<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
STRATEGIC DIAGNOSTICS INC.
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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>
STRATEGIC DIAGNOSTICS INC.
111 Pencader Drive
Newark, Delaware 19702
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, APRIL 28, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Strategic Diagnostics Inc. (the "Company") will be held at the
Christiana Hilton, 100 Continental Drive, Newark, Delaware 19713, on Tuesday,
April 28, 1998 at 10:00 a.m. for the following purposes:
1. To elect three Class II directors of the Company to serve for a
two-year term until the 2000 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 Meeting and at any adjournments or postponements
thereof.
Any action may be taken on the foregoing matters at the Meeting on the date
specified above, or on any date or dates to which, by original or later
adjournment, the Meeting may be adjourned, or to which the Meeting may be
postponed.
The Board of Directors has fixed the close of business on March 12, 1998 as
the record date for determining the stockholders entitled to notice of and to
vote at the Meeting and at any adjournments or postponements thereof. Only
stockholders of record of the Company's Common Stock and Series A Preferred
Stock at the close of business on that date will be entitled to notice of and to
vote at the Meeting and at any adjournments or postponements thereof.
You are requested to fill in 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 Meeting may vote in
person, even if they have previously delivered a signed proxy.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Martha C. Reider
-----------------------------------
Martha C. Reider
Secretary
Newark, Delaware
March 31, 1998
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 MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF
YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
<PAGE>
STRATEGIC DIAGNOSTICS INC.
111 Pencader Drive
Newark, Delaware 19702
- --------------------------------------------------------------------------------
PROXY STATEMENT
- --------------------------------------------------------------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of Strategic Diagnostics Inc.
(the "Company") for use at the Annual Meeting of Stockholders of the Company to
be held on Tuesday, April 28, 1998, and at any adjournments or postponements
thereof (the "Meeting"). At the Meeting, stockholders will be asked to vote upon
the election of three Class II directors of the Company and to act upon any
other matters properly brought before them.
This Proxy Statement and the accompanying Notice of Annual Meeting and
Proxy Card are first being sent to stockholders on or about March 31, 1998. The
Board has fixed the close of business on March 12, 1998 as the record date for
the determination of stockholders entitled to notice of and to vote at the
Meeting (the "Record Date"). Only stockholders of record of the Company's Common
Stock and Series A Preferred Stock (collectively, the "Stock") at the close of
business on the Record Date will be entitled to notice of and to vote at the
Meeting. As of the Record Date, there were 13,180,058 shares of Common Stock and
2,164,362 shares of Series A Preferred Stock outstanding and entitled to vote at
the Meeting. Holders of the 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 the Stock entitled to vote is
necessary to constitute a quorum for the transaction of business at the Meeting.
Abstentions and broker non-votes are each included in the number of shares
present at the Meeting for purposes of establishing a quorum. The affirmative
vote of the holders of a plurality of the shares of the Stock present or
represented at the Meeting is required for the election of Class II directors
and thus, abstentions and broker non-votes have no effect on the outcome of the
election of directors.
Stockholders of the Company are requested to complete, sign, date 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 Meeting and not revoked will be voted at the 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. It is not anticipated
that any matters other than those set forth in this Proxy Statement will be
presented at the Meeting. If other matters are presented, proxies will be voted
in accordance with the discretion of the proxy holders.
A stockholder of record as of the Record Date may revoke a proxy at any
time before it has been exercised by filing a written revocation with the
Secretary 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 Meeting. Any stockholder of record as of the Record Date
attending the 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 Meeting will not constitute revocation of a previously given proxy.
1
<PAGE>
STOCK OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table presents, as of March 12, 1998, information as to (i)
the persons or entities known to the Company to be beneficial owners of more
than 5% of the Company's Common Stock and the Series A Preferred Stock, each as
a class, on March 12, 1998, (ii) each director, (iii) each of the named officers
appearing in the Summary Compensation Table under "Executive Compensation"
below, and (iv) all directors and officers of the Company as a group, based on
representations of officers and directors of the Company and filings received by
the Company on Schedule 13G under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). As of such date, the Company had 13,180,058 shares
of Common Stock issued and outstanding and 2,164,362 shares of Series A
Preferred Stock issued and outstanding. The number of shares and the percentage
beneficially owned by the persons or entities named in the table and by all
officers and directors as a group is presented in accordance with Rule 13d-3 of
the Exchange Act and includes, in addition to shares issued and outstanding,
unissued shares which are subject to issuance upon exercise of options or
warrants within 60 days of March 12, 1998. The address of the individual
beneficial owners is in care of the Company at its address listed on the first
page of this Proxy Statement.
<TABLE>
<CAPTION>
No. of Shares Percent of
Beneficially Owned(1) Class
--------------------------- -------------------------
Series A Series A
Name and Address of Beneficial Owner Common Preferred Common Preferred
- ------------------------------------ ------ --------- ------ ---------
<S> <C> <C> <C> <C>
Palo Alto Investors, Inc.
431 Florence Street, Suite 200
Palo Alto, California 94302 2,265,780 -- 17.2% --
The Perkin-Elmer Corporation
761 Main Avenue
Norwalk, Connecticut 06859 1,308,724 -- 9.9% --
DSV Partners IV
221 Nassau Street
Princeton, New Jersey 08542(4) 182,157 1,082,181 1.4% 50.0%
Edison Venture Fund II, L.P.
