def14a
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.___)
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Filed by the Registrant
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Soliciting Material Pursuant to § 240.14a-12 |
ABAXIS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Check box if any part of the fee is offset as provided by Exchange
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September 17,
2007
Dear Shareholder:
This years annual meeting of shareholders will be held on
Thursday, October 25, 2007, at 10:00 a.m. Pacific
time, at our offices, located at 3240 Whipple Road, Union City,
California. You are cordially invited to attend.
The Notice of Annual Meeting of Shareholders and a Proxy
Statement, which describe the formal business to be conducted at
the meeting, follow this letter.
It is important that you use this opportunity to take part in
the affairs of Abaxis, Inc. by voting on the business to come
before this meeting. After reading the Proxy Statement, please
promptly mark, sign, date and return the enclosed proxy card in
the prepaid envelope to assure that your shares will be
represented. Regardless of the number of shares you own, your
careful consideration of, and vote on, the matters before our
shareholders is important.
A copy of Abaxis Annual Report to Shareholders is also
enclosed for your information. At the annual meeting we will
review Abaxis activities over the past year and our plans
for the future. We look forward to seeing you at the annual
meeting.
Sincerely yours,
CLINTON H. SEVERSON
Chairman of the Board, President and
Chief Executive Officer
ABAXIS,
INC.
3240 Whipple Road, Union City,
California
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS
To Be Held On October 25,
2007
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of
Shareholders of
Abaxis,
Inc., a California corporation (the
Company). The meeting will be held on Thursday,
October 25, 2007, at 10:00 a.m. local time at our
offices, located at 3240 Whipple Road, Union City, California
for the following purposes:
1. To elect six directors to serve for the ensuing
year and until their successors are elected and qualified.
2. To ratify the selection by the Audit Committee of
the Board of Directors of Burr, Pilger & Mayer LLP as
the Companys independent registered public accounting firm
for the fiscal year ending March 31, 2008.
3. To conduct any other business properly brought
before the meeting.
These items of business are more fully described in the Proxy
Statement accompanying this Notice.
The record date for the Annual Meeting is August 31, 2007.
Only shareholders of record at the close of business on that
date may vote at the meeting or any adjournment thereof. For ten
days prior to the meeting, a complete list of shareholders
entitled to vote at the meeting will be available for
examination by any shareholder, for any purpose relating to the
meeting, during ordinary business hours at our offices located
at 3240 Whipple Road, Union City, California.
By Order of the Board of Directors
ZARA Z. THOMAS
Secretary
Union City, California
September 17, 2007
You are cordially invited to attend the meeting in person.
Whether or not you expect to attend the meeting, please
complete, date, sign and return the enclosed proxy, or vote over
the telephone or the Internet as instructed in these materials,
as promptly as possible in order to ensure your representation
at the meeting. A return envelope (which is postage prepaid if
mailed in the United States) is enclosed for your convenience.
Even if you have voted by proxy, you may still vote in person if
you attend the meeting. Please note, however, that if your
shares are held of record by a broker, bank or other nominee and
you wish to vote at the meeting, you must obtain a proxy issued
in your name from that record holder.
TABLE OF
CONTENTS
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ABAXIS,
INC.
3240 Whipple Road, Union City,
California 94587
PROXY
STATEMENT
FOR THE 2007 ANNUAL MEETING OF
SHAREHOLDERS
October 25, 2007
QUESTIONS
AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING
Why am I
receiving these materials?
We have sent you this proxy statement and the enclosed proxy
card because the Board of Directors of Abaxis, Inc., a
California corporation (referred to as the Company
or Abaxis), is soliciting your proxy to vote at the
2007 Annual Meeting of Shareholders including at any
adjournments or postponements of the meeting. You are invited to
attend the annual meeting to vote on the proposals described in
this proxy statement. However, you do not need to attend the
meeting to vote your shares. Instead, you may simply complete,
sign and return the enclosed proxy card, or follow the
instructions below to submit your proxy over the telephone or on
the Internet.
The Company intends to mail this proxy statement and
accompanying proxy card on or about September 17, 2007 to
all shareholders of record entitled to vote at the annual
meeting.
Who can
vote at the annual meeting?
Only shareholders of record at the close of business on
August 31, 2007 will be entitled to vote at the annual
meeting. On this record date, there were 21,457,169 shares
of common stock outstanding and entitled to vote.
Shareholder
of Record: Shares Registered in Your Name
If on August 31, 2007 your shares were registered directly
in your name with Abaxis transfer agent, Computershare
Trust Company, N.A., then you are a shareholder of record.
As a shareholder of record, you may vote in person at the
meeting or vote by proxy. Whether or not you plan to attend the
meeting, we urge you to fill out and return the enclosed proxy
card or vote by proxy over the telephone or on the Internet as
instructed below to ensure your vote is counted.
Beneficial
Owner: Shares Registered in the Name of a Broker or
Bank
If on August 31, 2007 your shares were held, not in your
name, but rather in an account at a brokerage firm, bank,
dealer, or other similar organization, then you are the
beneficial owner of shares held in street name and
these proxy materials are being forwarded to you by that
organization. The organization holding your account is
considered to be the shareholder of record for purposes of
voting at the annual meeting. As a beneficial owner, you have
the right to direct your broker or other agent regarding how to
vote the shares in your account. You are also invited to attend
the annual meeting. However, since you are not the shareholder
of record, you may not vote your shares in person at the meeting
unless you request and obtain a valid proxy from your broker or
other agent.
What am I
voting on?
There are two matters scheduled for a vote:
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Election of six directors;
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Ratification of Burr, Pilger & Mayer LLP as our
independent registered public accounting firm for the fiscal
year ending March 31, 2008.
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How do I
vote?
You may either vote For all the nominees to the
Board of Directors or you may Withhold your vote for
any nominee you specify. For each of the other matters to be
voted on, you may vote For or Against or
abstain from voting. The procedures for voting are as follows:
Shareholder
of Record: Shares Registered in Your Name
If you are a shareholder of record, you may vote in person at
the annual meeting, vote by proxy using the enclosed proxy card,
vote by proxy over the telephone, or vote by proxy on the
Internet. Whether or not you plan to attend the meeting, we urge
you to vote by proxy to ensure your vote is counted. You may
still attend the meeting and vote in person even if you have
already voted by proxy.
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To vote in person, come to the annual meeting and we will give
you a ballot when you arrive.
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To vote using the proxy card, simply complete, sign and date the
enclosed proxy card and return it promptly in the envelope
provided. If you return your signed proxy card to us before the
annual meeting, we will vote your shares as you direct.
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To vote over the telephone, dial toll-free
1-800-652-VOTE,
(1-800-652-8683)
using a touch-tone phone and follow the recorded instructions.
You will be asked to provide the company number and control
number from the enclosed proxy card. Your vote must be received
by 1:00 a.m., Central time on October 25, 2007 to be
counted.
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To vote on the Internet, go to
http://www.investorvote.com
to complete an electronic proxy card. You will be asked to
provide the company number and control number from the enclosed
proxy card. Your vote must be received by 1:00 a.m.,
Central time on October 25, 2007 to be counted.
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Beneficial
Owner: Shares Registered in the Name of Broker or
Bank
A number of brokers and banks are participating in a program
provided through Broadridge Financial Solutions, Inc. that
offers telephone and Internet voting options. This program is
different from the program provided by Computershare for shares
registered directly in the name of the shareholder. If your
shares are held in an account with a broker or a bank
participating in the Broadridge Financial Solutions, Inc.
program, you may vote those shares telephonically or via the
Internet by calling the telephone number, or visiting the
Internet website, shown on the voting form received from your
broker or bank. To vote in person at the annual meeting, you
must obtain a valid proxy from your broker, bank, or other
agent. Follow the instructions from your broker or bank included
with these proxy materials, or contact your broker or bank to
request a proxy form.
We provide Internet proxy voting to allow you to vote your
shares online, with procedures designed to ensure the
authenticity and correctness of your proxy vote instructions.
However, please be aware that you must bear any costs associated
with your Internet access, such as usage charges from Internet
access providers and telephone companies.
How many
votes do I have?
On each matter to be voted upon other than the election of
directors, you have one vote for each share of common stock you
own as of August 31, 2007. For the election of directors,
cumulative voting is available. Under cumulative voting, you
would have six votes for each share of common stock you own. You
may cast all of your votes for one candidate, or you may
distribute your votes among different candidates as you choose.
However, you may cumulate votes (cast more than one vote per
share) for a candidate only if the candidate is nominated before
the voting and at least one shareholder gives notice at the
meeting, before the voting, that he or she intends to cumulate
votes. If you do not specify how to distribute your votes, by
giving your proxy you are authorizing the proxyholders (the
individuals named on your proxy card) to cumulate votes in their
discretion.
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What if I
return a proxy card but do not make specific choices?
If you return a signed and dated proxy card without marking any
voting selections, your shares will be voted For the
election of all six (6) nominees for director and
For the ratification of the appointment of Burr,
Pilger & Mayer LLP as independent registered public
accounting firm of the Company for its fiscal year ending
March 31, 2008. If any other matter is properly presented
at the meeting, your proxyholder (one of the individuals named
on your proxy card) will vote your shares using his or her best
judgment.
Who is
paying for this proxy solicitation?
We will pay for the entire cost of soliciting proxies, including
the preparation, assembly, printing and mailing of the proxy
materials and any additional solicitation materials furnished to
the shareholders. In addition to these mailed proxy materials,
our directors and employees may also solicit proxies in person,
by telephone, or by other means of communication. Directors and
employees will not be paid any additional compensation for
soliciting proxies. We may also reimburse brokerage firms, banks
and other agents for the cost of forwarding proxy materials to
beneficial owners.
What does
it mean if I receive more than one proxy card?
If you receive more than one proxy card, your shares are
registered in more than one name or are registered in different
accounts. Please complete, sign and return each proxy
card to ensure that all of your shares are voted.
Can I
change my vote after submitting my proxy?
Yes. You can revoke your proxy at any time before the final vote
at the meeting. If you are the record holder of your shares, you
may revoke your proxy in any one of three ways:
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You may submit another properly completed proxy card with a
later date.
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You may send a timely written notice that you are revoking your
proxy to Abaxis Secretary at 3240 Whipple Road, Union
City, California 94587.
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You may attend the annual meeting and vote in person. Simply
attending the meeting will not, by itself, revoke your proxy.
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If your shares are held by your broker or bank as a nominee or
agent, you should follow the instructions provided by your
broker or bank.
When are
shareholder proposals due for next years annual
meeting?
To be considered for inclusion in next years proxy
materials, your proposal must be submitted in writing by
May 20, 2008,
the date not less than one hundred twenty (120) days prior
to the one year anniversary of our mailing to shareholders of
this Proxy Statement for the 2007 Annual Meeting of
Shareholders, to Abaxis Secretary at 3240 Whipple
Road, Union City, California 94587.
How are
votes counted?
Votes will be counted by the inspector of election appointed for
the meeting, who will separately count For and
Withhold and, with respect to proposals other than
the election of directors, Against votes,
abstentions and broker non-votes. Abstentions and broker
non-votes will not be counted towards the vote total for any
proposal except Proposal 2. For Proposal 2,
abstentions and broker non-votes will have the same effect as
Against votes.
What are
broker non-votes?
Broker non-votes occur when a beneficial owner of shares held in
street name does not give instructions to the broker
or nominee holding the shares as to how to vote on matters
deemed non-routine. Generally, if shares are held in
street name, the beneficial owner of the shares is entitled to
give voting instructions to the broker or nominee
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holding the shares. If the beneficial owner does not provide
voting instructions, the broker or nominee can still vote the
shares with respect to matters that are considered to be
routine, but not with respect to
non-routine matters.
How many
votes are needed to approve each proposal?
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Proposal No. 1: Election of
Directors. For the election of directors, the six
(6) nominees receiving the most For votes (from
the holders of votes of shares present in person or represented
by proxy and entitled to vote on the election of directors) will
be elected. Only votes For or Withheld
will affect the outcome.
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Proposal No. 2: Ratification of Selection of
Independent Registered Public Accounting Firm. To
be approved, Proposal No. 2 ratifying the selection by
the Audit Committee of the Board of Directors of Burr,
Pilger & Mayer LLP as independent registered public
accounting firm for the fiscal year ending March 31, 2008
must receive For votes from the holders of a
majority of shares present and entitled to vote either in person
or by proxy. Abstentions and broker non-votes will also have the
same effect as Against votes.
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What is
the quorum requirement?
A quorum of shareholders is necessary to hold a valid meeting. A
quorum will be present if shareholders holding at least a
majority of the outstanding shares entitled to vote are present
at the meeting in person or represented by proxy. On the record
date, there were
21,457,169 shares
outstanding and entitled to vote. Thus, the holders of
10,728,585 shares must be present in person or represented
by proxy at the meeting or by proxy to have a quorum.
Votes for and against, abstentions and broker
non-votes will each be counted as present for the purposes
of determining the presence of a quorum. Your shares will be
counted towards the quorum only if you submit a valid proxy (or
one is submitted on your behalf by your broker, bank or other
nominee) or if you vote in person at the meeting. If there is no
quorum, the holders of a majority of shares present at the
meeting in person or represented by proxy may adjourn the
meeting to another date.
How can I
find out the results of the voting at the annual
meeting?
Preliminary voting results will be announced at the annual
meeting. Final voting results will be published in the
Companys quarterly report on
Form 10-Q
for the third quarter of fiscal 2008.
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Proposal 1
Election Of Directors
Our Bylaws authorize a Board of Directors consisting of six
directors. All of our six directors are to be elected for the
ensuing year and will hold office until the next annual meeting
of shareholders and until his or her successor is elected and
qualified, or, if sooner, until the directors death,
resignation or removal. Proxies cannot be voted for a greater
number of persons than the number of nominees named. Each of the
nominees listed below is currently a director of the Company who
was previously elected by the shareholders. It is the
Companys policy to strongly encourage nominees for
directors to attend the Annual Meeting.
All of our
directors attended the 2006 Annual Meeting of Shareholders.
The candidates receiving the highest number of affirmative votes
by the holders of shares entitled to be voted will be elected.
