<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:
--------------------------------------------------------------------------------
<PAGE> 2
ZOLL MEDICAL CORPORATION
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, FEBRUARY 8, 2001
------------------------
NOTICE IS HEREBY GIVEN that the 2001 Annual Meeting of Stockholders (the
"Annual Meeting") of Zoll Medical Corporation (the "Company") will be held on
Thursday, February 8, 2001 at 10:00 a.m. at Goodwin, Procter & Hoar LLP,
Exchange Place, Boston, Massachusetts 02109 for the following purposes:
1. To elect two Class III directors of the Company to serve until the
2004 Annual Meeting of Stockholders and until their respective successors
are duly elected and qualified; and
2. 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 29, 2000
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 8, 2001
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
------------------------
2001 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 8, 2001
January 8, 2001
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 2001 Annual Meeting of Stockholders of the Company to be held on
Thursday, February 8, 2001 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 two Class III
directors of the Company and (ii) 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 8, 2001. The
Board of Directors has fixed the close of business on December 29, 2000 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 8,805,133 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. Votes may be cast FOR or WITHHELD FROM each nominee. Votes cast FOR the
nominees will count as "yes votes"; votes that are WITHHELD FROM the nominees
will be excluded entirely from the vote and will have no effect. 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.
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
<PAGE> 4
BE VOTED FOR THE ELECTION OF THE TWO NOMINEES FOR CLASS III DIRECTORS OF THE
COMPANY NAMED IN THIS PROXY STATEMENT. IT IS NOT ANTICIPATED THAT ANY MATTER
OTHER THAN THAT 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. THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS A VOTE FOR THE NOMINEES.
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 2000 Annual Report, including the Company's audited financial
statements for the fiscal year ended September 30, 2000, 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 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. In February 2000, the Board
elected Benson F. Smith as a Class I Director to serve until the 2002 Annual
Meeting to fill a vacancy created by the death of a director of the Company.
At the Annual Meeting, two Class III directors will be elected to serve
until the 2004 Annual Meeting and until their successors are duly elected and
qualified. The Board of Directors has nominated Richard A. Packer and James W.
Biondi, M.D. for election as Class III 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 two
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 2002 and 2003 based on information furnished to the Company by
each director. The following information is as of September 30, 2000 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 III NOMINEES FOR ELECTION AT THE 2001 ANNUAL MEETING
Richard A. Packer..................................... 43 1996 59,050(2) *
Mr. Packer joined the Company in 1992 and in
November 1999, was appointed Chairman of the Board
of Directors and Chief Executive Officer. Mr. Packer
served as President, Chief Operating Officer and
Director from May 1996 to his appointment as CEO.
Since 1992 he has served as Chief Financial Officer
and Vice President of Operations of the Company.
From 1987 to 1992, Mr. Packer served as Vice
President of various functions for Whistler
Corporation, a consumer electronics Company. Prior
to this, Mr. Packer was a manager with the
consulting firm of PRTM/KPMG, specializing in
operations of high technology companies. Mr. Packer
is a director of Lifecor, Inc. Mr. Packer received
B.S. and M. Eng. degrees from the Rensselaer
Polytechnic Institute and an M.B.A. from the Harvard
Graduate School of Business Administration.
James W. Biondi, M.D.................................. 44 1999 3,500(3) *
Dr. Biondi has served as 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 Chairman of Ivy
Biomedical Systems, Inc.
CLASS I CONTINUING DIRECTORS -- TERM TO EXPIRE IN 2002
Daniel M. Mulvena..................................... 52 1998 5,000(4) *
Mr. Mulvena is the 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. and Cambridge Heart,
Inc.
Benson F. Smith....................................... 53 2000 0 *
Mr. Smith is a Senior Consultant at Gallup
Organization, a research organization. Mr Smith was
formerly President, Chief Operating Officer and a
member of the Board of Directors of C.R. Bard, Inc.
Mr. Smith worked at C.R. Bard, Inc. in various
capacities for 25 years until his retirement in
1998. Mr Smith currently serves as a board member
for a variety of academic and health-related
organizations.
</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 II CONTINUING DIRECTORS -- TERM TO EXPIRE IN 2003
Willard M. Bright, M.D................................ 86 1983 89,450(5) 1.0%
Dr. Bright previously served as Chairman of the
Board of Directors of the Company. Prior to joining
the Company, Dr. Bright served as 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.
