UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934
Filed by
the Registrant x
Filed by
a Party other than the Registrant o
Check the
appropriate box:
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o
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Preliminary
Proxy Statement
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o
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Confidential, for Use of the
Commission Only (as permitted by rule
14a-6(e)(2))
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x
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Definitive
Proxy Statement
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o
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Definitive
Additional Materials
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o
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Soliciting
Material Pursuant to S240.14a-11(c) or
S240.14a-12
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UTAH MEDICAL PRODUCTS,
INC.
(Name of
Registrant as Specified In Its Charter)
(Name of
Person(s) Filling Proxy Statement if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
x No
fee required.
o
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of
each class of securities to which transaction applies:
2) Aggregate
number of securities to which transaction applies:
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3)
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Per
unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was
determined).
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4) Proposed
maximum aggregate value of transaction:
5) Total fee
paid:
o
Fee paid previously with preliminary materials.
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o
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Check
box if any part of the fee is offset as
provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was
paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of its
filing.
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1) Amount
Previously Paid:
2) Form,
Schedule, or Registration Statement No.:
3) Filing
Party:
4) Date
Filed:
March 17,
2009
Dear UTMD
Shareholder:
You are
cordially invited to attend the 2009 Annual Meeting of Shareholders of Utah
Medical Products, Inc. (UTMD). The meeting will be held promptly at
12:00 noon (local time), on Friday, May 15, 2009, at the corporate offices of
UTMD, 7043 South 300 West, Midvale, Utah USA. Please use the North
Entrance.
Please
note that attendance at the Annual Meeting will be limited to shareholders as of
the record date (or their authorized representatives) and guests of the
Company. Proof of ownership can be a copy of the enclosed proxy
card. You may wish to refer to page one of this Proxy Statement for
information about voting your proxy, including voting at the Annual
Meeting.
At the
Annual Meeting, we seek the approval of UTMD shareholders in electing two
directors and considering other business. If you think you will be
unable to attend the meeting, please complete your proxy and return it as soon
as possible. If you decide later to attend the meeting, you may
revoke the proxy and vote in person.
You have
several options for obtaining UTMD’s public announcements and other disclosures
including financial information, such as SEC Forms 10-K and 10-Q. You
can be added to the Company mail or fax lists by contacting Paul Richins with
your mailing address or fax number, by sending an instruction letter to the
corporate address, by calling (801-569-4200) with instructions, or by e-mailing
your contact information to info@utahmed.com. As
an alternative, you can view and print Company financial and other information
directly from UTMD’s website;
http://www.utahmed.com.
Thank you
for your ownership in UTMD!
/s/ Kevin L.
Cornwell
Sincerely
Kevin L.
Cornwell
Chairman
& CEO
UTAH
MEDICAL PRODUCTS, INC.
7043
South 300 West
Midvale,
Utah 84047
(801)
566-1200
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD MAY 15, 2009
TO THE
SHAREHOLDERS OF UTAH MEDICAL PRODUCTS, INC.
The Annual Meeting of Shareholders (the
“Annual Meeting”) of UTAH MEDICAL PRODUCTS, INC. (the “Company” or “UTMD”), will
be held at the corporate offices of the Company, 7043 South 300 West, Midvale,
Utah, on May 15, 2009, at 12:00 noon, local time, for the following
purposes:
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(1)
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To
elect two directors to serve for terms expiring at the 2012 Annual Meeting
and until successors are elected and
qualified;
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(2)
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To
transact such other business as may properly come before the Annual
Meeting.
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UTMD’s Board of Directors recommends a
vote “FOR” the nominated directors, whose backgrounds are described in the
accompanying Proxy Statement, and for the other proposal.
Only shareholders of record at the
close of business on March 13, 2009 (the “Record Date”), are entitled to notice
of and to vote at the Annual Meeting.
This Proxy Statement and form of proxy
are being first furnished to shareholders of the Company on approximately April
1, 2009.
THE ATTENDANCE AT AND/OR VOTE OF EACH
SHAREHOLDER AT THE ANNUAL MEETING IS IMPORTANT, AND EACH SHAREHOLDER IS
ENCOURAGED TO ATTEND.
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BY
ORDER OF THE BOARD OF DIRECTORS
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/s/ Kevin L.
Cornwell
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Kevin
L. Cornwell, Secretary
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Salt Lake
City, Utah
Dated:
March 17, 2009
PLEASE PROMPTLY FILL IN, SIGN, DATE AND
RETURN THE ENCLOSED PROXY, WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL
MEETING.
If your shares are held in the name of
a third party brokerage firm, nominee, or other institution, only that third
party can vote your shares. In that case, please promptly contact the third
party responsible for your account and give instructions how
your shares should be voted.
TABLE OF
CONTENTS
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PAGE
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PROXY
STATEMENT
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1
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PROPOSAL
NO. 1. ELECTION OF DIRECTORS
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2
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SECURITY
OWNERSHIP OF MANAGEMENT AND CERTAIN PERSONS
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4
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EXECUTIVE
OFFICER COMPENSATION
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5
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2008 Summary Compensation
Table
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5
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2008 Grants of Equity Incentive
Plan-Based Awards
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5
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2008 Grants of Non-Equity
Incentive Plan-Based Awards
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6
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Outstanding Equity Awards at 2008
Fiscal Year End
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7
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2008 Option Exercises and Stock
Vested
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7
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2008 Pension
Benefits
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7
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2008 Nonqualified Deferred
Compensation
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7
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2008 Director
Compensation
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7
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DISCLOSURE
RESPECTING THE COMPANY’S EQUITY COMPENSATION PLANS
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8
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COMPENSATION
DISCUSSION AND ANALYSIS
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9
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CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
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12
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BOARD
OF DIRECTORS AND BOARD COMMITTEE REPORTS
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12
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Stockholder Communications with
Directors
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14
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Report of the Compensation and
Benefits Committee
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14
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Report of the Audit
Committee
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15
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STOCK
PERFORMANCE CHART
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16
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INDEPENDENT
PUBLIC ACCOUNTANTS
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17
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IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER
MEETING TO BE HELD ON MAY 15, 2009
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17
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SHAREHOLDER
PROPOSALS
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17
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MISCELLANEOUS
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18
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UTAH
MEDICAL PRODUCTS, INC.
PROXY
STATEMENT
This Proxy Statement is furnished to
shareholders of UTAH MEDICAL PRODUCTS, INC. (the “Company” or “UTMD”) in
connection with the Annual Meeting of Shareholders (the “Annual Meeting”) to be
held at the corporate offices of the Company, 7043 South 300 West, Midvale,
Utah, on May 15, 2009, at 12:00 noon, local time, and any postponement or
adjournment(s) thereof. The enclosed proxy, when properly executed
and returned in a timely manner, will be voted at the Annual Meeting in
accordance with the directions set forth thereon. If the enclosed
proxy is signed and timely returned without specific instructions, it will be
voted at the Annual Meeting:
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(1)
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FOR
the election of Kevin L. Cornwell and Paul O. Richins as directors;
and
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(2)
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IN
accordance with the best judgment of the persons acting under the proxies
on other matters presented for a
vote.
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The Board of Directors has approved the
foregoing proposals and recommends that the shareholders vote in favor of each
of the proposals. Proxies solicited by the Company will be voted FOR
each of the proposals unless a vote against, or an abstention from, one or more
of the proposals is specifically indicated on the proxy.
