<PAGE> 1
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:
<TABLE>
<S> <C>
/ / 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
RAYTEL MEDICAL CORPORATION
- --------------------------------------------------------------------------------
(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):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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> 2
RAYTEL MEDICAL CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 6, 1997
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of RAYTEL MEDICAL CORPORATION, a
Delaware corporation (the "Company"), will be held at the Hotel Sofitel, 223
Twin Dolphin Drive, Redwood City, California on Thursday, March 6, 1997 at 11:00
a.m. for the following purposes:
1. To elect two (2) directors to Class II of the Board of
Directors.
2. To ratify the appointment of Arthur Andersen LLP as the
independent accountants of the Company for the fiscal year
ending September 30,1997.
3. To transact such other business as may properly come before
the meeting, or any adjournment thereof.
Stockholders of record at the close of business on January 27, 1997
shall be entitled to vote at the meeting.
By order of the Board of Directors
/s/RICHARD F. BADER
RICHARD F. BADER
Chairman of the Board and
Chief Executive Officer
San Mateo, California
February 3, 1997
IMPORTANT: PLEASE FILL IN, DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY IN
THE POSTAGE-PAID ENVELOPE PROVIDED TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT
THE MEETING. IF YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON IF YOU WISH TO DO
SO EVEN THOUGH YOU HAVE SENT IN YOUR PROXY.
<PAGE> 3
RAYTEL MEDICAL CORPORATION
2755 CAMPUS DRIVE, SUITE 200
SAN MATEO, CALIFORNIA 94403
__________
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of Raytel Medical
Corporation, a Delaware corporation (the "Company"), for use at the Annual
Meeting of Stockholders to be held Thursday. March 6, 1997 at 11:00 a.m., local
time, or at any adjournment thereof, for the purposes set forth herein and in
the accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting
will be held at the Hotel Sofitel, 223 Twin Dolphin Drive, Redwood City,
California. The Company's principal executive offices are located at 2755 Campus
Drive, Suite 200, San Mateo, California. Its telephone number at that address is
(415) 349-0800.
These proxy solicitation materials were mailed on or about February 3,
1997 to all stockholders entitled to vote at the Annual Meeting.
RECORD DATE
Stockholders of record at the close of business on January 27, 1997 are
entitled to notice of, and to vote at, the Annual Meeting. At the record date,
8,410,075 shares of the Company's Common Stock, $0.001 par value, were issued
and outstanding.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Company a
written notice of revocation or a duly executed proxy bearing a later date or by
attending the Annual Meeting and voting in person.
VOTING
The shares represented by the proxies received will be voted as you
direct. If you give no direction, the shares will be voted as recommended by the
Board of Directors. Each stockholder is entitled to one vote for each share of
stock held by him or her on all matters.
SOLICITATION
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this Proxy Statement, the Proxy
and any additional soliciting materials sent to stockholders. The Company may
reimburse brokerage firms and other persons representing beneficial owners of
shares for their expenses in forwarding solicitation materials to such
beneficial owners. Proxies may also be solicited by certain of the Company's
directors, officers and regular employees, without additional compensation,
personally or by telephone or telegram. Except as described above, the Company
does not currently intend to solicit proxies other than by mail.
<PAGE> 4
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Stockholder proposals intended to be considered at the 1998 Annual
Meeting of Stockholders must be received by the Company no later than November
1, 1997. Such proposals may be included in next year's proxy statement if they
comply with certain rules and regulations promulgated by the Securities and
Exchange Commission (the "SEC").
PROPOSAL NO. 1
ELECTION OF DIRECTORS
CLASSIFIED BOARD
The Company has a classified Board of Directors consisting of three
classes of directors serving staggered three-year terms. The Class II directors
are Richard F. Bader and Allan Zinberg, whose current terms will end in 1997;
the Class III directors are Gene I. Miller, Timothy J. Wollaeger and Albert
Henry, whose current terms will end in 1998; and the Class I directors are F.
David Rollo, M.D., and Thomas J. Fogarty, M.D., whose current terms will end in
1999. At each annual meeting of stockholders, the successors to the class of
directors whose term expires at such meeting will be elected to hold office for
a term expiring at the annual meeting of stockholders held in the third year
following the year of their election.
NOMINEES
The terms of the two Class II directors will expire on the date of the
upcoming annual meeting. Accordingly, two persons are to be elected to the Board
as Class II directors at the meeting. Management's nominees for election to
these two positions are the current Class II directors, Richard F. Bader and
Allan Zinberg. If elected, the nominees will serve as directors until the
Company's annual meeting of stockholders in 2000, or until their successors are
elected and qualified. If either of the nominees declines to serve or becomes
unavailable for any reason, or if a vacancy occurs before the election, the
Proxies may be voted for such substitute nominees as management may designate.
If a quorum is present and voting, the two nominees for Class II
directors receiving the highest number of votes will be elected. Abstentions and
shares held by brokers that are present but not voted because the brokers were
prohibited from exercising discretionary authority, i.e., "broker non-vote,"
will not be counted as present for purposes of determining if a quorum is
present.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
ELECTION OF THE TWO NOMINEES NAMED IN THIS PROPOSAL.
