LIFE SCIENCES RESEARCH, INC.
METTLERS ROAD, P.O. BOX 2360
EAST MILLSTONE, NJ 08875
(732)
649-9961
April
18, 2008
Dear Stockholder:
The directors and officers of Life
Sciences Research, Inc. cordially invite you to attend the Annual Meeting of Stockholders
of the Company to be held on May 21, 2008, at 10:00 a.m., local time. The meeting will be
held at 53 Street, Urbanizacion Obarrio, Panama, Republic of Panama. Notice of the Annual
Meeting, the Proxy Statement and a proxy card are enclosed.
At this year's meeting you will be
asked to (i) elect directors and (ii) transact such other business as may properly come
before the meeting.
You are urged to mark, sign, date
and mail the enclosed Proxy immediately. By mailing your Proxy now you will not be
precluded from attending the meeting if you wish. Your Proxy is revocable, and in the event
you find it convenient to attend the meeting, you may, if you wish, withdraw your Proxy and
vote in person.
Very
truly yours,
/s/
Andrew Baker
Andrew
H. Baker
Chairman
of the Board
and
Chief Executive Officer
LIFE SCIENCES RESEARCH, INC.
METTLERS ROAD, P.O. BOX 2360
EAST MILLSTONE, NJ 08875
(732)
649-9961
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 21, 2008
Notice is hereby given that the
Annual Meeting of Stockholders (the "Meeting") of Life Sciences Research, Inc., a Maryland
corporation (the "Company" or "LSR"), will be held at 53 Street, Urbanizacion Obarrio,
Panama, Republic of Panama on May 21, 2008 at 10:00 a.m., local time, for the purpose of
considering and voting on the following matters described in the attached Proxy
Statement:
1. Election
of directors;
2. Transacting
such other business as may properly come before the Meeting or any adjournment
thereof.
Holders of record of voting common
stock at the close of business on April 15, 2008 (the "Record Date") shall be entitled to
notice of and to vote at the Meeting or any adjournment thereof. You are invited to attend
the Meeting in person. Whether or not you intend to attend the Meeting, please mark, sign,
date and return the enclosed Proxy to make certain that your shares are represented at the
Meeting. Stockholders who attend the Meeting may vote their shares personally, even though
they have previously returned Proxies.
PLEASE NOTE THAT YOU WILL NEED
GOVERNMENT ISSUED PHOTO ID AND PROOF THAT YOU OWN LSR STOCK TO BE ADMITTED TO THE
MEETING.
The Meeting may be adjourned from
time to time without notice other than announcement at the Meeting and any business for
which notice of the Meeting is hereby given may be transacted at a reconvened meeting
following such adjournment.
Your attention is invited to the
attached Proxy Statement.
BY
ORDER OF THE BOARD OF DIRECTORS:
/s/ Mark L.
Bibi
Mark L.
Bibi
Secretary
and General Counsel
Dated: April 18, 2008
LIFE SCIENCES RESEARCH, INC.
METTLERS ROAD, P.O. BOX 2360
EAST MILLSTONE, NJ 08875
(732)
649-9961
PROXY STATEMENT
GENERAL INFORMATION
PROXY SOLICITATION
This
Proxy Statement is furnished in connection with the solicitation of proxies (the "Proxies")
by and on behalf of the Board of Directors of Life Sciences Research, Inc., a Maryland
corporation ("LSR" or the "Company"), for its Annual Meeting of Stockholders (the
"Meeting") to be held at 10:00 a.m., local time, on May 21, 2008 at 53 Street, Urbanizacion
Obarrio, Panama, Republic of Panama, or at any adjournment thereof. The Company anticipates
that this Proxy Statement and the accompanying form of Proxy will be first mailed or given
to the stockholders of the Company on or about April 18, 2008.
The cost of soliciting Proxies will be borne by the Company.
Officers and regular employees of the Company, without additional compensation, may solicit
Proxies by further mailing, telephone, telegraph, facsimile transmission or by personal
conversations. The Company will, upon request, reimburse banks, brokerage firms, nominees,
fiduciaries and other custodians for their expenses in forwarding solicitation material to
the beneficial owners of the Company's voting common stock, par value $.01 per share (the
"Common Stock").
Any
Proxy that is properly submitted to the Company may be revoked by the person giving it at
any time before it has been voted. Proxies may be revoked by (i) delivering to the
Secretary of the Company at or before the Meeting a written notice of revocation bearing a
later date than the Proxy, (ii) duly executing a subsequent Proxy relating to the same
shares of Common Stock and delivering it to the Secretary of the Company at or before the
Meeting or (iii) attending the Meeting and voting in person (although attendance at the
Meeting will not in and of itself constitute revocation of a Proxy).
INFORMATION ABOUT
VOTING
The persons named in the Proxies will vote the Proxies in
accordance with the instructions specified therein. Unless instructed to the contrary in a
Proxy that is returned by a stockholder of the Company, the Proxy will be voted FOR the
persons named below in the election of the Company's Board of Directors. The persons named
in the Proxy will exercise their judgment with respect to other matters which may properly
come before the Meeting. The Company is not currently aware of any other matters to come
before the Meeting.
If you
participate in the Huntingdon Life Sciences Inc. Savings and Investment Plan (the
Company’s “401(k) Plan”), you may vote shares of Common Stock of the
Company credited to your 401(k) account by instructing the trustee of the 401(k) Plan,
pursuant to the separate 401(k) Plan instruction card being mailed with this Proxy
Statement to plan participants. You should complete and return the 401(k) Plan instruction
card to the proxy tabulators at the address set forth on that card. The trustee will vote
your shares in accordance with your duly executed instructions received by May 14, 2008. If
you do not send instructions, the shares credited to your account will be voted by the
trustee in the same proportion that it votes share equivalents for which it did receive
timely instructions.
You may also revoke previously given voting instructions by
May 14, 2008 by filing with the proxy tabulators either a written notice of revocation or a
properly completed and signed voting 401(k) Plan instruction card bearing a later date.
If you hold shares through a broker, follow the voting
instructions you receive from your broker. If you want to vote in person at the Meeting,
you must obtain a legal proxy from your broker and present it at the Meeting. If you do not
submit voting instructions to your broker, your broker may still be permitted to vote your
shares.
Holders of a majority of the shares of Common Stock of the
Company entitled to vote, present in person or represented by proxy, constitute a quorum at
the Meeting. Under Maryland law, an abstention is not a vote cast. However, abstentions are
counted as present for purposes of establishing the quorum necessary for the Meeting to
proceed. Likewise, if a broker indicates on the proxy that it does not have discretionary
authority as to certain shares to vote on a particular matter (a "broker non-vote"), such
broker non-vote is counted as present for purposes of establishing the quorum necessary for
the Meeting to proceed.
Directors will be elected by a favorable vote of a plurality
of the shares of Common Stock present and entitled to vote, in person or by proxy, at the
Meeting. Accordingly, abstentions and broker non-votes as to the election of directors will
not affect the election of the candidates receiving the plurality of votes. All other
matters to come before the Meeting, if any, require the approval of a majority of the
shares of Common Stock voted, in person or by proxy, at the Meeting, provided a quorum is
present. For purposes of the vote on such matters, abstentions and broker non-votes will
not be counted as votes cast and will have no effect on the result of the vote, although
they will count toward the presence of a quorum.
SHARES OUTSTANDING AND VOTING
RIGHTS
Holders
of record of Common Stock at the close of business on April 15, 2008 (the "Record Date"),
will be entitled to vote at the Meeting. The holders of the shares of LSR Common Stock are
entitled to one vote per share. Such shares may not be voted cumulatively. As of the Record
Date, there were 12,648,298 shares of LSR Common Stock issued and outstanding and entitled
to vote held by 1,968 shareholders of record. The presence in person or by Proxy of the
holders of at least a majority of the outstanding shares of Common Stock is necessary to
constitute a quorum at the Meeting. The directors and executive officers of the Company (8
persons), who as of the Record Date beneficially owned of record in the aggregate 3,915,396
(approximately 28.2%) of the outstanding shares of Common Stock, have indicated that they
intend to vote all such shares FOR all of the proposals set forth herein.
PROPOSAL 1
ELECTION OF
DIRECTORS
Nominees
to each of the five positions on the Board of Directors of the Company are to be elected at
the Meeting. If elected, each will serve for one year or until his successor is elected and
qualified. Each such nominee is a current director. The Company does not contemplate that
any of the persons named below will be unable or will decline to serve; however, if any
such nominee is unable or declines to serve, the persons named in the accompanying Proxy
will vote for a substitute, or substitutes, in their discretion.
Your Board recommends a vote FOR the election to the Board
of each of the nominees.
Listed
below are the names and ages of the nominees, the year in which each first became a
director and their principal occupations for at least the past five years.
Name and
Age
Principal
Occupation
Andrew Baker -
59 Andrew Baker was appointed to the Huntingdon Life Sciences
Group plc (“Huntingdon”) Board as Executive Chairman in September 1998 in
connection with his leadership of a rescue plan for Huntingdon. He became a Director and
Chairman and CEO of LSR on January 10, 2002. He is a chartered accountant and has operating
experience in numerous companies involved in the delivery of healthcare ancillary services.
He spent 18 years until 1992 with Corning Incorporated (“Corning”) and held the
posts of President and CEO of MetPath Inc., Corning’s clinical laboratory subsidiary,
from 1985 to 1989. He became President of Corning Laboratory Services Inc. in 1989, which
at the time controlled MetPath Inc. (now trading as Quest Diagnostics Inc.), and Hazleton
Corporation, G. H. Besselaar Associates and SciCor Inc., (all three now trading as Covance
Inc.). Since leaving Corning in 1992, Mr. Baker has focused on investing in and developing
companies in the healthcare sector including Unilab Corporation (“Unilab”), a
clinical laboratory services provider in California where Mr. Baker served as CEO from 1992
to 1996, and Medical Diagnostics Management, a U.S. based provider of radiology and
clinical laboratory services to health care payers. In 1997 he formed Focused Healthcare
Partners (“FHP”), an investment partnership that acts as general partner for
healthcare startup and development companies. In 2005 he formed Alconbury Estates for the
purpose of entering into a sale-leaseback transaction with the Company. See “Certain
Relationships and Transactions with Related Persons”.
Gabor Balthazar - 66 Gabor Balthazar was appointed to the Huntingdon Board as
the Senior Independent Non-Executive Director in March 2000. He became a director of LSR on
January 10, 2002. He has been active in international marketing and management consulting
for almost 30 years. Mr. Balthazar sat on Unilab’s board from 1992 until November
1999. From 1985 to 1997 Mr. Balthazar served as a consultant to Frankfurt Consult, the
merger/acquisition subsidiary of BHF-Bank, Frankfurt, Germany and to Unilabs Holdings SA, a
Swiss clinical laboratory testing holding company, from 1987 to 1992. He is a graduate of
the Columbia Law School and the Columbia Business School in New York City. Mr. Balthazar
serves on the Audit Committee (Chairman), Compensation Committee (Chairman) and Nominating
and Corporate Governance Committee.
Brian Cass –
60 Brian Cass, FCMA, CBE, was
appointed to the Huntingdon Board as Managing Director/Chief Operating Officer in September
1998 and became a Director and President and Managing Director of LSR on January 10, 2002.
Prior to joining Huntingdon he was a Vice President of Covance Inc. and Managing Director
of Covance Laboratories Ltd. (previously Hazleton Europe Ltd.) for nearly 12 years, having
joined the company in 1979 as Controller. Mr. Cass worked at Huntingdon Research Centre
between 1972 and 1974 and has previous experience with other companies in the electronics
and heavy plant industries. He has also held directorships with North Yorkshire Training
& Enterprise Council Ltd and Business Link North Yorkshire Ltd. In June 2002, in
recognition of his contribution to science and professional achievement, Mr. Cass was
appointed by the Queen of England as a Commander in the Most Excellent Order of the British
Empire. See, “Certain Relationships and Transactions with Related
Persons”.
Afonso Junqueiras –
51 Afonso Junqueiras became a director of LSR on January 15, 2003. He is a civil
engineer and has been President and director of a South American private civil engineering
firm since 1997. Mr. Junqueiras serves on the Audit Committee, Compensation Committee and
Nominating and Corporate Governance Committee.
Yaya Sesay – 65
Yaya Sesay became a director of
LSR on January 10, 2003. He served as a senior government official of an African nation for
approximately 25 years, culminating in his service as Financial Secretary of the Ministry
of Finance for three years. For the past five years, Mr. Sesay has been an international
businessman with an interest in the development of pharmaceutical products. Mr. Sesay
serves on the Audit Committee, Compensation Committee and Nominating and Corporate
Governance Committee (Chairman).
