<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule 14a-12.
YOUNG INNOVATIONS, INC.
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(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):
[X] 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.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
YOUNG INNOVATIONS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
MAY 16, 2000
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of Young Innovations, Inc. (the
"Company") will be held at the St. Louis Airport Marriott, I-70 at Lambert
Airport, St. Louis, Missouri, on May 16, 2000, at 10:00 A.M., St. Louis time,
for the following purposes:
1. To elect nine Directors to serve until the Annual Meeting of
Shareholders in 2001 or until their successors are duly elected and
qualified;
2. To consider and act upon ratification of the selection of Arthur
Andersen LLP as independent accountants for 2000; and
3. To consider and transact such other business as may properly come before
the meeting.
Only shareholders whose names appear of record at the Company's close of
business on March 10, 2000 are entitled to receive notice of and to vote at the
Annual Meeting or any adjournments thereof.
By Order of the Board of Directors,
George E. Richmond
Chief Executive Officer
April 10, 2000
Earth City, Missouri
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. WHETHER OR
NOT YOU INTEND TO BE PRESENT, PLEASE COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY CARD IN THE STAMPED AND ADDRESSED ENVELOPE ENCLOSED FOR YOUR
CONVENIENCE. SHAREHOLDERS CAN HELP THE COMPANY AVOID UNNECESSARY EXPENSE AND
DELAY BY PROMPTLY RETURNING THE ENCLOSED PROXY CARD. THE PRESENCE, IN PERSON OR
BY PROPERLY EXECUTED PROXY, OF A MAJORITY OF THE COMMON STOCK OUTSTANDING ON THE
RECORD DATE IS NECESSARY TO CONSTITUTE A QUORUM AT THE ANNUAL MEETING.
<PAGE> 3
YOUNG INNOVATIONS, INC.
13705 SHORELINE COURT EAST
EARTH CITY, MISSOURI 63045
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 16, 2000
This Proxy Statement is being furnished to the common shareholders of Young
Innovations, Inc. (the "Company") on or about April 10, 2000 in connection with
the solicitation of proxies on behalf of the Board of Directors of the Company
for use at the annual meeting of shareholders (the "Annual Meeting") to be held
on May 16, 2000 at the time and place and for the purposes set forth in the
accompanying Notice of Annual Meeting, and at any adjournment or postponement of
that meeting.
Holders of shares of common stock, par value $0.01 per share ("Shares" or
the "Common Stock"), of the Company at its close of business on March 10, 2000
(the "Record Date") will be entitled to receive notice of and vote at the Annual
Meeting. On the Record Date, 6,505,696 shares of Common Stock were outstanding.
Holders of Common Stock (the "Shareholders") are entitled to one vote per share
of Common Stock they held of record on the Record Date on each matter that may
properly come before the Annual Meeting.
A plurality of the votes of Shareholders cast at the Annual Meeting is
required for the election of each director. Ratification of the selection of the
independent accountants requires the affirmative vote of holders of a majority
of the Shares voted on the proposal. Abstentions and broker non-votes are
counted in the number of shares present in person or represented by proxy for
purposes of determining whether a quorum is present, but not for purposes of
election of directors. In connection with the ratification of the selection of
independent accountants, an abstention will have the same effect as a vote
against the proposal. Broker non-votes will not be voted for or against the
proposal and will have no effect on the proposal.
Shareholders of record on the Record Date are entitled to cast their votes
in person or by properly executed proxy at the Annual Meeting. The presence, in
person or by properly executed proxy, of a majority of the Common Stock
outstanding on the Record Date is necessary to constitute a quorum at the Annual
Meeting. If a quorum is not present at the time the Annual Meeting is convened,
the Company may adjourn or postpone the Annual Meeting.
All Common Stock represented at the Annual Meeting by properly executed
proxies received prior to or at the Annual Meeting and not properly revoked will
be voted at the Annual Meeting in accordance with the instructions indicated in
such proxies. If no instructions are indicated, such proxies will be voted FOR
Proposal 1 for the election of the Board's director nominees and FOR Proposal 2
for the ratification of the recommended independent accountants. The Board of
Directors of the Company does not know of any matters, other than the matters
described in the Notice of Annual Meeting attached to this Proxy Statement, that
will come before the Annual Meeting.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with the Secretary of the Company, at or before the Annual Meeting, a written
notice of revocation bearing a date later than the date of the proxy, (ii) duly
executing and dating a subsequent proxy relating to the Common Stock and
delivering it to the Secretary of the Company at or before the Annual Meeting,
or (iii) attending the Annual Meeting and voting in person (although attendance
at the Annual Meeting will not in and of itself constitute a revocation of a
proxy). Any written notice revoking a proxy should be sent to: Corporate
Secretary, Young Innovations, Inc., 13705 Shoreline Court East, Earth City,
Missouri 63045 (telephone number (314) 344-0010).
