SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934 (Amendment No. ____)
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Techne Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing:
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
TECHNE CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held
October 25, 2007
The annual meeting of shareholders of Techne Corporation (the "Company")
will be held at the offices of the Company, 614 McKinley Place N.E.,
Minneapolis, Minnesota, on Thursday, October 25, 2007, at 3:30 p.m. (Central
Daylight Time), for the following purposes:
1. To set the number of members of the Board of Directors at eight (8).
2. To elect directors of the Company for the ensuing year.
3. To take action upon any other business that may properly come before
the meeting or any adjournment thereof.
Only shareholders of record shown on the books of the Company at the close
of business on September 14, 2007 will be entitled to vote at the meeting or
any adjournment thereof. Each shareholder is entitled to one vote per share
on all matters to be voted on at the meeting.
You are cordially invited to attend the meeting. Whether or not you plan
to attend the meeting, please sign, date and return your Proxy in the return
envelope provided as soon as possible. Your cooperation in promptly signing
and returning the Proxy will help avoid further solicitation expense to the
Company.
This Notice, the Proxy Statement and the enclosed Proxy are sent to you by
order of the Board of Directors.
THOMAS E. OLAND,
Chairman of the Board and President
Dated: September 25, 2007
Minneapolis, Minnesota
TECHNE CORPORATION
__________
PROXY STATEMENT
for
Annual Meeting of Shareholders
To Be Held October 25, 2007
__________
INTRODUCTION
Your Proxy is solicited by the Board of Directors of Techne Corporation
(the "Company") for use at the Annual Meeting of Shareholders to be held on
October 25, 2007 and at any adjournment thereof, for the purposes set forth
in the attached Notice of Annual Meeting.
The cost of soliciting Proxies, including preparing, assembling and
mailing the Proxies and soliciting material, will be borne by the Company.
Directors, officers and regular employees of the Company may, without
compensation other than their regular compensation, solicit Proxies
personally or by telephone.
Proxies not revoked will be voted in accordance with the choice specified
by shareholders by means of the ballot provided on the Proxy for that
purpose. Proxies which are signed but which lack any such specification
will, subject to the following, be voted in favor of the proposals set forth
in the Notice of Meeting and in favor of the number and slate of directors
proposed by the Nominations and Governance Committee of the Board of
Directors and listed herein. If a shareholder abstains from voting as to any
matter, then the shares held by such shareholder shall be deemed present at
the meeting for purposes of determining a quorum and for purposes of
calculating the vote with respect to such matter, but shall not be deemed to
have been voted in favor of such matter. Abstentions, therefore, as to any
proposal, other than election of directors, will have the same effect as
votes against such proposal. If a broker returns a "non-vote" proxy,
indicating a lack of voting instruction by the beneficial holder of the
shares and a lack of discretionary authority on the part of the broker to
vote on a particular matter, then the shares covered by such non-vote shall
be deemed present at the meeting for purposes of determining a quorum but
shall not be deemed to be represented at the meeting for purposes of
calculating the vote required for approval of such matter. You may revoke
your proxy by sending a written statement to that effect to the Corporate
Secretary of the Company, submitting a properly signed proxy card with a
later date, or filing a notice of termination of the proxy and voting in
person at the Annual Meeting.
The mailing address of the Company's principal executive office is 614
McKinley Place N.E., Minneapolis, MN 55413. The Company expects that this
Proxy Statement and the related Proxy and Notice of Annual Meeting will first
be mailed to shareholders on or about September 25, 2007.
OUTSTANDING SHARES AND VOTING RIGHTS
The Board of Directors of the Company has fixed September 14, 2007 as the
record date for determining shareholders entitled to vote at the Annual
Meeting. Persons who were not shareholders on such date will not be allowed
to vote at the Annual Meeting. At the close of business on September 14,
2007, 39,524,378 shares of the Company's Common Stock were issued and
outstanding. Such Common Stock is the only outstanding class of stock of the
Company. Each share of Common Stock is entitled to one vote on each matter
to be voted upon at the meeting. Holders of the Common Stock are not
entitled to cumulative voting rights in the election of directors.
PRINCIPAL SHAREHOLDERS
The following table provides information concerning the only persons known
to the Company to be the beneficial owners of more than 5% of the Company's
outstanding Common Stock as of September 14, 2007:
Amount and
Name and Address Nature of Shares Percent
of Beneficial Owner Beneficially Owned(1) of Class(2)
---------------------------------- --------------------- -----------
Morgan Stanley Investment
Management, Inc. 5,195,800 (3) 13.1%
1585 Broadway
New York, NY 10036
Thomas E. Oland 1,553,472 (4)(5) 3.9%(4)
614 McKinley Place N.E.
Minneapolis, MN 55413
---------------------------
(1) Unless otherwise indicated, the person listed as the beneficial owner
of the shares has sole voting and sole investment power over the
shares.
(2) Shares not outstanding but deemed beneficially owned by virtue of the
right of a person to acquire them as of September 14, 2007, or within
sixty days of such date are treated as outstanding only when
determining the percent owned by such individual and when determining
the percent owned by the group.
(3) Sole voting power over 4,982,511 shares. Shared voting power over 166
shares.
(4) Does not include 698,965 shares held by the Company's Stock Bonus Plan
for accounts of employees other than Mr. Oland, which are included in
the group total in the Management Shareholding table. The Company's
Board of Directors, acting by a majority vote, currently directs the
Trustee, Marshall and Ilsley Trust Company, N.A., as to the voting of
such shares. Including such 698,965 shares, Mr. Oland, a director of
the Company, beneficially owns 2,252,437 shares or 5.7% of total shares
outstanding plus shares subject to options exercisable by him.
