<PAGE>
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:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
ST. JUDE MEDICAL, 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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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 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:
------------------------------------------------------------------------
<PAGE>
March 27, 1996
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
St. Jude Medical, Inc. at the Lutheran Brotherhood Auditorium, Lutheran
Brotherhood Building, 625 Fourth Avenue South, Minneapolis, Minnesota, on
Thursday, May 9, 1996 at 9:30 a.m.
This booklet includes the Notice of Annual Meeting and the Proxy Statement.
The Proxy Statement describes the business to be transacted at the meeting and
provides other information concerning the Company which you should be aware of
when you vote your shares.
The principal business of the Annual Meeting will be the election of
directors, approval to increase the authorized shares of the Company's common
stock and ratification of the appointment of the independent auditors. As in
prior years, we plan to review the status of the Company's business at the
meeting.
At last year's Annual Meeting over 74% of the outstanding shares were
represented. It is important that your shares be represented whether or not you
are personally able to attend the meeting. Regardless of the number of shares
you own, your vote is important. In order to ensure that you will be
represented, we ask you to please sign, date and return the enclosed proxy card
promptly. This will not limit your right to vote in person or to attend the
Annual Meeting.
As is our usual practice, we have provided space on the proxy card for
comments from our registered shareholders. I urge you to use it to let us know
your feelings about the Company or to bring a particular matter to our
attention. If you hold your shares through an intermediary, please feel free to
write directly to us.
Sincerely yours,
Ronald A. Matricaria
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
ST. JUDE MEDICAL, INC.
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
---------------------
Notice is hereby given that the Annual Meeting of Shareholders of St. Jude
Medical, Inc. will be held at the Lutheran Brotherhood Auditorium, Lutheran
Brotherhood Building, 625 Fourth Avenue South, Minneapolis, Minnesota on May 9,
1996 at 9:30 a.m. for the following purposes:
1. To elect three directors.
2. To approve an amendment to St. Jude Medical, Inc.'s Articles of
Incorporation to increase the number of authorized shares of common stock
from 100,000,000 to 250,000,000.
3. To ratify the re-appointment of independent auditors for the Company for
the current fiscal year.
4. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on March 15, 1996 as
the record date for the determination of shareholders entitled to notice of and
to vote at the meeting.
By Order of the Board of Directors
Kevin T. O'Malley
ASSISTANT SECRETARY
St. Paul, Minnesota
March 27, 1996
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN, DATE AND RETURN YOUR
PROXY ON THE ENCLOSED PROXY CARD WHETHER OR NOT YOU EXPECT TO ATTEND IN PERSON.
SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES AND VOTE IN PERSON
IF THEY DESIRE.
<PAGE>
ST. JUDE MEDICAL, INC.
---------------------
PROXY STATEMENT
---------------------
This Proxy Statement is furnished to the shareholders of St. Jude Medical,
Inc. (the "Company") in connection with the solicitation of proxies by the Board
of Directors of the Company to be voted at the Annual Meeting of Shareholders to
be held on May 9, 1996, or any adjournment(s) thereof. The Company's principal
offices are located at One Lillehei Plaza, St. Paul, Minnesota 55117. The
mailing of this Proxy Statement to shareholders of the Company commenced on or
about March 27, 1996.
Any proxy may be revoked at any time before it is voted by written notice,
mailed or delivered to the Assistant Secretary of the Company, or by revocation
of a written proxy by request in person at the Annual Meeting; but if not so
revoked, the shares represented by such proxy will be voted according to your
directions. If your proxy card is signed and returned without specifying a vote
or an abstention on any proposal, it will be voted according to the
recommendation of the Board of Directors on each proposal.
Under Minnesota law, each item of business properly presented at a meeting
of shareholders generally must be approved by the affirmative vote of the
holders of a majority of the voting power of the shares present, in person or by
proxy, and entitled to vote on that item of business. However, if the shares
present and entitled to vote on that item of business would not constitute a
quorum for the transaction of business at the meeting, then the item must be
approved by a majority of the voting power of the minimum number of shares that
would constitute such a quorum. A shareholder who submits votes by proxy
(including, in the case of shares held in street name, votes directed by brokers
at their discretion on certain non-controversial matters as allowed under New
York Stock Exchange rules) but does not vote on a specific item of business is
not considered to be present and entitled to vote with respect to such item of
business. On the other hand, a shareholder who specifically abstains with
respect to an item of business but otherwise gives a proxy authority to vote on
the shareholder's behalf will be counted as being present and entitled to vote
on such item even though the proxy may not vote on such item on the
shareholder's behalf.
The total number of shares of stock outstanding and entitled to vote at the
Annual Meeting as of March 15, 1996 consisted of 70,299,660 shares of $.10 par
value common stock. Each share of common stock is entitled to one vote and there
is no cumulative voting. Only shareholders of record at the close of business on
March 15, 1996 will be entitled to vote at the meeting. The presence, in person
or by proxy, of holders of a majority of the shares of common stock entitled to
vote at the Annual Meeting of Shareholders constitutes a quorum for the
transaction of business.
1
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents information provided to the Company as to the
beneficial ownership of the Company's common stock as of March 15, 1996 by (i)
persons holding 5% or more of such stock, (ii) named executive officers and
(iii) all directors and executive officers as a group:
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT OF
BENEFICIAL OWNERS OWNED OUTSTANDING SHARES
- ------------------------------------------------------------------- --------------- ---------------------
<S> <C> <C>
Named Executive Officers:
Ronald A. Matricaria............................................. 1,055,774(1) 1.5%
Eric W. Sivertson (5)............................................ 68,914 .1%
John P. Berdusco................................................. 52,004(1) .1%
Terry L. Shepherd................................................ 16,275(1) *
Stephen L. Wilson................................................ 76,728(1) .1%
Directors and Executive Officers as a Group (16)................... 2,157,034(2) 3.0%
FMR Corp. ......................................................... 8,133,604(3) 11.6%
82 Devonshire Street
Boston, Massachusetts
Provident Investment Counsel, Inc. ................................ 3,934,922(4) 5.6%
300 North Lake Avenue
Pasadena, California
</TABLE>
- ------------------------
*Less than .1%
(1) Includes 1,031,623, 48,900, 13,275 and 70,912 shares which Messrs.
Matricaria, Berdusco, Shepherd and Wilson, respectively, may acquire within
sixty days from the date hereof, pursuant to the exercise of stock options.
(2) Includes 1,576,159 shares which such individuals may acquire within sixty
days from the date hereof, pursuant to the exercise of stock options.
(3) As of December 31, 1995, FMR Corp. reported it beneficially owned 8,133,604
shares of the Company's common stock of which it held sole power to vote or
direct the vote of 587,147 shares.
