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TABLE OF CONTENTS
Table of Contents
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. )
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Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under §240.14a-12
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Rochester Medical Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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(3)
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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):
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Proposed maximum aggregate value of transaction:
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(5)
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Total fee paid:
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Fee paid previously with preliminary materials.
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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.
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(1)
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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ROCHESTER MEDICAL CORPORATION
One Rochester Medical Drive
Stewartville, Minnesota 55976
Telephone (507) 533-9600
December 28, 2012
Dear
Shareholders:
You
are cordially invited to join us for our 2013 Annual Meeting of Shareholders, which will be held on Thursday, January 31, 2013, at 10:00 a.m. (Central Time), at
Rochester Medical Corporation's corporate
headquarters located at One Rochester Medical Drive, Stewartville, Minnesota 55976. Holders of record of our common stock as of December 7, 2012, are entitled to notice of and to vote at the
2013 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.
Your
vote is important. Whether or not you attend the meeting, we encourage you to 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.
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Sincerely,
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ANTHONY J. CONWAY
Chairman of the Board, Chief Executive Officer
and President
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ROCHESTER MEDICAL CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
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Date and Time:
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Thursday, January 31, 2013 at 10:00 a.m., Central Time
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Place:
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Rochester Medical Corporation
One Rochester Medical Drive
Stewartville, Minnesota 55976
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Items of Business:
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1.
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The election of five directors to serve until the next Annual Meeting of Shareholders.
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2.
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The ratification of the selection of Grant Thornton LLP as our independent auditor for the fiscal year ending September 30, 2013.
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3.
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An advisory vote on a non-binding resolution to approve the compensation of our executives disclosed in this proxy statement.
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4.
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Any other business that may properly be considered at the Annual Meeting of Shareholders or any adjournment of the meeting.
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Record Date and Quorum:
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You may vote at the meeting if you were a shareholder of record at the close of business on December 7, 2012. 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.
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Voting by Proxy:
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It is important that your shares be represented and voted at the annual meeting. You may vote your shares by telephone or Internet by no later than 12:00 p.m. Central Time on January 30, 2013 (as directed on
the enclosed proxy card), or by completing, signing and promptly returning the enclosed proxy card by mail. Voting in any of these ways will not prevent you from attending or voting your shares at the meeting. A person giving a proxy may revoke it
before it is exercised by delivering to our Corporate Secretary a written notice terminating the proxy's 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.
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By Order of the Board of Directors,
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DAVID A. JONAS
Chief Financial Officer, Treasurer and Secretary
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December 28, 2012
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PROXY STATEMENT
TABLE OF CONTENTS
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PROXY STATEMENT
2013 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 31, 2013
The
Board of Directors of Rochester Medical Corporation is soliciting proxies for use at the Annual Meeting of Shareholders to be held on January 31, 2013, 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 28, 2012.
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 ratification of the selection of our independent auditor, and an advisory (non-binding) vote on the compensation
of our executives disclosed in this proxy statement.
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 7, 2012, as the record date for the annual meeting. If you were a shareholder of record
at the close of business on December 7, 2012, you are entitled to vote at the annual meeting.
As
of the record date, 12,142,050 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 12,142,050 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:
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you are present and vote in person at the meeting; or
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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 ways:
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over the telephone by calling a toll-free number;
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electronically, using the Internet; or
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by completing, signing and mailing the enclosed proxy card.
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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 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.
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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 the election of directors or 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 ratification of
the selection of our independent auditor, the advisory approval of the compensation of our executives disclosed in this proxy statement and the approval of any other proposals. Because your vote on
executive compensation is advisory, it will not be binding upon the company or the Board of Directors. The Compensation Committee, however, will take into account the outcome of the vote when
considering future executive compensation programs.
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 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." Broker non-votes are counted for purposes of
determining the presence of a quorum, but are not considered entitled to vote and thus are not counted for purposes of determining whether a proposal has been approved.
How does the Board recommend that I vote?
You will vote on the following management proposals:
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Election of five directors: Darnell L. Boehm, Anthony J. Conway, David A. Jonas, Richard W.
Kramp and Peter Shepard;
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Ratification of the selection of Grant Thornton LLP as our independent auditor for the fiscal year ending
September 30, 2013; and
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Advisory approval of the compensation of our executives disclosed in this proxy statement.
The
Board of Directors recommends that you vote
FOR
the election of each of the nominees to the Board of Directors,
FOR
the ratification of Grant Thornton LLP
as our independent auditor for the fiscal year ending September 30, 2013, and
FOR
the advisory approval of the compensation of our executives disclosed in this proxy statement.
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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:
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FOR
the election of all of the nominees for director;
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FOR
the ratification of the selection of Grant Thornton LLP as our
independent auditor for the fiscal year ending September 30, 2013; and
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FOR
the advisory approval of the compensation of our executives disclosed
in this proxy statement.
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:
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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 30, 2013;
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if you completed and returned a proxy card, submitting a new proxy card with a later date and returning it so that it is
received by January 30, 2013; or
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submitting timely written notice of revocation to our Corporate Secretary at the address shown below so that it is
received by January 30, 2013.
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 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 the votes and report the results to us.
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 a current report on
Form 8-K to be filed with the SEC within four business days after the meeting.
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 2014 Annual Meeting of Shareholders?
In order for a shareholder proposal to be considered for inclusion in our proxy statement for the 2014 Annual Meeting of Shareholders,
we must receive the written proposal at our principal executive offices at One Rochester
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Medical
Drive, Stewartville, Minnesota 55976, Attention: Corporate Secretary, on or before August 30, 2013. 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 year's 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 year's annual meeting. For the 2014 annual meeting, notices of director nominations and shareholder proposals to be made from the floor must be received
on or before November 2, 2013. 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 November 2, 2013, may not be presented in any manner at the 2014 annual meeting.
How can I communicate with Rochester Medical Corporation's Board of Directors?
Shareholders or other interested persons 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 31, 2013:
Our proxy statement and 2012 Annual Report are available at www.rocm.com/ir.
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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 7, 2012,
by:
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each person or group who we believe beneficially owned five percent or more of our common stock;
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each of our directors and director nominees;
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each of the executive officers named in the Summary Compensation Table in this proxy statement; and
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our directors and executive officers as a group.
Percentage
ownership calculations for beneficial ownership are based on 12,142,050 shares outstanding as of December 7, 2012. 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.
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Name of Beneficial Owner
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Amount and Nature
of Beneficial Ownership(1)
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Percent of Class
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GAMCO Investors, Inc.
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1,541,771
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(4)
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12.7
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Anthony J. Conway
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1,099,659
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(2)(3)(5)
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8.9
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Philip J. Conway
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550,743
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(2)(3)(6)
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4.5
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David A. Jonas
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241,500
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(2)(7)
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2.0
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Martyn R. Sholtis
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187,000
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(2)(8)
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1.5
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Benson Smith
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150,361
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(9)
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1.2
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Darnell L. Boehm
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108,361
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(10)
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*
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James M. Carper
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55,500
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(2)(11)
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*
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Peter H. Shepard
(12)
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18,461
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*
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Richard W. Kramp
(13)
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0
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*
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All directors and executive officers as a group (11 persons)
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2,476,408
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(14)
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18.8
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%
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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 7, 2012 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)
Based
on a Schedule 13D/A dated August 9, 2012, Mario J. Gabelli ("Mario Gabelli"), and various entities which he directly or indirectly
controls or acts as chief investment officer, reported that they had power to vote and dispose of 1,541,771 shares. Each of the reporting persons and covered persons has the sole power to vote or
direct the vote and sole power to dispose or to direct the disposition of the shares reported as of August 8, 2012, as follows: 640,024 shares by GAMCO Asset Management Inc. ("GAMCO"),
except that GAMCO does not have the authority to vote 129,500 of the reported shares; 433,845 shares by Gabelli Funds, LLC; 11,000 shares by Gabelli Securities, Inc. ("GSI"); and 456,902
shares by Teton Advisors, Inc. Mario Gabelli is deemed to have beneficial ownership of the shares owned beneficially by each of the foregoing persons. GSI is deemed to have beneficial ownership
of the shares owned beneficially by Gabelli & Company. GAMCO Investors, Inc. ("GBL") and GGCP, Inc. are deemed to have beneficial ownership of the shares owned
beneficially by each of the foregoing persons other than Mario Gabelli. Mario Gabelli, GBL and GGCP have indirect power with respect to the shares beneficially owned directly by other reporting
persons. The reporting
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persons
do not admit that they constitute a group. The address of the principal business office is One Corporate Center, Rye, New York 10580.