A proxy for the Annual Meeting is
enclosed. It is important that each shareholder complete, sign, date
and return the enclosed proxy promptly, whether or not she/he plans to attend
the Annual Meeting. Any shareholder who executes and delivers a proxy
has the right to revoke it at any time prior to its exercise by providing the
Secretary of the Company with an instrument revoking the proxy or by providing
the Secretary of the Company with a duly executed proxy bearing a later
date. In addition, a shareholder may revoke her/his proxy by
attending the Annual Meeting and electing to vote in person.
Proxies are being solicited by the
Company. All costs and expenses incurred in connection with the
solicitation will be paid by the Company. Proxies are being solicited
by mail, but in certain circumstances, officers and directors of the Company may
make further solicitation in person, by telephone, facsimile transmission,
telegraph or overnight courier.
Only holders of the 3,608,000 shares of
common stock, par value $0.01 per share, of the Company (the “Common Stock”)
issued and outstanding as of the close of business on March 13, 2009 (the
“Record Date”), will be entitled to vote at the Annual Meeting. Each
share of Common Stock is entitled to one vote. Holders of at least a
majority of the 3,608,000 shares of Common Stock outstanding on the Record Date
must be represented at the Annual Meeting to constitute a quorum for conducting
business.
All properly executed and returned
proxies, as well as shares represented in person at the meeting, will be counted
for purposes of determining if a quorum is present, whether or not the proxies
are instructed to abstain from voting or consist of broker
non-votes. Under the Utah Revised Business Corporation Act, matters
other than the election of directors and certain specified extraordinary matters
are approved if the number of votes cast FOR exceed the number of votes cast
AGAINST. Directors are elected by a plurality of the votes
cast. Abstentions and broker non-votes are not counted for purposes
of determining whether a matter has been approved or a director has been
elected.
Executive officers and directors
holding an aggregate of 390,154 shares, or approximately 11%, of the issued and
outstanding stock have indicated their intent to vote in favor of all
proposals.
1
General
The Company’s Articles of Incorporation
provide that the Board of Directors is divided into three classes as nearly
equal in size as possible, with the term of each director being three years and
until such director’s successor is elected and qualified. One class
of the Board of Directors shall be elected each year at the annual meeting of
the shareholders of the Company. The Board of Directors has nominated
Mr. Kevin L. Cornwell and Mr. Paul O. Richins for election as directors, each
for a three-year term expiring at the 2012 Annual Meeting.
It is intended that votes will be cast,
pursuant to authority granted by the enclosed proxy, for the election of the
nominee named above as director of the Company, except as otherwise specified in
the proxy. In the event a nominee shall be unable to serve, votes
will be cast, pursuant to authority granted by the enclosed proxy, for such
other person as may be designated by the Board of Directors. The
officers of the Company are elected to serve at the pleasure of the Board of
Directors. The information concerning the nominee and other directors
and their security holdings has been furnished by them to the
Company. (See “PRINCIPAL SHAREHOLDERS” below.)
Directors
and Nominees
The Board of Directors’ nominees for
election as directors of the Company at the Annual Meeting are Kevin L. Cornwell
and Paul O. Richins. Other members of the Board of Directors were
elected at the Company’s 2007 and 2008 meetings for terms of three years, and
therefore, are not standing for election at the Annual Meeting. The
term of Dr. Payne expires at the 2010 Annual Meeting, and the terms of Mr. Hoyer
and Dr. Beeson expire at the 2011 Annual Meeting. The Board of
Directors has determined that Dr. Payne, Mr. Hoyer and Dr. Beeson are
independent directors within the meaning of NASD Rule
4200(a)(15). Background information appears below with respect to the
incumbent directors whose terms have not expired, as well as the directors
standing for reelection to the Board.
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Year
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First
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Business
Experience during Past Five Years
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Name
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Age
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Elected
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and Other Information
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Kevin
L. Cornwell
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62
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1993
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Chairman
of UTMD since 1996. President and CEO since December 1992;
Secretary since 1993. Has served in various senior operating
management positions in several technology-based companies over a 30-year
time span, including as a director on seven other company
boards. Received B.S. degree in Chemical Engineering from
Stanford University, M.S. degree in Management Science from the Stanford
Graduate School of Engineering, and M.B.A. degree specializing in Finance
and Operations Management from the Stanford Graduate School of
Business.
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Ernst
G. Hoyer
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71
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1996
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Retired. Served
fifteen years as General Manager of Petersen Precision Engineering
Company, Redwood City, CA. Previously served in engineering and
general management positions for four technology-based companies over a
30-year time span. Received B.S. degree in process engineering
from the University of California, Berkeley, and M.B.A. degree from the
University of Santa Clara.
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Barbara
A. Payne
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62
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1997
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Retired. Served
over eighteen years as corporate research scientist for a Fortune 50 firm,
and environmental scientist for a national laboratory. Received
B.A. degree in psychology from Stanford University, M.A. degree from
Cornell University, and M.A. and Ph.D. degrees in sociology from Stanford
University.
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2
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Year
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First
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Business
Experience during Past Five Years
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Name
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Age
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Elected
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and Other Information
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James
H. Beeson
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67
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2007
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Professor
and Past Chairman of The University of Oklahoma College of Medicine,
Tulsa, Department of Obstetrics and Gynecology. Received B.S. degree in
Chemistry from Indiana University in 1962, Ph.D. degree in Organic
Chemistry from M.I.T. in 1966, MBA from Michigan State University in 1970,
and M.D. from the University of Chicago Pritzker School of
Medicine in 1976. Served four year residency in Ob/Gyn at Chicago Lying-In
Hospital, and has actively practiced Obstetrics and Gynecology for over 30
years. Currently licensed to practice medicine in the states of Utah,
Oklahoma and Texas. Has published numerous articles and other
technical papers.
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Paul
O. Richins
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48
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1998
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Chief
Administrative Officer of UTMD since 1997. Treasurer and
Assistant Secretary since 1994. Joined UTMD in
1990. Received B.S. degree in finance from Weber State
University, and M.B.A. degree from Pepperdine
University.
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Code
of Ethics
The Company has adopted a Code of
Ethics specifically for its Board of Directors. The Company also has
a Code of Conduct that applies to all of its employees, including its named
executive officers, principal financial officer, and board of
directors. The Code of Ethics and Code of Conduct are available on
the Company’s website, www.utahmed.com.
[remainder
of page intentionally left blank]
3
The following table furnishes
information concerning the ownership of the Company’s Common Stock as of March
13, 2009, by the directors, the nominees for director, the executive officers
named in the compensation tables on page 5, all directors and executive officers
as a group, and those known by the Company to own beneficially more than 5% of
the Company’s outstanding Common Stock as of December 31, 2008.
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Name
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Nature
of Ownership
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Number
of Shares Owned
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Percent
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Principal
Shareholders
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||||||
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FMR
Corp
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Direct
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460,000
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12.8%
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82
Devonshire Street
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||||||
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Boston,
Massachusetts 02109
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||||||
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Bares
Capital Management, Inc.
221
West 6th Street, Suite 1225
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Direct
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268,523
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7.4%
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Austin,
Texas 78701
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||||||
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Ashford
Capital Management, Inc.
