[MERIDIAN DIAGNOSTICS, INC. LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS To Be
Held January 22, 1998
Dear Shareholder:
We are pleased to invite you to attend our Annual Shareholders' Meeting
at The Phoenix, 812 Race Street, Cincinnati, Ohio on January 22, 1998 at 3:00
p.m. Eastern Time.
The purposes of this Annual Meeting are:
1. To elect six directors to serve for the next fiscal year;
2. To ratify the appointment of Arthur Andersen LLP as the Company's
independent public accountants for fiscal 1998; and
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
After the formal meeting, we will review the Company's progress during
the last fiscal year and our plans for fiscal 1998 and answer your questions
regarding the Company. Board members and executive officers will also be
available to discuss the Company's operations with you.
Yours truly,
/s/ WILLIAM J. MOTTO
William J. Motto
Chairman of the Board of Directors
Dated: December 19, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE VOTE, SIGN AND
PROMPTLY RETURN YOUR PROXY CARD IN THE ENCLOSED ENVELOPE. PROXIES MAY BE
REVOKED BY WRITTEN NOTICE OF REVOCATION, THE SUBMISSION OF A LATER PROXY, OR BY
ATTENDING THE MEETING AND VOTING IN PERSON.
MERIDIAN DIAGNOSTICS, INC.
3471 River Hills Drive
Cincinnati, Ohio 45244
Telephone (513) 271-3700
-------------------
P R O X Y S T A T E M E N T
Annual Meeting of Shareholders
January 22, 1998
INTRODUCTION
The Board of Directors of Meridian Diagnostics, Inc. is requesting your
proxy for use at the Annual Meeting of Shareholders on January 22, 1998, and at
any adjournment thereof, pursuant to the foregoing Notice. The approximate
mailing date of the Proxy Statement and the accompanying proxy card is December
19, 1997.
VOTING AT THE ANNUAL MEETING
General
- -------
Shareholders may vote in person or by proxy at the Annual Meeting.
Proxies given may be revoked at any time by filing with the Company either a
written revocation or a duly executed proxy card bearing a later date, or by
appearing at the Annual Meeting and voting in person. Abstentions and shares
not voted for any reason, including broker non-votes, will have no effect on
the outcome of any vote taken at the Annual Meeting.
As of December 5, 1997, the record date for determining shareholders
entitled to notice of and to vote at the Annual Meeting, Meridian had
14,371,641 shares of Common Stock outstanding. Each share is entitled to one
vote. Only shareholders of record at the close of business on December 5, 1997
will be entitled to vote at the Annual Meeting.
Principal Shareholder
- ---------------------
The following person is the only shareholder known by Meridian to own
beneficially 5% or more of its outstanding Common Stock as of December 5, 1997:
<TABLE>
<CAPTION>
Name of Percent
Beneficial Owner Amount of Class
---------------- --------- --------
<S> <C> <C>
William J. Motto 4,708,405 32.6%
</TABLE>
The business address of Mr. Motto is 3471 River Hills Drive, Cincinnati,
Ohio 45244.
Mr. Motto is a party to an agreement with Jerry L. Ruyan and the Company
pursuant to which he must offer his shares for sale to the Company, and if it
declines to purchase, to Mr. Ruyan, based on the current market price, if he
desires to sell more than 1% of the Company's Common Stock in any three-month
period.
The shares of Common Stock reported above as beneficially owned by Mr.
Motto include 883,985 shares held by his three children as trustees of various
trusts, 50,146 shares held by the William J. Motto Family Charitable Remainder
Unitrust, and 69,148 shares subject to options exercisable within 60 days.
Election of Directors
- ---------------------
The Board is nominating for re-election all of the current directors,
namely James A. Buzard, John A. Kraeutler, Gary P. Kreider, William J. Motto,
Robert J. Ready, and Jerry L. Ruyan.
All directors elected at the Annual Meeting will be elected to hold
office until the next Annual Meeting.
