<PAGE> 1
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- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12.
</TABLE>
STERIS CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
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<PAGE> 2
STERIS CORPORATION
5960 Heisley Road [] Mentor, Ohio 44060-1834 [] USA
TO OUR SHAREHOLDERS:
The 1999 Annual Meeting of Shareholders of STERIS Corporation will be held
at 9:00 a.m., Eastern Daylight-Saving Time, on Thursday, July 22, 1999, at the
Company's headquarters, 5960 Heisley Road, Mentor, Ohio, USA. At the Annual
Meeting, shareholders will be asked to elect two directors for terms running
through the 2001 Annual Meeting. Management will also report on fiscal year 1999
results. We urge you to attend the meeting and to vote FOR the nominees for
Director listed in the Proxy Statement.
The formal notice of the meeting and the Proxy Statement containing
information relative to the meeting follow this letter. We urge you to read the
Proxy Statement carefully.
PLEASE SIGN AND RETURN THE ENCLOSED PROXY WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING TO ASSURE YOUR SHARES WILL BE VOTED. If you do attend the meeting,
and the Board of Directors joins me in hoping that you will, there will be an
opportunity to revoke your Proxy and to vote in person if you prefer.
Sincerely,
/s/ Bill R. Sanford
BILL R. SANFORD
Chairman of the Board, President,
and Chief Executive Officer
June 23, 1999
<PAGE> 3
STERIS CORPORATION
5960 Heisley Road [] Mentor, Ohio 44060-1834 [] USA
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JULY 22, 1999
The Annual Meeting of Shareholders of STERIS Corporation will be held at
9:00 a.m., Eastern Daylight-Saving Time, on Thursday, July 22, 1999, at the
Company's headquarters, 5960 Heisley Road, Mentor, Ohio, USA, for the following
purposes:
1. To elect two directors to serve until the 2001 Annual Meeting;
2. To receive the reports of officers; and
3. To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on June 11, 1999, as
the record date for determining shareholders entitled to notice of the meeting
and to vote.
The Company's integrated Annual Report to Shareholders and Form 10-K for
the year ended March 31, 1999, is being mailed to shareholders with the Proxy
Statement. The Proxy Statement accompanies this Notice.
By Order of the Board of Directors
/s/ David C. Dvorak
DAVID C. DVORAK
Secretary
June 23, 1999
PLEASE SIGN AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED FOR THAT
PURPOSE, WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING. IF YOU
ATTEND THE ANNUAL MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE YOUR SHARES IN
PERSON.
<PAGE> 4
STERIS CORPORATION
5960 Heisley Road [] Mentor, Ohio 44060-1834 [] USA
PROXY STATEMENT
ANNUAL MEETING, JULY 22, 1999
THE PROXY AND
SOLICITATION
This Proxy Statement is being mailed on or about June 23,
1999, to the shareholders of STERIS Corporation ("STERIS" or
the "Company") of record as of the close of business on June
11, 1999 (the "Record Date"), in connection with the
solicitation by the Board of Directors of the enclosed form of
Proxy for the Annual Meeting of Shareholders to be held at 9:00 a.m., Eastern
Daylight-Saving Time, on Thursday, July 22, 1999, at the Company's headquarters,
5960 Heisley Road, Mentor, Ohio, USA. Pursuant to the Ohio General Corporation
Law, a shareholder may revoke a writing appointing a Proxy either by giving
notice to the Company in writing or in open meeting. The cost of soliciting the
Proxies will be borne by the Company. STERIS has engaged a professional proxy
solicitation firm, Georgeson & Company, Inc., to aid in the solicitation of
Proxies, for whose services the Company will pay a fee of not more than $10,000.
VOTING
SECURITIES
The Company has 67,309,864 Common Shares outstanding and
entitled to vote at the Annual Meeting, each of which is
entitled to one vote. The Board of Directors has fixed the
close of business on June 11, 1999, as the record date for
determining the shareholders entitled to notice of the meeting
and to vote. Under the Ohio General Corporation Law, the shares may be voted
cumulatively in the election of directors if (a) notice in writing is given by
any shareholder to the President, a Vice President, or the Secretary of the
Company not less than forty-eight hours before the time fixed for holding the
meeting that the shareholder desires the voting in the election to be cumulative
and (b) an announcement of the giving of the notice is made upon the convening
of the meeting by the Chairman or the Secretary or by or on behalf of the
shareholder giving the notice. If voting in the election of directors is
cumulative, each shareholder will have the right to cumulate the shareholder's
votes and to give one nominee a number of votes equal to the number of directors
to be elected multiplied by the number of votes to which the shareholder's
shares are entitled, or the shareholder may distribute the shareholder's votes
on the same principle among two or more nominees. In the event of cumulative
voting, the persons named in the enclosed Proxy will vote the shares represented
by valid Proxies on a cumulative basis for the election of the nominees listed
on page 3, allocating the votes among the nominees in accordance with their best
judgment.
