<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(A) of the Securities Exchange Act
of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
Preliminary Proxy Statement
[x] Definitive Proxy Statement
Definitive Additional Material
Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14A-12
ABAXIS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c) (1) (ii), 14a-6(i) (1), or
14a-6(i) (2)
$500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6 (i) (3)
Fee computed on table below per Exchange Act Rules 14a-6(i) (4)
and 0-11.
1) Title of each class of securities to which transaction applies:
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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: (1)
----------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------
(1) Set forth the amount on which the filing fee is calculated and
state how it was determined.
[ ] 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:
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4) Date Filed:
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<PAGE> 2
ABAXIS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held September 9, 1997
TO THE SHAREHOLDERS:
Please take notice that the annual meeting of the shareholders of Abaxis, Inc.,
a California corporation (the "Company"), will be held on September 9, 1997, at
10:00 a.m. at the offices of the Company, located at 1320 Chesapeake Terrace,
Sunnyvale, California, for the following purposes:
1. To elect six directors to hold office for the ensuing year.
2. To consider and vote upon a proposal to ratify the appointment
of Deloitte & Touche LLP as the Company's independent public
accountants for the fiscal year ending March 31, 1998.
3. To transact such other business as may properly come before the
meeting.
Shareholders of record at the close of business on July 24, 1997, are entitled
to notice of, and to vote at, this meeting and any adjournment or postponement.
By order of the Board of Directors
-----------------------------------
Ting W. Lu, Secretary
Sunnyvale, California
July 29, 1997
IMPORTANT: Please fill in, date, sign and promptly mail the enclosed proxy card
in the accompanying post-paid envelope to assure that your shares are
represented at the meeting. If you attend the meeting, you may choose to vote in
person even if you have previously sent in your proxy card.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SOLICITATION AND VOTING OF PROXIES.............................................. 1
INFORMATION ABOUT 2
ABAXIS..........................................................................
Stock Ownership of Certain Beneficial Owners and Management..... 2
Director Nominees............................................... 4
EXECUTIVE COMPENSATION AND OTHER MATTERS........................................ 6
Summary Compensation Table...................................... 6
Stock Options Granted in Fiscal 1997............................ 7
Option Exercises and Fiscal 1997 Year-End Values................ 8
Compensation of Directors....................................... 8
Change of Control Arrangements.................................. 8
Section 16(a) Beneficial Ownership Reporting Compliance......... 9
REPORT OF THE COMPENSATION COMMITTEE............................................ 10
COMPARISON OF SHAREHOLDER RETURN................................................ 12
ELECTION OF DIRECTORS........................................................... 13
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS................... 13
SHAREHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING.................... 14
TRANSACTION OF OTHER BUSINESS................................................... 14
</TABLE>
<PAGE> 4
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
The accompanying proxy is solicited by the Board of Directors of Abaxis, Inc., a
California corporation ("Abaxis" or the "Company"), for use at its annual
meeting of shareholders to be held on September 9, 1997, or any adjournment or
postponement thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareholders. The date of this Proxy Statement is August 6,
1997, the approximate date on which this Proxy Statement and the accompanying
form of proxy were first sent or given to shareholders.
SOLICITATION AND VOTING OF PROXIES
The cost of soliciting proxies will be borne by the Company. In addition to
soliciting shareholders by mail through its regular employees, the Company will
request banks and brokers, and other custodians, nominees and fiduciaries, to
solicit their customers who have stock of the Company registered in the names of
such persons and will reimburse them for their reasonable, out-of-pocket costs.
The Company may use the services of its officers, directors and others to
solicit proxies, personally or by telephone, without additional compensation.
On July 24, 1997, the Company had outstanding 11,886,153 shares of its Common
Stock held by 265 shareholders of record, all of which are entitled to vote with
respect to all matters to be acted upon at the annual meeting. The Company's
Bylaws provide that a majority of all of the shares of the stock entitled to
vote, whether present in person or represented by proxy, shall constitute a
quorum for the transaction of business at the meeting. Each share of Common
Stock is entitled to one vote, except that in the election of directors each
shareholder has cumulative voting rights and is entitled to as many votes as is
equal to the number of shares held multiplied by the number of directors to be
elected (six), which votes may be cast for a single candidate or distributed
among any or all of the candidates. No shareholder is entitled to cumulate votes
with respect to a candidate unless the candidate's name has been placed in
nomination prior to the voting and the shareholder or any other shareholder has
given notice, at the meeting and prior to the voting, of his or her intention to
cumulate his or her votes.
