SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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[_] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
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[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CONMED CORPORATION
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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CONMED CORPORATION
310 Broad Street
Utica, New York 13501
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of CONMED
Corporation (the "Company") will be held at the Radisson Hotel - Utica Centre,
200 Genesee Street, Utica, New York on Tuesday, May 15, 2001 at 3:30 P.M. (New
York time), for the following purposes:
(1) To elect six Directors to serve on the Company's Board of Directors;
(2) To appoint independent accountants for the Company for 2001; and
(3) To transact such other business as may properly be brought before the
meeting or any adjournment thereof.
The shareholders of record at the close of business on March 28, 2001, are
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
Even if you plan to attend the meeting in person, we request that you mark,
date, sign and return your proxy in the enclosed self-addressed envelope as soon
as possible so that your shares may be certain of being represented and voted at
the meeting. Any proxy given by a shareholder may be revoked by that shareholder
at any time prior to the voting of the proxy.
By Order of the Board of Directors,
/s/ Thomas M. Acey
Thomas M. Acey
Secretary
April 6, 2001
CONMED CORPORATION
310 Broad Street
Utica, New York 13501
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
May 15, 2001
The enclosed proxy is solicited by and on behalf of the Board of Directors
of CONMED Corporation (the "Company") for use at the Annual Meeting of
Shareholders to be held on Tuesday, May 15, 2001, at 3:30 P.M. (New York time),
at the Radisson Hotel - Utica Centre, 200 Genesee Street, Utica, New York, and
any adjournment thereof. The matters to be considered and acted upon at such
meeting are described in the foregoing notice of the meeting and this proxy
statement. This proxy statement, the related form of proxy and the Company's
annual report to shareholders are being mailed on or about April 6, 2001, to all
shareholders of record on March 28, 2001. Shares of the Company's Common Stock,
par value $.01 per share (the "Common Stock"), represented in person or by proxy
will be voted as hereinafter described or as otherwise specified by the
shareholder. Any proxy given by a shareholder may be revoked by the shareholder
at any time prior to the voting of the proxy by delivering a written notice to
the Secretary of the Company, by executing and delivering a later-dated proxy or
by attending the meeting and voting in person.
The persons named as proxies are Eugene R. Corasanti and Robert E. Remmell,
who are presently directors and, in the case of Mr. Corasanti, an officer of the
Company. The cost of preparing, assembling and mailing the proxy, this proxy
statement and other material enclosed, and all clerical and other expenses of
solicitations, will be borne by the Company. In addition to the solicitation of
proxies by use of the mails, directors, officers and employees of the Company
and its subsidiaries may solicit proxies by telephone, telegram or personal
interview. The Company also will request brokerage houses and other custodians,
nominees and fiduciaries to forward soliciting material to the beneficial owners
of Common Stock held of record by such parties and will reimburse such parties
for their expenses in forwarding soliciting material.
Votes at the 2001 Annual Meeting will be tabulated by a representative of
Registrar and Transfer Company, which has been appointed by the Company's Board
of Directors to serve as inspector of election.
VOTING RIGHTS
The holders of record of the 15,424,027 shares of Common Stock outstanding
on March 28, 2001, will be entitled to one vote for each share held on all
matters coming before the meeting. The holders of record of a majority of the
outstanding shares of Common Stock present in person or by proxy will constitute
a quorum for the transaction of business at the meeting. Shareholders are not
entitled to cumulative voting rights. Under the rules of the Securities and
Exchange Commission (the "SEC"), boxes and a designated blank space are provided
on the proxy card for shareholders if they wish either to abstain on one or more
of the proposals or to withhold authority to vote for one or more nominees for
director. In accordance with New York State law, such abstentions are not
counted in determining the votes cast at the meeting. With respect to Proposal
1, the director nominees who receive the greatest number of votes at the meeting
will be elected to the Board of Directors of the Company. Votes against, and
votes withheld in respect of, a candidate have no legal effect. Proposal 2
requires the affirmative vote of the holders of a majority of the votes cast at
the meeting in order to be approved by the shareholders.
When properly executed, a proxy will be voted as specified by the shareholder.
If no choice is specified by the shareholder, a proxy will be voted "for" all
portions of items (1) and (2) and in the proxies' discretion on any other
matters coming before the meeting.
Under the rules of the New York Stock Exchange, Inc., which effectively
govern the voting by any brokerage firm holding shares registered in its name or
in the name of its nominee on behalf of a beneficial owner, Proposals (1) and
(2) are considered "discretionary" items upon which brokerage firms may vote in
their discretion on behalf of their clients if such clients have not furnished
voting instructions within ten days prior to the Annual Meeting (shares held by
such clients, "broker non-votes"). The broker non-votes will be treated in the
same manner as votes present.
ANNUAL REPORT
The annual report for the fiscal year ended December 31, 2000, including
financial statements, is being furnished herewith to shareholders of record on
March 28, 2001. The annual report does not constitute a part of the proxy
soliciting material and is not deemed "filed" with the SEC.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of March 28, 2001, by each
shareholder known by the Company to be the beneficial owner of more than 5% of
its outstanding Common Stock, by each director and nominee director, by each of
the Named Executive Officers (as defined below) and by all directors and
executive officers as a group.
Amount and Nature
of Beneficial
Name of Beneficial Owner Ownership Percent of Class
----------------------------------------------- ----------------- ----------------
William W. Abraham(1) 214,151 1.32
Eugene R. Corasanti(2) 687,602 4.25
Joseph J. Corasanti(3) 116,525 (4)
Bruce F. Daniels(5) 12,875 (4)
William D. Matthews(1) 14,500 (4)
Robert E. Remmell(1) 7,950 (4)
Stuart J. Schwartz(6) 5,350 (4)
Robert D. Shallish, Jr.(1) 75,925 (4)
Daniel S. Jonas (1) 6,000 (4)
Directors and executive officers as a group (8 1,140,878 7.02
persons)(1)(2)(3)(5)(6)(7)
Bristol-Myers Squibb Company(8) 1,000,000 6.09%
345 Park Avenue
New York, NY 10154
2
Amount and Nature
of Beneficial
Name of Beneficial Owner Ownership Percent of Class
----------------------------------------------- ----------------- ----------------
Fenimore Asset Management, Inc.(9) 1,148,144 7.44%
Thomas O. Putnam
118 North Grand Street
P.O. Box 310
Cobleskill, New York 12043
State of Wisconsin Investment Board (10) 1,300,000 8.43%
P. O. Box 7842
121 E. Wilson Street
Madison, WI 53707
Massachusetts Financial Services Company (11) 1,044,180 6.46%
500 Boylston Street
15th Floor
Boston, MA 02116
Wellington Management Company, LLP (12) 1,519,000 9.39%
75 State Street
Boston, MA 02109
Dimensional Fund Advisors, Inc. (13) 818,322 5.31%
1299 Ocean Avenue
Santa Monica, CA 90401
-----------------------
* Unless otherwise set forth above, the address of each of the above listed
shareholders is c/o CONMED Corporation, 310 Broad Street, Utica, New York
13501.
(1) Includes shares subject to options, exercisable within 60 days.
(2) Includes shares subject to options, exercisable within 60 days. Also
includes 42,525 shares owned beneficially by the wife of Eugene R.
Corasanti. Eugene R. Corasanti disclaims beneficial ownership of these
shares.
(3) Includes shares subject to options, exercisable within 60 days. Joseph J.
Corasanti is the son of Eugene R. Corasanti.
(4) Less than 1%.
(5) Includes shares subject to options, exercisable within 60 days. Also
includes 5,375 shares owned beneficially by the wife of Bruce F. Daniels.
Mr. Daniels disclaims beneficial ownership of these shares.
(6) Includes shares subject to options, exercisable within 60 days. Also
includes 850 shares owned beneficially by the wife of Stuart J. Schwartz.
Dr. Schwartz disclaims beneficial ownership of these shares.
(7) Includes shares subject to options, exercisable within 60 days, held by
William W. Abraham, Eugene R. Corasanti, Joseph J. Corasanti, Bruce F.
Daniels, William D. Matthews, Robert E. Remmell, Stuart J. Schwartz and
Robert D. Shallish, Jr., directors and executive officers of the Company.
Such 744,152 shares are equal to approximately 4.82% of the Common Stock
outstanding. As of March 28, 2001, the Company's directors and executive
officers as a group (9 persons) are the record owners of 347,976 shares,
which is approximately 2.26% of the Common Stock outstanding.
(8) A Schedule 13D filed with the SEC by Bristol-Myers Squibb Company ("BMS")
on January 9, 1998, indicates that BMS beneficially owns 1,000,000 shares
of Common Stock by virtue of having sole voting and dispositive power over
such shares pursuant to a warrant to purchase Common Stock, dated as of
December 31, 1997, issued by the Company to BMS in connection with the
acquisition of Linvatec Corporation ("Linvatec") by the Company on December
31, 1997.
3
(9) An Amendment to a Schedule 13G filed with the SEC by Fenimore Asset
Management, Inc., on January 30, 2001 indicates that such entities
beneficially own 1,148,144 shares of Common Stock by virtue of having
shared voting and dispositive power over such shares through discretionary
accounts owned economically by clients.
