<PAGE>
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
[X] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
RESPIRONICS, INC.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
RESPIRONICS, INC.
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
[LOGO OF RESPIRONICS, INC.]
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Respironics, Inc. at 1:00 p.m., local time, on Wednesday, November 8, 1995 at
the Union Trust Building, in the Auditorium on the Tenth Floor, at 501 Grant
Street, Pittsburgh, Pennsylvania.
Information about the business of the meeting and the nominees for election as
directors of the Company is set forth in the notice of the meeting and the Proxy
Statement, which are attached. This year you are asked to elect three directors
and to ratify the selection of independent auditors for fiscal year 1996.
It is important that your shares be represented at the meeting. Even if you plan
to attend the meeting in person, please sign, date and return your proxy in the
enclosed envelope as promptly as possible. This will not prevent you from voting
your shares in person if you do attend, but will make sure that your shares are
represented in the event that you cannot attend.
Very truly yours,
/s/ Dennis S. Meteny
Dennis S. Meteny
President
October 13, 1995
<PAGE>
RESPIRONICS, INC.
1001 Murry Ridge Drive
Murrysville, Pennsylvania 15668
------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
------------------
The Annual Meeting of Shareholders of Respironics, Inc. will be held at the
Union Trust Building, 501 Grant Street, Pittsburgh, Pennsylvania, on Wednesday,
November 8, 1995 at 1:00 p.m., local time, in the Auditorium on the Tenth Floor,
for the following purposes:
(1) To elect three directors;
(2) To ratify the selection of auditors to examine the consolidated
financial statements of the Company for the fiscal year ending June
30, 1996; and
(3) To transact such other business as may properly come before the
meeting.
Please refer to the accompanying Proxy Statement for a description of the
matters to be considered at the meeting.
Please sign, date and return the enclosed proxy promptly in the envelope
provided, which requires no United States postage.
Dorita A. Pishko
Secretary
October 13, 1995
<PAGE>
RESPIRONICS, INC.
1001 Murry Ridge Drive
Murrysville, Pennsylvania 15668
------------------
PROXY STATEMENT
------------------
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD NOVEMBER 8, 1995
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
Respironics, Inc. (the "Company") for use at the Annual Meeting of Shareholders
to be held at 1:00 p.m., local time, on Wednesday, November 8, 1995 at the Union
Trust Building, 501 Grant Street, Pittsburgh, Pennsylvania. The accompanying
Notice of Annual Meeting of Shareholders sets forth the purposes of the meeting.
The enclosed proxy may be revoked at any time before its exercise by giving
notice of revocation to the Secretary of the Company. The shares represented by
proxies in the form solicited by the Board of Directors will be voted at the
meeting. If a choice is specified on the proxy with respect to a matter to be
voted upon, the shares represented by the proxy will be voted in accordance with
that specification. If no choice is specified, the shares will be voted as
stated below in this Proxy Statement.
It is expected that this Proxy Statement and the accompanying form of proxy
will first be mailed to shareholders of the Company on or about October 16,
1995. The Company's Annual Report to Shareholders for 1995 is enclosed with this
Proxy Statement but does not form a part of the proxy soliciting material. The
cost of soliciting proxies will be borne by the Company. Following the original
mailing of the proxy soliciting material, regular employees of the Company may
solicit proxies by mail, telephone, telegraph, telecopy and personal interview.
The Company may also request brokerage firms and other nominees or fiduciaries
to forward copies of the proxy soliciting material and the 1995 Annual Report to
beneficial owners of the stock held in their names, and the Company will
reimburse them for reasonable out-of-pocket expenses incurred in doing so.
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
If any shareholder wishes to present a proposal at the 1996 Annual Meeting
of Shareholders, the proposal must be received by the Secretary of the Company
by May 31, 1996 to be considered for inclusion in the Company's Proxy Statement
and form of proxy relating to the 1996 Annual Meeting. The 1996 Annual Meeting
is presently scheduled for November 15, 1996.
VOTING SECURITIES AND RECORD DATE
Holders of the Company's Common Stock of record as of the close of business
on September 25, 1995 (the "record date") are entitled to receive notice of and
to vote at the meeting. At the record date, the Company had outstanding
16,809,105 shares of Common Stock, the holders of which are entitled to one vote
per share.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the number of shares of Common Stock beneficially
owned by each director and nominee for director of the Company, the Chief
Executive Officer and the four other most highly compensated executive officers
of the Company and by all directors, nominees and executive officers of the
Company as a group, as of the record date. Management of the Company does not
know of any other person who beneficially owned as of the record date more than
five percent of the outstanding shares of the Company's Common Stock. As used
herein, "beneficial ownership" means the sole or shared power to vote, or to
direct the voting of, a security, or the sole or shared investment power with
respect to a security (i.e., the power to dispose of, or to direct the
disposition of, a security). A person is deemed, as of any date, to have
"beneficial ownership" of any security that the person has the right to acquire
within 60 days after that date.
