SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a)
of the
Securities Exchange Act of 1934
Check the
appropriate box:
| o | Preliminary Proxy Statement |
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o
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Confidential,
for Use of Commission Only (as permitted by Rule
14a-6(e)(2))
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| þ | Definitive Proxy Statement |
| o | Definitive Additional Materials |
| o | Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 |
ARRHYTHMIA
RESEARCH TECHNOLOGY, INC.
(Name of
Registrant as Specified in its Charter)
N/A
(Name of
Person(s) Filing Proxy Statement if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
| þ | No fee required. |
| o | Fee computed on table below per Exchange Act Rules 14a-6(a)(4) and 0-11. |
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Title
of each class of securities to which transaction
applies:
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Aggregate
number of securities to which transaction
applies:
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was
determined):
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Proposed
maximum aggregate value of
transaction:
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Total
fee paid:
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| o |
Fee
paid previously with preliminary
materials.
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| o |
Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form of Schedule and the date of its
filing.
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Amount
Previously Paid:
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Form,
Schedule or Registration Statement
No.:
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Filing
Party:
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Date
Filed:
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To the
Stockholders of Arrhythmia Research Technology, Inc.:
You are
cordially invited to attend the Annual Meeting of Stockholders of Arrhythmia
Research Technology, Inc. on Friday, June 19, 2009. The Annual
Meeting will begin at 10:00 a.m. local time at the Four Points by Sheraton, 99
Erdman Way, Leominster, Massachusetts.
This year
we are again pleased to be using the U.S. Securities and Exchange Commission
rule that allows us to furnish our proxy materials and annual report over the
Internet. As a result, we are mailing to our stockholders a Notice of
Internet Availability ("Notice") instead of paper copies of our Proxy Statement
and 2008 Annual Report on Form 10-K. The Notice contains instructions
on how to access these documents via the Internet. The Notice also contains
instructions on how you can receive a paper copy of our proxy materials,
including this Proxy Statement, our 2008 Annual Report on Form 10-K and a proxy
card. Stockholders who request paper copies of proxy materials will
receive them by mail. This process will conserve natural resources and reduce
the costs of printing and distributing our proxy materials to our
stockholders. Because it is important that your shares be voted at
the Annual Meeting, we urge you to complete, date and sign a proxy card and
return it as promptly as possible, whether or not you plan to attend in
person. If you are a stockholder of record and do attend the meeting
and wish to vote your shares in person, even after returning your proxy, you
still may do so.
We
appreciate your continued support of and interest in Arrhythmia Research
Technology, Inc. and are working hard to build a company that we are all proud
to own.
We look
forward to seeing you in Leominster on June 19, 2009.
Very
truly yours,
By: /s/
E.P. Marinos
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E.
P. Marinos
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Chairman
of the Board
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ARRHYTHMIA
RESEARCH TECHNOLOGY, INC.
25
Sawyer Passway
Fitchburg,
MA 01420
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
be held Friday, June 19, 2009
TO THE
STOCKHOLDERS OF ARRHYTHMIA RESEARCH TECHNOLOGY, INC.:
NOTICE IS
HEREBY GIVEN that the 2009 Annual Meeting of Stockholders of Arrhythmia Research
Technology, Inc., a Delaware corporation (the “Company”), will be held at the
Four Points by Sheraton, 99 Erdman Way, Leominster, Massachusetts, on Friday,
June 19, 2009, at 10:00 a.m., local time, for the following purposes, as
described in our Proxy Statement:
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1.
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To
elect two Class II directors each to hold office for three years and until
his successor is duly elected and
qualified.
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2.
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To
ratify the appointment of CCR LLP as the Company's independent registered
public accounting firm for the fiscal year ending December 31,
2009.
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3.
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To
consider and vote on a proposal to authorize the Board of Directors to
adjourn the Annual Meeting to a later date or dates, if necessary, to
allow time for further solicitation of proxies, in the event there are
insufficient votes present in person or represented by proxy at the Annual
Meeting to approve the proposals.
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4.
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To
transact any other business which properly may be brought before the
Annual Meeting or any adjournment or postponement
thereof.
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All
stockholders are cordially invited to attend the Annual Meeting of
Stockholders. Only stockholders of record of the Company at the close
of business on April 24, 2009 are entitled to notice of and to vote at the
Annual Meeting or any adjournment or postponement thereof. A complete
list of these stockholders will be open for the examination of any stockholder
of record at the Company's principal executive offices located at 25 Sawyer
Passway, Fitchburg, Massachusetts for a period of ten days prior to the Annual
Meeting. The list will also be available for the examination of any
stockholder of record present at the Annual Meeting.
Your vote
is important. Your prompt response will also help reduce proxy costs and will
help you avoid receiving follow-up telephone calls or mailings. Please vote as
soon as possible. Also, the Company has elected to take advantage of the
Securities and Exchange Commission rules that allow the Company to furnish proxy
materials to you and other shareholders on the Internet.
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By
Order of the Board of Directors,
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ARRHYTHMIA
RESEARCH TECHNOLOGY, INC.
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| /s/ E.P. Marinos |
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E.P. Marinos
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Secretary
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Fitchburg,
Massachusetts
April 30,
2009
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING
TO BE HELD ON JUNE 19, 2009, THE PROXY STATEMENT AND ANNUAL REPORT ARE AVAILABLE
AT WWW.CSTPROXY.COM/ARTHRT/2009.
TABLE
OF CONTENTS
APPENDIX I: Proxy Card
ARRHYTHMIA
RESEARCH TECHNOLOGY, INC.
PROXY
STATEMENT
FOR
ANNUAL
MEETING OF STOCKHOLDERS
To
be held June 19, 2009
This
proxy statement is furnished in connection with the solicitation of proxies by
the Board of Directors of Arrhythmia Research Technology, Inc., a Delaware
corporation (“ART” or
the “Company”), for use
at the Annual Meeting of ART stockholders to be held at the Four Points by
Sheraton, 99 Erdman Way, Leominster, Massachusetts, on June 19, 2009 at
10:00 a.m., local time, and at any adjournments or postponements of the
Annual Meeting. This proxy statement summarizes the information you
need to make an informed vote on the proposals to be considered at the Annual
Meeting. However, you do not need to attend the Annual Meeting to
vote your shares. Instead, you may simply complete, sign and return a
proxy card.
Under the
"Notice and Access Rule" that the Securities and Exchange Commission (the "SEC"), has adopted, we are
again this year furnishing proxy materials to our stockholders on the Internet
rather than mailing printed copies of those materials to each
stockholder. This will help us conserve natural resources and it will
save postage, printing and processing costs. If you received a Notice
of Internet Availability of Proxy Materials by mail, you will not receive a
printed copy of our proxy materials unless you specifically request one.
Instead, the Notice of Internet Availability will instruct you about how you may
(I) access and review our proxy materials on the Internet and (2) access your
proxy card to vote on the Internet. We anticipate that we will mail
the Notice of Internet Availability to our stockholders on or about May 1,
2009.
If you
received a Notice of Internet Availability by mail and you would prefer to
receive a printed copy of our proxy materials, including a paper proxy card,
please follow the instructions included in the Notice of Internet
Availability.
We will
address the following proposals at the Annual Meeting:
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1.
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The
election of the two nominees for Class II director identified below, each
to serve for three years;
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2.
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The
ratification of the appointment of CCR LLP as the Company's independent
registered public accounting firm for the fiscal year ending December 31,
2009;
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3.
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The
authorization to adjourn the Annual Meeting to a later date or dates if
there are insufficient votes to approve the proposals;
and
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4.
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Transaction
of such other business as may properly come before the Annual Meeting or
any adjournment or postponement of the Annual
Meeting.
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Our Board
of Directors has taken unanimous affirmative action with respect to each of the
foregoing proposals and recommends that the stockholders vote in favor of each
of the proposals.
Stockholders
who owned shares of ART voting stock at the close of business on April 24, 2009
(the “Record Date”) are
entitled to vote at the Annual Meeting on all matters properly brought before
the Annual Meeting.
On the
Record Date, the Company had 2,688,291 shares of issued and outstanding common
stock, par value $0.01 per share (“Common Stock”).
Each
share of Common Stock is entitled to one vote on each matter presented at the
Annual Meeting.
The
Annual Meeting will be postponed if a quorum is not present on June 19,
2009. The presence in person or by proxy of a majority of the voting
power of outstanding shares of capital stock of the Company as of the Record
Date will constitute a quorum and is required to transact business at the Annual
Meeting. If a quorum is not present, the Annual Meeting may be
adjourned until a quorum is obtained.
