SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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 Rule 14a-(11(c) or Rule 14a-12
PROFESSIONAL DETAILING, INC.
----------------------------
(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
PROFESSIONAL DETAILING, INC.
10 Mountainview Road
Upper Saddle River, New Jersey 07458
-------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 2, 1999
------------------------
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 Grand Hyatt
Hotel, Park Avenue at Grand Central Station, New York, N.Y. on June 2, 1999 at
11:00 a.m. Daylight Savings Time, for the following purposes:
1. To elect one Class III Director for the ensuing three years.
2. 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 May 6, 1999 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: May 6, 1999
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 Grand Hyatt Hotel, Park Avenue at Grand Central Station, New York, N.Y.
on June 2, 1999 at 11:00 a.m. Daylight Savings 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.
All shares represented by each properly executed unrevoked proxy received
in time for the meeting will be voted as specified. In the absence of any
specification, proxies will be voted for the election of the Class III Director
listed herein as a nominee and in the judgment of the Board of Directors on any
other matters which may properly come before the meeting. Any stockholder giving
a proxy has the power to revoke the same at any time before it is voted and a
prior proxy is automatically revoked by a stockholder giving a subsequent proxy
or attending and voting at 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 May 6, 1999. The
Company's 1998 Annual Report, including financial statements, is being mailed to
stockholders along with this 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.
VOTING SECURITIES
Only stockholders of record at the close of business on May 6, 1999 are
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof. On the record date there were issued and outstanding 10,689,562 Common
Shares. Each outstanding Common Share is entitled to one vote upon all matters
to be acted upon at the meeting. The affirmative
vote of holders of a plurality of the shares of Common Stock present or
represented at the Annual Meeting is required for the election of directors.
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, one Class III Director will be elected to serve
until the annual meeting of stockholders in 2002 and until the Director's
successor is elected and qualified. The Board of Directors has nominated Jan
Martens Vecsi for reelection as the Class III Director. The accompanying form of
proxy will be voted for the election of Ms. Vecsi as Director, unless the proxy
contains contrary instructions. Management has no reason to believe that Ms.
Vecsi will not be a candidate or will be unable to serve. However, in the event
that she should become unable or unwilling to serve as Director, the proxy will
be voted for the election of such person as shall be designated by the Board of
Directors.
A plurality of votes of the holders of shares of Common Stock of the
Company present in person or by proxy at the meeting is required for the
election of directors.
Management Recommends a Vote FOR the Election of the Foregoing Nominee.
INFORMATION REGARDING DIRECTORS
The following table sets forth the names and ages of the Directors,
including the Class III Director who has been nominated for election at the
Annual Meeting, based on information furnished by them to the Company:
DIRECTOR
NAME AGE CLASS SINCE
- ------------------ ---------- ---------- -------------
John P. Dugan.................... 63 I 1997
Charles T. Saldarini............. 35 II 1997
John M. Pietruski(1)............. 66 II 1998
Jan Martens Vecsi(1)............. 55 III 1998
Gerald J. Mossinghoff(1)......... 63 I 1998
- ----------
(1) Member of Audit and Compensation Committees
2
John P. Dugan is the founder and Chairman of the Board of Directors of the
Company and Director of Strategic Planning. He served as its President from
inception until January 1995 and as its 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. ("DFC") and served as its President until 1990. In 1990 Mr.
Dugan acquired sole control of the Company, which was then a wholly-owned
subsidiary of DFC. Mr. Dugan was a founder and served as the President of the
Medical Advertising 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 the President and Chief Executive Officer of the
Company and a Director. Mr. Saldarini became President in January 1995 and Chief
Executive Officer in November 1997. Prior to January 1995 Mr. Saldarini was
Chief Operating Officer of the Company. Mr. Saldarini joined the Company in 1987
as a sales manager. Mr. Saldarini received an A.B. in political science from
Syracuse University in 1985.
Gerald J. Mossinghoff became a director of the Company 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 of the Company 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. With Sterling Drug Inc.
from 1977 to his retirement in 1988, he also held the positions of Executive
Vice President, President and Chief Operating Officer. 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.
3
Jan Martens Vecsi became a director of the Company in May 1998. Ms. Vecsi
is the sister-in-law of John P. Dugan, the Chairman of the Board of the Company.
Ms. Vecsi was employed by Citibank, N.A. from 1967 through 1996 when she
retired. Starting in 1986 she served as the Senior Human Resources Officer and
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 shareholders will elect the
members of one of the three classes to a three-year term of office. Ms. Vecsi
serves in Class III whose term expires in 1999; Messrs. Saldarini and Pietruski
serve in Class II whose term expires in 2000; and Messrs. Dugan and Mossinghoff
serve in Class I whose term expires in 2001.
