<PAGE> 1
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
</TABLE>
HYCOR BIOMEDICAL INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] Fee not 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:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------------------
<PAGE> 2
[HYCOR LOGO] HYCOR BIOMEDICAL INC.
7272 Chapman Avenue
Garden Grove, CA 92841
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 10, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Hycor
Biomedical Inc. (the "Company") will be held at its corporate offices located at
7272 Chapman Avenue, Garden Grove, California 92841 on June 10, 1999 at 9 a.m.,
for the following purposes:
1. To elect the 7 nominees named in the accompanying Proxy Statement
as directors to serve for the ensuing year and until their
successors are elected and qualified; and
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only stockholders of record at the close of business on April 12, 1999
will be entitled to notice of and to vote at the meeting. A list of stockholders
will be available for inspection at the meeting and, for ten days prior thereto,
at Hycor's corporate offices at the address set forth above.
Your attention is directed to the proxy statement submitted with this
notice.
By order of the Board of Directors.
Reginald P. Jones
Secretary
Garden Grove, California
April 19, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE, WHICH
DOES NOT REQUIRE ANY POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 3
HYCOR BIOMEDICAL INC.
7272 CHAPMAN AVENUE
GARDEN GROVE, CALIFORNIA 92841-2103
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 10, 1999
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Hycor Biomedical Inc. (the "Company") to be
voted at the Annual Meeting of Stockholders of the Company to be held on June
10, 1999, at the Company's corporate offices located at 7272 Chapman Avenue,
Garden Grove, California 92841-2103 at 9 a.m. and at any adjournments thereof
(the "Annual Meeting"), for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders and described herein. The approximate date on
which this Proxy Statement and the enclosed form of proxy are first being sent
or given to stockholders is April 19, 1999.
Voting Rights and Solicitation of Proxies
The Board of Directors of the Company has fixed the close of business on
April 12, 1999, as the record date for the determination of stockholders
entitled to receive notice of, and to vote at, the Annual Meeting (the "Record
Date"). At the Record Date, the Company had outstanding 7,252,999 shares of
Common Stock, par value $.01 per share (the "Common Stock"). Each share of
Common Stock entitles the record holder on the Record Date to one vote on all
matters. With respect to the election of directors only, stockholders may vote
in favor of all nominees or withhold their votes as to all nominees or withhold
their votes as to specific nominees.
Any stockholder giving a proxy has the power to revoke it at any time
before it is voted. Revocation of a proxy is effective upon receipt by the
Secretary of the Company of either (i) an instrument revoking it or (ii) a duly
executed proxy bearing a later date. A stockholder who is present at the Annual
Meeting may revoke his proxy and vote in person if he so desires.
All shares represented by a properly executed proxy received in time for
the Annual Meeting and not revoked will be voted as directed. If no directions
are specified, the shares represented by such proxy will be voted (i) "FOR" the
election of the Board of Directors' seven nominees for director and (ii) at the
discretion of the persons named as proxies on all other matters which may
properly come before the Annual Meeting, although the Company does not presently
know of any other such business.
A majority of the outstanding shares of Common Stock entitled to vote
must be represented in person or by proxy at the Annual Meeting in order to
constitute a quorum for the transaction of business. Abstentions and non-votes
will be counted for purposes of determining the existence of a quorum at the
Annual Meeting. The candidates for election as directors will be elected by the
affirmative vote of a plurality of the shares of Common Stock present in person
or by proxy, entitled to vote and actually voting at the Annual Meeting. The
affirmative vote of a majority of the shares of Common Stock present in person
or by proxy, entitled to vote and actually voting on each of the proposals
(other than the election of directors) is required for the adoption or
ratification for each proposal. Abstentions will be counted as votes against any
of the proposals as to which a stockholder abstains, but non-votes will have no
effect on the voting with respect to any proposal as to which there is a
non-vote. A non-vote may occur when a nominee holding shares of Common Stock for
a beneficial owner does not vote on a proposal because such nominee does not
have discretionary voting power and has not received instructions from the
beneficial owner.
<PAGE> 4
ELECTION OF DIRECTORS
(Proposal 1
The Board of Directors has set at seven (7) the number of directors
constituting the Board of Directors for the ensuing year, and has nominated the
seven (7) individuals named in the table below to serve as members of the Board
of Directors until the next annual meeting and until their successors are
elected and qualified or until their earlier resignation or removal. All of the
nominees have consented to being named herein and have indicated their intention
to serve if elected. If at the time of the Annual Meeting of Stockholders any of
such nominees should be unable to serve, the persons named in the Proxy will
vote for the election of such person or persons as may be designated by the
present Board of Directors; alternatively, the Board of Directors may reduce the
number of authorized directors. The Board of Directors has no reason to believe
that any substitute nominee or nominees will be required. A plurality of the
votes of the shares present in person or represented by proxy at the Annual
Meeting, entitled to vote and actually voting, is required to elect each of the
nominees.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR ALL SEVEN NOMINEES.
