<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(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 Rule 14a-11(c) or Rule 14a-12
MINNTECH CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if
other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(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:(1)
--------------------------------------------------------------------
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:
--------------------------------------------------------------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
MINNTECH -REGISTRATION MARK-
14605 28TH AVENUE NORTH
MINNEAPOLIS, MINNESOTA 55447
------------------------
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders to be
held at the Radisson Plaza Hotel Minneapolis, 35 South Seventh Street,
Minneapolis, Minnesota at 3:30 p.m., Central Daylight Time, on August 25, 1999.
The Notice of Annual Meeting of Stockholders and the Proxy Statement that
follow describe the business to be conducted at the meeting. We will also report
on matters of current interest to our stockholders.
Whether you own a few or many shares of stock, it is important that your
shares be represented. If you cannot personally attend, we encourage you to make
certain that you are represented at the meeting by signing the accompanying
proxy and promptly returning it in the enclosed envelope.
Sincerely,
/s/ Thomas J. McGoldrick
Thomas J. McGoldrick
PRESIDENT AND CHIEF EXECUTIVE OFFICER
July 23, 1999
<PAGE>
MINNTECH -REGISTRATION MARK-
14605 28TH AVENUE NORTH
MINNEAPOLIS, MINNESOTA 55447
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
WEDNESDAY, AUGUST 25, 1999
---------------------
The Annual Meeting of Stockholders of Minntech Corporation will be held at
the Radisson Plaza Hotel Minneapolis, 35 South Seventh Street, Minneapolis,
Minnesota at 3:30 p.m., Central Daylight Time, on Wednesday, August 25, 1999,
for the following purposes:
1. To elect two directors for three-year terms each.
2. To ratify the appointment of PricewaterhouseCoopers LLP as the
independent accountants of the Company for the fiscal year ending March
31, 2000.
3. To transact such other business as may properly come before the meeting.
Pursuant to due action of the Board of Directors, stockholders of record on
July 9, 1999 will be entitled to vote at the meeting or any adjournments
thereof.
By Order of the Board of Directors
/s/ Barbara A. Wrigley
Barbara A. Wrigley
SECRETARY
July 23, 1999
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN, DATE AND RETURN YOUR
PROXY ON THE ENCLOSED PROXY CARD WHETHER OR NOT YOU EXPECT TO ATTEND IN PERSON.
STOCKHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES AND VOTE IN PERSON
IF THEY DESIRE.
<PAGE>
PROXY STATEMENT
OF
MINNTECH CORPORATION
14605 28TH AVENUE NORTH, MINNEAPOLIS, MINNESOTA 55447
------------------------
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
AUGUST 25, 1999
------------------------
PROXIES AND VOTING
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Minntech Corporation (the "Company") to be
used at the Annual Meeting of Stockholders of the Company to be held August 25,
1999. The approximate date on which this Proxy Statement and accompanying proxy
were first sent or given to stockholders was July 23, 1999. Each stockholder who
signs and returns a proxy in the form enclosed with this Proxy Statement may
revoke the same at any time prior to use by giving notice of such revocation to
the Company in writing or in open meeting. Unless so revoked, the shares
represented by such proxy will be voted at the meeting and at any adjournment or
adjournments thereof. Presence at the meeting of a stockholder who has signed a
proxy does not alone revoke the proxy. Only stockholders of record at the close
of business on July 9, 1999 will be entitled to vote at the meeting or any
adjournment or adjournments thereof.
Under Minnesota law, each item of business properly presented at a meeting
of stockholders generally must be approved by the affirmative vote of the
holders of a majority of the voting power of the shares present, in person or by
proxy, and entitled to vote on that item of business. However, if the shares
present and entitled to vote on that item of business would not constitute a
quorum for the transaction of business at the meeting, then the item must be
approved by a majority of the voting power of the minimum number of shares that
would constitute such a quorum. Votes cast by proxy or in person at the Annual
Meeting of Stockholders will be tabulated by the election inspectors appointed
for the meeting and such inspectors will determine whether or not a quorum is
present. The election inspectors will treat abstentions as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum and in tabulating votes cast on proposals presented to stockholders for a
vote but as not being voted for the approval of the matter from which the
stockholder abstains. Consequently, an abstention will have the same effect as a
negative vote. If a broker indicates on the proxy that it does not have
discretionary authority as to certain shares to vote on a particular matter,
those shares will not be considered as present and entitled to vote with respect
to that matter.
