SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2)
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
PROFESSIONAL DETAILING, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No Fee Required
|_| 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:
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2. Aggregate number of securities to which transaction applies:
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3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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4. Proposed maximum aggregate value transaction:
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5. Total fee paid:
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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 number, or
the Form or Schedule and the date of its filing.
1. Amount previously paid:
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2. Form, Schedule or Registration Statement No.:
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[logo] PDI
[Letterhead of PDI]
Charles T. Saldarini
Vice Chairman of the Board and
Chief Executive Officer
June 13, 2001
Dear Stockholder:
You are invited to attend the Annual Meeting of Stockholders of
Professional Detailing, Inc. to be held on Wednesday July 11, 2001, at 10:30
A.M., Eastern time, at the Sheraton Crossroads Hotel, One International
Boulevard, Mahwah, N.J. 07495.
At this year's meeting you will be asked to elect two directors; to
authorize amendments to our certificate of incorporation (i) increasing our
authorized common shares from 30 million to 100 million and (ii) changing our
name to "PDI, Inc."; and to ratify the selection of the Company's independent
auditors. The accompanying Notice of Meeting and Proxy Statement describe these
proposals. We urge you to read this information carefully.
Your Board of Directors unanimously believes that election of its nominees
for directors, the amendments to our certificate of incorporation and the
ratification of its selection of independent auditors are in the best interests
of PDI and its stockholders, and, accordingly, recommends a vote FOR the
election of the nominees for director and FOR proposals 2, 3 and 4.
In addition to the formal business to be transacted at the Annual Meeting,
management will make a presentation on developments of the past year and respond
to comments and questions of general interest to stockholders. I personally look
forward to greeting those PDI stockholders able to attend the meeting.
Whether or not you plan to attend the Annual Meeting in person, it is
important that your shares are represented. Therefore, please promptly complete,
sign, date and return the enclosed proxy card in the accompanying envelope,
which requires no postage if mailed in the United States. You are, of course,
welcome to attend the Annual Meeting and vote in person even if you previously
returned your proxy card.
Thank you.
Sincerely,
Charles T. Saldarini
Vice Chairman of the Board,
Chief Executive Officer
PROFESSIONAL DETAILING, INC.
10 Mountainview Road
Upper Saddle River, New Jersey 07458
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 11, 2001
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To the Stockholders of
Professional Detailing, Inc.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Professional Detailing, Inc. (the "Company") will be held at the Sheraton
Crossroads Hotel, One International Boulevard, Mahwah, New Jersey 07495 on July
11, 2001 at 10:30 a.m. Eastern time, for the following purposes:
1. To elect two Class I Directors for the ensuing three years.
2. To consider and approve an amendment to the Certificate of
Incorporation increasing the number of shares of Common Stock available for
issuance.
3. To consider and approve an amendment to the Certificate of
Incorporation changing the corporate name to PDI, Inc.
4. To ratify the selection of PricewaterhouseCoopers LLP as independent
auditors for the year ending December 31, 2001.
5. To consider and take action upon such other matters as may properly
come before the meeting or any adjournments thereof.
The close of business on June 11, 2001 has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
Annual Meeting and any adjournment thereof.
All stockholders are cordially invited to attend the meeting. Whether or
not you expect to attend, you are requested to sign, date and return the
enclosed proxy promptly. Stockholders who execute proxies retain the right to
revoke them at any time prior to the voting thereof. A return envelope, which
requires no postage if mailed in the United States, in enclosed for your
convenience.
By Order of the Board of Directors
Bernard C. Boyle, Secretary
Dated: June 13, 2001
PROFESSIONAL DETAILING, INC.
10 Mountainview Road
Upper Saddle River, New Jersey 07458
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Professional Detailing, Inc. (the "Company") of
proxies in the form enclosed for the Annual Meeting of Stockholders to be held
at the Sheraton Crossroads Hotel, One International Boulevard, Mahwah, New
Jersey 07495 on July 11, 2001 at 10:30 a.m., Eastern time, and for any
adjournment or adjournments thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders. The Board of Directors
knows of no other business which will come before the meeting.
The approximate date on which this Proxy Statement and the accompanying
form of proxy will be mailed to the Company's stockholders is June 14, 2001. The
Company's 2000 Annual Report, including financial statements, is being mailed to
stockholders along with this Proxy Statement, but should not be regarded as
proxy soliciting material. The principal executive offices of the Company are
located at 10 Mountainview Road, Upper Saddle River, New Jersey 07458.
Record Date and Quorum
Stockholders of record at the close of business on June 11, 2001 are
entitled to notice of and to vote at the Annual Meeting. As of the record date,
there were 13,877,970 shares of Common Stock of the Company outstanding. Each
share of Common Stock outstanding on the record date is entitled to one vote on
each matter presented for action at the meeting. Shares of Common Stock were the
only voting securities of the Company outstanding on the record date. A quorum
will be present at the Annual Meeting if a majority of the shares of Common
Stock outstanding on the record date is present at the meeting in person or by
proxy.
Voting of Proxies
The persons acting as proxies pursuant to the enclosed proxy will vote the
shares represented as directed in the signed proxy. Unless otherwise directed in
the proxy, the proxyholders will vote the shares represented by the proxy: (i)
for election of the two Class I director nominees named in this Proxy Statement;
(ii) for approval of the amendment to the Certificate of Incorporation to
increase the number of authorized shares of Common Stock;
(iii) for approval of the amendment to the Certificate of Incorporation to
change the name of the company from Professional Detailing, Inc. to PDI, Inc.;
(iv) for ratification of the selection of PricewaterhouseCoopers LLP as
independent auditors to audit the financial statements of the Company for the
fiscal year ending December 31, 2001; and (v) in the proxyholders' discretion on
such other business as may come before the meeting and any adjournments of the
meeting.
All votes will be tabulated by the inspector of election appointed for the
Annual Meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Under the Company's Bylaws and Delaware law:
(1) shares represented by proxies that reflect abstentions or "broker non-votes"
(i.e., shares held by a broker or nominee that are represented at the meeting,
but with respect to which such broker or nominee is not empowered to vote on a
particular proposal) will be counted as shares that are present and entitled to
vote for purposes of determining the presence of a quorum; (2) there is no
cumulative voting, and the director nominees receiving the highest number of
votes, up to the number of directors to be elected, are elected and,
accordingly, abstentions, broker non-votes and withholding of authority to vote
will not affect the election of directors; (3) proxies that reflect abstentions
as to a particular proposal will be treated as voted for purposes of determining
the approval of that proposal and will have the same effect as a vote against
that proposal; and (4) proxies that reflect broker non-votes will be treated as
unvoted for purposes of determining approval of that proposal and will not be
counted as votes for or against that proposal, except for Proposals 2 and 3 (the
proposed amendments to the Certificate of Incorporation), where broker non-votes
will have the effect of a vote against that proposal.
Revocability of Proxy
A stockholder who has signed and returned the enclosed proxy may revoke it
at any time before it is voted by (i) submitting to the Company a properly
executed proxy bearing a later date, (ii) submitting to the Company a written
revocation of the proxy, or (iii) voting in person at the Annual Meeting.
Expenses of Solicitation
The Company will bear the entire cost of this proxy solicitation,
including the preparation, printing and mailing of the Proxy Statement, the
proxy and any additional soliciting materials sent by the Company to
stockholders. In addition, the Company may reimburse brokerage firms and other
persons representing beneficial owners of shares for reasonable expenses
incurred by them in forwarding proxy soliciting materials to such beneficial
owners. Proxies may also be solicited by certain of the Company's directors,
officers and employees, without additional compensation, personally or by
telephone.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors consists of five members and is divided into three
classes, with two Directors in Class I, two Directors in Class II and one
Director in Class III. Directors serve for three-year terms with one class of
directors being elected by the Company's stockholders at each annual meeting.
