Meridian Bioscience, Inc. DEf 14A
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN THE PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. ___)
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Soliciting Material Under Rule 14a-12 |
Meridian Bioscience, 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):
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Per unit price or other underlying value of transaction computed pursuant to
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Proposed maximum aggregate value of transaction:
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Check box if any part of the fee is offset as provided by Exchange Act
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statement number, or the Form or Schedule and the date of its filing. |
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Form, Schedule or Registration Statement No.: |
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Date Filed: |
MERIDIAN BIOSCIENCE, INC.
3471 River Hills Drive
Cincinnati, Ohio 45244
www.meridianbioscience.com
Notice of Annual Meeting
and Proxy Statement
Dear Shareholder:
Our Annual Meeting of Shareholders will be held at 2:00 p.m. on January 19, 2006 at Holiday Inn,
4501 Eastgate Boulevard, Cincinnati, OH 45245. We hope you will attend.
At the meeting, you will hear a report on our operations and have a chance to meet your directors
and executive officers.
This booklet includes the formal notice of the meeting and the proxy statement. The proxy statement
tells you more about the agenda and procedures for the meeting. It also describes how the Board
operates and gives personal information about our director candidates.
Please complete, sign, date, and return your proxy card promptly in the enclosed envelope.
Sincerely yours,
/s/ William J. Motto
William J. Motto
Chairman of the Board
December 19, 2005
NOTICE OF ANNUAL MEETING
OF
SHAREHOLDERS OF MERIDIAN BIOSCIENCE, INC.
Time:
2:00 p.m., Eastern Time
Date:
January 19, 2006
Place:
Holiday Inn
4501 Eastgate Boulevard
Cincinnati, OH 45245
Purpose:
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Elect directors |
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Ratify appointment of Grant Thornton LLP as Meridians independent public accountants
for fiscal year 2006 |
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Conduct other business if properly raised |
Only shareholders of record on December 1, 2005 may vote at the meeting. The approximate
mailing date of this Proxy Statement and accompanying Proxy Card is December 19, 2005.
Your vote is important. Please complete, sign, date, and return your proxy card promptly in
the enclosed envelope.
/s/ Melissa Lueke
Melissa Lueke
Secretary
December 19, 2005
TABLE OF CONTENTS
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AMENDED AND RESTATED AUDIT COMMITTEE CHARTER |
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APPENDIX A |
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GENERAL INFORMATION
Who may vote
Shareholders of Meridian, as recorded in our stock register on December 1, 2005, may vote at the
meeting. As of that date, Meridian had 26,060,150 Commons Shares outstanding.
How to vote
You may vote in person at the meeting or by proxy. We recommend you vote by proxy even if you plan
to attend the meeting. You can always change your vote at the meeting.
How proxies work
Meridians Board of Directors is asking for your proxy. Giving us your proxy means you authorize us
to vote your shares at the meeting in the manner you direct. You may vote for all, some or none of
our director candidates. You may also vote for or against the other proposals or abstain from
voting.
If you sign and return the enclosed proxy card but do not specify how to vote, we will vote your
shares in favor of our director candidates and in favor of the ratification of appointment of Grant
Thornton LLP as Meridians independent public accountants for fiscal year 2006.
If any other matters come before the meeting or any adjournment, each proxy will be voted in the
discretion of the individuals named as proxies on the card.
You may receive more than one proxy or voting card depending on how you hold your shares. Shares
registered in your name are covered by one card. If you hold shares through someone else, such as a
stockbroker, you may get material from them asking how you want to vote.
Revoking a proxy
You may revoke your proxy before it is voted by submitting a new proxy with a later date, by voting
in person at the meeting, or by notifying Meridians Secretary in writing at the address under
Questions? on page 18.
Quorum
In order to carry on the business of the meeting, we must have a quorum. This means at least a
majority of the outstanding shares eligible to vote must be represented at the meeting, either by
proxy or in person.
Votes needed
The six director candidates receiving the most votes will be elected to fill the seats on the
Board. Ratification of appointment of accountants requires the favorable vote of a majority of the
votes cast. Only votes for or against this proposal count. Abstentions and broker non-votes count
for quorum purposes but not for voting purposes. Broker non-votes occur when a broker returns a
proxy card but does not have authority to vote on a particular proposal.
-1-
Other Matters
Any other matters considered at the meeting, including adjournment, will require the affirmative
vote of a majority of the votes cast.
ELECTION OF DIRECTORS
(Item 1 on the Proxy Card)
The Nominating Committee of the Board of Directors has nominated for re-election all of the
following current directors: James A. Buzard, John A. Kraeutler, Gary P. Kreider, William J. Motto,
David C. Phillips and Robert J. Ready.
Proxies solicited by the Board will be voted for the election of these nominees. All directors
elected at the Annual Meeting will be elected to hold office until the next annual meeting. In
voting to elect directors, shareholders are entitled to cumulate their votes and to give one
candidate a number of votes equal to the number of directors to be elected multiplied by the number
of shares held by the shareholder, or to distribute their votes on the same principle among as many
candidates as the shareholder sees fit. In order to invoke cumulative voting, notice of cumulative
voting must be given in writing by a shareholder to the President, a Vice President or the
Secretary of Meridian not less than 48 hours prior to the Annual Meeting. The proxies solicited
include discretionary authority to cumulate votes.
Four of our six nominees are not Meridian employees. Only non-employee directors serve on
Meridians Audit, Compensation and Nominating committees. All Meridian directors are elected for
one-year terms. Personal information on each of our nominees is given below.
If a director nominee becomes unavailable before the election, your proxy card authorizes us to
vote for a replacement nominee if the Board names one.
The Board recommends you vote FOR each of the following candidates:
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James A. Buzard, Ph.D.
Director since 1990
Age: 78
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James A. Buzard, Ph.D. was Executive Vice President
of Merrell Dow Pharmaceuticals Inc. from March 1981
until December 1989. From December 1989 until his
retirement in February 1990, he was Vice President
of Marion Merrell Dow, Inc. He has been a business
consultant since February 1990. |
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John A. Kraeutler
Director since 1997
Age: 57
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John A. Kraeutler has more than 30 years of
experience in the medical diagnostics industry and
joined Meridian as Executive Vice President and
Chief Operating Officer in January 1992. In July
1992, Mr. Kraeutler was named President of
Meridian. Before joining Meridian, Mr. Kraeutler
served as Vice President, General Manager for a
division of Carter-Wallace, Inc. Prior to that, he
held key marketing and technical positions with
Becton, Dickinson and Company and Organon, Inc. |
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Gary P. Kreider
Director since 1991
Age: 67
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Gary P. Kreider serves as Chairman of the
Compensation Committee and Board Secretary. For
over five years Mr. Kreider has been a senior
partner in the Cincinnati law firm of Keating
Muething |
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Klekamp PLL, the Companys outside
counsel. His primary practice areas are securities
law, mergers and acquisitions, and general
corporate law, and he has been with Keating
Muething Klekamp since 1963. Effective October 1,
2005 Mr. Kreider will no longer have a vote or
partnership interest in the firms earnings or
profits although his affiliation with the firm
shall continue. Mr. Kreider has been an Adjunct
Professor of Law in securities regulation at the
University of Cincinnati College of Law since 1977
and is a past Chairman of the Ohio State Bar
Association Corporate Law Committee. Mr. Kreider is
also a Director of LSI Industries, Inc. |
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William J. Motto
Director since 1977
Age: 64
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William J. Motto has more than 35 years of
experience in the pharmaceutical and diagnostics
products industries, is a founder of Meridian and
has been Chairman of the Board since 1977. Before
forming Meridian, Mr. Motto served in various
capacities for Wampole Laboratories, Inc., Marion
Laboratories, Inc. and Analytab Products, Inc., a
division of American Home Products Corp. |
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David C. Phillips
Director since 2000
Age: 67
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David C. Phillips serves as Chairman of the Audit
Committee. Mr. Phillips spent 32 years with Arthur
Andersen LLP. His service with this firm included
several managing partner leadership positions.
