<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Utah Medical Products, Inc.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] 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:
Notes:
<PAGE>
[LOGO OF UTAH MEDICAL PRODUCTS INC. APPEARS HERE]
April 10, 1995
Dear UTMD Shareholder:
You are cordially invited to attend the 1995 Annual Meeting of Shareholders of
Utah Medical Products, Inc. The meeting will be held at 12:00 noon (local time)
on Friday, May 19, 1995 at the Red Lion Hotel, 255 South West Temple, Salt Lake
City, Utah. A sandwich buffet will be served at 11:30 A.M.
Please note that attendance at the Annual Meeting will be limited to
shareholders as of the record date (or their authorized representatives) and to
guests of the Company. If your shares are registered in your name and you plan
to attend the Annual Meeting, please bring the enclosed proxy card with you to
the meeting. If your shares are held of record by a broker, bank or other
nominee and you plan to attend the meeting, contact promptly the person
responsible for your account and give instructions regarding your intention to
attend the meeting and to vote your shares at that time. Shareholders will only
be admitted to the Annual Meeting upon verification of stock ownership.
At the Annual Meeting, our shareholders will approve the appointment of an
independent audit firm, elect one Director and consider any other business. If
you think you will be unable to attend the meeting, please complete your proxy
and return it as soon as possible. If you decide later to attend the meeting in
person, you may, of course, revoke the proxy.
Thank you for your ownership and interest in UTMD!
Sincerely,
Kevin L. Cornwell
President and CEO
UTAH MEDICAL PRODUCTS, INC * 7043 South 300 West * Midvale, Utah 84047-1048
* 801/566-1200 * FAX #801/566-2062
<PAGE>
UTAH MEDICAL PRODUCTS, INC.
7043 South 300 West
Midvale, Utah 84047
(801) 566-1200
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 19, 1995
TO THE SHAREHOLDERS OF UTAH MEDICAL PRODUCTS, INC.
The annual meeting of the shareholders (the "Annual Meeting") of Utah
Medical Products, Inc. (the "Company"), will be held at the Red Lion Hotel, 255
South West Temple, Salt Lake City, Utah , on May 19, 1995, at 12:00 noon, local
time, for the following purposes:
(1) To elect one director to serve until the expiration of her term and
until her successor is elected and qualified;
(2) To approve the appointment of Deloitte & Touche as independent
certified public accountants and auditors of the Company for its 1995
fiscal year; and
(3) To transact such other business as may properly come before the Annual
Meeting.
Your board of directors unanimously recommends a vote "FOR" each of the
above proposals, which are described in more detail in the accompanying proxy
statement.
Only shareholders of record at the close of business on March 10, 1995 (the
"Record Date"), are entitled to notice of and to vote at the Annual Meeting.
This Proxy Statement and form of proxy are being first furnished to
shareholders of the Company on approximately April 17, 1995.
THE ATTENDANCE AT AND/OR VOTE OF EACH SHAREHOLDER AT THE ANNUAL MEETING IS
IMPORTANT, AND EACH SHAREHOLDER IS ENCOURAGED TO ATTEND.
BY ORDER OF THE BOARD OF DIRECTORS
Kevin L. Cornwell, Secretary
Salt Lake City, Utah
Dated: April 10, 1995
- - --------------------------------------------------------------------------------
PLEASE FILL IN, SIGN, DATE, AND RETURN THE ENCLOSED PROXY PROMPTLY, WHETHER OR
NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING.
If your shares are held in the name of a brokerage firm, nominee, or other
institution, only it can vote your shares. Please contact promptly the person
----------------
responsible for your account and give instructions for your shares to be voted.
-----------------
-1-
<PAGE>
UTAH MEDICAL PRODUCTS, INC.
PROXY STATEMENT
This Proxy Statement is furnished to shareholders of Utah Medical Products,
Inc. (the "Company") in connection with the annual meeting of shareholders (the
"Annual Meeting") to be held at the Red Lion Hotel, 255 South West Temple, Salt
Lake City, Utah, on May 19, 1995, at 12:00 noon, local time, and any
adjournment(s) thereof. The enclosed proxy, when properly executed and returned
in a timely manner, will be voted at the Annual Meeting in accordance with the
directions set forth thereon. If the enclosed proxy is signed and timely
returned without specific instructions, it will be voted at the Annual Meeting:
(1) FOR the election of Lori A. Sessions as director;
(2) FOR the approval of the appointment of Deloitte & Touche as
independent certified public accountants and auditors of the Company
for its 1995 fiscal year; and
(3) IN accordance with the best judgment of the persons acting under the
proxies on other matters presented for a vote.
The board of directors has unanimously approved all of the foregoing
proposals and recommends that the shareholders vote for each of the proposals.