2
<PAGE> 5
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Richard F. Bader.......................... 59 Chairman of the Board of Directors and
Chief Executive Officer
Allan Zinberg ............................ 55 President and Chief Operating Officer
E. Payson Smith, Jr. ..................... 48 Senior Vice President and Chief Financial Officer
F. David Rollo, M.D. .................... 57 Senior Vice President, Executive Medical Director and
Director
Michael O. Kokesh ........................ 46 Vice President, General Counsel and Secretary
Swapan Sen................................ 44 Vice President - General Manager,
Medical Facility Operations
John F. Lawler, Jr........................ 50 Vice President - Corporate Controller
Thomas J. Fogarty, M.D. .................. 62 Director
Albert J. Henry .......................... 59 Director
Gene I. Miller............................ 55 Director
Timothy J. Wollaeger...................... 53 Director
</TABLE>
RICHARD F. BADER was a founder of the Company in 1981 and has served as
its Chief Executive Officer and as a director since its inception and as
Chairman of the Company's Board of Directors since April 1986. Mr. Bader also
served as President of the Company from its inception to May 1988 and again from
May 1989 to December 1991, and as Chief Financial Officer from February 1990 to
December 1991. Prior to founding the Company, Mr. Bader was employed as
President and Chief Executive Officer of Compression Labs, Inc., a developer of
video digital signal compression technology, from 1977 to 1981, and of
Integrated Microsystems, a manufacturer of semiconductor microsystems, from 1969
to 1975.
ALLAN ZINBERG has been President and Chief Operating Officer of the
Company since December 1991. Mr. Zinberg joined the Company as President of the
Company's Cardiac Datacorp, Inc. subsidiary ("CDI") in February 1990, when CDI
was acquired by the Company, and has also served as a director of the Company
since that time. From June 1974 to February 1990, Mr. Zinberg was employed by
CDI, where he served as a senior executive from June 1979 to February 1990.
E. PAYSON SMITH, JR. has been Senior Vice President and Chief Financial
Officer of the Company since December 1991 and was a director from February 1990
to February 1993. From June 1986 through December 1991, Mr. Smith served as
Senior Vice President of Corporate Finance of Van Kasper & Company, an
investment banking firm.
F. DAVID ROLLO, M.D. has been Senior Vice President and Executive
Medical Director of the Company since June 1996 and a director of the Company
since March 1993. Dr. Rollo served as Senior Vice President-Medical Affairs of
HCIA, a healthcare information company, from April 1995 to June 1996. Dr. Rollo
served as President and Chief Executive Officer of Metricor, a healthcare
consulting company, from October 1992 to April 1995, when it was acquired by
HCIA. From September 1980 to October 1992, Dr. Rollo served as Senior Vice
President-Medical Affairs of Humana, Inc., a hospital management company. Dr.
Rollo is also a director of ADAC Laboratories, Inc.
3
<PAGE> 6
MICHAEL O. KOKESH has been General Counsel and Secretary of the Company
since March 1996 and a Vice President since December 1996. Mr. Kokesh was a
co-founder of National Reproductive Medical Centers, Inc., where he served as a
director from November 1991 to June 1993 and served as Vice President, General
Counsel, and Secretary from November 1991 until March 1996. From May 1989 to
November 1991, Mr. Kokesh was a partner with Bronson, Bronson & McKinnon, a
general practice law firm where he specialized in health care law, emphasizing
transactional, corporate and securities matters. Mr. Kokesh is a trustee of the
St. Helena Hospital and Health Center Foundation.
SWAPAN SEN has been a Vice President of the Company since February
1990, when he joined the Company following the CDI acquisition. Since the
Company's acquisition of Medical Imaging Partners L.P. in December 1991, Mr. Sen
has had primary responsibility for the day to day operations of the Company's
imaging centers. From February 1990 to December 1991, he managed the three
imaging centers associated with the CDI acquisition. From December 1985 to
February 1990, Mr. Sen served in the same capacity with CDI.
JOHN F. LAWLER, JR. has served as Vice President-Corporate Controller
of the Company since March 1993. Mr. Lawler served as Corporate Controller of
Zygo Corp., a manufacturer of measuring equipment and optical components, from
September 1983 to March 1993. Prior to September 1983, he served with Raymond
Industries, Inc., a diversified manufacturing company, and KPMG Peat Marwick.
THOMAS J. FOGARTY, M.D. has been a director of the Company since
November 1982. Dr. Fogarty is a cardiovascular surgeon and has served as
Professor of Surgery at Stanford University Medical School since July 1993. Dr.
Fogarty practiced with Pacific Coast Cardiac and Vascular Systems from 1971 to
July 1993. Dr. Fogarty is also the founder and President of Fogarty Engineering,
Inc., Thomas Fogarty Winery and Portola Valley Vineyards. Dr. Fogarty has
authored 85 patents in the field of catheter and cardiovascular instrumentation.
Dr. Fogarty is also a director of Biopsys Medical, Inc., Cardiac Pathways, Inc.,
CardioThoracic Systems, Inc., General Surgical Innovations, Inc., and several
privately-held companies. In addition, he is general partner of a venture
capital fund focused on the development of advanced cardiac care products.
ALBERT J. HENRY has been a director of the Company since March 1990.
Mr. Henry has been Chairman of the Board of Directors and Chief Executive
Officer of Henry & Co., a venture capital firm, and manager of its related
venture funds, since 1983. Mr. Henry also serves as chairman of the board of
directors of several privately-held biotechnology, healthcare and other
companies.
GENE I. MILLER has been a director of the Company since February 1989.
Mr. Miller has been a general partner of Peregrine Ventures funds, a venture
capital firm, since its inception in 1981. Mr. Miller is also a director of
Somatogen, Inc., a developer and manufacturer of human blood substitutes, and
Digital Transmission Systems, Inc., a manufacturer of telecommunications
equipment, and serves on the boards of several privately-held companies.
TIMOTHY J. WOLLAEGER has been a director of the Company since May 1995.
Mr. Wollaeger has been a general partner of Kingsbury Associates, L.P., a
venture capital firm, since December 1993. From May 1990 to December 1993, Mr.
