SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934 (Amendment No. ____)
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Techne Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
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2) Aggregate number of securities to which transaction applies:
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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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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing:
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held
October 28, 2010
The annual meeting of shareholders (the "Annual Meeting") of Techne
Corporation (the "Company") will be held at the offices of the Company, 614
McKinley Place N.E., Minneapolis, Minnesota, on Thursday, October 28, 2010,
at 3:30 p.m. (Central Daylight Time), for the following purposes:
1. To set the number of members of the Board of Directors at nine (9).
2. To elect directors of the Company.
3. To approve the Company's 2010 Equity Incentive Plan.
4. To take action upon any other business that may properly come before the
meeting or any adjournment thereof.
Only shareholders of record shown on the books of the Company at the
close of business on September 3, 2010 will be entitled to vote at the
meeting or any adjournment thereof. Each shareholder is entitled to one vote
per share on all matters to be voted on at the meeting.
You are cordially invited to attend the meeting. Whether or not you plan
to attend the meeting, please sign, date and return your Proxy in the return
envelope provided as soon as possible. Your cooperation in promptly signing
and returning the Proxy will help avoid further solicitation expense to the
Company.
This Notice, the Proxy Statement and the enclosed Proxy are sent to you
by order of the Board of Directors (the "Board of Directors" or the "Board").
THOMAS E. OLAND,
Chairman of the Board and President
Dated: September 16, 2010
Minneapolis, Minnesota
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL MEETING TO BE HELD ON OCTOBER 28, 2010:
The Proxy Statement and 2010 Annual Report to Shareholders are
available at www.proxyvote.com
You may vote your proxy at www.proxyvote.com
TECHNE CORPORATION
__________
PROXY STATEMENT
for
Annual Meeting of Shareholders
To Be Held October 28, 2010
__________
INTRODUCTION
Your proxy (the "Proxy") is solicited by the Board of Directors of Techne
Corporation (the "Company") for use at the Annual Meeting of Shareholders to
be held on October 28, 2010 and at any adjournment thereof, for the purposes
set forth in the attached Notice of Annual Meeting. A Notice of Internet
Availability of Proxy Materials was mailed to certain shareholders on or
about September 14, 2010. For the remaining shareholders and shareholders
who had previously requested hard copies, the Notice of Annual Meeting, Proxy
Statement, 2010 Annual Report to Shareholders and proxy card are being mailed
on or about September 21, 2010.
If you are a shareholder of record, you can vote in person at the annual
meeting or by Proxy. There are two ways to vote by Proxy. You can vote over
the Internet at www.proxyvote.com or if you received your proxy materials by
mail, you can vote by mail by completing, signing and dating the enclosed
proxy card and returning it promptly in the envelope provided.
The cost of soliciting Proxies, including preparing, assembling and
mailing the Proxies and soliciting material, will be borne by the Company.
Directors, officers and regular employees of the Company may, without
compensation other than their regular compensation, solicit Proxies
personally or by telephone.
Proxies not revoked will be voted in accordance with the choice specified
by shareholders by means of the ballot provided on the Proxy for that
purpose. Proxies which are signed but which lack any such specification
will, subject to the following, be voted in favor of the proposals set forth
in the Notice of Annual Meeting and in favor of the number and slate of
directors proposed by the Nominations and Governance Committee of the Board
of Directors and listed herein. If a shareholder abstains from voting as to
any matter, then the shares held by such shareholder shall be deemed present
at the meeting for purposes of determining a quorum and for purposes of
calculating the vote with respect to such matter, but shall not be deemed to
have been voted in favor of such matter. Abstentions, therefore, as to any
proposal, other than election of directors, will have the same effect as
votes against such proposal. If a shareholder withholds authority to vote
for a particular director nominee, such withheld authority will not count as
an affirmative vote for such nominee. Assuming that a quorum is present and
proposal one is approved by shareholders, the nine candidates for election
that receive a plurality of the vote of the shares present and entitled to
vote in the affirmative will be elected. If a quorum is present and proposal
one is not approved by shareholders, the eight candidates for election that
receive a plurality of the vote of the shares present and entitled to vote in
the affirmative will be elected. If a broker returns a "non-vote" Proxy,
indicating a lack of voting instruction by the beneficial holder of the
shares and a lack of discretionary authority on the part of the broker to
vote on a particular matter, then the shares covered by such non-vote shall
not be deemed present at the meeting for purposes of determining a quorum and
shall not be deemed to be represented at the meeting for purposes of
calculating the vote required for approval of such matter. You may revoke
your Proxy by sending a written statement to that effect to the Corporate
Secretary of the Company, submitting a properly signed proxy card with a
later date, or filing a notice of termination of your Proxy and voting in
person at the Annual Meeting. If you need directions to the Annual Meeting,
please contact the Company at 612-379-8854. The mailing address of the
Company's principal executive office is 614 McKinley Place N.E., Minneapolis,
MN 55413.
1
OUTSTANDING SHARES AND VOTING RIGHTS
The Board of Directors of the Company has fixed September 3, 2010 as the
record date for determining shareholders entitled to vote at the Annual
Meeting. Persons who were not shareholders on such date will not be allowed
to vote at the Annual Meeting. At the close of business on September 3,
2010, 37,043,775 shares of the Company's common stock (the "Common Stock")
were issued and outstanding. Such Common Stock is the only outstanding class
of stock of the Company. Each share of Common Stock is entitled to one vote
on each matter to be voted upon at the meeting. Holders of the Common Stock
are not entitled to cumulative voting rights in the election of directors.
PRINCIPAL SHAREHOLDERS
The following table provides information concerning the only persons
known to the Company to be the beneficial owners of more than 5% of the
Company's outstanding Common Stock as of September 3, 2010:
Amount and Nature of Percent
Name and Address of Beneficial Owner Shares Beneficially Owned of Class
------------------------------------ ------------------------- ----------
Morgan Stanley 4,698,770 (1) 12.7%
1585 Broadway
New York, NY 10036
BlackRock, Inc. 2,034,188 (2) 5.5%
40 East 52nd Street
New York, NY 10022
--------------
(1) Morgan Stanley reported its beneficial ownership on a Schedule 13G/A
filed with the SEC on February 12, 2010. The filing indicates that as of
December 31, 2009, Morgan Stanley had sole voting power over 4,518,086
shares, shared voting power over no shares, sole dispositive power over
4,698,770 shares, and shared dispositive power over no shares.
(2) BlackRock, Inc. reported its beneficial ownership on a Schedule 13G
filed with the SEC on January 29, 2010. The filing indicates that as of
December 31, 2009, BlackRock, Inc. had sole voting power over 2,034,188
shares, shared voting power over no shares, sole dispositive power over
2,034,188 shares, and shared dispositive power over no shares.
MANAGEMENT SHAREHOLDINGS
The following table sets forth the number of shares of the Company's
Common Stock beneficially owned as of September 3, 2010, by each executive
officer of the Company named in the Summary Compensation Table, by each
director and by all directors and executive officers (including the named
executive officers) as a group. Shares beneficially owned by Mr. Oland
constitute 4.2% of total shares outstanding. Each other individual
beneficially owns less than one percent of total shares outstanding plus
shares subject to options exercisable by him or her. As a group, officers
and directors beneficially own 7.0% of total shares outstanding plus shares
subject to options exercisable by them.
2
Name of Director or Number of Shares
Executive Officer Beneficially Owned (1)
--------------------------------- -----------------------
Thomas E. Oland 1,547,711 (2)
Roger C. Lucas, Ph.D. 26,456 (3)(4)(5)
Howard V. O'Connell 180,629 (3)(4)(6)
Randolph C. Steer, M.D., Ph.D. 15,000 (3)(4)(7)
Robert V. Baumgartner 37,000 (3)(4)(8)
Charles A. Dinarello, M.D. 26,500 (3)(4)(7)
Karen A. Holbrook, Ph.D. 25,000 (3)(4)(7)
John L. Higgins 15,000 (3)(4)(7)
Roeland Nusse, Ph.D. 5,000 (3)(4)(7)
Gregory J. Melsen 30,645 (9)
Marcel Veronneau 57,491 (10)
Officers and directors as a group (11 persons) 2,587,081 (11)
-----------
(1) Unless otherwise indicated, the person listed as the beneficial owner
has sole voting and sole investment power over outstanding shares. Shares
beneficially owned includes shares subject to options that are currently
outstanding and exercisable and options that are currently outstanding and
will become exercisable within 60 days of September 3, 2010.
(2) Includes 1,181,420 shares owned directly, 91,811 shares held by the
Techne Corporation and Affiliates Stock Bonus Plan (the "Stock Bonus Plan")
for Mr. Oland's account, 68,556 shares held by Thomas Oland and Associates
and 205,924 shares held by the Thomas Oland and Associates Profit Sharing
Plan and Trust. Does not include 627,865 shares held by the Stock Bonus Plan
for accounts of employees other than Mr. Oland, which are included in the
group total in the above table. Including such 627,865 shares, Mr. Oland, a
director of the Company, beneficially owns 2,175,576 shares or 5.9% of total
shares outstanding.
(3) Does not include 719,676 shares held by the Stock Bonus Plan. All
719,676 shares held by the Stock Bonus Plan are held for the benefit of
employees of the Company. No shares in the Stock Bonus Plan are held for the
benefit of any outside directors of the Company. The 719,676 shares are
included in the total of officers and directors as a group. The Company's
Board of Directors, acting by majority vote, currently directs the Trustee,
Marshall and Ilsley Trust Company, N.A. as to the voting of such shares.
(4) Does not include a stock option to purchase 5,000 shares which will be
granted on and will become exercisable as of the date of the Annual Meeting
pursuant to the 1998 Nonqualified Stock Option Plan if the individual is re-
elected as a director of the Company. If shareholders approve Proposal No.
3, the nonqualified stock options will be granted under the 2010 Equity
Incentive Plan.
(5) Includes 1,456 shares owned directly and 25,000 shares subject to stock
options.
(6) Includes 127,629 shares owned by trusts and 53,000 shares subject to
options held by trusts of which Mr. O'Connell is a trustee and beneficiary.
(7) All shares subject to stock options.
(8) Includes 2,000 shares owned directly and 35,000 shares subject to stock
options.
(9) Includes 542 shares held by the Stock Bonus Plan for Mr. Melsen's
account and 30,103 shares subject to stock options.
(10) Includes 31,600 shares owned directly, 6,674 shares held by the Stock
Bonus Plan for Mr. Veronneau's account and 19,217 shares subject to stock
options.
(11) Includes 719,676 shares held by the Stock Bonus Plan as to which the
Company's Board of Directors directs the voting and 248,820 shares which may
be purchased pursuant to stock options.
3
ELECTION OF DIRECTORS
(Proposals #1 and #2)
General Information
The bylaws of the Company provide that the number of directors shall be
determined by the shareholders at each Annual Meeting. The Nominations and
Governance Committee of the Board of Directors recommended to the Board of
Directors that the number of directors be set at nine and that the
individuals named in the table below be elected. THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE THAT THE NUMBER OF DIRECTORS BE SET AT NINE AND THAT
THE INDIVIDUALS NAMED IN THE TABLE BELOW BE ELECTED. Under applicable
Minnesota law and the Company's bylaws, approval of the proposal to set the
number of directors at nine requires the affirmative vote of the holders of
the greater of (1) a majority of the voting power of the shares represented
in person or by proxy at the Annual Meeting with authority to vote on such
matter or (2) a majority of the voting power of the minimum number of shares
that would constitute a quorum for the transaction of business at the Annual
Meeting. A plurality of votes cast is required for the election of
directors.
In the election of directors, each Proxy will be voted for each of the
nominees listed below unless the Proxy withholds a vote for one or more of
the nominees. Each person elected as a director shall serve for a term of
one year or until his or her successor is duly elected and qualified. All of
the nominees are members of the present Board of Directors. All directors,
except Dr. Nusse, were elected to the Board of Directors by the shareholders.
If any of the nominees should be unable to serve as a director by reason of
death, incapacity or other unexpected occurrence, the Proxies solicited by
the Board of Directors shall be voted by the proxy representatives for such
substitute nominee as is selected by the Nominations and Governance
Committee, or, in the absence of such selection, for such fewer number of
directors as results from such death, incapacity or other unexpected
occurrence.
The following table provides certain information with respect to the
nominees for director.
Current Position(s)
Name Age with Company
----------------------- --- -----------------------------
Thomas E. Oland 69 Chairman of the Board, Chief
Executive Officer President,
Treasurer and Director
Roger C. Lucas, Ph.D. 67 Vice Chairman and Director
Howard V. O'Connell 80 Lead Director
Randolph C. Steer, M.D., Ph.D. 60 Director
Robert V. Baumgartner 54 Director
Charles A. Dinarello, M.D. 67 Director
Karen A. Holbrook, Ph.D. 67 Director
John L. Higgins 40 Director
Roeland Nusse, Ph.D. 60 Director
Mr. Oland has been a Director, Chairman of the Board, Chief Executive
Officer, President and Treasurer of the Company since 1985. Mr. Oland
received his bachelor's degree in accounting from the University of Minnesota
- Duluth. Mr. Oland joined R&D Systems, Inc. (now a wholly-owned subsidiary
of the Company) as President in July 1982. From 1977 to 1982, Mr. Oland was
the founder and President of Thomas Oland and Associates, a management
consulting firm of which R&D Systems was a client. Previous to founding
Thomas Oland and Associates, Mr. Oland worked for nine years in the
Management Consulting Division of Touche Ross. Among other attributes,
skills and qualifications, the Board believes Mr. Oland is qualified to serve
as a Director of the Company because his thorough and extensive knowledge of
the Company's operations, values and culture, as well as his deep
understanding of the issues and complexities the Company faces, make Mr.
Oland a valuable director with critical analytical and strategic skills.
4
Dr. Lucas, Ph.D. has been Vice Chairman and Senior Scientific Advisor to
the Company's Board since 1995 and a Director since 1985. He holds a
bachelor's degree in biology from St. Mary's College in Winona, Minnesota,
and a Ph.D. in physiology/biochemistry from the Illinois Institute of
Technology. He was a recipient of the National Institutes of Health Pre- and
Post-doctoral fellowships and also served as Assistant Professor of
Biochemistry at the State University of New York, Medical School. Dr. Lucas
is also currently a board member of Envoy Medical Corporation, ChemoCentryx,
Inc. and Discovery Genomics, Inc. Dr. Lucas joined R&D Systems in 1980 as
Head of Research. In 1985 he founded the Company's Biotechnology Division.
From 1985 to 1995, Dr. Lucas was Chief Scientific Officer, Executive Vice
President and Secretary of the Company. Among other attributes, skills and
qualifications, the Board believes Dr. Lucas is qualified to serve as a
Director of the Company because of his scientific background, particularly
given his experience as Chief Scientific Officer of R&D Systems, Inc., and
his knowledge of the Company and its markets.
Mr. O'Connell has served on the Company's Board since 1985 and as Lead
Director since 2010. Mr. O'Connell has been a private investor since 1990.
From 1969 to 1990, he served as Chairman, President and Treasurer of John G.
Kinnard and Company, Incorporated, a securities broker-dealer. Among other
attributes, skills and qualifications, the Board believes Mr. O'Connell is
qualified to serve as a Director of the Company because of his over 40 years
of management and strategic experience as a successful investor, entrepreneur
and executive.
Dr. Steer, M.D., Ph.D. has served on the Company's Board since 1990. Dr.
Steer received his undergraduate degree in physiology and Ph.D. in
pathobiology from the University of Minnesota and his medical degree from the
Mayo Medical School. Dr. Steer has served as President and Chief Operating
Officer of Capstone Therapeutics Corp. (formerly OrthoLogic Corp.), a
biotechnology company, since 2006. In the past five years, Dr. Steer also
served as a director of BioCryst Pharmaceuticals, Inc. and MSO Holdings, Inc.
Dr. Steer was a consultant to the pharmaceutical and biotechnology industries
from 1989 to 2006 where he advised companies in business development, medical
marketing and regulatory and clinical affairs. His prior experience
includes service as Associate Director of Medical Affairs at Marion
Laboratories and as Medical Director at Ciba Consumer Pharmaceuticals. Among
other attributes, skills and qualifications, the Board believes Dr. Steer is
qualified to serve as a Director of the Company because his medical and
scientific backgrounds and his knowledge of the pharmaceutical and
biotechnology industries provide valuable strategic insight.
Mr. Baumgartner has served on the Company's Board since 2003. Mr.
