INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary Proxy Statement |_| Confidential, For use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Complete Management, Inc.
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(Name of Registrant as Specified in Its Charter)
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(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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 09-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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(5) Total fee paid:
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|_| Fee paid previously with preliminary materials:
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|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
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<PAGE>
COMPLETE MANAGEMENT, INC.
Notice of Annual Meeting of Shareholders to be held May 27, 1998
------------------
The Annual Meeting of Shareholders of Complete Management, Inc. will be
held at the Sheraton New York Hotel and Towers, 811 7th Avenue, New York, NY
10019, on May 27, 1998 at 10:00 a.m., eastern daylight savings time, for the
purpose of considering and acting upon the following:
1. Election of six directors;
2. Confirmation of the appointment of Arthur Andersen LLP as auditors
for the fiscal year ending December 31, 1998;
3. Adoption of the Complete Management, Inc. Employee Stock Purchase
Plan;
4. Approval of an amendment to the Company's 1995 Stock Option Plan to
increase the number of shares under the plan; and
5. Any and all matters incident to the foregoing, and such other
business as may legally come before the meeting and any adjournments
or postponements thereof.
The Board of Director has fixed the close of business on April 27, 1998 as
the record date for determining the shareholders having the right to notice of
and to vote at the meeting.
By order of the Board of Directors
Steven M. Rabinovici
Chairman of the Board, Chief Executive
Officer and President.
New York, New York
April 30, 1998
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IMPORTANT: Every shareholder, whether or not he or she expects to attend the
annual meeting in person, is urged to execute the proxy and return it
promptly in the enclosed business reply envelope.
<PAGE>
COMPLETE MANAGEMENT, INC.
-------------------
PROXY STATEMENT
For Annual Meeting of Shareholders
to be Held May 27, 1998
-----------------
Proxies in the form enclosed with this proxy statement (this "Statement")
are being solicited by Complete Management, Inc. ( the "Company") to be used at
the Annual Meeting of Shareholders (the "Annual Meeting") to be held at the
Sheraton New York Hotel and Towers, 811 7th Avenue, New York, NY 10019 at 10:00
a.m. eastern daylight savings time on May 27, 1998, for the purposes set forth
in the accompanying notice of meeting and this Statement. Complete's principal
executive offices are located at 254 West 31st Street, New York, New York 10001.
The approximate date on which this Statement and the accompanying proxy will be
mailed to shareholders ("Shareholders") is April 30, 1998.
THE VOTING AND VOTE REQUIRED
On April 27, 1998, the record date (the "Record Date") for the Annual
Meeting, there were [ ] common shares, par value $.001 per share ("Common
Shares"), outstanding, each of which will be entitled to one vote.
Directors are elected by a plurality of the votes cast at the meeting.
Confirmation of the appointment of auditors is by the affirmative vote of a
majority of the votes cast at the meeting. Adoption of the Complete Management,
Inc. Employee Stock Purchase Plan (the "Employee Stock Purchase Plan") and
approval of the amendment (the "Amendment") to the 1995 Stock Option Plan (the
"Stock Option Plan") are by the affirmative vote of a majority of all
outstanding shares entitled to vote thereon.
All shares represented by valid proxies will be voted in accordance with
the instructions contained therein. A proxy may be revoked by the shareholder
giving the proxy at any time before it is voted, either by oral or written
notice, and a prior proxy is automatically revoked by a shareholder giving a
subsequent proxy or attending and voting at the meeting. Attendance at the
meeting in and of itself does not revoke a prior proxy. In the absence of
instructions, proxies will be voted FOR each of the stated matters being voted
on at the meeting. Shares represented by proxies which are marked "WITHHOLD"
authority to vote for all six (6) nominees will not be counted in determining
whether a plurality vote has been received for the election of directors.
Similarly, shares represented by proxies which are marked "ABSTAIN" with respect
to the confirmation of auditors will not be counted in determining whether the
requisite vote has been received for such proposal. Shares represented by
proxies which are marked "ABSTAIN" with respect to the Employee Stock Purchase
Plan or the Amendment will have the effect of a vote against the Employee Stock
Purchase Plan or Amendment, as the case may be. In instances where brokers are
prohibited from exercising discretionary authority for beneficial owners who
have not returned proxies (so called "broker non-votes"), those shares will be
disregarded and, therefore, have no effect on the outcome of the vote on each of
the proposals, except in respect of the Employee Stock Purchase Plan and the
Amendment, where it will have the effect of a vote against the Employee Stock
Purchase Plan and the Amendment.
