<PAGE> 1
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
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 14a-12
ATRION CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than 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) 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 how it was
determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
<PAGE> 2
May 7, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 annual meeting of
stockholders of Atrion Corporation, which will be held at the offices of our
subsidiary in St. Petersburg, Florida on Monday, June 14, 1999 at 9:00 a.m.,
Eastern Time. A notice of the annual meeting and the Company's Proxy Statement,
together with a white proxy card, accompany this letter. Also enclosed is a copy
of our 1998 Annual Report.
At the annual meeting this year, you will be asked to elect two
directors and to ratify the Board of Directors' appointment of Arthur Andersen
LLP as independent accountants. Before casting your vote, please read carefully
the enclosed Proxy Statement, which describes the matters to be acted upon and
provides additional information.
We hope that you will attend the meeting in person. However, whether or
not you plan to be personally present, we urge you to read the accompanying
Proxy Statement carefully and then complete, date and sign the enclosed white
proxy card and return it promptly in the envelope provided herewith. This will
ensure representation of your shares of common stock if you are unable to attend
the meeting.
Sincerely,
/s/ Emile A. Battat
Emile A. Battat
Chairman and President
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ATRION CORPORATION
ONE ALLENTOWN PARKWAY
ALLEN, TEXAS 75002
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of Atrion Corporation:
Notice is hereby given that the annual meeting of stockholders of
Atrion Corporation (the "Company") will be held at the offices of Halkey-Roberts
Corporation, a Company subsidiary, 11600 Ninth Street North, St. Petersburg,
Florida, on Monday, June 14, 1999 at 9:00 a.m., Eastern Time, for the following
purposes:
1. To elect two Class I directors.
2. To ratify the Board of Directors' appointment of Arthur
Andersen LLP as independent accountants to audit the Company's
financial statements for the year 1999.
3. To transact such other business as may properly come before
the meeting.
The Board of Directors has fixed the close of business on April 27,
1999 as the record date for the determination of stockholders entitled to notice
of and to vote at the annual meeting and at any adjournment thereof.
By Order of the Board of Directors
Jeffery Strickland
Vice President and Chief Financial
Officer, Secretary and Treasurer
May 7, 1999
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO COMPLETE,
DATE AND SIGN THE ENCLOSED WHITE PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE
PROVIDED HEREWITH. IF YOU ATTEND THE MEETING, YOU MAY, IF YOU WISH, WITHDRAW
YOUR PROXY AND VOTE IN PERSON.
<PAGE> 4
ATRION CORPORATION
One Allentown Parkway
Allen, Texas 75002
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JUNE 14, 1999
GENERAL INFORMATION
This Proxy Statement is being furnished to the stockholders of Atrion
Corporation (the "Company") in connection with the solicitation of proxies by
the Board of Directors of the Company to be voted at the annual meeting of
stockholders to be held at the offices of Halkey-Roberts Corporation, a Company
subsidiary, 11600 Ninth Street North, St. Petersburg, Florida on Monday, June
14, 1999 at 9:00 a.m., Eastern Time, and at any adjournment of such meeting.
This Proxy Statement and the accompanying white proxy card are being first sent
or given to stockholders on or about May 7, 1999. The Company's 1998 Annual
Report is being mailed to stockholders with this Proxy Statement.
PURPOSE OF THE MEETING
At the annual meeting, the Company's stockholders will consider and
vote upon the following matters: (i) the election of two Class I directors and
(ii) a proposal to ratify the Board of Directors' appointment of Arthur Andersen
LLP as independent accountants to audit the Company's financial statements for
the year 1999.
VOTING SECURITIES AND RECORD DATE
Stockholders of record at the close of business on April 27, 1999 (the
"Record Date") will be entitled to notice of, and to vote at, the annual meeting
and at any adjournment thereof. At the close of business on the Record Date, the
Company had outstanding and entitled to vote 2,524,429 shares of common stock,
the only voting securities of the Company. Holders of record of shares of common
stock outstanding on the Record Date will be entitled to one vote for each share
held of record on that date upon each matter presented to the stockholders to be
voted upon at the meeting.
If the enclosed white proxy card is properly executed and received in
time for the annual meeting, unless previously revoked, shares of common stock
represented thereby will be voted at the annual meeting as specified by the
stockholder on the proxy. If no such specification is made, shares represented
by such proxy will be voted FOR the election as directors of the nominees of the
Board of Directors named herein and FOR ratification of the appointment of
Arthur Andersen LLP as independent accountants to audit the Company's financial
statements for the year 1999. In addition, in their discretion the persons
designated in the white proxy card will vote upon such other business as may
properly come before the meeting, including voting for any adjournment of the
meeting proposed by the Board of Directors. A proxy may be revoked at any time
before it is voted at the meeting by delivering to the Company a later-dated
proxy, by voting by ballot at the meeting or by filing with the Inspectors of
Election an instrument of revocation.
REQUIRED VOTE
The presence, in person or by proxy, of the holders of a majority of
the shares of common stock outstanding on the Record Date is necessary to
constitute a quorum at the annual meeting. Abstentions and broker
<PAGE> 5
non-votes will be counted as present and represented at the annual meeting for
purposes of determining a quorum. Directors will be elected at the annual
meeting by a plurality of the votes cast by the stockholders present in person
or by proxy and entitled to vote. Abstentions and broker non-votes will have no
effect on the outcome of the election of directors.
OTHER MATTERS
On April 16, 1999, a committee named The Atrion Stockholder Committee,
comprised of Jerry A. Howard and R. Scott Nieboer, filed a preliminary proxy
statement with the Securities and Exchange Commission ("Commission") indicating
that it intends to solicit proxies for the election of Mr. Howard and Mr.
Nieboer as directors of the Company in opposition to the Board of Directors'
nominees listed below. Prior to that time, the Company had been notified by Mr.
Howard, in compliance with the procedures for nominations by stockholders set
forth in the Company's Bylaws, that he intended to nominate himself and Mr.
Nieboer for election as directors at the 1999 annual meeting. In its preliminary
proxy statement, The Atrion Stockholder Committee states that if its nominees
are elected they plan to use their best efforts to influence a sale of the
Company or its individual businesses.
The Board of Directors of the Company unanimously opposes The Atrion
Stockholder Committee's nominees and strongly urges you not to sign any proxy
card that The Atrion Stockholder Committee may send you. The Board of Directors
believes that its nominees named herein, not those proposed by The Atrion
Stockholder Committee, are best qualified to fulfill the Company's commitment to
maximize shareholder value. If you have previously signed and returned any proxy
card provided to you by The Atrion Stockholder Committee, you have every right
to change your vote and revoke that proxy. You can do this by completing,
signing, dating and returning the enclosed white proxy card.
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes: Class
I, Class II and Class III. Two Class I directors are to be elected at the annual
meeting to serve until the annual meeting of stockholders to be held in 2002 and
until the election and qualification of their respective successors in office.
