<PAGE>
--------------------------------
\ OMB APPROVAL \
\------------------------------\
\ OMB Number: 3235-0059 \
\ Expires: December 31, 1997 \
\ Estimated average burden \
\ hours per response......89 \
--------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
[x] Definitive Proxy Statement RULE 14A-6(E)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Marquette Medical Systems, 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):
[_] $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 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:
-------------------------------------------------------------------------
SEC 1913 (12/95)
<PAGE>
MARQUETTE MEDICAL SYSTEMS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JULY 15, 1998
To the shareholders of Marquette Medical Systems, Inc.:
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of Marquette
Medical Systems, Inc., a Wisconsin corporation (the "Company"), will be held
on Wednesday, July 15, 1998, at 9:00 a.m., at the Company's offices, 8200 West
Tower Avenue, Milwaukee, Wisconsin, 53223 for the following purposes:
1. To elect six directors to serve until the next annual meeting of
shareholders and until their successors are elected and qualified;
2. To ratify the selection of Arthur Andersen LLP as the Company's
independent public accountants for fiscal 1999;
3. To transact such other business as may properly come before the annual
meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the proxy
statement accompanying this notice.
The Board of Directors has fixed the close of business on June 15, 1998, as
the record date for the determination of shareholders entitled to notice of
and to vote at this annual meeting or any adjournment or postponement thereof.
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. WHETHER OR NOT
YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN, AND RETURN THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN POSTAGE-PREPAID ENVELOPE IS ENCLOSED
FOR THAT PURPOSE. EVEN IF YOU HAVE GIVEN YOUR PROXY, YOU MAY STILL VOTE IN
PERSON IF YOU ATTEND THE MEETING.
By Order of the Board of Directors
Gordon W. Petersen, Secretary
Milwaukee, Wisconsin
June 25, 1998
<PAGE>
MARQUETTE MEDICAL SYSTEMS, INC.
----------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
JULY 15, 1998
----------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by and on behalf of the Board of Directors (the "Board") of Marquette
Medical Systems, Inc., a Wisconsin corporation (the "Company"), for use at the
Annual Meeting of shareholders to be held on July 15, 1998, at 9:00 a.m., or
any adjournment or postponement thereof (the "Meeting") for the purposes set
forth herein and in the accompanying Notice of Annual Meeting. The Meeting
will be held at the offices of the Company, 8200 West Tower Avenue, Milwaukee,
Wisconsin.
This Proxy Statement and accompanying Proxy are scheduled to be mailed to
all shareholders entitled to vote at the Meeting, commencing June 25, 1998.
OUTSTANDING SHARES AND VOTING RIGHTS
Only shareholders of record at the close of business on June 15, 1998, will
be entitled to notice of and to vote at the Meeting. At the close of business
on June 1, 1998, the Company had outstanding 17,905,998 common shares, $0.10
par value ("Common Stock").
Each share of Common Stock outstanding on the record date is entitled to one
vote. With respect to the election of directors, cumulative voting is not
permitted.
The presence, in person or by proxy, of the holders of record of a majority
of the outstanding shares of Common Stock entitled to vote will constitute a
quorum for the transaction of business at the Meeting or any adjournment or
postponement thereof.
The vote of (i) a plurality of the shares cast in person or by proxy is
required to elect the nominees for Directors (Proposal 1); and (ii) a majority
of the shares cast in person or by proxy is required to ratify the selection
of Arthur Andersen LLP as independent auditors of the Company's financial
statements for the fiscal year ending April 30, 1999 (Proposal 2). Votes cast
by proxy or in person at the Meeting will be tabulated by the inspector of
election appointed for the Meeting who will also determine whether or not a
quorum is present. The inspector of election will treat abstentions as shares
that are present and entitled to vote for purposes of determining the presence
of a quorum, but as unvoted for purposes of determining the approval of any
matter submitted to the shareholders for a vote. If a broker indicates on the
proxy that it does not have discretionary authority as to certain shares to
vote on a particular matter, those shares will not be considered as present
and entitled to vote with respect to that matter.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. A proxy may be revoked by (i) filing
with the Secretary of the Company at the Company's principal executive office,
at or before the taking of the vote at the Meeting, a written notice of
revocation bearing a later date than the proxy, (ii) duly executing a
subsequent proxy relating to the same shares and delivering it to the
Secretary of the Company before the Meeting, or (iii) attending the Meeting
and voting in person (although
<PAGE>
attendance at the Meeting will not in and of itself constitute a revocation of
a proxy). Any written notice revoking a proxy should be sent to Marquette
Medical Systems, Inc., 8200 West Tower Avenue, Milwaukee, Wisconsin 53223,
Attention: Secretary or hand delivered to the Secretary at or before the
taking of the vote at the Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies in the
enclosed form, including the preparation, assembly, printing and mailing of
this proxy statement, the proxy and any additional information furnished to
shareholders. The original solicitation of proxies by mail may be supplemented
by telephone, telegram, or personal solicitation by directors, officers, or
other regular employees of the Company; no additional compensation will be
paid to directors, officers, or other regular employees for such services.
