-----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, Fxsu8FmBH1pRczDIDekMxpT4Q2m0B37ULkkn8+a/yvU9burQu8jgMMkWn1Vkl1Go ou2EJnVcXV6BwbwmN5u3zA== 0000816151-97-000008.txt : 19970407 0000816151-97-000008.hdr.sgml : 19970407 ACCESSION NUMBER: 0000816151-97-000008 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970404 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LABONE INC CENTRAL INDEX KEY: 0000816151 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MEDICAL LABORATORIES [8071] IRS NUMBER: 480952323 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-15975 FILM NUMBER: 97574941 BUSINESS ADDRESS: STREET 1: 10310 W 84TH TERR CITY: LENEXA STATE: KS ZIP: 66214 BUSINESS PHONE: 9138888397 MAIL ADDRESS: STREET 1: 10310 W 84TH TERRACE CITY: LENEXA STATE: KS ZIP: 66214 FORMER COMPANY: FORMER CONFORMED NAME: HOME OFFICE REFERENCE LABORATORY INC DATE OF NAME CHANGE: 19940405 DEF 14A 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 LABONE, INC. Gregg R. Sadler - Secretary 10310 W. 84th Terrace Lenexa, Kansas 66214 ------------------------------------------------ (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. [ ] Fee computed on table below per Exchange Act Rules 14-a6(i)(1) 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: LabOne, Inc. 10310 W. 84th Terrace Lenexa, Kansas 66214 (913) 888-8397 -------------------------------------------------- NOTICE OF ANNUAL MEETING OF STOCKHOLDERS To Be Held May 8, 1997 -------------------------------------------------- The annual meeting of the stockholders of LabOne, Inc. (LabOne), a Delaware corporation, will be held at the offices of LabOne, 10310 W. 84th Terrace, Lenexa, Kansas, on Thursday, May 8, 1997, at 3:00 P.M., Central Daylight Time, for the following purposes: 1. To elect 13 directors as set forth in the accompanying Proxy Statement. 2. To ratify the appointment of KPMG Peat Marwick LLP as independent certified public accountants of the corporation and its subsidiary for the present fiscal year. 3. To transact such other business as may properly come before the meeting and any adjournment thereof. Stockholders of record at the close of business on March 10, 1997 are entitled to vote at the meeting. YOUR VOTE IS IMPORTANT. PLEASE DATE, SIGN AND RETURN THE ACCOMPANYING PROXY PROMPTLY IN THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING. Sending in your Proxy now will not interfere with your rights to attend the meeting or to vote your shares personally at the meeting if you wish to do so. All stockholders are cordially invited to attend the meeting. By Order of the Board of Directors GREGG R. SADLER Secretary Dated: April 4, 1997 LabOne, Inc. 10310 W. 84th Terrace Lenexa, Kansas 66214 (913) 888-8397 -------------------------------------------------- PROXY STATEMENT INTRODUCTION This Proxy Statement is furnished to the stockholders of LabOne, Inc. (LabOne), a Delaware corporation, in connection with solicitation of proxies by the Board of Directors of LabOne for use at the Annual Meeting of Stockholders to be held on Thursday, May 8, 1997, at 3:00 P.M., Central Daylight Time, at the offices of LabOne, 10310 W. 84th Terrace, Lenexa, Kansas, and at any adjournment thereof (the Annual Meeting). This Proxy Statement, the Notice and the accompanying form of Proxy were first mailed to the stockholders of LabOne on or about April 4, 1997. A copy of LabOne's annual report for the fiscal year ended December 31, 1996, is enclosed herewith. Such report is not incorporated in the Proxy Statement and is not to be deemed a part of the proxy soliciting material. VOTING Stockholders of record at the close of business on March 10, 1997, are entitled to notice of and to vote at the meeting. There were 13,084,935 shares of common stock outstanding at the close of business on that date. Stockholders are entitled to one vote per share on all matters submitted at the Annual Meeting. When a Proxy in the accompanying form is properly executed and returned, the shares represented by the Proxy will be voted at the Annual Meeting in accordance with the instructions thereon. If no instructions are specified, such shares will be voted for (1) the nominees for directors named herein, and (2) the ratification of the selection of the independent public accountants. Abstentions and broker nonvotes are counted for purposes of determining whether there is a quorum for the transaction of business at the meeting. In tabulating the votes cast on proposals presented to stockholders, abstentions are counted and broker nonvotes are not counted for purposes of determining whether a proposal has been approved. A stockholder may revoke his or her Proxy at any time before it is voted by giving to the Secretary of LabOne written notice of revocation bearing a later date than the Proxy, by submitting a later-dated Proxy, or by revoking the Proxy and voting in person at the Annual Meeting. Attendance at the Annual Meeting will not in and of itself constitute a revocation of a Proxy. Any written notice revoking a Proxy should be sent to Mr. Gregg R. Sadler, Secretary, LabOne, 10310 W. 84th Terrace, Lenexa, Kansas 66214. -1- PROPOSAL 1 ---------- ELECTION OF DIRECTORS INFORMATION CONCERNING NOMINEES FOR ELECTION AS DIRECTORS The stockholders will be asked to elect 13 Directors at the Annual Meeting. Each of the persons listed below will be nominated to hold office for a one-year term and until his successor is elected and qualified, or until his earlier death, resignation or removal. It is expected that each of such nominees will be available for election, but in the event that any of them should become unavailable, the persons named in the accompanying Proxy will vote for a substitute nominee or nominees designated by the Board of Directors. The terms of office of the present Directors will expire upon the election of their successors at the Annual Meeting. Principal Occupation, Five-Year Employment History and Other A Director Name (Age) Directorships (1) of LabOne Since - ------------- ----------------------------------- --------------- Joseph H. Brewer, Infectious Disease Specialist, St. 1988 M.D. (45) Luke's Hospital, Kansas City, Missouri. Dr. Brewer is also an Assistant Clinical Professor of Medicine at the University of Missouri-Kansas City. William D. Grant Chairman Emeritus of the Board of 1989 (80) Directors of Seafield Capital Corporation (Seafield), formerly BMA Corporation, Kansas City, Missouri, a holding company which owns 81.9% of the outstanding stock of LabOne. Mr. Grant is also a director of SLH Corporation (SLH), a company formed in 1996 to manage and develop real estate, energy and miscellaneous assets previously owned by Seafield, and a director of Boatmen's First National Bank of Kansas City, N.A.