RESEARCH MEDCIAL, INC.
6864 South 300 West
Midvale, Utah 84047
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 11, 1996
The Annual Meeting (Meeting) of the shareholders of Research Medcial, Inc.
will be held at the Marriott Hotel, Salon D, 75 South West Temple, Salt
Lake City, Utah, on Monday, November 11, 1996, at 10:00 a.m. local time, to
consider and act upon the following matters:
1.To elect six directors to serve for a one year term and
2.To transact any other such business as may properly come before the
Meeting or any adjournments thereof.
Proxy designations and instructions are being solicited by the Board of
Directors. For the reasons stated herein, your Board of Directors
unanimously recommends that you vote FOR these proposals. A Proxy
Statement, Proxy Card and a copy of the Annual Report on Form 10-K is being
provided to each shareholder.
The Board of Directors has fixed the close of business on September 9,
1996, as the record date for the determination of shareholders entitled to
notice of and to vote at the Meeting or any adjournments thereof.
By Order of the Board of Directors,
/s/ Mark W. Winn
Mark W. Winn
Secretary
October 7, 1996
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN ORDER TO ENSURE REPRESENT-
ATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF THE PROXY IS MAILED IN
THE UNITED STATES.
<PAGE>
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Research Medcial, Inc. (the "Company") of proxy
designations and instructions ("Proxy" or "Proxies") for voting at the
Annual Meeting of Shareholders of the Company (the "Meeting") to be held on
November 11, 1996, at the time, place and for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders, dated October 7,
1996, and at any adjournments thereof. It is anticipated that this Proxy
Statement will be mailed on or about October 7, 1996. Proxies may be
designated and voting directed on the enclosed Proxy Card.
All duly executed Proxies completed pursuant to this solicitation and
received prior to the Meeting or any adjournments thereof will be voted in
accordance with their terms. Any proxy may be revoked in writing by the
person giving it by sending or delivering a revocation in written form to
the Secretary of the Company at any time before the proxy's exercise, or by
the shareholder's vote in person at the Meeting. In order that a
sufficient number of shares may be represented and voted on the matters to
come before the Meeting, you are urged to execute and return your proxy
card promptly.
The cost of the Board's soliciting Proxies will be borne by the Company.
In addition to solicitations by mail, directors, officers or regular
employees of the Company may solicit Proxies on behalf of the Board in
person, by telephone, telegraph or telefax. The Company will reimburse
brokers, custodians, nominees, and fiduciaries for their expenses in
forwarding proxy material to the beneficial owners.
VOTING MATTERS / SIGNIFICANT SHAREHOLDERS
Shareholders of record at the close of business on September 9, 1996 (the
Record Date) will be entitled to vote at the Meeting and any adjournments
thereof. As of the record date there were approximately 1,200 shareholders
of record and approximately 84% of the outstanding shares were held by
nominees who hold shares for many additional shareholders. Shareholders
are entitled to one vote per share of Common Stock, $.50 par value, of the
Company ("Common Stock") held on the Record Date. As of the Record Date,
the Company had outstanding 9,627,725 shares of Common Stock entitled to
vote. The Company knows of no person or group that was the beneficial
owner of more than 5% of the Company's Common Stock as of the Record Date,
except for Gary L. Crocker, 6864 South 300 West, Midvale, Utah who is a
beneficial owner of 5.16% of the outstanding shares as of that date.
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)
It is proposed to elect six persons to the Board of Directors of the
Company to serve until the next Annual Meeting of Shareholders or until
their successors are elected and qualified. All current Directors have
been nominated for re-election. Management recommends a vote FOR all of
the nominees for Director. Management has no reason to believe that any of
these nominees will be unwilling or will be unable to serve. However, in
the event that any of the nominees should not be willing or will be unable
to serve as a Director, it is intended that management-held proxies will be
voted for the election of such other person as shall be nominated by the
Board of Directors.
