<PAGE>
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
Urologix, 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)(4) 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.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
Urologix, Inc.
14405 Twenty-First Avenue North
Minneapolis, Minnesota 55447
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
November 10, 1999
Notice is hereby given that the Annual Meeting of Shareholders of Urologix,
Inc. will be held at the Marquette Hotel, 710 Marquette Avenue, Minneapolis,
Minnesota, on Wednesday, November 10, 1999 at 10:00 a.m., local time, for the
following purposes:
1. To elect three directors to hold office for a term of three years or
until their respective successors have been elected.
2. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
The Board of Directors has fixed September 27, 1999 as the record date for
the determination of shareholders entitled to notice of and to vote at the
meeting.
By Order of the Board of Directors,
/s/ Christopher R. Geyen
Christopher R. Geyen, Secretary
Minneapolis, Minnesota
October 4, 1999
To ensure your representation at the Annual Meeting, please sign, date and
return your proxy in the enclosed envelope, whether or not you expect to
attend in person. Shareholders who attend the meeting may revoke their proxies
and vote in person if they so desire. This proxy is solicited on behalf of the
Board of Directors of the Company.
<PAGE>
Urologix, Inc.
14405 Twenty-First Avenue North
Minneapolis, Minnesota 55447
PROXY STATEMENT
This Proxy Statement is furnished to the shareholders of Urologix, Inc.
(the "Company") in connection with the solicitation of proxies by the Board of
Directors of the Company to be voted at the Annual Meeting of Shareholders to
be held on November 10, 1999 or any adjournment or adjournments thereof. The
cost of this solicitation will be borne by the Company. In addition to
solicitation by mail, officers, directors and employees of the Company may
solicit proxies by telephone, telegraph or in person. The Company may also
request banks and brokers to solicit their customers who have a beneficial
interest in the Company's common stock registered in the names of nominees and
will reimburse such banks and brokers for their reasonable out-of-pocket
expenses.
Any proxy may be revoked at any time before it is voted by receipt of a
proxy properly signed and dated subsequent to an earlier proxy, or by
revocation of a written proxy by request in person at the Annual Meeting. If
not so revoked, the shares represented by such proxy will be voted. The
Company's principal offices are located at 14405 Twenty-First Avenue North,
Minneapolis, Minnesota 55447, and its telephone number is (612) 475-1400. The
mailing of this proxy statement to shareholders of the Company commenced on or
about October 4, 1999.
The total number of shares outstanding and entitled to vote at the meeting
as of September 27, 1999 consisted of 11,485,170 shares of common stock, $.01
par value. Each share of common stock is entitled to one vote. Only
shareholders of record at the close of business on September 27, 1999 will be
entitled to vote at the meeting. A quorum, consisting of a majority of the
shares of common stock entitled to vote at the Annual Meeting, must be present
in person or by proxy before action may be taken at the Annual Meeting. If an
executed proxy is returned and the shareholder has abstained from voting on
any matter, the shares represented by such proxy will be considered present at
the meeting for purposes of determining a quorum and for purposes of
calculating the vote, but will not be considered to have been voted in favor
of such matter. If an executed proxy is returned by a broker holding shares in
"street name" indicating that the broker does not have discretionary authority
as to certain shares to vote on one or more matters, such shares will be
considered present at the meeting for purposes of determining a quorum, but
will not be considered to be represented at the meeting for purposes of
calculating the vote with respect to such matters.
1
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS
AND MANAGEMENT
The following table includes information as of September 27, 1999
concerning the beneficial ownership of common stock of the Company by (i) the
only shareholders known to the Company to hold more than five percent of the
common stock of the Company, (ii) each of the directors of the Company, (iii)
each of the Named Executive Officers of the Company, and (iv) all current
directors and executive officers of the Company as a group. Unless otherwise
indicated, all beneficial owners have sole voting and investment power over
the shares held.
<TABLE>
<CAPTION>
Name and Address of Number of Shares Percentage
Beneficial Owner Beneficially Owned(1) Beneficially Owned
------------------- --------------------- ------------------
<S> <C> <C>
Dimensional Fund Advisors Inc... 734,900(2) 6.4%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401-1038
John Reid....................... 620,087 5.4%
195 Bunker Hill Avenue
Stratham, NH 03885
Boston Scientific Corporation... 587,500 5.1%
One Boston Scientific Place
Natick, MA 01670
Mitchell Dann................... 537,351(3) 4.7%
Susan Bartlett Foote............ 5,000 *
Bobby I. Griffin................ 8,000 *
Paul A. LaViolette.............. 597,500(4) 5.2%
Robert R. Momsen................ 26,227(5) *
Michael M. Selzer, Jr........... 105,775(6) *
David C. Utz, M.D............... 38,800 *
John P. Costello................ -- *
Wesley E. Johnson, Jr........... 64,374 *
Jack E. Meyer................... 182,032 1.6%
David W. Powell................. 2,500 *
W. Allen Putnam................. 80,714 *
Rob J.W. ten Hoedt.............. 1,200 *
All current directors and
executive officers as a group
(10 persons)................... 1,413,736 12.1%
</TABLE>
- --------
* Indicates ownership of less than one percent.
(1) Includes options to purchase the following number of shares, which are or
will become exercisable within 60 days of this Proxy Statement: Mr. Dann,
10,000 shares; Ms. Bartlett Foote, 5,000 shares; Mr. Griffin, 5,000
shares; Mr. LaViolette, 10,000 shares; Mr. Momsen, 10,000 shares; Mr.
Selzer, 45,775 shares; Dr. Utz, 34,300 shares; Mr. Johnson 3,906 shares;
Mr. Putnam 27,009 shares; and all directors and executive officers as a
group, 159,947 shares.