Both of the nominees for election as Class I directors who are named below are
members of the Board of Directors and were elected by the stockholders to the
Board of Directors of ATRION Corporation, the predecessor to the Company prior
to its reincorporation in Delaware in February 1997. It is intended that the
persons named in the white proxy card will vote for the election of these
nominees. If either of the nominees listed below, each of whom has indicated his
willingness to serve as a director if elected, is not a candidate when the
election occurs, proxies will be voted for election of the remaining nominee and
may be voted for the election of any substitute nominee.
The following information is furnished with respect to each of the
Board of Directors' nominees for election as a director and each director whose
term will continue after the annual meeting.
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Name, Business Address (if any), Age, Service as a Director of the Company (a)
Principal Occupation, Positions and Offices, Other Directorships and
Business Experience
NOMINEES FOR ELECTION AS DIRECTORS
Class I - Term Ending in 2002
EMILE A. BATTAT
Mr. Battat, age 61, has been a director since 1987 and has served as
Chairman of the Board of the Company since January 1998 and as interim
President and Chief Executive Officer of the Company, and as Chairman
of the Board or President of each of the Company's subsidiaries, since
October 1998. Mr. Battat is President and Chief Executive Officer of
Piedmont Enterprises, Inc., a privately-held consulting firm, and has
served in such position since March 1994. Mr. Battat served as the
President and Chief Executive Officer of Minemet, Inc., a company
engaged in international trade, from August 1978 until February 1994.
From 1965 to 1978, he served with Kaiser Industries and its affiliates,
a diversified industrial group, in various functions including
strategic planning, diversification, acquisitions and divestitures,
with the last nine years as Vice President and director of Kaiser
International. Mr. Battat holds Bachelor of Science and Master of
Science degrees in Mechanical Engineering from Massachusetts Institute
of Technology and a Master of Business Administration degree from
Harvard University. He is an associate member of Sigma Xi, a scientific
honor society. Mr. Battat's business address is One Allentown Parkway,
Allen, Texas 75002.
JOHN H. P. MALEY
Mr. Maley, age 64, has been a director since February 1996. Mr. Maley
has been a consultant since January 1995 and has served as Chairman of
Magister Corporation, a company which manufactures orthopedic and
consumer healthcare products, since July 1995. The business address for
Mr. Maley and Magister Corporation is 310 Sylvan Street, Chattanooga,
Tennessee 37405. From 1976 to December 1994, Mr. Maley was President
and Chief Executive Officer of Chattanooga Group, Inc., a private
corporation that became the world's leading manufacturer of products
used for physical and sports medicine. In 1971 he founded, and from
1971 to 1974 he was President and Chief Executive Officer of, Invacare
Corporation, a company that is now recognized as the world leader in
the market for wheelchairs and a broad range of home healthcare
products. From 1962 to 1970 and in 1975, Mr. Maley was associated with
the consulting firm of McKinsey & Company, Inc., becoming a partner in
1968, and worked with clients of that firm in England, Australia and
the United States. Mr. Maley holds Bachelor of Arts and Master of Arts
degrees in Economics from Cambridge University. He is a director of
Rehabilicare, Inc.
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DIRECTORS CONTINUING IN OFFICE
Class II - Term Ending in 2000
RICHARD O. JACOBSON
Mr. Jacobson, age 62, has been a director since 1992. Mr. Jacobson is
Chairman of the Board of Jacobson Warehouse Company, Inc., a privately
held warehouse company with facilities in 17 locations in eight states,
which Mr. Jacobson founded 31 years ago. He is also Chairman of the
Board of Jacobson Transportation Company, Inc., a truckload common
carrier with authority to operate in 48 states and Canada. Mr. Jacobson
has a degree in Business Administration from the University of Iowa.
The business address for Mr. Jacobson, Jacobson Warehouse Company, Inc.
and Jacobson Transportation Company, Inc. is 3811 Dixon Street, Des
Moines, Iowa 50313. He is a director of FelCor Lodging Trust, Inc.,
Heartland Express, Inc., Firstar Bank of Des Moines, N.A. and Firstar
of Iowa, N.A.
JEROME J. MCGRATH
Mr. McGrath, age 76, has been a director since 1988. Mr. McGrath was Of
Counsel to the law firm of Gallagher, Boland, Meiburger & Brosnan from
January 1988 until his retirement in June 1997 and practiced law for
over 45 years. He is a graduate of Georgetown University and Georgetown
University Law Center.
HUGH J. MORGAN, JR.
Mr. Morgan, age 70, has been a director since 1988. Mr. Morgan is
Chairman of the Board of National Bank of Commerce of Birmingham and
has served in such position since February 1990. The business address
for Mr. Morgan and National Bank of Commerce of Birmingham is 1927
First Avenue North, Birmingham, Alabama 35203. Mr. Morgan was employed
for many years prior to 1988 by Sonat Inc., a diversified energy
holding company, where he held various positions including Vice
Chairman of the Board of Sonat Inc. and Chairman of the Board of its
wholly-owned subsidiary, Southern Natural Gas Company. Mr. Morgan holds
a Bachelor of Arts degree from Princeton University and is a graduate
of the Vanderbilt University Law School.
Class III - Term Ending in 2001
ROGER F. STEBBING
Mr. Stebbing, age 58, has been a director since 1992. Mr. Stebbing is
President and Chief Executive Officer of Marlboro Enterprises, Inc., a
company engaged in chemical plant engineering, design, construction and
operation, and has served in such capacities since 1976. He is also
President and Chief Executive Officer of Stebbing and Associates, Inc.,
an engineering consulting company, and has served in such capacities
since 1986. Mr. Stebbing is a licensed professional engineer and has a
BSC honors degree in Chemical Engineering from Salford University. The
business address for Mr. Stebbing, Marlboro Enterprises, Inc. and
Stebbing and Associates, Inc. is 634 Mississippi Avenue, Signal
Mountain, Tennessee 37377.
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JOHN P. STUPP, JR.
Mr. Stupp, age 49, has been a director since 1985. He is Chief
Operating Officer and Executive Vice President of Stupp Bros., Inc., a
diversified holding company, and has served in such capacities since
April 1996 and April 1995, respectively. The business address for Mr.
Stupp and Stupp Bros., Inc. is 120 South Central Avenue, Suite 1650,
St. Louis, Missouri 63105. From January 1992 to August 1995, Mr. Stupp
also served as President and since August 1995 he has served as Chief
Executive Officer of Stupp Corporation, a division of Stupp Bros., Inc.
Mr. Stupp holds a Bachelor of Science degree in Business and Economics
from Lehigh University.
