<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
STARR SURGICAL COMPANY
- - --------------------------------------------------------------------------------
(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.
[_] $125 per Exchange Act Rules-o-11(c)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A.
[_] $500 per party to the controversy pursuant to Exchange Act Rules
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>
[LETTERHEAD OF STAAR SURGICAL COMPANY]
April 21, 1997
To Our Stockholders:
The 1997 Annual Meeting of Stockholders of STAAR Surgical Company (the
"Company") will be held at 10:00 a.m. on Thursday, May 22, 1997, at the Holiday
Inn located at 924 West Huntington Drive, Monrovia, California.
Enclosed is the Company's Annual Report for the Company's fiscal year ending
January 3, 1997, Notice of the Annual Meeting of Stockholders, Proxy Statement
and Proxy Card. The enclosed Proxy Statement and Proxy Card contain details
concerning the business to come before the meeting, including the election of
two directors to fill the two three-year Class II director positions which
expire at the 1997 Annual Meeting of Stockholders. You should note that the
Board of Directors of the Company unanimously recommend a vote "FOR" the
election of its director nominees to serve as the two Class II directors on the
Company's Board of Directors.
If you are a record holder of the Company's common stock on April 3, 1997, you
are eligible to vote with respect to these matters, either personally at the
meeting or by proxy. It is important that your shares be voted, whether or not
you plan to attend the meeting, to ensure the presence of a quorum. For that
reason we request that you sign and return the Proxy Card now. A postage paid
envelope is enclosed for your convenience in replying. If you attend the
meeting and wish to vote your shares personally, you may revoke your proxy.
We look forward to reviewing the activities of the Company with you at the
meeting. We hope you can be with us.
Sincerely,
/s/ John R. Wolf
John R. Wolf
President and Chairman of the Board
<PAGE>
STAAR SURGICAL COMPANY
1911 WALKER AVENUE
MONROVIA, CALIFORNIA 91016
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 22, 1997
To the Stockholders of STAAR Surgical Company:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders (the
"Annual Meeting") of STAAR Surgical Company, a Delaware corporation (the
"Company"), will be held at 10:00 a.m. local time, on Thursday, May 22, 1997, at
the Holiday Inn located at 924 West Huntington Drive, Monrovia, California
91016, to consider and to vote on the following matters as more fully described
in the accompanying Proxy Statement:
1. To elect two directors to fill the two three-year Class II director
positions on the Board of Directors of the Company which expire at the
1997 Annual Meeting of Stockholders, with such Class II directors to
serve until the Annual Meeting of Stockholders to be held in the year
2000.
2. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on April 3, 1997, as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the Annual Meeting and any adjourned meetings thereof.
All stockholders are cordially invited to attend the Annual Meeting in
person. Your vote is important. PLEASE FILL IN, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE RETURN ENVELOPE FURNISHED FOR THAT PURPOSE AS PROMPTLY AS
POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. Your promptness
in returning the proxy will assist in the expeditious and orderly processing of
the proxies and will assist in ensuring that a quorum is present or represented.
If you return your proxy, you may nevertheless attend the Annual Meeting and
vote your shares in person if you wish. If you later desire to revoke your proxy
for any reason, you may do so in the manner described in the attached Proxy
Statement.
By Order of the Board of Directors
/s/ John R. Wolf
John R. Wolf
Chairman and President
Monrovia, California
April 21, 1997
<PAGE>
STAAR SURGICAL COMPANY
1911 Walker Avenue
Monrovia, California 91016
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 22, 1997
VOTING AND PROXY
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of STAAR Surgical Company (the "Company") for use at
the Annual Meeting of Stockholders to be held at 10:00 a.m., local time, on
Thursday, May 22, 1997, at the Holiday Inn located at 924 West Huntington Drive,
Monrovia, California 91016 (the "Annual Meeting"), and any adjournments thereof.
When such proxy is properly executed, dated and returned, the shares it
represents will be voted in accordance with any directions noted thereon. If no
specification is indicated, the shares will be voted "FOR" the election of the
two director nominees named on the proxy to fill the two three-year Class II
director positions on the Board of Directors of the Company which expire at the
1997 Annual Meeting of Stockholders, with such Class II directors to serve until
the Annual Meeting of Stockholders to be held in the year 2000. Any holder of
record giving a proxy has the power to revoke it at any time before it is voted
by written notice to the Secretary of the Company, by issuance of a later dated
proxy, or by voting at the meeting in person.
At the close of business on April 3, 1997, the record date for determining
stockholders entitled to notice of and to vote at the Annual Meeting, the
Company had issued and outstanding 13,075,646 shares of common stock ("Common
Stock"). Each share of Common Stock entitles the holder of record thereof to
one vote on any matter coming before the Annual Meeting. Only stockholders of
record at the close of business on April 3, 1997, are entitled to notice of and
to vote at the Annual Meeting or any adjournments thereof.
The Company will pay the expenses of soliciting proxies for the Annual Meeting,
including the cost of preparing, assembling, and mailing the proxy solicitation
materials. Proxies may be solicited personally, or by mail or by telephone, by
directors, officers and regular employees of the Company who will not be
additionally compensated therefor. It is anticipated that this Proxy Statement
and accompanying Proxy Card will be mailed on or shortly after April 22, 1997,
to all stockholders entitled to vote at the Annual Meeting.
1
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors recommends that Michael R. Deitz, M.D., and Peter J.
Utrata, M.D., be elected to serve as the two Class II directors on the Company's
Board of Directors, to hold office for a three-year term until the Annual
Meeting of Stockholders to be held in the year 2000, and until their respective
successors are elected and qualified. If either nominee should be unable or
unwilling to serve, the discretionary authority provided in the proxy will be
exercised to vote for a substitute nominee designated by management. The Board
of Directors has no reason to believe that any substitute nominee will be
required.
The proxies cannot be voted for more than two nominees. Stockholders wishing to
nominate a Class II director for election at the Annual Meeting may do so by
delivering to the Secretary of the Company, no later than fourteen days before
the Annual Meeting, a notice setting forth (1) the name, age, business address
and, if known, residence address of the nominee proposed in such notice, (2) the
principal occupation or employment of such nominee, and (3) the number of shares
of stock of the Company which are beneficially owned by such nominee. No person
may be elected as a Class II director unless he or she has been nominated by a
stockholder in the manner just described or by the Board of Directors. The two
nominees receiving the highest number of votes will be elected as the two Class
II directors.
The Class II directors will serve a three-year term until the Annual Meeting of
Stockholders to be held in the year 2000, and until his or her respective
successor is elected and qualified. No proxies are sought with respect to the
election of the presently serving Class III directors (Messrs. John R. Wolf and
Andrew F. Pollet) or Class I director (Dr. Donald R. Sanders), as the three-year
terms of these classes of directors do not expire until the Annual Meetings of
Stockholders to be held in 1998 and 1999, respectively.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF DR. DEITZ
AND DR. UTRATA AS THE TWO CLASS II DIRECTORS FOR THE COMPANY. PROXIES SOLICITED
BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY
OTHERWISE.
DESCRIPTION OF THE BOARD OF DIRECTORS
The Certificate of Incorporation and the Bylaws of the Company divide the Board
into three classes of directors, namely, Class I, Class II and Class III, with
the number of directors in each class to be as nearly equal as possible, and
with each class to be elected for a three-year term on a staggered basis. The
Company's Bylaws permit the Board of Directors to fix the number of the
authorized members of the Board of Directors from three to seven. At present,
the Board of Directors consists of five members, of which one member serves as a
Class I director, two members serve as Class II directors, and two members serve
as Class III directors. Drs. Michael R. Deitz and Peter J. Utrata presently
serve in Class II, which is subject to re-election at this Annual Meeting of
Stockholders. Messrs. John R. Wolf and Andrew F. Pollet presently serve in Class
III, which is subject to re-election at the Annual Meeting of Stockholders to be
held in 1998, and Dr. Sanders presently serves in Class I, which is subject to
re-election at the Annual Meeting of Stockholders to be held in 1999.