Baumgartner received a bachelor's degree in business administration from
Notre Dame. Mr. Baumgartner has served as Chief Executive Officer and
Director of the Center for Diagnostic Imaging, Inc., an operator of
diagnostic imaging centers, since 2001. Prior to 2001, he held numerous
executive positions, including as Chief Executive Officer and Director of
American Coating International, President and Chief Executive Officer of
First Solar and President of the Apogee Glass Group. He began his
professional career at KPMG, LLC, an international accounting firm. Mr.
Baumgartner currently serves on the board of Carestream Health, Inc. Among
other attributes, skills and qualifications, the Board believes Mr.
Baumgartner is qualified to serve as a Director of the Company because his
extensive finance and general business background provides valuable strategic
management and financial oversight skills.
Dr. Dinarello, M.D. has served on the Company's Board since 2005. Dr.
Dinarello received his medical degree from Yale University and his clinical
training at the Massachusetts General Hospital. Dr. Dinarello is presently
Professor of Medicine and Immunology at the University of Colorado School of
Medicine in Aurora, Colorado. Previously he was Professor of Medicine and
Pediatrics at Tufts University School of Medicine and a staff physician at
the New England Medical Center Hospital in Boston. In 1998, Dr. Dinarello
was elected to the United States National Academy of Sciences. Dr. Dinarello
is considered one of the founding fathers of cytokine biology. For his
research in the field, Dr. Dinarello has won numerous awards: the Novartis
Prize in Immunology (2010), the Paul Ehrlich Prize (2010), the Bonsfils-
Staton Award (2010), the Royal Swedish Academy of Sciences Crafoord Prize in
Polyarthritis (2009) and the Albany Medical Center Prize in Medical and
Biomedical Research (the largest U.S. prize in medicine) (2009). Dr.
Dinarello has also served as Acting Chief Executive Officer of Omni Bio
Pharmaceutical, Inc. since 2009. Among other attributes, skills and
qualifications, the Board believes Dr. Dinarello is qualified to serve as a
Director of the Company because of his distinguished scientific background
and his extensive experience with research organizations.
5
Dr. Holbrook, Ph.D. has served on the Company's Board since 2007. Dr.
Holbrook earned her bachelor's and master's degrees in zoology from the
University of Wisconsin-Madison. She earned a Ph.D. in biological structure
from the University of Washington School of Medicine where she pursued
postdoctoral training in the Department of Medicine, Division of Dermatology.
Dr. Holbrook has served as Vice President for Research and Innovation,
University of South Florida, since 2007. She served as President of The Ohio
State University from 2002 to 2007. Dr. Holbrook previously served as senior
vice president for academic affairs and provost at The University of Georgia,
as well as professor of cell biology and adjunct professor of anatomy and
cell biology and medicine at the Medical College of Georgia. Before that,
Dr. Holbrook served at the University of Florida at Gainesville as vice
president for research and dean of the Graduate School, as well as professor
of anatomy and cell biology and medicine (dermatology). Her earlier academic
career was spent as a professor of biological structure and medicine at the
University of Washington School of Medicine where she gained a national
reputation for her expertise in human fetal skin development and genetic skin
disease and was a National Institutes of Health (NIH) Merit awardee. She
also served as associate dean for scientific affairs. Dr. Holbrook also
serves on several non-profit boards, such as the American Association for the
Advancement of Science and the Association of American Medical Colleges,
among many others. In the past five years, Dr. Holbrook also served as a
director for Huntington Bancshares Incorporated. Among other attributes,
skills and qualifications, the Board believes Dr. Holbrook is qualified to
serve as a Director of the Company because her scientific background and
academic leadership provide valuable executive management and strategic
insight.
Mr. Higgins has served on the Company's Board since 2009. He graduated
Magna Cum Laude with a bachelor's degree from Colgate University. Mr. Higgins
has been President and Chief Executive Officer of Ligand Pharmaceuticals
Incorporated since January 2007 and has been a member of Ligand's Board of
Directors since March 2007. From 1997 until joining Ligand, Mr. Higgins was
with Connetics Corporation, a specialty pharmaceutical company, as its Chief
Financial Officer, and also served as Executive Vice President, Finance and
Administration and Corporate Development at Connetics from January 2002 until
its acquisition by Stiefel Laboratories, Inc. in December 2006. Mr. Higgins
was previously a member of the executive management team at BioCryst
Pharmaceuticals, Inc., a biopharmaceutical company. Currently, he is a
Director of BioCryst and serves as Chairperson of its Audit Committee. Before
joining BioCryst in 1994, Mr. Higgins was a member of the healthcare banking
team of Dillon, Read & Co. Inc., an investment banking firm. Mr. Higgins also
serves as Chairman of CoMentis, Inc, a biopharmaceutical company, and has
served as a director of numerous public and private companies. Among other
attributes, skills and qualifications, the Board believes Mr. Higgins is
qualified to serve as a Director of the Company due to his combination of
biopharmaceutical business, accounting and finance experience as well as his
executive management experience, particularly with public companies.
Dr. Nusse, Ph.D. has served on the Company's Board since May 2010. Dr.
Nusse earned a bachelor's degree in biology in from the University of
Amsterdam and a doctorate in molecular biology from the Netherlands Cancer
Institute in 1980. He did his postdoctoral fellowship at the University of
California, San Francisco. Dr. Nusse has served as Chairman of the Department
of Developmental Biology at Stanford University since 2007. Dr. Nusse has
been a professor or associate professor in the Department of Developmental
Biology at Stanford University and an investigator at the Howard Hughes
Medical Institute since 1990. He has also been the chair of the Department of
Developmental Biology at Stanford since 2007. Dr. Nusse was previously at
the Netherlands Cancer Institute (Amsterdam, The Netherlands) as a staff
scientist and ultimately head of the Department of Molecular Biology. Dr.
Nusse was elected to the United States National Academy of Sciences in April
2010. Dr. Nusse was previously named a member of the European Molecular
Biology Organization in 1988, a member of the Royal Dutch Academy of Sciences
in 1997 and a member of the American Academy of Arts and Sciences in 2001.
Among other attributes, skills and qualifications, the Board believes Dr.
Nusse is qualified to serve as a Director of the Company because his
scientific research and academic background provide valuable strategic
insight, including insight into the Company's customers and markets.
6
PROPOSAL NO. 3: 2010 EQUITY INCENTIVE PLAN
The Company is asking its shareholders to approve the Company's 2010
Equity Incentive Plan (the "2010 Plan") under which 3,000,000 shares of the
Company's Common Stock will be reserved for issuance. The Board has approved
the 2010 Plan, subject to approval from shareholders at the Annual Meeting.
Our named executive officers have an interest in this proposal.
The Company designed the 2010 Plan to facilitate the continued use of
incentive and nonqualified stock option awards, which are currently provided
under separate plans, and to permit the use of other types of awards. The
2010 Plan will replace the 1997 Incentive Stock Option Plan (the "1997
Plan"), which permitted awards of incentive stock options, and the 1998
Nonqualified Stock Option Plan (the "1998 Plan"), which permitted awards of
nonqualified stock options. Consequently, the 2010 Plan will permit awards
of both incentive and nonqualified stock options, as well as awards of
restricted stock, restricted stock units, performance shares, performance
units and stock appreciation rights (collectively referred to as an "Award"
or "Awards").
The Board of Directors intends that all future options will be granted
under the 2010 Plan. Therefore, if the shareholders approve the 2010 Plan,
no further options will be granted under either the 1997 Plan or the 1998
Plan; however, any options outstanding under these plans will remain subject
to their terms and conditions. In addition, any shares reserved for the 1997
Plan or the 1998 Plan not currently subject to outstanding options or not
issued upon the exercise of such options will not be used for the grant of
any future options. The 1997 Plan currently has 126,797 shares reserved for
options currently outstanding and 2,322,089 shares available for grant. The
1998 Plan currently has 307,170 shares reserved for options currently
outstanding and 749,688 shares available for grant. If the shareholders do
not approve the 2010 Plan, future stock options will continue to be granted
under the 1997 Plan and the 1998 Plan.
Description of Plan
A general description of the 2010 Plan is set forth below, but this
description is qualified in its entirety by reference to the full text of the
2010 Plan, a copy of which is attached as Appendix A to this proxy statement.
Purpose. The purpose of the 2010 Plan is to promote the success of the
Company by facilitating the employment and retention of competent personnel
and by furnishing incentives to officers, directors, employees, consultants
and advisors upon whose efforts the success of the Company will depend to a
large degree.
Administration. The 2010 Plan is administered by the Board of Directors
or a committee appointed by the Board (the "Administrator"). Any committee
appointed by the Board to administer the 2010 Plan shall consist of at least
two non-employee directors (as defined in Rule 16b-3, or any successor
provision, of the General Rules and Regulations under the Securities Exchange
Act of 1934). Currently, the Board has appointed the Executive Compensation
Committee (the "Committee") to administer the 2010 Plan.
The 2010 Plan gives broad powers to the Administrator to administer and
interpret the 2010 Plan, including the authority: (i) to establish rules for
the administration of the 2010 Plan; (ii) to select the individuals to be
granted Awards ("Participants"); and (iii) to prescribe the particular form
and conditions of each Award granted.
Term. Incentive stock options may be granted under the 2010 Plan for a
period of 10 years from the date of adoption of the 2010 Plan by the Board.
Other Awards may be granted pursuant to the Plan from time to time after the
effective date of the Plan and until the Plan is discontinued or terminated
by the Administrator.
Eligibility. All officers, directors, employees, consultants and
advisors of the Company or any affiliate are eligible to receive Awards
pursuant to the 2010 Plan. As of September 3, 2010, the Company and its
subsidiaries had approximately 730 employees (of which three are named
executive officers) and eight non-employee directors.
7
Shares Available. The maximum aggregate number of shares of Common Stock
reserved and available for Awards to Participants is 3,000,000. If any
Awards granted under the 2010 Plan expire or terminate prior to exercise or
otherwise lapse, or if any Awards are settled in cash, the shares subject to
such portion of the Award are available for subsequent grants of Awards.
Further, shares of stock used to pay the exercise price under any Award or
used to satisfy any tax withholding obligation attributable to any Award,
whether withheld by the Company or tendered by the Participant, will continue
to be reserved and available for Awards granted under the 2010 Plan.
The total number of shares and the exercise price per share of Common
Stock that may be issued pursuant to outstanding Awards are subject to
adjustment by the Board upon the occurrence of a stock dividend, stock split,
consolidation, or a similar event in which the Company receives no
consideration. The Board may also provide for the protection of Participants
in the event of a merger, liquidation, reorganization, divestiture (including
a spin-off) or similar transaction.
Amendment. The Board may from time to time suspend or discontinue the
2010 Plan or revise or amend it in any respect; provided, however, that no
such revision or amendment may impair the terms and conditions of any
outstanding Award to the material detriment of the Participant without the
consent of the Participant except as authorized in the event of merger,
consolidation or liquidation of the Company. Further, the 2010 Plan may not,
without any required approval of the shareholders, be amended in any manner
that will (a) materially increase the number of shares subject to the 2010
Plan except as provided in the case of stock splits, consolidations, stock
dividends or similar events; (b) change the designation of the class of
employees eligible to receive Awards; (c) decrease the price at which options
will be granted; (d) materially increase the benefits accruing to
Participants under the 2010 Plan; or (e) cause incentive stock options to
fail to meet the requirements of Code Section 422.
Types of Awards Available Under the Plan
Options. Options granted under the 2010 Plan may be either "incentive"
stock options within the meaning of Section 422 of the Internal Revenue Code
(the "Code") or "nonqualified" stock options that do not qualify for special
tax treatment of Code Section 422.
When an option is granted under the 2010 Plan, the Administrator, in its
discretion, specifies the option price and the number of shares of Common
Stock which may be purchased upon exercise of the option. However, the
exercise price of an incentive stock option may not be less than 100% of the
fair market value of the Company's Common Stock on the date of grant, or 110%
of the fair market value of the Company's Common Stock on the date of grant
if granted to a 10% or greater Company shareholder. The exercise price of a
nonqualified stock option also may not be less than the fair market value of
the Company's Common Stock on the date of grant, unless otherwise determined
by the Administrator. The closing sale price of the Company's Common Stock
as reported by Nasdaq on September 3, 2010 was $60.00 per share.
The Administrator will establish the term during which the option may be
exercised and whether the option will be exercisable immediately, in stages
or otherwise; provided, however, that the term of an incentive stock option
generally may not exceed ten years from the date of grant. Moreover, the
Administrator may also determine the effect that the termination of a
Participant's relationship with the Company may have on the exercisability of
an option. Each incentive or nonqualified stock option granted under the
2010 Plan is generally nontransferable during the lifetime of the
Participant; however, a nonqualified stock option may, if permitted by the
Administrator, be transferred to certain family members, family limited
partnerships and family trusts.
Participants may pay for shares upon exercise of options in cash, with a
personal or certified check, with Common Stock of the Company valued at the
stock's then fair market value, or through a broker-assisted cashless
exercise.
In no event may a Participant be granted stock options or stock
appreciation rights covering in the aggregate more than 100,000 shares of
Common Stock, subject to adjustment as described above; provided, however,
that a share of stock subject to a stock appreciation right that is granted
in tandem with an option shall count as one share against this limitation.
In addition, each non-employee director will automatically be granted a
nonqualified stock option to purchase 5,000 shares of Common Stock on the
date of such director's election or re-election to the Board, which option
will be immediately exercisable in full.
8
Restricted Stock Awards and Restricted Stock Unit Awards. The 2010 Plan
also permits awards of restricted stock and restricted stock units. The
Administrator will determine the number of shares covered by each restricted
stock and restricted stock unit award granted under the 2010 Plan, and may
also, in its discretion, establish continued employment, achievement of
performance criteria, or other conditions that must be satisfied for the
risks of forfeiture on restricted stock and restricted stock units to lapse.
A restricted stock award or restricted stock unit award may not be
transferred by a Participant until the risks of forfeiture have lapsed.
Restricted stock units may be paid in cash or in shares of the Company's
Common Stock, or any combination thereof, in the Administrator's discretion.
In no event shall a Participant be granted restricted stock awards, or,
to the extent payable in or measured by the value of shares of Common Stock,
restricted stock unit awards during any fiscal year of the Company covering
in the aggregate more than 100,000 shares of Common Stock, subject to
adjustment as described above.
Performance Share Awards and Performance Unit Awards. The Administrator
is also authorized to grant performance share and performance unit awards
under the 2010 Plan. Performance share awards generally provide the
Participant with the opportunity to receive shares of the Company's Common
Stock and performance units generally provide recipients with the opportunity
to receive cash awards, but only if certain performance criteria are achieved
over specified performance periods. A performance share award or performance
unit award may not be transferred by a Participant except by will or the laws
of descent and distribution. To the extent payable in or measured by the
value of shares of Common Stock, in no event shall a Participant be granted
performance awards during any fiscal year of the Company covering in the
aggregate more than 100,000 shares of Common Stock.
Stock Appreciation Rights. The 2010 Plan permits awards of stock
appreciation rights, which may be granted independent of or in tandem with a
previously or contemporaneously granted stock option, as determined by the
Administrator. The Administrator will determine the term of the stock
appreciation right and how it will become exercisable. Generally, upon the
exercise of a stock appreciation right, the Participant will receive cash,
shares of Common Stock, or some combination thereof, having a value equal to
the excess of (i) the fair market value of a specified number of shares of
the Company's Common Stock, over (ii) a specified exercise price. If the
stock appreciation right is granted in tandem with a stock option, the
exercise of the stock appreciation right will generally cancel a
corresponding portion of the option, and, conversely, the exercise of the
stock option will cancel a corresponding portion of the stock appreciation
right. A stock appreciation right may not be transferred by a Participant
except by will or the laws of descent and distribution. In no event shall a
Participant be granted options or stock appreciation rights during any fiscal
year of the Company covering in the aggregate more than 100,000 shares of
Common Stock, subject to adjustment as provided above; provided, however,
that a share of stock subject to stock appreciation right that is granted in
tandem with an option shall count as one share against this limitation.
Federal Income Tax Consequences of the Plan
Options. Nonqualified stock options granted under the 2010 Plan are not
intended to and do not qualify for favorable tax treatment available to
incentive stock options under Code Section 422. Generally, no income is
taxable to the Participant (and the Company is not entitled to any deduction)
upon the grant of a nonqualified stock option. When a nonqualified stock
option is exercised, the Participant generally must recognize compensation
taxable as ordinary income equal to the difference between the option price
and the fair market value of the shares on the date of exercise. The Company
normally will receive a deduction equal to the amount of compensation the
Participant is required to recognize as ordinary income and must comply with
applicable tax withholding requirements.