After retiring from Arthur Andersen in 1994, Mr.
Phillips became Chief Executive Officer of Downtown
Cincinnati, Inc., which is responsible for economic
revitalization of Downtown Cincinnati. Mr. Phillips
retired from DCI in 1999 to devote full time to
Cincinnati Works, Inc., an organization dedicated
to reducing the number of people living below the
poverty level by assisting them to strive towards
self-sufficiency through work, and his financial
consulting services. Mr. Phillips serves as a
director of Cintas Corporation and Summit Family of
Mutual Funds. |
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Robert J. Ready
Director since 1986
Age: 65
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Robert J. Ready serves as Chairman of the
Nominating Committee. Mr. Ready founded LSI
Industries Inc., Cincinnati, Ohio in 1976, which
engineers, manufactures and markets
commercial/industrial lighting and graphics
products, and has served as its President and
Chairman of its Board of Directors since that time. |
RATIFICATION OF APPOINTMENT OF ACCOUNTANTS
(Item 2 on the Proxy Card)
Although not required, the Board is seeking shareholder ratification of the Audit Committees
selection of Grant Thornton LLP as Meridians independent registered public accounting firm for the
2006 fiscal year. The affirmative vote of a majority of shares voting at the meeting is required
for ratification. If ratification is not obtained, the Audit Committee intends to continue the
employment of Grant Thornton at least through fiscal 2006.
PricewaterhouseCoopers, LLP served as Meridians independent registered public accounting firm for
fiscal 2004. On December 7, 2004 Meridians Audit Committee dismissed
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PricewaterhouseCoopers LLP as the independent registered public accounting firm engaged to audit
its financial statements after a review by the Audit Committee of PricewaterhouseCoopers proposed
auditing and Section 404 attestation reporting charges for fiscal 2005.
On December 14, 2004 Meridians Audit Committee engaged Grant Thornton LLP as its independent
registered public accounting firm. The Audit Committee had previously reviewed proposals from
Deloitte & Touche LLP, Grant Thornton LLP and Ernst & Young LLP.
PricewaterhouseCoopers report on Meridians financial statements for each of the last two fiscal
years (2003 and 2004) did not contain an adverse opinion or a disclaimer of opinion, nor was it
qualified or modified as to uncertainty, audit scope, or accounting principles. During Meridians
two most recent fiscal years (2003 and 2004) and the subsequent interim periods preceding the
dismissal of PricewaterhouseCoopers, there were no disagreements with PricewaterhouseCoopers on any
matter of accounting principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreement(s), if not resolved to the satisfaction of PricewaterhouseCoopers,
would have caused them to make a reference to the subject matter of the disagreement(s) in
connection with its report. Meridian authorized PricewaterhouseCoopers to respond fully to any
inquiries by Grant Thornton.
PricewaterhouseCoopers did not advise Meridian either during its two most recent fiscal years (2003
and 2004) or during the subsequent interim periods preceding Meridians decision to dismiss
PricewaterhouseCoopers:
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that the internal controls necessary for Meridian to develop reliable financial
statements did not exist; |
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that information had come to its attention that had led it to no longer be able to rely
on managements representations, or that had made it unwilling to be associated with the
financial statements prepared by management; |
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of the need to expand significantly the scope of its audit, or that information had come
to its attention during the two most recent fiscal years or any subsequent interim periods
that if further investigated might materially have impacted the fairness or reliability of
either: (i) a previously issued audit report or the underlying financial statements, or
(ii) the financial statements issued or to be issued covering the fiscal period(s)
subsequent to the date of the most recent financial statements covered by an audit report,
or have caused it to be unwilling to rely on managements representations or be associated
with Meridians financial statements; or |
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that information had come to its attention that it had concluded materially impacts the
fairness or reliability of either (i) a previously issued audit report or the underlying
financial statements, or (ii) the financial statements issued or to be issued covering the
fiscal period(s) subsequent to the date of the most recent financial statements covered by
an audit report, including information that, unless resolved to the accountants
satisfaction, would prevent it from rendering an unqualified audit report on those
financial statements. |
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During the two most recent fiscal years (2003 and 2004) and during the interim period prior to
engaging Grant Thornton, neither Meridian nor anyone on its behalf consulted Grant Thornton
regarding either: (i) the application of accounting principles to a specified transaction (either
completed or proposed) or the type of audit opinion that might be rendered on Meridians financial
statements, and no written report or oral advice was provided to Meridian that Grant Thornton
concluded was an important factor considered by Meridian in reaching a decision as to an
accounting, auditing or financial reporting issue; or (ii) any matter that was the subject of
either a disagreement or a reportable event.
PricewaterhouseCoopers furnished Meridian with a letter addressed to the Securities and Exchange
Commission related to the disclosures in our Current Report on Form 8-K filed with the Commission
on December 13, 2004. The letter was filed as Exhibit 16 to Form 8-K/A on December 22, 2004.
Principal Accounting Firm Fees:
Aggregate fees billed to Meridian by Grant Thornton for fiscal year 2005 and PricewaterhouseCoopers
LLP for fiscal year 2004 are listed below:
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2005 |
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2004 |
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Audit Fees |
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325,000 |
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$ |
216,375 |
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Audit Related Fees |
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20,490 |
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30,498 |
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Tax Fees |
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126,208 |
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All Other Fees |
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68,419 |
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$ |
413,909 |
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$ |
373,081 |
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Audit Fees. Audit fees are the fees billed for professional services rendered by Meridians
independent registered public accounting firm for their audit of Meridians consolidated annual
financial statements for the years ended September 30, 2005 and 2004, respectively, and reviews of
the unaudited quarterly consolidated financial statements contained in the reports on Form 10-Q
filed by Meridian during those years, and on reporting on Meridians internal control for fiscal
2005.
Audit-Related Fees. Audit-related fees are the fees billed for assurance and related services that
are reasonably related to the performance of the audit or review of Meridians financial
statements.
Tax Fees. Tax fees are the fees billed for services related to tax compliance, tax advice and tax
planning. Tax services performed for Meridian by the independent registered public accounting firm
included compliance, planning and advice with respect to both domestic and foreign subsidiaries of
Meridian. Fees for preparation of Meridians tax returns by Pricewaterhouse Coopers LLP were
$99,097 for fiscal year 2004.
All Other Fees. All other fees are the fees billed for services other than those in the three
categories previously described, including services for the OEM Concepts, Inc. acquisition and
common stock offering.