Board Of Director Meetings
During the year ended December 31, 1998, the Board of Directors held three
meetings. The director standing for re-election attended at least 75% of the
total number of meetings of the Board and of the committees on which she was a
member.
Board Of Director Committees
In May 1999, 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 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 evaluates the performance of the Company's executive employees and
determines the salaries and other compensations payable to such persons. During
the last full fiscal year, the Compensation Committee met twice and the Audit
Committee met once, 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.
4
Compensation of Directors
Each non-employee Director receives an annual director's fee of $8,000,
payable quarterly in arrears, plus $1,000 for each meeting attended in person
and $150 for each meeting attended telephonically as well as reimbursement for
travel costs and other out-of-pocket expenses incurred in attending each
Directors' meeting. In addition, committee members receive $200 for each
committee meeting attended in person and $100 for each committee meeting
attended telephonically. Additionally, pursuant to the Company's 1998 Stock
Option Plan, each non-employee Director, received options to purchase 7,500
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. In addition, each
non-employee Director will receive options to purchase an additional 3,750
shares of Common Stock 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 shareholders 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 shareholders 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.
5
EXECUTIVE OFFICERS
The following table sets forth the names, ages and principal position, of
the executive officers and key employees of the Company:
NAME AGE POSITION
- -------------------------- ------ -------------------------------------------
John P. Dugan........... 63 Chairman of the Board of Directors and
Director of Strategic Planning
Charles T. Saldarini.... 35 President and Chief Executive Officer
Chief Operating Officer and Executive
Steven K. Budd.......... 42 Vice President
Bernard C. Boyle........ 54 Chief Financial Officer, Executive Vice
President, Secretary and Treasurer
Robert R. Higgins....... 56 Executive Vice President-- Client Programs
The principal occupation and business experience for at least the last
five years for each current executive officer is set forth below (except for
Mssrs. Dugan and Saldarini, each of whose business experience is discussed
above).
Bernard C. Boyle has served as the Company's Executive Vice President and
Chief Financial Officer since March 1997 when he joined the Company. In 1990,
Mr. Boyle founded BCB Awareness, Inc., a firm that provided management advisory
services to the Company, among others, and served as its President until March
1997. During that period he was also a partner in Boyle & Palazzolo, Partners,
an accounting firm that also provided services to the Company. 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.
Steven K. Budd served the Company as a consultant from December 1995 to
April 1996 when he joined as Vice President, Account Group Sales. He became
Executive Vice President in July 1997 and Chief Operating Officer in January
1998. Prior to joining the Company, from April through December 1995, Mr. Budd
was an independent consultant. From January 1994 through April 1995, Mr. Budd
was employed by Innovex, Inc., a competing CSO, as a Director of New Business
Development. From 1989 through December 1993, Mr. Budd was employed by
Professional Detailing Network ("PDN"), a competing CSO, as a 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.
Robert R. Higgins joined the Company as a District Sales Manager in August
1996. He has served the Company in sales management as Associate Vice President,
Vice President, and most recently as Executive Vice President, Client Programs.
From 1965 to 1995, Mr.
6
Higgins was employed by Burroughs Wellcome Co., where he was responsible for
building and managing sales teams and developing and implementing marketing
strategies. Mr. Higgins received a B.S. in Biology from Kansas State University
in 1964, and an MBA from North Texas State University in 1971.
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation. The following table presents certain information
concerning compensation paid or accrued for services rendered to the Company in
all capacities during the year ended December 31, 1998, for the Chief Executive
Officer and the other four executive officers of the Company whose aggregate
annual base salary and bonus for 1998 exceeded $100,000 (collectively, the
"Named Executive Officers").
Long-Term
Annual Compensation Compensation
------------------------------------ -------------
Shares of
Common
Other Stock
Name and Principal Annual Underlying
Position Salary Bonus Compensation Options
- -------------------------- --------- ---------- ------------- -------------
John P. Dugan
Chairman of the
Board................. $125,000 -- $18,994 --
Charles T. Saldarini
President and
Chief Executive
Officer............... $233,744 $275,000 $2,394 --
Steven K. Budd
Chief Operating
Officer and
Executive Vice
President............. $168,678 $178,000 $2,302 --
Bernard C. Boyle
Chief Financial
Officer, Executive
Vice President,
Secretary and
Treasurer............. $155,833 $165,000 $4,170 --
Robert R. Higgins
Executive Vice
President............. $101,186 $45,000 $2,104 --
7
Option Grants. The following table sets forth certain information
regarding options granted by the Company to the Named Executive Officers during
1998.
