ULGX Urologix Inc (CE)

Urologix, Inc.

14405 21st Avenue North
Minneapolis, Minnesota 55447

_______________________

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
November 6, 2014

_______________________

TO THE SHAREHOLDERS OF UROLOGIX, INC.:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Urologix, Inc. will be held at the Sheraton Minneapolis West, 12201 Ridgedale Drive, Minnetonka, Minnesota 55305, on Thursday, November 6, 2014 at 4:00 p.m., local time, for the following purposes:

The Board of Directors has fixed September 18, 2014 as the record date for the determination of shareholders entitled to notice of, and to vote at, the meeting.

By Order of the Board of Directors,

Mitchell Dann, Chairman

Minneapolis, Minnesota
September 26, 2014

Regardless of whether you expect to attend the Annual Meeting in person, please vote your shares
in one of the ways described in the proxy statement as promptly as possible.

IMPORTANT NOTICE REGARDING AVAILABILITY
OF PROXY MATERIALS FOR THE
2014 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON THURSDAY, NOVEMBER 6, 2014

Under rules promulgated by the Securities and Exchange Commission, we are making our proxy materials available electronically via the Internet.

The Notice of 2014 Annual Meeting of Shareholders and Proxy Statement and our Annual Report on Form 10-K for the fiscal year ended June 30, 2014 are available at https://materials.proxyvote.com/917273.

On or about September 26, 2014, we mailed to some of our shareholders a Notice of Internet Availability containing instructions on how to access our proxy materials, including our proxy statement and our annual report. The Notice of Internet Availability includes instructions to access your proxy card to vote via the Internet, as well as how to request paper or e-mail copies of our proxy materials. Other shareholders received an e-mail notification that provided instructions on how to access our proxy materials and vote via the Internet, or were mailed paper copies of our proxy materials and a proxy card that provides instructions for voting via the Internet, by telephone or by mail.

If you received the Notice of Internet Availability and would prefer to receive printed proxy materials, please follow the instructions included in the Notice of Internet Availability. If you have previously elected to receive our proxy materials electronically, you will continue to receive e-mails with instructions to access these materials via the Internet unless you elect otherwise.

TABLE OF CONTENTS

Urologix, Inc.

14405 21st Avenue North
Minneapolis, Minnesota 55447

__________________

PROXY STATEMENT

__________________

Solicitation of Proxies

This proxy statement is furnished to the shareholders of Urologix, Inc. (“we” or “Urologix”) in connection with the Annual Meeting of Shareholders to be held on November 6, 2014 or any adjournment(s) or postponement(s) thereof. The mailing of this proxy statement to our shareholders commenced on or about September 26, 2014.

Cost and Method of Solicitation

This solicitation of proxies to be voted at this 2014 Annual Meeting of Shareholders is being made by our Board of Directors. The cost of this solicitation of proxies will be borne by Urologix. In addition to solicitation by mail, our officers, directors and employees may solicit proxies by telephone or in person. We may also request banks and brokers to solicit their customers who have a beneficial interest in our common stock registered in the names of nominees and we will reimburse such banks and brokers for their reasonable out-of-pocket expenses.

Voting

The total number of shares outstanding and entitled to vote at the meeting as of September 18, 2014 consisted of 21,665,906 shares of common stock, $.01 par value. Each share of common stock is entitled to one vote. Only shareholders of record at the close of business on September 18, 2014 will be entitled to vote at this Annual Meeting.

All shareholders are cordially invited to attend the meeting in person. Whether or not you expect to attend the meeting, please complete, date, sign and return the enclosed proxy as promptly as possible (or follow instructions to grant a proxy to vote by means of telephone or internet) in order to ensure your representation at the meeting. A return envelope (which is postage prepaid if mailed in the United States) is enclosed for that purpose. Even if you have given your proxy, you may vote in person if you attend the Annual Meeting. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the Annual Meeting, you must bring to the meeting a letter from the broker, bank or other nominee confirming your beneficial ownership of the shares. Additionally, in order to vote at the Annual Meeting, you must obtain from the record holder a proxy issued in your name.

If you sign and return the proxy card on time, the individuals named on the proxy card will vote your shares as you have directed. If you just sign and submit your proxy card without voting instructions, your shares will be voted “FOR” each director nominee and “FOR” each of the other proposals if you are a record holder. If you are a street name holder and do not provide voting instructions to your broker, this is a “broker non-vote” and accordingly, no votes will be cast on your behalf on:

However, your broker will be entitled to vote in its discretion on the ratification of Baker Tilly Virchow Krause LLP as our independent registered public accounting firm for fiscal year 2015, which is Proposal 3. Shareholders of Urologix who own shares of common stock through a bank or brokerage are sometimes called “street name” holders. Street name holders should review the additional information below under “Casting Your Vote as a Street Name Holder.”

Quorum and Voting Requirements

A quorum, consisting of a majority of the shares of common stock entitled to vote at this 2014 Annual Meeting of Shareholders, must be present, in person or by proxy, before action may be taken at the Annual Meeting. Shares held by brokers who do not have discretionary authority to vote on a particular matter and who have not received voting instructions from their customers are not counted or deemed to be present or represented for the purpose of determining whether shareholders have approved that matter, but they are counted as present for the purpose of determining a quorum at the Annual Meeting.

Proposal 1 relates to the election of directors. A director nominee identified in Proposal 1 will be elected if approved by the affirmative vote of the holders of a plurality of the voting power of the shares present, in person or by proxy, and entitled to vote for the election of directors. You may either vote “FOR” or “WITHHOLD” authority to vote for each nominee for the Board of Directors. If you withhold authority to vote for the election of a nominee, it has the same effect as a vote against that nominee.

Proposals 2 and 3 will be proved by the affirmative vote of a majority of the shares of our common stock present in person or by proxy and entitled to vote on that proposal at this Annual Meeting. You may vote “FOR,” “AGAINST” or “ABSTAIN” on each of Proposals 2 and 3. Abstentions are counted as present and entitled to vote for the purposes of determining a quorum, but are not counted for the purposes of determining whether shareholders have approved that matter. Therefore, if you abstain from voting on Proposals 2 or 3, it has the same effect as a vote against that proposal.

Casting Your Vote as a Street Name Holder

If you hold your shares through a broker (that is, in “street name”) and do not provide voting instructions to your broker, your shares will not be voted on any proposal on which your broker does not have discretionary authority to vote. As of January 1, 2010, brokers no longer have discretionary authority to vote their customers’ shares in an election of directors unless those customers give the brokers instructions on how to vote. As a result, if you hold your shares in street name and do not provide voting instructions to your broker, no votes will be cast on your behalf on the following proposals being presented at this Annual Meeting:

Because of this change in broker voting rules, all street name holders are urged to provide instructions to their brokers on how to vote their shares in the election of directors at the Annual Meeting and on Proposal 2.

Make your vote count!
Instruct your broker how to cast your vote on each of Proposals 1 through 3!

If you hold your shares in street name, your broker will continue to have discretion to vote any uninstructed shares on Proposal 3: Ratification of Appointment of Independent Registered Public Accounting Firm.

Revoking a Proxy

You may change your vote and revoke your proxy at any time before it is voted by:

All shares represented by valid, unrevoked proxies will be voted at the Annual Meeting and any adjournment(s) or postponement(s) thereof. Our principal offices are located at 14405 21st Avenue North, Minneapolis, Minnesota 55447, and our telephone number is (763) 475-1400.

Annual Meeting and Special Meetings; Bylaw Amendments

This 2014 Annual Meeting of Shareholders is a regular meeting of our shareholders and has been called by our Board of Directors in accordance with our bylaws. Under our bylaws, special meetings of our shareholders may be held at any time for any purpose and may be called by the Chairman of our Board, our chief executive officer, our chief financial officer, two or more directors or by a shareholder or shareholders holding 10% or more of the voting power of all shares entitled to vote on the matters to be presented to the meeting, except that a special meeting for the purpose of considering any action to directly or indirectly facilitate or affect a business combination, including any action to change or otherwise affect the composition of the Board of Directors for that purpose, must be called by 25% or more of the voting power of all shares entitled to vote. The business transacted at a special meeting is limited to the purposes as stated in the notice of the meeting. For business to be properly brought before a regular meeting of shareholders, a written notice containing the required information must be timely submitted. For more information, please review our bylaws and the section of this proxy statement entitled “Shareholder Proposals and Shareholder Nominees for 2015 Annual Meeting.”

Our bylaws may be amended or altered by a vote of the majority of the whole Board at any meeting. The authority of the Board is subject to the power of our shareholders, exercisable in the manner provided by Minnesota law, to adopt, amend, or repeal bylaws adopted, amended, or repealed by the Board. Additionally, the Board may not make or alter any bylaws fixing a quorum for meetings of shareholders, prescribing procedures for removing directors or filling vacancies in the Board of Directors, or fixing the number of directors or their classifications, qualifications, or terms of office, except that the Board may adopt or amend any bylaw to increase their number.

