following the optionees death.
During fiscal 2009, Messrs. Darnell Boehm, Roger W.
Schnobrich and Benson Smith were the only non-employee directors
and therefore the only directors eligible to receive the
compensation described above. On February 3, 2009,
Messrs. Boehm, Schnobrich and Smith each received an option
to purchase 10,000 shares of common stock. The stock
options vested immediately.
We reimburse all of our non-employee directors for reasonable
travel and other expenses incurred in attending Board of
Directors and committee meetings. Any director who is also one
of our employees receives no additional compensation for serving
as a director.
Director Compensation Table.
The following
table shows the compensation of the members of our Board of
Directors during fiscal year 2009:
DIRECTOR
COMPENSATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
|
Option
|
|
|
|
|
|
|
Paid in Cash
|
|
|
Awards
|
|
|
Total
|
|
Name(1)
|
|
($)
|
|
|
($)(2)
|
|
|
($)
|
|
|
Darnell L. Boehm
|
|
|
12,000
|
|
|
|
66,760
|
|
|
|
78,760
|
|
Roger W. Schnobrich
|
|
|
11,000
|
|
|
|
66,760
|
|
|
|
77,760
|
|
Benson Smith
|
|
|
11,000
|
|
|
|
66,760
|
|
|
|
77,760
|
|
|
|
|
(1)
|
|
Anthony J. Conway, our Chairman of the Board, Chief Executive
Officer and President, and David A. Jonas, our Chief Financial
Officer, are not included in this table because they are
employees of Rochester Medical Corporation and thus received no
compensation for their services as a director. The compensation
they received as employees of Rochester Medical Corporation is
shown in the Summary Compensation Table.
|
13
|
|
|
(2)
|
|
The amounts shown in this column are calculated based on
Accounting Standards Codification 718,
Compensation Stock Compensation
(ASC
718), and represent the compensation expense recognized by
Rochester Medical during the fiscal year for financial statement
purposes. Under ASC 718, a pro rata portion of the total expense
at time of grant is recognized over the applicable service
period generally corresponding with the vesting schedule of the
grant. The initial expense is based on the fair value of the
stock option grants as estimated using the Black-Scholes
option-pricing model. The assumptions used to arrive at the
Black-Scholes value are disclosed in Note 7 to our
financial statements included in our Annual Report on
Form 10-K
for the fiscal year ended September 30, 2009.
|
The option awards granted in 2009 are as follows:
Mr. Boehm: 10,000 options; Mr. Schnobrich: 10,000
options; and Mr. Smith: 10,000 options. The directors held
options as of September 30, 2009, as follows:
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
Unvested
|
Name
|
|
Options
|
|
Options
|
|
Mr. Boehm
|
|
|
60,000
|
|
|
|
0
|
|
Mr. Schnobrich
|
|
|
104,000
|
|
|
|
0
|
|
Mr. Smith
|
|
|
126,000
|
|
|
|
0
|
|
EXECUTIVE
COMPENSATION
Named
Executive Officers
This section provides information relating to our executive
compensation programs and the compensation paid to or accrued
for our Chief Executive Officer and Chief Financial Officer, and
each of our three other most highly compensated executive
officers during fiscal year 2009 (collectively, our Named
Executive Officers). Our Named Executive officers are
determined in accordance with the rules of the Securities and
Exchange Commission. For fiscal 2009, our Named Executive
Officers include Anthony J. Conway, our Chief Executive Officer
and President; David A. Jonas, our Chief Financial Officer,
Treasurer and Secretary; Martyn R. Sholtis, our Corporate Vice
President; Philip J. Conway, our Vice President, Product
Technologies; and James M. Carper, our Vice President, Marketing.
Compensation
Discussion and Analysis
Rochester Medical develops, manufactures and markets a broad
line of innovative, technologically enhanced PVC-free and
latex-free urinary continence and urine drainage care products
for the extended care and acute care markets. We participate in
the large U.S. medical device industry, and for
compensation purposes we generally compare ourselves against
other publicly-traded medical device companies with market
capital of $100 million to $250 million. We believe
the overall compensation structure for our company is below the
mid-point for comparably sized publicly-traded medical device
companies.
This Compensation Discussion and Analysis describes the major
elements of our compensation programs for the executive officers
named in the Summary Compensation Table in this proxy statement.
This CD&A also discusses the objectives, philosophy,
process and decisions underlying the compensation of the Named
Executive Officers. The CD&A should be read together with
the executive compensation tables and related footnotes found
later in this proxy statement.
Our Compensation Committee, which is comprised of three
independent, non-employee directors, discharges the
responsibilities of our Board of Directors with respect to all
forms of compensation of our executive officers and oversight of
our compensation plans. The Compensation Committee operates
under a written charter, and has the
14
authority to retain outside counsel, experts and other advisors
as it determines appropriate to assist it in the performance of
its functions.
Compensation
Philosophy
The Compensation Committee believes that compensation paid to
executive officers should be closely aligned with Rochester
Medicals performance on both a short-term and long-term
basis, linked to specific, measurable results intended to create
value for shareholders, and that such compensation should assist
us in attracting and retaining key executives critical to our
long-term success.
In establishing compensation for executive officers, the
following are the Compensation Committees objectives:
|
|
|
|
|
Attract and retain individuals of superior ability and
managerial talent;
|
|
|
|
Ensure senior officer compensation is aligned with our corporate
strategies, business objectives and the long-term interests of
our shareholders;
|
|
|
|
Increase the incentive to achieve key strategic and financial
performance measures by linking incentive award opportunities to
the achievement of performance goals in these areas; and
|
|
|
|
Enhance the officers incentive to increase our stock price
and maximize shareholder value, as well as promote retention of
key people, by providing a portion of total compensation
opportunities for senior management in the form of direct
ownership in Rochester Medical through stock options
and/or
restricted stock.
|
Our overall compensation program is structured to attract,
motivate and retain highly qualified executive officers by
paying them competitively, consistent with our success and their
contribution to that success. We believe compensation should be
structured to ensure that a significant portion of an
executives compensation opportunity will be directly
related to our performance and other factors that directly and
indirectly influence shareholder value. Accordingly, we set
goals designed to link each Named Executive Officers
compensation to our performance. Consistent with our
performance-based philosophy, we provide a base salary to our
executive officers and include a significant incentive based
component, payable in cash. We do not currently have an annual
performance-based equity plan for our executive officers, but
may make discretionary awards of equity-based compensation to
our Named Executive Officers under our 2001 Stock
Incentive Plan.
Compensation
Determination Process and Components
The Compensation Committee is provided with the primary
authority to determine and approve the compensation paid to our
executive officers. The Compensation Committee reviews the
executive compensation program in connection with our annual
performance review process, which typically concludes in
November of each fiscal year, with changes to base compensation
effective January 1st. We typically set base salary
structures and annual incentive targets after taking into
consideration a peer group of similarly sized and type of
companies in the medical device industry. While this benchmark
data provides a useful point of reference for measurement,
rather than the determinative factor, for executive
compensation, we believe this approach helps us ensure that our
compensation cost structures will allow us to remain competitive
in our markets. From time to time, the Compensation Committee
may use outside compensation consultants to assist it in
analyzing our compensation programs and determining appropriate
levels of compensation and benefits. The decision to retain
consultants and, if so, which consultants to retain, is made
solely by the Compensation Committee.
In general, the Compensation Committee typically begins by
reviewing credible third-party survey information of comparably
sized, publicly-traded medical device companies to benchmark our
competitive position for
15
the three principal components of executive
compensation base salary, annual incentives and
long-term incentives. The Chief Executive Officer and Chief
Financial Officer participate in the Compensation
Committees meetings at the committees request. To
aid the Compensation Committee in making its determination, the
Chief Executive Officer provides recommendations annually to the
Compensation Committee regarding the compensation of all
executive officers, excluding himself. Each member of the
executive management team, in turn, participates in an annual
performance review with the Chief Executive Officer to provide
input about their contributions to our success for the period
being assessed. Management does not participate in the final
determination of the amount or form of executive compensation.
The Compensation Committee evaluated the following in
determining the amount of executive compensation for fiscal 2009:
|
|
|
|
|
Competitive practices and the amounts and nature of compensation
paid to executive officers of similarly sized and type of
companies in the medical device industry; the proportionate
share of compensation related to base salary and incentive cash
compensation categorized by quartiles; and the job
responsibilities of the executive positions included in the
comparable compensation data.
|
|
|
|
The Chief Executive Officers recommendations and input to
the Compensation Committee regarding the contribution of each
individual executive officer to our performance.
|
|
|
|
For the compensation of the Chief Executive Officer, the
Compensation Committee also reviewed benchmark data for Chief
Executive Officers of similarly sized and type of companies in
the medical device industry.
|
Historically, the Compensation Committee has utilized salary
data of similarly sized and type of medical device companies
produced by Equilar and considered actual salary amounts
provided in peer group proxy statements. The Compensation
Committee engaged Towers Perrin, an independent compensation
consultant, during the summer of 2008 to further review and
analyze our overall compensation program and to provide
competitive market data for five executive officer positions:
Chief Executive Officer, Chief Financial Officer, Corporate Vice
President, Vice President, Operations, and Vice President,
Marketing. The Compensation Committee also requested available
data on the prevalence and amount of executive perquisites. In
evaluating the competitiveness of our compensation programs,
Towers Perrin reviewed, and provided to the Compensation
Committee, market data from the following sources:
|
|
|
|
|
Proxy Analysis of Peer Companies.
The
Compensation Committee considered the compensation practices of
a peer group of 26 publicly traded companies as listed below:
|
|
|
|
|
|
Alphatec Holdings Inc.
|
|
Endologix Inc.
|
|
Stereotaxis Inc.
|
AngioDynamics Inc.
|
|
I-Flow Corp.
|
|
Strategic Diagnostics Inc.
|
Aspect Medical Systems Inc.
|
|
IRIS International Inc.
|
|
Synovis Life Technologies Inc.
|
AtriCure Inc.
|
|
Kensey Nash Corp.
|
|
Utah Medical Products Inc.
|
ATRION Corp.
|
|
Micrus Endovascular Corp.
|
|
ViaCell Inc.
|
Cerus Corp.
|
|
Natus Medical Inc.
|
|
Vital Images Inc.
|
Clarient Inc.
|
|
NxStage Medical Inc.
|
|
VNUS Medical Technologies Inc.
|
Cyberonics Inc.
|
|
Orthovita Inc.
|
|
Young Innovations Inc.
|
Cynosure Inc.
|
|
Spectranetics Corp.
|
|
|
|
|
|
|
|
External Surveys.
In analyzing the
competitiveness of our compensation programs, Towers Perrin
reviewed the following three external surveys covering both the
general and medical instruments industry: (1) Watson
Wyatts 2007/2008 Industry Report on Top Management
Compensation (General Industry),
|
16
|
|
|
|
|
(2) Watson Wyatts 2007/2008 Industry Report on Top
Management Compensation (Instruments and Bio-Medical Equipment
and Supplies), and (3) William Mercers 2007 Executive
Survey.
|
Rochester Medicals executive positions were matched to
benchmark positions from each survey based on the job
descriptions provided to Towers Perrin by the company. The
survey data was updated to July 1, 2008, using an annual
adjustment factor of 4.0% and were scaled to Rochester
Medicals size of $32 million in revenue.
In November 2008, the Compensation Committee used this data for
purposes of its compensation decisions for fiscal 2009. Our
review indicated that, in general, we were providing annual cash
compensation below the median of the companies in the data we
reviewed. We believe, however, the design of base and incentive
annual cash compensation appropriately provides market
compensation to our executive officers.
Base
Salary
Base salaries are designed to provide regular recurring
compensation for the fulfillment of the regular duties and
responsibilities associated with job roles, and are paid in cash
on a semi-monthly basis. The base salaries for our executive
officers generally are established at the beginning of each
fiscal year (but with annual adjustments effective on a calendar
year basis) based on each individuals experience, an
analysis of each individuals performance during the prior
year, market factors including the salary levels of comparable
positions in the medical device industry using credible
third-party survey information, and other publicly available
data of comparable companies. The base salaries for our
executive officers are structured to be market-competitive and
to attract and retain these key employees. An executives
base salary is also determined by reviewing the executives
other compensation to ensure that the executives total
compensation is in line with our overall compensation philosophy.
The Compensation Committee reviews base salaries annually. The
Compensation Committee establishes base salaries for executive
officers (other than the Chief Executive Officer) based upon
prior year performance reviews conducted by the Chief Executive
Officer and his recommendations as presented to the Compensation
Committee for approval or modification, in conjunction with
available market data. Additionally, we may adjust base salaries
as warranted throughout the year for promotions or other changes
in the scope or breadth of an executives role or
responsibilities. The base salary of the Chief Executive Officer
is established by the Compensation Committee after consideration
of the Chief Executive Officers performance for the prior
year. As part of its determination, the Compensation Committee
reviews the companys actual performance during the year,
as well as available market data. The Committee also considered
the relatively high equity ownership position in Rochester
Medical that Mr. Conway maintains, which serves to
partially offset the lower percentile for base compensation
against the companys peers.
The Compensation Committee approved competitive base salary
increases for our Named Executive Officers for fiscal year 2009
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
2008 Base Salary(1)
|
|
|
2009 Base Salary(1)
|
|
|
% Change
|
|
|
Anthony J. Conway
|
|
$
|
265,000
|
|
|
$
|
280,900
|
|
|
|
6
|
%
|
David A. Jonas
|
|
$
|
200,000
|
|
|
$
|
208,000
|
|
|
|
4
|
%
|
Martyn R. Sholtis
|
|
$
|
187,000
|
|
|
$
|
194,480
|
|
|
|
4
|
%
|
Philip C. Conway
|
|
$
|
172,000
|
|
|
$
|
178,880
|
|
|
|
4
|
%
|
James M. Carper
|
|
$
|
120,000
|
|
|
$
|
130,000
|
|
|
|
8.3
|
%
|
(1) Base salary adjustments are effective January 1st
of each year. The amounts listed above are amounts approved by
the Compensation Committee for January through December and will
differ from Base Salary amounts presented in the Summary
Compensation Table, which lists amounts actually earned from
October 1 through September 30.
17
For fiscal 2009, the Compensation Committee approved a 6%
increase in base salary for our Chief Executive Officer in
recognition of the companys financial performance in
fiscal 2008, as well as in an effort to bring his base salary
closer to those of executives in a similar position at
comparable companies. The information provided by the
Committees independent consultant in fiscal 2008 confirmed
that the base salary compensation of our Chief Executive Officer
was below market. The other Named Executive Officers received
base salary increases of 4%, which were generally consistent
with increases provided to other salaried employees of the
company, with the exception of Mr. Carper, whose base
salary was increased 8.3% in recognition of the increased
executive role he was assuming as our Vice President of
Marketing upon the retirement of Ms. Dara Lynn Horner.
Annual
Cash Incentives
Rochester Medicals Management Incentive Plan is designed
to provide executive officers with annual incentive compensation
based on the achievement of certain corporate performance
objectives. At the beginning of each year, the objectives are
initially proposed by our Chief Executive Officer. The
objectives are then reviewed, revised and approved by the
Compensation Committee. Target, minimum,
and maximum levels are assigned to each performance
objective to determine payouts. Under the Management Incentive
Plan, there are no guaranteed minimum payouts. In other words,
the minimum level of payout is zero. While the Management
Incentive Plan allows for payouts at less than the target level,
all such payments are made at the sole discretion of the Board
of Directors. The bonuses are reviewed by the Compensation
Committee and, upon the recommendation of the Compensation
Committee, approved by the Board of Directors.
As necessary, the Compensation Committee may modify or re-weight
the objectives during the course of the fiscal year to reflect
changes in the companys business plan. In the event
certain threshold performance levels are exceeded but applicable
target levels are not achieved, the executive officers will earn
proportional awards. Incentive amounts to be paid under the
performance-based programs may be adjusted by the Compensation
Committee to account for unusual events such as extraordinary
transactions, asset dispositions and purchases, and mergers and
acquisitions if, and to the extent, the Compensation Committee
does not consider the effect of such events indicative of
company performance. Payments under each of the programs are
contingent upon continued employment, though pro rata bonus
payments will be paid in the event of death or disability based
on actual performance at the date relative to the targeted
performance measures for each program.
For fiscal 2009, our performance objectives included
quantitative financial goals based on sales and gross margin
targets. In prior years, the performance objectives had been
based on sales and operating income goals. The Compensation
Committee considered gross margin as a business criteria to be
more reflective of our current business strategy of increasing
market share and gross margin while still managing the business
to maintain profitability. Under the Management Incentive Plan
for fiscal 2009, Mr. Anthony Conway could have earned a
maximum bonus up to 75% of his base salary with a target of 50%
of his base salary. Messrs. Jonas, Sholtis and Philip
Conway could have earned a maximum bonus of 60% of their
respective base salary with a target of 40% of their respective
base salaries. Mr. Carper could have earned a maximum bonus
of 52.5% of his base salary with a target of 35% of his base
salary. The maximum and target bonus percentages for
Mr. Anthony Conway were increased slightly from the prior
fiscal year to increase the incentive nature of the program.
Each of their bonuses was weighted 50% on sales performance
objectives and 50% on gross margin objectives, which the
Compensation Committee believes is an appropriate weighting
because they emphasized in nearly equal measure our top
performance priorities, with the exception of Mr. Sholtis
and Mr. Carper whose bonuses were weighted 75% on sales
performance objectives and 25% on gross margin objectives to
correlate with their job functions. The sales and gross margin
performance targets were approved by the Compensation Committee.