(4) As of December 31, 1995, Provident Investment Counsel reported it
beneficially owned 3,934,922 shares of the Company's common stock of which
it held sole power to vote or direct the vote of 3,028,461 shares.
(5) Mr. Sivertson resigned from the Company effective January 19, 1996.
1. ELECTION OF DIRECTORS
Three directors will be elected to three-year terms at the Annual Meeting.
Pursuant to the Company's Articles of Incorporation, the Board of Directors is
divided into three classes of directors, each director serving a three-year
term. Each year only one class of directors is subject to a shareholder vote.
The Board of Directors has nominated for election the persons named below.
It is intended that proxies will be voted for such nominees. The Company
believes that each nominee named below will be able to serve; but should any
such nominee be unable to serve as a director, the persons named in the proxies
have advised that they will vote for the election of such substitute nominee as
the Board of Directors may propose.
2
<PAGE>
The names and ages of the nominees and other directors, their principal
occupations, and amount of common stock of the Company owned by each such person
are set forth below, based upon information furnished to the Company by such
persons. Ownership of common stock of the Company is given as of March 15, 1996.
<TABLE>
<CAPTION>
COMMON
STOCK PERCENT OF
DIRECTOR BENEFICIALLY OUTSTANDING
NAME AND AGE PRINCIPAL OCCUPATION SINCE OWNED SHARES
- -------------------------------- ------------------------------------------ ----------- --------------- ---------------
<S> <C> <C> <C> <C>
DIRECTORS NOMINATED FOR A TERM OF OFFICE ENDING IN 1999:
Thomas H. Garrett III (51) Attorney
Lindquist & Vennum P.L.L.P.
Minneapolis, MN 1979 70,479(1) .1%
Roger G. Stoll (53) CEO and President
Ohmeda, Inc.
Liberty Corner, NJ
(Medical Products) 1991 16,350(1) *
Paul J. Chiapparone (56) Senior Vice President
Electronic Data Systems Corporation
Plano, Texas
(Information Management Services) 1996 0 *
OTHER DIRECTORS WHOSE TERMS OF OFFICE WILL CONTINUE AFTER
THE ANNUAL MEETING AND WHOSE TERMS EXPIRE IN 1997:
Charles V. Owens, Jr. (68) Chairman of the Board
Genesis Labs, Inc.
Minneapolis, MN
(Medical Products) 1983 13,125(1) *
Ronald A. Matricaria (53) Chairman, President and CEO of the Company 1993 1,055,774(1) 1.5%
Walter L. Sembrowich (53) President
Aviex, Inc.
Minneapolis, MN
(Management Consulting Services) 1994 12,000(1) *
OTHER DIRECTORS WHOSE TERMS OF OFFICE WILL CONTINUE AFTER
THE ANNUAL MEETING AND WHOSE TERMS EXPIRE IN 1998:
William R. Miller (67) Former Vice Chairman
Bristol-Myers Squibb
New York, NY
(Pharmaceuticals) 1991 19,500(1) *
Kenneth G. Langone (60) Managing Director
Invemed Associates, Inc.
New York, NY
(Investment Banking) 1994 57,000(1) .1%
Gail R. Wilensky (52) Senior Fellow
Project Hope, Washington, D.C. 1995 4,800(1) *
</TABLE>
- ------------------------
*Less than .1%
3
<PAGE>
(1) Includes 36,000, 13,500, 9,000, 1,031,623, 9,000, 4,500, 4,500, and 4,500
shares which Messrs. Garrett, Stoll, Owens, Matricaria, Sembrowich, Miller,
Langone and Ms. Wilensky, respectively, may acquire within sixty days from
the date hereof, pursuant to the exercise of stock options.
OTHER INFORMATION REGARDING THE BOARD
BUSINESS EXPERIENCE. Mr. Garrett has been a member of the law firm of
Lindquist & Vennum P.L.L.P. of Minneapolis, Minnesota and served as its managing
partner from 1993 through 1995. Lindquist & Vennum P.L.L.P. has represented the
Company since its inception. Mr. Garrett is also a director of Check Technology
Corporation, a manufacturer of financial document printing systems.
Dr. Stoll is the Chief Executive Officer and President of Ohmeda, Inc., a
medical device and pharmaceutical manufacturer, and is a director of the BOC
Group, plc., of which Ohmeda is a subsidiary. He was previously employed by
Miles Inc., a wholly owned subsidiary of Bayer, AG, a German pharmaceutical
company, and served as Executive Vice President and General Manager of its
Diagnostics Business Group from 1987 to 1991 and Chief Administrative Officer
from 1986 to 1987. Dr. Stoll was also Chairman of the Board of Molecular
Diagnostics, Inc., and was a director of Bayer Diagnostics in Munich, Germany
and Miles-Sankyo in Tokyo, Japan. From 1976 to 1986, Dr. Stoll was employed by
American Hospital Supply Corporation, serving most recently as President of the
Critical Care Division. Dr. Stoll currently serves on the boards of the Health
Industry Manufacturing Association and St. Barnabas Medical Center in
Livingston, New Jersey.
Mr. Chiapparone is a Senior Vice President and a member of the Board of
Directors of Electronic Data Systems Corporation (EDS). He has been employed by
EDS since 1966 having a variety of operational responsibilities. He currently
serves on the boards of a number of charitable and educational organizations.
Mr. Owens was employed by Miles Laboratories, Inc., a pharmaceutical
company, from 1951 to 1982, serving as Executive Vice President from 1977 to
1982. From 1983 to 1985 he served as Chairman and Chief Executive Officer of
Kyoto Diagnostics, Inc., a marketing organization for medical diagnostic and
device companies. From 1985 to 1988, Mr. Owens served as the Chief Executive
Officer of Genesis Labs, Inc., a manufacturer of medical diagnostic products,
and since 1988 has been Chairman of the Board. He also serves as an industry
consultant to various medical diagnostic and device companies. Mr. Owens has
served as Chairman of the Diagnostics and Devices Section of the Pharmaceutical
Manufacturers Association and as a director of the Health Industry Manufacturers
Association. He is also a director of Chronimed Inc., a company which markets
pharmaceuticals and educational materials directly to patients.
