SCHEDULE
14A
(Rule 14a-101)
(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 [_]
Filed by a Party other than the Registrant [_]
Check the
appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Under Rule 14a-12
[_] Preliminary Proxy Statement [_] Soliciting Material Under Rule 14a-12
[_]
Confidential, For Use of the
Commission Only (as
permitted
by Rule
14a-6(e)(2))
[x]
Definitive Proxy Statement
[_]
Definitive Additional Materials
INNOVEX,
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):
[x] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to
which transaction applies:
2)
Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total
fee paid:
[_] Fee paid previously with preliminary materials:
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.
[_] 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:
____________________
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY
4, 2009
___________________
TO
THE SHAREHOLDERS OF
INNOVEX,
INC:
Notice is
hereby given that the Annual Meeting of Shareholders of Innovex, Inc. will be
held at Innovex’ headquarters located at 3033 Campus Drive, Suite E180,
Plymouth, Minnesota 55441 on Wednesday, February 4, 2009 at 9:00 a.m., Central
Time, for the following purposes:
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1.
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To
elect six directors to hold office until the next Annual Meeting of
Shareholders or until their respective successors are
elected.
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2.
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To
ratify the appointment of BDO Seidman LLP as independent registered public
accountants for the fiscal year ending October 3,
2009.
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3.
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To
transact such other business as may properly come before the meeting or
any adjournment or adjournments
thereof.
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For your
convenience, we are also offering a Webcast of the meeting. If you
choose to view the Webcast, go to www.innovexinc.com/investor.shtml
shortly before the meeting time and follow the instructions
provided. If you miss the meeting, you can view a replay of the
Webcast on that site until April 30, 2009.
The Board
of Directors has fixed the close of business on December 15, 2008 as the record
date for the determination of shareholders entitled to notice of and to vote at
the meeting.
| By Order of the Board of Directors | |
| John M. Clark III, Chairman of the Board |
Plymouth,
Minnesota
December
23, 2008
TO
ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN, DATE AND RETURN YOUR
PROXY IN THE ENCLOSED ENVELOPE WHETHER OR NOT YOU EXPECT TO ATTEND IN
PERSON. SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES
AND VOTE IN PERSON IF THEY SO DESIRE. THIS PROXY IS SOLICITED ON
BEHALF OF INNOVEX.
i
INNOVEX,
INC.
____________________
____________________
This proxy
statement is furnished to the shareholders of Innovex, Inc. (“we” or “Innovex”)
in connection with the solicitation of proxies by the Board of Directors to be
voted at the Annual Meeting of Shareholders to be held on February 4,
2009. Our corporate offices are located at 3033 Campus Drive, Suite
E180, Plymouth, Minnesota 55441, and our telephone number is (763)
383-4000. The mailing of this proxy statement to our shareholders
commenced on or about December 23, 2008.
For your
convenience, we are also offering a Webcast of the meeting. If you
choose to view the Webcast, go to www.innovexinc.com/investor.shtml shortly before
the meeting time and follow the instructions provided. If you miss
the meeting, you can view a replay of the Webcast on that site until April 30,
2009.
The cost
of this solicitation will be borne by us. In addition to solicitation
by mail, our officers, directors and employees may solicit proxies by telephone,
facsimile or in person. We may also request banks and brokers to
solicit their customers who have a beneficial interest in our common stock
registered in the names of nominees and we will reimburse such banks and brokers
for their reasonable out-of-pocket expenses.
We have
outstanding only one class of stock, $.04 par value common stock, of which
19,443,153 shares were issued and outstanding and entitled to vote at the close
of business of December 15, 2008. Each share of common stock is
entitled to one vote. Only shareholders of record at the close of
business on December 15, 2008 will be entitled to vote at the
meeting.
Under
Minnesota law, a quorum, consisting of a majority of the shares of common stock
entitled to vote at the Annual Meeting, must be present in person or by proxy
before action may be taken at the Annual Meeting. Votes cast by proxy
or in person at the Annual Meeting of Shareholders will determine whether or not
a quorum is present.
Shares
held by brokers who do not have discretionary authority to vote on a particular
matter and who have not received voting instructions from their customers are
not counted or deemed to be present or represented for the purpose of
determining whether shareholders have approved that matter, but they are counted
as present for the purposes of determining the existence of a quorum at the
Annual Meeting of Shareholders. Abstentions will be treated as shares
that are present and entitled to vote for purposes of determining the presence
of a quorum, but as unvoted for purposes of determining the approval of the
matter submitted to the shareholders for a vote. If you abstain from
voting on any of the proposals, it has the same effect as a vote against that
proposal.
A director
nominee will be elected if approved by the affirmative vote of the holders of a
plurality of the voting power of the shares present, in person or by proxy, and
entitled to vote for the election of directors. You may either vote
“FOR” or “WITHHOLD” authority to vote for each nominee for the Board of
Directors. If you withhold authority to vote for the election of one
of the directors, it has the same effect as a vote against that
director.
1
Each other
item of business properly presented at a meeting of shareholders generally must
be approved by the affirmative vote of the holders of a greater of: (a) a
majority of the voting power of the shares present, in person or by proxy, and
entitled to vote on that item of business or (b) a majority of the voting power
of the minimum number of shares that would constitute a quorum. You
may vote “FOR,” “AGAINST” or “ABSTAIN” on any other proposal.
Whether or
not you expect to attend the meeting, please complete, date, sign and return the
enclosed proxy as promptly as possible (or follow instructions to grant a proxy
to vote by means of telephone) in order to ensure your representation at the
meeting. A return envelope (which is postage prepaid if mailed in the
United States) is enclosed for that purpose. Even if you have given
your proxy, you may still vote in person if you attend the
meeting. Please note, however, that if your shares are held of record
by a broker, bank or other nominee and you wish to vote at the meeting, you must
bring to the meeting a letter from the broker, bank or other nominee confirming
your beneficial ownership of the shares. Additionally, in order to
vote at the meeting, you must obtain from the record holder a proxy issued in
your name. You will not be able to vote your shares via the
Webcast. If you plan to view the Webcast, please submit your vote
using the enclosed proxy.
Any proxy
may be revoked at any time before it is voted by written notice to the Secretary
of Innovex, by receipt of a proxy properly signed and dated subsequent to an
earlier proxy, or by revocation of a written proxy by request in person at the
Annual Meeting. If not so revoked, the shares represented by such
proxy will be voted.
This 2009
Annual Meeting of Shareholders is a regular meeting of our shareholders and has
been called by our board of directors in accordance with our
bylaws. Under our bylaws, special meetings of our shareholders may be
held at any time for any purpose and may be called by the chairman of our board,
our chief executive officer, our chief financial officer, two or more directors
or by a shareholder or shareholders holding 10% or more of the voting power of
all shares entitled to vote on the matters to be presented to the meeting,
except that a special meeting for the purpose of considering any action to
directly or indirectly facilitate or affect a business combination, including
any action to change or otherwise affect the composition of the board of
directors for that purpose, must be called by 25% or more of the voting power of
all shares entitled to vote. The business transacted at a special
meeting is limited to the purposes as stated in the notice of the
meeting. For business to be properly brought before a regular meeting
of shareholders, a written notice containing the required information must be
timely submitted. For more information, please review our bylaws and
the section of this proxy statement entitled “Shareholder Proposals for 2010
Annual Meeting.”
Our bylaws
may be amended or altered by a vote of the majority of the whole board at any
meeting. The authority of the board is subject to the power of our
shareholders, exercisable in the manner provided by Minnesota law, to adopt,
amend, or repeal bylaws adopted, amended, or repealed by the
board. Additionally, the board may not make or alter any bylaws
fixing a quorum for meetings of shareholders, prescribing procedures for
removing directors or filling vacancies in the board of directors, or fixing the
number of directors or their classifications, qualifications, or terms of
office, except that the board may adopt or amend any bylaw to increase their
number.
2
PRINCIPAL
HOLDERS AND MANAGEMENT
The
following table includes information as of December 15, 2008 concerning the
beneficial ownership of our common stock by (i) all persons who are known to us
to beneficially hold more than five percent of our common stock; (ii) each of
our directors and director nominees; (iii) each executive officer named in the
Summary Compensation Table set forth below (the “Named Executive Officers”); and
(iv) all of our current directors and executive officers as a
group. Unless otherwise indicated, all shares represent sole voting
and investment power. Unless otherwise indicated, the business
address of each person is 3033 Campus Drive, Suite E180, Plymouth, Minnesota
55441.
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Name and Address of Beneficial
Owner
|
Number
of Shares
Beneficially Owned (1)
|
Percent
of
Outstanding |
|
|
Perkins
Capital Management, Inc. (2)
730
East Lake Street
Wayzata,
MN 55391
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6,741,400
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34.7%
|
|
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State
of Wisconsin Investment Board (3)
P.O.
Box 7842
Madison,
WI 53707
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1,782,516
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9.2%
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Dimensional
Fund Advisors LP (4)
1299
Ocean Avenue, 11th Floor,
Santa
Monica, CA 90401
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1,057,932
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5.4%
|
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Terry
M Dauenhauer (5)(6)
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348,267
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1.8%
|
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D.
Allen Andersen
(6)
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50,000
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*
|
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Philip
D. Ankeny (6)
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70,000
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*
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John
M. Clark III (6)
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20,000
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*
|
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Kenneth
L. White
(6)
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20,000
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*
|
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Thira
Wipuchanin (6)
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—
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*
|
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Randy
L. Acres (5)
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—
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*
|
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Brian
R. Dahmes (5)
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102,325
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*
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William
P. Murnane (5)(7)
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37,881
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*
|
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Douglas
W. Keller
(5)(8)
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33,596
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*
|
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Keith
A. Foerster (5)(9)
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11,000
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*
|
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E.
Thomas Atchison (5)(10)
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26,851
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*
|
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All
current executive officers and directors as a group (8
persons)
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610,592
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3.1%
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*Less than
1%
3
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(1)
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Includes
the following number of shares which may be purchased pursuant to the
exercise of stock options within sixty days of December 15,
2008: Mr. Dauenhauer, 160,334 shares; Mr. Andersen, 50,000
shares; Mr. Ankeny, 70,000 shares; Mr. Clark, 20,000 shares; Mr. White,
20,000 shares; Mr. Dahmes, 79,834 shares and all current directors and
officers as a group, 400,168
shares.
|
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(2)
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Based
upon an Amendment No. 4 to Schedule 13G filed by Perkins Capital
Management, Inc. (“Perkins”), on December 5, 2008 with respect to holdings
as of November 30, 2008. Perkins is an investment adviser and
reports sole voting control over 4,034,400 shares and dispositive control
over 6,741,400 shares.
|
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(3)
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Based
upon a Schedule 13G filed on February 8, 2008. The State of
Wisconsin Investment Board is a government agency that manages public
pension funds subject to provisions comparable to ERISA. The
shareholder reports sole voting and dispositive control over all
shares.
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(4)
|
Based
on an Amendment No. 2 to Schedule 13G filed on February 6, 2008 by
Dimensional Fund Advisors LP (“Dimensional”), an investment advisor, with
respect to holdings as of December 31, 2007. Dimensional
furnishes investment advice to four investment companies and serves as
investment manager to certain other commingled group trusts and separate
accounts. These investment companies, trusts and accounts are
the “Funds.” In its role as investment advisor or manager,
Dimensional possesses investment and/or voting power over the securities
of Innovex described in this schedule that are owned by the Funds, and may
be deemed to be the beneficial owner of the shares of the Issuer held by
the Funds. However, all securities reported in this schedule
are owned by the Funds. Dimensional disclaims beneficial
ownership of such securities.
|
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(5)
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Named
Executive Officer.