(5) Includes 1,187,420 shares owned directly, 91,572 shares held by the
Company's Stock Bonus Plan for Mr. Oland's account, 68,556 shares held
by Thomas Oland and Associates and 205,924 shares held by the Thomas
Oland and Associates Profit Sharing Plan and Trust.
MANAGEMENT SHAREHOLDINGS
The following table sets forth the number of shares of the Company's
Common Stock beneficially owned as of September 14, 2007, by each executive
officer of the Company named in the Summary Compensation Table, by each
director and by all directors and executive officers (including the named
individuals) as a group. Shares beneficially owned by Mr. Oland constitute
3.9% of total shares outstanding. Each other individual beneficially owns
less than one percent of total shares outstanding plus shares subject to
options exercisable by him or her. As a group, officers and directors
beneficially own 7.2% of total shares outstanding plus shares subject to
options exercisable by them.
2
Name of Director or Number of Shares
Executive Officer Group Beneficially Owned(1)
---------------------------------- ---------------------
Thomas E. Oland 1,553,472 (2)
Roger C. Lucas, Ph.D. 21,456 (3)(4)(5)
Howard V. O'Connell 172,608 (3)(4)(6)
G. Arthur Herbert 204,360 (3)(4)(7)
Randolph C. Steer, M.D., Ph.D. 10,000 (3)(4)(8)
Robert V. Baumgartner 21,000 (3)(4)(9)
Charles A. Dinarello, M.D. 15,000 (3)(4)(10)
Karen A. Holbrook, Ph.D. 5,000 (3)(4)(11)
Monica Tsang, Ph.D. 75,552 (12)
Marcel Veronneau 56,174 (13)
Gregory J. Melsen 18,524 (14)
Officers and directors as a
group (11 persons) 2,845,150 (15)
------------------
(1) Unless otherwise indicated, the person listed as the beneficial owner
has sole voting and sole investment power over outstanding shares.
Shares beneficially owned includes shares subject to options that are
currently outstanding and exercisable and options that are currently
outstanding and will become exercisable within 60 days of September 14,
2007.
(2) See Note (4) and (5) to the preceding table.
(3) Does not include 790,537 shares held by the Company's Stock Bonus Plan,
which are included in the total of officers and directors as a group.
The Company's Board of Directors, acting by majority vote, currently
directs the Trustee as to the voting of such shares.
(4) Does not include an option to purchase 5,000 shares which will be
granted on and will become exercisable as of the date of the Annual
Meeting pursuant to the 1998 Nonqualified Stock Option Plan if the
individual is reelected as a director of the Company.
(5) Includes 1,456 shares owned directly and 20,000 shares subject to stock
options.
(6) Includes 132,608 shares owned by trusts of which Mr. O'Connell is a
trustee and beneficiary and 40,000 shares subject to options.
(7) Includes 11,000 shares owned by Mr. Herbert's wife, 153,360 shares held
by trusts and partnership of which Mr. Herbert is a trustee or partner
and 40,000 shares subject to options.
(8) Includes 10,000 shares subject to options.
(9) Includes 1,000 shares owned directly and 20,000 shares subject to
options.
(10) Includes 15,000 shares subject to options.
(11) Includes 5,000 shares subject to options.
(12) Includes 31,006 shares owned directly, 5,422 shares owned by Dr.
Tsang's husband, 188 shares held by the Company's Stock Bonus Plan for
Dr. Tsang's account and 38,936 shares held in an IRA for Dr. Tsang.
Dr. Tsang retired from the Company effective June 30, 2007.
(13) Includes 30,444 shares owned directly, 6,470 shares held by the
Company's Stock Bonus Plan for Mr. Veronneau's account and 19,260
shares subject to options.
(14) Includes 303 shares held by the Company's Stock Bonus Plan for Mr.
Melsen's account and 18,221 shares subject to options.
(15) Includes 790,537 shares held by the Company's Stock Bonus Plan as to
which the Company's Board of Directors directs the voting and 187,481
shares which may be purchased pursuant to options.
3
ELECTION OF DIRECTORS
(Proposals #1 and #2)
General Information
The Bylaws of the Company provide that the number of directors shall be
determined by the shareholders at each annual meeting. The Nominations and
Governance Committee of the Board of Directors of the Company recommends that
the number of directors to be set at eight and that the individuals named in
the table below be elected. Under applicable Minnesota law and the Company's
bylaws, approval of the proposal to set the number of directors at eight
requires the affirmative vote of the holders of the greater of (1) a majority
of the voting power of the shares represented in person or by proxy at the
Annual Meeting with authority to vote on such matter or (2) a majority of the
voting power of the minimum number of shares that would constitute a quorum
for the transaction of business at the Annual Meeting. A plurality of votes
cast is required for the election of directors.
In the election of directors, each Proxy will be voted for each of the
nominees listed below unless the Proxy withholds a vote for one or more of
the nominees. Each person elected as a director shall serve for a term of
one year or until his successor is duly elected and qualified. All of the
nominees are members of the present Board of Directors. All directors,
except Dr. Holbrook, were elected to the Board of Directors by the
shareholders. Dr. Holbrook was appointed to the Board by the Board of
Directors in February 2007. If any of the nominees should be unable to serve
as a director by reason of death, incapacity or other unexpected occurrence,
the Proxies solicited by the Board of Directors shall be voted by the proxy
representatives for such substitute nominee as is selected by the Nominations
and Governance Committee, or, in the absence of such selection, for such
fewer number of directors as results from such death, incapacity or other
unexpected occurrence.
The following table provides certain information with respect to the
nominees for director.
Current
Position(s) Principle Occupation(s) Director
Name Age with Company During Past Five Years Since
------------------- --- --------------- ------------------------ --------
Thomas E. Oland 66 Chairman of the Chairman of the Board, 1985
Board, Chief Chief Executive Officer,
Executive President and Treasurer
Officer, of the Company since
President, 1985 and President of
Treasurer and Research and Diagnostic
Director Systems, Inc. since 1982.
