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 a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Techne Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
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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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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing:
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
TECHNE CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held
October 21, 2004
The annual meeting of shareholders of Techne Corporation (the "Company")
will be held at the offices of the Company, 614 McKinley Place N.E.,
Minneapolis, Minnesota, on Thursday, October 21, 2004, at 3:30 p.m. (Central
Daylight Time), for the following purposes:
1. To set the number of members of the Board of Directors at six (6).
2. To elect directors of the Company for the ensuing year.
3. To take action upon any other business that may properly come before
the meeting or any adjournment thereof.
Only shareholders of record shown on the books of the Company at the close
of business on September 10, 2004 will be entitled to vote at the meeting or
any adjournment thereof. Each shareholder is entitled to one vote per share
on all matters to be voted on at the meeting.
You are cordially invited to attend the meeting. Whether or not you plan
to attend the meeting, please sign, date and return your Proxy in the return
envelope provided as soon as possible. Your cooperation in promptly signing
and returning the Proxy will help avoid further solicitation expense to the
Company.
This Notice, the Proxy Statement and the enclosed Proxy are sent to you by
order of the Board of Directors.
THOMAS E. OLAND,
President
Dated: September 21, 2004
Minneapolis, Minnesota
TECHNE CORPORATION
__________
PROXY STATEMENT
for
Annual Meeting of Shareholders
to be held October 21, 2004
__________
INTRODUCTION
Your Proxy is solicited by the Board of Directors of Techne Corporation
(the "Company") for use at the Annual Meeting of Shareholders to be held on
October 21, 2004 and at any adjournment thereof, for the purposes set forth
in the attached Notice of Annual Meeting.
The cost of soliciting Proxies, including preparing, assembling and
mailing the Proxies and soliciting material, will be borne by the Company.
Directors, officers and regular employees of the Company may, without
compensation other than their regular compensation, solicit Proxies
personally or by telephone.
Proxies not revoked will be voted in accordance with the choice specified
by shareholders by means of the ballot provided on the Proxy for that
purpose. Proxies which are signed but which lack any such specification
will, subject to the following, be voted in favor of the proposals set forth
in the Notice of Meeting and in favor of the number and slate of directors
proposed by the Nominating and Governance Committee of the Board of Directors
and listed herein. If a shareholder abstains from voting as to any matter,
then the shares held by such shareholder shall be deemed present at the
meeting for purposes of determining a quorum and for purposes of calculating
the vote with respect to such matter, but shall not be deemed to have been
voted in favor of such matter. Abstentions, therefore, as to any proposal
will have the same effect as votes against such proposal. If a broker
returns a "non-vote" proxy, indicating a lack of voting instruction by the
beneficial holder of the shares and a lack of discretionary authority on the
part of the broker to vote on a particular matter, then the shares covered by
such non-vote shall be deemed present at the meeting for purposes of
determining a quorum but shall not be deemed to be represented at the meeting
for purposes of calculating the vote required for approval of such matter.
The mailing address of the Company's principal executive office is 614
McKinley Place N.E., Minneapolis, MN 55413. The Company expects that this
Proxy Statement and the related Proxy and Notice of Annual Meeting will first
be mailed to shareholders on or about September 21, 2004.
OUTSTANDING SHARES AND VOTING RIGHTS
The Board of Directors of the Company has fixed September 10, 2004 as the
record date for determining shareholders entitled to vote at the Annual
Meeting. Persons who were not shareholders on such date will not be allowed
to vote at the Annual Meeting. At the close of business on September 10,
2004, 41,168,982 shares of the Company's Common Stock were issued and
outstanding. Such Common Stock is the only outstanding class of stock of the
Company. Each share of Common Stock is entitled to one vote on each matter
to be voted upon at the meeting. Holders of the Common Stock are not
entitled to cumulative voting rights in the election of directors.
2
PRINCIPAL SHAREHOLDERS
The following table provides information concerning the only persons known
to the Company to be the beneficial owners of more than five percent (5%) of
the Company's outstanding Common Stock as of September 10, 2004:
Amount and
Name and Address Nature of Shares Percent
of Beneficial Owner Beneficially Owned(1) of Class(2)
----------------------------- --------------------- -----------
Select Equity Group, Inc. 2,061,487 5.0%
Select Offshore Advisors, LLC
and George S. Loening
380 Lafayette Street, 6th floor
New York, NY 10003
Thomas E. Oland 1,742,145(3)(4) 4.2%(3)
614 McKinley Place N.E.
Minneapolis, MN 55413
--------------
(1) Unless otherwise indicated, the person listed as the beneficial owner of
the shares has sole voting and sole investment power over the shares.
(2) Shares not outstanding but deemed beneficially owned by virtue of the
right of a person to acquire them as of September 10, 2004, or within
sixty days of such date are treated as outstanding only when determining
the percent owned by such individual and when determining the percent
owned by the group.
(3) Does not include 820,496 shares held by the Company's Stock Bonus Plan
for accounts of employees other than Mr. Oland, which are included in the
group total in the Management Shareholding table. The Company's Board of
Directors, acting by a majority vote, currently directs the Trustee as to
the voting of such shares. Including such 820,496 shares, Mr. Oland, a
director of the Company, beneficially owns 2,562,641 shares or 6.2% of
total shares outstanding plus shares subject to options exercisable by
him.
(4) Includes 976,920 shares owned directly, 90,745 held by the Company's
Stock Bonus Plan for Mr. Oland's account, 68,556 shares held by Thomas
Oland and Associates, 205,924 shares held by the Thomas Oland and
Associates Profit Sharing Plan and Trust and 400,000 shares subject to
stock options which are currently exercisable.