9
Incentive stock options granted under the 2010 Plan are intended to
qualify for favorable tax treatment to the Participant under Code Section
422. Under Code Section 422, no taxable income is reportable by the
Participant when the incentive stock option is granted. Moreover, if the
Participant has been an employee of the Company at all times from the date of
grant until three months before the exercise date, the Participant generally
will recognize no taxable income when the incentive stock option is
exercised. The alternative minimum tax may be applicable in the year of
exercise, however, depending upon the Participant's individual circumstances.
If the Participant does not dispose of shares acquired upon exercise for a
period of two years from the grant date and one year after the exercise date,
the Participant will report any gain upon sale of the shares as capital gain.
However, if the Participant disposes of the shares prior to expiration of the
two- or one-year holding periods described above, the Participant will be
deemed to have received compensation taxable as ordinary income in the year
of the early sale in an amount equal to the lesser of the difference between
the fair market value of the Company's Common Stock on the date of exercise
(or the sale price, if less) and the exercise price of the shares.
The Company ordinarily is not entitled to any income tax deduction upon
the grant or exercise of an incentive stock option, but may be entitled to an
income tax deduction in an amount equal to the ordinary income recognized by
the Participant in the event of an early sale of shares.
Restricted Stock Awards. Generally, no income is taxable to the
Participant in the year a restricted stock award is granted. Instead, the
Participant will recognize compensation taxable as ordinary income equal to
the fair market value of the shares in the year in which the transfer
restrictions lapse. Alternatively, if the Participant makes a "Section 83(b)
Election," the Participant will, in the year that the restricted stock award
is granted, recognize compensation taxable as ordinary income equal to the
fair market value of the shares on the date the restricted stock award is
granted. Unless limited by Code Section 162(m), as discussed below, the
Company generally will receive a deduction equal to the amount of
compensation the Participant is required to recognize as ordinary taxable
income, and must comply with applicable tax withholding requirements.
Restricted Stock Unit Awards. A Participant will recognize compensation
taxable as ordinary income equal to the value of the shares of Common Stock
or cash received in the year that the restricted stock units vest. Unless
limited by Code Section 162(m), as discussed below, the Company generally
will receive a deduction equal to the amount of compensation the Participant
is required to recognize as ordinary taxable income, and must comply with
applicable tax withholding requirements.
Performance Share and Performance Unit Awards. A Participant will
recognize compensation taxable as ordinary income equal to the value of the
shares of Common Stock or the cash received, as the case may be, in the year
that the Participant receives payment. Unless limited by Code Section
162(m), as discussed below, the Company generally will receive a deduction
equal to the amount of compensation the Participant is required to recognize
as ordinary taxable income, and must comply with applicable tax withholding
requirements.
Stock Appreciation Rights. Generally, a Participant will recognize
compensation taxable as ordinary income equal to the value of the shares of
Common Stock or the cash received in the year that the stock appreciation
right is exercised. Unless limited by Code Section 162(m), as discussed
below, the Company generally will receive a deduction equal to the amount of
compensation the Participant is required to recognize as ordinary taxable
income, and must comply with applicable tax withholding requirements.
Section 162(m) of the Code
Special rules limit the deductibility of compensation paid to the
Company's Chief Executive Officer and to each of the Company's three other
most highly compensated executive officers (excluding the Chief Financial
Officer). Under Section 162(m) of the Code, the annual compensation paid to
any of these specified executives will be deductible only to the extent that
it does not exceed $1,000,000. However, the Company can preserve the
deductibility of certain compensation in excess of $1,000,000 for
performance-based compensation if the conditions of Section 162(m) are met.
These conditions include (i) obtaining shareholder approval of the Plan; (ii)
placing limits on the size of Awards an individual can receive; and (iii)
establishing performance criteria that must be met before the Award will vest
or be paid. The Plan has been designed to permit the Plan Administrator to
grant certain awards that qualify as performance-based for purposes of
satisfying the conditions of Section 162(m), thereby permitting the Company
to continue to receive a federal income tax deduction in connection with such
awards.
10
For purposes of the 2010 Plan, the performance criteria that must be met
before an Award will vest or be paid may be any one or more of the following
performance criteria, or derivations of such performance criteria, either
individually, alternatively or in any combination, applied to either the
Company as a whole or to a business unit or subsidiary, either individually,
alternatively or in any combination, and measured either annually or
cumulatively over a period of years, on an absolute basis or relative to a
pre-established target, to previous years' results or to a designated
comparison group, in each case as specified by the Committee: (i) revenue,
(ii) net income, (iii) earnings per share, (iv) return on equity, (v) return
on assets, (vi) increase in revenue, (vii) increase in share price or
earnings, (viii) return on investment, or (ix) increase in market share. The
performance goal applicable to an Award will be selected by the Committee and
established not later than 90 days after the commencement of the period of
service to which the performance goal relates, and while the outcome is
substantially uncertain; provided, however, that no performance goal shall be
established after 25% of the period of service has elapsed. The Committee
shall certify the extent to which any performance goal has been satisfied,
and the amount payable as a result thereof, prior to the payment, settlement
or vesting of any Award that is intended to satisfy the requirements of Code
Section 162(m). In determining the amounts earned by a Participant pursuant
to such an Award, the Committee, in its discretion, will have the right to
reduce or eliminate (but not to increase) the amount payable at a given level
of performance on a formula or discretionary basis, or any combination
thereof.
By approving the 2010 Plan, shareholders will be approving, among other
things, the eligibility requirements for participation by employees in the
2010 Plan; the performance criteria on which specific goals applicable to
certain Awards would be based; and the limits on the number of shares which
may be awarded to Participants under the 2010 Plan.
Awards to be Granted
Awards under the 2010 Plan are subject to the Administrator's discretion,
and, therefore, future grants of Awards and the number of Awards that a
Participant may receive cannot be determined at this time. As of September
3, 2010, no Awards have been granted under the 2010 Plan.
Vote Required
Approval of the 2010 Plan requires the affirmative vote of the holders of
the greater of (1) a majority of the voting power of the shares represented
in person or by proxy at the Annual Meeting with authority to vote on such
matter or (2) a majority of the voting power of the minimum number of shares
that would constitute a quorum for the transaction of business at the Annual
Meeting. The effect of an abstention is the same as that of a vote against
the proposal. Unless you indicate otherwise, your proxy will vote "FOR" the
proposal. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE
PROPOSAL.
11
CORPORATE GOVERNANCE
Code of Ethics and Business Conduct and Financial Fraud Hotline
The Company has adopted a Code of Ethics and Business Conduct, which is
applicable to all directors, officers and employees of the Company. A copy
is available for review at the Company's website, www.techne-corp.com. The
Company sponsors a financial fraud hotline that is available to all
employees, is operated on a confidential basis by a third party, and is
supervised with full powers of investigation by the Audit Committee of the
Board of Directors.
Board Independence
The Board has determined that all of the Company's non-employee directors
are "independent" as such term is defined in applicable law and regulations
of the Securities and Exchange Commission and Nasdaq. Mr. Oland is not
independent based on his service as the Company's Chief Executive Officer and
President. In making its independence determinations, the Board reviewed
transactions and relationships between the director, or any member of his or
her immediate family, and the Company and its subsidiaries based on
information provided by the director, Company records and publicly available
information.
Board Leadership Structure
Currently, the Company's Chief Executive Officer, Mr. Oland, also serves
as Chairman of the Board of Directors. The Company's Board has determined
that this structure is the most effective leadership structure for the
Company. The Board believes that Mr. Oland is the director best situated to
identify strategic opportunities for the Company and to focus the activities
of the Board due to his full-time commitment to the business and his long
tenure with the Company. The Board also believes that Mr. Oland's dual roles
as Chairman of the Board and Chief Executive Officer promotes effective
execution of the Company's business strategy and facilitates information flow
between management and the Board. The Board has determined that maintaining
the independence of a majority of directors helps maintain the Board's
independent oversight of management and ensures that the appropriate level of
independence is applied to all Board decisions. In addition, The Audit,
Executive Compensation and Nominations and Governance Committees each consist
entirely of independent directors.
In July 2010, the Board appointed Mr. Howard O'Connell to be the Lead
Director. Mr. O'Connell has been a member of the Board since 1985. His
duties and responsibilities are determined by the Nominations and Governance
Committee of the Board, and include, but are not limited to, presiding at
executive sessions of the Board and working with the Chairman to set Board
agendas.
Risk Oversight
Risk is an integral part of Board and committee deliberations throughout
the year. The Company's Board administers its risk oversight function
directly and through its committees. The Audit Committee has oversight
responsibility with respect to the Company's financial risk assessment and
financial risk management. The Audit Committee meets regularly with
management and the Company's independent auditors to review the Company's
risk exposures, the potential financial impact those risks may have on the
Company, the steps management takes to address those risks, and how
management monitors emerging risks. With respect to the Company's
compensation plans and programs, the Executive Compensation Committee
structures such plans and programs to balance risk and reward, while
mitigating the incentive for excessive risk taking by the Company's officers
and employees. The Executive Compensation Committee has concluded that the
Company's compensation policies and practices do not create risks that are
reasonably likely to have a material adverse effect on the Company. The
Nominations and Governance Committee oversees the management of risks
associated with the composition and independence of the Company's Board. The
full Board has oversight responsibility for all other risks, such as
strategic, technology and operational risks,
12
Directors' Meetings and Committees
The Board has scheduled meetings each quarter prior to the Company's
quarterly earnings release and may from time-to-time hold additional
meetings. During fiscal 2010, the Board held four meetings. While a
director during fiscal 2010, each director attended 75% or more of the total
number of meetings of the Board and of Committees of which he or she was a
member. Executive sessions of independent directors, meetings of outside
directors without any member of management present, are held in conjunction
with regularly scheduled meetings of the Board. It is the policy of the
Company that all directors should attend the Company's annual meeting of
shareholders. All then incumbent members did attend the annual meeting in
2009.
The Company's Board of Directors has three standing Committees, the Audit
Committee, the Executive Compensation Committee and the Nominations and
Governance Committee. All members of all Committees are "independent" as
such term is defined in applicable law and regulations of the Securities and
Exchange Commission and Nasdaq. In addition all members of the Audit
Committee meet the additional independence standards applicable to its
members. The Company also has a Scientific Subcommittee which was formed to
advise the Board regarding research strategies, the scientific merit of
technology or products involved in licensing and acquisition opportunities
and emerging science and technology issues, as well as meet with and mentor
key scientific employees. Members of the Scientific Subcommittee are Dr.
Dinarello (Chair) and Drs. Steer, Holbrook and Nusse.
The Audit Committee, whose members are Mr. Baumgartner (Chair), Mr.
O'Connell, Dr. Steer, Mr. Higgins and Mr. Herbert (through October 2009),
operates under a written charter established by the Company's Board of
Directors. A copy of the charter is available for review at the Company's
website, www.techne-corp.com. The Audit Committee is responsible for the
appointment and supervision of the Company's independent registered public
accounting firm and for reviewing the Company's internal audit procedures,
the quarterly and annual financial statements of the Company and the results
of the annual audit. The Audit Committee also pre-approves all related party
transactions, establishes and oversees the implementation of the Company's
cash investment policy and monitors the Company's financial fraud hotline.
The Board of Directors has determined that for fiscal 2010 all Audit
Committee members are "audit committee financial experts" as such term is
defined in Section 407 of the Sarbanes-Oxley Act, and all such members are
"independent" under applicable law and regulations of the SEC and Nasdaq.
The Audit Committee met six times during fiscal 2010. The Committee's report
is included in this Proxy Statement.
The Executive Compensation Committee, whose members are Dr. Steer
(Chair), Mr. O'Connell, Mr. Baumgartner, Mr. Higgins and Mr. Herbert (through
October 2009), determines compensation for executive officers of the Company.
The Committee operates under a written charter. A copy of the charter is
available for review at the Company's website, www.techne-corp.com. The
Executive Compensation Committee establishes both overall policies for
executive compensation and reviews the performance of the executive officers.
The Committee works with Mr. Oland, the Chief Executive Officer of the
Company, to establish performance goals for the other executive officers and,
acting independently, establishes the performance goals for Mr. Oland. The
Committee determines the annual base compensation of all officers and awards
bonuses, both cash and equity, to all officers based on performance. The
Committee met four times during fiscal 2010. The Committee's report is
included in this Proxy Statement.
The Nominations and Governance Committee, chaired by Dr. Holbrook, is
composed of all "independent" directors, currently all directors except Mr.
Oland. The Committee operates under a written charter. A copy of the
charter is available for review at the Company's website, www.techne-
corp.com. The functions of the Committee are to recruit well-qualified
candidates for the Board, select persons to be proposed in the Company's
proxy statement for election as directors at annual meetings of shareholders,
and establish governance standards and procedures to support and enhance the
performance and accountability of management and the Board. The Nominations
and Governance Committee assesses the appropriate size of the Board of
Directors, and whether any vacancies on the Board are expected due to
retirement or otherwise. In the event that vacancies are anticipated, or
otherwise arise, the Nominations and Governance Committee considers various
potential candidates for director. Candidates may come to the attention of
the Committee through current members of the Board of Directors, professional
search firms, shareholders or other persons and may be considered at any
point during the year. Dr. Nusse, who was appointed to the Board in May
2010, was someone whom the Board was familiar with through Dr. Nusse's
scientific reputation prior to his consideration by the Nominations and
Governance Committee.
13
The Nominations and Governance Committee utilizes a variety of methods
for identifying and evaluating nominees for director. Candidates for the
Board are considered and selected on the basis of outstanding achievement in
their professional careers, experience, wisdom, personal and professional
integrity, their ability to make independent, analytical inquiries, and their
understanding of the business environment. Candidates must have the
experience and skills necessary to understand the principal operational and
functional objectives and plans of the Company, the results of operations and
financial condition of the Company, and the position of the Company in its
industry. Candidates must have a perspective that will enhance the Board's
strategic discussions and be capable of and committed to devoting adequate
time to Board duties. While the Company does not have a formal diversity
policy for board membership, the Company seeks directors who represent a mix
of backgrounds and experiences that will enhance the quality of the Board of
Directors' deliberations and decisions. The Nominations and Governance
Committee considers, among other factors, diversity with respect to
perspectives, backgrounds, skills and experience in its evaluation of
candidates for board membership. Such diversity considerations are discussed
by the Committee in connection with the general qualifications of each
potential nominee. The Committee will consider all nominees for director
recommended by shareholders of the Company, applying the same criteria as is
used for nominees recommended by other sources. Recommendations may be sent
to the Committee at the Company's address: 614 McKinley Place N.E.,
Minneapolis, MN 55413. The Committee met once during fiscal 2010.
The Committee, meeting as part of the July 2010 Board meeting, has
recommended to shareholders the re-election of the incumbent directors of the
Company.
Compensation Committee Interlocks and Insider Participation
None of the members of the Executive Compensation Committee was an
officer or employee of the Company during fiscal 2010, or was formerly an
officer of the Company. None of the members of the Executive Compensation
Committee had any relationship requiring disclosure as a related party
transaction. No executive officer of the Company during fiscal 2010, served
on the Compensation Committee or the board of any company that employed any
member of the Company's Executive Compensation Committee or Board of
Directors.
Related Party Transactions
In accordance with the Audit Committee Charter, the Audit Committee
reviews and approves all related party transactions involving our directors
and executive officers or their immediate family members to determine whether
such transactions meet applicable legal requirements and are appropriately
disclosed in the Proxy. In the course of its review and approval of a
related party transaction, the Committee considers the material terms of the
transaction, the importance of the transaction to the related person, the
importance of the transaction to the Company, whether the transaction would
impair the judgment of a director or executive officer to act in the best
interest of the Company and any other matters the Committee deems
appropriate.
During fiscal 2010, Mr. Oland's daughter, Paige Jensen, Ph.D., J.D.,
served as the Company's Associate General Counsel. Dr. Jensen was originally
hired by the Company after approval by the Executive Compensation Committee.
Dr. Jensen's base salary for fiscal 2010 was $117,000. The Company also
provided medical and other benefits generally available to all Company
employees. During fiscal 2010, Dr. Jensen exercised stock options approved
and granted by the Executive Compensation Committee in fiscal 2005. Dr.
Jensen sold the shares exercised at a net gain of approximately $58,000. Dr.
Jensen is not an executive officer of the Company.
Shareholder Communications with Directors
Shareholders may communicate directly with the Board of Directors. All
communications should be directed to the Company at 614 McKinley Place N.E.,
Minneapolis, MN 55413, and should prominently indicate on the outside of the
envelope that it is intended for the Board of Directors, for non-management
directors, or for a particular director. Unless other distribution is
specified, the communication will be forwarded to the entire Board. The
communication will not be opened before being forwarded to the intended
recipient, but it will go through normal security procedures.
