THE QUIGLEY CORPORATION
Kells Building
621 Shady Retreat Road
P.O. Box 1349
Doylestown, PA 18901
------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held May 5, 2000
------------------------------
TO THE STOCKHOLDERS OF THE QUIGLEY CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of THE QUIGLEY
CORPORATION, a NEVADA Corporation (the "Company") will be held at Aldie
Mansion, 85 Old Dublin Pike, Doylestown, PA 18901 on Friday, May 5, 2000, at
4:00 P.M., local time, for the following purposes:
(i) To elect a Board of Directors to serve for the ensuing year until the next
Annual Meeting of Stockholders and until their respective successors have
been duly elected and qualified.
(ii) To ratify the appointment of PricewaterhouseCoopers LLP as independent
auditors for the year ending December 31, 2000.
(iii)To transact such other business as may properly come before the Meeting
and any adjournments thereof.
Only stockholders of record at the close of business on March 20, 2000 will be
entitled to notice of and to vote at the Meeting or any adjournment thereof.
Any stockholder may revoke a proxy at any time prior to its exercise by filing
a later-dated proxy, or a written notice of revocation with the Secretary of
the Company, or by voting in person at the Meeting. If a stockholder is not
attending the Meeting, any proxy or notice should be returned in time for
receipt no later than the close of business on the day preceding the Meeting.
DUE TO LIMITED SEATING CAPACITY, ADMISSION WILL BE LIMITED TO ONE (1) SEAT PER
STOCKHOLDER OF RECORD. IF YOUR SHARES ARE HELD BY A BANK OR BROKER, YOU MUST
BRING YOUR BANK OR BROKERS' STATEMENT EVIDENCING YOUR BENEFICIAL OWNERSHIP OF
THE QUIGLEY CORPORATION STOCK TO THE MEETING.
By Order of the Board of Directors
/s/ Eric H. Kaytes
-------------------
ERIC H. KAYTES, Secretary
Doylestown, PA
April 4, 2000
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, YOU ARE URGED TO FILL
IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
THE QUIGLEY CORPORATION
Kells Building
621 Shady Retreat Road
P. O. Box 1349
Doylestown, PA 18901
--------------------
PROXY STATEMENT
------------------
April 4, 2000
This Proxy Statement is being furnished in connection with the solicitation of
proxies by the Board of Directors of The Quigley Corporation, (the "Company")
for use at the Annual Meeting of Stockholders of the Company to be held at
Aldie Mansion, 85 Old Dublin Pike, Doylestown, PA 18901, on Friday, May 5, 2000
at 4.00 P.M., local time, and any adjournments thereof (the "Meeting").
The principal executive offices of the Company are located at the Kells
Building, 621 Shady Retreat Road, P.O. Box 1349, Doylestown, Pennsylvania
18901. The approximate date on which this Proxy Statement and the accompanying
Proxy will first be sent or given to stockholders is April 4, 2000.
At the Meeting, the following proposals will be presented to the Stockholders
for approval:
(i) To elect a Board of Directors to serve for the ensuing year until the next
Annual Meeting of Stockholders and until their respective successors have
been duly elected and qualified.
(ii) To ratify the appointment of PricewaterhouseCoopers LLP as independent
auditors for the year ending December 31, 2000.
(iii)To transact such other business as may properly come before the Meeting
and any adjournments thereof.
DUE TO LIMITED SEATING CAPACITY, ADMISSION WILL BE LIMITED TO ONE (1) SEAT PER
STOCKHOLDER OF RECORD. IF YOUR SHARES ARE HELD BY A BANK OR BROKER, YOU MUST
BRING YOUR BANK OR BROKERS' STATEMENT EVIDENCING YOUR BENEFICIAL OWNERSHIP OF
THE QUIGLEY CORPORATION STOCK TO THE MEETING.
RECORD AND VOTING SECURITIES
Only stockholders of record at the close of business on March 20, 2000 will be
entitled to notice of and to vote at the Meeting. At the close of business on
such record date, the Company had 10,349,731 shares of Common Stock, par value
$.0005 per share (the "Common Stock") outstanding and entitled to vote at the
Meeting. Each outstanding share of Common Stock is entitled to one vote. There
was no other class of voting securities of the Company outstanding on the
Record Date. A majority of the outstanding shares of Common Stock present in
person or by Proxy is required for a quorum.