BUSINESS EXPERIENCE OF CLASS II DIRECTOR NOMINEES
MICHAEL R. DEITZ, M.D., CLASS II DIRECTOR NOMINEE
Dr. Deitz has served as a director of the Company since June, 1990. Dr. Deitz
has been a physician specializing in ophthalmology since 1962. He attained a
subspecialty in refractive eye surgery in 1979 when he was the fourth surgeon in
the United States to perform radial keratotomy. Dr. Deitz has been a consultant
and co-investigator at the Eye Foundation of Kansas City since its founding in
1986. Dr. Deitz is also a Clinical Associate Professor in
2
<PAGE>
the Department of Ophthalmology of the University of Missouri Kansas City School
of Medicine. Dr. Deitz received his medical degree from the University of
Pennsylvania, and his specialty training at the University of Michigan in Ann
Arbor. Dr. Deitz currently serves as Counselor to the American Academy of
Ophthalmology. He served on the Board of Directors of the International Society
of Refractive Keratoplasty from 1984 through 1987 and from 1989 through 1992.
PETER J. UTRATA, M.D., CLASS II DIRECTOR NOMINEE
Dr. Utrata has served as a director of the Company since December 1987. Dr.
Utrata is an ophthalmic surgeon in Columbus, Ohio and has been the President of
Eye Surgery Center of Ohio, Inc. since May 1984. He is associated with the Grant
Eye and Ear Hospital, Columbus, Ohio. From 1974 to May 1984, he was a physician
and partner with Eye Surgery Consultants. Dr. Utrata received his undergraduate
and medical degrees from Ohio State University where he is currently a Clinical
Associate Professor.
BUSINESS EXPERIENCE OF CLASS I AND CLASS III DIRECTORS
DONALD R. SANDERS, PH.D., M.D., CLASS I DIRECTOR
Dr. Sanders has served as a director of the Company since May 1996. Dr. Sanders
has been a physician specializing in ophthalmology since 1977, and received his
Board Certification in 1988. Dr. Sanders has primarily been involved in
research relating to cataract and refractive eye surgery. Since its founding in
1984, Dr. Sanders has been the President and owner and a director of Center for
Clinical Research, Inc., a private company located in Chicago, Illinois which
provides marketing research, statistical, clinical and regulatory services to
companies and physicians in the ophthalmic industry. Dr. Sanders has been an
Associate Professor for the past fifteen years, and an Assistant Professor for
the five years prior thereto, in the Department of Ophthalmology of the
University of Illinois College of Medicine in Chicago. Dr. Sanders recently
retired as Chief Medical Editor of the Ocular Surgery News, after serving in
that capacity for fourteen years. Dr. Sanders received his Ph.D. degree in
Pharmacology from the University of Illinois School of Pharmacology, his medical
degree from the University of Illinois College of Medicine, and his Bachelor of
Science degree in Biology from the University of Illinois. Dr. Sanders has
published or edited over 15 books and over 100 scientific articles.
JOHN R. WOLF, CHAIRMAN OF THE BOARD AND CLASS III DIRECTOR
Mr. Wolf was elected President and a director in October 1989, and was appointed
Chairman of the Board in March 1994. Mr. Wolf served as Executive Vice
President of the Company from October 1986 to October 1989 and as a Vice
President of the Company from September 1983 to October 1986. From November
1980 through August 1983, Mr. Wolf was employed as an Intraocular Lens
Divisional Sales Manager for Iolab Corporation, a division of Johnson & Johnson,
where he was named manager of the year in 1982. Prior to that, he served (and
continues to serve) as President of his own privately-held corporation, Iotech,
Inc. Mr. Wolf is a graduate of the University of Southern California, where he
received his Bachelor of Science and Master of Business Administration degrees.
ANDREW F. POLLET, ESQ., CLASS III DIRECTOR
Mr. Pollet has served as a director of the Company since September 1990. Mr.
Pollet has been a principal of the law firm of Pollet & Woodbury, a Law
Corporation, and its predecessor law firms since 1980. Mr. Pollet also serves
as a director of Empyrean Diagnostics, Ltd., the Mason Group, E.L. Payne Heating
Company, Group Air Management, Inc., Page Digital Incorporated, Powder Keg,
Inc., and San Joaquin Chemicals. Mr. Pollet received his Juris Doctor degree
from the University of San Diego School of Law, and received his Bachelor of
Science and Master in Business Administration degrees from the University of
Southern California.
3
<PAGE>
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held four meetings during the 1996 fiscal
year. No director attended less than 75% of the total number of meetings of the
Board and the meetings of any committees on which they served.
During fiscal 1996, Mr. Wolf and Drs. Deitz and Sanders (and prior to Dr.
Sanders' appointment as a director in May 1996, his predecessor, Dr. Gathe)
served on the Audit Committee, and Mr. Pollet and Drs. Deitz, Utrata and Sanders
(and prior to Dr. Sanders' appointment, his predecessor, Dr. Gathe) served on
the Compensation Committee, which also serves as the Stock Option Committee.
The Audit Committee met one time in 1996 (as part of a Board meeting) and the
Compensation (Stock Option) Committee met one time in 1996 (also as part of a
Board meeting).
COMPENSATION OF DIRECTORS
Non-employee directors are ordinarily entitled to receive $1,000 for each Board
meeting and $1,500 for each committee meeting attended. However, by mutual
agreement of the Board of Directors, no cash fees will be payable to directors
during the period the options described below vest.
The Company granted non-qualified stock options to purchase 60,000 shares of
Common Stock to each of the Company's directors in consideration of, and as an
inducement for, their prospective service on the Board of Directors for a period
of three years. These options were initially granted in June 1994 to Drs.
Deitz, Gathe and Utrata and to Mr. Pollet, and covered the period of service for
these directors beginning June 1994 and ending May 1997. An additional grant
was made to Mr. Wolf in August 1994 for the period of service beginning August
1994 and ending July 1997. An additional grant was made to Dr. Sanders in May
1996 for the period of service beginning May 1996 and ending May 1999. The
exercise price for the options were $4.75 per share with respect to the options
granted to Drs. Deitz, Gathe and Utrata and to Mr. Pollet, $4.87 1/2 per share
with respect to the options granted to Mr. Wolf, and $12.50 per share with
respect to the options granted to Dr. Sanders, all of which prices corresponded
with the trading price of the Common Stock as of the respective dates of grant.
The aforesaid stock options vest one-third upon date of grant, and vest an
additional one-third and fully upon the directors' continued service through the
first and second anniversary dates of the grant of the options, respectively.
The stock options expire five years from date of grant, except that vested
options expire, if earlier, one year after the date on which a director's
service is terminated. Unvested options immediately terminate in the event of
the termination of a director's service on the Board; provided, however,
unvested options immediately vest upon the following events: (i) if such
termination is due to the failure or refusal of the Company, without cause, to
nominate the director for re-election to the Board, (ii) the failure of the
Company's stockholders to re-elect the director to the Board; (iii) the sale or
disposition by the Company of substantially all of its business or assets; (iv)
the sale of the capital stock of the Company in connection with the sale or
transfer of a controlling interest in the Company; (v) the merger or
consolidation of the Company with another corporation as part of a sale or
transfer of a controlling interest in the Company; or (vi) the dissolution or
liquidation of the Company. Should a director exercise an option, the Company
reserves the right, in its sole discretion, to allow the director to pay for the
option shares by cash, stock, or the provision of a full recourse promissory
note, bearing interest at a rate that precludes the imposition of interest under
the Internal Revenue Code, and secured by such security as prescribed by the
Stock Option Committee. The Company has no obligation to issue registered
shares, although the Company intends (but without any obligation to do so) to
file a registration statement on Form S-8 under the Securities Act of 1933, as
amended (the "Securities Act") with respect to said shares.
4
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1996, Mr. Pollet and Drs. Deitz, Utrata and Sanders (and prior to
Dr. Sanders' appointment as a director in May 1996, his predecessor, Dr. Gathe),
served on the Company's Compensation Committee (which is responsible for
determining executive compensation) and its Stock Option Committee (which is
responsible for determining grants of stock under the Company's various stock
plans to the Company's employees and/or consultants). None of these directors is
an executive officer or director of any other company of which any of the other
aforementioned directors is an executive officer or director.
BENEFICIAL OWNERSHIP OF DIRECTORS AND DIRECTOR NOMINEES
The following table sets forth, as of March 31, 1997, certain information with
respect to each director as of such date and nominee for director of the
Company, including the amount and nature of shares of Common Stock beneficially
owned by each of them as of such date.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
DIRECTOR BENEFICIAL OWNERSHIP OF
NAME(1) AGE SINCE COMMON STOCK(2)(3) PERCENTAGE(2)(3)
- - ------ --- ----- ----------------- ----------------
<S> <C> <C> <C> <C>
John R. Wolf 51 1989 1,096,013(4) 8.3%(4)
Michael R. Deitz, M.D 63 1990 372,862(5) 2.8%(5)
Andrew F. Pollet, Esq. 46 1990 783,678(6) 5.9%(6)
Peter J. Utrata, M.D. 53 1987 277,500(7) 2.1%(7)
Donald R. Sanders, Ph.D., M.D. 48 1996 74,035(8) *(8)
- - -------------------------
</TABLE>
* Less than 1%.
