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<PAGE>
Section 240.14a-101 Schedule 14A.
Information required in proxy statement.
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 Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Vital Signs, Inc.
.................................................................
(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:
.......................................................
<PAGE>
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OF
VITAL SIGNS, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Vital
Signs, Inc. (the 'Company' or 'Vital Signs') will be held at the Company's
headquarters, 20 Campus Road, Totowa, New Jersey, on Wednesday, March 3, 1999 at
10:00 a.m. local time, to consider and act upon the following:
1. The election of six directors to serve for a period of one year and
thereafter until their successors shall have been duly elected and shall
have qualified.
2. To consider and act upon any other matter which may properly come
before the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on January 20, 1999
as the date for determining the stockholders of record entitled to receive
notice of, and to vote at, the Annual Meeting.
By Order of the Board of Directors
Scott L. Spitzer
Secretary
Totowa, New Jersey
January 25, 1999
WE URGE YOU TO SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE,
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON. IF YOU DO ATTEND THE
MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON.
<PAGE>
<PAGE>
VITAL SIGNS, INC.
20 CAMPUS ROAD
TOTOWA, NEW JERSEY 07512
--------------------------
PROXY STATEMENT
--------------------------
The following statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Vital Signs, Inc. (the 'Company' or 'Vital
Signs'), a New Jersey corporation. Such proxies are to be used at the Company's
Annual Meeting of Stockholders to be held at the Company's headquarters, 20
Campus Road, Totowa, New Jersey, on March 3, 1999 commencing at 10:00 a.m.,
local time. This Proxy Statement and the enclosed form of proxy are first being
sent to stockholders on or about January 25, 1999.
STOCKHOLDERS ENTITLED TO VOTE
Only holders of record of the Company's Common Stock (the 'Common Stock')
at the close of business on January 20, 1999 (the record date fixed by the Board
of Directors) will be entitled to receive notice of, and to vote at, the Annual
Meeting. At the close of business on the record date, there were 12,436,530
shares of Common Stock outstanding and entitled to vote at the Meeting. Each
such share is entitled to one vote.
VOTING; REVOCATION OF PROXY; QUORUM AND VOTE REQUIRED
A form of proxy is enclosed for use at the Annual Meeting if a stockholder
is unable to attend in person. Each proxy may be revoked at any time before it
is exercised by giving written notice to the Secretary of the Meeting or by
submitting a duly executed, later-dated proxy. All shares represented by valid
proxies pursuant to this solicitation (and not revoked before they are
exercised) will be voted as specified in the form of proxy. If the proxy is
signed but no specification is given, the shares will be voted FOR the Board's
nominees for election to the Board of Directors. A majority of the shares
outstanding on the record date will constitute a quorum for purposes of the
Annual Meeting. Assuming that a quorum is present, the election of directors
will be effected by a plurality vote of the votes cast at the Annual Meeting.
For purposes of determining the votes cast with respect to any matter presented
for consideration at the Annual Meeting, only those votes cast 'for' or
'against' are included. Abstentions and broker non-votes are counted only for
the purpose of determining whether a quorum is present at the Annual Meeting.
COSTS OF SOLICITATION
The entire cost of soliciting these proxies will be borne by the Company.
In following up the original solicitation of the proxies by mail, the Company
may make arrangements with brokerage houses and other custodians, nominees and
fiduciaries to send proxies and proxy materials to the beneficial owners of the
Common Stock and may reimburse them for their expenses in so doing. If
necessary, the Company may also use its officers and their assistants to solicit
proxies from the stockholders, either personally or by telephone or special
letter.