Wollaeger served as Senior Vice President of Columbia/HCA Healthcare Corp., a
hospital management company. Mr. Wollaeger is also a director of Amylin
Pharmaceuticals, Inc., Phamis, Inc., and several privately-held companies.
There are no family relationships among directors or executive officers
of the Company.
4
<PAGE> 7
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held four meetings during the
fiscal year ended September 30, 1996. The Board of Directors has a Compensation
Committee, an Audit Committee, an Employee Stock Option Committee, and a
Nominating Committee. During the fiscal year ended September 30, 1996, no
incumbent director attended fewer than 75% of the aggregate of (i) all meetings
of the Board of Directors (held during the period in which such director served)
and (ii) all meetings of committees of the Board on which such director served.
The Compensation Committee, which consists of Dr. Fogarty, Mr.
Wollaeger and Mr. Henry, is responsible for reviewing the performance of the
officers of the Company and making recommendations to the Board concerning
salaries and incentive compensation for such officers. The Compensation
Committee held one meeting during the fiscal year ended September 30, 1996.
The Audit Committee, which consists of Mr. Miller and Mr. Wollaeger, is
responsible for reviewing the Company's financial statements and significant
audit and accounting practices with the Company's independent auditors and
making recommendations to the Board of Directors with respect thereto. The Audit
Committee held one meeting during the fiscal year ended September 30, 1996.
The Employee Stock Option committee, which consists of Messrs. Bader
and Zinberg, is authorized to grant stock options under the Company's 1990 Stock
Option Plan to employees of the Company who are not executive officers. The
Employee Stock Option Committee held one meeting during the fiscal year ended
September 30, 1996.
The Nominating Committee, which consists of Messrs. Bader, Henry and
Miller, was appointed in December 1996, after the end of last fiscal year. The
Nominating Committee was formed for purposes of identifying and evaluating the
qualifications of all candidates for election to the Board of Directors. The
Nominating Committee will consider nominations recommended by stockholders.
Stockholders wishing to submit nominations must notify the Company of their
intent to do so (and provide the Company with certain information set forth in
the Company's bylaws, a copy of which may be obtained from the Company) on or
before the date on which stockholder proposals to be included in the proxy
statement for the stockholder meeting must be received by the Company.
DIRECTOR COMPENSATION
Non-employee directors are entitled to a fee of $1,000 for each Board
meeting they attend. The Company's non-employee directors, including Dr. Rollo,
who was not an employee at the time, have been granted stock options pursuant to
the Company's 1990 Stock Option Plan in connection with their service on the
Board of Directors. The options are fully exercisable, subject to the Company's
right to repurchase any unvested shares at the original exercise price at the
time the optionee ceases to serve on the Board of Directors. Such shares vest,
and the Company's repurchase right terminates, in installments of 25% on June
30, 1995, and annually thereafter, subject to the optionee's continuous service
and subject to adjustment at each scheduled vesting date by multiplying the
number of shares scheduled for vesting by a fraction, the numerator of which is
the number of meetings of the Board of Directors attended by the optionee during
the preceding 12-month period and the denominator of which is all such meetings
held during such period.
In addition, the Company's 1995 Outside Directors Stock Option Plan
(the "Directors Plan") provides for formula-based grants of options to
non-employee directors. The Directors Plan provides that each non-employee
director of the Company shall be granted a nonstatutory stock option to purchase
6,000 shares of Common Stock on the date on which the optionee first becomes a
non-employee director of the Company. Thereafter, on the date immediately
following each annual stockholders' meeting, each non-employee director who is
reelected at the meeting to an additional term shall be granted an additional
option to purchase 6,000 shares of Common Stock if, on such date, he or she
shall have served on the Company's Board of Directors for at least six months.
The
5
<PAGE> 8
Directors Plan provides that each option shall become exercisable in
installments as to one-third of the total number of shares subject to the option
on each of the first, second and third anniversaries of the date of grant,
subject to the director's continuous service and subject to adjustment at each
scheduled vesting date by multiplying the number of shares eligible for vesting
by a fraction, the numerator of which is the number of meetings of the Board of
Directors attended by the director during the preceding 12-month period and the
denominator of which is all such meetings held during such period. Shares which
do not vest on a scheduled vesting date as a result of such an adjustment will
vest instead, without further adjustment, on the fifth anniversary of the date
of grant. The exercise price per share of all options granted under the
Directors Plan shall be equal to the fair market value of a share of the
Company's Common Stock on the date of grant. Options granted under the Directors
Plan have a term of ten years.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company
relating to the beneficial ownership of the Company's Common Stock by (i) each
person who is known by the Company to be the beneficial owner of more than 5% of
the outstanding shares of Common Stock, (ii) each executive officer named in the
tables set forth under "Executive Compensation," (iii) each director and (iv)
all executive officers and directors as a group, as of December 31, 1996:
<TABLE>
<CAPTION>
NUMBER OF
SHARES
BENEFICIALLY
NAME AND ADDRESS OWNED (1) PERCENT (1)
- -------------------------------------------------------------------------------------
<S> <C> <C>
T. Rowe Price Associates, Inc. (2) ................. 835,000 10.0%
100 E. Pratt Street
Baltimore, MD 21202
Richard F. Bader (3) ............................... 622,921 7.2%
c/o Raytel Medical Corporation
2755 Campus Drive, Suite 200
San Mateo, CA 94403
State of Wisconsin Investment Board ................ 575,000 6.9%
P.O. Box 7842
Madison, WI 53707
Thomas J. Fogarty, M.D. (4) ........................ 227,129 2.7%
Albert J. Henry (5) ................................ 210,953 2.5%
Allan Zinberg (6) .................................. 176,000 2.1%
E. Payson Smith, Jr. (7) ........................... 72,649 *
Gene I. Miller (8) ................................. 50,994 *
F. David Rollo, M.D. (9) ........................... 39,241 *
Swapan Sen (10) .................................... 29,250 *
Charleen Ernst ..................................... 26,000 *
John F. Lawler, Jr.(11) ............................ 10,500 *
Timothy J. Wollaeger ............................... 5,332 *
All executive officers and
directors as a group (11 persons) (12) ............. 1,470,969 16.6%
</TABLE>
6
<PAGE> 9
* Less than 1%
(1) Beneficial ownership is determined in accordance with the rules of the
SEC. In computing the number of shares beneficially owned by a person
and the percentage ownership of that person, shares of Common Stock
subject to options held by that person that are currently exercisable,
or will become exercisable within 60 days after December 31, 1996, are
deemed outstanding. Such shares, however, are not deemed outstanding
for purposes of computing the percentage ownership of any other person.
