<PAGE> 1
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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12.
</TABLE>
KENDLE INTERNATIONAL INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
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<PAGE> 2
Kendle Logo
KENDLE INTERNATIONAL INC.
700 CAREW TOWER
441 VINE STREET
CINCINNATI, OHIO 45202
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 1999
TO THE SHAREHOLDERS OF KENDLE INTERNATIONAL INC.:
The annual meeting of shareholders of Kendle International Inc. will be
held on Thursday, May 20, 1999 at 10:00 a.m., Eastern Time, at the Media Center,
RiverCenter Tower Offices, 50 East RiverCenter Boulevard, Covington, Kentucky,
for the following purposes:
1. To elect seven directors to hold office for the ensuing year or until
their respective successors are elected and qualified;
2. To amend the Company's Restated and Amended Articles of Incorporation to
increase the number of authorized shares of Common Stock;
3. To ratify the appointment of PricewaterhouseCoopers LLP as the
independent public accountants for the Company for the year ending
December 31, 1999; and
4. To consider and act upon any other matters that may properly come before
the meeting or any adjournment thereof.
The Board of Directors of the Company has designated the close of business
on March 31, 1999 as the record date for the determination of shareholders
entitled to receive notice of, and to vote at, the meeting or any adjournment
thereof. Only shareholders of record of the Company's Common Stock at the close
of business on that date will be entitled to vote.
You are cordially invited to attend the meeting. However, whether or not
you plan to be personally present at the meeting, please complete, date and sign
the enclosed proxy and return it promptly in the enclosed envelope. If you later
desire to revoke your proxy, you may do so at any time before it is exercised.
By Order of the Board of Directors,
Candace Kendle
Chairman of the Board and
Chief Executive Officer
DATED: APRIL 13, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE VOTE, SIGN AND
PROMPTLY RETURN YOUR PROXY CARD IN THE ENCLOSED ENVELOPE. PROXIES MAY BE REVOKED
BY WRITTEN NOTICE OF REVOCATION, THE SUBMISSION OF A LATER PROXY, OR BY
ATTENDING THE MEETING AND VOTING IN PERSON.
<PAGE> 3
Kendle Logo
KENDLE INTERNATIONAL INC.
700 CAREW TOWER
441 VINE STREET
CINCINNATI, OHIO 45202
-------------------------
PROXY STATEMENT
-------------------------
ANNUAL MEETING OF SHAREHOLDERS
INTRODUCTION
The Board of Directors of Kendle International Inc. is requesting your
proxy for use at the Annual Meeting of Shareholders on May 20, 1999, and at any
adjournment thereof, pursuant to the foregoing Notice. This Proxy Statement and
the accompanying proxy card are being mailed to shareholders with the Company's
1998 Annual Report on or about April 13, 1999.
VOTING AT THE ANNUAL MEETING
GENERAL
Shareholders may vote in person or by proxy at the Annual Meeting. Proxies
given may be revoked at any time prior to the Annual Meeting by filing with the
Company either a written revocation or a duly executed proxy card bearing a
later date, or by appearing at the Annual Meeting and voting in person. Except
as otherwise stated herein, the vote required on all matters to be voted upon is
a majority of shares actually voted and, therefore, abstentions and broker
non-votes will have no effect.
As of March 31, 1999, the record date for determining shareholders entitled
to notice of and to vote at the Annual Meeting, Kendle had 11,072,445 shares of
Common Stock outstanding. Each share is entitled to one vote. Only shareholders
of record at the close of business on March 31, 1999 will be entitled to vote at
the Annual Meeting.
<PAGE> 4
PRINCIPAL SHAREHOLDERS
The following shareholders are the only persons known by the Company to own
beneficially 5% or more of its outstanding Common Stock as of February 26, 1999:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER COMMON STOCK PERCENT (1)
