<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
STAAR SURGICAL
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
May 1, 1999
To Our Stockholders:
The 1999 Annual Meeting of Stockholders of STAAR Surgical Company (the
"Company") will be held at 10:00 a.m. on Thursday, May 27, 1999, at the Wyndham
Garden Hotel located at 700 West Huntington Drive, Monrovia, California 91016.
Enclosed is the Company's Annual Report for the fiscal year ending January
1, 1999, 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 one director
to fill the one three-year Class I director position which expires at the 1999
Annual Meeting of Stockholders. You should note that the members of the
Company's Board of Directors unanimously recommend a vote "FOR" the election of
the director-nominee to serve as the one Class I director on the Company's Board
of Directors.
If you are a record holder of the Company's Common Stock on April 16, 1999,
you are eligible to vote with respect to this matter, 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,
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 27, 1999
---------------------
To the Stockholders of STAAR Surgical Company:
NOTICE IS HEREBY GIVEN that the 1999 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 27, 1999, at
the Wyndham Garden Hotel located at 700 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 one director to fill the one three-year Class I director
position on the Board of Directors of the Company which expires at the 1999
Annual Meeting of Stockholders, with such Class I director to serve until the
Annual Meeting of Stockholders to be held in the year 2002; and
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 16, 1999 as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the Annual Meeting and any adjournments 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
John R. Wolf
Chairman and President
Dated: April 28, 1999
<PAGE>
STAAR SURGICAL COMPANY
1911 Walker Avenue
Monrovia, California 91016
---------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 27, 1999
----------------
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 27, 1999, at the Wyndham Garden Hotel located at 700 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. Votes cast by proxy or in person at the Annual Meeting will be
tabulated by the Inspectors of Election, in conjunction with information
received from the Company's transfer agent. The Inspectors of Election will
also determine whether or not a quorum is present. Directors are elected by a
plurality of the votes cast in the election. Pursuant to applicable state law,
abstentions will have the same effect as a negative note, but will be counted as
present for purposes of determining the existence of a quorum. If no
specification is indicated, the shares will be voted "FOR" the election of the
one director-nominee named on the proxy. 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 16, 1999, the record date for determining
stockholders entitled to notice of and to vote at the Annual Meeting, the
Company had issued and outstanding 14,029,810 shares of its 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 16, 1999, 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
28, 1999, to all stockholders entitled to vote at the Annual Meeting.
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. Dr. Donald R.
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<PAGE>
Sanders presently serves in Class I, which is subject to re-election at this
Annual Meeting of Stockholders. Drs. Michael R. Deitz and Peter J. Utrata
presently serve in Class II, which is subject to re-election at the Annual
Meeting of Stockholders to be held in the year 2000, and 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 the year 2001.
BUSINESS EXPERIENCE OF CLASS I DIRECTOR NOMINEE
Donald R. Sanders, Ph.D., M.D., Class I Director Nominee
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
was 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 became employed by the
Company on September 4, 1998 to serve as its Director of Clinical Affairs. 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.
BUSINESS EXPERIENCE OF CLASS II AND CLASS III DIRECTORS
Michael R. Deitz, M.D., Class II Director
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 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
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.
-2-
<PAGE>
John R. Wolf, Chairman of the Board and Class III Director
Mr. Wolf was elected as President and a director of the Company 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.
Since 1980, Mr. Pollet has been the principal of the law firm of Pollet Law, a
Law Corporation, and its predecessor law firms. Mr. Pollet also serves as a
director of Mason Group, Group Air Management, Inc., Page Digital Incorporated,
Jordan Pharmaceuticals, 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.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held one meeting during the 1998
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 year 1998, Mr. Wolf and Drs. Deitz and Sanders served on the
Audit Committee, and Mr. Pollet and Drs. Deitz, Utrata and Sanders served on the
Compensation Committee, which also serves as the Stock Option Committee. The
Audit Committee met one time in 1998 (in conjunction with a Board meeting) and
the Compensation (Stock Option) Committee met one time in 1998 (also in
conjunction with 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
agreement among the members of the Board of Directors, no cash fees will be
payable to directors during the period the options described below vest.
