UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule
14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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Definitive Proxy Statement
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Meridian Bioscience, Inc.
(Name of Registrant as
Specified in Its Charter)
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3471 River Hills Drive
Cincinnati, Ohio 45244
www.meridianbioscience.com
Notice of Annual Meeting of Shareholders
and Proxy Statement
Dear Shareholders:
Our Annual Meeting of Shareholders will be held at 2:00 p.m. on January 24, 2019 at the Meridian Innovation Center, 7007 Valley Avenue, Cincinnati,
Ohio 45244. We hope you will attend.
At the meeting, you will hear a report on our operations and have a chance to meet your Directors and
Executive Officers.
This booklet includes the formal notice of the meeting and the proxy statement. The proxy statement tells you more about
the agenda and procedures for the meeting. It also describes how the Board operates and gives personal information about our Director candidates.
Pursuant to the Securities and Exchange Commission rule allowing companies to furnish proxy materials to their shareholders over the internet, a Notice of Internet Availability of Proxy Materials (the
Notice) was sent to shareholders on or about December 13, 2018. The Notice contains information on how to access copies of the proxy materials and vote your shares.
Whether or not you plan to attend the meeting, please cast your proxy vote promptly, either online, over the phone or by returning your signed and dated proxy card in the enclosed envelope.
Sincerely yours,
/s/ David C. Phillips
David C. Phillips
Chairman of the
Board
December 13, 2018
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Date:
January 24,
2019
Time:
2:00 p.m., Eastern Standard Time
Place:
Meridian
Bioscience, Inc.
Meridian Innovation Center
7007 Valley Avenue
Cincinnati, Ohio 45244
Purpose:
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Elect as Directors the eight nominees named in the accompanying proxy materials
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Conduct an advisory vote on our executive compensation
(Say-on-Pay)
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Ratify appointment of Grant Thornton LLP as Meridians independent registered public accountants for fiscal year 2019
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Only shareholders of record on November 30, 2018 may vote at the meeting. The approximate mailing date of this proxy
statement and accompanying Proxy Card is December 13, 2018.
Your vote is important. Please cast your proxy vote promptly, either online,
over the phone or by returning your signed and dated proxy card in the enclosed envelope.
By order of the Board of Directors,
/s/ Melissa A. Lueke
Melissa A. Lueke
Secretary
December 13, 2018
Table of Contents
Meridian makes available, free of charge on its website, all of its filings that are made electronically with the
Securities and Exchange Commission (SEC), including Forms
10-K,
10-Q
and
8-K.
These filings are also available on the
SECs website (www.sec.gov). To access these filings, go to our website (www.meridianbioscience.com). Copies of Meridians Annual Report on Form
10-K
for the fiscal year ended September 30,
2018, including financial statements and schedules thereto, filed with the SEC, are also available without charge to shareholders upon written request addressed to:
Melissa A. Lueke
Executive Vice President, Chief Financial Officer and Secretary
Meridian Bioscience, Inc.
3471 River Hills
Drive
Cincinnati, Ohio 45244
MERIDIAN BIOSCIENCE, INC.
3471 River Hills Drive
Cincinnati, Ohio 45244
Telephone (513)
271-3700
P R O X
Y S T A T E M E N T
Annual Meeting of Shareholders
January 24, 2019
GENERAL INFORMATION
Who may vote
Shareholders of Meridian, as recorded in our stock register on
November 30, 2018, may vote at the meeting. As of that date, Meridian had 42,463,102 shares of Common Stock outstanding.
How to
vote
You may vote in person at the meeting, by telephone, online, or by completing and returning a proxy card. We recommend you vote
by proxy even if you plan to attend the meeting. You can always change your vote at the meeting.
How proxies work
Meridians Board of Directors is asking for your proxy. Giving us your proxy means you authorize us to vote your shares at the meeting in the manner
you direct. You may vote for all, some or none of our Director candidates. You may also vote for or against the other proposals or abstain from voting.
If you complete your proxy online, over the phone or sign and return the enclosed proxy card but do not specify how to vote, we will vote your shares in favor of: (i) our Director candidates;
(ii) our executive compensation; and (iii) ratification of appointment of Grant Thornton LLP as Meridians independent registered public accountants for fiscal year 2019. If any other matters come before the meeting or any postponement or
adjournment thereof, each proxy will be voted in the discretion of the individuals named as proxies on the card.
You may receive more than
one proxy or voting card depending on how you hold your shares. Shares registered in your name are covered by one card. If you hold shares through someone else, such as a stockbroker, bank or nominee, you may get material from them asking how you
want to vote.
Stockbrokers, banks and nominees holding shares for beneficial owners must vote those shares as instructed by you. If the
stockbroker, bank or nominee has not received instructions from you, the beneficial owner, the stockbroker, bank or nominee generally has discretionary voting power only with respect to the ratification of appointment of the independent registered
public accountants. However, a stockbroker, bank or nominee does not have discretion to vote for or against the election of Directors and certain other matters subject to a vote if they have not received voting instructions from you. In order to
avoid a broker
non-vote
of your shares on the election of Directors and the other matters subject to a vote, you must send voting instructions to your stockbroker, bank or nominee.
Solicitation of proxies
Solicitation of proxies is being made by management at the direction of Meridians Board of Directors, without additional compensation, through the
mail, in person or by telephone. The cost of preparing and mailing the Notice and the proxy statement and any accompanying material will be borne by Meridian. In addition, Meridian will request brokers and other custodians, nominees and fiduciaries
to forward proxy soliciting material to the beneficial owners of shares held of record, and Meridian will reimburse them for their expenses in so doing.
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Revoking a proxy
You may revoke your proxy before it is voted by submitting a new proxy with a later date, by voting in person at the meeting or by notifying Meridians Secretary in writing at the address under
Questions on page 31 of this proxy statement.
Quorum
In order to carry on the business of the meeting, we must have a quorum. This means at least a majority of the outstanding shares eligible to vote must be represented at the meeting, either by proxy or in
person.
Votes needed
The eight Director candidates receiving the most votes will be elected to fill the seats on the Board. The approval on an advisory basis of our executive
compensation (Proposal No. 2) and the ratification of appointment of accountants (Proposal No. 3) require the favorable vote of a majority of the votes cast. Only votes for or against these proposals count, with abstentions not being
counted either for or against these proposals.
Abstentions and broker
non-votes
count for quorum
purposes but, as indicated above, will not count for voting purposes. Broker
non-votes
occur when a broker returns a proxy card but does not have authority to vote on a particular proposal.
Other matters
Any other matters
considered at the meeting, including postponement or adjournment, will require the affirmative vote of a majority of the votes cast.
ELECTION OF DIRECTORS
(Item 1 on the Proxy Card)
The Nominating and Corporate Governance Committee of the Board of Directors has nominated for
re-election
the following current Directors: James M. Anderson, Dwight
E. Ellingwood, Jack Kenny, John C. McIlwraith, David C. Phillips, John M. Rice, Jr., Catherine A. Sazdanoff, and Felicia Williams.
Proxies solicited by the Board will be voted for the election of these nominees. All Directors elected at the Annual Shareholders Meeting will be
elected to hold office until the next annual meeting. In voting to elect Directors, shareholders are entitled to cumulate their votes and to give one candidate a number of votes equal to the number of Directors to be elected multiplied by the number
of shares held by the shareholder, or to distribute their votes on the same principle among as many candidates as the shareholder sees fit. In order to invoke cumulative voting, notice of cumulative voting must be given in writing by a shareholder
to the CEO, a Vice President or the Secretary of Meridian not less than 48 hours prior to the Annual Shareholders Meeting. The proxies solicited include discretionary authority to cumulate votes.
All Meridian Directors are elected for
one-year
terms. Personal information on each of our nominees is given
below.
If a Director nominee becomes unavailable before the election, your proxy card authorizes us to vote for a replacement nominee if the
Board names one.
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The Board recommends that shareholders vote
FOR
each of the following candidates:
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James M. Anderson
Director
since 2009
Age: 76
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James M. Anderson serves as Chairman of the Compensation Committee. He currently serves as Senior Strategic and External Affairs Advisor with Taft Stettinius & Hollister
LLP and President Emeritus of Cincinnati Childrens Hospital Medical Center (CCHMC), after having served as advisor to the President of CCHMC from January 2010 through June 30, 2017 and as President and Chief Executive Officer
of CCHMC from 1996 through 2009. From 2006 to 2014, he served as a director of Ameritas Mutual Holding Company and has also served as Chairman of the Board of the Cincinnati Branch of the Federal Reserve Bank of Cleveland, retiring in 2012. Prior to
joining the staff of CCHMC, Mr. Anderson was a partner in the general corporate law department at Taft, Stettinius & Hollister for 24 years (1968-1977; 1982-1996) and president of U.S. operations at Xomox Corporation, a publicly-traded
manufacturer of specialty process controls (1977-1982). Mr. Anderson has also served as director of Gateway Investment Advisors (1997-2008). The Board believes that Mr. Andersons corporate legal experience and his experience as CEO
of a large health care organization have given him a wealth of insight into various corporate governance and business management issues, which, along with his status as an independent Director, make him an integral member of the
Board.
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Dwight E. Ellingwood
Director
since 2014
Age: 66
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Dwight E. Ellingwood serves as Chairman of the Nominating and Corporate Governance Committee. With over 35 years of experience in health care strategy, planning, commercialization
and marketing, he currently serves as a teaching professor at Xavier University in the Graduate Program in the Department of Health Service Administration and as President of D.E.E. Strategy Consulting, LLC, to advise leadership in health care and
the community on strategy and innovative approaches to growth and collaboration. Mr. Ellingwood previously served as Senior Vice President of Strategy, Communications and Public Affairs for TriHealth in Cincinnati, Ohio (November 2014
July 2016) and as the Lead Executive for the Collective Impact on Health, The Health Collaborative (January 2014 November 2014). From 1997 through 2013, Mr. Ellingwood served as Senior Vice President, Planning and Business Development
for Cincinnati Childrens Hospital Medical Center. The Board believes that the Company benefits greatly from Mr. Ellingwoods extensive experience in the health care industry.
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Jack Kenny
Director since
2017
Age: 50
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Jack Kenny serves as Meridians Chief Executive Officer, having joined the Company on October 9, 2017. Before joining Meridian, Mr. Kenny served as Senior Vice
President and General Manager, North America, with Siemens Healthcare, a position he held from October 2014 to May 2017. From June 2012 through October 2014, Mr. Kenny served as Vice President and General Manager, U.S. Region, for Becton
Dickinson, Diagnostic Systems. Prior to June 2012, Mr. Kenny held executive roles at Danaher Corporation and Quest Diagnostics. Mr. Kennys experience as a key executive leader within large public companies in the health care and
medical device industry, as well as his ongoing insights into Meridians business and operations, makes him a valuable member of the Board.
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John C. McIlwraith
Director since 2015
Age: 59
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John C. McIlwraith
co-founded
Allos Ventures, a venture capital firm, in March 2010 and has served as a Managing Director there since that
time. Prior to founding Allos Ventures, Mr. McIlwraith was a Managing Director of Blue Chip Venture Company, a Cincinnati-based venture capital firm, which he joined in 1997. He has served on the board of directors of more than
20 health care or information technology companies. Prior to 1997, Mr. McIlwraith served as Senior Vice President of Strategic Planning and General Counsel of publicly-traded Quantum Health Resources, Inc., and was a partner in the Jones
Day law firm. The Board believes that Mr. McIlwraiths corporate legal and business development experience, and his years of business-building experience with an extensive number of companies, including health care companies, render his
service on the Board valuable to Meridian.
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David C. Phillips
Director since 2000
Age: 80
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David C. Phillips serves as Chairman of the Board and Chairman of the Audit Committee. Mr. Phillips spent 32 years with Arthur Andersen LLP. His service with this firm included
several managing partner leadership positions. After retiring from Arthur Andersen in 1994, Mr. Phillips became Chief Executive Officer of Downtown Cincinnati, Inc., which is responsible for economic revitalization of Downtown Cincinnati.
Mr. Phillips retired from DCI in 1999 to devote full time to Cincinnati Works, Inc., an organization dedicated to reducing the number of people living below the poverty level by assisting them to strive towards self-sufficiency through work,
and his financial consulting services. Mr. Phillips has also served as a director of Cintas Corporation, retiring in 2012, and as a director of Summit Mutual Funds, a registered investment company, through 2009. The Board believes that
Mr. Phillips years of service as a certified public accountant and trusted advisor to his clients and business owners, which qualify him as an audit committee financial expert under SEC guidelines, give him significant
experience in preparing, auditing, analyzing and evaluating financial statements and dealing with complex accounting and business issues, all of which is valuable to Meridian.
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John M. Rice, Jr.
Director since 2017
Age: 69
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John M. Rice is the founder, and since 2003 has been the Managing Partner of Triathlon Medical Venture Partners, a venture capital firm that invests equity capital in early and
expansion stage life science companies. Since 2014, Dr. Rice has also served as the Director of Life Sciences at CincyTech, a firm that provides advice and capital to entrepreneurs and helps research institutions commercialize technology
through startups. In addition, Dr. Rice has served on the board of directors of several privately-held health care companies. The Board believes that Dr. Rices years of experience with a number of companies operating in the health
care and related industries, as well as extensive experience within the capital markets, will prove extremely valuable to Meridian.