(2) Based on the Form 13F filed with the Securities and Exchange Commission by
Dimensional Fund Advisors Inc. on August 6, 1999.
(3) Includes 36,358 shares owned by M. Dann & Co. Profit Sharing Trust and a
separate trust for the benefit of family members.
(4) Includes 587,500 shares owned by Boston Scientific Corporation. Mr.
LaViolette is Senior Vice President of Boston Scientific Corporation and
President of Boston Scientific International. Mr. LaViolette disclaims
beneficial ownership of shares held by Boston Scientific Corporation.
(5) Includes 16,227 shares owned by the Momsen Living Trust, of which Mr.
Momsen is a trustee.
(6) Includes 25,000 shares of restricted stock, which are subject to
forfeiture under certain circumstances.
2
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
Pursuant to the terms of the Amended and Restated Articles of Incorporation
of the Company, directors are divided into three classes, with the term of one
class expiring each year. As the term of each class expires, the successors to
the directors in that class will be elected for a term of three years. The
terms of Mr. Dann, Ms. Foote and Dr. Utz expire at the Annual Meeting of
Shareholders on November 10, 1999, the term of Mr. LaViolette expires at the
Annual Meeting of Shareholders following fiscal 2000 and the terms of Messrs.
Griffin, Momsen and Selzer expire at the Annual Meeting of Shareholders
following fiscal year 2001. Buzz Benson, a member of the Board of Directors
since 1992, resigned in September 1999. The Company desires to express its
gratitude to Mr. Benson for his many years of valuable service to the Company.
Vacancies on the Board of Directors and newly created directorships can be
filled by vote of a majority of the directors then in office.
Three directors will be elected at the Annual Meeting to serve until the
Annual Meeting of Shareholders following fiscal year 2002 or until their
successors are elected. The Board of Directors has nominated for election
Mitchell Dann, Susan Bartlett Foote and David C. Utz, M.D., all of whom are
currently directors. Mr. Dann and Dr. Utz are currently serving as directors
and were previously elected by the shareholders. Ms. Foote was elected by the
current directors to fill a vacancy on the Board.
It is intended that proxies will be voted for the named nominees. Unless
otherwise indicated, each nominee and each continuing director has been
engaged in his or her present occupation as set forth below, or has been an
officer with the organization indicated, for more than five years. The Board
of Directors believes that the nominees named below will be able to serve, but
should any nominee be unable to serve as a director, the persons named in the
proxies have advised that they will vote for the election of such substitute
nominee as the Board of Directors may propose.
The names and biographical information concerning each nominee and the
other directors filling unexpired terms are set forth below, based upon
information furnished to the Company by the nominee and directors.
Principal Occupation and Other Directorships
Name and Age ----------------
- ---------
Nominees proposed for election for term expiring at the Annual Meeting
following fiscal 2002:
Mitchell Dann (39)....... Mr. Dann was a co-founder of the Company, has
served as a director since its inception in 1991
and served as acting President from June 1993 to
January 1994 and from October 1998 to January 1999.
He became Chairman of the Board in March 1993. Mr.
Dann is the founder of Sapient Capital Management,
LLC, a healthcare investment fund, and President of
M. Dann & Co., Inc., a venture capital advisory
firm. Prior to M. Dann & Co., Mr. Dann co-founded
and held the position of Managing Partner at IAI
Venture Capital Group, the venture capital division
of Investment Advisers, Inc.
Susan Bartlett Foote Ms. Foote has served as a director of the Company
(53)..................... since March 1999. She has been an Associate
Professor and Division Head of the Division of
Health Services Research and Policy at the
University of Minnesota since July 1999. From 1996
until July 1999, Ms. Foote was the President of
Public Policy Partners, a health care policy
development and lobbying organization located in
Washington, D.C., which she founded. From 1995 to
1996, Ms. Foote was Senior Vice President of APCO
Associates, Inc., a
3
<PAGE>
public affairs firm, and a partner of the
Washington office of the Dorsey & Whitney Law Firm.
Prior to that, Ms. Foote was a Senior Health Policy
Analyst for the Office of United States Senator
Dave Durenberger.
David C. Utz, M.D. Dr. Utz has been a director of the Company since
(75)..................... September 1994. He is an emeritus consultant, Mayo
Clinic. Dr. Utz was Professor of Urology, Mayo
Medical School, and a consultant in the Department
of Urology from 1957 to 1988. He holds an M.D.
degree from St. Louis University School of Medicine
and a M.S. degree in Urology from the University of
Minnesota. Dr. Utz has served in many medical and
professional urological associations and received
numerous prestigious awards in the field of
urology. He has been the author of over 145
publications and 28 abstracts and editorials.
Directors serving continuing terms:
Bobby I. Griffin (62).... Mr. Griffin has served as a director of the Company
since November 1998. From 1973 to 1998, Mr. Griffin
held various positions with Medtronic Inc., a
medical device manufacturer, and from 1991 to 1998
served as Executive Vice President of Medtronic
Inc. and President of the Medtronic Pacing
Business. Mr. Griffin retired from Medtronic in
1998. Mr. Griffin is also a director of MTS Systems
Corporation, a manufacturer of testing and
simulation equipment, and Lutheran Brotherhood
Corporation, a fraternal life insurance and
investment products company.
Paul A. LaViolette Mr. LaViolette has served as a director of the
(42)..................... Company since April 1996. Mr. LaViolette is a
Senior Vice President of Boston Scientific
Corporation and President of Boston Scientific
International. He joined Boston Scientific
Corporation in 1994 as President of International,
and in 1995 he was elected Senior Vice President
and Group President for the Nonvascular Businesses.
