<PAGE> 1
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:
[ ] 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
BIOMET, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
BIOMET, INC.
- --------------------------------------------------------------------------------
(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
[LOGO OF BIOMET, INC.]
To the Shareholders of Biomet, Inc.:
You are cordially invited to attend the Annual Meeting of Shareholders
of Biomet, Inc. to be held on Saturday, September 26, 1998 at 10:00 a.m., local
time, at the Ramada Inn, 2519 E. Center Street, Warsaw, Indiana.
At the meeting, shareholders will vote on the election of four persons to
the Board of Directors, the approval of the Biomet, Inc. 1998 Qualified and
Non-Qualified Stock Option Plan and the ratification of the selection of
PricewaterhouseCoopers LLP as independent accountants for the current year.
Details can be found in the accompanying Notice and Proxy Statement.
We hope you are planning to attend the Annual Meeting personally and we
look forward to meeting with you. Please check the appropriate "attendance" box
on your proxy card. However, because the vote of each shareholder is of utmost
importance, we kindly request that you complete, date and sign your proxy card
and return it to us promptly in the enclosed envelope, whether or not you
currently plan to attend the Annual Meeting. You may revoke your proxy at any
time before it is voted by giving written notice to the Secretary of the Company
or by filing a properly executed proxy bearing a later date.
On behalf of the Board of Directors and management of Biomet, Inc., I would
like to extend our appreciation for your continued support and confidence.
Sincerely yours,
BIOMET, INC.
/s/ Dane A. Miller, Ph.D.
Dane A. Miller, Ph.D.
President and Chief
Executive Officer
<PAGE> 3
[LOGO OF BIOMET, INC.]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 26, 1998
TO THE SHAREHOLDERS OF BIOMET, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Biomet,
Inc. (the "Company") will be held on Saturday, September 26, 1998 at 10:00 a.m.,
local time, at the Ramada Inn, 2519 E. Center Street, Warsaw, Indiana, for the
following purposes:
(1) To elect four directors to serve for terms of three years each.
(2) To approve the Biomet, Inc. 1998 Qualified and Non-Qualified Stock Option
Plan.
(3) To ratify the selection by the Board of Directors of PricewaterhouseCoopers
LLP as independent accountants for the Company for the fiscal year ending
May 31, 1999.
(4) To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Shareholders of record as of the close of business on July 20, 1998 are
entitled to receive notice of and to vote at the Annual Meeting.
We urge you to complete, date and sign the enclosed proxy and return it to
us promptly in the envelope provided, even if you hold only a few shares and
regardless of whether or not you expect to be present at the Annual Meeting in
person. You may revoke your proxy at any time prior to its exercise by filing
with the Secretary of the Company a properly executed instrument revoking such
proxy or by filing a properly executed proxy bearing a later date.
By Order of the Board of Directors,
/s/ Daniel P. Hann, Secretary
Daniel P. Hann, Secretary
August 11, 1998
Warsaw, Indiana
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN
THE ENCLOSED ENVELOPE.
<PAGE> 4
[BIOMET, INC.]
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 26, 1998
GENERAL INFORMATION
This Proxy Statement is furnished to the shareholders of Biomet, Inc. (the
"Company") in connection with the solicitation by the Board of Directors of the
Company of proxies to be voted at the Annual Meeting of Shareholders to be held
at the Ramada Inn, 2519 E. Center Street, Warsaw, Indiana, on Saturday,
September 26, 1998, at 10:00 a.m., local time, or any adjournment thereof. This
Proxy Statement and the accompanying form of proxy were first mailed to
shareholders on or about August 11, 1998.
Each properly executed proxy returned prior to the meeting will be voted in
accordance with the directions contained therein. Proxies may be revoked at any
time prior to exercise by written notice to the Secretary of the Company or by
filing a properly executed proxy bearing a later date. Appropriate forms will be
available at the Annual Meeting for shareholders who wish to vote in person.
As of July 20, 1998, the record date for the Annual Meeting, there were
112,123,018 Common Shares of the Company issued and outstanding, each of which
is entitled to one vote on each matter to come before the meeting.
Shareholders do not have cumulative voting rights.
All expenses in connection with the solicitation of proxies will be paid by
the Company. The Company will also provide to all brokers, dealers, banks and
voting trustees, and their nominees, copies of this Proxy Statement, the
accompanying form of proxy and the Annual Report for mailing to beneficial
owners and, upon request therefor, will reimburse such record holders for their
reasonable expenses in connection therewith. The Company expects to solicit
proxies primarily by mail, but directors, officers and employees of the Company
may also solicit in person or by telephone.
Shareholder proposals to be considered for presentation at the 1999 Annual
Meeting of Shareholders must be submitted in writing and received by the
Company's Secretary by April 5, 1999. The mailing address of the principal
executive offices of the Company is Airport Industrial Park, P.O. Box 587,
Warsaw, Indiana 46581-0587.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain data with respect to those persons
known by the Company to be the beneficial owners of more than 5% of the issued
and outstanding Common Shares of the Company as of July 20, 1998. Except as
otherwise indicated in the notes to the table, each shareholder has sole voting
and investment power with respect to the shares indicated.
<PAGE> 5
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE PERCENT
BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS
------------------- ----------------------- --------
<S> <C> <C>
State Farm Mutual Automobile 8,277,000(1) 7.4%
Insurance Company and
related entities
One State Farm Plaza
Bloomington, Illinois 61710
FMR Corp. 7,269,316(2) 6.5%
82 Devonshire Street
Boston, Massachusetts 02109-3614
</TABLE>
(1) According to information contained in a Schedule 13G filing made by
State Farm Mutual Automobile Insurance Company ("State Farm") dated January
20, 1998, State Farm acquired these shares for investment purposes in the
ordinary course of its business.
(2) According to information contained in a Schedule 13G filing made by FMR
Corp. ("FMR") dated February 14, 1998, FMR has no voting power with respect to
6,895,300 shares, and acquired these shares for investment purposes in the
ordinary course of its business.
SHARE OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth beneficial ownership of Common Shares of the
Company as of July 20, 1998 by each director of the Company, each executive
officer of the Company named in the Summary Compensation Table herein, and by
all directors and executive officers of the Company as a group. Unless otherwise
stated, the beneficial owners exercise sole voting and/or investment power over
their shares.