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Catherine A. Sazdanoff
Director since 2015
Age: 62
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Catherine A. Sazdanoff is the President and CEO of Sazdanoff Consulting, LLC, providing health care strategy and business development advisory services to a number of
clients, having held these positions since January 2015. She also currently serves as Business Advisor to Strata Oncology, Inc., a precision oncology company, having joined Strata in May 2016 as Chief Business Officer (May 2016 September
2017). Prior clients include mProve Health LLC (Strategic Advisor January 2015 March 2016). Ms. Sazdanoff is also a member since April 2016 of the Advisory Board of Neurocern, Inc., a dementia insuretech company, and is a lecturer since
March 2018 in the Business of Biotech program at the University of Chicago Graham School for Continuing and Professional Education. She serves on the Faculty Advisory Board of the University of Chicago Graham School and on the External Advisory
Board of the Rosalind Franklin University Innovation and Research Park. Ms. Sazdanoffs prior corporate roles include a number of global corporate positions with Takeda Pharmaceuticals, Inc. (Takeda), a wholly-owned
subsidiary of Japanese-based Takeda Pharmaceutical Corporation, from 2006 to 2015 including VP, Head of Corporate Projects (2012-2015), VP, Global Business Development (2011-2013) and VP, Corporate
Development (2010-2011). Ms. Sazdanoffs time at Takeda was preceded by approximately 22 years with Abbott Laboratories, where she held numerous executive positions covering legal, compliance and business
development. The Board believes that Ms. Sazdanoffs years of experience in the pharmaceutical and medical diagnostics industries makes her service on the Board valuable to Meridian.
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Felicia Williams
Director since 2018
Age: 53
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Felicia Williams has served as Executive Vice President, Controller and Enterprise Risk at Macys Inc. since June 2016. Having joined Macys in June 2004, she has
previously served as Senior Vice President, Finance and Risk Management (February 2011 June 2016), as well as in other finance, treasury, risk management and internal audit capacities. Prior to her time at Macys, Ms. Williams
served in various financial positions at the Coca-Cola Hellenic Bottling Company and The Coca-Cola Company (June 1994 June 2004). Ms. Williams brings broad and wide-ranging finance and risk management experience, which the Board believes
will greatly benefit the Company.
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ADVISORY VOTE ON COMPENSATION OF NAMED EXECUTIVE OFFICERS
(SAY-ON-PAY
PROPOSAL)
(Item 2 on the Proxy Card)
The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd Frank), enacted in July 2010, requires that we provide our shareholders
with the opportunity to vote to approve, on a
non-binding,
advisory basis, the compensation of our named executives officers as disclosed in this proxy statement in accordance with the compensation disclosure
rules of the Securities and Exchange Commission (SEC). Dodd Frank also provides that shareholders periodically be given the opportunity to vote, on a
non-binding,
advisory basis, for their
preference as to how frequently we should seek future advisory votes on the compensation of our named executive officers. This opportunity was provided to our shareholders at our 2018 annual meeting, where over 80% of our voting shareholders voted
to hold the
say-on-pay
advisory vote annually, in accordance with the recommendation of our Board of Directors. As a result, we are again holding a
say-on-pay
advisory vote at our 2019 annual meeting, with the next
say-on-pay
advisory vote to
be held at our 2020 annual meeting.
As described below under the heading Compensation Discussion and Analysis beginning on page
15 of this proxy statement, we seek to closely align the interests of our named executive officers with the interests of our shareholders. We structure our programs to discourage excessive risk-taking through a balanced use of compensation vehicles
and metrics with an overall goal of delivering sustained long-term shareholder value while aligning our executives interests with those of our shareholders. Further, our programs require that a substantial portion of each named executive
officers compensation be contingent on delivering performance results that benefit our shareholders. Our compensation programs are designed to reward our named executive officers for the
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achievement of short-term and long-term strategic and operational goals and the achievement of increased total shareholder return.
The vote on this matter is not intended to address any specific element of compensation; rather, the vote relates to the compensation of our named executive officers, as described in this proxy statement
in accordance with the compensation disclosure rules of the SEC. The vote is advisory, which means that the vote is not binding on the Company, our Board of Directors or the Compensation Committee. The Board and the Compensation Committee will
review and consider the voting results when making future decisions regarding our executive compensation program.
Accordingly, we ask our
shareholders to approve, on an advisory basis, the compensation of the named executive officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the
Summary Compensation Table and the other related tables and disclosure.
The Board recommends that shareholders vote
FOR
the
approval of the compensation of our named executive officers as disclosed in this proxy statement.
RATIFICATION OF APPOINTMENT OF GRANT THORNTON LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
(Item 3 on the Proxy Card)
Although not
required, we are seeking shareholder ratification of the Audit Committees selection of Grant Thornton LLP as Meridians independent registered public accountants for the 2019 fiscal year. The affirmative vote of a majority of shares
voting at the meeting is required for ratification. If ratification is not obtained, the Audit Committee intends to continue the engagement of Grant Thornton LLP at least through fiscal 2019. Representatives of Grant Thornton LLP are expected to be
present at the meeting and will be available to make a statement, if they so desire, and to respond to appropriate questions asked by shareholders.
Principal Accounting Firm Fees
Aggregate fees billed to Meridian by Grant Thornton LLP for
fiscal years 2018 and 2017 are listed below:
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2018
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2017
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Audit Fees
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$
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717,043
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$
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631,374
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Audit-Related Fees
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44,213
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39,450
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Tax Fees
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478,566
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352,611
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$1,239,822
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$1,023,435
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Audit Fees.
Audit fees are the fees billed for professional services rendered by Meridians
independent registered public accounting firm for their: (i) audit of Meridians consolidated annual financial statements for the fiscal years ended September 30, 2018 and 2017, respectively; (ii) reviews of the unaudited
quarterly consolidated financial statements contained in the reports on Form
10-Q
filed by Meridian during those years; (iii) completion of audits of wholly-owned subsidiaries statutory accounts in
the United Kingdom during fiscal 2018 and 2017; and (iv) reporting on Meridians internal controls during those years.
Audit-Related Fees
.
Audit-related fees are the fees billed for assurance and related services that are reasonably related to the
performance of the audit or review of Meridians financial statements, including the audit of the Savings and Investment Plan (i.e., the 401K Plan).
Tax Fees.
Tax fees are the fees billed for tax return preparation and compliance in Australia, England, Germany and the United States, as well as consultation and research on various matters
such as the U.S. tax reform act, state tax issues, international tax issues and transfer pricing.
The Board recommends that shareholders
vote
FOR
the ratification of appointment of Grant Thornton LLP as Meridians independent registered public accountants for the 2019 fiscal year.
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CORPORATE GOVERNANCE
As an Ohio corporation, Meridian is governed by the corporate laws of Ohio. Since its common shares are publicly traded on the Nasdaq Global Select
Market, and it files reports with the SEC, it is also subject to Nasdaq rules and federal securities laws.
Board Leadership Structure
Governance of the corporation is placed in the hands of the Directors who, in turn, elect officers to manage the business operations. The
Board oversees the management of Meridian on your behalf. The Board reviews Meridians long-term strategic plans and exercises direct decision making authority in all major decisions, such as acquisitions, the declaration of dividends, major
capital expenditures and the establishment of certain company policies.
The Board operates and evaluates its performance in accordance with
Corporate Governance Guidelines approved by the Board. These Guidelines are available at our website
www.meridianbioscience.com
.
The
Board of Directors is responsible for evaluating and determining Meridians leadership structure, and believes that at this point in time separate individuals should serve in the capacities of Chairman of the Board (Chairman) and
Chief Executive Officer (CEO). It is the Boards belief that such a structure provides the Company with the right foundation to pursue its strategic and operational objectives, while maintaining effective oversight and objective
evaluation of the Companys performance. These key executive positions are held by Mr. David C. Phillips, Chairman of the Board, and Mr. Jack Kenny, CEO. Having served as a Director since 2000, Mr. Phillips was appointed
Chairman of the Board upon Mr. John A. Kraeutler retiring from the Company and the Board effective September 30, 2018. In his capacity as Chairman, Mr. Phillips is responsible for: (i) general Board activities, including
setting agendas for Board meetings and presiding over all meetings of the Board and shareholders; and (ii) providing advice and counsel to Meridians management regarding the Companys business operations. As CEO, Mr. Kenny is
responsible for the general management, oversight, supervision and control of the business affairs of Meridian, and ensuring that all resolutions of the Board are put into effect.
Mr. Phillips was appointed by the Board to serve as Lead Director throughout fiscal 2018, during which time Mr. Kraeutler served as Executive
Chairman. As Lead Director, Mr. Phillips responsibilities included: (i) in consultation with the
non-management
Directors, advising the Chairman as to an appropriate schedule of Board meetings
and reviewing and providing the Chairman with input regarding the agendas for each Board meeting; (ii) presiding at all meetings at which the Chairman was not present, including Executive Sessions of the
non-management
Directors, and apprising the Chairman of the issues considered thereat; (iii) calling meetings of the
non-management
Directors when necessary and
appropriate; and (iv) performing such other duties as the Board may from time to time designate. We believe that this leadership structure was the most appropriate for Meridian during fiscal 2018.
In accordance with Nasdaq rules, our Board of Directors affirmatively determines the independence of each Director and nominee for election as a Director
in accordance with the elements of independence set forth in the Nasdaq listing standards and Exchange Act rules. Meridians Director Independence Standards are available at our website
www.meridianbioscience.com
. Based on these
standards, the Board has determined that each of the following members of the Board is independent: James M. Anderson, Dwight E. Ellingwood, John C. McIlwraith, David C. Phillips, John M. Rice, Catherine A. Sazdanoff, and Felicia Williams.
During fiscal 2018, the Board of Directors met on ten occasions. The independent Directors plan to meet as necessary during fiscal 2019
without the presence of management Directors. During fiscal 2018, the independent members of the Board periodically met in executive session without the presence of management Directors following regularly scheduled Board meetings. In addition,
there were two meetings of the independent directors during fiscal 2018.
Meridian expects all Directors to attend shareholders
meetings, and all Directors attended the 2018 Annual Shareholders Meeting.
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Shareholders may communicate with the full Board or individual Directors on matters concerning Meridian by
mail or through our website,
www.meridianbioscience.com
, in each case to the attention of the Secretary, the address for whom is set forth on page 31 of this proxy statement.
The Boards Role in Risk Oversight
The Board of Directors, as a whole and also at the
Committee level, plays a key role in operational risk oversight at Meridian and works with management to understand the risks the Company faces, the steps that management is taking to manage those risks and the level of risk appropriate for the
Company in light of its overall business strategy. The Board approves the high level strategies, financial plans and policies of Meridian, setting the tone and direction for the appropriate levels of risk-taking within the organization.
While overall responsibility for risk oversight rests with the Board, it is the Audit Committee that has been given the primary responsibility of
monitoring and evaluating the adequacy of managements risk assessment and risk management practices. This role is carried out through its charter-mandated responsibilities related to Meridians: (i) overall
financial risks and exposures; (ii) financial statement risks and exposures; (iii) financial reporting processes; (iv) compliance with ethics policies, such as the Code of Ethics, Employee Complaint Policy, Securities Trading Policies
and the Foreign Corrupt Practices Act Policy; and (v) compliance with governmental and legal regulations, including those contained within the Sarbanes-Oxley Act. The Audit Committee provides regular reports to the full Board and works closely
with management to update the full Board, as necessary, on matters identified through these Committee risk oversight roles.
The Board has
adopted a Code of Ethics applicable to Meridians officers, Directors and employees. This Code of Ethics is posted on
www.meridianbioscience.com
. To the extent permitted by Nasdaq Marketplace Rule 5610, any amendments to or waivers from
the Code of Ethics will be posted on our website within four business days after the date of an amendment.
Committees of the Board of
Directors
The Directors have organized themselves into the Committees described below. Each of these Committees has a charter posted on
www.meridianbioscience.com
. Meridian does not have an Executive Committee of its Board of Directors. The following table identifies membership and the Chairman of each of the current standing committees of the Board, as well as the number of
times each committee met during the fiscal year. In September 2018, Felicia Williams joined the Board and was appointed to the Audit Committee.
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Director
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Audit
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Compensation
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Nominating
and
Corporate
Governance
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James M. Anderson
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Member
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Chair
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Member
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Dwight E. Ellingwood
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Chair
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John C. McIlwraith
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Member
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Member
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David C. Phillips
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Chair
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Member
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Catherine A. Sazdanoff
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Member
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|
|
Felicia Williams
(1)
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|
Member
|
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|
|
|
|
|
|
Meetings in Fiscal 2018
|
|
9
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|
7
|
|
7
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(1)
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Ms. Williams was appointed to the Audit Committee upon joining the Board in September 2018.
|
The Audit Committee
is comprised of David C. Phillips (Chairman), James M. Anderson, Catherine A. Sazdanoff, and Felicia Williams
(effective September 20, 2018). The Committee met nine times during fiscal 2018. Each member is able to read and understand fundamental financial statements. David C. Phillips and Felicia Williams have been designated as Audit Committee
financial experts as that term is defined by the SEC.
The Committee oversees the accounting and financial reporting processes of Meridian and
the audits of its financial statements by its independent registered public accounting firm. The Committee is solely responsible for the appointment, compensation, retention and oversight of Meridians independent registered public accounting
firm. The Audit Committee also evaluates information received from Meridians independent registered public accounting
8
firm and management to determine whether the independent registered public accounting firm is independent of management. The independent registered public accounting firm reports directly to the
Audit Committee.
