SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934 (Amendment No. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule
14(a)-12
THE QUIGLEY CORPORATION
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(Name of Registrant as Specified in Charter)
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(Name of Person(s) filing Proxy Statement, if other than Registrant)
Payment of filing fee (check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.
Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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Form, Schedule or Registration Statement no.:
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Filing Party:
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Date Filed:
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THE QUIGLEY CORPORATION
Kells Building
621 Shady Retreat Road
P. O. Box 1349
Doylestown, PA 18901
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held May 1, 2002
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TO THE STOCKHOLDERS OF THE QUIGLEY CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of THE QUIGLEY
CORPORATION, a NEVADA Corporation (the "Company") will be held at Doylestown
Country Club, Green Street, P.O. Box 417, Doylestown, PA 18901 on Wednesday, May
1, 2002, at 4:00 P.M., local time, for the following purposes:
(i) To elect a Board of Directors to serve for the ensuing year
until the next Annual Meeting of Stockholders and until their
respective successors have been duly elected and qualified.
(ii) To ratify the appointment of PricewaterhouseCoopers LLP as
independent auditors for the year ending December 31, 2002.
(iii) To transact such other business as may properly come before
the Meeting and any adjournments thereof.
Only stockholders of record at the close of business on March 15, 2002 will be
entitled to notice of and to vote at the Annual Meeting of Stockholders or any
adjournment thereof. Any stockholder may revoke a proxy at any time prior to its
exercise by filing a later-dated proxy, or a written notice of revocation with
the Secretary of the Company, or by voting in person at the Meeting. If a
stockholder is not attending the Meeting, any proxy or notice should be returned
in time for receipt no later than the close of business on the day preceding the
Meeting.
DUE TO LIMITED SEATING CAPACITY, ADMISSION WILL BE LIMITED TO ONE (1) SEAT PER
STOCKHOLDER OF RECORD. IF YOUR SHARES ARE HELD BY A BANK OR BROKER, YOU MUST
BRING YOUR BANK OR BROKERS' STATEMENT EVIDENCING YOUR BENEFICIAL OWNERSHIP OF
THE QUIGLEY CORPORATION STOCK TO THE MEETING.
By Order of the Board of Directors
ERIC H. KAYTES, Secretary
Doylestown, PA
April 1, 2002
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, YOU ARE URGED TO FILL
IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
THE QUIGLEY CORPORATION
Kells Building
621 Shady Retreat Road
P. O. Box 1349
Doylestown, PA 18901
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PROXY STATEMENT
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APRIL 1, 2002
This Proxy Statement is being furnished in connection with the solicitation of
proxies by the Board of Directors of The Quigley Corporation, (the "Company")
for use at the Annual Meeting of Stockholders of the Company to be held at
Doylestown Country Club, Green Street, P.O. Box 417, Doylestown, PA 18901, on
Wednesday, May 1, 2002 at 4.00 P.M., local time, and any adjournments thereof
(the "Meeting").
The principal executive offices of the Company are located at the Kells
Building, 621 Shady Retreat Road, P.O. Box 1349, Doylestown, Pennsylvania 18901.
The approximate date on which this Proxy Statement and the accompanying Proxy
will first be sent or given to stockholders is April 1, 2002.
At the Meeting, the following proposals will be presented to the Stockholders
for approval:
(i) To elect a Board of Directors to serve for the ensuing year
until the next Annual Meeting of Stockholders and until their
respective successors have been duly elected and qualified.
(ii) To ratify the appointment of PricewaterhouseCoopers LLP as
independent auditors for the year ending December 31, 2002.
(iii) To transact such other business as may properly come before
the Meeting and any adjournments thereof.
DUE TO LIMITED SEATING CAPACITY, ADMISSION WILL BE LIMITED TO ONE (1) SEAT PER
STOCKHOLDER OF RECORD. IF YOUR SHARES ARE HELD BY A BANK OR BROKER, YOU MUST
BRING YOUR BANK OR BROKERS' STATEMENT EVIDENCING YOUR BENEFICIAL OWNERSHIP OF
THE QUIGLEY CORPORATION STOCK TO THE MEETING.
RECORD AND VOTING SECURITIES
Only stockholders of record at the close of business on March 15, 2002 will be
entitled to notice of and to vote at the Meeting. At the close of business on
such record date, the Company had 10,675,153 shares of Common Stock, par value
$.0005 per share (the "Common Stock") outstanding and entitled to vote at the
Meeting. Each outstanding share of Common Stock is entitled to one vote. There
was no other class of voting securities of the Company outstanding on the Record
Date. A majority of the outstanding shares of Common Stock present in person or
by Proxy is required for a quorum.