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(6)
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Serves
as a director of Innovex and has been nominated for election or
re-election at this 2009 Annual Meeting of
Shareholders.
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(7)
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Mr.
Murnane ceased serving as our Chief Executive Officer on December 15, 2007
but continued to serve as our employee and Chairman of the Board until
July 16, 2008 and as a director until July 23, 2008. Beneficial
ownership is based on reports filed by Mr. Murnane under Section 16 of the
Securities Exchange Act of 1934.
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(8)
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Mr.
Keller ceased serving as our Vice President, Finance and Chief Accounting
Officer as of April 30, 2008. Beneficial ownership is based on reports
filed by Mr. Keller under Section 16 of the Securities Exchange Act of
1934.
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(9)
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Mr.
Foerster ceased serving as our Senior Vice President, Development and
Sales effective April 30, 2008. Beneficial ownership is based
on reports filed by Mr. Foerster under Section 16 of the Securities
Exchange Act of 1934.
|
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(10)
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Mr.
Atchison ceased serving as our Vice President and Managing Director of
Innovex Thailand effective December 31, 2007. Beneficial ownership is
based on reports filed by Mr. Atchison under Section 16 of the Securities
Exchange Act of 1934.
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4
ELECTION
OF DIRECTORS
Under our
Amended and Restated Bylaws, the Board of Directors must consist of not less
than 3 nor more than 9 directors, as may be designated by resolution of the
Board of Directors from time to time. The Board of Directors has set
the number of directors at six. The Governance Committee has
nominated, and the Board of Directors has ratified the nomination of, the six
persons named below. All of the nominees are currently directors of
Innovex.
It is
anticipated that the proxies will be voted for the nominees named below, and the
Board of Directors has no reason to believe any nominee will not continue to be
a candidate or will not be able to serve as a director if elected. In
the event that any nominee named below is unable to serve as a director, the
persons named in the proxies have advised that they will vote for the election
of such substitute nominee as the Board of Directors may propose.
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Name and Age
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Principal Occupation and
Other Directorships
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Director
Since
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D.
Allen Andersen
Age
57
|
Since
August 2006, Mr. Andersen has been a private investor. From
2005 through August of 2006, Mr. Andersen was a Senior Advisor to the Sun
Hung Kai Properties Direct Investments Ltd., the private equity arm of the
Sun Hung Kai Properties Group. Mr. Andersen was a Managing
Director of PAMA Group (Hong Kong) Ltd., an Asia-based private equity
investment firm, from 1998 to 2005. Previously Mr. Andersen was
a member of Innovex’ Board from December 2002 to January 2004 and held
various management positions with Asia Access Investment Company, Richina
Group, Continental Grain Company and General Mills. Mr.
Andersen earned an M.B.A. from the Harvard Graduate School of Business
Administration and holds a B.S. in Accounting and Chinese from Brigham
Young University. Mr. Andersen is currently a director of Nu
Skin Enterprises, Inc.
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2006
|
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Philip
D. Ankeny
Age
45
|
Philip
D. Ankeny joined SurModics as its Vice President and Chief Financial
Officer in April 2003 with the additional responsibilities
of Vice President, Business Development added in April
2004. He was promoted to Senior Vice President and Chief
Financial officer of SurModics in May 2006. Prior to joining
SurModics, he served as Chief Financial Officer for Cognicity, Inc. from
1999 to 2002. Prior to that, Mr. Ankeny served as a Partner at
Sherpa Partners, LLC, a venture capital and venture development firm, from
1998 to 1999. He also spent five years in investment banking at
Robertson Stephens and Morgan Stanley. In addition, his operating
experience includes over five years with IBM and Shiva in sales, marketing
and business development roles. Mr. Ankeny received an A.B. degree
in Economics and Engineering from Dartmouth College in 1985 and an M.B.A.
from Harvard Business School in 1989.
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2004
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5
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Name and Age
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Principal Occupation and
Other Directorships
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Director
Since
|
|
John
M. Clark III
Age
58
|
In
July 2008, Mr. Clark was elected Chairman of the Company. Mr. Clark
retired from National Semiconductor Corporation in October 2007. Mr. Clark
joined National as in-house lawyer in 1978. From 1992 through 2007, Mr.
Clark served as Senior Vice President, General Counsel and Secretary. Mr.
Clark is Chairman of the Law Committee of the Semiconductor Industry
Association (SIA) as well as National’s Board Alternate to SIA. Mr. Clark
received his B.A. from Rice University in 1972 and his J.D. from Stanford
Law School in 1975.
|
February
1, 2008
|
|
Terry
M. Dauenhauer
Age
56
|
Mr.
Dauenhauer was appointed to the Board of Directors on October 23, 2007 and
was appointed as our Chief Executive Officer on December 15,
2007. From January 2004 until his appointment as our CEO, he
served as our Senior Vice President and Chief Operating Officer.
From 1993 to 1997, he spent five years with Seagate Technology as Vice
President of Thailand Operations and World Wide Product Performance.
Mr. Dauenhauer holds a B.S. in Electrical Engineering from the University
of Illinois.
|
2007
|
|
Kenneth
L. White
Age
62
|
Currently
Mr. White is Executive Director of Finansa Public Company Limited, a
regional merchant bank and investment management company headquartered in
Bangkok. Mr. White also serves as Chairman of Finansa Credit
Ltd., and Executive Director of Finansa Asset Management
Ltd. Prior to joining Finansa in 2001, Mr. White served as
Managing Director of Pacific Siam Strategic Consulting Company Ltd., an
advisory services firm from 1992 to 2001. Mr. White was previously
employed as General Manager for Thailand by the Chase Manhattan Bank from
1986 to 1992. He serves as a director and Audit Committee
Member for publicly listed corporations, Minor International PCL, and
Goodyear (Thailand) PCL. He is currently a Governor of the American
Chamber of Commerce in Thailand.
|
February
1, 2008
|
|
Thira
Wipuchanin
Age
59
|
Mr.
Wipuchanin is currently serving as a director and the Chairman of the
Audit Committee for United Palm Oil Industry Public Co. Ltd. and a
director and a member of the Audit Committee for Siam Makro Public Co.,
Ltd. In addition, Mr. Wipuchanin serves as a director for both Precious
Shipping Public Co. Ltd. and Dharmniti and Truth Co., Ltd. Mr. Wipuchanin
was a Senior Executive Vice President for the Export-Import Bank of
Thailand and was employed by the Export-Import Bank of Thailand from 1998
through 2003.
|
September
16,
2008
|
Under
Minnesota law and our Amended and Restated Bylaws, directors are elected by a
plurality of the votes cast at the meeting by holders of common stock voting for
the election of directors. This means that since shareholders will be
electing six directors, the six nominees receiving the highest number of votes
will be elected.
THE
BOARD OF DIRECTORS RECOMMENDS
A
VOTE “FOR”
THE
ELECTION OF EACH OF THE NOMINEES
___________________________
6
The Board
undertook a review of director independence in October 2008. As part
of that process, the Board reviewed all transactions and relationships between
each director (or any member of his or her immediate family) and Innovex, our
executive officers and our auditors, and other matters bearing on the
independence of directors. As a result of this review, the Board
affirmatively determined that Messrs. Andersen, Ankeny, Clark, White and
Wipuchanin are independent as defined by the Nasdaq Marketplace Rules and the
rules of the Securities and Exchange Commission. Mr. Dauenhauer is
not independent under the Nasdaq Marketplace Rules because he serves as our
Chief Executive Officer.
Our Board
of Directors has established an Audit Committee, a Compensation Committee and a
Governance Committee. The composition and function of these
committees are set forth below.
Audit
Committee. The Audit Committee assists the Board by reviewing
the integrity of our financial accounting and reporting, the system of internal
controls established by management, and the adequacy of auditing relative to
these activities. The Audit Committee has the ultimate authority for
engaging our independent auditors, pre-approving all fees and audit and
non-audit services to be provided by the auditors, overseeing the auditors,
reviewing and evaluating significant matters relating to our audit and internal
controls; and reviewing the scope and results of audits by, and recommendations
of, our independent auditors. In addition, the Audit Committee
reviews our audited financial statements and considers major changes and
questions of choice regarding appropriate auditing and accounting principles and
practices to be followed in the preparation of the our financial
statements.
The Audit
Committee operates under a written charter last amended by the Board of
Directors on October 15, 2004. A copy of the current Charter of the
Audit Committee is available on the “Investor Relations” section of our website,
www.innovexinc.com. The
Audit Committee consists of Messrs. Ankeny (Chair), Clark ,White and
Wipuchanin. During fiscal year 2008, the Audit Committee met six
times.
The Board
of Directors has determined that each member of the Audit Committee is an
“independent” director as that term is defined by Nasdaq Marketplace Rules and
Rule 10A-3 of the Securities Exchange Act of 1934 (the “1934
Act”). The Board of Directors has reviewed the education, experience
and other qualifications of each of the members of its Audit
Committee. After review, the Board of Directors has determined that
Mr. Ankeny meets the Securities and Exchange Commission definition of an “audit
committee financial expert.” A report of the Audit Committee is set
forth below.
Compensation
Committee. The Compensation Committee operates under a written
charter, available on the “Investor Relations” section of our website, www.innovexinc.com. The
Compensation Committee reviews and approves the compensation and terms of
employment of our Chief Executive Officer and our senior
management. Among its other duties, the Compensation Committee
oversees all significant aspects our compensation plans and benefit
programs. The Compensation Committee annually reviews and approves
corporate goals and objectives for the Chief Executive Officer and other
executive officers and evaluates their performance in light of these goals and
objectives. The members of the Compensation Committee are Messrs.
White (Chair), Andersen, Clark and Wipuchanin.
The
Charter of the Compensation Committee requires that the committee consist of no
fewer than two members, each of whom must be “independent” according to the
Nasdaq Marketplace Rules and the rules of the Securities and Exchange
Commission, and each of whom must be an “outside director” for purposes of
Section 162(m) of the Internal Revenue Code. Each member of the
Compensation Committee meets these requirements. During fiscal year
2008, the Compensation Committee met seven times.
7
Governance
Committee. The Governance Committee operates under a written
charter and is responsible for (i) identifying, evaluating and approving
individuals qualified to serve as members of the Board, (ii) administering our
governance guidelines, (iii) reviewing our overall corporate governance and
making improvements, when necessary; and (iv) overseeing the evaluation of the
Board and management. The current members of the Governance Committee
are Messrs. Clark (Chair), Andersen, Ankeny and Wipuchanin. During
fiscal year 2008, the Governance Committee met five times.
The
Charter of the Governance Committee requires that the Committee consist of no
fewer than two members who satisfy the “independence” requirements of the Nasdaq
Marketplace Rules. Each member of the Governance Committee meets
these requirements. A copy of the current Governance Committee
Charter is available on the “Investor Relations” section of our website, www.innovexinc.com.
The
Governance Committee will consider candidates for Board membership suggested by
its members, other Board members, as well as management and
shareholders. Shareholders who wish to recommend a prospective
nominee should follow the procedures set forth below in the section entitled
“Shareholder Proposals for Nominees”.