OWNERSHIP OF VOTING SECURITIES BY
PRINCIPAL HOLDERS AND MANAGEMENT

The following table includes information as of September 18, 2014, except as noted, concerning the beneficial ownership of our common stock by (i) the only shareholders known to us to hold five percent or more of our common stock, (ii) each of our directors and the nominee to our Board of Directors, (iii) each of the named executive officers and (iv) all current directors and executive officers of Urologix as a group. Unless otherwise indicated, all beneficial owners have sole voting and investment power over the shares held. Except as indicated below, the business address of each individual set forth below is 14405 21st Avenue North, Minneapolis, MN 55447.

______________________________
* Indicates ownership of less than one percent.

ELECTION OF DIRECTORS

Pursuant to the terms of our current articles of incorporation, directors are divided into three classes, with the term of one class expiring each year. As the term of each class expires, the successors to the directors in that class will be elected for a term of three years. Vacancies on the Board of Directors and newly created directorships can be filled by vote of a majority of the directors then in office.

The terms of Sidney W. Emery, Jr. and Patrick D. Spangler expire at this Annual Meeting of Shareholders, which follows our fiscal year 2014. The terms of Mitchell Dann and Gregory J. Fluet expire at the Annual Meeting of Shareholders following our fiscal year 2015. The term of Christopher R. Barys expires at the Annual Meeting of Shareholders following our fiscal year 2016.

A total of two directors will be elected at this Annual Meeting. Both directors will be elected at this Annual Meeting to serve until the Annual Meeting of Shareholders following our fiscal year 2017 or until their successors are elected and shall qualify, which is Proposal 1. Upon recommendation of the Governance/Nominating Committee, the Board of Directors has nominated for election Mr. Emery and Mr. Spangler to serve as directors until the Annual Meeting following fiscal year 2017.

Set forth below are the biographies of the nominees and the directors serving continuing terms, as well as a discussion of the specific experience, qualifications, attributes and skills that led to the conclusion that the nominee or director should serve as a director of Urologix at this time.

Directors Serving Continuing Terms

Term Expiring at the Annual Meeting Following Fiscal 2015:

Mitchell Dann, age 54, has served as a director and as our Chairman since February 25, 2008. Mr. Dann also served as our Interim Chief Executive Officer from February 25, 2008 until the appointment of Mr. Warren as the Chief Executive Officer on June 24, 2008. Mr. Dann is a co-founder of Urologix and served as a director from its inception in 1991 until 2005. In 2000, Mr. Dann founded Sapient Capital. Mr. Dann is currently the managing member of Sapient Capital Management, L.L.C., the general partner of the general partner of Sapient Capital, L.P., a venture capital firm specializing in the medical device industry. Mr. Dann has over 25 years of experience working with medical device companies as an investor, entrepreneur, executive, adviser and board member. From September 2000 to June 2011, Mr. Dann served as a member of the Board of Directors of TranS1 Inc., a publicly-held medical device company (Nasdaq: TSON). Mr. Dann received a Bachelor of Science degree in engineering from the University of Vermont.

Mr. Dann is qualified to serve on the Urologix Board because of his broad strategic perspective of the medical device industry. In addition, Mr. Dann brings to the Board an exceptional and deep understanding of the particular challenges and opportunities facing Urologix, gained through his role as the co-founder of Urologix, as a director of Urologix for fourteen years prior to his current service, and through his service as our interim Chief Executive Officer on three prior occasions, most recently from February to June 2008.

Gregory J. Fluet, age 45, has served as a director and as our Chief Executive Officer since January 25, 2013. He was appointed our interim Chief Financial Officer on August 13, 2014. From November 30, 2012 to January 25, 2013, Mr. Fluet served as our interim Chief Executive Officer. Prior to that time, he served as our Executive Vice President and Chief Operating Officer since July 14, 2008. Mr. Fluet initially joined Urologix as a consultant in February 2008 to provide strategic analysis and tactical support. Prior to joining Urologix, Mr. Fluet was an Associate at Sapient Capital Management, LLC, a venture capital firm focused on early stage investing in the healthcare industry, primarily minimally invasive therapeutic medical devices. While at Sapient Capital, he worked with portfolio companies that raised multiple rounds of private financing, completed initial public offerings and were acquired. He was also actively involved in all aspects of early stage medical device company development including being a Board observer, product development, intellectual property development, regulatory analysis, financial modeling, milestone based budgeting, clinical research and strategic market assessment for portfolio companies or potential investments. Mr. Fluet graduated from Stanford University with a Bachelor of Science degree in mechanical engineering.

Mr. Fluet is qualified to serve on the Urologix Board because he brings an in-depth knowledge of our business and operations gleaned from his years of service as our Chief Operating Officer prior to being appointed as our Chief Executive Officer. Mr. Fluet also has a strong and broad base of experience in a variety of areas important to Urologix’s business, including fund raising, product development, intellectual property development, financial modeling, milestone based budgeting, clinical research and strategic market assessment.

Term Expiring at the Annual Meeting Following Fiscal 2016:

Christopher R. Barys, age 48, has served as a director since August 6, 2010. Since March of 2014, Mr. Barys has served as Vice President and General Manager of Covidien Interventional Lung Solutions, a division of Covidien plc (NYSE: COV), a global developer and manufacturer of clinical and home healthcare products. The Interventional Lung Solutions Division develops and markets minimally-invasive lung navigation products designed to access difficult to reach areas in the lungs. From May 2011 until February of 2014, Mr. Barys served as a General Manager of the I-Flow Division of Kimberly-Clark Healthcare, an operating segment of Kimberly-Clark Corporation (NYSE: KMB), a global health and personal care products company. The I-Flow Division develops and markets drug delivery systems and products for post-surgical pain relief and surgical site care. From June 2010 to April 2011, Mr. Barys consulted for a variety of medical device companies globally. From July 2009 to June 2010, Mr. Barys served as the Chief Operating Officer of FlowCardia, Inc., a privately held developer of endovascular products for the treatment of chronic total occlusions that was acquired by C. R. Bard, Inc. in April 2010. From November 2007 to July 2009, he served as FlowCardia’s Executive Vice President, Sales and Marketing. From November 2005 to November 2007, Mr. Barys served as the Vice President, Sales and Marketing, Peripheral Vascular Systems for Edwards Lifesciences Corporation, a publicly-held medical device company with products and technologies designed to treat advanced cardiovascular disease (NYSE: EW). Mr. Barys received a Bachelor of Science degree in marketing from Northern Illinois University.

Mr. Barys is qualified to serve as a director of Urologix because of his significant sales and marketing and general management expertise developed through executive positions in medical device companies. We believe that Mr. Barys will provide our Board with insight into sales and marketing strategy development, campaign development and execution, implementing programs to improve sales force effectiveness and operational efficiencies.

PROPOSAL 1:
ELECTION OF DIRECTORS

Proposal 1 is the election of two directors to serve until the Annual Meeting of Shareholders following our fiscal year 2017 or until their successors are elected and shall qualify. Upon recommendation of the Governance/Nominating Committee, the Board of Directors has nominated for election Sidney W. Emery and Patrick D. Spangler to serve as directors until the Annual Meeting following fiscal year 2017. Mr. Emery and Mr. Spangler meet the criteria applicable to Board nominees that are set out in our Governance Guidelines and summarized under “Corporate Governance – Director Nominations – Criteria for Nomination to the Board; Diversity Considerations.”

It is intended that proxies will be voted for the named nominees for this Proposal 1. The Board of Directors believes that the nominees will be able to serve, but should they be unable to serve as a director, the persons named in the proxies have advised us that they will vote for the election of such substitute nominee or nominees as the Board of Directors may propose.

Information Regarding the Nominees

Sidney W. Emery, Jr., age 68, has served as a director since October 2005. In February 2010, Mr. Emery became the owner and Chief Executive Officer of Supply Chain Services, Inc., a privately-held provider of barcode scanning solutions located in Oakdale, Minnesota. From March 1998 until his retirement in September 2008, Mr. Emery served as the Chief Executive Officer and President of MTS Systems Corporation (Nasdaq: MTSC), a global supplier of mechanical testing systems and industrial position sensors.  Mr. Emery has also served as the chairman of the Board of Directors of MTS Systems Corporation from January 1999 until September 2008.  Mr. Emery previously held various management and executive positions with the Bendix Corporation and later Honeywell, Inc. after serving 10 years as an officer in the U.S. Navy.  Since May 2007, Mr. Emery has served as a director of ALLETE, Inc., a diversified energy company (NYSE: ALE).  He is also a director of Field Solutions, Inc., a privately held company providing independent field service technician resources and headquartered in Minnetonka, Minnesota. Mr. Emery is also Chairman of the Board of Governors at the University of St. Thomas School of Engineering. Mr. Emery received a Bachelor of Science degree in engineering from the U.S. Naval Academy and a Doctorate in industrial engineering from Stanford University.