------------------------------------ ------------ -----------
<S> <C> <C>
Candace Kendle (2)(3)................................ 1,333,422 12.0%
700 Carew Tower
441 Vine St.
Cincinnati, OH 45202
Dresdner RCM Global Investors........................ 1,088,150 9.8%
Four Embarcadero Center
San Francisco, CA 94111
Christopher C. Bergen (4)............................ 1,033,684 9.3%
700 Carew Tower
441 Vine St.
Cincinnati, OH 45202
Pilgrim Baxter & Associates, Ltd..................... 851,900 7.7%
825 Duportail Rd.
Wayne, PA 19087
Kendle Stock Trust................................... 620,500 5.6%
700 Carew Tower
441 Vine St.
Cincinnati, OH 45202
Capital Guardian Trust Company....................... 564,500 5.1%
11100 Santa Monica Blvd.
Suite 1500
Los Angeles, CA 90025
</TABLE>
- ---------------
(1) Based on 11,067,809 shares of Common Stock outstanding. Shares of the
Company's Common Stock which a beneficial owner has the right to acquire
within 60 days of February 26, 1999 pursuant to the exercise of stock
options are deemed to be outstanding for the purpose of computing the
percentage ownership of such owner but are not deemed outstanding for the
purpose of computing percentage ownership of any other person.
(2) Includes 18,236 shares of Common Stock held directly by Hazel Kendle, mother
of Dr. Kendle.
(3) Includes 450 shares of Common Stock issuable upon the exercise of vested
options.
(4) Includes 400 shares of Common Stock issuable upon the exercise of vested
options.
ELECTION OF DIRECTORS
The Board is nominating for re-election all of the current directors,
namely Candace Kendle, Philip E. Beekman, Christopher C. Bergen, Robert R. Buck,
Timothy M. Mooney, Mary Beth Price and Charles A. Sanders.
All directors elected at the Annual Meeting will be elected to hold office
until the next Annual Meeting and until their successors are elected and
qualified.
Proxies will be voted in favor of election of the nominees named herein
unless authority to vote is withheld.
If any of the nominees should become unable to accept election or declines
to serve, neither of which the Board anticipates, it is intended, in the absence
of contrary direction, that the proxies will be voted for the balance of those
named above and for substitute nominees as the Board may designate. The proxies
will in no event be
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<PAGE> 5
voted for a greater number of nominees than seven. The seven nominees receiving
the highest number of votes will be elected.
During 1998, the Board of Directors held six meetings. Each director
attended at least 75% of the aggregate of the total number of meetings of the
Board of Directors and all committees on which the individual director served.
Directors Robert R. Buck and Mary Beth Price were appointed to the Board of
Directors during December, 1998 and no meetings were held in 1998 following
their appointments. There are two committees and one subcommittee of the Board
of Directors which assist the Board in discharging its responsibilities. These
committees, their members and functions are discussed below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES FOR DIRECTOR.
INFORMATION ABOUT NOMINEES
CANDACE KENDLE, PHARM. D., 52, co-founded the Company in 1981 and has
served as Chief Executive Officer since its incorporation and has been Chairman
of the Board since 1991. From 1979-1981, Dr. Kendle served as Clinical Associate
Professor of Pediatrics at The University of Pennsylvania School of Medicine;
Clinical Assistant Professor at Philadelphia College of Pharmacy and Sciences;
and Director, Department of Pharmacy, The Children's Hospital of Philadelphia.
From 1974-1978, Dr. Kendle served in a variety of positions at the University of
North Carolina School of Pharmacy and School of Medicine. She has published more
than 15 scientific articles. Dr. Kendle serves as a director of H. J. Heinz
Company, a food products manufacturer, and is the wife of Christopher C. Bergen,
President and Chief Operating Officer of the Company.
PHILIP E. BEEKMAN, 67, was elected a Director of the Company in January
1997. Mr. Beekman is the President of Owl Hollow Enterprises, a consulting and
investment company. Prior to July 1994, Mr. Beekman served as Chairman of the
Board and Chief Executive Officer of Hook-SupeRx, Inc. Mr. Beekman is a director
of the National Association of Chain Drug Stores; General Chemical Group Inc., a
supplier of soda ash and other chemicals; Linens 'N Things, a retail chain of
home furnishings; the Ladies Professional Golf Association; and the National
Organization on Disability.
CHRISTOPHER C. BERGEN, 48, co-founded the Company in 1981 and has served as
President and Chief Operating Officer since 1981 and has served as a director of
the Company since its incorporation. From 1977 through 1981, Mr. Bergen served
in various capacities at The Children's Hospital of Philadelphia, most recently
as Associate Vice President. Mr. Bergen serves as a director for Component
Software International, Inc., a software design and engineering firm, and is the
husband of Candace Kendle, Chief Executive Officer of the Company.