Criteria for Nomination to the
Board. The Governance Committee is responsible for
identifying, evaluating and approving qualified candidates for nomination as
directors. The Committee has not adopted minimum qualifications that
nominees must meet in order for the Committee to recommend them to the Board of
Directors, as the Committee believes that each nominee should be evaluated based
on his or her merits as an individual, taking into account our needs and those
of the Board of Directors. The Governance Committee evaluates each
prospective nominee against the standards and qualifications set out in our
Governance Guidelines, including:
|
§
|
Background,
including high personal and professional ethics, integrity and values, and
the ability to exercise good business judgment and enhance the Board’s
ability to contribute to our Company’s overall corporate goals of
technology leadership, low cost manufacturing, effective execution, high
customer satisfaction, superior employee working environment and creation
and preservation of shareholder
value.
|
|
§
|
Commitment,
including the willingness to devote adequate time to the work of the Board
and its committees, and the ability to represent the interests of all
shareholders and not a particular interest
group.
|
|
§
|
Board
skills needed, in the context of the existing makeup of the Board, and the
candidate’s qualification as independent and qualification to serve on
Board committees.
|
|
§
|
Diversity,
in terms of knowledge, experience, skills, expertise, and other
demographics that contribute to the Board’s
diversity.
|
|
§
|
Business
experience and educational
background.
|
The
Governance Committee also considers such other relevant factors as it deems
appropriate. The Governance Committee will consider persons
recommended by the shareholders in the same manner as other
nominees.
Process for Identifying and
Evaluating Nominees. The process for identifying and
evaluating nominees to the Board of Directors is initiated by identifying a
slate of candidates who meet the criteria for selection as a nominee and have
the specific qualities or skills being sought based on input from members of the
Board and, if the Governance Committee deems appropriate, a third-party search
firm. The Governance Committee evaluates these candidates by
reviewing the candidates’ biographical information and qualifications and
checking the candidates’ references. One or more Committee members
will interview the prospective nominees in person or by
telephone. After completing the evaluation, the Committee makes a
recommendation to the full Board of the nominees to be presented for the
approval of the shareholders or for election to fill a vacancy.
8
Board Nominees for the 2009 Annual
Meeting. The nominees for this 2009 Annual Meeting were
selected by the Governance Committee. Of the nominees, Messrs.
Andersen, Ankeny and Dauenhauer were elected by shareholders at our 2008 Annual
Meeting. Messrs. Clark and White were recommended to the Governance
Committee as directors by Mr. Dauenhauer, and Mr. Wipuchanin was recommended to
the Governance Committee as a director by Mr. White. Messrs. Clark
and White were elected as directors effective February 1, 2008. Mr.
Wipuchanin was elected as a director effective September 16, 2008.
We have
not engaged a third-party search firm to assist in identifying potential
director candidates, but the Governance Committee may choose to do so in the
future.
Shareholder Proposals for
Nominees. The Governance Committee will consider written
proposals from shareholders for nominees for director. Any such
nominations should be submitted to the Governance Committee c/o the Secretary of
Innovex and should include the following information: (a) all information
relating to such nominee that is required to be disclosed pursuant to
Regulation 14A under the 1934 Act (including such person’s written consent
to being named in the proxy statement as a nominee and to serving as a director
if elected); (b) the name and record address of the shareholder and of the
beneficial owner, if any, on whose behalf the nomination will be made, and (c)
the class and number of shares of the corporation owned by the shareholder and
beneficially owned by the beneficial owner, if any, on whose behalf the
nomination will be made. As to each person the shareholder proposes
to nominate, the written notice must also state: (a) the name, age, business
address and residence address of the person, (b) the principal occupation or
employment of the person and (c) the class and number of shares of our capital
stock beneficially owned by the person. To be considered, the written
notice must be submitted in the time frame described under the caption
“Shareholder Proposals for 2010 Annual Meeting” below.
The Board
of Directors met nine times during fiscal year
2008. Each nominee serving as a director in fiscal year 2008 attended
at least 75% of the meetings of the Board of Directors and any committee on
which he served held during his term of service. We do not have a
formal policy on attendance at meetings of our shareholders. However,
we encourage all directors to attend all meetings, including the Annual Meeting
of Shareholders. One director attended the 2008 Annual Meeting of
Shareholders in person.
Shareholders
may communicate with the Board as a group, the chair of any committee of the
Board of Directors or any individual director by sending an e-mail to chair.director@innovexinc.com or by directing
the communication in care of the Corporate Secretary, at the address set forth
on the front page of this proxy statement. All communications will be
received and processed by the Corporate Secretary. You will receive a
written acknowledgement from the Corporate Secretary upon receipt of your
communication.
We have
adopted a Code of Ethics and Business Conduct that applies to all directors,
officers and employees, including our principal executive officer, principal
financial officer, principal accounting officer or controller, or persons
performing similar functions. The Code of Ethics and Business Conduct
may be found on the “Investor Relations” section of our website, www.innovexinc.com.
9
The Audit
Committee is comprised of Messrs. Ankeny (Chair), Clark, White and Wipuchanin.
In accordance with its Charter, the Audit Committee reviewed and discussed the
audited financial statements with management and BDO Seidman LLP, our
independent accountants. The discussions with BDO Seidman LLP also
included the matters required by applicable requirements of the Public Company
Accounting Oversight Board regarding the independent accountant’s communications
with the audit committee concerning independence.
BDO
Seidman LLP provided to the Audit Committee the written disclosures and the
letter regarding its independence as required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees). This
information was discussed with BDO Seidman LLP.
Based on
the discussions with management and BDO Seidman LLP, the Audit Committee’s
review of the representations of management and the report of BDO Seidman LLP,
the Audit Committee recommended to the Board that the audited financial
statements be included in our Annual Report on Form 10-K for the year ended
September 27, 2008, filed with the Securities and Exchange
Commission.
Submitted
By The Audit Committee Of The Board Of Directors
|
Philip
D. Ankeny (Chair)
John
M. Clark III
Kenneth
L. White
Thira
Wipuchanin
|
The
preceding report shall not be deemed incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under
the Securities Act of 1933 (the “1933 Act”) or the 1934 Act, except to the
extent we specifically incorporate this information by reference, and shall not
otherwise be deemed filed under the 1933 Act or the 1934 Act.
10
The
following discussion describes our compensation objectives and policies as
applied to the following executive officers who are referred to in this proxy
statement as the Named Executive Officers:
|
§
|
Terry
M. Dauenhauer, our Chief Executive
Officer
|
|
§
|
Randy
L. Acres, our Chief Financial
Officer
|
|
§
|
Brian
R. Dahmes, our Vice President,
Engineering
|
|
§
|
William
P. Murnane, our former Chief Executive
Officer
|
|
§
|
Douglas
W. Keller, our former Vice President,
Finance
|
|
§
|
Keith
A. Foerster, our former Senior Vice President of Development and
Sales
|
|
§
|
E.
Thomas Atchison, our former Vice President and Managing Director of
Innovex Thailand
|
This
section is intended to provide a framework within which to understand the actual
compensation awarded to, earned or held by each Named Executive Officer during
2008, as reported in the compensation tables and accompanying narrative sections
appearing on pages 14 to 18 of this proxy statement.
Mr. Keller
ceased serving as our Vice President, Finance and Chief Accounting Officer as of
April 30, 2008. Mr. Foerster ceased serving as our Senior Vice
President, Development and Sales effective April 30, 2008. Mr.
Atchison ceased serving as our Vice President and Managing Director of Innovex
Thailand effective December 31, 2007. Mr. Murnane ceased serving as
our Chief Executive Officer on December 15, 2007 but continued to serve as our
employee and Chairman of the Board until July 16, 2008.
Role
of the Compensation Committee in the Compensation Process
The
responsibility of the Compensation Committee is to review and approve the
compensation and other terms of employment of our Chief Executive Officer and
our other executive officers. Among its other duties, the
Compensation Committee approves the compensation and terms of employment of our
Chief Executive Officer and our senior management. In addition, the
Compensation Committee oversees all significant aspects of our compensation
plans and benefit programs. The Compensation Committee annually
reviews and approves corporate goals and objectives for the Chief Executive
Officer and other executive officers and evaluates their performance in light of
these goals and objectives.
The
Compensation Committee has also been appointed by the Board of Directors to
administer our 1994 Stock Option Plan. In carrying out its duties,
the Compensation Committee participates in the design and implementation and
ultimately reviews and approves specific compensation programs. For
fiscal 2008, employees, including the Named Executive Officers, were eligible
for cash bonuses depending upon our financial performance as compared to
performance goals established by the Compensation Committee under what is
referred to in this proxy statement as the 2008 Bonus Plan.
Under its
charter, the Compensation Committee has the authority to engage the services of
outside advisors, experts and others to assist it in performing its
duties. While the Compensation Committee did not use the services of
a compensation consultant in determining fiscal year 2008 compensation for the
Named Executive Officers, the Compensation Committee may choose to do so in the
future. The Compensation Committee also reviewed certain compensation
related information and recommendations from certain members of management, as
described below. The consultant’s recommendations considered base
salaries, bonus plans and stock option grants of peer companies, performance
related to peer companies and stock option plan overhang.
Role
of Management in the Compensation Process
In
determining compensation for Named Executive Officers other than the Chief
Executive Officer, the Compensation Committee solicits input from the Chief
Executive Officer regarding the duties and responsibilities of the other
executive officers and the results of performance reviews. The Chief
Executive Officer also recommends to the
Compensation Committee the base salaries for all Named Executive Officers,
awards under the cash bonus compensation program, and the awards under the
long-term equity program. In addition, the Chief Executive Officer
recommended to the Compensation Committee the corporate financial performance
goals under the 2008 Bonus Plan. From time to time, the Named
Executive Officers are invited to attend meetings of the Compensation
Committee. However, no Named Executive Officer attends any executive
session of the Compensation Committee or is present during deliberations or
determination of such Named Executive Officer’s compensation.
11
Objectives
of Compensation Programs
The
Compensation Committees’ governing philosophy for determining compensation
levels is designed to attract and retain the highest quality personnel possible
consistent with Innovex’ resources and capabilities.
For 2008,
as with prior years, the Compensation Committee determined that base salaries
should be targeted near the median of the market with cash bonuses at the target
level and the value of long-term incentives from stock options also near the
market median. Total compensation should only be in excess of the
market median if warranted by performance.
In
determining Named Executive Officers’ annual base salary and target bonus
compensation, the Compensation Committee considered our overall financial
performance, the duties of the executive officer, the executive officer’s
performance, a 2005 study of executive compensation, related compensation data
and information for employees in various positions in Minnesota and Thailand,
and with respect to the executive officers other than the Chief Executive
Officer, the recommendations of the Chief Executive Officer.
In
determining the number of stock options and therefore, the value of long-term
equity compensation, the Compensation Committee reviews historical granting
practice, option utilization, overhang and availability of shares under the 1994
Stock Option Plan for future grants, as well as the value of stock options for
peer companies and the market median of that value. The Compensation
Committee believes that long-term equity bonus compensation among the executive
officers should be structured such that the executive officers in positions of
increasing responsibility have an opportunity to receive a correspondingly
larger portion of the overall value of long-term equity compensation for the
year. The Compensation Committee believes that stock option grants to
executive officers encourage and reward effective management that results in
long-term corporate financial success, as measured by stock price
appreciation. The Compensation Committee believes that stock options
help align management’s and shareholder’s interests in enhancing shareholder
value. The Compensation Committee generally approves annual stock
option grants in recognition of performance of executive officers for the prior
fiscal year.
