-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CMkOi9+CyfSzfsr9cTIPPRNlczCVxiSUlC1MjrlC9+3rRiyidD8F7lo+c62oeqpl ntcgl7bMF/6V35XJGu6rhg== 0000950148-98-000540.txt : 19980324 0000950148-98-000540.hdr.sgml : 19980324 ACCESSION NUMBER: 0000950148-98-000540 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980324 FILED AS OF DATE: 19980323 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIAGNOSTIC PRODUCTS CORP CENTRAL INDEX KEY: 0000702259 STANDARD INDUSTRIAL CLASSIFICATION: IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835] IRS NUMBER: 952802182 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 001-09957 FILM NUMBER: 98570642 BUSINESS ADDRESS: STREET 1: 5700 W 96TH ST CITY: LOS ANGELES STATE: CA ZIP: 90045 BUSINESS PHONE: 2137760180 DEF 14A 1 DEFINITIVE PROXY MATERIAL 1 SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to section 240.14a-11(c) or section 240.14a-12
DIAGNOSTIC PRODUCTS CORPORATION - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): (4) Proposed maximum aggregate value of transaction: (5) Total fee paid: [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: (2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed: 2 [DPC LOGO] DIAGNOSTIC PRODUCTS CORPORATION 5700 WEST 96TH STREET LOS ANGELES, CA 90045 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 6, 1998 TO THE SHAREHOLDERS: NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Diagnostic Products Corporation will be held at the Company's offices at 5700 West 96th Street, Los Angeles, California, on May 6, 1998, at 2:30 p.m. local time, for the following purposes: 1. To elect a Board of Directors to serve until the next Annual Meeting of Shareholders and until their respective successors are elected and qualified. The nominees for election to the Board of Directors are: Dr. Sigi Ziering, Sidney A. Aroesty, Maxwell H. Salter, Dr. James D. Watson, Michael Ziering and Frederick Frank. 2. To transact such other business and to consider and take action upon any and all matters that may properly come before the Meeting or any adjournment thereof. The Board of Directors has fixed the close of business, March 13, 1998, as the record date for the determination of the shareholders entitled to notice of and to vote at the Meeting. SHAREHOLDERS WHO ARE UNABLE TO ATTEND THE MEETING PERSONALLY ARE REQUESTED BY MANAGEMENT TO MARK, SIGN AND RETURN THE ENCLOSED PROXY IMMEDIATELY. By Order of the Board of Directors MARILYN ZIERING Secretary March 24, 1998 3 [DPC LOGO] DIAGNOSTIC PRODUCTS CORPORATION PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS MAY 6, 1998 The enclosed proxy is solicited by and on behalf of the Board of Directors of Diagnostic Products Corporation (the "Company") in connection with the Annual Meeting of Shareholders to be held at the Company's executive offices located at 5700 West 96th Street, Los Angeles, California, on May 6, 1998, at 2:30 p.m. local time, and any adjournments thereof. It is expected that this Proxy Statement and accompanying proxy will first be mailed to shareholders on or about March 27, 1998. The expenses for soliciting proxies for the Annual Meeting are to be paid by the Company. Solicitation of proxies may be made by means of personal calls upon, or telephonic or telegraphic communications with, shareholders or their personal representatives by directors, officers and employees of the Company who will not be specially compensated for such services. VOTING PROCEDURES Only shareholders of record of the Company's Common Stock at the close of business on March 13, 1998, the record date fixed by the Board of Directors, are entitled to notice of and to vote at the Meeting. On that date, there were outstanding and entitled to vote at the Meeting, 13,768,237 shares of Common Stock, each of which is entitled to one vote. A majority of the shares entitled to vote, represented in person or by proxy, constitutes a quorum at the Meeting. Abstentions and broker non-votes are counted as present for purposes of determining the existence of a quorum. All shares represented by the accompanying proxy, if the proxy is properly executed and returned, will be voted as specified by the shareholder or, if no vote is indicated, the proxy will be voted FOR the Board of Directors' nominees for director. As to any other matter of business which may properly be brought before the Meeting, a vote may be cast pursuant to the accompanying proxy in accordance with the judgment and discretion of the person or persons voting the same, although management does not presently know of any such other matter of business. A shareholder has the power to revoke his proxy at any time before it has been voted by notifying the Company in writing, by submitting a substitute proxy having a later date or by voting in person at the Meeting. If, prior to the election of directors, any shareholder has given notice that he intends to cumulate his votes, then, for the election of directors only, each shareholder may cumulate votes for any nominee, if the nominee's name was placed in nomination prior to the voting. In cumulative voting, each shareholder is entitled in the election of directors to one vote for each voting share held by him multiplied by the number of directors to be elected and may cast all such votes for a single nominee for director or may distribute them among any two or more nominees as he sees fit. See "Election of Directors." 