SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934 (Amendment No. )
Filed by the Registrant (x)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement
( ) Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2))
(x) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
E-Z-EM, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
N/A
- --------------------------------------------------------------------------------
(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)(1) 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>
E-Z-EM, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 20, 1998
To the Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Meeting")
of E-Z-EM, INC., a Delaware corporation (the "Company"), will be held at the
Milleridge Inn, Jericho, New York, on October 20, 1998 at 10:00 a.m., Local
Time, for the following purposes:
1. To elect three Class II directors, each to serve for a term of three
years;
2. To ratify the appointment of Grant Thornton LLP as the Company's
independent auditors for the fiscal year ending May 29, 1999;
3. To transact such other business as may properly come before the Meeting.
The Board of Directors has fixed the close of business on September 24, 1998 as
the record date (the "Record Date") for the Meeting. Only stockholders of record
of the Company's Class A Common Stock, $0.10 par value, on the Company's stock
transfer books on the close of business on that date are entitled to vote at the
Meeting.
By Order of the Board of Directors
PETER J. GRAHAM, Secretary
Westbury, New York
Dated: September 29, 1998
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, YOU ARE URGED TO FILL
IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE THAT IS PROVIDED,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
If you wish to attend, please check the appropriate box on the enclosed proxy
and return it in the enclosed envelope.
<PAGE>
E-Z-EM, INC.
717 MAIN STREET
WESTBURY, NEW YORK 11590-5021
---------------------
PROXY STATEMENT
FOR
MEETING OF STOCKHOLDERS
OCTOBER 20, 1998
---------------------
INTRODUCTION
This Proxy Statement is being furnished to stockholders by the Board of
Directors of E-Z-EM, Inc., a Delaware corporation (the "Company"), in connection
with the solicitation of the accompanying proxy (each a "Proxy" and
collectively, the "Proxies") for use at the 1998 Annual Meeting of Stockholders
of the Company (the "Meeting") to be held at the Milleridge Inn, Jericho, New
York, on Tuesday, October 20, 1998 at 10:00 a.m., or at any adjournment thereof.
The principal executive offices of the Company are located at 717 Main
Street, Westbury, New York 11590-5021. The approximate date on which this Proxy
Statement and the accompanying Proxy will first be sent or given to stockholders
is September 29, 1998.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and accordingly files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information filed with the Commission are available for inspection and copying
at the public reference facilities maintained by the Commission at 450 Fifth
Street, Washington, D.C. 20549 and at certain of the Commission's regional
offices. Copies of such documents may be obtained from the Public Reference
Section of the Commission at prescribed rates. In addition, such material and
other information concerning the Company can be inspected at the American Stock
Exchange, on which exchange shares of the Company's securities are listed.
<PAGE>
TABLE OF CONTENTS
Page
----
Summary of Proxy Statement............................................ 1
Record Date and Voting Securities..................................... 1
Voting of Proxies..................................................... 1
Security Ownership.................................................... 2
Election of Directors................................................. 4
Nominees......................................................... 4
Meetings......................................................... 6
Executive Compensation........................................... 7
Compensation and Stock Option Committee Report........................ 12
Certain Transactions.................................................. 15
Ratification of Appointment of Independent Auditors................... 15
Annual Report......................................................... 15
Stockholder Proposals................................................. 16
Other Matters......................................................... 16
-i-
<PAGE>
SUMMARY OF PROXY STATEMENT
The following is a summary of certain information contained in this Proxy
Statement. This summary should not be considered complete and is qualified in
its entirety by the more detailed information and financial statements contained
in the Proxy Statement. Certain capitalized terms used in this summary are
defined in the Proxy Statement.
The principal offices of the Company are located at 717 Main Street,
Westbury, New York 11590-5021, (516) 333-8230.
ELECTION OF DIRECTORS (PROPOSAL NO. 1)
Three of the Company's seven directors are to be elected at the Annual
Meeting. Each of the directors will serve until the 2001 Annual Meeting of
Shareholders and until, in each case, his successor is duly elected and
qualified.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL NO. 2)
Shareholders are being asked at the Annual Meeting to ratify the
appointment of Grant Thornton LLP, certified public accountants, as the
independent auditors for the Company for the 1999 fiscal year.
RECORD DATE AND VOTING SECURITIES
As of the close of business on September 24, 1998, the record date (the
"Record Date"), there were 4,035,346 outstanding shares of the Company's Class A
Common Stock, $0.10 par value (the "Class A Common Stock"). Holders of the Class
A Common Stock have one vote per share on each matter to be acted upon. Only
stockholders of Class A Common Stock of record at the close of business on the
Record Date for the Meeting (the "Stockholders") will be entitled to vote at the
Meeting and at any adjournment thereof. A majority of the outstanding shares of
Class A Common Stock present in person or by proxy is required to constitute a
quorum at the Meeting.
Additionally, the Company had 6,030,952 shares of Class B Common Stock,
$0.10 par value (the "Class B Common Stock" and collectively with the Class A
Common Stock, the "Common Stock") outstanding as of the Record Date. Shares of
Class B Common Stock are nonvoting shares.
VOTING OF PROXIES
Shares of Class A Common Stock represented by Proxies that are properly
executed, duly returned and not revoked, will be voted in accordance with the
instructions contained therein. If no specification is indicated on the Proxy,
the shares of Class A Common Stock represented thereby will be voted: (i) for
the election as Directors of the persons who have been nominated by the Board of
Directors; (ii) for the ratification of the appointment of Grant Thornton LLP as
the Company's independent auditors for the fiscal year ending May 29, 1999 (the
"1999 Fiscal Year"); and (iii) with respect to any other matter that may
properly be brought before the Meeting in accordance with the judgment of the
person or persons voting the Proxies.