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Direct
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205,550
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5.7%
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1
Walkers Mill Road
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||||||
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Wilmington,
Delaware 19807
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||||||
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Argyll
Research
2711
Centerville Road Suite 400
Wilmington, Delaware 19808
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Direct
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182,000
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5.0%
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Directors
and Executive Officers
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||||||
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Kevin
L. Cornwell (1)(3)
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Direct
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289,241
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8.0%
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Options
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50,000
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1.4%
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Total
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339,241
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9.3%
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Ernst
G. Hoyer (1)(2)(3)(4)
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Direct
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53,844
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1.5%
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Options
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10,000
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0.3%
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Total
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63,844
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1.8%
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||||
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Paul
O. Richins
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Direct
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27,231
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0.8%
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Options
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275
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0.0%
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Total
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27,506
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0.8%
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Barbara
A. Payne(2)(3)(4)
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Direct
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19,838
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0.6%
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Options
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10,000
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0.3%
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Total
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29,838
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0.8%
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James
H. Beeson(2)(3)(4)
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Direct
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0
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0.0%
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Options
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7,500
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0.2%
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Total
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7,500
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0.2%
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||||
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All
executive officers and
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Direct
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390,154
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10.8%
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directors
as a group (5 persons)
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Options
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77,775
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2.1%
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Total
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467,929
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12.7%
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(2) Audit
Committee member
(3) Governance
and Nominating Committee member
(4) Compensation
and Benefits Committee member
In the
previous table, shares owned directly by directors and executive officers are
owned beneficially and of record, and such record shareholder has sole voting,
investment and dispositive power. Calculations of percentage of
shares outstanding assumes the exercise of options to which the percentage
relates. Percentages calculated for totals assume the exercise of
options comprising such totals.
4
Section 16(a) Beneficial
Ownership Reporting Requirements
Section 16(a) of the Securities
Exchange Act of 1934, as amended, requires the Company’s directors and executive
officers, and persons who own more than 10% of a registered class of the
Company’s equity securities, to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of equity
securities of the Company. Officers, directors and greater than 10%
shareholders are required to furnish the Company with copies of all Section
16(a) forms they file.
To the Company’s knowledge, based
solely on review of the copies of such reports furnished to the Company, all
Section 16(a) requirements applicable to persons who were officers, directors and
greater than 10% shareholders during the preceding fiscal year were complied
with.
The following table sets forth, for the
last three fiscal years, compensation received by the Company’s Chief Executive
Officer and Principal Financial Officer. There are no other named
executive officers.
2008
Summary Compensation Table
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Name
and Principal Position
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Year
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Salary
($)
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Bonus
($)
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Option
Awards
($)
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Non-equity
Incentive
Plan Compen-sation
($)
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All
Other
Compensation
($)
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Total
($)
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Kevin
L. Cornwell
Chairman
& CEO
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2008
2007
2006
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256,100
256,100
256,100
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--
--
--
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--
--
--
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--
247,000
261,250
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6,470
5,850
5,730
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262,570
508,950
523,080
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Paul
O. Richins
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2008
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97,724
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--
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--
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11,804
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3,156
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112,684
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VP
& Principal Financial Officer
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2007
2006
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94,435
90,280
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--
--
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--
--
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15,007
15,873
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3,097
2,960
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112,539
109,113
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Narrative disclosure to the Summary
Compensation Table:
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1.
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Amounts
included in All Other Compensation represent the aggregate total of
Company 401(k) matching contributions, Company Section 125 matching
contributions, and reimbursements under UTMD’s pet insurance plan to each
named executive officer, all of which are benefits generally available to
all employees. During 2009, each named executive officer will
be eligible to receive payment of eligible medical expenses under the
employee Health Plan, up to $5,880 in 401(k) matching contributions, up to
$500 in pet health cost reimbursements, and up to $450 in matching Section
125 matching contributions.
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2.
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Medical,
dental and vision expenses paid in 2008 under the Company’s Health Plan,
which are generally available to all employees, are not included in the
above table.
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3.
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Non-equity
Incentive Plan Compensation amounts, as described in more detail on the
next page under Item 4., were paid in late January or early February of
the following calendar year, representing Management Bonuses earned during
the fiscal year reported.
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2008
Grants of Equity Incentive Plan-Based Awards
No stock option awards were made in
2008 to any of the named executive officers listed in the Summary Compensation
Table. Mr. Richins was granted an option of 2,500 shares at $24.00
per share, the market price on the day of the grant, January 30,
2009. The Company has no other equity incentive
plans.
5
2008
Grants of Non-Equity Incentive Plan-Based Awards
Named Executive Officers participated
in the Profit-Sharing Sales & Management Bonus Plan (MB Plan), generally
available to all exempt, as well as key nonexempt, employees. The
structure of the performance-based MB Plan is described in the following Compensation Discussion and
Analysis. The 2008 awards under the MB Plan to the named
executive officers were recommended by the Compensation and Benefits Committee
in early 2009, after the independent audit of financial results had been
concluded. The awards were subsequently approved by the board of
directors. The structure of the MB Plan remains the same for
2009.
Additional
disclosure regarding executive and employee compensation
The Compensation and Benefits Committee
establishes the criteria, and directs the implementation, of all compensation
program elements for the CEO. The CEO’s base salary is set at the
beginning of each year by the board of directors after review of the
recommendation of the Compensation and Benefits Committee. Mr.
Cornwell’s base salary for 2008 was the same as for 2007 and
2006. Mr. Cornwell’s base salary for 2009 will also remain
unchanged. The Compensation and Benefits Committee accepted Mr.
Cornwell’s recommendation that he not receive any compensation under the MB Plan
for 2008. All other eligible UTMD exempt employees received bonuses,
prior to adjustment for individual accomplishment, approximately equal 79% of
the bonuses for 2007 performance. UTMD’s EBT, net income and earnings per share
in 2008 decreased 10.5%, 8.8% and 6.2%, respectively.
For all other employees, in
collaboration with the other executive officer(s), the CEO develops compensation
policies, plans and programs that are intended to meet the objectives of the
Company’s overall compensation program. The Compensation and Benefits Committee
annually reviews and approves the elements of the compensation program
recommended by the CEO. In addition, the committee periodically reviews any
proposed changes within a calendar year. The compensation of
employees other than the CEO, including other named executive officer(s), is
administered by the CEO under the review and ratification of the Compensation
Committee comprised of all the independent directors.
Mr. Richins’ base salary at the
beginning of 2009 was $99,000 which is subject to review and adjustment during
the year on the same basis as the Company’s performance review criteria for its
exempt employees. Mr. Richins’ MB, which was about 10% of his total
compensation in 2008, decreased 21%, consistent with the decrease targeted by
the Compensation and Benefits Committee for all participants in the MB Plan
based solely on Company performance. Other (non-executive) employees’
MBs were adjusted up or down from that guideline to reflect individual
performance and individual contribution to UTMD’s performance in
2008.
Employment
Agreements, Termination of Employment, and Change in Control.
Except for Mr. Cornwell, the Company
has no employment agreements in the United States. In Ireland, UTMD
is subject to providing certain advance notice to its employees in the event of
termination.
In May 1998, the Company entered into
an agreement with the CEO to provide a long term incentive to increase
shareholder value. The Company is required to pay Mr. Cornwell
additional compensation in the event his employment is terminated as a result of
a change in control at the election of the Company or by the mutual agreement of
Mr. Cornwell and the Company. Under the agreement, the additional
compensation that the Company is required to pay Mr. Cornwell is equal to his
last three years’ salary and bonuses, and the appreciation of stock value for
awarded options above the option exercise price. Presently, Mr. Cornwell holds
50,000 option shares at an exercise price of $25.59/ share. Based on the $21.95/
share closing price on December 31, 2008 and actual salary plus bonuses for the
three years of 2006-2008, the additional compensation would be
$1,276,600.
In the event of a change in control,
the Company will also pay Mr. Cornwell incentive compensation under the
agreement equal to about 2% of the excess value per share paid by an acquiring
company that exceeds $14.00 per share. For example, at the $21.95 per
share closing price at the end of 2008, the amount of incentive compensation in
the event of an acquisition of UTMD would be $596,250. At the time of
the execution of the agreement, the value per UTMD share was approximately
$7.75.