Mr. Emery is qualified to serve on the Urologix Board because of his demonstrated leadership and executive management experience, including serving as a Chief Executive Officer of a public company. Mr. Emery is also an audit committee financial expert as that term is defined under the rules of the Securities and Exchange Commission.

Patrick D. Spangler, age 59, has served as our director since August 15, 2010. Since September 2, 2014, Mr. Spangler has served as Chief Financial Officer of VigiLanz, a digital healthcare technology company that provides clinical decision support for hospitals. From September 2012 to September 2014, Mr. Spangler served as the Senior Vice President and Chief Financial Officer of Healthland, a provider of healthcare information technology solutions to rural community and critical access hospitals. From September 2010 to August 2012, Mr. Spangler served as the Chief Financial Officer of Epocrates, Inc. (Nasdaq: EPOC), a provider of mobile drug reference tools to healthcare professionals and interactive services to the healthcare industry. From May 2010 to September 2010, Mr. Spangler acted as an operating partner of and CFO advisor to Three Fields Capital, a private equity and venture capital firm. From June 2009 to April 2010, he was the Chief Financial Officer of High Jump Software, a privately-held software company. From March 2005 to January 2009, Mr. Spangler served as the Senior Vice President and Chief Financial Officer of ev3, Inc., a medical device company that was publicly-held until it was acquired in July 2010. Mr. Spangler has a Bachelor of Science degree in accounting from the University of Minnesota, a Master of Business Administration degree from University of Chicago and a Master of Business Taxation degree from the University of Minnesota.

Mr. Spangler is qualified to serve on the Urologix Board because of his significant executive management and finance experience at both public and private companies. In particular, Mr. Spangler’s finance experience will allow him to ably assist our Board and Audit Committee with oversight of our finance and accounting functions and the development and execution of our financial strategies. Mr. Spangler is also an audit committee financial expert as that term is defined under the rules of the Securities and Exchange Commission.

Vote Required for Proposal 1

Under Minnesota law and our bylaws, directors are elected by a plurality of the votes cast at the meeting by holders of common stock voting for the election of directors. This means that since shareholders will be electing two directors for three year terms, the two nominee receiving the highest number of votes will be elected.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”
THE ELECTION OF EACH NOMINEE IDENTIFIED IN THIS PROPOSAL 1
_______________________________________

CORPORATE GOVERNANCE

Board Independence

The Board of Directors undertook a review of director independence in August 2014. As part of that process, the Board reviewed all transactions and relationships between each director (or any member of his immediate family) and Urologix, our executive officers and our auditors, and other matters bearing on the independence of directors. As a result of this review, the Board affirmatively determined that each of Messrs. Barys, Emery, Dann and Spangler is independent according to the “independence” definition of the Nasdaq Listing Rules. Mr. Fluet is not independent because he currently serves as our Chief Executive Officer and Interim Chief Financial Officer.

Committees of the Board of Directors and Committee Independence

The Board of Directors has established a Compensation Committee, an Audit Committee and a Governance/Nominating Committee. The composition and function of these committees are set forth below.

Compensation Committee. The Compensation Committee reviews and approves the compensation and other terms of employment of our Chief Executive Officer and other senior management of Urologix. Among its other duties, the Compensation Committee administers our stock-based compensation plans (such as our 2012 Stock Incentive Plan), and cash incentive plans for executive officers, and recommends director compensation. The Compensation Committee annually reviews the Chief Executive Officer’s compensation and the Chief Executive Officer’s performance. In connection with its review of compensation of executive officers or any form of incentive or performance based compensation, the Committee will also review and discuss risks arising from our compensation policies and practices.

The charter of the Compensation Committee requires that the Committee consist of no fewer than two members, each of whom must be “independent” according to the Nasdaq Listing Rules, a non-employee director under Securities and Exchange Commission rules and an “outside director” for purposes of Section 162(m) of the Internal Revenue Code. Each member of our Compensation Committee meets these requirements. A copy of the current charter of the Compensation Committee is available on our website, www.urologix.com, by following the link to “Corporate Governance” in the “Investors” section.

The current members of the Compensation Committee are Messrs. Emery (Chair), Barys and Spangler. During fiscal year 2014, the Compensation Committee met three (3) times and also met in executive session without management present for one (1) of these meetings.

Governance/Nominating Committee. The Governance/Nominating Committee is charged with the responsibility of identifying, evaluating and approving qualified candidates to serve as our directors, ensuring that the Board and governance policies are appropriately structured, reviewing and recommending changes to our governance guidelines, overseeing Board and committee evaluations, and reviewing and making recommendations on succession plans for the Chief Executive Officer. The Governance/Nominating Committee is also responsible for the leadership structure of our Board, including the composition of the Board and its committees, and an annual review of the position of Chairman of the Board. As part of its annual review, the Governance/Nominating Committee is responsible for identifying individuals qualified to serve as Chairman and making recommendation to the Board of Directors for any changes in such position. The Governance/Nominating Committee also has responsibility for overseeing our annual process of self-evaluation by members of the committees and the Board of Directors as a whole.

The charter of the Governance/Nominating Committee requires that this committee consist of no fewer than two Board members who satisfy the “independence” requirements of the Nasdaq Listing Rules. Each member of the Governance/Nominating Committee meets these requirements. A copy of the current charter of the Governance/Nominating Committee is available by following the link to “Corporate Governance” in the “Investor” section of our website at www.urologix.com. A copy of our current Governance Guidelines is also available in the “Corporate Governance” section of our website.

The current members of the Governance/Nominating Committee are Messrs. Barys (Chair), Dann, Emery and Spangler. During fiscal year 2014, the Governance/Nominating Committee met two (2) times.

Audit Committee. The Audit Committee assists the Board by reviewing the integrity of our financial reporting processes and controls; the qualifications, independence and performance of the independent auditors; and compliance by us with certain legal and regulatory requirements. The Audit Committee has the sole authority to retain, compensate, oversee and terminate the independent auditors, as well as the responsibility to pre-approve all audit and non-audit services performed by the independent auditor. The Audit Committee reviews our annual audited financial statements, quarterly financial statements and related filings with the Securities and Exchange Commission. The Audit Committee reviews reports on various matters, including our critical accounting policies, significant changes in our selection or application of accounting principles, and our internal control processes. Under its charter, the Audit Committee exercises oversight of significant risks relating to financial reporting and internal control over financial reporting, including discussing these risks with management and the independent auditor and assessing the steps management has taken to minimize these risks.

The charter of the Audit Committee requires that this committee consists of three or more “independent” directors under the Nasdaq Listing Rules and that the directors also be independent under Securities and Exchange Commission Rule 10A-3. The members of the Audit Committee must also meet the experience and sophistication requirements of the Nasdaq Listing Rules. Each member of the Audit Committee meets the requirements of the charter. Our Governance/Nominating Committee and our Board of Directors also have reviewed the education, experience and other qualifications of each of the members of the Audit Committee. After such review, upon the recommendation of the Governance/Nominating Committee, the Board of Directors has determined that Messrs. Emery and Spangler each meet the Securities and Exchange Commission definition of an “audit committee financial expert.” A report of the Audit Committee is set forth below.

A copy of the current charter of the Audit Committee is available by following the “Corporate Governance” link in the “Investor” section of our website at www.urologix.com. Our Audit Committee consists of Messrs. Spangler (Chair), Emery, and Barys. During fiscal year 2014, the Audit Committee met eight (8) times, including two (2) times in executive session without management present for these meetings.

Board Leadership Structure

Currently, the leadership structure of Urologix’ Board consists of a non-executive chairman of the Board, who also serves in the role of lead director, and three standing committees that are each led by a chairman. The members of each committee are “independent directors” under the Nasdaq Listing Rules and meet the other similar independence requirements applicable to that committee. Our Chief Executive Officer is a director, but does not serve as chairman and does not serve on any committee.

The Governance/Nominating Committee believes that the current Board leadership structure is appropriate for Urologix at this time because it allows the Board and its committees to fulfill their responsibilities, draws upon the experience and talents of all directors, encourages management accountability to the Board, and helps maintain good communication among Board members and with management. Our current Board leadership structure is reflected in our Governance Guidelines and the Governance/Nominating Committee is empowered through its charter to consider and make changes to the structure if necessary.