(1) The business address of each person named is c/o STAAR Surgical Company,
1911 Walker Avenue, Monrovia, CA 91016.
(2) Based on 13,075,646 shares of Common Stock outstanding on the transfer
records as of March 31, 1997.
(3) Calculated pursuant to Rule 13d-3(d) of the Securities Exchange Act of
1934. Under Rule 13d-3(d), shares not outstanding which are subject to
options, warrants, rights or conversion privileges exercisable within 60
days are deemed outstanding for the purpose of calculating the number and
percentage owned by such person, but not deemed outstanding for the purpose
of calculating the percentage owned by each other person listed. The
Company believes that each individual or entity named has sole investment
and voting power with respect to shares of Common Stock indicated as
beneficially owned by them, subject to community property laws, where
applicable, except where otherwise noted.
(4) Includes 15,000 shares held by Iotech, Inc., a corporation owned and
controlled by Mr. Wolf, and 875 shares held by Mr. Wolf as Trustee of the
Iotech, Inc. Profit Sharing Plan. Also includes 172,500 shares issuable
upon exercise of (i) 62,500 formula options and 50,000 incentive options
granted under the 1991 Stock Option Plan; and (ii) 60,000 non-qualified
options granted as director incentive in connection with appointment to
Board in 1994.
(5) Includes 221,750 shares issuable upon exercise of (i) 25,000 formula
options granted under the 1991 Stock Option Plan; (ii) 25,000 warrants
granted with respect to appointment to the Board of Directors; (iii)
111,750 warrants issued in connection with a loan to the Company; and (iv)
60,000 non-qualified options granted as director incentive in connection
with appointment to Board in 1994.
(6) Includes 11,750 shares held by Mr. Pollet as Trustee of the Pollet &
Woodbury 401(k) Pension Plan. Also includes 135,000 shares issuable upon
exercise of (i) 50,000 formula options granted under the 1991 Stock Option
Plan; (ii) 25,000 warrants granted with respect to appointment to the Board
of Directors; and (iii) 60,000 non-qualified options granted as director
incentive in connection with appointment to Board in 1994.
(7) Includes 122,500 shares issuable upon exercise of (i) 50,000 formula
options granted under the 1991 Stock Option Plan; (ii) 12,500 warrants
issued for director compensation; and (iii) 60,000 non-qualified options
granted as director incentive in connection with appointment to Board in
1994.
(8) Includes 40,000 shares issuable upon exercise of 40,000 non-qualified
options granted as director incentive in connection with appointment to
Board in 1996.
5
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth certain information concerning the executive
officers of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
- - ---- --- --------
<S> <C> <C>
John R. Wolf 51 President, Chief Executive Officer and Chairman of the Board of Directors
William C. Huddleston 50 Vice President Finance, Chief Financial Officer, Treasurer and Secretary
Vladimir Feingold 47 Executive Vice President Research and Development
Michael J. Lloyd 48 Senior Vice President Manufacturing
Carl M. Manisco 47 Senior Vice President Sales and Marketing
Donald D. Ferguson 59 Vice President International Sales
Steven L. Ziemba 40 Vice President Regulatory Affairs
</TABLE>
The executive officers of the Company are employed pursuant to employment
agreements approved by the Board of Directors. See "Employment Agreements With
Named Executive Officers," below.
BUSINESS EXPERIENCE OF EXECUTIVE OFFICERS
JOHN R. WOLF, PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF THE BOARD OF
DIRECTORS
See "Business Experience of Class I and Class III Directors," above.
WILLIAM C. HUDDLESTON, VICE PRESIDENT FINANCE, CHIEF FINANCIAL OFFICER,
TREASURER AND SECRETARY
Mr. Huddleston has been Vice President Finance, Chief Financial Officer and
Treasurer of the Company since March 1990, and Secretary since March 1994. From
November 1988 to December 1989, Mr. Huddleston was Chief Financial Officer of
MRP Acquisition Corporation; from 1986 to November 1988, Mr. Huddleston was
Controller of International Pharmaceutical Products, Inc.; and from 1982 to
1986, he was Vice President and Controller and a director of Paper Pak Products,
Inc. Mr. Huddleston was Controller of the Green Bay mill of American Can Company
from 1979 to 1982. Prior to 1979, Mr. Huddleston was employed in various
management positions with International Paper Company. Mr. Huddleston is a
Certified Management Accountant and received a Master of Business Administration
degree from Northeast Louisiana University and a Bachelor of Science degree in
Accounting from Mississippi State University.
VLADIMIR FEINGOLD, EXECUTIVE VICE PRESIDENT RESEARCH AND DEVELOPMENT
Mr. Feingold has been Executive Vice President Research and Development since
September 1993. Prior to that, he was engaged by the Company as its Vice
President Research and Development since September 1991, and prior to that as a
consultant. Mr. Feingold has been, since its inception, Managing Director,
Executive and Head of Research and Development of Bionica Pty. Ltd., an
Australian corporation he founded in 1984, which is primarily involved in the
development, manufacturing and distribution of infusion systems. From 1975
through 1984, Mr. Feingold was employed as a design engineer, chief mechanical
engineer, manufacturing engineering executive, and a research executive with
Telectronics Pty., Ltd. Mr. Feingold is a graduate of the University of Sydney,
where he received a Bachelor of Science degree in Mathematics and a Bachelor of
Engineering (Mechanical) degree (First Class Honors). Mr. Feingold also has
Certificates from the N.S.W. Institute of Technology (Microprocessors and Data
Acquisition), the Australian Institute of Management (Influence and Negotiation,
Finance, and Management), and Sydney Hospital (Medical Technology).
6
<PAGE>
CARL M. MANISCO, SENIOR VICE PRESIDENT SALES AND MARKETING
Mr. Manisco has been Senior Vice President Sales and Marketing since 1992. Prior
to that time, Mr. Manisco served as Vice President Sales from March 1990 and
Director of Sales, Product Manager and Sales Manager since August 1983. From
1980 to 1983, Mr. Manisco served as sales representative and divisional sales
trainer of Iolab Corporation. Mr. Manisco received a Business Administration
degree in marketing from the University of Portland.
DONALD D. FERGUSON, VICE PRESIDENT INTERNATIONAL SALES
Mr. Ferguson has been Vice President International Sales since April 1995. From
December 1993 through April 1995, Mr. Ferguson was Vice President European
Affairs, and from April 1992 through December 1993 he served as Director of
European Affairs. From 1986 to February 1992 Mr. Ferguson was Vice President
International at Ioptex Research Inc. Prior to such employment, Mr. Ferguson was
Regional Manager North Asia and Hong Kong for Coopervision, Inc., Regional
Managing Director Far East at CILCO, Inc., and Director of Marketing, Director
of Planning & Administration, and Market Research Manager at INCO Ltd. Mr.
Ferguson received his Bachelor of Science and Master of Business Administration
degrees from Marshall University.
MICHAEL J. LLOYD, SENIOR VICE PRESIDENT - MANUFACTURING
Mr. Lloyd has been Senior Vice President Manufacturing since November 1993, and
Vice President Manufacturing since November 1990. He was Director of
Manufacturing from April 1990 to November 1990, Manufacturing Manager from
September 1987 to April 1990, and Production Supervisor from September 1986 to
September 1987. Prior to 1986, Mr. Lloyd was Materials Supervisor Of Sterile
Products and Production Supervisor of the Assembly and Preparation Departments
at Cilco, Inc. Mr. Lloyd received a Bachelor of Science degree in Business
Administration from California State Polytechnic University, Pomona.