Common Shares represented by properly executed Proxies will be voted in
accordance with specifications made thereon. If no specification is made,
Proxies will be voted FOR the election of the nominees named herein. Abstentions
and broker non-votes, unless a broker's authority to vote on a particular matter
is limited, are tabulated in determining the votes present at a meeting.
Consequently, an abstention or a broker non-vote (assuming a broker has
unlimited authority to vote on the matter) has the same effect as a vote against
a director nominee or against the approval of a proposal, as each abstention or
broker non-vote would be one less vote for a director nominee or for the
approval of a proposal.
Directors are elected and other actions are generally taken by a majority
vote of those shareholders present or represented by Proxy at the Annual Meeting
of Shareholders, provided that a quorum is present or represented at the
meeting.
PURPOSES OF
ANNUAL MEETING
The Annual Meeting has been called for the purposes of (1)
electing directors of the class whose term of office expires
in 2001 and (2) transacting such other business as may
properly come before the meeting.
The three persons named in the enclosed Proxy have been selected by the
Board of Directors and will vote shares represented by valid Proxies. They have
indicated that, unless otherwise specified in the Proxy, they intend to vote to
elect as directors of Class I the two nominees listed on page 3.
1
<PAGE> 5
ELECTION OF
DIRECTORS
STERIS has a classified board system, with the Board of
Directors divided into two classes (Classes I and II), the
members of which serve staggered two-year terms. The terms of
the current Class I Directors expire at the 1999 Annual
Meeting. Due to Mr. Magulski's appointment as Corporate Senior
Vice President of STERIS, he has decided not to stand for re-election to the
Board of Directors. The Company has not yet identified a replacement for Mr.
Magulski. Therefore, a vacancy will exist on the Board of Directors after the
1999 Annual Meeting. Both of the nominees for election at the 1999 Annual
Meeting for the two remaining seats in Class I are incumbent members of the
Board of Directors who were last elected by the shareholders at the 1997 Annual
Meeting.
The Board of Directors recommends a vote FOR the election of the two
nominees listed on page 3. The Proxy cannot be voted for more than two nominees.
The Board of Directors has no reason to believe that either of the nominees
will be unable to serve as a director. In the event, however, of the death or
unavailability of any nominee or nominees, the Proxy to that extent will be
voted for such other person or persons as the Board of Directors may recommend.
The Company has no knowledge of any other matters to be presented for vote
to the shareholders at the Annual Meeting. In the event other matters do
properly come before the meeting, the persons named in the Proxy will vote in
accordance with their judgment on such matters.
OWNERSHIP OF
VOTING SECURITIES
The following table sets forth information furnished to the
Company with respect to the beneficial ownership of the
Company's Common Shares by each executive officer named below,
director and nominee, and by all directors and executive
officers as a group, each as of May 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME BENEFICIALLY OWNED OF CLASS
---- ------------------- ---------
<S> <C> <C>
Bill R. Sanford(1)........................................ 2,278,228 3.3%
Raymond A. Lancaster(2)(3)................................ 58,378 *
Loyal W. Wilson(3)(4)..................................... 93,358 *
J. B. Richey(3)........................................... 150,318 *
Jerry E. Robertson(3)..................................... 53,478 *
Thomas J. Magulski(3)(5).................................. 80,334 *
Frank E. Samuel, Jr.(3)(5)................................ 80,334 *
Michael A. Keresman, III(6)............................... 460,900 *
J. Lloyd Breedlove(7)(8).................................. 2,868 *
Paul A. Zamecnik(9)....................................... 103,050 *
David C. Dvorak(7)(10).................................... 57,881 *
All directors and executive officers as a group
(13 persons)(11)........................................ 3,514,728 5.0%
</TABLE>
- ---------------
* Less than one percent
(1) Includes 1,667,000 Common Shares subject to options that are exercisable
within 60 days.
