SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement. [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2)).
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Section 240.14a-12
BIOMET INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[BIOMET INC LOGO]
August 12, 2004
To the Shareholders of Biomet, Inc.:
You are cordially invited to attend our Annual Meeting of Shareholders on
Saturday, September 18, 2004, at 1:30 p.m., local time, at 2517 Restaurant
located at 2517 East Center Street, Warsaw, IN. Information regarding the
matters to be voted upon at the Annual Meeting can be found in the accompanying
Notice and Proxy Statement.
We hope you are planning to attend the Annual Meeting and look forward to seeing
as many of you as possible. The vote of each shareholder is of utmost
importance. For this reason, we urge you to vote your proxy promptly, whether or
not you plan to attend the Annual Meeting.
On behalf of the Board of Directors and management of Biomet, Inc., I would like
to extend our appreciation for your continued support and confidence.
Sincerely,
BIOMET, INC.
/s/ Dane A. Miller
Dane A. Miller, Ph.D.
President and Chief
Executive Officer
[BIOMET INC LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 18, 2004
TO THE SHAREHOLDERS OF BIOMET, INC.:
The Annual Meeting of Shareholders of Biomet, Inc. will be held on Saturday,
September 18, 2004, at 1:30 p.m., local time, at 2517 Restaurant located at 2517
E. Center Street, Warsaw, IN, for the following purposes:
(1) To elect four Class III directors to serve for terms of three years each.
(2) To ratify the appointment of Ernst & Young LLP as Biomet's independent
accountants for the fiscal year ending May 31, 2005.
(3) To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
Shareholders of record as of the close of business on July 21, 2004 are entitled
to receive notice of and to vote at the Annual Meeting. We urge you to vote your
shares promptly, even if you hold only a few shares and regardless of whether or
not you expect to be present at the Annual Meeting in person.
By order of the Board of Directors,
/s/ Daniel P. Hann
Daniel P. Hann, Secretary
August 12, 2004
Warsaw, IN
YOUR VOTE IS VERY IMPORTANT. PLEASE VOTE YOUR PROXY PROMPTLY.
[BIOMET INC LOGO]
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 18, 2004
GENERAL INFORMATION
This Proxy Statement is furnished to the shareholders of Biomet, Inc. in
connection with the solicitation by the Board of Directors of Biomet of proxies
to be voted at the Annual Meeting of Shareholders to be held at 2517 Restaurant
located at 2517 E. Center Street, Warsaw, IN, on Saturday, September 18, 2004,
at 1:30 p.m., local time, or any adjournment or postponement thereof. This Proxy
Statement and the accompanying proxy card were first mailed to shareholders on
or about August 19, 2004. The following is important information in a
question-and-answer format regarding the Annual Meeting and this Proxy
Statement.
WHAT AM I VOTING ON?
You are voting on the following matters:
- The election of four Class III directors (M. Ray Harroff, Jerry L.
Miller, Charles E. Niemier and L. Gene Tanner) for three-year terms.
- The ratification of the appointment of Ernst & Young LLP as Biomet's
independent accountants for the fiscal year ending May 31, 2005.
WHAT ARE THE BOARD'S RECOMMENDATIONS?
Unless you instruct otherwise on your proxy card, the proxy holders will vote in
accordance with the recommendations of the Board of Directors. The Board's
recommendations are set forth with the discussion of each matter set forth later
in this Proxy Statement. In summary, the Board recommends that you vote:
- FOR the re-election of the nominees for directors.
- FOR ratification of the appointment of Ernst & Young LLP as Biomet's
independent accountants for fiscal year ending May 31, 2005.
With respect to any other matter that properly comes before the Annual Meeting
or any adjournment or postponement thereof, the proxy holders will vote in
accordance with their best judgment.
WHO IS ENTITLED TO VOTE?
Only those persons who own Biomet Common Shares at the close of business on the
record date, July 21, 2004, are entitled to receive notice of and to vote at the
Annual Meeting, or any adjournment or postponement of the meeting. As of the
record date, there were 254,012,785 Common Shares of Biomet issued and
outstanding. Each shareholder is entitled to one vote for each Biomet Common
Share owned as of the close of business on July 21, 2004.
WHAT CONSTITUTES A QUORUM?
A quorum is represented by the holders of a majority of the Common Shares
outstanding on the record date and present, in person or by proxy, at the Annual
Meeting. Proxies submitted by brokers that do not indicate voting instructions
for a proposal are called "broker non-votes." Broker non-votes and abstentions
will be included in the number of shares considered to be present at the Annual
Meeting, but will not be counted "for" or "against" the proposal. A quorum must
be present for a proposal to be properly approved at the Annual Meeting.
WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A SHAREHOLDER OF RECORD AND AS
A BENEFICIAL OWNER?
If your shares are registered directly in your name with our transfer agent you
are considered to be the "shareholder of record" with respect to those shares.
This Proxy Statement, the Annual Report to Shareholders and the proxy card have
been sent directly to you.
If your shares are held in a stock brokerage account, by a bank or other
nominee, you are considered to be the "beneficial owner" of the shares held in
street name. This Proxy Statement and the Annual Report to Shareholders have
been forwarded to you by your broker, bank or other nominee, who is considered
to be the shareholder of record with respect to those shares. As the beneficial
owner of the shares, you have the right to direct your broker, bank or other
nominee how to vote your shares by using the voting instruction card included in
the mailing.
HOW DO I VOTE?
It is important that you vote each proxy you receive. If you submit a signed
proxy, but do not indicate your voting preference, your shares will be voted FOR
the two proposals on your behalf.
SHAREHOLDERS OF RECORD. Shareholders of record may vote in person at the Annual
Meeting or by proxy, whether or not they plan to attend the Annual Meeting. This
year there are two convenient voting methods for shareholders of record to vote
by proxy.
- VOTING BY INTERNET. We encourage you to vote by using the Internet
at www.proxyvote.com. Please refer to the voting information on the
proxy card and on the website for directions on the manner in which
to transmit your voting instructions. Voting on the Internet has the
same effect as voting by mail. The deadline for Internet voting is
11:59 p.m. Eastern Time, Friday, September 17, 2004. Internet voting
is available 24 hours a day. If you vote by the Internet you should
NOT return your proxy card by mail.
- VOTING BY MAIL. If you choose to vote by mail, please mark, sign and
date each proxy card you receive and return it as soon as possible
in the postage-paid envelope provided.
BENEFICIAL OWNERS. Beneficial owners must refer to the voting information
provided by their broker, bank or other nominee to determine the manner in which
voting instructions are to be transmitted. A beneficial owner who wishes to vote
in person at the Annual Meeting must obtain an additional proxy from the broker,
bank or other nominee to do so, and must present that proxy at the Annual
Meeting.
HOW CAN I CHANGE MY VOTE?
If you are a beneficial owner, you must contact your broker, bank or other
nominee to determine how to change your voting instructions. If you are a
shareholder of record, you may change your vote at any time prior to the
tabulation of votes at the Annual Meeting. To do so, you must (1) deliver a
written notice of revocation to the Secretary of Biomet at P.O. Box 587, Warsaw,
IN 46581-0587, (2) submit a properly executed proxy bearing a later date in
writing or on the Internet, or (3) attend the Annual Meeting and cast your vote
in person.
2
HOW DO I VOTE MY SHARES IN BIOMET'S EMPLOYEE STOCK BONUS PLAN?
If you are one of Biomet's team members (Biomet refers to its employees as team
members) eligible to participate in Biomet's Employee Stock Bonus Plan ("Bonus
Plan"), you will receive a request for voting instructions from the Bonus Plan
trustee with respect to the shares allocated to your account in the Bonus Plan.
You are entitled to direct the Bonus Plan trustee how to vote your Bonus Plan
shares. If you do not provide voting instructions to the Bonus Plan trustee
within the prescribed time, the shares allocated to your account in the Bonus
Plan will be voted by the Bonus Plan trustee in the same proportion as the
shares held by the Bonus Plan trustee for which voting instructions have been
received from other members of the Bonus Plan. You may revoke your previously
provided voting instructions by filing with the Bonus Plan trustee either a
written notice of revocation or a properly executed proxy bearing a later date.
HOW MANY VOTES ARE NEEDED TO APPROVE EACH ITEM?
ELECTION OF DIRECTORS. The four nominees receiving the greatest number of votes
will be elected as directors. Withheld votes and broker non-votes will not be
counted as votes in favor of any nominee.