The proxies are solicited by the Board of Directors of the Company. In
addition to the use of the mails, proxies may be solicited personally or by
telephone or facsimile transmission, by directors, officers or employees of the
Company or persons employed by the Company for the purpose of soliciting
proxies. It is contemplated that brokerage houses, custodians, nominees and
fiduciaries will be requested to forward the soliciting material to the
beneficial owners of Common Stock held of record by such persons, and will be
reimbursed for expenses incurred therewith. The cost of solicitation of proxies
will be borne by the Company.
The Annual Report to Shareholders for fiscal year 1999 accompanies this
Proxy Statement. If you did not receive a copy of the report, you may obtain one
by writing to the Secretary of the Company.
---------------
The date of this Proxy Statement is April 10, 2000.
<PAGE> 4
PROPOSAL 1: ELECTION OF DIRECTORS
Pursuant to the By-laws of the Company, the Company's Directors are elected
annually and hold office until their successors are duly elected and qualified.
It is intended that the proxies (except proxies marked to the contrary)
will be voted for the nominees listed below, all of whom are members of the
present Board of Directors. It is expected that the nominees will serve; but if
any nominee declines or is unable to serve for any unforeseen cause, the proxies
will be voted to fill any vacancy so arising in accordance with the
discretionary authority of the persons named in the proxies.
The following table sets forth the names, ages, principal occupations and
other information respecting the director nominees:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
DIRECTOR AGE DURING PAST 5 YEARS
-------- --- -------------------
<S> <C> <C>
George E. Richmond...... 66 President of Young Dental Manufacturing Company ("Young
Dental") (predecessor to the Company) from 1961 until 1997.
Chief Executive Officer and a Director of the Company since its
organization in 1995 and Chairman of the Board since 1997.
Director of UMB Bank of St. Louis, National Association.
Alfred E. Brennan....... 47 President since July 1998, Chief Operating Officer of the
Company since October 1997, and Director of the Company since
August 1997. Senior Associate of Dewar Sloan, a dental
consulting company, from 1995 until October 1997. President of
the Dental Instrument Division of DENTSPLY International, Inc.
from 1991 to 1994. Director of Unico Systems Inc., a dental
consulting company.
Arthur L. Herbst, Jr.... 36 Chief Financial Officer since February 1999, Executive Vice
President of Strategic Planning since October 1998 and a
Director of the Company since November 1997. Vice President
and Portfolio Manager with Roberts, Glore & Co, a registered
investment advisor, from September 1995 to November 1998.
Director of Corporate Finance of DENTSPLY International, Inc.
from May 1993 through August 1995, a manufacturer of dental
supplies and equipment. Treasurer of GENDEX Corp., a
manufacturer of dental and medical equipment, from November
1990 to June 1993.
Richard G. Richmond..... 45 A Director of the Company since 1995, Vice President of the
Company from February 1999 to April 2000 and Secretary of the
Company from August 1995 to April 2000. President of Young
Dental from July 1997 to April 2000 and a Director of Young
Dental since June 1989. Mr. Richmond is George Richmond's son.
Richard P. Conerly(1)... 75 Director of the Company since August 1997. Retired since 1994.
Chairman and Chief Executive Officer of Orion Capital Inc., a
private investment company, from 1987 to 1994. Director of
LaBarge, Inc., a manufacturer of electronic systems, cable
assemblies and interconnect assemblies, ("LaBarge").
Craig E. LaBarge(1)..... 49 Director of the Company since August 1997. Chief Executive
Officer of LaBarge since 1991 and President of LaBarge since
1986. Director of LaBarge, and TALX Corporation, a provider of
software and services for human resource assistance.