14
Compensation of Directors
Directors who are not employees of the Company were compensated for the
year ended June 30, 2010 as follows:
Fees Earned
or Paid in Option
Cash (1) Awards (2) Total
----------- --------- --------
Roger C. Lucas, Ph.D. $25,000 $99,500 $124,500
Howard V. O'Connell 27,000 99,500 126,500
Randolph C. Steer, M.D., Ph.D. 27,000 99,500 126,500
Robert V. Baumgartner 27,000 99,500 126,500
Charles A. Dinarello, M.D. 25,000 99,500 124,500
Karen A. Holbrook, Ph.D. 25,000 99,500 124,500
John L. Higgins 27,000 99,500 126,500
G. Arthur Herbert (3) 8,333 0 8,333
Roeland Nusse, Ph.D. (4) 2,100 178,100 180,200
------------
(1) Amounts consist of the annual retainer and meeting fees for services as
members of the Company's Board of Directors. For further information
concerning such fees, see information following this table.
(2) Amounts represent the total fair value of equity-based compensation for
stock option awards granted in fiscal 2010 calculated in accordance with the
Financial Accounting Standards Board's Accounting Standards Codification
(ASC) Topic 718. Assumptions used in the calculation of these amounts are
described in Note I to the Company's audited financial statements for the
fiscal year ended June 30, 2010, included in the Company's Annual Report on
Form 10-K that was filed with the Securities and Exchange Commission on
August 27, 2010. Pursuant to the Company's 1998 Nonqualified Stock Option
Plan, each of the above directors, with the exception of Dr. Nusse, received
an automatic option grant for 5,000 shares of Company Common Stock on the
date of the 2009 Annual Shareholder Meeting. Dr. Nusse received options to
purchase 10,000 shares of the Company's Common Stock upon his appointment to
the Board in fiscal 2010 of which 5,000 vested in fiscal 2010 and 5,000 will
vest in fiscal 2011. As of June 30, 2010, the following non-employee
directors held options to purchase the following number of shares of the
Company's Common Stock: Dr. Lucas - 35,000; Dr. Steer - 15,000; Mr.
Baumgartner - 35,000; Dr. Dinarello - 26,500; Dr. Holbrook - 25,000; Mr.
Higgins - 15,000; Dr. Nusse - 10,000. Family trusts, of which Mr. O'Connell
is a trustee and beneficiary, held options to purchase 53,000 shares as of
June 30, 2010.
(3) Mr. Herbert did not stand for re-election at the fiscal 2009 Annual
Meeting and therefore his term of office as a Director of the Company expired
on that date.
(4) The Company's R&D Systems, Inc. subsidiary paid Dr. Nusse $24,000 in
fiscal 2010 for scientific consulting in addition to his director fees.
Fees for non-employee directors include $25,000 per year for service on
the Board and Committees of the Board. Directors are paid an additional
$1,000 for each meeting of the Board other than its regularly scheduled
quarterly meetings and for each meeting of a Committee on which the director
serves other than Committee meetings held in conjunction with a meeting of
the full Board. If appointed to the Board or retired during the fiscal
year, the non-employee director receives a prorated annual fee.
15
Under the Company's 1998 Nonqualified Stock Option Plan, non-employee
directors automatically receive options to purchase 5,000 shares of Company
Common Stock upon each re-election to the Board. The options have a term of
10 years and vest immediately. Upon initial election or appointment to the
Board, new non-employee directors receive options, which vest immediately,
for 5,000 shares of the Company's Common Stock prorated based on the time
remaining until the next annual meeting of shareholders. Dr. Nusse, at the
Executive Compensation Committee's discretion, received options to purchase
10,000 shares of the Company's Common Stock upon his appointment to the Board
in fiscal 2010. The grant included the automatic pro rata grant of 3,000
shares and an additional discretionary grant of 7,000 in recognition of his
qualifications, including his esteemed scientific background and experience.
Half of the options vested immediately upon his appointment to the Board and
the remaining 5,000 options vest on the first anniversary date of his
appointment. All non-employee directors elected at the Company's 2010 Annual
Meeting of Shareholders will receive options to purchase 5,000 shares of
Common Stock with an exercise price equal to the fair market value on the
date of the 2010 Annual Meeting.
EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS
Executive Compensation Committee Report
The Executive Compensation Committee of the Board of Directors is
responsible for reviewing and approving total compensation programs and
levels for the Company's Chief Executive Officer and its executive officer
group, which includes the named executive officers shown in the Summary
Compensation Table below. The Committee's responsibilities are specified in
the Executive Compensation Committee Charter.
The Committee reviewed and discussed the Executive Compensation
Discussion and Analysis below with management. Based on the Committee's
review and its discussions with management, the Committee recommended to the
Board of Directors that the Executive Compensation Discussion and Analysis be
included in the Company's Proxy Statement for the 2010 Annual Meeting.
Randolph C. Steer, M.D., Ph.D. (Chair)
Howard V. O'Connell
Robert V. Baumgartner
John L. Higgins
Members of the Executive
Compensation Committee
16
Overview
The Executive Compensation Committee of the Board of Directors is
responsible for establishing the compensation programs of the Company's Chief
Executive Officer and other executive officers, including but not limited to
the executive officers named in the summary compensation table of this Proxy
Statement (the "named executive officers"). The Committee participates in
the consideration and employment of prospective executive officers of the
Company. The Committee also administers the Company's stock option plans and
has the authority to grant options to purchase shares of the Company's Common
Stock, and to determine all terms and conditions of such options.
Compensation Objectives
The Executive Compensation Committee has designed the compensation
packages of the Company's executive officers to achieve the following
objectives:
- to recruit and retain highly qualified executive officers by offering
overall compensation that is competitive with that offered for
comparable positions in the local market;
- to motivate executives to achieve important business and individual
performance objectives and to reward them when such goals are met; and
- to align the interest of executive officers with the long-term interest
of shareholders through participation in the Company's stock option
plans.
The Executive Compensation Committee is responsible for assuring that
compensation for the executive officers is consistent with the Company's
compensation philosophy. The Executive Compensation Committee reviews the
compensation philosophy and trends in the local market to ensure that the
executive compensation program is competitive and attracts and retains
talented management, motivates the executives to achieve short term and long
term corporate objectives, and aligns the motivation and interests of the
executives with the interests of the Company's shareholders. The Executive
Compensation Committee also administers the Company's equity-based
compensation and performance-based bonus plan for the executive officers.
The Executive Compensation Committee reviews and approves each executive's
base pay, bonus, and equity incentives annually.
The Committee views the various components of its compensation program as
related, but distinct. Although the Executive Compensation Committee does
review and consider total compensation for each executive officer as a whole,
it does not believe that significant compensation derived from one component
should necessarily negate or reduce compensation from other components. The
Committee determines the appropriate level for each compensation component
based on overall compensation objectives. The Executive Compensation
Committee has not adopted any policies or guidelines for allocating
compensation among the different elements of the compensation program.
The Company's Executive Compensation Committee has not historically
retained a compensation consultant in connection with its decisions and did
not utilize consultants in establishing fiscal 2010 executive compensation.
The Executive Compensation Committee also does not compare the compensation
of the Company's executives to any industry peer group because the Company's
competitors are either privately-held or subsidiaries or divisions of large
publicly-held companies that have complex and substantially more generous
executive compensation programs for their executive officers. Although the
Executive Compensation Committee uses local comparative data from a variety
of industries to evaluate base salaries and total compensation, it is not a
material component of its decision-making process. This comparative data is
derived from locally-published business journals and newspaper reports that
annually measure and rank compensation levels of chief executive and
financial officers for public companies of various industries in the
Company's geographical region.
17
At the beginning of each fiscal year, the Executive Compensation
Committee assesses the base compensation and the potential compensation that
the named executive officers could earn by achieving the Company's financial
targets and their individual personal goals. As part of this assessment, the
Chief Executive Officer makes recommendations to the Executive Compensation
Committee regarding the base compensation to be paid to the executive
officers that report to him. Such recommendations take into account internal
pay equity, position within an internal compensation range, changes in
responsibilities, local compensation levels for similar positions in all
industries and duties and other factors the Chief Executive Officer considers
important in establishing competitive compensation for the executives that
report to him. Among these other factors is a philosophy that there should
be a reasonable relationship between executive salaries and the average
employee or mid-level manager salaries within an organization; the percentage
increase in base salary for executives should not be greater than the
percentage increase paid to a company's other employees; executive bonuses
should be based on performance; and incentives should be long-term equity
based arrangements that are tied to the long-term improvements in financial
results and appreciation in the Company's stock price.
In making the final decisions regarding the type and amount of
compensation to be paid to the named executive officers, the Executive
Compensation Committee not only considers the Chief Executive Officer's
recommendations but also conducts an independent review of local comparative
data for all industries, considers internal pay equity and responsibilities
and makes its own assessment as to the type and amount of compensation to be
paid.
The Executive Compensation Committee does not target a particular
percentile range for the base salaries or total compensation for the
Company's named executive officers, but typically approves compensation that
is conservative compared to local data among a variety of industries. The
Company's compensation for its executives has been historically among the
lowest among local public companies, including many that are smaller and less
profitable than the Company. The Executive Compensation Committee feels that
the compensation is, nevertheless, competitive due to the benefits and equity
incentive plans available to all of the Company's employees. Although the
Executive Compensation Committee considers the compensation levels implied by
comparative data derived from locally published executive compensation
reports, such comparative data is only one factor considered in the overall
compensation decision-making process and is not a material factor. The
Company's Chief Executive Officer waived an increase in his base compensation
for fiscal years 2007 through 2009. No increase in base compensation was
given to any named executive officer for fiscal 2010 as a result of a
company-wide freeze on salary increases for all employees with annual
salaries over $100,000.
Role of the Chief Executive Officer in Compensation Decisions
During meetings with the Executive Compensation Committee held each year,
the Company's President and Chief Executive Officer presents to the Committee
recommendations regarding compensation for the executive officers (other than
himself). The Committee discusses the recommendations and accepts or adjusts
them, in whole or in part. The executive officers are not present during the
Committee's final discussion and determination of their compensation.
Elements of the Compensation Program
The Company's executive compensation program is comprised of base
salaries, annual performance bonuses comprised of both cash and stock option
components, and various benefits, including the Company's Profit Sharing and
Savings Plan and Stock Bonus Plan in which all qualified employees of the
Company participate. In addition, the Executive Compensation Committee from
time to time may award special cash bonuses or stock options related to non-
recurring, extraordinary performance. The Executive Compensation Committee
typically also awards stock options upon retention of a new executive
officer.
Base salary. A competitive base salary is provided to each executive
officer recognizing the skills and experience each individual brings to the
Company, the length of time with the Company and the performance
contributions each makes. Salaries are reviewed on an annual basis and are
made in connection with annual performance reviews. In July 2010, the
Executive Compensation Committee approved base salaries of $290,000 for Mr.
Melsen and $185,000 for Mr. Veronneau for fiscal 2011. Mr. Oland waived an
increase in his base compensation for fiscal 2011 and will again receive
annual base compensation of $254,100.
18
Performance-based bonus plan. Under the Company's Executive Officer's
Incentive Bonus Plan put into effect for fiscal 2010, each executive officer
may earn a potential cash bonus of up to 40% of his or her annual salary.
The eligible cash bonus each executive officer could earn for fiscal 2010
was: Mr. Oland - $101,640, Mr. Melsen - $110,000 and Mr. Veronneau -
$67,000. In addition to the cash bonuses, each executive officer earns
stock options with a fair value equal to the amount of his cash bonus.
The plan provides that 70% of the executive officers cash bonus is based
upon the percentage of increase in consolidated revenues and net earnings
from the prior fiscal year and 30% of the bonus is based upon achievement of
qualitative personal goals set for each named executive officer. The
Executive Compensation Committee believes this bonus plan focuses the
executives on sustaining high quality revenue growth, bringing new products
to market, increasing market share and expanding market presence, as well as
balancing increased research and development with expense control.
The Company's fiscal 2010 consolidated revenues and net earnings were
$269 million and $ 110 million, respectively, increases of 1.93% and 4.31%,
respectively, from fiscal 2009. A weighting factor of 0.5 is applied to the
consolidated revenue increase and a weighting factor of 1.0 is applied to the
consolidated net earnings increase in calculating the cash portion of the
executive officers bonus. The Executive Compensation Committee has,
therefore, determined that based on the Company's consolidated results, each
executive officer earned a cash bonus of 5.28% of his base salary for fiscal
2010. As the 5.28% bonus equates to 70% of the total cash bonus for fiscal
2010, the maximum cash bonus percentage for fiscal 2010 was 7.54% (5.28% cash
bonus from financial results / 70% = 7.54%). Therefore, the maximum cash
bonus each executive officer could earn based on achievement of 100% of his
personal goals is 2.26% of his base salary (7.54% total cash bonus less 5.28%
cash bonus from financial results).
The personal goals for the named executive officers are generally
qualitative in nature and position-specific. These personal goals are
established annually by the Executive Compensation Committee taking into
account each executive's responsibilities at the Company and the
recommendations of the Chief Executive Officer as to the executives who
report to him. Following each fiscal year end, the Executive Compensation
Committee assesses the achievement of the personal goals by each named
executive officer, which assessment includes the recommendations of the Chief
Executive Officer as to the achievement of the personal goals of the
executives who report to him.
The personal goals set for fiscal 2010 for Mr. Oland related to:
- accomplishment of the Company's strategic objectives;
- succession planning;
- leadership development; and
- personnel matters
Mr. Oland waived any cash bonus for fiscal 2010.
The personal goals set for fiscal 2010 for Mr. Melsen related to:
- objectives within the information systems function, including
transition of departmental leadership, improvement of service
levels and reduction in consulting costs;
- the management of BiosPacific, Inc., the Company's sales subsidiary
that services diagnostic customers, including succession planning and
achievement of financials goals;
- objectives within the research and development function, including
administrative support, analysis of economic opportunities and
communication and enhancement of knowledge regarding Company products
and processes; and
- objectives within the accounting and finance and facilities functions,
including leadership development and operational efficiencies
The Executive Compensation Committee, with input from the Chief Executive
Officer, determined that Mr. Melsen met 80% of his personal goals and,
therefore, earned an additional cash bonus of 1.80% of his base salary (80%
of personal goals achieved times 2.26%). Mr. Melsen's total cash bonus for
fiscal 2010 was $19,478 (7.08% of his base salary of $275,000).
19
The personal goals set for fiscal 2010 for Mr. Veronneau related to the
management of the Company's Hematology Division, including:
- the achievement of division revenue and pre-tax earnings and gross
margin targets of $17.5 million, $5.9 million, and 72.6%,
respectively;
- the introduction of new hematology products;
- the improvement of quality control programs;
- regulatory compliance; and
- personnel matters
The Executive Compensation Committee, with input from the Chief Executive
Officer of the Company, determined that Mr. Veronneau met 83% of his personal
goals and, therefore, earned an additional cash bonus of 1.87% of his base
salary (83% of personal goals achieved times 2.26%). Mr. Veronneau's total
cash bonus for fiscal 2010 was $11,978 (7.15% of his base salary of
$167,500).
In addition to the above cash bonuses, each executive officer earns stock
options with a fair value equal to the amount of his cash bonus. The number
of options each executive officer receives is calculated based on his cash
bonus divided by the fair value of the options on the date of grant,
calculated in accordance with FASB ASC Topic 718. The stock option grant
date is the date the Executive Compensation Committee determines the
officer's cash bonus amount based on financial results and the achievement of
individual qualitative personal goals. The stock options vest immediately
with an exercise price equal to the closing price of the Company's stock on
the date of grant. The stock options earned for fiscal 2010 were granted to
the executive officers on July 30, 2010 under the Company's 1997 Incentive
Stock Option Plan and 1998 Nonqualified Stock Option Plan. The fair value
of the stock options on the grant date was determined to be $9.35 per share.
Therefore, Mr. Melsen was granted stock options for 2,083 shares of stock
($19,478 cash bonus divided by $9.35) and Mr. Veronneau was granted stock
options for 1,281 shares of stock ($11,978 cash bonus divided by $9.35). The
exercise price of the stock options are $58.40 per share.
Other compensation. The Company provided medical and insurance benefits
to its executive officers, which are the same as those generally available to
all Company employees. The Company has a Profit Sharing and Savings Plan and
a Stock Bonus Plan in which all qualified employees, including executive
officers, participate subject to statutory limitations on contributions for
highly compensated individuals. The amount of the Company's contribution to
the plans is based on the increase in revenues and after tax earnings from
the prior fiscal year. For fiscal 2010, the profit sharing percentage was
approximately 1.70%. The Company contributed to each of the Profit Sharing
and Savings Plan and the Stock Bonus Plan an amount equal to 0.85% of total
gross wages, respectively. The contribution to the Stock Bonus Plan is in
the form of Company common stock. The Company does not provide any other
significant perquisites or executive benefits to its named executive
officers.