The Company has outstanding only one class of voting securities, common
stock, $.05 par value. As of the close of business on the record date, July 9,
1999, 6,910,376 shares of common stock were outstanding. Each share of common
stock is entitled to one vote. There is not cumulative voting for the election
of directors.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS, DIRECTORS AND MANAGEMENT
The following table sets forth certain information concerning the beneficial
ownership of the common stock of the Company as of July 9, 1999 with respect to
(i) all persons known by the Company to be the beneficial owners of more than 5%
of the outstanding common stock of the Company, (ii) each director of the
Company, (iii) each executive officer named in the Summary Compensation Table on
page 6 and (iv) all directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
BENEFICIAL OWNER OWNED(1) SHARES
- ------------------------------------------------------- ----------- ---------------
<S> <C> <C>
Heartland Advisors (2) 1,302,200 18.8%
790 North Milwaukee St.
Milwaukee, Wisconsin 53202
T. Rowe Price Associates, Inc. (2)(3) 675,000 9.8
100 East Pratt Street
Baltimore, Maryland 21202
Wellington Management (2) 547,000 7.9
75 State Street
Boston, Massachusetts 02109
Putnam Investments, Inc. (2) 503,187 7.3
One Post Office Square
Boston, Massachusetts 02109
Fleet Financial Group, Inc. (2) 396,550 5.7
One Federal Street
Boston, Massachusetts 02110
Thomas J. McGoldrick 231,072 3.3
Fred L. Shapiro, M.D. 168,934 2.4
Daniel H. Schyma 126,103 1.8
George Heenan 123,851 1.8
Donald H. Soukup 115,525 1.7
Richard P. Goldhaber 115,011 1.6
Barbara A. Wrigley 84,250 1.2
Amos Heilicher 80,247 1.2
Paul E. Helms 44,260 *
Norman Dann 28,308 *
William Hope 13,548 *
Malcolm W. McDonald 11,599 *
All directors and executive officers as a group (14
persons) 1,257,434 15.9
</TABLE>
- ------------------------
* Less than one percent.
2
<PAGE>
(1) Includes shares subject to options exercisable currently or within 60 days
after July 9, 1999 as follows: Mr. McGoldrick, 182,000 shares; Dr. Fred
Shapiro, 60,458 shares; Mr. Schyma, 123,500 shares; Mr. Heenan, 70,835
shares; Mr. Soukup, 74,518 shares; Mr. Goldhaber, 103,500 shares; Ms.
Wrigley, 84,250 shares; Mr. Heilicher, 60,458 shares; Mr. Helms, 43,500
shares; Mr. Dann, 25,308 shares; Mr. Hope, 11,248 shares; Mr. McDonald,
11,248 shares; and all directors and executive officers as a group, 986,979
shares.
(2) Information is based on Schedule 13G filed with the Securities and Exchange
Commission dated as of December 31, 1998.
(3) These securities are owned by various individual and institutional
investors, including T. Rowe Price Small Cap Value Fund, Inc. (which owns
650,000 shares, representing 9.4% of the outstanding shares), which R. Rowe
Price Associates, Inc. ("Price Associates") serves as investment adviser
with power to direct investments and/or sole power to vote the securities.
Price Associates expressly disclaims beneficial owner of such securities.
3
<PAGE>
ELECTION OF DIRECTORS
The Company's Restated Articles of Incorporation, as amended, provide for
the election of approximately one-third of the Board of Directors annually.
Accordingly, two directors are to be elected at this year's annual meeting for
terms expiring in the year 2002. Set forth below is certain information with
respect to each person nominated by the Board of Directors and each person whose
term of office will continue after the meeting:
<TABLE>
<CAPTION>
DIRECTOR PRESENT TERM
NAME AND AGE PRINCIPAL OCCUPATION AND OTHER DIRECTORSHIPS SINCE EXPIRES
- --------------------------------- ------------------------------------------------------ ----------- ---------------
<S> <C> <C> <C>
NOMINEES:
Fred L. Shapiro, M.D. (64) Chairman of the Board of the Company. Consultant to 1982 1999
Hennepin Faculty Associates, a nonprofit
organization involved in medical education, research
and patient care, since June 1995. President of
Hennepin Faculty Associates from January 1984 to
June 1995. Medical Director of the Regional Kidney
Disease Program from 1966 to January 1984. Professor
of Medicine at Hennepin County Medical Center and
the University of Minnesota. Dr. Shapiro is the
nephew by marriage of Amos Heilicher. Dr. Shapiro is
also a director of MediJect, Inc.
Donald H. Soukup (59) Independent venture capitalist since 1984. Mr. Soukup 1980 1999
is also a director of Ciprico, Inc. and several
private companies.
CONTINUING DIRECTORS:
George Heenan (59) Executive Fellow and Director of the Institute of 1982 2000
Strategic Management from July 1999 to present and
Executive Fellow and Director of the Institute of
Venture Management at the University of St. Thomas
from September 1994 to July 1999. President of
Bissell Healthcare Corporation, North American
Operations, a manufacturer and distributor of
medical products, from February 1991 to August 1994.
Chairman of Clarus Medical Systems, Inc., a
manufacturer of diagnostic and interventional
endoscopes, from May 1987 to February 1991. Mr.
Heenan has also been a principal of Heenan
Investments, Inc., a venture development and
investment company, since January 1986.