OTHER MATTERS. The ratification of the independent accountants and approval of
any other matter that properly comes before the Annual Meeting require that the
number of votes cast "for" exceed those cast "against." Abstentions and broker
non-votes will not be counted as votes for or against any such matters.
WHAT IS "HOUSEHOLDING" AND HOW DOES IT AFFECT ME?
In an effort to reduce printing and postage costs, Biomet has adopted a process
for mailing the Annual Report to Shareholders and Proxy Statement known as
"householding." Householding has been approved by the Securities and Exchange
Commission and permits Biomet to mail only one copy of the Annual Report and
Proxy Statement to shareholders of record who share the same last name and
address, unless we receive contrary instructions from any shareholder of record
at that address. Each shareholder of record will continue to receive a separate
proxy card and is entitled to vote his or her shares individually.
If you prefer to receive multiple copies of the Annual Report and Proxy
Statement at the same address, additional copies will be provided to you
promptly upon request. You may contact the Investor Contact in writing at
Biomet, Inc., P.O. Box 587, Warsaw, IN 46581-0587, or by telephone at
574-372-1514. If you are a shareholder of record receiving multiple copies of
the Annual Report and Proxy Statement and would prefer to receive a single copy,
please contact us at the address and phone number provided above. If you are a
beneficial owner, information regarding householding should be forwarded to you
by your broker, bank or other nominee.
WHAT DOES IT MEAN IF I GET MORE THAN ONE PROXY CARD?
It means you have shares registered in more than one account. Please vote ALL
proxy cards to ensure that all of your shares are counted.
WHO CAN ATTEND THE ANNUAL MEETING?
All shareholders as of the close of business on July 21, 2004, or their duly
appointed proxy holders, may attend the Annual Meeting. Each shareholder may be
accompanied by one guest. However, seating will be limited. Admission to the
Annual Meeting will be on a first-come, first-served basis. Registration will
begin at 1:00 p.m. (local time).
3
WHAT TIME IS THE ANNUAL MEETING?
The Annual Meeting will begin at 1:30 p.m., local time. Please note that local
time is Eastern Standard Time, NOT Eastern Daylight Savings Time (i.e., during
this time of year, Warsaw is on the same time as Chicago).
WHO PAYS FOR THE COSTS ASSOCIATED WITH THIS PROXY STATEMENT?
Biomet will pay for all expenses in connection with the solicitation of proxies.
We will also provide to all brokers, dealers, banks and voting trustees, and
their nominees, copies of this Proxy Statement, the accompanying proxy card and
the Annual Report for mailing to beneficial owners and, upon request, will
reimburse such record holders for their reasonable expenses in connection with
such activities. Biomet expects to solicit proxies primarily by mail, but
directors, officers and employees of Biomet may also solicit proxies in person,
by telephone, by mail, facsimile transmission, or other forms of electronic
communication. Biomet's directors, officers and employees will not receive any
additional compensation for such activities.
STOCK OWNERSHIP
WHO ARE THE BENEFICIAL OWNERS OF MORE THAN 5% OF BIOMET'S COMMON SHARES?
The following table sets forth certain data with respect to those persons known
by Biomet to be the beneficial owners of more than 5% of the issued and
outstanding Common Shares of Biomet as of July 21, 2004.
NAME AND ADDRESS AMOUNT AND NATURE PERCENT
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS
------------------- ---------------------- --------
State Farm Mutual Automobile 18,911,259(1) 7.44%
Insurance Company and
related entities
One State Farm Plaza
Bloomington, Illinois 61710
FMR Corp. and related entities 13,437,941(2) 5.29%
82 Devonshire Street
Boston, Massachusetts 02109
(1) According to a Schedule 13G/A filed with the Securities and Exchange
Commission by State Farm Mutual Automobile Insurance Company (SFMAIC) and
certain related entities on January 30, 2004, as of December 31, 2003, SFMAIC is
the beneficial owner of 9,475,919 shares, as to which it has sole voting and
dispositive power for 9,409,500 shares and shared dispositive power for 66,419
shares. State Farm Life Insurance Company is the beneficial owner of 173,314
shares, as to which it has sole voting and dispositive power for 169,975 shares
and shared dispositive power for 3,339 shares. State Farm Fire and Casualty
Company is the beneficial owner of 8,373 shares, as to which it has shared
dispositive power and no voting power. State Farm Investment Management Corp. is
the beneficial owner of 4,408,198 shares, as to which it has sole voting and
dispositive power for 4,398,750 shares and shared voting and dispositive power
for 9,448 shares. State Farm Insurance Companies Employee Retirement Trust is
the beneficial owner of 6,905 shares, as to which it has shared dispositive
power and no voting power. State Farm Insurance Companies Savings and Thrift
Plan for U.S. Employees is the beneficial owner of 4,815,000 shares, as to which
it has sole voting and dispositive power. State Farm Mutual Fund Trust is the
beneficial owner of 23,550 shares, as to which it has sole voting and
dispositive power.
(2) According to a Schedule 13G/A filed with the Securities and Exchange
Commission by FMR Corp. (FMR), Edward C. Johnson 3d and Abigail P. Johnson on
February 17, 2004, as of December 31, 2003, Fidelity Management & Research
Company (Fidelity), a wholly-owned subsidiary of FMR, is the beneficial owner of
12,664,232 shares as a result of acting as investment adviser to various
investment companies registered under the Investment Company Act of 1940. Edward
C. Johnson 3d, FMR Corp., through its control of the Fidelity, and the funds
each has sole power to dispose of the 12,664,232 shares owned by the funds.
Voting power for the shares owned by the funds is carried out under written
guidelines established by the funds' Boards of Trustees. Fidelity Management
Trust Company (Trust), a wholly-owned subsidiary of FMR, and a bank as defined
in the Securities Exchange Act of 1934, is the beneficial owner of 680,484
shares as a result of its serving as investment manager of institutional
accounts(s). Edward C. Johnson 3d and FMR, through its control of Trust, each
has sole dispositive power over the 680,484 shares and sole power to vote the
680,484 shares. Strategic Advisers, Inc. (Strategic), a wholly-owned subsidiary
of FMR and an investment adviser registered under the Investment Advisers Act of
1940, is the beneficial owner of 93,225 shares as a result of acting as an
investment adviser to individuals.
4
HOW MANY COMMON SHARES DO BIOMET'S DIRECTORS AND EXECUTIVE OFFICERS OWN?
The following table sets forth the beneficial ownership of Common Shares as of
July 21,2004 by each director, each executive officer named in the Summary
Compensation Table herein, and by all directors and executive officers of Biomet
as a group.
OPTION
NUMBER SHARES TOTAL NUMBER
OF SHARES BIOMET'S 401(k) PROFIT EXERCISABLE OF SHARES
NAME OF BENEFICIALLY EMPLOYEE STOCK SHARING PLAN WITHIN BENEFICIALLY PERCENT
BENEFICIAL OWNER OWNED (1) BONUS PLAN (2) AND TRUST (3) 60 DAYS (4) OWNED OF CLASS
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Garry L. England 153,801 23,150 23,120 7,625 207,696 *
Jerry L. Ferguson 2,932,930 3,640 - - 2,936,570 1.2%
Daniel P. Hann 66,375 10,670 3,197 7,625 87,867 *
C. Scott Harrison, M.D. 708,665 - - 6,000 714,665 0.3%
M. Ray Harroff 48,374 - - 6,000 54,374 *
Thomas F. Kearns, Jr. 9,050 - - 2,000 11,050 *
Dane A. Miller, Ph.D. 7,046,153 31,957 22,946 - 7,101,056 2.8%
Jerry L. Miller 3,693,430 - - 6,000 3,699,430 1.5%
Kenneth V. Miller 10,107 - - 6,000 16,107 *
Charles E. Niemier 683,679 27,646 36,275 7,625 755,225 0.3%
Niles L. Noblitt 4,006,326 32,559 53,446 - 4,092,331 1.6%
James R. Pastena 113,424 12,161 11,360 1,250 138,195 *
Marilyn Tucker Quayle 21,916 - - 6,000 27,916 *
L. Gene Tanner 103,371 - - 4,000 107,371 *
Other Executive Officers (5 persons) 479,299 39,208 43,768 34,787 597,062 0.2%
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All Directors and Executive
Officers as a Group
(19 persons, including the foregoing) 94,912 20,546,915 8.1%
* Represents less than 1.0% of Biomet's issued and outstanding Common Shares.
(1) Except as noted below, each director and executive officer has sole or
shared voting power and investment power with respect to the Common Shares
listed next to his or her name:
- Mr. Garry England-4,050 shares held in an individual retirement
account ("IRA") for Mr. England's benefit as to which he has
investment power but no voting power and 3,736 shares owned of
record by Mr. England's children, as to which Mr. England has no
voting or investment power and disclaims beneficial ownership.