(2) Includes 3,400 Common Shares held by Mr. Lancaster as custodian for his
minor children and 2,000 Common Shares as to which Mr. Lancaster's wife has
sole voting power and sole dispositive power.
(3) Includes 50,000 Common Shares (46,000 Common Shares for Mr. Lancaster)
subject to options that are exercisable within 60 days, which options were
granted pursuant to the STERIS Corporation 1994 Nonemployee Directors
Equity Compensation Plan (the "Directors Plan").
(4) Includes 2,000 Common Shares as to which Mr. Wilson's wife has sole voting
power and sole dispositive power.
(5) Includes an additional 20,000 Common Shares subject to options that are
exercisable within 60 days.
(6) Includes 458,000 Common Shares subject to options that are exercisable
within 60 days. Also includes 2,760 Common Shares held by the Keresman
Family Trust, with regard to which Mr. Keresman has voting and dispositive
control as trustee.
(7) Common Shares owned by participants in the STERIS Corporation 401(k) Plan
and Trust are reflected as of May 31, 1999, the most recent accounting
available.
(8) Mr. Breedlove retired effective April 2, 1999.
(9) Includes 103,050 Common Shares subject to options that are exercisable
within 60 days.
(10) Includes 57,500 Common Shares subject to options that are exercisable
within 60 days.
(11) Includes 2,716,550 Common Shares subject to options that are exercisable
within 60 days.
2
<PAGE> 6
SECTION 16(a)
BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Based on Company records and information, the Company
believes that all Securities and Exchange Commission filing
requirements applicable to directors and executive officers
under Section 16(a) of the Securities Exchange Act of 1934,
as amended, for the fiscal year ended March 31, 1999, were
complied with.
BOARD OF DIRECTORS
The following provides as to nominees and directors whose
terms of office will continue after the Annual Meeting, the
principal occupation and employment, age, the year in which
each became a director of the Company, and directorships in companies having
securities registered pursuant to the Securities Exchange Act of 1934, as
amended.
NOMINEES FOR TERMS EXPIRING AT THE ANNUAL
MEETING IN 2001 (CLASS I DIRECTORS)
RAYMOND A. LANCASTER (age 53) joined the Company's Board of Directors in
1988. Since February 1995, Mr. Lancaster has held the position of Managing
Partner of Kirtland Capital Partners II L.P., a middle market leveraged buy out
partnership. From 1990 to 1994, Mr. Lancaster was Managing Director of Key
Equity Capital Corporation, a wholly-owned subsidiary of KeyCorp. Mr. Lancaster
is also currently a member of the Boards of Directors of PVC Container Corp. and
Unifrax Corporation.
J. B. RICHEY (age 62) joined the Company's Board of Directors in 1987.
Since 1984, Mr. Richey has been Senior Vice President of Invacare Corporation, a
provider of home healthcare medical equipment. Mr. Richey is also currently a
member of the Boards of Directors of Invacare Corporation, Royal Appliance
Manufacturing Company, and Unique Mobility, Inc.
CONTINUING DIRECTORS WHOSE TERMS EXPIRE
AT THE ANNUAL MEETING IN 2000 (CLASS II DIRECTORS)
JERRY E. ROBERTSON (age 66) joined the Company's Board of Directors in
1994. Dr. Robertson retired in March 1994 from 3M Company where he most recently
served (since 1986) as Executive Vice President, Life Sciences Sector and
Corporate Services and as a member of the Board of Directors. Dr. Robertson is
also currently a member of the Boards of Directors of Haemonetics Corporation,
Coherent, Inc., Cardinal Health, Inc., Medwave, Inc., and Choice Hotels
International.
FRANK E. SAMUEL, JR. (age 59) joined the Company's Board of Directors in
1992. Since February 1995, Mr. Samuel has been the President of the Edison
BioTechnology Center, a business formation organization for the State of Ohio in
the biotechnology, biomedical devices, and medical software fields. From January
1990 to February 1995, Mr. Samuel was an independent healthcare industry
consultant. From February 1984 through December 1989, Mr. Samuel was President
of the Health Industry Manufacturers Association, a national trade association
representing medical technology manufacturers. Mr. Samuel is also currently a
member of the Board of Directors of Protocol Systems, Inc.
