PROPOSAL 1
ELECTION OF CLASS II DIRECTOR
At the Annual Meeting, one Class II Director will be elected to serve until
the annual meeting of stockholders in 2010 and until such director's successor
is duly elected and qualified. The Board of Directors has nominated William D.
Corneliuson for re-election as the Class II Director. Unless otherwise specified
in the proxy, it is the intention of the persons named in the proxy to vote the
shares represented by each properly executed proxy for the re-election of
Mr. Corneliuson as director. Proxies cannot be voted for a greater number of
persons than the number of nominees named. The nominee has agreed to stand for
re-election and to serve, if elected, as director. However, if any person
nominated by the Board of Directors fails to stand for election or is unable to
accept election, the proxies will be voted for the election of such other person
or persons as the Board of Directors may recommend.
Vote Required For Approval
A quorum being present, the affirmative vote of a plurality of the votes
cast by holders of shares of common stock present or represented by proxy and
entitled to vote on the matter is required for the election of the nominee as
Class II Director of the Company.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE ELECTION OF
THE NOMINEE OF THE BOARD OF DIRECTORS AS CLASS II DIRECTOR OF THE COMPANY.
The Board of Directors and Its Committees
The Board of Directors of the Company held six meetings during fiscal year
2006 and once took action by unanimous written consent. During fiscal year 2006,
each director attended every meeting of the Board and of the committees of which
he was a member. The Board of Directors has established an Audit Committee, a
Compensation Committee and a Nominating and Corporate Governance Committee.
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Audit Committee. The Audit Committee selects the independent accounting
firm to audit the Company's financial statements and to perform services related
to the audit, reviews the scope and results of the audit with the independent
accountants, reviews with management and the independent accountants the
Company's annual operating results, reviews the Company's periodic disclosure
related to its financial statements, considers the adequacy of the internal
accounting procedures, considers the effect of such procedures on the
accountants' independence and establishes policies for business values, ethics
and employee relations. The Audit Committee currently consists of three
directors, James C. Hawley, as Chairman, Solomon Aronson, M.D. and William D.
Corneliuson, each of whom is not an employee of the Company and is considered
independent within the meaning of Rule 4200(a)(15) of the National Association
of Securities Dealers' Listing Standards and satisfy the other requirements for
service on the Audit Committee set forth in Rule 4350 of the National
Association of Securities Dealers' Listing Standards. At this stage of the
Company, the financial statements and accounting issues of the Company tend to
be relatively straightforward. Accordingly, the Board of Directors has
determined not to appoint an audit committee financial expert as that term is
defined in Item 401 of Regulation S-K, though Mr. Corneliuson is considered
financially sophisticated as such term is defined in Rule 4350(d)(2)(A) of the
National Association of Securities Dealers Listing Standards. The Audit
Committee has a written Charter adopted by the Board of Directors, which was
amended and restated in February 2004 and was attached as Appendix B to our
proxy statement for our 2004 Annual Meeting. A copy of this amended and restated
Audit Committee Charter is available on our website at www.medwave.com and will
be sent in paper form to any shareholder who submits a request to the Company's
Secretary at the address set forth on page 1. During fiscal year 2006, the Audit
Committee held three meetings. The Audit Committee's report to stockholders
appears elsewhere in this Proxy Statement.
Compensation Committee. The Compensation Committee reviews and recommends
the compensation arrangements for officers and other senior level employees,
reviews general compensation levels for other employees as a group, reviews
succession planning for senior management, reviews the options or stock to be
granted to eligible persons under the Company's 2004 Amended and Restated Stock
Option Plan and takes such other action as may be required in connection with
the Company's compensation and incentive plans. The Compensation Committee
currently consists of two non-employee, independent directors, William D.
Corneliuson, as Chairman, and Solomon Aronson, M.D., and held one meeting during
fiscal year 2006. The Compensation Committee's report on executive compensation
appears elsewhere in this Proxy Statement.
Nominating and Corporate Governance Committee. In February 2004, the Board
of Directors of the Company established a Nominating and Corporate Governance
Committee. The Nominating and Corporate Governance Committee oversees the
qualification and nomination process for potential director candidates, reviews
the continued qualification of existing directors and is responsible for
corporate governance oversight. The Nominating and Corporate Governance
Committee consists of two non-employee directors, William D. Corneliuson, as
Chairman, and Solomon Aronson, M.D. The Nominating and Corporate Governance
Committee held one meeting during fiscal year 2006. As required by Rule 4350(c)
of the Nasdaq listing requirements, each member of the Nominating and Corporate
Governance Committee is independent as defined in Rule 4200 of the Nasdaq
listing requirements. The Nominating and Corporate Governance Committee has
written charter adopted by the Board of Directors, which is available on the
Company's website at www.medwave.com and will be sent in paper form to any
shareholder who submits a request to the Company's Secretary at the address set
forth on page 1.