The execution of a Proxy will in no way affect a Stockholder's right to
attend the Meeting and vote in person. Any Proxy executed and returned by a
Stockholder may be revoked at any time thereafter if written notice of
revocation is given to the Secretary of the Company prior to the vote to be
taken at the Meeting, or by execution of a subsequent proxy which is presented
before the Meeting, or if the Stockholder attends the Meeting and votes by
ballot, except as to any matter or matters upon which a vote shall have been
cast pursuant to the authority conferred by such Proxy prior to such revocation.
For purposes of determining the presence of a quorum for transacting business at
the Meeting, abstentions and broker "non-votes" (i.e., proxies from brokers or
nominees indicating that such persons have not received instructions from the
beneficial owner or other persons entitled to vote shares on a particular matter
with respect to which the brokers or nominees do not have discretionary power)
will be treated as shares that are present but which have not been voted.
-1-
<PAGE>
The cost of solicitation of the Proxies being solicited on behalf of the
Board of Directors will be borne by the Company. In addition to the use of the
mail, proxy solicitation may be made by telephone, telegraph and personal
interview by officers, directors and employees of the Company. The Company will,
upon request, reimburse brokerage houses and persons holding Class A Common
Stock in the names of their nominees for their reasonable expenses in sending
soliciting material to their principals.
SECURITY OWNERSHIP
The following table sets forth information, as of September 24, 1998, as to
the beneficial ownership of the Company's voting Class A Common Stock by each
person known by the Company to own beneficially more than 5% of the Company's
voting Class A Common Stock:
Name and Address of Shares Percent of
Beneficial Owner Beneficially Owned Class
---------------- ------------------ -----
Howard S. Stern, ........................ 956,412 23.7
Chairman of the Board,
President, Chief Executive
Officer, Director
717 Main Street
Westbury, NY 11590
Betty S. Meyers, ........................ 820,806 20.3
401 Emerald Street
New Orleans, LA 70124
David P. Meyers, ........................ 311,551(1) 7.7
Director
1220 Pasadena Avenue
Atlanta, GA 30306
Jonas I. Meyers, ........................ 311,551(2) 7.7
904 Oakland Avenue
Ann Arbor, MI 48104
Stuart J. Meyers, ....................... 311,551(3) 7.7
434 Bellaire Drive
New Orleans, LA 70124
Dimensional Fund Advisors, Inc., ........ 233,075 5.8
1299 Ocean Avenue
Santa Monica, CA 90401
Wellington Management Company, .......... 219,258 5.4
75 State Street
Boston, MA 02109
- ----------
(1) Includes 154,801 shares in which David P. Meyers has only a remainder
interest. Betty S. Meyers holds a life estate in such shares.
(2) Includes 154,801 shares in which Jonas I. Meyers has only a remainder
interest. Betty S. Meyers holds a life estate in such shares.
(3) Includes 154,801 shares in which Stuart J. Meyers has only a remainder
interest. Betty S. Meyers holds a life estate in such shares.
-2-
<PAGE>
The following table sets forth information, as of September 24, 1998, as to
the beneficial ownership of the Company's voting Class A and nonvoting Class B
Common Stock, by (i) each of the Company's directors, (ii) each of the Company's
Named Executive Officers, and (iii) all directors and executive officers of the
Company as a group:
<TABLE>
<CAPTION>
Class A Class B
----------------------------- ------------------------------
Shares Percent Shares Percent
Name of Beneficially of Beneficially of
Beneficial Owner Owned (1) Class Owned (2) Class
---------------- ----------- ----- ------------ -----
<S> <C> <C> <C> <C>
Howard S. Stern, .......... 956,412 23.7 1,307,564 21.5
Chairman of the Board,
President, Chief Executive
Officer, Director
David P. Meyers, .......... 311,551(3) 7.7 587,318(4) 9.8
Director
Arthur L. Zimmet, ......... 28,750 * 90,784 1.5
Senior Vice President
Robert M. Topol, .......... 25,888 * 65,530 1.1
Director
Paul S. Echenberg, ........ 2,888 * 75,094 1.2
Chairman of the Board of
E-Z-EM Canada, Director
Donald A. Meyer, .......... 20,067 * 44,059 *
Director
James L. Katz, ............ 2,913 * 54,360 *
Director
Dennis J. Curtin, ......... 2,052 * 53,382 *
Vice President
Eamonn P. Hobbs, .......... 50 * 39,604 *
Vice President
Michael A. Davis, M.D., ... None * 38,836 *
Medical Director/Technical
Director, Director
Agustin V. Gago, .......... None * 11,274 *
Vice President
All directors and executive
officers as a group (17
persons) ................. 1,350,571(3) 31.0 2,503,746(4) 36.5
</TABLE>
- ----------
* Does not exceed 1%.
(1) Includes Class A Common Stock shares issuable upon exercise of options
currently exercisable or exercisable within 60 days from September 24, 1998
as follows: Robert M. Topol (2,388), Paul S. Echenberg (2,388), Donald A.
Meyer (2,388), James L. Katz (2,388) and all directors and executive
officers as a group (9,552).
-3-
<PAGE>
(2) Includes Class B Common Stock shares issuable upon exercise of options
currently exercisable or exercisable within 60 days from September 24, 1998
as follows: Howard S. Stern (78,786), Arthur L. Zimmet (50,884), Robert M.