PROXIES AND VOTING RIGHTS
Shares of Common Stock represented by Proxies that are properly executed, duly
returned and not revoked will be voted in accordance with the instructions
contained therein. If no instructions are contained in a Proxy, the shares of
Common Stock represented thereby will be voted (i) for election as directors of
the persons who have been nominated by the Board of Directors, (ii) for
ratification of the appointment of PricewaterhouseCoopers LLP as the Company's
independent auditors for the year ending December 31, 2002, and (iii) upon any
other matter that may properly be brought before the Meeting, in accordance with
the judgment of the person or persons voting the Proxy. The execution of a Proxy
will in no way affect a stockholder's right to attend the Meeting and to vote in
person. Any Proxy executed and returned by a stockholder may be revoked at any
time thereafter by written notice of revocation given to the Secretary of the
Company prior to the vote to be taken at the Meeting, by execution of a
subsequent Proxy that is presented at the Meeting, or by voting in person at the
Meeting, in any such case, except as to any matter or matters upon which a vote
shall have been cast pursuant to the authority conferred by such Proxy prior to
such revocation.
Broker "non-votes" and the shares of Common Stock as to which a stockholder
abstains are included for purposes of determining the presence or absence of a
quorum for the transaction of business at the Annual Meeting. A broker
"non-vote" occurs when a nominee holding shares for a beneficial owner does not
vote on a particular proposal because the nominee does not have discretionary
voting power with respect to that item and has not received instructions from
the beneficial owner.
ANNUAL REPORT PROVIDED WITH PROXY STATEMENT
Copies of the Company's Annual Report containing audited financial statements of
the Company for the year ended December 31, 2001, are being mailed together with
this Proxy Statement to all stockholders entitled to vote at the Meeting.
SECURITY OWNERSHIP
The following table sets forth information concerning ownership of the Company's
Common Stock as of March 15, 2002 by each person known by the Company to be the
beneficial owner of more than five percent of the Common Stock, each director
and executive officer and by all directors and executive officers of the Company
as a group. Unless otherwise indicated, the address of each person or entity
listed below is the Company's principal executive office.
Five Percent Stockholders, Directors, and Common Stock
all Executive Officers and Beneficially Percent of
Directors as a Group Owned (1) Class
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GUY J. QUIGLEY (2) (3) (4) 4,040,264 34.4
CHARLES A. PHILLIPS (2) (3) (5) 1,796,206 15.7
GEORGE J. LONGO (2) (3) (6) 515,000 4.6
ERIC H. KAYTES (2) (3) (7) 628,404 5.7
JACQUELINE F. LEWIS (2) (8) 55,000 -
ROUNSEVELLE W. SCHAUM (2) (9) 40,000 -
CHARLES A. GENUARDI (2) (10) 50,000 -
ALL DIRECTORS AND OFFICERS (11) 7,124,874 52.9
(Seven Persons)
(1) Beneficial ownership has been determined in accordance with Rule 13d-3
under the Exchange Act ("Rule 13d-3") and unless otherwise indicated,
represents shares for which the beneficial owner has sole voting and
investment power. The percentage of class is calculated in accordance with
Rule 13d-3 and includes options or other rights to subscribe which are
exercisable within sixty (60) days of March 15, 2002.
(2) Director of the Company.
(3) Officer of the Company.
(4) Mr. Quigley's beneficial ownership includes options and warrants
exercisable within sixty (60) days from March 15, 2002, to purchase 840,000
shares of Common Stock, options and warrants to purchase 239,000 shares of
Common Stock beneficially owned by Mr. Quigley's wife and an aggregate of
514,705 shares beneficially owned by members of Mr. Quigley's immediate
family.
(5) Mr. Phillips' beneficial ownership includes options and warrants
exercisable within sixty (60) days from March 15, 2002, to purchase 775,000
shares of Common Stock, and options to purchase 13,500 shares of Common
Stock beneficially owned by Mr. Phillips' wife.
(6) Mr. Longo's beneficial ownership includes options and warrants exercisable
within sixty (60) days from March 15, 2002, to purchase 475,000 shares of
Common Stock.
(7) Mr. Kaytes' beneficial ownership includes options and warrants exercisable
within sixty (60) days from March 15, 2002, to purchase 355,000 shares of
Common Stock.
(8) Ms. Lewis' address is 3805 Old Easton Road, Doylestown, PA 18901. Ms.
Lewis' beneficial ownership includes options exercisable within sixty (60)
days from March 15, 2002, to purchase 55,000 shares of Common Stock.
(9) Mr. Schaum's address is One Bannister's Warf, Newport, RI 02840. Mr.
Schaum's beneficial ownership includes options exercisable within sixty
(60) days from March 15, 2002, to purchase 35,000 shares of Common Stock.
(10) Mr. Genuardi's address is 470 Norristown Road, Suite 300, Blue Bell, PA
19422. Mr. Genuardi's beneficial ownership includes options exercisable
within sixty (60) days from March 15, 2002, to purchase 15,000 shares of
Common Stock.