The Nominating and Corporate Governance Committee will review and consider
director candidates who have been recommended by stockholders, with no regard to
the source of the initial recommendation of the proposed candidate. Stockholders
submitting candidates for consideration by the Nominating and Corporate
Governance Committee should deliver a submission in writing to the Secretary of
the Company and should follow the timing, informational and other requirements
regarding stockholder proposals set forth in the Company's By-laws or as set
forth in Rule 14a-8 promulgated under the Exchange Act. Such proposal should
specify whether the named person(s) should be considered by the Nominating and
Corporate Governance Committee for inclusion as a Board of Directors nominee or
whether the named person(s) are to be considered stockholder nominees under the
By-laws. All securityholder recommendations for director candidates for election
at the 2008 annual meeting of stockholders must be submitted the Secretary of
the Company on or before October 22, 2007 and must include the following
information:
• The name and address of the securityholder;
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• A representation that the securityholder is a record holder the Company's
securities, or if the securityholder is not a record holder, evidence of
ownership in accordance with Rule 14a8-(b)(2) under the Securities
Exchange Act of 1934;
• The name, age, business and residential address, educational background,
current principal occupation or employment, and principal occupation or
employment for the preceding five (5) full fiscal years of the proposed
director candidate;
• A description of the qualifications and background of the proposed
director candidate which addresses the minimum qualifications and other
criteria for Board membership as approved by the Board from time to time;
• A description of all arrangements or understandings between the
securityholder and the proposed director candidate; and
• Any other information regarding the proposed director candidate that is
required to be included in a proxy statement filed pursuant to the rules
of the SEC.
At a minimum, each nominee, whether proposed by a stockholder or any other
party, is expected to have the highest personal and professional integrity,
shall demonstrate exceptional ability and judgment, have an experience base
useful to the Company and complementary to the other directors, and shall be
expected to effectively interact with other members of the Board to serve the
long-term interests of the Company and its stockholders. A stockholder wishing
to nominate a director separately from the slate of directors nominated by the
Company should follow the procedures described in this Proxy Statement under the
heading "Submission of Stockholder Proposals for 2008 Annual Meeting."
Please note, the information contained on our website is not incorporated
by reference in, or considered to be a part of this Proxy Statement.
Director Compensation
Directors are not currently paid fees for attending meetings. Under the
Stock Option Plan, each non-employee director receives an option to purchase
shares of common stock upon his or her initial election to the Board. The two
most recent appointments to the Company's Board, Dr. Aronson in 2003 and
Mr. Hawley in December 2006, were each granted an option to purchase 50,000
shares of common stock upon their appointment. Each such option is for a term of
ten years and vests over a four-year period. In addition to awards upon
appointment, after three years of service, each non-employee director annually
receives a ten-year, non-qualified option to purchase 10,000 shares, which vests
on the first anniversary of the date of grant if the director is still serving
as a director. Pursuant to the Stock Option Plan, directors are also eligible
for discretionary option grants. In January 2007, each of Messrs. Corneliuson
and Katarow and Dr. Aronson were awarded an option to purchase 50,000 shares of
common stock that vests over a four-year period.
Communication with the Board of Directors
Any security holder desiring to send communications to the Board of
Directors, or any individual director, may forward such document(s) to the
Secretary of the Company at the Company's office in Arden Hills, Minnesota. The
Secretary of the Company will collect and organize such communications and
forward all of them to the Board of Directors or the particular director, as the
case may be.
The Company does not have a policy with respect to directors' attendance at
the Company's annual meeting. Timothy O'Malley, a former director, attended the
Company's 2006 annual meeting.
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INFORMATION REGARDING NOMINEES AND DIRECTORS
Set forth below is certain information regarding the directors of the
Company, including the Class II Director who has been nominated for election at
the Annual Meeting, based on information furnished by them to the Company.
Mr. Corneliuson and Dr. Aronson each serve as members of the Company's
Compensation, Audit and Nominating and Corporate Governance Committees.
Mr. Hawley serves as a member of the Company's Audit Committee. Mr. Katarow had
served as a member of the Company's Audit Committee until he was appointed
Interim Chief Executive Officer on September 21, 2006.
Director
Name Age Since
Class I-Term Expires 2009
Solomon Aronson, M.D. 49 2003
James C. Hawley 52 2006
Class II-Term Expires 2010
William D. Corneliuson* 66 1999
Class III-Term Expires 2008
Frank A. Katarow 48 2002
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* Nominee for election.
The principal occupation and business experience for at least the last five
years for each director of the Company is set forth below.
SOLOMON ARONSON M.D., FACC, FCCP, FAHA, has been a director of the Company
since August 2003. Concurrently, Dr. Aronson is Professor and Executive Vice
Chairman for Business Development and Finance for anesthesiology at Duke
University Medical Center. He was previously Professor of Anesthesia and
Critical Care at the University of Chicago and Chief of the Cardiothoracic and
Vascular Anesthesia Division of the University of Chicago Hospitals and Clinics.
