SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934 (Amendment
No. )
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Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy
Statement
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Definitive Proxy
Statement
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Definitive Additional
Materials
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Soliciting Material
Pursuant to §240.14a-11(c) or §240.14a-12
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Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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National Dentex Corporation
(Name of Registrant as Specified In Its Charter)
National Dentex Corporation
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
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Fee computed on table
below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each
class of securities to which transaction applies:
2) Aggregate
number of securities to which transaction applies:
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3)
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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):
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4) Proposed
maximum aggregate value of transaction:
5) Total fee paid:
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Fee paid previously with preliminary materials.
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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.
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1) Amount
Previously Paid:
2) Form, Schedule
or Registration Statement No.:
3) Filing Party:
4) Date Filed:
NATIONAL
DENTEX CORPORATION
NOTICE OF SPECIAL MEETING IN
LIEU OF
ANNUAL MEETING OF STOCKHOLDERS
National Dentex Corporation will be holding a Special Meeting in
Lieu of the 2009 Annual Meeting of Stockholders as follows:
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Date:
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Tuesday, May 12, 2009
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Time:
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10:00 a.m.
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Place:
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Posternak Blankstein & Lund LLP
Prudential Tower
800 Boylston Street, 33rd Floor
Boston, MA 02199-8004
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At the meeting, we will be asking our stockholders to:
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elect all six members of the Board of Directors;
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vote to approve an amendment to our 1992 Employees Stock
Purchase Plan (the
ESPP
) to increase the
number of shares of common stock reserved for purchase under the
ESPP by 250,000 shares (representing approximately 4.4% of
the outstanding shares);
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ratify the selection of PricewaterhouseCoopers LLP as our
independent auditors for 2009; and
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consider any and all other business, if properly raised.
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You may vote at the meeting if you owned National Dentex
Corporation common stock at the close of business on
March 23, 2009, the date that our Board of Directors has
set as the record date for the meeting. Enclosed with the proxy
statement for the meeting, you will find a copy of our Annual
Report on
Form 10-K
for 2008.
Your vote at the meeting is very important to us regardless
of the number of shares you own. Please vote your shares,
whether or not you plan to attend the meeting, by completing the
enclosed proxy card and returning it to us in the enclosed
envelope.
By Order of the Board of Directors,
Donald H. Siegel P.C.
Corporate Secretary
We are mailing this notice, proxy statement, and form of
proxy beginning on or about April 9, 2009
CONTENTS
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NATIONAL
DENTEX CORPORATION
2 Vision Drive
Natick, Massachusetts 01760
PROXY
STATEMENT
FOR
SPECIAL MEETING IN LIEU OF 2009 ANNUAL MEETING OF
STOCKHOLDERS
TO
BE HELD MAY 12, 2009
GENERAL
INFORMATION
Our Board of Directors (the
Board
) is
furnishing you this proxy statement to solicit proxies on its
behalf to be voted at the Special Meeting in lieu of the 2009
Annual Meeting of Stockholders of National Dentex Corporation
(the
Company
). The meeting will be held at
the offices of Posternak Blankstein & Lund LLP, at the
Prudential Tower, 33rd Floor, 800 Boylston Street, Boston MA,
02199, on May 12, 2009, at 10:00 a.m., local time. The
proxies also may be voted at any adjournments or postponements
of the meeting.
The mailing address of our principal executive offices is
National Dentex Corporation, 2 Vision Drive, Natick, MA 01760.
We are first furnishing the proxy materials to stockholders on
or about April 9, 2009.
All properly executed written proxies that are delivered
pursuant to this solicitation will be voted at the meeting in
accordance with the directions given in the proxy, unless the
proxy is revoked prior to completion of voting at the meeting.
Only owners of record of shares of common stock of the Company
at the close of business on March 23, 2009, the record
date, are entitled to notice of and to vote at the meeting, or
at any adjournments or postponements of the meeting. Each owner
of record on the record date is entitled to one vote for each
share of common stock held. On the record date, there were
5,657,904 shares of common stock issued and outstanding.
QUESTIONS
AND ANSWERS ABOUT THE MEETING AND VOTING
What is this document?
This is the
Notice of our Special Meeting in Lieu of the 2009 Annual Meeting
of Stockholders, combined with our proxy statement, which
provides important information for your use in voting your
shares of our common stock at the meeting.
Who can vote?
You can vote your shares
of common stock if our records show that you owned the shares as
of the close of business on March 23, 2009, the record date
for the special meeting. A total of 5,657,904 shares of
common stock are eligible to vote at the meeting. You are
permitted one vote for each share of common stock you owned on
March 23, 2009 including (1) shares held in your name
as a
stockholder of record
, and (2) shares held in
street name
for you as the
beneficial
owner
through a broker, trustee, or other nominee, such as a
bank. The enclosed proxy card shows the number of shares you can
vote.
How do I vote by proxy?
Follow the
instructions on the enclosed proxy card to vote on each proposal
to be considered at the meeting. Sign and date the proxy card
and mail it back in the enclosed envelope. The proxy holders
named on the proxy card will vote your shares as you instruct.
If you sign and return the proxy card but do not vote on a
proposal, the proxy holders will vote for you on that proposal
in accordance with the Board of Directors recommendations
below.
How does the Board of Directors recommend that I vote on
the proposals?
The Board of Directors
recommends that you vote:
FOR the election of the six nominees to serve as directors;
FOR the approval of the amendment to the 1992 Employees
Stock Purchase Plan to increase the number of authorized shares
available thereunder; and
FOR the ratification of the selection of PricewaterhouseCoopers
LLP as our independent auditors for 2009.
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What if other matters come up at the
meeting?
The matters described in this proxy
statement are the only matters we know that will be voted on at
the meeting. If other matters are properly presented at the
meeting, the proxy holders will vote your shares in their
discretion.
Can I change my vote after I return my proxy
card?
Yes. At any time before the meeting,
you can change your vote either by sending our Corporate
Secretary a written notice revoking your proxy card or by
signing, dating, and returning to us a new proxy card. We will
honor the proxy card with the latest date.
Can I vote in person at the meeting rather than by
completing the proxy card?
Although we
encourage you to complete and return the proxy card even if you
plan to attend the meeting to ensure that your vote is counted,
you can always vote your shares in person at the meeting.
Who will count the votes?
The votes
will be counted, tabulated and certified by the inspector of
elections, which will be our transfer agent and registrar,
Registrar and Transfer Company.
Will my vote be kept confidential?
Yes,
your vote will be kept confidential and we will not disclose
your vote, unless (1) we are required to do so by law
(including in connection with the pursuit or defense of a legal
or administrative action or proceeding), (2) a stockholder
makes a written comment on the proxy card or otherwise
communicates his or her vote to management, (3) to allow
the inspector of elections to certify the results of the vote,
or (4) there is a contested election for the Board of
Directors. The inspector of elections will forward any written
comments that you make on the proxy card to management without
providing your name, unless you expressly request disclosure on
your proxy card.
What do I do if I am a beneficial owner and my shares are
held in street name?
If your
shares are held in the name of your broker, a bank, or other
nominee, that party will give you instructions for voting your
shares, which should be enclosed with this document.
What constitutes a quorum?
In order for
business to be conducted at the meeting, a quorum must be
present. A quorum consists of the holders of a majority of the
shares of common stock issued, outstanding and entitled to vote
at the meeting, or at least 2,828,953 shares. If a quorum
is not present, the meeting will be adjourned until a quorum is
obtained.
Shares of common stock represented in person or by proxy
(including broker non-votes and shares that abstain
or do not vote with respect to one or more of the matters to be
voted upon) will be counted for the purpose of determining
whether a quorum exists. Broker non-votes are those
shares that are held in street name by a broker,
bank, or other nominee that indicates on its proxy that it does
not have discretionary authority to vote on a particular matter.
What vote is required for each item?
Election of directors.
Under our by-laws,
provided a quorum is present, the six nominees receiving the
highest number of votes cast at the meeting will be elected,
regardless of whether that number represents a majority of the
votes cast.
Approval of the Amendment to the 1992 Employees Stock
Purchase Plan.
Under our by-laws, provided a
quorum is present, the affirmative vote of a majority of the
total number of votes cast at the meeting is needed to approve
the amendment to the 1992 Employees Stock Purchase Plan.
Ratification of selection of PricewaterhouseCoopers LLP as
our independent auditors.
Under our by-laws,
provided a quorum is present, the affirmative vote of a majority
of the total number of votes cast at the meeting is needed to
ratify PricewaterhouseCoopers LLP as our independent auditors.
How will votes be counted?
Each share
of common stock will be counted as one vote according to the
instructions contained on a proper proxy card, whether submitted
by mail, or on a ballot voted in person at the meeting. With
respect to the election of directors, the approval of the
amendment to the 1992 Employees Stock Purchase Plan and
the ratification of the selection of our independent auditors,
shares will not be voted in favor of the matter, and will not be
counted as voting on the matter, if they either (1) abstain
or are withheld from voting on a particular matter, or
(2) are broker non-votes. If you hold shares
beneficially in street name and do not provide your broker with
voting instructions, your shares may constitute broker
non-votes. Generally, broker non-votes
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occur on a matter when a broker is not permitted to vote on that
matter without instructions from you, as the beneficial owner.
Accordingly, votes withheld for a particular director nominee
and broker non-votes will have no effect on the outcome of the
election of directors. Under our by-laws, neither abstentions
nor broker non-votes will have an effect on the outcome of the
voting to approve the amendment to the 1992 Employees
Stock Purchase Plan, or the voting to approve the ratification
of the selection of PricewaterhouseCoopers LLP as our
independent auditors.
Where can I find the voting results?
We
intend to announce the preliminary voting results at the
meeting, and will report the voting results in our Quarterly
Report on
Form 10-Q
for the second quarter of fiscal 2009, which we expect to file
with the Securities and Exchange Commission
(
SEC
) in August 2009. The results will be
contained in Part II, Item 4 of that Quarterly Report,
which will be available via Internet on the SECs website,
www.sec.gov.
We also make available these reports on the
investor relations page of our corporate website at
www.nationaldentex.com
, free of charge, as soon as
practicable after we file them with the SEC.
Who pays for this proxy
solicitation?
We do. In addition to sending
you and other stockholders these materials, one of our officers,
directors or employees may contact you and other stockholders by
telephone, by mail, or in person. None of these persons will
receive any extra compensation for doing this. If necessary, we
may retain the proxy solicitation firm Morrow & Co.,
at a cost which we would not expect to exceed $5,000.
How and when may I submit a stockholder proposal for
consideration at next years annual meeting of stockholders
(or special meeting in lieu thereof) or to recommend nominees to
serve as directors?
If you are interested in
submitting a proposal for inclusion in our proxy statement for
the annual meeting next year (or special meeting in lieu of the
annual meeting), or would like to recommend a nominee for
director, we must receive your written proposal at our principal
executive offices no later than December 10, 2009, which is
the 120th calendar day before the one-year anniversary of
the date of the proxy statement we are releasing to our
stockholders for this years annual meeting. If the date of
next years annual meeting (or special meeting in lieu of
the annual meeting) is moved more than 30 days before or
after the anniversary date of this years meeting, the
deadline for inclusion of proposals in our proxy statement will
instead be a reasonable time before we begin to print and mail
our proxy materials next year. Such proposals also will need to
comply with SEC regulations under
Rule 14a-8
regarding the inclusion of shareholder proposals in
company-sponsored proxy materials. Under our articles of
organization, by-laws, and applicable Massachusetts law, no
proposal or other business can be considered at next years
meeting that is not included in the notice we mail for next
years meeting. Any proposals should be addressed to:
National Dentex Corporation
2 Vision Drive
Natick, Massachusetts 01760
ATTN: Richard F. Becker, Jr.,
Executive Vice President-Treasurer and Assistant Secretary
Fax:
(508) 907-6050
Except in the case of proposals made in accordance with SEC
Rule 14a-8,
the Companys proxy holders are allowed to use their
discretionary voting authority on stockholder proposals that the
Company did not receive written notice of at least 45 days
prior to the anniversary of the date on which the Company first
mailed its proxy materials for its immediately preceding annual
meeting of stockholders, which date for the 2010 Special Meeting
in Lieu of Annual Meeting is February 23, 2010.
Copy of By-law Provisions:
You may contact our
Assistant Secretary (Mr. Becker) at our principal executive
offices for a copy of the relevant by-law provisions regarding
the requirements for making stockholder proposals. Our by-laws
also are available on the Investor Relations page on our website
at
www.nationaldentex.com.
How may I communicate with the Board of Directors or the
non-management directors on the Board of
Directors?
You may submit an
e-mail
to
our Board of Directors at
bod@nationaldentex.com.
All
directors have access to this
e-mail
address. Communications intended for non-management directors
should be directed to the attention of Mr. Norman F.
Strate, one of our non-management directors, at the
e-mail
address above. You may report your concerns anonymously or
confidentially.
4
Does National Dentex have a policy regarding the
attendance of directors at the
meeting?
Although we do not have a written
policy on attendance of directors at our annual meeting of
stockholders, our by-laws mandate that the Board of Directors
hold a meeting immediately after each annual meeting of
stockholders, or the special meeting in lieu thereof. As a
result, as a practical matter we normally expect each of our
directors to be present at the stockholders meeting.
How many directors attended last years
meeting?
Four of our six directors attended
in person. Mr. Harkins and Mr. Crosby were unable to
attend our 2008 annual meeting of stockholders.
Does National Dentex have a Code of Conduct applicable to
all directors, officers, and employees?
Yes.
In accordance with Section 406 of the Sarbanes-Oxley Act
and Rule 4350(n) of NASDAQs listing rules, we have
adopted a Code of Conduct that is applicable to all directors,
officers and employees. Our Code of Conduct provides for an
enforcement mechanism and requires that waiver of its provisions
for any of our directors or officers must be approved by our
Board of Directors. We are required to disclose any such waivers
on the investor relations page of our corporate website at
www.nationaldentex.com.