For
purposes of determining whether the stockholders have approved matters other
than the election of directors, abstentions are treated as shares present or
represented and voting, so abstaining has the same effect as a negative
vote. Shares held by brokers who do not have discretionary authority
to vote on a particular matter and who have not received voting instructions
from their customers are not counted or deemed to be present or represented for
the purpose of determining whether stockholders have approved that matter, but
they are counted as present for the purpose of determining the existence of a
quorum at the Annual Meeting.
Whether
you hold shares directly as the stockholder of record or beneficially in street
name, you may direct how your shares are voted without attending the Annual
Meeting. Stockholders may deliver their proxies either:
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(1)
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Electronically
over the Internet as outlined in the Notice of Internet Availability;
or
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(2)
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By
requesting, completing and submitting a properly signed paper proxy card
as outlined in the Notice of Internet
Availability.
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Returning
the proxy card will not affect your right to attend the Annual Meeting and vote
in person.
If you
properly fill in your proxy card and send it to us in time to vote, your proxy
(one of the individuals named on your proxy card) will vote your shares as you
have directed. If you sign the proxy card but do not make specific
choices, your proxy will vote your shares as recommended by the Board of
Directors as follows:
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1.
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FOR the nominees for Class II
director identified below;
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2.
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FOR the ratification of
the appointment of CCR LLP as the Company's independent registered public
accounting firm for the fiscal year ending December 31, 2009;
and
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3.
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FOR the authorization to
adjourn the Annual Meeting to a later date or dates if there are
insufficient votes present in person or represented by proxy at the Annual
Meeting to approve the proposals.
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If any
other matters are presented, your proxy will vote in accordance with his or her
best judgment. At the time this proxy statement went to press, we
knew of no matters that needed to be acted on at the Annual Meeting other than
those discussed in this proxy statement.
If you
plan to attend the Annual Meeting and vote in person on June 19, 2009, or at a
later date if the meeting is adjourned or postponed to a later date, we will
give you a ballot when you arrive. However, if your shares are held
in the name of your broker, bank or other nominee, you must bring a power of
attorney executed by the broker, bank or other nominee that owns the shares of
record for your benefit and authorizing you to vote the shares.
If you
give a proxy, you may revoke it at any time before it is exercised. You may
revoke your proxy in three ways:
1. You
may send in another proxy with a later date.
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2.
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You
may notify ART in writing (by you or your attorney authorized in writing,
or if the stockholder is a corporation, under its corporate seal, by an
officer or attorney of the corporation) at our principal executive offices
before the Annual Meeting, that you are revoking your
proxy.
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3. You
may vote in person at the Annual Meeting.
Proposal
1: Election of Directors.
A
plurality of the eligible votes cast is required to elect a director
nominee. A nominee who receives a plurality means he has received
more votes than any other nominee for the same director's seat.
Proposal
2: Ratification of independent registered public accounting
firm.
The
approval of Proposal 2, the ratification of the appointment of our independent
registered public accounting firm, requires the affirmative vote of the majority
of the shares present in person or represented by proxy at the Annual Meeting
and entitled to vote thereon.
Proposal
3: Adjournment of the Annual Meeting
The
approval of Proposal 3, the adjournment of the Annual Meeting, requires the
affirmative vote of the majority of the shares present in person or represented
by proxy at the Annual Meeting and entitled to vote thereon.
The Board
of Directors is not proposing any action for which the laws of the State of
Delaware, the Certificate of Incorporation or the By-Laws of ART provide a right
of a stockholder to dissent and obtain appraisal of or payment for such
stockholder's shares.
ART will
bear the cost of soliciting proxies in the accompanying form and will reimburse
brokerage firms and others for expenses involved in forwarding proxy materials
to beneficial owners or soliciting their execution.
The
principal executive offices of ART are located at 25 Sawyer Passway, Fitchburg,
Massachusetts and our telephone number is (978) 345-5000.
The
Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008
has been made available on the Internet to all stockholders entitled to vote at
the Annual Meeting and who received the Notice of Internet
Availability. Additional copies will be furnished without charge to
stockholders upon written request. Exhibits to the Form 10-K will be
provided upon written request and payment of an appropriate fee. All
written requests should be directed to Arrhythmia Research Technology, Inc., 25
Sawyer Passway, Fitchburg, Massachusetts 01420.
ART is
subject to the informational requirements of the Securities Exchange Act of
1934, as amended (the “Exchange
Act”) which requires that ART file reports, proxy statements and other
information with the Securities and Exchange Commission (“SEC”). The SEC
maintains a website on the Internet that contains reports, proxy and information
statements and other information regarding registrants, including ART, that file
electronically with the SEC. The SEC's website address is
http://www.sec.gov. In addition, ART's Exchange Act filings may be
inspected and copied at the public reference facilities of the SEC located at
Room 1580, 100 F Street, N.E., Washington, DC 20549, on official business days
during the hours of 10:00 am to 3:00 pm. You may obtain information about the
operation of the public reference room by calling the SEC at
1-800-SEC-0330.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS
AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
Beneficial
Owners of at Least Five Percent of our Common Stock
The
following table shows, as of the Record Date and to the best of our knowledge,
all persons we know to be beneficial owners of five percent or more of the
voting securities of the Company as of the Record Date.
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Name and Address of Beneficial
Owner
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Common
Stock Beneficially Owned (1)
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Percent of Class (1)
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Chambers Medical Foundation
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276,268(2)
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10.3%
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Edwin K. Hunter, Trustee
1807 Lake Street
Lake Charles, LA 70601
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FMR LLC
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271,041(3)
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10.1%
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Fidelity Management & Research Co.
82 Devonshire Street
Boston,
MA 02109
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__________________________
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(1)
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Unless
otherwise noted in these footnotes, the Company believes that all shares
referenced in this table are owned of record by each person named as
beneficial owner and that each person has sole voting and dispositive
power with respect to the shares of Common Stock owned by each of
them. In accordance with Rule 13d-3 under the Exchange Act,
each person’s percentage ownership is determined by assuming that the
options that are held by that person, and which are exercisable within 60
days, have been exercised.
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(2)
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Based
on information included in a Schedule 13D/A filed with the SEC on March 9,
2007 and a Form 4 filed with the SEC on April 5, 2007 by the
Chambers Medical Foundation.
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(3)
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Based on information included a
Schedule 13G/A filed with the SEC on April 9,
2009.
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Security
Ownership of Directors and Executive Officers
The
following table shows, as of the Record Date, the securities owned by each
director and nominee, the Named Executive Officers as defined below, and by all
of the present executive officers and directors as a group.
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Name and Address of Beneficial Owner
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Common Stock Beneficially Owned(1)
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Percent of Class(1)
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Julius Tabin, Ph.D.
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130,824(2)
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4.8%
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Paul F. Walter, M.D.
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74,055(2)
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2.7%
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E. P. Marinos
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63,948(2)
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2.4%
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Jason R. Chambers
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57,249(3)(4)
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2.1%
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David A. Garrison
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34,500(5)
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1.3%
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James E. Rouse
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16,900(6)
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*
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All Executive Officers and Directors as a Group (6
Persons)
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377,476
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13.6%
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__________________________
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*
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Less
than 1%.
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(1)
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Unless
otherwise noted in these footnotes, the Company believes that all shares
referenced in this table are owned of record by each person named as
beneficial owner and that each person has sole voting and dispositive
power with respect to the shares of Common Stock owned by each of
them. In accordance with Rule 13d-3 under the Exchange Act,
each person’s percentage ownership is determined by assuming that the
options that are held by that person, and which are exercisable within 60
days, have been exercised. The address of all persons listed above is c/o
Arrhythmia Research Technology, Inc., 25 Sawyer Passway, Fitchburg, MA
01420.
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(2)
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Includes
12,000 shares issuable upon exercise of options, but excludes options to
acquire 8,000 shares which are not currently exercisable but which vest
and will be exercisable as to an additional 2,000 shares on January 2,
2010 and each anniversary thereafter until fully
vested.
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(3)
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Includes
35,216 shares held in the EBC Charitable Remainder Trust, for which Mr.
Chambers serves as trustee and as to which an immediate family member is
beneficiary. Mr. Chambers disclaims beneficial ownership of the
shares held by the EBC Charitable Remainder
Trust.