997 Lenox Drive #3
Lawrenceville, New Jersey 08648(4) 156,500 907,636 1.2% 41.9%
Edison Venture Fund II-PA, L.P.
997 Lenox Drive #3
Lawrenceville, New Jersey 08648(4) 30,095 174,545 8.1%
Grover C. Wrenn 454,000(8) -- 3.4% --
Richard C. Birkmeyer 1,971,906(9) -- 14.8% --
Richard J. Defieux(10) 201,595 1,082,181 1.5% 50.0%
Robert E. Finnigan 56,600(11) -- * --
Stephen 0. Jaeger 1,324,924(12) -- 10.0% --
Kathleen E. Lamb 569,931(13) -- 4.3% --
Curtis Lee Smith 41,000(14) -- --
Anne F. Cavanaugh 604,827(15) -- 4.6% --
Arthur A. Koch, Jr 25,000(14) -- --
Martha C. Reider 541,470(15) -- 4.1% --
James W. Stave 104,907(14) -- --
AU Officers and Directors
as a group (II persons)(10) 5,896,160(16) 1,082,181 42.2% 50.0%
</TABLE>
- ----------------------
* Represents less than 1%.
2
<PAGE>
(1) Unless otherwise indicated, each of the stockholders has sole voting and
investment power with respect to the securities shown to be owned by such
stockholder. The inclusion herein of securities listed as beneficially
owned does not constitute an admission of beneficial ownership.
(2) Ownership of these shares was reported to the Company on Schedule 13G dated
February 12, 1998.
(3) Ownership of these shares was reported to the Company on Schedule 13D dated
January 9, 1997.
(4) Ownership of these shares was reported to the Company on Schedule 13D dated
January 9, 1997. Shares of Series A Preferred Stock are convertible into an
equal number of shares of Common Stock.
(5) Includes 156,358 shares underlying exercisable warrants.
(6) Includes 131,140 shares underlying exercisable warrants.
(7) Includes 25,218 shares underlying exercisable warrants.
(8) Includes 200,000 shares of Common Stock underlying exercisable options.
(9) Includes 100,661 shares underlying exercisable options.
(10) Shares of Common Stock represent shares owned and 171,358 shares of Common
Stock underlying exercisable warrants and options. Of such amount, 15,000
shares of Common Stock underlie exercisable options owned by Mr. Defieux
individually. Mr. Defieux is a General Partner of Edison Partners II, L.P.,
the General Partner of Edison Venture Fund II, L.P. and Edison Venture Fund
II-PA, L.P. Mr. Defieux shares voting and investment powers with the other
general partners of Edison Partners II, L.P. with respect to the shares
owned by such funds. Mr. Defieux disclaims beneficial ownership of shares
held by such funds except as to his proportionate partnership interest
therein. Shares of Series A Preferred Stock are convertible into an equal
number of shares of Common Stock.
(11) Includes 51,000 shares subject to exercisable options and 5,600 shares
owned jointly with Dr. Finnigan's wife.
(12) Includes 1,308,724 shares held by The Perkin-Elmer Corporation
("Perkin-Elmer") and 15,000 shares subject to exercisable options. Mr.
Jaeger, the Perkin-Elmer designee to the Company's Board of Directors, is
the Executive Vice President, Chief Financial Officer and a director of
Clinical Communications Group Inc. and has agreed to advise Perkin-Elmer
on matters concerning the Company, including matters requiring a vote of
the shares. Accordingly, Mr. Jaeger is deemed to share voting and
dispositive control, and therefore to have beneficial ownership of the
Company's Common Stock held by Perkin-Elmer. Mr. Jaeger disclaims
beneficial ownership of the shares owned by Perkin-Elmer.
(13) Ms. Lamb is the Vice President of Finance of EM Science, Inc., a division
of EM Industries, Inc. As such, she is deemed to share voting and
dispositive control, and therefore to have beneficial ownership of the
Company's Common Stock held by EM Industries, Inc. Ms. Lamb owns
exercisable options to purchase 15,000 shares of Common Stock. Ms. Lamb
disclaims beneficial ownership of the shares held by EM Industries, Inc.
(14) Consists of shares underlying exercisable options.
(15) Includes 30,362 shares underlying exercisable options.
(16) Includes 628,292 shares subject to exercisable options, 5,600 shares owned
jointly by Dr. Finnigan and his wife and 156,358 shares underlying
exercisable warrants.
3
<PAGE>
ELECTION OF A CLASS OF DIRECTORS
The Company is the entity resulting from the merger (the "Merger") of EnSys
Environmental Products, Inc. ("EnSys"), and Strategic Diagnostics Inc., a
privately held company ("SDI"), which occurred on December 30, 1996 pursuant to
an Agreement and Plan of Merger between such parties (the "Merger Agreement").
