LCA-VISION
INC.
7840
Montgomery Road
Cincinnati,
OH 45236
ANNUAL
MEETING OF STOCKHOLDERS
June
2, 2009
TO THE
STOCKHOLDERS OF LCA-VISION INC.:
You are
cordially invited to attend the Annual Meeting of the Stockholders of LCA-Vision
Inc. to be held on June 2, 2009 at 10:00 a.m. at The Queen City Club, 331 East
Fourth Street, Cincinnati, Ohio 45202, for the purpose of considering and acting
on the following:
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1)
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Election
of the six director nominees named in the accompanying proxy statement to
serve until the 2010 Annual
Meeting.
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2)
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Approval
of the company’s Stockholders Rights
Plan.
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3)
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Ratification
of Ernst & Young LLP as independent auditors of the company for
the fiscal year ending December 31,
2009.
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4)
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Transaction
of such other business as may properly come before the meeting or any
adjournment thereof.
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Stockholders
of record at the close of business on April 13, 2009 will be entitled to vote at
the meeting.
This year
we are furnishing our proxy materials to our stockholders over the
internet. You may read, print and download our annual report and
proxy statement at the investor relations section of our website at
www.lasikplus.com.
On
or about
April
23,
2009, we are mailing our
stockholders a notice containing instructions on how to access our 2009 proxy
statement and 2008 annual report, along with instructions on how to vote
online. The notice also provides instructions on how you can request
a paper copy of these documents if you desire.
You may
vote via the internet or by requesting a proxy card to complete, sign and return
by mail. If you do attend the meeting, you may vote personally on all
matters which are considered. It is important that your shares be
voted. In order to avoid the additional expense to the company of further
solicitation, we ask your cooperation in submitting your proxy
promptly.
By Order
of the Board of Directors
Steven C.
Straus
Chief
Executive Officer
April 23,
2009
LCA-VISION
INC.
7840
Montgomery Road
Cincinnati,
OH 45236
PROXY
STATEMENT
Our Board
of Directors is soliciting your proxy to vote your shares at the annual
meeting of Stockholders of LCA-Vision Inc. to be held on June 2,
2009. We are mailing the notice of the meeting to our
stockholders on or about April 23, 2009.
OUTSTANDING
VOTING SECURITIES
Each of
the ______________ shares of our Common Stock outstanding on April 13, 2009, the
record date for the annual meeting, is entitled to one vote on all matters
coming before the meeting. Only stockholders of record on our books
at the close of business on April 13, 2009 will be entitled to vote at the
meeting, either in person or by proxy.
If on the
record date your shares were held not in your name, but rather in an account at
a brokerage firm, bank, dealer or similar organization, then you are the
beneficial owner of the 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 stockholder of record for purposes
of voting at the annual meeting. As a beneficial owner, you have the
right to direct your broker, bank or other agent regarding how to vote the
shares in your account. You are also invited to attend the annual
meeting. However, because you are not the stockholder of record,
you may not vote your shares in person at the annual meeting unless you request
and obtain a valid proxy from your broker, bank or other agent.
PROXIES
AND VOTING
The proxy
names two of our officers, Steven C. Straus and Michael J. Celebrezze, as the
individuals who will vote your shares as you instruct when you vote by mail,
telephone or the internet. If you submit a signed proxy without
affirmatively designating how you wish it to be voted, Mr. Straus and Mr.
Celebrezze will vote your shares in accordance with the recommendation of the
Board of Directors or, if there is none, in accordance with their best
judgment.
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 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. "Non-routine" matters are generally
those involving a contest or a matter that may substantially affect the rights
or privileges of stockholders, such as mergers or stockholder
proposals.
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On
Proposal No. 1, the election of directors, the six nominees receiving the
most "For" votes from the holders of shares present in person or by proxy
and entitled to vote on the matter will be elected. Only votes "For" or
"Withheld" will affect the outcome.
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To
be approved, Proposal No. 2, approval of the Stockholder Rights Plan, must
receive “For” votes from the holders of a majority of the shares present
in person or by proxy and entitled to vote on the matter. If
you “Abstain” from voting, it will have the same effect as an "Against"
vote. Broker non-votes are not deemed to be votes cast, and
therefore will have no effect on the outcome of this
proposal.
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To
be approved, Proposal No. 3, the ratification of the selection of Ernst
& Young LLP as our independent auditors for 2009, must receive
"For" votes from the holders of a majority of the shares present in person
or by proxy and entitled to vote on the matter. If you "Abstain" from
voting, it will have the same effect as an "Against" vote. Broker
non-votes are not deemed to be votes cast, and therefore will have no
effect on the outcome of this
proposal.
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We are
soliciting proxies from our stockholders principally by mail, but we may also
have our directors, officers and other employees solicit proxies in person or by
telephone or other means. If these persons do assist in the proxy
solicitation process, we will not compensate them over and above their regular
salaries for doing so. We will reimburse brokers, banks and other
record owners for their reasonable costs in forwarding materials to beneficial
owners and obtaining voting instructions from those owners. We will
pay all expenses relating to our solicitation of proxies.
A quorum
of stockholders is necessary to hold a valid annual meeting. A quorum will be
present if stockholders holding at least a majority of the outstanding shares as
of the record date are present at the annual meeting in person or by proxy. The
holders of ___________shares must be present in person or by proxy at
the annual meeting to have 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 annual meeting. Broker
non-votes will not be counted towards the quorum requirement. If there is no
quorum, the holders of a majority of shares present at the meeting in person or
by proxy may adjourn the annual meeting to another date.
To be valid, proxies must be received
by the times detailed in the notice and proxy card.
Holders
of shares of Common Stock do not have appraisal rights under Delaware law in
connection with the matters to be acted on the annual meeting.
You can
revoke your proxy at any time before the final vote at the annual meeting. If
you are the record holder of your shares, you may revoke your proxy in any one
of three ways:
1. You
may submit another properly completed proxy card with a later date.
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2.
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You
may send a timely written notice that you are revoking your proxy to us at
7840 Montgomery Road, Cincinnati, Ohio 45236, Attention:
Secretary.
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3.
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You
may attend the annual meeting and vote in person. Simply attending the
meeting will not by itself, however, revoke your prior vote. If your
shares are held by your broker, bank or other agent as a nominee or agent,
you should follow the instructions provided by your broker, bank or other
agent.
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BUSINESS TO BE CONDUCTED AT
THE ANNUAL MEETING
Election of
Directors.
At the 2009 Annual Meeting, you will be asked to
elect six directors to hold office until the 2010 Annual Meeting of
Stockholders.
All of
the nominees named below currently are serving as members of the Board of
Directors. Each of the nominees was recommended to the Board of
Directors by the Nominating and Governance Committee of the
Board. Although we have no reason to believe that any nominee will,
prior to the date of the meeting, become unable to serve if elected, if someone
should, proxies will be voted for the election of any substitute
nominee.
The governance guidelines and
principles adopted by the Board of Directors require that any nominee for
director who receives a greater number of votes “withheld” from his election
than votes “for” such election must tender his resignation for consideration by
the Nominating and Governance Committee. The Nominating and
Governance Committee then will recommend to the Board the action to be taken
with respect to such resignation.
The Board recommends that each nominee,
described below, be elected to serve until the 2010 Annual Meeting or until his
successor is elected and qualified.
William F. Bahl
, age 58, is
the co-founder and President of Bahl & Gaynor Investment Counsel, an
independent registered investment adviser located in
Cincinnati. Prior to founding Bahl & Gaynor in 1990, he served as
Senior Vice President and Chief Investment Officer at Northern Trust Company in
Chicago. Mr. Bahl is a director of Cincinnati Financial Corporation
and serves as a trustee for the Talbert House Foundation, Deaconess
Associations, Inc. and Hamilton County Parks Foundation. He is a
member of the Cincinnati Society of Financial Analysts. He has served
as a member of the Board since 2005.
John H. Gutfreund
, age 79.
Since 1993, Mr. Gutfreund has been the President of Gutfreund & Co. Inc., a
financial management consulting firm. Mr. Gutfreund was a Senior
Advisor of Collins Stewart LLC (formerly C.E. Unterberg Towbin), an investment
partnership for high-growth technology companies, from January 2002 to September
2008. Formerly, Mr. Gutfreund was with Salomon Brothers from
1953-1991, most recently as its Chairman and Chief Executive
Officer. Mr. Gutfreund is a director of AXES LLC, Evercel, Inc.,
Montefiore Medical Center, and Nutrition 21, Inc., which he also serves as Board
Chairman. He is also a Member of The Brookings Institution; Council Advisory
Committee in New York; member, Council on Foreign Relations; Lifetime Member,
Board of Trustees, New York Public Library; Honorary Trustee, Oberlin (Ohio)
College; and Chairman Emeritus and Member of the Board of Trustees, Aperture
Foundation. He has served as a member of the Board since
1997.
John C. Hassan
, age 66, has
been a consultant to BSC Ventures, a holding company in the printing and
converting industry, since November 2006. Prior to that, he had been
the President and CEO of Champion Printing, Inc., a direct mail printing
company, for more than 15 years. Previously, he was Vice President
Marketing of the Drackett Company, a division of Bristol-Myers
Squibb. He currently serves on the boards of the Ohio Graphics Arts
Health Fund and the Madeira/Indian Hill Fire Company. He has served
as a member of the Board since 1996.
Edgar F. Heizer III
, age 49,
has been Chairman of Manus Health Systems, Inc., a multi-site dental-care
provider, since July 1997 and was also Chief Executive Officer of Manus Health
Systems from May 1999 through December 2004. Mr. Heizer also
currently serves as Managing Member of Coral SR LLC and Principal of
Heizer Capital, management and investment firms focused on growth businesses in
transition which he founded in 1995. He has served as a member of the
Board since February 2009.
Steven C. Straus
, age 52, is
our Chief Executive Officer. He joined us in that capacity in
November 2006. Mr. Straus’ healthcare career has spanned three
decades. Previously, Mr. Straus served sequentially as Chief
Development Officer, Chief Operating Officer and President of MSO Medical, a
bariatric surgery management company, from December 2003 through October
2006. Prior to December 2008, Mr. Straus was Chief Development
Officer at Titan Health Corporation, an ambulatory surgery center company, from
May 2003 to November 2003, and Vice President, General Manager of OR Partners,
Ambulatory Surgery Center Division of TLC Vision Inc. from October 2001 through
April 2003. Previously he was President of the Healthcare Products
Group at Jordan Industries; Senior Vice President at Columbia/HCA and Medical
Care, Inc. and served in several management capacities at Baxter Healthcare and
American Hospital Supply Corporation. He has served as a member of
the Board since November 2006.
E. Anthony Woods
, age 68, has
been non-executive Chairman of the Board since March 2006. Mr. Woods
has been Chairman of Deaconess Association, Inc. (Deaconess), a healthcare
holding company, since 2003, and was previously President and Chief Executive
Officer of Deaconess, from January 1987 through February 2003. Mr.
Woods is also director of Cincinnati Financial Corporation, Anchor Funding
Services, Inc., Critical Homecare Solutions, Inc. and Phoenix Health
Systems. He has served as a member of the Board since
2004.
The
complete mailing address of each director is c/o LCA-Vision Inc., 7840
Montgomery Road, Cincinnati, OH 45236.
Each
director holds office until the next annual meeting of stockholders or until his
or her successor has been elected and qualified. Officers are
appointed by and serve at the discretion of the Board.
Ratification
o
f
t
he Stockholder Rights
Plan.
On November 11,
2008, the Board adopted a Stockholder Rights Plan and in connection with the
Rights Plan declared a dividend distribution of one Right for each outstanding
share of Common Stock to stockholders of record at the close of business on
November 24, 2008. Pursuant to the terms of the Rights Plan, the
Rights will expire on November 23, 2009, if adoption of the Rights Plan has not
been approved by our stockholders. The Board is submitting the Rights Plan for
stockholder approval at the Annual Meeting. If the Rights Plan is not approved
at the annual meeting, the Board intends to let the Rights expire by their terms
on November 23, 2009.