Roger C. Lucas, Ph.D. 64 Vice Chairman Vice Chairman and 1985
and Director Senior Scientific Advisor
to the Company''s Board
and a private investor
since 1995. Chief
Scientific Officer,
Executive Vice President
and Secretary of the
Company from 1985 to 1995.
Howard V. O''Connell 77 Director Private investor since 1985
1990. Chairman, President
and Treasurer of John G.
Kinnard and Company,
Incorporated, a securities
broker-dealer, from 1969
to 1990.
G. Arthur Herbert 81 Director Principal of CEO Advisors, 1989
a management and financial
consulting firm, since
1989.
4
Current
Position(s) Principle Occupation(s) Director
Name Age with Company During Past Five Years Since
------------------- --- --------------- ------------------------ --------
Randolph C. Steer, 57 Director Consultant to the 1990
M.D., Ph.D. pharmaceutical and
biotechnology industries
since 1989; Director of
BioCryst Pharmaceuticals,
Inc.
Robert V. 51 Director Chief Executive Officer 2003
Baumgartner,C.P.A. of Center for Diagnostic
Imaging, Inc., an operator
of diagnostic imaging
centers, since 2001.
Charles A. Dinarello, 64 Director Professor of Medicine at 2005
M.D. the University of Colorado
School of Medicine in
Denver, Colorado since 1996.
Karen A. Holbrook, 64 Director Former President of The 2007
Ph.D. Ohio State University
from 2002 to 2007.
CORPORATE GOVERNANCE
Board Independence
The Board has determined that all of the Company's non-employee directors
(Messrs. O'Connell, Herbert, and Baumgartner and Drs. Lucas, Steer, Dinarello
and Holbrook) are "independent" as such term is defined in applicable law and
regulations of the Securities and Exchange Commission and Nasdaq. Mr. Oland
is not independent based on his service as our Chief Executive Officer and
President. In making its independence determinations, the Board reviewed
transactions and relationships between the director, or any member of his or
her immediate family, and the Company and its subsidiaries based on
information provided by the director, Company records and publicly available
information.
During fiscal 2007, Mr. Oland's daughter, Paige Jensen, Ph.D., J.D.,
served as the Company's Associate General Counsel. Dr. Jensen's base salary
for fiscal 2007 was $128,000. The Company also provided medical and other
benefits generally available to all Company employees. Dr. Jensen is not an
executive officer of the Company.
Directors' Meetings and Committees
The Board has scheduled meetings each quarter prior to the Company's
quarterly earnings release and may from time-to-time hold additional
meetings. During fiscal 2007, the Board held four meetings. Each director
attended 75% or more of the total number of meetings of the Board and of
Committees of which he or she was a member, with the exception of Dr.
Holbrook. Dr. Holbrook was appointed to the Board in February 2007 and
attended her first meeting in July 2007. Executive sessions of independent
directors, meetings of outside directors without any member of management
present, are held in conjunction with regularly scheduled meetings of the
Board. It is the policy of the Company that all directors should attend the
Company's annual meetings of shareholders. All then incumbent members did
attend the annual meeting in 2006.
The Company's Board of Directors has three standing Committees, the Audit
Committee, the Executive Compensation Committee and the Nominations and
Governance Committee. All members of all Committees are "independent" as
such term is defined in applicable law and regulations of the Securities and
Exchange Commission and Nasdaq. In addition all members of the Audit
Committee meet the additional independence standards applicable to its
members.
The Audit Committee (whose members are Messrs. Baumgartner, Herbert and
O'Connell and Dr. Steer) operates under a written charter established by the
Company's Board of Directors. A copy of the charter is available for review
at the Company's website, www.techne-corp.com. The Audit Committee is
responsible for the appointment and supervision of the Company's independent
registered public accounting firm and for reviewing the Company's
5
internal audit procedures, the quarterly and annual financial statements of
the Company and the results of the annual audit. The Audit Committee also
pre-approves all related party transactions, establishes and oversees the
implementation of the Company's cash investment policy and monitors the
Company's financial fraud hotline. The Board of Directors has determined
that for fiscal 2007 all Audit Committee members are "audit committee
financial experts" as such term is defined in Section 407 of the Sarbanes-
Oxley Act. The Audit Committee met seven times during fiscal 2007. The
Committee's report is included in this Proxy Statement.
The Executive Compensation Committee (whose members and Messrs. Herbert,
O'Connell and Baumgartner and Dr. Steer) determines compensation for
executive officers of the Company. The Committee operates under a written
charter. A copy of the charter is available for review at the Company's
website, www.techne-corp.com. The Executive Compensation Committee
establishes both over-all policies for executive compensation and reviews the
performance of the executive officers. The Committee works with Mr. Oland,
the Chief Executive Officer of the Company, to establish performance goals
for the other executive officers and, acting independently, establishes the
performance goals for Mr. Oland. The Committee determines the annual base
compensation of all officers and awards bonuses, both cash and equity, to all
officers based on performance. The Committee met twice during fiscal 2007.
The Committee's report is included in this Proxy Statement.
The Nominations and Governance Committee is composed of all "independent"
directors, currently all directors except Mr. Oland. The Committee operates
under a written charter. A copy of the charter is available for review at
the Company's website, www.techne-corp.com. The Committee did not formally
meet in fiscal 2007. Dr. Holbrook was appointed to the Board in February
2007 at a meeting of the full Board, which included all Nominations and
Governance Committee members. The functions of the Committee are to recruit
well-qualified candidates for the Board, select persons to be proposed in the
Company's proxy statement for election as directors at annual meetings of
shareholders, and establish governance standards and procedures to support
and enhance the performance and accountability of management and the Board.