In voting to elect directors, shareholders are entitled to cumulate their
votes and to give one candidate a number of votes equal to the number of
directors to be elected multiplied by the number of shares held by the
shareholder, or to distribute their votes on the same principle among as many
candidates as the shareholder sees fit. In order to invoke cumulative voting,
notice of cumulative voting must be given in writing by a shareholder to the
President, a Vice President or the Secretary of the Company not less than 48
hours prior to the Annual Meeting. The proxies solicited include discretionary
authority to cumulate votes.
Should any of the nominees become unable to serve, proxies will be voted
for any substitute nominee designated by the Board of Directors. Nominees
receiving the highest number of votes cast for the positions to be filled will
be elected.
Ratification of Appointment of Accountants
- ------------------------------------------
The Audit Committee of the Board of Directors appointed Arthur Andersen
LLP as the Company's independent public accountants for the fiscal year ending
September 30, 1998. Arthur Andersen LLP has been the independent accounting
firm for the Company since 1986. Although not required by law, the Board of
Directors is seeking shareholder ratification of this selection. The
affirmative vote of a majority of shares voting at the Annual Meeting is
required for ratification. If ratification is not obtained, the Board of
Directors intends to continue the employment of Arthur Andersen LLP at least
through fiscal 1998. Representatives of Arthur Andersen LLP are expected to be
present at the Annual Meeting and will be given an opportunity to comment, if
they so desire, and to respond to appropriate questions that may be asked by
shareholders.
Other Matters
- -------------
Any other matters considered at the Annual Meeting including adjournment
will require the affirmative vote of a majority of shares voting.
Voting by Proxy
- ---------------
All proxy cards properly signed will, unless a different choice is
indicated, be voted "FOR" election of all nominees for directors proposed by
the Board of Directors and "FOR" ratification of the selection of independent
public accountants.
If any other matters come before the Annual Meeting or any adjournment,
each proxy will be voted in the discretion of the individuals named as proxies
on the card.
Shareholder Proposals
- ---------------------
Shareholders who desire to have proposals included in the Notice for the
Annual Meeting of Shareholders to be held in 1999 must submit their proposals
in writing to the Company, Attention Secretary, at its offices on or before
August 20, 1998.
MANAGEMENT
Directors and Executive Officers
- --------------------------------
The following is information concerning Meridian's directors and
executive officers as of December 5, 1997:
<TABLE>
<CAPTION>
Common Stock
Beneficially Owned
-----------------------------
Name and Age Position Amount (1) Percentage
- ------------------------------------ ----------------------------------------- -------------- ----------
<S> <C> <C> <C>
William J. Motto Chairman of the Board of Directors, Chief 4,708,4057 (2) 32.6%
56 Executive Officer
John A. Kraeutler President, Chief Operating Officer and 119,105 *
49 Director
Gerard Blain Vice President, Secretary and Chief 21,420 *
57 Financial Officer
Ching Sui Arthur Yi, Ph.D. Vice President, Research and Development 27,523 *
51
Antonio A. Interno Vice President 354,022 2.4%
47
Richard L. Eberly Vice President, Sales and Marketing 3,487 *
36
James A. Buzard, Ph.D.(3) Director 17,125 *
70
Gary P. Kreider(3) Director 33,295 (4) *
59
Robert J. Ready(3) Director 18,381 *
57
Jerry L. Ruyan Director 558,120 (5) 3.9%
51
All Executive Officers and Directors
as a Group (10 Persons) -- 5,860,883 39.4%
<FN>
- -------------------
<F1> Includes options exercisable within 60 days for Mr. Motto of 60,794
shares, Mr. Kraeutler of 114,553 shares, Mr. Blain of 19,612 shares, Dr.
Yi of 11,910 shares, Mr. Interno of 194,705 shares, Mr. Eberly of 987
shares, Mr. Buzard of 15,873 shares, Mr. Kreider of 13,367 shares, Mr.
Ready of 18,380 shares, and Mr. Ruyan of 43,414 shares.
<F2> See description of Common Stock ownership contained under "Principal
Shareholder".