Mr. Matricaria was appointed President and Chief Executive Officer and a
director of the Company in April 1993. In January 1995, Mr. Matricaria was also
appointed as the Company's Chairman of the Board. Prior to joining St. Jude
Medical, Mr. Matricaria was employed by Eli Lilly and Company since 1970 where
he most recently was Executive Vice President of the Pharmaceutical Division and
President of its North American Operations. Previously he served as President of
Eli Lilly International, President -- Medical Devices and Diagnostics Division,
and President and Chief Executive Officer -- Cardiac Pacemakers, Inc., a wholly
owned subsidiary of Eli Lilly. Mr. Matricaria previously served as a director of
the Massachusetts College of Pharmacy and Allied Health Science, the American
Foundation for Pharmaceutical Education, the American Diabetes Association and
the National Foundation for Infectious Diseases. Currently Mr. Matricaria serves
as a director on the boards of Centacor, Inc., Diametrics Medical, Inc., and
InControl, Inc., all medical products manufacturers, and the Health Industry
Manufacturers Association.
Dr. Sembrowich is the President of Aviex, Inc. which provides management
consulting services. He was a founder of Diametrics Medical, Inc., a designer,
manufacturer and distributor of a point-of-care blood chemistry analysis system,
and was a Co-Chairman of the Board of Directors from January 1993 to February
1995, and a director since 1990. From 1990 through January 1993, he was
4
<PAGE>
President and Chief Executive Officer of the company. Currently Dr. Sembrowich
serves as director of Inomet, Inc. and Cortrak, Inc., both start-up medical
technology firms. He is also a business advisor and limited partner of Medical
Innovation Partners, a venture capital firm. From 1988 to 1990, Dr. Sembrowich
was a management consultant to PPG Industries, Inc., a health care and
industrial supply company. Dr. Sembrowich was a founder of Arden Medical
Systems, Inc., a developer and manufacturer of clinical chemistry analysis
systems, and served as its Vice President of Scientific Affairs from 1983 to
1986. Dr. Sembrowich has served as Chairman and Review Board member for the
Small Business Innovative Research program of the National Institute of Health,
and has served as a Director for Minnesota Project Innovation.
Mr. Miller retired as Vice Chairman of the Board of Directors of
Bristol-Myers Squibb Company, a pharmaceutical company, in 1991 after six years
in that position. Mr. Miller is a director of ISIS Pharmaceuticals, a
biotechnology company, and Westvaco Corporation, a paper, packaging and
chemicals corporation. He is chairman of Vion Pharmaceuticals, Inc. (formerly
OncoRx), a biotechnology company. He also serves on the Board of Trustees of the
Cold Spring Harbor Laboratory and is a past Chairman of the Board of the
Pharmaceutical Manufacturers Association.
Mr. Langone is the founder, Chairman of the Board, President, Chief
Executive Officer and Managing Director of Invemed Associates, Inc., a New York
Stock Exchange member firm engaged in investment banking and brokerage. He is a
co-founder of The Home Depot, Inc., the world's largest do-it-yourself home
improvement retailer and has been a director and member of the Executive
Committee of its board since it was founded in 1978. Mr. Langone serves on the
boards of Baby Superstore, Inc., a retail company, USSB, a subscription
television programming company, GMIS, Inc., a computer software and services
company, and Unifi, Inc., a textile company. He also serves on the boards of a
number of charitable and educational organizations.
Dr. Wilensky currently serves as the John M. Olin Senior Fellow at Project
HOPE, an international health foundation. From 1992 to 1993 she served as the
Deputy Assistant to President George Bush for policy development, and from 1990
to 1992 she was the Administrator of the United States Health Care Financing
Administration directing the Medicaid and Medicare programs. She currently
serves as Trustee for the Combined Benefits Fund of the United Mineworkers of
America, Governor on the Board of the Research Triangle Institute and as a
director on the boards of Syncor International, United HealthCare Corporation,
Suburban Hospital, Capstone Pharmacy Services, Inc. and Coram Health, all health
care service companies; and Advanced Tissue Sciences, Inc., a tissue engineering
company.
MEETINGS. During 1995, the Board of Directors met seven times. Each
director attended more than 75% of the meetings of the Board of Directors or any
Committee on which such director served.
BOARD COMMITTEES. The Audit Committee, consisting of Messrs. Garrett, Owens
and Lehmkuhl, met three times in 1995. Among other duties, the Audit Committee
reviews the scope and results of independent and internal audits, the Company's
financial results and comments by the auditors regarding internal controls and
accounting procedures and management's responses to those comments.
The Compensation Committee, consisting of Messrs. Langone and Miller, met
three times in 1995. The Compensation Committee's duties include annual approval
of the Company's compensation policies, including salary, bonus and long-term
incentive programs, evaluation of the appropriate base salary level for
executive officers for Board of Directors approval, consideration of matters
with respect to profit sharing and other employee benefits provided by the
Company and review of management succession planning.
The Nominating Committee was formed in 1995. Its members include Drs.
Sembrowich, Stoll and Wilensky. This committee which met once in 1995 evaluates
qualifications required and candidates for positions on the Board and recommends
Board committee composition.
5
<PAGE>
The Nominating Committee will consider nominees for Board membership
submitted by shareholders. Nominations by shareholders must be made pursuant to
timely notice in writing to the Corporate Secretary at One Lillehei Plaza, St.
Paul, Minnesota 55117. Candidates for director should be persons with broad
training and experience in their chosen fields who have earned distinction in
their activities. Notice by the shareholder to be timely must be received
between October 1 and November 30 of the year preceding the annual meeting. The
notice shall set forth certain information concerning such shareholder and the
nominees, including their names and addresses, their principal occupation or
employment, the capital stock of the Company which they beneficially own, such
other information as would be required in a proxy statement soliciting proxies
for the election of the nominees and the consent of each nominee to serve as a
director if so elected. The chairman of the Committee may refuse to acknowledge
the nomination of any person not made in compliance with the foregoing
procedure.
CERTAIN TRANSACTIONS. Mr. Garrett, a director of the Company, is a partner
in the law firm of Lindquist & Vennum P.L.L.P. which was paid for legal services
rendered to the Company during the last fiscal year. It is anticipated that
Lindquist & Vennum P.L.L.P. will continue to perform legal services for the
Company during the current fiscal year.
Lawrence A. Lehmkuhl, the Company's former President and Chief Executive
Officer and Chairman of the Board, and the Company executed a Consulting
Agreement (the "Agreement") in February 1995 whereby Mr. Lehmkuhl agreed to
provide the Company with consulting services with respect to general corporate
matters. The Agreement expired on December 31, 1995. Total payments under the
Agreement were $18,333. The Company and Mr. Lehmkuhl pay annually the premium
for a life insurance policy for Mr. Lehmkuhl. In 1995, the Company's payments
totalled $74,390.