<PAGE>
ELECTION OF DIRECTORS
Six directors are to be elected at the Annual Meeting each for a term of
one year and until the election and qualification of a successor.
It is intended that votes pursuant to the enclosed proxy will be cast for
the election of the six nominees named below. In the event that any such nominee
should become unable or unwilling to serve as a director, the proxy will be
voted for the election of such person, if any, as shall be designated by the
Board of Directors. Management has no reason to believe these nominees will not
be available for election.
The nominees for election and certain information about them are shown
below:
Steven M. Rabinovici has been Chairman of the Board, Chief Executive
Officer and a director of the Company since December 28, 1995. Since January 22,
1998, he has also served as the Company's President. From December 3l, 1992
through December 27, 1995, he was the President, Chief Executive Officer and a
director of Medical Management Inc., a wholly owned subsidiary of the Company
("MMI"). He is a founder of the Company and also provided certain consulting
services to it during 1994 and 1995. From July 1990 through December 3l, 1992,
he was an independent healthcare and business consultant. Earlier in his career,
Mr. Rabinovici had more than ten years experience in hospital administration,
including approximately two years as associate administrator of Brookdale
Hospital Medical Center, a 1,000 bed teaching hospital, and two years as the
administrator of the Division of Psychiatry, Cornell University New York
Hospital. Mr. Rabinovici has over 15 years of experience in the health care
industry.
Arthur L. Goldberg has been Vice Chairman of the Board since January 22,
1998, and Chief Financial Officer of the Company since July 1997. From April
1996 to January 22, 1998, Mr. Goldberg also served as Senior Executive Vice
President and Chief Operating Officer of the Company. From August 1993 through
March 1996 he was an independent management consultant. From December 1990
through August 1993, he was the Chief Financial Officer of Elek-Tek, Inc., a
reseller of computer and related equipment. Mr. Goldberg has over 25 years of
experience in a variety of senior financial and operational management
positions.
Kenneth S. Schwartz, M.D. has been a director of the Company since March
24, 1998 and Senior Executive Vice President--Medical Affairs and Business
Development of the Company since January 22, 1998. From September 23, 1997 to
January 22, 1998, Dr. Schwartz had been Executive Vice President--Medical
Affairs of the Company. From July 1997 to September 22, 1997, he was the Vice
President--Medical Affairs of the Company. Dr. Schwartz has been the Director of
Radiology, St. Francis Hospital, Poughkeepsie, N.Y and the Director at Hudson
Imaging Associates, P.C., Jefferson Valley, N.Y since January 1996 and November
1995, respectively. From March 1995 through November 1996, Dr. Schwartz was the
Systems Director, Radiology and Imaging Services, St. Francis Hospital and
Medical Center-Saint Francis and Mount Sinai Campuses, Hartford, CT. From 1991
through 1995, he was the Medical Director, Putnam Hospital Center, Carmel, N.Y.
and from 1981 through 1995 the Director of Northern Metropolitan Radiology
Associates, P.C., which became managed by the Company in August 1996. Dr.
Schwartz has been a member of the Board of Directors of BLC Financial Services,
Inc. since June 1997. Dr. Schwartz has been a physician for over 20 years.
Steven Cohn has been a director of the Company since January 3, 1996 and a
member of its Audit and Compensation Committees since April 2, 1996. Mr. Cohn is
a member of the law firm of Goldberg & Cohn, LLP.
Steven A. Hirsh has been a director of the Company and a member of its
Audit and Compensation Committees since September 30, 1996. Mr. Hirsh has been a
portfolio manager for William Harris & Co., a financial services company, for
more than five years. Since 1994, he has also been Chairman, Chief Executive
Officer and President of Astro Communications, Inc., a manufacturer of strobe
lights.
Joseph S. Tocci has been a director of the Company and a member of its
Audit and Compensation Committees since May 12, 1997. He is a founder and has
been a managing partner of Tocci, Goldstein & Co., LLP (formerly Tocci and
Marcano), certified public accountants, for the past five years. From October
1993
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through December 1995, Mr. Tocci was a director of MMI, which was acquired by
the Company in a merger in January 1996.
Board of Directors, Committees and Related Agreements
The Board of Directors of the Company (the "Board") held five meetings
during 1997. The Audit and Compensation Committees each held two meetings during
1997. The Audit and Compensation Committees are comprised of Messrs. Cohn, Hirsh
and Tocci. There is no nominating committee. All directors attended more than
75% of the aggregate number of meetings of the Board and those committees on
which they are members.
