SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as permitted by
[ ] Definitive Additional Materials Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
MOLECULAR DEVICES CORPORATION
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
------------------------------------------------------------------------
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Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transactions applies:
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(2) Aggregate number of securities to which transactions applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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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.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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<PAGE>
MOLECULAR DEVICES CORPORATION
1311 ORLEANS DRIVE
SUNNYVALE, CALIFORNIA 94089
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 22, 1998
TO THE STOCKHOLDERS OF MOLECULAR DEVICES CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Annual Meeting") of Molecular Devices Corporation, a Delaware corporation (the
"Company"), will be held at the Company's corporate headquarters, located at
1311 Orleans Drive, Sunnyvale, California 94089 on Friday, May 22, 1998 at 10:30
a.m. local time for the following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected.
2. To ratify the selection of Ernst & Young LLP as the Company's
independent auditors for its fiscal year ending December 31,
1998.
3. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on March 27, 1998
as the record date for the determination of stockholders entitled to notice of
and to vote at this Annual Meeting and at any adjournment or postponement
thereof.
By Order of the Board of Directors
Andrei M. Manoliu
Secretary
Sunnyvale, California
April 21, 1998
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE METING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE>
MOLECULAR DEVICES CORPORATION
1311 Orleans Drive
Sunnyvale, California 94089
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 22, 1998
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
Molecular Devices Corporation, a Delaware corporation (the "Company"), for use
at the Annual Meeting of Stockholders to be held on May 22, 1998 at 10:30 a.m.
local time (the "Annual Meeting"), or at any adjournment or postponement
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting. The Annual Meeting will be held at the Company's headquarters
located at 1311 Orleans Drive, Sunnyvale, California 94089. The Company intends
to mail this proxy statement and accompanying proxy card on or about April 21,
1998 to all stockholders entitled to vote at the Annual Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies,
including preparation, assembly, printing and mailing of this proxy statement,
the proxy and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses, fiduciaries
and custodians holding in their names shares of Common Stock beneficially owned
by others to forward to such beneficial owners. The Company may reimburse
persons representing beneficial owners of Common Stock for their costs of
forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers or other regular employees of the
Company. No additional compensation will be paid to directors, officers or other
regular employees for such services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on March
27, 1998 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on March 27, 1998, the Company had outstanding and entitled to
vote 9,366,128 shares of Common Stock. Each holder of record of Common Stock on
such date will be entitled to one vote for each share held on all matters to be
voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for
the meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 1311
Orleans Drive, Sunnyvale, California 94089, a written notice of revocation or a
duly executed proxy bearing a later date, or it may be revoked by attending the
meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy.
2
<PAGE>
STOCKHOLDER PROPOSALS
Proposals of stockholders that are intended to be presented at the
Company's 1999 Annual Meeting of Stockholders must be received by the Company no
later than December 11, 1998 in order to be included in the proxy statement and
proxy relating to that Annual Meeting. Stockholders are also advised to review
the Company's Bylaws, which contain additional requirements with respect to
advance notice of stockholder proposals and director nominations.
PROPOSAL 1
ELECTION OF DIRECTORS
There are eight nominees for the eight Board positions presently
authorized in the Company's By-laws. Each director to be elected will hold
office until the next annual meeting of stockholders and until his successor is
elected and has qualified, or until such director's earlier death, resignation
or removal. Each nominee listed below, with the exception of Joseph D. Keegan,
Ph.D., is currently a director of the Company, all seven directors having
previously been elected by the stockholders.
Shares represented by executed proxies will be voted, if authority to do
so is not withheld, for the election of the eight nominees named below. In the
event that any nominee should be unavailable for election as a result of an
unexpected occurrence, such shares will be voted for the election of such
substitute nominee as management may propose. Each person nominated for election
has agreed to serve if elected, and management has no reason to believe that any
nominee will be unable to serve. Directors are elected by a plurality of the
votes of the holders of Common Stock present in person or represented by proxy
and entitled to vote at the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR
OF EACH NAMED NOMINEE.
NOMINEES
The following information pertains to the nominees, their principal
occupations for the preceding five-year period, certain directorships, and their
ages as of March 31, 1998.
Principal Occupation/
Position Held
Name Age with the Company
---- --- ----------------
Joseph D. Keegan, Ph.D. 44 President, Chief Executive Officer
Moshe H. Alafi 69 General Partner, Alafi Capital Company
David L. Anderson 54 General Partner, Sutter Hill Ventures
A. Blaine Bowman 51 President, Chief Executive Officer,
Dionex Corporation
Paul Goddard, Ph.D. 48 Chairman, Chief Executive Officer,
Neurex Corporation
Andre F. Marion 62 Independent Investor
Harden M. McConnell, Ph.D. 70 Robert Eckles Swain Professor of
Physical Chemistry at Stanford
University, Management Consultant
J. Allan Waitz, Ph.D. 62 Independent Investor
Joseph D. Keegan, Ph.D. was appointed as President and Chief Executive
Officer of the Company effective March 30, 1998. From 1992 to 1998, Dr. Keegan
served in various positions at Becton Dickinson and Company, a research and
diagnostic company, including the positions of Vice President, Sales and
Service, Vice President, General Manager of the Immunocytometry Systems Division
and, most recently, President of the Worldwide Tissue
3
<PAGE>
Culture Business. From 1987 to 1992, he was employed by LEICA, Inc., a
microscope manufacturer, where he held various senior management positions. Dr.