The Board of Directors has established three committees. The Executive
Committee acts through delegated authority from the Board of Directors on
routine matters not deemed to require consideration by the full Board. It
also considers certain matters and makes recommendations to the full Board
including the nomination of prospective Directors. The Compensation
Committee has been established to consider salary and benefit matters for
the executive officers and key personnel of the Company. The Compensation
Committee also administers the Company's stock option plans. The Audit
Committee assists the Board in areas of financial reporting matters,
internal controls and compliance with financial polices of the Company,
meeting with its auditors when appropriate.
The Board of Directors met four times during the past fiscal year. The
Executive Committee met five times, the Audit Committee met twice and the
Compensation Committee met once during the year. All the Directors
attended more than 75% of the meetings of the Board of Directors and the
Committees on which they serve. Directors who are not also officers of the
Company are paid $1,000 for attendance at each Board meeting. Each member
of the Executive, Audit and Compensation Committee who is not also an
officer receives $250 for attendance at each committee meeting.
<PAGE>
NOMINEES FOR DIRECTOR AND SHARE OWNERSHIP
The following table and footnotes show information about the nominees for
election as Directors of the Company along with information as to the
securities of the Company beneficially owned by each nominee and by all
nominees and officers of the Company as a group as of the Record Date. The
information is furnished by the respective nominees and officers. No
nominee or officer beneficially owned more than 1% of the Common Stock
outstanding on the Record Date, except as follows: Mr. Crocker - 5.16%,
Mr. Haynie - 1.06%, and all nominees, directors and officers as a group
9.44%. Where a nominee or officer has a right to acquire shares of Common
Stock within 60 days of the Record Date, through the exercise of stock
options, these shares of Common Stock are treated as beneficially owned by
the individual and the group.
Common Stock of
the Company
Beneficially
Owned Directly
or Indirectly
as of Record
Date
<TABLE>
No.
Direct Shares Right to
or
Name Age Principal Occupation Since Owned Acquire
<S> <C> <C> <C> <C> <C>
*Gary L. 45 Chairman of the
Crocker Board, President and 1983 265,554 231,000
Chief Executive
Officer of the
Company
*SLouis M. 69 Director and General
Haynie Counsel of the
Company; Former Vice 1968 49,213 52,500
President of the
Company (1968-1991)
.Edward M. 54 Partner, William
Blair, Jr. Blair & Co. (an 1984 52,232 37,500
investment firm)
Trustee, Chicago
Dock and Canal Trust
*.S 70 Senior
Sterling Lecturer/Systems
D. Management, Naval
Sessions Postgraduate School;
Monterey,
California. 1986 1,369 19,500
Professor of
Management Emeritus
and Dean of Business
School at Weber
State University;
Ogden, Utah (1975-
1990). Director,
Daw Technologies,
Inc.
.SCharles 68 Retired Executive
J. Vice President and
Aschauer, Director of Abbott 23,500 4,098
Jr. Laboratories, Boston 1989
Scientific
Corporation and
Quadra Logic
Technologies, Inc.
SWilliam 60 Professor of
A. Gay, Surgery, Washington
Jr. University School of
Medicine, Barnes
Hospital; St Louis,
Mo. Chairman of
Cardiothoracic 1991 11,482 19,125
Surgery, Montefiore
Hospital; Bronx, NY
(1992-1995).
Professor and
Chairman, Department
of Surgery,
University of Utah
School of Medicine
(1984-1992)
All
Directors 436,496 472,663
and
Officers
as a Group
(11
persons)
</TABLE>
* Member of Executive Committee
. Member of Audit Committee
S Member of Compensation Committee
<PAGE>
EXECUTIVE OFFICERS
Name Present Office and Experience
Age
Gary L. 45 Chairman of the Board, President and
Crocker Chief Executive Officer since 1983.
Mark W. 46 Senior Vice President and Chief
Winn Financial Officer since 1991. Vice
President and Chief Financial Officer
at Gory Associated Industries (A
division of Elcor Corporation) 1985-
1991.
Michael 61 Senior Vice President of Operations.
N. Kelly Vice President 1983-1995.
Clyde H. 46 Senior Vice President. Vice
Baker President from 1987-1994.
James C. 46 Vice President of Technical and
McRea Scientific Affairs since 1989.
