ATRION CORPORATION
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14A-101)
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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Atrion Corporation
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Atrion Corporation
One Allentown Pkwy.
Allen, TX 75002-4211
Tel 972-390-9800
April 8, 2009
Dear Stockholder:
You are cordially invited to attend the 2009 annual meeting of stockholders of Atrion
Corporation which will be held at our offices in Allen, Texas on Thursday, May 21, 2009 at 10:00
a.m., Central Time. Details regarding admission to the meeting and the business to be conducted at
the annual meeting are described in the Notice of Internet Availability of Proxy Materials (the
Notice) you received in the mail and in the Companys proxy statement. A notice of the annual
meeting and the Companys proxy statement accompany this letter. We have also made a copy of our
2008 Annual Report available with our proxy statement.
We are pleased to take advantage of new Securities and Exchange Commission rules allowing
companies to furnish proxy materials to their stockholders primarily on the Internet. We believe
that this new method of distribution will lower the costs and reduce the environmental impact of
our annual meeting, as well as expediting stockholders receipt of proxy materials.
We encourage you to attend the meeting in person. However, whether or not you plan to be
personally present, we hope you will vote as soon as possible. To vote your shares, please refer
to the instructions for voting in the Companys proxy statement or in the Notice of Internet
availability of proxy materials or proxy card.
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Sincerely,
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Emile A. Battat
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Chairman and Chief Executive Officer |
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ATRION CORPORATION
One Allentown Parkway
Allen, Texas 75002
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of Atrion Corporation:
Notice is hereby given that the annual meeting of stockholders of Atrion Corporation (the
Company) will be held at the Companys offices, One Allentown Parkway, Allen, Texas on Thursday,
May 21, 2009 at 10:00 a.m., Central Time, for the following purposes:
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To elect one Class II director. |
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To ratify the appointment of Grant Thornton LLP as independent accountants to
audit the Companys financial statements for the year 2009. |
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To transact such other business as may properly come before the meeting. |
The Board of Directors fixed the close of business on March 30, 2009 as the record date (the
Record Date) for the determination of stockholders entitled to notice of and to vote at the
annual meeting and at any adjournment thereof.
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By Order of the Board of Directors
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Jeffery Strickland
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Vice President and Chief Financial |
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Officer, Secretary and Treasurer |
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April 8, 2009
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, WE HOPE YOU WILL VOTE AS SOON AS POSSIBLE. TO VOTE
YOUR SHARES, PLEASE REFER TO THE INSTRUCTIONS FOR VOTING IN THE COMPANYS PROXY STATEMENT OR IN THE
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS OR PROXY CARD.
ATRION CORPORATION
One Allentown Parkway
Allen, Texas 75002
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 2009
GENERAL INFORMATION
This proxy statement is being furnished to the stockholders of Atrion Corporation (the
Company) in connection with the solicitation of proxies by the Board of Directors of the Company
to be voted at the annual meeting of stockholders to be held at the Companys offices, One
Allentown Parkway, Allen, Texas on May 21, 2009 at 10:00 a.m., Central Time, and at any adjournment
of such meeting. This notice of annual meeting, proxy statement and form of proxy and the
Companys 2008 Annual Report are first being made available to stockholders on or about April 8,
2009.
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS
AND OUR ANNUAL MEETING
Q. What is the purpose of the annual meeting?
A. At the annual meeting, our stockholders will consider and vote upon the following matters:
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the election of one Class II director; and |
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a proposal to ratify the appointment of Grant Thornton LLP as independent
accountants to audit the Companys financial statements for the year 2009. |
Our stockholders will also transact such other business as may properly come before the meeting.
Q: Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials this year instead of a full set of proxy materials?
A: Rules adopted by the Securities and Exchange Commission allow us to provide access to our proxy
materials primarily over the Internet. Accordingly, we are sending a Notice of Internet
Availability of Proxy Materials (the Notice) to our stockholders. Instructions on how to access
the proxy materials over the Internet or to request a printed copy by mail may be found in the
Notice.
Q: How can I get electronic access to the proxy materials?
A: The Notice provides you with instructions regarding how you may access and review on the
Internet our proxy materials for the annual meeting.
Q. Who is entitled to vote at the annual meeting?
A. Stockholders Entitled to Vote. Stockholders of record at the close of business on March 30,
2009 (the Record Date) will be entitled to notice of, and to vote at, the annual meeting and at
any adjournment thereof. At the close of business on the Record Date, we had outstanding and
entitled to vote 1,979,171 shares of common stock, our only voting securities. Holders of record
of shares of common stock outstanding on the Record Date will be entitled to one vote for each
share held of record on that date upon each matter presented to the stockholders to be voted upon
at the meeting.
Registered Stockholders. If your shares are registered directly in your name with our
transfer agent, you are considered, with respect to those shares, the stockholder of record, and we
are providing the Notice to you directly. As the stockholder of record, you have the right to grant
your voting proxy directly to the individuals listed on the proxy card or to vote in person at the
annual meeting.
Beneficial Owners: If your shares are held in the name of a broker, bank or other nominee, you
are considered the beneficial owner of those shares and the broker, bank or other nominee is the
record holder. As the beneficial owner, you have the right to direct your broker, bank or other
nominee how to vote, and you are also invited to attend the annual meeting. However, because you
are not the record holder, you may not vote these shares in person at the annual meeting unless you
follow the record holders procedures for obtaining a legal proxy.
Q. Can I attend the annual meeting in person?
A. You are invited to attend the annual meeting if you are a registered stockholder or a beneficial
owner as of the Record Date. You must present a form of photo identification acceptable to us, such
as a valid drivers license or passport, to enter the meeting. In addition, if your shares are
held by your broker, bank or other nominee, please bring your Notice or other evidence of stock
ownership as of the Record Date. The meeting will begin promptly at 10:00 a.m., Central Time.
Check-in will begin at 9:30 a.m., Central Time. Please allow ample time for the check-in
procedures.
Q: How can I vote my shares?
A: Registered Stockholders: Registered stockholders may vote (i) by attending the Annual Meeting,
(ii) by following the instructions on your Notice for voting by telephone or on the Internet at
www.proxyvote.com or (iii) by signing, dating and mailing in a proxy card. Please note that the
Internet and telephone voting facilities will close at 11:59 p.m., Eastern Time, on May 20, 2009.
Beneficial Owners: If you hold your shares through a broker, bank or other nominee, that
institution will instruct you as to how your shares may be voted by proxy, including whether
telephone or Internet voting options are available. If you hold your shares through a broker, bank
or other nominee and would like to vote in person at the meeting, you must request a legal proxy
from the bank, broker or other nominee that holds your shares and present that proxy at the annual
meeting to vote your shares.
Q: If I sign a proxy, how will it be voted?
A: Unless you revoke your proxy instructions, as described below under Can I change my vote?,
shares of common stock represented by your proxy will be voted at the annual meeting as you specify
over the Internet, by telephone or on the proxy card. If you do not specify how to vote your
shares, the shares represented by your proxy will be voted FOR the election as director of the
nominee of the Board of Directors named herein and FOR ratification of the appointment of Grant
Thornton LLP as independent accountants to audit our financial statements for the year 2009. In
addition, in their discretion the persons designated as proxies will vote upon such other business
as may properly come before the meeting, including voting for any adjournment of the meeting
proposed by the Board of Directors.
Q: Can I change my vote?
A: You may change your vote at any time prior to the vote at the annual meeting. To revoke your
proxy instructions and change your vote if you are a holder of record, you must (i) attend the
annual meeting and vote your shares in person, (ii) advise our Corporate Secretary at our principal
executive office in writing before the proxy holders vote your shares, (iii) deliver later dated
and signed proxy instructions or (iv) vote again on a later date on the Internet or by telephone
(only your latest Internet or telephone proxy submitted prior to the annual meeting will be
counted). If your shares are held by a broker, bank or other nominee, you must request
instructions as to how to revoke your proxy from the bank, broker or other nominee that holds your
shares.
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Q: What happens if I decide to attend the annual meeting but I have already voted or submitted a proxy covering my shares?
A: You may attend the meeting and vote in person even if you have already voted or submitted a
proxy. Please be aware that attendance at the annual meeting will not, by itself, revoke a proxy.
If a bank, broker or other nominee holds your shares and you wish to attend the annual meeting and
vote in person, you must obtain a legal proxy from the record holder of the shares giving you the
right to vote the shares.
Q: What is a quorum?
A: The annual meeting will be held if a majority of the shares of common stock outstanding on the
Record Date entitled to vote is represented in person or by proxy at the meeting, constituting a
quorum. Abstentions and broker non-votes will be counted as present and represented at the annual
meeting for purposes of determining a quorum.
Q. How are votes counted?
A. Directors will be elected at the annual meeting by a plurality of the votes cast by the
stockholders present in person or by proxy and entitled to vote. Abstentions and broker non-votes
will have no effect on the election of directors. Ratification of the appointment of Grant
Thornton LLP requires the affirmative vote of a majority of the shares present, in person or by
proxy, at the meeting. Abstentions will have the same effect as a negative vote, and broker
non-votes will be considered absent and will have no effect, on the proposal to ratify the
appointment of Grant Thornton LLP.
ELECTION OF DIRECTORS
The Companys Board of Directors is divided into three classes: Class I, Class II and Class
III. One Class II director is to be elected at the annual meeting, to serve until the annual
meeting of stockholders to be held in 2012 and until the election and qualification of his
successor in office. The nominee for election as a Class II director named below is a member of
the Board of Directors and was previously elected by the stockholders. It is intended that the
persons named as proxies will vote for the election of this nominee. If the nominee listed below,
who has indicated his willingness to serve as a director if elected, is not a candidate when the
election occurs, proxies may be voted for the election of any substitute nominee.
The following information is furnished with respect to the Board of Directors nominee for
election as a director and each director whose term will continue after the annual meeting.
Name, Age, Service as a Director of the Company
Principal Occupation, Positions and Offices, Other Directorships and Business Experience
NOMINEE FOR ELECTION AS DIRECTOR
Class II Term Ending in 2012
Hugh J. Morgan, Jr.
Mr. Morgan, age 80, has been a director since 1988. Mr. Morgan is a private
investor. He served as Chairman of the Board of National Bank of Commerce of
Birmingham from February 1990 until April 2003. Mr. Morgan holds a Bachelor of Arts
degree from Princeton University and is a graduate of the Vanderbilt University Law
School.
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DIRECTORS CONTINUING IN OFFICE
Class III Term Ending in 2010
Roger F. Stebbing
Mr. Stebbing, age 68, has been a director since 1992 and has been the lead director
since December 2007. Mr. Stebbing is President and Chief Executive Officer of
Stebbing and Associates, Inc., an engineering consulting company, and has served in
such capacities since 1986. Mr. Stebbing is a licensed professional engineer and
has a BSc honors degree in Chemical Engineering from Salford University.
John P. Stupp, Jr.
