<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [ ] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
Zoll Medical Corporation
(Name of Registrant as Specified In Its Charter)
[ ]
(Name of Person(s) Filing Proxy Statement)
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.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
ZOLL MEDICAL CORPORATION
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, FEBRUARY 4, 1997
------------------------
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders (the
"Annual Meeting") of Zoll Medical Corporation (the "Company") will be held on
Tuesday, February 4, 1997 at 10:00 a.m. at State Street Bank and Trust Company,
225 Franklin Street, Boston, Massachusetts 02110 for the following purposes:
1. To elect three Class II directors of the Company to serve until the
2000 Annual Meeting of Stockholders and until their respective successors
are duly elected and qualified;
2. To approve the Company's Non-Employee Directors' Stock Option Plan
(the "Directors' Plan"), pursuant to which the Company grants stock options
to its non-employee directors to purchase up to 100,000 shares of common
stock, par value $.02 per share (the "Common Stock"), representing
approximately 1.6% of the total number of outstanding shares;
3. To amend the Company's 1992 Stock Option Plan (the "Plan") to
increase the number of Shares of the Company's Common Stock subject to
issuance under the Plan by 200,000 shares or approximately 3.2% of the
total number of outstanding shares; and
4. To consider and act upon any other matters which may properly be
brought before the Annual Meeting and at any adjournments or postponements
thereof.
Any action may be taken on the foregoing matters at the Annual Meeting on
the date specified above, or on any date or dates to which, by original or later
adjournment, the Annual Meeting may be adjourned, or to which the Annual Meeting
may be postponed.
The Board of Directors has fixed the close of business on December 13, 1996
as the record date for determining the stockholders entitled to notice of and to
vote at the 1997 Annual Meeting and at any adjournments or postponements
thereof. Stockholders of record of the Company's Common Stock at the close of
business on that date will be entitled to notice of and to vote at the Annual
Meeting and at any adjournments or postponements thereof.
You are requested to complete and sign the enclosed form of proxy which is
being solicited by the Board of Directors and to mail it promptly in the
enclosed postage-prepaid envelope. Any proxy may be revoked by delivery of a
later dated proxy. Stockholders of record who attend the Annual Meeting may vote
in person, even if they have previously delivered a signed proxy.
By Order of the Board of Directors
William H. Gorham, Clerk
Burlington, Massachusetts
December 23, 1996
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE
AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE-PREPAID ENVELOPE
PROVIDED. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH,
EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
<PAGE> 3
ZOLL MEDICAL CORPORATION
32 SECOND AVENUE
NORTHWEST PARK
BURLINGTON, MASSACHUSETTS 01803
------------------------
PROXY STATEMENT
------------------------
1997 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, FEBRUARY 4, 1997
December 23, 1996
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Zoll Medical Corporation (the "Company")
for use at the 1997 Annual Meeting of Stockholders of the Company to be held on
Tuesday, February 4, 1997, and at any adjournments or postponements thereof (the
"Annual Meeting"). At the Annual Meeting, stockholders will be asked to vote
upon (i) the election of three Class II directors of the Company, (ii) the
approval of the Company's Non-Employee Directors' Stock Option Plan (the
"Directors' Plan"), (iii) the amendment of the Company's 1992 Stock Option Plan
(the "Plan"), and (iv) any other matters properly brought before the Annual
Meeting.
This Proxy Statement and the accompanying Notice of Annual Meeting and
Proxy Card are first being sent to stockholders on or about December 23, 1996.
The Board of Directors has fixed the close of business on December 13, 1996 as
the record date for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting (the "Record Date"). Only stockholders of record
of the Company's common stock, par value $.02 per share (the "Common Stock"), at
the close of business on the Record Date will be entitled to notice of and to
vote at the Annual Meeting. As of the Record Date, there were 6,182,534 shares
of Common Stock outstanding and entitled to vote at the Annual Meeting. Holders
of Common Stock outstanding as of the close of business on the Record Date will
be entitled to one vote for each share held by them.
The presence, in person or by proxy, of holders of at least a majority of
the total number of outstanding shares of Common Stock entitled to vote is
necessary to constitute a quorum for the transaction of business at the Annual
Meeting. The affirmative vote of the holders of a plurality of the shares of
Common Stock present or represented at the Annual Meeting is required for the
election of directors. A majority of the total votes cast at the Annual Meeting
is required for approval of each of the Directors' Plan and the proposed
amendment to the Plan. Abstentions and broker non-votes are each included in the
number of shares present at the Annual Meeting for purposes of establishing a
quorum. Abstentions and broker non-votes will have no effect on the outcome of
the election of directors, approval of the proposed Directors' Plan or approval
of the amendment to the Plan.
STOCKHOLDERS OF THE COMPANY ARE REQUESTED TO COMPLETE, DATE, SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PREPAID
ENVELOPE. SHARES REPRESENTED BY A PROPERLY EXECUTED PROXY RECEIVED PRIOR TO THE
VOTE AT THE ANNUAL MEETING AND NOT REVOKED WILL BE VOTED AT THE ANNUAL MEETING
AS DIRECTED ON THE PROXY. IF A PROPERLY EXECUTED PROXY IS SUBMITTED AND NO
INSTRUCTIONS ARE GIVEN, THE PROXY WILL BE VOTED FOR THE ELECTION OF THE THREE
NOMINEES FOR CLASS II DIRECTORS OF THE COMPANY NAMED IN THIS PROXY
<PAGE> 4
STATEMENT, FOR APPROVAL OF THE DIRECTORS' PLAN, AND FOR APPROVAL OF THE PROPOSED
AMENDMENT TO THE PLAN. IT IS NOT ANTICIPATED THAT ANY MATTER OTHER THAN THOSE
SET FORTH IN THIS PROXY STATEMENT WILL BE PRESENTED AT THE ANNUAL MEETING. IF
OTHER MATTERS ARE PRESENTED, PROXIES WILL BE VOTED IN ACCORDANCE WITH THE
DISCRETION OF THE PROXY HOLDERS.