ROBERT R. BUCK, 51, was appointed to the Board of Directors of the Company
in December, 1998. Mr. Buck is President of the Uniform Rental Division of
Cintas Corporation, a company he joined in 1982 as Senior Vice President,
Finance. Mr. Buck is currently a member of the Dean's Advisory Council for the
College of Business Administration at the University of Cincinnati, a trustee of
the University of Cincinnati and the Fellowship of Christian Athletes and a
director of Citizens for Community Values and the American Cancer Society.
TIMOTHY M. MOONEY, 51, joined the Company in May 1996, was elected to the
Board of Directors in January 1997 and currently serves as Executive Vice
President, Chief Financial Officer and Treasurer. Prior to joining the Company,
Mr. Mooney was the Vice President, Chief Financial Officer and Treasurer of The
Future Now, Inc., a computer reseller. From May 1988 to July 1994, Mr. Mooney
served as Senior Vice President and Chief Financial Officer of Hook-SupeRx,
Inc., a retail drugstore chain. Mr. Mooney was previously a partner with Coopers
& Lybrand L.L.P. Mr. Mooney serves as a director of Winton Financial
Corporation, a unitary savings and loan holding company.
MARY BETH PRICE, 50, was appointed to the Board of Directors of the Company
in December, 1998. Mrs. Price founded Empower MediaMarketing (formerly Media
That Works), an advertising firm, in 1985, served as President and Chief
Executive Officer until 1997, and continues to serve as a director. In 1998, she
accepted an appointment as Professor, Richard A. Forsythe Chair in
Entrepreneurship at the Richard T. Farmer School of Business, Miami University,
Oxford, Ohio, where she teaches and holds the Associate Director position in the
Page Center for Entrepreneurship. Mrs. Price currently serves as a trustee on
the Dan Beard Boy Scout Council,
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<PAGE> 6
as a director of the Cincinnati Youth Collaborative and the Downtown Cincinnati
Small Business Development Fund.
CHARLES A. SANDERS, M.D., 67, was elected a Director of the Company in
January 1997. From 1989 to 1994, Dr. Sanders was Chief Executive Officer of
Glaxo Inc., and he served as Chairman of that company from 1992 to 1995. Prior
to joining Glaxo Inc., Dr. Sanders spent eight years with Squibb Corp. where he
held a number of senior positions including Vice Chairman. Previously, Dr.
Sanders was general director of Massachusetts General Hospital and Professor of
Medicine at Harvard Medical School. He is currently a member of the Institute of
Medicine of the National Academy of Sciences, a trustee of the University of
North Carolina at Chapel Hill, chairman of Project HOPE and chairman of the
Commonwealth Fund. Dr. Sanders serves as a director of StaffMark, Inc., a
provider of diversified staffing services to businesses, healthcare providers
and government agencies; and of Magainin Pharmaceuticals, Inc., Vertex
Pharmaceuticals Incorporated, Pharmcopeia, Inc., Scios, Inc. and Trimeris, Inc.,
all biopharmaceutical companies engaged in the development of medicines for
serious diseases.
SECURITIES OWNERSHIP
The following table sets forth certain information known to the Company
with respect to beneficial ownership of the Company's Common Stock as of
February 26, 1999 by each director and executive officer and by all directors
and executive officers as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED (1)
--------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT
- ------------------------ --------- -------
<S> <C> <C>
Philip E. Beekman......................................... 18,401 *
Christopher C. Bergen (2)................................. 1,033,684 9.3%
Robert R. Buck............................................ 6,000 *
Candace Kendle (2) (3).................................... 1,333,422 12.0%
Timothy M. Mooney......................................... 136,880 1.2%
Mary Beth Price........................................... 5,200 *
Charles A. Sanders........................................ 20,401 *
All Directors and executive officers as a group
(7 persons)............................................. 2,553,988 22.7%
</TABLE>
- ---------------
* Less than 1%
(1) Based on 11,067,809 shares of Common Stock outstanding. Includes shares of
the Company's Common Stock which are exercisable by such individuals within
60 days. The following options are included in the totals: 135,050 shares of
Common Stock for Mr. Mooney; 15,000 shares of Common Stock for each of
Messrs. Beekman and Sanders; 5,000 shares of Common Stock for each of Mr.
