<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(z))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
HOME HEALTH CORPORATION OF AMERICA, INC.
-------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box)
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined.):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
HOME HEALTH CORPORATION OF AMERICA, INC.
2200 RENAISSANCE BOULEVARD, SUITE 300
KING OF PRUSSIA, PA 19406
----------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 19, 1998
----------------------
To the Shareholders of Home Health Corporation of America, Inc.:
The 1998 Annual Meeting of Shareholders (the "Annual Meeting") of Home Health
Corporation of America, Inc. (the "Company") will be held on Thursday, November
19, 1998, at 8:30 a.m., prevailing time, at the Marriott, 111 Crawford Avenue,
West Conshohocken, Pennsylvania, for the purpose of considering and acting upon
the following:
1. To elect two Class C directors to each hold office for a term of three
years and until his successor is duly elected and qualified, as described in
the accompanying Proxy Statement; and
2. To transact such other business as may properly come before the Annual
Meeting.
Only shareholders of record at the close of business on October 16, 1998, are
entitled to notice of, and to vote at, the Annual Meeting or any adjournment or
postponement thereof.
If the Annual Meeting is adjourned for one or more periods aggregating at
least 15 days because of the absence of a quorum, those shareholders entitled to
vote who attend the reconvened Annual Meeting, if less than a quorum as
determined under applicable law, shall nevertheless constitute a quorum for the
purpose of acting upon any matter set forth in this Notice of Annual Meeting.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. WHETHER OR
NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE URGED TO SIGN,
DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD. A SELF-ADDRESSED ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE; NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
By Order of the Board of Directors
/s/ David S. Geller
Secretary and Chief Financial Officer
King of Prussia, Pennsylvania
October 19, 1998
<PAGE>
HOME HEALTH CORPORATION OF AMERICA, INC.
2200 RENAISSANCE BOULEVARD, SUITE 300
KING OF PRUSSIA, PA 19406
(610) 272-1717
----------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
----------------------
The accompanying proxy is solicited by the Board of Directors of Home Health
Corporation of America, Inc. (the "Company") for use at the 1998 Annual Meeting
of Shareholders (the "Annual Meeting") to be held on Monday, November 19, 1998,
at 8:30 a.m., prevailing time, at the Marriott, 111 Crawford Avenue, West
Conshohocken, Pennsylvania, and any adjournments or postponements thereof. This
Proxy Statement and accompanying proxy card are first being mailed to
shareholders on or about October 19, 1998.
The cost of this solicitation will be borne by the Company. In addition to
solicitation by mail, proxies may be solicited in person or by telephone,
facsimile, telegraph or teletype by officers, directors or employees of the
Company, without additional compensation. Upon request, the Company will pay
the reasonable expenses incurred by record holders of the Company's Common Stock
who are brokers, dealers, banks or voting trustees, or their nominees, for
mailing proxy material and annual shareholder reports to the beneficial owners
of the shares they hold of record.
Only shareholders of record, as shown on the transfer books of the Company,
at the close of business on October 16, 1998 (the "Record Date") are entitled to
notice of, and to vote at, the Annual Meeting. On the Record Date, there were
9,858,159 shares of Common Stock outstanding.
Proxies in the form enclosed, if properly executed and received in time for
voting, and not revoked, will be voted as directed on the proxies. If no
directions to the contrary are indicated, the persons named in the enclosed
proxy will vote all shares of Common Stock "for" the election of all nominees
for directors hereinafter named. Sending in a signed proxy will not affect a
shareholder's right to attend the Annual Meeting and vote in person since the
proxy is revocable. Any shareholder who submits a proxy has the power to revoke
it by, among other methods, giving written notice to the Secretary of the
Company at any time before the proxy is voted.
The presence, in person or represented by proxy, of the holders of a majority
of the outstanding shares of Common Stock will constitute a quorum for the
transaction of business at the Annual Meeting. All shares of the Company's
Common Stock present in person or represented by proxy and entitled to vote at
the Annual Meeting, no matter how they are voted or whether they abstain from
voting, will be counted in determining the presence of a quorum. If the Annual
Meeting is adjourned because of the absence of a quorum, those shareholders
entitled to vote who attend the adjourned meeting, although constituting less
than a quorum as provided herein, shall nevertheless constitute a quorum for the
purpose of electing directors. If the Annual Meeting is adjourned for one or
more periods aggregating at least 15 days because of the absence of a quorum,
those shareholders entitled to vote who attend the reconvened Annual Meeting, if
less than a quorum as determined under applicable law, shall nevertheless
constitute a quorum for the purpose of acting upon any matter set forth in the
Notice of Annual Meeting.
1
<PAGE>
Each share of Common Stock is entitled to one vote on each matter which may
be brought before the Annual Meeting. The election of directors will be
determined by a plurality vote and the nominee receiving the most "for" votes
will be elected. Approval of any other proposal will require the affirmative
vote of a majority of the shares cast on the proposal. Under the Pennsylvania
Business Corporation Law, an abstention, withholding of authority to vote or
broker non-vote will not have the same legal effect as an "against" vote and
will not be counted in determining whether the proposal has received the
required shareholder vote.
ELECTION OF DIRECTORS
The Company's Bylaws provide that the board of directors shall consist of not
fewer than three nor more than nine directors, with the exact number to be fixed
by the board of directors. The board of directors has fixed the number of
directors at four. Pursuant to the Bylaws of the Company, the directors are
divided into three classes, which is required to be as nearly equal in number as
possible. One class of directors is to be elected annually for a term of three
years. The board of directors is currently comprised of two classes (Class A
and Class B) of one director each and one class (Class C) of two directors.