A stockholder of record may revoke a proxy at any time before it has been
exercised by filing a written revocation with the Clerk of the Company at the
address of the Company set forth above; by filing a duly executed proxy bearing
a later date; or by appearing in person and voting by ballot at the Annual
Meeting. Any stockholder of record as of the Record Date attending the Annual
Meeting may vote in person whether or not a proxy has been previously given, but
the presence (without further action) of a stockholder at the Annual Meeting
will not constitute revocation of a previously given proxy.
The Company's 1996 Annual Report, including the Company's audited financial
statements for the fiscal year ended September 28, 1996, is being mailed to
stockholders concurrently with this Proxy Statement.
PROPOSAL 1
ELECTION OF A CLASS OF DIRECTORS
The Board of Directors of the Company is comprised of seven members and is
divided into three classes, with the directors in each class serving for a term
of three years and until their successors are duly elected and qualified. As the
term of one class expires, a successor class is elected at each succeeding
annual meeting of stockholders.
At the Annual Meeting, three Class II directors will be elected to serve
until the 2000 Annual Meeting and until their successors are duly elected and
qualified. The Board of Directors has nominated Willard M. Bright, Thomas M.
Claflin, II and M. Stephen Heilman for election as Class II directors (the
"Nominees"). The Board of Directors anticipates that each of the Nominees will
serve as a director if elected. However, if any person nominated by the Board of
Directors is unable to accept election, the proxies will be voted for the
election of such other person or persons as the Board of Directors may
recommend.
2
<PAGE> 5
INFORMATION REGARDING NOMINEES AND DIRECTORS
The following table sets forth certain information with respect to the
three Nominees for election as directors at the Annual Meeting and those
continuing directors of the Company whose terms expire at the annual meetings of
stockholders in 1998 and 1999 based on information furnished to the Company by
each director. The following information is as of September 28, 1996 unless
otherwise specified.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND PRINCIPAL OCCUPATION DIRECTOR BENEFICIAL OWNERSHIP PERCENT
FOR PAST FIVE YEARS AGE SINCE OF COMMON STOCK(1) OF CLASS
- ------------------------------------------------------ --- -------- -------------------- --------
<S> <C> <C> <C> <C>
CLASS II NOMINEES FOR ELECTION AT THE 1997 ANNUAL MEETING -- TERM TO EXPIRE IN 2000
Willard M. Bright..................................... 82 1983 172,200(2) 2.8%
Formerly Chairman of the Board of Directors of the
Company. Formerly President and Chief Executive
Officer of The Kendall Company and Boehringer
Mannheim Corporation, medical products
manufacturers, and President and director of
Curtiss-Wright Corp., an aerospace and industrial
products manufacturer. Mr. Bright is a Director of
CSS Industries, Inc., Furman Lumber Company and
MacroChem Corporation.
Thomas M. Claflin, II................................. 55 1980 64,245(3) 1.0%
Principal of Claflin Capital Management, Inc., a
venture capital firm, and General Partner of several
of its venture capital partnerships. Mr. Claflin is
a Director of Altron Incorporated.
M. Stephen Heilman.................................... 62 1996 210,000 3.4%
Founder, Chairman and Chief Executive Officer of
Lifecor, Inc. since 1986. Founder, Chairman and
Chief Executive Officer of Vascor, Inc. since 1986.
Mr. Heilman is a director of SkyMark Corporation,
Actronics, Medrad Inc. and Precision Therapeutics.
CLASS III CONTINUING DIRECTORS -- TERM TO EXPIRE IN 1998
Richard A. Packer..................................... 39 1996 12,300(4) *
President and Chief Operating Officer of the Company
since 1996. Formerly Chief Financial Officer and
Vice President of Operations of the Company since
1992; Vice President of various functions at
Whistler Corporation, a consumer electronics
company, prior to 1992.
Rolf S. Stutz......................................... 47 1983 124,400(5) 2.0%
Chairman of the Board of Directors and Chief
Executive Officer of the Company. From 1978 until he
joined the Company in 1983, Mr. Stutz held a variety
of domestic and international management positions
with Millipore Corporation, a manufacturer of high
technology membrane filtration and purification
products for the analytical, pharmaceutical and
microelectronics markets. Mr. Stutz is a director of
Hemasure Corporation, Cambridge Heart, Inc. and
Lifecor, Inc.
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND PRINCIPAL OCCUPATION DIRECTOR BENEFICIAL OWNERSHIP PERCENT
FOR PAST FIVE YEARS AGE SINCE OF COMMON STOCK(1) OF CLASS
- ----------------------------- --- -------- -------------------- --------
<S> <C> <C> <C> <C>
CLASS I CONTINUING DIRECTORS -- TERM TO EXPIRE IN 1999
Noah T. Herndon....................................... 64 1995 5,000 *
Partner of Brown Bothers Harriman & Co. since 1974.
