<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 [X] 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)
Zoll Medical Corporation
(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:
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<PAGE> 2
ZOLL MEDICAL CORPORATION
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, FEBRUARY 8, 2000
------------------------
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Stockholders (the
"Annual Meeting") of Zoll Medical Corporation (the "Company") will be held on
Tuesday, February 8, 2000 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
2003 Annual Meeting of Stockholders and until their respective successors
are duly elected and qualified;
2. 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 335,000 shares, or approximately 4.9% of the
total number of shares outstanding; and
3. 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 28, 1999
as the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting and at any adjournments or postponements thereof.
Stockholders of record of the Company's common stock, par value $.02 per share,
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
Raymond C. Zemlin, Clerk
Burlington, Massachusetts
January 10, 2000
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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.
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<PAGE> 3
ZOLL MEDICAL CORPORATION
32 SECOND AVENUE
NORTHWEST PARK
BURLINGTON, MASSACHUSETTS 01803
------------------------
PROXY STATEMENT
------------------------
2000 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 8, 2000
January 10, 2000
GENERAL INFORMATION
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 2000 Annual Meeting of Stockholders of the Company to be held on
Tuesday, February 8, 2000 at 10:00 a.m., 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 amendment to the Company's 1992 Stock Option
Plan (the "Plan"); and (iii) any other matters properly brought before the
Annual Meeting.
VOTING
This Proxy Statement and the accompanying Notice of Annual Meeting and
Proxy Card are first being sent to stockholders on or about January 10, 2000.
The Board of Directors has fixed the close of business on December 28, 1999 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 6,843,809 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. Directors are elected by a plurality of the votes cast at the Annual
Meeting. The affirmative vote of a majority of the total votes cast on the
proposal to amend the Plan is required to approve 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 or the 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 STATEMENT AND
FOR THE APPROVAL OF THE AMENDMENT TO THE PLAN. IT IS NOT ANTICIPATED THAT ANY
MATTERS OTHER THAN THOSE SET FORTH IN
<PAGE> 4
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 1999 Annual Report, including the Company's audited financial
statements for the fiscal year ended October 2, 1999, 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 currently comprised of six 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. The recent deaths of Rolf Stutz and
Noah Herndon, two former directors, have created two vacancies on the Board. The
Board expects that it will consider candidates to fill such vacancies at such
time as appropriate candidates are identified.
At the Annual Meeting, three Class II directors will be elected to serve
until the 2003 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.
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 2001 and 2002 based on information furnished to the Company by
each director. The following information is as of October 2, 1999 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 2000 ANNUAL MEETING
Willard M. Bright..................................... 85 1983 159,200(2) 2.3%
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.
</TABLE>
2
<PAGE> 5
<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>
Thomas M. Claflin, II................................. 58 1980 69,245(3) 1.0%
Principal of Claflin Capital Management, Inc., a
venture capital firm, and General Partner of its
venture capital partnerships.
M. Stephen Heilman.................................... 66 1996 54,000(4) *
Founder, Chairman and Chief Executive Officer of
Lifecor, Inc., a medical device company, since 1986.
Founder, Chairman and Chief Executive Officer of
Vascor, Inc. since 1986. Mr. Heilman is a director
of SkyMark Corporation, Medrad Inc. and Precision
Therapeutics.
CLASS III CONTINUING DIRECTORS -- TERM TO EXPIRE IN 2001
Richard A. Packer..................................... 42 1996 71,550(5) 1.0%
Chief Executive Officer and Chairman of the Company
since 1999 and President of the Company since 1996.
During 1996, he served as Chief Financial Officer of
the Company. From 1992 to 1996 he served as the
Company's Vice President of Operations. Prior to
1992, he was Vice President of various functions at
Whistler Corporation, a consumer electronics
company.
James W. Biondi, M.D. ................................ 43 1999 1,000 *
Chairman of Cardiopulmonary Corp. since its founding
in 1988, and Chief Executive Officer and President
since 1992. Cardipulmonary Corp. designs, develops,
and assembles advanced software driven ventilators
used for the treatment of anesthesia and intensive
care patients. Since 1992, Dr. Biondi has been an
Adjunct Assistant Professor of Medicine at Yale
University School of Medicine. Dr. Biondi also
serves as director of Ivy Biomedical Systems, Inc.
and Imagyn Medical Technologies, Inc.
CLASS I CONTINUING DIRECTOR -- TERM TO EXPIRE IN 2002
Daniel M. Mulvena..................................... 51 1998 2,500(6) *
Owner of Commodore Associates, Inc., a consulting
company. From 1992 to 1995, Mr. Mulvena was a Group
Vice President of Boston Scientific Corporation. Mr.
