def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. __)
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
HESKA 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):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Title of each class of securities to which transaction applies: |
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Aggregate number of securities to which transaction applies: |
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was
determined): |
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Proposed maximum aggregate value of transaction: |
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Total fee paid: |
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its
filing. |
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Amount Previously Paid: |
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Form, Schedule or Registration Statement No.: |
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Filing Party: |
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Date Filed: |
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March 29, 2011
Dear Heska Stockholder:
I am pleased to invite you to attend the Annual Meeting of Stockholders of Heska Corporation
to be held on Tuesday, May 3, 2011 at 9:00 a.m., local time, at 3760 Rocky Mountain Avenue,
Loveland, Colorado 80538.
Details regarding the meeting and the business to be conducted are more fully described in the
accompanying Notice of Annual Meeting and Proxy Statement. This notice and all proxy materials in
connection with this Annual Meeting are also available on https://materials.proxyvote.com/42805E.
Your vote is important. Whether or not you plan to attend the 2011 Annual Meeting, I hope you
will vote as soon as possible. You may vote by mailing a proxy or in person at the annual meeting.
Please review the instructions in the proxy statement and on the proxy card regarding your voting
options.
Thank you for your ongoing support of and continued interest in Heska.
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Sincerely, |
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Robert B. Grieve |
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Chairman and Chief Executive Officer, |
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Heska Corporation |
Loveland, Colorado
YOUR VOTE IS IMPORTANT
In order to ensure your representation at the meeting, please
complete, sign and date the enclosed proxy as promptly as possible
and return it in the enclosed envelope (to which no postage need be
affixed if mailed in the United States).
NOTICE OF 2011 ANNUAL MEETING OF STOCKHOLDERS
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TIME
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9:00 a.m., local time, on Tuesday, May 3, 2011 |
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PLACE
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Heska Corporation
3760 Rocky Mountain Avenue
Loveland, Colorado 80538 |
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ITEMS OF BUSINESS
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1. To elect two Directors to a three-year term. |
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2. To ratify the appointment of
Ehrhardt Keefe Steiner & Hottman PC as Heska Corporations
independent registered public accountant. |
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3. An
advisory vote with respect to discretionary voting by proxyholders,
if other business properly comes before the 2011 Annual Meeting. |
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4. To consider such other business as
may properly come before the 2011 Annual Meeting. |
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RECORD DATE
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You can vote if you were a stockholder of record at the close of business on
March 16, 2011. |
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ANNUAL REPORT
AND FORM 10-K
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Our corporate 2010 Annual Report and annual report on Form 10-K for the
year ended December 31, 2010, which are not a part of the proxy soliciting
material, are enclosed. |
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VOTING BY PROXY
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Please submit a proxy as soon as possible so that your shares can be voted at the 2011 Annual Meeting in
accordance with your instructions. For specific instructions on voting, please refer to the instructions on
the proxy card. |
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March 29, 2011
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By Order of the Board of Directors |
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Jason A. Napolitano |
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Executive Vice President, Chief Financial Officer |
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and Secretary, Heska Corporation |
This
proxy statement and accompanying proxy card are being distributed on or about March 29,
2011.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
STOCKHOLDER MEETING TO BE
HELD ON MAY 3, 2011
The
Proxy Statement, the Proxy Card and our annual report on
Form 10-K for the
year ended December 31, 2010 are available at https://materials.proxyvote.com/42805E.
TABLE OF CONTENTS
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TABLE OF CONTENTS
(Continued)
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-ii-
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS
AND THE 2011 ANNUAL MEETING
Q: |
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Why am I receiving these materials? |
A: |
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The Board of Directors (the Board) of Heska Corporation, a
Delaware corporation (Heska or the Company), is providing
these proxy materials for you in connection with Heskas Annual
Meeting of Stockholders (the Annual Meeting). The 2011 Annual
Meeting will take place on Tuesday, May 3, 2011. As a
stockholder, you are invited to attend the 2011 Annual Meeting
and are entitled to and requested to vote on the items of
business described in this proxy statement. |
Q: |
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What information is contained in these materials? |
A: |
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The information included in this proxy statement relates to the
proposals to be voted on at the 2011 Annual Meeting, the voting
process, the compensation of our Directors and most highly paid
Executive Officers, and certain other required information. Our
corporate 2010 Annual Report, and annual report on Form 10-K for
the year ended December 31, 2010 as filed with the Securities
and Exchange Commission (the SEC), are also enclosed. |
Q: |
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What items of business will be voted on at the 2011 Annual
Meeting? |
A: |
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The items of business scheduled to be voted on at the 2011
Annual Meeting are: |
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The election of two nominees to serve on our Board of Directors for a three-year term; |
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The ratification of our independent registered public accountant for fiscal 2011. |
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An advisory vote with respect to discretionary voting by
proxyholders, if other business properly comes before the 2011 Annual
Meeting. We will also consider other business that properly comes
before the 2011 Annual Meeting. |
Q: |
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How does the Board recommend I vote on the proposals? |
A: |
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The Board recommends a vote FOR the election of each of the Director
nominees, FOR the ratification of Ehrhardt Keefe Steiner & Hottman PC
(EKS&H) as the Companys independent registered public accountant
and FOR
your preference being that the proxyholders exercise their voting
discretion in a manner they determine to be in the best interest of
the Companys stockholders, if other business properly comes
before the 2011 Annual Meeting and you are voting by proxy.
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Who is entitled to vote? |
A: |
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Stockholders as of the close of business on March 16, 2011 (the
Record Date) are entitled to vote at the 2011 Annual Meeting. As of
the Record Date, 5,234,100 shares of our common stock were issued and
outstanding. Each stockholder is entitled to one vote for each share
of common stock held on the Record Date. A list of stockholders
entitled to vote at the 2011 Annual Meeting will be available at the
2011 Annual Meeting and for ten days prior to the meeting during
normal business hours at our offices at 3760 Rocky Mountain Avenue,
Loveland, Colorado 80538, by contacting our Secretary. |
Q: |
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Will you be able to confirm I am a stockholder entitled to
vote if I attend the 2011 Annual Meeting in person? |
A: |
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If you are a stockholder entitled to vote and attend the 2011 Annual Meeting in person, we expect to be able to confirm you as such only under
certain limited circumstances. A list of stockholders is maintained
and provided to us by Computershare Trust Company
(Computershare), our
registrar and transfer agent. This list forms the basis for tracking votes from given shares. We, through
Computershare, should be able to confirm you are a stockholder entitled
to vote if you hold shares registered in your name with Computershare
(Registered shares). However, a large portion of our shares are held
by Cede & Co., a nominee of Depository Trust Company (DTC
shares) as we believe is typical for publicly traded
companies. We believe DTC shares are more conveniently publicly traded than other Registered shares and thus
represent most of our daily trading volume. If a broker buys a position in DTC
shares from another broker, we believe the identity of the parties is typically not
reported to Computershare or us. We believe Depository Trust Company maintains
records of the DTC shares allocated to different entities, such as brokers and
banks, and in the case of a broker buying a position in DTC shares from another
broker will record an increase in the number of DTC shares allocated to the
first broker equal to the number of shares involved as well as a corresponding
decrease in the number of shares allocated to the second broker. DTC shares
allocated to a given broker in this way may represent many client accounts for
which the broker or the brokers agent maintains internal records, which we do
not believe are generally shared with Depository Trust Company or
Computershare. If your shares are held through a broker, bank or other nominee
and are not registered in your name with Computershare, such shares are herein
referred to as being held in Street Name, and you probably received these
materials through such broker, bank or other nominee. Computershare will
generally not be able to identify the holders of shares held in Street Name as
stockholders entitled to vote without further arrangements by the corresponding
broker, bank or other nominee.
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Q: |
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How can I tell if my shares are held in Street Name? |
A: |
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If these proxy materials were mailed to you by an
entity other than Computershare, your shares are
probably held in Street Name. We believe most of our
shares are held in Street Name. |
A: |
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There are two ways you can vote Registered shares: |
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Sign and date each proxy card you receive and return it in the postage prepaid
envelope; and |
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Vote in-person at the 2011 Annual Meeting. |
If you have shares held in Street Name, you should vote the shares via the procedures adopted by
your broker, bank or other nominee. This may include proxy voting communicated by mail, the
internet or telephone. If you wish to vote these shares at the 2011 Annual Meeting, you must
contact your broker, bank or other nominee to obtain the proper documentation and bring it with
you to the 2011 Annual Meeting.
Q: |
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How can I change my vote or revoke my proxy? |
A: |
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For Registered shares, you have the right to revoke your proxy and
change your vote at any time before the meeting by notifying our
Secretary, or returning a later-dated proxy card. You may also revoke
your proxy and change your vote by voting in person at the meeting. |
For shares held in Street Name, you should follow any corresponding procedures adopted by your
broker, bank or other nominee. These may include procedures as simple as a later vote via the
internet or telephone to change your vote.
Q: |
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Who can help answer my questions? |
A: |
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If you have any questions about the 2011 Annual Meeting or how to vote
or revoke your proxy, you should contact: |
Heska Corporation
Attn: Secretary
3760 Rocky Mountain Avenue
Loveland, Colorado 80538
(970) 493-7272
If you need additional copies of this proxy statement or voting
materials, please contact our Secretary as described above.
Q: |
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What does it mean if I get more than one proxy card? |
A: |
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It means that you hold shares in more than one account. Sign and
return all proxies to ensure that all of your shares are voted. |
Q: |
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Who will serve as inspector of elections? |
A: |
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The inspector of elections is to be a representative of Computershare. |
Q: |
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What are the quorum and voting requirements for the 2011 Annual
Meeting? |
A: |
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The quorum requirement for holding the 2011 Annual Meeting and
transacting business is that holders of a majority of the outstanding
shares of our common stock entitled to vote must be present in person
or represented by proxy at the meeting. |
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We intend to count shares underlying proxies containing a for,
withhold, against or abstain vote, as well as any signed and
returned proxies without any voting instructions as present for
purposes of determining a quorum. |
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We will consider an abstention or a non-vote on a given matter to be a
forfeiture of the right to vote on that matter and a forfeiture of the
voting power present at the 2011 Annual Meeting underlying the
forfeited votes regarding that matter. Accordingly, if you abstain or
do not vote on a given matter, your shares will not be voted for or
against that matter and will not be considered as present and
entitled to vote on that matter. An abstention or a non-vote on any
matter will not affect your ability to vote on any other matter.
If you hold shares in Street Name through a broker, bank or other
nominee, your broker, bank or nominee may not be permitted by law,
rule or policy to exercise voting discretion with respect to certain
matters to be acted upon. If you do not give your broker, bank or
nominee specific instructions, your underlying shares may not be voted
on those matters and, if so, will not be considered as present and
entitled to vote with respect to those matters. In some cases, your
broker, bank or other nominee may not be permitted by law, rule or
policy to exercise voting discretion with respect to any matters to be
acted upon and, in the absence of specific instructions from you, may
not vote or submit a proxy card to anyone at all regarding these
matters. In such a
circumstance, your underlying shares will not be considered present at
the Annual Meeting in person or by proxy and will not be voted on any
matters to be acted upon therein.
The holders of a majority of the outstanding shares of our common stock, present in person or by
proxy, will constitute a quorum for the transaction of business at the 2011 Annual Meeting.
Election of Directors will be determined by a plurality of the votes of the shares present in
person or by proxy, and entitled to vote, on the election of Directors.
The ratification of our independent registered public accountant for 2011 is to be approved by the
affirmative vote of a majority of the shares having voting power
present in person or by proxy,
and entitled to vote, on the subject matter.
Q: |
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Who can attend the 2011 Annual Meeting? |
A: |
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All stockholders as of the Record Date can attend. If you wish to
vote your shares at the 2011 Annual Meeting and your shares are held
in Street Name by a broker, bank or other nominee, you must contact
your broker, bank or other nominee to obtain the proper documentation
and bring it with you to the 2011 Annual Meeting. |
Q: |
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What happens if additional matters are presented at the 2011 Annual
Meeting? |
A: |
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Other than the two items of business described in this proxy
statement, we are not aware of any other business to be acted upon at
the 2011 Annual Meeting.
If other business properly comes before the 2011 Annual Meeting, we will first conduct an advisory vote of the stockholders who have granted us a
proxy regarding the preference of these stockholders regarding the manner in which the below persons named as proxyholders exercise their voting
discretion, and then proceed to consideration of the other business which has properly come before the 2011 Annual Meeting.
If you grant a proxy, the persons named as
proxyholders Robert B. Grieve, Ph.D., our Chairman and Chief
Executive Officer, Jason A. Napolitano, our Executive Vice President,
Chief Financial Officer and Secretary and Michael A. Bent, our Vice
President, Principal Accounting Officer and Controller will have the
discretion to vote your shares on any additional matters presented for
a vote at the meeting. It is important to note that while the proxyholders may consider the advisory vote in such a circumstance, the proxyholders retain full discretion to
vote as they may determine regardless of any outcome of the advisory vote.
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Q: |
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What happens if one or more of the nominees for Director is unable to
stand for election? |
A: |
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If for any unforeseen reason any of our nominees is not available as a
candidate for
Director, the persons named as proxyholders, Dr. Grieve, Mr. Napolitano and Mr.
Bent, will vote your proxy for such other candidate or candidates who may be
nominated by the Board. |
Q: |
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Where can I find the voting results of the meeting? |
A: |
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We intend to announce preliminary voting results at
the 2011 Annual Meeting, and publish final voting
results in an 8-K filing with the SEC within 4
business days of the 2011 Annual Meeting. If final
voting results are not available within 4 business
days of the 2011 Annual Meeting, we intend to publish
preliminary voting results in an 8-K filing with the
SEC on the fourth business day following the 2011
Annual Meeting and then publish final voting results
in an 8-K filing with the SEC within 4 business days
of the final voting results becoming known. |
-3-
Q: |
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May I propose actions for consideration at next
years Annual Meeting or nominate individuals to
serve as Directors? |
A: |
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You may submit proposals, including Director
nominations, for consideration at future stockholder
meetings. All proposals or nominations should be
addressed to: Secretary, Heska Corporation, 3760
Rocky Mountain Avenue, Loveland, Colorado 80538. |
Stockholder Proposals: For a stockholder proposal to be considered for inclusion in our proxy
statement for the annual meeting next year, the written proposal must be received by our
Secretary at our principal executive offices under either (1) Rule 14a-8 under the Securities
Exchange Act of 1934, as amended (a Rule 14 Proposal) or (2) the bylaws of Heska (a Bylaws
Proposal). A Rule 14 Proposal must be received by our Secretary at our principal executive
offices no later than November 26, 2011. If the date of next years annual meeting is moved
more than 30 days before or after the anniversary date of this years annual meeting, the
deadline for inclusion of proposals in our proxy statement is instead a reasonable period of
time before we begin to print and mail our proxy materials. Such proposals also will need to
comply with Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the Exchange
Act), regarding the inclusion of stockholder proposals in company-sponsored proxy materials.
For a Bylaws Proposal, the stockholder must deliver a written notice of intent to propose such
action in accordance with our bylaws, which in general require that the notice be received by us
not less than 60 days nor more than 90 days prior to the first anniversary of the date on which
notice of the prior years annual meeting was mailed to stockholders. These proxy materials for
the 2011 Annual Meeting are to be mailed on March 29, 2011. This means that for the 2012 Annual
Meeting, that any such proposal must be received no earlier than December 30, 2011 and no
later than January 29, 2012.
Director Nominees: You may propose Director candidates for consideration by the Boards
Corporate Governance Committee. Any such recommendations should be directed to our Secretary at
our principal executive offices. In addition, you may nominate a Director for consideration by
Heskas stockholders if you give timely and adequate notice to our Secretary of your intention
to make such nomination in accordance with our bylaws, which require that the notice be received
by the Secretary within the time periods described above under Stockholder Proposals and with
the detail regarding your nomination as is required by our bylaws.
Copy of Bylaw Provisions: You may contact our Secretary at our principal executive offices
for a copy of the relevant bylaw provisions regarding the requirements for making stockholder
proposals and nominating Director candidates. A copy of our bylaws has also been filed with the
SEC with our Quarterly Report on Form 10-Q for the quarter ended March 31, 2010. This document
is accessible at the website of the SEC at www.sec.gov.
Q: |
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Who bears the costs of soliciting votes for the 2011 Annual Meeting? |
A: |
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Heska is making this solicitation and will pay the entire cost of
preparing, printing, assembling and mailing these proxy materials.
In addition to the mailing of these proxy materials, certain of our Directors and employees may
solicit proxies on our behalf in person, by telephone, electronic transmission or facsimile. No
additional compensation will be paid to these people for such solicitation. We may enlist the
assistance of brokerage firms, fiduciaries, custodians and other third party solicitation firms
in soliciting proxies. If we elect to engage any such assistance, our arrangements with the
solicitation firm(s) will be on customary terms and conditions, the anticipated cost of which is
not anticipated to be material to us. Upon request, we will also reimburse brokerage houses
and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for
forwarding proxy and solicitation materials to stockholders.