Option Grants in Last Fiscal Year
Individual Grants
----------------------------------------------------------
Percent of
Number of total
Shares Options Potential Realizable Value at
Underlying Granted to Assumed Annual Rates of Stock Price
Options Employees Exercise Appreciation for Option Term(2)
Granted in Fiscal Price Expiration -----------------------------------
Name (#)(1) Year ($/share) Date 0% 5% 10%
- ----------------- ------------ ----------- --------- ----------- ------- --------- ---------
John P. Dugan ............ -- -- -- -- -- -- --
Charles P Saldarini ...... -- -- -- -- -- -- --
Steven K. Budd ........... -- -- -- -- -- -- --
Bernard C. Boyle ......... -- -- -- -- -- -- --
Robert R Higgins ......... 7,500 2.0% $ 16.00 05/20/08 $ 0 $ 75,467 $191,249
- ----------
(1) The options vest with respect to one-third of the shares of Common Stock
covered by the options on May 19, 1998 (the "Initial Vesting Date") and
one-third will vest on each of the first and second anniversary of the Initial
Vesting Date.
(2) Potential realizable values are net of exercise price but before taxes, and
are based on the assumption that the Common Stock of the Company appreciates at
the annual rate shown (compounded annually) from the date of grant until the
expiration date of the respective options. These numbers are calculated based on
Securities and Exchange Commission requirements and do not reflect the Company's
projection or estimate of future stock price growth. Actual gains, if any, on
stock option exercises are dependent on the future financial performance of the
Company, 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.
8
Option Exercises and Year-End Option Values. The following table provides
information with respect to options exercised by the Named Executive Officers
during 1998 and the number and value of unexercised options held by the Named
Executive Officers as of December 31, 1998.
Aggregated Option Exercise in Last Fiscal Year and Year-End Option Values
Number of Shares Underlying Value of Unexercised
Unexercised Options at Fiscal In-the-Money Options At Fiscal
Year-End(#) Year-End(2)
-------------------------------- --------------------------------
Shares
Acquired on Value
Name Exercise(#) Realized(1) Exercisable Unexercisable Exercisable Unexercisable
- ------------------ -------------- ------------- -------------- -------------- ------------ ----------------
John P. Dugan.......... -- -- -- -- -- --
Charles T. Saldarini... -- -- -- -- -- --
Steven K. Budd......... -- -- 13,063 26,126 347,998 $695,997
Bernard C. Boyle....... 5,000 $108,875 4,331 18,661 115,378 $497,129
Robert R. Higgins...... -- -- -- -- -- --
- ----------
(1) For the purposes of this calculation, value is based upon the difference
between the exercise price of the options, $1.61 per share, and the stock
price on the exercise date of $23.375 per share.
(2) For the purposes of this calculation, value is based upon the difference
between the exercise price of the options, $1.61 per share, and the stock
price at December 31, 1998 of $28.25 per share.
Employment Contracts
In January 1998, the Company 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.
As of April 1, 1998, the Company entered into an employment agreement with
Charles T. Saldarini providing for his employment, as President and 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 Company. 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), the Company will pay him an amount equal to the salary
which would have been payable to him over the unexpired current term of his
employment agreement.
9
As of March 1, 1998, the Company has also entered into employment
agreements with each of Messrs. Boyle and Budd, providing for their respective
employment, as Chief Financial Officer and Chief Operating Officer. Mr. Boyle's
agreement terminates on December 31, 2000 and Mr. Budd's agreement terminates on
March 31, 2001. 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
$165,000 for Mr. Boyle and $178,605 for Mr. Budd and for their participation in
all executive benefit plans. The agreements also provide that Messrs. Boyle and
Budd are entitled to bonus and incentive compensation awards as determined by
the Company. Each agreement also provides, among other things, that, if
employment is terminated by the Company without cause (as defined) or by the
executive for good reason (as defined), the Company will pay the employee an
amount equal to the salary which would have been payable over the current
unexpired term of the employment agreement.
1998 Stock Option Plan
In order to attract and retain persons necessary for the success of the
Company, in March 1998, the Board of Directors of the Company adopted its 1998
Stock Option Plan (the "Plan") reserving for issuance up to 750,000 shares of
its Common Stock, pursuant to which officers, directors and key employees of the
Company and consultants to the Company are eligible to receive incentive and/or
non-qualified stock options. The Plan, which has a term of ten years from the
date of its adoption, is administered by the Compensation Committee of Board of
Directors. 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 shareholder 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, 1998, options for an aggregate of 424,849 shares were
outstanding under the Plan, including 39,189 held by Steven K. Budd, the
Company's Chief Operating Officer, 22,992 held by Bernard C. Boyle, the
Company's Chief Financial Officer and 7,500 held by each of Gerald J.