- Mr. Jerry Ferguson-276,554 shares owned of record by Mr. Ferguson's
wife and 38,880 shares held in an IRA for her benefit, as to which
Mr. Ferguson has no voting or investment power and disclaims
beneficial ownership; and 58,806 shares held in an IRA for Mr.
Ferguson's benefit as to which he has investment power but no voting
power.
5
- Dr. Dane Miller-3,430,382 shares owned of record by Dr. Miller's
wife and 44,973 shares held in an IRA for her benefit, as to which
Dr. Miller has no voting or investment power and disclaims
beneficial ownership; and 103,473 shares held in an IRA for the
benefit of Dr. Miller, as to which he has investment power but no
voting power.
- Mr. Jerry Miller-3,587,209 shares held in an estate planning trust
for the benefit of Mr. Miller, as to which Mr. Miller has shared
voting and investment power.
- Mr. Charles Niemier-88,481 shares owned of record by Mr. Niemier's
wife and 30,573 shares held in an IRA for her benefit, as to which
Mr. Niemier has no voting or investment power and disclaims
beneficial ownership; 71,082 shares held in an IRA for Mr. Niemier's
benefit, as to which he has investment power but no voting power;
and 250,848 shares held in trust for the benefit of Mr. Niemier's
children, as to which he has no voting or investment power and
disclaims beneficial ownership.
- Mr. Niles Noblitt-1,999,059 shares owned of record by Mr. Noblitt's
wife, as to which Mr. Noblitt has no voting or investment power and
disclaims beneficial ownership; 10,264 shares owned of record by
Mr. Noblitt's wife as custodian of their children, as to which Mr.
Noblitt has no voting or investment power and disclaims beneficial
ownership; and 10,264 shares owned of record by Mr. Noblitt as
custodian for his children, as to which he has voting and investment
power but disclaims beneficial ownership.
- Mr. James Pastena-2,400 shares held in trust for the benefit of his
children, as to which he has no voting or investment power and
disclaims beneficial ownership.
- Other Executive Officers-4,282 shares held in IRA accounts for the
benefit of the spouses of two of these executive officers, as to
which they have no voting or investment power and disclaim
beneficial ownership; and 4,878 shares held in IRA accounts for the
benefit of two of the executive officers, as to which they have
investment power but no voting power.
(2) Biomet's executive officers have accounts in Biomet's Employee Stock Bonus
Plan qualified under section 401(a) of the Internal Revenue Code. The
executive officers who hold shares pursuant to the Employee Stock Bonus
Plan have voting power but do not have investment power for these shares.
(3) Biomet's executive officers may elect to participate in Biomet's Profit
Sharing Plan and Trust qualified under Section 401 (k) of the Internal
Revenue Code. The officers have no voting power for the shares held in
their accounts in the 401 (k) plan. They have sole investment power with
respect to any shares purchased through their personal contributions to
their accounts in the 401 (k) plan. They have no investment power with
respect to the shares contributed by Biomet to their accounts in the
401(k)plan.
(4) Reflects the number of shares that could be purchased by the exercise of
options exercisable at July 21, 2004, or within 60 days thereafter.
6
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
NUMBER OF MEETINGS. The Board of Directors met five times during fiscal year
2004. Each director attended at least 75% of the total number of meetings of the
Board of Directors and committees on which he or she served during fiscal year
2004.
ATTENDANCE AT ANNUAL MEETINGS OF SHAREHOLDERS. At this time, the Board of
Directors does not have a formal policy requiring that directors attend the
Annual Meeting of Shareholders. However, it is customary for directors to attend
the Annual Meeting of Shareholders, absent exceptional circumstances, and all
directors properly nominated for election are expected to attend the Annual
Meeting of Shareholders. All directors, other than Thomas F. Kearns, Jr. and
Marilyn Tucker Quayle, attended the 2003 Annual Meeting of Shareholders. Mr.
Kearns and Ms. Quayle were not able to attend due to conflicts with their travel
arrangements.
DIRECTOR INDEPENDENCE. Seven of Biomet's twelve directors are non-employee
directors. Although Biomet has not adopted formal standards of materiality for
independence purposes (other than those set forth in the NASDAQ Stock Market
listing standards), information provided by the directors and Biomet did not
indicate any material relationships that would impair the independence of any of
the non-employee directors. The Board has determined that each of its
non-employee directors satisfies the independence standards set forth in the
NASDAQ Stock Market listing standards.
EXECUTIVE SESSIONS OF NON-EMPLOYEE DIRECTORS. The Board holds meetings of its
non-employee directors in conjunction with each regularly scheduled meeting. The
Chairman of the Nominating and Corporate Governance Committee serves as the
chair of these meetings.
COMMUNICATIONS BETWEEN SHAREHOLDERS AND THE BOARD. The Board of Directors has
not established a formal process for shareholders to send communications to the
Board of Directors because it does not believe that a specific process is
necessary at this time. All Board members, including their committee
assignments, are identified each year in Biomet's Proxy Statement.
Communications that are intended for members of the Board of Directors may be
sent to the attention of the Secretary of Biomet at P.O. Box 587, Warsaw, IN
46581-0587, with a cover letter indicating to whom the correspondence is
directed. All mail received will be opened and screened for security purposes.
Correspondence that is determined to be appropriate and within the purview of
the Board of Directors will be delivered to the respective Board member to which
the communication is addressed. Mail addressed to "outside directors" or
"non-employee directors" will be delivered to the Chairman of the Nominating and
Corporate Governance Committee. Mail addressed to the "Board of Directors" will
be delivered to the Chairman of the Board.
CODE OF BUSINESS CONDUCT AND ETHICS. All Biomet team members, including the
Chief Executive Officer, Chief Financial Officer, Controller and other persons
performing similar functions, and the Board of Directors, as well as certain
other personnel associated with Biomet, are required to comply with Biomet's
long-standing Code of Business Conduct and Ethics (the "Code"). The Code was
recently augmented to comply with the new requirements of the NASDAQ Stock
Market and the Securities and Exchange Commission. The Code is based on five
broad corporate values that shape Biomet's business practices: (a)
Legal/Compliance Obligations, (b) Integrity, (c) Respect for People, (d)
Dedication to Quality and (e) Stewardship. The Code also includes a procedure
for reporting any potential violation and a process for investigating and
resolving any potential violation. A copy of the Code is available on Biomet's
website at www.biomet.com or a copy may also be requested free of charge by
contacting Biomet's Investor Relations Department at Biomet, Inc., P.O. Box 587,
Warsaw, IN 46581-0587 or at 574-372-1514.
7
ITEM 1-ELECTION OF DIRECTORS
Biomet's Board of Directors currently has 12 members. Biomet's Bylaws divide the
Board of Directors into three classes, with one class to be elected at each
Annual Meeting of Shareholders. At the Annual Meeting, the shareholders will
vote to elect four directors in Class III to serve for a three-year term
expiring in 2007, or until their successors are elected and qualified. Class I
Directors and Class II Directors will not be elected at the Annual Meeting and
will continue in office until the Annual Meetings of Shareholders to be held in
2005 and 2006, respectively. The Board of Directors has nominated the persons
named below for election as Class III Directors. The name, age, business
background and tenure as a director of Biomet of each nominee and each director
continuing in office are set forth below. Jerry L. Miller and Kenneth V. Miller
are brothers. No other family relationship exists among any of the nominees or
continuing directors. Except as otherwise indicated, the principal occupations
of the nominees and continuing directors have not changed during the last five
years. The nominees for director have consented to serve, if elected, and Biomet
has no reason to believe that any of the nominees will be unable to serve.
Should any nominee become unavailable for any reason, proxies may be voted for
an alternate candidate chosen by the Board of Directors. The four nominees for
director receiving the greatest number of votes will be elected as directors.
Withheld votes and broker non-votes (which are treated as "withheld" votes) are
not counted as votes in favor of any nominee. Unless the returned proxy
indicates otherwise, the proxy will be voted FOR the nominees named.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE NOMINEES BELOW.
DIRECTORS STANDING FOR ELECTION
NAME, AGE AND BUSINESS EXPERIENCE
CLASS III: FOR A THREE-YEAR TERM EXPIRING AT THE 2007 ANNUAL MEETING OF
SHAREHOLDERS
M. RAY HARROFF, age 64...................................... Director since 1977
Member: Nominating and Corporate Governance Committee. Mr. Harroff is one of the
four founders of Biomet and is President of Stonehenge Links Village Development
(real estate development company).