The persons authorized to vote shares represented by executed proxies (if
authority to vote for the election of directors is not withheld) will have full
discretion and authority to vote cumulatively and to allocate votes among any
and all nominees as they may determine or, if authority to vote for a specified
candidate or candidates has been withheld, among those candidates for whom
authority to vote has not been withheld. If an executed proxy is submitted
without any instruction for the voting of such proxy, the proxy will be voted in
favor of the proposals described, but votes may be cumulated for less than all
of the nominees for director.
All valid proxies received before the meeting will be exercised. A shareholder
giving a proxy has the power to revoke his or her proxy at any time before the
time it is exercised by delivering to the Secretary of the Company a written
instrument revoking the proxy or a duly executed proxy with a later date, or by
attending the meeting and voting in person.
1
<PAGE> 5
INFORMATION ABOUT ABAXIS
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of July 14, 1997, certain information with
respect to the beneficial ownership of the Company's Common Stock by (i) all
persons known by the Company to be the beneficial owners of more than 5% of the
outstanding Common Stock of the Company, (ii) each director and director-nominee
of the Company, (iii) the persons named in the Summary Compensation Table, and
(iv) all executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
PERCENT OF
ABAXIS
NUMBER OF COMMON STOCK
NAME OF BENEFICIAL OWNER(1) SHARES OUTSTANDING(2)
- ------------------------- --------- ------------
<S> <C> <C>
Gary H. Stroy(3) 369,421 3.0%
Vladimir Ostoich(4) 217,132 1.8%
Clinton H. Severson(5) 99,167 *
Daniel Wong(6) 63,520 *
Ting W. Lu(7) 61,223 *
Prithipal Singh(8) 26,154 *
Paul Hemmes(9) 19,833 *
Ernest S. Tucker, III, M.D.(10) 18,646 *
Richard Bastiani, Ph.D. (11) 8,104 *
Brenton G. A. Hanlon (12) 7,500 *
Executive officers and directors as a group (10 persons) 890,700 7.2%
</TABLE>
- ----------
* Less than 1%
1 The persons named in the table above have sole voting and investment
power with respect to all shares of Common Stock shown as beneficially
owned by them, subject to community property laws where applicable and
to the information contained in the footnotes to this table. Unless
otherwise indicated, the business address of each of the beneficial
owners listed is Abaxis, Inc., 1320 Chesapeake Terrace, Sunnyvale, CA
94089
2 The percentages shown in this column are calculated from the 11,886,153
shares of Common Stock actually outstanding on July 14, 1997 in addition
to options held by that person that are currently exercisable or
exercisable within 60 days following July 14, 1997 which are deemed
outstanding in accordance with the rules of the Securities and Exchange
Commission.
3 Includes an aggregate of 30,000 shares held by Mr. Stroy's son's IRA,
the Gary H. Stroy IRA, and the LeAnn Stroy IRA. Also includes 112,708
shares subject to options exercisable by Mr. Stroy within sixty days of
July 14, 1997.
2
<PAGE> 6
4 Includes (i) an aggregate of 58,000 shares held by Dr. Ostoich's IRA,
(ii) 20,000 shares held by Mrs. Ostoich's IRA, and (iii) 56,618 shares
held of record by the Vladimir Ostoich and Liliana Ostoich Trust Fund,
for the benefit of Dr. Ostoich and his wife. Also includes 82,514 shares
subject to stock options exercisable by Dr. Ostoich within sixty days of
July 14, 1997. Does not include shares that are held by his adult
children as to which Mr. Ostoich disclaims beneficial ownership.
5 Includes 79,167 shares subject to options exercisable by Mr. Severson
within sixty days of July 14, 1997.
6 Includes 2,000 shares of stock held by Mr. Wong's spouse, as to which
Mr. Wong disclaims beneficial ownership. Additionally, includes 61,520
shares subject to options exercisable by Dr. Wong within sixty days of
July 14, 1997.
7 Includes 57,223 shares subject to options exercisable by Ms. Lu within
sixty days of July 14, 1997.
8 Includes 16,154 shares subject to options exercisable by Mr. Singh
within sixty days of July 14, 1997.