The performance target for sales for achievement of the target
bonus contemplated 16% growth in sales over fiscal 2008, as
adjusted for variations in the currency exchange rate, with the
minimum requirement set at sales equivalent to fiscal 2008
results, and the maximum payout earned at 32% growth in sales
over fiscal 2008. The performance target for gross margin for
achievement of the target bonus contemplated 1.5% increase in
gross margin over fiscal
18
2008, as adjusted for variations in the currency exchange rate,
with the minimum requirement set at 4% below the budgeted fiscal
2009 gross margin percentage, and the maximum payout earned
at 4% above the budgeted fiscal 2009 gross margin
percentage.
At its November 2009 meeting, the Compensation Committee
reviewed the achievement of the corporate objectives in awarding
bonuses under the Management Incentive Plan, and concluded that
total sales for fiscal 2009 were $34,798,000, or 44.7% of the
level needed to achieve the target bonus, and gross margin was
at 48.4%, or 100% of the level needed to achieve the target
bonus. The Board of Directors, upon the recommendation of the
Compensation Committee, approved the 2009 bonus awards on
November 17, 2009. As a result, the following bonuses were
awarded to each of the executive officers named in this proxy
statement for the year ended September 30, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2009
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
|
% Bonus
|
|
|
Amount of
|
|
Name
|
|
Earned
|
|
|
Earned(1)
|
|
|
Bonus Paid
|
|
|
Anthony J. Conway
|
|
$
|
276,925
|
|
|
|
36.17347
|
%
|
|
$
|
100,173
|
|
David A. Jonas
|
|
$
|
206,000
|
|
|
|
28.93878
|
%
|
|
$
|
59,614
|
|
Martyn R. Sholtis
|
|
$
|
192,610
|
|
|
|
23.40817
|
%
|
|
$
|
45,086
|
|
Philip C. Conway
|
|
$
|
177,160
|
|
|
|
28.93878
|
%
|
|
$
|
51,268
|
|
James M. Carper
|
|
$
|
128,750
|
|
|
|
20.48215
|
%
|
|
$
|
26,371
|
|
|
|
|
(1)
|
|
Bonus percentage earned is calculated by multiplying the sum of
(a) the product of the percentage of the sales target
achieved (e.g. 44.7%) multiplied by the percentage weight given
to the sales target (e.g. 50%) plus (b) the product of the
percentage of the gross margin target achieved (e.g. 100%)
multiplied by the percentage weight given to the gross margin
target (e.g. 50%), by the individual executives target
bonus percentage.
|
Long-Term
Incentives
As discussed above, we believe that equity ownership in
Rochester Medical is important to tie the ultimate level of an
executive officers compensation to the performance of our
stock and shareholder gains while creating an incentive for
sustained growth. Our 2001 Stock Incentive Plan allows us the
opportunity to grant stock options and restricted stock awards.
We typically grant stock options to executive officers at the
commencement of their employment. The number of stock options
granted to an executive officer upon commencement of employment
is based on several factors, including the executives
responsibilities, experience and the value of the stock option
at the time of grant. Additional grants other than the initial
grant may be made following a significant change in job
responsibility or in recognition of performance. We do not
currently have an annual performance-based equity plan. The
Compensation Committee may consider adopting such a plan in the
future.
Stock options granted to our executive officers generally vest
in 25% annual cumulative installments beginning one year from
the date of grant. Stock option grants are made with an exercise
price equal to the closing market price of our common stock on
the date of grant. Shares of restricted stock granted under our
2001 Stock Incentive Plan vest 100% on the fourth anniversary of
the date of grant.
The Compensation Committee does not award stock options
according to a prescribed formula or target. In determining the
number of stock options granted to individuals and to the
officers as a group, individual experience, contributions and
achievements are considered, as well as the recommendations of
the Chief Executive Officer. The Compensation Committee also
considers the amount of equity awards granted to executives in
similar positions at comparable companies. A review of each
component of the executives compensation is conducted when
determining annual equity awards to ensure that an
executives total compensation is in line with our overall
compensation philosophy. For determining the number of stock
options to grant in fiscal 2009, the Compensation
19
Committee considered in particular the competitive market data
provided by the Committees independent consultant in
fiscal 2008 with respect to the proportionate share of
compensation related to long-term incentive compensation, and
determined that the size of grant was within market range.
The Compensation Committee and the Board of Directors approved
the following stock option awards to our Named Executive
Officers in fiscal 2009 in recognition of their contributions to
the company:
|
|
|
|
|
|
|
|
|
|
|
2009 Stock
|
|
|
Exercise Price
|
|
Name
|
|
Option Award
|
|
|
per Share
|
|
|
Anthony J. Conway
|
|
|
30,000
|
|
|
$
|
11.27
|
|
David A. Jonas
|
|
|
20,000
|
|
|
$
|
11.27
|
|
Martyn R. Sholtis
|
|
|
20,000
|
|
|
$
|
11.27
|
|
Philip C. Conway
|
|
|
20,000
|
|
|
$
|
11.27
|
|
James M. Carper
|
|
|
20,000
|
|
|
$
|
11.27
|
|
Perquisites
The Committees philosophy is to have as few perquisites as
possible. Currently, we compensate Mr. Sholtis for club
membership payments in support of business development
activities.
Other
Compensation
We provide our executive officers with the same benefits as our
other full-time employees, including health insurance, life and
disability insurance and dental insurance, which we believe are
reasonable, competitive and consistent with our overall
executive compensation program in order to attract and retain
talented executives. The Compensation Committee periodically
reviews the levels of benefits provided to executive officers.
Rochester Medical provides a 401(k) retirement savings plan in
which all full-time employees, including the executive officers,
may participate. Eligible employees may elect to reduce their
current compensation by an amount no greater than the
statutorily prescribed annual limit and may have that amount
contributed to the 401(k) plan. Participation of the executive
officers is on precisely the same terms as any other participant
in the plan. Matching contributions may be made to the 401(k)
plan at the discretion of our Board. Currently we match 50% of
the employees contribution up to a cap of 2.5%.
Severance
Benefits
We have entered into employment agreements with Anthony Conway
and Philip Conway that provide severance benefits upon
termination of employment without cause or by reason of death or
permanent disability. The terms of these arrangements were set
through the course of arms-length negotiations with each of
these officers. Rochester Medical has also entered into
change-in-control
severance agreements with each of our executive officers that
provide financial protection in the event of a
change-in-control
of the company that disrupts an executive officers career.
These agreements are designed to attract and retain high caliber
executive officers, recognizing that change in control
protections are commonly provided at comparable companies with
which we compete for executive talent. In addition, the
Compensation Committee believes
change-in-control
protections enhance the impartiality and objectivity of the
executive officers in the event a
change-in-control
transaction and better ensure that shareholder interests are
protected. A more complete description of the employment
agreements and
change-in-control
agreements, as well as an estimate of the compensation that
would have been payable had they been triggered as of fiscal
year-end, is found beginning at page 26 of this proxy
statement. The Compensation Committee will continue to review
these arrangements annually to determine whether they are
necessary and appropriate under the companys current
circumstances and the circumstances of the individual Named
Executive Officers.
20
Compliance
with Internal Revenue Code Section 162(m)
As a result of Section 162(m) of the Internal Revenue Code
of 1986, as amended (the Code), we will not be
allowed a federal income tax deduction for compensation paid to
certain executive officers to the extent that compensation
exceeds $1 million per officer in any one year. This
limitation will apply to all compensation paid to the covered
executive officers which is not considered to be
performance-based. Compensation which does qualify as
performance-based compensation will not have to be taken into
account for purposes of this limitation.
Section 162(m) of the Code did not affect the deductibility
of compensation paid to our executive officers in fiscal 2009
and it is anticipated it will not affect the deductibility of
such compensation expected to be paid in the foreseeable future.
The Compensation Committee will continue to monitor this matter
and may propose additional changes to the executive compensation
program if warranted.
Compensation
Committee Report
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis with management. Based upon
this review and discussion, the Compensation Committee
recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in this proxy statement.
Compensation
Committee of the Board of Directors of Rochester
Medical
|
|
|
|
|
Darnell L. Boehm
|
|
Roger W. Schnobrich
|
|
Benson Smith
|
The following tables and accompanying narrative disclosures and
footnotes should be read in conjunction with the CD&A,
which sets forth the objectives of Rochester Medical
Corporations executive compensation and benefit program.
Summary
Compensation Table
The table below contains information about the cash and non-cash
compensation for the last three fiscal years awarded to or
earned by the individuals who served as our Chief Executive
Officer or Chief Financial Officer, and each of our three other
Named Executive Officers.
21
SUMMARY
COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
All Other
|
|
|
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
Total
|
Name and Principal Position
|
|
Year
|
|
($)
|
|
($)(1)
|
|
($)(2)
|
|
($)(3)
|
|
($)(4)
|
|
($)(5)
|
|
($)
|
|
Anthony J. Conway
|
|
|
2009
|
|
|
|
276,925
|
|
|
|
|
|
|
|
|
|
|
|
199,023
|
|
|
|
100,173
|
|
|
|
|
|
|
|
576,121
|
|
Chief Executive Officer
|
|
|
2008
|
|
|
|
258,283
|
|
|
|
|
|
|
|
|
|
|
|
173,605
|
|
|
|
69,016
|
|
|
|
|
|
|
|
500,904
|
|
and President
|
|
|
2007
|
|
|
|
234,812
|
|
|
|
|
|
|
|
|
|
|
|
176,415
|
|
|
|
131,704
|
|
|
|
|
|
|
|
542,931
|
|
David A. Jonas
|
|
|
2009
|
|
|
|
206,000
|
|
|
|
|
|
|
|
53,036
|
|
|
|
123,708
|
|
|
|
59,614
|
|
|
|
|
|
|
|
442,358
|
|
Chief Financial Officer,
|
|
|
2008
|
|
|
|
195,000
|
|
|
|
|
|
|
|
53,189
|
|
|
|
108,401
|
|
|
|
46,316
|
|
|
|
|
|
|
|
402,906
|
|
Treasurer and Secretary
|
|
|
2007
|
|
|
|
176,503
|
|
|
|
|
|
|
|
52,165
|
|
|
|
110,715
|
|
|
|
86,624
|
|
|
|
|
|
|
|
426,007
|
|
Martyn R. Sholtis
|
|
|
2009
|
|
|
|
192,610
|
|
|
|
|
|
|
|
53,036
|
|
|
|
123,319
|
|
|
|
45,086
|
|
|
|
6,934
|
|
|
|
420,985
|
|
Corporate Vice President
|
|
|
2008
|
|
|
|
184,750
|
|
|
|
|
|
|
|
53,189
|
|
|
|
106,314
|
|
|
|
57,085
|
|
|
|
6,552
|
|
|
|
407,890
|
|
|
|
|
2007
|
|
|
|
174,844
|
|
|
|
|
|
|
|
52,165
|
|
|
|
105,522
|
|
|
|
87,413
|
|
|
|
5,923
|
|
|
|
425,867
|
|
Philip J. Conway
|
|
|
2009
|
|
|
|
177,160
|
|
|
|
|
|
|
|
|
|
|
|
123,319
|
|
|
|
51,268
|
|
|
|
|
|
|
|
351,747
|
|
Vice President, Product
|
|
|
2008
|
|
|
|
170,000
|
|
|
|
|
|
|
|
|
|
|
|
106,321
|
|
|
|
40,378
|
|
|
|
|
|
|
|
316,699
|
|
Technologies
|
|
|
2007
|
|
|
|
161,955
|
|
|
|
|
|
|
|
|
|
|
|
105,522
|
|
|
|
79,485
|
|
|
|
|
|
|
|
346,962
|
|
James M. Carper
(6)
|
|
|
2009
|
|
|
|
128,750
|
|
|
|
|
|
|
|
|
|
|
|
67,071
|
|
|
|
26,371
|
|
|
|
|
|
|
|
222,192
|
|
Vice President, Marketing
|
|
|
2008
|
|
|
|
113,077
|
|
|
|
|
|
|
|
|
|
|
|
29,340
|
|
|
|
16,600
|
|
|
|
|
|
|
|
159,017
|
|
|
|
|
2007
|
|
|
|
51,615
|
|
|
|
|
|
|
|
|
|
|
|
13,829
|
|
|
|
|
|
|
|
|
|
|
|
65,444
|
|
|
|
|
(1)
|
|
Under current reporting rules, only discretionary or guaranteed
bonuses are disclosed in this column. We award bonuses under our
Management Incentive Plan based on our achievement of certain
performance targets. Accordingly, bonus payments are reported in
the Non-Equity Incentive Plan Compensation column.
|
|
(2)
|
|
The amounts shown in this column are calculated based on ASC 718
and represent the compensation expense recognized by Rochester
Medical during the fiscal year for financial statement purposes,
excluding the financial impact of the estimated forfeitures
related to service-based vesting conditions. Under ASC 718, a
pro rata portion of the total expense calculated at time of
grant is recognized over the applicable service period generally
corresponding with the vesting schedule of the stock award. The
expenses represented in this column relate to restricted stock
grants originally made on November 21, 2006, which vest
100% on the fourth anniversary of the date of grant. The initial
expense is based on the fair value of the restricted stock
grants on the date of grant.
|
|
(3)
|
|
The amounts shown in this column are calculated based on ASC 718
and represent the compensation expense recognized by Rochester
Medical during the fiscal year for financial statement purposes,
excluding the financial impact of the estimated forfeitures
related to service-based vesting conditions. Under ASC 718, a
pro rata portion of the total expense calculated at time of
grant is recognized over the applicable service period generally
corresponding with the vesting schedule of the option award. We
typically have made annual grants to the officers named above
and to the other members of the executive team. Such options
typically vest in 25% annual cumulative installments beginning
one year from the date of grant. The initial expense is based on
the fair value of the stock option grants as estimated using the
Black-Scholes option-pricing model. The assumptions used to
arrive at the Black-Scholes value are disclosed in the following
notes to our consolidated financial statements:
(i) Note 7 to our financial statements included in our
Annual Report on
Form 10-K
for the fiscal year ended September 30, 2009,
(ii) Note 6 to our financial statements included in
our Annual Report on
Form 10-K
for the fiscal year ended September 30, 2008, and
(iii) Note 6 to our financial statements included in our
Annual Report on
Form 10-K
for the fiscal year ended September 30, 2007.
|
|
(4)
|
|
Represents cash bonuses earned during 2009, 2008 and 2007 for
achieving performance goals under our Management Incentive Plan.
See the CD&A for a more detailed description.
|
22
|
|
|
(5)
|
|
The amounts shown in this column consists of club membership
dues for Mr. Sholtis in support of business development
activities.
|
|
(6)
|
|
Mr. Carper rejoined Rochester Medical in March 2007, and
was promoted to Vice President, Marketing in November 2008.
|
Grants of
Plan-Based Awards
The following table summarizes the fiscal 2009 grants of equity
and non-equity plan-based awards to the Named Executive
Officers. All of the equity plan-based awards were granted under
the Rochester Medical Corporation 2001 Stock Incentive Plan.
GRANTS OF
PLAN-BASED AWARDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Awards:
|
|
Exercise
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Number of
|
|
or Base
|
|
|
|
Date Fair
|
|
|
|
|
|
|
Estimated Future Payouts Under Non-Equity
|
|
Shares of
|
|
Securities
|
|
Price of
|
|
Closing
|
|
Value of
|
|
|
|
|
|
|
Incentive Plan Awards(1)
|
|
Stock or
|
|
Underlying
|
|
Option
|
|
Market
|
|
Stock and
|
|
|
Grant
|
|
Approval
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Units
|
|
Options
|
|
Awards
|
|
Price
|
|
Option Awards
|
Name
|
|
Date
|
|
Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)(2)
|
|
($/Sh)
|
|
($/Sh)
|
|
($)(3)
|
|
Anthony J. Conway
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
138,463
|
|
|
|
207,695
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/3/09
|
|
|
|
2/3/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
11.27
|
|
|
|
11.27
|
|
|
|
199,733
|
|
David A. Jonas
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
82,400
|
|
|
|
123,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/3/09
|
|
|
|
2/3/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
11.27
|
|
|
|
11.27
|
|
|
|
133,153
|
|
Martyn R. Sholtis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77,044
|
|
|
|
115,566
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/3/09
|
|
|
|
2/3/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
11.27
|
|
|
|
11.27
|
|
|
|
133,153
|
|
Philip J. Conway
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,864
|
|
|
|
106,296
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/3/09
|
|
|
|
2/3/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
11.27
|
|
|
|
11.27
|
|
|
|
133,153
|
|
James M. Carper
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,063
|
|
|
|
67,595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/3/09
|
|
|
|
2/3/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
11.27
|
|
|
|
11.27
|
|
|
|
133,153
|
|
|
|
|
(1)
|
|
These columns show the potential payments for each of these
executive officers under our Management Incentive Plan for
fiscal 2009 performance. The target bonus for each executive
officer is a percentage of the respective base salary for the
executive officer. Under the Management Incentive Plan for
fiscal 2009, Mr. Anthony Conway could have earned a bonus
up to 75% of his base salary with a target of 50% of his base
salary. Messrs. Jonas, Sholtis, and Philip Conway could
have earned a bonus of up to 60% of their respective base salary
with a target of 40% of their respective base salaries.