Mr. Stupp, age 59, has been a director since 1985. He is President of Stupp Bros.,
Inc., a diversified holding company, and has served in such capacity since March
2004. From April 1995 until March 2004, he served as Executive Vice President and
Chief Operating Officer of Stupp Bros., Inc., and since August 1995 he has also
served as Chief Executive Officer of Stupp Corporation, a division of Stupp Bros.,
Inc. Mr. Stupp holds a Bachelor of Science degree in Business and Economics from
Lehigh University. He serves as a director and as a member of the audit committee
of The Laclede Group, Inc., a public utility holding company.
Class I Term Ending in 2011
Emile A. Battat
Mr. Battat, age 70, has been a director since 1987 and has served as Chairman of the
Board of the Company since January 1998, as Chief Executive Officer of the Company
and as Chairman of the Board or President of each of the Companys subsidiaries
since October 1998, and as President of the Company from October 1998 until May
2007. Mr. Battat holds Bachelor of Science and Master of Science degrees in
Mechanical Engineering from Massachusetts Institute of Technology and a Master of
Business Administration degree from Harvard University. He is an associate member
of Sigma Xi, a scientific honor society.
Ronald N. Spaulding
Mr. Spaulding, age 45, has been a director since February 2006, and is currently a
private investor. Prior to May 2008, Mr. Spaulding was the President of Worldwide
Commercial Operations of Abbott Vascular and a Vice President and corporate officer
of Abbott Laboratories, which he joined in April 2006 upon its acquisition of
Guidant Corporations vascular intervention assets. Between 2005 and April 2006,
Mr. Spaulding served as the President of International Operations of Guidant
Corporation, and also served on the Guidant Management Committee from 2002 until
2005. From 2003 to 2005, he was the President of Europe, Middle East, Africa and
Canada of Guidant Corporation. From 2000 to 2003, Mr. Spaulding served as President
of Guidants Cardiac Surgery business. Mr. Spaulding holds a Masters degree in
Biomedical Engineering and a Bachelor of Science degree in Mechanical Engineering
from the University of Miami.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF ITS NOMINEE,
HUGH J. MORGAN, JR.
4
Information Regarding Board of Directors and Committees
Director Independence. The Companys Board of Directors has determined that the
following directors are independent within the meaning of The Nasdaq Stock Market (Nasdaq)
listing standards: Messrs. Morgan, Spaulding, Stebbing and Stupp, and that Mr. Emile Battat is not
independent. The Companys independent directors meet in executive session from time to time. The
Companys bylaws provide that an independent director may be appointed as lead director, who is
responsible for calling, establishing agendas for and moderating executive sessions of independent
directors.
Meetings. The Board of Directors held four meetings during 2008. Each director attended at
least 75% of the aggregate of (i) the total number of meetings of the Board of Directors and (ii)
the total number of meetings of all committees on which he served held in 2008 during the time he
served as a director or as a member of such committees.
Nominating Process. Because of the small number of directors, the Board of Directors has
determined, and has adopted a resolution providing, that nominees for election to the Board of
Directors will be selected by a majority vote of the directors meeting the Nasdaq independence
requirements (Messrs. Morgan, Spaulding, Stebbing and Stupp). Accordingly, the Board of Directors
does not have a separate nominating committee or a nominating committee charter. In accordance with
resolutions adopted by the Board of Directors, in selecting nominees for election as directors, the
Board of Directors, with the assistance of the Corporate Governance Committee, will review and
evaluate candidates submitted by directors and management and by the Companys stockholders
pursuant to the procedures set forth in the Companys Bylaws and described in STOCKHOLDER
PROPOSALS Stockholder Nominations for Directors below. The Board of Directors, in considering
possible nominees, will take into account the following: (a) each director should be an individual
of the highest character and integrity; (b) each director should have substantial experience that
is relevant to the Company; (c) each director should have sufficient time available to devote to
the affairs of the Company; and (d) each director should represent the best interest of all
stockholders. All possible nominees are to be reviewed in the same manner, regardless of whether
they have been submitted by stockholders, directors or management.
Committees. The Board of Directors has four standing committees: the Executive Committee, the
Corporate Governance Committee, the Compensation Committee and the Audit Committee.
The Executive Committee is currently comprised of Mr. Emile Battat and Mr. Morgan.
The Corporate Governance Committee, which is currently comprised of Mr. Morgan and Mr.
Stebbing, is to assist in the evaluation of possible nominees for election to the Board of
Directors as requested by the Board of Directors, review annually and advise the Board of Directors
with respect to the compensation of directors and recommend to the Board of Directors (a) the
number of directors to be fixed in connection with each annual meeting of stockholders, (b) the
directors to be appointed to each of the committees of the Board, (c) corporate governance
guidelines and (d) proposed changes to the charter of the Corporate Governance Committee. In
making recommendations to the Board of Directors as to director compensation, the Corporate
Governance Committee considers the directors responsibilities and time devoted by them in
fulfilling their duties as directors, the skills required and market data on director compensation
and takes into account recommendations made by Mr. Emile Battat. The Corporate Governance
Committee met two times in 2008.
The Compensation Committee, which is currently comprised of Messrs. Morgan, Spaulding and
Stupp, makes recommendations to the Board of Directors as to the remuneration of all executive
officers of the Company, administers the Atrion Corporation 1997 Stock Incentive Plan (the 1997
Stock Incentive Plan), the Atrion Corporation 2006 Equity Incentive Plan (the 2006 Equity
Incentive Plan), the Atrion Corporation Non-Employee Director Stock Purchase Plan (the Stock
Purchase Plan) and the Atrion Corporation Deferred Compensation Plan for Non-Employee Directors
(the Deferred Compensation Plan), and reviews and makes recommendations regarding the Companys
other incentive compensation plans. The primary processes and procedures for the consideration and
determination of executive compensation, the role of executive officers in determining or
recommending the amount and form of executive officer compensation, the extent of delegation of
authority and the role of compensation consultants in determining or recommending executive officer
compensation are set forth in Compensation Discussion and Analysis below. The Board of Directors
has adopted a written charter for the Compensation Committee, a copy
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of which is available on the Companys website at www.atrioncorp.com. The Compensation Committee
met two times in 2008.
The Audit Committee, which is currently comprised of Messrs. Morgan, Spaulding, Stebbing and
Stupp, appoints, determines the appropriate compensation for and oversees the work of the Companys
independent auditors, and assists the Board of Directors in its oversight of the Companys
accounting and financial reporting principles and policies and internal audit controls and
procedures and oversees related party transactions. The Board of Directors has adopted a written
charter for the Audit Committee, a copy of which is available on the Companys website at
www.atrioncorp.com. The Audit Committee reviews, at least annually, the Audit Committee Charter
and is to recommend any changes to the Audit Committee Charter to the Board of Directors. The
Board of Directors has determined that each member of the Audit Committee is independent within the
meaning of the Nasdaq listing standards and is financially literate, and that Mr. Stupp qualifies
as an audit committee financial expert. The Audit Committee met six times in 2008.
Stockholder Communications to the Board of Directors. Any stockholder wishing to communicate
with the Board of Directors about any matter should send the communication, in written form, to
Emile A. Battat, Chairman and Chief Executive Officer, at the Companys principal office in Allen,
Texas. Mr. Emile Battat will promptly send the communication to the other members of the Board of
Directors.
Attendance at Stockholder Meetings. The Board of Directors has adopted a policy encouraging
each director to attend, if practicable, annual meetings of stockholders of the Company. The 2008
annual meeting was attended by all directors of the Company.
Code of Ethics. The Board of Directors has adopted a Code of Business Conduct that applies to
the Companys employees, including the Companys executive officers.
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SECURITIES OWNERSHIP
The following table sets forth information regarding the beneficial ownership of shares of
common stock of the Company as of March 20, 2009 by (i) each of the directors of the Company, one
of whom is also the Board of Directors nominee for election as a director at the annual meeting;
(ii) the executive officers of the Company who are named in the Summary Compensation Table herein;
(iii) all of the directors and executive officers of the Company as a group, and (iv) each other
person known by the Company to be the beneficial owner of more than 5% of the outstanding common
stock of the Company.
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Number of Shares |
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Percent |
Name of Beneficial Owner |
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Beneficially Owned (a) |
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of Class (a) |
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Emile A. Battat (b) |
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223,780 |
(c) |
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11.24 |
% |
David A. Battat |
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14,000 |
(c) |
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* |
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Hugh J. Morgan, Jr. |
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20,009 |
(d) |
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1.01 |
% |
Ronald N. Spaulding |
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1,117 |
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* |
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Roger F. Stebbing |
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28,800 |
(c) |
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1.45 |
% |
John P. Stupp, Jr. |
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163,896 |
(c)(e) |
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8.23 |
% |
Jeffery Strickland |
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22,399 |
(f) |
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1.13 |
% |
Royce & Associates, LLC(g) |
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152,458 |
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7.70 |
% |
T. Rowe Price Associates, Inc.(h) |
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195,700 |
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9.89 |
% |
All
directors and executive officers as a group |
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474,001 |
(i) |
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23.49 |
% |
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* |
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Less than 1% of class. |
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(a) |
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Based on 1,979,171 shares of common stock outstanding on March 20, 2009, plus shares that can
be acquired through the exercise of options within 60 days thereafter by the specified
individual or group. Except as otherwise indicated in the notes to this table, beneficial
ownership includes sole voting and investment power. |
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(b) |
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The business address for Mr. Emile Battat is One Allentown Parkway, Allen, Texas 75002-4211.
Mr. Emile Battat is the father of Mr. David Battat, who is the President and Chief Operating
Officer of the Company and the President of Halkey-Roberts Corporation, a Company subsidiary. |
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(c) |
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The shares listed include the following shares issuable upon the exercise of options
exercisable on March 20, 2009 or within 60 days thereafter: Mr. Emile Battat, 12,500 shares;
Mr. David Battat, 4,000 shares; Mr. Stebbing, 10,000 shares; and Mr. Stupp, 12,000 shares.
All such persons are parties to award agreements setting forth certain terms of options
granted to them under the 2006 Equity Incentive Plan or the 1997 Stock Incentive Plan. The
shares listed do not include stock units (Stock Units) convertible into shares of common
stock at a later date. |
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Does not include 29,000 shares held by Mr. Morgans children and their spouses and Mr.