Arrangements will also be made with custodians, nominees, and fiduciaries for
forwarding of proxy solicitation material to beneficial owners of shares held
of record by such custodians, nominees, and fiduciaries. The Company will,
upon request, reimburse the custodians, nominees, and fiduciaries for
reasonable expenses incurred in connection with such arrangements.
PROPOSAL 1:
ELECTION OF DIRECTORS
The directors of the Company are elected annually. The terms of office of
all directors expire on the date of the Meeting. Six directors will be elected
to hold office until the next annual meeting of shareholders or until their
respective successors are elected and have qualified or until any such
director's death, resignation, or removal from office.
Each of the six nominees listed below is currently a director of the Company
and, except for Dr. Robertson, who was appointed by the Board to fill the
vacancy created by the resignation of Timothy C. Mickelson, was elected to the
Board of Directors by the shareholders at the Company's 1997 annual
shareholders' meeting.
Shares of Common Stock represented by executed proxies will be voted, if
authority to do so is not withheld, for the election of the six nominees named
below. Should any nominee become unavailable to serve as a director or any
vacancy occur before the election (which events are not anticipated), such
shares will be voted for the election of such substitute nominee as management
may propose or the authorized number of directors may be reduced. If, for any
reason, the authorized number of directors is reduced, the proxies will be
voted, in the absence of instructions to the contrary, for the election of the
remaining nominees named in this proxy statement. Each person nominated for
election has agreed to serve if elected. The six candidates receiving the
highest number of the affirmative votes cast at the Meeting will be elected
directors of the Company.
NOMINEES
The names of the nominees and certain information about them, based on
information furnished by them, are set forth below:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION WITH THE COMPANY SINCE
---- --- ------------------------------------- --------
<S> <C> <C> <C>
Michael J. Cudahy(/1/)(/4/) 74 Director and Chairman of the Board 1965
John G. Bollinger(/2/)(/3/) 63 Director 1996
Frederick A. Robertson(/1/) 42 Director, Chief Executive Officer and
President--Monitoring Group 1997
Frederick G. Luber(/1/)(/2/) 72 Director 1968
Melvin S. Newman(/1/)(/2/) 62 Director and Assistant Secretary 1969
Walter L. Robb(/3/)(/4/) 70 Director 1982
</TABLE>
2
<PAGE>
- --------
(1) Member of the Executive Committee of the Board of Directors
(2) Member of the Audit Committee of the Board of Directors
(3) Member of the Human Resources Committee of the Board of Directors
(4) Member of the Nominating and Proxy Committee of the Board of Directors
There is no family relationship between any of the nominees or between any
nominee and any of the Company's executive officers.
John G. Bollinger has been Dean of the College of Engineering of the
University of Wisconsin-Madison, since 1982. Dr. Bollinger served as a
director of E for M Corporation, a wholly-owned subsidiary of the Company from
March, 1992 until December, 1995. Dr. Bollinger also serves as a director of
Andrew Corporation and The Kohler Company.
Michael J. Cudahy, Chairman of the Board, co-founded the Company in July
1965. He has served as Chairman of the Board since the Company was
incorporated and served as Chief Executive Officer of the Company until
November, 1997.
Frederick G. Luber has been Chairman of the Board of Super Steel Products
Corp. of Milwaukee, Wisconsin, a steel fabricating company, since 1966.
Melvin S. Newman is, and has been since 1965, a partner in Schoenberg,
Fisher, Newman & Rosenberg, Ltd., counsel for the Company.
Walter L. Robb served as Senior Vice President--Corporate Research and
Development for General Electric Company from September, 1986, until he
retired in December, 1992. He is the founder, and serves as President of
Vantage Management, Inc., a consulting and investment company. Dr. Robb also
serves as a director of Neopath, Inc., Cree Research, Inc., Mechanical
Technology, Inc. and Celgene Corp.
Frederick A. Robertson became Chief Executive Officer and President--
Monitoring Group of the Company and was appointed as a director of the Company
by the Board of Directors on November 25, 1997. Dr. Robertson became employed
by the Company in January, 1993 as Medical Director where he served as such
until June, 1994, when he was elected President of the Company's Monitoring
Division. Dr. Robertson resigned his presidency in January, 1997, and
reassumed his position as part-time Medical Director until November, 1997,
when he was elected as Chief Executive Officer and President of the Company's
Monitoring Group. During the ten years preceding his employment by the
Company, Dr. Robertson was a practicing anesthesiologist and a shareholder,
director and officer of Anesthesia Service Medical Group, based in San Diego,
California.