<TABLE>
<CAPTION>
Year
First Principal Occupation and Other
Name Elected Information Concerning Nominee
- ---- ------- ------------------------------
<S> <C> <C>
Samuel D. Anderson 1987 Chairman of the Board since July
Age 63 1998, Hycor Biomedical Inc.; General
business consultant since May 1991;
President, Trancel Corporation (a
pharmaceutical company) from March
1990 until April 1991; Director from
March 1984 until December 1991,
Chairman of the Board from October
1988 to March 1990, President and
Chief Executive Officer from March
1984 to October 1988, Alpha
Therapeutics Corporation (a
pharmaceutical company).
J. David Tholen 1998 President and Chief Executive
Age 54 Officer since July 1998, Executive
Vice President from January 1998
until July 1998, Hycor Biomedical
Inc.; General business consultant
from December 1996 until January
1998; President and Chief Executive
Officer, Murex International (a
medical diagnostic company) from
June 1994 until December 1996.
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
Year
First Principal Occupation and Other
Name Elected Information Concerning Nominee
- ---- ------- ------------------------------
<S> <C> <C>
David S. Gordon 1981 Senior Vice President, Medical
Age 57 Affairs, since April 1997, Aronex
Pharmaceuticals, Inc. (a
pharmaceutical company); Vice
President, Business Development,
Physician Reliance Network, Inc. (a
physician practice management
company) from October 1995 until
December 1996; Vice President, U.S.
Clinical Research, The Liposome
Company (a pharmaceutical company)
from March 1993 until September
1995; Director, Clinical
Research-Hematologics, R. W. Johnson
Pharmaceutical Research Institute (a
pharmaceutical company) from
November 1990 until February 1993;
Chairman of the Board from April
1981 to September 1990, Chief
Scientific Officer from February
1985 to November 1990, Chief
Executive Officer from April 1981 to
February 1985, Hycor Biomedical Inc.
Reginald P. Jones 1986 Senior Vice President since January
Age 52 1988, Chief Financial Officer since
May 1985, Secretary since June 1985,
Treasurer since January 1982, Hycor
Biomedical Inc.
James R. Phelps 1984 Partner, Hyman, Phelps and McNamara,
Age 60 P.C. (a law firm) since January
1980.
Richard E. Schmidt 1996 Chairman from September 1991 to
Age 67 February 1998, Chief Executive
Officer and President from September
1991 until June 1996, Newport
Corporation (a precision research
equipment company).
David A. Thompson 1995 Chief Executive Officer, Diagnostics
Age 57 Marketing Strategy, Inc. (a
marketing consulting firm) since
October 1996; President, Diagnostics
Division, and Senior Vice President,
Diagnostic Operations, Abbott
Laboratories, Inc. (a pharmaceutical
and diagnostic company) from 1990
until June 1995; various other
executive positions with Abbott
Laboratories since 1964. Mr.
Thompson is a director of NABI (a
biopharmaceutical company), Neopath,
Inc. (an automated imaging company)
and Lifecell Corporation (an
automated imaging company).
</TABLE>
3
<PAGE> 6
Board Meeting Attendance and Committees
The Board of Directors held a total of four meetings during 1998. All
directors attended at least 75% of all meetings of the Board and the committees
of the Board on which they served.
The Compensation Committee of the Board, composed of Messrs. Thompson,
Anderson and Phelps, acts for the Board in determining the executive
compensation program with respect to salary, bonuses, benefits and other
compensation matters. It also administers the Company's stock option plans. This
committee met three times during 1998.
The Audit Committee of the Board, composed of Messrs. Schmidt and
Gordon, acts for the Board in overseeing the Company's accounting practices,
recommending the independent public accountants for appointment by the Board,
monitoring the adequacy of internal accounting practices and reviewing
significant changes in accounting policies. This committee met twice in 1998.
The Nominating Committee, composed of Messrs. Gordon and Phelps,
considers and makes recommendations to the full Board of Directors for its
approval of individual candidates to be nominated by management for election to
the Board of Directors at the Annual Meeting of Stockholders. This committee met
once in 1998.
The Nominating Committee will consider proposals for nominees for the
Board of Directors suggested by stockholders. Such recommendations should be
submitted in writing to the Corporate Secretary at the address set forth on the
first page of this proxy statement and must be received not less than 120
calendar days in advance of the date of the Company's proxy statement released
to stockholders in connection with the previous year's annual meeting of
stockholders. The stockholder should specify the name of each proposed nominee
and should set forth detailed biographical information. A person to be
considered for nomination to the Board of Directors should, among other things,
have the ability to exercise sound business judgment, have had such broad
personal and professional experience as to enable him or her to make productive
contributions to the deliberation of the Board of Directors, and be a recognized
leader in his or her profession.