Board’s Role in Risk Oversight

We face a number of risks, including financial, technological, operational, regulatory, strategic and competitive risks. Management is responsible for the day-to-day management of risks we face, while the Board has responsibility for the oversight of risk management. In its risk oversight role, the Board of Directors ensures that the processes for identification, management and mitigation of risk by our management are adequate and functioning as designed.

Our Governance Guidelines were amended in August 2010 to formalize the Board’s responsibility for risk oversight as our policy.

Our Board is actively involved in overseeing risk management and it exercises its oversight both through the full Board and through the three standing committees of the Board: the Audit Committee, the Compensation Committee and the Governance/Nominating Committee. The three standing committees exercise oversight of the risks within their areas of responsibility, as disclosed in the descriptions of each of the committees above and in the charters of each of the committees.

The Board and the three committees receive information used in fulfilling their oversight responsibilities through our executive officers and advisors, including our outside legal counsel and our independent registered public accounting firm. At meetings of the Board, management makes presentations to the Board regarding our business strategy, operations, financial performance, fiscal year budgets, technology, quality and regulatory, and other matters. Many of these presentations include information relating to the challenges and risks to our business and the Board and management actively engage in discussion on these topics. Each of the committees also receives reports from management regarding matters relevant to the work of that committee. These management reports are supplemented by information relating to risk from our advisors. Additionally, following committee meetings, the Board receives reports by each committee chair regarding the committee’s considerations and actions. In this way, the Board also receives additional information regarding the risk oversight functions performed by each of these committees.

Director Nominations

The Governance/Nominating Committee will consider candidates for Board membership suggested by its members, other Board members, as well as management and shareholders. Shareholders who wish to recommend a prospective nominee should follow the procedures set forth in Section 3.13 of our bylaws as described in the section of this proxy statement entitled “Shareholder Proposals for Nominees.”

Criteria for Nomination to the Board; Diversity Considerations. The Governance/Nominating Committee is responsible for identifying, evaluating and approving qualified candidates for nomination as directors. The committee has not adopted minimum qualifications that nominees must meet in order for the committee to recommend them to the Board of Directors, as the committee believes that each nominee should be evaluated based on his or her merits as an individual, taking into account our needs and the needs of the Board of Directors. The Governance/Nominating Committee evaluates each prospective nominee against the standards and qualifications set out in our Governance Guidelines, including:

In considering candidates for the Board, including the nominee for election at this Annual Meeting, the Governance/Nominating Committee considers the entirety of each candidate’s credentials with reference to these standards. The Governance/Nominating Committee also considers such other relevant factors as it deems appropriate.

While the Governance/Nominating Committee does not have a formal policy with respect to diversity, the Governance/Nominating Committee does believe it is important that the Board represent diverse viewpoints within the context of these standards. As part of the nominee selection process for this Annual Meeting, the Governance/Nominating Committee reviewed the knowledge, experience, skills, expertise, and other characteristics of the nominees and the other directors. The Governance/Nominating Committee considered how each director contributed to the diversity of the Board. Based upon that review, the Governance/Nominating Committee believes that the overall mix of the directors’ backgrounds contributes to a diversity of viewpoints that enhances the quality of the Board’s deliberations and decisions.

In reviewing prospective nominees, the Governance/Nominating Committee reviews the number of public-company Boards on which a director nominee serves to determine if the nominee will have the ability to devote adequate time to the work of our Board and its committees. Under our Governance Guidelines, non-employee directors generally may not serve on more than five boards of other publicly owned companies, provided that the service does not adversely affect the director’s ability to perform his or her duties as a Urologix director.

The Governance/Nominating Committee will consider persons recommended by the shareholders using the same standards used for other nominees.

Process for Identifying and Evaluating Nominees. The process for identifying and evaluating nominees to the Board of Directors is initiated by identifying a slate of candidates who meet the criteria for selection as a nominee and have the specific qualities or skills being sought based on input from members of the Board and, if the Governance/Nominating Committee deems appropriate, a third-party search firm. The Governance/Nominating Committee evaluates these candidates by reviewing the candidates’ biographical information and qualifications and checking the candidates’ references. One or more committee members will interview the prospective nominees in person or by telephone. After completing the evaluation, the committee makes a recommendation to the full Board of the nominees to be presented for the approval of the shareholders or for election to fill a vacancy.

Board Nominee for this 2014 Annual Meeting. The Governance/Nominating Committee selected the nominees for this 2014 Annual Meeting in August 2014. Mr. Emery, a nominee for election at this 2014 Annual Meeting, was elected by the shareholders at the 2005 Annual Meeting of Shareholders. Mr. Spangler, also a nominee for election at this 2014 Annual Meeting, was elected by the shareholders at the 2010 Annual Meeting of Shareholders. We have not engaged a third-party search firm to assist us in identifying potential director candidates, however, the Governance/Nominating Committee may choose to do so in the future

Shareholder Proposals for Nominees. The Governance/Nominating Committee will consider written proposals from shareholders for nominees for director.

Any such nominations should be submitted to the Governance/Nominating Committee in care of the Secretary of Urologix and should include the following information: (i) the name and address of record of the shareholder who intends to make the nomination; (ii) a representation that the shareholder is a holder of record of shares of the Company entitled to vote generally at meeting for the election of directors and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (iii) the name, age, business and residence addresses, and principal occupation or employment of each nominee; (iv) a description of all arrangements or understandings between the shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the shareholder; (v) such other information regarding each nominee proposed by such shareholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission; and (vi) the consent of each nominee to serve as a director of the Company if so elected.

To be considered, the written notice must be submitted in the time frames described in our bylaws and under the caption “Shareholder Proposals and Shareholder Nominees for 2014 Annual Meeting” below.

Director Attendance at Board, Committee and Annual Shareholder Meetings

During fiscal year 2014, the Board of Directors met twelve (12) times. Each director in fiscal year 2014 attended at least seventy-five percent of the meetings of the Board of Directors and Board committees on which the director served. We do not have a formal policy on attendance at meetings of our shareholders. However, we encourage all Board members to attend shareholder meetings when held in conjunction with a meeting of the Board of Directors. The 2014 Annual Meeting of Shareholders will be held in conjunction with a meeting of the Board of Directors. One (1) director then serving attended the 2013 Annual Meeting of Shareholders.

Communications with Directors

The Board of Directors has designated Mitchell Dann, the Chairman of our Board of Directors, as our lead director. The lead director will act as chair of executive sessions of the Board. Shareholders may communicate with the Board as a group, the chair of any committee of the Board of Directors or any individual director by sending an e-mail to lead.director@urologix.com or by directing the communication in care of the lead director, at the address set forth on the front page of this proxy statement.

Code of Ethics

We have adopted a code of ethics that applies to all directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or persons performing similar functions. This code of ethics is included in our Code of Ethics and Business Conduct. The Code of Ethics and Business Conduct is publicly available by following the “Corporate Governance” link in the “Investor” section of our website at www.urologix.com. To the extent permitted, we intend to disclose any amendments to, or waivers from, the code of ethics applicable to our principal executive officer, principal financial officer, principal accounting officer or persons performing similar functions or with respect to the required elements of the code of ethics on our website at www.urologix.com by following the “Corporate Governance” link in the “Investor” section.

REPORT OF THE AUDIT COMMITTEE

This is a report of the Audit Committee of the Board of Directors of Urologix for the year ended June 30, 2014. This report shall not be deemed incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934 and shall not otherwise be deemed to be filed under either such Act.

In accordance with its charter, the Audit Committee reviewed and discussed the audited financial statements with management and Baker Tilly Virchow Krause LLP, our independent registered public accounting firm. The discussions with Baker Tilly Virchow Krause LLP also included the matters required by Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1, AU Section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T.

Baker Tilly Virchow Krause LLP provided to the Audit Committee the written disclosures and the letter regarding its independence as required by the Public Company Accounting Oversight Board. This information was discussed with Baker Tilly Virchow Krause LLP.

Based on the discussions with management and Baker Tilly Virchow Krause LLP, the Audit Committee’s review of the representations of management and the report of Baker Tilly Virchow Krause LLP, the Audit Committee recommended to our Board of Directors that the audited financial statements be included in our Annual Report on Form 10-K for the year ended June 30, 2014, filed with the Securities and Exchange Commission.

Submitted by the Audit Committee of the Board of Directors

EXECUTIVE OFFICERS

Set forth below is biographical and other information for our current executive officers. Information about Gregory J. Fluet, our Chief Executive Officer, may be found in this proxy statement under the heading “Proposal 1: Election of Directors.”