9 Includes 15,833 shares subject to options exercisable by Mr. Hemmes
within sixty days of July 14, 1997.
10 Includes 18,646 shares subject to options exercisable by Dr. Tucker
within sixty days of July 14, 1997.
11 Includes 8,104 shares subject to options exercisable by Dr. Bastiani
within sixty days of July 14, 1997.
12 Includes 7,500 shares subject to options exercisable by Mr. Hanlon
within sixty days of July 14, 1997.
3
<PAGE> 7
DIRECTOR NOMINEES
This section sets forth the ages and backgrounds of the individuals nominated to
be elected to serve as directors of the Company at this annual meeting of
shareholders.
<TABLE>
<CAPTION>
DIRECTOR
NAME POSITION WITH THE COMPANY AGE SINCE
- ---- ------------------------- --- --------
<S> <C> <C> <C>
Gary H. Stroy Chairman of the Board of Directors 54 1989
Clinton H. Severson President, Chief Executive Officer and 49 1996
Director
Richard Bastiani, Ph.D. Director 54 1995
Brenton G. A. Hanlon Director 51 1996
Prithipal Singh, Ph.D. Director 58 1992
Ernest S. Tucker, III, M.D. Director 64 1995
</TABLE>
Mr. Stroy, a co-founder of the Company, has served full-time as Chairman of the
Board since September 1995. Mr. Stroy served as President and Chief Executive
Officer from March 1992 to June 1996. Mr. Stroy also served full-time as
Chairman of the Board and Secretary from the Company's incorporation until May
1992 and as Senior Vice President of Sales and Marketing from December 1991
until March 1992. From 1983 to 1989, Mr. Stroy served as President and Chief
Executive Officer of Biotrack, Inc. ("Biotrack"), a diagnostic test company
which he co-founded and which was sold to Ciba-Geigy in 1990. From 1981 to 1983,
he served as Executive Vice President of LifeScan, a diagnostic test company
which he co-founded and which was sold to Johnson & Johnson in 1986. Prior to
1981, he was employed in a variety of marketing and management positions by
divisions of SmithKline Beecham, American Hospital Supply (Baxter), Syva
(Syntex) and Miles Laboratories (Bayer). Mr. Stroy also serves as Chairman of
the Board at LXN, a privately-held medical diagnostic company.
Mr. Severson has served as President, Chief Executive Officer and Director of
the Company since June 1996. From February 1989 to May 1996, Mr. Severson served
as President and Chief Executive Officer of MAST Immunosystems, Inc., a medical
diagnostic company. From 1984 to 1989, Mr. Severson was employed by 3M
Diagnostic Systems, an in-vitro allergy test system manufacturer, last serving
as General Manager. From 1978 to 1984, Mr. Severson was employed by Syva
Company, a medical diagnostic testing company, in various sales and marketing
management positions.
Dr. Bastiani joined the Company's Board of Directors in September 1995. Since
September 1995, Dr. Bastiani has been President of Activated Cell Therapy, a
biotechnology company. Dr. Bastiani served as President of Syva Company, a
medical diagnostic testing company, from February 1991 until June 1995. From
1971 to February 1991, Dr. Bastiani held various positions with Syva Company,
including as Vice President of Marketing and Sales from 1984 until February
1991.
Mr. Hanlon joined the Company's Board of Directors in November 1996. Mr. Hanlon
is President and COO of Tri-Continent Scientific, a subsidiary of Hitachi
Chemical, and a manufacturer of instrumentation for diagnostic applications. Mr.
Hanlon served as Vice President and General Manager of Tri-Continent Scientific
from 1989 to 1996. From 1984 to 1989, Mr. Hanlon was President of Corus Medical,
a medical
4
<PAGE> 8
products company. From 1980 to 1984 he held various marketing positions with
Syva Company, a medical diagnostic company.
Dr. Prithipal Singh joined the Company's Board of Directors in June 1992. Dr.
Singh is a founder of ChemTrak, Inc., a manufacturer of medical diagnostic
equipment, currently serving as Chairman of the Board and Chief Technical
Officer. From 1985 to August 1988, Dr. Singh was a Senior Vice President of
Idetek, Inc., a animal health care company. From April 1970 to January 1985, Dr.
