SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
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Check the appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Under Rule
[_] Confidential, For Use of the 14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
BIO-REFERENCE LABORATORIES, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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previously. Identify the previous filing by registration statement number,
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BIO-REFERENCE LABORATORIES, INC.
481 EDWARD H. ROSS DRIVE
ELMWOOD PARK, NEW JERSEY 07407
201-791-2600
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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JULY 30, 2009
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The annual meeting of the stockholders of Bio-Reference Laboratories,
Inc. (the "Company") will be held at the Sheraton Crossroads Hotel, Crossroads
Corporate Center, Route 17 North, Mahwah, New Jersey 07495-0001, on Thursday,
July 30, 2009 at 9:00 A.M. local time, for the purpose of considering and acting
on the following matters:
1. Election of three directors to the Company's Board of Directors,
each to serve for a term of three years and until his successor is
duly elected and qualified (Proposal One).
2. Such other business as may properly be brought before the meeting
or any adjournment thereof.
Pursuant to the provisions of the By-Laws, the Board of Directors has
fixed the close of business on Monday, June 15, 2009 as the record date for
determining the stockholders of the Company entitled to notice of, and to vote
at the meeting or any adjournment thereof.
Stockholders who do not expect to be present in person at the meeting
are urged to date and sign the enclosed proxy and promptly mail it in the
accompanying postage-paid envelope.
By Order of the Board of Directors
Marc D. Grodman
President
Dated: June 18, 2009
PLEASE COMPLETE AND PROMPTLY RETURN YOUR PROXY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE. THIS WILL NOT PREVENT YOU FROM VOTING IN PERSON AT THE
MEETING BUT WILL, HOWEVER, HELP TO ASSURE A QUORUM AND AVOID ADDED PROXY
SOLICITATION COSTS.
BIO-REFERENCE LABORATORIES, INC.
481 EDWARD H. ROSS DRIVE
ELMWOOD PARK, NEW JERSEY 07407
201-791-2600
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PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 30, 2009
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This Proxy Statement of Bio-Reference Laboratories, Inc., a New Jersey
corporation (the "Company") is first being mailed to Stockholders on or about
June 18, 2009 in connection with the solicitation of proxies by the Company's
Board of Directors to be used at the Annual Meeting of Stockholders of the
Company to be held on Thursday, July 30, 2009 at 9:00 A.M. (local time) at the
Sheraton Crossroads Hotel, Crossroads Corporate Center, Route 17 North, Mahwah,
New Jersey 07495-0001. Accompanying this Proxy Statement is a Notice of Annual
Meeting of Stockholders, a form of Proxy for the meeting and a copy of the
Company's 2008 Annual Report containing financial statements and related data.
All proxies which are properly filled in, signed and returned to the
Company prior to or at the Meeting will be voted in accordance with the
instructions thereon. A proxy may be revoked by any stockholder giving the same
prior to the exercise thereof by (a) written notice addressed to the Company's
Chief Information Officer and delivered to the Company's principal offices prior
to the commencement of the Meeting, (b) providing a signed proxy bearing a later
date, or (c) appearing in person and voting at the Meeting. The Company intends
to vote executed but unmarked proxies in favor of Proposal One. The Board has
fixed the close of business on Monday, June 15, 2009 as the record date for the
determination of stockholders who are entitled to notice of, and to vote at the
meeting or any adjournment thereof.
The expenses of preparing, assembling, printing and mailing the form of
proxy and the material used in solicitation of proxies will be borne by the
Company. In addition to the solicitation of proxies by use of the mails, the
Company may utilize the services of some of its officers and regular employees
(who will receive no additional compensation therefore) to solicit proxies
personally, and by telephone. The Company has requested banks, brokers and other
custodians, nominees and fiduciaries to forward copies of the proxy material to
their principals and to request authority for the execution of proxies and will
reimburse such persons for their services in doing so. The cost of such
additional solicitation incurred otherwise than by use of the mails is estimated
not to exceed $10,000.
At the record date, the Company had 13,805,308 shares of its Common
Stock, $.01 par value (the "Common Stock") issued and outstanding, the holders
of which are each entitled to one vote per share. The presence in person or by
proxy of at least a majority of the outstanding Common Stock is necessary to
constitute a quorum at the meeting. Broker nonvotes (that is,
proxies from brokers or nominees indicating that such persons have not received
instructions from the beneficial owners or other persons entitled to vote shares
on a particular matter as to which the broker or nominee does not have
discretionary authority) will be counted for purposes of determining a quorum
for the transaction of business at the Annual Meeting but will not be considered
as votes for purposes of determining the outcome of a vote. Election of
directors (Proposal One) requires the affirmative vote of a majority of the
votes cast on the Proposal by the holders of Common Stock present in person or
by proxy at the meeting.
The following table sets forth information as of June 15, 2009 with
respect to the ownership of Common Stock by (i) each person known by the Company
to be the beneficial owner of more than 5% of its outstanding Common Stock, (ii)
each director of the Company, (iii) each executive officer of the Company, and
(iv) all directors and executive officers as a group. The percentages have been
calculated on the basis of treating as outstanding for a particular holder, all
shares of Common Stock outstanding on said date owned by such holder and all
shares of Common Stock issuable to such holder in the event of exercise of
outstanding options and warrants owned by such holder at said date which are
exercisable within 60 days of such date.
Name and Address of Shares of Common Stock Percentage
Beneficial Owner Beneficially Owned(1) Ownership
---------------- ---------------------- ---------
Directors and
Executive Officers*
------------------
Marc D. Grodman(2) 1,460,501 11%
Howard Dubinett(3) 310,872 2%
Sam Singer(4) 91,916 1%
Joseph Benincasa -0- -
Harry Elias -0- -
Gary Lederman 27,200 -
John Roglieri 5,000 -
Executive Officers 1,895,489 14%
and Directors as a group
(seven persons)(2)(3)(4)
Other Greater than 5%
Beneficial Owner
----------------
Arbor Capital Management, LLC(5) 732,900 5%
Rick D.Leggott
One Financial Plaza
120 South Sixth Street
Suite 1000
Minneapolis, MN 55402
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* The address of all of the Company's directors and executive officers is c/o
the Company, 481 Edward H. Ross Drive, Elmwood Park, New Jersey 07407.
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(1) Except as otherwise noted, each holder named in the table has sole voting
and investment power with respect to the shares of Common Stock shown as
beneficially owned.
(2) Includes 1,233,834 shares owned directly. Also includes 173,467 shares
owned by Dr. Grodman's wife, Pam Grodman, and 53,200 shares owned by their
children. Dr. Grodman disclaims beneficial ownership of these 226,667
shares.
(3) Includes 310,872 shares owned directly. In lieu of an outright sale, on
October 15, 2007, Howard Dubinett entered into a pre-paid variable price
forward sales contract ("Forward Contract") with UBS Securities LLC
("UBS"). Pursuant to the Forward Contract, Mr. Dubinett pledged 89,047
shares of his BRLI Common Stock to secure his obligation to deliver a
maximum 89,047 shares of BRLI Common Stock to UBS on October 19, 2009 (the
"Settlement Date"). As prepayment for the pledge of these shares, UBS
agreed to pay Mr. Dubinett $2,572,474 or approximately $28.89 per share
representing 87.9% of the proceeds from the sale of 89,047 shares on
October 16, 2007. The number of shares that Mr. Dubinett is required to
deliver on the Settlement Date varies based upon the price of the Common
Stock on the Settlement Date. Mr. Dubinett will benefit from any excess in
the price of the Common Stock on the Settlement Date between $32.87 per
share up to a maximum $39.44 per share by being able to deliver fewer
shares. Until the Settlement Date, Mr. Dubinett retains the voting rights
to the 89,047 pledged shares and is deemed the beneficial owner of such
shares.
(4) Includes 82,016 shares owned directly, and 9,900 shares owned by children
who share Mr. Singer's household. Mr. Singer disclaims beneficial ownership
of these 9,900 shares.
(5) According to a Schedule 13G dated February 5, 2008 which they filed with
the Securities and Exchange Commission, Arbor Capital Management, LLC
("Arbor") in its capacity as an investment advisor and its CEO and
controlling person, Rick D. Leggott, could be deemed the beneficial owner
of these 732,900 shares which were owned by investment advisory clients at
said date. In the Schedule 13G filing, Arbor and Mr. Leggott stated that to
the best of their knowledge, these 732,900 shares were acquired in the
ordinary course of business; were not acquired for the purpose of and do
not have the effect of changing or influencing the control of the Company;
and were not acquired in connection with or as a participant in any
transaction having such purpose or effect.