Mr. Carper could have earned a bonus of up to 52.5% of his
base salary with a target of 35% of his base salary. Each of
their bonuses was weighted 50% on sales performance objectives
and 50% on gross margin objectives, with the exception of
Mr. Sholtis and Mr. Carper whose bonuses were weighted
75% on sales performance objectives and 25% on gross margin
objectives. Under the Management Incentive Plan, there are no
guaranteed minimum payouts. In other words, the minimum level of
payout or the threshold level is zero. While the Management
Incentive Plan allows for payouts at less than the target level,
all such payments are made at the sole discretion of the Board
of Directors. The bonuses are reviewed and approved by the
Compensation Committee. The actual awards made to the executive
officers in the table are reported in the Non-Equity Incentive
Plan Compensation column in the Summary Compensation table and
are discussed further above under the heading Compensation
Discussion and Analysis.
|
|
(2)
|
|
Stock options were granted under our 2001 Stock Incentive Plan
and vest in 25% annual cumulative installments beginning one
year from the date of grant.
|
|
(3)
|
|
Valuation of option awards based on the grant date fair value of
the options as estimated using the Black-Scholes option-pricing
model. Use of this model should not be construed as an
endorsement of its accuracy. All stock option pricing models
require predictions about the future movement of the stock
price. The assumptions used to arrive at the Black-Scholes value
are disclosed in Note 7 to our financial statements
included in our
|
23
|
|
|
|
|
Annual Report on Form
10-K
for the
fiscal year ended September 30, 2009. The real value of the
options in this table will depend on the actual performance of
our common stock during the applicable period and the fair
market value of our common stock on the date the options are
exercised.
|
2001
Stock Incentive Plan
Our 2001 Stock Incentive Plan was adopted in February 2001, and
amended by our shareholders in January 2006. The number of
shares of common stock authorized for issuance under the 2001
Stock Incentive Plan is 2,000,000 shares. As of
September 30, 2009, options to purchase an aggregate of
1,308,500 shares of common stock were outstanding under the
Plan and an aggregate of 505,000 shares of common stock had
been issued upon the exercise of stock options under the Plan.
Additionally, 40,000 shares of common stock had been issued
as restricted stock. Any stock options or restricted stock
granted under the 2001 Stock Incentive Plan that expire or are
terminated prior to exercise will be eligible again for issuance
under the 2001 Stock Incentive Plan.
The 2001 Stock Incentive Plan provides for the grant of
incentive stock options and nonqualified stock options.
Incentive stock options must be granted at an exercise price not
less than the fair market value of the common stock on the grant
date. The stock options granted to participants owning more than
10% of our outstanding voting stock must be granted at an
exercise price not less than 110% of fair market value of the
common stock on the grant date. The options expire on the date
determined by the Board of Directors, but may not extend more
than 10 years from the grant date, while incentive stock
options granted to participants owning more than 10% of our
outstanding voting stock expire five years from the grant date.
Employee stock options typically vest in 25% annual cumulative
installments beginning one year from date of grant. Our
officers, employees, directors, consultants, independent
directors and affiliates are eligible to receive stock options
under the 2001 Stock Incentive Plan; however, incentive stock
options may only be granted to our employees.
The Compensation Committee of our Board of Directors administers
the 2001 Stock Incentive Plan. Our Board of Directors or the
Compensation Committee may select the recipients of stock
options and restricted stock and determine, subject to any
limitations in the 2001 Stock Incentive Plan:
|
|
|
|
|
the number of shares of common stock covered by options and the
dates upon which those options become exercisable;
|
|
|
|
the number of shares of restricted stock and the dates upon
which those shares vest;
|
|
|
|
the exercise prices of options;
|
|
|
|
the duration of options; and
|
|
|
|
the methods of payment of the exercise price.
|
Certain stock option agreements issued pursuant to the 2001
Stock Incentive Plan provide that on the date (i) a public
announcement is made by us or any person that such person
beneficially owns more than 50% of our outstanding common stock,
(ii) we consummate a merger, consolidation or statutory
share exchange with any other person in which the surviving
entity would not have as its directors at least 60% of our
current Board and would not have at least 60% of its common
stock owned by our shareholders prior to such merger,
consolidation or statutory share exchange, (iii) a majority
of our Board is not comprised of our current directors or
directors elected upon recommendation of our Board of Directors,
or (iv) a sale or disposition of all or substantially all
of our assets or our dissolution (a Change in
Control), 100% of the unvested stock options outstanding
as of the date of the
change-in-control
event will become immediately exercisable. Additionally, our
restricted stock agreements issued pursuant to the Plan provide
that upon the occurrence of a Change in Control, such shares
shall fully vest.
Our Board of Directors may amend, alter, suspend, discontinue or
terminate any outstanding award, only with the consent of the
holder, unless our Board determines that such action would not
adversely affect the holder. Our Board of
24
Directors may at any time amend, alter, suspend, discontinue or
terminate the 2001 Stock Incentive Plan, except that, to the
extent determined by our Board, no amendment requiring
shareholder approval under any applicable securities exchange
listing requirement will become effective until the requisite
shareholder approval is obtained. See also
Proposal 2 Proposal to Approve the
Rochester Medical Corporation 2010 Stock Incentive
Plan.
Outstanding
Equity Awards at Fiscal Year-End
The following table shows the unexercised stock options and
unvested restricted stock held at the end of fiscal year 2009 by
the Named Executive Officers.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Market Value
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
of Shares
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Units of
|
|
|
or Units
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
Option
|
|
|
Stock Held
|
|
|
of Stock that
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Exercise
|
|
|
Expiration
|
|
|
that Have Not
|
|
|
Have not
|
|
Name
|
|
Exercisable(1)
|
|
|
Unexercisable(1)
|
|
|
Price ($)
|
|
|
Date
|
|
|
Vested (#)(2)
|
|
|
Vested ($)(3)
|
|
|
Anthony J. Conway
|
|
|
30,000
|
|
|
|
|
|
|
|
2.36
|
|
|
|
3/12/11
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
2.34
|
|
|
|
4/6/11
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
|
|
|
|
2.17
|
|
|
|
10/16/11
|
|
|
|
|
|
|
|
|
|
|
|
|
16,000
|
|
|
|
|
|
|
|
4.13
|
|
|
|
1/2/13
|
|
|
|
|
|
|
|
|
|
|
|
|
16,000
|
|
|
|
|
|
|
|
4.63
|
|
|
|
1/2/14
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
|
|
|
|
4.70
|
|
|
|
1/1/15
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
5,000
|
|
|
|
5.70
|
|
|
|
1/26/16
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
20,000
|
|
|
|
12.30
|
|
|
|
11/21/16
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
22,500
|
|
|
|
11.23
|
|
|
|
2/6/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
11.27
|
|
|
|
2/3/19
|
|
|
|
|
|
|
|
|
|
David A. Jonas
|
|
|
20,000
|
|
|
|
|
|
|
|
2.56
|
|
|
|
11/21/10
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
|
|
|
|
2.34
|
|
|
|
4/6/11
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
2.17
|
|
|
|
10/16/11
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
|
|
|
4.13
|
|
|
|
1/2/13
|
|
|
|
|
|
|
|
|
|
|
|
|
14,000
|
|
|
|
|
|
|
|
4.63
|
|
|
|
1/2/14
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
|
|
|
|
4.70
|
|
|
|
1/1/15
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
5,000
|
|
|
|
5.70
|
|
|
|
1/26/16
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
12.30
|
|
|
|
11/21/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
240,800
|
|
|
|
|
5,000
|
|
|
|
15,000
|
|
|
|
11.23
|
|
|
|
2/6/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
11.27
|
|
|
|
2/3/19
|
|
|
|
|
|
|
|
|
|
Martyn R. Sholtis
|
|
|
10,000
|
|
|
|
|
|
|
|
4.13
|
|
|
|
1/2/13
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
|
|
|
|
|
4.63
|
|
|
|
1/2/14
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
|
|
|
|
4.70
|
|
|
|
1/1/15
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
5,000
|
|
|
|
5.70
|
|
|
|
1/26/16
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
12.30
|
|
|
|
11/21/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
240,800
|
|
|
|
|
5,000
|
|
|
|
15,000
|
|
|
|
11.23
|
|
|
|
2/6/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
11.27
|
|
|
|
2/3/19
|
|
|
|
|
|
|
|
|
|
Philip J. Conway
|
|
|
24,000
|
|
|
|
|
|
|
|
2.63
|
|
|
|
2/20/11
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
2.34
|
|
|
|
4/6/11
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
2.17
|
|
|
|
10/16/11
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
|
|
|
4.13
|
|
|
|
1/2/13
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
|
|
|
|
|
4.63
|
|
|
|
1/2/14
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
|
|
|
|
4.70
|
|
|
|
1/1/15
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
5,000
|
|
|
|
5.70
|
|
|
|
1/26/16
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
12.30
|
|
|
|
11/21/16
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
15,000
|
|
|
|
11.23
|
|
|
|
2/6/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
11.27
|
|
|
|
2/3/19
|
|
|
|
|
|
|
|
|
|
James M. Carper
|
|
|
2,500
|
|
|
|
2,500
|
|
|
|
18.02
|
|
|
|
3/13/17
|
|
|
|
|
|
|
|
|
|
|
|
|
1,250
|
|
|
|
3,750
|
|
|
|
10.89
|
|
|
|
2/12/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
11.27
|
|
|
|
2/3/19
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Stock options were granted under our 2001 Stock Incentive Plan
and vest in 25% annual cumulative installments beginning one
year from the date of grant.
|
25
|
|
|
(2)
|
|
Shares of restricted stock were granted under our 2001 Stock
Incentive Plan and vest 100% on the fourth anniversary of the
date of grant.
|
|
(3)
|
|
Market value based on the closing market price of our common
stock on September 30, 2009, or $12.04 per share. The
amounts indicated are not necessarily indicative of the amounts
that may be realized by our Named Executive Officers.
|
Option
Exercises and Stock Vested
The following table summarizes the option exercises for each of
our Named Executive Officers for the fiscal year ended
September 30, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
Acquired on
|
|
|
Value Realized on
|
|
|
Acquired on
|
|
|
Value Realized
|
|
Name
|
|
Exercise (#)
|
|
|
Exercise ($)(1)
|
|
|
Vesting (#)
|
|
|
on Vesting ($)
|
|
|
Anthony J. Conway
|
|
|
60,000
|
|
|
|
502,422
|
|
|
|
|
|
|
|
|
|
David A. Jonas
|
|
|
20,000
|
|
|
|
177,200
|
|
|
|
|
|
|
|
|
|
Martyn R. Sholtis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philip J. Conway
|
|
|
20,000
|
|
|
|
172,674
|
|
|
|
|
|
|
|
|
|
James M. Carper
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Value based on the difference between the market price of our
common stock on the date of exercise and the exercise price per
share of the options.
|
|
(2)
|
|
No restricted stock vested in fiscal 2009 for these executive
officers.
|
Potential
Payments Upon Termination or
Change-in-Control
Except as discussed below, if the employment of any of
Messrs. Conway, Jonas, Sholtis, Conway or Carper is
voluntarily or involuntarily terminated, no additional payments
or benefits will accrue or be paid to him, other than what the
officer has accrued and is vested in under the benefit plans
discussed above in this proxy statement. Except in connection
with a
change-in-control
of Rochester Medical, a voluntary or involuntary termination
will not trigger an acceleration of the vesting of any
outstanding stock options or shares of restricted stock.
Employment
Agreements
On August 31, 1990, we entered into an Employment Agreement
with Anthony J. Conway as Chief Executive Officer, which
agreement automatically renews for successive one year periods
until employment is terminated in accordance with the agreement.
The agreement provides for a base salary to be reviewed
periodically by the Board of Directors or a committee thereof,
and such additional bonus and other compensation as may be
established from time to time by the Board based upon an annual
business plan setting goals for the company. Mr. Conway is
also entitled to participate in customary employee benefit
programs determined from time to time by the Board.
Mr. Conways Employment Agreement may be terminated
(i) by Mr. Conway at any time by giving us
30 days prior written notice; (ii) by the Board
without cause on any annual renewal date upon written notice to
Mr. Conway at least 90 days prior to the annual
renewal date; (iii) by the Board, upon written notice
effective immediately, for cause as defined in the Employment
Agreement; or (iv) by either party upon written notice
effective immediately if the other party becomes bankrupt or
initiates similar proceedings for the protection of creditors.
The Employment Agreement also terminates automatically upon
Mr. Conways death or permanent disability.
If the Employment Agreement is terminated voluntarily or with
cause, Mr. Conway will be entitled to the base salary
earned by him prior to the date of termination plus any
unreimbursed expenses. If the Employment
26
Agreement is terminated without cause, Mr. Conway will be
entitled to receive a severance cash payment as liquidated
damages for, and in lieu of, any and all damages which he may
incur as a result of such termination in an amount equal to the
greater of (i) his then base salary for six months, or
(ii) the amounts reasonably estimated to be due under the
Employment Agreement for the six months following the annual
renewal date upon which the termination becomes effective, which
shall be payable within 30 days from the date of
termination plus, in either case, one half of the cash bonus to
which he would have been entitled to had he continued in the
employment of the company for the year following termination. In
the event of Mr. Conways death or permanent
disability, Mr. Conway (or his estate) will be entitled to
his then base salary for a period of six months, plus the cash
bonus payable with respect to the fiscal year of death or
disability, in accordance with normal payment procedures.
Mr. Conways Employment Agreement also includes the
agreement of Mr. Conway not to compete with Rochester
Medical for a period of one year after he has ceased to be
employed by Rochester Medical
On August 31, 1990, we entered into an Employment Agreement
with Philip J. Conway as an officer of Rochester Medical, with
the same terms as the Employment Agreement with Anthony Conway
(other than position and initial base salary).
We do not have written employment agreements with
Messrs. Jonas, Sholtis or Carper.
Change in
Control Agreements
The Compensation Committee of the Board authorized change in
control agreements with Philip J. Conway, Vice President of
Production Technologies, on December 1, 1998; with Anthony
J. Conway, President and Chief Executive Officer, David A.
Jonas, Chief Financial Officer, and Martyn R. Sholtis, Corporate
Vice President, on November 21, 2000; and with James M.
Carper, Vice President of Marketing, on July 30, 2007. The
Compensation Committee and the Board believe that the
arrangements are appropriate to reinforce and encourage the
continued attention and dedication of members of our management
to their assigned duties without distraction if a change in
control of Rochester Medical is proposed. The Compensation
Committee and the Board believe that it is important, should we
or our shareholders receive a proposal for transfer of control
of the company, that management be able to assess and advise the
Board whether such proposal would be in the best interests of
Rochester Medical and our shareholders and to take such other
actions regarding such proposal as the Board might determine to
be appropriate, without being influenced by the uncertainties of
managements own personal situation. The change in control
agreements also include an agreement not to compete with
Rochester Medical for a period of one year after termination of
employment.
The change in control agreements, which are substantially the
same for each individual, provide that each employee agrees to
continue employment with us following a Change in Control (as
defined), unless such employment is terminated because of death,
disability or by the employee for Good Reason (as defined). If a
Change in Control occurs and the individual remains employed by
us for twelve months following such Change in Control, then the
individual will be entitled to receive a lump sum cash payment
equal to 2.5 times such individuals earned compensation
(salary plus cash bonuses) during the 12 month period. If
an individuals employment is terminated within twelve
months following a Change in Control by us without Cause (as
defined) or by the individual for Good Reason, then the
individual will be entitled to receive a lump sum cash payment
equal to 2.5 times such individuals earned compensation
during the one year period prior to the date of the Change in
Control. In either case, payments to an individual are subject
to excess payment limitations, such that the amounts payable
under such individuals agreement shall be reduced until no
portion of the total payments by Rochester Medical to such
individual as a result of the change in control (including the
value of accelerated vesting of stock options) will not be
deductible solely as a result of Section 280G of the
Internal Revenue Code of 1986, as amended.
Additionally, the agreements provide that following a Change in
Control, unless and until employment is terminated for Cause or
Disability or the individual terminates employment other than
for Good Reason, we will
27
maintain for the continued benefit of the individual and his or
her dependents for a period terminating on the earliest of
(i) twelve months after the date of termination or
(ii) the commencement date of equivalent benefits from a
new employee, each insured and self-insured employee welfare
benefit plan (including, without limitation, group health,
death, dental and disability plans) in which the individual was
entitled to participate immediately prior to the Change in
Control (provided the terms of such plans allow for continued
participation and such individual continues to pay his or her
regular contribution).
Stock
Options and Restricted Stock Agreements
Our stock option agreements generally provide that, upon a
Change in Control, the vesting of the options will be
accelerated and the options may be exercised as to all shares of
common stock remaining subject to the option. Likewise, our
restricted stock agreements provide that, upon a Change of
Control, the shares subject thereto will become fully vested.
See the description of our 2001 Stock Incentive Plan on
page 24 for additional information regarding the definition
of a Change of Control for purposes of such plan.
The table below shows potential payments to the executive
officers named in the Summary Compensation Table upon
termination without cause or upon a
change-in-control
of Rochester Medical. The amounts shown assume that termination
was effective as of September 30, 2009, the last business
day of the year, under
change-in-control
agreements that were effective as of such date and are estimates
of the amounts that would be paid to the executives upon
termination in addition to the base salary and bonus earned by
the executives during 2009. The actual amounts to be paid can
only be determined at the actual time of an executives
termination.