<PAGE>
<TABLE>
<CAPTION>
NAME OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
---------------- -------------------- --------
<S> <C> <C>
Daniel P. Barry..................................................................... 0 0%
Daniel J. Bevevino (9).............................................................. 32,350 0.19%
Douglas A. Cotter, Ph. D. (1)....................................................... 26,356 0.16%
Robert D. Crouch (2)................................................................ 280,000 1.65%
James H. Hardie (1), (3)............................................................ 25,616 0.15%
Joseph C. Lawyer (1), (4)........................................................... 1,272 0.01%
George J. Magovern, M.D. (1), (5)................................................... 1,065,648 6.33%
Gerald E. McGinnis (6).............................................................. 1,426,784 8.29%
Dennis S. Meteny (7)................................................................ 422,568 2.50%
Robert M. Oates (8)................................................................. 29,750 0.18%
Bernard Shou-Chung Zau (1).......................................................... 369,032 2.19%
Ronald J. Zdrojkowski, Ph. D........................................................ 753,328 4.48%
All of the above as a group (12 persons)............................................ 4,432,704 25.09%
</TABLE>
- ---------
(1) Includes shares which would be outstanding upon the exercise of currently
exercisable stock options granted under the 1991 Non-Employee Directors'
Stock Option Plan in the following amounts: Dr. Cotter, 24,016 shares; Mr.
Hardie, 12,016 shares; Mr. Lawyer, 1,272 shares; Dr. Magovern, 24,016
shares; and Mr. Zau, 24,016 shares.
(2) Includes 200,000 shares which would be outstanding upon the exercise of
currently exercisable stock options granted under the Company's 1984
Incentive Stock Option Plan.
(3) Includes 13,000 shares held by a partnership in which Mr. Hardie is the
general partner. Does not include 16,000 shares owned by Mr. Hardie's wife,
as to which he disclaims beneficial ownership.
(4) Does not include 550 shares held by Mr. Lawyer's wife, who has sole voting
and investment power of these shares and as to which he disclaims
beneficial ownership.
(5) Includes 1,005,122 shares held jointly with Dr. Magovern's wife, as to
which voting and investment power is shared, and 28,000 shares held by the
Magovern Grandchildren's Trust, of which Dr. Magovern and his wife are the
trustees, and 8,510 shares held by the Magovern Family Foundation Trust, of
which Dr. Magovern and his wife are the trustees. Dr. Magovern's business
address is 320 E. North Ave., Pittsburgh, PA 15212.
(6) Includes 992,384 shares held jointly with Mr. McGinnis' wife, as to which
voting and investment power is shared. Also includes 400,000 shares which
would be outstanding upon the exercise of currently exercisable stock
options granted to Mr. McGinnis as described below under "Employment
Agreements and Other Transactions." Also includes 34,400 shares held in the
Gerald E. McGinnis Charitable Foundation. Does not include 106,000 shares
held by Mr. McGinnis' wife, as to all of which Mr. McGinnis disclaims
beneficial ownership. Mr. McGinnis' business address is 1001 Murry Ridge
Drive, Murrysville, PA 15668.
(7) Includes 184,000 shares held jointly with Mr. Meteny's wife, as to which
voting and investment power is shared, and 4,000 shares held by Mr.
Meteny's minor children, as to which he controls voting and investment
power. Also includes 112,000 shares which would be outstanding upon the
exercise of currently exercisable stock options granted under the Company's
1984 Incentive Stock Option Plan.
(8) Includes 28,750 shares which would be outstanding upon the exercise of
currently exercisable stock options granted under the Company's 1984
Incentive Stock Option Plan.
(9) Included 32,350 shares which would be outstanding upon the exercise of
currently exercisable stock options granted under the Company's 1984
Incentive Stock Option Plan and 1992 Stock Incentive Plan.
The information presented is based upon the knowledge of management and, in the
case of the named individuals, upon information furnished by them.
2
<PAGE>
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors has four committees to assist in the management of
the affairs of the Company: the Stock Option and Compensation Committee, the
Audit Committee, the Nominating Committee and the Strategy Committee.
Stock Option and Compensation Committee. The Stock Option and Compensation
Committee (the "Compensation Committee") currently consists of Dr. Cotter
(Chairman) and Messrs. Hardie and Lawyer . Mr. Lawyer replaced Mr. Zau as a
member of The Compensation Committee in August, 1995. The Compensation Committee
administers the Company's 1984 Incentive Stock Option Plan and the 1992 Stock
Incentive Plan and has the authority to grant options thereunder. The
Compensation Committee also makes recommendations regarding the compensation
payable, including compensation under the Company's bonus plan, to all executive
officers of the Company and certain other management personnel.
Audit Committee. The Audit Committee consists of Messrs. Hardie (Chairman),
Barry and Zau. This committee assists the Board in fulfilling its functions
relating to corporate accounting and reporting practices and financial and
accounting controls.
Nominating Committee. The Nominating Committee consists of Messrs. McGinnis
(Chairman) and Meteny and Dr. Magovern. The Nominating Committee reviews the
size and composition of the Board of Directors and makes recommendations with
respect to nominations for directors. The Nominating Committee will consider
nominees recommended by shareholders provided that shareholders submit the names
of nominees in writing to the Secretary of the Company together with a statement
of the nominee's qualifications. Such information should be received no later
than May 31, 1996 with respect to nominations for election at the 1996 Annual
Meeting of Shareholders.
Strategy Committee. The Strategy Committee consists of Messrs. McGinnis
(Chairman), Lawyer and Meteny and Drs. Cotter and Magovern. The Strategy
Committee makes recommendations to the Board of Directors with respect to
general corporate strategy, including the development of present and new
products internally or by acquisition and, the development of strategies for
continued growth and profitability of the Company's business.