JERRY L. Miller, age 58..................................... Director since 1979
Member: Executive and Compensation and Stock Option (Chair) Committees. Mr.
Miller is a self-employed attorney, venture capitalist and a principal in
Havirco (private investment management firm). Mr. Miller is a director and a
member of the Compensation Committee of the Board of Directors of AvTech
Laboratories, Inc. (pharmaceutical laboratory) and TEAM Industries, Inc.
(manufacturer of expanded polystyrene products). In addition, Mr. Miller serves
as a director of various charitable and civic organizations.
CHARLES E. NIEMIER, AGE 48.................................. Director since 1987
Mr. Niemier is the Senior Vice President - International Operations of Biomet.
Mr. Niemier is a trustee of Valparaiso University, a member of the Board of
Directors of Lakeland Financial Corporation (Lake City Bank), and a member of
the Board of Directors of Kosciusko 21st Century Foundation, Inc. (non-profit
organization).
L. GENE TANNER, AGE 71...................................... Director since 1985
Member: Audit and Compensation and Stock Option Committee. Mr. Tanner is Vice
Chairman of the Board of NatCity Investments, Inc. (investment banking firm) and
a director of the Indiana Chamber of Commerce.
8
DIRECTORS CONTINUING IN OFFICE
NAME, AGE AND BUSINESS EXPERIENCE
CLASS I: TERM EXPIRES AT THE 2005 ANNUAL MEETING OF SHAREHOLDERS
C. SCOTT HARRISON, M.D., age 67............................. Director since 1994
Member: Executive, Nominating and Corporate Governance (Chair) and Audit
Committees. Dr. Harrison is the founder, President and Chief Executive Officer
of CURE International (non-profit organization).
KENNETH V. MILLER, age 56................................... Director since 1979
Member: Executive and Audit (Chair) Committees. Mr. Miller is a self-employed
attorney, venture capitalist and a principal in Havirco (private investment
management firm). Mr. Miller is a director and a member of the Compensation
Committee of the Board of Directors of AvTech Laboratories, Inc. (pharmaceutical
laboratory) and TEAM Industries, Inc. (manufacturer of expanded polystyrene
products). Mr. Miller is also a director of Keystone Community Bank and a member
of the Board of Trustees of Western Michigan University. In addition, Mr. Miller
serves as a director of various charitable and civic organizations.
NILES L. NOBLITT, age 53.................................... Director since 1977
Member: Executive Committee. Mr. Noblitt is one of the four founders of Biomet
and is the Chairman of the Board. Mr. Noblitt is also a trustee of Rose Hulman
Institute of Technology.
MARILYN TUCKER QUAYLE, age 55............................... Director since 1993
Member: Nominating and Corporate Governance Committee. Ms. Quayle is a director
and President of BTC, Inc. (private investment holding company) and a director
of booksfree.com. Prior to 2001, she was also an attorney engaged in private
practice as a partner in the Indianapolis, Indiana law firm of Krieg, DeVault,
Alexander & Capehart.
CLASS II: TERM EXPIRES AT THE 2006 ANNUAL MEETING OF SHAREHOLDERS
JERRY L. FERGUSON, age 63................................... Director since 1978
Member: Executive Committee. Mr. Ferguson is one of the four founders of Biomet
and is the Vice Chairman of the Board.
DANIEL P. HANN, age 49...................................... Director since 1989
Mr. Hann is the Senior Vice President, General Counsel and Secretary of Biomet.
THOMAS F. KEARNS, JR., age 67............................... Director since 1983
Member: Compensation and Stock Option Committee. Mr. Kearns is a retired partner
of Bear, Stearns & Co., Inc. (investment banking firm). Mr. Kearns is a trustee
of the University of North Carolina Foundation, a director of Fibrogen
Corporation (biotechnology company) and a director of the Omega Institute
(non-profit organization).
DANE A. MILLER, PH.D., age 58............................... Director since 1977
Member: Executive Committee. Dr. Miller is one of the four founders of Biomet
and is the President and Chief Executive Officer. Dr. Miller is a director of
1st Source Corporation (bank holding company), a trustee of Kettering University
(formerly General Motors Institute), a member of the Board of the University of
Chicago Health Systems and serves on the Engineering Advisory Committee of the
University of Cincinnati.
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COMMITTEES OF THE BOARD OF DIRECTORS
BOARD COMMITTEE MEMBERSHIP
Nominating Compensation
and Corporate and Stock
Executive Audit Governance Option
Name Committee Committee Committee Committee
Jerry L. Ferguson X
Daniel P. Hann
C. Scott Harrison, M.D. X X X
M. Ray Harroff X
Thomas F. Kearns, Jr. X
Dane A. Miller, Ph.D. X
Jerry L. Miller X X
Kenneth V. Miller X X
Charles E.Niemier
Niles L. Noblitt X
Marilyn Tucker Quayle X
L. Gene Tanner X X
The EXECUTIVE COMMITTEE has full authority from the Board of Directors to
conduct business within the limits prescribed by Indiana law. The Executive
Committee met five times during fiscal year 2004.
The function of the AUDIT COMMITTEE is to assist the Board of Directors in
fulfilling its oversight responsibilities as they relate to Biomet's accounting
policies, internal controls and financial reporting practices. The Audit
Committee fulfills this responsibility by reviewing the financial reporting
process, the systems of internal control, the audit process and Biomet's process
for monitoring compliance with laws and regulations and with its code of
conduct. The Audit Committee also establishes policies and makes recommendations
to the Board of Directors with respect to the approval of transactions between
Biomet and its directors, officers and employees; reviews and approves any
related-party transactions; appoints Biomet's independent accountants; and
reviews Biomet's compliance with applicable laws, regulations and internal
procedures. Members of the Audit Committee are independent non-executive
directors within the meaning of "independent director" as set forth in the
current NASDAQ Stock Market listing standards. The Audit Committee and the Board
of Directors have determined that each of the members of the Audit Committee
qualifies as an "audit committee financial expert" within the meaning of the
rules and regulations of the Securities and Exchange Commission. The Audit
Committee Charter is posted in the Corporate Governance Section of Biomet's
website at www.biomet.com. A free copy may also be requested by contacting
Biomet's Investor Relations Department at P.O. Box 587, Warsaw, IN 46581-0587
or at (574) 372-1514. The Audit Committee met twelve times during fiscal year
2004.
The NOMINATING AND CORPORATE GOVERNANCE COMMITTEE is responsible for, among
other things, receiving and reviewing recommendations for nominations to the
Board of Directors, establishing eligibility criteria and procedures for
identifying potential nominees to the Board of Directors, and recommending
10
individuals as nominees for election to the Board of Directors. The Nominating
and Corporate Governance Committee is also responsible for recommending to the
Board the director nominees for each committee of the Board; providing oversight
of the corporate governance affairs of the Board and Biomet; and assisting in
the evaluation of the Board, its committees and the individual directors. The
Nominating and Corporate Governance Committee consists only of directors who, in
the judgment of the Board of Directors, are independent in accordance with the
NASDAQ Stock Market listing standards and as determined in the business judgment
of the Board of Directors. The Nominating and Corporate Governance Committee
Charter is posted in the Corporate Governance Section of Biomet's website at
www.biomet.com. A free copy may also be requested by contacting Biomet's
Investor Relations Department at P.O. Box 587, Warsaw, IN 46581-0587 or at
574-372-1514. The Nominating and Corporate Governance Committee met twice during
fiscal year 2004.
The COMPENSATION AND STOCK OPTION COMMITTEE is responsible for administering the
compensation programs and stock option plans for Biomet's executive officers and
employees. Presently, no member of the Compensation and Stock Option Committee
participates in any of these plans with the exception that each of the
non-employee director members automatically receives an option to purchase 2,000
Common Shares every year during his or her service as a non-employee director of
Biomet pursuant to the terms of the Biomet, Inc. 1998 Qualified and
Non-Qualified Stock Option Plan. The Compensation and Stock Option Committee
consists only of directors who, in the judgment of the Board of Directors, are
independent in accordance with the NASDAQ Stock Market listing standards and as
determined in the business judgment of the Board of Directors. The Compensation
and Stock Option Committee met four times during fiscal year 2004.
