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. )
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Filed by a Party other than the Registrant |_|
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|_| 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 ss.240.14a-11(c) or ss.240.14a-12
Strategic Diagnostics Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
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<PAGE>
STRATEGIC DIAGNOSTICS INC.
111 Pencader Drive
Newark, Delaware 19702
---------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on Wednesday, April 26, 2000
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 Wednesday,
April 26, 2000 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 2002 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 13, 2000
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 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,
Martha C. Reider
Secretary
Newark, Delaware
March 30, 2000
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 Wednesday, April 26, 2000, and at any adjournments or postponements
thereof (the "Meeting"). At the Meeting, stockholders will be asked to vote upon
(i) the election of three Class II directors of the Company and (ii) 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 30, 2000. The
Board has fixed the close of business on March 13, 2000 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 (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
16,552,596 shares of Common 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. All other proposals require the affirmative vote of the
majority of shares present in person or represented by proxy at the meeting and
entitled to vote thereon.
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.
<PAGE>
STOCK OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table presents, as of March 13, 2000, 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, as a class, (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 16,552,596 shares of Common 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 13, 2000. 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 unless otherwise noted.
Percent of
No of Shares Shares
Name and Address of Beneficial Owner Benefically Owned (1) Outstanding
- ------------------------------------ --------------------- -----------
Palo Alto Investors, Inc.
470 University Avenue
Palo Alto, California 94301 1,327,400 (2) 8.0%
PE Corporation
761 Main Avenue
Norwalk, Connecticut 06859 1,308,724 (3) 7.9%
Grover C. Wrenn 504,000 (4) 3.0%
Richard C. Birkmeyer 1,946,245 (5) 11.7%
Richard J. Defieux 35,000 (6) *
Robert E. Finnigan 40,600 (7) *
Stephen O. Jaeger 1,344,924 (8) 8.1%
Kathleen E. Lamb 125,831 (9) *
Curtis Lee Smith 61,000 (6) *
Arthur A. Koch, Jr. 125,000 (6) *
Martha C. Reider 551,470 (10) 3.3%
James W. Stave 149,907 (6) *
KelIy J. Cullum 80,000 (6) *
All Officers and Directors
as a group (11 persons) 4,963,977 (11) 28.4%
- ----------
* 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 15, 2000.
(3) Ownership of these shares was reported to the Company on Schedule 13D
dated January 9, 1997.
(4) Includes 250,000 shares underlying exercisable options.
(5) Includes 100,000 shares underlying exercisable options.
(6) Consists of shares underlying exercisable options.
(7) Includes 35,000 shares subject to exercisable options and 5,600 shares
owned jointly with Dr. Finnigan's wife.
(8) Includes 1,308,724 shares held by PE Corporation ("PE") and 35,000 shares
underlying exercisable options individually owned by Mr. Jaeger. Mr.
Jaeger, the PE designee to the Company's Board of Directors, is the
Chairman and Chief Executive Officer of Inso Corporation and has agreed to
advise PE 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 PE. Mr. Jaeger disclaims beneficial
ownership of the shares owned by PE.
(9) Includes 35,000 shares underlying exercisable options individually owned
by Ms. Lamb and 88,831 held by EM Industries, Inc. 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 disclaims beneficial ownership of the
shares held by EM Industries, Inc.
(10) Includes 40,362 shares underlying exercisable options.
(11) Includes 951,869 shares subject to exercisable options and 5,600 shares
owned jointly by Dr. Finnigan and his wife.
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 PE Corporation (formerly 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 2001. Richard J. Defieux, Robert E. Finnigan,
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
2002 and until their successor is duly elected and qualified. The affirmative
votes 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 57 1992
Chairman of the Board SDI, Chief Executive Officer AccentHealth Inc.
Richard C. Birkmeyer 46 1996
President and Chief Executive Officer of the Company
Richard J. Defieux (1) 48 1996
General Partner of Edison Partners, L.P.
Robert E. Finnigan, Ph.D. (1) 72 1991
Director of Informed Diagnostics, Inc.
Kathleen E. Lamb 54 1996
Vice President of Finance of EM Science, Inc.