Compensation of Directors
All non-employee directors receive an annual retainer of $9,000 and a
fee of $500 for each Board, Audit and Compensation Meeting attended for services
as directors of the Company and are reimbursed for reasonable travel expenses
incurred in connection with each meeting attended.
Each non-employee director is eligible to receive stock options under
the Company's Nonqualified Stock Option Plan for Non-Employee Directors (the
"Plan"), a non-discretionary formula stock option plan. Each director who is a
non-employee director and who holds office immediately after the Company's
annual meeting of stockholders receives an option to purchase 6,000 shares of
Common Stock. The Plan also provides an automatic one-time only grant of an
option to purchase 4,000 shares of Common Stock to new non-employee directors on
the date such director first assumes the duties of a director. The price per
share at which an option may be exercised is the fair market value per share on
the date the option is granted, and each option granted shall vest pro rata over
a three-year period. In the event that the Company enters into a merger (other
than a merger in which the Company is the surviving corporation and under the
terms of which the Common Stock is unchanged), consolidation, sale or transfer
of substantially all of its assets, or liquidation during the term of an option,
the option shall become exercisable with respect to the full number of shares
subject thereto during the period of 30 days prior to the closing date of such
transaction; provided, however, the exercise of any portion of the option that
would otherwise not be exercisable at the closing date of such transaction shall
be contingent on the closing of the transaction.
4
<PAGE> 7
STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information with respect to
shares of Common Stock of the Company beneficially owned by (1) all persons
known to the Company to own beneficially more than 5% of the Company's Common
Stock; (2) each person who is a director or a nominee for director; (3) each of
the executive officers named in the Summary Compensation Table herein; and (4)
all directors and executive officers of the Company as a group. The persons
named hold sole voting and investment power with respect to the shares shown
opposite their respective names, unless otherwise indicated in the footnotes.
The information with respect to each person specified is as supplied or
confirmed by such person.
<TABLE>
<CAPTION>
Shares of Common Stock
Beneficially Owned as Percent of
Name of March 16, 1999 (1)(9) Class(1)
- ---- ------------------------- ---------
<S> <C> <C>
Brinson Partners, Inc. 617,400(2) 8.5
Dimensional Fund Advisors, Inc. 475,414(3) 6.6
Samuel D. Anderson 92,000 1.3
J. David Tholen 87,217 1.2
David S. Gordon 264,864(4) 3.6
Reginald P. Jones 313,213(5) 4.3
James R. Phelps 79,400 1.1
Richard E. Schmidt 14,000 *
David A. Thompson 24,000 *
Nelson F. Thune 180,023(6) 2.4
Mary Jo Deal 4,590 *
Thomas M. Li 18,464 *
Richard D. Hamill 225,508(7) 3.1
All executive officers and 1,077,771(8) 14.1
directors as a group
(10 persons)
</TABLE>
Footnotes
- --------------------------
* Indicates less than one percent.
(1) Includes shares subject to stock options which the following have the
right to acquire within sixty days of March 16, 1999; Mr. Anderson,
54,000 shares; Mr. Tholen, 25,000 shares; Dr. Gordon, 34,000 shares; Mr.
Jones, 102,500 shares; Mr. Phelps, 44,000 shares; Mr. Schmidt, 14,000
shares; Mr. Thompson, 14,000 shares; Mr. Thune, 110,434 shares; Ms.
Deal, 2,000 shares; Dr. Li, 15,000 shares; and all executive officers
and directors as a group, 414,934 shares.
(2) Brinson Partners, Inc. ("BPI"), 209 South LaSalle, Chicago, Illinois
60604, filed a joint amended Schedule 13G on or about February 3, 1999,
on behalf of (i) itself, an investment adviser registered under Section
203 of the Investment Advisors Act of 1940; (ii) UBS Inc., a parent
holding company of BPI; and (iii) UBS AG, a bank as defined in Section
3(a)(6) of the Securities Exchange Act of 1934, and a parent holding
company of which UBS Inc. is a wholly owned subsidiary. All such
companies have shared voting and dispositive power over 617,400 shares.
5
<PAGE> 8
Footnotes (continued)
- ------------------------
(3) Dimensional Fund Advisors, Inc. ("DFA"), 1299 Ocean Avenue, 11th Floor,
Santa Monica, California 90401, filed an amended schedule 13G on or
about February 11, 1999 on behalf of itself, an investment advisor
registered under Section 203 of the Investment Advisors Act of 1940. DFA
has sole voting power over 475,414 shares.
