PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 13, 2007
SOLICITATION AND REVOCATION OF PROXIES, VOTING RIGHTS
We
are furnishing this proxy statement to you as part of our solicitation of
proxies for the Possis Annual Meeting of Shareholders that will be held on December 13,
2007. We are soliciting proxies on behalf of our Board of Directors.
You
must be a record holder of our common stock at the close of business on October 26,
2007, to be entitled to this notice and to vote at the Annual Meeting. On October 26,
2007, we had 16,987,283 shares of common stock, our only voting securities,
outstanding. Each share of our common stock is entitled to one vote on each
matter presented at the meeting. You do not have the right to cumulate your
votes in the election of our directors.
You
may vote your shares in three ways: (i) through the Internet; (ii) by
a toll-free telephone call; or (iii) by completing and returning the
enclosed proxy card. The procedures for Internet and telephone voting are
described on the proxy card. The Internet and telephone voting procedures are
designed to verify your identity, allow you to give voting instructions and
confirm that your instructions have been recorded properly. If you vote through
the Internet or by telephone you do not need to return a proxy card.
You
have the right to revoke your proxy at any time before we convene the Annual
Meeting. Any revocation, however, must be dated and in writing, regardless of
how you voted your shares, and signed in exactly the same manner as you signed
the proxy. To be effective, the revocation must be received by our corporate
Secretary at our principal offices in Minneapolis, Minnesota, or delivered to
our representative who will be seated at the door of the meeting hall, before
the start of the meeting.
If
you properly complete, and have not revoked, a proxy it will be voted as you
have instructed. If you sign a proxy but do not indicate how we should vote, it
will be voted in favor of the proposals set forth in the Notice of Meeting and
in favor of all of the director nominees. If you abstain from voting as to any
matter, then the shares held by you will be deemed present at the meeting for
purposes of determining a quorum and for purposes of calculating the vote with
respect to that matter, but will not be deemed to have been voted in favor of
the matter. Abstentions as to any proposal, therefore, will have the same
effect as a vote against the proposal. If a broker returns a proxy indicating a
lack of voting instruction by the beneficial holder of the shares and a lack of
discretionary authority on the part of the broker to vote on a particular
matter, then the shares will not be deemed to be represented at the meeting for
purposes of calculating the vote for approval of the matter, but will be deemed
to be present for purposes of determining the presence of a quorum.
We
will bear the cost of the solicitation of proxies, including the charges and
expenses of brokerage firms and others that forward solicitation material to,
and obtain proxies from, beneficial owners of our common stock. In addition to
the use of the mails, proxies may be solicited in person or by telephone,
letter or facsimile. Proxies may be solicited by our officers or other
employees, who will receive no special compensation for their services. This
proxy statement and the enclosed form of proxy are first being sent to
shareholders on approximately November 5, 2007.
1
years.
Vesting of these grants is contingent on three levels of appreciation in the
value of our common stock. One-third of the initial grant vests if the stock
appreciates 20% in value; one-third vests if the stock appreciates 40% in
value; and the final third vests if the stock appreciates 60% in value. In addition,
all options granted under this program continue to be eligible for vesting for
five years following retirement from service as a director and vest, in any
event, five years following the date of the grant.
Pursuant
to our 1999 Stock Compensation Plan, each outside director may elect to
receive director fees in the form of discounted stock options. Each
director must make an election each year with regard to fees that would
otherwise be payable for that calendar year. The exercise price of the options
is 50 percent of the fair market value of the stock on the date of grant, which
is the first business day of the year following the year for which the fees are
earned. Each option becomes exercisable in full six months following the date
of grant. The number of shares subject to each option is calculated by dividing
the fees owed to the particular director by the discounted exercise price.
Going forward, these grants will remain exercisable for five years. For
calendar year 2007, all directors, with the exception of Ms. Brainerd,
elected to receive these fees in discounted stock options.
The
following table reflects all compensation awarded to, earned by, or paid to our
non-employee directors during fiscal year 2007.
|
|
Director Compensation Table
|
|
Name
|
|
Fees Earned(1)
|
|
Stock Awards(2)
|
|
Option Awards(3),
(4)
|
|
Total(5)
|
|
Mary K. Brainerd
|
|
$
|
20,500
|
|
$
|
7,500
|
|
$
|
154,800
|
|
$
|
182,800
|
|
Seymour J. Mansfield
|
|
$
|
43,500
|
|
$
|
7,500
|
|
$
|
22,320
|
|
$
|
73,320
|
|
William C. Mattison
|
|
$
|
27,000
|
|
$
|
7,500
|
|
$
|
44,400
|
|
$
|
78,900
|
|
Whitney A. McFarlin
|
|
$
|
23,500
|
|
$
|
7,500
|
|
$
|
44,400
|
|
$
|
75,400
|
|
Donald C. Wegmiller
|
|
$
|
32,000
|
|
$
|
7,500
|
|
$
|
22,320
|
|
$
|
61,820
|
|
Rodney A. Young
|
|
$
|
21,000
|
|
$
|
7,500
|
|
$
|
44,400
|
|
$
|
72,900
|
|
(1) Fees are paid on a calendar year basis.
All directors elected to receive their calendar 2006 directors fees, otherwise
payable in cash, in the form of discounted stock options as described
herein.
(2) Each non-employee director was granted
restricted stock on the first business day of the calendar year equal in value
to the $7,500 annual retainer. The $7,500 divided by the fair market value on
the date of grant equals the number of shares granted. A total of 3,174 shares
of stock was granted on January 2, 2007, 529 shares to each of the six
non-employee directors.
(3) All options were granted on January 2,
2007.
(4) All non-employee directors received 4,000
stock options valued at $5.58. Mr. Young , Mr. Mattison, Mr. McFarlin
and Ms. Brainerd received 4,000 additional options under the Companys
director retention option program. These options vest based on achievement of
specified stock appreciation over time and are valued differently for each price point, but at an
overall average value of $5.52. In addition, Ms. Brainerd was granted
20,000 options on January 2, 2007, as the initial grant under the director
retention option program, which we valued at the same level as the 4,000 share
grants under the director retention program.
(5)
Non-employee directors held the following stock options as of October 3,
2007: Mary K. Brainerd, 65,647; Seymour Mansfield, 108,117; William Mattison,
88,231; Whitney McFarlin, 98,093; Donald Wegmiller, 29,197 and Rodney Young,
70,218.
Shareholder Communication Policy
Shareholders
may communicate with the our Board of Directors by sending a letter
addressed to the Board of Directors or specified individual directors to:
Possis Medical, Inc., 9055 Evergreen Blvd. NW, Minneapolis, MN 55433, c/o Irving R. Colacci, Vice President,
General Counsel and Secretary. All communications will be compiled by the
General Counsel of the Company and submitted to the Board or the individual
directors on a periodic basis.
5
EXECUTIVE COMPENSATION
Executive Officers
:
The
following table presents information about our executive officers (other than Mr. Dutcher,
who is described under the Proposal No.1 relating to election of directors):
Name
|
|
Age
|
|
Position
|
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Officer Since
|
|
|
|
|
|
|
|
Irving
R. Colacci
|
|
54
|
|
Vice
President, Legal Affairs and Human Resources, General Counsel and Secretary,
and Chief Governance Officer
|
|
October 1988
|
Jules
L. Fisher
|
|
53
|
|
Vice
President, Finance and Chief
Financial Officer
|
|
May 2005
|
James
D. Gustafson
|
|
51
|
|
Senior
Vice President, Research, Development, Engineering, Clinical Evaluation and
Chief Quality Officer.
|
|
January 1994
|
Shawn
F. McCarrey
|
|
49
|
|
Executive
Vice President, Worldwide Sales and Marketing
|
|
April 2001
|
Robert
J. Scott
|
|
62
|
|
Vice
President, Manufacturing Operations and Information Technology, and Chief
Security Officer
|
|
October 1993
|
Irving R. Colacci
joined us in 1988 as Secretary and Corporate
Counsel. Since 1993, he has served as General Counsel and Vice President, Legal
Affairs and Human Resources; and in August 2005 was designated as Chief
Governance Officer.
Jules L. Fisher
joined us as Chief Financial Officer, Vice
President of Finance, in May 2005. Prior to that time, Mr. Fisher
served as a consultant with Certes Financial Pros since November 2004 and
was Corporate Controller of American Medical Systems from February to September 2004.