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(5)
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Includes
229,500 shares issuable upon exercise of currently outstanding options. Also includes 63,755 shares held by his wife.
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(6)
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Includes
147,000 shares issuable upon exercise of currently outstanding options. Also includes 9,600 shares held in an IRA for the benefit of
Mr. Philip J. Conway's wife, as to which he disclaims beneficial ownership.
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(7)
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Includes
159,000 shares issuable upon exercise of currently outstanding options.
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(8)
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Includes
147,000 shares issuable upon exercise of currently outstanding options.
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(9)
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Includes
132,000 shares issuable upon exercise of currently outstanding options. Mr. Smith's address is 228 Southern Hill Drive, Duluth, Georgia
30097.
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(10)
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Includes
88,000 shares issuable upon exercise of currently outstanding options. Mr. Boehm's address is 19330 Bardsley Place, Monument, Colorado
80132.
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(11)
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Includes
55,000 shares issuable upon exercise of currently outstanding options.
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(12)
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Mr. Shepard's
address is 1246 N. Ontare Road, Santa Barbara, CA 93105.
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(13)
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Mr. Kramp's
address is 9725 S. Robert Trail, Inver Grove Heights, MN 55077.
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(14)
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Includes
1,009,000 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, 2012 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, 2012 were satisfied.
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 director's successor has been duly elected and qualified, or until the earlier death, resignation, removal or disqualification of such director.
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; experience as an executive officer of a public company in the medical device or similar industry; experience as a director of a public company; independence; and general
criteria such as ethical standards, independent thought, practical wisdom and mature judgment. One or more of our directors must possess the education or experience required to qualify as an audit
committee financial expert. 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. While the company does not have a separate policy
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related
to board diversity, the Nominating Committee seeks nominees with a broad diversity of experience, expertise and backgrounds. We believe that the backgrounds and qualifications of the
directors, considered as a group, should provide a significant composite mix of experience, knowledge and abilities that will allow the board to fulfill its responsibilities and meet its objectives.
Nominees are not discriminated against on the basis of race, religion, national origin, sexual orientation, disability or any other basis prescribed by law.
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 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 candidate's willingness to serve as a director if elected; and (3) a signed
statement as to the submitting shareholder's 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 individual's 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 2013 Annual Meeting of Shareholders.
Our Director Nominees
Following the recommendation of the Nominating Committee, the Board of Directors has nominated the five persons named below for
election to the Board of Directors at the 2013 Annual Meeting of Shareholders. Four of our director nominees currently serve on our Board of Directors. Our Board has nominated Richard W. Kramp for
election at the annual meeting to fill the vacancy resulting from [the retirement of] Benson Smith upon conclusion of the annual meeting. Each of our director nominees is well
qualified under the criteria described above. As employees of the company, Mr. Conway and Mr. Jonas do not qualify as independent directors. Each director nominee brings a variety of
qualifications, skills, attributes and experience to the Board of Directors, including prior service on our Board (with the exception of Mr. Kramp) which adds valuable business and governance
experience with our company and familiarity with the challenges it faces.
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.
|
|
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Director Since
|
|
Position
|
Darnell L. Boehm
|
|
|
64
|
|
|
1995
|
|
Director
|
Anthony J. Conway
|
|
|
68
|
|
|
1988
|
|
Chairman of the Board, Chief Executive Officer and President
|
David A. Jonas
|
|
|
48
|
|
|
2008
|
|
Director, Chief Financial Officer, Treasurer and Secretary
|
Richard W. Kramp
|
|
|
67
|
|
|
|
|
Director nominee
|
Peter H. Shepard
|
|
|
67
|
|
|
2012
|
|
Director
|
8
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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.
Darnell L. Boehm
, age 64, 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. Mr. Boehm's deep financial expertise, which
includes several years experience as a certified public accountant and several chief financial officer or chief executive officer positions, provides particular value to our board in addition to his
insights from his years of service as a director for other companies.
Anthony J. Conway
, age 68, 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. Mr. Conway's thorough and extensive
knowledge of our products, operations, values and culture as well as a deep understanding of the issues and complexities we face in the medical device industry make Mr. Conway a valuable and
qualified director with critical analytical, strategic and risk assessment skills.
David A. Jonas
, age 48, 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. Mr. Jonas's years of service to Rochester Medical as our Chief Financial Officer as well as his extensive management and accounting experience
allow him to make a valuable contribution as a director.
Richard W. Kramp
, age 67, is a director nominee. Mr. Kramp served as President, Chief Executive Officer and Director of Synovis
Life Technologies from January 2007 until February 2012 when Synovis was acquired by Baxter International, Inc. Mr. Kramp had served as President of Synovis since June 2006. From August
2004 to May 2006, he served as President and Chief Operating Officer of the former Interventional Solutions division of Synovis. Prior to joining Synovis, Mr. Kramp most recently served as the
President and Chief Operating Officer of Medical CV, Inc. From 1988 to 2003, Mr. Kramp served as President and Chief Operating Officer, and then President and Chief Executive Officer, as
well as a director of ATS Medical, Inc. (now part of Medtronic, Inc.). From 1978 to 1988, Mr. Kramp held sales and marketing positions at St. Jude Medical, Inc.,
serving as Vice President of Sales and Marketing from 1981 to 1988. From 1972 to 1978, Mr. Kramp held the positions of Design Engineer, Supervisor of Electrical Design with Cardiac
Pacemaker, Inc. (now part of Boston Scientific, Inc.) and
9
Table of Contents
Territory
Manager, then State Sales Manager (Illinois) with an independent rep company of Cardiac Pacemaker's. Mr. Kramp is currently serving on the board of AUM Cardiovascular, a private
medical device company. Mr. Kramp's extensive experience in the medical device industry, including as a chief executive officer of a publicly traded company, will enable him to share meaningful
perspectives regarding strategic planning and growth initiatives.
Peter H. Shepard
, age 67, is a director nominee. Mr. Shepard volunteers his time at Santa Barbara Cottage Hospital where he
is Chairman of the Auxiliary Ambassador Committee. From 1976 to August 2004, Mr. Shepard held a number of sales & marketing and business development positions in the Urology and
Urogynecology division of Mentor Corporation, a leading supplier of surgical aesthetics products that is now part of Johnson & Johnson, retiring as Senior Vice-President Global
Sales & Marketing and Business Development. Mr. Shepard received his bachelor's degree from the University of the Pacific following a four-year term in the Navy as a Hospital
Corpsman specializing as a surgical scrub technician. Mr. Shepard is a member of the Society of Urologic Nurses and Associates, the Association of Rehabilitation Nurses and the International
Continence Society. During his career he also held positions on the Board of Trustees for the Association of Rehabilitation Nurses, on the Industry Council for the American Urological Association, and
as Industry Council Chairperson for the National Association for Continence. Mr. Shepard's extensive experience in the sales and marketing and business development fields, particularly with
respect to urological products, enables him to provide valuable insight and guidance to our management team with respect to our strategic initiatives to grow sales domestically and internationally.
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 2012, 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 Darnell Boehm, Peter Shepard and Benson Smith, and our director nominee,
Richard W. Kramp, are "independent." Each of our Audit, Nominating and Compensation Committees is comprised only of independent directors.
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, 2012, the Board of Directors met formally on five occasions, and conducted its business through eleven committee meetings. No director
attended fewer than 75% of all board and committee meetings during the fiscal year ended September 30, 2012. 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 2012.
10
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The
following table reflects the current membership of each Board committee.
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|
|
|
Committee Membership
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Name
|
|
Audit
|
|
Nominating
|
|
Compensation
|
|
Anthony J. Conway
|
|
|
|
|
|
|
|
|
|
|
Darnell L. Boehm
|
|
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Chair
|
|
|
ü
|
|
|
ü
|
|
David A. Jonas
|
|
|
|
|
|
|
|
|
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Peter H. Shepard
|
|
|
ü
|
|
|
ü
|
|
|
ü
|
|
Benson Smith
|
|
|
ü
|
|
|
Chair
|
|
|
Chair
|
|
Audit Committee
The Audit Committee is responsible for assisting the Board of Directors in its oversight of the quality and integrity of our financial
statements, including matters related to risks associated with financial reporting and audit and accounting issues, as well as 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 "Management's 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, 2012.
The Audit Committee has engaged Grant Thornton LLP as our independent auditors for fiscal year 2013.