STEVEN L. ZIEMBA, VICE PRESIDENT - REGULATORY AFFAIRS
Mr. Ziemba has been Vice President Regulatory Affairs since April 1990. From
July 1986 to March 1988 he was Manager of Clinical and Regulatory Affairs at
Ioptex and was Sales and Marketing Consultant to Ioptex from March 1988 to April
1990. Prior to 1986, Mr. Ziemba was Manager of Clinical Research of Allergan
Surgical Inc., Senior Clinical Monitor and Regulatory Analyst at Allergan
Medical Optics, Inc., Document Control Supervisor at CILCO, Inc., and Standards
Analyst, Associated Quality Engineer and Physical Test Technician at American
Pharmaseal Laboratories. Mr. Ziemba received a Masters of Science degree in
Systems Management from the University of Southern California and a Bachelor of
Arts degree in Biological Sciences from California State University.
BENEFICIAL OWNERSHIP OF CERTAIN STOCKHOLDERS
AND EXECUTIVE OFFICERS
The following table sets forth, as of March 31, 1997, certain information with
respect to the amount and nature of shares of Common Stock beneficially owned by
(1) each person (other than a person who is also a director and/or a director
nominee) who is a beneficial owner of more than 5% of the Company's outstanding
stock, (2) each person (other than a person who is also a director and/or a
director nominee) who is an executive officer named in
7
<PAGE>
the Summary Compensation Table below, and (3) all executive officers and
directors as a group. The term "executive officer" is defined as the President,
Secretary, Treasurer, any vice-president in charge of a principal business
function (such as sales, administration or finance), or any other person who
performs similar policy making functions for the Company. Information concerning
the amount and nature of beneficial ownership of executive officers who are also
directors and/or director nominees are disclosed in the table under that section
of this Proxy Statement captioned "Beneficial Ownership of Directors and
Director Nominees."
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP OF
NAME(1) IDENTITY COMMON STOCK(2)(3) PERCENTAGE(2)(3)
- - ------ -------- ----------------- ---------------
<S> <C> <C> <C>
William C. Huddleston Executive officer 195,184(4) 1.5%(4)
Vladimir Feingold Executive officer 238,538(5) 1.8%(5)
Carl M. Manisco Executive officer 135,943(6) 1.0%(6)
Donald D. Ferguson Executive officer 51,000(7) *(7)
Michael J. Lloyd Executive officer 134,486(8) 1.0%(8)
Steven L. Ziemba Executive officer 192,917(9) 1.5%(9)
Directors (including nominees)
and executive officers as a group
(11 persons) 3,552,146(10) 24.7%(10)
</TABLE>
- - ---------------------------
* Less than 1%.
(1) The business address of each person named is c/o STAAR Surgical Company,
1911 Walker Avenue, Monrovia, CA 91016.
(2) Based on 13,075,646 shares of Common Stock outstanding on the transfer
records as of March 31, 1997.
(3) Calculated pursuant to Rule 13d-3(d) of the Securities Exchange Act of
1934. Under Rule 13d-3(d), shares not outstanding which are subject to
options, warrants, rights or conversion privileges exercisable within 60
days are deemed outstanding for the purpose of calculating the number and
percentage owned by such person, but not deemed outstanding for the purpose
of calculating the percentage owned by each other person listed. The
Company believes that each individual or entity named has sole investment
and voting power with respect to shares of Common Stock indicated as
beneficially owned by them, subject to community property laws, where
applicable, except where otherwise noted.
(4) Includes 75,000 shares issuable upon exercise of (i) 60,000 incentive stock
options granted under the 1991 Stock Option Plan, and (ii) 10,000 options
granted in connection with current employment agreement.
(5) Includes 91,500 shares issuable upon exercise of (i) 77,500 incentive stock
options granted under the 1991 Stock Option Plan, and (ii) 14,000 options
granted in connection with current employment agreement. Also includes
70,000 shares held by Bionica Pty. Ltd., of which the executive officer is
a 52% stockholder.
(6) Includes 118,943 shares issuable upon exercise of (i) 12,500 formula
options and 72,500 incentive stock options granted under the 1991 Stock
Option Plan; (ii) 7,276 options granted under prior plans; (iii) 16,667
options granted in connection with a prior employment agreement; and (iv)
10,000 options granted in connection with current employment agreement.
(7) Includes 51,000 shares issuable upon exercise of (i) 45,000 incentive stock
options granted under the 1991 Stock Option Plan; and (ii) 6,000 options
granted in connection with current employment agreement.
(8) Includes 134,486 shares issuable upon exercise of (i) 12,500 formula
options and 60,000 incentive stock options granted under the 1991 Stock
Option Plan; (ii) 51,986 options granted in connection with a prior
employment agreement; and (iii) 10,000 options granted in connection with
current employment agreement.
(9) Includes 145,883 shares issuable upon exercise of (i) 12,500 formula
options and 65,000 incentive stock options granted under the 1991 Stock
Option Plan, (ii) 58,383 options granted in connection with a prior
employment agreement, and (iii) 10,000 non-qualified options granted in
connection with current employment agreement.
(10) Includes an aggregate of 1,308,562 shares issuable upon exercise of options
and warrants held by directors (including nominees) and executive officers
of the Company.
8
<PAGE>
SUMMARY COMPENSATION
The following table shows the compensation paid over the past three fiscal years
with respect to (i) the Company's Chief Executive Officer as of the end of the
1996 fiscal year, and (ii) the four other most highly compensated executive
officers (in terms of salary and bonus) serving at the end of the 1996 fiscal
year whose annual salary and bonus exceeded $100,000 (the "Named Executive
Officers"):
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------- ------ -------
OPTIONS
& STOCK
NAME APPRECIATION ALL OTHER
AND SALARY BONUS RIGHTS LTIP PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) (#)(1) ($) ($)
- - ------------------ ---- ------ ------ ----- --- ---
<S> <C> <C> <C> <C> <C> <C>
John R. Wolf 1996 200,000(2) --- --- --- ---
Director, CEO and 1995 200,000(2) --- --- --- ---
President 1994 202,801(2) --- 60,000 46,875(5) ---
William C. Huddleston 1996 131,754 50,000 50,000 --- ---
Vice President Finance, Chief 1995 128,690 42,000 --- --- ---
Financial Officer and 1994 120,165 20,000 40,000 --- ---
Secretary
Vladimir Feingold 1996 210,154 20,000 70,000 --- 104,000(6)
Executive Vice President 1995 183,266 40,000 --- --- 33,600(6)
Research & Development 1994 193,667 --- 90,000 --- ---
Carl M Manisco 1996 179,148(3) --- 50,000 --- ---
Senior Vice President 1995 173,464(3) --- --- --- ---
Sales and Marketing 1994 165,356(3) --- 35,000 --- ---
Donald D. Ferguson 1996 168,740(4) --- 30,000 --- ---
Vice President 1995 148,396(4) --- --- --- ---
International Sales 1994 137,228(4) --- 30,000 --- ---
</TABLE>
- - ------------------------------
(1) No stock appreciation rights were granted in 1994 through 1996.
(2) Does not include commissions paid to Iotech, Inc., a corporation owned by
Mr. Wolf, pursuant to the terms of the Company's sales representative
agreement with Iotech, Inc. These amounts were $412,000, $322,000 and
$263,000 in 1996, 1995 and 1994, respectively. See "Certain Relationships
and Related Transactions - Transactions With Management and Others" and
"Report of the Compensation Committee of the Board of Directors on
Executive Compensation - CEO Compensation," herein.
(3) Includes sales commission income paid to executive pursuant to the terms of
executive's employment agreement. These amounts were $74,148, $63,655 and
$55,136 in 1996, 1995 and 1994, respectively.
(4) Includes sales commission income paid to executive pursuant to the terms of
executive's employment agreement. These amounts were $48,740, $28,396 and
$6,889 in 1996, 1995 and 1994, respectively. Does not include $12,020 and
$41,602 paid or incurred in 1995 and 1994, respectively, in connection with
extraordinary housing allowance and relocation expenditures relating to Mr.
Ferguson's relocation to Europe.
(5) Represents forgiveness of indebtedness income with respect to quarterly
payment forgiven in the event of continued employment by Mr. Wolf pursuant
to the terms of a promissory note given to the Company by Mr. Wolf in
connection with his purchase of Common Stock. See "Certain Relationships
and Related Transactions - Indebtedness of Management and Others to the
Company" below.
(6) Represents payment of a finders fee in connection with Mr. Feingold's
efforts in obtaining certain patents, with such fee paid in the form of
forgiveness of indebtedness with respect to payment of principal and
interest on a promissory note given to the Company by Mr. Feingold. See
"Certain Relationships and Related Transactions - Indebtedness of
Management and Others to the Company" below.