Mr. Andrew Pollet was granted a Non-qualified Option to purchase 60,000
shares of Common Stock subject to a condition of continued service in his
capacity as a Director. These stock options vest over a period of three years,
20,000 shares per year, and have an exercise price of $6.25 per share.
The options expire three years from date of grant. Vested options expire
one year after the date on which Mr. Pollet's service as a director is
terminated. Unvested options immediately terminate in the event of the
termination of Mr. Pollet's service on the Board, however, unvested options will
immediately vest upon the following events: (i) termination due to the failure
or refusal of the Company, without cause, to nominate Mr. Pollet for re-election
to the Board; (ii) failure of the Company's stockholders to re-elect Mr. Pollet
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
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<PAGE>
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. The Company
reserves the right, in its sole discretion, to allow Mr. Pollet, upon exercising
an option, 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 of 1986, as amended (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 option shares.
In 1998 the Company granted Incentive Options to purchase 60,000 shares of
Common Stock to Mr. John Wolf subject to a condition of continued service in his
capacity as Chief Executive Officer. See, "Option & SAR Grants in the 1998
Fiscal Year".
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year 1998, Mr. Pollet and Drs. Deitz, Utrata and Sanders
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 NOMINEE
The following table sets forth, as of April 16, 1999, certain information
with respect to each director and nominee for director as of such date,
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 53 1989 1,125,152(4) 8%(4)
Michael R. Deitz, M.D. 65 1990 491,293(5) 3.5%(5)
Andrew F. Pollet, Esq. 48 1990 843,678(6) 6%(6)
Peter J. Utrata, M.D. 57 1987 213,000(7) 1.5%(7)
Donald R. Sanders, Ph.D., M.D. 50 1996 84,035(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 14,029,810 shares of Common Stock outstanding on the transfer
records as of April 16, 1999.
(3) Calculated pursuant to Rule 13d-3(d)(1) of the Securities Exchange Act of
1934. Under Rule 13d-3(d)(1), 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
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<PAGE>
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 61,500 shares issuable
upon exercise of (i) 37,500 formula options granted under the 1991 Stock
Option Plan; and (ii) 4,000 qualified options granted as director incentive
in connection with serving on the Board in 1997 and (iii) 20,000 qualified
options granted as incentive in connection with continued service as Chief
Executive Officer.
(5) Includes 109,000 shares issuable upon exercise of: (i) 25,000 formula
options granted under the 1991 Stock Option Plan; (ii) 60,000 non-qualified
options granted as director incentive in connection with appointment to
Board in 1994; and (iii) 24,000 non-qualified options granted as director
incentive in connection with serving on the Board in 1997.
(6) Includes 11,750 shares held by Mr. Pollet as Trustee of the Pollet &
Woodbury 401(k) Pension Plan.
(7) Includes 134,000 shares issuable upon exercise of: (i) 50,000 formula
options granted under the 1991 Stock Option Plan; (ii) 60,000 non-qualified
options granted as director incentive in connection with appointment to
Board in 1994; and (iii) 24,000 non-qualified options granted as director
incentive in connection with serving on the Board in 1997.
(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.
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 53 President, Chief Executive Officer and Chairman of the Board of Directors
William C. Huddleston 52 Vice President Finance, Chief Financial Officer, Treasurer and Secretary
Vladimir Feingold 49 Executive Vice President Research and Development
Michael J. Lloyd 50 Senior Vice President Manufacturing
Carl M. Manisco 49 Senior Vice President Sales and Marketing
Steven L. Ziemba 42 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 III Director," 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
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<PAGE>
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).
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.
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.
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.
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<PAGE>
BENEFICIAL OWNERSHIP OF CERTAIN STOCKHOLDERS
AND EXECUTIVE OFFICERS
The following table sets forth, as of April 16, 1999, certain information
with respect to the amount and nature of shares of Common Stock beneficially
owned by: (i) 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; (ii) each person (other than a person who is also a director
and/or a director nominee) who is an executive officer named in the Summary
Compensation Table below; and (iii) all executive officers and directors as a
group. The term "executive officer" is defined as the President, Secretary,
Chief Financial Officer/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 Nominee."