In general, options granted under the Company's 1983 Stock Option Plan
and its 1990 Stock Option Plan are fully exercisable from the date of
grant, subject to the Company's right to repurchase any unvested shares
at the original exercise price in the event of termination of the
optionee's employment. Options (or shares issued upon exercise thereof)
vest over a period of two to four years from the date of grant. Unless
otherwise indicated in the footnotes to this table, the persons and
entities named in the table have sole voting and sole investment power
with respect to all shares beneficially owned, subject to community
property laws where applicable.
(2) Includes 470,000 shares beneficially owned by T. Rowe Price New
Horizons Fund.
(3) Includes 272,244 shares issuable upon exercise of stock options that
are currently exercisable, of which 264,724 shares will be fully vested
within 60 days after December 31, 1996.
(4) Includes 161,935 shares held by the Lincoln Trust Company, Custodian
FBO Thomas J. Fogarty IRA Rollover Account, and 24,725 shares held by
the Fogarty Family Revocable Trust dated September 14, 1971, as amended
and restated February 14, 1991. Also includes 40,469 shares issuable
upon exercise of stock options that are currently exercisable, of which
34,141 shares will be fully vested within 60 days after December 31,
1996.
(5) Includes 170,484 shares held by Henry Venture II Limited. Mr. Henry, a
director of the Company, is Chairman and Chief Executive Officer of
Henry Venture II Limited, and thereby has voting and dispositive power
over such shares. Mr. Henry disclaims beneficial ownership of such
shares, except for his proportional interest therein. Also includes
40,469 shares issuable to Mr. Henry upon exercise of stock options that
are currently exercisable, of which 38,672 shares will be fully vested
within 60 days after December 31, 1996.
(6) Includes 20,710 shares issuable upon exercise of stock options that are
currently exercisable of which 19,210 shares will be fully vested
within 60 days after December 31, 1996. Does not include 37,500 shares
for which Mr. Zinberg has a contractual repurchase option from ML
Ventures II, L.P. which is currently exercisable. See "Certain
Transactions."
(7) Includes 62,325 shares issuable upon exercise of stock options that are
currently exercisable, of which 61,313 shares will be fully vested
within 60 days after December 31, 1996. In addition, Mr. Smith
indirectly owns 2,800 shares held by his minor children, as to which he
disclaims beneficial ownership.
(8) Includes 40,469 shares issuable upon exercise of stock options that are
currently exercisable, of which 39,063 shares will be fully vested
within 60 days after December 31, 1996.
(9) Includes 31,147 shares issuable upon exercise of stock options that are
currently exercisable, of which 26,116 shares will be fully vested
within 60 days after December 31, 1996.
(10) Includes 24,250 shares issuable upon exercise of stock options that are
currently exercisable, of which 23,013 shares will be fully vested
within 60 days after December 31, 1996.
(11) Includes 10,500 shares issuable upon exercise of stock options that are
currently exercisable, of which 9,938 shares will be fully vested
within 60 days after December 31, 1996.
(12) Includes 532,063 shares issuable upon exercise of stock options that
are currently exercisable, of which 506,252 shares will be fully vested
within 60 days after December 31, 1996. Excludes 37,500 shares subject
to a contractual repurchase option granted by a transferee, which are
not currently exercisable.
7
<PAGE> 10
EXECUTIVE COMPENSATION AND OTHER MATTERS
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth information concerning the compensation
received for services rendered to the Company during each of the fiscal years
ended September 30, 1996 and 1995 by the Chief Executive Officer of the Company,
the four other most highly compensated executive officers of the Company whose
total salary and bonus for fiscal 1996 exceeded $100,000 and one former
executive officer who would have been included in such group had such person
served as an executive officer through September 30, 1996 (collectively, the
"Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
OPTIONS
FISCAL ANNUAL COMPENSATION(1) GRANTED ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OTHER (SHARES) COMPENSATION(2)
--------------------------- ------ ------ ----- ----- -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Richard F. Bader ................... 1996 $282,754 $130,000 -0- 300,000 $ 9,989(2)
Chairman of the Board of Directors 1995 $259,560 $ 82,000 -0- $ 9,808(3)
and Chief Executive Officer
Allan Zinberg ...................... 1996 $281,480 $100,000 -0- 100,000 $ 9,254(2)
President and Chief Operating 1995 $259,560 $ 82,000 -0- $ 10,801(3)
Officer
E. Payson Smith, Jr ................ 1996 $174,591 $ 35,000 -0- 35,000 $ 10,063(2)
Senior Vice President and 1995 $160,974 $ 49,000 -0- $ 10,010(3)
Chief Financial Officer
Swapan Sen ......................... 1996 $143,133 $ 50,000 -0- 21,000 $ 9,975(2)
Vice President-General Manager, 1995 $131,630 $ 40,000 -0- $ 9.975(3)
Medical Facility Operations
Charleen Ernst(4) .................. 1996 $126,698(5) -0- $ 44,320(6) -0- $ 9,989(2)
Vice President-General Manager, 1995 $129,832 $ 28,000 -0- -0- $ 9,997(3)
Marketing and Sales
John F. Lawler, Jr ................. 1996 $107,080 $ 16,000 -0- -0- $ 7,393(2)
Vice President and Controller 1995 $ 96,042 $ 13,400 -0- -0- $ 5,988(3)
</TABLE>
- -------------------------
(1) Includes amounts (if any) deferred under the Company's 401(k) Plan and
its Executive Deferred Compensation Plan.