EnSys was the surviving entity and changed its name to Strategic Diagnostics
Inc. Upon consummation of the Merger, Mr. Birkmeyer and the other officers of
SDI became officers of the Company and Mr. Wrenn became its Chairman. The
Company's Fourth Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation") which was effective concurrently with the
consummation of the Merger on December 30, 1996, provides that the Board will
consist of seven members, three initially selected by EnSys (Messrs. Wrenn,
Finnigan and Smith), three initially selected by SDI (Messrs. Birkmeyer and
Defieux and Ms. Lamb) and the remaining member (Mr. Jaeger) initially selected
by Perkin-Elmer. The Merger Agreement and the Company's By-Laws require the
Company to nominate the Class II directors identified below for election at the
Meeting. The Board is divided into two classes of directors with each director
serving a two-year term. Each year only one class of directors is subject to a
stockholder vote. Three Class II directors will be elected each to a two-year
term at the Meeting. The members of Class I are Grover C. Wrenn, Richard C.
Birkmeyer, Kathleen E. Lamb and Curtis Lee Smith, Jr.; and of Class II are
Richard J. Defieux, Robert E. Finnigan and Stephen O. Jaeger. The Class I
members of the Board are not standing for election and their terms expire in
1999. Richard J. Defieux, Robert E. Finnigan, Ph.D. and Stephen O. Jaeger are
the Class II nominees for election to the Board at the Meeting. Such nominees if
elected, will hold office until the annual meeting in 2000 and until their
successor is duly elected and qualified. The affirmative vote of a plurality of
the shares of the Stock present or represented at the Meeting and entitled to
vote is required for the election of the Class II Directors. Unless otherwise
instructed, the persons named in the accompanying proxy will vote "FOR" the
election of Richard J. Defieux, Robert E. Finnigan and Stephen O. Jaeger as
Class II Directors. The following table sets forth the name, age and principal
occupation of each director, including the nominees, and the year in which he or
she became a director.
<TABLE>
<CAPTION>
Director
Name And Principal Occupation Age Since
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Grover C. Wrenn 55 1992
Chairman of the Board; Previously Chief Executive Officer of EnSys
Richard C. Birkmeyer 44 1996
President and Chief Executive Officer of the Company
Richard J. Defieux(1) 46 1996
General Partner of Edison Partners, L.P.
Robert E. Finnigan, Ph.D.(1) 70 1991
Consultant
Kathleen E. Lamb 52 1996
Vice President of Finance of EM Science, Inc.
Curtis Lee Smith, Jr 70 1991
Chief Executive Officer of New Horizons Worldwide, Inc.
Stephen O. Jaeger(1) 53 1996
Executive Vice President and Chief Financial Officer
Clinical Communications Group Inc.
</TABLE>
- ----------
(1) A nominee for election to the Board of Directors.
4
<PAGE>
BACKGROUND OF DIRECTORS
Grover C. Wrenn, age 55, has served as Chairman of the Board since December
1996. Mr. Wrenn has served as Chairman, President and Chief Executive Officer of
Better Health Network, a privately-held communications and marketing firm, since
November 1996. Prior thereto, Mr. Wrenn served as President and Chief Executive
Officer of EnSys from April 1995. Prior to being appointed its President and
CEO, Mr. Wrenn had served as a director of EnSys since 1992. From 1993 until
February 1995, Mr. Wrenn served as President, Chief Executive Officer and a
director of Applied Bioscience International, Inc. Mr. Wrenn is a director of
Laidlaw Environmental Services, Inc., a publicly-held provider of hazardous and
industrial waste management services to industry and government. Mr. Wrenn is
also a director of Pharmakinetics Laboratories, Inc., a publicly-held contract
research organization. Mr. Wrenn also serves as Chairman of the Board of
Trustees of Eckerd College, a director of the University of North Carolina
Public Health Foundation, and a director of the Environmental Law Institute.
Richard C. Birkmeyer, age 44, cofounded SDI in 1990 and served as its
President and Chief Executive Officer and as a director since inception. On
December 30, 1996, Mr. Birkmeyer was appointed a director of the Company and
became its president and Chief Executive Officer. Prior to founding SDI, Mr.
Birkmeyer was employed by E.I. duPont de Nemours from 1983 to 1990, where he had
most recently served as a product manager. Mr. Birkmeyer received a Ph.D. in
Biochemistry/Immunology from the State University of New York at Binghamton and
his B.S. in Biology from the State University of New York at Plattsburgh. In
addition, Mr. Birkmeyer completed post-doctoral research in immunogenetics at
Iowa State University.
Richard J. Defieux, age 46, served as a director of SDI since 1993 and was
appointed as a director of the Company on December 30, 1996. Mr. Defieux is a
General Partner of Edison Partners, L.P., which is the general partner of Edison
Venture Fund, L.P., a private venture capital fund. Since 1990, Mr. Defieux has
also been a general partner of Edison Partners II, L.P., which is the general
partner of Edison Venture Fund II, L.P., and Edison Venture Fund II-PA, L.P.,
and since 1994, a general partner of Edison Partners III, L.P., which is the
general partner of Edison Venture Fund III, L.P. Prior to joining Edison in
1987, Mr. Defieux was a General Partner of Princeton/Montrose Partners, a
venture capital firm. Mr. Defieux has been a director of Liberty Technologies,
Inc., since 1987. Mr. Defieux received his B.A. and M.A. degrees in Geology from
Boston University and his M.B.A. from Columbia University.