- ---------------------
(a) The Company was formed in 1996 as a wholly-owned subsidiary of ATRION
Corporation, an Alabama corporation (the "Predecessor Corporation"), as
a part of the Predecessor Corporation's plan to reincorporate in
Delaware. The reincorporation was completed on February 25, 1997. In
connection with the reincorporation, all of the directors and executive
officers of the Predecessor Corporation became directors and executive
officers of the Company, serving in the same capacities. Unless the
context otherwise requires, references in this Proxy Statement to the
Company, Board of Directors and executive officers of the Company prior
to February 25, 1997 shall mean the Predecessor Corporation and its
Board of Directors and executive officers.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF ITS
NOMINEES, EMILE A. BATTAT AND JOHN H. P. MALEY.
INFORMATION REGARDING BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held seven meetings during 1998. Each director
attended at least 75% of the aggregate of the number of meetings of the Board of
Directors and the number of meetings of all committees on which he served held
in 1998 during the time he served as a director or as a member of such
committees.
The Board of Directors has four standing committees, the Executive
Committee, the Corporate Governance Committee, the Compensation Committee and
the Audit Committee. The Executive Committee is currently comprised of Emile A.
Battat, Richard O. Jacobson, John H. P. Maley and Hugh J. Morgan, Jr. The
Corporate Governance Committee, which is currently comprised of Jerome J.
McGrath, Roger F. Stebbing and John P. Stupp, Jr., makes recommendations to the
Board of Directors respecting nominees for election as directors, the structure
and compensation of the Board of Directors and the responsibilities of the
committees of the Board of Directors. The Corporate Governance Committee will
consider nominees recommended by stockholders, which recommendations may be
directed to the Corporate Governance Committee in care of the Secretary of the
Company at the address stated herein. The Corporate Governance Committee did not
meet in 1998. The Compensation Committee, which is currently comprised of
Richard O. Jacobson, John H. P. Maley, Hugh J. Morgan, Jr. and J. Kenneth Smith,
makes recommendations to the Board of Directors as to the remuneration of all
executive officers of the Company, administers the Atrion Corporation 1990 Stock
Option Plan (the "1990 Stock Option Plan"), the Atrion Corporation 1994 Key
Employee Stock Incentive Plan (the "1994 Stock Incentive Plan"), and the Atrion
Corporation 1997 Stock Incentive Plan, (the "1997 Stock Incentive Plan") and
reviews and makes recommendations regarding the Company's other incentive
compensation plans. The Compensation Committee met five times in 1998. The Audit
Committee, the current members of which are Jerome J. McGrath, Roger R. Stebbing
and John P. Stupp, Jr., has the responsibility of reviewing the Company's
financial results, the scope and result of audits and internal accounting
controls. The Audit Committee also recommends to the Board of Directors the
appointment of the Company's independent auditors. The Audit Committee met two
times in 1998.
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In 1998, the Board of Directors adopted, and stockholders approved, the
Atrion Corporation 1998 Outside Directors Stock Option Plan ("1998 Outside
Directors Plan") providing for the grant on February 1 of each year beginning
February 1, 1998 and ending on February 1, 2000, to each director, other than
the Chairman of the Board, who is an outside director of an option to purchase
10,000 shares of common stock and to the Chairman of the Board, if he is an
outside director, of an option to purchase 20,000 shares of common stock.
Effective February 1, 1998, these grants took the place of cash retainers and
meeting fees paid and restricted stock grants made to outside directors prior to
that time. The purchase price of the common stock subject to each option granted
is the fair market value of the common stock on the date of grant. Options
granted under the 1998 Outside Directors Plan vest and become exercisable in
four equal quarterly installments on May 1, August 1, November 1 and February 1
next succeeding the date of grant provided the optionee is then serving as an
outside director. Each option expires 10 years from the date of the grant,
unless it is terminated sooner. If an optionee ceases to be an outside director
for any reason other than death or disability, he will have the right to
exercise his options at any time within six months after the date on which he
ceased to be an outside director to the extent of the full number of shares
vested on the date on which he ceased being an outside director. If the optionee
ceases to be an outside director by reason of his death or disability, then the
options may be exercised at any time within 12 months after the date on which he
ceased to be an outside director by the optionee or his legal representative, in
the case of disability, or by his heir or legatee or the personal
representative, administrator or executor of his estate, in the case of death,
to the extent of the full number of shares vested on the date on which he ceased
being an outside director. However, no option is to be exercisable after the
expiration of the 10-year term described above. In light of the recent
announcement of the Financial Accounting Standards Board that it has tentatively
concluded that the fair value of options granted to outside directors would have
to be expensed as incurred, in 1999 the Board of Directors amended the 1998
Outside Directors Plan to eliminate the grant of any options thereunder after
February 1, 1999. Therefore, there will be no additional grants of options under
the 1998 Outside Directors Plan. Effective February 1, 2000, each outside
director will be paid a fee of $1,000 per month and $750 for each meeting of the
Board of Directors at which he is in attendance. The Company will continue to
reimburse each such director for travel and out-of-pocket expenses incurred in
connection with attending meetings of the Board of Directors.
In 1999, the Board of Directors terminated the Company's Restricted
Shares Compensation Plan for Non-Employee Directors (the "Restricted Shares
Plan"), which provided for the issuance on July 10 of each year of 400 shares of
common stock of the Company to each outside director of the Company. No shares
of common stock have been issued under the Restricted Shares Plan since 1997, as
grants under that plan were suspended with the adoption of the 1998 Outside
Directors Plan.
Pursuant to the 1997 Stock Incentive Plan, on July 10 of each year each
outside director is granted automatically an option to purchase 2,000 shares of
common stock, at an exercise price equal to the fair market value of the common
stock on the date of grant. Each such option is fully exercisable on the date of
grant and expires on the first to occur of (i) the tenth anniversary of the date
of grant; (ii) six months after the date the outside director ceases to be a
director of the Company other than as a result of his death; or (iii) one year
after the outside director ceases to be a director by reason of his death. In
1999, the Board of Directors suspended the grant of options to outside directors
under the 1997 Stock Incentive Plan until the year 2000. Accordingly, no options
will be granted to outside directors under the 1997 Stock Incentive Plan on July
10, 1999.
CERTAIN ADDITIONAL INFORMATION
Except as set forth in this Proxy Statement, to the knowledge of the
Company none of the Company's directors or current Named Executive Officers: (i)
owns of record any securities of the Company that are not also beneficially
owned by them; (ii) is, or was within the past year, a party to any contract,
arrangements or understandings with any person with respect to the securities of
the Company, including, but not limited to, joint ventures, loan or option
arrangements, puts or calls, guarantees against loss or guarantees of profit,
division of losses or profits, or the giving or withholding of proxies; (iii)
has any substantial interest, direct or indirect, by security holdings or
otherwise, in any matter to be acted upon at the annual meeting; or (iv)
beneficially owns any
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securities of any subsidiary of the Company. Except as set forth in this Proxy
Statement, to the knowledge of the Company none of the Company's directors or
current Named Executive Officers nor any of their associates has any arrangement
or understanding with any person with respect to future employment by the
Company or its affiliates or with respect to any future transactions to which
the Company or any of its affiliates will or may be a party, nor any material
interest, direct or indirect, in any transaction which has occurred since May 1,
1998 or any currently proposed transaction, or series of similar transactions,
to which the Company or any of its affiliates was or is to be a party and in
which the amount involved exceeds $60,000.
