<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / 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 Section240.14a-11(c) or
Section240.14a-12
GISH BIOMEDICAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(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.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
GISH BIOMEDICAL, INC.
2681 KELVIN AVENUE
IRVINE, CALIFORNIA 92614
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 18, 1998
------------------------
The Shareholders of
GISH BIOMEDICAL, INC.
Notice is hereby given that the 1998 Annual Meeting of Shareholders of Gish
Biomedical, Inc., a California corporation (the "Company"), will be held at the
offices of the Company, 2681 Kelvin Avenue, Irvine, California, 92614, at 1:00
P.M., Pacific Standard Time, on November 18, 1998 for the following purposes:
(1) To elect six directors, the names of whom are set forth in the
accompanying proxy statement, to serve until the 1999 Annual Meeting.
(2) To ratify the selection of Ernst &Young, LLP as auditors for the year
ending June 30, 1999.
(3) To transact such other business as may properly be brought before the
meeting or any adjournment or postponement thereof.
Shareholders of record at the close of business on September 30, 1998, are
the only shareholders entitled to vote at the Annual Shareholders Meeting.
By Order of the Board of Directors
[LOGO]
Jeanne M. Miller
SECRETARY
Irvine, California
October 12, 1998
<PAGE>
GISH BIOMEDICAL, INC.
A CALIFORNIA CORPORATION
2681 KELVIN AVENUE
IRVINE, CALIFORNIA 92614
------------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF SHAREHOLDERS
NOVEMBER 18, 1998
1:00 P.M.
------------------------
INFORMATION CONCERNING THE SOLICITATION
This statement is furnished in connection with the solicitation of proxies
to be used at the Annual Meeting of Shareholders ("Annual Meeting") of Gish
Biomedical, Inc., a California corporation (the "Company"), to be held November
18, 1998.
The solicitation of proxies in the enclosed form is made on behalf of the
Board of Directors of the Company.
The cost of preparing, assembling and mailing the proxy material and of
reimbursing brokers, nominees, and fiduciaries for the out-of-pocket and
clerical expenses of transmitting copies of the proxy material to the beneficial
owners of shares held of record by such persons will be borne by the Company.
The Company does not intend to solicit proxies otherwise than by use of the
mail, but certain officers and regular employees of the Company or its
subsidiaries, without additional compensation, may use their personal efforts,
by telephone or otherwise, to obtain proxies. The proxy materials are being
mailed to shareholders of record at the close of business on October 13, 1998.
A shareholder signing and returning a proxy on the enclosed form has the
power to revoke it at any time before the shares subject to it are voted by
notifying the Secretary of the Company in writing. If a shareholder specifies
how the proxy is to be voted with respect to any of the proposals for which a
choice is provided, the proxy will be voted in accordance with such
specifications. If a shareholder fails to so specify with respect to such
proposals, the proxy will be voted FOR proposals 1 and 2.
Abstentions and broker non-votes are each included in the determination of
the number of shares present and voting for the purpose of determining whether a
quorum is present, and each is tabulated separately. In determining whether a
proposal has been approved, broker non-votes are not counted as votes for or
against a proposal but are included in the determination of the number of shares
present and voting on the proposal.
SHAREHOLDERS' PROPOSALS FOR NEXT ANNUAL MEETING
Shareholders' proposals intended to be presented at the 1999 Annual Meeting
must be received by the Company no later than June 15, 1999, for inclusion in
the Company's proxy statement and form of proxy for that meeting.