PROXIES AND VOTING RIGHTS
Shares of Common Stock represented by Proxies that are properly executed, duly
returned and not revoked will be voted in accordance with the instructions
contained therein. If no instructions are contained in a Proxy, the shares of
Common Stock represented thereby will be voted (i) for election as directors of
the persons who have been nominated by the Board of Directors, (ii) for
ratification of the appointment of PricewaterhouseCoopers LLP as the Company's
independent auditors for the year ending December 31, 2000, and (iii) upon any
other matter that may properly be brought before the Meeting, in accordance
with the judgment of the person or persons voting the Proxy. The execution of a
Proxy will in no way affect a stockholder's right to attend the Meeting and to
vote in person. Any Proxy executed and returned by a stockholder may be revoked
at any time thereafter by written notice of revocation given to the Secretary
of the Company prior to the vote to be taken at the Meeting, by execution of a
subsequent Proxy that is presented at the Meeting, or by voting in person at
the Meeting, in any such case, except as to any matter or matters upon which a
vote shall have been cast pursuant to the authority conferred by such Proxy
prior to such revocation. Broker "non-votes" and the shares of Common Stock as
to which a stockholder abstains are included for purposes of determining the
presence or absence of a quorum for the transaction of business at the Annual
Meeting. A broker "non-vote" occurs when a nominee holding shares for a
beneficial owner does not vote on a particular proposal because the nominee
does not have discretionary voting power with respect to that item and has not
received instructions from the beneficial owner.
ANNUAL REPORT PROVIDED WITH PROXY STATEMENT
-------------------------------------------
Copies of the Company's Annual Report containing audited financial statements
of the Company for the year ended December 31, 1999, are being mailed together
with this Proxy Statement to all stockholders entitled to vote at the Meeting.
SECURITY OWNERSHIP
------------------
The following table sets forth information concerning ownership of the
Company's Common Stock as of March 20, 2000 by each person known by the Company
to be the beneficial owner of more than five percent of the Common Stock, each
director and executive officer and by all directors and executive officers of
the Company as a group. Unless otherwise indicated, the address of each person
or entity listed below is the Company's principal executive office.
Five Percent Stockholders, Directors, Common Stock
and all Executive Officers Beneficially Percent of
and Directors as a Group Owned (1) Class
- --------------------------------------------------------------------------------
GUY J. QUIGLEY (2) (3) (4) 4,016,854 34.4
CHARLES A. PHILLIPS (2) (3) (5) 1,665,206 15.1
GEORGE J. LONGO (2) (3) (6) 355,000 3.3
ERIC H. KAYTES (2) (3) (7) 552,992 5.2
JACQUELINE F. LEWIS (2) (8) 20,000 -
ROUNSEVELLE W. SCHAUM (2) (9) - -
ALL DIRECTORS AND OFFICERS (10) 6,610,052 50.7
(Six Persons)
(1) Beneficial ownership has been determined in accordance with Rule 13d-3
under the Exchange Act ("Rule 13d-3") and unless otherwise indicated,
represents shares for which the beneficial owner has sole voting and
investment power. The percentage of class is calculated in accordance with
Rule 13d-3 and includes options of other rights to subscribe which are
exercisable within sixty (60) days of March 20, 2000.
(2) Director of the Company.
(3) Officer of the Company.
(4) Mr. Quigley's beneficial ownership includes options and warrants
exercisable within sixty (60) days from March 20, 2000, to purchase
900,000 shares of Common Stock, options and warrants to purchase 430,000
shares of Common Stock beneficially owned by Mr. Quigley's wife and an
aggregate of 380,000 shares beneficially owned by members of Mr. Quigley's
immediate family.
(5) Mr. Phillips' beneficial ownership includes options and warrants
exercisable within sixty (60) days from March 20, 2000, to purchase
645,000 shares of Common Stock, and options to purchase 12,500 shares of
Common Stock beneficially owned by Mr. Phillips' wife.
(6) Mr. Longo's beneficial ownership includes options and warrants exercisable
within sixty (60) days from March 20, 2000, to purchase 350,000 shares of
Common Stock.
(7) Mr. Kaytes' beneficial ownership includes options and warrants exercisable
within sixty (60) days from March 20, 2000, to purchase 320,000 shares of
Common Stock.
(8) Ms. Lewis' address is 3805 Old Easton Road, Doylestown, PA 18901. Ms.
Lewis' beneficial ownership includes options exercisable within sixty (60)
days from March 20, 2000, to purchase 20,000 shares of Common Stock.
(9) Mr. Schaum's address is One Bannister's Warf, Newport, RI 02840.
(10) Includes an aggregate of 2,677,500 shares of Common Stock underlying
options and warrants that are exercisable within sixty (60) days from
March 20, 2000.