PRINCIPAL STOCKHOLDERS; BENEFICIAL OWNERSHIP OF DIRECTORS AND OFFICERS
The following table sets forth information regarding the beneficial
ownership of the Common Stock as of December 31, 1998 by (i) each person who is
known by the Company to own beneficially more than five percent of the Common
Stock; (ii) trusts maintained for the benefit of the children of certain
directors of the Company; (iii) each director and each Named Officer (as defined
herein) of the Company; and (iv) all current executive officers and directors of
the Company as a group. Unless otherwise indicated, each of the named
stockholders possesses sole voting and investment power with
<PAGE>
<PAGE>
respect to the shares beneficially owned. Shares covered by stock options are
included in the table below only to the extent that such options may be
exercised by March 1, 1999.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
-------------------------
STOCKHOLDER NUMBER PERCENT(11)
- --------------------------------------------------------------------------------------- ---------- -----------
<S> <C> <C>
Terence D. Wall (1)(2)................................................................. 4,082,629 32.6%
Trusts for the benefit of the minor children of Terence D. Wall (Anthony J. Dimun,
trustee) (1)(3)...................................................................... 2,386,782 19.1%
Dimensional Fund Advisors, Inc. 11299 Ocean Avenue, 11th Floor, Santa Monica,
California 90401(4).................................................................. 892,500 7.2%
Barry Wicker (5)....................................................................... 385,485 3.1%
Trusts for the benefit of the children of Barry Wicker (Anthony J. Dimun, trustee)
(1)(3)............................................................................... 78,090 *
David J. Bershad (5)................................................................... 62,683 *
Anthony J. Dimun (1)(3)................................................................ 2,796,215 22.2%
Dennis Fenstermaker (7)................................................................ 24,837 *
Joseph J. Thomas....................................................................... 0 *
Stuart M. Essig (8).................................................................... 7,655 *
Christian Malmqvist (9)................................................................ 2,091 *
All directors and executive officers as a group
(10 persons) (10).................................................................... 7,369,015 57.9%
</TABLE>
- ------------
* Represents less than one percent.
(1) The business addresses of Mr. Wall, Mr. Dimun and the above-mentioned
trusts is c/o Vital Signs, Inc., 20 Campus Road, Totowa, New Jersey 07512.
(2) Includes 716,748 shares owned by Carol Vance Wall, Mr. Wall's wife, 29,452
shares held in the Company's 401(k) plan on Mr. Wall's behalf, 37,639
shares held in the Company's Investment Plan on Mr. Wall's behalf and
30,000 shares covered by options exercisable by Mr. Wall; excludes shares
held in trust for the benefit of the Walls' minor children (which shares
may not be voted or disposed of by Mr. Wall or Carol Vance Wall) and shares
held by a charitable foundation established by Terence and Carol Wall.
(3) As trustee of the trusts maintained for the benefit of the minor children
of Terence D. Wall and the children of Barry Wicker, Mr. Dimun has the
power to vote and dispose of each of the shares held in such trusts and
thus is deemed to be the beneficial owner of such shares under applicable
regulations of the Securities and Exchange Commission. Mr. Dimun is also
deemed to be the beneficial owner of 700 shares held in certain insurance
trusts established by Mr. Wicker. He is also deemed to be the beneficial
owner of 103,600 shares held by the charitable foundation described above.
Accordingly, the shares reflected in the table above as shares beneficially
owned by Mr. Dimun include shares held by Mr. Dimun for such trusts and
foundation, 54,788 shares owned by Mr. Dimun individually, 38,554 held in
the Company's Investment Plan on Mr. Dimun's behalf, 3,876 shares held in
the Company's 401(k) plan on Mr. Dimun's behalf and 129,825 shares covered
by options exercisable by Mr. Dimun.
(4) In a Schedule 13G filed with the Securities and Exchange Commission on
February 6, 1998, Dimensional Fund Advisors, Inc. states that it has sole
voting power with regard to 585,200 shares and sole dispositive power with
regard to 892,500 shares.
(5) Includes 18,380 shares owned by Mr. Wicker's wife, 10,997 shares held in
the Company's 401(k) plan on Mr. Wicker's behalf and 4,152 shares held in
the Company's Investment Plan and 20,000 shares covered by options
exercisable by Mr. Wicker; excludes shares held in trust for the benefit of
Mr. Wicker's children and shares held in certain insurance trusts (which
shares may not be voted or disposed of by Mr. Wicker or his wife).
(footnotes continued on next page)
2
<PAGE>
<PAGE>
(footnotes continued from previous page)
(6) Includes 2,000 shares owned by Mr. Bershad's wife as to which Mr. Bershad
disclaims beneficial ownership; also includes 10,403 shares held in the
Company's Investment Plan on Mr. Bershad's behalf and 46,080 shares covered
by exercisable options.