J. Steven 30 Treasurer and Corporate Controller
Johnson since 1995. Manager with KPMG Peat
Marwick (1994-1995).
A three year contract exists with Mr. Crocker to serve as President and
Chief Executive Officer of the Company. The Board agreed to sponsor Mr.
Crocker for election to the Board, to vote their shares of Common Stock for
his election and to sustain him as a member of the Executive Committee of
the Board.
There are no other arrangements or understandings between any of the
executive officers and any other person pursuant to which he was selected
as an officer. Each of the executive officers was elected to serve as such
for a term ending at the meeting of the Board held in conjunction with the
Annual Meeting of Shareholders or until their successor has been elected.
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term compensation for
the Chief Executive Officer and the Company's other most highly compensated
executive officers during the fiscal year ended June 30, 1996 who were
serving as executive officers on June 30, 1996 with compensation greater
than $100,000.
<TABLE>
SUMMARY COMPENSATION TABLE
LONG-
TERM
ANNUAL COMPENSATION COMPENS
ATION
AWARDS
NAME AND ALL OTHER
PRINCIPAL YEAR SALARY BONUS OPTIONS COMPENSATION
POSITION 1 (#) 2
<S> <C> <C> <C> <C> <C>
Gary L. Crocker, 1996 $231,636 $95,398 30,000 $4,633
President and
CEO
1995 216,796 50,543 30,000 5,078
1994 202,727 57,013 30,000 3,890
Clyde H. Baker, 1996 147,210 0 9,000 2,715
Sr. Vice
President
1995 142,755 1,546 9,000 2,880
1994 105,591 4,539 9,405 2,291
Mark W. Winn, 1996 93,000 22,284 9,000 2,306
Sr. Vice
President
1995 89,582 9,807 9,000 1,997
1994 72,442 13,490 9,405 1,762
Michael N. 1996 94,500 16,999 8,550 2,230
Kelly, Sr.
Vice
President
83,624 11,114 7,650 1,215
75,239 9,335 7,920 1,757
James C. McRea, 1996 90,000 16,650 8,100 1,833
Vice
President
1995 90,000 19,047 8,100 2,144
1994 65,981 10,439 7,920 1,522
</TABLE>
1 Mr. Baker's salary includes his sales commission overrides.
2 Represents the Company's contribution to the 401(k) plan on behalf of
the named executive.
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table lists information concerning the nonqualified stock
options that were granted to the named executives during fiscal 1996 under
the Company's Long-Term Equity Based Incentive Plan and/or the 1994
Supplemental Equity Based Incentive Plan. No stock appreciation rights
(SARs) were granted during fiscal 1996.
<TABLE>
% OF POTENTIAL REALIZABLE VALUE
TOTAL AT ASSUMED ANNUAL RATES OF
OPTIONS OPTIONS EXERCISE STOCK PRICE APPRECIATION
GRANTED GRANTED PRICE EXPIRATION FOR 10 YEAR OPTION TERM AT
NAME (#) TO PER DATE 5% 10%
EMPLOYEES SHARE
IN
FISCAL
YEAR
<S> <C> <C> <C> <C> <C>
Gary L. 30,000 22.8% $19.250 1/26/06 $503,700 $1,144,200
Crocker
Clyde H. 9,000 6.8% $19.250 1/26/06 151,110 343,260
Baker
Mark W. 9,000 6.8% $19.250 1/26/06 151,110 343,260
Winn
Michael 8,550 6.5% $19.250 1/26/06 143,555 326,097
N. Kelly
James C. 8,100 6.2% $19.250 1/26/06 135,999 308,934
McRea
</TABLE>
The assumed annual rates of appreciation of 5% and 10% would result in
stock prices of $36.04 and $57.39, respectively. Over the past 5 years the
market price of the Company's stock has grown at a compounded average
annual rate of 8.08%.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table lists information concerning nonqualified stock options
that were exercised by the named executives shown below during fiscal 1996,
including the aggregate value of gains on the date of exercise. In
addition, the table sets forth the number of shares covered by stock
options as of June 30, 1996, and the value of "in-the-money" stock options,
which represents the positive spread between the exercise price of a stock
option and the year-end market price of the shares subject to such option
on June 30, 1996.