From 1978 to present Mr. Herndon has been the
partner principally in charge of the operations for
Brown Brothers Harriman & Co.'s Boston office. Mr.
Herndon is a director of National Auto Credit, Inc.,
Fieldcrest Cannon, Inc. and Watts Industries, Inc.
C. William Zadel...................................... 53 1996 1,000 *
Chairman, President and Chief Executive Officer of
Millipore Corporation, a manufacturer of high
technology membrane filtration and purification
products for the analytical, pharmaceutical and
microelectronics markets. Formerly President and
Chief Executive Officer of Ciba Corning Diagnostics
Corp., a leading biotechnology company and supplier
to the clinical laboratory market, where he was
employed since 1983. Mr. Zadel is a director of
Kulicke & Soffa Industries, Inc.
All directors and executive officers as a group (12 626,645(6) 10.0%
persons).
</TABLE>
- ---------------
* Less than 1%.
(1) The persons named in the table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them,
subject to the information contained in the other footnotes to this table.
(2) Represents 172,200 shares of Common Stock held by the Willard M. Bright
Revocable Inter Vivos Trust dated August 2, 1990.
(3) Includes 229 shares of Common Stock held by Mr. Claflin's spouse and 3,277
shares held by various Claflin Capital Management, Inc. partnership
entities, as to which Mr. Claflin disclaims beneficial ownership.
(4) Includes 8,000 shares of Common Stock subject to stock options exercisable
as of September 28, 1996, or which will become exercisable within 60 days
after September 28, 1996.
(5) Includes 40,000 shares of Common Stock subject to stock options exercisable
as of September 28, 1996.
(6) Includes 85,500 shares of Common Stock subject to stock options exercisable
as of September 28, 1996, or which will become exercisable within 60 days
after September 28, 1996.
Dr. Paul M. Zoll has been made an Emeritus member of the Board.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors of the Company held 6 meetings during the fiscal
year ended September 28, 1996. Each of the directors attended more than 75% of
the aggregate of the total number of meetings of the Board of
4
<PAGE> 7
Directors and of the committees of which he was a member which were held during
the period he was a director or committee member, with the exception of Dr.
Zoll.
The Company has standing Audit and Compensation Committees. The members of
the Audit Committee are Messrs. Claflin (as Chairman), Herndon and Heilman. The
Audit Committee reviews the results of the annual audit of the Company's
accounts conducted by the Company's independent auditors and the recommendations
of the auditors with respect to accounting systems and controls. During the
fiscal year ended September 28, 1996, the Audit Committee held 1 meeting.
The members of the Compensation Committee are Messrs. Claflin (as
Chairman), Herndon and Zadel. The Compensation Committee reviews and approves
the Company's executive compensation and benefit policies, administers the
Company's 1992 Stock Option Plan and the Directors' Plan. During the fiscal year
ended September 28, 1996, the Compensation Committee held 1 meeting. The
Compensation Committee's report on executive compensation appears elsewhere in
this Proxy Statement.
The Board of Directors selects nominees for election as directors of the
Company. The Board of Directors will consider a nominee for election to the
Board recommended by a stockholder of record if such recommendation is timely in
accordance with, and is accompanied by the information required by, the
Company's By-laws. The Company does not maintain a standing nominating
committee.
DIRECTOR COMPENSATION
Non-employee directors of the Company receive: (i) an $8,000 annual
retainer payable quarterly; (ii) a $2,000 annual retainer for Committee Chairmen
payable quarterly; and (iii) a $500 meeting fee for each meeting of directors
attended. Dr. Bright has a consulting arrangement with the Company pursuant to
which he provides management, personnel and marketing advice and services to the
Company. During the fiscal year ended September 28, 1996, Dr. Bright received
$50,000 pursuant to this arrangement.
The Company has granted options for shares of the Company's Common Stock as
provided in the Directors' Plan. See "Proposal 2 -- Approval of Directors'
Plan."
5
<PAGE> 8
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth the aggregate
cash compensation paid by the Company with respect to the three most recent
fiscal years ended September 28, 1996 to the Company's Chief Executive Officer
and each of the four other most highly compensated executive officers in fiscal
1996.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION -----------------
----------------------------------------- SHARES UNDERLYING
NAME AND OTHER ANNUAL OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) COMPENSATION($) GRANTED(#)(2) COMPENSATION($)(3)
------------------ ---- --------- ----------- --------------- ----------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Rolf S. Stutz............ 1996 243,667 50,000 4,800(4) -- 720
Chairman and Chief 1995 231,000 -- 4,800(4) -- 947
Executive Officer 1994 210,000 15,000 4,800(4) -- 1,680
Richard A. Packer........ 1996 163,333 45,000 -- 20,000 720
President and Chief 1995 140,000 27,000 -- 12,000 574
Operating Officer 1994 130,000 10,000 -- -- 1,040
Frits J. Borst........... 1996 146,221 47,922(5) 33,547(6) -- --
Vice President- 1995 148,483 31,714(5) 22,682(6) 12,000 --
International
Operations 1994 122,014 10,187(5) 20,112(6) 30,000 --
Donald Boucher........... 1996 129,000 29,000 -- -- 619
Vice President- 1995 125,000 15,000 -- 12,000 513
Research and 1994 93,871 10,000 25,000(7) 30,000 751
Development
Ward M. Hamilton......... 1996 110,000 44,000 -- -- 528
Vice President- 1995 109,167 -- -- 6,000 523
Marketing 1994 100,000 18,000 -- -- 480
</TABLE>
- ---------------
(1) Amounts shown for each fiscal year include bonuses paid during the
succeeding fiscal year. Thus, the 1996 bonus includes an amount paid in
fiscal 1997 for fiscal 1996.