<F3> Audit Committee Member and Compensation Committee Member.
<F4> Includes 145 shares held directly by his wife and 9,364 shares held by
trusts of which Mr. Kreider is trustee and a beneficiary.
<F5> Includes 23,265 shares held by the Ruyan Family Charitable Remainder
Unitrust of which Mr. Ruyan is trustee and a beneficiary.
<F*> Less than 1%
</FN>
</TABLE>
William J. Motto has more than 25 years of experience in the
pharmaceutical and diagnostics products industries, is a founder of the Company
and has been Chairman of the Board since 1977. From that date until June 1986,
Mr. Motto served as President. He served as Chief Executive Officer from June
1986 until September 1989, and assumed that title again in May 1995. Before
forming the Company, Mr. Motto served in various capacities for Wampole
Laboratories, Inc., Marion Laboratories, Inc. and Analytab Products, Inc., a
division of American Home Products Corp.
John A. Kraeutler has over 20 years of experience in the medical
diagnostics industry and joined the Company as Executive Vice President and
Chief Operating Officer in January 1992. In July 1992, Mr. Kraeutler was named
President of the Company, and has been a Director since 1997. Before joining
Meridian, Mr. Kraeutler served as Vice President, General Manager for a
division of Carter-Wallace, Inc. Prior to that, he held key marketing and
technical positions with Becton, Dickinson and Company and Organon, Inc.
Gerard Blain joined the Company as Vice President and Chief Financial
Officer on March 1, 1994. He was elected Secretary in April 1996. Prior to
joining the Company, Mr. Blain was Vice President and Controller of Marion
Merrell Dow, Inc. Mr. Blain had been with Marion Merrell Dow, Inc. and its
predecessor companies since 1966.
Ching Sui Arthur Yi, Ph.D., has more than 17 years of experience in the
diagnostics industry and has been Vice President, Research and Development of
the Company since August 1989. From May 1986 until he joined the Company, he
was Director of Product Development of Cambridge BioScience Corporation.
Previously he was a partner of BioClinical System Inc. from July 1983 to April
1986, Manager of Research and Development of Terumo Medical Corporation from
March 1982 to June 1983 and Senior Scientist of Leeco Diagnostics from August
1979 to February 1982.
Antonio A. Interno was appointed as a Vice President in August 1991 and
appointed a Senior Vice President in September 1997. He has been Managing
Director of the Company's European subsidiary, Meridian Diagnostics Europe,
s.r.l., since February 1990. Prior to that time, he was the marketing manager
for Diagnostics International Distribution SPA, a major Italian diagnostics
distributor.
Richard L. Eberly was appointed Vice President of Sales and Marketing in
January 1997. He has over 11 years of experience in the medical diagnostic
industry and joined the Company in January 1995. Prior to his appointment to
Vice President of Sales and Marketing, Mr. Eberly served as the Director of
Sales for the Company. Before joining Meridian he held key sales and marketing
positions at Abbott Diagnostics.
James A. Buzard, Ph.D., has been a Director since 1990 and serves as
Chairman of the Compensation Committee. From March 1981 until December 1989, he
was Executive Vice President of Merrell Dow Pharmaceuticals Inc. From December
1989 until his retirement in February 1990, he was Vice President of Marion
Merrell Dow, Inc. He has been a business consultant since February 1990.
Gary P. Kreider has been a Director since 1991. For over five years Mr.
Kreider has been a Senior Partner of the Cincinnati law firm of Keating,
Muething & Klekamp, P.L.L., counsel to the Company.
Robert J. Ready has been a Director since 1986 and serves as Chairman of
the Audit Committee. In 1976, Mr. Ready founded LSI Industries, Inc.,
Cincinnati, Ohio, which engineers, manufactures and markets
commercial/industrial lighting and graphics products, and has served as its
President and Chairman of its Board of Directors since that time.