Keegan holds a Ph.D. in Chemistry from Stanford University.
Moshe H. Alafi has been a director of the Company since 1985. Mr. Alafi
has been the general partner of Alafi Capital Company, which specializes in
forming new companies in the medical, pharmaceutical and biological fields,
since January 1984.
David L. Anderson has been a director of the Company since 1983. Mr.
Anderson has been a general partner of Sutter Hill Ventures, a California
limited partnership, a venture capital investment partnership, since 1974. Mr.
Anderson is also a director of Cytel Corp., a biotechnology company, Dionex
Corporation, a leading supplier of analytical instrumentation ("Dionex"), and
Neurex Corporation, a company involved in the development of therapeutics to
treat disorders of the brain and central nervous system ("Neurex").
A. Blaine Bowman has been director of the Company since 1985. Mr.
Bowman is, and has been since 1980, President, Chief Executive Officer and a
director of Dionex.
Paul Goddard, Ph.D. has been a director of the Company since September
1995. Dr. Goddard currently is, and has been since 1991, the Chairman, Chief
Executive Officer and a director of Neurex. From 1976 through February 1991, Dr.
Goddard was employed by SmithKline Beecham Corp., a pharmaceutical company, and
its predecessors in various positions, most recently as Senior Vice President
and Director, Japan-Pacific. He is also a director of Onyx Pharmaceutical Inc.
and RibiImmunochem Research, Inc.
Andre F. Marion has been a director of the Company since September
1995. Mr. Marion was a founder of Applied Biosystems, Inc., a supplier of
instruments for biotechnology research, and served as its Chief Operating
Officer from 1983 to 1986, its President from 1985 to 1993, its Chief Executive
Officer from 1986 to 1993 and its Chairman of the Board from 1987 to February
1993, when it merged with the Perkin-Elmer Corporation, a manufacturer of
analytical instruments. Mr. Marion served as Vice President of Perkin-Elmer
Corporation and President of its Applied Biosystems Division until his
retirement in February 1995. Mr. Marion is presently a management consultant and
also a director of Applied Imaging Corp., a manufacturer of medical computer
systems, and Cygnus, Inc., a developer of drug delivery and diagnostic systems.
Harden M. McConnell, Ph.D., founder of the Company, has been a director
of and a consultant to the Company since the Company's inception in July 1983.
He is the Robert Eckles Swain Professor of Physical Chemistry at Stanford
University and a member of the National Academy of Sciences. Dr. McConnell has
received many awards in recognition of his scientific work, most recently these
include the 1987 Pauling Medal for Chemistry and, in 1988, the National Academy
of Sciences Award in Chemical Sciences. Dr. McConnell has also received the Wolf
Prize (1984), the Wheland Medal (1988), the National Medal of Science (1989),
the Peter Debeye Award in Physical Chemistry (1990) and the Bruker Prize of the
Royal Society of Chemistry (1995). Dr. McConnell holds a Ph.D. degree from the
California Institute of Technology. Dr. McConnell is also a director of Anergen,
Inc., a biotechnology company.
J. Allan Waitz, Ph.D. has been a director of the Company since 1990.
Dr. Waitz is currently retired. Until 1992, Dr. Waitz was President and Chief
Executive Officer of DNAX Research Institute of Molecular and Cellular Biology,
Inc., a subsidiary of Schering-Plough Corporation, a pharmaceutical company.
From 1991 through December 1996 Dr. Waitz served as chairperson of the Area
Committee on Microbiology of the National Committee for Clinical Laboratory
Standards. He is also a director of TerraGen Diversity, Inc. of Vancouver, BC.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended December 31, 1997, the Board of Directors
held six meetings. The Board of Directors has two committees, an Audit Committee
and a Compensation Committee. The Company does not have a Standing Nominating
Committee.
The Audit Committee recommends engagement of the Company's independent
accountants, approves services performed by such accountants, and reviews and
evaluates the Company's accounting system and its system of internal accounting
controls. The Audit Committee, consisting of Dr. McConnell, Dr. Goddard and Mr.
Bowman, held one meeting during the fiscal year ended December 31, 1997.
4
<PAGE>
The Compensation Committee consists of Messrs. Anderson and Marion and
Dr. Waitz. The Compensation Committee makes recommendations to the Board
concerning cash and long-term incentive compensation for employees of the
Company. The Compensation Committee also makes recommendations to the Board
regarding the number of shares that should be subject to options, the timing of
grants of options under the Company's 1995 Stock Option Plan and the number of
shares and the timing of offerings of such shares to employees under the
Company's 1995 Employee Stock Purchase Plan. During the fiscal year ended
December 31, 1997, the Compensation Committee produced one Written Consent in
lieu of a meeting.