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-4-
BOARD STRUCTURE AND COMMITTEES
Our Board is divided into three classes serving staggered three-year terms. Our Board has
three standing Committees, each of which is chaired by an independent Director: (1) Audit (the
Audit Committee), (2) Compensation (the Compensation Committee) and (3) Corporate Governance
(the Corporate Governance Committee). The membership during 2010 and the function of each
Committee are described below. Our Board held six meetings during 2010. Our Board currently has
six Directors: Robert B. Grieve, Ph.D., Chairman, William A. Aylesworth, Peter Eio, G. Irwin
Gordon, Louise L. McCormick and John F. Sasen, Sr. All of our Directors in 2010 attended our last
annual meeting of stockholders and at least 75% of all Board and applicable Committee meetings.
Board Leadership Structure
Since May 2000, Dr. Grieve has served as both our Chairman and Chief Executive Officer and we
believe the Company has benefited from the efficiencies inherent in combining these roles during
this time period. In 2010, we amended our bylaws to allow our Board to formally choose a Lead
Director. The Lead Director is expected to chair sessions involving only the independent
Directors, among other responsibilities as the Board may provide. Mr. Aylesworth has served as our
Lead Director since our 2010 Annual Meeting on May 4, 2010. We believe our Lead Director function
serves to simplify communications between management and the independent Directors, enhance our
Boards operations, in particular in situations where it is appropriate for the independent
Directors to act without management involvement, and increase the credibility of the Companys
independent Director oversight function.
Board Risk Oversight
Our business, including risk oversight, is conducted with the advice, counsel and direction of
our Board. The formal channel for risk-related information to be communicated to our Board is
through our Chief Executive Officer. Our Chief Executive Officer periodically conveys the
Companys risks, including credit risks, liquidity risks and operational risks to the Board at
Board meetings and through other forms of communication, such as email, as appropriate. Our Board
may also discuss the Companys risks with other members of management as directed by our Chief
Executive Officer or as part of another Board function. For example, our Chief Financial Officer
and our Controller have both discussed credit risk with Directors during Audit Committee meetings
primarily focused on accounting determinations.
Board Independence
Our Board has determined that each of the Directors standing for re-election has no material
relationship with the Company (either directly or as a partner, stockholder or officer of an
organization that has a relationship with the Company) and meets the requirements of independence
as set forth in the rules and regulations promulgated by the SEC and the Nasdaq Stock Market
listing standards (the Nasdaq Listing Standards). Furthermore, the Board has determined that,
with the exception of Dr. Grieve, Heskas Chairman and Chief Executive Officer, all current members
of the Board meet the requirements of independence as set forth in the rules and regulations
promulgated by the SEC and the Nasdaq Listing Standards.
Audit Committee
Our Audit Committee has the following responsibilities:
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appoint and replace our independent auditors; |
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compensate and oversee the work of our independent auditors; |
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oversee and monitor the integrity of our annual and quarterly financial statements; |
-5-
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review and discuss with management and our independent auditors significant
financial reporting issues and critical accounting policies and practices; |
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oversee and monitor the qualifications, independence and performance of our
independent auditors; |
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oversee and monitor our internal accounting and financial controls; and |
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provide the results of examinations and recommendations derived therefrom to the
Board. |
During 2010, our Audit Committee met five times. Our Audit Committee consisted of Mr.
Aylesworth, as Chairman, Mr. Eio and Ms. McCormick prior to our 2010 Annual Meeting on May 4, 2010
and Mr. Eio, as Chairman, Mr. Aylesworth and Ms. McCormick beginning at our 2010 Annual Meeting.
Our Board has determined that each of the current members of our Audit Committee meets the
requirements of independence as set forth in Section 10A(m)(3) of the Securities Exchange Act of
1934, the rules and regulations promulgated by the SEC and the Nasdaq Listing Standards. Our Board
has also determined that William A. Aylesworth is an audit committee financial expert within the
meaning of the rules and regulations promulgated by the SEC and he has accounting and related
financial management expertise within the meaning of the Nasdaq Listing Standards.
Our Audit Committee has a written charter, which is available on our website at www.heska.com
(under Investors Corporate Governance). The Companys website address provided above is not
intended to function as a hyperlink, and the information on the Companys website is not and should
not be considered part of this proxy statement and is not incorporated by reference herein.
Compensation Committee
Our Compensation Committee has the following responsibilities:
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discharge the Boards responsibilities relating to compensation of our Executive
Officers, including our Chief Executive Officer; |
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oversee all compensation programs involving the use of our stock; and |
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produce an annual report on executive compensation for inclusion in our proxy
statement for our annual meeting of stockholders. |
During 2010, our Compensation Committee met five times. Our Compensation Committee consisted
of Mr. Eio, as Chairman, Mr. Gordon and Mr. Sasen prior to our 2010 Annual Meeting on May 4, 2010
and Mr. Gordon, as Chairman, Mr. Eio and Mr. Sasen beginning at our 2010 Annual Meeting.
Our Board has determined that each of the current members of our Compensation Committee meets
the requirements of independence as set forth in the rules and regulations promulgated by the SEC
and the Nasdaq Listing Standards.
Our Compensation Committee has a written charter, which is available on our website at
www.heska.com (under Investors Corporate Governance). The Companys website address provided
above is not intended to function as a hyperlink, and the information on the Companys website is
not and should not be considered part of this proxy statement and is not incorporated by reference
herein.
-6-
Corporate Governance Committee
Our Corporate Governance Committee has the following responsibilities:
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assist our Board by identifying qualified candidates for Director, and select the
Director nominees for each annual meeting of stockholders; |
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lead our Board in its annual review of our Boards performance; |
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recommend Director nominees to our Board for each Board Committee; and |
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develop and recommend to our Board the corporate governance guidelines applicable to
the Company. |
During 2010, our Corporate Governance Committee met four times. Our Corporate Governance
Committee consisted of Mr. Sasen, as Chairman, Mr. Gordon and Ms. McCormick prior to our 2010
Annual Meeting on May 4, 2010 and Ms. McCormick, as Chairwoman, Mr. Gordon and Mr. Sasen beginning
at our 2010 Annual Meeting.
Our Board has determined that each of the current members of our Corporate Governance
Committee meets the requirements of independence as set forth in the rules and regulations
promulgated by the SEC and the Nasdaq Listing Standards.
Our Corporate Governance Committee has a written charter, which is available on our website at
www.heska.com. In addition, our Corporate Governance Committee prepared, and our full Board has
approved, Corporate Governance Guidelines outlining the qualifications, responsibilities and other
issues related to our Boards governance role and functions. The document is also available on our
website at www.heska.com (under Investors Corporate Governance). The references to the
Companys website address provided above is not intended to function as a hyperlink, and the
information on the Companys website is not and should not be considered part of this proxy
statement and is not incorporated by reference herein.
Director Qualification and Nomination
All of our Directors have served on our Board for over a year and have gained Company and
industry specific knowledge as a result. The experience, qualifications, attributes or skills that
qualify our Directors to serve on our Board are discussed on a Director-by-Director basis in the
Election of Directors section of this document as well as in this Board Structure and
Committees section. None of our Directors is serving as a result of one specific qualification.
It is the breadth of their individual experiences and the manner in which they complement each
other as a group that make them individually and collectively attractive Directors.
Our Corporate Governance Committee does not have an established policy for minimum
qualifications of Director nominees or appointees. However, pursuant to our Corporate Governance
Committee Charter, we believe that it is in the best interests of the Corporation and its
stockholders to obtain highly qualified candidates for the Board. Our Corporate Governance
Committee seeks candidates with excellent decision-making ability, business experience, relevant
experience, personal integrity and reputation as candidates for nomination and appointment.
Our Corporate Governance Committee does not have an established policy for diversity of
Director nominees or appointees. However, we believe diversity is inherent in our approach of
seeking high quality individuals with complementary skills to create a group dynamic and decision
making process that is even stronger than would be obtained by the mere summation of its individual
contributors in isolation.
-7-
Our Corporate Governance Committee does not have a formalized process for identifying and
evaluating nominees or appointees for Director. Our Corporate Governance Committee determines
desired Board member skills and attributes and conducts searches for prospective Director
candidates whose skills and attributes reflect those desired. This analysis may start with a Board
evaluation, including determination of areas of strength and areas for improvement. Particular
skills and experience may be desired in areas of improvement. Our Corporate Governance Committee
may determine guidelines and parameters for a search for an individual with the desired skills and
experience. Our Corporate Governance Committee will evaluate candidates identified by its own
initiative as well as candidates referred to it by other members of the Board, by the Companys
management, or by external sources. Our Corporate Governance Committee has utilized a third-party
executive search firm in the past to identify candidates as well as other sources such as the
National Association of Corporate Directors Registry® database.
Our Corporate Governance Committee will also consider nominees recommended by stockholders
provided such recommendations are made in accordance with our bylaws and the procedures described
in this proxy statement under Questions and Answers About the Proxy Materials and the 2011 Annual
Meeting. Although to date no stockholder has presented any candidate for Board membership to us,
it is expected that recommendations from stockholders would generally be considered in the same
manner as recommendations by a Director or an Officer of the Company.
Stockholder Communication with our Board
Stockholders can contact our Board, any Committee thereof, or any Director in particular, by
writing to them, c/o Heska Corporation, 3760 Rocky Mountain Avenue, Loveland, Colorado 80538, Attn:
Secretary. We will forward any correspondence sent in the foregoing manner to the appropriate
addressee without review by management.
-8-
DIRECTOR COMPENSATION
The form and amount of compensation paid to the non-employee Directors is reviewed from time
to time by our Corporate Governance Committee. Any revisions to our Director Compensation policy have
been recommended by our Corporate Governance Committee and approved by our Board.
In 2010, our sole employee Director did not receive any separate compensation for his Board
activities. Non-employee Directors received the compensation described below.
On each date of our Annual Meeting, each continuing non-employee Director who was a Director
immediately prior to the Annual Meeting automatically receives options to purchase shares of our
common stock valued at $37,500, subject to a maximum grant of options to purchase 5,000 shares of
our common stock. These grants are to be immediately exercisable and to vest in full on the
earlier of (i) the one year anniversary of the date of grant and (ii) the date immediately
preceding the date of the Annual Meeting for the year following the year of grant for the award.
Any new non-employee Directors appointed or elected to our Board will be automatically granted
options to purchase shares of our common stock valued at $37,500, subject to a maximum grant of
options to purchase 5,000 shares of our common stock. Any such grant is to be immediately
exercisable and to vest over a period of four years in equal annual installments. The value for
options granted pursuant to this paragraph is to be determined pursuant to our option valuation
policy at the time of issuance.
Each non-employee Director is also entitled to an annual cash retainer in the amount of
$30,000. Beginning July 1, 2011, the annual cash retainer is to increase to $31,500. The
Company pays the annual retainer in advance, in quarterly installments on the first business day of
each calendar quarter, subject to the non-employee Directors continued service to the Company
as a non-employee Director on such date.
Our Lead Director is entitled to an annual cash retainer in the amount of $10,000 (the Lead
Retainer). The Company is to pay the Lead Retainer in advance, in quarterly installments on the
first business day of each calendar quarter, subject to the non-employee Directors continued
service as Lead Director on such date. The first Lead Retainer payment was made on July 1, 2010
following our Lead Director assuming the role in May 2010. In addition, each non-employee Director who serves as
Chairperson of a Board Committee is entitled to an annual cash retainer in the amount of $2,500
(the Chair Retainer). The Chair Retainer is to increase to $4,500 beginning
July 1, 2011. The Company pays the Chair Retainer in advance, in quarterly installments
on the first business day of each calendar quarter, subject to the non-employee Directors
continued service as Chairperson of such Committee on such date. Each non-employee Director who
serves on a Board Committee is entitled to an annual cash retainer of $2,500 (the Committee
Retainer). The Committee Retainer is to increase to $3,000 beginning July 1, 2011. A
non-employee Director who is also the Chairperson of a Committee shall be entitled
to the Committee Retainer in addition to the Chair Retainer. The Company pays the Committee
Retainer in advance, in quarterly installments on the first business day of each calendar quarter,
subject to the non-employee Directors continued service as a member of such Committee on such
date. Non-employee Directors will also continue to be reimbursed for customary and usual travel
expenses.
-9-
The following tables provide information for fiscal 2010 compensation for non-employee
Directors who served during fiscal 2010.
Director Compensation (1)
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Change in |
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Fees |
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Pension |
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Earned |
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Value and |
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Or |
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Non-Equity |
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Nonqualified |
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Paid in |
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Stock |
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Option |
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Incentive Plan |
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Deferred |
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All Other |
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Cash |
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Awards |
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Awards |
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Compensation |
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Compensation |
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Compensation |
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Total |
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Name |
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($) |
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($) |
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($) (2) (3) |
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($) |
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Earnings |
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($) |
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($) |
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William A. Aylesworth |
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38,750 |
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16,065 |
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54,815 |
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Peter Eio |
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37,500 |
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16,065 |
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53,565 |
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G. Irwin Gordon |
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36,250 |
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16,065 |
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52,315 |
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Louise L. McCormick |
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36,250 |
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25,434 |
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61,684 |
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John F. Sasen, Sr. |
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36,250 |
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16,065 |
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52,315 |
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2010 Equity Grants to Directors
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Number of |
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Grant Date |
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Securities |
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Exercise |
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Fair Value of |
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Underlying |
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Price |
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Option Award |
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Name |
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Grant Date |
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Options |
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($) |
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($) (3) |
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William A. Aylesworth |
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5/4/10 |
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5,000 |
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8.60 |
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19,100 |
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Peter Eio |
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5/4/10 |
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5,000 |
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8.60 |
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19,100 |
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G. Irwin Gordon |
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5/4/10 |
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5,000 |
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8.60 |
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19,100 |
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Louise L. McCormick |
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5/4/10 |
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5,000 |
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8.60 |
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19,100 |
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John F. Sasen, Sr. |
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5/4/10 |
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5,000 |
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8.60 |
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19,100 |
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(1) |
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Reimbursed travel expenses incurred in connection with Board and Board Committee meeting
attendance are not included. |
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(2) |
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Represents cost recognized in 2010 for financial reporting purposes. |
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(3) |
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Grant date fair value of option awards are based on valuation techniques required by current
accounting guidance which we use in preparing our financial statements (Option Accounting
Rules). Like any estimate prepared in good faith, the underlying assumptions we use under
Option Accounting Rules may vary from our actual future results. The option valuations used
for accounting and/or financial reporting purposes do not necessarily represent the value any
individual recipient would place on an option award. In addition, Option Accounting Rules
prohibit some valuation techniques which may be useful in certain circumstances. A more
detailed description of our option valuation techniques and assumptions can be found in our
Annual Report on Form 10-K for the year ended December 31, 2010 in our Note 6 of the Notes to
Consolidated Financial Statements. |
-10-
PROPOSALS TO BE VOTED ON
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Our Board is divided into three classes serving staggered three-year terms. Our amended and
restated certificate of incorporation requires us to ensure each class is as nearly equal in number
as possible. Directors for each class are elected at the Annual Meeting of Stockholders held in
the year in which the term for their class expires.
The terms for two continuing Directors will expire at this 2011 Annual Meeting. Directors
elected at the 2011 Annual Meeting will hold office for a three-year term expiring at our 2014
Annual Meeting (or until their respective successors are elected and qualified, or until their
earlier death, resignation or removal).
Nominees for Three-Year Terms That Will Expire in 2014 (Class II)
Louise L. McCormick, age 68, has served us as a Director since January 2008. Ms. McCormick
was with Aetna, Inc. for over 25 years in various finance, strategic planning and legal positions,
including as Corporate Secretary and Securities Counsel, and Vice President, Strategy, Finance and
Administration. Ms. McCormick retired from Aetna, Inc. in 2000. Since June 2005, Ms. McCormick
has served as an independent Director of Foresters, a Toronto-based insurance company, and is a
member of its Ethics, Governance and Compensation Committee. She also serves as a Director of a
wholly-owned Foresters subsidiary and several non-profit and educational institutions. Ms.
McCormick holds a J.D. from the University of Connecticut Law School and a M.S.T. and B.A. from the
University of Florida.
John F. Sasen, Sr., age 68, has served us as a Director since October 1998. Since April 1998,
he has served as Executive Vice President and Chief Marketing Officer of PSS/World Medical, Inc.
(PSS), a medical supply distributor, and has held various other senior executive positions at
PSS, including President and Chief Operating Officer, since 1993. From July 1993 to April 1998,
Mr. Sasen served as a Director of PSS. Prior to joining PSS, Mr. Sasen was Vice President Sales,
Marketing and Distributor Relations for a division of Becton Dickinson & Company, a manufacturer of
health care products. Mr. Sasen was with Becton Dickinson for over 20 years. Mr. Sasen has
developed and implemented executive and sales compensation programs in his career. In addition,
Mr. Sasen serves as the Chairman of the Health Industry Distribution Association Education
Foundation, Executive Director of the Health Industry Distributor Association, Director of Nova
Vision, Inc. and Director of the Boys Home Foundation.
If any nominee is unable or declines to serve as Director at the time of the 2011 Annual
Meeting, the proxyholders will vote for such other candidate or candidates who may be nominated by
the Board.
Vote Required; Recommendation of our Board of Directors
The affirmative vote of a plurality of the votes of the shares present in person or by proxy
at the Annual Meeting and entitled to vote on the election of Directors will be used to elect the
nominees. Our Board of Directors unanimously recommends a vote FOR the election of its nominees,
Ms. McCormick and Mr. Sasen, as our Directors.