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CORPORATE GOVERNANCE
Meridian is an Ohio corporation and, therefore, is governed by the corporate laws of Ohio. Since
its Common Shares are publicly traded on Nasdaq and it files reports with the Securities and
Exchange Commission, it is also subject to NASD rules as well as various provisions of federal
securities laws.
Governance of the corporation is placed in the hands of the directors who, in turn, elect officers
to manage the business operations. The Board oversees the management of Meridian on your behalf.
The following directors meet the NASD requirements for independence: David C. Phillips, James A.
Buzard, Robert J. Ready and Gary P. Kreider. The Board reviews Meridians long-term strategic plans
and exercises direct decision making authority in all major decisions, such as acquisitions, the
declaration of dividends, major capital expenditures and the establishment of company policies.
During fiscal 2005, the Board of Directors met on eleven occasions and took action by writing on
three occasions.
Meridian expects all directors to attend shareholders meetings. Each director attended the 2005
Annual Shareholders Meeting, all meetings of the Board and all meetings of Committees of which he
was a member, except that Gary P. Kreider was unable to attend the Annual Meeting of the Directors
and Shareholders because he was out of the country at the time and James A. Buzard was unable to
attend the July 20, 2005 meetings due to delays in air travel.
Shareholders may communicate with the full Board or individual directors on matters concerning
Meridian by mail or through our website in each case to the attention of the Secretary.
Non-employee directors of Meridian receive $20,000 per year for serving as a director and as
members of committees of the Board. They also receive $1,500 for each meeting of the Board and
$1,000 for each committee meeting attended. They receive $750 for each Board meeting and $500 for
each committee meeting held by telephone. The Audit Committee Chairman receives an additional
$8,000 annually and the Compensation Committee Chairman receives an additional $3,000 annually. The
Board Secretary receives an additional $1,000 for serving at each meeting of a committee of which
he is not a member. Each non-employee director is also granted a non-qualified option to purchase
3,476 shares of Common Stock at the time of election or re-election to the Board of Directors, with
the exercise price being the closing sale price on Nasdaq reported on the date of grant. Directors
who are employees of Meridian are not separately compensated for serving as directors.
At its meeting on July 24, 2003, the Board adopted the Audit Committee Charter and a Code of Ethics
for Meridians officers, directors and employees. On November 10, 2005, the Board approved certain
amendments to the Audit Committee Charter. The amended and restated Audit Committee Charter is
attached to this Proxy Statement as Appendix A. The Code of Ethics will be sent without charge to
any shareholder who sends a request to Meridians Secretary.
The independent directors plan to meet at least one time, during fiscal 2006, without the presence
of management directors. The independent members of the Board had one such meeting in fiscal 2005.
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The directors have organized themselves into the committees described below. Each of these
committees is composed entirely of non-employee directors who meet the relevant independence
requirements established by Nasdaq and the Sarbanes-Oxley Act that apply to their particular
assignments. Meridian does not have an Executive Committee of its Board of Directors.
The Audit Committee is composed of David C. Phillips, Chairman, James A. Buzard and Robert J.
Ready. Each member is able to read and understand fundamental financial statements. David C.
Phillips has been designated as the Audit Committee financial expert as that term is defined in SEC
regulations.
The Committee oversees the accounting and financial reporting processes of Meridian and the audits
of its financial statements by its independent registered public accounting firm. The Committee is
solely responsible for the appointment, compensation, retention and oversight of Meridians
independent registered public accounting firm. The Audit Committee also evaluates information
received from Meridians independent registered public accounting firm and management to determine
whether the independent registered public accounting firm is independent of management. The
independent registered public accounting firm reports directly to the Audit Committee.
In addition, the Audit Committee has established procedures for the receipt, retention and
treatment of complaints received by Meridian concerning accounting, internal accounting controls or
auditing matters and has established procedures for the confidential and anonymous submission by
employees of any concerns they may have regarding questionable accounting or auditing matters.
The Audit Committee, or its Chairman, approves all audit and non-audit services performed for
Meridian by its independent registered public accounting firm before those services are commenced.
The Chairman reports to the full Committee at each of its meetings regarding pre-approvals he made
since the prior meeting and the Committee approves what he has done between meetings. For these
purposes, the Committee or its Chairman is provided with information as to the nature, extent and
purpose of each proposed service, as well as the approximate timeframe and proposed cost
arrangements for that service.
The Audit Committee met seven times and took no actions in writing during fiscal 2005. The
Committee has submitted the following report to shareholders.
REPORT OF THE AUDIT COMMITTEE
On August 19, 2005, the Committee met with representatives of Grant Thornton, LLP and Meridians
internal accountants and reviewed with them the proposed 2005 Audit Plan, areas warranting
particular concentration on the audit and the effects of new accounting pronouncements. The Grant
Thornton representatives reviewed with the Committee written disclosures required by the
Independence Standards Board Standard No. 1 regarding independence of the registered public
accounting firms and presented a letter regarding that matter to the Committee.
At its meeting on November 10, 2005, the Committee reviewed with management, Grant Thornton, and
Meridians accounting officers the results of the audit for fiscal 2005, including the audited
financial statements. The Committee reviewed the requirements of its Charter
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previously adopted and the reports that were required to be disclosed to the Committee. The
Committee discussed with Grant Thornton the matters required to be discussed by Statement on
Auditing Standards No. 61. As part of its deliberations, the Committee discussed with Grant
Thornton their independence and determined that Grant Thornton was independent of Meridian.
The Committee met on December 5, 2005 to review a draft of the Form 10-K. Based on their review,
the Committee recommended to the Board of Directors that the audited financial statements of
Meridian be included in its Annual Report on Form 10-K for the year ended September 30, 2005 for
filing with the Securities and Exchange Commission.
During its meetings, the Committee reviewed procedures related to the receipt, retention and
treatment of any complaints concerning accounting, internal accounting controls or auditing
matters. Also during its meetings, the Chairman of the Audit Committee reported to the full
Committee the independent accountants fees that had been preapproved and the Committee approved
such fees. Certain fees were preapproved by the full Committee. The Committee also reviewed the
requirements and Meridians progress in implementing the requirements of Section 404 of the
Sarbanes-Oxley Act.
Respectfully submitted,
Audit Committee
David C. Phillips (Chairman)
Robert J. Ready
James A. Buzard
The Compensation Committee is responsible for establishing compensation for executive officers.
This includes establishing salary levels and bonus plans, making bonus awards and otherwise dealing
in all matters concerning compensation of the executive officers. The Committee also awards stock
options for all employees. Meridians Compensation Committee is composed of Messrs. Kreider
(Chairman), Buzard, Phillips and Ready.
The Compensation Committee met two times and took action in writing on one occasion during fiscal
2005.
The report of the Compensation Committee follows.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee is responsible for setting salaries and establishing and maintaining
bonus plans for executive officers. It also administers and grants awards under Meridians 2004
Equity Compensation Plan.