During the fiscal year ended December 31, 1997, each director attended
at least 75% of the aggregate of the meetings of the Board and of the Committees
on which he served, held during the period for which he was a director or
committee member, respectively.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young, LLP ("Ernst & Young")
as the Company's independent auditors for the fiscal year ending December 31,
1998 and has further directed that management submit the selection of
independent auditors for ratification by the stockholders at the Annual Meeting.
Ernst & Young has served as the Company's independent auditors with respect to
the Company's books and accounts since the Company began operations in 1983.
Representatives of Ernst & Young are expected to be present at the Annual
Meeting. They will have the opportunity to make a statement if they so desire
and will be available to respond to appropriate questions.
The stockholders are being asked to ratify the selection of Ernst &
Young as the Company's independent auditors for the fiscal year ending December
31, 1998. Although it is not required to do so, the Board of Directors is
submitting the approval of Ernst & Young to the stockholders for ratification as
a matter of good corporate practice. Should the stockholders fail to provide
such ratification, the Board would reconsider its approval of Ernst & Young as
independent auditors for the fiscal year ending December 31, 1998. Even if the
selection is ratified, the Board in its discretion may direct the appointment of
a different independent auditing firm at any time during the year if the Board
determines that such a change would be in the best interests of the Company and
its stockholders.
The affirmative vote of the holders of a majority of the Common Stock
present in person or represented by proxy and entitled to vote at the Annual
Meeting will be required to ratify the selection of Ernst & Young.
THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND A VOTE IN FAVOR OF
PROPOSAL 2
5
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
ownership of the Company's Common Stock as of March 15, 1998 by (i) each nominee
for director, (ii) each Named Executive Officer (as defined under "Executive
Compensation"), (iii) all executive officers and directors as a group and (iv)
all those known by the Company to be beneficial owners of more than five percent
of its Common Stock:
Beneficial Ownership (1)
----------------------------
Number Percent
Name of Beneficial Owner of Shares of Class
- - ------------------------ --------- --------
Kopp Investment Advisors, Inc. 2,374,464 25.35%
7701 France Ave. South, Ste. 500
Edina, MN 55435
Harden M. McConnell, Ph.D.(2) 625,220 6.68%
421 El Escarpardo
Stanford, CA 94305
A. Blaine Bowman(3) 464,165 4.96%
Dionex Corporation
501 Mercury Drive
Sunnyvale, CA 94086
Moshe H. Alafi(4) 413,840 4.42%
Alafi Capital Company
9 Commodore Suite A405
Emeryville, CA 94608
David L. Anderson(5) 181,880 1.94%
Sutter Hill Ventures
755 Page Mill Road
Suite A200
Palo Alto, CA 94306
Gillian M.K. Humphries, Ph.D.(6) 56,066 *
Robert J. Murray(7) 31,532 *
Andrew H. Galligan(8) 25,195 *
Paul Goddard, Ph.D.(9) 11,000 *
Andre F. Marion(10) 11,000 *
J. Allan Waitz, Ph.D(11) 11,000 *
David P. Hadfield(12) 7,999
All directors and executive officers as a 1,838,897 19.63%
group (12 persons) (13)
- - ------------------------
* Less than one percent
(1) This table is based upon information supplied by officers, directors
and principal stockholders and Schedules 13D and 13G filed with the
Securities and Exchange Commission (the "SEC"). Unless otherwise
indicated in the footnotes to this table and subject to community
property laws where applicable, the Company believes that each of the
stockholders named in this table has sole voting and investment power
with respect to the shares indicated as beneficially owned. Applicable
percentages are based on 9,366,076 shares outstanding on March 15,
1998, adjusted as required by rules promulgated by the SEC.
(2) Consists of 614,220 shares held by the Harden M. McConnell and Sophia
G. McConnell Trust, of which Dr. McConnell is a co-trustee, and 11,000
shares that may be acquired within 60 days after March 15, 1998,
pursuant to outstanding stock options.
(3) Includes 382,166 shares beneficially owned by Dionex, of which Mr.
Bowman, a director of the Company, is President, Chief Executive
Officer and a director and 30,999 shares that may be acquired within 60
days
6
<PAGE>
after March 15, 1998, pursuant to outstanding stock options. Mr. Bowman
disclaims beneficial ownership of the Dionex shares.
(4) Includes 402,840 shares beneficially owned by Alafi Capital Company, of
which Mr. Alafi, a director of the Company, is a general partner, and
11,000 shares that may be acquired within 60 days after March 15, 1998,
pursuant to outstanding stock options.
(5) Includes: (i) 28,086 shares beneficially owned by Sutter Hill Ventures,
a California limited partnership ("Sutter Hill Ventures"), of which Mr.
Anderson, a director of the Company, is a general partner, (ii) 14,661
shares beneficially owned by Anvest, L.P., of which Mr. Anderson is a
general partner, and (iii) 11,000 shares that may be acquired within 60
days after March 15, 1998, pursuant to outstanding stock options. Mr.