The CEO is the only employee with a
formal termination benefit agreement, which was last modified in
1998. The board of directors does not anticipate the need for any
other agreements for the indefinite future. In the absence of any
practical requirement, UTMD has no general policies regarding termination
benefits.
6
The Company is also required to pay all
other optionees under employee and outside director’s option plans, the
appreciation of stock value for awarded options above the option exercise price
in the event of a change of control of the Company. The number of
options outstanding as of December 31, 2008, excluding those held by the CEO, is
158,300 at an average exercise price of $22.22/ share. Of those
option shares, 91,600 are at exercise prices above $21.95, the year-end 2008
closing price. At the $21.95 per share closing price, the amount of
change of control pay due all optionees excluding the CEO would be
$478,000.
|
|
Outstanding
Equity Awards at 2008 Fiscal Year
End
|
|
Named
Executive Officer
|
Option
Awards
|
|||
|
Number
of Securities Underlying Unexercised Options
(#)
|
Number
of Securities
Underlying
Unexercised Options
(#)
|
Option
Exercise Price
($)
|
Option
Expiration Date
|
|
|
Exercisable
|
Unexercisable
|
|||
|
Kevin
L. Cornwell
|
50,000
|
--
|
25.59
|
1/29/2014
|
|
Paul
O. Richins
|
125
|
--
|
18.00
|
10/4/2014
|
|
100
|
50
|
21.68
|
5/13/2015
|
|
|
|
The
Company has no outstanding Stock
Awards.
|
|
|
2008
Option Exercises and Stock Vested
|
No stock option exercises were made in
2008 by any of the named executive officers listed in the Summary Compensation
Table. The Company has made no Stock Awards.
|
|
2008
Pension Benefits
|
|
|
The
Company does not provide a defined benefit pension plan to any
employee.
|
|
|
2008
Nonqualified Deferred Compensation
|
|
|
The
Company does not provide nonqualified deferred compensation to any
employee.
|
|
|
2008
Director Compensation
|
|
Name
|
Fees
Earned or Paid in Cash
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
All
Other Compensation
($)
|
Total
($)
|
|
James
Beeson
|
21,000
|
--
|
30,923
|
--
|
51,923
|
|
Ernst
Hoyer
|
27,000
|
--
|
--
|
--
|
27,801
|
|
Barbara
Payne
|
21,000
|
--
|
--
|
--
|
21,000
|
Narrative disclosure to the Director
Compensation Table:
|
|
1.
|
Mr.
Hoyer was paid $4,000 as a member of the executive committee, $2,000 as
Chairman of the audit committee and the $21,000 base annual director’s
fee.
|
|
|
2.
|
Dr.
Beeson was paid the $21,000 base annual director’s fee. Option
Award compensation for Dr. Beeson represents the full grant date fair
value (as estimated under SFAS 123R) of the 10,000 share option granted to
Dr. Beeson in 2008 at $28.13 per share. The option vests over a
four-year period.
|
|
|
3.
|
Dr.
Payne was paid the $21,000 base annual director’s
fee.
|
4. For 2009,
the base annual director’s fee will remain $21,000.
In 1994, shareholders approved the 1993
Directors’ Stock Option Plan under which up to 80,000 shares per year could be
granted to outside directors over a ten-year term. The 1993 Plan
expired in September 2003. Of the aggregate 800,000 option share
limit, 186,000 shares were granted. Prior to expiration on September
8, 2003, the Board of Directors awarded options to outside directors in the
aggregate amount of 30,000 shares at an exercise price of $24.02 per share. The
Board of Directors did not approve an award of outside director options in the
three preceding years 2000-2002, or in the ensuing years of 2004-2008, except
for a 10,000 share award to Dr. Beeson upon joining the board in 2007 and an
ensuing 10,000 share award to Dr. Beeson in 2008.
7
At December 31, 2008, 20,000
unexercised outside director options were outstanding with an exercise price of
$24.02, 10,000 with a $31.33 exercise price and 10,000 with a $28.13 exercise
price. The Company is required to pay optionees under the outside
directors’ option plan the appreciation of stock value for issued options above
the option exercise price in the event of a change of control of the
Company. At the $21.90 per share closing price at the end of 2008,
the amount of change in control pay due outside directors would be
$0.
The following table summarizes, as of
the end of the most recent fiscal year, compensation plans, including individual
compensation arrangements, under which equity securities of the Company are
authorized for issuance, aggregated for all compensation plans previously
approved by shareholders and for all plans not previously approved by
shareholders:
|
Plan
Category
|
Number
of Securities To Be Issued upon Exercise of Outstanding Options, Warrants
and Rights
(a)
|
Weighted-Average
Exercise Price of Outstanding Options, Warrants and Rights
(b)
|
Number
of Securities Remaining Available for Future Issuance under Equity
Compensation Plans (excluding securities reflected in column
(a))
(c)
(1)
|
|||
|
Equity
compensation plans
approved
by security holders
|
208,000
|
$23.03
|
611,000
|
|||
|
Equity
compensation plans not
approved
by security holders
|
-
|
(Not
applicable)
|
-
|
|||
|
Total
|
208,000
|
$23.03
|
611,000
|
(1) Up to
an additional 100,000 shares will be added to the available shares on the first
day of each calendar year through 2013.
Additional
disclosure regarding dilution from equity awards:
In 2003, shareholders approved the
incentive stock option plan for employees and directors summarized in the table
above. The Company
currently has no other equity award programs. The dilutive impact to
shareholders of stock option awards is provided in the tables
below:
|
2006
|
2007
|
2008
|
|
|
Option
shares available for award per shareholder approved option plans
(beginning of year)
|
441,909
|
537,203
|
622,896
|
|
Option
shares allocated by the Board of Directors
|
30,000
|
40,000
|
30,000
|
|
Total
option shares awarded
|
14,600
|
23,600
|
26,100
|
|
2006
|
2007
|
2008
|
|
|
Total
unexercised awarded option shares (end of year)
|
227,944
|
212,245
|
208,257
|
|
Weighted-average
unexercised option exercise price
|
$
19.40
|
$
21.70
|
$
23.03
|
|
Closing
market price of UTMD stock per share (end of year)
|
$
32.98
|
$
29.72
|
$
21.95
|
|
(A)
Dilution from options (shares)
|
99,441
|
61,916
|
34,771
|
|
(B)
Weighted average shares outstanding
|
3,943,437
|
3,926,591
|
3,842,778
|
|
Total
diluted shares outstanding (A+B), used for EPS calculation
|
4,042,878
|
3,988,507
|
3,877,549
|
8
General
Under the supervision of the
Compensation and Benefits Committee, the Company has developed and implemented
compensation policies, plans, and programs that seek to enhance the long-term
profitability, EPS growth and return on shareholders’ equity (ROE) of the
Company, and thus shareholder value, by aligning closely the financial interests
of the Company’s senior managers and other key employees with those of its
shareholders. The long term key financial performance objectives are
a 20% annually compounded rate of increase in EPS and an average ROE prior to
payment of cash dividends greater than 25%. The Company has
cumulatively achieved 18.3% annually compounded rate of increase in EPS and an
average of 31% ROE (prior to payment of shareholder dividends) over the
twenty-two years since 1986, its first year of profitability since becoming a
publicly-traded company.