1 4 ELECTION OF DIRECTORS The shareholders are being asked to elect six directors to serve until the next Annual Meeting of Shareholders and until their successors are duly elected and qualified. The proxies will be voted in favor of the Board of Directors' nominees, all of whom are currently serving as directors, unless otherwise specifically instructed. Although the Board of Directors does not anticipate that any nominee will be unavailable for election, in the event of such occurrence the proxies will be voted for such substitute, if any, as the Board of Directors may designate. The six nominees receiving the highest number of affirmative votes of the shares entitled to be voted will be elected directors; votes withheld and broker non-votes have no legal effect. If voting for directors is conducted by cumulative voting, the persons named on the enclosed proxy will have discretionary authority to distribute votes among the nominees in such proportions as they may see fit, unless otherwise specifically instructed. In any case, the proxies may be voted for less than the entire number of nominees if any situation arises which, in the opinion of the proxy holders, makes such action necessary or desirable. The following information is supplied with respect to the nominees:
PRINCIPAL DIRECTOR NAME AGE OCCUPATION SINCE - ---------------------------- --- ------------------------------------------- -------- Sigi Ziering, Ph.D. 70 Chairman of the Board, 1973 Chief Executive Officer Sidney A. Aroesty 51 Senior Vice President, Operations 1981 Maxwell H. Salter 78 Chairman of the Board and Chief 1982 Executive Officer, Benos James D. Watson, Ph.D. 69 President, Cold Spring Harbor Laboratory 1987 Michael Ziering 41 President and Chief Operating Officer 1994 Frederick Frank 65 Vice Chairman, Lehman Brothers Inc. 1996
Dr. Sigi Ziering joined the Company as treasurer and director in 1973 and has served as Chief Executive Officer since 1974. Dr. Ziering holds a Ph.D. in Theoretical Physics from Syracuse University. Mr. Aroesty joined the Company in 1978. He served as Executive Vice President and Chief Operating Officer from 1982 through 1988 and as President and Chief Operating Officer from 1989 to 1994. He served as a consultant to the Company from 1994 until his election as Senior Vice President, Operations in September 1997. Mr. Salter is Chairman of the Board and Chief Executive Officer of Benos, a chain of family clothing stores in which Mr. Salter has been a principal since 1946. Dr. Watson was the Director of Cold Spring Harbor Laboratory of New York, a genetics and biotechnology research center, from 1968 until he became President in 1994. Dr. Watson received the Nobel prize in 1962 for his part in the discovery of the double helix structure of the DNA molecule. Dr. Watson is also a director of Pall Corporation and SIBIA Neurosciences, Inc. Mr. Michael Ziering, an attorney, joined the Company in 1986 as legal counsel. He served as Vice President-Administration from 1988 until his election as President and Chief Operating Officer in September 1994. Mr. Frank is Vice Chairman of Lehman Brothers Inc., an investment banking firm which he joined as a partner in 1969. He is a Chartered Financial Analyst, a member of The New York Society of Security 2 5 Analysts and a past president of the Chemical Processing Industry Analysts. Mr. Frank serves as a director of Pharmaceutical Product Development Corporation, Automated Call Processing, Digital Arts & Sciences, Inc., Physician Computer Network and R.P. Scherer Corporation. He is Chairman of the National Genetics Foundation, a Member of the Salk Institute National Council, a Director of the Salk Institute, a Trustee of the Hotchkiss School, a Member of the Yale School of Organization and Management Advisory Board, and a Member of the Board of Governors of the National Center for Genome Resources. Sigi Ziering and Marilyn Ziering, an executive officer, are husband and wife, and Michael Ziering is their son. See "Ownership of Common Stock" for information concerning the beneficial ownership of the Company's Common Stock by nominees for director. The Company's Bylaws authorize the Board of Directors to fix the number of directors between a range of five to seven and to fill any vacancy occurring as a result of an increase in the size of the Board. Currently, the number of directors is fixed at six. After the Annual Meeting of Shareholders, the Board of Directors intends to recruit an individual who would be considered "independent" to serve as the