The Company's executive officers and directors and members of their
immediate families owning and having the right to vote an aggregate 1,895,489
shares (14%) of the Company's outstanding Common Stock have stated their
intention to vote their shares FOR the nominees proposed for election as
directors (Proposal One).
ACTION TO BE TAKEN AT THE MEETING
ELECTION OF DIRECTORS
(PROPOSAL ONE)
The number of directors on the Company's Board of Directors is
currently fixed at seven. The Company's Certificate of Incorporation divides the
Board of Directors into three classes. The members of each class of directors
serve for staggered three-year terms. The Board is comprised of two Class I
directors (Dr. Grodman and Mr. Dubinett), two Class II directors (Mr.
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Singer and Mr. Elias) and three Class III directors (Mr. Benincasa, Mr. Lederman
and Dr. Roglieri), whose terms expire upon the election and qualification of
their successors at successive Annual Meetings to be held in 2009 (the Class III
directors), in 2010 (the Class I directors) and in 2011 (the Class II
directors). At each Annual Meeting of Stockholders, the directors comprising one
of the classes are elected for a full term of three years.
Mr. Benincasa, Mr. Lederman and Dr. Roglieri (current Class III
directors) are being proposed for re-election at this Annual Meeting of
Stockholders, each to serve for a three-year term and until his successor is
elected and qualifies. The shares represented by proxies will be voted in favor
of the election as directors of Mr. Benincasa, Mr. Lederman and Dr. Roglieri who
are the nominees of the Board of Directors for election, and authority to vote
for their election as Class III directors shall be deemed granted unless
specifically withheld. Management has no reason to believe that any of such
nominees for the office of director will not be available for election as a
director. However, should any of them become unwilling or unable to accept
nomination for election, it is intended that the individuals named in the
enclosed proxy may vote for the election of such other person or persons as the
Board of Directors may recommend.
The following table sets forth certain information as of the record
date with respect to each of the directors and executive officers of the
Company.
Name Age Position
---- --- --------
Marc D. Grodman, M.D. 57 Chairman of the Board, President,
Chief Executive Officer and
Director
Howard Dubinett 57 Executive Vice President, Chief
Operating Officer and Director
Sam Singer 65 Senior Vice President, Chief
Financial Officer, Chief
Accounting Officer and Director
Joseph Benincasa(a)(c)(e) 59 Director
Harry Elias(a)(c)(e) 79 Director
Gary Lederman, Esq.(b)(c)(e) 75 Director
John Roglieri, M.D.(a)(d)(e) 70 Director
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(a) Member of the Audit Committee
(b) Chairman of the Audit Committee
(c) Member of the Compensation Committee
(d) Chairman of the Compensation Committee
(e) Member of the Nominating Committee
BACKGROUND
The following is a brief account of the business experience of each
director including each nominee for director of the Company.
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Marc D. Grodman, M.D. founded the Company in December 1981 and has been
its Chairman of the Board, President, Chief Executive Officer and a Director
since its formation. Dr. Grodman is an Assistant Professor of Clinical Medicine
at Columbia University's College of Physicians and Surgeons and Assistant
Attending Physician at New York Presbyterian Hospital, New York City. From 1980
to 1983, Dr. Grodman attended the Kennedy School of Government at Harvard
University and was a Primary Care Clinical Fellow at Massachusetts General
Hospital. From 1982 to 1984, he was a medical consultant to the Metal Trades
Department of the AFL-CIO. Dr. Grodman received a B.A. degree from the
University of Pennsylvania in 1973 and an M.D. degree from Columbia University
College of Physicians and Surgeons in 1977. Except for his part time duties as
Assistant Professor of Clinical Medicine and Assistant Attending Physician at
Columbia University and New York Presbyterian Hospital, Dr. Grodman devotes all
of his working time to the business of the Company. Since January 2005, Dr.
Grodman has been a member of the Board of Directors of the American Clinical
Laboratory Association and since April 2008, has been its chairman.
Howard Dubinett has been the Executive Vice-President and Chief
Operating Officer of the Company since its formation in 1981. He became a
Director of the Company in April 1986. Mr. Dubinett attended Rutgers University.
Mr. Dubinett devotes all of his working time to the business of the Company.
Sam Singer has been the Company's Vice President and Chief Financial
Officer since October 1987 and a Director since November 1989. He is responsible
for all of the Company's financial activities. Mr. Singer was the Controller for
Sycomm Systems Corporation, a data processing and management consulting company,
from 1981 to 1987, prior to joining the Company. He received a B.A. degree from
Strayer University and an M.B.A. from Rutgers University. Mr. Singer devotes all
of his working time to the business of the Company.
Joseph Benincasa became a Director of the Company in June 2005. Mr.
Benincasa currently serves as the Executive Director of The Actors' Fund of
America, a position he has held since 1989. The Actors' Fund is the leading
national, non-profit human services organization providing comprehensive social
and health care services, employment, training and housing support to the
entertainment profession. It is headquartered in New York City with regional
offices in Chicago and Los Angeles. He is also a director of St. Peter's
University Medical Center and also sits on the boards of directors of Broadway
Cares/Equity Fights AIDS; the National Theatre Workshop of the Handicapped;
Career Transition for Dancers; the Times Square Alliance; the New York Society
of Association Executives; the YMCA of New York City and the Somerset Patriots,
a minor league baseball team. Mr. Benincasa holds a B.A. from St. Joseph's
University and an M. Ed. from Rutgers University. He also attended the Fordham
University Graduate School of Business.
Harry Elias became a Director of the Company in March 2004. Mr. Elias
commenced his employment in sales and marketing with JVC Company of America
("JVC") in 1967, subsequently being appointed as JVC's Senior Vice President of
Sales and Marketing in 1983 and as Executive Vice President of Sales and
Marketing in 1990. In 1995, Mr. Elias was named as JVC's Chief Operating
Officer, a position he occupied until April 2003 when he resigned his
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positions upon his appointment as JVC's "Honorable Chairman." JVC, a distributor
of audio and video products headquartered in Wayne, New Jersey is the wholly
owned United States subsidiary of Victor Company of Japan, a manufacturer of
audio and video products headquartered in Japan. In January 2005, after retiring
from JVC, Mr. Elias was appointed Chairman of the Board of and commenced to
serve as a consultant to AKAI USA, the sole distributor in the United States of
electronic products produced by AKAI, a Chinese manufacturer. Mr. Elias retired
from AKAI in 2007 and currently is self-employed as a Business Consultant.
Gary Lederman, Esq. became a Director of the Company in May 1997. He
received his B.A. degree from Brooklyn College in 1954 and his J.D. degree from
NYU Law School in 1957. He was manager of Locals 370, 491 and 662 of the
U.F.C.W. International Union from 1961 to 1985. He is retired from the unions
and has been a lecturer at Queensboro Community College in the field of
insurance. He served on an institutional review board for RTL, a pharmaceutical
drug testing laboratory until his retirement in February 2007.
John Roglieri, M.D. became a Director of the Company in September 1995.
He is an Assistant Professor of Clinical Medicine at Columbia University's
College of Physicians and Surgeons and an Assistant Attending Physician at New
York Presbyterian Hospital, New York City. Dr. Roglieri received a B.S. degree
in Chemical Engineering and a B.A. degree in Applied Sciences from Lehigh
University in 1960, an M.D. degree from Harvard Medical School in 1966, and a
Master's degree from the Columbia University School of Business in 1978. From
1969 until 1971, he was a Senior Assistant Surgeon in the U.S. Public Health
Service in Washington. From 1971 until 1973, he was a Clinical and Research
Fellow at Massachusetts General Hospital. From 1973 until 1975, he was Director
of the Robert Wood Johnson Clinical Scholars program at Columbia University. In
1975 he was appointed Vice-President, Ambulatory Services at New York
Presbyterian Hospital, a position which he held until 1980. Since 1980, he has
maintained a private practice of internal medicine at Columbia-Presbyterian
Medical Center. From 1988 until 1992, he was also Director of the Employee
Health Service at New York Presbyterian Hospital. From 1992 through 1999, Dr.
Roglieri was the Corporate Medical Director of NYLCare, a managed care
subsidiary of New York Life Insurance Company ("New York Life"). Dr. Roglieri
was chief medical officer of Physician WebLink, a national physician practice
management company, from 1999 to 2000. Since 2001, he has been a Medical
Director for New York Life. He is a member of advisory boards to several
pharmaceutical companies, a member of the Editorial Advisory Board of the
journals Managed Care and Seminars in Medical Practice, and is a subject of
biographical record in Who's Who in America.