Mossinghoff, John M. Pietruski and Jan Martens Vecsi, the Company's non-employee
Directors. In addition, as of December 31, 1998, options to purchase 5,000
shares of Common Stock had been exercised.
401(k) Plan
The Company maintains a retirement plan (the "401(k) Plan") intended to
qualify under Sections 401(a) and 401(k) of the Code. The 401(k) Plan is a
defined contribution plan that covers employees of the Company at least 21 years
of age, who have been employed by the Company for at least one year. Employees
may contribute up to 15% of their annual wages
10
(subject to an annual limit prescribed by the Code) as pre-tax salary deferral
contributions. Effective January 1, 1997, the Company 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. The Company's
contribution to the 401(k) Plan for 1998 was approximately $310,248.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1998, Boomer & Son, Inc. ("B&S"), a corporation which, prior to
1998 was wholly-owned by John P. Dugan, the Company's Chairman of the Board,
provided advertisement production and placement services to the Company. At the
end of 1997 John P. 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's business, however, John P. Dugan's son, Thomas Dugan, is
active in B&S. For the year ended December 31, 1998, the Company purchased
advertising in the amount of $1.8 million through B&S at stated advertising
rates set by the periodicals and publications in which advertisements were
placed. B&S received a commission from the publications for its placement
services. The Company believes 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. See note 8 to the Company's Audited Financial
Statements.
Peter Dugan, the son of John P. Dugan, the Company's Chairman of the
Board, is employed by the Company as Director of New Business Development. In
1998 the Company paid and accrued $103,000 in compensation for Peter Dugan.
In May 1998, in connection with its initial public offering, the Company
made a final cash distribution to its then existing shareholders of $5.9
million. This distribution reflected shareholders' equity of the Company as of
March 31, 1998 plus the earnings of the Company from April 1, 1998 to May 18,
1998. No such distributions will be made in future periods.
In April 1998, the Company loaned $1.4 million to its President and Chief
Executive Officer, Charles T. Saldarini. The proceeds of this loan were used by
Mr. Saldarini's to pay income taxes relating to his receipt of shares of Common
Stock pursuant to his stock grant from the Company in January 1997. Such 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 of Common
Stock held by Mr. Saldarini.
In November 1998, the Company agreed to loan $250,000 to its Executive
Vice President and Chief Operating Officer, Steven K. Budd, in connection with
Mr. Budd's relocation and purchase of a primary residence. Such loan is for a
term of ten years, subject to acceleration upon termination of employment, bears
interest at the rate of 5.5% per annum, payable quarterly in arrears and is
secured by a pledge of Mr. Budd's rights under his stock
11
option agreement and any shares issuable thereunder. Of such loan, $100,000 was
funded in November 1998 and the balance was funded in February 1999.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Compensation Policies Applicable To Executive Officers
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 shareholder value. Executive compensation in the
aggregate is made up principally of the executive's annual base salary, a bonus
which may be awarded by the Company's Compensation Committee and awards of stock
options under the Company's Stock Option Plan. The Company's Compensation
Committee annually considers and makes recommendations to the Board of Directors
as to executive compensation including changes in base salary, bonuses and
awards of Company stock or stock options.
Consistent with the above-noted purpose of the executive compensation
program, it is the policy of the Compensation Committee, in recommending the
aggregate annual compensation of executive officers of the Company, to consider
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. The performance of the Company
and of the division for which the executive has responsibility are significant
factors in determining aggregate compensation although they are not necessarily
determinative. While shareholders' total return is important and is considered
by the Compensation Committee, it is subject to the vagaries of the public
market place and the Company's compensation program focuses on the Company's
strategic plans, corporate performance measures, and specific corporate goals
which should lead to a favorable stock price. The corporate performance measures
which the Compensation Committee considers include sales, earnings, and
comparisons of sales and earnings with prior years and with budgets.
The Compensation Committee does not rely on any fixed formulae or specific
numerical criteria in determining an executive's aggregate compensation. It
considers both corporate and personal performance criteria, competitive
compensation levels, the economic environment and changes in the cost of living
as well as the recommendations of management. The Compensation Committee then
exercises business judgment based on all of these criteria and the purposes of
the executive compensation program.