In October 1998, he was appointed President of
International. Previously, Mr. LaViolette was with
C. R. Bard for ten years, where he served as
President of Bard's USCI Division from 1993 to 1994
and its USCI Angioplasty Division from 1991 to
1993. Before that time, he held several other
marketing positions at Bard between 1984 and 1991.
Robert R. Momsen (52).... Mr. Momsen has served as a director of the Company
since December 1992. Since 1981, Mr. Momsen has
been a general partner of InterWest Partners, a
venture capital firm. Mr. Momsen is also a director
of COR Therapeutics, Inc., Coulter Pharmaceutical,
Inc., and Progenitor, Inc., each of which is a
biopharmaceutical company, Innovasive Devices,
Inc., a tissue repair system company, Integ
Incorporated, a medical diagnostic company,
ArthroCare Corporation, a manufacturer of
arthroscopic surgical equipment, and several
privately-held medical companies.
Michael M. Selzer, Jr. Mr. Selzer has served as a director of the Company
(47)..................... since January 1999, when he joined the Company as
President and Chief Executive Officer. From 1994 to
1998, Mr. Selzer served as Vice President and
General Manager of the Neurostimulation Business of
Medtronic, Inc., a medical device manufacturer.
From 1987 to
4
<PAGE>
1994, Mr. Selzer served as a Vice President of
Medtronic in various general management roles with
its micro electronics subsidiary, battery
operation, biomaterials development group and
animal research facility. Mr. Selzer is also a
director of Cyberoptics Corporation, a manufacturer
of semiconductor equipment.
Meetings. The Board of Directors met six times during fiscal year 1999.
Each current director who served as a director in fiscal 1999 attended at
least seventy-five percent of the meetings of the Board of Directors and Board
committees on which the director served.
Board Committee Meetings. The Compensation Committee, which is currently
comprised of Messrs. Griffin and Momsen, acts on behalf of the Board of
Directors in developing the executive compensation policies and administering
the compensation programs for the chief executive officer, the Company's
executive officers, and other key executives; evaluates and acts upon the
incentive compensation plans for the Company's employees; administers the
Company's Stock Option Plan and other compensation plans approved by the Board
of Directors and shareholders; and makes recommendations to the Board with
respect to the compensation of Directors. The Compensation Committee met or
took action on six occasions in fiscal 1999.
The Audit Committee is responsible for recommending which firm to engage as
the Company's independent auditors; reviewing and evaluating significant
matters relating to the audit and internal controls of the Company; and
reviewing the scope and results of audits by, and recommendations of, the
Company's independent auditors. In addition, the Audit Committee reviews the
audited financial statements of the Company and considers major changes and
questions of choice regarding appropriate auditing and accounting principles
and practices to be followed in the preparation of the Company's financial
statements. The Audit Committee, which was comprised of Messrs. Benson and
LaViolette, met twice in fiscal 1999.
The Company does not have a nominating committee. However, the Company's
Bylaws provide that a notice of proposed shareholder nominations for the
election of directors must be timely given in writing to the Secretary of the
Company prior to the meeting at which directors are to be elected. To be
timely, the notice must be given by such shareholder to the Secretary of the
Company not less than 60 days nor more than 90 days prior to a meeting date
corresponding to the previous year's Annual Meeting. The notice to the Company
from a shareholder who intends to nominate a person at the meeting for
election as a director must contain certain information about such shareholder
and the person(s) nominated by such shareholder, including, among other
things, the name and address of record of such shareholder, a representation
that the shareholder is entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting, the name, age, business and residence
addresses and principal occupation of each nominee, such other information as
would be required to be included in a proxy statement soliciting proxies for
the election of the proposed nominee(s), and the consent of each nominee to
serve as a director if so elected. The Company may also require any proposed
nominee to furnish other information reasonably required by the Company to
determine the proposed nominee's eligibility to serve as director. If the
presiding officer of a meeting of shareholders determines that a person was
not nominated in accordance with the foregoing procedure, such person will not
be eligible for election as a director.
Vote Required. The affirmative vote of a majority of the shares of common
stock represented at the meeting in person or by proxy is required for the
election of the three nominees.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
NOMINEES.
5
<PAGE>
Executive Officers and Other Members of Management of the Company
The executive officers and other members of management of the Company are
as follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
President, Chief Executive Officer and
Michael M. Selzer, Jr.......... 47 Director
Christopher R. Geyen........... 28 Vice President, Finance and Administration,
Treasurer and Secretary
W. Allen Putnam................ 52 Vice President, Regulatory and Quality
David J. Talen................. 38 Vice President, Urologix International
Stephen J. Clark............... 38 Vice President, Business Development
David J. Michaelson............ 41 Vice President, U.S. Sales
Eric N. Rudie.................. 38 Chief Technology Director
William M. Sutton.............. 37 Director, Research and Development
</TABLE>
The following is a brief summary of the business experience of the
Company's executive officers and other members of management.
Mr. Selzer has served as President, Chief Executive Officer and a director
of the Company since January 1999. From 1994 to 1998, Mr. Selzer served as
Vice President and General Manager of the Neurostimulation Business of
Medtronic, Inc., a medical device manufacturer. From 1987 to 1994, Mr. Selzer
served as a Vice President of Medtronic in various general management roles
within its micro electronics subsidiary, battery operation, biomaterials
development group and animal research facility.
Mr. Geyen was promoted to Vice President, Finance and Administration,
Secretary and Treasurer in May 1999 after serving as Controller since joining
Urologix in September 1998. Prior to joining Urologix, Mr. Geyen served as
Controller of Survivalink Corporation, a medical device manufacturer, from
1996 through 1998. From 1993 though 1996, Mr. Geyen was an auditor for Ernst
and Young, LLP. Mr. Geyen is a Certified Public Accountant.