The
Articles of Amendment and Restatement of LSR provide that the directors shall be not less
than one in number and there shall be no maximum number of directors. Any director
appointed by the Board of Directors holds office only until the next following annual
meeting, at which time he shall be eligible for re-election by the stockholders. Directors
may be removed from office only for cause.
No director or executive officer has a family relationship
with any other director or executive officer.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
AND CERTAIN BENEFICIAL
OWNERS
Ownership of Management and Directors
The following table sets forth
certain information known to LSR regarding the beneficial ownership of LSR Common Stock as
of the Record Date by: (i) each of LSR’s directors and executive officers and (ii)
all directors and executive officers as a group. For purposes of this table, a person or
group of persons is deemed to have "beneficial ownership" of any shares as of a given date
which such person has the right to acquire within 60 days after such date. For purposes of
computing the percentage of outstanding shares held by each person or group of persons
named below on a given date, any security which such person or persons have the right to
acquire within 60 days after such date is deemed to be outstanding, but is not deemed to be
outstanding for the purpose of computing the percentage ownership of any other person.
Except as noted below, each person has full voting and investment power over the shares
indicated.
Name of Beneficial
Owner
|
Amount of Beneficial
Ownership
|
|
Nature of Beneficial
Ownership
|
Percentage of
Class
|
|
|
|
|
|
Andrew Baker
|
1,715,202
|
|
Direct
|
13.6%
|
Chairman and Chief
Executive Officer
|
255,500
|
|
Vested Options
|
2.0%
|
|
410,914
|
|
Vested Warrants
|
3.1%
|
|
2,381,616
|
(1)
|
|
17.9%
|
|
|
|
|
|
Gabor Balthazar
|
2,500
|
|
Direct
|
*
|
Director
|
22,500
|
|
Vested Options
|
*
|
|
25,000
|
|
|
*
|
|
|
|
|
|
Mark Bibi
|
156,561
|
|
Direct
|
1.2%
|
General Counsel and
Secretary
|
70,455
|
|
Vested Options
|
*
|
|
227,016
|
|
|
1.8%
|
|
|
|
|
|
Brian Cass
|
455,893
|
|
Direct
|
3.6%
|
President and Managing
Director
|
255,500
|
|
Vested Options
|
2.0%
|
|
711,393
|
|
|
5.5%
|
|
|
|
|
|
Julian Griffiths
|
54,076
|
|
Direct
|
*
|
Vice President of
Operations
|
87,750
|
|
Vested Options
|
*
|
|
141,826
|
|
|
1.1%
|
|
|
|
|
|
Afonso
Junqueiras
|
2,500
|
|
Direct
|
*
|
Director
|
2,500
|
|
Vested Options
|
*
|
|
5,000
|
|
|
*
|
|
|
|
|
|
Richard
Michaelson
|
298,242
|
|
Direct
|
2.4%
|
Chief Financial
Officer
|
120,303
|
|
Vested Options
|
*
|
|
418,545
|
|
|
3.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yaya Sesay
|
2,500
|
|
Direct
|
*
|
Director
|
2,500
|
|
Vested Options
|
*
|
|
5,000
|
|
|
*
|
|
|
|
|
|
All Directors and Executive
Officers as a group (8 persons)
|
3,915,396
|
|
|
28.2%
|
|
|
|
|
|
*Signifies less than 1%. All
percentages calculated on the basis of 12,648,298 shares of Common Stock
outstanding at the Record Date. Shares subject to issuance upon presently
exercisable options or warrants are included in the number of outstanding
shares for purposes of calculating that holder’s percentage interest, as
well as the aggregate percentage interest of all Directors and Executive
Officers as a group.
(1) 1,604,001 of such shares are beneficially owned by Focused Healthcare
Partners Ltd, a Bahamas corporation that is controlled by Mr. Baker. 490,914 of
such shares (including the 410,914 shares subject to presently exercisable
warrants noted above) are beneficially owned by Focused Healthcare Partners
LLC, a New Jersey limited liability company that is controlled by Mr.
Baker.
|
Ownership of Certain Beneficial Owners
The following table sets forth
certain information, to the knowledge of LSR, regarding the beneficial ownership of LSR
Common Stock as of the Record Date by all stockholders known by LSR (based on public
filings with the Commission, except as otherwise noted) to be the beneficial owners of more
than 5% of the outstanding shares of LSR Common Stock. For purposes of this table, a person
or group of persons is deemed to have "beneficial ownership" of any shares as of a given
date when such person has the right to acquire such shares within 60 days after such date.
For purposes of computing the percentage of outstanding shares held by each person or group
of persons named above on a given date, any security which such person or persons has the
right to acquire within 60 days after such date is deemed to be outstanding, but is not
deemed to be outstanding for the purpose of computing the percentage ownership of any other
person. Except as noted below, each person has full voting and investment power over the
shares indicated.
Name and
Address
of Beneficial
Owner
|
Number of Shares of
Common Stock
Beneficially
Owned
|
Percent of Common
Stock
Beneficially Owned
(1)
|
|
|
|
Andrew Baker
|
2,381,616 (2)
|
17.9%
|
c/o Life Sciences
Research, Inc.
|
|
|
Mettlers Road
|
|
|
East Millstone, NJ
08875
|
|
|
|
|
|
Brian Cass
|
711,393 (3)
|
5.5%
|
c/o Huntingdon Life
Sciences
|
|
|
Woolley Road
|
|
|
Alconbury,
Huntingdon
|
|
|
Cambridgeshire PE28
4HS
|
|
|
England
|
|
|
_______________
(1) Calculated pursuant
to Rule 13d-3 promulgated under the Exchange Act and based on 12,648,298 shares of Common
Stock outstanding as of the Record Date.
(2) Mr. Baker is the
Chairman and Chief Executive Officer of the Company. Includes presently exercisable options
to purchase 255,500 shares and presently exercisable warrants to purchase 410,914
shares.
As of the Record Date,
1,604,001 of such shares are
beneficially owned by Focused Healthcare Partners Ltd, a Bahamas corporation; 490,914 of
such shares (including 410,914 shares subject to presently exercisable warrants) are
beneficially owned by Focused Healthcare Partners LLC, a New Jersey limited liability
company that is controlled by Mr. Baker. Share ownership numbers reported herein are based
on Company records and Form 4’s filed by Mr. Baker.
(3) Mr. Cass is
President and Managing Director of the Company. Includes presently exercisable options to
purchase 255,500 shares. Share ownership numbers reported herein are based on Company
records and Form 4’s filed by Mr. Cass.
CORPORATE GOVERNANCE AND BOARD
MATTERS
The Board of Directors and its
Committees
The
Company’s Board of Directors (the “Board”) provides oversight and
guidance to the Company’s senior management in its operation of the Company. The
Board reviews significant developments affecting the Company and acts on matters requiring
its approval. During summer 2005, in anticipation of obtaining a listing of the
Company’s Common Stock on the New York Stock Exchange (“NYSE”), the Board
conducted a comprehensive review of the Company’s corporate governance policies and
practices, with a goal of assuring that such practices met all the NYSE’s listing
standards, as well as all regulations adopted and implemented by the Securities and
Exchange Commission (the “SEC”), as well as those under the Sarbanes-Oxley Act
of 2002. As a result of that comprehensive review, the Company adopted amended corporate
governance procedures; amended its corporate governance charters for its various Board
Committees (Audit; Compensation; Nominating and Corporate Governance); and posted such
charters on the Company’s web site at
www.lsrinc.net
. Prior to the Company’s
listing on NYSE Arca in December 2006, the Board and its Committees again conducted a
comprehensive review of its corporate governance procedures and charters, and amended these
procedures and charters as necessary to assure compliance with NYSE Arca rules and
regulations. The current versions of all the Company’s corporate governance charters
are posted on the Company’s website, and were most recently reviewed and updated in
March 2008.
LSR has also adopted a Code of
Business Conduct and Ethics which is applicable to LSR’s employees. The Board has
also adopted a Presiding Director policy. These codes and policies are posted on
LSR’s web site.
The Board has affirmatively
determined that three of the five Directors are independent, under the NYSE Arca Listing
Standards and LSR’s own independence standards. The Directors who have been
determined to be independent are: Gabor Balthazar, Afonso Junqueiras and Yaya Sesay.
The non-management members of
the Board of Directors meet in executive sessions without the presence of any members of
the Company’s management.
Meetings of Board of
Directors
During 2007 six (6) meetings of the
Board of Directors of LSR were convened. Each of the directors attended all such meetings
of the Board and all members of Board Committees attended all such meetings for the
Committee on which he served.
Director
Compensation
During
2007, each non-employee director received a cash fee of $25,000 per year for service as a
director. The Chairman of the Nominating and Corporate Governance Committee (Mr. Sesay)
receives an additional cash fee of $2,500 per year. The Chairman of the Compensation
Committee (Mr. Balthazar) receives an additional cash fee of $2,500 per year. The Chairman
of the Audit Committee (Mr. Balthazar) receives an additional cash fee of $15,000 per
year.
The cash compensation
paid to each non-employee director during 2007 was as follows:
Gabor
Balthazar
|
$48,026
|
Afonso
Junqueiras
|
$25,000
|
Yaya Sesay
|
$27,500
|
No stock awards or option awards
were made to the non-employee directors during 2007. Non-employee directors are reimbursed
for their travel and related expenses in connection with their services as directors.
Directors who are employees of the company (Messrs. Baker and Cass) receive no compensation
for serving as a director.
Audit
Committee
The Audit Committee of the Board of
Directors of LSR is, among other things, authorized to retain and evaluate the
Company’s independent accountants; to review and approve any major changes in
accounting policy; to review the arrangements for, scope and results of the independent
audit; to review and approve the scope of non-audit services to be performed by independent
accountants and to consider the possible effect on the independence of the accountants; to
review the effectiveness of internal auditing procedures and personnel; to review and
discuss earnings press releases; to discuss policies with respect to risk assessment and
risk management; to discuss with management the status of pending litigation, taxation
matters and other areas of oversight to the legal and compliance area as may be
appropriate; to establish confidential, anonymous “whistleblower” complaint
procedures; to review LSR’s policies and procedures for compliance with disclosure
requirements with respect to conflicts of interest and for prevention of unethical,
questionable or illegal payments; and to take such other actions as the Board shall from
time to time so authorize. Messrs. Balthazar, Junqueiras and Sesay comprise the Audit
Committee. Mr. Balthazar serves as Chairman. The Board of Directors has determined that Mr.
Balthazar meets the definition of “audit committee financial expert” as such
term is defined under SEC rules. Each member of the Audit Committee is considered to be an
independent director under SEC and NYSE Arca standards. The Audit Committee of LSR held
seven (7) meetings during 2007.
The Audit Committee operates
under a written charter adopted by the Board of Directors that is posted on LSR’s web
site. That charter was last reviewed and amended in March 2008.
The Audit Committee oversees
the Company’s financial reporting process on behalf of the Board of Directors.
Management is responsible for the Company’s financial statements and the financial
reporting process, including the system of internal controls. The independent auditors are
responsible for expressing an opinion on the conformity of those audited financial
statements with accounting principles generally accepted in the United States. In
fulfilling its oversight responsibilities, the Audit Committee has reviewed and discussed
with management and the independent auditors the Company’s audited financial
statements contained in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2007 including a discussion of the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant judgments, and the clarity of
disclosures in the financial statements.
Review of Financial Statements and Other Matters with Independent Accountant
The
Audit Committee discussed with the Company’s independent auditors for the fiscal year
ended December 31, 2007, Hugh Scott, the matters required to be discussed by Statement on
Auditing Standards No. 61,
Communication with Audit
Committees
, as amended.
In addition, the Audit Committee discussed with Hugh Scott the auditors’ independence
from the Company and its management including the matters in the written disclosures
provided to the Audit Committee as required by Independence Standards Board Standard No.
1,
Independence
Discussions with Audit
Committees
, and
considered the compatibilities of non-audit services with the auditors’
independence.
The Committee discussed with
Hugh Scott the overall scope and plans for their 2007 audit. The Committee met with the
internal and independent auditors, with and without management present, to discuss the
results of their examinations, their evaluations of the Company’s internal controls,
and the overall quality of the Company’s financial reporting. The Committee has
concluded that Hugh Scott’s provision of audit and non-audit services to LSR is
compatible with Hugh Scott’s independence.