Topol (40,638), Paul S. Echenberg (74,404), Donald A. Meyer (18,466), James
L. Katz (52,549), Dennis J. Curtin (50,556), Eamonn P. Hobbs (39,595),
Michael A. Davis, M.D. (38,836), Agustin V. Gago (11,274) and all directors
and executive officers as a group (591,929).
(3) Includes 154,801 shares in which Mr. Meyers has only a remainder interest.
Betty S. Meyers, a principal shareholder, holds a life estate in such
shares.
(4) Includes 175,893 shares in which Mr. Meyers has only a remainder interest.
Betty S. Meyers, a principal shareholder, holds a life estate in such
shares. Also includes 190,035 shares owned by a partnership which Mr.
Meyers has an interest in.
PROPOSAL I--ELECTION OF DIRECTORS
NOMINEES
As of October 31, 1997, the effective date of the separation from the
Company of Daniel R. Martin, the Company's Board of Directors consisted of seven
directors. The Board is classified into three classes, each of which has a
staggered three-year term. At the Meeting, the Stockholders will elect three
Class II directors each of whom will hold office until the Annual Meeting of
Stockholders to be held in 2001 and until their successors are duly elected and
qualified. The Class I directors and Class III directors will continue in office
during the terms indicated below. Unless otherwise specified, all Proxies
received will be voted in favor of the election of the persons named below (the
"Nominees") as directors of the Company. Directors shall be elected by a
plurality of the votes cast, in person or by proxy, at the Meeting. Abstentions
from voting and broker non-votes on the election of directors will have no
effect since they will not represent votes cast at the Meeting for the purpose
of electing directors.
The term of each of the current Class II directors expires at the Meeting
when his respective successor is duly elected and qualified. Management has no
reason to believe that any of the Nominees will be unable or unwilling to serve
as a director, if elected. Should any of the Nominees not remain a candidate for
election at the date of the Meeting, the Proxies will be voted in favor of the
Nominees who remain candidates and may be voted for substitute nominees selected
by the Board of Directors. The names of the Nominees and certain information
concerning them are set forth below:
Nominees to Class II of the Board of Directors
First Year
Became
Name Principal Occupation Age Director
---- -------------------- --- --------
Paul S. Echenberg President, Chief Executive 54 1987
Officer and Director of
Schroders & Associates
Canada Inc.
Donald A. Meyer Independent consultant in 64 1968
legal matters to arts and
business organizations
Robert M. Topol Private Investor 73 1982
PAUL S. ECHENBERG, age 54, has been a director of the Company since 1987
and has served as Chairman of the Board of E-Z-EM Canada Inc. since 1994. He is
the President, Chief Executive Officer and Director of Schroders & Associates
Canada Inc. (investment buy-out advisory services) and Director of Schroders
Ventures Ltd. since 1997. He is also a founder and has been a general partner
and director of Eckvest Equity Inc. (personal investment and consulting
services) since 1989. He was also a founder and had been a senior partner of BDE
Capital
-4-
<PAGE>
Partners (investment banking partnership) from 1992 to 1994. He is also a
director of Lallemand Inc., ISG Technologies, Inc., LDI Research Co., Inc., LDI
Marketing Co., Inc., Benvest Capital Inc., Colliers MacAuley Nicholl, Huntington
Mills (Canada) Ltd. and ITI Medical Technologies, Inc. The Company has
investments in ISG Technologies, Inc. and ITI Medical Technologies, Inc.
DONALD A. MEYER, age 64, has been a director of the Company since 1968. He
is currently an independent consultant in legal matters to arts and business
organizations, specializing in technical assistance. He had been the Executive
Director of the Western States Arts Federation, Santa Fe, New Mexico, which
provides and develops regional arts programs, from 1990 to 1995. From 1958
through 1990, he was an attorney practicing in New Orleans, Louisiana.
ROBERT M. TOPOL, age 73, has been a director of the Company since 1982.
Prior to his retirement in 1994, he served as an Executive Vice President of
Smith Barney, Inc. (financial services) for more than five years. He is also a
director of First American Health Concepts, Fund for the Aging, City Meals on
Wheels, American Health Foundation, State University of New York -- Purchase,
and Redstone Resources Inc.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES.
The following Class I and III Directors will continue on the Board of Directors
for the terms indicated:
Class I Directors
(Term Expiring in 2000):
JAMES L. KATZ, CPA, JD, age 62, has been a director of the Company since
1983. He is a founder and managing director since its organization in 1995 of
Chapman Partners LLC (investment banking). Previously, he had been the co-owner
and President of Ever Ready Thermometer Co., Inc. from its acquisition in 1985
until its sale in 1994. From 1971 until 1980 and from 1983 until 1985, he held
various executive positions with Baxter International and subsidiaries of Baxter
International, including that of Chief Financial Officer of Baxter
International. He is also a director of Intec, Inc., Binax, Inc. and ELPAS North
America, Inc.
MICHAEL A. DAVIS, M.D., age 57, has served as Medical Director/Technical
Director and Director of the Company since 1997, and previously served as
Medical Director and Director of the Company from 1995 to 1996, as Medical
Director from 1994 to 1995, and as Associate Medical Director from 1988 to 1993.
He has been Professor of Radiology and Nuclear Medicine and Director of the
Division of Radiologic Research, University of Massachusetts Medical Center
since 1980. He is also a director of MacroChem Corp.
Class III Directors
(Term Expiring in 1999):
HOWARD S. STERN, age 67, is a co-founder of the Company and has served as
Chairman of the Board and Director of the Company since its formation in 1962.