Connie H. Drisko, DDS(2) 59 Director of the Company since January 1998. Professor and
Chairperson of the Department of Periodontics, Endodontics and
Dental Hygiene at the University of Louisville School of
Dentistry since September 1993; prior to 1993 held various
teaching positions in Periodontic Department, University of
Missouri Kansas City for ten years.
James R. O'Brien(2)..... 56 Director of the Company since October 1998. Managing Director of
The Wellston Group, a consulting group, since 1995. President and
Chief Operating Officer of Swingster Company, a manufacturer and
distributor of corporate logoed merchandise, from 1994 through
1995. President of a number of divisions of FIGGIE International,
a Fortune 500 company, from 1986 through 1994.
Brian F. Bremer(1)(2)... 63 Director of the Company since May 1999. Partner in CroBern
Management Partnership, a venture capital investment group, since
1995.
</TABLE>
- ----------
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSAL 1 TO
APPROVE THE BOARD OF DIRECTORS' SLATE OF NOMINEES STANDING FOR ELECTION.
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors met six times during 1999. All directors attended at
least 75% of the meetings of the Board and of the committees upon which they
served in 1999.
-2-
<PAGE> 5
COMPENSATION OF DIRECTORS
Full-time employees of the Company who serve as directors receive only
reimbursement of expenses incurred in attending meetings. Effective November
1997, the Company adopted its 1997 Stock Option Plan pursuant to which each
non-employee director of the Company received a grant of an option to purchase
up to 5,000 shares of the Company's Common Stock and are reimbursed for all
expenses incurred in attending Board of Directors and committee meetings.
COMMITTEES
The Board of Directors has had standing Audit and Compensation Committees
since November 1997.
The Audit Committee met twice during 1999. The Committee is composed of
Richard P. Conerly, Craig E. LaBarge, and Brian F. Bremer. The Committee's
responsibilities include evaluation of significant matters relating to the audit
and internal controls of the Company and review of the scope and results of
audits by the independent auditors.
The Compensation Committee met one time during 1999. The Committee is
composed of Brian F. Bremer, Connie H. Drisko, and James R. O'Brien. The
Committee reviews the Company's remuneration policies and practices, including
executive salaries, compensation and other employee benefits, and administers
and determines awards under the Company's 1997 Stock Option Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1999, no executive officer of the Company served on the Board of
Directors or compensation committee of any other company with respect to which
any member of the Compensation Committee was engaged as an executive officer. No
member of the Compensation Committee was an officer or employee of the Company
during 1999, and no member of the Compensation Committee was formerly an officer
of the Company.
EXECUTIVE COMPENSATION
The following table summarizes the annual and long-term compensation earned
or awarded to the Company's Chief Executive Officer and each of the Company's
four other most highly compensated executive officers at December 31, 1999,
during the last three fiscal years for services rendered to the Company and its
subsidiaries.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
AWARDS
------
SECURITIES
ALL OTHER
COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUSES ($)(1) UNDERLYING OPTIONS #(5) ($)(6)
- --------------------------- ---- ---------- -------------- ----------------------- ------
<S> <C> <C> <C> <C> <C>
George E. Richmond .......... 1999 $250,021 $298,900 -- --
Chief Executive Officer 1998 214,400 70,720 -- --
1997 214,400 15,218 -- --
Alfred E. Brennan ........... 1999 $241,676 $341,600 120,000 $ 7,401
President and Chief Operating 1998 217,115 30,000 -- --
Officer (2) 1997 101,065 915 60,000 --
Arthur L. Herbst, Jr. (3) ... 1999 $179,442 $213,500 25,000 4,405
Executive Vice President of 1998 42,404 12,000 75,000 --
Strategic Planning and Chief
Financial Officer
Richard G. Richmond ......... 1999 $157,615 $ 75,000 25,000 7,200
Secretary 1998 150,000 49,742 -- --
1997 111,488 11,421 32,000 --
Eric R. Stetzel (4) ......... 1999 $159,000 $ 75,000 25,000 4,111
Vice President 1998 140,000 60,000 16,000
</TABLE>
- ----------
-3-
<PAGE> 6
(1) Annual bonus amounts were earned and accrued during the fiscal years
indicated and paid either in the fiscal year indicated or in the following
years.
(2) Mr. Brennan joined the Company in October 1997. Amounts indicated for 1997
include payments made by the Company for consulting services prior to Mr.
Brennan's employment.
(3) Mr. Herbst joined the Company in October 1998.