(2) Consists of matching contributions by the Company under the 401(k)
Plan, contributions by the Company to the Pension Plan and life
insurance premiums paid by the Company for the benefit of the Named
Executive Officer. The amounts representing 401(k) Plan contributions
are $2,375 for Mr. Bader, $1,640 for Mr. Zinberg, $2,449 for Mr. Smith,
$2,489 for Mr. Sen, $2,375 for Ms. Ernst and $2,008 for Mr. Lawler.
The amounts representing Pension Plan contributions for the calendar
year 1996 are $7,164 for Messrs. Bader, Zinberg, Smith and Ernst,
$7,036 for Mr. Sen and $5,025 for Mr. Lawler. The amounts representing
life insurance premiums are $450 for Messrs. Bader, Zinberg, Smith ,Sen
and Lawler, and $450 for Ms. Ernst.
(3) Consists of matching contributions by the Company under the 401(k)
Plan, contributions by the Company to the Pension Plan and life
insurance premiums paid by the Company for the benefit of the Named
Executive Officer. The amounts representing 401(k) Plan
8
<PAGE> 11
contributions are $2,194 for Mr. Bader, $3,187 for Mr. Zinberg, $2,309
for Mr. Smith, and $2,250 for Mr. Sen and $1,801 for Mr. Lawler. The
amounts representing Pension Plan contributions for the calendar year
1995 are $7,164 for Messrs. Bader, Zinberg, Smith, and Sen. The amounts
representing life insurance premiums are $450 for Messrs. Bader,
Zinberg, Smith, and Sen, and $360 for Mr. Lawler.
(4) Ms. Ernst resigned her position as Vice President-General Manager,
Marketing and Sales, with the Company effective July 31, 1996.
(5) Does not include $30,000 of deferred compensation for Ms. Ernst which
was paid to her during fiscal 1996, which amount was reported
in prior fiscal years.
(6) Includes $21,898 of prior year and current year unused accrued vacation
time and $1,095 of current year unused floating holiday time for Ms.
Ernst. Also includes severance payments of $13,686 and an outplacement
allowance of $3,000 paid to Ms. Ernst pursuant to an agreement between
Ms. Ernst and the Company. During fiscal 1997, Ms. Ernst will receive
additional severance of $46,533 and an additional outplacement
allowance of $6,000 under the same agreement. This amount also includes
$4,641 in interest paid to Ms. Ernst on deferred compensation in fiscal
1996.
STOCK OPTION GRANTS
The following table sets forth information concerning grants of options
to purchase the Company's Common Stock made during the fiscal year ended
September 30, 1996 to the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------
NUMBER OF % OF TOTAL POTENTIAL REALIZABLE VALUE
SHARES OPTIONS AT ASSUMED RATES OF STOCK
UNDERLYING GRANTED TO EXERCISE PRICE APPRECIATION FOR
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION OPTION TERM (1)
NAME GRANTED 1996 SHARE (2) DATE 5% 10%
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Richard F. Bader .... 300,000(3) 49.59% $11.50 07/15/06 $2,169,686 $5,498,411
Allan Zinberg ....... 100,000(3) 16.53% $11.50 07/15/06 $ 723,229 $1,832,804
E. Payson Smith, Jr.. 35,000(3) 5.79% $11.50 07/15/06 $ 253,130 $ 641,481
Swapan Sen .......... 21,000(4) 3.47% $ 9.50 02/26/06 $ 125,464 $ 317,952
John F. Lawler, Jr .. 6,000(4) 0.99% $ 9.50 02/26/06 $ 35,847 $ 90,843
Charleen Ernst ...... -0- -0- -0- -0- -0- -0-
</TABLE>
- -----------------------
(1) Potential realizable values are net of the exercise price but before
taxes associated with the exercise. Amounts represent hypothetical
gains that could be achieved for the respective options if exercised at
the end of the option term. The assumed 5% and 10% rates of stock price
appreciation are provided in accordance with the rules of the
Securities and Exchange Commission and do not represent the Company's
estimate or projection of the future Common Stock price. Actual gains,
if any, on stock option exercise are dependent on the future financial
performance of the Company, overall market conditions and the option
holders' continued employment through the vesting period.
(2) All options were granted at the fair market value of the Common Stock
on the date of grant, based on the closing price of the Company's
Common Stock on the Nasdaq National Market.
(3) The options vest and become exercisable at the rate of 8-1/3% on
September 30, 1996 and at the end of each calendar quarter thereafter
through June 30, 1999.
(4) The options vest and become exercisable at the rate of 6-1/4% on March
31, 1996 and at the end of each calendar quarter thereafter through
December 31, 1999.
9
<PAGE> 12
OPTION EXERCISES AND YEAR-END HOLDINGS
The following table sets forth information concerning the exercise of
the stock options during the fiscal year ended September 30, 1996 and the stock
options held as of September 30, 1996 by the Named Executive Officers.