Proxies solicited by the Company will be voted FOR each of the proposals unless
a vote against, or an abstention from, one or more of the proposals is
specifically indicated on the proxy.
A proxy for the Annual Meeting is enclosed. It is important that each
shareholder complete, sign, date, and return the enclosed proxy promptly,
whether or not he plans to attend the Annual Meeting. Any shareholder who
executes and delivers a proxy has the right to revoke it at any time prior to
its exercise by providing the secretary of the Company with an instrument
revoking the proxy or by providing the secretary of the Company with a duly
executed proxy bearing a later date. In addition, a shareholder may revoke his
proxy by attending the Annual Meeting and electing to vote in person.
Proxies are being solicited by the Company, and all costs and expenses
incurred in connection with the solicitation will be paid by the Company.
Proxies are being solicited by mail but, in certain circumstances, officers and
directors of the Company may make further solicitation in person, by telephone,
facsimile transmission, telegraph, or overnight courier.
Only holders of the 9,931,303 shares of common stock, par value $0.01 per
share, of the Company (the "Common Stock") issued and outstanding as of the
close of business on March 10, 1995 (the "Record Date"), will be entitled to
vote at the Annual Meeting. Each share of Common Stock is entitled to one vote.
Holders of at least a majority of the 9,931,303 shares (4,965,652 shares) of
Common Stock outstanding on the Record Date must be represented at the Annual
Meeting to constitute a quorum for conducting business.
All properly executed and returned proxies as well as shares represented in
person at the meeting will be counted for purposes of determining if a quorum is
present, whether or not the proxies are instructed to abstain from voting or
consist of broker non-votes. Under the Utah Revised Business Corporation Act,
matters, other than the election of directors and certain specified
extraordinary matters, are approved if the number of votes cast FOR exceed the
number of votes cast AGAINST, and abstentions and broker non-votes are not
counted for purposes of determining whether a matter has been approved. Which
means that abstentions and broker non-votes will have the same effect as a vote
for the proposals.
Officers and directors holding an aggregate of 60,498 shares, or
approximately 0.61% of the issued and outstanding stock, have indicated their
intent to vote in favor of all proposals.
-2-
<PAGE>
- - --------------------------------------------------------------------------------
PROPOSAL NO. 1. ELECTION OF DIRECTORS
- - --------------------------------------------------------------------------------
General
The Company's articles of incorporation provide that the board of directors
is divided into three classes as nearly equal in size as possible, with the term
of each director being three years and until such director's successor is
elected and qualified. One class of the board of directors shall be elected each
year at the annual meeting of the shareholders of the Company. The board of
directors has nominated Lori A. Sessions for election as director, for a three
year term expiring at the 1998 annual meeting.
It is intended that votes will be cast, pursuant to authority granted by
the enclosed proxy, for the election of the nominee named below as director of
the Company, except as otherwise specified in the proxy. In the event the
nominee shall be unable to serve, votes will be cast, pursuant to authority
granted by the enclosed proxy, for such person as may be designated by the board
of directors. Biographical information follows for the person nominated. The
officers of the Company are elected at the annual meeting of the board of
directors to serve at the pleasure of the board of directors. The information
concerning the nominee and directors and their security holdings has been
furnished by them to the Company. (See "PRINCIPAL SHAREHOLDERS" below.)
Directors and Nominees
The board of directors' nominee for election as director of the Company at
the Annual Meeting is Lori A. Sessions. The other members of the board of
directors were elected at the Company's 1994 meeting for terms of two or three
years, and therefore are not standing for election at the 1995 Annual Meeting.
Background information appears below with respect to the incumbent directors.
<TABLE>
<CAPTION>
Year
First Business Experience During Past Five
Name Age Elected Years and Other Information
- - ---- --- ------- -------------------------------------
<S> <C> <C> <C>
Perry L. Lane 77 1985 Chairman since February 1994.
Served as VP and Director of
Marketing, Executive VP and Director
of Sorenson Research Company, Salt
Lake City, UT., for a period of over
13 years. Has served as a director
on seven other company boards.
Kevin L. Cornwell 48 1993 Received B.S. degree in chemical
engineering from Stanford
University, M.S. degree in
engineering-economic systems from
Stanford Graduate School of
Engineering, and MBA degree in
finance from Stanford Graduate
School of Business. President and
CEO since 1992; Secretary since
1993. President and CEO of Three Way
Corporation, Sunnyvale, CA.,
1990-1992. Has served as a director
on seven other company boards.
David D. Chase 35 1991 Received B.S. degree in management
and administration/ finance from
University of Indiana. Has served
as Chairman and CEO of Chase
Ergonomics Inc., Albuquerque, NM,
since 1990.