Is the Code of Conduct publicly
available?
Yes. It is available on the
investor relations page of our website at
www.nationaldentex.com.
Where can I see the Companys corporate documents and
SEC filings?
The Companys website
contains the Companys by-laws, the Committee Charters, the
Companys Code of Conduct and the Companys SEC
filings. To view the by-laws, Committee Charters or Code of
Conduct, go to
www.nationaldentex.com
, click on
Investors and then click on SEC
Documents. To view the Companys SEC filings
including our periodic reports and the Forms 3, 4, and 5
filed by the Companys directors and executive officers, go
to
www.nationaldentex.com
, click on Investors
and then click on SEC Filings twice.
By unanimous written consent effective March 25, 2008, our
Board of Directors amended Article Fifth of the by-laws to
allow for the issuance of uncertificated shares. Previously, our
by-laws did not provide for the issuance of uncertificated
shares.
The Company will also promptly deliver free of charge, upon
request, a copy of the Companys Articles of Organization,
by-laws, Committee Charters or the Code of Conduct to any
stockholder requesting a copy. Requests for these documents may
be made as noted below.
How can I obtain an Annual Report on
Form 10-K?
A
copy of our Annual Report on
Form 10-K
for the year ended December 31, 2008 is enclosed with this
proxy statement. Stockholders may request another free copy of
our proxy statement and 2008 Annual Report on
Form 10-K
by making a written or telephone request to:
National
Dentex Corporation
2 Vision Drive
Natick, Massachusetts 01760
ATTN: Richard F. Becker, Jr.,
Executive Vice President-Treasurer and Assistant Secretary
Fax:
(508) 907-6050
Phone:
(508) 907-7800
Our proxy statement and Annual Report on
Form 10-K
are available on the investor relations web page of our
corporate website at
www.nationaldentex.com
and are also
available on the SECs site at
www.sec.gov.
Where can I get directions to the
meeting?
Directions to the annual meeting
location are available at the website
www.pbl.com
under
About Us.
Who should I contact if I have any
questions?
If you have any questions about
the meeting or any matters relating to this proxy statement,
please contact Richard F. Becker, Jr., at the address and
telephone number above.
Important Notice of Internet Availability of Proxy Materials
for the Annual Meeting
This proxy statement and our 2008 Annual Report are available at
www.proxydocs.com/nadx
. This site does not maintain
cookies that identify visitors to the site.
5
ELECTION
OF DIRETORS
(Item 1)
Our entire Board of Directors, consisting of six members, will
be elected at the meeting, The directors elected will hold
office until their successors are elected and qualified, which
should occur at the next annual meeting or special meeting in
lieu thereof, in accordance with our by-laws.
The Board recommends that you vote FOR each of the following
nominees:
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David L. Brown
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Thomas E. Callahan
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Jack R. Crosby
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David V. Harkins
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James E. Mulvihill, D.M.D.
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Norman F. Strate
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The Board, based on the recommendations of the Nominating
Committee, has nominated each of the above to stand for
reelection. Unless you specify otherwise, the Board intends the
accompanying proxy to be voted for these nominees.
All of the nominees for election at the meeting currently serve
as directors. Each has agreed to be named in this proxy
statement and to serve as a director if elected. We have no
reason to believe that any of the nominees will be unable or
unwilling for good cause to serve if elected. However, if any
nominee should become unable for any reason or unwilling for
good cause to serve, proxies may be voted for another person
nominated as a substitute by the Board, or the Board may reduce
the number of Directors.
Biographies
of Nominees for Directors.
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Name
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Age
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Office Held
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David V. Harkins
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68
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Chairman of the Board and Director
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David L. Brown
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68
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President, Chief Executive Officer and Director
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Thomas E. Callahan
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Director
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Jack R. Crosby
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82
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Director
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Norman F. Strate
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Director
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James E. Mulvihill, D.M.D.
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68
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Director
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David V. Harkins
is the Chairman of our Board of
Directors and has served as a director of National Dentex since
1982. Mr. Harkins has been affiliated with Thomas H. Lee
Partners, L.P. and its predecessor Thomas H. Lee Company, since
its founding in 1974, and currently serves as Vice Chairman of
Thomas H. Lee Partners, L.P. He has over 30 years
experience in the investment and venture capital industry with
the John Hancock Mutual Life Insurance Company, where he began
his career, as well as TA Associates and Massachusetts Capital
Corporation. He is currently a Director of Dunkin Brands,
Inc. and Nortek, Inc.
David L. Brown
has served as a director of National
Dentex since 1998 when he was also appointed President. He
became our Chief Executive Officer in 2000. Mr. Brown
joined National Dentex in 1984 as our Vice President-Finance and
Chief Financial Officer, and was appointed Treasurer in 1991. He
is the past Chairman of the Dental Trade Alliance and is a
former member of its Board of Directors. Mr. Brown is a
former director of the Dental Trade Alliance Foundation and of
the National Association of Dental Laboratories and is a former
member of the Board of Fellows of the Harvard School of Dental
Medicine.
Thomas E. Callahan
has served as a director of National
Dentex since 2004. Mr. Callahan served as Senior Vice
President and Chief Financial Officer of Welch Foods, Inc. from
1990 until his retirement in 2001. He also served as a director
of Welch Foods from 1996 through 2001. Mr. Callahan
formerly served on the Board of Directors of Circor
International, a leading provider of valves and fluid control
products listed on the New York
6
Stock Exchange. He is Chairman of the Board of Trustees of the
Tilton School in Tilton, New Hampshire and is a director of the
Economic Education Foundation, a non-profit organization that
promotes economic education in Massachusetts schools. He is also
a former director of the Boston Chapter of Financial Executives
International. Mr. Callahan has obtained a professional
director certification earned through an extended series of
director education programs sponsored by the Corporate Director
Group, an accredited organization of Risk Metrics ISS.
Jack R. Crosby
has served as a director of National
Dentex since 1992. He is Chairman of The Rust Group, a private
investment partnership headquartered in Austin, Texas.
Mr. Crosby formerly served as Chief Executive Officer and
director of CinemaStar Luxury Theaters, Inc., as well as
numerous other privately-held entities.
Norman F. Strate
has served as a director of National
Dentex since 1997. He is currently the President and a member of
the Advisory Board of TBS Technologies, a company developing
proprietary technology for the generation and delivery of
chlorine dioxide in low cost, portable and effective systems for
disinfection applications. He is the former President and Chief
Executive Officer of Protonex Technology Corporation as well as
a former member of its Board of Directors. He served as Chief
Executive Officer of J.F. Jelenko & Co., a supplier of
dental products to dental labs, from 1986 until it was acquired
by Heraeus, GmbH in 1996. He is also a partner in The Strate
Group, a merger and acquisitions firm and a member of the
Advisory Board of Strategic Insights, a global commercial
intelligence firm. Mr. Strate is a former member of the
Board of Fellows of the Harvard School of Dental Medicine, a
former member of the Lehigh University Alumni Association Board,
and a former member of the Permanent Board of Directors of The
William J. Gies Foundation for the Advancement of Dentistry of
the American Dental Education Association.
James E. Mulvihill, D.M.D.
was elected to the Board of
National Dentex in 2007. From 1980 to 1992, Dr. Mulvihill
was Vice President for Health Affairs, Executive Director and
Provost of the University of Connecticut Health Center. From
1982 to 1994 he was Senior Vice President for Health Policy of
the Travelers Insurance Company. In 1995, Dr. Mulvihill
became President and CEO of the Forsyth Dental Center in Boston,
Massachusetts. In 1996, he was appointed to a three year term as
President and CEO of the Juvenile Diabetes Foundation
International (JDFI). Since leaving JDFI,
Dr. Mulvihill has worked with a number of non-profit health
care organizations, including The American Dental Education
Association and its William J. Gies Foundation, Harvard
University Health Services, The University of Connecticut Health
Center and Foundation, and The First Tee, a national youth
development program. Dr. Mulvihill currently serves on the
board of directors of the National Fund for Medical Education
and is a member of the Board of Overseers of the Joslin Diabetes
Center. He holds a Doctor of Dental Medicine degree and a
specialty certificate in Periodontology from the Harvard School
of Dental Medicine.
BOARD OF
DIRECTORS AND CORPORATE GOVERNANCE MATTERS
Director Independence.
The Board has
determined that each of our directors are
independent directors as defined under applicable
NASDAQ rules, except for Mr. Brown, who serves as our
President and Chief Executive Officer. The
independent directors thus constitute a majority of
our Board of Directors.
Attendance at Annual Meeting and at Meetings of the Board
and Its Committees.
We normally expect each
of our directors to be present at the stockholders
meeting. Four of our six directors attended last years
special meeting in lieu of an annual meeting. Mr. Harkins
and Mr. Crosby were unable to attend the annual stockholder
meeting. Our Board held a total of nine meetings during 2008.
Four of the six directors attended all of the meetings.
Mr. Harkins and Mr. Crosby attended 6 of the 9
meetings. Each director attended at least 80% of the aggregate
of the total number of meetings held by all committees of the
Board on which he served during 2008.
Executive Sessions of Independent
Directors.
In 2008, our independent directors
met in executive session following each of our Board meetings,
without any member of our management present. Mr. Brown,
who is not an independent director due to his position as our
President and Chief Executive Officer, was not present at these
executive sessions of our independent directors.
Committees of the Board.
Our Board has
four principal committees: the Audit Committee, the Compensation
Committee, the Nominating Committee, and the Executive
Committee. All of the members of the Audit, Compensation, and
Nominating Committees are independent directors as
defined under applicable SEC and
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NASDAQ rules. Each of the members of the Executive Committee is
independent under applicable NASDAQ rules, except
for Mr. Brown.
The Company maintains copies of its written charters for each of
its Audit Committee, Compensation Committee and Nominating
Committee on the investor relations page of its corporate
website at
www.nationaldentex.com
. The following charts
describe the function and membership of each committee of our
Board and the number of times that each Committee met in 2008:
Audit
Committee 10 Meetings
|
|
|
Function
|
|
Members
|
|
Engage the independent auditors
|
|
Thomas E. Callahan (Chairman)
|
Review the annual financial statements
|
|
Jack R. Crosby
|
Review control procedures and accounting
practices
|
|
Norman F. Strate
|
Monitor accounting and reporting
practices
|
|
|
Review compliance with the
conflict-of-interest policy
|
|
|
Review our capital structure
|
|
|
Exercise such other functions as
mandated by the
Sarbanes-Oxley
Act and other applicable laws and regulations
|
|
|
We have a separately designated standing audit committee
established in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934. As noted above, the members of
the Audit Committee are Thomas Callahan, Jack Crosby and Norman
Strate. Our Board adopted our Audit Committees current
written charter in March 2004 in response to new requirements
imposed by the Sarbanes-Oxley Act of 2002 and related rules and
regulations of the SEC and NASDAQ. The Audit Committee reviews
the charter annually. Our Board has determined that each of the
three members of the Audit Committee named above is
independent under applicable NASDAQ rules, which
impose additional independence criteria in determining
eligibility for director service on audit committees. In
addition, our Board of Directors has determined that
Mr. Callahan qualifies as an audit committee
financial expert as defined by applicable regulations
promulgated by the SEC pursuant to Section 407 of the
Sarbanes-Oxley Act. See the report of the Audit Committee
beginning on page 15.
Compensation
Committee 6 Meetings
|
|
|
Function
|
|
Members
|
|
Review and approve compensation and
benefit programs
|
|
Norman F. Strate (Chairman)
|
Approve compensation of senior executives
|
|
Jack R. Crosby
|
Administer stock incentive plans
|
|
Thomas E. Callahan
|
The Compensation Committee of our Board is composed of three
directors, all of whom meet the applicable independence
requirements of the SEC and NASDAQ. The Board of Directors
appoints the Committees Chairman and determines the
composition of the Committees members.
The Compensation Committee is responsible for approving all
matters concerning our total compensation practices and
philosophy, including the conducting of periodic reviews of
those practices and the philosophy that underlies them to ensure
that they support the objectives of National Dentex and the
interests of its stockholders. The Compensation Committee is
responsible for administering and interpreting our 1992 Long
Term Incentive Plan, our 2001 Stock Plan, our 1992
Employees Stock Purchase Plan, our Dollars Plus 401(k)
Plan, our Supplemental Executive Retirement Plans, our
Supplemental Laboratory Executive Retirement Plan, our other
general health and welfare benefit plans, and all other
compensation and benefits plans.
The Compensation Committee has sole authority to retain
and/or
terminate all external consultants and to commission surveys or
analyses that it determines necessary to fulfill its
responsibilities. Additionally, the Compensation Committee has
sole authority to approve the fees of the external consultants.
During 2008, the Compensation Committee utilized the services of
Strategic Compensation Partners, as its external compensation
8
advisor for all matters concerning our senior management
compensation programs and to evaluate and make judgments
regarding our current compensation arrangements with our Board
and our President and Chief Executive Officer, Mr. Brown.
During fiscal 2008, as discussed in Compensation Discussion and
Analysis below, the Compensation Committee consulted with this
compensation consultant with respect to potential equity grants
to senior executives. The independent compensation
consultants report recommended granting stock options with
performance conditions to certain executive and senior officers.
In 2008, the Company granted 275,000 options with performance
condition to these executives and senior officers.
See the report of the Compensation Committee on page 26.
Nominating
Committee 1 Meeting
|
|
|
Function
|
|
Members
|
|
Review and recommend to the full Board
nominations for election
to the Board of Directors
|
|
Jack R. Crosby (Chairman)
Norman F. Strate
James E. Mulvihill
|
Each member of the Nominating Committee meets the independence
requirements of the NASDAQ listing standards.