Jerry L. Ruyan has more than 20 years of experience in the diagnostics
products and medical industries, is a founder of the Company and has been a
Director since 1977. Mr. Ruyan's principal occupation is investment in business
ventures, primarily privately held organizations, and presently is a partner in
Redwood Ventures LLC. Mr. Ruyan served as Chief Executive Officer of Meridian
from July 1992 to May 1995. In May 1995, Mr. Ruyan reduced his day-to-day
involvement in the Company in order to pursue outside interests. He
relinquished the title of Chief Executive Officer at that time, but continues
to serve as a Director and an employee. Mr. Ruyan served as President of the
Company from June 1986 to July 1992. From June 1986 through January 1992, Mr.
Ruyan served as Chief Operating Officer. Mr. Ruyan is also a director of
Frisch's Restaurants, Inc. and Meritage Hospitality Group Inc.
Board Actions and Compliance with Section 16 of the
Securities Exchange Act of 1934
- ----------------------------------------------------
The Board of Directors met four times during fiscal 1997 and took action
in writing on three occasions.
The Audit Committee, composed of Messrs. Ready (Chairman), Kreider and
Buzard, all of whom are non-employee directors, is responsible for reviewing
the Company's internal accounting operations. It also recommends the employment
of independent accountants and reviews the relationships between the Company
and its outside accountants. This committee met four times during fiscal 1997.
The Compensation Committee is responsible for establishing compensation
levels for management and for administering the Company's stock option plans.
The Compensation Committee, also consisting of Messrs. Buzard (Chairman),
Kreider and Ready, met four times during fiscal 1997 and took action in writing
on four occasions.
The Stock Compensation Committee, a sub-committee of the Compensation
Committee established in August 1996, is responsible for all stock option and
other stock-related compensation for executive officers. The Stock Compensation
Committee, consisting of Messrs. Buzard and Ready, met once during fiscal 1997.
The Company does not have a nominating committee or executive committee.
Directors who are not employees of Meridian receive $10,000 per year for
serving as a director and a member of committees, plus $1,000 for each
directors' meeting attended and $300 for each directors' meeting held by
telephone. Committee members receive $1,000 per committee meeting attended,
unless the committee meeting occurs on the same day as a directors' meeting, in
which case the committee member receives only the directors' meeting fee. Under
the Company's 1994 Directors' Stock Option Plan, each non-employee director is
granted a non-qualified option to purchase 2,317 shares of Common Stock at the
time of election or re-election to the Board of Directors, with the exercise
price being the closing sale price reported immediately prior to the date of
grant. Directors who are employees of the Company are not separately
compensated for serving as directors.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers, directors and persons who own more than ten percent of the
Company's Common Stock to file reports of ownership with the Securities and
Exchange Commission and to furnish the Company with copies of these reports.
Based solely upon its review of reports received by it, or upon written
representation from certain reporting persons that no reports were required,
Meridian believes that during fiscal 1997 all filing requirements were met.
Executive Compensation
- ----------------------
The following table sets forth information regarding compensation paid by
Meridian for the last three fiscal years to its Chief Executive Officer and
five other most highly compensated executive officers (the "Named Executives"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
-------------------------------------------------------------
Securities
Underlying All Other
Name and Principal Position Year Salary Bonus Options Compensation (1)
- ------------------------------------- ---- -------- ------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
William J. Motto 1997 $325,000 $ -- -- $ 4,742
Chairman of the Board of Directors, 1996 302,000 75,509 20,000 12,832
Chief Executive Officer 1995 275,000 68,750 38,625 8,744
John A. Kraeutler 1997 $235,000 $ -- -- $ 4,641
President, Chief Operating Officer 1996 215,000 53,841 24,000 11,816
1995 195,000 48,750 54,075 6,216
Gerard Blain 1997 $147,000 $ -- -- $ 4,593
Vice President, Secretary and Chief 1996 135,000 25,341 10,000 7,970
Financial Officer 1995 120,000 27,000 3,090 3,550
Antonio A. Interno 1997 $200,000 $ -- -- $ 0
Vice President 1996 181,250 25,700 10,000 0
1995 165,000 35,000 15,450 0
Ching Sui Arthur Yi 1997 $114,000 $ -- -- $ 3,730
Vice President, Research and 1996 108,000 20,288 2,000 8,022
Development 1995 101 000 18,938 6,180 3,300
Richard L. Eberly 1997 $ 94,100 $ 9,400 9,100 $ 3,350
Vice President, Sales and
Marketing (2)
<FN>
- -------------------
<F1> Amounts accrued under the Company's Savings and Investment Plan.