Stephen W. Bennett 62 1994 Received B.A. degree in biology from
Stanford University, M.D. degree
from Stanford School of Medicine,
M.P.H. and T.M. degree and Dr.P.H.
degree from Tulane School of
Medicine. Served five years as fund
manager, director and senior analyst
for health care investments for an
institutional investment firm.
Lori A. Sessions 35 1994 Received B.S. degree in accounting
and MBA degree from the University
of Utah. Controller since 1993.
Assistant Treasurer since 1994.
Served as Controller and in various
financial analysis positions for
Bourns Sensors/Controls, Inc.,
Ogden, UT., from 1988-1993.
</TABLE>
-3-
<PAGE>
Security Ownership of Management and Certain Persons
The following table furnishes information concerning the ownership of the
Company's Common Stock by each person owning of record, or known by the Company
to own beneficially, more than 5% of the Company's outstanding Common Stock, by
each director and by all directors and executive officers as a group.
<TABLE>
<CAPTION>
Nature of Number of
Name Ownership Shares Owned/(1)/ Percent/(2)/
- - --------------------------------- --------- ----------------- ------------
<S> <C> <C> <C>
Principal Shareholders
FMR Corp. Direct 1,009,200 10.16%
82 Devonshire Street
Boston, Massachusetts 02109
Directors
Perry L. Lane/(3)(4)(5)(6)/ Direct 24,000 0.24%
Options 2,500 0.02%
-----
Total 26,500 0.26%
Kevin L. Cornwell/(4)(5)/ Direct 28,000 0.28%
Options 51,875 0.51%
------
Total 79,875 0.79%
David D. Chase/(3)(4)(5)(6)/ Direct 4,000 0.04%
Options 25,000 0.25%
------
Total 29,000 0.29%
Stephen W. Bennett/(3)(4)5)(6)/ Direct 500 0.01%
Lori A. Sessions/(4)(5)/ Direct 2,000 0.02%
Options 2,188 0.02%
-----
Total 4,188 0.04%
All executive officers and Direct 60,498 0.61%
directors as a group (8) persons Options 184,024 1.82%
-------
Total 244,522 2.42%
</TABLE>
(1) Shares owned directly are owned beneficially and of record, and such
record shareholder has sole voting, investment, and dispositive
power.
(2) Calculations of percentage of shares outstanding assumes the
exercise or conversion of options, to which the percentage relates.
Percents calculated for totals assume the conversion or exercise of
options, comprising such totals.
(3) Audit Committee member.
(4) Nominating Committee member.
(5) Compliance Committee member.
(6) Compensation and Option Committee member.
Compliance with Exchange Act Requirements
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
10% of a registered class of the Company's equity securities to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of equity securities of the Company. Officers, directors,
and greater than 10% shareholders are required to furnish the Company with
copies of all section 16(a) forms they file.
-4-
<PAGE>
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company, all section 16(a) requirements applicable to
persons who were officers, directors and greater than 10% shareholders during
the preceding fiscal year were complied with, except the following: Stephen W.
Bennett filed a report in March 1994 which contained a direct/indirect coding
error and was filed twenty-three days late, and Ernest D. Hammond filed one
report in 1994 and one report in 1993 that contained incorrect direct share
holdings.
Board and Committee Meetings
The directors held four meetings during 1994 and one meeting to date in
1995. All of the directors attended all meetings, except for the meeting in 1995
in which Dr. Bennett participated by written consent.
The Company has standing Audit, Compliance, Nominating, and Compensation
and Option Committees. The current members of the Company's committees are
identified in the preceding table.
The Audit Committee met once during 1994 and once to date in 1995 to review
the results of the annual audits by Deloitte & Touche. The Audit Committee
recommends the selection of independent accountants, approves the scope of audit
and related fees, and reviews financial reports, audit results, internal
accounting procedures, and programs to comply with applicable requirements
relating to financial accountability.
The Compliance Committee met four times during 1994 and once to date in
1995 to review established policies and procedures for compliance with
applicable laws and regulations and to monitor compliance by the Company and its
personnel, including executive officers and directors, with applicable
regulatory requirements as well as the Company's own compliance policy.
The Nominating Committee met informally periodically during 1994, but did
not have a formal meeting. The Nominating Committee takes the lead in nominating
new directors. The Nominating Committee will consider nominees recommended by
shareholders. In accordance with the Company's bylaws, shareholder's nominations
for election as directors must be submitted in writing to the Company at its
principal offices not less than 30 days prior to the annual meeting at which the
election is to be held (or if less than 60 days' notice of the date of the
annual meeting is given or made to shareholders, not later than the tenth day
following the date on which the notice of the annual meeting was mailed). The
notice to the Company from a shareholder who intends to nominate a person at the
Annual Meeting for election as a director must contain certain information about
the shareholder and the person(s) nominated by him, including, among other
things, the name and address of the shareholder, a representation that the
shareholder is entitled to vote at the Annual Meeting and intends to appear in
person or by proxy at the Annual Meeting, a description of all arrangements or
understandings between the shareholder and each nominee, such other information
as would be required to be included in a proxy statement soliciting proxies for
the election of the proposed nominee, and the consent of each nominee to serve
as a director if so elected.
