UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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Meridian Bioscience, Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
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3471 River Hills Drive
Cincinnati, Ohio 45244
www.meridianbioscience.com
Notice of Annual Meeting of Shareholders
and Proxy Statement
Dear Shareholders:
Our Annual Meeting of Shareholders will be held at 2:00 p.m. on January 25, 201824, 2019 at the Holiday Inn Eastgate, 4501 Eastgate Boulevard,Meridian Innovation Center, 7007 Valley Avenue, Cincinnati, Ohio 45245.45244. We hope you will attend.
At the meeting, you will hear a report on our operations and have a chance to meet your Directors and Executive Officers.
This booklet includes the formal notice of the meeting and the proxy statement. The proxy statement tells you more about the agenda and procedures for the meeting. It also describes how the Board operates and gives personal information about our Director candidates.
We are pleasedPursuant to once again take advantage of the U.S. Securities and Exchange Commission rules that allowrule allowing companies to furnish their proxy materials to their shareholders over the Internet. As a result, we are mailing to most of our shareholdersinternet, a Notice of Internet Availability of Proxy Materials (the “Notice”) instead of a paper copy of this proxy statement and our Annual Report.was sent to shareholders on or about December 13, 2018. The Notice contains instructionsinformation on how to access and review those documents overcopies of the Internet. We believe that this process allows us to provide our shareholders with the information they need in a more timely manner, while reducing the environmental impact and lowering the costs of printing and distributing our proxy materials. If you received a Notice by mail and would like to receive a printed copy of our proxy materials you should follow the instructions for requesting such materials included in the Notice.and vote your shares.
Whether or not you plan to attend the meeting, please cast your proxy vote promptly, either online, over the phone or by returning your signed and dated proxy card in the enclosed envelope.
Sincerely yours,
/s/ John A. KraeutlerDavid C. Phillips
John A. KraeutlerDavid C. Phillips
Executive Chairman of the Board
December 14, 201713, 2018
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Date:
January 25, 201824, 2019
Time:
2:00 p.m., Eastern Standard Time
Place:
Holiday Inn EastgateMeridian Bioscience, Inc.
4501 Eastgate Blvd.Meridian Innovation Center
7007 Valley Avenue
Cincinnati, Ohio 4524545244
Purpose:
Elect as Directors the eight nominees named in the accompanying proxy materials
Conduct an advisory vote on our executive compensation(“Say-on-Pay”)
Conduct an advisory vote on the preference for the frequency of futureSay-on-Pay votes(“Say-on-Frequency”)
Ratify appointment of Grant Thornton LLP as Meridian’s independent registered public accountants for fiscal year 20182019
Only shareholders of record on November 30, 20172018 may vote at the meeting. The approximate mailing date of this proxy statement and accompanying Proxy Card is December 14, 2017.13, 2018.
Your vote is important. Please cast your proxy vote promptly, either online, over the phone or by returning your signed and dated proxy card in the enclosed envelope.
By order of the Board of Directors,
/s/ Melissa A. Lueke
Melissa A. Lueke
Secretary
December 14, 201713, 2018
Meridian makes available, free of charge on its website, all of its filings that are made electronically with the Securities and Exchange Commission (“SEC”), including Forms10-K,10-Q and8-K. These filings are also available on the SEC’s website (www.sec.gov). To access these filings, go to our website (www.meridianbioscience.com). Copies of Meridian’s Annual Report on Form10-K for the fiscal year ended September 30, 2017,2018, including financial statements and schedules thereto, filed with the SEC, are also available without charge to shareholders upon written request addressed to:
Melissa A. Lueke
Executive Vice President, Chief Financial Officer and Secretary
Meridian Bioscience, Inc.
3471 River Hills Drive
Cincinnati, Ohio 45244
MERIDIAN BIOSCIENCE, INC.
3471 River Hills Drive
Cincinnati, Ohio 45244
Telephone (513)271-3700
P R O X Y S T A T E M E N T
Annual Meeting of Shareholders
January 25, 201824, 2019
Who may vote
Shareholders of Meridian, as recorded in our stock register on November 30, 2017,2018, may vote at the meeting. As of that date, Meridian had 42,307,54242,463,102 shares of Common Stock outstanding.
How to vote
You may vote in person at the meeting, by telephone, online, or by proxy.completing and returning a proxy card. We recommend you vote by proxy even if you plan to attend the meeting. You can always change your vote at the meeting.
How proxies work
Meridian’s Board of Directors is asking for your proxy. Giving us your proxy means you authorize us to vote your shares at the meeting in the manner you direct. You may vote for all, some or none of our Director candidates. You may also vote for or against the other proposals or abstain from voting.
If you complete your proxy online, over the phone or sign and return the enclosed proxy card but do not specify how to vote, we will vote your shares in favor of: (i) our Director candidates; (ii) our executive compensation; and (iii) ratification of appointment of Grant Thornton LLP as Meridian’s independent registered public accountants for fiscal year 2018; and (iv) “one year” as the preferred frequency for future advisory votes on executive compensation.2019. If any other matters come before the meeting or any postponement or adjournment thereof, each proxy will be voted in the discretion of the individuals named as proxies on the card.
You may receive more than one proxy or voting card depending on how you hold your shares. Shares registered in your name are covered by one card. If you hold shares through someone else, such as a stockbroker, bank or nominee, you may get material from them asking how you want to vote.
Stockbrokers, banks and nominees holding shares for beneficial owners must vote those shares as instructed by you. If the stockbroker, bank or nominee has not received instructions from you, the beneficial owner, the stockbroker, bank or nominee generally has discretionary voting power only with respect to the ratification of appointment of the independent registered public accountants. However, a stockbroker, bank or nominee does not have discretion to vote for or against the election of Directors and certain other matters subject to a vote if they have not received voting instructions from you. In order to avoid a brokernon-vote of your shares on the election of Directors and the other matters subject to a vote, you must send voting instructions to your stockbroker, bank or nominee.
Solicitation of proxies
Solicitation of proxies is being made by management at the direction of Meridian’s Board of Directors, without additional compensation, through the mail, in person or by telephone. The cost of preparing and mailing the Notice and the proxy statement and any accompanying material will be borne by Meridian. In addition, Meridian will request brokers and other custodians, nominees and fiduciaries to forward proxy soliciting material to the beneficial owners of shares held of record, and Meridian will reimburse them for their expenses in so doing.
Revoking a proxy
You may revoke your proxy before it is voted by submitting a new proxy with a later date, by voting in person at the meeting or by notifying Meridian’s Secretary in writing at the address under “Questions” on page 31.31 of this proxy statement.
Quorum
In order to carry on the business of the meeting, we must have a quorum. This means at least a majority of the outstanding shares eligible to vote must be represented at the meeting, either by proxy or in person.
Votes needed
The eight Director candidates receiving the most votes will be elected to fill the seats on the Board. The approval on an advisory basis of our executive compensation (Proposal No. 2) and the ratification of appointment of accountants (Proposal No. 4)3) require the favorable vote of a majority of the votes cast. Only votes for or against these proposals count, with abstentions not being counted either for or against these proposals.
The advisory vote on the frequency ofsay-on-pay votes (every one, two, or three years) (Proposal No. 3) is a plurality vote, and we will consider shareholders to have expressed anon-binding preference for the frequency option that receives the most favorable votes. Abstentions from voting on this proposal will have the same effect as not expressing a preference.
Abstentions and brokernon-votes count for quorum purposes but, as indicated above, will not count for voting purposes. Brokernon-votes occur when a broker returns a proxy card but does not have authority to vote on a particular proposal.
Other matters
Any other matters considered at the meeting, including postponement or adjournment, will require the affirmative vote of a majority of the votes cast.
(Item 1 on the Proxy Card)
The Nominating and Corporate Governance Committee of the Board of Directors has nominated forre-election the following current Directors: James M. Anderson, Dwight E. Ellingwood, Jack Kenny, John A. Kraeutler, John C. McIlwraith, David C. Phillips, John M. Rice, Jr. and, Catherine A. Sazdanoff.Sazdanoff, and Felicia Williams.
Proxies solicited by the Board will be voted for the election of these nominees. All Directors elected at the Annual Shareholders’ Meeting will be elected to hold office until the next annual meeting. In voting to elect Directors, shareholders are entitled to cumulate their votes and to give one candidate a number of votes equal to the number of Directors to be elected multiplied by the number of shares held by the shareholder, or to distribute their votes on the same principle among as many candidates as the shareholder sees fit. In order to invoke cumulative voting, notice of cumulative voting must be given in writing by a shareholder to the CEO, a Vice President or the Secretary of Meridian not less than 48 hours prior to the Annual Shareholders’ Meeting. The proxies solicited include discretionary authority to cumulate votes.
All Meridian Directors are elected forone-year terms. Personal information on each of our nominees is given below.
If a Director nominee becomes unavailable before the election, your proxy card authorizes us to vote for a replacement nominee if the Board names one.
The Board recommends that shareholders voteFOR each of the following candidates:
James M. Anderson Director since 2009 Age: | James M. Anderson serves as Chairman of the Compensation Committee. He currently serves as Senior Strategic and External Affairs Advisor with Taft Stettinius & Hollister LLP and President Emeritus of Cincinnati Children’s Hospital Medical Center (“CCHMC”), after having served as advisor to the President of CCHMC from January 2010 through June 30, 2017 and as President and Chief Executive Officer of CCHMC from 1996 through 2009. From 2006 to 2014, he served as a director of Ameritas Mutual Holding Company and has also served as Chairman of the Board of the Cincinnati Branch of the Federal Reserve Bank of Cleveland, retiring in 2012. Prior to joining the staff of CCHMC, Mr. Anderson was a partner in the general corporate law department at Taft, Stettinius & Hollister for 24 years (1968-1977; 1982-1996) and president of U.S. operations at Xomox Corporation, a publicly-traded manufacturer of specialty process controls (1977-1982). Mr. Anderson has also served as director of Gateway Investment Advisors (1997-2008). The Board believes that Mr. Anderson’s corporate legal experience and his experience as CEO of a large health care organization have given him a wealth of insight into various corporate governance and business management issues, which, along with his status as an independent Director, make him an integral member of the Board. | |
Dwight E. Ellingwood Director since 2014 Age: | Dwight E. Ellingwood serves as Chairman of the Nominating and Corporate Governance Committee. With over 35 years of experience in health care strategy, planning, commercialization and marketing, he currently serves as a teaching professor at Xavier University in the Graduate Program in the Department of Health Service Administration and as President of D.E.E. Strategy Consulting, LLC, to advise leadership in health care and the community on strategy and innovative approaches to growth and collaboration. Mr. Ellingwood previously served as Senior Vice President of Strategy, Communications and Public Affairs for TriHealth in Cincinnati, Ohio (November 2014 – July 2016) and as the Lead Executive for the Collective Impact on Health, The Health Collaborative (January 2014 – November 2014). From 1997 through 2013, Mr. Ellingwood served as Senior Vice President, Planning and Business Development for Cincinnati Children’s Hospital Medical Center. The Board believes that the Company benefits greatly from Mr. Ellingwood’s extensive experience in the health care industry. | |
Jack Kenny Director since 2017 Age: | Jack Kenny serves as Meridian’s Chief Executive Officer, having joined the Company on October 9, 2017. Before joining Meridian, Mr. Kenny served as Senior Vice President and General Manager, North America, with Siemens Healthcare, a position he held from October 2014 to May 2017. From June 2012 through October 2014, Mr. Kenny served as Vice President and General Manager, U.S. Region, for Becton Dickinson, Diagnostic Systems. Prior to June 2012, Mr. Kenny held executive roles at Danaher Corporation and Quest Diagnostics. Mr. Kenny’s experience as a key executive leader within large public companies in the health care and medical device industry, as well as his ongoing insights into Meridian’s business and operations, makes him a valuable member of the Board. |
John
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Age: | John C. McIlwraithco-founded Allos Ventures, a venture capital firm, in March 2010 and has served as a Managing Director there since that time. Prior to founding Allos Ventures, Mr. McIlwraith was a Managing Director of Blue Chip Venture Company, a Cincinnati-based venture capital | |
David C. Phillips Age: | David C. Phillips serves as Chairman of the Board and Chairman of the Audit |
John M. Rice, Jr. Age: | John M. Rice is the founder, and since 2003 has been the Managing Partner of Triathlon Medical Venture Partners, a venture capital firm that invests equity capital in early and expansion stage life science companies. Since 2014, Dr. Rice has also served as the Director of Life Sciences at CincyTech, a firm that provides advice and capital to entrepreneurs and helps research institutions commercialize technology through startups. In addition, Dr. Rice has served on the board of directors of several privately-held health care companies. The Board believes that Dr. Rice’s years of experience with a number of companies operating in the health care and related industries, as well as extensive experience within the capital markets, will prove extremely valuable to Meridian. |
Catherine A. Sazdanoff Age: | Catherine A. Sazdanoff is the President and CEO of Sazdanoff Consulting, LLC, providing health care strategy and business development advisory services to a number of clients, having held these positions since January 2015. She also currently serves as Business Advisor | |
Felicia Williams Age: 53 | Felicia Williams has served as Executive Vice President, Controller and Enterprise Risk at Macy’s Inc. since June 2016. Having joined Macy’s in June 2004, she has previously served as Senior Vice President, Finance and Risk Management (February 2011 – June 2016), as well as in other finance, treasury, risk management and internal audit capacities. Prior to her time at Macy’s, Ms. Williams served in various financial positions at the Coca-Cola Hellenic Bottling Company and The Coca-Cola Company (June 1994 – June 2004). Ms. Williams brings broad and wide-ranging finance and risk management experience, which the Board believes will greatly benefit the Company. |
ADVISORY VOTE ON COMPENSATION OF NAMED EXECUTIVE OFFICERS(“SAY-ON-PAY” PROPOSAL)
(Item 2 on the Proxy Card)
The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd Frank”), enacted in July 2010, requires that we provide our shareholders with the opportunity to vote to approve, on anon-binding, advisory basis, the compensation of our named executives officers as disclosed in this proxy statement in accordance with the compensation disclosure rules of the Securities and Exchange Commission (“SEC”). As noted in the discussion of Proposal No. 3 below, Dodd Frank also provides that shareholders periodically be given the opportunity to vote, on anon-binding, advisory basis, for their preference as to how frequently we should seek future advisory votes on the compensation of our named executive officers. This opportunity was provided to our shareholders at our 20122018 annual meeting, where over 90%80% of our voting shareholders voted to hold the“say-on-pay” advisory vote annually, in accordance with the recommendation of our Board of Directors. As a result, we are again holding asay-on-pay advisory vote at our 20182019 annual meeting, with the nextsay-on-pay advisory vote to be held at our 2019 annual meeting. See Proposal No. 3 below regarding the“say-on-frequency” vote being held at the 20182020 annual meeting.