(7) Includes 4,945 shares held in the Company's 401(k) plan on Mr.
Fenstermaker's behalf, 9,475 shares held in the Company's Investment Plan
on Mr. Fenstermaker's behalf and 6,276 shares covered by exercisable
options.
(8) Includes 5,655 shares held in the Company's Investment Plan on Mr. Essig's
behalf and 2,000 shares covered by exercisable options.
(9) Includes 1,741 shares held in the Company's Investment Plan on Mr.
Malmqvist's behalf and 350 shares covered by exercisable options.
(10) Includes 237,597 shares covered by options exercisable by the Company's
executive officers and directors, 49,270 shares held in the Company's
401(k) plan and 111,975 shares held in the Company's Investment Plan on
behalf of the Company's executive officers; also includes shares held in
trust by Mr. Dimun for Mr. Wall's children and Mr. Wicker's children and
pursuant to certain insurance trusts established by Mr. Wicker and shares
held by a charitable foundation established by Terence and Carol Wall.
(11) Percent of class is based on 12,481,630 shares of Common Stock outstanding
on December 31, 1998.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Act of 1934 requires the Company's
directors, executive officers and 10% shareholders to file with the Securities
and Exchange Commission certain reports regarding such persons ownership of the
Company's securities. The Company is required to disclose any failures to file
such reports on a timely basis. The Company is not aware of any such untimely
filings during the fiscal year ended September 30, 1998.
ELECTION OF DIRECTORS
The holders of the Common Stock will elect six directors at the Annual
Meeting, each of whom will be elected for a one year term. Unless a stockholder
either indicates 'withhold authority' on his proxy or indicates on his proxy
that his shares should not be voted for certain nominees, it is intended that
the persons named in the proxy will vote for the election of the persons named
in the table below to serve until the expiration of their terms and thereafter
until their successors shall have been duly elected and shall have qualified.
Discretionary authority is also solicited to vote for the election of a
substitute for any of said nominees who, for any reason presently unknown,
cannot be a candidate for election.
The table below sets forth the names and ages (as of September 30, 1998) of
each of the nominees, the other positions and offices presently held by each
such person within the Company, the period during which each such person has
served on the Board of Directors of the Company, the expiration of their
respective terms and the principal occupations and employment of each such
person during at least the past five years.
<TABLE>
<CAPTION>
DIRECTOR EXPIRATION
NAME AND AGE (A) SINCE OF TERM BUSINESS EXPERIENCE (A)
- --------------------------- -------- ---------- --------------------------------------------------------------
<S> <C> <C> <C>
Terence D. Wall, 57 1972 1999 President and Chief Executive Officer of the Company. Mr. Wall
presently serves on the Boards of Directors of Exogen, Inc.,
and Bionx Implants, Inc.
David J. Bershad, 58 1991 1999 Member of the law firm of Milberg Weiss Bershad Hynes & Lerach
LLP. Mr. Bershad presently serves on the Board of Directors
of Bionx Implants, Inc.
</TABLE>
(table continued on next page)
3
<PAGE>
<PAGE>
(table continued from previous page)
<TABLE>
<CAPTION>
DIRECTOR EXPIRATION
NAME AND AGE (A) SINCE OF TERM BUSINESS EXPERIENCE (A)
- --------------------------- -------- ---------- --------------------------------------------------------------
<S> <C> <C> <C>
Anthony J. Dimun, 55 1987 1999 Executive Vice President and Chief Financial Officer of the
Company (1991 to Present); Treasurer of the Company (1991 to
Present); Secretary of the Company (December 1991 to
December 1998); Principal Owner, Strategic Concepts, Inc.
(financial and acquisition advisory firm) (1988 to Present).
Mr. Dimun presently serves on the Boards of Directors of
EchoCath, Inc. and Bionx Implants, Inc.
Stuart M. Essig, 37 1998 1999 President and Chief Executive Officer and a Director, Integra
LifeSciences Corporation (a medical technology company)
(1997 to present); Managing Director and various positions
with Goldman, Sachs & Co. (an investment banking firm) (1988
to 1998). Mr. Essig presently serves on the Board of
Directors of Neuromedical Systems, Inc.