The
Committee has selected Hugh Scott to conduct the Company’s 2008 audit.
Representatives of Hugh Scott will be invited to attend the Annual Meeting.
Audit Fees
Fees
for audit services totaled approximately $895,000 in 2007 and $730,000 in 2006, including
fees associated with the annual audit and the audit of internal control over financial
reporting and the reviews of the Company’s quarterly reports on Form 10-Q.
Audit Related Fees
Fees
for audit-related services totaled approximately $175,000 in 2007 and $47,000 in 2006.
Audit-related services principally include consultation on tax and accounting issues
related to the August 1, 2007 amendment to the Company’s Financing Agreement,
consultation on other accounting and internal control matters, including Sarbanes-Oxley
requirements and other attest services.
Tax Fees
Fees for tax services,
including tax compliance, tax advice and tax planning, totaled approximately $134,000 in
2007 and $89,000 in 2006.
All Other Fees
Hugh
Scott, P.C. did not provide any services not described above in 2007 and 2006.
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent
Auditors
The
Audit Committee pre-approves all audit and permissible non-audit services provided by the
independent auditors. These services may include audit services, audit-related services,
tax services and other services. The Audit Committee has adopted a policy for the
pre-approval of services provided by the independent auditors.
The Audit Committee has
considered whether the provision of the foregoing services is compatible with maintaining
the principal accountant’s independence, and has determined that such independence
has been maintained.
Recommendation that Financial Statements be Included in Annual Report
Based
on the reviews and discussions referred to above, the Audit Committee recommended to the
Board of Directors that the audited financial statements be included in the Company’s
Annual Report on Form 10-K for the last fiscal year for filing with the Securities and
Exchange Commission.
Other Matters
In
accordance with SEC rules, the foregoing information, which is required by paragraphs (a)
and (b) of Regulation S-K Item 306, shall not be deemed to be “soliciting
material”, or to be “filed” with the Commission or subject to the
Commission’s Regulation 14A, other than as provided in that Item, or to the
liabilities of Section 18 of the Securities Exchange Act of 1934, as amended, except to the
extent that the Company specifically requests that the information be treated as soliciting
material or specifically incorporates it by reference into a document filed under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended.
Audit Committee
Gabor Balthazar
(Chairman)
Afonso Junqueiras
Yaya Sesay
Nominating and Corporate Governance Committee
The
members of the Nominating and Corporate Governance Committee are Messrs. Sesay, Balthazar
and Junqueiras. Mr. Sesay serves as Chairman. This Committee met one (1) time during
2007.
The Committee operates pursuant to a Nominating and
Corporate Governance Committee Charter, which was last reviewed and updated in March 2008.
The Committee has established as its mission statement:
a. To evaluate and select qualified individuals as nominees
for the Board of Directors.
b. To
oversee and supervise the nominating process and ensure appropriate procedures are in place
for the selection and presentation of qualified candidates.
c. To
review, develop, evaluate and recommend to the Board appropriate corporate governance
guidelines for the Company.
d. To guide the Board in its annual evaluation of the
Board’s performance.
e. To
engage in such other matters as may from time to time be specifically delegated to this
Committee by the Board.
The
Nominating and Corporate Governance Committee assesses the appropriate size of the Board,
and whether any vacancies on the Board are expected due to retirement or otherwise. In the
event that vacancies are anticipated, or otherwise arise, the Committee considers various
potential candidates for director. Candidates may come to the attention of the Committee
through current Board members, professional search firms, shareholders or other persons.
All candidates must submit information regarding the nominee’s background, board
experience, industry experience, independence, financial expertise, and other relevant
information and are to be interviewed by the Chairman of the Board and at least one member
of the Committee. These candidates are evaluated at regular or special meetings of the
Committee, and may be considered at any point during the year. As described below, the
Committee considers properly submitted shareholder nominations for candidates for the
Board. If any materials are provided by a shareholder in connection with the nomination of
a director candidate, such materials are forwarded to the Committee. The Committee also
reviews materials provided by professional search firms or other parties in connection with
a nominee who is not proposed by a shareholder. In evaluating nominations, the Committee
seeks to recommend to shareholders a group that can best enable the success of the Company
and represent shareholder interests through the exercise of sound judgment using its
diversity of experience in various areas.
The criteria for director nominees include: the
candidate’s professional experience and personal accomplishments; the
candidate’s independence from the Company and management; the ability of the
candidate to attend Board and committee meetings regularly and devote an appropriate amount
of effort in preparation for those meetings; the candidate’s ability to function as a
member of a diverse group; the candidate’s recognition of and willingness to confront
the special challenges of being an LSR director in view of the animal rights extremist
campaign against the Company; and an understanding of the Company’s business and
industry.
The Committee will consider director
candidates recommended by shareholders. Recommendations for consideration for nominees at
the annual meeting of shareholders must be received not less than 120 days before the first
anniversary of the date of the Company’s proxy statement released to shareholders in
conjunction with the previous year’s meeting.
Code of Business Conduct and
Ethics
We maintain a code of business conduct and ethics governing
the conduct of our business and behavior by all personnel including our Chief Executive
Officer, President and Chief Financial Officer. The code was last reviewed and amended in
March 2008. A copy of the code is posted on LSR’s website.
Compensation Committee
In consultation with senior management, the Compensation
Committee establishes the Company’s general compensation philosophy, and oversees the
development and implementation of executive compensation programs and policies with respect
to the engagement of independent contractors of the Company. The Committee reviews on a
periodic basis the Company’s executive compensation programs and makes any
modifications that the Committee may deem necessary or advisable, in its sole
discretion.
The Committee annually reviews and approves the
Company’s goals and objectives relevant to the compensation of the Chief Executive
Officer and evaluates the performance of the Chief Executive Officer in light of those
goals and objectives, including assessing the Company’s success in addressing the
complexities and challenges that have been faced during that period. Based on such
evaluation, the Committee has the sole authority to set the compensation (including base
salary, incentive compensation and equity-based awards) of the Chief Executive Officer. In
determining incentive compensation, the Committee considers, among other factors it deems
appropriate from time to time, the Company’s performance and relative shareholder
return, the value of similar incentive awards to chief executive officers at comparable
companies, and the awards given to management in prior years.
The Committee also reviews and approves the compensation
(including base salary, incentive compensation and equity-based awards) of executive
officers of the Company. The Committee reviews the terms of the Company’s incentive
compensation plans, equity-based plans, pension plans, and welfare benefit plans. Unless
otherwise delegated, the Committee administers such plans, including determining any
incentive or equity-based awards to be granted to members of senior management under any
such plan.
The Compensation Committee is comprised of Messrs. Gabor
Balthazar, Afonso Junqueiras and Yaya Sesay. Mr. Balthazar serves as Chairman. Each is
considered to be an independent director. In addition, the Compensation Committee addresses
issues required or recommended to be addressed by independent directors, including
administration of the Company’s 2001 Equity Incentive Plan. The Compensation
Committee of LSR held three (3) meetings during 2007.
There were no Compensation Committee interlocks during
2007.
The Committee operates pursuant to a charter, which is
available on the Company's website at www.lsrinc.net under
the “Corporate Governance” icon. That charter was
most recently reviewed and amended in March 2008. Under its charter, the stated purposes of
the Compensation Committee are:
|
·
|
To
establish the Company’s general compensation philosophy and
oversee the development and implementation of executive compensation programs
and policies;
|
|
·
|
To annually review
and approve the
Company’s
goals and objectives relative to CEO compensation and to set the CEO
compensation
based on those goals and
objectives;
|
|
·
|
To review and approve the
compensation of other executive officers;
|
|
·
|
To review the terms of
incentive compensation plans, equity-based plans, retirement plans and welfare
benefit plans;
|
|
·
|
To review policies with
respect to post-service arrangements and perquisites;
|
|
·
|
To produce with the
assistance of management an annual report on executive compensation and a
compensation discussion and analysis for inclusion in the Company’s
annual report on Form 10-K or annual proxy statement;
|
|
·
|
To evaluate its own
performance on an annual basis;
|
|
·
|
To retain consultants and
professional advisors as it deems appropriate; and
|
|
·
|
To carry out such
other
duties as may be delegated
to it by the Board from time to time.
|
COMPENSATION DISCUSSION AND ANALYSIS
General Compensation Philosophy and
Objectives
LSR's executive compensation programs are
designed to attract, motivate and retain executives critical to the Company's long-term
success and the creation of stockholder value. The Company's fundamental compensation
philosophy is to closely link executive officers' total compensation with the achievement
of annual and long-term
performance goals. Management
and the Compensation Committee believe that compensation decisions are complex and best
made after a careful review of individual and Company performance; Contract Research
Organization (“CRO”) industry “peer group” compensation levels,
including consideration of the relative size and complexity of each of these peer
companies; and salary and total compensation levels of executives in other health care
companies, high growth companies, and comparably sized companies. The Committee awards
compensation to the Company’s executive officers that is based upon Company and
individual performance and that is designed to motivate them to achieve strategic
objectives and to continue to perform at the highest levels in the future.
The Compensation Committee has developed an overall compensation program and specific
compensation plans which are designed to enhance corporate performance, and thus
stockholder value, by aligning the financial interests of executives with those of its
stockholders. In pursuit of these overall objectives, the structure and scope of the
Company’s compensation program are designed to attract key executives to the Company
and retain the best possible executive talent; to reinforce and link executive and
stockholder interests through equity-based plans and encouragement of significant equity
holdings in the Company; and to provide a compensation package that recognizes individual
performance in conjunction with overall Company performance.
Based on the objectives described above, LSR strives to set a total compensation
opportunity within range of the median of the total direct compensation paid to similarly
situated executives at comparable companies against whom the Company competes in the CRO
industry marketplace, and in the broader health care market for executive talent. Actual
compensation may be above or below the median based on the actual performance of LSR and
the individual. This approach is intended to ensure that a significant portion of executive
compensation is based on LSR’s financial and strategic performance.
2007 Compensation Philosophy, Objectives and Actions
For 2007 the Compensation Committee, with the agreement and
support of the full Board of Directors and of senior management, determined that the key
performance goal for the Company would be to improve financial performance to more closely
approximate the financial performance of its key competitors in the CRO industry, behind
whom it has lagged historically. The Compensation Committee decided that the best barometer
of such financial performance would be operating margin percentage. The Compensation
Committee continues to encourage a significant equity interest in the Company for its
senior executives, and has historically encouraged their personal commitment to equity
ownership, and rewarded operating performance, with the issuance of stock and stock options
in order to further align their rewards with that of shareholders. The Compensation
Committee believes that shareholder value is best maximized by improving operating margin
percentage. Accordingly, the Compensation Committee determined that it would focus its
incremental compensation on this measurement through incentive bonus plans rather than
increases in base salaries (and, at its December 2007 meeting, made the same determination
for 2008) and based all incentive compensation for senior management for 2007 on improving
the Company’s operating margin percentage. The Compensation Committee expressed its
high level of satisfaction with the performance of the Company over the prior two years,
noting the significantly improving financial performance of the Company during that period,
and agreed with management to continue to focus senior management’s efforts on
continuing to improve operating margin percentage during 2007. The Compensation Committee
believed that to the extent that the annual and long term incentive compensation of the
named executive officers was tied directly to achieving specific performance levels of
operating margin percentage, that the overall compensation of the named executive officers
for 2007 would be an accurate reflection of Company financial performance, notwithstanding
the absence of increases in base salaries. The Compensation Committee made this
determination cognizant that it was possible that the senior officers of the
Company’s chief CRO industry competitors would receive raises in base salary and
recognizing that the disparity between the two approaches had the possibility of causing
dissatisfaction among the Named Executive Officers. However, after discussing its reasons
for this approach with the Named Executive Officers, the Compensation Committee believes
that senior management are in agreement with the way in which the Committee structured 2007
senior management compensation.
At its December 2007 meeting, the Compensation Committee further determined not to adopt
an annual bonus plan for 2008, so that full attention of senior management will be directed
at achieving the performance goals established in the Long Term Incentive Plan established
in December 2006 (the “2007 LTIP”). Consistent with this approach, they also
decided at that December 2007 meeting not to issue any additional stock options or other
stock-based compensation to the Named Executive Officers for 2008. Again, this was not
meant to reflect any dissatisfaction with the performance of senior management during 2007,
but rather to simply focus their efforts on the single over-riding goal of improving
operating margin percentage.
Roles and Responsibilities
Both the Compensation Committee and senior
management are involved in the development, review and evaluation, and approval of the
Company’s executive compensation programs. In general, the roles are discussed below;
additional
details regarding the roles of each are
addressed in the discussion of the “Annual Review of Executive
Compensation.”