Mr. Fisher was the Chief Financial Officer of Medical CV, Inc. from December 2001
to February 2004. From 1996 until December 2001, Mr. Fisher
served as Vice President and Chief Financial Officer at Minntech Corporation.
James D. Gustafson
has served as a Vice President since January 1994,
and has been responsible for our Quality Assurance and Regulatory/Clinical
Affairs since June 1993. In August 2001, Mr. Gustafson assumed
responsibility for research, development, and engineering functions, and in August 2005
he assumed responsibility for all clinical evaluation activities and was
designated Chief Quality Officer.
Shawn F. McCarrey
became our Director of U.S. Sales in December 1998
and became Vice President of U.S. Sales in April 2001. In February 2003
he became Vice President of Worldwide Sales and Executive Vice President of
Worldwide Sales and Marketing in August 2005.
Robert J. Scott
joined our medical subsidiary in 1985 and
has served as Vice President of Manufacturing since 1993. He assumed
responsibility for Information Technology in 2001. In August 2005 he was
designated as Chief Security Officer.
8
Compensation
Discussion and Analysis
Compensation Objectives.
Our executive compensation philosophy and practices are intended to
retain and provide an incentive for increased performance by our current
executives and to facilitate recruitment of new executives. We believe that
compensation paid to our executive officers should be closely aligned with our
performance on both a short-term and long-term basis and should be linked to
specific measurable results intended to increase shareholder value. Our executive
compensation program is designed to achieve the following objectives:
Attract and retain executives important to
our success and the creation of value for our shareholders;
Motivate our executives to achieve corporate
and individual performance objectives intended to enhance shareholder value;
and
Reward our executives for the achievement of
corporate and individual performance objectives, creation of shareholder value
and contribution to our short and
long-term success.
In order to achieve these objectives, our
compensation committee, with the authorization of our Board, has designed the
executive compensation program using the following philosophy and principles:
We target base salaries at or below the
median of the peer group and short-term cash bonuses at or above the peer
group, thus allocating a greater portion of each executives salary and bonus
compensation to achievement of annual corporate and individual objectives;
We target total compensation at the
50th to 75th percentile of companies in our peer group, with the
opportunity to earn total compensation above the market median when achievement
of performance objectives exceed plan targets;
We favor having a significant component of
variable compensation tied to results and achievement;
We differentiate individual compensation
among our executives based on responsibility, education, experience, job
performance and potential; and
We provide long-term incentives in the form of
equity participation through restricted stock and stock options and retirement
enhancement through participation in an employer contributed deferred
compensation program.
Determination of Compensation Awards.
Our compensation committee, operating under a
written charter adopted by our Board, has the primary authority to determine
compensation for our executive officers. Compensation committee determinations
are presented to and ratified by the Board. The compensation committee is
comprised entirely of independent directors within the meaning of the rules of
the NASDAQ market. For the past several years, the compensation committee has
retained the services of Financial Concepts, Inc. (FCI), an independent
executive compensation consultant, to advise on competitive pay practices and
the amounts and nature of compensation paid to executive officers at similar
companies, including a specified peer group of companies. Typically, the
committee utilizes the services of FCI to establish a three-year compensation
program, with less extensive services utilized annually to ensure that the
three-year program remains appropriate. FCI was retained during fiscal year
2007 to perform an extensive analysis of compensation and to present its
recommendations for our fiscal year 2008 executive compensation program. FCI reported
directly to the compensation committee and the committee had sole authority to
engage and terminate its services. The compensation committee also uses senior
management staff as needed to gather relevant historical data and prepare
analyses to assist in the evaluation of compensation data.
9
At the invitation of the Committee, our chief
executive officer participates in a portion of most compensation committee
meetings, although he is not present and does not participate in the final
consultation on his compensation. To aid our compensation committee in making
its determination and recommendations to the Board, our chief executive officer
provides an assessment of performance for each executive officer.
Using the input from the compensation consultant and
the chief executive officer, and with other information supplied by
administrative staff, our compensation committee reviews all components of the
compensation package for the executive officers including:
annual base salary;
cash bonuses based on corporate and
individual performance;
equity compensation;
accumulated realized and unrealized stock
option and restricted stock grants;
contributions to deferred compensation plans;
the dollar value to the executive and cost of
perquisites; and
the actual and projected payout obligations
under the our change-in-control agreements.
In order to allocate total compensation among the
above components, the compensation committee considers and discusses the merits
of several structures and decides on the structure that best meets both our
needs and the needs of the executives.
Compensation Benchmarking and Peer Group.
For 2007, as in prior years, our compensation
committee relied on compensation comparisons prepared by its outside
compensation consultant in reviewing compensation for our executive officers. The
committee reviewed the average total target cash compensation for each named
executive officer and the average number and value of equity-based awards
considering individual job responsibility levels on both a single year and
historical basis. The consultants data included a market analysis to ascertain
the relative compensation positions of the chief executive officer and other
executive officers compared to a peer group of medical device companies. We
have traditionally relied on a peer group of companies that includes those used
to prepare the comparative five-year cumulative total return chart that has
appeared in the annual proxy statement. In 2007, however, the peer group was
expanded to include five additional companies. The expanded peer group allowed
our compensation committee to compare our executive compensation to more
companies with a similar position in their growth cycle and comparable in
market capitalization. The peer group used included: Arthocare Corp., Datascope
Corp., Kensey Nash Corp., Merit Medical Systems, Inc., Spectronetics
Corp., Angiodynamics, Inc., Cantel Medical Corp., ev3 Inc., Polymedica
Corp. and FoxHollow Technologies, Inc. All elements of compensation pay
were considered. In order to determine the competitive market within the peer
group and to validate the data obtained, data from multiple survey sources was
also examined. A different combination of surveys was used for each executive
in an effort to accurately match survey data to individual job function. Sources
for survey data included Watson Wyatt, Stanton, the Employer Association,
Qualcomp and the Manufacturers Alliance.
Any proposed revisions to compensation levels are
discussed, modified as needed to reflect individual and specific circumstances
and acted upon following a comprehensive review of corporate and individual
performance against previously established goals and objectives. In order to
attract, retain and motivate its executives, the compensation committee
believes that total compensation should generally fall between the 50th and
75th percentile of remuneration provided by comparable peer
10
group companies. This approach ensures us that we
remain competitive in our markets even though we tend to keep base salaries
below the peer group median.
Executive Compensation Program.
Our executive compensation program and the
policies that govern its implementation are outlined briefly below. The
elements of the program are:
Base Salary
Short-Term Incentive Bonus
Long-Term Equity Awards
Retirement Benefits
Other Personal Benefits
Base Salary
. Base
salaries for executive officers are set at levels that the compensation
committee believes are generally competitive with levels of compensation paid
to executive officers of other comparably-sized medical device manufacturers
based on analysis and recommendations provided by FCI, market data reflecting
base salaries paid by comparably-sized medical device manufacturers, and
individual performance of the executive. Our overall performance, shareholder
return, and progress toward achieving specific objectives are also important
factors in setting compensation for the chief executive officer and, to a
lesser extent, for other officers. Annual salary adjustments are generally
modest.
Consistent with our policy of setting base salary at
or slightly below the median of executives at peer companies, for the 2007
fiscal year our compensation committee raised base salaries in amounts from 5-6
percent. Base salaries for fiscal year 2008 were increased by 9 percent for the
chief executive officer to raise his salary from the 25
th
percentile
to the 40
th
percentile and 5 percent for all other executive
officers. The $390,000 base salary of our chief executive officer for fiscal
year 2008 was approximately 5 percent below the mean of the salaries of
executives in our peer group. The $200,000 base salary of our chief financial
officer was approximately 11 percent below the mean. At $190,000, our general
counsel was approximately 16 percent below the mean; at $204,000 our vice
president of sales was 8 percent below the mean; at $189,600 our vice president
of research and clinical evaluation was 13 percent below the mean; and at
$160,000 our vice president of manufacturing and IT was 29 percent below the
mean.
Short-Term Incentive Bonus.
The compensation committee has established an annual short-term
incentive bonus program for officers. The incentive bonus is intended to reward
annual performance and help attract and retain qualified executives. Under the
incentive bonus program, the executive officers are eligible to receive a cash
bonus payment following the conclusion of the fiscal year, contingent on
achievement of predetermined performance goals.