In addition, the Audit Committee has established procedures for the receipt, retention and treatment of complaints received
by Meridian concerning accounting, internal accounting controls or auditing matters and has established procedures for the confidential and anonymous submission by employees of any concerns they may have regarding questionable accounting or auditing
matters.
The Audit Committee, or its Chairman, approves all audit and
non-audit
services performed
for Meridian by its independent registered public accounting firm before those services are commenced. The Chairman reports to the full Committee at each of its meetings regarding
pre-approvals
he made since
the prior meeting and the Committee approves what he has done between meetings. For these purposes, the Committee or its Chairman is provided with information as to the nature, extent and purpose of each proposed service, as well as the approximate
timeframe and proposed cost arrangements for that service.
As previously noted on page 8 in The Boards Role in Risk
Oversight section, the Audit Committee also bears certain risk oversight responsibilities.
The Committee has submitted the following
report for inclusion in this proxy statement.
REPORT OF THE AUDIT COMMITTEE
On January 24, 2018, the Audit Committee met with representatives of Grant Thornton LLP and Meridians internal accountants, at which time the
Grant Thornton LLP representatives presented to the Committee the results of their work, including their review of Meridians first quarter consolidated financial statements, and discussed their proposed audit fees for fiscal 2018. In addition,
the Committee: (i) received an update on controls being put into place to remediate the material weakness in the controls over financial reporting identified during the fiscal 2017 audit (the 2017 material weakness); (ii) discussed
the timing and scope of the planned Sarbanes-Oxley (SOX) and internal audit work for fiscal 2018; (iii) received an overview of the new Revenue Recognition Standard, which was effective for the Company October 1, 2018; (iv) received
an overview of the anticipated effects of the U.S. Tax and Jobs Act (the tax reform act) on the Company; and (v) received an update regarding certain of the Companys information technology (IT) and cyber security
endeavors.
On April 24, 2018, the Committee met with representatives of Grant Thornton LLP and Meridians internal accountants, at
which time the Grant Thornton LLP representatives presented to the Committee the results of their work for their review of Meridians second quarter consolidated financial statements and the timing and scope of their engagement for the audit of
Meridians fiscal 2018 consolidated financial statements. In addition, the Committee received an update on various matters including: (i) SOX work completed
to-date
by internal audit;
(ii) impact of the tax reform act; (iii) the Companys ongoing cyber security and disaster recovery efforts; (iv) status of the WFOE in China; and (v) status of efforts surrounding preparation to adopt the new Revenue
Recognition Standard. The Committee also received an update regarding the successful remediation of the 2017 material weakness.
On
July 24, 2018, the Committee met with representatives of Grant Thornton LLP and Meridians internal accountants, at which time the Grant Thornton LLP representatives presented to the Committee the results of their work for their review of
Meridians third quarter consolidated financial statements, including their activities related to their review of the income tax calculation and key accounting matters. Additionally, the Committee received an update on various matters
including: (i) SOX work completed
to-date
by internal audit, including the results of visits to the Companys locations in the U.K. and Italy, as well the status of certain ITGC testing; (ii) an
overview of the Companys 2018 cyber and IT risk reduction program; (iii) goodwill testing and the reporting units considered for such testing; and (iv) status of activities associated with the planned implementation of the new
Revenue Recognition Standard at the beginning of fiscal 2019.
9
At its meeting on November 6, 2018, the Committee reviewed and discussed with management, Grant
Thornton LLP and Meridians accounting officers the results of the audit for fiscal 2018, including the financial statements. The Committee discussed with Grant Thornton LLP the matters required to be discussed by Auditing Standards
No. 16, as amended (PCAOB Interim Auditing Standard AU Section 380,
Communication with Audit Committees
). The Grant Thornton LLP representatives reviewed with the Committee written disclosures required by applicable requirements of
the PCAOB regarding the independent accountants communications with the Audit Committee concerning independence, and presented a letter regarding that matter to the Committee. In concluding that the auditors are independent, we determined,
among other things, that the
non-audit
services provided by the auditors were compatible with their independence. In addition, the Committee approved related party transactions and approved amendments to the
Audit Committee Charter. It also received updates on: (i) IT security; (ii) the results of SOX work; and (iii) implementation of the new Revenue Recognition Standard.
Based on the above mentioned review and discussion of the audited consolidated financial statements, on November 20, 2018, the Committee recommended that the audited consolidated financial statements
of Meridian be included in its Annual Report on Form
10-K
for the year ended September 30, 2018 for filing with the SEC. Similar meetings were held during November 2017 related to the fiscal 2017 audited
financial statements.
The remaining meetings throughout fiscal 2018 were held primarily for the purpose of reviewing, discussing and
approving the Companys Quarterly Reports on Form
10-Q
for filing with SEC.
During its meetings
throughout the year, the Committee reviewed and assessed the Companys financial statements, financial control, financial reporting, and certain legal and regulatory risk exposures, including reviewing procedures related to the receipt,
retention and treatment of any complaints concerning accounting, internal accounting controls or auditing matters. Also during its meetings throughout the year, the Chairman of the Audit Committee reported to the full Committee the independent
accountants fees that had been
pre-approved
and the Committee approved such fees. Certain fees were
pre-approved
by the full Committee. The Committee also reviewed
the requirements of and Meridians ongoing compliance with Section 404 of the Sarbanes-Oxley Act and conducted a self-assessment, facilitated by a third party.
Respectfully submitted,
Audit Committee
David C. Phillips (Chairman)
James M. Anderson
Catherine A. Sazdanoff
Felicia
Williams
The Compensation Committee
is comprised of James M. Anderson (Chairman), John C. McIlwraith and David C. Phillips and
is responsible for establishing compensation for Executive Officers and administering the Companys compensation plans. As used in this proxy statement, Executive Officer means our president, principal financial officer, principal
accounting officer, any vice president in charge of a principal business unit, division or function, any other officer who performs a policy-making function, or any other person who performs similar policy-making functions for Meridian. Not all
Executive Officers are Named Executive Officers who are identified in the Summary Compensation Table on page 23. This includes establishing base salary levels and cash-based incentive plans, making stock-based awards, and
otherwise dealing in all matters concerning compensation of the Executive Officers. During fiscal 2018, the Compensation Committee met seven times.
In general, the Compensation Committee annually reviews the Companys compensation programs and its philosophy in setting performance targets in November of each year. At that time, the Company
provides the Compensation Committee with information on total compensation received for all Executive Officers, including the sources of such compensation, for the immediately preceding fiscal year and recommendations for the current fiscal year. In
discharging the responsibilities of the Board of Directors relating to compensation of the Companys CEO and other Executive Officers, the purposes of the Compensation Committee are, among others: (i) to review and approve the compensation
of the Companys CEO and other Executive Officers; and (ii) to oversee the compensation policies and programs of the Company, including stock and benefit plans. The Compensation Committees specific functions include adopting,
administering and approving the Companys cash-based incentive
10
compensation and stock-based incentive plans and awards, including amendments to the plans or awards and performing such duties and responsibilities under the terms of any executive compensation
plan, incentive-compensation plan or equity-based plan. The Compensation Committee has the authority to delegate any of its responsibilities to subcommittees as the Compensation Committee may deem appropriate in its sole discretion. The Compensation
Committee has the authority to engage consultants and advisors. An independent consultant was engaged during fiscal 2018 to complete a Company-wide compensation study, a part of which was assisting the Company in evaluating and making
recommendations related to the Companys long-term incentive compensation plan. See discussion of the Long-Term Stock-based Incentives below on pages 16 and 19. Another consultant provided a review of the competitiveness of the Companys
compensation of
non-employee
Directors. In 2018, the Committee also conducted a review of the CEOs performance, reviewed the CEOs assessment of his teams performance, reviewed its Charter and
conducted a self-assessment, facilitated by a third party.
The Compensation Committee determines the amount and mix of compensation
components for the CEO, Mr. Kenny. As CEO, Mr. Kenny provides recommendations to the Compensation Committee with respect to the compensation to be paid to the other Named Executive Officers.
To achieve corporate objectives, the Committee believes it is important to provide competitive levels of compensation to retain the most qualified
employees, to recognize individuals who exceed expectations and to closely link executive compensation with corporate performance. The Committee believes Meridians long-term objectives can be achieved through cash-based incentive compensation
plans and stock-based incentive compensation plans.
The Compensation Committees processes and procedures for the consideration and
determination of Executive and Director compensation are discussed in the section entitled Compensation Discussion and Analysis in this proxy statement. See Compensation Committee Report on page 22 following the Compensation Discussion
and Analysis.
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee has ever been an officer or employee of the Company. None of the members of the Compensation Committee is or was a participant in any related person
transaction in fiscal 2018 (see the section entitled Transactions With Related Persons in this proxy statement for a description of our policy on related person transactions). Lastly, none of the members of the Compensation Committee is
an Executive Officer of another entity at which one of our Executive Officers serves on the Board of Directors. No Named Executive Officer of Meridian serves as a Director or as a member of a committee of any company of which any of the
Companys
non-employee
Directors are Executive Officers.
The Nominating and Corporate
Governance Committee
consists of Dwight E. Ellingwood (Chairman), James M. Anderson and John C. McIlwraith. The Committee met seven times during fiscal 2018. On November 7, 2018, the Committee considered and recommended the
nomination of the current Directors for
re-election.
The Committee identifies qualified nominees for the Board, recommends to the Board who will be nominated by the Company for election to the Board and
recommends to the full Board any changes in the size of the Board. The Committee also reviewed its Charter and oversaw a third-party-facilitated self-assessment of the Board and its committees.
In recommending the nomination of Directors, the Committee takes into account, among other factors which it may deem appropriate, the judgment, skill,
diversity, independence, and business experience of the potential nominee and the needs of the Board as its function relates to the business of the Company. The Committee considers candidates for nomination from a variety of sources including
recommendations of shareholders. Shareholders desiring to submit recommendations for nominations by the Committee should direct them to the Chairman of the Nominating and Corporate Governance Committee in care of the Company at its address shown on
the cover page of this proxy statement.
The Nominating and Corporate Governance Committee will assess the qualifications of all candidates
for the Board on an equal basis. In identifying and considering candidates for nomination to the Board, the Committee considers, among other factors, quality of experience, the needs of the Company and the range of talent and experience currently
represented on the Board. The Committee also discusses a director skills matrix, which it has prepared and updated. The Committee evaluates such factors, among others, and does not assign any particular weighting or
11
priority to any of these factors, nor does the Committee have a formal policy with respect to diversity. However, the Committee, working with the Board, considers the diversity of all of the
Companys stakeholders including shareholders, employees and customers when engaging in corporate governance discussions.
During several Board meetings in fiscal 2018, the Board discussed the benefits of adding new members to the Board and its Committees. Pursuant to this,
the Nominating and Corporate Governance Committee conducted a thorough search, which involved meeting with several candidates identified through extensive conversations with and recommendations from
non-employee
Directors. Based upon the review of Ms. Williams qualifications and the favorable results of their meetings with her, the Committee recommended that the Board nominate Ms. Williams
as a candidate for election to the Board. As a result, the Board elected Ms. Williams as Director in September 2018.
During fiscal 2018,
the Nominating and Corporate Governance Committee provided oversight of the Boards process for electing Mr. David C. Phillips as Chairman of the Board.
Additionally, during 2018, under the oversight of the Nominating and Corporate Governance Committee, an evaluation of the Board and Committees was performed by a third party. The results of the evaluation
were reviewed by the Board on November 7, 2018.
DIRECTORS AND EXECUTIVE OFFICERS
This table lists the Executive Officers and Directors of Meridian and shows the number of shares beneficially owned, as determined under SEC rules, on
November 30, 2018. Beneficial ownership includes any shares as to which the individual has sole or shared voting or investment power and also any shares that the individual has the right to acquire within 60 days.