seventh member of the Board of Directors. MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES The Board of Directors held four meetings in 1997. During 1997 the members of the Executive Committee were Sigi Ziering, Marilyn Ziering and Maxwell H. Salter. The Executive Committee may exercise the full authority of the Board, subject to certain statutory limitations. The Audit Committee, comprised of Frederick Frank and Maxwell H. Salter, is responsible for periodically reviewing the financial condition and the results of audit examinations of the Company with its independent public accountants. The Audit Committee met twice during 1997. The Compensation Committee, comprised of Frederick Frank, Maxwell Salter and Louis Colen (a shareholder of the Company), is responsible for reviewing and recommending the approval to the Board of Directors of compensation of the officers of the Company. The Compensation Committee met once during 1997. The Stock Option Committee, comprised of Maxwell H. Salter and Marilyn Ziering during 1997, is responsible for administering the Company's Stock Option Plans and approving option grants. The Board of Directors has not designated a nominating committee. COMPENSATION OF DIRECTORS In 1997, non-employee directors of the Company received $1,000 per month as a director's fee. Non-employee directors were also reimbursed their out-of-pocket expenses for attending Board and Committee meetings. In August 1997, Frederick Frank, Maxwell H. Salter and James D. Watson were each granted 10,000 options with an exercise price of $29.25 per share (the fair market value on the date of grant) and a term of 10 years, which vest at the rate of 33 1/3% per year beginning one year after the date of grant. During 1997, Messrs. Aroesty, Frank and Watson provided consulting services to the Company for which they were paid $56,000 (for eight months), $12,000, and $12,000, respectively. Mr. Aroesty consulted with respect to manufacturing, international marketing, strategic planning and customer relations. Mr. Frank consulted in the areas of technology, product development and corporate matters. Dr. Watson consulted with respect to technology, research and product development. These consulting arrangements were terminated at the end of 1997. 3 6 EXECUTIVE OFFICERS The executive officers of the Company are as follows:
NAME AGE POSITION - ---------------------- --- ----------------------------------------------- Sigi Ziering, Ph.D. 70 Chairman of the Board and Chief Executive Officer Michael Ziering 41 President and Chief Operating Officer Sidney A. Aroesty 51 Senior Vice President, Operations Said El Shami 55 Senior Vice President, Research and Development and Chief Scientific Officer Marilyn Ziering 66 Vice President, Marketing Communications and Secretary Julian R. Bockserman 61 Vice President, Finance Kathy J. Maugh 53 Vice President, Operations Nico Arnold 46 Vice President, Sales and Marketing
For information concerning the business experience of Sigi Ziering, Michael Ziering and Sidney A. Aroesty, see "Election of Directors." Mr. El Shami joined the Company in 1978 as Assistant Director of Research, was elected Director of Research in 1980 and was elected Vice President, Research in 1982. Mr. El Shami was elected Senior Vice President, Research and Development in 1992 and Chief Scientific Officer in 1995. Mrs. Ziering joined the Company in 1973 as Secretary and served as Vice President, Marketing from 1979 until 1993 when she was elected Vice President, Marketing Communications. She served as a director of the Company from 1974 until 1998. Mrs. Ziering holds a masters degree from Syracuse University. Mr. Bockserman, a Certified Public Accountant, joined the Company in 1982 as Controller and was elected Chief Financial Officer in 1982 and Vice President, Finance in 1983. Ms. Maugh joined the Company in 1986 as a Product Manager. In 1988 she became a Technical Manager for the Company's product support group. She was promoted to Director of Product Support in 1990 and elected Vice President, Operations in 1992. Mr. Arnold was elected Vice President, Sales and Marketing, effective February 1, 1998. Mr. Arnold joined the Company's Dutch distributor in 1982 as a sales manager and he was appointed General Manager of the Company's affiliated distributors in The Netherlands and Belgium in 1989. He previously managed the Chemistry Laboratory for RIA testing at the Leyenburg Hospital in The Netherlands. Mr. Arnold has a degree in biochemistry from the Van't Hoff Institute, Rotterdam, The Netherlands. Officers of the Company serve at the discretion of the Board of Directors. 4 7 EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The following table provides compensation information with respect to the Chief Executive Officer and the four other most highly paid persons who were executive officers at December 31, 1997 (the "Named Officers") for services in all capacities during fiscal years 1997, 1996 and 1995.
