<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Atrion Corporation
- --------------------------------------------------------------------------------
(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:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
----------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
- --------------------------------------------------------------------------------
ATRION CORPORATION
One Allentown Pkwy.
Allen, TX 75002-4211
Tel 972-390-9800
Fax 972-390-9687
[ATRION LOGO]
March 31, 2000
Dear Stockholder:
You are cordially invited to attend the 2000 annual meeting of
stockholders of Atrion Corporation, which will be held at our offices in Allen,
Texas on Tuesday, April 25, 2000 at 10:00 a.m., Central Time. A notice of the
annual meeting and the Company's Proxy Statement, together with a proxy card,
accompany this letter. Also enclosed is a copy of our 1999 Annual Report to
Stockholders.
At the annual meeting this year, you will be asked to elect directors
and to ratify the Board of Directors' appointment of Arthur Andersen LLP as
independent accountants.
We hope that you will attend the meeting in person. However, whether
or not you plan to be personally present, please read the accompanying Proxy
Statement carefully and then complete, date and sign the enclosed 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
<PAGE> 3
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 Company's offices, One
Allentown Parkway, Allen, Texas on Tuesday, April 25, 2000 at 10:00 a.m.,
Central Time, for the following purposes:
1. To elect Class II 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 2000.
3. To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on March 28,
2000 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
March 31, 2000
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO COMPLETE,
DATE AND SIGN THE ENCLOSED 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
APRIL 25, 2000
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 Company's offices, One Allentown Parkway, Allen,
Texas on Tuesday, April 25, 2000 at 10:00 a.m., Central Time, and at any
adjournment of such meeting. This Proxy Statement and the accompanying proxy
card are being first sent or given to stockholders on or about March 31, 2000.
The Company's 1999 Annual Report to Stockholders 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 three Class II 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 2000.
VOTING SECURITIES AND RECORD DATE
Stockholders of record at the close of business on March 28, 2000 (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 2,100,593 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 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 2000. In addition, in their discretion the persons
designated in the 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 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.
<PAGE> 5
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes: Class
I, Class II and Class III. Three Class II directors are to be elected at the
annual meeting to serve until the annual meeting of stockholders to be held in
2003 and until the election and qualification of their respective successors in
office. All of the nominees for election as Class II directors who are named
below are members of the Board of Directors and were previously elected by the
stockholders. It is intended that the persons named in the proxy card will vote
for the election of these nominees. If any 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 nominees 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.
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 II - Term Ending in 2003
RICHARD O. JACOBSON
Mr. Jacobson, age 63, 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 32 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 became Chairman of the Boards of these companies in 1998,
having served for many years prior to 1998 as their President and
Chief Executive Officer. 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. Mr. Jacobson 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 77, has been a director since 1988. Mr. McGrath was
Of Counsel to the law firm of Gallagher, Boland & Meiburger 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 71, 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., which was 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.
2
<PAGE> 6
DIRECTORS CONTINUING IN OFFICE
Class III - Term Ending in 2001
ROGER F. STEBBING
Mr. Stebbing, age 59, has been a director since 1992. Mr. Stebbing is
President and Chief Executive Officer of Stebbing and Associates,
Inc., an engineering consulting company, and has served in such
capacities since 1986. He was President and Chief Executive Officer of
Marlboro Enterprises, Inc., a company engaged in chemical plant
engineering, design, construction and operation, from 1976 until the
sale of that company in September 1999 and has continued to serve as
an employee of Marlboro Enterprises, Inc. since September 1999. 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, Stebbing and Associates, Inc. and Marlboro
Enterprises, Inc. is 634 Mississippi Avenue, Signal Mountain,
Tennessee 37377.
JOHN P. STUPP, JR.
Mr. Stupp, age 49, has been a director since 1985. He is Executive
Vice President and Chief Operating Officer 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.
Class I - Term Ending in 2002
EMILE A. BATTAT
Mr. Battat, age 62, has been a director since 1987 and has served as
Chairman of the Board of the Company since January 1998 and as
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 was President and Chief Executive Officer of
Piedmont Enterprises, Inc., a privately-held consulting firm, from
1994 until 1998. 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.
3
<PAGE> 7
JOHN H. P. MALEY
Mr. Maley, age 64, has been a director since February 1996. Mr. Maley
has been a management consultant since January 1995 and has served as
Chairman of Magister Corporation, a manufacturer of 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.