COMPENSATION OF DIRECTORS
Fees are paid to Biomet's Board of Directors and its committee members as
follows:
Annual retainer for non-employee directors............................................ $ 20,000*
Annual retainer for non-employee members of the Executive Committee................... $ 20,000
Annual retainer for non-employee members of the Audit Committee....................... $ 20,000
Meeting attendance fee for non-employee directors and non-employee members of
committees (except meetings of the Compensation and Stock Option and
Nominating and Corporate Governance Committees held in conjunction with a
meeting of the Board of Directors, for which no meeting fee is paid)................ $ 1,300
Meeting fee for telephonic participation by non-employee directors and
non-employee members of committees (except meetings of the Compensation and
Stock Option and Nominating and Corporate Governance Committees held in
conjunction with a meeting of the Board of Directors, for which no meeting
fee is paid)........................................................................ $ 500
Board meeting attendance fee for employee directors................................... $ 800
Board meeting fee for telephonic participation by employee directors.................. $ 500
* Directors who are not employees receive one-half of their annual retainer in
the form of Common Shares of Biomet, which are held in trust by Biomet until
such Director's retirement from the Board of Directors. In addition, Biomet
reimburses each director for his or her travel expenses for attending meetings
of the Board of Directors and its committees.
11
Each director who is not a Biomet employee is automatically granted an option to
purchase 2,000 Common Shares every year during his or her service on the Board
of Directors pursuant to the terms of the Biomet, Inc. 1998 Qualified and
Non-Qualified Stock Option Plan ("1998 Plan"). The 1998 Plan provides that the
purchase price of option shares may not be less than the fair market value per
Common Share on the date of grant and the term of the option may not exceed ten
years from the date of grant.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Stock Option Committee is comprised of Jerry L. Miller
(Chair), Thomas F. Kearns, Jr. and L. Gene Tanner. None of the members of the
Compensation Committee is now serving or previously has served as an officer of
Biomet or any of its subsidiaries. None of Biomet's executive officers serves as
a director of, or in any compensation-related capacity for, other companies with
which members of Biomet's Compensation and Stock Option Committee are
affiliated.
EXECUTIVE COMPENSATION
GENERAL
The following Summary Compensation Table sets forth, for the three years ended
May 31, 2004, certain information with respect to the compensation of Biomet's
President and Chief Executive Officer and the four other most highly compensated
executive officers who served in such capacities as of May 31, 2004.
SUMMARY COMPENSATION TABLE
ANNUAL LONG-TERM
FISCAL YEAR COMPENSATION INCENTIVE AWARDS ALL OTHER
NAME AND PRINCIPAL POSITION ENDED MAY 31, SALARY BONUS STOCK OPTIONS(#) COMPENSATION(1)
--------------------------- ------------- ------ ----- ---------------- ---------------
Dane A. Miller, Ph.D. 2004 $300,800 $275,000 - $17,388
President and 2003 284,000 245,000 - 16,500
Chief Executive Officer 2002 264,300 230,000 - 16,875
Niles L. Noblitt 2004 $300,800 $275,000 - $17,388
Chairman of the Board 2003 284,000 245,000 - 16,500
2002 273,800 30,000 - 16,875
Charles E. Niemier 2004 $298,300 $242,000 10,000 $17,388
Senior Vice President - 2003 281,800 198,000 4,000 16,500
International Operations 2002 262,100 167,000 15,000 16,875
Garry L. England 2004 $279,500(2) $242,000 10,000 $13,838
Senior Vice President - 2003 264,100 220,000 4,000 13,500
Warsaw Operations 2002 246.700 209,000 15,000 13,500
James R. Pastena 2004 $307,200 $210,000 10,000 $13,838
Vice President of Biomet 2003 290,000 189,000 4,000 13,500
and President of EBI, L.P. 2002 279,700 199,500 15,000 13,500
(1) Represents the value of Biomet's contribution to the Employee Stock Bonus
Plan ($6,150, $6,000 and $6,000 for each of the named executives during
2004, 2003 and 2002, respectively), Biomet's contribution to the 401(k) Plan
($7,687.50, $7,500 and $7,500 for each of the named executives during 2004, 2003
and 2002, respectively) and director meeting attendance fees ($3,550, $3,000 and
$3,375 paid to Dr. Miller, Mr. Noblitt and Mr. Niemier during 2004, 2003 and
2002, respectively).
(2) Includes that portion of Mr. England's compensation deferred at his election
pursuant to the Biomet, Inc. Deferred Compensation Plan, as more fully described
on page 16 of this Proxy Statement.
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STOCK OPTIONS
Options were granted in fiscal year 2004 to the following executive officers
named in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
NUMBER OF POTENTIAL REALIZABLE VALUE
SECURITIES PERCENT OF TOTAL AT ASSUMED ANNUAL
UNDERLYING OPTIONS GRANTED EXERCISE RATES OF STOCK PRICE
OPTIONS GRANTED(1) TO EMPLOYEES IN PRICE EXPIRATION APPRECIATION FOR OPTION TERM(2)
NAME (#) FISCAL YEAR 2004 ($/SH) DATE 5% ($) 10% ($)
----- ----------------- ---------------- ------ ------ ------ -------
Charles E. Niemier 1,250 0.07% $28.88 7/9/06 $ 5,690 $ 11.949
1,250 0.07% 28.88 7/9/07 7,780 16,754
1,250 0.07% 28.88 7/9/08 9,974 22,039
1,250 0.07% 28.88 7/9/09 12,277 27,853
1,250 0.07% 28.88 7/9/10 14,696 34,249
1,250 0.07% 28.88 7/9/11 17,236 41,284
1,250 0.07% 28.88 7/9/12 19,903 49,022
1,250 0.07% 28.88 7/9/13 22,703 57,534
Garry L. England 1,250 0.07% $28.88 7/9/06 $ 5,690 $ 11,949
1,250 0.07% 28.88 7/9/07 7,780 16,754
1,250 0.07% 28.88 7/9/08 9,974 22,039
1,250 0.07% 28.88 7/9/09 12,277 27,853
1,250 0.07% 28.88 7/9/10 14.696 34,249
1,250 0.07% 28.88 7/9/11 17,236 41,284
1,250 0.07% 28.88 7/9/12 19.903 49,022
1,250 0.07% 28.88 7/9/13 22,703 57,534
James R. Pastena 1,250 0.07% $28.88 7/9/06 $ 5,690 $ 11,949
1,250 0.07% 28.88 7/9/07 7,780 16,754
1,250 0.07% 28.88 7/9/08 9,974 22,039
1,250 0.07% 28.88 7/9/09 12,277 27,853
1,250 0.07% 28.88 7/9/10 14,696 34,249
1,250 0.07% 28.88 7/9/11 17,236 41,284
1,250 0.07% 28.88 7/9/12 19,903 49,022
1,250 0.07% 28.88 7/9/13 22,703 57,534
(1) These options were granted under the Biomet, Inc. 1998 Qualified and
Non-Qualified Stock Option Plan. They were granted at fair market value at the
time of the grant, do not become exercisable until at least one year from the
date of grant and carry with them the right to deliver previously owned shares
in payment of the option price and to satisfy tax withholding requirements.
(2) The dollar amounts shown in these columns are the result of calculations at
the 5% and 10% appreciation rates set by the Securities and Exchange Commission
and are not intended to forecast the actual appreciation, if any, of Biomet's
stock price. Biomet did not use an alternate formula to determine potential
realizable value because it is not aware of any formula that is able to
determine with reasonable accuracy the potential realizable value based on
future unknown or volatile factors.
13
The following table sets forth the number of shares acquired on exercise of
stock options and the aggregate gain realized on exercise in fiscal year 2004 by
Biomet's executive officers named in the Summary Compensation Table. Dr. Miller
and Mr. Noblitt have never received stock options from Biomet.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION VALUES
NUMBER OF NUMBER OF UNEXERCISED OPTIONS VALUE OF UNEXERCISED IN-THE-MONEY
SHARES ACQUIRED VALUE AT MAY 31, 2004 OPTIONS AT MAY 31, 2004(2)
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------ -------------- ----------- ----------- ------------- -------------- -------------
Charles E. Niemier 25,968 $658,673 6,375 38,188 $ 166,578 $ 563,112
Garry L. England 14,437 $386,194 6,375 38,188 $ 166,578 $ 563,112
James R. Pastena 33,210 $788,093 0 42,875 0 $ 653,508
(1) Upon exercise of an option, an individual does not receive cash equal to the
amount contained in the Value Realized column of this table. Instead, the "Value
Realized" represents the difference between the base (or exercise) price of the
option shares and the market price of the option shares on the date the option
was exercised. It does not include any taxes which may have been owed. No cash
is received until or unless the shares received upon exercise of an option are
sold.