The Compensation and Nominating Committees both met once during fiscal year
1995, the Audit Committee met twice during fiscal year 1995, and the Strategy
Committee met four times during fiscal year 1995. These committees also met
informally by telephone during the fiscal year as the need arose. The Board of
Directors held four meetings during fiscal year 1995. Each of the Directors
attended all of the meetings of the Board and each committee on which the
Director served.
Each director who is not an employee of the Company receives an annual fee
of $9,600 for his service as a director and committee member. In addition, each
non-employee director receives fees of $500 and $300 for attendance at meetings
of the full Board of Directors and of committees of the Board of Directors,
respectively, and is reimbursed for his travel expenses for attendance at all
such meetings. Directors of the Company who are not employees also hold and
receive stock options under the Company's 1991 Non-Employee Directors' Stock
Option Plan. Under this Plan, each non-employee director is granted an option on
the third business day following each Annual Meeting of Shareholders to purchase
5,100 shares of the Company's Common Stock at the fair market value on such
date. Each option has a term of 10 years, is exercisable in installments and
becomes fully exercisable after three years from date of grant.
MATTERS TO BE ACTED UPON
1. ELECTION OF DIRECTORS
The Board of Directors, acting pursuant to the bylaws of the Company, has
determined that the number of directors constituting the full Board of Directors
shall be eight at the present time.
The Board is divided into three classes. One such class is elected every
year at the Annual Meeting of Shareholders for a term of three years.
Accordingly, a class is to be elected at the 1995 Annual Meeting of
3
<PAGE>
Shareholders, with each director to hold office until the 1998 Annual Meeting of
Shareholders or until the director's prior death, disability, resignation or
removal.
The Board of Directors has nominated Douglas A. Cotter, Ph.D., George J.
Magovern, M.D., and Gerald E. McGinnis for reelection as directors, and each of
them has agreed to serve if elected. Proxies are solicited in favor of these
nominees and will be voted for them unless otherwise specified. If any nominee
becomes unable or unwilling to serve as director, it is intended that the
proxies will be voted for the election of such other person, if any, as shall be
designated by the Board of Directors.
The bylaws of the Company provide that the size of the Board of Directors
may be determined either by the Board of Directors or by shareholders at an
Annual Meeting of Shareholders. Vacancies in the Board of Directors may be
filled by Board action. The term of office of any director so elected to the
Board by the Board itself lasts until the next election of the class of
directors to which such director was elected.
Information concerning those nominees for director (class of 1995) and the
other directors who will continue in office after the meeting (classes of 1996
and 1997) is set forth below, together with information concerning the Company's
executive officers who are not directors.
<TABLE>
<CAPTION>
NAME POSITION WITH THE COMPANY
---- -------------------------
<S> <C>
Class of 1995
Douglas A. Cotter, Ph.D. Director
George J. Magovern, M.D. Director
Gerald E. McGinnis Chairman of the Board
Class of 1996
Daniel P. Barry Director
Bernard Shou-Chung Zau Director
Class of 1997
James H. Hardie Director
Joseph C. Lawyer Director
Dennis S. Meteny President, Chief Executive Officer and Director
</TABLE>
Mr. Barry is 48 years old. He has been a director of the Company since
August 1995. He is currently Vice Chairman of AMSCO International, Inc.
("AMSCO"). Prior to his current position, he served as President and Chief
Executive Officer of AMSCO from October 1994 through July 1995. Mr. Barry served
as Senior Vice President--Finance and Planning (CFO) of AMSCO from April 1993 to
October 1994. Prior thereto, he served in various executive and consulting
capacities with AMSCO since 1981. Mr. Barry has been a director of AMSCO since
1991.
Dr. Cotter is 52 years old. He has been a director of the Company since
February 1989. Since 1985 he has been President of Healthcare Decisions, Inc., a
Massachusetts health care and biotechnology consulting firm specializing in
corporate development, strategic planning and acquisitions. For nineteen years
prior to joining Healthcare Decisions he was employed by Corning Glass Works,
where he held various management positions in research, product development and
clinical information systems.
Mr. Hardie is 65 years old. He has been a director of the Company since
November 1991. He is a lawyer and a partner of Reed Smith Shaw & McClay, a law
firm with principal offices in Pittsburgh, Washington and Philadelphia, which
since 1988 has performed legal services for the Company. Mr. Hardie has been a
partner of that firm since 1962. He is a Director of Access Corporation, a
marketer and developer of document and image handling systems and related
software. He is also a director of a number of other corporations, the
securities of which are not publicly traded.
Mr. Lawyer is 50 years old. Since 1988, he has been President and Chief
Executive Officer and a Director of Chatwins Group, Inc. (CGI), headquartered in
Pittsburgh, Pennsylvania, which designs, manufactures and markets a broad range
of fabricated and machined parts and products, in a variety of industries
primarily to
4
<PAGE>
original equipment manufacturers. From 1986 to 1988 he was President and Chief
Executive Officer and a Director of CP Industries, a predecessor company of CGI.
Prior thereto, he held various operations, marketing, sales, finance and
strategic planning positions for U.S. Steel Corporation for 17 years.