The Compensation and Option Committee, comprised of the outside directors,
consulted by telephone periodically throughout 1994 to review and recommend
officers' compensation, review officers' performance, and develop compensation
strategies and alternatives throughout the Company, including those discussed in
the committee's report contained in this proxy statement. The deliberations
included an independent analysis of the CEO's compensation during the fourth
quarter, which culminated in recommendations at the January 1995 Board Meeting.
All committee members attended all meetings of the committees of which they
were members during 1994 and to date in 1995.
-5-
<PAGE>
Executive Officer Compensation
The following table sets forth, for each of the last three fiscal years,
cash compensation received by the Company's chief executive officer during 1994
and any of the four remaining most highly compensated other executive officers
whose salary and bonus for all services in all capacities exceeded $100,000 for
the fiscal year ended December 31, 1994.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term Compensation
-------------------------------------
Annual Compensation Awards Payouts
----------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Securities
Year Annual Restricted Underlying All Other
Ended Comp- Stock Options/ LTIP Compen-
Dec. Salary Bonus ensation Award(s) SARs Payouts sation
Name and Principal Position 31 ($) ($) ($)/(1)/ ($) (#) ($) ($)
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Kevin L. Cornwell/(2)/ 1994 $156,900 $70,000 $ 900 -- 95,000 -- --
President, Chief 1993 $150,000 $48,750 -- -- 75,000 -- $13,899/(3)/
Executive Officer, and 1992 -- -- -- -- 75,000/(4)/ -- --
Director
Ernest D. Hammond 1994 $ 76,100 $26,250 $ 900 -- 10,000 -- --
Vice-President, Sales and 1993 $ 74,900 $16,900 $ 823 -- -- -- --
Marketing 1992 $ 73,800 $70,160/(5)/ $7,734 -- -- -- --
</TABLE>
(1) Amounts during 1994 and 1993 are Company payments for 401(k)
matching contributions. Amounts for Mr. Hammond during 1992 are for
life insurance premiums, employee portion of health insurance
premiums, auto allowance, and 401(k) matching contribution.
(2) Mr. Cornwell joined the Company on December 31, 1992.
(3) During 1993 the Company reimbursed such amount for moving expenses
incurred by Mr. Cornwell in relocating his residence to Utah.
(4) These options were canceled in 1993 in exchange for options to
purchase the same number of shares at a lower exercise price and a
longer vesting schedule. (See below.)
(5) Includes $7,328 paid as a bonus in 1993 applicable to the 1992
fiscal year and omitted in the 1993 proxy statement.
The following table sets forth information respecting all individual grants
of options and stock appreciation rights ("SARs") made during the last completed
fiscal year to any of the executives named in the summary compensation.
<TABLE>
<CAPTION>
Option/SAR Grants In Last Fiscal Year
Potential Realized Value
at Assumed Annual Rates
of Stock Appreciation for
Individual Grants Option Term/(2)/
- - ----------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g)
% of Total
Number of Options/SARs
Securities Granted to
Underlying Employees Exercise or
Options/SARs During Fiscal Base Price Expiration
Name Granted(#) Year/(1)/ ($/share) Date 5%($) 10%($)
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Kevin L. Cornwell 95,000/(3)(4)/ 35.2% $7.25 Jan. 2004 $433,200 $1,097,700
Ernest D. Hammond 10,000/(3)(4)/ 3.7% $7.25 Jan. 2004 $ 44,261 $ 115,500
</TABLE>
(1) The Company granted new options representing 270,000 shares to
employees during 1994. The percentages are based on this total.
(2) Value was calculated assuming indicated appreciation rate compounded
annually.
(3) The options became 25% vested on 1/1/95, will thereafter vest at the
rate of 6.25% per calendar quarter.
(4) All optionees may use Company shares owned for a period of at least
six months to pay for the exercise of options. The Company may
accept shares to cover withholding or other employee taxes. In the
event of a change in control, the Company is required to pay the
optionee a cash amount equal to the excess of the market price over
the exercise price of all options granted, whether or not vested.
-6-
<PAGE>
The following table sets forth information respecting the exercise of
options and SARs during the last completed fiscal year by each executive named
in the Summary Compensation Table above and the December 31, 1994, fiscal year
end values of unexercised options and SARs, based on the average high and low
price of the Company's common stock on December 30, 1994 on the NASDAQ Stock
Market of $8.56.