(2) See the following table captioned "Option Grants in Last Fiscal Year" for
additional information.
(3) All Other Compensation reflects life insurance premiums paid by the Company
for the executive officers.
(4) This amount reflects an automobile allowance for Mr. Stutz.
(5) These amounts represent a bonus payment of $28,973 and payment of $18,949
made in lieu of vacation benefits for fiscal 1996, a bonus payment of
$20,303 and a payment of $11,411 made in lieu of vacation benefits for
fiscal 1995, and a payment in lieu of vacation benefits for fiscal 1994.
(6) These amounts reflect an automobile allowance for Mr. Borst of $7,884 for
1996 and 1995, payments of $22,404, $14,798 and $13,542 made as a pension
contribution for 1996, 1995 and 1994, respectively, and a payment of $3,259
for disability insurance for 1996.
(7) This amount represents a moving allowance paid to Mr. Boucher.
6
<PAGE> 9
Option Grants in Last Fiscal Year. The following table sets forth certain
information regarding options granted during the fiscal year ended September 28,
1996 by the Company to the Chief Executive Officer and each other executive
officer named in the Summary Compensation Table.
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE VALUE
------------------------------------------------------ AT ASSUMED RATES
PERCENT OF OF STOCK PRICE
SHARES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM($)(2)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION -----------------
NAME GRANTED(#) FISCAL YEAR(%) SHARE($)(1) DATE 5% 10%
- ---- ---------- -------------- ----------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Rolf S. Stutz......................... -- -- -- -- -- --
Chairman and Chief
Executive Officer
Richard A. Packer..................... 20,000 10% 8.75 11/16/05 110,000 279,000
President and Chief
Operating Officer
Frits J. Borst........................ -- -- -- -- -- --
Vice President-
International Operations
Donald Boucher........................ -- -- -- -- -- --
Vice President - Research
and Development
Ward M. Hamilton...................... -- -- -- -- -- --
Vice President - Marketing
</TABLE>
- ---------------
(1) Represents the closing market price of the Common Stock on the grant date of
November 16, 1995.
(2) Represents the value of the options granted at the end of the option term if
the market price of the Company's Common Stock on the date of grant were to
appreciate annually by 5% and 10%, respectively. There is no assurance that
the stock price will appreciate at the rates shown in the table. If the
stock price appreciates, the value of the stock held by all stockholders
will also increase proportionally.
7
<PAGE> 10
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values. The following table sets forth certain information regarding stock
options exercised during the fiscal year ended September 28, 1996 and stock
options held as of September 28, 1996 by the Chief Executive Officer and each
other executive officer named in the Summary Compensation Table.
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END(2)
ACQUIRED -------------------------- -----------------------
ON VALUE EXERCIS- UNEXERCIS- EXERCIS- UNEXERCIS-
NAME EXERCISE(#) REALIZED($)(1) ABLE(#)(3) ABLE(#) ABLE($) ABLE($)
- ---- ----------- -------------- ---------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Rolf S. Stutz................. -- -- 40,000 20,000 235,000 27,500
Chairman and Chief
Executive Officer
Richard A. Packer............. -- -- 0 72,000 0 283,000
President and Chief
Operating Officer
Frits J. Borst................ -- -- 0 42,000 0 126,750
Vice President-
International Operations
Don Boucher................... -- -- 0 42,000 0 126,750
Vice President-
Research & Development
Ward M. Hamilton.............. -- -- 30,000 30,000 363,749 56,501
Vice President-Marketing
</TABLE>
- ---------------
(1) Value realized equals the aggregate market value of the shares acquired on
the exercise date(s), less the applicable aggregate option exercise
price(s).
(2) Year-end value is based on the closing market price per share on September
27, 1996 ($15.875), less the applicable aggregate option exercise price(s)
of in-the-money options multiplied by the number of unexercised in-the-money
options which are exercisable and unexercisable, respectively.
(3) Includes options exercisable within 60 days after September 28, 1996.
Stock Option Repricings. Effective April 22, 1996, the Board of Directors
and the Compensation Committee voted to adjust the exercise price and extend the
vesting periods of stock options granted to officers and employees of the
Company in fiscal 1992, 1993 and 1994. The purpose of these actions was to
restore the incentive effect of such options. The following table sets forth
information with respect to such repricing of options held by executive
officers. As disclosed in the proxy statement for the 1996 Annual Meeting of
Stockholders, the Company repriced certain options held by these persons in
1995.