SECURITIES OWNERSHIP
The following table sets forth information regarding the beneficial
ownership of shares of common stock of the Company as of the Record Date by (i)
each of the directors of the Company, two of whom are also the Board of
Directors' nominees for election as directors at the annual meeting; (ii) the
executive officers of the Company who are named in the Summary Compensation
Table herein (including two former executive officers who are named in the
Summary Compensation Table); (iii) all of the current directors and executive
officers of the Company as a group, and (iv) each other person known by the
Company to be the beneficial owner of more than 5% of the outstanding common
stock of the Company.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED (A) OF CLASS (A)
------------------------ ---------------------- ------------
<S> <C> <C>
Emile A. Battat 88,300 (b) 3.2%
Richard O. Jacobson 93,900 (b) 3.4%
Jerome J. McGrath 20,800 (b) *
John H. P. Maley 17,500 (b) *
Hugh J. Morgan, Jr. 46,000 (b) 1.7%
J. Kenneth Smith(c) 21,220 (b)(d) *
Roger F. Stebbing 19,300 (b) *
John P. Stupp, Jr. 155,500 (b)(e) 5.6%
Jeffery Strickland(f) 34,584 (b)(g) 1.3%
Charles S. Gamble(h) 6,300 (b)(i) *
Jerry A. Howard(j) 30,400 1.1%
Dick Rabenau(k) 3,000 (k) *
Dimensional Fund Advisors Inc.(l) 234,150 8.5%
T. Rowe Price Associates, Inc.(m) 275,000 10.0%
All directors and executive
officers as a group 503,404 (n) 18.2%
</TABLE>
--------------------
*Less than 1% of class outstanding
(a) For purposes of this table, the percentage of class beneficially owned
has been computed, in accordance with Rule 13d-3(d)(1) under the
Exchange Act, on the basis of 2,524,429 shares of common stock
outstanding on the Record Date plus 237,200 shares of common stock
issuable pursuant to options exercisable on the Record Date or within
60 days thereafter. Except as otherwise indicated in the notes to this
table, beneficial ownership includes sole voting and investment power.
(b) The shares listed include the following shares issuable upon the
exercise of options exercisable on the Record Date or within 60 days
thereafter: Mr. Battat, 24,000; Mr. Jacobson, 16,500; Mr. McGrath,
7
<PAGE> 11
16,500; Mr. Maley, 16,500; Mr. Morgan, 16,500; Mr. Smith, 16,500; Mr.
Stebbing, 16,500; Mr. Stupp, 16,500; Mr. Strickland, 31,700; and Mr.
Gamble, 4,000. The foregoing directors and executive officers are
parties to award agreements with the Company setting forth certain
terms of the options granted to them as follows: (i) all such persons
are parties to award agreements under the 1997 Stock Incentive Plan;
(ii) all outside directors are parties to award agreements under the
1998 Outside Directors Plan; and (iii) Mr. Strickland is a party to
award agreements under the 1990 Stock Option Plan and the 1994 Stock
Incentive Plan. The shares listed for all directors and executive
officers as a group include 175,200 shares issuable upon the exercise
of options exercisable on the Record Date or within 60 days thereafter.
(c) Mr. Smith, whose term as a director of the Company expires at the 1999
annual meeting, is retired.
(d) Includes 630 shares held under usufruct as to which Mr. Smith has
voting power but no dispositive power.
(e) Includes 135,000 shares held by Stupp Bros., Inc. as to which shares
Mr. Stupp shares voting power and investment power as a director and
executive officer of, and as a voting trustee of a voting trust which
owns 100% of the voting stock of, Stupp Bros., Inc. The 135,000 shares
held by Stupp Bros., Inc. represents 5.5% of the common stock of the
Company outstanding as of the Record Date and 4.9% of the class
computed as set forth in note (a) above. The business address for Mr.
Stupp and Stupp Bros., Inc. is 120 South Central Avenue, Suite 1650,
St. Louis, Missouri 63105.
(f) Mr. Strickland is Vice President and Chief Financial Officer, Secretary
and Treasurer of the Company. His business address is One Allentown
Parkway, Allen, Texas 75002.
(g) Includes 1,225 shares owned jointly with his wife.
(h) Mr. Gamble is President of Halkey-Roberts Corporation, a wholly-owned
subsidiary of the Company, that designs, develops, manufactures and
sells proprietary medical device components and related components. Mr.
Gamble's business address is 11600 Ninth Street North, St. Petersburg,
Florida 33716.
(i) Mr. Gamble purchased 200 shares of common stock of the Company on
October 15, 1998 and 300 shares of common stock on November 11, 1998.
(j) Mr. Howard ceased serving as a director, and his employment with the
Company terminated, on October 6, 1998. The number of shares
beneficially owned by Mr. Howard is based upon the information set
forth in the preliminary proxy statement filed with the Commission by
The Atrion Stockholder Committee on April 16, 1999.
(k) Mr. Rabenau's employment with Atrion Medical Products, Inc. terminated
on November 15, 1998. The number of shares beneficially owned by Mr.
Rabenau is based on information set forth in the Form 5 filed by him
with the Commission on February 9, 1999.
(l) The address of Dimensional Fund Advisors, Inc. is 1299 Ocean Avenue,
11th Floor, Santa Monica, California 90401. This information is based
upon a Schedule 13G dated February 12, 1999 filed with the Commission
and furnished to the Company by Dimensional Fund Advisors Inc.
("Dimensional"), a registered investment adviser, reporting that
Dimensional is deemed to have beneficial ownership of 234,150 shares of
common stock of the Company and that all of such shares are held in
portfolios of investment companies registered under the Investment
Company Act of 1940 as to which Dimensional serves as investment
advisor or other investment vehicles as to which Dimensional serves as
investment manager. In its Schedule 13G, Dimensional has reported that
it has sole power to vote or direct the vote and the sole power to
dispose or direct the disposition of 234,150 shares of common stock of
the Company. Dimensional has disclaimed beneficial ownership of all
such shares.
(m) The address of T. Rowe Price Associates, Inc. is 100 East Pratt Street,
Baltimore, Maryland 21202. This information is based upon a Schedule
13G dated February 12, 1999 filed with the Commission and furnished to
the Company by T. Rowe Price Associates, Inc. ("Price Associates") and
T. Rowe Price Small-Cap Value Fund, Inc. reporting that T. Rowe Price
Small-Cap Value Fund, Inc. has sole power to vote or direct the vote of
such shares of common stock and that Price Associates, which serves as
investment adviser for T. Rowe Price Small-Cap Value Fund, Inc., has
sole power to dispose or direct the disposition of such shares. For
purposes of the reporting requirements of the Exchange Act, Price
Associates is deemed to be a beneficial owner of such shares of common
stock; however, Price Associates has expressly disclaimed beneficial
ownership of all such shares.