Joseph J. Thomas, 62 1992 1999 President of Thomas Medical Products, Inc. (a subsidiary of
the Company) (1990 to Present); President and General
Manager of Access Devices, Inc. (a catheter manufacturer)
(1982-1989); research and development positions with various
companies, including Johnson & Johnson (prior years).
Barry Wicker, 58 1985 1999 Chief Operating Officer of the Company (1998 to Present),
Executive Vice President of the Company since 1985. From
1985 through November 1991, Mr. Wicker had primary
responsibility for Sales and Marketing; since then, he has
at various times served as either Chief Operating Officer or
head of the Company's sales operations.
</TABLE>
- ------------
(A) In each instance in which dates are not provided in connection with a
director's business experience, such director has held the position
indicated for at least the past five years. Messrs. Wall, Bershad and Dimun
have invested together (and serve together as Board members) in Bionx
Implants, Inc. ('Bionx') and Messrs. Wall and Bershad have invested
together (and serve as Board members) in Sonokinetics Corp. Further, the
Company is a shareholder, and Messrs. Wall and Dimun are shareholders (and
Mr. Dimun is a Board member) of EchoCath, Inc. Messrs. Wall, Dimun, Bershad
and Thomas, and/or venture funds in which they are primary investors, are
investors in X-Site, LLC (See Related Party Transactions).
4
<PAGE>
<PAGE>
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth, for the fiscal years ended September 30,
1996, 1997 and 1998, the annual and long-term compensation of the Company's
Chief Executive Officer and its other executive officers (the 'Named Officers').
Mr. Malmqvist did not become an Executive Officer until after September 30,
1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -------------
------------------------------------------ COMMON SHARES
OTHER SUBJECT
ANNUAL TO OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (A) COMPENSATION GRANTED(#) COMPENSATION (B)
- --------------------------------------------- ---- -------- --------- ------------ ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Terence D. Wall ............................. 1998 $225,000 $10,685 $ -- 75,278 $3,213
President and Chief Executive Officer 1997 225,000 10,685 -- -- 3,266
1996 225,000 10,835 -- 120,000 3,266
Anthony J. Dimun ............................ 1998 180,000 8,608 -- 71,414 3,071
Executive Vice President and Chief 1997 180,000 8,608 -- 5,694 3,088
Financial Officer 1996 180,000 8,308 -- 120,000 3,088
Barry Wicker ................................ 1998 151,250 7,281 -- 8,304 2,384
Executive Vice President and Chief 1997 151,250 7,281 -- -- 2,580
Operating Officer 1996 151,250 6,981 -- 80,000 2,844
Dennis Fenstermaker ......................... 1998 137,246 6,554 -- 14,396 2,935
Vice President-Manufacturing and General 1997 131,128 6,309 -- 4,554 2,870
Manager 1996 124,946 5,724 -- 3,764 2,870
Christian Malmqvist ......................... 1998 139,195 6,598 207,889(C) 3,320 1,730
Vice President, International Operations 1997 132,311 28,326 -- -- 1,731
</TABLE>
- ------------
(A) Reflects bonuses for the fiscal year for which the bonuses were granted,
which may not correspond with the fiscal year in which the bonuses were
paid. All bonuses earned in fiscal 1998 were awarded under the Company's
Well-Pay Policy. This policy covers all Company personnel working in the
Company's headquarters in Totowa, New Jersey and in certain of the
Company's subsidiaries. Under the Policy, an additional day's pay is earned
by any employee having perfect attendance for the preceding month. In
addition, payments of $200 to $275 are earned by employees having perfect
attendance for one or more consecutive years.
(B) 'Compensation' reported under this column for the year ended September 30,
1998 includes: (i) contributions of $2,500, $2,500, $1,905, $2,500, $1,730,
respectively, for Messrs. Wall, Dimun, Wicker, Fenstermaker and Malmqvist,
respectively, to the Company's 401(k) Plan on behalf of the Named Officers
to match pre-tax elective deferral contributions (included under 'Salary')
made by each Named Officer to that Plan and (ii) premiums of $713, $571,
$479, and $435, respectively, with respect to life insurance purchased by
the Company for the benefit of Messrs. Wall, Dimun, Wicker and
Fenstermaker, respectively.