<TABLE>
<CAPTION>
NAME OF NUMBER OF PERCENT
BENEFICIAL OWNER SHARES BENEFICIALLY OWNED OF CLASS
- ---------------- ------------------------- --------
<S> <C> <C>
Garry L. England 142,156 (1) 0.1%
Jerry L. Ferguson 1,552,228 (2) 1.4%
Daniel P. Hann 90,588 (3) *
C. Scott Harrison, M.D 409,896 (4) 0.4%
M. Ray Harroff 40,143 (5) *
Thomas F. Kearns, Jr 5,859 *
Dane A. Miller, Ph.D 4,512,418 (6) 4.0%
Jerry L. Miller 2,025,700 (7) 1.8%
Kenneth V. Miller 8,000 (8) *
Charles E. Niemier 409,474 (9) 0.4%
Niles L. Noblitt 2,854,468 (10) 2.5%
Joel P. Pratt 145,825 (11) 0.1%
Marilyn Tucker Quayle 5,000 (12) *
Prof. Dr. Bernhard Scheuble 0 --
L. Gene Tanner 71,886 *
All Directors and Executive Officers as a Group
(17 persons, including the foregoing) 12,404,619 (13) 11.1%
</TABLE>
*Represents less than .1% of the Company's issued and outstanding Common Shares.
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<PAGE> 6
(1) Includes 27,036 shares held jointly with his wife, as to which Mr. England
has shared voting and investment power; 9,518 shares held for Mr.
England's account in the Company's Employee Stock Bonus Plan qualified
under Section 401(a) of the Internal Revenue Code (the "ESBP"), as to
which Mr. England has voting power but no investment power; 13,409 shares
held in Mr. England's account in the Company's Profit Sharing Plan and
Trust qualified under Section 401(k) of the Internal Revenue Code (the
"401(k)"), as to which Mr. England has no voting or investment power;
1,800 shares held in an individual retirement account ("IRA") for Mr.
England's benefit as to which he has investment power but no voting power;
2,550 shares owned of record by Mr. England's minor children, as to which
Mr. England has no voting or investment power and disclaims beneficial
ownership; and 28,850 shares subject to options exercisable within 60
days.
(2) Includes 1,065,360 shares held jointly with his wife, as to which Mr.
Ferguson has shared voting and investment power; 210,836 shares owned of
record by his wife and 17,280 shares held in an IRA for her benefit, as to
which Mr. Ferguson has no voting or investment power and disclaims
beneficial ownership; 1,024 shares held for Mr. Ferguson's account in the
ESBP, as to which Mr. Ferguson has voting power but no investment power;
and 26,136 held in an IRA for his benefit as to which Mr. Ferguson has
investment power but no voting power.
(3) Includes 200 shares jointly held with his wife, as to which Mr. Hann has
shared voting and investment power; 22,187 shares owned of record by his
wife as to which Mr. Hann has no voting or investment power and disclaims
beneficial ownership; 3,969 shares held for Mr. Hann's account in the
ESBP, as to which Mr. Hann holds voting power but no investment power;
5,148 shares held in Mr. Hann's account in the Company's 401(k), as to
which Mr. Hann has no voting or investment power; and 41,750 shares
subject to options exercisable within 60 days.
(4) Includes 13,572 shares subject to options exercisable by Dr. Harrison
within 60 days.
(5) Includes 5,000 shares subject to options exercisable by Mr. Harroff within
60 days.
(6) Includes 4,423,454 shares held jointly with his wife, as to which Dr.
Miller has shared voting and investment power; 19,988 shares held in an
IRA for the benefit of his wife, as to which Dr. Miller has no voting or
investment power and disclaims beneficial ownership; 13,429 shares held
for Dr. Miller's account in the ESBP, as to which Dr. Miller holds voting
power but no investment power; 9,109 shares held in Dr. Miller's account
in the Company's 401(k), as to which he has no voting or investment power;
and 45,988 held in an IRA for the benefit of Dr. Miller, as to which he
has investment power but no voting power.
(7) Includes 110,000 shares held in trust for the benefit of Mr. Miller's
minor children, as to which Mr. Miller has shared voting and investment
power and disclaims beneficial ownership; 1,869,871 shares held in an
Estate Planning trust for the benefit of Mr. Miller, as to which Mr.
Miller has shared voting and investment power; and 5,000 shares subject to
options exercisable by Mr. Miller within 60 days.
(8) Includes 5,000 shares subject to options exercisable by Mr. Miller within
60 days.
(9) Includes 92,984 shares owned of record by Mr. Niemier's wife and 13,588
shares held in an IRA for her benefit, as to which Mr. Niemier has no
voting or investment power and disclaims beneficial ownership;
3
<PAGE> 7
11,509 shares held for Mr. Niemier's account in the ESBP, as to which Mr.
Niemier holds voting power but no investment power; 15,954 shares held in
Mr. Niemier's account in the Company's 401(k), as to which he has no
voting or investment power; 31,592 shares held in an IRA for Mr. Niemier's
benefit, as to which he has investment power but no voting power; 133,488
shares held in trust for the benefit of Mr. Niemier's children as to which
he has no voting or investment power and disclaims beneficial ownership;
and 14,250 shares subject to options exercisable within 60 days.
(10) Includes 21,600 shares held jointly with his wife, as to which he has
shared voting and investment power; 1,360,494 shares owned of record by
his wife and 14,400 shares held in an IRA for her benefit, as to which Mr.
Noblitt holds no voting or investment power and disclaims beneficial
ownership; 13,952 shares held for Mr. Noblitt's account in the ESBP, as to
which he holds voting power but no investment power; 15,495 shares held in
Mr. Noblitt's account in the Company's 401(k), as to which he has no
voting or investment power; 12,906 shares owned of record by his children,
as to which Mr. Noblitt has no voting or investment power and disclaims
beneficial ownership; 12,906 shares owned of record by his children, as to
which he has voting and investment power but disclaims beneficial
ownership; and 24,660 shares held in an IRA for the benefit of Mr. Noblitt
as to which he has investment power but no voting power.
(11) Includes 37,944 shares owned of record by his wife and 1,872 shares held
in an IRA for her benefit, as to which Mr. Pratt holds no voting or
investment power and disclaims beneficial ownership; 6,612 shares held for
Mr. Pratt's account in the ESBP, as to which he holds voting power but no
investment power; 5,028 shares held in Mr. Pratt's account in the
Company's 401(k), as to which he has no voting or investment power; 2,068
shares held in an IRA for the benefit of Mr. Pratt as to which he has
investment power but no voting power; and 43,000 shares subject to options
exercisable within 60 days.
(12) Includes 5,000 shares subject to options exercisable by Ms. Quayle within
60 days.