Mr. Putnam has served as Vice President, Regulatory and Quality for the
Company since October 1994 and was Vice President of Operations from December
1993 to October 1994. Before joining Urologix, Mr. Putnam served as President
and Chief Operating Officer of Uroplasty, Inc. from June 1992 to November
1993. Uroplasty was a wholly-owned subsidiary of Bioplasty, Inc., a medical
products company. Mr. Putnam also held the position of Vice President of
Quality Assurance and Regulatory Affairs at St. Jude Medical, Inc. from
December 1989 to June 1992. In addition, Mr. Putnam has held various positions
at Bio-Vascular, Inc., Minnetonka, Inc., Hollister Corporation, and Baxter-
Travenol Laboratories.
Mr. Talen was promoted to Vice President, Urologix International in
September 1999 after serving as Director of Global Marketing since February
1999 and in other positions of increasing responsibility since joining
Urologix in September 1997. Before joining Urologix, Mr. Talen held marketing
management positions with Integ, Inc. (1994 to 1997) and SCIMED Life Systems,
Inc. ("SCIMED")(1992 to 1994).
Mr. Clark was promoted to Vice President, Business Development in September
1999 after serving as Director of Marketing and Healthcare Initiatives since
January 1995. Prior to Urologix, Mr. Clark held marketing management positions
at SCIMED, American Medical Systems (Pfizer Inc.) and Pharmacia Deltec.
6
<PAGE>
Mr. Michaelson was promoted to Vice President of U.S. Sales in September
1999, after serving as Director of North American Sales since joining Urologix
in May 1997. Prior to joining Urologix, Mr. Michaelson served as Director of
Sales at Conceptus, a GYN/reproductive medical startup company, from March
1995 to May 1997. Previously, Mr. Michaelson served as Regional Sales Manager
at SCIMED from 1988 to 1994.
Mr. Rudie has provided technology leadership since the Company's inception
in May of 1991. During this time he has performed roles of increasing
responsibility, including Principal Engineer (1991-1993), Director of
Microwave Technology (1993-1998), Director of Research and Technology
(1998-1999) and most recently as Chief Technology Director. Mr. Rudie is an
inventor of 11 Urologix patents, including those covering Urologix' core
competencies.
Mr. Sutton was promoted to Director of Research & Development in October
1998 after serving as Manager of Research and Development since joining
Urologix in May 1997. Prior to that time, Mr. Sutton served as Manager,
Research and Development of Vas-Cath, Inc., a division of C.R. Bard
specializing in dialysis and angioplasty catheters, from February 1995 to May
1997. Previously, Mr. Sutton held research and development and program
management positions at C.R. Bard and Abbott Laboratories.
7
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of Cash and Certain Other Compensation
The following table shows, for the fiscal years ending June 30, 1999, 1998
and 1997, the cash compensation paid by the Company, as well as certain other
compensation paid or accrued to those years, to Michael M. Selzer, Jr., the
Company's President and Chief Executive Officer, and Jack E. Meyer, the
Company's former President and Chief Executive Officer, and to each of the
five other most highly compensated executive officers of the Company in office
during fiscal year 1999, whose total cash compensation exceeded $100,000
during fiscal year 1999 (together with Messrs. Selzer and Meyer, the "Named
Executive Officers") in all capacities in which they served:
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation(1) Compensation Awards
--------------------------------- -----------------------
Securities
Restricted Underlying
Name and Fiscal Other Annual Stock Options All Other
Principal Position Year Salary Bonus Compensation Awards (# Shares) Compensation
------------------ ------ ------ ------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael M. Selzer,
Jr.(2).................. 1999 $100,000 $37,200(3) -- $109,375(4) 400,000 --
President and Chief
Executive Officer
Jack E. Meyer(5)........ 1999 64,038 -- -- -- -- $140,941(6)
Former President and 1998 180,019 22,500 -- -- -- --
Chief Executive Officer 1997 175,000 22,096 -- -- 25,000 --
John P. Costello(7)..... 1999 124,795 -- -- -- 175,000(8) 66,234(6)
Former Executive V.P., 1998 149,667 41,931 -- -- 175,000(9) --
Sales and Marketing 1997 62,500 -- $135,000 -- 125,000 --
Wesley E. Johnson,
Jr.(10)................. 1999 142,133 -- -- -- 43,430(8) --
Former V.P., Finance 1998 127,025 13,496 -- -- -- --
Chief Financial Officer, 1997 118,334 18,194 -- -- -- --
Treasurer and Secretary
David W. Powell(11)..... 1999 135,375 25,180 -- -- 68,900(8) --
Vice President,
Operations 1998 131,730 12,423 -- -- 68,900(9) --
1997 105,414 18,777 -- -- 50,000 --
W. Allen Putnam......... 1999 127,123 13,646(12) -- -- 42,290(8) --
Vice President,
Regulatory 1998 116,151 9,945 -- -- 8,000 --
and Quality 1997 112,919 12,949 -- -- -- --
Rob ten Hoedt(13)....... 1999 150,000 32,784 -- -- 58,500(8) --
Vice President, Europe 1998 77,885 30,000 -- -- -- --
</TABLE>
- --------
(1) None of the Named Executive Officers received an aggregate amount of
perquisites and other personal benefits exceeding $50,000 or 10% of the
officer's total annual salary and bonus for the fiscal year.
(2) Mr. Selzer began employment with the Company in January 1999. Salary
reflects partial year of service.
(3) Does not include fiscal 1999 bonus payment of $37,200 that Mr. Selzer
elected to forego in order to receive 45,775 stock options granted in lieu
of cash bonus compensation under the Stock Option Exchange Program. The
options were granted after the conclusion of fiscal 1999.