There are no family relationships between or among any directors or
executive officers of Bio-Reference Laboratories. The Company's Certificate of
Incorporation provides for a staggered Board of Directors pursuant to which the
Board is divided into three classes of directors and the members of only one
class are elected each year to serve a three-year term.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE THREE CLASS III DIRECTOR
NOMINEES NAMED ABOVE.
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KEY PERSONNEL AND CONSULTANTS
The following key personnel and consultants make significant
contributions to the Company's operations.
James Weisberger, M.D. (Age 53) joined the Company in September 2003 as
Vice President, Assistant Chief Medical Officer and Director of Hematopathology.
He is currently employed as the Company's Chief Medical Officer. Prior to
joining the Company, he was Director of Hematopathology at IMPATH, Inc.
(1999-2003). He is board certified in internal medicine, anatomic and clinical
pathology, and hematopathology. He has a New York State Department of Health
Certificate of Qualification as a Laboratory Director. He is a Clinical
Assistant Professor of Pathology at New York Medical College, Valhalla, New
York. Prior to joining IMPATH, he was an Assistant Professor of Medicine and
Pathology at New York Medical College (1995-1999). He has a B.S. degree from
Stanford University (1977); an M.S. degree from Stanford University (1978); and
an M.D. degree from the University of Pennsylvania (1983).
Charles T. Todd, Jr. (Age 58) is a Senior Vice President engaged in
Sales. Mr. Todd was the founder and CEO of GenCare Biomedical Research
Corporation ("GenCare"), a specialty oncology laboratory that was purchased by
the Company in 1995. He attended Seton Hall University where he received a B.S.
degree in Finance in 1974.
Richard Faherty (Age 62) serves as the Company's Chief Information
Officer as well as the chief executive officer of its two informatics
operations. Mr. Faherty provided custom programming and system analysis services
to Gencare from 1987 until its acquisition by the Company in 1995. He became a
consultant to the Company in 1995 in the information technology area and an
employee in 1999. Mr. Faherty is a graduate of the University of Notre Dame
(1968) and the Fordham Law School (1975).
John Bennett, M.D., Scientific Advisory Board Chairman, is Professor
Emeritus at the University of Rochester Medical Center, Rochester, New York. Dr.
Bennett has long been recognized as an intellectual force in the treatment and
understanding of leukemias, lymphomas and other cancer-related diseases. He
established the French-American-British (FAB) Leukemia Working Group and is one
of the world's leading authorities on Myelodysplasia. He is founder and Chairman
of the MDS Foundation, as well as Editor of the Journal of Leukemia Research.
Dr. Bennett is currently Professor Emeritus and former Head of the Medical
Oncology Unit at the University of Rochester Medical Center and formerly was a
Professor of Oncology in Medicine, Pathology and Laboratory Medicine at the
University of Rochester Medical School. For nearly four decades, Dr. Bennett has
been honored by the medical community as an expert in the field of oncology as
evidenced by the numerous chairs he has held in prestigious societies and
committees and his authorship of more than 400 publications in peer review
journals, the majority of which are in the area of hematologic malignancies. Dr.
Bennett earned his B.A. from Harvard University and his M.D. from Boston
University. He served his residency in medicine at Beth-Israel Hospital, Boston,
Massachusetts and completed a fellowship in hematology at Boston City Hospital.
He headed the Morphology and Cytochemistry Section of the Clinical Center at the
National Institutes of Health ("NIH") before joining the faculty at the
University of
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Rochester. Dr. Bennett serves the Company in an advisory capacity as chairman of
its Scientific Advisory Board.
Sherri Bale, Ph.D., FACMG (Age 53) joined the Company in September
2006, when BioReference Laboratories acquired the operating assets of GeneDx.
She received her M.S. and Ph.D. degrees from the University of Pittsburgh, and
her post-doctoral training in medical genetics at the NIH. She is an American
Board of Medical Genetics-Certified Ph.D. - Medical Geneticist and Founding
Member of the American College of Medical Genetics. She founded GeneDx with Dr.
John Compton, also a long-time NIH scientist, after 16 years at the NIH. For the
past six years, she has served as President and Clinical Director of GeneDx,
which specializes in developing and providing molecular diagnostics tests for
rare hereditary disorders. She has authored more than 100 peer-reviewed papers,
book chapters, and books in the field. She serves on numerous Boards of patient
advocacy and non-profit organizations, and is a member of the Faculty of the
Metropolitan Medical Genetics Training Program of the National Human Genome
Research Institute-, NIH, in Bethesda, MD. She holds a second degree black belt
in judo.
John Compton, Ph.D., (Age 60) serves as Scientific Director and
Co-President of GeneDx Inc., the operating assets of which were acquired by
BioReference Laboratories in September 2006. He has 25 years experience in the
development and application of molecular biological techniques to answer
questions about genetics and epidermal differentiation, and has authored more
than 60 publications in the field. He holds B.S. degrees in Physics and Biology
from MIT, received his Ph.D. from the University of California, Berkeley in
Biophysics, and did his post-doctoral training in protein-DNA interactions at
the Baylor College of Medicine. Following six years as an independent
investigator at the Jackson Laboratory, he joined the Laboratory of Skin Biology
in the National Institute of Arthritis, Musculoskeletal and Skin Diseases at the
NIH in 1991 where he was Staff Scientist in the Genetic Studies Section until
2000, when he and NIH colleague Sherri Bale formed GeneDx to develop and provide
molecular genetic testing in rare hereditary disorders. In 2003 they were
jointly awarded the Entrepreneur of the Year award by the Technology Council of
Maryland. John is also in his eighth year as Mayor of the Town of Washington
Grove, MD.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Based solely on a review of Forms 3 and 4 and any amendments thereto
furnished to the Company pursuant to Rule 16a-3(e) under the Securities Exchange
Act of 1934, or representations that no Forms 5 were required, the Company
believes that with respect to fiscal 2008, its officers, directors and
beneficial owners of more than 10% of its equity timely complied with all
applicable Section 16(a) filing requirements.
THE BOARD AND ITS COMMITTEES
BOARD MEETINGS
The Board of Directors held four meetings during fiscal 2008. All of
the Company's current Directors attended all of the fiscal 2008 meetings of the
Board of Directors and of the
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committee meetings which they were eligible to attend. The Board of Directors
has determined that the four non-employee Directors each meet the definition of
"independent" as required by the applicable listing standards of the Nasdaq
Stock Market, Inc. ("Nasdaq Stock Market").
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has established three standing committees: an
Audit Committee, a Compensation Committee and a Nominating Committee.
AUDIT COMMITTEE
The Audit Committee is comprised of the four non-employee members of
the Board of Directors, Gary Lederman (Chairman), Joseph Benincasa, Harry Elias
and John Roglieri. The Board of Directors deems each such individual as
"independent" as defined by the rules of the Nasdaq Stock Market. The Audit
Committee met four times during fiscal year 2008. The Audit Committee confers
with the Company's auditors and reviews, evaluates and advises the Board of
Directors concerning the adequacy of the Company's accounting systems, its
financial reporting practices, the maintenance of its books and records and its
internal controls. In addition, the Audit Committee reviews the scope of the
audit of the Company's financial statements and the results thereof. The Board
of Directors has determined that Gary Lederman is qualified to serve as the
Company's "audit committee financial expert" as defined in Item 407(d) of
Regulation S-K promulgated by the Securities and Exchange Commission. A copy of
the Audit Committee Charter may be found on the Company's website:
WWW.BIOREFERENCE.COM.
COMPENSATION COMMITTEE
The Compensation Committee is comprised of the four non-employee
members of the Board of Directors, John Roglieri (Chairman), Joseph Benincasa,
Harry Elias and Gary Lederman. The Compensation Committee met once during fiscal
year 2008.
The Compensation Committee has the primary responsibility of setting
the compensation of the executive officers of the Company as well as adopting
the terms of any Senior Management Incentive Bonus Plan. A copy of the
Compensation Committee's Charter may be found on the Company's website:
WWW.BIOREFERENCE.COM.
NOMINATING COMMITTEE
The Nominating Committee is comprised of the four non-employee members
of the Board of Directors, Harry Elias, Joseph Benincasa, Gary Lederman and John
Roglieri. Pursuant to its charter, a copy of which may be found on the Company's
website: WWW.BIOREFERENCE.COM, the Nominating Committee's role is to establish
criteria for the selection of directors; to identify individuals qualified to be
directors; to evaluate director candidates proposed by stockholders; to
recommend individuals to fill vacancies on the Board and to recommend nominees
for director at each annual stockholder meeting. The Nominating Committee may
consider nominees for director of the Company submitted in writing c/o the
Committee at the Company's executive offices, whether by executive officers of
the Company; current directors of the Company, search
9
firms (if any) engaged by the Committee, and, in the circumstances provided
below, shall consider nominees for director proposed by a stockholder.