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(4)
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Includes
options to acquire 6,000 shares but excludes options to acquire 14,000
shares which are not currently exercisable but which vest and will be
exercisable as to an additional 2,000 shares on or after August 4, 2009
and January 2, 2010, respectively, and each anniversary thereafter until
fully vested.
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(5)
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Represents
34,500 shares issuable upon exercise of options; excludes options to
acquire an additional 6,000 shares which are not currently exercisable,
but which options vest and will be exercisable 1,500 shares on or after
January 2, 2010 each anniversary thereafter until fully
vested.
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(6)
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Includes
options to acquire 1,900 shares but excludes options to acquire 7,600
options which are not currently exercisable but which vest and will be
exercisable as to 1,900 shares on January 2, 2010 and each anniversary
thereafter until fully vested.
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Interest
of Directors and Executive Officers in the Matters to be Acted Upon
E.P.
Marinos and Julius Tabin have been nominated for re-election as Class II
directors and therefore have an interest in the outcome of Proposal
1.
Section
16(a) Beneficial Ownership Reporting Requirements
Section
16(a) of the Exchange Act requires our executive officers and directors, and
persons who own more than ten percent of any publicly traded class of our equity
securities, to file reports of ownership and changes in ownership of equity
securities of the Company with the SEC and the American Stock
Exchange. Officers, directors, and greater-than-ten-percent
stockholders are required by the SEC's regulations to furnish ART with copies of
all Section 16(a) forms that they file.
Based
solely upon a review of Forms 3 and Forms 4 furnished to ART during the most
recent fiscal year, and Forms 5 with respect to its most recent fiscal year, we
believe that all such forms required to be filed pursuant to Section 16(a) of
the Exchange Act were timely filed, as necessary, by the officers, directors,
and security holders required to file the same during the fiscal year ended
December 31, 2008, except that a Form 4 for Mr. E.P. Marinos reporting 3
transactions was filed one day late.
INFORMATION ABOUT DIRECTORS AND EXECUTIVE
OFFICERS
Directors
and Executive Officers
The
directors and executive officers of the Company are as follows:
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Name
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Age
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Title
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E.
P. Marinos
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67
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Chairman
of the Board (1)
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James
E. Rouse
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54
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President,
Chief Executive Officer and Director
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David
A. Garrison
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41
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Executive
Vice President of Finance and
Chief
Financial Officer
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Jason
R. Chambers
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31
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Director
(1)
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Julius
Tabin, Ph.D.
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89
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Director
(1)
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Paul
F. Walter, M.D.
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71
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Director
(1)
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___________________________
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(1)
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E. P. Marinos, Dr. Julius Tabin and Jason Chambers serve as members of the
Audit Committee and, together with Dr. Paul F. Walter, serve as
independent directors.
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Set forth
below are descriptions of the backgrounds of the executive officers and
directors of the Company and their principal occupations for the past five
years.
E. P. Marinos. Mr.
Marinos has served as a director of the Company since 1994. Mr. Marinos has been
Chief Executive Officer of AMT/EPM Associates, a consulting firm, since June 1,
2001. Mr. Marinos was President and Chief Executive Officer of Midcoast
Interstate Transmission, Inc. (MIT), an interstate pipeline company, from June
1997 until June 2001. He also became Corporate Vice President of Administration
for Midcoast Energy Resources, Inc. (MRS), MIT's parent company, in June 1999
and President and Chief Executive Officer of Kansas Pipeline Co. in December
1999, a subsidiary of MRS, and held those positions until MRS was sold in June
2001. From March 1995 until June 1997, he was President and Chief
Executive Officer of the Company. He is a graduate of Wayne State
University (B.S. in Finance and Accounting, 1964) and a member of the
AICPA. Mr. Marinos serves as Chairman of the Company's Board of
Directors.
James E.
Rouse. Mr. Rouse was appointed President and Chief Executive
Officer of the Company in October 2002 after serving in the capacity of
President and Chief Operating Officer since October of
2001. Previously he had served as Vice President and General Manager
of the Company from December 2000 to October 2001. Mr. Rouse has also served as
President, Chief Executive Officer and Chief Operating Officer of the Company’s
subsidiary, Micron Products, since December 2000, Vice President and General
Manager from July 2000 to December 2000 and Plant Operations Manager from
December 1996 to July 2000. Prior to joining Micron Products Mr. Rouse held the
position of Operations Manager from December 1995 to December 1996 for Jarvis
Surgical, Inc., a manufacturer of medical devices. He served in
positions of Biomedical Product Manager and Director of Quality Assurance during
his employment at KomTeK, Inc., a subsidiary of Kervick Enterprises, Inc., a
manufacturer of close tolerance forgings and investment castings, from 1983 to
1995. He is a graduate of the University of Massachusetts (Amherst)
(B.A. Political Science, 1977) and Worcester Polytechnic Institute, School of
Industrial Management (1997).
David A.
Garrison. Mr. Garrison was appointed Executive Vice President
of Finance of the Company in December 2004 and has served as Chief Financial
Officer since November 2002. He joined the Company as Corporate
Controller in September of 2002 after nine years as Controller and Chief
Financial Officer of H & R 1871, Inc., a privately held manufacturer of
single-barrel shotguns. He is a graduate of Miami University (B.S. in
Finance, 1990) and Boston University (Masters in Business Administration,
2001).
Jason R.
Chambers. Mr. Chambers has served as a director of the Company
since April 2006. Mr. Chambers has served as Chief Executive Officer
of Mountain Brook Water, a water bottling and distribution company, from June
14, 2002 to the present, and from August 2001 to the present has served as a
consultant assisting The Chambers Medical Foundation, a private foundation, in
assessing medical grant applications. The Foundation beneficially
owns approximately 10.3% of the Company’s outstanding common
stock. In addition, Mr. Chambers served from July 2004 through
December 2004 as Vice-President of Startbank Advisory Services, a middle market
financial services company. Mr. Chambers holds a Bachelor of Science
from Vanderbilt University School of Engineering and a Masters of Business
Administration degree from Owen Graduate School of Management, Vanderbilt
University with a concentration in finance and marketing. Mr.
Chambers is also a Dana-Farber Cancer Institute Hematologic Oncology visiting
committee member and a board member of Global Health Action, a non-profit
organization focused on providing health professionals with leadership,
management and project planning training. He currently serves as
Chairman of the Audit Committee.
Julius Tabin,
Ph.D. Dr. Tabin has served as a director of the Company since
its founding in 1982. Prior to his retirement in June 2006, Dr. Tabin
was a partner in the law firm of Fitch, Even, Tabin &
Flannery. His practice focused on client counseling, litigation, and
licensing in the areas of patents, trademarks, copyrights, trade secrets,
related contract, and antitrust law. He is a graduate of the
University of Chicago (B.S., 1940; Ph.D. Physics, 1946) and Harvard Law School
(LL.B., 1949).
Paul F. Walter,
M.D. Dr. Walter has served as a director of the Company since
its founding in 1982. Dr. Walter is an electrophysiologist and
Professor of Medicine at Emory University where he has served on the faculty
since 1980. He specializes in cardiology and internal medicine with a
focus on arrhythmias, cardiovascular disease and
electrophysiology. He is a 1961 graduate of the University of
Nebraska College of Medicine with graduate studies at the University of
Michigan.
No
director is related to any other director or executive officer of the Company or
its subsidiaries, and there are no arrangements or understandings between a
director and any other person pursuant to which such person was elected as
director.
Each
executive officer of ART is appointed by the Board of Directors and holds his
office(s) at the pleasure and discretion of the Board.
There are
no material proceedings to which any director, director nominee, executive
officer or affiliate of ART, any owner of record or beneficial interest of more
than five percent of any class of voting securities of ART, or any associate of
any such director, officer, affiliate or security holder is a party adverse to
ART or any of its subsidiaries or has a material interest adverse to ART or any
of its subsidiaries.
No
director, director nominee, officer or affiliate of ART, owner of record or
beneficial interest of more than five percent of any class of voting securities
of ART has, to the Company’s knowledge, during the last five years (i) been
convicted of any criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, United States
federal or state securities laws or finding any violations with respect to such
laws.
The
Board of Directors
The Board
of Directors oversees the business affairs of ART and monitors the performance
of management. Pursuant to the ART By-Laws, the Board of Directors
has established that the Board of Directors shall consist of no less than two
and no more than six members. Currently the number of seats on the
Board is five. The Company’s By-Laws further provide that the Board
of Directors be divided in three classes serving staggered three year terms with
each class to be as nearly equal in number as possible. See Proposal
1.