Compensation Committee
In consultation with senior
management, the Compensation Committee
establishes the Company’s general compensation philosophy, and oversees the
development and implementation of executive compensation programs and policies with respect
to the engagement of independent contractors of the Company. The Committee reviews on a
periodic basis the Company’s executive compensation programs and makes any
modifications that the
Committee may deem necessary or
advisable, in its sole discretion.
The Committee annually reviews and approves the Company’s goals and objectives
relevant to the compensation of the Chief Executive Officer and evaluates the performance
of the Chief Executive Officer in light of those goals and objectives, including assessing
the Company’s success in addressing the complexities and challenges that have been
faced during that period. Based on such evaluation, the Committee has the sole authority to
set the compensation (including base salary, incentive compensation and equity-based
awards) of the Chief Executive Officer. In determining incentive compensation, the
Committee considers, among other factors it deems appropriate from time to time, the
Company’s performance and relative shareholder return, the value of similar incentive
awards to chief executive officers at comparable companies, and the awards given to
management in prior years. During 2007, the Compensation Committee’s primary focus in
establishing the compensation of the Chief Executive Officer was to tie his incentive
compensation to an improvement in operating margin percentage.
The Committee also reviews and approves the compensation (including base salary, incentive
compensation and equity-based awards) of executive officers of the Company. The Committee
reviews the terms of the Company’s incentive compensation plans, equity-based plans,
pension plans, and welfare benefit plans. Unless otherwise delegated, the Committee
administers such plans, including determining any incentive or equity-based awards to be
granted to members of senior management under any such plan.
The Compensation Committee is comprised of Messrs. Gabor Balthazar, Afonso Junqueiras and
Yaya Sesay.
Mr. Balthazar serves as Chairman. Each is
considered to be an independent director. In addition, the Compensation Committee addresses
issues required or recommended to be addressed by independent directors, including
administration of the Company’s 2001 Equity Incentive Plan. The Compensation
Committee of LSR held three (3) meetings during 2007.
There were no Compensation Committee interlocks during 2007.
The Committee operates pursuant to a charter, which is available on the Company's website
at www.lsrinc.net under
the “Corporate
Governance” icon. That charter was most recently reviewed and amended in March 2008.
Under its charter, the stated purposes of the Compensation Committee are:
|
·
|
To
establish the Company’s general
compensation philosophy and oversee the development and implementation of
executive compensation programs and policies;
|
|
·
|
To annually review
and approve the
Company’s
goals and objectives relative to CEO compensation and to set the CEO
compensation
based on those goals and
objectives;
|
|
·
|
To review and approve the
compensation of other executive officers;
|
|
·
|
To review the terms of
incentive compensation plans, equity-based plans, retirement plans and welfare
benefit plans;
|
|
·
|
To review policies with
respect to post-service arrangements and perquisites;
|
|
·
|
To produce with the
assistance of management an annual report on executive compensation and a
compensation discussion and analysis for inclusion in the Company’s
annual report on Form 10-K or annual proxy statement;
|
|
·
|
To evaluate its own
performance on an annual basis;
|
|
·
|
To retain consultants and
professional advisors as it deems appropriate; and
|
|
·
|
To carry out such
other
duties as may be delegated
to it by the Board from time to time.
|
Senior Management
The Company’s senior management, under the leadership
and direction of the Chief Executive Officer, sets the strategic direction for the Company
and strives to design and develop compensation programs that motivate executives’
behaviors consistent with strategic objectives. In collaboration with the Compensation
Committee, senior management coordinates the annual review of the compensation programs for
the executive officers. This includes an evaluation of individual and Company performance,
factors that have influenced the Company during the year, competitive practices and trends,
and various compensation issues. Based on the outcomes of this review, the CEO makes
recommendations to the Compensation Committee regarding the compensation of each of the
executive officers (other than the Chief Executive Officer, whose compensation is
determined by the Compensation Committee).
Annual Review of Executive Compensation
LSR senior management and the Compensation Committee strive
to maintain an executive compensation program that is structured to provide executive
officers with a total compensation package that, at expected levels of performance, is
competitive with those provided to other executives holding comparable positions or having
similar qualifications in other similarly situated organizations in the CRO and healthcare
industries. This is achieved by the preparation of an annual review of executive officer
compensation.
In the preparation of the annual review, management, under the direction of the CFO,
reviews proxy statements filed by LSR’s CRO industry peer companies to obtain data
about the compensation of the named executive officers. (Additional information regarding
this peer group of companies is provided below). Based on competitive market data gathered
from peer company proxy statements, management prepares a report to the Compensation
Committee. The report may also include similar compensation information for selected small
cap healthcare companies outside the CRO industry. This report also provides LSR executive
officers’ total compensation and equity holdings. Based on this report, discussion of
compensation levels and packages offered to executives in other healthcare companies, and
assessment of individual executive officer performance over the prior year, the CEO makes
recommendations regarding the appropriate compensation for each of the executive officers
(other than the Chief Executive Officer). After reviewing these materials, the Compensation
Committee evaluates the executive’s performance through reports from other senior
management and, in some cases, personal observation. The Compensation Committee takes into
account this evaluation and other appropriate considerations to arrive at individual
compensation decisions.
In making its decisions on each executive officer’s compensation, the Compensation
Committee considers the nature and scope of all elements of the executive’s total
compensation package, the executive’s responsibilities, factors pertaining to the
executive’s home country, and his or her effectiveness in supporting LSR’s key
strategic, operational and financial goals. The Compensation Committee also considers
recommendations from the Chief Executive Officer regarding total compensation for those
executive officers.
Although the Compensation Committee receives information and recommendations regarding the
design and level of compensation of the Company’s executive officers from Company
management, the Compensation Committee makes the final decisions as to the plan design and
compensation levels for these executives.
Compensation Peer Group
In determining the appropriate amount for each element of the
total direct compensation (base salary, annual incentives, and long-term incentives), the
Compensation Committee considers, among other things, the compensation paid for similar
positions at other corporations within a peer group of companies prior to determining the
executive officers’ compensation. The peer group is comprised of companies against
which LSR competes in the CRO industry. There have historically been only two other
publicly traded companies that have conducted substantial amounts of pre-clinical CRO
safety testing, which is the Company’s primary business: Charles River Laboratories,
Inc. and Covance, Inc. Thus, these two companies comprise the compensation peer group.
Management and the Compensation Committee acknowledge that both Charles River and Covance
are substantially larger than the Company in terms of revenues and profits and take that
fact into consideration when making compensation decisions. The total compensation of the
Company’s executive officers historically has been, and remains, below that of the
total compensation paid at these peer companies. In addition to size differences, the
Compensation Committee also takes into account differences in complexity and challenges
faced by each of the Company and its peer group (some of which are unique to LSR) in
determining the proper range of executive officer compensation. Consistent with its focus
adopted for 2007, the Compensation Committee recognized that its decision not to increase
base salaries for senior management could result in a greater gap in base compensation
between Company executives and those at the CRO peer group, operating on the assumption
that the peer group companies were likely to increase base salaries for their executive
officers.
Mix of Compensation
LSR’s executive compensation program is composed of
three key elements – base salary, an annual incentive bonus, and long term
compensation – which represent an executive officer’s total direct compensation
(excluding benefits and perquisites). The Compensation Committee strives to align the
relative proportion of each element of total direct compensation with the competitive
market and LSR’s objectives, as well as preserve the flexibility to respond to the
challenges (some of which are unique to LSR) which the Company faces. The Compensation
Committee’s historical goal has been to strike the appropriate balance between annual
and long-term incentives, and it may adjust the allocation of pay to best support the
Company’s objectives. Historically, the majority of pay at LSR has been in the form
of base salary. Annual bonuses have been paid only when Company financial performance has
in the opinion of the Compensation Committee and Senior Management merited it. For 2007,
the mix of these three elements for each of the named executive officers is illustrated in
the following chart, and discussed in greater detail on page __ under “Annual
Incentive Awards”:
Percent of 2007 Total Direct
Compensation
Officer
|
Base
Salary
|
Annual Incentive
Award
|
Long-Term
Incentive
Awards
(1)
|
Andrew Baker
|
50%
|
50%
|
0
%
|
Richard Michaelson
|
67%
|
33%
|
0
%
|
Brian Cass
|
50%
|
50%
|
0
%
|
Julian Griffiths
|
67%
|
33%
|
0
%
|
Mark Bibi
|
67%
|
33%
|
0
%
|
(1)
The mixture of pay elements noted above represents the belief
that executive
officers should have elements of
their compensation tied to both short and long
term
objectives. This pay mixture is the result of historical Company
pay
practices, management recommendations, and
Compensation Committee
determinations. The fact that no payments were made in 2007
under the 2007
LTIP is, the Committee believes, a
reflection of the aggressive
financial
performance goals established under
that plan.
Elements of Executive Compensation
The key elements of direct compensation for the executive
officers are base salary, an annual incentive bonus, and equity-based
compensation
, typically delivered
through stock options and stock grants. The Compensation Committee determines the mix among
each of these elements in any given year, and there is no certainty that any given element
will be awarded in any specific year (other than base salary, but even in that element
there is no guarantee that an increase in base salary will be awarded). Executive officers
also are eligible for other elements of indirect compensation, comprised of health and
welfare benefits, pension, insurance, savings plans, and certain perquisites. The
Compensation Committee considers each of these elements when evaluating the overall
compensation program design and may include all elements, or only some of the elements, in
any given year.
Annual Base Salary
Base salaries for executives are determined by evaluating the
responsibilities of the position held and the experience of the individual, with reference
to the competitive marketplace for executive talent, including a comparison to base
salaries for positions having comparable responsibilities at other companies in the CRO
industry. In addition to comparing base salary compensation of other companies,
consideration is given to the relative overall corporate performance of the Company in
relation to its competitors in the industry, with the objective of achieving standards and
setting base executive salaries in the Company consistent with (or at least relatively
comparable to) the market rate paid for comparable positions in the CRO industry, taking
into account both size and complexity differences.
An executive officer’s base salary generally reflects the officer’s
responsibilities, tenure, job performance, and direct competition for the executive’s
services. The Compensation Committee reviews the base salaries of each executive officer,
including the Chief Executive Officer, on an annual basis. In addition to these annual
reviews, the Committee may at any time review the salary of an executive who has received a
significant promotion, whose responsibilities have been increased significantly, who has
achieved exceptional performance, or who is the object of competitive pressure. Any
adjustments are based on the results of the annual review of market salary data, job
performance of the executive officer over time, and the expansion of duties and
responsibilities, if any. No pre-determined weight or emphasis is placed on any one of
these factors.
In general, the Committee targets the base salary levels of the Chief Executive Officer
and other executive officers under the range of the 50th percentile of base salaries for
comparable executive positions at key competitors. Adjustment of an individual executive
officer's actual base salary above the range of the 50th percentile of this reference group
would generally be based upon:
|
·
|
Achieving
or exceeding key business objectives;
|
|
·
|
Highly developed individual
skills critical to the Company;
|
|
·
|
Demonstrating an ability to
positively impact stockholder value;
|
|
·
|
Consistently superior
levels of performance;
|
|
·
|
Experience and level
of responsibility
;
and
|
|
·
|
Availability of skills in
the market place
|
Consistent with its focus on improving operating margin
percentage (and the incentive compensation benefits executives would realize from
achievement of goals under the 2007 Annual Bonus Plan and the 2007 LTIP), the Committee did
not approve any increases to the base salaries of the named executive officers in either
2006 or 2007. (At its December 2007 meeting, the Committee also determined not to raise
base salaries for 2008.) This is not a reflection of any dissatisfaction with senior
management performance, but rather of a desire to focus management efforts and the payment
of incentive compensation on achieving operating performance targets.
Annual Incentive Awards
The Company’s executive officers and other key persons
are considered for an annual cash and/or stock bonus. Eligible executives may receive bonus
awards based upon certain percentages of base salary at threshold and maximum levels
appropriate to the nature of their position in the Company. Whether any bonus is awarded,
and, if so, the amount thereof depends upon actual performance against predetermined
individual and corporate objectives established by the CEO or the Compensation
Committee.
The potential payments available under the annual incentive program for the named
executive officers depend on the attainment of performance goals recommended by management
and approved by the Compensation Committee at the beginning of each year. In addition to
these awards, the Compensation Committee may approve additional bonuses following a
subjective evaluation of an executive officer’s performance and success in areas
deemed to be significant to LSR. Individual awards reflect both group performance and
individual contributions to the Company’s success.