(C) The compensation earned by Mr. Malmqvist related to the achievement of
business growth objectives in international operations.
5
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<PAGE>
STOCK OPTIONS
The following table contains information regarding the grant of stock
options to the Named Officers during the year ended September 30, 1998. In
addition, in accordance with rules adopted by the Securities and Exchange
Commission (the 'SEC'), the following table sets forth the hypothetical gains or
'option spreads' that would exist for the respective options assuming rates of
annual compound price appreciation in the Company's Common Stock of 5% and 10%
from the date the options were granted to their final expiration date.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE
AT ASSUMED
ANNUAL RATES
NUMBER OF PERCENT OF OF STOCK PRICE
COMMON SHARES TOTAL OPTIONS APPRECIATION
UNDERLYING GRANTED FOR OPTION TERM
OPTIONS TO EMPLOYEES EXERCISE PRICE EXPIRATION ---------------
NAME GRANTED(A) IN FISCAL 1998 PER SHARE DATE 5%
- --------------------------------- ------------- -------------- -------------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Terence D. Wall.................. 50,362 $17.87 10/01/07 $ 565,986
24,916 16.1% 18.06 01/15/08 282,992
------------- ----- ------- ---------- ---------------
Anthony J. Dimun................. 40,290 17.87 10/01/07 1,172,775
19,932 18.06 01/15/08 586,356
11,192 15.3% 17.87 07/01/08 325,781
------------- ----- ------- ---------- ---------------
Barry Wicker..................... 8,304 1.8 18.06 01/15/08 244,286
Dennis Fenstermaker.............. 14,396 3.1 18.06 01/15/08 423,499
Christian Malmqvist.............. 3,320 0.7 18.06 01/15/08 97,667
<CAPTION>
NAME 10%
- --------------------------------- -------------
<S> <C>
Terence D. Wall.................. $ 1,434,319
717,157
-------------
Anthony J. Dimun................. 1,867,449
933,674
518,751
-------------
Barry Wicker..................... 388,984
Dennis Fenstermaker.............. 674,352
Christian Malmqvist.............. 155,519
</TABLE>
- ------------
(A) The options granted to each of the Named Officers were granted under the
Company's Investment Plan. Pursuant to the Investment Plan, eligible
participants may purchase the Company's Common Stock during specified
window periods. For each share purchased, the Investment Plan provides that
the Company will grant the employee from one to three stock options. The
option-to-stock match in effect for the options granted under the
Investment Plan during the last fiscal year was two-for-one. The exercise
price is equal to the closing sale price of the Company's Common Stock on
NASDAQ on the last day of the window period. An employee must continue to
be employed for at least two years by the Company to exercise stock options
granted under the Investment Plan. If the employee retains the shares
purchased during the window period, the option can be exercised at any time
after the initial shares have been held for two years. In general, if the
employee sells any of the shares purchased under the Investment Plan before
the end of the two year holding period or directs the Company to stop
making payroll deductions before all shares that the employee committed to
buy are fully paid for, the employee will be required to wait five years
from the option grant date before options related to fully paid shares can
be exercised and must be employed by the Company at that time. The Board of
Directors is authorized to accelerate stock options related to fully paid
shares in connection with a change in control.
6
<PAGE>
<PAGE>
The following table provides data regarding the number of shares of the
Company' Common Stock covered by both exercisable and non-exercisable stock
options held by the Named Officers at September 30, 1998. Also reported are the
values for 'in-the-money' options, which represent the positive spread between
the exercise prices of existing options and $16.56, the closing sale price of
the Company's Common Stock on September 30, 1998. None of the Named Officers
exercised any stock options during fiscal 1998.