There
were 17 formal Board meetings in person or by teleconference during
2008. During 2008, all directors attended at least 75% of the
meetings of our Board and Board committees on which they served. Independent
directors meet on a regular basis as often as necessary to fulfill their
responsibilities, including at least annually in executive session without the
presence of non-independent directors and management.
Attendance
Policy
All Board
members are strongly encouraged to attend each meeting of the Board and
committees on which they serve and be prepared to discuss the business
presented. An attendance rate of at least 75% is the minimum
acceptable rate of attendance at Board and committee meetings. A
Board member’s record of attendance will be considered with respect to
recommendation of the renewal of a Board term or future assignment to a
committee. Directors are strongly encouraged to attend annual meetings, and four
of the five directors in office at that time attended the 2008 Annual
Meeting.
Committees
of the Board of Directors
The Board
of Directors has established the following standing committees, namely, an Audit
Committee, a Compensation Committee, an Executive and Finance Committee, a
Nominating and Corporate Governance Committee, and a Succession
Committee.
Audit
Committee. The Audit Committee assists the Board of Directors
in the oversight of the audit of the Company’s financial statements and the
quality and integrity of its accounting, auditing and financial reporting
processes. The Audit Committee also has the responsibility of
reviewing the qualifications, independence and performance of the Company’s
independent registered public accounting firm and is responsible for the
appointment, retention, oversight and, where appropriate, termination of the
independent registered public accounting firm. During the fiscal year
2008, the Audit Committee held five formal meetings. Its current
members are Mr. Jason Chambers (Chairman), Dr. Julius Tabin, and
Mr. E.P. Marinos. The Board of Directors has determined that
each of the members of the Audit Committee meets the criteria for independence
under the applicable listing standards of the NYSE AMEX, and that
Mr. Marinos also qualifies as an “audit committee financial expert,” as
defined by the rules adopted by the SEC. The Board of Directors has
adopted a written charter for the Audit Committee, which is reviewed annually by
the Audit Committee. The current Audit Committee Charter is available
on the Company’s web site, namely,
www.arthrt.com/investorrelations/corporategovernancee.
Compensation Committee. The
principal functions of the Compensation Committee are to evaluate the
performance of the Company’s senior executives, to consider the design and
competitiveness of the Company’s compensation plans, to review and approve
senior executive compensation and to administer the Company’s employee benefit
plans, including the Stock Option Plan and Stock Award Plan. Its
current members are Dr. Paul F. Walter (Chairman),
Mr. E.P. Marinos and Dr. Julius Tabin. During the
fiscal year 2008, the Compensation Committee held one formal
meeting. The current Compensation Committee Charter is available on
the Company’s web site, namely,
www.arthrt.com/investorrelations/corporategovernance.
Executive and Finance
Committee. The Executive and Finance Committee is composed of
three members: Mr. E. P. Marinos,
Mr. James E. Rouse and
Mr. Jason R. Chambers. The principal functions of the
Executive and Finance Committee are reviewing and evaluating significant
business and policy decisions and making recommendations to the full Board of
Directors. The Executive Committee held five formal meetings in
2008.
Nominating and Corporate Governance
Committee. The Nominating and Corporate Governance Committee
is presently composed of three members of the
board: Dr. Julius Tabin (Chairman),
Dr. Paul F. Walter, and Mr. E.P. Marinos, each of whom
is an independent director as independence is defined by the rules and
regulations of the NYSE AMEX. The Nominating and Corporate Governance
Committee assists the Board in identifying individuals qualified to be
directors, oversees the composition, structure and evaluation of the Board and
its committees, and develops and maintains a set of corporate governance
guidelines. The Nominating and Corporate Governance Committee reviews
these guidelines regularly and recommends changes as necessary or
appropriate. During the fiscal year 2008, the Committee held two
formal meetings. A copy of the Nominating and Corporate Governance
Committee Charter is available on the Company’s website,
www.arthrt.com/investorrelations/corporategovernance.
Succession
Committee. The Succession Committee is composed of five
members: Mr. E.P. Marinos (Chairman),
Mr. James E. Rouse, Dr. Julius Tabin,
Dr. Paul F. Walter, and
Mr. Jason R. Chambers. The Succession Committee
assists the Board in monitoring the preparation and adequacy of succession plans
for executive officer positions. During the fiscal year 2008, the
Committee held no formal meetings.
Nominees
to the Board of Directors
Mr. E.P.
Marinos and Dr. Julius Tabin are the Board of Director’s nominees for
re-election as Class II directors to the Board of Directors. See
“Information about Directors and Executive Officers” above for information
relative to their business experience.
The
Company’s Nominating and Corporate Governance Committee identifies new director
candidates through recommendations from members of the Committee, other Board
members and executive officers of the Company and will consider candidates who
are recommended by security holders, as described below. The Committee and the
Board will consider such factors as it deems appropriate to assist in developing
a Board and committees that are diverse in nature and comprised of experienced
and seasoned advisors. These factors may include decision-making
ability, judgment, personal integrity and reputation, experience with businesses
and other organizations of comparable size, experience as an executive with a
publicly traded company, and the extent to which the candidate would be a
desirable addition to the Board and any committees of the Board.
For
nominations by a stockholder to be properly brought before an annual meeting,
the stockholder must have given written notice thereof, either by personal
delivery or by United States mail, postage prepaid, to the Secretary of the
Company, not later than 90 days nor earlier than the 120th day
prior to the anniversary of the previous year’s annual meeting; provided,
however, that in the event that no annual meeting was held in the previous year
or the annual meeting is scheduled to be held on a date more than thirty (30)
days prior to or delayed by more than sixty (60) days after such anniversary
date, notice by the stockholder in order to be timely must be so received not
later than the later of the close of business ninety (90) days prior to the
annual meeting or the tenth (10th) day
following the day on which such notice of the date of the annual meeting was
mailed or such public disclosure of the date of the annual meeting was made,
which may include any public filing by the Company with the Securities and
Exchange Commission, of the date of the annual meeting. For
nominations by a stockholder to be properly brought before a special meeting of
stockholders called for the purpose of electing directors, the stockholder must
have given written notice thereof, either by personal delivery or by United
States mail, postage prepaid, not later than the close of business on the tenth
(10th) day
following the day on which public announcement of the date of the special
meeting is first made by the Company.
The
notice must set forth the following:
|
·
|
the
name and record address of the stockholder and the
nominee;
|
|
·
|
a
representation that the stockholder is a holder of record of stock of the
Company entitled to vote at such meeting and intends to appear in person
or by proxy at the meeting to propose such
business;
|
|
·
|
a
description of all arrangements or understandings between the stockholder
and each proposed nominee (naming the person) pursuant to which the
nomination is to be made by the
stockholder;
|
|
·
|
such
other information regarding each nominee proposed by such stockholder as
would be required to be included in a proxy statement filed pursuant to
the proxy rules of the Securities and Exchange Commission were such
nominee to be nominated by the Board of Directors;
and
|
|
·
|
consent
of each proposed nominee to serve as a director of the Company if so
elected.
|
In
addition to the provisions of Section 3 of the By-laws summarized above, a
stockholder shall also comply with all of the applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth herein.
The
Committee will evaluate new director candidates in view of the criteria
described above, as well as other factors the Committee deems to be relevant,
through reviews of biographical and other information, input from others,
including members of the Board and executive officers of the Company, and
personal discussions with the candidate when warranted by the results of these
other assessments. The Committee will evaluate any director
candidates recommended by security holders under the same process. In
determining whether to recommend to the Board the nomination of a director who
is a member of the Board, the Committee will review the Board performance of
such director and solicit feedback about the director from other Board
members.
Communicating
with the Board
The Board
desires to foster open communications with its security holders regarding issues
of a legitimate business purpose affecting the Company. Each Board
member is willing to accept correspondence. Communications from
stockholders should be in the form of written correspondence and sent via
registered mail or overnight delivery to the Company’s corporate office, care of
the Secretary. Electronic submissions of security holder
correspondence will not be accepted. The correspondence shall include
supporting documentation evidencing the security holder’s stock or other
holdings in the Company. The Secretary shall pass on any such
communication, other than a solicitation for a product or service or a request
for copies of reports filed with the Commission, to the appropriate Board
member. Any security holder correspondence addressed generically to
the Board of Directors will be forwarded to the Chairman of the
Board.