The persons named in the accompanying proxy will vote the shares
represented thereby for the nominees named below, but may
cumulate the votes for less than all of the nominees, as
permitted by the laws of the State of California, unless
otherwise instructed. If any nominee becomes unavailable for
election as a result of an unexpected occurrence, your shares
will be voted for the election of a substitute nominee proposed
by Abaxis. Each person nominated for election has agreed to
serve if elected. Our management has no reason to believe that
any nominee will be unable to serve.
The nominees for election to the Board of Directors at the 2007
Annual Meeting are Clinton H. Severson, Richard J.
Bastiani, Ph.D., Henk J. Evenhuis, Brenton G.A. Hanlon,
Prithipal Singh, Ph.D. and
Ernest S. Tucker, III, M.D. Please see
Directors and Executive Officers of the
Registrant below for information concerning the
nominees.
Vote
Required and Recommendation of the Board of Directors
Although abstentions and broker non-votes will each
be counted as present for purposes of determining a quorum,
neither abstentions nor broker non-votes will have
any impact on the election of directors and the six candidates
for election as directors at the annual meeting who receive the
highest number of affirmative votes will be elected.
If the nominees decline to serve or become unavailable for any
reason, or if a vacancy occurs before the election (although
management knows of no reason to anticipate that this will
occur), the proxies may be voted for substitute nominees as the
Board of Directors may designate. In the event that additional
persons are nominated for election as directors, the proxy
holders intend to vote all proxies received by them in such a
manner in accordance with cumulative voting as will ensure the
election of as many of the nominees listed below as possible,
and, in such event, the specific nominees to be voted for will
be determined by the proxy holders.
THE BOARD
OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR THE NOMINEES NAMED ABOVE.
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DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT
The following table sets forth certain information concerning
our directors and executive officers:
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Name
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Age
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Title
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Clinton H. Severson
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Chairman of the Board, President
and Chief Executive Officer
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Richard J.
Bastiani, Ph.D.(1)(2)(3)
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Director
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Henk J. Evenhuis(1)(3)
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Director
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Brenton G. A. Hanlon(1)(2)(3)
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61
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Director
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Prithipal Singh, Ph.D.(1)(3)
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68
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Director
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Ernest S.
Tucker, III, M.D.(1)(3)
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74
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Director
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Alberto R. Santa Ines
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60
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Chief Financial Officer and Vice
President of Finance
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Kenneth P. Aron, Ph.D.
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54
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Vice President of Research and
Development
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Vladimir E.
Ostoich, Ph.D.
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Vice President of Government
Affairs and Vice President of Marketing for the Pacific Rim,
Founder
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Christopher M. Bernard
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Vice President of Sales and
Marketing for the Domestic Medical Market
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Martin V. Mulroy
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Vice President of Veterinary Sales
and Marketing for North America
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Member of the Audit Committee |
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Member of the Compensation Committee |
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Member of the Nominating and Corporate Governance Committee |
Clinton H. Severson has served as our President, Chief
Executive Officer and one of our directors since June 1996.
He was appointed Chairman of the Board in May 1998. Since
November 2006, Mr. Severson serves on the Board of
Directors of CytoCore, Inc. (OTCBB: CYCR). From February 1989 to
May 1996, Mr. Severson served as President and Chief
Executive Officer of MAST Immunosystems, Inc., a privately-held
medical diagnostic company.
Richard J. Bastiani, Ph.D. joined our Board of
Directors in September 1995. Dr. Bastiani is currently
retired and serves as Chairman of the Board of Directors of
Response Biomedical Corporation (CDNX: RBM). From 1998 to 2005,
Dr. Bastiani served as Chairman of the Board of Directors
of ID Biomedical Corporation (Nasdaq: IDBE), after he was
appointed to the Board of Directors of ID Biomedical Corporation
in October 1996. Dr. Bastiani was President of Dendreon
(Nasdaq: DNDN), a biotechnology company, from September 1995 to
September 1998. From 1971 until 1995, Dr. Bastiani held a
number of positions with Syva Company, a diagnostic company,
including as President from 1991 until Syva was acquired by a
subsidiary of Hoechst AG of Germany in 1995. Dr. Bastiani
is also a member of the board of directors of three-privately
held companies.
Henk J. Evenhuis joined our Board of Directors in
November 2002. Mr. Evenhuis is currently retired and serves
on the Board of Directors of Credence Systems Corporation
(Nasdaq: CMOS), a semiconductor equipment manufacturer.
Mr. Evenhuis served as Executive Vice President and Chief
Financial Officer of Fair Isaac Corporation (NYSE: FIC), a
global provider of analytic software products to the financial
services, insurance and health care industries from October 1999
to October 2002. From 1987 to 1998, he was Executive Vice
President and Chief Financial Officer of Lam Research
Corporation (Nasdaq: LRCX), a semiconductor equipment
manufacturer.
Brenton G. A. Hanlon joined our Board of Directors in
November 1996. Since January 2001, Mr. Hanlon has been
President and Chief Executive Officer of Hitachi Chemical
Diagnostics, a manufacturer of in vitro allergy diagnostic
products. Concurrently, from December 1996 until the present,
Mr. Hanlon has served as President and Chief Operating
Officer of Tri-Continent Scientific, a subsidiary of Hitachi
Chemical, specializing in liquid-handling products and
instrument components for the medical diagnostics and
biotechnology industries. From 1989
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to December 1996, Mr. Hanlon was Vice President and General
Manager of Tri-Continent Scientific. Mr. Hanlon serves on
the board of directors of two privately-held companies.
Prithipal Singh, Ph.D. joined our Board of Directors
in June 1992. Prior to retiring, Dr. Singh was the Founder,
Chairman and Chief Executive Officer of ChemTrak Inc. (Pink
Sheets: CMTR) from 1988 to 1998. Prior to this, Dr. Singh
was an Executive Vice President of Idetec Corporation from 1985
to 1988 and a Vice President of Syva Corporation from 1977 to
1985.
Ernest S. Tucker, III, M.D. joined our Board of
Directors in September 1995. Dr. Tucker currently serves as
a self-employed healthcare consultant after having retired as
Chief Compliance Officer for Scripps Health in San Diego in
September 2000, a position which he assumed in April 1998.
Dr. Tucker was Chairman of Pathology at Scripps Clinic and
Research Foundation from 1992 to 1998 and Chair of Pathology at
California Pacific Medical Center in San Francisco from
1989 to 1992.
Alberto R. Santa Ines has served as our Chief Financial
Officer and Vice President of Finance since April 2002.
Mr. Santa Ines joined us in February 2000 as Finance
Manager. In April 2001, Mr. Santa Ines was promoted to
Interim Chief Financial Officer and Director of Finance, and in
April 2002 he was promoted to his current position. From March
1998 to January 2000, Mr. Santa Ines was a self-employed
consultant to several companies. From August 1997 to March 1998,
Mr. Santa Ines was the Controller of Unisil (Pink Sheets:
USIL), a semiconductor company. From April 1994 to August 1997,
he was a Senior Finance Manager at Lam Research Corporation
(Nasdaq: LRCX), a semiconductor equipment manufacturer.
Kenneth P. Aron, Ph.D. joined us in February 2000 as
Vice President of Research and Development. From April 1998 to
November 1999, Dr. Aron was Vice President of Engineering
and Technology of Incyte Pharmaceuticals (Nasdaq: INCY), a
genomic information company. From April 1996 to April 1998,
Dr. Aron was Vice President of Research, Development and
Engineering for Cardiogenesis Corporation (Nasdaq: CGCP), a
manufacturer of laser-based cardiology surgical products.
Vladimir E. Ostoich, Ph.D., one of our co-founders,
is currently our Vice President of Government Affairs and Vice
President of Marketing for the Pacific Rim. Dr. Ostoich has
served as Vice President in various capacities at Abaxis since
our inception, including as Vice President of Research and
Development, Senior Vice President of Research and Development,
Vice President of Engineering and Instrument Manufacturing and
Vice President of Marketing and Sales for the United States and
Canada.
Christopher M. Bernard joined us in November 2005 as Vice
President of Marketing and Sales for the Domestic Medical
Market. From September 2000 to October 2005, Mr. Bernard
served as Regional Business Director for Cytyc Corporation
(Nasdaq: CYTC), a manufacturer of medical products primarily
focused on womens health. From December 1995 to August
2000, Mr. Bernard held various sales and sales management
positions at Cytyc Corporation.
Martin V. Mulroy has served as our Vice President of
Veterinary Sales and Marketing for North America since May 2006.
Mr. Mulroy joined us in November 1997 as the Northeast
Regional Sales Manager. He was promoted to Eastern Area Director
of Sales in December 1998 and, in January 2005, he was promoted
to National Sales Director for the Domestic Veterinary market.
From March 1996 to November 1997, Mr. Mulroy was Regional
Sales Manager for BioCircuits Inc., an immunoassay company in
the medical market. Mr. Mulroy was Regional Sales Manager
from 1990 to 1992 and Field Operations Manager from 1992 to 1995
for MAST Immunosystems Inc., a privately-held medical diagnostic
company.
INFORMATION
REGARDING THE BOARD OF DIRECTORS AND CORPORATE
GOVERNANCE
Independence
of the Board of Directors
As required under the Nasdaq Stock Market (Nasdaq)
listing standards, a majority of the members of a listed
companys Board of Directors must qualify as
independent, as affirmatively determined by the
Board of Directors. The Board consults with the Companys
counsel to ensure that the Boards determinations are
consistent
7
with relevant securities and other laws and regulations
regarding the definition of independent, including
those set forth in pertinent listing standards of the Nasdaq, as
in effect time to time.
Consistent with these considerations, after review of all
relevant transactions or relationships between each director, or
any of his or her family members, and the Company, its senior
management and its independent auditors, the Board has
affirmatively determined that the following five directors are
independent directors within the meaning of the applicable
Nasdaq listing standards: Mr. Evenhuis, Dr. Bastiani,
Mr. Hanlon, Dr. Singh and Dr. Tucker. In making
this determination, the Board found that none of these directors
or nominees for director had a material or other disqualifying
relationship with the Company. Mr. Severson, the
Companys President and Chief Executive Officer, is not an
independent director by virtue of his employment with the
Company. There are no family relationships among any of our
directors or officers.
Meetings
of the Board of Directors
The Board of Directors met four times during the fiscal year
ended March 31, 2007. Each Board member attended 75% or
more of the aggregate of the meetings of the Board and of the
committees on which he served, held during the period for which
he was a director or committee member.
As required under applicable Nasdaq listing standards, in fiscal
2007, the Companys independent directors met four times in
regularly scheduled executive sessions at which only independent
directors were present.
Information
Regarding Committees of the Board of Directors
The Board has three
committees:
an Audit Committee, a Compensation Committee and a
Nominating and Corporate Governance Committee. The following
table provides membership and meeting information for fiscal
2007 for each of the Board committees:
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Nominating and
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Corporate
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Name
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Audit
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Compensation
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Governance
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Clinton H. Severson
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Richard J.
Bastiani, Ph.D.
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X
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X
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*
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X
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Henk J. Evenhuis
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X
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*
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X
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Brenton G. A. Hanlon
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X
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X
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X
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Prithipal Singh, Ph.D.
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X
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X
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Ernest S.
Tucker, III, M.D.
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X
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X
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Total meetings in fiscal 2007
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5
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1
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0
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Below is a description of each committee of the Board of
Directors. The Board of Directors has determined that each
member of each committee meets the applicable Nasdaq rules and
regulations regarding independence and that each
member is free of any relationship that would impair his or her
individual exercise of independent judgment with regard to the
Company.
Audit
Committee
The Audit Committee reviews and monitors our corporate financial
reporting and our external audits, including, among other
things, our control functions, the results and scope of the
annual audit and other services provided by our independent
registered public accountants and our compliance with legal
matters that have a significant impact on our financial reports.
Among other things, the Audit Committee:
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evaluates the performance of and assesses the qualifications of
the independent auditors;
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determines and approves the engagement of the independent
auditors;
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determines whether to retain or terminate the existing
independent auditors or to appoint and engage new independent
auditors;
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8
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reviews and approves the retention of the independent auditors
to perform any proposed permissible non-audit services;
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monitors the rotation of partners of the independent auditors on
the Companys audit engagement team as required by law;
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reviews and approves transactions between the company and any
related persons;
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confers with management and the independent auditors regarding
the effectiveness of internal controls over financial reporting;
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establishes procedures for the receipt, retention and treatment
of complaints received by the Company regarding accounting,
internal accounting controls or auditing matters and the
confidential and anonymous submission by employees of concerns
regarding questionable accounting or auditing matters; and
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meets to review the Companys annual audited financial
statements and quarterly financial statements with management
and the independent auditor, including reviewing the
Companys disclosures under Managements
Discussion and Analysis of Financial Condition and Results of
Operations.
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The Audit Committee is composed of five directors:
Mr. Evenhuis, Dr. Bastiani, Mr. Hanlon,
Dr. Singh and Dr. Tucker. Mr. Evenhuis serves as
Chairman of the Audit Committee. The Audit Committee held five
meetings during the fiscal year ended March 31, 2007. For
additional information about the Audit Committee, see
Report of the Audit Committee of the Board of
Directors below. The Audit Committee has adopted a written
charter that is available to shareholders in the Investor
Relations section of the Companys website at
http://www.abaxis.com.
The Board of Directors annually reviews the Nasdaq listing
standards definition of independence for Audit Committee members
and has determined that all members of our Audit Committee are
independent (as independence is currently defined in
Rule 4350(d)(2)(A)(i) and (ii) of the Nasdaq listing
standards). Securities and Exchange Commission, or SEC,
regulations require we disclose whether a director qualifying as
an audit committee financial expert serves on the
Audit Committee. The Board of Directors has determined that
Mr. Evenhuis qualifies as an audit committee
financial expert, as defined in applicable SEC rules. The
Board of Directors made a qualitative assessment of
Mr. Evenhuiss level of knowledge and experience based
on a number of factors, including his formal education and
experience as a chief financial officer for public reporting
companies.
Report of
the Audit Committee of the Board of
Directors1
The Audit Committee oversees Abaxis financial reporting
process on behalf of the Board of Directors. Management has the
primary responsibility for the financial statements and the
reporting process, including internal control systems. In the
fiscal year ended March 31, 2007, Burr, Pilger &
Mayer LLP was responsible for expressing an opinion as to the
conformity of our audited financial statements with generally
accepted accounting principles. Burr, Pilger & Mayer
LLP has acted in such capacity since its appointment on
August 25, 2005. Prior to Burr, Pilger & Mayer
LLPs appointment, Deloitte & Touche LLP acted as
our independent registered public accounting firm since its
appointment in the fiscal year ended March 31, 1996.