Our incentive bonus program for 2007 was established
by the compensation committee in August 2006, at the same time as
adjustments were made in base salaries. The program provided, generally, that
at targeted performance levels, the executives would receive a bonus that
placed their total compensation above the median for similarly situated
executives based on statistics provided by the compensation consultant. For our
chief executive officer, payout at target levels would have caused his total
compensation, when combined with base salary, to be in the 50
th
percentile of total compensation in the peer group.
Seventy percent of the 2007 bonus program was based
on achievement of corporate financial
objectives and thirty percent was based on achievement of non-financial
performance milestones. The financial objectives consisted of a total revenue
target of $71 million, broken down both annually and by quarterly sales by
product franchise, pre-tax income of $610,000 for the full year and further
11
subdivided by quarter, and a gross profit margin for
the year of 71.5 percent, also broken down by quarterly performance. Non-financial
goals included the ability to launch new products following appropriate
regulatory approval, obtaining regulatory clearance on specified applications,
completion or significant progress on specified clinical studies, completion of
specified new product development activities, publication of significant
clinical studies and completion of a specific investment/acquisition project
involving a third-party company.
Our compensation committee determines the extent to
which performance objectives have been met or exceeded. The amount of the
incentive bonus paid is set by the compensation committee after the committee
determines the level of goal achievement for the year. Based on an overall
corporate performance assessment of 81.4 percent of target objectives for 2007,
the chief executive officer qualified for a cash bonus of $194,800, which
represented 84.3 percent of his target award after factoring in an assessment
of his individual performance. For 2008, the chief executive officer will be
eligible to receive a cash bonus of $260,000 if corporate and individual
performance is assessed at 100 percent.
For 2007, the other executive officers received cash
bonuses in amounts that ranged from 84 percent to 86 percent of target based on
the 81.4 percent corporate performance assessment and application of individual
assessments that represented 25 percent of their total awards. For 2008,
executive officers will be eligible to receive cash bonuses ranging from
$107,000 to $200,000, depending on their position, and based on a 100 percent
assessment of corporate and individual performance.
Long-Term Equity Awards
. Long-term equity awards, in the form of restricted stock and
stock options, are granted annually to the chief executive officer and other
executive officers consistent with our executive incentive compensation program.
The combination of restricted stock and stock options are intended to encourage
executive retention, maximize individual performance and strengthen the
alignment of management interests with that of the shareholders. In making
awards under our incentive compensation program, the compensation committee
considers total compensation and the appropriate combination of equity-based
awards. The amount of long-term equity awards granted to the chief executive
officer and other executive officers is based upon the compensation committees
assessment of corporate performance in relation to goals and objectives
established at the beginning of the fiscal year and each executives expected
future contributions. In granting restricted stock and stock options to the
chief executive officer and other executive officers, the compensation
committee also considers the impact of the grant on our financial performance,
as determined in accordance with the requirements of Statement of Financial
Accounting Standards No. 123(R).
The committee attempts to limit the maximum number
of restricted stock and stock option awards to employees in each year,
exclusive of options to new employees and extraordinary grants compelled by
special circumstances, to two percent or less of the shares we have issued and
outstanding. In addition, and in order to reduce or eliminate dilution of
shareholders interests, we intend to
continue to attempt to repurchase at least as many shares in the open market
under our current stock repurchase program as are awarded in stock options and
restricted stock .
The compensation committee, under the authority
granted to it by the Board of Directors, has historically granted stock options
on an annual basis following the end of the fiscal year and at the same time as
base salary and cash bonus decisions are made consistent with its executive
incentive compensation program as described herein. Grants are made to officers
and other key employees based on the same goals and objectives and individual
performance assessments as are applied to determine cash bonus awards. Options
are granted by the committee only at regular or special meetings, or by
unanimous written consent. Although our chief executive officer makes
12
recommendations regarding the number of options and
other equity-based awards that are granted based on his performance assessment,
the committee has not delegated to the chief executive officer
or any other officer the ability to make these
grants. The committees normal practice is to condition the vesting of stock
options on the passage of time.
For fiscal year 2007, the committee granted a
portion of long-term equity-based compensation in the form of restricted
stock that will vest in equal annual installments of twenty-five percent per
year beginning one year following the date of grant. These grants also carry an
accelerated vesting provision that allows each 25 percent tranche of the total
grant to vest upon appreciation of 20 percent, 44 percent, 73 percent and 100
percent of the market value of our common stock after the date of grant. Because
of the disproportionate expense of options under SFAS 123(R) compared to other
forms of equity benefit, and because restricted stock represents a benefit less
susceptible to our highly volatile stock price, we have granted a portion of
our equity-based benefits in the form of restricted stock. We retain
custody of the restricted stock shares until they are no longer subject to the
restriction. The remainder of the fiscal year 2007 long-term equity award was
made in the form of nonqualified stock options priced at the closing price
of the underlying common stock on the date of grant. The stock options have a
five-year term and vest in equal annual installments of twenty-five percent
beginning one year following the date of grant.
Retirement Benefits.
Our policy is to provide an attractive benefit package to all employees.
All of our executive officers, to the extent they meet plan eligibility
requirements, are entitled to participate in our 401(k) retirement savings plan
on the same basis as other employees. In addition, our chief executive officer
is also the beneficiary of a Supplemental Executive Retirement Deferred
Compensation Agreement that provides for annual contributions by the Company in
amounts that are calculated to provide a target benefit following retirement at
age 65 in an amount equal to fifty percent of base salary for ten years, with
smaller benefits paid in the event of retirement prior to age sixty-five. Because
our chief executive officer is a highly valued employee, this Agreement has
been structured as both a retirement supplement and retention vehicle
incorporating non-compete and non-disclosure provisions. The annual
contribution is made to a self-directed investment account in an amount
calculated to provide the target benefit at retirement assuming a reasonable
rate of return and anticipated increases in annual base salary. Benefits, if
any, actually paid following retirement are dependent on the performance of the
investment account and the balance of the fund at the time of retirement. In
2007, a contribution of $204,599 was made for the benefit of our chief executive
officer under this Agreement.
During 2004, and based on extensive surveys of
industry compensation practices, our compensation committee determined that our
least competitive benefit, in relation to industry comparables, was executive
retirement benefits. Accordingly, our compensation committee recommended, and
our Board approved, a supplemental retirement program for our other executive
officers. This program conditions entitlement to retirement benefits on a
minimum level of corporate performance against the same objectives used to
determine incentive compensation, allows for increased benefits if the Company
performs in excess of Plan, recognizes that the Company has, in the past,
relied on stock options to make up for the lack of traditional retirement
programs and recognizes that use of stock options in the future may be
less desirable to the Company due to the changing accounting environment.
Contributions range from 6 percent of base salary if corporate performance is
assessed at 85-90 percent of goal to 14 percent of base salary if corporate
performance is assessed at over 110 percent of goal. For fiscal year 2007, a
total contribution of $62,968 was made, divided between the five eligible
executives, in an amount equal to 7 percent of each executives base salary,
based on an 81.4 percent corporate performance assessment. The benefits under
this supplemental retirement program are accrued during the term of each
officers employment, are invested at the discretion of
13
each individual officer in the same menu of
investments made available to employees under our 401(K) retirement savings
plan, and are paid out in equal annual payments for ten years following a
termination of employment or a change-in-control in the company, based on the
total amount accrued in the individual officers account at the time of
termination.
Other Personal Benefits.
We also provide other welfare benefits to our executive officers in
order to achieve a competitive total pay package. We believe we offer a minimal
amount of perquisites. The compensation committee believes that these benefits
are reasonable, competitive and consistent with our overall executive
compensation objectives. These other benefits consist of Company-paid premiums for life insurance,
tax preparation and financial planning services, automobile allowances and
health club dues. Benefits provided to all executive officers, above those
provided to all employees, aggregated less than $75,000 in 2007. Company
executive compensation practices exclude purely personal forms of benefits,
such as spousal travel reimbursement, vacation payouts and private aircraft.
Severance and Change in Control Agreements.
We do not have contracts with any executive
officer, including our chief executive officer, that provide for severance
benefits. We have, in the past, entered into severance agreements with
executive officers when their employment is terminated that provided the
executive with some form of severance benefit in exchange for
acknowledgement of continuing confidentiality covenants, covenants against
competition and liability releases. We may consider entering into
severance agreements in the future depending on the circumstances at the time.