LONG-TERM COMPENSATION ANNUAL --------------- COMPENSATION SECURITIES ------------------------- UNDERLYING ALL OTHER NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)(2) --------------------------- ---- ------------- --------- --------------- ------------------ Sigi Ziering 1997 370,000 0 0 16,000 Chief Executive Officer 1996 370,000 0 0 11,327 1995 370,000 0 0 14,000 Michael Ziering 1997 210,000 0 20,000 16,000 President and Chief 1996 200,000 0 0 15,000 Operating Officer 1995 175,000 0 20,000 18,000 Said El Shami 1997 256,000 0 0 16,000 Senior Vice President, 1996 244,000 0 0 15,000 Research and Development 1995 228,000 0 0 18,000 Julian R. Bockserman 1997 171,000 0 10,000 16,000 Vice President, Finance 1996 163,000 0 0 15,000 1995 152,000 0 0 18,000 John G. McLaughlin 1997 166,000 16,000(1) 0 16,000 Vice President, 1996 160,000 7,500(1) 0 15,000 Sales and Marketing(1) 1995 150,000 24,000(1) 0 18,000
- --------------- (1) Mr. McLaughlin terminated his employment with the Company on January 23, 1998. Represents amounts earned in accordance with a formula related to annual domestic sales performance. (2) The amounts in this column represent Company contributions to the Pension and/or Profit Sharing Plans in which all of the Company's employees are eligible to participate. RETIREMENT AGREEMENT Upon his retirement, the Company has agreed to pay Dr. Ziering, or his surviving relatives, $3,000 per month for 120 months. Dr. Ziering has agreed not to compete with the Company while he receives such monthly payments, and he has also agreed to provide consulting services after his retirement. Discharge for cause will void the retirement payments to Dr. Ziering. 5 8 FISCAL YEAR 1997 OPTION GRANTS Shown below is information regarding options granted to the Named Officers in 1997.
POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL RATES NUMBER OF % OF TOTAL OF STOCK PRICE SECURITIES OPTIONS EXERCISE APPRECIATION UNDERLYING GRANTED TO PRICE FOR OPTION TERM OPTIONS EMPLOYEES PER EXPIRATION --------------------- NAME GRANTED(#) IN FISCAL YEAR SHARE($) DATE 5%($) 10%($) - ------------------------------- ---------- -------------- -------- ---------- --------- --------- Sigi Ziering 0 -- -- -- -- -- Michael Ziering 20,000 5.6% 29.25 8/26/07 367,903 932,339 Said El Shami 0 -- -- -- -- -- Julian R. Bockserman 10,000 2.8% 29.25 8/26/07 183,952 466,170 John G. McLaughlin 0 -- -- -- -- --
Michael Ziering's options vest at the rate of 10% per year, and Julian Bockserman's options vest at the rate of 20% per year, in each case beginning one year after the date of grant. The options are subject to earlier termination in the event of termination of employment, death and certain corporate events. Under the terms of the Company's stock option plans, the Stock Option Committee has the authority to modify the terms of outstanding options, including the exercise price and vesting schedule. Non-qualified options granted under the 1997 Stock Option Plan may, if so provided in the option agreement, be transferred pursuant to a domestic relations order or to members of the optionee's immediate family, charitable institutions or certain related trusts or other entities. 1997 OPTION EXERCISES AND YEAR-END OPTION VALUES Shown below is information regarding options exercised during 1997 and holdings of unexercised stock options at December 31, 1997 by the Named Officers.
