<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 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
CRYOLIFE, INC.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No Filing Fee Required.
[_] $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:
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(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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[Logo of CryoLife, Inc. Appears Here]
1655 ROBERTS BOULEVARD, N.W.
[LOGO] KENNESAW, GEORGIA 30144
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF CRYOLIFE, INC.:
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of CRYOLIFE,
INC. (the "Company") will be held at the Marietta Country Club, 1400 Marietta
Country Club Drive, Kennesaw, Georgia 30144, on May 15, 1997 at 10:00 a.m.,
Atlanta time, for the following purposes:
1. To elect five directors to serve until the next annual meeting of
shareholders and until their successors are elected and have qualified.
2. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The proxy statement dated April 10, 1997 is attached.
Only record holders of the Company's $.01 par value Common Stock at the
close of business on March 28, 1997 will be eligible to vote at the meeting.
Your attendance at the annual meeting is very much desired. However, if
there is any chance you may not be able to attend the meeting, please execute,
complete, date and return the proxy in the enclosed envelope. If you attend
the meeting, you may revoke the proxy and vote in person.
By Order of the Board of Directors:
/s/ Steven G. Anderson
STEVEN G. ANDERSON,
Chairman of the Board and President
Date: April 10, 1997
A copy of the Annual Report of CryoLife, Inc. for the fiscal year ended
December 31, 1996 containing financial statements is enclosed.
<PAGE>
[Logo of CryoLife, Inc. Appears Here]
1655 ROBERTS BOULEVARD, N.W.
[LOGO] KENNESAW, GEORGIA 30144
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
This statement is furnished for the solicitation by the Board of Directors
of proxies for the annual meeting of shareholders of CryoLife, Inc.
("CryoLife," or the "Company") to be held on May 15, 1997, at 10:00 A.M.,
Atlanta time, at the Marietta Country Club, 1400 Marietta Country Club Drive,
Kennesaw, Georgia 30144. The sending in of a signed proxy will not affect the
shareholder's right to attend the meeting and vote in person. A signed proxy
may be revoked by the sending in of a timely but later dated, signed proxy.
Any shareholder giving a proxy may also revoke it at any time before it is
exercised by giving oral or written notice to Ronald D. McCall, Secretary of
the Company, or Ms. Suzanne Gabbert, Assistant Secretary, at the offices of
the Company. Oral notice may be delivered by telephone call to Ms. Gabbert, at
the offices of the Company, at (770) 419-3355.
Holders of record of the Company's $.01 par value Common Stock at the close
of business on March 28, 1997, will be eligible to vote at the meeting. The
Company's stock transfer books will not be closed. At the close of business on
March 28, 1997, the Company had outstanding a total of 9,600,120 shares of
$.01 par value common stock (excluding a total of 543,000 shares of treasury
stock held by the Company, which are not entitled to vote). Each such share
will be entitled to one vote (non-cumulative) at the meeting.
Other than the matters set forth herein, Management is not aware of any
other matters that may come before the meeting. If any other business should
properly come before the meeting, the persons named in the enclosed proxy will
have discretionary authority to vote the shares represented by the effective
proxies and intend to vote them in accordance with their best judgment.
This proxy statement and the attached proxy were first mailed to security
holders on behalf of the Company on or about April 10, 1997. Properly executed
proxies, timely returned, will be voted and, where the person solicited
specifies by means of a ballot a choice with respect to any matter to be acted
upon at the meeting, the shares will be voted as indicated by the shareholder.
If the person solicited does not specify a choice with respect to election of
directors, the shares will be voted "FOR" Management's nominees for election
as directors. In addition to the solicitation of proxies by the use of the
mails, directors and officers of the Company may solicit proxies on behalf of
Management by telephone, telegram and personal interview. Such persons will
receive no additional compensation for their solicitation activities, and will
be reimbursed only for their actual expenses in connection therewith. The
costs of soliciting proxies will be borne by the Company.
VOTING PROCEDURES AND VOTE REQUIRED
The Secretary of CryoLife, in consultation with the judges of election, who
will be employees of the Company's transfer agent, shall determine the
eligibility of persons present at the Annual Meeting to vote and shall
determine whether the name signed on each proxy card corresponds to the name
of a shareholder of the Company. The Secretary, based on such consultation,
shall also determine whether or not a quorum of the shares of the Company
(consisting of a majority of the votes entitled to be cast at the Annual
Meeting) exists at the Annual Meeting. Both abstentions from voting and broker
non-votes will be counted for the purpose of determining the presence or
absence of a quorum for the transaction of business. If a quorum exists and a
vote is taken at the Annual Meeting, the Secretary of the Company, with the
assistance of the judges of election, shall tabulate (i) the votes cast for or
against each proposal and (ii) the abstentions in respect of each proposal.
<PAGE>
Nominees for election as directors will be elected by a plurality of the
votes cast by the holders of shares entitled to vote in the election. Since
there are five directorships to be filled, this means that the five
individuals receiving the most votes will be elected. Abstentions and broker
non-votes will therefore not be relevant to the outcome.