At the Annual Meeting, shareholders will elect two Class C directors to each
serve for a term of three years and until his successor is elected and
qualified. Unless directed otherwise, the persons named in the enclosed Proxy
intend to vote such Proxy "for" the election of the listed nominees or, in the
event of inability of the nominees to serve for any reason, for the election of
such other persons as the board of directors may designate to fill the
vacancies. The board has no reason to believe that the nominees will not be
candidates or will be unable to serve.
The board of directors has nominated Bruce J. Feldman and Harvey Machaver to
serve as the Class C directors. Mr. Feldman and Mr. Machaver currently serve as
directors. The nominees have consented to being named in the Proxy Statement
and to serve if elected. The following table sets forth information, as of the
Record Date, concerning the Company's directors and nominees for election to the
board of directors:
<TABLE>
<CAPTION>
Director Term
Name Age Position Since Expires
- ----------------------- --- -------------------------- -------- --------------------
<S> <C> <C> <C> <C>
Bruce J. Feldman (1)(3) 49 Chairman of the Board, 1982 1998 Annual Meeting
President and Chief
Executive Officer
G. Michael Bellenghi(1)(2) 50 Director 1994 2000 Annual Meeting
Harvey Machaver (1)(2)(3) 73 Director 1985 1998 Annual Meeting
Donald M. Gleklen (1)(2) 61 Director 1998 1999 Annual Meeting
- ------------------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Nominee for Director.
</TABLE>
The following information about the Company's directors and nominees for
directors is based, in part, upon information supplied by such persons.
Bruce J. Feldman, the founder of the Company, has served as President, Chief
Executive Officer and Chairman of the Company since it was founded in December
1982. Prior to founding the Company, Mr. Feldman owned a Medicare-certified
home health agency, which became a subsidiary of the Company in 1982.
2
<PAGE>
G. Michael Bellenghi has been a director of the Company since October 1994.
Since January 1996, he has been the Chairman and Chief Executive Officer of
Recordex Services, Inc., a medical records retrieval company located in Malvern,
Pennsylvania. Mr. Bellenghi also serves as a director of F.Y.I. Incorporated,
the parent company of Recordex Services, Inc., a company with a class of
securities registered pursuant to Section 12 of the Securities Exchange Act of
1934. From 1990 to 1996, Mr. Bellenghi was the Chief Executive Officer of
Paragon Management Group, Inc., a health care consulting company located in
Malvern, Pennsylvania.
Harvey Machaver has been a director of the Company since December 1985.
Since 1990, Mr. Machaver has been President of Scopus Evaluation Services
("Scopus"), a health care consulting firm located in New York, New York. Mr.
Machaver is a fellow of the American College of Health Care Executives and a
fellow of the New York Academy of Medicine.
Donald M. Gleklen has been a director of the Company since April 1998. Since
March 1994, Mr. Gleklen has been a private investor and strategic business
advisor to companies in various industries, including health care. Mr. Gleklen
also serves as a director of Lason, Inc., New West Eyeworks, Inc. and NutraMax
Products, Inc., companies with a class of securities registered pursuant to
Section 12 of the Securities Exchange Act of 1934. Since March 1998 he has also
served as Vice Chairman of the Maine Merchant Bank. From February 1995 to
December 1997 he was President of Jocard Financial, an investment management
firm. From March 1994 to February 1995, Mr. Gleklen was special counsel to R.J.
Brobyn & Associates, a law firm.
SHAREHOLDER NOMINATIONS
Pursuant to the Company's Bylaws, no shareholder is permitted to nominate a
candidate for election as a director unless the shareholder is present in person
at the annual meeting and provides, in writing, to the Secretary of the Company
(a) information about the candidate that is equivalent to the information
concerning the candidates nominated by the board of directors that was contained
in the Company's proxy statement for the immediately preceding meeting at which
directors were elected if the Company distributed a proxy statement to its
shareholders in connection with such election of directors, or (b) if the
Company did not distribute a proxy statement, the following information about
such candidate: (i) name, age, business and residence address of such
candidate; (ii) any position, office or arrangement held with the Company by
such candidate and a description thereof; (iii) a description of any arrangement
between the candidate and any other person(s) (naming such person(s)) pursuant
to which he was nominated as a director; (iv) the candidate's principal
occupation for the five years prior to the election; (v) the number of shares of
the Company's stock beneficially owned by the candidate; (vi) a description of
any commercial transaction or series of transactions involving the candidate in
which the Company (or any of its affiliates) has a direct or indirect material
interest in the transaction, including the amount of the transaction and the
amount of the candidate's interest in the transaction; and (vii) evidence of the
consent of such candidate to serve as a director if elected. The Bylaws also
require that the nominating shareholder provide the Company with the following
information: (a) the name and address as they appear on the Company's stock
transfer books of such nominating shareholder and of the beneficial owners (if
any) of the Company's capital stock registered in such shareholder's name and
name and address of other shareholders known by the nominating shareholder to be
supporting such candidate; (b) the class and number of shares of the Company's
capital stock which are held of record, beneficially owned or represented by
proxy by such nominating shareholder and any other shareholders known to such
nominating shareholder to be supporting such candidate as of the record date for
the annual meeting in question (if such the shareholders of the Company have
then been given notice of such date) and as of the date of the nominating
shareholder's notice. This information is required to be provided in writing at
least four (4) months prior to the annual meeting of shareholders.