Salaries are set on a calendar year basis and therefore salaries paid in the first three months of
each fiscal year beginning October 1 are set in the prior year. A significant portion of
compensation for fiscal 2005 was in the form of performance bonuses, as is noted in the Summary
Compensation Table. The bonuses in the Summary Compensation Table for fiscal 2005 were based upon
the achievement of earnings levels starting at $10,300,000, which was substantially in excess of
fiscal 2004 earnings of $9,185,000. Options granted for fiscal 2005 to
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executive officers and business unit leaders were based upon the achievement of net earnings in
fiscal 2005 of at least $10,800,000. If that earnings level had not been met, the options would
have become void. Since the earnings level was met, those options run for a period of ten years
from grant and vest over a three year period that commences with the announcement of fiscal 2005
results. The Committee believes that these plans for bonuses and options effectively tied a
significant portion of each executives total pay package to Company performance in fiscal 2005.
The Committee met on November 10, 2005 to set compensation for 2006. No members of management
participated in this meeting and the only persons present were the Committee members. Salary
increases of 5% were awarded to all executive officers, with the exception of Messrs. Motto and
Kraeutler, reflecting the Committees favorable view of the performance of the management team in
fiscal 2005. Mr. Motto recommended that Mr. Kraeutlers increase be 10% in view of the outstanding
results the Company had achieved in fiscal 2005 and Mr. Kraeutlers additional efforts in
Meridians equity offering and its acquisition of OEM Concepts. There was no recommendation as to
Mr. Mottos salary, but the Committee determined that his compensation should also be increased 10%
because of his efforts in leading the Company through the outstanding year and his work in the
equity offering and the OEM acquisition. In making its decisions on salary, the Committee had
available benchmarks prepared by the Companys outside financial advisor showing salary ranges for
various levels of executives in the industry and in the Cincinnati area. The Committee also
reviewed a tabulation of all total compensation paid to each executive officer in salary, bonus,
allowances, profit sharing contribution and miscellaneous items in making their decision. The
Committee believes that its performance based plans with respect to bonuses and options for
executive officers have worked well for the Company, even in circumstances such as fiscal 2002 in
which no bonuses were awarded and options were forfeited because the minimum earning levels were
not met in that year.
At its November 10, 2005 meeting, the Committee also reviewed the Companys results and the
application of the 2005 Bonus Plan and objectives established for the previous year. The Committee
approved the bonus awards pursuant to that Plan in the amounts shown in the Summary Compensation
Table.
At the same meeting, the Committee established an Officers Compensation Plan for fiscal 2006. The
Plan follows the format of prior years plans with bonuses based upon the achievement of earnings
levels. For fiscal 2006 the minimum earnings level was set at $16,100,000, which is a meaningful
increase from the $12,565,000, which Meridian earned in fiscal 2005. The Plan covers six possible
steps ranging from $16,100,000 to $17,600,000. In addition to the net earnings test, the bonuses
are to be based on ratings of personal achievement, which are then applied to any bonuses earned.
Depending on net earnings levels achieved and the application of personal achievement ratings, cash
bonuses available to each individual covered by the Plan could range from 5% to 120% of the
individuals base salary. Options were also awarded to each executive officer to purchase 10,500
shares of common stock at a price of $21.01 per share pursuant to the 2004 Equity Compensation
Plan. These options will become void if net earnings for fiscal 2006 are less than $16,950,000,
but if that level is reached, the options will be for a period of ten years and vest over a three
year period commencing with the announcement of fiscal 2006 results. The earnings test for both
the bonus and option plans excludes positive and negative effects associated with extraordinary
developments as defined in the Plan, including adjustments for acquisitions and other matters.
-9-
The Committee believes that its plans will ensure that if the executive officers receive meaningful
bonuses and the options granted in November 2005 vest, it will be because their efforts,
individually and as a team, will have enabled Meridian to achieve significant increases in net
earnings for the benefit of all shareholders.
Respectfully submitted,
Compensation Committee
Gary P. Kreider (Chairman)
Robert J. Ready
James A. Buzard
David C. Phillips
The Nominating Committee identifies qualified nominees for the Board, determines who will be
nominated by the Company for election to the board and recommends to the full board any changes in
the size of the Board. The Nominating Committee consists of Robert J. Ready, Chairman, James A.
Buzard and David C. Phillips.
The Board of Directors has established a Charter for the Nominating Committee, a copy of which was
attached as Appendix B to the proxy statement for Meridians 2005 Annual Shareholders Meeting.
In nominating directors, the Nominating Committee takes into account, among other factors which it
may deem appropriate, the judgments, skill, diversity, business experience, and the needs of the
Board as its function relates to the business of the Company. The Committee considers candidates
for nomination from a variety of sources including recommendations of shareholders. Shareholders
desiring to submit recommendations for nominations by the Committee should direct them to the
Chairman of the Nominating Committee in care of the Company at its address shown on the cover page
of this proxy statement.
The Nominating Committee met one time last year. On November 10, 2005, the Committee considered and
nominated the current directors for re-election.
-10-
PRINCIPAL SHAREHOLDERS
William J. Motto, Chairman of the Board is the only shareholder known by Meridian to own
beneficially 5% or more of its outstanding Common Stock as of December 1, 2005. Information has
been furnished by the persons listed and/or has been obtained from reports filed by the persons
listed with the Securities and Exchange Commission:
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature |
|
|
|
|
of Beneficial |
|
|
Name of Beneficial Owner |
|
Ownership |
|
Percent of Class |
|
William J. Motto1 |
|
|
3,446,406 |
|
|
|
13.2 |
% |
|
|
|
1 |
|
The business address of Mr. Motto is 3471 River Hills Drive, Cincinnati, Ohio
45244. The shares of Common Stock reported as beneficially owned by Mr. Motto include 41,000 shares
subject to options exercisable within 60 days. |
-11-
DIRECTORS AND EXECUTIVE OFFICERS
This table lists the executive officers and directors of Meridian and shows how much common stock
each owned on December 1, 2005.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
|
|
Beneficially Owned |
Name |
|
Position |
|
Amount1 |
|
Percentage2 |
William J. Motto
|
|
Chairman of the Board of
Directors, Chief Executive Officer
|
|
|
3,446,406
|
2
|
|
|
13.2 |
% |
John A. Kraeutler
|
|
President, Chief Operating Officer
and Director
|
|
|
330,227 |
|
|
|
1.3 |
% |
Antonio A. Interno3
|
|
President and Managing Director
of Meridian Bioscience Europe
|
|
|
247,415 |
|
|
|
|
* |
Richard L. Eberly4
|
|
Executive Vice President, President
Meridian Life Science
|
|
|
11,150 |
|
|
|
|
* |
Kenneth J. Kozak5
|
|
Vice President, Research and
Development
|
|
|
64,025 |
|
|
|
|
* |
Melissa A. Lueke6
|
|
Vice President, Chief Financial
Officer and Secretary
|
|
|
71,885 |
|
|
|
|
* |
Susan A. Rolih7
|
|
Vice President, Regulatory Affairs
& Quality Systems
|
|
|
33,500 |
|
|
|
|
* |
Lawrence J. Baldini8
|
|
Vice President, Operations and
Information Systems
|
|
|
26,000 |
|
|
|
|
* |
Todd W. Motto9
|
|
Vice President, Sales and Marketing
|
|
|
665,698 |
|
|
|
2.6 |
% |
James A. Buzard, Ph.D.10, 11
|
|
Director
|
|
|
48,851 |
|
|
|
|
* |
Gary P. Kreider11, 12
|
|
Director
|
|
|
59,586 |
|
|
|
|
* |
Robert J. Ready10, 11
|
|
Director
|
|
|
47,931 |
|
|
|
|
* |
David C. Phillips10, 11
|
|
Director
|
|
|
26,380 |
|
|
|
|
* |
All Executive Officers and Directors
as a Group
|
|
|
|
|
5,079,054 |
|
|
|
19.5 |
% |
|
|
|
1 |
|
Includes options exercisable within 60 days from Mr. William J. Motto of 41,000
shares, Mr. Kraeutler of 201,215 shares, Mr. Eberly of 3,500 shares, Mr. Kozak of 56,525 shares,
Ms. Lueke of 27,875 shares, Ms. Rolih of 22,250 shares, Mr. Baldini of 3,500 shares, Mr. Todd W.