-2-
<PAGE>
COMPENSATION AND OTHER INFORMATION
----------------------------------
CONCERNING DIRECTORS AND OFFICERS
---------------------------------
Executive Compensation
- ----------------------
The following table provides summary information concerning cash and certain
other compensation for the years ended December 31, 1999, 1998 and 1997 paid or
accrued by the Company to or on behalf of the Company's Chief Executive Officer
and each of the other most highly compensated executive officers of the Company
whose compensation exceeded $100,000 during 1999:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
--------------------------
Annual Compensation Long-Term Compensation
------------------------------- ---------------------------
Other Annual Securities All Other
Name and Principal Position Year Salary Bonus Compensation Underlying Compensation
(1) (2) (3) (5) Options (4)
($) ($) ($) (#) ($)
- ----------------------------------------------------------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
Guy J. Quigley 1999 420,000 814,701 85,000 65,903
Chairman of the 1998 350,000 262,500 1,289,963 55,903
Board, President, 1997 250,000 437,500 2,546,262 240,000
Chief Executive Officer
Charles A. Phillips 1999 294,000 271,567 85,000 51,601
Executive Vice President, 1998 245,000 183,750 430,923 42,959
Chief Operating Officer 1997 175,000 306,250 847,990 185,000
George J. Longo 1999 252,000 100,000 27,820
Vice President, 1998 210,000 157,500 17,820
Chief Financial Officer 1997 150,000 262,500 200,000
Eric H. Kaytes 1999 192,000 50,000 27,039
Vice President, MIS, 1998 160,000 120,000 17,039
Secretary-Treasurer, 1997 100,000 175,000 135,000
Chief Information Officer
</TABLE>
(1) Compensation paid pursuant to employment agreements.
(2) Bonus's paid pursuant to the Company attaining specified sales and net
income goals.
(3) Additional payments, including founder's commission at 3.75% of sales
collected less certain deductions for Mr. Quigley, and founder's
commission at 1.25% of sales collected less certain deductions for Mr.
Phillips.
(4) Includes amounts attributable to the executive officers for reverse split
dollar life insurance policies on which the Company pays the premiums.
These insurance policies currently provide for the proceeds to be used by
the Company for, among other things, the purchase of the officer's stock,
at the fair market value, from the officer's estate if desired by the
executor of the estate. Also, included are matching contributions
attributable to each officer in the Company's 401-K Plan.
(5) The value of personal benefits for the executive officers of the Company
that might be attributable to management as executive fringe benefits,
such as vehicles, cannot be specifically or precisely determined; however,
it would not exceed the lesser of $50,000 or 10% of the total annual
salary and bonus reported for any individual named above.
Compensation Pursuant to Plans
- ------------------------------
An incentive stock option plan was instituted in 1997, (the "1997 Stock Option
Plan") and approved by the stockholders in 1998. Options pursuant to the 1997
Stock Option Plan have been granted to directors, executive officers, and
employees during 1999 and 1997. In early 1999, the Company implemented a
defined contribution plan for its employees with the Company's contribution to
the plan being based on the amount of the employee plan contribution.
-3-
<PAGE>
Option Grants Table
- -------------------
The following table sets forth certain information regarding stock option
grants made to each of the executive officers during 1999:
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
---------------------------------
Percent of Potential Realizable
Total Value at Assumed Rates
Number of Options of Annual Rates of Stock
Securities Granted to Exercise Price Appreciation for
Underlying Employees or Base Option ($) (1)
Options in Fiscal Price Expiration
Name Granted Year (%) ($/sh) Date 5% 10%
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Guy J. Quigley 85,000 20.8 5.125 4/07/09 273,700 694,450
Charles A. Phillips 85,000 20.8 5.125 4/07/09 273,700 694,450
George J. Longo 100,000 24.4 5.125 4/07/09 322,000 817,000
Eric H. Kaytes 50,000 12.2 5.125 4/07/09 161,000 408,500
</TABLE>
(1) The potential realizable portion of the foregoing table illustrates value
that might be realized upon exercise of options immediately prior to the
expiration of their term, assuming (for illustrative purposes only) the
specified compounded rates of appreciation on the Company's Common Stock
over the term of the option. These numbers do not take into account
provisions providing for termination of the option following termination
of employment, non-transferability or difference in vesting periods.
Aggregated Option Exercises and Year-End Option Values Table
- ------------------------------------------------------------
The following table sets forth certain information concerning stock options
exercised during 1999 and stock options, which were unexercised at the end of
1999 with respect to the executive officers:
AGGREGATED OPTION EXERCISES DURING THE MOST RECENTLY
COMPLETED FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
-------------------------------------------------------
Number of Value of
Shares Securities Unexercised
Acquired on Value Underlying In-the Money
Exercise Realized Unexercised Options at
Name (#) ($) Options Year End
($) (1)
- --------------------------------------------------------------------------------
Guy J. Quigley - - 900,000 218,800
Charles A. Phillips 150,000 660,975 645,000 -
George J. Longo - - 350,000 -
Eric H. Kaytes - - 320,000 65,640
(1) Represents the total gain that would be realized if all in-the-money
options held at December 31, 1999 were exercised, determined by
multiplying the number of shares underlying the options by the
difference between the per share option exercise price and $1.594 per
share, which was the closing bid price per share of the Company's
Common Stock on December 31, 1999. An option is in-the-money if the
fair market value of the underlying shares exceeds the exercise price
of the option.