At the Annual Meeting, two Class I Directors will be elected to serve
until the annual meeting of stockholders in 2004 and until each Director's
successor is elected and qualified. The Board of Directors has nominated John P.
Dugan and Gerald J. Mossinghoff for reelection as the Class I Directors. The
accompanying form of proxy will be voted for the election of Messrs. Dugan and
Mossinghoff as Directors, unless the proxy contains contrary instructions.
Management has no reason to believe that either Mr. Dugan or Mr. Mossinghoff
will not be a candidate or will be unable to serve. However, in the event that
either should become unable or unwilling to serve as Director, the proxy will be
voted for the election of such person or persons as shall be designated by the
Board of Directors.
A plurality of votes of the holders of shares of Common Stock present in
person or by proxy at the meeting is required for the election of
directors.
The Board of Directors Recommends a
Vote FOR the Election of the Foregoing Nominees.
PROPOSAL NO. 2
APPROVAL OF AMENDMENT TO CERTIFICATE OF
INCORPORATION TO INCREASE AUTHORIZED SHARES
The Board of Directors on April 26, 2001 adopted resolutions approving an
amendment to the Company's Certificate of Incorporation to increase the
authorized shares of Common Stock from 30,000,000 shares to 100,000,000 shares
and directing that the proposed amendment be submitted to a vote of the
stockholders at the Annual Meeting. The Board of Directors determined that the
amendment is in the best interests of the Company and unanimously recommends
approval by the stockholders. If the amendment is approved by the stockholders,
the Company will file a Certificate of Amendment to the Company's Certificate of
Incorporation with the Delaware Secretary of State reflecting the amendment,
which will become effective on the date the Certificate of Amendment is accepted
for filing by the Secretary of State.
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The proposed amendment will modify the first paragraph of Article Fourth
of the Certificate of Incorporation to read as follows:
"FOURTH: The total number of shares of all classes of stock which
this Corporation shall have authority to issue is 105,000,000, consisting
of (i) 100,000,000 shares of Common Stock, $.01 par value, per share
("Common Stock"), and (ii) 5,000,000 shares of Preferred Stock, $.01 par
value per share ("Preferred Stock")."
Assuming the presence of a quorum, approval of the amendment to the
Company's Certificate of Incorporation requires that a majority of the holders'
of the Company's outstanding shares vote in favor of the amendment.
Background and Reasons for the Proposal
The Company's Certificate of Incorporation presently authorizes the
issuance of up to 30,000,000 shares of Common Stock and 5,000,000 shares of
Preferred Stock. No shares of Preferred Stock are issued and outstanding. Of the
30,000,000 shares of Common Stock authorized, as of the close of business on
June 11, 2001 there were 13,877,970 shares issued and outstanding and 1,963,366
shares reserved for future issuance under the Company's incentive compensation
plans.
After deducting outstanding and reserved shares, of the 30,000,000 shares
of Common Stock presently authorized there are 14,158,664 authorized shares that
have not been issued and are not reserved for a specific purpose. The Board of
Directors believes that it is in the Company's best interests to increase the
number of authorized shares of Common Stock to make additional shares available
for issuance to meet the Company's future business needs.
The Company's management has no present arrangements, agreements,
understandings or plans for the issuance or use of the additional shares of
Common Stock proposed to be authorized by the amendment. The Board of Directors
believes the availability of such shares will benefit the Company by providing
flexibility to issue stock for a variety of proper corporate purposes as the
Board of Directors may deem advisable without further action by the Company's
stockholders, except as may be required by law, regulation or stock exchange
rule. These purposes could include, among other things, the sale of stock to
obtain additional capital funds, the purchase of property, the acquisition or
merger into the Company of other companies, the use of additional shares for
various equity compensation and other employee benefit plans, the declaration of
stock dividends or distributions, and other bona fide corporate purposes. Were
any of these situations to arise, the issuance of additional shares of stock
could have a dilutive effect on earnings per share, and, for a person who does
not purchase additional shares to maintain his or her pro rata interest, on a
stockholder's percentage voting power in the Company. Holders of Common Stock do
not have preemptive rights to subscribe to additional securities that may be
issued by the Company, which means that current stockholders do not have a prior
right to purchase any new issue of stock of the Company in order to maintain
their proportionate ownership interest.
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Although an increase in the authorized shares of Common Stock could, under
certain circumstances, have an anti-takeover effect (for example, by diluting
the stock ownership of a person seeking to effect a change in the composition of
the Board of Directors or contemplating a tender offer or other transaction
directed to the combination of the Company with another company), the current
proposal to amend the Certificate of Incorporation is not in response to any
effort to accumulate the Company's stock or to obtain control of the Company by
means of a merger, tender offer, solicitation in opposition to management or
otherwise. As of the date of this Proxy Statement, management is not aware of
any actions taken by any person or group to obtain control of the Company. In
addition, the proposal is not part of any plan by management to recommend a
series of similar amendments to the Board of Directors and the stockholders.
The affirmative vote of a majority of the shares of Common Stock
outstanding is required for the approval of the amendment to the
Certificate of Incorporation increasing the number of authorized shares of
Common Stock.
The Board of Directors Recommends a Vote FOR the Approval of the
Amendment to the Certificate of Incorporation Increasing the Number of
Authorized Shares of Common Stock.
PROPOSAL NO. 3
APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION
TO CHANGE THE CORPORATE NAME TO "PDI, INC."
The Board of Directors on April 26, 2001 adopted resolutions approving an
amendment to Article First of the Company's Certificate of Incorporation
changing the corporate name from "Professional Detailing, Inc." to "PDI, Inc."
and directed that the proposed amendment be submitted to a vote of the
stockholders at the Annual Meeting. The Board of Directors determined that the
amendment is in the best interests of the Company and unanimously recommends
approval by the stockholders. If the amendment is approved by the stockholders,
the Company will file a Certificate of Amendment to the Company's Certificate of
Incorporation with the Delaware Secretary of State reflecting the amendment,
which will become effective on the date the Certificate of Amendment is accepted
for filing by the Secretary of State.
The proposed amendment will restate Article First of the Certificate of
Incorporation to read as follows:
"FIRST: The name of the Corporation is PDI, Inc. (hereinafter, the
"Corporation")."
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The Board of Directors believes that the proposed change in the Company's
name, although minor, will result in a strengthened corporate identity,
broadening the scope of the business implied by the name beyond product
detailing into the broader realm of commercialization services currently offered
by the Company.
The affirmative vote of a majority of the shares of Common Stock
outstanding is required for the approval of the amendment to the
Certificate of Incorporation changing the Company's name.
The Board of Directors Recommends a Vote FOR the Approval of the Amendment
to the Certificate of Incorporation changing the Company's name to PDI,
Inc.
PROPOSAL NO. 4
RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed PricewaterhouseCoopers LLP as
independent public accountants for fiscal year 2001. Although stockholder
approval is not required, the Company desires to obtain from the stockholders an
indication of their approval or disapproval of the Board of Directors' action in
appointing PricewaterhouseCoopers LLP as the independent public accountants of
the Company and its subsidiaries. If the stockholders do not ratify this
appointment, such appointment will be reconsidered by the Audit Committee and
the Board of Directors. The proxy will be voted as specified, and if no
specification is made, the proxy will be cast "For" this proposal.
A representative of PricewaterhouseCoopers LLP will be present at the
Annual Meeting and will be afforded an opportunity to make a statement and to
respond to questions.
Fiscal 2000 Audit Firm Fee Summary
During fiscal year 2000, the Company retained its independent accountants,
PricewaterhouseCoopers LLP, to provide services in the following categories and
amounts:
Audit Fees $ 246,050
Financial Information Systems Design and
Implementation Fees 635,819
All Other Fees* 502,617
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Total $1,384,486
==========
- ----------
* Includes transaction and due diligence services fees ($351,385), tax
services fees ($75,692), registration statement filing fees ($46,540) and
audit of employee benefit plan fees ($29,000).