Mulvena serves as Chairman of the Board of Directors
of Echo-cath, Inc. and Magna Lab, Inc. He is also a
director of Thoratec Laboratories, Inc.
All directors and executive officers as a group (10 472,795 6.9%
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 151,700 shares of Common Stock held by the Willard M. Bright
Revocable Inter Vivos Trust dated August 2, 1990 and 7,500 shares of Common
Stock issuable upon exercise of options to purchase Common Stock which are
exercisable within 60 days after October 2, 1999.
3
<PAGE> 6
(3) Includes 229 shares of Common Stock held by Mr. Claflin's spouse and 3,278
shares held by various Claflin Capital Management, Inc. partnership
entities, as to which Mr. Claflin disclaims beneficial ownership, and 5,000
shares of Common Stock issuable upon exercise of options to purchase Common
Stock which are exercisable within 60 days after October 2, 1999.
(4) Includes 5,000 shares of Common Stock issuable upon exercise of options to
purchase Common Stock which are exercisable within 60 days after October 2,
1999.
(5) Includes 58,250 shares of Common Stock issuable upon exercise of options to
purchase Common Stock which are exercisable within 60 days after October 2,
1999. Does not include 28,750 options to purchase Common Stock which are
not exercisable within 60 days of October 2, 1999.
(6) Includes 2,500 shares of Common Stock subject to stock options which are
exercisable within 60 days of October 2, 1999.
(7) Includes 189,750 shares of Common Stock issuable upon exercise of options
to purchase Common Stock which are exercisable within 60 days after October
2, 1999.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors of the Company held 6 meetings during the fiscal
year ended October 2, 1999. Each of the directors attended more than 75% of the
aggregate of the total number of meetings of the Board of Directors and of the
committees of which he was a member which were held during the period he was a
director or committee member.
The Company has standing Audit and Compensation Committees. The members of
the Audit Committee are Messrs. Claflin (as Chairman), and Heilman and Dr.
Biondi. 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 October 2, 1999, the Audit Committee held 2
meetings.
The only current member of the Compensation Committee is Mr. Mulvena
(Chairman). We are currently in the process of identifying a member of the Board
to fill the position on the Compensation Committee created upon the death of Mr.
Herndon, the former Chairman of the Compensation Committee. 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 October 2, 1999, the Compensation Committee
held one 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 October 2, 1999, Dr. Bright received
$50,000 pursuant to this arrangement.
4
<PAGE> 7
Non-Employee Directors' Stock Option Plan. The Company has adopted a
Non-Employee Directors' Stock Option Plan which provides that each Director of
the Company who is not also an employee of the Company will be granted options
to purchase 10,000 shares of the Company's Common Stock. Each Non-Employee
Director of the Company who served in such position on April 23, 1996, the
effective date of this Plan, received a grant of options as of that date. Each
Non-Employee Director who is elected to the Board of Directors after that date
is automatically granted an option to purchase 10,000 shares of common stock on
the date such person is initially elected to the Board. The exercise price of
options granted under the Plan is equal to the fair market value of the common
stock on the date of grant. All options granted under the Plan vest in four
equal annual installments beginning on the first anniversary of the date of
grant.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth the aggregate
cash compensation paid by the Company with respect to the three fiscal years
ended October 2, 1999 to the Company's Chief Executive Officer and each of the
four other most highly compensated executive officers in fiscal 1999
(collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION -----------------
----------------------------------------- SHARES UNDERLYING
NAME AND OTHER ANNUAL OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($)(2) COMPENSATION($) GRANTED(#) COMPENSATION($)(3)
- ------------------ ---- --------- ----------- --------------- ----------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Rolf S. Stutz (1).................. 1999 267,000 90,000 4,900(4) 5,000 1,284
Chairman and Chief 1998 260,000 -- 4,800(4) -- 1,248
Executive Officer 1997 250,000 15,000 4,800(4) 10,000 1,200
Richard A. Packer (1).............. 1999 205,000 90,000 -- 5,000 984
Chief Executive Officer 1998 200,000 -- -- -- 960
and President 1997 180,000 15,000 -- 10,000 864
Ward M. Hamilton................... 1999 140,000 45,000 -- -- 672
Vice President-Marketing 1998 135,000 21,250 -- -- 648
1997 125,000 5,000 -- 5,000 600
Donald Boucher..................... 1999 140,000 37,500 -- -- 672
Vice President-Research 1998 129,000 18,125 -- -- 619
and Development 1997 129,000 5,000 -- 5,000 619
Steven Flora (5)................... 1999 145,000 125,000 59,281(6) -- 696
Vice-President-Sales and 1998 12,083 -- -- 40,000 58
Marketing 1997 -- -- -- -- --
</TABLE>
- ---------------
(1) Mr. Rolf Stutz was our Chief Executive Officer until his death in November
1999. Mr. Richard Packer, who has been serving as President of the Company
since 1996, replaced Mr. Stutz as Chief Executive Officer.