9
<PAGE>
OPTION & SAR GRANTS IN 1996 FISCAL YEAR
The following table provides certain information with respect to individual
grants of stock options and/or stock appreciation rights in the 1996 fiscal year
to each of the Named Executive Officers:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(1)
------------------------------------------------------------------ ----------------------
% OF TOTAL
OPTIONS/SARS EXERCISE
OPTIONS/ SARS GRANTED TO PRICE PER
GRANTED EMPLOYEE IN SHARE EXPIRATION 5% 10%
NAME (#)(2) FISCAL YEAR(3) ($) DATE ($) ($)
- - ------------------------ ------------- ------------- --------- ---------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
John R. Wolf --- --- --- --- --- ---
William C. Huddleston 50,000(4) 9.8% 12.50 9-20-06 31,250 62,500
Vladimir Feingold 70,000(4) 13.7% 12.50 9-20-06 43,750 87,500
Carl M. Manisco 50,000(4) 9.8% 12.50 9-20-06 31,250 62,500
Donald D. Ferguson 30,000(4) 5.9% 12.50 9-20-06 18,850 37,500
</TABLE>
- - --------------------------
(1) The potential realizable dollar value of any given option is the difference
between (i) the fair market value of the stock underlying such option as of
the date of grant, adjusted to reflect hypothetical 5% and 10% annual
growth rates {simple interest} from the date of grant of such option until
the expiration date of such option, and (ii) the exercise price for such
option. The 5% and 10% are hypothetical growth rates prescribed by the SEC
for illustration purposes only and are not a forecast or prediction as to
future stock prices. The actual amount that a Named Executive Officer may
realize will depend on various factors on the date the option is exercised,
so there is no assurance that the value realized by a Named Executive
Officer will be at or near the value set forth above in the chart.
(2) No SARs were granted to the Named Executive Officers in the 1996 fiscal
year.
(3) The numerator in calculating this percentage includes options granted to
each Named Executive Officer in his capacity both as an officer (employee)
and, if applicable, as a director. The denominator in calculating this
percentage is 510,000, which represents options granted to all of the
employees of the Company, including the Named Executive Officers,
including, if applicable, grants of options attributable to their
capacities as directors.
(4) Non-qualified stock options granted in connection with employment
agreements. See "Employment Agreements With Named Executive Officers" below
for a discussion of the terms of these stock options.
10
<PAGE>
OPTION & SAR EXERCISES IN THE 1996 FISCAL YEAR
AND
OPTIONS & SARS AT 1996 FISCAL YEAR END
The following table provides certain information with respect to the Named
Executive Officers of (i) options exercised in fiscal 1996, and (ii) the number
and value of unexercised options as of the 1996 fiscal year end:
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS AT
AT FY-END (#)(1) FY-END($)(1)(3)
SHARES ACQUIRED VALUE ---------------- --------------
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#)(1) ($)(2) UNEXERCISABLE UNEXERCISABLE
---- ------ ----- ------------- -------------
<S> <C> <C> <C> <C>
John R. Wolf --- --- 172,500 / 0 1,461,563 / 0
William C. Huddleston --- --- 75,000 / 40,000 541,250 / 35,000
Vladimir Feingold 33,621 327,805 91,500 / 56,000 638,500 / 49,000
Carl M. Manisco --- --- 82,500 / 40,000 591,875 / 35,000
Donald D. Ferguson --- --- 51,000 / 24,000 376,500 / 21,000
- - --------------------------
</TABLE>
(1) No SARs were exercised by any Named Executive Officer in 1996, nor did any
Named Executive Officer hold any unexercised SARs at the end of the 1996
fiscal year.
(2) The dollar amount shown represents the difference between the fair market
value of the Common Stock underlying the options as of the date of exercise
and the option exercise price.
(3) The dollar value provided represents the cumulative difference in the fair
market value of the Common Stock underlying all in-the-money options as of
the last day of the 1996 fiscal year and the exercise prices for such
options. Options are "in-the-money" if the fair market value of the
underlying Common Stock as of the last day of the 1996 fiscal year exceeds
the exercise price of such options. The fair market value of the Common
Stock for purposes of this calculation is $13.37 1/2, based upon the
closing price for the Company's stock as quoted on the Nasdaq National
Market on January 3, 1997, the last day of the Company's 1996 fiscal year.
EMPLOYMENT AGREEMENTS WITH NAMED EXECUTIVE OFFICERS
The Company entered into a five year employment agreement with Mr. John R. Wolf
in July 1990 in his capacity as President of the Company. The Company and Mr.
Wolf agreed in December 1994 to extend the term of this agreement for an
additional seven years commencing January 1, 1995. Thereafter, this agreement
will be renewed for additional one-year terms unless either party gives
notification of termination. Mr. Wolf's employment agreement initially provided
for an annual base salary of $160,000, which has since been increased to
$200,000. The employment agreement also obligates the Company to provide
certain health and life insurance and similar benefits to Mr. Wolf. The Company
also pays sales commissions to Mr. Wolf's wholly owned corporation, Iotech,
Inc., pursuant to a Sales Representative Agreement with the Company. See
"Certain Relationships and Related Transactions - Transactions With Management
and Others" and "Report of the Compensation Committee of the Board of Directors
on Executive Compensation - CEO Compensation," herein.
In March 1994 the Company entered into employment agreements with Mr. William C.
Huddleston, as Vice President Finance and Chief Financial Officer and Mr. Carl
M. Manisco, as Senior Vice President Sales and Marketing. The employment
agreements initially provided for three-year terms, however, in September 1996,
the Company and each of these executives agreed to extend the term of their
respective employment agreement through December 31, 2001.
11
<PAGE>
In September 1996, the Company also entered into a five year employment
agreement with Mr. Vladimir Feingold as Executive Vice President Research and
Development. The term of this employment agreement is five years, commencing
January 1, 1997 and terminating December 31, 2001. The employment agreement
further provides that it shall renew upon the expiration of the pending term on
a month-to-month basis, terminable upon 30 days prior notice, pending
negotiations for a new agreement. Mr. Feingold's employment agreement also
designates him as President of the Company's wholly owned subsidiary, STAAR
Surgical AG.
In September 1996, the Company also entered into an employment agreement with
Mr. Donald L. Ferguson in his capacity as Vice President International Sales.
The term of this employment agreement is three years, commencing September 20,
1996 and terminating September 20, 1999.
Each of the executives is required to devote his entire productive time to the
performance of his executive obligations. The employment agreements may be
terminated by the Company for cause or due to the disability of the executive.
The employment agreements may be terminated by the executive for cause, upon 180
days prior notice without cause, or in the event of, among other things, the
demotion of the executive, or any of the following events (unless the executive
votes in favor of such event as a director or stockholder): (i) the sale or
disposition by the Company of substantially all of its business or assets; (ii)
the sale of the capital stock of the Company in connection with the sale or
transfer of a controlling interest in the Company; (iii) the merger or
consolidation of the Company with another corporation as part of a sale or
transfer of a controlling interest; or (iv) the dissolution or liquidation of
the Company.
The current annual base compensation of Messrs. Huddleston, Feingold, Manisco
and Ferguson under their employment agreements is $127,439, $200,000, $105,000
and $120,000, respectively.
As additional compensation: (i) Mr. Manisco is entitled under his employment
agreement to commissions equal to one-quarter of one percent of domestic sales;
(ii) Mr. Ferguson is entitled under his employment agreement to commissions
equal to one-half of one percent of the Company's first $15 million in net
international sales, and one-quarter of one percent of the Company's net
international sales in excess of $15 million; and (iii) Mr. Feingold is entitled
to an automobile allowance of $750 per month. Each of the executives is also
provided with medical and dental insurance, disability insurance equal to 60% of
their base salary, and life insurance in the amount of $500,000.
Annual base compensation for each of Messrs. Wolf, Huddleston, Feingold, Manisco
and Ferguson under their respective employment agreements may be increased on an
annual basis at the discretion of the Board of Directors.
Each of Messrs. Huddleston's, Feingold's, Manisco's and Ferguson's respective
employment agreements provide that the Company shall pay such executive
severance pay in an amount equal to two year's base salary in the event any of
the following events occur and the Company or the executive terminates his
employment as a result of such event: (i) the sale or disposition by the Company
of substantially all of its business or assets, (ii) the sale of the capital
stock of the Company in connection with the sale or transfer of a controlling
interest (defined as 50% or more of the Common Stock) in the Company; or (iii)
the merger or consolidation of the Company with another corporation as part of a
sale or transfer of a controlling interest in the Company.