(4) Includes 11,400 shares held by Dr. Gordon's wife and dependent children.
(5) Includes 200,518 shares held by R. P. Jones and J. Jones as Trustees for
the Jones Family Trust; 3,000 shares held by dependent children; and
3,795 shares held by the Company's 401(k) Plan.
(6) Includes 3,452 shares held by the Company's 401(k) Plan.
(7) Executive resigned July 1998. Includes 218,319 shares held by R. D.
Hamill and M. L. Hamill as trustees for The Hamill Trust, 1996; and
12,000 shares held by Dr. Hamill's father-in-law's trust for which his
spouse is a trustee.
(8) Includes 7,947 shares held by the Company's 401(k) Plan. Does not
include any shares held by Richard D. Hamill.
(9) Under the terms of the Company's 401(k) Plan, a committee of three
persons has the power to direct the trustee to vote all shares held
pursuant to the 401(k) Plan.
6
<PAGE> 9
EXECUTIVE OFFICERS
The following table identifies, and contains certain information
concerning, the Company's executive officers as of the date of this Proxy
Statement. Executive officers are appointed by and serve at the pleasure of the
Board of Directors, subject to the relevant terms of their employment
agreements. See "Executive Compensation - Employment Agreements."
<TABLE>
<CAPTION>
Name Age Information Concerning Officer
- ---- --- ------------------------------
<S> <C> <C>
J. David Tholen 54 President and Chief Executive
Officer since July 1998, Executive
Vice President from January 1998
until July 1998, Hycor Biomedical
Inc.; General business consultant
from December 1996 until January
1998; President and Chief Executive
Officer, Murex International (a
medical diagnostic company) from
June 1994 until December 1996.
Reginald P. Jones 52 Senior Vice President since January
1988, Chief Financial Officer since
May 1985, Secretary since June 1985,
Treasurer since January 1982. Mr.
Jones is also a director of the
Company, a position which he has
held since 1986.
Nelson F. Thune 53 Senior Vice President, Operations
and Planning since February 1991,
Vice President, Operations from
January 1985 to February 1991.
Mary Jo Deal 43 Vice President, Marketing since
September 1997, Director of
Marketing from September 1995 to
August 1997; Marketing Manager from
July 1993 to August 1995, Technical
Assistance Manager from July 1991 to
June 1993, Dade International, Inc.
(a medical products company).
Thomas M. Li 52 Vice President, Research and
Development since April 1995; Senior
Development Manager, Syva Company (a
medical diagnostic company) from
January 1991 to March 1995.
</TABLE>
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following table sets forth information concerning compensation paid
or accrued by the Company to or on behalf of all persons serving as the
Company's Chief Executive Officer and each of the four other most highly
compensated executive officers (the "named executive officers") for services in
all capacities to the Company during the Company's last completed fiscal year.
7
<PAGE> 10
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation (1) Awards
--------------------------- ------------
Securities
Underlying All Other
Name and Salary Bonus Options/ Compensation
Principal Position Year ($)(2) ($) SARs (#) ($)(3)
- ------------------ ---- ------- ----- ---------- ------------
<S> <C> <C> <C> <C> <C>
J. David Tholen (4) 1998 180,637 -0- 206,100 783
President and CEO
Reginald P. Jones 1998 191,182 -0- 71,000 3,610
Senior Vice President, 1997 182,736 -0- -0- 4,805
Chief Financial 1996 176,236 -0- 96,000 5,744
Nelson F. Thune 1998 167,918 -0- 49,400 3,333
Senior Vice President, 1997 160,507 -0- -0- 4,673
Operations & Planning 1996 154,829 -0- 61,500 5,522
Mary Jo Deal (5) 1998 135,210 -0- 35,000 2,256
Vice President, 1997 107,118 -0- -0- 2,744
Marketing 1996 99,006 15,000 -15,000 461
Thomas M. Li 1998 168,700 -0- -0- 3,951
Vice President, 1997 157,140 -0- -0- 3,968
Research & Development 1996 149,852 -0- 58,500 1,500
Richard D. Hamill (6) 1998 114,228 -0- -0- 423,865
Former Chairman, 1997 247,975 -0- -0- 12,011
President, and CEO 1996 237,667 -0- 174,000 12,011
</TABLE>
Footnotes
- ----------------
(1) None of the named individuals received perquisites or other personal
benefits in excess of the lesser of $50,000 or 10% of the total of his
reported annual salary and bonus.
(2) Includes employee deferrals under the Company's Incentive Profit Sharing
Plan, a deferred compensation plan under Section 401(k) of the Internal
Revenue Code (the "401(k) Plan").