<F2> Mr. Eberly was appointed as Vice President, Sales and Marketing in
January 1997.
</FN>
</TABLE>
Stock Options
- -------------
The following table contains information concerning the exercise and
appreciation of stock options held by the Named Executives:
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Number of Securities % of Total Options for Option Term
Underlying Options Granted to Employees Exercise Price Expiration ---------------------------
Name Granted in Fiscal 1997 ($ per share) Date 5% 10%
- -------------------- -------------------- -------------------- -------------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
William J. Motto -- -- -- -- -- --
John A. Kraeutler -- -- -- -- -- --
Gerard Blain -- -- -- -- -- --
Antonio A. Interno -- -- -- -- -- --
Ching Sui Arthur Yi -- -- -- -- -- --
Richard L. Eberly 100 0.3% $13.1250 9/30/2006 826 2,091
1,000 3.0% $12.0625 11/19/2006 7,588 19,218
8,000 24.0% $13.1250 1/5/2007 66,040 167,320
</TABLE>
FISCAL 1997 OPTION EXERCISES
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised In-the-Money
Shares Acquired Value Unexercised Options at FY-End Options at FY-End
Name on Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
- -------------------- --------------- -------- ------------------------------- ---------------------------------
<S> <C> <C> <C> <C>
William J. Motto 11,138 $ 67,433 69,148/19,658 394,898/84,929
John A. Kraeutler -- -- 114,553/45,520 725,323/151,043
Gerard Blain -- -- 19,612/17,908 89,572/44,530
Antonio A. Interno 50,000 $628,885 193,455/11,363 1,893,702/39,308
Ching Sui Arthur Yi -- -- 11,660/8,045 69,210/18,034
Richard L. Eberly -- -- -- --
</TABLE>
Report of the Compensation Committee
- ------------------------------------
The Compensation Committee establishes compensation for executive
officers by setting salaries, establishing bonus plans, making bonus awards and
awarding stock options.
At a meeting held September 16, 1996, the Committee established salaries
for the Company's executive officers for fiscal 1997. In making its
determination, the Committee reviewed recommendations of management and salary
levels at similarly sized companies as well as the progress made by the Company
in the prior fiscal year and the contributions of its executive officers to
that progress.
With respect to the salary paid to Mr. Motto, the Committee utilized the
salary data, Company performance and the other factors described above. In
addition, the committee evaluated Mr. Motto's ability to develop and implement
strategic plans for the Company's growth and profitability. The Committee
determined his salary in light of these factors.
On November 20, 1996, the Committee granted a number of employees,
including Mr. Eberly, incentive stock options from the Company's Stock Option
Plan. Mr. Eberly was granted an option to purchase 1,000 shares of Company
common stock at an exercise price of $12.0625 per share; such option was
granted in accordance with the Company's normal stock option agreement
providing for vesting over a four year period. On January 6, 1997, the
Committee granted Mr. Eberly an additional option to purchase 8,000 shares of
Company common stock at an exercise price of $13.125 per share; such option was
also granted as an incentive stock option vesting over a four year period. Also
on January 6, 1997, the Committee established Mr. Eberly's annual salary. In
making its determination, the Committee reviewed recommendations of management
and salary levels at similarly sized companies.
At a meeting held on July 23, 1997, the Committee affirmed that the split
dollar insurance policy maintained for Mr. Kraeutler be retained at its current
level but that the premium portion being paid by the Company be increased from
$8,000 to $10,700 per year.