(2) -2- W. Thomas Grant II Chairman of the Board of Directors, 1983 (46) President and Chief Executive Officer of LabOne. Mr. Grant is also Chairman of the Board of Directors and Chief Executive Officer of Seafield. He is a director of Commerce Bancshares, Inc., Kansas City Power & Light Company, Response Oncology, Inc. and SLH(3) Thomas J. Hespe Executive Vice President - Sales 1995 (40) and Marketing of LabOne.(4) P. Anthony Jacobs President, Chief Operating Officer 1987 (55) and a director of Seafield and Chairman of the Board of Directors and a director of SLH. Mr. Jacobs is also a director of Trenwick Group, Inc. and Response Oncology, Inc.(5) Neal L. Patterson Chairman, Chief Executive Officer 1987 (47) and a director of Cerner Corporation, Kansas City, Missouri, a developer of clinical and management information systems that support relationships between providers, purchasers, payors and consumers of health services. Richard A. Rifkind, Chairman of the Sloan-Kettering 1987 M.D. (66) Institute, New York, New York, a medical research institution. Gregg R. Sadler, Executive Vice President - 1985 FSA (46) Administration and Secretary of LabOne and President-Insurance Laboratory Division.(6) Richard S. Schweiker Retired. Formerly President of 1995 (70) the American Council of Life Insurance, Washington, D.C., a life insurance trade association. Mr. Schweiker is also a director of Tenet Healthcare Corporation. James R. Seward Executive Vice President, Chief 1995 (44) Financial Officer and a director of Seafield and President, Chief Executive Officer and a director of SLH. Mr. Seward is also a director of Response Oncology, Inc.(7) -3- Robert D. Thompson Executive Vice President - Finance, 1995 (35) Chief Financial Officer and Treasurer of LabOne.(8) John E. Walker Retired. Formerly Managing 1984 (58) Director-Reinsurance of Business Men's Assurance Company of America (BMA). Mr. Walker is a director of FBL, Inc.(9) R. Dennis Wright, Member of Hillix, Brewer, Hoffhaus, 1987 Esq. (54) Whittaker & Wright, L.L.C., Kansas City, Missouri and its Executive Committee.(10) - --------------------- (1) Unless otherwise indicated, each Director has had the same principal occupation during the last five years. (2) Mr. W. D. Grant was appointed Chairman Emeritus of Seafield in 1993. Prior thereto he served as Chairman of the Board of Seafield. He is the father of W. Thomas Grant II. (3) Mr. W. Thomas Grant II was appointed Chairman of the Board of Directors, President and Chief Executive Officer of LabOne in 1995. He was appointed Chairman of the Board of Seafield in 1993. Prior thereto he was President of Seafield and Chairman of the Board of LabOne. He is the son of W. D. Grant. (4) Mr. Hespe was appointed Executive Vice President - Sales and Marketing in 1995. From 1990 to 1995, Mr. Hespe was Executive Vice President Sales and Marketing of Allscrips Pharmaceuticals, Vernon Hills, Illinois, a distributor of managed care pharmaceutical products and services with annual revenues of approximately $70 million. Mr. Hespe's responsibilities with Allscrips included developing strategies for market expansion and developing business with managed care organizations, including hospitals, physicians, HMO organizations, third party administrators, consulting firms, self-insured employers and insurance companies. (5) Mr. Jacobs was appointed President of Seafield in 1993 and Chief Operating Officer in 1990. Prior to 1993 he served as Executive Vice President of Seafield. He was appointed Chairman of the Board of Directors of SLH in 1996. (6) Mr. Sadler was appointed President - Insurance Laboratory Division in 1994. He was appointed Executive Vice President-Administration in 1993. Prior thereto he was Executive Vice-President. He has served as Secretary since 1988. -4- (7) Mr. Seward was appointed Executive Vice President of Seafield in 1993. He has served as Chief Financial Officer of Seafield since 1990. He was appointed President and Chief Executive Officer of SLH in 1996 (8) Mr. Thompson was appointed Executive Vice President - Finance, Chief Financial Officer and Treasurer in December 1993. He was Vice President - Business Development Planning from August 1993 to December 1993. He was an independent financial consultant from 1992 to 1993. From 1991 to 1992, he was Chief Financial Officer of MetWest, a division of Unilab Corporation, a collection of five formerly separate clinical testing laboratories in the Western United States. (9) Mr. Walker retired as Managing Director-Reinsurance of BMA in 1996. Mr. Walker served as Vice Chairman of the Board of Directors of LabOne prior to 1994. (10) Hillix, Brewer, Hoffhaus, Whittaker & Wright, L.L.C., provides legal services to LabOne, for which it was paid $384,502 in fees during 1996. MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES There were four meetings of the Board of Directors during 1996. The Board of Directors has an Audit Committee, a Compensation Committee and an Executive Committee. During 1996, the Audit Committee