- ---------------
(a) 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 mean ATRION Corporation, the
Company's predecessor, and its Board of Directors and executive
officers.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF ITS NOMINEES,
RICHARD O. JACOBSON, JEROME J. MCGRATH AND HUGH J. MORGAN, JR.
INFORMATION REGARDING BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held seven meetings during 1999. Each director,
other than John H. P. Maley, 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 1999 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 John H. P.
Maley, Jerome J. McGrath and Roger F. Stebbing, 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 met
one time in 1999. The Compensation Committee, which is currently comprised of
Richard O. Jacobson, Hugh J. Morgan, Jr. and John P. Stupp, Jr., 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 twice in 1999. The Audit
Committee, the current members of which are Jerome J. McGrath, Roger F.
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 three times in 1999.
4
<PAGE> 8
Each outside director is 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 reimburses each such director for travel and out-of-pocket expenses
incurred in connection with attending meetings of the Board of Directors. The
1997 Stock Incentive Plan provides that on July 10 of each year each outside
director is to be 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.
The Board of Directors suspended the grant of options for 1999, but options are
due to be granted on July 10, 2000 and each July 10 thereafter until
termination of the 1997 Stock Incentive Plan.
CERTAIN ADDITIONAL INFORMATION
Except as set forth in this Proxy Statement, to the knowledge of the
Company none of the Company's directors or 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 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 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 March 25, 1999 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.
5
<PAGE> 9
SECURITIES OWNERSHIP
The following table sets forth information regarding the beneficial
ownership of shares of common stock of the Company as of March 1, 2000 by (i)
each of the directors of the Company, three 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; (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 108,300 (b) 4.5%
Richard O. Jacobson 101,400 (b) 4.2%
Jerome J. McGrath 28,300 (b) 1.2%
John H. P. Maley 25,000 (b) 1.0%
Hugh J. Morgan, Jr. 53,500 (b) 2.2%
Roger F. Stebbing 26,800 (b) 1.1%
John P. Stupp, Jr. 163,000 (b)(c) 6.8%
Jeffery Strickland(d) 43,734 (b)(e) 1.8%
Charles S. Gamble(f) 8,800 (b) *
Dimensional Fund Advisors Inc.(g) 238,750 9.9%
T. Rowe Price Associates, Inc.(h) 200,000 8.3%
All directors and executive
officers as a group 558,834 (i) 23.3%
</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
Securities Exchange Act of 1934 (the "Exchange Act"), on the basis of
2,100,593 shares of common stock outstanding on March 1, 2000 plus
299,550 shares of common stock issuable pursuant to options
exercisable on March 1, 2000 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 March 1, 2000 or within 60 days
thereafter: Mr. Battat, 41,000; Mr. Jacobson, 24,000; Mr. McGrath,
24,000; Mr. Maley, 24,000; Mr. Morgan, 24,000; Mr. Stebbing, 24,000;
Mr. Stupp, 24,000; Mr. Strickland, 40,850; and Mr. Gamble, 6,500. 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 Atrion Corporation
1998 Outside Directors Stock Option 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 232,350 shares issuable upon the
exercise of options exercisable on March 1, 2000 or within 60 days
thereafter. The 108,300 shares held by Mr. Battat represent 5.2% of the
common stock of the Company outstanding as of March 1, 2000.
(c) 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 6.4% of the common stock of the
Company outstanding as of March 1, 2000 and 5.6% of the class computed
as set forth in note (a) above.
(d) 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.
6
<PAGE> 10
(e) Includes 1,225 shares owned jointly with his wife.
(f) 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.
(g) 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 4, 2000 filed with the
Securities and Exchange Commission ( 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 238,750 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 238,750 shares of common stock of the
Company. Dimensional has disclaimed beneficial ownership of all such
shares.
(h) 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, 2000 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.
(i) See notes (b)-(e) above.
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 1999.
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 2000. 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 2000.