3
<PAGE>
If the board of directors or a designated committee thereof determines that
any shareholder nomination was not timely made in accordance with the terms of
the Bylaws or that the information provided by the nominating shareholder does
not satisfy the informational requirements of the Bylaws in any material
respect, then such nomination will not be considered at the annual meeting in
question. If neither the board of directors nor such committee makes such a
determination as to the nominating shareholder's compliance with the Bylaws, the
judge(s) of election for the annual meeting, or if same have not been appointed
pursuant to the Bylaws, the Chairman of the annual meeting is required to
determine whether a nomination was made in accordance with these provisions. If
the board of directors, a designated committee thereof, the judge(s) of election
or the Chairman of the annual meeting, as the case may be, determines that a
nomination was made in accordance with the Bylaws, the Chairman will so declare
at the annual meeting and ballots will be provided for use at the meeting with
respect to such candidate.
BOARD OF DIRECTORS, COMMITTEES AND ATTENDANCE AT MEETINGS
The board of directors of the Company held four meetings during fiscal 1998.
Each director attended 75% or more of the meetings of the board and committees
of which he was a member during fiscal 1998.
The board of directors of the Company has appointed a Compensation Committee
to review and make recommendations to the board of directors regarding the
salaries, bonuses and other forms of compensation for executive officers of the
Company and to administer various compensation and benefit plans. During fiscal
1998, the Compensation Committee held two meetings.
The board of directors also has appointed an Audit Committee to, among other
things, review the Company's accounting practices, internal accounting controls
and financial results and to oversee the engagement of the Company's independent
auditors. The Audit Committee held two meetings during fiscal 1998.
The board of directors has not appointed a standing Nominating Committee.
DIRECTOR COMPENSATION
Directors' Fees. Prior to September 2, 1998, each director of the Company
who is not also an officer or employee of the Company received a fee of $1,000
for each meeting of the board of directors or any committee of the board of
directors attended in person and $500 for each meeting of the board of directors
or any committee of the board of directors attended by telephone. Effective
September 2, 1998, these amounts were increased to $2,500 and $1,000,
respectively. These fees may be paid in cash or in shares of the Company's
Common Stock.
Consulting Arrangements. The Company has a consulting arrangement with
Scopus, of which Mr. Machaver is the principal stockholder. In fiscal 1998,
1997 and 1996, the Company paid consulting fees of approximately $44,000,
$44,000 and $40,000, respectively, to Scopus.
Stock Options. Under the Amended and Restated 1995 Employee and Consultant
Equity Plan (the "Option Plan"), Mr. Bellenghi and Mr. Machaver, non-employee
directors, were each granted on November 13, 1995 an option to purchase 10,000
shares of Common Stock at an exercise price of $7.50 (the "Directors' Options").
The Directors Options are currently exercisable. Mr. Gleklen, a non-employee
director, was granted on April 14, 1998 an option to purchase 10,000 shares of
Common Stock at an exercise price of $2.75. Mr. Gleklen's options vest equally
over the three year period from the grant date through April 14, 2001.
4
<PAGE>
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS.
The following information is given with respect to the executive officers of
the Company who are not directors.
David S. Geller, age 39, became Chief Financial Officer in July 1998.
From February 1996 to July 1998, Mr. Geller was Senior Vice President/Chief
Financial Officer for Physician Support Systems, Inc., a provider of business
management services to physicians and hospitals. From May 1990 to February
1996, Mr. Geller was a Senior Audit Manager for Deloitte & Touche, certified
public accountants.
Colleen M. Lederer, age 42, became Corporate Vice President of Professional
Services in July 1994. From 1987 to 1994, Ms. Lederer was Director of
Professional Services of the Company.
Wanda Monical, age 44, became Corporate Senior Vice President - Business
Development and Planning in July 1998. From June 1997 to July 1998, Ms. Monical
was Corporate Vice President - Women's and Children's Health Services. From
March 1995 to March 1997, Ms. Monical was Vice President for Interim Healthcare,
Inc., a regional nursing services provider. From October 1992 to December 1994,
Ms. Monical served in senior development capacities at Olsten Kimberly Quality
Care, a national provider of nursing services.
Joseph J. Grilli, age 47, became Area Vice President, Northeast in March
1997, when the Mid-Atlantic Region was split into the Mid-Atlantic and Northeast
Regions. From July 1996 to April 1997, Mr. Grilli was the Vice President, Mid-
Atlantic Region and has been employed by the Company since 1988 in various
positions.
James Weinstein, age 44, became Area Vice President, Mid-Atlantic in March
1997. From 1991 to 1997, Mr. Weinstein was President of GHS Home Medical
Services, a home care provider owned by Graduate Health System, a vertically
integrated hospital system located in the Metropolitan Philadelphia area.
Jerry G. Carroll, age 56, became Senior Vice President, Southern Region in
September 1997. From April 1996 to June 1997, Mr. Carroll was Division Vice
President for Columbia/HCA, a provider of home health care. From September 1995
to February 1996, Mr. Carroll was Area Vice President for Coram, a provider of
home infusion therapy. From April 1993 to September 1995, Mr. Carroll was Area
Vice President of HMSS Inc., a provider of home infusion therapy.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of June 30, 1998, certain information
with respect to the beneficial ownership of the Common Stock (i) by each person
who is known by the Company to be the beneficial owner of more than 5% of the
Common Stock, (ii) by each director of the Company, (iii) by each executive
officer of the Company named in the Summary Compensation Table and (iv) by all
directors and executive
5
<PAGE>
officers of the Company as a group. Except as otherwise indicated, all
information is as of June 30, 1998 and the beneficial owners of the Common Stock
listed below have sole investment and voting power with respect to such shares.