2008
Compensation of Named Executive Officers
Base
Salaries
At its
meeting in October 2007, the Compensation Committee approved increases to the
base salaries of the Named Executive Officers effective for calendar year
2008. The following table shows the base salaries for the Named
Executive Officers for calendar year 2008 as compared to fiscal year
2007.
|
Name
|
Fiscal
Year
2007 Base Salary |
Calendar
Year
2008 Base Salary |
%
Difference
2008 as Compared to 2007 |
|
Terry
M. Dauenhauer
|
$244,000
|
$285,000
|
16.8%
|
|
Brian
R. Dahmes (1)
|
$157,590
|
$164,800
|
4.6%
|
|
William
P. Murnane
|
$360,000
|
$360,000
|
0%
|
|
Douglas
W. Keller
|
$165,000
|
$165,000
|
0%
|
|
Keith
A. Foerster
|
$215,000
|
$215,000
|
0%
|
|
E.
Thomas Atchison
|
$206,000
|
$206,000
|
0%
|
12
|
(1)
|
Calendar
year 2008 base salary represents approximate amount reflected in the
employment agreements we entered into with Mr. Dahmes effective April 1,
2008 and includes amounts payable in U.S. dollars and Thai baht, the
dollar value of which may fluctuate because of changes in the exchange
rate between U.S. dollars and Thai
baht.
|
When Mr.
Acres joined our company as our Chief Financial Officer in March 2008, the
Compensation Committee set his base salary in connection with the negotiation of
employment agreements with him. Mr. Acres’ annual base salary, which
has components payable in both U.S. dollar and Thai baht, for the remainder of
fiscal year 2008 is approximately $232,000.
Bonus Plans
Consistent
with its compensation philosophy and the objectives of annual cash bonus
programs, the Compensation Committee adopted the 2008 Bonus Plan on October 23,
2007. Employees, including the Named Executive Officers, participated
in the 2008 Bonus Plan and would be eligible to receive a bonus only if they
remained employed by us at the end of our 2008 fiscal year.
The 2008
Bonus Plan has two components, corporate objectives and individual
objectives. The bonus opportunity for each of the Named Executive
Officers participating in the 2008 Bonus Plan was based on corporate objectives
and not individual objectives. The 2008 corporate objectives were
measured based on three performance goals for fiscal year 2008: (1) dollar
amount of revenue excluding pass-through materials weighted at 30% of the total
bonus, (2) dollar amount of operating profit weighted at 35% of the total bonus,
and (3) dollar amount of earnings before interest, taxes, depreciation,
amortization and restructuring weighted at 35% of the total bonus. The
Compensation Committee established minimum, target and maximum levels of
achievement for each performance measure. The Named Executive Officer
participants would receive cash bonuses depending on Innovex’ achievement of the
three performance goals and the position of such participant with the
Company. Neither Messrs. Keller and Dahmes were selected to
participated in the 2008 Bonus Plan. Mr. Acres was appointed as the
Company’s Chief Financial Officer on March 17, 2008 and so was not eligible to
participate in the 2008 Bonus Plan.
The
following table shows the minimum, target and maximum aggregate bonuses to each
of the Named Executive Officers who participated in the 2008 Bonus Plan,
including all components, as a percentage of the officer’s base salary at the
end of fiscal year 2008:
|
Name
|
Minimum
|
Target
|
Maximum
|
|
Terry
M. Dauenhauer
|
0
|
40
|
80
|
|
William
P. Murnane
|
0
|
60
|
120
|
|
Keith
A. Foerster
|
0
|
40
|
80
|
|
E.
Thomas Atchison
|
0
|
35
|
70
|
For 2008,
revenue excluding pass-through materials was $42.7 million, the operating loss
was $20.4 million and the loss before interest, taxes, depreciation,
amortization and restructuring was $(13.4) million. Each of these
measures for 2008 was below the minimum set by the Compensation Committee with
respect to such measure. Under the matrix associated with the 2008
Bonus Plan, our 2008 financial performance resulted in no cash bonuses to the
Named Executive Officers.
On October
18, 2006, the Compensation Committee also established a deferred bonus
plan (the “Deferred Bonus Plan”) as a retention tool in light of our
ongoing corporate restructuring efforts. The Compensation Committee
funded the Deferred Bonus Plan with $350,000 to be used for
bonuses. Under the Deferred Bonus Plan, certain employees earned cash
bonuses based on their relative base salaries for fiscal year 2006 (excluding
any bonus) in proportion to the pool. The Compensation Committee did
not adopt any similar bonus plan with respect to fiscal year 2008.
13
Long-Term
Equity Compensation
The
long-term equity component of executive compensation is provided primarily
through stock options that are generally granted to executive officers in
connection with their initial employment and periodically upon review of
compensation levels, past performance and future potential. Stock
options have been awarded at an exercise price equal to the fair market value on
the date of grant and therefore have value only if the price of our stock
appreciates from the price on the date on which the stock options are
granted. In this way, our executive officers and shareholders benefit
equally from appreciation in our stock price. Stock options are awarded in a
manner consistent with our objective to provide a long-term equity interest in
us and to provide an opportunity for a greater financial reward if long-term
performance is sustained. To encourage a long-term perspective,
options generally vest equally over five years. The Compensation
Committee’s policy is to grant all equity awards under shareholder approved
equity compensation plans, such as our 1994 Stock Option Plan.
Elements
of Post-Termination Compensation
We have
entered into employment agreements with the Named Executive Officers that
include provisions relating to severance and change in control
benefits.
See
“Executive Compensation – Employment Agreements with Named Executive Officers
and Post-Employment Arrangements” in this proxy statement for a discussion of
the terms of the employment agreements and the value of benefits payable under
employment agreements.
The
following table shows information concerning compensation earned for services in
all capacities during the fiscal years noted for (i) Terry M. Dauenhauer who
began serving as our Chief Executive Officer on December 15, 2007 and previously
served as our Chief Operating Officer; (ii) William P. Murnane who served as our
Chief Executive Officer until December 15, 2007 and thereafter served as our
employee until July 16, 2008; (iii) Randy L. Acres, who began serving as our
Chief Financial Officer effective March 17, 2008; (iv) Douglas W. Keller, who
served as our Vice President, Finance until April 30, 2008 and thereafter
continued to serve as an employee on a part-time basis through the remainder of
fiscal year 2008; (v) Brian R. Dahmes, the only other executive officer serving
at the end of the fiscal year whose total compensation was at least $100,000,
less the amount representing the change in pension value and nonqualified
deferred compensation earnings and; (iv) the two additional persons
who would have been considered one of the three most highly compensated
executive officers except that neither were serving as our executive officer at
the end of fiscal year 2008 (together referred to as our “Named Executive
Officers”).
|
Name
and Principal Position
|
Year
|
Salary
($) |
Option
Awards ($) (1) |
Non-
Equity Bonus Plan Compen- sation ($)(2) |
All
Other
Compen-
sation ($)(3) |
Total
($)
|
|
Terry
M. Dauenhauer (4)
|
2008
|
$305,937
|
$93,661
|
—
|
$20,850
|
$420,448
|
|
Chief
Executive Officer
|
2007
|
238,615
|
63,901
|
$34,265
|
25,500
|
362,281
|
|
Randy
L. Acres (5)
|
2008
|
124,342
|
1,508
|
—
|
8,585
|
134,435
|
|
Chief
Financial Officer
|
||||||
|
Brian
R. Dahmes
|
2008
|
178,290
|
21,152
|
—
|
191,758
|
391,200
|
|
Vice
President, Engineering
|
2007
|
156,354
|
21,255
|
20,478
|
24,571
|
222,658
|
|
William
P. Murnane (6)
|
2008
|
290,769
|
2,031
|
—
|
82,224
|
375,024
|
|
Former
Chief Executive Officer
|
2007
|
351,923
|
89,591
|
$75,719
|
23,543
|
540,776
|
|
Douglas
W. Keller (7)
|
2008
|
177,790
|
13,554
|
—
|
173,460
|
364,804
|
|
Former
Vice President, Finance
|
2007
|
163,654
|
38,625
|
21,415
|
11,645
|
235,339
|
|
Keith
A. Foerster (8)
|
2008
|
132,457
|
6,182
|
—
|
99,532
|
238,171
|
|
Former
Senior Vice President, Development and Sales
|
2007
|
210,962
|
44,045
|
30,593
|
12,633
|
298,233
|
|
E.
Thomas Atchison (9)
|
2008
|
80,137
|
0
|
—
|
57,567
|
137,704
|
|
Former
Vice President and Managing Dir., Innovex Thailand
|
2007
|
202,500
|
29,011
|
25,832
|
26,733
|
284,076
|
14
|
(1)
|
Values
expressed represent the actual compensation cost recognized by our company
during fiscal 2008 for equity awards granted in 2008 and prior years as
determined pursuant to Statement of Financial Accounting Standards No.
123, Share-Based Payment (“SFAS 123R”) utilizing the assumptions discussed
in Note A, “Summary of Significant Accounting Policies – Stock-Based
Compensation,” in the notes to consolidated financial statements included
in our Annual Report on Form 10-K for the year ended September 27,
2008.
|
|
(2)
|
Represents
bonuses paid to the Named Executive Officers under a Deferred Bonus Plan
in effect for fiscal year 2007, which was reported for the year in which
the related services were
performed.
|
|
(3)
|
Includes
the following amounts:
|
|
Perquisites
and Personal Benefits
|
|
|
|
||||
|
Housing
Allowance |
Automobile
Allowance |
Club
Dues and Fees |
Severance |
Innovex
Contribution to 401(k) Plan |
Total | ||
|
Terry
M. Dauenhauer
|
$14,503
|
—
|
—
|
—
|
$6,347
|
$20,850
|
|
|
Randy
L. Acres
|
8,585
|
—
|
—
|
—
|
—
|
8,585
|
|
|
Brian
R. Dahmes
|
9,982
|
$8,250
|
0
|
$166,626
|
6,900
|
191,758
|
|
|
William
P. Murnane
|
0
|
719
|
$5,374
|
69,231
|
6,900
|
82,224
|
|
|
Douglas
W. Keller
|
0
|
1,560
|
0
|
165,000
|
6,900
|
173,460
|
|
|
Keith
A. Foerster
|
0
|
1,770
|
0
|
90,962
|
6,800
|
99,532
|
|
|
E.
Thomas Atchison
|
3,522
|
0
|
0
|
51,500
|
2,545
|
57,567
|
|
Severance
amounts for Mr. Dahmes represents severance payment under an employment
agreement dated October 1, 1997, as amended effective May 31, 2005, as
a result of the planned termination of his employment. Subsequent to
this payment, we entered into an employment agreement dated April 1, 2008 with
Mr. Dahmes.
|
(4)
|
Represents
amounts paid to Mr. Dauenhauer in all capacities for the fiscal years
noted.
|
|
(5)
|
Mr.
Acres began serving as our Chief Financial Officer effective March 17,
2008 and therefore, amounts represent a partial year of
compensation.
|
|
(6)
|
Mr.
Murnane served as our Chief Executive Officer in fiscal year 2007 and from
the beginning of fiscal year 2008 until December 15, 2007 and thereafter
served as our employee until July 16, 2008. Represents amounts
paid to Mr. Murnane in all employee capacities for the fiscal year
noted.
|
|
(7)
|
Mr.