Robert E. Finnigan, age 70, has served as a director of EnSys since 1991.
Dr. Finnigan was a member of the Scientific Advisory Board of EnSys and is a
consultant to several analytical instrument manufacturers. From 1967 to 1990,
Dr. Finnigan served in various executive roles and as a director at Finnigan
Corporation, an analytical instrument manufacturer. He is a director of
ThermoSpectra Corporation, a publicly owned subsidiary of Thermo Instrument
Systems, Inc. and is an advisor to Hambrecht & Quist's Environmental Technology
Fund.
Kathleen E. Lamb, age 52, served as a director of SDI since 1996 and was
appointed as a director of the Company on December 30, 1996. Since 1991, Ms.
Lamb has been Vice President of Finance of EM Science, Inc. and, from May 1996
through 1997, served as General Manager of OEM Marketing for EM Science, Inc., a
division of EM Industries, Inc. which is an affiliate of Merck KGaA, Darmstadt,
Germany. Prior to joining EM Science, Inc., Ms. Lamb was the Vice President of
Finance for EM Diagnostics Systems. She is also a member of the Board of
Directors of M.E. Gordon & Associates and has taught finance courses at Rowan
College in New Jersey. Ms. Lamb received her B.S. in Accounting and M.B.A from
Drexel University.
Curtis Lee Smith, Jr., age 70, has served as a director of EnSys since
1991. Mr. Smith served as Chairman of the Board and Chief Executive Officer of
Handex Corp., an environmental consulting and remediation company, from 1986 to
1996. He is now Chairman of the Board and Chief Executive Officer of New
Horizons Worldwide, Inc., an owner and franchisor of computer training centers.
Stephen O. Jaeger, age 53, served as a director of SDI since August 1996
and was appointed as a director of the Company on December 30, 1996. Mr. Jaeger
has been Executive Vice President and Chief Financial Officer of Clinical
Communications Group Inc., a privately-held provider of outsourced educational
marketing services to the pharmaceutical industry, since January 1998. Prior
thereto Mr. Jaeger had been Vice President and Chief Financial Officer of
Perkin-Elmer since 1995, and since 1996 had also been its Treasurer. From 1987
to 1995, Mr. Jaeger was employed by Houghton Mifflin and Company, most recently
as Executive Vice President, Chief Financial Officer and Treasurer, and served
on its board of directors. Mr. Jaeger is also a director of Inso Corporation.
5
<PAGE>
Compensation of Directors
Directors are entitled to receive compensation for their services as
determined by a majority of the Board. However, directors that are employees,
and who receive compensation for their services as such, are not entitled to
receive any compensation for their services as a director of the Company. Board
members are entitled to reimbursement for travel related expenses incurred in
attending meetings of the Board and its committees. On May 20, 1997, pursuant to
the Company's 1995 Stock Option Plan, each non-employee director except the
Chairman of the Board received a non-qualified stock option to purchase 45,000
shares of Common Stock at an exercise price of $1.875 per share. The Company
entered into an agreement as of December 30, 1996, (the "New Agreement") with
Mr. Wrenn in his capacity as Chairman of the Board which, except as to certain
enumerated provisions, terminated a previous employment agreement of April 11,
1995 between him and EnSys. The New Agreement provides for minimum annual
compensation of $80,000, and participation in the Company's employee benefit
plans and practices, including contributions to a 401(k) account and certain
insurance benefits. To the extent that Mr. Wrenn is called upon to render
services to the Company in excess of eight days per month, he will be entitled
to proportional additional compensation based on an annualized rate of $200,000
which, together with his minimum compensation, will not exceed $200,000 per
year. Mr. Wrenn's compensation is subject to annual increases as determined by
the Compensation Committee of the Board. Additionally, pursuant to the New
Agreement, Mr. Wrenn received a stock option grant for 100,000 shares of Common
Stock with an exercise price of $2.00 per share, which vests at a rate of
twenty-five percent on the date of grant and twenty-five percent on each
subsequent annual anniversary of the grant date. Under the surviving provisions
of his previous employment agreement, Mr. Wrenn received his previous salary and
certain other benefits for the one year period ending December 31, 1997.
Meetings of The Board Of Directors and Committees
The board of directors of the Company held five meetings during the fiscal
year ended December 31, 1997. Each of the directors attended at least 75% of the
aggregate of the total number of meetings of the board of directors of the
Company and of the committees of which he or she was a member which were held
during the period he or she was a director or committee member. The Audit
Committee of the Company's board of directors held three meetings in 1997. The
members of the Audit Committee were Mr. Jaeger, Ms. Lamb and Mr. Smith. The
Audit Committee recommends outside accountants, reviews the results and scope of
the annual audit and the services provided by the Company's independent auditors
and the recommendations of the auditors with respect to the accounting systems
and controls. The Compensation Committee of the Company's board of directors met
once in 1997. The members of the Compensation Committee were Mr. Wrenn, Mr.