BILL R. SANFORD (age 55) has served as Chairman of the Board of Directors,
President, and Chief Executive Officer of the Company since April 1, 1987. Mr.
Sanford is also currently a member of the Board of Directors of KeyCorp, a
financial services company.
LOYAL W. WILSON (age 51) joined the Company's Board of Directors in 1987.
Mr. Wilson has been a Managing Director of Primus Venture Partners, Inc., a
private equity investment and management firm, since its inception in 1983. Mr.
Wilson is also currently a member of the Board of Directors of Corinthian
Colleges, Inc.
BOARD MEETINGS
AND COMMITTEES
During the fiscal year ended March 31, 1999, there were five
meetings of the Company's Board of Directors. The Company's
Board of Directors has a Compensation Committee and an Audit
Committee. The Company's entire Board of Directors nominate
directors for election to the Board of Directors. The
Compensation Committee makes recommendations concerning salaries and other
compensation for employees of and consultants to the Company and administers the
Company's stock option and equity compensation plans. The Audit Committee
reviews the results and scope of
3
<PAGE> 7
the audit and other services provided by the Company's independent auditors.
Messrs. Lancaster, Robertson, and Wilson are the current members of the
Compensation Committee, and Messrs. Lancaster, Richey, and Samuel are the
current members of the Audit Committee. During the fiscal year ended March 31,
1999, there were four meetings of the Compensation Committee and two meetings of
the Audit Committee. Each director attended at least 75% of the aggregate number
of meetings held by the Board of Directors and all committees on which the
director served.
COMPENSATION OF
EXECUTIVE OFFICERS
Shown below is information concerning the annual, long-term,
and other compensation for services in all capacities to the
Company for the fiscal years ended March 31, 1999, 1998, and
1997 of those persons who were, at March 31, 1999, (i) the
chief executive officer and (ii) the four other most highly
compensated executive officers of the Company (the "Named Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
-------------------- ------------
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) OPTIONS(2)
--------------------------- ---- -------- -------- ------------
<S> <C> <C> <C> <C>
Bill R. Sanford............................... 1999 $466,249 $655,856 100,000
Chairman of the Board, President, 1998 383,556 564,823 100,000
and Chief Executive Officer 1997 321,101 417,400 700,000
J. Lloyd Breedlove(3)......................... 1999 $220,480 $146,794 50,000
Senior Vice President 1998 191,868 173,881 50,000
1997 165,034 150,251 100,000
Michael A. Keresman, III...................... 1999 $219,922 $140,760 50,000
Senior Vice President and 1998 191,544 185,773 50,000
Chief Information Officer 1997 160,241 147,508 110,000
Paul A. Zamecnik.............................. 1999 $186,544 $ 96,616 40,000
Vice President 1998 154,045 104,408 20,000
1997 111,300 73,154 25,000
David C. Dvorak............................... 1999 $166,412 $ 84,165 40,000
Vice President, General Counsel, 1998 146,923 97,700 20,000
and Secretary 1997 99,961 47,154 50,000
</TABLE>
- ---------------
(1) Amounts are those awarded under the Management Incentive Compensation Plan
or the Senior Executive Management Incentive Compensation Plan for the
respective fiscal year.
(2) The number of Common Shares underlying options for the fiscal years ended
1997 through 1999 have been adjusted to reflect a 2-for-1 stock split by
means of a 100% stock dividend on the Company's Common Shares that was
effective August 24, 1998.
(3) Mr. Breedlove retired effective April 2, 1999.
4
<PAGE> 8
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table sets forth, for each of the Named Officers, the
exercise of options to purchase the Company's Common Shares during the fiscal
year ended March 31, 1999, and the year-end value of unexercised options to
purchase the Company's Common Shares granted in the last fiscal year and in
prior years and held by the Named Officers at March 31, 1999. All options were
granted to the Named Officers under the Company's 1987 Amended and Restated
Non-qualified Stock Option Plan, the Company's 1994 Equity Compensation Plan, or
the Company's 1997 Stock Option Plan.
