UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): May 19, 2017
(Exact name of registrant as specified in its charter)
Utah | 0-18592 | 87-0447695 | ||
(State or other jurisdiction of | (Commission | (I.R.S. Employer | ||
incorporation or organization) | File Number) | Identification No.) | ||
1600 West Merit Parkway | ||
South Jordan, Utah | 84095 | |
(Address of principal executive offices) | (Zip Code) | |
(801) 253-1600
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
o Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On May 24, 2017, Richard W. Edelman, who has served as a director of Merit Medical Systems, Inc. (the “Company”) since 1988, resigned as a director of the Company, effective as of that date. Mr. Edelman had served as the Lead Independent Director of the Company’s Board of Directors (the “Board”) since 2014 and as a member of the Board’s Audit Committee since 1991.
Mr. Edelman’s resignation was provided in accordance with the Company’s Corporate Governance Guidelines for retirement of directors and was not the result of any disagreement with the Company, its management or the Board or any matter relating to the Company’s operations, policies or practices.
In anticipation of Mr. Edelman’s resignation, the Board’s Nominating and Corporate Governance Committee (the “Nominating Committee”) had previously identified and, upon receipt of the resignation, recommended Thomas Gunderson as a candidate to serve as a director of the Company, filling the vacancy resulting from Mr. Edelman’s resignation. On May 24, 2017, the Board accepted the Nominating Committee’s recommendation, elected Mr. Gunderson to serve as a director of the Company and appointed him to serve as a member of its Audit Committee. In accordance with the provisions of the Second Amended and Restated Bylaws of the Company, Mr. Gunderson will serve as a director during the remainder of Mr. Edelman’s term, which expires in 2019.
Mr. Gunderson is the Chairman of the Board of Directors at the Minneapolis Heart Institute Foundation, an Executive in Residence at the University of Minnesota’s Medical Industry Leadership Institute, and a member of the American Heart Association’s Science and Technology Accelerator Committee. For over 20 years (until his retirement in 2016), Mr. Gunderson was a managing director and senior research analyst at Piper Jaffray, following medical technology companies. Mr. Gunderson has been recognized by several industry publications, including the Wall Street Journal, Institutional Investor, First Call, and Medical Device and Diagnostic Industry. In 2014, Thomson-Reuters named him “Top Stock Picker” in the medical technology sector. Mr. Gunderson holds a Bachelor’s degree from Carleton College, a Master’s degree in cell biology from the University of Minnesota and a Master’s degree in business administration from the University of St. Thomas. Mr. Gunderson is an independent director.
During his service as a director of the Company, Mr. Gunderson will be entitled to receive annual director’s fees consistent with the Company’s current director compensation practices. Mr. Gunderson will be entitled to receive the annual director’s fee, which is currently equal to $60,000, plus an annual fee of $10,000 for his service as a member of the Board’s Audit Committee. Mr. Gunderson will also be eligible to participate as a non-employee director in the Company’s benefit plans, consistent with the Company's non-employee director compensation practices. At the time of his appointment, Mr. Gunderson was awarded an option to acquire 25,000 shares of the Company’s common stock, with an exercise price of $34.40 per share. The option has a term of seven years and is scheduled to become exercisable in five equal annual increments, commencing in May 2018.
Since the beginning of the Company’s last fiscal year, neither Mr. Gunderson, nor any of his immediate family members, has been a party to any transaction or currently proposed transaction with the Company that is reportable under Item 404(a) promulgated under Regulation S-K. There are no arrangements or understandings between Mr. Gunderson and any other person pursuant to which Mr. Gunderson was appointed as a director of the Company.
As a result of Mr. Edelman’s resignation, the Board also elected Nolan E. Karras to serve as Lead Independent Director. Mr. Karras will receive annual compensation of $50,000 for serving in that position, in addition to payment of annual fees for his service as a director and a member of the Board’s Audit Committee.
Item 5.07. Submission of Matters to a Vote of Security Holders.
On May 24, 2017, the Company held its 2017 Annual Meeting of Shareholders (the “Annual Meeting”). A total of 49,856,158 shares of the Company’s common stock were entitled to vote as of March 28, 2017, the record date for the Annual Meeting, of which 44,713,771 shares were represented in person or by proxy at the Annual Meeting.
The shareholders of the Company voted on the following matters at the Annual Meeting: (i) the election of three directors of the Company, to serve until the annual meeting of the Company’s shareholders to be held in 2020 and until their respective successors have been duly elected and qualified, (ii) a non-binding advisory proposal to approve the compensation of the Company’s named executive officers, otherwise known as a “say-on-pay” vote, (iii) a non-binding advisory proposal to recommend the frequency of future advisory votes on executive compensation during the next six years, otherwise known as a “say-on-frequency” vote, and (iv) the ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017.