(11) Includes an aggregate of 2,802,500 shares of Common Stock underlying
options and warrants that are exercisable within sixty (60) days from March
15, 2002.
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COMPENSATION AND OTHER INFORMATION
CONCERNING DIRECTORS AND OFFICERS
Executive Compensation
The following table provides summary information concerning cash and certain
other compensation for the years ended December 31, 2001, 2000 and 1999 paid or
accrued by the Company to or on behalf of the Company's Chief Executive Officer
and each of the other most highly compensated executive officers of the Company
whose compensation exceeded $100,000 during 2001:
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
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Other Annual Securities All Other
Name and Principal Position Salary Bonus Compensation Underlying Compensation
Year (1) (2) (3) (4) Options (5)
($) ($) ($) (#) ($)
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Guy J. Quigley 2001 504,000 126,000 489,460 70,000 66,403
Chairman of the 2000 504,000 536,851 70,000 66,403
Board, President, 1999 420,000 814,701 85,000 65,903
Chief Executive Officer
Charles A. Phillips 2001 352,800 88,200 162,154 60,000 52,101
Executive Vice President, 2000 352,800 178,949 70,000 52,101
Chief Operating Officer 1999 294,000 271,567 85,000 51,601
George J. Longo 2001 302,400 75,600 55,000 28,320
Vice President, 2000 302,400 70,000 28,320
Chief Financial Officer 1999 252,000 100,000 27,820
Eric H. Kaytes 2001 230,400 57,600 25,000 27,539
Vice President, 2000 230,400 70,000 27,539
Secretary-Treasurer, 1999 192,000 50,000 27,039
Chief Information Officer
(1) Compensation paid pursuant to employment agreements.
(2) Bonus's paid pursuant to the Company attaining specified sales and
net income goals.
(3) Additional compensation, including founder's commission at 3.75% of
sales collected less certain deductions for Mr. Quigley, and
founder's commission at 1.25% of sales collected less certain
deductions for Mr. Phillips.
(4) The value of personal benefits for the executive officers of the
Company that might be attributable to management as executive fringe
benefits, such as vehicles can not be specifically or precisely
determined; however, it would not exceed the lesser of $50,000 or
10% of the total annual salary and bonus reported for any individual
named above.
(5) Includes amounts attributable to the executive officers for reverse
split dollar life insurance policies on which the Company pays the
premiums. These insurance policies currently provide for the
proceeds to be used by the Company for, among other things, the
purchase of the officer's stock, at the fair market value, from the
officer's estate if desired by the executor of the estate. Also,
included are matching contributions attributable to each officer in
the Company's 401(k) Plan.
Compensation Pursuant to Plans
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An incentive stock option plan was instituted in 1997, (the "1997 Stock Option
Plan") and approved by the stockholders in 1998. Options pursuant to the 1997
Stock Option Plan have been granted to directors, executive officers, and
employees during 2001, 2000 and 1999. In early 1999, the Company implemented a
defined contribution plan for its employees with the Company's contribution to
the plan being based on the amount of the employee plan contribution.
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Option Grants Table
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The following table sets forth certain information regarding stock option grants
made to each of the executive officers during 2001:
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Percent of Value at Assumed Rates
Number of Total Options of Annual Rates of Stock
Securities Granted to Price Appreciation for
Underlying Employees in Exercise Option ($) (1)
Options Fiscal Year or Base Price Expiration
Name Granted (%) ($/sh) Date 5% 10%
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Guy J. Quigley 70,000 17.5 1.26 12/10/11 55,300 140,700
Charles A. Phillips 60,000 15.0 1.26 12/10/11 47,400 120,600
George J. Longo 55,000 13.8 1.26 12/10/11 43,450 110,550
Eric H. Kaytes 25,000 6.3 1.26 12/10/11 19,750 50,250
(1) The potential realizable portion of the foregoing table illustrates
value that might be realized upon exercise of options immediately
prior to the expiration of their term, assuming (for illustrative
purposes only) the specified compounded rates of appreciation on the
Company's Common Stock over the term of the option. These numbers do
not take into account provisions providing for termination of the
option following termination of employment, non-transferability or
difference in vesting periods.
Aggregated Option Exercises and Year-End Option Values Table
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The following table sets forth certain information concerning stock options
exercised during 2001 and stock options, which were unexercised at the end of
2001 with respect to the executive officers:
AGGREGATED OPTION EXERCISES DURING THE MOST RECENTLY
COMPLETED FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
Number of Value of
Shares Securities Unexercised
Acquired Value Underlying In-the Money
on Exercise Realized Unexercised Options at Year
Name (#) ($) Options End ($) (1)
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Guy J. Quigley - - 840,000 398,800
Charles A. Phillips - - 775,000 388,400
George J. Longo - - 475,000 218,200
Eric H. Kaytes - - 355,000 214,500
(1) Represents the total gain that would be realized if all in-the-money
options held at December 31, 2001 were exercised, determined by
multiplying the number of shares underlying the options by the
difference between the per share option exercise price and $2.30 per
share, which was the closing price per share of the Company's Common
Stock on December 31, 2001. An option is in-the-money if the fair
market value of the underlying shares exceeds the exercise price of
the option.