POTENTIAL
PAYMENTS UPON TERMINATION AND
CHANGE-IN-CONTROL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Upon
|
|
|
|
|
|
Payments Upon
|
|
|
|
|
|
Termination Without
|
|
|
|
|
|
Termination Without
|
|
|
Payments Accruing
|
|
|
Cause or for Good
|
|
|
|
|
|
Cause Without
|
|
|
12 months After a
|
|
|
Reason After a
|
|
|
|
|
|
Change-in-Control
|
|
|
Change-in-Control
|
|
|
Change-in Control
|
|
Name
|
|
Type of Payment
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Anthony J. Conway
|
|
Base Pay
|
|
|
140,500
|
|
|
|
952,683
|
|
|
|
952,683
|
|
|
|
Total Spread Value of Acceleration:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options(1)
|
|
|
|
|
|
|
1,493,420
|
|
|
|
1,493,420
|
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
140,500
|
|
|
|
2,446,103
|
|
|
|
2,446,103
|
|
David A. Jonas
|
|
Base Pay
|
|
|
|
|
|
|
669,035
|
|
|
|
669,035
|
|
|
|
Total Spread Value of Acceleration:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options(1)
|
|
|
|
|
|
|
1,409,840
|
|
|
|
1,409,840
|
|
|
|
Restricted Stock(2)
|
|
|
|
|
|
|
240,800
|
|
|
|
240,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
2,319,675
|
|
|
|
2,319,675
|
|
Martyn R. Sholtis
|
|
Base Pay
|
|
|
|
|
|
|
598,915
|
|
|
|
598,915
|
|
|
|
Total Spread Value of Acceleration:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options(1)
|
|
|
|
|
|
|
546,620
|
|
|
|
546,620
|
|
|
|
Restricted Stock(2)
|
|
|
|
|
|
|
240,800
|
|
|
|
240,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
1,386,335
|
|
|
|
1,386,335
|
|
28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Upon
|
|
|
|
|
|
Payments Upon
|
|
|
|
|
|
Termination Without
|
|
|
|
|
|
Termination Without
|
|
|
Payments Accruing
|
|
|
Cause or for Good
|
|
|
|
|
|
Cause Without
|
|
|
12 months After a
|
|
|
Reason After a
|
|
|
|
|
|
Change-in-Control
|
|
|
Change-in-Control
|
|
|
Change-in Control
|
|
Name
|
|
Type of Payment
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Philip J. Conway
|
|
Base Pay
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Spread Value of Acceleration:
|
|
|
89,440
|
|
|
|
575,370
|
|
|
|
575,390
|
|
|
|
Stock Options(1)
|
|
|
|
|
|
|
1,165,540
|
|
|
|
1,165,540
|
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
89,440
|
|
|
|
1,740,910
|
|
|
|
1,740,910
|
|
James M. Carper
|
|
Base Pay
|
|
|
|
|
|
|
390,938
|
|
|
|
390,938
|
|
|
|
Total Spread Value of Acceleration:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options(1)
|
|
|
|
|
|
|
21,150
|
|
|
|
21,150
|
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
412,088
|
|
|
|
412,088
|
|
|
|
|
(1)
|
|
Value computed for each stock option grant by multiplying
(i) the difference between (a) $12.04, the closing
market price of a share of our common stock on
September 30, 2009, the last business day of our fiscal
year and (b) the exercise price per share for that option
grant by (ii) the number of shares subject to that option
grant.
|
|
(2)
|
|
Value determined by multiplying the number of shares that vest
by $12.04, the closing market price of a share of our common
stock on September 30, 2009, the last business day of our
fiscal year.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Compensation
Committee Interlocks and Insider Participation
None of our executive officers serves as a member of the board
of directors or compensation committee, or other committee
serving an equivalent function, of any other entity that has one
or more of its executive officers serving as a member of our
Board of Directors or Compensation Committee. The members of our
Compensation Committee are Roger Schnobrich, Darnell Boehm and
Benson Smith. None of the current members of the Compensation
Committee of our Board has ever been one of our employees.
Review of
Related Person Transactions
Our Audit Committee has the authority to review and approve all
related party transactions as they are presented. Additionally,
we annually require each of our directors and executive officers
to complete a directors and officers questionnaire
that elicits information about related person transactions. Our
Board of Directors annually reviews all transactions and
relationships disclosed in the director and officer
questionnaires, and the Board makes a formal determination
regarding each directors independence.
In November 2007, the Audit Committee adopted a written policy
and procedures for the review, approval or ratification of
Related-Person Transactions. For purposes of the
policy, a Related Person Transaction includes any
financial transaction, arrangement or relationship (including
any indebtedness or guarantee of indebtedness) or any series of
similar transactions, arrangements or relationships, in which
Rochester Medical is a participant and a Related Person will
have a direct or indirect interest. A Related-Person
Transaction does not include compensation arrangements
with an executive officer or director of Rochester Medical in
connection with his or her duties to Rochester Medical or any of
its subsidiaries, including the reimbursement of business
expenses incurred in the
29
ordinary course, or indemnification payments and advancement of
expenses made pursuant to Rochester Medicals Articles of
Incorporation or Bylaws or pursuant to any agreement or
instrument. The policy defines Related Person as:
|
|
|
|
|
any person who is in any of the following categories:
(i) any director or executive officer of Rochester Medical;
(ii) any nominee for director of Rochester Medical; or
(iii) any Immediate Family Member of any of the foregoing
persons (which means any child, stepchild, parent, stepparent,
spouse, sibling,
mother-in-law,
father-in-law,
son-in-law,
daughter-in-law,
brother-in-law,
or
sister-in-law,
and any person (other than a tenant or employee) sharing the
household of a person); and
|
|
|
|
any person who is in any of the following categories when a
Transaction in which such person had a direct or indirect
material interest occurred or existed: (i) a security
holder known to Rochester Medical to be the beneficial owner of
more than five percent of any class of Rochester Medicals
voting securities; or (ii) any Immediate Family Member of
any such security holder.
|
Under the policy, management of Rochester Medical is responsible
for disclosing to the Audit Committee (through our Chief
Executive Officer) all material information with respect to any
Related-Person Transaction. The
Audit Committee may, in its sole discretion, approve or deny any
Related-Person Transaction. In determining whether to authorize,
approve
and/or
ratify any Related-Person Transaction, the Audit Committee shall
use any process and review any information that it determines is
reasonable in light of the circumstances in order to determine
if the Related-Person Transaction is fair and reasonable and on
terms no less favorable to Rochester Medical than could be
obtained in a comparable arms length transaction with an
unrelated third party to Rochester Medical. Any Related-Person
Transaction that is not approved or ratified, as the case may
be, shall be voided, terminated or amended, or such other
actions shall be taken, in each case as determined by the Audit
Committee so as to avoid or otherwise address any resulting
conflict of interest.
No director or executive officer of Rochester Medical was
indebted to the company during fiscal year 2009. There were no
related party transactions which were required to be disclosed
under the rules of the Securities and Exchange Commission.
PROPOSAL 2
PROPOSAL TO APPROVE THE
ROCHESTER MEDICAL CORPORATION 2010 STOCK INCENTIVE
PLAN
We are asking our shareholders to approve the Rochester Medical
Corporation 2010 Stock Incentive Plan (the 2010 Stock
Incentive Plan).
On December 15, 2009, the Board of Directors adopted,
subject to shareholder approval, the 2010 Stock Incentive Plan.
The purpose of the 2010 Stock Incentive Plan is to promote the
interests of Rochester Medical and our shareholders by aiding us
in attracting and retaining employees, officers, consultants,
independent contractors, advisors and non-employee directors
capable of assuring our future success. The 2010 Stock Incentive
Plan will allow us to offer such persons incentives to put forth
maximum efforts for the success of our business, to compensate
such persons through various stock-based arrangements and to
provide them with opportunities for stock ownership in Rochester
Medical, thereby aligning the interests of such persons with our
shareholders.
We currently award stock-based compensation, including stock
options and restricted stock, under our 2001 Stock Incentive
Plan. The 2001 Stock Incentive Plan will expire on
February 8, 2011. We also have the ability to award stock
options to certain eligible persons under our 1995 Non-Statutory
Stock Option Plan, although no options are currently outstanding
under that plan. As of December 11, 2009, a total of
234,500 shares remained available for future awards under
these plans (see the Equity Compensation Plan Information table
on page 36 for more information
30
on grants made under our equity compensation plans). No further
awards will be made pursuant to any of our existing equity
compensation plans following shareholder approval of the 2010
Stock Incentive Plan.
The Board of Directors believes that stock-based compensation is
essential in attracting, retaining and recruiting highly
qualified officers, employees and non-employee directors. The
2010 Stock Incentive Plan will allow for the continued use of
stock-based compensation, and will allow us to make all
stock-based awards to all participants throughout our company
under a single plan going forward. As discussed below, the 2010
Stock Incentive Plan will also permit us significant flexibility
in determining the types and specific terms of awards made to
participants. This flexibility will allow us to make future
awards based on then-current objectives for aligning
compensation with shareholder value.
The following is a summary of the material terms of the 2010
Stock Incentive Plan and is qualified in its entirety by
reference to the 2010 Stock Incentive Plan. A copy of the 2010
Stock Incentive Plan is attached as
Appendix A
to
this proxy statement.
Administration
Our Compensation Committee (the Committee) will
administer the 2010 Stock Incentive Plan and will have full
power and authority to determine when and to whom awards will be
granted, and the type, amount, form of payment and other terms
and conditions of each award, consistent with the provisions of
the 2010 Stock Incentive Plan. Subject to the provisions of the
2010 Stock Incentive Plan, the Committee may amend or waive the
terms and conditions, or accelerate the exercisability, of an
outstanding award. The Committee has authority to interpret the
2010 Stock Incentive Plan and establish rules and regulations
for the administration of the 2010 Stock Incentive Plan.
The Board of Directors may also exercise the powers of the
Committee at any time, so long as its actions would not violate
Rule 16b-3
promulgated by the SEC under the Exchange Act or
Section 162(m) of the Internal Revenue Code (the
Code).
Eligible
Participants
Any employee, officer, consultant, advisor or non-employee
director providing services to us or any of our affiliates, who
is selected by the Committee, is eligible to receive an award
under the 2010 Stock Incentive Plan. As of December 15,
2009, approximately 256 employees, officers, consultants,
advisors and directors were eligible as a class to be selected
by the Committee to receive awards under the 2010 Stock
Incentive Plan.
Shares Available
For Awards
The aggregate number of shares of our common stock that may be
issued under all stock-based awards under the 2010 Stock
Incentive Plan will be 1,000,000. If an award is terminated,
forfeited or cancelled without the issuance of any shares, then
the shares previously set aside for that award will be available
for future awards under the 2010 Stock Incentive Plan. If shares
of restricted stock are forfeited or otherwise reacquired prior
to vesting, whether or not dividends have been paid on such
shares, then the number of shares forfeited or reacquired will
again be available for future awards under the 2010 Stock
Incentive Plan. Shares tendered by participants as payment of
the purchase or exercise price of an award or in satisfaction of
tax obligations relating to an award will not become available
again for granting awards under the 2010 Stock Incentive Plan.
For stock appreciation rights (SARs) settled in
shares of our common stock upon exercise, the aggregate number
of shares with respect to which the SAR is exercised, rather
than the number of shares actually issued upon exercise, shall
be counted against the number of shares available for awards
under the 2010 Stock Incentive Plan. Awards that do not entitle
the holder thereof to receive or purchase shares of our common
stock, and awards that are denominated at the time of grant as
payable only in cash and that are settled in cash, are not
counted against the aggregate number of shares available for
awards under the 2010 Stock Incentive Plan.
31
Awards under the 2010 Stock Incentive Plan are subject to the
following limitations:
|
|
|
|
|
In any taxable year, no participant may be granted awards, the
value of which is based solely on an increase in the value of
our common stock after the date of grant of the award and which
are intended to represent qualified performance-based
compensation under Section 162(m) of the Code, in excess
of 100,000 shares.
|
|
|
|
In any taxable year, no participant may be granted performance
awards denominated in shares and which are intended to represent
qualified performance-based compensation under
Section 162(m) of the Code in excess of 100,000 shares.
|
|
|
|
In any taxable year, the maximum amount payable pursuant to all
performance awards denominated in cash to any person in the
aggregate will be $5,000,000 in value. This limitation does not
apply to any award subject to the other two limitations
described above.
|
The Committee will adjust the number of shares and share limits
described above in the case of a stock dividend or other
distribution, recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation,
split-up,
spin-off, combination, repurchase or exchange of shares,
issuance of warrants or other rights or other similar corporate
transaction or event that affects shares of our common stock, in
order to prevent dilution or enlargement of the benefits or
potential benefits intended to be provided under the 2010 Stock
Incentive Plan. Additionally, in the event of any
reorganization, merger, consolidation,
split-up,
spin-off, combination, repurchase or exchange of shares, or
other similar corporate transaction or event in which Rochester
Medical is not the continuing or surviving entity or in which
our shareholders do not continue to own a majority of the voting
power, the Committee may in its discretion provide for
termination of awards in exchange for equal cash value or
replacement of such awards with other rights or property,
assumption or substitution of such awards by the successor or
survivor entity, acceleration of the vesting of such awards as
of a date prior to the event, or expiration of such awards
beyond a certain date, which may be the date of the event.
Types of
Awards and Terms and Conditions
The 2010 Stock Incentive Plan permits the granting of:
|
|
|
|
|
stock options (including both incentive stock options qualified
under Section 422 of the Code and non-qualified stock options);
|
|
|
|
stock appreciation rights;
|
|
|
|
restricted stock and restricted stock units;
|
|
|
|
performance awards of cash, stock or property;
|
|
|
|
dividend equivalents;
|
|
|
|
stock awards; and
|
|
|
|
other stock-based awards.
|
Awards may be granted alone, in addition to, in combination with
or in substitution for, any other award granted under the 2010
Stock Incentive Plan or any other compensation plan. Awards can
be granted for no cash consideration or for any cash or other
consideration as may be determined by the Committee or as
required by applicable law. Awards may provide that upon the
grant or exercise thereof, the holder will receive cash, shares
of our common stock, other securities or property, or any
combination of these in a single payment, installments or on a
deferral basis. The exercise price per share under any stock
option and the grant price of any SAR may not be less than the
fair market value of our common stock on the date of grant of
such option or SAR except to satisfy legal
32
requirements of foreign jurisdictions or if the award is in
substitution for an award previously granted by an entity
acquired by us. Determinations of fair market value under the
2010 Stock Incentive Plan will be made in accordance with
methods and procedures established by the Committee. The term of
awards will be determined by the Committee at the time of grant
but may not be longer than 10 years from the date of grant.
Stock Options.
The holder of an option will be
entitled to purchase a number of shares of our common stock at a
specified exercise price during a specified time period, all as
determined by the Committee. The option exercise price may be
payable either in cash or, at the discretion of the Committee,
in other securities or other property having a fair market value
on the exercise date equal to the exercise price.
Stock Appreciation Rights.
The holder of an
SAR is entitled to receive the excess of the fair market value
(calculated as of the exercise date or, at the Committees
discretion, as of any time during a specified period before or
after the exercise date) of a specified number of shares of our
common stock over the grant price of the SAR. SARs vest and
become exercisable in accordance with a vesting schedule
established by the Committee.
Restricted Stock and Restricted Stock
Units.
The holder of restricted stock will own
shares of our common stock subject to restrictions imposed by
the Committee (including, for example, restrictions on the right
to vote the restricted shares or to receive any dividends with
respect to the shares) for a specified time period determined by
the Committee. The holder of restricted stock units will have
the right, subject to any restrictions imposed by the Committee,
to receive shares of our common stock, or a cash payment equal
to the fair market value of those shares, at some future date
determined by the Committee. If the participants
employment or service as a director terminates during the
vesting period, the restricted stock and restricted stock units
will be forfeited, unless the Committee determines that it would
be in our best interest to waive the remaining restrictions.
Performance Awards.
The Committee may grant
performance awards under the 2010 Stock Incentive Plan. A
performance award may be denominated or payable in cash, stock
(including restricted stock and restricted stock units), other
securities, other awards or other property, and confers on the
holder the right to receive payments, in whole or in part, upon
the achievement of performance goals during a performance period
as established by the Committee. The performance goals to be
achieved during any performance period, the length of any
performance period, the amount of any performance award granted,
the amount of any payment or transfer to be made pursuant to any
performance award and any other terms and conditions of any
performance award will be determined by the Committee.
Performance awards that are granted to participants who may be
covered employees under Section 162(m) of the
Code and that are intended to be qualified performance
based compensation within the meaning of
Section 162(m) of the Code, to the extent required by
Section 162(m) of the Code, must be conditioned solely on
the achievement of one or more objective performance goals
established by the Committee within the time prescribed by
Section 162(m) of the Code, and must otherwise comply with
the requirements of Section 162(m) of the Code.
Performance goals must be based solely on one or more of the
following business criteria, applied on a corporate, subsidiary,
division, business unit or line of business basis: sales,
revenue, costs, expenses, earnings (including one or more of net
profit after tax, gross profit, operating profit, earnings
before interest and taxes, earnings before interest, taxes,
depreciation and amortization and net earnings), earnings per
share, earnings per share from continuing operations, operating
income, pre-tax income, operating income margin, net income,
margins (including one or more of gross, operating and net
income margins), returns (including one or more of return on
actual or pro forma assets, net assets, equity, investment,
capital and net capital employed), shareholder return (including
total shareholder return relative to an index or peer group),
stock price, economic value added, cash generation, cash flow,
unit volume, working capital, market share, cost reductions,
completion of key projects and strategic plan development and
implementation. The measure of performance may be set by
reference to an absolute standard or a comparison to specified
companies or groups of companies, or other external measures. To
the extent consistent with Section 162(m), the Committee
may also exclude charges related to an event or
33
occurrence which the Committee determines should appropriately
be excluded, including (x) restructurings, discontinued
operations, extraordinary items, and other unusual or
non-recurring charges, (y) an event either not directly
related to the operations of the Company or not within the
reasonable control of the Companys management, or
(z) the cumulative effects of tax or accounting changes in
accordance with U.S. generally accepted accounting
principles.
Dividend Equivalents.
The holder of a dividend
equivalent will be entitled to receive payments (in cash, shares
of our common stock, other securities or other property)
equivalent to the amount of cash dividends paid by us to our
shareholders, with respect to the number of shares determined by
the Committee. Dividend equivalents will be subject to other
terms and conditions determined by the Committee.