<TABLE>
<CAPTION>
LENGTH OF
ORIGINAL
MARKET PRICE OF OPTION TERM
NUMBER OF COMMON STOCK EXERCISE PRICE REMAINING AT
EFFECTIVE SECURITIES UNDERLYING AT TIME OF AT TIME OF NEW EXERCISE DATE OF
NAME DATE OPTIONS REPRICED(#) REPRICING ($) REPRICING ($) PRICE ($) REPRICING (1)
- ---- --------- --------------------- --------------- -------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Rolf S. Stutz........ 4/22/96 20,000 14.50 24.75 14.50 7 years
Richard A. Packer.... 4/22/96 30,000 14.50 21.75 14.50 7 years
4/22/96 10,000 14.50 24.75 14.50 7 years
Frits J. Borst....... 4/22/96 30,000 14.50 36.75 14.50 8 years
Donald Boucher....... 4/22/96 30,000 14.50 31.00 14.50 8 years
Ward Hamilton........ 4/22/96 10,000 14.50 24.75 14.50 7 years
</TABLE>
- ---------------
(1) Represents the approximate remaining option term. In connection with the
repricing, the vesting of these options was delayed, such that the options
would begin to vest ratably over the first four anniversaries of the
effective date of repricing.
8
<PAGE> 11
STOCK PERFORMANCE CHART
The following chart provides a quarterly comparison, from the Company's
initial public offering in July 1992, of the cumulative total shareholder return
(assuming reinvestment of any dividends) among Zoll Medical Corporation, the
NASDAQ National Market ("NASDAQ") Index and the Hambrecht & Quist ("H&Q") Health
Care (Excluding Biotechnology) Index, an industry index of 43 health care and
medical technology companies (including the Company). The NASDAQ Index has been
provided because the Common Stock is listed on this market. The historical
information set forth below is not necessarily indicative of future performance.
COMPARISON OF 50 MONTH CUMULATIVE TOTAL RETURN*
<TABLE>
<CAPTION>
H & Q
MEASUREMENT PERIOD ZOLL MEDICAL NASDAQ STOCK HEALTHCARE-
(FISCAL YEAR COVERED) CORPORATION MARKET-US EXCLUDING BIOTECHNOLOGY
<S> <C> <C> <C>
0 100 100 100
1.5 150 102 91
13.5 269 133 67
25.5 69 135 80
37.5 69 186 119
49.5 115 220 145
</TABLE>
- ---------------
* $100 invested on 7/16/92 in stock or index -- including reinvestment of
dividends.
Fiscal year ending September 30.
9
<PAGE> 12
REPORT OF THE COMPENSATION COMMITTEE
Objective of the Company's Compensation Program. The Company's executive
compensation program is intended to attract, retain and reward executives who
are capable of leading the Company effectively and continuing its growth in the
competitive marketplace for cardiac resuscitation equipment. The Company's
objective is to utilize a combination of cash and equity-based compensation to
provide appropriate incentives for executives while aligning their interests
with those of the Company's stockholders.
Like many other public companies, the Company uses a three-pronged approach
to its compensation program. First, the executive's base salary is intended to
create a reasonably competitive minimum level of compensation for each executive
for the following twelve months. Second, the Company maintains an incentive
bonus program for executive officers and certain other members of management
under which discretionary bonuses may be offered based upon the achievement of
corporate and individual performance goals. The objective of the incentive bonus
program is to reward executives for their past twelve months' performance.
Finally, the Company utilizes stock options granted under its 1992 Stock Option
Plan as a long-term incentive for the executive officers as well as for many
other employees of the Company. The Company believes that stock options are
important in aligning management and stockholder interests and in encouraging
management to adopt a longer-term perspective. Accordingly, options generally
provide for incremental vesting over a four-year period.
Compensation Committee Procedures. The Company's executive compensation
program is administered under the direction of the Company's Compensation
Committee, which as of September 28, 1996 was composed of three non-employee
directors. The Compensation Committee meets periodically in connection with
regularly-scheduled Board of Directors' meetings, and may consult by telephone
at other times. The determinations of the Compensation Committee relating to the
compensation of the Company's executive officers and the granting of options are
then approved or ratified by all of the non-employee directors.
With respect to the compensation of Mr. Stutz, the Compensation Committee
exercises its independent discretion in determining his compensation, subject to
review by all of the non-employee directors. With respect to the compensation of
the other executive officers, the Compensation Committee consults other members
of the Board, but generally relies to a significant extent on Mr. Stutz's
recommendations as the Company's Chief Executive Officer.
Compensation of the Chief Executive Officer. The Compensation Committee
considers the Company's financial performance, as measured by sales and earnings
growth, to be a significant determinant in Mr. Stutz's overall compensation
package. In making its determinations, however, the Compensation Committee also
considers a number of other factors which are not subject to precise
quantitative measurement and which the Committee believes can only be properly
assessed over the long term. In fiscal 1996, these factors included development
of the management organization, strategic planning for new products, and the
development of new products and markets through acquisitions and investments.
Beginning in September 1996, following the June 4th election of Richard Packer
to the office of President and Chief Operating Officer, Mr. Stutz became
associated on a part-time basis with Claflin Capital Management, a venture
capital management company managed by Thomas Claflin. Mr. Stutz intends to
continue this association during fiscal 1997. Mr. Stutz retains full
responsibility as Chief Executive Officer of the Company and has agreed with the
Board of Directors that if the proper discharge of his responsibilities as Chief
Executive Officer requires him to be physically present with the Company on a
full-time basis, he will do so. Looking to 1997, the Compensation Committee
intends to consider the degree of success achieved by Mr. Stutz in turning
management responsibilities over to Mr. Packer and Mr. Packer's success in
discharging these duties as well
10
<PAGE> 13
as Mr. Stutz's continued success in the development of the management
organization and strategic planning for and development of new products and
markets. The Compensation Committee utilizes its business judgment to evaluate
these factors substantively, without the application of any mechanical formula.