Accounting and Tax Treatment
The Company accounts for equity-based compensation paid to employees
under FASB ASC Topic 718, which requires the Company to estimate and record
an expense over the service period of an option award. Thus, the Company may
record an expense in one year for awards granted in earlier years.
Accounting rules also requires the recording of cash compensation as an
expense at the time the obligation is accrued.
Section 162(m) of the Internal Revenue Code of 1986 generally disallows a
tax deduction to public companies for compensation in excess of $1 million
paid to a company's chief executive officer and three other most highly-paid
executive officers (other than its chief financial officer). Qualifying
performance-based compensation will not be subject to the deduction
limitation if certain requirements are met. Because the potential amount of
base salary and non-equity-based incentive compensation that the executive
officers can earn is less than $1 million, Section 162(m) has not been
material to the Executive Compensation Committee decisions.
20
Summary Compensation Table
The named executive officers received the following compensation for the
fiscal years ended June 30, 2010, 2009 and 2008:
Non-Equity
Incentive All Other
Name and Fiscal Option Plan Com- Compen-
Principal Position Year Salary(1) Awards(2) pensation(3) sation(4) Total
------------------ ------ --------- --------- ------------ -------- --------
Thomas E. Oland, 2010 $254,100 $ 0(5) $ 0(5) $ 4,156 $258,256
President and CEO 2009 254,100 0(5) 0(5) 7,772 261,872
2008 254,100 0(5) 0(5) 35,878 289,978
Gregory J. Melsen, 2010 275,000 350,078(6) 19,478 4,156 648,712
Vice President - 2009 275,000 2,150(7) 12,705(7) 7,772 297,627
Finance and CFO 2008 260,000 12,981 47,320 35,878 356,179
Marcel Veronneau, 2010 167,500 122,178(6) 11,978 3,365 305,021
Vice President - 2009 167,500 5,231 30,887 6,964 210,582
Hematology 2008 160,000 8,385 30,560 30,112 229,057
Operations
----------
(1) Includes amounts deferred under the Company's Profit Sharing and Savings
Plan, a qualified deferred compensation plan under section 401(k) of the
Internal Revenue Code.
(2) Amounts shown above represent the total fair value of equity-based
compensation for stock option awards earned in the respective fiscal year
under the Company's Executive Officer's Incentive Bonus Plan and other stock
options awards granted during the respective fiscal year. Stock options
earned under the Executive Officer's Incentive Bonus Plan are granted in the
following fiscal year. The fair value of the stock options is determined
pursuant to ASC Topic 718. Assumptions used in the calculation of the fair
value of the stock options are described in Note I to the Company's audited
financial statements for the fiscal year ended June 30, 2010, included in the
Company's Annual Report on Form 10-K that was filed with the Securities and
Exchange Commission on August 27, 2010.
(3) Represents cash bonuses earned under the Company's Executive Officer's
Incentive Bonus Plan in the respective fiscal year that were determined and
paid in the subsequent fiscal year.
(4) For each individual the amounts for fiscal 2010 and 2009 reflect profit
sharing for fiscal 2010 and 2009, respectively, contributed in the following
fiscal year to the Profit Sharing and Savings Plan (as to one-half) and
contributed in the following fiscal year to the Stock Bonus Plan in the form
of shares of the Company's Common Stock (as to one-half). For each
individual the amount for fiscal 2008 reflects profit sharing for fiscal 2008
contributed in fiscal 2009 to the Profit Sharing and Savings Plan (as to one-
third) contributed in fiscal 2009 to the Stock Bonus Plan in the form of
shares of the Company's Common Stock (as to one-third), and paid in cash in
fiscal 2009 (as to one-third).
(5) Mr. Oland waived his cash and stock option bonus under the Company's
Executive Officer's Incentive Bonus Plan.
(6) Includes the fair value of stock options granted in April, 2010 to Mr.
Melsen (30,000 shares at a fair value of $330,600) and Mr. Veronneau (10,000
shares at a fair value of $110,200), The options for Mr. Melsen vest 25% in
each of fiscal 2011-2014 and the options for Mr. Veronneau vest 50% in each
of fiscal 2011 and 2012.
(7) Mr. Melsen waived approximately 74% of his earned bonus, or that portion
of his bonus relating to the achievement of corporate financial objectives.
21
Grants of Plan-Based Awards
The following table sets forth certain information with respect to
grants of plan-based awards for the named executive officers earned in fiscal
2010 under the Company's Executive Officer's Incentive Bonus Plan.
Exercise
or Base Grant
Estimated Payouts Under Estimated Payouts Under Price of Date
Non-Equity Incentive Equity Incentive Option Fair
Plan Awards (1) Plan Awards (#) (2) Awards Value of
Grant ------------------------------ ------------------------------- (per Option
Name Date Threshold Target(3) Maximum(4) Threshold Target(3) Maximum (4) share) Awards
----------------- ------- --------- --------- ---------- --------- --------- ----------- -------- --------
Thomas E. Oland $0 $50,820 $101,640
7/30/10 0 5,435 10,870 -- --
Gregory J. Melsen 0 52,000 110,000
7/30/10 0 5,882 11,764 $58.40 $19,478
Marcel Veronneau 0 33,500 67,000
7/30/10 0 3,422 6,845 58.40 11,978
-----------
(1) Represents potential cash bonuses earned under the Company's Executive
Officer's Incentive Bonus Plan for fiscal 2010 to be paid in fiscal 2011.
The actual amounts paid under such plan were: Mr. Oland - $0 (waived); Mr.
Melsen - $19,478; Mr. Veronneau - $11,978.
(2) Represents potential stock options earned under the Company's Executive
Officer's Incentive Bonus Plan for fiscal 2010 which were granted in fiscal
2011. The grant date fair value calculated in accordance with ASC Topic 718
was $9.35 per share. The actual number of options granted was: Mr. Oland - 0
(waived); Mr. Melsen - 2,083; Mr. Veronneau - 1,281.
(3) The payout under the Company's Executive Officer's Incentive Bonus Plan
is targeted at cash of 20% of base salary and fair value of stock options of
20% of base salary, or 50% of the maximum under the plan.
(4) Maximum payout under the Executive Officer's Incentive Bonus Plan is cash
of 40% of base salary and fair value of options of 40% of base salary.
22
Outstanding Equity Awards at Fiscal Year-End
The following table shows all outstanding stock options held by the named
executive officers on June 30, 2010. The Company has not granted any stock
awards.
Number of Number of
Securities Securities
Underlying Underlying
Unexercised Unexercised Option Option
Options Options Exercise Expiration
Name Exercisable Unexercisable Price Date
--------------------------- ----------- ------------- -------- ----------
Thomas E. Oland 0 0
Gregory J. Melsen 426 0 $51.60 8/17/2012
1,012 0 49.43 7/26/2013
783 0 56.83 7/26/2014
25,000 0 39.53 12/16/2014
596 0 79.41 7/24/2015
203 0 62.46 7/23/2016
0 30,000(1) 66.25 4/29/2017
Marcel Veronneau 670 0 33.85 8/13/2010
15,000 0 37.01 11/30/2010
505 0 40.47 7/08/2011
475 0 51.60 8/17/2012
567 0 49.43 7/26/2013
510 0 56.83 7/26/2014
385 0 79.41 7/24/2015
494 0 62.46 7/23/2016
0 10,000 (2) 66.25 4/29/2017
----------
(1) Options vest 7,500 on each of April 30, 2011, 2012, 2013 and 2014.
(2) Options vest 5,000 on each of April 30, 2011 and 2012.
Option Exercises
No options were exercised by the named executive officers during fiscal
2010.
Employment Contracts and Change in Control Arrangements
The Company has an employment agreement effective through June 30, 2014
with Mr. Melsen. The agreement provides for a base salary subject to annual
review, bonuses as described above, benefits as provided to all employees and
severance compensation under certain circumstances. The severance payment is
triggered if employment with the Company is terminated in connection with a
merger, sale, or change in control of the Company. A "change in control"
means the acquisition in one or more transactions by a single party, or any
number of parties acting in concert, of a majority of the outstanding shares
of voting stock of the Company. The severance compensation is a lump sum
amount equal to the base salary and cost of benefits which would otherwise
have been paid under the terms of the employment agreement had the agreement
continued to be enforced for twelve months from the date of termination and a
pro-rata portion of the management incentive bonus he would have been
entitled to, if any, during the fiscal year in which termination occurred
provided he executes and does not rescind a release agreement.
23
The Company had a formal employment agreement effective through June 30,
2010 with Mr. Veronneau. There are no written employment agreements with
Mr. Oland.
For each named executive officer, the estimated amount of potential
payments at June 30, 2010, assuming the executive's employment terminates in
connection with a merger, sale or change in control of the Company is as
follows:
Cash
Name Severance Other (1)
-------------------- --------- ---------
Thomas E. Oland $ 0 $ 0
Gregory J. Melsen 275,000 19,400
Marcel Veronneau 0 0
----------
(1) Consists of medical, dental, disability and life insurance premiums.
AUDIT MATTERS
Audit Committee Report
The Audit Committee assists the Board of Directors with fulfilling its
oversight responsibility regarding the quality and integrity of the
accounting, auditing and financial reporting practices of the Company. In
discharging its oversight responsibilities regarding the audit process, the
Audit Committee:
- reviewed and discussed the audited financial statements with
management;
- discussed with the Company's independent registered public accounting
firm the material required to be discussed by Statement on Auditing
Standards No. 61, as amended;
- received the written disclosures and the letter from the independent
registered public accounting firm required by applicable requirements
of the Public Company Accounting Oversight Board regarding the
independent registered public accounting firm's communications with
the audit committee concerning independence; and
- discussed with the independent registered public accounting firm the
independent public accounting firm's independence.
Based upon the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited consolidated
financial statements be included in the Company's Annual Report on Form 10-K
for the fiscal year ended June 30, 2010 as filed with the Securities and
Exchange Commission.
Robert V. Baumgartner, C.P.A. (Chair)
Howard V. O'Connell
Randolph C. Steer, M.D., Ph.D.
John L. Higgins
Members of the Audit Committee
24
Independent Registered Public Accountants
KPMG LLP acted as the Company's independent registered public accounting
firm for fiscal 2010 and 2009. Representatives of KPMG LLP are expected to
be present at the Annual Meeting, will have the opportunity to make any
desired comments, and will be available to respond to appropriate questions.
The appointment of an independent registered public accounting firm for the
fiscal 2011 has not yet been made, but will be made on or near the date of
the Annual Meeting.
Audit Fees
The following fees were paid or payable to KPMG LLP for the fiscal years
ended June 30, 2010 and 2009:
2010 2009
-------- --------
Audit Fees $433,000 $472,000
Audit-Related Fees 0 0
Tax Fees 188,000 86,000
All Other Fees 0 10,000
"Audit Fees" are for professional services rendered and expenses incurred
for the audit of the Company's annual financial statements and review of
financial statements included in our Forms 10-K and 10-Q or services that are
normally provided by the accountant in connection with statutory and
regulatory filings or engagements. Audit fees also included fees incurred for
the audit of the effectiveness of internal control over financial reporting.
"Tax Fees" included fees for services provided and expenses incurred in
connection with preparation of the Company's tax returns in the United States
and the United Kingdom and inquiries and audits related to such returns. Tax
fees for fiscal 2010 included approximately $96,000 for several tax related
consulting projects.
"All Other Fees" in fiscal 2009 were for a computer forensic audit.
Pre-Approval Policies and Procedures
Pursuant to its written charter, the Audit Committee of the Company's
Board of Directors is required to pre-approve the audit and non-audit
services performed by the Company's independent registered public accounting
firm in order to assure that the provision of such services does not impair
the firm's independence. Annual tax services are reviewed and approved by
the Audit Committee prior to the commencement of such services. The Audit
Committee has authorized Company officers to engage KPMG LLP in permitted
non-audit and tax services that involve less than $25,000 in fees in the
aggregate. Such services are approved quarterly by the Audit Committee. All
of the services rendered by KPMG LLP in fiscal 2010 and 2009 were pre-
approved by the Audit Committee.
25
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than 10
percent of the Company's Common Stock, to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company.
Officers, directors, and greater than 10 percent shareholders ("Insiders")
are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file.
To the Company's knowledge, based on a review of the copies of such
reports furnished to the Company, during the fiscal year ended June 30, 2010,
all Section 16(a) filing requirements applicable to Insiders were met.
SHAREHOLDER PROPOSALS
Any appropriate proposal submitted by a shareholder of the Company and
intended to be presented at the 2011 Annual Meeting must be received by the
Company at its offices by May 19, 2011 to be eligible for inclusion in the
Company's Proxy Statement and related Proxy for the 2011 Annual Meeting. For
a discussion of policies and procedures related to shareholder
recommendations of candidates for director, please see the section on the
Nominations and Governance Committee discussed previously under Directors'
Meetings and Committees.
Also, if a shareholder proposal intended to be presented at the 2011
Annual Meeting but not included in the Company's Proxy Statement and Proxy is
received by the Company after August 2, 2011, then management named in the
Company's Proxy for the 2011 Annual Meeting will have discretionary authority
to vote the shares represented by such Proxies on the shareholder proposal,
if presented at the meeting, without including information about the proposal
in the Company's proxy materials.
OTHER BUSINESS
The Board of Directors knows of no other matters to be presented at the
meeting. If any other matter does properly come before the meeting, the
appointees named in the Proxies will vote the Proxies in accordance with
their best judgment.
ANNUAL REPORT
A copy of the Company's Annual Report to Shareholders for the fiscal year
ended June 30, 2010, including consolidated financial statements, accompanies
this Notice of Annual Meeting and Proxy Statement. No portion of the Annual
Report is incorporated herein or is to be considered proxy-soliciting
material.
THE COMPANY WILL FURNISH WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON
FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 30, 2010, TO ANY SHAREHOLDER OF THE
COMPANY UPON WRITTEN REQUEST. REQUESTS SHOULD BE SENT TO PRESIDENT, TECHNE
CORPORATION, 614 MCKINLEY PLACE N.E., MINNEAPOLIS, MINNESOTA 55413.
Dated: September 16, 2010
Minneapolis, Minnesota
APPENDIX A
TECHNE CORPORATION
2010 EQUITY INCENTIVE PLAN
SECTION 1.
DEFINITIONS
As used herein, the following terms shall have the meanings indicated
below:
(a) "Administrator" shall mean the Board of Directors of the Company,
or one or more Committees appointed by the Board, as the case may be.
(b) "Affiliate(s)" shall mean a Parent or Subsidiary of the Company.
(c) "Award" shall mean any grant of an Option, Restricted Stock Award,
Restricted Stock Unit Award, Stock Appreciation Right or Performance Award.
(d) "Change of Control" shall mean the occurrence, in a single
transaction or in a series of related transactions, of any one or more of the
events in subsections (i) through (iv) below. For purposes of this
definition, a person, entity or group shall be deemed to "Own," to have
"Owned," to be the "Owner" of, or to have acquired "Ownership" of securities
if such person, entity or group directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise, has or shares voting
power, which includes the power to vote or to direct the voting, with respect
to such securities.