(4) Mr. Stetzel joined the Company in February 1998 as President of Young
Acquisitions Company and became a Vice President of the Company in February
1999.
(5) Represents stock options awarded under the Company's 1997 Stock Option
Plan.
(6) Represents life and disability insurance premiums paid by the Company.
OPTION GRANTS
The following table sets forth certain information with respect to options
to purchase Common Stock granted during the fiscal year ended December 31, 1999
to each of the named executive officers who received option grants and the value
of options held by such officers at fiscal year-end.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- -----------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS EXERCISE PRICE APPRECIATION
UNDERLYING GRANTED TO PRICE FOR OPTION TERM(3)
OPTIONS EMPLOYEES PER EXPIRATION -----------------------
NAME GRANTED (#)(1) IN FISCAL YEAR SHARE ($/SH)(2) DATE 5%($) 10%($)
---- -------------- -------------- --------------- ---- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Alfred E. Brennan .... 120,000 47.2% $ 13.9375 10/01/09 1,051,826 $2,665,534
Arthur L. Herbst Jr.. 25,000 9.8% 13.9375 10/01/09 219,130 555,320
Richard G. Richmond .. 25,000 9.8% 13.9375 10/01/09 219,130 555,320
Eric R. Stetzel ...... 25,000 9.8% 13.9375 10/01/09 219,130 555,320
</TABLE>
- ----------
(1) Options were granted on October 1, 1999, one-fourth of each option becoming
exercisable each year beginning October 1, 1999.
(2) The exercise price for all options granted is equal to the closing market
price of the Company's stock as quoted on the Nasdaq National Market on the
date the options were granted.
(3) The amounts shown under these columns are the result of calculations at 5
percent and 10 percent annual rates over the ten-year term of the options
as required by the Securities and Exchange Commission and are not intended
to forecast future appreciation of the stock price of the Company's Common
Stock. Actual gains realized, if any, on stock option exercises and Common
Stock holdings are dependent on the future performance of the Common Stock
and overall stock market conditions. There can be no assurance that the
values shown in this table will be achieved.
FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information with respect to the
named executive officers concerning the unexercised options held and the value
thereof at fiscal year-end.
-4-
<PAGE> 7
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-
UNEXERCISED OPTIONS AT MONEY OPTIONS AT FISCAL
FISCAL YEAR-END(#) YEAR-END ($)(1)
--------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Alfred E. Brennan....... 60,000 120,000 $91,875 $125,625
Arthur L. Herbst Jr. ... 47,250 57,750 41,516 48,047
Richard G. Richmond .... 14,250 42,750 23,516 70,547
Eric R. Stetzel......... 10,250 30,750 3,516 10,547
</TABLE>
- ----------
(1) Based on the closing price of the Company's stock as quoted on the Nasdaq
National Market on December 30, 1999, of $14.50.
EMPLOYMENT AGREEMENTS
In October 1999, the Company entered into an employment agreement with
Alfred E. Brennan pursuant to which Mr. Brennan agreed to serve as the Company's
Chief Executive Officer or Chief Operating Officer. The employment agreement
expires on October 1, 2002. Mr. Brennan's minimum annual base salary under the
agreement is $243,800. If a Change of Control (as defined in the agreement)
occurs prior to October 1, 2003, the Company shall pay to Mr. Brennan, within
thirty (30) days following the date of the Change of Control, a cash payment
equal to 2.999 times Mr. Brennan's base amount (as such term is used in Section
280G(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code")).
In July 1999, the Company entered into an employment agreement with Arthur
L. Herbst, Jr. pursuant to which Mr. Herbst agreed to serve as the Company's
Chief Financial Officer and Executive Vice President of Strategic Planning. The
employment agreement expires on July 6, 2002. Mr. Herbst's minimum annual base
salary under the agreement is $180,250. If a Change of Control (as defined in
the agreement) occurs prior to July 6, 2003, the Company shall pay to Mr.
Herbst, within thirty (30) days following the date of the Change of Control, a
cash payment equal to 2.999 times Mr. Herbst's base amount (as such term is used
in Section 280G(b)(3) of the Code).