Option Re-pricing Table
- -----------------------
As discussed in the Report on Executive Compensation below, in May 1998 certain
employee stock options, including options held by executive officers, were
re-priced to $9.68 per share, with all other terms and conditions remaining
unchanged. The following table sets forth certain information regarding the
re-pricing of stock options for executive officers of the Company in May 1998
and within the ten previous years:
-4-
<PAGE>
<TABLE>
<CAPTION>
Ten-Year Option Re-pricing
--------------------------
Number of
Securities Market Price Exercise Length of
Underlying of Stock at Price at New Original Term
Re-pricing Options Time of Time of Exercise Remaining at
Name Date Re-priced Re-pricing Re-pricing Price Date of
(#) ($) ($) ($) Re-pricing
- ---------------------- ------------- ------------------ ---------------- ------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Guy J. Quigley 5/08/98 100,000 9.68 15.00 9.68 9 yrs. 7 mos.
Charles A. Phillips 5/08/98 100,000 9.68 15.00 9.68 9 yrs. 7 mos.
George J. Longo 5/08/98 115,000 9.68 15.00 9.68 9 yrs. 7 mos.
5/08/98 10,000 9.68 17.50 9.68 9 yrs. 7 mos.
Eric H. Kaytes 5/08/98 90,000 9.68 15.00 9.68 9 yrs. 7 mos.
5/08/98 10,000 9.68 17.50 9.68 9 yrs. 7 mos.
</TABLE>
Royalty and Employment Agreements
- ---------------------------------
The Cold-Eeze(R)product is manufactured for the Company by an independent
manufacturer and marketed by the Company in accordance with the terms of the
licensing agreement (between the Company and Godfrey Science & Design, Inc. and
John C. Godfrey, Ph.D.; hereinafter "Dr. Godfrey"). The contract is assignable
by the Company with Dr. Godfrey's consent. Throughout the duration of the
agreement Dr. Godfrey is to receive a three percent (3%) royalty on sales
collected, less certain deductions, of the Company's Cold-Eeze(R)products.
A separate consulting agreement between the parties referred to directly above
was similarly entered into on May 4, 1992 whereby Dr. John C. Godfrey and Dr.
Nancy J. Godfrey are to receive a consulting fee of two percent (2%) on sales
collected, less certain deductions, of the Company's Cold-Eeze(R) products for
consulting services to the Company with respect to such products.
Pursuant to the license agreement entered into between the Company and George
Eby Research, the Company pays a royalty fee. Throughout the duration of the
agreement, George Eby of George Eby Research, is to receive a three percent
(3%) royalty on sales collected, less certain deductions, of the Company's
Cold-Eeze(R) products.
An employment agreement between the Company and Guy J. Quigley was entered into
on June 1, 1995, whereby Guy J. Quigley is employed as the Chief Executive
Officer of the Company for a term ending on May 31, 2005. In addition to
compensation for services as an officer of the Company, Mr. Quigley is entitled
to receive a founder's commission of five percent (5%) on sales collected, less
certain deductions, of the Company's Cold-Eeze(R) products, which is shared
with Charles A. Phillips in a ration of 75% and 25%. Upon the termination of
the contract for any reason, Mr. Quigley is entitled to the remainder of his
compensation owed him through May 31, 2005.
An employment agreement between the Company and Charles A. Phillips was entered
into on June 1, 1995, whereby Charles A. Phillips is employed as the Executive
Vice President and Chief Operating Officer of the Company for a term ending on
May 31, 2005. In addition to compensation for services as an officer of the
Company, Mr. Phillips is entitled to receive twenty five percent (25%) of the
founder's commission received by Guy J. Quigley, either directly from Guy J.
Quigley or, if requested, directly from the Company. Should Mr. Phillips make
such a request upon the Company, the amount owed to him would be deducted from
any commissions due Guy J. Quigley. Upon the termination of the contract for
any reason, Mr. Phillips is entitled to the remainder of his compensation owed
him through May 31, 2005.