CERTAIN INFORMATION CONCERNING THE BOARD
The Board has standing Executive, Audit, Nominating and Proxy, and Human
Resources Committees which are appointed at the annual meeting of the Board of
Directors.
The Executive Committee, subject to certain limitations, has authority to
adopt resolutions on behalf of the Board and to perform its functions in the
absence of formal Board meetings. The current members of the Executive
Committee are Michael J. Cudahy, Frederick G. Luber, Frederick A. Robertson,
and Melvin S. Newman.
The Audit Committee recommends engagement of the Company's independent
accountants, reviews and approves services performed by such accountants,
reviews and evaluates the Company's accounting system and its system of
internal controls, and performs other related duties delegated to it by the
Board. The current members of the Audit Committee are John G. Bollinger,
Frederick G. Luber, and Melvin S. Newman.
3
<PAGE>
The Human Resources Committee recommends the nature and amount of
compensation to be paid to the Company's officers, reviews and recommends the
adoption of compensation and benefit plans for the Company and authorizes the
grant of stock options and sets the terms of stock options granted under the
Company's Amended and Restated Stock Option Plan for Employees of Marquette
Medical Systems, Inc. (the "Stock Option Plan" or "Plan"). The current members
of the Human Resources Committee are John G. Bollinger and Walter L. Robb.
The Nominating and Proxy Committee recommends to the Board nominees for
directors, including individuals recommended by shareholders, for whom proxies
should be solicited by the Company, and recommends to the Board a nominee for
President of the Company. Any shareholder who wishes to have the Nominating
and Proxy Committee consider a candidate for nomination as a director should
submit, in writing, the name of the candidate, together with biographical or
other relevant information regarding his qualifications and the written
consent of the candidate to serve if nominated and elected. Such submissions
should be addressed to the Nominating and Proxy Committee, care of the
Secretary of the Company at the Company's address as set forth on the first
page of this proxy statement and delivered between May 5, 1999, and May 30,
1999 for consideration for the 1999 annual meeting of shareholders. The
current members of the Nominating and Proxy Committee are Michael J. Cudahy
and Walter L. Robb.
During the fiscal year ended April 30, 1998, the Board of Directors held
four meetings, the Audit Committee held two meetings, and the Human Resources
Committee held three meetings. Neither the Executive Committee nor the
Nominating and Proxy Committee held any meetings during the year, although
various actions were taken by the Executive Committee by unanimous written
consent of its members.
During fiscal 1998, no incumbent Board member attended fewer than 75% of the
aggregate of (i) the total number of meetings of the Board held during the
period for which he was a director and (ii) the total number of meetings of
all committees of the Board on which he served during the periods that he
served.
Each non-employee director in August, 1997 was granted an option to purchase
4,000 shares of Common Stock at an exercise price of $26.75 (being the last
transaction price of such shares on the date preceding the date of the grant
as quoted on the NASDAQ National Market System) pursuant to the Marquette
Medical Systems, Inc. Directors (Non-Employee) Stock Option Plan ("Directors
Plan"). Each non-employee director elected at the Meeting will be granted,
pursuant to the Directors' Plan, another option to purchase 4,000 shares of
Common Stock at the last transaction price as quoted on the NASDAQ National
Market System of the shares on the date preceding the date of the grant.
Provided that the director continues to serve as such, each option granted
under the Directors Plan is exercisable for a period of ten years following
the date of the grant, subject to vesting at the rate of twenty-five percent
(25%) per year over the first four (4) years following the date of the grant.
At such time as a director no longer serves as such, vesting ceases and the
remaining term of the option is reduced to three years unless the termination
occurs by reason of the director's death or his belief that he has become
permanently physically or mentally disabled, in which event the remaining term
is reduced to five years.
Except for options granted under the Directors' Plan, no fee or other
compensation is paid for Board or committee meetings attended or services as a
director. Directors are reimbursed for out of pocket travel expenses
associated with their attendance at Board meetings.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
IN FAVOR OF EACH NAMED NOMINEE.
4
<PAGE>
PROPOSAL 2:
RATIFICATION OF SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Arthur Andersen LLP as the Company's
independent public accountants for the fiscal year ending April 30, 1999, and
has directed that this selection be submitted for ratification by the
shareholders at the Meeting. Arthur Andersen LLP was engaged by the Company in
1970, to audit its statements and has continued to audit the Company's
financial statements since that time. Representatives of Arthur Andersen LLP
are expected to be present at the Meeting, will have an opportunity to make a
statement if they so desire, and will be available to respond to appropriate
questions.