On May 21, 1998 the Securities and Exchange Commission adopted an amendment
to Rule 14a-4, as promulgated under the Securities and Exchange Act of 1934, as
amended. The amendment to Rule 14a-4(c)(1) governs the Company's use of its
discretionary proxy voting authority with respect to a stockholder proposal
which is not addressed in the Company's proxy statement. The new amendment
provides that if a proponent of a proposal fails to notify the Company at least
45 days prior to the month and day of mailing of the prior year's proxy
statement, then the Company will be allowed to use its discretionary voting
authority when the proposal is raised at the meeting, without any discussion of
the matter in the proxy statement. With respect to the Company's 1999 Annual
Meeting of Stockholders, if the Company is not provided notice of a stockholder
proposal, which the stockholder has not previously sought to include in the
Company's proxy statement, by August 28, 1999, the Company will be allowed to
use its voting authority as outlined.
<PAGE>
OUTSTANDING VOTING SECURITIES
Only shareholders of record at the close of business on September 30, 1998,
are entitled to vote at the Annual Meeting. On that day, there were issued and
outstanding 3,450,632 shares of Common Stock. Each share has one vote on all
matters other than, under certain conditions, the election of directors, (see
"Cumulative Voting"). A simple majority of the total shares represented at the
Annual Meeting is required to elect directors and ratify or approve the other
item being voted on at this time.
CUMULATIVE VOTING
California law and the bylaws of the Company provide that in elections of
directors, if any shareholder makes a proper request to cumulate such
shareholder's votes at a shareholder meeting prior to the vote for directors,
all shareholders present in person or represented by proxy at the meeting will
be entitled to cumulate their votes. Under cumulative voting, each shareholder
or proxy is entitled to multiply the number of shares to be voted on behalf of
that shareholder times the number of directors to be elected and distribute the
number of votes produced by the formula among one or more candidates as the
person voting the shares thinks fit.
Discretionary authority to cumulate votes represented by the proxies
requested hereby is solicited by the Company's Board of Directors because, in
the event that nominations are made in opposition to the nominees of the Board
of Directors, it is the intention of the persons named in the enclosed proxy to
cumulate votes represented by proxies for individual nominees in accordance with
their best judgment in order to assure the election of as many of the nominees
of the Board of Directors as possible.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL HOLDERS
Listed in the following table are the beneficial owners as of September 30,
1998, of more than five percent of the Company's outstanding Common Stock. In
addition, this table includes the outstanding voting securities beneficially
owned by the executive officers listed in the Summary Compensation Table who are
not directors of the Company, and the number of shares owned by directors and
executive officers as a group. Any voting securities beneficially owned by
directors and director nominees are disclosed under Election of Directors below.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1)(2) CLASS
- ------------------------------------ ------------------ -------------
<S> <C> <C>
Dimensional Fund Advisors, Inc. ................................ 243,500 7%
1299 Ocean Avenue, Santa Monica, CA 90104(3)
Heartland Advisors, Inc. ....................................... 738,800 21%
790 North Milwaukee Street, Milwaukee, WI 53202(4)
Jack W. Brown .................................................. 400,886 11%
2681 Kelvin Avenue, Irvine, California 92614
Jeanne M. Miller ............................................... 133,700 4%
2681 Kelvin Avenue, Irvine, California 92614(5)
All officers and directors as a group, seven persons............ 801,058 21%
</TABLE>
- ------------------------
(1) Except as otherwise noted below, the persons named in the table have sole
voting and investment power with respect to all shares shown as beneficially
owned by them, subject to community property laws where applicable.
(2) Includes shares subject to outstanding stock options exercisable within 60
days of the record date as follows: Mr. Brown 225,000; Ms. Miller 95,000;
and all officers and directors as a group 435,415.
2
<PAGE>
(3) According to a report filed with the Securities and Exchange Commission,
Dimensional Fund Advisors has sole voting power with respect to 124,150 of
these shares and sole dispositive power with respect to all of these shares.
(4) According to Heartland Advisors, Inc. they have sole voting power with
respect to 442,300 shares and sole dispositive power with respect to all of
these shares.
(5) Ms. Miller, age 42, joined the Company in 1982 as its Controller. She was
promoted to Vice President and Chief Financial Officer in May of 1986 and
became corporate secretary in November 1986. Before joining the Company she
was with Ernst & Young, LLP.