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership of
Name Identity Common Stock(2)(3) Percentage(2)(3)
------------------------------ ----------------------------------- ------------------------ ------------------
<S> <C> <C> <C>
William C. Huddleston(1) Executive officer 211,613(4) 1.5% (4)
Vladimir Feingold(1) Executive officer 203,427(5) 1.4% (5)
Carl M. Manisco(1) Executive officer 153,826(6) 1.1% (6)
Michael J. Lloyd(1) Executive officer 158,069(7) 1.1% (7)
Steven L. Ziemba(1) Executive officer 149,527(8) 1% (8)
Nevis Capital Management, 833,600 5.9% %
Inc.(10)
Robert Fleming, Inc.(11) 761,902 5.4%
Wellington Management Co., 1,332,000 9.51%
LLP(12)
Directors (including nominee)
and executive officers as a group 3,633,620(9) 26% (9)
(10 persons)
</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 14,029,810 shares of Common Stock outstanding on the transfer
records as of April 16, 1999.
(3) Calculated pursuant to Rule 13d-3(d)(1) of the Securities Exchange Act of
1934. Under Rule 13d-3(d)(1), 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 13,500 shares issuable upon exercise of options granted in
connection with his current employment agreement.
(5) Includes 84,400 shares issuable upon exercise of: (i) 37,500 incentive
stock options granted under the 1991 Stock Option Plan; and (ii) 46,900
options granted in connection with his current employment agreement.
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<PAGE>
(6) Includes 41,143 shares issuable upon exercise of: (i) 12,500 formula
options; (ii) 1,476 options granted under prior plans; (iii) 13,667 options
granted in connection with a prior employment agreement; and (iv) 13,500
options granted in connection with his current employment agreement.
(7) Includes 146,000 shares issuable upon exercise of: (i) 12,500 formula
options and 60,000 incentive stock options granted under the 1991 Stock
Option Plan; (ii) 40,000 options granted in connection with a prior
employment agreement; and (iii) 33,500 options granted in connection with
his current employment agreement.
(8) Includes 116,000 shares issuable upon exercise of: (i) 12,500 formula
options and 65,000 incentive stock options granted under the 1991 Stock
Option Plan; (ii) 5,000 options granted in connection with a prior
employment agreement; and (iii) 33,500 qualified options granted in
connection with his current employment agreement.
(9) Includes an aggregate of 745,543 shares issuable upon exercise of options
and warrants held by directors (including nominee) and executive officers
of the Company.
(10) 1119 St. Paul Street, Baltimore, MD 21202
(11) 320 Park Avenue, 11th and 12th Floor, New York, NY 10022
(12) 75 State Street, Boston, MA 02109
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
1998 fiscal year; (ii) the four other most highly compensated executive officers
(in terms of salary and bonus) serving at the end of the 1998 fiscal year whose
annual salary and bonus exceeded $100,000; and (iii) up to two additional
individuals who would be in category (ii) but for the fact that the individual
was not serving as an executive officer of the Company at the end of the last
completed fiscal year (the "Named Executive Officers"):
<TABLE>
<CAPTION>
Long Term Compensation
------------------------------------
Annual Compensation Awards Payouts
---------------------- ----------------- ---------------
Options
& Stock All Other
Appreciation LTIP Compen-
Salary Bonus Rights Payouts sation
Name and Principal Position Year ($) ($) (#)(1) ($) ($)
- -------------------------------- ----- ------------ ---------- ----------------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
John R. Wolf 1998 200,000(2) --- 60,000 --- ---
Director, CEO and 1997 200,000(2) --- 60,000 --- ---
President 1996 200,000(2) --- --- --- ---
William C. Huddleston 1998 137,635 100,000 --- --- ---
Vice President Finance, Chief 1997 137,635 60,000 50,000 --- ---
Financial Officer and Secretary 1996 131,754 42,000 --- --- ---
Vladimir Feingold 1998 250,000 62,500 --- --- ---
Executive Vice President 1997 250,000 20,000 70,000 --- 104,000(4)
Research & Development 1996 210,154 40,000 --- --- 33,600(4)
Carl M. Manisco 1998 167,249(3) --- --- --- ---
Senior Vice President 1997 174,853(3) --- 50,000 --- ---
Sales and Marketing 1996 179,148(3) --- --- --- ---
Michael J. Lloyd 1998 139,968 --- --- --- ---
Senior Vice President 1997 139,968 --- --- --- ---
Manufacturing 1996 136,579 --- --- --- ---
</TABLE>
______________________________
(1) No stock appreciation rights were granted in 1996 through 1998.