For fiscal 1996, the Compensation Committee determined to raise Mr. Stutz's
base salary by approximately 8% from $231,000 to $250,000, based on the
Committee's judgment that such amount represented a competitive base salary. The
Compensation Committee has recommended that this salary level remain the same
for fiscal 1997. Mr. Stutz's bonus for fiscal 1996 was set at $50,000. No bonus
was paid to Mr. Stutz in 1995. Mr. Stutz's bonus for fiscal 1997 will be based
on 1997 performance.
Compensation of Other Executive Officers. The Company's executive
compensation program utilizes several different subjective performance factors
in determining the compensation of the Company's other executive officers. Each
executive officer's compensation is based upon Mr. Stutz's, and ultimately the
Compensation Committee's, judgment as to the achievement of specific individual
or Company performance goals.
Report on Option Repricing. As described above, effective April 22, 1996
the Board of Directors and the Compensation Committee determined that, in order
to retain the incentive effect of the stock options granted to officers and
employees of the Company in fiscal 1992, 1993 and 1994, it was appropriate to
adjust the exercise price of such options to better reflect the current trading
range of the Common Stock. Accordingly, the Company offered to reprice all of
such options from their original exercise price to $14.50 per share, the closing
price on April 22, 1996. At the same time, the vesting schedule of any options
repriced would be delayed, such that the options would begin to vest ratably
over the first four anniversaries of the effective date of the repricing.
Additionally, the ten-year term of the options was delayed, such that the
options would expire ten years from the effective date of the repricing. The
Compensation Committee believes that the extension of the vesting schedule and
expiration date is appropriate in light of the reduction in the option exercise
price.
Submitted by the Compensation Committee for
fiscal 1996
THOMAS M. CLAFLIN, II, Chairman
NOAH T. HERNDON
C. WILLIAM ZADEL
SEVERANCE ARRANGEMENTS
Mr. Stutz and Mr. Packer each have an employment agreement with the Company
providing for a severance payment of twelve months' salary in the event their
employment is terminated by the Company without cause. Each Agreement provides
for non-competition for a period of three years following termination. At his
fiscal 1996 base salary, Mr. Stutz would receive a severance payment of
approximately $250,000 under this provision and Mr. Packer would receive a
severance payment of approximately $180,000.
CERTAIN RELATIONSHIPS
Noah T. Herndon, a director of the Company, is a partner of Brown Brothers
Harriman & Co., with which the Company maintains a working capital line of
credit and other customary, arm's-length banking
11
<PAGE> 14
relationships. M. Stephen Heilman is Founder, Chairman and Chief Executive
Officer of Lifecor, Inc., in which the Company has made a $2 million investment.
Pursuant to an agreement entered into in connection with such investment, the
Company has agreed to give Mr. Heilman an opportunity to become a director of
the Company, and Mr. Heilman has agreed to vote in favor of Mr. Stutz being
elected to Lifecor, Inc.'s board of directors.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Based on a review of the reports of changes in beneficial ownership of the
Corporation's Common Stock and written representations furnished to the
Corporation, the Corporation believes that its executive officers and directors
filed on a timely basis the reports required to be filed under Section 16(a) of
the Securities Exchange Act of 1934 during the fiscal year ended September 28,
1996, with the following exceptions: (i) Messrs. Bright, Claflin, Heilman,
Herndon and Zadel inadvertently failed to file a Form 5 with the SEC with
respect to one grant of 10,000 options each, (ii) Mr. Zadel inadvertently failed
to file a Form 4 with respect to one acquisition of 1,000 shares of Common
Stock, and (iii) Messrs. Borst, Boucher, Bright, Hamilton, Packer and Stutz
inadvertently failed to file a Form 5 with respect to one repricing of options
each. All such filings are currently being made.
12
<PAGE> 15
PROPOSAL 2
APPROVAL OF THE NON-EMPLOYEE DIRECTORS'
STOCK OPTION PLAN
BACKGROUND OF THE PLAN
The Non-Employee Directors' Stock Option Plan ("the Directors' Plan") was
adopted by the Board of Directors on April 23, 1996. The purpose of the proposed
Directors' Plan is to promote the interests of the Company by providing an
incentive to obtain and retain the services of highly qualified persons to serve
on the Company's Board of Directors through the granting of options to purchase
shares of Common Stock to eligible directors. The Directors' Plan provides for
the granting of non-qualified options to purchase up to 100,000 shares of Common
Stock, which currently represents approximately 1.6% of the total number of
outstanding shares.
ELIGIBILITY
The Directors' Plan provides for the grant of options to purchase Common
Stock to each eligible director of the Company. No director who is an employee
of the Company or any subsidiary thereof is eligible to participate in the
Directors' Plan.
OPTIONS
Pursuant to the Directors' Plan, each eligible director who was a member of
the Board of Directors as of April 23, 1996, was awarded nonqualified options to
purchase 10,000 shares of Common Stock. Each eligible director who is first
elected to the Board of Directors after April 23, 1996 will also receive
nonqualified options to purchase 10,000 shares of Common Stock upon election to
the Board of Directors. All options granted vest in four equal annual
installments over a four-year period beginning on the first anniversary of the
date of grant. The exercise price of the options granted to eligible directors
is the fair market value of the Common Stock on the date of grant. The exercise
price may be paid in cash, certified or bank check, other instrument acceptable
to the Compensation Committee, or shares of Common Stock (subject to certain
restrictions). Options granted under the Directors' Plan are exercisable for ten
years from the date of grant, or, with respect to vested options, the date at
which such director to whom such option was granted ceases to serve on the Board
of Directors. With respect to vested options, such options may be exercised
until the date three months after such Director ceases to serve on the Board of
Directors.