ELECTION OF DIRECTORS
PROPOSAL 1:
Six directors will be elected at the Annual Meeting to serve until the 1999
Annual Meeting or until their successors shall have been chosen and qualified.
All of the nominees are directors of the Company and were elected by the
shareholders at the 1997 Annual Meeting. All of the nominees named below have
indicated their willingness to serve. However, in the event any one or more of
such nominees shall be unable to serve, votes will be cast, pursuant to
authority granted by the enclosed proxy, for such person or persons as may be
designated by the Board of Directors, unless the Board reduces the number of
directors to be elected at the meeting. The Board of Directors recommends that
you vote FOR the election of each of the nominees named below. The names of the
nominees for directors of the Company are listed in the following table.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME, POSITION(3)(4) AGE DIRECTOR SINCE OWNERSHIP(1)(2) CLASS
- --------------------- --- -------------- ----------------- ----------
<S> <C> <C> <C> <C>
Jack W. Brown, ............................ 58 1980 400,886 11 %
Chairman of the Board, President
Richard A. Braun, ......................... 57 1988 34,333 1 %
Director
Ray R. Coulter, ........................... 65 1979 32,867 1 %
Director
Richard W. Dutrisac, ...................... 59 1987 23,083 1 %
Director
James B. Glavin, .......................... 63 1988 25,583 1 %
Director
John S. Hagestad, ......................... 51 1979 150,606 4 %
Director
</TABLE>
- ------------------------
(1) Reflects amounts of the Company's Common Stock held as of September 30,
1998. Except as otherwise noted below, the persons named in the table have
sole voting and investment power with respect to all shares shown as
beneficially owned by them, subject to community property laws where
applicable.
(2) Includes shares subject to outstanding stock options exercisable within 60
days of the record date as follows: Mr. Brown, 225,000, Mr. Braun, 23,083,
Mr. Coulter, 23,083, Mr. Dutrisac, 23,083, Mr. Glavin, 23,083, Mr. Hagestad,
23,083 and all officers and directors as a group, 435,415, including the
foregoing.
(3) There are no family relationships among the officers and directors of the
Company.
(4) The mailing address for each director is 2681 Kelvin Ave., Irvine, CA 92614.
3
<PAGE>
NOMINEE'S BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS
Mr. Brown joined the company in 1980 as the Vice President of Marketing.
Shortly thereafter in 1980 Mr. Brown was elected President and Chairman of the
Board of Directors. Prior thereto Mr. Brown was director of Market and Product
development for Bentley Laboratories, Inc., a manufacturer of disposable
Cardiovascular devices. Mr. Brown also serves on the board of ICU Medical, a
medical device manufacturer.
Mr. Braun, formerly the President of CardioVascular Concepts, a distributor
of Medical Products in the southwestern United States is presently employed in a
consulting capacity as Vice President, Corporate Affairs for CardioVascular
Concepts. Mr. Braun is also pursuing other private business interests.
Mr. Coulter is a co-founder and the Chief Financial Officer of Wintec Energy
Ltd., a company engaged in the alternate energy business and has held that
position since 1985.
Mr. Dutrisac has been the President and Chief Executive Officer of PFE,
Inc., a biological export company based in Newport Beach, California, since
1979. Mr. Dutrisac has been involved in the medical industry for 38 years.
Mr. Glavin is Chairman of the Board of Directors of The Immune Response
Corporation, a bio-pharmaceutical firm. From April 1987 to September 1994, Mr.
Glavin was President and Chief Executive Officer of the Immune Response
Corporation. Mr. Glavin serves on the boards of directors of The Immune Response
Corporation, Inhale Therapeutic Systems (a drug delivery), and the Meridian
Mutual Fund, Inc. (a mutual fund).
Mr. Hagestad is a Managing Director of Sares/Regis Group, a firm
specializing in real estate acquisition, development and management, located in
Irvine, California. He has been associated with Sares/Regis Group for more than
20 years.