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A plurality of votes of the holders of shares of Common Stock present in
person or by proxy at the meeting is required for the ratification of
accountants.
The Board of Directors Recommends a Vote FOR the Ratification of the
Appointment of PricewaterhouseCoopers LLP for Fiscal Year 2001.
SUBMISSION OF STOCKHOLDER PROPOSALS
FOR 2002 ANNUAL MEETING OF STOCKHOLDERS
Company stockholders who intend to present proposals at the Company's 2002
annual meeting and that stockholders desire to have included in the Company's
proxy materials relating to the meeting must be received by the Company no later
than February 11, 2002, which is 120 calendar days prior to the anniversary of
the date of this proxy statement, and must be in compliance with applicable laws
and regulations in order to be considered for possible inclusion in the proxy
statement and form of proxy for that meeting.
If a stockholder wishes to present a proposal at the Company's annual
meeting in the year 2002 and the proposal is not intended to be included in the
Company's proxy statement relating to that meeting, the stockholder must give
advance notice to the Company prior to the deadline for such meeting determined
in accordance with the Company's Bylaws (the "Bylaw Deadline"), as described
below in the section entitled "Other Matters." If a stockholder gives notice of
a proposal after the Bylaw Deadline, the stockholder will not be permitted to
present the proposal to the stockholders for a vote at the meeting.
Securities and Exchange Commission rules also establish a different
deadline for submission of stockholder proposals that are not intended to be
included in the Company's proxy statement with respect to discretionary voting
(the "Discretionary Vote Deadline"). The Discretionary Vote Deadline for the
year 2002 annual meeting is April 27, 2002 (45 calendar days prior to the
anniversary of the mailing date of this proxy statement). If a stockholder gives
notice of such a proposal after the Discretionary Vote Deadline, the Company's
proxy holders will be allowed to use their discretionary voting authority to
vote against the stockholder proposal when and if the proposal is raised at the
Company's year 2002 annual meeting. Because the Bylaw Deadline cannot be
determined until the Company publicly announces the date for its next annual
meeting, it is possible that the Bylaw Deadline may occur after the
Discretionary Vote Deadline. In such a case, a proposal received after the
Discretionary Vote Deadline but before the Bylaw Deadline would be eligible to
be presented at the 2002 annual meeting, and the Company believes that its proxy
holders would be allowed to use the discretionary authority granted by the proxy
card to vote against the proposal at the meeting without including any
disclosure of the proposal in the proxy statement relating to the meeting.
The Company has not been notified by any stockholder of his or her intent
to present a stockholder proposal from the floor at this year's Annual Meeting.
The enclosed proxy card
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grants the proxy holders discretionary authority to vote on any matter properly
brought before the Annual Meeting, including any stockholder proposals properly
presented to the Company prior to the Bylaw Deadline for this year's Annual
Meeting.
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If
any other matters properly come before the meeting, it is the intention of the
persons named in the enclosed form of proxy to vote the shares they represent as
the Board of Directors may recommend. Under the Company's Bylaws, in order to be
deemed properly presented, notice must be delivered to the Secretary of the
Company at the principal executive offices of the Company not more than 90 and
not less than 50 days before the annual meeting. The stockholder's notice must
set forth, as to each proposed matter: (i) a brief description of the business
desired to be brought before the annual meeting and the reasons for conducting
such business at the annual meeting and, if such business includes a proposal to
amend the Bylaws of the Company, the language of the proposed amendment; (ii)
the name and address, as they appear on the Company's books, of the stockholder
proposing such business; (iii) the number of shares of the Company which are
beneficially owned by such stockholder; (iv) a representation that the
stockholder is a holder of record of stock of the Company entitled to vote at
such annual meeting and intends to appear in person or by proxy at the annual
meeting to propose such business; and (v) any material interest of the
stockholder in such business.
INFORMATION REGARDING DIRECTORS
The following table sets forth the names and ages of the Company's
Directors, including the Class I Directors who have been nominated for
reelection at the Annual Meeting, based on information furnished by them to the
Company:
DIRECTOR
NAME AGE CLASS SINCE
- ------------------------- --------- -------- ----------
John P. Dugan ....................... 65 I 1997
Charles T. Saldarini ................ 38 II 1997
John M. Pietruski(1) ................ 68 II 1998
Jan Martens Vecsi(1) ................ 57 III 1998
Gerald J. Mossinghoff(1) ............ 65 I 1998
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(1) Member of Audit and Compensation Committees
John P. Dugan is our founder, chairman of the Board of Directors and
director of strategic planning. He served as our president from inception until
January 1995 and as our chief executive officer from inception until November
1997. In 1972, Mr. Dugan founded Dugan Communications, a medical advertising
agency that later became known as Dugan Farley Communications Associates Inc.
and served as its president until 1990. We were a wholly-owned subsidiary of
Dugan Farley in 1990 when Mr. Dugan became our sole stockholder. Mr. Dugan was a
founder and served as the president of the Medical Advertising
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Agency Association from 1983 to 1984. Mr. Dugan also served on the board of
directors of the Pharmaceutical Advertising Council (now known as the Healthcare
Marketing Communications Council, Inc.) and was its president from 1985 to 1986.
Mr. Dugan received an M.B.A. from Boston University in 1964.
Charles T. Saldarini is our vice chairman and chief executive officer.
Joining PDI in 1987, Mr. Saldarini has held positions of ever-increasing
responsibility, becoming president of PDI in January 1995 and chief executive
officer in November 1997, leading to his present role in June 2000. In his 13
years at PDI, his contributions have spanned the full range of our development.
He is responsible for establishing PDI's premier reputation and making PDI the
largest contract sales organization in the United States. Mr. Saldarini is a
frequent speaker on industry topics and an author, with numerous industry
publications to his credit. Prior to working at PDI, Mr. Saldarini worked at
Merrill Dow Pharmaceuticals. He received a B.A. in Political Science from
Syracuse University in 1985.
Gerald J. Mossinghoff became a director in May 1998. Mr. Mossinghoff is a
former Assistant Secretary of Commerce and Commissioner of Patents and
Trademarks of the Department of Commerce (1981 to 1985) and served as President
of Pharmaceutical Research and Manufacturers of America from 1985 to 1996. Since
1997 he has been senior counsel to the law firm of Oblon, Spivak, McClelland,
Maier and Newstadt of Arlington, Virginia. Mr. Mossinghoff has been a visiting
professor of Intellectual Property Law at the George Washington University Law
School since 1997 and Adjunct Professor of Law at George Mason University School
of Law since 1997. Mr. Mossinghoff served as United States Ambassador to the
Diplomatic Conference on the Revision of the Paris Convention from 1982 to 1985
and as Chairman of the General Assembly of the United Nations World Intellectual
Property Organization from 1983 to 1985. He is also a former Deputy General
Counsel of the National Aeronautics and Space Administration (1976 to 1981). Mr.
Mossinghoff received an electrical engineering degree from St. Louis University
in 1957 and a juris doctor degree with honors from the George Washington
University Law School in 1961. He is a member of the Order of the Coif and is a
Fellow in the National Academy of Public Administration. He is the recipient of
many honors, including NASA's Distinguished Service Medal and the Secretary of
Commerce Award for Distinguished Public Service.
John M. Pietruski became a director in May 1998. Since 1990 Mr. Pietruski
has been the chairman of the board of Texas Biotechnology Corp., a
pharmaceutical research and development company. He is a retired chairman of the
board and chief executive officer of Sterling Drug Inc. where he was employed
from 1977 until his retirement in 1988. Mr. Pietruski is a member of the boards
of directors of Hershey Foods Corporation, GPU, Inc., and Lincoln National
Corporation. Mr. Pietruski graduated Phi Beta Kappa with a B.S. in Business
Administration with honors from Rutgers University in 1954 and currently serves
as a regent of Concordia College.