Keller served as our Vice President, Finance in fiscal year 2007 and from
the beginning of fiscal year 2008 until April 30, 2008 and thereafter
continued to serve as an employee on a part-time basis through the
remainder of fiscal year 2008. Represents amounts paid to Mr. Keller in
all capacities for the fiscal years
noted.
|
|
(8)
|
Mr.
Foerster ceased serving as our Senior Vice President, Development and
Sales effective April 30, 2008.
|
|
(9)
|
Mr.
Atchison ceased serving as our Vice President and Managing Director of
Innovex Thailand effective December 31,
2007.
|
15
The
following table sets forth certain information concerning plan-based awards
granted to the Named Executive Officers during the fiscal year ended September
27, 2008.
|
Estimated
Future Payouts Under
Non-Equity Bonus Plan Awards(1) |
|||||||
|
Name
|
Grant
Date
|
Threshold
($) |
Target
($) |
Maximum
($) |
All
Other
Option Awards: Number of Securities Underlying Options (#)(2) |
Exercise
or Base Price of Option Awards ($/Sh) |
Grant
Date Fair Value of Stock and Option Awards ($) (3) |
|
Terry
M. Dauenhauer
|
10/23/2007
|
$0
|
$114,000
|
$228,000
|
—
|
—
|
—
|
|
10/23/2007
|
—
|
—
|
—
|
100,000
|
$0.91
|
$41,040
|
|
|
04/16/2008
(4)
|
—
|
—
|
—
|
250,000
|
0.365
|
58,852
|
|
|
Randy
L. Acres
|
03/17/2008
(4)
|
—
|
—
|
—
|
125,000
|
0.185
|
13,936
|
|
Brian
R. Dahmes
|
10/23/2007
|
—
|
—
|
—
|
10,000
|
0.905
|
2,645
|
|
4/16/2008
|
—
|
—
|
—
|
50,000
|
0.365
|
11,765
|
|
|
William
P. Murnane
|
10/23/2007
|
0
|
216,000
|
432,000
|
—
|
—
|
—
|
|
10/23/2007
|
—
|
—
|
—
|
70,000
|
0.905
|
28,728
|
|
|
Douglas
R. Keller
|
10/23/2007
|
—
|
—
|
—
|
30,000
|
0.905
|
12,312
|
|
Keith
A. Foerster
|
10/23/2007
|
0
|
86,000
|
172,000
|
—
|
—
|
—
|
|
10/23/2007
|
—
|
—
|
—
|
40,000
|
0.905
|
16,416
|
|
|
E.
Thomas Atchison
|
10/23/2007
|
0
|
72,100
|
144,200
|
—
|
—
|
—
|
|
(1)
|
Represents
bonuses that may have been earned by the Named Executive Officers under
our 2008 Bonus Plan. No bonuses were earned under the 2008
Bonus Plan. For a description of the 2008 Bonus Plan, refer to
refer to the information under the headings of Compensation Discussion and
Analysis entitled “Design of Bonus Plans” and “Elements of In-Service
Compensation – Cash Bonus,”
respectively.
|
|
(2)
|
Options
vest and become exercisable in equal installments on the first five
anniversaries of the date of grant.
|
|
(3)
|
Values
expressed represent fair value of the award as determined pursuant to SFAS
123R utilizing the assumptions discussed in Note A, “Summary of
Significant Accounting Policies – Stock-Based Compensation,” in the notes
to consolidated financial statements included in our Annual Report on Form
10-K for the year ended September 27,
2008.
|
|
(4)
|
These
options were amended after the end of fiscal year 2008 and amounts
reflected above do not reflect these amendments. See the
section below “Amendments to Options Granted in Fiscal Year 2008” for
additional information.
|
16
The
following table sets forth certain information concerning equity awards
outstanding to the Named Executive Officers at September 27,
2008. Because of the terminations of their employment, Mr. Atchison’s
options terminated effective January 30, 2008, Mr. Foerster’s and Mr. Keller’s
options terminated as of May 30, 2008, and Mr. Murnane’s options terminated as
of August 15, 2008.
|
Option
Awards
|
||||
|
Name
|
Number
of
Securities Underlying Unexercised Options (#) Exercisable |
Number
of
Securities Underlying Unexercised Options (#) Unexercisable (1) |
Option
Exercise Price ($) |
Option
Expiration
Date (2) |
|
Terry
M. Dauenhauer
|
40,000
|
10,000
|
8.9000
|
11/20/2013
|
|
30,000
|
20,000
|
4.4000
|
10/15/2014
|
|
|
14,000
|
21,000
|
3.0600
|
10/19/2015
|
|
|
8,000
|
32,000
|
2.4050
|
10/18/2016
|
|
|
—
|
100,000
|
0.9050
|
10/23/2017
|
|
|
—
(3)
|
250,000
(3)
|
0.3650
|
4/16/2018
|
|
|
Randy
L. Acres
|
—
(3)
|
125,000
(3)
|
0.1850
|
3/17/2018
|
|
Brian
R. Dahmes
|
12,000
|
—
|
11.5005
|
10/23/2008
|
|
6,000
|
—
|
7.8125
|
10/21/2009
|
|
|
15,000
|
—
|
13.0313
|
10/13/2010
|
|
|
9,000
|
—
|
1.7500
|
10/11/2011
|
|
|
12,000
|
—
|
1.9550
|
10/11/2012
|
|
|
10,000
|
2,500
|
9.7950
|
1/12/2014
|
|
|
9,000
|
6,000
|
4.4000
|
10/15/2014
|
|
|
4,000
|
6,000
|
3.0600
|
10/19/2015
|
|
|
2,000
|
8,000
|
2.4050
|
10/18/2016
|
|
|
—
|
10,000
|
0.9050
|
10/23/2017
|
|
|
—
|
50,000
|
0.3650
|
4/16/2018
|
|
|
(1)
|
Options
granted prior to October 23, 2007 vest and become exercisable in equal
installments on the first five anniversaries of the date of
grant. With the exception of the options issued to Mr. Acres on
March 17, 2008, which vest over five years, options granted on or after
October 23, 2007 vest and become exercisable in equal installments on the
first three anniversaries of the
date.
|
|
(2)
|
The
expiration date of each option is the ten-year anniversary of the date of
grant of such option.
|
|
(3)
|
These
options were amended after the end of fiscal year 2008 and amounts
reflected above do not reflect these amendments. See the
section below “Amendments to Options Granted in Fiscal Year 2008” for
additional information.
|
On
November 25, 2008, the Compensation Committee approved certain actions relating
to outstanding option granted under our 1994 Stock Option Plan, as described
below.
The 1994
Stock Option Plan provides that no optionee may be granted in any fiscal year
one or more options to purchase an aggregate total of more than 100,000 shares
of our common stock. In fiscal year 2008, two options were issued in excess of
this limit: an option to Mr. Dauenhauer to purchase 250,000 shares of the our
common stock granted on April 16, 2008, and an option to Mr. Acres to purchase
125,000 shares of our common stock granted on March 17, 2008.
In order
to rectify the inadvertent issuance of options in excess of the limit of the
1994 Stock Option Plan, the Compensation Committee approved the cancellation of
the April 2008 option to Mr. Dauenhauer and the cancellation of 25,000 shares
underlying the March 2008 option to Mr. Acres, representing the portion of such
option that would otherwise vest on March 17, 2013. The Compensation Committee
also amended the vesting of the March 2008 option to Mr. Acres such that the
option for 100,000 shares vests as to one-fourth of the underlying shares on
March 17, 2009, 2010, 2011 and 2012. The Compensation Committee granted Mr.
Acres an option to purchase 25,000 shares on October 25, 2008 in anticipation of
the partial cancellation and amendments to the March 2008 option described
above.
17
In
consideration of the agreement of Mr. Dauenhauer to cancel the April 2008
option, on November 25, 2008 the Compensation Committee granted Mr. Dauenhauer
an option to purchase 250,000 shares of our common stock outside of the 1994
Stock Option Plan. This option was structured to have substantially the same
terms as the cancelled April 2008 option, including an exercise price of $0.365
per share and vesting with respect to one-third of the option shares on April
16, 2009, 2010 and 2011. The exercise price of $0.365 per share is in excess of
the closing price of our common stock on November 25, 2008. The Compensation
Committee also approved a grant to Mr. Dauenhauer of an option to purchase
25,000 shares of our common stock with respect to our fiscal year 2009. This
option is in addition to the option to purchase 100,000 shares of our common
stock granted to Mr. Dauenhauer on October 23, 2008 and is designed to provide a
further long-term equity incentive consistent with the Compensation Committee’s
initial consideration of options for Mr. Dauenhauer with respect to fiscal year
2009. The option to purchase 25,000 shares was also granted outside of the 1994
Stock Option Plan, but with substantially the same terms as the October 23, 2008
option, including an exercise price of $0.165 per share and vesting with respect
to one-third of the underlying shares on October 23, 2009, 2010 and 2011. The
exercise price of $0.165 per share is in excess of the closing price of our
common stock on November 25, 2008.
The
following table sets forth certain information concerning options exercised and
stock vested during fiscal 2008 for the Named Executive Officers.
|
Option
Awards
|
Stock
Awards
|
|||
|
Name
|
Number
of Shares
Acquired on Exercise (#) |
Value
Realized on
Exercise ($) |
Number
of Shares
Acquired on Vesting (#) |
Value
Realized on
Vesting ($)(1) |
|
Terry
M. Dauenhauer
|
—
|
—
|
||
|
Randy
L. Acres
|
—
|
—
|
||
|
Brian
R. Dahmes
|
—
|
—
|
||
|
William
P. Murnane
|
—
|
—
|
||
|
Douglas
W. Keller
|
—
|
—
|
3,333
|
$1,766
|
|
Keith
A. Foerster
|
—
|
—
|
||
|
E.