In connection with the relocations of Messrs. Sivertson and Shepherd, and
one other executive officer, Mr. Kevin T. O'Malley, the Company purchased
through a third party relocation company, at appraised values, the former
residences of these individuals. Home equity advances made during 1994 were
$406,568, $159,394, and $160,485, for Messrs. Sivertson, Shepherd and O'Malley,
respectively. These advances were repaid during 1995.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION. The following table shows,
for the fiscal years ending December 31, 1995, 1994 and 1993, the cash
compensation paid by the Company and certain other compensation paid or accrued
for those years, to the Company's Chief Executive Officer, and to each of the
other four most highly compensated named executive officers of the Company whose
total cash compensation exceeded $100,000 during fiscal year 1995 in all
capacities in which they served.
6
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL ------------------------
COMPENSATION RESTRICTED
NAME AND ------------------------ STOCK ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS AWARDS (1) OPTIONS (2) COMPENSATION (3)
- -------------------------- --------- ----------- ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Ronald A. Matricaria 1995 $ 522,981 $ 549,130 $ -- 45,000 $ 37,339
Chairman, President and 1994 414,692 414,692 313,594 395,624 35,334
CEO 1993 284,615 358,250 307,500 600,000 807
Eric W. Sivertson (4) 1995 260,000 160,388 -- 19,500 28,984
President 1994 216,500 105,544 104,531 31,875 25,005
Pacesetter Division 1993 190,000 88,501 -- -- 16,034
John P. Berdusco 1995 192,479 100,445 -- 18,000 28,612
VP-Administration 1994 161,464 64,198 83,625 25,500 18,270
1993 69,885 -- -- 37,500 --
Terry L. Shepherd 1995 183,305 94,311 -- 18,000 19,150
President 1994 36,575 18,288 70,750 22,500 64
St. Jude Medical Division 1993 -- -- -- -- --
Stephen L. Wilson 1995 175,000 96,729 -- 19,500 26,957
VP-Finance and CFO 1994 166,787 68,866 83,625 25,500 24,662
1993 152,900 58,738 -- 6,000 14,480
</TABLE>
- ------------------------
Note: Certain columns have not been included in this table because the
information called for therein is not applicable to the Company or the
individuals named above for the periods indicated. In addition, "Other
Annual Compensation" was not listed because it did not exceed the lesser
of $50,000, or 10% of total salary and bonus for the named executive
officers. Stock options and stock option exercise prices have been
adjusted for the 50% stock dividend paid in November 1995.
(1) Upon employment by the Company in 1993, Mr. Matricaria was granted 15,000
shares of restricted stock. The restrictions fully lapsed on December 31,
1995. In 1994, restricted stock awards were made to Company officers.
Accelerated vesting of these restricted shares based on achievement of
targeted common stock price appreciation for 1994 and 1995 resulted in the
restrictions fully lapsing on December 31, 1995. Upon employment by the
Company in 1994, Mr. Shepherd was granted 3,000 shares of restricted stock.
The restrictions lapse annually over a four year period. At December 31,
1995, 2,250 shares with a market value of $96,750 remained restricted. Cash
dividends were paid on all restricted shares during 1994.
(2) No stock appreciation rights have been granted to the named executive
officers. Figures in this column represent the number of shares purchasable
upon exercise of stock options. In 1994, Mr. Matricaria was granted options
for 300,000 shares in recognition of his contribution to the diversification
of the Company. In 1993, Mr. Matricaria and Mr. Berdusco were granted
options for 600,000 shares and 37,500 shares, respectively, upon employment
by the Company.
(3) Includes Company retirement plan contributions and the value of Company
provided life insurance. For 1995, the Company's contributions to the
retirement plan, including contributions to a non-qualified retirement plan,
were $26,440, $26,440, $26,440, $18,639, and $26,440 for Messrs. Matricaria,
Sivertson, Berdusco, Shepherd and Wilson, respectively. The Company and Mr.
Matricaria entered into a Supplemental Executive Retirement Agreement
pursuant to which the Company established a $2.5 million funded trust for
Mr. Matricaria in which he becomes fully vested on October 1, 1996. This
trust was established to replace the value of the pension benefit
7
<PAGE>
Mr. Matricaria would have received had he remained with his previous
employer through that date. In addition, the Company provides Mr. Matricaria
with a $2.5 million face amount term life insurance policy. The 1995 premium
for this policy was $8,891.
(4) Mr. Sivertson resigned from the Company effective January 19, 1996.
The following table contains information concerning the grant of stock
options under the Company's 1994 Stock Option Plan to the named executive
officers during fiscal year 1995.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------------------
% OF
NUMBER OF TOTAL OPTIONS
SECURITIES GRANTED TO GRANT DATE
UNDERLYING EMPLOYEES EXERCISE EXPIRATION PRESENT
NAME OPTIONS GRANTED(1) IN 1995 PRICE/SHARE DATE VALUE (3)
- ------------------------- ------------------ ----------------- ----------- --------------------- -----------
<S> <C> <C> <C> <C> <C>
Ronald A. Matricaria 45,000(2) 7.3% $ 25.50 January 30, 2005 $ 526,500
Eric W. Sivertson 19,500(2) 3.2% 25.50 January 30, 2005 228,150
John P. Berdusco 18,000(2) 2.9% 25.50 January 30, 2005 210,600
Terry L. Shepherd 18,000(2) 2.9% 25.50 January 30, 2005 210,600
Stephen L. Wilson 19,500(2) 3.2% 25.50 January 30, 2005 228,150
</TABLE>
- ------------------------
(1) No stock appreciation rights were granted to the named executive officers
during the year ended December 31, 1995.
(2) Fifty percent of these options (the "performance options") become
exercisable if the Company's stock price reaches specified targets as of the
end of each fiscal year from 1995 through 1999. At December 31, 1995, 60% of
these performance options became exercisable as a result of a 69% increase
in the stock price from grant date. The balance of these options vest at the
rate of 25% annually on each of the anniversary dates from the grant date.
(3) The Company uses a variation of the Black-Scholes option pricing model to
establish grant date present value for the purposes of the above table. The
actual value, if any, will depend on the excess of the stock price over the
exercise price on the date the option is exercised. There is no assurance
that the value realized will be at or near the value as estimated by the
Black-Scholes model. The specific assumptions used in valuing the stock
options were as follows:
-Volatility of 31.2% representing the annual variance in the daily
percentage change in the price of the Company's common stock over the
six month period prior to the date of grant.
-Risk free rate of return of 7.56% representing the average six-year
treasury rate.
-Expected term of the options granted of six years representing the
average term of the options exercised in 1992 through 1995.
The following table sets forth information concerning the exercise of stock
options during the last fiscal year and unexercised options and stock
appreciation rights ("SARs") held as of the end of the fiscal year for the named
executive officers.