The Board
believes that the Rights Plan is in the best interests of our stockholders and
that it appropriately balances the Board’s use of the Rights Plan to increase
its negotiating leverage to maximize stockholder value, while observing current
best practices to give stockholders a voice in the process. In the
case of offers that the Board considers to be coercive, abusive or opportunist,
the Rights Plan should provide time for the Board to evaluate such offers, to
seek out and secure potentially superior financial alternatives, if available,
and ultimately to negotiate the best price for our stockholders if a change of
control transaction is to occur. Following is a summary of the
material terms of the Rights Agreement dated as of November 24, 2008 between us
and Computershare Trust Company, N.A., as Rights Agent, that embodies the Rights
Plan. The statements below are only a summary, and we refer you to
the full text of the Rights Agreement, which is incorporated by reference as an
exhibit to our Annual Report on Form 10-K for 2008. Each statement in
this summary is qualified in its entirety by this reference.
Under the
terms of the Rights Agreement, holders of Common Stock as of November 11, 2008
received a dividend of one preferred share purchase right (“Right”) for every
share of Common Stock held at the close of business on November 24,
2008. Each share of Common Stock issued after the close of business
on November 24, 2008 also will be issued one corresponding Right. The Rights
will be evidenced by Common Stock certificates. After the
Distribution Date (as defined below) each Right will entitle the holder to
purchase from the Company one-hundredth of a share of Series A Junior
Participating Preferred Stock (“Participating Preferred Stock”) at a purchase
price of $100 per one hundredth of a preferred share, subject to adjustment, or,
after a flip-in event (as described below), to purchase shares of Common Stock
equal in value to twice the exercise price (as adjusted). The Rights
also would entitle their holders to acquire common stock of an acquirer in the
circumstances described below.
The
Rights encourage third parties who may be interested in acquiring us to
negotiate directly with the Board. The Rights will not prevent a
takeover of the Company. However, as described below, the Rights may
cause substantial dilution to a person or group that acquires 20% or more of the
outstanding Common Stock (such person or group being an “Acquiring Person”) or
to an Adverse Person (as defined below) unless the Rights are first redeemed by
the Board. Nevertheless, the Rights should not interfere with a
transaction that is in the best interests of the Company and our stockholders
because the Rights may be redeemed by the Board prior to the close of business
on the tenth day following the date that a person becomes an Acquiring Person or
an Adverse Person. The Board’s decision to enter into the Rights
Agreement was not made in response to, or in anticipation of, any acquisition
proposal, and is not intended to prevent a non-coercive takeover bid from being
made for the Company or to secure continuance of management or the directors in
office.
Events Causing the Exercisability of
the Rights
.
The Rights will
become exercisable after the “Distribution Date,” which is the earliest to occur
of:
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The
close of business on the tenth business day following (A) public
announcement that a person or group of affiliated or associated persons
has acquired, or obtained the right to acquire, beneficial ownership of
20% or more of the outstanding Common Stock (subject to certain
limitations) (an “Acquiring Person”) or (B) the date a person (also an
"Acquiring Person") has entered into an agreement or arrangement with us
or any of our subsidiaries providing for an Acquisition Transaction (any
such date, a "Stock Acquisition
Date"),
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ten
business days (or such later date as the Board determines) following the
commencement of a tender offer or exchange offer that would result in a
person or group becoming an Acquiring Person,
and
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ten
business days after the Board determines that any person, alone or
together with its affiliates and associates, has become the beneficial
owner of an amount of Common Stock that the Board determines to be
substantial (which amount shall in no event be less than 10% of the shares
of Common Stock then outstanding) and at least a majority of the Board who
are not officers of the Company, after reasonable inquiry and
investigation, including consultation with such persons as the directors
deem appropriate, determine that (A) such beneficial ownership by such
person is intended to cause the Company to repurchase the Common Stock
beneficially owned by such person or to pressure the Company to take
action or enter into a transaction or series of transactions intended to
provide such person with short-term financial gain under circumstances
where the Board determines that the best long-term interests of the
Company and its stockholders would not be served by taking such action or
entering into such transactions or series of transactions at that time or
(B) such beneficial ownership is causing or is reasonably likely to cause
a material adverse impact (including, but not limited to, impairment of
relationships with customers or impairment of the Company's ability to
maintain its competitive position) on the business or prospects of the
Company (any such person being an "Adverse
Person").
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An
"Acquisition Transaction" is defined as (x) a merger, consolidation or similar
transaction involving the Company or any of its subsidiaries as a result of
which stockholders of the Company will no longer own a majority of the
outstanding shares of Common Stock or a publicly traded entity which controls
the Company or, if appropriate, the entity into which the Company may be merged,
consolidated or otherwise combined, (y) a purchase or other acquisition of all
or a substantial portion of the assets of the Company and its subsidiaries, or
(z) a purchase or other acquisition of securities representing 20% or more of
the shares of Common Stock then outstanding.
Until a
right is exercised or exchanged, the holder of the Right, by virtue of holding a
Right, will have no rights as a stockholder of the Company, including, for
example, the right to vote or to receive dividends.
Exchange
Provision.
At any time after an Acquiring Person has become
such and prior to the Acquiring Person beneficially owning 50% or more of the
outstanding Common Stock, the Board may exchange the Rights (other than Rights
beneficially owned by the Acquiring Person, an Adverse Person or their
affiliates), in whole or in part, at an exchange ratio of one share of Common
Stock per Right (subject to adjustment).
Effect of
“Flip-In.”
If a person becomes an Acquiring Person (subject to
certain exceptions) or if the Board determines that a person is an Adverse
Person (a “flip-in event”), then each right (other than Rights beneficially
owned by an Acquiring Person, an Adverse Person or their affiliates) will
entitle the holder thereof to purchase, for the exercise price, a number of
shares of the Common Stock having a value of twice the exercise
price. However, rights are not exercisable following the occurrence
of a flip-in event until the Rights are no longer redeemable by the Company as
described below.
Exercise of Rights for Shares of an
Acquiring Company.
If after the date an Acquiring Person is
publicly announced to have become such, (a) we merge into another equity, (b) an
acquiring entity merges into the Company or (c) we sell more than 50% of our
assets or earning power, each Right (other than Rights owned by an Acquiring
Person, an Adverse Person or their affiliates) will entitle the
holder thereof to purchase, for the exercise power, a number of shares of common
stock of the person engaging in the transaction having a value of twice the
exercise power.
Adjustments to Exercise
Price.
The exercise price for each Right and the number of
shares of Participating Preferred Stock (or other securities or property)
issuable upon exercise of the Rights are subject to adjustment for stock splits,
stock dividends or similar transactions and to prevent dilution.
Redemption of Rights.
The
Board may redeem the Rights at one-tenth of one cent per right at any time
before the tenth business day following the date a 20% position has been
acquired or a person has been declared an "Adverse Person."
Amendment of the Terms of the Rights
Agreement.
Any of the provisions of the Rights Agreement may be amended
by the Board before the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the Board to cure any
ambiguity, to correct or supplement any provision contained in the Rights
Agreement that may be effective or inconsistent with any other provision
therein, to make changes that do not adversely affect the interests of holders
of Rights (excluding the interests of an Acquiring Person, an Adverse Person, or
certain related parties), or to shorten or lengthen any time period under the
Rights Agreement. Notwithstanding the foregoing, no amendment may be made to the
Rights Agreement at a time when the Rights are not redeemable, except to cure
any ambiguity or correct or supplement any provision contained in the Rights
Agreement that may be defective or inconsistent with any other provision
therein.
Term.
The Rights will expire
on November 23, 2018. In addition, the Rights will terminate one year from the
date of their issuance, on November 23, 2009, unless adoption of the Rights Plan
has been ratified by our stockholders prior to that time.
Stockholder
Ratification
.
The
affirmative vote of the holders of a majority of the shares of Common Stock
represented, in person or by proxy, and entitled to vote at the annual meeting
is required to ratify the Rights Plan.
The
Board recommends a vote for ratification of the Rights Plan.
Ratification of Appointment of
Independent Auditors
.
The
Board desires to obtain from the stockholders an indication of their approval or
disapproval of the Board's action in appointing Ernst & Young LLP,
independent registered public accountants, to audit our financial statements for
the year 2009. Ernst & Young has served as our independent
auditors since 2001.
If the
resolution is defeated, the adverse vote will be considered a direction to the
Board to select other auditors for the following year. However,
because of the difficulty and expense of making any substitution of auditors so
long after the beginning of the current year, it is contemplated that the
appointment for the year 2009 will be permitted to stand unless the Board finds
other good reasons for making a change. Representatives of
Ernst & Young will be in attendance at the meeting, with the
opportunity to make a statement if they desire, and will be available to respond
to appropriate questions.
Information
on fees billed by Ernst & Young for services during 2008 and 2007 is
provided below.
Audit Fees.
Audit fees
totaled $
469,447
and
$431,965 in 2008 and 2007, respectively. Audit fees include fees
associated with the annual audit of the Company's consolidated financial
statements and the effectiveness of our internal control over financial
reporting. Audit fees also include fees associated with reviews of our quarterly
reports on Forms 10-Q, the statutory audit requirement with respect to our
captive insurance company, and reviews of registration statements.
Audit Related
Fees.
We did not pay Ernst & Young any amounts in 2008 or
2007 for assurance or related services that are (1) reasonably related to the
performance of the audit or review of our financial statements and (2) not
reported under “Audit Fees” above.
Tax Fees.
The Company
did not use Ernst & Young for any tax compliance, tax advice or tax planning
services in 2008 or 2007.
All Other Fees.
Ernst
& Young did not provide any products or perform any services for the Company
in 2008 or 2007 other than the audit services described above.
The
Board's Audit Committee approved the services provided and the fees charged by
Ernst & Young.
Required Vote
. The
affirmative vote of the holders of a majority of the shares of Common Stock
represented, in person or by proxy, and entitled to vote at the annual meeting
is required to ratify the appointment of Ernst & Young.
The
Board recommends a vote FOR ratification of the appointment of Ernst &
Young LLP.
INFORMATION
ABOUT THE BOARD OF DIRECTORS AND ITS COMMITTEES
Board
Governance, Meetings and Attendance at Meetings
The Board
met 16 times during 2008. During the year, all of the directors then
in office attended at least 75% of the meetings of the Board and all committees
of the Board on which they served. The Board has affirmatively
determined that Messrs. Bahl, Gutfreund, Hassan, Heizer and Woods are
“independent” directors as defined in the Marketplace Rules of the NASDAQ Stock
Market.
The Board
has adopted Board governance guidelines and principles that, together with the
charters of the Board committees, provide the framework for our corporate
governance. We also have a Code of Business Conduct and Ethics that is
applicable to all employees, including executive officers, as well as to
directors to the extent relevant to their services as directors. The Company’s
Board has three standing committees: Audit, Compensation, and Nominating and
Governance. Each committee is comprised solely of directors who are
“independent” as defined above. The Board has adopted a charter for each of the
Audit Committee, the Compensation Committee and the Nominating and Governance
Committee. The Code of Business Conduct and Ethics, Board Governance Guidelines
and Principles and committee charters are available on our website at
www.lasikplus.com by clicking on “Investors” and “Corporate Governance.” You may
request a copy of any of these documents to be mailed to you as described on the
last page of this Proxy Statement. Any amendments to, or waivers from, the Code
of Business Conduct and Ethics that apply to the Company’s principal executive
and financial officers will be posted on the Company’s website.
We
believe it is extremely important that our directors attend the Annual Meeting
of Stockholders and expect them to do so each year, barring unforeseen
circumstances. All of our directors then in office attended the 2008 Annual
Meeting.