Matter 1 - Election of Directors
Each of the three nominees listed below was re-elected to serve as a director of the Company. The votes cast for or withheld for each nominee, excluding 4,277,312 broker non-votes, were as follows:
Nominee | For | Withheld | ||
Kent W. Stanger | 37,829,135 | 2,607,324 | ||
Nolan E. Karras | 37,617,566 | 2,818,893 | ||
David M. Liu, M.D. | 38,664,849 | 1,771,610 | ||
Matter 2 - Advisory Vote on Executive Compensation
The results of the voting on a non-binding advisory proposal to approve the compensation of the Company’s named executive officers were as follows:
Votes For | Votes Against | Abstentions | Broker Non-Votes | ||||
25,066,522 | 15,224,144 | 145,793 | 4,277,312 | ||||
Accordingly, a majority of votes cast with respect to the advisory “say-on-pay” proposal were “for” approval of the compensation of the Company’s named executive officers, as disclosed in the Company’s proxy statement distributed in connection with the Annual Meeting.
Matter 3 - Advisory Vote on the Frequency of Votes on Executive Compensation
The results of the voting on a non-binding advisory proposal vote as to how frequently the Company should consider future “say-on-pay” proposals at its annual meetings of shareholders during the next six years were as follows:
One Year | Two Years | Three Years | Abstain | Broker Non-Votes | ||||
31,806,908 | 42,513 | 8,579,782 | 7,256 | 4,277,312 | ||||
In light of the voting results with respect to the frequency of future shareholder advisory votes on executive compensation shown above, the Company intends to hold an advisory vote on executive compensation on an annual basis until the next required vote on the frequency of executive compensation.
Matter 4 - Ratification of Appointment of Independent Registered Public Accounting Firm
The voting results with respect to the proposal to ratify the appointment of Deloitte & Touche LLP to serve as the Company’s independent registered public accountant for the fiscal year ending December 31, 2017 were as follows:
For | Opposed | Abstained | |||
42,121,814 | 2,575,019 | 16,938 | |||
Accordingly, the Company’s shareholders ratified the appointment of Deloitte and Touche LLP to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017.
No other matters were submitted to a vote of shareholders at the Annual Meeting.
Item 8.01. Other Events
On May 19, 2017, the Company entered into a group of related agreements with Sugan Co., Ltd. (“Sugan”), which has acted as the principal distributor of the Company’s products in Japan since 1989. Under the terms of the agreements:
(i) | Sugan agreed to transfer to the Company, at stated intervals during 2017 and 2018, a substantial portion of the product licenses, product inventory and customer information utilized by Sugan in distributing the Company’s products in Japan; |
(ii) | Sugan and the Company terminated the exclusive distribution agreement under which Sugan has acted as the principal distributor of the Company’s products in Japan; |
(iii) | the Company granted to Sugan exclusive distribution rights in Japan that expire on December 31, 2021 for a limited group of the Company’s products; and |
(iv) | the Company agreed to supply certain products to Sugan for resale on a non-exclusive basis. |
As a result of these agreements, with the exception of the limited exclusive distribution rights retained by Sugan through December 31, 2021, the Company intends to commence the direct sale of its products to customers in Japan, rather than through Sugan, beginning as early as July 1, 2017. The aggregate transaction consideration paid by the Company in connection with this transaction, excluding future purchases under the new distribution and supply agreements, was valued at approximately $5 million.
Item 9.01. Financial Statements and Exhibits.
Exhibit No. | Description | |
99.1 | Press Release dated May 26, 2017, entitled "Merit Medical Announces Appointment of New Director." | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
MERIT MEDICAL SYSTEMS, INC. | ||||||
Date: May 30, 2017 | By: | /s/ Brian G. Lloyd | ||||
Chief Legal Officer and Corporate Secretary | ||||||
EXHIBIT INDEX
Exhibit No. | Description | |
99.1 | Press Release dated May 26, 2017, entitled "Merit Medical Announces Appointment of New Director." | |
Exhibit 99.1
FOR IMMEDIATE RELEASE
Date: | May 26, 2017 |
Contact: | Anne-Marie Wright, Vice President, Corporate Communications |
Phone: | (801) 208-4167 e-mail: awright@merit.com Fax: (801) 253-1688 |
Merit Medical Announces Appointment of New Director
SOUTH JORDAN, Utah, May 26, 2017 (GLOBE NEWSWIRE) -- Merit Medical Systems, Inc. (NASDAQ:MMSI), a leading manufacturer and marketer of proprietary disposable medical devices used in interventional, diagnostic and therapeutic procedures, particularly in cardiology, radiology and endoscopy, announced today that it has appointed Thomas Gunderson to serve as a director of the Company.