(4) Mr. Selzer received 25,000 shares of restricted stock in connection with
his initial employment. The Company's Common Stock had a closing market
price of $4.375 per share on the date of grant. The shares are subject to
forfeiture until January 4, 2000. Mr. Selzer is entitled to vote the
shares and receive any dividends declared during the restricted period.
(5) Mr. Meyer resigned his position as President and Chief Executive Officer
in October 1998.
(6) Represents post-termination severance payments.
(7) Mr. Costello left employment with the Company in March 1999. The fiscal
1997 Other Annual Compensation to Mr. Costello consisted of reimbursement
of relocation expenses when he joined the Company in February 1997.
8
<PAGE>
(8) The number of options includes 175,000 shares for Mr. Costello, 43,430
shares for Mr. Johnson, 32,290 shares for Mr. Putnam, 68,900 shares for
Mr. Powell, and 50,000 shares for Mr. ten Hoedt that were granted prior to
fiscal 1999 and were amended in fiscal 1999. See "Report on Option
Repricing."
(9) The number of options includes 175,000 shares for Mr. Costello and 46,900
shares for Mr. Powell that were granted prior to fiscal 1998 and were
amended in fiscal 1998.
(10) Mr. Johnson left employment with the Company in June 1999.
(11) Mr. Powell left employment with the Company in August 1999.
(12) Does not include fiscal 1999 bonus payment of $10,000 that Mr. Putnam
elected to forego in order to receive 12,305 stock options granted in
lieu of cash bonus compensation under the Stock Option Exchange Program.
The options were granted after the conclusion of fiscal 1999.
(13) Mr. ten Hoedt left employment with the Company in August 1999.
Option Grants
The following table contains information concerning the grant of stock
options under the Amended and Restated Urologix, Inc. 1991 Stock Option Plan
to the Named Executive Officers during the fiscal year ended June 30, 1999:
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
- ----------------------------------------------------------------------------
% of
Total Potential Realizable
Options Value at Assumed
Granted Annual Rates of Stock
to Market Price Appreciation
Employees Exercise Price on for Option Term
Options in Fiscal Price Date Expiration ---------------------
Name Granted Year(1) Per Share of Grant Date 5% 10%
- ---- ------- --------- --------- -------- ---------- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael M. Selzer, Jr... 400,000 31.20% $3.875 $3.875 12/08/2008 $ 974,787 $ 2,470,301
Jack E. Meyer........... -- -- -- -- -- -- --
John P. Costello........ 175,000(1) 13.65% 3.625 3.625 10/13/2008 398,955 1,011,030
Wesley E. Johnson, Jr... 43,430(1) 3.39% 3.625 3.625 10/13/2008 99,009 250,909
David W. Powell......... 68,900(1) 5.37% 3.625 3.625 10/13/2008 157,074 398,057
W. Allen Putnam......... 32,290(1) 2.52% 3.625 3.625 10/13/2008 73,613 186,549
10,000 0.78% 3.625 3.625 10/13/2008 22,767 57,773
Rob ten Hoedt........... 50,000(1) 3.90% 3.625 3.625 10/13/2008 113,987 288,866
8,500 0.66% 3.625 3.625 10/13/2008 19,378 49,107
</TABLE>
- --------
(1) Reflects options that were granted prior to fiscal 1999 and were amended
in fiscal 1999. See "Report on Option Repricing."
9
<PAGE>
Option Exercises and Year-End Values
Stock options were exercised by the Named Executive Officers during the
fiscal year ended June 30, 1999. The following table sets forth certain
information regarding exercised and unexercised options held by each of the
Named Executive Officers at the end of the fiscal year ended June 30, 1999.
Aggregated Option Exercises in Last Fiscal Year and
Option Values at Fiscal Year End
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Shares Options at June 30, 1999 June 30, 1999(2)
Acquired On Value ------------------------- -------------------------
Name Exercise (#) Realized(1) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael M. Selzer, Jr... -- -- -- 400,000 -- --
Jack E. Meyer........... 119,532 $394,300 -- -- -- --
John P. Costello........ -- -- -- -- -- --
Wesley E. Johnson, Jr... -- -- 56,456 43,224 $91,988 --
David W. Powell......... -- -- 11,483 57,417 -- --
W. Allen Putnam......... 15,437 67,151 8,632 36,909 6,726 --
Rob ten Hoedt........... -- -- 9,332 49,168 -- --
</TABLE>
- --------
(1) Represents the difference between the fair market value of the shares on
the date of exercise and the exercise price multiplied by the number of
option shares exercised.
(2) Represents only options that were "in-the-money" on June 30, 1999. The
value of unexercised options is calculated by determining the difference
between the fair market value of the shares underlying the options at June
30, 1999 and the exercise price of the options, times the number of
options outstanding. Fair market value was determined based on a per share
price of $2.469, which is the last sale price for the Company's common
stock on June 30, 1999, the last trading day in the Company's fiscal year.
Report on Option Repricing
Over its history, the Company has believed that the granting of stock
options to employees has provided a significant incentive to the Company's
employees to align their interest with those of the Company's shareholders.
Substantially all the Company's employees have received options in the past.
The Company's policy has been to grant options to key employees on their
starting date and grant additional options to substantially all employees
based upon performance. On October 13, 1998, when the fair market value of the
Company's common stock was $3.625 per share, the Company's Compensation
Committee reviewed the Company's outstanding options and determined that the
Company had outstanding options at prices significantly above market.