ELECTION OF DIRECTORS
The proxy holders intend to vote "FOR" election of the nominees named below
(who are currently members of the Board) as directors of the Company, unless
otherwise specified in the proxy. Directors of the Company elected at the
Annual Meeting to be held on May 15, 1997 will hold office until the next
Annual Meeting or until their successors are elected and qualified.
Each of the nominees has consented to serve on the Board of Directors, if
elected. Should any nominee for the office of director become unable to accept
nomination or election, which is not anticipated, it is the intention of the
persons named in the proxy, unless otherwise specifically instructed in the
proxy, to vote for the election in his stead of such other person as
Management may recommend.
The individuals listed below as nominees for the Board of Directors were
directors of the Company during 1996. The name and age of each nominee, his
principal occupation, and the period during which such person has served as a
director, together with the number of shares of the Company's Common Stock
beneficially owned, directly or indirectly, by such person and the percentage
of outstanding shares of the Company's Common Stock such ownership represented
at the close of business on March 21, 1997 (according to information received
by the Company) is set forth below:
<TABLE>
<CAPTION>
SHARES OF
CRYOLIFE STOCK PERCENT OF
BENEFICIALLY OUTSTANDING
SERVICE AS OWNED AT MARCH SHARES OF
NAME OF NOMINEE DIRECTOR AGE 21, 1997(1) CRYOLIFE STOCK
--------------- ---------- --- -------------- --------------
<S> <C> <C> <C> <C>
Steven G. Anderson................ since 1984 58 1,157,980(2) 12.0%
Ronald C. Elkins, M.D.(6)......... since 1994 60 42,200(3) *
Benjamin H. Gray(4)............... since 1991 46 55,312(5) *
Rodney G. Lacy(4)(6).............. since 1985 57 388,086(7) 4.0%
Ronald D. McCall, Esq.(4)(6)...... since 1984 60 129,592(8) 1.3%
</TABLE>
- --------
* Ownership represents less than 1% of outstanding shares of CryoLife Common
Stock.
(1) Except as otherwise noted, the nature of the beneficial ownership for all
shares is sole voting and investment power.
(2) Includes 104,510 shares held of record by Ms. Ann B. Anderson, Mr.
Anderson's spouse. Also includes options to acquire 18,000 shares of
Common Stock which are presently exercisable or will become exercisable
within 60 days after the date of this proxy statement.
(3) Includes options to acquire 30,000 shares of Common Stock which are
presently exercisable or will become exercisable within 60 days after the
date of this proxy statement.
(4) Member of the Audit Committee.
(5) Includes options to acquire 48,000 shares of Common Stock which are
presently exercisable or will become exercisable within 60 days after the
date of this proxy statement.
(6) Member of the Compensation Advisory Committee.
2
<PAGE>
(7) Includes 24,000 shares held of record by Ms. Virginia C. Lacy, Mr. Lacy's
spouse. Includes options to acquire 28,000 shares of Common Stock which
are presently exercisable or will become exercisable within 60 days after
the date of this Proxy Statement. Includes 30,000 shares held as trustee
of a pension plan. Includes 110,586 shares held of record by Paine Webber,
Inc., as custodian for Mr. Lacy's IRA. Includes 195,500 shares held as
trustee of a family trust.
(8) Includes 10,000 shares of Common Stock owned of record by Ms. Marilyn B.
McCall, Mr. McCall's spouse. Includes options to acquire 48,000 shares of
Common Stock which are presently exercisable or will become exercisable
within 60 days after the date of this Proxy Statement.
Steven G. Anderson, a founder of the Company, has served as the Company's
President, Chairman of the Board, and Chief Executive Officer since its
inception. Mr. Anderson has more than 30 years of experience in the
implantable medical device industry. Prior to joining the Company, Mr.
Anderson was Senior Executive Vice President of Intermedics, Inc.
("Intermedics"), a manufacturer and distributor of pacemakers and other
medical devices.
Ronald C. Elkins, M.D. has served as a director of the Company since January
1994. Dr. Elkins is Professor and Vice Head of the Department of Surgery and
Chief, Section of Thoracic and Cardiovascular Surgery, University of Oklahoma
Health Science Center. He has been a physician at the Health Science Center
since 1971, and has held his present position since 1975.
Benjamin H. Gray has served as a director of the Company since December,
1991. He has been a principal of Massey Burch Capital Corp. ("MBCC") since
1994. From 1987 through 1993, he served as Vice President of Massey Burch
Investment Group, Inc. ("MBIG"). His duties at both MBCC and MBIG include
evaluating prospective investments and representing these companies'
respective interests with respect to certain of their portfolio venture
investments. Prior to joining MBIG, Mr. Gray was a Vice President of Chemical
Bank of New York.
Rodney G. Lacy has served as a director of the Company since July, 1985.