Stock Awards.
The Committee may grant
unrestricted shares of our common stock, subject to terms and
conditions determined by the Committee and the limitations in
the 2010 Stock Incentive Plan.
Other Stock-Based Awards.
The Committee is
also authorized to grant other types of awards that are
denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to our common
stock, subject to terms and conditions determined by the
Committee and the limitations in the 2010 Stock Incentive Plan.
Duration,
Termination and Amendment
The 2010 Stock Incentive Plan will become effective on the date
it is approved by our shareholders. Unless discontinued or
terminated earlier by the Board of Directors, if approved at the
annual meeting the 2010 Stock Incentive Plan will expire on
January 28, 2020. No awards may be made after that date.
However, unless otherwise expressly provided in an applicable
award agreement, any award granted under the 2010 Stock
Incentive Plan prior to expiration may extend beyond the
expiration of the 2010 Stock Incentive Plan through the
awards normal expiration date.
The Board of Directors may amend, alter, suspend, discontinue or
terminate the 2010 Stock Incentive Plan at any time, although
shareholder approval must be obtained for any amendment to the
2010 Stock Incentive Plan that would increase the number of
shares of our common stock available under the 2010 Stock
Incentive Plan, increase the award limits under the 2010 Stock
Incentive Plan, permit (contrary to the provisions of the 2010
Stock Incentive Plan) awards of options or SARs at a price less
than fair market value, permit repricing of options or SARs, or
cause Section 162(m) of the Code to become unavailable with
respect to the 2010 Stock Incentive Plan. Shareholder approval
is also required for any action that requires shareholder
approval under the rules and regulations of the SEC, the NASDAQ
Stock Market or any other securities exchange that are
applicable to us.
Prohibition
on Repricing Awards
Without the approval of our shareholders, the Committee will not
reprice, adjust or amend the exercise price of any options or
the grant price of any SAR previously awarded, whether through
amendment, cancellation and replacement grant or any other
means, except in connection with a stock dividend or other
distribution, recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation or other similar
corporate transaction or event that affects shares of our common
stock, in order to prevent dilution or enlargement of the
benefits, or potential benefits intended to be provided under
the 2010 Stock Incentive Plan.
Transferability
of Awards
Unless otherwise provided by the Committee, awards (other than
stock awards) under the 2010 Stock Incentive Plan may only be
transferred by will or by the laws of descent and distribution.
Incentive stock options may only be transferred by will or the
laws of descent and distribution.
34
Federal
Income Tax Consequences
Grant of Options and SARs.
The grant of a
stock option or SAR is not expected to result in any taxable
income for the recipient.
Exercise of Options and SARs.
Upon exercising
a non-qualified stock option, the optionee must recognize
ordinary income equal to the excess of the fair market value of
the shares of our common stock acquired on the date of exercise
over the exercise price. The holder of an incentive stock option
generally will have no taxable income upon exercising the option
(except that an alternative minimum tax liability may arise).
Upon exercising a SAR, the amount of any cash received and the
fair market value on the exercise date of any shares of our
common stock received are taxable to the recipient as ordinary
income.
Disposition of Shares Acquired Upon Exercise of Options
and SARs.
Upon disposition of shares acquired
through the exercise of a stock option or SAR, any gain or loss
a recipient realizes will generally be a capital gain or loss.
However, if shares acquired through the exercise of a incentive
stock option are disposed of prior to the expiration of the
applicable incentive stock option holding periods set forth in
the Code, any gain realized by recipient will be treated as
compensation taxable as ordinary income to the extent the fair
market value of the shares exceeded the exercise price of the
incentive stock option on the date of exercise. Any gain
realized on the disposition in excess of the amount treated as
compensation or any loss realized on the disposition will
constitute capital gain or loss, respectively.
Awards Other than Options and SARs.
As to
other awards granted under the 2010 Stock Incentive Plan that
are payable either in cash or shares of our common stock that
are either transferable or not subject to substantial risk of
forfeiture, the holder of the award must recognize ordinary
income equal to (a) the amount of cash received, as
applicable and (b) the excess of (i) the fair market
value of the shares received (determined as of the date of
receipt) over (ii) the amount (if any) paid for the shares
by the holder of the award.
As to an award that is payable in shares of our common stock
that are restricted from transfer and subject to substantial
risk of forfeiture, unless a special election is made by the
holder of the award under the Code, the holder will recognize
ordinary income at the time the shares first become transferable
or not subject to substantial risk of forfeiture, whichever
occurs earlier, equal to the excess of (i) the fair market
value of the shares determined at that later time over
(ii) the amount (if any) paid for the shares by the holder
of the award.
Income Tax Deduction.
Subject to the usual
rules concerning reasonable compensation, including our
obligation to withhold or otherwise collect certain income and
payroll taxes, and assuming that, as expected, stock options,
SARs and certain other performance awards paid under the 2010
Stock Incentive Plan are qualified performance-based
compensation within the meaning of Section 162(m) of
the Code, we will generally be entitled to a corresponding
income tax deduction at the time a participant recognizes
ordinary income from awards made under the 2010 Stock Incentive
Plan.
Special Rules for Executive Officers and Directors Subject to
Section 16 of the Exchange Act.
Special
rules may apply to individuals subject to Section 16 of the
Exchange Act. In particular, unless a special election is made
pursuant to the Code, shares received through the exercise of a
stock option or SAR may be treated as restricted as to
transferability and subject to a substantial risk of forfeiture
for a period of up to six months after the date of exercise.
Accordingly, the amount of any ordinary income recognized and
the amount of our income tax deduction will be determined as of
the end of that period.
Delivery of Shares for Tax Obligation.
Under
the 2010 Stock Incentive Plan, the Committee may permit
participants receiving or exercising awards, subject to the
discretion of the Committee and upon such terms and conditions
as it may impose, to deliver shares of our common stock (either
shares received upon the receipt or exercise of the award or
shares previously owned by the participant) to us to satisfy
federal, state or local tax obligations.
35
Section 409A of the
Code.
Section 409A of the Code imposes
certain requirements applicable to nonqualified deferred
compensation plans. If a nonqualified deferred
compensation plan subject to Section 409A fails to meet, or
is not operated in accordance with, these requirements, then all
compensation deferred under the plan is or becomes immediately
taxable to the extent that it is not subject to a substantial
risk of forfeiture and was not previously taxable. The tax
imposed as a result of these new rules would be increased by
interest at a rate equal to the rate imposed upon tax
underpayments plus one percentage point, and an additional tax
equal to 20% of the compensation required to be included in
income. The Committee intends to administer and interpret the
2010 Stock Incentive Plan and all award agreements in a manner
consistent with the requirements of Section 409A of the
Code in order to avoid any adverse tax results thereunder to a
holder of an award.
New Plan
Benefits
No benefits or amounts have been granted, awarded or received
under the 2010 Stock Incentive Plan. In addition, the Committee
in its sole discretion will determine the number and types of
awards that will be granted under the 2010 Stock Incentive Plan.
Thus, it is not possible to determine the benefits that will be
received by eligible participants if the 2010 Stock Incentive
Plan were to be approved by our shareholders. The closing price
of a share of our common stock, as reported on the Nasdaq Stock
Market on December 11, 2009, was $11.18.
Equity
Compensation Plan Information
The following table provides information related to our equity
compensation plans as of September 30, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
Remaining Available
|
|
|
|
Number of Securities
|
|
|
|
|
|
for Future Issuance
|
|
|
|
to be Issued Upon
|
|
|
Weighted-Average
|
|
|
Under Equity
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
Compensation Plans
|
|
|
|
Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
(Excluding Securities
|
|
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
Reflected in Column(a))
|
|
Plan Category
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity compensation plans approved by security holders
|
|
|
1,494,700
|
(1)
|
|
$
|
7.21
|
|
|
|
146,500
|
|
Equity compensation plans not approved by security holders(2)
|
|
|
|
|
|
$
|
|
|
|
|
88,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,494,700
|
|
|
$
|
7.21
|
|
|
|
234,500
|
|
|
|
|
(1)
|
|
Includes shares issuable under our 1991 Stock Option Plan and
2001 Stock Incentive Plan.
|
|
(2)
|
|
Includes shares issuable to persons other than our full-time
officers or employees pursuant to the exercise of stock options
granted under our 1995 Non-Statutory Stock Option Plan that do
not qualify as incentive stock options within the
meaning of Section 422 of the Code.
|
The Rochester Medical Corporation 1991 Stock Option Plan
authorized the issuance of up to 2,000,000 shares of common
stock. Under the terms of the 1991 Stock Option Plan, the Board
of Directors could grant employee incentive stock options equal
to fair market value of our common stock or employee
non-qualified options at a price which could not be less than
85% of the fair market value. Per the terms of the 1991 Stock
Option Plan, as of April 20, 2001, no new stock options may
be granted under the 1991 Stock Option Plan. As of
September 30, 2009, 146,200 options remain outstanding and
unexercised under the 1991 Stock Option Plan.
The 1995 Non-Statutory Stock Option Plan authorizes the issuance
of up to 100,000 shares of common stock. Per the terms of
the 1995 Non-Statutory Stock Option Plan, no option may be
granted with a term longer than ten years. The vesting schedule
for options granted under the 1995 Non-Statutory Stock Option
Plan is determined by
36
the Compensation Committee. As of September 30, 2009,
88,000 shares remain available for issuance under the 1995
Non-Statutory Stock Option Plan, and there were no options
outstanding under the plan.
The 2001 Stock Incentive Plan authorizes the issuance of up to
2,000,000 shares of Common Stock pursuant to grants of
incentive stock options, non-qualified options or restricted
stock. Per the terms of the 2001 Stock Incentive Plan, options
may be granted with a term no longer than ten years. The vesting
schedule and term for options and restricted stock granted under
the 2001 Stock Incentive Plan is determined by the Compensation
Committee of the Companys Board of Directors. As of
September 30, 2009, 146,500 shares remain available
for issuance under the 2001 Stock Incentive Plan, and there were
1,308,500 options outstanding under the plan. Additionally,
40,000 shares of common stock had been issued as restricted
stock.
If the 2010 Stock Incentive Plan is approved by our
shareholders, no further options or shares of restricted stock
will be granted under any of these plans. If the outstanding
shares of our common stock are changed into or exchanged for a
different number or kind of stock or other securities as a
result of a reorganization, recapitalization, stock dividend,
stock split, combination of shares, reclassification, merger,
consolidation or similar event, the number of shares underlying
outstanding options also may be adjusted. The plans may be
terminated, amended or modified by the Board of Directors at any
time.
The Board of Directors recommends that you vote FOR approval
of the Rochester Medical Corporation 2010 Stock Incentive Plan.
Proxies will be voted FOR this proposal unless otherwise
specified.
AUDIT
COMMITTEE REPORT AND PAYMENT OF FEES TO AUDITOR
Audit
Committee Report
The Audit Committee of the Board of Directors is responsible for
assisting the Board in monitoring the integrity of the financial
statements of Rochester Medical, compliance by Rochester Medical
with legal and regulatory requirements, and the independence and
performance of Rochester Medicals internal and external
auditors.
The consolidated financial statements of Rochester Medical for
the year ended September 30, 2009, were audited by Grant
Thornton LLP, independent auditor for Rochester Medical.
As part of its activities, the Audit Committee has:
1. Reviewed and discussed with management the audited
financial statements of Rochester Medical;
2. Discussed with the independent auditor the matters
required to be discussed under
Statement on Auditing
Standards No. 61 (Communications with Audit Committees),
Statement of Auditing Standards No. 99 (Consideration of
Fraud in a Financial Statement Audit)
, and under the
Securities and Exchange Commission, U.S. Public Company
Accounting Oversight Board and Nasdaq Stock Exchange rules;
3. Received the written disclosures and letter from the
independent auditor required by applicable requirements of the
Public Company Accounting Oversight Board regarding the
independent auditors communications with the Audit
Committee concerning independence; and
4. Discussed with the independent auditor their
independence.
Based on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited
consolidated financial statements of Rochester Medical for the
year ended September 30, 2009, be included in our Annual
Report on
Form 10-K
filed with the SEC.
37
Audit
Committee of the Board of Directors of Rochester
Medical
|
|
|
Darnell L. Boehm,
Chair
|
|
Roger W. Schnobrich
Benson Smith
|
Engagement
of Independent Auditor
On March 11, 2008, the Audit Committee, after a review of
proposals for audit services from several public accountants,
decided to engage Grant Thornton LLP as our independent auditor
for the fiscal year commencing October 1, 2007 and ending
September 30, 2008. McGladrey & Pullen LLP, the
then-current independent registered public accounting firm, was
dismissed by the Audit Committee as of March 11, 2008.
In connection with the audits of the two fiscal years ended
September 30, 2007, and the subsequent interim period
through March 11, 2008, there were no disagreements between
us and McGladrey & Pullen on any matter of accounting
principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements, if not
resolved to the satisfaction of McGladrey & Pullen,
would have caused McGladrey & Pullen to make reference
in connection with their opinion to the subject matter of the
disagreement.
There were no reportable events (as defined in
Regulation S-K
Item 304(a)(1)(v)) during our two most recent fiscal years
ended September 30, 2007, or the subsequent interim period
through March 11, 2008.
The audit reports of McGladrey & Pullen on our
consolidated financial statements as of and for the years ended
September 30, 2007 and September 30, 2006 did not
contain an adverse opinion or a disclaimer of opinion and were
not qualified or modified as to uncertainty, audit scope, or
accounting principles.
McGladrey & Pullen was provided with a copy of the
foregoing disclosures. A letter from McGladrey &
Pullen dated March 13, 2008 is attached as an exhibit to
our Annual Report on
Form 10-K,
stating its agreement with such statements.
On March 13, 2008, the Audit Committee engaged Grant
Thornton as our new independent auditor. During our two most
recent fiscal years and the subsequent interim period through
February 29, 2008, we did not consult with Grant Thornton
regarding any of the matters set forth in Item 304(a)(2)(i)
and (ii) of
Regulation S-K.
Payment
of Fees to Auditor
Audit
Fees
The aggregate fees billed to us by Grant Thornton for 2009 and
2008 for the audit of our financial statements included in our
Annual Report on
Form 10-K
and reviews of our financial statements included in each of our
Quarterly Reports on
Form 10-Q,
were $166,145 and $167,775, respectively.
Audit-Related
Fees
Grant Thornton did not provide audit-related services to us
during 2009 or 2008. Audit-related services include primarily
benefit plan audits.
Tax
Fees
Grant Thornton did not provide tax services to us during 2009 or
2008. Tax fees include primarily tax returns, advice and
planning. In regard to tax services, we engage
Deloitte & Touche LLP to assist us with tax compliance
services, including preparation and assistance with tax returns
and filings, which we believe is more cost efficient and
effective than to have only our employees conduct those
services. The Public Company Accounting Oversight Board and
certain investor groups have recognized that the involvement of
an independent registered public
38
accounting firm in providing certain tax services may enhance
the quality of an audit because it provides the auditor with
better insights into a companys tax accounting activities.
All
Other Fees
The aggregate fees billed for all other services provided to us
by Grant Thornton during 2009 and 2008 were $0 and $0,
respectively. Other services include primarily assistance with
acquisition and financing projects.
Administration
of Engagement of Independent Auditor
The Audit Committee is responsible for appointing, setting
compensation for and overseeing the work of our independent
auditor. The Audit Committee has established a policy for
pre-approving the services provided by our independent auditor
in accordance with the auditor independence rules of the SEC.
This policy requires the review and pre-approval by the Audit
Committee of all audit and permissible non-audit services
provided by our independent auditor and an annual review of the
financial plan for audit fees. To ensure that auditor
independence is maintained, the Audit Committee annually
pre-approves the audit services to be provided by our
independent auditor and the related estimated fees for such
services, as well as the nature and extent of specific types of
audit-related, tax and other non-audit services to be provided
by the independent auditor during the year.
As the need arises, other specific permitted services are
pre-approved on a
case-by-case
basis during the year. A request for pre-approval of services on
a
case-by-case
basis must be submitted by our Chief Financial Officer,
providing information as to the nature of the particular service
to be provided, estimated related fees and managements
assessment of the impact of the service on the auditors
independence. The Audit Committee has delegated to its Chair
pre-approval authority between meetings of the Audit Committee.
Any pre-approvals made by the Chair must be reported to the
Audit Committee. The Audit Committee will not delegate to
management the pre-approval of services to be performed by our
independent auditor.
All of the services provided by Grant Thornton LLP in 2008 and
2009, including services related to the Audit-Related Fees, Tax
Fees and All Other Fees described above, were approved by the
Audit Committee under its pre-approval policies.
PROPOSAL 3
RATIFICATION OF SELECTION OF AUDITOR
The Audit Committee has selected Grant Thornton LLP as our
independent auditor for the fiscal year ending
September 30, 2010. While we are not required to do so, we
are submitting the selection of Grant Thornton to serve as our
independent auditor for the fiscal year ending
September 30, 2010, for ratification in order to ascertain
the views of our shareholders on this appointment. If the
selection is not ratified, the Audit Committee will reconsider
its selection. Representatives of Grant Thornton are expected to
be present at the annual meeting, will have an opportunity to
make a statement if they desire to do so and will be available
to answer appropriate questions from shareholders.
The Board of Directors recommends that you vote FOR
ratification of the selection of Grant Thornton LLP as the
independent auditor of Rochester Medical and our subsidiaries
for the fiscal year ending September 30, 2010. Proxies will
be vote FOR ratifying this selection unless otherwise
specified.