At the
beginning of each year, the board of directors approves an operating plan which
sets the standards for the Company’s financial and nonfinancial
performance. The performance each year may vary according to general
economic conditions, competitive environment, life cycle of products, new
product development and other factors. The Compensation and Benefits
Committee then approves compensation criteria set in relation to the Company’s
annual operating plan which includes numerous income statement, balance sheet
and cash flow measures, in addition to nonfinancial objectives established for
each employee participating in the annual MB program.
The Company applies a consistent
philosophy to compensation for all employees, including senior
management. The philosophy is based on the premise that the
achievements of the Company result from the coordinated efforts of all
individual employees working toward common objectives. The Company
strives to achieve those objectives through teamwork that is focused on meeting
the needs and expectations of customers and shareholders.
There are seven basic objectives for
the Company’s compensation program:
(1) Pay for
Performance. The basic philosophy is that rewards are provided
for the long-term value of individual contribution and performance to the
Company. Rewards are both recurring (e.g., base salary) and
non-recurring (e.g.,
bonuses), and both financial and non-financial (e.g., recognition and time
off).
(2) Provide for Fairness and
Consistency in the Administration of Pay. Compensation is
based on the value of the job, what each individual brings to the job, and how
well each individual performs on the job, consistently applied across all
functions of the Company.
(3) Pay
Competitively. The Company believes it needs to attract and
retain the best people in the industry in order to achieve one of the best
performance records in the industry. In doing so, the Company needs
to be perceived as rewarding well, where competitive compensation includes the
total package of base pay, bonuses, awards, and other benefits.
(4) Conduct an Effective
Performance Review Process. The Company believes it needs to
encourage individual employee growth and candidly review each individual’s
performance in a timely way. This feedback process is bilateral,
providing management with an evaluation of the Company through the eyes of its
employees.
(5) Effectively Plan and
Administer the Compensation Program. Expenditures for employee
compensation must be managed to what the Company can afford and in a way that
meets management goals for overall performance and return on shareholder
equity.
(6) Communicate
Effectively. The Company believes that an effective
communication process must be employed to assure that its employees understand
how compensation objectives are being administered and met.
(7) Meet All Legal
Requirements. The compensation program must conform to all
state and federal employment laws and guidelines.
9
The Company uses essentially five
vehicles in its compensation program.
(1) Salary. UTMD
sets base salaries by reviewing the aggregate of base salary and annual bonus
for competitive positions in the market. The CEO’s base salary is set
at the beginning of each calendar year by the Board of Directors. For
executive officers and senior management, base salaries are fixed at levels
somewhat below the competitive amounts paid to senior management with comparable
qualifications, experience, and responsibilities at other similarly sized
companies engaged in the same or similar businesses. Then, annual bonuses
and longer term incentive compensation are more highly leveraged and tied
closely to the Company’s success in achieving significant financial and
non-financial goals.
(2) Bonuses. UTMD’s
Profit-Sharing Sales & Management Bonus (MB) Plan, which funds annual
management bonuses, along with other contemporaneous incentives during the year,
is generated out of a pretax/prebonus profit-sharing pool accrued throughout the
year, and finalized, where the annual bonus portion is concerned, after the
year-end independent financial audit has been completed. Prior to
2006, the Board of Directors had approved an accrual guideline of 4% of pretax,
prebonus earnings, plus 10% of pretax, prebonus earnings improvements over the
prior year’s results, as an allocation for the plan. For example, if
the Company achieved 20% growth in pretax/prebonus accrual earnings, the MB Plan
would accrue 6% of pretax, prebonus earnings during the year into a
“pool.” The pool would then be distributed after the completed
independent audit under recommendation of the Compensation and Benefits
Committee and approved by the Board. Beginning in 2006, although the
mechanism for the MB Plan remains unchanged, in order to compensate for the
decrease in the number of option shares granted key employees (as the result of
the requirement to expense the estimated “value” of options), the Board of
Directors increased the base percent of the annual Management Bonus accrual
formula from 4% to 5% of pretax/prebonus profits, and, except for the CEO, added
an additional bonus inflating factor ranging from 7-11%. For 2008 MB the
additional inflating factor was not used because of the options awarded in
January 2009, as described in Item 3, below. The pool accrual formula
remains the same for 2009.
UTMD’s management personnel, beginning
with the first level of supervision and professional management, and including
certain non-management specialists and technical people, together with all
direct sales representatives, are eligible as participants in the MB
Plan. At the beginning of the year, plan participants were generally
awarded participation units in the bonus plan, proportional to base salary and
responsibility, based on the Committee’s determination of the relative
contribution expected from each person toward attaining Company
goals. Each individual’s performance objectives, derived as the
applicable contribution needed from that key employee to achieve the Company’s
overall business plan for the year, were reviewed by the
Committee. As part of the planning process, each eligible employee
develops a set of measurable and dated objectives for the ensuing
year. Achieving the Company’s plan sets an expected value per bonus
unit. After the end of the year, each individual participant’s
contribution to the Company’s performance is assessed in order to determine the
allocation of units for individual contributions, with the accomplishment of the
beginning of year objectives as a key component. In 2008, 68
employees were included in the distribution of the $201,900 annual MB Plan
payout. The MB Plan also funded $33,500 in extraordinary bonuses paid
contemporaneously to employees during the year, $11,900 in non-exempt employee
attendance bonuses and $3,300 in holiday gifts to employees.
The Company makes occasional cash
awards, in amounts determined on an individual basis, to employees who make
extraordinary contributions to the performance of the Company at any time during
the year. These contemporaneous payments are made as frequently as
possible to recognize excellent accomplishments when they occur. The
awards are funded from the accrued MB plan described above, and therefore do not
otherwise impact the Company’s financial performance. Senior management is not
eligible for these awards.
(3) Employee Stock
Options. The Compensation and Benefits Committee believes that
its awards of stock options have successfully focused the Company’s key
management personnel on building profitability and shareholder
value. The Board of Directors considers this policy highly
contributory to growth in future shareholder value. The number of
options awarded in 2008 reflects the judgment of the Board of the number of
options sufficient to constitute a material, recognizable benefit to
recipients. No explicit formula criteria were utilized, other than
minimizing dilution to shareholder interests and the impact on earnings per
share for option expense. When taken together with the share
repurchase program, the net result of the option program over the last five
years has been awarding option shares to key employees at a higher price, and in
substantially smaller amounts, than shares actually repurchased in the open
market during the same time period.
10
In 1994,
shareholders approved the 1994 Employee Stock Option Plan under which up to two
million shares could be granted to employees within a ten-year
term. The 1994 Plan expired on January 29, 2004, with about 1.2
million of the two million authorized option shares expiring because they were
not granted. During the same ten year period, UTMD repurchased about
7.3 million of its shares in the open market. At the 2003 Annual
Meeting, shareholders approved the 2003 Employees’ and Directors’ Incentive
Plan, under which up to 1.2 million shares may be granted over the ten-year life
of the plan. As of March 7, 2009, 131,000 options have been granted
and are outstanding under the 2003 Plan.
After the conclusion of the annual
independent audit and public announcement of financial results, the Board of
Directors allocates an annual amount of shares for employee options each year at
its regularly scheduled Board meeting following the audited close of the prior
year’s financial performance. Option shares may be awarded on this
same date at the closing price on the date of the meeting. Some
number of allocated shares are usually reserved for awards later in the year to
employees, including new or key employees with increased
responsibilities. The Compensation and Benefits Committee approves
all awards, and the closing price on the date of the approval is the exercise
price of the option shares. According to policy, awards are not
made in advance of material news events, or when material non-public information
is known.