As described in detail below under the heading “Compensation Discussion and Analysis” beginning on page 1615 of this proxy statement, we seek to closely align the interests of our named executive officers with the interests of our shareholders. We structure our programs to discourage excessive risk-taking through a balanced use of compensation vehicles and metrics with an overall goal of delivering sustained long-term shareholder value while aligning our executives’ interests with those of our shareholders. Further, our programs require that a substantial portion of each named executive officer’s compensation be contingent on delivering performance results that benefit
our shareholders. Our compensation programs are designed to reward our named executive officers for the
achievement of short-term and long-term strategic and operational goals and the achievement of increased total shareholder return.
The vote on this matter is not intended to address any specific element of compensation; rather, the vote relates to the compensation of our named executive officers, as described in this proxy statement in accordance with the compensation disclosure rules of the SEC. The vote is advisory, which means that the vote is not binding on the Company, our Board of Directors or the Compensation Committee. The Board and the Compensation Committee will review and consider the voting results when making future decisions regarding our executive compensation program.
Accordingly, we ask our shareholders to approve, on an advisory basis, the compensation of the named executive officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosure.
The Board recommends that shareholders voteFOR the approval of the compensation of our named executive officers as disclosed in this proxy statement.
ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON COMPENSATION OF NAMED EXECUTIVE OFFICERS(“SAY-ON-FREQUENCY” PROPOSAL)
(Item 3 on the Proxy Card)
Dodd-Frank also provides that, at least once every six years, shareholders must be given the opportunity to vote, on anon-binding, advisory basis, for their preference as to how frequently we should seek future advisory votes on the compensation of our named executive officers as disclosed in accordance with the compensation disclosure rules of the SEC, which we refer to as an advisory vote on executive compensation. As noted in Proposal No. 2 above, we last provided this opportunity to our shareholders at our 2012 annual meeting where over 90% of our shareholders voted to hold the“say-on-pay” advisory vote annually. By voting with respect to this Proposal No. 3, shareholders may once again indicate whether they would prefer that we conduct future advisory votes on executive compensation once every one, two or three years.
Consistent with the 2012say-on-frequency voting results, our Board of Directors has determined that an advisory vote on executive compensation that occurs each year is the most appropriate alternative for the Company at this time, and therefore, our Board recommends that you vote for annual advisory votes on executive compensation. The Board of Directors has determined that an annual advisory vote on executive compensation will allow our shareholders to provide timely, direct input on the Company’s executive compensation philosophy, policies and practices as disclosed in the proxy statement each year. The Board believes that an annual vote is therefore consistent with the Company’s efforts to engage in an ongoing dialogue with our shareholders on executive compensation and corporate governance matters. However, shareholders should note that because the advisory vote on executive compensation occurs well after the beginning of the compensation year, and because the different elements of our executive compensation programs are designed to operate in an integrated manner and to complement one another, in many cases it may not be appropriate or feasible to change our executive compensation programs in consideration of any one year’s advisory vote on executive compensation by the time of the following year’s annual meeting of shareholders.
This vote is advisory and not binding on the Company or our Board of Directors in any way. The Board and the Compensation Committee will carefully review the voting results. Notwithstanding the Board’s recommendation and the outcome of the shareholder vote, the Board may in the future decide to conduct advisory votes on a more or less frequent basis and may vary its practice based on factors such as discussions with shareholders and the adoption of material changes to compensation programs.
Shareholders may cast a vote on the preferred voting frequency by selecting the option of every one year, two years, or three years (or abstain) when voting in response to this Proposal No. 3. Shareholders will not be voting to approve or disapprove the recommendation of the Board of Directors.
The Board recommends that shareholders voteFOR the option of “one year” as the preferred frequency for future advisory votes on executive compensation.
RATIFICATION OF APPOINTMENT OF GRANT THORNTON LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
(Item 43 on the Proxy Card)
Although not required, we are seeking shareholder ratification of the Audit Committee’s selection of Grant Thornton LLP as Meridian’s independent registered public accountants for the 20182019 fiscal year. The affirmative vote of a majority of shares voting at the meeting is required for ratification. If ratification is not obtained, the Audit Committee intends to continue the engagement of Grant Thornton LLP at least through fiscal 2018.2019. Representatives of Grant Thornton LLP are expected to be present at the Annual Shareholders’ Meetingmeeting and will be available to make a statement, if they so desire, and to respond to appropriate questions asked by shareholders.
Principal Accounting Firm Fees
Aggregate fees billed to Meridian by Grant Thornton LLP for fiscal years 20172018 and 20162017 are listed below:
2017 | 2016 | 2018 | 2017 | |||||||||||||
Audit Fees | $ | 631,374 | $ | 569,739 | $ | 717,043 | $ | 631,374 | ||||||||
Audit-Related Fees | 39,450 | 144,085 | 44,213 | 39,450 | ||||||||||||
Tax Fees | 352,611 | 393,669 | 478,566 | 352,611 | ||||||||||||
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$1,023,435 | $1,107,493 | $1,239,822 | $1,023,435 | |||||||||||||
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Audit Fees. Audit fees are the fees billed for professional services rendered by Meridian’s independent registered public accounting firm for theirtheir: (i) audit of Meridian’s consolidated annual financial statements for the fiscal years ended September 30, 20172018 and 2016,2017, respectively; (ii) reviews of the unaudited quarterly consolidated financial statements contained in the reports on Form10-Q filed by Meridian during those years; (iii) completion of audits of Bioline Groupwholly-owned subsidiaries’ statutory accounts in the United Kingdom during fiscal 20172018 and 2016;2017; and (iv) reporting on Meridian’s internal controls during those years. The fiscal 2016 amount also includes fees associated with expanded audit services in connection with the acquisition of Magellan Biosciences, Inc., and its wholly-owned subsidiary Magellan Diagnostics, Inc. (collectively, “Magellan”).
Audit-Related Fees. Audit-related fees are the fees billed for assurance and related services that are reasonably related to the performance of the audit or review of Meridian’s financial statements, including the audit of the Savings and Investment Plan (i.e., the 401K Plan). Fees in 2016 also included fees related to consulting and required standalone audits associated with the Magellan acquisition.
Tax Fees. Tax fees are the fees billed for tax return preparation and compliance in Australia, England, Germany and the United States, as well as consultation and research on various matters such as the U.S. tax reform act, state tax issues, international tax issues and transfer pricing. Additionally, the 2016 tax amount includes fees for services associated with the Magellan acquisition, includingpre-acquisition due diligence, tax return preparation, net operating loss limitations analysis and transaction cost deductibility analysis.
The Board recommends that shareholders voteFOR the ratification of appointment of Grant Thornton LLP as Meridian’s independent registered public accountants for the 20182019 fiscal year.
As an Ohio corporation, Meridian is governed by the corporate laws of Ohio. Since its common shares are publicly traded on the Nasdaq Global Select Market, and it files reports with the SEC, it is also subject to Nasdaq rules and federal securities laws.
Board Leadership Structure
Governance of the corporation is placed in the hands of the Directors who, in turn, elect officers to manage the business operations. The Board oversees the management of Meridian on your behalf. The Board reviews Meridian’s long-term strategic plans and exercises direct decision making authority in all major decisions, such as acquisitions, the declaration of dividends, major capital expenditures and the establishment of certain company policies.
The Board operates and evaluates its performance in accordance with Corporate Governance Guidelines approved by the Board. These Guidelines are available at our websitewww.meridianbioscience.com.
The Board of Directors is responsible for evaluating and determining Meridian’s leadership structure, and believes that at this point in time separate individuals should serve in the capacities of Chairman of the Board (“Chairman”) and Chief Executive Officer (“CEO”). It is the Board’s belief that such a structure currently provides the Company with the right foundation to pursue its strategic and operational objectives, while maintaining effective oversight and objective evaluation of the Company’s performance. Currently, theseThese key executive positions are held by Mr. John A. Kraeutler, ExecutiveDavid C. Phillips, Chairman of the Board, and Mr. Jack Kenny, CEO. Having served as both Chairman and CEOa Director since 2014,2000, Mr. KraeutlerPhillips was appointed Executive Chairman of the Board upon Mr. Kenny becomingJohn A. Kraeutler retiring from the Company’s CEO in October 2017.Company and the Board effective September 30, 2018. In his capacity as Executive Chairman, Mr. KraeutlerPhillips is responsible forfor: (i) general Board activities, including setting agendas for Board meetings and presiding over all meetings of the Board and shareholders; and (ii) providing advice and counsel to Meridian’s management regarding the Company’s business operations. As CEO, Mr. Kenny is responsible for the general management, oversight, supervision and control of the business affairs of Meridian, and ensuring that all resolutions of the Board are put into effect.
Mr. David C. Phillips has beenwas appointed by the Board to serve as Lead Director. The Board has determined that theDirector throughout fiscal 2018, during which time Mr. Kraeutler served as Executive Chairman. As Lead Director, shallMr. Phillips’ responsibilities included: (i) in consultation with thenon-management Directors, adviseadvising the Chairman as to an appropriate schedule of Board meetings and reviewreviewing and provideproviding the Chairman with input regarding the agendas for each Board meeting; (ii) presidepresiding at all meetings at which the Chairman iswas not present, including Executive Sessions of thenon-management Directors, and appriseapprising the Chairman of the issues considered thereat; (iii) callcalling meetings of thenon-management Directors when necessary and appropriate; and (iv) performperforming such other duties as the Board may from time to time designate. We believe that this leadership structure is currentlywas the most appropriate for Meridian particularly in light of the requirement noted below that all Committees of the Board are comprised solely of independent Directors.during fiscal 2018.
In accordance with Nasdaq rules, our Board of Directors affirmatively determines the independence of each Director and nominee for election as a Director in accordance with the elements of independence set forth in the Nasdaq listing standards and Exchange Act rules. Meridian’s Director Independence Standards are available at our websitewww.meridianbioscience.com. Based on these standards, the Board has determined that each of the following members of the Board areis independent: James M. Anderson, Dwight E. Ellingwood, John C. McIlwraith, David C. Phillips, John M. Rice, and Catherine A. Sazdanoff.Sazdanoff, and Felicia Williams.
During fiscal 2017,2018, the Board of Directors met on nine occasions and took no actions in writing.ten occasions. The independent Directors plan to meet as necessary during fiscal 20182019 without the presence of management Directors. During fiscal 2017,2018, the independent members of the Board periodically met in executive session without the presence of management Directors following regularly scheduled Board meetings. In addition, there were two meetings of the independent directors during fiscal 2018.
Meridian expects all Directors to attend shareholders’ meetings, and all but one ofDirectors attended the current Directors serving at that time were in attendance at the 20172018 Annual Shareholders’ Meeting.
Shareholders may communicate with the full Board or individual Directors on matters concerning Meridian by mail or through our website,www.meridianbioscience.com, in each case to the attention of the Secretary, the address for whom is set forth on page 31 of this proxy statement.
The Board’s Role in Risk Oversight
The Board of Directors, as a whole and also at the Committee level, plays a key role in operational risk oversight at Meridian and works with management to understand the risks the Company faces, the steps that management is taking to manage those risks and the level of risk appropriate for the Company in light of its overall business strategy. The Board approves the high level strategies, financial plans and policies of Meridian, setting the tone and direction for the appropriate levels of risk-taking within the organization.
While overall responsibility for risk oversight rests with the Board, it is the Audit Committee that has been given the primary responsibility of monitoring and evaluating the adequacy of management’s risk assessment and risk management practices. This role is carried out through its charter-mandated responsibilities related to Meridian’sMeridian’s: (i) overall financial risks and exposures; (ii) financial statement risks and exposures; (iii) financial reporting processes; (iv) compliance with ethics policies, such as the Code of Ethics, Employee Complaint Policy, Securities Trading Policies and the Foreign Corrupt Practices Act Policy; and (v) compliance with governmental and legal regulations, including those contained within the Sarbanes-Oxley Act. The Audit Committee provides regular reports to the full Board and works closely with management to update the full Board, as necessary, on matters identified through these Committee risk oversight roles.
The Board has adopted a Code of Ethics applicable to Meridian’s officers, Directors and employees. This Code of Ethics is posted onwww.meridianbioscience.com. To the extent permitted by Nasdaq Marketplace Rule 5610, any amendments to or waivers from the Code of Ethics will be posted on our website within four business days after the date of an amendment.
Committees of the Board of Directors
The Directors have organized themselves into the Committees described below. Each of these Committees has a charter posted onwww.meridianbioscience.com. Meridian does not have an Executive Committee of its Board of Directors. The following table identifies membership and the Chairman of each of the current standing committees of the Board, as well as the number of times each committee met during the fiscal year. In August 2017, John M. RiceSeptember 2018, Felicia Williams joined the Board and has not yet beenwas appointed to any committees.the Audit Committee.
Director | Audit | Compensation | Nominating and Corporate Governance | Audit | Compensation | Nominating and Corporate Governance | ||||||
James M. Anderson | Member | Chair | Member | Member | Chair | Member | ||||||
Dwight E. Ellingwood | Chair | Chair | ||||||||||
John C. McIlwraith | Member | Member | Member | Member | ||||||||
David C. Phillips | Chair | Member | Chair | Member | ||||||||
Catherine A. Sazdanoff | Member | Member | ||||||||||
Meetings in Fiscal 2017 | 9 | 6 | 6 | |||||||||
Felicia Williams(1) | Member | |||||||||||
Meetings in Fiscal 2018 | 9 | 7 | 7 |
(1) | Ms. Williams was appointed to the Audit Committee upon joining the Board in September 2018. |
The Audit Committee is comprised of David C. Phillips (Chairman), James M. Anderson, and Catherine A. Sazdanoff.Sazdanoff, and Felicia Williams (effective September 20, 2018). The Committee met nine times during fiscal 2017 and took no actions in writing.2018. Each member is able to read and understand fundamental financial statements. David C. Phillips hasand Felicia Williams have been designated as an Audit Committee financial expertexperts as that term is defined by the SEC.