Singh held a number of positions with Syva Corporation, now a division of
Behring Diagnostics, most recently as a Vice President.
Dr. Tucker joined the Company's Board of Directors in September 1995. Dr. Tucker
has served as Chairman of Pathology at Scripps Clinic and Research Foundation
since 1992. From 1989 to 1992, Dr. Tucker was Chairman of Pathology at
California Pacific Medical Center. From 1977 to 1988, Dr. Tucker served as the
Director of Immunology Reference Lab of the Research Institute of Scripps
Clinic.
Meetings of the Board of Directors. During the fiscal year ended March 31, 1997,
the Board of Directors of the Company held five meetings, the Audit Committee of
the Board of Directors held one meeting and the Compensation Committee of the
Board of Directors held one meeting. No director attended fewer than 75% of the
total number of meetings of the Board of Directors and meetings of the
Committees of the Board on which such director served during fiscal 1997.
During fiscal 1997, three directors served as members of the Company's Audit
Committee. Dr. Tucker was a member of the committee for the full year. Mr.
Robert J. Kunze was a member of the committee until November 1996 when he left
the Board of Directors. Mr. Hanlon became a member of the Board of Directors and
the Audit Committee in November 1996. The functions of the Audit Committee
include recommending to the Board the retention of independent public
accountants, reviewing and approving the planned scope of the annual audit,
proposed fee arrangements and the results of the annual audit, reviewing the
adequacy of accounting and financial controls and reviewing the independence of
the Company's independent public accountants.
Dr. Singh and Dr. Bastiani were the members of the Company's Compensation
Committee during fiscal 1997. The Compensation Committee reviews and determines
compensation criteria for corporate officers. For additional information about
the Compensation Committee, see "EXECUTIVE COMPENSATION AND OTHER MATTERS" and
"REPORT OF THE COMPENSATION COMMITTEE" below.
5
<PAGE> 9
EXECUTIVE COMPENSATION AND OTHER MATTERS
The following table sets forth information concerning the compensation during
the fiscal years ended March 31, 1997, March 31, 1996 and March 31, 1995 of the
Chief Executive Officer of the Company during fiscal 1997 and four other most
highly compensated executive officers of the Company in fiscal 1997:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
FISCAL COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ANNUAL COMPENSATION ($) AWARDS
- ----------------------------------------- ----------------------------------
OPTIONS
SALARY BONUS (SHARES)
------- ------ --------
<S> <C> <C> <C> <C>
CLINTON H. SEVERSON(1) 1997 146,535 19,050 250,000
President and Chief Executive
Officer
GARY H. STROY(1) 1997 169,490 21,000 50,000
Chairman of the Board 1996 209,185 -0- -0-
1995 185,584 12,960 -0-
VLADIMIR E. OSTOICH 1997 145,287 23,556 25,000
Vice President of Marketing and 1996 142,248 -0- 15,000
Sales for North America 1995 139,754 9,864 15,000
DANIEL WONG 1997 135,296 22,825 25,000
Vice President of Development 1996 129,815 -0- 15,000
1995 123,717 57,590 25,000
TING W. LU
Vice President of Finance and 1997 120,104 21,700 25,000
Administration, Chief Financial 1996 116,738 -0- 15,000
Officer and Secretary 1995 91,799 4,462 15,000
</TABLE>
(1) In June 1996, Clinton H. Severson succeeded Gary H. Stroy as President
and Chief Executive Officer of the Company. Mr. Stroy remains an
employee of the Company and continues to serve as Chairman of the Board
of Directors of the Company.
6
<PAGE> 10
STOCK OPTIONS GRANTED IN FISCAL 1997
The following table provides the specified information concerning grants of
options to purchase the Company's Common Stock made during the fiscal year ended
March 31, 1997, to the persons named in the Summary Compensation Table.