The Audit Committee has reviewed and discussed the audited
financial statements for the fiscal year ended March 31,
2007 with management of the Company. The Audit Committee has
discussed with the independent auditors the matters required to
be discussed by the Statement on Auditing Standards No. 61,
as amended (AICPA, Professional Standards, Vol. 1. AU
section 380), as adopted by the Public Company Accounting
Oversight Board (PCAOB) in Rule 3200T. The
Audit Committee has met with Burr, Pilger & Mayer LLP,
with and without management present, to discuss the overall
scope and results of Burr, Pilger & Mayer LLPs
audit and review procedures, and the overall quality of its
financial reporting. The Audit Committee has also received the
written disclosures and the letter from the independent
accountants required by the Independence Standards Board
1 The
material in this report is not soliciting material,
is not deemed filed with the Securities and Exchange
Commission and is not to be incorporated by reference in any
filing of Abaxis, Inc. under the Securities Act or the Exchange
Act, whether made before or after the date hereof and
irrespective of any general incorporation language in any such
filing.
9
Standard No. 1, (Independence Discussions with Audit
Committees), as adopted by the PCAOB in Rule 3600T and
has discussed with the independent accountants the independent
accountants independence. Based on the review and
discussions referred to above, the Audit Committee recommended
to the Board of Directors that Abaxis audited financial
statements be included in Abaxis Annual Report on
Form 10-K
for the fiscal year ended March 31, 2007.
THE AUDIT COMMITTEE
Henk J. Evenhuis, Chairman
Richard J. Bastiani, Ph.D.
Brenton G.A. Hanlon
Prithipal Singh, Ph.D.
Ernest S. Tucker, III, M.D.
Compensation
Committee
The Compensation Committee is composed of
two
directors: Dr. Bastiani and Mr. Hanlon.
Each of these individuals is a non-employee member of the
Companys Board of Directors and is independent (as
independence is currently defined in Rule 4200(a)(15) of
the Nasdaq listing standards.
The Compensation
Committee held one meeting during the fiscal year ended
March 31, 2007, each of which were attended by both
Messrs. Bastiani and Hanlon. The Compensation Committee has
adopted a written charter that is available to shareholders in
the Investor Relations section of the Companys website at
http://www.abaxis.com.
For additional information about the Compensation Committee, see
Compensation Committee Report and Executive
Compensation.
The Compensation Committee reviews and makes recommendations to
the Board of Directors regarding our compensation strategy,
policies, plans and programs and all forms of compensation to be
provided to our executive officers and directors, including
among other things:
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development or review and approval of corporate and individual
performance objectives relevant to the compensation of the
Companys Chief Executive Officer and evaluation of
performance in light of these stated objectives;
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review and approval of the compensation and other terms of
employment or service, including severance and
change-in-control
arrangements, of the Companys Chief Executive Officer and
the other executive officers; and
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development or review and approval of incentive-based or
equity-based compensation plans in which the Companys
executive officers and employees participate.
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Commencing this year, the Compensation Committee also began to
review with management the Companys Compensation
Discussion and Analysis and to consider whether to recommend
that it be included in
proxy statements and other
filings.
Compensation
Committee Processes and Procedures
Typically, the Compensation Committee meets at least one time
annually and with greater frequency if necessary. The agenda for
each meeting is usually developed by the Chair of the
Compensation Committee, in consultation with the Chief Executive
Officer. However, Mr. Severson does not participate in the
determination of his own compensation. The charter of the
Compensation Committee grants the Compensation Committee
authority to obtain, at the expense of the Company, advice and
assistance from internal and external legal, accounting or other
advisors and consultants and other external resources that the
Compensation Committee considers necessary or appropriate in the
performance of its duties. In particular, the Compensation
Committee has the sole authority to retain compensation
consultants to assist in its evaluation of executive and
director compensation, including the authority to approve the
consultants reasonable fees and other retention terms.
10
Our Compensation Committee does not delegate any of its
functions in determining executive
and/or
director compensation. To date, our Compensation Committee has
not established any formal policies or guidelines for allocating
compensation between long-term and currently paid out
compensation, cash and non-cash compensation, or among different
forms of non-cash compensation. Our Compensation Committee may
discuss with our Chief Executive Officer or Chief Financial
Officer our financial, operating and strategic business
objectives, bonus targets or performance goals. The Compensation
Committee reviews and determines the appropriateness of the
financial measures and performance goals, as well as assesses
the degree of difficulty in achieving specific bonus targets and
performance goals. From time to time, the Compensation Committee
may engage an independent compensation advisor to obtain
competitive compensation data.
The specific determinations of the Compensation Committee with
respect to executive compensation for fiscal 2007 are described
in greater detail in the Compensation Discussion and Analysis
section of this proxy statement.
Compensation
Committee Interlocks and Insider Participation
No member of our Compensation Committee has ever been an
executive officer or employee of the Company. None of our
executive officers currently serves, or has served during the
last completed fiscal year, on the Compensation Committee or
board of directors of any other entity that has one or more
executive officers serving as a member of our board of directors
or compensation committee. For information with respect to
related-person transactions involving members of the
Compensation Committee, see Transactions with Related
Persons.
Compensation
Committee
Report1
The Compensation Committee has reviewed and discussed with
management the disclosures contained in the Compensation
Discussion and Analysis (CD&A) contained in
this proxy statement. Based on this review and discussion, the
Compensation Committee has recommended to the Board of Directors
that the CD&A be included in this proxy statement.
THE COMPENSATION COMMITTEE
Richard J. Bastiani, Ph.D., Chair
Brenton G.A. Hanlon
Nominating
and Corporate Governance Committee
The members of the Nominating and Corporate Governance Committee
are Dr. Bastiani, Mr. Evenhuis, Mr. Hanlon,
Dr. Singh and Mr. Tucker. Each of the members of the
Nominating and Corporate Governance Committee is independent (as
independence is currently defined in Rule 4200(a)(15) of
the Nasdaq listing standards). The Nominating and Corporate
Governance Committee did not hold any meetings during the fiscal
year ended March 31, 2007. The Nominating and Corporate
Governance Committee has adopted a written charter that is
available to shareholders on the Investor Relations section of
the Companys website at
http://www.abaxis.com.
The Nominating and Corporate Governance Committee reviews the
results of the evaluation of the Board of Directors and its
committees, and the needs of the Board of Directors for various
skills, experience, expected contributions and other
characteristics, and the optimal size of the Board in light of
these needs, in determining the director candidates to be
nominated at the annual meeting. The Nominating and Corporate
Governance Committee will evaluate candidates for directors,
including incumbent directors and candidates proposed by
directors, shareholders or management, in light of the
Nominating and Corporate Governance Committees views of
the
1 The
material in this report is not soliciting material,
is not deemed filed with the Securities and Exchange
Commission and is not to be incorporated by reference in any
filing of Abaxis, Inc. under the Securities Act or the Exchange
Act, whether made before or after the date hereof and
irrespective of any general incorporation language in any such
filing.
11
current needs of the Board of Directors for certain skills,
experience or other characteristics, the candidates
background, skills, experience, other characteristics and
expected contributions and the qualification standards, if any,
established by the Nominating and Corporate Governance
Committee. If the Nominating and Corporate Governance Committee
believes that the Board of Directors requires additional
candidates for nomination, the Nominating and Corporate
Governance Committee may poll existing directors or management
for suggestions for candidates and may engage, as appropriate, a
third party search firm to assist in identifying qualified
candidates. The process may also include interviews and
additional background and reference checks for non-incumbent
nominees, at the discretion of the Nominating and Corporate
Governance Committee. In making the determinations regarding
nominations of directors, the Nominating and Corporate
Governance Committee may take into account the benefits of
diverse viewpoints as well as the benefits of a constructive
working relationship among directors. The Nominating and
Corporate Governance Committee will consider director
nominations made by shareholders in accordance with the
requirements of Abaxis bylaws consistent with these
procedures.
The Nominating and Corporate Governance Committee will consider
director candidates recommended by shareholders. Pursuant to our
bylaws, any shareholder entitled to vote in the election of
directors generally may nominate one or more persons for
election as directors at a meeting only if timely notice of such
shareholders intent to make such nomination or nominations
has been given in writing to the secretary of Abaxis. To be
timely, a shareholder nomination for a director to be elected at
an annual meeting shall be received at Abaxis principal
executive offices not less than 120 calendar days in advance of
the date that Abaxis proxy statement was released to
shareholders in connection with the previous years annual
meeting of shareholders, except that if no annual meeting was
held in the previous year or the date of the annual meeting has
been changed by more than 30 calendar days from the date
contemplated at the time of the previous years proxy
statement, or in the event of a nomination for director to be
elected at a special meeting, notice by the shareholders to be
timely must be received not later than the close of business on
the tenth day following the day on which such notice of the date
of the special meeting was mailed or such public disclosure was
made. Each such notice shall set forth: (a) the name and
address of the shareholder who intends to make the nomination
and of the person or persons to be nominated; (b) a
representation that the shareholder is a holder of record of
stock of Abaxis entitled to vote for the election of directors
on the date of such notice 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 shareholder 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
shareholder; (d) such other information regarding each
nominee proposed by such shareholder as would be required to be
included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission, had the 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 Abaxis if so elected. Other than the foregoing,
there are no stated minimum criteria for director nominees,
although the Nominating and Corporate Governance Committee may
also consider such other factors as it may deem to be in the
best interests of Abaxis and its shareholders.
Shareholder
Communications With The Board Of Directors
Shareholders may communicate with any and all company directors
by transmitting correspondence by mail, facsimile or email,
addressed as follows:
Chairman of the Board
or Board of Directors
or any individual director
c/o Ms. Zara
Thomas, Compliance Officer
3240 Whipple Road
Union City, CA 94587
Fax:
510-441-6151
or
Email Address: ComplianceOfficer@abaxis.com
The Compliance Officer shall maintain a log of such
communications and transmit as soon as practicable such
communications to the identified director addressee(s), unless
there are safety or security concerns that mitigate against
further transmission of the communication, as determined by the
Compliance Officer in consultation with
12
Abaxis legal counsel. The Board of Directors or individual
directors so addressed shall be advised of any communication
withheld for safety or security reasons as soon as practicable.
The Compliance Officer shall relay all communications to
directors absent safety or security issues.
Code
of Business Conduct and Ethics
The Company has adopted the Abaxis, Inc. Code of Business
Conduct and Ethics that applies to all our executive officers,
directors and employees. The Code of Business Conduct and Ethics
is available on our website at
http://www.abaxis.com/investor_relations/code_of_ethics.html.
If the Company makes any substantive amendments to the Code of
Business Conduct and Ethics or grants any waiver from a
provision of the Code of Business Conduct and Ethics to any
executive officer or director, the Company will promptly
disclose the nature of the amendment or waiver on its website.
The Company intends to satisfy the disclosure requirement under
Item 5.05 of
Form 8-K
regarding any amendment to, or waiver of, any provision of the
Code of Business Conduct and Ethics by disclosing such
information on the same website.
Ratification
Of Selection Of Independent
Registered Public Accounting Firm
The Audit Committee of the Board of Directors has selected Burr,
Pilger & Mayer LLP as the Companys independent
registered public accounting firm for the fiscal year ending
March 31, 2008 and has further directed that management
submit the selection for ratification by the shareholders at the
Annual Meeting. Burr, Pilger & Mayer LLP has audited
the Companys financial statements since its appointment on
August 25, 2005. Prior to Burr, Pilger & Mayer
LLPs appointment, Deloitte & Touche LLP acted as
our independent registered public accounting firm since its
appointment in the fiscal year ended March 31, 1996. A
representative of Burr, Pilger & Mayer LLP is expected
to be present at the Annual Meeting, with the opportunity to
make a statement if the representative desires to do so, and is
expected to be available to respond to appropriate questions.
Neither the Companys Bylaws nor other governing documents
or law require shareholder ratification of the selection of
Burr, Pilger & Mayer LLP as the Companys
independent registered public accounting firm. However, the
Audit Committee of the Board of Directors is submitting the
selection of Burr, Pilger & Mayer LLP to the
shareholders for ratification as a matter of good corporate
practice. If the shareholders fail to ratify the selection, the
Audit Committee of the Board of Directors will reconsider
whether or not to retain that firm. Even if the selection is
ratified, the Audit Committee of the Board of Directors in its
discretion may direct the appointment of different independent
registered public accounting firm at any time during the year if
they determine that such a change would be in the best interests
of the Company and its shareholders.
Principal
Accountant Fees and Services
For the fiscal years ended March 31, 2007 and 2006, our
independent registered public accounting firm, Burr,
Pilger & Mayer LLP, billed the approximate fees set
forth below.
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Year Ended March 31,
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2007
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2006
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Audit Fees(1)
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$
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580,000
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$
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527,000
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Audit-Related Fees
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Tax Fees
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All Other Fees(2)
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Total All Fees
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$
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580,000
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$
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527,000
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(1) |
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Audit fees represent fees for professional services provided in
connection with the audit of our financial statements and review
of our quarterly financial statements, including attestation
services related to Section 404 of the Sarbanes-Oxley Act
of 2002. Audit fees do not include $270,000 that were billed for
services in our fiscal |
13
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year ended March 31, 2006 for professional services
provided by Deloitte & Touche LLP, our former
independent registered public accounting firm. |
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(2) |
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All other fees consist of fees for products and services other
than the services reported above and do not include $67,000 in
fees for professional services provided by Deloitte &
Touche LLP during the fiscal year ended March 31, 2006,
related to the preparation of tax returns and various other
services after their dismissal in August
2005. |
Change
in Independent Auditors
On August 25, 2005, the Audit Committee of the Board of
Directors dismissed Deloitte & Touche LLP as our
independent registered public accounting firm, and engaged Burr,
Pilger & Mayer LLP as our new independent registered
public accounting firm for the fiscal year ended March 31,
2006. The decision to change independent auditors was authorized
by the Companys Board of Directors.