(10) A Schedule 13G filed with the SEC by State of Wisconsin Investment Board on
February 9, 2001 indicates that State of Wisconsin Investment Board
beneficially owns 1,300,000 shares of Common Stock by virtue of having sole
voting and dispositive power over such shares as manager of public pension
funds.
(11) A Schedule 13G filed with the SEC by Massachusetts Financial Services
Company on February 9, 2001 indicates that Massachusetts Financial Services
Company beneficially owns 885,740 shares of Common Stock by virtue of
having sole voting and dispositive power over those shares.
(12) A Schedule 13G filed with the SEC by Wellington Management Company, LLP on
February 14, 2001 indicates that Wellington Management Company, LLP
beneficially owns 1,519,000 shares of Common Stock by virtue of having
shared voting power over 1,399,700 shares and shared dispositive power over
1,519,000 shares in its capacity as an investment adviser.
(13) A Schedule 13G filed with the SEC by Dimensional Fund Advisors Inc. on
February 2, 2001 indicates that Dimensional Fund Advisors Inc. beneficially
owns 818,322 shares of Common Stock by virtue of having sole voting and
dispositive power over those shares in its role as investment advisor for
certain funds.
On March 28, 2001, there were 1,240 shareholders of record of the Company's
Common Stock.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to regulations promulgated by the Securities and Exchange
Commission, the Company is required to identify, based solely on a review of
reports filed under Section 16(a) of the Securities Exchange Act of 1934, and
furnished to the Company pursuant to Rule 16a-3(c) thereunder, each person who,
at any time during its fiscal year ended December 31, 2000, was a director,
officer or beneficial owner of more than 10% of the Company's Common Stock that
failed to file on a timely basis any such reports. Based on such reports, the
Company is not aware of any such failure to file on a timely basis any such
reports by any such person that has not previously been disclosed.
4
PROPOSAL ONE: ELECTION OF DIRECTORS
At the meeting, six directors are to be elected to serve on the Company's
Board of Directors. The shares represented by proxies will be voted as specified
by the shareholder. If the shareholder does not specify his choice, the shares
will be voted in favor of the election of the nominees listed on the proxy card,
except that in the event any nominee should not continue to be available for
election, such proxies will be voted for the election of such other persons as
the Board of Directors may recommend. The Company does not presently contemplate
that any of the nominees will become unavailable for election for any reason.
The director nominees who receive the greatest number of votes at the meeting
will be elected to the Board of Directors of the Company. Votes against, and
votes withheld in respect of, a candidate have no legal effect. Shareholders are
not entitled to cumulative voting rights.
The Board of Directors recommends a vote FOR this proposal.
The Board of Directors consists of six directors. Directors hold office for
terms expiring at the next annual meeting of shareholders and until their
successors are duly elected and qualified. Each of the nominees proposed for
election at the Annual Meeting is presently a member of the Board of Directors
and has been elected by the shareholders.
The following table sets forth certain information regarding the members
of, and nominees for, the Board of Directors:
NOMINEES FOR ELECTION AT THE 2001 ANNUAL MEETING
Served As
Director Principal Occupation or
Name Age Since Position with the Company
---- --- --------- -------------------------
Eugene R. Corasanti 70 1970 Chairman of the Board of Directors, and Chief
Executive Officer of the Company
Robert E. Remmell 70 1983 Partner of Steates Remmell Steates & Dziekan
(Attorneys)
Bruce F. Daniels 66 1992 Executive, retired; former Controller of the
international division of Chicago Pneumatic Tool
Company
William D. Matthews 66 1997 Retired Chairman of the Board of Directors and
retired Chief Executive Officer of Oneida Ltd. and
director of Oneida Financial Corporation and Coyne
Textile Services
Stuart J. Schwartz 64 1998 Physician, retired
37 1994 President and Chief Operating Officer of the Company
Joseph J. Corasanti
5
DIRECTORS, EXECUTIVE OFFICERS AND SENIOR OFFICERS
EUGENE R. CORASANTI (age 70) has served as Chairman of the Board of the
Company since its incorporation in 1970. Mr. Corasanti is also the Company's
Chief Executive Officer. Prior to that time he was an independent public
accountant. Mr. Corasanti holds a B.B.A. degree in Accounting from Niagara
University. Eugene R. Corasanti's son, Joseph J. Corasanti, is President and
Chief Operating Officer and a Director of the Company.
ROBERT E. REMMELL (age 70) has served as a Director since June 1983. Mr.
Remmell also served as an Assistant Secretary of the Company and as an officer
of several of the Company's subsidiaries from June 1983, until March 1, 2000,
when he resigned from his position as Assistant Secretary of the Company, and
from the positions he had held in the Company's subsidiaries. Mr. Remmell has
been a partner since January 1961 of Steates Remmell Steates & Dziekan, Utica,
New York, which has served as counsel to the Company. Mr. Remmell holds a B.A.
degree from Utica College and an L.L.B. from Syracuse University School of Law.
BRUCE F. DANIELS (age 66) has served as a Director of the Company since
August 1992. Mr. Daniels is a retired executive. From August 1974 to June 1997,
Mr. Daniels held various executive positions, including a position as Controller
with Chicago Pneumatic Tool Company. Mr. Daniels holds a B.S. degree in Business
from Utica College.
WILLIAM D. MATTHEWS (age 66) has served as a Director of the Company since
August 1997. From 1986 until retiring from the positions in 1999, Mr. Matthews
was the Chairman of the Board and the Chief Executive Officer of Oneida Ltd. Mr.
Matthews is a director of Oneida Financial Corporation and Coyne Textile
Services. Mr. Matthews holds a B.A. degree from Union College and an L.L.B.
degree from Cornell University School of Law.
STUART J. SCHWARTZ (age 64) has served as a Director of the Company since
May 1998. Dr. Schwartz is a retired physician. From 1969 to December 1997 he was
engaged in private practice as an urologist. Dr. Schwartz holds a B.A. degree
from Cornell University and a M.D. degree from SUNY Upstate Medical College,
Syracuse.
JOSEPH J. CORASANTI (age 37) has served as President and Chief Operating
Officer of the Company since August 1999 and as a Director of the Company since
May 1994. He also served as General Counsel and Vice President-Legal Affairs of
the Company from March 1993 to August 1998 and Executive Vice-President/General
Manager of the Company from August 1998 to August 1999. Prior to that time he
was an Associate Attorney with the law firm of Morgan, Wenzel & McNicholas, Los
Angeles, California from 1990 to March 1993. Mr. Corasanti holds a B.A. degree
in Political Science from Hobart College and a J.D. degree from Whittier College
School of Law. Joseph J. Corasanti is the son of Eugene R. Corasanti, Chairman
and Chief Executive Officer of the Company.
WILLLAM W. ABRAHAM (age 69) joined the Company in May 1977 as General
Manager. He has served as the Company's Vice President-Manufacturing and
Engineering since June 1983. In November of 1989 he was named Executive Vice
President and in March 1993, he was named Senior Vice President of the Company.
Mr. Abraham holds a B.S. degree in Industrial Management from Utica College.
6
ROBERT D. SHALLISH, JR. (age 52) joined the Company as Chief Financial
Officer and Vice President-Finance in December 1989 and has also served as an
Assistant Secretary since March 1995. Prior to this he was employed as
Controller of Genigraphics Corporation in Syracuse, New York since 1984. He was
employed by Price Waterhouse LLP as a certified public accountant and senior
manager from 1972 through 1984. Mr. Shallish graduated with a B.A. degree in
Economics from Hamilton College and holds a Master's degree in Accounting from
Syracuse University.
GERALD G. WOODARD (age 53) joined the Company as President of Linvatec
Corporation, a wholly-owned subsidiary of the Company, in May 2000. Prior to his
employment with the Company, Mr. Woodard served as the President of Elekta
Holdings, Inc. from March 1998 to May 2000. Previous to this position Mr.
Woodard was the President of the Monitoring and Information Systems Division of
Marquette Medical Systems from November 1995 to March 1998. Mr. Woodard holds a
B.G.S. degree from Indiana University.
DANIEL S. JONAS (age 37) joined the Company as General Counsel in August
1998 and in addition became the Vice President-Legal Affairs in March 1999. In
September 1999, Mr. Jonas assumed responsibility for certain of the Company's
Regulatory Affairs and Quality Assurance. Prior to his employment with the
Company he was a partner with the law firm of Harter, Secrest & Emery, LLP in
Syracuse from January 1998 to August 1998, having joined the firm as an
Associate Attorney in 1995. Prior to that he was an Associate Attorney at
Miller, Alfano & Raspanti, P.C. in Philadelphia from 1992 to 1995 as well as an
adjunct professor of law at the University of Pennsylvania Law School from 1991
to 1995. Mr. Jonas holds an A.B. degree from Brown University and a J.D. from
the University of Pennsylvania Law School.
LUKE A. POMILIO (age 36) joined the Company as Controller in September
1995. In addition, in September 1999, Mr. Pomilio became a Vice President with
responsibility for certain of the Company's manufacturing and research and
development activities. Prior to his employment with the Company, Mr. Pomilio
served for two years as Controller of Rome Cable Corporation, a wire and cable
manufacturer. He was also employed as a certified public accountant for seven
years with Price Waterhouse LLP where he served most recently as an audit
manager. Mr. Pomilio graduated with a B.S. degree in Accounting and Law from
Clarkson University.