ANNUAL
REPORT TO SHAREHOLDERS AND
FORM 10-K
Our 2009 Annual Report to Shareholders and
Form 10-K,
including financial statements for the year ended
September 30, 2009, accompanies, or has been mailed to you
immediately prior to, this proxy statement. The 2009 Annual
Report to Shareholders is also available on our website at
www.rocm.com/ir
. Copies of our
Form 10-K
are
39
available to shareholders, without charge, upon written request
to Corporate Secretary, Rochester Medical, One Rochester Medical
Drive, Stewartville, MN 55976. If requested, we will provide you
copies of any exhibits to the
Form 10-K
upon the payment of a fee covering our reasonable expenses in
furnishing the exhibits. You can request exhibits to the
Form 10-K
by writing to Corporate Secretary, Rochester Medical, One
Rochester Medical Drive, Stewartville, MN 55976.
HOUSEHOLDING
OF PROXY MATERIALS
The SEC rules permit companies and intermediaries such as
brokers to satisfy delivery requirements for proxy statements
and annual reports with respect to two or more shareholders
sharing the same address by delivering a single proxy statement
or annual report, as applicable, addressed to those
shareholders. This practice, which is commonly referred to as
householding, potentially provides extra convenience
for shareholders and cost savings for companies. Although we do
not household for our registered shareholders, some brokers
household Rochester Medical proxy materials and annual reports,
delivering a single proxy statement and annual report to
multiple shareholders sharing an address unless contrary
instructions have been received from the affected shareholders.
Once you have received notice from your broker that they will be
householding materials to your address, householding will
continue until you are notified otherwise or until you revoke
your consent. If, at any time, you no longer wish to participate
in householding and would prefer to receive a separate proxy
statement or annual report, or if you are receiving multiple
copies of either document and wish to receive only one, please
notify your broker. We will deliver promptly upon written or
oral request a separate copy of our annual report
and/or
proxy
statement to a shareholder at a shared address to which a single
copy of either document was delivered. For copies of either or
both documents, shareholders should write to Corporate
Secretary, Rochester Medical Corporation, One Rochester Medical
Drive, Stewartville, MN 55976.
OTHER
MATTERS
We do not know of any other matters that may be presented for
consideration at the annual meeting. If any other business does
properly come before the annual meeting, the persons named as
proxies on the enclosed proxy card will vote as they deem in the
best interests of Rochester Medical.
DAVID A. JONAS
Chief Financial Officer, Treasurer and Secretary
Dated: December 18, 2009
40
APPENDIX A
ROCHESTER
MEDICAL CORPORATION
2010 STOCK INCENTIVE PLAN
Section 1.
Purpose
The purpose of the Plan is to promote the interests of the
Company and its shareholders by aiding the Company in attracting
and retaining employees, officers, consultants, independent
contractors, advisors and non-employee directors capable of
assuring the future success of the Company, to offer such
persons incentives to put forth maximum efforts for the success
of the Companys business and to compensate such persons
through various stock-based arrangements and provide them with
opportunities for stock ownership in the Company, thereby
aligning the interests of such persons with the Companys
shareholders.
Section 2.
Definitions
As used in the Plan, the following terms shall have the meanings
set forth below:
(a)
Affiliate
shall mean (i) any
entity that, directly or indirectly through one or more
intermediaries, is controlled by the Company and (ii) any
entity in which the Company has a significant equity interest,
in each case as determined by the Committee.
(b)
Award
shall mean any Option, Stock
Appreciation Right, Restricted Stock, Restricted Stock Unit,
Performance Award, Dividend Equivalent, Stock Award or Other
Stock-Based Award granted under the Plan.
(c)
Award Agreement
shall mean any
written agreement, contract or other instrument or document
evidencing an Award granted under the Plan. An Award Agreement
may be in an electronic medium and need not be signed by a
representative of the Company or the Participant. Each Award
Agreement shall be subject to the applicable terms and
conditions of the Plan and any other terms and conditions (not
inconsistent with the Plan) determined by the Committee.
(d)
Board
shall mean the Board of
Directors of the Company.
(e)
Change in Control
shall have the
meaning ascribed to such term in an Award Agreement between the
Participant and the Company.
(f)
Code
shall mean the Internal Revenue
Code of 1986, as amended from time to time, and any regulations
promulgated thereunder.
(g)
Committee
shall mean the committee
designated by the Board to administer the Plan. The Committee
shall be comprised of not less than such number of Directors as
shall be required to permit Awards granted under the Plan to
qualify under
Rule 16b-3,
and each member of the Committee shall be a non-employee
director within the meaning of
Rule 16b-3
and an outside director within the meaning of
Section 162(m). The Company expects to have the Plan
administered in accordance with the requirements for the award
of qualified performance-based compensation within
the meaning of Section 162(m).
(h)
Company
shall mean Rochester Medical
Corporation, a Minnesota corporation, and any successor
corporation.
(i)
Director
shall mean a member of the
Board.
(j)
Dividend Equivalent
shall mean any
right granted under Section 6(e) of the Plan.
(k)
Eligible Person
shall mean any
employee, officer, consultant, independent contractor, advisor
or non-employee director providing services to the Company or
any Affiliate whom the Committee determines to be an Eligible
Person. An Eligible Person must be a natural person.
(l)
Exchange Act
shall mean the
Securities Exchange Act of 1934, as amended.
A-1
(m)
Fair Market Value
shall mean, with
respect to any property (including, without limitation, any
Shares or other securities), the fair market value of such
property determined by such methods or procedures as shall be
established from time to time by the Committee. Notwithstanding
the foregoing, unless otherwise determined by the Committee, the
Fair Market Value of Shares on a given date for purposes of the
Plan shall be the closing sale price of the Shares on the NASDAQ
Stock Market as reported on the consolidated transaction
reporting system on such date or, if such exchange is not open
for trading on such date, on the most recent preceding date that
such exchange is open for trading.
(n)
Incentive Stock Option
shall mean an
option granted under Section 6(a) of the Plan that is
intended to meet the requirements of Section 422 of the
Code or any successor provision.
(o)
Non-Qualified Stock Option
shall
mean an option granted under Section 6(a) of the Plan that
is not intended to be an Incentive Stock Option.
(p)
Option
shall mean an Incentive Stock
Option or a Non-Qualified Stock Option to purchase shares of the
Company.
(q)
Other Stock-Based Award
shall mean
any right granted under Section 6(g) of the Plan.
(r)
Participant
shall mean an Eligible
Person designated to be granted an Award under the Plan.
(s)
Performance Award
shall mean any
right granted under Section 6(d) of the Plan.
(t)
Performance Goal
shall mean one or
more of the following performance goals, either individually,
alternatively or in any combination, applied on a corporate,
subsidiary, division, business unit or line of business basis:
sales, revenue, costs, expenses, earnings (including one or more
of net profit after tax, gross profit, operating profit,
earnings before interest and taxes, earnings before interest,
taxes, depreciation and amortization and net earnings), earnings
per share, earnings per share from continuing operations,
operating income, pre-tax income, operating income margin, net
income, margins (including one or more of gross, operating and
net income margins), returns (including one or more of return on
actual or pro forma assets, net assets, equity, investment,
capital and net capital employed), shareholder return (including
total shareholder return relative to an index or peer group),
stock price, economic value added, cash generation, cash flow,
unit volume, working capital, market share, cost reductions,
completion of key projects and strategic plan development and
implementation. Each such performance goal may be based
(i) solely by reference to absolute results of individual
performance or organizational performance at various levels
(e.g., the Companys performance or the performance of a
subsidiary, division, business segment or business unit of the
Company) or (ii) upon organizational performance relative
to the comparable performance of other companies selected by the
Committee. To the extent consistent with Section 162(m),
the Committee may also exclude charges related to an event or
occurrence which the Committee determines should appropriately
be excluded, including (X) restructurings, discontinued
operations, extraordinary items, and other unusual or
non-recurring charges, (Y) an event either not directly
related to the operations of the Company or not within the
reasonable control of the Companys management, or
(Z) the cumulative effects of tax or accounting changes in
accordance with U.S. generally accepted accounting
principles (or other accounting principles which may then be in
effect).
(u)
Person
shall mean any individual or
entity, including a corporation, partnership, limited liability
company, association, joint venture or trust.
(v)
Plan
shall mean the Rochester
Medical Corporation 2010 Stock Incentive Plan, as amended from
time to time.
(w)
Restricted Stock
shall mean any
Share granted under Section 6(c) of the Plan.
A-2
(x)
Restricted Stock Unit
shall mean any
unit granted under Section 6(c) of the Plan evidencing the
right to receive a Share (or a cash payment equal to the Fair
Market Value of a Share) at some future date.
(y)
Rule 16b-3
shall mean
Rule 16b-3
promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, or any successor
rule or regulation.
(z)
Section 162(m)
shall mean
Section 162(m) of the Code, or any successor provision, and
the applicable Treasury Regulations promulgated thereunder.
(aa)
Section 409A
shall mean
Section 409A of the Code, or any successor provision, and
applicable Treasury Regulations and other applicable guidance
thereunder.
(bb)
Securities Act
shall mean the
Securities Act of 1933, as amended.
(cc)
Shares
shall mean shares of Common
Stock, without par value per share, of the Company or such other
securities or property as may become subject to Awards pursuant
to an adjustment made under Section 4(c) of the Plan.
(dd)
Specified Employee
shall mean a
specified employee as defined in Section 409A(a)(2)(B) of
the Code or applicable proposed or final regulations under
Section 409A, determined in accordance with procedures
established by the Company and applied uniformly with respect to
all plans maintained by the Company that are subject to
Section 409A.
(ee)
Stock Appreciation Right
shall mean
any right granted under Section 6(b) of the Plan.
(ff)
Stock Award
shall mean any Share
granted under Section 6(b) of the Plan.
Section 3.
Administration
(a)
Power and Authority of the
Committee
.
The Plan shall be administered by
the Committee. Subject to the express provisions of the Plan and
to applicable law, the Committee shall have full power and
authority to: (i) designate Participants;
(ii) determine the type or types of Awards to be granted to
each Participant under the Plan; (iii) determine the number
of Shares to be covered by (or the method by which payments or
other rights are to be calculated in connection with) each
Award; (iv) determine the terms and conditions of any Award
or Award Agreement; (v) amend the terms and conditions of
any Award or Award Agreement,
provided, however
, that,
except as otherwise permitted in connection with an event as
provided under Section 4(c) hereof, the Committee shall not
reprice, adjust or amend the exercise price of Options or the
grant price of Stock Appreciation Rights previously awarded to
any Participant, whether through amendment, cancellation and
replacement grant, or any other means; (vi) accelerate the
exercisability of any Award or the lapse of any restrictions
relating to any Award, (vii) determine whether, to what
extent and under what circumstances Awards may be exercised in
cash, Shares, promissory notes (
provided
,
however
,
that the acceptance of such promissory notes does not conflict
with Section 402 of the Sarbanes-Oxley Act of 2002), other
securities, other Awards or other property, or canceled,
forfeited or suspended; (viii) interpret and administer the
Plan and any instrument or agreement, including an Award
Agreement, relating to the Plan; (ix) establish, amend,
suspend or waive such rules and regulations and appoint such
agents as it shall deem appropriate for the proper
administration of the Plan; (x) make any other
determination and take any other action that the Committee deems
necessary or desirable for the administration of the Plan; and
(xi) adopt such modifications, rules, procedures and
subplans as may be necessary or desirable to comply with
provisions of the laws of
non-U.S. jurisdictions
in which the Company or an Affiliate may operate, including,
without limitation, establishing any special rules for
Affiliates, Eligible Persons or Participants located in any
particular country, in order to meet the objectives of the Plan
and to ensure the viability of the intended benefits of Awards
granted to Participants located in such
non-United
States jurisdictions. Unless otherwise expressly provided in the
Plan, all designations, determinations, interpretations and
other decisions under or with respect to the Plan or any Award
or Award Agreement shall be within the sole discretion of the
Committee, may be made at any time and shall be final,
A-3
conclusive and binding upon any Participant, any holder or
beneficiary of any Award or Award Agreement, and any employee of
the Company or any Affiliate.
(b)
Power and Authority of the
Board
.
Notwithstanding anything to the
contrary contained herein, the Board may, at any time and from
time to time, without any further action of the Committee,
exercise the powers and duties of the Committee under the Plan,
unless the exercise of such powers and duties by the Board would
cause the Plan not to comply with the requirements of
Rule 16b-3
or Section 162(m).
Section
4.
Shares Available
for Awards
(a)
Shares Available
.
Subject
to adjustment as provided in Section 4(c) of the Plan, the
aggregate number of Shares that may be issued under all Awards
under the Plan shall be 1,000,000. Notwithstanding the
foregoing, (i) the number of Shares available for granting
Incentive Stock Options under the Plan shall not exceed
1,000,000, subject to adjustment as provided in
Section 4(c) of the Plan and subject to the provisions of
Section 422 or 424 of the Code or any successor provision
and (ii) the number of Shares available for granting
Restricted Stock and Restricted Stock Units shall not exceed
1,000,000, subject to adjustment as provided in
Section 4(c) of the Plan. If an Award terminates or is
forfeited or cancelled without the issuance of any Shares, or if
any Shares covered by an Award or to which an Award relates are
not issued for any other reason, then the number of Shares
counted against the aggregate number of Shares available under
the Plan with respect to such Award, to the extent of any such
termination, forfeiture, cancellation or other event, shall
again be available for granting Awards under the Plan. If Shares
of Restricted Stock are forfeited or otherwise reacquired by the
Company prior to vesting, whether or not dividends have been
paid on such Shares, then the number of Shares counted against
the aggregate number of Shares available under the Plan with
respect to such Award of Restricted Stock, to the extent of any
such forfeiture or reacquisition by the Company, shall again be
available for granting Awards under the Plan. Shares that are
withheld in full or partial payment to the Company of the
purchase or exercise price relating to an Award or in connection
with the satisfaction of tax obligations relating to an Award
shall not be available for granting Awards under the Plan.
(b)
Accounting for Awards
.
For
purposes of this Section 4, if an Award entitles the holder
thereof to receive or purchase Shares, the number of Shares
covered by such Award or to which such Award relates shall be
counted on the date of grant of such Award against the aggregate
number of Shares available for granting Awards under the Plan.
For Stock Appreciation Rights settled in Shares upon exercise,
the aggregate number of Shares with respect to which the Stock
Appreciation Right is exercised, rather than the number of
Shares actually issued upon exercise, shall be counted against
the number of Shares available for Awards under the Plan. Awards
that do not entitle the holder thereof to receive or purchase
Shares and Awards that are settled in cash shall not be counted
against the aggregate number of Shares available for Awards
under the Plan.
(c)
Adjustments.
In the event that
any dividend or other distribution (whether in the form of cash,
Shares, other securities or other property), recapitalization,
stock split, reverse stock split, reorganization, merger,
consolidation,
split-up,
spin-off, combination, repurchase or exchange of Shares or other
securities of the Company, issuance of warrants or other rights
to purchase Shares or other securities of the Company or other
similar corporate transaction or event affects the Shares such
that an adjustment is necessary in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be
made available under the Plan, then the Committee shall, in such
manner as it may deem equitable, adjust any or all of
(i) the number and type of Shares (or other securities or
other property) that thereafter may be made the subject of
Awards, (ii) the number and type of Shares (or other
securities or other property) subject to outstanding Awards,
(iii) the purchase price or exercise price with respect to
any Award and (iv) the limitations contained in
Section 4(d) of the Plan;
provided
,
however
,
that the number of Shares covered by any Award or to which such
Award relates shall always be a whole number. Such adjustment
shall be made by the Committee or the Board, whose determination
in that respect shall be final, binding and conclusive.
A-4
Notwithstanding the foregoing in this Section 4(c), in the
event (i) of any reorganization, merger, consolidation,
split-up,
spin-off, combination, repurchase or exchange of Shares or other
securities of the Company or any other similar corporate
transaction or event involving the Company in which the Company
is not the continuing or surviving entity or in which the
shareholders of the Company prior to the corporate transaction
or event do not continue to beneficially own at least 50% of the
combined voting power of the resulting entity, or (ii) the
Company shall enter into a written agreement to undergo such a
transaction or event, the Committee or the Board may, in its
sole discretion, provide for any of the following:
(i) for either (A) termination of any such Award,
whether or not vested, in exchange for an amount of cash
and/or
other
property, if any, equal to the amount that would have been
attained upon the exercise of such Award or realization of the
Participants rights (and, for the avoidance of doubt, if,
as of the date of the occurrence of the transaction or event
described in this Section 4(c), the Committee or the Board
determines in good faith that no amount would have been attained
upon the exercise of such Award or realization of the
Participants rights, then such Award may be terminated by
the Company without payment) or (B) the replacement of such
Award with other rights or property selected by the Committee or
the Board, in its sole discretion;
(ii) that such Award be assumed by the successor or
survivor corporation, or a parent or subsidiary thereof, or
shall be substituted for by similar options, rights or awards
covering the stock of the successor or survivor corporation, or
a parent or subsidiary thereof, with appropriate adjustments as
to the number and kind of shares and prices;
(iii) that such Award shall be exercisable or payable or
fully vested with respect to all Shares covered thereby at such
date prior to the effective date of such event as may be
determined by the Committee or the Board, notwithstanding
anything to the contrary in the Plan or the applicable Award
Agreement; or
(iv) that the Award cannot vest, be exercised or become
payable after a date certain in the future, which may be the
effective date of such event.
In the event that the terms of any agreement between the Company
or any Affiliate and a Participant contains provisions that
conflict with and are more restrictive than the provisions of
this Section 4(c), then this Section 4(c) shall
prevail and control and the more restrictive terms of such
agreement (and only such terms) shall be of no force or effect.
(d)
Award Limitations Under the
Plan
.
(i)
Section 162(m) Limitation for Certain Types
of Awards
.