-4-
Royalty and Employment Agreements
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The Cold-Eeze(R) product is manufactured for the Company by an independent
manufacturer and marketed by the Company in accordance with the terms of the
licensing agreement (between the Company and Godfrey Science & Design, Inc.
and John C. Godfrey, Ph.D.; hereinafter "Dr. Godfrey"). The contract is
assignable by the Company with Dr. Godfrey's consent. Throughout the duration of
the agreement Dr. Godfrey is to receive a three percent (3%) royalty on sales
collected, less certain deductions, of the Company's Cold-Eeze(R)products.
A separate consulting agreement between the parties referred to directly above
was similarly entered into on May 4, 1992 whereby Dr. John C. Godfrey and Dr.
Nancy J. Godfrey are to receive a consulting fee of two percent (2%) on sales
collected, less certain deductions of the Company's Cold-Eeze(R) products for
consulting services to the Company with respect to such products.
Pursuant to the license agreement entered into between the Company and George
Eby Research, the Company pays a royalty fee of three percent (3%) on sales
collected, less certain deductions, of the Company's Cold-Eeze(R) products.
An employment agreement between the Company and Guy J. Quigley was entered into
on June 1, 1995, whereby Guy J. Quigley is employed as the Chief Executive
Officer of the Company for a term ending on May 31, 2005. In addition to
compensation for services as an officer of the Company, Mr. Quigley is entitled
to receive a founder's commission of five percent (5%) on sales collected, less
certain deductions, of the Company's Cold-Eeze(R) products, which is shared with
Charles A. Phillips in a ration of 75% and 25%, respectively. Upon the
termination of the contract for any reason, Mr. Quigley is entitled to the
remainder of his compensation owed him through May 31, 2005.
An employment agreement between the Company and Charles A. Phillips was entered
into on June 1, 1995, whereby Charles A. Phillips is employed as the Executive
Vice President and Chief Operating Officer of the Company for a term ending on
May 31, 2005. In addition to compensation for services as an officer of the
Company, Mr. Phillips is entitled to receive twenty five percent (25%) of the
founder's commission received by Guy J. Quigley, either directly from Guy J.
Quigley or, if requested, directly from the Company. Should Mr. Phillips make
such a request upon the Company, the amount owed to him would be deducted from
any commissions due Guy J. Quigley. Upon the termination of the contract for any
reason, Mr. Phillips is entitled to the remainder of his compensation owed him
through May 31, 2005.
George J. Longo is employed as the Chief Financial Officer of the Company
pursuant to an employment agreement dated November 5, 1996, for a term ending on
May 31, 2005. The agreement provides for a base salary of $150,000, or such
greater amount, as the Board of Directors may from time to time determine, with
annual increases over the prior year's base salary. In the event of his
disability, Mr. Longo is to receive the full amount of his base salary for
eighteen months. Upon a change of control of the Company, Mr. Longo is entitled
to receive the remainder of compensation for the remaining term of the agreement
until May 31, 2005. Upon early termination by the Company without cause (as
defined in the agreement), the Company is required to pay Mr. Longo the
remainder of the salary owed him through May 31, 2005.
The Company entered into an employment agreement dated as of January 1, 1997,
with Eric H. Kaytes on terms substantially similar to those of George J. Longo's
employment agreement for a term ending on December 31, 2002. Mr. Kaytes'
agreement provides for his employment by the Company as its Chief Information
Officer at a base salary of $100,000, or such greater amount, as the Board of
Directors may from time to time determine, with annual increases over the prior
year's base salary. Mr. Kaytes is entitled to receive severance compensation
equal to twelve months of his current compensation upon a change of control of
the Company. Upon early termination by the Company without cause (as defined in
the agreement), the Company is required to pay Mr. Kaytes the remainder of the
salary owed him through December 31, 2002.
REPORTS ABOUT OWNERSHIP OF THE COMPANY'S COMMON STOCK AND COMPLIANCE WITH
SECTION 16 (a) OF THE SECURITIES AND EXCHANGE ACT OF 1934
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Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "Commission"). Officers,
-5-
directors and greater than ten-percent stockholders are required by the
Commission's regulations to furnish the Company with copies of all Section 16(a)
forms they file.
Each of Messrs. Quigley, Phillips, Longo, Kaytes, Schaum, Genuardi and Ms. Lewis
filed on a timely basis statements of changes in beneficial ownership of
securities for 2001 as required by Section 16(a).