Information with respect to the proposed nominee must be provided in writing by
the stockholder addressed to the Committee at the Company's executive offices,
and received not less than 90 nor more than 120 days prior to the anniversary
date of the prior year's annual meeting, provided that if the current year's
annual meeting is not scheduled to be held within 30 days of the anniversary
date of the prior year's annual meeting, notice from a stockholder shall be
considered timely if it is received not later than the tenth day following the
date on which the notice of the annual meeting was mailed or the date on which
public disclosure of the date of the annual meeting was made, whichever occurs
first. The information shall include the name of the nominee, and such
information with respect to the nominee as would be required under the rules and
regulations of the Securities and Exchange Commission to be included in the
Company's Proxy Statement if the proposed nominee were to be included therein.
In addition, the stockholder's notice shall also include the class and number of
shares the stockholder owns, a description of all arrangements and
understandings between the stockholder and the proposed nominee, a
representation that the stockholder intends to appear in person or by proxy at
the meeting to nominate the person named in its notice, and a representation as
to whether the stockholder intends to deliver a proxy statement to or solicit
proxies from shareholders of the Company.
The Nominating Committee generally identifies potential candidates for
director by seeking referrals from the Company's management, members of the
Board of Directors and their various business contacts. Candidates are evaluated
based upon factors such as independence, knowledge, judgment, integrity,
character, leadership, skills, education, experience, financial literacy,
standing in the community and ability to foster a diversity of backgrounds and
views and to complement the Board's existing strengths. There are no differences
in the manner in which the Committee will evaluate nominees for director based
on whether the nominee is recommended by a stockholder.
The Company does not have an Executive Committee. Officers are elected
by and hold office at the discretion of the Board of Directors.
The Company does not have a policy with regard to attendance by
directors at annual meetings of stockholders. The Company's three executive
officers as well as Messrs. Elias and Lederman were the directors who attended
the Company's last annual meeting of stockholders on July 17, 2008.
Pursuant to the Company's charter and bylaws, the Company has agreed to
indemnify its directors and executive officers to the fullest extent permitted
by law.
CODE OF ETHICS
The Company has adopted a Code of Ethics that applies to its executive
officers and to key financial and accounting personnel. The Company will, upon a
stockholder's written request to Investor Relations, c/o the Company, furnish a
paper copy of the Code of Ethics.
10
EXECUTIVE COMPENSATION
The table below summarizes the total compensation paid or accrued by
the Company with respect to the years ended October 31, 2008 and 2007 to its
three executive officers and to its two other most highly compensated senior
management employees during the periods. All of the Company's group life,
health, hospitalization or medical reimbursement plans, if any, as well as its
401(k) Plan, do not discriminate in scope, terms or operation, in favor of any
of its officers, senior management members or directors, and are generally
available to all salaried employees.
SUMMARY COMPENSATION TABLE
Change in
Pension Value
Nonqualified
Non-Equity and
Incentive Deferred All
Fiscal Bonus Stock Option Plan Compensation Other
Name and Year Salary ($)(D) Awards Awards Compensation Earnings Compensation Total
Principal Position (b) ($)(c) (1) ($)(e) ($)(f) ($)(g)(2) ($)(h) ($)(i)(3) ($)(i)
------------------------------------------------------------------------------------------------------------------------------------
Marc D. 2008 $910,877 -0- -0- -0- -0- -0- $101,424 $1,012,301
Grodman M.D. 2007 852,000 -0- -0- -0- $85,200 -0- 96,230 1,033,430
President and
Chief Executive
Officer
------------------------------------------------------------------------------------------------------------------------------------
Howard 2008 $362,935 -0- -0- -0- -0- -0- $40,070 $403,005
Dubinett 2007 323,350 -0- -0- -0- $32,335 -0- 40,070 395,755
Executive Vice
President and
Chief Operating
Officer
------------------------------------------------------------------------------------------------------------------------------------
Sam Singer 2008 $362,935 -0- -0- -0- -0- -0- $39,739 $402,674
Senior Vice 2007 323,350 -0- -0- -0- $32,335 -0- 39,822 395,507
President and
Chief Financial
Officer
------------------------------------------------------------------------------------------------------------------------------------
Richard Faherty 2008 $486,540 -0- -0- -0- -0- -0- $139,962 $626,502
Chief Information 2007 438,750 -0- -0- -0- $43,875 -0- 167,187 649,812
Officer
------------------------------------------------------------------------------------------------------------------------------------
Charles T. Todd, Jr. 2008 $505,237 -0- -0- -0- -0- -0- $13,116 $518,353
Senior Vice 2007 385,500 -0- -0- -0- $38,550 -0- 10,184 434,234
President - Sales
------------------------------------------------------------------------------------------------------------------------------------
(1) Under SEC disclosure rules, the term "bonus" does not include awards that
are performance based. As a result of this definition, payments under the
Company's 2007 Incentive Bonus Plan for Senior Management are not considered
"bonuses" and are reported under the column captioned "Non-Equity Incentive Plan
Compensation".
(2) The 2007 Senior Management Incentive Bonus Plan adopted by the Compensation
Committee provided for bonuses as a percentage of salary to be paid to
designated members of Senior Management (twelve in total) to the extent the
Company's Total Operating Income equaled certain designated percentages of Total
Net Revenues. The amounts in column (g) reflect the cash awards to the named
officers under the 2007 Senior Management Incentive Bonus Plan. No bonuses were
earned under the Plan with respect to fiscal 2008.
(3) The amounts in column (i) All Other Compensation are detailed below.
11
Personal Use of
Company Leased Personal Use of Life Insurance
Name Automobile Company Airplane Premium (a) Other Total
---- ---------- ---------------- -------------- ----- -----
FISCAL YEAR 2008
-----------------------------------
Marc D. Grodman $23,020 $8,404 $70,000 $-0- $101,424
Howard Dubinett 15,070 -0- 25,000 -0- 40,070
Sam Singer 14,739 -0- 25,000 -0- 39,739
Richard Faherty 28,021 -0- -0- $111,941(b) 139,962
Charles Todd Jr. 9,937 3,179 -0- -0- 13,116
FISCAL YEAR 2007
-----------------------------------
Marc D. Grodman $20,900 $5,330 $70,000 $-0- $96,230
Howard Dubinett 15,070 -0- 25,000 -0- 40,070
Sam Singer 14,822 -0- 25,000 -0- 39,822
Richard Faherty 28,109 1,673 -0- $137,408(b) 167,190
Charles Todd Jr. 9,385 799 -0- -0- 10,184
----------
(a) See "Split Dollar Life Insurance" herein
(b) Mr. Faherty rents an airplane to the Company (when the Company's airplane is
unavailable) for corporate flights. Such rentals totaled $71,108 in fiscal 2008
and $55,965 in fiscal 2007. In addition, a separate corporation of which Mr.
Faherty is the majority shareholder provided networking, data reporting and
programming services to the Company in fiscal 2008 and fiscal 2007 for which it
received $40,833 and $81,713 in compensation respectively.
EMPLOYMENT AGREEMENTS WITH NAMED OFFICERS
Dr. Grodman serves as President and Chief Executive Officer pursuant to
a seven-year employment agreement which expires on October 31, 2011. Dr. Grodman
has the right to elect to cancel the employment agreement effective at the end
of any calendar month commencing October 31, 2008 on not less than 90 days prior
written notice, subject to a six month non-competition restriction. The
employment agreement is automatically renewable for additional two year periods
subject to the right of either party to elect not to renew at least six months
prior thereto. The employment agreement provides Dr. Grodman with minimum annual
base compensation of $750,000 subject to annual percentage increases to the
extent of annual percentage increases in the Consumer Price Index. The
Compensation Committee can but is not required to increase Dr. Grodman's
compensation at the end of any fiscal year based upon his and the Company's
performance. The employment agreement also provides Dr. Grodman with business
use of an automobile leased by the Company and participation in any fringe
benefit and bonus plans available to the Company's employees to the extent
determined by the Compensation Committee. The employment agreement contains
provisions governing in the event of Dr. Grodman's partial or total disability
and provides for termination for cause or in the event of Dr. Grodman's death.
Dr. Grodman has the right to terminate the employment agreement in the event of
a material change in his duties and responsibilities, the relocation of the
Company's principal executive offices from Elmwood Park, New Jersey to a
location more than fifty miles distant or a material breach of the employment
agreement by the Company (including a reduction in Dr. Grodman's benefits under
the agreement). In the event of a Change in Control of the Company, Dr. Grodman
can elect to terminate the agreement. In that event, he will be entitled to be
paid a lump sum Severance Payment equal to 2.99 times the average of his
12
annual compensation paid by the Company for the five calendar years preceding
the earlier of the calendar year in which the Change of Control occurred or the
calendar year of the Date of Termination, subject to the provisions of Section
409-A of the Internal Revenue Code. See "Split-Dollar Life Insurance" herein as
to the Endorsement Split-Dollar Life Insurance Agreement between the Company and
Dr. Grodman.