Aggregate Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at FY End (#) In-the-Money Options/SARs
at FY End ($)
Exercisable/ Exercisable/
Shares Acquired on Unexercisable Unexercisable
Name Exercise (#) Value Realized ($)
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kevin L. Cornwell -- -- 51,875/118,125 $31,113/$93,338
Ernest D. Hammond -- -- 80,208/7,500 $171,904/$9,825
</TABLE>
Report of the Compensation and Option Committee
General
Under the supervision of the Compensation and Option Committee, the Company
has developed and implemented compensation policies, plans, and programs that
seek to enhance the long-term profitability and growth of the Company, and thus
shareholder value, by aligning closely the financial interests of the Company's
senior managers and other key employees with those of its shareholders. The
Compensation and Option Committee of the board of directors is responsible for
evaluating and recommending specific executive compensation for formal board
approval on an annual basis.
The Company applies a consistent philosophy to compensation for all
employees, including senior management. The philosophy is based on the premise
that the achievements of the Company result from the coordinated efforts of all
individual employees working toward common objectives. The Company strives to
achieve those objectives through teamwork that is focused on meeting the needs
and expectations of customers and shareholders.
There are seven basic objectives for the Company's compensation program:
(1) Pay for Performance. The basic philosophy is that rewards are provided
-------------------
for the value of individual contribution and performance to the Company.
Rewards are both recurring (e.g., base salary) and non-recurring (e.g.,
bonuses), and both financial and non-financial (e.g., recognition and non-
financial awards).
(2) Provide for Fairness and Consistency in the Administration of Pay.
-----------------------------------------------------------------
Compensation is based on the value of the job, what each individual brings to
the job, and how well each individual performs on the job, consistently applied
across all functions of the Company.
(3) Pay Competitively. The Company believes it needs to attract and retain
-----------------
the best people in the industry in order to continue to achieve one of the best
performance records in the industry. In doing so, the Company needs to be
perceived as rewarding well, where competitive compensation includes the total
package of base pay, bonuses, awards, and other benefits.
(4) Conduct an Effective Performance Review Process. The Company believes
-----------------------------------------------
it needs to encourage individual employee growth and candidly review each
individual's performance in a timely way. This feedback process is bilateral,
providing management with an evaluation of the Company through the eyes of its
employees.
-7-
<PAGE>
(5) Effectively Plan and Administer the Compensation Program. Expenditures
--------------------------------------------------------
for employee compensation must be managed to what the Company can afford and in
a way that meets management goals for overall performance and return on
shareholder equity.
(6) Communicate Effectively. The Company believes that an effective
-----------------------
communication process must be employed to assure that its employees understand
how compensation objectives are being administered and met.
(7) Meet All Legal Requirements. The compensation program must conform to
---------------------------
all state and federal employment laws and guidelines.
The Company uses essentially five vehicles in its compensation program.
(1) Salary. The Company sets base salaries by reviewing the aggregate of
------
base salary and annual bonus for competitive positions in the market. Executive
base salaries are set at the beginning of each calendar year by the board of
directors. For senior management, base salaries are fixed at levels somewhat
below the competitive amounts paid to senior management with comparable
qualifications, experience, and responsibilities at other similarly sized
companies engaged in the same or similar businesses. Then, annual bonuses and
longer term incentive compensation are more highly leveraged and tied closely to
the Company's success in achieving significant financial and non-financial
goals.
(2) Bonuses. The Company has two basic plans, a Company bonus, which is
-------
budgeted and is paid out either quarterly or semi-annually based on achievement
of overall budgeted results, and a sales, research and development, and
management bonus, which is generated as an annual pretax profit sharing pool and
distributed to participants after the year-ending independent financial audit
has been completed. All employees participate in one or the other of the two
bonus plans. Both plans include the ability to adjust the individual bonus
which results from team performance by an individual performance rating factor.
The sales, research and development, and management bonus is offered to
Company management personnel down to the first level of professional management,
certain specialists and technical people, and all direct sales representatives.
The annual plan includes senior management as part of the group of about 75 of
the Company's 425 current employees. Senior management bonuses might range
between 10% and 100% of an individual's regular base pay, depending on actual
performance relative to targeted objectives. The board of directors has
approved 4% of pretax, prebonus earnings, plus 10% of pretax earnings
improvements over the prior year's results, as an allocation for the pool. For
example, if the Company achieves 20%-25% growth in pretax earnings, the sales,
research and development, and management bonus pool will accrue 6%-6.5% of
pretax earnings, which will be paid out under supervision of the Compensation
and Option Committee.