Lisa Ackermann was appointed as our Vice President, Sales and Marketing on June 16, 2011 and was promoted to Executive Vice President, Sales and Marketing on April 19, 2012. From September 1999 to June 2011, Ms. Ackermann was employed by Ethicon Endo-Surgery, Inc. (“EES”), a Johnson & Johnson Company.  EES makes and sells minimally invasive surgical products and advanced sterilization products.  Most recently, Ms. Ackermann served as Group Product Director, Endoscopy for EES from May 2010 to June 2011, with responsibility for marketing management of a $500 million portfolio of products and a team of brand managers.  As Group Product Director, she designed and implemented strategies to protect and grow market leading EES categories, including trocars, endoligation, and specimen retrieval.  From February 2007 to May 2010, Ms. Ackermann was Sales Director, Bariatrics.  In that role, she was responsible for leadership of ten division managers and seventy-five sales representatives in the US.  In addition to creating a culture of teamwork, development, and accountability, she prepared the sales organization to successfully execute the largest product launch in EES history with the Realize™ gastric band, while growing the endocutter base business in gastric bypass and sleeve gastrectomy procedures.  From January 2005 to February 2007, Ms. Ackermann was Manager, Sales Compensation for EES with responsibility for development, implementation and monitoring compensation plans for multiple sales teams, as well as management of an annual budget, commission projection modeling and developing process improvements. She also served as interim Director of Sales Planning and Operations from July to October 2006 where she was responsible for organizational design changes, deployment projects, talent development and budget management.

EXECUTIVE COMPENSATION

Summary of Executive Compensation

The following is an explanation of compensation during fiscal year 2014 to the persons who are referred to in this proxy statement as the “named executive officers”:

This section is intended to provide a framework within which to understand the actual compensation awarded to or earned by the named executive officers during fiscal year 2014, as reported in the compensation tables and accompanying narrative sections appearing on pages 24 to 32 of this proxy statement.

For a description of employment, severance and change in control arrangements with the named executive officers please see “Executive Compensation – Employment and Change In Control Arrangements.”

Role of the Compensation Committee in the Compensation Process

The responsibility of the Compensation Committee is to develop our philosophy and structure for executive compensation, review and approve the compensation and other terms of employment of our Chief Executive Officer and other executive officers, approve and oversee our cash incentive plans, and approve any other performance-based compensation and metrics. The Compensation Committee also oversees our stock-based compensation plans, including our 2012 Stock Incentive Plan (the “2012 Plan”), and cash incentive plans for executive officers and recommends Board compensation. The Compensation Committee annually reviews the Chief Executive Officer’s compensation and evaluates the Chief Executive Officer’s performance.

In carrying out its duties, the Compensation Committee reviews and approves specific compensation programs, including a bonus program tied to our financial performance and base salary amounts.

Under its charter, the Compensation Committee has the authority to engage the services of outside advisors, experts and others to assist it in performing its duties. While the Compensation Committee has used the services of a compensation consultant in the past, it did not do so in determining fiscal year 2014 compensation for the named executive officers. The Compensation Committee may choose to use the services of a compensation consultant in the future. In determining fiscal year 2014 compensation, the Compensation Committee reviewed certain compensation related information and recommendations from certain members of management, as described below.

Role of Management in the Compensation Process

To determine the in-service compensation for named executive officers other than the Chief Executive Officer, the Compensation Committee solicits input from the Chief Executive Officer regarding the duties and responsibilities of the other executive officers and the results of their performance reviews. The Chief Executive Officer also recommends to the Compensation Committee the base salary for all named executive officers, the amount of potential awards under the cash incentive compensation program, and the awards under our long-term equity program. The Chief Executive Officer also recommends to the Compensation Committee the performance goals under any performance-based compensation program, which for fiscal year 2014 was the incentive plan described below.

None of the named executive officers, other than the Chief Executive Officer, has a role in establishing executive compensation. From time to time, the named executive officers are invited to attend meetings of the Compensation Committee. However, no named executive officer attends any executive session of the Compensation Committee or is present during deliberations or determination of such named executive officer’s compensation.

Fiscal Year 2014 Base Salaries

On August 14, 2013, the Compensation Committee recommended, and the Board of Directors approved, no adjustments for fiscal year 2014 to the annual base salaries for the named executive officers from the amounts in effect for fiscal year 2013. Accordingly, the annual base salaries for the named executive officers for fiscal year 2014 were as follows: Mr. Fluet, $200,000 and Ms. Ackerman $210,000.

Design of and Payouts Under the Fiscal Year 2014 Incentive Plan

Our philosophy with respect to the compensation of executive officers is to provide competitive levels of compensation consistent with our annual and long-term performance goals, that recognize individual initiative, and assist us in attracting and retaining qualified executives. We believe that the fiscal year 2014 incentive plan, which is described below, is consistent with our philosophy.

On August 14, 2013, the Compensation Committee recommended, and the Board of Directors adopted, the 2014 incentive plan (the “2014 Incentive Plan”) and the performance goals under the 2014 Incentive Plan for the named executive officers. The Compensation Committee retained the discretion to modify the terms of the 2014 Incentive Plan and to grant cash bonuses or other compensation to the named executive officers outside the 2014 Incentive Plan.

The performance goals under the 2014 Incentive Plan for the named executive officers consist of our revenue for fiscal year 2014 and our cash balance at the end of fiscal year 2014, with these goals weighted 75% and 25%, respectively. The Compensation Committee also established minimum, target and maximum performance goals relating to revenue in fiscal year 2014 and approved a cash balance goal for fiscal year 2014. Under the 2014 Incentive Plan, achievement of the revenue goal at less than target level will result in a decreasing bonus until the achievement fails to meet the minimum, at which point the named executive officers are entitled to no bonus with respect to that measure. For the cash balance goal, the target amount is also the minimum amount of achievement that will result in any bonus relating to this measure and there is no adjustment in the bonus amounts for achievement beyond the target/minimum.

Management recommended that any bonus attributable to the revenue performance goal be paid in shares of the Company’s common stock. The Committee accepted this recommendation with respect to the Executives and all other participants in the 2014 Incentive Plan. On August 14, 2013, the Committee recommended and the Board approved the number of shares issuable to each participant in the 2014 Incentive Plan, including the Executives, if the Company’s revenue for fiscal year 2014 meets or exceeds the target level. If the Company’s revenue for fiscal year 2014 meets or exceeds the target level, the Executives will be issued the following number of shares of the Company’s common stock: Mr. Fluet, 75,000 shares; Mr. Smrdel, 30,375 shares; and Ms. Ackermann, 60,000 shares. Achievement of the revenue goal at less than target level will result in a decreasing number of shares until the achievement fails to meet the minimum revenue level, at which point the Executives and other participants in the 2014 Incentive Plan are entitled to no shares. Payouts under the 2014 Incentive Plan were made following the Compensation Committee’s determination after the end of the fiscal year to participants in the 2014 Incentive Plan who continued to be employed as of the date of such determination.

The Company’s revenue for fiscal year 2014 did not meet the minimum amount set by the Committee and no bonus was payable with respect to this performance goal. While the Company’s cash balance at the end of fiscal year 2014 exceeded the target level established by the Committee, under the terms of the 2014 Incentive Plan, the target amount was also the minimum and maximum amount and there was no adjustment in the bonus amount for achievement beyond the target. The Committee recommended and the Board approved a bonus for the cash balance performance goal at the target level. Accordingly, on August 13, 2014, the Committee recommended and the Board approved a bonus for achievement of the cash balance performance goal to Mr. Fluet of $25,000 and Ms. Ackermann of $20,000. No bonus was paid to Mr. Smrdel under the 2014 Incentive Plan.

Long-Term Equity Compensation

The long-term equity component of executive compensation is provided primarily through equity awards that are generally granted to executive officers in connection with their initial employment and periodically upon review of compensation levels, past performance and future potential.

The Compensation Committee believes that stock ownership by management and equity-based performance compensation arrangements are beneficial in aligning management and shareholder’s interest in enhancing shareholder value. Stock options are awarded at an exercise price equal to the fair market value on the date of grant and these options generally vest over a four-year period. The Compensation Committee’s policy is to grant all equity awards under shareholder approved equity compensation plans, such as the 2012 Plan.

In fiscal year 2014, the Compensation Committee granted stock options to purchase an aggregate of 191,500 shares of Urologix’ common stock to employees. Of these options granted in fiscal year 2014, options to purchase 102,500 shares were awarded to individuals who were named executive officers on the grant date, as described below.

On August 14, 2013, the Compensation Committee granted restricted stock and stock options under the 2012 Plan to Mr. Fluet, Mr. Smrdel and Ms. Ackermann for fiscal year 2013 performance.