<TABLE>
<CAPTION>
Shares Beneficially Owned (2)
--------------------------------
Name and Address of Beneficial Owner(1) Number Percent
- -------------------------------------------- ---------- -------
<S> <C> <C>
Bruce J. Feldman(3)......................... 784,603 8.0%
Fred J. Nicholas(4)......................... 94,333 1.0%
David S. Geller............................. - -
James Weinstein............................. 2,200 (*)
Joseph J. Grilli(5)......................... 31,666 (*)
Wanda Monical(6)............................ 3,333 (*)
G. Michael Bellenghi(6)..................... 10,000 (*)
Harvey Machaver(7).......................... 37,591 (*)
Donald M. Gleklen........................... 20,000 (*)
Wasatch Advisers, Inc.(8)................... 781,481 8.0%
Wellington Management Co., L.L.P.(9)........ 758,500 7.8%
Joseph Falkson(10).......................... 579,901 5.9%
Susan Falkson(10)........................... 579,901 5.9%
Michael Falkson(10)......................... 579,901 5.9%
Peter Falkson(10)........................... 579,901 5.9%
All Directors and Executive
Officers as a group (10 persons)(11)..... 987,459 10.1%
</TABLE>
- ------------------------------
(*) Denotes less than 1.0%
(1) Except as otherwise shown, the address of each person listed above is in
care of the Company, 2200 Renaissance Boulevard, Suite 300, King of
Prussia, PA 19406.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission (the "Commission") and includes voting
or investment power with respect to the shares. Shares of the Company
Common Stock subject to securities exercisable within 60 days following
June 30, 1998, are deemed outstanding for computing the share ownership and
percentage ownership of the person holding such securities, but are not
deemed outstanding for computing the percentage of any other person.
(3) Includes 95,238 shares of the Company Common Stock held by the Company's
Profit Sharing Plan, of which Mr. Feldman is sole voting trustee, 175,000
shares of the Company Common Stock which may be acquired upon the exercise
of stock options, and 5,000 shares of the Company Common Stock which may be
acquired upon the exercise of warrants.
(4) Includes 93,333 shares of the Company Common Stock which may be acquired
upon the exercise of options.
(5) Includes 21,666 shares of the Company Common Stock which may be acquired
upon the exercise of options.
(6) Represents shares of the Company Common Stock which may be acquired upon
the exercise of options.
(7) Consists of 20,000 shares of the Company Common Stock which may be acquired
upon the exercise of warrants, 10,000 shares of the Company Common Stock
which may be acquired upon the exercise of options and 7,591 shares held
jointly with Mr. Machaver's spouse.
6
<PAGE>
(8) The shares of the Company Common Stock are owned by a variety of investment
advisory clients of Wasatch Advisers, Inc. ("Wasatch"), which clients
receive dividends with respect to and proceeds from the sale of such
shares. No such client is known to beneficially own more than 5% of the
Company Common Stock. Wasatch has sole dispositive and voting power with
respect to all 781,481 of the shares of the Company Common Stock. The
information set forth herein with respect to the beneficial ownership of
the Company Common Stock is as of June 30, 1998 and is derived from
information supplied to the Company by Wasatch. The address of such
beneficial owner is 68 S. Main Street, Suite 400, Salt Lake City, UT
84101.
(9) The shares of the Company Common Stock are owned by a variety of investment
advisory clients of Wellington Management Company ("Wellington"), which
clients receive dividends with respect to and proceeds from the sale of
such shares. No such client is known to beneficially own more than 5% of
the Company Common Stock. Wellington has shared dispositive power with
respect to all 758,500 of the shares of the Company Common Stock and shared
voting power with respect to 363,000 of the shares of the Company Common
Stock. The information set forth herein with respect to the Company Common
Stock is as of June 30, 1998 and is derived from information supplied to
the Company by Wellington. The address of such beneficial owner is 75
State Street, Boston, MA 02109.
(10) Each of Joseph Falkson, Susan Falkson, Michael Falkson and Peter Falkson
have shared voting and dispositive power with respect to these shares.
Their address is 132 Lakeside Drive West, Centerville, MA 02632.
(11) Includes 25,000 shares of the Company Common Stock which may be acquired
upon the exercise of warrants and 316,665 shares of the Company Common
Stock which may be acquired upon the exercise of options.
7
<PAGE>
EXECUTIVE COMPENSATION
Compensation Committee Report
The Compensation Committee of the Company's board of directors establishes
the Company's general compensation policies, compensation plans and specific
compensation levels of the Company's most highly compensated executive officers,
and reviews the design, administration and effectiveness of compensation
programs for other key executives. The Compensation Committee's executive
compensation policies are designed to provide competitive levels of
compensation, integrate pay with the Company's annual and long-term performance
goals, reward above-average corporate performance, recognize individual
initiative and achievements, and assist the Company in attracting and retaining
qualified executives.
The Company's executive officer compensation program is comprised of base
salary, annual cash incentive compensation, long term incentive compensation in
the form of stock options and various benefits generally available to full-time
employees of the Company, including participating in group medical and life
insurance plans. The Company seeks to be competitive with compensation programs
offered by companies of a similar size within the health care industry based on
formal and informal surveys conducted by the Company.
Decisions with respect to the compensation of Bruce Feldman, the Chairman,
President and Chief Executive Officer of the Company for fiscal 1998 were made
by the Compensation Committee. Decisions with respect to the compensation of
all other executive officers of the Company are made by Mr. Feldman within the
guidelines established by the Compensation Committee.