Motto of 7,700 shares, Mr. Buzard of 34,760 shares, Mr. Kreider of 25,832 shares, Mr. Ready of
34,760 shares, and Mr. Phillips of 17,380 shares. |
|
2 |
|
See description of Common Stock ownership contained under Principal Shareholders. |
|
3 |
|
Antonio A. Interno was appointed as a Vice President in August 1991, appointed a
Senior Vice President in September 1997, and appointed as President, Managing Director of Meridian
Bioscience Europe in October 2003. He has been Managing Director of Meridians European
subsidiaries, Meridian Bioscience Europe since February 1990. Age: 55 |
|
4 |
|
Richard L. Eberly was appointed Vice President of Sales and Marketing on January 10,
1997, appointed an Executive Vice President in May 2000, appointed Executive Vice President,
General Manager of Meridian Life Science in February 2003, and appointed Executive Vice |
-12-
|
|
|
|
|
President and President Meridian Life Science in October 2005. He has over 18 years of experience
in the medical diagnostic industry and joined Meridian in January 1995. Prior to his appointment to
Vice President of Sales and Marketing, Mr. Eberly served as the Director of Sales for Meridian.
Before joining Meridian, he held key sales and marketing positions at Abbott Diagnostics. Age: 44 |
|
5 |
|
Kenneth J. Kozak joined Meridian in October 1987 and was appointed Vice President,
Research and Development, on May 17, 1999. Prior to this appointment, Mr. Kozak served as Director
of Product Development for Meridian. Before joining Meridian, Mr. Kozak held a variety of positions
at the University of Cincinnati College of Medicine. Age: 51 |
|
6 |
|
Melissa A. Lueke was appointed Vice President, Chief Financial Officer and Secretary
on January 23, 2001. Prior to her appointment, Ms. Lueke served as Meridians Controller since
March 2000 and Acting Secretary from July 20, 2000 to January 23, 2001. Before joining Meridian,
Ms. Lueke was employed by Arthur Andersen LLP from June 1985 to January 1999, most recently as a
Senior Audit Manager. Age: 42 |
|
7 |
|
Susan A. Rolih was appointed Vice President of Regulatory Affairs and Quality Systems
on May 29, 2001. Before joining Meridian, Ms. Rolih held various regulatory and quality positions
with Immucor, Inc. Age: 56 |
|
8 |
|
Lawrence J. Baldini was appointed Vice President of Operations on April 3,
2001 and appointed Executive Vice President Operations and Information Systems in October
2005. Before joining Meridian, Mr. Baldini held various operations management positions
with Instrumentation Laboratories and Fisher Scientific. Age: 46 |
|
9 |
|
Todd W. Motto was appointed Vice President of Sales and Marketing on October 3,
2005. Prior to this appointment, Mr. Motto served in a number of different sales and marketing
positions for Meridian, beginning in 1993. Most recently, he served as Meridians Vice President
of Sales and Marketing, Meridian Bioscience Europe for the last five years. Age: 39 |
|
10 |
|
Audit Committee Member. |
|
11 |
|
Compensation Committee Member. |
|
12 |
|
Includes 217 shares held by his wife, 1,500 shares held as custodian for his minor
child, 6,183 shares held by trusts of which Mr. Kreider is trustee and a beneficiary, and Meridian
debentures convertible into 2,689 shares. |
|
* |
|
Less than one percent. |
SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934 requires Meridians executive officers, directors
and persons who own more than ten percent of a registered class of Meridians equity securities to
file reports of ownership and changes in ownership with the Securities and
-13-
Exchange Commission. Based on a review of the copies of such forms received by it, Meridian
believes that during the last fiscal year, all of its executive officers, directors and ten percent
stockholders complied with the Section 16 reporting requirements.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Gary P. Kreider, who is Chairman of the Compensation Committee, is a senior partner of Keating,
Muething & Klekamp, P.L.L., Cincinnati, Ohio, a law firm that provided legal services to Meridian
in fiscal 2005.
SUMMARY COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying |
|
All Other |
Name and Principal Position |
|
Year |
|
Salary |
|
Bonus |
|
Options |
|
Compensation6 |
|
William J. Motto1 |
|
|
2005 |
|
|
$ |
422,168 |
|
|
$ |
510,213 |
|
|
|
10,500 |
|
|
$ |
76,550 |
|
Chairman of the Board of
Directors, |
|
|
2004 |
|
|
|
409,615 |
|
|
|
388,125 |
|
|
|
10,500 |
|
|
|
56,723 |
|
Chief Executive Officer |
|
|
2003 |
|
|
|
395,000 |
|
|
|
251,813 |
|
|
|
37,500 |
|
|
|
204,483 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John A. Kraeutler2 |
|
|
2005 |
|
|
$ |
328,123 |
|
|
$ |
401,760 |
|
|
|
10,500 |
|
|
$ |
31,114 |
|
President, Chief Operating Officer |
|
|
2004 |
|
|
|
306,308 |
|
|
|
290,625 |
|
|
|
10,500 |
|
|
|
30,819 |
|
|
|
|
2003 |
|
|
|
294,000 |
|
|
|
187,425 |
|
|
|
37,500 |
|
|
|
96,133 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Antonio A. Interno3 |
|
|
2005 |
|
|
$ |
308,011 |
|
|
$ |
275,447 |
|
|
|
10,500 |
|
|
$ |
30,967 |
|
President and Managing Director of |
|
|
2004 |
|
|
|
277,717 |
|
|
|
178,593 |
|
|
|
10,500 |
|
|
|
38,161 |
|
MBE |
|
|
2003 |
|
|
|
239,883 |
|
|
|
152,925 |
|
|
|
15,000 |
|
|
|
20,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard L. Eberly4 |
|
|
2005 |
|
|
$ |
219,473 |
|
|
$ |
199,341 |
|
|
|
10,500 |
|
|
$ |
24,510 |
|
Executive Vice President, President |
|
|
2004 |
|
|
|
211,923 |
|
|
|
167,187 |
|
|
|
10,500 |
|
|
|
26,058 |
|
MLS |
|
|
2003 |
|
|
|
205,000 |
|
|
|
108,906 |
|
|
|
15,000 |
|
|
|
37,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Melissa A. Lueke5 |
|
|
2005 |
|
|
$ |
174,752 |
|
|
$ |
158,520 |
|
|
|
10,500 |
|
|
$ |
17,475 |
|
Vice President, Chief Financial |
|
|
2004 |
|
|
|
169,157 |
|
|
|
133,597 |
|
|
|
10,500 |
|
|
|
17,094 |
|
Officer and Secretary |
|
|
2003 |
|
|
|
163,000 |
|
|
|
103,913 |
|
|
|
15,000 |
|
|
|
27,304 |
|
|
|
|
1 |
|
All Other Compensation for Mr. Motto includes (a) car allowances of $20,000,
$19,584, and $14,600 in 2005, 2004 and 2003, respectively, (b) professional allowances of $45,000,
$25,000 and $25,000 in 2005, 2004 and 2003, respectively, and (c) amounts accrued under Meridians
Savings and Investment Plan. Todd W. Motto, the adult son of William J. Motto, is Vice President of
Sales and Marketing. Todd W. Motto received approximately $174,270 in compensation for fiscal 2005.