OPTION GRANTS IN FISCAL 1997
<TABLE>
<CAPTION>
Potential
Realizable Value at
Assumed Annual
Rates of Stock
Price Appreciation
Individual Grants in Fiscal 1997 for Option Term(1)
- ----------------------------------------------------------------------- ---------------------
Name Options % of Total Exercise Expriation
Granted Options Base Date
(#) (2) Granted to Price
Employees ($/SH)(3) 5% ($) 10% ($)
in Fiscal
Year
------- ---------- --------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Clint H. Severson 250,000 43.2 5.125 06/24/06 805,771 2,041,983
Gary H. Stroy 50,000 8.6 5.625 04/02/06 176,877 448,240
Ting W. Lu 15,000 2.6 5.625 04/02/06 53,063 134,472
Ting W. Lu 10,000 1.7 2.500 03/10/07 15,722 39,844
Vladimir E. Ostoich 15,000 2.6 5.625 04/02/06 53,063 134,472
Vladimir E. Ostoich 10,000 1.7 2.500 03/10/07 15,722 39,844
Daniel Wong 15,000 2.6 5.625 04/02/06 53,063 134,472
Daniel Wong 10,000 1.7 2.500 03/10/07 15,722 39,844
</TABLE>
- ----------
(1) Potential gains are net of exercise price, but before taxes associated
with exercise. These amounts represent certain assumed rates of
appreciation only, based on the Securities and Exchange Commission
rules. Actual gains, if any, on stock option exercises are dependent on
the future performance of the Common Stock, overall market conditions
and the option holders' continued employment through the vesting period.
The amounts reflected in this table may not necessarily be achieved.
(2) All options granted in fiscal 1997 were granted pursuant to the
Company's 1989 Stock Option Plan. These options vest and become
exercisable at the rate of one-fourth on the first anniversary of the
date of grant and 1/48 per month thereafter for each full month of the
optionee's continuous employment by the Company. Under the Company's
1989 Stock Option Plan, the Board retains discretion to modify the
terms, including the price, of outstanding options. For additional
information regarding options, see "Change of Control Arrangements."
(3) All options were granted at market value on the date of grant.
7
<PAGE> 11
OPTION EXERCISES AND FISCAL 1997 YEAR-END VALUES
The following table provides the specified information concerning exercises of
options to purchase the Company's Common Stock in the fiscal year ended March
31, 1997, and unexercised options held as of March 31, 1997, by the persons
named in the Summary Compensation Table.
OPTION EXERCISES AND FISCAL 1997 YEAR-END VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT 3/31/97 3/31/97 ($) (2)
------------------------------ -----------------------------
SHARES
ACQUIRED VALUE
ON REALIZED
NAME EXERCISE ($) EXERCISABLE(1) UNEXERCISABLE EXERCISABLE(1) UNEXERCISABLE
---- -------- -------- -------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Clinton H. Severson -0- -0- -0- 250,000 -0- -0-
Gary H. Stroy -0- -0- 95,000 50,000 69,150 -0-
Vladimir E. Ostoich -0- -0- 72,748 32,877 72,750 11,250
Daniel Wong -0- -0- 51,666 33,334 -0- 11,250
Ting W. Lu -0- -0- 47,266 33,984 -0- 11,250
</TABLE>
____________
(1) Company stock options generally vest one-fourth on the first anniversary
of the date of grant and 1/48 per month thereafter for each full month
of the optionee's continuous employment by the Company. All options are
exercisable only to the extent vested.
(2) The value of the unexercised in-the-money options is based on the
closing price of the Company's Common Stock ($3.625 per share) on March
31, 1997 and is net of the exercise price of such options.
COMPENSATION OF DIRECTORS
All non-employee directors of the Company receive compensation in the amount of
$750 per Board meeting they attend plus reimbursement of reasonable travel
expenses incurred. In addition, Dr. Tucker serves as a consultant to the Company
and receives a monthly compensation of $1,000 plus reimbursement of expenses for
attending meetings at or on behalf of the Company. Each of the Company's
non-employee directors also receives an automatic annual grant of options to
purchase 4,000 shares of Common Stock under the Company's Outside Directors
Stock Option Plan. In addition, Dr. Tucker receives an additional annual grant
of options to purchase 5,000 shares for serving as a consultant. Gary H. Stroy
and Clinton H. Severson, the directors of the Company who are also employees of
the Company, do not receive any compensation for their services as members of
the Board of Directors.