All employees not participating in the sales, research and development, and
management plan participate in the Company bonus plan, paid out either quarterly
or semi-annually as a percentage of employees' base working pay for the given
period.
The Company will make occasional one-time cash awards, in unspecified but
budgeted amounts, to employees who may make extraordinary contributions to the
performance of the Company within a given period. These payments are planned to
be made to a few, probably less than two dozen, employees during the year.
Senior management is not eligible for these awards.
In 1994, the annual sales, research and development, and management bonus
was paid based on specific individual management objectives and was used for 67
salaried employees. The senior management employees received a total bonus of
$125,650, which was equal to about 31% of their aggregate base salaries. Actual
individual bonuses resulted from the Compensation and Option Committee's
assessment of each executive's achievement of specific objectives and value of
contribution to the Company's overall performance.
(3) Employee Stock Options. The Compensation and Option Committee believes
----------------------
that its past grants of stock options have successfully focused the Company's
key management personnel on building profitability and shareholder value. The
number of options granted was consistent with the Company's overall goal
discussed above of increasing key employees' financial stake in the Company and
reflects the judgment of the Committee that the total number of options at each
grant date
-8-
<PAGE>
was sufficient to constitute a material, recognizable benefit to the recipients
while minimizing dilution to existing shareholders; no objective criteria were
utilized.
In 1994, the board of directors approved grants to 85 employees of options
to purchase a total of 270,000 shares. Subsequently, grants representing 44,000
shares of this total were cancelled upon the resignation of certain employees.
Included in the 1994 grants were shares of 147,500 granted to senior management
pursuant to shareholder approval at the 1994 annual meeting, and such approval
was obtained. All new options vest over a four year period, with a ten year
exercise period. Management expects to recommend similar quantities of options
to be awarded on an annual basis to the Company's key employees based on its
belief that sharing the wealth of the Company with those who help create it is
the best way to assure growth in shareholder value.
(4) 401(k) Retirement Plan. The Compensation and Option Committee believes
----------------------
that a continuance of the Company plan instituted in 1985 is consistent,
ensuring a stable employment base helping to provide Company employees with a
vehicle to building long-term financial security. The Company matched a portion
of employee contributions in 1994 by an amount equal to $54,400. Of this total
amount, senior management received about $3,800. The board of directors has
approved a matching formula of 30%, up to certain individual limits, for
employees who meet eligibility requirements.
(5) Group Benefit Plan. The Company provides a group health, dental, and
------------------
life insurance plan for its employees consistent with self-funded group plans
offered by other companies its size. A portion of the monthly premium cost is
generally paid by plan participants. All employees, including executive
officers and senior managers, pay premiums on the same basis.
CEO and Executive Officer Compensation
Utilizing the compensation objectives and vehicles outlined above, the
Committee established base compensation for executive officers, including the
CEO, by reference to surveys of similar companies as discussed above, adjusted
as the Committee deemed appropriate for variations in industry type, geographic
location, size, and profitability. Base salaries were fixed at levels somewhat
below the competitive amounts paid to senior management with comparable
qualifications, experience, and responsibilities at other similarly sized
companies engaged in the same or similar businesses. Then, annual bonuses and
longer term incentive compensation in the form of stock options were more highly
leveraged and tied closely to the Company's success in achieving significant
financial and non-financial goals.
Bonuses for executive officers were awarded on the same basis as all
employees included in the sales, research, development, and management bonus
plan. At the beginning of the year, the CEO and other executive officers were
awarded participation units in the bonus plan, proportional to base salary,
based on the Committee's determination of the relative contribution expected
from each person toward attaining Company goals. Each executive's individual
performance objectives, derived as the applicable contribution needed from that
executive to achieve the Company's overall business plan for the year, were
reviewed by the Committee. These goals included financial (weighted most
heavily) and non-financial goals. Financial goals included net sales, gross
profit margin, after-tax profits, and return on equity, and particularly in the
case of the CEO, growth in earnings per share. Non-financial goals included
continuing the development of a talented and motivated team of employees,
conceiving and implementing programs to maintain competitive advantages and to
achieve consistent growth, promoting the Company's participation in socially
responsible programs, maintaining compliance with regulatory requirements,
achieving a high regard of shareholders and the broad business community in the
integrity of the Company and its management, and minimizing factors that
represent significant business risks.
The amounts of bonuses to the CEO and other executive officers were based
on the Committee's evaluation of each executive's success in meeting the
respective performance objectives, supplemented by the Committee's subjective
evaluation of each executive's performance and contribution in meeting the
Company's non-financial objectives. In 1994, management met or exceeded
financial objectives set in the operating plan at the beginning of the year. In
addition, the Committee believes that each of the non-financial goals of the
executive officers was met or exceeded. In addition, the CEO also was credited
by the Committee with elevating the level of professional management of the
Company, building a cohesive management team, and identifying new strategies for
long-term growth in profitability and shareholder value.