(13) Includes 8,007 shares held in the ESBP for the accounts of two executive
officers of the Company who are not directors and are not named in the
Summary Compensation Table herein, as to which they have voting power but
no investment power; 9,936 shares held in the Company's 401(k) for the
accounts of these executive officers, as to which they have no voting or
investment power; 15,225 shares held by the wives of these executive
officers, as to which they have no voting power or investment power and
disclaim beneficial ownership; 52,232 shares held jointly by these
executive officers and their wives, as to which they have shared voting
and investment power; and 30,724 shares subject to options exercisable by
these executive officers within 60 days.
ELECTION OF DIRECTORS (ITEM 1)
The Company's Bylaws divide the Board of Directors into three classes, with
one class to be elected at each annual meeting of shareholders. At the Annual
Meeting, the shareholders will vote to elect four directors in Class III to
serve for a three-year term expiring in 2001, and until their successors are
elected and qualified. Class I Directors and Class II Directors will not be
elected at the Annual Meeting and will continue in office until the annual
meetings of shareholders to be held in 1999 and 2000, respectively. The Board of
Directors has nominated the persons named below for election as Class III
Directors. The name, age, business background and tenure as a director of the
Company of each nominee and each director continuing in office are set forth
below. Jerry L. Miller and Kenneth V. Miller are brothers; no other family
relationship exists among any of the nominees or continuing directors. Except as
otherwise indicated, the principal occupations of the nominees and continuing
directors have not changed during the last five years. The nominees for director
have consented to
4
<PAGE> 8
serve, if elected, and the Company has no reason to believe that any of the
nominees will be unable to serve. Should any nominee become unavailable for any
reason, proxies will be voted for an alternate candidate chosen by the Board of
Directors, unless the Board of Directors reduces the number of directors. To be
elected a director, a nominee must receive the affirmative vote of a plurality
of votes of the Common Shares present or represented at the meeting and entitled
to vote in the election of directors. Withheld votes and broker non-votes (which
are treated as "withheld" votes) are not counted as votes in favor of any
nominee. Unless authority to vote for a nominee is withheld, the accompanying
proxy will be voted FOR the nominees named.
DIRECTORS STANDING FOR ELECTION
NAME, AGE AND BUSINESS EXPERIENCE
CLASS III: FOR A THREE-YEAR TERM EXPIRING AT THE 2001 ANNUAL MEETING OF
SHAREHOLDERS
M. RAY HARROFF, age 58 . . . . . . . . . . . . . . . . . Director since 1977
Mr. Harroff is one of the four founders of the Company and is President of
Stonehenge Links Village Development (real estate development). Mr. Harroff was
also President of Stonehenge Golf Club, Inc. (golf country club) until February
1998. On September 2, 1997, Mr. Harroff filed for protection under Federal
Bankruptcy laws. Also on September 2, 1997, Stonehenge Golf Club and Stonehenge
Links Village Development filed a petition for reorganization pursuant to
Chapter 11 of the United States Bankruptcy Code.
JERRY L. MILLER, age 52 . . . . . . . . . . . . . . . . Director since 1979
Member: Executive, Nominating, Audit, Compensation and Stock Option Committees.
Mr. Miller is a principal in Havirco (private investment management). Mr. Miller
is a director and a member of the Compensation Committee of the board of
directors of AvTech Laboratories, Inc. (pharmaceutical laboratory) and TEAM
Industries, Inc. (manufacturer of expanded polystyrene products).
CHARLES E. NIEMIER, age 42 . . . . . . . . . . . . . .. Director since 1987
Mr. Niemier is the Senior Vice President - International Operations of the
Company. Mr. Niemier is a trustee of Valparaiso University.
PROF. DR. BERNHARD SCHEUBLE, age 44 . . . . . . . . . . .. Director since 1998
Prof. Scheuble is CEO Pharma, and has been a General Partner and Member of the
Executive Board of Merck KGaA (pharmaceutical company) since April 1, 1998. From
1996 until 1998, Prof. Scheuble was Head of Pharma Ethicals, Merck KGaA and from
1995 to 1996 he was Head of Pharma International, Merck KGaA. Prior thereto,
Prof. Scheuble was General Manager Liquid Crystals Unit, E. Merck, Germany.
Prof. Scheuble is a director and member of the Compensation Committee of
Pharmaceutical Resources, Inc. (pharmaceutical company).
DIRECTORS CONTINUING IN OFFICE
NAME, AGE AND BUSINESS EXPERIENCE
CLASS I: TERM EXPIRES AT THE 1999 ANNUAL MEETING OF SHAREHOLDERS
C. SCOTT HARRISON, M.D., age 61 . . . . . . . . . . . . Director since 1994
Member: Executive Committee. Dr. Harrison is President of Bethany Crippled
Children Foundation. Dr. Harrison served as a consultant to the Company from
January 1995 to December 1996. Prior thereto, Dr. Harrison was the President,
Chief Executive Officer and Chairman of the Board of Kirschner Medical
Corporation.
5
<PAGE> 9
NILES L. NOBLITT, age 47. . . . . . . . . . . . . . . . . Director since 1977
Member: Executive and Stock Option Committees. Mr. Noblitt is one of the four
founders of the Company and is the Chairman of the Board of the Company. Mr.
Noblitt is also a trustee of Rose Hulman Institute of Technology.
KENNETH V. MILLER, age 50 . . . . . . . . . . . . . . . . Director since 1979
Member: Executive, Nominating, Audit, Compensation and Stock Option Committees.
Mr. Miller is a principal in Havirco, Inc. (private investment management). Mr.
Miller is a director and a member of the Compensation Committee of the Board of
Directors of AvTech Laboratories, Inc. (pharmaceutical laboratory) and TEAM
Industries, Inc. (manufacturer of expanded polystyrene products). Mr. Miller is
also a director of Keystone Community Bank.
L. GENE TANNER, age 65 . . . . . . . . . . . . . . . . . Director since 1985
Member: Audit Committee. Mr. Tanner is Vice Chairman of the Board of
NatCity Investments, Inc. (investment banking firm). Mr. Tanner is a director
of the Indiana Chamber of Commerce.
MARILYN TUCKER QUAYLE, age 49 . . . . . . . . . . . . . . Director since 1993
Ms. Quayle is an attorney engaged in private practice as a partner in the
Indianapolis, Indiana law firm of Krieg, DeVault, Alexander & Capehart. She is
also Vice President and Treasurer of BTC, Inc. (public speaking company).
CLASS II: TERM EXPIRES AT THE 2000 ANNUAL MEETING OF SHAREHOLDERS
DANE A. MILLER, PH.D., age 52 . . . . . . . . . . . . . Director since 1977
Member: Executive, Compensation and Stock Option Committees. Dr. Miller is one
of the four founders of the Company and is the President and Chief Executive
Officer of the Company. Dr. Miller is a director of 1st Source Corporation (bank
holding company), a trustee of GMI Institute and serves on the Engineering
Advisory Committee of the University of Cincinnati.