During the fiscal year ended March 31, 2005, and through
the subsequent interim period ended August 25, 2005, there
were no disagreements with Deloitte & Touche LLP on
any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of
Deloitte & Touche LLP, would have caused
Deloitte & Touche LLP to make reference to the subject
matter of the disagreements in connection with its audit report.
Furthermore, Deloitte & Touche LLPs reports
related to the audits of our financial statements for the fiscal
year ended March 31, 2005 did not contain any adverse
opinion or disclaimer of opinion, nor were they qualified or
modified as to uncertainty, audit scope or accounting
principles. In connection with Deloitte & Touche
LLPs report related to the audit of the effectiveness of
Abaxis internal control over financial reporting as of
March 31, 2005, based on the criteria established in
Internal Control Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway
Commission, Deloitte & Touche LLP expressed an adverse
opinion in its report dated June 13, 2005 on the
effectiveness of Abaxis internal control over financial
reporting due to a material weakness in our controls relating to
the determination and reporting of the provision for income
taxes.
There were no reportable events as defined in
Item 304(a)(1)(v) of
Regulation S-K,
except that on June 13, 2005, Deloitte & Touche
LLP advised the Audit Committee of a material weakness in
internal control over financial reporting related to provision
for income taxes as disclosed in the Abaxis
Form 10-K
for the fiscal year ended March 31, 2005.
Abaxis has provided a copy of the above disclosures to
Deloitte & Touche LLP and asked Deloitte &
Touche LLP to provide Abaxis with a letter addressed to the SEC
stating whether or not Deloitte & Touche LLP agrees
with the Companys statements. A copy of that letter, dated
August 29, 2005, was filed as Exhibit 16.1 to the
Companys Current Report on
Form 8-K
filed with the SEC on August 31, 2005.
Prior to engaging Burr, Pilger & Mayer LLP, Abaxis did
not consult Burr, Pilger & Mayer LLP with respect to
the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit
opinion that might be rendered on Abaxis financial
statements, as well as any other matters or reportable events
described under Item 304(a)(2)(i) and (ii) of
Regulation S-K.
Pre-Approval
Policies and Procedures
The Audit Committee has adopted a policy for the pre-approval of
all audit and non-audit services to be performed for the Company
by the independent registered public accounting firm. The Audit
Committees policy is to pre-approve all audit and
permissible non-audit services provided by our independent
auditors. These services may include audit services,
audit-related services, tax services and other services. The
independent auditor and management are required to periodically
report to the Audit Committee regarding the extent of services
provided by the independent auditor in accordance with this
pre-approval. The Chair of the Audit Committee is also
authorized, pursuant to delegated authority, to pre-approve
additional services on a
case-by-case
basis, and such approvals are communicated to the full Audit
Committee at its next meeting. During fiscal year 2007, all
Audit Fees were pre-approved by the Audit Committee.
14
The Audit Committee has considered the role of Burr,
Pilger & Mayer LLP in providing audit and
audit-related services to Abaxis and has concluded that such
services are compatible with Burr, Pilger & Mayer
LLPs role as Abaxis independent registered public
accounting firm.
Vote
Required and Recommendation of the Board of Directors
The affirmative vote of the holders of a majority of the shares
present in person or represented by proxy and voting at the
annual meeting
(which shares
voting affirmatively also constitute at least a majority of the
required quorum) will be required to ratify the selection of
Burr, Pilger & Mayer LLP. Although abstentions and
broker non-votes are counted as present for purposes
of a quorum, they are not counted as affirmative votes for the
proposals. In other words, the vote in favor of each of this
proposal must exceed the sum of (i) the votes against,
(ii) abstentions and (iii) the broker
non-votes for this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR THE
RATIFICATION OF THE APPOINTMENT OF BURR, PILGER &
MAYER LLP AS THE
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR ABAXIS,
INC. FOR THE
FISCAL YEAR ENDING MARCH 31, 2008.
Security
Ownership Of
Certain Beneficial Owners And Management
The following table sets forth certain information regarding the
ownership of our common stock as of August 31, 2007 by:
(i) each nominee for director; (ii) each of our
current and former executive officers named in the Summary
Compensation Table appearing in this proxy statement;
(iii) all of our executive officers and directors as a
group; and (iv) all those known by us to be beneficial
owners of more than five percent of our common stock. The
persons named in the table have sole or shared voting and
investment power with respect to all shares of common stock
shown as beneficially owned by them, subject to community
property laws where applicable and to the information contained
in the footnotes to this table.
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent of our
|
|
|
Shares
|
|
Common Stock
|
|
|
Beneficially
|
|
Beneficially
|
Name and Address of Beneficial Owner(1)
|
|
Owned
|
|
Owned(2)
|
|
Five
Percent Holders:
|
|
|
|
|
|
|
|
|
Wasatch Advisors, Inc.(3)
|
|
|
2,198,987
|
|
|
|
10.2
|
%
|
Lord, Abbett & Co. LLC(4)
|
|
|
1,469,837
|
|
|
|
6.9
|
%
|
Brown Capital Management, Inc.(5)
|
|
|
1,400,635
|
|
|
|
6.5
|
%
|
The TCW Group, Inc.(6)
|
|
|
1,162,924
|
|
|
|
5.4
|
%
|
Named Executive
Officers:
|
|
|
|
|
|
|
|
|
Clinton H. Severson(7)
|
|
|
721,531
|
|
|
|
3.3
|
%
|
Vladimir E. Ostoich, Ph.D.(8)
|
|
|
424,374
|
|
|
|
2.0
|
%
|
Alberto R. Santa Ines(9)
|
|
|
150,643
|
|
|
|
|
*
|
Kenneth P. Aron, Ph.D.(10)
|
|
|
107,585
|
|
|
|
|
*
|
Robert B. Milder(11)
|
|
|
65,805
|
|
|
|
|
*
|
Outside Directors:
|
|
|
|
|
|
|
|
|
Richard J. Bastiani, Ph.D.(12)
|
|
|
76,500
|
|
|
|
|
*
|
Brenton G. A. Hanlon(13)
|
|
|
32,500
|
|
|
|
|
*
|
Prithipal Singh, Ph.D.(14)
|
|
|
32,500
|
|
|
|
|
*
|
Ernest S.
Tucker, III, M.D.(15)
|
|
|
22,000
|
|
|
|
|
*
|
Henk J. Evenhuis(16)
|
|
|
19,500
|
|
|
|
|
*
|
Executive officers and
directors as a group (11 persons)(17)
|
|
|
1,614,143
|
|
|
|
7.2
|
%
|
15
|
|
|
* |
|
Less than one percent. |
|
(1) |
|
Unless otherwise noted, the business address of the beneficial
owners listed is
c/o Abaxis,
Inc., 3240 Whipple Road, Union City, CA 94587. |
|
(2) |
|
The percentages shown in this column are calculated based on
21,457,169 shares of common stock outstanding on
August 31, 2007 and includes shares of common stock that
such person or group had the right to acquire on or within
60 days after that date, including, but not limited to,
upon the exercise of options. |
|
(3) |
|
Based on information set forth in a Schedule 13G/A filed
with the SEC on February 15, 2007 by Wasatch Advisors,
Inc., reporting sole power to vote and dispose of
2,198,987 shares. The business address for Wasatch
Advisors, Inc. is 150 Social Hall Avenue, Salt Lake City, UT
84111. |
|
(4) |
|
Based on information set forth in a Schedule 13G/A filed
with the SEC on February 14, 2007 by Lord,
Abbett & Co. LLC, reporting sole power to vote and
dispose of 1,348,337 and 1,469,837 shares, respectively.
The business address for Lord, Abbett & Co. LLC is 90
Hudson Street, Jersey City, NJ 07302. |
|
(5) |
|
Based on information set forth in a Schedule 13G filed with the
SEC on August 3, 2007 by Brown Capital Management, Inc.,
reporting sole power to vote and dispose of 597,785 and
1,400,635 shares, respectively. The business address for
Brown Capital Management, Inc. is 1201 N. Calvert
Street, Baltimore, MD 21202. |
|
(6) |
|
Based on information set forth in a Schedule 13G filed with
the SEC on February 12, 2007 by The TCW Group, Inc., on
behalf of the TCW Business Unit, reporting shared power to vote
and dispose of 633,108 and 1,162,924 shares, respectively.
The business address for The TCW Group, Inc. is 865 South
Figueroa Street, Los Angeles, CA 90017. |
|
(7) |
|
Includes: |
|
|
|
|
|
371,114 shares held by Mr. Severson; and
|
|
|
|
350,417 shares subject to stock options exercisable by
Mr. Severson within sixty days of August 31, 2007.
|
|
|
|
|
|
94,791 shares held by Dr. Ostoich;
|
|
|
|
26,355 shares held by Dr. Ostoichs IRA;
|
|
|
|
22,400 shares held by Mrs. Ostoichs IRA;
|
|
|
|
117,328 shares held by the Vladimir Ostoich and Liliana
Ostoich Trust Fund, for the benefit of Dr. Ostoich and
his wife; and
|
|
|
|
163,500 shares subject to stock options exercisable by
Dr. Ostoich within sixty days of August 31, 2007.
|
|
|
|
|
|
18,643 shares held by Mr. Santa Ines; and
|
|
|
|
132,000 shares subject to stock options exercisable by
Mr. Santa Ines within sixty days of August 31, 2007.
|
|
|
|
|
|
9,976 shares held by Dr. Aron; and
|
|
|
|
97,609 shares subject to stock options exercisable by
Dr. Aron within sixty days of August 31, 2007.
|
|
|
|
(11) |
|
Mr. Milder, our former Chief Operations Officer, resigned
in June 2007. Includes: |
|
|
|
|
|
25,805 shares held by Mr. Milder, as of June 29,
2007, his last day of employment with Abaxis; and
|
|
|
|
40,000 shares subject to vested stock options exercisable
by Mr. Milder within sixty days of August 31, 2007.
|
|
|
|
|
|
48,500 shares held by Dr. Bastiani; and
|
|
|
|
28,000 shares subject to stock options exercisable by
Dr. Bastiani within sixty days of August 31, 2007.
|
16
|
|
|
|
|
4,500 shares held by Mr. Hanlon; and
|
|
|
|
28,000 shares subject to stock options exercisable by
Mr. Hanlon within sixty days of August 31, 2007.
|
|
|
|
|
|
6,500 shares held by Dr. Singh; and
|
|
|
|
26,000 shares subject to stock options exercisable by
Dr. Singh within sixty days of August 31, 2007.
|
|
|
|
|
|
5,000 shares held by Dr. Tucker; and
|
|
|
|
17,000 shares subject to stock options exercisable by
Dr. Tucker within sixty days of August 31, 2007.
|
|
|
|
|
|
1,500 shares held by Mr. Evenhuis; and
|
|
|
|
18,000 shares subject to stock options exercisable by
Mr. Evenhuis within sixty days of August 31, 2007.
|
|
|
|
(17) |
|
Total amount includes: |
|
|
|
|
|
729,260 shares; and
|
|
|
|
884,883 shares subject to stock options exercisable within
sixty days of August 31, 2007.
|
Section 16(a)
Beneficial Ownership
Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the
1934 Act) requires the Companys directors
and executive officers, and persons who own more than ten
percent of a registered class of the Companys equity
securities, to file with the SEC initial reports of ownership
and reports of changes in ownership of common stock and other
equity securities of the Company. Officers, directors and
greater than ten percent shareholders are required by SEC
regulation to furnish the Company with copies of all
Section 16(a) forms they file.
To the Companys knowledge, based solely on a review of the
copies of such reports furnished to the Company and written
representations that no other reports were required, during the
fiscal year ended March 31, 2007, all Section 16(a)
filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with;
except with respect to one late report filing, covering one
transaction, by Mr. Brenton Hanlon, one of the
Companys directors.
17
Compensation
Discussion and Analysis
Overview
The goals of our executive compensation program are to attract,
retain, motivate and reward executive officers who contribute to
our success and to incentivize these executives on both a
short-term and long-term basis to achieve our business
objectives. This program combines cash and equity awards in the
proportions that we believe will motivate our executive officers
to increase shareholder value over the long-term.
Our executive compensation program is designed to achieve the
following objectives:
|
|
|
|
|
to align our executive compensation with our strategic business
objectives;
|
|
|
|
to align the interests of our executive officers with both
short-term and long-term shareholder interests; and
|
|
|
|
to place a substantial portion of our executives
compensation at risk such that payouts depend on both overall
company performance and individual performance.
|
Executive
Compensation Program Objectives and Framework
Our executive compensation program has three primary components:
(1) base salary, (2) annual cash incentive bonus and
(3) equity grants. Base salaries for our executive officers
are a minimum fixed level of compensation consistent with or
below competitive market practice. Annual cash incentive bonuses
awarded to our executive officers are intended to incentivize
and reward achievement of financial, operating and strategic
objectives during the fiscal year. Equity grants awarded to our
executive officers are designed to ensure that incentive
compensation is linked to our long-term company performance,
promote retention and to align our executives long-term
interests with shareholders long-term interests. Our
executive officers total potential cash compensation is
heavily weighted toward annual cash incentive bonuses, because
our Compensation Committee and Board of Directors believes this
weighting best aligns the interests of our executive officers
with that of shareholders generally.
Executive compensation is reviewed annually by our Compensation
Committee and Board of Directors, and adjustments are made to
reflect company objectives and competitive conditions.
Generally, base salaries are adjusted effective May 1 of each
year. We also offer our executive officers participation in our
401(k) plan, health care insurance, flexible spending accounts
and certain other benefits available generally to all full-time
employees.
Role
of Our Compensation Committee
Our Compensation Committee, which operates under a written
charter adopted by the Board of Directors, is responsible for
recommending to the Board of Directors for approval the
compensation arrangements for our executive officers. Our
Compensation Committee also considers the recommendations of our
Chief Executive Officer, Mr. Clinton Severson. However,
Mr. Severson does not participate in the determination of
his own compensation. No other executive officers participate in
the determination or recommendation of the amount or form of
executive officer compensation, except as discussed below. Our
Compensation Committee does not delegate any of its functions in
determining executive
and/or
director compensation. To date, our Compensation Committee has
not established any formal policies or guidelines for allocating
compensation between long-term and currently paid out
compensation, cash and non-cash compensation, or among different
forms of non-cash compensation.