Defieux and Dr. Finnigan. The Compensation Committee reviews and approves
salaries for all corporate officers, reviews and approves all incentive and
special compensation plans and programs, including stock options and related
longer term incentive compensation programs, reviews and approves management
succession planning, conducts special competitive studies, retains compensation
consultants as necessary and appropriate, and recommends appropriate programs
and action on any of the above matters to the Board. The Board selects nominees
for election as directors of the Company. The Board 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.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors to file initial reports of ownership and reports of change of
ownership with the Securities and Exchange Commission (the "SEC"). The Company
has a program to assist its officers and directors in complying with the filing
requirements of Section 16(a). Executive officers and directors are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file. Based on a review of the copies of such forms furnished to the
Company and other information gathered by the Company, the Company believes that
during the preceding year the executive officers and directors then subject to
Section 16(a) complied with all Section 16(a) filing requirements.
6
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth certain
compensation information for each of the last three fiscal years with respect to
(i) the Company's Chief Executive Officer and (ii) each of the Company's four
other most highly compensated officers based on salary and bonus paid during
1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
All
Long-Term Other
Annual Compensation Compensation Compensation
------------------- ------------ ------------
Securities
Underlying
Name and Principal Position Year Salary($) Bonus($) Options(#) Amount($)
--------------------------- ---- --------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Grover C. Wrenn (1) 1997 80,000 -- -- 170,123
Chairman, Previous President 1996 157,500 117,688 100,000 14,834
and CEO of EnSys 1995 107,917(2) -- 150,000 --
Richard C. Birkmeyer (3) 1997 164,000 64,500 -- 10,150
President & CEO 1996 -- -- 100,000 --
Arthur A. Koch, Jr. (4) 1997 124,100 43,500 100,000 2,250
Vice President and CFO 1996 --
Anne F. Cavanaugh (5) 1997 103,350 25,000 60,000 8,478
Vice President, 1996 --
Corporate Development
Martha C. Reider (6) 1997 101,200 20,000 60,000 8,433
Vice President, Manufacturing 1996
James W. Stave, Ph.D. (7) 1997 99,600 20,000 60,000 8,381
Vice President, 1996 --
Research & Development
</TABLE>
(1) Effective December 30, 1996, Mr. Wrenn resigned as President and Chief
Executive Officer and was appointed Chairman. All Other Compensation
consists of $4,750 in Company contributions to Mr. Wrenn's 401(k) account;
and $7,873 in premium payments on a long term disability policy and
$157,500 attributable to a severance payment, both in accordance with Mr.
Wrenn's prior employment agreement paid in 1997.
(2) Mr. Wrenn's employment as President and Chief Executive Officer of EnSys
commenced on April 11, 1995.
(3) Mr. Birkmeyer's employment as President and Chief Executive Officer of the
Company commenced on December 30, 1996. All other compensation consists of
$4,750 in Company contributions to Mr. Birkmeyer's 401(k) account and
$5,400 for an automobile allowance.
(4) Mr. Koch's employment commenced April 14, 1997. All other compensation
consists of an automobile allowance.
(5) Ms. Cavanaugh's employment with the Company commenced upon consummation of
the merger on December 30, 1996. Prior thereto Ms. Cavanaugh held a similar
position at SDI where she had been employed since the company's founding in
1990. All other compensation consists of $5,400 for an automobile allowance
and $3,078 in Company contributions to Ms. Cavanaugh's 401(k) account.
(6) Ms. Reider's employment with the Company commenced upon consummation of the
merger on December 30, 1996. Prior thereto Ms. Reider held a similar
position at SDI where she had been employed since the company's founding in
1990. All other compensation consists of $5,400 for an automobile allowance
and $3,033 in Company contributions to Ms. Reider's 401(k) account.
7
<PAGE>
(7) Dr. Stave's employment with the Company commenced upon consummation of the
merger on December 30, 1996. Prior thereto Dr. Stave held a similar
position at SDI where he had been employed since 1991. All other
compensation consists of $5,400 for an automobile allowance and $2,981 in
Company contributions to Dr. Stave's 401(k) account.
Option Grants and Exercises in Fiscal Year 1997. The following tables
summarize option grants and exercises during 1997 to or by the officers named in
the Summary Compensation Table. In accordance with SEC rules, also shown are the
hypothetical gains or "option spreads," on a pre-tax basis, that would exist for
the respective options. These gains are based on assumed rate of annual compound
stock appreciation of 5% and 10% from the date the options were granted over the
full option term.
OPTION GRANTS IN FISCAL YEAR 1997
<TABLE>
<CAPTION>
Potential Realizable Value
Individual Grants Under the Company's at Assumed Annual Rates of
Amended and Restated 1995 Stock Option Plan Stock Price Appreciation
------------------------------------------------------------ -----------------------------------
Number of Percent of
Securities Total Options
Underlying Granted to Exercise 5% for 10% for
Options Employees in Price per Expiration Option Option
Name Granted Fiscal Year (%) Share Date Term ($) Term ($)
- -------------------- ---------- ---------------- ----------- ------------ --------- --------
<S> <C> <C> <C> <C> <C> <C>
Arthur A. Koch, Jr. 100,000(1) 18.3% $1.875 4/14/07 117,918 298,827
Anne F. Cavanuagh 60,000(2) 11.0% $1.875 5/20/07 70,751 179,296
Martha C. Reider 60,000(2) 11.0% $1.875 5/20/07 70,751 179,296
James W. Stave 60,000(3) 11.0% $1.875 5/20/07 70,751 179,296
</TABLE>
(1) Options were granted April 14, 1997 and will become exercisable at a rate
of 25% on January 1, 1998 and 25% annually on each January 1 thereafter.