Since 1974, Mr. Lacy has been a director and executive officer of Precision
Devices Corp., an independent sales representative for medical devices,
including cardiac pacemakers. Mr. Lacy has also served as President of
American Identification Industries, Inc. ("AII") since 1986. Mr. Lacy helped
found AII in 1986. AII is a custom printer and personalizer of plastic
identification cards.
Ronald D. McCall has served as a director of the Company and as the
Secretary and Treasurer of the Company since January, 1984. From 1985 to the
present, Mr. McCall has been the proprietor of the law firm of Ronald D.
McCall, P.A., Attorney at Law, Tampa, Florida. Mr. McCall was admitted to the
practice of law in Florida in 1961.
INFORMATION ABOUT THE BOARD OF DIRECTORS
AND COMMITTEES OF THE BOARD
Meetings of the Board of Directors. During 1996, there were six meetings of
the Board of Directors.
DIRECTOR COMPENSATION--All of the members of the Board of Directors of the
Company are paid $500 for each Board meeting attended. In addition, directors
are reimbursed for expenses incurred in connection with their services as a
director. In 1995, the Company adopted the CryoLife, Inc. Non-Employee
Directors Stock Option Plan. Pursuant to this Plan, options to purchase 4,000
shares of Common Stock were granted to each of Messrs. Elkins, Gray, Lacy and
McCall immediately following the 1996 Annual Meeting of Shareholders. The Plan
3
<PAGE>
provides that an annual grant will be made each year immediately following the
Company's Annual Meeting of Shareholders of an option to purchase 4,000 shares
of Common Stock to each individual elected, reelected or continuing as a non-
employee director of the Company; provided, however, that if such director is
an individual who has not previously served on the Board of Directors of the
Company, such individual shall receive instead an option to purchase 25,000
shares of Common Stock. In 1996, the non-employee directors were each also
granted a special option to purchase 24,000 shares of Common Stock. All
options granted pursuant to the Plan were granted at a purchase price equal to
the last closing price of the Company's Common Stock on The Nasdaq Stock
Market immediately prior to the grant of the option and vest in two equal
annual installments of 50% each on the first and second anniversaries of the
option award date. All options granted pursuant to the special grant were
granted at a purchase price equal to the last closing price of the Company's
Common Stock on The Nasdaq Stock Market on the date of grant and vest in four
equal annual installments of 25% each on the first, second third and fourth
anniversaries of the option award date. No option granted pursuant to the Plan
or the special grant may be exercised later than five years following the date
of grant thereof. In addition to the foregoing, Dr. Elkins received $3,020 in
consulting fees from the Company in 1996.
AUDIT COMMITTEE--The Company's Audit Committee consists of three non-
employee directors: Mr. McCall, Mr. Gray and Mr. Lacy. The Audit Committee met
two times in 1996. The Audit Committee reviews the general scope of the
Company's annual audit and the nature of services to be performed for the
Company in connection therewith, acting as liaison between the Board of
Directors and the independent auditors. The Audit Committee also formulates
and reviews various company policies, including those relating to accounting
practices and internal control systems of the Company. In addition, the Audit
Committee is responsible for reviewing and monitoring the performance by the
Company's independent auditors and for recommending the engagement or
discharge of the Company's independent auditors.
COMPENSATION ADVISORY COMMITTEE--The Company has a Compensation Advisory
Committee currently consisting of three non-employee directors: Mr. McCall,
Mr. Lacy and Dr. Elkins. The Compensation Advisory Committee met four times in
1996. The Compensation Advisory Committee is responsible for reviewing and
making recommendations to the Board regarding the annual compensation for all
officers, including the salary and the compensation package of executive
officers. A portion of the compensation package includes a bonus award. The
Compensation Advisory Committee also administers the Company's benefit plans.
NOMINATING COMMITTEE--CryoLife does not have a standing nominating committee
of the Board of Directors.
During 1996, no director attended fewer than 75% of the aggregate of the
total number of meetings of the Board of Directors and the total number of
meetings held by all committees of the Board on which he served.
4
<PAGE>
Notwithstanding anything to the contrary set forth in any of the Company's
filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate other Company
filings, including this proxy statement, in whole or in part, the following
Report and Performance Graph shall not be incorporated by reference into any
such filings.
REPORT OF THE COMPENSATION ADVISORY COMMITTEE ON
EXECUTIVE COMPENSATION
OVERVIEW
The Compensation Advisory Committee (the "Committee") of the Board of
Directors of CryoLife, Inc. is composed of non-employee directors and approves
the compensation of the Company's executive officers at least annually. The
Committee believes the actions of top executives of the Company have a
profound impact on the short-term and long-term profitability of the Company.
Therefore, the Committee gives significant attention to the design of the
Company's compensation package.
The Company's compensation package consists of three parts and is relatively
simple in design. The three primary parts are a base salary, a cash bonus, and
stock-based incentive compensation. No significant perquisites are provided to
executive officers.
BASE SALARY
The Committee believes it is important for executive officers and other
employees of the Company to receive acceptable salaries so that the Company
can recruit and retain the talent it needs. For several years, the Committee
has obtained a salary survey report. This survey, which is entitled "the
Radford Salary Survey for U.S. Biotech Companies," contains information
regarding salaries paid to various biotech executives in the United States.