Shareholder ratification of the selection of Arthur Andersen LLP as the
Company's independent public accountants is not required by the Company's By-
laws or otherwise. However, the Board is submitting the selection of Arthur
Andersen LLP to the shareholders for ratification as a matter of good
corporate practice. If the shareholders fail to ratify the selection, the
Board will reconsider whether or not to retain that firm. Even if the
selection is ratified, the Board, in its discretion, may direct the
appointment of a different independent accounting firm at any time during the
year if the Board feels that such a change would be in the best interests of
the Company and its shareholders. The affirmative vote of the holders of a
majority of the shares of Common Stock represented and voting at the Meeting
will be required to ratify the selection of Arthur Andersen LLP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
IN FAVOR OF PROPOSAL 2.
STOCK OWNERSHIP OF MANAGEMENT AND OTHERS
The following table sets forth the beneficial ownership of the Company's
Common Stock as of June 1, 1998, by each director, each person known by the
Company to own beneficially more than five percent of the Company's Common
Stock, and all directors, nominees for directors and executive officers as a
group, based upon information furnished by such persons. Except as indicated
in the footnotes, the persons listed have sole voting and investment power
over the shares beneficially owned.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED
-----------------------------------------
PERCENTAGE
NUMBER OF OF CLASS
NAME AND ADDRESS SHARES OUTSTANDING
- ---------------- --------- -----------
<S> <C> <C>
Michael J. Cudahy.................... 3,401,060(/1/)(/2/) 18.73%
8200 West Tower Avenue
Milwaukee, Wisconsin 53223
Norwest Bank Minnesota (N.A.)
6th Street and Marquette Avenue
Minneapolis, Minnesota 55479
As trustee under the Marquette
Medical Systems, Inc. Profit
Sharing 401(k) Plan................ 1,781,207(/3/) 9.95%
As trustee under other trusts....... 22,800 *
John G. Bollinger.................... 1,000(/4/) *
Frederick G. Luber................... 288,045(/5/)(/6/) 1.61%
Frederick A. Robertson............... 5,080(/1/)(/7/) *
Melvin S. Newman..................... 69,000(/5/) *
Walter L. Robb....................... 21,100(/5/) *
All directors and officers as a group
(12 persons)........................ 3,963,404(/1/)(/2/)(/5/)(/8/) 21.67%
</TABLE>
5
<PAGE>
- --------
* The amount shown is less than one percent of the outstanding shares of such
class.
(1) Includes shares allocated to the shareholder's account under the Company's
Profit Sharing and 401(k) Plan.
(2) Includes 5,000 shares owned by The Michael J. Cudahy Charitable Foundation
and 250,000 shares covered by an option granted by the Company exercisable
within 60 days.
(3) Participants in the Profit Sharing-401(k) Plan have the right to direct
the voting of allocated shares by Norwest Bank Minnesota (N.A.), the
trustee.
(4) Consists of shares covered by options issued under the Directors Plan
exercisable within 60 days.
(5) Includes 10,000 shares covered by options issued under the Directors Plan
exercisable within 60 days.
(6) Includes 28,300 shares owned by The Anne and Fred Luber Foundation.
(7) Includes 5,000 shares covered by options granted under the Stock Option
Plan exercisable within 60 days.
(8) Includes 385,282 shares covered by options granted under the Stock Option
Plan and under the Directors Plan exercisable within 60 days.
EXECUTIVE OFFICER COMPENSATION
The following table shows the compensation for the past three fiscal years
of the Company for (i) the Chief Executive Officer; and (ii) each of the
Company's four other most highly compensated executive officers serving as
executive officers on April 30, 1998 and Timothy C. Mickelson who, but for the
fact that he was not serving as an executive officer as of April 30, 1998,
would have been among the four most highly compensated executive officers (the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------- ------------
SECURITIES
NAME AND PRINCIPAL YEAR OTHER ANNUAL UNDERLYING ALL OTHER
POSITION (APRIL 30) SALARY BONUS COMPENSATION(1) OPTIONS COMPENSATION(2)
- ------------------------ ---------- -------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Michael J. Cudahy 1998 $237,500 $ 83,183 $ -0- 250,000 $7,507
Chairman of the Board 1997 300,000 22,471 -0- -0- 6,756
1996 300,000 2,262 -0- -0- 4,513
Frederick A. Robertson 1998 174,000 74,526 -0- 150,000 6,466
Chief Executive 1997 184,750 57,062 -0- -0- 9,135
Officer;
President--Monitoring 1996 175,000 76,283 -0- 9,700 8,146
Group
Louis P. Scafuri 1998 213,752 135,773 -0- 175,000 7,507
Chief Operating Officer 1997 160,000 64,092 91,777(/3/) 7,600 9,458
and President-- 1996 105,539 2,407 -0- 100,000 1,595
Cardiology Group
Mary M. Kabacinski 1998 180,000 62,368 -0- 7,100 7,507
Senior Vice President 1997 170,000 36,748 -0- 8,000 9,458
and
Chief Financial Officer 1996 160,000 25,291 -0- 8,900 7,993
Mark R. Tauscher(/5/) 1998 160,000 71,568 31,571(/4/) 6,300 1,901
Senior Vice President-- 1997 69,743 37,138 10,000(/4/) 60,000 -0-
Supplies
Timothy C. 1998 275,000 51,645 -0- -0- -0-
Mickelson(/6/)
President and Chief 1997 250,000 57,402 72,954(/7/) 11,900 9,458
Operating Officer 1996 229,280 35,473 -0- 100,000 8,253
</TABLE>
6
<PAGE>
- --------
(1) While the Named Executive Officers enjoy certain perquisites, for the year
ending April 30, 1997 these did not exceed $50,000 or ten percent (10%) of
any officer's salary and bonus.