In 1999, our Board approved a Change in Control
Termination Pay Plan (the Plan) that provides, at the discretion of the
Board, salary and benefit continuation payments to the chief executive officer
and other executive officers, together with selected key management and technical
personnel, in the event they are terminated within twenty-four months of a
change in control. The definition of a change in control for purposes of the
Plan is described in this proxy under the section, Change in Control. We created the Plan, with this definition, in
order to provide assurances that the livelihood of the persons covered by the
Plan would not be adversely affected by a transaction in the nature of an
acquisition, and to make certain that the officers would not work against a
transaction that might be in the best interest of our shareholders.
Under the Plan currently in effect, the chief
executive officer is eligible to receive a three-year salary and benefit
continuation and the other executive officers a two-year salary and benefit continuation.
In addition, other key management and technical personnel are entitled to
salary and benefit continuation benefits ranging in duration from six to
twenty-four months. The Plan also provides that any unvested restricted stock
and stock options would become immediately exercisable upon the change in
control event.
The Plan provides that the chief executive officer
and one other executive officer are eligible for reimbursement of excise taxes
paid or payable by them under the Internal Revenue Service Code Section 280(g).
In the event that any payment or other benefit conferred by the Company to or
for the benefit of the chief executive officer under the Plan would be subject
to the excise tax imposed by Section 4999 of the Internal Revenue Code, the
chief executive officer is entitled to receive an additional payment from us
equal to 100 percent of any excise tax actually paid or payable.
The Board of Directors has approved additional
variable payments upon a change in control notwithstanding employment status
following a change in control. The amount of the pool available for such
payments is limited, in aggregate, to between two and four percent of the value
of Possis at the time of the change in control. The percentage applied is based
on the extent to which the change in control agreement price exceeds the value
of the corporation prior to public announcement of the
14
acquisition. The value of the corporation for this
purpose is equal to the closing stock price averaged over the thirty days prior
to announcement of a change in control agreement times the number of shares
issued and outstanding on the date of announcement. If the change in control
agreement price is less than 11 percent above the value of the corporation,
then no bonus pool is created. If the change in control agreement price is
between 11 percent and 20 percent, then a pool of 2 percent of the value of the
Company at the time of the change in control is created. The available pool
increases in increments to a maximum of 4 percent if the premium exceeds 50
percent. At present, our chief executive officer is entitled to 30 percent of
the bonus pool, other executive officers are entitled to 10 percent of the
bonus pool and 20 percent is unallocated but awardable to executive officers or
other key employees at the discretion of the board of directors.
Deductibility of Executive Compensation.
Section 162(m)
of the Internal Revenue Code of 1986, as amended, imposes a $1 million annual limit
on the amount that a public company may deduct for compensation paid to its
chief executive officer during a tax year or to any of the companys most
highly compensated executive officers who are still employed at the end of the
tax year. The limit does not apply to compensation that meets the requirements
of Section 162(m) for qualified performance-based compensation (i.e.,
compensation paid only if the executive meets pre-established, objective goals
based upon performance criteria approved by the companys shareholders).
Compensation Committee Report
The Compensation Committee of the Company has
reviewed and discussed with management the section of this proxy statement
entitled, Compensation Discussion and Analysis, which is required by Item 402(b) of
Regulation S-K. Based on such review and discussions, the Compensation
Committee recommended to the Board that the section entitled, Compensation
Discussion and Analysis, be included in the proxy statement.
Compensation Committee of the Board of Directors
Donald C. Wegmiller, Chairman
Seymour J. Mansfield
Mary K. Brainerd
15
Summary Compensation Table
The following table summarizes all
compensation paid to or earned by our chief executive officer, our chief
financial officer, and the three other most highly compensated executive
officers (named executive officers) for services rendered to the Company
during fiscal year 2007.
Name and
Principal Position
|
|
Year
|
|
Salary
|
|
Stock
Awards(1)
|
|
Option
Awards(1)
|
|
Non-Equity Incentive
Plan Compensation(2)
|
|
All Other
Compensation(3)
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert G.
Dutcher, Chairman, President and Chief Executive Officer
|
|
2007
|
|
$
|
358,555
|
|
$
|
67,288
|
|
$
|
118,011
|
|
$
|
194,800
|
|
$
|
17,111
|
|
$
|
755,765
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jules L. Fisher,
Vice President and Chief Financial Officer
|
|
2007
|
|
$
|
190,898
|
|
$
|
31,176
|
|
$
|
54,627
|
|
$
|
108,200
|
|
$
|
15,402
|
|
$
|
400,303
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Irving R.
Colacci, Vice President, Legal Affairs and Human Resources, General Counsel
and Secretary, and Chief Governance Officer
|
|
2007
|
|
$
|
181,757
|
|
$
|
31,176
|
|
$
|
54,627
|
|
$
|
98,200
|
|
$
|
17,317
|
|
$
|
383,077
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James D.
Gustafson, Senior Vice President, Research, Development, Engineering,
Clinical Evaluation, and Chief Quality Officer
|
|
2007
|
|
$
|
180,786
|
|
$
|
31,176
|
|
$
|
54,627
|
|
$
|
110,200
|
|
$
|
14,249
|
|
$
|
391,038
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shawn F. McCarrey,
Executive Vice President, Worldwide Sales and Marketing
|
|
2007
|
|
$
|
194,215
|
|
$
|
43,473
|
|
$
|
54,627
|
|
$
|
162,700
|
|
$
|
15,924
|
|
$
|
470,939
|
|
(1) The Stock Awards and Option Awards columns
represent the dollar amount of restricted stock and stock option awards to each
officer in August 2006 under our Incentive Compensation Plan that created
accounting expense beginning in fiscal year 2007. These awards were based on an
assessment of corporate and individual performance as measured against
corporate goals and objectives established by the Board of Directors and an
assessment of individual performance based on the recommendations of the
Companys chief executive officer. The Compensation Committee assessed the
individual performance of the chief executive officer directly. The dollar
amounts shown reflect the dollar amount recognized for financial statement
reporting purposes for the year ended July 31, 2007, in accordance with
FAS123(R), which placed a value of $4.17 on each stock option and $8.66 on each
share of restricted stock (the closing price of the stock on the August 15,
2006, grant date).
(2) The dollar amounts shown in the Non-Equity
Incentive Plan Compensation column represent cash bonus incentive payments made
in August 2007 pursuant to our Incentive Compensation Plan for performance
during the fiscal year ended July 31, 2007. No bonus was paid to any named
executive officer that was either discretionary, guaranteed and/or made outside
of the Incentive Compensation Plan. All cash bonuses were based on an
assessment of corporate and individual performance as measured against
corporate goals and objectives established by the Board of Directors and an
assessment of individual performance based on the recommendation of the Companys
chief executive officer. The Compensation Committee assessed the individual
performance of the chief executive officer directly.
(3) The All Other Compensation column
represents the value of Company contributions to each officers 401(K) Plan,
the value of the use of a company-owned automobile, amounts paid on each
officers behalf for tax return preparation and financial planning services,
company-paid premiums for excess life insurance coverage, the amount of
company-paid health club dues and membership fees, and the amount of Medicare
tax paid by the Company that is associated with the benefits provided and
included in the listing of All Other Compensation, as reflected below:
Name and
Principal Position
|
|
Contributions
to
401(K) Plan
|
|
Excess Life
Insurance
Premiums
|
|
Health
Club
Dues
|
|
Financial
Planning and
Income Tax
Preparation
|
|
Automobile
Benefit
|
|
Medicare
Tax Paid
on W-2
Gross-Up
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert G. Dutcher
|
|
$
|
6,008
|
|
$
|
792
|
|
$
|
996
|
|
$
|
1,174
|
|
$
|
7,992
|
|
$
|
150
|
|
$
|
17,112
|
|
Jules L. Fisher
|
|
$
|
5,986
|
|
$
|
276
|
|
$
|
372
|
|
$
|
882
|
|
$
|
8,125
|
|
$
|
132
|
|
$
|
15,401
|
|
Irving R. Colacci
|
|
$
|
6,757
|
|
$
|
276
|
|
$
|
1,827
|
|
$
|
1,343
|
|
$
|
6,964
|
|
$
|
149
|
|
$
|
17,316
|
|
James D. Gustafson
|
|
$
|
5,764
|
|
$
|
276
|
|
$
|
0
|
|
$
|
1,419
|
|
$
|
6,671
|
|
$
|
119
|
|
$
|
14,249
|
|
Shawn F. McCarrey
|
|
$
|
6,895
|
|
$
|
180
|
|
$
|
0
|
|
$
|
880
|
|
$
|
7,956
|
|
$
|
13
|
|
$
|
15,924
|
|
16
Grants of Plan-Based Awards
The following table summarizes all plan-based
award grants to each of the named executive officers during fiscal year 2007. Please
refer to the Compensation Discussion and Analysis sections entitled, Determination
of Compensation Award, Short-Term Incentive Bonus and Long-Term Equity
Awards, for an explanation of how plan-based awards are determined.