(3) The amounts disclosed in this column for 1998 include:
(a) Company contributions of cash and Common Stock under the 401(k)
Plan made on behalf of Tholen, Jones, Thune, Deal, Li and Hamill,
in the amounts of $783, $3285, $3008, $2039, $3630 and $3088,
respectively, and 0, 208, 208, 139, 205 and 208 shares,
respectively. The dollar value of the shares is included in the
table and was calculated based on the fair market value of such
shares at the time acquired by the Plan.
(b) Payment by the Company of premiums for term life insurance on
behalf of Dr. Hamill in the amount of $3,785.
(4) Mr. Tholen became employed by the Company in January 1998 as Executive
Vice President and was promoted to President and Chief Executive Officer
in July 1998.
(5) Ms. Deal became employed by the Company in September 1995 and was
promoted to an executive officer in September 1997.
(6) Dr. Hamill resigned in July 1998. The salary shown was paid to him
between January 1998 and July 17, 1998. The other compensation shown for
1998 includes a severance benefit of $416,667 that will be paid out over
20 months.
8
<PAGE> 11
Employment Agreements
The Company is a party to employment agreements with Messrs. Tholen,
Jones, Thune and Li and Ms. Deal. The principal features of such agreements are
described below.
Mr. Tholen is employed as President and Chief Executive Officer of the
Company pursuant to an employment agreement which commenced June 17, 1998 and
provides for an annual base salary of $185,000. The term of the agreement is for
two years and may be renewed upon mutually agreeable terms. In addition, under
the terms of the agreement, in the event of the termination of Mr. Tholen's
employment (other than on account of death or for cause as defined in the
agreement), or Mr. Tholen's election to resign with good cause (as defined in
the agreement), within two years after a change in control of the Company, Mr.
Tholen will be entitled to receive severance pay in an amount equal to 200% of
the average of the annual base salary plus bonuses paid to Tholen since his
start of employment or for the prior three years. Such amount would be in
addition to any other amounts otherwise payable to Mr. Tholen under any benefit
plans of the Company. A change in control of the Company would be deemed to
occur if any person is or becomes the beneficial owner, directly or indirectly,
of securities of the Company representing 25% or more of the combined voting
power of the Company's then outstanding securities or if specified changes in
the composition of the Company's Board of Directors occurs. The Company can also
terminate the agreement at any time "without cause" by paying Mr. Tholen a lump
severance benefit equal to twelve months base salary or the remaining term of
the agreement at the time of termination, whichever is less. The agreement also
provides for certain payments upon Mr. Tholen's death or incapacity.
The Company also has entered into three-year employment agreements with
Messrs. Jones, Thune and Li and Ms. Deal under which each is employed as a Vice
President of the Company. These agreements, which commenced June 20, 1997 for
Messrs. Jones, Thune and Li, and commenced September 1, 1997 for Ms. Deal,
provide for base salaries of $184,100, $161,700, $158,600 and $120,000 per
annum, respectively. Each agreement automatically renews for successive one-year
terms unless written notice of either party's intention not to renew is given at
least three months prior to expiration of the term. In addition, under the terms
of the agreement, in the event of the termination of employment (other than on
account of death or for cause as defined in the agreement), or election to
resign with good cause (as defined in the agreement), within two years after a
change in control of the Company, Messrs. Jones, Thune, or Li or Ms. Deal will
be entitled to receive severance pay in an amount equal to 200% of the average
of the annual base salary plus bonuses paid the prior three years. Such amount
would be in addition to any other amounts otherwise payable under any benefit
plans of the Company. A change in control of the Company would be deemed to
occur if any person is or becomes the beneficial owner, directly or indirectly,
of securities of the Company representing 25% or more of the combined voting
power of the Company's then outstanding securities or if specified changes in
the composition of the Company's Board of Directors occurs. The Company can also
terminate the agreement at any time "without cause" by paying a lump severance
benefit equal to twelve months base salary at the time of termination. The
agreement also provides for certain payments upon death or incapacity.
Dr. Hamill was employed as President and Chief Executive Officer of the
Company pursuant to an employment agreement which commenced June 20, 1997, and
provided for an annual base salary of $250,000. In July 1998, Dr. Hamill
resigned from all his positions with the Company. As part of his severance, the
Company agreed to pay him twenty months base salary and continue paying his
medical insurance premiums, and transferred to Dr. Hamill certain insurance
policies.