The Committee reviews this salary survey primarily for information regarding
salaries, as opposed to bonus and stock incentive information. In setting
salaries, the Committee takes into consideration the individual employee's
performance, length of service to the Company, and the information provided by
the Radford Survey. The Committee seeks to set compensation at levels which
are reasonable under the circumstances and near the midrange for U.S. biotech
companies. For 1996, salaries for executive officers were raised by 10%, on
the average, as compared to 1995. The range of increases was from 0% to 19%.
The base salary for each executive officer is set on a subjective basis,
bearing in mind an overall impression of that executive's relative skills,
experience and contribution to the Company. The Committee does not attempt to
address the relative weight assigned to the various factors, which are
evaluated on a subjective overall basis by each individual member of the
Committee. Salaries of all executive officers are reviewed annually by the
Committee. The base salary for the new executive officer employed in 1996, to
wit: James C. Vander Wyk, Vice President of Regulatory Affairs and Quality
Assurance, was established utilizing a procedure agreed upon by the Committee.
In accordance with this procedure, the Committee consults with Mr. Anderson,
the President and Chief Executive Officer of the Company, and an appropriate
range of base salary, bonus, and stock options is subjectively considered,
based upon the range of compensation received by the other executive officers
and the requirements of the particular positions to be filled. The Chief
Executive Officer negotiates with the candidate for employment, subject to
acceptance and ratification by the Committee, and this negotiated base salary
is reflected in the candidate's employment agreement.
5
<PAGE>
CASH BONUSES
Cash bonuses are the next component of executive officer compensation. In
determining the amount to be paid as bonuses to executive officers, the
Compensation Advisory Committee considers the performance of the Company in
reaching goals for increased revenues and pre-tax profit as well as the
performance of each executive officer. For 1996 the Compensation Advisory
Committee based its decision that bonuses should be awarded to the Company's
executive officers upon its subjective determination that the Company's 1996
increases in total revenues and pre-tax profits justified the granting
thereof. The amount of the bonus paid to individual executive officers was
determined based upon the Committee's subjective analysis of the performance
of each such officer. 1996 executive officer bonuses were paid in 1997.
STOCK-BASED INCENTIVES
Stock-based incentives have been a supplemental component of compensation
for the Company's executive officers, and certain other employees, since the
formation of the Company. The Company adopted formal incentive stock option
plans in 1984, 1989 and 1993. The Company has also made grants of non-
qualified options under an informal stock option program, and in 1992, made
grants of non-qualified options to directors who were ineligible to receive
stock options under the 1989 option plan. The Committee also approves grants
of stock options under the Company's option plans.
Historically, grants made by the Company have generally vested at a rate of
20% per year and have had a term of five and one-half years. These options
also usually expire upon termination of employment, except in the event of
disability or death, in which case the term of the option may continue for
some time thereafter.
The Committee believes that the Company's stock option program has been
effective in focusing attention on shareholder value since the gain to be
realized by executive officers upon exercise of options will change as the
stock price changes. The Committee also believes that the long-term nature of
the options encourages the Company's executive officers to remain with the
Company. Finally, the Committee has found it appropriate to grant options to
newly employed executive officers in order to encourage such officers to
identify promptly with the Company's goal of increased shareholder value. For
example, upon the employment in 1996 of James C. Vander Wyk, Vice President of
Regulatory Affairs and Quality Assurance, he was granted a stock option for
30,000 shares of Common Stock. The number of shares to be granted was
established utilizing the procedure described above at "-Base Salary." The
Committee subjectively determined the number of shares to be granted based on
its analysis of the number which would provide an adequate incentive to the
new executive officer to accept a position with the Company.
In general, following initial employment, the granting of stock-based
incentives is considered by the Committee to be justified when the Company's
revenues and earnings, coupled with the individual executive's performance,
warrant supplemental compensation in addition to the salary and bonus paid
with respect to a given year. Each of these factors is weighed subjectively by
Committee members in determining whether or not a stock-based incentive should
be granted, and such incentives are not granted routinely. The Committee
thinks it unlikely that any participants in the Company's stock plans will, in
the foreseeable future, receive in excess of $1 Million in aggregate
compensation (the maximum amount for which an employer may claim a
compensation deduction pursuant to Section 162(m) of the Internal Revenue Code
of 1986, as amended, unless certain performance-related compensation
exemptions are met) during any fiscal year, and has therefore determined that
the Company will not take any affirmative action at this time to meet the
requirements of such exemptions.