12
Compensation of the Chief Executive Officer
Mr. Saldarini's base salary of $234,000 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 successful completion of the Company's initial public offering in May 1998
resulting in proceeds to the Company of approximately $48 million and the
Company's strong performance in 1998 as reflected in its performance relative to
the companies that comprise both the Nasdaq Stock Market Index and the Company's
Peer Industry Index, Mr. Saldarini was awarded a bonus of $275,000 for his
performance in 1998.
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
1998 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.
Respectfully submitted,
Professional Detailing, Inc. Compensation Committee
Jan Martens Vecsi, (Chairperson), Gerald J.
Mossinghoff and John M. Pietruski
13
STOCKHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder 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
ended December 31, 1998. The members of the Peer Industry Index are Boron Lepore
& Associates, Inc., Healthworld Corp., Quintiles Transnational Corp. and Snyder
Communications, 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.
5/20/98 12/31/98
----------- ----------
Nasdaq Stock Market Index $100.00 $ 125.04
Peer Industry Index $100.00 $ 96.62
Professional Detailing, Inc. $100.00 $ 130.64
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BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information known to the Company
regarding the beneficial ownership of Common Stock as of April 1, 1999, by (i)
each person known to the Company to be the beneficial owner of more than 5% of
its outstanding shares of Common Stock, (ii) each Director of the Company, (iii)
each Named Executive Officer and (iv) all Directors, and Executive Officers of
the Company as a group. Except as otherwise indicated, the persons or entities
listed below have sole voting and investment power with respect to all shares of
Common Stock owned by them.
Number of Percentage of
Shares shares
Beneficially Beneficially
Name and Address(1) Owned(2) Owned(2)
- ------------------------------------- ---------------- ----------------
John P. Dugan ......................... 6,344,878 59.4%
Charles T. Saldarini .................. 1,117,684 10.5%
Steven K. Budd ........................ 13,463(3) *
Bernard C. Boyle ...................... 9,331(4) *
Robert Higgins ........................ 5,000 *
John M. Pietruski ..................... 4,500(5) *
Jan Martens Vecsi ..................... 2,500(6) *
Gerald J. Mossinghoff ................. 2,500(6) *
All Executive Officers and Directors
as a group (8 persons) ............. 7,499,856(7) 70.2%
- ----------
* Less than 1%.
(1) The addresses of Messrs. Dugan and Saldarini are c/o the Company, 10
Mountainview Road, Upper Saddle River, New Jersey 07458.
(2) Pursuant to the rules of the Commission, shares of the Company's Common
Stock that a person has the right to acquire within 60 days of the date
hereof pursuant to the exercise of stock options are deemed to be
outstanding for the purpose of computing the percentage ownership of such
person but are not deemed outstanding for the purpose of computing the
percentage ownership of any other person.
(3) Includes 13,063 shares issuable pursuant to options exercisable within 60
days of the date hereof.
(4) Includes 4,331 shares issuable pursuant to options exercisable within 60
days of the date hereof.
(5) Includes 2,500 shares issuable pursuant to options exercisable within 60
days of the date hereof.
(6) Represents shares issuable pursuant to options exercisable within 60 days
of the date hereof.
(7) Includes 24,894 shares issuable pursuant to options exercisable within 60
days of the date hereof.
15
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 shareholders 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 except for one Form
5 filing by Steven K. Budd reflecting one transaction.
GENERAL
The management of the Company does not know of any matters other than
those stated in this Proxy Statement which are to be presented for action at the
meeting. If any other matters should properly come before the meeting, it is
intended that proxies in the accompanying form will be voted on any such other
matters in accordance with the judgment of the persons voting such proxies.
Discretionary authority to vote on such other matters is conferred by such
proxies upon the persons voting them.
The Company expects representatives of PricewaterhouseCoopers LLP, the
Company's independent auditors, to be present at the Annual Meeting and to
respond to pertinent questions of stockholders.
The Company will bear the cost of preparing, assembling and mailing the
Proxy, Proxy Statement and other material which may be sent to the stockholders
in connection with this solicitation. In addition to the solicitation of proxies
by use of the mail, officers and regular employees may solicit the return of
proxies. The Company may reimburse persons holding stock in their names or in
the names of other nominees for their expenses in sending proxies and proxy
material to principals. Proxies may be solicited by mail, personal interview,
telephone and telegraph.
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 1998
(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.
16
All proposals of stockholders intended to be included in the proxy
statement to be presented at the 1999 Annual Meeting of Stockholders must be
received at the Company's executive offices no later than January 10, 2000 and
should be directed to the Secretary of Professional Detailing, Inc.
By Order of the Board of Directors
Bernard C. Boyle, Secretary
Dated: May 6, 1999
17