The Nominating Committee will consider candidates for our Board
that are recommended by our stockholders to the extent such
nominations are provided no later than the deadline for
stockholder proposals and in the manner for stockholder
proposals outlined above on page 4. The Nominating
Committee is committed to evaluating nominees recommended by our
stockholders no differently than other nominees.
Stockholder recommendations for director should include:
(i) the name and address of the stockholder recommending
the person to be nominated; (ii) a representation that the
stockholder is a holder of record of stock of National Dentex,
including the number of shares held and the period of holding;
(iii) a description of all arrangements or understandings
between the stockholder and the recommended nominee;
(iv) such other information regarding the recommended
nominee as would be required to be included in a proxy statement
filed pursuant to Regulation 14A promulgated by the SEC
pursuant to the Securities Exchange Act of 1934, as amended; and
(v) the consent of the recommended nominee to serve as a
director of National Dentex, if so elected.
To be considered by the Nominating Committee, a nominee must
meet the following minimum criteria:
|
|
|
|
|
Director candidates shall have the highest personal and
professional integrity.
|
|
|
|
Director candidates shall have a record of exceptional ability
and judgment.
|
|
|
|
Director candidates must be able and willing to devote the
required amount of time to the Companys affairs, including
attendance at Board and committee meetings.
|
|
|
|
Director candidates should have the interest, capacity and
willingness, in conjunction with the other members of the Board,
to serve the long-term interests of the Companys
stockholders.
|
|
|
|
Director candidates shall be free of any personal or
professional relationships that would adversely affect their
ability to serve the best interests of the Company and its
stockholders.
|
It is expected that the Nominating Committee will have direct
input from the Chairman of the Board and from the Chief
Executive Officer. Input on nominees will also be solicited from
the other members of the Board. Management and other external
sources may also identify prospective Director nominees.
Executive
Committee 1 Meeting
|
|
|
Function
|
|
Members
|
|
Approve terms of acquisitions of dental
laboratories or other businesses under $1.0 million in purchase
price
|
|
David V. Harkins (Chairman)
Norman F. Strate
David L. Brown
|
9
Corporate
Governance Materials
The following corporate governance materials are available and
can be viewed and downloaded from the investor relations page of
our website at
www.nationaldentex.com
:
|
|
|
|
|
Our Articles of Organization;
|
|
|
|
our by-laws;
|
|
|
|
our Audit Committee Charter;
|
|
|
|
our Compensation Committee Charter;
|
|
|
|
our Nominating Committee Charter; and
|
|
|
|
the Business Ethics and Conduct Guidelines (Code of Conduct)
applicable to all our employees, executive officers and
directors.
|
A copy of these materials is also available to our stockholders
free of charge upon request to our Assistant Secretary, Richard
F. Becker, Jr.,
c/o National
Dentex Corporation, 2 Vision Drive, Natick, Massachusetts 01760.
Transactions
With Related Persons
Under SEC rules, we are required to disclose transactions in
excess of $120,000 in which National Dentex was a participant in
which related persons had or will have a direct or
indirect material interest. Related persons include any of our
directors, nominees for director, or executive officers, and any
immediate family members of such persons. The term
transaction is broadly defined under SEC rules to
include any financial transaction, arrangement or relationship,
including any indebtedness transaction or guarantee of
indebtedness.
Based on information available to us and provided to us by our
directors and executive officers, we do not believe that there
were any such transactions in effect since January 1, 2008,
or any such transactions proposed to be entered into during
2009, except as follows:
|
|
|
|
|
In January 2007, John W. Green became an executive officer of
National Dentex upon his appointment as our Executive Vice
President, Laboratory Operations. In March 2005, National Dentex
had acquired all of the outstanding capital stock of Green
Dental Laboratories, Inc., of Heber Springs, Arkansas, from its
two shareholders, Mr. Green and Mr. Richard M.
Nordskog, pursuant to the terms of a stock purchase agreement
dated March 1, 2005. As part of the consideration for this
transaction, Mr. Green was to receive three additional
annual payments following the closing of the transactions.
Pursuant to these terms, Mr. Green was paid $814,540 in
each of 2006, 2007 and 2008. In each of 2006, 2007 and 2008, we
also paid Mr. Green an additional $158,667 per year as
consideration under a non-competition agreement that we have as
a result of the acquisition of Green Dental Laboratories. No
further payments are due Mr. Green under either of these
two agreements. These transactions were approved by our Board of
Directors in 2005 prior to Mr. Greens employment with
the Company, which began in September 2006. Mr. Green did
serve as a consultant to the Company in 2006 for which he was
paid $212,514.
|
Our Board of Directors has a policy that generally requires it
to review and approve any related party transactions. Management
is required to present to the Board specific information with
respect to any such transaction expected to be entered into.
After reviewing this information, the Board will approve such
transaction only if the following two conditions are met:
(1) the Board believes that the transaction is in the best
interests (or not inconsistent with the best interests) of
National Dentex and its stockholders, and (2) the
transaction must be entered into by National Dentex on terms
that are comparable to, or better than, those that would be
obtained in an arms length transaction with an unrelated
third party. If any additional related party transactions are
entered into without prior approval of the Board, management is
required to present such transactions to the Board for approval
or ratification at the next subsequent Board meeting.
10
DIRECTOR
COMPENSATION
Annual Retainer.
We annually afford
each of our non-employee directors the opportunity to receive,
at their individual choice, either (1) a cash retainer fee
of $30,000, or (2) restricted stock or restricted stock
units having a fair market value of $36,000 on the date the
grants are awarded. These grants of restricted stock or
restricted stock units vest one year from the award date. The
settlement of restricted stock units may, at the directors
election be further deferred for not less than three years, if
the election is made prior to the year of the grant. All of our
directors, except Mr. Brown, are non-employee directors.
With respect to 2008, Mr. Crosby elected to receive the
annual cash retainer; Mr. Harkins elected to receive
restricted stock; and Messrs. Strate, Callahan and
Mulvihill elected to receive restricted stock units. The
elections to receive $36,000 worth of restricted stock and
restricted stock units resulted in awards of restricted stock
(in the case of Mr. Harkins) and restricted stock units (in
the cases of Messrs. Strate, Callahan and Mulvihill) equal
to 3,380 shares, based upon the closing price of our common
stock ($10.65) on May 13, 2008, the date of last
years Board meeting at which the grants were awarded.
Annual Equity Grant.
In 2007, the
Company began to make annual equity grants to its directors
valued at $18,000. In 2008, the Compensation Committee increased
the annual equity grant from $18,000 to $36,000. On May 13,
2008, the Board granted to each non-employee director an equity
grant of 3,380 shares of restricted stock. These shares had
a value of $36,000 based upon the closing price of our common
stock ($10.65) on that date. These shares vest in equal 50%
installments on May 13, 2009 and 2010.
Committee Service and Attendance
Fees.
In addition to the annual retainer and
annual equity grant, we pay each non-employee director $1,000
for each meeting of the Board of Directors that he attends (or
$500 for participating by telephone) and $500 for each committee
meeting not held on the day of a regular board meeting. We pay
the Chairman of the Audit Committee (Mr. Callahan) an
additional $10,000 for serving in that capacity. We pay the
other members of the Audit Committee (Messrs. Crosby and
Strate) an additional $2,000 annually for their service on that
Committee. We also pay the Chairman of each of our Executive,
Compensation and Nominating Committees (Messrs. Harkins,
Strate, and Crosby, respectively) an additional $2,000 for
serving in those capacities. All of these additional payments
for committee service and attendance are made in cash. In
addition, all of our directors are reimbursed for travel and
similar expenses incurred in connection with their service. We
do not offer our directors any other perquisites or benefits in
exchange for their service.
Processes and Procedures for Determining Director
Compensation.
The Compensation Committee is
comprised of three directors, all of whom meet the applicable
independence requirements of the SEC and NASDAQ. The Board of
Directors appoints the Chairman of the Compensation Committee
and determines which directors serve on the Committee. The
Compensation Committee is responsible for determining all
matters concerning compensation for the independent members of
the Board. Director compensation recommendations by the
Compensation Committee are submitted to the full Board for
ratification. Directors who are employees of National Dentex do
not receive any compensation for their service as a director.
The Compensation Committee has sole authority to directly retain
external consultants and to commission surveys or analyses that
it determines necessary to fulfill its responsibilities.
Executive officers play no role in determining the amount or
form of director compensation, other than gathering information,
such as survey data, from external sources, as directed by the
Compensation Committee. The Committee periodically reviews the
competitiveness of our director compensation using available
survey data covering similarly sized U.S. public companies
from general industry.
Director Stock Ownership Policy.
The
Board has adopted stock ownership guidelines for non-employee
directors, pursuant to which each director has committed to own
and maintain an equity interest in National Dentex common stock
equal to at least two times the directors annual cash and
equity Board compensation. Non-employee directors have committed
to attain such ownership by August 2010.
11
DIRECTOR
COMPENSATION TABLE
The table below summarizes the compensation that we paid our
non-employee directors for the fiscal year ended December, 31,
2008. Our President and Chief Executive Officer, Mr. Brown,
earned no compensation for his service as a director.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
or Paid in
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
Awards(6)
|
|
|
Awards
|
|
|
Compensation
|
|
|
Deferred
|
|
|
All Other
|
|
|
|
|
Name
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Total
|
|
|
David V. Harkins
|
|
$
|
5,500
|
(1)
|
|
$
|
72,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
77,500
|
|
Thomas E. Callahan
|
|
|
21,000
|
(2)
|
|
|
72,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
93,000
|
|
Jack R. Crosby
|
|
|
42,500
|
(3)
|
|
|
36,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
78,500
|
|
Norman F. Strate
|
|
|
14,500
|
(4)
|
|
|
72,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
86,500
|
|
James E. Mulvihill D.M.D.
|
|
|
6,500
|
(5)
|
|
|
72,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
78,500
|
|
|
|
|
(1)
|
|
Mr. Harkins received $2,000 as Executive Committee Chairman
and $3,500 in meeting fees.
|
|
(2)
|
|
Mr. Callahan received $10,000 as Audit Committee Chairman
and $11,000 in meeting fees.
|
|
(3)
|
|
Mr. Crosby received $2,000 as Nominating Committee
Chairman, $2,000 as a member of the Audit Committee, $8,500 in
meeting fees, and $30,000 as a cash retainer fee.
|
|
(4)
|
|
Mr. Strate received $2,000 as Compensation Committee
Chairman, $2,000 as a member of the Audit Committee and $10,500
in meeting fees.
|
|
(5)
|
|
Dr. Mulvihill received $6,500 in meeting fees.
|
|
(6)
|
|
Represents the value on the grant date of the $36,000 of
restricted stock or restricted stock units elected by all of the
directors, except Mr. Crosby, in lieu of the annual cash
retainer, plus the $36,000 restricted stock equity grant, based
on the value of a share of common stock on May 13, 2008
($10.65).
|
12
OWNERSHIP
OF NATIONAL DENTEX STOCK
The following table shows the number of shares of our common
stock beneficially owned as of March 23, 2009 by:
|
|
|
|
|
each person known by us to own more than 5% of our common stock;
|
|
|
|
each director and nominee for director;
|
|
|
|
each person shown in the summary compensation table
below; and
|
|
|
|
all executive officers and directors as a group.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
|
|
|
Number of
|
|
Outstanding
|
Name
|
|
Shares(1)
|
|
Shares(2)
|
|
5% Stockholders:
|
|
|
|
|
|
|
|
|
FMR LLC(3)
|
|
|
558,249
|
|
|
|
9.9
|
%
|
82 Devonshire Street
Boston, MA 02109
|
|
|
|
|
|
|
|
|
Heartland Advisors, Inc.(3)
|
|
|
524,682
|
|
|
|
9.3
|
%
|
789 North Water Street
Milwaukee, WI 53202
|
|
|
|
|
|
|
|
|
Artisan Partners Limited Partnership(3)
|
|
|
448,351
|
|
|
|
7.9
|
%
|
875 East Wisconsin Ave., #800
Milwaukee, WI 53202
|
|
|
|
|
|
|
|
|
ClearBridge Advisors, LLC(3)
|
|
|
360,864
|
|
|
|
6.4
|
%
|
620 Eighth Avenue
New York, NY 10018
|
|
|
|
|
|
|
|
|
Nominees for Director and Executive Officers:
|
|
|
|
|
|
|
|
|
David V. Harkins(4)*
|
|
|
59,075
|
|
|
|
1.0
|
%
|
Jack R. Crosby(5)*
|
|
|
9,535
|
|
|
|
0.2
|
%
|
Norman F. Strate(6)*
|
|
|
14,487
|
|
|
|
0.3
|
%
|
Thomas E. Callahan(7)*
|
|
|
22,033
|
|
|
|
0.4
|
%
|
James E. Mulvihill, D.M.D.(8)*
|
|
|
4,380
|
|
|
|
0.1
|
%
|
David L. Brown(9)*
|
|
|
253,286
|
|
|
|
4.3
|
%
|
Richard F. Becker, Jr. (10)
|
|
|
74,275
|
|
|
|
1.3
|
%
|
John W. Green IV (11)
|
|
|
38,583
|
|
|
|
0.7
|
%
|
Arthur B. Champagne (12)
|
|
|
48,030
|
|
|
|
0.8
|
%
|
Wayne M. Coll (13)
|
|
|
15,609
|
|
|
|
0.3
|
%
|
All executive officers and directors/nominees as a group
(10 persons)
|
|
|
539,293
|
|
|
|
9.1
|
%
|
|
|
|
*
|
|
Nominee for re-election as a director. The address of this
person is
c/o National
Dentex Corporation, 2 Vision Drive, Natick MA 01760.
|
|
|
|
Executive officer. The address of this person is
c/o National
Dentex Corporation, 2 Vision Drive, Natick, MA 01760.
|
|
(1)
|
|
The number of shares beneficially owned by each entity, person,
director, nominee for director, or named executive officer is
determined under applicable SEC rules, particularly
Rule 13d-3,
and the information is not necessarily indicative of beneficial
ownership for any other purposes. Under such rules, each entity
or individual is considered the beneficial owner of any shares
as to which they have the sole or shared voting power or
investment power. Such persons are also deemed under the same
rules to beneficially own any shares that they have the right to
acquire within 60 days of March 23, 2009, through the
exercise of stock options or other similar rights. This stock
ownership information is based upon information furnished to us
by the
|
13
|
|
|
|
|
persons named on the table. Unless otherwise indicated, these
individuals have sole voting and dispositive power over the
shares indicated.
|
|
(2)
|
|
Ownership percentage is reported based on 5,657,904 shares
of common stock outstanding on March 23, 2009, plus, as to
each holder thereof and no other person, the number of shares
(if any) that such person has the right to acquire within
60 days of March 23, 2009, through the exercise of
stock options or other similar rights.
|
|
(3)
|
|
Information as to the number of shares is as of
December 31, 2008, except for Artisan Partners which is as
of February 28, 2009, and is furnished in reliance on the
most recently filed Schedule 13G of the named beneficial
owner, as follows:
|
|
|
|
Based solely on a 13G filed on February 17,
2009, FMR LLC is the parent company of Fidelity
Management & Research Company (Fidelity).