FISCAL YEAR-END VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT YEAR-END YEAR-END
---------------------------- ----------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Terence D. Wall...................................................... 30,000 165,278 $ -- $--
Anthony J. Dimun..................................................... 129,825 137,108 549,390 --
Barry Wicker......................................................... 20,000 68,304 -- --
Dennis Fenstermaker.................................................. 6,276 18,950 3,493 --
Christian Malmqvist.................................................. 350 3,320 -- --
</TABLE>
ARRANGEMENTS WITH DIRECTORS
Joseph Thomas became a director of the Company upon the Company's
acquisition of Thomas Medical Products, Inc. ('TMP') on September 30, 1992. In
connection with the TMP acquisition, Mr. Thomas entered into an employment
agreement with TMP pursuant to which Mr. Thomas was entitled to receive a salary
of at least $100,000 per year (with a cost of living adjustment) during the
five-year term of his employment agreement. The employment agreement has expired
by its terms and Mr. Thomas continues to be employed by the Company as the
President of TMP. For the year ended September 30, 1998, Mr. Thomas received a
salary of $150,000 and a bonus of $46,691. His salary for the fiscal year ended
September 30, 1999 has been set at $150,000.
Directors of the Company presently do not receive any cash fees for serving
in such capacity.
Messrs. Wall, Wicker, Dimun and Thomas have been granted options as
employees of either the Company or TMP. Messrs. Bershad and Essig, the two
directors who are not employed by the Company or its subsidiaries, participate
in the Company's 1991 Director Stock Option Plan (the 'Director Plan'). In
addition, John Toedtman who was a director during part of the fiscal year and
who resigned in June, 1998 was eligible to participate in the Director Plan
during the most recent past year. Under the Director Plan, each outside director
automatically receives options covering 4,000 shares (with an exercise price
equal to fair market value on the date of grant) on an annual basis and is
entitled to receive additional options at the discretion of the committee
administering the Director Plan. During fiscal 1998, Mr. Bershad, Mr. Essig and
Mr. Toedtman each received options covering 4,000 shares of Common Stock
pursuant to the Director Plan. One half of the options granted under the
Director Plan vest immediately at the time of grant. Half of the balance may be
exercised commencing one year after the date of grant and the remainder may be
exercised commencing two years after the date of grant.
Following Mr. Toedtman's resignation from the Board in June, 1998, the
Company entered into a consulting agreement with Mr. Toedtman that provided that
in consideration of such services, Mr. Toedtman would continue to retain vesting
and exercise rights on stock options granted to him under the Director Plan and
the Investment Plan. On June 10, 1998, the Board approved an amendment to the
Director Plan and to the Investment Plan to permit an individual to retain
vesting and exercise rights on options during the term of a consulting services
agreement with the Company following termination of service on the Board.
7
<PAGE>
<PAGE>
THE BOARD OF DIRECTORS; COMMITTEES OF THE BOARD
The Board of Directors of the Company held seven meetings during the year
ended September 30, 1998. The Board's Audit Committee, which is responsible for
reviewing significant audit and accounting principles, policies and practices
and for meeting with the Company's independent accountants, met five times
during the year ended September 30, 1998. The Audit Committee presently consists
of Messrs. Bershad and Essig.
The Board has a Nominating Committee, consisting of Messrs. Wall and Dimun.
This Committee did not meet during the year ended September 30, 1998, as all
nominating matters were considered by the full Board. The Nominating Committee
is charged with the responsibility of interviewing potential candidates for
election to the Board and for nominating individuals each year for election to
the Board. The Nominating Committee has not established any procedures for
considering nominees recommended by stockholders.
The Board does not have a general Compensation Committee. It maintains a
Stock Option Committee, however, to administer the 1990 Employee Stock Option
Plan, the 1991 Director Stock Option Plan and the Vital Signs Investment Plan.
The Stock Option Committee presently consists of Messrs. Wall and Wicker and
acted by unanimous consent during the Company's most recent fiscal year.
Each member of the Company's Board was present for 75% or more of the
aggregate of the total meetings of the Board and each Board committee on which
he serves.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors does not maintain a Compensation Committee.
Accordingly, compensation decisions are made by the entire Board of Directors.
During the fiscal year ended September 30, 1998, the following individuals
served on the Board: Terence D. Wall, David J. Bershad, Anthony J. Dimun, Stuart
M. Essig, Joseph J. Thomas, John Toedtman and Barry Wicker. During that year, of
the persons named, Messrs. Wall, Dimun, Thomas and Wicker were officers and
employees of the Company or its subsidiaries.