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 twice during the fiscal year ended September 30, 2012.
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 Officer's 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 three times during the fiscal year ended
September 30, 2012. For
11
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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 22.
Board Leadership Structure
The board of directors has chosen to combine the principal executive officer and board chairman positions and has not appointed a
separate lead director. Anthony Conway has served as the chief executive officer and chairman of our board since founding the company in 1988. At the present time, we believe that Mr. Conway is
best situated to serve as chairman because he is the director most familiar with our business and most capable of effectively identifying strategic priorities and leading the discussion and execution
of strategy. In addition, we believe that the fact that a majority of our board as well as the entire membership of each of our board committees consists of independent directors balances our
governance structure to protect the interests of our shareholders. While we believe that the current board leadership structure is appropriate in the current circumstances, the board may change this
structure if it no longer believes it continues to meet our objectives.
Risk Oversight by the Board of Directors
Board-level risk oversight is primarily performed by our full board of directors, although the audit committee oversees our internal
controls and regularly assesses financial and accounting processes and risks. Our risk oversight process includes an ongoing dialogue between management and the board of directors and audit committee,
intended to identify and analyze risks that face the company. Through these discussions with management and their own business experience and knowledge, our directors are able to identify material
risks, analyze their potential impact on the company and the steps needed to manage them.
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 2012 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 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 2012.
The director compensation policy in effect for fiscal 2012 provides for an annual cash retainer of $20,000 to each
non-employee director, paid in quarterly installments between each annual meeting of the shareholders (i.e. paid in February, May, August and November). In addition, the policy
provides for a single annual grant of restricted shares under our 2010 Stock Incentive Plan, valued at $50,000 based on the closing stock price on the date of grant, for each non-employee
director elected
at the annual meeting. New non-employee directors joining the Board also receive an initial grant of restricted shares equivalent in value on the date of grant to 40% of a stock option
grant of 20,000 shares. Additional information about our annual grants of restricted shares is included in note (2) to the Non-Employee Director Compensation Table below. Prior to
implementation of this compensation
12
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policy,
non-employee directors were paid $3,000 for each Board and Committee meeting attended in person, and $1,000 for each Board and Committee meeting attended by telephone.
We
also reimburse all of our non-employee directors for reasonable travel and other expenses incurred in attending Board of Directors and committee meetings. Any director who
is also one of our employees receives no additional compensation for serving as a director.
Director Compensation Table.
The following table shows the compensation of the members of our Board of Directors during fiscal year
2012:
Fiscal 2012 Non-Employee Director Compensation
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|
|
|
|
|
|
|
|
|
|
|
Name(1)
|
|
Fees Earned or
Paid in Cash
($)
|
|
Stock
Awards
($)(2)
|
|
Option
Awards
($)(3)
|
|
Total
($)
|
|
Darnell L. Boehm.
|
|
|
21,000
|
|
|
50,000
|
|
|
|
|
|
71,000
|
|
Roger W. Schnobrich(4).
|
|
|
5,000
|
|
|
|
|
|
|
|
|
5,000
|
|
Peter H. Shepard
|
|
|
15,000
|
|
|
115,000
|
|
|
|
|
|
130,000
|
|
Benson Smith
|
|
|
21,000
|
|
|
50,000
|
|
|
|
|
|
71,000
|
|
-
(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.
(2)
Reflects
the grant date fair value for restricted shares granted to directors, determined in accordance with Financial Accounting Standards Board ("FASB")
Accounting Standards Codification Topic 718,
Compensation Stock Compensation
("ASC Topic 718"). The assumptions used in the valuation are
discussed in Note 7 to our financial statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2012. The date of our annual grant
of restricted shares to non-employee directors in fiscal 2012 was January 26, 2012, the date of our 2012 Annual Meeting of Shareholders. We establish the number of restricted shares
subject to the grant by dividing the target value of the grant by the closing price of a share of our common stock on the date of grant. Such restricted shares vest on the first, second, third or
fourth anniversary of the date of grant, as elected by the director on the date of grant. If a director ceases to be a director prior to vesting, the director will forfeit the restricted shares except
in the event of death, disability or change of control (in which case the restricted shares will vest immediately) or unless otherwise determined by our Compensation Committee.
The
restricted shares granted in fiscal 2012 are as follows: Mr. Boehm: 6,361 shares; Mr. Shepard: 14,361 shares; and Mr. Smith: 6,361 shares. The directors held restricted shares
as of September 30, 2012, as follows:
|
|
|
|
|
|
|
|
Name
|
|
Vested
Shares
|
|
Unvested
Shares
|
|
Mr. Boehm
|
|
|
0
|
|
|
6,361
|
|
Mr. Schnobrich
|
|
|
|
|
|
|
|
Mr. Shepard
|
|
|
0
|
|
|
14,361
|
|
Mr. Smith
|
|
|
0
|
|
|
6,361
|
|
-
(3)
-
Non-employee
directors can also each receive non-qualified stock options or other stock-based awards under our 2010 Stock Incentive
Plan. Each stock option grant typically has the following terms: (1) the exercise price is equal to the fair market value (as defined in the 2010 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
optionee's death. The amounts shown in this column consist of the aggregate grant date fair value of stock
13
Table of Contents
options
granted during the fiscal year, calculated in accordance with ASC Topic 718. The grant date fair value is based on 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, 2012.
No
stock options were granted in fiscal 2012 to our non-employee directors. The directors held options as of September 30, 2012, as follows:
|
|
|
|
|
|
|
|
Name
|
|
Vested
Options
|
|
Unvested
Options
|
|
Mr. Boehm
|
|
|
88,000
|
|
|
0
|
|
Mr. Schnobrich
|
|
|
132,000
|
|
|
0
|
|
Mr. Shepard
|
|
|
|
|
|
|
|
Mr. Smith
|
|
|
132,000
|
|
|
0
|
|
-
(4)
-
Mr. Schnobrich
retired from the Board upon conclusion of the 2012 Annual Meeting of Shareholders. Mr. Schnobrich received cash compensation of
$3,000 for each Board and Committee meeting attended in person, and $1,000 for each Board and Committee meeting attended by telephone, during fiscal 2012 through the date of the 2012 Annual Meeting of
Shareholders.
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 2012 (collectively, our "Named Executive Officers"). Our Named
Executive officers are determined in accordance with the rules of the Securities and Exchange Commission. For fiscal 2012, 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, U.S. Sales & Marketing.
Compensation Discussion and Analysis
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.
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 patients who generally use such products at home. A small percentage of our urological products also are used in the acute care market, which generally includes hospitals
and extended care treatment facilities. With our acquisition of Laprolan B.V. in April 2011, we also sell certain ostomy and wound and scar care products and other brands of urological products
into the European marketplace. The primary purchasers of our products are distributors, individual hospitals and healthcare institutions, and extended care facilities. We sell our products directly
and through private label partners, both in the domestic market and internationally.
Net
sales for our fiscal year ended September 30, 2012 were $61.7 million, an increase of $8.3 million, or 16%, from $53.4 million in the prior fiscal year.
Our net income for fiscal 2012 was $2,050,000, or $.17 per diluted share compared to a net loss of $(1,315,000), or $(.11) per diluted share, in fiscal 2011. The increase in net income for fiscal 2012
compared to fiscal 2011 primarily resulted from increased sales as well as reduced operating expenses incurred in 2012. The objective of our three year strategic plan that we adopted at the beginning
of fiscal 2011 was to double our annual overall sales during the three fiscal years of the plan, while also producing a
14
Table of Contents
significant
increase in net income in the third fiscal year. As part of that plan, we increased the level of investment in our sales and marketing programs to support our direct sales growth in the
U.S. and Europe through the addition of several members to our sales team, with the increased investment expected to be funded primarily through cash generated from operations. We recently updated our
three-year strategic plan, primarily as a result of the discontinuation of our Foley catheter line and, to a lesser extent, a more conservative assumption regarding international sales
given the broader economic challenges in Europe, although we still expect significant growth in sales and improved net income as a result of our strategic plan and the higher level of profitability we
expect to achieve following our exit of the Foley catheter business. Management believes that the ongoing strategic effort to grow our Rochester Medical direct sales through increased investment in
sales and marketing programs is providing positive results.
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 approximates the mid-point for total direct compensation at comparably
sized publicly-traded medical device companies, while our CEO's compensation has generally remained below market.
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 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 Medical's
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 Committee's 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 long-term 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, restricted stock
or other stock-based awards.