Our Compensation Committee may discuss with our Chief Executive
Officer or Chief Financial Officer our financial, operating and
strategic business objectives, bonus targets or performance
goals. The Compensation Committee reviews and determines the
appropriateness of the financial measures and performance goals,
as well as assesses the degree of difficulty in achieving
specific bonus targets and performance goals. The Compensation
Committee then presents its recommendation for executive
compensation to the Board of Directors for final review and
approval. Typically, these recommendations are made to our Board
of Directors during the first quarter of the ensuing fiscal year.
18
From time to time, our Compensation Committee may engage an
independent compensation advisor to obtain competitive
compensation data. In fiscal 2006, we engaged the independent
compensation consulting firm of Top Five Data Services, Inc. and
took its recommendations into account in setting fiscal 2007
executive compensation. We did not engage a compensation
consultant in connection with our determination of fiscal 2008
executive compensation because our Compensation Committee and
Board of Directors determined that the recommendations made by
Top Five Data Services, Inc. with respect to fiscal 2007
continued to be relevant for fiscal 2008. Our Compensation
Committee and Board of Directors will engage compensation
consultants in the future as they deem it to be necessary or
appropriate.
Competitive
Benchmarking
In March 2006, our Compensation Committee retained Top Five Data
Services, Inc., an independent compensation consulting firm to
help identify appropriate peer group companies and to obtain and
evaluate executive compensation data for these companies. In
April 2006, the independent compensation consultant, in
consultation with our Compensation Committee, compared our
senior management compensation to the senior management
compensation at a group of 19 companies (the
Compensation Peer Group). This Compensation Peer
Group represents similarly-situated medical device and
diagnostic companies that were identified by Top Five Data
Services, Inc. as companies with similar financial growth and as
competitors for executive talent. The following companies
comprised the Compensation Peer Group:
|
|
|
|
|
Abiomed
|
|
Conceptus
|
|
Palomar Medical Technologies
|
Adeza Biomedical
|
|
Cutera
|
|
Surmodics
|
Angiodynamics
|
|
Digene
|
|
Thoratec
|
Aspect Medical Systems
|
|
Intralase
|
|
Vivus
|
ATS Medical
|
|
Kensey Nash
|
|
VNUS Medical Technologies
|
Biosite
|
|
Meridian Bioscience
|
|
|
Cholestech
|
|
Orasure Technologies
|
|
|
Top Five Data Services, Inc. measured our relative performance
against the Compensation Peer Group over one and three year
periods based on the following three financial metrics:
|
|
|
|
|
total shareholder return;
|
|
|
|
revenue; and
|
|
|
|
EBITDA (earnings before income tax, depreciation and
amortization).
|
For fiscal 2006, based on these three financial metrics, we
performed at the 80th percentile, when compared to the
Compensation Peer Groups results on a weighted average
performance percentile rank. The data obtained regarding the
Compensation Peer Group was considered by the Compensation
Committee in its fiscal 2007 and fiscal 2008 executive
compensation decisions.
Compensation
Determinations
The Compensation Committee did not target executive compensation
in fiscal 2007 and fiscal 2008 to any specific benchmarks
against the Compensation Peer Group, but did generally target
total compensation to be competitive with companies in the
Compensation Peer Group with similar financial growth rates.
However, our executive officers total potential cash
compensation is more heavily weighted toward annual cash
incentive bonuses than most companies in the Compensation Peer
Group. In addition to any competitive benchmarks the
Compensation Committee deems relevant, the Compensation
Committee also considers the recommendations from our Chief
Executive Officer regarding the compensation of our executive
officers who report directly to him. These recommendations
generally include annual adjustments to compensation levels, an
assessment of each executive officers overall individual
contribution, scope of responsibilities and level of experience.
19
Elements
of Compensation
Base
Salary
We provide an annual base salary to each of our executive
officers, including each of the named executive officers listed
on the Summary Compensation Table beginning on page 25,
(the Named Executive Officers). Each base salary is
reviewed annually by the Compensation Committee and adjusted
based on an evaluation of individual job performance during the
prior year, as well as an evaluation of the compensation levels
of similarly-situated executive officers at the Compensation
Peer Group and in our industry generally. In determining fiscal
2007 and fiscal 2008 base salaries for our Named Executive
Officers our Compensation Committee generally targeted salaries
to be between the 25th and 50th percentile of the
Compensation Peer Group. In addition, the Compensation Committee
considered the base salaries for our Named Executive Officers
for fiscal 2006 and deemed approximately 4% to be a reasonable
year-over-year increase. Our Compensation Committee also
considered the recommendations of the Chief Executive Officer
regarding the compensation of the Named Executive Officers who
reported directly to him. However, the Compensation Committee
did not base its considerations on any single factor but rather
considered a mix of factors and evaluated individual salaries
against that mix.
Based on the recommendations of the Compensation Committee, our
Board of Directors approved the following base salaries
(effective May 1 of the relevant year) for our Named Executive
Officers:
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2007
|
|
|
Fiscal 2008
|
|
Named Executive Officer
|
|
Base Salary
|
|
|
Base Salary
|
|
|
Clinton H. Severson
|
|
$
|
325,000
|
|
|
$
|
338,000
|
|
Alberto R. Santa Ines
|
|
$
|
175,000
|
|
|
$
|
185,000
|
|
Robert B. Milder*
|
|
$
|
200,000
|
|
|
$
|
208,000
|
|
Kenneth P. Aron, Ph.D.
|
|
$
|
185,000
|
|
|
$
|
193,000
|
|
Vladimir E.
Ostoich, Ph.D.
|
|
$
|
195,000
|
|
|
$
|
203,000
|
|
|
|
|
* |
|
Mr. Milder, our former Chief Operations Officer, resigned
in June 2007. |
Our Board of Directors set such increased salaries after
considering a peer company analysis of total compensation for
executive officers prepared in early 2006 by Top Five Data
Services, Inc. and the recommendations of the Compensation
Committee. The Compensation Committee recommended that we
increase base salaries in amounts designed to reward each of the
Named Executive Officers for their performance in the prior year
while maintaining base salaries at an appropriately competitive
level. Accordingly, the Compensation Committee approved
approximately 4% increases to base salaries, effective
May 1, 2007, for all of the Named Executive Officers,
except for Mr. Santa Ines, who received an increase of 5.7%
to be more competitive with the market rate of
comparable executive officers in the Compensation Peer Group.
Annual
Cash Incentive Bonus
Our annual cash incentive bonus paid to each executive officer,
including each of our Named Executive Officers, is primarily
based upon Abaxis achieving two equally-weighted financial
goals, net sales and pre-tax income, which we have determined to
be important for us to increase long-term shareholder value.
Additionally, the bonus targets established by the Compensation
Committee require executive officers to increase annual
corporate financial performance during the fiscal year, compared
to our previous years actual financial results.
Accordingly, meeting the bonus targets is highly challenging and
requires executive officers to improve financial performance on
a year-over-year basis and thus, a substantial portion of our
executive officers compensation is at risk if corporate
financial results are not achieved during a fiscal year. In
addition to meeting financial goals, we must not exceed a
certain failure rate on our reagents discs. However, our
Compensation Committee has the discretion to grant bonuses even
if these performance goals are not met.
For fiscal 2007, our Compensation Committee generally targeted
total cash compensation to be at or above the
75th percentile of the Compensation Peer Group. Our
Compensation Committee considered this 75th percentile
target as a general guideline for the appropriate level of
potential cash bonus compensation, but did not attempt to
specifically match this or any other percentile. In April 2006,
our Board of Directors approved the fiscal 2007 target
20
bonus levels for our executive officers. The following table
summarizes the fiscal 2007 target bonus amounts and the bonus
amounts awarded during fiscal 2007 for our Named Executive
Officers:
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2007
|
|
|
Fiscal 2007
|
|
Named Executive Officer
|
|
Target Bonus
|
|
|
Bonus Awarded
|
|
|
Clinton H. Severson
|
|
$
|
435,000
|
|
|
$
|
500,250
|
|
Alberto R. Santa Ines
|
|
$
|
250,000
|
|
|
$
|
287,500
|
|
Robert B. Milder*
|
|
$
|
290,000
|
|
|
$
|
333,500
|
|
Kenneth P. Aron, Ph.D.
|
|
$
|
250,000
|
|
|
$
|
287,500
|
|
Vladimir E.
Ostoich, Ph.D.
|
|
$
|
250,000
|
|
|
$
|
287,500
|
|
|
|
|
* |
|
Mr. Milder, our former Chief Operations Officer, resigned
in June 2007. |
Payment of the target bonus is equally weighted between
achievement of our quarterly net sales performance goal and our
quarterly pre-tax income performance goal. For fiscal 2007,
bonuses were earned only if we achieved at least 90% of one or
more of our pre-established quarterly net sales
and/or
quarterly pre-tax income goals. After the initial threshold is
met, the amount of the target bonus paid is based on a sliding
scale relative to the proportionate achievement of the
performance goals. If we achieve 90% of only one performance
goal, the payout would be limited to 25% of the aggregate target
bonus. For each 1% above 90% of that performance goal, the
payout would increase by 2.5% for the aggregate target bonus.
The target bonus will be fully earned if at least 100% of both
performance goals are achieved. For each 1% above 100% of a
performance goal, the payout would increase by 1.5% for the
aggregate target bonus. The maximum bonus payout is 200% of the
target bonus, provided we achieve greater than 133% of at least
one of the performance goals. Assuming targets are reached, the
bonus payments are paid as follows: 20% of the applicable bonus
amount for the first quarter, 25% in the second and third
quarters, and 30% in the fourth quarter. At the end of the
fourth quarter, the final payment will be adjusted to reflect
overall performance against the year. For the Named Executive
Officers, the financial targets for fiscal 2007 were based on
the companys overall net sales and pre-tax income goals.
Based on these pre-established goals, our Named Executive
Officers received 115% of their target bonus awards for fiscal
2007.
For fiscal 2008, our Compensation Committee recommended that we
increase target bonuses in amounts designed to reward each of
the Named Executive Officers for their performance in fiscal
2007 while maintaining total compensation at an appropriately
competitive level. In April 2007, our Board of Directors
approved the fiscal 2008 target bonus levels for our executive
officers based on a reasonable increase over the prior year. The
following table summarizes the fiscal 2008 target bonus amounts
for our Named Executive Officers:
|
|
|
|
|
|
|
Fiscal 2008
|
|
Named Executive Officer
|
|
Target Bonus
|
|
|
Clinton H. Severson
|
|
$
|
480,000
|
|
Alberto R. Santa Ines
|
|
$
|
275,000
|
|
Robert B. Milder*
|
|
$
|
315,000
|
|
Kenneth P. Aron, Ph.D.
|
|
$
|
275,000
|
|
Vladimir E.
Ostoich, Ph.D.
|
|
$
|
275,000
|
|
|
|
|
* |
|
Mr. Milder, our former Chief Operations Officer, resigned
in June 2007. |
Payment of the target bonus, as identified above, is equally
weighted at 50% for achievement of our quarterly net sales
performance goal and 50% for achievement of our quarterly
pre-tax income performance goal. For fiscal 2008, bonuses will
only be earned if we achieved at least 90% of one or more of our
pre-established quarterly net sales
and/or
quarterly pre-tax income goals during fiscal 2008. After the
initial threshold is met, the amount of the target bonus paid
will be based on a sliding scale relative to the proportionate
achievement of the performance goals. If we achieve 90% of only
one performance goal, the payout would be limited to 25% of the
aggregate target bonus. For each 1% above 90% of that
performance goal, the payout would increase by 2.5% for the
aggregate target bonus. The target bonus will be fully earned if
at least 100% of both performance goals are achieved. For each
1% above 100% of a performance goal, the payout would increase
by 1.5% for the aggregate target bonus. The maximum bonus payout
is 200% of the target bonus, provided we achieve greater than
133% of at least one of the
21
performance goals. Assuming targets are reached, the bonus
payments are paid as follows: 15% of the applicable bonus amount
for the first quarter, 25% in the second and third quarters, and
35% in the fourth quarter. At the end of the fourth quarter of
fiscal 2008, the final payment will be adjusted to reflect
overall performance against the year.
We do not currently have a formal policy regarding adjustments
or recovery of awards or payments following a restatement of
financial performance targets. In such a circumstance, the
Compensation Committee would evaluate whether compensation
adjustments were appropriate based upon the facts and
circumstances surrounding the restatement.
Long-term
Equity Incentive Compensation
Under our 2005 Equity Incentive Plan, we are permitted to award
stock options, stock appreciation rights, restricted stock
awards, restricted stock units, performance shares, performance
units, deferred compensation awards or other share-based awards.
Beginning in fiscal 2007, equity-based grants to our executive
officers consisted of restricted stock units. Prior to fiscal
2007, equity-based grants to our executive officers comprised
solely of stock options. There were no equity grants to our
current Named Executive Officers in fiscal 2006. Equity grants
to our Named Executive Officers in fiscal 2007 and fiscal 2008
are discussed below. We do not currently have stock ownership
guidelines for our executive officers.
Stock
Options
Prior to fiscal 2007, a substantial portion of our executive
compensation arrangement consisted of long-term incentive
grants, comprising of stock options. We granted stock options
with an exercise price equal to the fair market value of our
common stock on the grant date. Accordingly, our Named Executive
Officers only realize actual compensation value if our
shareholders realize value. In addition, we believe our stock
options to Named Executive Officers created retention incentives
as the stock options vested over a period of four years based on
cliff-vesting terms only as long as the Named Executive Officers
remained an employee with us. For the unvested stock options
granted prior to fiscal 2007, we are required to recognize
share-based compensation expense over the vesting period in
accordance with Statement of Financial Accounting Standards
No. 123 (revised 2004), Share-Based Payment,
which we adopted in fiscal 2007 using the modified prospective
method.
Restricted
Stock Units
Fiscal 2007 Restricted Stock Unit
Grants. Beginning in fiscal 2007, we began to
employ restricted stock units with performance acceleration. Our
Board of Directors believes that this form of long-term equity
incentive will help ensure executive retention and more directly
link executive pay to company financial performance. The four
year time-based vesting of the restricted stock units would
accelerate if certain performance criteria discussed below are
exceeded during the performance period. The Compensation
Committee approves all restricted stock unit grants to our Named
Executive Officers and other executive officers.