Thomas M. Claflin, II................................. 59 1980 71,745(6) *
Mr. Claflin is a principal of Claflin Capital
Management, Inc., a venture capital firm, and
general partner of its venture capital partnerships.
M. Stephen Heilman, M.D............................... 67 1996 56,500(7) *
Dr. Heilman founded and has served as Chairman and
Chief Executive Officer of Lifecor, Inc., a medical
device company, since 1986. Dr. Heilman also founded
and has served as Chairman and Chief Executive
Officer of Vascor, Inc. since 1986 and also founded
Medrad Inc. in 1964. Dr. Heilman is a director of
SkyMark Corporation, Medrad Inc. and Precision
Therapeutics.
All directors and executive officers as
a group (11 persons)................................ 324,245(8) 3.7%
</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) Includes 45,750 shares of Common Stock issuable upon exercise of options
to purchase Common Stock which are exercisable within 60 days after
September 30, 2000. Does not include 71,250 options to purchase Common
Stock which are not exercisable within 60 days of September 30, 2000.
(3) Includes 2,500 shares of Common Stock issuable upon exercise of options to
purchase Common Stock which are exercisable within 60 days after September
30, 2000.
(4) Represents 5,000 shares of Common Stock issuable upon exercise of options
to purchase Common Stock which are exercisable within 60 days after
September 30, 2000.
(5) Represents 78,200 shares of Common Stock held by the Willard M. Bright
Revocable Inter Vivos Trust dated August 2, 1990 and 11,250 shares of
Common Stock issuable upon exercise of options to purchase Common Stock
which are exercisable within 60 days after September 30, 2000.
(6) 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, and
7,500 shares of Common Stock issuable upon exercise of options to purchase
Common Stock which are exercisable within 60 days after September 30,
2000.
(7) Includes 7,500 shares of Common Stock issuable upon exercise of options to
purchase Common Stock which are exercisable within 60 days after September
30, 2000.
(8) Includes 114,500 shares of Common Stock issuable upon exercise of options
to purchase Common Stock which are exercisable within 60 days after
September 30, 2000.
4
<PAGE> 7
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors of the Company held 7 meetings during the fiscal
year ended September 30, 2000. 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 Smith and Dr. Heilman.
Each of the members of the Audit Committee is independent as defined in the
National Association of Securities Dealers' listing standards. 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. The Board of Directors
has adopted a written charter for the Audit Committee, which is included as
Exhibit A to this Proxy Statement. During the fiscal year ended September 30,
2000, the Audit Committee held 3 meetings. The Audit Committee's report on the
Company's audited financial statements for the fiscal year ended September 30,
2000 appears elsewhere in this Proxy Statement.
The members of the Compensation Committee are Mr. Mulvena (Chairman) and
Dr. Biondi. The Compensation Committee reviews and approves the Company's
executive compensation and benefit policies, administers the Company's 1992
Stock Option Plan and the Non-Employee Directors' Stock Option Plan. During the
fiscal year ended September 30, 2000, the Compensation Committee held 2
meetings. 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 30, 2000, Dr. Bright received
$50,000 pursuant to this arrangement.
Non-Employee Directors' Stock Option Plan. The Company has adopted a
Non-Employee Directors' Stock Option Plan which provides that each Director of
the Company who is not also an employee of the Company will be granted options
to purchase 10,000 shares of the Company's Common Stock. Each Non-Employee
Director of the Company who served in such position on April 23, 1996, the
effective date of this Plan, received a grant of options as of that date. Each
Non-Employee Director who is first elected to the Board of Directors after that
date is automatically granted an option to purchase 10,000 shares of common
stock on the date such person is initially elected to the Board. The exercise
price of options granted under the Plan is equal to the fair market value of the
common stock on the date of grant. All options granted under the Plan vest in
four equal annual installments beginning on the first anniversary of the date of
grant.