THOMAS M. ACEY (age 54) has been employed by the Company since August 1980
and has served as the Company's Treasurer since August 1988 and as the Company's
Secretary since January 1993. Mr. Acey holds a B.S. degree in Public Accounting
from Utica College and prior to joining the Company was employed by the
certified public accounting firm of Tartaglia & Benzo in Utica, New York.
FRANK R. WILLIAMS (age 52) joined the Company in 1974 as Sales Manager and
Director of Marketing and became Vice President-Marketing and Sales in June
1983. In September 1989, he became Vice President-Business Development, in
November 1995, he became Vice President-Technology Assessment and in January
2000, he also became Vice President-Research and Development and Marketing for
Minimally Invasive Surgical Products. Mr. Williams graduated with a B.A. degree
from Hartwick College in 1970 as a biology major and did his graduate study in
Human Anatomy at the University of Rochester College of Medicine.
JOHN J. STOTTS (age 44) joined the Company as Vice President-Marketing and
Sales for Patient Care in July 1993 and became Vice President-Marketing in
December 1996. In January 2000, Mr. Stotts became Vice President - Marketing and
Sales for Patient Care Products. Prior to his employment with the Company, Mr.
Stotts served as Director of Marketing and Sales for Medtronic Andover Medical,
Inc. Mr. Stotts holds a B.A. degree in Business Administration from Ohio
University.
7
The Company's Directors are elected at each annual meeting of shareholders
and serve until the next annual meeting and until their successors are duly
elected and qualified. Eugene R. Corasanti's employment is subject to an
employment agreement which expires December 31, 2001. Joseph J. Corasanti's
employment is subject to an employment agreement which expires on December 31,
2004. The Company's other officers are appointed by the Board of Directors and,
except as set forth in the following section, hold office at the will of the
Board of Directors.
COMPENSATORY ARRANGEMENTS AND RELATED TRANSACTIONS
The Company has outstanding agreements with certain executive employees of
the Company selected by the Board of Directors, which agreements provide that
the individuals will not, in the event of the commencement of steps to effect a
Change of Control (defined generally as an acquisition of 20% or more of the
outstanding voting shares or a change in a majority of the Board of Director),
voluntarily leave the employ of the Company until a third person has terminated
his or her efforts to effect a Change of Control or until a Change of Control
has occurred.
In the event of a termination of the individual's employment within two (2)
years and six (6) months of a Change of Control, the executive is entitled to
three years' compensation, including bonus, retirement benefits equal to the
benefits he would have received had he completed three additional years of
employment, continuation of all life, accident, health, savings, or other fringe
benefits for three years, as well as any excise or other tax that may become due
as a result of such Change of Control.
The Board of Directors of the Company may terminate any such agreement upon
three years prior written notice. The Board of Directors may also, at any time,
terminate an agreement with respect to any executive employee who is affiliated
with any group seeking or accomplishing a Change of Control. Messrs. E.
Corasanti, J. Corasanti, W. Abraham, D. Jonas and R. Shallish are each a party
to such an agreement, as are certain other officers of the Company and/or its
subsidiaries.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Company's Board of Directors has three standing committees: the Audit
Committee, the Stock Option Committee and the Compensation Committee. The
Company has no nominating committee.
The Audit Committee presently consists of Messrs. Daniels, Matthews and
Remmell. The Audit Committee is charged with evaluating accounting and control
procedures and practices of the Company and reporting on such to the Board of
Directors. The Audit Committee also serves as the direct liaison with the
Company's independent public accountants and recommends the engagement or
discharge of such auditors. The Audit Committee met five times during 2000. The
current Audit Committee Charter is attached as Appendix A hereto.
The Stock Option Committee presently consists of Messrs. Daniels and
Remmell and Dr. Schwartz. The Stock Option Committee administers the Company's
employee stock option plans and has authority to grant options to officers and
key employees, as designated by the Stock Option Committee, and to determine the
terms of such options in accordance with such plan. The Stock Option Committee
acted by unanimous written consent on resolutions ten times during 2000.
The Compensation Committee presently consists of Messrs. Daniels, Matthews
and Remmell. The Compensation Committee is charged with reviewing and
establishing levels of salary, bonuses, benefits and other compensation for the
Company's officers. The Compensation Committee met three times during 2000, and
voted by unanimous consent once during 2000.
8
The full Board of Directors met six times in person and voted by unanimous
consent on one resolution during 2000. Each incumbent director attended or acted
upon at least 75% of the total 2000 board meetings or unanimous consents and
committee meetings or unanimous consents held or acted upon during periods that
he was a member of the Board or such committees.
Each Director was paid $1,000 for each of the five meetings of the full
Board of Directors personally attended and Messrs. Daniels, Matthews and Remmell
and Dr. Schwartz, as non-employee directors, were paid $2,500 for each of the
four fiscal quarters of service on the Board of Directors. In addition, under
the Company's Stock Option Plan for Non-Employee Directors, each non-employee
director (Messrs. Daniels and Remmell in 1996 and 1997, Messrs. Daniels,
Matthews and Remmell and Dr. Schwartz in 1998 and 1999 and, if elected, Messrs.
Daniels, Matthews and Remmell and Dr. Schwartz in 2000) elected, reelected or
continuing as a director, receives 1,500 (3,000 in 2001) options with an option
price equal to the fair market value of the Company's Common Stock on the
business day following each annual meeting of the shareholders.
AUDIT COMMITTEE REPORT
The role of the Audit Committee is to assist the Board of Directors in its
oversight of the company's financial reporting process. The Board of Directors,
in its business judgment, has determined that all members of the Committee are
"independent", as required by applicable listing standards of NASDAQ. The
Committee operates pursuant to a Charter that was last amended and restated by
the Board on February 15, 2001, a copy of which is attached to this Proxy
Statement as Appendix A.
Management is responsible for CONMED's internal controls, financial
reporting process and compliance with laws and regulations. The independent
accountants are responsible for performing an independent audit of CONMED's
consolidated financial statements in accordance with generally accepted auditing
standards and to issue a report thereon. The Committee's responsibility is to
monitor and oversee these processes.
In this context, the Committee has met and held discussions with management
and the independent auditors. Management represented to the Committee that the
Company's consolidated financial statements were prepared in accordance with
generally accepted accounting principles, and the Committee has reviewed and
discussed the consolidated financial statements with management and the
independent accountants. The Committee discussed with the independent auditors
matters required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees).
CONMED's independent auditors also provided to the Committee the written
disclosures and the letter required by Independence Standards Board Standard No.
1 (Independence Discussions with Audit Committees), and the Committee discussed
with the independent accountants that firm's independence.
The members of the Audit Committee are not professionally engaged in the
practice of auditing or accounting and are not experts in the fields of
accounting or auditing, including in respect of auditor independence. Members of
the Committee rely without independent verification on the information provided
to them and on the representations made by management and the independent
accountants. Accordingly, the Audit Committee's oversight does not provide an
independent basis to determine that management has maintained appropriate
accounting and financial reporting principles or appropriate internal control
and procedures designed to assure compliance with accounting standards and
applicable laws and regulations. Furthermore, the Audit Committee's
considerations and discussions referred to above do not assure that the audit of
the Company's financial statements has been carried out in accordance with
generally accepted auditing standards, that the financial statements are
presented in accordance with generally accepted accounting principles or that
the Company's auditors are in fact "independent".
10
Based upon the Committee's review and discussions referred to above, and
subject to the limitations on the role and responsibilities of the Committee
referred to above and in the Charter, the Committee recommended that the Board
of Directors include the Company's audited consolidated financial statements in
CONMED's Annual Report on Form 10-K for the year ended December 31, 2000 filed
with the Securities and Exchange Commission.
Submitted by the Audit Committee,
Bruce Daniels (Chairman)
William Matthews
Robert E. Remmell
COMPENSATION OF EXECUTIVE OFFICERS
The following information relates to all plan and non-plan compensation
awarded to, earned by, or paid to (i) Eugene R. Corasanti, the Chairman of the
Board of Directors and Chief Executive Officer of the Company (the "CEO"), (ii)
the Company's four most highly compensated executive officers, other than the
CEO, who were serving as executive officers of the Company at December 31, 2000
and (iii) Gerald Woodard, the President of Linvatec, who began work in 2000 (the
CEO and such officers, the "Named Executive Officers").
The following information does not reflect any compensation awarded to or
earned by the Named Executive Officers subsequent to December 31, 2000, except
as may otherwise be indicated. Any compensation awarded to or earned by the
Named Executive Officers during 2001 will be reported in the proxy statement for
the Company's 2002 Annual Meeting of Shareholders, unless such compensation has
been previously reported.
Summary Compensation Table
The following table sets forth for the Named Executive Officers for each of
the last three fiscal years: (i) the name and principal position of the
executive officer (column (a)); (ii) the year covered (column (b)); (iii) annual
compensation (columns (c), (d) and (e)), including: (A) base salary earned
during the year covered (column (c)); (B) bonus earned during the year covered
(column (d)); and (C) other annual compensation not properly categorized as
salary or bonus (column (e)); and (iv) long-term compensation, including the sum
of the number of stock options granted (column (f)).