Fidelity is the beneficial owner of 558,249 shares as a
result of acting as an investment advisor to various funds.
Edward Johnson and FMR LLC, through their control of Fidelity
and the funds, each have the sole power to dispose of these
shares.
|
|
|
|
Based solely on a 13G filed on February 11,
2009, Heartland Advisors, Inc. shares voting and dispositive
power over these shares with William Nasgovitz, as a result of
his ownership interest in Heartland Advisors, Inc. Heartland
Advisors and William Nasgovitz each specifically disclaim
beneficial ownership of these shares.
|
|
|
|
Based solely on a 13G filed on March 9, 2009,
Artisan Partners Limited Partnership (Artisan
Partners) and its controlling persons have shared voting
power over 410,651 shares of Common Stock and shared
dispositive power over 448,351 shares of Common Stock. The
general partner of Artisian Partners is Artisan Investment
Corporation, whose sole stockholder is ZFIC, Inc. The principal
stockholders of ZFIC are Andrew A. Ziegler and Carlene M.
Ziegler.
|
|
|
|
Based solely on a 13G filed on February 9,
2009, ClearBridge Advisors, LLC has sole power to vote
325,665 shares of Common Stock and sole power to dispose
360,864 shares of Common Stock.
|
|
(4)
|
|
Mr. Harkins owns 59,075 shares of Common Stock, of
which 7,260 shares are restricted stock. The restricted
stock vests as to 500 shares on August 14, 2009,
5,070 shares on May 13, 2009, and 1,690 shares on
May 13, 2010.
|
|
(5)
|
|
Mr. Crosby owns 9,535 shares of Common Stock, of which
3,880 shares are restricted stock. The restricted stock
vests as to 500 shares vest on August 14, 2009,
1,690 shares on May 13, 2009, and 1,690 shares on
May 13, 2010.
|
|
(6)
|
|
Mr. Strate owns 14,487 shares of Common Stock, of
which 3,880 shares are restricted stock. The restricted
stock vests as to 500 shares on August 14, 2009,
1,690 shares on May 13, 2009, and 1,690 shares on
May 13, 2010. He also owns 6,977 restricted stock units,
the receipt of which have either not vested or have been
deferred and are not included in the above table.
|
|
(7)
|
|
Mr. Callahan owns 22,033 shares of Common Stock, of
which 3,880 shares are restricted stock. The restricted
stock vests as to 500 shares on August 14, 2009,
1,690 shares on May 13, 2009, and 1,690 shares on
May 13, 2010. He also owns 3,380 restricted stock units,
which have either not vested or have been deferred, and are not
included in the above table.
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(8)
|
|
Dr. Mulvihill owns 4,380 shares of Common Stock, of
which 3,880 shares are restricted stock. The restricted
stock vests as to 500 shares on August 14, 2009,
1,690 shares on May 13, 2009, and 1,690 shares on
May 13, 2010. He also owns 5,381 restricted stock units,
which have either not vested or have been deferred, and are not
included in the above table.
|
|
(9)
|
|
Mr. Brown owns 62,036 shares of Common Stock, which he
holds jointly with his wife, and holds options for
271,250 shares, of which 191,250 shares are
exercisable within 60 days of March 23, 2009.
|
|
(10)
|
|
Mr. Becker owns 23,275 shares of Common Stock, which
he holds jointly with his wife, and holds options for
91,000 shares, 51,000 shares of which are exercisable
within 60 days of March 23, 2009.
|
|
(11)
|
|
Mr. Green owns 38,583 shares of Common Stock, and
holds options for 40,000 shares, none of which are
exercisable within 60 days of March 23, 2009.
|
|
(12)
|
|
Mr. Champagne owns 4,500 shares of Common Stock, is
deemed under applicable SEC rules to beneficially own
30 shares held by his wife, and holds options for
43,500 shares, all of which are exercisable within
60 days of March 23, 2009.
|
|
(13)
|
|
Mr. Coll owns 3,009 shares of Common Stock, which he
holds jointly with his wife, and holds options for
47,600 shares, 12,600 shares of which are exercisable
within 60 days of March 23, 2009.
|
14
AUDIT
COMMITTEE REPORT
The Audit Committee is composed of three non-employee directors,
each of whom is an independent director under
applicable SEC and NASDAQ rules governing the qualifications of
the members of audit committees. The Board of Directors has
determined that the Chairman of the Audit Committee,
Mr. Callahan, qualifies as an audit committee
financial expert under applicable SEC rules.
The Audit Committee is solely responsible for the appointment,
compensation and oversight of the work of the independent
auditors for the purpose of preparing and issuing an audit
report. The independent auditors audit the annual financial
statements prepared by management, express an opinion as to
whether those financial statements fairly present the financial
position, results of operations and cash flows of National
Dentex in conformity with generally accepted accounting
principles and discuss with us any issues they believe should be
raised with us.
The Audit Committee is responsible for providing independent,
objective oversight of National Dentexs accounting
functions and internal controls. Management has the primary
responsibility for the financial statements and the reporting
process, including the system of internal controls. The Audit
Committee oversees the financial reporting process on behalf of
the Board of Directors, reviews National Dentexs financial
disclosures, and meets privately, outside the presence of
management, with the independent auditors to discuss internal
accounting control policies and procedures and financial
personnel.
In fulfilling its oversight responsibilities, the Audit
Committee met to review and discuss with management the audited
financial statements contained in the Annual Report on
Form 10-K
and the quarterly financial statements during fiscal 2008,
including the specific disclosures in the section titled
Management Discussion and Analysis of Financial Condition
and Results of Operations. These discussions also
addressed the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant
judgments, and the clarity of disclosures in the financial
statements. The Audit Committee reports on these meetings to the
Board of Directors.
The Audit Committee held ten meetings during the fiscal year
ended December 31, 2008. The meetings were designed to
facilitate and encourage communication between members of the
Audit Committee and management as well as private communication
between the members of the Audit Committee and our independent
auditors, PricewaterhouseCoopers LLP (
PwC
).
The Audit Committee reviewed with the independent auditors, who
are responsible for expressing an opinion on the conformity of
the audited financial statements with generally accepted
accounting principles, their judgments as to the quality, not
just the acceptability, of our accounting principles and such
other matters as are required to be discussed with the Audit
Committee under generally accepted auditing standards. In
addition, the Audit Committee has discussed with the independent
auditors and considered the compatibility of the provision of
non-audit services by the independent auditors with the
auditors independence.
During 2008, National Dentex paid no fees to PwC for consulting
work outside of the review and audit of our financial
statements, the review of certain of our SEC filings, and the
related tax work.
During 2004, management began the process of documenting,
assessing and testing National Dentexs system of internal
controls in response to the requirements of the Sarbanes-Oxley
Act of 2002. In consultation with the Audit Committee,
management retained Deloitte & Touche LLP
(
Deloitte
) to assist it in this project. The
Audit Committee has been kept appraised of progress in this
process, including planning and result updates provided by
management, Deloitte and PwC.
The Audit Committee has adopted a formal written Audit Committee
Charter and reviews and reassesses the adequacy of this charter
on an annual basis.
The Audit Committee hereby affirms that it:
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|
Has reviewed and discussed the audited financial statements as
of and for the year ended December 31, 2008 with the
management of National Dentex;
|
|
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|
Has discussed with National Dentexs independent auditors
the matters required to be discussed by Statement on Auditing
Standards No. 61, as amended (AICPA, Professional Standards
Vol. 1, AU
|
15
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Section 380), as adopted by the Public Company Accounting
Oversight Board (
PCAOB
) in Rule 3200T,
as may be modified or supplemented, relating to the conduct of
the audit; and
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|
Has received the written disclosures and the letter from the
independent auditors required by PCAOB Ethics and Independence
Rule 3526, Communicating With Audit Committees
Concerning Independence, as may be modified or
supplemented, and has discussed with the independent auditors
the independent auditors independence.
|
Based on its review and discussions described above, the Audit
Committee recommended to the Board of Directors (and the Board
of Directors has approved) that National Dentexs audited
financial statements be included in its Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008.
The Audit Committee has selected PwC as independent auditors for
the fiscal year ending December 31, 2009. We are asking our
stockholders to ratify their selection. Although ratification is
not required by our by-laws or otherwise, we are submitting the
selection of PwC to our stockholders for ratification as a
matter of good corporate governance. If the selection is not
ratified, the Audit Committee will consider whether it is
appropriate to continue to retain PwC or retain other auditors.
Submitted by:
Thomas E.
Callahan
, Chairman
Jack
R. Crosby
Norman F. Strate
PROPOSAL
TO AMEND OUR 1992 EMPLOYEES STOCK PURCHASE PLAN
TO INCREASE THE NUMBER OF AUTHORIZED SHARES
(Item 2)
Our Employees Stock Purchase Plan (the
ESPP
) was approved by our stockholders in
1992, with subsequent amendments approved by our stockholders in
2000 and 2007, under which an aggregate of 450,000 shares
of our common stock may be purchased, through a payroll
deduction program, generally at a price equal to 85% of the fair
market value of our common stock on certain specified dates
during a particular plan year. The ESPP is intended to encourage
ownership of our common stock by our employees and to provide
additional incentive for our employees to promote the success of
our business by enabling eligible employees to purchase shares
of our common stock.
The ESPP is intended to be an Employee Stock Purchase
Plan within the meaning of Section 423 of the
Internal Revenue Code of 198, as amended (the
Code
). It is a broad-based plan that is open
to substantially all of our full-time employees. As of
December 31, 2008, a total of 333,703 shares had been
purchased under the ESPP. We estimate that all of the remaining
116,297 shares will have been purchased in the current plan
year during April 2009. As a result, if the proposed amendment
is not approved, there will be no additional shares available
for future purchases under the ESPP.
In view of this situation, on March 10, 2009, our Board of
Directors approved an amendment to the ESPP, subject to
stockholder approval at the meeting. The proposed amendment, a
copy of which is attached to this proxy statement as
Appendix A
, would increase the number of
shares available for future purchases under the ESPP by
250,000 shares (representing approximately 4.4% of the
current number of outstanding shares of our common stock). The
ESPP would remain unchanged in all other respects. Our Board of
Directors believes that continuing to afford our employees the
opportunity to purchase shares under our ESPP will assist us in
continuing to attract, motivate and retain key personnel, and
will benefit National Dentex in the long term by aligning the
interest of our employees more closely with those of our
stockholders.
16
Summary
of ESPP
The ESPP is administered by the Compensation Committee, which
has the power to construe and interpret the ESPP and to
determine all questions that arise under the ESPP. A copy of the
ESPP is filed as an exhibit to our most recent Annual Report on
Form 10-K.
Because participation in the ESPP is voluntary and employees may
withdraw from the ESPP at any time during a purchase period
without penalty, the benefits to be received by any particular
person or group are not determinable by us at this time.
Individuals are eligible to participate in the ESPP if they have
been employed on an offering date for at least two years, they
are regularly employed by us for more than 20 hours a week
and they do not own five percent or more of our outstanding
common stock. If we receive requests from employees to purchase
more than the number of shares available during any offering,
the available shares will be allocated on a pro rata basis to
subscribing employees. We generally make one offering to
purchase common stock under the ESPP each plan year, which
begins on April 1 (the grant date) and ends on March 31of the
following year (the exercise date).
The price at which an employee who is not a Section 16
reporting person may purchase common stock under the ESPP is 85%
of the lower of (i) the market price of the common stock on
the grant date, and (ii) the market price on the exercise
date. The price at which an employee who is a Section 16
reporting person may purchase common stock under the ESPP is 85%
of the average of (i) the market price of the common stock
on the grant date, and (ii) the market price on the
exercise date. Our board of directors may at any time terminate
or amend the ESPP. However, our board may not amend the ESPP if
any such amendment would increase the number of shares of common
stock reserved under the ESPP without approval of our
stockholders.
Summary
of U.S. Federal Income Tax Consequences
The following is a summary of the United States federal income
tax consequences that generally will arise with respect to
purchases made under the ESPP and with respect to the sale of
common stock acquired under the ESPP.
Tax
Consequences to Participants
The ESPP is intended to qualify as an employee stock
purchase plan under Section 423 of the Code. In
general, an employee will not recognize U.S. taxable income
upon enrolling in the ESPP or upon purchasing shares of common
stock. Instead, if an employee sells common stock acquired under
the ESPP for an amount that exceeds the purchase price, then the
employee will recognize taxable income in an amount equal to the
excess of the sale price of the common stock over the purchase
price, partially as ordinary income and partially as capital
gain, depending upon the date of the sale. If the employee sells
the common stock more than one year after acquiring it and more
than two years after the applicable offering date, and the sale
price of the common stock is higher than the purchase price,
then the employee will recognize ordinary income in an amount
equal to the lesser of (i) 85% of the fair market value of
the common stock on the offering date; and (ii) the excess
of the sale price of the common stock over the purchase price.