Base Salary. Prior to the beginning of each fiscal year, financial and
other goals are established for the Company. Each executive officer is
responsible for accomplishing the goals pertaining to his area of
responsibility. At the end of each fiscal year, a performance review takes
place with each executive officer to measure performance against those
objectives. Base salary decisions are made based on the results of the
performance review as well as other considerations such as the executive
officer's level of responsibility, years of service with the Company and
professional background.
Annual Incentive Compensation. For fiscal 1998 the Company established a
performance based bonus plan which awarded to executive officers bonus
compensation up to 10% of base salary if certain financial goals were achieved.
Information concerning bonus compensation paid to certain executive officers
with respect to fiscal 1998 is set forth in the Summary Compensation Table.
Stock Options. The Company uses its Option Plan as a long-term incentive
plan for executive officers and lay employees. The objectives of the Option
Plan with respect to executive officers are to align the long-term interests of
executive officers and shareholders by creating a direct link between executive
compensation and shareholder return and to enable executives to develop and
maintain a significant long-term equity interest in the Company. The Plan
authorizes the Compensation Committee to award stock options to officers and key
employees. Stock options granted to executive officers are based upon the level
and degree of responsibility of the positions they hold. In general under the
Option Plan, options are granted with an exercise price equal to the fair market
value of the Company Common Stock on the date of grant and are exercisable
according to a vesting schedule determined by the Compensation Committee at the
time of grant. In fiscal 1998, the Compensation Committee granted options to
purchase an aggregate of 341,667 shares of Company Common Stock under the Plan,
excluding options to purchase 148,000 shares of Company Common Stock which were
repriced to $3.00 per share during April 1998. Information concerning the
option grants to certain executive officers is set forth in the Summary
Compensation Table.
8
<PAGE>
Determination of Compensation of Chief Executive Officer. The Compensation
Committee based Mr. Feldman's compensation for fiscal 1998 in part on a survey
of compensation paid to the chief executive officers of companies comparable to
the Company. The Compensation Committee also considered Mr. Feldman's role in
developing acquisition opportunities for HHCA, the achievement by HHCA of
certain financial goals and the performance of the Company Common Stock.
Policy with Respect to Section 162(m) of the Internal Revenue Code.
Generally, Section 162(m) of the Internal Revenue Code of 1986, and the
regulations promulgated thereunder (collectively, "Section 162(m)"), denies a
deduction to any publicly held corporation, such as the Company, for certain
compensation exceeding $1,000,000 paid during a taxable year to the chief
executive officer and the four other highest paid executive officers, excluding,
among other things, certain performance-based compensation. Where appropriate,
the Compensation Committee has taken action to reduce the impact of this
provision. For example, the Compensation Committee intends that the Option Plan
qualify for the performance-based exclusion. The Compensation Committee
continually evaluates to what extent Section 162(m) will apply to its other
compensation programs.
THE COMPENSATION COMMITTEE
Harvey Machaver, Chairman
G. Michael Bellenghi
Donald M. Gleklen
9
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding the
compensation paid to the Chief Executive Officer and each of the four other most
highly compensated executive officers of the Company for services rendered in
all capacities to the Company for fiscal 1998, 1997 and 1996 (collectively the
"named executive officers"):
<TABLE>
<CAPTION>
Long Term
Annual Compensation
Compensation (1) --------------
----------------------------- Securities
Name and Fiscal Underlying All Other
Principal Position Year Salary Bonus Options Compensation
- -------------------------------- --------- ----------------- --------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Bruce J. Feldman, 1998 $325,904 $ - - $15,460 (2)
President and Chief 1997 300,000 - 100,000 33,792 (3)
Executive Officer 1996 254,000 43,600 75,000 33,792 (3)
Fred J. Nicholas 1998 194,135 - - -
Chief Operating 1997 165,000 - 50,000 -
Officer, Corporate (4) 1996 155,000 15,500 50,000 -
James Weinstein, 1998 138,137 - - -
Area Vice President, 1997 28,846 - - -
Mid-Atlantic (5)
Joseph J. Grilli 1998 131,858 - 50,000 (6) -
Area Vice President, 1997 125,000 - 15,000 -
Northeast 1996 110,000 11,000 10,000 -
Wanda Monical, 1998 114,615 - 10,000 (8) -
Senior Vice President, 1997 - - 10,000 -
Business Development
and Planning,
Corporate(7)
</TABLE>
_____________________________
(1) Does not include the value of perquisites provided to certain executive
officers which in the aggregate did not exceed the lesser of $50,000 or 10%
of such officer's salary and bonus.
(2) Consists of $15,460 of premiums on a split-dollar life insurance policy.
(3) Consists of $15,460 of premiums on a split-dollar life insurance policy and
$18,332 relating to indebtedness to the Company that was forgiven upon the
attainment of certain operating results.
(4) Mr. Nicholas resigned as Chief Operating Officer effective July 1, 1998.
(5) Mr. Weinstein started with the Company in April 1997.
(6) Reflects options to purchase 15,000, 15,000 and 10,000 shares of Company
Common Stock granted in July 1997, July 1996 and December 1995,
respectively, which were repriced during April 1998 to $3.00 per share from
$12.00, $10.00 and $7.50 per share, respectively. Additionally, includes
options to purchase 10,000 shares of Company Common Stock granted in May,
1998 at $3.44 per share.
(7) Ms. Monical started with the Company June 23, 1997.
(8) Reflects option to purchase 10,000 shares of Common Stock granted June 23,
1997 which was repriced during April 1998 to $3.00 per share from $9.75 per
share.