(2) Options were granted on May 20, 1997 and will become exercisable at a rate
of 25% on January 1, 1998 and 25% annually on each January 1 thereafter.
(3) Options were granted May 20, 1997 and will become exercisable at a rate of
25% on October 1, 1998 and 25% annually on each October 1 thereafter.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1997
AND FISCAL YEAR-END OPTION VALUES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options
Shares Year-End (#) at Fiscal Year-End ($) (1)
Acquired on Value ------------------------------- ------------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Grover C. Wrenn -- -- 200,000 50,000 12,500 12,500
Richard C. Birkmeyer -- -- 100,661 50,000 116,862 12,500
Arthur A. Koch, Jr. -- -- 25,000 75,000 9,375 28,125
Anne F. Cavanaugh -- -- 30,362 45,000 37,271 16,875
Martha C. Reider -- -- 30,362 45,000 37,271 16,875
James W. Stave -- -- 104,907 45,000 190,833 16,875
</TABLE>
(1) Value is calculated based on the difference between the option exercise
price and the market price of the Common Stock on December 31, 1997
($2.25), multiplied by the number of shares to which the option relates.
8
<PAGE>
Executive Employment Agreements
The Company maintains an employment agreement dated as of December 30, 1996
with Mr. Birkmeyer, which provides for compensation at an annual rate of
$164,000 with annual increases of not less than 5% of the then current salary as
determined by the Compensation Committee. Additionally, Mr. Birkmeyer is
entitled to an annual bonus as determined by the Compensation Committee not to
exceed 75% of his then current salary. This agreement also grants Mr. Birkmeyer
an option to purchase 100,000 shares of the Company's Common Stock, which option
becomes exercisable at a rate of 25% immediately and 25% annually thereafter on
the three successive option grant date anniversaries. Such option vests
immediately upon a change of control of the Company (as defined in Section 12 of
the Company's Amended and Restated 1995 Stock Option Plan). This agreement was
for an initial one year term and is automatically extended for subsequent one
year terms unless otherwise terminated by Mr. Birkmeyer or the Board by giving
not less than 60 days written notice. Mr. Birkmeyer will be entitled to receive
salary and benefits then in effect for one year after termination of the
agreement by Mr. Birkmeyer for good reason (as defined in the agreement) or by
the Company without cause.
Certain Relationships and Related Transactions
Rodney Hilton was the former President and Chief Executive Officer of
Ohmicron Corporation. He resigned from such position effective August 30, 1996
in connection with the merger of Ohmicron Corporation with SDI. During 1997, the
Company paid $185,000 to Mr. Hilton in severance payments.
On May 20, 1997, options to purchase 45,000 shares of Common Stock with
exercise prices of $1.875 per share were granted to Messrs. Defieux, Finnigan
and Jaeger, each of whom is a director of the Company and a nominee for election
at the Meeting, and to Ms. Lamb and Mr. Smith each of whom is a director.
Report Of The Compensation Committee
The Compensation Committee of the Board of Directors is comprised of three
directors. The Compensation Committee determines the compensation for the Chief
Executive Officer and reviews the recommendations of the Chief Executive Officer
and approves salaries for all other corporate officers, reviews and approves all
incentive and special compensation plans and programs, including stock options
and related longer term incentive compensation programs, reviews and approves
management succession planning, conducts special competitive studies, retains
compensation consultants as necessary and appropriate, and recommends
appropriate programs and action on any of the above matters to the Board.
Compensation Philosophy
The Company approaches compensation for all its employees, including senior
management, with a consistent philosophy. This philosophy is based on the
premise that the achievements of the Company result from the coordinated efforts
of all individuals working toward common objectives. The Company strives to
achieve those objectives through teamwork that is focused on meeting the
expectations of customers and stockholders.
The goals of the compensation program are to align compensation with business
objectives and performance, and to enable the Company to attract, retain and
reward executive officers whose contributions are critical to the long-term
success of the Company. The Company's compensation program for executive
officers is based on the same four principles applicable to compensation
decisions for all employees of the Company:
* The Company pays competitively.
The Company is committed to maintaining a pay program that helps
attract and retain the best people in the industry. To ensure that pay
is competitive, the Company regularly compares its pay practices with
those of other comparable companies and sets its pay parameters based
on this review.
* The Company pays for sustained performance.
Executive officers are rewarded based upon corporate performance,
business unit performance and individual performance. Corporate
performance and business unit performance are evaluated by
9
<PAGE>
reviewing the extent to which strategic and business plan goals are
met, including such factors as profitability, performance relative to
competitors and timely new product introductions. Individual
performance is evaluated by reviewing organizational and management
development progress against set objectives and the degree to which
teamwork and Company values are fostered.
* The Company strives for fairness in the administration of pay.
The Company strives to compensate a particular individual equitably
compared to other executives at similar levels both inside the Company
and at comparable companies.
* The Company strives to provide incentives designed to maximize
stockholder value.