8
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FISCAL YEAR END (1) AT FISCAL YEAR END (1)(2)
SHARES ACQUIRED VALUE -------------------------- -----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------- ------------------- --------- ----------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
R. Matricaria -- $ -- 1,031,623 9,000 $ 20,689,767 $ 157,500
E. Sivertson -- -- 88,725 36,900 $ 1,954,501 $ 771,250
J. Berdusco -- -- 45,150 35,850 $ 979,125 $ 702,249
T. Shepherd -- -- 11,025 29,475 $ 203,719 $ 548,157
S. Wilson -- -- 64,350 22,275 $ 1,420,322 $ 424,687
</TABLE>
- ------------------------
(1) The Company has no stock appreciation rights (SARs) outstanding.
(2) Values were calculated using a price of $43.00 per share, the closing sale
price of the Company's common stock as reported by the NASDAQ National
Market System on December 29, 1995.
STOCK PERFORMANCE. The Securities and Exchange Commission requires that the
Company include in this proxy statement a line-graph presentation comparing
cumulative five-year shareholder returns on an indexed basis with the Standard
and Poor's (S&P) 500 Stock Index and either a nationally recognized industry
standard or an index of peer companies selected by the Company. The Board of
Directors has approved the use of the S&P Medical Products and Supplies Index as
its peer group index. The table below compares the cumulative total return as of
the beginning of each of the Company's last five fiscal years assuming $100 was
invested as of December 31, 1990 in the common stock of the Company, the S&P
Medical Products and Supplies Index and the S&P 500 Stock Index, assuming the
reinvestment of all dividends. The Indexes are weighted based on market
capitalization at the time of each reported data point. The following graph
shall not be deemed incorporated by reference by any general statement
incorporating by reference this proxy statement into any filing under the
Securities Act of 1933 (the "1933 Act") or the Securities and Exchange Act of
1934 (the "1934 Act"), except to the extent that the Company specifically
incorporates this information by reference and shall not otherwise be deemed
filed under the 1933 Act or the 1934 Act.
9
<PAGE>
SHAREHOLDER RETURN PERFORMANCE GRAPH
(DIVIDENDS REINVESTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SHAREHOLDER RETURN PERFORMANCE GRAPH
(DIVIDENDS REINVESTED)
S&P MEDICAL
ST. JUDE PRODUCTS AND S&P 500
MEDICAL, INC. SUPPLIES INDEX INDEX
<S> <C> <C> <C>
1990 $100.0 $100.0 $100.0
1991 $160.9 $163.1 $130.0
1992 $122.6 $139.7 $139.7
1993 $78.5 $106.6 $153.5
1994 $118.7 $126.1 $155.5
1995 $192.6 $212.6 $213.2
</TABLE>
EMPLOYMENT, TERMINATION AND CHANGE-IN-CONTROL AGREEMENTS. In April 1993,
the Board approved an employment agreement for Mr. Matricaria through December
31, 1997. Pursuant to the terms of the agreement, Mr. Matricaria receives a
minimum annual base salary of $400,000 and customary fringe benefits, including
an opportunity to earn a bonus. If Mr. Matricaria's employment is terminated
prior to December 31, 1997, for any reason other than "good cause," he will
receive monthly payments based on his then existing base salary and bonuses for
the previous two years, except that any such monthly payment will not be made
past December 31, 1997. "Good cause" means acting in bad faith or dishonesty,
violating any law of any domestic or international government to which the
Company is bound, or performing duties with gross negligence. The Company and
Mr. Matricaria entered into a Supplemental Executive Retirement Agreement
pursuant to which the Company established a $2.5 million funded trust for Mr.
Matricaria in which he becomes fully vested on October 1, 1996. This trust was
established to replace the value of the pension benefit Mr. Matricaria would
have received had he remained with his previous employer through that date.
Pursuant to Board of Directors approval, the Company has entered into
employment agreements with thirteen of its officers, including the named
executive officers. In the event of any "change in control" as defined in the
agreements and for a period of three years thereafter, if an officer's
employment is terminated (i) by the Company for reasons other than death,
retirement, disability or "cause," or (ii) by the officer for "good reason,"
then the Company shall pay a severance payment equal to two times the prior
twelve months' compensation if the officer's employment with the Company has
exceeded three years and one times the prior twelve months' compensation if such
employment was less than three years, except in the case of Mr. Matricaria, who
immediately qualified for a severance payment equal to twice his prior twelve
months' compensation. "Cause" means conviction by a court of competent authority
for felony criminal conduct. "Good reason" means substantial and material
reduction of principal duties, responsibilities and reporting obligations or a
reduction in annual compensation. In general, a change in control occurs when
there has been any change in the controlling persons reported in the Company's
proxy statements, when 40% or more of the Company's outstanding voting stock is
acquired by any person, or when current members of the Board of Directors or
their successors elected or nominated by such members cease to be a majority of
10
<PAGE>
the Board of Directors. If a change of control had occurred at the end of 1995,
the following named executive officers would have received the payments
indicated pursuant to their employment agreements: Mr. Matricaria, $1,930,546,
Mr. Sivertson, $770,980, Mr. Berdusco, $273,927, Mr. Shepherd, $218,843 and Mr.
Wilson, $522,232.
INDEMNIFICATION AGREEMENTS. The Company has entered into indemnification
agreements with each of its directors and officers which provide for
indemnification against certain costs incurred by each director and officer made
or threatened to be made a party to a proceeding because of his or her official
capacity as a director or officer. The indemnification agreements, together with
the Company's Bylaws, provide for indemnification to the fullest extent
permitted by Minnesota law.
DIRECTOR COMPENSATION. Each non-employee director receives a retainer of
$2,500 per month plus $1,000 for each Board meeting attended. Directors are
reimbursed for expenses incurred in connection with travel and lodging when
attending meetings of the Board or otherwise engaged in Company business.
Payments to Mr. Garrett are charged to legal fees invoiced by the law firm of
Lindquist & Vennum P.L.L.P. to the Company.
Under the 1991 Stock Plan (the "1991 Plan"), each person who is not an
employee of the Company and who is elected, re-elected or serving an unexpired
term as a director at any annual or special meeting of shareholders shall, as of
the date of such election or re-election, automatically receive an option to
purchase 3,000 shares of common stock at an option price of not less than 100%
of the fair market value of the Company's common stock on such date. All such
options are designated as non-qualified stock options with ten-year terms. The
maximum number of shares as to which the 1991 Plan options may be granted to any
non-employee director shall be 45,000 shares. Each of the options granted under
the 1991 Plan is exercisable by the optionee after the six month anniversary
date of the option grant. At the 1995 annual meeting of shareholders, each
non-employee director at that time was granted an option to purchase 3,000
(4,500 shares post-split) shares at $44.00 ($29.33 post-split) per share.