Dr. Magovern is 71 years old. He has been a director of the Company since
1983. Currently, he is Executive Vice President for Health Services Delivery and
Professor of Surgery at Allegheny General Hospital, a 736-bed, acute care
teaching hospital in Pittsburgh. Between 1968 and 1995 Dr. Magovern was director
of the Department of Surgery. He has been affiliated with Cardio-Thoracic
Surgical Associates, Inc., a professional corporation, since 1970. He has been a
Clinical Associate Professor of Surgery at the University of Pittsburgh School
of Medicine and is currently a Professor of Surgery at the Medical College of
Pennsylvania. Dr. Magovern has participated in the development of the
application of bio-engineering to cardiac and thoracic surgery at Allegheny
General Hospital.
Mr. McGinnis is 61 years old. He has been a director of the Company since
1977 and Chairman of the Board since November 1994. He served as Chief Executive
Officer of the Company between 1977 and 1994, and President between 1984 and
1994. Prior to 1977, Mr. McGinnis was President of Lanz Medical Products
Corporation, the predecessor to the Company. From 1971 to 1975, Mr. McGinnis
also served on the staff of the Critical Care Department, Presbyterian
University Hospital, Pittsburgh, where he participated in various medical
engineering programs seeking the application of technology to medical care.
Prior thereto, Mr. McGinnis was head of the Surgical Research Department at
Allegheny General Hospital, Pittsburgh, for two years and for eleven years he
was employed at the research and development laboratory of Westinghouse Electric
Corporation. At Westinghouse he served six years as the Manager of the
Bio-Engineering Department and headed the medical product development
activities.
Mr. Meteny is 42 years old. He has been a director of the Company since
January 1986 and President and Chief Executive Officer since November 1994. From
August 1992 through November 1994, Mr. Meteny served as Executive Vice President
and Chief Operating and Financial Officer of the Company. He was Vice
President--General Manager and Chief Financial Officer of the Company from
January 1988 through August 1992 and was Vice President--Finance and Accounting
from 1984 through January 1988. For eight years prior to joining the Company he
was employed as an accountant in various auditing capacities by Ernst & Young.
Mr. Zau is 57 years old. He has been a director of the Company since July
1984. Since prior to 1985, Mr. Zau has been the Managing Director of Micro
Electronics, Ltd., a privately-held manufacturer of electrical components
located in Hong Kong. He currently serves as director of several other
privately-held entities in Hong Kong. He resides in Hong Kong.
2. SELECTION OF AUDITORS
The Board of Directors, following the recommendation of the Audit
Committee, has selected the independent public accounting firm of Ernst & Young
as the auditors to examine the consolidated financial statements of the Company
for fiscal year 1996. The proxies solicited on behalf of the Board of Directors
will be voted to ratify selection of that firm unless otherwise specified.
Ernst & Young has served as the independent auditors for the Company since
1984. Representatives of Ernst & Young are expected to be present at the Annual
Meeting of Shareholders. They will have the opportunity to make statements if
they desire to do so and will be available to respond to appropriate questions.
3. OTHER BUSINESS
The Board of Directors does not know of any other business to be presented
to the Annual Meeting of Shareholders. If any other matters properly come before
the meeting, however, the persons named in the enclosed form of proxy will vote
the proxy in accordance with their best judgment.
VOTE REQUIRED
Under Delaware law, the three nominees for election as directors at the
Annual Meeting of Shareholders who receive the greatest number of votes cast for
the election of directors by the holders of the Company's Common Stock present
in person or represented by proxy and entitled to vote at the meeting, a quorum
being
5
<PAGE>
present, will be elected as directors. Under Delaware law, the affirmative vote
of the holders of a majority of the shares of the Company's Common Stock present
in person or represented by proxy and entitled to vote at the Annual Meeting of
Shareholders, a quorum being present, is necessary for the ratification of the
selection of Ernst & Young. The aggregate number of shares for which a vote
"For", "Against" or "Abstain" is made is counted for the purpose of determining
the minimum number of affirmative votes required for ratification of the
selection, and the total number of votes cast "For" ratification of the
selection is counted for the purpose of determining whether sufficient votes are
received. An abstention from voting on a matter other than election of directors
by a stockholder present in person or represented by proxy and entitled to vote
has the same legal effect as a vote "Against" the matter.
EXECUTIVE COMPENSATION
The information regarding compensation of executive officers is provided in
accordance with the Securities and Exchange Commission's revised rules regarding
disclosure of executive compensation which, with respect to the Company, became
effective for fiscal year 1993.