The Nominations and Governance Committee assesses the appropriate size of the
Board of Directors, and whether any vacancies on the Board are expected due
to retirement or otherwise. In the event that vacancies are anticipated, or
otherwise arise, the Nominations and Governance Committee considers various
potential candidates for director. Candidates may come to the attention of
the Committee through current members of the Board of Directors, professional
search firms, stockholders or other persons and may be considered at any
point during the year. The Nominations and Governance Committee utilizes a
variety of methods for identifying and evaluating nominees for director.
Candidates for the Board are considered and selected on the basis of
outstanding achievement in their professional careers, experience, wisdom,
personal and professional integrity, their ability to make independent,
analytical inquiries, and their understanding of the business environment.
Candidates must have the experience and skills necessary to understand the
principal operational and functional objectives and plans of the Company, the
results of operations and financial condition of the Company, and the
position of the Company in its industry. Candidates must have a perspective
that will enhance the Board's strategic discussions and be capable of and
committed to devoting adequate time to Board duties. The Committee will
consider all nominees for director recommended by shareholders of the
Company. Recommendations may be sent to the Committee at the Company's
address: 614 McKinley Place N.E., Minneapolis, MN 55413.
The Nominations and Governance Committee has determined to propose to
shareholders at their 2007 annual meeting the re-election of the incumbent
directors of the Company.
6
Compensation of Directors
Directors who are not employees of the Company were compensated for the
year ended June 30, 2007 as follows:
Fees Earned
or Paid in Option
Name Cash (1) Awards (2) Total
-------------------------- ----------- ---------- ---------
Roger C. Lucas, Ph.D. $25,000 $162,300 $187,300
Howard V. O'Connell 28,000 162,300 190,300
G. Arthur Herbert 27,000 162,300 189,300
Randolph C. Steer, M.D., Ph.D. 28,000 162,300 190,300
Robert V. Baumgartner 28,000 162,300 190,300
Charles A. Dinarello, M.D. 25,000 225,800 250,800
Karen A. Holbrook, Ph.D. 9,640 232,900 242,540
-----------------
(1) Amounts consist of the annual retainer and meeting fees for services as
members of the Company's Board of Directors. For further information
concerning such fees, see the below.
(2) Amounts represent compensation expense recognized in fiscal 2007
related to stock option awards that vested in fiscal 2007 calculated in
accordance with Statement of Financial Accounting Standard No. 123
(revised 2004) (SFAS No. 123R). Pursuant to the Company's 1998
Nonqualified Stock Option Plan, each of the above directors, with the
exception of Dr. Holbrook, received an automatic option grant for 5,000
shares of Company Common Stock on the date of the 2006 Annual
Shareholder Meeting. Dr. Holbrook received options to purchase 10,000
shares of the Company's Common Stock upon her appointment to the Board
in fiscal 2007. As of June 30, 2007, the following non-employee
directors held options to purchase the following number of shares of
the Company's Common Stock: Dr. Lucas - 20,000; Mr. O'Connell -
55,000; Mr. Herbert - 40,000; Dr. Steer - 10,000; Mr. Baumgartner -
20,000; Dr. Dinarello - 15,000; Dr. Holbrook - 10,000.
Fees for non-employee directors include $25,000 per year for service on
the Board and Committees of the Board. Directors are paid an additional
$1,000 for each meeting of the Board other than its regularly scheduled
quarterly meetings and for each meeting of a committee on which the director
serves other than committee meetings held in conjunction with a meeting of
the full Board. If appointed to the Board or retired during the fiscal
year, the non-employee director receives a prorated annual fee.
Under the Company's 1998 Nonqualified Stock Option Plan, non-employee
directors automatically receive options to purchase 5,000 shares of Company
Common Stock upon each re-election to the Board. The options have a term of
10 years and vest immediately. Upon initial election or appointment to the
Board, new non-employee directors receive options, which vest immediately,
for 5,000 shares of the Company's Common Stock prorated based on the time
remaining until the next annual meeting of shareholders. Dr. Dinarello and
Dr. Holbrook, at the Compensation Committee's discretion, each received
options to purchase 10,000 shares of the Company's Common Stock upon their
appointment to the Board in fiscal 2006 and 2007, respectively. The
additional shares were in recognition of their strong scientific backgrounds.
Half of the options vested immediately upon their appointment to the Board
and the remaining 5,000 options vested on the first anniversary date of their
appointment, respectively. All non-employee directors elected at the
Company's 2007 Annual Meeting of Shareholders will receive options to
purchase 5,000 shares of Common Stock with an exercise price equal to the
fair market value on the date of the 2007 Annual Meeting.
7
Shareholder Communications with Directors
Shareholders may communicate directly with the Board of Directors. All
communications should be directed to the Company at 614 McKinley Place N.E.,
Minneapolis, MN 55413, and should prominently indicate on the outside of the
envelope that it is intended for the Board of Directors, for non-management
directors, or for a particular director. Unless other distribution is
specified, the communication will be forwarded to the entire Board. The
communication will not be opened before being forwarded to the intended
recipient, but it will go through normal security procedures.
Code of Ethics and Business Conduct and Financial Fraud Hotline
The Company has adopted a Code of Ethics and Business Conduct, which is
applicable to all directors, officers and employees of the Company. A copy
is available for review at the Company's website, www.techne-corp.com. The
Company sponsors a financial fraud hotline that is available to all
employees, is operated on a confidential basis by a third party, and is
supervised with full powers of investigation by the Audit Committee of the
Board of Directors.
Compensation Committee Interlocks and Insider Participation
The Executive Compensation Committee of the Board of Directors of the
Company is composed of directors G. Arthur Herbert, Howard V. O'Connell, Dr.