10
Summary Compensation Table
-----------------------------------------------------------------------------------------------------------------------
Long-Term
Compensation
Annual Compensation Awards
------------------------------------- ----------- --------------- --------------- ----------------- -------------------
(a) (b) (c) (d) (e) (f)
------------------------------------- ----------- --------------- --------------- ----------------- -------------------
Fiscal Salary Bonus Other Annual Options
Name and Principal Position Year ($) ($)(1) Compensation ($) (#)
------------------------------------- ----------- --------------- --------------- ----------------- -------------------
Eugene R. Corasanti, 2000 337,335 0 370,490 75,000
Chief Executive Officer and 1999 322,854 65,000 245,900(2) 50,000
Chairman of the Board 1998 300,000 45,000 225,000(2) 55,000
------------------------------------- ----------- --------------- --------------- ----------------- -------------------
Joseph J. Corasanti, 2000 208,895 0 100,000 75,000
President and 1999 170,134 40,000 - 60,000
Chief Operating Officer 1998 133,195 21,843 - 30,000
------------------------------------- ----------- --------------- --------------- ----------------- -------------------
William W. Abraham, 2000 183,807 0 - 10,000
Senior Vice President 1999 178,907 34,840 - 10,000
1998 176,557 25,350 - 5,000
------------------------------------- ----------- --------------- --------------- ----------------- -------------------
Gerald G. Woodard, 2000 118,794 0 - 35,000
President of Linvatec(3) 1999 n/a n/a - n/a
1998 n/a n/a - n/a
------------------------------------- ----------- --------------- --------------- ----------------- -------------------
Robert D. Shallish, Jr., 2000 165,948 0 - 10,000
Chief Financial Officer 1999 161,327 31,574 - 10,000
and Vice President-Finance 1998 158,662 22,893 - 5,000
------------------------------------- ----------- --------------- --------------- ----------------- -------------------
Daniel S. Jonas, 2000 140,760 0 - 10,000
Vice President - Legal Affairs, 1999 128,968 26,512 - 8,000
General Counsel(4) 1998 50,700 7,813 - 6,000
------------------------------------- ----------- --------------- --------------- ----------------- -------------------
------------------
(1) Includes cash bonuses in year earned even if paid after the fiscal year
end.
(2) Amounts represent deferred compensation and accrued interest for Messrs.
Eugene and Joseph Corasanti. See the discussion of the employment
agreements for Messrs. Eugene and Joseph Corasanti, below.
(3) Mr. Woodard was hired effective May 30, 2000.
(4) Mr. Jonas was hired effective August 3, 1998.
Eugene R. Corasanti has a five-year employment agreement (the "CEO
Employment Agreement") with the Company, extending through December 31, 2001.
The CEO Employment Agreement provides for Mr. Corasanti to serve as chief
executive officer of the Company for five years at an annual salary not less
than $300,000, as determined by the Board of Directors. Mr. Corasanti also
receives deferred compensation of $100,000 per year (which the Board increased
to $200,000 for 2000 and 2001) with interest at 10% per annum, payable in 120
equal monthly installments upon his retirement or to his beneficiaries at death,
and is entitled to participate in the Company's employee stock option plan and
pension and other employee benefit plans and such bonus or other compensatory
arrangements as may be determined by the Board of Directors. In the event that
the Board of Directors should fail to re-elect
11
Mr. Corasanti as chief executive officer or should terminate his employment for
reasons other than just cause, Mr. Corasanti will become entitled to receive the
greater of three years' base annual salary or the balance of his base annual
salary plus the average of the bonuses, deferred compensation and incentive
compensation awarded to Mr. Corasanti during the three years prior to such
termination for the five-term employment term, and shall continue to receive
other employment benefits, for the greater of three years or the balance of the
CEO Employment Agreement's five-year term. In the event of Mr. Corasanti's death
or disability, Mr. Corasanti or his estate or beneficiaries will be entitled to
receive 100% of his base annual salary and other employment benefits (other than
deferred compensation) for the balance of the CEO Employment Agreement's term.
If, during the term of Mr. Corasanti's employment under the Employment Agreement
and within two years after a Change in Control, his employment with the Company
is terminated by the Company, other than for Cause or by him for Good Reason (as
such capitalized terms are defined in the Employment Agreement), Mr. Corasanti
will be entitled to receive (a) a lump sum payment equal to three times the sum
of (i) his base salary on the date of such termination or his base salary in
effect immediately prior to the Change in Control, whichever is higher, plus
(ii) the average of the bonuses, deferred compensation and incentive
compensation awarded to Mr. Corasanti during the three years prior to such
termination; (b) continued coverage under the benefit plans in which he
participates for a period of two years from the date of such early termination;
(c) a lump sum payment equal to the aggregate amount credited to his deferred
compensation account; and (d) awards for the calendar year of such termination
under incentive plans maintained by the Company as though any performance or
objective criteria used in determining such awards were satisfied. The Board of
Directors has determined that Mr. Corasanti's base salary was $325,000 for 2000.
Joseph J. Corasanti has a five-year employment agreement (the "COO
Employment Agreement") with the Company, extending through December 31, 2004.
The COO Employment Agreement provides for Mr. Corasanti to serve as chief
operating officer of the Company for five years at an annual salary not less
than $200,000, as determined by the Board of Directors. Mr. Corasanti also
receives deferred compensation of $100,000 per year with interest at 10% per
annum, payable in 120 equal monthly installments, at his option, upon his
departure or retirement or to his beneficiaries at death, and is entitled to
participate in the Company's employee stock option plan and pension and other
employee benefit plans and such bonus or other compensatory arrangements as may
be determined by the Board of Directors. In the event that the Board of
Directors should fail to re-elect Mr. Corasanti as chief operating officer or
should terminate his employment for reasons other than just cause, Mr. Corasanti
will become entitled to receive the greater of three years' base annual salary
or the balance of his base annual salary plus the average of the bonuses,
deferred compensation and incentive compensation awarded to Mr. Corasanti during
the three years prior to such termination for the five-term employment term, and
shall continue to receive other employment benefits, for the greater of three
years or the balance of the COO Employment Agreement's five-year term. In the
event of Mr. Corasanti's death or disability, Mr. Corasanti or his estate or
beneficiaries will be entitled to receive 100% of his base annual salary and
other employment benefits (other than deferred compensation) for the balance of
the COO Employment Agreement's term. If, during the term of Mr. Corasanti's
employment under the COO Employment Agreement and within two years after a
Change in Control, his employment with the Company is terminated by the Company,
other than for Cause or by him for Good Reason (as such capitalized terms are
defined in the Employment Agreement), Mr. Corasanti will be entitled to receive
(a) a lump sum payment equal to three times the sum of (i) his base salary on
the date of such termination or his base salary in effect immediately prior to
the Change in Control, whichever is higher, plus (ii) the average of the
bonuses, deferred compensation and incentive compensation awarded to Mr.
Corasanti during the three years prior to such termination; (b) continued
coverage under the benefit plans in which he participates for a period of two
years from the date of such early termination; (c) a lump sum payment equal to
the aggregate amount credited to his deferred compensation account; and (d)
awards for the calendar year of such termination under incentive plans
maintained by the Company as though any performance or objective criteria used
in determining
12
such awards were satisfied. The Board of Directors has determined that Mr.
Corasanti's base salary was $200,000 for 2000.
The Company is paying the premiums on three split-dollar life insurance
policies for Eugene R. Corasanti. In 2000, premiums on these policies paid by
the Company aggregated approximately $52,000. In addition, the Company is paying
the premiums for a split-dollar life insurance policy for Mr. J. Corasanti, for
which the Company paid premiums of $12,130 in 2000. These matters are described
under "Board of Directors Interlocks and Insider Participation; Certain
Relationships and Related Transactions."
STOCK OPTION PLANS
1999 Long-Term Incentive Stock Plan
In May 1999, the shareholders approved the CONMED Corporation 1999
Long-Term Incentive Plan (the "1999 Plan"). Under the 1999 Plan, in the
discretion of the Stock Option Committee of the Board of Directors (the
"Committee"), options, performance shares and restricted stock may be granted to
employees and/or consultants of the Company and its subsidiaries. The Committee
presently consists of Messrs. Daniels and Remmell and Dr. Schwartz.
Options may be granted which are (i) incentive stock options within the
meaning of Internal Revenue Code Section 422, (ii) options other than incentive
stock options (i.e., non-qualified options), (iii) performance shares, and (iv)
restricted stock (collectively, the "awards"). A total of 1,000,000 shares of
Common Stock (subject to adjustment for stock splits and other changes in the
Company's capital structure) are reserved against the issuance of awards to be
granted under the 1999 Plan. Shares reserved under an award which for any reason
expires or is terminated, in whole or in part, shall again be available for the
purposes of the 1999 Plan. Options relating to 472,575 shares of Common Stock
have been granted and not terminated under the 1999 Plan. At this time, 22,500
of the options are exercisable. Options relating to 527,425 shares of Common
Stock remain available to be granted.
