<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>
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 Thursday, February 17, 2000
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 7, 2000
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 18, 2000
WE URGE YOU TO SIGN AND RETURN THE ENCLOSED PROXY, OR VOTE BY TELEPHONE OR VIA
THE INTERNET AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING IN PERSON. RETURNING THE PROXY OR VOTING ELECTRONICALLY BY TELEPHONE OR
VIA THE INTERNET WILL NOT LIMIT YOUR RIGHT TO VOTE AT THE MEETING IF YOU LATER
DECIDE TO ATTEND IN PERSON.
<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 February 17, 2000 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 19, 2000.
STOCKHOLDERS ENTITLED TO VOTE
Only holders of record of the Company's Common Stock (the 'Common Stock')
at the close of business on January 7, 2000 (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 13,136,873
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;
VOTING BY TELEPHONE AND VIA THE INTERNET
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. An
abstention has the same effect as a vote against the proposals.
Instead of submitting your vote by mail on the enclosed form of proxy, you
can vote by telephone or via the internet. Instructions to use these methods are
set forth on the enclosed proxy card. If you vote by telephone or via the
internet, please have your proxy card available. The control number appearing on
your card is necessary to verify your vote. A telephone or internet vote
authorizes the named proxies in the same manner as if you marked, signed and
returned the card by mail. Voting by telephone and via the internet are valid
proxy voting methods under applicable law and the Company's By-Laws.
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.
<PAGE>
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, 1999 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 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,
2000.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
--------------------------
STOCKHOLDER NUMBER PERCENT(12)
----------- ------ -----------
<S> <C> <C>
Terence D. Wall (1)(2)...................................... 4,244,105 32.0%
Trusts for the benefit of the minor children of Terence D.
Wall
(Anthony J. Dimun, trustee) (1)(3)........................ 2,420,327 18.4%
Dimensional Fund Advisors, Inc., 11299 Ocean Avenue, 11th
Floor, Santa Monica, California 90401 (4)................. 890,500 6.8%
Barry Wicker (5)............................................ 407,298 3.1%
David J. Bershad (6)........................................ 75,385 *
Anthony J. Dimun (1)(3)..................................... 2,821,062 21.1%
Scott Spitzer (7)........................................... 9,000 *
Joseph J. Thomas............................................ 0 *
Stuart M. Essig (8)......................................... 10,064 *
Christian Malmqvist (9)..................................... 4,777 *
Daniel L. Reuvers (10)...................................... 12,864 *
All directors and executive officers as a group (9 persons)
(11)...................................................... 7,483,691 55.0%
</TABLE>
- ------------
* Represents less than one percent.
(1) The business address 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, 29,916
shares held in the Company's 401(k) plan on Mr. Wall's behalf and 37,639
shares held in the Company's Investment Plan held on Mr. Wall's behalf;
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. Includes 135,278 shares covered by exercisable options.
(3) As trustee of the trusts maintained for the benefit of the minor children
of Terence D. Wall, 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
600 shares held in an insurance trust established by Mr. Wicker. He is also
deemed to be the beneficial owner of 87,400 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, 72,243 shares owned by Mr. Dimun
individually, 20,381 shares held in the Company's Investment Plan, 4,369
shares held in the Company's 401(k) plan on Mr. Dimun's behalf and 215,741
shares covered by options exercisable by Mr. Dimun.
(4) In a Schedule 13G filed with the Securities and Exchange Commission on
February 11, 1999, Dimensional Fund Advisors, Inc., states that it has sole
voting and dispositive power with regard to 890,500 shares.
(5) Includes 18,380 shares owned by Mr. Wicker's wife, 6,687 shares held in the
Company's 401(k) plan on Mr. Wicker's behalf, 8,971 shares held in the
Company's Investment Plan on Mr. Wicker's behalf
(footnotes continued on next page)
2
<PAGE>
(footnotes continued from previous page)
and 48,304 shares covered by options exercisable by Mr. Wicker; excludes
shares held in an insurance trust (which shares may not be voted or
disposed of by Mr. Wicker or his wife).
(6) Includes 2,000 shares owned by Mr. Bershad's wife as to which Mr. Bershad
disclaims beneficial ownership; also includes 7,975 shares held in the
Company's Investment Plan on Mr. Bershad's behalf and 61,210 shares covered
by exercisable options.
(7) Includes 1,000 shares held in the Company's Investment Plan on Mr.
Spitzer's behalf and 8,000 shares covered by exercisable options.
(8) Includes 8,064 shares held in the Company's Investment Plan on Mr. Essig's
behalf and 2,000 shares covered by exercisable options.
(9) Includes 1,107 shares held in the Company's Investment Plan on Mr.
Malmqvist's behalf and 3,670 shares covered by exercisable options.