Mr. Dubinett serves as Executive Vice President and Chief Operating
Officer pursuant to an employment agreement which has been extended through
October 31, 2009. Mr. Dubinett's minimum annual compensation under the extended
agreement is equal to his annual compensation in fiscal 2002 and is subject to
increases based on increases in the Consumer Price Index as well as to increases
at the discretion of the Compensation Committee. The agreement provides for (i)
the leasing of an automobile for his use; (ii) participation in fringe benefit,
bonus, pension, profit sharing, and similar plans maintained for the Company's
employees; (iii) disability benefits; (iv) certain termination benefits; and (v)
in the event of termination due to a Change in Control of the Company, a
Severance Payment equal to 2.99 times Mr. Dubinett's average annual compensation
during the preceding five years, subject to the provisions of Section 409-A of
the Internal Revenue Code. See "Split Dollar Life Insurance" herein as to the
Endorsement Split Dollar Life Insurance Agreement between the Company and Mr.
Dubinett.
Mr. Singer serves as Senior Vice President and Chief Financial Officer
pursuant to an employment agreement which has been extended through October 31,
2009, Mr. Singer's minimum annual compensation under the extended agreement is
equal to his annual compensation in fiscal 2002 and is subject to increases
based on increases in the Consumer Price Index as well as to increases at the
discretion of the Compensation Committee. The agreement provides for (i) the
leasing of an automobile for his use; (ii) participation in fringe benefit,
bonus, pension, profit sharing, and similar plans maintained for the Company's
employees; (iii) disability benefits; (iv) certain termination benefits; and (v)
in the event of termination due to a Change in Control of the Company, a
Severance Payment equal to 2.99 times Mr. Singer's average annual compensation
during the preceding five years, subject to the provisions of Section 409-A of
the Internal Revenue Code. See "Split-Dollar Life Insurance" herein as to the
Endorsement Split-Dollar Life Insurance Agreement between the Company and Mr.
Singer.
Mr. Faherty serves as Chief Information Officer and Director of
Information Services pursuant to an employment agreement currently due to expire
on October 31, 2011. Mr. Faherty's initial Base Compensation of $400,000 in
fiscal 2005 is subject to increases based upon management's evaluation of his
and the Company's performance and is also subject to increases based on
increases in the Consumer Price Index. The agreement provides for (i) the
leasing of an automobile for Mr. Faherty's use; (ii) participation in fringe
benefit and bonus plans available to the Company's employees; (iii) disability
benefits; (iv) certain termination benefits; and (v) in the event of termination
due to a Change in Control of the Company, a Severance Payment equal to 2.99
times Mr. Faherty's average annual compensation during the preceding five years,
subject to the provisions of Section 409-A of the Internal Revenue Code.
Mr. Todd serves as a Senior Vice President in Sales pursuant to an
Employment Agreement currently due to expire on October 31, 2011. Mr. Todd's
initial Base Compensation of $350,000 in fiscal 2005 is subject to increases
based upon management's evaluation of his and
13
the Company's performance and is also subject to increases based on increases in
the Consumer Price Index. The agreement provides for (i) the leasing of an
automobile for Mr. Todd's use; (ii) participation in fringe benefits and bonus
plans available to the Company's employees; (iii) disability benefits; (iv)
certain termination benefits; and (v) in the event of termination due to a
Change in Control of the Company, a Severance Payment equal to 2.99 times Mr.
Todd's average annual compensation during the preceding five years, subject to
the provisions of Section 409-A of the Internal Revenue Code.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL AS OF OCTOBER 31, 2008
The following table sets out the payments that could be paid to each of
the Company's three executive officers and to its two other most highly
compensated senior management employees upon termination of employment due to
death, disability, for Good Reason or a Change in Control, in each case
occurring as of October 31, 2008.
Employee Disability(a) Good Reason(b) Death(c) Change in Control(d)
-------- ------------ ------------- -------- --------------------
FISCAL YEAR 2008
----------------
Marc D. Grodman M.D. $1,366,300 $2,732,600 $7,861,374 $2,253,250
Howard Dubinett 362,900 362,900 1,334,550 876,152
Sam Singer 362,900 362,900 768,295 877,175
Richard Faherty 486,500 1,459,600 243,300 1,170,738
Charles Todd, Jr. 505,200 1,515,700 252,618 973,093
-------------
(a) Dr. Grodman's employment agreement entitles him to monthly compensation at
his then current Base Compensation for 18 months in the event of his Total
Disability. The employment agreement of each of the other employees listed in
the table entitles the employee to monthly compensation at his then current Base
Compensation for twelve months in the event of his Total Disability.
(b) "Good Reason" entitling the employee to voluntarily terminate his employment
agreement includes assignment of duties inconsistent with his current duties,
reduction of his Base Compensation, relocation of the Company's principal
executive offices to a location more than 50 miles from the current location and
other breaches by the Company of the employment agreement. In the event of his
voluntary termination for "Good Reason", each of the employees listed in the
table is entitled to be paid his monthly Base Compensation until completion of
his current Employment Period which is as follows: Dr. Grodman - until October
31, 2011; Messrs. Dubinett and Singer - until October 31, 2009; and Messrs.
Faherty and Todd - until October 31, 2011.
(c) Under Dr. Grodman's employment agreement, his employment terminates in the
event of his death and his beneficiaries would be entitled to the death proceeds
of the insurance policy owned by the Company on his life after deducting the
Company's "Interest in the Policy". In the event of Mr. Dubinett's death or Mr.
Singer's death while employed by the Company, the decedent's beneficiaries would
be entitled to the death proceeds of the insurance policy owned by the Company
on his life after deducting the Company's "Interest in the Policy" plus
additional payments equal to six months of his Base Compensation in effect at
the time of his death. See "Split-Dollar Life Insurance" herein. In the event of
Mr. Faherty's death or Mr. Todd's death while employed by the Company, the
decedent's beneficiaries would be entitled to additional payments equal to six
months of his Base Compensation at the time of his death.
(d) In the event of a termination of employment after a "Change in Control" of
the Company, the employee is entitled to receive a lump sum Severance Payment
equal to 2.99 times the average of his annual compensation paid or payable by
the Company in connection with his employment and
14
included in his gross income as compensation income for the five calendar years
preceding the calendar year in which the Change in Control occurred, subject to
the provisions of Section 409-A of the Internal Revenue Code.
SPLIT-DOLLAR LIFE INSURANCE
Pursuant to the terms of their 1997 employment agreements, the Company
had established split-dollar life insurance programs for each of its three
Executive Officers. As a result of the passage of the Sarbanes Oxley Act of 2002
(signed into law on July 30, 2002), these three programs were modified. Pursuant
to the modification, each of the three Executive Officers assigned ownership of
his policies to the Company and new policies were issued to replace the prior
policies with annual premiums under the new policies ($70,000 under Dr.
Grodman's policy and $25,000 each under Messrs. Dubinett's and Singer's
policies) being equal to the premiums paid under the replaced policies. The
Company has now executed new "Endorsement Split-Dollar Life Insurance
Agreements" with each of its three Executive Officers. Pursuant to the new
agreements, the Company has agreed to continue to pay the annual premium on the
policy on each officer's life during the period of his full-time employment by
the Company. The Company is the sole owner of the policy and of its net cash
surrender value, and in the event of the officer's death while serving as a
full-time employee of the Company, the Company will be entitled to receive that
amount of the death proceeds equal to its interest in the policy (the aggregate
amount of premiums paid by the Company with respect to the policy less the
amount of any loans, if any, from the Insurer to the Company against the cash
value or policy proceeds, and less the aggregate amount of any premiums paid by
the officer to the Company in reimbursement of premiums paid by the Company) and
the balance of the death proceeds will be paid to the officer's designated
beneficiaries. The premiums paid by the Company on the current policies and the
prior policies aggregated approximately $1,542,000 and $1,422,000 at October 31,
2008 and October 31, 2007, respectively. At that date, the net cash surrender
value of the three current policies aggregated approximately $1,225,000 and
$1,054,000 at October 31, 2008 and October 31, 2007, respectively and is
recorded on the books of the Company at these values.