The 1992 Plan
In April 1992, the shareholders approved the CONMED Corporation 1992 Stock
Option Plan (as amended and approved by the shareholders on May 21, 1996, the
"1992 Plan"). Under the 1992 Plan, in the discretion of the Stock Option
Committee of the Board of Directors (the "Committee"), options may be granted to
officers and key employees of the Company and its subsidiaries for the purchase
of shares of Common Stock. The Committee presently consists of Messrs. Daniels
and Remmell and Dr. Schwartz.
Options may be granted which are (i) incentive stock options within the
meaning of Internal Revenue Code Section 422 or (ii) options other than
incentive stock options (i.e., non-qualified options). A total of 2,000,000
shares of Common Stock (subject to adjustment for stock splits and other changes
in the Company's capital structure) are reserved against the exercise of options
to be granted under the 1992 Plan. Shares reserved under an option which for any
reason expires or is terminated, in whole or in part, shall again be available
for the purposes of the 1992 Plan. Options relating to 2,598,049 shares of
Common Stock have been granted and not terminated under the 1992 Plan, of which
options relating to 1,016,867 shares of Common Stock are still exercisable.
Options relating to 175,641 shares of Common Stock remain available to be
granted.
13
The 1983 Plan
In June 1983, the shareholders of the Company approved an employee stock
option plan (the "1983 Plan"), which was subsequently amended and approved by
the shareholders on June 30, 1987 and April 10, 1992. Options may be granted
which are (i) incentive stock options within the meaning of Internal Revenue
Code Section 422 or (ii) options other than incentive stock options (i.e.,
non-qualified options). Pursuant to the 1983 Plan, officers and key employees of
the Company were eligible for grants of stock options at the fair market value
of the Company's Common Stock on the date of grant, exercisable commencing one
year after grant. The 1983 Plan is administered by the Committee.
No additional options may be granted under the 1983 Plan. Options relating
to 1,005,753 shares of Common Stock were granted under the 1983 Plan, of which
options for 11,625 shares of Common Stock are still exercisable.
Stock Option Plan for Non-Employee Directors
In May 1995, the shareholders of the Company approved the Stock Option Plan
For Non-Employee Directors of CONMED Corporation (the "Non-Employee Directors
Plan"). All members of the Company's Board of Directors who are not current or
former employees of the Company or any of its subsidiaries ("Non-Employee
Directors") are eligible to participate in the Non-Employee Directors Plan.
Under the Non-Employee Directors Plan, each Non-Employee Director (Daniels and
Remmell in 1996 and 1997, Messrs. Daniels, Matthews and Remmell and Dr. Schwartz
in 1998, 1999 and 2000 and if elected, Messrs. Daniels, Matthews and Remmell and
Dr. Schwartz in 2001) elected, reelected or continuing as a director receives
1,500 options (which are non-qualified stock options under the Internal Revenue
Code of 1986) (3,000 starting in 2001) with an option price equal to the fair
market value of the Company's Common Stock on the business day following each
annual meeting of the shareholders.
A total of 75,000 shares of Common Stock (subject to adjustment for stock
splits and other changes in the Company's capital structure) are reserved
against the exercise of options to be granted and not terminated under the
Non-Employee Directors Plan, of which options for 28,500 shares of Common Stock
have been granted and options for 18,000 shares are still exercisable. Options
relating to 46,500 shares of Common Stock remain available to be granted. Shares
issuable under the Non-Employee Directors Plan may be authorized but unissued
shares or treasury shares. Shares reserved under an option which for any reason
expires or is terminated, in whole or in part, shall again be available for the
purposes of the Non-Employee Directors Plan.
Option Grants Table
The following table sets forth, with respect to grants of stock options
made during 2000 to each of the Named Executive Officers: (I) the name of the
executive officer (column (a)); (ii) the number of securities underlying options
granted (column (b)); (iii) the percent the grant represents of the total
options granted to all employees during 2000; (iv) the per share exercise price
of the options granted (column (d)); (v) the expiration date of the options
(column (e)); and (vi) the potential realizable value of each grant, assuming
the market price of the Common Stock appreciates in value from the date of grant
to the end of the option term at a rate of (A) 5% per annum (column (f)) and (B)
10% per annum (column (g)).
14
Option Grants in 2000
Potential Realiazable Value at
Assumed Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term
---------------------------------------------------------------------------------------------- ------------------------------
(a) (b) (C) (d) (e) (f) (g)
Number of
Securities
Underlying % of Total
Options Options Granted Exercise or
Granted to Employees in Base Price Expiration
Name (#) 2000 ($/Sh) Date 5%($) 10%($)
------------------------ ---------- --------------- ------------ ---------- ---------- ------------
Eugene R. Corasanti 25,000 5.49% 24.63 5/16/10 387,163.25 981,147.70
50,000 10.98% 13.75 10/11/10 432,365.06 1,095,697.94
Joseph J. Corasanti 25,000 5.49% 24.63 5/16/10 387,163.25 981,147.70
50,000 10.98% 13.75 10/11/10 432,365.06 1,095,697.94
William W. Abraham 5,000 1.10% 24.63 5/16/10 77,432.65 196,229.54
5,000 1.10% 13.75 10/11/10 43,236.51 109,569.79
Robert D. Shallish, Jr. 5,000 1.10% 24.63 5/16/10 77,432.65 196,229.54
5,000 1.10% 13.75 10/11/10 43,236.51 109,569.79
Gerald Woodard 25,000 5.49% 25.44 6/6/10 399,937.68 1,013,520.60
10,000 2.20% 16.06 7/20/10 101,016.20 255,994.88
Daniel S. Jonas 5,000 1.10% 24.63 5/16/10 77,432.65 196,229.54
5,000 1.10% 13.75 10/11/10 43,236.51 109,569.79
15
Aggregated Option Exercises and Year-End Option Value Table
The following table sets forth, with respect to each exercise of stock
options during 2000 by each of the Named Executive Officers and the year-end
value of unexercised options on an aggregated basis: (I) the name of the
executive officer (column (a)); (ii) the number of shares received upon
exercise, or, if no shares were received, the number of securities with respect
to which the options were exercised (column (b)); (iii) the aggregate dollar
value realized upon exercise (column (c)); (iv) the total number of securities
underlying unexercised options held at December 31, 2000, separately identifying
the exercisable and unexercisable options (column (d)); and (v) the aggregate
dollar value of in-the-money, unexercised options held at December 31, 2000,
separately identifying the exercisable and unexercisable options (column (e)).
The Company's stock option plans do not provide for stock appreciation rights.
Aggregated Option Exercises in 2000 and
December 31, 2000 Option Values
(a) (b) (C) (d) (e)
Name of Securities Underlying Value of Unexercised In-the-Money
Unexercised Options at 12/31/00 Options at 12/31/00 ($)(1)
(#) ---------------------------------
-------------------------------
Shares
Acquired on Value Realized
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
----------------------- ------------ -------------- ----------- ------------- ----------- -------------
Eugene R. Corasanti 0 $0 410,502 75,000 $1,461,796 $168,750
William W. Abraham 0 $0 162,051 10,001 $1,010,494 $ 16,881
Gerald Woodard 0 $0 0 35,000 $0 $ 10,625
Robert D. Shallish, Jr. 11,200 $254,167 61,600 30,400 $181,624 $ 17,125
Joseph J. Corasanti 0 $0 60,100 151,400 $42,406 $170,188
Daniel S. Jonas 0 $0 4,000 20,000 $0 $ 16,875
--------------------------------------------------------------------------------
(1) Assumes $17.125 per share fair market value on December 31, 2000 which was
the closing price on December 29, 2000, the last day of trading on NASDAQ
in 2000.
PENSION PLANS
The Company maintains a broadly based defined benefit pension plan (the
"Pension Plan") for all employees. The Pension Plan entitles a participant to a
normal monthly retirement benefit equal to 1 1/2% of the participant's average
monthly earnings over the period of employment times years of service. The
deferred compensation for Mssrs. E. and J. Corasanti is not included in the
calculation of retirement benefits. Benefits are fully vested after five years
of service, starting from date of hire. Upon reaching normal retirement age,
generally age 65 with five years of credited service, participants are entitled
to receive vested benefits under the Pension Plan either in the form of a lump
sum payment or a monthly retirement benefit.
16
The Pension Plan represents a "fresh start" as of January 1, 1989,
replacing the three pension plans formerly in place. The three former plans have
been merged into the Pension Plan, which is the former broadly based plan with
the benefit formula increased from 1/2% of pay to 1 1/2% of pay. Benefits
accrued by participants under the former plans became fully vested as of
December 31, 1988 and are paid, when due, from this "fresh start" Pension Plan.
Benefits accrued under the former plans are payable from the Pension Plan in
addition to the benefits to be received under the Pension Plan.
As of December 31, 2000, Messrs. E. Corasanti, Abraham, Shallish, J.