George J. Longo is employed as the Chief Financial Officer of the Company
pursuant to an employment agreement dated November 5, 1996, for a term ending
on December 31, 2001. The agreement provides for a base salary of $150,000, or
such greater amount, as the Board of Directors may from time to time determine,
with annual increases over the prior year's base salary. In the event of his
disability, Mr. Longo is to receive the full amount of his base salary for
eighteen months. Upon a change of control of the Company, Mr. Longo is entitled
to receive severance compensation equal to forty-eight months of his current
compensation. Upon early termination by the Company without cause (as defined
in the agreement), the Company is required to pay Mr. Longo the remainder of
the salary owed him through December 31, 2001.
-5-
<PAGE>
The Company entered into an employment agreement dated as of January 1, 1997,
with Eric H. Kaytes on terms substantially similar to those of George J.
Longo's employment agreement for a term ending on December 31, 2001. Mr.
Kaytes's agreement provides for his employment by the Company as its Chief
Information Officer at a base salary of $100,000, or such greater amount, as
the Board of Directors may from time to time determine, with annual increases
over the prior year's base salary. Mr. Kaytes is entitled to receive severance
compensation equal to twelve months of his current compensation upon a change
of control of the Company. Upon early termination by the Company without cause
(as defined in the agreement), the Company is required to pay Mr. Kaytes the
remainder of the salary owed him through December 31, 2001.
REPORTS ABOUT OWNERSHIP OF THE COMPANY'S COMMON STOCK AND COMPLIANCE WITH
-------------------------------------------------------------------------
SECTION 16 (a) OF THE SECURITIES AND EXCHANGE ACT OF 1934
---------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's officers and directors, and persons who own more than ten percent of
a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "Commission"). Officers, directors and greater than ten-percent
stockholders are required by the Commission's regulations to furnish the
Company with copies of all Section 16(a) forms they file.
Each of Messrs. Quigley, Phillips, Longo, Kaytes, Sloan and Ms. Lewis filed on
a timely basis statements of changes in beneficial ownership of securities for
1999 as required by Section 16(a).
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
For the year ended December 31, 1999, $1,086,268 was paid or payable under
founder's commission agreements between the Company and Guy J. Quigley and
Charles A. Phillips, who share a commission of 5% on sales collected, less
certain deductions, of the Company's Cold-Eeze(R) products.
In the ordinary course of business, the Company has sales brokerage
arrangements with ScandaSystems Ltd., whose President and major stockholder is
Mr. Gary Quigley, a relative of the Company's Chief Executive Officer.
Approximately $248,517 was paid or payable by the Company to such firm during
1999. Also, the Company has consulting arrangements with the Kay Group, Inc.
whose President and major stockholder is Mr. David Kaytes, a relative to the
Company's Chief Information Officer. Approximately $112,074 was paid or payable
by the Company to such firm during 1999. The Company believes that the services
performed by these firms are on terms no more favorable than could have
otherwise been obtained from an unaffiliated third party.
The Company is in the process of acquiring licenses in certain countries
through related party entities. During 1999, fees amounting to $110,000 have
been paid to a related entity to obtain such licenses.
PROPOSALS TO BE SUBMITTED FOR STOCKHOLDER APPROVAL
--------------------------------------------------
Proposal 1. ELECTION OF A BOARD OF DIRECTORS
The Directors of the Company are elected annually and hold office for the
ensuing year until the next annual meeting of stockholders and until their
successors have been duly elected and qualified. The directors are elected by
plurality of votes cast by stockholders. The Company's by-laws state that the
number of directors constituting the entire Board of Directors shall be
determined by resolution of the Board of Directors. The number of directors
currently fixed by the Board of Directors is six.
No proxy may be voted for more people than the number of nominees listed below.
Shares represented by all proxies received by the Board of Directors and not so
marked as to withhold authority to vote for any individual director (by writing
that individual director's name where indicated on the proxy) or for all
directors will be voted "FOR" the election of all the nominees named below
(unless one or more nominees are unable or unwilling to serve). The Board of
Directors knows of no reason why any such nominee would be unable or unwilling
to serve, but if such should be the case, proxies may be voted for the election
of substitute nominees selected by the Board of Directors.
-6-
<PAGE>
The following table and the paragraphs following the table sets forth
information regarding the current ages, terms of office and business experience
of the current directors and executive officers of the Company, all of whom are
being nominated for re-election to the Board of Directors:
Year First
Name Position Age Elected
- --------------------------------------------------------------------------------
Guy J. Quigley (1) Chairman of the Board,
President, CEO 58 1989
Charles A. Phillips* (1) Executive Vice President,
COO and Director 52 1989
George J. Longo Vice President, CFO
and Director 53 1997
Eric H. Kaytes Vice President, CIO
and Director 45 1989
Jacqueline F. Lewis* Director 54 1997
Rounsevelle W. Schaum* Director 67 2000
* Member of the audit committee (1) Member of the compensation committee
GUY J. QUIGLEY has been Chairman of the Board, President, and Chief Executive
Officer of the Company since September 1989. Prior to this date, Mr. Quigley,
an accomplished author, established and operated various manufacturing, sales,
marketing and real estate companies in the United States, Europe and the
African Continent.