Morgans grandchildren as a result of gifts by Mr. Morgan, none of which shares is
beneficially owned by Mr. Morgan. |
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Includes 135,000 shares held by Stupp Bros., Inc. as to which Mr. Stupp shares voting power
and investment power as a director and executive officer and as a voting trustee of a voting
trust which owns 100% of the voting stock of Stupp Bros., Inc. The 135,000 shares held by
Stupp Bros., Inc. are pledged to that companys lenders as security for its working capital
line of credit. The 135,000 shares held by Stupp Bros., Inc. represent 6.82% of the common
stock of the Company outstanding as of March 20, 2009. The business address for Mr. Stupp and
Stupp Bros., Inc. is 3800 Weber Road, St. Louis, Missouri 63125. |
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Includes 15,499 shares held in a family trust of which Mr. Strickland is a co-trustee. |
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The address of Royce & Associates, LLC (Royce) is 1414 Avenue of the Americas, New York,
New York 10019. This information is based upon a Schedule 13G dated January 23, 2009 filed
with the Commission and furnished to the Company reporting that Royce has sole power to vote
or direct the vote of and the sole power to dispose or direct the disposition of 152,458
shares of common stock of the Company. |
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The address of T. Rowe Price Associates, Inc. is 100 East Pratt Street, Baltimore, Maryland
21202. This information is based upon a Schedule 13G dated February 13, 2009 filed with the
Commission and furnished to the Company by T. Rowe Price Associates, Inc. (Price Associates)
and T. Rowe Price Small-Cap Value Fund, Inc. (Small-Cap Value Fund) reporting that Price
Associates has sole power to vote or direct the vote of 18,700 shares of common stock and has
sole power to dispose of or direct the disposition of 195,700 shares |
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of common stock and that Small-Cap Value Fund has sole power to vote or direct the vote of
177,000 shares of common stock. For purposes of the reporting requirements of the Exchange
Act, Price Associates is deemed to be a beneficial owner of such shares of common stock;
however, Price Associates has expressly disclaimed beneficial ownership of all such shares. |
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(i) |
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See notes (a)-(f) above. |
APPROVAL OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Audit Committee has appointed the firm of Grant Thornton LLP as independent accountants to
audit the financial statements of the Company for the year 2009. Although ratification by
stockholders of the selection of Grant Thornton LLP is not required by law, the selection of Grant
Thornton LLP is being submitted to stockholders for ratification because the Company believes it is
a good corporate practice. If stockholders do not ratify the selection, the Audit Committee will
reconsider whether to retain Grant Thornton LLP. Even if the selection is ratified, the Audit
Committee, in its discretion, may change the appointment 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. A
representative of Grant Thornton LLP will attend the annual meeting, will have an opportunity to
make a statement and will be available to respond to appropriate questions.
|
|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE APPOINTMENT
OF GRANT THORNTON LLP AS INDEPENDENT ACCOUNTANTS TO AUDIT THE FINANCIAL STATEMENTS
OF THE COMPANY FOR THE YEAR 2009. |
Audit and Related Fees
Audit Fees
The aggregate fees billed by Grant Thornton LLP for professional services rendered for the
audit of the Companys annual financial statements and the reviews of the financial statements
included in the Companys quarterly reports on Form 10-Q were $254,531 for the year ended December
31, 2008 and $281,440 for the year ended December 31, 2007.
Audit Related Fees
The aggregate fees billed by Grant Thornton LLP for professional services rendered for
consultations regarding financial and reporting standards were $13,335 for the year ended December
31, 2007. No audit related fees were billed by Grant Thornton LLP for the year ended December 31,
2008.
Tax Fees
The aggregate fees billed by Grant Thornton LLP for professional services rendered for tax
services were $11,366 for the year ended December 31, 2008 and $43,707 for the year ended December
31, 2007. These fees relate to federal and state tax compliance and tax advice in each such year.
All Other Fees
There were no fees billed by Grant Thornton LLP for services rendered for the year ended
December 31, 2008 or for the year ended December 31, 2007 other than those set forth above.
The Audit Committee has determined that the provision by Grant Thornton LLP of the above
referenced services is compatible with maintaining its independence.
The Audit Committee has adopted policies and procedures for pre-approval of audit and
non-audit services in order to ensure that the provision of those services does not impair the
auditors independence. In accordance with those policies and procedures, the Company is not to
engage the independent auditors to render any audit or non-audit services unless either the service
is approved in advance by the Audit Committee or the engagement to
8
render the service is entered into pursuant to the Audit Committees pre-approval policies and
procedures. In the fourth quarter of each year, the Audit Committee is to review the services
expected to be performed by the independent auditor. The Audit Committee will pre-approve fee
levels for the up-coming fiscal year for each of the following categories: audit, audit-related and
tax compliance/planning services (individual projects less than $10,000). Tax compliance/planning
projects exceeding $10,000 and all other services not pre-approved in the categories above will
require specific pre-approval from the Audit Committee on an individual project basis. Approval
for such services may be requested at the next Audit Committee meeting or, if earlier approval is
necessary, it may be obtained in accordance with the Audit Committees delegation to the Audit
Committee Chairman as described below. The Audit Committee will not delegate to management its
responsibilities to pre-approve services performed by the independent auditor. However, the Audit
Committee has delegated pre-approval authority to the Audit Committee Chairman for unplanned
services that arise during the year. The Chairman has the authority to review and approve
permissible services up to $10,000 per service, provided that the aggregate amount of such services
does not exceed $25,000 in any calendar year. The Audit Committee Chairman must report, for
informational purposes only, any pre-approval decisions to the Audit Committee at its next
scheduled meeting. During the year ended December 31, 2008, no services were provided by Grant
Thornton LLP other than in accordance with the pre-approval policies and procedures then in place.
Audit Committee Report
The Audit Committee of the Board of Directors has reviewed and discussed with management the
Companys audited financial statements as of and for the year ended December 31, 2008. The Audit
Committee has discussed with Grant Thornton LLP, the Companys auditors, the matters required to be
discussed by Statement on Auditing Standards No. 61, Communication with Audit Committees, as
amended, by the Auditing Standards Board of the American Institute of Certified Public Accountants.
The audit committee has received the written disclosures and the letter from the independent
accountant required by applicable requirements of the Public Company Accounting Oversight Board
regarding the independent accountants communications with the audit committee concerning
independence, and has discussed with the independent accountant the independent accountants
independence.
Based on the reviews and discussions referred to above, the Audit Committee recommended to the
Board of Directors that the financial statements referred to above be included in the Companys
Annual Report on Form 10-K for the year ended December 31, 2008.
Members of the Audit Committee
John P. Stupp, Jr. (Chairman) Hugh J. Morgan, Jr. Roger F. Stebbing Ronald N. Spaulding
DIRECTOR COMPENSATION
During 2008, each non-employee director was paid a fee of $30,000 for his service as a
director. Effective January 1, 2009, the annual fee for each non-employee director was increased
to $60,000. In addition, the Chairmen of the Corporate Governance Committee and the Compensation
Committee are each paid a fee of $6,000 per year, and the Chairman of the Audit Committee is paid a
fee of $12,000 per year. The Company reimburses each director for travel and out-of-pocket
expenses incurred in connection with attending meetings of the Board of Directors.
The Stock Purchase Plan provides non-employee directors with a convenient method of acquiring
shares of the Companys common stock. The Stock Purchase Plan allows non-employee directors to
elect to receive fully-vested stock and restricted stock in lieu of some or all of their fees. The
foregone fees are converted into shares of fully-vested and restricted stock on the day the
applicable fees otherwise would have been paid. The restricted stock vests in equal amounts on the
first day of the second, third and fourth calendar quarters following receipt of the stock,
provided the non-employee director is then serving as a member of the Board of Directors.
The Deferred Compensation Plan allows non-employee directors to defer all or part of their
fees into stock units (Stock Units). A Stock Unit account is set up for each participating
non-employee director. The Stock Unit account is credited with a number of Stock Units equal to
the fees deferred by the non-employee director divided by the closing price of the Companys common
stock on the day next preceding the date on which the deferred fees would have been paid. The
Stock Units vest as follows: 25% vest on the date credited to the Stock Unit account and 25%
9
vest on each of the April 1, July 1 and October 1 immediately following the date credited to the
Stock Unit account, provided the non-employee director is then serving as a member of the Board of
Directors. Each Stock Unit account is credited with additional whole or partial Stock Units
reflecting dividends that would have been paid on the number of shares represented by that Stock
Unit account. A non-employee director may elect to receive a distribution of his Stock Unit
account in the form of shares of common stock, with cash paid for fractional Stock Units, in the
January following the year in which his service as a director of the Company ceases or in January
of a particular year.
The fees for non-employee directors who elect to participate in either the Stock Purchase Plan
or the Deferred Compensation Plan or both are paid on the first business day of January of each
year for the calendar year then beginning, in each case to the extent such election or elections
apply.
The following table sets forth summary information concerning the compensation of the
non-employee directors of the Company for the year ended December 31, 2008:
|
|
|
|
|
|
|
|
|
Name(1) |
|
Fees Earned or Paid in Cash ($) |
|
Total ($) |
|
Hugh J. Morgan, Jr. |
|
|
36,000 |
(2) |
|
|
36,000 |
|
Ronald N. Spaulding |
|
|
30,000 |
(3) |
|
|
30,000 |
|
Roger F. Stebbing |
|
|
36,000 |
(4) |
|
|
36,000 |
|
John P. Stupp, Jr. |
|
|
42,000 |
(5) |
|
|
42,000 |
|
|
|
|
(1) |
|
Mr. Emile Battat is not included in this table as he receives no compensation for his service
as a director. |
|
(2) |
|
Mr. Morgan elected to receive all of his fees for 2008 in shares of the Companys common
stock, pursuant to the Stock Purchase Plan described above. Mr. Morgan was issued 288 shares,
valued at $125 per share, the closing market price of the Companys common stock on December
31, 2007, the last trading date prior to the date of issuance. |
|
(3) |
|
Mr. Spaulding elected to receive $9,000 of his fees for 2008 in shares of the Companys
common stock pursuant to the Stock Purchase Plan described above. Mr. Spaulding was issued 72
shares, valued at $125 per share, the closing market price of the Companys common stock on
December 31, 2007, the last trading date prior to the date of issuance. |
|
(4) |
|
Mr. Stebbing elected to defer all of his fees for 2008 into Stock Units, pursuant to the
Deferred Compensation Plan described above. Mr. Stebbings Stock Unit account was credited
with 288 Stock Units, which amount was based on $125 per share, the closing market price of
the Companys common stock on December 31, 2007, the last trading date prior to the date of
issuance. As of December 31, 2008, Mr. Stebbing held an aggregate of 10,000 stock options and
had an aggregate of 476.01 Stock Units in his Stock Unit account. |
|
(5) |
|
Mr. Stupp elected to defer $5,985 of his fees for 2008 into Stock Units, pursuant to the
Deferred Compensation Plan described above. Mr. Stupps Stock Unit account was credited with
47.88 Stock Units, which amount was based on $125 per share, the closing market price of the
Companys common stock on December 31, 2007, the last trading date prior to the date of
issuance. As of December 31, 2008, Mr. Stupp held an aggregate of 12,000 stock options and
had an aggregate of 74.45 Stock Units in his Stock Unit account. |
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
We believe that a compensation program that is attractive and competitive is necessary in
order to attract, retain and motivate executive officers and other key personnel who will further
our interests and enhance stockholder value. Our compensation program is designed to reward high
level corporate performance as reflected by increases in our operating income and earnings per
share. Elements of the program are also intended to reward key personnel based on the performance
of our operating units and to reward them for individual responsibilities, experience, performance
and capacity to influence our results.