(n) See notes (b)-(g) above.
8
<PAGE> 12
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors to file initial reports of ownership and reports of
changes of ownership of the Company's common stock with the Commission.
Executive officers and directors are required to furnish the Company with copies
of Section 16(a) forms that they file. Based upon a review of these filings and
written representations from the Company's directors and executive officers
regarding the filing of such reports, the Company believes that its directors
and executive officers complied with all applicable Section 16(a) filing
requirements during 1998.
RATIFICATION OF APPOINTMENT OF AUDITORS
Subject to stockholder ratification, the Board of Directors, upon
recommendation of the Audit Committee, has appointed the firm of Arthur Andersen
LLP as independent accountants to audit the financial statements of the Company
for the year 1999. Arthur Andersen LLP has audited the Company's financial
statements for many years. A representative of Arthur Andersen LLP will attend
the annual meeting, will have an opportunity to make a statement, and will be
available to respond to appropriate questions. If the stockholders do not ratify
the appointment of Arthur Andersen LLP, the selection of independent auditors
will be reconsidered by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT ACCOUNTANTS TO AUDIT
THE FINANCIAL STATEMENTS OF THE COMPANY FOR THE YEAR 1999.
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
annual and long-term compensation for services in all capacities to the Company
and its subsidiaries for the years ended December 31, 1998, 1997, and 1996 of
(i) those persons who at any time during 1998 served as the Chief Executive
Officer of the Company and (ii) the other persons who served as executive
officers of the Company in 1998 and whose salary and bonus for the year ended
December 31, 1998 exceeded $100,000 (such officers are referred to herein as the
"Named Executive Officers").
9
<PAGE> 13
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
ANNUAL COMPENSATION (1) Awards
----------------------- -----------------------
Securities
Name and Restricted Underlying All Other
Principal Position Year Salary Bonus Stock Awards Options(2) Compensation
- -------------------- ---- -------- -------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Emile A. Battat (3) 1998 $ 27,692 $ 0 $ 0 42,000(4) $ 14,880(5)
Chairman of the
Board, President
and Chief
Executive Officer
Jeffery Strickland 1998 $138,000 $ 10,000 $ 20,000(6) 18,000 $ 49,110(5)
Vice President and 1997 135,000 40,000 0 18,000 11,605
Chief Financial 1996 97,500 29,080 0 2,700 8,648
Officer, Secretary
and Treasurer
Charles S. Gamble 1998 $150,000 $ 55,687 $ 0 17,500 $ 4,167(5)
President- 1997 150,000 28,800 0 7,500 9,256
Halkey-Roberts 1996 88,400 29,265 0 0 5,470
Corporation
Jerry A. Howard (7) 1998 $205,129 $ 0 $ 0 50,000 $426,136(5)
Chairman of the 1997 400,000 50,000 0 48,000 35,913
Board, President 1996 400,000 91,000 0 5,400 34,748
and Chief
Executive Officer
Dick Rabenau(8) 1998 $131,250 $ 0 $ 0 3,300 $147,845(5)
President- 1997 150,000 48,560 0 9,000 8,307
Atrion Medical 1996 126,658 42,232 0 2,700 6,916
Products, Inc.
</TABLE>
(1) In accordance with the regulations of the Commission, this table does
not include perquisites and other personal benefits received by a Named
Executive Officer since the value of perquisites and other benefits for
each Named Executive Officer did not exceed the lesser of $50,000 or
10% of the total annual salary and bonus reported for such Named
Executive Officer.
(2) For 1996, options granted represent incentive stock options granted
under the 1994 Stock Incentive Plan. For 1997 and 1998 for Mr. Gamble
and Mr. Rabenau, options granted represent incentive stock options and
for Mr. Strickland and Mr. Howard represent both incentive and
nonqualified stock options granted under the 1997 Stock Incentive Plan.
For 1998 for Mr. Battat, options granted represent both incentive stock
options and nonqualified stock options granted under the 1997 Stock
Incentive Plan and the 1998 Outside Directors Plan.
(3) Mr. Battat became President and Chief Executive Officer of the Company
on October 6, 1998.
(4) During 1998, options for 20,000 of these shares expired or were
terminated.
(5) Includes the following paid or accrued by the Company or one or more of
its subsidiaries: (i) matching contributions to the Atrion Corporation
401(k) Savings Plan for Mr. Strickland, $3,428; Mr. Gamble, $4,087; Mr.
Howard, $7,294; and Mr. Rabenau, $3,281 (ii) payment of life insurance
premiums for Mr. Battat, $130; Mr. Strickland, $3,429; Mr. Gamble, $80;
Mr. Howard, $8,849; and Mr. Rabenau, $814; (iii) contributions to the
Atrion Corporation Supplemental Executive Thrift Plan for Mr.
Strickland, $4,799;
10
<PAGE> 14
and Mr. Howard, $10,211; (iv) relocation costs incurred in connection
with moving from the Florence, Alabama area to the Allen, Texas area
for Mr. Strickland, $37,454 and Mr. Howard, $63,161; (v) for Mr.
Battat, fees of $13,000 paid to Piedmont Enterprises, Inc. for
consulting services rendered prior to the time Mr. Battat began
receiving compensation as an executive officer of the Company; (vi)
payment to Mr. Howard in connection with the termination of his
employment of $336,621, including accrued vacation pay, and payment to
Mr. Rabenau in connection with the termination of his employment of
$143,750; and (vii) director's fees in the amount of $1,750 paid to Mr.
Battat in 1998 prior to the time he became a Named Executive Officer.
(6) At December 31, 1998, Mr. Strickland held 1,641 shares of restricted
stock having an aggregate value on that date of $13,128.
(7) Mr. Howard ceased serving as a director, and his employment with the
Company terminated, on October 6, 1998.
(8) Mr. Rabenau's employment with Atrion Medical Products, Inc. terminated
on November 15, 1998.
INFORMATION CONCERNING STOCK OPTIONS
The following tables summarize certain information concerning grants to
and exercises by the Named Executive Officers during the year ended December 31,
1998 of options and the value of all unexercised options held by such persons as
of December 31, 1998.
<TABLE>
<CAPTION>
OPTION GRANTS IN 1998
---------------------
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM (2)
-------------------------------------------------------------- ----------------------------------
% OF TOTAL
OPTIONS GRANTED
OPTIONS TO EMPLOYEES EXERCISE
NAME GRANTED(1) IN 1998 PRICE (1) EXPIRATION 5% 10%
- ------------------ ---------- --------------- --------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C>
Emile A. Battat 20,000(5) N/A $ 13.25 01/31/08(3) $166,659(3) $422,331(3)
2,000(4) N/A 9.00 07/09/08 11,320 28,687
20,000(5) 7.1% 6.88 11/11/08 86,474 219,134
Jeffery Strickland 6,000(6) 2.1% 12.19 01/20/08 45,998 116,563
12,000(6) 4.3% 12.63 01/20/08 95,316 241,541
Charles S. Gamble 4,500(6) 1.6% 12.25 02/09/08 34,668 87,853
13,000(7) 4.6% 6.88 11/11/08 56,208 142,437
Jerry A. Howard 13,600(6)(8) 4.8% 12.63 01/20/08(8) 108,025 273,747
36,400(6)(8) 12.9% 12.19 01/20/08(8) 279,052 707,750
Dick Rabenau 3,300(6)(8) 1.2% 12.25 02/09/08(8) 25,423 64,425
</TABLE>
- ----------------
(1) The options granted in 1998 are, with respect to Mr. Gamble and Mr.