(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 $300,000, $420,000, and
$412,000 in 1998, 1997 and 1996, respectively. See "Certain Relationships
and Related Transactions-Transactions
-8-
<PAGE>
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 $62,249, $73,892, and
$74,148 in 1998, 1997 and 1996, respectively.
(4) Represents payment of a finders fee in connection with Mr. Feingold's
efforts in obtaining certain patents, with such fee paid in the form of
forgiveness of indebtedness with respect to payment of principal and
interest on a promissory note given to the Company by Mr. Feingold. See
"Certain Relationships and Related Transactions Indebtedness of Management
and Others to the Company" below.
OPTION & SAR GRANTS IN THE 1998 FISCAL YEAR
The following table provides certain information with respect to individual
grants of stock options and/or stock appreciation rights in the 1998 fiscal year
to each of the Named Executive Officers:
<TABLE>
<CAPTION> Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term(1)
----------------------------------------------------------------- -----------------------------
% of Total
Options/ Options/SARs Exercise
SARs Granted to Price Per
Granted Employee in Share Expiration 5% 10%
Name (#)(2) Fiscal Year (3)) ($) Date ($) ($)
- --------------------- --------- ----------------- ----------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
John R. Wolf 60,000 19% 6.25 9/4/2008 $294,813 $747,115
William C. Huddleston --- --- --- --- --- ---
Vladimir Feingold --- --- --- --- --- ---
Carl M. Manisco --- --- --- --- --- ---
Michael J. Lloyd --- --- --- --- --- ---
</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 1998 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 315,000, which represents options granted to all of the
employees of the Company, including the Named Executive Officers, which
includes, if applicable, grants of options attributable to them in their
capacities as directors.
-9-
<PAGE>
OPTION & SAR EXERCISES IN THE 1998 FISCAL YEAR AND
OPTIONS & SARS AT 1998 FISCAL YEAR END
The following table provides certain information with respect to the Named
Executive Officers concerning: (i) options exercised in fiscal year 1998; and
(ii) the number and value of unexercised options as of the 1998 fiscal year end:
<TABLE>
<S> <C> <C> <C> <C>
Number of
Unexercised Value of
Options/SARs Unexercised
Shares Acquired Value at FY-End (#)(1) In-The-Money
On Exercise Realized Exercisable/ Options/SARs at
Name (#)(1) ($)(2) Unexercisable FY-End($)(1)(3)
- ------------------------ ---------------- -------- ------------- ----------------
John R. Wolf 155,000 129,375 61,500/76,000 $236,750/$118,788
William C. Huddleston 85,000 69,375 13,500/16,500 $ 21,101/$25,790
Vladimir Feingold 40,000 172,501 84,400/23,100 $ 145,980/$36,105
Carl M. Manisco 92,500 66,563 41,143/16,500 $ 194,673/$25,790
</TABLE>
__________________________
(1) No SARs were exercised by any Named Executive Officer in 1998, nor did any
Named Executive Officer hold any unexercised SARs at the end of the 1998
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 1998 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 1998 fiscal year exceeds
the exercise price of such options. The fair market value of the Common
Stock for purposes of this calculation is $7.813, based upon the closing
price for the Company's stock as quoted on the Nasdaq National Market on
January 1, 1999, the last day of the Company's 1998 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,
Mr. Carl M. Manisco, as Senior Vice President Sales and Marketing, and Mr.
Michael J. Lloyd, as Senior Vice President Manufacturing. 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 his
respective employment agreement through December 31, 2001.
-10-
<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.
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 Lloyd under their employment agreements is $137,635, $250,000,
$105,000, and $139,968 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; and (ii) 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 Lloyd 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 Lloyds's respective
employment agreements provide that the Company shall pay such executive
severance pay in an amount equal to two years' 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.
These stock options are fully vested 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 of the optionee. 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
-11-
<PAGE>
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.
In September 1996, in connection with the extension of Messrs.