STOCK OPTIONS
EMPLOYEE STOCK OPTION PLANS
THE 1989 PLAN
In July 1989, the Company's Board of Directors adopted the 1989
Employees Stock Option Plan (the "1989 Plan") which was approved by shareholders
in November 1989. The 1989 Plan provided for the grant of options to purchase up
to 666,667 shares of Common Stock. Under the terms of the 1989 Plan, options
granted thereunder could be designated as options which qualify for incentive
stock option treatment ("ISOs") under Section 422 of the Internal Revenue Code
of 1986 ("the Code"), or options which do not so qualify ("NQOs").
Under the 1989 Plan, the exercise price of an option designated as an
ISO could not be less than the fair market value of the Common Stock on the date
the option was granted. However, in the event an option designated as an ISO was
granted to a 10% shareholder (as defined in the 1989 Plan) such exercise price
was required to be at least 110% of such fair market value. Exercise prices of
NQOs could be less than such fair market value. The aggregate fair market value
of shares subject to options granted to a participant which are designated as
15
ISOs which first become exercisable in any calendar year could not exceed
$100,000. All options under the 1989 Plan were required to be granted before the
Plan's July 1999 Termination Date so that no further options can be granted
under the 1989 Plan. At October 31, 2008, there were no outstanding ISO's under
the 1989 Plan.
THE 2000 PLAN
On August 25, 2000, the Board of Directors adopted the 2000 Employee
Incentive Stock Option Plan (the "2000 Plan") reserving an aggregate 800,000
shares of Bio-Reference Common Stock for issuance upon exercise of ISOs which
may be granted under the 2000 Plan. Stockholders ratified the adoption of the
2000 Plan at the December 14, 2000 Annual Meeting of Stockholders. During fiscal
2008, no ISOs were granted under the 2000 Plan. During fiscal 2008, ISOs issued
under the 2000 Plan to purchase an aggregate 4,500 shares at exercise prices
ranging from $5.94 to $8.40 per share were exercised. As a result, at October
31, 2008, there were outstanding ISOs under the 2000 Plan exercisable to
purchase an aggregate 157,000 shares at exercise prices ranging from $5.52 to
$15.34 per share.
The 2000 Plan authorizes the grant of options which qualify for ISO
treatment under Section 422 of the Code, to purchase up to a maximum aggregate
800,000 shares of the Company's Common Stock. Options may only be granted under
the 2000 Plan to employees of the Company and its subsidiaries (including
officers and directors who are also employees).
The 2000 Plan is administered by the Board of Directors. The Board has
the discretion to determine the eligible employees to whom, and the price (not
less than the fair market value on the date of grant) at which options will be
granted; the periods during which each option is exercisable; and the number of
shares subject to each option. The Board has the authority to interpret the 2000
Plan and to establish and amend rules and regulations relating thereto.
The 2000 Plan provides that the exercise price of an option granted
thereunder shall not be less than the fair market value of the Common Stock on
the date the option is granted. However, in the event an option is granted under
the 2000 Plan to a holder of 10% or more of the Company's outstanding Common
Stock, the exercise price must be at least 110% of such fair market value. Under
the 2000 Plan, options must be granted before the August 24, 2010 Termination
Date. No option may have a term longer than ten years (limited to five years in
the case of an option granted to a 10% or greater stockholder of the Company).
The aggregate fair market value of the Company's Common Stock with respect to
which options are exercisable for the first time by a grantee under the 2000
Plan during any calendar year cannot exceed $100,000. Options granted under the
2000 Plan are non-transferable and must be exercised by an optionee, if at all,
while employed by the Company or a subsidiary or within three months after
termination of such optionee's employment due to retirement, or within one year
of such termination if due to disability or death. The Board may, in its sole
discretion, cause the Company to lend money to or guaranty any obligation of an
employee for the purpose of enabling such employee to exercise an option granted
under the 2000 Plan provided that such loan or obligation cannot exceed fifty
percent (50%) of the exercise price of such option.
16
THE 2003 PLAN
On June 3, 2003, the Board of Directors adopted the 2003 Employee
Incentive Stock Option Plan (the "2003 Plan") reserving an aggregate 800,000
shares of Bio-Reference Common Stock for issuance upon exercise of ISOs which
may be granted under the 2003 Plan. Stockholders ratified the adoption of the
2003 Plan at the July 31, 2003 Annual Meeting of Stockholders. During fiscal
2008, ISOs were granted under the 2003 Plan exercisable to purchase 20,000
shares at an exercise price of $34.99 per share. In fiscal 2008, ISOs issued
under the 2003 Plan to purchase an aggregate 29,313 shares at exercise prices
ranging from $12.22 to $21.46 per share were exercised and ISOs granted under
the 2003 Plan exercisable to purchase 7,145 shares were canceled due to
terminations of employment. As a result, at October 31, 2008, there were
outstanding ISOs under the 2003 Plan exercisable to purchase an aggregate
244,280 shares at exercise prices ranging from $12.22 to $34.99 per share.
The 2003 Plan authorizes the grant of options which qualify for ISO
treatment under Section 422 of the Code to purchase up to a minimum aggregate
800,000 shares of the Company's Common Stock. Options may only be granted under
the 2003 Plan to employees of the Company and its subsidiaries (including those
officers and directors who are also employees).
The 2003 Plan is administered by the Board of Directors. The Board has
the discretion to determine the eligible employees to whom, and the prices (not
less than the fair market value on the date of grant) at which options will be
granted; the periods during which each option is exercisable; and the number of
shares subject to each option. The Board has the authority to interpret the 2003
Plan and to establish and amend rules and regulations relating thereto.
The 2003 Plan provides that the exercise price of an option granted
thereunder shall not be less than the fair market value of the Common Stock on
the date the option is granted. However, in the event an option is granted under
the 2003 Plan to a holder of 10% or more of the Company's outstanding Common
Stock, the exercise price must be at least 110% of such fair market value.
Under the 2003 Plan, options must be granted before the June 2, 2013
Termination Date. No option may have a term longer than ten years (limited to
five years in the case of an option granted to a 10% or greater stockholder of
the Company). The aggregate fair market value of the Company's Common Stock with
respect to which options are exercisable for the first time by a grantee under
all of the Company's Stock Option Plans during any calendar year cannot exceed
$100,000. Options granted under the 2003 Plan are non-transferable and must be
exercised by an optionee, if at all, while employed by the Company or a
subsidiary or within three months after termination of such optionee's
employment due to retirement, or within one year of such termination if due to
disability or death. The Board may, in its sole discretion, cause the Company to
lend money to or guaranty any obligation of an employee for the purpose of
enabling such employee to exercise an option granted under the 2003 Plan
provided that such loan or obligation cannot exceed fifty percent (50%) of the
exercise price of such option.
17
NON-QUALIFIED OPTIONS (NQOS) AND WARRANTS
At October 31, 2007, there were outstanding NQOs owned by one member of
the Scientific Advisory Board exercisable to purchase an aggregate 15,000 shares
at an exercise price of $7.94 per share. These NQOs expired unexercised in
fiscal 2008.
See Note 11 of Notes to the Consolidated Financial Statements.
OPTION GRANTS TO THE COMPANY'S THREE NAMED EXECUTIVE OFFICERS (AND THE TWO OTHER
NAMED MOST HIGHLY COMPENSATED SENIOR MANAGEMENT EMPLOYEES) IN LAST FISCAL YEAR
No options to purchase shares of the Common Stock were granted to any
of the Company's three Named Executive Officers or the two other named most
highly compensated senior management employees in fiscal 2008.
OPTION EXERCISES AND STOCK VESTED
At October 31, 2007 and at October 31, 2008, these were no outstanding
options held by the Company's three executive officers, the two other named most
highly compensated senior management employees or any of its directors.
DIRECTOR COMPENSATION
During fiscal 2008, each director who was not a Company employee was
compensated for his services as a director with a quarterly fee of $13,750. In
addition, Gary Lederman as chairman of the Audit Committee and John Roglieri
M.D. as chairman of the Compensation Committee was each compensated for serving
as a Committee Chairman with an additional quarterly fee of $2,750. No
director's fees were paid to the Company's employee directors who determined the
compensation to be paid to the Company's non-employee directors for serving in
such capacity and as Committee chairmen.
The following table sets forth the compensation paid to the Company's
non-employee directors in fiscal 2008.