In March 2008, the Named Executive Officers received annual bonus awards based on the
Company meeting predetermined financial goals established for fiscal year 2007 by the
Compensation Committee. Specifically, the Compensation Committee had established for fiscal
year 2007 three threshold levels of operating margin percentage on which to base the
awarding of annual bonuses. The Company’s 2007 financial performance met the middle
performance threshold, as described in more detail below.
2007 Annual Bonus Plan
At its meeting on December 6, 2006, the Compensation
Committee determined amounts that may be paid to executive officers and certain additional
senior management members of the Company under the 2007 Annual Bonus Plan, based on the
achievement of varying levels of operating performance during fiscal year 2007. The
Committee established three specific levels of operating margin percentage as the
thresholds for payment: 12.5%, 13.5%, and 14.5%. Each threshold was above then-current
levels of operating margin percentage; the Company’s 2006 operating margin percentage
was 10.4%. The awards would be paid in cash following completion of the 2007 audited
financial statements showing the level of operating performance achieved, if the minimum
threshold level or a higher performance level was achieved, taking into account the payment
of such bonuses.
The aggregate amount payable to all participants if the
minimum threshold performance level was achieved was approximately $1.5 million; if
the
middle threshold performance level was achieved
was approximately $3.0 million; and if the maximum threshold level was achieved was
approximately $4.6 million. The potential ranges of payment under this plan for each of the
executive officers was as follows:
|
12.5%
|
13.5%
|
14.5%
|
Andrew Baker, Chairman and CEO*
|
$330,182
|
$660,363
|
$990,546
|
Richard Michaelson, CFO
|
$75,000
|
$150,000
|
$225,000
|
Brian Cass, President and Managing
Director*
|
$330,182
|
$660,363
|
$990,546
|
Julian Griffiths, Vice President of
Operations*
|
$82,545
|
$165,091
|
$247,635
|
Mark Bibi, Secretary and General
Counsel
|
$75,000
|
$150,000
|
$225,000
|
Based on the 2007 audited financial statements presented in
Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007, the
Company achieved the middle performance level of operating margin percentage established
under the 2007 Annual Bonus Plan. Accordingly, the following payments were earned under
that plan by each executive officer:
Andrew Baker, Chairman and CEO*
|
$660,363
|
Richard Michaelson, CFO
|
$150,000
|
Brian Cass, President and Managing
Director*
|
$660,363
|
Julian Griffiths, Vice President of
Operation*
|
$165,091
|
Mark Bibi, Secretary and General
Counsel
|
$150,000
|
*
Payments to Messrs. Baker, Cass and Griffiths are made in UK
pounds sterling. For
purposes
of estimating these payments in US dollars, the 2007 average exchange rate
of
£1.00 = $2.0011
has been used.
Operating margin percentage was selected as the performance measure for use in the 2007
Annual Bonus Plan (as well as in the 2007 LTIP discussed below) because the Compensation
Committee, as well as the full Board of Directors and senior management, believes that it
most accurately reflects the true financial and operating performance of the Company, and
is the metric most directly impacted by the actions and efforts of management. Operating
margin percentage is a measure of performance that is not affected by non-operational
items, such as the non-cash accounting treatment associated with the Company’s
functional currency being the British Pound. Moreover, operating margin is a metric that
can be compared to peer companies as a useful measure of performance. Finally, operating
margin percentage is easily leveraged into an impact on earnings, and thus stock price,
which thus has the effect of aligning the interests of management with those of
stockholders.
At its December 2007 meeting, the Compensation Committee determined not to adopt a 2008
Annual Bonus Plan for
the Named Executives, instead
limiting potential 2008 incentive compensation to payments under the 2007 LTIP. The
rationale for this was to focus senior management’s efforts on improving operating
performance with a goal of achieving the aggressive operating margin percentage goals
established by the 2007 LTIP.
2007 LTIP
At its meeting on December 6, 2006, the Committee determined
amounts that may be paid to executive officers and certain senior management members of the
Company in respect of LTIP awards for the three-year 2007-2009 performance period. This
plan is referred to as the 2007 LTIP. The Committee established 16% as the specified
average level of operating margin percentage to be achieved over any four consecutive
quarters during such performance period that would trigger the payment of the awards. This
threshold level of operating margin percentage is higher than the maximum level of
operating margin percentage under the 2007 Annual Bonus Plan (14.5%). Consistent with
historical practice, the Committee determined to establish an aggressive target, but a
target that they believed would be achievable within the 2007-2009 time period. The awards
would be paid in cash following confirmation by the Company’s independent auditor
that the threshold performance level had been achieved, taking into account the payment of
such bonuses. The Compensation Committee selected the 16% operating margin target because
they believed it accurately reflected the company’s goal of achieving operating
performance that was comparable to the “mid- to high-teens” fully burdened
operating margin performance enjoyed by its CRO peer company competitors, Covance and
Charles River. The Committee believed that the Company’s stock price would likely
reflect its operating performance, and therefore determined that an appreciable improvement
in stock price would likely accompany an improvement in operating margin performance from
the 10.4% achieved by the company in 2006 to the 16% established as a target under the 2007
LTIP. The committee recognized that 16% was an aggressive goal that might not be achieved,
but believed it was in the best interests of the Company and its stockholders to focus
senior management’s attention on a target that would represent a high level of
achievement.
The Compensation Committee believed that the payout for achieving an aggressive target
should be considerable and commensurate with the effort necessary to achieve this goal.
Accordingly, it determined that the payout upon achievement of the target would be equal to
four times a specified percentage of then-current base salary assigned to each participant
in the 2007 LTIP. The specified percentage for Messrs. Baker and Cass was 50%; for Messrs.
Michaelson and Griffiths was 40%, and for Mr. Bibi was 30%. Thus, if the 16% target was
achieved, Messrs. Baker and Cass would receive a payment equal to 200% of their base
salary; Messrs. Michaelson and Griffiths would receive a payment equal to 160% of their
base salary; and Mr. Bibi would receive a payment equal to 120% of his base salary.
The aggregate amount payable to all participants (which includes the five Named Executive
Officers and other key members of management who are included in the 2007 LTIP) under the
2007 LTIP if the specified performance level is achieved is slightly in excess of $5
million. The potential payments under this plan for each of the Named Executive Officers is
as follows:
Andrew Baker, Chairman and CEO*
|
$1,320,726
|
Richard Michaelson, CFO
|
$480,000
|
Brian Cass, President and Managing
Director*
|
$1,320,726
|
Julian Griffiths, Director of
Operations*
|
$528,291
|
Mark Bibi, Secretary and General
Counsel
|
$360,000
|
*
|
Payments to Messrs. Baker, Cass and Griffiths
are made in UK pounds sterling. For
purposes of estimating these payments in US
dollars, the 2007 average exchange rate of £1.00 = $2.0011 has been
used.
|
The threshold level of operating margin percentage under the
2007 LTIP was not achieved during any of the four quarters of 2007. Accordingly, no
payments were made during 2007 under the 2007 LTIP. At its December 2007 meeting, the
Compensation Committee determined that it would be in the best interests of the Company and
its stockholders for senior management’s focus during 2008 to continue to be on
achieving the 16% threshold operating margin percentage specified in the 2007 LTIP.
Accordingly, the Committee determined that the 2007 LTIP would be the sole form of
incentive compensation for senior management during 2008. No 2008 Annual Bonus Plan was
adopted for the Named Executive Officers.
Long-Term Equity Compensation
LSR provides executives with long-term equity compensation
through the LSR 2001 Equity Incentive Plan (the “EIP”), which was approved by
the Company’s shareholders in 2001. The EIP is intended to encourage employees,
consultants, and directors to acquire or increase their equity interest in the Company and
to provide a means whereby they may develop a sense of proprietorship and
personal involvement in the development and
financial success of the Company. The EIP also encourages this group to remain with and
devote their best efforts to the business of the Company, thereby advancing the interests
of the Company and its stockholders. The EIP also enhances the Company’s and its
subsidiaries’ ability to attract and retain the services of individuals who are
essential for the growth and profitability of the Company, and the
enhancement of shareholder value.
At its December 2007 meeting, the Compensation Committee
determined not to grant any stock options or other form of equity-based compensation to
senior management for 2008. The Committee did reserve 30,000 options for small grants
during 2008 to operating management at
a level below
senior management (subsequently increased to a reserve of 75,000 options at the March 2008
meeting).
Health and Welfare Benefits
The Company provides its executive officers with benefits
that are intended to be a part of a competitive total compensation package that provides
health and welfare and retirement programs comparable to those provided to employees and
executives at other companies in the CRO industry. Except as specifically noted below,
executive officers participate in the Company's health, life insurance and welfare programs
on the same relative basis as other LSR employees.
Pension, Insurance and Savings Plans
The benefit plan descriptions below and accompanying tables
provided in the “Summary Compensation Table”, and “Pension Benefits
Table” provides an explanation of the major features of the Company’s employee
benefit plans.
Pension Plans –
Andrew Baker and Brian Cass each receives pursuant to his
employment agreement an annual contribution to his private pension arrangements equivalent
to 33% of his base
annual salary.
Julian Griffiths receives an annual contribution to his private pension arrangements
equivalent to 20% of this base annual salary. LSR does not offer any pension plans to US
employees, so neither Richard Michaelson nor Mark Bibi has any pension plan.
Insurance Plans –
The Company pays for
Richard Michaelson pursuant to his employment
agreement
the premiums for
$1 million of term life insurance, and
supplemental long term care insurance coverage. Andrew Baker receives pursuant to his
employment agreement reimbursement for his life insurance premiums. The Compensation
Committee approved at its December 2007 meeting the provision of supplemental long term
care insurance coverage for Andrew Baker and Mark Bibi.
Medical Plans
– Andrew Baker receives pursuant to his
employment agreement reimbursement for his private medical insurance. Messrs. Cass,
Griffiths, Michaelson and Bibi participate in the health insurance plans offered generally
to the Company’s employees.
Savings Plans –
The Company provides executive officers in
the U.S. the opportunity to participate along with all other U.S. employees in the
Huntingdon Life Sciences Savings and Investment (the “401(k) Plan”) a
tax-qualified broad-based employee savings plan. Employee contributions up to 15% of
pre-tax annual compensation are permitted up to dollar limits established annually by the
Internal Revenue Service (“IRS”). The Company contributes 75% of employee
contributions up to a maximum of 6%. Messrs. Michaelson and Bibi participate in the 401(k)
Plan.
Perquisites
Relocation Allowance
–
The Company provides Andrew Baker and Brian
Cass each a relocation allowance of £2,000 per month.
Car
Allowance
–
The Company provides
executive officers with the following car allowances: £1,000
($2,011)
per month to Messrs. Baker and Cass,
£750
($1,501)
per month to Mr. Griffiths, and $1,000 per
month to Messrs. Michaelson and Bibi.
Tax Preparation Fees –
The Company paid tax preparation fees in 2007
for Messrs. Michaelson and Bibi in the amount of $2,706
for Mr. Michaelson and $2,500
for Mr. Bibi.
Club Fees –
The Company paid $1,425 for membership fees
for a luncheon club that provides Manhattan meeting space for the use of Richard
Michaelson.
Gasoline expenses
– The Company paid the gasoline expenses for Messrs.
Cass and Griffiths in the amount of
£5,498 ($11,003)
for Mr. Cass and
£
2,600 ($5,203)
for Mr. Griffiths.
Employment Agreements
Andrew Baker
The services of Mr. Baker are provided for not less than 100
days per year through a management services contract between Huntingdon and Focused
Healthcare Partners (“FHP”), an investment firm controlled by Mr. Baker. Under
the contract, FHP agrees to provide the services of Mr. Baker as Chairman and CEO of the
Company. The management services contract will continue until terminated on 12
months’ written notice from either party.
Under the management services contract FHP was paid during 2007 an annual fee of
£330,000, the same as in 2006, and the same that is scheduled to be paid in 2008. Mr.
Baker receives health and medical insurance benefits from the Company. Mr. Baker receives
contributions to his private pension arrangements, equivalent to 33 percent of this basic
annual fee. He is also entitled to a non-pensionable car allowance of £1,000 per
month and £2,000 per month as a relocation allowance. The management services
contract may be terminated if either FHP or Mr. Baker is guilty of serious misconduct or is
in material breach of the terms of the contract, among other reasons. In the event of
termination without “cause” following a “change in control”, as
defined, FHP would receive a payment equal to 2.99 times this annualized fee plus an amount
equal to 2.99 times all incentive compensation earned or received by FHP or Mr. Baker
during the 12 months prior to termination.