The balance of the income will be treated as long-term capital
gain. If the sale price of the common stock is less than the
price at which the employee purchased the common stock, then the
employee will recognize long-term capital loss in an amount
equal to the excess of the purchase price over the sale price of
the common stock.
If the employee sells the common stock within one year after
acquiring it or within two years after the offering date, which
is referred to as a Disqualifying Disposition, then the employee
will recognize as ordinary income in an amount equal to the
excess of the fair market value of the common stock on the date
that it was purchased over the purchase price plus either
(i) capital gain in an amount equal to the excess of the
sale price of the common stock over the fair market value of the
common stock on the date that it was purchased, or
(ii) capital loss in an amount equal to the excess of the
fair market value of the common stock on the date that it was
purchased over the sale price of the common stock. This capital
gain or loss will be a long-term capital gain or loss if the
employee held the common stock for more than one year prior to
the date of the sale and will be a short-term capital gain or
loss if the employee held the common stock for a shorter period.
17
Tax
Consequences to National Dentex
The offerings of common stock under the ESPP will have no tax
consequences to us. Moreover, in general, neither the purchase
nor the sale of common stock acquired under the ESPP will have
any federal income tax consequences to us except that we will be
entitled to a compensation deduction with respect to any
ordinary compensation income recognized by an employee upon
making a Disqualifying Disposition. Any such deduction will be
subject to the limitations on deductions for certain employee
remuneration contained in Section 162(m) of the Code.
The board of directors recommends you vote for the approval
of the amendment to our ESPP to increase the number of shares of
our common stock available for issuance by
250,000 shares.
Unless you specify otherwise, the Board intends the accompanying
proxy to be voted for this proposal.
Equity
Compensation Plan Information
The following table provides aggregate information with respect
to all of our equity compensation plans in effect as of
December 31, 2008:
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Number of Shares of
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National Dentex
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|
Number of Shares of
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Corporation
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|
National Dentex
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Common Stock to
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Corporation
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Be Issued Upon
|
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|
Weighted Average
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Common Stock
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Exercise of
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Exercise Price of
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Remaining Available
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Outstanding Options
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Outstanding Options
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for Future Issuance
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1992 LTIP(1)
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154,330
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$
|
12.18
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None
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|
2001 Stock Plan(2)
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563,000
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$
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13.25
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122,018
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ESPP(3)
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116,297
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Total
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717,330
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$
|
13.02
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238,315
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(1)
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In 1992, the Board and stockholders adopted the 1992 Long-Term
Incentive Plan (
1992 LTIP
). Key employees,
officers and directors were eligible to receive grants under the
plan. No additional options may be granted under this plan.
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(2)
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In January 2001, the Board adopted the 2001 Stock Plan
(
2001 Stock Plan
), which was approved by our
stockholders in April 2001. Key employees, officers and
directors are eligible to receive grants under the plan. On
May 16, 2006, our shareholders approved an amendment to the
2001 Stock Plan at our annual meeting of stockholders to allow
for the issuance of restricted stock and restricted stock units.
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(3)
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We maintain an employee stock purchase plan titled the 1992
Employees Stock Purchase Plan (
ESPP
),
described in Item 2 above, that is qualified under
Section 423 of the Internal Revenue Code of 1968, as
amended. The aggregate number of shares that have been reserved
under the ESPP is 450,000. The additional shares being voted on
in Item 2 are not included in the numbers in this table.
|
PROPOSAL TO
RATIFY THE SELECTION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
(Item 3)
The Audit Committee has again selected PricewaterhouseCoopers
LLP
(PwC)
to serve as our independent
auditors to examine our financial statements for the fiscal year
ending December 31, 2009. A resolution to ratify this
selection will be presented at the meeting.
Stockholder approval of the selection of PwC is not required
under our bylaws or Massachusetts corporate law. Although not
required to do so, the Board is submitting the selection of PwC
for ratification by National Dentexs stockholders for
their views, as a matter of good corporate governance. If the
stockholders do not ratify the selection, the Audit Committee
will consider the engagement of other independent auditors and
whether to retain PwC but may, however, ultimately determine to
retain PwC. Even if PwCs appointment is ratified, the
Audit
18
Committee retains the ultimate discretion to appoint or
terminate the appointment of our auditors and may appoint a
different independent registered public accounting firm at any
time during the year if the Audit Committee, in its sole
discretion, determines it is advisable to do so.
PwC has served as our independent auditors since the 2002 fiscal
year and is familiar with our business and the industry we
operate in. Most recently, PwC audited and reported upon our
financial statements for fiscal 2008. In connection with that
audit, PwC also reviewed our Annual Report on
Form 10-K,
quarterly financial statements for the fiscal quarters ended
March 31, 2008, June 30, 2008 and September 30,
2008, and our filings with the SEC, and consulted with our
management as to the financial statement implications of matters
under consideration.
A representative of PwC will be at the meeting and will have the
opportunity to make a statement if he or she desires to do so,
and will be available to answer appropriate questions. PwC has
advised us that it has no direct, nor any indirect, financial
interest in National Dentex or any of its subsidiaries.
The Board recommends that you vote FOR the proposal to ratify
the selection of PricewaterhouseCoopers LLP.
Unless you specify otherwise, the Board intends the accompanying
proxy to be voted for this proposal.
INDEPENDENT
REGISTERED ACCOUNTING FIRMS FEES AND SERVICES
The following table represents fees that we paid to PwC for
professional services rendered for the audit of our annual
financial statements for 2007 and 2008 and fees billed for
audit-related services, tax services, and all other services by
PwC for 2007 and 2008.
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2007
|
|
|
2008
|
|
|
Audit fees
|
|
$
|
449,100
|
|
|
$
|
612,000
|
|
Audit-Related fees
|
|
|
|
|
|
|
|
|
Tax fees
|
|
|
17,040
|
|
|
|
27,100
|
|
All other fees
|
|
|
18,251
|
|
|
|
16,575
|
|
|
|
|
|
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TOTAL
|
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$
|
484,391
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$
|
655,675
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Audit
Fees
These are fees related to professional services that PwC
rendered in connection with the audit of our annual financial
statements included in our Annual Report on
Form 10-K,
the audit of managements assessment of our internal
control over financial reporting and PwCs own audit of our
internal control over financial reporting, the reviews of the
financial statements included in each of our Quarterly Reports
on
Form 10-Q,
and accounting consultations that relate to the audited
financial statements and are necessary to comply with generally
accepted auditing standards.
Audit-Related
Fees
We did not incur any audit-related fees in 2007 and 2008, which
are generally fees for assurance and related services.
Tax
Fees
These are fees for professional services related to tax return
preparation services and tax compliance services.
All Other
Fees
Consist of fees for services provided by PwC that are not
included in the categories reported above. These included fees
billed by PwC in fiscal 2007 and in fiscal 2008 related to
compliance products and travel expenses.
19
Engagement
of Deloitte & Touche LLP
The implementation of Section 404 of the Sarbanes-Oxley Act
of 2002 prompted us to engage the services of
Deloitte & Touche LLP, which provided internal control
design consultation and testing services as well as project
management to help us meet our compliance obligations. Our
engagement of Deloitte & Touche LLP did not relate to
the audit of our annual financial statements. The amounts we
paid Deloitte & Touche LLP for their professional
services were in addition to the amounts set forth above.
Audit
Committees Pre-Approval Policy and Procedures
The Audit Committee of our Board of Directors has adopted
policies and procedures for the pre-approval of audit and
non-audit services for the purpose of maintaining the
independence of our independent auditors. We may not engage our
independent auditors to render any audit or non-audit service
unless either the service is approved in advance by the Audit
Committee or the engagement to render the service is entered
into pursuant to the Audit Committees pre-approval
policies and procedures. The Audit Committee may pre-approve
services that are expected to be provided to National Dentex by
the independent auditors during the following 12 months. At
the time the Audit Committee grants such pre-approval, it must
(1) identify the particular pre-approved services in a
sufficient level of detail so that management will not be called
upon to make judgment as to whether a proposed service fits
within the pre-approved services and (2) establish a
monetary limit with respect to each particular pre-approved
service, which limit may not be exceeded without obtaining
further pre-approval under the policy. At regularly scheduled
meetings of the Audit Committee, management or the independent
auditors must report to the Audit Committee regarding each
service actually provided to National Dentex.
During 2008, PwC provided no services other than in accordance
with the pre-approval policies and procedures described above.
EXECUTIVE
COMPENSATION
EXECUTIVE
OFFICERS OF NATIONAL DENTEX
The following table sets forth our current executive officers,
their ages, the positions and offices held by each person, and
the year each person first served as an executive officer of
National Dentex. The officers serve at the discretion of the
Board of Directors.
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First Year as
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|
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|
|
an Executive
|
Name
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Age
|
|
Offices Held
|
|
Officer
|
|
David L. Brown
|
|
|
68
|
|
|
President, Chief Executive Officer, and Director
|
|
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1984
|
|
Richard F. Becker, Jr.
|
|
|
56
|
|
|
Executive Vice President, Treasurer, and Assistant Secretary
|
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1990
|
|
John W. Green, IV
|
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55
|
|
|
Executive Vice President, Laboratory Operations
|
|
|
2007
|
|
Arthur B. Champagne
|
|
|
68
|
|
|
Senior Vice President
|
|
|
1986
|
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Wayne M. Coll
|
|
|
45
|
|
|
Vice President, Chief Financial Officer, and Assistant Treasurer
|
|
|
2003
|
|
David L. Browns
background is summarized on
page 6 above.
Richard F. Becker, Jr.
served as Corporate
Controller of National Dentex from 1984 to 1990, Vice President
and Corporate Controller from 1990 to 1996 and Vice President,
Treasurer and Chief Financial Officer from 1996 to 2007. He was
made Executive Vice President in 2005 and is currently our
Executive Vice President, Treasurer. Prior to joining National
Dentex, Mr. Becker held a number of financial management
positions with Etonic, Inc. and Kendall Company, subsidiaries of
Colgate-Palmolive, Adage Corporation, William Underwood Company
and Rix Corporation. Mr. Becker is a member of the Board of
Directors of the National Association of Dental Laboratories and
the Laboratory Advisory Committee of the National Foundation of
Dentistry for the Handicapped.
20
John W. Green, IV
founded Green Dental Laboratories in
Heber Springs, Arkansas in 1980, which was acquired by National
Dentex in March 2005. In January 2007, Mr. Green was
appointed our Executive Vice President of Laboratory Operations.
Prior to his appointment, Mr. Green was serving as a
consultant to the Company. Mr. Green has lectured
nationally and internationally on dental laboratory management
and implant and cosmetic reconstruction. He has served on the
boards of directors of both The Dental Laboratory Conference and
the American Dental Trade Association.
Arthur B. Champagne
has been a Vice President of National
Dentex since 1986. In January 2007, he became Senior Vice
President. Mr. Champagne focuses on our laboratory
facilities, and has been employed by National Dentex and its
predecessor for over 40 years.
Wayne M. Coll
has been employed by National Dentex since
1990 and had been our Corporate Controller since 1996. He was
elected to the positions of Assistant Treasurer in April 2003,
Vice President, Corporate Controller in January 2006, and Chief
Financial Officer in January 2007. He is currently our Vice
President, Chief Financial Officer and Assistant Treasurer.
Prior to joining National Dentex, Mr. Coll held several
financial management positions, including Assistant Controller
at Depot Distributors, Inc.
COMPENSATION
DISCUSSION AND ANALYSIS
Overview
Employees are the key to success in the dental laboratory
industry, which is driven by the importance of building and
fostering relationships with dentists. Accordingly, we believe
that it is necessary for us to have a competitive compensation
and benefits program that will enable us to attract, retain and
motivate the employees we need to operate successfully in our
competitive industry. We recognize that our compensation
programs must be fair and equitable and also cost efficient.
Additionally, we believe that we should give our employees the
opportunity to participate in the ownership of National Dentex
in proportion to each employees contribution to our
success.
This Compensation Discussion and Analysis, or CD&A,
describes the compensation program for our named executive
officers and how it relates to this overall philosophy.
Role of
the Compensation Committee
The Compensation Committee of our Board of Directors is composed
of three directors, all of whom meet the applicable independence
requirements of the SEC and NASDAQ. The Board of Directors
appoints the Committees Chairman and determines the
composition of the Committees members.
The Compensation Committee is responsible for approving all
matters concerning our total compensation practices and
philosophy, including the conducting of periodic reviews of
those practices and the philosophy that underlies them to ensure
that they support the objectives of National Dentex and the
interests of our stockholders. The Committee is responsible for
administering and interpreting our 1992 Long Term Incentive
Plan, our 2001 Stock Plan, our 1992 Employees Stock
Purchase Plan, our Dollars Plus 401(k) Plan, our Supplemental
Executive Retirement Plans, our Supplemental Laboratory
Executive Retirement Plan, our other general health and welfare
benefit plans, and all other compensation and benefits plans.
The Compensation Committee has sole authority to retain
and/or
terminate all external consultants and to commission surveys or
analyses that it determines necessary to fulfill its
responsibilities. Additionally, the Committee has sole authority
to approve the fees of the external consultants. During 2008,
the Committee utilized the services of Strategic Compensation
Partners as its external compensation advisor for all matters
concerning our senior management compensation programs and to
evaluate and make recommendations regarding our current
compensation arrangements with our President and Chief Executive
Officer, Mr. Brown.
The Compensation Committee annually reviews and approves the
corporate goals and objectives for our President and CEO,
evaluates his performance in light of those goals and
objectives, establishes his total compensation, and refers its
recommendations to the independent directors of the Board of
Directors for ratification.