Director's Committee
Director Fees Chairman Fees Other Total
-------- ---------- ------------- ----- -----
Joseph Benincasa $55,000 -0- -0- $55,000
Harry Elias 55,000 -0- $527 (a) 55,527
Gary Lederman (b) 55,000 $11,000 (b) -0- 66,000
John Roglieri M.D. (c) 55,000 11,000 (c) -0- 66,000
-----------
(a) For personal use of Company airplane
(b) Chairman of the Audit Committee
(c) Chairman of the Compensation Committee
18
COMPENSATION DISCUSSION AND ANALYSIS
BACKGROUND
Through fiscal 2001, the Board of Directors, including the Company's
three executive officers, were responsible for reviewing the compensation paid
to the Company's executive officers, provided that none of the Company's
executive officers could vote with respect to his own compensation package. In
fiscal 2002, the Company established a Compensation Committee consisting of
three non-employee directors, Morton L. Topfer (Chairman), Gary Lederman and
John Roglieri. Mr. Topfer resigned as a director and as a member of the
Compensation Committee in February 2004. In March 2004, Dr. Roglieri became the
Chairman of the Compensation Committee and Mr. Elias was elected as a member of
the Committee. Mr. Benincasa was elected as a member of the Committee in June
2005.
In May 1997, the Company executed an employment agreement with Dr.
Grodman which expired on October 31, 2004. Effective November 1, 2004, the
Company executed a new seven year employment agreement with Dr. Grodman, the
terms of which are described above. See "Employment Agreements with Named
Officers."
In May 1997, the Company also executed employment agreements with
Messrs. Dubinett and Singer (each expiring on October 31, 2002). During fiscal
2002, the Compensation Committee authorized extensions of both Messrs. Dubinett
and Singer's contracts for two additional years, with the Company having the
option to extend each agreement for two consecutive one-year periods in
addition. In consideration for Messrs. Dubinett and Singer executing the
extension agreements, the Company agreed that the base compensation during each
extension year would not be less than the total cash compensation paid to such
individual in fiscal 2002. The Company's option to extend Mr. Dubinett and Mr.
Singer's employment agreements has been further extended through fiscal 2009.
EXECUTIVE COMPENSATION PHILOSOPHY
In view of the fact that the three named executive officers own
substantial equity interests in the Company, the compensation program for them
focuses primarily on base salary, subject to annual increase based upon a review
of the executive's and the Company's performance. In addition, to further
incentivize the executive officers as well as certain other members of senior
management, in 2005, the Company established a Senior Management Incentive Bonus
Plan designed to assist in the Company's profitability. Bonuses under the Plan
are earned and paid only to the extent the Company's Total Operating Income
equaled certain designated percentages of Total Net Revenues. Plan criteria were
met with respect to fiscal 2005 and 2007 so that bonuses were earned and paid,
but no bonuses were earned or paid under the Plan with respect to fiscal 2006 or
fiscal 2008 as the Plan's targeted performances were not achieved.
RATIONALE FOR CURRENT EMPLOYMENT AGREEMENTS WITH THE THREE EXECUTIVE OFFICERS
During the summer of calendar year 2004 with the knowledge that Dr.
Grodman's seven year employment agreement was due to expire in October 2004, the
Compensation Committee
19
commenced negotiations with Dr. Grodman for the terms of a new employment
agreement. In the course of its negotiations, the Committee took into account
among other factors as a barometer of Dr. Grodman's performance as the Company's
chief executive officer, the substantial increase since 1997 in the Company's
net revenues, operating income and the market price of the Common Stock. Another
factor taken into account by the Committee was the compensation being paid to
the chief executive officers of a peer group of nine other publicly owned
clinical testing laboratories including the two major companies in the industry,
Quest Diagnostics, Inc. and Laboratory Corporation of America Holdings. The
terms of Dr. Grodman's "split-dollar" insurance arrangement with the Company and
the fact that the proposed new employment agreement did not provide Dr. Grodman
with additional equity compensation was also taken into account. After
discussion, each of the three members of the Compensation Committee at the time
(Dr. Roglieri, Mr. Elias and Mr. Lederman) concluded that the terms of the
proposed new employment agreement were fair to and in the best interests of the
Company and its stockholders and that the proposed compensation thereunder was
not excessive.
The Compensation Committee has determined that the base salaries paid
with respect to fiscal 2008, and the terms of the extension agreements with
Messrs. Dubinett and Singer, were reasonable in relationship to the services
performed, the responsibilities assumed and the results obtained, and were in
the best interests of the Company. In connection with Dr. Grodman's
compensation, the Compensation Committee considered the Company's increase in
net revenues, patients serviced, working capital and shareholders' equity in
fiscal 2008 compared with the corresponding period in fiscal 2007. Furthermore,
the compensation paid to Messrs. Grodman, Dubinett and Singer for fiscal 2008
comports with the Compensation Committee's perception of base compensation
levels of principal executives employed by other companies, both public and
private.
BENEFITS AND PERQUISITES
The Company's policy is to provide health benefits as well as access to
its 401(k) Plan to which it contributes a maximum of $500 per employee each
year, for all of its employees including the three executive officers.
The Company leases automobiles for their use but amounts reflecting
their personal use are reported as income to them subject to tax. Similarly,
personal use of the Company airplane by any of the executive officers is
reported as income to them, subject to tax. See Footnote (3) to the "Summary
Compensation Table".
CHANGE IN CONTROL BENEFITS
The employment agreements with the three executive officers provide for
substantial Severance Payments to them in the event of a change in control of
the Company. This provision provides an additional level of financial security
for the three executive officers. These executives could be asked to evaluate a
transaction purportedly expected to maximize shareholder value while resulting
in the elimination of their jobs. The Severance Payment provision (2.99 times
the annual average of the preceding five years of compensation) could help
20
to minimize the distraction caused by concerns over personal financial security
in the context of a proposed change in control.
STOCK OPTION GRANT PRACTICES
The Company grants stock options at an exercise price at least equal to
the fair market value on the date of the grant. Due to the substantial stock
ownership position of the three executive officers, no stock options have been
granted to them (or restricted stock awarded to them) in the last three years.
POLICY REGARDING THE ONE MILLION DOLLAR DEDUCTION LIMITATION
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public corporations for compensation in excess of $1,000,000 paid
for any fiscal year to a corporation's chief executive officer and to the four
other most highly compensated executive officers in office as of the end of the
fiscal year. The statute exempts qualifying performance-based compensation from
the deduction limit if certain requirements are met. However, shareholder
interests may at times be best served by not restricting the Compensation
Committee's discretion and flexibility in developing compensation programs, even
though the programs may result in non-deductible compensation expenses.
Accordingly, the Compensation Committee may from time to time approve elements
of compensation for certain officers that are not fully deductible, although no
such elements have been approved to date.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 2008, the members of the Company's Compensation Committee
were:
John Roglieri M.D. - Chairman
Joseph Benincasa
Harry Elias
Gary Lederman
No member of the Compensation Committee was an officer or employee of
the Company in fiscal 2008 or was formerly an officer of the Company.
COMPENSATION COMMITTEE REPORT
The members of the Company's Compensation Committee hereby state;
(A) We have reviewed and discussed the Compensation Discussion and
Analysis contained in the Company's Annual Report on Form 10-K for
the year ended October 31, 2008 with the Company's Management, and
21
(B) Based on such review and discussions, we have recommended to the
Company's Board of Directors that the Compensation Discussion and
Analysis be included in the Company's Annual Report on Form 10-K
for the year ended October 31, 2008.
COMPENSATION COMMITTEE
By John Roglieri M.D., Chairman
Joseph Benincasa*
Harry Elias
Gary Lederman
* Mr. Benincasa first became a member of the Compensation Committee in June 2005
and was not a party to the 2004 negotiation of Dr. Grodman's employment
agreement.
AUDIT COMMITTEE REPORT
The Audit Committee oversees the Company's financial reporting process
on behalf of the Board of Directors. It is the responsibility of the Company's
independent auditors to perform an independent audit of and express an opinion
on the Company's financial statements. The Audit Committee's responsibility is
one of review and oversight. In fulfilling its oversight responsibilities:
(1) The Audit Committee of the Board of Directors has reviewed and
discussed with the Company's management the audited financial
statements.
(2) The Audit Committee has discussed with MSPC, Certified Public
Accountants and Advisors, A Professional Corporation ("MSPC"), the
Company's independent auditors, the matters required to be
discussed by Statement on Auditing Standards No. 61, "Codification
of Statements on Auditing Standards, AU ss. 380," as modified or
supplemented.
(3) The Audit Committee has also received the written disclosures and
the letter from MSPC required by the Independence Standards Board
Standard No. 1 (Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees), as modified or
supplemented, and has discussed with MSPC. the independence of
that firm as the Company's auditors.
(4) Based on the Audit Committee's review and discussions referred to
above, the Audit Committee recommended to the Board of Directors
that the Company's audited financial statements be included in the
Company's Annual Report on Form 10-K for the year ended October
31, 2008, for filing with the Securities and Exchange Commission.
Each of the Audit Committee members is independent, as defined in the
Rules of the Nasdaq Stock Market, Inc.