Both FHP and Mr. Baker are bound by confidentiality restrictions and a restriction
preventing Mr. Baker from holding any interests conflicting with those of the Company,
without the Company’s consent. Mr. Baker has undertaken to the Company that, during
the continuance of the management services contract, he will not without the prior consent
of the Company, be concerned or interested in any business, which competes or conflicts
with the business of the Company.
Richard Michaelson
The services of Mr. Michaelson are provided through a service
agreement between him and Huntingdon Life Sciences Inc. (a wholly owned subsidiary of the
Company). The service agreement appoints Mr. Michaelson as Chief Financial Officer of the
Company. Mr. Michaelson’s service agreement will continue until terminated by Mr.
Michaelson on thirty days’ written notice or by Huntingdon Life Sciences Inc. on 12
months’ written notice. In the event of termination without “cause”
following a “change in control”, as defined, Mr. Michaelson would receive a
payment equal to 2.99 times his annual salary plus an amount equal to 2.99 times all
incentive compensation earned or received by Mr. Michaelson during the 12 months prior to
termination.
Mr. Michaelson received during 2007 an annual salary of $300,000 gross, the same as he
received in 2006 and the same that he is scheduled to receive in 2008. Mr. Michaelson is
entitled to health insurance, life insurance, personal accident insurance, medical expenses
insurance, long term care insurance, and participation in the 401(k) Plan of Huntingdon
Life Sciences Inc. Mr. Michaelson’s service agreement also provides for the payment
of a bonus to Mr. Michaelson in the absolute discretion of the Company’s Board. In
addition, Mr. Michaelson is entitled to a car allowance of $1,000 gross per month.
The agreement may be terminated if Mr. Michaelson is guilty of serious misconduct or is in
material breach of the terms of the service agreement, among other reasons.
Mr. Michaelson is bound by confidentiality restrictions and a restriction preventing him
from being engaged, concerned or interested in any business conflicting with the business
of the Company or any subsidiary unless the Board otherwise consents or the interest is
limited to a holding or other interest of no more than 5 percent of the total amount of
shares or securities of any company quoted on a recognized investment exchange.
Brian Cass
The services of Mr. Cass are provided through a service
agreement between Huntingdon Life Sciences Limited (a wholly owned subsidiary of the
Company) and Mr. Cass, which appoints Mr. Cass as President/Managing Director of the
Company. Mr. Cass’ service agreement can be terminated on two years’ written
notice from either party.
Mr. Cass received during 2007 a gross salary of £330,000 per annum, the same as he
received in 2006 and the same that he is scheduled to receive in 2008. Under the service
agreement, Mr. Cass is also entitled to health insurance, life insurance, personal accident
insurance and medical expenses insurance. Mr. Cass receives contributions to his private
pension arrangements, equivalent to 33 percent of his basic annual salary. He is also
entitled to a non-pensionable car allowance of £1,000 gross per month and
£2,000 per month as relocation allowance. Mr. Cass’ service agreement also
provides for payment to Mr. Cass of a bonus, in the absolute discretion of the
Company’s Board. In the event of termination without “cause” following a
“change in control”, as defined, Mr. Cass would receive a payment equal to 2.99
times his annual salary plus an amount equal to 2.99 times all incentive compensation
earned or received by Mr. Cass during the 12 months prior to termination.
Mr. Cass’ service agreement may be terminated if Mr. Cass is guilty of serious
misconduct or is in material breach of the terms of the service agreement or is in breach
of the model code for securities transactions by directors of listed companies, among other
reasons.
Mr. Cass is bound by confidentiality restrictions and a restriction preventing him from
being engaged, concerned or interested in any business that conflicts with the business of
the Company or any subsidiary unless either the Company’s Board otherwise consents or
the interest is limited to a holding or other interest of no more than 5 percent of the
total amount of shares or securities of any company quoted on a recognized investment
exchange.
Julian Griffiths
The services of Mr. Griffiths are provided through a service
agreement between him and Huntingdon Life Sciences Limited (a wholly owned subsidiary of
the Company). The service agreement appointed Mr. Griffiths as Finance Director of
Huntingdon and he now holds the position of Vice President of Operations of the Company.
Mr. Griffiths’ service agreement will continue until terminated by Mr. Griffiths on
six months’ written notice or by Huntingdon Life Sciences Limited on 12 months’
written notice. In the event of termination without “cause” following a
“change in control”, as defined, Mr. Griffiths would receive a payment equal to
2.99 times his annual salary plus an amount equal to 2.99 times all incentive compensation
earned or received by Mr. Griffiths during the 12 months prior to termination.
Mr. Griffiths received during 2007
an annual salary
of £165,000 gross, the same as he received in 2006 and the same that he is scheduled
to receive in 2008 and is entitled to permanent health insurance, life insurance, personal
accident insurance, medical expenses insurance and pension benefits. Mr. Griffiths receives
contributions to his private pension arrangements, equivalent to 20 percent of his basic
annual salary. Mr. Griffiths’ service agreement also provides for the payment of a
bonus to Mr. Griffiths in the absolute discretion of the Company’s Board.
In addition, Mr. Griffiths is entitled to a non-pensionable car allowance of £750
gross per month.
The agreement may be terminated if Mr. Griffiths is guilty of serious misconduct or is in
material breach of the terms of the service agreement, amongst other reasons.
Mr. Griffiths is bound by confidentiality restrictions and a restriction preventing him
from being engaged, concerned or interested in any business conflicting with the business
of the Company or any subsidiary unless either the Company’s Board otherwise consents
or the interest is limited to a holding or other interest of no more than 5 percent of the
total amount of shares or securities of any company quoted on a recognized investment
exchange.
Mark Bibi
The services of Mr. Bibi are provided through a service
agreement between him and Huntingdon Life Sciences Inc. (a wholly owned subsidiary of the
Company). The service agreement appointed Mr. Bibi as General Counsel and Secretary of
Huntingdon Life Sciences Inc. and he now also serves as the Company’s General Counsel
and Secretary. Mr. Bibi’s service agreement will continue until terminated by Mr.
Bibi on thirty days’ written notice or by Huntingdon Life Sciences Inc. on 12
months’ written notice. In the event of termination without “cause”
following a “change in control”, as defined, Mr. Bibi would receive a payment
equal to 2.99 times his annual salary plus an amount equal to 2.99 times all incentive
compensation earned or received by Mr. Bibi during the 12 months prior to termination.
Mr. Bibi received an annual salary in 2007 of $300,000 gross, the same as he received in
2006 and the same that he is scheduled to receive in 2008, and is entitled to health
insurance, life insurance, personal accident insurance, long-term care insurance, medical
expenses insurance and participation in the 401(k) Plan of Huntingdon Life Sciences
Inc.
Mr. Bibi’s service agreement also provides for the payment of a bonus to Mr. Bibi in
the absolute discretion of the Company’s Board.
In addition, Mr. Bibi is entitled to a car allowance of $1,000 gross per month.
The agreement may be terminated if Mr. Bibi is guilty of serious misconduct or is in
material breach of the terms of the service agreement, among other reasons.
Mr. Bibi is bound by confidentiality restrictions and a restriction preventing him from
being engaged, concerned or interested in any business conflicting with the business of the
Company or any subsidiary unless the Board otherwise consents or the interest is limited to
a holding or other interest of no more than 5 percent of the total amount of shares or
securities of any company quoted on a recognized investment exchange.
Compensation of the Chief Executive Officer
In connection with the review of the Chief Executive
Officer’s annual salary for 2007, the Compensation Committee reviewed, and compared,
among other things, Mr. Baker’s total compensation to that of peer company CEOs. The
Committee also considered certain key goals for 2007, primarily an improvement in the
Company’s operating margin percentage and certain unique challenges faced by the
Company (most notably the animal rights extremist campaign against the Company) that makes
Mr. Baker’s successful performance all the more notable.
For 2007, Mr. Baker’s base salary
(payable as a
fee to FHP)
was £330,000
($660,363), the same as in 2006 and the same that he is
scheduled to receive in 2008. He received no cash incentive compensation during 2007;
however in March 2008 he received a cash bonus under the 2007 Annual Bonus Plan of
£330,000
($660,363
)
for achievement of
2007 financial goals. When viewed in combination, his 2007 base salary plus actual annual
incentive compensation earned during 2007 (but paid in March 2008) was
£660,000
($1,320,726
).
Accounting and Tax Treatments of the Elements of
Compensation
The Company accounts for stock-based awards, including stock
options and stock awards, as provided in FAS123(R).
The Compensation Committee considers the potential impact of IRC Section 162(m) on
compensation decisions. Section 162
(m)
disallows a tax deduction by the Company for individual executive compensation exceeding $1
million in any taxable year for the Chief Executive Officer and the other four highest
compensated senior executive officers, other than compensation that is performance-based
under a plan that is approved by the stockholders of the Company and that meets certain
other technical requirements. The Committee's approach with respect to qualifying
compensation paid to executive officers for tax deductibility purposes is that executive
compensation plans will generally be designed considering a number of factors, including
tax deductibility. However, non-deductible compensation may still be paid to executive
officers when necessary for competitive reasons, to attract or retain a key executive, to
enable the company to retain flexibility in maximizing its pay for performance philosophy,
or where achieving maximum tax deductibility would not be in the best interest of the
Company.
Post-Employment Compensation
Each of the Company’s named executive officers is party
to an employment agreement that specifies the payment of certain post-employment
compensation. In the event their employment terminates other than for cause (and not in
connection with a change of control of the
Company
), Messrs. Baker, Michaelson,
Griffiths and Bibi would continue to receive their base compensation for a period of 12
months, and Mr. Cass for a period of 24 months. If their employment is terminated without
cause following a change in control, each of Messrs. Baker, Cass, Michaelson, Griffiths and
Bibi would receive a payment equal to 2.99 times base compensation plus an amount equal to
2.99 times all incentive compensation earned during the 12 months prior to termination.
Set forth below are the total amounts payable in the event of termination by the Company
without a change in control and with a change in control, based on compensation earned by
the Named Executive Officers in 2007:
|
Without
a change in control
|
With
a change in control
|
|
Base
compensation
($)
|
Incentive
compensation
($)
|
Total
($)
|
Base
compensation
($)
|
Incentive
compensation
($)
|
Total
($)
|
|
|
|
|
|
|
|
Andrew
Baker
|
660,363
|
-
|
660,363
|
1,974,485
|
1,974,485
|
3,948,971
|
Richard
Michaelson
|
300,000
|
-
|
300,000
|
897,000
|
448,500
|
1,345,500
|
Brian
Cass
|
1,320,726
|
-
|
1,320,726
|
1,974,485
|
1,974,485
|
3,948,971
|
Julian
Griffiths
|
330,182
|
-
|
330,182
|
987,243
|
493,621
|
1,480,864
|
Mark
Bibi
|
300,000
|
-
|
300,000
|
897,000
|
448,500
|
1,345,500
|
Total
for All Named Executive Officers
|
2,911,271
|
|
2,911,271
|
6,730,213
|
5,339,591
|
12,069,806
|
The above table values are calculated using the 2007 base compensation and the 2007
incentive compensation earned during 2007 (but paid in March 2008), converted at the 2007
average exchange rate of $2.0011 for Messrs. Baker, Cass and Griffiths, who are paid in UK
Pounds Sterling.
Compensation
tables follow on the subsequent pages.