In April 2006, after considering an analysis of total
compensation practices for executive officers of the
Compensation Peer Group prepared by the independent compensation
consultant and upon the recommendation of the Compensation
Committee, our Board of Directors approved 20,000 restricted
stock units, with performance acceleration, for each of our
Named Executive Officers, other than our Chief Executive
Officer. The 20,000 restricted stock units granted to each of
the Named Executive Officers, other than the Chief Executive
Officer, is approximately at the 75th percentile of the
equity compensation level of the Compensation Peer Group
members. The value of this equity grant for our Named Executive
Officers, excluding our Chief Executive Officer, is equal to
approximately $500,000 per executive officer. The Compensation
Committee believed that the grant of 20,000 restricted stock
units is conservative given that we had performed at the
80th percentile of the Compensation Peer Group and that no
stock option grants were made to our Named Executive Officers in
fiscal 2006 or fiscal 2007.
For fiscal 2007, Mr. Severson received 90,000 restricted
stock units which are subject to performance acceleration in the
same manner as the other Named Executive Officers. The amount of
the restricted stock unit grant to Mr. Severson was
determined based on a review of total compensation for Chief
Executive Officers in the Compensation Peer Group and
recognition of our higher growth rates than most of the
companies in the Compensation Peer Group and because we had
performed at the 80th percentile of the Compensation Peer
Group
22
over the last three years. Based on this assessment,
Mr. Seversons equity grants were generally targeted
at the 80th percentile of the expected long-term incentive
value of the Compensation Peer Groups equity grants.
Mr. Seversons restricted stock unit grant value for
fiscal 2007 was approximately $2,250,000.
Vesting Terms of Fiscal 2007 Restricted Stock Unit
Grants. The fiscal 2007 restricted stock unit
grants are based on time-based vesting and are subject to
accelerated vesting upon achieving certain performance based
milestones.
The four year time-based vesting terms of the fiscal 2007
restricted stock unit awards are as follows: five percent
vesting after the first year of continuous employment;
additional ten percent after the second year of continuous
employment; additional 15 percent after the third year of
continuous employment; and the remaining 70 percent after
the fourth year of continuous employment. Time-based vesting
terms is intended to provide retention for our executive
officers as the awards vest based on continuous employment.
The fiscal 2007 restricted stock units are subject to the
following performance-based acceleration criteria:
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|
upon attainment of certain pre-tax income goals by
March 31, 2007, vesting will accelerate to an aggregate of
25% within one year from grant date; by March 31, 2008,
vesting will accelerate to an aggregate of 25% within two years
from grant date; by March 31, 2009, vesting will accelerate
to an aggregate of 30%, within three years of grant date; hence,
meeting pre-tax income goals in each of the fiscal years ended
March 31, 2007, 2008 and 2009 can result in a cumulative
vesting of 80% over three years;
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upon attainment of certain product development objectives prior
to June 30, 2007, an additional vesting of 10% would be
awarded;
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upon satisfaction of certain regulatory requirements prior to
March 31, 2008, an additional vesting of 10% would be
awarded; or
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|
upon attainment of a certain level of operating income per share
for any fiscal year during the four year vesting period, the
restricted stock units will accelerate in full.
|
If any of the above performance criteria are met, then an
executive officers restricted stock units will vest
accordingly. The acceleration criteria for fiscal 2007 were not
achieved. Our Compensation Committee established the various
performance goals to motivate our management team to achieve
specific product, regulatory and financial goals within a
certain period and thus, enhance our company performance in the
short-term.
Fiscal 2008 Restricted Stock Unit Grants. In
May 2007, after considering an analysis of total compensation
for our Named Executive Officers and upon the recommendation of
the Compensation Committee, our Board of Directors approved
50,000 restricted stock units for our Chief Executive Officer
and 20,000 restricted stock units for each of our other Named
Executive Officers. The Compensation Committee believed that the
grant of restricted stock units was appropriate based on our
performance over the prior year. The four year time-based
vesting terms of the fiscal 2008 restricted stock unit awards
are as follows: five percent vesting after the first year of
continuous employment; additional ten percent after the second
year of continuous employment; additional 15 percent after
the third year of continuous employment; and the remaining
70 percent after the fourth year of continuous employment.
Unlike the fiscal 2007 restricted stock units, these restricted
stock units are not subject to performance-based acceleration.
Our Compensation Committee believed that retention of the Named
Executive Officers was key to our success and that these
additional restricted stock units would be more likely, given
the time-based vesting schedule of the restricted stock units,
to maximize retention of our Named Executive Officers without
performance-based acceleration milestones.
Other
Compensation and Benefits
We do not provide any of our executive officers with any
material perquisites. Currently, all benefits offered to our
executive officers, including an opportunity to participate in
our 401(k) plan, medical, dental, vision, life insurance,
disability coverage and flexible spending accounts, are also
available on a non-discriminatory basis to other full-time
employees. We also provide vacation and other paid holidays to
all full-time employees, including our Named Executive Officers.
23
Employment
Agreements
In August 2005, we entered into an employment agreement with
Clinton H. Severson, our President and Chief Executive Officer,
which provides Mr. Severson with two years of salary, bonus
and benefits if his employment with us is terminated for any
reason other than cause. Certain severance benefits provided
pursuant to the Severance Plan (described below in Change
in Control Agreements) with respect to a change of control
supersede those provided pursuant to the employment agreement.
No other executives have employment agreements.
Change
in Control Agreements
In July 2006, our Board of Directors, after considering a change
of control program analysis from the Compensation Peer Group
prepared by an independent compensation expert and upon the
recommendation of the Compensation Committee, approved and
adopted the Abaxis, Inc. Executive Change of Control Severance
Plan (the Severance Plan). The Severance Plan was
adopted by the Board to reduce the distraction of executives and
potential loss of executive talent that could arise from a
potential change of control. Participants in the Severance Plan
include Abaxis senior managers who are selected by the
Board. The Board has designated the following executive officers
as participants in the Severance Plan: Clinton H. Severson, our
Chairman, President and Chief Executive Officer; Alberto R.
Santa Ines, our Chief Financial Officer and Vice President of
Finance; Robert B. Milder, our former Chief Operations Officer;
Vladimir E. Ostoich, Ph.D., our Vice President of
Government Affairs and Vice President of Marketing for the
Pacific Rim; Kenneth P. Aron, Ph.D., Vice President of
Research and Development; Christopher M. Bernard, our Vice
President of Marketing and Sales, Medical Market; and Martin V.
Mulroy, our Vice President of Marketing and Sales, Veterinary
Market.
The Severance Plan provides that upon the occurrence of a change
of control a participants outstanding stock option(s) and
restricted stock units will accelerate in full and such equity
instrument shall become immediately exercisable at the closing
of the change of control event.
If the participants employment is terminated by us for any
reason other than cause, death, or disability within
18 months from the change of control date, the participant
is eligible to receive severance benefits as follows:
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a lump sum payment equal to two times the sum of the
participants annual salary and the participants
target annual bonus amount for the year in which the change of
control occurs;
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a lump sum payment relating to all options or instruments, which
were not exercised as of the termination date, in an amount
equal to the difference between the share price established in
the change of control transaction and the exercise price of the
instrument;
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|
payment of 24 months of premiums for medical, dental,
disability and life insurance benefits, provided, however, that
if the participant becomes eligible to receive comparable
benefits under another employers plan, the Companys
benefits shall be secondary to those provided under such other
plan; and
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|
payment of an amount equal to any excise tax imposed under
Section 4999 of the Internal Revenue Code of 1986, as
amended.
|
Payment of the foregoing severance benefits is conditioned upon
the participants execution of a valid and effective
release of claims against us.
Tax
Considerations
Deductibility
of Executive Compensation
We have considered the provisions of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the Code)
and related Treasury Regulations which restrict deductibility of
executive compensation paid to our Named Executive Officers and
our other executive officers holding office at the end of any
year to the extent such compensation exceeds $1,000,000 for any
of such officers in any year and does not qualify for an
exception under the statute or regulations. The Compensation
Committee endeavors to maximize deductibility of compensation
under Section 162(m) of the Code to the extent practicable
while maintaining a competitive, performance-based compensation
program. However, tax consequences, including tax deductibility,
are subject to many factors (such
24
as changes in the tax laws and regulations or interpretations
thereof and the timing of various decisions by officers
regarding stock options) which are beyond the control of both
the company and our Compensation Committee. In addition, the
Compensation Committee believes that it is important to retain
maximum flexibility in designing compensation programs that meet
its stated business objectives. For these reasons, the
Compensation Committee, while considering tax deductibility as a
factor in determining compensation, will not limit compensation
to those levels or types of compensation that will be
deductible. The Compensation Committee will continue to consider
alternative forms of compensation, consistent with its
compensation goals that preserve deductibility. The Compensation
Committee does not believe that the components of our
compensation will be likely to exceed $1,000,000 by a material
amount for any affected executive officer in the near future and
therefore concluded that no further action with respect to
qualifying such compensation for deductibility was necessary at
this time.
Summary
Compensation Table
The following table sets forth for fiscal 2007, the compensation
awarded or paid to, or earned by, our Chief Executive Officer,
Chief Financial Officer and the three other most highly
compensated executive officers at March 31, 2007
(collectively, the Named Executive Officers).
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Non-Equity
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Stock
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Option
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Incentive Plan
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All Other
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Fiscal
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|
Salary
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Bonus
|
|
Awards
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Awards
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|
Compensation
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Compensation
|
|
Total
|
Name and Principal Position
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Year
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|
($)
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|
($)
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($)(1)
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($)(1)
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($)(2)
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($)(3)
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($)
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|
Clinton H. Severson
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2007
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323,500
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101,040
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8,603
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|
500,250
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13,823
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(4)
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947,216
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|
President, Chief Executive Officer
and Chairman of the Board
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Alberto R. Santa Ines
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2007
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174,008
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22,453
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|
8,997
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287,500
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|
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13,227
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(5)
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506,185
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Chief Financial Officer and Vice
President of Finance
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Robert B. Milder
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2007
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|
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|
199,123
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|
22,453
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|
|
|
6,882
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|
|
|
333,500
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|
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|
23,031
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(6)
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|
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584,989
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|
Former Chief Operations Officer
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Kenneth P.
Aron, Ph.D.
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2007
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|
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184,054
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22,453
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|
6,882
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|
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287,500
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22,592
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(7)
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523,481
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Vice President of Research and
Development
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Vladimir E.
Ostoich, Ph.D.
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2007
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194,100
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22,453
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6,882
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|
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287,500
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17,013
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(8)
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527,948
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Vice President of Government
Affairs and Vice President of Marketing for the Pacific Rim
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(1) |
|
Amounts listed in this column represent the compensation cost
recognized by us for financial statement reporting purposes for
fiscal 2007 related to stock options and restricted stock unit
awards granted to the Named Executive Officers in and prior to
fiscal 2007. These amounts have been calculated in accordance
with Statement of Financial Accounting Standards No. 123
(revised 2004) (SFAS No. 123(R)). For a
discussion of the assumptions used in determining the fair value
of awards of stock options and restricted stock units in the
above table, see Note 10 of the Notes to Financial
Statements included in our Annual Report on
Form 10-K
filed with the SEC on June 14, 2007. |
|
(2) |
|
Represents aggregate cash performance bonuses earned in fiscal
2007 based on achievement of corporate financial performance
goals for fiscal 2007, as described under Executive
Compensation Compensation Discussion and
Analysis above. These bonuses were paid in four
installments quarterly within one month following the end of the
quarter. Amounts do not include bonuses paid in fiscal 2007,
with respect to bonuses earned in fiscal 2006. |
25
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(3) |
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Amounts listed are based upon our actual costs expensed in
connection with such amounts. |
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(4) |
|
Consists of $4,366 in supplemental health plan expenses
reimbursed by us, $780 in group life insurance paid by us, $812
in disability insurance premiums paid by us and $7,865 in
matching contributions made by us to Mr. Seversons
401(k) account. |
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(5) |
|
Consists of $4,505 in supplemental health plan expenses
reimbursed by us, $420 in group life insurance paid by us, $437
in disability insurance premiums paid by us and $7,865 in
matching contributions made by us to Mr. Santa Ines
401(k) account. |
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(6) |
|
Consists of $14,186 in supplemental health plan expenses
reimbursed by us, $480 in group life insurance paid by us, $500
in disability insurance premiums paid by us and $7,865 in
matching contributions made by us to Mr. Milders
401(k) account. Mr. Milder, our former Chief Operations
Officer, resigned in June 2007. |
|
(7) |
|
Consists of $14,186 in supplemental health plan expenses
reimbursed by us, $444 in group life insurance paid by us, $462
in disability insurance premiums paid by us and $7,500 in
matching contributions made by us to Mr. Arons 401(k)
account. |
|
(8) |
|
Consists of $10,058 in supplemental health plan expenses
reimbursed by us, $468 in group life insurance paid by us, $487
in disability insurance premiums paid by us and $6,000 in
matching contributions made by us to Mr. Ostoichs
401(k) account. |
Salary and Bonus in Proportion to Total
Compensation. The following table sets forth the
percentage of base salary and annual cash incentive bonus earned
by each Named Executive Officer as a percentage of total
compensation for fiscal 2007.
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Annual Cash
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Base Salary
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Incentive Bonus as
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as a Percentage of
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|
a Percentage of
|
Named Executive Officer
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Total Compensation
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Total Compensation
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|
Clinton H. Severson
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34
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%
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53
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%
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Alberto R. Santa Ines
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34
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%
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57
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%
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Robert B. Milder
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34
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%
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|
57
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%
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Kenneth P. Aron, Ph.D.
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35
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%
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55
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%
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Vladimir E.
Ostoich, Ph.D.
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37
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%
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54
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%
|
CEO Employment Agreement. In August 2005, we
entered into an employment agreement with Clinton H. Severson,
our President and Chief Executive Officer, which provides
Mr. Severson with two years of salary, bonus and benefits
if his employment with us is terminated for any reason other
than cause. Certain severance benefits provided pursuant to the
Severance Plan (described above in Change of Control
Agreements) with respect to a change of control supersede
those provided pursuant to the employment agreement. No other
executives have employment agreements.
26
Grants of
Plan-Based Awards in Fiscal 2007
The following table sets forth the grants of plan-based awards
to our Named Executive Officers during fiscal 2007.