Randolph C. Steer, and Robert V. Baumgartner. None of the members of the
Executive Compensation Committee was an officer or employee of the Company
during fiscal 2007, and no executive officer of the Company during fiscal
2007, served on the Compensation Committee or the board of any company that
employed any member of the Company's Executive Compensation Committee or
Board of Directors.
EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS
Overview
The Executive Compensation Committee of the Board of Directors is
responsible for establishing the compensation programs of the Company's Chief
Executive Officer and other executive officers. The Committee participates
in the consideration and employment of prospective executive officers of the
Company. The Committee also administers the Company's stock option plans and
has the authority to grant options to purchase shares of the Company's Common
Stock, and to determine all terms and conditions of such options.
Compensation Objectives
The Executive Compensation Committee has designed the compensation
packages of the Company's executive officers to achieve the following
objectives:
- to recruit and retain highly qualified executive officers by offering
overall compensation that is competitive with that offered for
comparable positions in the local market;
- to motivate executives to achieve important business and individual
performance objectives and to reward them when such goals are met;
and
- to align the interest of executive officers with the long-term
interest of stockholders through participation in the Company's stock
option plans.
The Executive Compensation Committee is responsible for assuring that
compensation for the executive officers is consistent with our compensation
philosophy. The Executive Compensation Committee reviews the compensation
philosophy and trends in the local market to ensure that the executive
compensation program is competitive and attracts and retains talented
management, motivates the executives to achieve short term and long term
corporate objectives, and aligns the motivation and interests of the
executives with the interests of the Company's shareholders. The Executive
Compensation Committee also administers the Company's equity-based
compensation and performance-based bonus plan for the executive officers.
The Executive Compensation Committee reviews and approves each executive's
base pay, bonus, and equity incentives annually.
8
The Committee views the various components of its compensation program as
related, but distinct. Although the Executive Compensation Committee does
review and consider total compensation for each executive officer as a whole,
it does not believe that significant compensation derived from one component
should necessarily negate or reduce compensation from other components. The
Committee determines the appropriate level for each compensation component
based on overall compensation objectives. The Executive Compensation
Committee has not adopted any policies or guidelines for allocating
compensation among the different elements of the compensation program.
Role of the Chief Executive Officer in Compensation Decisions
During meetings with the Executive Compensation Committee held each year,
the Company's President and Chief Executive Officer presents to the Committee
recommendations regarding compensation for the executive officers (other than
himself). The Committee discusses the recommendations and accepts or adjusts
them, in whole or in part. The executive officers are not present during the
Committee's final discussion and determination of their compensation.
Elements of the Compensation Program
The Company's executive compensation program is comprised of base
salaries, annual performance bonuses comprised of both a cash and stock
option component, and various benefits, including the Company's profit
sharing and savings plan and stock bonus plan in which all qualified
employees of the Company participate. In addition, the Executive
Compensation Committee from time to time may award special cash bonuses or
stock options related to non-recurring, extraordinary performance. The
Executive Compensation Committee typically also awards stock options upon
retention of a new executive officer.
Base salary. The Executive Compensation Committee has followed a policy
of paying annual base salaries which are on the moderate side of being
competitive in its industry. A competitive base salary is provided to each
executive officer recognizing the skills and experience each individual
brings to the Company, the length of time with the Company and the
performance contributions each makes. Salaries are reviewed on an annual
basis and are made in connection with annual performance reviews. In July
2007, the Executive Compensation Committee approved the base salary for the
executive officers for fiscal 2008 as follows: Mr. Melsen - $260,000 and Mr.
Veronneau - $160,000. Mr. Oland again waived an increase, leaving his base
salary at $254,100 for fiscal 2008.
Performance-based bonus plan. Under the Company's Executive Officers
Incentive Bonus Plan, each executive officer may earn a potential bonus of up
to 40% of his or her annual salary. The Plan provides that 70% of the
eligible bonus is based upon achieving the Company's budgeted revenues and
earnings for the fiscal year. Bonuses are awarded on a prorated basis if
between 85% and 100% of budgeted revenues and earnings are achieved. The
remaining 30% of the eligible bonus is based upon achievement of personal
goals set for each officer. The personal goals are established annually as
recommended by the Chief Executive Officer of the Company and approved by the
Executive Compensation Committee, taking into account each executive's
responsibilities at the Company. The annual bonus is paid 50% in cash and
50% in stock options. The officer may elect to exchange his or her cash
portion of the bonus for additional stock options and if so, such officer is
entitled to 1.7 times the cash value of the cash bonus in options. The number
of options each executive officer is entitled to are calculated based on the
closing share price at the date of grant. Options granted under the Plan
vest immediately and the exercise price of the options is the closing price
of the Company's stock on the date of grant. The stock option grant date is
the date of the Committee's first meeting subsequent to fiscal year-end,
which coincides with the Company's scheduled quarterly Board meeting. For
fiscal 2007, the Executive Compensation Committee has determined that the
Company's revenues and earnings were an average of 99.79% of budget.
Therefore each executive officer earned 99.79% of the 70% of his or her
overall bonus. The Compensation Committee also determined that Mr. Melsen,
Dr. Tsang and Mr. Veronneau earned 70%, 100% and 79% of the remaining 30%
bonus respectively.
Other compensation. The Company provided medical and insurance benefits to
its executive officers, which are the same as those generally available to
all Company employees. The Company has a Profit Sharing and Savings Plan and
a Stock Bonus Plan in which all qualified employees, including executive
officers, participate subject to statutory limitations on contributions for
highly compensated individuals. In fiscal 2007, the Company contributed to
the plan an amount equal to approximately 9.7% of gross wages. One half of
the contribution to the plan is in the form of Company common stock. The
Company does not provide any other significant perquisites or executive
benefits to its Named Executive Officers.