(i) Any person, entity or group becomes the Owner, directly or
indirectly, of securities of the Company representing more than fifty percent
(50%) of the combined voting power of the Company's then outstanding
securities other than by virtue of a merger, consolidation or similar
transaction. Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur (A) on account of the acquisition of securities of the
Company by an investor, any affiliate thereof or any other person, entity or
group from the Company in a transaction or series of related transactions the
primary purpose of which is to obtain financing for the Company through the
issuance of equity securities or (B) solely because the level of Ownership
held by any person, entity or group (the "Subject Person") exceeds the
designated percentage threshold of the outstanding voting securities as a
result of a repurchase or other acquisition of voting securities by the
Company reducing the number of shares outstanding, provided that if a Change
in Control would occur (but for the operation of this sentence) as a result
of the acquisition of voting securities by the Company, and after such share
acquisition, the Subject Person becomes the Owner of any additional voting
securities that, assuming the repurchase or other acquisition had not
occurred, increases the percentage of the then outstanding voting securities
Owned by the Subject Person over the designated percentage threshold, then a
Change in Control shall be deemed to occur;
(ii) There is consummated a merger, consolidation or similar
transaction involving (directly or indirectly) the Company and, immediately
after the consummation of such merger, consolidation or similar transaction,
the stockholders of the Company immediately prior thereto do not Own,
directly or indirectly, either (A) outstanding voting securities representing
more than fifty percent (50%) of the combined outstanding voting power of the
surviving entity in such merger, consolidation or similar transaction or (B)
more than fifty percent (50%) of the combined outstanding voting power of the
parent of the surviving entity in such merger, consolidation or similar
transaction, in each case in substantially the same proportions as their
Ownership of the outstanding voting securities of the Company immediately
prior to such transaction;
(iii) There is consummated a sale, lease, exclusive license or other
disposition of all or substantially all of the total gross value of the
consolidated assets of the Company and its subsidiaries, other than a sale,
lease, license or other disposition of all or substantially all of total
gross value of the consolidated assets of the Company and its subsidiaries to
an entity, more than fifty percent (50%) of the combined voting power of the
voting securities of which are Owned by stockholders of the Company in
substantially the same proportions as their Ownership of the outstanding
voting securities of the Company immediately prior to such sale, lease,
license or other disposition (for purposes of this Section 1(d)(iii), "gross
value" means the value of the assets of the Company or the value of the
assets being disposed of, as the case may be, determined without regard to
any liabilities associated with such assets); or
(iv) Individuals who, at the beginning of any consecutive twelve-
month period, are members of the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the members of the Board at any
time during that consecutive twelve-month period; (provided, however, that if
the appointment or election (or nomination for election) of any new Board
member was approved or recommended by a majority vote of the members of the
Incumbent Board then still in office, such new member shall, for purposes of
this Plan, be considered as a member of the Incumbent Board).
For the avoidance of doubt, the term Change in Control shall not include
a sale of assets, merger or other transaction effected exclusively for the
purpose of changing the domicile of the Company. To the extent required, the
determination of whether a Change of Control has occurred shall be made in
accordance with Internal Revenue Code Section 409A and the regulations,
notices and other guidance of general applicability issued thereunder.
(e) "Committee" shall mean a Committee of two or more directors who
shall be appointed by and serve at the pleasure of the Board. To the extent
necessary for compliance with Rule 16b-3, or any successor provision, each of
the members of the Committee shall be a "non-employee director." Solely for
purposes of this Section 1(e), "non-employee director" shall have the same
meaning as set forth in Rule 16b-3, or any successor provision, as then in
effect, of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended. Further, to the extent necessary for compliance
with the limitations set forth in Code Section 162(m), each of the members of
the Committee shall be an "outside director" within the meaning of Code
Section 162(m) and the regulations issued thereunder.
(f) The "Company" shall mean Techne Corporation, a Minnesota
corporation.
(g) "Fair Market Value" as of any date shall mean (i) if such stock is
listed on the Nasdaq Global Select Market, Nasdaq Global Market, Nasdaq
Capital Market or an established stock exchange, the price of such stock at
the close of the regular trading session of such market or exchange on such
date, as reported by The Wall Street Journal or a comparable reporting
service, or, if no sale of such stock shall have occurred on such date, on
the next preceding date on which there was a sale of stock; (ii) if such
stock is not so listed on the Nasdaq Global Select Market, Nasdaq Global
Market, Nasdaq Capital Market, or an established stock exchange, the average
of the closing "bid" and "asked" prices quoted by the OTC Bulletin Board, the
National Quotation Bureau, or any comparable reporting service on such date
or, if there are no quoted "bid" and "asked" prices on such date, on the next
preceding date for which there are such quotes; or (iii) if such stock is not
publicly traded as of such date, the per share value as determined by the
Board, or the Committee, in its sole discretion by applying principles of
valuation with respect to the Company's Common Stock.
(h) The "Internal Revenue Code" or "Code" is the Internal Revenue Code
of 1986, as amended from time to time.
(i) "Option" means an incentive stock option or nonqualified stock
option granted pursuant to the Plan.
(j) "Parent" shall mean any corporation which owns, directly or
indirectly in an unbroken chain, fifty percent (50%) or more of the total
voting power of the Company's outstanding stock.
(k) The "Participant" means (i) a key employee or officer of the
Company or any Affiliate to whom an incentive stock option has been granted
pursuant to Section 9; (ii) a consultant or advisor to, or director, key
employee or officer of, the Company or any Affiliate to whom a nonqualified
stock option has been granted pursuant to Section 10; (iii) a consultant or
advisor to, or director, key employee or officer of, the Company or any
Affiliate to whom a Restricted Stock Award or Restricted Stock Unit Award has
been granted pursuant to Section 11; (iv) a consultant or advisor to, or
director, key employee or officer of, the Company or any Affiliate to whom a
Performance Award has been granted pursuant to Section 12; or (v) a
consultant or advisor to, or director, key employee or officer of, the
Company or any Affiliate to whom a Stock Appreciation Right has been granted
pursuant to Section 13.
(l) "Performance Award" shall mean any Performance Shares or
Performance Units granted pursuant to Section 12 hereof.
(m) "Performance Objective(s)" shall mean one or more performance
objectives established by the Administrator, in its sole discretion, for
Awards granted under this Plan. For any Awards that are intended to qualify
as "performance-based compensation" under Code Section 162(m), the
Performance Objectives shall be limited to any one, or a combination of, (i)
revenue, (ii) net income, (iii) earnings per share, (iv) return on equity,
(v) return on assets, (vi) increase in revenue, (vii) increase in share price
or earnings, (viii) return on investment, or (ix) increase in market share,
in all cases including, if selected by the Administrator, threshold, target
and maximum levels.
(n) "Performance Period" shall mean the period, established at the time
any Performance Award is granted or at any time thereafter, during which any
Performance Objectives specified by the Administrator with respect to such
Performance Award are to be measured.
(o) "Performance Share" shall mean any grant pursuant to Section 12
hereof of an Award, which value, if any, shall be paid to a Participant by
delivery of shares of Common Stock of the Company upon achievement of such
Performance Objectives during the Performance Period as the Administrator
shall establish at the time of such grant or thereafter.
(p) "Performance Unit" shall mean any grant pursuant to Section 12
hereof of an Award, which value, if any, shall be paid to a Participant by
delivery of cash upon achievement of such Performance Objectives during the
Performance Period as the Administrator shall establish at the time of such
grant or thereafter.
(q) The "Plan" means the Techne Corporation 2010 Equity Incentive Plan,
as amended hereafter from time to time, including the form of Agreements as
they may be modified by the Administrator from time to time.
(r) "Restricted Stock Award" or "Restricted Stock Unit Award" shall
mean any grant of restricted shares of Stock of the Company or the grant of
any restricted stock units pursuant to Section 11 hereof.
(s) "Stock," "Option Stock" or "Common Stock" shall mean Common Stock
of the Company (subject to adjustment as described in Section 15).
(t) "Stock Appreciation Right" shall mean a grant pursuant to Section
13 hereof.
(u) A "Subsidiary" shall mean any corporation of which fifty percent
(50%) or more of the total voting power of the Company's outstanding Stock is
owned, directly or indirectly in an unbroken chain, by the Company.
SECTION 2.
PURPOSE
The purpose of the Plan is to promote the success of the Company and its
Affiliates by facilitating the employment and retention of competent
personnel and by furnishing incentive to officers, directors, employees,
consultants, and advisors upon whose efforts the success of the Company and
its Affiliates will depend to a large degree.
It is the intention of the Company to carry out the Plan through the
granting of Options which will qualify as "incentive stock options" under the
provisions of Section 422 of the Internal Revenue Code, or any successor
provision, pursuant to Section 9 of this Plan; through the granting of
"nonqualified stock options" pursuant to Section 10 of this Plan; through the
granting of Restricted Stock Awards and Restricted Stock Unit Awards pursuant
to Section 11 of this Plan; through the granting of Performance Awards
pursuant to Section 12 of this Plan; and through the granting of Stock
Appreciation Rights pursuant to Section 13 of this Plan. Adoption of this
Plan shall be and is expressly subject to the condition of approval by the
shareholders of the Company within twelve (12) months before or after the
adoption of the Plan by the Board of Directors. Awards may be granted prior
to the date this Plan is approved by the shareholders of the Company;
provided, however, that any incentive stock options granted after adoption of
the Plan by the Board of Directors shall be treated as nonqualified stock
options if shareholder approval is not obtained within such twelve-month
period.
SECTION 3.
EFFECTIVE DATE OF PLAN
The Plan shall be effective as of the date of adoption by the Board of
Directors, subject to approval by the shareholders of the Company as required
in Section 2.
SECTION 4.
ADMINISTRATION
The Plan shall be administered by the Board of Directors of the Company
(hereinafter referred to as the "Board") or by a Committee which may be
appointed by the Board from time to time to administer the Plan (hereinafter
collectively referred to as the "Administrator"). Except as otherwise
provided herein, the Administrator shall have all of the powers vested in it
under the provisions of the Plan, including but not limited to exclusive
authority to determine, in its sole discretion, whether an Award shall be
granted; the individuals to whom, and the time or times at which, Awards
shall be granted; the number of shares subject to each Award; the option
price; and the performance criteria, if any, and any other terms and
conditions of each Award. The Administrator shall have full power and
authority to administer and interpret the Plan, to make and amend rules,
regulations and guidelines for administering the Plan, to prescribe the form
and conditions of the respective agreements evidencing each Award (which may
vary from Participant to Participant), and to make all other determinations
necessary or advisable for the administration of the Plan. The
Administrator's interpretation of the Plan, and all actions taken and
determinations made by the Administrator pursuant to the power vested in it
hereunder, shall be conclusive and binding on all parties concerned.
No member of the Board or the Committee shall be liable for any action
taken or determination made in good faith in connection with the
administration of the Plan. In the event the Board appoints a Committee as
provided hereunder, any action of the Committee with respect to the
administration of the Plan shall be taken pursuant to a majority vote of the
Committee members or pursuant to the written resolution of all Committee
members.
SECTION 5.
PARTICIPANTS
The Administrator shall from time to time, at its discretion and without
approval of the shareholders, designate those employees, officers, directors,
consultants, and advisors of the Company or of any Affiliate to whom Awards
shall be granted under this Plan; provided, however, that consultants or
advisors shall not be eligible to receive Awards hereunder unless such
consultant or advisor is a natural person, renders bona fide services to the
Company or any Affiliate and such services are not in connection with the
offer or sale of securities in a capital raising transaction and do not
directly or indirectly promote or maintain a market for the Company's
securities. The Administrator shall, from time to time, at its discretion
and without approval of the shareholders, designate those employees of the
Company or any Affiliate to whom Awards, including incentive stock options,
shall be granted under this Plan. The Administrator may grant additional
Awards, including incentive stock options, under this Plan to some or all
Participants then holding Awards, or may grant Awards solely or partially to
new Participants. In designating Participants, the Administrator shall also
determine the number of shares to be optioned or awarded to each such
Participant and the performance criteria applicable to each Performance
Award. The Administrator may from time to time designate individuals as being
ineligible to participate in the Plan.
SECTION 6.
STOCK
The Stock to be optioned under this Plan shall consist of authorized but
unissued shares of Common Stock. The maximum aggregate number of shares of
Stock reserved and available for Awards under the Plan is Three Million
(3,000,000); provided, however, that all shares of Stock reserved and
available under the Plan shall constitute the maximum aggregate number of
shares of Stock that may be issued through incentive stock options. The
following shares of Stock shall continue to be reserved and available for
Awards granted pursuant to the Plan: (i) any outstanding Award that expires
for any reason, (ii) any portion of an outstanding Option or Stock
Appreciation Right that is terminated prior to exercise, (iii) any portion of
an Award that is terminated prior to the lapsing of the risks of forfeiture
on such Award, (iv) shares of Stock used to pay the exercise price under any
Award, (v) shares of Stock used to satisfy any tax withholding obligation
attributable to any Award, whether such shares are withheld by the Company or
tendered by the Participant, and (vi) shares of Stock covered by an Award to
the extent the Award is settled in cash.
Notwithstanding anything in the Plan to the contrary, for any Awards
granted under the Plan that are intended to qualify as "performance-based
compensation" under Code Section 162(m), the following limits will apply:
(a) In no event shall a Participant be granted Options or Stock
Appreciation Rights during any fiscal year of the Company covering in the
aggregate more than One Hundred Thousand (100,000) shares of Stock, subject
to adjustment as provided in Section 15; provided, however, that a share of
Stock subject to a Stock Appreciation Right that is granted in tandem with an
Option shall count as one share against this limitation.
(b) In no event shall a Participant be granted Restricted Stock Awards
or, to the extent payable in or measured by the value of shares of Stock,
Restricted Stock Unit Awards during any fiscal year of the Company covering
in the aggregate more than One Hundred Thousand (100,000) shares of Stock,
subject to adjustment as provided in Section 15.
(c) To the extent payable in or measured by the value of shares of Stock,
in no event shall a Participant be granted Performance Awards during any
fiscal year of the Company covering in the aggregate more than One Hundred
Thousand (100,000) shares of Stock, subject to adjustment as provided in
Section 15.
SECTION 7.
DURATION OF PLAN
Incentive stock options may be granted pursuant to the Plan from time to
time during a period of ten (10) years from the effective date as defined in
Section 3. Other Awards may be granted pursuant to the Plan from time to
time after the effective date of the Plan and until the Plan is discontinued
or terminated by the Administrator.
SECTION 8.
PAYMENT
Participants may pay for shares upon exercise of Options granted pursuant
to this Plan (i) in cash, or with a personal check or certified check, (ii)
by the transfer from the Participant to the Company of previously acquired
shares of Common Stock, (iii) through the withholding of shares of Stock from
the number of shares otherwise issuable upon the exercise of the Option
(e.g., a net share settlement), (iv) through broker-assisted cashless
exercise, or (v) by a combination thereof. Any stock tendered as part of
such payment shall be valued at such stock's then-current Fair Market Value,
or such other form of payment as may be authorized by the Administrator. In
the event the Optionee elects to pay the exercise price in whole or in part
with previously acquired shares of Common Stock or through a net share
settlement, the Fair Market Value of the shares of Stock delivered or
withheld shall equal the total exercise price for the shares being purchased
in such manner. The Administrator may, in its sole discretion, limit the
forms of payment available to the Participant and may exercise such
discretion any time prior to the termination of the Option granted to the
Participant or upon any exercise of the Option by the Participant.
"Previously-owned shares" means shares of the Company's Common Stock which
the Participant has owned for at least six (6) months prior to the exercise
of the Option, or for such other period of time, if any, as may be required
by generally accepted accounting principles.
With respect to payment in the form of Common Stock of the Company, the
Administrator may require advance approval or adopt such rules as it deems
necessary to assure compliance with Rule 16b-3, or any successor provision,
as then in effect, of the General Rules and Regulations under the Securities
Exchange Act of 1934, if applicable.
SECTION 9.
TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS
Each incentive stock option granted pursuant to this Section 9 shall be
evidenced by a written incentive stock option agreement (the "Option
Agreement"). The Option Agreement shall be in such form as may be approved
from time to time by the Administrator and may vary from Participant to
Participant; provided, however, that each Participant and each Option
Agreement shall comply with and be subject to the following terms and
conditions:
(a) Number of Shares and Option Price. The Option Agreement shall
state the total number of shares covered by the incentive stock option.
Except as permitted by Code Section 424(a), or any successor provision, the
option price per share shall not be less than one hundred percent (100%) of
the per share Fair Market Value of the Common Stock on the date the
Administrator grants the Option; provided, however, that if a Participant
owns stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or of its Parent or any
Subsidiary, the option price per share of an incentive stock option granted
to such Participant shall not be less than one hundred ten percent (110%) of
the per share Fair Market Value of the Company's Common Stock on the date of
the grant of the Option. The Administrator shall have full authority and
discretion in establishing the option price and shall be fully protected in
so doing.
(b) Term and Exercisability of Incentive Stock Option. The term during
which any incentive stock option granted under the Plan may be exercised
shall be established in each case by the Administrator. Except as permitted
by Code Section 424(a), in no event shall any incentive stock option be
exercisable during a term of more than ten (10) years after the date on which
it is granted; provided, however, that if a Participant owns stock possessing
more than ten percent (10%) of the total combined voting power of all classes
of stock of the Company or of its Parent or any Subsidiary, the incentive
stock option granted to such Participant shall be exercisable during a term
of not more than five (5) years after the date on which it is granted.
The Option Agreement shall state when the incentive stock option becomes
exercisable and shall also state the maximum term during which the Option may
be exercised. In the event an incentive stock option is exercisable
immediately, the manner of exercise of the Option in the event it is not
exercised in full immediately shall be specified in the Option Agreement.
The Administrator may accelerate the exercisability of any incentive stock
option granted hereunder which is not immediately exercisable as of the date
of grant.