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Common Stock
Beneficially
Owned
|
|
Name
|
|
Position
|
|
Amount
1
|
|
|
Percentage
|
|
Jack Kenny
|
|
Chief Executive Officer
and Director
|
|
|
25,000
|
|
|
|
*
|
|
Lawrence J. Baldini
2
|
|
Executive Vice President, Global Operations
|
|
|
44,135
|
|
|
|
*
|
|
Melissa A. Lueke
3
|
|
Executive Vice President, Chief Financial Officer and Secretary
|
|
|
206,080
|
|
|
|
*
|
|
Eric S. Rasmussen
4
|
|
Executive Vice President, Corporate Development
|
|
|
|
|
|
|
|
|
Susan D. Rolih
5
|
|
Executive Vice President, Global
Regulatory & Quality Systems
|
|
|
197,980
|
|
|
|
*
|
|
Lourdes G. Weltzien
6
|
|
Executive Vice President, Life Science
|
|
|
17,327
|
|
|
|
*
|
|
David C. Phillips
7, 8
|
|
Chairman of the Board and Director
|
|
|
126,126
|
|
|
|
*
|
|
James M. Anderson
7, 8, 9
|
|
Director
|
|
|
99,000
|
|
|
|
*
|
|
Dwight E. Ellingwood
9
|
|
Director
|
|
|
53,500
|
|
|
|
*
|
|
John C. McIlwraith
8, 9
|
|
Director
|
|
|
47,000
|
|
|
|
*
|
|
John M. Rice
|
|
Director
|
|
|
25,000
|
|
|
|
*
|
|
Catherine A. Sazdanoff
7
|
|
Director
|
|
|
48,700
|
|
|
|
*
|
|
Felicia Williams
7
|
|
Director
|
|
|
12,000
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
All Executive Officers and Directors as a Group
|
|
|
876,848
|
|
|
|
2.0
|
%
|
12
1
|
Includes shares for options and restricted stock units currently exercisable and/or exercisable or vesting within 60 days as follows: Mr. Kenny
(25,000); Mr. Baldini (8,200); Ms. Lueke (75,000); Ms. Rolih (69,700); Dr. Weltzien (5,000); Mr. Phillips (88,000); Mr. Anderson (88,000); Mr. Ellingwood (45,500); Mr. McIlwraith (39,000); Dr. Rice
(22,000); Ms. Sazdanoff (41,000); and Ms. Williams (12,000).
|
2
|
Lawrence J. Baldini was appointed Vice President of Operations in April 2001, Executive Vice President, Operations and Information Systems in October
2005 and Executive Vice President, Global Operations in March 2016. Before joining Meridian, Mr. Baldini held various operations management positions with Instrumentation Laboratories and Fisher Scientific. Age: 59
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3
|
Melissa A. Lueke was appointed Vice President, Chief Financial Officer and Secretary in January 2001 and Executive Vice President, Chief Financial
Officer and Secretary in November 2009. Prior to her appointment, Ms. Lueke served as Meridians Controller since March 2000 and Acting Secretary from July 20, 2000 to January 23, 2001. Before joining Meridian, Ms. Lueke was
employed by Arthur Andersen LLP from June 1985 to January 1999, most recently as a Senior Audit Manager. On December 6, 2018, Ms. Lueke notified the Company of her retirement from the position of Executive Vice President and Chief
Financial Officer effective January 1, 2019. Age: 55
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4
|
Eric S. Rasmussen joined Meridian as Executive Vice President, Corporate Development in June 2018. Before joining Meridian, Mr. Rasmussen served
as Vice President, Strategy and Business Development with Lear Corporation from October 2012 to May 2018. Mr. Rasmussen has been promoted to the position of Executive Vice President, Chief Financial Officer effective January 1, 2019. Age:
51
|
5
|
Susan D. Rolih was appointed Vice President of Regulatory Affairs and Quality Assurance in May 2001, Senior Vice President of Regulatory Affairs and
Quality Assurance in April 2008, Executive Vice President of Regulatory and Quality Systems in April 2013, and Executive Vice President, Global Regulatory and Quality Systems in November 2016. Before joining Meridian, Ms. Rolih held various
regulatory and quality positions with Immucor, Inc. Effective November 30, 2018, Ms. Rolih retired from her position with the Company. Age: 69
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6
|
Lourdes G. Weltzien joined Meridian in July 2008 as General Manager of Life Science and was appointed Vice President and General Manager of Life
Science in April 2013, as well as President of Asia Pacific Markets in July 2016, and Executive Vice President, Life Science in March 2018. Prior to joining Meridian, Dr. Weltzien held various executive and management positions with
Sigma-Aldrich Corporation (now Millipore-Sigma) since 1994. Age: 53
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7
|
Audit Committee Member.
|
8
|
Compensation Committee Member.
|
9
|
Nominating and Corporate Governance Committee Member.
|
13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table lists the persons known by the Company to be the beneficial owners of more than five percent of the Companys Common Stock as of
November 30, 2018, unless otherwise noted. Beneficial ownership includes any shares as to which the individual has sole or shared voting or investment power.
|
|
|
|
|
|
|
|
|
Name and address of beneficial owner
|
|
Amount and nature of
beneficial ownership
|
|
|
Percent of
class
1
|
|
BlackRock, Inc.
55 East 52
nd
Street
New York, NY 10055
|
|
|
5,273,081
|
|
|
|
12.50
|
|
|
|
|
Brown Capital Management, LLC
1201 N. Calvert Street
Baltimore, MD 21202
|
|
|
4,665,143
|
|
|
|
11.03
|
|
|
|
|
The Vanguard Group, Inc.
100 Vanguard Blvd.
Malvern, PA 19355
|
|
|
4,258,302
|
|
|
|
10.06
|
|
|
|
|
Renaissance Technologies LLC
800 Third Avenue
New York, NY 10022
|
|
|
2,230,676
|
|
|
|
5.27
|
|
1
|
For the beneficial owners listed in the table, the percentages listed reflect disclosures in the Schedule 13Gs most recently filed by each beneficial
owner with the SEC as of the date of this proxy statement.
|
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934 requires Meridians Executive Officers, Directors and
persons who own more than ten percent of a registered class of Meridians equity securities to file reports of ownership and changes in ownership with the SEC. Based on a review of the copies of such forms received by it, Meridian believes that
during the last fiscal year, all of its Executive Officers, Directors and ten percent stockholders complied with the Section 16 reporting requirements. In making these statements, Meridian has relied upon examination of the copies of Forms 3, 4
and 5, and amendments thereto, and the written representation of its Directors and Executive Officers.
TRANSACTIONS WITH RELATED PERSONS
During fiscal 2018, the Company leased certain office space from an entity controlled by Marco G. Calzavara, who served as President and Managing Director, Meridian Bioscience Europe through July
2018. Payments made under such arrangements during fiscal 2018 totaled approximately $160,000.
Nasdaq rules require the Company to
conduct an appropriate review of related party transactions required to be disclosed by the Company pursuant to SEC Regulation
S-K
Item 404 for potential conflict of interest situations on an ongoing basis and
that all such transactions must be approved by the Audit Committee or another Committee comprised of independent Directors. As a result, the Audit Committee annually reviews all such related party transactions and approves each related party
transaction if it determines that it is in the best interests of the Company. Additionally, the Audit Committees Charter provides it the authority to review, approve and monitor transactions involving the Company and related
persons (Directors and Executive Officers or their immediate family members, or shareholders owning five percent or greater of the Companys outstanding stock). This also covers any related person transaction that meets the minimum
threshold for disclosure in the proxy statement under
14
the relevant SEC rules (generally, transactions involving amounts exceeding $120,000 in which a related person has a direct or indirect material interest). In considering
the transaction, the Audit Committee may consider all relevant factors, including, as applicable: (i) the Companys business rationale for entering into the transaction; (ii) the alternatives to entering into a related person
transaction; (iii) whether the transaction is on terms comparable to those available to third parties, or in the case of employment relationships, to employees generally; (iv) the potential for the transaction to lead to an actual or
apparent conflict of interest and any safeguards imposed to prevent such actual or apparent conflicts; and (v) the overall fairness of the transaction to the Company. This policy is included in the Companys Employee Handbook. The
approvals of such related person transactions are evidenced by internal Company resolutions, minutes or memoranda.
COMPENSATION DISCUSSION AND ANALYSIS
Throughout this proxy statement, the individuals who served as the Companys CEO and Chief Financial Officer during fiscal 2018, as well as the other individuals listed in the Summary Compensation
Table below, are referred to as the Named Executive Officers or NEOs.
Compensation Philosophy and Objectives
Our executive compensation is tied to performance objectives that are aligned with our strategic objectives to incentivize and focus
behavior on strengthening our business for long-term shareholder value. Meridian believes that people who understand our purpose will drive progress. In order to create value for our shareholders, it has been important for us to focus on the core
areas of growth, cost containment and organizational redesign. In fiscal 2018, we launched our new Meridian brand supporting a fresh, new image and message to the channels and customers we serve. We also consolidated what were essentially
separately-run,
subsidiary businesses into two globally integrated strategic business units. This coincided with the realignment of our organizational structure, which resulted in fewer management layers and a more
efficient cost structure that will free up resources for future growth initiatives.
We continued to transform our business resources in 2018,
based on where to compete in the market, and better leverage our strengths across the globe. Our strategic priorities are as follows:
|
|
|
Reshape the financial profile to achieve higher growth over time, while maintaining strong financial returns and mitigating risks in our business.
|
|
|
|
Focus on organic and inorganic investment to
re-allocate
capital to where we can win and compete over the
long-term.
|
|
|
|
Align the deployment of human capital and minimize risk, while improving organizational fitness.
|
Compensation and benefit programs are an important part of the Companys employment relationship, which also include challenging and rewarding work
and a focus on career growth, while aligning with our strategy of increasing value. Pay for performance is fundamental to our compensation philosophy. We reward individuals performance for contributions to business success.
Critical to each element of our total compensation and benefits philosophy is that it be based on a strategy to attract, retain, and unlock the hidden
potential of our human capital, and it therefore consists of competitive pay, incentive programs, and benefits that meet income security and protection. The affordability of compensation and benefits are considered over the medium- to long-term, and
to the extent possible, will not fluctuate based on short-term business conditions.
The key principles to the design of our compensation
programs are as follows:
|
|
|
Base salaries, which reflect job responsibilities, competitiveness, and individual performance in connection with merit increases;
|
|
|
|
Annual cash-based incentive opportunities, which are a function of company and personal performance; and
|
15
|
|
|
Longer-term stock-based incentive opportunities under our 2012 Stock Incentive Plan, in the form of stock options and/or restricted stock unit grants,
which align the long-term interests of senior management with our shareholders.
|
Base salaries are based on individual job
duties, performance and achievements, while considering internal pay equity, retention, critical skills, and independent survey market data for specific regions. Annual cash-based incentive programs include a payout range of 17.5% to 56% of base
salary, with a target payout ratio of 35% of base salary. Our intent is to increase this payout range over time, pending results. Annual cash-based incentive programs are based on defined metrics aligned to our strategic objectives and the
achievement of performance goals that are set at levels to motivate executives to commit to growth and align with value creation, while improving performance.
Stock-based incentive awards consist of restricted stock units, both time-based and performance-based, and performance-based
non-qualified
options. This combination
of stock-based awards is designed to both reward and retain, while aligning interests of management with our shareholders.
The Compensation
Committee has established several principles and practices that are important to achieving our compensation philosophy and objectives. These are summarized below.
Gross-up
Payments, Repricing of Options, Pledging, Hedging and Margin Accounts
The Company avoids new contractual agreements that include excise tax
gross-up
payments. It does not allow the repricing of options, which is not permitted under
the 2012 Stock Incentive Plan without first obtaining the approval from stockholders of the Company. Additionally, the Companys Insider Trading Policy places restrictions on the Companys Directors and Executive Officers regarding
entering into hedging transactions with respect to the Companys securities and from holding the Companys securities in margin accounts or otherwise pledging such securities as collateral for loans. Specifically, our Insider Trading
Policy provides that Directors, Executive Officers and certain other designated employees may not purchase Meridian securities on margin or borrow against any account in which Meridian securities are held. The Policy also provides that such
persons may not pledge Meridian securities as collateral for a loan or engage in hedging or monetization transactions with respect to Meridian securities. No Directors or Executive Officers have in place any pledges or hedging transactions.
Recovery of Past Awards
With respect to recovery of past awards, except as provided by applicable laws and regulations, we do not have a policy with respect to adjustment or
recovery of awards or payments if relevant Company performance measures upon which previous awards were based are restated or otherwise adjusted in a manner that would reduce the size of such award or payment. Under those circumstances, we expect
that the Compensation Committee and the Board would evaluate whether compensation adjustments are appropriate based upon the facts and circumstances surrounding the applicable restatement or adjustment.
Minimum Vesting Periods
Although the
plan document for our 2012 Stock Incentive Plan does not include minimum vesting periods for options or stock appreciation rights, our Compensation Committee includes minimum vesting provisions in the award agreements for stock options pursuant to
authority granted to it under the 2012 Stock Incentive Plan. Generally the option award agreements provide for a minimum vesting period of three years. The 2012 Stock Incentive Plan provides that no Restricted Shares or Restricted Share Units
conditioned upon the achievement of performance objectives shall be based on a restriction period of less than one year, subject to the Plans provisions applicable to termination of employment and change of control.
Cash Buyouts of Underwater Options
Although the plan document for our 2012 Stock Incentive Plan does not include a provision expressly prohibiting cash buyouts of options or stock
appreciation rights, the Compensation Committee believes cash buyouts of underwater options is a governance practice that investors view as unfavorable. As a result, the Compensation Committee is generally opposed to cash buyouts of
options or stock appreciation rights.
16
Back-Dating and Spring-Loading
Although Meridian does not have a written policy regarding the timing or practices related to granting equity awards, neither Meridian nor the Compensation Committee engages in spring-loading, back-dating
or bullet-dodging practices. Equity awards are generally granted by the Compensation Committee in the first quarter of the fiscal year. Stock options are granted at the closing market price on the date of grant, pursuant to the 2012 Stock
Incentive Plan. Prior to the exercise of an option, the holder has no rights as a stockholder with respect to the shares subject to such option, including no rights to vote or to receive dividends. Prior to vesting of restricted stock units noted
above, the holder may receive dividend equivalent payments depending on the award nature and agreement. Restricted stock units do not have voting rights.