RELATED PARTY TRANSACTIONS
Thomas Medical Products, Inc., a subsidiary of the Company ('TMP'),
provides product development and manufacturing services to X-Site, LLC
('X-Site'), a company engaged in the development of specialized cardiovascular
products. X-Site paid TMP $132,219 during the current fiscal year for such
services. In addition, X-Site incurred $423,332 in expenses owed to the Company,
of which $81,268 was owed as of November 30, 1998. The Company believes that the
rates charged to X-Site for such services are no less favorable than those
charged to similarly situated third parties. A private venture fund of which Mr.
Wall is the primary investor owns 44% of X-Site. Mr. Dimun, an investment
limited partnership in which Mr. Bershad is the primary investor, Mr. Thomas and
Mr. Spitzer (Vice President, General Counsel and Secretary of the Company) own
5%, 5%, 3% and less than 1%, respectively, of X-Site.
The Company believes that the overall terms of the above-described
arrangements with X-Site were no less favorable to the Company than terms that
would be available from similarly situated unrelated parties.
8
<PAGE>
<PAGE>
BOARD REPORT ON EXECUTIVE COMPENSATION
Pursuant to rules adopted by the SEC designed to enhance disclosure of
corporate policies regarding executive compensation, the Company has set forth
below a report of its Board regarding compensation policies as they affect Mr.
Wall and the other Named Officers.
The Board of Directors views compensation of executive officers as having
three distinct parts, a current compensation program, a set of standard benefits
and a long-term benefit. The current compensation element focuses upon the
executive officer's salary and is designed to provide appropriate reimbursement
for services rendered. The Company's standard benefit package consists primarily
of the matching portion of the Company's 401(k) Plan and eligibility for bonuses
based upon performance of the specific individual and the Company. The long-term
benefit element has been reflected in the grants of stock options to specific
executive officers.
During the past four completed fiscal years, the three most senior
executive officers did not receive any salary increase. Traditionally, Mr.
Wall's salary has been set at levels which are perceived by the Board to be
below the salaries of chief executive officers of other comparable companies.
Mr. Wall, whose family continues to own more than half of the outstanding Common
Stock of the Company, has been willing to accept such salary levels primarily
because of the message his salary sends to other executive officers, employees
and shareholders. Furthermore, Mr. Wall's personal net worth ultimately depends
more on the performance of the Company than on any specific salary level. The
salaries of each of the other Named Officers are based upon experience with the
Company, contributions to the Company and the relationship of such individual's
responsibilities to the Chief Executive Officer's responsibilities.
Stock options granted to executive officers of the Company have
historically been granted at a price equal to fair market value. Accordingly,
such options will gain appreciable value if, and only if, the market value of
the Common Stock increases subsequent to the date of grant. The Board believes
that the issuance of stock options at fair market value provides incentives to
employees to maximize the Company's performance and to assure continued
affiliation with the Company.
The Board believes that an appropriate compensation program can help in
promoting strong earnings performance if it reflects an appropriate balance
between providing rewards to executive officers while at the same time
effectively controlling cash compensation costs. It is the Board's objective to
continue monitoring the Company's compensation program to assure that this
balance is maintained.
By: The Board of Directors
<TABLE>
<S> <C> <C>
Terence D. Wall Stuart M. Essig David J. Bershad
Joseph J. Thomas Anthony J. Dimun Barry Wicker
</TABLE>
9
<PAGE>
<PAGE>
STOCKHOLDER RETURN COMPARISON
Set forth below is a line-graph presentation comparing the cumulative
stockholder return on the Company's Common Stock, on an indexed basis, against
the cumulative total returns of the NASDAQ Market Index and the Media General
Medical Instruments and Supplies Group Index (consisting of 277 publicly traded
medical instrument and device companies) for the period from October 1, 1993
(October 1, 1993 = 100) through September 30, 1998.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
ON VITAL SIGNS, INC. COMMON STOCK,
NASDAQ MARKET INDEX AND MEDIA GENERAL MEDICAL INSTRUMENTS
AND SUPPLIES GROUP INDEX
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
COMPANY MG GROUP INDEX NASDAQ
-------- -------------- ------
<S> <C> <C> <C>
1993 100 100 100
1994 72.29 118.39 105.82
1995 119.56 171.08 128.48
1996 118.73 213.6 150
1997 105.09 240.83 203.88
1998 97.32 251.48 211.88
</TABLE>
10
<PAGE>
<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Goldstein Golub Kessler LLP ('GGK'), certified public accountants, has been
selected by the Board of Directors to audit and report on the Company's
financial statements for the year ending September 30, 1999. A representative of
that firm is expected to be present at the Annual Meeting and will have an
opportunity to make a statement if he so desires. The representative is expected
to be available to respond to appropriate questions from stockholders. GGK
audited the Company's financial statements for more than the past five years.