MANAGEMENT SHAREHOLDINGS
The following table sets forth the number of shares of the Company's
Common Stock beneficially owned as of September 10, 2004, by each executive
officer of the Company named in the Summary Compensation Table, by each
director and by all directors and executive officers (including the named
individuals) as a group. Shares beneficially owned by Mr. Oland constitute
4.2% of total shares outstanding plus shares subject to options exercisable
by him. Each other individual beneficially owns less than one percent of
total shares outstanding plus shares subject to options exercisable by him or
her. As a group, officers and directors beneficially own 8.1% of total
shares outstanding plus shares subject to options exercisable by them.
3
Name of Director or Number of Shares
Executive Officer Group Beneficially Owned(1)
----------------------- ---------------------
Thomas E. Oland 1,742,145 (2)(3)
Roger C. Lucas, Ph.D. 93,956 (4)(5)(6)
Howard V. O'Connell 225,880 (4)(6)(7)
G. Arthur Herbert 228,360 (4)(6)(8)
James A. Weatherbee, Ph.D. 43,239 (9)
Monica Tsang, Ph.D. 124,065 (10)
Christopher S. Henney, D.Sc, Ph.D. 25,000 (4)(6)(11)
Randolph C. Steer, M.D., Ph.D. 45,000 (4)(6)(12)
Marcel Veronneau 60,275 (13)
Robert V. Baumgartner 15,000 (4)(6)(14)
Officers and directors as a
group (10 persons) 3,341,729 (15)
----------------
(1) Unless otherwise indicated, the person listed as the beneficial owner
has sole voting and sole investment power over outstanding shares.
Shares beneficially owned includes shares subject to options that are
currently outstanding and exercisable and options that are currently
outstanding and will become exercisable within 60 days of September 10,
2004.
(2) See Note (3) to the preceding table.
(3) See Note (4) to preceding table.
(4) Does not include 911,241 shares held by the Company's Stock Bonus Plan,
which are included in the total of officers and directors as a group.
The Company's Board of Directors, acting by majority vote, currently
directs the Trustee as to the voting of such shares.
(5) Includes 20,000 shares owned by Dr. Lucas' wife and 52,500 shares
subject to stock options. Dr. Lucas disclaims beneficial ownership of
the shares owned by his wife.
(6) Does not include an option to purchase 5,000 shares which will be
granted on and will become exercisable as of the date of the Annual
Meeting pursuant to the 1998 Nonqualified Stock Option Plan if the
individual is reelected as a director of the Company.
(7) Includes 121,980 shares owned by trusts of which Mr. O'Connell is a
trustee and beneficiary and 85,000 shares subject to options.
(8) Includes 10,000 owned by Mr. Herbert's wife, 153,360 shares held by
trusts and partnership of which Mr. Herbert is a trustee or partner and
65,000 shares subject to options.
(9) Includes 37,598 shares held by the Company's Stock Bonus Plan for Dr.
Weatherbee's account. Does not include shares beneficially owned by Dr.
Tsang, Dr. Weatherbee's wife.
(10) Includes 38,298 shares held by the Company's Stock Bonus Plan for Dr.
Tsang's account and 19,475 shares subject to stock options. Does not
include shares beneficially owned by Dr. Weatherbee, Dr. Tsang's
husband.
(11) Includes 25,000 shares subject to options.
(12) Includes 45,000 shares subject to options.
(13) Includes 5,791 shares held by the Company's Stock Bonus Plan for Mr.
Veronneau's account and 25,538 shares subject to options.
(14) Includes 15,000 shares subject to options.
(15) Includes 911,241 shares held by the Company's Stock Bonus Plan as to
which the Company's Board of Directors directs the voting and 732,513
shares which may be purchased pursuant to options.
4
ELECTION OF DIRECTORS
(Proposals #1 and #2)
General Information
The Bylaws of the Company provide that the number of directors shall be
determined by the shareholders at each annual meeting. The Nominations and
Governance Committee of the Board of Directors of the Company recommends that
the number of directors to be set at six and that the individuals named in
the table below be elected. Under applicable Minnesota law, approval of the
proposal to set the number of directors at six, as well as the election of
each nominee, requires the affirmative vote of the holders of the greater of
(1) a majority of the voting power of the shares represented in person or by
proxy at the Annual Meeting with authority to vote on such matter or (2) a
majority of the voting power of the minimum number of shares that would
constitute a quorum for the transaction of business at the Annual Meeting.
In the election of directors, each Proxy will be voted for each of the
nominees listed below unless the Proxy withholds a vote for one or more of
the nominees. Each person elected as a director shall serve for a term of
one year or until his successor is duly elected and qualified. All of the
nominees are members of the present Board of Directors. If any of the
nominees should be unable to serve as a director by reason of death,
incapacity or other unexpected occurrence, the Proxies solicited by the Board
of Directors shall be voted by the proxy representatives for such substitute
nominee as is selected by the Nominations and Governance Committee, or, in
the absence of such selection, for such fewer number of directors as results
from such death, incapacity or other unexpected occurrence.
The following table provides certain information with respect to the
nominees for director.
Current
Position(s) with Principle Occupation(s) Director
Name Age Company During Past Five Years Since
--------------- --- --------------- ----------------------- --------
Thomas E. Oland 63 Chairman of the Chairman of the Board, 1985
Board, Chief President and Treasurer
Executive and of the Company since
Chief Financial 1985 and President of
Officer, Research and Diagnostic
President, Systems, Inc. since
Treasurer and 1982.
Director
Roger C. Lucas, Ph.D. 61 Vice Chairman Vice Chairman and 1985
and Director Senior Scientific
Advisor to the
Company's Board and a
private investor since
1995. Chief Scientific
Officer, Executive Vice
President and Secretary
of the Company from
1985 to 1995.