CHANGE OF CONTROL ARRANGEMENTS
The Company's 1989 Stock Option Plan and the Outside Directors Stock Option Plan
(the "Option Plans") provide that, in the event of a transfer of control of the
Company ("Transfer of Control"), the
8
<PAGE> 12
surviving, continuing, successor or purchasing corporation or a parent
corporation thereof, as the case may be (the "Acquiring Corporation"), shall
either assume the Company's rights and obligations under stock option agreements
outstanding under the Option Plans (the "Options") or substitute options for the
Acquiring Corporation's stock for such outstanding Options. In the event the
Acquiring Corporation elects not to assume or substitute for such outstanding
Options in connection with a merger constituting a Transfer of Control, the
Company's Board shall provide that any unexercisable and/or unvested portion of
the outstanding Options shall be immediately exercisable and vested as of a date
prior to the Transfer of Control, as the Company's Board so determines. Any
Options which are neither assumed by the Acquiring Corporation, nor exercised as
of the date of the Transfer of Control, shall terminate effective as of the date
of the Transfer of Control. Options which are assumed by the Acquiring
Corporation shall become exercisable and vested as provided under the relevant
stock option agreements under the Option Plans, unless the Acquiring Corporation
terminates the option holder under certain circumstances defined in the Option
Plans. Under such circumstances, the holder's Options shall become immediately
exercisable and vested as of the date of termination.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and persons who beneficially own more than 10% of
the Company's Common Stock to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission ("SEC"). Such
persons are required by SEC regulations to furnish the Company with copies of
all Section 16(a) forms filed by such persons.
Based solely on the Company's review of such forms furnished to the Company and
written representations from certain reporting persons, the Company believes
that all filing requirements applicable to the Company's executive officers,
directors and persons who beneficially own more than 10% of the Company's Common
Stock were complied with during fiscal year ended March 31, 1997.
9
<PAGE> 13
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors is comprised of two
non-employee directors of the Company. The Compensation Committee is responsible
for approving all compensation recommended by the President for the Company's
executive officers. The Compensation Committee provides recommendations to the
Board of Directors for approval of all compensation for the President and Chief
Executive Officer of the Company. The goal of the Company's compensation policy
for the executive officers is to attract, retain and reward executive officers
who contribute to the Company's success and to motivate these executives to
achieve the Company's business objectives. The Company uses salary, stock
options and incentive bonus to meet these goals.
Salaries are initially set for each executive officer according to a range of
salaries for similar positions in comparable companies in the Company's
industry, as reported in compensation survey information obtained by the Company
from compensation consulting firms. Salaries are generally set near the middle
of the applicable range for each position, and adjusted for historical and
expected contributions of each officer to the Company. Salaries are reviewed
annually for comparability against the industry survey and adjustments are made
if necessary to maintain competitiveness within the industry. In April 1997,
during the company-wide annual salary review, the salaries of the executives of
the Company were determined to be within the proper ranges and hence no salary
adjustments were made.
The Compensation Committee strongly believes that executive compensation should
be based in part on the Company's performance and has used stock options and
incentive bonuses to accomplish this goal. In November 1996, the Compensation
Committee approved an executive bonus plan with target bonus levels set at 28%
to 36% of annual salaries for accomplishing certain Company objectives in fiscal
1997. The Company paid approximately 61% of these targeted bonuses with
quarterly payments made in February 1997 and May 1997. In April 1997, the
Compensation Committee approved an executive bonus plan with target bonus levels
set at 36% to 47% of annual salaries for accomplishing certain Company
objectives associated with financial performance in fiscal 1998. At the same
time, the Board of Directors approved a bonus plan for the Company's President
of 30% of his annual salary for accomplishing certain Company objectives
associated with financial performance in fiscal 1998.
The Compensation Committee believes that equity ownership by executive officers
serves to align the officers' interests with the interest of shareholders by
providing the officers with incentive to build shareholder value. In March 1997,
in conjunction with an annual review of company wide stock option grants, the
Compensation Committee approved incentive stock options to all officers with the
exception of the President and Chief Executive Officer. As part of his
employment agreement with the Company, the President and Chief Executive Officer
was granted options to purchase 250,000 shares in June 1996. In April 1997, the
Board of Directors granted an additional option to purchase 50,000 shares to the
President and Chief Executive Officer.
The Board of Directors annually reviews the performance and compensation of the
President and Chief Executive Officer of the Company. During the first quarter
of fiscal 1997, Gary H. Stroy served as the President and Chief Executive
Officer of the Company. In June 1996, Clint H. Severson succeeded Mr. Stroy as
President and Chief Executive Officer of the Company.