(c) Nontransferability. No incentive stock option shall be
transferable, in whole or in part, by the Participant other than by will or
by the laws of descent and distribution. During the Participant's lifetime,
the incentive stock option may be exercised only by the Participant. If the
Participant shall attempt any transfer of any incentive stock option granted
under the Plan during the Participant's lifetime, such transfer shall be void
and the incentive stock option, to the extent not fully exercised, shall
terminate.
(d) No Rights as Shareholder. A Participant (or the Participant's
successor or successors) shall have no rights as a shareholder with respect
to any shares covered by an incentive stock option until the date of the
issuance of a stock certificate evidencing such shares. No adjustment shall
be made for dividends (ordinary or extraordinary, whether in cash, securities
or other property), distributions or other rights for which the record date
is prior to the date such stock certificate is actually issued (except as
otherwise provided in Section 15 of the Plan).
(e) Withholding. The Company or its Affiliate shall be entitled to
withhold and deduct from any future payments to the Participant all legally
required amounts necessary to satisfy any and all withholding and employment-
related taxes attributable to the Participant's exercise of an incentive
stock option or a "disqualifying disposition" of shares acquired through the
exercise of an incentive stock option as defined in Code Section 421(b). In
the event the Participant is required under the Option Agreement to pay the
Company, or make arrangements satisfactory to the Company respecting payment
of, such withholding and employment-related taxes, the Administrator may, in
its discretion and pursuant to such rules as it may adopt, permit the
Participant to satisfy such obligation, in whole or in part, by delivering
shares of the Company's Common Stock or by electing to have the Company
withhold shares of Common Stock otherwise issuable to the Participant as a
result of the exercise of the incentive stock option. Such shares shall have
a Fair Market Value equal to the minimum required tax withholding, based on
the minimum statutory withholding rates for federal and state tax purposes,
including payroll taxes, that are applicable to the supplemental income
resulting from such exercise or disqualifying disposition. In no event may
the Participant deliver shares, nor may the Company or any Affiliate withhold
shares, having a Fair Market Value in excess of such statutory minimum
required tax withholding. The Participant's election to have shares withheld
for this purpose shall be made on or before the later of (i) the date the
incentive stock option is exercised or the date of the disqualifying
disposition, as the case may be, or (ii) the date that the amount of tax to
be withheld is determined under applicable tax law. Such election shall be
approved by the Administrator and otherwise comply with such rules as the
Administrator may adopt to assure compliance with Rule 16b-3, or any
successor provision, as then in effect, of the General Rules and Regulations
under the Securities Exchange Act of 1934, if applicable.
(f) Vesting Limitation. Notwithstanding any other provision of the
Plan, the aggregate Fair Market Value (determined as of the date an Option is
granted) of the Stock with respect to which incentive stock options are
exercisable for the first time by a Participant during any calendar year
(under the Plan and any other "incentive stock option" plans of the Company,
any "subsidiary" of the Company within the meaning of Code Section 424(f),
and any "parent corporation" of the Company within the meaning of Code
Section 424(e)) shall not exceed $100,000 (or such other amount as may be
prescribed by the Code from time to time); provided, however, that if the
exercisability or vesting of an incentive stock option is accelerated as
permitted under the provisions of the Plan and such acceleration would result
in a violation of the limit imposed by this Section 9(f), such acceleration
shall be of full force and effect but the number of shares of Stock that
exceed such limit shall be treated as having been granted pursuant to a
nonqualified stock option; and provided, further, that the limits imposed by
this Section 9(f) shall be applied to all outstanding incentive stock options
(under the Plan and any other "incentive stock option" plans of the Company,
any "subsidiary" of the Company within the meaning of Code Section 424(f),
and any "parent corporation" of the Company within the meaning of Code
Section 424(e)), in chronological order according to the dates of grant.
(g) Other Provisions. The Option Agreement authorized under this
Section 9 shall contain such other provisions as the Administrator shall deem
advisable. Any such Option Agreement shall contain such limitations and
restrictions upon the exercise of the Option as shall be necessary to ensure
that such Option will be considered an "incentive stock option" as defined in
Section 422 of the Internal Revenue Code or to conform to any change therein.
SECTION 10.
TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTIONS
Each nonqualified stock option granted pursuant to this Section 10 shall
be evidenced by a written nonqualified stock option agreement (the "Option
Agreement"). The Option Agreement shall be in such form as may be approved
from time to time by the Administrator and may vary from Participant to
Participant; provided, however, that each Participant and each Option
Agreement shall comply with and be subject to the following terms and
conditions:
(a) Number of Shares and Option Price. The Option Agreement shall
state the total number of shares covered by the nonqualified stock option.
Unless otherwise determined by the Administrator, the option price per share
shall be one hundred percent (100%) of the per share Fair Market Value of the
Common Stock on the date the Administrator grants the Option.
(b) Term and Exercisability of Nonqualified Stock Option. The term
during which any nonqualified stock option granted under the Plan may be
exercised shall be established in each case by the Administrator. The Option
Agreement shall state when the nonqualified stock option becomes exercisable
and shall also state the maximum term during which the Option may be
exercised. In the event a nonqualified stock option is exercisable
immediately, the manner of exercise of the Option in the event it is not
exercised in full immediately shall be specified in the Option Agreement.
The Administrator may accelerate the exercisability of any nonqualified stock
option granted hereunder which is not immediately exercisable as of the date
of grant.
(c) Transferability. A nonqualified stock option shall be
transferable, in whole or in part, by the Participant by will or by the laws
of descent and distribution. In addition, the Administrator may, in its sole
discretion, permit the Participant to transfer any or all nonqualified stock
options to any member of the Participant's "immediate family" as such term is
defined in Rule 16a-1(e) promulgated under the Securities Exchange Act of
1934, or any successor provision, or to one or more trusts whose
beneficiaries are members of such Participant's "immediate family" or
partnerships in which such family members are the only partners; provided,
however, that the Participant cannot receive any consideration for the
transfer and such transferred nonqualified stock option shall continue to be
subject to the same terms and conditions as were applicable to such
nonqualified stock option immediately prior to its transfer.
(d) No Rights as Shareholder. A Participant (or the Participant's
successor or successors) shall have no rights as a shareholder with respect
to any shares covered by a nonqualified stock option until the date of the
issuance of a stock certificate evidencing such shares. No adjustment shall
be made for dividends (ordinary or extraordinary, whether in cash, securities
or other property), distributions or other rights for which the record date
is prior to the date such stock certificate is actually issued (except as
otherwise provided in Section 15 of the Plan).
(e) Withholding. The Company or its Affiliate shall be entitled to
withhold and deduct from any future payments to the Participant all legally
required amounts necessary to satisfy any and all withholding and employment-
related taxes attributable to the Participant's exercise of a nonqualified
stock option. In the event the Participant is required under the Option
Agreement to pay the Company, or make arrangements satisfactory to the
Company respecting payment of, such withholding and employment-related taxes,
the Administrator may, in its discretion and pursuant to such rules as it may
adopt, permit the Participant to satisfy such obligation, in whole or in
part, by delivering shares of the Company's Common Stock or by electing to
have the Company withhold shares of Common Stock otherwise issuable to the
Participant as a result of the exercise of the nonqualified stock option.
Such shares shall have a Fair Market Value equal to the minimum required tax
withholding, based on the minimum statutory withholding rates for federal and
state tax purposes, including payroll taxes, that are applicable to the
supplemental income resulting from such exercise. In no event may the
Participant deliver shares, nor may the Company or any Affiliate withhold
shares, having a Fair Market Value in excess of such statutory minimum
required tax withholding. The Participant's election to deliver shares or to
have shares withheld for this purpose shall be made on or before the later of
(i) the date the nonqualified stock option is exercised, or (ii) the date
that the amount of tax to be withheld is determined under applicable tax law.
Such election shall be approved by the Administrator and otherwise comply
with such rules as the Administrator may adopt to assure compliance with Rule
16b-3, or any successor provision, as then in effect, of the General Rules
and Regulations under the Securities Exchange Act of 1934, if applicable.
(f) Automatic Granting to Non-Employee Directors. Each non-employee
director who, on and after the date this Plan is approved by the Company's
shareholders, is elected or re-elected as a director of the Company or, in
the event the Company adopts staggered terms for its directors, whose term of
office continues after a meeting of shareholders at which directors are
elected shall, as of the date of such re-election or shareholder meeting,
automatically be granted an option to purchase 5,000 shares of the Common
Stock at an option price per share equal to 100% of the Fair Market Value of
the Common Stock on the date of such election, re-election or shareholder
meeting; provided however, that if such non-employee director is elected
other than by shareholders at an annual meeting, the number of shares subject
to the option shall be determined by multiplying 5,000 by a fraction, the
numerator of which is the number of months until the next regular annual
meeting of shareholders and the denominator of which is 12. Options granted
pursuant to this subsection (f) shall be immediately exercisable in full.
(g) Other Provisions. The Option Agreement authorized under this
Section 10 shall contain such other provisions as the Administrator shall
deem advisable.
SECTION 11.
RESTRICTED STOCK AND RESTRICTED STOCK UNIT AWARDS
Each Restricted Stock Award or Restricted Stock Unit Award granted
pursuant to the Plan shall be evidenced by a written restricted stock or
restricted stock unit agreement (the "Restricted Stock Agreement" or
"Restricted Stock Unit Agreement," as the case may be). The Restricted Stock
Agreement or Restricted Stock Unit Agreement shall be in such form as may be
approved from time to time by the Administrator and may vary from Participant
to Participant; provided, however, that each Participant and each Restricted
Stock Agreement or Restricted Stock Unit Agreement shall comply with and be
subject to the following terms and conditions:
(a) Number of Shares. The Restricted Stock Agreement or Restricted
Stock Unit Agreement shall state the total number of shares of Stock covered
by the Restricted Stock Award or Restricted Stock Unit Award.
(b) Risks of Forfeiture. The Restricted Stock Agreement or Restricted
Stock Unit Agreement shall set forth the risks of forfeiture, if any,
including risks of forfeiture based on Performance Objectives, which shall
apply to the shares of Stock covered by the Restricted Stock Award or
Restricted Stock Unit Award, and shall specify the manner in which such risks
of forfeiture shall lapse. The Administrator may, in its sole discretion,
modify the manner in which such risks of forfeiture shall lapse but only with
respect to those shares of Stock which are restricted as of the effective
date of the modification.
(c) Issuance of Shares; Rights as Shareholder.
(i) With respect to a Restricted Stock Award, the Company shall
cause to be issued a stock certificate representing such shares of Stock in
the Participant's name, and shall deliver such certificate to the
Participant; provided, however, that the Company shall place a legend on such
certificate describing the risks of forfeiture and other transfer
restrictions set forth in the Participant's Restricted Stock Agreement and
providing for the cancellation and return of such certificate if the shares
of Stock subject to the Restricted Stock Award are forfeited. Until the
risks of forfeiture have lapsed or the shares subject to such Restricted
Stock Award have been forfeited, the Participant shall be entitled to vote
the shares of Stock represented by such stock certificates and shall receive
all dividends attributable to such shares, but the Participant shall not have
any other rights as a shareholder with respect to such shares.
(ii) With respect to a Restricted Stock Unit Award, as the risks of
forfeiture on the restricted stock units lapse, the Participant shall be
entitled to payment of the Restricted Stock Units. The Administrator may, in
its sole discretion, pay Restricted Stock Units in cash, shares of Stock or
any combination thereof. If payment is made in shares of Stock, the
Administrator shall cause to be issued one or more stock certificates in the
Participant's name and shall deliver such certificates to the Participant in
satisfaction of such restricted stock units. Until the risks of forfeiture
on the restricted stock units have lapsed, the Participant shall not be
entitled to vote any shares of stock which may be acquired through the
restricted stock units, shall not receive any dividends attributable to such
shares, and shall not have any other rights as a shareholder with respect to
such shares.
(d) Withholding Taxes. The Company or its Affiliate shall be entitled
to withhold and deduct from any future payments to the Participant all
legally required amounts necessary to satisfy any and all withholding and
employment-related taxes attributable to the Participant's Restricted Stock
Award or Restricted Stock Unit Award. In the event the Participant is
required under the Restricted Stock Agreement or Restricted Stock Unit
Agreement to pay the Company, or make arrangements satisfactory to the
Company respecting payment of, such withholding and employment-related taxes,
the Administrator may, in its discretion and pursuant to such rules as it may
adopt, require the Participant to satisfy such obligations, in whole or in
part, by delivering shares of Common Stock, including shares of Stock
received pursuant to the Restricted Stock Award or Restricted Stock Unit
Award on which the risks of forfeiture have lapsed. Such shares shall have a
Fair Market Value equal to the minimum required tax withholding, based on the
minimum statutory withholding rates for federal and state tax purposes,
including payroll taxes, that are applicable to the supplemental income
resulting from the lapsing of the risks of forfeiture on such restricted
stock or restricted stock unit. In no event may the Participant deliver
shares having a Fair Market Value in excess of such statutory minimum
required tax withholding. The Participant's election to deliver shares of
Common Stock for this purpose shall be made on or before the date that the
amount of tax to be withheld is determined under applicable tax law. Such
election shall be approved by the Administrator and otherwise comply with
such rules as the Administrator may adopt to assure compliance with Rule
16b-3, or any successor provision, as then in effect, of the General Rules
and Regulations under the Securities Exchange Act of 1934, if applicable.
(e) Nontransferability. No Restricted Stock Award or Restricted Stock
Unit Award shall be transferable, in whole or in part, by the Participant,
other than by will or by the laws of descent and distribution, prior to the
date the risks of forfeiture described in the Restricted Stock Agreement or
Restricted Stock Unit Agreement have lapsed. If the Participant shall
attempt any transfer of any Restricted Stock Award or Restricted Stock Unit
Award granted under the Plan prior to such date, such transfer shall be void
and the Restricted Stock Award or Restricted Stock Unit Award shall
terminate.
(f) Other Provisions. The Restricted Stock Agreement or Restricted
Stock Unit Agreement authorized under this Section 11 shall contain such
other provisions as the Administrator shall deem advisable.
SECTION 12.
PERFORMANCE AWARDS
Each Performance Award granted pursuant to this Section 12 shall be
evidenced by a written performance award agreement (the "Performance Award
Agreement"). The Performance Award Agreement shall be in such form as may be
approved from time to time by the Administrator and may vary from Participant
to Participant; provided, however, that each Participant and each Performance
Award Agreement shall comply with and be subject to the following terms and
conditions:
(a) Awards. Performance Awards in the form of Performance Units or
Performance Shares may be granted to any Participant in the Plan. Performance
Units shall consist of monetary awards which may be earned or become vested
in whole or in part if the Company or the Participant achieves certain
Performance Objectives established by the Administrator over a specified
Performance Period. Performance Shares shall consist of shares of Stock or
other Awards denominated in shares of Stock that may be earned or become
vested in whole or in part if the Company or the Participant achieves certain
Performance Objectives established by the Administrator over a specified
Performance Period.
(b) Performance Objectives, Performance Period and Payment. The
Performance Award Agreement shall set forth:
(i) the number of Performance Units or Performance Shares subject to
the Performance Award, and the dollar value of each Performance Unit;
(ii) one or more Performance Objectives established by the
Administrator;
(iii) the Performance Period over which Performance Units or
Performance Shares may be earned or may become vested;
(iv) the extent to which partial achievement of the Performance
Objectives may result in a payment or vesting of the Performance Award, as
determined by the Administrator; and
(v) the date upon which payment of Performance Units will be made or
Performance Shares will be issued, as the case may be, and the extent to
which such payment or the receipt of such Performance Shares may be deferred.
(c) Withholding Taxes. The Company or its Affiliates shall be entitled
to withhold and deduct from any future payments to the Participant all
legally required amounts necessary to satisfy any and all withholding and
employment-related taxes attributable to the Participant's Performance Award.
In the event the Participant is required under the Performance Award
Agreement to pay the Company or its Affiliates, or make arrangements
satisfactory to the Company or its Affiliates respecting payment of, such
withholding and employment-related taxes, the Administrator may, in its
discretion and pursuant to such rules as it may adopt, permit the Participant
to satisfy such obligations, in whole or in part, by delivering shares of
Common Stock, including shares of Stock received pursuant to the Performance
Award. Such shares shall have a Fair Market Value equal to the minimum
required tax withholding, based on the minimum statutory withholding rates
for federal and state tax purposes, including payroll taxes. In no event may
the Participant deliver shares having a Fair Market Value in excess of such
statutory minimum required tax withholding. The Participant's election to
deliver shares of Common Stock for this purpose shall be made on or before
the date that the amount of tax to be withheld is determined under applicable
tax law. Such election shall be approved by the Administrator and otherwise
comply with such rules as the Administrator may adopt to assure compliance
with Rule 16b-3, or any successor provision, as then in effect, of the
General Rules and Regulations under the Securities Exchange Act of 1934, if
applicable.