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 executive's 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 Officer's compensation to our performance. Consistent with
our performance-based philosophy, we provide a base salary to our executive officers and have included a significant annual incentive-based component, payable in cash, that is tied to
company-wide financial objectives, and stock-based awards which have value long term only through future share price appreciation. We may also make discretionary awards of equity-based
compensation to our Named Executive Officer's under our 2010 Stock Incentive Plan to recognize unique individual efforts or achievements during the fiscal year.
15
Table of Contents
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 peer group 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.
The
Chief Executive Officer and Chief Financial Officer participate in the Compensation Committee's meetings at the committee's request. To aid the Compensation Committee in making its
determination, tally sheets summarizing total compensation for the last three fiscal years, as well as the current inventory of stock-based awards held by the executive officers, are provided. 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.
Historically,
the Compensation Committee has utilized salary data of similarly sized and type of medical device companies produced by Equilar or other credible third party sources and
considered actual salary amounts provided in peer group proxy statements. In conjunction with its compensation review for fiscal 2012, the Compensation Committee engaged Towers Watson, an independent
compensation consultant, to provide updated competitive market data for six executive officer positions: Chief Executive Officer, Chief Financial Officer, Corporate Vice President, Vice President,
Product Technologies, Vice President, Marketing and Vice President, Quality & Regulatory. The Compensation Committee also requested available data on the prevalence and amount of executive
perquisites, as well as market data regarding outside director compensation. In evaluating the competitiveness of our compensation programs, Towers Watson reviewed, and provided to the Compensation
Committee, market data from the following sources:
-
-
Proxy Analysis of Peer Companies.
The compensation practices
of a peer group of 24 publicly traded companies listed below were reviewed and analyzed:
|
|
|
|
|
Alphatec Holdings, Inc.
|
|
Cynosure Inc.
|
|
Stereotaxis Inc.
|
Angeion Corp.
|
|
Endologix Inc.
|
|
Strategic Diagnostics Inc.
|
AtriCure, Inc.
|
|
Escalon Medical Corp.
|
|
SurModics Inc.
|
ATRION Corp.
|
|
IRIS International Inc.
|
|
Synovis Life Technologies Inc.
|
Bovie Medical Corporation
|
|
Kensey Nash Corp.
|
|
Urologix, Inc.
|
Cardiovascular Systems Inc.
|
|
Retractable Technologies
|
|
Utah Medical Products Inc.
|
CAS Medical Systems, Inc.
|
|
Spectranetics Corp.
|
|
Vascular Solutions Inc.
|
Cerus Corp.
|
|
STAAR Surgical Company
|
|
Young Innovations Inc.
|
This
group largely overlapped the group of 26 companies used in their 2008 assessment. However, since 2008, eight companies in the group were acquired and therefore removed from the peer
group, and six companies were added to keep the sample size similar.
-
-
External Surveys.
In analyzing the competitiveness of our
compensation programs, Towers Watson also reviewed the following external surveys covering both the general and medical equipment and supplies industry: (1) Tower Watson's 2010/2011Industry
Report on Top Management Compensation (General Industry), (2) Tower Watson's 2010/2011 Industry Report on Top Management Compensation (Instruments and Bio-Medical Equipment and
Supplies), and (3) William Mercer's 2010 Executive Survey.
16
Table of Contents
Rochester
Medical's executive positions were matched to comparable positions from each survey based on the job descriptions provided to Towers Watson by the company. The survey data was
updated to November 1, 2011 using an annual adjustment factor of 2.9%, and was scaled to Rochester Medical's then-current size of $41 million in revenue.
Our
review indicated that, in general, we were providing current base salary that approximates the median of the companies in the data we reviewed, with the exception of our CEO, whose
base pay was below the 25
th
percentile. The review also indicated that our annual incentive compensation was slightly ahead of the median on both an actual and target basis, again
with the exception of the CEO's target, although it was noted that annual incentive payout levels had declined over the past few years due largely to the economic downturn. Our long-term
incentives were generally ahead of our peer group predicted practice from both a percent of base salary and a dollar value standpoint, also with the exception of our CEO. Overall, target total direct
compensation (i.e. target total annual cash plus the expected value of long-term incentives) approximated the median based on peer compensation data gathered from the most recent
proxy statement filed by each peer company.
The
Compensation Committee used this data as well as publicly available reports regarding pay practices and trends for purposes of its compensation decisions for fiscal 2012, and
determined to refresh the peer group data it uses for its compensation decisions once every three years. As such, the Committee expects to rely on the same data points for purposes of its fiscal 2013
and 2014 compensation decisions, but reserves the right to make structural modifications to the key elements of the compensation provided to executive officers from year to year. We believe, however,
the design of our base and incentive annual cash compensation appropriately provides market compensation to our executive officers.
The
Compensation Committee established the elements of executive compensation for fiscal 2012 in the fall of 2011, before the company's advisory shareholder vote on executive
compensation in January 2012. Over 80% of shares voting supported the proposal and, therefore, the advisory resolution regarding executive compensation was approved. Although the vote was
non-binding, the Committee reviewed the results of the vote and considered the high approval rate as an indication that shareholders generally support the company's executive compensation
philosophy and decisions. We have determined that our shareholders should vote on an advisory say-on-pay proposal each year. Accordingly, our Board of Directors recommends that
you vote FOR Proposal 3 at the Annual Meeting. For more information, see "Proposal 3 Advisory Vote on Executive Compensation" in this proxy statement.
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 individual's experience, an analysis of each individual's 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 executive's base salary is also determined by reviewing the executive's other compensation to ensure that the executive's 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 executive's role or responsibilities. The base
salary of the Chief Executive Officer is established by the Compensation Committee after consideration of the Chief Executive Officer's performance for the prior year. As part of its determination,
the Compensation Committee reviews the company's actual performance during the year, as well as available market data. The Committee also takes into account the relatively high equity ownership
position in Rochester Medical that
17
Table of Contents
Mr. Conway
maintains, which serves to partially offset the lower percentile for base compensation against the company's peers.
The
Compensation Committee approved competitive base salary increases for our Named Executive Officers for fiscal year 2012 as follows:
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
2011 Base Salary(1)
|
|
2012 Base Salary(1)
|
|
% Change
|
|
Anthony J. Conway
|
|
$
|
298,007
|
|
$
|
309,927
|
|
|
4
|
%
|
David A. Jonas
|
|
$
|
220,667
|
|
$
|
225,080
|
|
|
2
|
%
|
Martyn R. Sholtis
|
|
$
|
206,323
|
|
$
|
210,449
|
|
|
2
|
%
|
Philip C. Conway
|
|
$
|
189,773
|
|
$
|
193,569
|
|
|
2
|
%
|
James M. Carper
|
|
$
|
164,800
|
|
$
|
175,000
|
|
|
7
|
%
|
-
(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.
For
fiscal 2012, the Compensation Committee approved a 4% increase in base salary for our Chief Executive Officer in recognition of the company's financial performance in fiscal 2011 in
light of the general economic conditions, as well as taking into consideration Mr. Conway's base salary relative to the Company's peer group. For fiscal 2011, Rochester Medical had record sales
of $53.4 million compared to $41.5 million the prior year, but reported a net loss for the year of $1,315,000 (or $.11 per diluted share) compared to net loss for the year of $254,000
(or $.02 per diluted share) the prior year, primarily due to the company's strategic decision to increase its investment in its sales and marketing programs. While the Committee continued to believe
that Mr. Conway's base salary is below market compared to his peers, it took into account Mr. Conway's equity stake in Rochester Medical. The other Named Executive Officers also received
modest base salary increases of 2%, which were generally consistent with increases provided to other salaried employees of the company and which the Committee believed was in line with base salary
increases relative to the company's peer group, with the exception of Mr. Carper, whose base salary was increased 7% to bring his base salary more in line with his peers. The Committee also
considered and discussed the percentage of total compensation tied to short-term performance compensation versus base compensation.
Rochester Medical's 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,
discussed and approved by the Compensation Committee. Prior year performance, current market conditions and the strategic business plan for the new fiscal year are taken into account to ensure that
goals have a reasonable probability of being achieved. "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. Bonuses are paid after the financial results for the fiscal year are finalized. Any recommended deviations from the approved plan must be
approved by the Compensation Committee.