During fiscal 1997, Mr. Severson's compensation consisted of salary, incentive
stock options and performance based bonus. During the annual review, the Board
of Directors found Mr. Severson's salary to be appropriate as compared with
comparable companies within the Company's industry, based on the compensation
survey information obtained by the Company from compensation consulting firms.
Mr. Severson was paid an incentive bonus in February 1997 based on the Company's
progress toward pre-determined goals for fiscal 1997. During fiscal 1997, Mr.
Stroy's compensation as President and Chief Executive Officer of the Company
consisted of salary, incentive stock options and performance based
10
<PAGE> 14
bonus. Mr. Stroy was paid an incentive bonus in April 1996 based on performance
goals associated with the Company's fiscal 1996 executive bonus plan. Mr. Stroy
remains an employee of the Company and continues to serve as Chairman of the
Board of Directors of the Company.
COMPENSATION COMMITTEE
Richard Bastiani and Prithipal Singh
11
<PAGE> 15
COMPARISON OF SHAREHOLDER RETURN
Set forth below is a line graph comparing the annual percentage change in the
cumulative total return on the Company's Common Stock with the cumulative total
return of the Russell 2000 Index and the Hambrecht & Quist ("H&Q") Health Care
(Excluding Biotech) Index for the period commencing on March 31, 1992, and
ending on March 31, 1997.1
Comparison of Cumulative Total Return From
March 31, 1992 through March 31, 1997:(2)
Abaxis, Inc., Russell 2000 Index and H&Q Health Care (Excluding Biotech) Index
[ABAXIS, INC., COMPARISON OF CUMULATIVE TOTAL RETURN GRAPH]
(1) The Company's 1997 fiscal year ended on March 31, 1997.
(2) Assumes that $100.00 was invested on March 31, 1992 in the Company's
Common Stock, at the closing sales price, and in each index and that all
dividends were reinvested. No cash dividends have been declared on the
Company's Common Stock. Shareholder returns over the indicated period
should not be considered indicative of future shareholder returns.
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<PAGE> 16
ELECTION OF DIRECTORS
Six (6) directors of the Company are to be elected for the ensuing year and
until their successors are elected and qualified. Proxies cannot be voted for a
greater number of persons than the number of nominees named. Please see
"INFORMATION ABOUT ABAXIS--Directors" above for information concerning the
nominees.
If elected, each nominee will hold office until the next annual meeting of
shareholders or until his successor is elected and qualified unless he shall
resign or his office becomes vacant by death, removal, or other cause in
accordance with the Bylaws of the Company.
The persons named in the accompanying form of proxy will vote the shares
represented thereby for the following nominees, but may cumulate the votes for
less than all of the nominees, as permitted by the laws of the State of
California, unless otherwise instructed. Management knows of no reason why any
of these nominees should be unable or unwilling to serve. However, if any
nominee(s) should for any reason be unable or unwilling to serve, the proxies
will be voted for the election of such other person(s) for the office of
director as the Board may recommend in the place of such nominee(s).
If a quorum is present and voting, the six nominees receiving the highest number
of votes will be elected directors.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has selected Deloitte & Touche LLP
("Deloitte & Touche") as independent public accountants to audit the financial
statements of the Company for the fiscal year ending March 31, 1998. A
representative of Deloitte & Touche is expected to be present at the annual
meeting with the opportunity to make a statement if the representative desires
to do so, and is expected to be available to respond to appropriate questions.
The Company's Board of Directors approved a change in the Company's independent
accountants for the fiscal year ended March 31, 1996, from Ernst & Young LLP
("Ernst & Young") to Deloitte & Touche on January 26, 1996, based on the
recommendation of the Audit Committee of the Company. The reports of Ernst &
Young for the fiscal year ended March 31, 1995, contained no adverse opinion,
disclaimer of opinion or qualification or modification as to uncertainty, audit
scope or accounting principles. During the fiscal year ended March 31, 1995, and
the interim period from April 1, 1995 through January 26, 1996, there were no
disagreements between the Company and Ernst & Young on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which, if not resolved to the satisfaction of Ernst & Young, would
have caused it to make reference to the subject matter of the disagreement in
connection with its report. No event described in paragraph (a)(1)(v) of Item
304 of Regulation S-K has occurred within the Company's fiscal year ending March
31, 1995, or the period from April 1, 1995 through January 26, 1996.