Rabenau, incentive stock options or, with respect to Mr. Battat, Mr.
Strickland and Mr. Howard, incentive stock options and nonqualified
stock options, granted pursuant to the 1997 Stock Incentive Plan or the
1998 Outside Directors Plan. The exercise price of the options granted
is equal to (i) with respect to incentive stock options, the average of
the high and low price per share of common stock on the date of grant,
as reported by The Nasdaq Stock Market and (ii) with respect to
nonqualified stock options, the closing price per share of common stock
on
11
<PAGE> 15
the date of grant, as reported by The Nasdaq Stock Market. The options
are not transferable by the optionee except by will or by the laws of
descent and distribution, and each option is exercisable during the
lifetime of the optionee, only by the optionee or, in the event of
disability, by the optionee's guardian or representative. All options
under the 1997 Stock Incentive Plan terminate three months after the
optionee's termination of employment except in case of death or
disability, in which case the options terminate one year after
termination of employment, and options under the 1998 Outside Directors
Plan terminate six months after the optionee ceases to be an outside
director except in the case of death or disability, in which case the
options terminate 12 months after the date the optionee ceased to be an
outside director. The number of options granted to key employees, the
term thereof and the manner in which those options are to be exercised
under the 1997 Stock Incentive Plan are determined by the Compensation
Committee, while the grants to outside directors under the 1997 Stock
Incentive Plan or the 1998 Outside Directors Plan are automatic, with
the plans specifying the term and manner of exercise.
(2) Potential realizable value is based upon the assumption that the market
price of the common stock of the Company will appreciate at the
compounded annual rate shown from the date of grant until the end of
the option term. The dollar amounts in the foregoing table have been
calculated based upon the requirements in the rules on executive
compensation disclosure adopted by the Commission and do not reflect
the Company's estimate of future growth in the price of the Company's
common stock.
(3) These options, which expired or were terminated in 1998, and,
accordingly, at December 31, 1998, had no potential realizable value,
were granted to Mr. Battat under the 1998 Outside Directors Plan on
February 1, 1998, prior to the time that he became a Named Executive
Officer. These options became, or were to become, exercisable in four
equal quarterly installments on May 1, August 1 and November 1, 1998
and February 1, 1999.
(4) These options were granted to Mr. Battat in his capacity as a director
under the 1997 Stock Incentive Plan on July 10, 1998, prior to the time
he became a Named Executive Officer. These options were immediately
exercisable.
(5) These options became first exercisable one-half one month after grant
and the remaining one-half six months after grant.
(6) These options are first exercisable one-third one year after grant, an
additional one-third three years after grant and the remaining
one-third five years after grant.
(7) These options are first exercisable one-half two years after grant and
the remaining one-half four years after grant.
(8) These options were forfeited in 1999.
AGGREGATED OPTION EXERCISES IN 1998
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT YEAR END IN THE MONEY OPTIONS AT YEAR END(1)
SHARES -------------------------- -----------------------------------
ACQUIRED VALUE
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Emile A. Battat 0 $ 0 14,000(2) 10,000 $11,250 $11,250
Jeffery Strickland 0 0 25,700 34,950 0 0
Charles S. Gamble 0 0 2,500 22,500 0 14,625
Jerry A. Howard 0 0 67,750(3) 93,700(3) 0 0
Dick Rabenau 0 0 9,900(3) 14,100(3) 0 0
</TABLE>
- -------------
12
<PAGE> 16
(1) Such value is equal to the product of (i) the closing price of the
common stock of the Company on December 31, 1998 ($8.00 per share) less
the exercise price and (ii) the number of shares subject to
in-the-money options.
(2) Includes options to purchase 4,000 shares granted to Mr. Battat in his
capacity as an outside director before he became a Named Executive
Officer.
(3) These options were forfeited in 1999.
RETIREMENT PLAN
Effective January 1, 1998, the Company's non-contributory pension plan
(the "Retirement Plan") was converted into a "cash balance" retirement plan (the
"Cash Balance Plan"). The Cash Balance Plan includes all full-time active
employees of the Company and its subsidiaries other than Quest Medical, Inc.
Each participant has an account balance which represents his or her benefit
under the Cash Balance Plan. Benefits that were accrued prior to January 1, 1998
under the Retirement Plan were converted to a lump sum actuarial equivalent and
constituted the participant's initial account balance under the Cash Balance
Plan. The Cash Balance Plan provides for the Company to make annual
contributions to a participant's cash balance account in an amount equal to 5%
of the participant's eligible compensation up to the Social Security wage base
and 10% in excess thereof and for an interest credit each plan year equal to the
rate on 30 year U.S. Treasury bonds during November of the preceding plan year.
For the 1998 plan year, the interest rate was 6.11%. For purposes of the Cash
Balance Plan, "eligible compensation" is the participant's salary and bonus as
included in the Summary Compensation Table above. Generally, each participant
becomes fully vested in the benefits under such plan after five years of
employment. Benefits may be paid, subject to certain limitations under the
Internal Revenue Code of 1986, as amended, upon termination of employment,
retirement or death. The Cash Balance Plan specifies various options that
participants may select for the distribution of their accrued balance, including
forms of annuity payments and lump sum distributions. All of the Named Executive
Officers participate, or formerly participated, in the Cash Balance Plan. The
Company's Supplemental Executive Retirement Plan was terminated at the end of
1998. The estimated annual retirement benefits payable to the named executive
officers under the Cash Balance Plan at normal retirement age of 65, assuming 4%
annual increases in eligible compensation until retirement, no change from 1999
levels of maximum includable compensation and Social Security wage base, and a
30 year U.S. Treasury bond rate of 6.5%, are as follows: Mr. Battat, $4,747; Mr.
Gamble, $11,962; and Mr. Strickland, $98,805 (Mr. Howard and Mr. Rabenau have no
retirement benefits under the Cash Balance Plan because their account balances
were distributed to them at their requests following the termination of their
employment).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
From the beginning of 1998 until May 12, 1998, the members of the
Compensation Committee of the Board of Directors were Emile A. Battat, Richard
O. Jacobson, Jerome J. McGrath, John H. P. Maley, Hugh J. Morgan, Jr., J.
Kenneth Smith, Roger F. Stebbing and John P. Stupp, Jr. From May 12, 1998 until
the end of 1998, the Compensation Committee members were Messrs. Jacobson,
Maley, Morgan and Smith.