met four times and the Compensation Committee and Executive Committee each met twice. All Directors attended 75 percent or more of the total number of all meetings of the Board and of Committees of which they are members during 1996, with the exception that Dr. Rifkind was unable to attend the February 16 and May 10 meetings of the Board and Audit Committee. The Audit Committee consists of Mr. Wright, Chairman, and Messrs. W. D. Grant, Patterson, Rifkind, Walker and Seward. The Audit Committee reviews LabOne's financial statements with the independent auditors, determines the effectiveness of the audit effort through meetings with the independent auditors and officers of LabOne, inquires into the effectiveness of LabOne's internal controls through discussions with the independent auditors, reports to the Board on its activities and recommendations, and recommends to the Board the appointment of independent auditors for the ensuing year. The Compensation Committee consists of Mr. Richard S. Schweiker, Chairman, and Messrs. Brewer, W. Thomas Grant II, Jacobs, and Wright. The purpose of the Compensation Committee is to oversee LabOne's compensation structure, incentive plans and other employee benefits. The Compensation Committee reviews and recommends adjustments to the officers' salary structure. It approves cash awards to nonofficer employees and recommends to the Board amounts to be set aside and cash awards to be paid to officers under LabOne's cash bonus plan. The Committee recommends to the Board compensation for nonofficer directors, monitors the administration of employee benefit plans and reviews significant employee supplementary pension or termination arrangements. -5- The Executive Committee consists of Mr. W. Thomas Grant II, Chairman, and Messrs. Hespe, Jacobs, Patterson, Sadler, Seward and Thompson. The purpose of the Executive Committee is to act on behalf of the Board of Directors and to serve in an advisory capacity to management. The Executive Committee also develops, recommends and reviews policy guidelines for all investments and borrowings of LabOne and recommends outside investment management firms to provide services to LabOne. The Executive Committee exercises all the powers and authority of the Board in interim periods between meetings of the Board, except as limited by Delaware law, and reports all of its actions to the Board. LabOne does not have a standing nominating committee of the Board of Directors or a committee performing a similar function. EXECUTIVE OFFICERS The executive officers of LabOne are as follows:
Five-Year An Executive Employment of LabOne Name (Age) Positions History Since - ---------- ---------------- --------------------------------- ------ W. Thomas Grant II Chairman of the (1) 1995 (46) Board of Directors, President and Chief Executive Officer Carl W. Ludvigsen Executive Vice President- Dr. Ludvigsen was appointed Executive 1989 Jr., M.D., Ph.D., Corporate Development Vice President-Corporate Development J.D., FCAP, FCLM and Chief Medical and Chief Medical Officer in December (44) Officer 1996. He was Executive Vice President- Operations and Chief Operating Officer from December 1993 to November 1996. He was Executive Vice President from August to December 1993. Prior thereto he was Senior Vice President and Chief Pathologist. Roger K. Betts Executive Vice President- Mr. Betts was appointed Executive Vice 1983 (54) Sales-Insurance President-Sales-Insurance Laboratory Laboratory Division Division in 1994. He was Senior Vice President-Sales of the Division from 1993 to 1994. Prior thereto he was Senior Vice President- Technical Sales & Support. Thomas J. Hespe Executive Vice (2) 1995 (40) President-Sales and Marketing of LabOne. -6- Michael A. Peat, Executive Vice Dr. Peat was appointed Executive Vice 1996 Ph.D. (49) President- President-Toxicology in May 1996. Toxicology He was Senior Vice President- Toxicology from 1994 to 1996. Prior thereto he was Vice President of Toxicology of Roche Biomedical Laboratories, Inc., Research Triangle Park, North Carolina. Gregg R. Sadler, Executive Vice President- (3) 1988 FSA (46) Administration and Secretary and President- Insurance Laboratory Division Robert D. Thompson Executive Vice President- (4) 1993 (35) Finance, Chief Financial Officer and Treasurer Robert F. Thompson Executive Vice President- Mr. Thompson was appointed Executive 1985 (61) Insurance Laboratory Vice President-Insurance Laboratory Division Division in 1995. Prior thereto he was President of Lab One Canada Inc. (formerly Head Office Reference Laboratory Limited), LabOne's wholly- owned Canadian subsidiary. Roy K. Vance Executive Vice President- Mr. Vance was appointed Executive 1996 (43) Laboratory Operations Vice President-Laboratory Operations in November 1996. From 1993 to 1996 he was Vice President-Laboratory Operations. Prior thereto he was Director of Laboratory Operations. Kurt E. Gruenbacher, Vice President-Finance Mr. Gruenbacher was appointed Vice 1994 CPA, CMA (37) and Chief Accounting President-Finance and Chief Accounting Officer Officer in May 1995. From 1994 to 1995 he was Corporate Controller. From 1993 to 1994 he was Director, Financial Analysis and Budgets. Prior thereto he was Manager, Financial Analysis and Budgets.