7
<PAGE> 11
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, 1999, 1998 and 1997 of
those persons who served as (i) the Chief Executive Officer of the Company at
any time during 1999 and (ii) executive officers of the Company at December 31,
1999 and whose salary and bonus for the year then ended exceeded $100,000 (such
officers are referred to herein as the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL AWARDS
--------------- ---------------------------
COMPENSATION(1) SECURITIES
NAME AND --------------- RESTRICTED UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS STOCK AWARD OPTIONS(2) COMPENSATION
- ------------------- ---- ------ ------ ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Emile A. Battat (3) 1999 $180,000 $ 0 $ 0 20,000 $ 1,758(4)
Chairman of the 1998 27,692 0 0 42,000(5) 14,880
Board, President
and Chief
Executive Officer
Jeffery Strickland 1999 138,000 30,000 0 0 6,977(4)
Vice President and 1998 138,000 10,000 20,000(6) 18,000 49,110
Chief Financial 1997 135,000 40,000 0 18,000 11,605
Officer, Secretary
and Treasurer
Charles S. Gamble 1999 150,000 75,210 0 0 3,745(4)
President- 1998 150,000 55,687 0 17,500 4,167
Halkey-Roberts 1997 150,000 28,800 0 7,500 9,256
Corporation
</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 1997 and 1998, for Mr. Gamble options granted represent incentive
stock options and for Mr. Strickland represent both incentive and
nonqualified stock options granted under the 1997 Stock Incentive
Plan. For 1998 and 1999, for Mr. Battat options granted represent both
incentive stock options and nonqualified stock options granted under
the 1997 Stock Incentive Plan as well as nonqualified stock options in
1998 under the 1998 Outside Directors Plan.
(3) Mr. Battat became President and Chief Executive Officer of the Company
on October 6, 1998.
(4) 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. Battat, $1,038; Mr.
Strickland, $3,450; and Mr. Gamble, $3,678; and (ii) payment of life
insurance premiums for Mr. Battat, $720; Mr. Strickland, $3,527; and
Mr. Gamble, $67.
(5) During 1998, options for 20,000 of these shares expired or were
terminated.
(6) At December 31, 1999, Mr. Strickland held 1,641 shares of restricted
stock having an aggregate value on that date of $17,436.
8
<PAGE> 12
INFORMATION CONCERNING STOCK OPTIONS
The following table summarizes certain information concerning grants
of options to Named Executive Officers to whom options were granted during the
year ended December 31, 1999.
OPTION GRANTS IN 1999
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(1)
---------------------------------------------------------------- --------------------------
% OF TOTAL
OPTIONS GRANTED
OPTIONS TO EMPLOYEES EXERCISE
NAME GRANTED(2) IN 1999 PRICE(2) EXPIRATION 5% 10%
- ------------------ ----------- ----------------- -------------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Emile A. Battat 20,000(3) 69% $7.625 02/09/09 $95,907 $243,040
</TABLE>
(1) 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.
(2) The options granted in 1999 were incentive stock options and
nonqualified stock options granted pursuant to the 1997 Stock
Incentive 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 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. 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.
(3) These options are first exercisable as follows: (i) as to 13,000
options, February 1, 2000 and (ii) as to 7,000 options, six months
after the date of grant.
The following table provides information on the values of each Named Executive
Officer's unexercised options at December 31, 1999. There were no options
exercised by the Named Executive Officers in 1999.
9
<PAGE> 13
AGGREGATED OPTION EXERCISES IN 1999
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)
----------------------------- -----------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Emile A. Battat 31,000(2) 13,000 $99,250 $39,000
Jeffery Strickland 40,850 19,800 3,540 0
Charles S. Gamble 6,500 18,500 0 48,750
</TABLE>
(1) Such value is equal to the product of (i) the closing price of the
common stock of the Company on December 31, 1999 ($10.625 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.
RETIREMENT PLAN
The Company maintains a "cash balance" retirement plan (the "Cash
Balance Plan") that 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. 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 1999 plan year, the interest rate was 5.25%. 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 in the Cash Balance Plan. 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, $3,148; Mr.
Gamble, $12,235; and Mr. Strickland, $98,480.
INCENTIVE COMPENSATION PLAN
The Company has an incentive compensation plan pursuant to which Emile
A. Battat, who is Chairman of the Board, President and Chief Executive Officer,
may be entitled to receive incentive compensation at the time he ceases to
serve as Chief Executive Officer of the Company. If he ceases to serve in that
capacity other than in connection with a business combination involving the
Company and the market price of the Company's common stock exceeds $12.00 per
share at that time, or if he ceases to serve in such capacity in connection
with a business combination involving the Company and the value of the
consideration received by the Company's stockholders in such business
combination exceeds $12.00 per share, he will be entitled to receive incentive
compensation based on the product of (i) one or more fixed dollar amounts
provided in the plan and (ii) the amount by which such market price or value
exceeds $12.00 per share.