During
2008, option awards were granted to 24 employees and one director to purchase a
total of 26,100 shares at exercise prices of $29.41 or $28.13 per
share. No options were awarded to named executive
officers. Of the 16,100 options granted to employees in 2008,
options representing 4,900 shares have been canceled after termination of
services. All 10,000 shares granted to Dr. Beeson remain
outstanding. Employee and director options vest over a four-year
period, with a ten-year exercise period. Management expects to
recommend additional options be awarded on an annual basis to the Company’s key
employees based on its belief that sharing ownership of the Company with those
who help create its success is the best way to assure growth in shareholder
value. In January 2009, the Board of Directors authorized awards of
up to 60,000 option shares during 2009, and 56,600 of those shares were granted
on the same date of the meeting to 67 employees at an exercise price of $24.00
per share, 2,500 of which were granted to Mr. Richins. No shares were
awarded to the other named executive officer or outside directors.
(4) Retirement
Plans. The Company has sponsored a 401(k) retirement plan for
U.S. employees since 1985, and a contributory retirement plan for Irish
employees since 1998. The Compensation and Benefits Committee
believes that a continuance of the retirement plans is consistent with ensuring
a stable employment base by helping to provide Company employees with a vehicle
to build long-term financial security. The Company matched a portion
of employee contributions in 2008 and paid administrative expenses at a total
cost of about $124,000. For 2009, the Board of Directors has approved
continuing the retirement plan matching formulas on the same basis as in
2008.
(5) Group Benefit
Plans. The Company provides group health, dental, and life
insurance benefit plans for its employees. For U.S. employees, the
medical plan is consistent with self-funded group plans offered by other
companies. A portion of the monthly premium cost is generally paid by
plan participants. Prior to 1998, all U.S. employees, including
executive officers and senior managers, paid premiums on the same
basis. Between 1998 and 2002, employees being paid wages at a rate of
$9.50 or less per hour were provided a 25% discount to the standard premium
rates. In 2003, employees with a base annual salary over $45,000
began paying 10-20% more than the standard premium rates, and employees being
paid at a rate of $10.50 or less per hour were provided a 25% discount to
standard premiums paid by other employees. In Ireland, employees are
provided medical and life coverages consistent with benefits provided to
employees of similar companies.
Structure for Executive Officer
Compensation
Utilizing the compensation objectives
and vehicles outlined previously, the Compensation and Benefits Committee,
comprised of all three outside directors, establishes base salary for the
CEO. All other employees’ salaries are set by the CEO, and reviewed
by the Committee for consistency with the Company’s compensation
objectives. The Committee periodically uses surveys of similar
companies selected from among the companies with which UTMD’s stock is compared
in the Stock Performance Chart, based on variations in industry type, geographic
location, size, and profitability as the Committee deemed
appropriate. Base salary was fixed at a level somewhat below the
competitive amounts paid to executive officers with comparable qualifications,
experience and responsibilities at other similarly sized companies engaged in
the same or similar businesses. The annual bonus and long-term
incentive compensation in the form of stock options were more highly leveraged
and tied closely to the Company’s success in achieving significant financial and
non-financial goals.
11
The annual bonuses for the named
executive officers are awarded using the same basis as all employees included in
the annual profit-sharing MB Plan. The goals for executive officers
include financial and non-financial goals. Financial goals
include net sales,
gross profit margin, operating margin, after-tax profits, return on equity, and
particularly in the case of the CEO, growth in earnings per
share. Non-financial goals include continuing the development of a
talented and motivated team of employees, conceiving and implementing programs
to maintain competitive advantages and to achieve consistent earnings per share
growth, reacting to competitive challenges, developing business initiatives to
further support critical mass in a consolidating marketplace, promoting the
Company’s participation in socially responsible programs, protecting
intellectual property, maintaining compliance with regulatory requirements,
achieving a high regard for the integrity of the Company and its management, and
minimizing issues that represent significant business risk
factors. In 2008, UTMD generally did not meet its financial
objectives. Based on the Company’s overall performance, annual
bonuses were 12.7% lower than the previous year for unchanged management
responsibility and contribution. Because the board approved a larger
number of options to be awarded in 2009 than had been the case since it began
expensing options, there was no 2008 MB inflation factor, which was 11% in
2007. Therefore, compared to 2007, annual total dollar bonuses paid
for 2008 were 21.3% lower than for 2007. In the case of the CEO, the
2008 MB was zero.
The Committee intends that stock
options serve as a significant component of executive officers’ total
compensation in order to retain critical efforts on behalf of the Company and to
focus efforts on enhancing shareholder value. The Committee believes
that past option awards have successfully provided this incentive. An
option for 50,000 shares was awarded the CEO in January 2004, at an exercise
price of $25.59 per share. No CEO options were awarded from 1999
through 2003, and none were awarded in 2005 through 2008.
Compensation
and Benefits Committee Interlocks and Insider Participation
The members of the Compensation and
Benefits Committee are Ernst G. Hoyer, Barbara A. Payne and Dr. James H.
Beeson. Dr. Beeson joined the committee in February
2007. No member of the committee is a present or former officer of
the Company or any subsidiary. There are no other
interlocks. No member of the Committee, his or her family, or his or
her affiliate was a party to any material transactions with the Company or any
subsidiary since the beginning of the last completed fiscal year. No
executive officer of the Company serves as an executive officer, director, or
member of a compensation committee of any other entity, an executive officer or
director of which is a member of the Compensation and Benefits Committee of
UTMD.
None.
Director
Independence
UTMD’s
Board of Directors has determined that a majority of its directors are
independent, as that term is defined in NASD Rule 4200(a)(15), which satisfies
the independence requirement of NASD Rule 4350(c). The Board of
Directors was not aware of any transactions, relationships or arrangements to be
considered in determining that Dr. Payne, Mr. Hoyer and Dr. Beeson were
independent under the NASD Rules.
Board
Committees and Meetings
The board of directors held four formal
meetings during 2008, and one meeting to date in 2009. All of the
directors attended all meetings during their respective
incumbencies.
The Company has Executive, Audit,
Governance and Nominating, and Compensation and Benefits
Committees. The current members of the Company’s committees are
identified in the table on page 4. The written charters of each of
these committees are available for review at www.utahmed.com.
12
The Executive Committee held about two
informal meetings per month during 2008, and to date in 2009. In
2008, formal actions taken on of behalf of the Board of Directors at a formal
meeting on December 18, 2008 were unanimously ratified by the full board in its
regularly scheduled meeting in January 2009.
The Audit Committee formally met four
times during 2008 and once to date in 2009 to review the quarterly financial
reports, and periodic independent reviews and audits by Jones Simkins, P.C.,
UTMD’s independent auditor. The Audit Committee selects the Company’s
independent accountants, approves the scope of audit and related fees, and
reviews financial reports, audit results, internal accounting procedures,
internal controls and other programs to comply with applicable requirements
relating to financial accountability.
The Governance and Nominating Committee
met informally during 2008 at board of director meetings. The
Governance and Nominating Committee, which is comprised of the independent
members of the Board of Directors and the CEO, takes the lead in developing and
implementing policies that are intended to ensure that the board of directors
will be appropriately constituted and organized to meet its fiduciary
obligations to the Company and its shareholders, identify individuals qualified
to become members of the board of directors, and develop and recommend to the
board of directors a set of corporate governance principles applicable to the
Company. The Governance and Nominating Committee will consider
nominees recommended by shareholders. In accordance with the
Company’s Bylaws, shareholders’ nominations for election as directors must be
submitted in writing to the Company at its principal offices not less than 30
days prior to the Annual Meeting at which the election is to be held (or if less
than 40 days’ notice of the date of the Annual Meeting is given or made to
shareholders, not later than the tenth day following the date on which the
notice of the Annual Meeting was mailed).