(2) Amounts shown for each fiscal year include bonuses paid during the
succeeding fiscal year. Thus, the 1998 bonus includes an amount paid in
fiscal 1999 for fiscal 1998 and the 1999 bonus includes an amount paid in
fiscal 2000 for fiscal 1999.
(3) All Other Compensation reflects life insurance premiums paid by the Company
for the executive officers.
(4) Car allowance of $400 per month (one month at $500 in 1999).
(5) Mr. Flora joined the company in 1998.
(6) Relocation expenses.
5
<PAGE> 8
Option Grants in Last Fiscal Year. The following table sets forth certain
information regarding options granted during the fiscal year ended October 2,
1999 by the Company to the Named Executive Officers.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
INDIVIDUAL GRANTS AT ASSUMED
------------------------------------- ANNUAL RATES
% OF TOTAL OF STOCK PRICE
NUMBER OF OPTIONS APPRECIATION
SECURITIES GRANTED FOR OPTION
UNDERLYING TO EXERCISE OR TERM(1)
OPTIONS EMPLOYEES BASE PRICE EXPIRATION ----------------
NAME GRANTED IN 1999 ($/SH) DATE 5%($) 10%($)
- ---- ---------- ---------- ----------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Rolf S. Stutz............................... 5,000 2% 8.25 11/18/2008 25,942 65,742
Richard A. Packer........................... 5,000 2% 8.25 11/18/2008 25,942 65,742
Ward M. Hamilton............................ 0 -- -- -- -- --
Donald Boucher.............................. 0 -- -- -- -- --
Steven Flora................................ 0 -- -- -- -- --
</TABLE>
- ---------------
(1) Represents the value of the options granted at the end of the option terms
if the price of the Company's Common Stock 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.
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 October 2, 1999 and stock options
held as of October 2, 1999 by the Chief Executive Officer and each Named
Executive Officer.
<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............... 0 0 36,250 38,750 813,906 866,719
Richard A. Packer........... 0 0 58,250 28,750 1,248,906 641,719
Steven Flora................ 0 0 10,000 30,000 217,500 652,500
Ward M. Hamilton............ 0 0 53,500 7,500 1,317,500 168,750
Donald Boucher.............. 17,750 82,969 11,750 17,500 258,750 393,750
</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 October 2,
1999 ($29.375), 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 October 2, 1999.
6
<PAGE> 9
STOCK PERFORMANCE CHART
The following chart provides an annual comparison, from September 30, 1994
of the cumulative total shareholder return (assuming reinvestment of any
dividends) among Zoll Medical Corporation, the Russell 2000 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 Russell 2000 Index covers a broad cross-section of public
companies, many of which have relatively small market capitalizations. The
historical information set forth below is not necessarily indicative of future
performance.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
AMONG ZOLL MEDICAL CORPORATION, THE RUSSELL 2000 INDEX
AND THE HAMBRECHT & QUIST HEALTHCARE-EXCLUDING BIOTECHNOLOGY INDEX
[GRAPH OMITTED]
<TABLE>
<CAPTION>
HAMBRECHT & QUIST
HEALTHCARE-
ZOLL MEDICAL EXCLUDING
CORPORATION RUSSELL 2000 BIOTECHNOLOGY
------------ ------------ -----------------
<S> <C> <C> <C>
9/94 100.00 100.00 100.00
9/95 101.00 123.00 175.00
9/96 168.00 140.00 192.00
9/97 76.00 186.00 287.00
9/98 82.00 154.00 267.00
9/99 327.00 177.00 514.00
</TABLE>
* $100 INVESTED ON 9/30/94 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING SEPTEMBER 30.
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
7
<PAGE> 10
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 for each executive for the following twelve months. 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 is currently composed of one non-employee director. We are
currently in the process of identifying a member of the Board to fill the
position on the Compensation Committee created upon the death of Mr. Herndon,
the former Chairman of the Compensation Committee. The Compensation Committee
meets periodically, 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.