10
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning stock options
granted during fiscal 1998 to the named executive officers. The following table
also sets forth the potential realizable value over the term of the options (the
period from grant date to the expiration date), based on assumed rates of stock
appreciation of 5% and 10%, compounded annually. These amounts do not represent
the Company's estimate of future stock price. Actual realizable values, if any,
of stock options will depend on the future performance of the Company's common
stock.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual
Rates of Stock Price
Appreciation For
Individual Grants Option Term(1)
------------------------------------------------------------- --------------------
Number of Percent of
Securities Total Options
Underlying Granted to
Options Employees In Exercise Expiration
Name Granted Fiscal Year Price Date 5% 10%
- ---------------------- ---------- ------------- ---------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C>
Bruce J. Feldman...... - - - - - -
Fred J. Nicholas...... - - - - - -
James Weinstein....... - - - - - -
Joseph J. Grilli...... 40,000(2) 8.2% $3.00 (2) - -
10,000 2.0% 3.44 5/1/08 - -
Wanda Monical......... 10,000(3) 2.0% 3.00 6/23/07 - -
</TABLE>
__________________________
(1) Represents the difference between the market value of the Company's common
stock for which the option may be exercised, assuming that the market value
of the common stock appreciates in value from the date of grant to the end
of the option term at annualized rates of 5% and 10%, respectively, and the
exercise price of the option. The rates of appreciation used in this table
are prescribed by regulations of the Securities and Exchange Commission and
are not intended to forecast future appreciation of the market value of the
common stock.
(2) Reflects options to purchase 15,000, 15,000 and 10,000 shares of Common
Stock granted in July 1997, July 1996 and December 1995, respectively, which
were repriced during April 1998 to $3.00 per share from $12.00, $10.00 and
$7.50 per share, respectively and which expire December 2005, July 2006 and
July 2007, respectively.
(3) Reflects option to purchase 10,000 shares of Common Stock granted on June
23, 1997 which was repriced during April 1998 to $3.00 per share from $9.75
per share.
11
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth certain information concerning the exercise
of stock options during fiscal 1998 and the number and value of unexercised
options held at the end of fiscal 1998 by the named executive officers.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at Year-End Fiscal Year-End(2)
------------------------------ --------------------------------
Shares
Acquired on Value
Name Exercise Realized(1) Exercisable Unexercisable Exercisable Unexerciseable
- ------------------- ------------ ------------- ------------- --------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Bruce J. Feldman... - - 175,000 - - -
Fred J. Nicholas... - - 93,333 8,334 $2,188 -
James Weinstein.... - - - - - -
Joseph J. Grilli... 5,000 $56,875 21,666 28,334 - -
Wanda Monical...... - - 3,333 6,667 - -
</TABLE>
(1) Calculated by determining the difference between the last reported sales
price of the common stock underlying the exercised Options on the date of
exercise and the exercise price.
(2) Calculated by determining the difference between the last reported sales
price of the common stock underlying the Options on June 30, 1998 and the
exercise price for those Options where the exercise price of the Options
exceeded the last reported sales price of the common stock.
EMPLOYMENT AGREEMENTS
Bruce J. Feldman. On September 1, 1995, the Company entered into an
employment agreement with Bruce J. Feldman, President and Chief Executive
Officer of the Company, for an initial term of three years, subject to automatic
annual extensions of one year on August 31, 1996 and each anniversary
thereafter. Pursuant to the terms of Mr. Feldman's employment agreement, Mr.
Feldman is entitled to receive (i) an annual base salary of $284,000, or such
higher amount as the Compensation Committee may determine (the "Base Salary"),
(ii) an annual cash bonus based on the Company's achievement of specified levels
of net income as determined by the Compensation Committee and (iii) a deferred
annuity program of $15,000 per year and other benefits at least equivalent to
those provided to the Company's other executive officers. The Base Salary will
be reviewed by the Compensation Committee on not less than an annual basis.
Pursuant to the employment agreement, Mr. Feldman is also entitled to receive a
car allowance of at least $9,000 per year.
12
<PAGE>
Mr. Feldman's employment agreement may be terminated by the Company with or
without cause, which is defined to include, among other things, the material
breach of the employment agreement by Mr. Feldman, gross negligence in the
performance of his duties, conviction of a felony or commission of a material
act of dishonesty or breach of trust with respect to the Company. The
employment agreement may also be terminated by Mr. Feldman for good reason,
which includes, among other things, the demotion or removal of Mr. Feldman, a
material diminishment of his responsibilities, a reduction in his Base Salary,
failure to be re-elected to the Board or upon a change in control of the
Company. In the event of termination for good reason (including the Company's
failure to renew the term of the employment agreement) by Mr. Feldman, or
without cause by the Company, Mr. Feldman will be entitled to receive, among
other things, regular payments of his Base Salary for three years and have any
unvested stock options and awards accelerate and become fully exercisable. In
the event of termination by the Company for cause or for any other reason, Mr.
Feldman will be entitled to receive any unpaid salary and benefits through the
date of termination. Under the employment agreement, Mr. Feldman is prohibited
from disclosing confidential information during and after the term of the
agreement. In addition, Mr. Feldman is prohibited from soliciting employees or
customers of the Company or engaging or participating in any business which
competes with the Company within a 100-mile radius of any of the Company's
branch offices while he is employed by the Company and for one year thereafter
or, in the event of termination by Mr. Feldman for good reason (including the
Company's failure to renew the term of the employment agreement) or by the
Company without cause, for three years thereafter.