DIRECTORS' FEES
Director's who are not officers of the Company each receive a fee of $8,000
per fiscal year and an additional fee of $500 for attendance at each Board of
Directors' and committee meeting. Officers of the Company do not receive
additional compensation for attendance at Board of Directors' meetings or
committee meetings.
FORMULA GRANT OF OPTIONS TO NON-EMPLOYEE DIRECTORS
The Company grants a non-qualified option on the last day of each fiscal
year of the Company, to each person who is, as of the last day of the fiscal
year in question, a director of the Company, but is not then an employee of the
Company or any subsidiary of the Company. The number of shares of Common Stock
subject to each such option shall be equal to a minimum of 5,000 shares plus the
product of the gain, if applicable, in market price of the Company's Common
Stock multiplied by one thousand shares, the sum of which is not to exceed an
aggregate of fifteen thousand shares. The gain in market price is calculated by
subtracting the closing price of the Company's Common Stock on the last trading
day of the prior fiscal year from the closing price of the Company's Common
Stock on the last trading day of the current fiscal year. The exercise price of
the shares subject to each stock option granted shall be 100% of the fair market
value of such shares on the date of the grant of the option.
BOARD OF DIRECTORS' AFFILIATIONS
No affiliations exist between the Company and the non-employee nominees to
the Board of Directors.
MANAGEMENT INDEBTEDNESS
During the fiscal year ended June 30, 1991 the Company loaned $100,000 for
the exercise of Gish Biomedical, Inc. common stock options to Mr. Jack W. Brown,
President and Chairman of the Board. During the year ended June 30, 1998, Mr.
Brown borrowed an additional $18,800 and the balance of the
4
<PAGE>
note was renewed. The note is secured by Company stock, bears interest at 5.5%
per annum and is due within one year.
During the fiscal year ended June 30, 1995, the Company loaned $40,000 to
Ms. Jeanne M. Miller, Vice President and Secretary. During the year ended June
30, 1998 Ms. Miller repaid $3,588 and the note was renewed. On September 18,
1998, Ms. Miller repaid the note in its entirety. The note was secured and bore
interest at 5.5% per annum.
COMMITTEES OF THE BOARD OF DIRECTORS
Pursuant to the Company's by-laws, the Board of Directors has appointed two
standing committees from among its members. These committees are the Audit and
Compensation Committees. The Board of Directors does not have a standing
nominating committee.
The function of the Audit Committee is to review and report to the Board on
the financial statements the Company prepared by management and to review and
report to the Board the results of audit examinations by the Company's
independent public accountants. The members of the Audit Committee are Ray R.
Coulter, James B. Glavin and John S. Hagestad.
The Compensation Committee reviews and recommends compensation of Company
officers to the Board and administers the Company's 1981, 1987 and 1997 Stock
Option Plans. The Committee is authorized to grant employee stock options to
non-officer employees of up to 3,750 shares. The members of the Compensation
Committee are Richard W. Dutrisac, James B. Glavin and John S. Hagestad.
MEETING ATTENDANCE
There were 4 meetings of the Board of Directors during the fiscal year ended
June 30, 1998, one meeting of the Audit Committee and one meeting of the
Compensation Committee. All directors attended more than 75% of the meetings of
the Board and of the committees of which they are members.
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning compensation
paid to the Company's Chief Executive Officer and the only other executive
officer earning in excess of $100,000 per annum (the "Named Executives"):
SUMMARY OF COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------- ------------
OTHER ANNUAL STOCK ALL OTHER
COMPENSATION OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(2) ($)(1) (SHARES) (3)
- ---------------------------- ---- --------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Jack W. Brown .................................... 1998 175,500 47,750 5,269 225,000 250
President and Chief Executive Officer of the 1997 160,000 26,240 5,281 -- 250
Company 1996 160,000 33,749 5,692 -- 250
Jeanne M. Miller ................................. 1998 131,500 35,750 4,414 95,000 250
Vice President and Chief Financial Officer of 1997 120,000 21,960 4,414 -- 250
the Company 1996 120,000 24,728 4,777 -- 250
</TABLE>
- ------------------------
(1) Other Annual Compensation consists of the personal use portion of
company-provided automobiles and premiums paid on executive disability
policies.