Audit
Committee
The
primary function of the Audit Committee is to assist the Board in fulfilling its
oversight responsibilities with respect to our financial statements, internal
controls over financial reporting and auditing, accounting and financial
reporting process generally. The Audit Committee is responsible for the
selection, compensation and oversight of our independent auditors and for the
pre-approval of all audit and permitted non-audit services to be performed by
the independent auditors. Among other things, the Committee meets with the
independent auditors to review and discuss the adequacy and effectiveness of our
internal controls and its disclosure controls and procedures; to review our
significant accounting and reporting principles and practices; to discuss the
auditors’ judgments on the quality of our accounting principles; and to discuss
any management letters issued by the independent auditors. The Audit Committee
also is responsible for receiving and investigating any complaints regarding
questionable accounting or auditing matters and violations of our Code of
Business Conduct and Ethics.
The Audit
Committee held 11 meetings in 2008. At four of these meetings, the Committee met
separately with members of our internal audit department and with our
independent auditors. The current members of the Committee are Messrs. Hassan
(Chair), Bahl and Woods. The Board has determined that each of Messrs. Hassan,
Bahl and Woods qualifies as an “audit committee financial expert” under
applicable SEC rules.
Audit Committee
Report
In
accordance with its written charter, the Audit Committee of the Board assists
the Board in fulfilling its responsibility for oversight of the quality and
integrity of our accounting, auditing and financial reporting
practices.
In
discharging its oversight responsibility as to the audit process, the Audit
Committee obtains from the independent auditors a formal written statement
describing all relationships between the auditors and us that might bear on the
auditors’ independence consistent with applicable requirements of the Public
Company Accounting Oversight Board, discussed with the auditors any
relationships that may impact their objectivity and independence, and satisfied
itself as to the auditors’ independence.
The Audit
Committee discusses and reviews with the independent auditors all communications
required by generally accepted auditing standards, including those described in
Statement on Auditing Standards No. 61, as amended, “Communications with Audit
Committees” and, with and without management present, discusses and reviews the
results of the independent auditors’ examination of the financial
statements.
The Audit
Committee reviewed and discussed our audited financial statements as of and for
the fiscal year ended December 31, 2008 with management and the independent
auditors. Management has the responsibility for the preparation of
our financial statements and the independent auditors have the responsibility
for the examination of those statements.
Based on
the above-mentioned review and discussions with management and the independent
auditors, the Audit Committee recommended to the Board that our audited
financial statements be included in our Annual Report on Form 10-K for the
fiscal year ended December 31, 2008, for filing with the Securities and Exchange
Commission.
March
13, 2009
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John
C. Hassan (Chair)
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William
F. Bahl
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E.
Anthony Woods
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Compensation
Committee
The
Compensation Committee consists of Messrs. Bahl (Chair), Gutfreund, Hassan and
Woods. No member of the Committee has any interlocking relationship with the
Company, as defined in applicable SEC rules and regulations. The Committee is
responsible for developing and recommending our executive compensation
principles, policies and programs to the Board. In addition, the Compensation
Committee either determines or recommends to the Board on an annual basis the
compensation to be paid to the chief executive officer and, with advice from the
chief executive officer, determines the amount paid to each of our other
executive officers. The principal responsibilities of the Compensation Committee
include to:
|
·
|
Review
and approve corporate goals, objectives and compensation of our chief
executive officer and evaluate his
performance.
|
|
·
|
Determine,
or recommend to the Board for determination, the compensation of our other
executive officers of the Company.
|
|
·
|
Discharge
responsibilities of the Board with respect to our incentive compensation
plans and equity-based plans and oversee the activities of the individuals
responsible for administering these
plans.
|
|
·
|
Approve
issuance or any material amendment of, any tax qualified,
non-discriminatory employee benefit plan or parallel non-qualified plan
pursuant to which a director, officer, employee or consultant will acquire
restricted or unrestricted stock, performance units or
options.
|
|
·
|
Approve
issuances under, or any material amendment of, any stock incentive or
other similar plan pursuant to which a person not previously an employee
or director of the Company, as an inducement to the individual’s entering
into employment with the Company, will acquire restricted or unrestricted
stock, performance units or
options.
|
The
Compensation Committee met seven times during 2008. The chief
executive officer is not present during any voting or deliberations of the
Committee regarding the chief executive officer’s compensation.
The
Committee may, in its discretion, delegate all or a portion of its duties and
responsibilities to a subcommittee consisting of one or more
members. During 2008, the Committee did not delegate any of its
duties or responsibilities.
The
Committee has the authority to select, retain, terminate and approve the fees
and other retention terms of special counsel or other experts or consultants, as
it deems appropriate, without seeking approval of the Board or management. The
authority to retain compensation consultants to assist in the evaluation of
director, chief executive officer or other executive officer compensation is
vested solely in the Committee. The Committee currently utilizes the
services of Total Rewards Strategies as its compensation consultant. This
consultant has provided information to the Committee on the types and amounts of
compensation paid to executive officers by various comparator groups of public
companies. This information was used by the Committee as described under
“Compensation Discussion and Analysis.”
Nominating
and Governance Committee
The
Nominating and Governance Committee was established under and has the
responsibilities set forth in its charter. During 2008, the Nominating and
Governance Committee held four meetings. The current members of the Nominating
and Governance Committee are Messrs. Gutfreund (Chair), Bahl, Hassan and
Woods.
Responsibilities
of the Nominating and Governance Committee include searching for and
recommending qualified nominees for election to the Board; identifying Board
members qualified to fill vacancies on Board committees; recommending to the
full Board programs and procedures relating to the compensation, evaluation,
retention, retirement and resignation of directors; reviewing and making
recommendations to the Board to address stockholder resolutions; addressing
Board performance; and reviewing the performance of senior management for
purposes of management succession. The Nominating and Governance Committee has
the authority to engage outside advisors at our expense. The Nominating and
Governance Committee will consider, on at least an annual basis, whether the
number of directors should be increased, remain the same or be decreased. To the
extent vacancies on the Board exist, either as the result of a director not
standing for re-election or resigning or as a result of an increase in the size
of the Board, the Nominating and Governance Committee will seek candidates who
are qualified to fill the vacancy. In evaluating candidates, the Nominating and
Governance Committee will consider such qualifications as its members then deem
of most benefit to the Company. Experience in the healthcare field is considered
a valuable but not necessary qualification.
In
identifying director candidates, the Nominating and Governance Committee expects
to rely upon the experience of its own members along with recommendations that
may be made by others, including our Chief Executive Officer and stockholders of
the Company. Stockholders who wish to suggest possible candidates should direct
their suggestions to the attention of our Assistant General Counsel, who will
then forward the suggestions to the Nominating and Governance Committee unless
he determines that the suggestions are frivolous or not made in good faith.
Candidates suggested by stockholders should at a minimum meet the qualifications
set forth above. Candidates suggested by stockholders will be considered on the
same basis as those suggested to the Nominating and Governance Committee by
other individuals. In 2008, other than one proposal which was later
withdrawn, we did not receive any recommendations for director nominations from
stockholders owning more than 5% of our common stock.
EXECUTIVE
OFFICERS
Our
current executive officers are Steven C. Straus, Chief Executive Officer;
Michael J. Celebrezze, Senior Vice President of Finance, Chief Financial Officer
and Treasurer; David L. Thomas, Senior Vice President of Operations; and Stephen
M. Jones, Senior Vice President of Human Resources. Information about Mr. Straus
is given above under “Current Directors of LCA-Vision Inc.”
Michael J. Celebrezze
, age
52, was named Senior Vice President of Finance, Chief Financial Officer and
Treasurer on December 1, 2008. He had previously served as interim
Chief Financial Officer since June 2008 and Senior Vice President and Treasurer
since July 2007. Michael joined us in July 2006 as Vice President of
Finance and Treasurer from First Transit, Inc., a national public transportation
company with $400 million in revenue, where he served as Chief Financial Officer
from June 2001 through June 2006. Prior to joining First Transit, he
was employed for 17 years with APCOA/Standard Parking, where he held a variety
of financial positions including Executive Vice President and Chief Financial
Officer. Mr. Celebrezze holds a Certified Public Accounting
designation in Ohio (inactive) and received a B.S. in Accounting from Kent State
University and an M.B.A. from John Carroll University.
Stephen M. Jones
, age 56, is
Senior Vice President of Human Resources. He came to us in May 2007
from The Kroger Company, where he was Vice President of Talent Management from
June 2001 through May 2007. Prior to joining The Kroger Company, he
was Principal and Practice Leader with the Performance and Rewards Practice of
Mercer Consulting, the largest human resources consulting organization in the
United States from June 1993 through June 2001. Mr. Jones earned a
B.A. in Biology from Brown University, and an M.B.A. in Health Administration
from Widener University.
David L. Thomas
, age 50,
joined us as Senior Vice President of Operations in April 2008. Prior
to joining us, he was a Senior Manager of McDonald’s Corp., serving as Chief
Operating Officer of Boston Market, Inc. from 2004 until September
2007. From 2001 until 2004, he was Division President and Senior
Vice-President, Operations for Boston Market. Previously, Mr. Thomas
held a number of positions with McDonald’s Corporation from 1991 to 2001
including, in 2001, serving as Country Market Manager of McDonald’s Puerto
Rico. Mr. Thomas is a graduate of the U.S. Military Academy at West
Point.
COMPENSATION
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The undersigned members of the
Compensation Committee of the Board of Directors of LCA-Vision Inc. during 2008
and currently have furnished the following report for inclusion in this Proxy
Statement.
The Committee has reviewed and
discussed the Compensation Discussion and Analysis presented below with our
management. Based upon that review and those discussions, the
Committee recommended to the Board of Directors that the Compensation Discussion
and Analysis be included in this Proxy Statement for our 2009 Annual Meeting of
Stockholders.
March
13, 2009
|
William
F. Bahl (Chair)
|
|
John
H. Gutfreund
|
|
John
C. Hassan
|
|
E.
Anthony Woods
|
COMPENSATION
DISCUSSION AND ANALYSIS
Our
compensation programs are designed to provide our executive officers with
market-competitive salaries and the opportunity to earn incentive compensation
related to performance expectations identified by the Compensation Committee of
the Board. The objectives of our executive compensation program as
developed by the Compensation Committee are to:
|
·
|
Provide
a direct link between executive officer compensation and the interests of
our stockholders by making a significant portion of executive officer
compensation dependent upon our financial
performance.
|
|
·
|
Support
the achievement of our annual and long-term goals and objectives as
determined annually by the Committee of the
Board.
|
|
·
|
Provide
opportunities for equity ownership based on competitive levels,
corporate/segment performance, share price performance and share dilution
considerations.
|
|
·
|
Provide
compensation plans and arrangements that encourage the retention of
better-performing executives.
|
Components
and Philosophy of Executive Compensation
The
Compensation Committee seeks to set total compensation for our executive
officers at levels that are competitive with that paid to executives with
similar levels of responsibilities at similarly-sized corporations that are
deemed comparable to us. The Compensation Committee’s goal is to
provide total compensation, assuming achievement of target performance measures
for incentive compensation are met, that approximates the
50th percentile of the comparable companies and that approaches the
75th percentile of total compensation at such comparable companies,
if maximum performance measures are achieved.
In
furtherance of this goal, the Compensation Committee’s then compensation
consultant prepared for the Committee’s review a list of comparable companies in
late 2007. Compensation for the named executive officers for 2008 was
set by the Committee using a peer group of 25 companies selected from direct
competitors, medical technology companies, healthcare, hospitality, medical
devices and retail with similar market value, revenue, net income and number of
employees. This group consisted of the following:
Alliance
Imaging, Inc.
|
PolyMedica
Corporation
|
American
Medical Systems Holdings
|
Radiation
Therapy Services, Inc.
|
AmSurg
Corp.
|
Select
Comfort Corporation
|
ArthroCare
Corporation
|
SonoSite,
Inc.
|
Books-A-Million,
Inc.
|
Symbion,
Inc.
|
Build-A-Bear
Workshop, Inc.
|
Symmetry
Medical, Inc.
|
California
Pizza Kitchen, Inc.
|
TLC
Vision Corporation
|
Hanger
Orthopedic Group, Inc.
|
Tuesday
Morning Corporation
|
Jos.