Jan Martens Vecsi became a director in May 1998. Ms. Vecsi is the
sister-in-law of John P. Dugan, our chairman. Ms. Vecsi was employed by
Citibank, N.A. from 1967 through 1996 when she retired. Starting in 1984 she
served as the senior human resources officer and
9
vice president of the Citibank Private Bank. Ms. Vecsi received a B.A. in
Psychology and Elementary Education from Immaculata College in 1965.
The Board of Directors of the Company is divided into three classes as
nearly equal in number as possible. Each year the stockholders will elect the
members of one of the three classes to a three-year term of office. Messrs.
Saldarini and Pietruski serve in Class II whose term expires in 2003; and
Messrs. Dugan and Mossinghoff serve in Class I whose term expires in 2001 and
Ms. Vecsi serves in Class III whose term expires in 2002.
Board Of Director Meetings
During the year ended December 31, 2000, the Board of Directors held six
meetings. The directors standing for re-election attended at least 75% of the
total number of meetings of the Board of Directors and of the committees on
which he or she was a member.
Board Of Director Committees
In May 1998, the Board of Directors established and has since then
maintained an Audit Committee and Compensation Committee each comprised of Ms.
Vecsi and Messrs. Mossinghoff and Pietruski. Each committee member is a
non-employee director of the Company. The Audit Committee approves the selection
of the Company's independent accountants and meets and interacts with the
independent accountants to discuss questions in regard to the Company's
financial reporting. In addition, the Audit Committee reviews the scope and
results of the audit with the independent accountants, reviews with management
and the independent accountants the Company's quarterly and annual operating
results, considers the adequacy of the internal accounting procedures and
considers the effects of such procedures on the accountant's independence. The
Compensation Committee is responsible for reviewing and approving executive
compensation programs and has the responsibility for periodically evaluating and
modifying the various compensation plans covering such executives. In addition,
the Compensation Committee evaluates the performance of the Company's executive
employees and determines the salaries and other compensation payable to such
persons, consistent with the Company's business and stockholder objectives.
During the last full fiscal year, the Compensation Committee met four times and
the Audit Committee met five times, with all members present at each respective
Committee meeting.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
None of the Directors serving on the Compensation Committee is an employee
of the Company. No Director or executive officer of the Company 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.
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Compensation of Directors
Each non-employee Director receives an annual director's fee of $20,000,
payable quarterly in arrears, plus $1,000 for each meeting attended in person
and $500 for each telephonic meeting attended, as well as reimbursement for
travel costs and other out-of-pocket expenses incurred in attending each
Directors' meeting. In addition, committee members receive $500 for each
committee meeting attended in person and $200 for each committee meeting
attended telephonically. Additionally, pursuant to the Company's Stock Option
Plans, on the date of initial election to the Board of Directors, each
non-employee Director receives options to purchase 10,000 shares of Common Stock
exercisable at the fair market value on the date of grant. These options will
vest one-third on the date of grant and one-third at the end of each subsequent
year of service on the Board of Directors. In addition, each non-employee
Director will receive options to purchase an additional 7,500 shares of Common
Stock annually on the date of the Company's annual stockholders' meeting. Such
options will have an exercise price equal to the fair market value of the Common
Stock on the date of grant and will vest one-third upon grant and one-third on
each of the first and second anniversary of the date of grant.
Limitation of Directors' Liability and Indemnification
The Delaware General Corporation Law (the "DGCL") authorizes corporations
to limit or eliminate the personal liability of directors to corporations and
their stockholders for monetary damages for breach of directors' fiduciary duty
of care. The Company's Certificate of Incorporation limits the liability of
Directors of the Company to the Company or its stockholders to the fullest
extent permitted by Delaware law.
The Company's Certificate of Incorporation provides mandatory
indemnification rights to any officer or Director of the Company who, by reason
of the fact that he or she is an officer or Director of the Company, is involved
in a legal proceeding of any nature. Such indemnification rights include
reimbursement for expenses incurred by such officer or Director in advance of
the final disposition of such proceeding in accordance with the applicable
provisions of the DGCL. Insofar as indemnification for liabilities under the
Securities Act may be provided to officers and Directors or persons controlling
the Company, the Company has been informed that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
There is no pending litigation or proceeding involving a Director,
officer, employee or agent of the Company in which indemnification by the
Company will be required or permitted. The Company is not aware of any
threatened litigation or proceeding that may result in a claim for such
indemnification.
11
INFORMATION REGARDING EXECUTIVE OFFICERS
The following table sets forth the names, ages and principal position,
of the executive officers of the Company:
NAME AGE POSITION
- ------------------------ ----- --------------------------------------------
John P. Dugan........... 65 Chairman of the Board of Directors and
Director of Strategic Planning
Charles T. Saldarini.... 38 Vice Chairman and Chief Executive Officer
Steven K. Budd.......... 44 President and Chief Operating Officer
Bernard C. Boyle........ 57 Chief Financial Officer, Executive Vice
President, Secretary and Treasurer
Robert R. Higgins....... 58 Executive Vice President, Client Programs
Christopher Tama........ 42 Executive Vice President, LifeCycle Ventures
Stephen Cotugno......... 41 Executive Vice President, Corporate
Development
The principal occupation and business experience for at least the last
five years for each current executive officer is set forth below (except for
Messrs. Dugan and Saldarini, each of whose business experience is discussed
above).
Steven K. Budd is our president and chief operating officer. Since June
2000, Mr. Budd oversees the management of PDI's internal support functions,
contributes to the development of PDI's strategic plans and serves on our
executive business development team. Since joining PDI in April 1996 as vice
president, Account Group Sales, he became executive vice president in July 1997
and chief operating officer in January 1998. From January 1994 through April
1995, Mr. Budd was employed by Innovex, Inc., as director of new business
development. From 1989 through December 1993, he was employed by Professional
Detailing Network (now known as Nelson Professional Sales, a division of Nelson
Communications, Inc.), as vice president with responsibility for building sales
teams and developing marketing strategies. Mr. Budd received a B.A. in History
and Education from Susquehanna University in 1978.
Bernard C. Boyle has served as our chief financial officer and executive
vice president since March 1997. In 1990, Mr. Boyle founded BCB Awareness, Inc.,
a firm that provided management advisory services, and served as its president
until March 1997. During that period he was also a partner in Boyle & Palazzolo,
Partners, an accounting firm. From 1982 through 1990 he served as controller and
then chief financial officer and treasurer of William Douglas McAdams, Inc., an
advertising agency. From 1966 through 1971, Mr. Boyle was employed by the
national accounting firm of Coopers & Lybrand L.L.P. as supervisor/senior audit
staff. Mr. Boyle received a B.B.A. in Accounting from Manhattan College in 1965
and an M.B.A. in corporate finance from New York University in 1972.
Robert R. Higgins became our executive vice president-client programs in
October 1998. He joined us as a district sales manager in August 1996 and became
vice president in 1997. Mr. Higgins has over 30 years experience in the
pharmaceutical industry. From 1965 to 1995, Mr. Higgins was employed by
Burroughs Wellcome Co., where he was responsible for building and managing sales
teams and developing and implementing marketing strategies.
12
After he left Burroughs Wellcome and before he joined us, Mr. Higgins was
self-employed. Mr. Higgins received a B.S. in biology from Kansas State
University in 1964, and an MBA from North Texas State University in 1971.
Christopher Tama joined us as executive vice president-LifeCycle Ventures
in January 2000. Prior to joining us, Mr. Tama spent 19 years with Pharmacia &
Upjohn, Searle and Novartis where he held various marketing and sales positions.
Before joining us, Mr. Tama was with Pharmacia & Upjohn for 13 years. Most
recently he was vice president-marketing for Novartis' central nervous system
therapeutic area. His marketing and sales experience range many different
therapeutic areas, both in primary care and specialty markets. He has extensive
domestic and international experience and has launched 13 products throughout
his career. He received his B.A. in Economics from Villanova University in 1981.