In September, 1999 the Company entered into an employment agreement with
Richard Richmond pursuant to which Mr. Richmond agreed to serve as a Vice
President and the Secretary of the Company. The employment agreement expires on
September 27, 2002. Mr. Richard's minimum annual base salary is $159,000. If a
Change of Control (as defined in the agreement) occurs prior to September 27,
2003, the Company shall pay to Mr. Richmond, within thirty (30) days following
the date of the Change of Control, a cash payment amount equal to 2.999 times
Mr. Richmond's base amount (as such term is used in Section 280G(b)(3) of the
Code).
In October, 1999 the Company entered into an employment agreement with Eric
Stetzel pursuant to which Mr. Stetzel agreed to serve as a Vice President of the
Company. The employment agreement expires on October 25, 2002. Mr. Stetzel's
minimum annual base salary is $159,000. If a Change of Control (as defined in
the agreement) occurs prior to October 25, 2003, the Company shall pay to Mr.
Stetzel, within thirty (30) days following the date of the Change of Control, a
cash payment equal to 2.999 times Mr. Stetzel's base amount (as such term is
used in Section 280G(b)(3) of the Code, as amended).
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for the
Company's remuneration policies and practices, including salaries, compensation
and other employee benefits, and administers and determines awards under the
Company's 1997 Stock Option Plan. It annually determines the compensation to be
paid to the executive officers of the Company. The Committee is composed of
outside directors.
-5-
<PAGE> 8
OVERVIEW AND PHILOSOPHY
Executive compensation for 1999 was fixed by the Compensation Committee of
the Company's Board of Directors. In developing the Company's executive
compensation policies, the Committee has two principal objectives: 1)
attracting, rewarding and retaining officers who possess outstanding talent, and
2) motivating the officers to achieve short-term and long-term corporate
objectives that enhance shareholder value. Following annual reviews, the
Committee authorizes appropriate changes as determined by the three primary
components of executive compensation, which are: a) base salary, b)
performance-based annual incentive bonus and c) long-term stock-based awards.
In evaluating and setting the three components of compensation for
executive officers, including the Chief Executive Officer of the Company, the
Committee considers: individual responsibilities, including changes which may
have occurred since the prior review; individual performance in fulfilling
responsibilities and achieving the Company's financial goals for the year;
relative contributions of the individual to the results of operations; the
impact of operating conditions; the effect of economic changes on salary
structure; comparisons with compensation paid to individuals with similar skills
and experience; and, comparisons with compensation paid by similarly situated
companies. Such considerations are subjective, and specific measures are not
used in the review process.
The program is composed of base salary, performance-based annual incentive
bonus and long-term stock-based awards. As of December 31, 1999, 525,300 stock
options on shares of the Company's Common Stock were outstanding and 254,000
stock options were granted during the fiscal year then ended.
BASE SALARY
The minimum base salary for each officer (other than the Chief Executive
Officer) is provided for as set forth in each of their respective Employment
Agreements. (See description of Employment Agreements). Adjustments to minimum
base salary may be made by the Compensation Committee. Factors that the
Compensation Committee may rely on in adjusting the minimum base salary of an
executive include: whether the base salary is competitive with companies in the
industries and geographic areas in which the Company competes; and the
individual's performance over a period of time as well as any other information
which may be available as to the value of the particular individual's
performance and prospective future services to the Company. This information
includes comments and performance evaluations by the Company's Chief Executive
Officer. The Committee considers all such data; it does not prescribe the
relative weight to be given to any particular component.
PERFORMANCE-BASED ANNUAL INCENTIVE BONUS
Performance-based annual incentive bonus is ordinarily determined to be
paid based on the individual responsibilities, including changes which may have
occurred since the prior review; individual performance in fulfilling
responsibilities and achieving the Company's financial goals for the year;
relative contributions of the individual to the results of operations; the
impact of operating conditions; the effect of economic changes on salary
structure; and comparisons with compensation paid to individuals with similar
skills and experience.
LONG-TERM STOCK-BASED AWARDS
In general, the Committee believes that equity based compensation should
form a significant part of an executive's total compensation package. Stock
options are granted to executives because they directly relate the executive's
earnings to the stock price appreciation realized by the Company's shareholders
over the option period. Stock options also provide executives the opportunity to
acquire an ownership interest in the Company. The number of shares covered by
each executive's option was determined by factors similar to those considered in
establishing base salary and as outlined under the Company's 1997 Stock Option
Plan.
COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER
The Committee applies the same standards in establishing the compensation
of the Company's Chief Executive Officer as are used for other executives. The
Chief Executive Officer does not participate in setting the amount and nature of
his compensation.