AMENDMENT AND TERMINATION
The Board of Directors may amend the Directors' Plan as it may deem proper
and in the best interest of the Company; provided however, that no amendment may
adversely affect options previously granted without the consent of the affected
option holders. The Board of Directors may terminate the Directors' Plan at any
time, except with respect to any options then outstanding.
VOTE REQUIRED FOR APPROVAL.
Approval of the Directors' Plan requires the vote of the holders of a
majority of the total votes cast on the proposal at the Annual Meeting. THE
BOARD OF DIRECTORS BELIEVES THAT THE DIRECTORS' PLAN IS IN THE BEST INTEREST OF
THE COMPANY AND THEREFORE RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE PLAN.
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<PAGE> 16
PROPOSAL 3
AMENDMENT OF THE 1992 STOCK OPTION PLAN
BACKGROUND OF THE PLAN
The Company's 1992 Stock Option Plan (the "Plan") was adopted by the Board
of Directors and the stockholders of the Company in April, 1992. The Plan
replaced the Company's prior stock option plan, which was terminated by the
Board of Directors except as to then-outstanding options. The Plan provides for
the granting of "incentive stock options" under the Internal Revenue Code of
1986 and non-qualified options to purchase shares of Common Stock. Options under
the Plan may be granted to officers, employees and consultants of the Company
and its subsidiaries.
PROPOSED AMENDMENT OF THE PLAN
As originally adopted, the Plan provided for the issuance of up to 450,000
shares of Common Stock pursuant to the exercise of options granted under the
Plan. At that time, the Company had approximately 125 full-time and 9 part-time
employees. As a result of the Company's rapid growth and the Board of Director's
belief that stock options should not be reserved exclusively for senior
management but should be granted as a performance incentive throughout the
organization, the original shares remaining available for issuance under the
Plan were nearly exhausted by the end of 1994. Accordingly, in January 1995 the
Plan was amended, with the approval of the stockholders of the Company, to
increase the number of shares of Common Stock available for issuance under the
Plan by 300,000 shares.
Since that time, the Company has continued to experience substantial
growth. At November 1, 1996, the Company had 307 full-time and 11 part-time
employees. The Company has granted options to approximately 26% of these
employees, effectively depleting the pool of options available for issuance. On
November 21, 1996 the Board of Directors adopted an amendment to the Plan,
subject to stockholder approval, to increase the number of shares of Common
Stock available for issuance under the Plan by 200,000 shares. In all other
respects, the Plan would remain unchanged. The Board of Directors believes that
the additional 200,000 shares, which represent approximately 3.2% of the
outstanding shares of Common Stock, are necessary for the Company to continue to
attract and retain the highly-qualified officers and employees necessary for its
future growth.
VOTE REQUIRED FOR APPROVAL
The proposed amendment of the Plan requires the vote of the holders of a
majority of the total votes cast on the proposal at the Annual Meeting. THE
BOARD OF DIRECTORS BELIEVES THAT THE PROPOSED AMENDMENT IS IN THE BEST INTEREST
OF THE COMPANY AND THEREFORE RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
AMENDMENT.
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<PAGE> 17
OTHER MATTERS
PRINCIPAL STOCKHOLDERS
The following table presents information as to the persons or entities
believed by the Company to be beneficial owners of more than 5% of the Company's
Common Stock on September 28, 1996 based on representations of officers and
directors of the Company and certain filings made under Section 13 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). All such
information was provided by the stockholders listed and reflects their
beneficial ownership as of the dates specified in the footnotes to the table.
<TABLE>
<CAPTION>
NO. OF SHARES
NAME AND ADDRESS BENEFICIALLY PERCENT
OF BENEFICIAL OWNER OWNED OF CLASS
------------------- ------------- --------
<S> <C> <C>
The Edgemont Asset....................................... 865,000 14.0%
Management Corporation(1)
17 Battery Place
Suite 2624
New York, New York 10004
Kopp Investment Advisors, Inc.(2)........................ 1,032,500 16.7%
6600 France Avenue South, Suite 672
Edina, MN 55435
Massachusetts Financial Services Company(2).............. 606,600 9.8%
500 Boylston Street
Boston, MA 02116
</TABLE>
- ---------------
(1) Based on information set forth in a Form 13F filed under the Exchange Act
for the quarter ended September 30, 1996. The Company has been informed by
The Edgemont Asset Management Corporation that it is the investment advisor
to the Kaufmann Fund.
(2) Based on information set forth in a Form 13F filed under the Exchange Act
for the quarter ended September 30, 1996.
INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Ernst & Young has served as the Company's
independent auditors since 1984. A representative of Ernst & Young will be
present at the Annual Meeting, will be given the opportunity to make a statement
if he so desires and will be available to respond to appropriate questions.
SOLICITATION OF PROXIES
The cost of solicitation of proxies in the form enclosed herewith will be
borne by the Company. In addition to the solicitation of proxies by mail, the
directors, officers and employees of the Company may also solicit proxies
personally or by telephone without special compensation for such activities. The
Company will also request persons, firms and corporations holding shares in
their names or in the names of their nominees, which are beneficially owned by
others, to send proxy materials to and obtain proxies from such beneficial
owners. The Company will reimburse such holders for their reasonable expenses.