Anderson disclaims beneficial ownership of shares held by Sutter Hill
Ventures and Anvest, L.P., and individuals and entities associated with
Sutter Hill Ventures and Anvest, L.P., except as to the shares held of
record in his name and his proportionate partnership interest in the
shares held of record by Sutter Hill Ventures and Anvest, L.P.
(6) Includes 27,400 shares beneficially owned by the Humphries 1991 Living
Trust, of which Dr. Humphries is a co-trustee, and 28,666 shares that
may be acquired within 60 days after March 15, 1998 pursuant to
outstanding stock options.
(7) Includes 30,165 shares that may be acquired within 60 days after March
15, 1998 pursuant to outstanding stock options.
(8) Includes 24,221 shares that may be acquired within 60 days after March
15, 1998 pursuant to outstanding stock options.
(9) Includes 11,000 shares that may be acquired within 60 days after March
15, 1998 pursuant to outstanding stock options.
(10) Includes 11,000 shares that may be acquired within 60 days after March
15, 1998 pursuant to outstanding stock options.
(11) Includes 11,000 shares that may be acquired within 60 days after March
15, 1998 pursuant to outstanding stock options.
(12) Includes 7,999 shares that may be acquired within 60 days after March
15, 1998 pursuant to outstanding stock options.
(13) Includes 827,773 shares held by entities affiliated with certain
directors and 188,050 shares that certain directors and officers have
the right to acquire within 60 days after March 15, 1998 pursuant to
the exercise of outstanding stock options. See Footnotes (2) - (12).
7
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934, as amended,
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities,
to file with the SEC initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Executive
officers, directors and greater than ten percent stockholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1997, the
Company's executive officers, directors and greater than 10 percent stockholders
complied with applicable Section 16(a) filing requirements.
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers and certain key employees of the Company and their
ages and positions at March 31, 1998 are as follows:
Name Age Position
---- --- --------
Joseph D. Keegan, Ph.D. 44 President, Chief Executive Officer
Andrew H. Galligan 41 Vice President, Chief Financial Officer
David P. Hadfield 39 Vice President
Gillian M.K. Humphries, Ph.D. 59 Vice President
Robert J. Murray 49 Vice President
Joseph D. Keegan, Ph.D. was appointed as President and Chief Executive
Officer of the Company effective March 30, 1998. From 1992 to 1998, Dr. Keegan
served in various positions at Becton Dickinson and Company, a research and
diagnostic company, including the positions of Vice President, Sales and
Service, Vice President, General Manager of the Immunocytometry Systems Division
and, most recently, President of the Worldwide Tissue Culture Business. From
1987 to 1992, he was employed by LEICA, Inc., a microscope manufacturer, where
he held various senior management positions. Dr. Keegan holds a Ph.D. in
Chemistry from Stanford University.
Andrew H. Galligan has served as Vice President and Chief Financial
Officer of the Company since December 1993. From January 1992 through December
1993, Mr. Galligan was Vice President and Chief Financial Officer of IPS Health
Care, Inc., a medical diagnostic imaging service company. From May 1990 to
January 1992, Mr. Galligan served as Vice President and Chief Financial Officer
of Lumisys, Inc., a medical imaging equipment company. From 1987 to April 1990,
Mr. Galligan was employed by Diasonics, Inc., a medical diagnostic imaging
equipment company, where he held various corporate and divisional finance
positions, including, most recently, the position of Vice President of Finance
for the MRI division and its successor corporation, Toshiba America MRI, Inc.
Mr. Galligan is qualified as a Chartered Accountant and holds a business degree
from Trinity College, Dublin, Ireland.
David P. Hadfield has served as a Vice President of the Company since
March 1997. From November 1995 through February 1997, he served as the Company's
Director of International Sales. From February 1991 to March 1995, Mr. Hadfield
served as Vice President of Marketing at Oxford GlycoSystems plc., a
biotechnology and research systems company. From March 1984 to February 1991, he
was employed by Applied Biosystems Inc., a bioanalytical research instrument
company, where he held various senior marketing and sales positions in both the
United States and Europe. Mr. Hadfield holds a B.Sc. degree in chemistry from
the University of Manchester, England.
Gillian M.K. Humphries, Ph.D. has served as a Vice President of the
Company since March 1990. Dr. Humphries served as a consultant to the Company
since its inception in July 1983. In 1984, Dr. Humphries joined the Company on a
full time basis as a research scientist and, from 1985 to March 1990, she served
as Director of
8
<PAGE>
MAXline and Cytosensor Development. Dr. Humphries holds a Ph.D. in Biochemistry
from Stanford University and an MS in Biochemistry from San Jose State
University.
Robert J. Murray has served as a Vice President of the Company since
July 1995. Mr. Murray served as the Company's Director of Operations from
October 1993 to July 1995. From January 1993 to October 1993, Mr. Murray was a
consultant to Tandem Computers, Incorporated, a computer manufacturer. From
September 1991 to January 1993, Mr. Murray was Vice President of Manufacturing
at Electromer Corporation, an electronic component company, and from March 1989
to September 1991, a Vice President of Comptronix Corp., a contract
manufacturing company. Mr. Murray holds an MS in Electrical Engineering from San
Jose State University.