6
<PAGE>
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Committee fixed the 1996 salary of Mr. Steven G. Anderson, Chief
Executive officer of the Company, at $300,000. Mr. Anderson was awarded a cash
bonus of $100,000 for his performance in 1996. This bonus reflected an
increase of $25,000 over the 1995 bonus. This exhibits the philosophy of the
Committee as set forth at "--Base Salary" and "--Cash Bonuses" above. In May
1996, Mr. Anderson was granted a stock option for 40,000 shares of common
stock, thereby providing him with the same option shares granted to the other
directors of the Company pursuant to the Non-Employee Director's Stock Option
Plan, adopted at the Annual Shareholder's Meeting in 1995, and pursuant to a
special option granted to the other directors in May 1996. The Committee
believes the compensation of Mr. Anderson, a founder of the Company, reflects
the Committee's subjective opinion that Mr. Anderson has provided superlative
leadership and fulfilled the functions of an executive officer of the Company
at the highest level.
CONCLUSION
The Committee believes that its mix of a cash salary and bonuses and a long-
term stock incentive compensation program represents a balance that has
motivated and will continue to motivate the Company's management team to
produce the best results possible given overall economic conditions and the
difficulty of predicting the Company's performance in the short term.
COMPENSATION ADVISORY
COMMITTEE:
RONALD D. McCALL, CHAIRMAN
RODNEY G. LACY
RONALD C. ELKINS, M.D.
7
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line-graph presentation comparing the cumulative
shareholder return on the Company's Common Stock, on an indexed basis, against
cumulative total returns of the Nasdaq Stock Market (U.S. Companies) and a
"peer group" selected by Management of the Company. The peer group selected for
inclusion in this proxy statement includes Advanced Tissue Sciences ("ATS"),
Osteotech, Inc. ("Osteotech") and LifeCell. Each of these companies has
securities traded on the Nasdaq Stock Market. ATS and Osteotech were selected
because they had been utilized as a basis for comparison with the Company in
reports by analysts for each of the two co-managers of the Company's initial
public offering. Management selected LifeCell to be included in the peer group
based on the fact that LifeCell, a developer of tissue engineered products, is
also a biomedical company. The returns for the peer group were weighted
according to each issuer's market capitalization. The Performance Graph shows
total return on investment for the period beginning February 11, 1993 (the date
of the Company's initial Public Offering) and ending December 31, 1996.
[GRAPH APPEARS HERE]
VALUE OF $100 INVESTED ON FEBRUARY 11, 1993 AT;
<TABLE>
<CAPTION>
02/11/93 12/31/93 12/31/94 12/31/95 12/31/96
------------ ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
CRYOLIFE $ 100.00 $ 52.08 $ 54.17 $ 129.17 $ 208.33
PEER GROUP $ 100.00 $ 76.78 $ 67.61 $ 86.26 $ 83.11
NASDAQ MARKET $ 100.00 $118.70 $ 124.63 $ 161.66 $ 200.88
</TABLE>
Total return assumes reinvestment of dividends.
8
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid or accrued by the
Company to the Company's Chief Executive Officer and the four other most
highly paid executive officers of the Company in 1996 (the "Named
Executives"). The information presented is for the years ended December 31,
1996, 1995 and 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL ------------
COMPENSATION SECURITIES
----------------- UNDERLYING ALL OTHER
NAME AND YEAR SALARY BONUS OPTIONS/SARS COMPENSATION
PRINCIPAL POSITION (1) ($) (2) ($) (3) (#) (4) ($) (5)
- ------------------ ---- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Steven G. Anderson 1996 $300,000 $100,000 40,000 $28,125
Chairman of the Board 1995 250,444 75,000 40,000 22,533
of Directors, 1994 213,444 50,000 100,000 19,654
President and Chief
Executive Officer
Robert T. McNally, Ph.D. 1996 160,000 40,000 0 14,250
Senior Vice President, 1995 152,296 40,000 30,000 12,917
Clinical Research 1994 139,062 35,000 0 11,860
Albert E. Heacox, Ph.D. 1996 132,000 40,000 0 7,190
Vice President, 1995 126,227 25,000 30,000 6,680
Laboratory Operations 1994 123,000 20,000 0 6,223
Edwin B. Cordell, Jr.(6) 1996 112,000 30,000 0 4,668
Vice President and 1995 100,000 20,000 0 1,250
Chief Financial Officer 1994 15,257 0 30,000 0
Gerald B. Seery(7) 1996 105,000 25,000 0 2,615
Vice President, Marketing 1995 87,392 8,000 30,000 2,180
1994 76,384 0 5,000 966
</TABLE>
- --------
(1) The periods presented are the calendar years ended December 31, 1996, 1995
and 1994.
(2) Includes base salary earned by the Named Executives for the periods
presented or, for executives hired during the periods presented, from the
date of hire to the end of the applicable period. Also includes
compensation deferred under the Company's 401(k) plan, and amounts such
officers elected to apply to the Company's supplemental life insurance
program. Amounts for perquisites and other personal benefits extended to
the Named Executives are less than 10% of the total of annual salary and
bonus of such Named Executive.
(3) Includes bonuses earned by the Named Executives for the periods presented
or, for executives hired during the periods, for the period from the date
of hire to the end of the applicable year (see 2 above).