The Committee oversees the accounting and financial reporting processes of Meridian and the audits of its financial statements by its independent registered public accounting firm. The Committee is solely responsible for the appointment, compensation, retention and oversight of Meridian’s independent registered public accounting firm. The Audit Committee also evaluates information received from Meridian’s independent registered public accounting
firm and management to determine whether the independent registered public accounting firm is independent of management. The independent registered public accounting firm reports directly to the Audit Committee.
In addition, the Audit Committee has established procedures for the receipt, retention and treatment of complaints received by Meridian concerning accounting, internal accounting controls or auditing matters and has established procedures for the confidential and anonymous submission by employees of any concerns they may have regarding questionable accounting or auditing matters.
The Audit Committee, or its Chairman, approves all audit andnon-audit services performed for Meridian by its independent registered public accounting firm before those services are commenced. The Chairman reports to the full Committee at each of its meetings regardingpre-approvals he made since the prior meeting and the Committee approves what he has done between meetings. For these purposes, the Committee or its Chairman is provided with information as to the nature, extent and purpose of each proposed service, as well as the approximate timeframe and proposed cost arrangements for that service.
As previously noted on page 8 in “The Board’s Role in Risk Oversight” section, the Audit Committee also bears primarycertain risk oversight responsibilities, including responsibilities such as: (i) overseeing the risks and exposures relating to the Company’s financial statements and financial reporting process; (ii) overseeing the Company’s policies and procedures for monitoring and mitigating such risks and exposures; and (iii) reviewing management’s monitoring of the Company’s compliance with established ethics and legal policies and procedures.responsibilities.
The Committee has submitted the following report for inclusion in this proxy statement.
On January 24, 2017,2018, the Audit Committee met with representatives of Grant Thornton LLP and Meridian’s internal accountants, at which time the Grant Thornton LLP representatives presented to the Committee the results of their work, including their review of Meridian’s first quarter consolidated financial statements, and discussed their proposed audit fees for fiscal 2017.2018. In addition, the CommitteeCommittee: (i) received an update on controls being put into place to remediate the material weakness in the controls over financial reporting identified during the fiscal 2017 audit (the “2017 material weakness”); (ii) discussed the timing and scope of the planned Sarbanes-Oxley (“SOX”) and internal audit work for fiscal 2017,2018; (iii) received a progress reportan overview of the new Revenue Recognition Standard, which was effective for the Company October 1, 2018; (iv) received an overview of the anticipated effects of the U.S. Tax and Jobs Act (the “tax reform act”) on the efforts to form a wholly foreign-owned enterprise (“WFOE”) in China,Company; and (v) received an update regarding certain of the Company’s information technology (“IT”) and cyber security endeavors.
On April 25, 2017,24, 2018, the Committee met with representatives of Grant Thornton LLP and Meridian’s internal accountants, at which time the Grant Thornton LLP representatives presented to the Committee the results of their work for their review of Meridian’s second quarter consolidated financial statements and the timing and scope of their engagement for the audit of Meridian’s fiscal 20172018 consolidated financial statements. In addition, the Committee received an update on various matters including: (i) SOX work completedto-date by internal audit; (ii) impact of the tax reform act; (iii) the Company’s ongoing cyber security and disaster recovery efforts; (iv) status of the WFOE in ChinaChina; and IT security, and discussed planned training activities focused on(v) status of efforts surrounding preparation to adopt the Foreign Corrupt Practices Act and U.K. Bribery Act.new Revenue Recognition Standard. The Committee also received an update regarding the successful remediation of the 2017 material weakness.
On July 25, 2017,24, 2018, the Committee met with representatives of Grant Thornton LLP and Meridian’s internal accountants, at which time the Grant Thornton LLP representatives presented to the Committee the results of their work for their review of Meridian’s third quarter consolidated financial statements, including thetheir activities related to their review of the goodwill impairment charge recorded for Magellan during the quarter.income tax calculation and key accounting matters. Additionally, the Committee received an update on various matters includingincluding: (i) SOX work completedto-date by internal audit, including the results of visits to the Company’s ongoing cyber security reviewlocations in the U.K. and disaster recovery planning,Italy, as well the status of Magellan financial integration,certain ITGC testing; (ii) an overview of the WFOE in China,Company’s 2018 cyber and IT risk reduction program; (iii) goodwill testing and the reporting units considered for such testing; and (iv) status of activities associated with the planned implementation of the new Revenue Recognition Standard inat the beginning of fiscal 2019.
At its meeting on September 26, 2017, the Committee reviewed management’s outlook for 2017 and the Company compliance update related to SOX requirements. The Committee performed its annual risk assessment, reviewed and approved related party transactions, and approved the Audit Committee Charter. In addition, Grant Thornton LLP representatives reviewed the status of their internal control and interim testing being performed in connection with the fiscal 2017 audit.
At its meeting on November 8, 2017,6, 2018, the Committee reviewed and discussed with management, Grant Thornton LLP and Meridian’s accounting officers the results of the audit for fiscal 2017,2018, including the financial statements. The Committee discussed with Grant Thornton LLP the matters required to be discussed by Auditing Standards No.
16, as amended (PCAOB Interim Auditing Standard AU Section 380,Communication with Audit Committees). The Grant Thornton LLP representatives reviewed with the Committee written disclosures required by applicable requirements of the PCAOB regarding the independent accountants’ communications with the Audit Committee concerning independence, discussed with the Committee the independent accountants’ independence, and presented a letter regarding that matter to the Committee. The Committee discussed with Grant Thornton LLP its independence. In concluding that the auditors are independent, we determined, among other things, that thenon-audit services provided by the auditors were compatible with their independence. In addition, the Committee approved related party transactions and approved amendments to the Audit Committee Charter. It also received anupdates on: (i) IT security update.security; (ii) the results of SOX work; and (iii) implementation of the new Revenue Recognition Standard.
Based on the above mentioned review and discussion of the audited consolidated financial statements, including during aon November 20, 2017 Committee meeting, and discussion of a material weakness associated with access to a computer file, on November 28, 2017,2018, the Committee recommended that the audited consolidated financial statements of Meridian be included in its Annual Report on Form10-K for the year ended September 30, 20172018 for filing with the SEC. Similar meetings were held during November 2017 related to the fiscal 2017 audited financial statements.
The remaining meetings throughout fiscal 2018 were held primarily for the purpose of reviewing, discussing and approving the Company’s Quarterly Reports on Form10-Q for filing with SEC.
During its meetings throughout the year, the Committee reviewed and assessed the Company’s financial statements, financial control, financial reporting, and certain legal and regulatory risk exposures, including reviewing procedures related to the receipt, retention and treatment of any complaints concerning accounting, internal accounting controls or auditing matters. Also during its meetings throughout the year, the Chairman of the Audit Committee reported to the full Committee the independent accountants’ fees that had beenpre-approved and the Committee approved such fees. Certain fees werepre-approved by the full Committee. The Committee also reviewed the requirements of and Meridian’s ongoing compliance with Section 404 of the Sarbanes-Oxley Act.
During 2017, under the oversight of the NominatingAct and Corporate Governance Committee, an evaluation of the Board and Committees was performedconducted a self-assessment, facilitated by a third party. The results of the evaluation were reviewed by the Board on November 8, 2017.
Respectfully submitted,
Audit Committee
David C. Phillips (Chairman)
James M. Anderson
Catherine A. Sazdanoff
Felicia Williams
The Compensation Committee is comprised of James M. Anderson (Chairman), John C. McIlwraith and David C. Phillips and is responsible for establishing compensation for Executive Officers and administering the Company’s compensation plans. As used in this proxy statement, “Executive Officer” means our president, principal financial officer, principal accounting officer, any vice president in charge of a principal business unit, division or function, any other officer who performs a policy-making function, or any other person who performs similar policy-making functions for Meridian. Not all “Executive Officers” are “Named Executive Officers” who are identified in the Summary Compensation Table on page 23. This includes establishing base salary levels and cash-based incentive plans, making stock-based awards, and otherwise dealing in all matters concerning compensation of the Executive Officers. During fiscal 2017,2018, the Compensation Committee met six times, and took one action in writing.seven times.
In general, the Compensation Committee annually reviews the Company’s compensation programs and its philosophy in setting performance targets in November of each year. At that time, the Company provides the Compensation Committee with information on total compensation received for all Executive Officers, including the sources of such compensation, for the immediately preceding fiscal year and recommendations for the current fiscal year. In discharging the responsibilities of the Board of Directors relating to compensation of the Company’s CEO and other Executive Officers, the purposes of the Compensation Committee are, among others: (i) to review and approve the compensation of the Company’s CEO and other Executive Officers; and (ii) to oversee the compensation policies and programs of the Company, including stock and benefit plans. The Compensation Committee’s specific functions include adopting, administering and approving the Company’s cash-based incentive
compensation and stock-based incentive plans and awards, including amendments to the plans or awards and performing such duties and responsibilities under the terms of any executive compensation plan, incentive-compensation plan or equity-based plan. The Compensation Committee has the authority to delegate any of its responsibilities to subcommittees as the Compensation Committee may deem appropriate in its sole discretion. The Compensation Committee has the authority to engage consultants and advisors. The Compensation Committee did not engageAn independent consultant was engaged during fiscal 2018 to complete a Company-wide compensation study, a part of which was assisting the Company in evaluating and making recommendations related to the Company’s long-term incentive compensation plan. See discussion of the Long-Term Stock-based Incentives below on pages 16 and 19. Another consultant in 2017.provided a review of the competitiveness of the Company’s compensation ofnon-employee Directors. In 20172018, the Committee also conducted a review of the CEO’s performance, reviewed the CEO’s assessment of his team’s performance, reviewed its Charter and conducted a self-assessment, facilitated by a third party.
The Compensation Committee determines the amount and mix of compensation components for the Executive Chairman, Mr. Kraeutler, and the CEO, Mr. Kenny. During fiscal 2017,As CEO, Mr. Kraeutler as both Chairman and CEO, providedKenny provides recommendations to the Compensation Committee with respect to the compensation to be paid to the other Named Executive Officers. For fiscal 2018, Mr. Kenny provided input and recommendations with respect to the compensation of the other Named Executive Officers.
To achieve compensationcorporate objectives, the Committee believes it is important to provide competitive levels of compensation to retain the most qualified employees, to recognize individuals who exceed expectations and to closely link executive compensation with corporate performance. The Committee believes Meridian’s long-term objectives can be achieved through cash-based incentive compensation plans and stock-based incentive compensation plans.
The Compensation Committee’s processes and procedures for the consideration and determination of Executive and Director compensation are discussed in the section entitled “Compensation Discussion and Analysis” in this proxy statement. See Compensation Committee Report on page 2422 following the Compensation Discussion and Analysis.
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee has ever been an officer or employee of the Company. None of the members of the Compensation Committee is or was a participant in any related person transaction in fiscal 20172018 (see the section entitled “Transactions With Related Persons” in this proxy statement for a description of our policy on related person transactions). Lastly, none of the members of the Compensation Committee areis an Executive Officer of another entity at which one of our Executive Officers serves on the Board of Directors. No Named Executive Officer of Meridian serves as a Director or as a member of a committee of any company of which any of the Company’snon-employee Directors are Executive Officers.
The Nominating and Corporate Governance Committee consists of Dwight E. Ellingwood (Chairman), James M. Anderson and John C. McIlwraith. The Committee met sixseven times during fiscal 2017 and took no actions in writing.2018. On November 8, 2017,7, 2018, the Committee considered and nominatedrecommended the nomination of the current Directors forre-election. The Committee identifies qualified nominees for the Board, determinesrecommends to the Board who will be nominated by the Company for election to the Board and recommends to the full Board any changes in the size of the Board. The Committee also reviewed its Charter and oversaw a third-party-facilitated self-assessment of the Board and its committees.
In nominatingrecommending the nomination of Directors, the Committee takes into account, among other factors which it may deem appropriate, the judgment, skill, diversity, independence, and business experience of the potential nominee and the needs of the Board as its function relates to the business of the Company. The Committee considers candidates for nomination from a variety of sources including recommendations of shareholders. Shareholders desiring to submit recommendations for nominations by the Committee should direct them to the Chairman of the Nominating and Corporate Governance Committee in care of the Company at its address shown on the cover page of this proxy statement.
The Nominating and Corporate Governance Committee will assess the qualifications of all candidates for the Board on an equal basis. In identifying and considering candidates for nomination to the Board, the Committee considers, among other factors, quality of experience, the needs of the Company and the range of talent and experience currently represented on the Board. The Committee also discusses a director skills matrix, which it has prepared and updated. The Committee evaluates such factors, among others, and does not assign any particular weighting or
priority to any of these factors, nor does the Committee have a formal policy with respect to diversity. However, the Committee, working with the Board, considers the diversity of all of the Company’s stakeholders – including shareholders, employees and customers – when engaging in corporate governance discussions.
During several Board meetings in fiscal 2017,2018, the Board discussed the benefits of adding new members to the Board.Board and its Committees. Pursuant to this, the Nominating and Corporate Governance Committee considered potentialconducted a thorough search, which involved meeting with several candidates based uponidentified through extensive conversations with and recommendations fromnon-managerialnon-employee Directors, and chose to meet with Dr. Rice.Directors. Based upon the review of hisMs. Williams’ qualifications and the favorable results of their meetings with her, the Committee recommended that the Board proceeded to nominate Dr. RiceMs. Williams as a candidate for election to the Board. As a result, the Board elected Ms. Williams as Director in September 2018.
During fiscal 2018, the Nominating and Corporate Governance Committee provided oversight of the Board’s process for electing Mr. David C. Phillips as Chairman of the Board.
Additionally, during 2018, under the oversight of the Nominating and Corporate Governance Committee, an evaluation of the Board and heCommittees was appointed toperformed by a third party. The results of the evaluation were reviewed by the Board in August 2017.on November 7, 2018.
DIRECTORS AND EXECUTIVE OFFICERS
This table lists the Executive Officers and Directors of Meridian and shows the number of shares beneficially owned, as determined under SEC rules, on November 30, 2017.2018. Beneficial ownership includes any shares as to which the individual has sole or shared voting or investment power and also any shares that the individual has the right to acquire within 60 days.