Amos Heilicher (81) President of Advance Carter Co., a distributor of 1982 2000
coin-operated machines, and Advance Realty Co. for
more than five years. Mr. Heilicher is also the
director of a private company. Mr. Heilicher is the
uncle by marriage of Fred L. Shapiro.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR PRESENT TERM
NAME AND AGE PRINCIPAL OCCUPATION AND OTHER DIRECTORSHIPS SINCE EXPIRES
- --------------------------------- ------------------------------------------------------ ----------- ---------------
<S> <C> <C> <C>
Thomas J. McGoldrick (58) President and Chief Executive Officer of the Company 1997 2000
since March 1997; Acting President and Chief
Executive Officer from January 1997 to March 1997;
Executive Vice President from June 1995 to January
1997; and Vice President Corporate Development from
March 1985 to June 1995.
Norman Dann (72) Independent Consultant. Director of Medwave Inc. and 1995 2001
several private companies.
William Hope (66) Director and past President and Chief Executive 1998 2001
Officer of G&K Services, Inc., a supplier of
uniforms and specialty garments throughout North
America. Mr. Hope was President and Chief Executive
Officer of G&K Services, Inc. from 1997 to January
1999, President from 1993 to 1997 and a director
since 1983. Mr. Hope was the Vice President
Operations of G&K Services, Inc. from 1977 to 1993,
General Manager from 1969 to 1977 and Controller
from 1965 to 1969.
Malcolm W. McDonald (62) Director and Sr. Vice President of Space Center, Inc., 1998 2001
an industrial real estate firm, since 1977. Mr.
McDonald is also a director of several private
companies and a director or trustee of several
nonprofit organizations.
</TABLE>
All shares represented by proxies will be voted for the election of Dr.
Shapiro and Mr. Soukup except as otherwise provided therein. If a nominee should
withdraw or otherwise become unavailable for reasons not presently known, such
shares may be voted for another person in the place of such nominee in
accordance with the best judgment of the persons named in the proxy.
The Board of Directors had 15 meetings during the last fiscal year. Each
director participated in at least 75% of the meetings of the Board of Directors
and any committees on which such person served.
COMMITTEES
The Board of Directors has established an Audit Committee, a Compensation
Committee and an Acquisitions Committee. The Board does not have a Nominating
Committee.
The Audit Committee consists of two non-employee directors, Donald H. Soukup
and Norman Dann, and is responsible for matters relating to accounting policies
and practices, financial reporting and internal controls. The Audit Committee
held one meeting during the last fiscal year.
The Compensation Committee consists of four non-employee directors, George
Heenan, Amos Heilicher, Malcolm McDonald and Fred L. Shapiro, M.D., and is
responsible for making recommendations to the Board of Directors concerning the
amount and form of compensation paid by the Company to its executive officers
and members of the Board of Directors. The Compensation Committee held one
meeting during the last fiscal year.
The Acquisitions Committee consists of four non-employee directors, Amos
Heilicher, Donald H. Soukup, Norman Dann and William Hope and is responsible for
the review, evaluation and proposal to the Board of Directors of possible
mergers, acquisitions and other business combinations on behalf of the Company.
The Acquisitions Committee held one meeting during the last fiscal year.
5
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the fiscal years ending March 31, 1999, 1998
and 1997, the cash compensation paid by the Company, as well as certain other
compensation paid or accrued for those years, to Thomas J. McGoldrick, the
Company's President and Chief Executive Officer, and to each of the other four
most highly compensated executive officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
FISCAL YEAR ANNUAL COMPENSATION -------------
ENDED MARCH ---------------------- STOCK ALL OTHER
NAME AND POSITION 31 SALARY BONUS OPTIONS COMPENSATION(1)
- ------------------------------------------- ------------- ---------- ---------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
Thomas J. McGoldrick 1999 $ 264,223 $ 198,750 24,000 $ 20,117
President and Chief 1998 225,000 126,563 40,000 18,176
Executive Officer 1997 159,994 -- 40,000 557
Richard P. Goldhaber 1999 $ 210,911 $ 105,495 12,000 $ 12,899
Vice President Research 1998 206,856 116,357 20,000 16,282
and Development 1997 202,650 -- 20,000 --
Daniel H. Schyma 1999 $ 170,930 $ 128,388 12,000 $ 13,045
Vice President 1998 158,000 88,875 20,000 13,496
Sales and Marketing 1997 125,046 -- 20,000 780
Barbara A. Wrigley 1999 $ 182,337 $ 91,260 12,000 $ 11,862
Executive Vice President 1998 173,000 64,875 20,000 12,633
Corporate Development, 1997 144,118 -- 20,000 764
General Counsel and Secretary
Paul E. Helms(2) 1999 $ 172,510 $ 86,346 12,000 $ 11,042
Sr. Vice President 1998 163,700 61,201 20,000 42,058(3)
Operations 1997 101,538 -- 20,000 15,588(3)
</TABLE>
- ------------------------
(1) Except as otherwise noted, includes profit sharing contributions and/or
401(k) matching contributions under the Company's Profit Sharing and
Retirement Plan. See "Report of the Compensation Committee."