- -------------------------- (1) See footnote (3) on page 4 hereof for Mr. Grant's five-year employment history. (2) See footnote (4) on page 4 hereof for Mr. Hespe's five-year employment history. (3) See footnote (6) on page 4 hereof for Mr. Sadler's five-year employment history. (4) See footnote (8) on page 5 hereof for Mr. Thompson's five-year employment history. -7- Section 16 (a) Beneficial Ownership Reporting Compliance Neal L. Patterson, a director, filed with the Securities and Exchange Commission 9 weeks late a Form 4 reporting on his purchase of 1,000 shares of LabOne stock in August 1996. Roy K. Vance, Executive Vice President-Lab Operations, filed with the Securities and Exchange Commission 25 days late a Form 3 reporting his appointment as an executive officer of LabOne in November 1996. PROPOSAL 2 ---------- SELECTION OF AUDITORS The Board of Directors has selected KPMG Peat Marwick LLP to examine the accounts of LabOne and its subsidiary for the fiscal year ending December 31, 1997. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS. Representatives of KPMG Peat Marwick LLP are expected to be present at the Annual Meeting to make any statement they may desire and to respond to appropriate questions concerning the audit report. EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The following table provides certain summary information concerning compensation paid or accrued by LabOne to or on behalf of (i) the person who served as its chief executive officer during 1996 and (ii) the four most highly compensated executive officers other than the chief executive officer serving as of December 31, 1996, for services rendered in all capacities to LabOne and its subsidiaries for each of the last three completed fiscal years. -8- * * Long-Term * * Annual Compensation * Compensation* All * ------------------- * ------------* Other * *Stock Option *Compensation Name and Fiscal* * Shares * ($) (1) Principal Position Year * Salary ($) Bonus ($)* Granted (#) * ------------------ ------* ---------- ---------* -----------*------------ W. Thomas Grant II 1996 0 0 0 0 Chairman of the 1995 0 0 0 0 Board of Direc- 1994 0 0 0 0 tors, President and Chief Execu- tive Officer Robert D. Thompson 1996 209,277 75,000 0 17,086 Executive Vice 1995 157,173 50,000 70,000 19,330 President-Finance, 1994 125,401 0 0 13,039 Chief Financial Officer and Treasurer Carl W. Ludvigsen, 1996 230,277 25,000 0 20,634 Jr. 1995 227,539 0 20,000 20,507 Executive Vice 1994 214,686 0 0 20,541 President- Operations and Corporate Development, Chief Operating Officer and Chief Medical Officer Thomas J. Hespe 1996 159,277 50,000 0 20,490 Executive Vice 1995 40,125 0 100,000 34,053(2) President-Sales 1994 0 0 0 0 and Marketing Gregg R. Sadler 1996 150,277 50,000 0 20,923 Executive Vice 1995 146,308 0 24,000 20,038 President-Admin- 1994 126,404 0 0 20,486 istration and Secretary and President- Insurance Laboratory Division (1) The amounts shown in this column consist of contributions by LabOne to the accounts of the named executive officers under LabOne's defined contribution pension plan, 50% matching contributions by LabOne to the accounts of such persons under LabOne's profit-sharing 401(k) plan and insurance premium payments by LabOne with respect to group term life insurance for the benefit of such persons. (2) Payment of relocation expenses in connection with Mr. Hespe's move to Stilwell, Kansas. -9- OPTION GRANTS IN 1996 No options were granted to any of the named executive officers during 1996. AGGREGATE OPTION EXERCISES AND DECEMBER 31, 1996 OPTION VALUE TABLE The following table provides certain information concerning the exercise of stock options during 1996 by each of the named executive officers and the number and value of unexercised options held by such persons at December 31, 1996.
Number of Unexercised Value of Unexercised Options at In-the-Money Options December 31, 1996(#) at December 31, 1996($) Shares Acquired on Value Options Options Options Options Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable - -------------- ----------- -------- --------- ----------- --------- ----------- W. Thomas Grant II 0 0 27,431 0 229,734 0 Robert D. Thompson 0 0 94,000 56,000 392,750 331,000 Carl W. Ludvigsen, Jr. 0 0 71,000 18,000 386,623 113,000 Thomas J. Hespe 0 0 20,000 80,000 132,500 530,000 Gregg R. Sadler 0 0 78,400 21,600 548,294 87,600
COMPENSATION OF DIRECTORS Directors who are not employees of LabOne or Seafield receive an annual retainer fee of $5,000 in cash and a grant of a number of shares of common stock of LabOne having a value equal to $10,000, plus $500 for each Board and Committee meeting attended and reimbursement for reasonable expenses in attending meetings. Richard S. Schweiker, a Director of LabOne, has agreed to attend national meetings of insurance underwriters on LabOne's behalf and to make selected contacts in furtherance of LabOne's business, for which services LabOne will pay Mr. Schweiker additional fees of $30,000 annually. EMPLOYMENT AGREEMENTS LabOne has Employment Agreements with Robert D. Thompson, Carl W. Ludvigsen Jr., Gregg R. Sadler and Thomas J. Hespe. Mr. Thompson's Agreement provides for his employment for an eighteen month term ending in May 1997 and renewable annually thereafter for successive one-year terms unless LabOne elects not to extend the Agreement. Dr. Ludvigsen's Agreement provides for his employment for a two-year term ending in November 1998 and renewable annually thereafter for successive one-year terms unless LabOne elects not to extend the Agreement. Mr. Sadler's Agreement is renewable annually for one-year terms unless LabOne elects not to extend it and Mr. Hespe's Agreement is terminable by LabOne on thirty days' notice. The annual base salaries provided under the Agreements are $200,900 to Mr. Thompson, $230,900 to Dr. Ludvigsen, $150,900 to Mr. Sadler and $150,900 to Mr. Hespe. In the event that LabOne terminates Messrs. Thompson, Ludvigsen or Sadler without cause -10- (as defined in the Agreements), LabOne will pay the terminated officer a lump sum severance payment equal to his base salary for the balance of the term of the Agreement, plus 50% of one year's annual base salary. If LabOne terminates Mr. Hespe without cause, LabOne will pay Mr. Hespe a severance payment equal to one year's base salary. If a change of control of LabOne (as defined in the Agreements) occurs at any time during which the executive officer is in LabOne's full-time employment, and within one year after such a change in control the executive officer's employment is terminated for any reason other than permanent disability, death or normal retirement, LabOne will pay the officer as termination compensation a lump sum amount equal to three times the officer's average annual compensation for the most recent five taxable years (subject to certain limitations prescribed in the Internal Revenue Code) and any remaining term of the officer's Agreement shall be cancelled. Under each Agreement, the executive officer agrees not to compete with LabOne for a period of two years after the termination of his employment with LabOne. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Prior to November 1996, Mr. W. Thomas Grant II was Chairman of the Compensation Committee of the Board of Directors of LabOne. Mr. Grant has been Chairman of the Board of Directors, President and Chief Executive Officer of LabOne throughout 1996. LabOne believes that Mr. Grant was qualified to act independently as Chairman of the Compensation Committee notwithstanding his positions as an executive officer of LabOne, as he served as an executive officer of LabOne without cash compensation. Mr. R. Dennis Wright, a member of the Compensation Committee, is a member of Hillix, Brewer, Hoffhaus, Whittaker & Wright, L.L.C. and its Executive Committee, which firm provides legal services to LabOne for which it was paid $384,502 in fees during 1996. BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION LabOne's executive compensation program is administered by the Compensation Committee, a Committee of the Board of Directors composed of the nonemployee Directors listed at the end of this report. As noted earlier in this Proxy Statement, all issues pertaining to executive compensation are reviewed by the Compensation Committee and recommendations are submitted by the Committee to the full Board of Directors for approval. Compensation Philosophy The philosophy governing executive compensation is based on a belief that management and stockholders have a common goal -- increasing the value of LabOne. The business strategy for achieving this goal is expressed in LabOne's mission statement: "LabOne is dedicated to maximizing the return on investment for our stockholders . . . to providing the lowest-cost, highest- quality laboratory testing services for our clients . . . to providing a working environment that emphasizes accountability for results and rewards employees based on their contribution to the Company's success." -11- Three principal elements of executive compensation -- base salary, annual incentive plan, and stock options -- are used to motivate and reward the accomplishment of annual corporate objectives, reinforce a strong orientation toward operating excellence, provide variability in individual awards based on contributions to business results, and maintain a competitive compensation package to attract, retain and motivate individuals of the highest professional quality. Base Salary Salary ranges were developed based on a survey initially conducted in 1986 by an independent consultant and updated in 1989. Base salaries were targeted at the 60th to 65th percentile of pay for comparable positions in "All Industrial Base Salaries" surveyed by the consultant. Salary ranges have been adjusted annually to reflect inflationary increases shown in industry surveys. Salary ranges have also been adjusted to reflect changes in job responsibilities. These salary ranges are reviewed annually by a consultant. In determining base salary levels, the Committee considers both the salary ranges and individual performance evaluations for each executive officer. Measurements related to LabOne's performance are not a significant factor in base salary decisions since they are the sole factors in determining incentive awards and the value of stock options. Annual Incentive Plan The Annual Incentive Plan is designed to motivate and reward the accomplishment of targeted operating results. Prior to the beginning of each fiscal year, the Committee establishes an earnings per share goal under the Plan based upon the Committee's judgment of reasonable earnings per share growth over the previous fiscal year. No incentive bonuses are payable under the plan if the minimum net earnings threshold is not met. The size of the incentive pool increases pursuant to a formula established by the Committee as net earnings increase over the minimum threshold. The incentive pool is distributed in cash to designated officers and managers at year end according to a pre- established weighting. The weighting is based upon senior management's subjective evaluations of each individual's potential contribution to the Company's financial and strategic goals for the year, and is reviewed and approved by the Committee. In 1996 the minimum net earnings threshold established under the Plan was not met and no bonuses were paid under the Plan. However, in light of improvements in quarterly earnings throughout 1996, discretionary bonuses aggregating $342,000 were paid to 50 officers and managers in 1996. Stock Options The Compensation Committee, as well as the Board of Directors, believes that significant stock ownership through stock options by key employees and directors is a major incentive in aligning the interests of employees and stockholders, because value is only provided if the stock price increases, and because stock options have an effective long- term reward and retention function. -12- The stockholders approved the Long-Term Incentive Plan in 1987 and increases in the number of shares which may be issued under the Plan were approved by stockholders in 1991, 1994 and 1995. Under the Plan, ten-year nonqualified stock options are granted to executive officers and other key employees when they are hired or promoted into eligible positions, with vesting generally occurring