Pursuant to the terms of an Agreement Concerning Disability and Death, Meridian is required to
provide certain benefits to Mr. Motto or to his designated beneficiaries upon his death or
disability. In the case of a disability, Meridian is obligated to pay Mr. Motto 60 % of his total
annual salary and bonus for a period of up to 60 months. In the case of death, Meridian is
obligated to pay to Mr. Mottos designated beneficiaries up to $1 million. These benefits are to
be reduced by the gross amount of any insurance payments made to Mr. Motto under any insurance
policy or program maintained by Meridian. |
-14-
|
|
|
2 |
|
All Other Compensation for Mr. Kraeutler includes (a) car allowances of $12,280,
$13,479, and $11,216 in 2005, 2004 and 2003, respectively, (b) professional allowances, and (c)
amounts accrued under Meridians Savings and Investment Plan of $11,550, $12,339, and $10,000 in
2005, 2004 and 2003, respectively. Mr. Kraeutler and Meridian are parties to an employment
agreement dated February 15, 2001 which sets forth compensation, non-competition, benefit and
severance provisions and provides for a payment equal to three times Mr. Kraeutlers base salary
(plus any salary earned but not paid) upon the occurrence of certain events, including a change in
control of Meridian. The agreement automatically extends until either party terminates the
agreement. |
|
3 |
|
All Other Compensation for Mr. Interno includes (a) car allowances of $25,409,
$32,161, and $16,200 in 2005, 2004 and 2003, respectively and (b) amounts accrued under Meridians
Savings and Investment Plan. |
|
4 |
|
All Other Compensation for Mr. Eberly includes (a) car allowances of $12,000,
$14,003, and $8,472 in 2005, 2004 and 2003, respectively, (b) professional allowances, and (c)
amounts accrued under Meridians Savings and Investment Plan of $11,550, $12,055, and $10,000 in
2005, 2004 and 2003, respectively. |
|
5 |
|
All Other Compensation for Ms. Lueke includes (a) car allowances of $5,000 in each
of 2005, 2004 and 2003, (b) amounts accrued under Meridians Savings and Investment Plan of
$11,550, $11,319, and $7,757 in 2005, 2004 and 2003, respectively, and (c) professional allowances. |
|
6 |
|
All Other Compensation for fiscal 2003 includes loans forgiven in connection with
the Split-Dollar Life Insurance Program, which has been terminated. These loans were incurred in
the amounts of $154,883 by Mr. Motto, $69,917 by Mr. Kraeutler, $15,828 by Mr. Eberly, and $13,547
by Ms. Lueke. |
-15-
OPTION GRANTS IN LAST FISCAL YEAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Total |
|
|
|
|
|
|
|
|
|
Potential Realized |
|
|
Number of |
|
Options |
|
|
|
|
|
|
|
|
|
Value at Assumed |
|
|
Securities |
|
Granted to |
|
Exercise |
|
|
|
|
|
Annual Rates of |
|
|
Underlying |
|
Employees |
|
Price |
|
|
|
|
|
Price Appreciation |
|
|
Options |
|
in Fiscal |
|
($/Per |
|
Expiration |
|
for Option Term |
Names |
|
Granted |
|
2005 |
|
Share) |
|
Date |
|
5% |
|
10% |
|
William J. Motto |
|
|
10,500 |
|
|
|
5 |
% |
|
$ |
10.92 |
|
|
|
12/07/14 |
|
|
$ |
186,769 |
|
|
$ |
297,399 |
|
John A. Kraeutler |
|
|
10,500 |
|
|
|
5 |
% |
|
$ |
10.92 |
|
|
|
12/07/14 |
|
|
$ |
186,769 |
|
|
$ |
297,399 |
|
Antonio A. Interno |
|
|
10,500 |
|
|
|
5 |
% |
|
$ |
10.92 |
|
|
|
12/07/14 |
|
|
$ |
186,769 |
|
|
$ |
297,399 |
|
Richard L. Eberly |
|
|
10,500 |
|
|
|
5 |
% |
|
$ |
10.92 |
|
|
|
12/07/14 |
|
|
$ |
186,769 |
|
|
$ |
297,399 |
|
Melissa A. Lueke |
|
|
10,500 |
|
|
|
5 |
% |
|
$ |
10.92 |
|
|
|
12/07/14 |
|
|
$ |
186,769 |
|
|
$ |
297,399 |
|
FISCAL 2005 OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities |
|
|
|
|
Shares |
|
|
|
|
|
Underlying Unexercised |
|
Value of Unexercised In- |
|
|
Acquired |
|
|
|
|
|
Options at |
|
the-Money Options at |
|
|
on |
|
Value |
|
September 30, 2005 |
|
September 30, 2005 |
Name |
|
Exercise |
|
Realized |
|
Exercisable/Unexercisable |
|
Exercisable/Unexercisable |
|
William J. Motto |
|
|
30,000 |
|
|
$ |
96,750 |
|
|
|
71,000/100,000 |
|
|
$ |
1,131,172/$1,647,046 |
|
John A. Kraeutler |
|
|
101,535 |
|
|
|
907,835 |
|
|
|
219,215/100,000 |
|
|
|
3,246,156/1,649,276 |
|
Antonio A. Interno |
|
|
21,750 |
|
|
|
108,238 |
|
|
|
3,500/32,500 |
|
|
|
48,696/463,571 |
|
Richard L. Eberly |
|
|
90,787 |
|
|
|
428,632 |
|
|
|
3,500/32,500 |
|
|
|
48,696/463,571 |
|
Melissa A. Lueke |
|
|
12,000 |
|
|
|
62,763 |
|
|
|
27,875/32,500 |
|
|
|
484,438/463,571 |
|
-16-
PERFORMANCE GRAPH
The following graph shows the yearly percentage change in Meridians cumulative total shareholder
return on its Common Stock as measured by dividing the sum of (A) the cumulative amount of
dividends, assuming dividend reinvestment during the periods presented and (B) the difference
between Meridians share price at the end and the beginning of the periods presented; by the share
price at the beginning of the periods presented with the Wilshire 5000 Equity Index and a Peer
Group Index. The Peer Group consists of Biomerica, Inc., Biosite, Inc., BioSource International
Inc., Diagnostic Products Corp., Idexx Laboratories Corp., Inverness Medical Innovation Inc.,
Orasure Technologies Inc., Quidel Corp., Strategic Diagnostics Inc. and Trinity Biotech Plc.