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<PAGE>
Stock options were awarded to the CEO and other executive officers
generally on the criteria utilized for establishing cash bonuses as discussed
above, supplemented by the Committee's subjective evaluation of the suitability
of long-term options grants as an effective incentive to each individual
executive.
In early 1994, the Compensation and Option Committee had recommended Mr.
Cornwell's 1994 salary be set at $157,500 and awarded a stock option for 95,000
shares which has an exercise price of $7.25 per share. The 1994 option was
awarded contingent upon shareholder approval, and such approval was obtained.
In early 1995, upon recommendation of the Compensation Committee, the board
of directors awarded Mr. Cornwell a 1994 bonus of $70,000 under the Management
Bonus Plan. In addition, the board set Mr. Cornwell's base annual salary for
1995 at $170,000, and awarded a stock option for 40,000 shares with an exercise
price of $9.50 per share. All options granted to employees (including Mr.
Cornwell) since 1992 vest over a four year period.
The Committee intends that stock options serve as a significant component
of Mr. Cornwell's total compensation package in order to retain his efforts on
behalf of the Company and to focus his efforts on enhancing shareholder value.
In that regard, shareholders in 1994 approved a performance option plan under
which Mr. Cornwell may receive the future right to purchase up to an additional
360,000 shares of common stock at future market prices contingent upon the
Company achieving compounded 25% per annum growth in earnings per share
beginning with 1994 earnings.
The foregoing report has been furnished by: Perry L. Lane
David D. Chase
Stephen W. Bennett
Compensation and Option Committee Interlocks and Insider Participation
The members of the Compensation and Option Committee are Perry L. Lane,
David D. Chase, and since his election to the board on February 25, 1994,
Stephen W. Bennett. No member of such committee is a present or former officer
of the Company or any subsidiary.
Employment Agreements, Termination of Employment, and Change in Control
Kevin L. Cornwell, President and Chief Executive Officer, currently
receives a base salary of $170,000 per year and participates in the Company's
cash executive bonus programs. On December 31, 1992, the Company entered into an
employment agreement with Mr. Cornwell that expired on December 31, 1993, except
for the provision under which the Company is required to pay Mr. Cornwell a one-
time payment of one year's base salary in the event his employment is terminated
as a result of a change in control, at the election of the Company, or by the
mutual agreement of Mr. Cornwell and the Company. In addition, the Company is
required to pay Mr. Cornwell appreciation of stock value for issued options
above the option exercise price, in the event of a change in control of the
Company or if terminated at the election of the Company. The Company presently
has no other employment agreements. The Company has a performance option plan
under which Mr. Cornwell could earn options to purchase up to an aggregate of
360,000 shares at a future market price if the Company attains 25% compounded
per annum growth in earnings per share.
Director's Compensation
Outside (non-employed) directors receive annual cash compensation of
$10,000 each ($12,000 in the case of the Chairman), plus reimbursement of
expenses in attending meetings. In addition, the Company, pursuant to the 1993
Directors' Stock Option Plan approved by shareholders at the 1994 annual
meeting, awards annually to each director options to purchase 10,000 shares
(15,000 shares in the case of the Chairman) at an exercise price equivalent to
the closing bid price ten trading days after the public release of the Company's
annual financial results. Pursuant to the (outside) directors' option plan, the
Company granted options for 55,000 shares at prices of $10 and $7.50 per share
during 1994 (20,000 awarded at $10 per share for 1993, and 35,000 awarded at
$7.50 per share for 1994). On March 31, 1995, outside directors will be granted
an additional 35,000 shares awarded at an exercise price of $10.625 for 1995.
All of the options vest over a four year period from grant date.
-10-
<PAGE>
Stock Performance Chart
The following chart compares what an investor's five year cumulative total
return (assuming re-investment of dividends) would have been assuming initial
$100 investments on December 29, 1989 for the Company's common stock and the two
indicated indexes.