Mr. Stern has also served as President and Chief Executive Officer of the
Company since November 1997. From 1990 to 1994, Mr. Stern served as Chief
Executive Officer, and from the formation of the Company until 1990, he served
as President and Chief Executive Officer. Mr. Stern is also a director of ITI
Medical Technologies, Inc. The Company has an investment in ITI Medical
Technologies, Inc.
DAVID P. MEYERS, age 34, has been a director of the Company since 1996. He
is the founder of MedTest Express, Inc., an Atlanta, Georgia provider of
contracted laboratory services for home health agencies, and has served as its
President and Chief Executive Officer since 1994. For the five years prior to
that, Mr. Meyers was the Vice President of Operations at Radiation Care, Inc.,
an Atlanta, Georgia operator of radiation therapy and diagnostic imaging
centers.
-5-
<PAGE>
MEETINGS
The Board of Directors held four regular meetings and two special meetings
by conference call during the 1998 Fiscal Year. From time to time, the members
of the Board of Directors act by unanimous written consent pursuant to the laws
of the State of Delaware. All directors attended all Board meetings during the
1998 Fiscal Year, except that Messrs. Davis and Katz each missed one meeting and
Messrs. Meyer and Topol each missed two meetings.
The Company has a standing Executive Committee, Audit Committee, Nominating
Committee, Compensation Committee and Finance Committee.
The Executive Committee has the power and authority to act on behalf of the
Board during intervals between regularly scheduled Board meetings. The members
of the Executive Committee are Messrs. Stern, Echenberg, Katz and Topol. The
Executive Committee did not meet during the 1998 Fiscal Year.
The Audit Committee recommends to the Board the selection of independent
accountants and reviews the scope and results of the annual audit. The members
of the Audit Committee are Messrs. Katz and Topol. The Audit Committee met twice
during the 1998 Fiscal Year.
The Nominating Committee recommends to the Board nominees for election to
the Board. The members of the Nominating Committee are Messrs. Meyer and Topol.
The Nominating Committee did not meet during the 1998 Fiscal Year.
The Compensation Committee determines the cash and other incentive
compensation, if any, to be paid to the Company's executive officers and key
employees. The Compensation Committee also sets the policies and parameters of
the Company's executive compensation programs and awards thereunder, and makes
determinations as to stock option grants under the 1983 Stock Option Plan and
the 1984 Directors and Consultants Stock Option Plan. The members of the
Compensation Committee are Messrs. Stern and Meyer. During the 1998 Fiscal Year,
the Compensation Committee met twice on a formal basis, and numerous times on an
informal basis amending the executive compensation program.
The Board of Directors created a Finance Committee in 1995. Its members are
Messrs. Topol and Katz. The Finance Committee did not meet during the 1998
Fiscal Year.
-6-
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning the compensation for
services, in all capacities for 1998, 1997 and 1996, of those persons who were,
at the end of 1998, Chief Executive Officer ("CEO") (Howard S. Stern) and each
of the four most highly compensated executive officers of the Company other than
the CEO (collectively, the "Named Executive Officers"):
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
---------------------------------- ----------------------------------------
Awards Payouts
---------------------------- -------
Other
Annual Restricted All Other
Name and Compensa- Stock Options LTIP Compensa-
Principal Fiscal Salary Bonus tion (1) Awards --------------- Payouts tion (4)
Position Year ($) ($) ($) ($) # (2) # (3) ($) ($)
-------- ---- -------- ------- --------- ---------- ----- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Howard S. Stern, .......... 1998 $250,000 $61,874 None None None .2273 None $19,609
Chairman of the Board, 1997 250,000 11,538 None None None 8.5527 None 7,090
President and Chief 1996 250,000 None None None None None None 7,245
Executive Officer
Eamonn P. Hobbs, .......... 1998 $195,000 $21,923 None None None .2273 None $ 7,630
Vice President 1997 176,250 6,058 None None None 45.4545 None 7,902
1996 170,648 None None None None None None 8,021
Arthur L. Zimmet, ......... 1998 $155,000 $40,283 None None None None None $ 8,069
Senior Vice President 1997 153,000 7,062 None None None None None 7,380
1996 153,000 None None None None None None 7,760
Dennis J. Curtin, ......... 1998 $146,667 $38,861 None None None None None $ 7,637
Vice President 1997 144,000 6,646 None None None 3.4091 None 7,534
1996 144,000 7,500 None None None None None 7,880
Agustin V. Gago, .......... 1998 $177,581 None None None None None None $ 7,166
Vice President 1997 184,515 None None None None None None 7,791
1996 130,989 None None None 2,185 None None 6,274
</TABLE>
- ----------
(1) The Company has concluded that the aggregate amount of perquisites and
other personal benefits paid to each of the Named Executive Officers for
1998, 1997 and 1996 did not exceed the lesser of 10% of such officer's
total annual salary and bonus for 1998, 1997 or 1996 or $50,000; such
amounts are, therefore, not reflected in the table.
(2) Options are exercisable in Class B Common Stock of the Company and have
been retroactively adjusted for the 3% stock dividends described in Note M
to the Consolidated Financial Statements.
(3) Options are exercisable in Class B Common Stock of AngioDynamics, Inc., a
wholly-owned subsidiary of the Company.
(4) For 1998, 1997 and 1996, includes for each of the Named Executive Officers
the amounts contributed by the Company under the Profit-Sharing Plan and,
as matching contributions, under the companion 401(k) Plan. For 1998, also
includes for Howard S. Stern fees of $12,000 relating to attendance at
directors' meetings of AngioDynamics.