5
<PAGE> 8
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth the aggregate
cash compensation paid by the Company with respect to the three fiscal years
ended September 30, 2000 to the Company's Chief Executive Officer and each of
the four other most highly compensated executive officers in fiscal year 2000
(collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SHARES
----------------------------------------- UNDERLYING
NAME AND OTHER ANNUAL OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) COMPENSATION($) GRANTED(#) COMPENSATION($)(2)
------------------ ---- --------- ----------- --------------- ------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Richard A. Packer............. 2000 237,500 120,000 -- 75,000 941
Chief Executive Officer 1999 205,000 90,000 -- 5,000 984
and President 1998 200,000 -- -- -- 960
A. Ernest Whiton(3)........... 2000 155,000 61,000 -- -- 614
Chief Financial Officer
and 1999 102,421 50,000 -- 40,000 492
Vice
President-Administration 1998 -- -- -- -- --
Donald Boucher................ 2000 147,000 38,250 582
Vice President-Research 1999 140,000 37,500 -- -- 672
and Development 1998 129,000 18,125 -- -- 619
Steven Flora.................. 2000 154,166 69,000 -- -- 610
Vice President-N.A. Sales 1999 145,000 125,000 59,281(4) -- 696
1998 12,083 -- -- 40,000 58
Ward M. Hamilton.............. 2000 147,000 40,000 -- -- 582
Vice President-Marketing 1999 140,000 45,000 -- -- 672
1998 135,000 21,250 -- -- 648
</TABLE>
---------------
(1) Amounts shown for each fiscal year include bonuses paid during the
succeeding fiscal year. Thus, the 1998 bonus includes an amount paid in
fiscal 1999 for fiscal 1998, the 1999 bonus includes an amount paid in
fiscal 2000 for fiscal 1999, and the 2000 bonus includes an amount paid in
fiscal 2001 for fiscal 2000.
(2) All Other Compensation reflects life insurance premiums paid by the
Company for the executive officers.
(3) Mr. Whiton joined the Company in 1999.
(4) Relocation expenses.
Option Grants in Last Fiscal Year. The following table sets forth certain
information regarding options granted during the fiscal year ended September 30,
2000 by the Company to the Named Executive Officers.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
INDIVIDUAL GRANTS AT ASSUMED
------------------------------------- ANNUAL RATES
% OF TOTAL OF STOCK PRICE
NUMBER OF OPTIONS APPRECIATION
SECURITIES GRANTED FOR OPTION
UNDERLYING TO EXERCISE OR TERM(1)
OPTIONS EMPLOYEES BASE PRICE EXPIRATION ---------------------
NAME GRANTED IN 2000 ($/SH) DATE 5%($) 10%($)
---- ------------- ---------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Richard A. Packer...................... 75,000 20% 38.25 11/15/09 1,804,141 4,572,049
</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.
6
<PAGE> 9
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 30, 2000 and stock
options held as of September 30, 2000 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>
Richard A. Packer................ 45,000 1,526,783 45,750 71,250 1,310,938 1,215,313
Ward Hamilton.................... 52,000 2,281,063 5,250 3,750 217,031 157,031
Donald Boucher................... 6,000 258,000 14,500 8,750 607,188 366,406
Steven Flora..................... 10,000 407,500 10,000 20,000 411,250 822,500
A. Ernest Whiton................. 4,750 183,766 5,250 30,000 205,734 1,175,625
</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
30, 2000 ($48.75), 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 30, 2000.
7
<PAGE> 10
STOCK PERFORMANCE CHART
The following chart provides an annual comparison, from September 30, 1995
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 CHASE H & Q HEALTHCARE (EXCLUDING BIOTECHNOLOGY) INDEX
[GRAPH OMITTED]
<TABLE>
<S> <C> <C> <C>
CHASE H & Q HEALTHCARE- EXCLUDING
ZOLL MEDICAL CORPORATION RUSSELL 2000 BIOTECHNOLOGY
100.00
9/95 100.00 100.00 122.39
9/96 165.33 113.13 146.78
9/97 74.67 150.68 150.09
9/98 80.67 122.03 150.60
9/99 322.67 145.30 223.04
9/00 520.00 161.60
</TABLE>
* $100 INVESTED ON 9/30/95 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
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.
8
<PAGE> 11
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 two non-employee directors. 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 in November, 1999 following
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. Mr.
Packer was awarded a bonus of $120,000 for fiscal 2000. In establishing this
bonus, the Compensation Committee considered Mr. Packer's success in meeting key
strategic goals and his oversight of operating and financial performance of the
Company. In fiscal 2000, Mr. Packer contributed to, among other things, the
success of the Company's proprietary Biphasic technology in the marketplace; the
addition of multiple key diagnostic features to the Company's M Series line of
products; the Company's successful public offering of shares of common stock in
February, 2000; and the acquisition of Pinpoint Technologies, a step that has
given the Company an opportunity to market a more complete information
management solution to the emergency medical services market.