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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For the year ended December 31, 2001, $651,614 was paid or payable under
founder's commission agreements between the Company and Guy J. Quigley and
Charles A. Phillips, who share a commission of 5% on sales collected, less
certain deductions, of the Company's Cold-Eeze(R) products.
In the ordinary course of business, the Company has sales brokerage arrangements
with ScandaSystems Ltd. whose President and major stockholder is Mr. Gary
Quigley, a relative of the Company's Chief Executive Officer. Approximately
$175,436 was paid or payable by the Company to such firm during 2001. The
Company has consulting arrangements with the Kay Group, Inc. whose President and
major stockholder is Mr. David Kaytes, a relative to the Company's Chief
Information Officer. Approximately $176,823 was paid or payable by the Company
to such firm during 2001. Certain individuals related to the Company's Chief
Executive Officer are also employees of the Company whose aggregate compensation
for 2001 was $220,500 and an aggregate of option grants to purchase 16,000
shares of the Company's Common Stock. The Company believes that the services
performed by these firms and employees are on terms no more favorable than could
have otherwise been obtained from an unaffiliated third party.
The Company is in the process of acquiring licenses in certain countries through
related party entities. During 2001, fees amounting to $281,250 have been paid
to a related entity to obtain such licenses.
PROPOSALS TO BE SUBMITTED FOR STOCKHOLDER APPROVAL
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Proposal 1. ELECTION OF A BOARD OF DIRECTORS
The Directors of the Company are elected annually and hold office for the
ensuing year until the next annual meeting of stockholders and until their
successors have been duly elected and qualified. The directors are elected by
plurality of votes cast by stockholders. The Company's by-laws state that the
number of directors constituting the entire Board of Directors shall be
determined by resolution of the Board of Directors. The number of directors
currently fixed by the Board of Directors is seven.
No proxy may be voted for more people than the number of nominees listed below.
Shares represented by all proxies received by the Board of Directors and not so
marked as to withhold authority to vote for any individual director (by writing
that individual director's name where indicated on the proxy) or for all
directors will be voted "FOR" the election of all the nominees named below
(unless one or more nominees are unable or unwilling to serve). The Board of
Directors knows of no reason why any such nominee would be unable or unwilling
to serve, but if such should be the case, proxies may be voted for the election
of substitute nominees selected by the Board of Directors.
The following table and the paragraphs following the table set forth information
regarding the current ages, terms of office and business experience of the
current directors and executive officers of the Company, all of whom are being
nominated for re-election to the Board of Directors:
Year First
Name Position Age Elected
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Guy J. Quigley (1) Chairman of the Board, President, CEO 60 1989
Charles A. Phillips (1) Executive Vice President, COO and Director 54 1989
George J. Longo Vice President, CFO and Director 55 1997
Eric H. Kaytes Vice President, CIO and Director 47 1989
Jacqueline F. Lewis* Director 56 1997
Rounsevelle W. Schaum* Director 69 2000
Charles A. Genuardi* Director 54 2001
* Member of the audit committee (1) Member of the compensation committee
-6-
GUY J. QUIGLEY has been Chairman of the Board, President, and Chief Executive
Officer of the Company since September 1989. Prior to this date, Mr. Quigley, an
accomplished author, established and operated various manufacturing, sales,
marketing and real estate companies in the United States, Europe and the African
Continent.
CHARLES A. PHILLIPS has been Executive Vice President, Chief Operations Officer
and a Director of the Company since September 1989. Before his employment with
the Company, Mr. Phillips founded and operated KEB Enterprises, a gold and
diamond mining operation that was based in Sierra Leone, West Africa. In
addition, Mr. Phillips served as a technical consultant for Re-Tech, Inc.,
Horsham, Pennsylvania, where he was responsible for full marketing and
production of a prototype electrical device. Mr. Phillips also serves as a
director of Invicta Corporation.
GEORGE J. LONGO currently serves as Vice President, Chief Financial Officer and
Director of the Company. Mr. Longo assumed his duties as Vice President and
Chief Financial Officer for the Company in January 1997. Mr. Longo was also
appointed as a Director of the Company in March 1997. Before joining the
Company, Mr. Longo served as Chief Financial Officer of two privately held
international manufacturing firms and Manager of Corporate Accounting with the
predecessor pharmaceutical company to Aventis S.A. (NYSE-AVE), being responsible
for SEC and IRS compliance, and was involved in acquisition and general
accounting issues. Prior to that, Mr. Longo was with KPMG LLP.
ERIC H. KAYTES currently serves as Vice President, Chief Information Officer,
Secretary, Treasurer and Director of the Company. From 1989 until January 1997,
Mr. Kaytes also served as the Chief Financial Officer of the Company. Prior to
1989 and concurrent with his responsibilities for the Company, Mr. Kaytes had
been an independent programmer and designer of computer software.