Curtis Lee Smith, Jr. 72 1991
Chairman of New Horizons Worldwide, Inc.
Stephen O. Jaeger (1) 55 1996
Director and Chief Executive Officer
Inso Corporation
</TABLE>
- ----------
(1) A nominee for election to the Board of Directors.
4
<PAGE>
BACKGROUND OF DIRECTORS
Grover C. Wrenn, age 57, has served as Chairman of the Board since
December 1996. Mr. Wrenn has served as President and Chief Executive Officer of
AccentHealth Inc., a privately held communications and marketing firm, from
November 1996 until October 1999, and Chairman from October 1999 to the present.
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 Safety-Kleen Corp., a
publicly held provider of hazardous and industrial waste management services to
industry and government. Mr. Wrenn also serves as a Trustee of Eckerd College.
Richard C. Birkmeyer, age 46, co-founded 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 48, served as a director of SDI since 1993 and was
appointed as a director of the Company on December 30, 1996. Since 1990, Mr.
Defieux has 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. Mr. Defieux is also a
general partner of Allegra Capital Partners IV L.P. Prior to joining Edison in
1987, Mr. Defieux was a General Partner of Princeton/Montrose Partners, a
venture capital firm. 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, Ph.D., age 72, was a co-founder of Finnigan Corp., a
manufacturer of analytical instruments, and held various senior executive roles
in Finnigan and served as director of the company for 23 years until it was
acquired by Thermo Instrument Systems, Inc. in 1990. He is currently a director
of Informed Diagnostics, Inc., a privately held company serving the medical
diagnostics field and is an advisor to Chase H&Q's Environmental Technology
Fund. He has served as director of Strategic Diagnostics, Inc. (SDI) since 1996
and was a director of EnSys Environmental Products, Inc. from 1990 until it
merged with SDI in 1996.
Kathleen E. Lamb, age 54, 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 72, 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. Mr. Smith serves as Chairman of the Board of New Horizons Worldwide, Inc.,
an owner and franchisor of computer training centers.
Stephen O. Jaeger, age 55, served as a director of SDI since August 1996
and was appointed a director of the Company on December 30, 1996. Mr. Jaeger has
served as Chairman of the Board and Chief Executive Officer of Inso Corporation,
a firm providing computer software since March 1999. Mr. Jaeger had been
Executive Vice President, Chief Operating Officer and a Director of PharmaCom
Group Inc., from February 1999 to December 1999. Mr. Jaeger remains a Director
of PharmaCom Group Inc. From December 1997 through October 1998, Mr. Jaeger was
the 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. Prior thereto Mr. Jaeger had
been Vice President and Chief Financial Officer of PE Corporation (formerly
Perkin-Elmer) since 1995, and since 1996 had also been its Treasurer.
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. No director has received
compensation for serving as a director in any of the past three years.
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, 1999. Each of the directors attended at least 80% 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 1999. The
members of the Audit Committee were Mr. Jaeger, Ms. Lamb and Mr. Smith. The
Audit Committee reviews the selection of 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 1999. 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 accompanied by
the information required by, the Company's By-Laws. The Company does not
maintain a standing nominating committee.
Compensation Committee Interlocks and Insider Participation
Mr. Wrenn, a member of the Compensation Committee, was formerly President
and Chief Executive Officer of EnSys, a predecessor to the Company, from April
1995 to November 1996.
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, except that Messrs. Birkmeyer and Koch filed reports for September
1999 transactions in December 1999.