At a meeting held on October 16, 1997, the Committee granted options for
the following number of shares at $10.875 per share: Mr. Blain - 10,000 shares;
Mr. Eberly - 7,500 shares; Mr. Interno - 5,000 shares; Mr. Kraeutler - 20,000
shares; and Dr. Yi - 6,000 shares. All of these options vest over four year
periods.
At a meeting held November 19, 1997, the Committee reviewed with
management the Company's financial results for fiscal 1997 in connection with
the bonus plan previously approved by the Board. Since the targets set forth in
the plan for fiscal 1997 were not met, no bonuses were awarded.
Compensation Committee of
the Board of Directors
James A. Buzard, Chairman
Gary P. Kreider
Robert J. Ready
The following graph shows the yearly percentage change in Meridian's
cumulative total shareholder return on its Common Stock (as measured by
dividing (i) the sum of (A) the cumulative amount of dividends, assuming
dividend reinvestment during the periods presented and (B) the difference
between Meridian's share price at the end and the beginning of the periods
presented; by (ii) the share price at the beginning of the periods presented)
with the Wilshire 5000 Equity Index and a Peer Group Index. The Peer Group
consists of Diagnostics Products Corp., Gamma Biologicals, Inc., Hycor
Biomedical, Inc. and Immucor, Inc.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG MERIDIAN DIAGNOSTICS, INC., THE WILSHIRE 5000 EQUITY INDEX
AND A PEER GROUP
<TABLE>
<CAPTION>
Measurement Period Meridian Wilshire
(Fiscal Year Covered) Diagnostics, Inc. 5000 Index Peer Group
------------------------- ----------------- ---------- ----------
<S> <C> <C> <C>
Measurement Pt. - 9/30/92 $100 $100 $100
9/30/93 90 117 185
9/30/94 86 120 104
9/30/95 137 155 166
9/30/96 230 85 157
9/30/97 208 255 133
* $100 Invested on 9/30/92 in Stock or Index -
Including Reinvestment of Dividends.
Fiscal Year Ending September 30.
</TABLE>
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
Gary P. Kreider, who is a member of the Compensation Committee, is a
senior partner of Keating, Muething & Klekamp, P.L.L., Cincinnati, Ohio, a law
firm that provided legal services to Meridian in fiscal 1997.
OTHER MATTERS
Meridian is not aware of any other matters to be presented at the Annual
Meeting other than those specified in the Notice.
By order of the Board of Directors
Gerard Blain
Secretary
December 19, 1997
MERIDIAN DIAGNOSTICS, INC.
The undersigned hereby appoints WILLIAM J. MOTTO and GERARD
PROXY BLAIN, or either of them, proxies of the undersigned, each with
the power of substitution, to vote cumulatively or otherwise all
FOR shares of Common Stock which the undersigned would be entitled
to vote on the matters specified below and in their discretion
ANNUAL with respect to such other business as may properly come before
the Annual Meeting of Shareholders of Meridian Diagnostics, Inc.
MEETING to be held on January 22, 1998 at 3:00 P.M. Eastern Time at The
Phoenix, 812 Race Street, Cincinnati, Ohio or any adjournment of
such Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS:
1. Authority to elect as directors the six (6) nominees listed below.
FOR [ ] WITHHOLD AUTHORITY [ ]
JAMES A. BUZARD, JOHN A. KRAEUTLER, GARY P. KREIDER, WILLIAM J. MOTTO,
ROBERT J. READY AND JERRY L. RUYAN
WRITE THE NAME OF ANY NOMINEE(S) FOR WHOM AUTHORITY TO VOTE IS WITHHELD
2. Ratification of the appointment of Arthur Andersen LLP as independent
public accountants for fiscal 1998.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THIS PROXY WILL BE VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS UNLESS A
CONTRARY CHOICE IS SPECIFIED.
(This proxy is continued and is to be signed on the reverse side)
Date __________________________, 19____
_______________________________________
_______________________________________
(Important: Please sign exactly as name
appears hereon indicating, where proper,
official position or representative
capacity. In the case of joint holders,
all should sign.)
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS