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
NUMBER OF IN-THE-MONEY
UNEXERCISED OPTIONS AT
OPTIONS AT FISCAL YEAR-
SHARES FISCAL YEAR-END END(2)
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED(1) UNEXERCISABLE UNEXERCISABLE
---- ----------- ----------- --------------- ---------------
<S> <C> <C> <C> <C>
Bill R. Sanford.......................... -- -- 1,662,000/ $36,244,794/
545,000 5,603,750
J. Lloyd Breedlove(3).................... 20,000 $ 592,750 402,500/ $ 8,754,781/
145,500 1,107,594
Michael A. Keresman, III................. 54,000 $1,678,831 395,500/ $ 8,346,687/
152,500 1,208,125
Paul A. Zamecnik......................... 8,500 $ 225,944 76,800/ $ 1,442,859/
72,500 374,141
David C. Dvorak.......................... -- -- 30,000/ $ 372,969/
80,000 454,844
</TABLE>
- ---------------
(1) Excess of market price on date of exercise over exercise price.
(2) Excess of $26.625 (market price at fiscal year-end) over exercise price.
(3) Mr. Breedlove retired effective April 2, 1999.
OPTION GRANTS DURING LAST FISCAL YEAR
The following table sets forth information with respect to the stock
options granted to the Named Officers pursuant to either the Company's 1994
Equity Compensation Plan or the Company's 1997 Stock Option Plan during the
fiscal year ended March 31, 1999.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
OPTIONS RATES OF STOCK
GRANTED TO APPRECIATION OVER TEN
EMPLOYEES EXERCISE YEAR OPTION TERM
OPTIONS IN FISCAL PRICE PER EXPIRATION -----------------------
NAME GRANTED(1) YEAR SHARE DATE 5% 10%
---- ---------- ---------- --------- --------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Mr. Sanford.............. 100,000 8.26% $30.65625 August 27, 2008 $1,948,691 $4,950,444
Mr. Breedlove(2)......... 50,000 4.13% $30.65625 August 27, 2008 $ 974,345 $2,475,222
Mr. Keresman............. 50,000 4.13% $30.65625 August 27, 2008 $ 974,345 $2,475,222
Mr. Zamecnik............. 40,000 3.31% $30.65625 August 27, 2008 $ 779,476 $1,980,177
Mr. Dvorak............... 40,000 3.31% $30.65625 August 27, 2008 $ 779,476 $1,980,177
</TABLE>
- ---------------
(1) All of these options were granted as nonqualified options on July 27, 1998
under the Company's 1994 Equity Compensation Plan or the Company's 1997
Stock Option Plan. In general, options granted under these plans have and
will vest in equal annual increments over a four-year period from the date
of grant.
(2) Mr. Breedlove retired effective April 2, 1999.
5
<PAGE> 9
As of March 31, 1999, Mr. Sanford owed the Company $2,501,451.26 under a
loan made in 1997 in connection with his exercise of certain stock options. The
loan is evidenced by a full recourse promissory note, bears interest at the rate
of 5.7% per annum, and is repayable in a lump sum on or before February 28,
2002.
BOARD
COMPENSATION
Each director who is not an employee of the Company is paid a
retainer of $24,000 per year plus $1,000 for each Board
meeting attended in excess of four meetings per year and $500
for each committee meeting attended in excess of two committee
meetings per year. Under the Directors Plan, $14,000 of the
annual retainer is paid in Restricted Common Shares and each director
automatically receives a stock option for 10,000 of the Company's Common Shares
at the beginning of each year of service on the Board. The Restricted Common
Shares are subject to forfeiture if the director does not serve for a full year
following grant of those shares. All directors are reimbursed for certain
expenses in connection with attendance at Board and committee meetings.
REPORT OF
COMPENSATION
COMMITTEE
The Board of Directors of the Company has delegated to the
Compensation Committee responsibility for determining
executive compensation. The Committee is comprised of three
independent nonemployee directors who have no interlocking
relationships with the Company as defined by the Securities
and Exchange Commission.
The Company has adopted, and the Compensation Committee has approved, a
compensation policy for executives under which a significant portion of current
compensation during each fiscal year is linked directly to the Company's
performance in that year and a significant portion of total compensation is
provided in the form of stock options, thereby linking total compensation to the
long-term performance of the Company's Common Shares.
The Compensation Committee has determined that this compensation policy
will better enable the Company to attract and retain qualified individuals as
executives and to motivate those individuals to perform to their highest
abilities and work toward the achievement of annual performance goals that will
increase shareholder value.
The Company's Management Incentive Compensation Plan provides for payment
of bonuses to participants if the Company achieves certain net revenue,
operating income, and net income objectives set by the Board of Directors. For
fiscal 1999, the Plan provided for target potential bonuses ranging from 20% to
100% of a participant's base salary. No incentive compensation is payable until
the plan objectives are at least 80% achieved. Above this threshold, actual
payouts are made as a percentage of target bonuses in direct proportion to
achievement of plan objectives up to a maximum of 120% of target. Based upon the
extent to which the Company achieved the net revenue and operating income
objectives set by the Board of Directors for fiscal 1999, bonuses were paid at
approximately 81% of target levels under the Management Incentive Compensation
Plan to all executive officers.
Effective July 27, 1998, in conjunction with a general adjustment of base
salaries of all executive officers, the Compensation Committee set Mr. Sanford's
base salary at $500,000 per annum. The Compensation Committee determined that
this level of base salary was appropriate in view of the primary role played by
Mr. Sanford in the management of the Company, the growth and increased size of
the Company, and the financial performance of the Company. For fiscal 1999,
based upon the extent to which the Company achieved the net revenue, operating
income, and net income objectives set by the Board of Directors for that year
for purposes of the Senior Executive Management Incentive Compensation Plan, Mr.
Sanford was paid a bonus of $655,856.
The Compensation Committee has developed a practice of considering the
grant of options to key employees each year and has followed this practice in
the case of Mr. Sanford. On July 27, 1998, in accordance with that practice and
in recognition of Mr. Sanford's continuing efforts and success in leading the
Company, the Compensation Committee granted to Mr. Sanford a nonqualified stock
option to purchase 100,000 Common Shares at the then current market price of
$30.65625 per share (as adjusted to reflect the 2-for-1 stock split on August
24, 1998). The Compensation Committee believes that both this most recent grant
and the general practice of granting annual options to Mr. Sanford are
appropriate in recognition of the continuing performance
6
<PAGE> 10
of the Company under his direction and as an additional incentive for continuing
efforts by Mr. Sanford to enhance the value of the Company's Common Shares.
Section 162(m) of the Code prevents a publicly-traded corporation from
taking a tax deduction for certain compensation in excess of $1 million per year
that it or any subsidiary pays to specified executives. Those specified
executives are the Chief Executive Officer and the four other executive officers
for whom proxy disclosure is required ("Covered Employees"). Compensation that
is contingent on the attainment of performance goals is excluded from the
deduction limit and is therefore deductible without regard to the $1 million
limit. The Company's 1998 Long-Term Incentive Stock Plan and its Senior
Executive Management Incentive Compensation Plan are designed so that
compensation paid under those plans can qualify as performance-based
compensation and therefore be excluded from the calculation of the $1 million
limit. The general position of the Company with respect to Section 162(m) is
that the Company will seek to qualify compensation paid to its executive
officers in such a way as to satisfy the requirements of Section 162(m) where it
appears to the Compensation Committee to be in the best interests of the Company
to do so. However, from time to time there may be circumstances in which the
Compensation Committee concludes that the best interests of the Company will be
served by a compensation arrangement that does not satisfy those requirements
and, in those circumstances, the Company may proceed without complying with the
requirements of Section 162(m).
In making its determinations as to the levels of salary, annual incentive
compensation opportunity, and stock option grants to the various executive
officers, the Compensation Committee considers compensation data from other
companies gathered and analyzed by an independent compensation consultant.
Taking into account that data, as well as the performance of the Company and its
executive officers, and the need to provide competitive levels of compensation
to retain and to motivate those executives to continue providing services to the
Company, it is the judgment of the Compensation Committee that the compensation
program described above and the levels of compensation paid to executive
officers of the Company during fiscal 1999 are appropriate.
Compensation Committee
Board of Directors
Raymond A. Lancaster
Jerry E. Robertson
Loyal W. Wilson
7
<PAGE> 11
STOCK PERFORMANCE GRAPH
The following graph shows the cumulative performance for STERIS
Corporation's Common Shares over the last five years compared with the
performance of the Standard & Poor's 500 Index, the Standard & Poor's Midcap 400
Index, the Standard & Poor's Health Care Sector Index, and the Dow Jones Medical
Supplies Index.