-7-
<PAGE>
Option/SAR Grants Table
The following table sets forth certain information concerning stock option
grants made during 1998 to the Named Executive Officers. These grants are also
reflected in the Summary Compensation Table. All of the options granted during
1998 have an exercise price not less than the fair market value of the Class B
Common Stock of AngioDynamics, Inc., a wholly-owned subsidiary of the Company,
on the date of grant, and expire in ten years. In accordance with SEC disclosure
rules, the hypothetical gains or "option spreads" for each option grant are
shown based on compound annual rates of stock price appreciation of 5% and 10%
from the grant date to the expiration date. The assumed rates of growth are
prescribed by the SEC and are for illustrative purposes only; they are not
intended to predict future stock prices, which will depend upon market
conditions and the Company's future performance. The Company did not grant any
stock appreciation rights during 1998.
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock
Individual Grants Price Appreciation for Option Term
- -------------------------------------------------------------------------- ---------------------------------------------------
Number of % of Total
Securities Options 5% 10%
Underlying Granted to Exercise --------------------- -----------------------
Options Employees in or Base Stock Potential Stock Potential
Granted Fiscal Year Price Expiration Price Value Price Value
Name (#) (1) 1998 (3) ($/Sh) (4) Date ($/Sh) $ ($/Sh) $
---- ---------- ------------ ---------- ---------- ------ --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Howard S. Stern .... .2273(2) 2.2% $40,000 5/29/08 $65,156 $5,717 $103,750 $14,489
Eamonn P. Hobbs .... .2273(2) 2.2% $40,000 5/29/08 $65,156 $5,717 $103,750 $14,489
Arthur L. Zimmet ... None
Dennis J. Curtin ... None
Agustin V. Gago .... None
</TABLE>
- ----------
(1) Options are exercisable in Class B Common Stock of AngioDynamics, Inc., a
wholly-owned subsidiary of the Company.
(2) Options are exercisable 20% per year over five years from the date of
grant, provided a threshold event occurs or 100% on the ninth anniversary
of the grant, if no threshold event occurs. A threshold event is the
earlier of (i) fourteen months after either an initial public offering
("IPO") or the spin off of all AngioDynamics stock to the Company's
shareholders, or (ii) two months after the occurrence of both an IPO and
the spin off of all AngioDynamics stock to the Company's shareholders.
(3) Represents the percentage of total options granted to employees during 1998
and exercisable in Class B Common Stock of AngioDynamics, Inc.
(4) The options granted during 1998 have an exercise price not less than the
fair market value of the Class B Common Stock of AngioDynamics, Inc. on the
date of grant. A total of 136.36 shares of AngioDynamics' Class B Common
Stock may be issued under this plan.
-8-
<PAGE>
Aggregated Option Exercises and Fiscal Year-End Option Value Table
The following table sets forth certain information concerning all exercises
of stock options during 1998 by the Named Executive Officers and the fiscal
year-end value of unexercised stock options on an aggregated basis:
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
May 30, 1998 May 30, 1998
(#) ($) (1)
------------ -------------
Shares Value Exercisable/ Exercisable/
Acquired on Realized Unexercisable Unexercisable
Name Exercise (#) ($) (2) (2)
---- ----------- -------- ------------ -------------
<S> <C> <C> <C> <C>
Howard S. Stern .................... None None 78,786/ $130,365/
None None
Eamonn P. Hobbs .................... None None 39,595/ $57,373/
None None
Arthur L. Zimmet ................... None None 50,884/ $74,695/
None None
Dennis J. Curtin ................... None None 50,556/ $80,269/
None None
Agustin V. Gago .................... None None 11,274/ $11,644/
None None
</TABLE>
- ----------
(1) Options are "in-the-money" if on May 30, 1998, the market price of the
stock exceeded the exercise price of such options. At May 30, 1998, the
closing price of the Company's Class A and Class B Common Stock was $7.00
and $5.88, respectively. The value of such options is calculated by
determining the difference between the aggregate market price of the stock
covered by the options on May 30, 1998 and the aggregate exercise price of
such options.
(2) Options granted prior to the Company's recapitalization on October 26, 1992
are exercisable one-half in Class A Common Stock and one-half in Class B
Common Stock. Options granted after the recapitalization are exercisable in
Class B Common Stock.
-9-
<PAGE>
Compensation of Directors
Directors, who are not employees of the Company, are entitled to directors
fees of $15,000 annually. Directors, who serve on committees of the Company and
who are not employees or consultants of the Company, are entitled to a fee of
$500 for each committee meeting attended, except that the chairman of a
committee is entitled to a fee of $1,000 for each committee meeting attended.
Employment Contract
During 1994, the Company entered into an employment contract with Howard S.
Stern. This employment contract is for a term of eight years at an annual
compensation of $250,000.
Severance Arrangements
The Company has entered into severance agreements ("Severance Agreements")
with the Named Executive Officers (excluding Howard S. Stern) and certain other
executive officers and key employees ("Executives").
Each Severance Agreement provides certain security to the Executives in
connection with a change of control. A change of control ("Change of Control")
is defined as the acquisition of 50% or more of the outstanding voting power of
all capital stock of the Company; or the transfer of all or substantially all of
the assets of either or both of the AngioDynamics or Contrast Systems business
segments. Upon a Change of Control, all outstanding stock options vest and
remain exercisable until the original expiration date of such options without
regard to the need to remain employed by the Company. The Company will provide
the Executive (or his estate) with an interest-free loan in the amount necessary
to pay the exercise price and the income and employment taxes due as a result of
the option exercise.