21
In addition, the Compensation Committee annually reviews with
our President and CEO the individual compensation for our other
executive officers, evaluates their performance with him in
light of corporate goals and objectives, previously approved by
the Committee, and establishes their total compensation. Below
this level, the Committee approves the overall design of the
total executive compensation program and delegates the
discretion to approve individual compensation decisions to our
President and CEO.
Our Compensation Committee met six times during 2008. At those
meetings, the Committee reviewed and approved our corporate
goals and objectives relative to executive compensation and
evaluated the performance of the President and CEO and other
members of our senior management in light of those goals and
objectives.
Elements
of Compensation
The fundamental purpose of our executive compensation program is
to provide competitive compensation and benefits that will
enable us to attract, retain and motivate the senior management
and other personnel we need to operate successfully in our
competitive industry and meet our financial objectives. Specific
goals to achieve this purpose are:
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|
provide compensation competitive with similar companies;
|
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|
|
reward executives consistent with the performance of National
Dentex;
|
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|
recognize individual performance;
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attract, retain and motivate qualified executives; and
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|
encourage our executives to increase stockholder value by
aligning their interests with the interests of our stockholders.
|
To achieve these goals, the Compensation Committee has put in
place an executive compensation program with five basic
elements; base salary, annual cash bonus, stock options, health
and welfare benefits, and
change-in-control
agreements. The Committee intends to review its compensation
policies from time to time in order to take into account factors
which are unique to National Dentex.
The Compensation Committee does not use specific formulas to
determine the amount of compensation allocated to each element
of the compensation program. Instead, the Committee makes
subjective, individual decisions that provide for an appropriate
mix of the elements of compensation based upon the
individuals job responsibilities, overall job performance
and the competitive marketplace.
Base Salary.
The Compensation Committee
determines the base salary of each executive officer. The
Committee considers competitive industry salaries, the nature of
the officers position, the officers contribution and
experience, and the officers length of service. Base
salaries are conservatively pegged to a level we subjectively
believe to be competitive with the median levels of base salary
for similar positions in organizations of similar size.
Decisions regarding salary increases take into account the
executives current salary and amounts paid to the
executives peers within and outside of the Company. The
Committee generally reviews and establishes base salaries in
February of each year.
In reviewing compensation policies and practices for executives,
the Compensation Committee reviews executive compensation
surveys provided by its independent compensation consultant,
Strategic Compensation Partners, obtained from The Survey Group,
AON Consulting, ERI Executive Salary Assessor, and Towers
Perrin. The surveys are generally based on broad indexes of
U.S. public companies of reasonably comparable size. In
February 2008, based on the Compensation Committees review
of base salaries, it did not generally adjust salaries. However,
the Compensation Committee approved increases in base salary for
Mr. Coll and Mr. Becker, in light of their increased
responsibilities within our restructured executive management
team. Later in the year, on June 1, 2008, based in part on
the advice of its compensation consultant, the Compensation
Committee re-evaluated Mr. Browns compensation
arrangement and increased his base salary to take into account
his individual performance, level of responsibility and his
experience within the dental laboratory industry. In February
2009, the Compensation Committee determined, in light of the
financial uncertainties caused by the economic recession, not to
adjust base salaries for 2009 for our executive team, including
Mr. Brown.
22
Annual Cash Bonus.
The Compensation
Committee grants annual cash bonuses to executive officers based
directly on the short-term financial performance of both our
operating dental laboratories and National Dentex as a whole.
This annual cash bonus is designed to provide
better-than-competitive
pay only for
better-than-competitive
financial performance.
National Dentex has established cash incentive plans which
reward:
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|
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|
|
dental laboratory management and other key employees who
directly influence the financial performance of an individual
dental laboratory, as expressed in terms of growth in laboratory
operating income; and
|
|
|
|
key executives, based upon our achievement of corporate earning
targets, expressed in terms of pre-tax income, as compared to
our budget for each year.
|
This
compensation-for-performance
philosophy is designed to ensure that annual compensation awards
follow the achievement of specific financial goals that are
important to National Dentexs overall business objectives.
Our bonus plans at both the laboratory and corporate level
provide that cash bonuses will be paid only upon the achievement
of certain performance targets.
Laboratory
Incentive Compensation Plan
At the laboratory level, these targets were changed in 2008 to
reward growth in laboratory operating income, as compared to our
prior targets that were based on a combination of sales growth,
customer retention and percentage of laboratory operating
income. We changed the targets to growth in laboratory operating
income in order to increase the focus of the laboratory
management on internal growth, both in sales and profits, and
away from a system which mainly rewarded operating efficiency.
In 2008, the base salaries of certain employees were increased
following the changes in the targets in order to make them
competitive with positions in laboratories of similar size. As a
result, $1,675,000 of incentive compensation paid in 2007 was
paid as base salary in 2008. In 2008, payments under our
laboratory plan were $591,000, a decrease of $1,606,000 or 73.1%
from the adjusted payments of $2,197,000 made for 2007.
Corporate
Executive Incentive Plan
At the corporate level, the targets are based on pre-tax income
(which may exclude non recurring charges) for our business as a
whole. We focus on the entire Company for corporate-level
executives, which includes all of our executive officers,
because we believe that they are in a better position than the
laboratory executive to impact our overall financial
performance. Participants may receive a bonus payment expressed
as a percentage of base salary. The target payment is 50% of
base salary for the CEO, and lesser percentages for other
executive officers which is called the annual standard bonus.
The bonus for which a participant is eligible under the
corporate executive incentive plan ranges from 50% to a maximum
200% of that persons annual standard bonus, depending on
the level of achievement to the performance targets. If
performance targets are not satisfied, the corporate executive
incentive plan allows for a discretionary bonus, which in fiscal
2009 may be up to 25% of a persons annual standard bonus.
For 2008, 100% of the target payments would have been payable
upon achievement of approximately $11.9 million of pre-tax
income. As we did not satisfy the minimum performance target,
none of the participants in the corporate plan were eligible for
any payment under the corporate level bonus plan.
Stock Options and other Equity
Awards.
The Compensation Committee
administers our stock incentive plans, which seek to reward
executives and other employees for helping create long-term
value to our stockholders. The goals of our stock incentive
plans are to:
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|
|
reward executives for long-term strategic management and the
enhancement of stockholder value through appropriate equity
ownership in National Dentex;
|
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|
|
support a performance-oriented environment that rewards plan
participants for improving the financial performance of National
Dentex; and
|
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|
|
attract and retain key executives and employees that are
important to our long-term success.
|
23
The number of stock options granted is within the discretion of
the Compensation Committee and is based on a variety of
subjective factors, including past performance, competitive
factors, evaluation of other compensation, anticipated future
contribution, and the overall ability to impact our results. All
stock options are granted at an exercise price equal to the
closing price our of common stock on the date of grant. In
granting options, the Committee does not have any policy or
practice of linking grants to the public release of financial or
other information. We prohibit the repricing of stock options
without the approval of shareholders.
In 2003, the Financial Accounting Service Board, or FASB,
adopted Statement of Financial Accounting Standards No. 123
(revised 2004), Share Based Payment, which impacted
the accounting treatment of options. After the adoption of
Standards No. 123R, the Compensation Committee stopped
making stock option grants, although it believed that grants of
stock options were still an important element of an appropriate
compensation policy. In 2008, the Compensation Committee
discussed the Companys compensation programs, target
levels of equity ownership by executive officers, the types of
stock grants it may award in the future, and the accounting
consequences of such grants. After reviewing these matters with
its consultant, the Compensation Committee believed that in
order to better align the retention value of each
individuals option grants with the performance of the
individual, their job levels and future contribution to the
Company, performance-based options would be an effective form of
equity compensation. Thus, the Compensation Committee granted
performance options to certain executive and senior officers,
including the President and CEO, to purchase up to
275,000 shares of common stock. The performance-based
grants are contingent on specific performance criteria,
specifically earnings per share targets for 2009, 2010, and
2011. If the annual performance targets are met the option vests
following the Audit Committees approval of the
Companys financial statements for the applicable fiscal
year. If any of the performance targets are not satisfied, the
options are cancelled and returned to the 2001 Stock Plan. The
table on page 28 summarize the performance options granted
to each named executive officer.
Since 2006, the Compensation Committee also has had the ability
to grant shares of restricted stock or restricted stock units.
While these have been offered to directors in lieu of their
annual cash retainer and, starting in 2007, in the form of
annual equity grants, the Committee has not made any such grants
to executive officers or other employees during this time.
Employees Stock Purchase
Plan.
Our Employees Stock Purchase Plan
(ESPP)
, as discussed in more detail above, is
intended to encourage ownership of our common stock by our
employees and to provide additional incentive for employees to
promote the success of our business. The ESPP enables our
employees, through a payroll deduction program, to purchase
shares of our common stock at a discount, primarily at a price
equal to 85% of the fair market value of our common stock on
certain specified dates during a particular plan year. The ESPP
is intended to be an Employee Stock Purchase Plan
within the meaning of Section 423 of the Internal Revenue
Code. It is a broad-based plan that is open to substantially all
of our full-time employees.
Employee benefits and retirement
plans.
Our various employee benefits and
retirement plans are intended to attract and retain qualified
executives by ensuring that our overall benefits package is
competitive and provides an adequate opportunity for retirement
savings. We maintain a number of broad-based benefit plans that
are available to all of our employees, including group medical,
dental, life insurance and short and long term disability plans,
all of which are contributory. We offer all of our employees,
including our executive officers, the ability to participate in
a tax-qualified defined contribution 401(k) plan, which allows
savings for retirement on a tax deferred basis. We provide
matching contributions of up to 2.5% of deferred compensation.
The Summary Compensation Table on page 27 below includes
information about contributions we made for our named executive
officers for 2008.
In 1995 we implemented a Supplemental Executive Retirement Plan
and in 1996 we implemented a Supplemental Laboratory Executive
Retirement Plan. These plans are designed to provide certain of
our key employees, including some of our named executive
officers, annual benefits payable over a period of ten years
beginning on the participants 65th birthday or the
participants date of retirement (whichever comes later),
if the key employee has elected to do so in accordance with the
terms of the plan. In order to provide these benefits, we have
purchased life insurance contracts for each participating
employee. The benefits for each participant vest over periods of
ten years. Accordingly, certain participants are fully vested.
In 2006, we implemented an additional Supplemental Executive
Retirement Plan in which our President and CEO, David L. Brown,
participates, which vests over a five year period and would
provide Mr. Brown with ten annual payments of approximately
$125,000 beginning at age 70. The Summary
24
Compensation Table on page 27 and the Nonqualified Deferred
Compensation Table on page 30 below include information
regarding premiums we have paid, our contributions during the
years indicated, and accumulated benefits as of
December 31, 2008, the end of our most recently completed
fiscal year, for each of our named executive officers.
Employment Contracts and Change in Control
Agreements.
National Dentex has entered into
employment agreements with David L. Brown, our President and
CEO, and Richard F. Becker, Jr., who serves as Executive
Vice President and Treasurer, which provide for annual base
salaries that may be increased at the discretion of our Board of
Directors. These agreements also provide for participation in
our executive incentive compensation plan, reimbursement of
expenses, and the same types of benefits that we generally offer
to our other executives. In the event that either terminate
their employment with good reason, the Company terminates them
without cause, or their death or disability, each as defined in
their employment agreement, the Company will continue to pay
their current base salary and average bonus for a period of two
years following the date of termination, which amount may be
reduced in the second year to the extent of compensation
received from other employment, and in the case of disability,
may be reduced to the extent of any payments under the
Companys long term disability plan. The average bonus paid
in each of these scenarios means the average bonus paid to these
executives in the previous two years. Also, in the event of such
a termination, the Company will also provide health and welfare
benefits for the shorter of (i) two years following the
termination date, or (ii) until Mr. Brown or
Mr. Becker has commenced other employment. Mr. Becker
and Mr. Brown are also subject to certain non-competition
provisions covering the dental laboratory business. The
agreements automatically renew for one-year terms until such
time as they may be terminated by National Dentex or the named
employee.
National Dentex has also has entered into change of control and
severance agreements with each of David L. Brown, Richard F.
Becker, Jr., John W. Green IV, Arthur B. Champagne, and
Wayne M. Coll which provide for a severance benefit upon
termination of employment within two years after a change in
control of National Dentex. Except for Mr. Brown, these
agreements provide that, in the event that the named employee is
terminated without cause, or terminates his employment for
certain specified reasons (such as a reduction in compensation
or duties), within two years of a change of control, the
employee will receive severance benefits equal to two times his
base salary in effect immediately prior to the date of
termination, plus two times the average amount of the bonus
payable for the two fiscal years ending on or immediately prior
to the date of termination. In Mr. Browns case, these
severance benefits are three times salary and three times the
average bonus over the two preceding years. These agreements
also provide for two years of post-termination health and
welfare benefits. The severance payments are payable in a lump
sum within thirty (30) days of the qualifying termination
following a change of control.
Executive Compensation Decisions in
2008.
Our Compensation Committee determines
the compensation of our President and CEO, which is ratified by
the independent directors serving on our Board of Directors. Our
President and CEO recommends compensation for the other named
executive officers to the Compensation Committee for their
review and approval.
Through May 2008, we paid our President and CEO, David L. Brown,
a base salary of $350,000. This salary level was set in January
2005 based on Mr. Browns performance up to that time,
his reputation and status in the dental laboratory industry, his
experience and his leadership of National Dentex. On
June 1, 2008, based in part on the advice of its
compensation consultant, Strategic Compensation Partners, the
Compensation Committee approved and the full Board ratified an
increase in Mr. Browns base salary to $400,000, which
the Committee believes, along with his annual cash bonus
targets, would bring his total compensation within the median
levels of small to mid-cap sized public companies. The base
salaries during 2008 of our other named executive officers are
included in the Summary Compensation Table on page 27.