-6-
<PAGE> 9
The Committee does not expect that Section 162(m) of the Internal Revenue
Code will limit the deductibility of compensation expected to be paid by the
Company in the foreseeable future.
Brian F. Bremer, Chairman
Connie H. Drisko
James R. O'Brien
-7-
<PAGE> 10
PERFORMANCE GRAPH
The following graph and table compare the cumulative total shareholder
return on the Company's Common Stock from November 4, 1997, the date of the
initial public offering of the Common Stock, through December 31, 1999, with the
Russell 2000 Index and an industry peer group. The comparisons reflected in the
table and graph are not intended to forecast the future performance of the
Common Stock and may not be indicative of such future performance. The table and
graph assume an investment of $100 in the Common Stock, the index and the
industry peer group on November 4, 1997 and the reinvestment of all dividends;
the beginning price for the Company's Common Stock is $12, the price at which
shares of its Common Stock were sold in its initial public offering.
<TABLE>
<CAPTION>
Cumulative Total Return
-------------------------------
11/4/97 12/97 12/98 12/99
<S> <C> <C> <C> <C>
YOUNG INNOVATIONS, INC. 100 150 109 122
PEER GROUP(1) 100 109 116 100
RUSSELL 2000 100 105 98 96
</TABLE>
- ----------
(1) Peer Group Composite is a weighted average index based on market
capitalization. The Composite includes Dentsply International, Inc., Sybron
International Corporation, American Dental Technologies, Inc. and Zila,
Inc., all of whom are in the same industry as the Company. Prior to 1999,
the Composite also included Schick Technologies, Inc. Schick Technologies,
Inc. was delisted from the Nasdaq National Market in 1999 and is not
included in the Composite for 1999.
-8-
<PAGE> 11
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Solutions in 3D, Inc. ("3D"), a manufacturer of plastic resin prototypes,
leases space from the Company at its premises in Earth City at a rental of $750
per month. George Richmond owns 52.5% of the outstanding common stock of 3D.
3D's business is primarily with unrelated third parties. In 1999, the Company
paid an aggregate of $10,000 for plastic resin prototyping services provided to
the Company. 3D leases space from the Company and the Company may continue to
purchase services from 3D.
George Richmond is a 40% minority shareholder and former officer and
director of Earth City Technologies ("Technologies"), a company located in
Fenton, Missouri. Technologies repairs damaged scalers for the Company returned
by its customers and sells scaler parts. Total amounts paid to Technologies for
repairs/parts in 1999 were $3,000. Technologies purchases certain products and
components from the Company from time to time. Total amounts billed to
Technologies in 1999 were $86,000. Mr. Richmond is currently not an officer,
director or employee of Technologies and plays no role in its management. The
Company believes that arrangements with 3D and Technologies are on terms to the
Company as favorable as could be obtained from unaffiliated third parties.
The Company has adopted a policy that all transactions between the Company
and any affiliated party will be approved by a majority of all members of the
Company's Board of Directors and by a majority of the independent and
disinterested Directors and will continue to be on terms no less favorable to
the Company than terms the Company believes would be available from unaffiliated
third parties.
SECURITIES BENEFICIALLY OWNED BY MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth information as of March 10, 2000, concerning
the ownership of Common Stock by (i) each Director, each of the executive
officers named in the Summary Compensation Table included in this Proxy
Statement, all Directors and executive officers as a group, and (ii) all persons
known by the Company to be the beneficial owners of five percent or more of the
Common Stock. On March 10, 2000, there were 6,505,696 shares of Common Stock
issued and outstanding. The address of each Director and executive officer
listed below is Young Innovations, Inc., 13705 Shoreline Court East, Earth City,
Missouri 63045.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME AND ADDRESS BENEFICIALLY OWNED(1) OF CLASS
---------------- -------------------- --------
<S> <C> <C>
(i) George E. Richmond(2) 3,295,065 49.1%
Richard G. Richmond(3)(4) 261,614 4.0%
Alfred E. Brennan(5) 75,000 1.1%
Richard P. Conerly(6) 10,000 *
Craig E. LaBarge(7) 5,000 *
Arthur L. Herbst, Jr.(8) 69,550 1.04%
Connie H. Drisko (7) 5,000 *
James R. O'Brien(9) 10,000 *
Brian F. Bremer(7) 5,000 *
Eric R. Stetzel (10) 64,750 *
All directors and executive 3,800,979 56.7%
officers as a group (9 persons)
(ii) Charles M. Royce (11) 372,200 5.5%
Royce & Associates, Inc.