JACQUELINE F. LEWIS, appointed to the Board of Directors in December 1997, is
presently Vice President and Chief Operating Officer of D. A. Lewis, Inc., a
direct mail advertising company that she co-founded in 1976. D. A. Lewis now
employs 250 people. Ms. Lewis has also served on the Board of Directors of
Suburban Community Bank since 1993.
ROUNSEVELLE W. SCHAUM, was appointed to the Board of Directors in March 2000.
Since 1993, Mr. Shaum has served as Chairman of Newport Capital Partners, Inc.,
an investment-banking firm, specializing in the private placement of equity and
convertible debt securities. In such capacity, Mr. Schaum has directed and
organized over thirty private equity placements and served on the board of
directors of numerous public and private emerging growth companies. Prior to
1993, Mr. Schaum has held senior management positions with international
manufacturing companies. He also served as the Chairman of the California Small
Business Development Corporation, a private venture capital syndicate, and was
the founder of the Center of Management Sciences, a management-consulting firm
that services multinational high technology companies and government agencies,
including NASA and the Department of Defense.
CHARLES A. GENUARDI, appointed to the Board of Directors in June 2001, was
Chairman, President and CEO of Genuardi's Family Markets, with sales of
approximately $1 billion, more than 7,000 employees and 40 stores in
Pennsylvania, Delaware and New Jersey from 1990 to 2000, when the company was
sold to Safeway. Mr. Genuardi is a founding member of the Philadelphia Food Bank
and served as a member of the Board of Directors of St. Joseph's University
Academy of Food Marketing. He was a Director of the Food Marketing Institute,
and a member of the Coca-Cola Retailing Research Council. Currently, Mr.
Genuardi serves on the Board of Directors of Gund, Inc., a leading manufacturer
of collectible toys and Genuardi Capital Appreciation Limited Partnership. He is
also a director of the Genuardi Family Foundation, which was established in 2001
to perpetuate the Genuardi family's legacy of philanthropy. In 2000, Mr.
Genuardi was named one of the top 50 business leaders in the Delaware Valley by
Main Line Magazine and Genuardi's Family Markets was recognized as
Pennsylvania's "Family Business of the Year."
Required Vote
- -------------
Directors are elected by a plurality of the votes cast, in person or by proxy,
at the Meeting. Votes withheld and broker non-votes are not counted toward a
nominee's total.
Recommendation of the Board of Directors
- ----------------------------------------
The Board of Directors of the Company recommends a vote "FOR" the election of
each of the nominees.
-7-
Meetings and Committees of the Board of Directors
- -------------------------------------------------
For the fiscal year ended December 31, 2001, there were four meetings of the
Board of Directors. Each of the directors attended (or participated by
telephone) more than 75% of such meetings of the Board of Directors and
Committees on which they served in 2001. During 2001, the Board of Directors
also acted by unanimous written consent in lieu of a meeting on one occasion.
The Company has three standing committees, the Audit Committee, Executive
Operating Committee and Compensation Committee. Prior to establishing these
Committees, the customary functions of such committees had been performed by the
entire Board of Directors. The Board of Directors does not presently have a
standing nominating committee, the customary functions of such committee being
performed by the entire Board of Directors. Stockholders wishing to recommend
candidates for consideration by the Board of Directors may do so by writing to
the Secretary of the Company and providing the candidate's name, biographical
data and qualifications.
The members of the Audit Committee are Messrs. Schaum, Genuardi, and Ms. Lewis.
Mr. Schaum, serves as Chairman of the Audit Committee. The Audit Committee
reviews, analyzes and makes recommendations to the Board of Directors with
respect to the Company's accounting policies, controls and statements, consults
with the Company's independent public accountants, and reviews filings
containing financial information of the Company to be made with the Securities
and Exchange Commission. The Audit Committee met one time during 2001.
The members of the Executive Operating Committee are Messrs. Quigley, Phillips,
Longo, and Kaytes. The Executive Operating Committee possesses and exercises all
the power and authority of the Board of Directors in the management and
direction of the business and affairs of the Company, except as limited by law,
and except for the power to change the membership or to fill vacancies on the
Board of Directors or the Executive Operating Committee. The Executive Operating
Committee met one time during 2001.
The members of the Compensation Committee are Messrs. Quigley and Phillips. The
Compensation Committee reviews and recommends the salary and other compensation
of officers and key employees of the Company, including non-cash benefits, and
designates the employees entitled to participate in the Company's benefits plans
and other arrangements, as from time to time constituted. The Compensation
Committee also administers the Company's Stock Option Plans and recommends the
terms of grants of stock options and the persons to whom such options shall be
granted in accordance with such plans. These recommendations are then subject to
approval by the full Board of Directors. The Compensation Committee met two
times during 2001.