NUMBER OF SECURITIES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED OPTIONS HELD AT IN-THE-MONEY OPTIONS AT SHARES DECEMBER 31, 1997(#) DECEMBER 31, 1997($)(1) ACQUIRED ON VALUE --------------------------- --------------------------- NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - -------------------------- ------------- ------------- ----------- ------------- ----------- ------------- Sigi Ziering 0 0 0 0 0 0 Michael Ziering 10,000 199,050 23,000 57,000 128,000 94,500 Said El Shami 6,000 119,070 52,000 0 423,000 0 Julian R. Bockserman 10,000 198,450 26,000 10,000 211,500 0 John G. McLaughlin 0 0 17,520 26,280 135,780 203,671
- --------------- (1) Represents the difference between the aggregate market value on December 31, 1997 ($27.75 per share) and the aggregate exercise price of options that had an exercise price of less than $27.75. 6 9 REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEES ON EXECUTIVE COMPENSATION The Company's executive compensation policies are administered by the Compensation Committee and the Stock Option Committee. The Compensation Committee reviews and determines the compensation of the Company's officers and evaluates management performance, management succession and related matters. The Compensation Committee's decisions are subject to ratification by the Board of Directors. The Stock Option Committee administers the Company's stock option plans and is responsible for decisions concerning stock option recipients and the timing, pricing and amount of stock options which are granted. The compensation policy of the Company is to provide competitive levels of compensation that are influenced by corporate performance, that reward individual achievements, and that enable the Company to attract and retain qualified executives. Compensation consists primarily of annual salary and long-term incentive compensation in the form of stock options. Bonuses are usually awarded only in extraordinary circumstances when, in the Compensation Committee's judgment, the Company or a particular executive had meritorious performance during the prior year. Consistent with industry practices with respect to sales and marketing personnel, the Company had an arrangement with its former Vice President-Sales and Marketing whereby such officer was paid an annual bonus based on domestic sales performance. The principal responsibility of the Compensation Committee is to determine the salary and bonus components of executive compensation, while the Stock Option Committee determines the stock option component. The Compensation Committee believed that the Company's financial performance in 1996 and the Chief Executive Officer's contribution to such performance would have justified an increase in his salary. But at Dr. Ziering's request, the Compensation Committee did not increase his salary for 1997. The 1997 salaries of the Company's other executive officers were principally based on the Chief Executive Officer's recommendations, which reflected his subjective assessment of the nature of each officer's position, contribution to the Company's overall performance, experience and tenure with the Company. The Committee evaluated such recommendations in light of the Company's overall financial performance in 1996, but the Company does not establish targets or financial performance standards. The recommended salary increases for executive officers were generally in line with Company-wide employee compensation increases for 1997. The objective of the Stock Option Committee in granting stock options is to provide long-term incentives through the opportunity to participate in the long-term increase in the market value of the Common Stock. Stock options typically have a term of ten years and become exercisable after one year in cumulative installments which have ranged from 10% to 25% for executive officers. Stock options are not awarded annually, but are awarded in recognition of outstanding performance, based on the Committee's and management's subjective evaluations, and as an incentive to attract new executives. When the Stock Option Committee decides to grant options, it also takes into account the amount and values of outstanding options held by the executive. Based on their performance and the Chief Executive Officer's recommendations, the Committee awarded stock options to three executive officers in 1997. In addition, the Senior Vice President, Operations was granted stock options in connection with his election to that office. Section 162 of the Internal Revenue Code eliminates the deductibility of most compensation over $1 million per year paid to certain top executives of publicly-held corporations unless certain criteria are satisfied. The Company's Stock Option Plans are not exempt from the deduction limits of Section 162. The current level of executive compensation, including the current value of exercisable options which are not exempt from the deductibility limits, does not exceed the deductibility limit. The Compensation