The following table sets forth information concerning compensation paid to
the Chief Executive Officer of the Company and the four highest paid executive
officers other than the Chief Executive Officer (the "named officers") for
services rendered in all capacities to the Company and its subsidiaries during
the fiscal years ended June 30, 1995, 1994 and 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------- -------------------------- -------
SECURITIES
OTHER RESTRICTED UNDERLYING
ANNUAL STOCK OPTIONS/ LTIP
NAME AND SALARY BONUS COMPENSATION AWARDS SAR'S PAYOUTS
PRINCIPAL POSITION YEAR ($) (A) ($) ($) (B) ($) (POUND) (E) ($)
- ----------------------------- ---- -------- ----- ------------ ---------- ----------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Gerald E. McGinnis
Chairman of the Board 1995 231,704 34,171 -- -- -- --
1994 254,695 -- -- -- -- --
1993 242,302 94,000 -- -- -- --
Dennis S. Meteny
President and Chief
Executive Officer 1995 187,696 74,094 -- -- -- --
1994 159,083 -- -- -- 32,000 --
1993 143,505 58,703 -- -- -- --
Robert D. Crouch
Vice President--Sales
and Marketing 1995 145,855 53,260 -- -- -- --
1994 128,569 -- -- -- 48,000 --
1993 118,202 43,761 -- -- -- --
Ronald J. Zdrojkowski
Vice President--Research
and Development 1995 228,695(D) -- -- -- -- --
1994 205,444(D) -- -- -- -- --
1993 185,620(D) -- -- -- -- --
Kam-Kwen Ng
President, Respironics (HK)
Ltd. 1995 141,638 30,000 -- -- -- --
1994 148,169 -- -- -- 32,000 --
1993 143,684 90,698 -- -- -- --
<CAPTION>
ALL OTHER
NAME AND COMPENSATION
PRINCIPAL POSITION ($) (C)
- ---------------------------- ------------
<S> <C>
Gerald E. McGinnis
Chairman of the Board 130,474
118,575
108,499
Dennis S. Meteny
President and Chief
Executive Officer 26,018
22,895
17,634
Robert D. Crouch
Vice President--Sales
and Marketing 17,831
18,055
13,828
Ronald J. Zdrojkowski
Vice President--Research
and Development 9,166
8,672
7,596
Kam-Kwen Ng
President, Respironics (HK)
Ltd. 15,000
15,000
13,782
</TABLE>
- ------------
(A) This column represents base salary and includes tax deferred Section 401(k)
contributions under the Company's Retirement Savings Plan.
(B) The dollar value of perquisites and other personal benefits is required to
be disclosed under this column if the amount for any named officer equals or
exceeds $50,000 or 10% of the total of annual salary and bonus.
6
<PAGE>
The dollar value of the perquisites and other personal benefits did not
exceed the threshold amount for any of the named officers for any of the
years covered in the table.
(C) The amounts in this column for 1995 represent the following: matching
contributions under the Company's Retirement Savings Plan (Mr. McGinnis,
$8,663; Mr. Meteny, $6,458; Mr. Crouch, $4,791; and Dr. Zdrojkowski,
$2,406); annuity plan premiums paid on the officer's behalf (Mr. McGinnis,
$39,150; Mr. Meteny, $19,560; Mr. Crouch, $13,040; Dr. Zdrojowski, $6,760;
and Mr. Ng, $15,000); and life insurance premiums paid by the Company for
policies under which the named officer (or his estate) will receive the
accumulated cash surrender value of the policy upon the earlier of his death
or his reaching age 65 and the Company will receive the remainder of the
death benefit (Mr. McGinnis, $82,661).
(D) The amounts shown for Dr. Zdrojkowski include royalties paid to him based on
sales of a product developed by him pursuant to his employment agreement.
See "Employment Agreements and Other Transactions."
(E) The amounts in this column have been adjusted retroactively to reflect a
two-for-one stock split of the Company's Common Stock effected in fiscal
year 1995.
STOCK OPTIONS
No stock options were granted to any named officers during fiscal year
1995. The Company has not granted any stock appreciation rights ("SAR's") to any
of the named officers or any other officers or employees of the Company.
The following table sets forth information concerning the stock option
exercises by the named officers during the fiscal year 1995 and the unexercised
stock options held at June 30, 1995 by the named officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR FY-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END (POUND) FY-END ($)
------------- ----------
SHARES ACQUIRED VALUE
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE (2)/
NAME (POUND) ($) (1) UNEXERCISABLE UNEXERCISABLE
- ---------------------- --------------- --------- ------------- ----------------
<S> <C> <C> <C> <C>
Gerald E. McGinnis -- -- 400,000/-- 4,950,000/--
Dennis S. Meteny -- -- 104,000/24,000 976,000/120,000
Robert D. Crouch 80,000 1,109,600 188,000/36,000 2,026,000/180,000
Ronald J. Zdrojkowski -- -- --/-- --/--
Kam-Kwen Ng 48,000 514,600 56,000/24,000 508,000/120,000
</TABLE>
- ---------
(1) Represents the amount by which the fair market value of the shares acquired
on exercise at the exercise date exceeded the exercise price of such
shares.
(2) Represents the amount by which the fair market value ($14.25) of the shares
covered by the stock options on June 30, 1995 exceeded the exercise price
of such stock options.
EMPLOYMENT AGREEMENTS AND OTHER TRANSACTIONS
The Company paid royalties to Dr. Zdrojkowski for fiscal years 1995, 1994
and 1993 on the sale of a product developed by him pursuant to his employment
agreement. These royalties are included in Dr. Zdrojkowski's compensation shown
in the Summary Compensation Table. His Employment Agreement is for a term of one
year, renewable annually.
Effective in May 1988, Mr. McGinnis transferred to the Company his rights
to all inventions, improvements, processes or discoveries made or conceived by
him during his employment with the Company, and his right to royalty payments
under a former employment and license agreement terminated. In exchange for his
patents on certain of the Company's products, the Company in May 1988 paid Mr.
McGinnis $600,000 in cash and in exchange for all other intellectual properties
transferred granted him the right to purchase 400,000 shares of
7
<PAGE>
common stock of the Company at a price of $1.88 per share. The exercise price of
the option granted to Mr. McGinnis was determined through arms'-length
negotiations between Mr. McGinnis and the Company's directors other than Mr.
McGinnis. The option is presently exercisable for all 400,000 shares. The option
is exercisable for a maximum period of 10 years after grant.