CHARLES A. PHILLIPS has been Executive Vice President, Chief Operations Officer
and a Director of the Company since September 1989. Before his employment with
the Company, Mr. Phillips founded and operated KEB Enterprises, a gold and
diamond mining operation that was based in Sierra Leone, West Africa. In
addition, Mr. Phillips served as a technical consultant for Re-Tech, Inc.,
Horsham, Pennsylvania, where he was responsible for full marketing and
production of a prototype electrical device. Mr. Phillips also serves as a
director of Businessnet Holdings Corp.
GEORGE J. LONGO currently serves as Vice President, Chief Financial Officer and
Director of the Company. Mr. Longo assumed his duties as Vice President and
Chief Financial Officer for the Company in January 1997. Mr. Longo was also
appointed as a Director of the Company in March 1997. Before joining the
Company, Mr. Longo served as Chief Financial Officer of two privately held
international manufacturing firms and Manager of Corporate Accounting with the
predecessor pharmaceutical company to Aventis S.A. (NYSE-AVE), being
responsible for SEC and IRS compliance, and was involved in acquisition and
general accounting issues. Prior to that, Mr. Longo was with KPMG LLP.
ERIC H. KAYTES currently serves as Vice President, Chief Information Officer,
Secretary, Treasurer and Director of the Company. From 1989 until January 1997,
Mr. Kaytes also served as the Chief Financial Officer of the Company. Prior to
1989 and concurrent with his responsibilities for the Company, Mr. Kaytes had
been an independent programmer and designer of computer software.
JACQUELINE F. LEWIS, appointed to the Board of Directors in December 1997, is
presently Vice President and Chief Operating Officer of D. A. Lewis, Inc., a
direct mail advertising company that she co-founded in 1976. D. A. Lewis now
employs 250 people. Ms. Lewis has also served on the Board of Directors of
Suburban Community Bank since 1993.
ROUNSEVELLE W. SCHAUM, was appointed to the Board of Directors in March 2000.
Since 1993, Mr. Shaum has served as Chairman of Newport Capital Partners, Inc.,
an investment-banking firm, specializing in the private placement of equity and
convertible debt securities. In such capacity, Mr. Schaum has directed and
organized over thirty private equity placements and served on the board of
directors of numerous public and private emerging growth companies. Prior to
1993, Mr. Schaum has held senior management positions with international
manufacturing companies. He also served as the Chairman of the California Small
Business Development Corporation, a private venture capital syndicate, and was
the founder of the Center of Management Sciences, a management-consulting firm
that services multi-national high technology companies and government agencies,
including NASA and the Department of Defense.
-7-
<PAGE>
Required Vote
- -------------
Directors are elected by a plurality of the votes cast, in person or by proxy,
at the Meeting. Votes withheld and broker non-votes are not counted toward a
nominee's total.
Recommendation of the Board of Directors
- ----------------------------------------
The Board of Directors of the Company recommends a vote "FOR" the election of
each of the nominees.
Meetings and Committees of the Board of Directors
- -------------------------------------------------
For the fiscal year ended December 31, 1999, there were six meetings of the
Board of Directors. Each of the directors attended (or participated by
telephone) more than 75% of such meetings of the Board of Directors and
Committees on which they served in 1999. During 1999, the Board of Directors
also acted by unanimous written consent in lieu of a meeting on one occasion.
The Company has three standing committees, the Audit Committee, Executive
Operating Committee and Compensation Committee. Prior to establishing these
Committees, the customary functions of such committees had been performed by
the entire Board of Directors. The Board of Directors does not presently have a
standing nominating committee, the customary functions of such committee being
performed by the entire Board of Directors. Stockholders wishing to recommend
candidates for consideration by the Board of Directors may do so by writing to
the Secretary of the Company and providing the candidate's name, biographical
data and qualifications.
The members of the Audit Committee are Messrs. Phillips, Schaum and Ms. Lewis.
Mr. Schaum, elected to the Board of Directors in March 2000, replaced Mr. Sloan
as a member of the Audit Committee after his resignation from the Board of
Directors on March 1, 2000. The Audit Committee reviews, analyzes and makes
recommendations to the Board of Directors with respect to the Company's
accounting policies, controls and statements, consults with the Company's
independent public accountants, and reviews filings containing financial
information of the Company to be made with the Securities and Exchange
Commission. The Audit Committee met one time during 1999.