Huddleston's, Manisco's and Lloyd's employment agreements, and the execution of
a new employment agreement with Mr. Feingold, the Company agreed to grant non-
qualified stock options to Messrs. Huddleston, Manisco, Lloyd and Feingold to
purchase 50,000, 50,000, 50,000 and 70,000 shares of Common Stock, respectively,
at $12.50 per share (the then trading price of the Common Stock). In September
1998, as an incentive to Messrs. Huddleston, Manisco, Lloyd and Feingold to
continue rendering services to the Company, the parties cancelled the non-
qualified options granted pursuant to the employment agreements and the Company
granted incentive stock options to purchase 50,000, 50,000, 50,000 and 70,000
shares of Common Stock to Messrs. Huddleston, Manisco, Lloyd and Feingold,
respectively, with an exercise price of $6.25 per share (the then trading price
of the Common Stock).
The stock options for each of the above employees vest in two increments,
67% on September 4, 1998 and 33% on September 4, 1999, so long as the executive
continues his employment with the Company and/or its affiliates. The stock
options expire September 4, 2008, 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 of the optionee. 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.
The Company reserves the right, in its sole discretion, to allow the executive
to pay for the option shares, upon exercise, 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 which is secured by
such security as prescribed by the Stock Option Committee.
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 are 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 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.
-12-
<PAGE>
Messrs. Huddleston, Feingold, Lloyd and Manisco 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.
On September 4, 1998 the Company entered into a five year employment
agreement with Dr. Donald Sanders, a member of the Company's Board of Directors.
Pursuant to the employment agreement, Dr. Sanders is acting as Director of
Clinical Affairs for the Company. In this capacity Dr. Sanders is responsible
for generally overseeing the clinical component of the process required to
obtain approval of the Company's products from the United States Food and Drug
Administration. Pursuant to the employment agreement, Dr. Sanders is paid a
salary of $120,000 per year, received options to purchase 100,000 shares of the
Company's Common Stock at a price of $6.25 per share, and is entitled to receive
two years' salary upon a sale or disposition by the Company of substantially all
of its business or assets. The employment agreement may be terminated for
cause, upon Dr. Sanders' death or disability, or by Dr. Sanders upon 180 days
notice to the Company.
In September 1998, the Company granted Dr. Sanders incentive stock options
to purchase 60,000 shares of its Common Stock and cancelled the non-qualified
options granted to him in September, 1996. The exercise price for the incentive
stock options is $6.25 per share.
The stock options vest in vest in two increments, 67% on September 4, 1998
and 33% on September 4, 1999, so long as Dr. Sanders continues his employment
with the Company and/or its affiliates. The stock options expire September 4,
2008, 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 of the optionee. 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. The Company
reserves the right, in its sole discretion, to allow Dr. Sanders to pay for the
option shares, upon exercise, 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 which is secured by
such security as prescribed by the Stock Option Committee.
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 three independent directors and Dr.
Sanders. The Compensation Committee also serves as the Stock Option Committee
under the Company's various stock plans. This report discusses the compensation
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<PAGE>
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: (i) to link the
interests of management with those of stockholders by encouraging stock
ownership in the Company; (ii) to attract and retain superior executives by
providing them with the opportunity to earn total compensation packages that are
competitive with the industry; (iii) to reward individual results by recognizing
performance through salary, annual cash incentives and long-term stock based
incentives; and (iv) 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 quality executives. 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 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 1998, the Compensation Committee awarded bonuses of $100,000 and $62,500 to
Messrs. Huddleston and Feingold, respectively.
Long-term Stock Ownership Plans. The Company has two active 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 1996 Executive Stock Plan and the
1998 Staar Surgical Company 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 because all shares attributed to these plans have been
issued or are reserved for issuance.) The 1996 Executive Stock Plan affords the
Company the ability to make stock grants and to grant non-qualified stock
options to the Company's officers and employees. The Company replaced non-
qualified stock options granted in 1996 to Dr. Sanders and Messrs. Feingold,
Wolf, Huddleston, Lloyd, Ziemba and Manisco with qualified-incentive stock
options for the purchase of 70,000 shares to Mr. Feingold; 60,000 shares to both
Dr. Sanders and Mr. Wolf; and 50,000 shares to Messrs. Huddleston, Lloyd, Ziemba
and Manisco. The exercise price for the options is $6.25
-14-
<PAGE>
per share. The 1998 Stock Option Plan affords the Company 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 1998 STAAR Surgical Company Stock Plan was
approved by the stockholders of the Company at the 1998 Annual Meeting held on
May 29, 1998.