Stephen P. Cotugno became our executive vice president-corporate
development in January 2000. He joined us as a consultant in 1997 and in January
1998 he was hired full time as vice president-corporate development. Prior to
joining us, Mr. Cotugno was an independent financial consultant. He received his
B.A. in Finance and Economics from Fordham University in 1981.
13
COMPENSATION OF EXECUTIVE OFFICERS
Summary compensation. The following table sets forth certain information
concerning compensation paid for services in all capacities awarded to, earned
by or paid to our chief executive officer and the other four most highly
compensated executive officers during 2000, 1999 and 1998, whose aggregate
compensation exceeded $100,000.
Annual compensation Long-term compensation
----------------------------------- ------------------------
Shares of
common
Restricted stock
Other annual stock underlying All other
Name and Principal Position Salary Bonus compensation awards$(1) options compensation
- ------------------------------------ ------ ----- ------------ ---------- ---------- ------------
Charles T. Saldarini
Vice chairman and chief
executive officer
2000 ........................... $294,594 $506,731 $ 8,713 -- -- $ 6,203
1999 ........................... 283,254 450,000 5,657 -- -- 2,145
1998 ........................... 233,744 275,000 2,394 -- -- --
Stephen K. Budd
President and chief operating
officer
2000 ........................... 225,000 243,003 2,891 104,144 -- 4,744
1999 ........................... 182,053 216,409 2,229 83,591 25,000 3,524
1998 ........................... 168,678 178,000 2,302 -- -- 3,373
Bernard C. Boyle
Chief financial officer,
executive vice president,
secretary and treasurer
2000 ........................... 187,500 207,211 4,706 88,805 -- 4,010
1999 ........................... 167,975 180,180 3,350 77,220 20,000 3,256
1998 ........................... 155,833 165,000 4,170 -- -- 825
Robert R. Higgins
Executive vice president
2000 ........................... 141,667 114,042 3,456 48,875 -- 3,000
1999 ........................... 125,567 73,238 1,977 31,387 15,000 2,396
1998 ........................... 101,186 45,000 2,104 -- 7,500 1,373
Christopher Tama(2)
Executive vice president
2000 ........................... 167,708 210,000 1,828 90,000 5,000 --
1999 ........................... -- -- -- -- -- --
1998 ........................... -- -- -- -- -- --
- ----------
(1) For the years ended December 31, 2000 and 1999, a portion of the named
executive officers' annual bonus was paid in restricted stock. The number of
shares were calculated by dividing the portion of bonus expense attributable to
restricted stock by a trailing 20-day average stock price on December 31, 2000
and 1999, which was $99.42 and $27.25, respectively. The fair market value of
the shares owned by the named executive officers on December 31, 2000 at the end
of 2000, based upon the closing price of our Common Stock of $105.766 on that
date, was as follows: Mr. Budd -- $435,121 (4,114 shares); Mr. Boyle -- $394,084
(3,726 shares); Mr. Higgins -- $173,668 (1,642 shares); and Mr. Tama -- $95,718
(905 shares).
(2) Mr. Tama joined us as executive vice president in January 2000.
14
Option grants. The following table sets forth certain information
regarding options granted by us in 2000 to each of the executives named in the
Summary Compensation Table.
Option Grants in Last Fiscal Year
--------------------------------------------------------------------------------------------
Individual Grants Potential Realizable
------------------------------------------------------------ Value at Assumed
Number of Percent of Annual Rates of Stock
Shares Total Options Price Appreciation
Underlying Granted Exercise for Option Term (1)
Options to Employees Price Expiration -----------------------
Name Granted in Fiscal Year ($/share) Date 5% 10%
- ----------------------------- ---------- -------------- --------- ---------- ------- --------
Charles T. Saldarini ........ -- -- -- -- -- --
Steven K. Budd .............. -- -- -- -- -- --
Bernard C. Boyle ............ -- -- -- -- -- --
Robert R. Higgins ........... -- -- -- -- -- --
Christopher Tama ............ 5,000 1.8% $29.53 1/17/10 $92,056 $235,316
- ----------
(1) Potential realizable values are net of exercise price but before taxes,
and are based on the assumption that our Common Stock appreciates at the
annual rate shown (compounded annually) from the date of grant until the
expiration date of the options. These numbers are calculated based on
Securities and Exchange Commission requirements and do not reflect our
projection or estimate of future stock price growth. Actual gains, if any,
on stock option exercises are dependent on our future financial
performance, overall market conditions and the option holder's continued
employment through the vesting period. This table does not take into
account any appreciation in the price of the Common Stock from the date of
grant to the date of this proxy statement.
Option exercises and year-end option values. The following table provides
information with respect to options exercised by the Named Executive Officers
during 2000 and the number and value of unexercised options held by the Named
Executive Officers as of December 31, 2000.
Aggregated Option Exercise in Last Fiscal Year and Year-End Option Values
Number of Shares Underlying Value of Unexercised In-the-
Unexercised Options at Fiscal Money Options At Fiscal
Year-End Year-End (2)
----------------------------- ------------------------------
Shares Acquired
Name on Exercise (#) Value Realized (1) Exercisable Unexercisable Exercisable Unexercisable
- ---- --------------- ------------------ ----------- ------------- ----------- -------------
Charles T. Saldarini -- -- -- -- -- --
Steven K. Budd 39,189 $4,317,621 8,333 16,667 $ 654,821 $1,309,642
Bernard C. Boyle 22,992 2,693,979 6,667 13,333 523,857 1,047,713
Robert R. Higgins 10,000 909,832 -- 12,500 -- 1,010,200
Christopher Tama -- -- -- 5,000 -- 381,180
- ----------
(1) For the purposes of this calculation, value is based upon the difference
between the exercise price of the options and the stock price at date of
exercise.
(2) For the purposes of this calculation, value is based upon the difference
between the exercise price of the exercisable and unexercisable options
and the stock price at December 31, 2000 of $105.766 per share.
15
Employment Contracts
In January 1998, we entered into an agreement with John P. Dugan providing
for his appointment as chairman of the board and director of strategic planning.
The agreement provides for an annual salary of $125,000, no cash bonuses and for
participation in all executive benefit plans.
In April 1998, we entered into an employment agreement with Charles T.
Saldarini providing for his employment as chief executive officer for a term
expiring on February 28, 2003, subject to automatic one-year renewals unless
either party gives written notice 180 days prior to the end of the then current
term of the agreement. The agreement provides for an annual base salary of
$275,000 and for participation in all executive benefit plans. The agreement
also provides that Mr. Saldarini will be entitled to bonus and incentive
compensation awards as determined by the Compensation Committee. Further, the
agreement provides, among other things, that, if his employment is terminated
without cause (as defined) or if Mr. Saldarini terminates his employment for
good reason (as defined), we will pay him an amount equal to the salary which
would have been payable over the unexpired term of his employment agreement.
In January 2000, we entered into an employment agreement with Mr. Tama
providing for Mr. Tama's employment as executive vice president -- Life Cycle
Ventures. Mr. Tama's agreement terminates on December 31, 2002. The agreement is
subject to automatic one-year renewals unless either party gives written notice
180 days prior to the end of the then current term of the agreement. The
agreements provide for an annual base salary of $175,000 and for Mr. Tama's
participation in all executive benefit plans. The agreements also provide that
Mr. Tama is entitled to bonus and incentive compensation awards as determined by
the Compensation Committee. The agreement also provides, among other things,
that, if we terminate the employee's employment without cause (as defined) or
the employee terminates his employment for good reason (as defined), we will pay
the employee an amount equal to the salary which would have been payable over
the unexpired term of the employment agreement.
In May 2001, we entered into employment agreements with each of Messrs.