David S. Geller. On July 20, 1998, the Company entered into an employment
agreement with David S. Geller, Chief Financial Officer, for an initial term of
three years, subject to automatic annual extensions of one year on July 19, 1999
and each anniversary thereafter. Pursuant to the terms of Mr. Geller's
employment agreement, Mr. Geller is entitled (i) to receive a base salary of at
least $165,000 per year through January 19, 1999, which amount will be increased
to $175,000 per year on January 20, 1999, (ii) to participate in a bonus program
in the event the Company achieves targeted consolidated net income, and (iii) to
receive other benefits similar to those provided to the Company's other
officers. Mr. Geller was also granted an option to purchase 150,000 shares of
the Company's common stock at a per share exercise price of $2.25. These shares
vest equally over the three year period ended July 20, 2001. Mr. Geller's
employment agreement may be terminated by the Company with or without cause,
which is defined to include, among other things, the material breach of the
employment agreement by Mr. Geller, gross negligence in the performance of his
duties, conviction of a felony or commission of a material act of dishonesty or
breach of trust with respect to the Company. The employment agreement may also
be terminated by Mr. Geller for good reason, which includes, among other things,
the demotion or removal of Mr. Geller, a material diminishment of his
responsibilities, a reduction in his base salary, or upon a change of control of
the Company. In the event of termination for good reason (including the
Company's failure to renew the term of the employment agreement) by Mr. Geller,
or without cause by the Company, Mr. Geller will be entitled to among other
things, receive regular payments of his base salary for 12 months after
termination, have any stock options and awards issued to Mr. Geller become
fully-vested and have health insurance continue to be provided to Mr. Geller for
a period of 12 months from the date of his termination. If Mr. Geller
terminates the employment agreement for good reason as a result of a change of
control he will be entitled to receive regular payments of his base salary for
the period which is the greater of (i) 12 months after the termination or (ii)
the number of months remaining in the initial term of the employment agreement.
In the event of termination by the Company for cause, Mr. Geller will be
entitled to receive any unpaid salary and benefits through the date of
termination. Under the employment agreement, Mr. Geller is prohibited from
disclosing confidential information during and after the term of the agreement.
In addition, Mr. Geller is prohibited from soliciting employees or customers of
the Company or engaging or participating in any business which competes with the
Company within a 100-mile radius of any of
13
<PAGE>
the Company's offices while he is employed by the Company or receiving severance
payments from the Company and for one year thereafter.
Joseph J. Grilli. On May 1, 1998, the Company entered into an employment
agreement with Joseph J. Grilli, Area Vice President, Northeast, for an initial
term of three years, subject to automatic annual extensions of one year on April
30, 1999 and each anniversary thereafter. Pursuant to the terms of Mr. Grilli's
employment agreement, Mr. Grilli is entitled (i) to receive a base salary of at
least $129,000 per year, (ii) to participate in a bonus program in the event the
Company achieves targeted consolidated net income, and (iii) to receive other
benefits similar to those provided to the Company's other officers. Mr.
Grilli's employment agreement may be terminated by the Company with or without
cause, which is defined to include, among other things, the material breach of
the employment agreement by Mr. Grilli, gross negligence in the performance of
his duties, conviction of a felony or commission of a material act of dishonesty
or breach of trust with respect to the Company. The employment agreement may
also be terminated by Mr. Grilli for good reason, which includes, among other
things, the demotion or removal of Mr. Grilli, a material diminishment of his
responsibilities, a reduction in his base salary, or upon a change of control of
the Company. In the event of termination for good reason (including the
Company's or without cause by the Company, Mr. Grilli will be entitled to, among
other things, receive regular payments of his base salary for 12 months after
termination, have any stock options and awards issued to Mr. Grilli become
fully-vested and have health insurance continue to be provided to Mr. Grilli for
a period of 12 months from the date of his termination. If Mr. Grilli terminates
the employment agreement for good reason as a result of a change of control he
will be entitled to receive regular payments of his base salary for the period
which is the greater of (i) 12 months after the termination or (ii) the number
of months remaining in the initial term of the employment agreement. In the
event of termination by the Company for cause, Mr. Grilli will be entitled to
receive any unpaid salary and benefits through the date of termination. Under
the employment agreement, Mr. Grilli is prohibited from disclosing confidential
information during and after the term of the agreement. In addition, Mr. Grilli
is prohibited from soliciting employees or customers of the Company or engaging
or participating in any business which competes with the Company within a 100-
mile radius of any of the Company's offices while he is employed by the Company
or receiving severance payments from the Company and for two years thereafter.
14
<PAGE>
STOCK PERFORMANCE GRAPH
The graph which follows indicates the cumulative total return on the
Company's Common Stock since November 8, 1995, the date the Company's Common
Stock began trading on the Nasdaq National Market, compared with the cumulative
total return of companies on the Nasdaq National Market (U.S. Companies) and
shares of all healthcare institutions tracked by Standard and Poors ("S&P Health
Care"). Cumulative total return on the Company's Common Stock or the index
equals the total increase in value since November 8, 1995, assuming reinvestment
of all of the Company's Common Stock. The graph assumes that $100 was invested
on November 8, 1995 in the Company's Common Stock and in each of the indexes.
[STOCK PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Nasdaq
National S&P
HHCA Market (U.S.) HealthCare
-------------- ------------------- ------------------
<S> <C> <C> <C>
November 8, 1995 $100 $100 $100
June 30, 1996 181 114 119
June 30, 1997 127 139 182
June 30, 1998 31 183 241
</TABLE>
15
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who beneficially own more than ten
percent of the Company's common stock, to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors
and greater than ten-percent shareholders are required by regulation of the
Securities and Exchange Commission to furnish the Company with copies of all
Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company during or with respect to the Company's most
recent fiscal year and written representations that no other reports were
required, all Section 16(a) filing requirements applicable to the Company's
officers, directors and greater than ten-percent beneficial owners were complied
with during fiscal 1998 except that during fiscal 1998, certain non-executive
officers inadvertently filed change of ownership reports late related to the
repricing during fiscal 1998 of certain stock options received by them in prior
fiscal periods. Additionally, one director and one non-executive officer
inadvertently filed changes of ownership reports late related to options they
had received during fiscal 1998.