over five years. In addition to executive officers and employees, each nonemployee Director of the Company has also received a ten-year nonqualified stock option grant to vest over four years. LabOne also has a Stock Plan for Nonemployee Directors under which each nonemployee Director receives annual retainer fees of $5,000 in cash and a grant of a number of shares of LabOne stock having a value equal to $10,000. The purpose of the plan is to provide nonemployee Directors with an additional proprietary interest in LabOne's success and progress. Chief Executive Officer's Compensation Mr. W. Thomas Grant II, Chairman of the Board of Directors, President and Chief Executive Officer of LabOne, serves in such capacities without cash compensation from LabOne. Deductibility Cap on Compensation Exceeding $1,000,000 The Committee does not believe that Internal Revenue Service regulations regarding nondeductibility of annual compensation in excess of $1,000,000 will have any material impact upon LabOne, given the current salary and bonus levels of officers of the corporation and the treatment in the regulations of compensation under the corporation's Long-Term Incentive Plan. Submitted by the Compensation Committee Richard S. Schweiker, Chairman Joseph H. Brewer W. Thomas Grant II P. Anthony Jacobs R. Dennis Wright -13- Comparison of Five Year Cumulative Total Return Among LabOne, Nasdaq Composite Index and Peer group THE GRAPHICAL FORM OF THE "PERFORMANCE CHART" IS REPRESENTED BY THE TABLE BELOW. THE DATA POINTS IN THE TABLE ACCURATELY PRESENT THE INFORMATION FROM THE PERFORMANCE CHART. 1991 1992 1993 1994 1995 1996 ----------------------------------------------------- LabOne, Inc. 100.00 94.55 133.39 116.05 116.53 152.95 Nasdaq US CRSP Index 100.00 116.38 133.59 130.59 184.67 227.14 Peer Group 100.00 63.12 51.00 45.78 34.38 13.29 The table assumes the investment at the close of business on December 31, 1991, of $100 in LabOne's common stock and in the portfolio represented in each index, and assumes that all dividends were reinvested. LabOne has selected an index of seven testing laboratories as its peer group: Bio-Reference Labs, Laboratory Corporation of America, Oncormed, Pharmchem, Psychemedics, Unilab and Universal Standard Medical. The Company feels that the peer group index provides an appropriate comparison. -14- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS The following table shows as of March 10, 1997, the total number of shares of common stock of LabOne beneficially owned by persons known to be beneficial owners of more than 5% of the outstanding stock. Percentage of Shares of LabOne Outstanding Shares Beneficially Owned of LabOne Beneficially Beneficial Owner March 10, 1997(1) Owned March 10, 1997 ---------------- ----------------- -------------------- Seafield Capital Corporation 10,712,200 81.9% 2600 Grand, Suite 500, Kansas City, Missouri 64141 (1) Seafield has sole voting and investment power with respect to the shares listed. SECURITY OWNERSHIP OF MANAGEMENT The following table shows as of March 10, 1997, for each director, each of the executive officers named in the Summary Compensation Table on page 9 hereof, and all directors and executive officers of LabOne as a group, the total number of shares of common stock of LabOne and of Seafield beneficially owned by such persons. Percentage of Percentage of Outstanding Outstanding Shares of Shares Shares of Shares of LabOne Bene- of LabOne Seafield Seafield ficially Beneficially Beneficially Beneficially Beneficial Owner Owned(1)(2) Owned(6) Owned(1) Owned - ---------------- --------- ----------- ----------- ---------- Joseph H. Brewer, M.D. 26,075 * 0 * William D. Grant 10,749,275(3) 82.0% 1,087,386(7) 16.6% W. Thomas Grant II 10,741,431(3) 81.9% 146,880(8) 2.3% Thomas J. Hespe 20,278(4) * 0 * P. Anthony Jacobs 10,735,700(3) 81.9% 22,248(9) * Carl W. Ludvigsen 73,637(4) * 0 * Jr., M.D. Neal L. Patterson 26,075 * 0 * Richard A. Rifkind, 25,978 * 0 * M.D. Gregg R. Sadler, 90,435(4) * 0 * Richard S. Schweiker 5,658 * 0 * James R. Seward 10,724,000(3) 81.9% 21,779(10) * -15- Robert D. Thompson 99,788(4) * 0 * John E. Walker 26,075(5) * 7,099(11) * R. Dennis Wright, 23,258 * 0 * Esq. All directors and 11,350,587(3)(4) 83.1% 1,281,941 19.8% executive officers of LabOne as a group (20 persons) (1) Unless otherwise indicated, each person has sole voting and investment power with respect to the shares listed. (2) Includes the following numbers of shares which such persons have the right to acquire within 60 days pursuant to options granted under the LabOne Long-Term Incentive Plan: Joseph H. Brewer, 22,000 shares; William D. Grant, 22,000 shares; W. Thomas Grant II, 27,431 shares; Thomas J. Hespe, 20,000 shares; P. Anthony Jacobs, 22,000 shares; Carl W. Ludvigsen Jr., 72,000 shares; Neal L. Patterson, 22,000 shares; Richard A. Rifkind, 22,000 shares; Gregg R. Sadler, 84,400 shares; Richard S. Schweiker, 4,400 shares; James R. Seward, 8,800 shares; Robert D. Thompson, 98,000 shares; John E. Walker, 22,000 shares; R. Dennis Wright, 22,000 shares; and all directors and executive officers as a group, 574,720 shares. (3) Includes 10,712,200 shares of LabOne common stock owned by Seafield (see "Security Ownership of Certain Beneficial Owners" above), as to which William D. Grant, W. Thomas Grant II, P. Anthony Jacobs and James R. Seward each has shared voting power and investment power as a member of the Board of Directors of Seafield. Each of such persons disclaims beneficial ownership of the LabOne shares owned by Seafield. (4) Includes the following numbers of shares held in individually directed accounts of the named persons under LabOne's 401(k) profit-sharing plan, as to which each of such persons has sole investment power only: Thomas J. Hespe, 278 shares; Carl W. Ludvigsen Jr., 1,637 shares; Gregg R. Sadler, 4,535 shares; Robert D. Thompson, 1,788 