2007 Summary
Compensation Table
|
|
|
|
|
|
|
|
Name and Principal
Position
|
Year
|
Salary
|
Bonus
|
Stock
Awards
|
Option
Awards
|
Non-Equity Incentive
Plan Compensation
|
Change in Pension Value
and Non-qualified Deferred Compensation Earnings
|
All Other
Compensation
|
Total
|
|
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
|
|
|
|
|
|
|
|
|
|
Andrew Baker
|
2007
|
660,363
|
660,363
|
-
|
-
|
-
|
-
|
339,461
|
1,660,187
|
Chairman and Chief
Executive Officer
|
2006
|
608,256
|
152,064
|
-
|
831,970
|
-
|
-
|
296,173
|
1,880,463
|
|
|
|
|
|
|
|
|
|
|
Richard
Michaelson
|
2007
|
300,000
|
150,000
|
-
|
-
|
-
|
-
|
64,612
|
514,612
|
Chief Financial Officer and
Secretary
|
2006
|
300,000
|
37,500
|
460,000
|
-
|
-
|
-
|
45,082
|
842,582
|
|
|
|
|
|
|
|
|
|
|
Brian Cass
|
2007
|
660,363
|
660,363
|
-
|
-
|
-
|
-
|
312,654
|
1,633,380
|
President
|
2006
|
608,256
|
152,064
|
-
|
831,970
|
-
|
-
|
287,506
|
1,879,796
|
|
|
|
|
|
|
|
|
|
|
Julian Griffiths
|
2007
|
330,182
|
165,091
|
-
|
-
|
-
|
-
|
96,456
|
591,728
|
Vice President of
Operations
|
2006
|
304,128
|
38,016
|
-
|
415,985
|
-
|
-
|
85,059
|
843,188
|
|
|
|
|
|
|
|
|
|
|
Mark Bibi
|
2007
|
300,000
|
150,000
|
-
|
-
|
-
|
-
|
35,975
|
485,975
|
General Counsel and
Secretary
|
2006
|
300,000
|
37,500
|
460,000
|
831,970
|
-
|
-
|
23,076
|
1,652,546
|
Salary and other payments:
Messrs. Baker, Cass and Griffiths are paid in
UK pounds sterling. These amounts have been converted for 2007 figures at the average 2007
exchange rate of £1.00 = $2.0011 and for 2006 figures at the average 2006 exchange
rate of £1.00 = $1,8432.
Stock awards
: The value of stock
awards represents the number of shares multiplied by the closing price on the date of the
award.
Options price
: The options issued
on December 6, 2006 had an exercise price of $9.95 per share, the average daily high price
for the five trading days ending on December 6, 2006.
Options – fair
value
: the fair value of the options were estimated using a Black-Scholes option
pricing model, with the assumptions; expected dividend yield of stock at 0%; expected
volatility of stock 161.50%; risk-free interest rate 4.48% and the weighted average
expected term on the options of 6.28 years.
All
other
compensation:
Andrew Baker
: Included within ‘All Other
Compensation’ were pension contributions of $217,920 (2007) and $200,724 (2006),
medical insurance of $14,328 (2007) and $16,284 (2006), life insurance of $35,124 (2007)
and $12,810 (2006), a car allowance of $24,013 (2007) and $22,118 (2006) and a relocation
allowance of $48,026 (2007) and $44,237 (2006).
Richard
Michaelson
: Included within ‘All Other
Compensation’ were insurance of $38,280 (2007) and $26,810 (2006),
car allowance of $12,000 (2007) and $12,000 (2006) and 401(k)
contributions of $11,625 (2007).
Brian
Cass
: Included within ‘All Other
Compensation’ were pension contributions of $217,920 (2007) and $200,724 (2006), a
car allowance of $24,013 (2007) and $22,118 (2006), a relocation allowance of $48,026
(2007) and $44,237 (2006) and gasoline expenses of $11,003 (2007) and $9,111
(2006).
Julian
Griffiths
: Included within ‘All Other
Compensation’ were pension contributions of $66,036 (2007) and $60,826 (2006) and a
car allowance of $18,000 (2007) and $16,589 (2006).
Mark
Bibi
: Included within ‘All Other
Compensation’ was a $12,000 car allowance (2007 and 2006) and a 401(k) contribution
of $10,005 (2007).
Grants of Plan-Based
Awards Table
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under Non-Equity
Incentive Plan Awards
|
Estimated Future Payouts Under Equity Incentive
Plan Awards
|
All Other Stock Awards: Number of Securities
Underlying Options
(#)
|
All Other Option Awards: Number of Securities
Underlying Options
(#)
|
Exercise or Base Price of Option Awards
($/Sh)
|
Grant Date Fair Value of Stock and Option
Awards ($)
|
Name
|
Grant Date
|
Minimum Threshold ($)
|
Middle Threshold ($)
|
Maximum Threshold ($)
|
Threshold ($)
|
Target ($)
|
Maximum ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Andrew Baker*
|
|
|
|
|
|
|
|
|
|
|
|
2007 Annual Bonus Plan
|
December 6, 2006
|
-
|
660,363(1)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
2007 LTIP
|
December 6, 2006
|
-
|
|
1,320,726
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard Michaelson
|
|
|
|
|
|
|
|
|
|
|
|
2007 Annual Bonus Plan
|
December 6, 2006
|
-
|
150,000(1)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
2007 LTIP
|
December 6, 2006
|
-
|
-
|
480,000
|
-
|
-
|
-
|
-
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian Cass*
|
|
|
|
|
|
|
|
|
|
|
|
2007 Annual Bonus Plan
|
December 6, 2006
|
-
|
660,363(1)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
2007 LTIP
|
December 6, 2006
|
-
|
-
|
1,320,726
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Julian Griffiths*
|
|
|
|
|
|
|
|
|
|
|
|
2007 Annual Bonus Plan
|
December 6, 2006
|
-
|
165,091(1)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
2007 LTIP
|
December 6, 2006
|
-
|
-
|
528,291
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark Bibi
|
|
|
|
|
|
|
|
|
|
|
|
2007 Annual Bonus Plan
|
December 6, 2006
|
-
|
150,000(1)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
2007 LTIP
|
December 6, 2006
|
-
|
-
|
360,000
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Represents payment made in March 2008 under the
Annual Bonus Plan for 2007 achievement by the Company of the middle threshold
13.5% operating margin under the 2007 Annual Bonus Plan.
|
|
|
|
|
·
Messrs. Baker, Cass and Griffiths are paid in UK
pounds sterling. For purposes of estimating these payments in US dollars, the
2007 average exchange rate of £1.00 = $2.0011 has been used.
|
|
|
|
Outstanding Equity Awards at Fiscal Year-End
Table
|
|
|
|
|
|
|
|
|
|
Option Awards
|
Stock Awards
|
Name
|
Number of Securities Underlying Unexercised
Options (Exercisable) (#)
|
|
Number of Securities Underlying Unexercised
Options (Unexercisable) (#)
|
Equity Incentive Plan Awards: Number of
Securities Underlying Unexercised Unearned Options
(#)
|
Option Exercise Price
($)
|
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
($)
|
Equity Incentive Plan Awards: Number of
Unearned Shares, Units
or Other Rights That Have Not Vested
(#)
|
Equity Incentive Plan Awards: Market or Payout
Value of Unearned Shares, Units or Other Rights That Have Not Vested
($)
|
|
|
|
|
|
|
|
|
|
|
|
Andrew Baker
|
200,000
|
|
-
|
-
|
$1.50
|
March 1, 2012
|
-
|
-
|
-
|
-
|
|
55,500
|
|
-
|
-
|
$3.30
|
June 1, 2014
|
-
|
-
|
-
|
-
|
|
-
|
|
100,000
|
-
|
$9.95
|
December 6, 2016
|
-
|
-
|
-
|
-
|
|
255,500
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard Michaelson
|
90,000
|
|
-
|
-
|
$1.50
|
March 1, 2012
|
-
|
-
|
-
|
-
|
|
30,303
|
|
-
|
-
|
$3.30
|
June 1, 2014
|
-
|
-
|
-
|
-
|
|
120,303
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian Cass
|
200,000
|
|
-
|
-
|
$1.50
|
March 1, 2012
|
-
|
-
|
-
|
-
|
|
55,500
|
|
-
|
-
|
$3.30
|
June 1, 2014
|
-
|
-
|
-
|
-
|
|
|
|
100,000
|
-
|
$9.95
|
December 6, 2016
|
-
|
-
|
-
|
-
|
|
255,500
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Julian Griffiths
|
60,000
|
|
-
|
-
|
$1.50
|
March 1, 2012
|
-
|
-
|
-
|
-
|
|
27,750
|
|
-
|
-
|
$3.30
|
June 1, 2014
|
-
|
-
|
-
|
-
|
|
-
|
|
50,000
|
-
|
$9.95
|
December 6, 2016
|
-
|
-
|
-
|
-
|
|
87,750
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark Bibi
|
50,000
|
|
-
|
-
|
$1.50
|
March 1, 2012
|
-
|
-
|
-
|
-
|
|
20,455
|
|
-
|
-
|
$3.30
|
June 1, 2014
|
-
|
-
|
-
|
-
|
|
|
|
100,000
|
-
|
$9.95
|
December 6, 2016
|
-
|
-
|
-
|
-
|
|
70,455
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The stock awards listed in
this column beco
me
exercisable 50% on December 31, 2008 and 50% on December 31, 2009.
|
|
Option
Exercises and Stock Vested Table
|
|
|
|
|
Options
Awards
|
Stock
Awards
|
Name
|
Number of Shares
Acquired on Exercise
|
Value Realized on
Exercise
|
Number of Shares
Acquired on Vesting
|
Value Realized on
Vesting
|
|
(#)
|
($)
|
(#)
|
($)
|
|
|
|
|
|
Andrew Baker
|
-
|
-
|
-
|
-
|
|
|
|
|
|
Richard
Michaelson
|
-
|
-
|
-
|
-
|
|
|
|
|
|
Brian Cass
|
-
|
-
|
-
|
-
|
|
|
|
|
|
Julian Griffiths
|
-
|
-
|
-
|
-
|
|
|
|
|
|
Mark Bibi
|
-
|
-
|
-
|
-
|
|
|
|
|
|
The aggregate number of
stock awards and option awards held by each director at fiscal
year-end
|
|
Option
Awards
|
|
Share
Awards
|
|
Andrew Baker
|
355,500
|
|
31,493
|
|
Brian Cass
|
355,500
|
|
31,493
|
|
Gabor Balthazar
|
22,500
|
|
2,500
|
|
Yaya Sesay
|
2,500
|
|
2,500
|
|
Afonso
Junqueiras
|
2,500
|
|
2,500
|
|
Summary Compensation
Table for Non-Executive Directors
|
|
|
|
Name and Principal
Position
|
Year
|
Fees Earned or Paid in
Cash
($)
|
Stock Awards
($)
|
Option Awards
($)
|
Non-Equity Incentive
Plan Compensation
($)
|
Change in Pension Value
and Non-qualified Deferred Compensation Earnings
($)
|
All Other
Compensation
($)
|
Total
($)
|
|
|
|
|
|
|
|
|
|
Gabor Balthazar
|
2007
|
48,026
|
-
|
-
|
-
|
-
|
-
|
48,026
|
|
|
|
|
|
|
|
|
|
Yaya Sesay
|
2007
|
27,500
|
-
|
-
|
-
|
-
|
-
|
27,500
|
|
|
|
|
|
|
|
|
|
Afonso
Junqueiras
|
2007
|
25,000
|
-
|
-
|
-
|
-
|
-
|
25,000
|
Audit Committee
The Audit Committee of the Board of Directors of LSR is
authorized to retain and evaluate the Company’s independent accountants; to review
and approve any major changes in accounting policy; to review the arrangements for, scope
and results of the independent audit; to review and approve the scope of non-audit services
to be performed by independent accountants and to consider the possible effect on the
independence of the accountants; to review the effectiveness of internal auditing
procedures and personnel; to review LSR’s policies and procedures for compliance with
disclosure requirements with respect to conflicts of interest and for prevention of
unethical, questionable or illegal payments; and to take other such actions as the Board
shall from time to time so authorize. Messrs. Balthazar, Junqueiras and Sesay comprise the
Audit Committee. Mr. Balthazar serves as Chairman. The Board of Directors has determined
that Mr. Balthazar meets the definition of “audit committee financial expert”
as such term is defined under the SEC rules. Each member of the Audit Committee is
considered to be an independent director.
The Audit Committee operates under a written charter adopted by the Board of Directors
that is posted on the Company’s web site.
Compensation Committee Interlocks and Insider
Participation
The Company’s Compensation Committee was comprised
during 2007 of Gabor Balthazar, Afonso Junqueiras and Yaya Sesay. Mr. Balthazar served as
Chairman. That composition remains the same currently. None of such persons was during 2007
or currently is or prior to 2007 was an officer or employee of the Company. None of such
persons
had any relationship requiring disclosure
under Item 404 of Regulation S-K.
Compensation Committee Report
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis (“CD&A”) contained elsewhere in this
Form 10-K with the Company’s management. Based on this review and discussion, the
Compensation Committee recommended to the Board of Directors that the CD&A be included
in this Proxy Statement.