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
1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term All Other
Annual Compensation Compensation Compensation
-------------------------- ---------------- ------------
Securities
Underlying
Salary Bonus Options Amount
Name and Principal Position Year ($) ($) (#) ($)
- ------------------------- ---- --------- ------- ------------------ -------------
<S> <C> <C> <C> <C> <C>
Grover C. Wrenn (1) 1999 -- -- -- --
Chairman 1998 33,333 -- -- 1,000
1997 80,000 -- -- 216,790
Richard C. Birkmeyer (2) 1999 186,750 30,000 -- 10,400
President and CEO 1998 174,333 -- -- 10,150
1997 164,000 64,500 -- 10,150
Arthur A. Koch. Jr. (3) 1999 169,683 34,070 100,000 10,400
Chief Operating Officer 1998 158,886 -- 100,000 7,820
1997 124,100 43,500 100,000 2,250
Martha C. Reider(4) 1999 112,937 13,770 -- 8,788
Vice President, 1998 107,601 -- -- 8,636
Quality Assurance/Human Resources 1997 101,200 20,000 60,000 8,433
James W. Stave Ph.D.(5) 1999 123,208 19,235 100,000 9,080
Vice President, 1998 109,001 -- -- 8,686
Research and Development 1997 99,600 20,000 60,000 8,381
Kelly J. Cullum(6) 1999 227,949 11,475 -- 5,000
Vice President, 1998 200,064 35,000 200,000 --
Sales and Marketing 1997 -- -- -- --
</TABLE>
- ----------
(1) Effective December 30, 1996, Mr. Wrenn resigned as President and Chief
Executive Officer and was appointed Chairman. Effective June 1, 1998, Mr.
Wrenn no longer received a salary or benefits from the Company for serving
as its Chairman.
(2) Mr. Birkmeyer's employment as President and Chief Executive Officer of the
Company commenced on December 30, 1996. All other compensation consists of
$5,000 in Company contributions to Mr. Birkmeyer's 401(k) account and
$5,400 for an automobile allowance.
(3) Mr. Koch's employment commenced April 14, 1997. All other compensation
consists of $5,000 in Company contributions to Mr. Koch's 401(k) account
and $5,400 for an automobile allowance.
(4) Ms. Reider's employment with the Company commenced on December 30, 1996.
All other compensation consists of $3,388 in Company contributions to Ms.
Reider's 401(k) account and $5,400 for an automobile allowance.
(5) Dr. Stave's employment with the Company commenced on December 30, 1996.
All other compensation consists of $3,680 in Company contributions to Dr.
Stave's 401(k) account and $5,400 for an automobile allowance.
(6) Ms. Cullum's employment commenced on February 10, 1998. All other
compensation consists of $5,000 in Company contributions to Ms. Cullum's
401(k) account.
7
<PAGE>
Option grants and Exercises in Fiscal Year 1999. The following tables summarize
option grants and exercises during 1999 to or by the officers named in the
Summary Compensation Table. In accordance with SEC rules, also shown are the
hypothetical gains or "option spreads," on a pre-tax basis, that would exist for
the respective options. These gains were based on assumed rate of annual
compound stock appreciation of 5% and 10% from the date the options were granted
over the full option term.
OPTION GRANTS IN FISCAL YEAR 1999
<TABLE>
<CAPTION>
Potential Realizable Value
Individual Grants Under the Company's at Assumed Annual Rates
2000 Stock Incentive Plan of Stock Price Appreciation
----------------------------------------------------- ---------------------------
Percent
Number of of Total
Securities Options
Underlying Granted to Exercise 5% for 10% for
Options Employees Price Expiration Option Option
Name Granted in Fiscal Year(%) per Share Date Term($) Term($)
- ----- ---------- ----------------- --------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Arthur A. Koch, Jr. 100,000(1) 27.0% $2.875 04/27/09 158,507 390,410
James W. Stave 100,000(1) 27.0% $2.875 04/27/09 158,507 390,410
</TABLE>
- ----------
(1) Options were granted April 27, 1999 and will become exercisable at a rate
of 25% on January 1, 2000 and 25% annually on each January 1 thereafter.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1999
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options
Shares Year-End(#) at Fiscal Year-End($)(1)
Acquired on Value ------------------------ ------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ----- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Grover C. Wrenn -- -- 250,000 -- 1,065,750 --
Richard C. Birkmeyer 50,661 284,841 100,000 -- 456,300 --
Arthur A. Koch.Jr. 25,000 143,750 50,000 225,000 234,400 898,550
Martha C. Reider 20,000 90,260 25,362 30,000 118,897 140,640
James W. Stave 10,000 46,850 109,907 130,000 649,887 509,440
Kelly J. Cullum 40,000 190,000 40,000 120,000 157,520 472,560
</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, 1999
($6.563), multiplied by the number of shares to which the option relates.