The following table shows the number of shares underlying each award type granted to each executive:

The restrictions on the shares of restricted stock lapsed on August 14, 2014, the one year anniversary of the date of grant. These awards were made after consideration by the Compensation Committee of the factors stated above and also the Compensation Committee’s desire to use long-term equity compensation, particularly the restricted stock awards, for retention of the named executive officers. Mr. Smrdel’s restricted stock was forfeited as a result of his resignation on August 13, 2014. Mr. Smrdel’s resignation took place one day prior to the date the restrictions would have lapsed.

On August 13, 2014, the Compensation Committee granted restricted stock awards under the 2012 Plan to Mr. Fluet and Ms. Ackermann for fiscal year 2014 performance. The following table shows the number of shares underlying each award type granted to each executive:

The restrictions on 25% of the shares of restricted stock will lapse on August 13, 2015, and 25% will lapse on each of three consecutive anniversary dates thereafter. These awards were made after consideration by the Compensation Committee of the factors stated above and also the Compensation Committee’s desire to use long-term equity compensation, particularly the restricted stock awards, for retention of the named executive officers.

Summary Compensation Table

The following table summarizes all compensation for each of the last two fiscal years awarded to, earned by or paid to the named executive officers: (i) Gregory J. Fluet, current Chief Executive Officer and interim Chief Financial Officer, who began serving in the CEO role on an interim basis beginning on November 30, 2012 and on a non-interim basis beginning January 25, 2013 and who previously served as our Executive Vice President and Chief Operating Officer; (ii) Brian J. Smrdel, our Chief Financial Officer until August 13, 2014; and (v) Lisa A. Ackermann, our Executive Vice President, Sales and Marketing.

Grants of Plan-Based Awards in 2014

The following table sets forth certain information concerning equity and non-equity plan-based awards granted to the named executive officers during the fiscal year ended June 30, 2014:

Outstanding Equity Awards At Fiscal Year-End – Stock Options

The following table sets forth certain information concerning option awards outstanding to the named executive officers at June 30, 2014:

Outstanding Equity Awards At Fiscal Year-End – Restricted Stock Awards

The following table sets forth certain information concerning stock awards outstanding to the named executive officers at June 30, 2014.

2014 Option Exercises and Stock Vested

During fiscal 2014, there were no stock option awards held by certain executive officers that were exercised.

During fiscal year 2014, restricted stock awards held by certain executive officers vested as follows:

Employment and Change In Control Arrangements

Agreements and Arrangements with the Named Executive Officers

Letter Agreement with Gregory J. Fluet

We have entered into letter agreements dated July 14, 2008 with Gregory J. Fluet regarding employment and change in control arrangements. The offer letter set out the initial compensation of Mr. Fluet, which included annual base compensation of $150,000 for fiscal year 2009 and participation in the cash bonus program for executive officers for our fiscal year 2009 with a bonus opportunity of 30% of his base salary at the target level of achievement. Mr. Fluet also was reimbursed for a maximum of $25,000 in costs and expenses associated with temporary housing and relocation. However, the offer letter provided that Mr. Fluet was required to reimburse us for these amounts if his employment with us ended prior to the one-year anniversary of his start date. Mr. Fluet also participates in our health, dental and life insurance benefit plans on the same basis as our other employees.

Pursuant to the offer letter, Mr. Fluet was granted an incentive stock option on July 14, 2008 to purchase 75,000 shares of our common stock. The option has an exercise price of $1.85, which is equal to the fair market value of our common stock as of the grant date. The option vests with respect to 25% of the shares underlying the option on the first anniversary of the date of grant and, thereafter, as to 1/36 of the shares underlying the option on the monthly anniversary of the date of grant for each of the next 36 months.

In connection with his employment, Mr. Fluet entered into a letter agreement relating to change in control benefits, which was amended on April 23, 2012. Under this amended letter agreement, if a Change in Control occurs and Mr. Fluet’s employment is terminated without Cause, or by Mr. Fluet for Good Reason, within twelve months of a Change in Control, we will pay Mr. Fluet a severance payment in cash in a single sum within sixty days of the date of termination equal to 100% of the sum of his annual target compensation (base salary and bonus) in effect on such date. In addition, we will continue Mr. Fluet’s health, dental and life insurance benefits for a period of twelve months, with Mr. Fluet obligated to pay the employee’s share of the premiums for such benefits. Except with respect to this letter agreement, Mr. Fluet’s employment with Urologix is “at will.” Mr. Fluet also entered into our standard agreement with employees governing assignment of inventions, confidential information and non-competition.

Letter Agreement with Lisa A. Ackermann

On June 3, 2011, we entered into an offer letter agreement with Lisa A. Ackermann in which she agreed to serve as our Vice President, Sales and Marketing beginning on June 16, 2011. The offer letter set out the initial compensation of Ms. Ackermann, which included annual base compensation of $210,000 and participation in the cash incentive program for executive officers for fiscal year 2012 on terms determined by the Compensation Committee. Ms. Ackermann is provided with office space in Cincinnati, Ohio and a car allowance of $650 per month. Ms. Ackermann also participates in health, dental and life insurance benefit plans on the same basis as our other employees.

Pursuant to the offer letter, Ms. Ackermann was granted an incentive stock option on June 16, 2011 to purchase 100,000 shares of our common stock. The option has an exercise price of $1.03, which is equal to the fair market value of our common stock as of the grant date. The option vests with respect to 25% of the shares underlying the option on the first anniversary of the date of grant and, thereafter, as to 1/36 of the shares underlying the option on the monthly anniversary of the date of grant for each of the next 36 months. On June 16, 2011, Ms. Ackermann was also granted 45,632 shares of restricted stock on June 16, 2011 with the restrictions and risk of forfeiture lapsing as to 75% of the shares on the first anniversary of the grant date, and then as to the remaining 25%, ratably on each of the subsequent three anniversaries of the grant date.

On April 23, 2012, Ms. Ackermann entered into our current letter agreement relating to change in control benefits. Under this letter agreement, if a Change in Control occurs and Ms. Ackermann’s employment is terminated without Cause, or by Ms. Ackermann for Good Reason, within twelve months of a Change in Control, we will pay Ms. Ackermann a severance payment in cash in a single sum within sixty days of the date of termination equal to 100% of the sum of her annual target compensation (base salary and bonus) in effect on such date. In addition, we will continue Ms. Ackermann’s health, dental and life insurance benefits for a period of twelve months, with Ms. Ackermann obligated to pay the employee’s share of the premiums for such benefits. Except with respect to this letter agreement, Ms. Ackermann’s employment with us is “at will.” Ms. Ackermann also entered into our standard agreement with employees governing assignment of inventions, confidential information and non-competition. Effective April 19, 2012, the Board of Directors promoted Ms. Ackermann to Executive Vice President, Sales and Marketing upon the recommendation of the Compensation Committee.

All of the foregoing compensation determinations and arrangements were recommended or approved by the Compensation Committee. In addition, all stock option grants or restricted stock grants were made under the 1991 Amended and Restated Stock Option Plan and the 1991 Plan contains provisions relating to a change in control (as defined under the 1991 Plan) that govern the awards made under the 1991 Plan, including those made to the named executive officers.

Letter Agreement with Brian J. Smrdel

Effective August 13, 2014, we entered into a letter agreement with Brian J. Smrdel pursuant to which Mr. Smrdel resigned as our Chief Financial Officer. Following termination of Mr. Smrdel’s employment, we agreed to pay Mr. Smrdel a single payment in the amount of $2,596.15, representing one weeks pay at Mr. Smrdel’s current base salary. We also agreed to pay for Mr. Smrdel’s group health insurance until the earlier of August 30, 2014 or the first day Mr. Smrdel received coverage under another group insurance plan. This August 13, 2014 letter agreement superceded the letter agreement dated April 29, 2010, which was amended on April 23, 2012, between Mr. Smrdel and the Company relating to employment and change of control payments. Mr. Smrdel also entered into the Company’s standard agreement with employees governing assignment of inventions, confidential information and non-competition and that agreement continued in effect following the August 13, 2014 letter agreement.

Certain Definitions Relating to Change in Control

Each of the letter agreements with Mr. Fluet and Ms. Ackermann described above incorporates the following definitions of “change in control,” “cause” and “good reason” where “you” refers to the executive officer party to the letter agreement.

Additionally, the 1991 and 2012 Plans provide that upon a change of control, as defined in the plan, each outstanding stock option and each award of restricted stock, including those held by the named executive officers, will become exercisable in full as to all of the shares covered thereby without regard to any installment exercise or vesting provisions and all restrictions on the restricted stock will lapse. For the purposes of the 1991 and 2012 Plans, “change of control” means any of the following:

For awards granted under the 1991 and 2012 Plans, if a change in control (as defined in the plan) occurs, and if the agreements effectuating the change in control do not provide for the assumption or substitution of all stock incentives granted under the 1991 and 2012 Plans, with respect to any stock incentive granted under the 1991 and 2012 Plans that is not so assumed or substituted, stock incentives shall immediately vest and be exercisable and any restrictions thereon shall lapse. For the purposes of the 1991 and 2012 Plans, “change in control means a change in control which would be required to be reported in response to Item 5.01 of Form 8-K promulgated under the Exchange Act (or any successor item of Form 8-K), whether or not Urologix is then subject to such reporting requirement, including without limitation, if:

Notwithstanding the foregoing, unless the Compensation Committee determines at or prior to the change in control, no stock incentive that is subject to any performance criteria for which the performance period has not expired, shall accelerate at the time of a change in control.