As part of their initial employment agreements, the Company agreed to grant
incentive stock options under the 1991 Stock Option Plan to Messrs. Feingold and
Manisco to purchase 90,000, and 35,000 shares of the Common Stock, respectively,
at $4.75 per share (the then trading price of the Common Stock), and agreed to
grant non-qualified options to Mr. Huddleston to purchase 40,000 shares of
Common Stock at $4.75 per share. At the same time, the Company also agreed to
grant incentive stock options to Mr. Donald Ferguson to purchase 30,000 shares
of Common Stock at $4.75 per share in connection with his then appointment as
Vice President European Affairs.
12
<PAGE>
These stock options vest one-third, two-thirds, and fully upon the executive's
continued employment by the Company and/or its affiliates as of January 1, 1995,
1996 and 1997, respectively, and expire ten years following the grant date,
except that vested options expire earlier in the following circumstances: (i)
immediately upon the date of termination in the event of the termination of an
optionee's employment by the Company for cause; (ii) three months following the
date of termination if such termination is without cause by the Company; and
(iii) one year after date of death. Unvested options immediately terminate in
the event of the termination of an optionee's employment, with the exception of
the following events, in which case the options immediately vest: (i) the
termination of the optionee's employment if such termination is made by the
Company and is without cause; (ii) the termination of the optionee's employment
if such termination is made by the optionee and is for cause; (iii) the future
sale or disposition by the Company of substantially all of its business or
assets; (iv) the sale of the capital stock of the Company in connection with the
sale or transfer of a controlling interest in the Company; (v) the merger or
consolidation of the Company with another corporation as part of a sale or
transfer of a controlling interest in the Company; or (vi) the dissolution or
liquidation of the Company. Should an executive exercise an option, the Company
reserves the right, in its sole discretion, to allow the executive to pay for
the option shares by cash, stock, or the provision of a full recourse promissory
note, bearing interest at a rate that precludes the imposition of interest under
the Internal Revenue Code, and secured by such security as prescribed by the
Stock Option Committee. The Company has filed a registration statement on Form
S-8 under the Securities Act with respect to these options.
In September 1996, in connection with the extension of Messrs. Huddleston's and
Manisco's employment agreements, and the entering into of new employment
agreements with Messrs. Feingold and Ferguson, the Company agreed to grant non-
qualified stock options to Messrs. Huddleston, Manisco, Feingold and Ferguson to
purchase 50,000, 50,000, 70,000 and 30,000 shares of the Common Stock,
respectively, at $12.50 per share (the then trading price of the Common Stock).
The stock options for each of the above employees vest in cumulative 20% annual
increments upon the executive's continued employment by the Company and/or its
affiliates, with such vesting commencing September 20, 1996 and ending September
20, 2000. The stock options expire September 20, 2006, if unexercised, except
that vested options expire earlier in the following circumstances: (i)
immediately upon the date of termination in the event of the termination of an
optionee's employment by the Company for cause; (ii) three months following the
date of termination if such termination is without cause by the Company; and
(iii) one year after date of death. Unvested options immediately terminate in
the event of the termination of an optionee's employment, with the exception of
the following events, in which case the options immediately vest: (i) the
termination of the optionee's employment if such termination is made by the
Company and is without cause; (ii) the termination of the optionee's employment
if such termination is made by the optionee and is for cause; (iii) the future
sale or disposition by the Company of substantially all of its business or
assets; (iv) the sale of the capital stock of the Company in connection with the
sale or transfer of a controlling interest in the Company; (v) the merger or
consolidation of the Company with another corporation as part of a sale or
transfer of a controlling interest in the Company; or (vi) the dissolution or
liquidation of the Company. Should an executive exercise an option, the Company
reserves the right, in its sole discretion, to allow the executive to pay for
the option shares by cash, stock, or the provision of a full recourse promissory
note, bearing interest at a rate that precludes the imposition of interest under
the Internal Revenue Code, and secured by such security as prescribed by the
Stock Option Committee. The Company intends to file a registration statement on
Form S-8 under the Securities Act with respect to these options.
Mr. Feingold's employment agreement also addresses forgiveness of a loan in the
amount of $192,000 which the Company extended to Mr. Feingold in March 1994.
The terms of this loan is more particularly described in "Certain Relationships
and Related Transactions - Indebtedness of Management and Others to the Company"
below. Among other things, the employment agreement provides that Mr. Feingold
will be obligated to maintain collateral equal to at least 110% of the
outstanding balance of this loan. The employment agreement also provides that
the Company shall forgive the outstanding balance of this loan in the event of:
(i) the future sale or
13
<PAGE>
disposition by the Company of substantially all of its business or assets; (ii)
the sale of the capital stock of the Company in connection with the sale or
transfer of a controlling interest in the Company; or (iii) the merger or
consolidation of the Company with another corporation as part of a sale or
transfer of a controlling interest in the Company. Similar forgiveness will be
granted with respect to the outstanding balance of any other loans extended by
the Company to Mr. Feingold in connection with his exercise of incentive stock
options granted under the employment agreement, provided that such options were
exercised at least ninety days prior to entering into negotiations for any
transaction triggering loan forgiveness.
Messrs. Huddleston, Feingold, Manisco and Ferguson have each covenanted,
pursuant to the terms of their employment agreements, that they shall not, for a
period of one year following the termination of their employment or services,
compete with the Company within certain specified geographic areas, or solicit
the Company's employees or customers. In addition, these executives have
covenanted to return all proprietary information to the Company following the
termination of their respective employment agreements, and to not disclose any
confidential information of the Company.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
The following is the report from the Compensation Committee of the Board of
Directors, comprised of the Company's four independent directors. The
Compensation Committee also serves as the Stock Option Committee under the
Company's various stock plans. This report discusses the compensation policies
for executive officers in general and the Committee's rationale for compensation
paid to the Chief Executive Officer in particular.
REPORT OF THE COMPENSATION COMMITTEE
GENERAL. The Company's executive compensation program is designed to align
- - -------
stockholder's interests with business strategy, company values and management
initiatives. It is based upon the following four objectives: (1) to link the
interests of management with those of stockholders by encouraging stock
ownership in the Company; (2) to attract and retain superior executives by
providing them with the opportunity to earn total compensation packages that are
competitive with the industry; (3) to reward individual results by recognizing
performance through salary, annual cash incentives and long-term stock based
incentives; and (4) to manage compensation based on the level of skill,
knowledge, effort and responsibility needed to perform the job successfully.
Executive officers' compensation includes base salary, bonuses based on annual
performance, and long-term stock ownership plans. In general, the Company's
practice in determining compensation is for management to make a recommendation
to the Compensation Committee, which, in turn, will evaluate such recommendation
and make its own recommendation to the Board for its determination. The
Compensation Committee, however, makes the final determination with respect to
grants under the Company's various stock plans.
BASE COMPENSATION. The present base compensation of the Company's executive
- - -----------------
officers is based upon the amounts set forth in their respective employment
agreements which range, in term, from three to seven years. The initial amount
of base salary paid to executive officers under their employment agreements was
the amount, as determined by the Committee at such time, to be necessary to
attract and retain executives with the requisite superior abilities to perform
their executive functions. Certain executive officers also receive commissions
based upon sales. The Committee believes that the amount of base salary paid to
its executive officers is consistent with that generally paid in the industry.
Pursuant to the terms of their employment agreements, base salary for the
Company's executives is reviewed on an annual basis by the Compensation
Committee. The Compensation Committee's philosophy toward increasing
14
<PAGE>
base salary is to offer moderate increases from present levels, thereby
maintaining base salaries on a basis consistent with what the Compensation
Committee believes is paid in the industry.
ANNUAL CASH BONUSES. The Compensation Committee, in its sole discretion,
- - -------------------
approves the payment of bonuses from time-to-time to the Company's employees,
including its executive officers, as a medium-term incentive to influence
employees to be productive over the course of each fiscal year. The
determination of which executive officers should receive a bonus, and what the
amount of the bonus should be, is based upon a subjective analysis of the
executive's level of responsibility, performance of duties, and contribution
toward the success of the Company, and also takes into consideration other types
and amounts of performance based compensation paid to them, such as commissions.
In 1996, the Compensation Committee awarded bonuses of $50,000 and $20,000 to
Messrs. Huddleston and Feingold, respectively.