Code
of Conduct and Ethics
The
Company has adopted a Code of Conduct and Ethics that applies to all its
employees as well as its principal executive, financial and accounting
officers. A copy of the Code can be found on the Company’s website at
http://www.arthrt.com/investorrelations/corporategovernance. The
Company intends to satisfy the disclosure requirements regarding any amendments
to or waivers from a provision of the Code that applies to its principal
executive, financial and accounting officers by posting such information on its
website at the address set forth above.
REPORT OF THE AUDIT COMMITTEE
The
information contained in this Proxy Statement with respect to the Audit
Committee Report and charter and the independence of the members of
the Audit Committee shall not be deemed to be “soliciting material”
or to be “filed” with the SEC, nor shall such information be incorporated by
reference into any future filing under the Securities Act of 1933, as amended
(the “Securities Act”),
or the Exchange Act, except to the extent that the Company specifically
incorporates it by reference in such filing.
The Audit
Committee is directly responsible for the appointment, compensation, retention
and oversight of the accounting firm that we engage as the Company’s independent
registered public accounting firm. The Company’s management is
responsible for the Company’s internal controls, disclosure controls and
financial reporting process. The Company’s independent registered
public accounting firm is responsible for performing an independent audit of the
Company’s consolidated financial statements and expressing an opinion on the
conformity of those financial statements with generally accepted accounting
principles.
In the
performance of the Audit Committee’s oversight function, we have reviewed and
discussed with management the Company’s audited financial statements of the
Company for the fiscal year ended December 31, 2008 and management’s assessment
of the effectiveness of the Company’s internal control over financial
reporting. We have also discussed with the Company’s independent
registered public accounting firm the matters requiring discussion pursuant to
Statement on Auditing Standards No. 61, as amended (Communications with Audit
Committees) and as adopted by the Public Company accounting Oversight Board in
Rule 3200T and such other matters as we have deemed to be
appropriate. We have also discussed with CCR LLP matters relating to
its independence, and have received the written disclosures and letter from it
required by the applicable requirements of the Public Company Accounting
Oversight Board.
On the
basis of the reviews and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the Company’s audited consolidated
financial statements for the year ended December 31, 2008 be included in the
Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008
for filing with the Securities and Exchange Commission.
|
By the members of the Audit Committee:
|
|
|
Mr.
Jason R. Chambers, Chairman
|
|
|
Mr.
E.P. Marinos
|
|
|
Dr.
Julius Tabin
|
|
Audit
Committee Pre-Approval of Audit and Non-Audit Services
The Audit
Committee pre-approves all audit and permissible non-audit services provided to
the Company by the independent registered public accounting
firm. These services may include audit services, audit-related
services, tax services and other services. The Audit Committee has
adopted policies and procedures for the pre-approval of services provided by the
independent registered public accounting firm. Such policies and procedures
provide that management and the independent registered public accounting firm
shall jointly submit to the Audit Committee a schedule of audit and non-audit
services for approval as part of the annual plan for each fiscal
year. In addition, the policies and procedures provide that the Audit
Committee may also pre-approve particular services not in the annual plan on a
case-by-case basis. Management must provide a detailed description of
each proposed service and the projected fees and costs (or a range of such fees
and costs) for the service. The policies and procedures require
management and the independent registered public accounting firm to provide
quarterly updates to the Audit Committee regarding services rendered to date and
services yet to be performed.
As
permitted under the Sarbanes-Oxley Act of 2002, the Audit Committee may delegate
pre-approval authority to one or more of its members, for audit and non-audit
services to a subcommittee consisting of one or more members of the Audit
Committee. Any service pre-approved by a delegatee must be reported
to the Audit Committee at the next scheduled meeting.
COMPENSATION OF DIRECTORS AND EXECUTIVE
OFFICERS
Summary
Compensation Table
The
following table sets forth information regarding annual and long-term
compensation with respect to the fiscal years ended December 31, 2008 and 2007,
paid or accrued by the Company to or on behalf of those persons who were, during
the fiscal year ended December 31, 2008, the Company's Chief Executive Officer
and the Company's most highly compensated executive officers serving as such as
of December 31, 2008 whose compensation was in excess of $100,000 (the “Named Executive
Officers”).
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)(1)
|
Non
Equity Incentive Plan Compensation
($)(2)
|
Nonqualified
Deferred Compensation Earnings
|
All
Other Compensation
($)(3)
|
Total
($)
|
|
James E. Rouse (4)
|
2008
|
230,500
|
--
|
--
|
4,800
|
--
|
--
|
--
|
235,300
|
|
President and CEO
|
2007
|
232,000
|
--
|
--
|
--
|
3,500
|
--
|
--
|
235,500
|
|
David A.Garrison (5)
|
2008
|
142,500
|
--
|
--
|
5,400
|
--
|
--
|
--
|
147,900
|
|
EVP and CFO
|
2007
|
150,000
|
--
|
--
|
3,300
|
2,500
|
--
|
--
|
155,800
|
__________________________
|
(1)
|
Represents
share-based compensation expense incurred for the year ended December 31,
2008, as well as prior fiscal years, computed in accordance with SFAS
123R. The amounts shown exclude the impact of estimated
forfeitures related to service-based vesting conditions. For
additional information on the valuation assumptions related to the
calculation of the valuation, see Footnote 10 to the Consolidated
Financial Statements for the fiscal year ended December 31, 2008, included
in the Company’s Annual Report on Form 10-K captioned “Stock
Options”.
|
|
(2)
|
The
amounts shown in this column include payments made under the 2006 annual
performance-based incentive plan.
|
|
(3)
|
Includes
perquisites based on the aggregate incremental cost to the Company unless
the amount of such compensation is less than $10,000, gross-ups or other
amounts reimbursed during the year for payment of taxes; accrued severance
payments; contributions to defined contribution plans and the dollar value
of insurance premiums paid by the Company with respect to life insurance
for the benefit of the named executive
officer.
|
|
(4)
|
Mr.
Rouse was appointed President and Chief Executive Officer of the Company
in October 2002. He served as President and Chief Operating
Officer of the Company from October 2001 to October
2002.
|
|
(5)
|
Mr.
Garrison was appointed as Executive Vice President of Finance of the
Company in December 2004, and has served as Chief Financial Officer of the
Company since November 2002.
|
Narrative
Disclosure to Summary Compensation Table
Incentive Compensation Program.
The Company’s 2008 incentive plan was designed to provide an incentive
for employees to achieve and surpass targeted performance goals. All
of the Company’s regular full time, salaried employees, including the executive
officers, participate in this plan. The annual bonus amount for each
participant is based on one or more Company-wide performance
measures. The cash bonuses payable under the program are determined
as a percentage of a participant’s annual base salary ranging from 3% to 17.5%
for staff, managers and vice-president/manager personnel and ranging from 15% to
20% for executive officers. The Compensation Committee normally
establishes the target level for performance-based cash incentive compensation
based on the Company’s internal budget targets, which are reviewed and approved
by the Board. The factors that the Compensation Committee considers
in establishing the performance target include the aggressiveness of the budget
target, the revenue and earnings growth included in the budget target as
compared to the prior year, and any significant strategic initiatives that may
impact the budget target. This is usually done through discussions
with the Company’s senior executives and with the Board. Upon
completion of the fiscal year, the Compensation Committee assesses the
performance of the Company based on the performance measures that it established
for that year and approves the funding level of the cash incentive
plan. For 2006 bonus levels for executive officers were based on a
percentage of base salary assuming targeted budgeted operating profit levels
were met or exceeded with a portion paid in 2007. As the 2007 and
2008 incentive plan goals were not met, no amounts were paid to the Named
Executive Officers under the 2007 or 2008 incentive plan.
Employment
Agreements. The Company entered into an Executive Employment
Agreement as of October 4, 2006 with James E. Rouse, the Company’s President and
Chief Executive Officer, for the five year period commencing as of October 4,
2006. The agreement replaces the prior five year employment agreement
originally expiring October 4, 2006 and, as amended, extended to December 4,
2006. Under the terms of the agreement, Mr. Rouse is to receive an
annual base salary commencing as of October 5, 2006 of $230,000 subject to
annual review and modification by the Board upon the recommendation of the
Compensation Committee subject to minimum increases of $10,000 as of October 5,
2007 and 2008.
The
Company entered into an Executive Employment Agreement as of February 14, 2007,
with David A. Garrison, the Company’s Executive Vice President and Chief
Financial Officer, for the five year period commencing as of
January 1, 2007. Under the terms of the agreement, Mr.
Garrison is to receive an annual base salary commencing as of
January 1, 2007 of $150,000.