Ownership Guidelines
Consistent with its compensation philosophy and the principle of
aligning the interests of management and Directors of the Company with the interests of its stockholders, the Board of Directors has implemented stock ownership guidelines for Specified Officers (defined in the guidelines as those
officers required to file beneficial ownership reports with the SEC) and
non-employee
Directors. Under the guidelines, the Companys Chief Executive Officer is required to own an amount of Company common
stock (including vested and
non-vested
restricted stock units) which is equal to or exceeds three times such Chief Executive Officers annual base salary, and Specified Officers other than the Chief
Executive Officer are required to own an amount of Company common stock (including vested and
non-vested
restricted stock units) which is equal to or exceeds such officers annual base salary. Also under
the guidelines, each of the Companys
non-employee
Directors is required to own an amount of Company common stock which is equal to or exceeds three times such
non-employee
directors annual retainer. Generally, persons subject to the guidelines are required to achieve the applicable guideline not later than three years from the appointment to their position.
Excluding those still within the
phase-in
period, as of the date of this proxy statement, persons subject to these guidelines have been deemed by the Board to have met their ownership target, either as a
result of their direct holdings or shares held indirectly by an entity affiliated with such person, in accordance with the guidelines.
The
Compensation Committee is responsible for ongoing oversight of compliance with this compensation philosophy. The Compensation Committee ensures that the total compensation paid to the NEOs is fair, reasonable and competitive.
At our 2018 annual meeting, Meridian once again held an advisory vote on the compensation of its NEOs, commonly referred to as a
say-on-pay
vote. Our shareholders approved the compensation of our NEOs, with approximately 95% of votes cast in favor of our 2018
say-on-pay
resolution. Based on the results of the 2018
say-on-pay
vote, the Compensation Committee concluded that the
compensation paid to the NEOs and Meridians overall pay practices received strong shareholder support and do not require substantial revision to address shareholder concerns.
Executive Summary
Actions of the Compensation Committee
In several meetings during the year, Mr. Kenny and the Compensation Committee Chairman discussed, among other things, Meridians compensation
system and its effectiveness in attracting and retaining talented employees. They noted that the underlying principles in the plan have been followed for many years, even when following such principles resulted in no Officers Performance
Compensation Plan (cash-based incentive compensation) bonuses being awarded to the NEOs and performance-based stock awards not vesting. They also discussed certain changes to the compensation programs for fiscal 2019 which are outlined in this proxy
statement.
At its 2018 meetings, the Compensation Committee discussed these matters, both with and without the presence of management. The
Compensation Committee discussed the recommendations of the CEO for compensation levels for all officers and the general pay increases to be paid throughout the Company. The Committee then made the compensation decisions, which are reflected in the
figures presented in this proxy statement.
Fiscal 2018 Compensation Decisions
For fiscal 2018, the Cash-based Incentive Compensation Plans target payout ratio for the NEOs was thirty-five percent of base salary, with forty percent of the target payout ratio (14%) based on
revenues; forty percent of the target payout ratio (14%) based on
non-GAAP
net earnings; and the remaining twenty percent of the target payout
17
ratio (7%) based on individual performance using a
1-5
rating system. The specific minimum levels of revenues,
non-GAAP
earnings and individual performance ratings required to achieve the varying percentage of target payout for each measurement criteria are as follows:
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Threshold
(50%)
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|
Target
(100%)
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|
Maximum
(150%)
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Revenues
|
|
$
|
208,000,000
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|
|
$
|
212,000,001
|
|
|
$
|
216,000,001
|
|
Non-GAAP Earnings
|
|
$
|
31,400,000
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|
|
$
|
32,550,001
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|
|
$
|
33,800,001
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Individual Performance
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2 Rating
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3 Rating
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4 Rating
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The cash-based incentive compensation payments received by the NEOs for fiscal 2018, as reflected in the Summary
Compensation Table, were based on the Company achieving: (i) revenues totaling $213,571,000 (100% of target payout);
non-GAAP
earnings totaling $31,705,000 (50% of target payout); and
(iii) individual performance ratings of 3 or higher. As set forth in the Companys fiscal 2018 Annual Report on Form
10-K,
non-GAAP
earnings exclude the impact
of restructuring and litigation costs incurred in fiscal 2018, along with the
one-time
benefit of the U.S. tax law change and the repatriation transition tax.
Due to the Company not achieving the $34,700,000
non-GAAP
earnings threshold required to earn performance-based
long-term stock incentive awards for fiscal 2018, no such performance-based restricted stock unit awards vested for any NEOs. The minimum threshold related to these awards was established as a stretch target for the Company.
However, as discussed below in the John A. Kraeutler Employment Agreement and Supplemental Benefit Agreement section, as a result of fiscal
2018 revenue and earnings guidance being achieved, the performance-based restricted stock unit awards made to Mr. Kraeutler in connection with his Third Amended and Restated Employment Agreement fully vested.
Fiscal 2019 Compensation Decisions
Base Salaries
Based on our
financial results in fiscal 2018 and the Compensation Committees review of the CEOs evaluation of the other NEOs, the Compensation Committee approved a merit increase pool of 2.5% for NEOs, with the actual merit increases to be
determined by the CEO. With respect to Mr. Kenny, see page 21 for discussion of his compensation arrangements. Base salaries across all Meridian employees below the executive level are expected to increase approximately 3% effective
January 1, 2019.
Cash-based Incentive Compensation
The Compensation Committee approved the 2019 Cash-based Incentive Compensation Plan structure, including performance targets and payout targets. For NEOs, the target payout ratio is
thirty-five percent of base salary. Forty percent of the target payout ratio (14%) is based on achieving certain levels of net revenues; forty percent of the target payout ratio (14%) is based on achieving certain levels of operating income; and the
remaining twenty percent of the target payout ratio (7%) is based on individual performance. Depending on the level of achievement, a NEO may earn from 0% to 56% of base salary.
Cash-based incentive compensation, if earned, is paid in the first quarter of each fiscal year, for the prior fiscal years performance. The net revenues and operating income targets operate
independently. While the net revenues portion may be earned upon achieving the net revenues targets, the component related to operating income is subject to the Companys attainment of the specific operating income target, after inclusion of
the compensation expense related to cash-based incentive compensation. Should the Company fail to reach the minimum operating income target, no cash-based incentive compensation will be paid for this component.
Management and the Compensation Committee have intended that the net revenues and operating income thresholds be set at reasonably achievable targets,
yet at levels that require diligence to produce improved performance. The Compensation Committee tends to set the thresholds consistent with the net revenue and operating income guidance range.
18
Long-Term Stock-based Incentives
After considering the independent consultants findings and recommendations, the Compensation Committee has modified the Companys long-term stock-based incentive program. As a result of these
modifications, awards to be granted to certain executives of the Company including the NEOs will include two types of equity awards, restricted stock units and options to purchase Company stock. Varying levels of these awards, ranging from 50% to
150% would be earned if established targets for net revenue, operating income and total shareholder return are achieved over an established three year measurement period. The target levels to be achieved as part of this program are established at
levels that the Compensation Committee believes represent appropriate long-term incentive compensation value for each executive.
Establishing Compensation Levels
The
Compensation Committee recommends CEO compensation to the Board of Directors for approval. On October 9, 2017, Mr. Kenny was hired as CEO. The terms of his Employment Agreement are summarized on page 21. The compensation levels for the
other NEOs are recommended by the CEO. The Compensation Committee has discretion to follow or modify such recommended levels of compensation. The Compensation Committee considers the input of our CEO as a crucial component of its compensation
processes and decisions relating to NEO compensation. The Compensation Committee is not obligated to follow his recommendations. The Company does not engage in strict numerical benchmarking in determining the percentage modifications for the NEOs.
Under its charter, the Compensation Committee is authorized to engage outside advisors at the Companys expense. In fiscal 2018, the Company engaged an independent consultant to complete a Company-wide compensation study, a part of which
was assisting the Company in evaluating, and making recommendations related to the Companys long-term incentive compensation, including providing benchmarked peer data of such compensation. See discussion of the long-term incentive
compensation above.
In setting the NEOs compensation, the Compensation Committee reviews all components of such compensation through
the use of tally sheets. These tally sheets provide the amount of total compensation paid or earned by each NEO based on his or her base salary, cash-based incentive compensation, stock-based awards and retirement contributions. The tally sheets
reviewed provide all of the information that is reflected in the Summary Compensation Table. The review by the Compensation Committee analyzes how changes in any element of compensation would impact other elements, particularly severance or change
in control benefits, if applicable to the executive. Such analysis has become an important component in the Compensation Committees review of executive compensation, as the tally sheet allows the Compensation Committee to consider an
executives overall compensation rather than only one or two specific components of an executives compensation. This allows the Compensation Committee to make compensation decisions and evaluate management recommendations based on a
complete analysis of an executives total compensation. Salaries are set on a calendar year basis and, therefore, salaries paid in the first three months of each fiscal year beginning on the first day of October are set in the prior fiscal
year.
Components of Executive Compensation and Related Risk Profile
Meridians executive compensation and benefits packages consist of base salary, cash-based incentive compensation, long-term stock-based incentive awards, Company-sponsored benefit and retirement
plans, and change in control severance benefits. Each of these components has a certain risk profile.
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Element
|
|
Form of Compensation
|
|
Purpose
|
|
Risk Profile
|
Base Salaries
|
|
Cash
|
|
Provides competitive, fixed compensation to attract and retain exceptional executive talent
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|
Low to moderate
|
19
|
|
|
|
|
|
|
Element
|
|
Form of Compensation
|
|
Purpose
|
|
Risk Profile
|
|
|
|
|
Annual Cash-based Incentives
|
|
Cash
|
|
Provides a direct financial incentive to achieve corporate operating goals
|
|
Moderate to high
|
|
|
|
|
Long-Term Stock-based Incentives
|
|
Non-qualified
stock options and/or restricted stock units
|
|
Encourages Executive Officers to build and maintain a long-term equity ownership position in Meridian so that their interests are aligned with our shareholders
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High
|
|
|
|
|
Health, Retirement and Other Benefits
|
|
Eligibility to participate in benefit plans generally available to our employees, including retirement plan contributions, and premiums paid on disability and life insurance
policies
|
|
Benefit plans are part of a broad-based employee benefits program providing competitive benefits to our Executive Officers
|
|
Low
|
|
|
|
|
Change in Control Severance Benefits
|
|
Cash and continuation of certain benefits
|
|
Encourages Executive Officers to maximize value for shareholders in the event that the Company becomes subject to a change in control transaction
|
|
Moderate to high
|
The Compensation Committee has reviewed the risk profile of the components of the Companys executive compensation
program, including the performance objectives and target levels used in connection with incentive awards, and has considered the risks a NEO might be incentivized to take with respect to such components. When establishing the mix among these
components, the Compensation Committee is careful not to encourage excessive risk taking. Specifically, the performance objectives contained in the Companys executive compensation programs have been balanced between annual and long-term
incentive compensation to ensure that both components are aligned and consistent with our long-term business plan and that our overall mix of stock-based awards has been allocated to promote an appropriate combination of incentive and retention
objectives.
The Compensation Committee believes that the Companys executive compensation program does not incentivize the NEOs to
engage in business activities or other behavior that would threaten the value of the Company or the investments of its shareholders.
The
Compensation Committee continues to monitor and evaluate on an
on-going
basis the mix of compensation, especially equity compensation, awarded to the NEOs, and the extent to which such compensation aligns the
interests of the NEOs with those of the Companys shareholders. In connection with this practice, the Compensation Committee has, from time to time, including in November 2018 as noted above, reconsidered the structure of the Companys
executive compensation program and the relative weighting of various compensation elements.
See Executive Summary on page 17 for
discussion of base salaries, annual cash-based incentive compensation and long-term stock-based compensation.
20
Company-Sponsored Benefit and Retirement Plans
Meridian provides Company-sponsored benefit and retirement plans to the NEOs. In general, executives participate in the Companys benefit and
retirement plans on the same basis as other Company employees. The core benefit package includes health, dental, short and long-term disability, and group term life insurance. Meridian generally provides retirement benefits to executives through
qualified (under the Internal Revenue Code) defined contribution plans (401K Plan).
Change in Control Severance Benefits
The Compensation Committee believes that a reasonable level of salary and Company-sponsored benefit protection provides a means of retention and allows
the NEOs to remain focused on achievement of Company goals and objectives in the event that the Company becomes subject to a merger or acquisition transaction. This component of compensation would only be paid in the event of a change in control of
the Company, under certain qualifying conditions, and termination of the NEOs employment (double trigger). For the CEO and other NEOs, this component of compensation would include two years base salary, performance bonus and core
benefits. See page 28 for a description of change in control severance agreements entered into with our Executive Officers.
Jack Kenny
Employment Agreement
Effective October 9, 2017, the Company and Mr. Kenny entered into an Employment Agreement (the Kenny
Employment Agreement) providing for the terms of Mr. Kennys employment as Chief Executive Officer. The Kenny Employment Agreement provides that Mr. Kenny is entitled to receive a base salary of $550,000 for the first year of
the Kenny Employment Agreements term (Year 1) and $650,000 for the second year of the Kenny Employment Agreements term (Year 2). Mr. Kenny is eligible to earn an annual bonus of up to $275,000 for Year 1 and
$325,000 for Year 2, subject to the achievement of certain performance criteria as determined by the Compensation Committee of the Board. The Kenny Employment Agreement also provides that Mr. Kenny receive: (i) a grant of stock options to
purchase 100,000 shares of common stock which will vest on a
pro-rata
basis over four (4) years following the effective date of the Kenny Employment Agreement; and (ii) a grant of 13,000 restricted
stock units vesting in a lump sum or cliff basis on the second anniversary of the effective date of the Kenny Employment Agreement. The Kenny Employment Agreement also provides that Mr. Kenny receive an annual equity award of no
less than 25,000 restricted stock units per year.