Buck and Mrs. Price; 450 shares of Common Stock for Dr. Kendle; and 400
shares of Common Stock for Mr. Bergen.
(2) Shares beneficially owned do not include 620,500 shares of the Company's
Common Stock of which neither Dr. Kendle nor Mr. Bergen exercise voting or
investment control. See Principal Shareholders.
(3) Includes 18,236 shares of Common Stock held directly by Hazel Kendle, mother
of Dr. Kendle.
COMMITTEES OF THE BOARD OF DIRECTORS
There are two committees and one subcommittee of the Company's Board of
Directors: the Management Development and Compensation Committee, the
Compensation Subcommittee and the Audit Committee. The Management Development
and Compensation Committee met twice during 1998, is composed of Mr. Beekman
(Chairman), Mr. Buck, Dr. Kendle and Dr. Sanders and is responsible for
monitoring the performance and succession of senior management, the review of
the Company's compensation plans and the general review of the Company's
employee compensation policies. The Compensation Subcommittee, which was formed
during March 1998 and met once during the year, is composed of Mr. Beekman
(Chairman), Mr. Buck and Dr. Sanders
4
<PAGE> 7
and is responsible for the approval of remuneration arrangements for executive
officers of the Company and for the administration of the Company's
stock-related benefit plans. The Audit Committee, which met twice during 1998,
is composed of Dr. Sanders (Chairman), Mr. Beekman, Mr. Bergen and Mrs. Price
and is responsible for the engagement of independent auditors, the review of
audit fees, the supervision of matters relating to audit functions, and the
review of internal policies and procedures regarding audit, accounting and other
financial controls.
The Company does not have a nominating committee or executive committee.
COMPENSATION OF DIRECTORS
Non-employee directors are paid $1,000 for each directors' meeting attended
and $500 for each committee meeting attended. Such compensation for meetings is
reduced by 50% if the director participates in the meeting by telephone. The
foregoing compensation is paid quarterly, in arrears, in the form of Company
Common Stock. Under the Company's 1997 Stock Option and Stock Inventive Plan,
each non-employee director is granted a non-qualified option to purchase 5,000
shares of Common Stock on the date of their first election or appointment to the
Board and an option for 1,000 shares of Common Stock upon each annual election
as a director thereafter. The option price for all such options equals the fair
market value of Common Stock on the grant date. Directors who are employees of
the Company are not separately compensated for serving as directors.
EXECUTIVE COMPENSATION
The following table sets forth information regarding compensation paid for
the last three fiscal years to its Chief Executive Officer and the two other
executive officers (the "Named Executives"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION AWARDS
ANNUAL COMPENSATION -------------------------------------
------------------------- SECURITIES ALL OTHER
NAME AND SALARY BONUS UNDERLYING OPTIONS COMPENSATION(1)
PRINCIPAL POSITION YEAR ($) ($) (#) ($)
------------------ ---- ------- ------ ------------------ ---------------
<S> <C> <C> <C> <C> <C>
Candace Kendle.................. 1998 193,750 58,000 200 0
Chairman of the Board 1997 153,444 70,000 2,250 0
and Chief Executive Officer 1996 122,400 0 0 2,291
Christopher C. Bergen........... 1998 171,250 40,250 200 12,934
President and Chief Operating 1997 145,944 56,000 2,000 0
Officer 1996 122,400 0 0 2,291
Timothy M. Mooney (2)........... 1998 151,866 32,550 200 0
Executive Vice President, 1997 134,671 42,000 1,650 0
Chief Financial 1996 72,035 0 135,050 0
Officer and Treasurer
</TABLE>
- ---------------
(1) Represents insurance premium payments
(2) Mr. Mooney joined Kendle in May 1996.