Each of
Mr. Rouse and Mr. Garrison are also entitled to participate in bonus
compensation and employee benefits plans as the Company may institute from time
to time in the discretion of the Compensation Committee, upon the approval of
the Board of Directors. The Executive Employment Agreements each
provide confidentiality, non-competition and non-solicitation restrictions
following termination of employment. In the event the Company
terminates either Mr. Rouse or Mr. Garrison’s employment agreement without
“cause” or the executive terminates the agreement for “good reason” as such
terms are defined in the agreements, the Company will be required to pay the
greater of the executive’s then current annual base compensation for the
remaining period of employment as in effect immediately prior to such
termination or his then current annual base compensation for twenty-four months
and will provide certain medical benefits for up to 24 months. In the
event of a “change of control,” including merger, consolidation, a sale of all
or substantially all of the Company's assets or a sale or transfer of the
Company's voting securities resulting in a change in the ownership of a majority
of the Company's voting securities, the Company may terminate the executive’s
employment, in which event he is entitled to the greater of his current base
compensation up to the date of termination or his base compensation for a period
of 24 months, as well as 24 months of medical and dental benefits.
Outstanding
Equity Awards
|
Option Awards
|
Stock Awards
|
||||||||
|
Name
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
Number
of Securities Underlying Unexercised Options (#)
Unexercisable
|
Equity
Incentive Plan Awards: Number of Securities Underlying
Unexercised Unearned Options (#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of Shares or Units of Stock That Have Not Vested (#)
|
Market
Value of Shares or Units of Stock That Have Not Vested ($)
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or
Other Rights That Have Not Vested (#)
|
Equity
Incentive Plan Awards: Market or Payout Value of
Unearned Shares, Units or Other Rights That Have Not Vested
($)
|
|
James
E. Rouse
|
1,900(1)
|
7,600(1)
|
--
|
$
7.15
|
1/2/2014
|
--
|
--
|
--
|
--
|
|
David
A. Garrison
|
8,000
|
--
|
--
|
9.86
|
12/19/2011
|
--
|
--
|
--
|
--
|
|
25,000(2)
|
--
|
--
|
4.85
|
7/31/2009
|
--
|
--
|
--
|
--
|
|
|
1,500(3)
|
6,000(3)
|
--
|
7.15
|
1/2/2014
|
--
|
--
|
--
|
--
|
|
_________________________
|
(1)
|
Exercisable
as to 1,900 shares on 1/2/09 and each anniversary until all 9,500 options
are exercisable.
|
|
(2)
|
Vested
and became exercisable July 31,
2008.
|
|
(3)
|
Exercisable
as to 1,500 shares on 1/2/09 and each anniversary until all 7,500 options
are exercisable.
|
Director
Compensation
For
fiscal year 2008 each non-employee director received cash compensation of
$25,000, payable quarterly. Additionally, the chairman of the Board
received an additional $5,000 and the chairman of the audit committee received
an annual fee of $4,000. During fiscal year 2008, our current
directors who were serving in such capacity in 2008 received the following
fees:
|
Name(1)
|
Fees
Earned or Paid in Cash ($)(2)
|
Stock
Awards
($)
|
Option
Awards
($)(3)
|
Non-Equity
Incentive Plan Compensation ($)
|
Nonqualified
Deferred Compensation Earnings
|
All
Other Compensation
($)
|
Total
($)
|
|
E.P. Marinos
|
$
31,700
|
--
|
$ 5,000
|
--
|
--
|
--
|
$ 36,700
|
|
Julius Tabin
|
25,000
|
--
|
5,000
|
--
|
--
|
--
|
30,000
|
|
Paul F. Walter, M.D.
|
25,000
|
--
|
5,000
|
--
|
--
|
--
|
30,000
|
|
Jason
R. Chambers
|
27,300
|
--
|
16,000
|
--
|
--
|
--
|
43,300
|
|
James E. Rouse
|
--
|
--
|
4,800
|
--
|
--
|
--
|
4,800
|
__________________________
|
(1)
|
James
Rouse, President and CEO, serves as a director without any additional
compensation.
|
|
(2)
|
Includes
amounts earned from the annual retainer and chairperson
fees.
|
|
(3)
|
Amounts
included in the “Option Awards” column reflect the aggregate dollar amount
recognized for financial statement reporting purposes for 2008 with
respect to stock options to purchase 10,000 shares of common stock granted
to each of the directors. The aggregate dollar amount was
determined in accordance with FAS 123R, but without regard to any estimate
of forfeitures related to service-based vesting. See Note 11 to
the Consolidated Financial Statements contained in the 2008 Annual Report
on Form 10-K captioned “Stock Options” for an explanation of the
assumptions made by the Company in the valuation of these
awards.
|
Compensation
Committee Procedures
The
following information relating to the Compensation Committee is not soliciting
material and as such is not deemed filed with the SEC nor incorporated by
reference in any filing of the Company under the Securities Act or the Exchange
Act, whether made before or after the date of this Proxy Statement and
irrespective of any general incorporation language in any such
filing.
The
Compensation Committee is responsible for establishing and reviewing the
Company’s executive compensation policies, advising the full Board of Directors
on all compensation matters and administering the Company’s employee benefit
plans including the Stock Option Plan and Stock Award Plan. In 2008,
the Committee was comprised of Dr. Paul F. Walter, Chairman, Dr. Julius Tabin,
and Mr. E.P. Marinos, each of whom is an independent director.
The
Compensation Committee works with management to develop relationships between
pay levels, financial performance and returns to stockholders, in order to align
our compensation structure with our organizational objectives. By
tying compensation in part to particular goals, the Compensation Committee
believes that a performance-oriented environment is created for the Company’s
employees and executives. All decisions of the Committee relating to
compensation of the President and Chief Executive Officer and other Named
Executive Officers are reviewed and approved by the other non-employee
Directors.
The
Company's executive compensation policies are designed to foster the Company's
business goals of achieving profitable growth and premium returns to
stockholders. The principal objectives of these policies are as follows: (1) to
attract, motivate and retain executives of outstanding ability and character;
(2) to provide rewards based on each person’s individual performance
and the Company’s overall financial performance and growth during the
prior year by placing a portion of compensation at risk; and (3) to align the
interests of executives and stockholders through long-term, equity-based
incentives and programs to encourage and reward stock ownership.
The
Compensation Committee has the authority under its charter to engage the
services of outside advisors, experts and others to assist the Compensation
Committee.
Base Salary. Base
salaries are intended to provide economic security for executive officers at a
level sufficient to attract and retain talent. Initial salary levels
are set based on the executive officer’s experience and performance, pay levels
for similar positions and negotiations with individual named executive
officers. Thereafter, the Compensation Committee considers increases
to base salaries each year based on its subjective assessment of our overall
performance over the preceding year, internal factors involving the executive's
experience, individual performance, and changes in responsibilities and equity
issues relating to pay for other Company executives, as well as external factors
involving competitive positioning, overall corporate performance, and general
economic conditions. No specific formula is applied to determine the weight of
each factor which may vary from one named executive officer to
another.
Incentive Compensation
Program. The Company’s annual cash incentive plan is designed
to provide an incentive for employees to achieve and surpass targeted
performance goals. All of the Company’s regular full time, salaried
employees, including the executive officers, participate in this
plan. The annual bonus amount for each participant is based on one or
more Company-wide performance measures. The Compensation Committee
normally establishes the target level for performance-based cash incentive
compensation based on the Company’s internal budget targets, which are reviewed
and approved by the Board. The factors that the Compensation
Committee considers in establishing the performance target include the
aggressiveness of the budget target, the revenue and earnings growth included in
the budget target as compared to the prior year, and any significant strategic
initiatives that may impact the budget target. This is usually done
through discussions with the Company’s senior executives and with the
Board. Upon completion of the fiscal year, the Compensation Committee
assesses the performance of the Company based on the performance measures that
it established for that year and approves the funding level of the cash
incentive plan.
Long-Term Incentive
Compensation. The Company also grants stock options and other
equity incentives under its Stock Option and Stock Award Plans in order to link
compensation to the Company's long-term growth and performance and to increase
stockholder value. The Committee has broad discretion to establish
the terms of such grants to eligible employees of the Company and its
subsidiaries. It grants awards to designated employees upon
commencement of employment or following a significant change in an employee's
responsibility or title based in part on the recommendation of the Company’s
executive officers. Awards are based on guidelines relating to the employee's
position in the Company that are set by the Committee, as well as the employee's
current performance and anticipated future contributions. The
Committee also considers the amount and terms of stock options and stock awards
previously granted to the employees and executive officers. The
Committee individually evaluates these factors with respect to the employees and
each executive officer and then the Committee reaches a consensus on the
appropriate award. There were grants of 9,500 and 7,500 stock options
to to Mr. Rouse and Mr. Garrison, respectively in 2008.