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All Other
|
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Stock
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Awards:
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Grant Date
|
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|
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Number
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|
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Fair Value
|
|
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|
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Estimated Future Payouts Under
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Estimated Future Payouts Under
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|
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of Shares
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of Stock
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|
Non-Equity Incentive Plan Awards(1)
|
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Equity Incentive Plan Awards
|
|
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of Stock
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|
|
and Option
|
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|
|
Grant
|
|
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Threshold
|
|
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Target
|
|
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Maximum
|
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Threshold
|
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Target
|
|
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Maximum
|
|
|
or Units
|
|
|
Awards
|
|
Name
|
|
Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)(2)(3)
|
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|
(#)
|
|
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($)(4)
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|
|
Clinton H. Severson
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|
4/25/2006
|
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|
|
|
|
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|
40,000
|
|
|
|
|
|
|
|
1,031,200
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|
|
|
|
4/25/2006
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50,000
|
|
|
|
|
|
|
|
1,289,000
|
|
|
|
|
|
|
|
|
108,750
|
|
|
|
435,000
|
|
|
|
870,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
Alberto R. Santa Ines
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|
|
4/25/2006
|
|
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20,000
|
|
|
|
|
|
|
|
515,600
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|
|
|
|
|
|
|
|
62,500
|
|
|
|
250,000
|
|
|
|
500,000
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
Robert B. Milder
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|
|
4/25/2006
|
|
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|
|
|
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|
20,000
|
|
|
|
|
|
|
|
515,600
|
|
|
|
|
|
|
|
|
72,500
|
|
|
|
290,000
|
|
|
|
580,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth P. Aron, Ph.D.
|
|
|
4/25/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
515,600
|
|
|
|
|
|
|
|
|
62,500
|
|
|
|
250,000
|
|
|
|
500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vladimir E.
Ostoich, Ph.D.
|
|
|
4/25/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
515,600
|
|
|
|
|
|
|
|
|
62,500
|
|
|
|
250,000
|
|
|
|
500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Actual cash performance bonuses, which were approved by the
Compensation Committee based on achievement of corporate
financial performance goals for fiscal 2007, were paid in four
installments quarterly within one month following the end of the
quarter and are shown in the Non-Equity Incentive Plan
Compensation column of the Summary Compensation Table
above. |
|
(2) |
|
Each of the equity-based awards reported in the Grants of
Plan-Based Awards table was granted under, and is subject
to, the terms of our 2005 Equity Incentive Plan. |
|
(3) |
|
Represents full acceleration of the restricted stock unit awards
granted during fiscal 2007 if a certain level of operating
income per share is achieved during the fiscal year ended
March 31, 2007. These restricted stock unit awards are
subject to accelerated vesting upon achieving the following
performance-based milestones: |
|
|
|
upon attainment of certain pre-tax income goals by
March 31, 2007, vesting will accelerate to an aggregate of
25% within one year from grant date; by March 31, 2008,
vesting will accelerate to an aggregate of 25% within two years
from grant date; by March 31, 2009, vesting will accelerate
to an aggregate of 30%, within three years of grant date; hence,
meeting pre-tax income goals in each of the fiscal years ended
March 31, 2007, 2008 and 2009 can result in a cumulative
vesting of 80% over three years;
|
|
|
|
upon attainment of certain product development
objectives prior to June 30, 2007, an additional vesting of
10% would be awarded;
|
|
|
|
upon satisfaction of certain regulatory requirements
prior to March 31, 2008, an additional vesting of 10% would
be awarded; or
|
|
|
|
upon attainment of a certain level of operating
income per share for any fiscal year during the four year
vesting period, the restricted stock units will accelerate in
full.
|
|
(4) |
|
Represents the fair value of the restricted stock unit award on
the date of grant, pursuant to SFAS No. 123(R). See
Note 10 of the Notes to Financial Statements included in
our Annual Report on
Form 10-K
filed with the SEC on June 14, 2007 for additional
information. |
27
Outstanding
Equity Awards at Fiscal Year End
The following table shows, for the fiscal year ended
March 31, 2007, certain information regarding outstanding
equity awards at fiscal year end for our Named Executive
Officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
Plan Awards:
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
Number of
|
|
Payout Value
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
Number of
|
|
Shares or
|
|
Unearned
|
|
of Unearned
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
Shares or
|
|
Units of
|
|
Shares, Units
|
|
Shares, Units
|
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
Units of
|
|
Stock
|
|
or Other
|
|
or Other
|
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
|
|
Stock That
|
|
That
|
|
Rights That
|
|
Rights That
|
|
|
Options
|
|
Options
|
|
Exercise
|
|
Option
|
|
Have Not
|
|
Have Not
|
|
Have Not
|
|
Have Not
|
|
|
(#)
|
|
(#)
|
|
Price
|
|
Expiration
|
|
Vested
|
|
Vested
|
|
Vested
|
|
Vested
|
Name
|
|
Exercisable(1)
|
|
Unexercisable
|
|
($)(2)
|
|
Date
|
|
(#)
|
|
($)
|
|
(#)(3)
|
|
($)(4)
|
|
Clinton H. Severson
|
|
|
140,000
|
|
|
|
0
|
|
|
|
1.5625
|
|
|
|
1/26/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
0
|
|
|
|
4.87
|
|
|
|
4/24/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,375
|
|
|
|
1,042
|
(5)
|
|
|
3.85
|
|
|
|
4/22/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
(6)
|
|
|
0
|
|
|
|
21.65
|
|
|
|
4/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
974,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
1,218,500
|
|
Alberto R. Santa Ines
|
|
|
8,000
|
|
|
|
0
|
|
|
|
8.625
|
|
|
|
1/24/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
0
|
|
|
|
7.875
|
|
|
|
4/3/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
0
|
|
|
|
4.87
|
|
|
|
4/24/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,000
|
|
|
|
0
|
|
|
|
5.47
|
|
|
|
7/24/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
0
|
|
|
|
3.00
|
|
|
|
7/23/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,167
|
|
|
|
833
|
(5)
|
|
|
3.85
|
|
|
|
4/22/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
(6)
|
|
|
0
|
|
|
|
21.65
|
|
|
|
4/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
487,400
|
|
Robert B. Milder
|
|
|
50,000
|
|
|
|
0
|
|
|
|
8.125
|
|
|
|
1/25/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
|
0
|
|
|
|
5.47
|
|
|
|
7/24/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
833
|
(5)
|
|
|
3.85
|
|
|
|
4/22/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
(6)
|
|
|
0
|
|
|
|
21.65
|
|
|
|
4/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
487,400
|
|
Kenneth P. Aron, Ph.D.
|
|
|
60,000
|
|
|
|
0
|
|
|
|
7.5625
|
|
|
|
2/7/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
0
|
|
|
|
6.31
|
|
|
|
10/31/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,500
|
|
|
|
0
|
|
|
|
5.47
|
|
|
|
7/24/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,667
|
|
|
|
833
|
(5)
|
|
|
3.85
|
|
|
|
4/22/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
(6)
|
|
|
0
|
|
|
|
21.65
|
|
|
|
4/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
487,400
|
|
Vladimir E. Ostoich, Ph.D.
|
|
|
25,000
|
|
|
|
0
|
|
|
|
1.875
|
|
|
|
10/26/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
0
|
|
|
|
2.25
|
|
|
|
4/27/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,000
|
|
|
|
0
|
|
|
|
8.125
|
|
|
|
1/25/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,000
|
|
|
|
0
|
|
|
|
4.87
|
|
|
|
4/24/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,500
|
|
|
|
0
|
|
|
|
5.47
|
|
|
|
7/24/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,167
|
|
|
|
833
|
(5)
|
|
|
3.85
|
|
|
|
4/22/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
(6)
|
|
|
0
|
|
|
|
21.65
|
|
|
|
4/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
487,400
|
|
|
|
|
(1) |
|
Options granted to the Named Executive Officers expire
10 years after the grant date. All options vest one-fourth
on the first anniversary date of grant and vests at a rate of
1/48th for each full month thereafter, except as otherwise noted. |
|
(2) |
|
Represents the fair value of our common stock on the grant date
of the option. |
|
(3) |
|
The four year time-based vesting terms of the restricted stock
units is as follows, assuming continuous employment: five
percent of the shares vest on April 25, 2007; ten percent
of the shares vest on April 25, 2008; 15 percent of
the shares vest on April 25, 2009; and 70 percent of
the shares vest on April 25, 2010. Additionally, these
restricted stock unit awards are also subject to accelerated
vesting upon achieving the following performance-based
milestones: |
28
|
|
|
|
|
upon attainment of certain pre-tax income goals by
March 31, 2007, vesting will accelerate to an aggregate of
25% within one year from grant date; by March 31, 2008,
vesting will accelerate to an aggregate of 25% within two years
from grant date; by March 31, 2009, vesting will accelerate
to an aggregate of 30%, within three years of grant date; hence,
meeting pre-tax income goals in each of the fiscal years ended
March 31, 2007, 2008 and 2009 can result in a cumulative
vesting of 80% over three years;
|
|
|
|
upon attainment of certain product development
objectives prior to June 30, 2007, an additional vesting of
10% would be awarded;
|
|
|
|
upon satisfaction of certain regulatory requirements
prior to March 31, 2008, an additional vesting of 10% would
be awarded; or
|
|
|
|
upon attainment of a certain level of operating
income per share for any fiscal year during the four year
vesting period, the restricted stock units will accelerate in
full.
|
|
|
|
In each case, vesting of the equity award is conditioned upon
the Named Executive Officers continuous employment through
the applicable vesting date. |
|
(4) |
|
The value of the equity award is based on the closing price of
our common stock of $24.37 on March 30, 2007, the last
trading day of our fiscal 2007, as reported on the Nasdaq Global
Select Market. |
|
(5) |
|
100% of these shares will become exercisable on April 22,
2007. |
|
(6) |
|
These options were accelerated in full by our Board of Directors
and became fully vested on December 5, 2005. However,
pursuant to a
lock-up and
consent agreement entered into with each of our Named Executive
Officers, these options may not be exercised prior to the date
on which the exercise would have been permitted under the
vesting schedule set forth in footnote (1), or earlier upon the
Named Executive Officers last day of employment or a
change in control. |
Option
Exercises and Stock Vested in Fiscal 2007
The following table shows all shares of common stock acquired
upon exercise of stock options and value realized upon exercise,
and all stock awards vested and value realized upon vesting,
held by our Named Executive Officers during fiscal 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
Acquired on
|
|
|
Value Realized on
|
|
|
Acquired on
|
|
|
Value Realized
|
|
|
|
Exercise
|
|
|
Exercise
|
|
|
Vesting
|
|
|
on Vesting
|
|
Name
|
|
(#)
|
|
|
($)(1)
|
|
|
(#)
|
|
|
($)(2)
|
|
|
Clinton H. Severson
|
|
|
413,583
|
|
|
|
6,264,359
|
|
|
|
|
|
|
|
|
|
Alberto R. Santa Ines
|
|
|
4,000
|
|
|
|
55,180
|
|
|
|
|
|
|
|
|
|
Robert B. Milder
|
|
|
166,166
|
|
|
|
3,428,147
|
|
|
|
|
|
|
|
|
|
Kenneth P. Aron, Ph.D.
|
|
|
87,500
|
|
|
|
1,783,673
|
|
|
|
|
|
|
|
|
|
Vladimir E.
Ostoich, Ph.D.
|
|
|
56,000
|
|
|
|
885,410
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The value realized equals the difference between the option
exercise price and the fair market value of our common stock on
the date of exercise, as reported on the Nasdaq Global Market,
multiplied by the number of shares for which the option was
exercised. |
|
(2) |
|
Restricted stock units were not granted prior to fiscal 2007.
There were no restricted stock units vested during fiscal 2007. |
Severance
and Change in Control Agreements
Employment
Agreement
In August 2005, we entered into an employment agreement with
Clinton H. Severson, our President and Chief Executive Officer,
which provides Mr. Severson with two years of salary, bonus
and benefits if his employment with us is terminated for any
reason other than cause. Certain severance benefits provided
pursuant to the Severance Plan
29
(described in Change of Control Agreements) with
respect to a change of control supersede those provided pursuant
to the employment agreement. No other executives have employment
agreements.
Executive
Change of Control Severance Plan
In July 2006, our Board of Directors, after considering a change
of control program analysis from the Compensation Peer Group
prepared by an independent compensation expert and upon the
recommendation of the Compensation Committee, approved and
adopted the Abaxis, Inc. Executive Change of Control Severance
Plan (the Severance Plan). The Severance Plan was
adopted by the Board to reduce the distraction of executives and
potential loss of executive talent that could arise from a
potential change of control. Participants in the Severance Plan
include Abaxis senior managers who are selected by the
Board. The Board has designated the following executive officers
as participants in the Severance Plan: Clinton H. Severson, our
Chairman, President and Chief Executive Officer; Alberto R.
Santa Ines, our Chief Financial Officer and Vice President of
Finance; Robert B. Milder, our former Chief Operations Officer;
Vladimir E. Ostoich, Ph.D., our Vice President of
Government Affairs and Vice President of Marketing for the
Pacific Rim; Kenneth P. Aron, Ph.D., Vice President of
Research and Development; Christopher M. Bernard, our Vice
President of Marketing and Sales, Medical Market; and
Martin V. Mulroy, our Vice President of Marketing and
Sales, Veterinary Market.
The Severance Plan provides that upon the occurrence of a change
of control a participants outstanding stock option(s) and
restricted stock units will accelerate in full and such equity
instrument shall become immediately exercisable at the closing
of the change of control event.
If the participants employment is terminated by us for any
reason other than cause, death, or disability within
18 months from the change of control date, the participant
is eligible to receive severance benefits as follows:
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a lump sum payment equal to two times the sum of the
participants annual salary and the participants
target annual bonus amount for the year in which the change of
control occurs;
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a lump sum payment relating to all options or instruments, which
were not exercised as of the termination date, in an amount
equal to the difference between the share price established in
the change of control transaction and the exercise price of the
instrument;
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payment of 24 months of premiums for medical, dental,
disability and life insurance benefits, provided, however, that
if the participant becomes eligible to receive comparable
benefits under another employers plan, the Companys
benefits shall be secondary to those provided under such other
plan; and
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payment of an amount equal to any excise tax imposed under
Section 4999 of the Internal Revenue Code of 1986, as
amended.