SHAREHOLDER PROPOSALS FOR NEXT YEAR
The deadline for shareholder proposals to be included in the Proxy Statement for next years
meeting is August 21, 2006.
The form of Proxy for this meeting grants authority to the designated proxies to vote in their
discretion on any matters that come before the meeting except those set forth in Meridians Proxy
Statement and except for matters as to which adequate notice is received. In order for a notice to
be deemed adequate for the 2007 Annual Shareholders Meeting, it must be received prior to November
4, 2006. If there is a change in the anticipated date of next years annual meeting or these
deadlines by more than 30 days, we will notify you of this change through our Form l0-Q filings.
-17-
Meridians Code of Regulations provides that only persons nominated by an officer, director or in
writing by a shareholder at least five days prior to the meeting at which directors are to be
selected shall be eligible for election.
QUESTIONS?
If you have questions or need more information about the annual meeting, write to:
Melissa Lueke, Vice President, Chief Financial Officer and Secretary
Meridian Bioscience, Inc.
3471 River Hills Drive
Cincinnati, Ohio 45244
or call us at (513) 271-3700.
For information about your record holdings call the Computershare Shareholder Services at
1-888-294-8217.
-18-
APPENDIX A
MERIDIAN BIOSCIENCE, INC.
AUDIT COMMITTEE CHARTER
AS REVISED BY THE BOARD OF DIRECTORS ON NOVEMBER, 10, 2005
The primary function of the Audit Committee is to assist the Company in maintaining the
integrity of its financial statements and to assist it in providing full and fair disclosure of the
financial aspects of its operations. This function applies to the Companys financial reports,
financial press releases, filings with the Securities and Exchange Commission and other financial
information provided by the Company to any governmental body or the public; the Companys systems
of internal controls regarding finance, accounting, legal compliance and ethics that management and
the Board have established; and the Companys auditing, accounting and financial reporting
processes generally. Consistent with this function, the Committee should encourage continuous
improvement of, and should foster adherence to, the Companys policies, procedures and practices at
all levels. The Committee shall:
Serve as an independent and objective party to monitor the Companys financial reporting
process and internal control system.
Review and appraise the audit efforts of the Companys independent public accountants.
Provide an open avenue of communication among the independent public accountants, financial
and senior management and the Board.
The Committee is authorized to employ, at the Companys expense, any outside experts, legal
counsel, accountants or other personnel deemed by the Committee in its collective judgment to be
reasonably necessary, and in the best interest of the Company and its shareholders, to enable the
Committee to fulfill its responsibilities.1
The Committee shall be comprised of three or more directors as determined by the Board,
each of whom shall satisfy the independence and financial literacy requirements prescribed by the
NASD and Section 10A of the Securities Exchange Act.2 At least one member of the
Committee shall be an audit committee financial expert as defined under the United States
Securities and Exchange Commission rules promulgated pursuant to § 407 of the Sarbanes-Oxley Act of
2002.3
The members of the Committee shall be elected by the Board at the annual organizational
meeting of the Board and serve until their successors shall be duly elected and qualified. Unless
a Chairman is elected by the Board, the members of the Committee shall designate a Chair.
The Committee shall meet at least four times annually, and more frequently as
circumstances dictate. As part of its job to foster open communication, the Committee should meet
at least annually with management, the chief financial officer and the independent public
accountants in separate executive sessions to discuss any matters that the Committee or any of
A-1
these groups believe should be discussed independently. In addition, the Committee or at
least its Chair should meet with the independent accountants and management quarterly to review the
Companys financials. The Committee shall maintain minutes of its meetings and activities.
IV. |
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RESPONSIBILITIES AND DUTIES |
To fulfill its responsibilities and duties the Committee shall:
Documents/Reports Review
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Review and update this Charter annually.4 |
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2. |
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Review the Companys annual financial statements, financial
press releases, and any reports or other financial information submitted to
any governmental body, or the public, including any certification, report,
opinion, or review rendered by the independent accountants. This information
should be sent to the Committee at least 24 hours before release.5 |
Independent Accountants
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3. |
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Appoint, compensate and oversee the independent public accountants who
audit the Companys financial statements and consider their independence and
effectiveness. On an annual basis, the Committee shall ensure the receipt from
the independent public accountants of their formal written statement
delineating all relationships between them and the Company. The Committee
shall, as appropriate, also discuss with the auditor any undisclosed
relationships or non-accounting services rendered to the Company or any of its
affiliates that could impact the objectivity and independence of the
independent public accountants, and take, or recommend that the Board take,
appropriate action to oversee the independence of the independent
accountants.6 |
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Evaluate the performance of the independent public
accountants and discharge the independent public accountants when
circumstances warrant.7 |
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Review most recent report of the Public Company Accounting
Oversight Board of its examination of the Companys independent public
accountant.8 |
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6. |
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Ensure that lead audit partner of the independent public
accountant and the audit partner responsible for reviewing the audit are
rotated off the audit at least every five years with a five year cooling off
period. Ensure that all audit partners are rotated off the audit at least
every seven years with a two year cooling off period.9 |
A-2
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Pre-approve all audit and non-audit services and their
accompanying fees to be performed by the Companys independent public
accountants. The Committee may delegate this function to the Chairman of the
Committee between meetings, with an obligation to report any actions to the
Committee.10 |
The auditors may not perform:
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bookkeeping, |
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financial information and systems design and implementation, |
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appraisal or valuation services or contribution-in-kind reports, |
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fairness opinions, |
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actuarial services, |
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internal audit outsourcing services, |
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management functions or human resources, |
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brokers or dealer, investment advisor or
investment banking services, |
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legal services and expert services
unrelated to the audit, and |
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any other service that the Accounting
Oversight Board determines by regulation is
impermissible.11 |
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Ensure disclosure in the Companys Form 10-K filed with the SEC of any
non-audit services approved to be performed by the Companys independent
public accountants.12 |
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9. |
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Periodically consult with the independent public accountants
out of the presence of management about internal controls, the fullness and
accuracy of the Companys financial statements, and the adequacy/capability of
financial staff given the business and changes in operations.13 |
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Review with the independent public accountants the
coordination of audit work to assure completeness of coverage, reduction of
redundant efforts, and the effective use of audit resources.14 |
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11. |
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Discuss with the independent accountants any major risk
areas, critical accounting policies employed by the Company and any preferred
accounting policies that differ from those being employed by the
Company.15 |
A-3
Financial Reporting Processes
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Meet with the independent accountants and the appropriate company
financial staff to plan the scope of each audit prior to commencement of each
audit process.16 |
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13. |
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In consultation with the independent public accountants,
review the integrity of the Companys financial reporting processes, both
internal and external.17 |
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Consider the independent accountants judgments about the
quality and appropriateness of the Companys accounting principles as applied
in its financial reporting.18 |
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Advise financial management and the independent public
accountants that they are expected to provide a timely analysis of significant
current financial reporting issues and practices. |
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Consider and approve, if appropriate, major changes to the
Companys auditing and accounting principles and practices as suggested by the
independent accountants or management as developed by the
Committee.19 |
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Continue the process of reporting to the Committee by each of
management and the independent public accountants regarding any significant
judgments made in managements preparation of the financial statements and the
view of each as to appropriateness of such judgments.20 |
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Conduct an inquiry with the CEO and the CFO regarding the
quality of earnings for the period. |
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19. |
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Conduct an inquiry of management regarding any significant
risks and exposures to the business and steps to minimize. |
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20. |
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At least annually, review a report from the independent
public accountants as to all critical accounting policies and practices,
alternative treatments with financial information within GAAP discussed with
management, ramifications of the use of alternative disclosures, the treatment
preferred by the independent public accounts in each instance, management
letters and other communications.21 |
A-4
Process Improvement
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Following completion of the annual audit, review separately with each of
management and the independent public accountants any significant difficulties
encountered during the course of the audit, including any restrictions on the
scope of work or access to required information.22 |
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Resolve any disagreements between management and the
independent public accountants in connection with the preparation of the
financial statements.23 |
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Consider and review with the independent public accountant: |
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a. |
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The adequacy of the Companys internal
controls including computerized information system controls and
security. |
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b. |