Howard V. O'Connell 74 Director Private investor since 1985
1990. Chairman,
President and Treasurer
of John G. Kinnard and
Company, Incorporated,
a securities broker-
dealer,from 1969 to
1990.
G. Arthur Herbert 78 Director Principal of CEO 1989
Advisors, a management
and financial
consulting firm, since
1989; from 1969 to
1988, President and
Vice President Manager
of Electro-Science
Management Corp., a
manager of venture
capital partnerships.
5
Randolph C. Steer, 54 Director Consultant to the 1990
M.D., Ph.D. pharmaceutical and
biotechnology
industries since 1989;
Chairman (1999-2000)
of Vicus.com, Inc.
Director of BioCryst
Pharmaceuticals, Inc.
Robert V. Baumgartner, 48 Director Chief Executive Officer 2003
C.P.A. of Center for Diagnostic
Imaging, Inc., an
operator of diagnostic
imaging centers, since
2001; CEO of American
Coating Technologies,
Inc., a manufacturer of
coated paper, in 2000;
CEO of First Solar, LLC,
a producer of thin-film
photo-noltaic coatings,
in 1999 and 2000; from
1986 to 1999 various
officer positions with
Apogee Enterprises, Inc.,
a diversified manufacturer
of glass and other products.
Committees and Meetings of the Board of Directors
The Company's Board of Directors has three standing Committees, the Audit
Committee, the Executive Compensation Committee and the Nominations and
Governance Committee. All members of all Committees are "independent" as
such term is defined in applicable law and regulations of the Securities and
Exchange Commission and Nasdaq.
The Audit Committee (whose members are Messrs. Herbert, O'Connell and
Baumgartner and Dr. Steer) operates under a written charter established by
the Company's Board of Directors, a copy of which is attached to this Proxy
Statement as Appendix A. The Audit Committee is responsible for the
appointment and supervision of the Company's independent registered public
accounting firm and for reviewing the Company's internal audit procedures,
the quarterly and annual financial statements of the Company and the results
of the annual audit. The Audit Committee also establishes and oversees the
implementation of the Company's cash investment policy and monitors the
Company's financial fraud hotline. The Board of Directors has determined
that for fiscal 2004 Messrs. Herbert and O'Connell and Dr. Steer served as
"financial experts" as such term is defined in Section 407 of the Sarbanes-
Oxley Act. The Audit Committee met five times during fiscal 2004. The
Committee's report is included in this Proxy Statement.
The Executive Compensation Committee (whose members are Drs. Henney and
Steer and Messrs. Herbert and O'Connell) determines compensation for
executive officers of the Company. The Executive Compensation Committee's
charter is attached to this Proxy Statement as Appendix B. The Committee met
three times during fiscal 2004. The Committee's report is included in this
Proxy Statement.
The Nominations and Governance Committee is composed of all "independent"
directors, i.e., currently all directors except Mr. Oland. The committee
operates under a written charter, a copy of which is attached to this Proxy
Statement as Appendix C. The functions of the Committee are to recruit well
qualified candidates for the Board, select persons to be proposed in the
Company's proxy statement for election as directors at annual meetings of
shareholders, and to establish governance standards and procedures which will
support and enhance the performance and accountability of management and the
Board. The Committee did not formally meet in fiscal 2004, however, it met
informally and conducted the search and made the selection as a director of
Mr. Baumgartner in replacement of the retired Mr. Lowel E. Sears. The
Committee also determined to propose to shareholders at their 2004 annual
meeting the reelection of the incumbent directors of the Company except for
Dr. Henney. Dr. Henney is retiring and not standing for reelection. The
Committee will consider all nominees for director recommended by shareholders
of the Company. Recommendations may be sent to the Committee at the
Company's address, 614 McKinley Place N.E., Minneapolis, MN 55413.
Candidates for the Board are considered and selected on the basis of
outstanding achievement in their professional careers, experience, wisdom,
personal and professional integrity, their ability to make independent,
analytical inquiries, and their understanding of the business environment.
Candidates must have the experience and skills necessary to understand the
principal operational and functional objectives and plans of the Company, the
results of operations and financial condition of the Company, and the
position of the Company in its industry. Candidates must have a perspective
that will enhance the Board's strategic discussions and be capable of and
committed to devoting adequate time to Board duties.
6
During fiscal 2004, the Board held seven meetings. Each director except
Dr. Henney attended 75% or more of the total number of meetings of the Board
and of Committees of which he was a member. Dr. Henney attended 70% of such
meetings. Dr. Henney is retiring and not standing for reelection to the
Board. Executive sessions of independent directors, i.e, meetings of outside
directors without any member of management present, are held in conjunction
with regularly scheduled meetings of the Board. It is the policy of the
Company that all directors should attend the Company's annual meetings of
shareholders. All members did attend the annual meeting in 2003.
Shareholder Communications with Directors
Shareholders may communicate directly with the Board of Directors. All
communications should be directed to the Company at 614 McKinley Place N.E.,
Minneapolis, MN 55413, and should prominently indicate on the outside of the
envelope that it is intended for the Board of Directors, for non-management
directors, or for a particular director. Unless other distribution is
specified, the communication will be forwarded to the entire Board. The
communication will not be opened before being forwarded to the intended
recipient, but it will go through normal security procedures.
Code of Ethics and Business Conduct and Financial Fraud Hotline
The Company has adopted a Code of Ethics and Business Conduct which is
applicable to all directors, officers and employees of the Company. A copy
is available for review at the Company's website, www.techne-corp.com. The
Company sponsors a financial fraud hotline that is available to all
employees, is operated on a confidential basis by a third party, and is
supervised with full powers of investigation by the Audit Committee of the
Board of Directors.