JERRY L. FERGUSON, age 57 . . . . . . . . . . . . . . . Director since 1978
Member: Executive and Nominating Committees. Mr. Ferguson is one of the four
founders of the Company and has served as Vice Chairman of the Board of the
Company since December 1997. He previously served as the Company's Senior Vice
President from December 1994 to December 1997 and as Special Projects Advisor to
the Company from December 1993 to December 1994.
THOMAS F. KEARNS, JR., age 61 . . . . . . . . . . . . . Director since 1983
Mr. Kearns is a retired partner of Bear, Stearns & Co., Inc. (investment banking
firm). Mr. Kearns is a director of PharmaKinetics Laboratories, Inc. (contract
research organization), a trustee of the University of North Carolina Foundation
and a director of Fibrogen Corporation (a biotechnology company).
DANIEL P. HANN, age 43 . . . . . . . . . . . . . . . . Director since 1989
Mr. Hann is the Vice President, General Counsel and Secretary of the Company.
6
<PAGE> 10
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has an Executive Committee comprised
of Dane A. Miller, Ph.D., Niles L. Noblitt, Jerry L. Ferguson, C. Scott
Harrison, M.D., Kenneth V. Miller and Jerry L. Miller. The Board of Directors
also has a Nominating Committee comprised of Jerry L. Ferguson, Jerry L. Miller
and Kenneth V. Miller; an Audit Committee comprised of L. Gene Tanner, Jerry L.
Miller, and Kenneth V. Miller; a Compensation Committee comprised of Dane A.
Miller, Ph.D., Jerry L. Miller and Kenneth V. Miller; and a Stock Option
Committee comprised of Dane A. Miller, Ph.D., Niles L. Noblitt, Jerry L. Miller
and Kenneth V. Miller.
The Executive Committee has full authority from the Board of Directors to
conduct the business of the Company within the limits prescribed by Indiana law.
The Nominating Committee is responsible for, among other things, receiving
and reviewing recommendations for nominations to the Board of Directors,
establishing eligibility criteria and procedures for identifying potential
nominees to the Board of Directors and recommending individuals as nominees for
election to the Board of Directors. The Nominating Committee will consider for
nomination as directors persons recommended by shareholders provided that such
recommendations are in writing and delivered to the Secretary, Biomet, Inc.,
Airport Industrial Park, P.O. Box 587, Warsaw, Indiana 46581-0587, and delivered
to, or mailed and received, at such address not less than sixty days nor more
than ninety days prior to the Annual Meeting of Shareholders. In the event that
less than seventy days' notice or prior public disclosure of the date of the
annual meeting is given or made to shareholders, any notice of nomination by a
shareholder must be received not later than the close of business on the tenth
day following the day on which such notice of the date of the meeting was mailed
or such public disclosure was made.
The function of the Audit Committee is to monitor the internal controls and
financial reporting of the Company and its subsidiaries; to review these matters
with the President and Chief Executive Officer and the Company's independent
accountants; to review the scope and parameters of the independent accountants'
audit of the Company's consolidated financial statements; to review the scope
and parameters of the findings of the Company's internal auditor; to establish
policies and make recommendations to the Board of Directors with respect to
approval of transactions between the Company and its directors, officers and
employees; and to make recommendations to the Board of Directors concerning the
annual appointment of the Company's independent accountants.
The Compensation Committee is responsible for administering the
compensation programs for the executive officers and employees of the Company.
The Stock Option Committee administers the stock option plans of the
Company. Presently, no member of the Stock Option Committee participates in any
of these plans with the exception that each of the two non-employee director
members, Jerry L. Miller and Kenneth V. Miller, receives an option to purchase
5,000 Common Shares of the Company every three years during his service as a
non-employee director of the Company pursuant to the terms of the Biomet, Inc.
1992 Employee and Non-Employee Director Stock Option Plan.
The Board of Directors, the Executive Committee, the Nominating Committee,
the Audit Committee, the Compensation Committee and the Stock Option Committee
of the Company met 5 times, 6 times, 2 times, 2 times, 2 times and 2 times,
respectively, during the past fiscal year.
7
<PAGE> 11
COMPENSATION OF DIRECTORS
Each director of the Company who is not an employee receives an annual fee
of $10,000, plus a fee of $750 and reimbursement for travel expenses for each
meeting of the Board of Directors attended in person and a fee of $375 for
attending a meeting by telephone. Directors who are employees of the Company
receive a fee of $750 for each meeting of the Board of Directors attended in
person and a fee of $375 for attending a meeting by telephone. Each member of
the Executive Committee of the Board of Directors who is not an employee of the
Company receives an additional annual fee of $10,000, plus a fee of $750 and
reimbursement for travel expenses for each committee meeting attended in person
and a fee of $375 for attending a committee meeting by telephone. Each member of
the Nominating, Audit and Compensation Committees of the Board of Directors
receives a fee of $750 for each committee meeting attended in person and a fee
of $375 for attending a committee meeting by telephone, unless such meetings are
held in conjunction with a meeting of the Board of Directors or Executive
Committee. No fees are paid for attending meetings of the Stock Option
Committee.
Each director who is not an employee of the Company is automatically
granted an option to purchase 5,000 Common Shares of the Company every three
years during his or her service on the Board of Directors pursuant to the terms
of the Biomet, Inc. 1992 Employee and Non-Employee Director Stock Option Plan
(the "1992 Plan"). The 1992 Plan provides that the purchase price of option
shares may not be less than the fair market value per Common Share on the date
of grant and the term of the option may not exceed ten years from the date of
grant. Under the terms of the 1992 Plan, neither the Board of Directors nor the
Compensation Committee has the authority to alter or modify the number of
option shares granted or interval of grants to the non-employee directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year 1998, the Compensation Committee was comprised of Dane
A. Miller, Ph.D., Jerry L. Miller and Kenneth V. Miller. Dr. Miller serves as
the Company's President and Chief Executive Officer. His compensation is
established by the Compensation Committee, without his participation, and
approved by the Board of Directors. Except for Dane A. Miller, Ph.D., none of
the other members of the Compensation Committee are now serving or previously
have served as officers of the Company or any subsidiary. None of the Company's
executive officers serve as directors of, or in any compensation-related
capacity for, other companies with which members of the Company's Compensation
Committee are affiliated.