As
necessary, the Compensation Committee may modify or re-weight the objectives during the course of the fiscal year to reflect changes in the company's 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
18
Table of Contents
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 2012, our performance objectives included quantitative financial goals based on sales and operating income targets. In prior years, the performance objectives had been based
on sales and gross margin goals. The Compensation Committee considered operating income as a business criteria to be more reflective of the company's business strategy and progress with the
three-year strategic plan as the company focused on growing both top line sales and bottom line income in fiscal 2012. Under the Management Incentive Plan for fiscal 2012,
Mr. Anthony Conway could have earned a maximum bonus up to 90% of his base salary earned in fiscal 2012 with a target of 60% of his base salary. Messrs. Jonas, Sholtis, Carper and Philip
Conway could have earned a maximum bonus of 75% of their respective base salary earned in fiscal 2012 with a target of 50% of their respective base salaries. As stated above, the Committee had
determined to remain conservative with base salary in light of economic results and current economic conditions and to provide greater incentive for continuing progress with the three-year
strategic plan through the Management Incentive Plan. The Committee also noted management's strong confidence level in their forecast for the new fiscal year, but established goals intended to be
reasonably achievable by the efficient execution of the company's operating plan.
Each
of their bonuses was weighted 50% on sales performance objectives and 50% on operating income 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 operating income objectives to correlate with their job functions. Mr. Sholtis' sales objectives would be focused on non-U.S. Direct Sales, while
Mr. Carper's sales objectives would be focused on U.S. Direct Sales. The sales and operating income performance targets were approved by the Compensation Committee. The performance target for
sales for achievement of the target bonus contemplated 22% growth in sales over fiscal 2011, as adjusted for variations in the currency exchange rate, with the minimum requirement set at sales
equivalent to fiscal 2011 results, and the maximum payout earned at 27% growth in sales over fiscal 2011. The performance target for operating income for achievement of the target bonus contemplated
$6,237,000 growth in operating income over fiscal 2011, as adjusted for stock compensation expense, with the minimum requirement set at operating income budgeted to the minimum sales target for fiscal
2012, and the maximum payout earned at operating income budgeted at the maximum sales target for fiscal 2012.
The
Compensation Committee reviewed the achievement of the corporate objectives in awarding bonuses under the Management Incentive Plan, and noted that total sales for fiscal 2012 were
$61.7 million (or 94.7% of the level needed to achieve the target bonus), and operating income for fiscal 2012 was $3.2 million (or 70.1% of the level needed to achieve the target
bonus). 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, 2012:
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fiscal 2012
Base Salary
Earned(1)
|
|
% Bonus
Earned(2)
|
|
Amount of
Bonus Paid
|
|
Anthony J. Conway
|
|
$
|
306,947
|
|
|
70
|
%
|
$
|
129,559
|
|
David A. Jonas
|
|
$
|
223,977
|
|
|
70
|
%
|
$
|
78,782
|
|
Martyn R. Sholtis
|
|
$
|
209,418
|
|
|
62
|
%
|
$
|
64,901
|
|
Philip C. Conway
|
|
$
|
192,620
|
|
|
70
|
%
|
$
|
67,752
|
|
James M. Carper
|
|
$
|
172,450
|
|
|
91
|
%
|
$
|
78,062
|
|
-
(1)
Weighted
average salary for fiscal 2012. Base salary increases for each fiscal year become effective on January 1
st
.
(2)
Bonus
percentage earned is calculated by multiplying the sum of (a) the product of the percentage of the sales target achieved (e.g. 94.7%)
multiplied by the percentage weight given to the sales target (e.g. 50%) plus (b) the product of the percentage of the operating income target achieved (e.g. 70.1%) multiplied by
the percentage weight given to the operating income target (e.g. 50%), by the individual executive's target bonus percentage.
19
Table of Contents
As discussed above, we believe that equity ownership in Rochester Medical is important to tie the ultimate level of an executive
officer's compensation to the performance of our stock and shareholder gains while creating an incentive for sustained growth. Our 2010 Stock Incentive Plan allows us the opportunity to grant a
variety of award vehicles, including stock options, restricted stock, restricted stock units, stock appreciation rights ("SARs") and other performance-based awards. Through fiscal 2011, we had granted
primarily stock options, with restricted stock grants on a limited basis to acknowledge unique contributions. We have typically granted stock options to executive officers at the commencement of their
employment, and then annually thereafter following the annual meeting of shareholders. The number of stock options granted to an executive officer upon commencement of employment has been based on
several factors, including the executive's responsibilities, experience and the value of the stock option at the time of grant. Additional grants other than the initial grant have been made following
a significant change in job responsibility or in recognition of performance.
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 to executive officers under our 2010 Stock Incentive Plan generally vest
100% on the fourth anniversary of the date of grant.
The
Compensation Committee does not award stock-based compensation according to a prescribed formula or target. In determining the amount of equity awards 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 executive's compensation is conducted when determining annual equity
awards to ensure that an executive's total compensation is in line with our overall compensation philosophy. For determining the equity awards to grant in fiscal 2012, the Compensation Committee
considered in particular the competitive market data provided by the Committee's independent consultant with respect to the proportionate share of compensation related to long-term
incentive compensation. For fiscal 2012, the Committee examined the use of restricted stock or restricted stock units (RSUs), particularly with performance-based vesting terms, rather than traditional
stock options with time-based vesting terms. RSUs represent the right to receive shares of common stock upon vesting. The Committee took into account the related compensation expense
chargeable to the company and tax implications to recipients. The Committee considered additional data including an estimate of the grant date fair value of proposed grants of restricted stock or RSUs
under various scenarios for the closing market price of the company's common stock on the date of grant and the percentage of total compensation that such stock awards would represent.
Rather
than traditional stock options, the Committee decided to grant RSUs to executive officers for fiscal 2012 with a performance-based vesting trigger measured in fiscal 2013 (the
third year of the company's three-year strategic plan). The performance target used for the RSUs was operating income for fiscal 2013, excluding stock-based compensation expense and any
new medical device excise tax imposed by the new 2010 health care legislation. If the company achieves 80% of the fiscal 2013 operating income originally projected under the three-year
strategic plan as so adjusted, 50% of the RSUs will vest. If the company achieves 100% of fiscal 2013 operating income originally projected under the three-year strategic plan as so
adjusted, the other 50% of the RSUs will vest. If employment is terminated for death or disability prior to completion of the performance period, the RSUs will remain outstanding until the end of the
performance period and will vest to the extent the performance target is achieved. The number of RSUs granted equaled 50% of the executive's combined fiscal 2012 base salary and target bonus (or 75%
for the CEO), divided by the closing stock price on the date of grant. The Compensation
20
Table of Contents
Committee
and the Board of Directors approved the following grants of restricted stock units to our Named Executive Officers in fiscal 2012 in recognition of their contributions to the company:
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
2012 Restricted
Stock Unit Award
|
|
Closing Price per Share
on Date of Grant
|
|
Grant Date
Fair Value
|
|
Anthony J. Conway
|
|
|
47,317
|
|
$
|
7.86
|
|
$
|
371,912
|
|
David A. Jonas
|
|
|
21,477
|
|
$
|
7.86
|
|
$
|
168,809
|
|
Martyn R. Sholtis
|
|
|
20,081
|
|
$
|
7.86
|
|
$
|
157,837
|
|
Philip C. Conway
|
|
|
18,470
|
|
$
|
7.86
|
|
$
|
145,174
|
|
James M. Carper
|
|
|
16,698
|
|
$
|
7.86
|
|
$
|
131,246
|
|
The
Committee believed that performance-based equity awards tied to the company's three-year strategic plan provided significant incentive to the management team and aligns
with the interest of our shareholders.
The Committee's philosophy is to have as few perquisites as possible. Currently, we compensate Mr. Sholtis for club membership
payments in support of business development activities.
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 U.S. 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
employee's contribution up to a cap of 2.5%.
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 officer's 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 of 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 27 of this proxy statement. The Compensation
Committee will continue to review these arrangements annually to determine whether they are necessary and appropriate under the company's current circumstances and the circumstances of the individual
Named Executive Officers.
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
21
Table of Contents
compensation
exceeds $1 million per officer in any one year. This limitation will apply to all compensation paid to the covered executive officers which is not considered to be
performance-based. Compensation which does qualify as performance-based compensation will not have to be taken into account for purposes of this limitation.
Section 162(m)
of the Code did not affect the deductibility of compensation paid to our executive officers in fiscal 2012 and it is anticipated it will not affect the
deductibility of such compensation expected to be paid in the foreseeable future. The Compensation Committee will continue to monitor this matter and may propose additional changes to the executive
compensation program if warranted.
Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based upon this review
and discussion, the Compensation
Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.
Compensation Committee of the Board of Directors of Rochester Medical
|
|
|
|
|
Darnell L. Boehm
|
|
Peter H. Shepard
|
|
Benson Smith
|
The
following tables and accompanying narrative disclosures and footnotes should be read in conjunction with the CD&A, which sets forth the objectives of Rochester Medical Corporation's
executive compensation and benefit program.
Summary Compensation Table
The table below contains information about the cash and non-cash compensation for the last three fiscal years awarded to or
earned by the individuals who served as our Chief Executive Officer or Chief Financial Officer, and each of our three other Named Executive Officers.
SUMMARY COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
Salary
($)(1)
|
|
Bonus
($)(2)
|
|
Stock
Awards
($)(3)
|
|
Option
Awards
($)(4)
|
|
Non-Equity
Incentive Plan
Compensation
($)(5)
|
|
All Other
Compensation
($)(6)
|
|
Total
($)
|
|
Anthony J. Conway
|
|
|
2012
|
|
|
306,947
|
|
|
|
|
|
371,912
|
|
|
|
|
|
129,559
|
|
|
|
|
|
808,418
|
|
Chief Executive Officer
|
|
|
2011
|
|
|
295,837
|
|
|
|
|
|
|
|
|
188,679
|
|
|
169,184
|
|
|
|
|
|
653,700
|
|
and President
|
|
|
2010
|
|
|
287,220
|
|
|
|
|
|
|
|
|
214,299
|
|
|
182,702
|
|
|
|
|
|
684,221
|
|
David A. Jonas
|
|
|
2012
|
|
|
223,977
|
|
|
|
|
|
168,809
|
|
|
|
|
|
78,782
|
|
|
|
|
|
471,568
|
|
Chief Financial Officer,
|
|
|
2011
|
|
|
219,060
|
|
|
|
|
|
219,800
|
|
|
125,786
|
|
|
104,397
|
|
|
|
|
|
669,043
|
|
Treasurer and Secretary
|
|
|
2010
|
|
|
212,680
|
|
|
|
|
|
|
|
|
142,866
|
|
|
112,739
|
|
|
|
|
|
468,285
|
|
Martyn R. Sholtis
|
|
|
2012
|
|
|
209,418
|
|
|
|
|
|
157,837
|
|
|
|
|
|
64,901
|
|
|
7,926
|
|
|
440,082
|
|
Corporate Vice President
|
|
|
2011
|
|
|
204,821
|
|
|
|
|
|
219,800
|
|
|
125,786
|
|
|
102,410
|
|
|
7,361
|
|
|
660,183
|
|
|
|
|
2010
|
|
|
198,856
|
|
|
|
|
|
|
|
|
142,866
|
|
|
109,353
|
|
|
5,679
|
|
|
456,754
|
|
Philip J. Conway
|
|
|
2012
|
|
|
192,620
|
|
|
|
|
|
145,174
|
|
|
|
|
|
67,752
|
|
|
|
|
|
405,546
|
|
Vice President, Product
|
|
|
2011
|
|
|
188,391
|
|
|
|
|
|
|
|
|
125,786
|
|
|
38,084
|
|
|
|
|
|
352,217
|
|
Technologies
|
|
|
2010
|
|
|
182,905
|
|
|
|
|
|
|
|
|
142,866
|
|
|
96,955
|
|
|
|
|
|
422,726
|
|
James M. Carper
|
|
|
2012
|
|
|
172,450
|
|
|
|
|
|
131,246
|
|
|
|
|
|
78,062
|
|
|
|
|
|
381,758
|
|
Vice President, Marketing
|
|
|
2011
|
|
|
163,600
|
|
|
|
|
|
|
|
|
125,786
|
|
|
37,767
|
|
|
|
|
|
327,153
|
|
|
|
|
2010
|
|
|
140,000
|
|
|
|
|
|
|
|
|
142,866
|
|
|
65,440
|
|
|
|
|
|
348,306
|
|
-
(1)
Reflects
the dollar amount of base salary paid in the designated fiscal year.
(2)
Only
discretionary or guaranteed bonuses are disclosed in this column. We award bonuses under our Management Incentive Plan based on achievement of certain
performance goals. Accordingly, bonus payments are reported in the Non-Equity Incentive Plan column.
22
Table of Contents
-
(3)
-
The
amounts shown in this column consist of the aggregate grant date fair value of restricted stock awards and restricted stock units granted during the
applicable fiscal year, calculated in accordance with FASB ASC Topic 718. The grant date fair value of the stock awards is determined by the closing market price at the date of grant. Restricted stock
awards generally vest 100% on the fourth anniversary of the date of grant. The RSUs granted in fiscal 2012 vest on September 30, 2013 if the applicable performance goal is achieved. See
"Compensation Determination Process and Components Long-Term Incentives" in the CD&A for a more detailed description. The assumptions used in the valuation 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, 2012.
-
(4)
-
The
amounts shown in this column consist of the aggregate grant date fair value of stock options granted during the applicable fiscal year, calculated in
accordance with FASB ASC Topic 718. The grant date fair value is based on the Black-Scholes valuation model. 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 assumptions used to arrive at the Black-Scholes value are
disclosed in the following notes to our consolidated financial statements: (i) Note 8 to our financial statements included in our Annual Report on Form 10-K for the
fiscal year ended September 30, 2011, and (ii) Note 7 to our financial statements included in our Annual Report on Form 10-K for the fiscal year ended
September 30, 2010.
-
(5)
-
Represents
cash bonuses earned during fiscal 2012, 2011 and 2010 for achieving performance goals under our Management Incentive Plan. See "Compensation
Determination Process and Components Annual Cash Incentives" in the CD&A for a more detailed description.
-
(6)
-
The
amounts shown in this column consists of club membership dues for Mr. Sholtis in support of business development activities.
Grants of Plan-Based Awards
The following table and accompanying narrative and notes provide information about the fiscal 2012 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 2010 Stock
Incentive Plan.
GRANTS OF PLAN-BASED AWARDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)(2)
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under
Non-Equity
Incentive Plan Awards(1)
|
|
Exercise
or Base
Price of
Option
Awards
($/Sh)
|
|
Grant
Date Fair
Value of
Stock and
Option Awards
($)(3)
|
|
Name
|
|
Grant
Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Anthony J. Conway
|
|
|
|
|
|
|
|
|
184,168
|
|
|
276,252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/12
|
|
|
|
|
|
|
|
|
|
|
|
47,317
|
|
|
|
|
|
|
|
|
371,912
|
|
David A. Jonas
|
|
|
|
|
|
|
|
|
111,989
|
|
|
167,983
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/12
|
|
|
|
|
|
|
|
|
|
|
|
21,477
|
|
|
|
|
|
|
|
|
168,809
|
|
Martyn R. Sholtis
|
|
|
|
|
|
|
|
|
104,709
|
|
|
157,064
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/12
|
|
|
|
|
|
|
|
|
|
|
|
20,081
|
|
|
|
|
|
|
|
|
157,837
|
|
Philip J. Conway
|
|
|
|
|
|
|
|
|
96,310
|
|
|
144,465
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/12
|
|
|
|
|
|
|
|
|
|
|
|
18,470
|
|
|
|
|
|
|
|
|
145,174
|
|
James M. Carper
|
|
|
|
|
|
|
|
|
86,225
|
|
|
129,338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/12
|
|
|
|
|
|
|
|
|
|
|
|
16,698
|
|
|
|
|
|
|
|
|
131,246
|
|
-
(1)
These
columns show the potential payments for each of these executive officers under our Management Incentive Plan for fiscal 2012 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 2012, Mr. Anthony Conway could have
earned a bonus up to 90% of his base salary with a target of 60% of his base salary. Messrs. Jonas, Sholtis, Philip Conway and Carper could have earned a bonus of up to 75% of their
23
Table of Contents
respective
base salary with a target of 50% of their respective base salaries. Each of their bonuses was weighted 50% on sales performance objectives and 50% on operating income objectives, with the
exception of Mr. Sholtis and Mr. Carper whose bonuses were weighted 75% on sales performance objectives and 25% on operating income 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 "Compensation Determination Process and
Components Annual Cash Incentives" in the CD&A.
-
(2)
-
This
column shows the number of shares subject to restricted stock units granted under our 2010 Stock Incentive Plan.
-
(3)
-
The
grant date fair value of the stock awards is determined by the closing market price at the date of grant.