|
|
Grant
|
|
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards(
1)
|
|
Estimated Future Payouts Under
Equity Incentive Plan Awards(
2)
|
|
All Other
Awards:
Number
of Shares
of Stock
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
|
|
Exercise
or Base
Price of
Option
|
|
Grant
Date Fair
Value of
Stock and
Option
|
|
Name
|
|
Date
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target(
3)
|
|
Maximum
|
|
or Units(4)
|
|
Options(5)
|
|
Awards
|
|
Awards(7)
|
|
|
|
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
($)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
($/Sh)(6)
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert G.
|
|
2/16/07
|
|
|
|
|
|
|
|
|
|
81,187
|
|
|
|
|
|
|
|
|
|
|
|
Dutcher
|
|
2/16/07
|
|
N/A
|
|
231,000
|
|
N/A
|
|
N/A
|
|
37,500
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
8/15/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,300
|
|
$
|
8.66
|
|
118,011
|
|
|
|
8/15/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,770
|
|
|
|
|
|
67,288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jules L.
|
|
2/16/07
|
|
|
|
|
|
|
|
|
|
49,795
|
|
|
|
|
|
|
|
|
|
|
|
Fisher
|
|
2/16/07
|
|
N/A
|
|
127,200
|
|
N/A
|
|
N/A
|
|
17,300
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
8/15/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,100
|
|
$
|
8.66
|
|
54,627
|
|
|
|
8/15/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,600
|
|
|
|
|
|
31,176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Irving R.
|
|
2/16/07
|
|
|
|
|
|
|
|
|
|
49,795
|
|
|
|
|
|
|
|
|
|
|
|
Colacci
|
|
2/16/07
|
|
N/A
|
|
115,500
|
|
N/A
|
|
N/A
|
|
17,000
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
8/15/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,100
|
|
$
|
8.66
|
|
54,627
|
|
|
|
8/15/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,600
|
|
|
|
|
|
31,176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James D.
|
|
2/16/07
|
|
|
|
|
|
|
|
|
|
49,795
|
|
|
|
|
|
|
|
|
|
|
|
Gustafson
|
|
2/16/07
|
|
N/A
|
|
128,100
|
|
N/A
|
|
N/A
|
|
17,300
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
8/15/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,100
|
|
$
|
8.66
|
|
54,627
|
|
|
|
8/15/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,600
|
|
|
|
|
|
31,176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shawn F.
|
|
2/16/07
|
|
|
|
|
|
|
|
|
|
49,795
|
|
|
|
|
|
|
|
|
|
|
|
McCarrey
|
|
2/16/07
|
|
N/A
|
|
192,400
|
|
N/A
|
|
N/A
|
|
17,300
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
8/15/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,100
|
|
$
|
8.66
|
|
54,627
|
|
|
|
8/15/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,020
|
|
|
|
|
|
43,473
|
|
(1) Cash bonus awards are granted following
the end of the fiscal year based on corporate and individual performance during
the preceding fiscal year. The Target award is determined at the beginning of
the fiscal year. No pre-determined threshold is specified at the beginning or
duruing the fiscal year that must be met in order to support an award at the
end of the year, but the Board retains the discretion to decline to grant an
award if corporate performance is determined to be so poor as to not support
incentive awards. In the event the corporate performance exceeds the plan, the
Board retains the discretion to grant awards in excess of targets specified at
the beginning of the fiscal year.
(2) Equity incentive awards are granted
consistent with the policy and procedure governing non-equity incentive awards
(see above).
(3) Represents the target dollar value of
restricted stock that will be awarded if, following the close of the fiscal
year, corporate and individual performance is assessed at 100 percent. The
number of shares awarded is calculated by dividing the dollar award by the
stock price on the date of grant.
(4) Consists of restricted stock awards granted
consistent with the policy and procedure governing cash and stock option
incentive awards (see above).
(5) The stock options listed in this column
were awarded based on corporate and individual performance as measured against
pre-determined goals and objectives for the applicable fiscal year performance.
Each grant of stock options vest 25% per year beginning one year following the
dated of grant, provided the recipient of the grant is employed by Company at
the time the grant vests.
(6) The exercise price of all option awards is
the closing market price of Possis Medical common stock on the date of grant.
(7) Values are calculated for the 8/15/06
restricted stock grants listed in the column entitled, All Other Awards: Number of shares of Stock or Units, using
the closing price of the underlying stock on the date of grant, which was $8.66.
The value of the stock options granted on 8/15/06 was calculated based on the
$4.17 value per option applied by the Company for accounting purposes
consistent with FAS123(R).
17
Outstanding Equity Awards At Fiscal Year-End
The table below reflects all outstanding
equity awards made to each of the named executive officers that were
outstanding as of July 31, 2007, the end of our fiscal year 2007. The market
value or payout value of unexercised shares that have not vested is based on
the closing price of Possis Medical common stock on July 31, 2007, which was
$11.66.
Name
|
|
Option
Grant
Date
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
Equity
Incentive Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
|
Option
Exercise
Price ($)
|
|
Option
Expiration
Date
|
|
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested (#)(5)
|
|
Equity
Incentive Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested ($)(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert G. Dutcher
|
|
9/24/1997
|
|
24,000
|
(1)
|
|
|
|
|
14.38
|
|
9/24/2007
|
|
|
|
|
|
|
9/14/1998
|
|
30,000
|
(1)
|
|
|
|
|
5.81
|
|
9/13/2008
|
|
|
|
|
|
|
8/12/1999
|
|
90,000
|
(1)
|
|
|
|
|
8.63
|
|
8/12/2009
|
|
|
|
|
|
|
8/7/2000
|
|
18,000
|
(1)
|
|
|
|
|
6.13
|
|
8/7/2010
|
|
|
|
|
|
|
8/7/2000
|
|
72,000
|
(1)
|
|
|
|
|
6.13
|
|
8/7/2010
|
|
|
|
|
|
|
11/2/2000
|
|
47,200
|
(1)
|
|
|
|
|
5.88
|
|
11/2/2010
|
|
|
|
|
|
|
1/16/2001
|
|
18,489
|
(2)
|
|
|
|
|
5.56
|
|
1/16/2011
|
|
|
|
|
|
|
4/3/2001