Factors Considered in Setting Compensation of the Chief Executive Officer
and President. Mr. Packer, who has served as President of the Company since
1996, became Chief Executive Officer and Chairman upon the death of Mr. Rolf
Stutz. Mr. Packer has an employment agreement with the Company providing for a
base salary which was increased to $240,000 in connection with Mr. Packer's
appointment as Chief Executive Officer in November, 1999. In addition, at the
same time Mr. Packer was awarded options to purchase 75,000 shares in order to
provide him with additional long-term incentives tied to the Company's
performance. The Compensation Committee considers the Company's financial
performance, as measured by sales and earnings growth, to be a significant
determinant in Mr. Packer'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.
Compensation Decisions for Chief Executive Officer and President. The
Compensation Committee recognizes that during fiscal 1998 both Mr. Stutz and Mr.
Packer contributed substantially to, among other things, the development and
introduction of the new M Series line of products and the management of the
Company's proprietary bi-phasic waveform. Based on the successful launch of the
M Series line of products and the Company's strong performance as reflected in
both its operating results and its stock performance relative to the companies
that comprise the Russell 2000 Index and the H&Q Healthcare (excluding
biotechnology) Index, Mr. Stutz and Mr. Packer were each awarded bonuses of
$90,000 for fiscal 1999.
Submitted by the Compensation
Committee for fiscal 1999
DANIEL M. MULVENA, Chairman
8
<PAGE> 11
SEVERANCE ARRANGEMENTS
Mr. Packer has an employment agreement with the Company providing for a
severance payment of twelve months' salary in the event his employment is
terminated by the Company without cause. The Agreement provides for
non-competition for a period of three years following termination. At his fiscal
1999 base salary, Mr. Packer would be entitled to receive a severance payment of
approximately $630,000 upon termination.
CERTAIN 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 Mr. Heilman serving as a director of the Company, and Mr. Heilman
voted in favor of Mr. Stutz being elected to Lifecor, Inc.'s board of directors.
On January 7, 1999, the Company entered into an agreement with Elliott
Associates, L.P. ("Elliott") and Westgate International, L.P. ("Westgate"),
shareholders of the Company who together owned approximately 15.4% of the
Company's Common Stock as of such date. Pursuant to the terms of the agreement,
Elliott and Westgate proposed, and the Company agreed, that the Board of
Directors would be expanded to eight members and Dr. James W. Biondi would be
elected as a Class III Director to fill the resulting vacancy. On January 7,
1999, Dr. Biondi joined the Board of Directors as a Class III Director. Elliott
and Westgate are no longer significant shareholders of the Company.
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, as amended (the "Exchange Act"), during the
fiscal year ended October 2, 1999, with the following exception: M. Stephen
Heilman filed a report after the applicable deadline to report the sales of a
portion of his shares.
PROPOSAL 2
AMENDMENT TO 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 in 1992, 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
9
<PAGE> 12
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. In November, 1996, the Plan was
amended, with the approval of the stockholders of the Company, to add 200,000
more shares to the Plan. In November, 1998, the Plan was again amended, with the
approval of stockholders of the Company, to add 300,000 more shares to the Plan.
As of October 2, 1999, the Company had 423 full-time and six part-time
employees. The Company has granted options to approximately 28% of these
employees and in October, 1999 granted options to purchase 170,000 shares in
connection with the acquisition of Pinpoint Technologies, Inc., effectively
depleting the pool of options available for issuance. On November 15, 1999 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 335,000 shares. In all other respects, the Plan would
remain unchanged. The Board of Directors believes that the additional 335,000
shares, which represent approximately 4.9% 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 affirmative 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.
10
<PAGE> 13
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 October 2, 1999 based on representations of officers and
directors of the Company and certain filings made under Section 13 of 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 PERCENT
NAME AND ADDRESS BENEFICIALLY OF
OF BENEFICIAL OWNER OWNED CLASS
- ------------------- ------------- -------
<S> <C> <C>
The Kaufmann Fund, Inc.(1)............................... 910,900 13.3%
140 E. 45th St., 43rd Floor
Suite 2624
New York, New York 10017
Wellington Management Company, LLP(2).................... 630,700 9.2%
75 State Street
Boston, Massachusetts 02109
Dimensional Fund Advisors Inc.(3)........................ 415,200 6.1%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
</TABLE>
- ---------------
(1) Based on information set forth in a Schedule 13G/A filed under the Exchange
Act on February 18, 1998.