2010 Stock Incentive Plan
Our 2010 Stock Incentive Plan was adopted by our shareholders in January 2010, and authorizes the issuance of up to 1,000,000 shares of
common stock pursuant to grants of incentive stock options, non-qualified options, stock appreciation rights, restricted stock and restricted stock units, performance awards, dividend
equivalents, stock awards and other stock-based awards. The purpose of this 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 permits significant
flexibility in determining the types and specific terms of awards made to participants. This flexibility allows as to make awards based on current objectives for aligning compensation with shareholder
value.
Our
Compensation Committee administers the 2010 Stock Incentive Plan and has 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.
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
24
Table of Contents
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.
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 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.
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
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.
As
of September 30, 2012, there were 527,000 options, 101,883 restricted shares and 135,491 restricted stock units outstanding under this plan. The shares subject to any awards
granted under the 2010 Stock Incentive Plan that expire or are terminated prior to issuance will be eligible again for issuance under the 2010 Stock Incentive Plan.
25
Table of Contents
Outstanding Equity Awards at Fiscal Year-End
The following table shows the unexercised stock options and unvested restricted stock or restricted stock units held at the end of
fiscal year 2012 by the Named Executive Officers.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable(1)
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable(1)
|
|
Option
Exercise
Price ($)(2)
|
|
Option
Expiration
Date
|
|
Number of
Shares or
Units of
Stock Held
That Have Not
Vested (#)
|
|
Market Value
of Shares
or Units
of Stock That
Have Not
Vested ($)(3)
|
|
Anthony J. Conway
|
|
|
16,000
|
|
|
|
|
|
4.13
|
|
|
1/2/13
|
|
|
|
|
|
|
|
|
|
|
16,000
|
|
|
|
|
|
4.63
|
|
|
1/2/14
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
|
|
4.70
|
|
|
1/1/15
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
5.70
|
|
|
1/26/16
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
|
|
12.30
|
|
|
11/21/16
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
|
|
11.23
|
|
|
2/6/18
|
|
|
|
|
|
|
|
|
|
|
22,500
|
|
|
7,500
|
|
|
11.27
|
|
|
2/3/19
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
15,000
|
|
|
12.27
|
|
|
1/28/20
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
22,500
|
|
|
10.72
|
|
|
1/27/21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,317
|
(4)
|
|
558,814
|
|
David A. Jonas
|
|
|
10,000
|
|
|
|
|
|
4.13
|
|
|
1/2/13
|
|
|
|
|
|
|
|
|
|
|
14,000
|
|
|
|
|
|
4.63
|
|
|
1/2/14
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
|
|
4.70
|
|
|
1/1/15
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
5.70
|
|
|
1/26/16
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
12.30
|
|
|
11/21/16
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
11.23
|
|
|
2/6/18
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
5,000
|
|
|
11.27
|
|
|
2/3/19
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
10,000
|
|
|
12.27
|
|
|
1/28/20
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
15,000
|
|
|
10.72
|
|
|
1/27/21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
(5)
|
|
236,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,477
|
(4)
|
|
253,643
|
|
Martyn R. Sholtis
|
|
|
10,000
|
|
|
|
|
|
4.13
|
|
|
1/2/13
|
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
|
|
|
4.63
|
|
|
1/2/14
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
|
|
4.70
|
|
|
1/1/15
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
5.70
|
|
|
1/26/16
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
12.30
|
|
|
11/21/16
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
11.23
|
|
|
2/6/18
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
5,000
|
|
|
11.27
|
|
|
2/3/19
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
10,000
|
|
|
12.27
|
|
|
1/28/20
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
15,000
|
|
|
10.72
|
|
|
1/27/21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
(5)
|
|
236,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,081
|
(4)
|
|
237,157
|
|
Philip J. Conway
|
|
|
10,000
|
|
|
|
|
|
4.13
|
|
|
1/2/13
|
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
|
|
|
4.63
|
|
|
1/2/14
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
|
|
4.70
|
|
|
1/1/15
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
5.70
|
|
|
1/26/16
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
12.30
|
|
|
11/21/16
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
11.23
|
|
|
2/6/18
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
5,000
|
|
|
11.27
|
|
|
2/3/19
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
10,000
|
|
|
12.27
|
|
|
1/28/20
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
15,000
|
|
|
10.72
|
|
|
1/27/21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,470
|
(4)
|
|
218,131
|
|
James M. Carper
|
|
|
5,000
|
|
|
|
|
|
18.02
|
|
|
3/13/17
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
|
10.89
|
|
|
2/12/18
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
5,000
|
|
|
11.27
|
|
|
2/3/19
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
10,000
|
|
|
12.27
|
|
|
1/28/20
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
15,000
|
|
|
10.72
|
|
|
1/27/21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,698
|
(4)
|
|
197,203
|
|
-
(1)
Stock
options were granted under our 2010 Stock Incentive Plan or 2001 Stock Incentive Plan and vest in 25% annual cumulative installments beginning one
year from the date of grant.
26
Table of Contents
-
(2)
-
The
exercise price for all stock options is the fair market value of our common stock on the date of grant, which is equal to the closing market price
reported on the Nasdaq Stock Market.
-
(3)
-
Market
value based on the closing market price of our common stock on September 28, 2012, or $11.81 per share. The amounts indicated are not
necessarily indicative of the amounts that may be realized by our Named Executive Officers.
-
(4)
-
Restricted
stock units were granted under our 2010 Stock Incentive Plan and vest on September 30, 2013 if the applicable performance goal is
achieved. The number of shares shown assumes the performance goal will be achieved.
-
(5)
-
Shares
of restricted stock were granted under our 2010 Stock Incentive Plan and vest 100% on the fourth anniversary of the date of grant.
Option Exercises and Stock Vested
The following table sets forth information regarding the number of shares acquired upon exercise of stock options by, and the vesting
of restricted stock held by, each of our Named Executive Officers during the fiscal year ended September 30, 2012:
|
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|
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|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number of Shares
Acquired on
Exercise (#)
|
|
Value Realized on
Exercise ($)(1)
|
|
Number of Shares
Acquired on
Vesting (#)
|
|
Value Realized
on Vesting ($)
|
|
Anthony J. Conway
|
|
|
30,000
|
|
|
142,350
|
|
|
|
|
|
|
|
David A. Jonas
|
|
|
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|
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Martyn R. Sholtis
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Philip J. Conway
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|
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|
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James M. Carper
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|
|
|
|
|
|
|
|
|
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|
|
|
-
(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.
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. Conway's
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. Conway's death or permanent disability.
27
Table of Contents
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 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. Conway's 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. Conway's
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 management's 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 individual's earned compensation (salary plus cash
bonuses) during the 12 month period. If an individual's 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 individual's 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 individual's 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 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
28
Table of Contents
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 and restricted stock unit agreements provide that, upon a Change of
Control, the shares subject thereto will become fully vested.
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, 2012, 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 2012. The actual amounts to be paid can only be determined at the actual time of an executive's termination.