AGGREGATE OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF SHARES UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED SEPTEMBER 30, 1996 SEPTEMBER 30, 1996(2)
UPON VALUE ---------------------------------------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE(3) UNEXERCISABLE EXERCISABLE(3) UNEXERCISABLE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Richard F. Bader ... -0- -0- 247,234 275,010 2,416,888 550,020
Allan Zinberg ...... 108,194 $1,090,860 12,380 91,670 49,465 183,340
E. Payson Smith, Jr -0- -0- 59,410 32,084 650,414 64,169
Swapan Sen ......... 5,000 $ 38,750 23,900 78,506 130,715 137,385
John F. Lawler, Jr . -0- -0- 22,937 17,063 223,459 68,250
Charleen Ernst ..... 26,000 $ 247,100 -0- -0- -0- -0-
</TABLE>
(1) "Value Realized" represents the fair market value of the Common Stock
on the exercise date minus the aggregate exercise price of such
options. For purposes of this calculation, the fair market value of the
Common Stock is based on the closing price for the Common Stock, as
quoted on the Nasdaq National Market.
(2) Based on the closing price of $13.50 for the Common Stock as quoted on
the Nasdaq National Market on September 30, 1996, less the exercise
price.
(3) Options granted prior to October 1, 1995, are fully exercisable,
subject to the Company's right to repurchase any unvested shares at the
original exercise price in the event of the optionee's termination.
Options (or shares issued upon exercise thereof) vest over periods of
two to four years from the date of grant.
PENSION PLAN
The Raytel Medical Corporation Pension Plan (the "Pension Plan") was
adopted in March 1990. Pursuant to the Pension Plan, the Company makes annual
contributions on behalf of each full-time employee. The Company's contribution
is equal to 3% of the amount of such employee's salary and bonus for each
calendar year, not exceeding $150,000, plus an additional 3% of the amount by
which such salary and bonus (up to $150,000) exceeds the maximum amount of
remuneration that is treated as "wages" for purpose of social security tax
withholding (the "Social Security Wage Base"). The Social Security Wage Base was
$61,200 in calendar year 1995 and $62,700 in calendar year 1996. The aggregate
amount contributed by the Company on an employee's behalf becomes 20% vested
after three years of employment and thereafter vests in annual 20% increments
such that the employee's benefits are fully vested after seven years.
Alternatively, an employee's pension benefits become fully vested immediately in
the event of (i) the employee's retirement at or after age 65, (ii) the
employee's death or permanent disability, or (iii) termination of the Pension
Plan or of the Company's contributions thereunder. Upon becoming eligible to
receive distributions, an employee may elect to receive his or her benefits in
10
<PAGE> 13
various forms, including different types of annuities or a lump sum payment.
Absent an election, benefits to an employee who is married are paid in the form
of a "50% joint and survivor annuity," pursuant to which the employee is
entitled to a monthly benefit until death, after which the employee's spouse, if
he or she survives the employee, is entitled to continued 50% monthly benefits
until his or her death.
Assuming that (i) each of the Named Executive Officers retires at the
end of the calendar year in which such person attains age 65, (ii) each
individual's salary and bonus and the Social Security Wage Base increase by 5%
annually, (iii) there is no change in the $150,000 limit on the amount of
compensation on which the Company's contributions are based and (iv) funds
invested through the Pension Plan appreciate at a 6% annual return, the
retirement benefits that would be payable in a lump sum to each of the Named
Executive Officers would be $142,636 in the case of Mr. Bader, $708,702 in the
case of Mr. Zinberg, $290,662 in the case of Mr. Smith, $63,341 in the case of
Dr. Rollo, and $524,533 in the case of Mr. Sen. Assuming further that each such
individual receives his or her benefits in the form of a 50% joint and survivor
annuity, and based on the current age of each individual and that of each
spouse, the monthly benefits payable to the foregoing individuals will be $1,060
in the case of Mr. Bader, $5,267 in the case of Mr. Zinberg, $2,145 in the case
of Mr. Smith, $477 in the case of Dr. Rollo and $4,019 in the case of Mr. Sen.
EMPLOYMENT AGREEMENTS
Messrs. Bader, Zinberg and Smith have each entered into an employment
agreement with the Company that entitles each to receive a base annual salary
and such bonus as may be authorized from time to time by the Board of Directors.
Each agreement originally had a term of two years, expiring in September 1997,
and provides that at the end of each year, beginning in September 1996, the term
is automatically extended for an additional year, unless either party elects not
to renew the agreement. The agreements require each officer to devote his full
time and attention to the affairs of the Company. If the Company terminates the
employment of one of these officers other than for cause (or if the officer
voluntarily terminates his employment following certain specified actions by the
Company), the officer will be entitled to receive severance payments equal to
his then current base salary for a period of 24 months following the date of
termination. The current annual base salaries of Messrs. Bader, Zinberg and
Smith are $282,754, $281,480 and $179,734, respectively.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY
The goals of the Company's compensation policy are to attract, retain
and reward executive officers who contribute to the overall success of the
Company by offering compensation that is competitive in the healthcare industry,
to motivate executives to achieve the Company's business objectives and to align
the interests of officers with the long-term interests of stockholders. The
Company currently uses salary, a management incentive plan, an executive
deferred compensation plan and stock options to meet these goals.
COMPENSATION COMMITTEE
The Compensation Committee is composed of three non-management members
of the Board of Directors, Timothy J. Wollaeger, Albert J. Henry and Thomas J.