(2) These figures represent the amount of the Company's contribution to its
Profit Sharing and 401(k) Plan allocated to the officer.
(3) Reimbursement of expenses incurred by Mr. Scafuri in relocating from
Massachusetts to Connecticut.
(4) Reimbursement of expenses incurred by Mr. Tauscher in relocating to
Florida.
(5) Mr. Tauscher became employed by the Company in November, 1996.
(6) Dr. Mickelson served as President and Chief Operating Officer until
November 25, 1997.
(7) Reimbursement of expenses incurred by Dr. Mickelson in relocating from
Connecticut to Wisconsin.
OPTIONS GRANTED IN LAST FISCAL YEAR
The following table provides information related to options granted to the
Chief Executive Officer and Named Executive Officers during the fiscal year
ending April 30, 1998 and the number and value of options held at year end:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK APPRECIATION
FOR OPTION TERM
INDIVIDUAL GRANTS COMPOUNDED ANNUALLY(3)
------------------------------------------------------- ---------------------------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS GRANTED
UNDERLYING TO EMPLOYEES EXERCISE OR
OPTIONS GRANTED IN FISCAL YEAR BASE PRICE EXPIRATION 5% 10%
NAME (#) (%) ($/SHARE) DATE ($) ($)
- ---- --------------- ---------------- ----------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael J. Cudahy(/1/).. 250,000 29.9% 20.63 5/28/07 3,243,524 8,219,727
Frederick A.
Robertson(/2/)......... 150,000 17.9% 22.50 11/24/07 2,122,519 5,378,881
Louis P. Scafuri(/2/)... 25,000 3.0% 23.25 6/1/07 365,545 926,363
150,000 17.9% 22.50 11/24/07 2,122,519 5,378,881
Mary M. Kabacinski(/2/). 7,100 0.8% 25.09 2/19/08 112,031 283,908
Mark R. Tauscher(/2/)... 6,300 0.8% 25.09 2/19/08 99,407 251,918
Timothy C. Mickelson.... -0- 0.0% 0.00 n/a -0- -0-
</TABLE>
- --------
(1) Fully exercisable.
(2) Exercisable to the extent of 20% of the shares as of the first anniversary
of the date of the grant and an additional 20% on or after each of the next
four anniversaries of the date of the grant.
(3) The realizable values are reported net of the option exercise price. The
dollar amounts under these columns are the result of calculations at the
five percent and ten percent rates (determined from the price at the date
of the grant and not the stock's current market value) and therefore are
not intended to forecast possible future appreciation, if any, of the
Company's Common Stock price. The actual gains, if any, on stock option
exercises are dependent on the future performance of the Common Stock, as
well as the option holder's continued employment with the Company through
the vesting period. The potential realizable value calculation assumes that
the option holder waits until the end of the option term (10 years from the
date of grant) to exercise the option.
7
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR END OPTION VALUE
The following table provides information related to options exercised by the
Chief Executive Officer and the Named Executive Officers during the fiscal
year ending April 30, 1998, and the number and value of options held at year
end:
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED IN-THE-
UNEXERCISED OPTIONS MONEY OPTIONS AT
AT APRIL 30, 1998 APRIL 30, 1998
SHARES (#) ($)
ACQUIRED VALUE ------------------- -------------------
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($)(1) UNEXERCISABLE UNEXERCISABLE(2)
- ---- ----------- --------- ------------------- -------------------
<S> <C> <C> <C> <C>
Michael J. Cudahy....... -0- -0- 250,000/0 1,592,500/0
Frederick A. Robertson.. 35,000 318,125 5,000/209,700 38,750/1,409,500
Louis P. Scafuri........ 7,000 77,406 14,520/251,080 145,070/1,535,690
Mary M. Kabacinski...... 13,000 153,125 51,600/72,400 648,300/783,261
Mark R. Tauscher........ -0- -0- 0/66,300 0/552,033
Timothy C. Mickelson.... 93,000 1,155,113 25,000/0 209,250/0
</TABLE>
- --------
(1) Based on the closing price of the Common Stock on the date of exercise as
quoted on the NASDAQ National Market System, less the exercise price.