The Kenny Employment Agreements term continues through October 9, 2019, and
thereafter provides for renewal periods of one (1) year that automatically renew on the annual anniversary of the effective date of the Kenny Employment Agreement. Pursuant to the terms of the Kenny Employment Agreement, there is no required
minimum period of employment and either the Company or Mr. Kenny may terminate his employment under the Kenny Employment Agreement at any time for any reason or no reason. If Mr. Kenny terminates the Kenny Employment Agreement, he must
give the Company at least 90 days prior written notice. If the Company terminates the Kenny Employment Agreement without Cause, the Company is obligated to give Mr. Kenny 90 days prior written notice. In the event that the Company
terminates the employment of Mr. Kenny without Cause or if he terminates his employment for Good Reason, each as defined in the Kenny Employment Agreement, Mr. Kenny is entitled to a severance payment equal to twelve months of his then
current base salary plus a
pro-rata
portion of the target bonus through the date of termination. If such termination occurs during a change of control period (double trigger), Mr. Kenny is entitled to a
severance payment equal to two times his then current base salary plus his target bonus for the severance period.
John A. Kraeutler
Employment Agreement and Supplemental Benefit Agreement
Effective October 3, 2016, the Company and Mr. Kraeutler entered into a
Third Amended and Restated Employment Agreement (the Kraeutler Employment Agreement), which, among other things, extended the term of his employment and incorporated the terms and conditions of his Supplemental Benefit Agreement. The
Kraeutler Employment Agreement provided that Mr. Kraeutler was entitled to receive an established minimum annual salary and that he was eligible to participate in the Companys cash-based and stock-based incentive plans. The Kraeutler
Employment Agreement also provided that Mr. Kraeutler receive: (i) a grant of 50,000
non-qualified
stock options vesting on September 30, 2017 and a grant of 50,000
non-qualified
stock options vesting on September 30, 2018 so long as he was employed on that date; and (ii) two grants of 25,000 performance-based restricted stock units, with one grant to be earned if
fiscal 2017 revenue and earnings guidance was achieved, and the other grant to be earned if fiscal 2018 revenue and earnings guidance was achieved. As a result of the fiscal 2018 revenue and earnings guidance being achieved, 25,000 restricted stock
units granted under the Kraeutler Employment Agreement have
21
fully vested. However, as a result of fiscal 2017 revenue and earnings guidance not being achieved, 25,000 restricted stock units granted under the Kraeutler Employment Agreement were not earned
and have been cancelled.
Pursuant to his Second Amended and Restated Employment Agreement, effective from January 15, 2015 to
October 3, 2016 (the 2015 Employment Agreement) and which was replaced by the Kraeutler Employment Agreement, Mr. Kraeutler earned 50,000
non-qualified
stock options as a result of being
employed by the Company as of September 30, 2016. However, as a result of fiscal 2016 revenue and earnings guidance not being achieved, 25,000 restricted stock units granted under the 2015 Employment Agreement were not earned and have been
cancelled.
In addition, the Kraeutler Employment Agreement provides that Mr. Kraeutler is eligible to receive:
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|
|
Post-retirement benefit payments totaling $1,200,000, payable in one hundred twenty (120) monthly payments of $10,000; and
|
|
|
|
Lifetime insurance benefits including health insurance and comprehensive long-term care insurance.
|
The Kraeutler Employment Agreements term extended through September 30, 2018, and included provisions for a
12-month
consulting arrangement following that date.
Lueke Consulting Agreement
The Company and Ms. Lueke have entered into a Consulting Agreement effective January 1, 2019 upon her retirement from the Company. The
Consulting Agreement provides that Ms. Lueke will assist the Company on an
as-requested
basis with matters related to the Companys financial reporting and accounting, among other matters. Under the
Consulting Agreement, the Company agreed to pay Ms. Lueke $90,000 per year and reimburse her for certain expenses. The Consulting Agreements term is three years and may be renewed upon mutual written agreement or cancelled by
Ms. Lueke at any time.
Internal Pay Equity
The Compensation Committee believes that the relative difference between the CEOs compensation and the compensation of the Companys other executives has not increased significantly over the
years. Further, the Compensation Committee believes that the Companys internal pay equity structure is appropriate based upon the contributions to the success of the Company and as a means of motivation to other executives and employees.
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation
S-K
with management. Based on
these reviews and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Companys proxy statement on Schedule 14A.
Members of the Compensation Committee
James M. Anderson (Chairman)
John C. McIlwraith
David C. Phillips
CEO PAY RATIO
Our CEO Pay Ratio was calculated in compliance with the requirements set forth in Item 402(u) of Regulation
S-K.
We identified the median employee population as of July 31, 2018, which included all 618 global full-time, part-time, temporary and seasonal employees employed on that date, excluding 26 such employees in
our Belgium, China, France, Holland and Singapore locations, which in the aggregate represent less than 5% of our workforce. We used a consistently applied compensation measure across our global employee population to calculate the median employee
compensation. For our consistently applied compensation measure, we utilized total cash
22
compensation per our internal payroll records, annualized and translated to U.S. dollars. We then calculated the median employees fiscal 2018 compensation in the same manner as the named
executive officers in the Summary Compensation Table. Our median employee compensation for fiscal 2018 was $71,983 and our Chief Executive Officers compensation was $1,858,606. Accordingly, our
CEO-to-Employee
Pay Ratio is 26:1 (17:1 upon excluding certain
one-time
compensation components related to our CEOs hiring in October 2017, as disclosed within
this proxy statement).
SUMMARY COMPENSATION TABLE
The following table summarizes the aggregate compensation paid, or earned, by each of the NEOs for the fiscal years ended September 30, 2018, 2017 and 2016, respectively:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal
Position
(a)
|
|
Year
(b)
|
|
|
Salary
(c)
|
|
|
Bonus
(d)
|
|
|
Stock
Awards
1,2
(e)
|
|
|
Option
Awards
3
(f)
|
|
|
Non-Equity
Incentive Plan
Compensation
4
(g)
|
|
|
Change
in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
(h)
|
|
|
All
Other
Compensation
5
(i)
|
|
|
Total
|
|
Jack Kenny
Chief Executive
Officer
|
|
|
2018
2017
2016
|
|
|
$
|
542,408
|
|
|
|
|
|
|
$
|
554,750
|
|
|
$
|
319,140
|
|
|
$
|
250,000
|
|
|
|
|
|
|
$
|
192,308
|
|
|
$
|
1,858,606
|
|
|
|
|
|
|
|
|
|
|
|
Melissa A. Lueke
Executive
Vice President, Chief Financial Officer and Secretary
|
|
|
2018
2017
2016
|
|
|
$
$
$
|
344,000
339,520
292,194
|
|
|
|
|
|
|
$
$
$
|
109,875
169,500
194,100
|
|
|
$
$
$
|
40,306
27,708
44,416
|
|
|
$
|
96,320
|
|
|
|
|
|
|
$
$
$
|
38,771
45,564
68,343
|
|
|
$
$
$
|
629,272
582,292
599,053
|
|
|
|
|
|
|
|
|
|
|
|
John A. Kraeutler
6
Former Executive Chairman of the Board
|
|
|
2018
2017
2016
|
|
|
$
$
$
|
656,518
655,942
621,605
|
|
|
|
|
|
|
$
$
$
|
748,750
423,750
485,250
|
|
|
$
$
|
306,640
53,300
|
|
|
$
|
183,825
|
|
|
|
|
|
|
$
$
$
|
152,205
155,859
198,275
|
|
|
$
$
$
|
1,741,298
1,542,191
1,358,430
|
|
|
|
|
|
|
|
|
|
|
|
Lawrence J. Baldini
Executive
Vice President, Global Operations
|
|
|
2018
2017
2016
|
|
|
$
$
$
|
350,804
346,673
310,001
|
|
|
|
|
|
|
$
$
$
|
109,875
169,500
198,765
|
|
|
$
$
|
40,306
44,184
|
|
|
$
|
98,617
|
|
|
|
|
|
|
$
$
$
|
41,774
42,561
69,204
|
|
|
$
$
$
|
641,376
558,734
622,154
|
|
|
|
|
|
|
|
|
|
|
|
Susan D. Rolih
Executive Vice
President,
Global Regulatory & Quality Systems
|
|
|
2018
2017
2016
|
|
|
$
$
$
|
339,683
332,750
294,522
|
|
|
|
|
|
|
$
$
$
|
109,875
169,500
198,493
|
|
|
$
$
$
|
40,306
27,708
3,553
|
|
|
$
|
95,491
|
|
|
|
|
|
|
$
$
$
|
41,394
42,941
66,794
|
|
|
$
$
$
|
626,749
572,899
563,362
|
|
|
|
|
|
|
|
|
|
|
|
Richard L. Eberly
7
Former Executive Vice President, President, Chief Commercial Officer
|
|
|
2018
2017
2016
|
|
|
$
$
$
|
167,538
404,904
339,669
|
|
|
|
|
|
|
$
$
$
|
109,875
169,500
194,100
|
|
|
$
$
|
40,306
74,408
|
|
|
|
|
|
|
|
|
|
|
$
$
$
|
1,162,239
57,891
66,888
|
|
|
$
$
$
|
1,479,958
632,295
675,065
|
|
|
|
|
|
|
|
|
|
|
|
Marco G. Calzavara
8
Former President and Managing
Director,
Meridian Bioscience Europe
|
|
|
2018
2017
2016
|
|
|
$
$
$
|
252,547
289,397
324,503
|
|
|
|
|
|
|
$
$
$
|
117,200
169,500
194,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
$
$
|
914,361
60,234
72,599
|
|
|
$
$
$
|
1,284,108
519,131
591,202
|
|
1
|
The amounts shown reflect the grant date fair value of the restricted stock units issued during fiscal years 2018, 2017 and 2016 in accordance with ASC
Topic 718, including those granted to Mr. Kenny upon his being hired as Chief Executive Officer in October 2017. With the exception of Employment Agreement RSUs discussed in Note 2 below, no compensation cost is included in this table related
to the performance-based portion of the restricted stock units granted during fiscal 2018, 2017 and 2016. Because the required earnings targets for Meridian were not reached for fiscal 2018, 2017 or 2016, with the exception of the Employment
Agreement RSUs discussed in Note 2 below, the performance-based restricted stock units have been cancelled. A discussion of the assumptions used in calculating these values may be found in Note 7(b) on page 72 of the Companys Annual Report on
Form
10-K
filed with the SEC on November 29, 2018. In addition, the amounts reflected for Mr. Baldini and Ms. Rolih for fiscal 2016 include the value of unrestricted common shares granted
pursuant to Company policy for 15 years of service.
|
23
2
|
The amount reflected for Mr. Kraeutler for fiscal 2018 includes $382,500 for the grant date fair value of performance-based restricted stock units
granted pursuant to his employment agreement dated October 3, 2016 (Employment Agreement RSUs). Since the required revenue and earnings guidance was achieved for fiscal 2018, the Employment Agreement RSUs were earned and the
corresponding compensation cost is included in this table. A discussion of the assumptions used in calculating these values may be found in Note 7(b) on page 72 of the Companys Annual Report on Form
10-K
filed with the SEC on November 29, 2018.
|
3
|
The amounts shown reflect the grant date fair value of the stock options granted during fiscal years 2018, 2017 and 2016 in accordance with ASC Topic
718, and during fiscal 2018 are comprised of: (i) stock options granted to Mr. Kenny upon his being hired as Chief Executive Officer in October 2017; and (ii) time-based grants made in connection with the Companys long-term
incentive compensation program. No compensation cost is included in this table related to the performance-based portion of stock options granted during fiscal 2018. Because the required earnings target for Meridian was not reached for fiscal 2018,
the performance-based stock options have been cancelled. The fiscal 2017 amounts are comprised of stock options granted to: (i) Mr. Kraeutler pursuant to his employment agreement dated October 3, 2016; (ii) Ms. Lueke in
recognition of increased responsibilities in her position of Executive Vice President and Chief Financial Officer; and (iii) Ms. Rolih in connection with her promotion. The fiscal 2016 amounts are comprised of stock options granted to:
(i) Ms. Lueke, Mr. Kraeutler, Mr. Baldini and Ms. Rolih in connection with the Magellan acquisition; and (ii) Mr. Baldini and Mr. Eberly in connection with their promotions. A discussion of the assumptions
used in calculating these values may be found in Note 7(b) on page 72 of the Companys Annual Report on Form
10-K
filed with the SEC on November 29, 2018.
|
4
|
The amounts shown represent amounts earned by the NEOs pursuant to the Officers Performance Compensation Plan for fiscal 2018. No such amounts
were earned for fiscal 2017 or 2016, as the corporate-wide targets were not reached for each of the respective fiscal years.
|
5
|
See the All Other Compensation table below for amounts, which include certain Company contributions and other personal benefits for fiscal 2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other Compensation
|
|
|
|
Jack
Kenny
|
|
|
Melissa A.
Lueke
|
|
|
John A.
Kraeutler
|
|
|
Lawrence J.
Baldini
|
|
|
Susan D.
Rolih
|
|
|
Richard L.
Eberly
|
|
|
Marco G.