Committee will, however, 7 10 continue to evaluate whether future compliance with the deductibility requirements of Section 162 would be appropriate. The Company also maintains broad-based employee benefit plans in which executive officers participate on the same terms as other employees. For fiscal year 1997, the Company contributed the required 10% of participants' compensation to its Pension Plan, but made no contribution to the Profit Sharing Plan. Certain executive officers, including the Chief Executive Officer, received reduced amounts due to limitations imposed by the Internal Revenue Code. The Compensation Committee Louis Colen Maxwell H. Salter Frederick Frank The Stock Option Committee Maxwell H. Salter Marilyn Ziering COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION During 1997, the members of the Compensation Committee were Frederick Frank and Maxwell H. Salter, both of whom are non-employee directors of the Company, and Louis Colen, a shareholder of the Company. During 1997, Mr. Frank provided consulting services to the Company. See "Election of Directors -- Compensation of Directors." See also "Certain Transactions." During 1997, the members of the Stock Option Committee were Maxwell H. Salter, a non-employee director of the Company, and Marilyn Ziering, Vice President, Marketing Communications of the Company who was also a director of the Company during 1997. Since 1981, the Company has leased its principal offices from a partnership comprised of Dr. Sigi Ziering, Marilyn Ziering and Michael Ziering, officers and/or directors of the Company, and other children of Sigi and Marilyn Ziering who are shareholders of the Company. During 1997, the Company paid $879,000 in rent to the Ziering partnership. In 1997, the Company exercised an option to extend the term of the lease from December 31, 1997 to December 31, 2002. In accordance with terms of the lease, the rental rate for the five year extension period was to be the current market rate. Based on an independent valuation obtained by the Company, the rental rate for the five year extension period was fixed at $80,500 per month, without future adjustments, compared to a 1997 rental rate of $73,252 per month. CERTAIN TRANSACTIONS Frederick Frank, a director of the Company, is Vice Chairman of Lehman Brothers, Inc., an investment banking firm which performed services for the Company in 1997 and which may, from time to time, provide services to the Company in the future. See also "Compensation and Stock Option Committee Interlocks and Insider Participation." 8 11 DPC STOCK PRICE PERFORMANCE Set forth below is a line graph which compares the cumulative total shareholder return, assuming dividend reinvestment, on the Company's Common Stock for the five years ended December 31, 1997, with the S&P Composite-500 Stock Index and the S&P Midcap Medical Products Index.
Health Care Diagnostic (Medical Measurement Period Products Prods & S&P 500 (Fiscal Year Covered) Corporation Supp)-Mid Index 1992 100.00 100.00 100.00 1993 65.53 80.63 110.08 1994 91.28 90.65 111.53 1995 133.41 128.92 153.45 1996 92.42 136.22 188.66 1997 100.76 169.78 251.63
The amounts in the foregoing table assume that the value of an investment in Diagnostic Products Corporation and each index was $100 on December 31, 1992. The annual amounts are based on monthly compounding with dividends reinvested. 9 12 OWNERSHIP OF COMMON STOCK The following table sets forth information as of February 27, 1998, with respect to Common Stock of the Company owned by each person who is known by the Company to own beneficially 5% or more of the outstanding Common Stock, by each director and Named Officer of the Company and by all current directors and executive officers as a group.
NUMBER PERCENTAGE NAME* OF SHARES OWNERSHIP ----- --------- ---------- Sigi and Marilyn Ziering 2,465,856(1)(2) 17.9% 5700 West 96th Street Los Angeles, California 90045 Maxwell H. Salter 336,900 2.4% Sidney A. Aroesty 104,900(2) ** Dr. James D. Watson 46,050(3) ** Michael Ziering 275,728(4) 2.0% Frederick Frank 20,000(5) ** Julian R. Bockserman 75,000(2)(6) ** Said El Shami 58,000(7) ** John G. McLaughlin 0 ** All directors and executive officers as a group (11 persons) 3,331,504(8) 23.9% Louis Colen 901,400 6.5% 2727 Krim Drive Los Angeles, California 90064 The Kaufmann Fund, Inc. 768,400(9) 5.6% 140 E. 45th Street New York, New York 10017