(2) Based on the closing price of the Common Stock on April 30, 1998 as quoted
on the NASDAQ National Market System ($27.00) less the exercise price.
AGREEMENTS WITH OFFICERS
On February 27, 1998, the Company entered into a Severance Agreement with
Frederick A. Robertson, the Company's Chief Executive Officer and a director,
pursuant to which the parties agreed that in the event the Company shall
terminate Dr. Robertson's employment on or before November 30, 1999, other
than for reasons involving moral turpitude, Dr. Robertson will provide
consulting services to the Company for a 90 day period following the
termination and that the Company will pay Dr. Robertson a consulting fee over
12 months equal to his annual base salary in effect as of the date of his
termination. The Company's obligation to continue to make payments will end if
Dr. Robertson becomes employed by a competitor of the Company.
On March 11, 1998, the Company entered into a Severance Agreement with
Timothy C. Mickelson, who served as President of the Company until November
25, 1997, and as a director of the Company until March 11, 1998, pursuant to
which the Company agreed to pay to Dr. Mickelson during calendar year 1998 the
sum of $275,000 less such compensation that Dr. Mickelson may earn during that
period while in the employ of any other company. The Company's obligation to
continue payments (at the rate of $22,917 per month) terminates in the event
that Dr. Mickelson becomes employed by or associated with certain named
competitors of the Company. Under the terms of the Agreement, the Company also
agreed to pay Dr. Mickelson the estimated pro rata portion of the incentive
bonus that would have been earned had he stayed in the Company's employ until
April 30, 1998 and extended Dr. Mickelson's right to exercise stock options
covering a total of 100,700 shares of Common Stock to January 1, 2000. The
Company also agreed to continue Dr. Mickelson's health and dental insurance
coverage through December 31, 1998 at the Company's expense and to reimburse
Dr. Mickelson for certain out placement services that may be incurred by Dr.
Mickelson during 1998 to a maximum of $23,000.
REPORT OF THE HUMAN RESOURCES COMMITTEE
HUMAN RESOURCES COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Human Resources Committee is comprised of Drs. John G. Bollinger and
Walter L. Robb. Neither of the members of the Human Resources Committee is or
has been an employee or officer of the Company.
OVERVIEW AND PHILOSOPHY
The Human Resources Committee is responsible for authorizing grants of stock
options under the Stock Option Plan and for establishing and administering the
Company's executive compensation policies and
8
<PAGE>
recommends to the Board of Directors the compensation to be paid to the
Company's executive officers, including the Company's Chief Executive Officer.
In formulating its recommendations, the Human Resources Committee relies on
information from surveys, consultants and Company officers.
In adopting and administering its policies, the Committee pursues the
following objectives as guidelines:
To provide a compensation package competitive with those offered by other
health care equipment and health care product manufacturers to attract and
retain talented and devoted key executives.
To reward successful achievement by executive officers of defined
objectives, subject, to some extent, to the overall success of the Company
during the measurement period.
To align the executive officers' interest with that of the Company's
shareholders through the grant of stock options.
The Committee resorts to reports prepared by one or more nationally
recognized consulting firms who provide information on salaries paid by health
care equipment manufacturers and who publish surveys containing such
information to determine competitive compensation levels.
EXECUTIVE OFFICER COMPENSATION PROGRAM COMPONENTS
For the past fiscal year, the executive compensation program consisted of
three principal elements:
1. A base compensation targeted at competitive medians of a peer group of
successful health care device manufacturers, guided by an independent
salary survey. A number of the health care device manufacturers with whom
the Company's salary levels are compared are normally included among those
companies used to determine the S&P Medical Products and Supplies Index
displayed in the stock price performance graph (see page 11), although the
performance of additional companies are used in the preparation of that
index.
2. The Company maintains an Incentive Compensation Plan ("ICP") in which
the Company's executive officers and key managers participate. The ICP is
an annual incentive plan that provides cash compensation based on the
achievement of goals set by the Committee for each of the Company's
executive officers and other key managers whose participation is approved
by the Board of Directors. For fiscal 1998, various corporate and
divisional performance goals were set for each officer and the key manager
such as the attainment of corporate or divisional revenue, net income and
cash flow targets, as were set forth in the Company's business plan for
that fiscal year.