shares; and all directors and executive officers as a group, 20,733 shares. (5) Includes 4,075 shares owned by a revocable trust for Mr. Walker's wife, as to which he disclaims beneficial ownership. (6) For purposes of determining this percentage, the outstanding shares of LabOne include shares which such persons have the right to acquire within 60 days pursuant to options granted under LabOne's Long-Term Incentive Plan. -16- (7) Includes 237,960 shares held by a family trust for which William D. Grant serves as a co-trustee with UMB Bank, N.A., and in that capacity shares voting and investment power; 5,400 shares held by a family foundation of which William D. Grant shares voting and investment power with UMB Bank, N.A.; and 26,850 shares owned by the wife of William D. Grant, as to which he disclaims beneficial ownership. (8) Includes 31,561 shares held by W. Thomas Grant II as custodian for his children; 45,000 shares held in a family trust for which W. Thomas Grant II serves as a co-trustee with Laura Gamble and in that capacity shares voting and investment power; 11,970 shares owned by the wife of W. Thomas Grant II, as to which he disclaims beneficial ownership; and 1,190 shares held in Mr. Grant's account under the Seafield Capital Corporation 401(k) Plan and Trust as of December 31, 1996, as to which Mr. Grant shares investment power, but has no voting power. (9) Includes 1,000 shares owned by the wife of P. Anthony Jacobs, as to which he disclaims beneficial ownership; and 2,261 shares held in Mr. Jacobs' account under the Seafield Capital Corporation 401(k) Plan and Trust as of December 31, 1996, as to which Mr. Jacobs shares investment power, but has no voting power. (10) Includes 1,500 shares held in a family trust of which Mr. Seward serves as a co-trustee with his mother, and in that capacity shares voting and investment power; 665 shares held in Mr. Seward's account under the Seafield Capital Corporation 40l(k) Plan and Trust as of December 31, 1996, and 6,183 shares held by Mr. Seward as a Plan Administrative Committee member of the Seafield Capital Corporation 401(k) Plan and Trust, as to which he shares voting and investment power with The Investors Services Trust Company, the trustee of the Trust. The trustee is obligated to grant voting rights to the Plan Administrative Committee if requested by the Committee. (11) Includes 5,278 shares held by the wife of John E. Walker, as to which he disclaims beneficial ownership. * Less than 1% of outstanding shares RELATIONSHIP WITH SEAFIELD As of March 10, 1997, Seafield beneficially owned 10,712,200 shares, or 81.9%, of the outstanding common stock of LabOne. Seafield, by virtue of its ownership of a majority of LabOne's common stock, has control of LabOne and is able to elect all of the members of LabOne's Board of Directors. Seafield has permitted LabOne to operate independently of Seafield in the past and intends to do so in the future. The officers of LabOne have direct responsibility for LabOne's management and operations. During 1996 none of the officers of LabOne other than W. Thomas Grant II were employed in any capacity by Seafield or any of its subsidiaries. Mr. Grant serves as Chairman of the Board of Directors, President -17- and Chief Executive Officer of LabOne and as Chairman of the Board of Directors and Chief Executive Officer of Seafield. In 1995 LabOne was advised by Seafield that Seafield had retained Alex. Brown & Sons Incorporated as financial advisor to assist Seafield in considering strategic alternatives to maximize Seafield shareholder value. LabOne has been informed that one alternative Seafield expects to pursue is a merger of Seafield into LabOne. The merger would most likely be preceded by Seafield's distribution to its shareholders or other disposition by Seafield of its other assets. Seafield's Board has also announced that it will consider other business combination proposals that are presented to it. LabOne has appointed a special committee of independent directors to consider any merger or other proposal that may be presented to it by Seafield. During 1996, Seafield charged LabOne for certain services, including advice and assistance provided by senior Seafield officers, pursuant to a Services Agreement (the Services Agreement). For the year ended December 31, 1996, the total charges to LabOne by Seafield for these services were $111,846. The Services Agreement is automatically renewable for successive one-year terms until terminated. LabOne has its own personnel responsible for operations, marketing, data processing, finance, accounting and other support functions, and, except as provided for in the Services Agreement, does not rely on Seafield for such services. Under the Services Agreement, LabOne retains the services of certain of Seafield's senior management to provide policy advice to LabOne and to attend on behalf of LabOne various marketing and client development functions in order to promote LabOne's laboratory testing services. In consideration for these services, LabOne pays Seafield a percentage of LabOne's annual sales equal to 0.20% of sales up to $50 million, plus 0.125% of sales of $50 million up to $100 million, plus 0.0625% of sales of $100 million or more. LabOne also reimburses Seafield for all direct travel expenses reasonably incurred by its employees in providing these services. Seafield also makes certain administrative services available to LabOne, including financial and investment advice, and the advice and assistance of Seafield's corporate secretary. LabOne is under no obligation to rely on Seafield for these services and is free to obtain the services from any other source. To the extent that LabOne utilizes these services, LabOne reimburses Seafield for costs incurred in providing these services. Seafield and LabOne are also parties to a Transition Agreement (Transition