(2) Mr. Helms commenced his employment with the Company on August 5, 1996.
(3) Consists of amounts reimbursed to Mr. Helms for moving and temporary living
expenses.
6
<PAGE>
STOCK OPTIONS
The following table contains information concerning the grant of stock
options under the Company's 1998 Stock Option Plan during fiscal 1999 to the
named executive officers of the Company identified in the Summary Compensation
Table above.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED RATES
% OF TOTAL OF STOCK PRICE
OPTIONS GRANTED APPRECIATION FOR
NUMBER OF TO EMPLOYEES IN OPTION TERM(2)
SHARES FISCAL YEAR ENDED EXERCISE EXPIRATION ----------------------
NAME GRANTED(1) MARCH 31, 1999 PRICE DATE 5% 10%
- -------------------------- ----------- ----------------- --------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Thomas J. McGoldrick 24,000 9.3% $ 12.675 3/29/09 $ 495,600 $ 785,982
Richard P. Goldhaber 12,000 4.6% 12.675 3/29/09 247,800 393,000
Daniel H. Schyma 12,000 4.6% 12.625 3/29/09 247,800 393,000
Barbara A. Wrigley 12,000 4.6% 12.625 3/29/09 247,800 393,000
Paul E. Helms 12,000 4.6% 12.625 3/29/09 247,800 393,000
</TABLE>
- ------------------------
(1) Fifty percent of each option is exercisable immediately, the remaining
shares become exercisable in four equal installments on March 29, 2000,
2001, 2002 and 2003. The options have a ten-year term and were granted at
the fair market value of the Company's common stock on the date of grant.
(2) Potential realized values shown above represent the potential gains based
upon annual compound price appreciation of 5% and 10% from the date of grant
through the full option term. The actual value realized, if any, on stock
option exercises will be dependent upon overall market conditions and the
future performance of the Company and its common stock. There is no
assurance that the actual value realized will approximate the amounts
reflected in this table.
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the named
executives concerning the exercise of options during the last fiscal year and
unexercised options held as of the end of the fiscal year.
AGGREGATED OPTION EXERCISES
AND FISCAL YEAR-END OPTION VALUES(1)
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AS OF
OPTIONS AT MARCH 31, 1999 MARCH 31, 1999 (2)
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Thomas J. McGoldrick 182,000 52,000 $ 303,750 $ 61,963
Richard P. Goldhaber 103,500 28,500 176,875 35,625
Daniel H. Schyma 123,500 28,500 228,125 35,625
Barbara A. Wrigley 84,250 28,500 138,375 35,625
Paul E. Helms 38,500 33,500 46,875 45,625
</TABLE>
- ------------------------
(1) No options were exercised by any named executives during the fiscal year
ended March 31, 1999.
(2) Market value of shares covered by in-the-money options on March 31, 1999,
less option exercise price. Options are in-the-money if the market value of
the shares covered thereby is greater than the option exercise price. Market
price was $12.625 per share on March 31, 1999.
EMPLOYMENT AGREEMENTS
The Company has entered into agreements with its executive officers,
including the executive officers named in the Summary Compensation Table above,
that provide for a lump sum cash severance payment
7
<PAGE>
equal to an amount of one dollar less than three times the executive's average
annual compensation for the preceding five year period or, if less, the period
of the executive's employment with the Company, plus fringe benefits, in the
event of a "change of control" of the Company. The maximum amounts currently
payable to the named executives in the event of a change of control are as
follows: Mr. McGoldrick, $1,078,841; Mr. Goldhaber, $725,323; Mr. Schyma,
$526,870; Ms. Wrigley, $543,478; and Mr. Helms, $603,313. The agreements are in
effect until September 1, 1999. The agreements automatically renew for
additional periods of one year after the end of the effective period until
notice of termination of the agreement is given to the executive by the Company.
Such notice must be given by the Company within 60 days prior to the expiration
of the original term of the agreement or the annual renewal period then in
effect. If a change in control of the Company occurs during the original term of
the agreement or any renewal term then in effect, the severance payments are due
any executive who either is involuntarily terminated by the Company or
voluntarily terminates his or her employment after a reduction in his or her
duties, compensation or fringe benefits which occurs within the 36-month period
following the change of control. Under the agreement, each executive agrees to
remain with the Company for 90 days following a change of control to assist the
transition, after which time the executive may, during the next 90 days,
voluntarily terminate his or her employment and receive 50% of such severance
payment.
DIRECTOR COMPENSATION
All non-employee directors received an annual fee of $10,000 (provided such
directors attended at least 75% of all meetings of the Board of Directors during
the fiscal year) and also received $1,000 for each full meeting attended in
fiscal 1999. All directors received $750 for each committee meeting attended.