Submitted by the Compensation
Committee for
fiscal 2000
DANIEL M. MULVENA, Chairman and
JAMES W. BIONDI, M.D.
9
<PAGE> 12
REPORT OF THE AUDIT COMMITTEE
The Audit Committee has reviewed and discussed the Company's audited
financials for the fiscal year ended September 30, 2000 with the Company's
management. The Audit Committee has discussed with Ernst & Young LLP, the
Company's independent auditors, the matters required to be discussed by
Statement on Auditing Standards No. 61. The Audit Committee has received the
written disclosures and the letter from Ernst & Young LLP required by
Independence Standards Board Standard No. 1 and discussed with Ernst & Young LLP
its independence. Based on the review and discussions described above, the Audit
Committee recommended to the Board of Directors that the Company's audited
financial statements be included in its Annual Report on Form 10-K for the
fiscal year ended September 30, 2000.
Submitted by the Audit Committee for
fiscal 2000
THOMAS M. CLAFLIN, II, Chairman
M. STEPHEN HEILMAN, M.D. and
BENSON F. SMITH
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
2000 base salary, Mr. Packer would be entitled to receive a severance payment of
approximately $240,000 upon termination.
Mr. Packer and Mr. Whiton each have a severance agreement with the Company
that may be triggered upon a change in control of the Company. Mr. Packer's
agreement provides for a severance payment if, within thirty-six months after a
change in control, the Company terminates his employment for any reason or Mr.
Packer resigns from the Company for any reason. In either case, Mr. Packer is
entitled to receive 2.5 times the sum of (i) his base salary and (ii) most
recent bonus paid prior to the change in control in one lump-sum payment, as
well as health and dental insurance coverage for thirty months after his
separation from the Company. Generally, if Mr. Whiton is terminated by the
Company without cause (as defined in his severance agreement) or resigns from
the Company for good reason (as defined in his severance agreement) within
twelve months after a change in control of the Company, the Company must pay Mr.
Whiton his base salary and most recent bonus in one lump-sum payment, as well as
provide him with health and dental insurance coverage for twelve months after
his separation from the Company.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
M. Stephen Heilman, M.D. 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 Dr. Heilman serving as a director of the Company, and a
representative of the Company serving as a director of Lifecor, Inc.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
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 September 30, 2000.
10
<PAGE> 13
OTHER MATTERS
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
The following table presents information regarding beneficial ownership of
the Company's Common Stock as of September 30, 2000 by (i) each of the Named
Executive Officers and (ii) the persons or entities believed by the Company to
be beneficial owners of more than 5% of the Company's Common Stock based on
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>
Richard A. Packer(1)................................... 59,050 *
A. Ernest Whiton(2).................................... 5,250 *
Donald Boucher (3)..................................... 14,500 *
Steven K. Flora(4)..................................... 14,000 *
Ward M. Hamilton(5).................................... 5,250 *
Kopp Investment Advisors, Inc.(6)...................... 1,071,925 12.2%
Pilgrim Baxter & Associates Ltd(7)..................... 502,600 5.7%
825 Duportail Road
Wayne, PA 19087
</TABLE>
---------------
* Less than 1%.
(1) Includes 45,750 shares of common stock issuable upon exercise of stock
options which are exercisable within 60 days after September 1, 2000. Does
not include options to purchase 71,250 shares of common stock which are not
exercisable within 60 days after September 30, 2000.
(2) Represents 5,250 shares of common stock issuable upon exercise of options
which are exercisable within 60 days after September 30, 2000. Does not
include options to purchase 30,000 shares of common stock which are not
exercisable within 60 days after September 30, 2000.
(3) Represents 14,500 shares of common stock issuable upon exercise of options
which are exercisable within 60 days after September 30, 2000. Does not
include options to purchase 8,750 shares of common stock which are not
exercisable within 60 days after September 30, 2000.
(4) Includes 10,000 shares of common stock issuable upon exercise of options
which are exercisable within 60 days after September 30, 2000. Does not
include options to purchase 20,000 shares of common stock which are not
exercisable within 60 days after September 30, 2000.
(5) Represents 5,250 shares of common stock issuable upon exercise of options
which are exercisable within 60 days after September 30, 2000. Does not
include options to purchase 3,750 shares of common stock which are not
exercisable within 60 days after September 30, 2000.