The Committee believed that because of the significant difference between
the price of the Company's stock and the exercise price of these options, it
was unlikely that these options would provide significant incentive for
employees. Accordingly, the Compensation Committee determined that it was in
the best interest of the Company to offer employees, a consultant and members
of the Medical Advisory Board the ability to surrender their unexercised
outstanding options for new options to purchase the same number of shares at
an exercise price of $3.625 per share. All employee options issued upon
surrender are subject to a new vesting period, with 1/48 of the shares vesting
on the 13th day of each month following October 1998. Any new options granted
to the consultant and the Medical Advisory Board members contain the same
vesting provisions as the original surrendered options. As a result, 56 option
holders surrendered options representing 547,021 shares for the new option
program. Members of the Board of Directors were not given the right to
surrender their outstanding director options for new options. See "Certain
Transactions."
10
<PAGE>
The table below provides information with respect to such repricing.
Ten-Year Option Repricings
<TABLE>
<CAPTION>
Number of
Shares Market Price Length of Original
Underlying of Stock at Exercise Price Option Term
Options Time of at Time of New Remaining at Date
Repriced or Repricing or Repricing or Exercise of Repricing or
Name Date Amended(#) Amendment($) Amendment($) Price($) Amendment
- ---- -------- ----------- ------------ -------------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C>
John P. Costello........ 3/19/98 125,000 $8.813 $17.50 $8.813 8 years, 11 months
10/13/98 125,000 3.625 8.813 3.625 9 years, 5 months
50,000 3.625 8.188 3.625 9 years, 6 months
Wesley E. Johnson, Jr... 10/13/98 11,430 3.625 14.00 3.625 7 years, 7 months
12,000 3.625 18.00 3.625 8 years, 8 months
20,000 3.625 8.188 3.625 9 years, 6 months
David W. Powell......... 3/19/98 46,900 8.813 13.375 8.813 8 years, 6 months
10/13/98 46,900 3.625 8.813 3.625 9 years, 5 months
12,000 3.625 18.00 3.625 8 years, 8 months
10,000 3.625 8.188 3.625 9 years, 6 months
W. Allen Putnam......... 10/13/98 24,290 3.625 14.00 3.625 7 years, 7 months
8,000 3.625 18.00 3.625 8 years, 8 months
Rob J. ten Hoedt........ 3/19/98 50,000 8.813 13.563 8.813 9 years, 11 months
10/13/98 50,000 3.625 8.813 3.625 9 years, 5 months
</TABLE>
Board Compensation Committee Report
The Compensation Committee (the "Committee") of the Board of Directors is
responsible for administering the Company's compensation program with respect
to the Company's executive officers. This report shall not be deemed
incorporated by reference to any filing under the Securities Act of 1933 or to
the Securities Exchange Act of 1934 and shall not otherwise be deemed to be
filed under either Act.
Compensation Philosophy
The compensation philosophy of the Company is to provide competitive levels
of compensation that are consistent with the Company's annual and long-term
performance goals, recognize individual initiative and achievements and assist
the Company in attracting and retaining qualified executives.
In establishing compensation for executive officers, the Company examines a
variety of factors, including salaries for executives holding comparable
positions in similarly situated companies, including companies in the medical
device industry. The Company also seeks to establish an executive compensation
program that provides incentives that will reward officers for pursuing the
actions necessary to improve the Company's performance and increase long-term
shareholder value.
There are four elements to the Company's executive compensation program:
base salary, cash bonuses, stock option exchange program and long-term stock-
based incentives. The Company believes that there should be a strong
relationship between executive compensation and achievement of corporate
goals.
Base Salary
Executive base salaries have been based upon past performance, experience,
responsibility and salary levels for persons holding similar positions in
similarly situated companies.
11
<PAGE>
Cash Bonuses
Bonuses are awarded to executive officers upon achievement of specific
goals established at the beginning of the fiscal year.
Stock Options
Stock options are generally granted to executive officers in connection
with their initial employment and periodically upon review of compensation
levels and past performance. The Committee believes that stock ownership by
management and stock-based performance compensation arrangements are
beneficial in aligning management and shareholder's interest in enhancing
shareholder value. Stock options have been awarded at an exercise price equal
to the fair market on the date of grant and therefore have value only if the
price of the Company's stock appreciates from the price on the date on which
the stock options are granted. In this way, the Company's executive officers
and shareholders benefit equally from such stock price appreciation. Stock
options are awarded in a manner consistent with the Company's objective to
provide a long-term equity interest in the Company and to provide an
opportunity for a greater financial reward if long-term performance is
sustained. To encourage a long-term perspective, options generally vest over a
four-year period.
Stock Option Exchange Program
To encourage stock ownership by executives, the Company offers a program
that allows executives to elect to receive stock options in lieu of some or
all of the cash bonuses. Currently under the program, participants receive an
option on $3 of common stock at market value for every $1 of compensation
exchanged. Stock options granted to named executives in fiscal 1999 under this
program are disclosed in the "Summary Compensation Table."
Chief Executive Officer Compensation
On December 5, 1998, the Company entered into an employment agreement with
Michael M. Selzer, Jr. under which Mr. Selzer agreed to serve as the Chief
Executive Officer, President and a Director of the Company at a base salary of
$200,000 per year, with salary increases subject to the discretion of the
Company's Board of Directors. Mr. Selzer has a bonus target of 50% of his base
salary based upon achievement of corporate goals. Under the employment
agreement, Mr. Selzer also received 25,000 shares of Restricted Stock and Non-
Qualified Stock Options to purchase 400,000 shares of Common Stock. Prior to
entering into the employment agreement, the Company negotiated with Mr. Selzer
regarding its terms, with particular emphasis on establishing a total
compensation package which would induce Mr. Selzer to relinquish his
significant responsibilities and earning potential with his prior employer.