Directors and their spouses are reimbursed for all travel expenses incurred in
connection with attendance at meetings of the Board of Directors. Effective
April 1, 1999, the Board of Directors increased the annual fee paid to
non-employee directors to $15,000 annually. The amount of the fees paid to
directors for attendance of full meetings and committee meetings remained
unchanged. The Board of Directors also reduced the number of scheduled full
meetings from twelve to six.
Effective April 1, 1995, the Company adopted the Emeritus Director
Consulting Plan (the "Plan"). The Plan has been adopted to enable the Company to
continue to utilize the expertise of directors after retirement. Non-employee
directors who have served on the Board of Directors for five full consecutive
years are eligible for, and in the event of a change in control of the Company
are, subject to certain exceptions, entitled to, participation in the Plan. An
annual fee equal to the annual retainer in effect at the time of the director's
retirement will be paid in consideration for consulting services to be provided
to the Company following the director's retirement. Determination of eligibility
and participation in the Plan will be made annually. The length of participation
in the Plan will be limited to the number of years of service on the Board of
Directors. There are presently no directors participating in the Plan.
The Company's 1998 Stock Plan (the "1998 Plan") provides for the annual,
automatic granting of a defined number of options to non-employee directors at
the last regularly scheduled meeting of the Board of Directors during the fiscal
year. Such options are granted to each director who is not and has never been an
employee of the Company and who (i) is serving an unexpired term as a director,
as of the date of the last regularly scheduled meeting of the Board of Directors
during any fiscal year of the Company and (ii) at the time of any such meeting,
has served as a director for at least six months of the year preceding the date
of such meeting. The 1998 Plan provides that each such director shall, as of the
date of the applicable meeting, automatically receive a non-qualified option to
purchase 7,030 shares of the Company's common stock, with the option price equal
to the fair market value of the Company's common stock on such date. The 1998
Plan was amended in September 1998 to provide that commencing April 1, 1998, no
option may be granted under the 1998 Plan in any fiscal year if following such
grant the number of shares purchasable pursuant to options granted under the
1998 Plan in such fiscal year would exceed 3% of the total number of outstanding
shares of the Company as of the date of such grant. Because of this amendment,
the Board unanimously agreed to reduce the number of shares to be granted to
each non-
8
<PAGE>
employee Director to 4,218 shares. Non-employee directors as a group from April
1, 1998 through March 31, 1999 were granted options under the 1998 Plan to
purchase 29,526 shares at an exercise price of $12.875 per share.
REPORT OF THE COMPENSATION COMMITTEE
OVERVIEW
The Compensation Committee (the "Committee") of the Board of Directors is
responsible for establishing compensation policies for all executive officers of
the Company, including the five most highly compensated executive officers named
in the accompanying tables (the "Named Executives"). The Committee establishes
the total compensation for the executive officers in light of these policies.
The Committee is composed entirely of non-employee directors.
The following report addresses the Company's executive compensation policies
and discusses factors considered by the Committee in determining the
compensation of the Company's President and Chief Executive Officer and other
executive officers for its fiscal year ended March 31, 1999.
COMPENSATION POLICIES FOR EXECUTIVE OFFICERS
The Committee's executive compensation policies are designed to provide
competitive levels of compensation that integrate pay with the Company's annual
and long-term performance goals, reward above-average corporate performance,
recognize individual initiative and achievements, and assist the Company in
attracting and retaining qualified executives. To that end, the Committee has
established certain parameters of corporate performance that must be met before
the discretionary features of its executive compensation plans apply. These
discretionary features include stock option grants and performance bonuses,
which are from 50% to 75% of an executive officer's base salary. Absent the
discretionary features, the Company's executive officers are paid base salaries
that are subject to annual cost-of-living increases, along with periodic
adjustments to make such salaries competitive with other similar sized companies
in the medical device industry. The Company's executive officers are also given
the opportunity to participate in certain other broad-based employee benefit
plans. As the result of the Company's increased emphasis on tying executive
compensation to corporate performance, in any particular year the Company's
executives may be paid more or less than the executives of other companies in
the medical device industry. The Company's use of stock option grants as a key
component of its executive compensation plans reflects the Committee's position
that stock ownership by management and stock-based compensation arrangements are
beneficial in aligning management's and stockholders' interests to enhance
stockholder value.
RELATIONSHIP OF PERFORMANCE UNDER THE COMPENSATION PLANS
Compensation paid to the Company's executive officers in fiscal 1999, as
reflected in the Summary Compensation Table above as to the Named Executives,
consisted of base salary and bonuses paid pursuant to a plan adopted by the
Committee prior to the beginning of fiscal 1999. In addition, the Committee had
established target performance levels and corresponding bonus amounts if those
performance levels are met for the current fiscal year under the Company's bonus
plan. The measures of performance that are utilized under the Company's
performance bonus plan for fiscal 1999 were based on achieving specified pre-tax
profits, taking into account certain levels of projected growth in earnings per
share and return on stockholders' equity.