Our Compensation Committee has set the following base salaries
for 2009 for our named executive officers:
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Percentage Increase
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2009
|
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Over 2008
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Named Executive Officer
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|
Base Salary
|
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|
Base Salary
|
|
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David L. Brown
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$
|
400,000
|
|
|
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|
%
|
John W. Green IV
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|
350,000
|
|
|
|
|
%
|
Richard F. Becker, Jr.
|
|
|
240,000
|
|
|
|
|
%
|
Arthur B. Champagne
|
|
|
185,000
|
|
|
|
|
%
|
Wayne M. Coll
|
|
|
175,000
|
|
|
|
|
%
|
25
None of our executive officers were paid a cash bonus in 2008.
This was determined under our corporate executive incentive plan
discussed above. Mr. Brown had a target bonus of 50% of his
base salary or $200,000. The other executive officers had lesser
percentages from 15% to 35%.
Conclusion
In evaluating the individual components of compensation for each
of our executive officers, the Compensation Committee reviews
each element of compensation as well as the level of total
compensation. Through the compensation programs discussed above,
a significant portion of each executive officers
compensation is contingent upon individual as well as Company
performance. The Compensation Committee is committed to
retaining this
compensation-for-performance
philosophy and will continue to structure compensation programs
in this light.
Compensation
Committee Report
The Compensation Committee has reviewed and discussed with our
management the Compensation Discussion and Analysis appearing in
this proxy statement, and based on this review and discussion,
the Compensation Committee has recommended to our Board of
Directors that the Compensation Discussion and Analysis be
included in this Proxy Statement and (through incorporation by
reference) in our most recently filed Annual Report on
Form 10-K.
The foregoing report has been furnished on behalf of the Board
of Directors by the members of its Compensation Committee.
Submitted by:
Norman F. Strate
,
Chairman
J
ack
R.
C
rosby
Thomas E. Callahan
Compensation
Committee Interlocks and Insider Participation
During fiscal 2009, our Compensation Committee consisted of
Norman F. Strate (Chairman), Jack R. Crosby, and Thomas E.
Callahan. No member of our Compensation Committee is serving or
has served as one of our or our subsidiaries officers or
employees at any time. None of our executive officers serves as
a member of the compensation committee of any other company that
has an executive officer serving as a member of our Board of
Directors. None of our executive officers serves as a member of
the board of directors of any other company that has an
executive officer serving as a member of our Boards
Compensation Committee.
None of the directors is a director or executive officer of any
other corporation that has a director or executive officer who
is also a director of the Company.
26
SUMMARY
COMPENSATION TABLE
The table below summarizes the compensation that we paid to our
CEO, our CFO and other named executive officers for
the fiscal year ended December 31, 2008.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified
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Name and
|
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|
|
|
|
|
|
|
|
Option
|
|
Non Equity
|
|
Deferred
|
|
|
|
|
Principal
|
|
|
|
|
|
Bonus
|
|
Stock
|
|
Awards
|
|
Incentive Plan
|
|
Compensation
|
|
All other
|
|
|
Position
|
|
Year
|
|
Salary
|
|
(1)
|
|
Awards
|
|
(2)
|
|
(3)
|
|
Earnings
|
|
Compensation
|
|
Total
|
|
David L. Brown
|
|
|
2008
|
|
|
$
|
371,154
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
156,822
|
(4)
|
|
$
|
527,976
|
|
President, CEO
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|
|
2007
|
|
|
|
350,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
92,750
|
|
|
|
0
|
|
|
|
156,697
|
|
|
|
599,447
|
|
|
|
|
2006
|
|
|
|
350,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
162,166
|
|
|
|
512,166
|
|
Wayne M. Coll
|
|
|
2008
|
|
|
|
169,327
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
17,145
|
(5)
|
|
|
186,472
|
|
Vice President, CFO
|
|
|
2007
|
|
|
|
160,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
22,000
|
|
|
|
0
|
|
|
|
15,842
|
|
|
|
197,842
|
|
|
|
|
2006
|
|
|
|
140,000
|
|
|
|
15,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
18,959
|
|
|
|
173,959
|
|
Richard F. Becker
|
|
|
2008
|
|
|
|
233,846
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
16,649
|
(6)
|
|
|
250,495
|
|
Executive VP,
|
|
|
2007
|
|
|
|
228,077
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
37,000
|
|
|
|
0
|
|
|
|
14,421
|
|
|
|
279,498
|
|
Treasurer
|
|
|
2006
|
|
|
|
220,000
|
|
|
|
15,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
17,786
|
|
|
|
252,786
|
|
Arthur B. Champagne
|
|
|
2008
|
|
|
|
181,442
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
8,425
|
(7)
|
|
|
189,867
|
|
Senior Vice
|
|
|
2007
|
|
|
|
185,000
|
|
|
|
15,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
6,550
|
|
|
|
206,550
|
|
President
|
|
|
2006
|
|
|
|
185,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
10,097
|
|
|
|
0
|
|
|
|
11,323
|
|
|
|
206,420
|
|
John W. Green IV(8)
|
|
|
2008
|
|
|
|
350,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4,900
|
(9)
|
|
|
354,900
|
|
Executive Vice
|
|
|
2007
|
|
|
|
350,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
56,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
406,000
|
|
President, Laboratory Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Paid in the subsequent year for services rendered in 2006 under
the Corporate Executive Incentive Plan.
|
|
(2)
|
|
In 2008, the Company granted performance options to each of
Mr. Brown, Mr. Coll, Mr. Becker and
Mr. Green. In accordance with FAS 123R, the Company
did not record any compensation expense for these awards in
fiscal 2008 because the Company determined that it was not
reasonably probable that the options would be earned.
|
|
(3)
|
|
Paid for services rendered in the year specified under the
Laboratory Incentive Compensation Plan for Mr. Champagne in
2006 and under the Corporate Executive Incentive Plan for the
other executives in 2007.
|
|
(4)
|
|
Represents $147,822 for life insurance premiums, $5,125 for use
of an automobile and $3,875 in matching contributions under
National Dentexs 401(k) plan.
|
|
(5)
|
|
Represents $4,810 for life insurance premiums, $8,460 for use of
an automobile and $3,875 in matching contributions under
National Dentexs 401(k) plan.
|
|
(6)
|
|
Represents $12,774 for use of an automobile and $3,875 in
matching contributions under National Dentexs 401(k) plan.
|
|
(7)
|
|
Represents $4,550 for use of an automobile and $3,875 in
matching contributions under National Dentexs 401(k) plan.
|
|
(8)
|
|
Mr. Green became a National Dentex employee in September
2006. National Dentex acquired Green Dental Laboratories, of
which he was a principal stockholder, in March 2005. He received
deferred purchase price, non-competition and consulting payments
in 2006 and 2007 as a result of the acquisition, as described on
page 10 above.
|
|
(9)
|
|
Represents $4,900 for use of an automobile.
|
27
2008
GRANTS OF PLAN-BASED AWARDS
In 2008, the Company granted performance based options for an
aggregate of 275,000 shares to certain executives and
senior officers under the 2001 Stock Plan, including the named
executive officers below. The performance-based options vest in
three annual installments provided certain earnings per share
targets are satisfied for each of 2009, 2010, and 2011,
respectively. In each case, the performance based options would
vest following the Audit Committees approval of our
financial statements for the applicable fiscal year providing
the target earnings per share for that fiscal year have been
met. If a performance target is not satisfied, the options that
would have vested for that fiscal year are cancelled and
returned to the 2001 Stock Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under
|
|
|
Estimated Future
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
|
Non-Equity Incentive
|
|
|
Payouts Under
|
|
|
Exercise or Base
|
|
|
Fair Value of
|
|
|
|
|
|
|
Plan Awards(1)
|
|
|
Equity Incentive
|
|
|
Price of Option
|
|
|
Stock and
|
|
|
|
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Plan Awards
|
|
|
Awards
|
|
|
Option Awards
|
|
Name
|
|
Grant Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Target (#)
|
|
|
($/Sh)
|
|
|
($)(2)
|
|
|
David L. Brown
|
|
|
9-08-08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000
|
|
|
$
|
12.00
|
|
|
$
|
357,762
|
|
|
|
|
2-26-08
|
|
|
$
|
100,000
|
|
|
$
|
200,000
|
|
|
$
|
400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wayne Coll
|
|
|
7-14-08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
|
|
|
12.00
|
|
|
|
156,450
|
|
|
|
|
2-26-08
|
|
|
|
21,875
|
|
|
|
43,750
|
|
|
|
87,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard F. Becker, Jr.
|
|
|
7-14-08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
12.00
|
|
|
|
178,800
|
|
|
|
|
2-26-08
|
|
|
|
42,000
|
|
|
|
84,000
|
|
|
|
168,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arthur Champagne
|
|
|
2-26-08
|
|
|
|
12,875
|
|
|
|
27,750
|
|
|
|
55,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W. Green IV
|
|
|
7-14-08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
12.00
|
|
|
|
178,800
|
|
|
|
|
2-26-08
|
|
|
|
61,250
|
|
|
|
122,500
|
|
|
|
245,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
This column relates to awards granted in 2008 under the
Corporate Executive Incentive Plan. Under the corporate
executive incentive plan, a percentage of the officers
annual standard bonus is awarded if certain levels of the
Companys pre-tax income are achieved. If the minimum level
of pre-tax income is not achieved, no cash bonus is awarded.
However, the Compensation Committee may award a discretionary
bonus under the plan based on individual performance. The
maximum cash bonus achievable under the corporate incentive plan
is 200% of the officers standard annual bonus. For a
further discussion of the corporate executive incentive plan,
see the Compensation Discussion and Analysis above.
No amounts were earned under the corporate executive incentive
plan for 2008 as the Company did not meet the minimum pre-tax
net income for 2008, nor did the Compensation Committee grant a
discretionary bonus under the plan.
|
|
(2)
|
|
Represents the estimated fair value of the award as of the grant
date in accordance with FAS 123R (assuming no forfeitures).
We calculated the estimated fair value of said award on the date
of grant using the Black-Scholes option pricing model. The
assumptions used were: risk-free interest rate of 3.84%;
expected life of six years, no dividend yield, and expected
volatility of 30.19%.
|
28
OUTSTANDING
EQUITY AWARDS AT DECEMBER 31, 2008
The following table sets forth information concerning
outstanding equity-based awards to our named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
Option
|
|
|
|
Options
|
|
|
Options
|
|
|
Unearned
|
|
|
Exercise
|
|
|
Expiration
|
|
|
|
#
|
|
|
#
|
|
|
Options
|
|
|
Price
|
|
|
Date
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
#
|
|
|
($)
|
|
|
(1)
|
|
|
David L. Brown
|
|
|
11,250
|
|
|
|
0
|
|
|
|
0
|
|
|
|
8.6667
|
|
|
|
04-05-10
|
|
|
|
|
58,500
|
|
|
|
0
|
|
|
|
0
|
|
|
|
13.5000
|
|
|
|
01-23-11
|
|
|
|
|
91,500
|
|
|
|
0
|
|
|
|
0
|
|
|
|
13.3667
|
|
|
|
04-10-11
|
|
|
|
|
18,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
16.4533
|
|
|
|
01-22-12
|
|
|
|
|
12,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
13.3667
|
|
|
|
01-21-13
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
80,000
|
(2)
|
|
|
12.0000
|
|
|
|
09-08-18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wayne M. Coll
|
|
|
3,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
8.6667
|
|
|
|
04-05-10
|
|
|
|
|
3,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
13.9333
|
|
|
|
05-24-11
|
|
|
|
|
3,600
|
|
|
|
0
|
|
|
|
0
|
|
|
|
16.4533
|
|
|
|
01-22-12
|
|
|
|
|
3,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
13.3667
|
|
|
|
01-21-13
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
35,000
|
(2)
|
|
|
12.0000
|
|
|
|
07-14-18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard F. Becker, Jr.
|
|
|
7,500
|
|
|
|
0
|
|
|
|
0
|
|
|
|
8.6667
|
|
|
|
04-05-10
|
|
|
|
|
13,500
|
|
|
|
0
|
|
|
|
0
|
|
|
|
13.5000
|
|
|
|
01-23-11
|
|
|
|
|
18,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
16.4533
|
|
|
|
01-22-12
|
|
|
|
|
12,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
13.3667
|
|
|
|
01-21-13
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
40,000
|
(2)
|
|
|
12.0000
|
|
|
|
07-14-18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arthur B. Champagne
|
|
|
13,500
|
|
|
|
0
|
|
|
|
0
|
|
|
|
13.5000
|
|
|
|
01-23-11
|
|
|
|
|
18,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
16.4533
|
|
|
|
01-22-12
|
|
|
|
|
12,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
13.3667
|
|
|
|
01-21-13
|
|
John W. Green IV
|
|
|
0
|
|
|
|
0
|
|
|
|
40,000
|
(2)
|
|
|
12.0000
|
|
|
|
07-14-18
|
|
|
|
|
(1)
|
|
The expiration date of each option is ten years after the date
of grant. Each option became vested in three equal increments
beginning on the first anniversary of the grant date and on each
of the second and third anniversaries of the grant date.
|
|
(2)
|
|
Performance based options become vested in three equal
increments, beginning in 2010, contingent upon the achievement
of certain performance criteria for fiscal years 2009, 2010 and
2011. The expiration of any portion of the option that vests is
ten years after the date of grant.
|
OPTION
EXERCISES AND STOCK VESTED DURING 2008
The were no options or shares realized pursuant to the vesting
or exercise of equity-based awards during the fiscal year ended
December 31, 2008 for our named executive officers.
PENSION
BENEFITS
We do not have a defined benefit pension plan. Accordingly, we
have omitted the table otherwise required to be included here
detailing any pension benefit to our named executive officers.