Heskas Directors listed below whose terms are not expiring this year will continue in office
for the remainder of their terms in accordance with our bylaws. Information regarding the business
experience and education of each of such Director is provided below.
-11-
Directors Whose Terms Will Expire in 2013 (Class I)
Peter Eio, age 69, has served us as a Director since October 2002. Mr. Eio served as the
President of LEGO Systems, Inc., from 1989 to 2001 and was Managing Director of LEGO UK from 1982
to 1989. He also held various positions with International Playtex, Inc., in Scandinavia and the UK
from 1971 to 1981. His previous experience includes marketing, sales and general management
positions. Mr. Eio is also a Director of two private companies and serves on the Board of several
charitable and educational organizations. Mr. Eio holds an honorary degree from Rensselaer
Polytechnic Institute (Doctor of laws-honoris causa, 1996), attended the IMD Business School in
Lausanne, Switzerland and received the Prince Henrik Medal of Honor for services to Danish industry
in 1992.
G. Irwin Gordon, age 60, has served us as a Director since May 2001. Mr. Gordon is the
founder and Managing Partner of Trion LLC, a consulting firm. From July 2000 until August 2001,
Mr. Gordon served as President and Chief Executive Officer of Gruma Corporation, a food
manufacturer. He also served as President and Chief Operating Officer of Suiza Foods Corporation,
a food manufacturer and distributor, from February 1998 to October 1999. Mr. Gordon joined Suiza
in August 1997 as its Executive Vice President and Chief Marketing Officer. Prior to joining
Suiza, Mr. Gordon held various positions with subsidiaries of PepsiCo, Inc. (PepsiCo), including
most recently as Senior Vice President Global Branding for Frito-Lay, Inc., from May 1996 to August
1997. From 1983 to 1992, Mr. Gordon served as President and General Manager of several
international Frito-Lay companies before becoming Senior Vice President Marketing, Sales and
Technology for Frito-Lay International from 1992 to 1996. Prior to joining PepsiCo in 1992, Mr.
Gordon served in various capacities at the Kellogg Company. Mr. Gordon holds an Education degree
from the University of British Columbia and a Management Certificate from Stanford University.
Directors Whose Terms Will Expire in 2012 (Class III)
William A. Aylesworth, age 68, has served us as a Director since June 2000. Mr. Aylesworth
served as Senior Vice President from 1988 to 2003 and Chief Financial Officer of Texas Instruments
Incorporated from 1984 to 2003. He served as Treasurer of Texas Instruments from 1982 to 2002.
From 1972 to 1982, he served in treasury services, and from 1967 to 1972, he held numerous
assignments in control, manufacturing and marketing for Texas Instruments. He holds an M.S. in
industrial administration from Carnegie Mellon University and a B.E.E. in electrical engineering
from Cornell University.
Robert B. Grieve, Ph.D., age 59, one of our founders, currently serves as Chief Executive
Officer and Chairman of the Board of Directors. Dr. Grieve was named Chief Executive Officer
effective January 1999, Vice Chairman effective March 1992 and Chairman of the Board effective May
2000. Dr. Grieve also served as Chief Scientific Officer from December 1994 to January 1999 and
Vice President, Research and Development, from March 1992 to December 1994. He has been a member
of our Board of Directors since 1990. He holds a Ph.D. degree from the University of Florida and
M.S. and B.S. degrees from the University of Wyoming.
-12-
PROPOSAL NO. 2
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANT
Our Board of Directors is submitting the appointment of Ehrhardt Keefe Steiner & Hottman PC
(EKS&H) as the Companys independent registered public accountant for stockholder ratification at
the 2011 Annual Meeting. EKS&H has served as our independent registered public accountant since
March 31, 2006. A representative of EKS&H is expected to be present at the Annual Meeting and will
have an opportunity to make a statement if the representative desires to do so. Such
representative also is to be available to answer questions at the meeting.
Vote Required; Recommendation of our Board of Directors
Stockholder ratification of the appointment of EKS&H as our independent registered public
accountant is not required by our bylaws or otherwise. Our Board, however, is submitting the
appointment of EKS&H to the stockholders for ratification as a matter of good corporate governance
practice. The affirmative vote of a majority of the shares present in
person or by proxy, and entitled to vote, on the subject matter is required to ratify the appointment of EKS&H as our independent registered public
accountant for fiscal 2011. If the stockholders fail to ratify the appointment, our Audit
Committee will reconsider whether or not to retain that firm. Even if the appointment is ratified,
our Audit Committee in its discretion may direct the appointment of a different independent
registered public accountant at any time during the year if it determines that such a change would
be in the best interest of the Company and its stockholders.
Our Board unanimously recommends a vote FOR the ratification of EKS&H as our independent
registered public accountant for fiscal 2011.
-13-
POTENTIAL
VOTE NO. 3
ADVISORY
VOTE WITH RESPECT TO DISCRETIONARY VOTING BY PROXYHOLDERS
Other than the two items of business previously described in Proposal No. 1 and Proposal No. 2,
we are not aware of any other business to be acted upon at the 2011 Annual Meeting. Since our 1997
initial public offering, only items that were described in the proxy materials made available to
stockholders prior to the corresponding Annual Meeting or Special Meeting were resolved by a vote
of our stockholders. While we have taken steps to ensure this remains the case, it is possible
other business may properly come before our 2011 Annual Meeting, via the efforts of a stockholder
or otherwise. In such a circumstance, our proxyholders Robert B. Grieve, our Chairman and Chief
Executive Officer, Jason A. Napolitano, our Executive Vice President, Chief Financial Officer and
Secretary and Michael A. Bent, our Vice President, Principal Accounting Officer and Controller
will have the discretion to vote shares for which we have been granted a proxy as they may
determine. As a matter of good corporate governance practice, we are asking stockholders to submit
an advisory vote for the proxyholders consideration in such a circumstance. We will interpret a
for vote as an indication that the stockholders
preference is that the
proxyholders exercise their voting discretion in a manner
they determine to be in the best interest of the Companys
stockholders, a no vote as an indication that the
stockholders preference is that the proxyholders
exercise their voting discretion
against any proposal brought to a vote as
outlined above, including a proposal the proxyholders otherwise believe to be in the best interests of the
Companys stockholders, and an abstain or non-vote as an indication that the stockholder does not wish to
express preference regarding such a circumstance. It is important to note this is an advisory vote
only, and that while the proxyholders may consider the advisory vote in such a circumstance, the
proxyholders retain full discretion to vote as they may determine
regardless of any outcome of the advisory vote.
Recommendation of our Board of Directors
Our Board unanimously recommends a vote FOR
your preference being that the proxyholders exercise their voting
discretion in a manner they determine to be in the best interest of
the Companys stockholders, if other business properly comes
before the 2011 Annual Meeting and you are voting by proxy.
-14-
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables show the number of shares of our common stock beneficially owned as of
March 15, 2011 by each of the Named Executive Officers listed in the Summary Compensation Table,
each of our Directors, all of our Directors and Named Executive Officers as a group, and each
person who is known by us to be the beneficial owner of more than 5% of our common stock. We had
5,234,100 shares outstanding on March 15, 2011.
Ownership Table
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Shares |
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Percentage |
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Beneficially |
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Beneficially |
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Name and Address of Beneficial Owner |
|
Owned (1) |
|
|
Owned (1) |
|
State of Wisconsin Investment Board (2)
P.O. Box 7842
Madison, WI 53707 |
|
|
887,375 |
|
|
|
17.0 |
% |
CMC Master
Fund, L.P. (3)
525 University Avenue, Suite 1400
Palo Alto, CA 94301 |
|
|
779,046 |
|
|
|
14.9 |
% |
Zesiger
Capital Group LLC (4)
320 Park Avenue, 30th Floor
New York, NY 10022 |
|
|
544,370 |
|
|
|
10.4 |
% |
William A. Aylesworth (5) |
|
|
66,978 |
|
|
|
1.3 |
% |
Peter Eio (5) |
|
|
44,994 |
|
|
|
* |
|
G. Irwin Gordon (5) |
|
|
50,161 |
|
|
|
* |
|
Robert B. Grieve, Ph.D. (5)(6) |
|
|
303,011 |
|
|
|
5.5 |
% |
Louise L. McCormick (5) |
|
|
26,727 |
|
|
|
* |
|
John F. Sasen, Sr. (5) |
|
|
52,014 |
|
|
|
* |
|
Michael A. Bent (5) |
|
|
51,231 |
|
|
|
* |
|
Michael J. McGinley, Ph.D. (5) |
|
|
70,716 |
|
|
|
1.3 |
% |
Jason A. Napolitano (5)(7) |
|
|
211,546 |
|
|
|
3.9 |
% |
Nancy
Wisnewski, Ph.D. (5) |
|
|
54,848 |
|
|
|
1.0 |
% |
All Directors and Executive Officers as a group
(10 persons) (5)(6)(7) |
|
|
932,226 |
|
|
|
15.6 |
% |
|
|
|
* |
|
Amount represents less than 1% of our common stock. |
|
(1) |
|
To our knowledge and unless otherwise noted, the persons named in the table have sole voting
and investment power with respect to all shares of common stock shown as beneficially owned by
them, subject to community property laws where applicable and the information contained in the
footnotes to this table. Beneficial ownership is determined in accordance with the rules of
the SEC and includes voting and investment power with respect to securities. Shares of common
stock issuable upon exercise of stock options exercisable within 60 days of March 15, 2011,
including fractional shares discussed in footnote 5 below, are deemed outstanding and beneficially owned
by the person holding such option for purposes of computing such persons percentage ownership,
but are not deemed outstanding for the purpose of computing the percentage ownership of any other
person. |
|
(2) |
|
Based upon information derived from a Schedule 13G filed on February 9, 2011 for holdings on December 31, 2010 by State of Wisconsin Investment Board. According to the Schedule
13G, State of Wisconsin Investment Board has sole power to vote and dispose of 887,375 shares. |
|
(3) |
|
Based upon information derived from a Schedule 13D filed September 4, 2010 for holdings by
CMC Master Fund, L.P. According to the Schedule 13D, CMC Master Fund, L.P. has sole power to
vote and dispose of 779,046 shares. This share number has been
adjusted to reflect the Companys 1-for-10 reverse stock split
effective December 30, 2010. |
|
(4) |
|
Based upon information derived from a Schedule 13G filed February 10, 2011 for holdings on
December 31, 2010 by Zesiger Capital Group LLC. According to the Schedule 13G, Zesiger
Capital Group LLC has the sole power to vote 517,970 shares and the sole power to dispose of
544,370 shares. |
|
(5) |
|
Includes Shares Owned, Exercisable Options from Exercisable Option Table and
Aggregate Fractional Shares Underlying Options from footnote 2 of Exercisable Option Table
below for each Director and Named Executive Officer, as well as for all Directors and
Executive Officers as a group. A fractional share has been counted as a whole share for
purposes of this table. |
|
(6) |
|
Includes 6,154 shares of common stock held for the benefit of Dr. Grieves children and 1,564
shares of common stock held by Dr. Grieves wife, all of with respect to which Dr. Grieve
disclaims beneficial ownership. Dr. Grieves business address is c/o the Company at 3760
Rocky Mountain Avenue, Loveland, Colorado 80538. |
|
(7) |
|
Includes 602 shares of common stock held by Mr. Napolitanos wife, with respect to which Mr.
Napolitano disclaims beneficial ownership. |
-15-
Exercisable Option Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable |
|
|
Average |
|
|
Exercisable |
|
|
Net Shares |
|
|
|
|
|
|
|
|
|
|
|
Exercisable |
|
|
Option |
|
|
Remaining |
|
|
In-the |
|
|
from |
|
|
|
Shares |
|
|
Exercisable |
|
|
Option Price |
|
|
Average |
|
|
Contractual |
|
|
money |
|
|
Exercisable |
|
Name |
|
Owned (1) |
|
|
Options (2) |
|
|
Range (3) |
|
|
Price (4) |
|
|
Life (5) |
|
|
Options (6) |
|
|
Options (7) |
|
William A. Aylesworth |
|
|
20,000 |
|
|
|
46,973 |
|
|
$ |
3.80-26.87 |
|
|
$ |
12.09 |
|
|
|
4.67 |
|
|
|
5,320 |
|
|
|
1,388 |
|
Peter Eio |
|
|
2,000 |
|
|
|
42,985 |
|
|
$ |
4.60-27.30 |
|
|
$ |
12.05 |
|
|
|
5.24 |
|
|
|
9,000 |
|
|
|
2,215 |
|
G. Irwin Gordon |
|
|
3,700 |
|
|
|
46,456 |
|
|
$ |
3.80-26.87 |
|
|
$ |
12.00 |
|
|
|
4.69 |
|
|
|
5,320 |
|
|
|
1,388 |
|
Robert B. Grieve, Ph.D. (8) |
|
|
59,751 |
|
|
|
243,255 |
|
|
$ |
3.40-23.00 |
|
|
$ |
12.97 |
|
|
|
4.97 |
|
|
|
37,560 |
|
|
|
11,773 |
|
Louise L. McCormick |
|
|
7,200 |
|
|
|
19,526 |
|
|
$ |
4.60-18.30 |
|
|
$ |
11.67 |
|
|
|
7.83 |
|
|
|
5,000 |
|
|
|
1,302 |
|
John F. Sasen, Sr. |
|
|
3,992 |
|
|
|
48,013 |
|
|
$ |
4.60-27.30 |
|
|
$ |
12.07 |
|
|
|
4.77 |
|
|
|
5,000 |
|
|
|
1,302 |
|
Michael A. Bent |
|
|
4,556 |
|
|
|
46,672 |
|
|
$ |
3.40-23.00 |
|
|
$ |
11.54 |
|
|
|
4.91 |
|
|
|
8,875 |
|
|
|
2,998 |
|
Michael J. McGinley, Ph.D. |
|
|
4,258 |
|
|
|
66,454 |
|
|
$ |
3.40-23.00 |
|
|
$ |
10.95 |
|
|
|
6.14 |
|
|
|
19,375 |
|
|
|
5,966 |
|
Jason A. Napolitano (9) |
|
|
61,944 |
|
|
|
149,597 |
|
|
$ |
4.40-23.00 |
|
|
$ |
10.71 |
|
|
|
4.45 |
|
|
|
14,500 |
|
|
|
4,057 |
|
Nancy Wisnewski, Ph.D. |
|
|
5,474 |
|
|
|
49,372 |
|
|
$ |
3.40-18.30 |
|
|
$ |
11.87 |
|
|
|
5.53 |
|
|
|
7,791 |
|
|
|
2,400 |
|
All Directors and
Executive Officers as a
group (10 persons) (8)(9) |
|
|
172,875 |
|
|
|
759,303 |
|
|
$ |
3.40-27.30 |
|
|
$ |
11.93 |
|
|
|
5.04 |
|
|
|
117,741 |
|
|
|
34,789 |
|
|
|
|
(1) |
|
To our knowledge and unless otherwise noted, the persons named in the table have sole voting
and investment power with respect to all shares of common stock shown in the column, subject
to community property laws where applicable and the information contained in the footnotes of
this table. |
|
(2) |
|
Represents shares of common stock issuable upon exercise of stock options exercisable within
60 days of March 15, 2011, excluding exercisable options to purchase fractional shares resulting from
Heskas December 2010 1-for-10 reverse stock split as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate |
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
Fractional |
|
|
|
|
|
|
Exercisable |
|
|
Average |
|
|
|
Shares |
|
|
Exercisable |
|
|
Option |
|
|
Remaining |
|
|
|
Underlying |
|
|
Option Price |
|
|
Average |
|
|
Contractual |
|
Name |
|
Options |
|
|
Range |
|
|
Price |
|
|
Life |
|
William A. Aylesworth |
|
|
4.7 |
|
|
$ |
7.80-26.87 |
|
|
$ |
15.80 |
|
|
|
3.36 |
|
Peter Eio |
|
|
8.6 |
|
|
$ |
7.80-27.30 |
|
|
$ |
17.10 |
|
|
|
3.38 |
|
G. Irwin Gordon |
|
|
4.5 |
|
|
$ |
7.80-26.87 |
|
|
$ |
15.31 |
|
|
|
3.39 |
|
Robert B. Grieve, Ph.D. |
|
|
4.6 |
|
|
$ |
3.40-17.17 |
|
|
$ |
10.24 |
|
|
|
2.94 |
|
Louise L. McCormick |
|
|
0.8 |
|
|
$ |
18.30-18.30 |
|
|
$ |
18.30 |
|
|
|
6.80 |
|
John F. Sasen, Sr. |
|
|
8.4 |
|
|
$ |
7.30-27.30 |
|
|
$ |
16.52 |
|
|
|
4.06 |
|
Michael A. Bent |
|
|
3.0 |
|
|
$ |
10.60-23.00 |
|
|
$ |
15.37 |
|
|
|
2.82 |
|
Michael J. McGinley, Ph.D. |
|
|
4.0 |
|
|
$ |
8.80-23.00 |
|
|
$ |
15.37 |
|
|
|
4.32 |
|
Jason A. Napolitano |
|
|
4.4 |
|
|
$ |
7.00-17.17 |
|
|
$ |
9.91 |
|
|
|
2.29 |
|
Nancy Wisnewski, Ph.D. |
|
|
2.0 |
|
|
$ |
12.50-17.17 |
|
|
$ |
14.84 |
|
|
|
5.21 |
|
All Directors and
Executive Officers as a
group (10 persons) |
|
|
45.0 |
|
|
$ |
3.40-27.30 |
|
|
$ |
14.92 |
|
|
|
3.54 |
|
|
|
|
|
|
Heska intends to issue whole shares only from option exercises. |
|
(3) |
|
Represents the lowest and highest strike price for stock options exercisable within 60 days
of March 15, 2011, excluding options to purchase fractional shares resulting from Heskas
December 2010 reverse stock split. |
|
(4) |
|
Represents the average strike price for stock options exercisable within 60 days of March 15,
2011, excluding options to purchase fractional shares resulting from Heskas December 2010
reverse stock split. |
|
(5) |
|
Represents the weighted average remaining contractual life, in years, for stock options
exercisable within 60 days of March 15, 2011, excluding options to purchase fractional shares
resulting from Heskas December 2010 reverse stock split. |
|
(6) |
|
Represents shares of common stock issuable upon exercise of stock options exercisable within
60 days of March 15, 2011, excluding options to purchase fractional shares resulting from
Heskas December 2010 reverse stock split, that have a strike price less than $6.22, the last
closing market price per share of Heska stock available on March 15, 2011. |
|
(7) |
|
Represents net shares under the Treasury Stock method assuming a market price per share of
$6.22, the last closing market price per share of Heska stock available on March 15, 2011, for
shares of common stock issuable upon exercise of stock options exercisable within 60 days of
March 15, 2011 that have a strike price less than $6.22, excluding options to purchase
fractional shares resulting from Heskas December 2010 reverse stock split. |
|
(8) |
|
Includes 6,154 shares of common stock held for the benefit of Dr. Grieves children and 1,564
shares of common stock held by Dr. Grieves wife, all of with respect to which Dr. Grieve
disclaims beneficial ownership. |
|
(9) |
|
Includes 602 shares of common stock held by Mr. Napolitanos wife, with respect to which Mr.