The Company's retirement plan for each non-employee director provides for
the payment of an annual benefit equal to the average of the annual retainer
paid to the director during his or her service as a director with a minimum
annual benefit of $24,000. The retirement benefit, which is payable to directors
who have served five years or more, will commence at the later of the time of
retirement or when the director becomes 60 years old. In the event of any change
of control as defined in the plan, directors become immediately vested in the
plan whether or not they have completed five years of service. The retirement
benefit is payable over a number of years equal to the director's years of
service as a member of the Board of Directors. For purposes of the payment term,
years of service after January 1, 1988 are counted as full years and years of
service prior to that time are counted as one-half a year.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Board of Directors is
responsible for administering the compensation program for the Company's
executive officers including the named executive officers. The Committee is
composed exclusively of independent, non-employee directors who are not eligible
to participate in any of the executive compensation programs. All decisions by
the Committee relating to the compensation of the Company's executive officers
are reviewed by the Board of Directors.
The following report shall not be deemed incorporated by reference by any
general statement incorporating by reference this proxy statement into any
filing under the 1933 Act or the 1934 Act, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under the 1933 Act or the 1934 Act.
Annually the Committee evaluates the Company's executive compensation
programs in relation to the programs offered by other medical products and
supplies companies. This analysis ensures the
11
<PAGE>
Committee has sufficient comparative data with respect to overall compensation
levels. There were eighteen medical products and supplies companies included in
the most recent analysis. Certain of these companies are included in the S&P
Medical Products and Supplies group which is used for the purpose of comparing
shareholder returns in the shareholder return performance graph. Some of the
companies included in the S&P Medical Products and Supplies group do not
participate in the compensation survey. The Committee's objective is to attract
and retain talented individuals by targeting total executive compensation at the
60th percentile of the market, defined as the previously referenced eighteen
medical products and supplies peer group companies.
In recognition of Code Section 162(m) of the Internal Revenue Code (the
"IRC"), which limits the deductibility of certain executive compensation to $1
million per year, the Committee will, to the extent programs can be excluded
from the $1 million limit and to the extent no pre-existing, contractual
obligations exist, take the necessary action to secure full tax deductibility
under the IRC.
COMPENSATION PHILOSOPHY
The Company's recent growth and diversification activities together with
worldwide health care reform and increased competitive pressures present
significant challenges to the Company's management. The Committee believes that,
if the Company is to continue its success, its executive compensation program
must have the flexibility to attract and retain the highest quality employees
available worldwide. Further, the executive compensation program must provide
incentives which will reward key managers for aggressively pursuing the actions
necessary to improve the Company's performance and enhance long-term shareholder
value.
The Company's executive compensation program is based upon a
pay-for-performance philosophy. There are three components to the Company's
executive compensation program: base salary, an annual cash incentive bonus
payment and long-term stock based incentives. The Company is committed to a
strong link between its business and strategic goals and its compensation
program. The financial goals for certain elements of the compensation program
are reviewed and approved by the Board in conjunction with its approval of the
Company's strategic and operating plans.
BASE SALARY. An executive's base salary is determined by an assessment of
his or her sustained performance, advancement potential, experience,
responsibility, scope and complexity of the position, current salary in relation
to the range designated for the job and salary levels for comparable positions
at the peer group companies referenced above. Additionally, the Committee sets
base salaries for executive officers based on the executive's contribution to
the Company's success through operational improvements and strategic
initiatives. Factors considered in determining base salary are not assigned
pre-determined relative weights. Based on the survey information available from
the eighteen medical products and supplies peer group companies, the executive
officers' salary levels are currently estimated to be at the 50th percentile.
The Company has a non-qualified deferred compensation plan for certain highly
compensated employees. This plan provides for employees to defer base salary and
annual incentive payments and for the Company to supplementally contribute
amounts to restore benefits lost due to legal limits on qualified retirement
plan contributions.
ANNUAL INCENTIVES. Payments under the Company's annual cash incentive plan,
the Management Incentive Compensation Plan (the "Plan"), are based on the
Company's level of achievement of annual earnings per share targets, divisional
profitability targets and individual objectives, all as established under the
Company's annual operating plan. There is a pre-assigned relative weighting
ascribed to each of these factors. Payments under the Plan are based on one or a
combination of these factors.
Executive officers are eligible for normal annual cash incentive payments
ranging from 40% to 50% of base salary, except for the Chief Executive Officer
who is eligible for a normal incentive payment of up to 100% of base salary. The
payments can increase by up to 50% of the normal payments based on performance
above targeted levels and decrease substantially if actual results fail to meet
12
<PAGE>
targeted levels. For fiscal year 1995, the performance of the Company exceeded
targeted profitability levels and; therefore, the Committee approved annual
incentive awards that were slightly above the normal levels referenced above.
Mr. Matricaria's annual incentive award was based on the Company's
performance in achieving its 1995 earnings per share target. For fiscal 1995,
Mr. Matricaria received an award of 105% of base salary based upon the Company's
overachievement of its earnings per share target.
LONG-TERM INCENTIVES. The Company's overall long-term compensation
philosophy is that long-term incentives should be directly related to the
creation of shareholder value, thus providing a strong link between management
and shareholders. In support of this philosophy, the Company has awarded to its
executive officers stock options and to a limited extent, restricted stock.
STOCK OPTION AWARDS. Stock options encourage and reward executive officers
for creating shareholder value as measured by stock price appreciation. Stock
options have been awarded at an exercise price equal to the fair market value of
the stock on the date of grant and therefore, only have value if the price of
the Company's stock appreciates in value from the date the stock options are
granted. The executive officers and shareholders benefit equally from such stock
price appreciation.
Stock options are awarded annually consistent with the Company's objective
to provide (i) a long-term equity interest in the Company, and (ii) an
opportunity for a greater financial reward if long-term performance is
sustained. To encourage a longer-term perspective, the options cannot be
exercised immediately. Generally options become exercisable over a four-year
period. The number of options granted to each executive officer falls within a
pre-determined range, set and approved annually by the Committee. Individual
grant size is dependent upon the Company's future business plans and the
executive officer's ability to positively impact those plans, the executive
officer's position and level of responsibility within the Company, and an
evaluation of the executive officer's performance. No pre-assigned relative
weight is ascribed to any of these factors. Stock options may be granted which
may become exercisable at accelerated rates if certain performance measures are
met. If the performance measures are not met, the options typically vest at
expiration of the term of the option, generally ten years subsequent to the date
of grant. See "1995 Performance Stock Option Program" below.
Stock ownership guidelines were established in 1995. These guidelines set
forth stock ownership targets which management and board members are expected to
achieve. Targeted stock ownership levels range from one to three times base
salary for employees or retainer for Board members. Increased insider ownership
will further align management and Board interests with shareholder interests.