The Company has provided Ernst & Young with a copy of the disclosures contained
herein and has filed as an exhibit hereto the response of Ernst & Young to the
disclosures set forth in this section.
The Registrant has not consulted with Deloitte & Touche during the fiscal year
ended March 31, 1995, and the period from April 1, 1995 through January 26,
1996, on any matter which was the subject of any disagreement or any reportable
event or on the application of accounting principles to a specified transaction,
either completed or proposed.
The affirmative vote of a majority of the votes cast affirmatively or negatively
at the annual meeting of shareholders at which a quorum representing a majority
of all outstanding shares of Common Stock of the Company is present and voting,
either in person or by proxy, is required for approval of this proposal. Votes
against, abstentions and "broker non-votes" will each be counted as present for
purposes of
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<PAGE> 17
determining the presence of a quorum. Neither abstentions nor "broker non-votes"
will be counted as having been cast affirmatively or negatively on the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPOINTMENT OF
DELOITTE & TOUCHE AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL
YEAR ENDING MARCH 31, 1998.
SHAREHOLDER PROPOSALS TO BE PRESENTED
AT NEXT ANNUAL MEETING
Proposals of shareholders intended to be presented at the next annual meeting of
the shareholders of the Company must be received by the Company at its offices
at 1320 Chesapeake Terrace, Sunnyvale, California 94089, no later than April 8,
1998, and satisfy the conditions established by the Securities and Exchange
Commission for shareholder proposals to be included in the Company's proxy
statement for that meeting.
TRANSACTION OF OTHER BUSINESS
At the date of this Proxy Statement, the Board of Directors knows of no other
business that will be conducted at the 1997 annual meeting of shareholders of
Abaxis other than as described in this Proxy Statement. If any other matter or
matters are properly brought before the meeting, or any adjournment or
postponement thereof, it is the intention of the persons named in the
accompanying form of proxy to vote the proxy on such matters in accordance with
their best judgment.
By Order of the Board of Directors
----------------------------
Ting W. Lu, Secretary
July 29, 1997
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<PAGE> 18
ABAXIS, INC.
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 9, 1997
SOLICITED BY THE BOARD OF DIRECTORS.
The undersigned hereby appoints Clinton H. Severson and Ting W. Lu, and
each of them, with full power of substitution, to represent the undersigned and
to vote all of the shares of stock in Abaxis, Inc., a California corporation
(the "Company"), which the undersigned is entitled to vote at the Annual Meeting
of Shareholders of the Company to be held on September 9, 1997 at 10:00 a.m.,
local time, at the offices of the Company, located at 1320 Chesapeake Terrace,
Sunnyvale, California, and at any adjournment or postponement thereof (1) as
hereinafter specified upon the proposals listed on the reverse side and as more
particularly described in the Proxy Statement of the Company dated July 29, 1997
(the "Proxy Statement"), receipt of which is hereby acknowledged, and (2) in
their discretion upon such other matters as may properly come before the
meeting.
THE SHARES REPRESENTED HEREBY SHALL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION IS MADE, SUCH SHARES SHALL BE VOTED FOR PROPOSALS 1 AND 2.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
[x] Please mark votes
as in this example.
A vote FOR the following proposals is recommended by the Board of Directors:
1. To elect the following six (6) persons as directors to hold office for a
one-year term and until their respective successors are elected and
qualified:
NOMINEES: Clinton H. Severson, Richard Bastiani, Ph.D., Brenton G.A.
Hanlon, Prithipal Singh, Ph.D., Gary H. Stroy, Ernest S. Tucker, III,
M.D.
FOR WITHHELD
[ ] [ ]
[ ] __________________
For all nominees except
as noted above
2. To consider, approve and ratify the appointment of Deloitte & Touche LLP
as independent public accountants for the Company for the fiscal year
ending March 31, 1998
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON,
YOU ARE URGED TO SIGN AND PROMPTLY MAIL THIS PROXY IN
THE RETURN ENVELOPE SO THAT YOUR SHARES MAY BE
REPRESENTED AT THE MEETING.
Please sign here. If shares of stock are held jointly,
both or all of such persons should sign. Corporate or
partnership proxies should be signed in full corporate
or partnership name by an authorized person. Persons
signing in a fiduciary capacity should indicate their
full titles in such capacity.
Signature:________________ Date:_______ Signature:________________ Date:_______