(2) Bonuses paid to the Named Executives are pursuant to annual incentive
compensation programs established each year for selected employees of the
Company, including the Company's executive
5
<PAGE>
officers. Under this program, performance goals, relating to such matters as
sales growth, gross profit margin and net income as a percentage of sales and
individual efforts are established each year. Incentive compensation, in the
form of cash bonuses, was awarded based on the extent to which the Company and
the individual achieved or exceeded the performance goals.
(3) All Other Compensation consists of the Company's matching contributions to
the Gish Salary Savings Plan under Section 401(k) of $250 in each fiscal
year.
OPTION GRANTS
The following table sets forth certain information regarding stock options
granted for the Named Executives in fiscal 1998.
<TABLE>
<CAPTION>
VALUE AT POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL RATES
OF STOCK PRICE
NUMBER OF APPRECIATION FOR
SECURITIES % OF TOTAL EXERCISE OPTION TERM ($)
UNDERLYING OPTIONS OPTIONS PRICE --------------------
NAME GRANTED GRANTED ($/SH.) EXPIRATION DATE 5%($) 10%($)
- ---- ------------------- ------------- ----------- --------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Jack W. Brown..................... 29,000 6.2 2.72 11/8/99 5,461 11,021
66,667 14.2 2.72 8/23/00 20,162 41,471
33,333 7.1 2.72 7/09/01 14,482 30,441
20,913 4.5 2.72 3/29/00 5,104 10,396
19,087 4.1 2.72 6/25/00 5,320 10,898
30,000 6.4 2.72 8/23/99 4,757 9,550
26,000 5.5 2.72 9/25/99 4,453 8,960
Jeanne M. Miller.................. 15,000 3.2 2.72 8/23/99 2,378 4,775
20,000 4.3 2.72 9/25/99 3,426 6,892
20,000 4.3 2.72 8/4/99 3,025 6,066
13,333 2.8 2.72 3/29/00 3,254 6,627
6.667 1.4 2.72 8/23/00 2,016 4,147
6,667 1.4 2.72 8/23/00 2,016 4,147
6,666 1.4 2.72 8/4/99 2,016 4,147
6,667 1.4 2.72 8/23/00 2,016 4,147
</TABLE>
AGGREGATE OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table provides information on option exercises in fiscal 1998
by the Named Executives and the value of unexercised in-the-money options held
by the Named Executives as of June 30, 1998.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
IN-THE-MONEY OPTIONS AT
NUMBER OF UNEXERCISED OPTIONS AT JUNE 30, 1998
SHARES JUNE 30, 1998 ($)(1)(2)
ACQUIRED ON VALUE -------------------------------- --------------------------------
NAME EXERCISE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------- ----------- ----------- ------------------- ----------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Jack W. Brown................... 9,050 $ 23,002 225,000 0 $ 35,100 0
Jeanne M. Miller................ 0 0 95,000 0 $ 14,820 0
</TABLE>
- ------------------------
(1) The average of the high and low prices of the Company's common stock on June
30, 1998 on the NASDAQ National Market System was $2.875. The dollar amounts
shown reflect the value of options accumulated over a ten-year period from
1988-1998.
(2) Values are calculated by subtracting the exercise price from the fair market
value of the stock as of June 30, 1998.
6
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is a standing committee of the Board of Directors
of the Company. The Compensation Committee is responsible for establishing and
evaluating the effectiveness of compensation policies and programs for the
Company and for making determinations regarding the compensation of the
Company's executive officers, subject to review by the full Board of Directors.