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Report related findings and recommendations
of the independent public accountant together with managements
responses.24 |
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24. |
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Review with the independent public accountants and management
the extent to which changes or improvements in financial or accounting
practices, as approved by the Committee, have been implemented. This review
should be conducted at an appropriate time after implementation of changes or
improvements, as decided by the Committee.25 |
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25. |
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Review specifically all repeat audit points and
recommendations not implemented from prior audits.26 |
Ethical and Legal Compliance
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26. |
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Establish, review and update periodically a Code of Ethics, a Corporate
Securities Trading Policy, Foreign Corrupt Practices Act Policy and a
Code of Ethical Conduct for financial managers and ensure that
these items are published to employees.27 |
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27. |
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Review managements monitoring of the Companys compliance
with these codes and policies, and review the systems management has in place
to ensure that the Companys financial statements, reports and other financial
information disseminated to governmental organizations, and the public satisfy
legal requirements.28 |
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Establish and maintain procedures for the receipt, retention
and treatment of complaints received by the Company regarding accounting,
internal accounting controls and auditing matters and |
A-5
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for the confidential, anonymous submission by employees and others of
concerns regarding questionable accounting or auditing
matters.29 |
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29. |
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Review activities, organizational structure, and
qualifications of any internal audit efforts.30 |
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30. |
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Review with the Companys counsel, any legal or regulatory
matter that could have a significant impact on the Companys financial
statements.31 |
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31. |
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Review and approve all related-party
transactions.32 |
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32. |
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Perform any other activities consistent with this Charter,
the Companys By-laws and governing law, as the Committee or the Board deems
necessary or appropriate.33 |
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33. |
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Recommend to the Company whether the audited financial
statements should be included in the annual Form 10-K for submission to the
Securities and Exchange Commission.34 |
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34. |
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Prepare a Report of the Audit Committee for transmission to
shareholders through the annual Proxy Statement.35 |
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35. |
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Review the process utilized by management in presenting
certifications as to the financial statements to the Securities and Exchange
Commission.36 |
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36. |
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Review policies and procedures with respect to officers
expense accounts and perquisites, including their use of corporate assets and
request from the independent public accountant and review a report as to all
loans or extensions of credit by the Company to its officers.37 |
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37. |
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Determine whether the provision of non-audit services by the
independent accountants is compatible with their independence.38 |
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38. |
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Annually perform a review of the Audit Committee
effectiveness. |
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1 |
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NASD Rule 4350(d)(1)(C). Sarbanes-Oxley §301. |
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2 |
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NASD Rule 4350(d)(2)(A). Sarbanes-Oxley §301. |
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3 |
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NASD Rule 4350(d)(2)(A). Sarbanes-Oxley §407. |
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4 |
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NASD Rule 4350(d)(1). |
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Recommended. |
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6 |
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NASD Rule 4350(d)(1)(C). Sarbanes-Oxley §301. Regulation S-K Item 306. Schedule 14A Item 9. |
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Sarbanes-Oxley §301. |
A-6
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8 |
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Recommended. |
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Sarbanes-Oxley §203. |
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10 |
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NASD Rule 4350(d)(1)(C). Sarbanes-Oxley §202. |
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11 |
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Sarbanes-Oxley §201 |
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12 |
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Sarbanes-Oxley §202 |
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Recommended. |
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14 |
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Recommended. |
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Regulation S-K Item 306. |
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Recommended. |
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Recommended. |
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18 |
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Recommended. |
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19 |
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Recommended. |
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20 |
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Recommended. |
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21 |
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Sarbanes-Oxley §204. |
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22 |
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Recommended. |
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23 |
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Sarbanes-Oxley §301. |
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24 |
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Recommended. |
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25 |
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Recommended. |
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26 |
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Recommended. |
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27 |
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Recommended. |
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28 |
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Recommended. |
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29 |
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NASD Rule 4350(d)(1)(C). Sarbanes-Oxley §301. |
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Recommended. |
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31 |
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Recommended. |
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32 |
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NASD Rule 4350(h) |
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33 |
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Recommended. |
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34 |
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Regulation S-K Item 306. |
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35 |
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Regulation S-K Item 306. Schedule 14A Item 9. |
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36 |
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Recommended. |
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37 |
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Recommended. |
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38 |
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Schedule 14A Item 9. |
A-7
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Mark box
with an X if you have made changes to your name or address details above. |
Annual Meeting Proxy Card
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Election of Directors |
1.
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Authority to elect as directors the six nominees listed below. |
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The Board of Directors recommends a vote FOR the listed nominees. |
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For |
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Withhold |
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For |
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Withhold |
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01 JAMES A. BUZARD
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05 WILLIAM J. MOTTO
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02 JOHN A. KRAUETLER
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06 DAVID C. PHILLIPS
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03 GARY P. KREIDER
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07 ROBERT J. READY
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B
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Issues |
The Board of Directors recommends a vote FOR the following proposal. |
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For |
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Against |
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Abstain |
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2.
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To ratify the appointment of Grant Thornton LLP as
independent public accountants for fiscal 2006.
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C
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Authorized Signatures Sign Here This section must be completed for your instructions to be executed. |
NOTE: Please sign exactly as name appears hereon indicating, where proper, official position or representative capacity. In the case of joint holders, you should sign. |
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Signature 1 Please keep signature within the box |
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Signature 2 Please keep signature within the box |
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Date (mm/dd/yyyy) |
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/
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/
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n
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1 U P X H H H P P P P 007187
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001CD40001 00HPWA
Proxy Meridian Bioscience, Inc.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The
undersigned hereby appoints WILLIAM J. MOTTO and MELISSA A. LUEKE, or either of them,
proxies of the undersigned, each with the power of substitution, to vote cumulatively or otherw all
shares of Common Stock which the undersigned would be entitled to vote on the matters specified on
the reverse side and in their discretion with respect to such other business as may prop come
before the Annual Meeting of Shareholders of Meridian Bioscience, Inc. to be held on January 19,
2006 at 2:00 P.M. Eastern Time at Holiday Inn, 4501 Eastgate Boulevard, Cincinnati, and any
postponement or adjournment of such Annual Meeting.
THIS PROXY WILL BE VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS UNLESS A CONTRARY CHOICE IS SPECIFIED.
(This proxy is continued and is to be signed on the reverse side)