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: (i) acting as an inducement for long-term
employment with the Company, thereby lending stability to the Company's employee
base; and (ii) encouraging more long-term productivity by the Company's
employees as they see their efforts translate into greater share value.
Compensation for Chief Executive Officer. 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. 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. Donald R. Sanders, Ph.D., M.D.
Andrew F. Pollet, Esq. Peter J. Utrata, M.D
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<PAGE>
STOCK PERFORMANCE GRAPH
Set forth below is a line graph, assuming an initial investment of $100 on
December 31, 1993, comparing the yearly percentage change in the cumulative
total stockholder return for the last six fiscal years of the Common Stock
relative to the cumulative total stockholder return for the same time period of:
(i) United States and foreign companies listed on the Nasdaq Stock Market (the
"Nasdaq Index"); and (ii) United States and foreign companies listed on the
Nasdaq Stock Market (the "Peer Index") which 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]
Legend
<TABLE>
<CAPTION>
Symbol CRSP Total Returns Index for: 12/1993 12/1994 12/1995 01/1997 01/1998 12/1998
- ------ ---------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
_______________ STAAR Surgical Company 100.0 175.6 209.8 263.4 324.4 152.4
___ ... ___ ... Nasdaq Stock Market (US & Foreign) 100.0 97.0 136.2 165.5 205.1 282.0
- - - - - - - - - NASDAQ Stocks (SIC 3840-3849 US + Foreign) 100.0 106.4 161.4 149.8 173.7 195.8
Surgical, Medical, and Dental
Instruments and Supplies
Notes:
A. The lines represent monthly index levels derived from compounded daily returns that include all dividends.
B. The indexes are reweighted daily, using market capitalization on the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 12/31/1993.
</TABLE>
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<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 (1%) 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 1998, the Company paid Iotech $300,000 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 Law, a California Corporation. During 1998,
the Company paid Pollet Law approximately $525,000 in legal fees, costs and
expense reimbursements. It is anticipated that Pollet Law 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, for 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 had a five-year term commencing June 1, 1992, provided 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 provided for the
payment to Dr. Sanders, at the beginning of each year of the agreement, of 7,500
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 services
rendered pursuant to his consulting agreement during 1996, the Company paid Dr.
Sanders $94,688, which was equivalent to the then-trading price of the Common
Stock. Dr. Sanders' Consulting Agreement with the Company expired on June 1,
1997. Upon the expiration of the Consulting Agreement, Dr. Sanders continued to
provide consulting services. In 1998, the Company paid $462,505 for Dr. Sanders'
consulting services. Compensation received by Dr. Sanders pursuant to the
Consulting Agreement and the Employment Agreement was and will be separate from
compensation payable to Dr. Sanders for serving as a director of the Company.
The terms of Dr. Sander's Employment Agreement are more particularly described
in "Employment Agreements with Named Executive Officers" above.
Indebtedness of Management and Others to the Company
As of January 2, 1999, 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 $2,034,120, which represented the highest balance (including
accrued interest) of Mr. Wolf's indebtedness to the Company for the 1998 fiscal
year. This indebtedness arose from promissory notes given by Mr. Wolf to the
Company in February 1991 and September 1998, in connection with Mr. Wolf's
exercise of options and warrants to purchase 640,565 and 155,00 shares,
respectively, of Common Stock for the sum of $1,431,020. The note executed in
February 1991 in the original
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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 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 date to April 2000. This note is secured by shares of
Common Stock held as collateral by a pledgeholder.
On September 4, 1998 Mr. Wolf exercised 155,000 options to purchase the
Company's Common Stock by executing a promissory note in favor of the Company in
the principal amount of $839,375. Payment of the promissory note is secured
with shares of Common Stock, pursuant to the terms of a Stock Pledge Agreement
executed by Mr. Wolf. The promissory note is due to be paid in full on
September 4, 2003. The promissory note bears interest at the rate of 7%
annually or at the lowest rate allowed by the Internal Revenue Service.