Napolitano disclaims beneficial ownership. |
-16-
Outstanding Option Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding |
|
|
Average |
|
|
|
|
|
|
Net Shares |
|
|
|
|
|
|
|
|
|
|
|
Outstanding |
|
|
Option |
|
|
Remaining |
|
|
Outstanding |
|
|
from |
|
|
|
Shares |
|
|
Outstanding |
|
|
Option Price |
|
|
Average |
|
|
Contractual |
|
|
In-the-money |
|
|
Outstanding |
|
Name |
|
Owned (1) |
|
|
Options (2) |
|
|
Range (3) |
|
|
Price (4) |
|
|
Life (5) |
|
|
Options (6) |
|
|
Options (7) |
|
William A. Aylesworth |
|
|
20,000 |
|
|
|
46,973 |
|
|
$ |
3.80-26.87 |
|
|
$ |
12.09 |
|
|
|
4.67 |
|
|
|
5,320 |
|
|
|
1,388 |
|
Peter Eio |
|
|
2,000 |
|
|
|
42,985 |
|
|
$ |
4.60-27.30 |
|
|
$ |
12.05 |
|
|
|
5.24 |
|
|
|
9,000 |
|
|
|
2,215 |
|
G. Irwin Gordon |
|
|
3,700 |
|
|
|
46,456 |
|
|
$ |
3.80-26.87 |
|
|
$ |
12.00 |
|
|
|
4.69 |
|
|
|
5,320 |
|
|
|
1,388 |
|
Robert B. Grieve, Ph.D. (8) |
|
|
59,751 |
|
|
|
298,442 |
|
|
$ |
3.40-23.00 |
|
|
$ |
11.67 |
|
|
|
4.97 |
|
|
|
87,747 |
|
|
|
24,154 |
|
Louise L. McCormick |
|
|
7,200 |
|
|
|
19,526 |
|
|
$ |
4.60-18.30 |
|
|
$ |
11.67 |
|
|
|
7.83 |
|
|
|
5,000 |
|
|
|
1,302 |
|
John F. Sasen, Sr. |
|
|
3,992 |
|
|
|
48,013 |
|
|
$ |
4.60-27.30 |
|
|
$ |
12.07 |
|
|
|
4.77 |
|
|
|
5,000 |
|
|
|
1,302 |
|
Michael A. Bent |
|
|
4,556 |
|
|
|
59,497 |
|
|
$ |
3.40-23.00 |
|
|
$ |
10.32 |
|
|
|
4.91 |
|
|
|
20,000 |
|
|
|
5,698 |
|
Michael J. McGinley, Ph.D. |
|
|
4,258 |
|
|
|
96,896 |
|
|
$ |
3.40-23.00 |
|
|
$ |
9.31 |
|
|
|
6.14 |
|
|
|
46,500 |
|
|
|
12,648 |
|
Jason A. Napolitano (9) |
|
|
61,944 |
|
|
|
177,431 |
|
|
$ |
4.40-23.00 |
|
|
$ |
9.90 |
|
|
|
4.45 |
|
|
|
40,500 |
|
|
|
10,410 |
|
Nancy
Wisnewski, Ph.D. |
|
|
5,474 |
|
|
|
63,248 |
|
|
$ |
3.40-18.30 |
|
|
$ |
10.66 |
|
|
|
5.53 |
|
|
|
19,500 |
|
|
|
5,214 |
|
All Directors and
Executive Officers as a
group (10 persons) (8)(9) |
|
|
172,875 |
|
|
|
899,467 |
|
|
$ |
3.40-27.30 |
|
|
$ |
10.98 |
|
|
|
5.06 |
|
|
|
243,887 |
|
|
|
65,719 |
|
|
|
|
(1) |
|
To our knowledge and unless otherwise noted, the persons named in the table have sole voting
and investment power with respect to all shares of common stock shown in the column, subject
to community property laws where applicable and the information contained in the footnotes of
this table. |
|
(2) |
|
Represents shares of common stock issuable upon exercise of stock options outstanding on
March 15, 2011, excluding outstanding options to purchase fractional shares resulting from Heskas
December 2010 1-for-10 reverse stock split, as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
Aggregate |
|
|
|
|
|
|
Outstanding |
|
|
Average |
|
|
|
Fractional |
|
|
Outstanding |
|
|
Option |
|
|
Remaining |
|
|
|
Shares Underlying |
|
|
Option Price |
|
|
Average |
|
|
Contractual |
|
Name |
|
Options |
|
|
Range |
|
|
Price |
|
|
Life |
|
William A. Aylesworth |
|
|
4.7 |
|
|
$ |
7.80-26.87 |
|
|
$ |
15.80 |
|
|
|
3.36 |
|
Peter Eio |
|
|
8.6 |
|
|
$ |
7.80-27.30 |
|
|
$ |
17.10 |
|
|
|
3.38 |
|
G. Irwin Gordon |
|
|
4.5 |
|
|
$ |
7.80-26.87 |
|
|
$ |
15.31 |
|
|
|
3.39 |
|
Robert B. Grieve, Ph.D. |
|
|
7.6 |
|
|
$ |
3.40-18.30 |
|
|
$ |
9.78 |
|
|
|
4.82 |
|
Louise L. McCormick |
|
|
0.8 |
|
|
$ |
18.30-18.30 |
|
|
$ |
18.30 |
|
|
|
6.80 |
|
John F. Sasen, Sr. |
|
|
8.4 |
|
|
$ |
7.30-27.30 |
|
|
$ |
16.52 |
|
|
|
4.06 |
|
Michael A. Bent |
|
|
3.0 |
|
|
$ |
10.60-23.00 |
|
|
$ |
15.37 |
|
|
|
2.82 |
|
Michael J. McGinley, Ph.D. |
|
|
4.0 |
|
|
$ |
8.80-23.00 |
|
|
$ |
15.37 |
|
|
|
4.32 |
|
Jason A. Napolitano |
|
|
4.4 |
|
|
$ |
7.00-17.17 |
|
|
$ |
9.91 |
|
|
|
2.29 |
|
Nancy Wisnewski, Ph.D. |
|
|
2.0 |
|
|
$ |
12.50-17.17 |
|
|
$ |
14.84 |
|
|
|
5.21 |
|
All Directors and
Executive Officers as a
group (10 persons) |
|
|
48.0 |
|
|
$ |
3.40-27.30 |
|
|
$ |
14.56 |
|
|
|
3.80 |
|
|
|
|
|
|
Heska intends to issue whole shares only from option exercises. |
|
(3) |
|
Represents the lowest and highest strike price for stock options outstanding on March 15,
2011, excluding options to purchase fractional shares resulting from Heskas December 2010
reverse stock split. |
|
(4) |
|
Represents the average strike price for stock options outstanding on March 15, 2011,
excluding options to purchase fractional shares resulting from Heskas December 2010 reverse
stock split. |
|
(5) |
|
Represents the weighted average remaining contractual life, in years, for stock options
outstanding on March 15, 2011, excluding options to purchase fractional shares resulting from
Heskas December 2010 reverse stock split. |
|
(6) |
|
Represents shares of common stock issuable upon exercise of stock options outstanding on
March 15, 2011, excluding options to purchase fractional shares resulting from Heskas
December 2010 reverse stock split, that have a strike price less than $6.22, the last closing
market price per share of Heska stock available on March 15, 2011. |
|
(7) |
|
Represents net shares under the Treasury Stock method assuming a market price per share of
$6.22, the last closing market price per share of Heska stock available on March 15, 2011, for
shares of common stock issuable upon exercise of stock options outstanding on March 15, 2011
that have a strike price less than $6.22, excluding options to purchase fractional shares
resulting from Heskas December 2010 reverse stock split. |
|
(8) |
|
Includes 6,154 shares of common stock held for the benefit of Dr. Grieves children and 1,564
shares of common stock held by Dr. Grieves wife, all of with respect to which Dr. Grieve
disclaims beneficial ownership. |
|
(9) |
|
Includes 602 shares of common stock held by Mr. Napolitanos wife, with respect to which Mr.
Napolitano disclaims beneficial ownership. |
-17-
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Compliance with Section 16(a) of the Securities Exchange Act of 1934 requires our Directors,
Executive Officers and persons who own more than 10% of a registered class of our equity securities
to file reports of holdings and transactions of Heska common stock and other equity securities with
the SEC. Directors, Executive Officers and 10% or greater stockholders are required by SEC
regulations to furnish us with copies of all of the Section 16(a) reports they file. Based solely
upon a review of the copies of the forms furnished to us and the representations made by the
reporting persons to us, we believe that during 2010 our Directors, Executive Officers and 10% or
greater stockholders complied with all filing requirements under Section 16(a) of the Exchange Act.
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information about our common stock that may be issued upon
exercise of options and rights under all of our equity compensation plans as of December 31, 2010,
including the 1997 Stock Incentive Plan, the 1997 Employee Stock Purchase Plan and the 2003 Equity
Incentive Plan. Our stockholders have approved all of these plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) |
|
|
|
|
|
|
|
|
|
|
|
Number of Securities |
|
|
|
|
|
|
|
|
|
|
|
Remaining Available for |
|
|
|
(a) |
|
|
|
|
|
|
Future Issuance Under Equity |
|
|
|
Number of Securities to be |
|
|
(b) |
|
|
Compensation Plans |
|
|
|
Issued Upon Exercise of |
|
|
Weighted-Average Exercise |
|
|
(excluding securities |
|
|
|
Outstanding Options and |
|
|
Price of Outstanding |
|
|
reflected |
|
Plan Category |
|
Rights (1) |
|
|
Options and Rights (1) |
|
|
in column (a)) |
|
Equity Compensation
Plans Approved by
Stockholders |
|
|
1,341,876 |
|
|
$ |
11.00 |
|
|
|
255,117 |
|
Equity Compensation
Plans Not Approved
by Stockholders |
|
None |
|
|
None |
|
|
None |
|
Total |
|
|
1,341,876 |
|
|
$ |
11.00 |
|
|
|
255,117 |
|
|
|
|
(1) |
|
Excluding outstanding options to purchase an aggregate of
133.5 fractional shares with a weighted average strike price of
$12.98 resulting
from our December 2010 reverse stock split. |
SIGNIFICANT RELATIONSHIPS AND TRANSACTIONS WITH DIRECTORS, OFFICERS OR PRINCIPAL STOCKHOLDERS
Related Party Transactions
Pursuant to our code of ethics for senior executives and financial officers, a copy of which
is available on Heskas website at www.heska.com, and our Corporate Governance Committee charter,
our Audit Committee or our Corporate Governance Committee must review and approve any transaction
that the Company proposes to enter into that would be required to be disclosed under Item 404(a) of
Regulation S-K. Item 404(a) of Regulation S-K requires the Company to disclose in its proxy
statement any transaction involving more than $120,000 in which the Company is a participant and in
which any related person has or will have a direct or indirect material interest. A related person
for purposes of this analysis is any executive officer, director, nominee for director, or holder
of 5% or more of the Companys common stock, or an immediate family member of any of those persons.
Since January 1, 2010, the Company has not been a participant in any transaction with a
related person other than the indemnification agreements described below.
Indemnification agreements with officers and directors
Our amended and restated certificate of incorporation and our bylaws provide that we will
indemnify each of our Directors and Executive Officers to the fullest extent permitted by the
Delaware General Corporation Law. Further, we have entered into indemnification agreements with
each of our Directors and
Executive Officers.
-18-
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Executive Compensation Objective and Philosophy
The Compensation Committee of Heska Corporations Board of Directors (the Committee)
administers our executive compensation program and establishes the salaries of our Executive
Officers. The ultimate objective of our executive compensation program is to attract, retain and
reward executives who will enhance the value and profitability of Heska Corporation (Heska or the
Company) and increase stockholder value. The Committee strives to provide competitive
compensation opportunities with the ultimate amount of compensation received tied significantly to
short-term and long-term Company performance. Inherent in our approach is the philosophy that
compensation can align behavior and actions with stockholder interests, attract and retain stronger
executives and thus create value for stockholders over time. The Committees goal in executive
compensation is to design and administer programs that best serve these ends.
What is Heskas Executive Compensation Program Designed to Reward?
The Committee develops our executive compensation programs to reward Executive Officers for
their contribution to Heskas financial performance and to recognize individual initiative,
leadership, achievement and other contributions. An effective compensation program will reward
executives for working well collectively as well as for strong individual performance.
What are the Elements of Heskas Executive Compensation?
Our compensation program is designed to reward four interlocking aspects of executive
performance:
|
|
|
Annual financial performance: rewarded primarily through the awards paid under the
Management Incentive Plan (MIP); |
|
|
|
Individual contribution: rewarded primarily through the setting of base salary and
annual MIP targets; |
|
|
|
Long-term gains in stockholder value: rewarded primarily through the equity
incentive program; and |
|
|
|
Continued service to the Company; rewarded primarily through base salary, equity
award requirements and vesting and competitive benefits levels; |
Why Does Heska Choose to Pay Each Element of Executive Compensation?
Base salary. Base salaries are set on an annual or other periodic basis and designed to reflect
competitive market salaries for each position. They are also used in determining the basis for
bonus targets in our Management Incentive Plan (MIP) discussed below.
Performance-based incentive compensation. This form of compensation is based on the achievement of
predetermined financial, project, research or other designated objectives. This form of
compensation is paid to reward near-term performance (i.e., no longer than the coming year) and
encourage Executive Officers to optimize immediate opportunities. In recent years, an MIP has been
offered to Executive Officers and other managers to provide a performance-based incentive.
Long-term equity compensation. This form of compensation is designed to encourage the achievement
of superior financial results over an extended period of time and align the interests of
stockholders and Executive Officers. It is intended to ensure that Executive Officers make thoughtful decisions
about the Companys future and long-term prospects.
Other benefits, compensation or arrangements. Other than broad-based programs open to all
employees, such as participation in our 401(k) program and employee stock purchase plan, this
category tends to be used rarely. All of our Executive Officers have employment agreements. An
Executive Officers extraordinary performance or participation in an unanticipated endeavor may
occasionally trigger such an award in this category.
-19-
Perspective on Executive Compensation at Heska
Heska was founded in 1988 and completed its initial public offering in 1997 but only achieved
its first profitable year in 2005. We believe the Companys historical liquidity concerns and
efforts to achieve profitability have influenced the Committees decisions regarding executive
compensation, as outlined below.
Profitability has been an important goal for Heska to ensure the sustainability of the
business. Profitability has also been critical, not only for its own sake, but also for employee
morale, attracting talented individuals to join the Company and commercial perceptions. At the
request of Heskas Executive Officers to help achieve profitability, the Committee froze base
salaries for all Executive Officers in 2005 and 2006. Similarly, the 2005 MIP called for a
performance in excess of the Companys internal budget before any bonus payments were made and no
payouts were ultimately made under the 2004 MIP or the 2005 MIP (with the foregoing base salary and
MIP information defined as Historical Cash Compensation). Based on the challenges the Company
faced in 2008 and at the request of management, the Committee took a similar approach to cash
compensation in 2009. With limited circumstance-based exceptions outlined below, in November 2008
the Committee froze base salaries for all of our Executive Officers and also adopted a 2009 MIP
that called for a performance in excess of the Companys internal budget before any bonus payments
are made.