Common Stock Beneficially Owned | ||||||||||
Name | Position | Amount1 | Percentage | |||||||
John A. Kraeutler | Executive Chairman of the Board and Director | 444,561 | 1.0 | % | ||||||
Jack Kenny | Chief Executive Officer and Director | — | — | |||||||
Richard L. Eberly2 | Executive Vice President, President, Chief Commercial Officer | 23,348 | * | |||||||
Lawrence J. Baldini3 | Executive Vice President, President, Global Operations | 69,254 | * | |||||||
Melissa A. Lueke4 | Executive Vice President, Chief Financial Officer and Secretary | 130,523 | * | |||||||
Vecheslav A. Elagin5 | Executive Vice President, Research & Development, and Chief Scientific Officer | 26,819 | * | |||||||
Susan D. Rolih6 | Executive Vice President, Global Regulatory & Quality Systems | 131,039 | * | |||||||
Amy M. Winslow7 | Executive Vice President, President and Chief Executive Officer, Magellan | 3,400 | * | |||||||
Marco G. Calzavara8 | President and Managing Director, Meridian Bioscience Europe | 17,057 | * | |||||||
James M. Anderson9, 10, 11 | Director | 87,000 | * | |||||||
Dwight E. Ellingwood11 | Director | 41,500 | * | |||||||
John C. McIlwraith10, 11 | Director | 32,000 | * | |||||||
David C. Phillips9, 10 | Director | 121,626 | * | |||||||
John M. Rice12 | Director | 12,000 | * | |||||||
Catherine A. Sazdanoff9 | Director | 36,700 | * | |||||||
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All Executive Officers and Directors as a Group | 1,176,827 | 2.7 | % |
Common Stock Beneficially Owned | ||||||||||
Name | Position | Amount1 | Percentage | |||||||
Jack Kenny | Chief Executive Officer and Director | 25,000 | * | |||||||
Lawrence J. Baldini2 | Executive Vice President, Global Operations | 44,135 | * | |||||||
Melissa A. Lueke3 | Executive Vice President, Chief Financial Officer and Secretary | 206,080 | * | |||||||
Eric S. Rasmussen4 | Executive Vice President, Corporate Development | — | — | |||||||
Susan D. Rolih5 | Executive Vice President, Global Regulatory & Quality Systems | 197,980 | * | |||||||
Lourdes G. Weltzien6 | Executive Vice President, Life Science | 17,327 | * | |||||||
David C. Phillips7, 8 | Chairman of the Board and Director | 126,126 | * | |||||||
James M. Anderson7, 8, 9 | Director | 99,000 | * | |||||||
Dwight E. Ellingwood9 | Director | 53,500 | * | |||||||
John C. McIlwraith8, 9 | Director | 47,000 | * | |||||||
John M. Rice | Director | 25,000 | * | |||||||
Catherine A. Sazdanoff7 | Director | 48,700 | * | |||||||
Felicia Williams7 | Director | 12,000 | * | |||||||
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All Executive Officers and Directors as a Group | 876,848 | 2.0 | % |
1 | Includes shares for options and restricted stock units currently exercisable and/or exercisable or vesting within 60 days as follows: Mr. |
|
Lawrence J. Baldini was appointed Vice President of Operations in April 2001, Executive Vice President, Operations and Information Systems in October 2005 and Executive Vice President, |
Melissa A. Lueke was appointed Vice President, Chief Financial Officer and Secretary in January 2001 and Executive Vice President, Chief Financial Officer and Secretary in November 2009. Prior to her appointment, Ms. Lueke served as Meridian’s Controller since March 2000 and Acting Secretary from July 20, 2000 to January 23, 2001. Before joining Meridian, Ms. Lueke was employed by Arthur Andersen LLP from June 1985 to January 1999, most recently as a Senior Audit Manager. On December 6, 2018, Ms. Lueke notified the Company of her retirement from the position of Executive Vice President and Chief Financial Officer effective January 1, 2019. Age: |
4 | Eric S. Rasmussen joined Meridian as Executive Vice President, Corporate Development in June 2018. Before joining Meridian, Mr. Rasmussen served as Vice President, Strategy and Business Development with Lear Corporation from October 2012 to May 2018. Mr. Rasmussen has been promoted to the position of Executive Vice President, Chief Financial Officer effective January 1, 2019. Age: 51 |
5 |
|
Susan D. Rolih was appointed Vice President of Regulatory Affairs and Quality Assurance in May 2001, Senior Vice President of Regulatory Affairs and Quality Assurance in April 2008, Executive Vice President of Regulatory and Quality Systems in April 2013, and Executive Vice President, Global Regulatory and Quality Systems in November 2016. Before joining Meridian, Ms. Rolih held various regulatory and quality positions with Immucor, Inc. Effective November 30, 2018, Ms. Rolih retired from her position with the Company. Age: |
6 | Lourdes G. Weltzien joined Meridian in July 2008 as General Manager of Life Science and was appointed Vice President and General Manager of Life Science in April 2013, as well as President of Asia Pacific Markets in July 2016, and Executive Vice President, Life Science in March 2018. Prior to joining Meridian, Dr. Weltzien held various executive and management positions with Sigma-Aldrich Corporation (now Millipore-Sigma) since 1994. Age: 53 |
7 |
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8 |
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9 |
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Nominating and Corporate Governance Committee Member. |
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* | Less than one percent. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table lists the persons known by the Company to be the beneficial owners of more than five percent of the Company’s Common Stock as of November 30, 2017,2018, unless otherwise noted. Beneficial ownership includes any shares as to which the individual has sole or shared voting or investment power.
Name and address of beneficial owner | Amount and nature of beneficial ownership | Percent of class1 | Amount and nature of beneficial ownership | Percent of class1 | ||||||||||||
BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | 5,273,081 | 12.50 | ||||||||||||||
Brown Capital Management, LLC 1201 N. Calvert Street Baltimore, MD 21202 | 5,691,631 | 13.49 | 4,665,143 | 11.03 | ||||||||||||
BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | 4,819,109 | 11.40 | ||||||||||||||
The Vanguard Group, Inc. 100 Vanguard Blvd. Malvern, PA 19355 | 4,258,302 | 10.06 | ||||||||||||||
The Vanguard Group, Inc. 100 Vanguard Blvd. Malvern, PA 19355 | 3,614,424 | 8.56 | ||||||||||||||
Renaissance Technologies LLC 800 Third Avenue New York, NY 10022 | 2,230,676 | 5.27 |
1 | For the beneficial owners listed in the table, the percentages listed reflect disclosures in the Schedule 13Gs most recently filed by each beneficial owner with the SEC as of the date of this proxy statement. |
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934 requires Meridian’s Executive Officers, Directors and persons who own more than ten percent of a registered class of Meridian’s equity securities to file reports of ownership and changes in ownership with the SEC. Based on a review of the copies of such forms received by it, Meridian believes that during the last fiscal year, all of its Executive Officers, Directors and ten percent stockholders complied with the Section 16 reporting requirements. In making these statements, Meridian has relied upon examination of the copies of Forms 3, 4 and 5, and amendments thereto, and the written representation of its Directors and Executive Officers.
TRANSACTIONS WITH RELATED PERSONS
During fiscal 2017,2018, the Company leased certain office space from an entity controlled by Marco G. Calzavara, who served as President and Managing Director, Meridian Bioscience Europe.Europe through July 2018. Payments made under such arrangements during fiscal 20172018 totaled approximately $150,000.$160,000.
Nasdaq rules require the Company to conduct an appropriate review of related party transactions required to be disclosed by the Company pursuant to SEC RegulationS-K Item 404 for potential conflict of interest situations on an ongoing basis and that all such transactions must be approved by the Audit Committee or another Committee comprised of independent Directors. As a result, the Audit Committee annually reviews all such related party transactions and approves each related party transaction if it determines that it is in the best interests of the Company. Additionally, the Audit Committee’s Charter provides it the authority to review, approve and monitor transactions involving the Company and “related persons” (Directors and Executive Officers or their immediate family members, or shareholders owning five percent or greater of the Company’s outstanding stock). This also covers any related person transaction that meets the minimum threshold for disclosure in the proxy statement under
the relevant SEC rules (generally, transactions involving amounts exceeding $120,000 in which a related person has a direct or indirect material interest). In considering the transaction, the Audit Committee may consider all relevant factors, including, as applicable: (i) the Company’s business rationale for entering into the transaction; (ii) the alternatives to entering into a related person transaction; (iii) whether the transaction is on terms comparable to those available to third parties, or in the case of employment relationships, to employees generally; (iv) the potential for
the transaction to lead to an actual or apparent conflict of interest and any safeguards imposed to prevent such actual or apparent conflicts; and (v) the overall fairness of the transaction to the Company. This policy is included in the Company’s Employee Handbook. The approvalapprovals of such related person transactions are evidenced by internal Company resolutions, minutes or memoranda.
COMPENSATION DISCUSSION AND ANALYSIS
Throughout this proxy statement, the individuals who served as the Company’s CEO and Chief Financial Officer during fiscal 2017,2018, as well as the other individuals listed in the Summary Compensation Table below, are referred to as the “Named Executive Officers” or “NEOs.”
Compensation Philosophy and Objectives
Our principles and actions regarding executive compensation programs are designed to achieve a series of objectives. We believe our executive compensation programs support our corporate strategies by adopting a “pay for performance” philosophy that provides incentives to our Executive Officers and employees for support and achievement of these strategies. Our executive compensation is tied to performance objectives that are aligned with our strategic objectives to incentivize and focus behavior on strengthening our business for long-term shareholder value. Meridian believes that people who understand our purpose will drive progress. In order to create value for our shareholders, it has been important for us to focus on the core areas of growth, cost containment and organizational redesign. In fiscal 2018, we launched our new Meridian brand supporting a fresh, new image and message to the channels and customers we serve. We also consolidated what were essentiallyseparately-run, subsidiary businesses into two globally integrated strategic business units. This coincided with the realignment of our organizational structure, which resulted in fewer management layers and a more efficient cost structure that will free up resources for future growth initiatives.
We continued to transform our business resources in 2018, based on where to compete in the market, and better leverage our strengths across the globe. Our strategic priorities are as follows:
Reshape the financial profile to achieve higher growth over time, while maintaining strong financial returns and mitigating risks in our business.
Focus on organic and inorganic investment tore-allocate capital to where we can win and compete over the long-term.
Align the deployment of human capital and minimize risk, while improving organizational fitness.
Compensation and benefit programs are designedan important part of the Company’s employment relationship, which also include challenging and rewarding work and a focus on career growth, while aligning with our strategy of increasing value. Pay for performance is fundamental to align the interests of management with thoseour compensation philosophy. We reward individuals’ performance for contributions to business success.
Critical to each element of our shareholders,total compensation and benefits philosophy is that it be based on a strategy to attract, retain, and motivate high quality executives. Each elementunlock the hidden potential of totalour human capital, and it therefore consists of competitive pay, incentive programs, and benefits that meet income security and protection. The affordability of compensation is designed such that it achieves one or moreand benefits are considered over the medium- to long-term, and to the extent possible, will not fluctuate based on short-term business conditions.
The key principles to the design of these objectives.
We follow several principles when designing our compensation programs. First, we select performance measures on which incentive compensation is based. These performance measures establish expectations for performance. We then set payout ratios based on levels of achievement of those performance measures. Our performance measures align incentive pay so that management is compensated for activities and performance that drive revenue growth, profitability and shareholder returns. We believe our programs offer a competitive total compensation opportunity with a significant portion dependent on the achievement of performance goals.
Our executive compensation program focuses on both short and long-term results and is composed of three key elements:are as follows:
Base salaries, which reflect job responsibilities, competitiveness, and take into account individual performance in connection with merit increases;
Annual cash-based incentive opportunities, which are a function of the performance of the Company;company and personal performance; and
Longer-term stock-based incentive opportunities under our 2012 Stock Incentive Plan, in the form of stock options and/or restricted stock unit grants, which linkalign the long-term interests of senior management with our shareholders.
Base salaries are generally set in the 50th-75th percentile ofbased on individual job duties, performance and achievements, while considering internal pay equity, retention, critical skills, and independent survey market ratesdata for the specific region.regions. Annual cash-based incentive programs targetinclude a payout range of 12.5%17.5% to 37.5%56% of base salary, with a target payout ratio of 25%35% of base salary. Our intent is to increase this payout range over time, pending results. Annual cash-based incentive programs are based on defined metrics aligned to our strategic objectives and the achievement of performance goals that are set at levels to motivate executives by being reasonably achievable, yet at levels that produce improvedto commit to growth and align with value creation, while improving performance. It is intended to set goals at levels that enable sustained improvements in performance.
Stock-based incentive awards consist of restricted stock units, both time-based and performance-based, and performance-basednon-qualified options, both time-based and performance-based.options. This combination of stock-based awards is designed to both reward and retain, while aligning interests of management with our shareholders.
The Compensation Committee has established several principles and practices that are important to achieving our compensation philosophy and objectives. These are summarized below.
Gross-up Payments, Repricing of Options, Pledging, Hedging and Margin Accounts
The Company avoids new contractual agreements that include excise taxgross-up payments. It does not allow the repricing of options, which is not permitted under the 2012 Stock Incentive Plan without first obtaining the approval from stockholders of the Company. Additionally, the Company’s Insider Trading Policy places restrictions on the Company’s Directors and Executive Officers regarding entering into hedging transactions with respect to the Company’s securities and from holding the Company’s securities in margin accounts or otherwise pledging such
securities as collateral for loans. Specifically, our Insider Trading Policy provides that Directors, Executive Officers and certain other designated employees may not purchase Meridian securities on margin or borrow against any account in which Meridian securities are held. The Policy also provides that such persons may not pledge Meridian securities as collateral for a loan or engage in hedging or monetization transactions with respect to Meridian securities. No Directors or Executive Officers have in place any pledges or hedging transactions.
Recovery of Past Awards
With respect to recovery of past awards, except as provided by applicable laws and regulations, we do not have a policy with respect to adjustment or recovery of awards or payments if relevant Company performance measures upon which previous awards were based are restated or otherwise adjusted in a manner that would reduce the size of such award or payment. Under those circumstances, we expect that the Compensation Committee and the Board would evaluate whether compensation adjustments wereare appropriate based upon the facts and circumstances surrounding the applicable restatement or adjustment.