No Eligible Person may be granted
Options, Stock Appreciation Rights or any other Award or Awards
under the Plan, the value of which Award or Awards is based
solely on an increase in the value of the Shares after the date
of grant of such Award or Awards, and which is intended to
represent qualified performance-based compensation
with the meaning of Section 162(m), for more than
100,000 Shares (subject to adjustment as provided for in
Section 4(c) of the Plan), in the aggregate in any taxable
year.
(ii)
Section 162(m) Limitation for Performance
Awards Denominated in Shares
.
No Eligible
Person may be granted Performance Awards denominated in Shares
(including, without limitation, Restricted Stock and Restricted
Stock Units), and which are intended to represent
qualified performance-based compensation with the
meaning of Section 162(m), for more than
100,000 Shares (subject to adjustment as provided for in
Section 4(c) of the Plan), in the aggregate in any taxable
year.
(iii)
Section 162(m) Limitation for Performance
Awards Denominated in Cash
.
The maximum
amount payable pursuant to all Performance Awards denominated in
cash to any Participant in the aggregate in any taxable year
shall be $5,000,000 in value, whether payable in cash, Shares or
other property. The limitation contained in this
A-5
Section 4(d)(iii) does not apply to any Award subject to
the limitation contained in Section 4(d)(i) or
Section 4(d)(ii). The limitation contained in this Section
4(d)(iii) shall apply only with respect to Awards granted under
this Plan, and limitations on awards granted under any other
shareholder approved executive incentive plan maintained by the
Company will be governed solely by the terms of such other plan.
Section
5.
Eligibility
Any Eligible Person shall be eligible to be designated a
Participant. In determining which Eligible Persons shall receive
an Award and the terms of any Award, the Committee may take into
account the nature of the services rendered by the respective
Eligible Persons, their present and potential contributions to
the success of the Company or such other factors as the
Committee, in its discretion, shall deem relevant.
Notwithstanding the foregoing, an Incentive Stock Option may
only be granted to full-time or part-time employees (which term
as used herein includes, without limitation, officers and
directors who are also employees), and an Incentive Stock Option
shall not be granted to an employee of an Affiliate unless such
Affiliate is also a subsidiary corporation of the
Company within the meaning of Section 424(f) of the Code or
any successor provision.
Section 6.
Awards
(a)
Options
.
The Committee is
hereby authorized to grant Options to Eligible Persons with the
following terms and conditions and with such additional terms
and conditions not inconsistent with the provisions of the Plan
as the Committee shall determine:
(i)
Exercise Price
.
The purchase
price per Share purchasable under an Option shall be determined
by the Committee and shall not be less than 100% of the Fair
Market Value of a Share on the date of grant of such Option;
provided, however,
that the Committee may designate a
purchase price below Fair Market Value on the date of grant
(A) to the extent necessary or appropriate, as determined
by the Committee, to satisfy applicable legal or regulatory
requirements of a foreign jurisdiction or (B) if the Option
is granted in substitution for a stock option previously granted
by an entity that is acquired by or merged with the Company or
an Affiliate.
(ii)
Option Term
.
The term of each
Option shall be fixed by the Committee at the time but shall not
be longer than 10 years from the date of grant.
(iii)
Time and Method of
Exercise
.
The Committee shall determine the
time or times at which an Option may be exercised in whole or in
part and the method or methods by which, and the form or forms
(including, without limitation, cash, Shares, promissory notes
(
provided
,
however
, that the acceptance of such
promissory notes does not conflict with Section 402 of the
Sarbanes-Oxley Act of 2002), other securities, other Awards or
other property, or any combination thereof, having a Fair Market
Value on the exercise date equal to the applicable exercise
price) in which, payment of the exercise price with respect
thereto may be made or deemed to have been made. Alternatively,
the Committee may, in its discretion, permit an Option to be
exercised by delivering to the Participant a number of Shares
having an aggregate Fair Market Value (determined as of the date
of exercise) equal to the excess, if positive, of the Fair
Market Value of the Shares underlying the Option being
exercised, on the date of exercise, over the exercise price of
the Option for such Shares.
(iv)
Incentive Stock
Options
.
Notwithstanding anything in the Plan
to the contrary, the following additional provisions shall apply
to the grant of stock options which are intended to qualify as
Incentive Stock Options:
(A) The Committee will not grant Incentive Stock Options in
which the aggregate Fair Market Value (determined as of the time
the Option is granted) of the Shares with respect to which
Incentive Stock Options are exercisable for the first time by
any Participant during any calendar year (under this Plan and
all other plans of the Company and its Affiliates) shall exceed
$100,000.
A-6
(B) All Incentive Stock Options must be granted within ten
years from the earlier of the date on which this Plan was
adopted by the Board or the date this Plan was approved by the
shareholders of the Company.
(C) Unless sooner exercised, all Incentive Stock Options
shall expire and no longer be exercisable no later than
10 years after the date of grant;
provided
,
however
, that in the case of a grant of an Incentive
Stock Option to a Participant who, at the time such Option is
granted, owns (within the meaning of Section 422 of the
Code) stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or of its
Affiliate, such Incentive Stock Option shall expire and no
longer be exercisable no later than 5 years from the date
of grant.
(D) The purchase price per Share for an Incentive Stock
Option shall be not less than 100% of the Fair Market Value of a
Share on the date of grant of the Incentive Stock Option;
provided
,
however
, that, in the case of the grant
of an Incentive Stock Option to a Participant who, at the time
such Option is granted, owns (within the meaning of
Section 422 of the Code) stock possessing more than 10% of
the total combined voting power of all classes of stock of the
Company or of its Affiliate, the purchase price per Share
purchasable under an Incentive Stock Option shall be not less
than 110% of the Fair Market Value of a Share on the date of
grant of the Incentive Stock Option.
(E) Any Incentive Stock Option authorized under the Plan
shall contain such other provisions as the Committee shall deem
advisable, but shall in all events be consistent with and
contain all provisions required in order to qualify the Option
as an Incentive Stock Option.
(b)
Stock Appreciation Rights
.
The
Committee is hereby authorized to grant Stock Appreciation
Rights to Eligible Persons subject to the terms of the Plan and
any applicable Award Agreement. A Stock Appreciation Right
granted under the Plan shall confer on the holder thereof a
right to receive upon exercise thereof the excess of
(i) the Fair Market Value of one Share on the date of
exercise (or, if the Committee shall so determine, at any time
during a specified period before or after the date of exercise)
over (ii) the grant price of the Stock Appreciation Right
as specified by the Committee, which price shall not be less
than 100% of the Fair Market Value of one Share on the date of
grant of the Stock Appreciation Right;
provided, however,
that the Committee may designate a grant price below Fair
Market Value on the date of grant (A) to the extent
necessary or appropriate, as determined by the Committee, to
satisfy applicable legal or regulatory requirements of a foreign
jurisdiction or (B) if the Stock Appreciation Right is
granted in substitution for a stock appreciation right
previously granted by an entity that is acquired by or merged
with the Company or an Affiliate. Subject to the terms of the
Plan and any applicable Award Agreement, the grant price, term,
methods of exercise, dates of exercise, methods of settlement
and any other terms and conditions of any Stock Appreciation
Right shall be as determined by the Committee. The Committee may
impose such conditions or restrictions on the exercise of any
Stock Appreciation Right as it may deem appropriate.
(c)
Restricted Stock and Restricted Stock
Units
.
The Committee is hereby authorized to
grant an Award of Restricted Stock and Restricted Stock Units to
Eligible Persons with the following terms and conditions and
with such additional terms and conditions not inconsistent with
the provisions of the Plan as the Committee shall determine:
(i)
Restrictions
.
Shares of
Restricted Stock and Restricted Stock Units shall be subject to
such restrictions as the Committee may impose (including,
without limitation, any limitation on the right to vote a Share
of Restricted Stock or the right to receive any dividend or
other right or property with respect thereto), which
restrictions may lapse separately or in combination at such time
or times, in such installments or otherwise as the Committee may
deem appropriate. Notwithstanding the foregoing, the Committee
may permit acceleration of vesting of such Awards in the event
of the Participants death, disability or retirement or a
Change in Control.
A-7
(ii)
Issuance and Delivery of
Shares
.
Any Restricted Stock granted under
the Plan shall be issued at the time such Awards are granted and
may be evidenced in such manner as the Committee may deem
appropriate, including book-entry registration or issuance of a
stock certificate or certificates, which certificate or
certificates shall be held by the Company. Such certificate or
certificates shall be registered in the name of the Participant
and shall bear an appropriate legend referring to the
restrictions applicable to such Restricted Stock. Shares
representing Restricted Stock that are no longer subject to
restrictions shall be delivered to the Participant promptly
after the applicable restrictions lapse or are waived. In the
case of Restricted Stock Units, no Shares shall be issued at the
time such Awards are granted. Upon the lapse or waiver of
restrictions and the restricted period relating to Restricted
Stock Units evidencing the right to receive Shares, such Shares
shall be issued and delivered to the holder of the Restricted
Stock Units.
(iii)
Forfeiture
.
Except as
otherwise determined by the Committee, upon a Participants
termination of employment or resignation or removal as a
director (in either case, as determined under criteria
established by the Committee) during the applicable restriction
period, all Shares of Restricted Stock and all Restricted Stock
Units held by the Participant at such time shall be forfeited
and reacquired by the Company;
provided
,
however
,
that the Committee may, when it finds that a waiver would be in
the best interest of the Company, waive in whole or in part any
or all remaining restrictions with respect to Shares of
Restricted Stock or Restricted Stock Units, except as otherwise
provided in the Award Agreement.
(d)
Performance Awards
.
The
Committee is hereby authorized to grant Performance Awards to
Eligible Persons subject to the terms of the Plan and any
applicable Award Agreement. A Performance Award granted under
the Plan (i) may be denominated or payable in cash, Shares
(including, without limitation, Restricted Stock and Restricted
Stock Units), other securities, other Awards or other property
and (ii) shall confer on the holder thereof the right to
receive payments, in whole or in part, upon the achievement of
one or more objective Performance Goals during such performance
periods as the Committee shall establish. Subject to the terms
of the Plan, the Performance Goals to be achieved during any
performance period, the length of any performance period, the
amount of any Performance Award granted, the amount of any
payment or transfer to be made pursuant to any Performance Award
and any other terms and conditions of any Performance Award
shall be determined by the Committee. Performance Awards that
are granted to Eligible Persons who may be covered
employees under Section 162(m) and that are intended
to be qualified performance-based compensation
within the meaning of Section 162(m), to the extent
required by Section 162(m), shall be conditioned solely on
the achievement of one or more objective Performance Goals
established by the Committee within the time prescribed by
Section 162(m), and shall otherwise comply with the
requirements of Section 162(m), as described below.
(i)
Timing of Designations; Duration of Performance
Periods
.
For each Award intended to be
qualified performance-based compensation, the
Committee shall, not later than 90 days after the beginning
of each performance period, (i) designate all Participants
for such performance period and (ii) establish the
objective performance factors for each Participant for that
performance period on the basis of one or more of Performance
Goals; provided that, with respect to such Performance Goals,
the outcome is substantially uncertain at the time the Committee
actually establishes the Performance Goal. The Committee shall
have sole discretion to determine the applicable performance
period, provided that in the case of a performance period less
than 12 months, in no event shall a performance goal be
considered to be pre-established if it is established after
25 percent of the performance period (as scheduled in good
faith at the time the Performance Goal is established) has
elapsed.
(ii)
Certification
.
Following the
close of each performance period and prior to payment of any
amount to a Participant with respect to an Award intended to be
qualified performance-based compensation, the
Committee shall certify in writing as to the attainment of all
factors (including the performance factors for a Participant)
upon which any payments to a Participant for that performance
period are to be based.
A-8
(iii)
Payment of Qualified Performance
Awards
.
Certified Awards shall be paid no
later than two and one-half months following the conclusion of
the applicable performance period;
provided, however,
that the Committee may establish procedures that allow for
the payment of Awards on a deferred basis subject to the
requirements of Section 409A. The Committee may, in its
discretion, reduce the amount of a payout achieved and otherwise
to be paid in connection with an Award intended to be
qualified performance-based compensation, but may
not exercise discretion to increase such amount.
(iv)
Certain Events
.
If a
Participant dies or becomes permanently and totally disabled
before the end of a performance period or after the performance
period and before an Award is paid, the Committee may, in its
discretion, determine that the Participant shall be paid a
pro-rated portion of the Award that the Participant would have
received but for his or her death or disability.
(e)
Dividend Equivalents
.
The
Committee is hereby authorized to grant Dividend Equivalents to
Eligible Persons under which the Participant shall be entitled
to receive payments (in cash, Shares, other securities, other
Awards or other property as determined in the discretion of the
Committee) equivalent to the amount of cash dividends paid by
the Company to holders of Shares with respect to a number of
Shares determined by the Committee. Subject to the terms of the
Plan and any applicable Award Agreement, such Dividend
Equivalents may have such terms and conditions as the Committee
shall determine.
(f)
Stock Awards
.
The Committee is
hereby authorized to grant to Eligible Persons Shares without
restrictions thereon, as deemed by the Committee to be
consistent with the purpose of the Plan. Subject to the terms of
the Plan and any applicable Award Agreement, such Stock Awards
may have such terms and conditions as the Committee shall
determine.
(g)
Other Stock-Based Awards
.
The
Committee is hereby authorized to grant to Eligible Persons such
other Awards that are denominated or payable in, valued in whole
or in part by reference to, or otherwise based on or related to,
Shares (including, without limitation, securities convertible
into Shares), as are deemed by the Committee to be consistent
with the purpose of the Plan. The Committee shall determine the
terms and conditions of such Awards, subject to the terms of the
Plan and any applicable Award Agreement. Shares or other
securities delivered pursuant to a purchase right granted under
this Section 6(g) shall be purchased for consideration
having a value equal to at least 100% of the Fair Market Value
of such Shares, or other securities on the date the purchase
right is granted. The consideration paid by the Participant may
be paid by such method or methods and in such form or forms
(including, without limitation, cash, Shares, promissory notes
(
provided
,
however
, that the acceptance such
promissory notes does not conflict with Section 402 of the
Sarbanes-Oxley Act of 2002), other securities, other Awards or
other property or any combination thereof), as the Committee
shall determine.
(h)
General
.
(i)
Consideration for
Awards
.
Awards may be granted for no cash
consideration or for any cash or other consideration as may be
determined by the Committee or required by applicable law.
(ii)
Awards May Be Granted Separately or
Together
.
Awards may, in the discretion of
the Committee, be granted either alone or in addition to, in
tandem with or in substitution for any other Award or any award
granted under any other plan of the Company or any Affiliate.
Awards granted in addition to or in tandem with other Awards or
in addition to or in tandem with awards granted under any other
plan of the Company or any Affiliate may be granted either at
the same time as or at a different time from the grant of such
other Awards or awards.
(iii)
Forms of Payment under
Awards
.
Subject to the terms of the Plan and
of any applicable Award Agreement, payments or transfers to be
made by the Company or an Affiliate upon the grant, exercise or
payment of an Award may be made in such form or forms as the
Committee shall determine (including, without limitation, cash,
Shares, promissory notes (
provided
,
however
, that
the acceptance of such promissory notes
A-9
does not conflict with Section 402 of the Sarbanes-Oxley
Act of 2002), other securities, other Awards or other property
or any combination thereof), and may be made in a single payment
or transfer, in installments or on a deferred basis, in each
case in accordance with rules and procedures established by the
Committee. Such rules and procedures may include, without
limitation, provisions for the payment or crediting of
reasonable interest on installment or deferred payments or the
grant or crediting of Dividend Equivalents with respect to
installment or deferred payments.
(iv)
Term of Awards
.
Subject to
Section 6(a)(iv)(C), the term of each Award shall be for a
period not to exceed 10 years from the date of grant.
(v)
Limits on Transfer of
Awards
.
Except as otherwise provided by the
Committee or in this Section 6(h)(v), no Award (other than
a Stock Award) and no right under any such Award shall be
transferable by a Participant other than by will or by the laws
of descent and distribution. Notwithstanding the immediately
preceding sentence, no Incentive Stock Option shall be
transferable by a Participant other than by will or by the laws
of descent and distribution. The Committee may establish
procedures as it deems appropriate for a Participant to
designate a Person or Persons, as beneficiary or beneficiaries,
to exercise the rights of the Participant and receive any
property distributable with respect to any Award in the event of
the Participants death. The Committee, in its discretion
and subject to such additional terms and conditions as it
determines, may permit a Participant to transfer a Non-Qualified
Stock Option to any family member (as defined in the
General Instructions to
Form S-8
(or any successor to such Instructions or such Form) under the
Securities Act) at any time that such Participant holds such
Option,
provided
that such transfers may not be for value
(as defined in the General Instructions to
Form S-8
(or any successor to such Instructions or such Form) under the
Securities Act) and the family member may not make any
subsequent transfers other than by will or by the laws of
descent and distribution. Each Award under the Plan or right
under any such Award shall be exercisable during the
Participants lifetime only by the Participant (except as
provided herein or in an Award Agreement or amendment thereto
relating to a Non-Qualified Stock Option) or, if permissible
under applicable law, by the Participants guardian or
legal representative. No Award (other than a Stock Award) or
right under any such Award may be pledged, alienated, attached
or otherwise encumbered, and any purported pledge, alienation,
attachment or encumbrance thereof shall be void and
unenforceable against the Company or any Affiliate.
(vi)
Restrictions; Securities Exchange
Listing
.