8
<PAGE> 12
EXECUTIVE COMPENSATION
GENERAL
The following Summary Compensation Table sets forth, for the three years
ended May 31, 1998, certain information with respect to the compensation of the
Company's President and Chief Executive Officer and the four other most highly
compensated executive officers who served in such capacities as of May 31, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION ALL OTHER
FISCAL YEAR COMPENSATION AWARDS COMPENSATION(1)
NAME AND PRINCIPAL POSITION ENDED MAY 31 SALARY ($) BONUS ($) STOCK OPTIONS (#) ($)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dane A. Miller, Ph.D 1998 205,400 146,500 -- 11,825
President and 1997 199,700 126,270 -- 12,575
Chief Executive Officer 1996 182,000 129,281 -- 11,575
Niles L. Noblitt 1998 205,400 146,500 -- 11,825
Chairman of the Board 1997 199,700 126,270 -- 13,200
1996 182,000 129,281 -- 11,575
Charles E. Niemier 1998 203,800 120,300 20,000 11,825
Senior Vice President- 1997 198,000 109,350 10,000 12,575
International Operations 1996 180,399 91,099 -- 11,575
Garry L. England 1998 190,800 132,300 20,000 8,800
Senior Vice President- 1997 185,400 111,476 10,000 9,475
Warsaw Operations 1996 168,939 115,500 -- 9,175
Joel P. Pratt 1998 184,900 122,800 20,000 8,800
Vice President 1997 163,700 62,500 10,000 9,175
1996 163,700 64,800 -- 9,175
</TABLE>
(1) Represents the value of the Company's contribution to the Employee Stock
Bonus Plan and the 401(k), and director fees paid to Dr. Miller, Mr. Noblitt and
Mr. Niemier
9
<PAGE> 13
STOCK OPTIONS
Options were granted in fiscal year 1998 to the following executive
officers named in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
NUMBER OF AT ASSUMED ANNUAL
SECURITIES PERCENT OF TOTAL RATES OF STOCK PRICE
UNDERLYING OPTIONS GRANTED EXERCISE APPRECIATION FOR OPTION TERM
OPTIONS GRANTED(1) TO EMPLOYEES IN PRICE EXPIRATION ----------------------------
Name (#) FISCAL YEAR 1998 ($/SH) DATE 5% ($) 10% ($)
- ---- --------------- ---------------- ------ ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Charles E. Niemier 4,000 0.4% 17.375 June 8, 2000 10,955 23,005
4,000 0.4% 17.375 June 8, 2001 14,978 32,255
4,000 0.4% 17.375 June 8, 2002 19,202 42,430
4,000 0.4% 17.375 June 8, 2003 23,637 53,623
4,000 0.4% 17.375 June 8, 2004 28,293 65,936
Garry L. England 4,000 0.4% 17.375 June 8, 2000 10,955 23,005
4,000 0.4% 17.375 June 8, 2001 14,978 32,255
4,000 0.4% 17.375 June 8, 2002 19,202 42,430
4,000 0.4% 17.375 June 8, 2003 23,637 53,623
4,000 0.4% 17.375 June 8, 2004 28,293 65,936
Joel P. Pratt 4,000 0.4% 17.375 June 8, 2000 10,955 23,005
4,000 0.4% 17.375 June 8, 2001 14,978 32,255
4,000 0.4% 17.375 June 8, 2002 19,202 42,430
4,000 0.4% 17.375 June 8, 2003 23,637 53,623
4,000 0.4% 17.375 June 8, 2004 28,293 65,936
</TABLE>
(1) These options were granted under the Biomet, Inc. 1992 Employee and
Non-Employee Director Stock Option Plan. They were granted at fair market value
at the time of the grant, do not become exercisable until one year from the date
of grant and carry with them the right to elect to have shares withheld upon
exercise and/or to deliver previously owned shares in payment of the option
price and to satisfy tax withholding requirements.
The following table sets forth the number of shares acquired on exercise of
stock options and the aggregate gain realized on exercise in fiscal year 1998 by
the executive officers of the Company named in the Summary Compensation Table.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
NUMBER OF UNEXERCISED OPTIONS VALUE OF UNEXERCISED IN-THE-MONEY
SHARES ACQUIRED VALUE REALIZED(1) AT MAY 31, 1998 (#) OPTIONS AT MAY 31, 1998 ($)(2)
NAME ON EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles E. Niemier 0 0 8,250 40,500 151,281 596,063
Garry L. England 6,250 88,282 19,725 40,500 418,191 596,063
Joel P. Pratt 18,750 376,531 32,625 56,750 702,347 877,781
</TABLE>
(1) "Value Realized" represents the difference between the base (or exercise)
price of the option shares and the market price of the option shares on the date
the option was exercised. It does not include any taxes which may have been
owed.
(2) The value of these options assumes a market price of $28.875, which was
the closing price of the Common Shares reported by the Nasdaq Stock Market on
May 29, 1998.
10
<PAGE> 14
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEES
POLICIES AND OBJECTIVES
The Compensation Committee and the Stock Option Committee of the Board of
Directors (collectively referred to herein as the "Committee") are responsible
for administering the compensation and benefit programs for the Company's
employees, including the executive officers. The Committee annually reviews and
evaluates cash compensation and stock option grant recommendations made by the
President and Chief Executive Officer for the executive officers (other than for
himself) along with the rationale for such recommendations. The Committee
examines these recommendations in relation to the Company's overall objectives
and makes compensation recommendations to the Board of Directors for final
approval. The Committee also sends to the Board of Directors for approval its
recommendations on compensation for the President and Chief Executive Officer,
who does not participate in the Committee's decisions as to his compensation
package.
The Company's current executive compensation policies and practices reflect
the compensation philosophies of the Company's four founders - Dane A. Miller,
Ph.D., Niles L. Noblitt, Jerry L. Ferguson and M. Ray Harroff. The Company is
committed to maximizing shareholder value through performance. The Committee
believes that superior performance by the Company's executive and management
team is an essential element to reaching that goal. The Company's practices and
policies are designed to help achieve this objective by (1) attracting,
retaining and rewarding highly qualified and productive persons; (2) relating
compensation to both Company and individual performance; (3) establishing
compensation levels that are internally equitable and externally competitive;
and (4) encouraging an ownership interest and instilling a sense of pride in the
Company which are consistent with the interests of the Company's shareholders.
The Committee firmly believes that all employees (which the Company refers
to as Team Members rather than "employees") play a critical role in the
Company's success and, therefore, all employees participate in the Company's
cash and equity compensation plans. The Committee continues to believe in one of
the founding philosophies of the Company, that equity compensation in the form
of stock options is an excellent incentive for all employees, including
executive officers, and serves to align the interests of employees, management
and shareholders.