In 1998, the Company paid Piedmont Enterprises, Inc. $13,000 for
consulting services. Emile A. Battat, Chairman of the Board, President and Chief
Executive Officer of the Company, is the President and Chief Executive Officer
and sole stockholder of Piedmont Enterprises, Inc. These consulting services
were rendered prior to the time Mr. Battat began receiving compensation as an
executive officer of the Company. It is not anticipated that Piedmont
Enterprises, Inc. or Mr. Battat will render consulting services to the Company
in 1999. In conjunction with Mr. Battat's election on October 6, 1998 as
President and Chief Executive Officer of the Company, he agreed with the Board
of Directors to serve in those capacities on an interim basis while the Company
conducted a search for a new President and Chief Executive Officer.
13
<PAGE> 17
During 1998, John H. P. Maley provided certain consulting services to
the Company for which he was paid $21,000. Mr. Maley has also provided
consulting services to the Company in 1999 and has been paid $10,500 for those
services. The Company expects that Mr. Maley will provide additional consulting
services in 1999.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee, which is currently comprised of Richard O.
Jacobson, John H. P. Maley, Hugh J. Morgan, Jr. and J. Kenneth Smith,
establishes the overall executive compensation program for the Company and makes
recommendations for base salaries, salary increases and bonuses for the
Company's executive officers. In addition, the Compensation Committee
administers the Company's incentive programs. The executive compensation
program, which is periodically reviewed and modified, as necessary, by the
Compensation Committee, is designed to attract, retain and motivate management
personnel and includes compensation that is tied to enhanced stockholder value.
With the change in the Company's business, the Compensation Committee is placing
even greater emphasis on executive compensation being closely linked to the
Company's performance and returns to stockholders.
Compensation Policies
Base salary, cash incentive compensation and stock awards are the
principal components of compensation for the Company's executive officers. Base
salaries of the Company's executive officers are reviewed annually and
adjustments made generally on the basis of the Company's performance as measured
by certain financial and non-financial criteria, various survey information
respecting compensation of executive officers, compensation levels for executive
officers in a broad range of companies (which range is broader than the group of
companies included in the peer group index used in comparing cumulative
stockholder return), cost-of-living information and individual performance of
the particular executive officer. The Compensation Committee has not assigned
relative weights or values to any of such criteria. With respect to all
executive officers, the Compensation Committee takes into consideration a review
of individual performance. With respect to the financial performance of the
Company, the Compensation Committee generally takes into consideration the
Company's earnings from continuing operations, earnings per share and total
stockholder return. A new executive's base salary is determined on the basis of
the responsibilities of the position, the experience of the new executive and
the competitive marketplace for management talent. Executive officers of the
Company are eligible for discretionary bonuses as determined by the Compensation
Committee.
In late 1998, the Compensation Committee recommended, and the Company's
Board of Directors approved, the termination of certain benefit plans that over
the years had covered only a limited number of the Company's highest paid
executive officers. These were so-called "top-hat plans" that provided benefits
that were supplemental to the Company's non-contributory pension plan and the
Company's 401(k) Savings Plan. The Compensation Committee concluded that such
plans, and the costs associated therewith, were no longer necessary or
appropriate. The Compensation Committee also recommended in late 1998, and the
Board of Directors approved, the termination of certain incentive plans which
had been used by two of the Company's subsidiaries and the implementation of new
incentive plans keyed to each subsidiary's earnings or annual return on assets.
The Compensation Committee recommended those plans because it believed that they
better fostered a corporate culture focused on bottom line results by providing
key employees with a substantial stake in reducing costs and increasing sales
and productivity while conserving capital resources.
Stock awards are designed to motivate executives to improve the
long-term performance of the Company's common stock in the market, to encourage
them to achieve superior results over the long term and to align the interests
of executive officers with those of stockholders. Decisions respecting
restricted stock awards are made on the basis of the criteria referred to above,
and decisions respecting the grant of stock options are made using the same
criteria as well as the number of unexercised options held by key employees. The
Compensation Committee generally staggers the exercise dates for options over a
period of time so that the key employee receiving stock
14
<PAGE> 18
option awards will be rewarded only if he remains with the Company for an
extended period and in order to emphasize the significance of the Company's
long-term performance.
Compensation of Chief Executive Officer
In reaching its decisions respecting Mr. Howard's cash compensation and
stock option awards, at the beginning of 1998 the Compensation Committee
reviewed Mr. Howard's base salary, bonuses and stock option and restricted stock
awards in the 1993-1997 period, the changes in such compensation made during
such period and certain of the factors considered when those changes in
compensation were made, and the change in the Company's business. Additionally,
the Compensation Committee took into consideration the financial criteria
outlined above, but did not assign relative weights or values to any of such
criteria in assessing the Company's performance. In addition, the Compensation
Committee considered surveys of executive officer compensation, information
respecting the compensation levels for chief executive officers in various
industries, and Mr. Howard's individual performance. The Compensation Committee
concluded that Mr. Howard's overall compensation should be restructured to be
more in line with other companies of comparable size in the medical products
industry and determined that Mr. Howard's base salary should be reduced from
$400,000 to $250,000.
As a part of the restructuring of Mr. Howard's compensation to link it
more closely with the Company's performance and returns to stockholders over the
long term, in early 1998 the Compensation Committee awarded Mr. Howard options
for 50,000 shares with those options to vest at various dates in the future.
Those options, along with other options previously granted to Mr. Howard, were
forfeited in early 1999, three months after the termination of Mr. Howard's
employment with the Company.
In October 1998, when Mr. Battat was elected interim President and
Chief Executive Officer of the Company in place of Mr. Howard, the Compensation
Committee, after consultation with Mr. Battat, determined that Mr. Battat's
annual base salary should be fixed at $180,000. In making such determination,
the Compensation Committee took into account the request of Mr. Battat that his
base salary be set at the lower end of the range of base salaries of chief
executive officers of comparable companies. The Compensation Committee also
granted to Mr. Battat options to purchase 20,000 shares of common stock of the
Company in recognition of Mr. Battat's willingness to serve as President and
Chief Executive Officer of the Company and to devote substantial time to the
Company in that capacity. The Compensation Committee also acknowledged that as a
result of being selected to those positions options granted under the Company's
1998 Outside Directors Plan to Mr. Battat in his capacity as Chairman of the
Board had been or were likely to be forfeited.
MEMBERS OF THE COMPENSATION COMMITTEE
Richard O. Jacobson Hugh J. Morgan, Jr.
John H. P. Maley J. Kenneth Smith
PERFORMANCE OF COMMON STOCK
The following graph compares the cumulative total return on investment
(the change in year-end stock price plus reinvestment of dividends), for each of
the last five fiscal years, assuming that $100 was invested on December 31, 1993
in each of (i) the Company, (ii) a group of stocks consisting of companies in
the Media General Index of Surgical & Medical Instruments and (iii) a group of
stocks consisting of all companies whose stocks are included in the S&P 500
Composite Index.