As of January 2, 1999, Mr. William C. Huddleston, Vice President Finance
and Chief Financial Officer of the Company, was indebted to the Company in the
amount of $659,060 which represented the highest balance (including accrued
interest) of Mr. Huddleston's indebtedness to the Company for the 1998 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; (iii) warrants
to purchase 12,500 shares of Common Stock in March 1993; and (iv) options to
purchase 85,000 shares of the Company's Common Stock in September 1998. The
promissory notes executed in February 1991, July 1992 and March 1993 are in the
original principal amounts of $119,185, $80,000, and $28,000, originally bore
interest at the rates of 7%, 9% and 4%, respectively, and were originally
payable on February 28, 1994, March 29, 1995, and February 28, 1994,
respectively. Payment of each of these notes is secured by shares of Common
Stock held as collateral by a 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. The
promissory note executed in September 1998 is in the original principal amount
of $461,875. The payment of this promissory note is also secured with shares of
Common Stock, pursuant to the terms of a Stock Pledge Agreement executed by Mr.
Huddleston. This promissory note is due to be paid in full on September 4, 2003
and bears interest at the rate of 7% annually or at the lowest rate allowed by
the Internal Revenue Service.
As of January 1, 1999, Mr. Vladimir Feingold, the Executive Vice President
Research and Development of the Company, was indebted to the Company in the
amount of $320,750, which represented the highest balance (including accrued
interest) of Mr. Feingold's indebtedness to the Company for the 1998 fiscal
year. Mr. Feingold's indebtedness as of January 2, 1999, 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.
As of January 1, 1999, Mr. Andrew F. Pollet, a director of the Company, was
indebted to the Company in the amount of $1,721,170, which represented the
highest balance (including accrued interest) of Mr. Pollet's
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indebtedness to the Company for the 1998 fiscal year. This indebtedness arose
from promissory notes 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 and on September 4, 1998, in connection with Mr. Pollet's exercise
of options to purchase 204,000 shares of Common Stock. The principal amounts of
the promissory notes are $733,335 and $987,835, respectively. The note in the
amount of $733,335, originally bearing interest at the 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. Payment of this promissory note is secured by real property.
The promissory note executed on September 4, 1998 is due to be paid in full
on September 4, 2003 and bears interest at the rate of 7% annually or at the
lowest rate allowed by the Internal Revenue Service. Payment of the promissory
note is secured with shares of Common Stock, pursuant to the terms of a Stock
Pledge Agreement executed by Mr. Pollet.
As of January 1, 1999, Mr. Carl Manisco, Senior Vice President Sales and
Marketing, was indebted to the Company in the amount of $511,563, which
represented the highest balance (including accrued interest) of Mr. Manisco's
indebtedness to the Company for the 1998 fiscal year. This indebtedness arose
from a promissory note executed by Mr. Manisco in favor of the Company on
September 4, 1998 for the exercise of 92,500 options for the Company's Common
Stock. Repayment of the promissory note is secured with shares of Common Stock,
pursuant to the terms of a Stock Pledge Agreement executed by Mr. Manisco. The
promissory note is due to be paid in full on September 4, 2003. The note bears
interest at the rate of 7% annually or at the lowest rate allowed by the
Internal Revenue Service.
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 Common Stock
with the Securities and Exchange Commission and Nasdaq. Directors, executive
officers and persons who own more than 10% of the Common Stock are required by
Securities and Exchange Commission regulations to furnish the Company with
copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely upon review of the copies of such
reports received or written representations from the reporting persons, the
Company believes that during its 1998 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:
Dr. Sanders and Messrs. Huddleston, Feingold, Lloyd, Ziemba, Manisco and Wolf
each filed a late Form 4 for the month of September (with respect to the
termination of non-qualified stock options granted in May, 1996 and the issuance
of qualified options in September 1998). Mr. Feingold did not file a Form 4 or
a Form 5 reporting sales of the Company's Common Stock which occurred during the
months of April and November. The total number of shares sold was 70,000.
OVERVIEW OF PROPOSAL
This Proxy Statement contains one proposal requiring stockholder action.
The Proposal relates to the election of one director to fill the one three-year
Class I director position which expires at the 1999 Annual Meeting of
Stockholders. The proposal is discussed in more detail below.