Calzavara
|
|
Retirement Contributions
|
|
$
|
11,846
|
|
|
$
|
16,771
|
|
|
$
|
17,529
|
|
|
$
|
19,774
|
|
|
$
|
19,394
|
|
|
$
|
8,406
|
|
|
$
|
26,012
|
|
|
|
|
|
|
|
|
|
Relocation Costs, Including
Gross-up
|
|
|
148,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Dividends
|
|
|
31,500
|
|
|
|
22,000
|
|
|
|
62,500
|
|
|
|
22,000
|
|
|
|
22,000
|
|
|
|
11,000
|
|
|
|
13,255
|
|
|
|
|
|
|
|
|
|
Auto Lease / Auto Allowance
|
|
|
|
|
|
|
|
|
|
|
11,552
|
|
|
|
|
|
|
|
|
|
|
|
5,023
|
|
|
|
3,815
|
|
|
|
|
|
|
|
|
|
Insurance Premiums, Including
Gross-up
|
|
|
|
|
|
|
|
|
|
|
60,624
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Separation Payment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,137,810
|
|
|
|
871,279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
192,308
|
|
|
$
|
38,771
|
|
|
$
|
152,205
|
|
|
$
|
41,774
|
|
|
$
|
41,394
|
|
|
$
|
1,162,239
|
|
|
$
|
914,361
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6
|
Mr. Kraeutler served as Executive Chairman of the Board through September 30, 2018, after having been named to the position effective
October 9, 2017, upon the hiring of Mr. Jack Kenny as Chief Executive Officer. Prior to that time, Mr. Kraeutler served as Chairman of the Board, Chief Executive Officer and President.
|
7
|
In February 2018, Mr. Eberly was terminated from his position with Meridian. In connection with his termination, Mr. Eberly received the
separation payment reflected in the All Other Compensation Table above, which included the payout of accrued but unused vacation.
|
8
|
In July 2018, Mr. Calzavara was terminated from his position with Meridian. In connection with his termination, Mr. Calzavara received the
separation payment reflected in the All Other Compensation Table above, which included the payout of accrued but unused vacation. The amounts reflected in the Summary Compensation Table and the notes thereto were converted from the British
Pound Sterling at the average exchange rates for the respective periods in which the payments were made.
|
24
GRANTS OF PLAN-BASED AWARDS
The following table sets forth, for each of the NEOs, information related to grants made during fiscal 2018 under Meridians 2012 Stock Incentive
Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under
Non-Equity
Incentive Plan
Awards
1
|
|
|
Estimated Future Payouts Under
Equity Incentive Plan Awards
|
|
|
All other
Stock
Awards:
Number of
Shares of
Stock or
Units (#)
|
|
|
All other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
|
|
|
Exercise
or Base
Price of
Option
Awards
($/Sh)
|
|
|
Grant Date
Fair Value
of Stock
and
Option
Awards
|
|
Name
|
|
Grant
Date
|
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Max
($)
|
|
|
Threshold
(#)
|
|
|
Target
(#)
|
|
|
Max
(#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
(k)
|
|
|
(l)
|
|
Jack Kenny
|
|
|
10/09/17
11/08/17
|
|
|
$
|
96,250
|
|
|
$
|
192,500
|
|
|
$
|
275,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,000
25,000
|
2
3
|
|
|
100,000
|
2
|
|
$
|
14.50
|
|
|
$
$
|
507,640
366,250
|
|
Melissa A. Lueke
|
|
|
11/08/17
|
|
|
$
|
60,200
|
|
|
$
|
120,400
|
|
|
$
|
180,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
3
|
|
|
12,500
|
3
|
|
$
|
14.65
|
|
|
$
|
150,181
|
|
John A. Kraeutler
|
|
|
10/02/17
11/08/17
|
|
|
$
|
114,891
|
|
|
$
|
229,781
|
|
|
$
|
344,672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
25,000
|
4
3
|
|
|
|
|
|
|
|
|
|
$
$
|
382,500
366,250
|
|
Lawrence J. Baldini
|
|
|
11/08/17
|
|
|
$
|
61,636
|
|
|
$
|
123,272
|
|
|
$
|
184,908
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
3
|
|
|
12,500
|
3
|
|
$
|
14.65
|
|
|
$
|
150,181
|
|
Susan D. Rolih
|
|
|
11/08/17
|
|
|
$
|
59,682
|
|
|
$
|
119,364
|
|
|
$
|
179,046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
3
|
|
|
12,500
|
3
|
|
$
|
14.65
|
|
|
$
|
150,181
|
|
Richard L. Eberly
|
|
|
11/08/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
3
|
|
|
12,500
|
3
|
|
$
|
14.65
|
|
|
$
|
150,181
|
|
Marco G. Calzavara
|
|
|
11/08/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,000
|
3
|
|
|
|
|
|
|
|
|
|
$
|
117,200
|
|
1
|
These columns reflect the potential payout for each NEO under the Fiscal 2018 Cash-Based Incentive Compensation Plan if the threshold, target and
maximum goals were satisfied for all performance measures. As described within the Executive Summary section of the Compensation Discussion and Analysis beginning on page 17, the performance measurements were achieved during
fiscal 2018, resulting in the amounts set forth in
Non-Equity
Incentive Plan Compensation column of the Summary Compensation Table being earned by the NEOs. While Messrs. Eberly and Calzavara were
subject to the Fiscal 2018 Cash-Based Incentive Compensation Plan, in light of their terminations during fiscal 2018, payments made to them were included within their Separation Payments set forth in Note 5 of the Summary Compensation Table.
|
2
|
This grant of time-based restricted stock units and options was made to Mr. Kenny upon his being hired as Chief Executive Officer.
|
3
|
At the time of the grant, half of each NEOs restricted stock units and options (as applicable) were time-based with 100% vesting after four
years, and the remaining half were performance-based, subject to attainment of a specified earnings target for fiscal 2018. As the 2018 earnings target was not met, the performance-based restricted stock units and options have been cancelled and are
not reflected in the table above.
|
4
|
This grant of performance-based restricted stock units was made to Mr. Kraeutler pursuant to his employment agreement dated October 3, 2016
and was subject to attainment of revenue and earnings guidance for fiscal 2018. As the fiscal 2018 revenue and earnings guidance was met, these restricted stock units have fully vested.
|
25
OUTSTANDING EQUITY AWARDS AT FISCAL
YEAR-END
The following table provides information on the NEOs holdings of equity awards
under Meridians 2012 Stock Incentive Plan and 2004 Equity Compensation Plan as of September 30, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 (#)
|
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units
or
Other
Rights That
Have Not
Vested ($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
Jack Kenny
|
|
|
|
|
|
|
100,000
1
|
|
|
|
|
|
|
$
|
14.50
|
|
|
|
10/09/27
|
|
|
|
13,000
10
25,000
11
|
|
|
$
$
|
193,700
372,500
|
|
|
|
|
|
|
|
|
|
Melissa A. Lueke
|
|
|
6,250
2
2,500
3
|
|
|
|
6,250
2
7,500
3
12,500
4
|
|
|
|
|
|
|
$
$
$
|
19.56
16.85
14.65
|
|
|
|
03/24/26
11/16/26
11/08/27
|
|
|
|
9,000
12
10,000
13
10,000
14
7,500
11
|
|
|
$
$
$
$
|
134,100
149,000
149,000
111,750
|
|
|
|
|
|
|
|
|
|
John A. Kraeutler
|
|
|
100,000
5
15,000
2
100,000
6
|
|
|
|
|
|
|
|
|
|
|
$
$
$
|
16.50
19.56
19.09
|
|
|
|
09/30/21
12/30/18
09/30/21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lawrence J. Baldini
|
|
|
500
7
1,000
2
6,700
8
|
|
|
|
1,000
2
3,300
8
12,500
4
|
|
|
|
|
|
|
$
$
$
$
|
19.71
19.56
20.41
14.65
|
|
|
|
08/04/20
03/24/26
03/28/26
11/08/27
|
|
|
|
9,000
12
10,000
13
10,000
14
7,500
11
|
|
|
$
$
$
$
|
134,100
149,000
149,000
111,750
|
|
|
|
|
|
|
|
|
|
Susan D. Rolih
|
|
|
1,200
7
5,000
9
500
2
2,500
3
|
|
|
|
500
2
7,500
3
12,500
4
|
|
|
|
|
|
|
$
$
$
$
$
|
19.71
21.75
19.56
16.85
14.65
|
|
|
|
08/04/20
07/01/23
03/24/26
11/16/26
11/08/27
|
|
|
|
9,000
12
10,000
13
10,000
14
7,500
11
|
|
|
$
$
$
$
|
134,100
149,000
149,000
111,750
|
|
|
|
|
|
|
|
|
|
Richard L. Eberly
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marco G. Calzavara
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26
1
|
Options vest in four equal annual installments from the date of grant, until fully vested on October 9, 2021.
|
2
|
Options vest in four equal annual installments from the date of grant, until fully vested on March 24, 2020, with the exception of
Mr. Kraeutlers options which vested upon his September 30, 2018 retirement.
|
3
|
Options vest in four equal annual installments from the date of grant, until fully vested on November 16, 2020.
|
4
|
Options vest in four equal annual installments from the date of grant, until fully vested on November 8, 2021.
|
5
|
Options are fully vested; half as of September 30, 2015 and half as of September 30, 2016.
|
6
|
Options are fully vested; half as of September 30, 2017 and half as of September 30, 2018.
|
7
|
Options fully vested on August 4, 2014.
|
8
|
Options vest in three approximately equal annual installments from the date of grant, until fully vested on March 28, 2019).
|
9
|
Options fully vested on July 1, 2017.
|
10
|
Units vest on October 9, 2019.
|
11
|
Units vest on November 15, 2021.
|
12
|
Units vest on November 15, 2018.
|
13
|
Units vest on November 15, 2019.
|
14
|
Units vest on November 15, 2020.
|
OPTION EXERCISES AND STOCK VESTED
The following table sets
forth, for each of the NEOs, information on options exercised and restricted stock units vested during fiscal 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of
Shares
Acquired on
Exercise (#)
|
|
|
Value Realized
on Exercise ($)
1
|
|
|
Number of Shares
Acquired on
Vesting (#)
|
|
|
Value Realized on
Vesting ($)
2
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
Jack Kenny
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
Melissa A. Lueke
|
|
|
|
|
|
$
|
|
|
|
|
9,000
|
|
|
$
|
134,550
|
|
John A. Kraeutler
|
|
|
|
|
|
$
|
|
|
|
|
140,000
|
|
|
$
|
2,086,750
|
|
Lawrence J. Baldini
|
|
|
|
|
|
$
|
|
|
|
|
9,000
|
|
|
$
|
134,550
|
|
Susan D. Rolih
|
|
|
|
|
|
$
|
|
|
|
|
9,000
|
|
|
$
|
134,550
|
|
Richard L. Eberly
3
|
|
|
12,500
|
|
|
$
|
1,875
|
|
|
|
45,500
|
|
|
$
|
660,150
|
|
Marco G. Calzavara
3
|
|
|
|
|
|
$
|
|
|
|
|
46,000
|
|
|
$
|
721,000
|
|
1
|
Amounts reflect the difference between the exercise price of the option and the market price of Meridian common shares at the time of exercise.
|
27
2
|
Amounts reflect the market price of Meridian common shares at the time of restricted stock units vesting.
|
3
|
Upon their terminations, Messrs. Eberly and Calzavara became fully vested in the unvested restricted stock units held at that time, which were
comprised of time-based restricted stock units granted in November 2014, November 2015, November 2016 and November 2017.
|
401(K) PLAN
Our 401(k) Savings Plan (401(k) Plan) allows all U.S. employees of the Company as soon as administratively possible following their employment
to set aside a portion of their compensation each year for their retirement needs, up to the limits set by the Internal Revenue Code. Presently, the Company contributes a matching contribution of 100% of the first 4% of the employees
contribution (i.e., up to 4% of an employees salary), subject to Internal Revenue Code limitations. The Company may also contribute a profit-sharing contribution at its discretion. Employee contributions and employer matching contributions are
100% vested immediately. Participants are entitled to direct the investment of their accounts among various mutual funds selected by the Meridian Bioscience, Inc., Savings and Investment Plan Committee. Participants who terminate employment are
entitled to receive the vested portion of their accounts.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN
CONTROL
As described on page 21 in the Compensation Discussion and Analysis section of this proxy statement, Mr. Kenny
and Meridian are parties to the Kenny Employment Agreement which sets forth compensation,
non-competition,
benefit and severance provisions and provides for a payment equal to twelve months of
Mr. Kennys then current base salary plus a
pro-rata
portion of the target bonus through the date of termination in the event Mr. Kenny is terminated by Meridian without cause or Mr. Kenny
terminates his employment for good reason. If such termination occurs during a change of control period (double trigger), Mr. Kenny is entitled to a severance payment equal to two times his then current base salary plus his target bonus for the
severance period.