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<PAGE> 8
STOCK OPTIONS
The tables below provide certain information with respect to grants and
exercises of stock options to the Named Executives pursuant to the Company's
stock option plans during the year ended December 31, 1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED
ANNUAL RATE
OF STOCK PRICE
NUMBER OF APPRECIATION
SECURITIES PERCENT OF TOTAL FOR OPTION
UNDERLYING GRANTED TO TERM(2)(3)
OPTIONS EMPLOYEES IN EXERCISE ----------------
GRANTED(1) FISCAL YEAR PRICE EXPIRATION 5% 10%
NAME (#) (%) ($/SHARE) DATE ($) ($)
---- ---------- ---------------- --------- ---------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Candace Kendle.............. 200 0.06 23.56 09/01/08 2,964 7,511
Christopher C. Bergen....... 200 0.06 23.56 09/01/08 2,964 7,511
Timothy M. Mooney........... 200 0.06 23.56 09/01/08 2,964 7,511
</TABLE>
- ---------------
(1) All options granted to the Named Executives are exercisable in five equal
annual installments beginning one year after the date of grant.
(2) Potential realizable value is calculated from the exercise price of the
options granted.
(3) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates set by the Securities and Exchange Commission and,
therefore, are not intended to forecast possible future appreciation, if
any, of the Company's Common Stock price.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF UNDERLYING VALUE OF UNEXERCISED
NUMBER OF SECURITIES UNEXERCISED SECURITIES IN-THE-MONEY
UNDERLYING OPTIONS VALUE OPTIONS OPTIONS AT DECEMBER 31,
EXERCISED REALIZED AT DECEMBER 31, 1998(#) 1998($)(1)
NAME (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- -------------------- -------- -------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
Candace Kendle........... 0 0 450 2,000 4,219 16,875
Christopher C. Bergen.... 0 0 400 1,800 3,750 15,000
Timothy M. Mooney........ 330 2,372 135,050 1,520 2,993,383 12,375
</TABLE>
- ---------------
(1) Represents the number of shares optioned multiplied by the difference
between $23.38, the fair market value of the Common Stock at December 31,
1998, and the exercise price for that option.
PROTECTIVE COMPENSATION AND BENEFIT AGREEMENTS
The Company has entered into Protective Compensation and Benefit Agreements
with certain employees, including all executive officers of the Company. These
agreements are subject to annual review by the Company's Board of Directors,
expire on December 31, 1999, and will be automatically extended in one year
increments unless cancelled by the Company. The agreements provide for specified
benefits, including two years' compensation, in the event of a change in control
as that term is defined in the agreements.
COMPENSATION SUBCOMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Subcommittee of the Management Development and
Compensation Committee is composed of three directors, none of whom is an
officer or employee of the Company or its subsidiaries. The Subcommittee is
responsible for the establishment of policies governing, and for the
implementation, administration and interpretation of, all aspects of executive
officer compensation. The Subcommittee establishes executive
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<PAGE> 9
officer compensation by setting salaries, approving bonus plans, making bonus
awards and awarding stock options.
The Subcommittee reviews the compensation of executive officers on an
ongoing basis, developing and implementing plans to serve the following
objectives:
- Support and drive achievement of the Company's business strategies and
goals;
- Attract and retain the highest caliber executive officers by providing
compensation opportunities comparable to those offered by other firms
with whom the Company competes for business and talent; and
- Closely align the interests of executive officers with shareholders'
interests.
At a meeting held on March 12, 1999, the Management Development and
Compensation Committee (prior to formation of the Subcommittee) reviewed with
management the Company's financial results for 1998 and individual performance
of the Named Executives, including the Chief Executive Officer, to previously
stated objectives. On this basis, it awarded the bonuses shown in the Summary
Compensation table.
At a meeting held on May 21, 1998, the Subcommittee set salaries for the
Named Executives retroactive to April 1, 1998. In establishing these salaries,
the members reviewed recommendations of management against the pay practices of
comparable companies and the Company's competitors. Corporate profitability,
position responsibility levels and individual qualifications and performance
were also considered. The salary of the Chief Executive Officer was set on the
same basis.
On August 21, 1998, the Subcommittee reviewed and approved stock option
grants to each of the Company's employees, including grants to the Named
Executives. During 1998, the Subcommittee considered and awarded individual
grants reflecting its view of the importance of particular individuals to the
Company's future performance.
Under Section 162(m) of the Internal Revenue Code of 1986, as amended a
public company may not deduct more than $1 million in compensation paid to any
one of its executive officers, unless the excess amount is performance-based
compensation satisfying certain rules. The Company's Stock Option Plan is
designed to qualify under the compensation requirements of this provision. Due
to current salary levels and anticipated bonus targets, the Subcommittee
believes that it is unlikely that application of Section 162(m) will prevent the
Company from claiming a deduction for the amount of compensation paid to senior
executive officers.