Gabor
Balthazar
Afonso
Junqueiras
Yaya
Sesay
CERTAIN RELATIONSHIPS
AND
TRANSACTIONS WITH RELATED
PERSONS
Private
Placement
. On March 28,
2002 LSR completed the sale of 5,085,334 shares of Common Stock in a private placement
transaction (the “Private Placement”). All shares were sold for a purchase
price of $1.50 per share. Certain persons related to LSR purchased shares of LSR Common
Stock in the Private Placement:
Andrew
Baker
. Mr. Baker,
Chairman and CEO of LSR, acquired 1,480,000 shares of LSR Common Stock in the Private
Placement. 1,400,000 of such shares were acquired through conversion of $2,100,000 of the
£2,000,000 ($2,910,000) loan made by Mr. Baker to Huntingdon in September 2002 (the
“Baker Loan”) and 80,000 shares were acquired through conversion of a portion
of the $550,000 participation in the Baker Loan entered into by FHP in March 2001 (the
“FHP Participation”).
Brian
Cass
. Mr. Cass, President
and Managing Director of LSR, acquired 400,000 shares of LSR Common Stock in the Private
Placement. Mr. Cass acquired such shares through the delivery of two promissory notes, both
of which were paid in full in 2006. Both such promissory notes, each in the amount of
£211,678.60, were to come due on March 28, 2007; bear interest at the rate of 5% per
annum; and were secured by the 200,000 shares of LSR Common Stock purchased with the
proceeds of each such loan. The due date of each promissory note would be accelerated if
Mr. Cass voluntarily resigned from his employment with LSR or had his employment
terminated. Repayment of one of the promissory notes was to be made by automatic deduction
of £44,000 per year from the yearly pension contribution made by the Company to a
pension plan established by Mr. Cass. The other note was further collateralized by the
£214,500 accrued in such pension account. In addition, one-third of any yearly bonus
received by Mr. Cass was to be used to reduce principal of the promissory notes.
Richard
Michaelson
. Mr.
Michaelson, Chief Financial Officer of LSR, acquired 150,000 shares of LSR Common Stock in
the Private Placement. 100,000 of such shares were acquired for cash and 50,000 of such
shares were acquired through conversion of a portion of the FHP Participation, representing
Mr. Michaelson’s former ownership interests in FHP. Mr. Michaelson no longer has any
ownership interest in FHP.
Julian
Griffiths
. Mr. Griffiths,
former director of LSR and current Director of Operations of LSR, acquired 50,000 shares of
LSR Common Stock in the Private Placement. Mr. Griffiths acquired such shares through the
delivery of a promissory note in the principal amount of £52,817 ($94,315), which was
to come due on March 28, 2007; but was paid in full in 2003. The promissory note bore
interest at the rate of 5% per annum; and was secured by the 50,000 shares of LSR Common
Stock purchased with the proceeds of the loan.
Mark Bibi
. Mr. Bibi,
General Counsel and Secretary of LSR, acquired 50,000 shares of Common Stock in the Private
Placement for cash.
In view of the proposed participation in the Private
Placement by certain directors and officers of LSR and Huntingdon, a Special Committee of
the LSR Board was formed to consider, negotiate and approve the Company’s decision to
sell shares in the Private Placement and the terms of that sale. The members of the Special
Committee were Messrs. Gabor Balthazar and John Caldwell, both of whom were non-employee
directors at the time and considered to be independent directors and neither of whom
participated in the Private Placement.
FHP
Warrants
. Warrants to
acquire 410,914 shares of Common Stock at an exercise price of $1.50 were issued to FHP on
June 12, 2002 following approval of such issuance by LSR’s stockholders at the 2002
Annual Meeting of Stockholders. FHP is controlled by Andrew Baker, Chairman and Chief
Executive Officer of LSR. Mr. Baker is currently the beneficial owner of 2,381,616 shares
of LSR Common Stock, including such warrants. See “Security Ownership of Directors
and Executive Officers”.
Sale/Leaseback.
On June 14, 2005, the Company entered into and consummated
the Sale/Leaseback Transaction with Alconbury. Alconbury was newly formed in June 2005 and
controlled by LSR’s Chairman and CEO, Andrew Baker. The total consideration paid by
Alconbury for the three properties was $40 million, consisting of $30 million cash and a
five year, $10 million variable rate subordinated promissory note, which Alconbury paid in
full on June 30, 2006, together with accrued interest of $0.6 million.
The Company agreed to pay the expenses incurred by Alconbury
in the Sale/Leaseback Transaction of $4.6 million, subject to Alconbury’s obligation
to reimburse those expenses in the future. Such reimbursement shall be made in equal
installments in each year of the five-year period beginning on June 14, 2008, the third
anniversary of the closing date of the Sale/Leaseback Transaction.
As part of the Sale/Leaseback Transaction, the Company
(through subsidiaries) entered into thirty-year leases with Alconbury for each facility,
with two five-year renewal options. The initial base aggregate annual rent for the
facilities was $4.9 million (approximately $1.8 million in the US and approximately $3.1
million in the UK) which increases by 3% each subsequent year for the UK facilities and by
an amount equal to the annual US consumer price index for the US facility. Under the terms
of the leases, no security deposit was initially required, but a three-month security
deposit was paid at the time that Alconbury refinanced its financing arrangements.
Additionally, because the leases are “triple net” leases, LSR also pays for all
of the costs associated with the operation of the facilities, including costs such as
insurance, taxes and maintenance.
Since the Sale/Leaseback Transaction was with a related party
(Mr. Baker, LSR’s Chairman and CEO and the controlling owner of Alconbury), an
Independent Committee of LSR’s Board of Directors (the “Committee”) was
formed to analyze and consider the proposed Sale/Leaseback Transaction. The Committee was
comprised of the three independent directors of LSR: Gabor Balthazar, Afonso Junqueiras and
Yaya Sesay. The Committee retained independent legal and financial advisors to assist in
its analysis. The Committee and LSR’s senior management (other than Mr. Baker)
negotiated the key terms and provisions of the Sale/Leaseback Transaction with Alconbury.
In evaluating the total consideration negotiated for this transaction, the committee took
into consideration an assessment and review of the levels of consideration that were
proposed to be paid by independent third party bidders over the prior several years for
sale/leaseback transactions of the Company’s operating facilities in transactions
that were proposed and negotiated but not ultimately consummated. The Committee also
obtained appraisals of the facilities from independent real estate appraisal firms and a
fairness opinion from an independent investment banking firm.
The proceeds from the Sale/Leaseback Transaction (plus
additional cash on hand) were used by the Company to pay in full its £22.6 million
non-bank debt ($41.1 million based on exchange rates at the time).
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon a review of Forms 3, 4,
and 5 filed with the Commission by the Company's directors and officers in 2007 the Company
believes that all such required forms were filed on a timely basis.
ANNUAL REPORT AND FINANCIAL STATEMENTS
You are referred to the Annual
Report on Form 10-K for the fiscal year ended December 31, 2007, including the financial
statements and the management's discussion and analysis of the Company's financial
condition and results of operations contained therein, which is being mailed together with
this Proxy Statement. The Annual Report on Form 10-K is not to be regarded as proxy
soliciting material or a communication by means of which any solicitation is to be
made.
STOCKHOLDER PROPOSALS
Any proposal by a stockholder
intended to be presented at the Company's 2009 Meeting of Stockholders must be received by
the Company no later than January 21, 2009 to be included in the Company's proxy statement
and form of proxy relating to such annual meeting. Any proposal should be addressed to the
offices of the Company, Mettlers Road, P. O. Box 2360, East Millstone, NJ 08875, Attention:
Secretary.
Under
the provisions of our By-Laws, for nominations or other business to be properly brought
before an annual meeting by a stockholder, the stockholder must (a) have given timely
notice thereof in writing to the Secretary of the Company; (b) the business must be a
proper matter for stockholder action under Maryland law; (c) if the stockholder, or the
beneficial owner on whose behalf any such proposal or nomination is made, has provided the
Company with a “Solicitation Notice” (as that term is defined below), such
stockholder or beneficial owner must, in the case of a proposal, have delivered a proxy
statement and form of proxy to holders of at least the percentage of the Company’s
voting shares required under applicable laws to carry any such proposal, or, in the case of
a nomination or nominations, have delivered a proxy statement and form of proxy to holders
of a percentage of the Company’s voting shares reasonably believed by such
stockholder or beneficial holder to be sufficient to elect the nominee or nominees proposed
to be nominated by such stockholder, and must, in either case, have included in such
materials the Solicitation Notice; and (d) if no Solicitation Notice relating thereto has
been timely provided, the stockholder or beneficial owner proposing such business or
nomination must not have solicited a number of proxies sufficient to have required the
delivery of such a Solicitation Notice. To be timely, a stockholder’s notice must be
delivered to the Secretary of the Company at the principal executive offices of the Company
not later than the close of business on the ninetieth
(90
th
) calendar day nor earlier than the
close of business on the one hundred and twentieth
(120
th
) calendar day prior to the first
(1
st
) anniversary of the preceding
year’s annual meeting. For purposes of the 2009 annual meeting, that would mean such
notice must be delivered no later than the close of business on February 21, 2009 nor
earlier than the close of business on January 21, 2009. Such stockholder’s notice
shall set forth (a) as to each person whom the stockholder proposes to nominate for
election or reelection as a Director all information relating to such person that is
required to be disclosed in solicitations of proxies for election of Directors in an
election contest, or is otherwise required, in each case pursuant to Regulation 14A under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (including
such person’s written consent to being named in the proxy statement as a nominee and
to serving as a Director if elected); (b) as to any other business that the stockholder
proposes to bring before the meeting, a brief description of the business desired to be
brought before the meeting, the text of the proposal or business (including the text of any
resolutions proposed for consideration and in the event that such business includes a
proposal to amend the Company’s Bylaws, the language of the proposed amendment), the
reasons for conducting such business at the meeting and any material interest in such
business of such stockholder and the beneficial owner, if any, on whose behalf the proposal
is made; and (c) as to the stockholder giving the notice and the beneficial owner, if any,
on whose behalf the nomination or proposal is made (1) the name and address of such
stockholder, as they appear on the Company’s books, and of such beneficial owner, (2)
the class (and, if applicable, series) and number of shares of stock of the Company which
are owned beneficially and of record by such stockholder and such beneficial owner, (3) 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 or nomination, and (4) a representation whether the stockholder or
the beneficial owner, if any, intends or is part of a group which intends to deliver a
proxy statement and/or form of proxy to holders of at least the percentage of the
Company’s outstanding capital stock required to approve or adopt the proposal or
elect such nominee or nominees (an affirmative statement of such intent, a
“Solicitation Notice”). The foregoing notice requirements shall be deemed
satisfied by a stockholder if the stockholder has notified the Company of his or her
intention to present a proposal at an annual meeting in compliance with Rule 14a-8 (or any
successor) in a proxy statement that has been prepared by the Company to solicit proxies
for such annual meeting. The Company may require any proposed nominee to furnish such other
information as it may reasonably require to determine the eligibility of such proposed
nominee to serve as a Director.
HOUSEHOLDING OF PROXY
MATERIALS
Only one copy of this Proxy Statement has been sent to
multiple stockholders who share the same address and last name, unless we have received
contrary instructions from one or more of those stockholders. This procedure is referred to
as “householding”. We have been notified that certain intermediaries (brokers
or banks) also will household proxy materials. We will deliver promptly, upon oral or
written request, separate copies of the Proxy Statement to any stockholder at the same
address. If you wish to receive separate copies of one or both of these documents, you may
write to Life Sciences Research, Inc., P. O. Box 2360, Mettlers Road, East Millstone, NJ
08875, Attention: Secretary. You may contact your broker or bank to make a similar request.
Stockholders sharing an address who now receive multiple copies of our Proxy Statement may
request delivery of a single copy of each document by writing or calling us at the above
address or by contacting their broker or bank (provided the broker or bank has determined
to household proxy materials).
AVAILABLE INFORMATION
Our Internet website is located
at
http://www.lsrinc.net
. The Company posts on its website its filings with the
Securities and Exchange Commission (“SEC”), including those on Form 10-K, Form
10-Q and Form 8-K. The reference to our Internet website does not constitute incorporation
by reference of the information contained on or hyperlinked from our Internet website and
should not be considered part of this document.
The public may read and copy any materials we file with the
SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549.
The public may obtain information on the operation of the Public Reference Rooms by calling
the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website that contains
reports, proxy and information statements and other information regarding issuers that file
electronically with the SEC. The SEC’s Internet website is located at
http://www.sec.gov
.
OTHER MATTERS
The Board does not know of any other
matters to be brought before the Meeting. However, if any other matters should properly
come before the Meeting, it is the intention of the persons named in the accompanying Proxy
to vote such Proxy as in their discretion they may deem advisable.
By
Order of the Board of Directors
Mark
L. Bibi
Secretary
and General Counsel
Dated: April 18, 2008
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