In each 2008 board meeting, after
receiving the Company’s routine compliance reports, the Board reviewed
compliance by UTMD and its personnel, including executive officers and
directors, with applicable regulatory requirements as well as the Company’s own
compliance policy, and compared its established policies and procedures for
compliance with current applicable laws and regulations, under the guidance of
corporate counsel, as needed.
When considering candidates for
directors, the Governance and Nominating Committee takes into account a number
of factors, including the following:
|
|
·
|
judgment,
skill, integrity and reputation;
|
|
|
·
|
whether
the candidate has relevant business
experience;
|
|
|
·
|
whether
the candidate has achieved a high level of professional
accomplishment;
|
|
|
·
|
independence
from management under both Nasdaq and Securities and Exchange Commission
definitions;
|
|
|
·
|
existing
commitments to other businesses;
|
|
|
·
|
potential
conflicts of interest with other
pursuits;
|
|
|
·
|
corporate
governance background and
experience;
|
|
|
·
|
financial
and accounting background that would permit the candidate to serve
effectively on the Audit Committee;
|
|
|
·
|
age,
gender, and ethnic background; and
|
|
|
·
|
size,
composition, and experience of the existing Board of
Directors.
|
The committee will also consider
candidates for directors suggested by stockholders using the same
considerations. Stockholders wishing to suggest a candidate for
director should write to Governance and Nominating Committee, Utah Medical
Products, Inc., 7043 South 300 West, Midvale, UT 84047 and include:
|
|
·
|
a
statement that the writer is a stockholder and is proposing a candidate
for consideration by the committee;
|
|
|
·
|
the
name of and contact information for the
candidate;
|
|
|
·
|
a
statement that the candidate is willing to be considered and would serve
as a director if elected;
|
|
|
·
|
a
statement of the candidate’s business and educational experience
preferably in the form of a resume or curriculum
vitae;
|
13
|
|
·
|
information
regarding each of the factors identified above, other than facts regarding
the existing Board of Directors, that would enable the committee to
evaluate the candidate;
|
|
|
·
|
a
statement detailing any relationship between the candidate and any
customer, supplier, or competitor of the
Company;
|
|
|
·
|
detailed
information about any relationship or understanding between the
stockholder and the proposed candidate;
and
|
|
|
·
|
confirmation
of the candidate’s willingness to sign the Company’s code of ethics and
other restrictive covenants, and abide by all applicable laws and
regulations.
|
Before nominating a sitting director
for reelection at an annual meeting, the committee will consider:
|
|
·
|
the
director’s performance on the Board of Directors and attendance at Board
of Directors’ meetings; and
|
|
|
·
|
whether
the director’s reelection would be consistent with the Company’s
governance guidelines and ability to meet all applicable corporate
governance requirements.
|
When seeking candidates for director,
the committee may solicit suggestions from incumbent directors, management or
others. After conducting an initial evaluation of the candidates, the
committee will interview that candidate if it believes the candidate might be
suitable for a position on the Board of Directors. The committee may
also ask the candidate to meet with management. If the committee
believes the candidate would be a valuable addition to the Board of Directors,
it will recommend to the full Board of Directors that candidate’s
nomination.
The Compensation and Benefits
Committee, comprised of all incumbent outside directors as indicated in the
table on page 4, consulted by telephone and met once formally in early 2008 and
2009 to review management performance relative to objectives for the prior
years, recommend compensation and develop compensation strategies and
alternatives throughout the Company, including those discussed in the
Compensation Discussion and Analysis section of this Proxy
Statement. The deliberations culminated in recommendations ratified
at the January 2009 Board of Directors meeting.
The
policy of the Company is that each member of the Board of Directors is
encouraged, but not required, to attend the Annual Meeting. All five
directors attended the 2008 Annual Meeting.
Stockholder
Communications with Directors
UTMD stockholders who wish to
communicate with the Board, any of its committees, or with any individual
director may write to the Company at 7043 South 300 West, Midvale, UT
84047. Such letter should indicate that it is from a UTMD
stockholder. Depending upon the subject matter, management
will:
|
|
·
|
forward
the communication to the director, directors, or committee to whom it is
addressed;
|
|
|
·
|
attempt
to handle the inquiry directly if it is a request for information about
UTMD or other matter appropriately dealt with by management;
or
|
|
|
·
|
not
forward the communication if it is primarily commercial in nature, or if
it relates to an improper or irrelevant
topic.
|
At each Board of Directors’ meeting, a
member of management will present a summary of communications received since the
last meeting that were not forwarded to the directors and make those
communications available to the directors on request.
Report of the Compensation
and Benefits Committee
The Compensation Committee has reviewed
and discussed the CD&A with UTMD management. Based on that
review, the Committee recommended to the Board of Directors that the CD&A be
included in the Company’s annual report on Form 10-K and this Proxy
Statement. In August 2008, the Board of Directors adopted an updated
Compensation and Benefits Committee charter, which is available at
www.utahmed.com.
|
Submitted
by the Compensation and Benefits Committee:
|
Ernst
G. Hoyer
|
|
Barbara
A. Payne
|
|
|
James
H. Beeson
|
14
Report of the Audit
Committee
The Audit Committee of the Board of
Directors is composed of all outside directors, all of whom are independent as
defined in Nasdaq Stock Market Rule 4200(a)(15) and under Rule 10A-3(b)(1)
adopted pursuant to the Securities Exchange Act of 1934. The members
of the Audit Committee are James H. Beeson, Ernst G. Hoyer and Barbara A.
Payne. In August 2008, the Board of Directors adopted an updated
Audit Committee charter, which is available at www.utahmed.com. Ernst
G. Hoyer is the Board of Directors’ designated Audit Committee Financial Expert
consistent with The Sarbanes-Oxley Act of 2002.
The Audit Committee oversees the
financial reporting and internal controls processes for UTMD on behalf of the
Board of Directors. In fulfilling its oversight responsibilities, the
Audit Committee reviewed the quarterly and annual financial statements included
in the Annual Report to Shareholders and reports filed with the Securities and
Exchange Commission.
The Audit Committee formally met four
times during 2008 and once to date in 2009 to review the quarterly financial
reports and reviews and audits by Jones Simkins, P.C., UTMD’s independent
auditor. The Committee also met informally from time to time during
the year. In accordance with Statement on Auditing Standards No. 61,
discussions were held with management and the independent auditors as needed
regarding the acceptability and the quality of the accounting principles used in
the reports. These discussions included the clarity of the
disclosures made therein, the underlying estimates and assumptions used in the
financial reporting, and the reasonableness of the significant judgments and
management decisions made in developing the financial statements. In
addition, the Audit Committee has discussed with the independent auditors their
independence from the Company and its management, including the matters in the
written disclosures required by Independence Standards Board Standard No. 1 and
The Sarbanes-Oxley Act of 2002.
The Audit Committee has also met with
Company management and its independent auditors and discussed issues related to
the overall scope and objectives of the audits conducted, the internal controls
used by the Company, the openness and honesty of management, auditor
verification of information provided by management, quality control procedures
used by auditors in performing the independent audit, and any possible conflicts
of interest. The Committee elicited recommendations for improving
UTMD’s internal control procedures. The independent auditors
completed a formal review of the scope and effectiveness of the Company’s
internal control procedures, and made a couple of informal
suggestions.