A. Bank Clothiers, Inc.
|
VCA
Antech, Inc.
|
Meridian
Bioscience, Inc.
|
Vital
Images, Inc.
|
P.F.
Chang’s China Bistro, Inc.
|
Vital
Signs, Inc.
|
Palomar
Medical Technologies, Inc.
|
Zoll
Medical Corporation
|
Pediatric
Services of America, Inc.
|
|
Using the
comparator group, the Committee’s compensation consultant advises the Committee
as to the nature of the elements of compensation paid by the comparable
companies and then calculates a market rate of compensation for each such
element for each named executive officer’s position (which is essentially equal
to the 50th percentile of the element of compensation paid by those
companies).
The
compensation of our executive officers is, therefore, designed to be competitive
with that paid by the comparable companies and includes three elements, namely
(i) base salary, (ii) annual incentive cash bonuses, and (iii) long-term equity
incentive compensation. Cash bonuses and long-term equity incentives
(collectively, “Incentive Compensation”) represent a significant portion of an
executive officer’s potential annual compensation. In general, the
proportion of an executive officer’s compensation that is Incentive Compensation
increases with the level of responsibility of the
officer. Allocations by the Committee among the three elements of
compensation are market based in order to enable us to attract and retain
qualified employees and are intended to provide an appropriate salary to our
executive officers while making the greater part of their compensation
contingent on, and tied to, our performance. The allocation to annual
incentive cash bonuses is intended to encourage and reward short-term
success. The allocation to equity incentive compensation, in addition
to encouraging and rewarding success over the performance period, is intended to
tie the executive’s interest to our long term success by giving the executive an
equity interest in us.
The
compensation program is designed to further our current strategic goals, which
are to increase stockholder value by focusing on improving operating results
through increases in revenue coupled with operating
efficiencies. Executive officers also receive various benefits
generally available to all of our employees, such as a 401(k) plan and medical
plans.
In
setting annual and long-term Incentive Compensation goals and performance
levels, the Committee intends to provide the executives a challenging yet
reasonable opportunity to reach the threshold amount, while requiring
substantial growth to reach the maximum level without encouraging executives to
take unnecessary and excessive risks.
Other
than new hires, the Compensation Committee typically takes actions with regard
to executive officer cash and stock compensation in the first quarter of each
year after financial results for the previous fiscal year have been
finalized.
Base Salaries
The
Compensation Committee seeks to set base salaries for the Company’s executive
officers at levels that are competitive with the market rate for executives with
similar roles and responsibilities at comparable companies, adjusted to reflect
the performance of the individual executive officer. The Committee
has established a target range of 80% to 120% of median level. In
setting annual salaries for individuals, the Compensation Committee first
considers the market rate compensation paid for similar positions at companies
in the comparator group as a benchmark forecast. It then considers
individual performance of the executive measured against
expectations. The Company has developed a performance development
assessment designed to provide a consistent and efficient approach to evaluating
performance. The assessment includes six success factors, namely
growth through leadership, growth through management excellence, growth through
people practices, growth through exceptional results, growth through
patient/customer excellence and growth through personal
commitment. Each executive officer is assessed on a scale of 1 to 5,
with 1 being not applicable and 5 being exceptional performance, in a number of
specific areas under each success factor. The performance development
assessment includes both a self assessment and a reviewer/supervisor
assessment. In the case of the Chief Executive Officer, this latter
assessment is provided by the Compensation Committee and the Chairman of the
Board of Directors. With respect to the other named executive
officers, the assessment is provided by the Chief Executive Officer or (other
than with respect to the Chief Financial Officer) the Chief Financial
Officer.
The
results of the performance development assessment are used by the Committee in
setting the salary compensation of the Chief Executive Officer. In
the case of the other named executive officers, the Committee receives advice
from the Chief Executive Officer, but actual compensation decisions are made by
the Committee. In each case, the decision is based upon the
appropriate market rate salary adjusted subjectively by the Committee to reflect
the results of the individual performance development
assessment. Salaries paid to the Company’s named executive officers
during 2008 are provided in the Summary Compensation
Table. Differences between individual named executive officers
reflect the above considerations and also the fact that some served as executive
officers for only a portion of 2008.
Annual
Incentive Bonuses (Non-Equity Incentive Compensation)
Our
Executive Cash Bonus Plan establishes performance criteria for the payment of
annual cash incentive bonuses to our executive officers and such other
additional employees as may be selected by the Compensation Committee from time
to time. Bonus amounts are calculated as a percent of base salary at
the end of the year based upon the extent to which threshold, target and maximum
performance goals set annually by the Committee are
achieved. Information on awards made for 2008 is provided elsewhere
in this Proxy Statement under 2008 Grants of Plan Based Awards.
In late
February and early March 2008, the Committee met to set cash incentive bonuses
for 2008. The Committee set bonus levels for achieving the threshold,
target and maximum performance for 2008 at 75%, 100% and 125% of base salary,
respectively, for Steven Straus, with linear interpolation between those
percentages. These levels were established in accordance with Mr.
Straus’ employment agreement, which is described below. For the other
named executive officers, the bonus levels for achieving threshold, target and
maximum performance were set for 2008 at 20%, 40% and 60% of base salary,
respectively. In each case, the bonus levels were determined by the
Committee based upon advice from its compensation consultant and were chosen to
be market based in order to enable us to attract and retain competent
employees. The bonus levels for Mr. Straus also represented the
results of arms length negotiations with him at the time of his employment in
November 2006 as described under Basis for Chief Executive
Compensation. The 2008 performance measure was adjusted operating
income of $26,370,900 for threshold, $29,301,000 for target and $32,231,000 for
maximum. The adjustment excludes deferred income from separately priced
warranties. The Committee may select one or more additional or
different objective performance measures in the future. Based upon
our 2008 performance, no cash bonuses will be paid for 2008.
In
February 2009, the Committee determined that, in view of current market
conditions and uncertainties affecting our ability to forecast our operating
results for 2009, it was unable to select objective performance measures for
2009 cash bonuses to our executive officers. Accordingly, in
accordance with the recommendation of its independent compensation consultant,
the Committee determined that 2009 cash bonuses for our executive officers would
be entirely discretionary and the Committee would determine them after financial
results for 2009 are available.
Long-Term
Equity Incentive Grants
Our stock
incentive plans authorize the Compensation Committee to award stock options and
restricted stock to executive officers and other key employees. Stock
incentive grants are designed to align the long-term interests of our key
employees with those of its stockholders by enabling key employees to develop
and maintain significant long-term equity ownership positions.
The value
and number of stock incentives granted to an executive officer is market based,
adjusted to reflect the executive’s level of performance responsibility as
reflected in the performance development assessment. The approach
used by the Committee is similar to that used in setting salary compensation as
described above.
For 2008,
the Compensation Committee continued a long-term equity incentive program begun
in 2006 under which a performance measure for each year is established,
performance goals are set and threshold, target and maximum performance share
award opportunities are made to the Company’s executive officers at the
beginning of the year. The Committee then considered the form in
which equity consideration awards should be made for 2008. In doing
so, the Committee noted the uncertain economic conditions under which we were
operating and the effect that external factors, such as consumer confidence and
the overall economy, might have upon our results of operations. The
Committee also noted that no incentive awards had been earned for 2007 and
considered the resulting negative effect upon our ability to attract and retain
qualified employees.
Taking
all of these factors into account, the Committee determined that equity
incentive awards for 2008 should consist of performance share awards and
time-based stock options. The Committee believed that this approach
was appropriate in order to balance risk for the executives and requirements for
stockholder return. The number of performance share awards was
determined by dividing one-half of each named executive officer’s incentive
award dollar figure by the fair market value of our common stock on the date of
grant. The performance measure for 2008 was operating income and the
terms of the performance share awards essentially were the same for
2007. The number of shares to be granted under options was calculated
by multiplying the number of performance shares by three. The
Committee felt that this was a reasonable allocation of value between
performance shares and options based upon advice received from the Committee’s
compensation consultant. The performance shares earned may not be
sold by the holder until the third anniversary of the date on which the
performance share award was granted and will be forfeited if the holder’s
employment terminates before that date for any reason other than death or
disability. Once issued, the performance shares having voting and
dividend rights during the restricted period. The options are
exercisable at fair market value on the date of grant, and will vest over five
years and expire after 10 years.
Based
upon market rate data developed for each named executive officer by the
Committee’s compensation consultant, as adjusted subjectively to reflect the
executive’s level of performance and responsibility as reflected in the
performance development assessment and the importance attributed internally to
different executive positions, the Committee established for each named
executive officer a dollar value of target equity incentive
compensation. Information about grants made for 2008 is provided
elsewhere in this Proxy Statement under 2008 Grants of Plan Based
Awards. The performance measure for 2008 was adjusted operating
income at the levels described under Annual Incentive Bonus. The
evaluation of 2008 performance will occur when audited financial information is
available.
In
accordance with its customary practices, the Committee met in February 2009 and
determined that, in view of the uncertainties described above with respect to
non-equity incentive compensation, equity incentive awards to the executive
officers for 2009 would consist solely of stock options, which were awarded
effective as of March 2, 2009. The Committee subsequently determined
that these grants inadvertently exceeded the limitation set forth in our 2006
Stock Incentive Plan on the maximum number of options that may be granted to any
person in one year. Upon the recommendation of our Chief Executive
Officer, on March 10, 2009, the Committee, with the consent of the optionees,
rescinded all of the options granted in 2009.
Basis
for Chief Executive Compensation
Effective
November 2, 2006, the Board appointed Steven C. Straus as Chief Executive
Officer. Mr. Straus has an employment agreement dated November 1,
2006. The Compensation Committee designed the agreement in accordance
with the principles described under “Components and Philosophy of Executive
Compensation,” and, with advice from the Committee’s compensation consultant,
negotiated it at arm’s length with Mr. Straus. The Committee believes
that the terms of the Agreement are consistent with market
provisions. The agreement was amended effective April 28,
2008. The principal terms of the agreement, as amended, are as
follows:
|
·
|
Annualized
salary of not less than $380,000.
|
|
·
|
Participation
in our Executive Cash Bonus Plan with a cash bonus target equal to 100% of
his annual base salary. The threshold will be 75% of his annual
base salary and the maximum bonus will be 125% of his annual base
salary. The target, threshold and maximum bonus goals for 2008
were established by the Compensation Committee on March 5,
2008.
|
|
·
|
Participation
in our 2008 Stock Incentive Plan. Mr. Straus received
time-based Restricted Share Units for 4,682 shares based upon the fair
market value on the date of his employment and a Performance Share Award
for 9,365 shares. Performance Shares were to be earned based on
our performance metrics for 2007 determined by the Compensation
Committee. Based on our performance, no Performance Shares were
earned for 2007. Mr. Straus’ Restricted Share Units will vest
on November 2, 2009, the third anniversary of his date of
employment.
|
|
·
|
Application
of the standard Confidentiality Agreement, which provides that for a
period of one year after termination of his employment with the Company,
he will not render services, directly or indirectly, to any competing
organization or solicit employees of the Company to join any competing
organization.
|
The
agreement has a two-year term that will be automatically renewed for successive
two-year periods, unless either we or Mr. Straus provides written notice to the
other party not to so renew at least 120 days prior to the anniversary
date. Mr. Straus also is entitled to certain severance payments as
described under “Executive Compensation – Potential Post-Employment
Payments.”