RESTRICTED STOCK AWARDS. Restricted stock awards have been utilized as an
incentive to enhance the Company's financial performance. In addition, the
Committee believes restricted shares provide an immediate and direct link to
shareholder interests. The timing and number of shares granted is based on the
Company's future business plans and the executive's ability to positively impact
those plans. Restricted stock awards may be made subject to meeting certain
performance measures and generally vest over a four-year period. However,
accelerated vesting may be available based on the achievement of performance
measures.
1995 PERFORMANCE STOCK OPTION PROGRAM. In January 1995, the Board approved
a performance stock option program under which management has the opportunity to
accelerate vesting of stock options by achieving predetermined, aggressive
annual stock price appreciation targets. The purpose of this program is to
motivate management to significantly increase shareholder value through
successful execution of the Company's strategic and operating plans. At December
31, 1995, 60% of the stock options granted under this program vested based on a
69% appreciation in the stock price from the January 1995 grant date. Had the
stock price failed to appreciate to at least the preset target level, no
accelerated vesting of options would have occurred.
13
<PAGE>
CHIEF EXECUTIVE OFFICER COMPENSATION
Annually the Committee commissions a study by an independent compensation
consulting firm which covers the Company's executive compensation program. The
analysis addresses all compensation elements and compares the Company's program
to the executive compensation programs of other leading medical products and
supplies companies in the peer group noted above. This analysis ensures the
Committee has sufficient comparative data with respect to overall compensation
levels.
In determining Mr. Matricaria's compensation, the Committee considered his
significant experience and industry knowledge as well as the Company's continued
high level of profitability during a time of global industry consolidation and
health care reform. In addition, the Committee annually evaluates Mr.
Matricaria's leadership and performance. In determining Mr. Matricaria's 1995
compensation, the Committee noted that under his direction the Company achieved
its 1994 financial objectives and began implementing a diversification strategy
for St. Jude Medical through a number of equity investments and strategic
alliances and, more importantly, a major accretive acquisition. The Pacesetter
acquisition was a major step to transform St. Jude into a more broadly based
global leader in the medical device industry.
In recognition of the Company's 62% increase in 1995 market valuation
following a 50% market valuation increase in 1994, the Committee accelerated
vesting of 520,498 time-based stock options which were granted to Mr. Matricaria
in 1993, 1994 and 1995. In addition the Committee removed the restrictions on
7,500 shares which were issued in 1993.
SUBMITTED BY THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
KENNETH G. LANGONE
WILLIAM R. MILLER
2. PROPOSAL TO APPROVE AN AMENDMENT TO ST. JUDE MEDICAL, INC.'S ARTICLES OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
FROM 100,000,000 TO 250,000,000
The Articles of Incorporation of the Company, as amended and presently in
effect, authorize the issuance of 100,000,000 shares of common stock, $ .10 par
value per share, and 25,000,000 shares of preferred stock, $1.00 par value per
share. As of December 31, 1995 , there were 69,991,700 shares of common stock
outstanding and 30,008,300 shares of common stock were authorized but unissued.
Of the unissued shares, 9,037,633 shares were reserved for issuance pursuant to
the Company's various stock plans, approximately 10,000,000 shares were
committed as consideration for the proposed acquisition of Daig Corporation, and
approximately 149,000 shares were committed as consideration for the acquisition
of The Heart Valve Company, a previously 50% owned joint venture with Hancock
Jaffe Laboratories , leaving a balance of approximately 10,800,000 authorized,
unissued, unreserved and uncommitted shares of common stock.
The Board of Directors recommends that the authorized number of shares of
common stock be increased from 100,000,000 to 250,000,000 both at par value of
$.10 per share. If approved, Article VII of the Company's Articles of
Incorporation, as amended, will be amended to increase the authorized shares of
common stock of the Company to 250,000,000. No change in the authorized
preferred stock is being proposed.
The Board of Directors believe that the increase in the number of authorized
shares will provide greater flexibility for the Board to declare stock dividends
or stock splits; use stock for future acquisitions; raise equity capital; adopt
additional employee benefit plans or increase the shares available under
existing plans or to use the additional shares for other general corporate
purposes.
The proposed shares of common stock for which authorization is sought would
be part of the existing class of such stock and would have no effect upon the
terms of the common stock or the rights
14
<PAGE>
of the holders of such stock. If this proposed amendment is adopted, the
additional authorized shares of common stock will be available for issuance from
time to time at the discretion of the Board of Directors without further action
by the shareholders, although use of such shares for certain employee benefit
plans or other transactions may require shareholder approval. The proposed
additional authorized shares of common stock would have the same rights and
privileges as the shares of common stock presently outstanding. Shareholders of
the Company's common stock do not have preemptive rights to purchase additional
shares of common stock.
REQUIRED VOTE:
The affirmative vote of the holders of a majority of the shares of the
Company's common stock represented and entitled to vote at the Annual Meeting is
required to approve the amendment to the Articles of Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING
RESOLUTIONS THAT WILL BE PRESENTED AT THE MEETING
RESOLVED, that the first sentence of Article VII of the corporation's
Articles of Incorporation be replaced with the following: "The authorized
capital stock of this corporation shall be Two Hundred Fifty Million
(250,000,000) shares of common stock of par value of Ten Cents ($.10) per
share (the "Common Stock") and Twenty-Five Million (25,000,000) shares of
preferred stock of the par value of One dollar ($1.00) per share (the
"Preferred Stock")."
RESOLVED FURTHER, that the officers of the corporation, acting individually,
are each authorized to execute such documents and certificates and to take
such action as may be necessary to give effect to the previous resolution.
3. RATIFICATION OF RE-APPOINTMENT OF INDEPENDENT AUDITORS
The accounting firm of Ernst & Young LLP has been the Company's auditing
firm since its inception. Ernst & Young LLP has been re-appointed by the Board
of Directors as the Company's auditing firm for the current year. Although
shareholder approval is not required, the Board of Directors requests
shareholder ratification of Ernst & Young LLP's re-appointment. In the event the
appointment of Ernst & Young LLP should not be ratified by the shareholders, the
Board of Directors will make another appointment to be effective at the earliest
possible time.
A representative from Ernst & Young LLP will be available at the Annual
Meeting of Shareholders to answer any appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
RATIFICATION OF THE RE-APPOINTMENT OF ERNST & YOUNG LLP
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
The proxy rules of the Securities and Exchange Commission permit
shareholders, after timely notice to issuers, to present proposals for
shareholder action in issuer proxy statements where such proposals are
consistent with applicable law, pertain to matters appropriate for shareholder
action and are not properly omitted by issuer action in accordance with the
proxy rules. The Company's annual meeting for the fiscal year ending December
31, 1996 is expected to be held on or about May 1, 1997, and proxy materials in
connection with that meeting are expected to be mailed on or about March 31,
1997. Except as indicated below, shareholder proposals prepared in accordance
with the proxy rules must be received by the Company on or before December 1,
1996.