In fiscal year 1998 the members of the Committee were John S. Hagestad, Richard
W. Dutrisac, and James B. Glavin, all of whom are non-employee directors of the
Company.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The following report is submitted by the Compensation Committee members with
respect to the executive compensation policies established by the Compensation
Committee and compensation paid or awarded to executive officers who consist of
Jack Brown (the Company's Chief Executive Officer) and Jeanne Miller (the
Company's Vice President and Chief Financial Officer) (the "Executive Officers")
for fiscal year 1998.
COMPENSATION POLICIES AND OBJECTIVES
In establishing, and also evaluating the effectiveness of, compensation
programs for Executive Officers, the Compensation Committee is guided by three
basic principles:
- The Company must offer competitive salaries to be able to attract and
retain highly-qualified and experienced executives and other management
personnel.
- Executive compensation in excess of base salaries should be tied to the
Company's performance, measured in terms of sales growth, gross profit and
profitability, as well as attainment of individual objectives.
- The financial interests of the Company's executives should be aligned with
the financial interests of the shareholders, primarily through stock
option grants which reward executives for improvements in the market
performance of the Company's Common Stock.
SALARIES AND EMPLOYEE BENEFIT PROGRAMS
In order to retain executives and other key employees, and to be able to
attract additional well-qualified executives when the need arises, the Company
strives to offer salaries, health care and other employee benefit programs, to
its executives and other employees which are comparable to those offered by
competing businesses.
In establishing salaries for the Executive Officers, the Compensation
Committee reviews (i) the historical performance of the Executive Officers; and
(ii) available information regarding prevailing salaries and compensation
programs offered by competing businesses. Another factor which is considered in
establishing salaries of the Executive Officers is the cost of living in
Southern California where the Company is headquartered, as such cost is
generally higher than in other parts of the country.
Salary increases in future years are expected to be limited for the most
part to cost-of-living increases. Merit increases in salaries for management
employees have been substantially eliminated in favor of incentive compensation
programs, described below, that are tied to the Company's performance.
However, in order to retain qualified management personnel, the Company has
followed the practice of seeking to promote executives from within the Company
whenever that is practicable. The Board of Directors believes that this policy
enhances employee morale and provides continuity of management. Typically,
modest appropriate increases are made in conjunction with such promotions.
7
<PAGE>
PERFORMANCE-BASED COMPENSATION
The Compensation Committee believes that annual compensation in excess of
base salaries should be made dependent on both the Company's performance and the
individual executive's performance. Accordingly, at the beginning of each fiscal
year, the Compensation Committee establishes an incentive compensation program
for executive officers and other key management personnel under which the
Executive Officers and other key management personnel may earn bonuses, in
amounts ranging from 15% to 40% of their annual salaries, provided the
individuals meet their individual performance goals and the Company achieves or
exceeds the corporate performance goals for the year.
The Company performance goals are established on the basis of the annual
operating plan developed by management and approved by the Board of Directors.
The measurements used to determine Company performance are sales growth, gross
profit as a percentage of sales and income before taxes as a percentage of
sales. The annual operating plan, which is designed to maximize profitability,
within the constraints of economic and competitive conditions, some of which are
outside the control of the Company, is developed on the basis of (i) the
Company's performance in the prior year; (ii) estimates of sales revenue for the
plan year based upon recent market conditions and trends and other factors
which, based on historical experience, are expected to affect the level of sales
that can be achieved; (iii) historical operating costs and cost savings that
management believes can be realized; and (iv) competitive conditions faced by
the Company. By taking all of these factors into account, including market
conditions, the corporate performance goals in the annual operating plan are
fixed at what is believed to be a realistic level so as to make the incentives
meaningful to executives and to avoid penalizing executives and other key
management personnel for conditions outside of their control.