The graph assumes $100 invested as of March 31, 1994 in each of the
following: the Company's Common Shares, the Standard & Poor's 500 Index, the
Standard & Poor's Midcap 400 Index, the Standard & Poor's Health Care Sector
Index, and the Dow Jones Medical Supplies Index. The performance shown is not
necessarily indicative of future performance.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG STERIS CORPORATION, THE STANDARD & POOR'S 500 INDEX,
THE STANDARD & POOR'S MIDCAP 400 INDEX, THE STANDARD & POOR'S HEALTH CARE SECTOR
INDEX, AND THE DOW JONES MEDICAL SUPPLIES INDEX
<TABLE>
<CAPTION>
STANDARD & STANDARD & DOW JONES
STERIS STANDARD & POOR'S MIDCAP POOR'S HEALTH MEDICAL
CORPORATION POOR'S 500 400 CARE SECTOR SUPPLIES
----------- ---------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
3/94 100.00 100.00 100.00 100.00 100.00
3/95 170.00 116.00 108.00 141.00 146.00
3/96 255.00 153.00 139.00 208.00 181.00
3/97 207.00 183.00 154.00 253.00 231.00
3/98 460.00 271.00 230.00 406.00 303.00
3/99 453.00 321.00 222.00 522.00 362.00
* $100 INVESTED ON 3/31/94 IN STOCK OR INDEX-INCLUDING REINVESTMENT OF DIVIDENDS. FISCAL YEAR ENDING MARCH 31.
</TABLE>
8
<PAGE> 12
2000
SHAREHOLDER
PROPOSALS
The deadline for shareholders to submit proposals to be
considered for inclusion in the Proxy Statement for the next
Annual Meeting of Shareholders is expected to be February 24,
2000. In the event, however, that the date of the 2000 Annual
Meeting is changed by more than 30 calendar days from the date
currently contemplated, a proposal must be received by the
Company a reasonable time before the solicitation in connection with the meeting
is made.
Additionally, a shareholder may submit a proposal for consideration at the
next Annual Meeting of Shareholders, but not for inclusion in the Proxy
Statement, if that proposal is submitted not less than 120 calendar days in
advance of the anniversary of the previous year's annual meeting, which
deadline, given a July 22, 1999 Annual Meeting, will be March 24, 2000. For a
proposal to be properly requested by a shareholder to be brought before the
Annual Meeting of Shareholders, the shareholder must comply with all of the
requirements of STERIS's Amended and Restated Regulations, not just the
timeliness requirement described above.
INDEPENDENT
AUDITOR
Ernst & Young LLP has been appointed as the Company's
independent auditor for the fiscal year ending March 31, 2000,
pursuant to the recommendations of the Audit Committee of the
Board of Directors. A representative of Ernst & Young is
expected to be present at the meeting with an opportunity to
make a statement if he desires to do so and to answer appropriate questions with
respect to that firm's audit of the Company's financial statements and records
for the fiscal year ended March 31, 1999.
ANNUAL REPORT
The integrated Annual Report and Form 10-K of the Company for
the fiscal year ended March 31, 1999, which includes financial
statements for the Company for the fiscal year then ended, is
being mailed to each shareholder of record with this Proxy
Statement.
By Order of the Board of Directors
/s/ David C. Dvorak
DAVID C. DVORAK
Secretary
June 23, 1999
9
<PAGE> 13
PROXY PROXY
STERIS CORPORATION
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JULY 22, 1999
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
At the Annual Meeting of Shareholders of the Company to be held on July 22,
1999, and at any adjournment thereof, Bill R. Sanford, Frank E. Samuel, Jr., and
Loyal W. Wilson, and each of them, with full power of substitution in each (the
"Proxies"), are hereby authorized to represent me and to vote my shares on the
following:
Electing directors of a class to serve for a two-year term of office expiring at
the Company's 2001 Annual Meeting of Shareholders ("Class I" Directors). The
nominees of the Board of Directors for Class I are: Raymond A. Lancaster and
J.B. Richey.
THE BOARD OF DIRECTORS RECOMMENDS TO ELECT AS CLASS I DIRECTORS THE NOMINEES
LISTED ABOVE.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED TO ELECT AS CLASS I
DIRECTORS THE NOMINEES LISTED ABOVE. SEE REVERSE SIDE.
(change of address)
------------------------------
------------------------------
------------------------------
------------------------------
(If you have written in the
above space, please mark the
corresponding box on the
reverse side.)
...............................................................................