Directors' Fees
Directors who are not employees of the Company are compensated at the rate
of $25,000 per year for service on the Board and Committees of the Board.
Directors are paid an additional $1,000 for each meeting of the Board other
than its regularly scheduled quarterly meetings and for each meeting of a
committee on which the director serves other than committee meetings held in
conjunction with a meeting of the full Board. Under the Company's 1998
Nonqualified Stock Option Plan, outside directors automatically receive an
option to purchase shares of the Company's Common Stock on election and upon
each re-election. In connection with the 2004 Annual Meeting of
Shareholders, the number of shares subject to the option granted to outside
directors re-elected to the Board will be 5,000 per director.
During fiscal 2004, in addition to the regular compensation of directors
described above, the Board granted to Robert V. Baumgartner, as an incentive
to join the Company's Board, an option to purchase 10,000 shares of the
Company's Common Stock at $28.43 per share, the market price on the date of
grant. The Company also granted to Dr. Roger C. Lucas, in recognition of his
service as the Company's designated director of three companies in which the
Company has made investments, an option to purchase 7,500 shares at $38.82
per share, the market price on the date of grant.
7
Audit Committee Report
The Audit Committee assists the Board of Directors with fulfilling its
oversight responsibility regarding the quality and integrity of the
accounting, auditing and financial reporting practices of the Company. In
discharging its oversight responsibilities regarding the audit process, the
Audit Committee:
(1) reviewed and discussed the audited financial statements with
management;
(2) discussed with the independent registered public accounting firm the
material required to be discussed by Statement on Auditing Standards
No. 61; and
(3) reviewed the written disclosures and the letter from the independent
registered public accounting firm required by the Independence
Standards Board's Standard No.1, and discussed with the independent
registered public accounting firm any relationships that may impact
their objectivity and independence.
Based upon the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 2004 as filed with the Securities and Exchange
Commission.
Robert V. Baumgartner, C.P.A.
G. Arthur Herbert
Howard V. O'Connell
Randolph C. Steer, M.D., Ph.D.
Members of the Audit Committee
EXECUTIVE COMPENSATION
Executive Compensation Committee Report
Committee Interlocks and Insider Participation. The Executive
Compensation Committee of the Board of Directors of the Company is composed
of directors Christopher S. Henney, D.Sc., Ph.D., G. Arthur Herbert, Howard
V. O'Connell and Randolph C. Steer, M.D., Ph.D. None of the members of the
Committee is or ever has been an employee or officer of the Company and none
is affiliated with any entity other than the Company with which an executive
officer of the Company is affiliated.
Overview and Philosophy. The Company's executive compensation program is
comprised of base salaries, annual performance bonuses comprised of a cash
and option component, long-term incentive compensation in the form of stock
options, and various benefits, including the Company's profit sharing and
savings plan and stock bonus plan in which all qualified employees of the
Company participate. In addition, the Compensation Committee from time to
time may award special cash bonuses or stock options related to non-
recurring, extraordinary performance.
The Compensation Committee has followed a policy of paying annual base
salaries which are on the moderate side of being competitive in its industry
and of awarding bonuses based on achievement of specific revenue, profit and
non-monetary goals. If the goals are achieved, the officer receives an
option to purchase a number of shares with a fair market value on date of
grant equal to 20% of the officer's base salary and receives, at the election
of the officer, either a cash bonus equal to 20% of the officer's base salary
or an additional option to purchase a number of shares with a fair market
value on date of grant equal to 170% of the cash bonus alternative. Bonuses
are awarded on a prorated basis if between 85% and 100% of the specific
revenue and profit goals are achieved. The goals are established annually as
recommended by the Chief Executive Officer of the Company and approved by the
Compensation Committee.
8
The Company has formal employment agreements effective through June 30,
2007 with its full-time executive officers who served during fiscal 2004,
other than Mr. Oland, its President who serves pursuant to an oral
understanding. See "Employment Contracts and Change in Control Arrangements"
below. The agreements provide for base salaries subject to annual review,
bonuses as described above, benefits as provided to all employees and
severance compensation dependent upon years of employment with or service to
the Company in the event that the officer's employment is terminated without
cause or in connection with a sale or merger of the Company.
Compensation in 2004. During fiscal 2004, the Company maintained its
principal compensation policies and made adjustments in base salaries to
reflect competitive industry and individual performance factors. The
Committee, at the beginning of fiscal 2004, established performance criteria
for officers based 70% on growth in consolidated revenues and earnings and,
working through the Company's Chief Executive Officer, 30% on individual
goals which, if met, would permit each officer to earn a cash bonus and
additional stock options. The Company achieved record revenues and earnings.
On the basis of performance against the criteria established, the Committee,
at the close of fiscal 2004 awarded to Dr. Tsang, and Mr. Veronneau the
bonuses set fourth in the table below under "Summary Compensation Table" and,
subsequent to fiscal year end, the options indicated in footnote (4) to the
table below under "Options/SAR Grants During 2004 Fiscal Year". During
fiscal 2004, the Committee also made special awards to Dr.Tsang of options to
purchase 25,000 shares and to Mr. Veronneau to purchase 15,000 shares (for
details on such options see below "Options/SARGrants During Fiscal 2004). In
further recognition of the officers' achievements, the Committee established
base salaries for fiscal 2005 as disclosed below under "Employment Contracts
and Change in Control Arrangements."