Corasanti and Jonas had five, four, eleven, eight and two years of credited
service, respectively. The first table presents information concerning the
annual pension payable under the Pension Plan based upon various assumed levels
of annual compensation and years of service
CONMED Pension Plan
Years of Service
Average
Pay 15 20 25 30 35
--------------- ------- ------- ------- ------- -------
$125,000 $28,125 $37,500 $46,875 $56,250 $65,625
$150,000 33,750 45,000 56,250 67,500 78,750
$175,000(1) 36,000 48,000 60,000 72,000 84,000
$200,000(1) 36,000 48,000 60,000 72,000 84,000
$225,000(1) 36,000 48,000 60,000 72,000 84,000
$250,000(1) 36,000 48,000 60,000 72,000 84,000
$300,000(1) 36,000 48,000 60,000 72,000 84,000
$400,000(1) 36,000 48,000 60,000 72,000 84,000
$450,000(1) 36,000 48,000 60,000 72,000 84,000
$500,000(1) 36,000 48,000 60,000 72,000 84,000
(1) 2000 statutory limits are $130,000 and straight life annuity benefit payable
at age 65 and $160,000 annual compensation taken into account in determining
average pay.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's Board of Directors, pursuant to the terms of the CEO and COO
Employment Agreements, establishes the annual salary of Eugene R. Corasanti and
Joseph J. Corasanti. The Compensation Committee establishes the compensation
plans and specific compensation levels for the Company's other officers. The
Stock Option Committee administers the Company's stock option plans. The
Compensation Committee is presently composed of Bruce F. Daniels, William D.
Matthews and Robert E. Remmell. The Stock Option Committee is presently composed
of Bruce F. Daniels, Robert E. Remmell and Stuart J. Schwartz.
The Board of Directors believes that the compensation of Eugene R.
Corasanti, the Company's Chairman and Chief Executive Officer ("CEO"), should be
heavily influenced by company performance, long-term growth and strategic
positioning. Therefore, although there is necessarily some subjectivity in
setting the CEO's salary, major elements of the compensation package are
directly tied to company performance, long-term growth and strategic
positioning. This philosophy is reflected in Mr. Corasanti's
17
current five-year employment contract, which provides for a base annual salary
of $300,000 and permits the Board of Directors, in its discretion, to establish
a higher salary.
The Board of Directors believes that the compensation of Joseph J.
Corasanti, the President and Chief Operating Officer ("COO"), should also be
heavily influenced by company performance, long-term growth and strategic
positioning. This philosophy is reflected in the employment contract for the COO
which is generally similar to the contract provided to the CEO, and which
provides for a base annual salary of $200,000 and permits the Board of Directors
to determine a higher salary in its discretion.
In 1993, while the Company consummated the $21.8 million acquisition of
certain assets and the business of Medtronic Andover Medical, Inc. from
Medtronic Inc., the Company incurred a net loss of $1.4 million, primarily as a
result of a $5.0 million charge relating to patent infringement litigation. In
1994, the Company returned to profitability, recording net income of $5.4
million, or $0.56 per diluted share. In 1995, the Company acquired Birtcher
Medical Systems, Inc. (in a $21.2 million stock-for-stock exchange) and the
business and substantially all of the assets of The Master Medical Corporation
(in a $10.0 million purchase transaction) and recorded net income of $10.9
million, or $0.94 per diluted share. In 1996, the Company acquired the business
and substantially all of the assets of New Dimensions In Medicine, Inc. in a
$34.9 million purchase transaction and continued to increase the level of net
income to $16.3 million, or $1.12 per diluted share.
In the light of the foregoing matters, on November 4, 1996, the Board of
Directors approved Mr. Corasanti's current employment agreement, for employment
from January 1, 1997 through December 31, 2001. In November 1999, the Board
approved amending this agreement so as to provide Mr. Corasanti with the terms
of a Change of Control Agreement as outlined above.
In 1997, the Company continued to integrate its completed acquisitions,
recording then record revenues of $138.2 million. The Company also completed two
additional acquisitions to nearly triple the Company's size -- the acquisition
of a surgical suction instrument and tubing product line from the Davol
subsidiary of C.R. Bard, Inc. for a cash purchase price of $24 million and the
acquisition of Linvatec and certain related assets from Bristol-Myers Squibb for
a cash purchase price of $370 million (plus the assumption of net liabilities
totaling approximately $16.6 million) and the issuance of a warrant to purchase
one million shares of the Company's Common Stock at a warrant exercise price of
$34.23. For 1997, excluding unusual charges related to the acquisition of
Linvatec and the closure of the Company's Dayton, Ohio manufacturing facility,
the Company had net income of $17 million, or $1.12 per diluted share.
In 1998, the Company continued to integrate its completed acquisitions,
again recording record revenues of $336.4 million. The Company, through its
wholly owned subsidiary Linvatec, acquired an arthroscopic fluid control product
line from Minnesota Mining and Manufacturing Company for a cash purchase price
of $17.5 million. For 1998, excluding a one-time charge in connection with the
refinancing of the Company's credit facility, the Company had net income of
$19.4 million, or $1.26 per diluted share. The Company's stock price had
increased from $7.22 on December 31, 1992 to $33 on December 31, 1998. In light
of these factors, the Board of Directors awarded Mr. Corasanti 1999 base salary
compensation of $312,277.
In 1999, the Company continued to integrate its completed acquisitions,
again recording record revenues of $372.6 million. The Company, through its
wholly owned subsidiary Linvatec, acquired a powered surgical instrument product
line from Minnesota Mining and Manufacturing Company for a cash purchase price
of $39.0 million, before certain adjustments. For 1999, excluding certain
one-time charges, the Company had net income of $27.4 million, or $1.77 per
diluted share. In light of these factors, the Board of Directors awarded Mr.
Corasanti 2000 base salary compensation of $325,000.
18
In 2000, the Company continued to integrate its completed acquisitions,
again recording record revenues of $392.2 million. The Company acquired certain
minimally invasive surgery products from Imagyn Medical Technologies, Inc. for a
cash purchase price of $6.0 million, subject to additional contingent
consideration of up to $2.0 million. During part of this period, Mr. E.
Corasanti managed the operations of Linvatec until a new President was installed
at Linvatec, and Mr. J. Corasanti assumed the responsibilities as President and
COO. During this period, the Company also undertook efforts to improve its
distribution channels in all product areas and intensified efforts to produce
internal growth through the development and introduction of new products. For
2000, excluding certain one-time charges, the Company had net income of $20.3
million, or $1.31 per diluted share.
In light of these matters, the Board of Directors awarded Mr. E. Corasanti
an increase in deferred compensation to $200,000 for 2000 and 2001. In light of
the foregoing matters, on April 28, 2000, the Board of Directors approved Mr. J.
Corasanti's employment agreement for employment from January 1, 2000 through
December 31, 2004. Pursuant to this agreement, Mr. J. Corasanti was provided
base salary of $200,000 and the Board of Directors is permitted, in its
discretion, to establish a higher salary. In addition, Mr. J. Corasanti was
awarded deferred compensation of $100,000 under the terms of the employment
agreement. In light of the Company's performance during 2000, no bonuses were
awarded to Mr. E. Corasanti or Mr. J. Corasanti.
The Compensation Committee has adopted similar policies with respect to
compensation of the other executive officers of the Company. The Company's
performance, long-term growth and strategic positioning and the individual's
past performance and future potential are considered in establishing the base
salaries of executive officers. The policy regarding other elements of the
compensation package for executive officers is similar to the CEO's in that the
package is tied to achievement of performance targets. As discussed below, in
2000, the Company granted each of the Company's executive officers, including
Eugene R. Corasanti, stock options. In light of the Company's performance during
2000, no bonuses were granted to any officer.
Stock options are granted to the Company's executive officers, including
Eugene R. Corasanti, primarily based on the executive's ability to influence the
Company's long-term growth and profitability. The number of options granted is
determined by using the same subjective criteria. All options are granted at the
current market price. Since the value of an option bears a direct relationship
to the Company's stock price it is an effective incentive for managers to create
value for shareholders. The Committee therefore views stock options as an
important component of its long-term, performance-based compensation philosophy.
The Committee granted stock options to Eugene R. Corasanti in 2000. In 2000, the
Committee granted options to executive officers.
The Board of Directors has not yet adopted a policy with respect to
qualification of executive compensation in excess of $1 million per individual
for deduction under Section 162(m) of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder. The Board of Directors does not
anticipate that the compensation of any executive officer during 2001 will
exceed the limits for deductibility. In determining a policy for future periods,
the Board of Directors would expect to consider all relevant factors, including
the Company's tax position and the materiality of the amounts likely to be
involved.
Board of Directors Compensation Committee Stock Option Committee
------------------ ---------------------- ----------------------
Eugene R. Corasanti, Chairman William D. Matthews, Chairman Robert E. Remmell, Chairman
Joseph J. Corasanti Bruce F. Daniels Bruce F. Daniels
Bruce F. Daniels Robert E. Remmell Stuart J. Schwartz
William D. Matthews
Robert E. Remmell
Stuart J. Schwartz
19
BOARD OF DIRECTORS INTERLOCKS AND INSIDER PARTICIPATION;
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's Board of Directors, which is presently composed of Eugene R.
Corasanti, Joseph J. Corasanti, Bruce F. Daniels, William D. Matthews, Robert E.