9
<PAGE> 12
Stock Options
The following table sets forth information, with respect to the named
executive officers, concerning the grant of stock options under the Company's
stock option plans during the last fiscal year.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential
Individual Grants Realizable
- -------------------------------------------------------------------------------------- Value at
Number of % of Total Assumed Rates
Securities Options/SARs of Stock Price
Underlying Granted to Exercise Market Appreciation
Options/SARs Employees or Base Price Expira- for Option Term
Granted in Fiscal Price on Date tion -----------------
Name (#)(1)(5) Year ($/Sh) of Grant Date 5% 10%
- --------------------------------------------------------------------------------------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
J. D. Tholen 100,000(2) 17.6 $2.00 $2.00 1/12/08 125,779 318,748
106,100(3) 18.7 1.63 1.63 8/11/08 108,763 275,627
R. P. Jones 71,000(3) 12.5 1.63 1.63 8/11/08 72,782 184,444
N. F. Thune 49,400(3) 8.7 1.63 1.63 8/11/08 50,640 128,331
M. J. Deal 8,000(4) 1.4 1.75 1.75 2/26/08 8,805 22,312
27,000(3) 4.8 1.63 1.63 8/11/08 27,678 70,141
</TABLE>
- -----------------
(1) The Company did not grant any stock appreciation rights (SARs) during
the last fiscal year.
(2) Incentive stock options were granted under the 1992 Incentive Stock Plan
on 1/13/98 and are exercisable in four annual equal installments
beginning 1/13/99.
(3) Incentive stock options were granted under the 1992 Incentive Stock Plan
on 8/12/98 and are exercisable in four annual equal installments
beginning 8/12/99.
(4) Incentive stock options were granted under the 1992 Incentive Stock Plan
on 2/27/98 and are exercisable in four annual equal installments
beginning 2/27/99.
(5) In the event that the Company enters into a merger (other than a merger
in which the Company is the surviving corporation and under the terms of
which the Common Stock is unchanged), consolidation, sale or transfer of
substantially all of its assets, or liquidation during the term of the
option, the option shall become exercisable with respect to the full
number of shares subject thereto for a period of 30 days prior to the
closing date of such transaction; provided, however, the exercise of any
portion of the option that would otherwise not be exercisable at the
closing date of such transaction shall be contingent on the closing of
the transaction.
10
<PAGE> 13
The following table sets forth information, with respect to the named
executive officers, concerning the exercise of options during the last fiscal
year and unexercised options held as of the end of the fiscal year.
OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired Options/SARs In-the-Money Options/SARs
on Value at Fiscal Year-End (#) at Fiscal Year-End ($)(2)
Exercise Realized ------------------------- -------------------------
Name (#) ($) (1) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- -------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
J.D.Tholen -0- -0- -0- 206,100 -0- -0-
R.P.Jones 33,492 19,425 99,250 170,250 -0- -0-
N.F.Thune 23,557 16,908 107,434 113,900 -0- -0-
M.J.Deal -0- -0- -0- 50,000 -0- -0-
T.M.Li -0- 0- 11,250 62,250 -0- -0-
R.D.Hamill(3) 12,000 10,536 -0- -0- -0- -0-
</TABLE>
- ----------------
(1) Calculated based upon the market value of Common Stock at the exercise
date, minus the option exercise price.
(2) Calculated based upon the closing price of Common Stock at December 31,
1998, minus the option exercise price.
(3) Dr. Hamill resigned July 1998.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE
COMPANY'S PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE
FILINGS, INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING
REPORT AND THE PERFORMANCE GRAPH WHICH FOLLOW SHALL NOT BE DEEMED TO BE
INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
The executive compensation program is administered by the Compensation
Committee of the Company's Board of Directors (the "Committee") which is
comprised of the individuals listed below. All of the members of the Committee
are outside directors of the Company. The Committee is responsible for all
compensation matters applicable to the Company's executive officers including
developing, administering and monitoring the compensation policies.
In the past, the Committee has retained the services of an independent
compensation consulting firm to assist in its evaluation of the key elements of
the Company's compensation program. The Committee reviews surveys and other data
supplied by the consultant in the course of its deliberations relating to
compensation proposals and in its evaluations of the particular needs of the
Company and each executive's performance.
11
<PAGE> 14
Compensation and Overall Objectives. The general goals and objectives of
the Company's compensation program are to:
o Provide incentives for the Company's management to create value for the
Company's stockholders;
o To attract, retain and motivate a quality, performance-oriented
management team;
o Position executive compensation at the median levels when compared to
companies with similar size, organization structure, product cycle and
industry; and
o Create long-term incentives which are tied to the Company's long-term
growth, financial success and stockholder value.
In designing and administering the individual elements of the executive
compensation program, the Committee strives to balance short- and long-term
incentive objectives and employ prudent judgment in establishing performance
criteria, evaluating performance and determining actual incentive payments.