(4) During the periods presented, the only form of long-term compensation
utilized by the Company has been grant of stock options. The Company has
not awarded restricted stock or stock appreciation rights, or made any
long-term incentive payouts. Accordingly, the columns for "Restricted
Stock Award(s)" and "Long Term Incentive Payouts" have been omitted.
9
<PAGE>
(5) Since the inception of the Company's 401(k) plan, the Company has been
matching contributions to the plan subject to certain limitations and
vesting requirements. In 1992, the Company adopted its supplemental life
insurance program for certain executive officers. The following table sets
forth, for each of the Named Executives, the amount of the Company's
contributions to the 401(k) plan and the supplemental life insurance
program:
(6) Mr. Cordell joined the Company in November 1994.
(7) Mr. Seery was promoted to the position of Vice President of Marketing in
August 1995.
<TABLE>
<CAPTION>
1996 1995 1994
--------------------------------- --------------------------------- ---------------------------------
SUPPLEMENTAL SUPPLEMENTAL SUPPLEMENTAL
LIFE LIFE LIFE
401(K) INSURANCE 401(K) INSURANCE 401(K) INSURANCE
TOTAL CONTRIBUTION PROGRAM TOTAL CONTRIBUTION PROGRAM TOTAL CONTRIBUTION PROGRAM
------- ------------ ------------ ------- ------------ ------------ ------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Steven G.
Anderson........ $28,125 $4,750 $23,375 $22,533 $4,620 $17,913 $19,654 $4,891 $14,763
Robert T.
McNally, Ph.D... 14,250 4,000 10,250 12,917 3,490 9,427 11,860 3,558 8,302
Albert E. Heacox,
Ph.D............ 7,190 3,300 3,890 6,680 3,156 3,524 6,223 2,997 3,226
Edwin B. Cordell,
Jr.............. 4,668 4,668 -- 1,250 1,250 0 0 0 0
Gerald B. Seery.. 2,615 2,615 -- 2,180 2,180 0 966 966 0
</TABLE>
Grant of Options. During 1996, an option was granted to Steven G. Anderson
in recognition of his performance. No options were granted to any of the other
Named Executives during 1996. No stock appreciation rights (SARs) have been
granted by the Company. The following table sets forth information regarding
the grant of options in 1996.
OPTION/SAR GRANTS IN LAST FISCAL YEAR (1996)
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF
SECURITIES OPTIONS/SARS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION -------------------
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE (1) 5%($) 10%($)
---- ------------ ------------ -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Steven G. Anderson...... 40,000 53% $18.425 5/16/2001 $463,495 $1,911,588
</TABLE>
- --------
(1) Options are subject to earlier termination in the event of death,
disability, retirement, or termination of employment.
10
<PAGE>
Options Exercised. The following table sets forth information regarding the
exercise of options in 1996 and the number of options held by the Named
Executives as listed in the Summary Compensation Table, including the value of
unexercised in-the-money options as of December 31, 1996. The closing price of
the Company's Common Stock on December 31, 1996 used to calculate such values
was $12.50 per share.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR (1996)
AND FISCAL YEAR-END OPTION/SAR VALUES (AS OF DECEMBER 31, 1996)
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS OPTIONS/SARS
ACQUIRED ON VALUE AT YEAR END (#) AT YEAR END ($)
EXERCISE REALIZED ------------------------- -------------------------
(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Steven G. Anderson...... 51,000 $444,140 0 132,000 $ 0 $554,320
Robert T. McNally,
Ph.D................... 0 0 6,000 24,000 30,000 120,000
Albert E. Heacox, Ph.D.. 0 0 6,000 24,000 30,000 120,000
Edwin B. Cordell, Jr.... 6,000 54,000 6,000 18,000 54,000 162,000
Gerald B. Seery......... 0 0 8,000 27,000 45,548 139,692
</TABLE>
Option Repricing. The Company did not reprice any stock options in 1994 or
1995 or 1996 and, to date, has not issued any stock appreciation rights.
Long-Term Incentive Plans. The Company has no long-term incentive plans.
Management believes the Company's stock option programs provide long-term
incentives.
Employment Agreements. The Company has entered into employment agreements
with each of the Named Executives. Except for Mr. Anderson's agreement and
other than with respect to specific terms, such as duties of employment and
compensation, these employment agreements are substantially identical and
provide that employment may be terminated by either party with or without
cause upon 30 days' written notice to the other. The agreements automatically
terminate upon death. Each employee is required to devote his full and
exclusive time and attention to his employment duties, and the Company
reserves the right to change the nature and scope of those duties. The
agreement conditions employment and continued employment upon the employee's
signing the Company's standard Secrecy and Noncompete Agreement.
A new employment contract with Mr. Anderson was negotiated in 1995 for a
term of five years. The Compensation Advisory Committee approved the inclusion
of a provision in the agreement pursuant to which Ms. Ann B. Anderson, the
spouse of Mr. Anderson, would be provided with health care coverage throughout
her life. The agreement provides that either party may terminate the
employment by giving 180 days' written notice to the other. The termination
may be with or without cause. In the event the Company terminates employment
without cause, Mr. Anderson will be entitled to be paid for the remainder of
his term or for two years, whichever is greater. If the termination is with
cause, after the 180 days' notice period no additional compensation is due.