Fogarty, M.D. The Committee is responsible for setting and administering the
policies governing annual compensation of executive officers, including cash
compensation and
11
<PAGE> 14
grants of stock options. The Committee reviews compensation levels of executive
officers, considers their performance and makes recommendations regarding their
cash compensation and stock option awards to the full Board of Directors.
FORMS OF COMPENSATION
The Company provides its executive officers with a compensation package
consisting of base salary, variable incentive pay, and participation in benefit
plans generally available to other employees. In setting total compensation, the
Committee considers individual and Company performance, as well as market
information from published survey data provided to the Committee by the
Company's human resources staff. The market data consist primarily of base
salary and total cash compensation rates, as well as incentive bonus and stock
programs of the companies considered by the Committee to be peer companies in
the Company's industry.
Base Salary. Salaries for executive officers are initially set based on
negotiation with individual executive officers at the time of recruitment and
with reference to salaries for comparable positions among individuals of similar
education and background to the executive officers being recruited. The Company
also gives consideration to the individual's experience, reputation in his or
her industry and expected contributions to the Company.
Generally, salary adjustments are made for each executive officer at
the end of each fiscal year. The size of the annual salary adjustments for each
executive officer is primarily based on the Committee's determination that the
officer has met or exceeded his or her individual goals. These individual goals
are determined in consultation with management, subject to review and approval
by the Board of Directors, and generally relate to strategic goals within the
responsibility of the executive officer. The Chief Executive Officer's goals
also include the Company's financial performance, measured primarily by the
achievement of predetermined revenue and expense objectives and maintenance of
adequate cash reserves.
Executive Bonuses. The Company seeks to provide additional incentives
and rewards to executives who make valuable contributions to the Company.
Accordingly, the Compensation Committee awards annual bonuses, which can
comprise a substantial portion of the total compensation of each executive
officer. At the beginning of each fiscal year, the Board establishes a suggested
budget for bonuses that may be earned during such fiscal year by executive
officers and other employees. Following the end of the fiscal year, the
Compensation Committee determines the amount of the cash bonus to be awarded to
each executive officer. Awards are based upon such factors as the Compensation
Committee may consider relevant in any particular year, including the Company's
attainment of certain goals for revenue growth and profitability, as well as the
Compensation Committee's evaluation of each executive officer's individual
contribution to the attainment of such goals.
Long-term Incentives. Longer term incentives are provided through the
1990 Stock Option Plan, which rewards executives and other employees through the
growth in value of the Company's stock. The committee believes that employee
equity ownership is highly motivating, provides a major incentive for employees
to build stockholder value and serves to align the interests of employees with
those of stockholders.
Grants of stock options to executive officers are based upon each
officer's relative position, responsibilities, historical and expected
contributions to the Company, and the officer's existing stock ownership and
previous option grants, with primary weight given to the executive officers'
relative rank and responsibilities. Initial stock option grants designed to
recruit an executive officer to join the Company may be based on negotiations
with the officer and with reference to historical option grants to existing
officers. Stock options are granted at market price on the date of grant and
will provide value to the executive officers only when the price of the
Company's Common Stock increases over the exercise price.
Other Benefit Plans. Executive officers may participate in several
benefit plans, including the Company's Pension Plan, 401(k) plan and Executive
Deferred Compensation Plan, a nonqualified deferred compensation plan.
12
<PAGE> 15
The Company makes matching contributions to the 401(k) plan equal to 25% of the
amount contributed by each employee.
FISCAL 1996 COMPENSATION
Bonuses paid after the end of fiscal 1996 were based upon the Company's
successes in fiscal 1996 and each executive's contribution to these successes.
These bonus awards recognized that fiscal 1996 was a year in which management
strategically positioned the Company for future growth through the development
and operation of heart centers while successfully operating its existing
businesses. Concurrent with these developments, the Company posted new records
for profitability, with pre-tax income for fiscal 1996 of $9,828,000 which was
more than 55% higher than the Company's previous record of $6,321,000 earned in
fiscal 1995.
For specific information regarding compensation earned in fiscal 1996
by certain executive officers, see "Executive Compensation - Summary
Compensation Table."
THE COMPENSATION COMMITTEE
Timothy J. Wollaeger
Albert J. Henry
Thomas J. Fogarty, M.D.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the SEC and Nasdaq. Officers, directors
and greater than 10% stockholders are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on its review of the copies of
such reports received by it, or written representations from reporting persons
that all required reports were filed, all Section 16(a) filing requirements
applicable to its officers, directors and greater-than-10% beneficial owners
during fiscal 1996 were complied with, except that Gene I. Miller was
inadvertently late in filing one report with respect to the automatic conversion
of preferred stock beneficially owned by him, together with accrued dividends,
into Common Stock upon the Company's initial public offering. In addition,
Michael O. Kokesh did not timely file the report with respect to his appointment
as an executive officer of the Company. The report has since been filed.
13
<PAGE> 16
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total return
at September 30, 1996 (assuming reinvestment of dividends) on $100 invested,
alternatively in the Company's Common Stock, the Nasdaq Stock Market - US Index,
and the Nasdaq Health Services Index on December 1, 1995, the date of the
Company's initial public offering.
<TABLE>
<CAPTION>
Cumulative Total Return
------------------------------------------------------------------------------
12/01/95 12/31/95 3/31/96 6/30/96 9/30/96
<S> <C> <C> <C> <C> <C>
Raytel Medical Corporation $100 $106 $125 $159 $169
Nasdaq Stock Market - US $100 $100 $105 $113 $117
Nasdaq Health Services $100 $104 $109 $118 $118
</TABLE>
14
<PAGE> 17
CERTAIN TRANSACTIONS
In February 1995, the Company made a short-term loan of $454,174 to
Allan Zinberg, President and Chief Operating Officer and a director of the
Company, bearing interest at the rate of 9% per annum, for the purpose of
assisting Mr. Zinberg in repaying a loan he had obtained in connection with his
purchase of 125,000 shares of the Company's stock. Mr. Zinberg repaid the loan
in March 1995 following his sale of the shares to ML Venture Partners, II, L.P.