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
The members of the Company's Board of Directors do not currently receive
any cash compensation from the Company for their services as members of the
Board of Directors or any committee thereof, although they may be reimbursed for
out-of-pocket and travel expenses incurred in connection with attendance at
Board and committee meetings.
Since the Company was founded in 1983, Dr. McConnell has provided
consulting services to the Company regarding, among other matters, the Company's
research and development activities and business strategy. Dr. McConnell is
currently paid $5,000 per month for such services.
During 1995, the Board adopted the 1995 Non-Employee Directors' Stock
Option Plan (the "Directors' Plan") to provide for the automatic grant of
options to purchase shares of Common Stock to non-employee directors of the
Company ("Non-Employee Directors"). The maximum number of shares of Common Stock
that may be issued pursuant to options granted under the Directors' Plan is
247,500.
Pursuant to the terms of the Directors' Plan, each Non-Employee Director
is automatically granted an option to purchase 16,500 shares of Common Stock on
the date of his or her election to the Board. On the date of adoption of the
Directors' Plan, each person who was then a Non-Employee Director of the Company
was granted an option to purchase 16,500 shares of Common Stock of the Company
under the Directors' Plan, at an exercise price of $5.25 per share. Thereafter
each Non-Employee Director will automatically be granted an option to purchase
an additional 16,500 shares of Common Stock under the Directors' Plan upon full
vesting of any stock option previously granted to such person under the
Directors' Plan.
Outstanding options under the Directors' Plan will vest over a period of
three years from the date of grant in equal annual installments. The exercise
price of options granted under the Directors' Plan must equal or exceed the fair
market value of the Common Stock on the date of grant. No option granted under
the Directors' Plan may be exercised after the expiration of ten years from the
date it was granted. Options granted under the Directors' Plan are generally
non-transferable. The Board may suspend or terminate the Directors' Plan at any
time. In the event of a merger or consolidation, or a reverse merger or
reorganization in which the Company is not the surviving corporation, options
outstanding under the Directors' Plan will automatically become fully vested and
will terminate if not exercised prior to such event.
As of March 15, 1998, no options had been exercised under the Directors'
Plan.
9
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
<TABLE>
The following table shows, for the fiscal years ended December 31,
1995, 1996 and 1997, compensation awarded or paid to, or earned by, the
Company's Chief Executive Officers and the Company's other executive officers
who earned more than $100,000 during the year ended December 31, 1997 (the
"Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term
Compensation
Awards
Annual Compensation -------------
-------------------------- Securities All Other
Salary Bonus Underlying Compensation
Name and Principal Position Year ($) ($)(1) Options (#) ($)(2)
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Andre F. Marion
Interim President, Chief
Executive Officer 1997 $ 72,916(3) $ --- $ --- $ ---
James P. Iuliano (4) 1997 192,696 60,000 50,000 1,770
President, Chief Executive Officer 1996 158,350 55,000 --- 330
1995 150,000 40,000 133,332 370
Andrew H. Galligan 1997 131,005 52,402 10,000 1,856
Vice President, Chief Financial Officer 1996 112,518 32,500 --- 218
1995 107,508 25,000 13,333 218
Gillian M.K. Humphries, Ph.D. 1997 118,013 38,354 16,000 3,210
Vice President 1996 119,166 40,000 --- 1,620
1995 114,996 23,000 10,000 1,620
Robert J. Murray 1997 118,920 38,649 10,000 2,146
Vice President 1996 112,440 32,500 --- 571
1995 107,040 25,000 36,600 571
David P. Hadfield (5)
Vice President 1997 115,020 37,382 35,000 224
<FN>
(1) Represents amounts accrued by the Company in 1995, 1996 and 1997, but paid
in 1996, 1997 and 1998 at the election of the Company.
(2) Represents the taxable portion of group life insurance paid by the Company
and the Company's discretionary contribution to employee's 401(k) accounts.
(3) Based on annual base salary of $350,000 from October 13, 1997 to December
31, 1997.
(4) Mr. Iuliano resigned from the Company in October 1997.
(5) Mr. Hadfield has served as a Vice President of the Company since March
1997.
</FN>
</TABLE>
10
<PAGE>
EMPLOYMENT AND SEVERANCE AGREEMENTS
Chief Executive Officer Separation Agreement
On October 2, 1997, James P. Iuliano, former President and Chief
Executive Officer of the Company, entered into a Separation Agreement with the
Company that provided for the following:
o Mr. Iuliano's last day of work as an employee and officer of the
Company was October 13, 1997 (the "Separation Date").
o Severance payments in the form of continuation of Mr. Iuliano's
annual base salary of $175,000 were in effect from the Separation
Date through March 31, 1998.
o Mr. Iuliano was eligible for a $60,000 bonus for 1997 based on
achievement of specified Company goals. These goals were achieved and
o Mr. Iuliano was paid this bonus in March of 1998 as detailed in the
Summary Compensation Table above.
o Outstanding stock options as of the Separation Date ceased vesting
and terminated in accordance with the underlying agreements on
November 1, 1998.