(10) Includes 3,866 shares held in the Company's Investment Plan on Mr. Reuvers
behalf; 554 shares held in the Company's 401(k) plan and 8,444 shares
covered by exercisable options.
(11) Includes 482,647 shares covered by options exercisable by the Company's
executive officers and directors, 41,526 shares held in the Company's
401(k) plan and 89,003 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.
(12) Percent of class is based on 13,134,164 shares of Common Stock outstanding
on December 31, 1999.
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, 1999.
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.
3
<PAGE>
The table below sets forth the names and ages (as of September 30, 1999) 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, 58 1972 2000 President and Chief Executive Officer of the Company.
Mr. Wall presently serves on the Board of Directors
of Bionx Implants, Inc.
David J. Bershad, 59 1991 2000 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.
Anthony J. Dimun, 56 1987 2000 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, 38 1998 2000 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 1997).
Mr. Essig presently serves on the Board of
Directors of St. Jude Medical Corporation.
Joseph J. Thomas, 63 1992 2000 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, 59 1985 2000 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 Omnisonics, Inc. (formerly
Sonokinetics Inc.). 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 are investors in X-Site, LLC
(See Related Party Transactions).
4
<PAGE>
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth, for the fiscal years ended September 30,
1997, 1998 and 1999, the annual and long-term compensation of the Company's
Chief Executive Officer and its other executive officers (the 'Named Officers').
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(B) GRANTED (#) COMPENSATION(C)
--------------------------- ---- ------ -------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Terence D. Wall ................... 1999 225,000 $10,695 $ 6,000 -- $5,088
President and Chief Executive 1998 225,000 10,695 6,000 75,278 3,213
Officer 1997 225,000 10,685 6,000 -- 3,266
Anthony J. Dimun .................. 1999 180,000 8,608 12,600 9,638 4,482
Executive Vice President and 1998 180,000 8,608 12,600 71,414 3,071
Chief Financial Officer 1997 180,000 8,608 12,600 5,694 3,088
Barry Wicker ...................... 1999 151,250 7,331 6,000 9,638 3,574
Executive Vice President 1998 151,250 7,281 6,000 8,304 2,384
1997 151,250 7,281 6,000 -- 2,580
Christian Malmqvist ............... 1999 145,631 6,971 6,000 -- 2,493
Vice President, International 1998 139,195 6,598 6,000 3,320 1,730
Operations 1997 132,311 28,326 6,000 -- 1,731
Scott Spitzer ..................... 1999 231,944 13,406 6,000 8,000 3,103
Vice President, General Counsel 1998 106,442 18,027 3,000 -- --
and Secretary (D)
</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 1999 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 $350 are earned by employees having perfect
attendance for one or more consecutive years.
(B) Comprised entirely of monthly car allowances for Messrs. Wall, Wicker,
Malmqvist and Spitzer. In addition to the monthly car allowances, Mr. Dimun
is also provided an entertainment allowance of $550 per month.
(C) 'Compensation' reported under this column for the year ended September 30,
1999 includes: (i) contributions of $2,500, $2,500, $1,982, $1,907, $2,436,
respectively, for Messrs. Wall, Dimun, Wicker, Malmqvist, Spitzer,
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 $2,588,
$1,982, $1,592, $586 and $667, respectively, with respect to life insurance
purchased by the Company for the benefit of Messrs. Wall, Dimun, Wicker,
Malmqvist and Spitzer, respectively.
(D) Mr. Spitzer joined the Company in April 1998.
5
<PAGE>
STOCK OPTIONS
The following table contains information regarding the grant of stock
options to the Named Officers during the year ended September 30, 1999. 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
NUMBER OF PERCENT OF AT ASSUMED ANNUAL RATES
COMMON SHARES TOTAL OPTIONS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED FOR OPTION TERM
OPTIONS TO EMPLOYEES EXERCISE PRICE EXPIRATION -------------------------------
NAME GRANTED(A) IN FISCAL 1999 PER SHARE DATE 5% 10%
- ---- ---------- -------------- --------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Anthony J. Dimun.......... 9,638 6.4% $20.75 8/27/09 $ 125,771 $ 318,731
Barry Wicker.............. 9,638 6.4% $20.75 8/27/09 125,771 318,731
Scott Spitzer............. 8,000 5.3% $17.87 2/18/08 89,907 227,841
</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 options shall automatically be forfeited,
unless the Committee administering the Plan determines that the employee
has sufficient hardship and such hardship has caused such employee to take
such actions. In such event, 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 such time in
order to exercise such options. The Board of Directors is authorized to
accelerate stock options related to fully paid shares in connection with a
change in control.