Remmell and Stuart J. Schwartz, establishes the compensation plans and specific
compensation levels for Eugene R. Corasanti directly (with Mr. Corasanti
abstaining) and for other executive officers through the Compensation Committee,
and administers the Company's stock option plans through the Stock Option
Committee. As disclosed above, Eugene R. Corasanti, the Chairman of the Board of
Directors, is the President and Chief Executive Officer of the Company and also
serves as an officer of the Company's subsidiaries. Joseph J. Corasanti, a
director of the Company, is the President and Chief Operating Officer of the
Company, also serves as an officer of several of the Company's subsidiaries and
is the son of Eugene R. Corasanti.
Robert E. Remmell had served as the Assistant Secretary of the Company, and
as an officer of several of the Company's subsidiaries, until March 1, 2000,
when he resigned from those positions. Mr. Remmell is a partner in the law firm
of Steates, Remmell, Steates and Dziekan, which has served a counsel to the
Company, although the Company made no payments to the firm in 2000.
The Company has entered into a contract with George A. Nole & Son, Inc., a
construction company, in connection with certain renovations being made to one
of the Company's Central New York facilities. The sole shareholder of George A.
Nole & Son, Inc., a New York corporation, is Angelo Nole, who is the
brother-in-law of Eugene R. Corasanti. The sub-contractors were awarded
contracts following a competitive bidding process which was conducted through an
architectural firm. Payments to George A. Nole & Son, Inc. during fiscal 2000
amounted to approximately $7.0 million, of which approximately $5.4 million was
paid to sub-contractors during fiscal 2000.
The Company pays all premiums on three split-dollar life insurance policies
totaling $3,175,000 for the benefit of Eugene R. Corasanti. Premiums paid or
accrued by the Company in the fiscal year ended December 31, 2000 were
approximately $52,000. Of such premiums, an aggregate of approximately $5,300
has been reflected as compensation to Mr. E. Corasanti. The remaining amount of
$46,700 is being treated by the Company as a loan to Mr. E. Corasanti. At
December 31, 2000, the aggregate amount due the Company from Mr. E. Corasanti
related to these split-dollar life insurance policies is $590,500. This amount
(and subsequent loans for future premiums) will be repaid to the Company on Mr.
E. Corasanti's death and the balance of the policy will be paid to Mr. E.
Corasanti's estate or beneficiaries.
The Company likewise pays all premiums associated with a split-dollar life
insurance policy totaling $1,000,000 for the benefit of Joseph J. Corasanti.
Premiums paid or accrued by the Company in the fiscal year ended December 31,
2000 were approximately $12,130. Of such premiums, an aggregate of approximately
$230 has been reflected as compensation to Mr. J. Corasanti. The remaining
amount of $11,900 is being treated by the Company as a loan to Mr. J. Corasanti.
This amount (and subsequent loans for future premiums) will be repaid to the
Company on Mr. J. Corasanti's death and the balance of the policy will be paid
to Mr. J. Corasanti's estate or beneficiaries.
The Company has entered into directors and officers insurance policies with
National Union Fire Insurance Company of Pittsburgh, PA covering the period from
January 31, 2001 through January 31, 2002 at a total cost of $149,000, which
covers directors and officers of the Company and its subsidiaries.
20
PERFORMANCE GRAPH
The graph below compares the yearly percentage change in the Company's
Common Stock with the cumulative total return of the Center for Research for
Stock Performance ("CRSP") Total Return Index for the NASDAQ Stock Market and
the cumulative total return of the Standard & Poor's Medical Products and
Supplies Industry Group Index. In each case, the cumulative total return assumes
reinvestment of dividends into the same class of equity securities at the
frequency with which dividends are paid on such securities during the applicable
fiscal year.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG CONMED CORPORATION,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE S & P HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) INDEX
[GRAPHIC-GRAPH PLOTTED TO DATA POINTS LISTED BELOW]
21
PROPOSAL TWO: INDEPENDENT PUBLIC ACCOUNTANTS
The independent accountants for the Company have been
PricewaterhouseCoopers LLP since 1982. The Audit Committee recommended to the
Board of Directors that PricewaterhouseCoopers LLP be nominated as independent
accountants for 2001, and the Board has approved the recommendation.
Audit Fees
The aggregate fees billed by PricewaterhouseCoopers LLP for
professional services rendered for the audit of the Company's annual
financial statements for the fiscal year ended December 31, 2000 and
for the reviews of the financial statements included in the Company's
Quarterly Reports on Form 10-Q for that fiscal year were $220,600.
All Other Fees
The aggregate fees billed by PricewaterhouseCoopers LLP for services
rendered to the Company, other than the services described above under
"Audit Fees" for the fiscal year ended December 31, 2000 were $207,260.
Unless otherwise specified, shares represented by proxies will be voted
for the appointment of PricewaterhouseCoopers LLP as independent accountants for
2001. Representatives of PricewaterhouseCoopers LLP are expected to be present
at the meeting. Such representatives will have the opportunity to make a
statement if they desire to do so and are expected to be available to respond to
appropriate questions.
The affirmative vote of the holders of a majority of votes cast at the
meeting is necessary for the appointment of PricewaterhouseCoopers LLP as
independent accountants for the Company for 2001.
The Board of Directors recommends a vote FOR this proposal
OTHER BUSINESS
Management knows of no other business which will be presented for
consideration at the Annual Meeting, but should any other matters be brought
before the meeting, it is intended that the persons named in the accompanying
proxy will vote such proxy at their discretion.
SHAREHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
Any shareholder desiring to present a proposal to the shareholders at
the 2002 Annual Meeting, which currently is expected to be scheduled on or about
May 14, 2002, and who desires that such proposal be included in the Company's
proxy statement and proxy card relating to that meeting, must transmit such to
the Company so that it is received by the Company at its principal executive
offices on or before December 19, 2001. All such proposals should be in
compliance with applicable SEC regulations. In addition, shareholders wishing to
propose matters for consideration at the 2002 Annual Meeting or to propose
nominees for election as directors at the 2002 Annual Meeting must follow
specified advance notice procedures contained in the Company's By-laws, a copy
of which is available on request to the Secretary of the Company, c/o CONMED
Corporation, 310 Broad Street, Utica, New York 13501 (Telephone (315) 797-8375).
As of the date of this proxy statement, shareholder proposals, including
director nominee proposals, must comply with the conditions set forth in Section
1.13 of the Company's
22
By-laws and to be considered timely, notice of a proposal must be received by
the Company between February 14, 2002 and March 15, 2002.
By Order of the Board of Directors,
/s/Thomas M. Acey
-----------------
Thomas M. Acey
Secretary
April 6, 2001
23
Appendix A
CONMED CORPORATION
AUDIT COMMITTEE CHARTER
Amended and Restated as of February 15, 2001
I. Composition of the Audit Committee: The Audit Committee shall be
comprised of at least three directors. Each such director shall not be an
officer or employee of the Company or its subsidiaries, and shall not
either have any relationship which, in the opinion of the Board of
Directors, would interfere with the exercise of independent judgment in
carrying out the responsibilities of a director, or the individual's
membership on the Audit Committee shall have been determined by the Board
of Directors under limited and exceptional circumstances to be required by
the best interests of the shareholders. Further, the directors who are
members of the Audit Committee shall otherwise satisfy the applicable
membership requirements under the rules of the Securities and Exchange
Commission and the stock exchange upon which the Company's shares are
traded, as such requirements are interpreted by the Board of Directors in
its business judgment.
II. Purposes of the Audit Committee: The purposes of the Audit Committee
are to assist the Board of Directors:
1. in its oversight of the Company's accounting and financial reporting
principles and policies and internal accounting controls and
procedures;
2. in its oversight of the Company's financial statements and the
independent audit thereof;
3. in nominating the outside auditors to be proposed for shareholder
approval in any proxy statement, evaluating and, where deemed
appropriate, replacing the outside auditors; and
4. in evaluating the independence of the outside auditors.
The function of the Audit Committee is oversight. The
management of the Company is responsible for the preparation,
presentation and integrity of the Company's financial
statements. Management and the internal accounting and
financial departments are responsible for maintaining
appropriate accounting and financial reporting principles and
policies and internal controls and procedures designed to
assure compliance with accounting standards and applicable
laws and regulations. The outside auditors are responsible for
planning and carrying out a proper audit and reviews,
including reviews of the Company's quarterly financial
statements prior to the filing of each quarterly report on
Form 10-Q, and other procedures. In fulfilling their
responsibilities hereunder, it is recognized that members of
the Audit Committee are not full-time employees of the Company
and are not, and do not represent themselves to be,
accountants or auditors by
24
profession or experts in the fields of accounting or auditing including
in respect of auditor independence. As such, it is not the duty or
responsibility of the Audit Committee or its members to conduct "field
work" or other types of auditing or accounting reviews or procedures or
to set auditor independence standards, and each member, to the extent
that he or she, in the exercise of business judgment, determines such
reliance to be appropriate, of the Audit Committee shall be entitled to
rely on (i) the integrity of those persons and organizations within and
outside the Company that it receives information from, (ii) the
accuracy of the financial and other information provided to the Audit
Committee by such persons or organizations absent actual knowledge to
the contrary (which shall be promptly reported to the Board of
Directors), and (iii) representations made by management as to any
information technology, internal audit and any non-audit services
provided by the auditors to the Company.