(2) Based on information set forth in a Schedule 13G filed under the Exchange
Act on August 10, 1999.
(3) Based on information set forth in a Schedule 13G filed under the Exchange
Act on February 11, 1999.
INDEPENDENT AUDITORS
The accounting firm of Ernst & Young LLP has served as the Company's
independent auditors since 1984. A representative of Ernst & Young LLP 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.
STOCKHOLDER PROPOSALS
For a proposal of a stockholder to be included in the Company's proxy
statement for the Company's 2001 Annual Meeting, it must be received at the
principal executive offices of the Company on or before September 12, 2000. 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.
11
<PAGE> 14
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 (a) not less than 75 calendar days
nor more than 120 calendar days prior to the anniversary date of the immediately
preceding annual meeting of stockholders or special meeting in lieu thereof (the
"Anniversary Date") or (b) in the case of a special meeting of stockholders in
lieu of the annual meeting or in the event that the annual meeting of
stockholders is called for a date more than 30 calendar days prior to the
Anniversary Date, not later than the close of business on (i) the 10th calendar
day (or if that day is not a business day for the corporation, on the next
succeeding business day) following the earlier of (1) the date on which notice
of the date of such meeting was mailed to stockholders, or (2) the date on which
the date of such meeting was publicly disclosed, or (ii) if such date of notice
or public disclosure occurs more than 75 calendar days prior to the scheduled
date of such meeting, the 75th calendar day prior to such scheduled date of such
meeting (or if that day is not a business day for the corporation, on the next
succeeding business day). 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.
12
<PAGE> 15
<TABLE>
<CAPTION>
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
<S> <C>
================================================================= 1. Proposal to elect the following
persons as Class II Directors
ZOLL MEDICAL CORPORATION to serve until the 2003 Annual
Meeting and until their successors
================================================================= are duly elected and qualified. For All With- For All
Nominees Hold Except
Mark box at right if an address change or comment has been (01) DR. WILLARD M. BRIGHT
noted on the reverse side of this card. [ ] (02) THOMAS M. CLAFFLIN II [ ] [ ] [ ]
(03) M. STEPHEN HEILMAN
INSTRUCTION: To withhold authority to vote for any nominee,
mark the "For All Except" box and strike a line through the
CONTROL NUMBER: name(s) of the nominee(s) in the list above.
RECORD DATE SHARES:
For Against Abstain
2. To amend the Company's 1992 Stock
Option Plan to increase the number of [ ] [ ] [ ]
shares available for issuance under
the Plan by 335,000 shares.
3. In their discretion, the proxies are authorized to vote upon
any other business that may properly come before the meeting
or at any adjournment(s) thereof.
--------------------
Please be sure to sign and date this Proxy. Date
- ----------------------------------------------------------------- The undersigned hereby acknowledges receipt of a copy of the
accompanying Notice of Annual Meeting of Stockholders, the
Proxy Statement with respect thereto and the Company's 1999
Annual Report and hereby revokes any proxy or proxies
heretofore given. This proxy may be revoked at any time before
- --------Stockholder sign here----------Co-owner sign here-------- it is exercised.
DETACH CARD DETACH CARD
</TABLE>
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 one 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 February 8, 2000.
Thank you in advance for your prompt consideration of these matters. This will
help the Company avoid the expense of subsequent mailings.
Sincerely,
ZOLL MEDICAL CORPORATION
<PAGE> 16
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 8, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Richard A. Packer and Willard M.
Bright 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 28, 1999, 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 8, 2000, at
10:00 a.m., local time, and at any adjournments or postponements thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE THREE NOMINEES FOR CLASS II DIRECTORS AND FOR THE
APPROVAL OF THE AMENDMENT TO THE PLAN 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 AND "FOR" PROPOSAL 2. 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, DATE AND SIGN ON REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE SIGN THIS PROXY EXACTLY AS YOUR NAME(S) APPEAR(S) ON THE BOOKS OF THE
COMPANY. JOINT OWNERS SHOULD EACH SIGN PERSONALLY. TRUSTEES AND OTHER
FIDUCIARIES SHOULD INDICATE THE CAPACITY IN WHICH THEY SIGN, AND WHERE MORE THAN
ONE NAME APPEARS, A MAJORITY MUST SIGN. IF A CORPORATION, THIS SIGNATURE SHOULD
BE THAT OF AN AUTHORIZED OFFICER WHO SHOULD STATE HIS OR HER TITLE.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
______________________________________ ________________________________________
______________________________________ ________________________________________
______________________________________ ________________________________________