Thomas Atchison
|
—
|
—
|
||
|
(1)
|
Represents
the number of shares vested multiplied by the fair market value of our
common stock on the date of
vesting.
|
Certain
terms used in the employment agreements of Messrs. Dauenhauer, Foerster and
Murnane have defined meanings. The terms “cause,” “change in
control,” and “good reason,” used in these employment agreements are defined as
follows with the term “Employee” referring to the executive officer party
thereto and the “Company” refers to Innovex:
|
Term
|
Definition
|
|
Good
Cause
|
Good
Cause shall exist if the Employee has (a) engaged in theft, embezzlement,
other act of dishonesty, moral turpitude, or any willful violation of the
Securities Exchange Act of 1934, as amended; (b) materially breached any
of his obligations under this Agreement; or (c) engaged in gross
mismanagement or gross negligence in the performance of his duties
hereunder. With respect to (b) and (c), Employee shall be given written
notice of the facts believed to constitute grounds for termination and a
30-day period in which to cure those grounds to the satisfaction of the
Board.
|
18
|
Term
|
Definition
|
|
Good
Reason
|
Good
Reason shall exist if the Employee experiences (a) a material reduction in
his compensation or responsibilities (except if such change is made
available as reasonable accommodation in the event of
Employee’s Disability or other inability to perform his duties due to a
physical or mental condition) or (b) a requirement that he relocate to a
workplace more than 50 commuting miles from his principal residence,
provided however that Good Reason shall not exist following a Change in
Control if the Employee retains responsibility for a division, subsidiary
or other operational unit or entity that is substantially similar to or
larger than Innovex as it existed prior to the Change in
Control.
|
|
Change
in Control
|
A
Change in Control shall be deemed to have occurred if any of the following
occur:
(1) Any “Person” (as defined in Section 13(d) of the Securities Exchange Act of 1934, as amended, or any successor statute thereto (the Exchange Act)) acquires or becomes a beneficial owner (as defined in Rule 13d-3 or any successor rule), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of directors (Voting Securities) or 20% or more of the outstanding shares of common stock of the Company (Common Stock), provided, however, that the following shall not constitute a Change in Control: (a) any acquisition or beneficial
ownership by the Company or a subsidiary of the Company;
(b) any acquisition or beneficial
ownership by any employee benefit plan (or related trust) sponsored or
maintained by the Company or one or more of its
subsidiaries;
(2) Continuing
Directors shall not constitute a majority of the members of the Board of
Directors of the Company. Continuing Directors shall mean: (a) individuals
who, on the date hereof, are directors of the Company, (b) individuals
elected as directors of the Company subsequent to the date hereof for
whose election proxies shall have been solicited by the Board of Directors
of the Company, or (c) any individual elected or appointed by the Board of
Directors of the Company to fill vacancies on the Board of Directors of
the Company caused by death or resignation (but not by removal) or to fill
newly-created directorships, provided that a Continuing Director shall not
include an individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the
threatened election or removal of directors (or other actual or threatened
solicitation of proxies or consents) by or on behalf of any person other
than the Board of Directors of the Company;
(3) Consummation of a reorganization, merger or consolidation of the Company (other than a merger or consolidation with a subsidiary of the Company), unless immediately following such reorganization, merger or consolidation, all or substantially all of the persons who were the beneficial owners, respectively, of Voting Securities and Common Stock immediately prior to such reorganization, merger or consolidation beneficially own, directly or indirectly, 51% or more respectively of (a) the combined voting power of the then outstanding Voting Securities entitled to vote generally in the election of directors, and (b) the then outstanding shares of Common Stock of the corporation resulting from such reorganization, merger or consolidation in substantially the same proportions as their ownership of the Voting Securities and Common Stock, as the case may be, immediately prior to such reorganization, merger or consolidation; or (4) Consummation of a liquidation or dissolution of the Company or the sale or other disposition of all or substantially all of the assets of the Company (in one or a series of transactions), other than to a wholly-owned subsidiary of the Company. Notwithstanding anything stated above, a Change of Control event shall not be deemed to occur with respect to the Employee if the acquisition or beneficial ownership of the 20% or greater interest referred to in (1) is by the Employee or a group, acting in concert, that includes the Employee or a majority of the then combined voting power of the then outstanding Voting Securities (or voting equity interests) of the surviving corporation or of any corporation (or other entity) acquiring all or substantially all of the assets of the Company shall, immediately after a reorganization, merger, consolidation or disposition of assets referred to in (3) or (4) of this definition, be beneficially owned, directly or indirectly, by the Employee or by a group, acting in concert, that includes the Employee. |
19
|
Term
|
Definition
|
|
Disability
|
The
Employee’s Disability shall occur if he becomes unable to substantially,
with or without reasonable accommodation, perform his duties under this
Agreement, by reason of any medically determinable physical or mental
impairment, for at least 180 consecutive days. The existence of a
Disability will be determined pursuant to the standards for entitlement
for long-term disability benefits set forth in Innovex’ Long-Term
Disability Plan.
|
For the
purposes of the employment agreements with Messrs. Acres, Dahmes, Atchison and
Keller, the following defined terms have the following meanings with the term
“Employee” referring to the officer and the “Company” refers to
Innovex:
|
Term
|
Definition
|
|
Cause
|
§ The
Employee is indicted or an information claim is brought against him
alleging the commission of a felony or any misdemeanor arising out of a
theft, embezzlement, other act of dishonesty, moral turpitude, or any
willful violation of the Securities Exchange Act of 1934, as amended;
or
§ [for
Mr. Acres and Dahmes only] The Employee engages in acts of personal
dishonesty that are intended to result in substantial personal enrichment
of the Employee at the expense of Innovex;
§ The
Employee breaches any of his obligations under this Agreement;
or
§ Gross
mismanagement.
|
|
Change
in Control
|
As
used in this Agreement, a “Change in Control” shall mean a Change in
Control which would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1934, as amended (“Exchange Act”),
whether or not Innovex is then subject to such reporting requirements and
which does not arise from a transaction or a series of transactions
authorized, recommended or approved by formal action taken by the Board,
including, without limitation, if:
§ Any
“person” (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) becomes a “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), other than Innovex’ officers and directors as a
group, directly or indirectly, of securities of Innovex representing 20%
or more of the combined voting power of Innovex’ then outstanding
securities; or
§ There
ceases to be a majority of the Board comprised of individuals described
below.
For purposes of this Subsection 3.3 only, the “Board” shall mean: (a) individuals who on the date hereof constituted the Board of Innovex; and (b) any new director who subsequently was elected or nominated for election by a majority of the directors who held such office immediately prior to a Change in Control. |
|
Total
Disability
|
“Total
Disability” shall occur if Employee becomes unable to substantially
perform his duties under this Agreement by reason of any medically
determinable physical or mental impairment which is expected to last for a
continuous period of 12 months or more or is likely to result in
death.
|
|
Constructive
Termination
|
Material
reduction in salary or employment responsibilities without the consent of
the Employee.
|
20
Agreement
with Messrs. Dauenhauer, Acres and Dahmes
Effective
February 16, 2006, we entered into an employment agreement with Terry Dauenhauer
as our Senior Vice President and Chief Operating Officer. On January
16, 2008, the Compensation Committee approved and the independent directors of
our Board ratified an amended and restated employment agreement for Mr.
Dauenhauer relating to his service as our President and Chief Executive
Officer. Mr. Dauenhauer has served as our President and CEO since
December 15, 2007. Pursuant to the Agreement, Mr. Dauenhauer will
receive an annual base salary of $285,000 with salary reviews to occur at least
once per year and is also eligible for a bonus award pursuant to a bonus plan
determined by the Board. A bonus awarded may take the form of cash or stock
options. If Mr. Dauenhauer is terminated by us for other than Good Cause or by
Mr. Dauenhauer with Good Reason, we will continue to pay his base salary and the
employer share of group health and dental premiums for 12 months from the
termination date. The agreement also provides Mr. Dauenhauer compensation
following a Change in Control. This compensation includes a continuation of his
base salary for 18 months, payment of the employer share of his group health and
dental premiums for up to 18 months and immediate 100% vesting of any unvested
stock options. In addition, if Mr. Dauenhauer’s employment is terminated without
Good Cause by us or by Mr. Dauenhauer with Good Reason, we will provide
relocation expenses back to the United States not to exceed
$50,000.
Effective
March 17, 2008, Randy Acres accepted the position of our Chief Financial
Officer. Under the employment agreements between us and Mr. Acres,
Mr. Acres will receive an annual base salary of $132,000 and an additional Thai
baht salary of 3,120,000 (approximately $100,000 depending on the exchange rate)
for a total base salary of approximately $232,000. He will also receive a
housing and transportation allowance of 40,000 baht per month, as well as
reimbursement for vacation airfare. We will pay Mr. Acres’ reasonable
relocation expense from Bangkok to Chiang Mai at any time during his first year
of employment. Salary reviews are to occur at least once per year.
Under the dual employment agreement, Mr. Acres will also be eligible for a bonus
award pursuant to a bonus plan determined by the Board. A bonus awarded may take
the form of cash or stock options. If Mr. Acres is terminated by us for any
reason other than Good Cause or by Mr. Acres with Good Reason, we will continue
to pay his base salary and the employer share of group health and dental
premiums for 12 months from the termination date. The agreement also provides
Mr. Acres’ compensation following a Change in Control. This compensation
includes a continuation of his base salary for 12 months and payment of the
employer share of his group health and dental premiums for up to 12 months. In
addition, if Mr. Acres’ employment is terminated by us, we will provide
reasonable relocation expenses back to the United States and pay for certain
temporary housing expenses.
Effective
April 1, 2008, we entered into employment agreements with Brian R. Dahmes
relating to his service as our Vice President, Engineering. Under the
dual employment agreement between us and Mr. Dahmes, Mr. Dahmes will receive a
base salary of approximately $104,400 annually and an additional Thai baht
salary of 164,800 per month (approximately $60,400 annually, depending on the
exchange rate) for a total annual base salary of approximately
$164,800. He will also receive a housing and transportation allowance
of 30,000 baht per month, as well as reimbursement for vacation
airfare. Mr. Dahmes will be eligible for the Innovex Inc. standard
health, dental and life insurance plans and continues to be eligible for the
Vice President monthly car allowance according to our standard
policy. We will also pay for all reasonable actual costs related to
storage of goods in the United States until 30 days following termination of the
employment agreement. All tuition and fees related to pre-university
schooling will be paid or reimbursed by us for Mr. Dahmes children up to and
including the age of 18. Salary reviews are to occur at least once
per year. Under the employment agreements, Mr. Dahmes will also be eligible to
participate in option and bonus programs as determined by the
Board. If Mr. Dahmes is terminated by us for any reason other than
Good Cause or by Mr. Dahmes with Good Reason, we will continue to pay his base
salary and the employer share of group health and dental premiums for 12 months
from the termination date. The agreement also provides Mr. Dahmes’ compensation
following a Change in Control, which is continuation of his base salary for 12
months and payment of the employer share of his group health and dental premiums
for up to 12 months. In addition, if Mr. Dahmes’ employment is
terminated without Good Cause by us or by Mr. Dahmes with Good Reason, we will
provide reasonable relocation expenses back to the United States.
While he
has served as our Vice President, Engineering since August 2005, we entered into
the April 2008 agreement with Mr. Dahmes to replace our prior agreement with
him. Just prior to April 2008, we notified Mr. Dahmes that his
employment would be terminated, which triggered our obligation to pay Mr. Dahmes
severance under his prior agreement. Subsequent to that notification,
we determined we would be able to continue to employ Mr. Dahmes and entered into
the April 2008 agreement with him. Under the April 2008 agreement, in
lieu of any severance claim on or prior to May 31, 2013, Mr. Dahmes will be paid
the sum of $104,152.68 and 1,977,600 baht on or about May 31, 2008, which
represents the severance payments under his prior agreement. If Mr.
Dahmes’ employment is terminated by Innovex involuntarily for other than cause
on or prior to May 31, 2013, Mr. Dahmes will be provided with 90 days notice,
but any severance payment to Mr. Dahmes will be considered already paid in full
by the May 31, 2008 payment.
21
However,
after May 31, 2013 Mr. Dahmes will be provided with 90 days notice for a
termination of employment by Innovex involuntarily (not including death or
disability and other than Termination for Cause), the termination of Innovex’
operations as a result of bankruptcy or insolvency, a Change in Control of
Innovex or a termination by Mr. Dahmes for Good Reason that is a material
reduction in his compensation or responsibilities (except if such change is made
available as reasonable accommodation in the event of Mr. Dahmes’ Disability or
other inability to perform his duties due to a physical or mental condition). He
will also be entitled to severance, with the amount depending on the date of
termination. If such termination is after May 31, 2013 and on or
before May 31, 2014, severance will be equal to 3 months total US and Thai base
pay at that time; if after May 31, 2014 and on or before May 31, 2015 severance
will be equal to 6 months total US and Thai base pay at that time; if after May
31, 2015 and on or before May 31, 2016 severance will be equal to 9 months total
US and Thai base pay at that time and if after May 31, 2016 severance will be
equal to 12 months total US and Thai base pay at that time.