If an Executive's employment with the Company is terminated by the Company
for good cause (as defined below), death or disability, or by the Executive
other than for good reason (as defined below), during the term of the Severance
Agreement and within two years following a Change of Control, the Executive
shall be entitled to accrued but unpaid base salary.
A termination of employment is for good cause ("Good Cause") under the
Severance Agreements if the basis of termination is (i) repeated acts or serious
omissions constituting dishonesty, intentional breach of fiduciary obligation or
intentional wrongdoing or malfeasance; (ii) conviction of a crime involving
fraud, dishonesty or moral turpitude; or (iii) a material breach of the
Severance Agreement or the conditions and requirements of employment.
Good reason ("Good Reason") exists under the Severance Agreements if there
is (i) a significant reduction in the nature or the scope of the Executive's
authority and/or responsibility; (ii) a material reduction in the Executives
rate of base salary; (iii) a significant reduction in employee benefits; or (iv)
a change in the principal location in which the Executive is required to perform
services, which significantly increases commuting distance.
If an Executive's employment with the Company is terminated by the Company
without Good Cause or by the Executive for Good Reason, during the term of the
Severance Agreement and within two years following a Change of Control, the
Executive shall be entitled to: (i) accrued but unpaid base salary; (ii) a lump
sum payment equal to between one and two times annual base salary, based upon
years of service; (iii) any benefits accrued under any incentive and retirement
plans; (iv) paid medical plan coverage until the earlier of 18 months from
termination or the time when the Executive obtains comparable coverage through a
new employer; (v) a lump sum payment equal to the unvested portion, if any, of
the Executive's 401(k) plan; and (vi) outplacement and career counseling
services.
Each Severance Agreement provides that if any amounts due to an Executive
thereunder become subject to the "golden parachute" rules set forth in Section
4999 of the Internal Revenue Code, then such amounts will be reduced to the
extent necessary to avoid the application of such rules.
-10-
<PAGE>
Report on Repricing of Options
During 1998, the Company's Board of Directors approved the repricing of all
outstanding stock options previously granted under the AngioDynamics Stock
Option Plan. The repricing provided for the exercise price of 128.41 options to
be reduced from $80,000 per share to $40,000 per share, to reflect current fair
value. The repricing did not affect the term or vesting period of the options.
The following table sets forth certain information concerning the repricing of
stock options previously granted to the Named Executive Officers.
<TABLE>
<CAPTION>
Number of Market Length of
Securities Price of Original
Underlying Stock at Exercise Option Term
Options Time of Price at New Remaining at
Repriced Repricing or Repricing Exercise Date of
or Amended Amendment or Price Repricing or
Name Date (#) (1) ($/Sh) Amendment ($/Sh) Amendment
---- ---- ---------- ------------ --------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Howard S. Stern .............. 5/05/98 8.5227(2) $40,000 $80,000 $40,000 106 Months
Eamonn P. Hobbs .............. 5/05/98 45.4545(2) $40,000 $80,000 $40,000 106 Months
Arthur L. Zimmet ............. None None None None None None
Dennis J. Curtin ............. 5/05/98 3.4091(2) $40,000 $80,000 $40,000 106 Months
Agustin V. Gago .............. None None None None None None
</TABLE>
- ----------
(1) Options are exercisable in Class B Common Stock of AngioDynamics, Inc., a
wholly-owned subsidiary of the Company.
(2) Options are exercisable 20% per year over five years from the date of
grant, provided a threshold event occurs or 100% on the ninth anniversary
of the grant date, if no threshold event occurs. A threshold event is the
earlier of (i) fourteen months after either an initial public offering
("IPO") or the spin off of all AngioDynamics stock to the Company's
shareholders, or (ii) two months after the occurrence of both an IPO and
the spin off of all AngioDynamics stock to the Company's shareholders.
Compensation Committee Interlocks and Insider Participation
During 1998, the Compensation Committee consisted of Howard S. Stern and
Donald A. Meyer. Mr. Stern also served as President and Chief Executive Officer
since November 1997. From 1990 until 1994, Mr. Stern served as Chief Executive
Officer, and from the formation of the Company until 1990, he served as
President and Chief Executive Officer.
A facility of the Company located in Westbury, New York is owned 27% by
Howard S. Stern. Aggregate rentals, including real estate tax payments, were
$146,000 during 1998. The lease term expired in June 1996 and is currently being
extended on a month-to-month basis.
During 1998, the Company entered into a split dollar life insurance
arrangement with Howard S. Stern. On an annual basis, the Company makes interest
bearing advances of approximately $100,000 toward the cost of such life
insurance. Interest on the advances is to be paid to the Company annually. Under
a collateral assignment agreement, the proceeds from the underlying life
insurance policies will first be paid to the Company to repay the advances it
made. If the policies are terminated prior to the death of Mr. Stern or his wife
Linda B. Stern (the "insureds"), the Company will be entitled to the cash
surrender value of the policies at that time, and any shortfall between that
amount and the amount of the advances made by the Company will be repaid to the
Company by the insureds.
-11-
<PAGE>
COMPENSATION AND STOCK OPTION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
General
The Compensation Committee determines the cash and other incentive
compensation, if any, to be paid to the Company's executive officers and key
employees. Howard S. Stern and Donald A. Meyer are the members of the
Compensation Committee.