The actual award earned depends upon the degree of attainment of several
Company and/or divisional goals established by the Committee, the goals for
each executive officer differing, depending on his or her function and
responsibilities. The goals are based on internal business plan objectives
that incorporate aggressive growth assumptions and each executive officer
is assigned several goals of varying weights. Participants in the ICP may
earn between 0% and 150% of the bonus target, depending upon the degree of
goal attainment. The Company's Chief Executive Officer has the power to
increase or decrease the bonus earned by any Participant in the ICP by up
to ten percent, based upon the President's evaluation of the participant's
overall performance.
For fiscal 1998, executive officers earned an average of 88.1% of their
bonus targets under the ICP.
3. Incentive and non-qualified stock options are awarded by the Human
Resources Committee, based upon the recommendation of the Chief Executive
Officer and the Company's Human Resource Department. The Human Resources
Committee believes that the Company's interest is furthered by requiring
its executive officers to benefit from option exercises over an extended
period. During the past fiscal year stock options were granted to the
executive officers of the Company covering an aggregate of 612,800 shares
of Common Stock. The Human Resources Committee does consider prior options
granted to executive officers in determining any subsequent grants.
9
<PAGE>
CHIEF EXECUTIVE OFFICER COMPENSATION
Michael J. Cudahy served as the Company's Chief Executive Officer until
November 25, 1997, when he resigned and Dr. Frederick A. Robertson was elected
as Chief Executive Officer by the Board of Directors. Mr. Cudahy's base annual
compensation was set at $300,000, a rate that has remained in effect since
1989. Mr. Cudahy also participated in the ICP during fiscal 1998.
Mr. Robertson's compensation was recommended by the Human Resources
Committee based upon negotiations with Dr. Robertson that preceded his
election as Chief Executive Officer of the Company. The Committee took into
consideration competitive factors and the career alternatives that were
available to Dr. Robertson in the practice of medicine. The Committee
concluded and recommended to the Board that Dr. Robertson's compensation be
set at the same compensation paid to Mr. Cudahy and in lieu of participating
in the ICP during fiscal 1998 that he receive a $120,000 bonus payable in two
annual installments. The Committee also recommended the grant of an incentive
stock option to Dr. Robertson covering 150,000 shares of the Company's Common
Stock and the execution of a Severance Agreement with Dr. Robertson, the terms
of which are described on page 8. Inasmuch as Dr. Robertson assumed the
position of Chief Executive Officer this year, his compensation, as
recommended by the Committee, had no relationship to the Company's
performance.
SECTION 162(M)
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation in excess of $1
million paid during the taxable year (in the case of the Company, its fiscal
year) to a Company's Chief Executive Officer and the four other most highly
compensated executive officers. Qualifying performance-based compensation is
not subject to the deduction limit if certain requirements are met.
For fiscal 1998, the Committee does not contemplate that there will be non-
deductible compensation for the six Company positions in question, although
the exercise by Mr. Cudahy of his option granted on June 24, 1997, would, if
the fair value of the Common Stock purchased exceeds the exercise price by
more than $1,000,000, result in non-deductibility of such excess. The Human
Resources Committee plans to review this matter for 1999, and, unless
circumstances justify otherwise, take such actions as are necessary to comply
with Section 162(m)to avoid non-deductible compensation payments.
HUMAN RESOURCES COMMITTEE
John G. Bollinger
Walter L. Robb
10
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The following performance graph compares the Company's cumulative total
shareholder return on its Common Stock for a five-year period (May 1, 1993 to
April 30, 1998) with the cumulative total return of the NASDAQ Composite Stock
Index and the S&P Medical Products and Supplies Index (dividends invested).
The graph assumes $100 was invested on May 1, 1993 in the Common Stock, the
NASDAQ Stock Market-U.S. Index and the S&P Medical Products and Supplies
Index.
<TABLE>
<CAPTION>
Research Data Group Peer Group Total Return Worksheet
Marquette Med Sys Inc (MARQ)
Cumulative Total Return
-----------------------------------------
4/93 4/94 4/95 4/96 4/97 4/98
<S> <C> <C> <C> <C> <C> <C>
Marquette Med Sys Inc MARQ 100 103 127 120 134 180
NASDAQ STOCK MARKET (U.S) 100 111 129 184 195 292
S&P HLTH CARE (MED PRODS & SUPPLS) 100 94 146 198 230 329
</TABLE>
LOGO
There can be no assurance that the Company's stock performance will continue
into the future with the same or similar trends depicted in the graph above.
The Company will neither make or endorse any predictions as to future stock
performance.
The stock price performance graph above shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement to any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934 except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under either of such Acts.
CERTAIN TRANSACTIONS
During the fiscal year ending April 30, 1998, the Company paid to Cozzens &
Cudahy Air, Inc., a corporation, all of whose shares of stock are owned by
Michael J. Cudahy, the sum of $344,226 as compensation for the use by the
Company of a jet airplane. The Company believes that the rates paid by the
Company were competitive with those available from third parties and were at
prevailing market rates.