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Payment of the foregoing severance benefits is conditioned upon
the participants execution of a valid and effective
release of claims from us.
Incentive
Plans
Under our 2005 Equity Incentive Plan, (the 2005 EIP)
in the event of a change in control, as such term is
defined by the 2005 EIP, the surviving, continuing, successor or
purchasing entity or its parent may, without the consent of any
participant, either assume or continue in effect any or all
outstanding options and stock appreciation rights or substitute
substantially equivalent options or rights for its stock. Any
options or stock appreciation rights which are not assumed or
continued in connection with a change in control or exercised
prior to the change in control will terminate effective as of
the time of the change in control. The Compensation Committee
may provide for the acceleration of vesting of any or all
outstanding options or stock appreciation rights upon such terms
and to such extent as it determines. The 2005 EIP also
authorizes the Compensation Committee, in its discretion and
without the consent of any participant, to cancel each or any
outstanding option or stock appreciation right upon a change in
control in exchange for a payment to the participant with
respect to each vested share (and each unvested share if so
determined by the Compensation Committee) subject to the
cancelled award of an amount equal to the excess of the
consideration to be paid per share of common stock in the change
in control transaction over the exercise price per share under
the award. The Compensation Committee, in its discretion, may
provide in the event
30
of a change in control for the acceleration of vesting
and/or
settlement of any stock award, restricted stock unit award,
performance share or performance unit, cash-based award or other
share-based award held by a participant upon such conditions and
to such extent as determined by the Compensation Committee. It
is currently anticipated that awards granted to executive
officers will accelerate fully on a change of control. The
vesting of non-employee director awards granted under the 2005
EIP automatically will accelerate in full upon a change in
control.
All outstanding stock options under our 1992 Outside
Directors Stock Option Plan (the Directors
Plan) are fully vested and no additional options will be
granted under the Directors Plan. Our Directors Plan provides
that, in the event of a transfer of control of the company, the
surviving, continuing, successor or purchasing corporation or a
parent corporation thereof, as the case may be, shall either
assume our rights and obligations under stock option agreements
outstanding under our option plans or substitute options for the
acquiring corporations stock for such outstanding options.
Any options which are neither assumed by the acquiring
corporation, nor exercised as of the date of the transfer of
control, shall terminate effective as of the date of the
transfer of control.
As described above, certain additional compensation is payable
to a Named Executive Officer (i) if his employment was
involuntarily terminated without cause, (ii) upon a change
in control or (iii) if his employment was terminated
involuntarily following a change in control. The amounts shown
in the table below assume that such termination was effective as
of March 31, 2007, and do not include amounts in which the
Named Executive Officer had already vested as of March 31,
2007. The actual compensation to be paid can only be determined
at the time of the change in control
and/or a
Named Executive Officers termination of employment.
Potential
Payments Upon Termination or Change in Control
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Involuntary
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Involuntary
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Termination Without
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Termination
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Change in Control
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Cause Following a
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Executive Benefits and Payments Upon Separation
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Without Cause(1)
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(No Termination)
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Change in Control(2)
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Clinton H. Severson
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Salary and bonus
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$
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1,595,000
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$
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1,595,000
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Vesting of stock options(3)
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$
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21,382
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$
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21,382
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$
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21,382
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Vesting of restricted stock
units(4)
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$
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2,193,300
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$
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2,193,300
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$
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2,193,300
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Health and welfare benefits
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$
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11,916
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$
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11,916
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Total
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$
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3,821,598
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$
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2,214,682
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$
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3,821,598
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Alberto R. Santa Ines
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Salary and bonus
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$
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884,353
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Vesting of stock options(3)
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$
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17,093
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$
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17,093
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Vesting of restricted stock
units(4)
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$
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487,400
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$
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487,400
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Health and welfare benefits
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$
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10,724
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Total
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$
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504,493
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$
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1,399,570
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Robert B. Milder(5)
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Salary and bonus
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$
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1,009,951
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Vesting of stock options(3)
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$
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17,093
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$
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17,093
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Vesting of restricted stock
units(4)
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$
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487,400
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$
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487,400
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Health and welfare benefits
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$
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30,332
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Total
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$
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504,493
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$
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1,544,776
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Kenneth P.
Aron, Ph.D.
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Salary and bonus
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$
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912,692
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Vesting of stock options(3)
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$
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17,093
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$
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17,093
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Vesting of restricted stock
units(4)
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$
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487,400
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$
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487,400
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Health and welfare benefits
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$
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30,184
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Total
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$
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504,493
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$
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1,447,369
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31
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Involuntary
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Involuntary
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Termination Without
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Termination
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Change in Control
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Cause Following a
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Executive Benefits and Payments Upon Separation
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Without Cause(1)
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(No Termination)
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Change in Control(2)
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Vladimir E.
Ostoich, Ph.D.
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Salary and bonus
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$
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933,786
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Vesting of stock options(3)
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$
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17,093
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$
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17,093
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Vesting of restricted stock
units(4)
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$
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487,400
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$
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487,400
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Health and welfare benefits
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$
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22,026
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Total
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$
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504,493
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$
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1,460,305
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(1) |
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Amounts relate to payments to Mr. Severson equal to two
years of salary, bonus and benefits if his employment with us is
terminated for any reason other than cause (as defined in
Mr. Seversons employment agreement). |
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(2) |
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Amounts assume that the Named Executive Officer was terminated
without cause or due to constructive termination during the
eighteen-month period following a change in control. |
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(3) |
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The value of the stock option assumes that the market price per
share of our common stock on the date of termination of
employment was equal to the closing price of our common stock of
$24.37 on March 30, 2007, the last trading day of our
fiscal 2007, as reported on the Nasdaq Global Select Market. The
value is calculated based upon the difference between the option
exercise price and $24.37. |
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(4) |
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The value of the restricted stock unit assumes that the market
price per share of our common stock on the date of termination
of employment was equal to the closing price of our common stock
of $24.37 on March 30, 2007, the last trading day of our
fiscal 2007, as reported on the Nasdaq Global Select Market. |
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(5) |
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Mr. Milder, our former Chief Operations Officer, resigned
in June 2007. |
Director
Compensation Table
The table below summarizes the compensation paid to our
non-employee directors for fiscal 2007.
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Fees Earned or
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All Other
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Paid in Cash
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Stock Awards
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Option Awards
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Compensation
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Total
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Name(1)
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($)
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($)(2)(3)(4)
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($)(5)
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($)(6)
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($)
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Richard J.
Bastiani, Ph.D.
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25,000
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33,680
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58,680
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Henk J. Evenhuis
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27,000
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33,680
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60,680
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Brenton G. A. Hanlon
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23,000
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33,680
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56,680
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Prithipal Singh, Ph.D.
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22,000
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33,680
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55,680
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Ernest S.
Tucker, III, M.D.
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22,000
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33,680
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1,001
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56,681
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(1) |
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Clinton H. Severson, our Chief Executive Officer and Director,
is not included in this table as he is an employee of the
Company and receives no compensation for his services as a
director. The compensation received by Mr. Severson as an
employee is shown in the Summary Compensation Table
above. |
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(2) |
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Amounts listed in this column represent our accounting expense
for these awards, over the requisite service period, in
accordance with SFAS No. 123(R). For a discussion of the
assumptions used in determining the fair value of awards of
restricted stock units in the above table, see Note 10 of
the Notes to Financial Statements in our Annual Report on
Form 10-K
filed with the SEC on June 14, 2007. Restricted stock units
were not granted to non-employee directors prior to fiscal 2007.
No stock awards were forfeited by any of our non-employee
directors during 2007. |
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(3) |
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Each non-employee director listed in the table above was granted
an award of 1,500 restricted stock units on April 25, 2006
under our 2005 EIP. The grant date fair value, as determined in
accordance with SFAS No. 123(R), of the restricted
stock units granted during fiscal 2007 for each of the directors
listed in the table above was $38,670. |
32
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(4) |
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As of March 31, 2007, none of our non-employee directors
held any outstanding and vested restricted stock units. |
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(5) |
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No options were awarded to our non-employee directors in fiscal
2007. As of March 31, 2007, each non-employee director has
the following number of options outstanding: Dr. Bastiani,
28,000; Mr. Evenhuis, 18,000; Mr. Hanlon, 28,000;
Dr. Singh, 26,000; and Dr. Tucker, 22,000 shares. |
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(6) |
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Represents the reimbursement of travel expenses. |
Cash
Compensation Paid to Board Members
During fiscal 2007, all non-employee directors received an
annual retainer of $12,000. The non-employee Chairs of our Audit
Committee and Compensation Committee received an annual
supplement of $5,000 and $2,000, respectively. Our non-employee
directors each received $1,250 per board meeting attended and
$1,000 per committee meeting attended. We also reimburse our
non-employee directors for reasonable travel expenses incurred
in connection with attending board and committee meetings.
Directors who are employees receive no compensation for their
service as directors.
Equity
Compensation Paid to Board Members
Non-employee directors are eligible to receive awards under the
2005 EIP, but such awards are discretionary and not automatic.
In fiscal 2007, each non-employee director received 1,500
restricted stock units granted under the 2005 EIP. Each award of
restricted stock units represents the right of the participant
to receive, without payment of monetary consideration, on the
vesting date, a number of shares of common stock equal to the
number of units vesting on such date. Subject to the
directors continued service with us through the applicable
vesting date, each restricted stock unit award will vest in full
12 months after the grant date. Under the terms of the 2005
EIP, the vesting of each non-employee director restricted stock
unit award will also be accelerated in full in the event of a
change in control, as defined in the 2005 EIP.
Transactions
With Related Persons
Certain
Relationships and Related Transactions
During the fiscal year ended March 31, 2007 and as of the
date hereof, there was not, nor is there any currently proposed
transaction or series of similar transactions to which Abaxis
was or is to be a party in which the amount involved exceeds
$120,000 and in which any executive officer, director or holder
of more than 5% of any class of voting securities of Abaxis and
members of that persons immediate family had or will have
a direct or indirect material interest, other than as set forth
in the Summary Compensation Table above.
Indemnification
Agreements
We generally enter into indemnity agreements with our directors
and certain of our executive officers. These indemnity
agreements require us to indemnify these individuals to the
fullest extent permitted by law. The Company has entered into
indemnity agreements with certain officers and directors which
provide, among other things, that the Company will indemnify
such officer or director, under the circumstances and to the
extent provided for therein, for expenses, damages, judgments,
fines and settlements he or she may be required to pay in
actions or proceedings which he or she is or may be made a party
by reason of his or her position as a director, officer or other
agent of the Company, and otherwise to the fullest extent
permitted under California law and the Companys Bylaws.
Related-Person
Transactions Policy and Procedures
Pursuant to the requirements set forth in the charter of our
Audit Committee, our Audit Committee is responsible for
reviewing and approving any related-party transactions, after
reviewing each such transaction for potential conflicts of
interests and other improprieties. In considering related-person
transactions, the Audit Committee takes into account the
relevant available facts and circumstances including, but not
limited to (a) the risks, costs and benefits to the
Company, (b) the impact on a directors independence
in the event the related person is a director, immediate family
member of a director or an entity with which a director is
affiliated, (c) the terms of the transaction, (d) the
availability of other sources for comparable services or
products and (e) the terms available to or from, as the
case may
33
be, unrelated third parties or to or from employees generally.
We do not have any additional written procedures governing the
process for addressing related-person transactions. However, in
approving or rejecting proposed transactions, our audit
committee generally considers the relevant facts and
circumstances available and deemed relevant, including, but not
limited to the risks, costs and benefits to us, the terms of the
transaction, the availability of other sources for comparable
services or products, and, if applicable, the impact on a
directors independence.
As required under the Nasdaq listing standards, a majority of
the members of a listed companys Board of Directors must
qualify as independent, as affirmatively determined
by the Board of Directors. The Board consults with the
Companys counsel to ensure that the Boards
determinations are consistent with relevant securities and other
laws and regulations regarding the definition of
independent, including those set forth in the Nasdaq
listing standards, as in effect time to time. Consistent with
these considerations, after review of all relevant transactions
or relationships between each director, or any of his or her
family members, and the Company, its senior management, and its
independent registered public accounting firm, the Board has
affirmatively determined that the following five directors are
independent directors within the meaning of the applicable
Nasdaq listing standards: Messrs. Evenhuis and Hanlon and
Drs. Bastiani, Singh and Tucker. In making this
determination, the Board found that none of the directors had a
material or other disqualifying relationship with the Company.
Mr. Severson, the Companys Chairman, President and
Chief Executive Officer, is not an independent director by
virtue of his employment with the Company.
Householding
of Proxy Materials
The SEC has adopted rules that permit companies and
intermediaries (e.g., brokers) to satisfy the delivery
requirements for proxy statements and annual reports with
respect to two or more shareholders sharing the same address by
delivering a single proxy statement addressed to those
shareholders. This process, which is commonly referred to as
householding, potentially means extra convenience
for shareholders and cost savings for companies.
This year, a number of brokers with account holders who are
Abaxis shareholders may be householding our proxy
materials. A single proxy statement may be delivered to multiple
shareholders sharing an address unless contrary instructions
have been received from the affected shareholders. Once you have
received notice from your broker that they will be
householding communications to your address,
householding will continue until you are notified
otherwise or until you revoke your consent. If, at any time, you
no longer wish to participate in householding and
would prefer to receive a separate proxy statement and annual
report, please notify your broker. Direct your written request
to Abaxis, Inc., Zara Z. Thomas, Secretary, 3240 Whipple Road,
Union City, California 94587 or contact Zara Z. Thomas at
1-510-675-6500. Shareholders who currently receive multiple
copies of the proxy statement at their addresses and would like
to request householding of their communications
should contact their brokers.
The Board of Directors knows of no other matters that will be
presented for consideration at the Annual Meeting. If any other
matters are properly brought before the meeting, it is the
intention of the persons named in the accompanying proxy to vote
on such matters in accordance with their best judgment.
By Order of the Board of Directors
ZARA Z. THOMAS
Secretary
September 17, 2007
A copy of the Companys Annual Report to the Securities
and Exchange Commission on
Form 10-K
for the fiscal year ended March 31, 2007 is available
without charge upon written request to: Corporate Secretary,
Abaxis, Inc., 3240 Whipple Road, Union City, California
94587.
34