General. The Company provided medical and insurance benefits to its
executive officers, which are the same as those generally available to all
Company employees. The Company has a profit sharing and savings plan in
which all qualified employees, including executive officers, participate
subject to statutory limitations on contributions for highly compensated
individuals. In fiscal 2004, 2003 and 2002, the Company has contributed to
the plan an amount equal to approximately 8%, 4% and 10% of gross wages,
respectively. One half of the contributions to the plan is in the form of
Common Stock of the Company. The amount of perquisites allowed to executive
officers, as determined in accordance with rules of the Securities and
Exchange Commission, did not exceed 10% of salary in fiscal 2004.
Chief Executive Officer Compensation. Thomas E. Oland served as the
Company's Chief Executive Officer in fiscal 2004. His compensation was
determined in accordance with the policies described above as applicable to
all executive officers. His base salary of $225,000 in fiscal 2003 was
increased to $230,000 in fiscal 2004. For fiscal 2004 performance he earned
but waived a cash bonus. In February, 1996 the Compensation Committee, in
connection with the Board's long-term strategic planning for the Company,
adopted a substantial long-term incentive for Mr. Oland in the form of
options to purchase an aggregate of 400,000 shares of the Common Stock of the
Company at $4.53 per share, the fair market value on the date of grant. The
options are fully vested and will expire on the earlier of (a) as to 268,000
shares one year from the date of termination of employment and as to 132,000
shares three months from the date of termination of employment, or (b)
February 1, 2006.
Summary. Aggregate executive compensation increased moderately in fiscal
2004 and the Company awarded stock options to officers because the Company
achieved record revenues and individual officers achieved certain performance
goals. The Compensation Committee intends to continue its policy of paying
relatively moderate base salaries, basing bonuses on specific revenue, profit
and performance goals and granting options to provide long-term incentive.
Christopher S. Henney, D.Sc., Ph.D.
G. Arthur Herbert
Howard V. O'Connell
Randolph C. Steer, M.D., Ph.D.
Members of the Compensation Committee
9
Employment Contracts and Change in Control Arrangements
The Company has formal employment agreements with each of its full-time
executive officers with the exception of its President and Chief Executive
Officer, with whom the Company has an oral understanding. The agreements with
Dr. Tsang and Mr. Veronneau were scheduled to expire June 30, 2004 but were
extended on such date for an additional three years. The agreements provide
for base salaries subject to annual review, bonuses as described in the
Compensation Committee Report contained in this Proxy Statement, benefits as
provided to all employees and severance compensation based upon years of
employment by or service to the Company in the event that the officer's
employment is terminated without cause or in connection with a sale or merger
of the Company. Base salaries for fiscal 2005 for the executive officers
named in the Summary Compensation Table are as follows: T. Oland - $242,000;
M. Tsang - $239,400; M. Veronneau - $147,000. Each of such officers is also
subject to a confidentiality and non-competition agreement, which prohibits
competition with the Company for a period of two years following termination
of employment with the Company.
Summary Compensation Table
The following table sets forth certain information regarding compensation
paid during each of the Company's last three fiscal years to the Company's
President (who serves as Chief Executive Officer) and to the Company's other
executive officers whose salary and bonus for fiscal 2004 exceeded $100,000.
Not included in the table is Dr. James Weatherbee, Vice President and Chief
Scientific Officer, who was on medical leave and did not receive any
compensation from the Company in fiscal 2004.
Long Term Compensation
-----------------------------
Annual Compensation Awards Payouts
--------------------------- --------------------- -------
Securities
Restricted Underlying LTIP All Other
Name and Fiscal Stock Options Payouts Compen-
Principal Position Year Salary($) Bonus($) Other(1) Awards($) /SARs(#) ($) sation($)(2)
--------------------- ------ --------- -------- -------- ---------- ---------- ------ ------------
Thomas E. Oland, 2004 230,000 0 None None 0 None 17,503
CEO 2003 225,000 0 None None 0 None 8,903
and President 2002 225,000 0 None None 0 None 19,873
Monica Tsang, Ph.D., 2004 228,000 45,600 None None 26,126 None 17,503
Vice President - 2003 221,000 36,841 None None 1,088 None 8,903
Research 2002 210,000 39,480 None None 1,400 None 19,873
Marcel Veronneau, 2004 140,000 20,440 None None 15,505 None 14,228
Vice President - 2003 136,000 22,671 None None 670 None 7,033
Hematology Operations 2002 130,000 22,100 None None 785 None 18,019
----------------
(1) "None" indicates zero or an amount equal to less than 10% of the total
amount of annual salary and bonus reported for the named executive
officer.
(2) For each individual the amount reflects Company contributions to Profit
Sharing and Savings Plan (as to one-half) and Stock Bonus Plan (as to
one-half), the latter in the form of shares of the Company's Common
Stock.
10
Options/SAR Grants During 2004 Fiscal Year
The following table provides information related to options granted to the
name executive officers during fiscal 2004. The Company has not granted any
stock appreciation rights.
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term
---------------------------------------------------- ----------------------
Number of
Securities Percent of Total
Underlying Options/SARs
Options/SARs Granted to Exercise or
Granted Employees Base Price Expiration
Name (#) in Fiscal Year ($/Sh) Date 5%($) 10%($)
---------------------- ------------ ---------------- ----------- ---------- -------- --------
Thomas E. Oland 0 -- -- -- -- --
Monica Tsang, Ph.D.(4) 1,088(1) 0.6% 33.85 8/13/10 14,993 34,940
25,000(2) 13.0% 37.01 11/30/10 376,679 877,824
Marcel Veronneau(4) 670(1) 0.3% 33.85 8/13/10 9,233 21,516
15,000(3) 7.8% 37.01 11/30/10 226,008 526,695
----------------
(1) Such option is an incentive stock option and became exercisable August
14, 2003.