Compensation Vehicles
The Company uses a total compensation program that consists of cash (salary
and bonus) and equity-based compensation. Having a compensation program that
allows the Company to attract and retain key employees permits it to provide
useful products and services to customers, enhance stockholder value, motivate
technological innovation, foster teamwork, and adequately reward employees. The
vehicles are:
Cash-based Compensation
Salary
The Company establishes salary ranges for employees by reviewing the
aggregate of base salary and annual bonus for competitive positions in the
market against that individual's overall performance, which is measured against
his or her individual responsibilities and strategic objectives for the year.
In both setting goals and measuring all executive officers' performance
against those goals, the Company takes into account the performance of its
competitors and general economic and market conditions. None of the factors
included in the Company's strategic and business goals is assigned a specific
weight. Instead, the Company recognizes that these factors may change in order
to adapt to specific business challenges and to changing economic and
marketplace conditions.
Bonus
The Company pays bonuses based upon the Company's financial performance and
on the Committee's subjective determination of the executive officer's
individual performance. For fiscal 1997, the Compensation Committee established
corporate performance goals for net sales and profitability. Individual
management goals were set for each executive depending on his or her individual
responsibilities and strategic objectives for the year.
Equity-based Compensation
Stock Incentive Program
The purpose of this program is to provide additional incentives to senior
management to work to maximize stockholder value. The Company also recognizes
that a stock incentive program is a necessary element of a competitive
compensation package for its senior managers. The program utilizes vesting
periods to encourage such employees to continue in the employ of the Company and
thereby acts as a retention device for its senior managers. The Company believes
that the program encourages senior managers to maintain a long-term perspective.
In determining the size of an option award for an executive officer, the
Compensation Committee reviews such individual's performance against the
criteria described above and considers the number of outstanding unvested
options which the officer holds and the size of previous option awards to that
individual. The Compensation Committee does not assign specific weights to these
items.
Corporate Tax Deduction on Compensation in Excess of $1 Million a Year
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation in excess of $1
million paid to the Company's Chief Executive Officer or any of the four
10
<PAGE>
other most highly compensated executive officers. Certain performance-based
compensation, however, is specifically exempt from the deduction limit. The
Company's current policy is to structure the performance-based portion of
compensation of its executive officers in a manner that complies with this
provision.
Chief Executive Officer Compensation
Richard C. Birkmeyer has been President and Chief Executive Officer of the
Company since December 30, 1996. The Compensation Committee used the same
compensation policy described above for all employees to determine Mr.
Birkmeyer's fiscal 1997 compensation.
In setting both the cash-based and equity-based elements of Mr. Birkmeyer'
s compensation, the Compensation Committee made an overall assessment of Mr.
Birkmeyer's leadership in achieving the Company's long-term strategic and
business goals. The Compensation Committee assessed the importance of Mr.
Birkmeyer to the continued growth and development of the Company, his increased
responsibility as a result of several recent acquisitions, his expertise in the
industry, his management skills and ability to implement the Company's strategic
plans, his efforts to assemble a highly qualified executive management team for
the Company and the achievement of various strategic milestones. The
Compensation Committee does not assign specific weights to these categories.
Base Salary
Mr. Birkmeyer's base salary for 1997 pursuant to his employment agreement
dated December 30, 1996 was $164,000, which reflects a consideration of
competitive forces. Pursuant to such agreement, Mr. Birkmeyer is entitled to
annual increases of not less than 5% of his then current salary as determined by
the Committee. Based on its evaluation of the factors listed above, The
Compensation Committee increased Mr. Birkmeyer's base salary by 10% to $180,000
for fiscal year 1998.
Bonus
Pursuant to his employment agreement, Mr. Birkmeyer is entitled to an
annual bonus as determined by the Committee, not to exceed 75% of his then
current salary.
Based on its evaluation of the factors listed above, the Compensation
Committee granted Mr. Birkmeyer a cash-bonus for 1997 equal to $61,500.
Stock Options
The Company follows the same policy described above for other executive
officers, to determine Mr. Birkmeyer's stock incentive awards. Stock options are
granted to encourage and facilitate stock ownership by the executive officers
and thus strengthen both their personal commitment to the Company and a longer
term perspective in their managerial responsibilities. This component of an
executive officer's compensation directly links the officers' interest with
those of the Company's other stockholders.
In light of his existing stock holdings and stock options, no additional
options were granted to Mr. Birkmeyer during 1997.
COMPENSATION COMMITTEE
Richard J. Defieux
Robert E. Finnigan
Grover C. Wrenn
11
<PAGE>
OTHER MATTERS
Independent Auditors
The accounting firm of Arthur Andersen LLP has served as the Company's
independent auditors since January 1997. A representative of Arthur Andersen LLP
will be present at the Meeting, will be given the opportunity to make a
statement if he or she desires and will be available to respond to appropriate
questions. KPMG Peat Marwick LLP was EnSys' principal accounting firm and was
dismissed by the Board in January 1997 and replaced by Arthur Andersen LLP,
which was SDI's principal accounting firm. KPMG Peat Marwick LLP's reports on
the financial statements of EnSys for the past two years contained no adverse
opinion or disclaimer of opinion nor were such reports qualified or modified as
to uncertainty, audit scope, or accounting principles. Furthermore, during the
past two years, there were no disagreements with KPMG Peat Marwick LLP on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure. A representative of KPMG Peat Marwick LLP will not
be present at the Meeting.