11
<PAGE>
Schoenberg, Fisher, Newman and Rosenberg, Ltd. ("SFNR"), 222 South Riverside
Plaza, Chicago, Illinois has served as general counsel to the Company since
1965. Melvin S. Newman is a partner in SFNR. The Company paid SFNR legal fees
in the amount of $389,142 during the Company's last fiscal year.
FUTURE SHAREHOLDER PROPOSALS
Proposals of shareholders that are intended to be presented by such
shareholders at the Company's 1999 annual meeting of shareholders must be
received by the Company at its offices at 8200 West Tower Avenue, Milwaukee,
Wisconsin between April 22, 1999 and May 15, 1999, in order to be included in
the proxy statement and proxy relating to that meeting.
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 initial reports of ownership and reports of
changes in ownership of equity securities of the Company. Officers, directors,
and greater than ten percent shareholders are required by regulation to
furnish the Company with copies of all section 16(a) forms they file.
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, the Company believes that its officers, directors, and
greater than ten percent beneficial owners complied with all applicable
section 16(a) filing requirements.
OTHER MATTERS
The Company knows of no other matters to be submitted to the Meeting.
However, if any other matters are properly presented to the Meeting, it is the
intention of the persons named in the accompanying proxy to vote in respect
thereof in accordance with their best judgment.
The Board of Directors hopes that shareholders will attend the Meeting.
Whether or not you plan to attend, you are urged to complete, sign, and return
the enclosed proxy in the accompanying envelope. A prompt response will
greatly facilitate arrangements for the Meeting, and your cooperation will be
appreciated. Share-holders who attend the Meeting may vote their shares
personally even though they have sent in their proxies.
ADDITIONAL FINANCIAL INFORMATION
The Company will furnish to any shareholder of record as of June 15, 1998
(or any beneficial owner representing that he is or was entitled to vote at
the Meeting) a copy of its Form 10-K Annual Report for the year ended April
30, 1998 (including statements and financial statement schedules, but
excluding other exhibits) without charge, upon written request addressed to
the Secretary of the Company at its principal offices located at 8200 West
Tower Avenue, Milwaukee, Wisconsin, 53223.
By Order of the Board of Directors
Gordon W. Petersen, Secretary
Milwaukee, Wisconsin
June 25, 1998
12
<PAGE>
Marquette Medical Systems, Inc.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P
R
O FOR THE ANNUAL MEETING OF SHAREHOLDERS - JULY 15, 1998
X
Y
Michael J. Cudahy and Mary M. Kabacinski, or either of them, each with the
power of substitution and revocation, are hereby authorized to represent the
undersigned, with all powers which the undersigned would possess if personally
present, to vote the Common Stock of the undersigned at the Annual Meeting of
shareholders of Marquette Medical Systems, Inc. (the "Company"), to be held at
the Company's offices at 8200 West Tower Avenue, Milwaukee, Wisconsin, 53223 at
9:00 a.m. on July 15, 1998, or any adjournment or postponement thereof, as set
forth on the reverse side.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES FOR
DIRECTOR LISTED ON THE REVERSE SIDE AND FOR APPROVAL OF THE OTHER PROPOSALS
LISTED ON THE REVERSE SIDE.
This proxy will be voted as specified or, if no choice is specified,
will be voted FOR the election of the nominees named and FOR the other
proposals listed on the reverse side.
CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE
<PAGE>
SEE REVERSE
SIDE
1. To elect six directors to serve until the next annual meeting of
shareholders and until their successors are elected and qualified. Nominees:
John G. Bollinger, Michael J. Cudahy, Frederick G. Luber, Frederick A.
Robertson, Melvin S. Newman and Walter L. Robb
FOR WITHHELD
[ ] [ ]
- --------------------- MARK HERE
For all nominees FOR ADDRESS
except as noted above CHANGE AND
NOTE BELOW
[ ]
2. To ratify the selection of Arthur Andersen LLP. as the Company's indepen
dent public accountants for fiscal 1999.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In their discretion, the proxy holders are authorized to vote upon such
other business as may properly come before the 1998 annual meeting or any
adjournment or postponement thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Please sign exactly as name appears at left. Executors, administrators,
trustees, guardians, attorneys-in-fact, etc., should give their full titles. If
signor is a corporation, please give full corporate name and have a duly
authorized officer sign stating title. If a partnership, please sign partner
ship name by authorized person. If share certificate is registered in two names
both should sign.
Signature_________________________Date______
Signature_________________________Date______
PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY CARD PROMPTLY USING THE
ENCLOSED POSTAGE-PREPAID ENVELOPE.