The table below under the caption Nonqualified Deferred
Compensation provides information regarding certain plans
that provide for payments at, following, or in connection with
the retirement of our named executive officers.
29
NONQUALIFIED
DEFERRED COMPENSATION
The following table includes information about the participation
of our named executive officers in the supplemental executive
retirement plans discussed above on page 24 under the
caption Employee benefits and retirement plans.
Mr. Green was not a participant at fiscal year end. The
amounts noted in column 2 are also included in All Other
Compensation in the Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
Contributions in
|
|
|
Contributions
|
|
|
Earnings
|
|
|
Withdrawals
|
|
|
Balance at
|
|
|
|
Last FY
|
|
|
in Last FY
|
|
|
in Last FY
|
|
|
Distributions
|
|
|
Last FYE
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
David L. Brown
|
|
$
|
0
|
|
|
$
|
147,822
|
|
|
$
|
247,740
|
|
|
$
|
0
|
|
|
$
|
1,421,603
|
(1)
|
Wayne M. Coll
|
|
|
0
|
|
|
|
4,810
|
|
|
|
5,932
|
|
|
|
0
|
|
|
|
36,082
|
(1)
|
Richard F. Becker, Jr.
|
|
|
0
|
|
|
|
0
|
|
|
|
8,652
|
|
|
|
0
|
|
|
|
113,026
|
(1)
|
Arthur B. Champagne
|
|
|
0
|
|
|
|
0
|
|
|
|
24,635
|
|
|
|
0
|
|
|
|
323,136
|
(1)
|
|
|
|
(1)
|
|
The Aggregate Balance includes amounts previously recorded in
the Summary Compensation Tables under All Other
Compensation. These amounts aggregate as follows: for
Mr. Brown $1,307,846; for Mr. Coll $9,620; for
Mr. Becker $44,504; and for Mr. Champagne $101,826.
|
30
The following table sets forth an estimate of the dollar amounts
potentially payable to our named executive officers assuming
termination of employment or
change-in-control
under various scenarios as of December 31, 2008. The
applicable agreements are described above under
Compensation Discussion and Analysis.
David
L. Brown
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
For
|
|
|
|
|
|
|
|
|
Not for
|
|
|
Involuntary
|
|
|
Upon
|
|
|
|
|
|
|
|
|
|
Good
|
|
|
Early
|
|
|
Normal
|
|
|
Cause
|
|
|
For Cause
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
Reason
|
|
|
Retirement
|
|
|
Retirement
|
|
|
Termination
|
|
|
Termination
|
|
|
Control
|
|
|
Death
|
|
|
Disability
|
|
|
Severance
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,339,125
|
|
|
$
|
0
|
|
|
$
|
0
|
|
SERP(1)
|
|
|
1,500,000
|
|
|
|
0
|
|
|
|
1,500,000
|
|
|
|
1,500,000
|
|
|
|
1,500,000
|
|
|
|
1,500,000
|
|
|
|
1,500,000
|
|
|
|
1,500,000
|
|
Employment Agreement
|
|
|
892,750
|
|
|
|
0
|
|
|
|
0
|
|
|
|
892,750
|
|
|
|
0
|
|
|
|
0
|
(2)
|
|
|
892,750
|
|
|
|
892,750
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$
|
2,392,750
|
|
|
$
|
0
|
|
|
$
|
1,500,000
|
|
|
$
|
2,392,750
|
|
|
$
|
1,500,000
|
|
|
$
|
2,839,125
|
|
|
$
|
2,392,750
|
|
|
$
|
2,392,750
|
|
Richard
F. Becker, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
For
|
|
|
|
|
|
|
|
|
Not for
|
|
|
Involuntary
|
|
|
Upon
|
|
|
|
|
|
|
|
|
|
Good
|
|
|
Early
|
|
|
Normal
|
|
|
Cause
|
|
|
For Cause
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
Reason
|
|
|
Retirement
|
|
|
Retirement
|
|
|
Termination
|
|
|
Termination
|
|
|
Control
|
|
|
Death
|
|
|
Disability
|
|
|
Severance
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
517,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
SERP(1)
|
|
|
315,000
|
|
|
|
0
|
|
|
|
315,000
|
|
|
|
315,000
|
|
|
|
315,000
|
|
|
|
315,000
|
|
|
|
315,000
|
|
|
|
315,000
|
|
Employment Agreement
|
|
|
517,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
517,000
|
|
|
|
0
|
|
|
|
0
|
(2)
|
|
|
517,000
|
|
|
|
517,000
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$
|
832,000
|
|
|
$
|
0
|
|
|
$
|
315,000
|
|
|
$
|
832,000
|
|
|
$
|
315,000
|
|
|
$
|
832,000
|
|
|
$
|
832,000
|
|
|
$
|
832,000
|
|
Arthur
B. Champagne
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
For
|
|
|
|
|
|
|
|
|
Not for
|
|
|
Involuntary
|
|
|
Upon
|
|
|
|
|
|
|
|
|
|
Good
|
|
|
Early
|
|
|
Normal
|
|
|
Cause
|
|
|
For Cause
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
Reason
|
|
|
Retirement
|
|
|
Retirement
|
|
|
Termination
|
|
|
Termination
|
|
|
Control
|
|
|
Death
|
|
|
Disability
|
|
|
Severance
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
385,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
SERP(1)
|
|
|
367,500
|
|
|
|
0
|
|
|
|
367,500
|
|
|
|
367,500
|
|
|
|
367,500
|
|
|
|
367,500
|
|
|
|
367,500
|
|
|
|
367,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$
|
367,500
|
|
|
$
|
0
|
|
|
$
|
367,500
|
|
|
$
|
367,500
|
|
|
$
|
367,500
|
|
|
$
|
752,500
|
|
|
$
|
367,500
|
|
|
$
|
367,500
|
|
Wayne
M. Coll
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
For
|
|
|
|
|
|
|
|
|
Not for
|
|
|
Involuntary
|
|
|
Upon
|
|
|
|
|
|
|
|
|
|
Good
|
|
|
Early
|
|
|
Normal
|
|
|
Cause
|
|
|
For Cause
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
Reason
|
|
|
Retirement
|
|
|
Retirement
|
|
|
Termination
|
|
|
Termination
|
|
|
Control
|
|
|
Death
|
|
|
Disability
|
|
|
Severance
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
372,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
SERP(1)
|
|
|
280,000
|
|
|
|
0
|
|
|
|
280,000
|
|
|
|
280,000
|
|
|
|
280,000
|
|
|
|
280,000
|
|
|
|
280,000
|
|
|
|
280,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$
|
280,000
|
|
|
$
|
0
|
|
|
$
|
280,000
|
|
|
$
|
280,000
|
|
|
$
|
280,000
|
|
|
$
|
652,000
|
|
|
$
|
280,000
|
|
|
$
|
280,000
|
|
John
W. Green, IV
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
For
|
|
|
|
|
|
|
|
|
Not for
|
|
|
Involuntary
|
|
|
Upon
|
|
|
|
|
|
|
|
|
|
Good
|
|
|
Early
|
|
|
Normal
|
|
|
Cause
|
|
|
For Cause
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
Reason
|
|
|
Retirement
|
|
|
Retirement
|
|
|
Termination
|
|
|
Termination
|
|
|
Control
|
|
|
Death
|
|
|
Disability
|
|
|
Severance
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
756,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
756,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
31
|
|
|
(1)
|
|
Payable in ten equal annual installments beginning when the
executive terminates employment after attaining the age of 65,
in accordance with the terms of the SERP. Solely as to
Mr. Brown, these amounts include an additional SERP that
provides for ten equal annual installments of $125,000,
beginning when Mr. Brown terminates employment after
attaining age 70.
|
|
(2)
|
|
The terms of the Employment Agreements stipulate that in the
event of a change in control the determination and payment of
any benefits following a qualified termination would be
exclusively governed by the provisions of any existing Change in
Control Severance Agreement. Under either agreement, the
executives would also be entitled to continuation of health
insurance and other welfare benefits.
|
|
(3)
|
|
In the case of termination for disability, payment would be
reduced by the amount of disability compensation received by the
executive pursuant to the Companys long-term disability
plan.
|
32
Section 16(a) of the Securities Exchange Act requires our
officers, directors and greater than 10% stockholders
(
reporting persons
) to file certain reports
with the SEC (
Section 16 reports
) with
respect to beneficial ownership of our equity securities. Based
solely on a review of the Section 16 reports furnished to
us by or on behalf of the reporting persons and, where
applicable, any written representation by any of them that
Section 16 reports were not required, we believe that all
Section 16(a) filing requirements applicable to our
reporting persons during and with respect to 2008 have been
complied with on a timely basis, except for the following: a
Form 4 was filed late for Mr. Harkins, disclosing the
restricted stock grant of 3,380 shares as of May 13,
2008.
OTHER
MATTERS
The Board of Directors is not aware of any other matters which
may come before the meeting. If any other matters properly come
before the meeting, the persons named in the enclosed proxy will
vote in accordance with their best judgment.
Please remember that your vote at the meeting is very
important to us regardless of the number of shares you own.
Please vote your shares, whether or not you plan to attend the
meeting, by completing the enclosed proxy card and returning it
to us in the enclosed envelope.
33
Appendix A
THIRD
AMENDMENT TO 1992 EMPLOYEES STOCK PURCHASE PLAN
The first sentence of Section 6 of the Plan, as previously
amended, has been further amended (effective as of shareholder
approval of the Amendment on May 12, 2009) to read in
its entirety as follows:
No more than an aggregate of 700,000 shares of Common
Stock may be issued or delivered pursuant to the exercise of
options under the Plan, subject to adjustments made in
accordance with Section 9.8.
A-1
|
|
|
|
|
|
|
|
|
z
|
|
|
|
|
|
|
|
{
|
x
|
|
PLEASE MARK VOTES
|
|
REVOCABLE PROXY
|
|
|
|
|
|
AS IN THIS EXAMPLE
|
|
NATIONAL DENTEX CORPORATION
|
|
For
|
With-
hold
|
For All
Except
|
PROXY
FOR THE SPECIAL MEETING IN LIEU OF ANNUAL MEETING
OF SHAREHOLDERS ON MAY 12, 2009
THIS PROXY IS BEING SOLICITED BY
THE BOARD OF DIRECTORS
The undersigned, having received the Notice of Special Meeting in Lieu of Annual Meeting of Shareholders, Proxy Statement and the
Annual Report of National Dentex Corporation (the Company), hereby
appoint(s) David V, Harkins, David L. Brown, and Richard F.
Becker or any one of them, proxies for the undersigned, with full power of
substitution in each of them, to represent the undersigned
at the Special Meeting in Lieu of Annual Meeting of Shareholders of the Company to be held at Posternak Blankstein & Lund LLP, Prudential
Tower, 800 Boylston Street, 33 Floor, Boston, Massachusetts,
02199 at 10:00 a.m. on Tuesday, May 12,
2009 and at any adjournment or postponement thereof, and thereat, to vote and act in regard to all matters which may properly come before said meeting (except those matters
as to which authority is hereinafter withheld) upon and in respect of
all shares of Common Stock of the Company upon or in respect of which the
undersigned would be entitled to vote or act and with all powers the undersigned would possess, if personally present, and especially (but without limiting
the general authorization and power hereby given) to vote and act as indicated hereon.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Please be sure to date and sign
this proxy card in the box below.
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sign above
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
|
Proposal to elect
the following persons as directors.
|
|
o
|
|
o
|
|
o
|
|
|
(01) David L. Brown
|
|
(04) David V. Harkins
|
|
|
|
|
(02) Thomas E. Callahan
|
|
(05) James E.
Mulvihill, D.M.D.
|
|
|
(03) Jack R. Crosby
|
|
(06) Norman F. Strate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INSTRUCTION: To withhold authority to
vote for any individual nominee(s), mark For All Except
and write that nominees name(s) in the space provided
below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
|
|
Against
|
|
Abstain
|
2.
|
|
Proposal
to approve the amendment to the Companys 1992 Employees Stock
Purchase Plan (the ESPP) to increase the number of shares of common stock
reserved for issuance under the ESPP by 250,000 shares (representing
approximately 4.4% of the outstanding shares.)
|
|
o
|
|
o
|
|
o
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
|
|
Against
|
|
Abstain
|
3.
|
|
Proposal to ratify the selection of
PricewaterhouseCoopers LLP as the Companys independent auditors
for 2009.
|
|
o
|
|
o
|
|
o
|
|
|
|
|
|
|
|
|
|
|
|
4.
|
|
In their discretion on any other matters as may
properly come before the meeting or at any adjournment or postponement thereof.
|
|
|
|
|
|
|
|
|
|
|
|
Mark box at right if an address change or comment has been noted on the bottom portion of this card.
|
|
o
|
|
|
|
|
|
|
|
|
|
|
|
Please check the box at right if you plan to
attend the meeting on May 12.
|
|
o
|
|
THE SHARES REPRESENTED BY THIS PROXY
WILL BE VOTED AS DIRECTED BY THE SHAREHOLDER. IF NO INSTRUCTIONS ARE
INDICATED, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.
|
Ç
Detach above card, sign, date and mail in postage paid envelope
provided.
Ç
NATIONAL DENTEX CORPORATION
The
above signed hereby confer(s) upon said proxies, and each of them, discretionary authority to
vote (a) upon any other matters or proposals not known at the time of solicitation of
this proxy which may properly come before the meeting, and (b) with respect to the selection
of Directors in the event of any unforeseen emergency.
Attendance
of the above signed at said meeting or at any adjournment or postponement thereof will not be deemed to
revoke this proxy unless the above signed shall affirmatively indicate thereat
his or her intention to vote said shares in person. If a fiduciary capacity is attributed to
the above signed hereon, this proxy will be deemed signed by the
above signed in that capacity.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
IF YOUR ADDRESS HAS
CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED BELOW AND RETURN THIS
PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
5381
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