22
The members of the Audit Committee are not professionally engaged in
the practice of auditing or accounting and are not experts in the fields of
accounting, auditing, or auditor independence. However, the Board of Directors
has determined that Gary Lederman is qualified to serve as the "audit committee
financial expert" of the Company as defined in Item 407(d) of Regulation S-K
promulgated by the Securities and Exchange Commission. Members of the Committee
rely without independent verification on the information provided to them and on
the representations made by management and the independent auditors.
AUDIT COMMITTEE
Gary Lederman, Chairman
Joseph Benincasa, Member
Harry Elias, Member
John Roglieri, Member
STOCK PRICE PERFORMANCE
Set forth below is a line graph comparing the yearly cumulative total
return on the Company's Common Stock for the five fiscal years ended October 31,
2008 based on the market price of the Common Stock, with the cumulative total
return of companies in the S&P 500 Composite and with a peer group of eight
publicly owned medical laboratories.
COMPARISON OF FIVE YEAR TOTAL RETURN
FOR BIO-REFERENCE LABORATORIES, INC.,
S&P 500 COMPOSITE AND
MEDICAL LABORATORY PEER GROUP
[GRAPHIC OMITTED]
23
The Medical Laboratory peer group consists of the following companies:
Clarion Technologies, Inc., Enzo Biochem Inc., Genoptix Inc., Laboratory CP of
Amer Holdgs, Medtox Scientific Inc., Neogenomics Inc., Orchid Cellmark Inc., and
Quest Diagnostics Inc.
AUDITORS
The firm of MSPC, has been selected by the Board of Directors to audit
the accounts of the Company and its subsidiaries for the fiscal year ending
October 31, 2009. MSPC and its predecessor firm have served as the Company's
auditors since 1988. Representatives of such firm are not expected to be present
at the July 30, 2009 Annual Meeting of Stockholders.
AUDIT FEES
MSPC billed the Company approximately $235,120 for professional
services rendered in connection with the audit of the Company's annual financial
statements for the fiscal year ended October 31, 2008 and the review of the
financial statements included in its quarterly reports on Form 10-Q for such
fiscal year compared to approximately $232,300 in billings for such services for
the fiscal year ended October 31, 2007. In addition, MSPC billed the Company
approximately $17,500 in fiscal 2008 for its audit of the Company's 401(k) Plan
for calendar year 2007 as compared to approximately $17,500 of such fees in
fiscal 2007 with respect to calendar year 2006.
AUDIT-RELATED FEES
MSPC billed the Company approximately $15,750 for due diligence
services rendered in relation to certain acquisitions during fiscal 2008 and
approximately $97,750 for Sarbanes-Oxley ("SOX") related audit fees.
TAX FEES
MSPC billed the Company approximately $72,500 for tax services for
fiscal 2008 and approximately $46,900 for tax services for fiscal 2007. The fees
were billed for tax return preparation.
ALL OTHER FEES
No other fees were billed to the Company by MSPC with respect to fiscal
2008 or fiscal 2007 other than for the services described above.
AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
The Audit Committee pre-approved each material non-audit engagement for
services performed by the Company's independent auditor in fiscal 2008. Prior to
pre-approving any such non-audit engagement or service, it is the Committee's
practice to first gather information regarding the requested engagement or
service in order to enable the Committee to assess the impact of the engagement
or service on the auditor's independence.
24
The Audit Committee has considered whether the provision of tax return
preparation and other professional services to the Company by MSPC is compatible
with such firm maintaining its independence and has concluded that such firm is
independent with respect to the Company in its role as the Company's principal
accountant and auditor.
STOCKHOLDER PROPOSALS FOR 2010 ANNUAL MEETING
Under current rules of the Securities and Exchange Commission,
stockholders wishing to submit proposals for inclusion in the Proxy Statement of
the Board of Directors for the 2010 Annual Meeting of Stockholders (expected to
be held in July 2010), must submit such proposals so as to be received by the
Company at 481 Edward H. Ross Drive, Elmwood Park, New Jersey 07407 on or before
February 18, 2010.
OTHER MATTERS
Management does not know of any other matters which are likely to be
brought before the Meeting. However, in the event that any other matters
properly come before the Meeting, the persons named in the enclosed proxy will
vote said proxy in accordance with their judgment in said matters.
According to Securities and Exchange Commission rules, the information
presented in this Proxy Statement under the captions "Compensation Committee
Report, "Audit Committee Report" and "Stock Price Performance" will not be
deemed to be "soliciting material" or deemed filed with the Securities and
Exchange Commission under the Securities Act of 1933 or the Securities Exchange
Act of 1934, and nothing contained in any previous filings made by the Company
under such Acts shall be interpreted as incorporating by reference the
information presented under said specified captions.
BY ORDER OF THE BOARD OF DIRECTORS
Marc D. Grodman, President
Elmwood Park, New Jersey
June 18, 2009
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BIO-REFERENCE LABORATORIES, INC.
REVOCABLE PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS - JULY 30, 2009
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, a Stockholder of BIO-REFERENCE LABORATORIES, INC. (the
"Company") hereby appoints Marc D. Grodman and Sam Singer or either of them, as
proxy or proxies of the undersigned, with full power of substitution, to vote,
in the name, place and stead of the undersigned, with all of the powers which
the undersigned would possess if personally present, on behalf of the
undersigned, all the shares which the undersigned is entitled to vote at the
Annual Meeting of the Stockholders of BIO-REFERENCE LABORATORIES, INC. to be
held at 9:00 A.M. (local time) on Thursday, July 30, 2009 at the Sheraton
Crossroads Hotel, Crossroads Corporate Center, Route 17 North, Mahwah, New
Jersey 07495-0001 and at any and all adjournments thereof. The undersigned
directs that this proxy be voted as follows:
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
[ ] 14475 [ ]
ANNUAL MEETING OF STOCKHOLDERS OF
BIO-REFERENCE LABORATORIES, INC.
JULY 30, 2009
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL
-------------------------------------------------
The Notice of Meeting, Proxy Statement, Proxy Card
are available at www.bioreference.com
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.
| Please detach along perforated line and mail in the envelope provided. |
\/ \/
[ ] 20330000000000000000 9 073009
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS AND "FOR" PROPOSAL 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [x]
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1. To elect two Class II directors, each to serve for a term of | FOR AGAINST ABSTAIN
three years and until his successor is elected and qualified | 2. In their discretion, on all other matters -- -- --
(Proposal One). | as shall properly come before the meeting | | | | | |
| -- -- --
--- NOMINEES: |
| | FOR ALL NOMINEES O Joseph Benincasa | THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL OF THE FOREGOING.
--- O Gary Lederman | UNLESS OTHERWISE SPECIFIED AS ABOVE, THIS PROXY WILL BE VOTED
0 John Roglieri | "FOR" THE ELECTION OF DIRECTORS (PROPOSAL ONE). IN ADDITION,
--- WITHHOLD AUTHORITY | DISCRETIONARY AUTHORITY IS CONFERRED AS TO ALL OTHER MATTERS THAT
| | FOR ALL NOMINEES | MAY COME BEFORE THE MEETING UNLESS SUCH AUTHORITY IS SPECIFICALLY
--- | WITHHELD. STOCKHOLDERS WHO ARE PRESENT AT THE MEETING MAY WITHDRAW
| THEIR PROXY AND VOTE IN PERSON IF THEY SO DESIRE.
--- FOR ALL EXCEPT |
| | (See instructions below) |
--- | PLEASE MARK, SIGN, AND RETURN YOUR PROXY PROMPTLY. NO POSTAGE IS
| REQUIRED IF RETURNED IN THE ENCLOSED ENVELOPE AND MAILED IN THE
| UNITED STATES. RECEIPT OF THE NOTICE OF ANNUAL MEETING OF
| STOCKHOLDERS, THE ACCOMPANYING PROXY STATEMENT OF THE BOARD OF
| DIRECTORS AND THE COMPANY'S ANNUAL REPORT FOR THE YEAR ENDED
| OCTOBER 31, 2008 IS ACKNOWLEDGED.
INSTRUCTIONS: To withhold authority to vote for any individual |
nominee(s), mark "FOR ALL EXCEPT" and fill in the |
circle next to each nominee you wish to withhold, |
as shown here: o |
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To change the address on your account, please check the |
box at right and indicate your new address in the --- |
address space above. Please note that changes to the | | |
registered name(s) on the account may not be submitted --- |
via this method. |
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Signature of Stockholder | | Date: | | Signature of Stockholder | | Date: | |
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NOTE: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should
sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If
the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such.
If signer is a partnership, please sign in partnership name by authorized person.
[ ] [ ]