All Shares or other securities
delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such restrictions as the Committee
may deem advisable under the Plan, applicable federal or state
securities laws and regulatory requirements, and the Committee
may cause appropriate entries to be made with respect to, or
legends to be placed on the certificates for, such Shares or
other securities to reflect such restrictions. The Company shall
not be required to deliver any Shares or other securities
covered by an Award unless and until the requirements of any
federal or state securities or other laws, rules or regulations
(including the rules of any securities exchange) as may be
determined by the Company to be applicable are satisfied.
(vii)
Section 409A
Provisions
.
Notwithstanding anything in the
Plan or any Award Agreement to the contrary, to the extent that
any amount or benefit that constitutes deferred
compensation to a Participant under Section 409A and
applicable guidance thereunder is otherwise payable or
distributable to a Participant under the Plan or any Award
Agreement solely by reason of the occurrence of a Change in
Control or due to the Participants disability or
separation from service (as such term is defined
under Section 409A), such amount or benefit will not be
payable or distributable to the Participant by reason of such
circumstance unless the Committee determines in good faith that
(i) the circumstances giving rise to such Change in
Control, disability or separation from service meet the
definition of a change in ownership or control, disability, or
separation from service, as the case may be, in
Section 409A(a)(2)(A) of the Code and applicable proposed
or final regulations, or (ii) the payment or distribution
of such amount or benefit would be exempt from the application
of Section 409A by reason of the short-term deferral
exemption or otherwise. Any payment or distribution that
A-10
otherwise would be made to a Participant who is a Specified
Employee (as determined by the Committee in good faith) on
account of separation from service may not be made before the
date which is six months after the date of the Specified
Employees separation from service (or if earlier, upon the
Specified Employees death) unless the payment or
distribution is exempt from the application of Section 409A
by reason of the short term deferral exemption or otherwise.
Section 7.
Amendment
and Termination; Corrections
(a)
Amendments to the Plan
.
The
Board may amend, alter, suspend, discontinue or terminate the
Plan at any time;
provided
,
however
, that,
notwithstanding any other provision of the Plan or any Award
Agreement, prior approval of the shareholders of the Company
shall be required for any amendment to the Plan that:
(i) requires shareholder approval under the rules or
regulations of the Securities and Exchange Commission, the
NASDAQ Stock Market or any other securities exchange that are
applicable to the Company;
(ii) increases the number of shares authorized under the
Plan as specified in Section 4(a) of the Plan;
(iii) increases the number of shares subject to the
limitation contained in Section 4(d)(i) or
Section 4(d)(ii) of the Plan or the dollar amount subject
to the limitation contained in Section 4(d)(iii) of the
Plan;
(iv) permits the award of Options or Stock Appreciation
Rights at a price less than 100% of the Fair Market Value of a
Share on the date of grant of such Option or Stock Appreciation
Right, contrary to the provisions of Section 6(a)(i) and
Section 6(b)(ii) of the Plan;
(v) permits repricing of Options or Stock Appreciation
Rights which is prohibited by Section 3(a)(v) of the Plan
; or
(vi) would cause Section 162(m) to become unavailable
with respect to the Plan or permits.
(b)
Amendments to Awards
.
Subject
to the provisions of the Plan, the Committee may waive any
conditions of or rights of the Company under any outstanding
Award, prospectively or retroactively. Except as otherwise
provided in the Plan, the Committee may amend, alter, suspend,
discontinue or terminate any outstanding Award, prospectively or
retroactively, but no such action may adversely affect the
rights of the holder of such Award without the consent of the
Participant or holder or beneficiary thereof. Notwithstanding
the foregoing, the Committee shall not waive any conditions or
rights of the Company, or otherwise amend or alter any
outstanding Award in such a manner as to cause such Award not to
constitute qualified performance-based compensation
within the meaning of Section 162(m) of the Code. The Company
intends that Awards under the Plan shall satisfy the
requirements of Section 409A to avoid any adverse tax
results thereunder, and the Committee shall administer and
interpret the Plan and all Award Agreements in a manner
consistent with that intent. If any provision of the Plan or an
Award Agreement would result in adverse tax consequences under
Section 409A, the Committee may amend that provision (or take
any other action reasonably necessary) to avoid any adverse tax
results and no action taken to comply with Section 409A
shall be deemed to impair or otherwise adversely affect the
rights of any holder of an Award or beneficiary thereof.
(c)
Correction of Defects, Omissions and
Inconsistencies
.
The Committee may correct
any defect, supply any omission or reconcile any inconsistency
in the Plan or in any Award or Award Agreement in the manner and
to the extent it shall deem desirable to implement or maintain
the effectiveness of the Plan.
Section 8.
Income
Tax Withholding
In order to comply with all applicable federal, state, local or
foreign income tax laws or regulations, the Company may take
such action as it deems appropriate to ensure that all
applicable federal, state, local or foreign payroll,
withholding, income or other taxes, which are the sole and
absolute responsibility of a Participant, are withheld or
collected from such Participant. In order to assist a
Participant in paying all or a portion of the applicable
A-11
taxes to be withheld or collected upon exercise or receipt of
(or the lapse of restrictions relating to) an Award, the
Committee, in its discretion and subject to such additional
terms and conditions as it may adopt, may permit the Participant
to satisfy such tax obligation by (a) electing to have the
Company withhold a portion of the Shares otherwise to be
delivered upon exercise or receipt of (or the lapse of
restrictions relating to) such Award with a Fair Market Value
equal to the amount of such taxes (but only to the extent of the
minimum amount required to be withheld under applicable laws or
regulations) or (b) delivering to the Company Shares other
than Shares issuable upon exercise or receipt of (or the lapse
of restrictions relating to) such Award with a Fair Market Value
equal to the amount of such taxes. The election, if any, must be
made on or before the date that the amount of tax to be withheld
is determined.
Section 9.
General
Provisions
(a)
No Rights to Awards
.
No
Eligible Person, Participant or other Person shall have any
claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Eligible Persons,
Participants or holders or beneficiaries of Awards under the
Plan. The terms and conditions of Awards need not be the same
with respect to any Participant or with respect to different
Participants.
(b)
Award Agreements
.
No
Participant shall have rights under an Award granted to such
Participant unless and until an Award Agreement shall have been
duly executed on behalf of the Company and, if requested by the
Company, signed by the Participant, or until such Award
Agreement is delivered and accepted through an electronic medium
in accordance with procedures established by the Company.
(c)
Plan Provisions Control
.
In
the event that any provision of an Award Agreement conflicts
with or is inconsistent in any respect with the terms of the
Plan as set forth herein or subsequently amended, the terms of
the Plan shall control.
(d)
No Rights of
Shareholders
.
Except with respect to
Restricted Stock and Stock Awards, neither a Participant nor the
Participants legal representative shall be, or have any of
the rights and privileges of, a shareholder of the Company with
respect to any Shares issuable upon the exercise or payment of
any Award, in whole or in part, unless and until such Shares
have been issued.
(e)
No Limit on Other Compensation
Arrangements
.
Nothing contained in the Plan
shall prevent the Company or any Affiliate from adopting or
continuing in effect other or additional compensation plans or
arrangements, and such plans or arrangements may be either
generally applicable or applicable only in specific cases.
(f)
No Right to Employment
.
The
grant of an Award shall not be construed as giving a Participant
the right to be retained as an employee of the Company or any
Affiliate, or the right to be retained as a director, nor will
it affect in any way the right of the Company or an Affiliate to
terminate a Participants employment at any time, with or
without cause, or remove a director in accordance with
applicable law. In addition, the Company or an Affiliate may at
any time dismiss a Participant from employment, or remove a
director who is a Participant, free from any liability or any
claim under the Plan or any Award, unless otherwise expressly
provided in the Plan or in any Award Agreement. By participating
in the Plan, each Participant shall be deemed to have accepted
all the conditions of the Plan and the terms and conditions of
any rules and regulations adopted by the Committee and shall be
fully bound thereby.
(g)
Governing Law
.
The internal
law, and not the law of conflicts, of the State of Minnesota
shall govern all questions concerning the validity, construction
and effect of the Plan or any Award, and any rules and
regulations relating to the Plan or any Award.
(h)
Severability
.
If any provision
of the Plan or any Award is or becomes or is deemed to be
invalid, illegal or unenforceable in any jurisdiction or would
disqualify the Plan or any Award under any law deemed applicable
by
A-12
the Committee, such provision shall be construed or deemed
amended to conform to applicable laws, or if it cannot be so
construed or deemed amended without, in the determination of the
Committee, materially altering the purpose or intent of the Plan
or the Award, such provision shall be stricken as to such
jurisdiction or Award, and the remainder of the Plan or any such
Award shall remain in full force and effect.
(i)
No Trust or
Fund Created
.
Neither the Plan nor any
Award shall create or be construed to create a trust or separate
fund of any kind or a fiduciary relationship between the Company
or any Affiliate and a Participant or any other Person. To the
extent that any Person acquires a right to receive payments from
the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general
creditor of the Company or any Affiliate.
(j)
Other Benefits
.
No
compensation or benefit awarded to or realized by any
Participant under the Plan shall be included for the purpose of
computing such Participants compensation or benefits under
any pension, retirement, savings, profit sharing, group
insurance, disability, severance, termination pay, welfare or
other benefit plan of the Company, unless required by law or
otherwise provided by such other plan.
(k)
No Fractional Shares
.
No
fractional Shares shall be issued or delivered pursuant to the
Plan or any Award, and the Committee shall determine whether
cash shall be paid in lieu of any fractional Share or whether
such fractional Share or any rights thereto shall be canceled,
terminated or otherwise eliminated.
(l)
Headings
.
Headings are given
to the sections and subsections of the Plan solely as a
convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
(m)
Consultation With Professional Tax and Investment
Advisors
.
The holder of any Award granted
hereunder acknowledges that the grant, exercise, vesting or any
payment with respect to such an Award, and the sale or other
taxable disposition of the Shares acquired pursuant to the Plan,
may have tax consequences pursuant to the Code or under local,
state or international tax laws. Such a holder further
acknowledges that such holder is relying solely and exclusively
on the holders own professional tax and investment
advisors with respect to any and all such matters (and is not
relying, in any manner, on the Company or any of its employees
or representatives). Finally, such a holder understands and
agrees that any and all tax consequences resulting from the
Award and its grant, exercise, vesting or any payment with
respect thereto, and the sale or other taxable disposition of
the Shares acquired pursuant to the Plan, is solely and
exclusively the responsibility of such holder without any
expectation or understanding that the Company or any of its
employees, representatives or Affiliates will pay or reimburse
such holder for such taxes or other items.
(n)
Forfeiture
.
All Awards under
this Plan shall be subject to forfeiture
and/or
penalty conditions or provisions as determined by the Committee
and set forth in the applicable Award Agreement. Notwithstanding
the foregoing provisions, unless otherwise provided by the
Committee in the applicable Award Agreement, this
Section 9(n) shall not be applicable to any Participant
following a Change in Control.
(o)
Foreign Employees and Foreign Law
Considerations
.
The Committee may grant
Awards to Eligible Persons who are foreign nationals, who are
located outside the United States, who are United States
citizens or resident aliens on global assignments in foreign
nations, who are not compensated from a payroll maintained in
the United States, or who are otherwise subject to (or could
cause the Company to be subject to) legal or regulatory
provisions of countries or jurisdictions outside the United
States, on such terms and conditions different from those
specified in the Plan as may, in the judgment of the Committee,
be necessary or desirable to foster and promote achievement of
the purposes of the Plan, and, in furtherance of such purposes,
the Committee may make such modifications, amendments,
procedures, or subplans as may be necessary or advisable to
comply with such legal or regulatory provisions.
A-13
(p)
Blackout
Periods
.
Notwithstanding any other provision
of this Plan or any Award to the contrary, the Company shall
have the authority to establish any blackout period
that the Company deems necessary or advisable with respect to
any or all Awards.
Section 10.
Effective
Date of the Plan
The Plan shall be subject to approval by the shareholders of the
Company at the annual meeting of shareholders of the Company to
be held on January 28, 2010, and the Plan shall be
effective as of the date of such shareholder approval.
Section
11.
Term
of the Plan
No Award shall be granted under the Plan after ten years from
the date of shareholder approval or any earlier date of
discontinuation or termination established pursuant to
Section 7(a) of the Plan;
provided, however,
that in
the case of a Performance Award intended to be qualified
performance-based compensation, no such Performance Award
shall be granted under the Plan after the fifth year following
the year in which shareholders approved the Performance Goals
unless and until the Performance Goals are re-approved by the
shareholders. However, unless otherwise expressly provided in
the Plan or in an applicable Award Agreement, any Award
theretofore granted may extend beyond such dates, and the
authority of the Committee provided for hereunder with respect
to the Plan and any Awards, and the authority of the Board to
amend the Plan, shall extend beyond the termination of the Plan.
A-14
ROCHESTER MEDICAL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
Thursday, January 28, 2010
3:30 p.m. CST
Minneapolis Hilton and Towers Hotel
1001 Marquette Avenue
Minneapolis, MN 55403
|
|
|
Rochester Medical Corporation
One Rochester Medical Drive
Stewartville, MN 55976
|
|
|
proxy
|
|
This Proxy is Solicited on Behalf of The Board of Directors for use at the Annual Meeting on
January 28, 2010.
The undersigned, having duly received the Notice of Annual Meeting and Proxy Statement dated
December 18, 2009, revoking any proxy previously given, hereby appoints Anthony J. Conway and David
A. Jonas as Proxies (each with the power to act alone and with the power of substitution and
revocation) to represent the undersigned and to vote, as designated below, all Common Shares of
Rochester Medical Corporation held of record by the undersigned on December 11, 2009, at the 2010
Annual Meeting of Shareholders to be held Thursday, January 28, 2010, at the Minneapolis Hilton and
Towers Hotel, 1001 Marquette Avenue, Minneapolis, Minnesota 55403, at 3:30 p.m. CST, and any
adjournment(s) thereof, and, in their discretion, upon any other matters which may be brought
before the meeting.
If this signed proxy card contains no specific voting instructions, my (our) shares will be voted
as recommended by the Directors.
See reverse for voting instructions.
Vote by Internet, Telephone or Mail
24 Hours a Day, 7 Days a Week
Your telephone or Internet vote authorizes the Named
Proxies to vote your shares in the same manner as if
you marked, signed and returned your proxy card.
|
|
|
|
|
INTERNET
www.eproxy.com/rocm
Use the
Internet to vote your proxy until 12:00
p.m. (CT) on January 27, 2010.
Please
have your proxy card and the last four
digits of your Social Security Number or
Tax Identificaction Number available.
Follow the simple instructions to obtain
your records and create an electronic
ballot.
|
|
|
|
|
|
PHONE
1-800-560-1965
Use any touch-tone telephone to vote your
proxy until 12:00 p.m. (CT) on January 27,
2010.
Please have your proxy card and the
last four digits of your Social Security
Number or Tax Identification Number
available. Follow the simple instructions
the voice provides you.
|
|
|
|
|
|
Mail
Mark, sign and date your proxy card
and return it in the postage-paid envelope
weve provided or return it to
Rochester
Medical Corporation,
c/o Shareowner
Services
SM
, P.O. Box 64873, St.
Paul, MN 55164-0873.
|
If you vote by Phone or Internet,
please do not mail your Proxy Card
ò
Please detach here
ò
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
|
Election of Five Directors:
|
|
01 Darnell L. Boehm
|
|
04 Roger W. Schnobrich
|
|
|
|
|
|
|
|
|
|
|
02 Anthony J. Conway
|
|
05 Benson Smith
|
|
|
|
|
|
|
|
|
|
|
03 David A. Jonas
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Instructions: To withhold authority to vote for any indicated nominee,
|
|
|
|
|
write the number(s) of the nominee(s) in the box provided to the right.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.
|
|
|
Approval of the Rochester Medical Corporation 2010 Stock Incentive Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.
|
|
|
Ratification of selection of Grant Thornton LLP as independent auditor for the fiscal
year ending September 30, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vote FOR all nominees
(except as marked to
|
|
o
|
|
Vote WITHHELD
from all nominees
|
|
|
|
|
the contrary)
|
|
|
|
|
|
|
|
|
|
o
|
|
For
o
Against
o
Abstain
|
|
|
|
|
|
|
|
|
|
|
|
o
|
|
For
o
Against
o
Abstain
|
|
|
|
|
|
|
|
|
|
|
|
|
4.
|
|
In their discretion, the Proxies are authorized to vote upon other business of which the
Board of Directors is presently unaware and which may properly come before the meeting, and
for the election of any person as a member of the Board of Directors if a nominee named in the
accompanying Proxy Statement is unable to serve or for good cause will not serve.
|
|
|
|
|
|
|
|
|
|
|
|
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
SHAREHOLDER OR, IF NO DIRECTION IS GIVEN, THIS PROXY SHALL BE VOTED FOR THE ELECTION OF ALL
NOMINEES FOR DIRECTOR LISTED IN ITEM 1,
FOR
ITEMS 2 AND 3, AND UPON ALL OTHER MATTERS, THE PROXIES
SHALL VOTE AS THEY DEEM IN THE BEST INTERESTS OF THE COMPANY.
|
|
|
|
|
|
|
|
Address Change? Mark Box
o
Indicate changes below:
|
|
|
|
|
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Signature(s) in Box
|
|
|
|
|
|
|
|
|
|
Please sign exactly as name appears at left.
When shares are held by joint tenants, both
should sign. If signing as attorney,
executor, administrator or guardian, please
give full title as such. If a corporation,
please sign in full corporate name by
president or other authorized officer. If a
partnership, please sign in partnership name
by an authorized person.
|
Rochester Medical Corp. (MM) (NASDAQ:ROCM)
Historical Stock Chart
From Jun 2024 to Jul 2024
Rochester Medical Corp. (MM) (NASDAQ:ROCM)
Historical Stock Chart
From Jul 2023 to Jul 2024