SHAREHOLDER PROPOSALS
Shareholder proposals for the 1999 Annual Meeting of Shareholders must be
submitted to the Company by June 21, 1999 to receive consideration for inclusion
in the Company's Proxy Statement and form of proxy. Receipt after August 21,
1999 by the Company of notice of any shareholder proposal submitted outside the
processes of Rule 14a-8 under the Securities Exchange act of 1934 will be
considered untimely.
APPOINTMENT OF AUDITORS
The board of directors has appointed PricewaterhouseCoopers LLP,
independent accountants, to serve as the Company's independent auditors for the
year ending June 30, 1999. A representative of PricewaterhouseCoopers LLP is
expected to be present at the Annual Meeting and to be available to respond to
appropriate questions. The representative will have the opportunity to make a
statement if they so desire.
OTHER MATTERS
The Company is not presently aware of any matters (other than procedural
matters) which will be brought before the Annual Meeting which are not reflected
in the attached Notice of the Annual Meeting. The enclosed Proxy confers
discretionary authority to vote with respect to any and all of the following
matters that may come before the Annual Meeting: (i) any matter with respect to
which the Company did not receive notice a reasonable time before the Company
mails its proxy materials for the Annual Meeting; (ii) approval of the minutes
of a prior meeting of shareholders, if such approval does not amount to
ratification of the action taken at the meeting; (iii) the election of any
person to any office for which a bona fide nominee named in this Proxy Statement
is unable to serve or for good cause will not serve; (iv) any proposal omitted
from this Proxy Statement and the form of proxy pursuant to Rules 14a-8 or 14a-9
under the Securities Exchange Act of 1934; and (v) matters incident to the
conduct of the Annual Meeting. In connection with such matters, the persons
named in the enclosed Proxy will vote in accordance with their best judgment.
16
<PAGE>
ANNUAL REPORT TO SHAREHOLDERS AND FORM 10-K
This Proxy Statement is accompanied by the Company's Annual Report to
Shareholders for fiscal 1998.
EACH PERSON SOLICITED HEREUNDER CAN OBTAIN A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR FISCAL 1998 AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, WITHOUT CHARGE EXCEPT FOR EXHIBITS TO THE REPORT, BY SENDING A
WRITTEN REQUEST TO:
HOME HEALTH CORPORATION OF AMERICA, INC.
2200 Renaissance Boulevard
Suite 300
King of Prussia, PA 19406
Attention: Tina Labant
By Order of the Board of Directors
/s/ David S. Geller
Secretary and Chief Financial Officer
King of Prussia, Pennsylvania
October 19, 1998
17
<PAGE>
HOME HEALTH CORPORATION OF AMERICA, INC.
KING OF PRUSSIA, PA
PROXY FOR 1998 ANNUAL MEETING OF SHAREHOLDERS, NOVEMBER 19, 1998
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints David S. Geller and Tina
Labant, and each of them, as attorneys and proxies of the undersigned, with
full power of substitution, for and in the name, place and stead of the
undersigned, to appear at the annual meeting of shareholders of Home Health
Corporation of America, Inc. to be held on the 19th day of November, 1998 and
at any postponement or adjournment thereof, and to vote all of the shares of
Home Health Corporation of America, Inc. which the undersigned is entitled to
vote, with all the powers and authority the undersigned would possess if
personally present. The undersigned hereby directs that this proxy be voted as
marked on the reverse side hereof.
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED. IF NO
DIRECTIONS TO THE CONTRARY ARE INDICATED IN THE BOXES PROVIDED, THE PERSONS
NAMED HEREIN INTEND TO VOTE FOR EACH PROPOSAL LISTED ON THE REVERSE SIDE
HEREOF.
A MAJORITY OF SAID ATTORNEYS AND PROXIES PRESENT AND ACTING AT THE MEETING IN
PERSON OR BY THEIR SUBSTITUTES (OR IF ONLY ONE IS PRESENT AND ACTING, THEN THAT
ONE) MAY EXERCISE ALL THE POWERS CONFERRED HEREBY. DISCRETIONARY AUTHORITY IS
CONFERRED HEREBY AS TO CERTAIN MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
(Continued and to be marked, signed and dated on the reverse side)
<PAGE>
(1) ELECTION OF DIRECTORS: Bruce J. Feldman and Harvey Machaver
<TABLE>
<CAPTION>
FOR all nominees WITHHOLD AUTHORITY (INSTRUCTION: To
listed above except to vote for the withhold authority
as marked to the nominees listed to vote for any
contrary at right.) above. individual nominee,
write that nominee's
name in the space
provided below.)
<S> <C> <C> <C>
[ ] [ ] ---------------------
</TABLE>
(2) To transact such other business as may properly come before the meeting or
any postponement or adjournment thereof.
Receipt of the Notice of Annual Meeting
of Shareholders and Proxy Statement
dated October 19, 1998 is hereby
acknowledged.
Date: ___________________________, 1998
(Please date this Proxy)
_________________________________________
_________________________________________
Signature(s)
Please sign exactly as your name or
names appear hereon, including any
official position or representative
capacity.
PLEASE MARK, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED POSTAGE PAID ENVELOPE.