- ------------ * Includes addresses of 5% or more shareholders. ** Less than 1%. (1) Dr. and Mrs. Ziering, husband and wife, hold their shares in a revocable family trust of which they are co-trustees; excludes 18,500 shares owned by Dr. Ziering's mother who resides with Dr. and Mrs. Ziering and as to which beneficial ownership is disclaimed. (2) Includes 30,000 shares owned by the Company's Profit Sharing Plan over which Sigi Ziering, Sidney A. Aroesty and Julian R. Bockserman, as trustees, have shared voting and investment power. Beneficial ownership is disclaimed except as to each person's proportionate interest in such plan. These shares are counted once in the total number of shares held by all directors and executive officers as a group. (3) Includes 29,650 shares subject to options which are exercisable within 60 days. (4) Includes 23,000 shares subject to options which are exercisable within 60 days, and 2,025 shares held by Mr. Ziering's wife, as to which beneficial ownership is disclaimed. (5) Includes 20,000 shares subject to options which are exercisable within 60 days. (6) Includes 26,000 shares subject to options which are exercisable within 60 days. (7) Includes 52,000 shares subject to options which are exercisable within 60 days. 10 13 (8) See Notes above. Also includes 9,070 shares subject to options which are exercisable within 60 days held by executive officers not named in the foregoing table. (9) Holdings at December 31, 1997 as reported in a Schedule 13G filed with the Securities and Exchange Commission. THE COMPANY'S AUDITORS It is the current intention of the Company's Board of Directors to select and retain Deloitte & Touche LLP as independent auditors of the Company for the current year. Deloitte & Touche LLP conducted the audit for the year ended December 31, 1997. A representative of Deloitte & Touche LLP will be present at the Meeting and will have an opportunity to make statements if he so desires and will be available to respond to appropriate questions. FORM 10-K A copy of the Company's Annual Report on Form 10-K for the year ended December 31, 1997 as filed with the Securities and Exchange Commission accompanies this Proxy Statement. SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING In order for a shareholder proposal to be included in the Board of Directors' Proxy Statement and proxy for the Annual Meeting of Shareholders to be held in 1999, such proposal must be received no later than the close of business on November 30, 1998, at 5700 West 96th Street, Los Angeles, California 90045, Attention: Corporate Secretary, and such proposal must otherwise comply with Rule 14a-8 under the Securities Exchange Act of 1934, as amended. OTHER MATTERS As of the date of this Proxy Statement, the Board of Directors does not know of any other matter which will be brought before the Annual Meeting. However, if any other matter properly comes before the Meeting, or any adjournment thereof, the person or persons voting the proxies have authority to vote on such matters in accordance with their judgment and discretion. By Order of the Board of Directors MARILYN ZIERING Secretary Los Angeles, California March 24, 1998 11 14 PROXY DIAGNOSTIC PRODUCTS CORPORATION PROXY FOR ANNUAL MEETING OF SHAREHOLDERS MAY 6, 1998 The undersigned hereby appoints DR. SIGI ZIERING and MICHAEL ZIERING, and each of them, the attorneys and proxies of the undersigned with full power of substitution to appear and to vote all of the common shares of DIAGNOSTIC PRODUCTS CORPORATION held of record by the undersigned on March 13, 1998, at the Annual Meeting of Shareholders of said Company to be held on May 6, 1998, or any adjournment thereof, as designated herein. (CONTINUED AND TO BE MARKED, DATED AND SIGNED ON THE OTHER SIDE) - -------------------------------------------------------------------------------- FOLD AND DETACH HERE 15
PLEASE MARK YOUR VOTE AS INDICATED IN THE EXAMPLE. [X] FOR ALL WITHHOLD NOMINEES LISTED AUTHORITY BELOW (EXCEPT TO VOTE FOR ALL AS MARKED TO THE NOMINEES 1. ELECTION OF DIRECTORS CONTRARY BELOW) LISTED BELOW Nominees: Dr. Sigi Ziering, Sidney A. Aroesty, [ ] [ ] 2. IN THEIR DISCRETION, THE PROXIES ARE Maxwell H. Salter, Dr. James D. Watson, AUTHORIZED TO VOTE ON SUCH OTHER Michael Ziering, Frederick Frank MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT To withhold authority to vote for any individual nominee, THEREOF. write that nominee's name on the space provided below. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF DIAGNOSTIC ______________________________________________________ PRODUCTS CORPORATION. IF NO VOTE IS INDICATED, THIS PROXY WILL BE VOTED WITH AUTHORITY FOR THE ELECTION OF THE DIRECTORS NAMED ABOVE. YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN THIS PROXY IN THE ENVELOPE PROVIDED. IT IS IMPORTANT FOR YOU TO BE REPRESENTED AT THIS MEETING. THE EXECUTION OF YOUR PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ARE PRESENT AT THE MEETING. Signature(s) _____________________________________________________________________________ Date _________________________________ IMPORTANT: Please sign as name appears herein. When signing as an attorney, executor, administrator, trustee or guardian, give full title as such. If the signatory is a corporation, sign the full corporate name by duly authorized officer, or if a partnership, sign in partnership name by authorized person. Joint owners should each sign. - ------------------------------------------------------------------------------------------------------------------------------------ FOLD AND DETACH HERE
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