Bonuses under the incentive plan are awarded not only on the basis of the
Company's performance, but also on the achievement by an executive of specific
objectives within his or her area of responsibility. For example, a bonus may be
awarded for an executive's efforts in achieving greater than anticipated cost
savings, or establishing new or expanding existing markets for the Company's
products. The maximum bonus that may be awarded for individual achievement of
specific objectives is half of the total available under the program.
As a result of this performance-based bonus program, executive compensation,
and the proportion of each executive's total cash compensation that is
represented by incentive or bonus income, increases in those years in which the
Company meets its performance goals. On the other hand, in years in which the
Company does not meet its goals, bonuses, and therefore also total executive
compensation, tend to be lower.
STOCK OPTIONS AND EQUITY-BASED PROGRAMS
In order to align the financial interests of senior executives and other key
employees with those of the shareholders, the Company grants stock options to
its senior executives and other key employees on a periodic basis. Stock option
grants, in particular, reward senior executives and other key employees for
performance that results in increases in the market price of the Company's
Common Stock, which directly benefit all shareholders. Moreover, the
Compensation Committee generally has followed the practice of granting options
on terms which provide that the options become exercisable in cumulative annual
installments, generally over a two to four-year period. The Compensation
Committee believes that this feature of the option grants not only provides an
incentive for senior executives to remain in the employ of the Company, but also
makes longer term growth in share prices important for the executives who
receive stock options.
8
<PAGE>
FISCAL YEAR 1998 COMPENSATION
In fiscal 1998, 25% of the Company's performance goals were met under the
incentive plan. Therefore, Mr. Brown received $9,550 out of a maximum of $38,200
under the plan and Ms. Miller received $7,150 out of a maximum of $28,600 under
the plan for the achievement of these goals.
With respect to meeting the individual performance criteria it was
determined that Mr. Brown met 100% of his individual goals and therefore earned
$38,200 out of a maximum of $38,200 and Ms. Miller met 100% of her individual
goals and therefore earned $28,600 out of a maximum of $28,600. Evaluations of
the Company's performance and individual performance are determined with respect
to each quarter and overall fiscal year performance.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN THE COMPANY'S PREVIOUS
OR FUTURE FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE BY REFERENCE
PREVIOUS OR FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART,
THE FOREGOING REPORT, AND THE PERFORMANCE GRAPH ON PAGE 9, SHALL NOT BE
INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
<TABLE>
<S> <C>
Richard W. Dutrisac, member James B. Glavin, member
John S. Hagestad, member
</TABLE>
9
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph sets forth the cumulative shareholder return (assuming
dividend reinvestment) to the Company's shareholders during the five year period
ended June 30, 1998 as well as an overall stock market index (Media General
Index) and the Company's peer group index (Media General Index of Medical
Instruments and Supplies):
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GISH BIOMEDICAL, INC. MG GROUP INDEX MEDIA GENERAL INDEX
<S> <C> <C> <C>
1993 $100.00 $100.00 $100.00
1994 $86.96 $94.70 $104.50
1995 $123.91 $132.15 $124.37
1996 $100.00 $179.81 $155.49
1997 $86.96 $206.00 $199.82
1998 $50.00 $241.06 $255.97
</TABLE>
The stock performance graph assumes $100 was invested on July 1, 1993.
Assumes dividend reinvested during fiscal year ending June 30, 1998.