Chief Executive Officer Key Employee Agreement
On March 11, 1998, Joseph D. Keegan, Ph.D., entered into a Key Employee
Agreement with the Company that provided for the following:
o Dr. Keegan was appointed as President and Chief Executive Officer,
effective March 30, 1998 (the "Employment Date").
o Dr. Keegan will be paid an annual base salary of $280,000.
o Dr. Keegan will receive a one time "signing bonus" of $150,000. Such
bonus is subject to repayment if Dr. Keegan terminates his employment
with the Company within the first year of his employment.
o Dr. Keegan is eligible to receive an annual performance bonus up to
50% of his base salary based on achievement of certain goals
specified by the Board.
o The Board will grant Dr. Keegan options to purchase 170,000 shares of
the Company's Common Stock with an exercise price equal to the fair
market value of the Common Stock on the Employment Date. The Options
will vest over five years with 34,000 shares vesting on the first
anniversary of the Employment Date and 8,500 shares vesting every
June 30, September 30, December 30, and March 30 thereafter. Vesting
ceases if Dr. Keegan's employment terminates at any time for any
reason with the following exceptions: (a) Dr. Keegan is retained by
the Company in a post-employment consulting position, as specified,
thus providing for an additional year of vesting, or (b) if Dr.
Keegan is demoted without cause, as defined in the agreement, within
two years following certain defined transactions, then vesting of the
remaining unvested options will accelerate such that Dr. Keegan will
be fully vested with respect to the options to purchase 170,000
shares of the Company's Common Stock.
o The Board will grant Dr. Keegan an aggregate of 30,000 shares of the
Company's Common Stock subject to applicable securities laws
restrictions, over two years. A total of 3,750 shares will be granted
following the completion of each quarter of service with the Company
as President and Chief Executive Officer on June 30, 1998 and 1999,
September 30, 1998 and 1999, December 30, 1998 and 1999, and March
30, 1999 and 2000. Upon granting, each individual grant will be fully
earned and vested. Granting of stock ceases if Dr. Keegan's
employment terminates at any time for any reason with the following
exception: if Dr. Keegan is demoted without cause, as defined in the
agreement, within two years following certain defined transactions,
then granting of the remaining ungranted shares will accelerate such
that Dr. Keegan will be granted a total of 30,000 shares of the
Company's Common Stock.
11
<PAGE>
o In the event Dr. Keegan's employment is terminated by the Company
without cause, as defined in the agreement, the Company shall provide
Dr. Keegan with a one-year consulting agreement, as defined, and
outplacement services.
Chief Financial Officer Employment Agreement
On September 3, 1997, Andrew Galligan, Vice President of Finance and
Chief Financial Officer, entered into an employment agreement with the Company
that provided for the following:
o Mr. Galligan's annual base salary was increased to $150,000.
o Mr. Galligan was eligible for a bonus of 40% of his 1997 compensation
based on achievement of specified Company goals. These goals were
achieved and Mr. Galligan was paid this bonus in March of 1998 as
detailed in the Summary Compensation Table above.
o In the event of a change of control and if Mr. Galligan continues his
employment through the effective change of control date, all of his
outstanding stock options will become fully vested (subject to the
transaction not having to qualify as a "pooling of interests") and a
one time severance payment equal to the last twelve months of his
total compensation (base salary plus bonus) will be paid.
o In the event a new Chief Executive Officer is appointed and Mr.
Galligan agrees to remain in his present position for a minimum of
three months after the new Chief Executive Officer is in place, the
Company will pay Mr. Galligan a one time severance payment equal to
the last twelve months of his salary at the time of his departure.
STOCK OPTION GRANTS AND EXERCISES
The Company has granted options to its executive officers under its 1988
Stock Option Plan (the "1988 Plan") and, in the future, intends to grant options
under its 1995 Stock Option Plan (the "1995 Plan" and collectively with the 1988
Plan, the "Option Plans"). The 1988 Plan was terminated upon establishment of
the 1995 Plan. As of March 15, 1998, options to purchase a total of 719,928
shares were outstanding under the Option Plans and options to purchase 739,928
shares remained available for grant thereunder.
12
<PAGE>
<TABLE>
The following tables set forth, for the fiscal year ended December 31,
1997, certain information regarding options granted to, exercised by, and held
at year end by the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Option Grants in Last Fiscal Year
---------------------------------
% of Total Potential Realizable Value at
Number of Options Assumed Annual Rates of
Securities Granted to Stock Price Appreciation for
Underlying Employees Exercise Option Term(2)(3)
Options in Fiscal Price Expiration -----------------------------
Granted Year ($/Sh)(1) Date 5% 10%
------- ------- --------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
James P. Iuliano (4) 50,000 15.47% $13.375 03/03/07 $420,574 $1,065,815
Andrew H. Galligan 10,000 3.09% $13.375 03/03/07 84,115 213,163
Gillian M.K.Humphries 10,000 3.09% $13.375 03/03/07 84,115 213,163
6,000 1.86% $15.375 12/14/07 58,016 147,023
Robert J. Murray 10,000 3.09% $13.375 03/03/07 84,115 213,163
David Hadfield 35,000 10.83% $13.375 03/03/07 294,402 746,070
<FN>
(1) The exercise price is equal to 100% of the fair market value of the Common
Stock on the date of the Grant.