Pursuant to the reviews and discussions
described above, the Audit Committee recommended to the Board of Directors that
the audited financial statements be included in the Company’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2008, for filing with the
Securities and Exchange Commission.
|
Submitted
by the Audit Committee:
|
Ernst
G. Hoyer
|
|
Barbara
A. Payne
|
|
|
James
H. Beeson
|
15
The following chart compares what an
investor’s five-year cumulative total return (assuming reinvestment of
dividends) would have been assuming initial $100 investments on December 31,
2003, for the Company’s Common Stock and the two indicated
indices. The Company’s Common Stock trades on the Nasdaq Global
Market.
Cumulative shareholder return data
respecting the Nasdaq Stock Market (U.S. and Foreign) are included as the
comparable broad market index. The peer group index is all Nasdaq
Stocks with Standard Industrial Classification (SIC) codes 3840-3849, all of
which are in the medical device industry. UTMD’s primary SIC code is
3841.
Five-Year Cumulative Total Returns
|
Dec-03
|
Dec-04
|
Dec-05
|
Dec-06
|
Dec-07
|
Dec-08
|
|
|
Utah
Medical Products, Inc.
|
100.0
|
87.7
|
126.4
|
133.3
|
124.2
|
97.9
|
|
Nasdaq
Stock Market (US & Foreign)
|
100.0
|
108.9
|
111.3
|
122.8
|
135.7
|
65.1
|
|
Nasdaq
Stocks (SIC 3840-3849) Medical Devices, Instruments and
Supplies
|
100.0
|
117.2
|
128.6
|
135.6
|
172.4
|
92.8
|
16
The Board of Directors retained Jones
Simkins, P.C. as the Company’s auditor and independent certified public
accountants for the two years ended December 31, 2007 and 2008. The
selection of the Company’s auditors for the current fiscal year is not being
submitted to the shareholders for their consideration in the absence of a
requirement to do so. The selection of the independent auditors for
2009 will be made by the Company’s Audit Committee of the Board of Directors, at
such time as they may deem it appropriate.
Representatives of Jones Simkins, P.C.
will be present at the Annual Meeting and have the opportunity to make a
statement, if they desire to do so, and to be available to respond to
shareholder questions.
Audit
Fees
During 2008 and 2007, Jones Simkins,
P.C. billed UTMD $94,748 and $91,434, respectively for professional services
rendered for the audit of its annual financial statements, reviews of the
financials included in UTMD’s quarterly reports on Form 10-Q and related
regulatory reviews, S-8 review, and audit of its internal controls in accordance
with the Sarbanes Oxley Act of 2002.
Audit-Related
Fees
UTMD was not billed by Jones Simkins,
P.C. for any audit-related fees in 2008 or 2007.
Tax
Fees
During
2008 and 2007, Jones Simkins, P.C. billed UTMD $58,535 and $29,350,
respectively, for tax filing, preparation and tax advisory
services.
All
Other Fees
UTMD was not billed by Jones Simkins,
P.C. for any other fees in either 2008 or 2007.
Audit
Committee Policy and Approval
The engagements of UTMD’s auditors to
perform all of the above-described services were made by the Audit
Committee. The policy of the Audit Committee is to require that all
services performed by the independent auditor be pre-approved by the Audit
Committee before services are performed.
Auditor
Independence
The Audit Committee has considered
whether the provision of the services rendered for nonaudit matters is
compatible with maintaining Jones Simkins’ independence, and concluded that its
independence was not impaired by performing such work for the
Company.
This proxy statement and the annual
report to shareholders are available at www.utahmed.com/proxy.htm.
No proposals have been submitted by
shareholders of the Company for consideration at the 2009 Annual
Meeting. It is anticipated that the next Annual Meeting of
Shareholders will be held during May 2010. In accordance with SEC
Rule 14a-8 and the advance notice requirements of Section 2.15 of UTMD’s Bylaws,
shareholders may present proposals for inclusion in the Proxy Statement to be
mailed in connection with the 2010 Annual Meeting of Shareholders of the
Company, provided such
proposals are received by the Company no later than December 2, 2009, and are
otherwise in compliance with applicable laws and regulations and the governing
provisions of the Articles of Incorporation and Bylaws of the
Company.
17
Other
Business
Management does not know of any
business other than that referred to in the Notice that may be considered at the
Annual Meeting. If any other matters should properly come before the
Annual Meeting, it is the intention of the persons named in the accompanying
form of proxy to vote the proxies held by them in accordance with their best
judgment.
In order to assure the presence of the
necessary quorum and to vote on the matters to come before the Annual Meeting,
please indicate your choices on the enclosed proxy and date, sign, and return it
promptly in the envelope provided. Whether or not you sign a proxy,
we encourage you to attend the meeting.
|
By
Order of the Board of Directors,
|
|
|
UTAH
MEDICAL PRODUCTS, INC.
|
|
|
/s/ Kevin L.
Cornwell
|
|
|
Salt
Lake City, Utah
|
Kevin
L. Cornwell
|
|
March
17, 2009
|
Chairman
and CEO
|
18
PROXY
|
Annual
Meeting of the Shareholders of
|
(This
Proxy is Solicited on Behalf
|
|
Utah
Medical Products, Inc.
|
of
the Board of Directors)
|
The
undersigned hereby appoint Kevin L. Cornwell and Paul O. Richins, and each of
them, proxies, with full power of substitution, to vote the shares of common
stock of Utah Medical Products, Inc. (the "Company") which the undersigned is
entitled to vote at the Annual Meeting of Shareholders of the Company (the
"Annual Meeting") to be held at the corporate offices of the Company, 7043 South
300 West, Midvale, Utah, on May 15, 2009, at 12:00 noon, local time, and any
postponement or adjournment(s) thereof, such proxies being directed to vote as
specified below. If
no instructions are specified, such proxies will be voted "FOR" each
proposal.
To vote
in accordance with the Board of Directors' recommendations, sign below; the
"FOR" boxes may, but need not be checked. To vote against any of the
recommendations, check the appropriate box(es) marked "WITHHOLD@ or AAGAINST,"
below.
|
|
(1)
|
To
elect two directors of the Company to serve three year terms and until
their successors are elected and
qualified;
|
|
Kevin
L. Cornwell:
|
FOR
|
G
|
WITHHOLD
|
G
|
|
Paul
O. Richins:
|
FOR
|
G
|
WITHHOLD
|
G
|
|
|
(2)
|
To
transact such other business as may properly come before the Annual
Meeting.
|
|
FOR
|
G
|
AGAINST
|
G
|
ABSTAIN
|
G
|
PLEASE
SIGN EXACTLY AS YOUR NAME APPEARS IN THE RECORDS OF THE COMPANY. WHEN
SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN. IF YOUR SHARES
ARE HELD AT A BROKERAGE HOUSE, PLEASE INDICATE THE NAME OF THE BROKERAGE HOUSE
AND THE NUMBER OF SHARES HELD.
|
Dated
___________________________
|
No.
of Shares _______________________________
|
|
Signature
________________________
|
Signature
(if held jointly) _______________________
|
|
Print
Name _______________________
|
Print
Name
_________________________________
|
PLEASE
ACT PROMPTLY
PLEASE
MARK, SIGN, DATE, AND RETURN PROXY IN THE BUSINESS REPLY ENVELOPE
PROVIDED. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
Important Notice Regarding the
Availability of Proxy Materials for the Shareholders Meeting to Be Held on May
15, 2009 - the proxy statement and annual report are available at
www.utahmed.com/proxy.htm.
Utah
Medical Products, Inc.
7043
South 300 West
Midvale,
Utah 84047