Stock options have historically had the advantage of allowing the Company to address both
liquidity and profitability concerns simultaneously. First, stock options allowed the Committee to
compensate employees without a corresponding cash outlay, and, in fact, provided the Company with
cash upon exercise in most instances. Secondly, stock options granted have not historically been
required to be expensed for financial reporting purposes. Accordingly, the Committee tended to
emphasize stock options as a tool for executive compensation. Since 2006, the Company has been
required to recognize a cost for certain stock options in its financial statements, as detailed in
the Summary Compensation Table below; the estimated fair value of stock options granted, rather
than the corresponding intrinsic value, is amortized ratably over the vesting periods of the
related options. After considering the significant impact that the use of fair values, rather than
intrinsic values, would have on our future results of operations, as well as factors including
Historical Cash Compensation to Executive Officers and similar cash compensation issues to other
employees, the Company accelerated stock option vesting in December 2004 and March 2005 as well as
issuing all options with immediate vesting on and between March 30, 2005 and December 31, 2005. In
addition, in the fourth quarter of 2006, after significant discussion and considering factors
including the Historical Cash Compensation to Executive Officers, the fact that the 2006 MIP was
expected to be capped, the Companys expected financial results in the fourth quarter of 2006,
the significant impact that the use of fair values for options granted would have on our future
results of operations and the total number of options previously granted in 2006, the Committee
decided to grant fully-vested stock options in an amount approximately 60% of the size of the prior
years grant. These actions explain the relatively low 2008 Option Awards expense in the
Historical Compensation Table below.
The Committee is also sensitive to, and tries to optimize, tax implications. It is our policy
generally to qualify compensation paid to Executive Officers for deductibility under Section 162(m)
of the Internal Revenue Code. The Committee has structured the Management Incentive Plan Master
Document, the 2008 MIP, the 2009 MIP, the 2010 MIP and the 2011 MIP to qualify as awards under such
plans as performance-based compensation and to maximize the tax deductibility of such awards.
However, the Committee reserves the discretion to pay compensation to its Executive Officers that
may not be tax deductible.
-20-
Determination of Compensation Elements
In reviewing the compensation of our Executive Officers, the Committee reviews the nature and
scope of each Executive Officers responsibilities as well as his or her effectiveness in that role
as well as in supporting the Companys long-term goals. Heskas Board of Directors (the Board)
formally evaluates the Chief Executive Officer (our CEO). Our CEO communicates his view of the
performance of other Executive Officers to the Committee and makes recommendations regarding
salary, incentive-based performance compensation and long-term compensation grants for the
Committees consideration. The Company has a performance appraisal system it uses to evaluate its
employees, including Executive Officers, which Dr. Grieve considers, potentially along with other
information, such as third-party interviews of Company employees who interact with the Companys
Executive Officers. In the past several years, our Vice President of Human Resources and/or our
Controller has compiled and/or presented data discussed below for the Committees consideration of
the different compensation elements. The Chief Financial Officer (our CFO) has also met with the
Committee to communicate on issues of interest to the Committee, including the accounting
implications of various compensation alternatives and information on our financial plans,
expectations and historical results for the Committees consideration.
The Committee has considered it appropriate, and in the best interests of Heskas
stockholders, to endeavor to set our overall Executive Officer compensation near the mid-point of
the range of companies in the comparison group it reviewed (Comparable Companies). The Committee
also reviews the relative mix of compensation paid by Comparable Companies for use as a guideline.
It is the sense of the Committee that performance-based incentive compensation has been relatively
lower and long-term equity compensation relatively higher than for Comparable Companies. We
anticipate the Committee will continue to exercise its discretion regarding the relative mix of
compensation, although the relative mix may become more similar to that of Comparable Companies
over time. The Committee views the difference between the compensation of our CEO and our other
Named Executive Officers as largely a reflection of competitive market practices and the CEOs
responsibility for all Company operations and not any compensation philosophy specific to Heska.
In compensation matters, the Committee reviews relevant information and makes a case-by-case
determination relying on its collective judgment and experience.
At our regularly scheduled Board meeting in November 2007, the Committee met with an outside
compensation consultant (the Consultant) and decided to engage the Consultant for an assessment
of executive compensation strategy and programs and to provide data on competitive compensation
practices. Accordingly, the process to determine executive compensation was delayed. The
Committee asked the Consultant to conduct a compensation survey of companies similar to Heska and
to review the current total and equity compensation of the Companys Executive Officers. The
Consultant reported to the Committee, only, and was prohibited from doing any work for management
unless it was specifically requested by the Chairman of the Committee. The Committee viewed the
Consultant as an advisor only, and the Committee retained the discretion to implement or not
implement the Consultants suggestions. In subsequent dialogue with the Consultant, alternative
long-term compensation approaches were discussed, including the use of restricted stock and
performance-based vesting. The Committee held a series of meetings in December 2007 to review
information and suggestions from the Consultant and to debate, and ultimately approve, the form and
scale of long-term equity compensation for 2008. Base salaries and 2008 performance-based
incentive compensation were agreed upon at a Committee meeting during our regularly scheduled Board
meeting in February 2008. The Committee engaged the Consultant in the second half of 2010 and
received a report on executive compensation from the Consultant in December 2010. The Committee
viewed the Consultant as an advisor only, and the Committee retained the discretion to implement or
not implement the Consultants suggestions.
-21-
The Committee considers compensation data from companies in medical, biotechnology and general
industry groups that have similar revenues, veterinary focus and/or are in a similar stage of
development to Heska. In 2008, the Committee reviewed compensation data for the following
companies as part of its review of Executive Compensation: Abaxis, Array Biopharma, Auxilium
Pharmaceuticals, Cardiac Science, Cyberonics, Hi Tech Pharmaceuticals, IDEXX Laboratories, Immucor,
Meridian Bioscience, MGI Pharma, Noven Pharmaceuticals, Quidel, Santarus, Savient Pharmaceuticals
and Zoll Medical. In 2009, the Committee reviewed compensation data for the following companies as part of its review of
Executive Compensation: Abaxis, Akron, Array Biopharma, Hi Tech Pharmaceuticals, ImmunoGen, Inspire
Pharmaceuticals, ISTA Pharmaceuticals, Jazz Pharmaceuticals, Lannett, Lexicon Pharmaceuticals,
Noven Pharmaceuticals, Pain Therapeutics, POZEN, Quidel, Santarus, and XOMA.
In 2010 and early 2011,
the Committee reviewed compensation data for the following companies as part of its review of
Executive Compensation: Abaxis, Akron, Array Biopharma, Hi Tech Pharmaceuticals, ISTA
Pharmaceuticals, Lannett, Natural Alternatives, POZEN, Progenics Pharmaceuticals, Quidel, Santarus,
and XOMA. The Committee also
reviewed summary compensation data based on company size for each year.
Base Salary. The Committee reviews each Executive Officers base salary annually. When
reviewing base salaries, the Committee considers compensation data from companies in medical,
biotechnology and general industry groups that have similar revenues, veterinary focus and/or are
in a similar stage of development to Heska. Consideration is also given to prior performance,
relevant experience, level of responsibility and skills, and abilities of each Executive Officer.
The Committee believes that salary levels for our Executive Officers are set at a level that, at
the time such salary determinations were made, were reasonable and necessary given the Companys
financial resources and stage of development. The Committee reviews relevant information and makes
a case-by-case determination relying on its collective judgment and experience.
In February 2008, after reviewing and considering relevant data, including input from Dr.
Grieve, the Committee agreed to the following base salaries, effective March 2008. Dr. McGinleys
salary increase was due in part, to his anticipated promotion and increased responsibilities upon
another Executive Officer leaving the Company. Dr. McGinley was promoted to Executive Vice
President, Global Operations and General Manager, Heska Des Moines in April 2008.
|
|
|
|
|
|
|
|
|
Name |
|
Annual Salary |
|
|
Percent Increase |
|
Robert B.
Grieve, Ph.D. |
|
$ |
420,000 |
|
|
|
5.0 |
% |
Jason A. Napolitano |
|
$ |
243,000 |
|
|
|
4.5 |
% |
Michael J. McGinley, Ph.D. |
|
$ |
195,000 |
|
|
|
17.0 |
% |
Nancy Wisnewski, Ph.D. |
|
$ |
180,000 |
|
|
|
4.3 |
% |
Michael A. Bent |
|
$ |
172,000 |
|
|
|
3.0 |
% |
In November 2008, at the request of management based on the challenges the Company faced in
2008 and expected to face in the near term, the Committee froze base
salaries for all current Executive
Officers, with the exception of Dr. McGinley. In November 2008, our Board of Directors appointed
Dr. McGinley the Companys President and Chief Operating Officer at a salary of $230,000, effective
January 1, 2009.
In November 2009, the Committee reviewed market data on base compensation and executive
compensation practices, noted managements performance in 2009 as well as the aforementioned salary
freezes, and decided upon the following base salaries for the Named Executive Officers.
|
|
|
|
|
|
|
|
|
Name |
|
Annual Salary |
|
|
Percent Increase |
|
Robert B. Grieve, Ph.D. |
|
$ |
440,000 |
|
|
|
4.8 |
% |
Jason A. Napolitano |
|
$ |
260,000 |
|
|
|
7.0 |
% |
Michael J. McGinley, Ph.D. |
|
$ |
245,000 |
|
|
|
6.5 |
% |
Nancy Wisnewski, Ph.D. |
|
$ |
195,000 |
|
|
|
8.3 |
% |
Michael A. Bent |
|
$ |
180,000 |
|
|
|
4.7 |
% |
In February 2011, the Committee reviewed market data on base compensation and executive
compensation practices, noted managements performance in 2010, and decided upon the following base
salaries for the Named Executive Officers. The Committee also discussed potential
performance-based increases later in 2011 for Dr. McGinley, Mr. Napolitano and Mr. Bent.
-22-
|
|
|
|
|
|
|
|
|
Name |
|
Annual Salary |
|
|
Percent Increase |
|
Robert B. Grieve, Ph.D. |
|
$ |
462,000 |
|
|
|
5.0 |
% |
Jason A. Napolitano |
|
$ |
263,400 |
|
|
|
1.3 |
% |
Michael J. McGinley, Ph.D. |
|
$ |
265,000 |
|
|
|
8.2 |
% |
Nancy Wisnewski, Ph.D. |
|
$ |
212,500 |
|
|
|
9.0 |
% |
Michael A. Bent |
|
$ |
200,000 |
|
|
|
11.1 |
% |
Performance-Based Incentive Compensation. The Company first adopted an MIP in 1999 to provide
incentives to our Executive Officers, other managers and key employees to meet and exceed certain
predetermined annual goals. Target annual incentives and specific performance criteria are
established each year by the Committee, with the actual payout based on the extent to which the
specified performance criteria are met. We believe this approach provides a strong incentive for
our management to achieve the stated annual goals. An example of the incentive can be seen when
comparing the cash levels of the 2009 MIP Payouts to zero 2010 MIP Payouts in the Non-Equity
Incentive Plan Compensation column of the Historical Compensation Table below. In late 2005,
the Committee adopted the Management Incentive Plan Master Document (the Master Document). A
goal of the Master Document is self-funding status for the MIP in any given year. A given years
MIP can be implemented by the Committee agreeing on four parameters: 1) the percent of salary that
is an individuals targeted bonus compensation, 2) the relative weighting of companywide and
individual performance, 3) the key parameter(s) the MIP Payouts are to be based upon and 4) the
Payout Structure by which the MIP is funded. Typically there has been a cap on the MIP of
approximately 150% of target payout to all employees, although this is not required in any given
year. Each individual has a targeted MIP Payout and this is intended as a guideline. Our CEO
will generally make recommendations to the Committee regarding MIP Payouts to other MIP Plan
participants; all awards under the MIP Plan are at the discretion of the Committee. Any MIP
Payouts are to be made in the first quarter of the following year. All Executive Officers are
eligible for the 2011 MIP. We do not believe our compensation policy
for our Executive Officers,
our sales force or our other employees are reasonably likely to have a material adverse effect on
our Company. We generally pay our sales force commissions based on
sales volume and other targets, which we believe is
typical in our industry.
In considering the 2008 MIP, the Committee considered the Companys 2007 performance and 2008
outlook in setting the payout structure. At the Committee meeting in the first quarter of 2008,
the Committee adopted the 2008 MIP with the following parameters:
|
|
|
Parameter |
|
Result |
% Salary Target
|
|
Chief Executive Officer 50%
All other eligible Executive Officers 35% |
Relative Weighting
|
|
75% Company Performance / 25% Individual Performance |
Key Parameter
|
|
Pre-MIP Operating Income |
Payout Structure
|
|
Funding starts at $5.862 million of Pre-MIP Operating Income, as defined
32.22% Share of every additional $1 in Pre-MIP Operating Income
MIP Capped at $1.732 million (150% of targeted payout) |
As an example, if Heska had approximately $8.013 million in Pre-MIP Operating Income there
would be approximately $693 thousand available for the MIP for the Committee to distribute among
plan participants. This represents a plan funded at 60% of target. Dr. Grieves 2008 salary was
$416,666 and his targeted payout was $208,333 (50% of $416,666). In a 60% MIP-funded plan, his
funded targeted payout would be $125,000 (60% of $208,333). The Committee could then adjust his
pay upward for strong individual performance or downward for poor individual performance using a
25% weighting as a guideline for the adjustment. This is a guideline only, however, as the
Committee retains discretion to adjust this number as circumstances dictate.
-23-
The Companys financial performance was well below expectations in 2008. The Company failed
to achieve pre-MIP Operating Income at a level to fund the MIP. Accordingly, no MIP Payouts were
made under the 2008 MIP.
In considering the 2009 MIP, the Committee considered the challenges facing the Company and
the importance of observing the MIPs self-funding goal, particularly in a period with restrictive
credit conditions. Accordingly, the Committee approved an MIP with aggressive payout thresholds
which were in excess of the Companys internal budget levels before any MIP Payouts were to be
made. In November 2008, the Committee adopted the 2009 MIP with the following parameters:
|
|
|
Parameter |
|
Result |
% Salary Target
|
|
Chief Executive Officer
50%
All other eligible Executive Officers 35% |
Relative Weighting
|
|
75% Company Performance / 25% Individual Performance |
Key Parameter
|
|
Pre-MIP Net Income, as defined in
the Third Amended and Restated Credit and Security Agreement by
and between Heska Corporation, Diamond Animal Health, Inc. and
Wells Fargo Bank, National Association dated December 30, 2005. |
Payout Structure
|
|
Funding starts at $2 million
of Pre-MIP Net Income, as defined
30.0% Share of every additional $1 in Pre-MIP Net Income
MIP Capped at $1.855 million (150% of targeted payout) |
At a Committee meeting in February 2009, the Committee approved MIP plan participants MIP
Payouts recommendations and decided Dr. Grieves MIP Payout would be equal to his individual funded
target (roughly 85% of target). Each of the Named Executive Officers eligible for the MIP received
an MIP Payout in line with his individual funded target, with the exception of Mr. Bent who
received a higher percentage due to his particularly strong individual performance. The MIP
Payouts to MIP-eligible Named Executive Officers are listed as Non-Equity Incentive Plan
Compensation in the Summary Compensation Table below.
In considering the 2010 MIP, the Committee considered the Companys 2009 performance as well
as anticipated challenges in 2010, in particular the loss of access to consumables and supplies for
the handheld line of instruments the Company sold in 2009. The Committee approved an MIP with a
higher anticipated threshold payout level than in 2009 but with a higher payout percentage upon
reaching the threshold. In November 2009, the Committee adopted the 2010 MIP with the following
parameters:
|
|
|
Parameter |
|
Result |
% Salary Target
|
|
Chief Executive Officer
50%
All other eligible Executive Officers 35% |
Relative Weighting
|
|
75% Company Performance / 25% Individual Performance |
Key Parameter
|
|
Pre-MIP Operating Income |
Payout Structure
|
|
Funding starts at
$3.257 million of Pre-MIP Operating Income
53.0% Share of every additional $1 in Pre-MIP Operating Income
MIP Capped at $1.5 million (150% of targeted payout) |
The Companys financial performance was well below expectations in 2010. The Company failed
to achieve pre-MIP Operating Income at a level to fund the MIP. Accordingly, no MIP Payouts were
made under the 2010 MIP.