(2) The options have a ten-year term, subject to earlier termination upon death,
disability or termination of employment.
(3) The potential realizable value is calculated based on the term of the option
at its time of grant (10 years) and is calculated by assuming that the stock
price on the date of grant as determined by the Board of Directors
appreciates at the indicated annual rate compounded annually for the entire
term of the option and that the option is exercised and sold on the last day
of its term for the appreciated price. The 5% and 10% assumed rates of
appreciation are derived from the rules of the Securities and Exchange
Commission and do not represent the Company's estimate or projection of the
future Common Stock price.
(4) Mr. Iuliano resigned from the Company in October 1997.
</FN>
</TABLE>
13
<PAGE>
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<CAPTION>
Number of Value of
Securities Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Shares Acquired FY-End (#) FY-End ($)
on Exercise Value Exercisable/ Exercisable/
Name (#) Realized($) Unexercisable Unexercisable (1)
- - --------------------- ---------------- --------------- -------------------------- --------------------------
<S> <C> <C> <C> <C>
Mr. Marion 0 $0 11,000/5,000 $176,000/$88,000
Mr. Iuliano 155,000 $2,898,417 6,526/0 $126,770/$0
Mr. Galligan 15,000 $261,563 18,498/26,501 $324,091/$363,392
Dr. Humphries 0 $0 25,332/24,001 $469,117/$247,643
Mr. Murray 3,000 $36,375 24,165/32,834 $427,511/$470,721
Mr. Hadfield 4,999 $86,607 499/44,501 $7,984/$416,641
<FN>
(1) Represents the fair market value of the underlying shares on the last day
of the fiscal year ($21.25 based on the closing sales price of the Common
Stock as reported on the NASDAQ National Market) less the exercise price
of the options multiplied by the number of shares underlying the option.
</FN>
</TABLE>
14
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON
EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
is comprised of Messrs. Anderson and Marion and Dr. Waitz, none of whom has been
an officer or employee of the company. The Committee is responsible for
establishing the Company's compensation for executive officers.
The goals of the compensation program are to align compensation with
business objectives and performance and to enable the Company to attract, retain
and reward executive officers and other key employees who contribute to the
long-term success of the Company and to motivate them to enhance long-term
stockholder value. To meet these goals, the Committee has adopted a mix of the
compensation elements of salary, bonus and stock options.
Base Salary. The Committee meets at least annually to review and
approve each executive officer's salary for the ensuing year. When reviewing
base salaries, the Committee considers the following factors, in order of
importance: competitive pay practices, individual performance against goals,
levels of responsibility, breadth of knowledge and prior experience. To provide
the Committee with more information for making compensation comparisons, the
Company surveys a group of comparable companies with a capitalization similar to
that of the Company.
Bonus. The bonus program is a discretionary program for executive
officers and other key employees of the Company. The Committee meets in the
first quarter following the year of the awards to be made to determine the
amount of the bonuses. The bonus award depends on the extent to which the
Company and individual performance objectives are achieved. The Company's
objectives consist of operating, strategic and financial goals that are
considered to be critical to the Company's fundamental long-term goal of
building stockholder value. For fiscal 1997, these goals were related to
specific increases in revenue and operating income over the prior years.
Stock Options. The Option Plans maintained by the Company have been
established to provide employees of the Company with an opportunity to share,
along with stockholders of the Company, in the long-term performance of the
Company. Initial grants of stock options are generally made to eligible
employees upon commencement of employment, with additional grants being made to
certain employees periodically or following a significant change in the job
responsibilities, scope or title of such employment. Stock options under the
Options Plans generally vest over a five-year period and expire ten years from
the date of grant. The exercise price of such options is usually 100% of the
fair market value of the underlying stock on the date of grant.
Guidelines for the number of stock options for each participant under
the Option Plans are generally determined by a formula established by the
Committee whereby several factors are applied to the salary and performance
level of each participant and then related to the approximate market price of
the stock at the time of grant. In awarding stock options, the Committee
considers individual performance, overall contribution to the Company, officer
retention, the number of unvested stock options held by the officer and the
total number of stock options to be awarded.
Section 162(m) of the Internal Revenue Code of 1986 limits the Company
to a deduction for federal income tax purposes of up to $1 million of
compensation paid to certain Named Executive Officers in a taxable year.
Compensation above $1 million may be deducted if it is "performance-based
compensation." The Compensation Committee has determined that stock options
granted under the Company's 1995 Plan with an exercise price at least equal to
the fair market value of the Company's common stock on the date of grant shall
be treated as "performance-based compensation" and any compensation recognized
by a Named Executive Officer as a result of the grant of such a stock options is
deductible by the Company.