9
Accounting and Tax Treatment
The Company accounts for equity-based compensation paid to employees under
SFAS No. 123R promulgated by the Financial Accounting Standards Board, which
requires the Company to estimate and record an expense over the service
period of an option award. Thus, the Company may record an expense in one
year for awards granted in earlier years. The Company adopted SFAS No. 123R
on July 1, 2005 and, therefore, fiscal 2006 was the first year in which
expense was recorded related to employee stock options. Accounting rules
also requires the recording of cash compensation as an expense at the time
the obligation is accrued.
Section 162(m) of the Internal Revenue Code of 1986 generally disallows a
tax deduction to public companies for compensation in excess of $1 million
paid to the company's chief executive officer and four other most highly-paid
executive officers. Qualifying performance-based compensation will not be
subject to the deduction limitation if certain requirements are met. Because
the potential amount of base salary and non-equity-based incentive
compensation that the executive officers can earn is less than $1 million,
Section 162(m) has not been material to the Executive Compensation Committee
decisions.
Compensation Committee Report
The Compensation Committee of the Board of Directors is responsible for
reviewing and approving total compensation programs and levels for the
Company's Chief Executive Officer and its executive officer group, which
includes the Named Executive Officers shown in the Summary Compensation Table
above. The Committee's responsibilities are specified in the Compensation
Committee Charter.
The Committee reviewed and discussed the Executive Compensation Discussion
and Analysis above with management. Based on the Committee's review and its
discussions with management, the Committee recommends to the Board of
Directors that the Executive Compensation Discussion and Analysis be included
in the Company's Proxy Statement for the 2007 Annual Meeting.
G. Arthur Herbert
Howard V. O'Connell
Randolph C. Steer, M.D., Ph.D.
Robert V. Baumgartner
Members of the Compensation Committee
10
Summary Compensation Table
The Named Executive Officers received the following compensation for the
fiscal year ended June 30, 2007:
Non-Equity
Incentive All Other
Name and Option Plan Com- Compen-
Principal Position Salary(1) Awards(2) pensation(3) sation(4) Total
------------------ --------- --------- ------------ ---------- --------
Thomas E. Oland, $254,100 $ 0(5) $ 0(5) $ 23,804 $277,804
CEO and President
Gregory J. Melsen, $245,000 $123,207(6) $ 44,541 $ 23,804 $436,552
Vice President -
Finance and CFO
Monica Tsang, Ph.D., $263,000 $ 17,520 $ 52,547 $ 23,804 $356,871
Vice President -
Research
Marcel Veronneau, $155,000 $ 10,728 $ 29,016 $ 19,782 $214,526
Vice President -
Hematology Operations
---------------------
(1) Includes amounts deferred under the Company's Profit Sharing and Savings
Plan, a qualified deferred compensation plan under section 401(k) of the
Internal Revenue Code.
(2) Amounts shown above represent amounts recognized for financial statement
reporting in fiscal 2007 as determined pursuant to provisions of
Statement of Financial Accounting Standards No. 123 (revised 2004),
"Share-Based Payments" and thus include amounts from awards granted in
and prior to fiscal 2007. Assumptions used in the calculation of these
amounts are described in Note I to the Company's audited financial
statements for the fiscal year ended June 30, 2007, included in the
Company's Annual Report on Form 10-K that was filed with the Securities
and Exchange Commission on August 29, 2007.
(3) Represents cash bonuses earned under the Company's Executive Officer's
Incentive Bonus Plan in fiscal 2007 that were determined and paid in
fiscal 2008.
(4) For each individual the amount reflects Company contributions for fiscal
2007 made in fiscal 2008 to the Profit Sharing and Savings Plan (as to
one-half) and the Stock Bonus Plan (as to one-half), the latter in the
form of shares of the Company's Common Stock.
(5) Mr. Oland waived his cash and stock option bonus under the Company's
Executive Officer's Incentive Bonus Plan.
(6) Represents $19,147 related option granted on July 27, 2006 and $104,060
related to options granted at initial date of employment in December
2004.
11
Grants of Plan-Based Awards
The following table sets forth certain information with respect to grants
of plan-based awards for the Named Executive Officers during fiscal 2007.
All Other Exercise
Option or Base Grant
Estimated Payouts Under Estimated Payouts Under Awards: Price of Date
Non-Equity Incentive Equity Incentive Number of Options Fair
Plan Awards(1) Plan Awards(#)(2) Shares Awards Value of
Grant --------------------------- --------------------------- Underlying (per Option
Name Date Threshold Target(3) Maximum Threshold Target(4) Maximum Options share) Awards
------------------ ------- --------- --------- ------- --------- --------- ------- ---------- -------- --------
Thomas E. Oland $0 $50,820 $50,820 -- -- -- -- -- --
7/27/06 -- -- -- 0 1,028 1,028 -- -- --
Gregory J. Melsen $0 $46,000 $46,000 -- -- -- -- -- --
7/27/06 -- -- -- 0 930 930 -- $49.43 $15,760
7/27/06 -- -- -- -- -- -- 179(5) $49.43 $ 3,387
Monica Tsang $0 $50,280 $50,280 -- -- -- -- -- --
7/27/06 -- -- -- 0 1,017 1,017 -- $49.43 $17,520
Marcel Veronneau $0 $30,000 $30,000 -- -- -- -- -- --
7/27/06 -- -- -- 0 606 606 -- $49.43 $10,728
---------
(1) Represents potential cash bonuses earned under the Company's Executive
Officer's Incentive Bonus Plan for fiscal 2006 which were paid in fiscal
2007. The actual amounts earned and paid under such Plan were: Mr.
Oland - $0 (waived): Mr. Melsen - $41,170: Dr. Tsang - $45,755: Mr.