|
|
80,000
|
(1)
|
|
|
|
|
3.94
|
|
4/3/2011
|
|
|
|
|
|
|
9/10/2002
|
|
57,400
|
(1)
|
|
|
|
|
12.10
|
|
9/10/2012
|
|
|
|
|
|
|
8/28/2003
|
|
37,350
|
(1)
|
12,450
|
|
|
|
18.69
|
|
8/28/2013
|
|
|
|
|
|
|
9/17/2004
|
|
28,150
|
(1)
|
28,150
|
|
|
|
17.25
|
|
9/17/2014
|
|
|
|
|
|
|
8/29/2005
|
|
13,825
|
(3)
|
41,475
|
|
|
|
12.57
|
|
8/29/2010
|
|
|
|
|
|
|
8/15/2006
|
|
|
|
28,300
|
(3)
|
|
|
8.66
|
|
8/15/2011
|
|
|
|
|
|
|
2/16/2007
|
|
|
|
|
|
37,500
|
|
|
|
|
|
7,301
|
|
81,187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jules L. Fisher
|
|
5/11/2005
|
|
15,000
|
(4)
|
5,000
|
|
|
|
8.91
|
|
5/11/2015
|
|
|
|
|
|
|
8/15/2006
|
|
|
|
13,000
|
(1)
|
|
|
8.66
|
|
8/15/2011
|
|
|
|
|
|
|
2/16/2007
|
|
|
|
|
|
17,300
|
|
|
|
|
|
4,478
|
|
49,795
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Irving R. Colacci
|
|
9/24/1997
|
|
14,300
|
(1)
|
|
|
|
|
14.38
|
|
9/24/2007
|
|
|
|
|
|
|
9/14/1998
|
|
20,000
|
(1)
|
|
|
|
|
5.81
|
|
9/14/2008
|
|
|
|
|
|
|
8/12/1999
|
|
20,000
|
(1)
|
|
|
|
|
8.63
|
|
8/12/2009
|
|
|
|
|
|
|
8/12/1999
|
|
10,000
|
(1)
|
|
|
|
|
8.63
|
|
8/12/2009
|
|
|
|
|
|
|
8/7/2000
|
|
13,500
|
(1)
|
|
|
|
|
6.13
|
|
8/7/2010
|
|
|
|
|
|
|
8/7/2000
|
|
26,500
|
(1)
|
|
|
|
|
6.13
|
|
8/7/2010
|
|
|
|
|
|
|
11/2/2000
|
|
19,600
|
(1)
|
|
|
|
|
5.88
|
|
11/2/2010
|
|
|
|
|
|
|
4/3/2001
|
|
25,000
|
(1)
|
|
|
|
|
3.94
|
|
4/3/2111
|
|
|
|
|
|
|
9/10/2002
|
|
22,000
|
(1)
|
|
|
|
|
12.10
|
|
9/10/1012
|
|
|
|
|
|
|
8/28/2003
|
|
14,925
|
(1)
|
4,975
|
|
|
|
18.69
|
|
8/28/2013
|
|
|
|
|
|
|
9/17/2004
|
|
10,550
|
(1)
|
10,550
|
|
|
|
17.25
|
|
9/17/2014
|
|
|
|
|
|
|
8/29/2005
|
|
5,775
|
(3)
|
17,325
|
|
|
|
12.57
|
|
8/29/2010
|
|
|
|
|
|
|
8/15/2006
|
|
|
|
13,100
|
(3)
|
|
|
8.66
|
|
8/15/2011
|
|
|
|
|
|
|
2/16/2007
|
|
|
|
|
|
17,300
|
|
|
|
|
|
4,478
|
|
49,795
|
18
James D. Gustafson
|
|
9/24/1997
|
|
14,600
|
(1)
|
|
|
|
|
14.38
|
|
9/24/2007
|
|
|
|
|
|
|
9/14/1998
|
|
20,000
|
(1)
|
|
|
|
|
5.81
|
|
9/14/2008
|
|
|
|
|
|
|
8/12/1999
|
|
20,000
|
(1)
|
|
|
|
|
8.63
|
|
8/12/2009
|
|
|
|
|
|
|
8/12/1999
|
|
10,000
|
(1)
|
|
|
|
|
8.63
|
|
8/12/2009
|
|
|
|
|
|
|
8/7/2000
|
|
13,500
|
(1)
|
|
|
|
|
6.13
|
|
8/7/2010
|
|
|
|
|
|
|
8/7/2000
|
|
16,500
|
(1)
|
|
|
|
|
6.13
|
|
8/7/2010
|
|
|
|
|
|
|
1/2/2000
|
|
17,000
|
(1)
|
|
|
|
|
5.88
|
|
11/2/2010
|
|
|
|
|
|
|
4/3/2001
|
|
35,000
|
(1)
|
|
|
|
|
3.94
|
|
4/3/2111
|
|
|
|
|
|
|
9/10/2002
|
|
21,700
|
(1)
|
|
|
|
|
12.10
|
|
9/10/1012
|
|
|
|
|
|
|
8/28/2003
|
|
4,875
|
(1)
|
14,625
|
|
|
|
18.69
|
|
8/28/2013
|
|
|
|
|
|
|
9/17/2004
|
|
11,400
|
(1)
|
11,400
|
|
|
|
17.25
|
|
9/17/2014
|
|
|
|
|
|
|
8/29/2005
|
|
5,775
|
(3)
|
17,325
|
|
|
|
12.57
|
|
8/29/2010
|
|
|
|
|
|
|
8/15/2006
|
|
|
|
13,100
|
(3)
|
|
|
8.66
|
|
8/15/2011
|
|
|
|
|
|
|
2/16/2007
|
|
|
|
|
|
17,300
|
|
|
|
|
|
4,478
|
|
49,795
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shawn F. McCarrey
|
|
12/1/1998
|
|
10,000
|
|
|
|
|
|
8.38
|
|
12/1/2008
|
|
|
|
|
|
|
8/12/1999
|
|
15,000
|
|
|
|
|
|
8.63
|
|
8/12/2009
|
|
|
|
|
|
|
8/7/2000
|
|
15,000
|
|
|
|
|
|
6.13
|
|
8/7/2010
|
|
|
|
|
|
|
9/6/2000
|
|
10,023
|
|
|
|
|
|
7.69
|
|
9/6/2010
|
|
|
|
|
|
|
11/2/2000
|
|
8,500
|
|
|
|
|
|
5.88
|
|
11/2/2010
|
|
|
|
|
|
|
4/3/2001
|
|
25,000
|
|
|
|
|
|
3.94
|
|
4/3/2111
|
|
|
|
|
|
|
9/10/2002
|
|
20,000
|
|
|
|
|
|
12.10
|
|
9/10/1012
|
|
|
|
|
|
|
8/28/2003
|
|
19,900
|
|
|
|
|
|
18.69
|
|
8/28/2013
|
|
|
|
|
|
|
9/17/2004
|
|
10,600
|
|
10,600
|
|
|
|
17.25
|
|
9/17/2014
|
|
|
|
|
|
|
8/29/2005
|
|
5,775
|
(3)
|
17,325
|
|
|
|
12.57
|
|
8/29/2010
|
|
|
|
|
|
|
8/15/2006
|
|
|
|
13,100
|
(3)
|
|
|
8.66
|
|
8/15/2011
|
|
|
|
|
|
|
2/16/2007
|
|
|
|
|
|
17,300
|
|
|
|
|
|
4,478
|
|
49,795
|
(1) Stock Options vested 25% per year
beginning one year following the date of grant and expire after ten years.
(2) Vested in full August 1, 2001.
(3) Stock options vest 25% per year beginning
one year following the date of grant and expire after 5 years.
(4) Vest 25% per year beginning July 31, 2005.
(5) Represents the number of shares of
restricted stock that would be awarded following the end of the fiscal year if
100 percent of the target dollar amount is earned based on corporate and
individual performance against incentive plan objectives, using the closing
price of the stock on July 31, 2007, for purposes of calculations.
(6) Represents the dollar value of restricted
stock that would be awarded following the end of the fiscal year if corporate
and individual performance is assessed at 100 percent of Plan objectives.
19
O
ption Exercises and Stock Vested
The table
below includes information related to stock options exercised by each of the
named executive officers and restricted stock awards that vested during fiscal
year 2007. The table also includes the value realized for such stock options
and restricted stock. For stock options, the value realized on exercise is
equal to the difference between the fair market price of the underlying shares
at exercise and the exercise price of the options. For stock awards, the value
realized on vesting is equal to the market price of the underlying shares at
vesting.
|
|
Option Awards
|
|
Stock Awards
|
Name
|
|
Number of
Shares Acquired
on Exercise
|
|
Value Realized
on Exercise
|
|
Number of
Shares Acquired
on Vesting
|
|
Value Realized
on Vesting
|
|
|
(#)
|
|
($)
|
|
(#)
|
|
($)
|
Robert G.
Dutcher
|
|
|
|
|
|
7,770
|
|
99,223
|
Jules L.
Fisher
|
|
|
|
|
|
3,600
|
|
45,972
|
Irving R.
Colacci
|
|
10,000
|
|
91,500
|
|
3,600
|
|
45,972
|
James D.
Gustafson
|
|
|
|
|
|
3,600
|
|
45,972
|
Shawn F.
McCarrey
|
|
|
|
|
|
5,020
|
|
64,105
|
N
onqualified Deferred Compensation
The table
below includes information with respect to the deferral of compensation on a
basis that is not tax-qualified for each of the named executive officers for
fiscal year 2007. A narrative description of the material factors necessary to
understand the information in the table is provided below.
Name
|
|
Executive
Contributions
in Last Fiscal
Year ($)
|
|
Registrant
Contributions in
Last Fiscal
Year ($)
|
|
Aggregate
Earnings in
Last Fiscal
Year ($)
|
|
Aggregate
Withdrawals/
Distributions
($)
|
|
Aggregate
Balance at
Last Fiscal
Year End
($)
|
|
|
|
|
|
|
|
|
|
|
|
Robert G.