(d) Nontransferability. No Performance Award shall be transferable, in
whole or in part, by the Participant, other than by will or by the laws of
descent and distribution. If the Participant shall attempt any transfer of
any Performance Award granted under the Plan, such transfer shall be void and
the Performance Award shall terminate.
(e) No Rights as Shareholder. A Participant (or the Participant's
successor or successors) shall have no rights as a shareholder with respect
to any shares covered by a Performance Award until the date of the issuance
of a stock certificate evidencing such shares. No adjustment shall be made
for dividends (ordinary or extraordinary, whether in cash, securities or
other property), distributions or other rights for which the record date is
prior to the date such stock certificate is actually issued (except as
otherwise provided in Section 15 of the Plan).
(f) Other Provisions. The Performance Award Agreement authorized under
this Section 12 shall contain such other provisions as the Administrator
shall deem advisable.
SECTION 13.
STOCK APPRECIATION RIGHTS
Each Stock Appreciation Right granted pursuant to this Section 13 shall
be evidenced by a written stock appreciation right agreement (the "Stock
Appreciation Right Agreement"). The Stock Appreciation Right Agreement shall
be in such form as may be approved from time to time by the Administrator and
may vary from Participant to Participant; provided, however, that each
Participant and each Stock Appreciation Right Agreement shall comply with and
be subject to the following terms and conditions:
(a) Awards. A Stock Appreciation Right shall entitle the Participant
to receive, upon exercise, cash, shares of Stock, or any combination thereof,
having a value equal to the excess of (i) the Fair Market Value of a
specified number of shares of Stock on the date of such exercise, over (ii) a
specified exercise price. Unless otherwise determined by the Administrator,
the specified exercise price shall not be less than 100% of the Fair Market
Value of such shares of Stock on the date of grant of the Stock Appreciation
Right. A Stock Appreciation Right may be granted independent of or in tandem
with a previously or contemporaneously granted Option.
(b) Term and Exercisability. The term during which any Stock
Appreciation Right granted under the Plan may be exercised shall be
established in each case by the Administrator. The Stock Appreciation Right
Agreement shall state when the Stock Appreciation Right becomes exercisable
and shall also state the maximum term during which such Stock Appreciation
Right may be exercised. In the event a Stock Appreciation Right is
exercisable immediately, the manner of exercise of such Stock Appreciation
Right in the event it is not exercised in full immediately shall be specified
in the Stock Appreciation Right Agreement. The Administrator may accelerate
the exercisability of any Stock Appreciation Right granted hereunder which is
not immediately exercisable as of the date of grant. If a Stock Appreciation
Right is granted in tandem with an Option, the Stock Appreciation Right
Agreement shall set forth the extent to which the exercise of all or a
portion of the Stock Appreciation Right shall cancel a corresponding portion
of the Option, and the extent to which the exercise of all or a portion of
the Option shall cancel a corresponding portion of the Stock Appreciation
Right.
(c) Withholding Taxes. The Company or its Affiliate shall be entitled
to withhold and deduct from any future payments to the Participant all
legally required amounts necessary to satisfy any and all withholding and
employment-related taxes attributable to the Participant's Stock Appreciation
Right. In the event the Participant is required under the Stock Appreciation
Right to pay the Company or its Affiliate, or make arrangements satisfactory
to the Company or its Affiliate respecting payment of, such withholding and
employment-related taxes, the Administrator may, in its discretion and
pursuant to such rules as it may adopt, permit the Participant to satisfy
such obligation, in whole or in part, by delivering shares of the Company's
Common Stock or by electing to have the Company withhold shares of Common
Stock otherwise issuable to the Participant as a result of the exercise of
the Stock Appreciation Right. Such shares shall have a Fair Market Value
equal to the minimum required tax withholding, based on the minimum statutory
withholding rates for federal and state tax purposes, including payroll
taxes, that are applicable to the supplemental income resulting from such
exercise. In no event may the Participant deliver shares, nor may the
Company or any Affiliate withhold shares, having a Fair Market Value in
excess of such statutory minimum required tax withholding. The Participant's
election to deliver shares or to have shares withheld for this purpose shall
be made on or before the later of (i) the date the Stock Appreciation Right
is exercised, or (ii) the date that the amount of tax to be withheld is
determined under applicable tax law. Such election shall be approved by the
Administrator and otherwise comply with such rules as the Administrator may
adopt to assure compliance with Rule 16b-3, or any successor provision, as
then in effect, of the General Rules and Regulations under the Securities
Exchange Act of 1934, if applicable.
(d) Nontransferability. No Stock Appreciation Right shall be
transferable, in whole or in part, by the Participant, other than by will or
by the laws of descent and distribution. If the Participant shall attempt
any transfer of any Stock Appreciation Right granted under the Plan, such
transfer shall be void and the Stock Appreciation Right shall terminate.
(e) No Rights as Shareholder. A Participant (or the Participant's
successor or successors) shall have no rights as a shareholder with respect
to any shares covered by a Stock Appreciation Right until the date of the
issuance of a stock certificate evidencing such shares. No adjustment shall
be made for dividends (ordinary or extraordinary, whether in cash, securities
or other property), distributions or other rights for which the record date
is prior to the date such stock certificate is actually issued (except as
otherwise provided in Section 15 of the Plan).
(f) Other Provisions. The Stock Appreciation Right Agreement
authorized under this Section 13 shall contain such other provisions as the
Administrator shall deem advisable, including but not limited to any
restrictions on the exercise of the Stock Appreciation Right which may be
necessary to comply with Rule 16b-3 of the Securities Exchange Act of 1934,
as amended.
SECTION 14
PERFORMANCE-BASED COMPENSATION
The Committee may specify that an Award or a portion of an Award is
intended to satisfy the requirements for "performance-based compensation" of
Code Section 162(m); provided that, notwithstanding anything in this Plan to
the contrary, the performance criteria for such Award or portion of an Award
(either, a "Section 162(m) Award") shall be a measure based on one or more
Performance Objectives selected by the Committee and established on or before
the time required to qualify such Performance Objective as a "preestablished
goal" under Code Section 162(m) and the regulations issued thereunder. The
Committee shall certify the extent to which any Performance Objective has
been satisfied, and the amount payable as a result thereof, prior to the
payment, settlement or vesting of any Award that is intended to satisfy the
requirements for "performance-based compensation" under Code Section 162(m).
In determining the amounts earned by a Participant pursuant to a Section
162(m) Award, the Committee, in its discretion, will have the right to reduce
or eliminate (but not to increase) the amount payable at a given level of
performance on a formula or discretionary basis, or any combination thereof.
Notwithstanding anything in this Plan to the contrary, if the vesting,
settlement or payment of any Award intended to be a Section 162(m) Award is
accelerated by reason of the Participant's termination of employment for any
reason other than death, disability or a Change of Control, such Award will
not be deemed to be "performance-based compensation" for purposes of Code
Section 162(m) to the extent prohibited by Code Section 162(m), or the
regulations, notices and other guidance of general applicability issued
thereunder.
SECTION 15.
RECAPITALIZATION, SALE, MERGER, EXCHANGE
OR LIQUIDATION
In the event of an increase or decrease in the number of shares of Common
Stock resulting from a stock dividend, stock split, reverse split,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without
receipt of consideration by the Company, the Board may, in its sole
discretion, adjust the number of shares of Stock reserved under Section 6
hereof, the number of shares of Stock covered by each outstanding Award, and,
if applicable, the price per share thereof to reflect such change.
Additional shares which may become covered by the Award pursuant to such
adjustment shall be subject to the same restrictions as are applicable to the
shares with respect to which the adjustment relates.
Unless otherwise provided in the agreement evidencing an Award, in the
event of a Change of Control, the Board may provide for one or more of the
following:
(a) the acceleration of the exercisability of any outstanding Options
or Stock Appreciation Rights, the vesting and payment of any Performance
Awards, or the lapsing of the risks of forfeiture on any Restricted Stock
Awards or Restricted Stock Unit Awards;
(b) the complete termination of this Plan, the cancellation of
outstanding Options or Stock Appreciation Rights not exercised prior to a
date specified by the Board (which date shall give Participants a reasonable
period of time in which to exercise such Option or Stock Appreciation Right
prior to the effective date of such Change of Control), the cancellation of
any Performance Award and the cancellation of any Restricted Stock Awards or
Restricted Stock Unit Awards for which the risks of forfeiture have not
lapsed;
(c) that Participants holding outstanding Options and Stock
Appreciation Rights shall receive, with respect to each share of Stock
subject to such Option or Stock Appreciation Right, as of the effective date
of any such Change of Control, cash in an amount equal to the excess of the
Fair Market Value of such Stock on the date immediately preceding the
effective date of such Change of Control over the price per share of such
Options or Stock Appreciation Rights; provided that the Board may, in lieu of
such cash payment, distribute to such Participants shares of Common Stock of
the Company or shares of stock of any corporation succeeding the Company by
reason of such Change of Control, such shares having a value equal to the
amount specified in this Section 15(c);
(d) that Participants holding outstanding Restricted Stock Awards,
Restricted Stock Unit Awards and Performance Share Awards shall receive, with
respect to each share of Stock subject to such Awards, as of the effective
date of any such Change of Control, cash in an amount equal to the Fair
Market Value of such Stock on the date immediately preceding the effective
date of such Change of Control; provided that the Board may, in lieu of such
cash payment, distribute to such Participants shares of Common Stock of the
Company or shares of stock of any corporation succeeding the Company by
reason of such Change of Control, such shares having a value equal to the
amount specified in this Section 15(d);
(e) the continuance of the Plan with respect to the exercise of Options
or Stock Appreciation Rights which were outstanding as of the date of
adoption by the Board of such plan for such Change of Control and the right
to exercise such Options and Stock Appreciation Rights as to an equivalent
number of shares of stock of the corporation succeeding the Company by reason
of such Change of Control; and
(f) the continuance of the Plan with respect to Restricted Stock Awards
or Restricted Stock Unit Awards for which the risks of forfeiture have not
lapsed as of the date of adoption by the Board of such plan for such Change
of Control and the right to receive an equivalent number of shares of stock
of the corporation succeeding the Company by reason of such Change of
Control.
(g) the continuance of the Plan with respect to Performance Awards and,
to the extent applicable, the right to receive an equivalent number of shares
of stock of the corporation succeeding the Company by reason for such Change
of Control.
The Board may restrict the rights of or the applicability of this Section
15 to the extent necessary to comply with Section 16(b) of the Securities
Exchange Act of 1934, the Internal Revenue Code or any other applicable law
or regulation. The grant of an Award pursuant to the Plan shall not limit in
any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge, exchange or consolidate or to dissolve, liquidate,
sell or transfer all or any part of its business or assets.
SECTION 16.
INVESTMENT PURPOSE
No shares of Stock shall be issued pursuant to the Plan unless and until
there has been compliance, in the opinion of Company's counsel, with all
applicable legal requirements, including without limitation, those relating
to securities laws and stock exchange listing requirements. As a condition
to the issuance of Stock to Participant, the Administrator may require
Participant to (a) represent that the shares of Stock are being acquired for
investment and not resale and to make such other representations as the
Administrator shall deem necessary or appropriate to qualify the issuance of
the shares as exempt from the Securities Act of 1933 and any other applicable
securities laws, and (b) represent that Participant shall not dispose of the
shares of Stock in violation of the Securities Act of 1933 or any other
applicable securities laws.
As a further condition to the grant of any Option or the issuance of
Stock to Participant, Participant agrees to the following:
(a) In the event the Company advises Participant that it plans an
underwritten public offering of its Common Stock in compliance with the
Securities Act of 1933, as amended, and the underwriter(s) seek to impose
restrictions under which certain shareholders may not sell or contract to
sell or grant any option to buy or otherwise dispose of part or all of their
stock purchase rights of the Common Stock underlying Awards, Participant will
not, for a period not to exceed 180 days from the prospectus, sell or
contract to sell or grant an option to buy or otherwise dispose of any Option
granted to Participant pursuant to the Plan or any of the underlying shares
of Common Stock without the prior written consent of the underwriter(s) or
its representative(s).
(b) In the event the Company makes any public offering of its
securities and determines in its sole discretion that it is necessary to
reduce the number of issued but unexercised stock purchase rights so as to
comply with any state's securities or Blue Sky law limitations with respect
thereto, the Board of Directors of the Company shall have the right (i) to
accelerate the exercisability of any Option and the date on which such Option
must be exercised, provided that the Company gives Participant prior written
notice of such acceleration, and (ii) to cancel any Options or portions
thereof which Participant does not exercise prior to or contemporaneously
with such public offering.
(c) In the event of a Change of Control, Participant will comply with
Rule 145 of the Securities Act of 1933 and any other restrictions imposed
under other applicable legal or accounting principles if Participant is an
"affiliate" (as defined in such applicable legal and accounting principles)
at the time of the transaction, and Participant will execute any documents
necessary to ensure compliance with such rules.
The Company reserves the right to place a legend on any stock certificate
issued in connection with an Award pursuant to the Plan to assure compliance
with this Section 16.
SECTION 17.
AMENDMENT OF THE PLAN
The Board may from time to time, insofar as permitted by law, suspend or
discontinue the Plan or revise or amend it in any respect; provided, however,
that no such revision or amendment, except as is authorized in Section 15,
shall impair the terms and conditions of any Award which is outstanding on
the date of such revision or amendment to the material detriment of the
Participant without the consent of the Participant. Notwithstanding the
foregoing, no such revision or amendment shall (i) materially increase the
number of shares subject to the Plan except as provided in Section 15 hereof,
(ii) change the designation of the class of employees eligible to receive
Awards, (iii) decrease the price at which Options may be granted, or (iv)
materially increase the benefits accruing to Participants under the Plan
without the approval of the shareholders of the Company if such approval is
required for compliance with the requirements of any applicable law or
regulation. Furthermore, the Plan may not, without the approval of the
shareholders, be amended in any manner that will cause incentive stock
options to fail to meet the requirements of Code Section 422.
Notwithstanding anything in the Plan to the contrary, the Board may amend
this Plan to the extent necessary or desirable to comply with the
requirements of Code Section 409A and the regulations, notices and other
guidance of general applicability issued thereunder.
SECTION 18.
NO OBLIGATION TO EXERCISE OPTION
The granting of an Option shall impose no obligation upon the Participant
to exercise such Option. Further, the granting of an Award hereunder shall
not impose upon the Company or any Affiliate any obligation to retain the
Participant in its employ for any period.
TECHNE CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints THOMAS E. OLAND and KATHLEEN BACKES, or
either of them acting alone, with full power of substitution, as proxies to
represent and vote, as designated below, all shares of Common Stock of Techne
Corporation registered in the name of the undersigned, at the Annual Meeting
of the Shareholders to be held on Thursday, October 28, 2010 at 3:30 p.m.
Central Daylight Time, at the offices of the Company, 614 McKinley Place
N.E., Minneapolis, Minnesota, and at all adjournments of such meeting. If
you need directions to the Annual Meeting, please contact Techne Corporation
at 612-379-8854.
The undersigned hereby revokes all proxies previously granted with respect
to such meeting.
The Board of Directors recommends that you vote FOR the following proposals:
(1) To set the number of Directors at nine:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(2) To elect Directors: [ ] FOR ALL [ ] WITHHOLD ALL [ ] FOR ALL EXCEPT
Nominees:
1) Thomas E. Oland
2) Roger C. Lucas PhD
3) Howard V. O'Connell
4) Randolph C Steer MD PhD
5) Robert V. Baumgartner
6) Charles A. Dinarello MD
7) Karen A. Holbrook PhD
8) John L. Higgins
9) Roeland Nusse PhD
(To withhold authority to vote for any individual nominee(s), mark "For All
Except" and write the name(s) of the nominee on the line below.)
__________________________________________________________________________
(3) To approve the Company's 2010 Equity Incentive Plan.
(4) Other matters: In their discretion, the appointed proxies are
authorized to vote upon such other business as may properly come before the
Meeting or any adjournment.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN FOR A PARTICULAR PROPOSAL, WILL BE VOTED FOR SUCH PROPOSAL.
Date_________________________, 2010
_________________________________________
_________________________________________
PLEASE DATE AND SIGN ABOVE exactly as name
appears at the left, indicating, where
appropriate official position or
representative capacity. If stock is held
in joint tenancy, each joint owner
should sign.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL
MEETING TO BE HELD ON OCTOBER 28, 2010:
The Proxy Statement and 2010 Annual Report to Shareholders are
available at www.proxyvote.com
You may vote your proxy at www.proxyvote.com