Compensation Philosophy
The Compensation Committee's executive compensation philosophy is to base
management's pay, in part, on the achievement of the Company's annual and
long-term performance goals by (a) setting levels of compensation designed to
attract and hold superior executives in a highly competitive business
environment, (b) providing incentive compensation that varies directly with the
Company's financial performance and individual initiative and achievement
contributions to such performance, (c) linking compensation to elements which
affect the Company's annual and long-term performance, (d) evaluating the
competitiveness of executive compensation programs based upon information drawn
from a variety of sources, and (e) establishing salary levels and bonuses
intended to be consistent with competitive practice and level of responsibility,
with salary increases and bonuses reflecting competitive trends, the overall
financial performance of the Company, the performance of the individual
executive and the contractual arrangements that may be in effect with the
individual executive. Executive compensation consists of base salary, annual
performance bonuses, and stock options.
Certain Tax Consideration
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), prohibits a publicly held corporation, such as the Company, from
claiming a deduction on its federal income tax return for compensation in excess
of $1 million paid for a given fiscal year to the chief executive officer (or
person acting in that capacity) or to the four most highly compensated officers
of the corporation, other than the chief executive officer, at the end of the
corporation's fiscal year. The $1 million compensation deduction limitation does
not apply to "performance-based compensation." The Company believes that any
compensation received by the Named Executive Officers in connection with the
exercise of options granted under the 1983 Stock Option Plan will qualify as
"performance-based compensation", except for a certain de minimus option grant
awarded in 1996. Stock options issued pursuant to the Company's AngioDynamics
subsidiary 1997 Stock Option Plan will not qualify as "performance-based
compensation." The Company has not established a policy with respect to Section
162(m) of the Code because the Company has not and does not currently anticipate
paying compensation in excess of $1 million per annum to any employee.
Base Salaries
Base salaries for the Company's executive officers are determined initially
by evaluating the responsibilities of the position held and the experience of
the individual, and by reference to the competitive marketplace for management
talent, including a comparison of base salaries for comparable positions at
comparable companies. Annual salary adjustments are determined consistent with
the Company's compensation policy by evaluating the competitive marketplace, the
performance of the Company, the performance of the executive particularly with
respect to the ability to manage growth of the Company, and any increased
responsibilities assumed by the executive.
Annual Incentive Compensation
The Company administers an Executive Incentive Bonus Plan (the "Bonus
Plan"), under which cash bonuses may be made to the CEO and President, other
corporate officers, and certain divisional personnel. The bonus pool is
determined at the beginning of each fiscal year based on budgeted earnings for
the year. A discretionary bonus may be awarded if certain performance
objectives, including corporate, business unit and departmental goals, have been
met, as determined by the Compensation Committee. The Company awarded bonuses
ranging up to 26% of base salary to corporate officers under the Bonus Plan for
the 1998 Fiscal Year.
-12-
<PAGE>
Stock Option Agreements
Long-term compensation awards are granted pursuant to the Company's stock
option plans. The use of stock options ensures that the interest of the
Company's executive officers are tied to the interest of the Company's
stockholders by making a portion of the executive's long-term compensation
dependent upon the value created for stockholders. Options are granted at an
exercise price equal to the fair market value of the Company's Class B Common
Stock on the date of the grant. Optionees can receive value from stock option
grants only if the underlying Common Stock appreciates in the long term.
Generally stock option grants utilize vesting periods ranging from two to nine
years to encourage key executives to continue in the employ of the Company. The
Committee considers the amount of stock options previously granted to each
officer, as well as the officer's current performance and contribution to the
Company when determining the size of an option grant.
Compensation of Chief Executive Officer
During the 1998 Fiscal Year, no options were granted to and no options
previously granted were exercised by Mr. Stern. During the 1998 Fiscal Year, the
base salary for Mr. Stern was determined based upon the Employment Contract
entered into during 1994. Mr. Stern's base salary was not adjusted and remained
at $250,000 following his appointment as President and Chief Executive Officer
in November 1997. Mr. Stern received a cash bonus of $61,864 for the 1998 Fiscal
Year, based upon his level of achievement in developing the Company's products
and strengthening its management team. Mr. Stern's bonus was ratified by the
entire Board of Directors.
THE COMPENSATION COMMITTEE
Donald A. Meyer
Howard S. Stern
Common Stock Performance
The following graph compares the cumulative total shareholder return on the
Company's Class A and Class B Common Stock with returns on the American Stock
Exchange Market Value Index ("AMEX Market Value") and the Standard and Poor's
Health Care (Medical Products and Supplies) Index ("S&P Medical Index"), for the
five year period ended May 30, 1998. The total return of the Class A Common
Stock presented in the following graph treats all stock dividends payable in
Class B Common Stock as cash dividends and assumes the reinvestment of such
dividends in Class A Common Stock. As prescribed by the SEC, the measurements
are indexed to a value of $100 at May 31, 1993, and assume all dividends were
reinvested.
-13-
<PAGE>
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG E-Z-EM, INC. CLASS A & B, THE AMEX MARKET VALUE INDEX
AND THE S & P HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) INDEX
[GRAPH OMITTED - TO BE SUBMITTED UNDER SEPARATE COVER]
* $100 INVESTED ON 5/31/93 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING MAY 31.
<TABLE>
<CAPTION>
Total Return - Data Summary
Cumulative Total Return
-----------------------------------------------------------
5/93 5/94 5/95 5/96 5/97 5/98
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
E-Z-EM, INC. - CLASS A (EZM.A) 100 89 84 256 154 134
E-Z-EM, INC. - CLASS B (EZM.B) 100 74 72 232 137 109
AMEX MARKET VALUE (1) 100 100 112 139 142 169
S & P MEDICAL INDEX 100 94 139 189 234 311
</TABLE>
Graph Produced by Research Data Group
- ----------
(1) As of July 24, 1995 the Company's Common Stock commenced trading on the
American Stock Exchange ("AMEX") and ceased being quoted on NASDAQ.