Dutcher
|
|
|
|
204,559
|
|
92,528
|
|
|
|
969,705
|
Jules L.
Fisher
|
|
|
|
10,800
|
|
1,171
|
|
|
|
11,971
|
Irving R.
Colacci
|
|
|
|
10,380
|
|
3,293
|
|
|
|
26,865
|
James D. Gustafson
|
|
|
|
10,320
|
|
1,409
|
|
|
|
24,802
|
Shawn F.
McCarrey
|
|
|
|
11,100
|
|
2,310
|
|
|
|
26,349
|
As described in the section of this proxy statement
entitled, Compensation Discussion and Analysis, we have established a
deferred compensation plan for our chief executive officer and a second plan
for our other executive officers. These plans are designed as retirement plans
and the participants make no individual contributions into their own accounts. Amounts
contributed by
20
Possis are invested into self-directed accounts
that, for the named executive officers other than our chief executive officer,
mirror investment options available under our 401(K) plan, and for our chief
executive officer into an investment vehicle chosen by an investment committee
established by the compensation committee of the board of directors in
consultation with Mr. Dutcher. Participant account balances are fully vested
and will be paid to each executive officer over a ten-year period following
retirement.
Potential Payments Upon Termination or Change of Control
Named executive officers are not entitled to
any benefits upon death, disability, early retirement, normal retirement or
termination other than those benefits that are offered to all employees and the
deferred compensation plans described above. Named executive officers and a
limited number of other key employees are, however, entitled to participate in
our Change in Control Termination Pay Plan and have agreements under that Plan
that provide benefits in the event of a change in control, as described below.
On September 15, 1999, our Board of Directors
approved a Change in Control Termination Pay Plan that provides salary and
benefit-continuation payments to executive officers and selected key management
and technical personnel in the event they are terminated within twenty-four
months of a change in control. The plan provides for a three-year salary and
benefit continuation for the chief executive officer and two-year salary and benefit
continuations for other named executive officers. Additional key management and
technical personnel are entitled to salary and benefit continuation benefits
ranging in duration from six to twenty-four months.
The Board of Directors has approved additional
payments to the named executive officers that are not dependent upon a
termination of employment following a change in control. This Cash Transaction
Bonus provision establishes a pool of available cash for such payments limited
to, in aggregate, between two and four percent of the value of Possis at the
time of the change in control, but only if the value of the transaction meets a
minimum threshold. The percentage applied is based on the extent to which the
change in control agreement price exceeds the value of the corporation prior to
public announcement of the acquisition, as measured by the number of Company
shares issued and outstanding times the stock price averaged over the thirty
days prior to announcement of a change in control agreement. The applicable
premium and bonus percentages are as follows:
if the premium is less than 11%, no bonus pool is created. If the
premium is 11-20%, the bonus goal is 2% of the value of the corporation. If the
premium is 21-30%, the bonus pool is 2.5% of the value of the corporation. If
the premium is 31-40%, the bonus pool is 3% of the value of the corporation. If
the premium is 41-50%, the bonus pool is 3.5% of the value of the corporation. If
the premium is great than 50%, the bonus pool is 4% of the value of the
corporation.
At present, only executive
officers are entitled to payments from the Cash Transaction Bonus pool. The
Board of Directors, however, retains the discretion to add key employees as
circumstances warrant. The Companys chief executive officer is currently
entitled to 30% of the resulting bonus pool; the other named executive officers
are entitled to 10% of the resulting bonus pool; and 20% of the bonus pool is
currently reserved for assignment to these or other employees at the discretion
of the Board.
For purposes of the Plan, a Change in Control
is defined as:
(a) a change in control we
would be required to report under the SECs proxy rules;
(b) our public announcement
that any person or entity, or group of persons and entities acting together,
has become the beneficial owner of more than 25% of our voting stock unless
the
21
acquisition was approved in
advance by those members of our board not affiliated with the acquiring person
or representing more than 50%
of
our voting regardless of such approval; or
(c) the announcement of a
tender offer by any person or entity for 20% or more of our voting stock that
has not been approved by our Board; or
(d) a change in our board
where a majority of new directors have not been nominated by our current
directors or their successors; or
(e) shareholder approval of
(i) a business combination where we are not the successor corporation or where
our stock is converted into cash, securities or other property; or (ii) any
sale, lease, exchange or other transfer of all or substantially all of our
assets of the Employer; or (iii) any plan of liquidation or dissolution of the
Employer.
The table below reflects estimated benefits for our
named executive officers under their current change in control agreements,
assuming that the change of control occurrs during our fiscal year 2008.
Name
|
|
Salary
Continuation
|
|
FY 2008
Incentive
Cash
Bonus
|
|
Cash
Transaction
Bonus Pool
Amount(1)
|
|
Health &
Welfare
Continuation
|
|
Outplacement
Benefit
|
|
Auto/Tax/
Health Club
Continuation
|
|
Estimated
Tax
Gross-Up
|
|
Total
|
Robert
G. Dutcher
|
|
$
|
1,170,000
|
|
$
|
260,000
|
|
$
|
2,345,620
|
|
$
|
36,000
|
|
$
|
20,000
|
|
$
|
36,000
|
|
$
|
2,345,225
|
|
$
|
6,212,845
|
Irving
R. Colacci
|
|
$
|
380,000
|
|
$
|
120,000
|
|
$
|
781,873
|
|
$
|
24,000
|
|
$
|
15,000
|
|
$
|
24,000
|
|
N/A
|
|
$
|
1,344,873
|
Jules
L. Fisher
|
|
$
|
400,000
|
|
$
|
131,000
|
|
$
|
781,873
|
|
$
|
24,000
|
|
$
|
15,000
|
|
$
|
19,200
|
|
N/A
|
|
$
|
1,371,073
|
James
D. Gustafston
|
|
$
|
379,200
|
|
$
|
133,000
|
|
$
|
781,873
|
|
$
|
24,000
|
|
$
|
15,000
|
|
$
|
19,200
|
|
N/A
|
|
$
|
1,352,273
|
Shawn
F. McCarrey
|
|
$
|
408,000
|
|
$
|
200,000
|
|
$
|
781,873
|
|
$
|
24,000
|
|
$
|
15,000
|
|
$
|
19,200
|
|
N/A
|
|
$
|
1,448,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) For purposes of the Table, the amounts
shown in the Cash Transaction Bonus Pool column assumes a sale of the company
at a 30% premium over a stock price of $13.69, the closing price of Possis
stock on October 1, 2007, and that 17,573,145 shares were outstanding at the
time of the change in control.
22
Securities
Authorized for Issuance Under Equity Compensation Plans
The following table provides information on
equity compensation plans under which equity securities of the Company are
authorized for issuance, as of July 31, 2007:
Plan category
|
|
Number of
securities to be
issued upon exercise
of outstanding
options
|
|
Weighted-average
exercise price of
outstanding
options
|
|
Number of securities remaining
available for future issuance under
equity compensation plans
(excluding securities reflected in the
second column)
|
Equity compensation plans
approved by Security holders
(1)
|
|
3,324,666
|
|
$
|
11.12
|
|
370,764
|
Equity compensation plans not approved by
Security holders
|
|
None
|
|
N/A
|
|
None
|
Total
|
|
3,324,666
|
|
$
|
11.12
|
|
370,764
|
(1)
Includes our 1992 and 1999 Stock Compensation Plans.
AUDIT COMMITTEE REPORT AND PAYMENT OF FEES TO
ACCOUNTANTS
Payment of Fees to Accountants
The following table presents fees billed for
professional services rendered for the audit of our annual financial statements
for fiscal years 2006 and 2007 and fees billed for other services provided by the
our independent auditors in each of the last two fiscal years.
|
|
Fiscal Year 2006
|
|
Fiscal Year 2007
|
Audit Fees
(1)
|
|
$
|
273,703
|
|
$
|
367,304
|
Audit-Related Fees
(2)
|
|
$
|
89,395
|
|
$
|
20,948
|
Tax Fees (3)
|
|
$
|
95,392
|
|
$
|
125,688
|
All Other Fees
(4)
|
|
$
|
19,770
|
|
$
|
|
(1) Audit Fees consisted of fees billed by
Deloitte & Touche LLP for services rendered in auditing our financial
statements for fiscal years 2006 and 2007, and reviewing the financial
statements included in our quarterly reports on Form 10-Q for fiscal years 2006
and 2007, and services related to Sarbanes-Oxley 404 certification.