(2) Represents the difference between the base (or exercise) price of the option
shares and a market price of $40.12, the closing price of the Common Shares
reported by The Nasdaq National Market on May 28, 2004, the last business day
prior to May 31, 2004.
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
The Compensation and Stock Option Committee of the Board of Directors (referred
to herein as the "Committee") is responsible for administering the compensation
and benefit programs for Biomet's team members, including the executive
officers. The Committee annually reviews and evaluates cash compensation and
stock option grant recommendations made by the Chairman of the Board and the
President and Chief Executive Officer for the executive officers (other than for
themselves) along with the rationale for such recommendations. The Committee
examines these recommendations in relation to Biomet's overall objectives and
makes compensation recommendations to the Board of Directors for final approval.
The Committee also sends to the Board of Directors for approval its
recommendations on compensation for the Chairman of the Board and the President
and Chief Executive Officer, who do not participate in the decisions of the
Board as to their compensation packages. Neither the Chairman of the Board nor
the President and Chief Executive Officer is a member of the Compensation and
Stock Option Committee.
WHAT IS BIOMET'S PHILOSOPHY OF EXECUTIVE OFFICER COMPENSATION?
Biomet's current executive compensation policies and practices reflect the
compensation philosophies of Biomet's founders. Biomet is committed to
maximizing shareholder value through performance. The Committee believes that an
essential element to reaching that goal is the superior performance of Biomet's
executive officers and management team. Biomet's practices and policies are
designed to help achieve this objective by accomplishing the following goals:
- Attracting, retaining and rewarding highly-qualified and productive
persons.
- Relating compensation to both company and individual performance.
- Establishing compensation levels that are internally equitable and
externally competitive.
- Encouraging an ownership interest and instilling a sense of pride in
Biomet, consistent with the interests of Biomet's shareholders.
The Committee firmly believes that all team members play a critical role in
Biomet's success and, therefore, all team members are eligible to participate in
Biomet's cash and equity compensation plans. The Committee continues to believe
in one of Biomet's founding philosophies: equity incentives in the form of stock
14
options are an excellent motivation for all team members, including executive
officers, and serve to align the interests of team members, management and
shareholders.
Based on these objectives, the compensation package of the executive officers
consists of five primary elements:
- base salary,
- incentive bonuses,
- stock options,
- participation in employee benefit plans, and
- deferred compensation elections.
BASE SALARY. A base salary is set for each executive officer at the beginning of
each calendar year by the Board of Directors, after receiving a recommendation
from the Committee. The Committee recommends to the Board of Directors what it
believes to be an appropriate base salary for each executive officer based on
Biomet's performance, the executive officer's performance, Biomet's future
objectives and challenges, and the current competitive environment. Base
salaries are intended to be relatively moderate, but competitive. During fiscal
year 2004, the base salary of the executive officers as a group increased
approximately 5%.
INCENTIVE BONUSES. A significant portion of each executive officer's annual
compensation is based on the financial performance of Biomet. Approximately
one-half of each executive officer's potential annual cash compensation is based
upon an incentive bonus, which is accrued and paid at the mid-point and the
conclusion of each fiscal year. The potential bonus is determined at the
discretion of the Committee and approved by the Board of Directors at the
beginning of each fiscal year. In exercising its discretion, the Committee takes
into account the growth in revenues and earnings and working capital management
of the operations for which the executive officer is responsible or plays a
significant role, as well as the goals, objectives, responsibilities and length
of service of each officer.
STOCK OPTIONS. Stock options have always been a key element in Biomet's
long-term incentives program. The primary purpose of stock options is to provide
executive officers and other team members with a personal and financial interest
in Biomet's success through stock ownership, thereby aligning the interests of
such persons with those of Biomet's shareholders. This broad-based program is a
vital element of Biomet's goal to empower and motivate outstanding long-term
contributions by team members within all levels of Biomet. The Committee
believes that stock options help to create an entrepreneurial environment within
Biomet and instill the spirit of a small company. Additionally, the Committee
believes stock options provide broad incentives for the day-to-day achievements
of all team members in order to sustain and enhance Biomet's long-term
performance.
The Committee believes that the value of stock options will reflect Biomet's
financial performance over the long term. Because Biomet's employee stock option
program provides for at least a one-year waiting period before options may be
exercised and an exercise price at fair market value as of the date of grant,
executive officers and other team members benefit from stock options only when
the market value of the Common Shares increases over time. Individual executive
officer stock option awards are based on level of responsibility, individual
contribution, length of service and total number of Common Shares owned in
relation to other executive officers. All team members are eligible to receive
stock options. The current plan provides that all hourly team members of Biomet
and its subsidiaries receive a stock option after just two years of service with
Biomet or one of its subsidiaries.
BENEFIT PLANS. The executive officers may also participate in Biomet's 401(k)
Plan and the Employee Stock Bonus Plan ("ESBP"). All team members residing in
the United States who are at least 18 years of age and complete at least 90 days
of service or 1,000 hours per year are also eligible to participate in both
plans. With respect to the 401(k) Plan, each year Biomet, in its sole
discretion, may match 75% of each team member's contributions, up to a maximum
amount equal to 5% of the team member's compensation, either in cash or in
Common Shares. All contributions to the 401(k) Plan are allocated to accounts
maintained on
15
behalf of each participating team member and, to the extent vested, are
distributed to the team member upon retirement, death, disability or termination
of service. Historically, the 401(k) Plan has purchased Common Shares with
Biomet's matching contribution. Biomet may make contributions to the ESBP in the
form of Common Shares or cash in such amounts, if any, as it may determine in
its sole discretion, and participating team members may make voluntary
contributions to the ESBP in amounts up to 10% of their annual compensation.
Historically, Biomet has made contributions to the ESBP equal to 3% of each team
member's annual salary, up to the maximum amount permitted by applicable
Internal Revenue Service regulations. The funds accumulated under the ESBP are
invested by the trustee primarily in Biomet Common Shares. To the extent vested,
distributions are made to team members at retirement, death, disability or
termination of service, in Common Shares or, at the team member's option, in
cash. Because a significant portion of the assets of both of these plans is
invested in Biomet's Common Shares, they serve to further align the interests of
team members, management and shareholders.
DEFERRED COMPENSATION PLAN. During fiscal year 2004, the Board of Directors
approved the Biomet, Inc. Deferred Compensation Plan (the "Plan"), a
non-qualified deferred compensation plan, that is available for Biomet's highly
compensated team members and members of the Board of Directors. The Plan allows
eligible participants to defer pre-tax compensation to reduce current tax
liability and assist those team members in their plan for retirement and other
long-term savings goals in a tax-effective manner. Biomet does not make any
contributions to the Plan. Under the Plan, eligible participants may defer up to
100% of their base salary and bonus payments, as well as Board of Director fees,
if applicable. All distributions from the Plan are treated as ordinary income
subject to federal and state income taxation at the time of distribution.
Amounts contributed to the Plan are "deemed investments," which means that the
participants have no ownership interest in the investment alternative selected.
The participants' deferrals and gains are reflected on Biomet's financial
statements and are unsecured general assets of Biomet. The Plan is an unfunded
"future promise to pay" on behalf of Biomet. Neither Biomet nor the plan
recordkeeper provides any guarantee of investment return.
HOW IS BIOMET'S PRESIDENT AND CHIEF EXECUTIVE OFFICER COMPENSATED?
The compensation for Biomet's President and Chief Executive Officer, Dane A.
Miller, Ph.D., is established by the Compensation and Stock Option Committee and
approved by the Board of Directors. Dr. Miller is not a member of the
Compensation and Stock Option Committee and does not participate in decisions of
the Board of Directors with respect to his compensation. Over the years, Dr.
Miller has received modest increases in his cash compensation, notwithstanding
Biomet's strong financial results. These modest increases reflect his
cost-conscious management style and belief that the financial success of
management should be closely aligned with shareholder interests through
appreciation in the value of Biomet's stock. Dr. Miller has never received a
stock option and he does not participate in Biomet's stock option program.
Notwithstanding an increase of 16% and 14% in Biomet's net sales and net income,
respectively, for fiscal year 2004, the total compensation paid to Dr. Miller
increased approximately 9% during fiscal year 2004. The Committee believes that
the executive compensation programs and practices described above are
conservative and fair to Biomet's shareholders. The Committee further believes
that these programs and practices serve the best interests of Biomet and its
shareholders.
Respectfully submitted,
COMPENSATION AND STOCK OPTION COMMITTEE
Jerry L. Miller, Chairman
Thomas F. Kearns, Jr.