(2) Of such 25,000 total, 7,106 were issued as an incentive stock option and
17,894 were issued as a non-qualified stock option. One-third of the
total were immediately exercisable, one-third will become exercisable
December 1, 2004 and one-third will become exercisable December 1, 2005,
contingent on continued employment.
(3) Of such 15,000 total, 7,489 were issued as an incentive stock option and
7,511 was issued as a non-qualified tock option. One-third of the total
were immediately exercisable, one-third will become exercisable December
1, 2004 and one-third will become exercisable December 1, 2005,
contingent on continued employment.
(4) Subsequent to fiscal 2004 year end, immediately exercisable options for
the indicated number of shares at an exercise price of $40.47 per share
expiring July 8, 2011 were granted: M. Tsang - 1,126; M. Veronneau - 505
Option/SAR Exercises During 2004 Fiscal Year
and Fiscal Year End Options/SAR Values
No named executive officer exercised an option during the 2004 fiscal
year. The following table provides information related to the number and
value of options held by each named executive officer at fiscal year end.
Number
of Securities Value of
Underlying Unexercised
Unexercised In-the Money
Options/SARs Options/SARs at
Shares Value at FY-End(#) FY-End($)(1)
Acquired on Realized Exercisable/ Exercisable/
Name Exercise(#) ($) Unexercisable Unexercisable
------------------- ------------ -------- ------------- ---------------
Thomas E. Oland 0 0 400,000/0 15,567,480/0
Monica Tsang, Ph.D. 0 0 21,949/16,667 415,476/107,319
Marcel Veronneau 0 0 27,313/10,000 815,790/64,390
(1) Based on the difference between the $43.45 per share closing price of the
Company's Common Stock as reported by Nasdaq on June 30, 2004 and the
Option exercise price.
11
Stock Performance Chart
The following chart compares the cumulative total shareholder return on
the Company's Common Stock with the S&P Midcap 400 Index and the S&P 400
Biotechnology Index. The comparison assumes $100 was invested on June 30,
1999 in the Company's Common Stock and in each of the foregoing indices and
assumes reinvestment of dividends.
TOTAL SHAREHOLDER RETURN
INDEXED RETURNS
Years Ending
Company / Index June 2000 June 2001 June 2002 June 2003 June 2004
--------------------- --------- --------- --------- --------- ---------
TECHNE CORP 512.32 256.16 222.42 239.21 342.46
S&P MIDCAP 400 INDEX 116.98 127.36 121.35 120.48 154.20
S&P 400 BIOTECHNOLOGY 222.84 205.48 102.17 127.35 143.68
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
KPMG LLP acted as the Company's independent registered public accounting
firm for fiscal 2004 and 2003. The appointment of an independent registered
public accounting firm for the current fiscal year has not yet been made but
will be made immediately following the 2004 annual meeting of shareholders.
Representatives of KPMG LLP are expected to be present at the shareholders'
meeting, will have the opportunity to make any desired comments, and will be
available to respond to appropriate questions.
As previously reported, on November 18, 2002 the Company dismissed its
independent registered public accounting firm, Deloitte & Touche LLP ("D&T")
and engaged KPMG LLP ("KPMG") to serve as its new independent registered
public accounting firm for the fiscal year ending June 30, 2003. The
dismissal of D&T and the engagement of KPMG were pursuant to action taken by
the Audit Committee of the Company's Board of Directors. The Company by
action of the Audit Committee renewed the engagement of KPMG for fiscal 2004.
D&T's reports on the Company's consolidated financial statements for the
fiscal year ended June 30, 2002 did not contain an adverse opinion or
disclaimer of opinion, nor was it qualified or modified as to uncertainty,
audit scope or accounting principles.
During the fiscal year ended June 30, 2002 and through November 18, 2002,
there were no disagreements with D&T on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure,
which, if not resolved to D&T's satisfaction, would have caused it to make
reference to the subject matter of the disagreements in connection with its
report on the Company's consolidated financial statements for such year; and
there were no "reportable events," as such term is defined in Item 304 (a)
(1) (v) of Regulation S-K of the Securities and Exchange Commission.
12
The Company provided D&T with a copy of the foregoing disclosures. D&T
provided the Company with a letter addressed to and previously filed with the
Securities and Exchange Commission, stating its agreement with the statements
contained in such disclosures.
During the year ended June 30, 2002 and through the date of the Audit
Committes decision to engage KPMG, the Company did not consult KPMG with
respect to the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Company's consolidated financial statements, or any
other matters or reportable events as set forth in Items 304 (a) (2) (i) and
(ii) of Regulation S-K of the Securities and Exchange Commission.
Audit Fees
The following fees were paid to KPMG LLP in fiscal years ended June 30,
2004 and 2003:
2004 2003
-------- --------
Audit Fees $125,700 $104,000
Audit-Related Fees $ 37,500 $ 14,000
Tax Fees $ 33,700 $ 32,375
All Other Fees $157,000 -0-
"Audit Fees" are for professional services rendered and expenses incurred
for the audit of the Company's annual financial statements and review of
financial statements included in our Forms 10-K and 10-Q or services that are
normally provided by the accountant in connection with statutory and
regulatory filings or engagements.
"Audit-Related Fees" are primarily for services rendered and expenses
incurred for the audit of the Company's Profit Sharing and Savings Plan and
Stock Bonus Plan, analysis of the Company's investments in entities in which
the Company owns a minority interest, and advice on the Company's compliance
with certain requirements of the Sarbanes-Oxley Act.
"Tax Fees" included fees for services provided and expenses incurred in
connection with preparation of the Company's tax returns in the United States
and the United Kingdom.
"All Other Fees" include fees for services and expenses incurred in
connection with a claim for a refund of certain sales and use taxes paid to
the State of Minnesota.