The members of the Executive Operating Committee are Messrs. Quigley, Phillips,
Longo, and Kaytes. The Executive Operating Committee possesses and exercises
all the power and authority of the Board of Directors in the management and
direction of the business and affairs of the Company, except as limited by law,
and except for the power to change the membership or to fill vacancies on the
Board of Directors or the Executive Operating Committee. The Executive
Operating Committee met three times during 1999.
The members of the Compensation Committee are Messrs. Quigley and Phillips. The
Compensation Committee reviews and recommends the salary and other compensation
of officers and key employees of the Company, including non-cash benefits, and
designates the employees entitled to participate in the Company's benefits
plans and other arrangements, as from time to time constituted. The
Compensation Committee also administers the Company's Stock Option Plans and
recommends the terms of grants of stock options and the persons to whom such
options shall be granted in accordance with such plans. These recommendations
are then subject to approval by the full Board of Directors. The Compensation
Committee met two times during 1999.
Compensation of Directors
- -------------------------
Outside directors receive compensation annualized at $10,000. In the event that
there are more than five meetings of the Board during any particular year, such
director will receive an additional $2,000 for each such meeting. In addition,
in 1999 the Board of Directors approved the grant of Options to purchase 10,000
shares of Common Stock to each of the outside directors, at the time of grant,
under the Company's 1997 Stock Option Plan. Officers of the Company receive no
compensation for their service on the Board or on any Committee.
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
The Board of Directors as a whole provides overall guidance and approval of the
Company's executive compensation program. All members of the Board participate
in the approval of each of the components of the Company's executive
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<PAGE>
compensation program described in the "Report on Executive Compensation" except
that no director who is also a Company employee participates in the approval of
their respective compensation. Mr. Quigley serves on the Compensation Committee
and Mr. Phillips serves on the Compensation and Audit Committees. No other
executive officer of the Company served on any other committee or the
compensation committee of another entity performing similar functions during
the fiscal year.
Report on Executive Compensation
- --------------------------------
General
- -------
The Compensation Committee reviews and recommends the salary and other
compensation of officers and key employees of the Company. The Compensation
Committee also administers the Company's Stock Option Plan and recommends the
terms of grants of stock options and the persons to whom such options shall be
granted in accordance with such plan. These recommendations, as previously
indicated, are subject to approval by the full Board of Directors.
Compensation Philosophy
- -----------------------
In reaching decisions regarding executive compensation, the committee as well
as the full board upon approval of such recommendations, balances the total
compensation package for each executive, and makes it variable, with sales and
profits attained as well as achievement of annual and long-term goals.
Competitive levels of compensation are necessary in attracting, rewarding,
motivating, and retaining qualified management. The board also believes that
the potential for equity ownership by management is beneficial in aligning
management's and stockholders' interests in the enhancement of stockholder
value. Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), places a limit of $1,000,000 on the amount of compensation that may be
deducted by the Company in any year with respect to certain of the Company's
highest paid executives. Certain performance-based compensation that has been
approved by stockholders is not subject to the deduction limit. If necessary,
the Company may attempt to qualify certain compensation paid to executive
officers for deductibility under the Code, including Section 162(m). However,
the Company may from time to time pay compensation to its executive officers
that may not be deductible.
Compensation Program
- --------------------
The Company has a comprehensive compensation program, which consists of cash
compensation, both fixed and variable, and equity-based compensation. Overall
compensation is predicated on industry and peer group comparisons and on
performance judgements as to the past and expected future contributions of the
individual executive officer. Specific compensation for each executive is
designed to fairly remunerate that employee of the Company for the effective
exercise of their responsibilities, their management of the business functions
for which they are responsible, their extended period of service to the Company
and their dedication and diligence in carrying out their responsibilities for
the Company.
The fixed aspect is intended to meet the requirements of the employment
contracts in effect for all of the Company's officers. See "Executive
Compensation - Royalty and Employment Agreements". Employment agreements are in
place to insure the Company of consistency of leadership and the retention of
qualified executives, and to foster a spirit of employment security, which
thereby encourages decisions that will benefit long-term stockholders. Variable
compensation is based upon the entire board adopting and approving annually,
sales and profit goals to be attained for the ensuing year.
Equity-based compensation is through options periodically granted under the
1997 Stock Option Plan. These grants are designed to directly reward and create
a proprietary interest, among the executive officers and other employees, in
the Company, which will be an incentive for these employees to work to maximize
the long-term total return to stockholders.