Severance
Arrangements
As
discussed under Potential Post-Employment Payments below, we entered into
agreements with our named executive officers other than Mr. Straus during
2008. The Compensation Committee and Board considered these
agreements important as a tool to retain executives during difficult economic
times or in the event of a change in control. The Compensation
Committee reviewed the agreements with its compensation consultant, which
advised that the agreements were consistent with benefits offered by companies
in the peer group.
Accounting
and Tax Treatments of Executive Compensation
Section
162(m) of the Internal Revenue Code prohibits us from taking an income tax
deduction for any compensation in excess of $1 million per year paid to our
Chief Executive Officer or any of our other four most-highly compensated
executive officers, unless the compensation qualifies as “performance-based” pay
under a plan approved by stockholders. Our stockholders have approved
our long-term stock incentive plans. We intend the plans to qualify
as performance-based compensation and be fully deductible by us. Our
annual cash bonus plan has not been approved by stockholders and does not so
qualify.
Review
of Past Awards
When
evaluating the current year compensation awards, the Compensation Committee
reviews awards made in prior years in addition to benchmark data from comparable
companies.
Adjustment
or Recovery of Awards
Under the
2006 Stock Incentive Plan, if, at any time within one year after the date on
which a participant exercised an option or on which Restricted Stock vests, the
Committee determines in its discretion that the Company or a Subsidiary has been
materially harmed by the participant, then any gain realized by the participant
shall be paid by the participant to us upon notice from us.
Timing of Grants
We have
not timed, and we do not intend to time, our release of material non-public
information for the purpose of affecting the value of executive
compensation. The current policy of the Compensation Committee is
grants of options or restricted stock for all employees, including executive
officers, will be approved during, or pre-approved with an effective grant date
during, a trading “window period,” which we define as a period beginning on the
third day following release of its quarterly financial results and ending 15
days before the end of the next fiscal quarter. If we are in
possession of material non-public information at the time of any proposed grant,
action may be deferred until the information has been made
public. Restricted stock grants to newly appointed or newly promoted
executive officers will be effective on the date approved by the Compensation
Committee (or, if later, the first day of employment).
EXECUTIVE
COMPENSATION
Summary
The
following table summarizes the annual compensation of our Principal Executive
Officer, Principal Financial Officer and of each of our other executive officers
(the “named executives”) for services rendered to us in all capacities in 2008,
2007 and 2006 for years that the officers were named executive
officers.
We
estimated the fair value of each common stock option granted during 2008 using
the following weighted-average assumptions:
|
|
2008
|
|
Dividend
yield
|
|
5-7.1%
|
|
Expected
volatility
|
|
361-362%
|
|
Risk-free
interest rate
|
|
3-3.1%
|
|
Expected
lives (in years)
|
|
5
|
|
Plan-Based
Compensation
The
following table summarizes the programs under which grants of cash or
equity-based compensation were available to the named executives in
2008. Because actual financial results for 2008 did not meet the
threshold performance level, none of these awards will be paid.
Summary
Compensation Table
Name and Principal Position
|
|
Year
|
|
Salary ($)
|
|
|
Stock
Awards ($)
(7)
|
|
|
Option
Awards ($)
(8)
|
|
|
Non-Equity
Incentive Plan
Compensation ($)
|
|
|
All Other
Compensation
($)
|
|
|
Total ($)
|
|
Steven
C. Straus (1)
|
|
2008
|
|
$
|
380,000
|
|
|
$
|
53,425
|
|
|
$
|
60,276
|
|
|
$
|
-
|
|
|
$
|
41,752
|
(9)
|
|
$
|
535,453
|
|
Chief
Executive Officer
|
|
2007
|
|
$
|
350,000
|
|
|
$
|
53,280
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
196,843
|
|
|
$
|
600,123
|
|
|
|
2006
|
|
$
|
70,833
|
|
|
$
|
8,612
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
79,445
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
J. Celebrezze (2)
|
|
2008
|
|
$
|
209,583
|
|
|
$
|
7,554
|
|
|
$
|
30,138
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
247,275
|
|
Senior
Vice President/Finance,
|
|
2007
|
|
$
|
190,000
|
|
|
$
|
7,533
|
|
|
$
|
-
|
|
|
$
|
26,250
|
|
|
$
|
6,750
|
|
|
$
|
230,533
|
|
Chief
Financial Officer & Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen
M. Jones (3)
|
|
2008
|
|
$
|
214,900
|
|
|
$
|
-
|
|
|
$
|
30,138
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
245,038
|
|
Senior
Vice President of
|
|
2007
|
|
$
|
140,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
3,500
|
|
|
$
|
143,500
|
|
Human
Resources
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
L. Thomas (4)
|
|
2008
|
|
$
|
212,596
|
|
|
$
|
-
|
|
|
$
|
25,660
|
|
|
$
|
-
|
|
|
$
|
122,787
|
(10)
|
|
$
|
361,043
|
|
Senior
Vice President of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alan
H. Buckey (5)
|
|
2008
|
|
$
|
150,987
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
150,987
|
|
Executive
Vice President of
|
|
2007
|
|
$
|
282,000
|
|
|
$
|
121,070
|
|
|
$
|
176,454
|
|
|
$
|
-
|
|
|
$
|
4,942
|
|
|
$
|
584,466
|
|
Finance
and Chief Financial
|
|
2006
|
|
$
|
270,000
|
|
|
$
|
102,096
|
|
|
$
|
216,727
|
|
|
$
|
115,627
|
|
|
$
|
1,000
|
|
|
$
|
705,450
|
|
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
H. Brenner (6)
|
|
2008
|
|
$
|
254,583
|
|
|
$
|
-
|
|
|
$
|
286,830
|
|
|
$
|
-
|
|
|
$
|
29,625
|
(11)
|
|
$
|
571,038
|
|
Chief
Marketing Officer
|
|
2007
|
|
$
|
166,667
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
178,960
|
|
|
$
|
345,627
|
|
(1)
|
Mr.
Straus began his employment with us on November 1,
2006.
|
(2)
|
Mr.
Celebrezze began his employment with us on July 17, 2006 and was named an
executive officer on August 21,
2007.
|
(3)
|
Mr.
Jones began his employment with us on May 1, 2007 and was named an
executive officer on August 21,
2007.
|
(4)
|
Mr.
Thomas began his employment with us on April 10, 2008 and was named an
executive officer on the same date.
|
(5)
|
Mr.
Buckey resigned his employment with us on June 30,
2008.
|
(6)
|
Mr.
Brenner's employment with us terminated effective July 31,
2008.
|
(7)
|
The
Long Term Incentive Grants section under Compensation Discussion and
Analysis describes the equity awards granted to the named
executives. Represents expense recognized in in accordance with
SFAS 123 ( R ).
|
(8)
|
Represents
expense recognized in accordance with SFAS123 ( R ) for stock options
issued prior to January 1, 2008 but not vested as of January 1,
2008. We did not grant any stock options in 2006 or
2007. Refer to the Outstanding Equity Awards at Fiscal
Year-End table for details of outstanding stock options for named
executives. We estimate the fair value of each stock option
using the Black-Scholes option pricing model using the assumptions in
the following table. We base expected volatility on a
blend of implied and historical volatility of our common
stock. We use historical data on exercises of stock options and
other factors to estimate the expected term of the share-based
payments granted. The risk-free rate is based on the U.S.
Treasury yield curve in effect at the date of grant. The
expected life of the options is based on historical data and is not
necessarily indicative of exercise patterns that may
occur.
|
(9)
|
Consists
of $23,585 of moving cost reimbursement and tax gross-up for relocation
expense of $18,167.
|
(10)
|
Consists
of $88,366 of moving cost reimbursement and tax gross up for relocation
expense of $34,421.
|
(11)
|
Consists
of $106,250 of severence payments, $16,574 of moving cost reimbursement
and tax gross up for relocation expense of
$13,051.
|
2008
Grants of Plan-Based Awards
|
|
|
|
Estimated Future Payouts Under Non-
Equity Incentive Plan Awards (1)
|
|
|
Estimated Future Payouts Under Equity
Incentive Plan Awards (2)
|
|
|
All Other Stock
Awards:
Number of
Shares of Stock
|
|
|
Grant Date
Fair Value of
Stock and
Option
|
|
Name
|
|
Grant Date
|
|
Threshold ($)
|
|
|
Target ($)
|
|
|
Maximum ($)
|
|
|
Threshold (#)
|
|
|
Target (#)
|
|
|
Maximum (#)
|
|
|
or Units (#)
|
|
|
Awards ($)
|
|
Steven
C. Straus
|
|
3/5/2008
|
|
$
|
285,000
|
|
|
$
|
380,000
|
|
|
$
|
475,000
|
|
|
|
6,127
|
|
|
|
12,254
|
|
|
|
18,381
|
|
|
|
36,762
|
|
|
$
|
699,948
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
J. Celebrezze
|
|
3/5/2008
|
|
$
|
41,917
|
|
|
$
|
83,833
|
|
|
$
|
125,750
|
|
|
|
3,063
|
|
|
|
6,127
|
|
|
|
9,190
|
|
|
|
18,381
|
|
|
$
|
349,974
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen
M. Jones
|
|
3/5/2008
|
|
$
|
42,980
|
|
|
$
|
85,960
|
|
|
$
|
128,940
|
|
|
|
3,063
|
|
|
|
6,127
|
|
|
|
9,190
|
|
|
|
18,381
|
|
|
$
|
349,974
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
L. Thomas (3)
|
|
4/1/2008
|
|
$
|
41,250
|
|
|
$
|
82,500
|
|
|
$
|
123,750
|
|
|
|
3,610
|
|
|
|
7,221
|
|
|
|
10,831
|
|
|
|
21,663
|
|
|
$
|
431,527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alan
H. Buckey (4)
|
|
3/5/2008
|
|
$
|
58,374
|
|
|
$
|
116,748
|
|
|
$
|
175,122
|
|
|
|
4,814
|
|
|
|
9,628
|
|
|
|
14,442
|
|
|
|
28,884
|
|
|
$
|
549,951
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
H. Brenner (4)
|
|
3/5/2008
|
|
$
|
51,000
|
|
|
$
|
102,000
|
|
|
$
|
153,000
|
|
|
|
4,814
|
|
|
|
9,628
|
|
|
|
14,442
|
|
|
|
28,884
|
|
|
$
|
549,951
|
|
(1)
|
Awards
under the Company's Executive Cash Bonus Plan. See
"Compensation Discussion and Analysis" for a discussion of the
plan.
|
(2)
|
Awards
under the Company's 2006 Stock Incentive Plan. See
"Compensation Discussion and Analysis" for a discussion of the
plan.
|
(3)
|
We
hired Mr. Thomas on April 1, 2008 and provided the plan-based awards on a
pro rata basis using 9/12
proration.
|
(4)
|
As
former employees, Messrs. Buckey and Brenner will not be eligible for any
payments of these awards.