Pre-Approval Policies and Procedures
Pursuant to its written charter, the Audit Committee of the Company's
Board of Directors is required to pre-approve the audit and non-audit
services performed by the Company's independent registered public accounting
firm in order to assure that the provision of such services does not impair
the firm's independence. All of the services rendered by KPMG and described
above were pre-approved by the Audit Committee. The Audit Committee has
considered whether provision of the above non-audit services is compatible
with maintaining KPMG's independence and has determined that such services
have not adversely affected KPMG's independence.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than 10
percent of the Company's Common Stock, to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company.
Officers, directors, and greater than 10 percent shareholders ("Insiders")
are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file.
To the Company's knowledge, based on a review of the copies of such
reports furnished to the Company, during the fiscal year ended June 30, 2004,
all Section 16(a) filing requirements applicable to Insiders were met.
13
SHAREHOLDER PROPOSALS
Any appropriate proposal submitted by a shareholder of the Company and
intended to be presented at the 2005 Annual Meeting must be received by the
Company at its offices by May 22, 2005 to be eligible for inclusion in the
Company's Proxy Statement and related Proxy for the 2005 Annual Meeting. For
a discussion of policies and procedures related to shareholder
recommendations of candidates for director, please see the section on the
Nominations and Governance Committee above under Committees and Meetings of
the Board.
Also, if a shareholder proposal intended to be presented at the 2005
Annual Meeting but not included in the Company's Proxy Statement and Proxy is
received by the Company after August 6, 2005, then management named in the
Company's Proxy for the 2005 Annual Meeting will have discretionary authority
to vote the shares represented by such proxies on the shareholder proposal,
if presented at the meeting, without including information about the proposal
in the Company's proxy materials.
OTHER BUSINESS
The Board of Directors knows of no other matters to be presented at the
meeting. If any other matter does properly come before the meeting, the
appointees named in the Proxies will vote the Proxies in accordance with
their best judgment.
ANNUAL REPORT
A copy of the Company's Annual Report to Shareholders for the fiscal year
ended June 30, 2004, including financial statements, accompanies this Notice
of Annual Meeting and Proxy Statement. No portion of the Annual Report is
incorporated herein or is to be considered proxy-soliciting material.
THE COMPANY WILL FURNISH WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON
FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 30, 2004, TO ANY SHAREHOLDER OF THE
COMPANY UPON WRITTEN REQUEST. REQUESTS SHOULD BE SENT TO PRESIDENT, TECHNE
CORPORATION, 614 MCKINLEY PLACE N.E., MINNEAPOLIS, MINNESOTA 55413.
Dated: September 21, 2004
Minneapolis, Minnesota
14
APPENDIX A
----------
AUDIT COMMITTEE CHARTER
The Audit Committee of the Board of Directors of Techne Corporation (the
"Company") shall exist primarily for the purpose of overseeing the accounting
and financial reporting processes of the Company and audits of the financial
statements of the Company. The independent registered public accounting firm
which audits the Company's financial statements shall be accountable to the
Audit Committee which is directly responsible for the appointment,
compensation and oversight of such firm.
The Audit Committee shall be composed of three or more directors who are
"independent" as applicable law and regulations of the Securities Exchange
Commission (the "SEC") and Nasdaq define such term and who are free of any
relationship that, in the opinion of the Board of Directors, would interfere
with their exercise of independent judgment. Each of the members of the
Audit Committee shall be a person who through prior education and experience
is financially sophisticated, is able to read and understand financial
statements and is familiar with financial oversight responsibilities. In
addition, at least one member of the Committee shall be a "financial expert"
as applicable law and regulations of the SEC and Nasdaq define such term.
In carrying out these responsibilities, the Audit Committee shall:
-Meet not fewer than four times per year.
-Select and retain the independent registered public accounting firm
which audits the financial statements of the Company and its divisions
and subsidiaries and, when appropriate, replace such firm.
-Pre-approve all audit services and non-audit services to be
preformed by the Company's independent accounting firm, provided that
(1) the Committee may delegate to one of more of its members the
authority to grant pre-approvals subject to such pre-approvals being
reported to and reviewed by the full Committee at its next meeting, and
(2) pre-approval shall not be required for non-audit services if the
aggregate amount of all such non-audit services constitutes not more
than 5% of the total amount paid by the Company to its independent
accounting firm during the fiscal year in which such non-audit services
are provided, such services were not recognized by the Company at the
time of engagement to be non-audit services, and such services are
promptly brought to the attention of the Committee and approved by the
Committee prior to completion of the audit.
-Meet with the independent accounting firm and financial management
of the Company to determine the scope of the proposed audit for the
current year and the audit procedures to be utilized, resolve any
disputes between the auditors and management regarding financial
reporting, and, at its conclusion, review such audit, including any
comments or recommendations of the independent accounting firm.
-Receive from the independent accounting firm reports concerning, and
take appropriate action as to, 1) all critical accounting policies and
practices to be used in their audit, 2) all alternative treatments of
financial information that have been discussed with management,
ramifications of the use of such alternatives, and the treatment
preferred by the independent accounting firm; and 3) other
communications between the independent accounting firm and management,
including any management letter or schedule of unadjusted differences.
-Review with the independent accounting firm and the Company's
financial and accounting personnel the adequacy and effectiveness of
the accounting and financial controls of the Company, and elicit any
recommendations for the improvement of such internal control procedures
or particular areas where new or more detailed controls or procedures
are desirable. Particular emphasis shall be given to the adequacy of
such internal controls to expose any payments, transactions, or
procedures that might be deemed illegal or otherwise improper.