Agreements
with Mr. Murnane
On October
19, 2005, we entered into an employment agreement with William P. Murnane
relating to his service as President and Chief Executive Officer of
Innovex.
On January
16, 2008, we entered into an amendment to our employment agreement with Mr.
Murnane. Under the amendment, Mr. Murnane’s employment will end one year from
January 16, 2008 unless either he or we terminate his employment
sooner. There was no change in Mr. Murnane’s annual base compensation
at the time of the amendment. Under the amendment, if Mr. Murnane’s
employment is terminated by us or by Mr. Murnane for any reason other than Good
Cause, we will continue to pay his base salary and the employer share of group
health and dental premiums for 365 days from the termination date, provided the
365 day period will be reduced by one day for each day after the date of the
amendment that Mr. Murnane continues as an employee of the Company (the
“Continuation Period”). Additionally, if, following a Change in Control, Mr.
Murnane’s employment is terminated without Good Cause or he resigns for Good
Reason, he will receive immediate 100% vesting of any unvested stock options, in
addition to the salary continuation and employer share of insurance premiums
described above. If Mr. Murnane’s termination is for Good Cause, his base salary
and benefits will be paid only through his termination date. If there is a
Change in Control, in addition to the payments noted above during the
Continuation Period, Mr. Murnane will receive his base salary for an additional
six months after the Continuation Period and the continuation of the payment of
the employer share of employee’s group health and dental premiums for an
additional six months after the Continuation Period.
On January
16, 2008, we entered into an agreement with Mr. Murnane to serve as Chairman of
the Board of Innovex for a period of six months or until his earlier death or
removal. Mr. Murnane received $10,000 retainer per month for his service as
Chairman of the Board. As additional consideration for his services as Chairman
of the Board, we transferred title of a vehicle utilized by Mr. Murnane during
his service to us. This agreement expired by its terms on July 16,
2008. On July 18, 2008, the Board ratified the termination of Mr.
Murnane’s employment agreement with us on July 16, 2008, concurrently with the
termination of his role as Chairman. Mr. Murnane will receive the
benefits following termination as described in the January 16, 2008 amendment to
his employment agreement, described above. Following July 16, 2008,
Mr. Murnane continued to serve as a director and was compensated in accordance
with our standard non-employee director arrangements until his resignation as a
director on July 23, 2008.
22
Agreements
with Messrs. Keller, Atchison & Foerster
We have
also entered into employment agreements with Douglas W. Keller, our former Vice
President, Finance, E. Thomas Atchison, our former Vice President and Managing
Director, Innovex Thailand and Keith A. Foerster, our former Senior Vice
President, Development and Sales.
The
employment agreements with Messrs. Atchison and Keller provide that they will be
entitled to a lump sum cash severance payment of 12 months’ base salary at the
time of termination in the event of involuntary termination other than for
cause, termination of our operations due to bankruptcy or insolvency, total
disability of the executive officer, a change in control of Innovex or
constructive termination. For Mr. Foerster, if he terminates his
employment for good reason or if we terminate his employment for other than good
cause and such termination is not related to a change in control, Mr. Atchison
will continue to be paid his regular salary and employee benefits for 12 months
after the date of termination of employment.
The
employment agreements also prohibit disclosure of confidential information
concerning Innovex and require disclosure of, and assignment of, inventions,
discoveries and other works relating to the employment of these executive
officers. The employment agreements contain a covenant not to compete
with us at any time during employment with us and for a period following
termination of employment.
On April
30, 2008, we entered into a part-time employment agreement with Mr. Keller.
Pursuant to this agreement, Mr. Keller ceased serving as our Vice President,
Finance and Chief Accounting Officer and as our principal accounting officer as
of April 30, 2008. The termination of Mr. Keller's employment was related to the
transfer of some corporate functions to Thailand. As of the result of
the termination of his employment, Mr. Keller was entitled to the
post-termination benefits under his employment agreement and received a
severance of $165,000 following the termination of his
employment. Further, under the part-time employment agreement,
effective May 1, 2008, Mr. Keller became a part-time employee on an at-will
basis at an hourly rate of $110 or $150, depending on when the services are
rendered. Mr. Keller reported to our Chief Financial Officer and assisted in the
transfer of the corporate offices to Thailand and other tasks as assigned. Mr.
Keller was not eligible for any Company benefits or be eligible for any equity
based compensation under the part-time employment agreement. The part-time
employment agreement superseded our prior employment agreement with Mr. Keller,
except that certain obligations of Mr. Keller relating to assignment of
inventions, confidential information and non-competition will
continue. Mr. Keller ceased serving as a part-time employee
on November 21, 2008.
On
November 16, 2007, we entered into an amendment to our employment agreement with
Mr. Foerster. Under the amendment, Mr. Foerster’s employment will end one year
from November 16, 2007 unless either he or Innovex terminates his employment
sooner. During this time, he continued to assist us in the transition of its
corporate office to Thailand. There was no change in Mr. Foerster’s annual base
compensation with the amendment. Under the amendment, if Mr. Foerster’s
employment is terminated by us or by Mr. Foerster for any reason other than Good
Cause, we would continue to pay his base salary and the employer share of group
health and dental premiums for 365 days from the termination date, provided the
365 day period will be reduced by one day for each day after the date of the
Amendment that Mr. Foerster continues as an employee of the Company.
Additionally, if Mr. Foerster’s employment is terminated without Good Cause or
he resigns for Good Reason following a Change in Control, he will receive
immediate 100% vesting of any unvested stock options, in addition to the salary
continuation and employer share of insurance premiums described above. If Mr.
Foerster’s termination is for Good Cause, his base salary and benefits will be
paid only through his termination date. Mr. Foerster terminated his employment
with Innovex as of April 30, 2008 and received a severance payment of $90,962
following his last day of employment.
Effective
December 21, 2007, we entered into an employment separation agreement with E.
Thomas Atchison who served as our Vice President and Managing Director of
Innovex Thailand. Under this agreement, Mr. Atchison’s last day of
employment with us was December 31, 2007. Mr. Atchison received a
severance payment of $51,500, equal to three months base salary, following his
last day of employment.
23
Non-employee
directors receive compensation through one of two compensation plans: a cash
payment plan or a equity payment plan. The non-employee director must
select a compensation plan prior to election or re-election each
year. For fiscal year 2008, Messrs. Andersen, Ankeny and Clark
selected the equity payment plan and Messrs. White and Wipuchanin selected the
cash payment plan.
Non-employee
directors selecting the equity compensation plan will receive an option to
purchase 15,000 shares, as well a monthly retainer of $1,000 per
month. Non-employee directors selecting the cash payment option will
be paid a monthly retainer of $1,000 and an annual retainer of $7,000, as well
as meeting fees of $1,000 for each Board of Directors meeting attended and $500
for each committee meeting attended. In addition, each non-employee
director selecting the cash payment option will receive an automatic grant of
options to purchase 1,000 shares of common stock at an exercise price equal to
the fair market value of such common stock on the date on which such director is
re-elected. On January 16, 2008, we entered into an agreement with
Mr. Murnane to serve as Chairman of the Board of Innovex for a period of six
months or until his earlier death or removal. See “Employment Agreements with
Named Executive Officers and Post-Employment Arrangements – Agreements with Mr.
Murnane” for information regarding his compensation for these
services.
Any
non-employee director elected for the first time by the shareholders or the
Board of Directors will receive an option to purchase 20,000 shares of common
stock at an exercise price equal to the fair market value of a share of common
stock on the date such director is elected. These options will be in
addition to any other option grant to the non-employee director under the cash
payment plan or equity payment plan. Any director first elected
during a particular year and not at an annual meeting will receive a pro-rata
amount of the retainer and meeting fees for that year. On their
respective dates of appointments to the Board, Messrs. Clark, White and
Wipuchanin received a ten-year option to purchase 20,000 shares of common stock
at the fair market value of a share of common stock on that date. The
options vest and become exercisable on the six-month anniversary of the date of
grant.
The
following table shows for fiscal year 2008, the cash and other compensation paid
by us to each of our Board members:
|
Name
|
Fees
Earned or
Paid in Cash ($)
(1)
|
Option Awards ($)
(2)
|
All Other Compensation ($) |
Total ($)
|
|
William
P. Murnane (3)
|
$60,000
|
—
|
$36,000
|
$96,000
|
|
D.
Allen Andersen
|
12,000
|
$6,662
|
—
|
18,662
|
|
Philip
D. Ankeny
|
12,000
|
6,662
|
—
|
18,662
|
|
Robert
C. Buhrmaster (4)
|
14,000
|
—
|
—
|
14,000
|
|
Kenneth
J. Roering (4)
|
4,000
|
—
|
—
|
4,000
|
|
John
M. Clark III (4)
|
8,000
|
3,272
|
—
|
11,272
|
|
Kenneth
L. White (4)
|
17,000
|
3,272
|
—
|
20,272
|
|
Thira
Wipuchanin (4)
|
—
|
437
|
—
|
437
|
|
(1)
|
Represents
cash retainer and meeting fees for fiscal year 2008 as described
above.
|
|
(2)
|
Values
expressed represent the actual compensation cost recognized by our company
during fiscal 2008 for equity awards granted in 2008 and in prior years as
determined pursuant to SFAS 123R utilizing the assumptions discussed in
Note A, “Summary of Significant Accounting Policies – Stock-Based
Compensation” in the notes to consolidated financial statements included
in our Annual Report on Form 10-K for the year ended September 27, 2008.
The aggregate number of stock options outstanding at September 27, 2008
and held by the current and former directors identified above was: Mr.
Murnane, 0 shares; Mr. Andersen, 50,000 shares; Mr. Ankeny, 70,000 shares;
Mr. Buhrmaster, 0 shares; Mr. Roering, 0 shares; Mr. Clark, 20,000 shares;
Mr. White, 20,000 shares; and Mr. Wipuchanin, 20,000
shares.
|
|
(3)
|
Mr.
Murnane served as Chairman of the Board until July 16, 2008 and ceased
serving as a director effective July 23, 2008. “All Other
Compensation” for Mr. Murnane represents the value of a vehicle
transferred to him pursuant to our January 16, 2008 agreement with
him.
|
|
(4)
|
Mr.
Buhrmaster ceased serving as a director effective February 1, 2008. Mr.
Roering ceased serving as a director effective January 15,
2008. Messrs. Clark and White were elected as directors
effective February 1, 2008. Mr. Wipuchanin was elected as a
director effective September 16, 2008. Amounts represent a
partial year of service.
|
Terry M.
Dauenhauer, who is a director and an executive officer, received no compensation
for Board or committee service during fiscal 2008.
24
Since the
beginning of 2008, we have not entered into any transaction and there are no
currently proposed transactions, in which we were or are to be a participant and
the amount involved exceeds $120,000 and in which any related person had or will
have a direct or indirect material interest.
The
charter of our Audit Committee provides that the Audit Committee is responsible
for reviewing and approving the terms and conditions of all of transactions we
enter into in which an officer, director or 5% or greater shareholder or any
affiliate of these persons has a direct of indirect material
interest. Our Code of Ethics and Business Conduct, which is
applicable to all of our employees and directors, also prohibits our employees,
including our executive officers, and our directors from engaging in conflict of
interest transactions. Requests for waivers by our executive officers
and directors from the provisions of, or requests for consents by our executive
officers and directors under, our Code of Ethics and Business Conduct must be
made to the Audit Committee.