|
Outstanding
Equity Awards at Fiscal 2008 Year-End
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
|
Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
|
|
Option
Exercise
Price ($)
|
|
Option
Expiration
Date
|
|
Number of
Shares or
Units of
Stock that
Have Not
Vested (#)
|
|
|
Market Value
of Shares or
Units of Stock
that Have Not
Vested ($)
|
|
|
Equity
Incentive Plan
Awards:
Number of
Unearned
Shares, Units
Or Other Rights
that Have Not
Vested (#) (7)
|
|
|
Equity Incentive
Plan Awards:
Market or
Payout Value of
Unearned
Shares, Units or
Other Rights
that Have Not
Vested ($) (7)
|
|
Steven
C. Straus
|
|
|
-
|
|
|
|
-
|
|
|
|
36,762
|
(1)
|
|
$
|
14.28
|
|
3/5/2018
|
|
|
4,682
|
(2)
|
|
$
|
19,243
|
|
|
|
6,127
|
|
|
|
25,182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
J. Celebrezze
|
|
|
-
|
|
|
|
-
|
|
|
|
18,381
|
(3)
|
|
$
|
14.28
|
|
3/5/2018
|
|
|
166
|
(4)
|
|
|
682
|
|
|
|
3,063
|
|
|
|
12,589
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen
M. Jones
|
|
|
-
|
|
|
|
-
|
|
|
|
18,381
|
(5)
|
|
$
|
14.28
|
|
3/5/2018
|
|
|
-
|
|
|
|
-
|
|
|
|
3,063
|
|
|
|
12,589
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
L. Thomas
|
|
|
-
|
|
|
|
-
|
|
|
|
21,663
|
(6)
|
|
$
|
12.94
|
|
4/1/2018
|
|
|
-
|
|
|
|
-
|
|
|
|
3,610
|
|
|
|
14,837
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alan
H. Buckey
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
19,786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
H. Brenner
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
19,786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vesting
Schedule
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
(2) Steven C. Straus
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/2/2009
|
|
|
4,682
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/2/2009
|
|
|
|
|
|
|
7,353
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/2/2010
|
|
|
|
|
|
|
7,353
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/2/2011
|
|
|
|
|
|
|
7,352
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/2/2012
|
|
|
|
|
|
|
7,352
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/2/2013
|
|
|
|
|
|
|
7,352
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,682
|
|
|
|
36,762
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
(4) Michael J. Celebrezze
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/17/2009
|
|
|
166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/2/2009
|
|
|
|
|
|
|
3,677
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/2/2010
|
|
|
|
|
|
|
3,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/2/2011
|
|
|
|
|
|
|
3,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/2/2012
|
|
|
|
|
|
|
3,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/2/2013
|
|
|
|
|
|
|
3,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
166
|
|
|
|
18,381
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5)
Stephen M. Jones
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/2/2009
|
|
|
3,677
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/2/2010
|
|
|
3,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/2/2011
|
|
|
3,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/2/2012
|
|
|
3,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/2/2013
|
|
|
3,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,381
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6)
David L. Thomas
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/2/2009
|
|
|
4,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/2/2010
|
|
|
4,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/2/2011
|
|
|
4,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/2/2012
|
|
|
4,332
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/2/2013
|
|
|
4,332
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,663
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7) Based
on threshold awards under our Long-Term Equity Incentive Plan. No
amounts were earned or paid under this plan for 2008 performance. See
“Compensation Discussion and Analysis.”
The
following table summarizes the value of the named executives of stock options
exercised or restricted awards vested during 2008. We calculated the
stock award value realized on vesting by multiplying the number of shares by the
market value on the vesting date.
2008
Option Exercises and Stock Vested
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares
|
|
|
Value
|
|
|
Shares
|
|
|
Value
|
|
|
|
Acquired
|
|
|
Realized
|
|
|
Acquired
|
|
|
Realized
|
|
|
|
on Exercise
|
|
|
on Exercise
|
|
|
on Vesting
|
|
|
on Vesting
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
Steven
C. Straus
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
J. Celebrezze
|
|
|
-
|
|
|
|
-
|
|
|
|
167
|
|
|
|
828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
L. Thomas
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen
M. Jones
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alan
H. Buckey
|
|
|
7,650
|
|
|
|
50,720
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
H. Brenner
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Nonqualified
Deferred Compensation
We offer
a non-qualified deferred compensation plan. Eligible participants
include all surgeons, whether our employees or independent contractors or
employees or independent contractors of professional corporations that are
affiliated with us. Eligible participants also include other
employees of ours with annual base compensation for such year equal to or
exceeding $120,000. We have not provided any match to the participant
deferral. None of the named executive officers participated in the
deferred compensation plan in 2008.
As of
December 31, 2008, based on the recommendation of the participants and approval
of the Board’s Compensation Committee, we terminated the non-qualified deferred
compensation plan. In accordance with the Plan, all disbursements
will occur between the periods of 12 months and 24 months after termination of
the Plan.
Potential Post-Employment
Payments
Chief
Executive Officer
Under the
terms of Mr. Straus’ employment agreement, as amended, if we terminate Mr.
Straus’ employment without Cause (Cause is defined as a conviction of a felony
involving theft or moral turpitude or willful failure to perform duties) or he
terminates his employment for Good Reason (Good Reason is defined as a material
reduction of title, authority, duties or responsibilities, relocation more than
35 miles from our headquarters in Cincinnati, Ohio, reduction of base salary or
bonus percentage, material breach of our obligations, or removal from or failure
to be elected to the board of directors), or his employment terminates upon the
expiration of any two-year employment term as a result of our notice to him of
non-renewal of the employment term or his employment terminates due to death or
disability, he will be entitled to the following severance and benefits in
addition to any then-accrued and unpaid compensation and benefits from
us: (i) continuation of base salary, payable monthly, for 24 months
following termination, (ii) continuation of health, dental and vision benefits
for 24 months with premiums charged to him at active employee rates, (iii) in
the case of any such termination occurring after the sixth complete month of the
fiscal year of termination, a bonus under the Executive Cash Bonus Plan for the
year of termination in an amount based on actual performance for the year
(provided all subjective individual performance measures will be deemed
satisfied), pro-rated for the fraction of the year during which he was employed,
and payable when annual bonuses are paid to other senior executives, (iv) all of
his time-based Restricted Share Units will vest in full and all of his
Performance Share Awards will vest pro rata (and treated as having been earned
at a target level of performance if the performance period is not then
completed) based on the ratio of the number of days employed from the date of
grant to the number of days constituting the vesting period. In the
event of a Change of Control, all of his time-based Restricted Share Units will
vest in full and all of his Performance Share Awards will be treated as earned
at target (if the performance period is not then completed) and will vest in
full. Change of Control is defined as any “person” becoming the
“beneficial owner,” directly or indirectly, of 20% or more of the total voting
power of all of our voting securities then outstanding and the acquisition of
such beneficial ownership not pre-approved by at least a majority of our
directors; at any date the individuals who constituted our Board at the
beginning of the two-year period immediately preceding such date (together with
any new directors whose election by our Board, or whose nomination for election
by our stockholders, was approved by a vote of at least a majority of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute at least a majority of the
directors then in office; or immediately after a transaction involving us, our
voting shares outstanding immediately prior to such transaction do not represent
more than 50% of the total voting power of our voting securities or surviving or
acquiring entity or any parent thereof outstanding immediately after such
transaction. All of the foregoing payments are subject to downward
adjustment to avoid the application of certain excise taxes.
In
connection with his employment agreement, Mr. Straus also entered into a
Confidentiality, Inventions and Non-competition Agreement with us that includes,
among other provisions, an agreement not to compete with us in the United States
or in foreign countries where the Company markets it products or services for a
period of one year after his termination of employment.
Other
Named Executives
Effective
June 26, 2008, we entered into agreements with each of Messrs. Thomas,
Celebrezze, Jones and Brenner. The principal terms of the agreements
are as follows:
|
·
|
The
executive’s employment will be for a one-year term that will be
automatically renewed for successive one-year periods, unless we or he
provides written notice to the other party not to so renew at least 90
days prior to December 31 of each
year.
|
|
·
|
The
executive may terminate the Agreement if (A) we have breached any material
provision of the agreement, (B) there is a material diminution in the
executive’s authority, duties or responsibilities; (C) there is a change
of more than 35 miles in the executive’s workplace; or (D) a successor or
assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of our business and/or assets fails
to assume all of our obligations under the Agreement; in each case after
notice and failure to cure. We may terminate the employment if
(i) the executive has breached any material provision and within 30 days
after notice thereof, the executive fails to cure such breach; or (ii) the
executive at any time refuses or fails to perform, or misperforms, any of
his obligations under or in connection with the Agreement in a manner of
material importance to us and within 30 days after notice the executive
fails to cure such action or inaction; or (iii) a court determines that
the executive has committed a fraud or criminal act in connection with his
employment that materially affects
us.
|
|
·
|
If
the executive’s employment is terminated by us for any reason other than
pursuant to clauses (i) through (iii) above, or by the executive pursuant
to clauses (A), (B), (C) or (D) above, or we give notice of non-renewal as
described above, the executive shall be entitled to the following
severance and benefits: (i) continuation of base salary and
benefits for 12 months, (ii) in the case of any such termination occurring
after the sixth complete month of the fiscal year termination, a bonus
under our Executive Cash Bonus Plan for the year of termination in an
amount based on actual performance for the year (provided, all subjective
individual performance measures will be deemed satisfied), pro-rated for
the fraction of the year during which the Employee was employed, and
payable when annual bonuses are paid to other senior executives, (iii) all
of the executive’s Options and Time-Based Restricted Share Awards will
vest in full, (iv) the executive will be issued shares under
outstanding Performance-Based Restricted share Awards based on the actual
level of achievement of the performance criteria for the applicable
performance period applicable to the Awards, pro-rated to reflect the
number of days from the start of the applicable performance
period to the date the executive ceases to be employed by us, divided by
the total number of days in the applicable performance period, any such
shares to be issued to the executive at the same time as shares are issued
to other senior executive officers; and (v) specified accrual
obligations.
|
|
·
|
In
the event of a Change in Control (as defined under our 2006 Stock
Incentive Plan), all of the executive’s Options and Time-Based Restricted
Share Awards will vest in full and all of the executive’s
Performance-Based Restricted Share Awards will be treated as earned at
target (if the performance period is not then completed) and the shares
subject thereto will be issued to the executive within 10 days of such
Change in Control.
|
|
·
|
Each
executive entered into a one-year Confidentiality, Inventions and
Non-competition Agreement in connection with these
agreements.
|
Upon the
promotion of Michael J. Celebrezze as our Senior Vice President of Finance,
Chief Financial Officer and Treasurer on December 1, 2008, we amended his
agreement to reflect an increase of his base salary from $205,000 to
$260,000.
Mr.
Brenner’s offer letter also provided that if we were to terminate his employment
for any reason other than cause, we would pay 12 months of base salary over a
twelve-month period and would maintain his benefits, in exchange for continued
adherence with Confidentiality, Inventions and Non-competition
Agreements. We terminated Mr. Brenner’s employment on July 31,
2008. The actual payment to Mr. Brenner after his termination through
December 31, 2008 was $106,250 in severance and $4,085 in health and welfare
benefits. He is entitled to receive $148,750 in severance and
approximately $5,719 in health and welfare benefits through July 31,
2009
Upon his
resignation, Mr. Buckey was not entitled to any post-employment
compensation.
Other
Arrangements
Our Stock
Incentive Plans contain change of control provisions that provide that under
certain conditions all unvested stock options and grants become fully vested
immediately.
The
following table summarizes potential post-employment compensation to Messrs.
Straus, Celebrezze, Thomas and Jones for any reason other than involuntary
termination with cause (in which case no payments would be made) based on an
assumption that a triggering event took place on December 31, 2008 and using the
$4.11 per share closing price for the Common Stock on that date:
|
|
Mr.
Straus
(1)
|
|
|
Mr.
Celebrezze
(2)
|
|
|
Mr.
Thomas
(2)
|
|
|
Mr.
Jones
(2)
|
|
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
$
|
760,000
|
|
|
$
|
260,000
|
|
|
$
|
275,000
|
|
|
$
|
214,900
|
|
Non-Equity
Incentive Plan Payments
(3)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Time-Based
Restricted Stock
(4)
|
|
|
19,243
|
|
|
|
682
|
|
|
|
-
|
|
|
|
-
|
|
Performance-Based
Restricted Stock
(3)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Benefits
and Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health
and Welfare Benefits
|
|
|
19,608
|
|
|
|
9,804
|
|
|
|
9,804
|
|
|
|
6,834
|
|
Total
Compensation
|
|
$
|
798,851
|
|
|
$
|
270,486
|
|
|
$
|
284,804
|
|
|
$
|
221,734
|
|
(1) Mr.