-24-
In considering the 2011 MIP, the Committee
considered the Boards desire that the Company
achieve growth. The Committee decided to design half of the MIP based on a share of
operating income above a given level, as in the past. The second half of the MIP was to be based
on the achievement of certain milestones Company management had identified as important to achieve
future growth. After considering a Board presentation in February 2011 regarding potential
strategic areas for the Company to grow, Committee members worked with Executive Officers to choose
five such milestones for inclusion in the 2011 MIP. In March 2011, the Committee adopted the 2011
MIP with the following parameters:
|
|
|
Parameter |
|
Result |
% Salary Target
|
|
Chief Executive Officer
50%
All other eligible Executive Officers 35% |
Relative Weighting
|
|
50% Company Financial Performance
/ 50% Company Achievement of
Strategic Growth Initiatives (SGI) |
Key Parameters
|
|
Pre-MIP Operating Income and
Strategic Growth Milestone Achievement |
Payout Structure
|
|
Funding starts at
$1.5 million of Pre-MIP Operating Income
18.8% Share of every additional $1 in Pre-MIP Operating Income
$105K payout for achievement of each of 5 SGI milestones if at
least $1.5 million of Pre-MIP Operating Income
MIP Capped at $1.3125 million (150% of targeted payout for
Pre- MIP
Operating Income and 100% achievement of SGI Milestones) |
In the table named Grants of Plan-Based Awards below, we list potential payouts under the
2011 MIP to Named Executive Officers, under Estimated Future Payouts Under Non-Equity Incentive
Plan Awards. All Threshold MIP Payouts are listed at $0 as the MIP Plan will not fund if
Pre-MIP Operating Income is at (or below) the threshold level of $1.500 million. All Target MIP
Payouts are as defined above. The Maximum MIP Payouts are 25% greater than the Target MIP
Payouts to reflect that the 2011 MIP Plan is capped at 125% of its targeted funding level. It is
possible the Committee may decide to pay a Named Executive Officer greater than this amount,
although this did not occur in 2006 when the 2006 MIP Plan reached its capped funding level.
Long-term Equity Compensation. Historically, we have used stock options to provide long-term
equity compensation to our Executive Officers. The Committee is responsible for determining the
number and terms of options, or other forms of long-term equity compensation, to be granted to
Executive Officers, taking into account such factors as individual and Company performance,
policies regarding cash compensation and practices of Comparable Companies. Options granted to
Executive Officers have exercise prices equal to fair market value (closing price) at the time of
grant and expire within ten years from the time of grant. Any vesting ceases and the vested
portion of options must be exercised within a certain period should an Executive Officer leave
Heskas service (subject to any rights to partial acceleration of vesting upon termination without
cause under employment agreements). Accordingly, option grants will provide a return to an
Executive Officer only if said Executive Officer continues to work for the benefit of the Company
and only if Heskas market price per share appreciates over the option term. We believe that these
provisions help both to retain qualified employees and to motivate them to achieve long-term
increases in stock value, providing continuing benefits to the Company and its stockholders beyond
those in the year of grant. The Committee had discussions regarding the use of restricted stock
and performance-based vesting in December 2007, but decided not to pursue these alternatives. This
was due to potential tax implications for employees in using restricted stock and the likely
increase in complexity and administrative costs, as well as potential redundant incentives to the
MIP in using performance-based vesting. While it appears stock options will remain the core
component of long-term equity compensation in the near future, it is possible the Committee will
choose to use restricted stock, restricted stock units, some other form of long-term equity
compensation or some combination of the foregoing with or without stock options in the future.
-25-
In December 2007, after receiving input from the Consultant, reviewing relevant data,
including data requested to follow-up on certain questions, and engaging in significant discussion
and debate, the Committee approved a grant of stock options to certain Officers of the Company.
Due to this process, including hiring and considering the input of the Consultant, the option grant
occurred on December 31, 2007 later in the year than in
2006. In contrast to the then recent stock
option grants, this stock option grant was subject to monthly vesting over a four year period as a
result of the concern of some of our Board members that fully-vested options may not provide as
great a retention incentive as desired. We anticipate granting stock options with 4-year monthly
vesting will continue to be our standard practice in the future. The Committee granted Dr. Grieve
a significantly larger stock option grant than in the prior year, reflective of the Committees
view of the market and the Committees evaluation of Dr. Grieves performance. The amortization
resulting from this option grant is a large factor in the difference between Option Awards for
Dr. Grieve in the Historical Compensation Table and the Summary Compensation Table. This
reflects the size of the grant as well as the Companys stock price at the time, which was
significantly higher than at the time of stock option grants in 2008 and 2009 and thus leads to a
higher valuation under Option Accounting Rules. The Committee considered Dr. Grieves input in
addition to market data in determining stock option grants to the other Named Executive Officers,
all of which increased or were at the same level as the prior year.
In November 2008, the Committee considered the fact that 2009 salaries had been frozen for
most Executive Officers, that no 2008 MIP Payouts were to be made and that the Companys 2009 MIP
required a performance in excess of the Companys internal budget before any MIP Payouts were to be
made. Accordingly, the Committee desired to provide Executive Officers with a greater proportion
of long-term compensation than in the recent past. In November 2008, the Committee granted all of
our Named Executive Officers a greater number of shares underlying options than in 2007, with the
exception of Dr. Grieve, who received the same number of shares underlying options. Dr. McGinley
received the largest year-over-year increase in recognition of his pending promotion to President
and Chief Operating Officer and increased responsibilities.
In November 2009, the Committee considered individual performance, salary and projected 2009
MIP Payouts, as well as overall corporate performance and awarded option grants listed in Grants
of Plan-Based Awards below.
In December 2010, after receiving input from the Consultant and reviewing relevant data, the
Committee approved a grant of stock options to certain Officers of the Company. The Committee
considered individual performance as well as overall corporate performance and awarded option
grants listed in Grants of Plan-Based Awards below. Shares underlying option grants were
slightly below or at the same level as in 2009 when adjusted to
reflect our December 2010 1-for-10 reverse stock split.
Other Benefits, Compensation or Arrangements
All Other Compensation in the Summary Compensation Table below represent matching funds
received by each of our Named Executive Officers under our 401(k) plan, which is open to all
employees, as well as life insurance and short-term and long-term disability premiums. We have
historically provided a 25% match of 401(k) contribution limits (up to a certain maximum). In
2009, we suspended this match which is a reason for the decline in All Other Compensation from
2008 to 2009 in the Summary Compensation Table below for most Named Executive Officers. The
match was restored on January 1, 2010.
All
of our current Named Executive Officers had employment contracts in 2008, 2009 and 2010. They
entitle Named Executive Officers to payments based on salary, continuing medical benefits for a
given period and immediate vesting of unvested options in certain circumstances. Payments based on
salary are typically paid monthly. The Committee believes these are common, in line with the
experience of the Committee for executives at other companies and are intended to provide Executive
Officers with additional resources to seek a comparable job, which is unlikely to be a rapid
process given the level of employment, in these certain circumstances, such as an acquisition. Dr.
Grieve is also entitled to payout based on bonus targets in certain circumstances, such as
termination without cause, as well. These employment contracts are intended to provide the Named
Executive Officers with protections appropriate for, and in line with, those received by comparable
executives at companies similar to Heska. Periodically, we review these agreements versus market
benchmarks. Such a review was conducted in late 2010 and early 2011.
In summary, as Heska Corporation continues to change, Heskas Executive Compensation continues
to adjust to that change. The Committee endeavors to find the proper level and balance of base
salary, performance-based incentive compensation, long-term equity incentive compensation and other
forms of compensation.
-26-
Historical and Summary Compensation Tables
The following table sets forth compensation for services rendered in all capacities to us
during 2008, 2009 and 2010 by Robert B. Grieve, our Chairman of the Board and Chief Executive
Officer, Jason A. Napolitano, our Chief Financial Officer, and our three other most highly
compensated Executive Officers for the fiscal year ended December 31, 2010 (the Named Executive
Officers). The following table represents compensation recognized for financial reporting
purposes for each of the Named Executive Officers. The Option Awards column lists the accounting
cost of options recognized for a given individual in a given year. In general, stock options are valued at the time of grant with the corresponding cost
amortized ratably over the corresponding option vesting period.
Historical Compensation Table
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Change in |
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Pension Value |
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and |
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Nonqualified |
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Non-Equity |
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Deferred |
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Option |
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Incentive Plan |
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Compensation |
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All Other |
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Salary |
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Stock |
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Awards |
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Compensation |
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Earnings |
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Compensation |
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Total |
|
Name and Principal Position |
|
Year |
|
|
($) (1) |
|
|
Bonus |
|
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Awards |
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($) (2) |
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($) (3) |
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($) |
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($) (4) |
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($) |
|
Robert B.
Grieve, Ph.D. |
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Chairman of
the Board and |
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2010 |
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440,000 |
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92,728 |
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8,905 |
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541,633 |
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Chief Executive Officer |
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2009 |
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420,000 |
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77,325 |
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180,182 |
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7,827 |
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685,334 |
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2008 |
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416,666 |
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61,696 |
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11,277 |
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489,639 |
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Jason A. Napolitano |
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Executive
Vice President, |
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2010 |
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260,000 |
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33,720 |
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6,923 |
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300,643 |
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Chief Financial Officer and Secretary |
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2009 |
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243,000 |
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28,118 |
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72,974 |
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3,178 |
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347,270 |
|
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2008 |
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241,263 |
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22,586 |
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5,346 |
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269,195 |
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Michael J.
McGinley, Ph.D. (5) |
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President and |
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2010 |
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245,000 |
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30,949 |
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6,422 |
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282,371 |
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Chief Operating Officer |
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2009 |
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230,000 |
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25,347 |
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69,071 |
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99,083 |
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423,501 |
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2008 |
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194,105 |
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17,582 |
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5,695 |
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217,652 |
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Nancy
Wisnewski, Ph.D. |
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Vice President, Product Development |
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2010 |
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195,000 |
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19,287 |
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5,115 |
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219,402 |
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and Technical Customer Service |
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2009 |
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180,000 |
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16,479 |
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|
59,900 |
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2,733 |
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|
259,111 |
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2008 |
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180,000 |
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15,155 |
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5,037 |
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200,192 |
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Michael A. Bent |
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|
Vice
President, Principal |
|
|
2010 |
|
|
|
180,000 |
|
|
|
|
|
|
|
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|
|
|
10,832 |
|
|
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|
|
|
|
|
5,961 |
|
|
|
196,793 |
|
Accounting
Officer and Controller |
|
|
2009 |
|
|
|
172,000 |
|
|
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|
|
|
|
|
|
|
|
8,431 |
|
|
|
57,200 |
|
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|
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|
|
|
3,896 |
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|
241,526 |
|
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|
2008 |
|
|
|
170,939 |
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|
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|
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6,257 |
|
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|
|
|
|
|
|
|
|
6,431 |
|
|
|
183,627 |
|
|
|
|
(1) |
|
Salary includes amounts, if any, deferred pursuant to 401(k) arrangements. |
|
(2) |
|
Represents cost recognized in each year for financial reporting purposes. Grant date fair
value of option awards are based on valuation techniques required by Option Accounting Rules.
Like any estimate prepared in good faith, the underlying assumptions we use under Option
Accounting Rules may vary from our actual future results. The option valuation used for
accounting and/or financial reporting purposes does not necessarily represent the value any
individual recipient would place on an option award. In addition, Option Accounting Rules
prohibits some valuation techniques which may be useful in certain circumstances. A more
detailed description of our option valuation techniques and assumptions can be found in our
Annual Report on Form 10-K for the year ended December 31, 2010 in our Note 6 of the Notes to
Consolidated Financial Statements. |
|
(3) |
|
Amounts earned pursuant to our Management Incentive Plans. Amounts indicated are for year in
which compensation was earned. |
|
(4) |
|
Includes life insurance premiums, short-term and long-term disability premiums and 401(k)
match. |
|
(5) |
|
Dr. McGinley was appointed President and Chief Operating Officer of the Company at an annual
salary of $230,000 effective as of January 1, 2009. Dr. McGinley received $95,585 related to
the cost of his relocation to Colorado in 2009. This amount is included in All Other
Compensation for 2009. |
-27-
The following table contains the same information as above with the exception of the column
entitled Option Awards. Option Awards in the following table represent the grant date option
value for all stock options granted in a given year rather than the value of stock options vesting
during that year.
Summary Compensation Table
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Change in |
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Pension Value |
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and |
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|
Nonqualified |
|
|
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|
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|
|
|
|
|
|
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|
|
|
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|
|
Non-Equity |
|
|
Deferred |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option |
|
|
Incentive Plan |
|
|
Compensation |
|
|
All Other |
|
|
|
|
|
|
|
|
|
|
Salary |
|
|
|
|
|
|
Stock |
|
|
Awards |
|
|
Compensation |
|
|
Earnings |
|
|
Compensation |
|
|
Total |
|
Name and Principal Position |
|
Year |
|
|
($) (1) |
|
|
Bonus |
|
|
Awards |
|
|
($) (2) |
|
|
($) (3) |
|
|
($) |
|
|
($) (4) |
|
|
($) |
|
Robert B.
Grieve, Ph.D.
Chairman of the Board and |
|
|
2010 |
|
|
|
440,000 |
|
|
|
|
|
|
|
|
|
|
|
53,460 |
|
|
|
|
|
|
|
|
|
|
|
8,905 |
|
|
|
502,365 |
|
Chief Executive Officer |
|
|
2009 |
|
|
|
420,000 |
|
|
|
|
|
|
|
|
|
|
|
48,412 |
|
|
|
180,182 |
|
|
|
|
|
|
|
7,827 |
|
|
|
656,421 |
|
|
|
|
2008 |
|
|
|
416,666 |
|
|
|
|
|
|
|
|
|
|
|
51,269 |
|
|
|
|
|
|
|
|
|
|
|
11,277 |
|
|
|
479,212 |
|
|
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|
|
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|
|
|
|
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|
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|
|
|
|
|
|
|
|
Jason A. Napolitano
Executive Vice President, |
|
|
2010 |
|
|
|
260,000 |
|
|
|
|
|
|
|
|
|
|
|
29,160 |
|
|
|
|
|
|
|
|
|
|
|
6,923 |
|
|
|
296,083 |
|
Chief Financial Officer and |
|
|
2009 |
|
|
|
243,000 |
|
|
|
|
|
|
|
|
|
|
|
26,068 |
|
|
|
72,974 |
|
|
|
|
|
|
|
3,178 |
|
|
|
345,220 |
|
Secretary |
|
|
2008 |
|
|
|
241,263 |
|
|
|
|
|
|
|
|
|
|
|
22,204 |
|
|
|
|
|
|
|
|
|
|
|
5,346 |
|
|
|
268,813 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J.
McGinley, Ph.D. (5)
President and |
|
|
2010 |
|
|
|
245,000 |
|
|
|
|
|
|
|
|
|
|
|
29,160 |
|
|
|
|
|
|
|
|
|
|
|
6,422 |
|
|
|
280,582 |
|
Chief Operating Officer |
|
|
2009 |
|
|
|
230,000 |
|
|
|
|
|
|
|
|
|
|
|
26,068 |
|
|
|
69,071 |
|
|
|
|
|
|
|
99,083 |
|
|
|
424,222 |
|
|
|
|
2008 |
|
|
|
194,105 |
|
|
|
|
|
|
|
|
|
|
|
18,040 |
|
|
|
|
|
|
|
|
|
|
|
5,695 |
|
|
|
217,840 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nancy
Wisnewski, Ph.D.
Vice President, Product |
|
|
2010 |
|
|
|
195,000 |
|
|
|
|
|
|
|
|
|
|
|
12,960 |
|
|
|
|
|
|
|
|
|
|
|
5,115 |
|
|
|
219,402 |
|
Development and Technical |
|
|
2009 |
|
|
|
180,000 |
|
|
|
|
|
|
|
|
|
|
|
13,485 |
|
|
|
59,900 |
|
|
|
|
|
|
|
2,733 |
|
|
|
259,111 |
|
Customer Service |
|
|
2008 |
|
|
|
180,000 |
|
|
|
|
|
|
|
|
|
|
|
8,540 |
|
|
|
|
|
|
|
|
|
|
|
5,037 |
|
|
|
200,192 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael A. Bent
Vice President, Principal |
|
|
2010 |
|
|
|
180,000 |
|
|
|
|
|
|
|
|
|
|
|
12,960 |
|
|
|
|
|
|
|
|
|
|
|
5,961 |
|
|
|
198,921 |
|
Accounting Officer and |
|
|
2009 |
|
|
|
172,000 |
|
|
|
|
|
|
|
|
|
|
|
11,172 |
|
|
|
57,200 |
|
|
|
|
|
|
|
3,896 |
|
|
|
244,268 |
|
Controller |
|
|
2008 |
|
|
|
170,939 |
|
|
|
|
|
|
|
|
|
|
|
8,540 |
|
|
|
|
|
|
|
|
|
|
|
6,431 |
|
|
|
185,910 |
|
|
|
|
(1) |
|
Salary includes amounts, if any, deferred pursuant to 401(k) arrangements. |
|
(2) |
|
Represents cost recognized in each year for financial reporting purposes, with the exception
of Stock Awards and Option Awards, which are listed at their grant date fair value. Grant
date fair value of option awards are based on valuation techniques required by Option
Accounting Rules. Like any estimate prepared in good faith, the underlying assumptions we use
under Option Accounting Rules may vary from our actual future results. The option valuation
used for accounting and/or financial reporting purposes does not necessarily represent the
value any individual recipient would place on an option award. In addition, Option Accounting
Rules prohibits some valuation techniques which may be useful in certain circumstances. A
more detailed description of our option valuation techniques and assumptions can be found in
our Annual Report on Form 10-K for the year ended December 31, 2010 in our Note 6 of the Notes
to Consolidated Financial Statements. |
|
(3) |
|
Amounts earned pursuant to our Management Incentive Plans. Amounts indicated are for year in which
compensation was earned. |
|
(4) |
|
Includes life insurance premiums, short-term and long-term disability premiums and 401(k)
match. |
|
(5) |
|
Dr. McGinley was appointed President and Chief Operating Officer of the Company at an annual
salary of $230,000 effective as of January 1, 2009. Dr. McGinley received $95,585 related to
the cost of his relocation to Colorado in 2009. This amount is included in All Other
Compensation for 2009. |
-28-
Grants of Plan-Based Awards in Last Fiscal Year
The following table shows all grants of options to acquire shares of our common stock granted
in the fiscal year ended December 31, 2010 to the Named Executive Officers.