Performance Graph appears here. Detailed below are the plot points:
<TABLE>
<CAPTION>
12/29/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Utah Medical Products 100.0 119.5 249.4 189.6 123.5 133.3
Nasdaq Stock Market (US & Foreign) 100.0 85.0 135.7 157.4 181.2 175.2
Nasdaq Stocks (SIC 3800-3899) 100.0 105.7 199.2 168.3 142.4 153.5
</TABLE>
-11-
<PAGE>
- - --------------------------------------------------------------------------------
PROPOSAL NO. 2. RATIFICATION OF APPOINTMENT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
- - --------------------------------------------------------------------------------
The Company's auditors for the 1994 fiscal year were Deloitte & Touche,
certified public accountants. The Company has once again engaged Deloitte &
Touche as its auditors for its current fiscal year and is presenting this
selection to the shareholders for ratification. While ratification by the
shareholders of this appointment is not required by law or the Company's
certificate of incorporation or bylaws, the Company believes such ratification
is desirable. If the appointment is not approved by the shareholders, the board
of directors will, upon consultation with the audit committee, select other
independent accountants. If Deloitte & Touche declines to act, becomes
incapable of acting, or if its engagement is otherwise terminated by the audit
committee (none of which events are currently anticipated), the board of
directors will appoint other auditors for the current fiscal year. It is
anticipated that a representative of Deloitte & Touche will be present at the
Annual Meeting to respond to questions from the shareholders in attendance and
to make a statement to the shareholders if so desired.
The board of directors recommends a vote "FOR" the proposal to ratify the
appointment of Deloitte & Touche as the Company's independent certified
accountants and auditors for fiscal year 1995. It is intended that, in the
absence of contrary specification, votes will be cast pursuant to the enclosed
proxies for ratification of Deloitte & Touche as the Company's independent
certified public accountants and auditors for fiscal year 1995.
- - --------------------------------------------------------------------------------
SHAREHOLDER PROPOSALS
- - --------------------------------------------------------------------------------
No proposals have been submitted by shareholders of the Company for
consideration at the Annual Meeting. It is anticipated that the next annual
meeting of shareholders will be held during May 1996. Shareholders may present
proposals for inclusion in the proxy statement to be mailed in connection with
the 1996 annual meeting of shareholders of the Company, provided such proposals
are received by the Company no later than December 5, 1995, and are otherwise in
compliance with applicable laws and regulations and the governing provisions of
the articles of incorporation and bylaws of the Company.
- - --------------------------------------------------------------------------------
MISCELLANEOUS
- - --------------------------------------------------------------------------------
Other Business
Management does not know of any business other than that referred to in the
Notice which may be considered at the Annual Meeting. If any other matters
should properly come before the Annual Meeting, it is the intention of the
persons named in the accompanying form of proxy to vote the proxies held by them
in accordance with their best judgment.
In order to assure the presence of the necessary quorum and to vote on the
matters to come before the Annual Meeting, please indicate your choices on the
enclosed proxy and date, sign, and return it promptly in the envelope provided.
The signing of a proxy by no means prevents your attending the meeting.
By Order of the Board of Directors,
UTAH MEDICAL PRODUCTS, INC.
Salt Lake City, Utah Kevin L. Cornwell, President and Director
April 10, 1995
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<PAGE>
PROXY
Annual Meeting of the Shareholders of (This Proxy is Solicited on Behalf
Utah Medical Products, Inc. of the Board of Directors)
The undersigned hereby appoints Kevin L. Cornwell and Paul Richins, and
each of them, proxies, with full power of substitution, to vote the shares of
common stock of Utah Medical Products, Inc. (the "Company") which the
undersigned is entitled to vote at the meeting of shareholders of the Company to
be held at the Red Lion Hotel, 255 South West Temple, Salt Lake City, Utah , on
May 19, 1995, at 12:00 noon, local time, or any adjournment(s) thereof (the
"Annual Meeting"), such proxies being directed to vote as specified below. If no
instructions are specified, such proxies will be voted "FOR" each proposal.
To vote in accordance with the board of directors' recommendations, sign
below; the "FOR" boxes may, but need not be, checked. To vote against any of the
recommendations, check the appropriate box(es) marked "AGAINST," below.
(1) To elect Lori A. Sessions a director of the Company to serve a three
year term and until her successor is elected and qualified;
Lori A. Sessions: FOR [_] WITHHOLD AUTHORITY [_]
(2) To approve the appointment of Deloitte & Touche as independent
certified public accountants and auditors of the Company for its 1995
fiscal year;
FOR [_] AGAINST [_] ABSTAIN [_]
(3) To transact such other business as may properly come before the Annual
Meeting.
FOR [_] AGAINST [_] ABSTAIN [_]
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS IN THE RECORDS OF THE COMPANY. WHEN
SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN. IF YOUR SHARES ARE HELD AT
A BROKERAGE HOUSE, PLEASE INDICATE IN THE SPACE PROVIDED THE NAME OF THE
BROKERAGE HOUSE AND THE NUMBER OF SHARES HELD.
Dated ___________________________ No. of Shares ___________________________
Signature________________________ Signature (if held jointly)______________
Print Name_______________________ Print Name_______________________________
PLEASE MARK, SIGN, DATE, AND RETURN PROXY IN THE BUSINESS REPLY ENVELOPE
PROVIDED. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
Utah Medical Products, Inc.
7043 South 300 West
Midvale, Utah 84047