In 1983, Dr. Aronson received his MD with honors in research from the Medical
College of Wisconsin. In 1986, after completing his residency at the University
of Texas where he served as Chief Resident in 1985, he was awarded a fellowship
in cardiac and vascular anesthesia at the Texas Heart Institute in Houston.
Following his fellowship in Texas, Dr. Aronson was recruited to the University
of Chicago, Department of Anesthesia and Critical Care where he served as an
instructor, assistant professor, and associate professor before being promoted
to full professor in 1999. Dr Aronson is active in many professional
organizations, including the American College of Cardiology, the American
College of Chest Physicians, the American Heart Association, the American
Society of Echocardiography for which he is Chair of the Intraoperative Council,
the Society of Cardiovascular Anesthesiology for which he has been elected to
serve on the Board of Directors, the National Board of Echocardiography for
which he has also served on the Board of Directors, the American Society of
Anesthesiology for which he serves on the Economic Committee, and the
International Anesthesia Research Society. Dr. Aronson has recently been honored
to serve through 2007 on the Anesthetic and Life Support Drug Advisory Committee
for the FDA. He has also been honored with listings in "Who's Who" & "How to
Find the Best Doctors in America". In 2000, 2001, and 2003, he was elected by
his peers to "The Best Doctors in America". Dr. Aronson has authored more than
75 journal articles, 40 book chapters, one textbook, and over 100 abstracts, and
he has lectured extensively at universities throughout the United States and in
many foreign countries.
WILLIAM D. CORNELIUSON, has been a director of the Company since May 1999
and Chairman of the Board since February 2002. Mr. Corneliuson is President of
B.C. Holdings, Inc., a private investment company. Mr. Corneliuson has been with
B.C. Holdings, Inc. since 1993. From 1976 to 1993, Mr. Corneliuson was
President, Co-Founder, and Vice Chairman of the Board of Strong/Corneliuson
Capital Management, Inc. He was also co-founder of the Strong family of mutual
funds.
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JAMES C. HAWLEY, has been a director of the Company since December 2006.
Mr. Hawley is currently a Principal of Cincinnatus, Inc., a management advisory
firm. Prior to his position at Cincinnatus, from May 2006 to July 2006,
Mr. Hawley was the President and Founder of Bridge Road Business Advisors, Inc.,
a management advisory firm. Prior to his tenure as President of Bridge Road
Business Advisors, Inc., Mr. Hawley served from February 2005 as Senior Vice
President and from March 2005, Chief Financial Officer to April 2006, of MGI
Pharma, Inc., a specialty pharmaceutical company; and from April 2003 to
August 2004, Mr. Hawley served as Vice President, Chief Financial Officer, and
Secretary of Cima Labs, Inc., a drug delivery and specialty pharmaceutical
company. From 2000 to March 2003, Mr. Hawley was Vice President and Principal of
Manchester Companies, Inc., a business advisory and investment banking company.
FRANK A. KATAROW, has been a director of the Company since 2002. Since the
resignation of the Company's former Chief Executive Officer on September 21,
2006, Mr. Katarow has served as the Interim Chief Executive Officer. Mr. Katarow
is also a consultant in the medical technology industry. Mr. Katarow had been
the Chief Operating Officer of HomMed, LLC from October 2003 until their
acquisition by Honeywell in December 2004. Prior to his position at HomMed,
Mr. Katarow was President and Chief Operating Officer of BCI, Inc., a designer,
manufacturer and distributor of patient monitoring equipment. Mr. Katarow was
employed at BCI from October 1980 until October 2003, serving in various roles,
including President and Chief Operating Officer from January 1993 to
October 2003. BCI was sold in 1998 to Smiths Group, plc., a public company
traded on the London exchange. Mr. Katarow served as President of Smiths Group's
Patient Monitoring Division and President of Smiths Group's Veterinary Division
for five years after the sale of BCI to Smiths Group.
Director Independence
The Board of Directors has determined that each of Messrs. Corneliuson and
Hawley and Dr. Aronson is an "independent director" in accordance with the
corporate governance rules of the National Association of Securities Dealers
because none of them have a relationship with Company other than (1) serving as
a director and a Board of Director committee member and (2) having beneficial
ownership of the Company's common stock as disclosed in this Proxy Statement.
Therefore, the Company currently has a majority of "independent directors."
Meetings of Independent Directors
Independent directors of the Company regularly meet in executive sessions
outside the presence of management. The presiding director for these meetings is
currently Mr. Corneliuson. Any interested party who wishes to make their
concerns known to the independent directors may contact Mr. Corneliuson by
sending a communication to the Secretary of the Company at the Company's office
in Arden Hills, Minnesota.
Departure of John Miclot
On September 21, 2006, John Miclot resigned from the Company's Board of
Directors. As previously disclosed in the Company's filings with the SEC, in
connection with his resignation, Mr. Miclot submitted a letter to the Company
indicating that that his resignation was prompted by his disagreement with the
continuing members of the Board of Directors concerning the process followed and
decisions reached by them regarding the development of the business and the
resignation of Mr. O'Malley as Chief Executive Officer.
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