The Company believes that securing full rights to the Company's products
from Mr. McGinnis and terminating future royalty payments to him was in the best
interests of the Company. The consideration paid was determined by negotiations
between the Board of Directors of the Company and Mr. McGinnis, taking into
account all relevant factors including a review of past royalty payments and
estimate of future royalty payments. The terms of this agreement were approved
by the Board of Directors, including all of the disinterested directors of the
Company.
Effective April 1, 1995 the Company entered into an Employment Agreement
with Mr. McGinnis providing for his employment as Chairman of the Company's
Board of Directors for a three year term ending March 31, 1998. Each year until
March 31, 1997, the term of the Agreement is automatically extended for one
additional year unless previously either Mr. McGinnis or the Company gives
notice in the then current first year of the term that the term will not be
further extended. Under the terms of the Agreement, Mr. McGinnis agreed to spend
not less than two-thirds of his working time in the performance of his duties as
Chairman, including assisting the Company's President in fulfilling the
Company's civic and charitable responsibilities, serving as Chairman of the
Company's Strategy Commiteee, providing guidance and direction in new product
development as well as acquisition of new products and businesses and ensuring
good liaison between the Board and the Company's management. The Agreement
provides for a base salary at the rate of $190,000 per year plus participation
in the Company's benefit plans (other than stock option and stock purchase
plans) on a basis comparable with other executives in the Company.
Effective December 1, 1994 the Company entered into an Employment Agreement
with Mr. Meteny providing for his employment as President and Chief Executive
Officer of the Company for a three year term ending November 30, 1997. Effective
the same date the Company and Mr. Crouch entered into an Employment Agreement
providing for his employment as Vice President of Sales and Marketing also for a
three year term ending November 30, 1997. Each agreement is automatically
extended each year for one additional year absent prior notice by either party.
The Agreements provide for base salaries for Messrs. Meteny and Crouch of
$195,600 per year and $138,200 per year, respectively, plus participation in the
Company's benefit and incentive plans on a basis comparable with other
executives in the Company.
In April 1995, the Company guaranteed a loan made by a commercial bank to
Mr. Crouch in the amount of $400,000. In consideration for this guarantee, Mr.
Crouch granted to the Company a security interest in 80,000 shares of the
Company's common stock owned by him. This security interest will remain in place
until Mr. Crouch's commercial bank loan has been repaid in full. At June 30,
1995, the shares held by the Company pursuant to this security interest had a
fair market value of approximately $1,140,000.
Respironics (HK) Limited is lessee under a Tenancy Agreement expiring on
April 30, 1997, with Micro Electronics, Ltd. as lessor, for premises located in
Hong Kong, providing for a monthly rent of approximately $12,000 (U.S.). Bernard
Shou-Chung Zau, a director of the Company, is also a director of Micro
Electronics, Ltd., and Micro Electronics, Ltd. is a shareholder of the Company.
Together with other family members, Mr. Zau controls Micro Electronics, Ltd. The
Company believes that the terms of the above agreements with Micro Electronics,
Ltd. are no less favorable than those which the Company would have agreed to if
determined through arms'-length negotiations with unaffiliated third parties.
EXECUTIVE OFFICERS
The executive officers of the Company, other than those who also serve as
directors and are described above, are Ronald J. Zdrojkowski, Ph.D., 52, Vice
President--Research & Development, Robert D. Crouch, 47, Vice President--Sales
and Marketing, Robert M. Oates, 53, Vice President--Engineering, and Daniel J.
Bevevino, 35, Controller and Chief Financial Officer.
Dr. Zdrojkowski assumed the position of Vice President--Research and
Development in late 1990. Prior to 1990 Dr. Zdrojkowski was Vice
President--Engineering for the Company since 1987 and held that position from
8
<PAGE>
1977 to 1985 as well. From 1985 to 1987 he was Product Development Manager. Dr.
Zdrojkowski joined the Company in 1977 and has worked on the design, development
and manufacturing of most of the Company's products and the transfer of
technology to Respironics (HK) Limited. Prior to joining the Company, he worked
as a consultant for various companies assisting in the design of new medical
products.
Mr. Crouch joined the Company as Director of Sales and Marketing in January
1989. He was promoted to Vice President Sales and Marketing in May 1989. From
1986 to 1989, Mr. Crouch worked as a consultant for various companies on
administrative and governmental affairs issues. From 1985 to 1986, he was
employed by Cryogenic Associates, serving as Executive Vice President and later
President. From 1983 to 1985, Mr. Crouch was President, Chief Executive Officer
and Chairman of the Board of Beta Med Pharmaceuticals.
Mr. Oates joined the Company as Vice President--Engineering in July 1992.
From 1982 to July 1992, he was employed by Westinghouse Electric Company Science
& Technology Center, serving as the Manager of Communication Systems, Sensor
Development and Electo-optic Systems.
Mr. Bevevino joined the Company in 1988 as Manager of Cost Accounting. He
was promoted to Controller in 1990 and continues to serve in that position. In
November of 1994, Mr. Bevevino was elected Chief Financial Officer. Immediately
prior to his Respironics' affiliation, Mr. Bevevino--a Certified Public
Accountant--spent five years with the international accounting firm of Ernst &
Young.
REPORT OF THE COMPENSATION COMMITTEE
INTRODUCTION
Decisions regarding compensation of the Company's executives generally are
made based on recommendations by the Compensation Committee, which is composed
of three independent outside directors. All decisions of the Compensation
Committee relating to compensation of the Company's executive officers and the
President of Respironics (HK) Ltd. are reviewed and approved by the full Board.