The principal elements of our compensation program are: (i) base salary; (ii) annual cash
bonuses; and (iii) long term incentives in the form of equity awards. Additional elements are our
health insurance plan, retirement
10
benefits under our Section 401(k) Savings Plan, or 401(k) Plan, and other perquisites. We utilize
these elements because we believe they are necessary or helpful in achieving the objectives of our
compensation program. For example, base salaries are designed to attract and retain executive
officers and key personnel and are intended to be at a competitive level. Annual cash bonuses and
equity awards are intended to reward executive officers and key personnel and provide incentives
for superior results by us or one of our operating units and for individual responsibility and
performance. Equity awards also are intended to align the interests of our executive officers and
key personnel with the interests of our stockholders. The combination of these elements is designed
to compensate employees fairly for the services they provide on a regular basis.
We believe that base salary is the most crucial element of the program in terms of attracting
and retaining key employees. Annual cash bonuses provide our executive officers and other key
personnel with the opportunity to receive cash compensation in addition to their salaries and are
intended to reward them for the performance of the Company as a whole or of our operating units and
for individual performance. We consider long term incentives in the form of equity awards as very
important in aligning the interests of our executive officers and key personnel with the interests
of our stockholders. We do not have a specific policy of awarding options as opposed to restricted
stock or restricted stock units. However, over the years most of our equity awards have been in the
form of stock options because of the incentive they provide to employees in that they have to be in
the money for the employees to realize any benefit from the award. In the past few years, we have
shifted the focus of our equity awards to restricted stock units, principally due to the change in
accounting treatment for options. We believe that our health insurance benefits, along with certain
other benefits, are necessary components of the program insofar as attracting and retaining
employees.
Our Compensation Committee establishes the overall compensation program for our executive
officers and makes recommendations for their base salaries, salary increases, and any discretionary
bonuses. In addition, the Compensation Committee administers our equity incentive program. From
time to time, directors who are not members of the Compensation Committee attend meetings of the
Compensation Committee, including Mr. Emile Battat who attends some meetings or parts of meetings.
The Compensation Committee does not delegate the authority to make equity awards. Our executive
officers are responsible for the salaries, salary increases, and cash bonuses of key personnel in
our operating units who are not executive officers, and they administer separate incentive plans
for those units, subject, in the case of one of our units, to review by our Compensation Committee
with respect to bonuses for one executive officer who participates in that units plan. In
considering the base salaries for Mr. David Battat and for Mr. Strickland, the Compensation
Committee takes into account the recommendations of Mr. Emile Battat. Mr. Emile Battat also
assisted in the development of an annual cash incentive plan for Mr. Strickland that was first
effective in 2007 and is modeled after the bonus plan applicable to Mr. Emile Battat. Additionally,
Mr. Emile Battat has recommended that Mr. David Battat continue participating in the incentive plan
of the operating unit of which he continues to serve as President and to be responsible for its
day-to-day operations. Mr. Emile Battat is the only executive officer or key employee with an
employment agreement, which is described below.
We believe that our executive compensation program should be internally consistent and
equitable. In 2008 Mr. Emile Battats base salary, which is fixed by his employment agreement, was
2.0 times the base salary of Mr. David Battat and approximately 2.4 times the base salary of Mr.
Strickland. We believe that these differences were appropriate based on the responsibilities and
experience of our executive officers. As discussed below, both Mr. Emile Battat and Mr. Strickland
are entitled to annual cash bonuses equal to certain percentages of increases in our operating
income. The percentage of increase in operating income for Mr. Emile Battat was determined based on
our discussions with him. In determining what percentage of our operating income increase would be
awarded to Mr. Strickland, the Compensation Committee took into account the responsibilities and
experience of these two executive officers, as well as their capacities to influence our results,
and concluded that it would be appropriate for the maximum bonus that could be paid to Mr.
Strickland under the formula applicable to him to be approximately 25% of the maximum bonus that
could be paid to Mr. Emile Battat under the formula applicable to him. Mr. David Battats annual
cash bonus is based on the performance of our unit for which Mr. David Battat serves as President
and continues to be responsible for day-to-day operations.
We endeavor to structure our compensation program so that our currently-paid-out compensation
is adequate to attract and retain key personnel and we have sufficient long-term compensation that
motivates our executive officers and other key personnel to focus on our performance over the
longer term. Our Compensation
11
Committee considers the following corporate factors in establishing compensation policies and
making compensation decisions:
|
|
|
increase in earnings per share |
|
|
|
|
increase in operating income |
|
|
|
|
total stockholder return |
|
|
|
|
safety |
|
|
|
|
efficiency of operations |
Base Salaries
In structuring the compensation program, we start with the annual base salary and build on
that element. Salaries are based on the executive officers performance, responsibilities,
experience, capacity to influence our results, competitive conditions and length of service with
us. When determining the base salaries for our executive officers, we review the total annual
compensation for those executive officers for previous years, including base salary, cash bonuses,
long term incentive awards, health insurance, retirement benefits and other perquisites. To
facilitate this review, we use tally sheets identifying each of these elements. Each tally sheet
also shows the amount payable to the executive officers upon termination of employment under
various circumstances and equity ownership. Our base salaries are not contingent on our corporate
performance.
Mr. Emile Battats annual base salary is $500,000 and has been at that level since 2002, in
accordance with the terms of his employment agreement. Mr. Emile Battat requested that his base
salary not be increased during that period, including when his employment agreement was amended in
2006 to, among other things, extend the term of employment.
During 2007, when Mr. David Battat was elected as our President and Chief Operating Officer,
his responsibilities were expanded beyond those of President of one of our operating units. In
connection with such election and expansion of responsibilities, we increased his annual base
salary to $200,000. Effective January 1, 2008, his annual base salary was increased to $250,000.
Our Compensation Committee believes that this increase was appropriate in light of his enhanced
duties at the Company level as well as the significant contribution that the operating unit of
which he serves as President has been making to the Companys overall results.
Mr. Stricklands annual base salary was increased from $200,000 to $210,000 effective January
1, 2008. Our Compensation Committee believes this increase was appropriate in light of market
conditions, the continuing growth of the Company, Mr. Stricklands individual performance and his
length of service with the Company.
Annual Incentive Compensation
Our employment agreement with Mr. Emile Battat and our annual bonus plan for Mr. Strickland
each provide for annual cash bonuses based on increases in our operating income, albeit at
different levels. Our Compensation Committee has the authority to exercise discretion to adjust any
increase in operating income to disregard one-time, nonrecurring extraordinary items and is to make
such equitable adjustments as are required to give effect to acquisitions, divestitures or similar
corporate transactions. The Compensation Committee also may recommend an increase in the size of an
award or payment under both Mr. Emile Battats employment agreement and Mr. Stricklands incentive
compensation plan or award compensation if the performance goals are not attained. We believe that
this discretionary authority may be useful because there may be circumstances that would support
awards being made in the absence of attainment of the performance goals. Mr. David Battat, our
President and Chief Operating Officer, serves as President of one of our operating units and
devotes a substantial portion of his time to the operations of that unit. In reviewing Mr. David
Battats total compensation, our Compensation Committee concluded that for 2007 and, again, for
2008 it was appropriate for Mr. David Battat to continue participating in that units incentive
compensation plan. Accordingly, the Compensation Committee has not recommended that a separate plan
similar to those for Messrs. Emile Battat and Strickland be implemented for Mr. David Battat. The
units plan establishes a pool each year equal to a portion of the units operating profits. The
pool is used to pay certain bonuses to that units manufacturing and assembly employees, other
discretionary bonuses to employees not designated as key employees and certain other expenses. The
balance of the pool, if any, is distributed to key employees, with 75% of a participants bonus to
be paid prior to March 15 of the year immediately following the
12
year for which the pool is established and 25% to be paid by March 15 of the following year if the
participant is still employed. The plan is administered by our executive officers subject to review
and adjustments by our Compensation Committee with respect to bonuses for any of our executive
officers who participate in that plan.
Long Term Incentive Awards
Long term equity-based compensation is an integral part of our total compensation package. It
is intended to align the interests of our executive officers and key personnel with the interests
of our stockholders in focusing on long-term growth and stock performance. We review the costs and
benefits to us from the various forms of long-term compensation, recognizing that stock options
will have little or no value if we do not have increased profitability and that restricted stock
and restricted stock units may continue to have value, though possibly reduced, if our
profitability declines. During 2008, we granted options for 16,000 shares to Mr. David Battat and
awarded him 4,000 shares of restricted stock. These options and restricted stock vest over a four
year period.
Our policy is that if we are going to make equity awards, other than in connection with new
hires or unusual circumstances, those awards will be made at the meeting of our Compensation
Committee held in conjunction with our annual stockholders meetings, which usually are held each
May. Consistent with that policy, the awards to Mr. David Battat were made in May 2008, and those
were the only long term incentive awards we made in 2008.
Health Insurance and Other Perquisites
As a part of our total compensation package, we provide health insurance and other benefits
and perquisites including life and disability insurance to our executive officers. We also
maintain a 401(k) Plan for all of our employees, including our executive officers. Under our 401(k)
Plan, we make matching contributions of up to 3.5% of a participants eligible compensation. Our
executive officers are fully vested in our matching contributions.
Termination and Change in Control Arrangements
We have agreements or plans under which Messrs. Emile Battat, David Battat and Strickland are
entitled to payments and benefits upon termination of employment under certain circumstances. The
terms of Mr. Emile Battats arrangement were determined on the basis of our discussions with him.
The terms of Mr. David Battats arrangement were recommended by our Compensation Committee after
consideration of his responsibilities and experience. The terms of Mr. Stricklands severance plan
were recommended by our Compensation Committee after consideration of Mr. Stricklands total
compensation package and length of service with the Company. We have structured our arrangements
with our executives so that a change in control alone does not trigger any payments and, with
respect to their equity awards, results only in acceleration of vesting. For a more detailed
discussion of the terms of these arrangements, see Potential Termination and Change of Control
Payments beginning at page 21.
Other
The base salaries of our executive officers can be adjusted upwards and downwards, except in
the case of Mr. Emile Battat, and discretionary bonuses can be awarded based on the individual
performance of the executives. Additionally, we can make equity awards to reward individual
performance. We have not had to adjust or restate performance measures upon which awards have been
made and, accordingly, have not made any decisions nor adopted any policy with respect to adjusting
or reducing awards as a result of any such adjustment or restatement. However, we would expect to
reduce or adjust awards if such events were to occur. We recognize that there may be circumstances
where the individual responsibilities and performance of our executive officers or our corporate
performance is so exceptional that a material increase in compensation would be appropriate.