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<PAGE>
PROPOSAL
Election Of Director
One Class I director is to be elected as a director on the Company's Board
of Directors at the Annual Meeting, and to hold office for a three-year term
until the Annual Meeting of Stockholders to be held in the year 2002, and until
his successor is elected and qualified. The Board of Directors has nominated
Dr. Donald R. Sanders, the one presently serving Class I Director, for re-
election as the one Class I director. Holders of proxies solicited by this
Proxy Statement will vote the proxies received by them as directed on the proxy
card or, if no direction is made, for Dr. Donald R. Sanders. If such 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 nominee receiving the highest number of votes will be elected as the
one Class I director. The proxies cannot be voted for more than one nominee.
Stockholders wishing to nominate a Class I director for election at the Annual
Meeting may do so by delivering to the Secretary of the Company, no later than
fourteen (14) days before the Annual Meeting, a notice setting forth: (i) the
name, age, business address and, if known, residence address of the nominee
proposed in such notice; (ii) the principal occupation or employment of such
nominee; and (iii) the number of shares of stock of the Company which are
beneficially owned by such nominee. No person may be elected as a Class I
director unless he or she has been nominated by a stockholder in the manner just
described or by the Board of Directors.
No proxies are sought with respect to the election of the presently serving
Class II directors (Drs. Michael R. Deitz and Peter J. Utrata) or Class III
directors (Messrs. John R. Wolf and Andrew F. Pollet), as the three-year terms
of these classes of directors do not expire until the Annual Meetings of
Stockholders to be held in 2000 and 2001, respectively.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF DR.
SANDERS AS THE ONE CLASS I DIRECTOR FOR THE COMPANY. PROXIES SOLICITED BY THE
BOARD OF DIRECTORS WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY OTHERWISE.
The Audit Committee of the Board has not yet met in order to select the
Company's auditors for its 1999 fiscal year. BDO Seidman LLP served as the
Company's auditors for the 1998 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 1999
Annual Meeting. However, if other matters should come before the 1999 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 1999 ANNUAL MEETING
Any proposals of security holders which are intended to be presented at the
Annual Meeting of the Company to be held in 2000 must be received by the Company
at its principal executive offices no later than January 2, 2000 (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.
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<PAGE>
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.
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<PAGE>
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STAAR SURGICAL COMPANY PROXY
This Proxy is solicited on behalf of the Board of Directors
for the Annual Meeting on May 27, 1999
This proxy will be voted as specified by the stockholder. If no
specification is made, all shares will be voted as set forth in the proxy
statement FOR the election of the Director.
The stockholder(s) represented herein appoint(s) William C. Huddleston and
John R. Wolf, or any of them, proxies with the power of substitution to vote all
shares of Common Stock entitled to be voted by said stockholder(s) at the Annual
Meeting of Stockholders of Staar Surgical Company to be held at the Wymdham
Garden Hotel, 700 West Huntington Drive, Monrovia, CA, on May 27, 1999 at 10:00
a.m., and in any adjournment or postponement thereof as specified in this proxy.
(To Be Signed on Reverse Side.)
<PAGE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
STAAR SURGICAL COMPANY
May 27, 1999
Please Detach and Mail in the Envelope Provided
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[X] Please mark your
votes as in this
example
The Board of Directors recommends a vote FOR Item 1.
<TABLE>
<S> <C> <C>
FOR WITHHELD
1. To elect one [_] [_] Nominee: Donald R. Sanders In their discretion proxies are entitled
director to fill to vote upon such other matters as
the one year Class 1 may properly come before the meeting,
director position on the Board or any adjournment thereof.
of Directors of the Company which
expires at the end of the 1999
Annual Meeting of Stockholders, PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY CARD IN
with such Class 1 Director to -------------------------------------------------------------
serve until the Annual Meeting of THE ENCLOSED ENVELOPE
Stockholders to be held in the ---------------------
year 2002.
Check if you intend to attend the meeting in person. [_]
Change of Address [_]
Please Note Below
Change of Address
________________________________
________________________________
________________________________
Signature __________________________________ Date______________ Signature __________________________________ Date______________
NOTE: Please sign above exactly as your name appears on this card. Joint owners should each sign personally. Corporate proxies
should be signed by an authorized officer. Executors, Administrators, Trustee, etc. should so indicate their status when
signing.
</TABLE>