Based on these objectives, the compensation package of the executive
officers consists of four primary elements: (1) base salary; (2) incentive
bonuses; (3) stock options; and (4) participation in employee benefit plans.
BASE SALARY. A base salary is set for each executive officer at the
beginning of each calendar year by the Board of Directors after receiving a
recommendation from the Committee. The Committee recommends to the Board of
Directors what it believes to be an appropriate base salary for each executive
officer based on the Company's performance, the executive officer's performance,
the Company's future objectives and challenges and the current competitive
environment. Base salaries are intended to be relatively moderate, but
competitive. During fiscal year 1998, the base salary of the executive officers
as a group increased approximately 6%.
INCENTIVE BONUSES. The Company's policy is to base a significant portion of
each executive officer's annual compensation on the financial performance of the
Company. Approximately one-half of each executive officer's potential annual
cash compensation is based upon the incentive bonus which is accrued and paid at
11
<PAGE> 15
the conclusion of each fiscal year. The bonus is determined on the basis of a
formula which compares actual performance against targets which are established
by the Committee and approved by the Board of Directors at the beginning of each
fiscal year of the Company. The bonus targets are equally weighted between
revenues growth and earnings growth of the Company during the fiscal year. The
target bonus for each officer is determined by the Committee based upon the
goals, objectives, responsibilities and length of service of each officer. The
Committee may exercise some discretion in making bonus awards.
STOCK OPTIONS. Stock options have always been a key element in the
Company's long-term compensation program. The primary purpose of stock options
is to provide executive officers and other employees with a personal and
financial interest in the success of the Company through stock ownership,
thereby aligning the interests of such persons with those of the Company's
shareholders. This broad-based program is a vital element of the Company's goal
to empower and motivate outstanding long-term contributions by employees within
all levels of the Company. The Committee believes that stock options help to
create an entrepreneurial environment within the Company and instill the spirit
of a small company. Additionally, the Committee believes stock options provide
broad incentives for the day-to-day achievements of all employees in order to
sustain and enhance the Company's long-term performance.
The Committee believes that the value of stock options will reflect the
financial performance of the Company over the long term. Because the Company's
stock option program provides for a one-year waiting period before options may
be exercised and an exercise price at fair market value as of the date of grant,
executive officers and other employees benefit from stock options only when the
market value of the Common Shares increases over time. Individual executive
officer stock option awards are based on level of responsibility, individual
contribution, length of service and total number of Common Shares owned in
relation to other executive officers in the Company. Currently, more than 60% of
employees below the executive officer level have been awarded one or more stock
options under this program and approximately 90% of the option shares have been
granted to employees other than executive officers.
BENEFIT PLANS. The executive officers also participate in the Company's
401(k) and the ESBP. All executive officers and employees who are at least 18
years of age and have at least 90 days of service are eligible to participate in
both plans. With respect to the 401(k), each year the Company, in its sole
discretion, may match 50% of each employee's contributions, up to a maximum
amount equal to 5% of the employee's compensation, either in cash or in Common
Shares of the Company. All contributions to the 401(k) are allocated to accounts
maintained on behalf of each participating employee and, to the extent vested,
are distributed to the employee upon retirement, death, disability or
termination of service. Historically, the 401(k) has purchased Common Shares
with the Company's matching contribution. The Company may make contributions to
the ESBP in the form of Common Shares or cash in such amounts, if any, as it may
determine in its sole discretion, and participating employees may make voluntary
contributions to the ESBP in amounts up to 10% of their annual compensation. The
funds accumulated under the ESBP are invested by the trustee primarily in Common
Shares of the Company. Distributions are made to employees at retirement, death,
disability or termination of service, in Common Shares or, at the employee's
option, in cash. Because a significant portion of the assets of both of these
plans is invested in the Company's Common Shares, both plans serve to further
align the interests of employees, management and shareholders.
12
<PAGE> 16
COMPENSATION OF THE PRESIDENT AND CHIEF EXECUTIVE OFFICER
The compensation for the Company's President and Chief Executive Officer,
Dane A. Miller, Ph.D., is established by the Committee, without participation by
Dr. Miller, and approved by the Board of Directors. Over the years, Dr. Miller
has received modest increases in his cash compensation, notwithstanding the
strong financial results of the Company. These modest increases reflect his
cost-conscious management style and belief that the financial success of
management should be closely aligned with shareholder interests through
appreciation in the value of the Company's shares. Dr. Miller has never received
a stock option and he does not participate in the Company's stock option
program. Notwithstanding an increase in the Company's sales and net income in
excess of 12% and 17%, respectively, for fiscal year 1998, the total
compensation paid to Dr. Miller increased less than 8%.
The Committee believes that the executive compensation programs and
practices described above are conservative and fair to the Company's
shareholders. The Committee further believes that these programs and practices
serve the best interests of the Company and its shareholders.
Respectfully submitted,
Kenneth V. Miller, Chairman
Dane A. Miller, Ph.D.
Jerry L. Miller
Niles L. Noblitt
13
<PAGE> 17
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on the
Company's Common Shares with the cumulative total return of the Standard &
Poor's 500 Composite Stock Index (the "S&P 500 Index") and the Standard & Poor's
Medical Products and Supplies Industry Group Index (the "S&P Medical Index") for
the five most recent fiscal years ended May 31. The comparison assumes $100
invested on May 31, 1993, in the Company's Common Shares and in each of the
indices.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG BIOMET, INC., THE S & P 500 INDEX
AND THE S & P HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) INDEX
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
---------------------------------------------------------------
5/93 5/94 5/95 5/96 5/97 5/98
<S> <C> <C> <C> <C> <C> <C>
BIOMET, INC. 100.00 92.86 141.67 133.33 179.09 278.16
S&P 500 100.00 104.26 125.31 160.95 208.29 272.20
S&P HEALTH CARE (MED PRODS & SUPPLS) 100.00 94.18 138.67 188.81 233.93 310.58
</TABLE>
14
<PAGE> 18
CERTAIN TRANSACTIONS
Dane A. Miller, Ph.D., President and Chief Executive Officer and a member
of the Board of Directors of the Company, is a majority shareholder in a
corporation which provides the use of an aircraft to the Company on an as-needed
basis. The Company pays a flat monthly fee of $20,800 to that corporation for
the use of the aircraft. The Company made payments to that corporation of
approximately $372,985 during the last fiscal year. The Board of Directors
believes the rental rate and other terms of this arrangement to be no less
favorable to the Company than would have been available in the absence of the
relationship described.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who own more than ten percent of a
registered class of the Company's equity securities to file with the Securities
and Exchange Commission ("SEC") initial reports of ownership and reports of
changes in ownership of Common Shares and other equity securities of the
Company. Officers, directors and greater-than-ten percent shareholders are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms filed by them.