The various performance-related aspects of the Company's executive
compensation plans are set forth below:
PERFORMANCE BONUS AWARDS. Performance bonus opportunities for the Company's
executive officers, including the Named Executives and other key employees, are
linked to a percentage of base salary,
9
<PAGE>
generally limited to 50% to 75% of an executive's base salary for fiscal 1999.
Prior to the start of fiscal 1999, the Committee established a maximum bonus
pool payable based on the Company reaching certain increases in pre-tax profits.
The Committee has once again established corporate target performance levels and
corresponding bonus amounts if those performance levels are met for the current
fiscal year under the Company's bonus plan. The measures of performance utilized
under the Company's performance bonus plan for fiscal 1999 were based on
achieving pre-tax profits of varying levels, taking into account projected
growth in earnings per share and return on stockholders' equity.
At the time it establishes the target profit levels, the Committee also sets
out a list of the employees allowed to participate in the performance bonus plan
for the coming fiscal year, along with maximum bonus amounts payable to each
participant. The Company's President and Chief Executive Officer is then allowed
to determine actual amounts payable to each participant, generally limited to
such maximum amounts established by the Committee, based upon his evaluation of
the individual's performance, subject to ratification by the Committee.
The Company's operating results met the pre-tax profit level established by
the Committee for fiscal 1999 and $1,108,127 was paid out in bonus awards out of
a total bonus pool of $1,125,883.
STOCK OPTION GRANTS. For fiscal 1999, the Compensation Committee granted
stock options to various executives, including the options granted to the Named
Executives as reflected in the table above. Stock options are intended to focus
the Company's key employees, including the Named Executives, on long-term
Company performance which results in improvement in stockholder value and
provides significant earnings potential to the executives.
OTHER COMPENSATION PLANS. The executive officers are able to defer a
portion of their income to future years under the Company's deferred
compensation plan. In addition, at various times in the past the Company has
adopted certain broad-based employee benefit plans in which the Company's
executive officers, including the Named Executives, have been permitted to
participate. The incremental cost to the Company of the Named Executives'
benefits provided under these plans (which is not set forth in the table above)
equaled approximately 2% to 3% of their base salaries for fiscal 1999.
Other than with respect to the Company's Profit Sharing and Retirement Plan
and its 1990 Employee Stock Purchase Plan, benefits under these plans are not
directly or indirectly tied to Company performance.
MR. MCGOLDRICK'S FISCAL 1999 COMPENSATION
Mr. McGoldrick's compensation for fiscal 1999, as reflected in the Summary
Compensation Table above, consisted of base compensation, a cash performance
bonus and a grant of an option to purchase 24,000 shares of the Company's common
stock. Mr. McGoldrick's base salary for fiscal 1999 was increased 17.4% over his
base salary paid for fiscal 1998. Mr. McGoldrick was paid a performance bonus of
$198,750 for fiscal year 1999. The Company met the target performance bonus
standards set by the Committee, and the Company continued to perform well during
fiscal 1999, with revenues and net earnings increasing 10% and 32% (excluding
after tax earnings of $981,000 from the sale of two U.S. patents), respectively,
over the previous year. The strong performance of the Company's earnings in
addition to the belief that stock options provide the Company's executives with
incentives tied to the Company's long-term performance, were factors considered
by the Committee in its determination to grant Mr. McGoldrick an option to
purchase 24,000 additional shares of the Company's common stock in March 1999.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE COMPANY'S BOARD OF DIRECTORS:
George Heenan Amos Heilicher Fred L. Shapiro, M.D. Malcolm McDonald
10
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
common stock of the Company for the last five fiscal years with the cumulative
total return of the Standard & Poor's 500 Stock Index and the Standard & Poor's
Medical Products and Supplies Index over the same period (assuming the
investment of $100 in each on March 31, 1994, and the reinvestment of all
dividends).
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG MINNTECH CORPORATION, THE
S&P 500
STOCK INDEX AND THE S&P HEALTH CARE (MEDICAL PRODUCTS AND SUPPLIES) INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
S&P HEALTH CARE (MEDICAL PRODUCTS AND SUPPLIES)
MINNTECH CORPORATION S&P 500 INDEX INDEX
3/94 $100 $100 $100
3/95 $133 $116 $146
<S> <C> <C> <C>
3/96 $180 $153 $217
3/97 $89 $183 $238
3/98 $112 $271 $344
3/99 $114 $321 $452
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
--------------------------------------------------
1994 1995 1996 1997
----- ----- ----- -----
<S> <C> <C> <C> <C>
Minntech Corporation.................................................... 100 133 180 89
S&P 500 Index........................................................... 100 116 153 183
S&P Health Care (Medical Products and Supplies) Index................... 100 146 217 238
<CAPTION>
1998 1999
----- -----
<S> <C> <C>
Minntech Corporation.................................................... 112 114
S&P 500 Index........................................................... 271 321
S&P Health Care (Medical Products and Supplies) Index................... 344 452
</TABLE>
11
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal year ended March 31, 1999, the Company had a loan
outstanding to Mr. McGoldrick, its President and Chief Executive Officer. The
purpose of the loan was for the payment of taxes related to the exercise of
options by Mr. McGoldrick in 1997. The highest amount outstanding of the loan
during the fiscal year ended March 31, 1999 was $65,655. As of June 30, 1999,
the outstanding balance of the loan was $59,970. The loan bears interest at the
rate of 5.91% per annum, compounded semi-annually. Payment of principal and
interest on the loan is due on April 13, 2000.