In connection with such sale, Mr. Zinberg was granted the right to repurchase up
to 62,500 of such shares if and when the per share price of the Common Stock
exceeds $9.50 per share for an amount equal to the price paid for such shares,
$3.87 per share. The repurchase option expires in installments between March 3,
1996 and March 3, 1997, subject to extension upon certain conditions. In
February 1996 and November 1996, Mr. Zinberg exercised the repurchase option as
to 12,500 shares and 12,500 shares, respectively.
In July 1996, the Company made a short-term loan of $400,000 to F.
David Rollo, M.D., Senior Vice President and Executive Medical Director and a
director of the Company, bearing interest at the rate of 9.25% per annum, for
the purpose of assisting Dr. Rollo in the purchase of his principal residence
upon his relocation to California. The loan is secured by a second deed of trust
on the new principal residence. The note evidencing Dr. Rollo's loan requires
that interest be paid monthly on the outstanding principal balance. The
outstanding principal and any accrued but unpaid interest is due on May 1, 1997,
provided that a portion thereof is due earlier upon the sale of three separate
parcels of residential property held by Dr. Rollo. One of these properties was
sold in August 1996, and a payment of $150,000 was made, reducing the
outstanding principal balance to $250,000.
For a description of the compensation of officers and directors of the
Company, employment agreements between certain officers and the Company and the
eligibility of the Company's officers and directors to participate in the
Company's employee benefit plans, see "Proposal No. 1 - Election of Directors -
Director Compensation" and "Executive Compensation - Employment Agreements".
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Arthur Andersen LLP as the
independent auditors of the Company for the current fiscal year. The selection
of the independent auditors is being submitted to the stockholders for
ratification at the Annual Meeting. In the event that ratification by the
stockholders of the selection of Arthur Andersen LLP as the Company's
independent auditors is not obtained, the Board of Directors will reconsider
such selection. Arthur Andersen LLP has audited the Company's financial
statements since 1993.
The ratification of the selection of Arthur Andersen LLP will require
the affirmative vote of not less than a majority of the shares of the Company's
Common Stock represented and voting at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE SELECTION OF ARTHUR ANDERSEN LLP.
15
<PAGE> 18
OTHER BUSINESS
The Company currently knows of no other matters to be submitted at the
Annual Meeting. If any other matters properly come before the Annual Meeting, it
is the intention of the persons named in the enclosed form of Proxy to vote the
shares they represent as the Board of Directors may recommend.
THE BOARD OF DIRECTORS
Dated: February 3, 1997
16
<PAGE> 19
RAYTEL MEDICAL CORPORATION
Proxy for Annual Meeting of Stockholders
Solicited by the Board of Directors
The undersigned, revoking all prior proxies, hereby appoints
P Richard Bader and E. Payson Smith, Jr., or either of them, with full power
R of substitution, as proxies to represent and vote as designated in this
O proxy any and all of the shares of stock of Raytel Medical Corporation,
X held or owned by or standing in the name of the undersigned on the
Y Company's books on January 27, 1997 at the Annual Meeting of Stockholders
of the Company to be held at the Hotel Sofliel, 223 Twin Dolphin Drive,
Redwood City, California at 11:00 a.m. on March 6, 1997, and any
continuation or adjournment thereof, with all powers the undersigned would
possess if personally present at the meeting.
The undersigned hereby directs and authorizes said proxies, and
each of them, or their substitute or substitutes, to vote as specified
below with respect to the proposals listed in paragraphs 1 and 2 on the
reverse side, or if no specification is made, to vote in favor thereof.
The undersigned hereby further confers upon said proxies, and
each of them, or their substitute or substitutes, discretionary authority
to vote with respect to all other matters, which may properly come before
the meeting or any continuation or adjournment thereof.
The undersigned hereby acknowledges receipt of: (a) Notice of
Annual Meeting of Stockholders of the Company, (b) accompanying Proxy
Statement, and (c) Annual Report to Stockholders for the fiscal year ended
September 30, 1996.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
[SEE REVERSE SIDE]
<PAGE> 20
DETACH HERE
/X/ Please mark
votes as in
this example
The undersigned hereby votes all the shares of the stock of Raytel Medical
Corporation which the undersigned is entitled to vote as hereinafter specified
upon the proposals listed below.
1. Election of two (2) directors to Class II of the Board of Directors.
Nominees: Richard F. Bader and Allan Zinberg
For Against
/ / / /
/ /
For both nominees except as noted above
2. To ratify the appointment of Arthur Andersen LLP as
independent auditors of the Company for the fiscal year
ending September 30, 1997.
For Against Abstain
/ / / / / /
MARK HERE FOR
ADDRESS CHANGE / /
AND NOTE AT LEFT
Sign exactly as your name(s) appear on your stock certificate. If shares of
stock stand of record in the name of two or more persons or in the name of
husband and wife, whether as joint tenants or otherwise, both or all of such
persons should sign this ballot. If shares of stock are held of record by a
corporation, this ballot should be executed by the President or Vice President
and the Secretary or Assistant Secretary, and the corporate seal should be
affixed thereto. Executors or administrators or other fiduciaries who execute
this ballot for a deceased stockholder should give their full title.
Signature: Date: Signature: Date:
--------------- -------- ------------- -----