Equity Granting Process

Stock awards to our executive officers and senior management are typically granted annually in conjunction with the review of the individual performance of our executive officers. This review takes place at a regularly scheduled meeting of the Compensation Committee typically held in August. These regular grants of stock options are approved in advance by the Compensation Committee. Stock options are also granted in connection with the hiring of new employees, with the option grant effective as of the date of approval by the Compensation Committee. The new hire grants are either approved in advance for award on the first day of employment or subsequent to the first day of employment. The Compensation Committee’s policy is to grant all equity awards under shareholder approved equity compensation plans, such as the 1991 and 2012 Plans.

Under the 2012 Plan, the Board may delegate to our executive officers the authority to grant options to persons who are not our executive officers. In the 2014 fiscal year, the Board of Directors did not exercise this delegation authority.

Our policy is that the exercise price of all stock options is set at the closing price of our common stock as reported by the OTCQB Marketplace as of the date of grant, which is the date of the action by the Compensation Committee or Board of Directors selecting an award recipient, determining the number of shares to be awarded under the option, and establishing all other material terms of the stock option.

PROPOSAL 2:
ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION

Provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) require public companies to hold advisory (non-binding) votes on executive compensation. The advisory vote on executive compensation is commonly known as “say-on-pay”. The Dodd-Frank Act say-on-pay requirements are first applicable to Urologix with this 2014 Annual Meeting. Accordingly, the Board of Directors is asking shareholders to cast an advisory vote on named executive officer compensation as described in this proxy statement.

As described in detail in the section entitled “Executive Compensation – Explanation of Compensation,” our executive compensation programs are designed to attract, motivate, and retain our named executive officers. Under these programs, our named executive officers are rewarded for the achievement of specific annual goals that we believe are critical to our success and are rewarded through equity only through the realization of increased shareholder value. Shareholders are encouraged to read the Executive Compensation section of this proxy statement for a more detailed discussion of our executive compensation programs, including information about the fiscal year 2014 compensation of our named executive officers.

We are asking our shareholders to indicate their support for our named executive officer compensation as described in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives our shareholders the opportunity to express their views on our named executive officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this proxy statement. 

Accordingly, we ask our shareholder to vote “FOR” the following resolution at the Annual Meeting:

RESOLVED, that the shareholders of Urologix, Inc. approve, on an advisory basis, the compensation of the named executive officers, as disclosed pursuant to the rules of the Securities and Exchange Commission in Urologix’s proxy statement for the 2014 Annual Meeting of Shareholders.

Vote Required for Proposal 2

Approval of this Proposal 2 requires the affirmative vote of the holders of the majority of the shares of common stock represented at this Annual Meeting and entitled to vote on this Proposal 2. The advisory vote will not be binding on the Compensation Committee or the Board of Directors. However, they will carefully consider the outcome of the vote and take into consideration concerns raised by shareholders when determining future compensation arrangements. Proxies will be voted in favor of Proposal 2 unless otherwise indicated.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”
ADVISORY APPROVAL OF NAMED EXECUTIVE OFFICER COMPENSATION

_______________________________________

DIRECTOR COMPENSATION

Our non-employee directors received the following cash amounts for Board and committee service in fiscal year 2014: $1,500 per Board meeting held in person, $750 per Board meeting held telephonically, and $750 per committee meeting. In addition, each chair of a committee received an annual retainer of $5,000. For fiscal year 2014, the non-executive Chairman, who was also the lead director, received an annual retainer of $20,000 for service in these two roles. If the lead director had not been the non-executive Chairman, the lead director would have received an annual retainer of $5,000. Each director is also reimbursed for expenses associated with attending Board of Directors and committee meetings.

Mitchell Dann was appointed as our lead director, in addition to his position as Chairman of the Board, in August 2008 and served in those capacities also in fiscal year 2014. During fiscal year 2014, Christopher R. Barys, Sidney W. Emery, Jr., and Patrick D. Spangler each chaired one of the three committees of our Board.

Each of Messrs. Barys, Dann, Emery, and Spangler received an award of restricted stock under the 2012 Plan with the number of shares of restricted stock equal to $22,500 divided by the closing price of our common stock on the date of the 2013 Annual Meeting, rounded up to the next whole share, subject to a maximum of 50,000 shares per non-employee director. The restricted stock award was granted on the date of the 2013 Annual Meeting and the restrictions on the restricted stock will lapse on the first business day immediately prior to the date of the 2014 Annual Meeting of Shareholders if the director is serving as a director as of such date.

The Compensation Committee recommended and the Board of Directors approved on August 13, 2014 an award of restricted stock to each non-employee director serving as a member of the Board immediately after this Annual Meeting, with the number of shares of restricted stock equal to $5,000 divided by the closing price of our common stock on the date of the Annual Meeting, rounded up to the next whole share, subject to a maximum of 50,000 shares per non-employee director. The restricted stock award will be granted under the 2012 Plan on the date of the Annual Meeting. The restrictions on the restricted stock will lapse on the first business day immediately prior to the date of the 2015 Annual Meeting of Shareholders if the director is serving as a director as of such date.

The following table shows, for fiscal year 2014, the cash and other compensation earned by each of the directors serving in fiscal year 2014. Mr. Fluet, who currently serves as our Chief Executive Officer and a director, receives no compensation for Board service.

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

Since the beginning of fiscal year 2014, we have not entered into any transaction and there are no currently proposed transactions, in which we were or are to be a participant and the amount involved exceeds $120,000 and in which any related person had or will have a direct or indirect material interest.

The charter of our Audit Committee provides that the Audit Committee is responsible for reviewing and approving the terms and conditions of all of transactions we enter into in which an officer, director or 5% or greater shareholder or any affiliate of these persons has a direct of indirect material interest. Our Code of Ethics and Business Conduct, which is applicable to all of our employees and directors, also prohibits our employees, including our executive officers, and our directors from engaging in conflict of interest transactions. Requests for waivers or requests for consents by our executive officers and directors under our Code of Ethics and Business Conduct must be made to the Audit Committee.

We have adopted a related person transaction approval policy describing policies and procedures for the review, approval or ratification of any transaction required to be reported in our filings with the Securities and Exchange Commission. Our policy applies to any financial transaction, arrangement or relationship or any series of similar transactions, arrangements or relationships in which our company is a participant and in which a related person has a direct or indirect interest.  Through the policy, the Audit Committee has also identified and pre-approved certain transactions with related persons, including:

The Audit Committee must approve any related person transaction subject to the policy before commencement of the related party transaction.  If pre-approval is not feasible, the Audit Committee may ratify, amend or terminate the related person transaction.  The Audit Committee will analyze the following factors, in addition to any other factors the Committee deems appropriate, in determining whether to approve a related party transaction:

The Audit Committee may, in its sole discretion, approve or deny any related person transaction. Approval of a related person transaction may be conditioned upon our company and the related person taking such precautionary actions, as the Audit Committees deems appropriate.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers, and persons who own 10% or more of a registered class of our equity securities, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of our common stock and our other equity securities. These insiders are required by Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) forms they file, including Forms 3, 4 and 5. To our knowledge, our directors, officers and owners of 10% or more of our common stock timely filed all required Section 16(a) reports during the fiscal year ended June 30, 2014.

PROPOSAL 3:
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

 The Audit Committee has selected Baker Tilly Virchow Krause LLP as our independent registered public accounting firm to audit our financial statements for the fiscal year ending June 30, 2015, and to perform other appropriate audit-related services. While the Audit Committee retains the sole authority to retain, compensate, oversee and terminate the independent registered public accounting firm, the Audit Committee is submitting the selection of Baker Tilly Virchow Krause LLP for ratification. In the event the appointment of Baker Tilly Virchow Krause LLP is not ratified by the shareholders, the Audit Committee will reconsider the selection.

The affirmative vote of the holders of a majority of the shares of common stock represented at this Annual Meeting and entitled to vote is required to approve the ratification of the appointment of the independent registered public accounting firm, provided that the total number of shares that vote on the proposal represent a majority of our shares outstanding on the record date. Proxies will be voted in favor of this proposal unless otherwise indicated.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”
THE RATIFICATION OF THE APPOINTMENT OF BAKER TILLY VIRCHOW KRAUSE LLP

_______________________________________

RELATIONSHIP WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee has selected Baker Tilly Virchow Krause LLP to serve as our independent registered public accounting firm for the year ending June 30, 2015. Baker Tilly Virchow Krause LLP served as the Company’s independent registered public accounting firm for the year ended June 30, 2014.