Agreement) pursuant to which they have agreed to an allocation of certain corporate opportunities and to mutual indemnification for certain liabilities and expenses. Under the Transition Agreement, so long as Seafield, directly or indirectly, owns at least 20% of the outstanding voting shares of LabOne, Seafield agrees to refer to LabOne any product, service, idea or other corporate opportunity that is within the scope of LabOne's business. For purposes of this Agreement, LabOne's business is defined as providing -18- laboratory testing services for the insurance and health care industry and the development and implementation of data processing and communications facilities for receiving test-related instructions from clients, for conducting laboratory operations and for the collection, use, storage, retrieval and transmission of test results data by both LabOne and its clients. In the event that a majority of the independent, disinterested Directors of LabOne informs Seafield that LabOne does not intend to pursue, or LabOne within a reasonable time fails to pursue, the consideration and development of any product, service, idea or other business opportunity referred to it by Seafield, Seafield is entitled under the Transition Agreement to consider and develop the product, service, idea or business opportunity for its own benefit. Under the Agreement, LabOne also agrees to indemnify and hold harmless Seafield, and any controlling person of Seafield, with respect to certain civil liabilities, including any and all claims, losses, damages, liabilities, costs and expenses that arise from or are based on operations of LabOne. Similarly, Seafield agrees to indemnify and hold harmless LabOne and any controlling person of LabOne (other than Seafield), with respect to certain civil liabilities, including any and all claims, losses, damages, liabilities, costs and expenses that arise from or are based on the operations of Seafield (other than the business of LabOne). STOCKHOLDER PROPOSALS Any proper stockholder proposal intended to be presented for action at the 1998 annual stockholders' meeting must be received by LabOne by December 1, 1997, for inclusion in the proxy material relating to such meeting. GENERAL The Board of Directors knows of no other matters which will be presented for consideration at the Annual Meeting other than those stated in the Notice of Annual Meeting which is part of this Proxy Statement. If any other matter does properly come before the meeting, it is intended that the persons named in the accompanying proxy will vote thereon in accordance with their judgment. In addition to the solicitation of proxies from stockholders by mail, proxies may be solicited by LabOne's Directors, officers and other employees, by personal interview, telephone or telegram. Such persons will receive no additional compensation for such services. LabOne requests that brokerage houses and other custodians, nominees and fiduciaries forward the soliciting material to the beneficial owners of the shares of LabOne common stock held of record by such persons and will pay such brokers and other fiduciaries their reasonable out-of-pocket expenses incurred in connection therewith. -19- All costs of solicitation, including the costs of preparing, assembling and mailing this Proxy Statement and all papers which now accompany or may hereafter supplement the same, will be borne by LabOne. By Order of the Board of Directors GREGG R. SADLER Secretary April 4, 1997 -20- Appendix A Form of Proxy LabOne, Inc. 10310 W. 84th Terrace, Lenexa, Kansas 66214 PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS MAY 8, 1997 The undersigned hereby appoints W. Thomas Grant II and Gregg R. Sadler, and each of them, as proxies for the undersigned at the Annual Meeting of Stockholders of LabOne, Inc., at 10310 W. 84th Terrace, Lenexa, Kansas, on May 8, 1997, at 3:00 p.m. C.D.T., and at any adjournment, to vote the shares of common stock the undersigned would be entitled to vote, if personally present, upon the election of Directors, the proposal stated on the reverse, and any other matter brought before the meeting, all as set forth in the April 4, 1997 Proxy Statement. THE BOARD OF DIRECTORS RECOMMEND A VOTE "GRANTED" FOR ELECTION OF DIRECTORS AND "FOR" PROPOSAL 2. 1. The election of the following nominees Nominees: as Directors, as set forth in the Proxy Joseph H. Brewer, M.D. Statement, or a substitute nominee or William D. Grant nominees designated by the Board of W. Thomas Grant II Directors if any of them becomes Thomas J. Hespe unavailable. P. Anthony Jacobs Neal L. Patterson / / Authority GRANTED to vote for all nominees Richard A. Rifkind, M.D. / / Authority WITHHELD to vote for all nominees Gregg R. Sadler Richard S. Schweiker (INSTRUCTIONS: To withhold authority to James R. Seward vote for any individual nominee, line Robert D. Thompson through that nominee's name in the John E. Walker list at right.) R. Dennis Wright 2. Ratification of the appointment of KPMG Peat Marwick LLP, as independent certified public accountants. / / FOR / / AGAINST / / ABSTAIN Unless otherwise marked, the Proxy will be deemed marked "GRANTED" on Proposal 1 and marked "FOR" on Proposal 2 and voted accordingly. This Proxy is solicited by the Board of Directors. (Please sign, date and return this Proxy in the enclosed envelope.) SIGNATURE DATED: , 1997 ---------------------------------------------- -------- SIGNATURE DATED: , 1997 ---------------------------------------------- -------- (SIGNATURE IF HELD JOINTLY) (Note: Please sign exactly as name appears hereon. Executors, administrators, trustees, etc., should so indicate when signing, giving full title as such. If a signer is a corporation, execute in full corporate name by authorized officer. If shares are held in the name of two or more persons, all should sign.) -----END PRIVACY-ENHANCED MESSAGE-----