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
$l64,000 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 granted Mr. Birkmeyer
an option to purchase 100,000 shares of the Company's Common Stock, which option
became 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 2000 Stock Incentive 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 the termination of the agreeemnt by
Mr. Birkmeyer for good reason (as defined in the agreement) or by the Company
without cause.
8
<PAGE>
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:
o 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.
o 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 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.
o 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.
o The Company strives to provide incentives designed to maximize
stockholder value.
The Company is committed to the use of stock options as a
significant component of total compensation in order to
appropriately align management's compensation with stockholder's
interests.
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:
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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 are 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 (a) the Company's financial
performance, measured against established corporate performance for net sales
and profitability and (b) on the Committee's subjective determination of the
executive officer's individual performance goals, measured against individual
management goals established for each executive.
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 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 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 1999 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.
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Base Salary
Mr. Birkmeyer's base salary for 1999 pursuant to his employment agreement
dated December 30, 1996 was $189,000, 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, the Compensation
Committee increased Mr. Birkmeyer's base salary by 7% to $202,230 for fiscal
year 2000.
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.
The Compensation Committee follows the same policy described above for
other executive officers to determine Mr. Birkmeyer's bonus. Based on the
Committee's evaluation of the established corporate performance goals for net
sales and profitability, the Compensation Committee granted Mr. Birkmeyer a cash
bonus of $30,000 for 1999.
Stock Options
The Compensation Committee 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 commitments 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.
Based on its evaluation of the factors listed above, the Compensation
Committee granted Mr. Birkmeyer options to purchase 60,000 shares of Common
Stock pursuant to the Company's 2000 Stock Incentive Plan for 1999.
COMPENSATION COMMITTEE
Richard J. Defieux
Robert E. Finnigan
Grover C. Wrenn
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OTHER MATTERS
Independent Auditors
The accounting firm of KPMG LLP has served as the Company's independent
auditors since September 1998. A representative of KPMG LLP will be present at
the Meeting, and will be given the opportunity to make a statement if he desires
and will be available to respond to appropriate questions. During 1999, there
were no disagreements with KPMG LLP on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure.
Arthur Andersen LLP had been the Company's principal accounting firm since the
December 30, 1996 merger, and was dismissed by the Board in September 1998. KPMG
LLP had been EnSys' principal accounting firm and was dismissed by the Board in
January 1997. Arthur Andersen LLP's reports on the financial statements of SDI
for 1996, and the Company for 1997, 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 1996 and 1997, there were
no disagreements with Arthur Andersen LLP on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure.
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, 1999 to be considered
for inclusion in the Company's proxy materials relating to the 2000 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 1999 Annual Report, including financial statements for the
fiscal year ended December 31, 1999, 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, 1999 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., Chief Operating 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 30, 2000
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STRATEGIC DIAGNOSTICS INC.
111 Pencader Drive
Newark, Delaware 19702
Annual Meeting of Stockholders - April 26, 2000
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 2000 Annual Meeting of
Stockholders of STRATEGIC DIAGNOSTICS INC. to be held at the Christiana Hilton,
100 Continental Drive, Newark, Delaware 19713, on Wednesday, April 26, 2000, 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 set forth 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" THE ELECTION OF DIRECTORS.
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?
___________________________ ________________________________
___________________________ ________________________________
___________________________ ________________________________
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STRATEGIC DIAGNOSTICS INC. 1. Election of Class II Directors
With- For All
For held Except
RECORD DATE SHARES: 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).
|X| PLEASE MARK VOTES
AS IN THIS EXAMPLE
Please be sure to sign and date In their discretion, the proxies are
this Proxy. authorized to vote upon any other business
that may properly come before the meeting or
at any adjournment thereof.
__________________________________ Date ___________________________
Stockholder sign here
__________________________________ Date ___________________________
Co-owner sign here
Mark box at right if an address change or
comment 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 votes on the election of the Company's directors is important 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
26, 2000.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Strategic Diagnostics Inc.