Section 162(m) of the Internal Revenue Code limits the Company's tax
deduction to $1 million in any taxable year for compensation paid to individual
executive officers, unless certain performance, disclosure, and stockholder
approval requirements are met. While the compensation program provides pay
levels unlikely to reach or exceed the limit for any of the executive officers,
the Committee believes a substantial portion of the compensation program would
be exempted from the $1 million deduction limitation. The Committee's present
intention is to qualify, to the extent reasonable, the substantial portion of
the executive officers' compensation for deductibility under applicable tax
laws.
Base Salaries. The base compensation levels were established to
compensate the executive officers for the functions they perform. The salary
levels are reviewed annually and may be increased by the Compensation Committee
in accordance with certain criteria determined to be relevant by the Committee,
which include (i) individual performance, (ii) the functions performed by the
executive officer, (iii) competitive base pay levels for similar functions, and
(iv) the Company's overall performance during the year. The weight given such
factors by the Committee may vary from individual to individual. With respect to
base salaries, the Committee generally intends to target base salary levels at
the median for medical device and biotechnology organizations comparable in size
and structure. Other than in connection with the promotion of Ms. Deal to Vice
President, no salary increases were given in 1998.
Annual Incentive Compensation Program. Awards may be earned under the
Company's Annual Executive Incentive Plan (the "Annual Incentive Plan"). The
objective of the Annual Incentive Plan is to deliver competitive levels of
compensation for the attainment of financial objectives that the Committee
believes are primary determinants of stock price over time. Targeted awards for
the executive officers of the Company, including the Chief Executive Officer,
under the Annual Incentive Plan range from 35% to 45% of base salary. Minimum
objectives of sales and pretax earnings must be achieved before any awards are
earned. Awards in any single year cannot exceed 150% of the target award
opportunity. No bonus awards were made for fiscal 1998.
Long-Term Incentive Program. The long-term incentive program for senior
management consists of a stock-based compensation plan, the 1992 Incentive Stock
Plan (the "Plan"). The Committee believes that by providing those persons who
have substantial responsibility for the management and growth of the Company
with an opportunity to increase their ownership of Company stock, the interests
of the stockholders and executives will be closely aligned. The Committee, which
administers the Plans, may make grants under the Plans based on a number of
factors,
12
<PAGE> 15
including (i) the executive officer's position in the Company, (ii) the
executive officer's performance and responsibilities, (iii) the extent to which
the executive officer already holds an equity stake in the Company, (iv) equity
participation levels of comparable executives at other companies in the
compensation peer group, and (v) individual contribution to the success of the
Company's financial performance. Generally, stock options are granted each year
at 100% of current fair market value of the Company's stock. Stock options have
a ten-year term and typically become exercisable over a four-year period, as
determined by the Committee. In August 1998, the Company issued 253,500 options
to executive officers, made available by the cancellation of options held by
Richard Hamill, former Chief Executive Officer.
Chief Executive Officer Compensation. J. David Tholen was employed in
January 1998 as Executive Vice President and was promoted to President and Chief
Executive Officer in July. His salary was not increased at that time but will be
reviewed and adjusted in the future on the same basis as discussed above. Tholen
received an option grant of 106,100 in August in addition to his 100,000 option
grant he received when he joined the Company in January.
COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Samuel D. Anderson David A. Thompson James R. Phelps
(Chairman)
13
<PAGE> 16
STOCK PRICE PERFORMANCE GRAPH
Set forth below is a graph comparing cumulative total stockholder return
on the Company's Common Stock, the S&P 500 Index and the S&P Medical Products
and Supplies Index for the period commencing December 31, 1993 and ended
December 31, 1998. The graph assumes that the value of the investment in the
Company's Common Stock and each index as $100 at December 31, 1992 and that all
dividends were reinvested.
The Company has determined that a better performance comparison would be
to other companies listed in the Nasdaq stock market and would utilize the
Nasdaq US index and the Nasdaq Pharmaceutical index. The Company's stock is
included in both these Nasdaq indexes and is not included in either of the S&P
indexes used in the past. Comparison to both prior years' indexes and the new
indexes are shown below.
The stockholder return shown on the following graph is not necessarily
indicative of future performance.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
[GRAPH]
Cumulative Total Return
<TABLE>
<CAPTION>
12/93 12/94 12/95 12/96 12/97 12/98
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Company 100 89 97 67 35 24
S&P 500 100 101 139 171 229 294
S&P Medical Products & Supply 100 119 200 230 287 413
Nasdaq US 100 98 138 170 209 293
Nasdaq Pharmaceutical 100 75 138 138 143 183
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than 10% of
a registered class of the Company's equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Officers, directors and greater than
10% stockholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file.