Straus has an employment agreement for two years of pay and health
benefits.
(2) Messrs.
Celebrezze, Thomas and Jones have employment agreements for one year of pay and
health benefits.
(3)
Payment under incentive compensation plans for 2008 performance did not
occur.
(4) Only
one grant of time-based restricted stock shares is unvested for each of these
individuals. Their agreements call for an immediate vesting of all
unvested shares. As of December 31, 2008, all options granted these
executives had a strike price of $14.28, which was higher than the $4.11 market
price. Therefore, we have determined their values as of that date to
be $0.
DIRECTOR
COMPENSATION
Non-employee
directors receive an annual fee of $40,000, paid one-half in cash and one-half
in shares of unrestricted Common Stock. Payments are made quarterly in arrears,
pro-rated from the time that an individual first becomes a
director. In addition, each non-employee director receives a
Restricted Share Unit award having a value of $50,000, granted at the close of
business on the date of our Annual Meeting of Stockholders and pro-rated based
upon the date upon which an individual first became a director. These
Restricted Share Units vest over a two-year period, one half on the first
anniversary of the date of issue and the remainder on the second anniversary of
the date of issue, contingent on the individual remaining a non-employee
director on those dates. The chairman of the Audit Committee receives
an annual cash payment of $10,000 and the Chairs of the Compensation Committee
and Nominating and Governance Committee receive an annual cash payment of $5,000
each, payable quarterly. Finally, upon first becoming a non-employee Director,
an individual receives a grant of 1,000 shares of Restricted Share Units which
vests over a two-year period. In addition to the compensation to non-employee
directors listed above, in 2008, Mr. Woods received an annualized fee of
$125,000 paid quarterly in cash for his board service as non-executive Chairman
of the Board. At the recommendation of the Nominating and Governance Committee,
the Board has determined that the only change in the compensation structure in
2009 will be to reduce the value of the Restricted Share Units issued to each
non-employee director from $75,000 to $50,000.
Steven C.
Straus, who was a director during 2008, did not receive any additional
compensation for serving on the Board.
2008
Director Compensation
Name
|
|
Fees
Earned
or
Paid
in
Cash
($)
(1)
|
|
|
Stock
Awards
($)
(2)
(3)
(4)
|
|
|
Option
Awards
($)
|
|
|
All
Other
Compensation
($)
|
|
|
Total
($)
|
|
E.
Anthony Woods
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chairman
of the Board
|
|
$
|
145,000
|
|
|
$
|
98,323
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
243,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William
F. Bahl
|
|
$
|
25,000
|
|
|
$
|
98,323
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
123,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
H. Gutfreund
|
|
$
|
23,750
|
|
|
$
|
98,323
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
122,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
C. Hassan
|
|
$
|
30,000
|
|
|
$
|
98,323
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
128,323
|
|
(1)
|
Mr.
Woods received compensation of $125,000 in cash during 2008 for his
services as non-executive Chairman of the
Board.
|
(2)
|
The
equity compensation expense to be recorded in the 2008 financial
statements for stock awards made to the directors
during
2008 is shown in this column.
|
(3)
|
The
grant date of fair value is measured by FAS 123(R) for awards made to
directors in 2008 are as follows:
|
|
|
3/31/2008
|
|
|
5/12/2008
|
|
|
6/30/2008
|
|
|
9/30/2008
|
|
|
12/31/2008
|
|
E.
Anthony Woods
|
|
$
|
5,000
|
|
|
$
|
74,997
|
|
|
$
|
4,999
|
|
|
$
|
5,002
|
|
|
$
|
5,002
|
|
William
F. Bahl
|
|
|
5,000
|
|
|
|
74,997
|
|
|
|
4,999
|
|
|
|
5,002
|
|
|
|
5,002
|
|
John
H. Gutfreund
|
|
|
5,000
|
|
|
|
74,997
|
|
|
|
4,999
|
|
|
|
5,002
|
|
|
|
5,002
|
|
John
C. Hassan
|
|
|
5,000
|
|
|
|
74,997
|
|
|
|
4,999
|
|
|
|
5,002
|
|
|
|
5,002
|
|
The
aggregate number of stock awards and stock options outstanding at December 31,
2008 was:
|
|
Stock
Awards
|
|
|
Options
|
|
|
Total
|
|
E.
Anthony Woods
|
|
|
8,722
|
|
|
|
33,713
|
|
|
|
42,435
|
|
William
F. Bahl
|
|
|
8,722
|
|
|
|
28,857
|
|
|
|
37,579
|
|
John
H. Gutfreund
|
|
|
8,722
|
|
|
|
2,344
|
|
|
|
11,066
|
|
John
C. Hassan
|
|
|
8,722
|
|
|
|
9,376
|
|
|
|
18,098
|
|
SECURITY
OWNERSHIP
OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table and notes set forth certain information with respect to the
beneficial ownership of Common Stock, our only voting security, as of April 13,
2009, by (1) each person who is known by us to be the beneficial owner of more
than 5% of our outstanding Common Stock, (2) each director and named executive
officer, and (3) all directors and executive officers as a group, based upon
___________ shares outstanding as of that date.
SEC rules
provide that shares of Common Stock which an individual or group has a right to
acquire within 60 days of April 13, 2009 are deemed to be outstanding for
purposes of computing the percentage ownership of that individual or group, but
are not deemed to be outstanding for the purpose of computing the percentage
ownership of any other person shown on the table.
Name and Address of Beneficial Owner
|
|
Amount and
Nature
of
Ownership
(1)
|
|
|
Percent
of Class
|
|
Stephen
N. Joffe
|
|
|
2,115,320
|
(2)
|
|
|
11.4
|
%
|
c/o
Steven Wolosky, Esq.
|
|
|
|
|
|
|
|
|
Olshan
Grundman Frome Rosenzweig & Wolosky LLP
|
|
|
|
|
|
|
|
|
Park
Avenue Tower
|
|
|
|
|
|
|
|
|
Park
East 55th Street
|
|
|
|
|
|
|
|
|
New
York, NY 10022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edwardo
Baviera Sabater, Julio Baviera Sabater,
|
|
|
1,400,484
|
(3)
|
|
|
7.5
|
%
|
Inversiones
Telesan BV and Investment Ballo Holding BV
|
|
|
|
|
|
|
|
|
Paseo
de la Castellano 20
|
|
|
|
|
|
|
|
|
P28046
Madrid, Spain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HWP
Capital Partners II L.P.
|
|
|
1,303,882
|
(4)
|
|
|
7.0
|
%
|
300
Cresent Court, Suite 1700
|
|
|
|
|
|
|
|
|
Dallas,
TX 75201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barclays
Global Investors, NA
|
|
|
1,275,594
|
(5)
|
|
|
6.9
|
%
|
400
Howard Street
|
|
|
|
|
|
|
|
|
San
Francisco, CA 94105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royce
& Associates, LLC
|
|
|
1,261,066
|
(6)
|
|
|
6.8
|
%
|
1414
Avenue of the Americas
|
|
|
|
|
|
|
|
|
New
York, NY 10019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Janus
Capital Management LLC
|
|
|
1,095,000
|
(7)
|
|
|
5.8
|
%
|
Perkins
Small Cap Value Fund
|
|
|
|
|
|
|
|
|
151
Detroit Street
|
|
|
|
|
|
|
|
|
Denver,
CO 80206
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
E.
Anthony Woods, Chairman of the Board
|
|
|
79,276
|
(8)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
Steven
C. Straus, Chief Executive Officer, Director
|
|
|
23,853
|
(9)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
William
F. Bahl, Director
|
|
|
50,923
|
(10)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
John
H. Gutfreund, Director
|
|
|
19,110
|
(11)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
John
C. Hassan, Director
|
|
|
31,911
|
(12)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
Edgar
F. Heizer III, Director
|
|
|
-
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
Michael
J. Celebrezze, Senior Vice President of Finance,
|
|
|
9,261
|
(13)
|
|
|
*
|
|
Chief
Financial Officer and Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
L. Thomas, Senior Vice President of Operations
|
|
|
5,333
|
(14)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
Stephen
M. Jones, Senior Vice President of Human Resources
|
|
|
3,677
|
(15)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
All
directors and executive officers as a group (9 persons)
|
|
|
223,344
|
(16)
|
|
|
1.2
|
%
|
* Less
than 1%
(1)
|
|
Except
as otherwise noted, the persons named in the table have sole voting and
dispositive powers with respect to all shares of common stock shown as
beneficially owned by them, subject to community property laws, where
applicable.
|
(2)
|
|
This
information is based on a Schedule 13D filed with the SEC on November 5,
2008, as amended, in which Mr. Joffe reported having shared voting
and dispositive powers.
|
(3)
|
|
This
information is based on a Schedule 13D/A filed with the SEC on February
23, 2009. According to this filing, Sr. Eduardo Baviera Sabater
and Inversiones Telesan BV each have sole voting and dispositive power
over 765,786 shares of common stock and Sr. Julio Baviera Sabater and
Investment Ballo Bolding BV each have sole voting and dispositive power
over 634,698 shares of common stock.
|
(4)
|
|
This
information is based on Schedule 13G/A filed with the SEC on December 22,
2006. According to this filing, HWP Capital Partners, HWP II,
L.P., HWII, LLC and Robert B. Haas have sole voting and dispositive power
over these shares.
|
(5)
|
|
This
information is based on a Schedule 13G filed with the SEC on February 5,
2009 by Barclays Global Investors, NA and certain affiliates
("Barclays"). According to this filing, Barclays has sole
voting power over 1,054,889 shares of common stock and sole dispositive
power over 1,215,594 shares of common stock.
|
(6)
|
|
This
information is based on a Schedule 13G filed with the SEC by Royce &
Associates LLC, a registered investment advisor, on January 26, 2009, in
which it reported having sole voting and dispositive power over these
shares.
|
(7)
|
|
This
information is based on a Schedule 13G filed with the SEC on February 17,
2009 by Janus Capital Management LLC, a registered investment advisor, in
which it reported having shared voting and dispositive power over
1,095,000 shares of common stock. According to this filing,
Janus Capital Management has a direct 78.4% ownership of Perkins
Invsetment Management LLC, which reports having sole voting and
dispositive power over 1,080,000 shares of common
stock.
|
(8)
|
|
Includes
for Mr. Woods 33,713 shares issuable upon the exercise of certain
unexercised stock options.
|
(9)
|
|
Includes
for Mr. Straus 7,353 shares issuable upon the exercise of stock options
that will vest within 60 days.
|
(10)
|
|
Includes
for Mr. Bahl 28,857 shares issuable upon the exercise of unexercised stock
options.
|
(11)
|
|
Includes
for Mr. Gutfreund 2,344 shares issuable upon the exercise of certain
unexercised stock options.
|
(12)
|
|
Includes
for Mr. Hassan 9,376 shares issuable upon the exercise of certain
unexercised stock options. Of the shares owned by Mr. Hassan,
13,626 are held in a margin account.
|
(13)
|
|
Includes
for Mr. Celebrezze 3,677 shares issuable upon the exercise of stock
options that will vest within 60 days.
|
(14)
|
|
Includes
for Mr. Thomas 4,333 shares issuable upon the exercise of stock options
that will vest within 60 days.
|
(15)
|
|
Includes
for Mr. Jones 3,677 shares issuable upon the exercise of stock options
that will vest within 60 days.
|
(16)
|
|
Includes
160,736 shares issuable upon the exercise of certain unexercised stock
options held by such persons and stock options that will vest within 60
days.
|
CERTAIN
TRANSACTIONS
Related
persons include our executive officers, directors, director nominees, 5% or more
beneficial owners of our common stock and immediate family members of these
persons. The Audit Committee is responsible for reviewing and approving or
ratifying related person transactions that would require approval under the
proxy rules or which would affect independence under our principles of corporate
governance. If an Audit Committee member or his or her family member is involved
in a related person transaction, the member will not participate in the approval
or ratification of the transaction. In instances where it is not practicable or
desirable to wait until the next meeting of the Audit Committee for review of a
related person transaction, the Chair of the Audit Committee (or, if the Chair
or his or her family member is involved in the related person transaction, any
other member of the Audit Committee) has delegated authority to act between
Audit Committee meetings for these purposes. A report of any action taken
pursuant to delegated authority must be made at the next Audit Committee
meeting.