Grants of Plan-Based Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other |
|
|
All Other |
|
|
|
|
|
|
Date |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
Option |
|
|
|
|
|
|
Fair |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
|
Awards: |
|
|
Exercise |
|
|
Value of |
|
|
|
|
|
Estimated Future Payouts |
|
|
Estimated Future Payouts |
|
|
Number |
|
|
Number of |
|
|
or Base |
|
|
Stock |
|
|
|
|
|
Under Non-Equity Incentive |
|
|
Under Equity Incentive Plan |
|
|
of Shares |
|
|
Securities |
|
|
Price of |
|
|
and |
|
|
|
|
|
Plan Awards |
|
|
Awards |
|
|
of Stock |
|
|
Underlying |
|
|
Option |
|
|
Option |
|
|
|
Grant |
|
Threshold |
|
|
Target |
|
|
Maximum |
|
|
Threshold |
|
|
Target |
|
|
Maximum |
|
|
or Units |
|
|
Options |
|
|
Awards |
|
|
Awards |
|
Name |
|
Date |
|
($) |
|
|
($) |
|
|
($) (1) |
|
|
(#) |
|
|
(#) |
|
|
(#) |
|
|
(#) |
|
|
(#) (2) |
|
|
($/Sh) |
|
|
($) (3) |
|
Robert B. Grieve, Ph. D. |
|
12/31/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,750 |
|
|
|
4.960 |
|
|
|
122,760 |
|
|
|
N/A |
|
|
|
|
|
|
231,000 |
|
|
|
288,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jason A. Napolitano |
|
12/31/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,500 |
|
|
|
4.960 |
|
|
|
66,960 |
|
|
|
N/A |
|
|
|
|
|
|
92,190 |
|
|
|
115,238 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. McGinley, Ph. D. |
|
12/31/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,500 |
|
|
|
4.960 |
|
|
|
66,960 |
|
|
|
N/A |
|
|
|
|
|
|
92,750 |
|
|
|
115,938 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nancy
Wisnewski, Ph. D. |
|
12/31/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000 |
|
|
|
4.960 |
|
|
|
29,760 |
|
|
|
N/A |
|
|
|
|
|
|
74,375 |
|
|
|
92,969 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael A. Bent |
|
12/31/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000 |
|
|
|
4.960 |
|
|
|
29,760 |
|
|
|
N/A |
|
|
|
|
|
|
70,000 |
|
|
|
87,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Based on targeted bonus multiplied by the percentage cap in our 2011 Management Incentive
Plan (MIP) for Named Executive Officers. Our 2011 MIP is designed with a cap of
approximately $1.3125 million on total payouts, or 125% of projected targeted bonuses. Our
2011 MIP gives our Compensation Committee discretion as to how any payouts will be distributed
and the ability to make total payouts above the cap level. Accordingly, although our
Compensation Committee has never awarded an MIP Payout to an employee greater than the
employees targeted bonus multiplied by the applicable percentage cap, our Compensation
Committee has the ability to make 2011 MIP Payouts to Executive Officers in excess of that
amount, which is reported as maximum in this column. |
|
(2) |
|
One-forty-eighth (1/48th) of the total options granted become vested and
exercisable each month from the grant date until options granted have vested in full on the
four-year anniversary of the grant date. Each option was granted with an exercise price equal
to 100% of the fair market value of our stock on the date of grant as determined by our
Compensation Committee, and has a term of ten years, subject to earlier termination in certain
events related to termination of employment. |
|
(3) |
|
Grant date fair value of option awards are based on valuation techniques required by Option
Accounting Rules. Like any estimate prepared in good faith, the underlying assumptions we use
under Option Accounting Rules may vary from our actual future results. The option valuations
used for accounting and/or financial reporting purposes do not necessarily represent the value
any individual recipient would place on an option award. In addition, Option Accounting Rules
prohibit some valuation techniques which may be useful in certain circumstances. A more
detailed description of our option valuation techniques and assumptions can be found in our
Annual Report on Form 10-K for the year ended December 31, 2010 in our Note 6 of the Notes to
Consolidated Financial Statements. |
-29-
Outstanding Equity Awards at Fiscal Year-End
The following table shows unexercised stock options held at the end of fiscal year ended
December 31, 2010 by the executive officers named in the Summary Compensation Table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
|
Incentive |
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan |
|
|
Plan Awards |
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
|
Market or |
|
|
|
Number |
|
|
|
|
|
|
Awards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market |
|
|
Number of |
|
|
Payout Value |
|
|
|
of |
|
|
Number of |
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Value of |
|
|
Unearned |
|
|
of Unearned |
|
|
|
Securities |
|
|
Securities |
|
|
Securities |
|
|
|
|
|
|
|
|
|
|
Shares or |
|
|
Shares or |
|
|
Shares, Units |
|
|
Shares, Units |
|
|
|
Underlying |
|
|
Underlying |
|
|
Underlying |
|
|
|
|
|
|
|
|
|
|
Units of |
|
|
Units of |
|
|
or Other |
|
|
or Other |
|
|
|
Unexercised |
|
|
Unexercised |
|
|
Unexercised |
|
|
Option |
|
|
Option |
|
|
Stock That |
|
|
Stock That |
|
|
Rights That |
|
|
Rights That |
|
|
|
Options |
|
|
Options |
|
|
Unearned |
|
|
Exercise |
|
|
Expiration |
|
|
Have Not |
|
|
Have Not |
|
|
Have Not |
|
|
Have Not |
|
|
|
(#) |
|
|
(#) |
|
|
Options |
|
|
Price |
|
|
Date |
|
|
Vested |
|
|
Vested |
|
|
Vested |
|
|
Vested |
|
Name |
|
Exercisable |
|
|
Unexercisable |
|
|
(#) |
|
|
($) |
|
|
(1) |
|
|
(#) |
|
|
($) |
|
|
(#) |
|
|
($) |
|
Robert B.
Grieve, Ph. D.(2) |
|
|
0 |
|
|
|
24,750 |
|
|
|
|
|
|
|
4.960 |
|
|
|
12/30/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,042 |
|
|
|
18,957 |
|
|
|
|
|
|
|
4.500 |
|
|
|
11/9/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,626 |
|
|
|
14,373 |
|
|
|
|
|
|
|
4.400 |
|
|
|
11/4/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,500 |
|
|
|
7,499 |
|
|
|
|
|
|
|
18.300 |
|
|
|
12/31/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,999 |
|
|
|
|
|
|
|
|
|
|
|
17.170 |
|
|
|
11/17/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000 |
|
|
|
|
|
|
|
|
|
|
|
12.500 |
|
|
|
12/15/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,199 |
|
|
|
|
|
|
|
|
|
|
|
8.800 |
|
|
|
3/30/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,500 |
|
|
|
|
|
|
|
|
|
|
|
23.000 |
|
|
|
1/5/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,499 |
|
|
|
|
|
|
|
|
|
|
|
7.000 |
|
|
|
1/31/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,999 |
|
|
|
|
|
|
|
|
|
|
|
3.400 |
|
|
|
1/6/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,499 |
|
|
|
|
|
|
|
|
|
|
|
12.100 |
|
|
|
1/12/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,499 |
|
|
|
|
|
|
|
|
|
|
|
12.500 |
|
|
|
2/5/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jason A. Napolitano(3) |
|
|
0 |
|
|
|
13,500 |
|
|
|
|
|
|
|
4.960 |
|
|
|
12/30/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,791 |
|
|
|
10,209 |
|
|
|
|
|
|
|
4.500 |
|
|
|
11/9/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,770 |
|
|
|
6,230 |
|
|
|
|
|
|
|
4.400 |
|
|
|
11/4/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,250 |
|
|
|
2,750 |
|
|
|
|
|
|
|
18.300 |
|
|
|
12/31/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,999 |
|
|
|
|
|
|
|
|
|
|
|
17.170 |
|
|
|
11/17/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,000 |
|
|
|
|
|
|
|
|
|
|
|
12.500 |
|
|
|
12/15/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,500 |
|
|
|
|
|
|
|
|
|
|
|
8.800 |
|
|
|
3/30/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,000 |
|
|
|
|
|
|
|
|
|
|
|
23.000 |
|
|
|
1/5/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,915 |
|
|
|
|
|
|
|
|
|
|
|
7.000 |
|
|
|
1/31/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,608 |
|
|
|
|
|
|
|
|
|
|
|
7.000 |
|
|
|
5/31/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,080 |
|
|
|
|
|
|
|
|
|
|
|
8.100 |
|
|
|
4/30/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
786 |
|
|
|
|
|
|
|
|
|
|
|
9.400 |
|
|
|
8/31/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43 |
|
|
|
|
|
|
|
|
|
|
|
9.400 |
|
|
|
8/24/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J.
McGinley, Ph. D.(4) |
|
|
0 |
|
|
|
13,500 |
|
|
|
|
|
|
|
4.960 |
|
|
|
12/30/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,791 |
|
|
|
10,209 |
|
|
|
|
|
|
|
4.500 |
|
|
|
11/9/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,333 |
|
|
|
7,667 |
|
|
|
|
|
|
|
4.400 |
|
|
|
11/4/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,000 |
|
|
|
1,000 |
|
|
|
|
|
|
|
14.000 |
|
|
|
4/18/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,250 |
|
|
|
1,750 |
|
|
|
|
|
|
|
18.300 |
|
|
|
12/31/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,999 |
|
|
|
|
|
|
|
|
|
|
|
17.170 |
|
|
|
11/17/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,499 |
|
|
|
|
|
|
|
|
|
|
|
12.500 |
|
|
|
12/15/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,499 |
|
|
|
|
|
|
|
|
|
|
|
8.800 |
|
|
|
3/30/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,499 |
|
|
|
|
|
|
|
|
|
|
|
23.000 |
|
|
|
1/5/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,500 |
|
|
|
|
|
|
|
|
|
|
|
7.000 |
|
|
|
1/31/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000 |
|
|
|
|
|
|
|
|
|
|
|
3.400 |
|
|
|
1/6/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000 |
|
|
|
|
|
|
|
|
|
|
|
10.600 |
|
|
|
2/5/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,400 |
|
|
|
|
|
|
|
|
|
|
|
11.400 |
|
|
|
4/26/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nancy
Wisnewski, Ph. D.(5) |
|
|
0 |
|
|
|
6,000 |
|
|
|
|
|
|
|
4.960 |
|
|
|
12/30/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,625 |
|
|
|
4,375 |
|
|
|
|
|
|
|
4.500 |
|
|
|
11/9/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
312 |
|
|
|
688 |
|
|
|
|
|
|
|
5.000 |
|
|
|
9/13/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,604 |
|
|
|
2,396 |
|
|
|
|
|
|
|
4.400 |
|
|
|
11/4/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,250 |
|
|
|
1,750 |
|
|
|
|
|
|
|
18.300 |
|
|
|
12/31/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,999 |
|
|
|
|
|
|
|
|
|
|
|
17.170 |
|
|
|
11/17/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,999 |
|
|
|
|
|
|
|
|
|
|
|
12.500 |
|
|
|
12/15/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,500 |
|
|
|
|
|
|
|
|
|
|
|
8.800 |
|
|
|
3/30/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000 |
|
|
|
|
|
|
|
|
|
|
|
11.600 |
|
|
|
11/22/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,750 |
|
|
|
|
|
|
|
|
|
|
|
15.900 |
|
|
|
5/18/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000 |
|
|
|
|
|
|
|
|
|
|
|
15.300 |
|
|
|
9/2/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,000 |
|
|
|
|
|
|
|
|
|
|
|
9.500 |
|
|
|
4/10/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,500 |
|
|
|
|
|
|
|
|
|
|
|
3.400 |
|
|
|
1/6/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,500 |
|
|
|
|
|
|
|
|
|
|
|
10.600 |
|
|
|
2/5/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000 |
|
|
|
|
|
|
|
|
|
|
|
12.100 |
|
|
|
1/12/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000 |
|
|
|
|
|
|
|
|
|
|
|
11.400 |
|
|
|
4/26/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael A. Bent(6) |
|
|
0 |
|
|
|
6,000 |
|
|
|
|
|
|
|
4.960 |
|
|
|
12/30/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,625 |
|
|
|
4,375 |
|
|
|
|
|
|
|
4.500 |
|
|
|
11/9/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,604 |
|
|
|
2,396 |
|
|
|
|
|
|
|
4.400 |
|
|
|
11/4/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,250 |
|
|
|
750 |
|
|
|
|
|
|
|
18.300 |
|
|
|
12/31/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000 |
|
|
|
|
|
|
|
|
|
|
|
17.170 |
|
|
|
11/17/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,499 |
|
|
|
|
|
|
|
|
|
|
|
12.500 |
|
|
|
12/15/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,000 |
|
|
|
|
|
|
|
|
|
|
|
8.800 |
|
|
|
3/30/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,499 |
|
|
|
|
|
|
|
|
|
|
|
23.000 |
|
|
|
1/5/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,500 |
|
|
|
|
|
|
|
|
|
|
|
7.000 |
|
|
|
1/31/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000 |
|
|
|
|
|
|
|
|
|
|
|
3.400 |
|
|
|
1/6/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,600 |
|
|
|
|
|
|
|
|
|
|
|
9.900 |
|
|
|
4/12/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,199 |
|
|
|
|
|
|
|
|
|
|
|
10.600 |
|
|
|
2/5/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,200 |
|
|
|
|
|
|
|
|
|
|
|
11,400 |
|
|
|
4/26/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-30-
|
|
|
(1) |
|
Options are subject to earlier termination in certain events related to termination of
service. |
|
(2) |
|
Excludes outstanding options to purchase an aggregate of 8.6 fractional shares resulting from
the Companys December 2010 1-for-10 reverse stock split with a weighted average remaining
contractual life of 4.45 years, a weighted average exercise price of $10.09 and exercise
prices ranging from $3.40 to $18.30. These outstanding options include exercisable options to
purchase an
aggregate of 5.6 shares with a weighted average remaining contractual life of 2.60 years, a
weighted average exercise price of $10.64 and exercise prices ranging from $3.40 to $17.17. The
Company intends to issue whole shares only from option exercises. |
|
(3) |
|
Excludes outstanding options to purchase an aggregate of 4.4 fractional shares resulting from
the Companys December 2010 1-for-10 reverse stock split with a weighted average remaining
contractual life of 2.50 years, a weighted average exercise price of $9.91 and exercise prices
ranging from $7.00 to $17.17. The Company intends to issue whole shares only from option
exercises. |
|
(4) |
|
Excludes outstanding options to purchase an aggregate of 4.0 fractional shares resulting from
the Companys December 2010 1-for-10 reverse stock split with a weighted average remaining
contractual life of 4.52 years, a weighted average exercise price of $15.37 and exercise
prices ranging from $8.80 to $23.00. The Company intends to issue whole shares only from
option exercises. |
|
(5) |
|
Excludes outstanding options to purchase an aggregate of 2.0 fractional shares resulting from
the Companys December 2010 1-for-10 reverse stock split with a weighted average remaining
contractual life of 5.42 years, a weighted average exercise price of $14.84 and exercise
prices ranging from $12.50 to $17.17. The Company intends to issue whole shares only from
option exercises. |
|
(6) |
|
Excludes outstanding options to purchase an aggregate of 3.0 fractional shares resulting from
the Companys December 2010 1-for-10 reverse stock split with a weighted average remaining
contractual life of 3.02 years, a weighted average exercise price of $15.37 and exercise
prices ranging from $10.60 to $23.00. The Company intends to issue whole shares only from
option exercises. |
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
The following table shows aggregate exercises of options to purchase our common stock in the
fiscal year ended December 31, 2010 by the Named Executive Officers.
Option Exercises and Stock Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Stock Awards |
|
|
|
Number of |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Shares |
|
|
|
|
|
|
Shares |
|
|
|
|
|
|
Acquired |
|
|
Value Realized |
|
|
Acquired |
|
|
Value Realized |
|
|
|
on Exercise |
|
|
on Exercise |
|
|
on Vesting |
|
|
On Vesting |
|
Name |
|
(#) |
|
|
($) |
|
|
(#) |
|
|
($) |
|
Robert B. Grieve, Ph. D. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jason A. Napolitano |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. McGinley, Ph. D. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nancy Wisnewski, Ph. D. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael A. Bent |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Payments Upon Termination or Change-in-Control
The following table summarizes the potential payments and benefits payable to each of the
Named Executive Officers upon termination of employment or a change-in-control under each situation
listed below, assuming, in each situation, that our Named Executive Officers were terminated on
December 31, 2010 as determined under the terms of our plans and arrangements as in effect on
December 31, 2010.