- FOLD AND DETACH HERE -
PLEASE VOTE, SIGN, DATE, AND RETURN THIS PROXY FORM PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE> 14
STERIS CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
<TABLE>
<CAPTION>
FOR WITHHELD FOR ALL
ALL ALL EXCEPT:
<S> <C> <C> <C> <C> <C>
1. Election of Directors
Director Nominees: [ ] [ ] [ ]
------------------
Raymond A. Lancaster and J. B. Richey.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL THE ABOVE NOMINEES.
Attend Meeting [ ]
- --------------------------------------------
Nominee Exception
Change of Address [ ]
In their discretion, the Proxies are
authorized to vote upon such other
business as may properly come before the
meeting or at any adjournment thereof and
matters incident to the conduct of the
meeting.
Date: , 1999
-----------------------------
-----------------------------------------
Signature(s)
-----------------------------------------
Signature(s)
NOTE: Please sign exactly as name appears hereon.
Joint owners should each sign. When signing
as attorney, executor, administrator,
trustee or guardian, please give full title
as such.
</TABLE>
...............................................................................
- FOLD AND DETACH HERE -
PLEASE VOTE, SIGN, DATE, AND RETURN THIS PROXY FORM PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE> 15
DIRECTION FORM
STERIS CORPORATION
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JULY 22, 1999
INSTRUCTIONS FOR VOTING SHARES HELD BY KEY TRUST COMPANY OF OHIO, N.A.,
TRUSTEE UNDER THE STERIS CORPORATION 401(k) PLAN AND TRUST (THE "PLAN")
Pursuant to the Plan, I hereby direct Key Trust Company of Ohio, N.A., as
Trustee, to vote in person or by proxy all Common Shares of the Company credited
to my stock fund account under the Plan at the Annual Meeting of Shareholders of
the Company to be held on July 22, 1999, and at any adjournment thereof, as
specified, on all matters coming before said meeting.
Electing directors of a class to serve for a two-year term of office expiring at
the Company's 2001 Annual Meeting of Shareholders ("Class I" Directors). The
nominees of the Board of Directors for Class I are: Raymond A. Lancaster and J.
B. Richey.
THE BOARD OF DIRECTORS RECOMMENDS TO ELECT AS CLASS I DIRECTORS THE NOMINEES
LISTED ABOVE.
IF THE TRUSTEE DOES NOT RECEIVE YOUR INSTRUCTIONS FOR VOTING, IT WILL VOTE THE
SHARES CREDITED TO YOUR STOCK FUND ACCOUNT IN THE SAME PROPORTION AS IT VOTES
THOSE SHARES WITH RESPECT TO WHICH IT DOES RECEIVE VOTING INSTRUCTIONS REGARDING
THE ELECTION OF THE NOMINEES FOR DIRECTOR LISTED ABOVE, AND ALL OTHER MATTERS AS
MAY PROPERLY COME BEFORE THE MEETING. SEE REVERSE SIDE.
DIRECTION FORMS MUST ARRIVE AT THE OFFICES OF HARRIS TRUST AND SAVINGS BANK, THE
TABULATING AGENT, NO LATER THAN 5:00 P.M. EASTERN DAYLIGHT-SAVING TIME ON JULY
16, 1999, FOR TABULATION.
...............................................................................
- FOLD AND DETACH HERE -
PLEASE VOTE, SIGN, DATE, AND RETURN THIS DIRECTION FORM PROMPTLY USING THE
ENCLOSED ENVELOPE.
<PAGE> 16
STERIS CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
<TABLE>
<CAPTION>
FOR WITHHELD FOR ALL
ALL ALL EXCEPT:
<S> <C> <C> <C> <C> <C>
1. Election of Directors
Director Nominees: [ ] [ ] [ ]
------------------
Raymond A. Lancaster and J. B. Richey.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL THE ABOVE NOMINEES.
Attend Meeting [ ]
- --------------------------------------------
Nominee Exception
In its discretion, the Trustee is authorized to
vote upon such other business as may properly
come before the meeting or at any adjournment
thereof and matters incident to the conduct of
the meeting.
Date: , 1999
-----------------------------
-----------------------------------------
Signature(s)
-----------------------------------------
Signature(s)
NOTE: Please sign exactly as name appears
hereon. Joint owners should each sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such.
</TABLE>
...............................................................................
- FOLD AND DETACH HERE -
PLEASE VOTE, SIGN, DATE, AND RETURN THIS DIRECTION FORM PROMPTLY USING THE
ENCLOSED ENVELOPE.