The Bylaws of the Company establish an advance notice procedure with regard
to (i) certain business to be brought before an annual meeting of shareholders
of the Company; and (ii) the nomination by shareholders of candidates for
election as directors.
15
<PAGE>
PROPERLY BROUGHT BUSINESS. The Bylaws provide that at the annual meeting
only such business may be conducted as is of a nature that is appropriate for
consideration at an annual meeting and has been either specified in the notice
of the meeting, otherwise properly brought before the meeting by or at the
direction of the Board of Directors, or otherwise properly brought before the
meeting by a shareholder who has given timely written notice to the Secretary of
the Company of such shareholder's intention to bring such business before the
meeting. To be timely, the notice must be given by such shareholder to the
Secretary of the Company not less than 50 days nor more than 75 days prior to
the meeting (or if less than 60 days' notice or prior public disclosure of the
date of the annual meeting is given or made to shareholders, not later than the
tenth day following the day on which the notice of the date of the annual
meeting was mailed or such public disclosure was made). Notice relating to the
conduct of such business at an annual meeting must contain certain information
as described in Article I of the Company's Bylaws, which are available for
inspection by shareholders at the Company's principal executive offices pursuant
to Section 302A.461, subd. 4 of the Minnesota Statutes. Nothing in the Bylaws
precludes discussion by any shareholder of any business properly brought before
the annual meeting in accordance with the Company's Bylaws.
SHAREHOLDER NOMINATIONS. The Bylaws provide that a notice of proposed
shareholder nominations for the election of directors must be timely given in
writing to the Secretary of the Company prior to the meeting at which directors
are to be elected. To be timely, the notice must be given by such shareholder to
the Secretary of the Company not less than 50 days nor more than 75 days prior
to the meeting (or if less than 60 days' notice or prior public disclosure of
the date of the annual meeting is given or made to shareholders, not later than
the tenth day following the day on which the notice of the date of the annual
meeting was mailed or such public disclosure was made). The notice to the
Company from a shareholder who intends to nominate a person at the meeting for
election as a director must contain certain information as described in Article
II of the Company's Bylaws, which are available for inspection by shareholders
at the Company's principal executive offices pursuant to Section 302A.461, subd.
4 of the Minnesota Statutes. If the presiding officer of a meeting of
shareholders determines that a person was not nominated in accordance with the
foregoing procedure, such person will not be eligible for election as a
director.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT. Section 16(a) of the
Exchange Act requires the Company's directors and executive officers to file
with the Securities and Exchange Commission reports of ownership and changes in
ownership of the Company's common stock, and the Company is required to identify
any of those persons who fail to file such reports on a timely basis. All such
1995 filings were filed on a timely basis.
GENERAL
All proxies properly executed will be voted in the manner directed by
shareholders. If no direction is made, proxies will be voted "FOR" the election
of the Board of Director's nominees for directors and "FOR" proposals 2 and 3.
The management of the Company knows of no matter other than the foregoing to
be brought before the meeting. However, the enclosed proxy gives discretionary
authority in the event any additional matters should be presented.
All expenses in connection with solicitation of proxies will be borne by the
Company. The Company will pay brokers, nominees, fiduciaries, or other
custodians their reasonable expenses for sending proxy material to, and
obtaining instructions from, persons for whom they hold stock of the Company.
The Company expects to solicit proxies by mail, but directors, officers, and
other employees of the Company may also solicit in person, by telephone, by
facsimile or by mail.
16
<PAGE>
The Annual Report of the Company for the year ended December 31, 1995 is
enclosed herewith. Shareholders may receive without charge a copy of the
Company's Form 10-K Annual Report, including financial statements and schedules
thereto, as filed with the Securities and Exchange Commission, by writing to:
Investor Relations, St. Jude Medical, Inc., One Lillehei Plaza, St. Paul,
Minnesota 55117.
By Order of the Board of Directors
Kevin T. O'Malley
ASSISTANT SECRETARY
March 27, 1996
17
<PAGE>
ST. JUDE MEDICAL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 9, 1996
The undersigned hereby appoints Ronald A. Matricaria, Stephen L. Wilson and
Kevin T. O'Malley or any one of them, as proxies, with full power of
substitution to vote all the shares of common stock which the undersigned would
be entitled to vote if personally present at the Annual Meeting of Shareholders
of St. Jude Medical, Inc., to be held May 9, 1996, at 9:30 a.m. at the Lutheran
Brotherhood Auditorium, Lutheran Brotherhood Building, 625 Fourth Avenue South,
Minneapolis, Minnesota, or at any adjournments thereof, upon any and all matters
which may properly be brought before the meeting or adjournments thereof, hereby
revoking all former proxies.
<TABLE>
<S> <C> <C> <C>
(1) ELECTION OF DIRECTORS / / FOR all nominees listed below / / WITHHOLD AUTHORITY
(EXCEPT AS MARKED TO THE CONTRARY BELOW) TO VOTE FOR ALL NOMINEES LISTED BELOW
Thomas H. Garrett III Roger G. Stoll Paul J. Chiapparone
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE WRITE THAT NOMINEE'S NAME IN THE SPACE
PROVIDED BELOW.)
----------------------------------------------------------------------------------------------------------------
(2) PROPOSAL TO APPROVE AN AMENDMENT TO ST. JUDE MEDICAL, INC.'S ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK FROM 100,000,000 TO 250,000,000.
/ / FOR / / AGAINST / / ABSTAIN
(3) PROPOSAL TO RATIFY THE RE-APPOINTMENT OF ERNST & YOUNG LLP AS THE INDEPENDENT AUDITORS OF THE CORPORATION
/ / FOR / / AGAINST / / ABSTAIN
(4) IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING.
</TABLE>
(CONTINUED ON REVERSE SIDE)
<PAGE>
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED ON PROPOSALS (1), (2),
AND (3) IN ACCORDANCE WITH THE SPECIFICATIONS MADE AND "FOR" THE NOMINEES LISTED
ABOVE AND PROPOSALS (2) AND (3) IF THERE IS NO SPECIFICATION.
PLEASE DATE AND SIGN exactly as your name(s) appears below indicating, where
proper, official position or representative capacity in which you are signing.
When signing as executor, administrator, trustee or guardian, give full title as
such; when shares have been issued in names of two or more persons, all should
sign.
Dated , 1996
-----------------------------------
-----------------------------------
Signature of Shareholder
-----------------------------------
Signature of Shareholder