<TABLE>
VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED VALUE OPTIONS AT YEAR-END (#) AT YEAR-END ($) 1
NAME ON REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
EXERCISE
<S> <C> <C> <C> <C> <C> <C>
Gary L. 21,000 $459,820 231,000 0 $2,718,562 $0
Crocker
Clyde H. 29,000 619,615 38,125 0 360,689 0
Baker
Mark W. 19,405 326,869 18,000 0 93,375 0
Winn
Michael 39,150 522,255 8,550 0 24,581 0
N. Kelly
James C. 9,000 192,415 41,265 0 420,761 0
McRea
1Calculated on the basis of the last reported sale price per share for the
Company's Common Stock on the Nasdaq National Market System of $22.125 on
June 28, 1996.
</TABLE>
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee (Committee) is a group of outside directors
responsible for evaluating executive compensation and making
recommendations to the Board of Directors related to such compensation.
The Committee has the primary responsibility for establishing the
compensation package for Mr. Gary L. Crocker, Chief Executive Officer of
the Company. Mr. Crocker establishes the compensation packages for the
other executive officers, subject to the Committee's review and the Board's
approval.
The Company's executive compensation policies and programs seek to achieve
two fundamental goals: (1) to increase the Company's performance and
shareholder value by linking a portion of executive officer compensation to
the Company's financial performance, and (2) to reward superior executive
performance with pay incentives adequate to retain them in the future in
the face of considerable competition for executive talent within the
biomedical industry.
Compensation for each of the Company's executive officers consists of a
base salary, an annual bonus and long-term incentive compensation in the
form of stock option grants. Mr. Crocker's base salary and annual stock
option award are established in his current employment agreement. The
criteria for payment of an incentive bonus is also specified in his
employment agreement and is based on the achievement of certain health care
earnings performance goals as compared to the Board approved budget and
prior year health care results. The level of bonus varies based on the
level of achievement of these goals. Mr. Clyde H. Baker, Senior Vice
President, receives the majority of his annual bonus in the form of
overrides on the incremental annual increase in medical product sales.
This override is redefined annually with Mr. Crocker. A portion of Mr.
Baker's bonus is based on his achievement of personal incentive goals. All
other executive officers can obtain a bonus of up to 25% of their base
salaries. One half of these bonuses are based on achievement of specific
company earnings objectives and the other half is based on their
achievement of personal incentive goals.
Annual stock option awards under the Long-Term Equity Based Incentive Plan
and the Supplemental Equity Based Incentive Plan for executive officers
(excluding Mr. Crocker) are recommended to the Board by Mr. Crocker based
on his assessment of individual performance in terms of personal goal
performance, personal contribution and initiative and the individual's
level of management responsibility. Mr. Crocker presents his listing of
officers and awards to the Committee for approval.
Mr. Crocker has received the annual bonus and stock option awards provided
for in his employment agreement based on the performance criteria
established in that agreement.
No member of the Committee is a former or current officer or employee of
the Company, except Mr. Haynie, who was an officer and employee prior to
1992.
Members of the Compensation Committee
Sterling D. Sessions, Chairman
Charles J. Aschauer, Jr.
William A. Gay, Jr.
Louis M. Haynie
<PAGE>
PERFORMANCE GRAPH
The following chart compares the change in the cumulative total shareholder
return on the Company's Common Stock of a peer group and Nasdaq Stock
Market indices shown below. The comparisons assume $100 invested at the
close of trading on June 30, 1991. The stock price performance shown on
the graph below is not necessarily indicative of future price performance.