CEO Compensation. The Committee used the same procedures described
above in setting the annual salary, bonus and stock option awards for the CEO.
The CEO's salary is determined based on comparisons with companies with a
capitalization similar to that of the Company.
15
<PAGE>
Summary. Through the plans described above, a significant portion of
the Company's compensation program for its executive officers (including the
CEO) is contingent upon the individual's and Company's performance, and
realization of benefits by the CEO and the other executive officers is closely
linked to increases in long-term stockholder value. The Company remains
committed to this philosophy of pay for performance, recognizing that the
competitive market for talented executives and the volatility of the Company's
business may result in highly variable compensation during any given annual
period.
COMPENSATION COMMITTEE
David L. Anderson
Andre F. Marion
J. Allan Waitz, Ph.D.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As noted above, the Compensation Committee is comprised of three
non-employee directors.
16
<PAGE>
PERFORMANCE MEASUREMENT COMPARISON (1)
The following chart shows total stockholder return of an investment of
$100 in cash on December 13, 1995 for the Nasdaq Stock Index, a peer group index
comprised of all public companies using SIC Code 3826 (Laboratory Analytical
Instruments) (the "Peer Group")(2) and for the Company:
DIAGRAM (see graph insert on following page)
[The following descriptive data is supplied in accordance with Rule 304(d) of
Regulation S-T]
12/13/95 12/31/95 12/31/96 12/31/97
-------- -------- -------- --------
MOLECULAR DEVICES CORP. 100 92.31 136.81 186.81
PEER GROUP 100 108.68 130.06 154.29
NASDAQ STOCK INDEX 100 99.63 123.81 151.45
- - ----------
(1) This Section is not "soliciting material," is not deemed "filed" with
the SEC and is not to be incorporated by reference in any filing of the
Company under the Securities Act or the Exchange Act, whether made
before or after the date hereof and irrespective of any general
incorporation language in any such filing.
(2) Upon written request of a stockholder, the Company will provide a list
of companies comprising the Peer Group.
(3) The cumulative total return on investment (change in year-end stock
price plus reinvested dividends) for the Company, the Nasdaq Stock
Index and the Peer Group, based on December 13, 1995 = 100. In
accordance with the rules of the SEC, the returns of companies
comprising the Peer Group are weighted according to their respective
stock market capitalization at the beginning of each period for which a
return is indicated.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See Employment and Severance Agreements detailed on pages 11 and 12.
OTHER MATTERS
The Board of Directors does not know of any other matters that may come
before the meeting. If any other matters are properly presented to the meeting,
it is the intention of the persons named in the accompanying proxy to vote, or
otherwise to act in accordance with their best judgment on such matters.
By Order of the Board of Directors
Andrei M. Manoliu
Secretary
April 21, 1998
17
<PAGE>
1467-PS-98
<PAGE>
Exhibit A
PROXY
MOLECULAR DEVICES CORPORATION
Proxy Solicited on Behalf of the Board of Directors of
the Company for Annual Meeting, May 22, 1998
The undersigned hereby constitutes and appoints Joseph D. Keegan, Ph.D.,
Andrew H. Galligan and Andrei M. Manoliu, and each of them, his or her true and
lawful agents and proxies with full power of substitution in each, to represent
the undersigned at the Annual Meeting of Shareholders of Molecular Devices
Corporation, to be held at the Company's corporate headquarters, located at 1311
Orleans Drive, Sunnyvale, California on Friday, May 22, 1998, and at any
adjournment thereof, on all matters coming before said meeting.
You are encouraged to specify your choice by marking the appropriate box,
SEE REVERSE SIDE, but you need not mark any box if you wish to vote in
accordance with the Board of Directors' recommendations. The Proxies cannot vote
your shares unless you sign and return this card.
- - ----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- - ----------- -----------
<PAGE>
[X] Please mark
votes as in
this example.
<TABLE>
<CAPTION>
<S> <C>
This proxy, when properly executed, will be voted in the manner directed herein and authorizes the Proxies to take action in
their discretion upon other matters that may properly come before the meeting. If no direction is made, this proxy will be voted
FOR the elect
ion of all nominees listed below and FOR proposal 2.
1. Election Directors,
Nominees: Joseph D. Keegan, Ph.D., Moshe H. Alati, David 2. To ratify the selection FOR AGAINST ABSTAIN
L. Anderson, A. Blaine Bowman, Paul Goddard, Ph.D., Andre of Ernst & Young LLP as
F. Marion, Harden M. McConnell, Ph.D., J. Allen Waitz, independent auditors of [ ] [ ] [ ]
Ph.D. the Company for its
fiscal year ending
FOR WITHHELD December 31, 1998.
[ ] ALL [ ] FROM ALL
NOMINEES NOMINEES
[ ] ______________________________________________
For all nominees except as noted above
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Please sign exactly as your name appears hereon. Joint
owners should sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give full
title as such.
Signature: _______________________________ Date: ________________ Signature: ________________________________ Date: ________________
</TABLE>