Compensation of President and Chief
Executive Officer. James E. Rouse was named President and
Chief Executive Officer of the Company in October 2002 and served pursuant to a
five-year employment agreement through October 4, 2006 at an annual rate of
compensation of $175,000. Based in part on advice received from the
consulting firm engaged by the Compensation Committee as to competitive
conditions for senior executive officers at similar public companies and in part
on negotiations with Mr. Rouse, a new five-year employment agreement was
negotiated and implemented providing annual compensation of $230,000 per year
commencing as of October 5, 2006. A discussion of other terms and
conditions of the employment agreement are set forth elsewhere
herein.
Equity
Compensation Plan Information
The
following table provides information, as of March 31, 2009, with respect to our
equity compensation plans:
|
Plan
category
|
Number
of securities to be issued upon exercise of outstanding options, warrants
and rights (a)
|
Weighted-average
exercise price of outstanding options, warrants and rights
(b)
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column (a)
(c))
|
|
Equity
compensation plans approved by security holders
|
207,000
|
$
8.75
|
240,000(1)
|
|
Equity
compensation plans not approved by security holders
|
--
|
--
|
--
|
|
Total
|
207,000
|
$
8.75
|
240,000(1)
|
(1)
Includes 140,000 shares available under the 2001 Stock Option Plan and 100,000
shares available under the 2005 Stock Award Plan.
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
The
following paragraphs set forth the reportable transactions in the last fiscal
year between ART and its executive officers, directors or
affiliates. See “Compensation of Directors and Executive Officers”,
“Narrative to Summary Compensation Table”, and “Employment Agreements” for
descriptions of the terms of the employment agreement between ART and the
Company’s Executive Officers and “Director Compensation” for a description of
terms of compensation arrangements with our directors.
Transactions
with Management and Others
To date,
all transactions between the Company and its officers, directors or their
affiliates have been approved or ratified by a majority of the directors who did
not have an interest in, and who were not employed by the Company at the time
of, such transaction. The Company’s Audit Committee reviews and
oversees transactions between the Company and its executive officers and
directors.
PROPOSALS RECOMMENDED FOR CONSIDERATION BY
STOCKHOLDERS
ELECTION
OF DIRECTORS
The
Company’s By-Laws provide that the number of directors shall be fixed from time
to time by a vote of the majority of the Board of Directors. The
Board has determined the Board shall consist of no less than two or more than
six directors. The By-Laws further provide that the Board of
Directors be divided into three classes (Class I, Class II and Class III)
serving staggered three-year terms, with each class to be as nearly equal in
number as possible. The Board of Directors currently consists of five
seats, namely, James E. Rouse and Jason R. Chambers (Class I with term expiring
at the 2011 Annual Meeting); E. P. Marinos and Julius Tabin (Class II with terms
expiring at the 2009 Annual Meeting) and Paul F. Walter (Class III with term
expiring at the 2010 Annual Meeting).
The Board
of Directors, based on the recommendation of the Nominating Committee, has
concluded that the nomination and re-election of E.P. Marinos and Julius Tabin
as Class II directors is in the best interest of the Company and recommends
stockholder approval of the re-election of Mr. Marinos and Dr. Tabin for
three-year terms (expiring at the 2012 Annual Meeting) and until the successor
of each has been duly elected and shall qualify.
The
remaining directors will continue to serve in their positions for the remainder
of their terms. Biographical information concerning Mr. Marinos and
Dr. Tabin, and the other ART directors can be found under “Information About
Directors and Executive Officers.”
The
persons named in the proxy will vote FOR the nominees, except where authority
has been withheld as to the particular nominee.
The
nominees for director receiving a plurality of the votes represented by the
shares of common stock present in person or represented by proxy at the Annual
Meeting and entitled to vote thereon will be elected as
director. Each of the nominees has consented to being named in this
Proxy Statement and to serve his term if elected. As of the date of
this Proxy Statement, the Board is not aware that either nominee is unable or
will decline to serve as a director. If a nominee should for any
reason become unavailable for election, proxies may be voted with discretionary
authority by the persons appointed as proxies for any substitute designated by
the Board of Directors of the Company.
The
Board of Directors recommends that stockholders vote FOR the nominees for
election to the Board of Directors of the Company.
APPOINTMENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit
Committee has concluded that the continued engagement of CCR LLP (“CCR”) as our independent
registered public accounting firm is in the best interests of
ART. CCR, formerly known as Carlin, Charon & Rosen LLP, has
served as the Company’s registered public accounting firm since February
2006.
The
stockholders of the Company are being asked to ratify this
appointment. The Company has been informed that neither CCR nor any
of its partners have any direct financial interest or any material indirect
financial interest in the Company nor have had any connection during the past
three years with the Company in the capacity of promoter, underwriter, voting
trustee, director, officer or employee. A representative of CCR is
expected to be present at the Annual Meeting, to make a statement if so desired,
and to respond to any appropriate questions.
The Audit
Committee, prior to recommending the appointment of CCR in connection with the
audit for the fiscal year ended December 31, 2008 and its reappointment for the
fiscal year ended December 31, 2009, considered the qualifications of that firm,
including its performance previously, its reputation for integrity, competence
in the fields of accounting and auditing and its independence.
Fees
earned by CCR for services rendered in connection with the fiscal years ended
December 31, 2008 and 2007 are set forth below. All fees earned by
our independent registered public accounting firm were pre-approved by the Audit
Committee.
|
2008
|
2007
|
||
|
Audit fees
|
$ 100,900
|
$
96,500
|
|
|
Audit-related fees
|
-
|
-
|
|
|
Tax fees
|
17,600
|
41,300
|
|
|
All other fees
|
-
|
-
|
|
Audit
Fees
Audit
Fees for 2008 and 2007 consist of fees for the audit of the Company’s annual
financial statements, the review of financial statements included in the
Company’s quarterly reports, and audit services provided in connection with
other statutory or regulatory requirements and amounted to $100,900 and $96,500
respectively.
Audit-Related
Fees
There
were no Audit-Related Fees for 2008 and 2007.
Tax
Fees
Tax Fees
for 2008 and 2007 consist of tax service fees for compliance work, as well as
tax planning and tax advice and amounted to $17,600 and $41,300 respectively,
all of which was approved by the Audit Committee of the Board of
Directors.
All
Other Fees
There
were no Other Fees for 2008 and 2007.
Recommendation
and Vote
To be
approved, Proposal 2 requires the affirmative vote of the majority of the shares
present in person or represented by proxy at the Annual Meeting and entitled to
vote thereon.
The
Board of Directors recommends that stockholders vote FOR the ratification of the
appointment of CCR LLP, together with any successor firm, as the Company's
independent registered public accounting firm for the fiscal year ending
December 31, 2009.
AUTHORIZATION
TO ADJOURN THE ANNUAL MEETING
General
If, at
the Annual Meeting, the number of shares of common stock, present in person or
by proxy, is insufficient to constitute a quorum of the number or shares of
common stock voting in favor is insufficient to elect each of E.P. Marinos and
Julius Tabin to the Board of Directors and to ratify the independent public
accountants for the year ending December 31, 2009, management intends to move to
adjourn the Annual Meeting to a later date or dates, if necessary, in order to
enable the Board of Directors to solicit additional proxies. In that event, we
will ask our stockholders to vote only upon the adjournment proposal and not the
proposals relating to election of Mr. E. P. Marinos and
Dr. Julius Tabin to the Board of Directors and the ratification of the
appointment of the independent public accountants for the fiscal year ending
December 31, 2009.
In this
proposal, we are asking you to grant discretionary authority to the holder of
any proxy solicited by the Board of Directors so that such holder can vote in
favor of the proposal to adjourn the Annual Meeting to a later date or dates, if
necessary, to solicit additional proxies. If our stockholders approve the
adjournment proposal, we could adjourn the Annual Meeting, and any adjourned
session of the Annual Meeting, and use the additional time to solicit additional
proxies, including the solicitation of proxies from stockholders who have
previously voted. Among other things, approval of the adjournment proposal could
mean that, even if we had received proxies representing a sufficient number of
votes against any of the proposals to defeat the proposal, we could adjourn the
Annual Meeting without a vote on the election of directors and ratification of
accountants and seek to convince the holders of those shares to change their
votes in favor or the proposals.