Payments Upon Termination (Without a Change-in-Control). Pursuant to an employment agreement
with each of Drs. Grieve, McGinley and Wisnewski, and Messrs. Napolitano and Bent, in the event he
or she is involuntarily terminated, he or she is entitled to receive amounts earned during his or
her term of employment. Such amounts include: base salary and the cost of health insurance
premiums as set forth in the table below. Pursuant to his employment agreement, upon an
involuntary termination not for cause, Dr. Grieve is entitled to accelerated vesting of all stock
options, an extension of the term of all outstanding stock options and a bonus payment as set forth
in the table below. Further, pursuant to his employment agreement, upon termination for good
reason Dr. Grieve is entitled to the payments set forth below.
Payments Upon Change-in-Control. Pursuant to an employment agreement with each of Drs.
Grieve, McGinley and Wisnewski, and Messrs. Napolitano and Bent, in the event he or she is
terminated upon a change-in-control he or she is entitled to receive amounts earned during the
term of his or her employment. Such amounts include: base salary and the cost of health insurance
premiums as set forth in the table below. Pursuant to his employment agreement, each of Dr. Grieve
and Mr. Napolitano are entitled to accelerated vesting of all stock options and Dr. Grieve is
entitled to an extension of the term of all outstanding stock options in certain circumstances.
Further, pursuant to his employment agreement, upon an involuntary termination not for cause, Dr.
Grieve is entitled to a bonus payment as set forth in the table below. Further, upon termination
for good reason, Dr. Grieve is entitled to the payments set forth below. In addition, as provided
in the underlying plan documents, all MIP Participants, including Executive Officers, are entitled
to a prorated target MIP Payout upon a change-in-control and Stock Options issued to an employee
under both
our 1997 Incentive Stock Plan and our 2003 Equity Incentive Plan will vest in full if the
employee, including any such employee who is an Executive Officer, is terminated following a
change-in-control, as defined.
-31-
Payments Upon Death or Disability. In the event of death or disability, Dr. Grieve is
entitled to the same benefits as in the event of termination without a change in control and is
also entitled to receive the death benefits under our life insurance plan or the disability
benefits under our disability plan, as appropriate, as set forth below. In the event of death or
disability, Dr. McGinley and Dr. Wisnewski, and Messrs. Napolitano and Bent, are each entitled to
receive the death benefits under our life insurance plan or the disability benefits under our
disability plan, as appropriate, as set forth below. In addition, as provided in the underlying
plan documents, an MIP Participant who dies, including an Executive Officer, is entitled to a
prorated MIP Payout to his designated beneficiary, Stock Options issued to an employee under our
1997 Incentive Stock Plan and our 2003 Equity Incentive Plan will vest in full if the employee,
including any such employee who is an Executive Officer, dies, and Stock Options issued to an
employee under our 1997 Incentive Stock Plan will vest in full if the employee, including any such
employee who is an Executive Officer, suffers a total and permanent disability.
Dr. Grieves employment agreement requires that he execute and not revoke a separation
agreement and release of claims, not compete with Heska for 12 months and not solicit Heskas
employees, consultants, customers or users for 24 months as a condition to severance payments under
his employment agreement.
Potential Payments Upon Termination or Change-in-Control (1)
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Involuntary |
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Termination |
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Involuntary |
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Voluntary |
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Not for Cause Other |
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Termination |
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Termination or |
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Than in Connection |
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Not for Cause in |
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Termination |
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With a |
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Connection With a |
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Executive Benefits and |
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for Cause |
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Change-in-Control |
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Change-in-Control |
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Death |
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Disability |
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Payments Upon Termination |
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($) |
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($) |
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($) |
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($) |
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($) |
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Robert B. Grieve, Ph. D. |
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Base Salary |
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440,000 |
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880,000 |
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440,000 |
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440,000 |
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Bonus |
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220,000 |
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440,000 |
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220,000 |
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Medical continuation |
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14,266 |
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28,532 |
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14,266 |
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14,266 |
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Death benefits |
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300,000 |
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Monthly disability benefits |
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15,300 |
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Value of accelerated stock options (2) |
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7,190 |
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16,769 |
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16,769 |
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8,720 |
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Jason A. Napolitano |
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Base Salary |
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130,000 |
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260,000 |
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Bonus |
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91,000 |
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Medical continuation |
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7,133 |
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14,266 |
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Death benefits |
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300,000 |
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Monthly disability benefits |
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8,000 |
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Value of accelerated stock options (2) |
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8,185 |
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8,185 |
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4,696 |
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Michael J.
McGinley, Ph. D. |
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Base Salary |
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122,500 |
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245,000 |
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Bonus |
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85,750 |
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Medical continuation |
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7,133 |
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14,266 |
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Death benefits |
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300,000 |
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Monthly disability benefits |
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8,000 |
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Value of accelerated stock options (2) |
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8,990 |
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8,990 |
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4,696 |
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Nancy Wisnewski, Ph. D. |
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Base Salary |
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97,500 |
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195,000 |
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Bonus |
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68,250 |
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Medical continuation |
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7,133 |
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14,266 |
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Death benefits |
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300,000 |
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Monthly disability benefits |
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8,000 |
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Value of accelerated stock options (2) |
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3,354 |
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3,354 |
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2,013 |
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Michael A. Bent |
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Base Salary |
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90,000 |
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180,000 |
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Bonus |
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63,000 |
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Medical continuation |
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7,133 |
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14,266 |
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Death benefits |
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300,000 |
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Monthly disability benefits |
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8,000 |
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Value of accelerated stock options (2) |
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3,354 |
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3,354 |
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2,013 |
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(1) |
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Based on 2010 salary and cost information. |
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(2) |
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Calculated based on December 31, 2010 closing price of $4.96 per share less strike price of
each accelerated stock option with a strike price less than $4.96. |
-32-
The following Compensation Committee Report and related disclosure shall not be deemed
incorporated by reference by any general statement incorporating this proxy statement into any
filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934,
as amended, except to the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Company has reviewed and discussed the Compensation
Discussion and Analysis required by Item 402(b) of Regulation S-K and, based on such review and
discussions, the Compensation Committee recommended to the Board that the Compensation Discussion
and Analysis be included in this Proxy Statement.
THE COMPENSATION COMMITTEE
G. Irwin Gordon, Chairman
Peter Eio
John F. Sasen, Sr.
March 29, 2011
-33-
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Our Compensation Committee consists of non-employee Directors only. No interlocking
relationship existed during 2010 between our Executive Officers, members of our Board of Directors
or members of our Compensation Committee, and the Executive Officers, members of the Board of
Directors or members of the Compensation Committee of the Board of Directors of any other company.
AUDITOR FEES AND SERVICES
EKS&H was our independent registered public accountant for fiscal 2009 and 2010. The
following table sets forth the aggregate fees billed by EKS&H for audit services rendered in
connection with the consolidated financial statements and reports for fiscal years 2009 and 2010,
respectively, and for other services rendered during 2009 and 2010 on behalf of Heska and its
subsidiaries, as well as all out-of-pocket costs incurred in connection with these services which
have been billed to Heska and its subsidiaries. Our Audit Committee has approved all of the below
fees.
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EKS&H |
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2009 |
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2010 |
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Audit Fees (1) |
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$ |
255,198 |
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$ |
257,683 |
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Audit Related Fees (2) |
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16,750 |
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16,750 |
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Tax Fees (3) |
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80,325 |
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73,500 |
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All Other Fees |
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Total |
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$ |
352,273 |
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$ |
347,933 |
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(1) |
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Audit fees represent fees for the audit of our annual financial statements, review of
financial statements included in our Form 10-Q Quarterly Reports and services that are
normally provided by the independent auditors in connection with statutory and regulatory
filings including consents for historical audit opinions. |
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(2) |
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Audit related fees are fees for the assurance and related services by the independent
auditors that are reasonably related to the performance of the audit or review of our
financial statements and are not reported above under Audit Fees. The services for fees
disclosed under this category include the annual audit of our 401(k) Retirement Plan. 2010
data is an estimate. |
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(3) |
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2010 data contains certain estimates. |
Pre-Approval Policy. Our Audit Committee pre-approves all auditing services and non-audit
services not prohibited by law to be performed by our independent registered public accountant.
Our Audit Committee also pre-approves all associated fees, except for de minimis amounts for
non-audit services, which are approved by our Audit Committee prior to the completion of the audit.
In February 2009, our Audit Committee approved EKS&H as our primary provider of tax compliance and
return preparation services.
-34-
The following Report of our Audit Committee and related disclosure shall not be deemed
incorporated by reference by any general statement incorporating this proxy statement into any
filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934,
as amended, except to the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
REPORT OF OUR AUDIT COMMITTEE
The ultimate responsibility for good corporate governance rests with Heska Corporations Board
of Directors (the Board), whose primary roles are oversight, counseling and direction to Heska
Corporations management in the best long-term interests of Heska Corporation (Heska or the
Company) and its stockholders. The Audit Committee of the Board (the Audit Committee) has been
established for the purpose of overseeing the accounting and financial reporting processes of the
Company and audits of Heskas financial statements.
The Audit Committee operates under a written charter, a copy of which is available on Heskas
website at www.heska.com. As described more fully in its charter, the purpose of the Audit
Committee is to assist the Board in its oversight and monitoring of Heskas financial reporting,
internal controls and audit function. Management is responsible for the preparation, presentation
and integrity of Heskas financial statements; accounting and financial reporting principles;
internal controls; and procedures designed to ensure compliance with accounting standards,
applicable laws and regulations. The Audit Committee has hired an independent registered public
accountant, who is responsible for performing an independent audit of the Companys consolidated
financial statements in accordance with generally accepted auditing standards. In accordance with
the Sarbanes-Oxley Act of 2002, the Audit Committee has ultimate authority and responsibility to
select, direct, compensate, evaluate and, when appropriate, replace Heskas independent registered
public accountant.
The Audit Committee members are not professional accountants or auditors, and their functions
are not intended to duplicate or to certify the activities of management and the independent
registered public accountant, nor can the Audit Committee certify that the independent registered
public accountant is independent under applicable rules. The Audit Committee serves a
board-level oversight role, in which it provides advice, counsel and direction to management on the
basis of the information it receives, discussions with management and the independent registered
public accountant, and the experience of the Audit Committees members in business, financial and
accounting matters. The Audit Committee has the authority to engage its own outside advisers,
including experts in particular areas of accounting, as it determines appropriate, apart from
counsel or advisers hired by management.
In this context, during the year 2010, we met and held discussions with management and
Ehrhardt Keefe Steiner & Hottman PC (EKS&H), Heskas independent registered public accountant.
Management represented to us that Heskas consolidated financial statements were prepared in
accordance with generally accepted accounting principles, and we have reviewed and discussed the
consolidated financial statements with management and EKS&H. In Audit Committee meetings with
EKS&H, we discussed matters as required by Statement of Auditing Standards No. 61 (Communication
with Audit Committees). Our review included a discussion with management of the quality, not
merely the acceptability, of Heskas accounting principles, the reasonableness of significant
estimates and judgments and the disclosure in Heskas consolidated financial statements.
We received from EKS&H the written disclosures required by the applicable requirements of the
Public Company Accounting Oversight Board regarding the independent accountants communications
with the Audit Committee concerning independence and discussed with EKS&H its independence. In
reliance on the reviews and discussions noted above, and the report of the independent registered
public accountant, we recommended to the Board that the Companys audited financial statements be
included in its Annual Report
on Form 10-K for the year ended December 31, 2010, and be filed with the Securities and Exchange
Commission.
-35-
Heska was not required to have an audit of its internal control over financial reporting in
2009 as the Securities and Exchange Commission did not require registrants in Heskas market value
category to do so. We discussed the advisability of obtaining a voluntary audit of internal
control over financial reporting with management and EKS&H. Heska decided not to proceed with a
voluntary audit and we do not expect that Heska will have an audit of its internal control over
financial reporting until required.
Overall audit fees and related expenses increased in 2010 as compared to 2009. Tax fees
declined in 2010 as compared to 2009. A factor in the change was the Companys reported pre-tax
loss for the first six months of 2010 and less corresponding need for estimated tax payment
services compared with the first half of 2009, when the Company generated a pre-tax income in the
first half of the year.
Submitted by the Audit Committee of Heskas Board of Directors:
Peter Eio, Chairman
William A. Aylesworth
Louise L. McCormick
March 29, 2011
-36-
ADDITIONAL INFORMATION
Householding of Proxy Materials
The SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy
delivery requirements for proxy statements with respect to two or more stockholders sharing the
same address by delivering a single proxy statement addressed to those stockholders. This process,
which is commonly referred to as householding, potentially provides extra convenience for
stockholders and cost savings for companies. Heska and some brokers household proxy materials,
delivering a single proxy statement to multiple stockholders sharing an address unless contrary
instructions have been received from the affected stockholders. Once you have received notice
from your broker or us that they or we will be householding materials to your address, householding
will continue until you are notified otherwise or until you revoke your consent. If, at any time,
you no longer wish to participate in householding and would prefer to receive a separate proxy
statement, or if you are receiving multiple copies of the proxy statement and wish to receive only
one, please notify your broker if your shares are held in a brokerage account or us if you hold
registered shares. You can notify us by sending a written request to Investor Relations, Heska
Corporation, 3760 Rocky Mountain Avenue, Loveland, Colorado 80538.
OTHER MATTERS
Our Board knows of no other matters to be presented for stockholder action at our 2011 Annual
Meeting. However, if other matters do properly come before our Annual Meeting or any adjournments
or postponements thereof, our Board intends that the persons named in the proxies will vote upon
such matters in accordance with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS
Jason A. Napolitano
Executive Vice President, Chief Financial Officer and
Secretary
Heska Corporation
Loveland, Colorado
March 29, 2011
-37-
Heska Corporation
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Holder Account Number |
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C 1234567890 J N T |
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o
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Mark this box with an X if you
have made changes to your name or
address details above. |
2011 Annual Meeting Proxy Card
The Board of Directors (the Board) recommends a vote FOR the listed nominees.
1. |
|
Election of two Directors nominated by the
Board to serve for a three-year term that
expires at the 2014 Annual Meeting or until
their respective successors have been elected
and qualified. |
01Louise L. McCormick
02John F. Sasen, Sr.
The Board of Directors recommends a vote FOR each of the following:
2. |
|
To ratify the appointment of
Ehrhardt Keefe Steiner & Hottman PC
as Heska Corporations independent
registered public accountant. |
|
3. |
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Advisory vote with respect to voting by proxyholders,
if other business properly comes before the 2011 Annual Meeting. |
C. |
|
Authorized Signatures Sign Here This section must be completed for your instructions to
be executed. |
Please date and sign exactly as your name or names appear herein. Corporate or partnership
proxies should be signed in full corporate or partnership name by an authorized person. Persons
signing in a fiduciary capacity should indicate their full title in such capacity.
Signature 1Please keep signature within the box Signature 2Please keep signature within the box
Date (mm/dd/yyyy)
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/
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/ |
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1 U P X
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H H H
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P P P P
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001808 |
1
ProxyHeska Corporation
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert B. Grieve, Ph.D., Jason A. Napolitano and Michael A.
Bent, and each of them, as proxies, with full power of substitution (the Proxies), and hereby
authorizes them to represent and vote, as designated below, all shares of the Public Common Stock of Heska
Corporation, a Delaware corporation (the Company), held of record by the undersigned on March 16,
2011, at the 2011 Annual Meeting of Stockholders (the Annual Meeting) to be held at the corporate
offices of the Company located at 3760 Rocky Mountain Avenue, Loveland, Colorado 80538 at 9:00
a.m., local time, on Tuesday, May 3, 2011, or at any adjournment or postponement thereof, with all
the powers that the undersigned would have if personally present at the meeting.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting and Proxy
Statement, dated March 29, 2011, and a copy of Heska Corporations corporate 2010 Annual Report as
well as a copy of Heska Corporations annual report on Form 10-K for the year ended December 31,
2010 as filed with the Securities and Exchange Commission. The undersigned hereby expressly
revokes any and all proxies heretofore given or executed by the undersigned with respect to the
shares of stock represented by this proxy and, by filing this proxy with the Secretary of Heska
Corporation, gives notice of such revocation. This proxy when properly executed will be voted in
accordance with the specifications made by the undersigned
stockholder, as explained below.
THIS PROXY IS TO BE VOTED FOR OR WITHHOLD AS MARKED REGARDING THE ELECTION OF
DIRECTORS AND FOR OR AGAINST AS MARKED REGARDING THE RATIFICATION OF EHRHARDT
KEEFE STEINER & HOTTMAN PC AS THE COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTANT. A
PROXY MARKED ABSTAIN OR A PROXY THAT DOES NOT INDICATE A SINGLE PREFERENCE
OTHER THAN ABSTAIN ON A GIVEN MATTER WILL NOT BE TREATED AS PRESENT OR ENTITLED TO VOTE ON SUCH MATTER AND WILL BE INTERPRETED
AS A FORFEITURE OF THE RIGHT TO VOTE ON SUCH MATTER AND A FORFEITURE OF THE VOTING POWER PRESENT
UNDERLYING THE FORFEITED VOTES REGARDING SUCH MATTER. REGARDLESS OF THE DIRECTION MADE, IF ANY,
THIS PROXY WILL BE VOTED AT THE DISCRETION OF THE PROXIES ON ANY OTHER BUSINESS THAT MAY PROPERLY COME
BEFORE THE ANNUAL MEETING. THIS PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE TIME IT IS VOTED.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
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