Section
16(a) of the 1934 Act requires our directors and executive officers, and persons
who own more than 10% of a registered class of our equity securities, to file
with the Securities and Exchange Commission initial reports of ownership and
reports of changes in ownership of our common stock and other equity
securities. The insiders are required by Securities and Exchange
Commission regulations to furnish us with copies of all Section 16(a) forms they
file, including Forms 3, 4, and 5.
To our
knowledge, based solely on review of the copies of such reports furnished to us
and written representations that no other reports were required, during the
fiscal year ended September 27, 2008, all Section 16(a) filing requirements
applicable to our insiders were complied with.
APPOINTMENT
OF INDEPENDENT AUDITORS
On
September 18, 2008, the Audit Committee has appointed BDO Seidman LLP as our
independent registered public accountants for the current year. The
Audit Committee has also selected BDO Seidman LLP as our auditors for the year
ended October 3, 2009. Although shareholder approval is not required,
it is the policy of the Board of Directors to request shareholder ratification
of the appointment or reappointment of independent registered public accountants
for the year ended October 3, 2009.
The Board
of Directors recommends that the shareholders vote “for” the proposal to approve
the appointment of BDO Seidman LLP, and the endorsed proxy will be so voted
unless a contrary vote is indicated. In the event the shareholders do
not approve the reappointment of BDO Seidman LLP, the Audit Committee will make
another appointment to be effective at the earliest possible time.
Representatives
of BDO Seidman LLP will be in attendance at the Annual Meeting of Shareholders
and will have the opportunity to make a statement if they desire to do
so. In addition, representatives will be available to respond to
appropriate questions.
Approval
of Proposal 2: Ratification of appointment of BDO Seidman LLP requires the
affirmative vote of the holders of a greater of: (a) a majority of the voting
power of the shares present, in person or by proxy, and entitled to vote on
Proposal 2 or (b) a majority of the voting power of the minimum number of shares
that would constitute a quorum.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”
APPOINTMENT
OF BDO SEIDMAN LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS.
___________________________
25
On August
13, 2008, the Chair of the Audit Committee received a letter from Grant Thornton
LLP (“Grant Thornton”) notifying us of Grant Thornton’s resignation as our
independent registered public accounting firm.
The audit
report of Grant Thornton on the consolidated financial statements of Innovex and
subsidiaries as of and for the year ended September 29, 2007 and September 30,
2006 did not contain any adverse opinion or a disclaimer of opinion, and were
not qualified or modified as to uncertainty, audit scope, or accounting
principles.
In our two
most recent fiscal years and any interim period, there were no disagreements
between us and Grant Thornton on any matters of accounting principles or
practices, financial statement disclosure, or auditing scope or procedures,
which disagreements, if not resolved to the satisfaction of Grant Thornton would
have caused Grant Thornton to make reference to the subject matter of the
disagreement in connection with its reports on our financial statements for such
years. In our two most recent fiscal years and any interim period,
there were no reportable events.
On
September 18, 2008, the Audit Committee engaged BDO Seidman, LLP (“BDO Seidman”)
as our new independent registered public accounting firm. Prior to the
engagement, and for the preceding two most recent fiscal years and any
subsequent interim period prior to the engagement, neither Innovex nor anyone on
our behalf consulted with BDO Seidman regarding either: (i) the application of
accounting principles to any specified transaction, either completed or
proposed, or the type of audit opinion that might be rendered on the Company’s
financial statements nor has BDO Seidman provided any written report or oral
advice to us that BDO Seidman concluded was an important factor considered by us
in reaching a decision as to the accounting, auditing or financial reporting
issue or (ii) any matter that was either the subject of a disagreement or a
reportable event.
As used in
this section, the term “reportable event” has the meaning defined in paragraph
(a)(1)(v) of Item 304 of Regulation S-K. The term “disagreement” has
the meaning defined in paragraph (a)(1)(iv) and the related instructions of Item
304 of Regulation S-K.
The
following is an explanation of the fees billed to us by Grant Thornton and BDO
Seidman for professional services rendered during the fiscal years ended
September 27, 2008 and September 29, 2007, which totaled $343,179 and $309,036,
respectively. We did not engage BDO Seidman for any purpose in the
fiscal year ended September 29, 2007 and therefore, the fees for such fiscal
year (including those detailed below) relate solely to services of Grant
Thornton. For the fiscal year ended September 27, 2008, $72,210 of
the fees relate to the services of Grant Thornton and $270,969 of the fees
relate to the services of BDO Seidman, who was engaged as our auditor in for a
portion of fiscal year 2008 beginning on September 18, 2008.
Audit Fees. The aggregate fees
billed to us for professional services related to the audit of our annual
financial statements, review of financial statements included in our Form 10-Q,
or other services normally provided in connection with statutory and regulatory
filings or engagements for the fiscal years ended September 27, 2008 and
September 29, 2007 totaled $318,179 and $264,327, respectively. Of
these fees for fiscal year ended September 27, 2008, $47,210 relate to services
of Grant Thornton and $270,969 relate to services of BDO Seidman.
Audit-Related
Fees. The aggregate fees billed to us for professional
services for assurance and related services by Grant Thornton LLP that are
reasonably related to the performance of the audit or review of our financial
statements and are not reported above under “Audit Fees,” including statutory
filings, accounting consultations and the audit of management’s assessment of
internal controls for the fiscal years ended September 27, 2008 and September
29, 2007 totaled $0 and $21,110, respectively.
26
Tax Fees. The
aggregate fees billed to us for professional services related to tax compliance,
tax advice, and tax planning, for the fiscal years ended September 27, 2008 and
September 29, 2007 totaled $25,000 and $23,599, respectively. Of
these fees for fiscal year ended September 27, 2008, the full amount relate to
services received from Grant Thornton only.
We have
adopted pre-approval policies and procedures for the Audit Committee that
require the Audit Committee to pre-approve all audit and all permitted non-audit
engagements and services (including the fees and terms thereof) by the
independent auditors, except that the Audit Committee may delegate the authority
to pre-approve any engagement or service less than $10,000 to one of its
members, but requires that the member report such pre-approval at the next full
Audit Committee meeting. The Audit Committee may not delegate its
pre-approval authority for any services rendered by our independent auditors
relating to internal controls. These pre-approval policies and
procedures prohibit delegation of the Audit Committee’s responsibilities to our
management. Under the policies and procedures, the Audit Committee
may pre-approve specifically described categories of services which are expected
to be conducted over the subsequent twelve months on its own volition, or upon
application by management or the independent auditor.
All of the
services described above for fiscal year 2008 were pre-approved by the Audit
Committee or a member of the Committee before the auditor was engaged to render
the services.
Any
shareholder desiring to submit a proposal for action at the 2010 Annual Meeting
of Shareholders to be held on or about February 3, 2010 and presentation in our
proxy statement with respect to such meeting should arrange for such proposal to
be delivered to our offices, 3033 Campus Drive, Suite E180, Plymouth, MN 55441,
addressed to Chairman of the Board, no later than September 22, 2009 in order to
be considered for inclusion in our proxy statement relating to the
meeting. Matters pertaining to such proposals, including the number
and length thereof, eligibility of persons entitled to have such proposals
included and other aspects are regulated by the 1934 Act, rules and regulations
of the Commission and other laws and regulations to which interested persons
should refer.
Pursuant
to Rule 14a-4(c)(1) of the 1934 Act, if a proponent of a proposal fails to
notify us at least 45 days prior to the month and day of mailing of the prior
year’s proxy statement, then we will be allowed to use our discretionary voting
authority when the proposal is raised at the meeting, without any discussion of
the matter in the proxy statement. With respect to our 2010 Annual
Meeting of Shareholders, if we are not provided notice of a shareholder
proposal, which the shareholder has not previously sought to include in our
proxy statement, by November 15, 2009, we will be allowed to use its voting
authority as described above.
The Board
of Directors knows of no matters other than the foregoing to be brought before
the meeting. However, the enclosed proxy gives discretionary
authority in the event that any additional matters should be properly
presented. Our Annual Report for the past fiscal year is enclosed
herewith and contains our financial statements for the fiscal year ended
September 27, 2008. A copy of Form 10-K, the annual report filed by
us with the Commission, will be furnished without charge to any shareholder who
requests it in writing from us at the address noted on the first page of this
proxy statement.
By Order
of the Board of Directors,
John M.
Clark III, Chairman of the
Board
27
PROXY
INNOVEX,
INC.
ANNUAL
MEETING OF SHAREHOLDERS TO BE HELD ON FEBRUARY 4, 2009
Solicited
by the Board of Directors for use at the Annual Meeting
The undersigned hereby appoints Terry
M. Dauenhauer and Randy L. Acres, or either of them, as attorneys and proxies
(each with full power to act alone and full power of substitution
and revocation), to represent the undersigned at the Annual Meeting of
Shareholders to be held at the Company’s headquarters, 3033 Campus Drive, Suite
E180, Plymouth, Minnesota 55441 on February 4, 2009 at 9:00 a.m. Plymouth,
Minnesota time, and at any adjournment(s) or postponement(s) thereof, and to
vote, as designated on the reverse side, all shares of common stock of Innovex,
Inc. held of record by the undersigned at the close of business on December 15,
2008, and that the undersigned would be entitled to vote at such Annual Meeting,
hereby revoking all former proxies.
This
proxy, if properly executed, will be voted in the manner directed herein by the
undersigned. If no direction is given, this proxy will be voted FOR
each nominee named in Proposal 1 and FOR Proposal 2. Please sign,
date and detach below and return this proxy form using the envelope
provided.
SEE
REVERSE SIDE FOR VOTING INSTRUCTIONS
[please
detach here]
___________________________________________________
INNOVEX,
INC. 2009 ANNUAL MEETING OF STOCKHOLDERS
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR EACH NOMINEE AND EACH PROPOSAL.
1. ELECTION
OF DIRECTORS:
|
01 D.
Allen Andersen
|
04 Terry
M. Dauenhauer
|
[ ] Vote
for all nominees
|
[ ] Vote
WITHHELD
|
|
02 Philip
D. Ankeny
|
05 Kenneth
L. White
|
(except
as marked)
|
from all
nominees
|
|
03 John
M. Clark III
|
06 Thira
Wipuchanin
|
|
(INSTRUCTIONS:
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE,
|
||
|
WRITE
THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE
RIGHT.)
|
|
2.
|
PROPOSAL
TO RATIFY APPOINTMENT OF BDO SEIDMAN LLP AS INDEPENDENT REGISTERED PUBLIC
ACCOUNTANTS FOR THE FISCAL YEAR ENDING OCTOBER 3,
2009.
|
FOR AGAINST ABSTAIN
|
IN
THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON ANY OTHER
MATTERS COMING BEFORE THE MEETING.
|
THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED FOR
EACH NOMINEE AND FOR EACH OTHER PROPOSAL.
|
Dated:
|
_____________________________________________________,
20__________
|
|
__________________________________________________________________
|
|
|
(Signature)
|
|
|
__________________________________________________________________
|
|
|
(Signature)
|
|
| Please sign name(s) exactly as shown at left. When signing as executor, administrator, trustee or guardian, give full title as such; when shares have been issued in names of two or more persons, all should sign. |