Gunderson recently retired from a 24-year career at Piper Jaffray where he covered numerous companies as a Senior Research Analyst for Medical Technology. Prior to joining Piper Jaffray, he worked for 12 years at American Medical Systems, a private medical device company acquired by Pfizer in 1983. Gunderson has served on several non-profit boards and is currently serving as Chairman of the Board of Directors of the Minneapolis Heart Institute Foundation, as a member of the Board of TransMedics, Inc., and as a director of the Abbott Northwestern Hospital Foundation.
Gunderson was appointed by Merit’s Board of Directors to fill a vacancy which resulted from the resignation of Richard Edelman, who served as a director of Merit since the company’s founding and recently as Lead Director. Merit’s Board of Directors also appointed Nolan Karras to assume the role of Lead Director.
“We are pleased to have Thom Gunderson join our Board,” said Fred P. Lampropoulos, Merit’s Chairman and Chief Executive Officer. “We believe his broad experience in observing, analyzing and reporting on medtech companies will bring a seasoned perspective to the Board as we continually seek to represent the best interests of our shareholders. We would like to publicly thank Dick Edelman for his many years of dedication and service to Merit’s Board.”
ABOUT MERIT
Founded in 1987, Merit Medical Systems, Inc. is engaged in the development, manufacture and distribution of proprietary disposable medical devices used in interventional, diagnostic and therapeutic procedures, particularly in cardiology, radiology and endoscopy. Merit serves client hospitals worldwide with a domestic and international sales force totaling approximately 290 individuals. Merit employs approximately 4,500 people worldwide with facilities in South Jordan, Utah; Pearland, Texas; Richmond, Virginia; Malvern, Pennsylvania; Rockland, Massachusetts; San Jose, California; Maastricht and Venlo, The Netherlands; Paris, France; Galway, Ireland; Beijing, China; Tijuana, Mexico; Joinville, Brazil; Markham, Ontario, Canada; Melbourne, Australia; Tokyo, Japan; and Singapore.
FORWARD-LOOKING STATEMENTS
Statements contained in this release which are not purely historical, including, without limitation, statements regarding Merit's forecasted plans, revenues, net income, financial results or anticipated or completed acquisitions, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties such as those described in Merit's Annual Report on Form 10-K for the year ended December 31, 2016 and subsequent filings with the Securities and Exchange Commission. Such risks and uncertainties include risks relating to Merit's potential inability to successfully manage growth through acquisitions, including the inability to commercialize technology acquired through completed, proposed or future
transactions; product recalls and product liability claims; expenditures relating to research, development, testing and regulatory approval or clearance of Merit's products and risks that such products may not be developed successfully or approved for commercial use; governmental scrutiny and regulation of the medical device industry, including governmental inquiries, investigations and proceedings involving Merit; reforms to the 510(k) process administered by the U.S. Food and Drug Administration; restrictions on Merit's liquidity or business operations resulting from its current debt agreements; infringement of Merit's technology or the assertion that Merit's technology infringes the rights of other parties; the potential of fines, penalties or other adverse consequences if Merit's employees or agents violate the U.S. Foreign Corrupt Practices Act or other laws or regulations; laws and regulations targeting fraud and abuse in the healthcare industry; potential for significant adverse changes in governing regulations; changes in tax laws and regulations in the United States or other countries; increases in the prices of commodity components; negative changes in economic and industry conditions in the United States or other countries; termination or interruption of relationships with Merit's suppliers, or failure of such suppliers to perform; fluctuations in exchange rates; concentration of a substantial portion of Merit's revenues among a few products and procedures; development of new products and technology that could render Merit's existing products obsolete; market acceptance of new products; volatility in the market price of Merit's common stock; modification or limitation of governmental or private insurance reimbursement policies; changes in healthcare policies or markets related to healthcare reform initiatives; failure to comply with applicable environmental laws; changes in key personnel; work stoppage or transportation risks; introduction of products in a timely fashion; price and product competition; availability of labor and materials; fluctuations in and obsolescence of inventory; and other factors referred to in Merit's Annual Report on Form 10-K for the year ended December 31, 2016 and other materials filed with the Securities and Exchange Commission. All subsequent forward-looking statements attributable to Merit or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Actual results will likely differ, and may differ materially, from anticipated results. Financial estimates are subject to change and are not intended to be relied upon as predictions of future operating results, and Merit assumes no obligation to update or disclose revisions to those estimates.