Generally,
if the Annual Meeting is adjourned, no notice of the adjourned meeting is
required to be given to stockholders, other than announcement at the Annual
Meeting of the place, date and time to which the meeting is adjourned. However,
the Company’s By-laws provide that if the adjournment or adjournments are for
more than 30 days, or if after adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting will be given to each
stockholder of record entitled to vote at the adjourned meeting.
Recommendation
and Vote
To be
approved, the adjournment proposal requires the affirmative vote of the holders
of a majority of the shares of common stock present in person or represented by
proxy at the Annual Meeting, whether or not a quorum is present. Abstentions and
broker non-votes will not affect the vote on the adjournment
proposal.
The
Board of Directors recommends that stockholders vote FOR the proposal to
authorize the Board of Directors to adjourn the Annual Meeting of stockholders
to allow time for the further solicitation of proxies to approve the election of
each of E.P. Marinos and Julius Tabin to the Board of Directors and the
ratification of the appointment of the independent registered accounting firm
for the fiscal year ending December 31, 2009.
Stockholder
Proposals and Submissions
Stockholders are entitled
to submit proposals on matters appropriate for stockholder action and have that
proposal included in the Company's proxy statement consistent with the Company’s
By-Laws and the regulations of the SEC. Should a stockholder intend
to present a proposal at the 2010 Annual Meeting and have that proposal included
in the Company's proxy statement, it must be received by the Secretary of the
Company c/o Arrhythmia Research Technology, Inc., 25 Sawyer Passway, Fitchburg,
MA 01420, not later than 90 nor earlier than 120 days prior to
the anniversary of the previous year’s annual meeting; provided, however, that
in the event that no annual meeting was held in the previous year or the annual
meeting is scheduled to be held on a date more than 30 days prior to or delayed
by more than 60 days after such anniversary date, notice by the stockholder in
order to be timely must be received not later than the day on which such notice
of the date of the annual meeting was mailed or such public disclosure of the
date of the annual meeting was made including through public
filings. For nominations by a stockholder relating to a special
meeting of stockholders called for the purpose of electing directors, the
stockholder must have given written notice, either by personal delivery or by
mail not later than the close of business on the 10th day
following the day on which public announcement of the date of the meeting is
first made by the Company.
The
notice must set forth as to each matter the stockholder proposes to bring before
the annual meeting:
|
·
|
a
brief description of the business desired to be brought before the annual
meeting, the text of the proposal or business and the reasons for
conducting such business at the annual meeting;
and
|
|
·
|
any
material interest of the stockholder in such business;
and
|
as to the
stockholder giving the notice:
|
·
|
the
name and record address of the
stockholder;
|
|
·
|
A
description of all arrangements or understandings between the stockholder
and any other person or persons (naming the person) in connection with the
proposal of such business by the stockholder and any material interest of
the stockholder in such business;
|
|
·
|
the
class, series and number of shares of capital stock of the Company which
are owned beneficially and of record by the stockholder and by the
beneficial owner, if any, on whose behalf the proposal is
made;
|
|
·
|
a
representation that the stockholder is a holder of record of stock of the
Company entitled to vote at such meeting and intends to appear in person
or by proxy at the meeting to propose such
business.
|
Any
proposal of a stockholder intended to be presented at the Company’s next annual
meeting of stockholders and included in the proxy statement and form of proxy
for that meeting must be received by the Company no later than March 21, 2010
nor earlier than February 19, 2010.
A copy of
the relevant By-Law provisions containing the requirements for making
stockholder proposals may be obtained by contacting the Company's Secretary at
the executive offices of the Company.
No
Incorporation by Reference
In the
Company’s filings with the SEC, information is sometimes “incorporated by
reference.” This means that we are referring you to information that
has previously been filed with the SEC and the information should be considered
as part of the filing. Based on SEC regulations, the “Audit Committee
Report” and the “Compensation Committee Procedures”, specifically are not
incorporated by reference into any other filings with the SEC. In
addition, this proxy statement includes website addresses. These
website addresses are intended to provide inactive, textual references
only. The information on these websites is not part of this proxy
statement.
Householding
of Proxy Statements
The SEC
has adopted rules that permit companies and intermediaries (e.g., brokers) to
satisfy the delivery requirements for proxy statements and annual reports with
respect to two or more stockholders sharing the same address by delivering a
single proxy statement addressed to those stockholders. This process,
which is commonly referred to as “householding,” potentially means extra
convenience for stockholders and cost savings for companies.
A number
of brokers with account holders who are our stockholders may “household” our
proxy materials. In that event, a single proxy statement will be
delivered to multiple stockholders sharing an address unless contrary
instructions have been received from the affected stockholders. Once
you have received notice from your broker that they will be householding
communications to your address, householding will continue until you are
notified otherwise or until you revoke your consent. If, at any time,
you no longer wish to participate in householding and would prefer to receive a
separate proxy statement and annual report, please notify your broker and our
Secretary in writing at 25 Sawyer Passway, Fitchburg, MA 01420 or by telephone
at (978) 345-5000. Stockholders who currently receive multiple copies
of the proxy statement at their address and would like to request householding
of their communications should contact their broker.
Other
Proposed Action
The Board
of Directors does not intend to bring any other matters before the Annual
Meeting, nor does the Board of Directors know of any matters which other persons
intend to bring before the Annual Meeting. If, however, other matters
not mentioned in this proxy statement properly come before the Annual Meeting,
the persons named in the accompanying form of proxy will vote thereon in
accordance with the recommendation of the Board of Directors.
|
By
Order of the Board of Directors,
|
|
ARRHYTHMIA
RESEARCH TECHNOLOGY, INC.
|
|
/s/ E.P.
Marinos
|
|
E.
P. Marinos, Secretary
|
Fitchburg,
Massachusetts
April 30,
2009
ARRHYTHMIA
RESEARCH TECHNOLOGY, INC.
This
proxy is solicited by the Board of Directors
for
the Annual Meeting of Stockholders to be held on
June
19, 2009
The
undersigned stockholder acknowledges receipt of the Notice of Annual Meeting of
Stockholders and the Proxy Statement, each dated April 30, 2009 and hereby
appoints Judy Lucier and David A. Garrison, or either of them, proxies for the
undersigned, each with full power of substitution, to vote all of the
undersigned's shares of common stock of Arrhythmia Research Technology, Inc.
(the “Company”) at the Annual Meeting of Stockholders of the Company to be held
at Four Points by Sheraton, 99 Erdman Way, Leominster, Massachusetts, on Friday,
June 19, 2009 at 10:00 a.m., local time, and at any adjournments or
postponements thereof.
|
1.
|
Election
of Class II Directors (3 year
terms) Nominees: E.P.
Marinos Julius
Tabin
|
o VOTE FOR ALL
NOMINEES or
o VOTE WITHHELD FOR ALL NOMINEES
or oVOTE FOR ALL NOMINEES
EXCEPT
|
|
2. To
ratify the appointment of CCR LLP as the Company’s independent registered
public accounting firm for the year ending December 31,
2009.
|
o VOTE
FOR o VOTE
AGAINST o ABSTAIN
|
|
3. Authorization
to adjourn the Annual Meeting.
|
o VOTE
FOR o VOTE
AGAINST o ABSTAIN
|
|
4. Other
Matters
|
In their
discretion, to vote with respect to any other matters that may come before the
Annual Meeting or any adjournment thereof, including matters incident to its
conduct.
Please sign and date on the reverse
side.
The board
of directors recommends a vote FOR the nominees and proposals above and if no
specification is made, the shares will be voted for such nominees and
proposals.
PLEASE
SIGN AND DATE.
Dated ___________________________,
2009
__________________________________________________
Signature
__________________________________________________
Printed
Name
__________________________________________________
Signature
__________________________________________________
Printed
Name
(Joint
Owners Should Each Sign, Attorneys-in-Fact, Executors, Administrators,
Custodians, Partners, or Corporate Officers Should Give Their Full
Title.)
Signature
should agree with name printed hereon. If stock is held in the name
of more than one person, EACH joint owner should sign. Executors,
administrators, trustees, guardians, and attorneys should indicate the capacity
in which they sign. Attorneys should submit powers of
attorney.
PLEASE
DATE, SIGN AND RETURN THIS PROXY
NO
POSTAGE NECESSARY IF MAILED IN THE UNITED STATES