(6) Based on information set forth in a Schedule 13G filed under the Exchange
Act on August 3, 2000.
(7) Based on information set forth in a Schedule 13G/A filed under the Exchange
Act on January 7, 2000.
11
<PAGE> 14
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 or she 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 2002 Annual Meeting, it must be received at the
principal executive offices of the Company on or before September 10, 2001. 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 (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
EXHIBIT A
ZOLL MEDICAL CORPORATION
AUDIT COMMITTEE CHARTER
I. GENERAL STATEMENT OF PURPOSE
The Audit Committee of the Board of Directors (the "Audit Committee") of
ZOLL (the "Company") assists the Board of Directors (the "Board") in general
oversight and monitoring of management's and the independent auditor's
participation in the Company's financial reporting process and of the Company's
procedures for compliance with legal and regulatory requirements. The primary
objective of the Audit Committee in fulfilling these responsibilities is to
promote and preserve the integrity of the Company's financial statements and the
independence and performance of the Company's external independent auditor.
II. AUDIT COMMITTEE COMPOSITION
The Audit Committee shall consist of at least three members who shall be
appointed annually by the Board and shall satisfy the qualification requirements
set forth in Rule 4310 of the Marketplace Rules of the National Association of
Securities Dealers, Inc. The Board shall designate one member of the Audit
Committee to be Chairman of the committee.
III. MEETINGS
The Audit Committee generally is to meet two times per year in person or by
telephone conference call, with any additional meetings as deemed necessary by
the Audit Committee.
IV. AUDIT COMMITTEE ACTIVITIES
The principal activities of the Audit Committee will generally include the
following:
A. REVIEW OF CHARTER
- Review and reassess the adequacy of this Charter annually and submit
it to the Board for approval.
B. AUDITED FINANCIAL STATEMENTS AND ANNUAL AUDIT
- Review the overall audit plan with the independent auditor and the
members of management who are responsible for maintaining the
Company's accounts and preparing the Company's financial statements,
including the Company's Chief Financial Officer.
- Review and discuss with management (including the Company's Chief
Financial Officer) and with the independent auditor:
(i) the Company's annual audited financial statements, including any
significant financial reporting issues which have arisen in
connection with the preparation of such audited financial
statements;
(ii) the adequacy of the Company's internal financial reporting
controls that could significantly affect the integrity of the
Company's financial statements;
A-1
<PAGE> 16
(iii) major changes in and other questions regarding accounting and
auditing principles and procedures.
- Review and discuss with the independent auditor (outside of the
presence of management) how the independent auditor plans to handle
its responsibilities under the Private Securities Litigation Reform
Act of 1995, and receive assurance from the auditor that Section 10A
of the Private Securities Litigation Reform Act of 1995 has not been
implicated.
- Review and discuss with the independent auditor (outside of the
presence of management) any problems or difficulties that the auditor
may have encountered with management or others and any management
letter provided by the auditor and the Company's response to that
letter. This review shall include considering:
(i) any difficulties encountered by the auditor in the course of
performing its audit work, including any restrictions on the
scope of its activities or its access to information.
- Review and discuss major changes to the Company's auditing and
accounting principles and practices as may be suggested by the
independent auditor or management.
- Discuss with the independent auditor such issues as may be brought to
the Audit Committee's attention by the independent auditor pursuant to
Statement on Auditing Standards No. 61 ("SAS 61").
- Based on the Audit Committee's review and discussions (1) with
management of the audited financial statements, (2) with the
independent auditor of the matters required to be discussed by SAS 61,
and (3) with the independent auditor's concerning the independent
auditor's independence, make a recommendation to the Board as to
whether the Company's audited financial statements should be included
in the Company's annual Report on Form 10-K.
- Request that the independent auditor provide the Audit Committee with
the written disclosures and the letter required by Independence
Standards Board Standard No. 1, and review and discuss with the
independent auditor the independent auditor's independence.
- Prepare the Audit Committee report required by Item 306 of Regulation
S-K of the Securities Exchange Act of 1934 (or any successor
provision) to be included in the Company's annual proxy statement.
C. UNAUDITED QUARTERLY FINANCIAL STATEMENTS
- Review and discuss with management and the independent auditor the
Company's quarterly financial statements. Such review shall include
discussions by the Chairman of the Audit Committee or the Audit
Committee with the independent auditor of such issues as may be
brought to the Chairman's or Audit Committee's attention by the
independent auditor pursuant to Statement on Auditing Standards No.