The Compensation Committee viewed this compensation as appropriate in light of
Mr. Selzer's relevant experience in the medical device industry and the
comparable compensation levels for chief executive officers in similarly
situated companies.
Mr. Selzer earned a bonus in the amount of $74,400 for fiscal 1999, of
which he elected to take fifty percent in cash and the remainder in stock
options. The bonus was determined based on achievement of specific goals
established as part of the Company's 1999 Bonus Plan, including financial
performance and product quality goals.
Mr. Meyer resigned as President and Chief Executive Officer in October
1998. His fiscal 1999 salary was set at $185,000, and he did not receive any
bonus for fiscal 1999. Mr. Meyer received the severance package described in
"Employment Agreements," below.
Submitted by the Compensation Committee of the Board of Directors
ROBERT R. MOMSEN BOBBY I. GRIFFIN
12
<PAGE>
Performance Graph
The following graph compares the cumulative total shareholder return on the
common stock of the Company from May 30, 1996, the first day of trading after
the Company's initial public offering, to June 30, 1999, the end of the
Company's fiscal year, with the cumulative total return of the Nasdaq Stock
Market and the Hambrecht--Quist Healthcare (excluding biotechnology) Index
over the same period (assuming the investment of $100 on May 30, 1996, the
first day of trading after the Company's initial public offering, and the
reinvestment of all dividends).
COMPARISON OF 25 MONTH CUMULATIVE TOTAL RETURN*
AMONG UROLOGIX, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE HAMBRECHT & QUIST HEALTHCARE (EXCLUDING BIOTECHNOLOGY) INDEX
Cumulative Total Return
---------------------------------------------------
5/30/96 6/96 6/97 6/98 6/99
UROLOGIX, INC. 100.00 96.43 121.43 60.71 17.64
NASDAQ STOCK MARKET (U.S.) 100.00 96.27 117.08 154.16 220.30
HAMBRECHT & QUIST
HEALTHCARE (EXCLUDING
BIOTECHNOLOGY) 100.00 95.61 120.06 145.76 149.46
* $100 INVESTED ON 5/30/96 IN STOCK OR INDEX--INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING JUNE 30, 1998
13
<PAGE>
Compensation of Directors
Under the current terms of the Company's 1991 Stock Option Plan, persons
serving as non-employee directors at the date of the annual shareholder
meeting automatically receive a grant to purchase 5,000 shares at a price
equal to fair market value on the date of grant. The options are immediately
exercisable on the date of grant and expire ten years from the date of grant,
subject to earlier termination one year after the person ceases to be a
director of the Company. Each director is also reimbursed for expenses
associated with attending Board of Directors meetings. Non-employee directors
are also paid $1,000 per board meeting and $500 per committee meeting.
Employment Agreements
The Company entered into an employment agreement with Mr. Selzer for his
services as President, Chief Executive Officer and a Director. The agreement
provides for a compensation and benefits package consisting of a base salary
of $200,000 per year and a target cash bonus of 50% of the base salary. In
addition, Mr. Selzer was granted a non-qualified stock option to purchase
400,000 shares of the Company's common stock at the closing price of the
Company's common stock on the date of grant. The option vests in three
tranches: the first 200,000 shares vest over four years beginning on the date
of grant, the second 100,000 shares vest over four years beginning on the
first anniversary of employment and the last 100,000 shares vest over the
four-year period beginning on the second anniversary of employment. If a
change of control (as defined in the Company's Stock Option Plan) occurs, any
unvested options will automatically accelerate. In connection with his
employment agreement, Mr. Selzer also received 25,000 shares of restricted
stock. The shares are subject to forfeiture until January 4, 2000.
The employment agreement is terminable at will by either the Company or Mr.
Selzer. If his employment is terminated by the Company without Cause (as
defined in the agreement), the Company will be obligated to pay Mr. Selzer's
base salary for up to 12 months or until the date he secures other employment,
whichever occurs first.
Mr. Meyer resigned as President and Chief Executive Officer in October
1998. In connection with his resignation, Mr. Meyer entered into a severance
agreement with the Company. Under the severance agreement, Mr. Meyer's monthly
salary of $15,416 and certain employee insurance benefits were continued for
nine months following his resignation. In addition, the Board of Directors
waived the service requirement with respect to 23,750 option shares and
extended the exercise period for those options for 60 days.
The Company also has letter severance agreements with its other executive
officers and key employees. Under the terms of their respective agreements,
the Company has agreed that, if the employment of the executive officer or key
employee is terminated without cause, the Company will pay the employee's
salary for a period of six or twelve months or until such person has secured
alternative employment, whichever occurs first.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of common stock and other equity securities of the
Company. These insiders are required by Securities and Exchange Commission
regulations to furnish the Company with copies of all Section 16(a) forms they
file, including Forms 3, 4 and 5. During the fiscal year ended June 30, 1999,
all reports required by insiders were filed in a timely manner, except that
Mr. Putnam and Mr. ten Hoedt each failed to report one option grant on Form 5
on a timely basis.
14
<PAGE>
CERTAIN TRANSACTIONS
In 1996, the Company entered into an international distribution agreement
with Boston Scientific Corporation ("Boston Scientific"). Under the agreement,
Boston Scientific was granted exclusive distribution rights for the Company's
Targis System in all countries outside the United States and Japan. Prior to
entering into this distribution agreement, Boston Scientific made an equity
investment in the Company and currently holds approximately 5.1% of the
Company's common stock. During the year ended June 30, 1999, the Company's
product sales to Boston Scientific were not material. Under the distribution
agreement, which was amended in February 1999, the Company assumed
responsibility for market development of the Targis(TM) System and works with
Boston Scientific to sell Targis Systems from Boston Scientific's inventory
through the Company's direct sales force in Europe. The amount which Boston
Scientific paid the Company for these services in fiscal 1999 exceeded five
percent of the Company's gross revenues for that year. The Company also has a
Co-Marketing Agreement with Boston Scientific, under which certain members of
the Boston Scientific Microvasive Urology sales force assist in the promotion
and marketing of the Urologix Targis System procedure among urologists
throughout the United States. The fees paid to Boston Scientific for these
services were not material in fiscal 1999. Paul A. LaViolette, a Senior Vice
President of Boston Scientific Corporation and President of Boston Scientific
International, is a director of the Company.