10
<PAGE> 14
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
From the beginning of 1999 until June 14, 1999, the members of the
Compensation Committee of the Board of Directors were Richard O. Jacobson, John
H. P. Maley, Hugh J. Morgan, Jr. and J. Kenneth Smith. From June 14, 1999 until
the end of 1999, the Compensation Committee members were Messrs. Jacobson,
Morgan and John P. Stupp, Jr.
During 1999, Mr. Maley provided certain consulting services to the
Company for which he was paid $32,800. Mr. Maley has also provided consulting
services to the Company in 2000 and has been paid $6,750 for those services.
The Company expects that Mr. Maley will provide additional consulting services
in 2000 and thereafter.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee, which is currently comprised of Richard O.
Jacobson, Hugh J. Morgan, Jr. and John P. Stupp, Jr., 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.
Compensation Policies
Base salaries, 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.
At the recommendation of the Compensation Committee, the Company and
its subsidiaries have implemented cash incentive plans covering certain key
employees. These plans are intended to foster 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 option
awards will be rewarded only if he remains with the Company and in order to
emphasize the significance of the Company's long-term performance.
11
<PAGE> 15
Compensation of Chief Executive Officer
In October 1998, when Mr. Battat was elected President and Chief
Executive Officer of the Company, 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. Despite the Compensation Committee's view that Mr.
Battat's base salary should be increased for 1999, the Compensation Committee,
at the request of Mr. Battat, did not recommend an increase and, instead,
recommended that his annual base salary remain fixed at $180,000 for 1999. In
July 1999, the Compensation Committee reviewed Mr. Battat's performance as
Chief Executive Officer and concluded that he had provided superior leadership
since he had first been elected President and Chief Executive Officer. On the
basis of that determination, as well as the level of his base salary and the
goal of further aligning Mr. Battat's interests with those of stockholders, the
Compensation Committee recommended that an incentive compensation plan covering
Mr. Battat be adopted. The Compensation Committee concluded that such plan
should be keyed to the enhancement of shareholder value. Under the plan as
adopted, at the time he ceases to serve as Chief Executive Officer of the
Company, Mr. Battat will be entitled to receive incentive compensation based on
the amount by which the market price of the Company's common stock exceeds
$12.00 per share at such time or, if he ceases to serve in such capacity in
connection with a business combination involving the Company, the amount by
which the consideration received by the Company's stockholders in such
transaction exceeds $12.00 per share. Thus, in order for Mr. Battat to receive
any incentive compensation under the plan, the value of the Company's common
stock, measured as set forth above, must be substantially enhanced over the
$9.19 per share closing price of the Company's common stock immediately
preceding adoption of the plan. During 1999, the Compensation Committee also
granted to Mr. Battat options to purchase 20,000 shares of common stock of the
Company in recognition of his willingness to continue serving 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 serving in those positions, Mr. Battat would not receive in 1999 a
grant of options under the Company's 1998 Outside Directors Plan even though he
was continuing to serve as Chairman of the Board.
MEMBERS OF THE COMPENSATION COMMITTEE
Richard O. Jacobson Hugh J. Morgan, Jr. John P. Stupp, Jr.
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,
1994 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.
12
<PAGE> 16
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Atrion Corp 100.00 136.82 167.60 146.99 84.75 112.56
Surgical & Medical Instruments 100.00 170.61 185.81 215.53 294.27 267.47
S&P Composite 100.00 137.58 169.17 225.61 290.09 351.13
</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 2001 annual meeting of
stockholders, such proposals must be received by the Company on or before
November 30, 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 2001 annual meeting must be delivered not earlier than January
25, 2001 and not later than February 24, 2001, provided the date of the 2001
annual meeting is not more than 30 days before or more than 60 days after April
25, 2001. 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.
13
<PAGE> 17
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.
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
March 31, 2000
14
<PAGE> 18
ATRION CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby appoints
Roger F. Stebbing and John P. Stupp, Jr., 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 Atrion Corporation, One Allentown Parkway, Allen,
Texas, on Tuesday, April 25, 2000 at 10:00 a.m., Central Time, and at any
adjournment thereof, in the following manner:
1. Election of Directors
[_] FOR all nominees listed below [_] WITHHOLD AUTHORITY
(except as otherwise instructed to vote for all nominees
below) listed below
Richard O. Jacobson, Jerome M. McGrath and Hugh J. Morgan, Jr.
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: _______________, 2000
_____________________________
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.