Minimum Vesting Periods
Although the plan document for our 2012 Stock Incentive Plan does not include minimum vesting periods for options or stock appreciation rights, our Compensation Committee includes minimum vesting provisions in the award agreements for stock options pursuant to authority granted to it under the 2012 Stock Incentive Plan. Generally the option award agreements provide for a minimum vesting period of three years. The 2012 Stock Incentive Plan provides that no Restricted Shares or Restricted Share Units conditioned upon the achievement of performance objectives shall be based on a restriction period of less than one year, subject to the Plan’s provisions applicable to termination of employment and change of control.
Cash Buyouts of Underwater Options
Although the plan document for our 2012 Stock Incentive Plan does not include a provision expressly prohibiting cash buyouts of options or stock appreciation rights, the Compensation Committee believes cash buyouts of “underwater options” is a governance practice that investors view as unfavorable. As a result, the Compensation Committee is generally opposed to cash buyouts of options or stock appreciation rights.
Back-Dating and Spring-Loading
Although Meridian does not have a written policy regarding the timing or practices related to granting equity awards, neither Meridian nor the Compensation Committee engages in spring-loading, back-dating or bullet-dodging practices. Equity awards are generally granted at a regularly scheduled meeting ofby the Compensation Committee in the first quarter of the fiscal year. Stock options are granted at the closing market price on the date of grant, pursuant to the 2012 Stock Incentive Plan. Prior to the exercise of an option, the holder has no rights as a stockholder with respect to the shares subject to such option, including no rights to vote or to receive dividends. Prior to vesting of restricted stock units noted above, the holder may receive dividend equivalent payments depending on the award nature and agreement. Restricted stock units do not have voting rights.
Ownership Guidelines
Consistent with its compensation philosophy and the principle of aligning the interests of management and Directors of the Company with the interests of its stockholders, the Board of Directors has implemented stock ownership guidelines for “Specified Officers” (defined in the guidelines as those officers required to file beneficial ownership reports with the SEC) andnon-employee Directors. Under the guidelines, the Company’s Chief Executive Officer is required to own an amount of Company common stock (including vested andnon-vested restricted stock units) which is equal to or exceeds three times such Chief Executive Officer’s annual base salary, and Specified Officers other than the Chief Executive Officer are required to own an amount of Company common stock (including vested andnon-vested restricted stock units) which is equal to or exceeds such officer’s annual base salary. Also under the guidelines, each of the Company’snon-employee Directors is required to own an amount of Company common stock which is equal to or exceeds three times suchnon-employee director’s annual retainer. Generally, persons subject to the guidelines are required to achieve the applicable guideline not later than three years from the appointment to their position. Excluding those still within thephase-in period, as of the date of this proxy statement, persons subject to these guidelines have been deemed by the Board to have met their ownership target, either as a result of their direct holdings or shares held indirectly by an entity affiliated with such person, in accordance with the guidelines.
The Compensation Committee is responsible for ongoing oversight of compliance with this compensation philosophy. The Compensation Committee ensures that the total compensation paid to the NEOs is fair, reasonable and competitive.
At our 20172018 annual meeting, Meridian once again held an advisory vote on the compensation of its NEOs, commonly referred to as asay-on-pay vote. Our shareholders approved the compensation of our NEOs, with approximately 96%95% of votes cast in favor of our 20172018say-on-pay resolution. Based on the results of the 20172018say-on-pay vote, the Compensation Committee concluded that the compensation paid to the NEOs and Meridian’s overall pay practices received strong shareholder support and do not require substantial revision to address shareholder concerns.
Executive Summary
Actions of the Compensation Committee
In several meetings during the year, Mr. Kraeutler, and subsequent toyear-end, Mr. Kenny and the Compensation Committee Chairman discussed, among other things, Meridian’s compensation system and its effectiveness in attracting and retaining talented employees. They noted that the underlying principles in the plan have been followed for many years, even when following such principles resulted in no Officer’s Performance Compensation Plan (cash-based incentive compensation) bonuses being awarded to the NEOs and performance-based stock awards not vesting. They also discussed certain changes to the compensation programs for fiscal 20182019 which are outlined in this proxy statement.
At its November 8, 2017 meeting,2018 meetings, the Compensation Committee discussed these matters, both with and without the presence of management. The Compensation Committee discussed the recommendations of the CEO for compensation levels for all officers and the general pay increases to be paid throughout the Company. The Committee then made the compensation decisions, which are reflected in the figures presented in this proxy statement.
Fiscal 20172018 Compensation Decisions
In lightFor fiscal 2018, the Cash-based Incentive Compensation Plan’s target payout ratio for the NEOs was thirty-five percent of our financial results not meetingbase salary, with forty percent of the target payout ratio (14%) based on revenues; forty percent of the target payout ratio (14%) based onnon-GAAP net earnings; and the remaining twenty percent of the target payout
ratio (7%) based on individual performance using a1-5 rating system. The specific minimum threshold targets in ourlevels of revenues,non-GAAP earnings and individual performance ratings required to achieve the varying percentage of target payout for each measurement criteria are as follows:
Threshold (50%) | Target (100%) | Maximum (150%) | ||||||||||
Revenues | $ | 208,000,000 | $ | 212,000,001 | $ | 216,000,001 | ||||||
Non-GAAP Earnings | $ | 31,400,000 | $ | 32,550,001 | $ | 33,800,001 | ||||||
Individual Performance | 2 Rating | 3 Rating | 4 Rating |
The cash-based incentive compensation planpayments received by the NEOs for fiscal 2018, as reflected in the Summary Compensation Table, were based on the Company achieving: (i) revenues totaling $213,571,000 (100% of target payout);non-GAAP earnings totaling $31,705,000 (50% of target payout); and (iii) individual performance ratings of 3 or ourhigher. As set forth in the Company’s fiscal 2018 Annual Report on Form10-K,non-GAAP earnings exclude the impact of restructuring and litigation costs incurred in fiscal 2018, along with theone-time benefit of the U.S. tax law change and the repatriation transition tax.
Due to the Company not achieving the $34,700,000non-GAAP earnings threshold required to earn performance-based long-term stock incentive awards for fiscal 2018, no NEOs received cash-based incentive compensation payments, and nosuch performance-based restricted stock unit awards vested for any NEOs. The minimum threshold related to these awards was established as a stretch target for the Company.
However, as discussed below in the “John A. Kraeutler Employment Agreement and Supplemental Benefit Agreement” section, as a result of fiscal 2018 revenue and earnings guidance being achieved, the performance-based restricted stock unit awards made to Mr. Kraeutler in connection with his Third Amended and Restated Employment Agreement fully vested.
Fiscal 20182019 Compensation Decisions
Base Salaries
Based on our financial results in fiscal 20172018 and the individual evaluationsCompensation Committee’s review of the NEOs byCEO’s evaluation of the Compensation Committee,other NEOs, the Compensation Committee approved a merit increase pool of 1.5%2.5% for NEOs, with the actual merit increases to be determined by the CEO. With respect to Mr. Kraeutler, now Executive Chairman, Mr. Kraeutler waived the provisions of his Employment Agreement and will forego an increase in his salary as of January 1, 2018. With respect to Mr. Kenny, hired October 9, 2017 as CEO, see page 2221 for discussion of his compensation arrangements. Base salaries across all Meridian employees below the executive level are expected to increase approximately 3% effective January 1, 2018.2019.
Cash-based Incentive Compensation
The Compensation Committee approved the 20182019 Cash-based Incentive Compensation Plan structure, including performance targets and payout targets. For NEOs, the target payout ratio is twenty-fivethirty-five percent of base salary. FiftyForty percent of the target payout ratio (12.5%(14%) is based on achieving certain levels of net revenues. The remaining fiftyrevenues; forty percent of the target payout ratio (12.5%(14%) is based on achieving certain levels of net earnings on anon-GAAP basis.Non-GAAP items for fiscal 2018 are defined inoperating income; and the below excerpt from Section Vremaining twenty percent of the plan document, whichtarget payout ratio (7%) is filed as Exhibit 10.9 to our fiscal 2017 Form10-K.based on individual performance. Depending on the level of achievement, ana NEO may earn from 0% to 37.5%56% of base salary.
NON-GAAP MEASUREMENT
Non-GAAP items shall consist of items disclosed in the Company’sNon-GAAP Financial Measures disclosures in the MD&A section of the fiscal 2018 Form10-K.
In the event of an acquisition during the Plan year, to the extent not already captured in thenon-GAAP disclosures noted above, the Board, upon the proposal of the Compensation Committee, may in its discretion consider restructuring, purchase accounting and extraordinary charges associated with such acquisitions as disclosed in the Company’s Form10-K to be considered in the calculation ofnon-GAAP earnings. If the acquisition provides accretive earnings, the Board may, in its discretion, include this for purposes of bonus calculations as a means to incent management to pursue accretive acquisitions and in recognition of the significant time and effort necessary to complete such acquisitions. Upon the completion of acquisitions, interest income assumed in the fiscal plan will be adjusted to reflect the cash used.
The Compensation Committee shall evaluate certain events, in its discretion, for determination of treatment in the bonus calculation. Examples include the impact of tax legislation and the impact of implementing new accounting standards.
Net revenues must reach a minimum of $208 million for NEOs to earn any portion of the cash-based incentive tied to net revenues achievement. At net revenues in excess of $212 million, NEOs earn one hundred percent payout for this portion (12.5% of base salary), while upon achievement of net revenues in excess of $216 million, NEOs earn one hundred and fifty percent payout for this portion (18.75% of base salary).Non-GAAP net earnings must reach a minimum of $27.65 million to earn any portion of cash-based incentive tied to net earnings achievement. Upon achievingnon-GAAP net earnings in excess of $28.65 million, NEOs earn one hundred percent payout for this portion (12.5% of base salary) and upon achievingnon-GAAP net earnings in excess of $29.75 million, NEOs earn one hundred fifty percent payout (18.75% of base salary).
Cash-based incentive compensation, if earned, is paid in the first quarter of each fiscal year, for the prior fiscal year’s performance. The net revenues andnon-GAAP net earnings operating income targets operate independently. While the net revenues portion may be earned upon achieving the net revenues targets, the portioncomponent related tonon-GAAP net earnings operating income is subject to the Company’s attainment of the specificnon-GAAP net earnings operating income target, after inclusion of the compensation expense related to cash-based incentive compensation. Should the Company fail to reach the minimumnon-GAAP net earnings operating income target, no cash-based incentive compensation will be paid for this portion.component.
Management and the Compensation Committee have intended that the net revenues andnon-GAAP net earnings operating income thresholds be set at reasonably achievable targets, yet at levels that require diligence to produce improved performance. The Compensation Committee tends to set the thresholds consistent with the net revenue and net earningsoperating income guidance range requiring that the low end of guidance is achieved before cash-based incentive compensation is paid.range.
Long-Term Stock-based Incentive AwardsIncentives
TheAfter considering the independent consultant’s findings and recommendations, the Compensation Committee approvedhas modified the Company’s long-term stock-based incentive program. As a result of these modifications, awards to be granted to certain executives of the Company including the NEOs will include two types of equity awards, restricted stock unitunits and options to purchase Company stock. Varying levels of these awards, ranging from 50% to 150% would be earned if established targets for net revenue, operating income and two typestotal shareholder return are achieved over an established three year measurement period. The target levels to be achieved as part ofnon-qualified stock option awards for the Company’s NEOs, with the exception of Messrs. Kraeutler and Kenny, whose awards consisted of only restricted stock units. Messrs. Kraeutler and Kenny received separatenon-qualified option awards in connection with their respective employment agreements. The first type of restricted stock unit award andnon-qualified stock option award is performance-based, where the NEOs’ ability to vest in such awards is contingent upon the Company reaching a minimum level ofnon-GAAP net earnings of $30.5 million for fiscal 2018. This award would vest 25% per year over four years, if earned. The second type of restricted stock unit award andnon-qualified stock option award is time-based and fully vests after four years (cliff vesting). Management and this program are established at levels that the Compensation Committee determined the mix of both restricted stock units andnon-qualified stock options provides better alignment with shareholder interests. In prior years the awards consisted of only restricted stock units. Following is a summary of the awards:
Messrs. Kraeutler and Kenny werebelieves represent appropriate long-term incentive compensation value for each awarded 25,000 performance-based and 25,000 time-based restricted stock units. Other NEOs were each awarded 7,500 performance-based and 7,500 time-based restricted stock units. The other NEOs were also each awarded 12,500 performance-based and 12,500 time-basednon-qualified options.executive.
Establishing Compensation Levels
The Compensation Committee recommends CEO compensation to the Board of Directors for approval. On October 9, 2017, Mr. Kenny was hired as CEO. The terms of his Employment Agreement are summarized on page 22.21. The compensation levels for the other NEOs are recommended by the CEO. The Compensation Committee has discretion to follow or modify such recommended levels of compensation. The Compensation Committee considers the input of our CEO as a crucial component of its compensation processes and decisions relating to NEO compensation. The Compensation Committee is not obligated to follow his recommendations. The Company does not engage in strict numerical benchmarking in determining the percentage modifications for the NEOs. Under its charter, the Compensation Committee is authorized to engage outside advisors at the Company’s expense. In fiscal 2017,2018, the Company did not engageengaged an independent consultant to complete a consultant, as it had done soCompany-wide compensation study, a part of which was assisting the Company in 2016.evaluating, and making recommendations related to the Company’s long-term incentive compensation, including providing benchmarked peer data of such compensation. See discussion of the long-term incentive compensation above.
In setting the NEOs’ compensation, the Compensation Committee reviews all components of such compensation through the use of tally sheets. These tally sheets provide the amount of total compensation paid or earned by each NEO based on his or her base salary, cash-based incentive compensation, stock-based awards and retirement contributions. The tally sheets reviewed provide all of the information that is reflected in the Summary Compensation Table. The review by the Compensation Committee analyzes how changes in any element of compensation would impact other elements, particularly severance or change in control benefits, if applicable to the executive. Such analysis has become an important component in the Compensation Committee’s review of executive compensation, as the tally sheet allows the Compensation Committee to consider an executive’s overall compensation rather than only one or two specific components of an executive’s compensation. This allows the Compensation Committee to make compensation decisions and evaluate management recommendations based on a complete analysis of an executive’s total compensation. Salaries are set on a calendar year basis and, therefore, salaries paid in the first three months of each fiscal year beginning on the first day of October are set in the prior fiscal year.
Components of Executive Compensation and Related Risk Profile
Meridian’s executive compensation and benefits packages consist of:of base salary, cash-based incentive compensation, long-term stock-based incentive awards, Company-sponsored benefit and retirement plans, and change in control severance benefits. Each of these components has a certain risk profile.