Veronneau - $28,020. Mr. Melsen was awarded an additional
discretionary bonus for fiscal 2006 of $8,830.
(2) Represents potential stock options earned under the Company's Executive
Officer's Incentive Bonus Plan for fiscal 2006 which were granted in
fiscal 2007. The grant date fair value calculated in accordance with
SFAS No. 123R was $18.92 per share. The actual number of options
granted was: Mr. Oland - 0 (waived); Mr Melsen - 833; Dr. Tsang - 926;
Mr. Veronneau - 567.
(3) It is assumed that annual budget revenues and earnings will be met and
personal objectives achieved. Therefore, targeted and maximum potential
compensation are the same.
(4) Targeted share grants are calculated based on closing share price at date
of grant. See (3) above.
(5) Mr. Melsen received an additional discretionary stock option award for
fiscal 2006 performance under the Company's 1998 Nonqualified Stock
Option Plan.
12
Outstanding Equity Awards at Fiscal Year-End
The following table shows all outstanding stock options held by the Named
Executive Officers on June 30, 2007. As of June 30, 2007, none of the Named
Executive Officers held unearned equity incentive plan awards. The Company
has not granted any stock awards.
Number of Number of
Securities Securities
Underlying Underlying
Unexercised Unexercised Option Option
Options Options Exercise Expiration
Name Exercisable Unexercisable Price Date
---------------------- ----------- ------------- -------- ----------
Thomas E. Oland 0 0
Gregory J. Melsen 426 0 $51.60 8/17/2012
1,012 0 49.43 7/26/2013
16,000 9,000 (1) 39.53 12/16/2014
Monica Tsang 1,088 0 33.85 8/13/2010
8,334 0 37.01 11/30/2010
1,126 0 40.47 7/08/2011
844 0 51.60 8/17/2012
926 0 49.43 7/26/2013
Marcel Veronneau 748 0 32.50 6/30/2008
785 0 28.22 6/30/2009
670 0 33.85 8/13/2010
15,000 0 37.01 11/30/2010
505 0 40.47 7/08/2011
475 0 51.60 8/17/2012
567 0 49.43 7/26/2013
-----------------
(1) Options vest on December 17, 2007.
Option Exercises
There were no stock option exercises by the Named Executive Officers
during fiscal 2007.
Employment Contracts and Change in Control Arrangements
The Company had formal employment agreements effective through June 30,
2007 with Dr. Tsang and Mr. Veronneau. Dr. Tsang retired from the Company on
June 30, 2007. Subsequent to June 30, 2007, Mr. Veronneau's employment
agreement was extended through June 30, 2010. Mr. Melsen's employment
agreement is effective through June 30, 2008 and Mr. Oland serves pursuant to
an oral understanding. The agreements provide for base salaries subject to
annual review, bonuses as described above, benefits as provided to all
employees and severance compensation under certain circumstances. The
severance payment is triggered if an executive's employment with the Company
is terminated in connection with a merger, sale, or change in control of the
Company. A "change in control" means the acquisition in one or more
transactions by a single party, or any number of parties acting in concert,
of a majority of the outstanding shares of voting stock of the Company.
13
Dr. Tsang's and Mr. Veronneau's severance compensation is one month of
salary for each year of employment with or service to the Company. Mr.
Melsen's severance compensation is equal to the base salary and benefits
which would otherwise have been paid under the terms of the employment
agreement or the base salary and benefits for twelve months from date of
termination, whichever period is longer.
For each Named Executive Officer, the estimated amount of potential
payments at June 29, 2007 (the last business day of fiscal 2007), assuming
the executive's employment terminates in connection with a merger, sale or
change in control of the Company is as follows:
Cash
Name Severance Other
---------------------- --------- --------
Thomas E. Oland $ 0 $ 0
Gregory J. Melsen 245,000 12,000(1)
Monica Tsang (2) 482,000 0
Marcel Veronneau (3) 181,000 0
---------------------
(1) Consists of medical, dental, disability and life insurance premiums.
(2) Based on 22 years of service with the Company. Dr. Tsang retired
effective June 30, 2007.
(3) Based on 14 years of service with the Company.
14
AUDIT MATTERS
Audit Committee Report
The Audit Committee assists the Board of Directors with fulfilling its
oversight responsibility regarding the quality and integrity of the
accounting, auditing and financial reporting practices of the Company. In
discharging its oversight responsibilities regarding the audit process, the
Audit Committee:
(1) reviewed and discussed the audited financial statements with
management;
(2) discussed with the Company's independent registered public accounting
firm the material required to be discussed by Statement on Auditing
Standards No. 61; and
(3) reviewed the written disclosures and the letter from the Company's
independent registered public accounting firm required by the
Independence Standards Board's Standard No.1, and discussed with the
independent registered public accounting firm any relationships that
may impact their objectivity and independence.
Based upon the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited consolidated
financial statements be included in the Company's Annual Report on Form 10-K
for the fiscal year ended June 30, 2007 as filed with the Securities and
Exchange Commission.
Robert V. Baumgartner, C.P.A.
G. Arthur Herbert
Howard V. O'Connell
Randolph C. Steer, M.D., Ph.D.
Members of the Audit Committee
15
Independent Registered Public Accountants
KPMG LLP acted as the Company's independent registered public accounting
firm for fiscal 2007 and 2006. Representatives of KPMG LLP are expected to
be present at the shareholders' meeting, will have the opportunity to make
any desired comments, and will be available to respond to appropriate
questions. The appointment of an independent registered public accounting
firm for the fiscal 2008 has not yet been made, but will be made on or near
the date of the 2007 annual meeting of shareholders.