The outside auditors for the Company are ultimately accountable to the
Board of Directors (as assisted by the Audit Committee). The Board of
Directors, with the assistance of the Audit Committee, has the ultimate
authority and responsibility to nominate and evaluate the outside
auditors to be proposed for shareholder approval in the proxy
statement, and, where appropriate, to replace such auditors.
The outside auditors shall submit to the Company annually a formal
written statement delineating all relationships between the outside
auditors and the Company ("Statement as to Independence"), addressing
each non-audit service provided to the Company and the matters set
forth in Independence Standards Board No. 1.
The outside auditors shall submit to the Company annually a formal
written statement of fees billed for each of the following categories
of services rendered by the outside auditors: (I) the audit of the
Company's annual financial statements for the most recent fiscal year
and the reviews of the financial statements included in the Company's
Quarterly Reports on Form 10-Q or 10-K for that fiscal year; (ii)
information technology consulting services for the most recent fiscal
year, in the aggregate and by each service (and separately identifying
fees for such services relating to financial information systems design
and implementation); and (iii) all other services rendered by the
outside auditors for the most recent fiscal year, in the aggregate and
by each service.
III. Meetings of the Audit Committee: The Audit Committee shall meet
periodically, as circumstances dictate, to discuss with management the
annual audited financial statements and quarterly financial statements.
The Audit Committee shall also meet separately at least annually with
management, the officers of the Company responsible for internal
accounting and financial controls and the outside auditors to discuss
any matters that the Audit Committee or any of these persons or firms
believe should be discussed privately. The Audit Committee may request
any officer or employee of the Company or the Company's outside counsel
or outside auditors to attend a meeting of the Audit Committee or to
meet with any members of, or consultants to, the Audit Committee.
Members of the Audit Committee may participate in a meeting of the
Audit
25
Committee by means of conference call or similar communications
equipment by means of which all persons participating in the meeting
can hear each other.
IV. Duties and Powers of the Audit Committee: To carry out its purposes,
the Audit Committee shall have the following duties and powers:
1. with respect to the outside auditor,
(i) to provide advice to the Board of Directors in
nominating, selecting, evaluating or replacing outside
auditors;
(ii) to review the fees charged by the outside auditors for
audit and non-audit services;
(iii) to ensure that the outside auditors prepare and deliver
annually a Statement as to Independence (it being
understood that the outside auditors are responsible
for the accuracy and completeness of this Statement),
to discuss with the outside auditors any relationships
or services disclosed in this Statement that may impact
the objectivity and independence of the Company's
outside auditors and to recommend that the Board of
Directors take appropriate action in response to this
Statement to satisfy itself of the outside auditors'
independence;
(iv) if applicable, to consider whether the outside
auditors' provision of (a) information technology
consulting services relating to financial information
systems design and implementation and (b) other
non-audit services to the Company is compatible with
maintaining the independence of the outside auditors;
and
(v) to instruct the outside auditors that the outside
auditors are ultimately accountable to the Board of
Directors and Audit Committee;
2. with respect to the internal officer or officers of the
Company responsible for internal accounting and financial
controls,
(i) to review the appointment and replacement of the
officer or officers of the Company responsible for
internal accounting and financial controls; and
(ii) to advise that he or she is, or they are, expected to
provide to the Audit Committee summaries of and, as
appropriate, the significant reports to management
prepared by any internal or other auditor and
management's responses thereto;
3. with respect to financial reporting principles and policies
and internal accounting and financial controls and procedures,
(i) to advise management, officers responsible for internal
accounting and financial controls, and the outside
auditors that they are expected to
26
provide to the Audit Committee a timely analysis of
significant financial reporting issues and practices;
(ii) to consider any reports or communications (and
management's and any other internal responses thereto)
submitted to the Audit Committee by the outside
auditors required by or referred to in SAS 61 (as
codified by AU Section 380), as may be modified or
supplemented, including reports and communications
related to:
o deficiencies noted in the audit in the design or
operation of internal controls;
o consideration of fraud in a financial statement
audit;
o detection of illegal acts;
o the outside auditor's responsibility under
generally accepted auditing standards;
o significant accounting policies;
o management judgments and accounting estimates;
o adjustments arising from the audit;
o the responsibility of the outside auditor for
other information in documents containing
audited financial statements;
o disagreements with management;
o consultation by management with other
accountants;
o major issues discussed with management prior to
retention of the outside auditor;
o difficulties encountered with management in
performing the audit;
o the outside auditor's judgments about the
quality of the entity's accounting principles;
and
o reviews of interim financial information
conducted by the outside auditor;
(iii) to meet with management, the officer or officers of
the Company responsible for internal accounting and
financial controls and/or the outside auditors:
27
o to discuss the scope of the annual audit;
o to discuss the audited financial statements;
o to discuss any significant matters arising from
any audit or report or communication referred to
in items 2(ii) or 3(ii) above, whether raised by
management, the officer or officers of the
Company responsible for internal accounting and
financial controls, or the outside auditors,
relating to the Company's financial statements;
o to review the form of opinion the outside
auditors propose to render to the Board of
Directors and shareholders;
o to discuss significant changes to the Company's
financial and accounting principles, policies,
controls, procedures and practices proposed or
contemplated by the outside auditors, the
officer or officers of the Company responsible
for internal accounting and financial controls
or management; and
o to inquire about significant risks and
exposures, if any, and the steps taken to
monitor and minimize such risks;
(iv) to obtain from the outside auditors assurance that
the audit was conducted in a manner consistent with
the Securities Exchange Act of 1934, as amended,
which sets forth certain procedures to be followed in
any audit of financial statements required under the
Securities Exchange Act of 1934; and
(v) to discuss with the Company's General Counsel any
significant legal matters that may have a material
effect on the financial statements, the Company's
compliance policies, including material notices to or
inquiries received from governmental agencies; and
4. with respect to reporting and recommendations,
(i) to prepare any report or other disclosures, including
any recommendation of the Audit Committee, required
by the rules of the Securities and Exchange
Commission to be included in the Company's annual
proxy statement;
(ii) to review this Charter at least annually and
recommend any changes to the full Board of Directors;
and
(iii) to report its activities to the full Board of
Directors on a regular basis and to make such
recommendations with respect to the above and other
matters as the Audit Committee may deem necessary or
appropriate.
28
V. Resources and Authority of the Audit Committee: The Audit Committee
shall have the resources and authority appropriate to discharge its
responsibilities, including the authority to engage outside auditors
for special audits, reviews and other procedures and to retain special
counsel and other experts or consultants.
29
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
REVOCABLE PROXY
CONMED CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
MAY 15, 2001
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
The undersigned hereby appoints Eugene R. Corasanti and Robert E. Remmell, and
either of them, proxies of the undersigned, with full power of substitution, to
vote all the shares of Common Stock of CONMED Corporation (the "Company") held
of record by the undersigned on March 28, 2001, at the Annual Meeting of
Shareholders to be held May 15, 2001, and at any adjournment thereof.
(1) Election of directors
NOMINEES: Eugene R. Corasanti, Robert E. Remmell, Bruce F. Daniels, William D.
Matthews, Stuart J. Schwartz and Joseph J. Corasanti.
For All
For Withhold Except
[_] [_] [_]
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
--------------------------------------------------------------------------------
(2) Appointment of Pricewaterhouse-Coopers LLP as independent accountants of
the Company for 2001.
For Against Abstain
[_] [_] [_]
(3) In their discretion the proxies are authorized to vote upon such other
matters as may come before the meeting or any adjournment thereof.
All as more particularly described in the Company's Proxy Statement, dated
April 6, 2001 (the "Company's Proxy Statement"), relating to such meeting,
receipt of which is hereby acknowledged.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED BY THE UNDERSIGNED
SHAREHOLDER. IF NO CHOICE IS SPECIFIED BY THE SHAREHOLDER, THIS PROXY WILL BE
VOTED "FOR" ALL PORTIONS OF ITEMS (1) AND (2), AND IN THE PROXIES' DISCRETION ON
ANY OTHER MATTERS COMING BEFORE THE MEETING.
_________________________________________
Please be sure to sign and date Date
this Proxy in the box below.
________________________________________________________________________________
________Stockholder sign above_________Co-holder (if any) sign above____________
=> Detach above card, sign, date and mail in postage paid envelope provided. =>
CONMED CORPORATION
310 Broad Street-- Utica, New York 13501
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The above signed hereby revokes any proxy or proxies heretofore given to vote
upon or act with respect to such stock and hereby ratifies and confirms all that
said proxies, their substitutes or any of them may lawfully do by virtue hereof.
Please date this Proxy Card and sign your name exactly as it appears
hereon. Where there is more than one owner, each should sign. When signing as an
attorney, administrator, executor, guardian, or trustee, please add your title
as such. If executed by a corporation, this Proxy Card should be signed by a
duly authorized officer. If executed by a partnership, please sign in
partnership name by authorized persons.
PLEASE PROMPTLY MARK, DATE, SIGN AND MAIL THIS PROXY CARD
IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
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IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
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