Likewise, we recognize that there could be a material downturn in our corporate performance, in
which event we would consider reducing and, if appropriate, materially reduce compensation levels
where permitted. In addition, we recognize that it may be necessary to materially increase
compensation to retain personnel who may have attractive offers from other companies. However, this
has not been a practice that we have engaged in regularly, though we have taken this action on
occasion in the past.
13
In making equity awards or considering adjustments to base salaries or cash incentives, our
Compensation Committee takes into account the other elements of the compensation packages of our
executive officers, including the number of unexercised options held and restricted stock or
restricted stock units held, as well as the potential benefits they may realize upon the sale of
the stock underlying these awards.
Although we expect to continue to grant options where appropriate to provide longer term
incentives to our executive officers and other key personnel, we are continually weighing the
benefit we expect to receive from that element of our compensation program against the impact that
type of award will have on our corporate earnings under recent accounting changes.
We have not adopted any guidelines and have no specific requirements respecting the ownership
of our securities by our executive officers and other key personnel. However, through our equity
awards to our executive officers and other key personnel we encourage ownership of our securities.
We also have a policy that discourages hedging the risk of ownership of our securities.
During the last few years, our outside compensation consultant, Mercer Human Resource
Consulting, reviewed the compensation of chief executive officers, chief operating officers and
chief financial officers in companies with annual revenues of less than $250 million and annual
median revenues ranging from $75 million to $125 million. These surveys provided us with
information regarding base salary, target bonus, target total annual compensation, long term
incentives, and total direct compensation. This information has been used by our Compensation
Committee in formulating its recommendations to our Board of Directors regarding the compensation
structure and levels of our executive officers. In addition, the Compensation Committee reviews
compensation surveys that include a broad range of companies.
Compensation Committee Report
The Compensation Committee has reviewed and discussed with management the Compensation
Discussion and Analysis set forth above. Based on this review and discussions, the Compensation
Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis
be included in the proxy statement.
Members of the Compensation Committee
Hugh J. Morgan, Jr. (Chairman) Ronald N. Spaulding John P. Stupp, Jr.
14
The following table sets forth summary information concerning the compensation during the periods
indicated of those executive officers of the Company for which such disclosure is required
(collectively, the Named Executive Officers).
Summary Compensation Table
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Change in |
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Non- |
|
Pension Value |
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Equity |
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and |
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Incentive |
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Nonqualified |
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Plan |
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Deferred |
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Name and |
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Compen- |
|
Compensation |
|
All Other |
|
|
Principal Position |
|
Year |
|
Salary ($) |
|
Bonus ($) |
|
Stock Awards ($) |
|
Option Awards ($) |
|
sation ($) |
|
Earnings ($)(1) |
|
Compensation ($) |
|
Total ($) |
|
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Emile A. Battat |
|
|
2008 |
|
|
|
500,000 |
|
|
|
296,481 |
|
|
|
107,790 |
(2) |
|
|
112,644 |
(2) |
|
|
|
|
|
|
5,438 |
|
|
|
8,539 |
(3) |
|
|
1,030,892 |
|
Chairman of the |
|
|
2007 |
|
|
|
500,000 |
|
|
|
411,195 |
|
|
|
107,790 |
(4) |
|
|
112,644 |
(4) |
|
|
|
|
|
|
15,491 |
|
|
|
3,363 |
(5) |
|
|
1,150,483 |
|
Board and Chief |
|
|
2006 |
|
|
|
500,000 |
|
|
|
100,000 |
|
|
|
44,913 |
(6) |
|
|
46,936 |
(6) |
|
|
|
|
|
|
14,640 |
|
|
|
3,089 |
(7) |
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709,578 |
|
Executive Officer |
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David A. Battat |
|
|
2008 |
|
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250,000 |
|
|
|
|
|
|
|
74,040 |
(9) |
|
|
64,820 |
(9) |
|
|
215,000 |
(10) |
|
|
609 |
|
|
|
8,535 |
(11) |
|
|
613,004 |
|
President and Chief |
|
|
2007 |
|
|
|
186,538 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000 |
(12) |
|
|
8,500 |
|
|
|
2,610 |
(13) |
|
|
347,648 |
|
Operating Officer
(8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffery Strickland |
|
|
2008 |
|
|
|
210,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
74,120 |
(14) |
|
|
9,886 |
|
|
|
10,637 |
(15) |
|
|
304,643 |
|
Vice President and |
|
|
2007 |
|
|
|
200,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
(16) |
|
|
18,467 |
|
|
|
21,106 |
(17) |
|
|
339,573 |
|
Chief Financial |
|
|
2006 |
|
|
|
195,000 |
|
|
|
|
|
|
|
|
|
|
|
6,401 |
(18) |
|
|
59,603 |
(19) |
|
|
17,517 |
|
|
|
5,621 |
(20) |
|
|
284,142 |
|
Officer, Secretary
and Treasurer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The amounts presented in column (h) are the amounts accumulated in the Named Executive
Officers account under the Cash Balance Plan between January 1, 2008 and December 31, 2008,
January 1, 2007 and December 31, 2007 and January 1, 2006 and December 31, 2006, respectively. |
|
(2) |
|
The amounts shown do not reflect compensation actually received by Mr. Emile Battat.
Instead, the amounts shown are the compensation costs recognized by the Company for the year
ended December 31, 2008 as determined pursuant to FAS 123(R). The assumptions used to
calculate the value of these stock and option awards are set forth under Note 8 of the Notes
to Consolidated Financial Statements included in the Companys Annual Report on Form 10-K for
the year ended December 31, 2006 filed with the Commission on March 9, 2007. |
|
(3) |
|
Includes the following paid or accrued by the Company or one or more of its subsidiaries: (i)
matching contributions to the 401(k) Plan of $8,050 and (ii) payment of life insurance
premiums of $489. |
|
(4) |
|
The amounts shown do not reflect compensation actually received by Mr. Emile Battat.
Instead, the amounts shown are the compensation costs recognized by the Company for the year
ended December 31, 2007 as determined pursuant to FAS 123(R). The assumptions used to
calculate the value of these stock and option awards are set forth under Note 8 of the Notes
to Consolidated Financial Statements included in the Companys Annual Report on Form 10-K for
the year ended December 31, 2006 filed with the Commission on March 9, 2007. |
|
(5) |
|
Includes the following paid or accrued by the Company or one or more of its subsidiaries: (i)
matching contributions to the 401(k) Plan of $2,700 and (ii) payment of life insurance
premiums of $663. |
|
(6) |
|
The amounts shown do not reflect compensation actually received by Mr. Emile Battat.
Instead, the amounts shown are the compensation costs recognized by the Company for the year
ended December 31, 2006 as determined pursuant to FAS 123(R). The assumptions used to
calculate the value of these stock and option awards are set forth under Note 8 of the Notes
to Consolidated Financial Statements included in the Companys Annual Report on Form 10-K for
the year ended December 31, 2006 filed with the Commission on March 9, 2007. |
|
(7) |
|
Includes the following paid or accrued by the Company or one or more of its subsidiaries: (i)
matching contributions to the 401(k) Plan of $2,640 and (ii) payment of life insurance
premiums of $449. |
|
(8) |
|
Mr. David Battat was elected President and Chief Operating Officer in May 2007. |
|
(9) |
|
The amounts shown do not reflect compensation actually received by Mr. David Battat.
Instead, the amounts shown are the compensation costs recognized by the Company for the year
ended December 31, |
15
|
|
|
|
|
2008 as determined pursuant to FAS 123(R). The assumptions used to
calculate the value of these stock and option awards are set forth under Note 9 of the Notes
to Consolidated Financial Statements included in
the Companys Annual Report on Form 10-K for the year ended December 31, 2008 filed with the
Commission on March 13, 2009. |
|
(10) |
|
Mr. David Battat was awarded this amount for 2008 pursuant to the Halkey-Roberts Corporation
Incentive Compensation Plan (the Halkey-Roberts Plan). The Halkey-Roberts Plan provides
that each participant will receive 75% of his or her bonus prior to March 15 of the year
following the year to which the bonus is attributable, and 25% by the next succeeding March 15
provided the participant is then employed by Halkey-Roberts Corporation or an affiliate. |
|
(11) |
|
Includes the following paid or accrued by the Company or one or more of its subsidiaries: (i)
matching contributions to the 401(k) Plan of $8,050 and (ii) payment of life insurance
premiums of $485. |
|
(12) |
|
Mr. David Battat was awarded this amount for 2007 pursuant to the Halkey-Roberts Plan. |
|
(13) |
|
Includes the following paid or accrued by the Company or one or more of its subsidiaries: (i)
matching contributions to the 401(k) Plan of $2,238 and (ii) payment of life insurance
premiums of $372. |
|
(14) |
|
Mr. Strickland was awarded this amount pursuant to the Incentive Compensation Plan for Chief
Financial Officer for Calendar Years Beginning 2007 (the CFO Plan). |
|
(15) |
|
Includes the following paid or accrued by the Company or one or more of its subsidiaries: (i)
matching contributions to the 401(k) Plan of $7,350 and (ii) payment of life insurance
premiums of $3,287. |
|
(16) |
|
Mr. Strickland was awarded this amount pursuant to the CFO Plan. |
|
(17) |
|
Includes the following paid or accrued by the Company or one or more of its subsidiaries: (i)
matching contributions to the 401(k) Plan of $2,400, (ii) payment of life insurance premiums
of $3,270 and (iii) a payment of $15,436 in connection with the settlement of the Companys
obligations to participants under the Companys Supplemental Executive Thrift Plan. |
|
(18) |
|
The amount shown does not reflect compensation actually received by Mr. Strickland. Instead,
the amount shown is the compensation cost recognized by the Company for the year ended
December 31, 2006 as determined pursuant to FAS 123(R). This compensation cost reflects
option awards granted prior to 2006. The Company estimated the fair value of the option
awards using the Black-Scholes option-pricing formula and a single option award approach. To
arrive at the dollar amount recognized for financial statement reporting purposes with respect
to the fiscal year ended December 31, 2006, the Company used the following assumptions, which
were determined at the time of the grant in 2002: risk-free interest rate (4.08%), dividend
yield (0%), volatility factor (43.8%) and expected life (4 years). |
|
(19) |
|
Mr. Strickland was awarded this amount pursuant to the Atrion Corporation Incentive
Compensation Plan for Chief Financial Officer for Calendar Years Beginning 2001 (the
Strickland Incentive Plan). |
|
(20) |
|
Includes the following paid or accrued by the Company or one or more of its subsidiaries: (i)
matching contributions to the 401(k) Plan of $2,340 and (ii) payment of life insurance
premiums of $3,281. |
16
The following table sets forth summary information concerning the grants of plan-based awards
to the Named Executive Officers of the Company during the year ended December 31, 2008.