LONG-TERM STOCK OWNERSHIP PLANS. The Company has three stock plans in place
- - -------------------------------
which it generally uses to grant stock or options to purchase stock to its
employees as long-term incentives, namely, its 1990 Stock Option Plan, its 1991
Stock Option Plan and its 1996 Executive Stock Plan (there are also certain
prior stock option plans in place, however, the Company is not actively granting
stock or options under these plans). The 1990 Stock Option Plan and the 1991
Stock Option Plan afford the Company with the ability to make stock grants and
to grant incentive stock options, non-qualified stock options, accelerated stock
options, and tandem stock options to, among others, the Company's officers and
employees. The 1996 Executive Stock Plan affords the Company with the ability
to make stock grants and to grant non-qualified stock options to the Company's
officers and employees.
The Compensation Committee's objective is to grant stock or options to purchase
stock under its various stock plans subject to vesting conditions based on
continued employment. These vesting requirements are intended to create a more
productive workforce by: (1) acting as an inducement for long-term employment
with the Company, thereby lending stability to the Company's employee base; and
(2) encouraging more long-term productivity by the Company's employees as they
see their efforts translate into greater share value.
Most of the available shares under the 1990 and 1991 Stock Option Plans have
been issued or reserved for issuance. The Compensation Committee is awarding
stock and options under these plans as shares become available, based upon the
lapse or forfeiture of previously issued options.
CEO COMPENSATION. Mr. Wolf's base salary, which was last increased in August
- - ----------------
1991, is by its terms subject to annual review by the board of directors, which
review is conducted in accordance with the philosophy for the determination of
executive officer compensation described above in that section of this report
captioned "Base Compensation." As part of its review, the Compensation Committee
takes into consideration other forms of performance-based compensation or
consideration directly or indirectly received by Mr. Wolf, including the 1%
override sales commission payable to Mr. Wolf's wholly owned Corporation,
Iotech, Inc., pursuant to the sales representative agreement between Iotech,
Inc. and the Company dating back to Mr. Wolf's original association with the
Company, and has not, due to its consideration of such other payments, recently
increased Mr. Wolf's base compensation in his capacity as an executive officer.
See "Certain Relationships and Related Transactions - Transactions With
Management and Others," herein.
POLICY UNDER (S)162(m) OF THE INTERNAL REVENUE CODE. The Compensation Committee
- - ---------------------------------------------------
has not formulated a policy in qualifying compensation paid to executive
officers for deductibility under Section 162(m) of the Internal Revenue Code,
and does not foresee the necessity of doing so in the near future. Should
limitations on the deductibility of compensation become a material issue, the
Compensation Committee will, at such time, determine whether such a policy
should be implemented, either in general or with respect to specific
transactions.
THE COMPENSATION COMMITTEE
Michael R. Deitz, M.D. Joseph C. Gathe, M.
Andrew F. Pollet, Esq. Peter J. Utrata, M.D
15
<PAGE>
STOCK PERFORMANCE GRAPH
Set forth below is a line graph, assuming an initial investment of $100 on
December 31, 1991, comparing the yearly percentage change in the cumulative
total stockholder return for the last five fiscal years of the Common Stock
relative to the cumulative total stockholder return for the same time period of:
(1) United States and foreign companies listed on the Nasdaq Stock Market (the
"Nasdaq Index") and (2) United States and foreign companies listed on the Nasdaq
Stock Market (the "Peer Index") who operate in the surgical, medical and dental
instrument and supply industries (based upon Standard Industrial Classification
{"SIC"} codes in the range of 3840 through 3849; the Company's SIC code is
3845). The Nasdaq Index and the Peer Index were prepared by the Center for
Research in Security Prices of the University of Chicago's Graduate School of
Business.
[GRAPH APPEARS HERE]
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG STAAR SURGICAL CO., NASDAQ AND PEER GROUP
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period STAAR PEER
(Fiscal Year Covered) SURGICAL CO. NASDAQ GROUP
- - ------------------- ------------ --------- ----------
<S> <C> <C> <C>
Measurement Pt-12/31/91 $100 $100 $100
FYE 12/31/92 $ 32.5 $116.0 $ 83.0
FYE 12/31/93 $ 35.0 $134.3 $ 67.1
FYE 12/31/94 $ 61.5 $130.3 $ 71.4
FYE 12/31/95 $ 73.5 $183.0 $108.3
FYE 12/31/96 $ 90.6 $224.0 $101.5
</TABLE>
The lines represent monthly index levels derived from compounded daily
returns that include all dividends. The indexes are reweighted daily, using
market capitalization on the previous trading day. If the monthly interval,
based on a fiscal year end, is not a trading day, the preceding trading day
is used. The index level for all series was set to $100 on December 31,
1991. The historical stock performance depicted on the graph is not
necessarily indicative of future performance. The Company will not make or
endorse any predictions as to future stock performance or dividends.
16
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Mr. John R. Wolf, the President, Chief Executive Officer and Chairman of the
Board of the Company, owns and is President of Iotech, Inc. ("Iotech"), which
is paid an override sales commission of up to one percent with respect to sales
of the Company's products pursuant to the terms of a Sales Representative
Agreement with Iotech, which was entered into in 1983 when Mr. Wolf originally
became associated with the Company. This agreement was entered into when the
Company determined that it was essential to engage Iotech's services to build a
customer base for intraocular lenses based primarily upon Mr. Wolf's experience
in marketing and distributing intraocular lenses. In December 1994, the Company
and Iotech agreed to extend the term of this agreement for an additional seven
years, commencing January 1, 1995. Commissions are payable on a quarterly
basis, and are determined by a percentage of the Company's gross sales. In 1996,
the Company paid Iotech $412,000 in commissions.
In February 1994, the Company entered into a consulting agreement with Dr.
Michael R. Deitz, a director of the Company, with respect to his services in
evaluating new products. This agreement, which has a three-year term, provides
for the payment of $7,000 per month to Dr. Deitz. Compensation under this
agreement is separate from compensation payable to Dr. Deitz for services
rendered as a director of the Company.
Mr. Andrew F. Pollet, a director of the Company, is the managing officer and
principal stockholder of Pollet & Woodbury, a Law Corporation. During 1996, the
Company paid Pollet & Woodbury approximately $322,000 in legal fees, costs and
expense reimbursements. It is anticipated that Pollet & Woodbury will continue
to render legal services to the Company.
In April 1992, the Company entered into a consulting agreement with Dr. Donald
R. Sanders, a director of the Company, with respect to the provision of clinical
consulting services in connection with new product development, preparing
scientific data relating to the Company's products, providing product education
services to other physicians and participating in Company sponsored courses and
seminars. This agreement, which has a five-year term commencing June 1, 1992,
provides for the payment of $25,000, $30,000, $35,000, $40,000 and $40,000 per
month for the first through fifth years of the agreement. The agreement also
provides for the payment to Dr. Sanders, at the beginning of each year of the
agreement, of 7,500 registered shares of Common Stock. In March 1997, in
satisfaction of the Company's obligation to issue 7,500 shares of Common Stock
to Dr. Sanders for 1996 under his consulting agreement, the Company paid Dr.
Sanders $94,688, which was equivalent to the then-trading price of the Common
Stock. Compensation under this agreement is separate from compensation payable
to Dr. Sanders for serving as a director of the Company.
INDEBTEDNESS OF MANAGEMENT AND OTHERS TO THE COMPANY
As of January 3, 1996, Mr. John R. Wolf, the President, Chief Executive Officer
and Chairman of the Board of the Company, was indebted to the Company in the
amount of $1,551,325, which represented the highest balance (including accrued
interest) of Mr. Wolf's indebtedness to the Company for the 1996 fiscal year.
This indebtedness arose from a promissory note given by Mr. Wolf to the Company
in February 1991, in connection with Mr. Wolf's exercise of options and warrants
to purchase 640,565 shares of Common Stock for the sum of $1,431,020. This
note, in the original principal amount of $1,431,020, and originally bearing
interest at the approximate rate of 7%, was originally payable on February 28,
1994. In October 1993, the Board authorized the extension of the payment date
to April 1997, and reduced this interest rate to approximately 4%, the lowest
rate then allowed by the Internal Revenue Service. In April 1997, the Board
authorized a further extension of the payment date to April 2000. This note is
secured by shares of Common Stock held as collateral by a third party
pledgeholder.