Budd, Boyle and Cotugno, providing for Mr. Budd's employment as president and
chief operating officer, Mr. Boyle's employment as chief financial officer, and
Mr. Cotugno's employment as executive vice president -- corporate development.
Mr. Budd's agreement terminates on April 30, 2005, Mr. Boyle's agreement
terminates on April 30, 2004, and Mr. Cotugno's agreement terminates on November
30, 2004. Each agreement is subject to automatic one-year renewals unless either
party gives written notice 180 days prior to the end of the then current term of
the agreement. The agreements provide for an annual base salary of $275,000 for
Mr. Budd, $250,000 for Mr. Boyle and $175,000 for Mr. Cotugno and for their
participation in all executive benefit plans. The agreements also provide for
bonus and incentive compensation awards as determined by the Compensation
Committee. Each agreement also provides, among other things, that, if we
terminate the employee's employment without cause (as defined) or the employee
terminates his employment for good reason (as defined), we will pay the employee
a lump-sum amount equal to twenty-four times the employee's Monthly Salary
16
Amount which the agreements define as (y) the employee's then current base
salary plus (z) the average annual bonus paid to the employee during the three
years immediately preceding the termination date.
Stock compensation plans
2000 Omnibus Incentive Compensation Plan
In May, 2000 our Board of Directors approved our 2000 Omnibus
Incentive Compensation Plan. The purpose of the Omnibus Plan is to provide a
flexible framework that will permit the board to develop and implement a variety
of stock-based incentive compensation programs based on our changing needs, our
competitive market and the regulatory climate. The maximum number of shares as
to which awards or options may at any time be granted under the Omnibus Plan is
1.5 million shares of the our Common Stock. The Omnibus Plan is administered by
the Compensation Committee, which is responsible for developing and implementing
specific stock-based plans that are consistent with the intent and specific
terms of the framework created by the Omnibus Plan. Eligible participants under
the Omnibus Plan include our officers and other employees, members of our board,
and outside consultants. The right to grant awards under the Omnibus Plan will
terminate upon the expiration of 10 years after the date the Omnibus Plan was
adopted. No Participant may be granted more than 100,000 shares of Common Stock
from all awards under the Omnibus Plan.
1998 Stock Option Plan
In March 1998, our Board of Directors approved our 1998 stock option
plan reserving for issuance up to 750,000 shares. Officers, directors, key
employees and consultants are eligible to receive incentive and/or non-qualified
stock options under this plan. The plan, which has a term of ten years from the
date of its adoption, is administered by the Compensation Committee. The
selection of participants, allotment of shares, determination of price and other
conditions relating to the purchase of options is determined by the Compensation
Committee in its sole discretion. Incentive stock options granted under the plan
are exercisable for a period of up to 10 years from the date of grant at an
exercise price which is not less than the fair market value of the Common Stock
on the date of the grant, except that the term of an incentive stock option
granted under the plan to a stockholder owning more than 10% of the outstanding
Common Stock may not exceed five years and its exercise price may not be less
than 110% of the fair market value of the Common Stock on the date of the grant.
At December 31, 2000, options for an aggregate of 653,921 shares were
outstanding under our stock option plans, including 25,000 granted to Steven
Budd, our president and chief operating officer, 20,000 granted to Bernard
Boyle, our chief financial officer, 12,500 granted to Robert Higgins, our
executive vice president of client programs, 16,670 granted to Stephen Cotugno,
our executive vice president of corporate development, 5,000 granted to
Christopher Tama, our executive vice president LifeCycle Ventures and 18,750
granted to each of Gerald J. Mossinghoff, John M. Pietruski and Jan Martens
Vecsi, our outside directors. In addition,
17
as of December 31, 2000, options to purchase 286,634 shares of Common Stock had
been exercised.
401(k) plan
We maintain two 401(k) retirement plans intended to qualify under sections
401(a) and 401(k) of the Internal Revenue Code. These 401(k) plans are defined
contribution plans. Under one plan, we committed to make mandatory contributions
to the 401(k) plan to match employee contributions up to a maximum of 2% of each
participating employee's annual wages. Under the other 401(k) plan, we committed
to match 100% of the first $1,250 contributed by each employee, 75% of the next
$1,250, 50% of the next $1,250 and 25% of the next $1,250 contributed. In
addition we can make discretionary contributions to this plan. Our contribution
to the 401(k) plan for 2000 was approximately $1.2 million.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of our Common Stock as of May 1, 2001 by:
o each person known to us to be the beneficial owner of more than 5%
of our outstanding shares;
o each of our directors;
o each executive officer named in the Summary Compensation Table
above;
o all of our directors and executive officers as a group.
Except as otherwise indicated, the persons listed below have sole voting
and investment power with respect to all shares of Common Stock owned by them.
All information with respect to beneficial ownership has been furnished to us by
the respective stockholder. The address for each of Messrs. Dugan and Saldarini
is c/o Professional Detailing, Inc., 10 Mountainview Road, Upper Saddle River,
New Jersey 07458.
18
Number of Shares Percentage of Shares
Name of Beneficial Owner Beneficially Owned(1) Beneficially Owned
------------------------ --------------------- ------------------
Executive officers and directors:
John P. Dugan 4,909,878 35.4%
Charles T. Saldarini 800,000 5.8%
Steven K. Budd 13,848(2) *
Bernard C. Boyle 10,394(3) *
Robert Higgins 7,992(4) *
Christopher Tama 2,572(5) *
John M. Pietruski 18,250(6) *
Jan Martens Vecsi 16,250(7) *
Gerald J. Mossinghoff 16,250(7) *
All executive officers and directors as a group (11 persons) 5,803,938(8) 41.6%
5% stockholders:
Putnam Investment Management, Inc.(9) 1,542,648 11.1%
One Post Office Square
Boston, MA 02110
AIM Management Group, Inc.(9) 734,920 5.3%
11 Greenway Plaza
Houston, TX 77046
Navellier & Associates Inc.(9) 717,967 5.2%
One East Liberty, Third Floor
Reno, NV 89501
- ----------
* Less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that
person, shares of Common Stock subject to options and warrants held by
that person that are currently exercisable or exercisable within 60 days
of May 1, 2001 are deemed outstanding. Such shares, however, are not
deemed outstanding for the purpose of computing the percentage ownership
of any other person.
(2) Includes 8,333 shares issuable pursuant to options exercisable within 60
days of May 1, 2001.
(3) Includes 6,667 shares issuable pursuant to options exercisable within 60
days of May 1, 2001.
(4) Includes 2,500 shares issuable pursuant to options exercisable within 60
days of May 1, 2001.
(5) Includes 1,667 shares issuable pursuant to options exercisable within 60
days of May 1, 2001.
(6) Includes 16,250 shares issuable pursuant to options exercisable within 60
days of May 1, 2001.
(7) Represents shares issuable pursuant to options exercisable within 60 days
of May 1, 2001.
(8) Includes 74,587 shares issuable pursuant to options exercisable within 60
days of May 1, 2001.
(9) This information was derived from the Schedule 13f filed by the reporting
person.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with our efforts to recruit sales representatives, we place
advertisements in various print publications. These ads are placed on our behalf
through Boomer & Son, Inc., which receives commissions from the publications.
Prior to 1998, B&S was wholly-owned by John P. Dugan, our chairman of the board.
At the end of 1997 Mr. Dugan transferred his interest in B&S to his son, Thomas
Dugan, and daughter-in-law, Kathleen Dugan. John P. Dugan is not actively
involved in B&S; however, his son, Thomas Dugan, is active in B&S. For the year
ended December 31, 2000 we purchased $2.1 million of advertising through B&S
19
and B&S received commissions of approximately $380,000. All ads were placed at
the stated rates set by the publications in which they appeared. In addition, we
believe that the amounts paid to B&S were no less favorable than would be
available in an arms-length negotiated transaction with an unaffiliated entity.