On February 28, 2013, the Company engaged Baker Tilly Virchow Krause LLP, independent certified public accountants, to serve as our independent registered public accounting firm for the remainder of the fiscal year ended June 30, 2013. Also on February 28, 2013, the Company dismissed KPMG LLP, independent certified public accountants, as the Company’s independent registered public accounting firm. Both the engagement of Baker Tilly Virchow Krause LLP and dismissal of KPMG LLP were approved by the Audit Committee, which has sole authority and responsibility with respect to the selection, engagement and dismissal of the Company’s independent registered public accounting firm.

Representatives of Baker Tilly Virchow Krause LLP are expected to be present at the Annual Meeting of Shareholders and will have the opportunity to make a statement if they desire to do so. In addition, representatives will be available to respond to appropriate questions.

Accountant Fees and Services

The following is an explanation of the fees billed to us by Baker Tilly Virchow Krause LLP (“BTVK”) and KPMG LLP (“KPMG”) for professional services rendered for the fiscal years ended June 30, 2014 and June 30, 2013. KPMG rendered no services to the Company during fiscal year 2014. For the fiscal year ended June 30, 2014, total fees billed to us by BTVK were approximately $123,500. For the fiscal year ended June 30, 2013, total fees billed to us were an aggregate of $148,500, consisting of $60,000 by BTVK and $88,500 by KPMG.

Audit Fees.  The aggregate fees billed to us by BTVK for professional services related to the audit of our annual financial statements, review of financial statements included in our quarterly reports on Forms 10-Q, or other services normally provided by our auditor in connection with statutory and regulatory filings or engagements for the fiscal year ended June 30, 2014 totaled approximately $123,500. The aggregate fees billed to us for professional services related to the audit of our annual financial statements, review of financial statements included in our quarterly reports on Forms 10-Q, or other services normally provided by our auditor in connection with statutory and regulatory filings or engagements for the fiscal year ended June 30, 2013 totaled an aggregate of $111,000, consisting of $60,000 by BTVK and $51,000 by KPMG

Audit-Related Fees.  There were no aggregate fees billed to us for professional services for assurance and related services by our auditors that were reasonably related to the performance of the audit or review of our financial statements and were not reported above under “Audit Fees” for the fiscal year ended June 30, 2014 or 2013 by either BTVK or KPMG.

Tax Fees.  There were no aggregate fees billed to us by BTVK for professional services related to tax compliance, tax advice, and tax planning for the fiscal year ended June 30, 2014. The aggregate fees billed to us for professional services related to tax compliance, tax advice, and tax planning for the fiscal year ended June 30, 2013 totaled an aggregate of $37,500, all of which were provided by KPMG

All Other Fees.  For the fiscal year ended June 30, 2014 or 2013 there were no fees for such professional services or products. 

Audit Committee Pre-Approval Procedures

We have adopted pre-approval policies and procedures for the Audit Committee that require the Audit Committee to pre-approve all audit and all permitted non-audit engagements and services (including the fees and terms thereof) by the independent auditors, except that the Audit Committee may delegate the authority to pre-approve any engagement or service less than $10,000 to the Chair of the Audit Committee, but requires that the Chair report such pre-approval at the next full Audit Committee meeting. The Audit Committee may not delegate its pre-approval authority for any services rendered by our independent auditors relating to internal controls. These pre-approval policies and procedures prohibit delegation of the Audit Committee’s responsibilities to our management. Under the policies and procedures, the Audit Committee may pre-approve specifically described categories of services which are expected to be conducted over the subsequent twelve months on its own volition, or upon application by management or the independent auditor.

All of the services described above for fiscal year 2014 were pre-approved by the Audit Committee or a member of the committee before Baker Tilly Virchow Krause LLP was engaged to render the services.

SHAREHOLDER PROPOSALS AND SHAREHOLDER NOMINEES
FOR 2015 ANNUAL MEETING

The proxy rules of the Securities and Exchange Commission permit shareholders of a company, after timely notice to the company, to present proposals for shareholder action in the company’s proxy statement where such proposals are consistent with applicable law, pertain to matters appropriate for shareholder action and are not properly omitted by company action in accordance with the proxy rules. The Urologix, Inc. 2015 Annual Meeting of Shareholders is expected to be held on or about November 12, 2015, and proxy materials in connection with that meeting are expected to be mailed on or about October 1, 2015. Shareholder proposals prepared in accordance with the proxy rules must be received by us on or before June 1, 2015.

Pursuant to our bylaws, in order for any other proposal to be properly brought before the next annual meeting by a shareholder, including a nominee for director to be considered at the next annual meeting, the shareholder must give written notice of such shareholder’s intent to bring a matter before the annual meeting, or nominate the director, in a timely manner.

To be timely under our bylaws, the notice must be given by such shareholder to the Secretary of Urologix not less than 60 days nor more than 90 days prior to a meeting date corresponding to the previous year’s annual meeting. Each such notice must set forth certain information with respect to the shareholder who intends to bring such matter before the meeting and the business desired to be conducted, as set forth in greater detail above under “Corporate Governance – Director Nominations” and in our bylaws. Shareholders are advised to review our bylaws carefully regarding the requirements for proposals and director nominations. Notwithstanding the foregoing, the advance notice provisions of our bylaws do not apply to shareholder proposals made pursuant to, and in accordance with, Rule 14a-8 as may be in effect from time to time.

In addition, if we receive notice of a shareholder proposal less than 45 days before the date on which we first mailed our materials for the prior year’s annual meeting, such proposal also will be considered untimely pursuant to Rules 14a-4 and 14a-5(e) and the persons named in proxies solicited by the Board of Directors for this 2014 Annual Meeting of Shareholders may exercise discretionary voting power with respect to such proposal.

ANNUAL REPORT

An Annual Report of Urologix, Inc. setting forth our activities and containing our financial statements for the fiscal year ended June 30, 2014 accompanies this notice of annual meeting and proxy statement.

Shareholders may receive, without charge, a copy of our Annual Report on Form 10-K for the fiscal year ended June 30, 2014, including financial statements schedules and amendments thereto, as filed with the Securities and Exchange Commission, by writing to: Urologix, Inc., 14405 21st Avenue North, Minneapolis, Minnesota 55447, Attention: Secretary, or by calling us at (763) 475-1400.

OTHER BUSINESS

The Board of Directors does not intend to bring other matters before the meeting except items incident to the conduct of the meeting, and the Company has not received timely notice from any shareholder of an intent to present any other proposal at the meeting. On any matter properly brought before the meeting by the Board or by others, the persons named as proxies in the accompanying proxy, or their substitutes, will vote in accordance with their best judgment.

Shareowner Services P.O. Box 64945 St. Paul, MN 55164-0945

TO VOTE BY MAIL AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL ITEMS BELOW,
SIMPLY SIGN, DATE, AND RETURN THIS PROXY CARD.

Please detach here

The Board of Directors Recommends a Vote FOR Items 1, 2 and 3.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED FOR THE NOMINEES, AND FOR EACH OTHER PROPOSAL. THE PROXIES ARE AUTHORIZED TO VOTE IN THEIR DISCRETION WITH RESPECT TO OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING.

UROLOGIX, INC.

ANNUAL MEETING OF SHAREHOLDERS

Thursday, November 6, 2014
4:00 p.m.

Sheraton Minneapolis West
12201 Ridgedale Drive
Minnetonka, MN 55304

Urologix, Inc. 14405 Twenty-First Avenue North Minneapolis, Minnesota 55447

proxy

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Gregory J. Fluet and Mitchell Dann, or any of them, with power of substitution to each, as proxies, and hereby authorizes them to represent the undersigned at the Annual Meeting of Shareholders of Urologix, Inc. to be held at the Sheraton Minneapolis West, 12201 Ridgedale Drive, Minnetonka, MN 55305 on Thursday, November 6, 2014 at 4:00 p.m. local time, and at any adjournment(s) or postponement(s) thereof, and to vote, as designated below, all shares of Common Stock of Urologix, Inc. held of record by the undersigned on September 18, 2014 and which the undersigned would be entitled to vote at such Annual Meeting, hereby revoking all former proxies.

See reverse for voting instructions.

Urologix (CE) (USOTC:ULGX)
Historical Stock Chart
From Apr 2024 to May 2024

Urologix (CE) (USOTC:ULGX)
Historical Stock Chart
From May 2023 to May 2024