Grants of Plan-Based Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
All Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
Option |
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under |
|
Estimated Future Payouts Under |
|
Number of |
|
Awards: |
|
Exercise or Base |
|
|
|
|
|
|
|
|
Non-Equity Incentive Plan |
|
Equity Incentive Plan Awards |
|
Shares |
|
Number of |
|
Price of |
|
Grant Date Fair |
|
|
|
|
|
|
Awards |
|
|
|
|
|
|
|
|
|
Maxi- |
|
of Stock |
|
Securities |
|
Option |
|
Value of Stock and |
|
|
|
|
|
|
Threshold |
|
Target |
|
Maximum |
|
Threshold |
|
Target |
|
mum |
|
or Units |
|
Underlying |
|
Awards |
|
Option |
Name |
|
Grant Date |
|
($)(1) |
|
($)(2) |
|
($) (3) |
|
(#) |
|
(#) |
|
(#) |
|
(#) |
|
Options (#) |
|
($/Sh) |
|
Awards ($) |
|
David A. Battat(4) |
|
|
|
|
|
|
0 |
|
|
|
215,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffery
Strickland(4) |
|
|
|
|
|
|
0 |
|
|
|
74,120 |
|
|
|
105,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The amount shown in this column is $0 because the Halkey-Roberts Plan and the CFO Plan do not
provide for a threshold amount if performance targets are not met. |
|
(2) |
|
The amounts shown in this column represent the payments that Mr. David Battat and Mr.
Strickland received in 2008. |
|
(3) |
|
The Halkey-Roberts Plan does not provide for a maximum bonus. The maximum amount shown for
Mr. Strickland represents fifty percent (50%) of Mr. Stricklands base salary for 2008, the
highest percentage of base salary that may be awarded under the CFO Plan. |
|
(4) |
|
See Certain Agreements, Plans and Transactions below. |
Base Salary
Mr. Emile Battats base salary is fixed by his employment agreement. Base salaries for Mr.
Strickland and Mr. David Battat are reviewed annually, and adjustments are generally made on the
basis of the Companys performance as measured by certain financial and non-financial criteria,
various survey information respecting compensation of executive officers, compensation levels for
executive officers in a broad range of companies, cost-of-living information and the individual
performance of the respective executive officer. The Compensation Committee has not assigned
relative weights or values to any of such criteria. With respect to the financial performance of
the Company, the Compensation Committee generally takes into consideration the Companys operating
income, earnings per share and total stockholder return.
Incentive Compensation
Subject to the terms of any employment agreement or incentive compensation plan, executive
officers of the Company are eligible for discretionary bonuses as determined by the Compensation
Committee. At the recommendation of the Compensation Committee, the Company and its subsidiaries
have implemented cash incentive plans covering certain key employees. These plans are intended to
foster a corporate culture focused on bottom line results by providing key employees with a
substantial stake in reducing costs and increasing sales and productivity while conserving capital
resources.
Equity-Based Awards
Stock Options. The Compensation Committee may grant stock options to eligible persons under
the 2006 Equity Incentive Plan. Each option granted pursuant to the 2006 Equity Incentive Plan is
designated at the time of grant as either an option intended to qualify as an incentive stock
option under Section 422 of the Code or as an option that is not intended to so qualify, referred
to as a nonqualified stock option. Nonqualified stock options may be granted to all eligible
persons, but incentive stock options may be granted only to employees of the Company and its
subsidiaries. The Compensation Committee may set the exercise price of stock options, provided
that the
17
exercise price per share is not less than the par value of a share of common stock and is not
less than the fair market value of the underlying common stock on the date of grant. Stock options
will vest and become exercisable in such a manner and on such date or dates as are determined by
the Compensation Committee. Any incentive stock options granted pursuant to the 2006 Equity
Incentive Plan will expire after a period not exceeding ten years from the date of grant, as
determined by the Compensation Committee, subject to earlier termination in the event that the
participants employment or service with the Company or a subsidiary ceases before the end of the
option period. If an incentive stock option is granted to a key employee who owns or is deemed to
own more than 10% of the combined voting power of all classes of the Companys stock, the option
period may not exceed five years and the exercise price may not be less than 110% of the fair
market value of the underlying common stock on the date of grant. The exercise price for any
option is generally payable in cash or, in certain circumstances, by the surrender, at the fair
market value on the date on which the option is exercised, of shares of the Companys common stock
then issuable upon exercise of the option having a value equal to the exercise price. The 2006
Equity Incentive Plan permits optionholders to exercise their options prior to the date on which
the options will vest, subject to Compensation Committee action. In such case, the optionholder
will, upon payment for the shares, receive restricted stock having vesting terms that are identical
to the vesting terms under the original option and subject to repurchase by the Company while the
restrictions on vesting are in effect. Each stock option is to be evidenced by an award agreement
containing such provisions, consistent with the 2006 Equity Incentive Plan, as are determined by
the Compensation Committee.
Restricted Common Stock. The Compensation Committee may award restricted common stock to key
employees and consultants under the 2006 Equity Incentive Plan. The participants rights to the
restricted common stock are subject to certain transferability and forfeiture restrictions during a
restricted period which commences on the date of grant of the restricted common stock and expires
from time to time in accordance with a schedule established by the Compensation Committee. While
the restrictions are in place, the participant generally has the rights and privileges of a
stockholder as to the restricted common stock, including the right to vote the restricted common
stock and to receive dividends thereon. Upon the expiration of the restricted period, the
restrictions are of no further force or effect with respect to the restricted common stock. Each
restricted common stock award is to be evidenced by an award agreement between the Company and the
participant setting forth the applicable restrictions.
Restricted Stock Units and Stock Units. The Compensation Committee may award restricted stock
units and stock units to key employees and consultants under the 2006 Equity Incentive Plan, each
for the duration that it determines in its discretion. Each restricted stock unit and each stock
unit is equivalent in value to one share of common stock and entitles the participant receiving the
award to receive one share of common stock for each restricted stock unit at the end of the vesting
period applicable to such restricted stock unit and for each stock unit at the end of the deferral
period. Participants are not required to pay any additional consideration in connection with the
settlement of restricted stock units or stock units. A holder of restricted stock units or stock
units has no voting rights, right to receive cash distributions or other rights as a stockholder
until shares of common stock are issued to the holder in settlement of the stock units. However,
participants holding restricted stock units or stock units are entitled to receive dividend
equivalents with respect to any payment of cash dividends on an equivalent number of shares of
common stock. Such dividend equivalents are credited in the form of additional stock units.
Stock Appreciation Rights. The Compensation Committee may award stock appreciation rights to
key employees and consultants, alone or in tandem with stock options, pursuant to the 2006 Equity
Incentive Plan. SARs are awards that give the participant the right to receive an amount equal to
(1) the number of shares exercised under the right, multiplied by (2) the amount by which the
Companys stock price exceeds the exercise price. Payment may be in cash, in shares of the
Companys common stock with equivalent value, or in some combination, as determined by the
Compensation Committee. The Compensation Committee will determine the exercise price, vesting
schedule and other terms and conditions of stock appreciation rights; however, SARs expire under
the same rules that apply to stock options.
Performance Units. The Compensation Committee is authorized to establish performance programs
and may award performance units to key employees and consultants in accordance with such programs
under the 2006 Equity Incentive Plan. Holders of performance units will be entitled to receive
payment in cash or shares of our common stock (or in some combination of cash and shares) if the
performance goals established by the Compensation Committee are achieved or the awards otherwise
vest. Each performance unit will have an initial value established by the Compensation Committee.
The Compensation Committee will set performance objectives,
18
and such performance objectives may be based upon the achievement of Company-wide, subsidiary
or individual goals.
The following table sets forth summary information concerning the outstanding equity awards as
of December 31, 2008 for the Named Executive Officers.
Outstanding Equity Awards at Year-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
Awards: |
|
|
|
|
|
|
|
|
|
|
Equity Incentive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
Market or |
|
|
|
|
|
|
|
|
|
|
Plan Awards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards: |
|
Payout Value |
|
|
Number of |
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number |
|
of Unearned |
|
|
Securities |
|
|
|
|
|
Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Market |
|
of Unearned |
|
Shares, |
|
|
Underlying |
|
Number of |
|
Underlying |
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of |
|
Shares, Units or |
|
Units or |
|
|
Unexercised |
|
Securities Underlying |
|
Unexercised |
|
Option |
|
Option |
|
Number of Shares or Units |
|
Shares or Units of |
|
Other |
|
Other Rights |
|
|
Options (#) |
|
Unexercised Options |
|
Unearned |
|
Exercise |
|
Expiration |
|
of Stock That Have Not |
|
Stock That Have Not |
|
Rights That Have |
|
That Have |
Name |
|
Exercisable |
|
(#) Unexercisable |
|
Options (#) |
|
Price ($) |
|
Date |
|
Vested (#) |
|
Vested ($)(1) |
|
Not Vested (#) |
|
Not Vested ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Emile A. Battat |
|
|
12,500 |
|
|
|
12,500 |
(2) |
|
|
|
|
|
|
71.86 |
|
|
|
8/6/11 |
|
|
|
4,500 |
|
|
|
436,950 |
|
|
|
|
|
|
|
|
|
David A. Battat |
|
|
|
|
|
|
12,416 |
(3) |
|
|
|
|
|
|
111.06 |
|
|
|
5/9/13 |
|
|
|
4,000 |
|
|
|
388,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,584 |
(4) |
|
|
|
|
|
|
111.50 |
|
|
|
5/9/13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffery Strickland |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Based on the closing price of $97.10 per share of the common stock of the Company on December
31, 2008. |
|
(2) |
|
One-half of this option award will vest on each of August 7, 2009 and August 7, 2010. |
|
(3) |
|
One-quarter of this option award will vest on each of May 8, 2009, May 8, 2010, May 8, 2011
and May 8, 2012. |
|
(4) |
|
One-quarter of this option award will vest on each of May 8, 2009, May 8, 2010, May 8, 2011
and May 8, 2012. |
The following table sets forth summary information concerning the exercise of options and the
vesting of stock during the year ended December 31, 2008 for the Named Executive Officers.