Royce Management Company
1414 Avenue of the Americas
New York, NY 10019
Wasatch Advisors Inc. (11) 406,600 6.1%
150 Social Hall Avenue
Salt Lake City, UT 84111
</TABLE>
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* Less than 1.0%.
(1) Beneficial ownership of shares, as determined in accordance with applicable
Securities and Exchange Commission rules, includes shares as to which a
person has or shares sole voting power and/or investment power. Except as
otherwise indicated, all shares are held of record with sole voting and
investment power. Pursuant to the rules of the Securities and Exchange
Commission, certain shares of the Company's Common Stock which a person has
the right to acquire within 60 days pursuant to the exercise of stock
options and warrants are deemed to be outstanding for the purpose of
computing beneficial ownership and the percentage ownership of that person,
but are not deemed outstanding for purposes of computing the
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<PAGE> 12
percentage ownership of any other person. All directors and executive
officers as a group hold options to purchase an aggregate of 206,500 shares
of Common Stock.
(2) Includes 2,388,285 shares held in a revocable trust as to which Mr.
Richmond has sole voting and dispositive power and 906,780 shares held in a
trust as to which Mr. Richmond is a co-trustee and has sole voting power
and shared dispositive power. Excludes 1,735 shares owned by Mr. Richmond's
spouse.
(3) Includes 239,364 shares owned directly by Mr. Richard Richmond.
(4) Includes 22,250 shares of Common Stock issuable to Mr. Richmond upon
exercise of stock options exercisable within sixty days. Excludes 34,750
shares of Common Stock subject to stock options issued to Mr. Richard
Richmond which will become exercisable over the next three years.
(5) Includes 75,000 shares of Common Stock issuable to Mr. Brennan upon
exercise of stock options exercisable within sixty days. Excludes 105,000
shares of Common Stock subject to stock options which will become
exercisable over the next three years.
(6) Includes 5,000 shares owned directly by Mr. Conerly and 5,000 shares of
Common Stock issuable to Mr. Conerly upon exercise of stock options.
(7) Includes 5,000 shares of Common Stock issuable to Messrs. LaBarge and
Bremer and Ms. Drisko upon exercise of stock options.
(8) Includes 3,300 shares owned directly by Mr. Herbst, 5,000 shares of Common
Stock issuable upon exercise of stock options originally issued to Mr.
Herbst as a non-employee Director, 60,250 shares of Common Stock issuable
to Mr. Herbst as an employee upon exercise of stock options exercisable
within sixty days and 1,000 shares owned by Mr. Herbst's daughters over
which Mr. Herbst has voting and dispositive powers. Excludes 1,250 shares
owned by Mr. Herbst's spouse and 39,750 shares of Common Stock subject to
stock options which will become exercisable over the next three years.
(9) Includes 5,000 shares owned directly by Mr. O'Brien and 5,000 shares of
Common Stock issuable to Mr. O'Brien upon exercise of stock options.
(10) Includes 46,000 shares owned directly by Mr. Stetzel, 4,500 shares owned by
Mr. Stetzel's family members over which Mr. Stetzel has voting and
dispositive powers and 14,250 shares of Common Stock issuable to Mr.
Stetzel upon exercise of stock options exercisable within sixty days.
Excludes 26,750 shares of Common Stock subject to stock options issued to
Mr. Stezel which will become exercisable over the next three years.
(11) Based solely upon information contained in Schedule 13G filed with the
Securities and Exchange Commission.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than ten percent
(10%) of the Company's Common Stock, to file initial reports of ownership and
changes in ownership with the Securities and Exchange Commission. Based on a
review of the copies of such forms furnished to the Company and written
representations from the Company's executive officers and directors, to the
knowledge of the Company, all Section 16(a) filing requirements applicable to
its officers, directors and greater than ten percent beneficial owners were
complied with during 1999.
PROPOSAL 2: APPOINTMENT OF INDEPENDENT AUDITORS
Arthur Andersen LLP has been appointed to serve as the independent auditors
for the Company and its subsidiary corporations for the fiscal year ending
December 31, 2000. The appointment is being submitted to the shareholders for
ratification.