Compensation Subcommittee of the Board of Directors
Philip E. Beekman, Chairman
Robert R. Buck
Charles A. Sanders
7
<PAGE> 10
CERTAIN TRANSACTIONS
In 1998, the Company paid approximately $426,000 to a construction company
owned by a relative of Dr. Kendle for construction and renovations at its
principal executive offices. Such work is continuing. Management believes that
payments to the construction company are on terms no less favorable than those
that could have been negotiated with unaffiliated third parties.
During 1998, Kendle paid $210,303 for legal services to Keating, Muething &
Klekamp, P.L.L., of which William J. Keating, Jr., trustee of the Kendle Stock
Trust, is a partner.
PERFORMANCE GRAPH
The following graph shows cumulative total shareholder returns for the
period beginning August 22, 1997 and ending on December 31, 1998 with a
published industry index or line-of-business index. The Company has selected the
Nasdaq Stock Market (U.S.) Index and a composite peer group consisting of
ClinTrials Research Inc., Parexel International, Pharmaceutical Product
Development, Inc. and Quintiles Transnational Corp. The graph assumes that $100
was invested on August 22, 1997 in Kendle International Inc. stock and in the
index and peer group on August 22, 1997. The graph further assumes the
reinvestment of all dividends.
<TABLE>
<CAPTION>
Cumulative Total Return
-----------------------
August 22, 1997 December 31, 1997 December 31, 1998
--------------- ----------------- -----------------
<S> <C> <C> <C>
Kendle International Inc....................... 100 120 167
Peer Group..................................... 100 93 118
Nasdaq Stock Market (U.S.)..................... 100 99 139
</TABLE>
AMENDMENT OF THE RESTATED AND AMENDED ARTICLES OF INCORPORATION TO INCREASE THE
AUTHORIZED SHARES
The Restated and Amended Articles of Incorporation authorize the issuance
of 15,000,000 Common Shares. At March 31, 1999, the Company had 11,072,445
Common Shares outstanding, with an additional 2,091,497 shares reserved and
remaining available for issuance pursuant to stock related benefit plans.
Therefore, of the 15,000,000 shares authorized by the Restated and Amended
Articles of Incorporation, 1,836,058 are available for issuance for general
corporate purposes.
The Board of Directors believes that it should have, at all times,
authorized Common Shares equal to approximately three times the number of shares
that are outstanding or committed to issuance. This authorization may enable the
Board of Directors, without further shareholder approval, to issue additional
shares from time to time in sales for cash, acquisitions, option or other
incentive plans, stock splits, stock dividends or similar occurrences. The
issuance of additional Common Shares through stock dividends or splits will not
affect the
8
<PAGE> 11
percentage ownership of shareholders. Issuance for stock options and other
benefit plans and for acquisitions would affect the percentage of stock
ownership, but their effect upon earnings per share would depend upon the
earnings realized from the cash received or business acquired in such stock
issuances. There are no plans, understandings or arrangements calling for
issuances of Common Shares by the Company other than those discussed above.
The Board of Directors has approved the amendment to the Restated and
Amended Articles of Incorporation to increase total authorized Common Shares to
45,000,000 and recommends a vote in favor of this proposal. The affirmative vote
of the holders of two-thirds of the outstanding Common Shares is required for
approval of this amendment. The failure to vote, abstentions and broker
non-votes will have the same effect as a vote against the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR AMENDMENT TO ARTICLE FOUR OF
THE RESTATED AND AMENDED ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK FROM 15,000,000 TO 45,000,000.
RATIFICATION OF APPOINTMENT OF ACCOUNTANTS
The Audit Committee of the Board of Directors appointed
PricewaterhouseCoopers LLP as the Company's independent public accountants for
the year ending December 31, 1999. PricewaterhouseCoopers has been the
independent accounting firm for the Company since 1996. Although not required by
law, the Board of Directors is seeking shareholder ratification of this
selection. The affirmative vote of a majority of shares voting at the Annual
Meeting is required for ratification. If ratification is not obtained, the Board
of Directors intends to continue the employment of PricewaterhouseCoopers at
least through 1999. Representatives of PricewaterhouseCoopers are expected to be
present at the Annual Meeting and will be given an opportunity to comment, if
they so desire, and to respond to appropriate questions that may be asked by
shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF
PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR
THE YEAR ENDING DECEMBER 31, 1999.