Option Exercises and Stock Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
Stock Awards |
|
|
Number of |
|
|
|
|
|
Number of |
|
|
|
|
Shares Acquired on |
|
Value Realized |
|
Shares Acquired |
|
Value Realized |
Name |
|
Exercise (#) |
|
on Exercise ($) |
|
on Vesting (#) |
|
on Vesting ($) |
|
Emile A. Battat |
|
|
17,800 |
|
|
|
1,560,526 |
|
|
|
1,500 |
|
|
|
166,988 |
|
Jeffery Strickland |
|
|
7,000 |
|
|
|
613,690 |
|
|
|
|
|
|
|
|
|
Cash Balance Plan
The Company has maintained a Cash Balance Plan, which includes all full-time active employees
of the Company and its subsidiaries, other than Quest Medical, Inc., that were hired prior to May
1, 2005. Each participant has an account balance which represents his or her benefit under the
Cash Balance Plan. The Cash Balance Plan provided for the Company to make annual allocations to a
participants cash balance account in an amount equal to 3% of the participants eligible
compensation up to the Social Security wage base and 6% in excess thereof and for an interest
credit each plan year equal to the rate on 30 year U.S. Treasury bonds during November of the
preceding plan year. For the 2008 plan year, the interest rate was 4.52%. Generally, each
participant was to become fully
19
vested in the benefits under such plan after five years of employment. Benefits may be paid,
subject to certain limitations under the Internal Revenue Code of 1986, as amended, upon
termination of employment, retirement or death. The Cash Balance Plan specifies various options
that participants may select for the distribution of their accrued balance, including forms of
annuity payments and lump sum distributions. Messrs. Emile and David Battat and Mr. Strickland
have participated in the Cash Balance Plan. The Board of Directors approved an amendment to the
Cash Balance Plan to freeze all future benefit accruals to participants account balances after
December 31, 2007, and terminated the Cash Balance Plan effective December 31, 2007. Participants
in the Cash Balance Plan will continue to earn interest credits on their account balances until
such time as the Cash Balance Plan has settled all its obligations with respect to termination.
Pension Benefits
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Years |
|
Present Value of |
|
Payments During |
|
|
|
|
|
|
Credited Service |
|
Accumulated Benefit |
|
Last Fiscal Year |
Name |
|
Plan Name |
|
(#) |
|
($)(1) |
|
($) |
|
Emile A. Battat |
|
Cash Balance Plan |
|
|
9.25 |
|
|
|
125,749 |
|
|
|
|
|
David A. Battat |
|
Cash Balance Plan |
|
|
2.83 |
|
|
|
14,071 |
|
|
|
|
|
Jeffery Strickland |
|
Cash Balance Plan |
|
|
24.33 |
|
|
|
228,598 |
|
|
|
|
|
|
|
|
(1) |
|
The amounts presented in this column are the lump sum payments that the Named Executive
Officer would have received if the benefits under the Cash Balance Plan had been paid on
December 31, 2008. |
Certain Agreements, Plans and Transactions
In 2002, the Company entered into an employment agreement with Mr. Emile Battat which, as
amended that same year, provided for his employment for an initial term that expired on December
31, 2006 (as amended, the Original Battat Agreement). The Original Battat Agreement provided for
base salary for each calendar year of $500,000. In addition, Mr. Emile Battat was entitled to
receive a cash bonus each year of not less than $100,000. On August 7, 2006, the Board of
Directors approved an Amended and Restated Employment Agreement with Mr. Emile Battat (the Amended
Battat Agreement) which became effective on January 1, 2007. The Amended Battat Agreement
provides for an initial term that expires on December 31, 2012. The Amended Battat Agreement
provides for the same base salary for each calendar year as provided for in the Original Battat
Agreement and provides for a cash bonus each year equal to a percentage of the increase in
operating income for such calendar year over operating income for the prior calendar year, subject
to equitable adjustments in the discretion of the Compensation Committee. The Amended Battat
Agreement also provides for certain payments to be made and benefits provided to Mr. Emile Battat
upon termination of employment, as discussed in more detail below.
Mr. David Battat participates in the Halkey-Roberts Plan. The Halkey-Roberts Plan provides
for a bonus pool equal to 15% of the excess of Halkey-Roberts operating profit, reduced by 50% of
the amount of the Companys corporate overhead allocated to Halkey-Roberts each calendar year, over
that amount required for Halkey-Roberts to realize a 15% return on the average of total net assets
excluding cash but including working capital used in the operations of Halkey-Roberts for such
calendar year. The Halkey-Roberts Plan provides that each participant will receive 75% of his or
her bonus prior to March 15 of the year following the year to which the bonus is attributable, and
25% by the next succeeding March 15 provided the participant is then employed by Halkey-Roberts or
an affiliate. Mr. David Battat was awarded a bonus of $215,000 for 2008, $161,250 of which was
paid in early 2009 and $53,750 of which will be paid on or before March 15, 2010 if Mr. David
Battat is then employed by the Company or a subsidiary. In March 2009, the Company entered into a
Change in Control Agreement with Mr. David Battat. The Change in Control Agreement provides that
Mr. David Battat will be entitled to certain payments and benefits in the event his employment is
terminated in connection with a change in control of the Company, as discussed in more detail
below.
The Strickland Incentive Plan that was in effect through 2006 provided that, during the first
quarter of each calendar year, the Compensation Committee would set a target for earnings per basic
share (EPS) for the Company. If the target EPS were achieved, Mr. Strickland would have been
entitled to receive incentive compensation equal to 25% of his base salary for that year. If the
target were exceeded, then for each 1% in excess
20
in actual EPS over the target EPS, Mr. Strickland would have been entitled to an additional
bonus equal to 0.75% of his base salary. The Strickland Incentive Plan was terminated following
the 2006 calendar year. In May 2007, the Board of Directors approved the CFO Plan. The CFO Plan
provides that Mr. Strickland will receive a cash bonus each year equal to a percentage of the
increase in operating income for such calendar year over operating income for the prior calendar
year, subject to equitable adjustments in the discretion of the Compensation Committee. The bonus
may not exceed 50% of the CFOs base salary for such calendar year. Mr. Strickland was awarded a
bonus of $74,120 for 2008 pursuant to the CFO Plan. The Company has a severance plan (the
Strickland Severance Plan) pursuant to which Mr. Strickland will be entitled to certain payments
if his employment is terminated under certain circumstances in connection with a change in control
of the Company, as discussed in more detail below.
In 2007, the Companys Board of Directors approved final settlement of the Companys
obligations to participants in the Companys Supplemental Executive Retirement Plan and the
Companys Supplemental Executive Thrift Plan. In connection therewith, Mr. Strickland received a
payment in the amount of $15,436. These plans had been frozen since December 31, 1998.
Potential Termination and Change of Control Payments
Termination for Cause or Without Good Reason
If Mr. Emile Battats employment is terminated by the Company for just cause or by Mr. Emile
Battat without good reason (as those terms are defined in the Amended Battat Agreement), he is to
receive his base salary up to the termination date and the annual bonus for the calendar year in
which the termination date occurs, prorated for the number of days in such calendar year prior to
the termination date. He will also be entitled to receive his accrued vacation pay, unreimbursed
business expenses, his account balance under the Cash Balance Plan, and vested amounts under the
401(k) Plan.
If Mr. David Battats employment or Mr. Stricklands employment is terminated for cause, they
will each receive their base salary up to the termination date, accrued vacation pay, unreimbursed
business expenses, their account balances under the Cash Balance Plan and vested amounts under the
401(k) Plan.
Termination Without Just Cause or With Good Reason or Due to Death or Disability
If Mr. Emile Battats employment is terminated by the Company without just cause, by Mr. Emile
Battat with good reason or due to his death or disability, he will be entitled to receive the same
payments and other benefits he would receive had the termination been with just cause plus an
amount equal to the sum of one years base salary and the average annual bonus received by him in
the three years prior to the year in which the termination occurs. In addition, the Company will
continue to provide group health plan benefits for him, his spouse and his dependents for one year
and all stock options and other equity will fully vest and become exercisable on the termination
date.
If Mr. David Battats or Mr. Stricklands employment is terminated by the Company without
just cause, by either of them with good reason (as those terms are defined in Mr. David
Battats Change in Control Agreement or the Strickland Severance Plan) or due to death or
disability, and such termination is not in connection with a change in control of the Company, they
will each receive the same payments and other benefits they would receive had the termination been
with just cause.
Termination Without Just Cause or With Good Reason in Connection with Change in Control
If Mr. Emile Battats employment is terminated by the Company without just cause or by Mr.
Emile Battat for good reason in contemplation of or within two years following a change in
control (as that term is defined in the Amended Battat Agreement), he will be entitled to receive
the same payments and other benefits he would receive had the termination been with just cause,
plus an amount equal to two times the sum of one years base salary and the average annual bonus
received by him for the three years prior to the year in which the termination occurs. In
addition, the Company will continue to provide group health plan benefits for him, his spouse and
his dependents for one year and all stock options and other equity will fully vest and become
exercisable on the termination date.
21
If Mr. David Battats employment is terminated by the Company or Halkey-Roberts without just cause
or by Mr. David Battat for good reason in contemplation of or within two years following a change
in control (as defined in Mr. David Battats Change in Control Agreement), he will be entitled to
receive the same payments and other benefits he would have received had the termination been with
just cause, plus an amount equal to two times the sum of one years base salary and the average
annual bonus to which he was entitled for the three years prior to the year in which the
termination occurs. In addition, Mr. David Battats unvested equity awards will vest and he will
be entitled to one years health benefits.
If there is a change in control of the Company and Mr. Stricklands employment is terminated
by the Company without cause or by Mr. Strickland with good reason prior to Mr. Stricklands death,
attainment of age 65 or the expiration of two years following the change in control, Mr. Strickland
will be entitled to receive severance pay in an amount equal to his annual base salary for the 12
months preceding termination of employment. In addition, Mr. Strickland will be entitled to
receive his account balance under the Cash Balance Plan and the vested amount under the 401(k)
Plan.
The following table sets forth the payments and benefits that each Named Executive Officer
would have received had his employment been terminated on December 31, 2008:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination for |
|
Termination Without |
|
|
|
|
|
|
|
|
Just Cause or |
|
Just Cause, For Good |
|
Termination Without Just Cause |
|
|
|
|
|
|
Without |
|
Reason, or upon Death |
|
or For Good Reason in Connection |
Name |
|
Type of Payment or Benefit |
|
Good Reason ($) |
|
or Disability ($) |
|
with a Change in Control ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Emile A. Battat |
|
Severance Payment |
|
|
300,020 |
|
|
|
1,003,752 |
|
|
|
1,707,483 |
|
|
|
Equity Awards |
|
|
0 |
|
|
|
752,450 |
(1) |
|
|
752,450 |
(1) |
|
|
Retirement Benefits(2) |
|
|
167,013 |
|
|
|
167,013 |
|
|
|
167,013 |
|
|
|
Health Benefits |
|
|
0 |
|
|
|
10,117 |
|
|
|
10,117 |
|
|
|
Total |
|
|
467,033 |
|
|
|
1,933,332 |
|
|
|
2,637,063 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David A. Battat |
|
Severance Payment(3) |
|
|
|
|
|
|
|
|
|
|
916,474 |
|
|
|
Equity Awards |
|
|
|
|
|
|
|
|
|
|
388,400 |
(4) |
|
|
Retirement Benefits(5) |
|
|
26,024 |
|
|
|
26,024 |
|
|
|
26,024 |
|
|
|
Health Benefits |
|
|
|
|
|
|
|
|
|
|
4,700 |
|
|
|
Total |
|
|
26,024 |
|
|
|
26,024 |
|
|
|
1,335,598 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffery Strickland |
|
Severance Payment |
|
|
|
|
|
|
|
|
|
|
284,120 |
(6) |
|
|
Equity Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Benefits(7) |
|
|
372,840 |
|
|
|
372,840 |
|
|
|
372,840 |
|
|
|
Health Benefits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
372,840 |
|
|
|
372,840 |
|
|
|
656,960 |
|
|
|
|
(1) |
|
These amounts represent the market price as of December 31, 2008 of equity awards vesting on
termination of employment less, in the case of options, the exercise price of those options. |
|
(2) |
|
These retirement benefits are the sum of the account balance of $125,749 under the Companys
Cash Balance Plan and the market value of the vested amount contributed by the Company to Mr.