Arthur Andersen LLP has served as the independent auditors for the Company
and its predecessor since 1994.
Representatives of Arthur Andersen LLP will be present at the Annual
Meeting to respond to shareholders' questions and to have the opportunity to
make any statements they consider appropriate.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 2
FOR THE RATIFICATION OF ITS SELECTION OF ARTHUR ANDERSEN LLP AS INDEPENDENT
AUDITORS TO AUDIT THE ACCOUNTS OF THE COMPANY AND ITS SUBSIDIARIES FOR 2000.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 2001 Annual Meeting
of Shareholders of the Company must be received by the Company at its address
stated above by December 11, 2000 to be considered for inclusion in the
Company's Proxy Statement and Proxy relating to such meeting. Upon receipt of
any such proposal, the Company will determine whether or not to include such
proposal in the proxy statement and proxy in accordance with regulations
governing the solicitation of proxies.
In order for a shareholder to bring other business before a shareholders
meeting, notice must be received by the Company at its address stated above by
February 24, 2000. Such notice must include various matters regarding the
shareholder giving the notice and a description of the proposed business. These
requirements are separate from the requirements a shareholder must meet to have
a proposal included in the Company's proxy statement.
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<PAGE> 13
OTHER MATTERS
The Board of Directors does not intend to present to the Annual Meeting any
business other than the items stated in the "Notice of Annual Meeting of
Shareholders" and does not know of any other matters to be brought before or
voted upon at the meeting other than those referred to above. If any other
matters properly come before the meeting, it is the intention of the proxies
named in the enclosed Proxy to vote the shares represented thereby with respect
to such matters in accordance with their best judgment.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN THE PROXY AND
RETURN IT IN THE ENCLOSED STAMPED ENVELOPE.
By Order of the Board of Directors
Arthur L. Herbst, Jr.
Chief Financial Officer
Date: April 10, 2000
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS SOLICITED,
AND TO EACH PERSON REPRESENTING THAT AS OF THE RECORD DATE FOR THE MEETING HE OR
SHE WAS A BENEFICIAL OWNER OF SHARES ENTITLED TO BE VOTED AT THE MEETING, ON
WRITTEN REQUEST, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1999 FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO. SUCH
WRITTEN REQUEST SHOULD BE DIRECTED TO YOUNG INNOVATIONS, INC., ATTENTION: MR.
ARTHUR L. HERBST, JR., CHIEF FINANCIAL OFFICER, 13705 SHORELINE COURT EAST,
EARTH CITY, MISSOURI 63045.
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<PAGE> 14
YOUNG INNOVATIONS, INC.
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS - MAY 16, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of YOUNG INNOVATIONS, INC., a Missouri
corporation (the "Company"), hereby constitutes and appoints George E. Richmond
and Richard G. Richmond, and each of them, his Attorneys and Proxies (with full
power of substitution in each), and authorizes them to represent the
undersigned at the Annual Meeting of Shareholders of the Company to be held on
May 16, 2000, at 10:00 A.M. and at any adjournment thereof, and to vote the
common stock of the Company held by the undersigned as designated below on
proposals 1 and 2 and in their discretion on all other matters coming before
the Meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY
THE SHAREHOLDER, BUT IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1 AND 2.
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
(except as marked below) to vote for nominees listed below.
George E. Richmond, Alfred E. Brennan, Arthur L. Herbst Jr., Richard G.
Richmond, Richard P. Conerly, Craig E. LaBarge, Connie H. Drisko, James R.
O'Brien and Brian F. Bremer
(INSTRUCTION: To withhold authority to vote for any individual nominee(s),
print such nominee's(s') Name(s) in the space provided below.)
2. TO RATIFY THE SELECTION OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS FOR
THE COMPANY:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
- --------------------------------------------------------------------------------
PLEASE MARK (ON REVERSE SIDE), SIGN, DATE, AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, trustee or
other representative capacity, please give full title as such if a corporation,
please sign in full corporate name by President or other authorized officer.
THE SIGNER REVOKES ALL PROXIES HERETOFORE GIVEN TO VOTE AT SAID MEETING OR ANY
ADJOURNMENT THEREOF.
-----------------------------------------------
Signature of Shareholder
-----------------------------------------------
Signature of Shareholder
DATED: , 2000.
----------------------------------