Option Re-pricing
- -----------------
In May 1998, following stockholder approval of the 1997 Stock Option Plan, the
Board amended certain stock options previously granted under such plan to
certain employees of the Company, including certain options held by Messrs.
Quigley, Phillips, Longo and Kaytes. The options re-priced were approved by the
Board of Directors in light of the decline in the market value of the Common
Stock that had occurred since the options were originally granted. The Board
believed that drop in market price was due to factors unrelated to the
accomplishments and efforts of the employees whose options were re-priced and
that such re-pricing would afford these individuals with a significant
incentive that the options were originally intended to provide.
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<PAGE>
Compensation Committee: Guy J. Quigley, Charles A. Phillips
PERFORMANCE GRAPH
The following graph reflects a five-year comparison, calculated on a dividend
reinvested basis, of the cumulative total stockholder return on the Common
Stock of the Company, the NASDAQ Market Index, and a "peer group" index
classified as drug related products by Media General Financial Services ("MG
Group Index"). The comparisons utilize an investment of $100 on January 1, 1994
for the Company and the comparative indices, which then measure the values for
each group at December 31 of each year presented. There can be no assurance
that the Company's stock performance will continue with the same or similar
trends depicted in the following performance graph.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG THE QUIGLEY CORPORATION,
NASDAQ MARKET INDEX AND PEER GROUP INDEX
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
-------------------------------FISCAL YEAR ENDING ---------------------
COMPANY/INDEX/MARKET 12/30/1994 12/29/1995 12/31/1996 12/31/1997 12/31/1998 12/31/1999
<S> <C> <C> <C> <C> <C> <C>
Quigley Corporation, The 100.00 87.50 1743.74 2888.00 1106.00 318.00
Drug Related Products 100.00 101.96 152.73 212.47 142.25 122.15
NASDAQ Market Index 100.00 129.71 161.18 197.16 278.08 490.46
</TABLE>
-10-
<PAGE>
Proposal 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed PricewaterhouseCoopers LLP as the
Company's independent public auditor for the fiscal year ending December 31,
2000. Although the selection of auditors does not require ratification, the
Board of Directors has directed that the appointment of PricewaterhouseCoopers
LLP be submitted to stockholders for ratification due to the significance of
their appointment to the Company. A representative of PricewaterhouseCoopers
LLP is expected to be present at the Meeting. Such representative will have an
opportunity to make a statement if so desired, and will be available to respond
to appropriate questions from stockholders.
Required Vote
- -------------
The affirmative vote of the holders of a majority of the shares of Common Stock
present, in person or by Proxy is required for ratification of the appointment
of PricewaterhouseCoopers LLP as independent auditors of the Company. An
abstention, withholding of authority to vote or broker non-vote, therefore,
will not have the same legal effect as an "against" vote and will not be
counted in determining whether the proposal has received the requisite
stockholder vote.
Recommendation of the Board of Directors
- ----------------------------------------
The Board of Directors of the Company recommends a vote "FOR" the ratification
of the appointment of PricewaterhouseCoopers LLP as the Company's independent
auditors for the year ending December 31, 2000.
STOCKHOLDER PROPOSALS
---------------------
Proposals of stockholders intended for inclusion in the Proxy Statement to be
furnished to all stockholders entitled to vote at the next Annual Meeting of
Stockholders of the Company must be received at the Company's principal
executive offices not later than December 5, 2000. In order to curtail
controversy as to the date on which a proposal was received by the Company, it
is suggested that proponents submit their proposals by Certified Mail - Return
Receipt Requested.
With respect to any stockholder proposals to be presented at the next annual
meeting which are not included in the Company's proxy materials, management
proxies for such meeting will be entitled to exercise their discretionary
authority to vote on such proposals notwithstanding that they are not discussed
in the proxy materials unless the proponent notifies the Company of such
proposal by not later than February 19, 2001.
EXPENSES AND SOLICITATION
-------------------------
All expenses in connection with this solicitation will be borne by the Company.
In addition to the use of the mail, proxy solicitation may be made by
telephone, telegraph and personal interview by officers, directors and
employees of the Company. The Company will, upon request, reimburse brokerage
houses and persons holding shares in the names of their nominees for their
reasonable expenses in sending soliciting material to their principals.
OTHER BUSINESS
--------------
The Board of Directors knows of no business that will be presented for
consideration at the Meeting other than those items stated above. If any other
business should come before the Meeting, votes may be cast, pursuant to
proxies, in respect to any such business in the best judgment of the person or
persons acting under the proxies.
Dated: April 4, 2000 THE QUIGLEY CORPORATION
By: /s/ Eric H. Kaytes
------------------
ERIC H. KAYTES, Secretary
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