71.
D. MATTERS RELATING TO SELECTION, PERFORMANCE AND INDEPENDENCE OF
INDEPENDENT AUDITOR
- Recommend to the Board the appointment of the independent auditor.
Instruct the independent auditor that the independent auditor's
ultimate accountability is to the Board and the Audit Committee "as
representatives of the Company's shareholders".
A-2
<PAGE> 17
- Evaluate on an annual basis the performance of the independent auditor
and, if necessary in the judgement of the Audit Committee, recommend
that the Board replace the independent auditor.
- Recommend to the Board on an annual basis the fees to be paid to the
independent auditor.
- Require that the independent auditor provide the Audit Committee with
periodic reports regarding the auditor's independence, which reports
shall include but not be limited to a formal written statement setting
forth all relationships between the independent auditor and the
Company or any of its officers or directors. The Audit Committee shall
discuss such reports with the independent auditor, and if necessary in
the judgment of the Audit Committee, the committee shall recommend
that the Board take appropriate action to ensure the independence of
the auditor or replace the auditor.
E. MATTERS RELATING TO THE INDEPENDENCE OF THE AUDIT COMMITTEE
- Periodically review the independence of each member of the Audit
Committee and promptly bring to the attention of management and the
Board any relationships or other matters that may in any way
compromise or adversely affect the independence of any member of the
Audit Committee or any member's ability to assist the Audit Committee
in fulfilling its responsibilities under this Charter, including any
such relationship or other matter that may have caused or may in the
future cause the Company to fail to comply with the requirements set
forth in Rule 4310 of the Marketplace Rules of the National
Association of Securities Dealers, Inc.
F. GENERAL
- The Audit Committee may be requested by the Board to review or
investigate on behalf of the Board activities of the Company or of its
employees, including compliance with laws, regulations or Company
policies.
- Perform such other oversight functions as may be requested by the
Board.
- In performing its responsibilities, the Audit Committee shall be
entitled to rely upon advice and information that it receives in its
discussions and communications with management and the independent
auditor. The Audit Committee shall have the authority to retain
special legal, accounting or other professionals to render advice to
the committee. The Audit Committee shall have the authority to request
that any officer or employee of the Company, the Company's outside
legal counsel, the Company's independent auditor or any other
professional retained by the Company to render advice to the Company
attend a meeting of the Audit Committee or meet with any members of or
advisors to the Audit Committee.
- Notwithstanding the responsibilities and powers of the Audit Committee
set forth in this Charter, the Audit Committee does not have the
responsibility of planning or conducting audits of the Company's
financial statements or determining whether or not the Company's
financial statements are complete, accurate and in accordance with
generally accepted accounting principles. Such responsibilities are
the duty of management and, to the extent of the independent auditor's
audit responsibilities, the independent auditor. It also is not the
duty of the Audit Committee to resolve disagreements, if any, between
management and the independent auditor or to ensure compliance with
laws, regulations or Company policies.
A-3
<PAGE> 18
ZOLCM-PS-2001
<PAGE> 19
ZOLL MEDICAL CORPORATION
C/O EQUISERVE
P.O. BOX 9398
BOSTON, MA 02205-9398
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 below 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, 2001.
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
DETACH HERE
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
1 Proposal to elect the following persons as Class III Directors to serve
until the 2004 Annual Meeting and until their successors are duly
elected and qualified.
Nominees: (01) RICHARD A. PACKER
(02) JAMES W. BIONDI, M.D.
FOR WITHHELD
ALL [ ] [ ] FROM ALL
NOMINEES NOMINEES
[ ] _________________________________________
For all nominees except as noted above
2 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.
Mark box at right if an address change or comment has been noted on the
reverse side of this card. [ ]
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 2000 Annual Report and hereby revokes any proxy
or proxies heretofore given. This proxy may be revoked at any time before
it is exercised.
Signature ________________ Date _______ Signature _________________ Date _______
<PAGE> 20
ZOLL MEDICAL CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 8, 2001
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 29, 2000, at the Annual
Meeting of Stockholders to be held at Goodwin, Procter & Hoar LLP, Exchange
Place, Boston, Massachusetts 02109 on Thursday, February 8, 2001, 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 two nominees for Class III Directors. The Board of
Directors recommends a vote "FOR" Proposal 1. 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 AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE.
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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.
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HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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