Peter Dugan, the son of John P. Dugan, our chairman of the board, is
employed by us as executive director of marketing. In 2000, compensation paid or
accrued to Peter Dugan was $192,820.
In April 1998, we loaned $1.4 million to our vice chairman and chief
executive officer, Charles T. Saldarini. The proceeds of this loan were used by
Mr. Saldarini to pay income taxes relating to his receipt of shares of Common
Stock in January 1997. This loan is for a term of three years, bears interest at
a rate equal to 5.4% per annum payable quarterly in arrears and is secured by a
pledge of the shares held by Mr. Saldarini. In February 2000, Mr. Saldarini
repaid this loan in full.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The purpose of the Company's executive compensation program is to attract,
retain and motivate qualified executives to manage the business of the Company
so as to maximize profits and stockholder value. In order to enhance the
effectiveness of the compensation package provided to the Company's executives,
the Compensation Committee of the Board of Directors has engaged and consulted
with nationally recognized human resource consulting firms, to assist in the
review of PDI's current compensation methods, and to make recommendations
regarding the modification of the compensation elements within the Executive
Compensation package. After careful analysis of the Company's needs and an
examination of the competitive practices among peer organizations, the Board of
Directors approved the adoption of the Variable Incentive Compensation Plan, an
annual incentive plan providing incentives to officers based on performance tied
to the success and growth of PDI. In addition, the Board of Directors adopted
deferred compensation arrangements, which provide for the deferral of cash
compensation by the executive to be used towards his or her retirement.
The executive compensation package is made up of a number of key elements
which address current and future competitive and performance issues. These
include the executive's annual base salary, an annual incentive opportunity
under the Variable Incentive Compensation Plan and awards under the Omnibus
Incentive Compensation Plan. The Compensation Committee annually considers and
makes recommendations to the Board of Directors as to changes in these plans, as
well as considering the addition of new compensation components that are
consistent with the Company's goal of being the "Employer of Choice." In
recommending any changes to the annual compensation of executive officers of the
Company, the Compensation Committee considers the overall performance of the
Company, the performance of the division of the Company for which the executive
has responsibility, and the individual contribution and performance of the
executive. While increases in stockholders'
20
value is considered important by the Compensation Committee, the compensation
program focuses on the Company's strategic plans, corporate performance, and the
Company's ability to attract and retain highly qualified professional managers.
Annual Incentive Program
The Company's officers, executives and senior management are eligible to
participate in PDI's Variable Incentive Compensation Plans ("VICP"). Under the
VICP, participants can earn annual awards based on the financial and strategic
performance of PDI, their contributions to the success of their functional
business area, as well as on their achievement of individual performance
objectives. Annual performance measures and relative targets are determined
prior to the beginning of each fiscal year, based on PDI's business focus, and
may change from year to year. Each Participant's target bonus is expressed as a
percentage of his or her base salary. Awards are payable under the VICP only if
pre-defined minimum performance levels are met. If performance targets are
exceeded, a participant may earn additional VICP awards, determined by the
extent that the performance exceeds the target. Awards under the VICP are
subject to the determination and final approval of the Compensation Committee.
Deferred Compensation
In order to complement the total compensation package of its key
employees, in December 1999, the Compensation Committee adopted the Officer and
Director Deferred Compensation Plans, covering officers, selected highly
compensated executives, and members of the Board of Directors. Subsequently, the
Committee adopted the Senior Management Deferred Compensation Plan, covering
selected senior management. The purpose of each of the Plans is to allow
participants to defer receipt of current cash compensation, which would allow
them to maximize deferrals that could not otherwise be put into Qualified Plans
such as the 401(k). The Plan also allows members of the Board of Directors to
defer board fees.
For each Plan Year of participation, a Participant may make an irrevocable
election to defer all or a portion of his or her Cash Compensation. The Company
may, but is not required to, make supplemental contributions on a totally
discretionary basis. A Participant is immediately 100% vested in his/her account
with respect to the Cash Compensation deferred that he/she would have received,
had it not been deferred; Company contributions, if any, would vest to the
Participant over a five (5) year period. A Deferred Account will be established
for each Participant in a Grantor "Rabbi" Trust that tracks deferrals and any
interest that may be accrued, and will be held under a trust to be established
by and between the Company and a named trustee. All funds within a Participant's
Deferred Account remain subject to the claims of the creditors of the Company
regardless of vesting, in the event of the Company's bankruptcy or insolvency.
21
Compensation of the Chief Executive Officer
Mr. Saldarini's base salary of $294,594 was paid in accordance with his
Employment Agreement with the Company entered into in April 1998. Mr.
Saldarini's Employment Agreement provides for bonuses and incentive compensation
in the discretion of the Board of Directors or a Committee thereof. Based upon
the Company's strong performance in 2000 as reflected in its performance
relative to the companies that comprise both the Nasdaq Stock Market Index and
the Company's Peer Industry Index, as well as specific performance benchmarks
established by the Compensation Committee, Mr. Saldarini was awarded a bonus of
$506,731 for his performance in 2000.
Section 162(m) of the Internal Revenue Code of 1996, as amended (the
"Code"), generally disallows a tax deduction to public companies for
compensation over $1 million paid to the Company's chief executive officer and
four other most highly compensated executive officers, unless the compensation
is considered performance based. The compensation disclosed in this Proxy
Statement does not exceed the $1 million limit, and executive compensation for
2001 is also expected to qualify for deductibility. The Company currently
intends to structure the performance-based portion of its executive officers'
compensation to achieve maximum deductibility under Section 162(m) of the Code
with minimal sacrifices in flexibility and corporate objective.
SUBMITTED BY THE COMPENSATION COMMITTEE
Jan Martens Vecsi, Chairman
Gerald J. Mossinghoff
John M. Pietruski
************************
The foregoing Report of Compensation Committee shall not be deemed to be
incorporated by reference in any previous or future documents filed by the
Company with the Securities and Exchange Commission under the Securities Act of
1933 or the Securities Exchange Act of 1934, except to the extent that the
Company specifically incorporates the Report by reference in any such document.
22
AUDIT COMMITTEE REPORT
The role of the Audit Committee is to assist the Board of Directors in
overseeing the Company's financial reporting process. The Board of Directors, in
its business judgment, has determined that all members of the Audit Committee
are "independent", as required by applicable listing standards of Nasdaq. The
Audit Committee's responsibilities are described in its Charter, adopted by the
Board of Directors on August 5, 1998 and amended by the Board of Directors on
April 26, 2001, a copy of which is attached to this Proxy Statement as Appendix
A.
In the performance of its oversight function, the Audit Committee has
considered and discussed the audited financial statements with management and
the independent auditors. The Audit Committee has also discussed with the
independent auditors the matters required to be discussed by Statement on
Auditing Standards No. 61, Communication with Audit Committees, as currently in
effect. Finally, the Audit Committee has received the written disclosures and
the letter from the independent auditors required by Independence Standards
Board Standard No. 1, Independence Discussions with Audit Committees, as
currently in effect, has considered whether the provision of non-audit services
by the independent auditors to the Company is compatible with maintaining the
auditors' independence and has discussed with the auditors the auditors'
independence.
The members of the Audit Committee are not professionally engaged in the
practice of auditing or accounting and are not experts in the fields of
accounting or auditing. Management of the Company is responsible for the
preparation of the Company's financial statements. The independent auditors are
responsible for auditing the Company's financial statements and expressing an
opinion as to their conformity with generally accepted accounting principles.
Members of the Audit Committee rely without independent verification on the
information provided to them and on the representations made by management and
the independent accountants.
Based upon the reports and discussions described in this report, and
subject to the limitations on the role and responsibilities of the Audit
Committee referred to above and in the Charter, 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 year ended December 31, 2000 as
filed with the Securities and Exchange Commission.
SUBMITTED BY THE AUDIT COMMITTEE
Gerald J. Mossinghoff, Chairman
John M. Pietruski
Jan Martens Vecsi
***********************
The foregoing Report of Audit Committee shall not be deemed to be incorporated
by reference in any previous or future documents filed by the Company with the
Securities and Exchange Commission under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates the Report by reference in any such document.
23
STOCKHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on the Company's Common Stock, based on
the market price of the Company's Common Stock with the total return of
companies included within the Nasdaq Stock Market Index and a peer group of
companies engaged in contract sales and outsourcing for the pharmaceutical
industry (the "Peer Industry Index") for the period commencing May 20, 1998 and
ending December 31, 2000. The members of the Peer Industry Index are Boron
Lepore & Associates, Inc., Quintiles Transnational Corp. and Ventiv Health, Inc.
The calculation of total cumulative return assumes a $100 investment in the
Company's Common Stock, the Nasdaq Stock Market Index and the Peer Industry
Index on May 20, 1998, the first day of trading of the Company's Common Stock,
and the reinvestment of all dividends.
[The following data is set forth in graph form]
5/20/98 12/31/98 12/31/99 12/31/00
------- -------- -------- --------
Nasdaq Stock Market Index $100.00 $125.04 $228.15 $134.87
Peer Industry Index $100.00 $ 96.62 $ 35.97 $ 36.67
Professional Detailing, Inc. $100.00 $130.64 $138.44 $489.09
24
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC"). Officers, directors and greater than ten-percent stockholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file. Based solely on review of the copies of such forms
furnished to the Company, or written representations that no Forms 5 were
required, the Company believes that all Section 16(a) filing requirements
applicable to its officers and directors were complied with.
The Company will provide without charge to each person being solicited by
this Proxy Statement, on the written consent of any such person, a copy of the
Annual Report of the Company on Form 10-K for the year ended December 31, 2000
(as filed with the Securities and Exchange Commission) including the financial
statements thereto. All such requests should be directed to Bernard C. Boyle,
Secretary, Professional Detailing, Inc., 10 Mountainview Road, Upper Saddle
River, New Jersey 07458.
By Order of the Board of Directors
Bernard C. Boyle, Secretary
June 13, 2001
25
APPENDIX A
PROFESSIONAL DETAILING, INC.
Audit Committee Charter
Purpose
The purpose of the Audit Committee is to assist the Board of Directors of the
Company in fulfilling its responsibilities to oversee the Company's financial
reporting process, including monitoring the integrity of the Company's financial
statements and the independence and performance of the Company's internal and
external auditors.
It is the responsibility of executive management of the Company to prepare
financial statements in accordance with generally accepted accounting principles
and of the Company's independent auditors to audit those financial statements.
The Audit Committee's responsibility is one of oversight and in carrying out its
responsibility, the Audit Committee is not providing any expert or other special
assurance as to the Company's financial statements,
Membership Requirements
The Audit Committee shall be comprised of that number of directors as the Board
of Directors shall determine from time to time, such numbers not to be less than
three (3) in accordance with the Company's By-Laws, each of which Directors
shall meet all applicable requirements of the Audit Committee Policy of NASDAQ
with respect to independence, financial literacy, accounting or related
financial expertise, and any other matters required by NASDAQ. The members of
the Audit Committee, including the Chairman thereof, shall be appointed annually
by the Board of Directors.
Authority
In discharging its oversight responsibilities, the Audit Committee shall have
unrestricted access to the Company's management, books and records and the
authority to retain outside counsel, accountants or other consultants at the
Audit Committee's sole discretion.
Responsibilities
The following are the general responsibilities of the Audit Committee and are
set forth only for its guidance. The Audit Committee may diverge from these
responsibilities and may assume such other responsibilities, as it deems
necessary or appropriate in carrying out its oversight functions. The Audit
Committee shall:
o propose to the Board of Directors annually the appointment of the
independent auditors who shall be accountable to the Board of Directors
and the Audit Committee;
o determine whether to recommend to the Board of Directors that the
Company's financial statements be included in its Annual Report on Form
10-K for filing with the Securities and Exchange Commission. To carry out
this responsibility, the Audit Committee shall:
- review and discuss the audited financial statements with management
and the independent auditors;
- discuss with the independent auditors the matters required by
Statement on Auditing Standards No. 61;
- review and discuss with the independent auditors the written
disclosures required by Independence Standards Board Standard No. 1
regarding their independence and, where appropriate, recommend that
the Board of Directors take appropriate action in response to the
disclosures to satisfy itself of the independence of the Company's
independent auditors; and
- based upon the reviews and discussions, issue its report for
inclusion in the Company's proxy statement;
o consider whether the provision of services by the independent auditors not
related to the audit of the annual financial statement and the review of
the interim financial statements included in the Company's Forms 10-Q for
such year is compatible with maintaining the auditor's independence;
o review and discuss with management and the independent auditors the
Company's interim financial statements to be included in the Company's
quarterly reports to be filed with the Securities and Exchange Commission;
o oversee the functioning of the Internal Audit Review, including its
organization, charter, staffing, budget and work plans, and review
periodic reports prepared by such organization;
o meet privately with the independent auditors and with the head of the
Internal Audit Department to review the Company's accounting practices,
internal accounting controls and such other matters as the Audit Committee
deems appropriate;
o regularly report to the Board of Directors its conclusions with respect to
the matters that the Audit Committee has considered; and
o review and reassess the adequacy of this Charter annually and submit it to
the Board of Directors for approval.
Meetings
Subject to the Company's by-laws and resolutions of the Board of Directors, the
Audit Committee shall meet at least four (4) times annually at such times as the
Chairman of the Committee shall designate.
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PROXY SOLICITED BY THE BOARD OF DIRECTORS
PROFESSIONAL DETAILING, INC.
ANNUAL MEETING OF STOCKHOLDERS
July 11, 2001
The undersigned stockholder of Professional Detailing, Inc. (the "Company")
hereby appoints John P. Dugan and Charles T. Saldarini and each of them acting
singly, with power of substitution, the attorneys and proxies of the undersigned
and authorizes them to represent and vote on behalf of the undersigned, as
designated, all of the shares of capital stock of the Company that the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held on July 11, 2001, and at any adjournment or postponement of
such meeting for the purposes identified on the reverse side of this proxy and
with discretionary authority as to any other matters that properly come before
the Annual Meeting of Stockholders of the Company, in accordance with and as
described in the Notice of Annual Meeting of Stockholders and the Proxy
Statement. This proxy when properly executed will be voted in the manner
directed herein by the undersigned stockholder. If this proxy is returned
without direction being given, this proxy will be voted FOR all proposals.
(IMPORTANT -- TO BE SIGNED AND DATED BELOW)
A: |X| Please mark your vote as in this example.
The Board of Directors recommends a vote FOR the
election of each Director Nominee and FOR proposals 2, 3 and 4.
1. Election of two Class I Directors:
Nominee: John P. Dugan FOR WITHHOLD
|_| |_|
Gerald J. Mossinghoff FOR WITHHOLD
|_| |_|
2. Approval of amendment to Certificate of Incorporation to increase
authorized common shares from 30 million to 100 million.
FOR AGAINST WITHHOLD
|_| |_| |_|
3. Approval of amendment of Certificate of Incorporation to change Company
name to PDI, Inc.
FOR AGAINST WITHHOLD
|_| |_| |_|
4. Ratification of PricewaterhouseCoopers LLP as independent auditors for
fiscal 2001.
FOR AGAINST WITHHOLD
|_| |_| |_|
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PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Signature: ___________________ Signature: __________________ Date: _____________
NOTE: Please sign exactly as your name appears on stock certificate. If acting
as attorney, executor, trustee, guardian or in other representative
capacity, sign name and title. If a corporation, please sign in full
corporate name by President or other authorized officer. If a partnership,
please sign in the partnership name by an authorized person. If held
jointly, both parties must sign and date.
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