OTHER MATTERS
At the time that this Proxy Statement was mailed to stockholders,
management was not aware that any matter other than the election of directors,
would be presented for action at the Annual Meeting. If other matters properly
come before the Meeting, it is intended that shares represented by proxies will
be voted with respect to those matters in accordance with the best judgment of
the persons voting them.
If a stockholder intends to present a proposal at the next Annual Meeting
of Stockholders, the proposal must be received by the Company in writing no
later than September 27, 1999 in order for such proposal to be eligible for
inclusion in the Company's Proxy Statement and form of proxy for next year's
meeting.
By Order of the Board of Directors
Scott L. Spitzer, Secretary
Dated: January 25, 1999
A COPY OF AN ANNUAL REPORT FOR THE YEAR ENDED SEPTEMBER 30, 1998, INCLUDING
FINANCIAL STATEMENTS, ACCOMPANIES THIS PROXY STATEMENT. THE ANNUAL REPORT IS NOT
TO BE REGARDED AS PROXY SOLICITING MATERIAL OR AS A COMMUNICATION BY MEANS OF
WHICH ANY SOLICITATION IS TO BE MADE.
11
<PAGE>
<PAGE>
APPENDIX 1
VITAL SIGNS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS.
MARCH 3, 1999
The undersigned hereby appoints Anthony J. Dimun, Scott L. Spitzer and
Terence D. Wall, and each of them, attorneys and proxies, with power of
substitution in each of them, to vote for and on behalf of the undersigned
at the annual meeting of the stockholders of the Company to be held on
March 3, 1999, and at any adjournment thereof, upon matters properly coming
before the meeting, as set forth in the related Notice of Meeting and Proxy
Statement, both of which have been received by the undersigned. Without
otherwise limiting the general authorization given hereby, said attorneys
and proxies are instructed to vote as follows:
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
<PAGE>
Please date, sign and mail your
proxy card back as soon as possible
Please Detach and Mail in the Envelope Provided
- -------------------------------------------------------------------------------
A[X]Please mark your
votes as in this
example
<TABLE>
<CAPTION>
The Board of Directors recommends a vote "FOR".
FOR the WITHHOLD
nominees listed at right AUTHORITY
(except as marked to to vote for the nominees
the contrary below) listed at right
<S> <C> <C> <C>
1. Election of
the Board's [ ] [ ] Nominees: David J. Bershad
nominees for Anthony J. Dimun
Director. Stuart M. Essig
Joseph J. Thomas
Terence D. Wall
Barry Wicker
</TABLE>
(INSTRUCTION: To withhold authority to vote for any
individual nominee, write the nominee's name in the space
provided below.)
- --------------------------------------------------------------
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
2. Upon all such other matters as may properly come before [ ] [ ] [ ]
the meeting and/or any adjournment or adjournments
thereof, as they in their discretion may determine. The
Board of Directors is not aware of any such other matters.
</TABLE>
UNLESS OTHERWISE SPECIFIED IN THE SQUARES OR SPACE PROVIDED IN THIS PROXY, THIS
PROXY WILL BE VOTED FOR EACH OF THE BOARD'S NOMINEES
DATED:___________________________________________,1999
SIGNED:_______________________________________________
_______________________________________________
SIGNATURE_____________________________________DATE_______
SIGNATURE_____________________________________DATE_______
Signature if held jointly
NOTE: Please sign this proxy and return it promptly whether or not you expect to
attend the meeting. You may nevertheless vote in person if you attend.
Please sign exactly as your name appears hereon. Give full title if an
Attorney, Executor, Administrator, Trustee, Guardian, etc. For an account
in the name of two or more persons, each should sign, or if one signs, he
should attach evidence of his authority.