Element | Form of Compensation | Purpose | Risk Profile | |||
Base Salaries | Cash | Provides competitive, fixed compensation to attract and retain exceptional executive talent | Low to moderate |
Element | Form of Compensation | Purpose | Risk Profile | |||
Annual Cash-based Incentives | Cash | Provides a direct financial incentive to achieve corporate operating goals | Moderate to high |
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Long-Term Stock-based Incentives | Non-qualified stock options and/or restricted stock units | Encourages Executive Officers to build and maintain a long-term equity ownership position in Meridian so that their interests are aligned with our shareholders | High | |||
Health, Retirement and Other Benefits | Eligibility to participate in benefit plans generally available to our employees, including retirement plan contributions, and premiums paid on disability and life insurance policies | Benefit plans are part of a broad-based employee benefits program providing competitive benefits to our Executive Officers | Low | |||
Change in Control Severance Benefits | Cash and continuation of certain benefits | Encourages Executive Officers to maximize value for shareholders in the event that the Company becomes subject to a change in control transaction | Moderate to high |
The Compensation Committee has reviewed the risk profile of the components of the Company’s executive compensation program, including the performance objectives and target levels used in connection with incentive awards, and has considered the risks ana NEO might be incentivized to take with respect to such components. When establishing the mix among these components, the Compensation Committee is careful not to encourage excessive risk taking. Specifically, the performance objectives contained in the Company’s executive compensation programs have been balanced between annual and long-term incentive compensation to ensure that both components are aligned and consistent with our long-term business plan and that our overall mix of stock-based awards has been allocated to promote an appropriate combination of incentive and retention objectives.
The Compensation Committee believes that the Company’s executive compensation program does not incentivize the NEOs to engage in business activities or other behavior that would threaten the value of the Company or the investments of its shareholders.
The Compensation Committee continues to monitor and evaluate on anon-going basis the mix of compensation, especially equity compensation, awarded to the NEOs, and the extent to which such compensation aligns the interests of the NEOs with those of the Company’s shareholders. In connection with this practice, the Compensation Committee has, from time to time, including in November 2017,2018 as noted above, reconsidered the structure of the Company’s executive compensation program and the relative weighting of various compensation elements. See discussion of Long-Term Stock-based Incentives on page 19 for changes made for fiscal 2018 to this component of compensation.
See Executive Summary on page 1817 for discussion of base salaries, annual cash-based incentive compensation and long-term stock-based compensation.
Company-Sponsored Benefit and Retirement Plans
Meridian provides Company-sponsored benefit and retirement plans to the NEOs. In general, executives participate in the Company’s benefit and retirement plans on the same basis as other Company employees. The core benefit package includes health, dental, short and long-term disability, and group term life insurance. Meridian generally
provides retirement benefits to executives through qualified (under the Internal Revenue Code) defined contribution plans (401K Plan).
Change in Control Severance Benefits
The Compensation Committee believes that a reasonable level of salary and Company-sponsored benefit protection provides a means of retention and allows the NEOs to remain focused on achievement of Company goals and objectives in the event that the Company becomes subject to a merger or acquisition transaction. This component of compensation would only be paid in the event of a change in control of the Company, under certain qualifying conditions, and termination of the NEO’s employment (double trigger). For the CEO and theother NEOs, other than the Executive Chairman, this component of compensation would include two years’ base salary, performance bonus and core benefits. For the Executive Chairman, this component of compensation would include three years’ base salary, performance bonus and core benefits. See page 2928 for a description of change in control severance agreements entered into with our Executive Officers.
Other Personal Benefits
Two of the NEOs have auto leases that are paid by the Company, the costs of which are included in the All Other Compensation table on page 25. The Company believes payment of these leases to be reasonable given the nature of the positions and consistent with the Company’s overall executive compensation philosophy.
Jack Kenny Employment Agreement
Effective October 9, 2017, the Company and Mr. Kenny entered into an Employment Agreement (the “Kenny Employment Agreement”) providing for the terms of Mr. Kenny’s employment as Chief Executive Officer. The Kenny Employment Agreement provides that Mr. Kenny is entitled to receive a base salary of $550,000 for the first year of the Kenny Employment Agreement’s term (“Year 1”) and $650,000 for the second year of the Kenny Employment Agreement’s term (“Year 2”). Mr. Kenny is eligible to earn an annual bonus of up to $275,000 for Year 1 and $325,000 for Year 2, subject to the achievement of certain performance criteria as determined by the Compensation Committee of the Board. The Kenny Employment Agreement also provides that Mr. Kenny receivereceive: (i) a grant of stock options to purchase 100,000 shares of common stock which will vest on apro-rata basis over four (4) years following the effective date of the Kenny Employment Agreement; and (ii) a grant of 13,000 restricted stock units vesting in a lump sum or “cliff” basis on the second anniversary of the effective date of the Kenny Employment Agreement. The Kenny Employment Agreement also provides that Mr. Kenny receive an annual equity award of no less than 25,000 restricted stock units per year vesting in a lump sum or “cliff” basis on the fourth anniversary following the date of grant.year.
The Kenny Employment Agreement’s term continues through October 9, 2019, and thereafter provides for renewal periods of one (1) year that automatically renew on the annual anniversary of the effective date of the Kenny Employment Agreement. Pursuant to the terms of the Kenny Employment Agreement, there is no required minimum period of employment and either the Company or Mr. Kenny may terminate his employment under the Kenny Employment Agreement at any time for any reason or no reason. If Mr. Kenny voluntarily terminates the Kenny Employment Agreement, he must give the Company at least 90 days’ prior written notice. If the Company voluntarily terminates the Kenny Employment Agreement without cause,Cause, the Company is obligated to give Mr. Kenny 90 days’ prior written notice. In the event that the Company terminates the employment of Mr. Kenny without Cause or if he terminates his employment for Good Reason, each as defined in the Kenny Employment Agreement, Mr. Kenny is entitled to a severance payment equal to twelve months of his then current base salary plus apro-rata portion of the target bonus through the date of termination. If such termination occurs during a change of control period (double trigger), Mr. Kenny is entitled to a severance payment equal to two times his then current base salary plus his target bonus for the severance period.
John A. Kraeutler Employment Agreement and Supplemental Benefit Agreement
Effective October 3, 2016, the Company and Mr. Kraeutler entered into a Third Amended and Restated Employment Agreement (the “Kraeutler Employment Agreement”), which, among other things, extended the term of his employment and incorporated the terms and conditions of his Supplemental Benefit Agreement. The Kraeutler Employment Agreement providesprovided that Mr. Kraeutler iswas entitled to receive an established minimum annual salary and that he iswas eligible to participate in the Company’s cash-based and stock-based incentive plans. The Kraeutler Employment Agreement also providesprovided that Mr. Kraeutler receivereceive: (i) a grant of 50,000non-qualified stock options vesting on September 30, 2017 and a grant of 50,000non-qualified stock options vesting on September 30, 2018 so
long as he iswas employed on that date; and (ii) two grants of 25,000 performance-based restricted stock units, with one grant to be earned if published fiscal 2017 revenue and earnings guidance iswas achieved, and the other grant to be earned if published fiscal 2018 revenue and earnings guidance iswas achieved. As a result of the fiscal 2018 revenue and earnings guidance being achieved, 25,000 restricted stock units granted under the Kraeutler Employment Agreement have
fully vested. However, as a result of originally published fiscal 2017 revenue and earnings guidance not being achieved, 25,000 restricted stock units granted under the Kraeutler Employment Agreement were not earned and have been cancelled.
Pursuant to his Second Amended and Restated Employment Agreement, effective from January 15, 2015 to October 3, 2016 (the “2015 Employment Agreement”) and which was replaced by the current Kraeutler Employment Agreement, Mr. Kraeutler earned 50,000non-qualified stock options as a result of being employed by the Company as of September 30, 2016. However, as a result of published fiscal 2016 revenue and earnings guidance not being achieved, 25,000 restricted stock units granted under the 2015 Employment Agreement were not earned and have been cancelled.
In addition, the Kraeutler Employment Agreement provides that Mr. Kraeutler is eligible to receive:
Post-retirement benefit payments totaling $1,200,000, payable in one hundred twenty (120) monthly payments of $10,000; and
Lifetime insurance benefits including health insurance and comprehensive long-term care insurance.
The Kraeutler Employment Agreement provides for potential payments to Mr. Kraeutler upon a change in control. These payments are described on page 29 of this proxy statement. The Kraeutler Employment Agreement’s term extendsextended through September 30, 2018, and includesincluded provisions for a12-month consulting arrangement following that date.
Richard Eberly Employment LetterLueke Consulting Agreement
On July 26, 2016, theThe Company and Richard EberlyMs. Lueke have entered into a letter agreement providing for terms of Mr. Eberly’s employment as Corporate Executive Vice President and President, Chief Commercial Officer, responsible for all sales and marketing operations inConsulting Agreement effective January 1, 2019 upon her retirement from the core diagnostics and Life Science units, as well as research and development for these units, effective August 1, 2016.Company. The letter agreementConsulting Agreement provides that Mr. Eberly’s annual base salary shall be $400,000, he shall be entitledMs. Lueke will assist the Company on anas-requested basis with matters related to participate in the Company’s cash-based incentive compensation plan, he shallfinancial reporting and accounting, among other matters. Under the Consulting Agreement, the Company agreed to pay Ms. Lueke $90,000 per year and reimburse her for certain expenses. The Consulting Agreement’s term is three years and may be awarded options to acquire 20,000 of the Company’s shares of Common Stock, vesting 25% each year from date of grant, and he shall be entitled to receive other benefits commensurate with his new position with the Company.renewed upon mutual written agreement or cancelled by Ms. Lueke at any time.
Internal Pay Equity
The Compensation Committee believes that the relative difference between the CEO’s compensation and the compensation of the Company’s other executives has not increased significantly over the years. Further, the Compensation Committee believes that the Company’s internal pay equity structure is appropriate based upon the contributions to the success of the Company and as a means of motivation to other executives and employees.
Tax Deductibility of Pay
Section 162(m) of the Internal Revenue Code contains compensation deduction limitations for certain highly compensated employees. One exception to this limitation is for performance-based compensation that is approved by, among other things, a committee of “outside directors” (as defined under IRS treasury regulations). The Committee believes that compensation paid to the NEOs for fiscal year 2017 is properly deductible under Section 162(m), but no assurance can be made in this regard.
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of RegulationS-K with management. Based on these reviews and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s proxy statement on Schedule 14A.
Members of the Compensation Committee
James M. Anderson (Chairman)
John C. McIlwraith
David C. Phillips
Our CEO Pay Ratio was calculated in compliance with the requirements set forth in Item 402(u) of RegulationS-K. We identified the median employee population as of July 31, 2018, which included all 618 global full-time, part-time, temporary and seasonal employees employed on that date, excluding 26 such employees in our Belgium, China, France, Holland and Singapore locations, which in the aggregate represent less than 5% of our workforce. We used a consistently applied compensation measure across our global employee population to calculate the median employee compensation. For our consistently applied compensation measure, we utilized total cash
compensation per our internal payroll records, annualized and translated to U.S. dollars. We then calculated the median employee’s fiscal 2018 compensation in the same manner as the named executive officers in the Summary Compensation Table. Our median employee compensation for fiscal 2018 was $71,983 and our Chief Executive Officer’s compensation was $1,858,606. Accordingly, ourCEO-to-Employee Pay Ratio is 26:1 (17:1 upon excluding certainone-time compensation components related to our CEO’s hiring in October 2017, as disclosed within this proxy statement).