10
<PAGE>
PROFIT SHARING PLAN
The Company has a Salary Reduction Profit Sharing Plan, established under
Section 401(k) of the Internal Revenue Code, in which all employees are eligible
to participate (the "Profit Sharing Plan"). Under the provisions of the Profit
Sharing Plan employees may cause up to 15% of their salary to be contributed to
the Profit Sharing Plan. Contributions by employees are held in a trust
established under the Profit Sharing Plan and invested as directed by each
participant. A participant's contributions and the earnings thereon are payable
to the participant or his or her survivors upon death, disability or retirement
in a lump sum or installments over not more than 15 years as directed by the
participant. The Company matches up to $250 of annual contributions by each
employee. For the plan year ended December 31, 1997, the Company made
contributions to the Profit Sharing Plan totaling $54,300 and paid
administrative costs of $45,400. Non-employee directors are not eligible to
participate in the Profit Sharing Plan.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Based upon its review of the copies of reporting forms furnished to the
Company, the Company believes that all filing requirements under Section 16(a)
of the Securities Exchange Act of 1934 applicable to its directors, officers and
any persons holding ten percent or more of the Company's Common Stock with
respect to the Company's fiscal year ended June 30, 1998, were satisfied.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
PROPOSAL 2:
Subject to ratification by the shareholders, the Board of Directors has
reappointed Ernst & Young, LLP as independent auditors to audit the financial
statements of the Company for the current fiscal year. Ernst & Young, LLP has
served as the Company's auditors since 1979 and has issued its report on the
Company's financial statements for the last fourteen years.
Representatives of Ernst & Young, LLP are expected to be present at the
Annual Meeting and will have the opportunity to make a statement if they so
desire and will be available to respond to appropriate questions.
The Audit Committee and the Board of Directors recommend the shareholders
vote FOR such ratification.
OTHER MATTERS
As of the date of this proxy statement, the Board of Directors is not
informed of any matters, other than those stated above, that may be brought
before the meeting. The persons named in the enclosed form of proxy or their
substitutes will vote with respect to any such matters in accordance with their
best judgment.
A copy of the Company's Annual Report to Shareholders, including Financial
Statements for the three fiscal years ending June 30, 1998, 1997 and 1996,
together with the report of Ernst & Young, LLP therein, has been mailed to each
shareholder together with this Proxy Statement.
By Order of the Board of Directors
[LOGO]
Jeanne M. Miller
SECRETARY AND VICE PRESIDENT
Dated October 12, 1998
11
<PAGE>
GISH BIOMEDICAL, INC
Proxy Solicited by Board of Directors
Jack W. Brown and Jeanne M. Miller, and each of them, with full power of
substitution, are hereby appointed proxies to vote all shares of stock which
the undersigned may be entitled to vote at the Annual Meeting of Shareholders
of Gish Biomedical, Inc. (the "Company") to be held on November 18, 1998 at
the Company's offices at 2681 Kelvin Ave., Irvine, California, at 1:00 p.m.,
Pacific Time, or any adjournment thereof, as follows:
(Continued and to be signed on reverse side.)
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FOLD AND DETACH HERE
<PAGE>
Please mark your votes as indicated in this example /X/
FOR WITHHOLD
all nominees listed AUTHORITY
below (except as indicated to vote for all
to the contrary below) nominees listed below
/ / / /
Proposal 1 - Election of Directors
Jack W. Brown, Richard A. Braun,
Ray R. Coulter, Richard W. Dutrisac,
James B. Glavin and John S. Hagestad
INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.
- -----------------------------------------------------------------------------
2. To ratify appointment of Ernst & Young, LLP as auditors for the fiscal
year ending June 30, 1999.
FOR AGAINST ABSTAIN
/ / / / / /
3. In their discretion, the proxies named herein are authorized to vote upon
such other business as may properly come before the meeting or any
adjournment thereof, including procedural and other matters relating to the
conduct of the meeting.
THIS PROXY WILL BE VOTED AS DIRECTED. UNLESS OTHERWISE DIRECTED, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE SIX DIRECTORS AND FOR PROPOSAL 2.
PLEASE DATE, SIGN AND RETURN THIS CARD IN THE ENCLOSED ENVELOPE.
Signature(s) Date , 1998
-------------------------------- --------------
NOTE: Please sign exactly as your name appears hereon. (When shares are held
by joint tenants, both should sign. When signing as attorney, as 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.)
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FOLD AND DETACH HERE