During fiscal year 1991, a Form 4 filed on behalf of Jerry L. Ferguson,
Vice Chairman of the Board, inadvertently omitted 100,000 shares resulting from
a stock split and a related transaction. These shares represent less than 5% of
Mr. Ferguson's aggregate benefical holdings of Biomet Common Shares.
During fiscal year 1996, Niles L. Noblitt did not file on a timely basis
under Section 16(a) of the Securities Exchange Act of 1934 one required report
relating to one transaction. The transaction involved a gift of stock by Mr.
Noblitt and his wife to their children in the amount of 3,000 shares, which
represent approximately 0.1% of Mr. Noblitt's aggregate beneficial holdings of
Biomet Common Shares. It is important to note that the Form 4 Report relating to
the gift was timely filed by Mr. Noblitt; however, the receipt of the gift by
his children was inadvertently omitted from that Report.
Except for the transactions referenced above, to the Company's knowledge,
based solely on review of the copies of such reports furnished to the Company
and written representations that no other reports were required, all Section
16(a) filing requirements applicable to its officers, directors and
greater-than-ten percent beneficial owners were complied with on a timely basis
during the fiscal year ended May 31, 1998.
APPROVAL OF THE BIOMET, INC. 1998 QUALIFIED
AND NON-QUALIFIED STOCK OPTION PLAN (ITEM 2)
Subject to approval by the shareholders, the Board of Directors has
adopted the Biomet, Inc. 1998 Qualified and Non-Qualified Stock Option Plan (the
"Plan") pursuant to which "incentive stock options" qualified under Section 422
of the Internal Revenue Code (referred to as "Qualified Options"), and options
not qualified under Section 422 ("Non-Qualified Options"), to purchase up to
7,000,000 Common Shares of the Company may be granted to key employees of the
Company and its subsidiaries, to persons engaged in the sale or distribution of
the products of the Company and its subsidiaries ("distributors") and to
non-employee directors of the Company. The Plan will not affect currently
outstanding options previously granted under the Company's 1989 Distributor
Stock Option Plan ("Distributor Plan") or the Biomet, Inc. 1992 Employee and
Non-Employee
15
<PAGE> 19
Director Stock Option Plan ("1992 Plan"); but if the Plan is approved, the Plan
will replace both the Distributor Plan (which is scheduled to expire in
September 1999) and the 1992 Plan (as to which substantially all available
options have been granted) and the Company will not grant any additional options
under those plans. Consequently, if the Plan is approved, the total number of
Common Shares available for grants of options thereafter under any plans of the
Company would be limited to 7,000,000 shares. An aggregate of 55,000 Common
Shares and 3,045,000 Common Shares are currently available for the grant of
options under the 1992 Plan and the Distributor Plan, respectively.
The affirmative vote of holders of a majority of the Common Shares
represented at the Annual Meeting is required to approve the Plan. The essential
features of the Plan are summarized below, and a copy of the Plan may be
obtained by any shareholder of the Company upon written request directed to the
Secretary of the Company.
PURPOSE
As stated in the Report of the Compensation and Stock Option Committees
included in this Proxy Statement, those committees firmly believe in the
participation by employees and distributors in equity compensation plans, and
that such plans provide an excellent incentive and serve to align the interests
of employees, distributors, management and shareholders. Stock options have
always been a key element in the Company's compensation programs. This Plan
essentially combines the features and benefits of the Distributor Plan and the
1992 Plan.
ADMINISTRATION
The Plan will be administered, construed and interpreted by the Stock
Option Committee (the "Committee") consisting of directors of the Company, two
or more of whom will be "non-employee directors" of the Company, within the
meaning of Rule 16b-3 of the Securities Exchange Act of 1934. If the Committee
includes individuals who do not qualify as non-employee directors, those
individuals will not participate in the Plan or be eligible for option grants
thereunder and will abstain or recuse themselves from actions relating to the
grant of options intended to be exempt under Rule 16b-3. The Committee will
select the employees and distributors to whom options will be granted, and will
determine the time of grant, the number of Common Shares to be covered by each
option, whether such option shall be a Qualified Option or a Non-Qualified
Option (only employees may receive Qualified Options), the option price, the
period of time within which the option may be exercised, and other terms and
conditions of options granted. Non-Qualified Options will be granted
automatically to all non-employee directors once every three years, each such
option to be for the purchase of 5,000 shares, beginning with the mid-year 1999
meeting of the Board of Directors, consistent with the current provisions of the
1992 Plan. All options will be granted at an option price equal to the fair
market value of the shares on the date of the grant.
ELIGIBILITY
Options may be granted under the Plan only to those key employees and
distributors selected by the Committee, and to non-employee directors. Employees
(including employees who are also directors or distributors) may be granted
either Qualified Options or Non-Qualified Options, and more than one grant may
be made to any one individual. Non-employee directors and non-employee
distributors may receive only Non-Qualified Options.
16
<PAGE> 20
RESERVATION OF SHARES
The Plan permits the granting of options to purchase an aggregate of
7,000,000 Common Shares over the ten-year life of the Plan. In the event of
changes affecting the number or class of Common Shares such as a stock split or
a consolidation of shares, the payment of a share dividend, or other increase or
decrease in the Common Shares effected without new compensation to the Company,
the aggregate number of shares for which options may be granted, the number of
shares covered by each outstanding option, and the exercise price per share for
each option will be proportionately adjusted.
TERMS OF THE OPTIONS
EXERCISE PRICE. The price to be paid for Common Shares upon exercise of
each option pursuant to the Plan may not be less than the fair market value of
such shares on the date on which the option is granted. The exercise price of
any Qualified Option granted to a person owning more than 10% of the outstanding
shares of the Company (as determined under the Plan) may not be less than 110%
of such fair market value. Upon exercise, the exercise price is to be paid in
full in cash or cash equivalents or by surrender or withholding of a number of
Common Shares of the Company having a fair market value equal to the exercise
price, or by other means permitted under the Plan.
TERM OF OPTIONS. No option may have a term that is longer than ten
years from the date of grant, and any Qualified Option granted to a person
owning more than 10% of the outstanding shares of the Company must terminate not
later than five years from the date of grant.
EXERCISE OF OPTIONS. Options may be exercisable in full at any time, or
on a cumulative basis from time to time, but subject to any limitations imposed
by the Committee at the time of the grant. It is the current policy of the
Committee to prohibit the exercise of options prior to the first anniversary of
the date of the grant of a qualified option, and to provide for the forfeiture
of any options held in the event of termination of employment during that
period. The aggregate fair market value (determined at the time the option is
granted) of shares with respect to which Qualified Options are exercisable for
the first time by the optionee during any calendar year may not exceed $100,000.