The following table summarizes the aggregate compensation paid, or earned, by each of the NEOs for the fiscal years ended September 30, 2018, 2017 2016 and 2015,2016, respectively:
Name and Principal Position (a) | Year (b) | Salary (c) | Bonus (d) | Stock Awards (e) | Option Awards (f) | Non-Equity Incentive Plan Compensation4 (g) | Change in Pension Value and Nonqualified Deferred Compensation Earnings (h) | All Other Compensation (i) | Total | |||||||||||||||||||||||||||
Chief Executive | | 2017 2016 |
| $ | 542,408 — — | — — — | $ | 554,750 — — | $ | 319,140 — — | $ | 250,000 — — | — — — | $ | 192,308 — — | $ | 1,858,606 — — | |||||||||||||||||||
Melissa A. Lueke Executive Vice President, Chief Financial Officer and Secretary | 2018 2017 2016 |
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| $ $ $ | 27,708 44,416 | $ | 96,320 — — | — — — | $ $ $ | 38,771 45,564 68,343 | $ $ $ | 629,272 582,292 599,053 | ||||||||||||||||
John A. Kraeutler6 Former Executive Chairman of the Board | 2018 2017 2016 | $ $ $ | 656,518 655,942 621,605 | — — — | $ $ $ | 748,750 423,750 485,250 | $ $ | — 306,640 53,300 |
| $ | 183,825 — — | — — — | $ $ $ | 152,205 155,859 198,275 | $ $ $ | 1,741,298 1,542,191 1,358,430 | ||||||||||||||||||||
Lawrence J. Baldini Executive Vice President, Global Operations | 2018 2017 2016 | $ $ $ | 350,804 346,673 310,001 | — — — | $ $ $ | 109,875 169,500 198,765 | $ $ | 40,306 — 44,184 | $ | 98,617 — — | — — — | $ $ $ | 41,774 42,561 69,204 | $ $ $ | 641,376 558,734 622,154 | |||||||||||||||||||||
Susan D. Rolih Executive Vice President, Global Regulatory & Quality Systems | 2018 2017 2016 | $ $ $ | 339,683 332,750 294,522 | — — — | $ $ $ | 109,875 169,500 198,493 | $ $ $ | 40,306 27,708 3,553 | $ | 95,491 — — | — — — | $ $ $ | 41,394 42,941 66,794 | $ $ $ | 626,749 572,899 563,362 | |||||||||||||||||||||
Richard L. Eberly7 Former Executive Vice President, President, Chief Commercial Officer | 2018 2017 2016 | $ $ $ | 167,538 404,904 339,669 | — — — | $ $ $ | 109,875 169,500 194,100 | $ $ | 40,306 — 74,408 |
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The amounts shown reflect the grant date fair value of the restricted stock units issued during fiscal years 2018, 2017 |
The amount reflected for Mr. Kraeutler for fiscal |
The amounts shown reflect the grant date fair value of the stock options granted during fiscal years 2018, 2017 |
4 | The amounts shown represent amounts earned by the NEOs pursuant to the Officer’s Performance Compensation Plan for fiscal 2018. No such amounts were earned for fiscal 2017 or 2016, as the corporate-wide targets were not reached for each of the respective fiscal years. |
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See the All Other Compensation table below for amounts, which include certain Company contributions and other personal |
Fiscal 2017
All Other Compensation | All Other Compensation | |||||||||||||||||||||||||||||||||||||||||||||||
John A. Kraeutler | Melissa A. Lueke | Richard L. Eberly | Susan D. Rolih | Vecheslav A. Elagin | Jack Kenny | Melissa A. Lueke | John A. Kraeutler | Lawrence J. Baldini | Susan D. Rolih | Richard L. Eberly | Marco G. Calzavara | |||||||||||||||||||||||||||||||||||||
Retirement Contributions | $ | 17,206 | $ | 17,964 | $ | 18,237 | $ | 15,341 | $ | 18,182 | $ | 11,846 | $ | 16,771 | $ | 17,529 | $ | 19,774 | $ | 19,394 | $ | 8,406 | $ | 26,012 | ||||||||||||||||||||||||
Auto Lease | 11,516 | — | 12,054 | — | — | |||||||||||||||||||||||||||||||||||||||||||
Insurance Premiums, includingGross-up | 61,012 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Relocation Costs, IncludingGross-up | 148,962 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Restricted Stock Dividends | 66,125 | 27,600 | 27,600 | 27,600 | 27,600 | 31,500 | 22,000 | 62,500 | 22,000 | 22,000 | 11,000 | 13,255 | ||||||||||||||||||||||||||||||||||||
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Auto Lease / Auto Allowance | — | — | 11,552 | — | — | 5,023 | 3,815 | |||||||||||||||||||||||||||||||||||||||||
Insurance Premiums, IncludingGross-up | — | — | 60,624 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Separation Payment | — | — | — | — | — | 1,137,810 | 871,279 | |||||||||||||||||||||||||||||||||||||||||
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Totals | $ | 155,859 | $ | 45,564 | $ | 57,891 | $ | 42,941 | $ | 45,782 | $ | 192,308 | $ | 38,771 | $ | 152,205 | $ | 41,774 | $ | 41,394 | $ | 1,162,239 | $ | 914,361 | ||||||||||||||||||||||||
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Mr. Kraeutler |
7 | In February 2018, Mr. Eberly was terminated from his position with Meridian. In connection with his termination, Mr. Eberly received the separation payment reflected in the All Other Compensation Table above, which included the payout of accrued but unused vacation. |
8 | In July 2018, Mr. Calzavara was terminated from his position with Meridian. In connection with his termination, Mr. Calzavara received the separation payment reflected in the All Other Compensation Table above, which included the payout of accrued but unused vacation. The amounts reflected in the Summary Compensation Table and the notes thereto were converted from the British Pound Sterling at the average exchange rates for the respective periods in which the payments were made. |
The following table sets forth, for each of the NEOs, information related to grants made during fiscal 20172018 under Meridian��sMeridian’s 2012 Stock Incentive Plan:
Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All other Stock Awards: Number of Shares of Stock or Units (#) | All other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards | Estimated Future Payouts Under Non-Equity Incentive Plan Awards1 | Estimated Future Payouts Under Equity Incentive Plan Awards | All other Stock Awards: Number of Shares of Stock or Units (#) | All other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Max ($) | Threshold (#) | Target (#) | Max (#) | Grant Date | Threshold ($) | Target ($) | Max ($) | Threshold (#) | Target (#) | Max (#) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | (l) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | (l) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jack Kenny | | 10/09/17 11/08/17 |
| $ | — 96,250 |
| $ | — 192,500 |
| $ | — 275,000 |
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| | — — |
| | — — |
| | 13,000 25,000 | 2 3 | | 100,000 — | 2
| $
| 14.50 — |
| $ $ | 507,640 366,250 |
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Melissa A. Lueke | 11/08/17 | $ | 60,200 | $ | 120,400 | $ | 180,600 | — | — | — | 7,500 | 3 | 12,500 | 3 | $ | 14.65 | $ | 150,181 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
John A. Kraeutler | | 10/03/16 11/09/16 |
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| | — — |
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| 25,000 | 2 | | 100,000 — | 1
| $
| 19.09 — |
| $ $ | 306,640 423,750 |
| | 10/02/17 11/08/17 |
| $ | — 114,891 |
| $ | — 229,781 |
| $ | — 344,672 |
| | — — |
| | — — |
| | — — |
| | 25,000 25,000 | 4 3 | | — — |
| | — — |
| $ $ | 382,500 366,250 |
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Melissa A. Lueke | | 11/09/16 11/16/16 |
| | — — |
| | — — |
| | — — |
| | — — |
| | — — |
| | — — |
| | 10,000 — | 2
| | — 10,000 | 3 | $ | — 16.85 |
| $ $ | 169,500 27,708 |
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Lawrence J. Baldini | 11/08/17 | $ | 61,636 | $ | 123,272 | $ | 184,908 | — | — | — | 7,500 | 3 | 12,500 | 3 | $ | 14.65 | $ | 150,181 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Susan D. Rolih | 11/08/17 | $ | 59,682 | $ | 119,364 | $ | 179,046 | — | — | — | 7,500 | 3 | 12,500 | 3 | $ | 14.65 | $ | 150,181 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Richard L. Eberly | 11/09/16 | — | — | — | — | — | — | 10,000 | 2 | — | — | $ | 169,500 | 11/08/17 | — | — | — | — | — | — | 7,500 | 3 | 12,500 | 3 | $ | 14.65 | $ | 150,181 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Susan D. Rolih | | 11/09/16 11/16/16 |
| | — — |
| | — — |
| | — — |
| | — — |
| | — — |
| | — — |
| | 10,000 — | 2
| | — 10,000 | 3 | $ | — 16.85 |
| $ $ | 169,500 27,708 |
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Vecheslav A. Elagin | | 11/09/16 05/19/17 |
| | — — |
| | — — |
| | — — |
| | — — |
| | — — |
| | — — |
| | 10,000 — | 2
| | — 10,000 | 4 | $ | — 13.60 |
| $ $ | 169,500 21,845 |
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Marco G. Calzavara | 11/08/17 | — | — | — | — | — | — | 8,000 | 3 | — | — | $ | 117,200 |
1 | These columns reflect the potential payout for each NEO under the Fiscal 2018 Cash-Based Incentive Compensation Plan if the threshold, target and maximum goals were satisfied for all performance measures. As described within the “Executive Summary” section of the “Compensation Discussion and Analysis” beginning on page 17, the performance measurements were achieved during fiscal 2018, resulting in the amounts set forth in“Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table being earned by the NEOs. While Messrs. Eberly and Calzavara were subject to the Fiscal 2018 Cash-Based Incentive Compensation Plan, in light of their terminations during fiscal 2018, payments made to them were included within their Separation Payments set forth in Note 5 of the Summary Compensation Table. |
2 | This grant of time-based restricted stock units and options was made to Mr. |
At the time of the grant, half of each NEO’s restricted stock units and options (as applicable) were time-based with 100% vesting after four years, and the remaining half were performance-based, subject to attainment of a specified earnings target for fiscal |
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4 | This |
OUTSTANDING EQUITY AWARDS AT FISCALYEAR-END
The following table provides information on the NEOs’ holdings of equity awards under Meridian’s 2012 Stock Incentive Plan and 2004 Equity Compensation Plan as of September 30, 2017:2018:
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Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||||||
Jack Kenny | — | 100,0001 | — | $ | 14.50 | 10/09/27 | | — 13,00010 25,00011 |
| $ $ | — 193,700 372,500 |
| | — — — |
| | — — — |
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Melissa A. Lueke | | 6,2502 2,5003 — |
| | 6,2502 7,5003 12,5004 |
| | — — — |
| $ $ $ | 19.56 16.85 14.65 |
| | 03/24/26 11/16/26 11/08/27 |
| | — — — 9,00012 10,00013 10,00014 7,50011 |
| $ $ $ $ | — — — 134,100 149,000 149,000 111,750 |
| | — — — — — — — |
| | — — — — — — — |
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John A. Kraeutler | | 100,0005 15,0002 100,0006 |
| | — — — |
| | — — — |
| $ $ $ | 16.50 19.56 19.09 |
| | 09/30/21 12/30/18 09/30/21 |
| | — — — |
| | — — — |
| | — — — |
| | — — — |
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Lawrence J. Baldini | | 5007 1,0002 6,7008 — |
| | — 1,0002 3,3008 12,5004 |
| | — — — — |
| $ $ $ $ | 19.71 19.56 20.41 14.65 |
| | 08/04/20 03/24/26 03/28/26 11/08/27 |
| | — — — — 9,00012 10,00013 10,00014 7,50011 |
| $ $ $ $ | — — — — 134,100 149,000 149,000 111,750 |
| | — — — — — — — — |
| | — — — — — — — — |
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Susan D. Rolih | | 1,2007 5,0009 5002 2,5003 — |
| | — — 5002 7,5003 12,5004 |
| | — — — — — |
| $ $ $ $ $ | 19.71 21.75 19.56 16.85 14.65 |
| | 08/04/20 07/01/23 03/24/26 11/16/26 11/08/27 |
| | — — — — — 9,00012 10,00013 10,00014 7,50011 |
| $ $ $ $ | — — — — — 134,100 149,000 149,000 111,750 |
| | — — — — — — — — — |
| | — — — — — — — — — |
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Richard L. Eberly | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Marco G. Calzavara | — | — | — | — | — | — | — | — | — |
1 | Options vest in four equal annual installments from the date of grant, until fully vested on |
2 | Options vest in four equal annual installments from the date of grant, until fully vested on |
3 | Options vest in four equal annual installments from the date of grant, until fully vested on |
4 | Options vest in four equal annual installments from the date of grant, until fully vested on |
5 |
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Options are fully vested; half as of September 30, 2015 and half as of September 30, 2016. |
6 | Options are fully vested; half as of September 30, 2017 and half as of September 30, 2018. |
7 | Options fully vested on August 4, 2014. |
8 | Options vest in three approximately equal annual installments from the date of grant, until fully vested on March 28, 2019). |
9 | Options fully vested on July 1, 2017. |
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10 |
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11 |
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12 |
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Units vest on November 15, 2018. |
Units vest on November 15, 2019. |
Units vest on November 15, 2020. |
OPTION EXERCISES AND STOCK VESTED
The following table sets forth, for each of the NEOs, information on options exercised and restricted stock units vested during fiscal 2017:2018:
Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)1 | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)2 | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)1 | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)2 | ||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (b) | (c) | (d) | (e) | ||||||||||||||||||||||||
Jack Kenny | — | $ | — | — | $ | — | ||||||||||||||||||||||||||
Melissa A. Lueke | — | $ | — | 9,000 | $ | 134,550 | ||||||||||||||||||||||||||
John A. Kraeutler | — | $ | — | 10,000 | $ | 163,500 | — | $ | — | 140,000 | $ | 2,086,750 | ||||||||||||||||||||
Melissa A. Lueke | — | $ | — | 7,500 | $ | 122,625 | ||||||||||||||||||||||||||
Richard L. Eberly | — | $ | — | 7,500 | $ | 122,625 | ||||||||||||||||||||||||||
Lawrence J. Baldini | — | $ | — | 9,000 | $ | 134,550 | ||||||||||||||||||||||||||
Susan D. Rolih | 15,750 | $ | 6,237 | 7,500 | $ | 122,625 | — | $ | — | 9,000 | $ | 134,550 | ||||||||||||||||||||
Vecheslav A. Elagin | — | $ | — | 7,500 | $ | 122,625 | ||||||||||||||||||||||||||
Richard L. Eberly3 | 12,500 | $ | 1,875 | 45,500 | $ | 660,150 | ||||||||||||||||||||||||||
Marco G. Calzavara3 | — | $ | — | 46,000 | $ | 721,000 |
1 | Amounts reflect the difference between the exercise price of the option and the market price of Meridian common shares at the time of exercise. |
2 | Amounts reflect the market price of Meridian common shares at the time of restricted stock units vesting. |
3 | Upon their terminations, Messrs. Eberly and Calzavara became fully vested in the unvested restricted stock units held at that time, which were comprised of time-based restricted stock units granted in November 2014, November 2015, November 2016 and November 2017. |
Our 401(k) Savings Plan (“401(k) Plan”) allows all U.S. employees of the Company as soon as administratively possible following their employment to set aside a portion of their compensation each year for their retirement needs, up to the limits set by the Internal Revenue Code. Presently, the Company contributes a matching contribution of 100% of the first 4% of the employee’s contribution (i.e., up to 4% of an employee’s salary), subject to Internal Revenue Code limitations, having increased from 100% of the first 3% of the employee’s contribution (i.e., up to 3% of an employee’s salary), subject to Internal Revenue Code limitations, effective January 1, 2017.limitations. The Company may also contribute a profit-sharing contribution at its discretion. Employee contributions and employer matching contributions are 100% vested immediately. Participants are entitled to direct the investment of their accounts among various mutual funds selected by the Meridian Bioscience, Inc., Savings and Investment Plan Committee. Participants who terminate employment are entitled to receive the vested portion of their accounts.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
As described on page 2221 in the “Compensation Discussion and Analysis” section of this proxy statement, Mr. KraeutlerKenny and Meridian are parties to the KraeutlerKenny Employment Agreement which sets forth compensation,non-competition, benefit and severance provisions and provides for a payment equal to three timestwelve months of Mr. Kraeutler’s three-year averageKenny’s then current base salary (plus any salary earned but not paid) and three-year average annual performanceplus apro-rata portion of the target bonus ifthrough the date of termination in the event Mr. KraeutlerKenny is terminated by Meridian without cause or Mr. KraeutlerKenny terminates his employment for good reason or is terminated in connection withreason. If such termination occurs during a change inof control of Meridianperiod (double trigger).
Pursuant to the Kraeutler Employment Agreement, had, Mr. Kraeutler’s employment with the Company terminated on September 30, 2017, Mr. Kraeutler would have beenKenny is entitled to receive post-retirement benefit payments totaling $1,200,000, payable in one hundred twenty (120) monthly payments of $10,000.a severance payment equal to two times his then current base salary plus his target bonus for the severance period.