Compensation Advisory Committee Interlocks and Insider Participation. The
following three directors serve on the Compensation Advisory Committee of the
Company's Board of Directors: Mr. McCall, Mr. Lacy and Dr. Elkins. Mr. McCall
has been Secretary and Treasurer of the Company since 1984. The Company has
engaged Ronald McCall, P.A., a law firm of which Mr. McCall is the sole
shareholder, to perform legal services on an ongoing basis. For the year ended
December 31, 1996, the Company paid Ronald McCall, P.A. approximately $40,208
for such legal services (including expense reimbursements). Management
believes that these services were provided on terms no less favorable to the
Company than terms available from unrelated parties for comparable services.
11
<PAGE>
SECTION 16(a) BENEFCIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors and persons who beneficially own more than
10% of the Company's stock to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission and the
National Association of Securities Dealers, Inc. Executive officers, directors
and greater than 10% beneficial owners are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of copies of forms received by it pursuant to
Section 16(a) of the Securities Exchange Act of 1934, as amended, or written
representations from certain reporting persons, the Company believes that with
respect to 1996, all Section 16(a) filing requirements applicable to its
executive officers, directors and greater than 10% beneficial owners were
complied with, except that (i) Mr. Anderson filed one late report on Form 4
disclosing one late transaction; (ii) Mr. Gray filed one late report on Form 4
disclosing one late transaction; (iii) Mr. Heacox filed one late report on
Form 4 disclosing one late transaction; (iv) Mr. Cordell filed one late report
on Form 4 disclosing one late transaction; and (v) Mr. Lacy filed one late
report on Form 5 disclosing two late transactions and correcting an error
regarding his indirect holdings
OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND CERTAIN EXECUTIVE OFFICERS
The name and address of each person or entity who owned beneficially 5% or
more of the outstanding shares of Common Stock of CryoLife on March 21, 1997,
together with the number of shares owned and the percentage of outstanding
shares that ownership represents is set forth in the following table. The
table also shows information concerning beneficial ownership by each of the
Named Executives (See "Executive Compensation") and by all directors and
executive officers as a group. The number of shares beneficially owned is
determined under the rules of the SEC, and the information is not necessarily
indicative of beneficial ownership for any other purpose. Under such rules,
beneficial ownership includes any shares as to which the individual has the
sole or shared voting power or investment power and also any shares which the
individual has the right to acquire within 60 days after the date hereof
through the exercise of any stock option or other right. Unless otherwise
indicated, each person has sole investment and voting powers (or shares such
powers with his or her spouse) with respect to the shares set forth in the
following table:
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF SHARES OUTSTANDING
OF CRYOLIFE STOCK SHARES OF
BENEFICIAL OWNER BENEFICIALLY OWNED CRYOLIFE STOCK
---------------- ------------------ --------------
<S> <C> <C>
Steven G. Anderson 1,157,980(1) 12.0%
c/o CryoLife, Inc.
1655 Roberts Boulevard, N.W.
Kennesaw, Georgia 30144
Robert T. McNally, Ph.D...................... 206,000(2) 2.1%
Albert E. Heacox, Ph.D....................... 72,000(3) *
Edwin B. Cordell, Jr......................... 13,000(4) *
Gerald B. Seery.............................. 9,199(5) *
All current Directors and Executive Officers
as a group (11) persons).................... 2,085,648(6) 21.3%
</TABLE>
12
<PAGE>
- --------
* Ownership represents less than 1% of outstanding CryoLife Common Stock.
(1) Includes 104,510 shares held of record by Ms. Ann B. Anderson, Mr.
Anderson's spouse. Also includes 18,000 shares subject to options which
are presently exercisable or will become exercisable within 60 days after
the date of this proxy statement.
(2) Includes 25,000 shares held of record by Ms. Gertrude McNally, Dr.
McNally's spouse. Includes 6,000 shares subject to options which are
either presently exercisable or will become exercisable within 60 days.
(3) Includes 6,000 shares subject to options which are either presently
exercisable or will become exercisable within 60 days.
(4) Includes 1,000 shares in a trading account as to which Mr. Cordell has
signature authority and 6,000 shares subject to options which are either
presently exercisable or will become exercisable within 60 days.
(5) Includes 8,000 shares subject to options which are either presently
exercisable or will become exercisable within 60 days.
(6) See "Election of Directors" for information as to beneficial ownership of
certain shares attributed to directors. Includes 210,000 shares subject to
options which are presently exercisable or will become exercisable within
60 days after the date of this proxy statement. Includes 1,000 shares held
by the parents of an executive officer for which such executive officer
has shared voting control. Includes 180 shares held as trustee by an
executive officer. Includes 25,000 shares held of record by the spouse of
an executive officer.
INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Ernst & Young LLP was chosen to replace KPMG Peat
Marwick LLP as the independent certified public accountants of the Company in
1996. Approval or selection of the independent certified public accountants of
the Company is not submitted to the annual meeting of shareholders. The Board
of Directors of the Company has historically selected the independent
certified public accountants of the Company, with the advice of the Audit
Committee, and the Board believes that it would be to the detriment of the
Company and its shareholders for there to be any impediment (such as selection
or ratification by the shareholders) to its exercising its judgment to remove
the Company's independent certified public accountants if, in its opinion,
such removal is in the best interest of the Company and its shareholders.
It is anticipated that a representative from the accounting firm of Ernst &
Young LLP will be present at the annual meeting of shareholders to answer
questions and make a statement if the representative desires to do so.
13
<PAGE>
SHAREHOLDER PROPOSALS
Appropriate proposals of shareholders intended to be presented at the
Company's 1998 annual meeting of shareholders must be received by the Company
by December 11, 1997 for inclusion in its proxy statement and form of proxy
relating to that meeting. If the date of the next annual meeting is advanced
or delayed by more than 30 calendar days from the date of the annual meeting
to which this proxy statement relates, the Company shall, in a timely manner,
inform its shareholders of the change, and the date by which proposals of
shareholders must be received.
UPON THE WRITTEN REQUEST OF ANY RECORD OR BENEFICIAL OWNER OF COMMON STOCK
OF THE COMPANY WHOSE PROXY WAS SOLICITED IN CONNECTION WITH THE 1997 ANNUAL
MEETING OF SHAREHOLDERS, THE COMPANY WILL FURNISH SUCH OWNER, WITHOUT CHARGE,
A COPY OF ITS ANNUAL REPORT ON FORM 10-K WITHOUT EXHIBITS FOR ITS FISCAL YEAR
ENDED DECEMBER 31, 1996. REQUEST FOR A COPY OF SUCH ANNUAL REPORT ON FORM 10-K
SHOULD BE ADDRESSED TO SUZANNE GABBERT, ASSISTANT SECRETARY, CRYOLIFE, INC.,
1655 ROBERTS BOULEVARD, N.W., KENNESAW, GEORGIA 30144.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO NOT
EXPECT TO ATTEND THE MEETING IN PERSON ARE URGED TO SIGN, COMPLETE, DATE AND
RETURN THE PROXY CARD IN THE ENCLOSED ENVELOPE, TO WHICH NO POSTAGE NEED BE
AFFIXED.
By Order of the Board of Directors
/s/ Steven G. Anderson
STEVEN G. ANDERSON, Chairman
of the Board, President and Chief
Executive Officer
Dated: April 10, 1997
14
<PAGE>
Please mark [X]
your vote as
indicated in
this example
1. ELECTION OF DIRECTORS. NOMINEES: Steven G. Anderson, Ronald C.
Elkins, M.D., Benjamin H. Gray, Rodney G.
Lacy, Ronald D. McCall, Esq.
FOR election of the REFRAIN FROM (INSTRUCTION: To withhold
individuals set forth VOTING FOR authority to vote for any
opposite as directors election of the individual nominee(s), write that
(except as marked to individuals set person's name on the space
the contrary) forth as directors provided below.)
[_] [_] ---------------------------------
2. Upon such other matters as may
properly come before the meeting.
THE PROXIES SHALL VOTE AS
SPECIFIED ABOVE, OR IF A CHOICE IS
NOT SPECIFIED, THEY SHALL VOTE
"FOR" THE ELECTION OF THE ABOVE-
NAMED PERSONS AS DIRECTORS.
Dated: , 1997
----------------------
---------------------------------
---------------------------------
(Signature)
(Shareholders should sign exactly
as name appears on stock. Where
there is more than one owner each
should sign. Executors,
Administrators, Trustees and
others signing in a representative
capacity should so indicate.)
Please enter your Social Security
Number or Federal Employer
Identification Number here:
---------------------------------
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
Annual Meeting
of
Shareholders
of
CRYOLIFE, INC.
May 15, 1997
at
Marietta Country Club
1400 Marietta Country Club Drive
Kennesaw, Georgia
10:00 A.M.
<PAGE>
CRYOLIFE, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR USE AT THE ANNUAL MEETING ON MAY 15, 1997
The undersigned shareholder hereby appoints STEVEN G. ANDERSON and RONALD
D. McCALL, or any of them, with full power of substitution, to act as proxy for,
and to vote the stock of, the undersigned at the annual meeting of shareholders
of CRYOLIFE, INC. (the "Company") to be held on May 15, 1997, and any
adjournments thereof.
The undersigned acknowledges receipt of Notice of the Annual Meeting and
Proxy Statement, each dated April 10, 1997, and grants authority to said
proxies, or their substitutes, and ratifies and confirms all that said proxies
may lawfully do in the undersigned's name, place and stead. The undersigned
instructs said proxies to vote as indicated on the reverse hereof.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(CONTINUED ON THE REVERSE SIDE)
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