-14-
<PAGE>
CERTAIN TRANSACTIONS
A facility of the Company located in Westbury, New York is owned 27% by
Howard S. Stern, 25% by Betty S. Meyers, a principal shareholder, 2% by other
employees of the Company and 46% by unrelated parties, which includes a 25%
owner who manages the property. Aggregate rentals, including real estate tax
payments, were $146,000 during 1998. The lease term expired in 1996 and is
currently being extended on a month-to-month basis.
During 1998, the Company entered into split dollar life insurance
arrangements with Howard S. Stern (including his spouse) and Betty S. Meyers
(the "insureds"). On an annual basis, the Company makes interest bearing
advances of approximately $100,000 per insured toward the cost of such life
insurance policies. Interest on the advances is to be paid to the Company
annually by the insureds. Under collateral assignment agreements, the proceeds
from the policies will first be paid to the Company to repay the advances it
made. If the policies are terminated prior to the death of the insured, the
Company will be entitled to the cash surrender value of the policies at that
time, and any shortfall between that amount and the amount of the advances made
by the Company will be repaid to the Company by the insureds.
The Company has an unsecured, two-year interest bearing note receivable
from Eamonn P. Hobbs, an executive officer of the Company, in the principal
amount of $320,000. The outstanding principal and interest matures on September
30, 1999.
The Company has engaged Paul S. Echenberg, a director of the Company, for
consulting services. Fees for such services, including fees relating to
attendance at directors' meetings, were approximately $99,000 during 1998.
The Company has engaged Michael A. Davis, M.D., a director of the Company,
for consulting services. Fees for such services were approximately $132,000
during 1998.
PROPOSAL II--RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
The Board of Directors appointed Grant Thornton LLP, certified public
accountants, who were the Company's independent auditors for the 1998 Fiscal
Year, as the Company's independent auditors for the 1999 Fiscal Year. Although
the selection of auditors does not require ratification, the Board of Directors
has directed that the appointment of Grant Thornton LLP be submitted to the
Stockholders for ratification due to the significance of their appointment to
the Company.
The approval of the proposal to ratify the appointment of Grant Thornton
LLP requires the affirmative vote of a majority of the votes cast by all
Stockholders represented and entitled to vote thereon. Therefore, an abstention,
withholding of authority to vote or broker non-vote will not have the same legal
effect as an "against" vote and will not be counted in determining whether the
proposal has received the required shareholder vote.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE 1999 FISCAL YEAR.
ANNUAL REPORT
All stockholders of record as of the Record Date, have been sent, or are
concurrently herewith being sent, a copy of the Company's 1998 Annual Report for
the 1998 Fiscal Year.
ANY STOCKHOLDER OF THE COMPANY MAY OBTAIN WITHOUT CHARGE A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE 1998 FISCAL YEAR (WITHOUT
EXHIBITS), AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, BY WRITING TO
STOCKHOLDER INFORMATION, E-Z-EM, INC., 717 MAIN STREET, WESTBURY, NEW YORK
11590-5021.
-15-
<PAGE>
STOCKHOLDER PROPOSALS
In order to be considered for inclusion in the proxy materials to be
distributed in connection with the next Annual Meeting of Stockholders of the
Company, stockholder proposals for such meeting must be submitted to the Company
no later than May 1, 1999.
OTHER MATTERS
As of the date of this Proxy Statement, management knows of no matters
other than those set forth herein which will be presented for consideration at
the Meeting. If any other matter or matters are properly brought before the
Meeting or any adjournment thereof, the persons named in the accompanying Proxy
will have discretionary authority to vote, or otherwise act, with respect to
such matters in accordance with their judgment.
PETER J. GRAHAM
Secretary
September 29, 1998
-16-
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
E-Z-EM, INC.
Proxy--Annual Meeting of Stockholders
October 20, 1998
The undersigned, a stockholder of Class A Common Stock, $.10 par value (the
"Class A Common Stock") of E-Z-EM, Inc., a Delaware corporation (the "Company"),
does hereby appoint Howard S. Stern and Dennis J. Curtin, and each of them, the
true and lawful attorneys and proxies with full power of substitution, for and
in the name, place and stead of the undersigned, to vote all of the shares of
Class A Common Stock of the Company which the undersigned would be entitled to
vote if personally present at the 1998 Annual Meeting of Stockholders of the
Company to be held at the Milleridge Inn in Jericho, New York, on Tuesday,
October 20, 1998, at 10:00 a.m., Local Time, or at any adjournment or
adjournments therof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1 AND 2.
1. ELECTION OF DIRECTORS
For Paul S. Echenberg, Donald A. Meyer and Robert M. Topol as Class II
directors:
TO WITHHOLD AUTHORITY TO VOTE
WITHHOLD FOR ANY NOMINEE(S), PRINT
FOR ___________ VOTE ___________ NAME(S) BELOW
_____________________________
2. RATIFICATION OF APPOINTMENT OF AUDITORS
FOR ___________ AGAINST ___________ ABSTAIN ___________
To transact such other business as may properly come before the meeting or any
adjournment thereof.
Please mark, date and sign exactly as your name appears on this Proxy card. When
shares are held jointly, both holders should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title. If
the holder is a corporation or partnership, the full corporate or partnership
name should be signed by a duly authorized officer.
Signature _____________________ Signature _____________________ Date ___________