Company Market Peer
Date Index Index Index
6/28/91 100.000 100.000 100.000
7/31/91 106.667 105.875 109.102
8/30/91 104.444 110.925 112.828
9/30/91 104.444 111.474 114.943
10/31/91 136.667 115.165 122.090
11/29/91 131.111 111.331 119.968
12/31/91 145.000 124.496 140.951
1/31/92 111.667 131.959 138.759
2/28/92 129.167 134.899 133.766
3/28/92 111.667 128.655 123.816
4/30/92 91.667 123.165 112.294
5/29/92 90.000 124.753 110.930
6/30/92 86.667 119.929 104.106
7/31/92 103.333 123.933 108.264
8/30/92 93.333 120.228 105.696
9/30/92 95.000 124.467 104.207
10/30/92 106.667 129.113 108.520
11/30/92 121.667 139.230 116.473
12/31/92 118.333 144.459 120.871
1/29/93 106.667 148.759 115.442
2/26/93 85.000 143.420 100.749
3/31/93 78.333 147.746 100.408
4/30/93 91.667 141.832 95.740
5/28/93 83.333 150.360 100.915
6/30/93 87.500 151.326 102.283
7/30/93 83.333 151.591 102.160
8/31/93 75.000 159.480 100.554
9/30/93 58.333 163.952 101.421
10/29/93 56.667 167.738 103.917
11/30/93 65.000 162.445 101.247
12/31/93 71.667 167.225 102.983
1/31/94 75.000 172.555 111.875
2/28/94 75.883 170.685 109.267
3/31/94 61.667 160.221 98.888
4/29/94 58.333 158.129 97.333
5/31/94 59.167 158.317 97.258
6/30/94 53.333 152.079 93.734
7/29/94 55.833 155.682 96.052
8/31/94 73.333 165.147 104.779
9/30/94 73.333 164.917 106.834
10/31/94 83.333 167.788 108.192
11/30/94 89.167 161.907 108.373
12/30/94 91.667 162.191 110.107
1/31/95 97.500 162.748 113.943
2/28/95 108.333 171.069 118.182
3/31/95 116.667 176.425 124.083
4/28/95 117.500 182.157 125.874
5/31/95 118.333 186.608 127.126
6/30/95 153.333 201.673 138.413
7/31/95 158.333 216.076 150.991
8/31/95 177.500 220.286 154.254
9/29/95 194.167 225.684 161.568
10/31/95 183.333 223.943 156.375
11/30/95 183.333 229.105 160.640
12/29/95 180.000 227.764 160.840
1/31/96 135.833 229.241 167.186
2/29/96 159.167 238.289 166.426
3/29/96 153.333 238.782 164.891
4/30/96 167.500 258.222 178.985
5/31/96 169.167 270.013 195.591
6/28/96 147.500 257.280 171.727
<PAGE>
INDEPENDENT AUDITORS
The accounting firm of KPMG Peat Marwick LLP, Salt Lake City, Utah,
conducted the audit of the Company's financial statements for the year
ended June 30, 1996. The Board of Directors plans to appoint the firm of
KPMG Peat Marwick LLP to perform the same services for the year ending June
30, 1997. Representatives of KPMG Peat Marwick LLP are expected to be
present at the Meeting and will be available to respond to appropriate
questions and will be afforded the opportunity to make a statement if they
wish to do so.
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Any shareholders' proposals need to be received by July 31, 1997, in order
to be reviewed for inclusion in the Proxy Statement for the 1997 Annual
Meeting.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and persons who own more than ten percent of
the Company's Common Stock (collectively, "Reporting Persons"), to file
with the Securities and Exchange Commission initial reports of ownership
and reports of changes in ownership of Common Stock and other equity
securities. Reporting Persons are required by SEC regulations to furnish
the Company with copies of all Section 16(a) forms filed.
Based solely on its review of the copies of such reports received or
representations from Reporting Persons that no Forms 5 were required, the
Company believes that during fiscal 1996 all Reporting Persons complied
with all applicable filing requirements.
OTHER MATTERS
Management does not know of any other business to be presented at the
meeting. Should any matter come before the meeting, however, the persons
named in the proxy will have discretionary authority to vote all proxies
with respect to such matters in accordance with their judgment.
The Company's Annual Report on Form 10-K is being provided to each
shareholder along with this Proxy Statement and the enclosed Proxy Card.
Any Shareholder not receiving a copy of the 1996 Annual Report on Form 10-K
should contact Mark W. Winn at (801) 562-0200.
By order of the Board of Directors,
/s/ Mark W. Winn
Mark W. Winn