15
<PAGE> 19
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
-------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Atrion Corporation 100.00 86.81 118.78 145.50 127.61 73.58
Media General Index of Surgical & Medical Instruments 100.00 115.07 196.32 213.81 248.01 338.62
S & P Composite Index 100.00 101.32 139.40 171.41 228.59 293.92
</TABLE>
STOCKHOLDER PROPOSALS
STOCKHOLDER PROPOSALS IN THE COMPANY'S PROXY STATEMENT
In order for proposals by stockholders to be considered for inclusion
in the Company's proxy material relating to the 2000 annual meeting of
stockholders, such proposals must be received by the Company on or before
January 7, 2000.
STOCKHOLDER PROPOSALS TO BE PRESENTED AT ANNUAL MEETINGS
The Company's Bylaws provide that a stockholder who desires to propose
any business at an annual meeting of stockholders must give the Company written
notice of such stockholder's intent to bring such business before such meeting.
Such notice is to be delivered to, or mailed, postage prepaid, and received by,
the Secretary of the Company at the principal executive offices of the Company
not later than 60 days nor earlier than 90 days prior to the first anniversary
of the preceding year's annual meeting of stockholders. However, in the event
that the date of the annual meeting is more than 30 days before or more than 60
days after such anniversary date, notice by the stockholder must be delivered
not earlier than 90 days prior to such annual meeting and not later than the
later of 60 days prior to such annual meeting and the 10th day following the
issuance by the Company of a press release announcing the meeting date. Such
notice for the 2000 annual meeting must be delivered not earlier than March 16,
2000 and not later than April 15, 2000, provided the date of the 2000 annual
meeting is not more than 30 days before or more than 60 days after June 14,
2000. The stockholder's written notice must set forth (a) a brief description of
the business desired to be brought before the meeting and the reasons for
conducting such business at the meeting; (b) the name and address of the
stockholder who intends to propose such business; (c) a representation that the
stockholder is a holder of record of shares of common stock of the Company
entitled to vote at such meeting and intends to appear in person or by proxy at
such meeting to propose such business; and (d) any material interest of the
stockholder in such business. The Chairman of the meeting may refuse to transact
any business presented at any meeting without compliance with the foregoing
procedure.
16
<PAGE> 20
STOCKHOLDER NOMINATIONS FOR DIRECTORS
The Company's Bylaws provide that a stockholder who desires to nominate
directors at a meeting of stockholders must give the Company written notice,
within the same time period described above for a stockholder who desires to
bring business before a meeting, setting forth (a) the name and address of the
stockholder who intends to make the nomination and of the person or persons to
be nominated; (b) a representation that the stockholder is a holder of record of
shares of common stock of the Company entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to nominate the person or
persons specified in the notice; (c) a description of all arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder; (d) such other information
regarding each nominee proposed by such stockholder as would have been required
to be included in a proxy statement filed pursuant to the proxy rules of the
Commission had each nominee been nominated, or intended to be nominated, by the
Board of Directors; and (e) the consent of each nominee to serve as a director
of the Company if so elected. The Chairman of the meeting may refuse to
acknowledge the nomination of any person if a stockholder has failed to comply
with the foregoing procedure.
COST AND METHOD OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. In
addition to the use of the mails, proxies may be solicited personally or by
telephone, telegram, facsimile and other electronic communication methods by the
directors, officers and employees of the Company without additional
compensation. Brokerage firms, nominees, fiduciaries and other custodians will
be requested to forward soliciting materials to the beneficial owners of common
stock of the Company held in their names or in those of their nominees and their
reasonable expenses will be reimbursed upon request. The Company has engaged
Georgeson & Company Inc. to assist in the solicitation of proxies for a fee of
$20,000, plus out of pocket expenses. It is anticipated that approximately 25
persons will be used by Georgeson & Company Inc. in its solicitation efforts.
Total expenditures for the solicitation of proxies, including fees for
attorneys, accountants, solicitors, advertising, printing, transportation, and
other costs incidental to the solicitation, are estimated to be $150,000,
excluding (i) the costs normally expended for a solicitation for the election of
directors in the absence of a proxy contest and (ii) the salaries and wages of
regular employees and officers of the Company and its subsidiaries, and total
expenditures to date have been approximately $30,000.
OTHER BUSINESS
The Board of Directors does not intend to bring any business before the
meeting other than that stated herein and is not aware of any other matters that
may be presented for action at the meeting. However, if any other matters should
properly come before the meeting, or any adjournments thereof, it is the
intention of the persons named in the accompanying proxy to vote on such matters
as they, in their discretion, may determine.
By Order of the Board of Directors
Jeffery Strickland
Vice President and Chief Financial
Officer, Secretary and Treasurer
May 7, 1999
17
<PAGE> 21
PROXY PROXY
ATRION CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby appoints
Richard O. Jacobson and Roger F. Stebbing, or either of them, proxies of the
undersigned, with full power of substitution, to represent and to vote all
shares of common stock of Atrion Corporation which the undersigned would be
entitled to vote at the annual meeting of stockholders of Atrion Corporation to
be held at the offices of Halkey-Roberts Corporation, 11600 Ninth Street North,
St. Petersburg, Florida, on Monday, June 14, 1999 at 9:00 a.m., Eastern Time,
and at any adjournment thereof, in the following manner:
<TABLE>
<CAPTION>
1. ELECTION OF DIRECTORS
<S> <C> <C> <C>
|_| FOR all nominees listed below |_| WITHHOLD AUTHORITY
(except as otherwise instructed below) to vote for all nominees listed below
Emile A. Battat and John H. P. Maley
</TABLE>
TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, WRITE THAT NOMINEE'S NAME IN THE
SPACE PROVIDED BELOW.
-----------------------------------------------------
2. PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS
INDEPENDENT ACCOUNTANTS OF THE COMPANY.
|_| FOR |_| AGAINST |_| ABSTAIN
3. IN THEIR DISCRETION, UPON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE MEETING.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 AND 2. IF THIS PROXY IS
PROPERLY SIGNED AND RETURNED, THE SHARES REPRESENTED WILL BE VOTED "FOR" ITEMS 1
AND 2 UNLESS YOU OTHERWISE SPECIFY HEREIN.
DATED: , 1999
--------------------
---------------------------------
SIGNATURE
---------------------------------
SIGNATURE
PLEASE SIGN THIS PROXY EXACTLY AS YOUR
NAME APPEARS HEREON.
WHEN SIGNING AS EXECUTOR, ADMINISTRATOR, TRUSTEE,
CORPORATE OFFICER, ETC., PLEASE GIVE FULL TITLE. IN
CASE OF JOINT OWNERS, EACH JOINT OWNER SHOULD SIGN.
Please Date, Sign and Return TODAY in the Enclosed Envelope.
No Postage Required if Mailed in the United States.
18