PROPOSALS OF STOCKHOLDERS
The proxy rules of the Securities and Exchange Commission permit
stockholders, after timely notice to issuers, to present proposals for
stockholder action in issuer proxy statements where such proposals are
consistent with applicable law, pertain to matters appropriate for stockholder
action, and are not properly omitted by company action in accordance with the
proxy rules. Stockholder proposals prepared in accordance with the proxy rules
and intended to be presented at the next annual meeting of stockholders must be
received by the Secretary of the Company, 14605 28th Avenue North, Minneapolis,
Minnesota 55447 on or before March 25, 2000 for inclusion in the proxy statement
for such annual meeting.
Under the Company's Restated Bylaws, as amended, stockholder proposals to be
brought before any meeting of stockholders must be made pursuant to timely
notice in writing to the corporate secretary at 14605 28th Avenue North,
Minneapolis, Minnesota 55447. To be timely, a stockholder's notice of any such
business to be conducted at an annual meeting must be delivered to the Secretary
of the Company, or mailed and received at the principal executive office of the
Company, not less than 90 days before the first anniversary of the date of the
preceding year's annual meeting of stockholders. If, however, the date of the
annual meeting of stockholders is more than 30 days before or after such
anniversary date, notice by a stockholder shall be timely only if so delivered
or mailed and received not less than 90 days before such annual meeting or, if
later, within 10 days after the first public announcement of the date of such
annual meeting. The notice must set forth as to each matter the stockholder
proposes to bring before the meeting a brief description of the business desired
to be brought before the meeting and the reasons for conducting such business at
the meeting, the name and address, as they appear on the Company's books, of the
stockholder proposing such business, the class or series (if any) and number of
shares of the Company that are beneficially owned by the stockholder and any
material interest of the stockholder in such business. The presiding officer of
the meeting may refuse to acknowledge any proposal not made in compliance with
the foregoing procedure.
Under the Company's Restated Bylaws, as amended, nominations of persons for
election as a director at any meeting of stockholders must be made pursuant to
timely notice in writing to the corporate secretary at 14605 28th Avenue North,
Minneapolis, Minnesota 55447. To be timely, a stockholder's notice of
nominations to be made at an annual meeting of the stockholders must be
delivered to the Secretary of the Company, or mailed and received at the
principal executive office of the Company, not less than 90 days before the
first anniversary of the date of the preceding year's annual meeting of
stockholders. If, however, the date of the annual meeting of stockholders is
more than 30 days before or after such anniversary date, notice by a stockholder
shall be timely only if so delivered or so mailed and received not less than 90
days before such annual meeting, or, if later, within 10 days after the first
public announcement of the date of such annual meeting. The notice must set
forth certain information concerning such stockholder and the nominees,
including their names and addresses, their principal occupation or employment,
the capital stock of the Company that they beneficially own, such other
information as would be required in a proxy statement soliciting proxies for the
election of the nominees, a description of any arrangement or understanding
between the stockholder and each nominee or other persons pursuant to which the
nominations are to be made by the stockholder and the consent of each nominee to
serve as a director if so elected. The presiding officer of the meeting may
refuse to acknowledge the nomination of any person not made in compliance with
the foregoing procedure.
12
<PAGE>
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
At the meeting, a vote will be taken on a proposal to ratify the appointment
of PricewaterhouseCoopers LLP by the Board of Directors to act as independent
accountants of the Company for the year ending March 31, 2000.
PricewaterhouseCoopers LLP, independent certified public accountants, have
audited the Company's financial statements since 1995. A representative of
PricewaterhouseCoopers LLP is expected to be present at the Annual Meeting to
make a statement if such representative so desires and to respond to appropriate
questions.
OTHER MATTERS
SOLICITATION
The Company will bear the cost of preparing, assembling and mailing the
proxy, Proxy Statement, annual report and other material that may be sent to the
stockholders in connection with this solicitation. Brokerage houses and other
custodians, nominees and fiduciaries may be requested to forward soliciting
material to the beneficial owners of stock, in which case they will be
reimbursed by the Company for their expenses in doing so. Proxies are being
solicited primarily by mail but, in addition, officers, employees and agents of
the Company may solicit proxies personally by telephone or special letter
without remuneration other than regular compensation.