29
Table of Contents
POTENTIAL PAYMENTS UPON TERMINATION AND CHANGE-IN-CONTROL
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Name
|
|
Type of Payment
|
|
Payments Upon
Termination Without
Cause Without
Change-in-Control
($)
|
|
Payments Accruing
12 months After a
Change-in-Control
($)
|
|
Payments Upon
Termination Without
Cause or for Good
Reason After a
Change-in Control
($)
|
|
Anthony J. Conway
|
|
Base Pay
|
|
|
154,964
|
|
|
1,098,715
|
|
|
1,098,715
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|
|
|
Total Spread Value of Acceleration:
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|
|
|
|
|
|
|
|
|
|
|
Stock Options(1)
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710,260
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|
|
710,260
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|
|
|
Restricted Stock Units(2)
|
|
|
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|
|
558,814
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|
|
558,814
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|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
154,964
|
|
|
2,367,789
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|
|
2,367,789
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|
David A. Jonas
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|
Base Pay
|
|
|
|
|
|
759,655
|
|
|
759,655
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|
|
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Total Spread Value of Acceleration:
|
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|
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|
|
|
|
|
|
Stock Options(1)
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|
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|
|
628,120
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|
|
628,120
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|
|
|
Restricted Stock Units(2)
|
|
|
|
|
|
253,643
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|
|
253,643
|
|
|
|
Restricted Stock(2)
|
|
|
|
|
|
236,200
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|
|
236,200
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|
|
|
|
|
|
|
|
|
|
|
|
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Total
|
|
|
|
|
|
1,877,618
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|
|
1,877,618
|
|
Martyn R. Sholtis
|
|
Base Pay
|
|
|
|
|
|
688,375
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|
|
688,375
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|
|
|
Total Spread Value of Acceleration:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options(1)
|
|
|
|
|
|
542,260
|
|
|
542,260
|
|
|
|
Restricted Stock Units(2)
|
|
|
|
|
|
237,157
|
|
|
237,157
|
|
|
|
Restricted Stock(2)
|
|
|
|
|
|
236,200
|
|
|
236,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
1,703,992
|
|
|
1,703,992
|
|
Philip J. Conway
|
|
Base Pay
|
|
|
96,785
|
|
|
653,303
|
|
|
653,303
|
|
|
|
Total Spread Value of Acceleration:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options(1)
|
|
|
|
|
|
542,660
|
|
|
542,660
|
|
|
|
Restricted Stock Units(2)
|
|
|
|
|
|
218,131
|
|
|
218,131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
96,785
|
|
|
1,414,094
|
|
|
1,414,094
|
|
James M. Carper
|
|
Base Pay
|
|
|
|
|
|
632,655
|
|
|
632,655
|
|
|
|
Total Spread Value of Acceleration:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options(1)
|
|
|
|
|
|
37,200
|
|
|
37,200
|
|
|
|
Restricted Stock Units(2)
|
|
|
|
|
|
197,203
|
|
|
197,203
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
867,058
|
|
|
867,058
|
|
-
(1)
Value
computed for each stock option grant by multiplying (i) the difference between (a) $11.81, the closing market price of a share of our
common stock on September 28, 2012, 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 $11.81, the closing market price of a share of our common stock on September 28,
2012, the last business day of our fiscal year.
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Table of Contents
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 Darnell Boehm, Peter Shepard 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 director's independence.
The
Audit Committee has 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 ordinary course, or indemnification payments and advancement of expenses made pursuant to Rochester Medical's 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 Medical's 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 arm's 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 2012. There were no related party transactions which were required to be disclosed
under the rules of the Securities and Exchange Commission.
31
Table of Contents
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 Medical's internal and external auditors.
The
consolidated financial statements of Rochester Medical for the year ended September 30, 2012, 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 auditor's 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, 2012, be included in our Annual Report on Form 10-K filed with the SEC.
Audit Committee of the Board of Directors of Rochester Medical
|
|
|
Darnell L. Boehm,
Chair
|
|
Peter H. Shepard
Benson Smith
|
Payment of Fees to Auditor
The aggregate fees billed to us by Grant Thornton for 2012 and 2011 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 $281,236 and $215,100, respectively.
The aggregate fees billed to us by Grant Thornton for 2012 and 2011 for audit-related services were $14,662 and $14,330, respectively.
Audit-related services include primarily benefit plan audits, including our 401(k) plan.
The aggregate fees billed to us by Grant Thornton for 2012 and 2011for tax services were $75,552 and $106,900, respectively. Tax fees
include primarily tax returns, advice and planning. In regard to tax services, we engaged Moquist Thorvilson Kaufmann Kennedy & Pieper to assist us with tax provision preparation.
Other services include primarily assistance with acquisition and financing projects. No such services were provided to us by Grant
Thornton during 2012 and 2011.
32
Table of Contents
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 management's assessment of the impact of the service on the auditor's 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 2011 and 2012, 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 2 RATIFICATION OF SELECTION OF AUDITOR
The Audit Committee has selected Grant Thornton LLP as our independent auditor for the fiscal year ending September 30, 2013.
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, 2013, 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, 2013. Proxies will be vote FOR ratifying this selection unless otherwise specified.
PROPOSAL 3 ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 added Section 14A to the Securities Exchange
Act of 1934, which requires that we provide our shareholders with the opportunity to vote to approve, on a nonbinding, advisory basis, the compensation of our named executive officers as disclosed in
this proxy statement (sometimes referred to as "say-on-pay") in accordance with the compensation disclosure rules of the SEC. At the 2012 Annual Meeting of Shareholders, our
shareholders approved the proposal with more than 80% of the votes cast in favor. In response to the recommendation of our shareholders, the Board of Directors has determined that it will include
say-on-pay votes in the company's proxy materials annually until the next required shareholder vote on the frequency of shareholder votes on the compensation of executives.
Accordingly, we again are asking our shareholders to approve the compensation of our named executive officers as disclosed in this proxy statement.
As
described in the Compensation Discussion and Analysis section of this proxy statement (the "CD&A"), the Compensation Committee's goal in setting executive compensation is to provide a
compensation package structured to attract, motivate and retain highly qualified executive officers by paying them competitively, consistent with our success and their contribution to that success.
The Committee believes compensation should be structured to ensure that a significant portion of an executive's compensation opportunity will be directly related to
33
Table of Contents
our
performance and other factors that directly and indirectly influence shareholder value. Consistent with our performance-based philosophy, we provide a base salary to our executive officers and
include a significant annual incentive based component, payable in cash, that is tied to company-wide financial objectives, and long-term incentive stock-based awards which
have value only through future share price appreciation.
Shareholders
are urged to read the CD&A, which discusses how our compensation policies and procedures implement our compensation philosophy, as well as the Summary Compensation Table and
other related compensation tables and narrative disclosure which describe the compensation of our five most highly-compensated executive officers in fiscal 2012. The Compensation Committee and the
Board of Directors believe that the policies and procedures articulated in the CD&A are effective in implementing our compensation philosophy and in achieving its goals and that the compensation of
our Named Executive Officers in fiscal 2012 reflects and supports these compensation policies and procedures.
Shareholders
are being asked to vote on the following resolution:
RESOLVED,
that the shareholders of Rochester Medical Corporation approve, on an advisory basis, the compensation of the company's Named Executive Officers described in the Compensation
Discussion and Analysis section of the proxy statement for the 2013 Annual Meeting of Shareholders and disclosed in the 2012 Summary Compensation Table and related compensation tables and narrative
disclosure included in the proxy statement.
This
advisory vote on executive compensation is not binding on our Board of Directors. However, the Board and the Compensation Committee will take into account the result of the vote
when determining future executive compensation arrangements.
The Board of Directors recommends a vote FOR adoption of the resolution approving the compensation of our executive officers, as described in the Compensation
Discussion and Analysis section and the related tabular and narrative disclosure, set forth in this proxy statement. Proxies will be voted FOR approval of the proposal unless otherwise
specified.
ANNUAL REPORT TO SHAREHOLDERS AND FORM 10-K
Our 2012 Annual Report to Shareholders and Form 10-K, including financial statements for the year ended
September 30, 2012, accompanies, or has been mailed to you immediately prior to, this proxy statement. The 2012 Annual Report to Shareholders is also available on our website at
www.rocm.com/ir
.
Copies of our Form 10-K are 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
34
Table of Contents
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 28, 2012
35
|
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 31, 2013. The undersigned, having duly received the
Notice of Annual Meeting and Proxy Statement dated December 28, 2012,
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 7, 2012, at the 2013 Annual
Meeting of Shareholders to be held Thursday, January 31, 2013, at the
companys corporate headquarters located at One Rochester Medical Drive,
Stewartville, Minnesota 55976, at 10:00 a.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
Board of Directors. ROCHESTER MEDICAL CORPORATION ANNUAL MEETING OF
SHAREHOLDERS Thursday, January 31, 2013 10:00 a.m. CST One Rochester Medical
Drive Stewartville, MN 55976 See reverse for voting instructions.
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Date
_________________________________ Please detach here 1. Election of Five
Directors: 01 Darnell L. Boehm 04 Peter H. Shepard Vote FOR all nominees Vote
WITHHELD 02 Anthony J. Conway 05 Richard W. Kramp (except as marked from all
nominees 03 David A. Jonas to the contrary) (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. Ratification of selection of
Grant Thornton LLP as independent auditor for the fiscal year ending
September 30, 2013 For Against Abstain 3. Advisory approval, by non-binding
vote, of executive compensation as disclosed in the proxy statement For
Against 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. 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. Address Change? Mark
Box Indicate changes below: COMPANY # 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 30, 2013. Please have
your proxy card and the last four digits of your Social Security Number or
Tax Identification 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 30,
2013. 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 ServicesSM, P.O. Box 64873,
St. Paul, MN 55164-0873. If you vote by Phone or Internet, please do not mail
your Proxy Card Shareowner ServicesSM P.O. Box 64945 St. Paul, MN 55164-0945
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