14
<PAGE> 17
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required during the fiscal year ended December 31, 1998, the
Company's officers, directors and greater than 10% beneficial owners complied
with all Section 16(a) filing requirements.
INDEPENDENT AUDITORS
Deloitte & Touche LLP served as the Company's independent auditors for
the fiscal year ended December 31, 1998. Representatives of Deloitte & Touche
LLP are expected to be present at the Annual Meeting, will be given the
opportunity to make a statement, if they desire, and are expected to be
available to respond to appropriate questions. Auditors for the current fiscal
year will be selected by the Board of Directors in June 1999.
ANNUAL REPORT
The Annual Report of the Company including financial statements for the
year ended December 31, 1998 is enclosed with this Proxy Statement.
STOCKHOLDER PROPOSALS
Stockholders who intend to submit proposals to the Company's
stockholders at the 2000 Annual Meeting must submit such proposals to the
Company no later than December 20, 1999 in order for them to be included in the
proxy statement and form of proxy to be distributed by the Board of Directors in
connection with that meeting. Stockholder proposals should be submitted to Hycor
Biomedical Inc., 7272 Chapman Avenue, Garden Grove, California 92841, Attention:
Corporate Secretary.
EXPENSES OF SOLICITATION
The expense of preparing, assembling, printing and mailing this Proxy
Statement and the materials used in the solicitation of proxies for the Annual
Meeting will be borne by the Company. Solicitation of proxies may be made by
means of personal calls upon, or telephonic or telegraphic communications with,
stockholders or their personal representatives by directors, officers and
employees of the Company who will not be specially compensated for such
services. Although there is no formal agreement to do so, the Company may
reimburse banks, brokerage houses and other custodians, nominees and fiduciaries
for their reasonable expenses in forwarding this Proxy Statement to stockholders
whose Common Stock is held of record by such entities.
OTHER MATTERS
The Board of Directors knows of no other matters which will be brought
before the Annual Meeting. However, if any other matter properly comes before
the Annual Meeting or any adjournment thereof, it is intended that the persons
named in the enclosed form of proxy will vote on such matter in accordance with
their best judgment.
Reginald P. Jones
April 19, 1999 Secretary
15
<PAGE> 18
HYCOR BIOMEDICAL INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE JUNE 10,
1999 ANNUAL MEETING OF STOCKHOLDERS AND MAY BE REVOKED PRIOR TO ITS EXERCISE
The undersigned hereby appoints J. DAVID THOLEN and REGINALD JONES, and each
of them, as proxy or proxies, with full power of substitution and
resubstitution, for and in the name or names of the undersigned, to vote all
shares of Common Stock of Hycor Biomedical Inc. (the "Company"), which the
undersigned would be entitled to vote if personally present at the Annual
Meeting of Stockholders to be held on June 10, 1999, at 9 a.m., local time, at
the Company's offices located at 7272 Chapman Avenue, Garden Grove, California
92841, and at any adjournment thereof, upon the matters described in the
accompanying Notice of Annual Meeting of Stockholders and Proxy Statement,
receipt of which is hereby acknowledged, and upon any other business that may
properly come before the meeting or any adjournment thereof. SAID PROXIES ARE
DIRECTED TO VOTE ON THE MATTERS DESCRIBED IN THE NOTICE OF ANNUAL MEETING AND
PROXY STATEMENT AS FOLLOWS, AND OTHERWISE ARE DIRECTED TO VOTE IN THEIR
DISCRETION UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND
ANY ADJOURNMENT THEREOF.
<TABLE>
<S> <C> <C>
1. Election of Directors [ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed
below
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(S),
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
J. David Tholen, Samuel D. Anderson, David S. Gordon, Reginald P. Jones,
James R. Phelps, Richard E. Schmidt and David A. Thompson.
2. THE PROXIES ARE AUTHORIZED TO VOTE IN THEIR DISCRETION UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
(Continued and to be signed and dated on the reverse side)
<PAGE> 19
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS INDICATED, THIS PROXY
WILL BE VOTED "FOR" EACH NOMINEE NAMED IN PROPOSAL 1, AND IN ACCORDANCE WITH THE
DISCRETION OF THE PROXY HOLDER(S) ON SUCH MATTERS THAT MAY PROPERLY COME BEFORE
THE MEETING.
Date: , 1999
-------------------------
(Signature)
-------------------------
(Signature)
Please date this proxy
and sign exactly as your
name or names appear
hereon. When more than
one owner is shown above,
each should sign. When
signing in a fiduciary or
representative capacity,
please give full title.
If this proxy is
submitted by a
corporation, it should be
executed in the full
corporate name by a duly
authorized officer. If
this proxy is submitted
by a partnership, it
should be executed in the
partnership name by an
authorized person.