Stockholder Proposals
The proxy rules of the SEC permit stockholders, after timely notice to
issuers, to present proposals for stockholder action in issuer proxy statements
where such proposals are consistent with applicable law, pertain to matters
appropriate for stockholder action and are not properly omitted by issuer action
in accordance with the proxy rules. Under applicable SEC rules, such proposals
must be received by the Company no later than December 1, 1998 to be considered
for inclusion in the Company's proxy materials relating to the 1999 Annual
Meeting.
General
The Board knows of no matter other than the foregoing to be brought before
the Meeting. However, the enclosed proxy gives discretionary authority in the
event any additional matters should be properly presented.
The Company's 1997 Annual Report, including financial statements for the
fiscal year ended December 31, 1997, accompanies this Proxy Statement. The
Company will provide free of charge to any stockholder from whom a proxy is
solicited pursuant to this Proxy Statement, upon written request from such
stockholder, a copy of the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997 which was filed with the SEC. Requests for such
report should be directed to Strategic Diagnostics Inc., 111 Pencader Drive,
Newark, Delaware 19702, Attention: Arthur A. Koch, Jr. Vice President and Chief
Financial Officer.
The accompanying proxy is solicited by and on behalf of the Board, whose
notice of meeting is attached to this Proxy Statement. The entire cost of such
solicitation will be borne by the Company. In addition to the use of the mails,
proxies may be solicited by personal interview, telephone or telegram by
directors, officers and other employees of the Company who will not be specially
compensated for these services. Additionally, the Company will request that
brokers, nominees, custodians and other fiduciaries forward soliciting materials
to the beneficial owners of shares held of record by such brokers, nominees,
custodians and other fiduciaries. The Company will reimburse such persons for
their reasonable expenses in connection therewith.
Certain information contained in this Proxy Statement relating to the
occupation and security holdings of the directors and officers of the Company is
based upon information received from the individual directors and officers.
PLEASE DATE, SIGN AND RETURN THE PROXY CARD AT YOUR EARLIEST CONVENIENCE IN THE
ENCLOSED RETURN ENVELOPE.
STRATEGIC DIAGNOSTICS INC.
Newark, Delaware
March 31, 1998
12
<PAGE>
STRATEGIC DIAGNOSTICS INC.
111 Pencader Drive
Newark, Delaware 19702
Annual Meeting of Stockholders - April 28, 1998
Proxy Solicited on Behalf of the Board of Directors
The undersigned, revoking all prior proxies, hereby appoints Kathleen E. Lamb
and Richard C. Birkmeyer as Proxies, with full power of substitution to each, to
vote for and on behalf of the undersigned at the 1997 Annual Meeting of
Stockholders of STRATEGIC DIAGNOSTICS INC. to be held at the Christiana Hilton,
100 Continental Drive, Newark, Delaware 19713, on Tuesday, April 28, 1997, at
10:00 a.m. local time, and at any adjournment or adjournments thereof. The
undersigned hereby directs the said proxies to vote in accordance with their
judgment on any matters which may properly come before the Annual Meeting, all
as written in the Notice of Annual Meeting, receipt of which is hereby
acknowledged, and to act on the following matters set forth in such notice as
specified by the undersigned.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE
UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED
"FOR" PROPOSAL 1.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
Please sign exactly as your name(s) appear(s) on the books of the Company. Joint
owners should each sign personally. Trustees, custodians, and other fiduciaries
should indicate the capacity in which they sign, and where more than one name
appears, a majority must sign. If the stockholder is a corporation, the
signature should be that of an authorized officer who should indicate his or her
title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
X PLEASE MARK VOTES AS IN THIS EXAMPLE
STRATEGIC DIAGNOSTICS INC.
1. Election of Class II Directors
With- For All
For held Except
Richard J. Defieux [ ] [ ] [ ]
Robert E. Finnigan
Stephen O. Jaeger
NOTE: If you do not wish your shares voted "For" a particular nominee, mark the
"For All Except" box and strike a line through the nominee's (s') name(s). Your
shares will be voted for the remaining nominee(s). RECORD DATE SHARES:
In their discretion, the proxies are authorized to vote upon any other business
that may properly come before the meeting or at any adjournment thereof.
Date
Please be sure to sign and date this Proxy. ________
__________________________________ Mark box at right if an address change or
comment Stockholder sign here Co-owner sign here has been noted on the reverse
side of this card.
- --------------------------------------------------------------------------------
DETACH CARD DETACH CARD
STRATEGIC DIAGNOSTICS INC.
Dear Stockholder,
Please take note of the important information regarding the Company's management
and financial results enclosed with this Proxy Ballot. Your vote on the election
of the Company's directors counts and you are strongly encouraged to exercise
your right to vote your shares. Please mark the boxes on this proxy card to
indicate how your shares will be voted. Then sign 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 on April 28, 1998. Thank
you in advance for your prompt consideration of these matters. Sincerely,
Strategic Diagnostics Inc.