Set forth below is a report submitted by Dr. Cotter and Messrs. Hardie and Zau
(the members of the Compensation Committee at the relevant time during fiscal
year 1995) in their capacity as members of the Board's Compensation Committee
addressing the Company's compensation policies for fiscal year 1995 as they
affected executive officers of the Company, including Mr. Meteny, the President
and Chief Executive Officer, and Messrs. McGinnis, Crouch, Ng and Zdrojkowski,
the four executive officers other than Mr. Meteny who were, for fiscal year
1995, the Company's most highly compensated executives.
COMPENSATION
The Company's executive and key employee compensation program consists of a
base salary component, a component providing the potential for an annual profit
sharing bonus based on overall Company performance as well as individual
performance, and a component providing the opportunity to earn stock options
linking the employee's long-term financial success to that of the Company's
stockholders.
Cash Compensation
Officers are compensated within salary ranges that are generally based on
similar positions in companies of comparable size and complexity to the Company.
Companies are selected based on products marketed, customers and markets served,
geographic distribution, manufacturing locations and complexity of operations
(which involves several factors, with sales revenue being a major factor) for
those companies operating in the respiratory products market. In addition, the
Company participates in and receives summary compensation survey information
from the Health Industry Manufacturers Association ("HIMA"), which surveyed 67
HIMA member companies in 1994.
The methodology used to determine guidelines for compensation was a
matching of each executive's responsibilities to a comparable position described
in the HIMA survey. Based on this matching, each executive's salary was compared
to the corresponding salary range of comparable executives in the HIMA survey.
Then, an appropriate salary range (e.g., 25th percentile, median, 75th
percentile) was selected based on the comparison of the executive's
responsibilities to those of the comparable position in the HIMA survey. The
comparable companies operating in the respiratory market and other data were
then examined for reasonableness on a position-by-
9
<PAGE>
position basis. Salaries were established based on the performance of the
executive given his responsibilities within a specific position and the
relationship of the current salary to the appropriate percentile of the HIMA
survey for the most comparable position available within the survey.
The primary level of compensation is based on a combination of years of
experience and performance. An officer's performance is based on how well he
meets objectives set by his supervisor through a Company-wide process of stating
objectives for each associate (employee), insuring compatibility of objectives
among associates, reviewing performance against objectives and recognizing the
accomplishment of these objectives. The Board of Directors establishes and
reviews the objectives of the Chairman of the Board, and the Board also assesses
the Chairman's performance compared to these objectives. The salary of all
officers is reviewed annually in November, with the amount of the increases
(which take effect the following February) based on factors such as Company
performance, general economic conditions, marketplace compensation trends and
individual performance. The relative weight of each of these factors in
determing salary increases varies for each annual salary determination. There is
no fixed weighting. However, in the past, the factors which have generally had
the greatest influence on salary increases have been (in decreasing
significance) Company performance, individual performance, marketplace trends in
compensation and general economic conditions.
In fiscal year 1995 the Compensation Committee recommended and the Board
approved a base salary increase for Mr. Meteny of 20% considering the foregoing
factors as well as Mr. Meteny's election as Chief Executive Officer. It also
recommended and the Board approved a 6% increase in base salary for Mr. Crouch
based on the above mentioned factors. In the case of Mr. McGinnis, who became
Chairman of the Board of Directors and who agreed to spend not less than
two-thirds of his working time (as compared with full time as Chief Executive
Officer on Company matters), the Committee recommended and the Board approved a
base salary reduction of 27%. See "Executive Compensation--Employment Agreements
and Other Transactions."
The Board of Directors of the Company's subsidiary (Respironics (HK) Ltd.)
approved the base salary of Mr. Ng after consultation with Committee. In the
case of Dr. Zdrojkowski, his base salary remanded at the same level as approved
by the Board after consultation with the Committee. His compensation increased
because of increased royalty payments made to him under his Employment
Agreement, which payments were at the same rates, but on greater amounts of
covered sales.
Profit Sharing Bonus
The second compensation component is a Company-wide profit sharing program
under the Company's Profit Sharing Bonus Plan. Bonuses are primarily based on
the Company's annual financial performance and secondarily on the performance of
the individual. Bonuses generally range from zero to 40% of base salary. The
measures of annual financial performance used in determining the amount of
bonuses include sales growth, earnings growth and net income as a percentage of
sales. Based on these factors, profit sharing bonuses were accrued for fiscal
year 1995 for the named officers in the amounts set forth in the Summary
Compensation Table above.
Stock Options
The third major component of the officer's compensation consists of stock
options. The primary purpose of granting stock options is to link the officers'
financial success to that of the stockholders of the Company. The exercise price
of stock options is determined by the Compensation Committee at the time the
option is granted, but may not be less than the fair market value of the
Company's Common Stock as of the date of grant. Options become exercisable
commencing a minimum of six months from the date of grant and are exercisable
for a maximum period of 10 years, as determined by the Compensation Committee.
The Compensation Committee awarded stock options to 65 of the Company's
employees during fiscal year 1995. No stock options were granted to any named
officer during fiscal year 1995.
CEO COMPENSATION
The following factors constitute the basis for the compensation paid to Mr.