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 Securities
and Exchange Commission initial reports of ownership and reports of changes in
ownership of common stock and other equity securities of the Company. These
insiders are required by Securities and Exchange Commission regulations to
furnish the Company with copies of all Section 16(a) forms they file, including
Forms 3, 4 and 5.
To the Company's knowledge, based solely on a review of copies of such
reports furnished to the Company and written representations that no other
reports were required during and with respect to the fiscal year ended March 31,
1999, there were no failures in such fiscal year to file on a timely basis a
report required under Section 16(a) except for the failure to file a report
related to the acquisition of 2,300 shares of the Company by Mr. Hope in fiscal
1999.
OTHER MATTERS
The Board of Directors does not intend to present to the meeting any matter
not referred to above and does not presently know of any matters that may be
presented to the meeting by others. However, if other matters come before the
meeting, it is the intention of the persons named in the enclosed form of proxy
to vote the proxy in accordance with their best judgment.
The Company is including with this Proxy Statement its Annual Report to
Stockholders for the year ended March 31, 1999, which includes an audited
balance sheet as of that date and the related statements of earnings, cash flows
and stockholders' equity, as well as other financial information relating to the
Company, including Management's Discussion and Analysis of Financial Condition
and Results of Operations. STOCKHOLDERS MAY RECEIVE, WITHOUT CHARGE, A COPY OF
THE COMPANY'S 1999 FORM 10-K REPORT AS
13
<PAGE>
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BY WRITING TO MINNTECH
CORPORATION, 14605 28TH AVENUE NORTH, MINNEAPOLIS, MINNESOTA 55447, ATTENTION:
CHIEF FINANCIAL OFFICER.
By Order of the Board of Directors
/s/ Barbara A. Wrigley
Barbara A. Wrigley
SECRETARY
July 23, 1999
14
<PAGE>
[LOGO]
MINNTECH CORPORATION
ANNUAL MEETING
WEDNESDAY, AUGUST 25, 1999
3:30 P.M. CENTRAL DAYLIGHT TIME
MINNTECH CORPORATION
14065 28TH AVENUE NORTH
MINNEAPOLIS, MINNESOTA
MINNTECH CORPORATION
14605 28TH AVENUE NORTH, MINNEAPOLIS, MINNESOTA 55447 PROXY
- -------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
By signing this proxy, you revoke all prior proxies and appoint Thomas J.
McGoldrick and Barbara A. Wrigley, or either one of them, as Proxies, each
with the power to appoint his or her substitute and to act without the other,
and authorize each of them to represent and to vote, as designated herein,
all shares of common stock of MINNTECH CORPORATION (the "Company") held of
record by the undersigned on July 9, 1999, at the Annual Meeting of
Stockholders of the Company to be held on August 25, 1999 or at any
adjournment thereof.
IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED "FOR" ITEMS 1 AND 2.
SEE REVERSE FOR VOTING INSTRUCTIONS.
<PAGE>
------------------
COMPANY #
CONTROL #
------------------
THERE ARE TWO WAYS TO VOTE YOUR PROXY.
YOUR TELEPHONE VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES IN THE
SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD.
VOTE BY PHONE -- TOLL FREE -- 1-800-240-6326 -- QUICK *** EASY *** IMMEDIATE
- - Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a week.
- - You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which is located above.
- - Follow the simple instructions the Voice provides you.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid
envelope we've provided or return it to Minntech Corporation, c/o Shareowner
Services,SM P.O. Box 64873, St. Paul, MN 55164-0873.
[LOGO]
IF YOU VOTE BY PHONE, PLEASE DO NOT MAIL YOUR PROXY CARD.
- Please detach here -
<TABLE>
<CAPTION>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
<S> <C> <C> <C>
1. Election of directors: 01 Fred L. Shapiro, M.D. / / Vote FOR all / / Vote WITHHELD for
02 Donald H. Soukup nominees (except all nominees
as marked to the
contrary below)
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE, --------------------------------------------------
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) / /
--------------------------------------------------
2. Ratification of the appointment of PricewaterhouseCoopers LLP as the / / For / / Against / / Abstain
independent auditors of the Company for the fiscal year ending March 31, 2000.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR EACH ITEM. THE PROXIES ARE AUTHORIZED TO VOTE IN THEIR DISCRETION WITH RESPECT TO OTHER
MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING.
Address Change? Mark Box / /
Indicate changes below:
Date
-----------------------------------
--------------------------------------------------
/ /
/ /
/ /
--------------------------------------------------
Signature(s) in Box
Please sign exactly as your name(s) appear(s) on
the Proxy. If held in joint tenancy, all persons
must sign. Trustees, administrators, etc. should
include title and authority. Corporations should
provide the full name of corporation and title
of authorized officer signing the Proxy.
</TABLE>