17
<PAGE>
As of January 3, 1996, Mr. William C. Huddleston, Vice President Finance and
Chief Financial Officer of the Company, was indebted to the Company in the
amount of $251,482, which represented the highest balance (including accrued
interest) of Mr. Huddleston's indebtedness to the Company for the 1996 fiscal
year. This indebtedness arose from promissory notes given by Mr. Huddleston to
the Company in connection with Mr. Huddleston's exercise of: (i) options and
warrants to purchase 99,644 shares of Common Stock in February 1991; (ii)
warrants to purchase 16,667 shares of Common Stock in July 1992; and (iii)
warrants to purchase 12,500 shares of Common Stock in March 1993. These
promissory notes, in the original principal amounts of $119,185, $80,000 and
$28,000, respectively, originally bore interest at the approximate rates of 7%,
9% and 4%, respectively, and were originally payable on February 28, 1994, March
29, 1995, and February 28, 1994, respectively. Each note is secured by shares
of Common Stock held as collateral by a third party pledgeholder. In October
1993, the Board authorized the extension of the payment date for each of these
promissory notes to April 1997, and reduced the interest rate to approximately
4%, the lowest rate then allowed by the Internal Revenue Service. In April
1997, the Board authorized a further extension of the payment dates to April
2000.
As of January 3, 1997, Mr. Vladimir Feingold, the Executive Vice President
Research and Development of the Company, was indebted to the Company in the
amount of $223,680, including accrued interest. Mr. Feingold's indebtedness as
of January 3, 1997 arose from a promissory note for a personal loan extended to
Mr. Feingold in March 1994 in the amount of $192,000. This note bears interest
at the rate of 6%, and was originally payable on April 1, 1997. In April 1997,
the Board authorized an extension of the payment date under this promissory note
to April 2000. This note is secured by deeds of trust on two properties, both
of which are in second position, and by shares of Common Stock held as
collateral by a third party pledgeholder. Mr. Feingold is obligated to maintain
collateral with respect to each loan equal to at least 110% of the outstanding
balance of such loan. Mr. Feingold's employment agreement also provides that
the Company shall forgive the outstanding balance of this note upon the
occurrence of any of the following transactions: (i) the future sale or
disposition by the Company of substantially all of its business or assets; (ii)
the sale of the capital stock of the Company in connection with the sale or
transfer of a controlling interest in the Company; or (iii) the merger or
consolidation of the Company with another corporation in connection with the
sale or transfer of a controlling interest in the Company.
The highest balance (including accrued interest) of Mr. Feingold's indebtedness
to the Company for the 1996 fiscal year was $318,080 as of February 29, 1996.
This indebtedness was based, in part, upon outstanding indebtedness under a
second promissory note whose balance of indebtedness was forgiven on this date.
This note reflected a personal loan extended in March 1994 to Mr. Feingold in
the original principal amount of $120,000. This note bears interest at the rate
of 8%, and was originally payable on April 1, 1997. In February 1996 the
Company forgave $104,000 in remaining indebtedness under this note as a finders
fee in connection with Mr. Feingold's efforts in obtaining certain patents.
As of January 3, 1997, Mr. Andrew F. Pollet, a director of the Company, was
indebted to the Company in the amount of $872,027, which represented the highest
balance (including accrued interest) of Mr. Pollet's indebtedness to the Company
for the 1996 fiscal year. This indebtedness arose from a promissory note given
by Mr. Pollet to the Company on May 26, 1992, in connection with Mr. Pollet's
exercise of warrants to purchase 244,445 shares of Common Stock for the sum of
$733,335. This note, originally bearing interest at the approximate rate of 5%,
was originally payable on May 31, 1995. In October 1993, the Board authorized
the extension of the payment date to April 1997, and reduced the interest rate
to approximately 4%, the lowest rate then allowed by the Internal Revenue
Service. In April 1997, the Board authorized the further extension of the
payment date to April 2000. This note is secured by a deed of trust on real
property.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES ACT
Section 16(a) of the Securities Act requires the Company's respective directors,
executive officers and persons who own more than 10% of the Common Stock to file
reports of ownership and changes in ownership of the
18
<PAGE>
Common Stock with the SEC and Nasdaq. Directors, executive officers and persons
who own more than 10% of the Common Stock are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely upon review of the copies of such forms furnished to the Company, or
written representations that no Forms 5 were required, the Company believes that
during its 1996 fiscal year the Company's respective directors, executive
officers and persons who own more than 10% of the Common Stock complied with all
Section 16(a) filing requirements, except as follows: Mr. Vladimir Feingold did
not file a From 4 for the month of October with respect to one transaction (the
purchase of a business partner's interest in a business in exchange for Common
Stock), and also did not file a Form 5 with respect to such transaction.
INDEPENDENT AUDITORS
The Audit Committee of the Board has not yet met in order to select the
Company's auditors for its 1997 fiscal year. BDO Seidman LLP served as the
Company's auditors for the 1996 fiscal year. The Company expects a
representative of BDO Seidman LLP to be present at the meeting.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the 1997
Annual Meeting. However, if other matters should come before the 1997 Annual
Meeting, it is the intention of each person named in the proxy to vote such
proxy in accordance with his, her or its judgment on such matters.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Any proposals of security holders which are intended to be presented at the
Annual Meeting of the Company to be held in 1998 must be received by the Company
at its principal executive offices no later than December 21, 1997 (120 days
before the month and day this Proxy Statement was released to the stockholders
of the Company), in order to be considered for inclusion in the Company's proxy
materials relating to that meeting.
TRANSACTION OF OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors of the Company is
not aware of any matters other than those set forth herein and in the Notice of
Annual Meeting of Stockholder that will come before the meeting. Should any
other matters arise requiring the vote of stockholders, it is intended that
proxies will be voted with respect thereto in accordance with the best judgment
of the person or persons voting the proxies.-
19
<PAGE>
PROXY PROXY
STAAR SURGICAL COMPANY
ANNUAL MEETING OF STOCKHOLDERS--MAY 22, 1997
The undersigned hereby appoints JOHN R. WOLF and WILLIAM C. HUDDLESTON and
each of them [with full power to act without the other] the true and lawful
proxies of the undersigned, each having full power to substitute, to represent
the undersigned and to vote all shares of stock of STAAR SURGICAL COMPANY (the
"Company") which the undersigned would be entitled to vote if personally
present at the Annual Meeting of Stockholders of the Company to be held at the
Holiday Inn, 924 West Huntington Drive, Monrovia, California, on Thursday, May
22, 1997, at the hour of 10:00 a.m., prevailing local time, or any adjournments
thereof.
1. FOR [_] WITHHOLD [_] election of the following nominee in the Notice
of Annual Meeting and Proxy Statement as the two Class II directors of
the Company:
Michael R. Deitz, M.D. Peter J. Utrata, M.D.
2. Upon all such other matters that may properly be brought before such
Annual Meeting, or any adjournments thereof, as to which the undersigned
hereby confers discretionary authority upon said proxies.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
UNLESS DIRECTION IS GIVEN TO WITHHOLD AUTHORITY FOR THE AFORESAID DIRECTOR
NOMINEES, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE ELECTION
OF THE AFORESAID DIRECTOR NOMINEES TO SERVE AS THE TWO CLASS II DIRECTORS ON
THE COMPANY'S BOARD OF DIRECTORS. THE UNDERSIGNED MAY WITHHOLD AUTHORITY TO
VOTE FOR THE ELECTION OF EITHER OF THE AFORESAID NOMINEES BY LINING THROUGH THE
NOMINEE'S NAME ABOVE.
All other proxies heretofore given by the undersigned to vote shares of stock
of the Company which the undersigned would be entitled to vote if personally
present at said Annual Meeting or any adjournment thereof are hereby expressly
revoked. This proxy may be revoked at any time prior to the voting hereof.
<PAGE>
NOTE: PLEASE DATE THIS PROXY AND SIGN IT EXACTLY AS YOUR NAME OR NAMES APPEAR
ON YOUR SHARES. IF SIGNING AS AN ATTORNEY, EXECUTOR, ADMINISTRATOR, GUARDIAN OR
TRUSTEE, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE SIGN FULL
CORPORATE NAME BY DULY AUTHORIZED OFFICER OR OFFICERS, AFFIX CORPORATE SEAL AND
ATTACH A CERTIFIED COPY OF RESOLUTION OR BYLAWS EVIDENCING AUTHORITY.
___________________________________________
(DATE)
___________________________________________
(SIGNATURE)
___________________________________________
(SIGNATURE)