L. Gene Tanner
16
REPORT OF NOMINATING AND
CORPORATE GOVERNANCE COMMITTEE
The Nominating and Corporate Governance Committee is responsible for, among
other things, reviewing and recommending nominees for director, recommending
director nominees for each committee of the Board of Directors and providing
oversight of the corporate governance affairs of the Board and Biomet. The
Nominating and Corporate Governance Committee operates pursuant to its Charter
adopted June 27, 2003, a copy of which is available in the Corporate Governance
section of Biomet's website at www.biomet.com. A free copy may also be requested
by contacting Biomet's Investor Relations Department at P.O. Box 587, Warsaw IN
46581-0587 or at (574) 372-1514.
The Nominating and Corporate Governance Committee has no fixed process for
identifying and evaluating potential candidates to be nominees. To date, the
Nominating and Corporate Governance Committee has not retained the services of
any third party to assist in the process of identifying or evaluating potential
candidates. Likewise, the Nominating and Corporate Governance Committee has no
fixed set of qualifications that must be satisfied before a candidate will be
considered. Rather, the Nominating and Corporate Governance Committee has the
flexibility to consider such factors as it deems appropriate. These factors may
include education, diversity, experience with businesses and other organizations
of comparable size as Biomet, the interplay of the candidate's experience with
that of other members of the Board of Directors and the extent to which the
candidate would be a desirable addition to the Board of Directors and any of the
committees of the Board of Directors.
The Nominating and Corporate Governance Committee will consider for nomination
as directors persons recommended by shareholders provided that such
recommendations are in writing and delivered to the attention of the Secretary
of Biomet, P.O. Box 587, Warsaw IN 46581-0587, and delivered to, or mailed and
received at, such address not less than 60 days nor more than 90 days prior to
the Annual Meeting of Shareholders. In the event that less than 70 days' notice
or prior public disclosure of the date of the Annual Meeting is given or made to
shareholders, any notice of nomination by a shareholder must be received no
later than the close of business on the tenth day following the day on which
such notice of the date of the meeting was mailed or such public disclosure was
made. Further information regarding the submission of nominees for director is
provided on page 22 of this Proxy Statement. The Nominating and Corporate
Governance Committee will evaluate nominees for director submitted by
shareholders in the same manner in which it evaluates other director nominees.
Respectfully submitted,
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
C. Scott Harrison, M.D., Chairman
M. Ray Harroff
Marilyn Tucker Quayle
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REPORT OF AUDIT COMMITTEE
The primary function of the Audit Committee is to assist the Board of Directors
in fulfilling its oversight responsibilities as they relate to Biomet's
accounting policies, internal controls and financial reporting practices. The
Audit Committee fulfills this responsibility by reviewing the financial
reporting process, the systems of internal control, the audit process and
Biomet's process for monitoring compliance with laws and regulations and with
its Code of Business Conduct and Ethics. In performing its duties, the Audit
Committee maintains effective working relationships with the Board of Directors,
management, the internal audit department and the independent accountants. The
Audit Committee operates persuant to a Charter adopted June 27, 2003, a copy of
which was attached to Biomet's 2003 Proxy Statement. To effectively perform his
or her role, each committee member will obtain an understanding of the detailed
responsibilities of committee membership as well as Biomet's business,
operations and risks.
The Audit Committee fulfills its responsibilities through periodic meetings with
Biomet's independent accountants, internal auditors and members of Biomet's
management. During fiscal year 2004, the Audit Committee met twelve times.
The Audit Committee has discussed the quality and adequacy of Biomet's internal
controls with management, the internal auditors and the independent accountants.
The Audit Committee has considered and reviewed with the internal auditors and
independent accountants their audit plans, the scope of the audit, the
identification of audit risks and the results of the internal audit
examinations. The Audit Committee has adopted an Audit and Non-Audit Services
Pre-Approval Policy.
The Audit Committee has reviewed Biomet's audited financial statements for the
fiscal year ended May 31, 2004, and discussed them with management and Biomet's
independent accountants. Management has the responsibility for the preparation
and integrity of Biomet's financial statements and the independent accountants
have the responsibility for the examination of those statements. The Audit
Committee's review included discussion with the independent accountants of
matters required to be discussed pursuant to Statement on Auditing Standards No.
61 (Communication With Audit Committees).
The Audit Committee has received and reviewed written disclosures and a letter
from the independent accountants required by the Independence Standards Board
Standard No. 1, entitled "Independence Discussions with Audit Committees," as
amended to date, and has discussed with the independent accountants their
independence from management. The Audit Committee has determined that the
provision of non-audit services to Biomet during the most recently ended fiscal
year by the independent accountants is compatible with maintaining their
independence.
Based upon the review of the financial statements and discussions with
management and the independent accountants, the Audit Committee recommended to
the Board that Biomet's audited financial statements be included in its Annual
Report on Form 10-K for the fiscal year ended May 31, 2004 for filing with the
Securities and Exchange Commission.
The Audit Committee has appointed Ernst & Young LLP as the independent
accountants for Biomet's fiscal year 2005.
During fiscal year 2004, the Audit Committee reviewed all transactions between
Biomet and its executive officers. The Audit Committee believes the terms of
these transactions are no less favorable to Biomet than would have been
available in the absence of the relationship with the executive officer.
18
It is not the duty of the Audit Committee to plan or conduct audits or to
determine that Biomet's financial statements are complete and accurate and in
accordance with accounting principles generally accepted in the United States.
Those responsibilities belong to management and Biomet's independent
accountants. In giving its recommendations to the Board of Directors, the Audit
Committee has relied on (a) management's representation that such financial
statements have been prepared with integrity and objectivity and in conformity
with accounting principles generally accepted in the United States, and (b) the
report of Biomet's independent accountants with respect to such financial
statements.
Respectfully submitted,
AUDIT COMMITTEE
Kenneth V. Miller, Chairman
C. Scott Harrison, M.D.
L. Gene Tanner
19
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on Biomet's
Common Shares with the cumulative total return of Standard & Poor's 500 Stock
Index ("S&P 500 Index") and Standard & Poor's Health Care Equipment Index ("S&P
Health Care Index") for the five most recent fiscal years ended May 31. The
comparison assumes $100 invested on May 31, 1999, and the reinvestment of
dividends, in Biomet's Common Shares and in each of the indices.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG COMMON SHARES OF BIOMET, INC., THE S&P 500 INDEX
AND THE S&P HEALTH CARE INDEX
[LINE GRAPH]
INDEXED RETURNS
YEARS ENDING
BASE PERIOD
COMPANY/INDEX 5/31/99 5/31/00 5/31/01 5/31/02 5/31/03 5/31/04
----------------------------------------------------------------------------------------------------------------------------
Biomet, Inc. $ 100 $ 90.64 $169.02 $160.67 $157.18 $230.38
S&P 500 Index 100 110.48 98.82 85.13 78.27 92.62
S&P Health Care Index 100 111.55 109.86 119.37 123.88 160.61
CERTAIN TRANSACTIONS
Dane A. Miller, Ph.D., President and Chief Executive Officer and a member of the
Board of Directors of Biomet, is a majority shareholder in a corporation which
provides the use of an aircraft to Biomet on an as-needed basis. Biomet pays a
flat monthly fee of $39,750, plus sales tax, to that corporation for the use of
the aircraft. During the last fiscal year, Biomet made payments to that
corporation of approximately $505,620 in rental fees. The Audit Committee of the
Board of Directors has reviewed this relationship and believes the rental rate
and other terms of this arrangement to be no less favorable to Biomet than would
have been available in the absence of the relationship described. All other fees
principally relate to benefit plans and real estate activities.
20
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Biomet's directors
and executive officers and persons who own more than 10 percent of a registered
class of Biomet's equity securities to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
Biomet Common Shares and other equity securities. Officers, directors and
greater-than-ten percent shareholders are required by SEC regulations to furnish
Biomet with copies of all Section 16(a) forms filed by them.
During fiscal year 2004, one of Biomet's executive officers, Gregory D. Hartman,
did not timely report the exercise of a stock option and the resulting
acquisition of shares on May 21, 2004. This transaction was included in the Form
5 Annual Statement of Beneficial Ownership of Securities filed by Mr. Hartman.
Other than the transactions noted above, to Biomet's knowledge, based solely on
the review of the copies of such reports furnished to Biomet and written
representations that no other reports were required, all Section 16(a) filing
requirements applicable to its officers, directors and greater-than-ten percent
beneficial owners were complied with on a timely basis during the fiscal year
ended May 31, 2004.