6
<PAGE>
The following table provides data regarding the number of shares of the
Company's Common Stock covered by both exercisable and non-exercisable stock
options held by the Named Officers at September 30, 1999. Also reported are the
values for 'in-the-money' options, which represent the positive spread between
the exercise prices of existing options and $20.38, the closing sale price of
the Company's Common Stock on September 30, 1999. None of the Named Officers
exercised any stock options during fiscal 1999.
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............................... 60,000 135,278 $ -- $184,214
Anthony J. Dimun.............................. 155,519 121,052 830,937 175,462
Barry Wicker.................................. 40,000 57,942 -- 19,265
Christian Malmqvist........................... 350 3,320 -- 7,702
Scott Spitzer................................. -- 8,000 -- 20,080
</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, 1999, Mr. Thomas received a
salary of $150,000. In addition, Mr. Thomas received an auto allowance of
$4,800. During fiscal year 2000 Mr. Thomas is being paid at the rate of $150,000
per year.
Directors of the Company presently do not receive any cash fees for serving
in such capacity.
During fiscal year 1999, Messrs. Wall, Wicker and Dimun were granted
options as employees of the Company. 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'). 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 1999,
Mr. Bershad and Mr. Essig 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.
THE BOARD OF DIRECTORS; COMMITTEES OF THE BOARD
The Board of Directors of the Company held seven meetings during the year
ended September 30, 1999. 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, 1999. 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, 1999, 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.
7
<PAGE>
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, 1999, the following individuals
served on the Board: Terence D. Wall, David J. Bershad, Anthony J. Dimun, Stuart
M. Essig, Joseph J. Thomas 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 $227,211 during the current fiscal year for such
services. In addition, during fiscal year 1999 the Company provided certain
accounting services for X-Site in which various suppliers of X-Site, including
TMP, were paid by the Company. X-Site, in turn, reimbursed the Company. In
fiscal 1999, X-Site fully reimbursed the Company in the amount of $1,028,164.
The Company believes that the rates charged to X-Site for such services are no
less favorable to the Company than those charged to similarly situated unrelated
parties. Mr. Wall owns 44% of X-Site. Mr. Dimun, an investment limited
partnership in which Mr. Bershad is the primary investor, Mr. Thomas and Mr.
Spitzer 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 are no less favorable to the Company than terms that
would be available from similarly situated unrelated parties.
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.
8
<PAGE>
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>
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, 1994
(October 1, 1994 = 100) through September 30, 1999.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURNS
AMONG VITAL SIGNS, INC.,
NASDAQ MARKET INDEX AND MG GROUP INDEX
[GRAPH]
MG NASDAQ
VITAL GROUP MARKET
YEAR SIGNS, INC. INDEX INDEX
--------- ----------- ----------- ----------
1994 $100 $100 $100
1995 144.51 165.4 121.41
1996 180.43 164.25 141.75
1997 203.43 145.37 192.67
1998 212.43 134.89 200.23
1999 242.6 167.37 323.92
ASSUMES $100 INVESTED ON OCTOBER 1, 1994
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING SEPTEMBER 30, 1999
9
<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, 2000. 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 20, 2000 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 18, 2000
A COPY OF AN ANNUAL REPORT FOR THE YEAR ENDED SEPTEMBER 30, 1999, 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.
10
<PAGE>
APPENDIX 1
[PROXY CARD]
VITAL SIGNS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 17, 2000
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 February 17,
2000 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>
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
VITAL SIGNS, INC.
FEBRUARY 17, 2000
Please Detach and Mail in the Envelope Provided
PLEASE MARK YOUR
A [X] VOTES AS IN THIS
EXAMPLE.
<TABLE>
<S> <C> <C> <C>
FOR the nominees WITHHOLD The Board of Directors recommends a vote
listed at right (except AUTHORITY "FOR" the nominees for Directors in Proposal 1.
as marked to the to vote for the nominees
contrary below) listed at right
1. ELECTION NOMINEES: 2. Upon all such other matters as may
OF [ ] [ ] David J. Bershad properly come before the meeting and/or
DIRECTORS Anthony J. Dimun any adjournment or adjournments thereof,
Stuart M. Essig as they in their discretion may
INSTRUCTION: To withhold authority to vote for any Joseph J. Thomas determine. The Board of Directors is not
individual nominee listed at right, write the nominee's Terence D. Wall aware of any such other matters.
name in the space provided below. Barry Wicker
UNLESS OTHERWISE SPECIFIED IN THE SQUARES
OR SPACE PROVIDED IN THIS PROXY, THIS PROXY
____________________________________________________________ BE VOTED FOR EACH OF THE BOARD'S NOMINEES.
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.
</TABLE>
<TABLE>
<S> <C> <C> <C>
Signed:________________________________________ Signed:________________________________________ Dated:____________________, 2000.
</TABLE>
NOTE: 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.