Compensation of Directors
- -------------------------
Outside directors receive compensation annualized at $12,000. In the event that
there are more than five meetings of the Board during any particular year, such
director will receive an additional $2,400 for each such meeting. In addition,
in 2001 the Board of Directors approved the grant of Options to purchase 15,000
shares of Common Stock to each of the outside directors, at the time of grant,
under the Company's 1997 Stock Option Plan. Officers of the Company receive no
compensation for their service on the Board or on any Committee.
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
The Board of Directors as a whole provides overall guidance and approval of the
Company's executive compensation program. All members of the Board participate
in the approval of each of the components of the Company's executive
compensation program described in the "Report on Executive Compensation" except
that no director who is also a Company employee participates in the approval of
their respective compensation. Messrs. Quigley and Phillips serve on the
Compensation Committee. No other executive officer of the Company served on any
other committee or the compensation committee of another entity performing
similar functions during the fiscal year.
The report of the Audit Committee, the report of the Compensation Committee and
the performance graph that follow shall not be deemed incorporated by reference
by any general statement incorporating by reference this proxy statement or
future filings into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates the information by reference, and shall not otherwise
be deemed filed under such Acts.
-8-
Report of the Audit Committee
- -----------------------------
The members of the Audit Committee are Messrs. Schaum, Genuardi, Phillips, and
Ms. Lewis. Messrs. Schaum, Genuardi, and Ms. Lewis are independent as defined
under the rules of NASD and operate under a written charter adopted by the Board
of Directors in 2000. The only non-independent member of the Audit Committee
during 2001 was Mr. Phillips, the Company's Chief Operating Officer and
Executive Vice President who has been with the Company since 1989. As permitted
under the NASD requirements, the Board of Directors carefully considered Mr.
Phillips' affiliation with the Company and his membership on the Audit Committee
and determined that based on the need for continuity of membership and stability
of the Audit Committee, it is in the best interest of the Company and its
stockholders that Mr. Phillips continue to serve as a member of the Audit
Committee during 2001. Effective January 2, 2002, Mr. Phillips resigned as a
member of the Audit Committee.
We have reviewed and discussed with management the Company's audited financial
statements as of and for the year ended December 31, 2001.
We have discussed with the independent auditors, PricewaterhouseCoopers LLP, the
matters required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as amended, by the Auditing Standards Board
of the American Institute of Certified Public Accountants. Additionally, audit
fees, financial information system designing and implementation fees, and all
other service fees that were paid or payable to PricewaterhouseCoopers LLP for
2001 were discussed and amounted to $101,400, zero, $27,757, respectively.
We have received and reviewed written disclosures and the letter from
PricewaterhouseCoopers LLP required by Independent Standards No. 1, Independence
Discussions with Audit Committees, as amended, by the Independence Standards
Board, and have discussed with the auditors the auditor's independence.
Based on the reviews and discussions referred to above, we recommend to the
Board of Directors that the financial statements referred to above be included
in the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 2001 for filing with the Securities and Exchange Commission.
Audit Committee
Rounsevelle W. Schaum, Chairman
Jacqueline F. Lewis
Charles A. Genuardi
-9-
Report on Executive Compensation
- --------------------------------
General
- -------
The Compensation Committee reviews and recommends the salary and other
compensation of officers and key employees of the Company. The Compensation
Committee also administers the Company's Stock Option Plan and recommends the
terms of grants of stock options and the persons to whom such options shall be
granted in accordance with such plan. These recommendations, as previously
indicated, are subject to approval by the full Board of Directors.
Compensation Philosophy
- -----------------------
In reaching decisions regarding executive compensation, the Compensation
Committee as well as the full board upon approval of such recommendations,
balances the total compensation package for each executive, and makes it
variable, with sales and profits attained as well as achievement of annual and
long-term goals. Competitive levels of compensation are necessary in attracting,
rewarding, motivating, and retaining qualified management. The board also
believes that the potential for equity ownership by management is beneficial in
aligning management's and stockholders' interests in the enhancement of
stockholder value. Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), places a limit of $1,000,000 on the amount of compensation
that may be deducted by the Company in any year with respect to certain of the
Company's highest paid executives. Certain performance-based compensation that
has been approved by stockholders is not subject to the deduction limit. If
necessary, the Company may attempt to qualify certain compensation paid to
executive officers for deductibility under the Code, including Section 162(m).
However, the Company may from time to time pay compensation to its executive
officers that may not be deductible.
Compensation Program
- --------------------
The Company has a comprehensive compensation program, which consists of cash
compensation, both fixed and variable, and equity-based compensation. Overall
compensation is predicated on industry and peer group comparisons and on
performance judgments as to the past and expected future contributions of the
individual executive officer. Specific compensation for each executive is
designed to fairly remunerate that employee of the Company for the effective
exercise of their responsibilities, their management of the business functions
for which they are responsible, their extended period of service to the Company
and their dedication and diligence in carrying out their responsibilities for
the Company.