For the
Audit Committee to approve a related person transaction, it must be satisfied
that it has been fully informed of the interests, relationships and actual or
potential conflicts present in the transaction and must believe that the
transaction is fair to us. The Audit Committee also must believe, if necessary,
that we have developed a plan to manage any actual or potential conflicts of
interest. The Audit Committee may ratify a related person transaction that did
not receive pre-approval if it determines that there is a compelling business or
legal reason for us to continue with the transaction, the transaction is fair to
us and the failure to comply with the policy’s pre-approval requirements was not
due to fraud or deceit.
During
2008, there were no transactions or series of transactions involving the Company
and any of its executive officers, directors, holders of more than 5% of our
Common Stock or any immediate family member of any of the foregoing persons that
are required to be disclosed pursuant to Item 404 of Regulation S-K under the
Securities Exchange Act of 1934, as amended.
Any
situation that might be construed as disqualifying a director as “independent”
will be brought to the attention of the Nominating and Governance Committee
which will make a recommendation to the Board regarding the director’s continued
service on Board Committees.
2010
ANNUAL MEETING OF STOCKHOLDERS
In
order for any stockholder proposal to be eligible for inclusion in our Proxy
Statement and on our proxy card for the 2010 Annual Meeting of Stockholders, it
must be received by our Secretary at the address shown on the cover of this
Proxy prior to the close of business on December 25, 2009. Any
proposal received after such date will be considered untimely. In
accordance with the Bylaws, any stockholder who intends to propose any other
matter to be acted upon at the 2010 Annual Meeting (but not include such
proposal in our Proxy Statement) must inform us no later than March 4,
2010. If notice is not provided by that date, the persons named in
our proxy for the 2010 Annual Meeting will be allowed to exercise their
discretionary authority to vote upon any such proposal without the matter having
been discussed in the Proxy Statement for the 2010 Annual
Meeting.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934 requires our executive officers and
directors, and persons who beneficially own more than ten percent of our equity
securities, to file reports of security ownership and changes in that ownership
with the SEC. Officers, directors and greater than ten-percent
beneficial owners also are required to furnish us with copies of all Section
16(a) forms they file. Based upon a review of copies of these forms,
we believe that all Section 16(a) filing requirements were complied with on a
timely basis during and for 2008, except a Form 4 to report one stock option
grant for Mr. Thomas.
STOCKHOLDER
COMMUNICATIONS
The Board
has established a process for stockholders to communicate with members of the
Board. A stockholder should direct his or her communication in
writing to the attention of our Assistant General Counsel at the address shown
on the cover of this Proxy Statement. The Assistant General Counsel
will forward the communication to the members of the Board unless he determines
that the communication is frivolous or has not been made by the stockholder in
good faith.
HOUSEHOLDING
PROXY MATERIALS
We have
adopted a procedure approved by the SEC called “householding” that will reduce
our printing costs and postage fees. Under this procedure, multiple
stockholders residing at the same address will receive a single copy of the
Annual Report on Form 10-K, Proxy Statement or notice, as applicable, unless the
stockholders notify us that they wish to receive individual
copies. Stockholders may revoke their consent to householding at any
time by contacting us, either by calling the Company at (513) 792-5629 or by
writing to our Secretary at the address set forth on the front page of this
Proxy Statement. We will remove you from the householding program
within 30 days of receipt of your notice, after which you will receive an
individual copy of the Annual Report on Form 10-K, Proxy Statement or notice, as
applicable.
REQUESTS
FOR CERTAIN DOCUMENTS
You
may obtain without charge our Form 10-K for the fiscal year ended December 31,
2008 or any of the other corporate governance documents referred to in this
Proxy Statement by writing to our Secretary at our address shown on the cover
page of this Proxy Statement or calling 513-792-5629. These also are available
on the SEC’s website at
www.sec.gov
or on our websites at
www.lasikplus.com
and
www.lca-vision.com.
Important
Notice Regarding Internet Availability of Proxy Materials for the Annual
Meeting:
The
Notice and Proxy Statement and Annual Report are available at
www.proxyvote.com.
PROXY
LCA-VISION
INC.
7840
Montgomery Road
Cincinnati,
OH 45236
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The
undersigned hereby appoints Steven C. Straus and Michael J. Celebrezze,
and each of them with full power of substitution, as proxies to vote as
designated on the reverse side, for and in the name of the undersigned,
all shares of stock of LCA-Vision Inc. which the undersigned is entitled
to vote at the Annual Meeting of the Stockholders of said Company
scheduled to be held June 2, 2009 at 10:00 a.m. ET at The Queen City Club,
331 East Fourth Street, Cincinnati, Ohio 45202 or at any adjournment or
recess thereof. A properly signed proxy that gives no direction will be
voted in accordance with the recommendation of the Board of Directors or,
if there is none, in accordance with their best judgment.
This proxy, when properly
executed, will be voted in the manner directed herein by the undersigned
stockholder. If no direction is made, this proxy will be voted FOR the
election of Directors, FOR the approval of the Stockholders Rights Plan
and FOR the ratification of Ernst & Young LLP as independent auditors
for the fiscal year ending December 31,
2009
.
|
Important
Notice Regarding the Availability of Proxy Materials for the Stockholder
Meeting to be held on 06/2/09.
|
This
communication presents only an overview of the more complete proxy materials
that are available to you on the Internet. We encourage you to access and review
all of the important information contained in the proxy materials before
voting.
The
following materials are available online for viewing and printing:
•
|
2009
LCA-VISION INC. Proxy Statement/Notice of Annual Meeting of
Stockholders
|
•
|
2008
LCA-VISION INC. Letter to Stockholders and Annual Report on Form
10-K
|
•
|
2009
LCA-VISION INC. Form of Proxy (Proxy
Card)
|
To view
this material, have the 12-digit Control #(s) available and visit:
www.proxyvote.com
If
you want to receive a paper or e-mail copy of the above listed documents you
must request one. There is no charge to you for requesting a copy. To facilitate
timely delivery please make the request as instructed below on or before
05/12/09.
To
request material:
|
Internet
:
www.proxyvote.com
|
Telephone
:
1-800-579-1639
|
**Email
:
sendmaterial@proxyvote.com
|
**If
requesting material by e-mail please send a blank e-mail with the
12-digit Control# (located on the
following page)
in the subject line. Requests, instructions and other
inquiries will NOT be forwarded to your investment advisor.
|
|
LCA-VISION
INC.
|
|
|
|
Vote
In Person
|
|
|
Many
stockholder meetings have attendance requirements including, but not
limited to, the possession of an attendance ticket issued by the entity
holding the meeting. Please check the meeting materials for any special
requirements for meeting attendance. At the Meeting you will need to
request a ballot to vote these shares.
|
|
|
|
|
|
|
Vote
By Internet
|
|
|
To
vote
now
by Internet, go to
WWW.PROXYVOTE.COM.
Use
the Internet to transmit your voting instructions and for electronic
delivery of information up until 11:59 P.M. Eastern Time the day
before the meeting date. Have your notice in hand when you access the
web site and follow the
instructions
|
Meeting
Type:
|
Annual
|
Meeting
Location:
|
The
Queen City Club
|
Meeting
Date:
|
06/2/09
|
|
331
East Fourth Street
|
Meeting
Time:
|
10:00
A.M. ET
|
|
Cincinnati,
OH 45202
|
For
holders as of:
|
04/13/09
|
|
|
For
directions to the LCA-Vision Annual Meeting for Stockholders, please contact
LCA-Vision Investor Relations by telephone at 513-792-5629 or by email at
Invest@lca.com
The
Board of Directors recommends a FOR vote on each proposal.
1.
|
ELECTION
OF DIRECTORS
|
|
Nominees:
|
|
01)
|
WILLIAM
F. BAHL
|
04)
|
EDGAR
F. HEIZER III
|
|
02)
|
JOHN
H. GUTFREUND
|
05)
|
STEVEN
C. STRAUS
|
|
03)
|
JOHN
C. HASSAN
|
06)
|
E.
ANTHONY WOODS
|
|
|
|
|
|
2.
|
Approval
of the Company’s Stockholders Rights Plan.
|
|
|
3.
|
The
ratification of Ernst & Young LLP as independent auditors of the
Company for the fiscal year ending December 31, 2009.
|
|
|
|
|
|
4.
|
Transaction
of such other business as may properly come before the meeting or any
adjournment thereof.
|
|
VOTE BY INTERNET -
www.proxyvote.com
Use
the Internet to transmit your voting instructions and for electronic
delivery of information up until 11:59 P.M. Eastern Time on June1,
2009. Have your proxy card in hand when you access the web site and follow
the instructions to obtain your records and to create an electronic voting
instruction form.
ELECTRONIC
DELIVERY OF FUTURE STOCKHOLDER COMMUNICATIONS
If
you would like to reduce the costs incurred by LCA-Vision Inc. in mailing
proxy materials, you can consent to receiving all future proxy statements,
proxy cards and annual reports electronically via e-mail or the Internet.
To sign up for electronic delivery, please follow the instructions above
to vote using the Internet and, when prompted, indicate that you agree to
receive or access stockholder communications electronically in future
years.
|
|
|
|
VOTE
BY PHONE - 1-800-690-6903
Use
any touch-tone telephone to transmit your voting instructions up until
11:59 P.M. Eastern Time on June 1, 2009. Have your proxy card in hand when
you call and then follow the instructions.
|
|
|
|
VOTE
BY MAIL
Mark,
sign and date your proxy card and return it in the postage-paid envelope
we have provided or return it to LCA-Vision Inc., c/o Broadridge, 51
Mercedes Way, Edgewood, NY 11717.
|
TO
VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
|
LCAVS1
|
KEEP
THIS PORTION FOR YOUR RECORDS
|
|
|
DETACH
AND RETURN THIS PORTION ONLY
|
THIS PROXY CARD IS
VALID ONLY WHEN SIGNED AND DATED.
|
LCA-VISION
INC.
The Board of Directors
recommends a FOR vote on each proposal.
Vote on
Directors
|
|
For
All
|
|
Withhold
All
|
|
For
All Except
|
|
To
withhold authority to vote for any individual nominee(s), mark “For All
Except” and write the number(s) of the nominee(s) on the line
below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
ELECTION
OF DIRECTORS
|
|
o
|
|
o
|
|
o
|
|
|
|
|
|
|
|
|
|
|
Nominees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
01)
|
WILLIAM
F. BAHL
|
|
04)
|
EDGAR
F. HEIZER III
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02)
|
JOHN
H. GUTFREUND
|
|
05)
|
STEVEN
C. STRAUS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03)
|
JOHN
C. HASSAN
|
|
06)
|
E.
ANTHONY WOODS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vote on
Proposal
|
|
|
|
|
|
|
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.
|
Approval
of the Company’s Stockholders Rights Plan
|
|
o
|
|
o
|
|
o
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3.
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The
ratification of Ernst & Young LLP as independent auditors of the
Company for the fiscal year ending December 31,
2009.
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o
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o
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o
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4.
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Transaction
of such other business as may properly come before the meeting or any
adjournment thereof.
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ALL FORMER PROXIES ARE HEREBY
REVOKED.
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(Please
sign exactly as your name appears hereon. All joint owners should sign.
When signing in a fiduciary capacity or as a corporate officer,
please give full title as such.)
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Signature
[PLEASE SIGN WITHIN BOX]
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Date
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Signature
(Joint Owners)
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Date
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