Had one of the events noted above occurred on September 30, 2017,2018 and Meridian been within a change of control period at that time, Mr. KraeutlerKenny would also have been entitled to the following under the KraeutlerKenny Employment Agreement:
Salary | $ | 1,885,817 | $ | 1,100,000 | ||||
Annual Performance Bonus | — | 385,000 | ||||||
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Total Lump Sum Payment | $ | 1,885,817 | $ | 1,485,000 | ||||
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Our Board of Directors authorized us to enter into change in control severance agreements with our Executive Officers (other than our Executive Chairman and our Chief Executive Officer, each of whom havewho has a change of control provisionsprovision in theirhis Employment Agreements), which were executed effective August 4, 2016.Agreement). Each agreement had an initial term ended December 31, 2016, and each year will automatically renew for an additional one year term, provided however, that if a change in control occurs the term will expire no earlier than 24 calendar months after the calendar month in which such change in control occurs. A change of control is generally defined in each agreement as any of the following: (i) a person is or becomes a beneficial owner of more than 50% of our voting securities; (ii) the composition of a majority of our Board changes; (iii) we consummate a merger or similar transaction; (iv) the sale of all or substantially all of our assets; or (v) the employment of a Chief Executive Officer other than the Company’s current CEO as of the date of the agreement. Each agreement provides, among other things, that if a change in control occurs during the term of the agreement, and the executive’s employment is terminated either by us or by the executive, other than: (a) by us for cause; (b) by reason of death or disability; or (c) by the executive without good reason, such executive will receive a severance payment equal to: (A) a multiple of such executive’s annual base salary; (B) a multiple of executive’s target bonus amounts; and (C) earned but unused vacation time. In addition, each change in control agreement provides that in the event that the severance and other benefits provided
for in the agreement or otherwise payable to the executive would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, the benefits under the agreement
will be either delivered in full, or delivered to a lesser extent which would result in no portion of the benefits being subject to such excise tax, whichever is more beneficial to the executive.
Had termination in connection with a change in control occurred on September 30, 2017,2018, the NEOs to which the policy applied at that date (Ms. Lueke, Mr. Eberly,Baldini and Ms. Rolih and Dr. Elagin)Rolih) would have been entitled to the following lump sum payments under the policy:
Melissa A. Lueke | Richard L. Eberly | Susan D. Rolih | Vecheslav A. Elagin | Melissa A. Lueke | Lawrence J. Baldini | Susan D. Rolih | ||||||||||||||||||||||
Salary | $ | 688,000 | $ | 810,000 | $ | 672,000 | $ | 674,430 | $ | 688,000 | $ | 704,410 | $ | 682,080 | ||||||||||||||
Annual Performance Bonus | — | — | — | — | 240,800 | 246,544 | 238,728 | |||||||||||||||||||||
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Total Lump Sum Payment | $ | 688,000 | $ | 810,000 | $ | 672,000 | $ | 674,430 | $ | 928,800 | $ | 950,954 | $ | 920,808 | ||||||||||||||
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For fiscal 2017,2018, independent Directors of Meridian received the following compensation for service on the Board and the Audit Committee (“AC”), Compensation Committee (“CC”) and Nominating & Corporate Governance Committee (“N&CGC”) (annual amounts presented):
-Base for Director service | $ | 40,000 | ||
-Additional for Lead Director | $ | 20,000 | ||
-AC Chair | $ | 20,000 | ||
-AC Member | $ | 10,000 | ||
-CC Chair | $ | 13,000 | ||
-CC Member | $ | 6,000 | ||
-N&CGC Chair | $ | 13,000 | ||
-N&CGC Member | $ | 5,000 |
Additionally, in accordance with the terms and conditions set forth in the Company’s 2012 Stock Incentive Plan, each independent Director willwas also be granted anon-qualified option to purchase 12,000 common shares at the time of election orre-election to the Board of Directors, with the exercise price being the grant date closing sale price on Nasdaqas reported on the date of grant.Nasdaq. Directors who are employees of Meridian are not separately compensated for serving as Directors.
Effective for fiscal 2019, the additional Lead Director compensation is being eliminated and the independent Chairperson of the Board will receive $50,000, resulting in the following independent Director compensation (annual amounts presented):
-Base for Director service | $ | 40,000 | ||
-Additional for Independent Chairperson | $ | 50,000 | ||
-AC Chair | $ | 20,000 | ||
-AC Member | $ | 10,000 | ||
-CC Chair | $ | 13,000 | ||
-CC Member | $ | 6,000 | ||
-N&CGC Chair | $ | 13,000 | ||
-N&CGC Member | $ | 5,000 |
Additionally, as the result of the review of the competitiveness of the Company’s compensation program fornon-employee Directors conducted by an independent consultant, the equity awards to independent Directors of the Company are being increased to a value of $100,000 per Director, to be phased in over atwo-year period commencing January 2019. Accordingly, each independent Director will be granted equity valued at $50,000 in January 2019, increasing to $100,000 in January 2020.One-third of such equity value is to be in the form of restricted stock units (valued at the market value of our common stock at the date of award) andtwo-thirds is to be in the form ofnon-qualified options to purchase common shares of the Company at an exercise price equal to the grant date closing sale price as reported on Nasdaq (valued pursuant to the current methodology utilized by the Company for financial reporting purposes, which may be found in Note 7(b) on page 72 of the Company’s Annual Report on Form10-K filed with the SEC on November 29, 2018).
The following table provides information on compensation related to fiscal 20172018 for independent Directors who served during fiscal 2017:2018:
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)1 | Option Awards ($)1 | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation ($) | Total ($) | Fees Earned or Paid in Cash ($) | Stock Awards ($)1 | Option Awards ($)1 | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation ($) | Total ($) | ||||||||||||||||||||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | ||||||||||||||||||||||||||||||||||||||||||
James M. Anderson | $ | 68,000 | — | $ | 24,672 | — | — | — | $ | 92,672 | $ | 68,000 | — | $ | 42,787 | — | — | — | $ | 110,787 | ||||||||||||||||||||||||||||||||||||
Dwight E. Ellingwood | $ | 53,000 | — | $ | 24,672 | — | — | — | $ | 77,672 | $ | 53,000 | —�� | $ | 42,787 | — | — | — | $ | 95,787 | ||||||||||||||||||||||||||||||||||||
John C. McIlwraith | $ | 51,000 | — | $ | 24,672 | — | — | — | $ | 75,672 | $ | 51,000 | — | $ | 42,787 | — | — | — | $ | 93,787 | ||||||||||||||||||||||||||||||||||||
David C. Phillips | $ | 86,000 | — | $ | 24,672 | — | — | — | $ | 110,672 | $ | 86,000 | — | $ | 42,787 | — | — | — | $ | 128,787 | ||||||||||||||||||||||||||||||||||||
John M. Rice | $ | 5,900 | — | $ | 26,118 | — | — | — | $ | 32,018 | $ | 49,750 | — | $ | 42,787 | — | — | — | $ | 92,537 | ||||||||||||||||||||||||||||||||||||
Catherine A. Sazdanoff | $ | 50,000 | — | $ | 24,672 | — | — | — | $ | 74,672 | $ | 50,000 | — | $ | 42,787 | — | — | — | $ | 92,787 | ||||||||||||||||||||||||||||||||||||
Felicia Williams | $ | 1,100 | — | $ | 40,014 | — | — | — | $ | 41,114 |
1 | The amounts shown reflect the grant date fair value of the awards made in fiscal year |
SHAREHOLDER PROPOSALS FOR NEXT YEAR
The deadline for shareholder proposals to be included in the proxy statement for next year’s meeting is August 16, 2018.26, 2019.
The form of proxy for this meeting grants authority to the designated proxies to vote in their discretion on any matters that come before the meeting except those set forth in Meridian’s proxy statement and except for matters as to which adequate notice is received. In order for a notice to be deemed adequate for the 20192020 Annual Shareholders’ Meeting, it must be received prior to October 27, 2018.25, 2019. If there is a change in the anticipated date of next year’s Annual Shareholders’ Meeting or these deadlines by more than 30 days, we will notify you of this change through our Form8-K and/or Form10-Q filings.
Meridian’s Code of Regulations provides that only persons nominated by an officer, Director or in writing by a shareholder not earlier than 150 days nor later than 90 days prior to the meeting at which Directors are to be selected shall be eligible for election and that shareholder proposals be presented not earlier than 150 days nor later than 90 days prior to the meeting at which the proposals are to be presented.
If you have questions or need more information about the annual meeting, call us at (513)271-3700 or write to:
Melissa A. Lueke
Executive Vice President, Chief Financial Officer and Secretary
Meridian Bioscience, Inc.
3471 River Hills Drive
Cincinnati, Ohio 45244
or call us at (513)271-3700
For information about your record holdings, call Computershare Shareholder Services at (888)294-8217.
*** Exercise YourRight to Vote ***
Important Notice Regarding the Availability of Proxy Materials for the
Shareholder Meeting to Be Held on January 25, 201824, 2019
MERIDIAN BIOSCIENCE, INC.
| Meeting Information
Meeting Type: Annual Meeting For holders as of: November 30, 2018 Date:January 24, 2019 Time: 2:00 PM EST Location: Meridian Innovation Center 7007 Valley Avenue Cincinnati, OH 45244 |
You are receiving this communication because you hold shares in the company named above. | ||||
MERIDIAN BIOSCIENCE, INC. 3471 RIVER HILLS DRIVE CINCINNATI, OH 45244 |
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This is not a ballot. You cannot use this notice to vote these shares. This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. You may view the proxy materials online atwww.proxyvote.com or easily request a paper copy (see reverse side).
We encourage you to access and review all of the important information contained in the proxy materials before voting.
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See the reverse side of this notice to obtain proxy materials and voting instructions. |
— Before You Vote —
How to Access the Proxy Materials
Proxy Materials Available to VIEW or RECEIVE:
1. Notice and Proxy Statement 2. Annual Report and FormNOTICE AND PROXY STATEMENT ANNUAL REPORT AND FORM 10-K
How to View Online:
Have the information that is printed in the box marked by the arrow (located on the following page) and visit:www.proxyvote.com.
How to Request and Receive a PAPER orE-MAIL Copy:
If you want to receive a paper ore-mail copy of these documents, you must request one. There is NO charge for requesting a copy. Please choose one of the following methods to make your request:
1)BY INTERNET: www.proxyvote.com
2)BY TELEPHONE: 1-800-579-1639
3)BYE-MAIL*: sendmaterial@proxyvote.com
* If requesting materials bye-mail, please send a blanke-mail with the information that is printed in the box marked by the arrow (located on the following page) in the subject line.
Requests, instructions and other inquiries sent to thise-mail address will NOT be forwarded to your investment advisor. Please make the request as instructed above on or before January 11, 201810, 2019 to facilitate timely delivery.
— How To Vote —
Please Choose One of the Following Voting Methods
Vote In Person: Many shareholder meetings have attendance requirements including, but not limited to, the possession of an attendance ticket issued by the entity holding the meeting. Please check the meeting materials for any special requirements for meeting attendance. At the meeting, you will need to request a ballot to vote these shares.
Vote By Internet:To vote now by Internet, go towww.proxyvote.com.Have the information that is printed in the box marked by the arrow (located on the following page) available and follow the instructions.
Vote By Mail:You can vote by mail by requesting a paper copy of the materials, which will include a proxy card.
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Voting |
The Board of Directors recommends you vote FOR the following: | ||||||||||||||||
1. Election of Directors | ||||||||||||||||
Nominees | ||||||||||||||||
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04) JOHN C. MCILWRAITH 08) FELICIA WILLIAMS | ||||||||||||||||
The Board of Directors recommends you vote FOR | ||||||||||||||||
2. Advisory vote | ||||||||||||||||
3. | ||||||||||||||||
NOTE:Such other business as may properly come before the meeting or any postponement or adjournment thereof. Only shareholders of record at the close of business on November 30, |
MERIDIAN BIOSCIENCE, INC. 3471 RIVER HILLS DRIVE CINCINNATI, OH 45244 | VOTE BY INTERNET-www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59
VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E53812-P14433 KEEP THIS PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY
MERIDIAN BIOSCIENCE, INC. | ||||||||||||||||||||||||||||||||||||||||||||||
| To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | |||||||||||||||||||||||||||||||||||||||||||||
The Board of Directors recommends you vote FORthe following: | For All | Withhold All | For All Except | |||||||||||||||||||||||||||||||||||||||||||
☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||||||||||||||||
1. Election of Directors | ||||||||||||||||||||||||||||||||||||||||||||||
Nominees
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02) DWIGHT E. ELLINGWOOD | 06) JOHN M. RICE, JR. | |||||||||||||||||||||||||||||||||||||||||||||
| 07) CATHERINE A. SAZDANOFF | |||||||||||||||||||||||||||||||||||||||||||||
04) JOHN C. MCILWRAITH | 08) FELICIA WILLIAMS |
The Board of Directors recommends you vote FOR proposals 2 and 3. | ||||||||||||||||||||||||||||||||||||||
2. Advisory vote | For ☐ | Against ☐ | Abstain ☐ | |||||||||||||||||||||||||||||||||||
| 2019. | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||||||
NOTE:Such other business as may properly come before the meeting or any postponement or adjournment thereof. Only shareholders of record at the close of business on November 30, | ||||||||||||||||||||||||||||||||||||||
For address changes and/or comments, please check this box and write them on the back where indicated. | ☐ | |||||||||||||||||||||||||||||||||||||
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Please indicate if you plan to attend this meeting. | Yes | No | ||||||||||||||||||||||||||||||||||||
Please sign exactly as your name(s)
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Signature [PLEASE SIGN WITHIN BOX]
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| Signature (Joint Owners)
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement, Annual Report and Form 10-K are available atwww.proxyvote.com.
E53813-P14433 |
MERIDIAN BIOSCIENCE, INC. Annual Meeting of Shareholders January This proxy is solicited by the Board of Directors
The undersigned hereby appoints JACK KENNY and MELISSA A. LUEKE, and either of them, attorneys and proxies of the undersigned, each with the power of substitution and re-substitution, to vote all shares of Common Stock of Meridian Bioscience, Inc. which the undersigned
This proxy, when properly executed, will be voted as directed by the shareholder(s). If no such directions are made, this proxy will be votedFOR the election to the Board of Directors all of the nominees
Please mark, sign, date, and return this proxy card promptly using the enclosed reply envelope.
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(If you noted any Address
Continued and to be signed on reverse side
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