(2) Audit-Related Fees
consisted of fees for fiscal year 2005 and 2006 audits of
our 401(k) Plan and fees related to special projects in connection with
business initiatives during fiscal year 2006.
(3) Tax Fees consisted of preparation of fiscal
year 2005 and 2006 corporate income tax returns, and consultation on
international tax issues.
(4) All Other Fees consists of analysis of our
Change in Control Termination Pay Plan.
Prior to engagement of our auditors to render
audit or non-audit services, the engagement is approved by our Audit Committee.
Our Audit Committee has determined that the
provision of non-audit services was compatible with maintaining the
independence of Deloitte & Touche LLP.
23
Report of the Audit Committee of the Board of Directors
The Audit Committee is responsible for
overseeing managements financial reporting practices and internal controls.
The Audit Committee operates under a written
charter adopted by the Board of Directors. All of the members of the Audit
Committee are independent for purposes of current Nasdaq listing requirements.
The Audit Committee has reviewed and
discussed the audited financial statements of Possis for the fiscal year ended
July 31, 2007 with management. The Audit Committee has discussed with Deloitte
& Touche LLP, our independent public accountants, the matters required to
be discussed by Statement on Auditing Standards No. 61 (Communication with
Audit Committees).
The Audit Committee has also received the
written disclosures and the letter from Deloitte & Touche LLP required by
Independence Standards Board Standard No. 1 (Independence Discussions with
Audit Committees), and the Audit Committee has discussed the independence of
Deloitte & Touche LLP with that firm.
Based on the Audit Committees review and
discussions described above, the Audit Committee recommended to the Board of
Directors that the Companys audited financial statements be included in the
Possis Annual Report on Form 10-K for the fiscal year ended July 31, 2007 for
filing with the SEC.
Audit
Committee of the Board of Directors
Whitney A. McFarlin, Chair
William C. Mattison, Jr.
Rodney
A. Young
RATIFICATION OF APPOINTMENT OF INDEPENDENT
AUDITORS
(Proposal
Number Two)
We are submitting the selection of Deloitte
& Touche LLP to serve as our independent auditors for the fiscal year
ending July 31, 2008, for ratification in order to ascertain the views of our
shareholders on this appointment. If the selection is not ratified, the Audit
Committee will reconsider its selection.
Deloitte & Touche LLP has been our
independent auditor since July 31, 1960. Representatives of Deloitte &
Touche LLP will be in attendance at the Annual Meeting of Shareholders and will
have the opportunity to make a statement if they desire to do so. In addition,
they will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT THE SHAREHOLDERS RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS
OUR INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING JULY 31, 2008. The enclosed
proxy will be voted FOR the appointment unless a contrary specification is
made.
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SHAREHOLDER PROPOSALS
In order to be eligible for inclusion in our
proxy solicitation materials for our next annual meeting of shareholders, any
shareholder proposal to be considered at such meeting must be received at our
principal executive offices, 9055 Evergreen Boulevard N.W., Minneapolis,
Minnesota 55433-8003, no later than July 5, 2008. Pursuant to our bylaws, in
order for business to be properly brought before the next annual meeting by a
shareholder, the shareholder must give written notice of such shareholders
intent to bring a matter before the annual meeting no later than July 5, 2008. Such
notice should be sent to the Corporate Secretary at our principal executive
offices, and must set forth certain information with respect to the shareholder
who intends to bring such matter before the meeting and the business desired to
be conducted, as set forth in greater detail in our bylaws. Any such proposal
will be subject to the requirements of the proxy rules adopted under the
Securities Exchange Act of 1934. Shareholder proposals that are submitted after
July 5, 2008 may not be presented in any manner at the 2008 Annual Meeting of
Shareholders.
OTHER MATTERS
Our Board of Directors is aware of no other
matter that will be presented for action at the annual meeting. If, however,
other matters do properly come before the meeting, it is the intention of the
persons named in the proxy to vote in accordance with their best judgment on
such matters.
ANNUAL REPORT
A copy of our Annual Report on Form 10-K may
be obtained without charge by any beneficial owner of our common shares on the
record date upon written request addressed to Investor Relations, Possis
Medical, Inc., 9055 Evergreen Boulevard N.W., Minneapolis, Minnesota
55433-8003.
By Order of the Board of
Directors
IRVING R. COLACCI,
Vice President, General Counsel and Secretary
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VOTE
BY INTERNET - www.proxyvote.com
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Use the Internet to transmit your voting instructions
and for electronic delivery of information up until 11:59 P.M. Eastern Time
the day before the cut-off date or meeting date. Have your proxy card in hand
when you access the web site and follow the instructions to obtain your
records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE SHAREHOLDER COMMUNICATIONS
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POSSIS MEDICAL, INC.
9055 EVERGREEN BLVD. NW
MINNEAPOLIS, MN 55433-8003
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If you would like to reduce the costs incurred by Possis Medical, Inc. in
mailing proxy materials, you can consent to receiving all future proxy
statements, proxy cards and annual reports electronically via e-mail or the
Internet. To sign up for electronic delivery, please follow the instructions
above to vote using the Internet and, when prompted, indicate that you agree
to receive or access shareholder communications electronically in future
years.
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VOTE BY PHONE - 1-800-690-6903
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Use any touch-tone telephone to transmit your voting instructions up until
11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have
your proxy card in hand when you call and then follow the instructions.
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VOTE BY MAIL
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Mark, sign and date your proxy card and return it in the postage-paid
envelope we have provided or return it to Possis Medical, Inc., c/o
Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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TO VOTE, MARK
BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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POSMD1
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KEEP THIS PORTION
FOR YOUR RECORDS
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THIS
PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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DETACH AND RETURN
THIS PORTION ONLY
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POSSIS MEDICAL, INC.
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The Board of Directors Recommends a
Vote FOR
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Items 1, 2 and 3.
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For
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Withhold
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For All
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To withhold
authority to vote for any individual nominee(s), mark For All Except and
write the number(s) of the nominee(s) on the line below.
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Vote On Directors
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All
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All
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Except
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o
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o
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1.
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Election of directors
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Nominees:
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01) Robert G.
Dutcher
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05) Whitney A.
McFarlin
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02) Mary K.
Brainerd
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06) Donald C.
Wegmiller
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03) Seymour J.
Mansfield
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07) Rodney A.
Young
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04) William C.
Mattison, Jr.
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For
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Against
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Abstain
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Vote On Proposals
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2.
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PROPOSAL TO
RATIFY SELECTION OF Deloitte & Touche LLP as our independent auditors.
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o
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o
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o
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3.
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In his
discretion, the Proxy is hereby authorized to vote upon such other business
as may properly come before the meeting or any adjournment thereof.
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o
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o
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PLEASE REMEMBER TO DATE THIS PROXY
. Please sign below exactly as name
appears hereon. Executors, administrators, trustees, guardians, etc, should
so indicate when signing. If a corporation, please sign in full corporate
name by the president or other authorized officer. If a partnership, please sign
in partnership name by an authorized person. Please return promptly in the
enclosed addressed envelope.
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THIS PROXY WHEN PROPERLY EXECUTED
WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED FOR
EACH PROPOSAL.
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Please indicate if you plan to attend this meeting.
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o
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o
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Yes
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No
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint
Owners)
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Date
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POSSIS
MEDICAL, INC.
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PROXY FOR ANNUAL SHAREHOLDERS MEETING
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December 13, 2007
4:00 p.m.
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Dorsey & Whitney LLP
50 South Sixth Street, 15th floor
Minneapolis, Minnesota 55402
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POSSIS MEDICAL, INC.
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9055 Evergreen Boulevard, N.W.
Minneapolis, Minnesota 55433-8003
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This
Proxy is solicited by the Board of Directors of the Corporation.
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The undersigned hereby
appoints Irving R. Colacci and Jules L. Fisher as Proxies, with the power to
appoint their substitute, and the undersigned hereby authorizes them to
represent and vote, as designated on the reverse side, all Common Shares of
Possis Medical, Inc., a Minnesota corporation, that the undersigned would be
entitled to vote if personally present at the Annual Meeting of Shareholders
of Possis Medical, Inc. to be held at the offices of Dorsey & Whitney
LLP, 50 South Sixth Street, 15th floor, Minneapolis, Minnesota 55402, on the
13th day of December 2007, at 4:00 p.m., or any adjournments thereof.
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See
reverse for voting instructions.
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