Had one of the events noted above occurred on September 30, 2018 and Meridian been within a change of control period
at that time, Mr. Kenny would also have been entitled to the following under the Kenny Employment Agreement:
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Salary
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$
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1,100,000
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Annual Performance Bonus
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385,000
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Total Lump Sum Payment
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$
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1,485,000
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Our Board of Directors authorized us to enter into change in control severance agreements with our Executive Officers
(other than our Chief Executive Officer, who has a change of control provision in his Employment Agreement). Each agreement had an initial term ended December 31, 2016, and each year will automatically renew for an additional one year term,
provided however, that if a change in control occurs the term will expire no earlier than 24 calendar months after the calendar month in which such change in control occurs. A change of control is generally defined in each agreement as any of the
following: (i) a person is or becomes a beneficial owner of more than 50% of our voting securities; (ii) the composition of a majority of our Board changes; (iii) we consummate a merger or similar transaction; (iv) the sale of
all or substantially all of our assets; or (v) the employment of a Chief Executive Officer other than the Companys current CEO as of the date of the agreement. Each agreement provides, among other things, that if a change in control
occurs during the term of the agreement, and the executives employment is terminated either by us or by the executive, other than: (a) by us for cause; (b) by reason of death or disability; or (c) by the executive without good
reason, such executive will receive a severance payment equal to: (A) a multiple of such executives annual base salary; (B) a multiple of executives target bonus amounts; and (C) earned but unused vacation time. In
addition, each change in control agreement provides that in the event that the severance and other benefits provided for in the agreement or otherwise payable to the executive would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code, the benefits under the agreement
28
will be either delivered in full, or delivered to a lesser extent which would result in no portion of the benefits being subject to such excise tax, whichever is more beneficial to the
executive.
Had termination in connection with a change in control occurred on September 30, 2018, the NEOs to which the policy applied
at that date (Ms. Lueke, Mr. Baldini and Ms. Rolih) would have been entitled to the following lump sum payments under the policy:
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Melissa A.
Lueke
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Lawrence J.
Baldini
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Susan D.
Rolih
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Salary
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$
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688,000
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$
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704,410
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$
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682,080
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Annual Performance Bonus
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240,800
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246,544
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238,728
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Total Lump Sum Payment
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$
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928,800
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$
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950,954
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$
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920,808
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DIRECTOR COMPENSATION
For fiscal 2018, independent Directors of Meridian received the following compensation for service on the Board and the Audit Committee (AC), Compensation Committee (CC) and
Nominating & Corporate Governance Committee (N&CGC) (annual amounts presented):
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-Base for Director service
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$
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40,000
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-Additional for Lead Director
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$
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20,000
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-AC Chair
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$
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20,000
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-AC Member
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$
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10,000
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-CC Chair
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$
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13,000
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-CC Member
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$
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6,000
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-N&CGC Chair
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$
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13,000
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-N&CGC Member
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$
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5,000
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Additionally, in accordance with the terms and conditions set forth in the Companys 2012 Stock Incentive Plan, each
independent Director was also granted a
non-qualified
option to purchase 12,000 common shares at the time of election or
re-election
to the Board of Directors, with the
exercise price being the grant date closing sale price as reported on Nasdaq. Directors who are employees of Meridian are not separately compensated for serving as Directors.
Effective for fiscal 2019, the additional Lead Director compensation is being eliminated and the independent Chairperson of the Board will receive $50,000, resulting in the following independent Director
compensation (annual amounts presented):
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-Base for Director service
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$
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40,000
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-Additional for Independent Chairperson
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$
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50,000
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-AC Chair
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$
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20,000
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-AC Member
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$
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10,000
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-CC Chair
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$
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13,000
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-CC Member
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$
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6,000
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-N&CGC Chair
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$
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13,000
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-N&CGC Member
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$
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5,000
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29
Additionally, as the result of the review of the competitiveness of the Companys compensation program
for
non-employee
Directors conducted by an independent consultant, the equity awards to independent Directors of the Company are being increased to a value of $100,000 per Director, to be phased in over a
two-year
period commencing January 2019. Accordingly, each independent Director will be granted equity valued at $50,000 in January 2019, increasing to $100,000 in January 2020.
One-third
of such equity value is to be in the form of restricted stock units (valued at the market value of our common stock at the date of award) and
two-thirds
is to
be in the form of
non-qualified
options to purchase common shares of the Company at an exercise price equal to the grant date closing sale price as reported on Nasdaq (valued pursuant to the current
methodology utilized by the Company for financial reporting purposes, which may be found in Note 7(b) on page 72 of the Companys Annual Report on Form
10-K
filed with the SEC on November 29, 2018).
The following table provides information on compensation related to fiscal 2018 for independent Directors who served during fiscal 2018:
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Name
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Fees
Earned
or
Paid in
Cash
($)
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Stock
Awards
($)
1
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Option
Awards
($)
1
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Non-Equity
Incentive Plan
Compensation
($)
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Change in
Pension
Value
and Nonqualified
Deferred
Compensation
Earnings
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All Other
Compensation
($)
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Total
($)
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(a)
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(b)
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(c)
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(d)
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(e)
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(f)
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(g)
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(h)
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James M. Anderson
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$
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68,000
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$
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42,787
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$
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110,787
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Dwight E. Ellingwood
|
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$
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53,000
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$
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42,787
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$
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95,787
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John C. McIlwraith
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$
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51,000
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|
$
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42,787
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$
|
93,787
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David C. Phillips
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|
$
|
86,000
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|
|
|
$
|
42,787
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|
|
$
|
128,787
|
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John M. Rice
|
|
$
|
49,750
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|
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|
|
|
$
|
42,787
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$
|
92,537
|
|
Catherine A. Sazdanoff
|
|
$
|
50,000
|
|
|
|
|
|
|
$
|
42,787
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|
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|
|
$
|
92,787
|
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Felicia Williams
|
|
$
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1,100
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$
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40,014
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|
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$
|
41,114
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1
|
The amounts shown reflect the grant date fair value of the awards made in fiscal year 2018 in accordance with ASC Topic 718. A discussion of the
assumptions used in calculating these values may be found in Note 7(b) on page 72 of the Companys Annual Report on Form
10-K
filed with the SEC on November 29, 2018.
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SHAREHOLDER PROPOSALS FOR NEXT YEAR
The deadline for shareholder proposals to be included in the proxy statement for next years meeting is August 26, 2019.
The form of proxy for this meeting grants authority to the designated proxies to vote in their discretion on any matters that come before the meeting except those set forth in Meridians proxy
statement and except for matters as to which adequate notice is received. In order for a notice to be deemed adequate for the 2020 Annual Shareholders Meeting, it must be received prior to October 25, 2019. If there is a change in the
anticipated date of next years Annual Shareholders Meeting or these deadlines by more than 30 days, we will notify you of this change through our Form
8-K
and/or Form
10-Q
filings.
Meridians Code of Regulations provides that only persons nominated by an officer,
Director or in writing by a shareholder not earlier than 150 days nor later than 90 days prior to the meeting at which Directors are to be selected shall be eligible for election and that shareholder proposals be presented not earlier than 150 days
nor later than 90 days prior to the meeting at which the proposals are to be presented.
30
QUESTIONS
If you have questions or need more information about the annual meeting, call us at (513)
271-3700
or write to:
Melissa A. Lueke
Executive Vice President,
Chief Financial Officer and Secretary
Meridian Bioscience, Inc.
3471 River Hills Drive
Cincinnati, Ohio 45244
For information about your record holdings, call Computershare Shareholder Services at (888)
294-8217.
31
*** Exercise Your
Right
to Vote ***
Important Notice Regarding the Availability of Proxy Materials for the
Shareholder Meeting to Be Held on January 24, 2019
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MERIDIAN BIOSCIENCE, INC.
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Meeting Information
Meeting Type:
Annual Meeting
For holders as of:
November 30, 2018
Date:
January 24,
2019
Time:
2:00 PM EST
Location:
Meridian Innovation Center
7007 Valley Avenue
Cincinnati, OH 45244
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You are receiving this communication
because you hold shares in the company named above.
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MERIDIAN BIOSCIENCE, INC.
3471 RIVER
HILLS DRIVE
CINCINNATI, OH 45244
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This is not a ballot. You cannot use
this notice to vote these shares. This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. You may view the proxy materials online at
www.proxyvote.com
or easily request a
paper copy (see reverse side).
We
encourage you to access and review all of the important information contained in the proxy materials before voting.
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See the reverse side of this notice to obtain proxy materials and voting instructions.
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Before You Vote
How to Access the Proxy Materials
Proxy Materials Available to VIEW or RECEIVE:
NOTICE AND PROXY STATEMENT ANNUAL REPORT AND
FORM 10-K
How to View Online:
Have the information that is printed in the box marked by the arrow
(located on the following page) and visit:
www.proxyvote.com
.
How to Request and Receive a PAPER or
E-MAIL
Copy:
If you want to receive a paper or
e-mail
copy of these documents, you must
request one. There is NO charge for requesting a copy. Please choose one of the following methods to make your request:
1)
BY INTERNET
: www.proxyvote.com
2)
BY TELEPHONE
:
1-800-579-1639
3)
BY
E-MAIL*
: sendmaterial@proxyvote.com
* If requesting materials by
e-mail,
please send a blank
e-mail
with the information that is printed in the box marked by the arrow
(located on the following page) in the subject line.
Requests, instructions and other inquiries sent to this
e-mail
address will NOT be forwarded to your investment advisor. Please make the request as instructed above on or before January 10, 2019 to facilitate timely delivery.
How To Vote
Please Choose One of the Following Voting Methods
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Vote In Person:
Many shareholder 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.
Have the information that is printed in the box marked by the arrow
(located on the following page) available and follow the instructions.
Vote By Mail:
You can vote by mail by requesting a paper copy of the materials, which will include a proxy card.
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The Board of Directors recommends you
vote FOR the following:
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1.
Election of Directors
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Nominees
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01) JAMES M. ANDERSON
05) DAVID C. PHILLIPS
02) DWIGHT E. ELLINGWOOD 06) JOHN M. RICE,
JR.
03) JACK KENNY
07) CATHERINE A. SAZDANOFF
04) JOHN C.
MCILWRAITH 08) FELICIA WILLIAMS
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The Board of Directors recommends you vote FOR proposals 2 and 3.
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2. Advisory vote to approve compensation of named executive officers, as disclosed in the Proxy Statement (Say-on-Pay Proposal).
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3. Ratification of the appointment of Grant Thornton LLP as Meridians independent registered public accountants for fiscal year 2019.
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NOTE:
Such other business as may properly come before the meeting or any postponement or adjournment thereof. Only shareholders of record at the close of business
on November 30, 2018 are entitled to notice of and to vote at the meeting.
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MERIDIAN BIOSCIENCE, INC.
3471 RIVER HILLS DRIVE
CINCINNATI, OH 45244
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VOTE BY INTERNET
-
www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the
cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy
cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials
electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date.
Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it
in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E53812-P14433 KEEP THIS PORTION FOR
YOUR RECORDS
THIS PROXY CARD IS VALID
ONLY WHEN SIGNED AND DATED.
DETACH AND RETURN THIS PORTION ONLY
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MERIDIAN BIOSCIENCE, INC.
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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.
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The Board of Directors recommends you vote FOR
the following:
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For
All
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Withhold
All
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For All
Except
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☐
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☐
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☐
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1.
Election of Directors
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Nominees
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01) JAMES M. ANDERSON
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05) DAVID C. PHILLIPS
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02) DWIGHT E. ELLINGWOOD
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06) JOHN M. RICE, JR.
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03) JACK KENNY
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07) CATHERINE A. SAZDANOFF
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04) JOHN C. MCILWRAITH
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08) FELICIA WILLIAMS
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The Board of Directors recommends you vote FOR proposals 2
and 3.
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2. Advisory vote to approve compensation of named executive officers, as disclosed in the Proxy Statement
(Say-on-Pay Proposal).
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For
☐
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Against
☐
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Abstain
☐
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3. Ratification of the appointment of Grant Thornton LLP as Meridians independent registered public
accountants for fiscal year 2019.
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☐
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☐
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☐
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NOTE:
Such other business as may properly come before the
meeting or any postponement or adjournment thereof. Only shareholders of record at the close of business on November 30, 2018 are entitled to notice of and to vote at the meeting.
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For address changes and/or comments, please check this box and
write them on the back where indicated.
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☐
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☐
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☐
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Please indicate if you plan to attend this meeting.
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Yes
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No
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Please sign exactly as your name(s) appear(s) hereon. When signing
as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by
authorized officer.
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date
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Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement, Annual Report and Form 10-K are available at
www.proxyvote.com
.
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MERIDIAN BIOSCIENCE, INC.
Annual Meeting of Shareholders
January 24,
2019 2:00 PM
This proxy is solicited by the Board of Directors
The undersigned hereby appoints JACK KENNY and MELISSA A. LUEKE, and
either of them, attorneys and proxies of the undersigned, each with the power of substitution and re-substitution, to vote all shares of Common Stock of Meridian Bioscience, Inc. which the undersigned may be entitled to vote on the matters specified
on the reverse side (and in their discretion to cumulate votes in the election of directors if cumulative voting is invoked by a shareholder through proper notice to the Company) and, in their discretion, with respect to such other matters as may
properly come before the Annual Meeting of Shareholders of Meridian Bioscience, Inc. to be held on January 24, 2019, at 2:00 p.m. Eastern Standard Time, at the Meridian Innovation Center, 7007 Valley Avenue, Cincinnati, Ohio 45244 and any
postponement or adjournment of such Annual Meeting.
This
proxy, when properly executed, will be voted as directed by the shareholder(s). If no such directions are made, this proxy will be voted
FOR
the election to the Board of Directors all of the nominees under Proposal 1 and
FOR
each
remaining proposal as recommended by the Board of Directors.
Please mark, sign, date, and return this proxy card promptly using the enclosed reply envelope.
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Address Changes/Comments:
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(If you noted any Address Changes/Comments
above, please mark corresponding box on the reverse side.)
Continued and to be signed on reverse side
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