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<PAGE> 18
STOCKHOLDER PROPOSALS
For a proposal of a stockholder to be included in the Company's proxy
statement for the Company's 1998 Annual Meeting, it must be received at the
principal executive offices of the Company on or before August 30, 1997. Such a
proposal must also comply with the requirements as to form and substance
established by the Securities and Exchange Commission for such a proposal to be
included in the proxy statement.
In addition, the Company's By-laws provide that any stockholder wishing to
nominate a director or have a stockholder proposal considered at an annual
meeting must provide written notice of such nomination or proposal and
appropriate supporting documentation, as set forth in the By-laws, to the
Company at its principal executive offices not less than 75 days nor more than
120 days prior to the anniversary of the immediately preceding annual meeting of
stockholders (the "Anniversary Date"); provided, however, that in the event that
the annual meeting is scheduled to be held more than 30 days prior to the
Anniversary Date, such nominations or proposals must be delivered to the Company
not later than 75 days prior to such earlier date if the Company has given 75
days prior notice or public disclosure of the scheduled date or ten days prior
to the earlier of the date on which notice of the meeting was mailed or the date
on which public disclosure is made, if the Company has not given 75 days prior
notice or public disclosure of the scheduled date, in order to be considered for
inclusion in the Company's proxy statement and form of proxy for that meeting.
Any such proposal should be mailed to: Zoll Medical Corporation, 32 Second
Avenue, Northwest Park, Burlington, Massachusetts 01803, Attention: Clerk.
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS IMPORTANT TO THE
COMPANY. PLEASE COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY CARD
TODAY.
16
<PAGE> 19
<TABLE>
<S> <C>
[X] PLEASE MARK VOTE
AS IN THIS EXAMPLE
1. Proposal to elect the following persons as Class II
Directors to serve until the 2000 Annual Meeting and With- For All
ZOLL MEDICAL until their successors are duly elected and qualified. For hold Except
CORPORATION
Willard M. Bright, Thomas M. Clafflin, II, and [ ] [ ] [ ]
M. Stephen Hellman
INSTRUCTION: To withhold authority to vote for any nominee, mark the "For All Except"
box and strike a line through the nominee's name in the list above.
For Against Abstain
RECORD DATE SHARES: 2. Proposal to approve the Company's Non-Employee
Directors' Stock Option Plan. [ ] [ ] [ ]
3. Proposal to amend the Company's 1992 Stock
Option Plan to increase the number of shares of [ ] [ ] [ ]
the Company's Common Stock subject to issuance
under the Plan.
The undersigned hereby acknowledge(s) receipt of a copy of the accompanying
Notice of Annual Meeting of Stockholders, the Proxy Statement with respect
thereto and the Company's 1996 Annual Report and hereby revoke(s) any proxy
or proxies heretofore given. This proxy may be revoked at any time before it is
exercised.
--------------------
Please be sure to sign and date this Proxy. Date
- ----------------------------------------------------------------- Mark box at right if an address change or comments [ ]
have been noted on the reverse side of this card.
- ----------------------------------------------------------------
Stockholder sign here Joint-owner sign here
- ------------------------------------------------------------------------------------------------------------------------------------
DETACH CARD DETACH CARD
ZOLL MEDICAL CORPORATION
Dear Stockholder,
Please take note of the important information regarding the Company's management and financial results enclosed with this
proxy card.
Your vote on these matters counts, and you are strongly encouraged to exercise your right to vote your shares.
Please mark on box for each proposal on the proxy card above to indicate how your shares should be voted. Then, sign and
date the card, detach it and return your proxy vote in the enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders to be held on February 4, 1997.
Thank you in advance for your prompt consideration of these matters, which will help the Company avoid the expense of
subsequent mailings.
Sincerely,
ZOLL MEDICAL CORPORATION
</TABLE>
<PAGE> 20
ZOLL MEDICAL CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 4, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Rolf S. Stutz and Richard A.
Parker, and each of them, as Proxies of the undersigned, with full power to
appoint their substitutes, and authorizes each of them to represent and to vote
all shares of Common Stock of Zoll Medical Corporation (the "Company") held by
the undersigned as of the close of business on December 13, 1996, at the Annual
Meeting of Stockholders to be held at State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110 on Tuesday, February 4, 1997, at
10:00 a.m., local time, and at any adjournments and postponements thereof.
WHEN PROPERLY EXECUTED THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR THE PROPOSALS SET FORTH ON THE REVERSE SIDE HEREOF, AND AT THE
PROXIES DISCRETION UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 1, "FOR"
PROPOSAL 2, AND "FOR" PROPOSAL 3. A STOCKHOLDER WISHING TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATION NEED ONLY SIGN AND DATE THIS PROXY
AND RETURN IT IN THE ENVELOPE PROVIDED.
----------------------------------------------------------------------------
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
----------------------------------------------------------------------------
Please sign this proxy exactly as your name appears on the books of the
Company. Joint owners should each sign personally. Trustees, custodians, and
other fiduciaries should indicate the capacity in which they sign, and where
more than one name appears, a majority must sign. If the shareholder is a
corporation, the signature should be that of an authorized officer who should
state his or her title.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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