The fixed aspect is intended to meet the requirements of the employment
contracts in effect for all of the Company's officers. See "Executive
Compensation - Royalty and Employment Agreements". Employment agreements are in
place to insure the Company of consistency of leadership and the retention of
qualified executives, and to foster a spirit of employment security, which
thereby encourages decisions that will benefit long-term stockholders. Variable
compensation is based upon the entire board adopting and approving annually,
sales and profit goals to be attained for the ensuing year.
Equity-based compensation is through options periodically granted under the 1997
Stock Option Plan. These grants are designed to directly reward and create a
proprietary interest, among the executive officers and other employees, in the
Company, which will be an incentive for these employees to work to maximize the
long-term total return to stockholders.
Compensation of the Chief Executive Officer
- -------------------------------------------
Mr. Quigley's compensation was $1,119,460 in 2001. Mr. Quigley's compensation is
based upon the factors described in the compensation program section paragraphs
above and is set forth in his employment contract.
Compensation Committee
Guy J. Quigley
Charles A. Phillips
-10-
PERFORMANCE GRAPH
The following graph reflects a five-year comparison, calculated on a dividend
reinvested basis, of the cumulative total stockholder return on the Common Stock
of the Company, the NASDAQ Market Index, and a "peer group" index classified as
drug related products by Media General Financial Services ("MG Group Index").
The comparisons utilize an investment of $100 on January 1, 1996 for the Company
and the comparative indices, which then measure the values for each group at
December 31 of each year presented. There can be no assurance that the Company's
stock performance will continue with the same or similar trends depicted in the
following performance graph.
GRAPH PLOT POINTS
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ----
THE QUIGLEY CORPORATION 100.00 165.62 63.43 18.24 9.32 26.38
MG GROUP INDEX 100.00 139.12 93.14 79.98 69.10 101.02
NASDAQ MARKET INDEX 100.00 122.32 172.52 304.29 191.25 152.46
-11-
Proposal 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed PricewaterhouseCoopers LLP as the Company's
independent public auditor for the fiscal year ending December 31, 2002.
Although the selection of auditors does not require ratification, the Board of
Directors has directed that the appointment of PricewaterhouseCoopers LLP be
submitted to stockholders for ratification due to the significance of their
appointment to the Company. A representative of PricewaterhouseCoopers LLP is
expected to be present at the Meeting. Such representative will have an
opportunity to make a statement if so desired, and will be available to respond
to appropriate questions from stockholders.
Required Vote
- -------------
The affirmative vote of the holders of a majority of the shares of Common Stock
present, in person or by Proxy is required for ratification of the appointment
of PricewaterhouseCoopers LLP as independent auditors of the Company. An
abstention, withholding of authority to vote or broker non-vote, therefore, will
not have the same legal effect as an "against" vote and will not be counted in
determining whether the proposal has received the requisite stockholder vote.
Recommendation of the Board of Directors
- ----------------------------------------
The Board of Directors of the Company recommends a vote "FOR" the ratification
of the appointment of PricewaterhouseCoopers LLP as the Company's independent
auditors for the year ending December 31, 2002.
STOCKHOLDER PROPOSALS
---------------------
Proposals of stockholders intended for inclusion in the Proxy Statement to be
furnished to all stockholders entitled to vote at the next Annual Meeting of
Stockholders of the Company must be received at the Company's principal
executive offices not later than December 5, 2002. In order to curtail
controversy as to the date on which a proposal was received by the Company, it
is suggested that proponents submit their proposals by Certified Mail - Return
Receipt Requested.
With respect to any stockholder proposals to be presented at the next annual
meeting which are not included in the Company's proxy materials, management
proxies for such meeting will be entitled to exercise their discretionary
authority to vote on such proposals notwithstanding that they are not discussed
in the proxy materials unless the proponent notifies the Company of such
proposal by not later than February 17, 2003.
EXPENSES AND SOLICITATION
-------------------------
All expenses in connection with this solicitation will be borne by the Company.
In addition to the use of the mail, proxy solicitation may be made by telephone,
telegraph and personal interview by officers, directors and employees of the
Company. The Company will, upon request, reimburse brokerage houses and persons
holding shares in the names of their nominees for their reasonable expenses in
sending soliciting material to their principals.
OTHER BUSINESS
--------------
The Board of Directors knows of no business that will be presented for
consideration at the Meeting other than those items stated above. If any other
business should come before the Meeting, votes may be cast, pursuant to proxies,
in respect to any such business in the best judgment of the person or persons
acting under the proxies.
Dated: April 1, 2002 THE QUIGLEY CORPORATION
By: /s/ Eric H. Kaytes
----------------------
ERIC H. KAYTES, Secretary
-12-