Audit Fees
The following fees were paid or payable to KPMG LLP for the fiscal years
ended June 30:
2007 2006
-------- --------
Audit Fees $473,000 $410,000
Audit-Related Fees 0 17,000
Tax Fees 66,400 74,000
All Other Fees 0 0
"Audit Fees" are for professional services rendered and expenses incurred
for the audit of the Company's annual financial statements and review of
financial statements included in our Forms 10-K and 10-Q or services that are
normally provided by the accountant in connection with statutory and
regulatory filings or engagements. Audit fees also included fees incurred for
the audit of the effectiveness of internal control over financial reporting.
Audit fees in fiscal 2007 include fees of $37,000 for services incurred in
connection with an analysis of the Company's stock option practices.
"Audit-Related Fees" in fiscal 2006 were primarily for services rendered
and expenses incurred for the analysis of acquired companies.
"Tax Fees" included fees for services provided and expenses incurred in
connection with preparation of the Company's tax returns in the United States
and the United Kingdom. Tax fees in fiscal 2006 include fees of $16,000 for
services and expenses incurred in connection with analysis of transfer
pricing and repatriation of foreign earnings.
Pre-Approval Policies and Procedures
Pursuant to its written charter, the Audit Committee of the Company's
Board of Directors is required to pre-approve the audit and non-audit
services performed by the Company's independent registered public accounting
firm in order to assure that the provision of such services does not impair
the firm's independence. In 2005, the Audit Committee approved a resolution
authorizing Company officers to engage KPMG in permitted non-audit services
that involve less than $25,000 in fees in the aggregate. Such services are
approved by the Audit Committee Chairman prior to commencing the services and
approved quarterly by the Audit Committee. Tax services are reviewed and
approved by the Audit Committee prior to the commencement of such services.
All of the services rendered by KPMG were pre-approved by the Audit
Committee. The Audit Committee has considered whether provision of the above
non-audit services is compatible with maintaining KPMG's independence and has
determined that such services have not adversely affected KPMG's
independence.
16
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than 10
percent of the Company's Common Stock, to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company.
Officers, directors, and greater than 10 percent shareholders ("Insiders")
are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file.
To the Company's knowledge, based on a review of the copies of such
reports furnished to the Company, during the fiscal year ended June 30, 2007,
all Section 16(a) filing requirements applicable to Insiders were met.
SHAREHOLDER PROPOSALS
Any appropriate proposal submitted by a shareholder of the Company and
intended to be presented at the 2008 Annual Meeting must be received by the
Company at its offices by May 22, 2008 to be eligible for inclusion in the
Company's Proxy Statement and related Proxy for the 2008 Annual Meeting. For
a discussion of policies and procedures related to shareholder
recommendations of candidates for director, please see the section on the
Nominations and Governance Committee above under Committees and Meetings of
the Board.
Also, if a shareholder proposal intended to be presented at the 2008
Annual Meeting but not included in the Company's Proxy Statement and Proxy is
received by the Company after August 6, 2008, then management named in the
Company's Proxy for the 2008 Annual Meeting will have discretionary authority
to vote the shares represented by such proxies on the shareholder proposal,
if presented at the meeting, without including information about the proposal
in the Company's proxy materials.
OTHER BUSINESS
The Board of Directors knows of no other matters to be presented at the
meeting. If any other matter does properly come before the meeting, the
appointees named in the Proxies will vote the Proxies in accordance with
their best judgment.
ANNUAL REPORT
A copy of the Company's Annual Report to Shareholders for the fiscal year
ended June 30, 2007, including consolidated financial statements, accompanies
this Notice of Annual Meeting and Proxy Statement. No portion of the Annual
Report is incorporated herein or is to be considered proxy-soliciting
material.
THE COMPANY WILL FURNISH WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON
FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 30, 2007, TO ANY SHAREHOLDER OF THE
COMPANY UPON WRITTEN REQUEST. REQUESTS SHOULD BE SENT TO PRESIDENT, TECHNE
CORPORATION, 614 MCKINLEY PLACE N.E., MINNEAPOLIS, MINNESOTA 55413.
Dated: September 25, 2007
Minneapolis, Minnesota
TECHNE CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints THOMAS E. OLAND and KATHLEEN BACKES, or
either of them acting alone, with full power of substitution, as proxies to
represent and vote, as designated below, all shares of Common Stock of Techne
Corporation registered in the name of the undersigned, at the Annual Meeting
of the Shareholders to be held on Thursday, October 25, 2007 at 3:30 p.m.
Central Daylight Time, at the offices of the Company, 614 McKinley Place
N.E., Minneapolis, Minnesota, and at all adjournments of such meeting. The
undersigned hereby revokes all proxies previously granted with respect to
such meeting.
The Nominations and Governance Committee of the Board of Directors
recommends that you vote "FOR" the following proposals:
(1) To set the number of Directors at eight:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(2) To elect Directors: [ ] FOR ALL [ ] WITHHOLD ALL [ ] FOR ALL EXCEPT
Nominees:
1) Thomas E. Oland
2) Roger C. Lucas, Ph.D.
3) Howard V. O'Connell
4) G. Arthur Herbert
5) Randolph C. Steer, M.D., Ph.D.
6) Robert V. Baumgartner
7) Charles A. Dinarello, M.D.
8) Karen A. Holbrook, Ph.D.
(To withhold authority to vote for any individual nominee(s), mark "For
All Except" and write the name(s) of the nominee on the line below.)
______________________________________________________________________
(3) Other matters: In their discretion, the appointed proxies are
authorized to vote upon such other business as may properly come before
the Meeting or any adjournment.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN FOR A PARTICULAR PROPOSAL, WILL BE VOTED FOR SUCH
PROPOSAL.
Date_________________________, 2007
_________________________________________
_________________________________________
PLEASE DATE AND SIGN ABOVE exactly as
name appears at the left, indicating,
where appropriate official position or
representative capacity. If stock is
held in joint tenancy, each joint owner
should sign.