The Company has had a Consulting Agreement with Dr. David C. Utz, a
director of the Company, since September 1, 1993. The agreement has a one-year
term, which has been annually extended to August 31, 2000. Dr. Utz provides
consulting services to the Company in connection with the Medical Advisory
Board, as well as general consultation in the Company's products and clinical
evaluation of those products. In exchange for his services, Dr. Utz is paid
$24,000 per year, and at September 15, 1999 had received non-qualified stock
options to purchase an aggregate of 25,050 shares of the Company's common
stock under the Consulting Agreement and as a Scientific Advisory Board
member. In connection with the October 13, 1998 re-pricing of employee and
Medical Advisory Board stock options and the stock options granted to Dr. Utz
under his Consulting Agreement, Dr. Utz surrendered 12,000 options and
received replacement options to purchase the same number of shares at an
exercise price of $3.625 per share.
M. Dann & Co., Inc., a company owned by Mitchell Dann, the Company's
chairman, currently provides consulting services to the Company. These
consulting services include, without limitation, assessing overall strategic
direction, developing and monitoring patent strategy, and maintaining
relationships with key physicians and the financial community. Additionally,
Mr. Dann served as acting Chief Executive Officer of the Company from October
1998 to January 1999. For these services, the Company paid M. Dann & Co., Inc.
an aggregate of $107,500 plus expenses in the amount of $24,000 during fiscal
1999. The Consulting Agreement commenced as of September 1, 1996 and has been
renewed on an annual basis thereafter.
SHAREHOLDER PROPOSALS
The proxy rules of the Securities and Exchange Commission permit
shareholders of a company, after timely notice to the company, to present
proposals for shareholder action in the company's proxy statement where such
proposals are consistent with applicable law, pertain to matters appropriate
for shareholder action and are not properly omitted by company action in
accordance with the proxy rules. The Urologix, Inc. 2000 Annual Meeting of
Shareholders is expected to be held on or about November 15, 2000, and proxy
materials in connection with that meeting are expected to be mailed on or
about October 11, 2000. Shareholder proposals prepared in accordance with the
proxy rules must be received by the Company on or before June 14, 2000.
15
<PAGE>
ANNUAL REPORT
An Annual Report of the Company setting forth the Company's activities and
containing financial statements of the Company for the fiscal year ended June
30, 1999 accompanies this Notice of Annual Meeting and proxy solicitation
material.
The accounting firm of Arthur Andersen, LLP has served as independent
public accountants for the Company for the year ended June 30, 1999. The
Company has selected Arthur Andersen, LLP to serve as independent public
accountants for the Company for the fiscal year ended June 30, 2000. The
Company expects that a representative from Arthur Andersen, LLP will attend
the Annual Meeting and be available to respond to appropriate shareholder
questions.
GENERAL
The Company's Annual Report to Shareholders for the fiscal year ended June
30, 1999 is being mailed to shareholders with this Proxy Statement.
Shareholders may receive without charge a copy of the Company's Annual Report
on Form 10-K, including financial statements schedules and amendments thereto,
as filed with the Securities and Exchange Commission, by writing to: Urologix,
Inc., 14405 21st Avenue North, Minneapolis, Minnesota 55447, Attention:
Christopher R. Geyen, or by calling the Company at (612) 475-1400.
By the Order of the Board of
Directors
/s/ Christopher R. Geyen
Christopher R. Geyen, Secretary
16
<PAGE>
- --------------------------------------------------------------------------------
UROLOGIX, INC.
NOVEMBER 10, 1999 ANNUAL MEETING OF SHAREHOLDERS
This Proxy is solicited on behalf of the Board of Directors of the Company.
The stockholder(s) named on this card hereby appoint Mitchell Dann, Michael M.
Selzer, Jr. and Christopher R. Geyen, each of them, as their proxy, with power
of substitution to vote at the Annual Meeting as directed below. The proxies may
also vote, in their discretion, upon all other matters that may properly come
before the Meeting, or any adjournment or adjournments thereof. The shares will
be voted as if the shareholder(s) were personally present at the meeting. All
former proxies are revoked. If not otherwise specified, shares will be voted as
recommended by the Board of Directors.
Please mark this proxy as indicated on the reverse side to vote on any item.
(Continued and to be signed on other side.)
<PAGE>
Please detach here
- --------------------------------------------------------------------------------
The Board of Directors Recommends a Vote FOR Item 1
1. ELECTION OF DIRECTORS: 01 Mitchell Dann 02 Susan Bartlett Foote
03 David C. Utz, M.D.
(Instructions: To withhold authority to [_] Vote FOR [_] Vote WITHHELD
vote for any indicated nominee, write the all nominees from all nominees
number(s) of the nominee(s) in the box
provided to the right.) ---------------------------------
---------------------------------
2. I PLAN TO ATTEND THE MEETING [_] Yes [_] No
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
Address Change? Mark Box [_] Indicate changes below:
Date_________________________
- ---------------------------------------
- ---------------------------------------
Signature(s) in Box
NOTE: Please date and sign exactly as name
appears indicating, if appropriate, official
position or capacity. If co-owners, both
should sign.