Emile Battats account under the 401(k) Plan in the amount of $41,264. |
|
(3) |
|
The severance payment to Mr. David Battat assumes that Mr. David Battats Change in Control
Agreement that was entered into on March 31, 2009 had been effective as of December 31, 2008. |
|
(4) |
|
This amount represents the market price as of December 31, 2008 of restricted stock vesting
on termination of employment. As of said date the exercise price of all of Mr. David Battats
unvested options was greater than the market price of the underlying stock. |
|
(5) |
|
These retirement benefits are the sum of the account balance of $14,071 under the Companys
Cash Balance Plan plus the market value of the vested amount contributed by the Company to Mr.
David Battats account under the 401(k) Plan in the amount of $11,953. |
|
(6) |
|
The severance payment includes the payment under the Strickland Severance Plan and the bonus
for 2008 under the CFO Plan. |
22
|
|
|
(7) |
|
These retirement benefits are the sum of the account balance of $228,598 under the Companys
Cash Balance Plan plus the market value of the vested amount contributed by the Company to Mr.
Stricklands account under the 401(k) Plan in the amount of $144,242. |
Compensation Committee Interlocks and Insider Participation
During 2008, Messrs. Morgan, Spaulding and Stupp served as members of the Compensation
Committee. None of the members of the Compensation Committee was an officer or employee of the
Company or its subsidiaries or had any relationship requiring disclosure pursuant to Item 404 of
Regulation S-K. Additionally, during 2008, none of the executive officers of the Company was a
member of the board of directors, or any committee thereof, of any other entity one of the
executive officers of which served as a member of the Board of Directors, or any committee thereof,
of the Company.
Related Party Transactions
The Audit Committee, pursuant to the Audit Committee Charter, is authorized to review and
approve or disapprove, in its sole discretion, in advance, any proposed related-party transaction,
within the meaning of Nasdaq listing standards and rules and regulations promulgated by the
Commission. Under the Audit Committees written policies, transactions involving amounts in excess
of $120,000 in which a related person has a direct or indirect material interest are subject to
review and approval or disapproval. The Audit Committee will approve such a transaction only if it
determines that the transaction is in the best interest of the Company.
In considering a related party transaction, the Audit Committee will consider all relevant
factors, including as applicable (i) the Companys business rationale for entering into the
transaction; (ii) the alternatives to entering into a related person transaction; (iii) whether the
transaction is on terms comparable to those available to third parties, or in the case of
employment relationships, to employees generally; (iv) the potential for the transaction to lead to
an actual or apparent conflict of interest and any safeguards imposed to prevent such actual or
apparent conflicts; and (vi) the overall fairness of the transaction to the Company.
The Audit Committee will periodically monitor the transaction to ensure that there are no
changed circumstances that would render it advisable for the Company to amend or terminate the
transaction. Management or the affected director or executive officer is to bring the matter to
the attention of the Audit Committee. If a member of the Audit Committee is involved in the
transaction, he or she will be recused from all discussions and decisions about the transaction.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Companys executive officers and directors to
file initial reports of ownership and reports of changes of ownership of the Companys common stock
with the Commission. The Company assists the directors and officers with completing and filing
these reports. Based upon a review of these filings and written representations from the Companys
directors and executive officers, the Company believes that all reports were filed timely in 2008.
STOCKHOLDER PROPOSALS
Stockholder Proposals in the Companys Proxy Statement
In order for proposals by stockholders to be considered for inclusion in the Companys proxy
material relating to the 2010 annual meeting of stockholders, such proposals must be received by
the Company on or before December 9, 2009.
Stockholder Proposals to be Presented at Annual Meetings.
The Companys Bylaws provide that a stockholder who desires to propose any business at an
annual meeting of stockholders must give the Company written notice of such stockholders intent to
bring such business before such meeting. Such notice is to be delivered to, or mailed, postage
prepaid, and received by, the Secretary of
23
the Company at the principal executive offices of the Company not later than the close of business
on the 120th day prior to the first anniversary of the date of the Companys proxy statement
released to stockholders in connection with the preceding years annual meeting of stockholders.
However, in the event that no annual meeting was held in the previous year or the date of the
annual meeting is more than 30 days before or more than 60 days after the anniversary date of the
previous years meeting, notice by the stockholder must be delivered not later than the close of
business on the later of the 120th day prior to such annual meeting and the 10th day following the
date on which public announcement of the date of the meeting is first made. Such notice for the
2010 annual meeting must be delivered not later than December 9, 2009, provided the date of the
2010 annual meeting is not more than 30 days before or more than 60 days after May 21, 2010. The
stockholders written notice must set forth (a) a brief description of the business desired to be
brought before the meeting and the reasons for conducting such business at the meeting; (b) the
name and address of the stockholder who intends to propose such business; (c) a representation that
the stockholder is a holder of record of shares of common stock of the Company entitled to vote at
such meeting and intends to appear in person or by proxy at such meeting to propose such business;
(d) any material interest of the stockholder in such business; and (e) as to the stockholder giving
the notice and the beneficial owner, if any, on whose behalf the proposal is made (i) the name and
address of such stockholder, as they appear on the Companys books, and of such beneficial owner
and (ii) the class and number of shares of the Company which are owned beneficially and of record
by such stockholder and such beneficial owner. The Chairman of the meeting may refuse to transact
any business presented at any meeting without compliance with the foregoing procedure.
Stockholder Nominations for Directors.
The Companys Bylaws provide that a stockholder who desires to nominate directors at a meeting
of stockholders must give the Company written notice, within the same time period described above
for a stockholder who desires to bring business before a meeting, setting forth (a) the name and
address of the stockholder who intends to make the nomination and of the person or persons to be
nominated; (b) a representation that the stockholder is a holder of record of shares of common
stock of the Company entitled to vote at such meeting and intends to appear in person or by proxy
at the meeting to nominate the person or persons specified in the notice; (c) a description of all
arrangements or understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or nominations are to be
made by the stockholder; (d) such other information regarding each nominee proposed by such
stockholder as would have been required to be included in a proxy statement filed pursuant to the
proxy rules of the Commission had each nominee been nominated, or intended to be nominated, by the
Board of Directors; and (e) the consent of each nominee to serve as a director of the Company if so
elected. The Chairman of the meeting may refuse to acknowledge the nomination of any person if a
stockholder has failed to comply with the foregoing procedure.
NO INCORPORATION BY REFERENCE
In the Companys filings with the Commission, information is sometimes incorporated by
reference. This means that the Company is referring you to information that has previously been
filed with the Commission, and that the information should be considered part of a particular
filing. As provided in regulations promulgated by the Commission, the Audit Committee Report and
the Compensation Committee Report contained in this proxy statement specifically are not
incorporated by reference into any other filings with the Commission. In addition, this proxy
statement includes the Companys website address. This website address is intended to provide
inactive, textual references only. The information on the Companys website is not part of this
proxy statement.
COST AND METHOD OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. In addition to the use of the
mails, proxies may be solicited personally or by telephone, telegram, facsimile and other
electronic communication methods by the directors, officers and employees of the Company without
additional compensation. Brokerage firms, nominees, fiduciaries and other custodians will be
requested to forward soliciting materials to the beneficial owners of common stock of the Company
held in their names or in those of their nominees and their reasonable expenses will be reimbursed
upon request.
24
OTHER BUSINESS
The Board of Directors does not intend to bring any business before the meeting other than
that stated herein and is not aware of any other matters that may be presented for action at the
meeting. However, if any other matters should properly come before the meeting, or any
adjournments thereof, it is the intention of the persons named in the accompanying proxy to vote on
such matters as they, in their discretion, may determine.
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By Order of the Board of Directors
Jeffery Strickland
Vice President and Chief Financial
Officer, Secretary and Treasurer
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April 8, 2009
25
ATRION CORPORATION
ONE ALLENTOWN PARKWAY
ALLEN, TX 75002
VOTE
BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions
to obtain your records and to create an electronic voting instruction form.
ELECTRONIC
DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred
by our company in mailing proxy materials, you can consent
to receiving all future proxy statements, proxy cards and
annual reports electronically via e-mail or the Internet.
To sign up for electronic delivery, please follow the instructions
above to vote using the Internet and, when prompted, indicate that
you agree to receive or access proxy materials electronically in future years.
VOTE
BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until
11:59 P.M. Eastern Time the day before the cut-off date or meeting date.
Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have
provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way,
Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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M12899 |
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KEEP THIS PORTION FOR YOUR RECORDS |
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DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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ATRION CORPORATION |
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For All |
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To withhold authority to vote for any individual |
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Except |
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nominee(s), mark For
All Except and write the |
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number(s) of the nominee(s) on the line below. |
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1. Election of Director
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Ratification of the appointment of Grant Thornton LLP as the Companys independent accountant for 2009.
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In their discretion, upon such other matters that may properly come before the meeting or any adjournment thereof. |
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The
Board of Directors recommends a vote FOR the
election of the nominee listed in Item 1 and FOR
Item 2. If this proxy is properly executed and returned, the
shares represented will be voted "FOR" the nominee listed in
Item 1 and FOR Item 2 unless you otherwise specify
herein.
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Please sign exactly
as your name(s) appear(s) hereon. When signing as attorney, executor,
administrator, or other fiduciary, please give full title as such.
Joint owners should each sign personally. All holders must sign.
If a corporation or partnership, please sign in full corporate or
partnership name, by authorized officer.
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Signature [PLEASE SIGN WITHIN BOX]
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Signature (Joint Owners) |
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Important Notice
Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
M12900
ATRION CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints Roger F. Stebbing and John P. Stupp, Jr., or either of them, as proxies of the
undersigned, with full power of substitution, and hereby authorizes them to represent and to vote, as specified on the reverse side of this proxy and in their discretion upon such other matters that may properly come before the meeting or any adjournment thereof, all of the shares of Common Stock of Atrion Corporation that the undersigned is entitled to vote at the annual meeting of stockholders of Atrion Corporation to be held at 10:00 a.m., Central Time, on Thursday, May 21, 2009, at the offices of Atrion Corporation, One Allentown Parkway, Allen, TX 75002, and at any adjournment or postponement thereof.
PLEASE
MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED REPLY
ENVELOPE
Continued and to be signed on reverse side