15
-Provide sufficient opportunity for the independent accounting firm
to meet with the members of the Audit Committee without members of
management present. Among the items to be discussed in these meetings
are the firm's evaluation of the Company's financial, accounting, and
auditing personnel, and the cooperation that the firm received during
the course of the audit.
-Oversee the independence of the independent accounting firm through
appropriate means including obtaining a written statement delineating
all relationships between the firm and the Company and determining
whether and to what extent the objectivity and independence of the
accounting firm may be impacted by all relationships and services.
-Discuss with the independent accounting firm's representatives
qualitative judgments about the appropriateness, not just the
acceptability, of accounting principles and financial disclosure
practices used or proposed to be adopted by the Company, particularly
about the degree of aggressiveness or conservatism of the Company's
accounting principles and underlying estimates.
-Review and approve all related-party transactions to which the
Company may be a party prior to their implementation to assess whether
such transactions meet applicable legal requirements and are
appropriately disclosed.
-Prepare and review periodically a Code of Ethical Conduct for senior
management of the Company and review enforcement of such Code.
-Establish and maintain procedures for responding to complaints
received by the Company regarding accounting, internal accounting
controls and auditing, including a procedure to allow employees to
submit concerns on a confidential, anonymous basis.
-Establish and review adherence to the Company's cash management and
investment policies.
-Provide the report for the Company's annual proxy statement required
by regulations of the SEC respecting activities of the Committee and
state whether the Committee recommends inclusion of the Company's
audited financial statements in the annual report to be filed with
Commission.
-Investigate any matter brought to its attention within the scope of
its duties, with the power to retain, at the expense of the Company,
outside counsel or other consultants for this purpose if, in its
judgement, that is appropriate.
-Submit to the Board of Directors the minutes of all meetings of the
Audit Committee and discuss the material matters discussed at each
committee meeting with the Board of Directors.
16
APPENDIX B
----------
EXECUTIVE COMPENSATION COMMITTEE CHARTER
The Executive Compensation Committee of the Board of Directors of Techne
Corporation (the "Company") shall determine the compensation of the executive
officers of the Company. The Committee shall establish both over-all
policies and plans of compensation and review the performance of executive
officers. In coordination with the Chief Executive Officer of the Company,
the Committee shall establish performance goals for executive officers other
than the CEO, determine the annual base compensation of such officers, and
award bonuses to such officers based on performance. Acting independently,
the Committee shall perform the same functions with regard to the CEO of the
Company. The Committee shall prepare and have published in the proxy
statement prepared for the Company's annual meeting of shareholders a report
on its actions regarding compensation paid during the preceding year and its
plan for the compensation during the succeeding year.
The Committee shall actively participate in the recruitment, consideration
of and employment of prospective executive officers of the Company. The
Company shall make recommendations to the Board of Directors respecting the
election of executive officers of the Company.
The Committee shall make recommendations to the Board regarding option and
other equity incentive plans for the Company's officers and employees. The
Committee shall have the authority to grant options to purchase shares of the
Company's Common Stock, and to determine all terms and conditions of such
options.
APPENDIX C
----------
NOMINATIONS AND GOVERNANCE COMMITTEE CHARTER
The Nominations and Governance Committee of the Board of Directors of
Techne Corporation (the "Company") shall exist primarily for the purpose of
recruiting well qualified candidates for the Board, selecting persons to be
proposed in the Company's proxy statement for election as directors at the
annual meetings of shareholders, and establishing governance standards and
procedures which will support and enhance the performance and accountability
of management and the Board.
The Committee shall adopt procedures for having shareholders of the
Company submit candidates for the Board and for having the Committee consider
such candidates. The Committee shall determine the qualifications on which
candidates from any source will be evaluated, including experience in
specific aspects of the Company's business and Board's responsibilities which
may be needed at a particular time.
The Committee shall be composed of all "independent" members of the Board
as such term is defined in applicable law and regulations of the Securities
and Exchange Commission and Nasdaq.
17
TECHNE CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints THOMAS E. OLAND and KATHLEEN BACKES, or
either of them acting alone, with full power of substitution, as proxies to
represent and vote, as designated below, all shares of Common Stock of Techne
Corporation registered in the name of the undersigned, at the Annual Meeting
of the Shareholders to be held on Thursday, October 21, 2004 at 3:30 p.m.
Central Daylight Time, at the offices of the Company, 614 McKinley Place
N.E., Minneapolis, Minnesota, and at all adjournments of such meeting. The
undersigned hereby revokes all proxies previously granted with respect to
such meeting.
The Nominations and Governance Committee of the Board of Directors
recommends that you vote "FOR" the following proposals:
(1) To set the number of Directors at six:
[ ] FOR [ ]AGAINST [ ] ABSTAIN
(2) To elect Directors: Nominees: Thomas E. Oland, Roger C. Lucas, Ph.D.,
Howard V. O'Connell, G. Arthur Herbert, Randolph C. Steer, M.D., Ph.D.,
and Robert V. Baumgartner.
[ ] FOR all Nominees listed above [ ] WITHOUT AUTHORITY
(except those whose names have to vote for all nominees
been written on the line below listed above
(To withhold authority to vote for any nominee, write that nominee's name
on the line below.)
_________________________________________________________________________
(3) Other matters: In their discretion, the appointed proxies are authorized
to vote upon such other business as may properly come before the Meeting
or any adjournment.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN FOR A PARTICULAR PROPOSAL, WILL BE VOTED FOR SUCH
PROPOSAL.
Date_________________________, 2004
_________________________________________
_________________________________________
PLEASE DATE AND SIGN ABOVE exactly as
name appears at the left, indicating,
where appropriate official position or
representative capacity. If stock is
held in joint tenancy, each joint owner
should sign.