Meteny, the Company's Chief Executive Officer ("CEO"), during fiscal year 1995;
his responsibilities as the Company's CEO; the Company's ability to achieve its
objectives for revenue and earnings growth and its objectives for long-term
growth; the
10
<PAGE>
salaries paid to other CEO's of comparable companies as reported in the HIMA
survey; and Mr. Meteny's experience compared to the CEO's of comparable
companies in the HIMA survey. As indicated in the Summary Compensation Table,
Mr. Meteny was awarded a bonus of $74,094 for fiscal year 1995 based on the
Company's achievement of certain revenue and earnings goals.
Compensation Committee of the Company's Board of Directors:
Douglas A. Cotter, Chairman
James H. Hardie
Bernard Shou-Chung Zau
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Securities and Exchange Commission's rules relating to the disclosure
of executive compensation require that the Proxy Statement include certain
information about "insider" participation on compensation committees and about
specific kinds of "interlocking" relationships between the compensation
committees of different companies, under the foregoing caption.
The Compensation Committee of the Board of Directors is responsible for
executive compensation decisions as described above under "Board of Directors
and Committees of the Board." During fiscal year 1995, the Committee consisted
of Dr. Cotter (Chairman) and Messrs. Zau and Hardie, with Mr. Lawyer replacing
Mr. Zau as a member of the Committee in August 1995. Mr. Hardie is a partner in
the law firm which has provided legal services to the Company since 1988 and
which is expected to provide legal services to the Company in the future.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission (the "Commission") and the National Association of
Securities Dealers National Market System initial reports of ownership and
reports of change in ownership of Common Stock and other equity securities of
the Company. Officers, directors and greater than ten-percent shareholders are
required by Commission regulation to furnish the Company with copies of all
Section 16(a) forms they file.
All Forms 3, 4, and 5 have been filed within the guidelines of the
Commission during fiscal year 1995. In making this disclosure, the Company has
relied solely on the written representation of its directors and officers and
copies of the reports that they have filed with the Commission.
11
<PAGE>
PERFORMANCE GRAPH
The following graph shows a five year comparison of cumulative total
returns for the Company, the NASDAQ Market Index and the Standard & Poor's
Medical Products and Supplies Index ("S&P Medical"). The graph assumes that the
value of the investment in the Company's Common Stock and each index was $100 at
June 30, 1990, and that all dividends were reinvested.
<TABLE>
<CAPTION>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG RESPIRONICS, NASDAQ INDEX AND S&P MEDICAL INDEX
Measurement period Nasdaq S&P Medical
(Fiscal year Covered) Respironics Index Index
- ----------------------- ----------- ------ -----------
<S> <C> <C> <C>
Measurement PT_
6/30/90 $100.00 $100.00 $100.00
FYE 6/30/91 $101.16 $105.89 $132.92
FYE 6/30/92 $158.14 $127.20 $151.78
FYE 6/30/93 $211.63 $159.97 $124.49
FYE 6/30/94 $156.98 $161.56 $120.01
FYE 6/30/95 $265.13 $215.36 $184.12
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30
----------------------------------------------------------------
1990 1991 1992 1993 1994 1995
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Respironics, Inc..................... $ 100.00 $ 101.16 $ 158.14 $ 211.63 $ 156.98 $ 265.13
NASDAQ............................... $ 100.00 $ 105.89 $ 127.20 $ 159.97 $ 161.56 $ 215.36
S&P Medical.......................... $ 100.00 $ 132.92 $ 151.78 $ 124.49 $ 120.01 $ 184.12
</TABLE>
Dorita A. Pishko
Secretary
October 13, 1995
12
<PAGE>
RESPIRONICS
1001 MURRY RIDGE DR.
MURRYSVILLE, PA 16668
ANNUAL MEETING OF SHAREHOLDERS, NOVEMBER 8, 1995
Gerald E. McGinnis, Dennis S. Meteny and Dorita A. Pishko, or any of
them, are hereby appointed proxies with full power of substitution, to vote
the shares of the shareholder(s) named on the reverse side hereof at the
Annual Meeting of Shareholders of Respironics, Inc. to be held at the Union
Trust Building, in the Auditorium, at 501 Grant Street, Pittsburgh,
Pennsylvania, on November 8, 1995, and at any adjournment thereof, as directed
hereon, and in their discretion to vote and act upon any other matters as
may properly come before this meeting.
(Continued on reverse side)
FOLD AND DETACH HERE
<PAGE>
1. Election of Directors.
FOR all nominees WITHHOLD
(listed to the right AUTHORITY
except as marked to vote for all nominees
to the contrary) listed to the right
NOMINEES: Douglas A. Cotter, Ph.D., George J. Magovern, M.D., Gerald E.
McGinnis
(Instruction: To withhold authority to vote for any nominee, write that
nominee's name in the space provided below)
- -----------------------------------------------------------------------
2. To ratify the selection of Ernst & Young LLP
as independent public accountants for the
fiscal year ending June 30, 1996.
FOR AGAINST ABSTAIN
This proxy is solicited on behalf of the Board of Directors and will be
voted as specified: A vote FOR the election of nominees listed includes
discretionary authority to vote for a substitute if any nominee is unable
to serve or for good cause will not serve.
Date: , 1995
-----------------------------------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Shareholder(s) signature should correspond to the name(s) shown hereon.
(Executors, Administrators, Trustees, etc. should so indicate when signing).
PLEASE SIGN, DATE AND MAIL YOUR PROXY TODAY!
"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES"
FOLD AND DETACH HERE