OTHER MATTERS
The Board knows of no other matters which will be presented at the Annual
Meeting. If however, any other matter is properly presented at the Annual
Meeting it will require the affirmative vote of a majority of shares voting for
approval.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers, directors and persons who own more than ten percent of the Company's
Common Stock to file reports of ownership with the Securities and Exchange
Commission and to furnish the Company with copies of these reports. Based solely
upon its review of reports received by it, or upon written representation from
certain reporting persons that no reports were required, the Company believes
that during 1998 all filing requirements were met.
VOTING BY PROXY
All proxy cards properly signed will, unless a different choice is
indicated, be voted "FOR" election of all nominees for directors proposed by the
Board of Directors, "FOR" the proposed amendment to the Restated and Amended
Articles of Incorporation increasing the authorized shares of Common Stock from
15,000,000 to 45,000,000, and "FOR" ratification of the selection of independent
public accountants.
If any other matters come before the Annual Meeting or any adjournment,
each proxy will be voted in the discretion of the individuals named as proxies
on the card.
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<PAGE> 12
SHAREHOLDER PROPOSALS
Shareholders who desire to have proposals included in the notice for the
Annual Meeting of Shareholders to be held in the Spring of 2000 must submit
their proposals in writing by January 20, 2000 to the Company, Attention Julie
G. Lerner, Investor Relations, 700 Carew Tower, 441 Vine Street, Cincinnati,
Ohio 45202.
The form of Proxy for this meeting grants authority to the designated
proxies to vote in their discretion on any matters that come before the meeting
except those set forth in the Company's Proxy Statement and except for matters
as to which adequate notice is received. For notice to be deemed adequate for
the 2000 Annual Shareholders' Meeting, it must be received prior to February 27,
2000. If there is a change in the anticipated date of next year's Annual
Shareholders' Meeting or in the notice deadline by more than 30 days, we will
notify you of this change through our Form 10-Q filings.
April 13, 1999
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<PAGE> 13
Kendle International Inc.
700 Carew Tower
441 Vine Street
Cincinnati, Ohio 45202
The undersigned hereby appoints Paul F. Ritter and Anthony L.
Forcellini, or either of them, proxies of the undersigned, each with
the power of substitution, to vote all shares of Common Stock which
PROXY the undersigned would be entitled to vote on the matters specified
FOR below and in their discretion with respect to such other business as
ANNUAL may properly come before the Annual Meeting of Shareholders of Kendle
MEETING International Inc. to be held on May 20, 1999 at 10:00 A.M. Eastern
Time at The Media Center, RiverCenter Tower Offices, 50 East
RiverCenter Boulevard, Covington, Kentucky or at any adjournment of
such Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS:
Authority to elect as directors the following seven (7) nominees:
Candace Kendle, Philip E. Beekman, Christopher C. Hergen, Robert R. Buck,
Timothy M. Mooney, Mary Beth Price, AND Charles A. Sanders
FOR WITHHOLD AUTHORITY
--- ---
WRITE THE NAME OF ANY NOMINEE(S) FOR WHOM AUTHORITY TO VOTE IS WITHHELD
-----------------------------
To amend the Restated and Amended Articles of Incorporation to increase the
number of authorized shares of Common Stock.
FOR AGAINST ABSTAIN
--- --- ---
Ratify and approve the appointment of PricewaterhouseCoopers LLP as independent
public accountants for 1999.
FOR AGAINST ABSTAIN
--- --- ---
THIS PROXY WILL BE VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS UNLESS A
CONTRARY CHOICE IS SPECIFIED.
(This proxy is continued and is to be signed on the reverse side)
<PAGE> 14
The undersigned hereby acknowledges
receipt of the Notice of Annual
Meeting of Shareholders dated April
13, 1999 and the Proxy Statement
furnished therewith. Any proxy
heretofore given to vote said shares
is hereby revoked.
PLEASE DATE, SIGN AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE.
Dated: , 1999
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------------------------------------
(Signature)
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(Signature)
(Important: Please sign exactly as
name appears hereon indicating,
where proper, official position or
representative capacity. In the case
of joint holders, all should sign.)