With certain exceptions, upon an optionee's separation from service with the
Company and its subsidiaries, all rights under any options granted to such
person, but not yet exercised, terminate. An optionee may exercise options at
any time within three months after separation from service due to retirement
with the consent of the Company or if otherwise permitted by the Committee, in
its discretion, or at any time within twelve months after separation from
service due to permanent and total disability. In the event of the optionee's
death, the optionee's options which were exercisable on the date of death may be
exercised by the optionee's personal representative at any time within twelve
months from the date of death. All outstanding options would be immediately
exercisable upon a change of control of the Company. Options granted pursuant to
the Plan may not be exercised until the requirements of all applicable federal
and state laws pertaining to the offer and sale of securities issued under the
Plan have been met.
TRANSFERABILITY OF OPTION. No option may be assigned or transferred,
except for transfers by will or the laws of descent and distribution.
17
<PAGE> 21
AMENDMENT AND TERMINATION
The Board of Directors of the Company may, from time to time alter,
amend, suspend or discontinue the operation of the Plan; provided, however, that
without the approval of the shareholders of the Company the following changes in
the Plan may not be made: (a) an increase in the number of Common Shares that
may be issued under the Plan; (b) a change in the class of shares for which
options may be granted under the Plan; (c) a change in the designation of the
persons or class of persons eligible to receive options under the Plan; or (d) a
change in the provisions concerning the exercise price.
FEDERAL INCOME TAX CONSEQUENCES
QUALIFIED OPTIONS. The grant of an incentive stock option that is
qualified under Code Section 422 ("Qualified Option") under the Plan generally
will have no federal income tax consequences to the Company or the optionee.
Except for alternative minimum tax purposes, the exercise of a Qualified Option
pursuant to the Plan will have no federal income tax consequences to the Company
or the optionee. An optionee generally will recognize capital gain or loss upon
the sale of shares acquired in exercising a Qualified Option, provided that the
shares are sold at least two years after the date of grant of the option and at
least one year after the optionee acquires the shares. An optionee generally
will recognize ordinary income upon the sale of shares acquired in exercising a
Qualified Option if the sale is made within two years of the date the option was
granted or within one year of the date the shares were transferred to the
optionee. In such event, the amount of ordinary income recognized by the
optionee generally will equal the difference between the option price and the
fair market value of the shares on the date of exercise. The Company may take an
income tax deduction for compensation conveyed by a Qualified Option only in
situations (and the taxable year) in which the employee must recognize ordinary
income.
NON-QUALIFIED OPTIONS. The grant of a Non-Qualified Option under the
Plan generally will have no federal income tax consequences to the Company or
the optionee. However, upon exercising a Non-Qualified Option granted under the
Plan, an optionee normally will recognize ordinary income in an amount equal to
the excess of the fair market value of the acquired shares on the date of
exercise over the option price. The optionee's basis in the shares acquired in
exercising a Non-Qualified Option generally will equal the option price, plus
the amount included in the optionee's ordinary income upon exercise. Upon the
disposition of the acquired shares, the optionee generally will recognize
capital gain or loss, as the case may be, to the extent of the difference
between the optionee's basis in the shares and the sales price. Whether the
optionee's gain will be treated as long-term or short-term will depend upon the
holding period of the shares, which normally begins on the date immediately
following the date on which the shares are acquired upon exercise of the
Non-Qualified Option. Gain from the sale or exchange of the acquired shares
generally will be treated as long-term if the shares are deemed to be held for
more than one year.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL
OF THE BIOMET, INC. 1998 QUALIFIED AND NON-QUALIFIED STOCK OPTION PLAN.
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS (ITEM 3)
Subject to ratification by the shareholders, the Board of Directors has
selected PricewaterhouseCoopers LLP as independent accountants for the Company
for the fiscal year ending May 31, 1999. The Company has
18
<PAGE> 22
been advised by such firm that neither it nor any of its associates has any
direct or material indirect financial interest in the Company.
Representatives of PricewaterhouseCoopers LLP are expected to be
present at the Annual Meeting and to be available to respond to appropriate
questions concerning the audit for the fiscal year ended May 31, 1998.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of the
Company has no knowledge of any matters to be presented for consideration at the
Annual Meeting other than those referred to above. If (a) any matters of which
the Company did not have notice by July 1, 1998 (45 days prior to the month and
date of mailing of proxy materials with respect to the 1997 Annual Meeting)
should properly come before the meeting; (b) a person not named herein is
nominated at the meeting for election as a director because a nominee named
herein is unable to serve or for good cause will not serve; or (c) any matters
should arise incident to the conduct of the meeting, then the proxies will be
voted in accordance with the recommendations of the Board of Directors of the
Company.
By Order of the Board of Directors,
/S/ Daniel P. Hann
Daniel P. Hann, Secretary
August 11, 1998
19
<PAGE> 23
PROXY BIOMET, INC.
ANNUAL MEETING OF SHAREHOLDERS - SEPTEMBER 26, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Dane A. Miller, Ph.D and Niles L.
Noblitt as proxies, each with the power to act alone and of substitution, and
hereby authorizes them to represent and to vote, as designated below, all the
Common Shares of the Company which the undersigned is entitled to vote at the
Annual Meeting of Shareholders to be held on Saturday, September 26, 1998, or
any adjournment thereof.
1. Election of directors.
Nominees: M. Ray Harroff, Jerry L. Miller, Charles E. Niemier and
Prof. Dr. Bernhard Scheuble
[ ] VOTE FOR all nominees listed above except vote withheld from the
following nominees (if any):
--------------------------------------------------------------
[ ] VOTE WITHHELD from all nominees listed above
2. Approval of the Biomet, Inc. 1998 Qualified and Non-Qualified Stock
Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Ratification of the selection of PricewaterhouseCoopers LLP as
independent public accountants for the Company for the fiscal year
ending May 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, upon such other matters as may properly come
before the meeting or any adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED. IF NO
DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED "FOR" MATTERS 1, 2 & 3 ABOVE.
Please sign on the reverse side.
- -------------------------------------------------------------------------------
Please sign exactly as your name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND Date _____________________________, 1998
RETURN THIS PROXY CARD
PROMPTLY USING THE Signature ______________________________________
ENCLOSED ENVELOPE.
Signature, if held jointly _____________________
Please indicate below whether you will
or will not attend the Annual Meeting.
[ ] WILL ATTEND [ ] WILL NOT ATTEND