ITEM 2-RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Audit Committee has appointed the firm of Ernst & Young LLP ("Ernst &
Young"), independent certified public accountants, to serve as independent
accountants for the year ending May 31, 2005. The Board of Directors has
determined that it would be desirable to request that the shareholders ratify
such selection. Biomet has been advised by Ernst & Young that neither it nor any
of its associates has any direct or material indirect financial interest in
Biomet.
Representatives of Ernst & Young are expected to be present at the Annual
Meeting. They will have the opportunity to make a statement, if they desire to
do so, and are expected to be available to respond to appropriate questions
concerning the audit for the fiscal year ended May 31, 2004.
MATTERS RELATING TO AUDITORS
Fees for professional services provided by our independent accountants in each
of the last two fiscal years, in each of the following categories are:
2004 2003
---------- ----------
Audit Fees $1,187,462 $1,166,291
Audit-Related Fees 83,122 84,763
Tax Fees 109,018 95,052
All Other Fees 0 113,127
---------- ----------
$1,379,602 $1,459,233
---------- ----------
Fees for audit services include fees associated with the annual audit, the
reviews of Biomet's quarterly reports on Form 10-Q and statutory audits required
internationally. Audit-related fees principally included due diligence in
connection with acquisitions, assistance with implementation of various rules
and standards promulgated pursuant to Section 404 of the Sarbanes-Oxley Act of
2002, accounting consultation, and benefit plan audits. Tax fees included tax
compliance, tax advice and tax planning, assistance with tax audits, and
expatriate tax services.
21
Pursuant to the Audit and Non-Audit Services Pre-Approval Policy, the Audit
Committee, or the Chairman of the Audit Committee, is responsible for approving
in advance all audit and permitted non-audit services to be performed for Biomet
by its independent accountants. Prior to the engagement of the independent
accountants for the next year's audit, management, with the participation of the
independent accountants, submits to the Audit Committee for approval an
aggregate request for services expected to be rendered during that year for
various categories of services. In the event that additional services are
required from the independent accountants, the Audit Committee has delegated
authority to approve or deny such requests to the Chairman of the Audit
Committee, subject to ratification by the Audit Committee at its next meeting.
INCORPORATION BY REFERENCE
To the extent that this Proxy Statement is incorporated by reference into any
other filing by Biomet under the Securities Act of 1933 or the Securities
Exchange Act of 1934, the sections of this Proxy Statement entitled "Report of
Audit Committee", "Report of the Compensation and Stock Option Committees" and
"Stock Performance Graph," as well as the exhibits to this Proxy Statement, will
not be deemed incorporated, unless specifically provided otherwise in such
filing.
INFORMATION REGARDING SHAREHOLDER PROPOSALS
FOR THE 2005 ANNUAL MEETING
If you wish to submit a shareholder proposal pursuant to Rule 14a-8 under the
Securities Exchange Act of 1934 to be included in the proxy materials for
Biomet's Annual Meeting for the fiscal year ended May 31, 2005, you should
submit your proposal in writing to the Secretary of Biomet, P.O. Box 587,
Warsaw, IN 46581-0587, no later than April 21, 2005.
Biomet's Bylaws establish an advance notice procedure with regard to shareholder
nominations of directors. If you wish to submit director nominees for
consideration by the shareholders at Biomet's 2005 Annual Meeting, you must
provide a written notice to the Secretary of Biomet, P.O. Box 587, Warsaw, IN
46581-0587. Such written notice must be delivered to, or mailed and received at,
such address not less than 60 days nor more than 90 days prior to next year's
Annual Meeting. In the event that less than 70 days' notice or prior public
disclosure of the date of the Annual Meeting is given or made to shareholders,
any notice of nomination by a shareholder must be received no later than the
close of business on the tenth day following the day on which such notice of the
date of the Annual Meeting was mailed or such public disclosure was made. Such
written notice must also contain specified information concerning the person(s)
to be nominated and concerning the shareholder making such nominations. You may
obtain a copy of Biomet's Bylaws from the Secretary of Biomet. If you notify
Biomet after July 6,2005, of an intent to present a proposal at Biomet's 2005
Annual Meeting, Biomet's proxy holders will have the right to exercise
discretionary voting authority with respect to such proposal, if presented at
the meeting, without including information regarding such proposal in Biomet's
proxy materials.
22
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of Biomet has no
knowledge of any matters to be presented for consideration at the Annual Meeting
other than those referred to above. If (a) any matters of which Biomet did not
have notice by June 30, 2004 (45 days prior to August 14, the first date of
mailing of proxy materials for last year's Annual Meeting), should properly come
before the meeting; (b) a person not named herein is nominated at the meeting
for election as a director because a nominee named herein is unable to serve or
for good cause will not serve; or (c) any matters should arise incident to the
conduct of the meeting, then the proxies will be voted in accordance with the
recommendations of the Board of Directors of Biomet.
By Order of the Board of Directors,
/s/ Daniel P. Hann
Daniel P. Hann, Secretary
August 12, 2004
23
YOUR VOTE IS IMPORTANT.
PLEASE VOTE YOUR PROXY AS SOON AS POSSIBLE.
[BIOMET INC LOGO]
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================================================================================
PROXY
BIOMET, INC.
ANNUAL MEETING OF SHAREHOLDERS--SEPTEMBER 18, 2004, AT 1:30 P.M.
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Dane A. Miller, Ph.D. and Niles L.
Noblitt as proxies, each with the power to act alone and of
substitution, and hereby authorizes them to represent and to vote, as
designated on the reverse side, all the Common Shares of the Company
that the undersigned is entitled to vote at the Annual Meeting of
Shareholders to be held on Saturday, September 18, 2004, or any
adjournment thereof. With respect to any other matter that properly
comes before the meeting, the proxy holders will vote in this own
discretion.
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ADDRESS CHANGES/COMMENTS: _____________________________________________
_______________________________________________________________________
_______________________________________________________________________
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(If you noted address changes or comments above, please check the
corresponding box on the reverse side.)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
================================================================================
[BIOMET, INC. LOGO]
BIOMET, INC. VOTE BY INTERNET - www.proxyvote.com
56 E. BELL DRIVE Use the Internet to transmit your voting
P.O. BOX 587 instructions and for electronic delivery of
WARSAW, IN 46582 information up until 11:59 P.M. Eastern Time the day
before the cut-off date or meeting date. Have your
proxy card In hand when you access the web site and
follow the Instructions to obtain your records and
to create an electronic voting instruction form.
VOTE BY MAIL
AUTO DATA PROCESSING Mark, sign, and date your proxy card and return it
INVESTOR COMM SERVICES in the postage-paid envelope we have provided or
ATTENTION: return it to Biomet, Inc., c/o ADP, 51 Mercedes Way,
TEST PRINT Edgewood, NY 11717.
51 MERCEDES WAY
EDGEWOOD, NY
11717
[BAR CODE]
123,456,789,012.00000
--------------
---> 000000000000
--------------
A/C 1234567890123456789
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: [X]
BIOMET KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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BIOMET, INC.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED 02 0000000000 214958324462
IN THE MANNER DIRECTED. IF NO DIRECTION IS GIVEN,
THIS PROXY WILL BE VOTED "FOR" MATTERS 1 & 2 BELOW.
ELECTION OF DIRECTORS FOR WITHHOLD FOR ALL To withhold authority to vote, mark
ALL ALL EXCEPT "For All Except" and write the
1. NOMINEES: 01) M. RAY HARROFF nominee's number on the line below.
02) JERRY L. MILLER [ ] [ ] [ ]
03) CHARLES E. NIEMIER --------------------------------------
04) L. GENE TANNER
VOTE ON PROPOSAL FOR AGAINST ABSTAIN
2. RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR [ ] [ ] [ ]
THE COMPANY FOR THE FISCAL YEAR ENDING MAY 31, 2005.
Please sign exactly as your name appears above. When shares are held by joint tenants,
both should sign. When signing as attorney, executor, administrator, trustee or guardian,
please give FULL title as such. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign in partnership name
by authorized person.
For address changes and/or comments, please check AUTO DATA PROCESSING
this box and write them on the back where INVESTOR COMM SERVICES
indicated. [ ] ATTENTION:
TEST PRINT
Please indicate if you plan to attend this meeting. [ ] [ ] 51 MERCEDES WAY
EDGEWOOD, NY
Yes No 11717
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| | | | | | 123,456,789,012
-------------------------------------------- -------------------------------------------- 090613100
Signature [PLEASE SIGN WITHIN BOX] Date P01237 Signature (Joint Owners) Date 22
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