The Compensation Committee reviews and recommends to the Board of
Directors the compensation and benefits of all officers of the Company, reviews
general policy matters relating to compensation and benefits of employees of the
Company and administers the issuance of stock options and discretionary cash
bonuses to the Company's officers, employees, directors and consultants. The
Audit Committee meets with management and the Company's independent public
accountants to determine the adequacy of internal controls and other financial
reporting matters. It is the intention of the Company to appoint only
independent directors to the Audit and Compensation Committees.
Steven Rabinovici, David Jacaruso, Marie Graziosi, Dennis Shields and Dr.
Lawrence Shields, founders of the Company, are parties to a shareholders'
agreement pursuant to which they have agreed, until June 1, 2005, to vote all of
their shares of the Company in favor of the election to the Board and for such
other or additional nominees as may be designated from time to time and approved
by the Board and to vote on all other matters in accordance with the
recommendations of the Board. Marie Graziosi is the wife of David Jacaruso, the
former Vice Chairman and former President of the Company.
The Board of Directors unanimously recommends a vote FOR the election of
each of the nominees.
CONFIRMATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board proposes that the Shareholders ratify the appointment of Arthur
Andersen LLP as the Company's independent auditors for 1998. Arthur Andersen LLP
were the Company's independent auditors for 1997, 1996 and 1995. The report of
Arthur Andersen LLP with respect to the Company's financial statements appears
in the Company's Annual Report for the fiscal year ended December 31, 1997. A
representative of Arthur Andersen LLP will be at the annual meeting and will
have an opportunity to make a statement if he desires to do so and will be
available to respond to appropriate questions. In the event that Shareholders
fail to ratify the appointment, the Board will consider it a directive to
consider other auditors for a subsequent year.
The Board of Directors unanimously recommends a vote FOR this proposal.
3
<PAGE>
ADOPTION OF EMPLOYEE STOCK PURCHASE PLAN
On January 22, 1998, the Board of Directors approved the adoption of the
Complete Management, Inc. Employee Stock Purchase Plan ("Employee Stock Purchase
Plan"), which is now being proposed for Shareholder approval. The Board of
Directors believes that the Employee Stock Purchase Plan is essential to the
Company's ability to retain and recruit highly qualified employees. The Employee
Stock Purchase Plan provides a significant incentive to all employees
participating in the plan to perform their responsibilities in ways that
increase the return on equity to the Company's stockholders. Stock purchase
plans also foster positive relations by assisting employees in acquiring Common
Shares, through payroll deductions, and helping to provide for their future
financial security.
The Employee Stock Purchase Plan will be administered by the Company. The
total number of Common Shares subject to purchase under the plan is 1,000,000
Common Shares. The plan offers eligible employees who elect to participate in
the Employee Stock Purchase Plan (a "Participating Employee") the opportunity to
purchase the Common Shares at the end of each bi-weekly payroll period. The
price per Common Share at which shares may be purchased will equal 95% of the
purchase price paid for the Common Shares. The number of shares that each
Participating Employee purchases will be determined by adding 5% of his or her
contribution amount to the contribution amount and dividing that number by the
price of the Common Shares on the last day of the month. The Company (or, at the
Company's discretion, the Participating Employee's employing subsidiary) will
pay the additional 5% of the purchase price and all transactional costs of the
purchase. No fractional shares will be issued under the Employee Stock Purchase
Plan. Cash in respect of fractional shares will be applied to purchases for the
following payroll period for the Participating Employee.
The Employee Stock Purchase Plan is open to each employee of the Company
and its subsidiaries whose customary employment is for more than 20 hours per
week and more than 5 months per calendar year, except any employee who would own
after the purchase of any share under the Employee Stock Purchase Plan more than
5% of any voting class of securities of the Company. An employee must also have
completed 90 days of employment with the Company or a subsidiary to participate
in the Employee Stock Purchase Plan. No Participating Employee may purchase more
than $25,000 in fair market value of the Common Shares in any calendar year
under the plan.
Shares purchased by a Participating Employee under the Employee Stock
Purchase Plan will be held in an account under the Participating Employee's
name. Shares will be left in the account of the Participating Employee until
they are sold at the Participating Employee's election or until the end of the
2-year period beginning on the date of purchase of the shares. A current or
former Participating Employee may elect once a year to have stock certificates
representing the Common Shares held for the minimum 2-year period delivered to
him or her and may elect at any time to have the Company sell the Common Shares
and distribute the proceeds to him or her (with the Company paying transactional
expenses on any sales effected by the Company with respect to shares held for
the Participating Employee by the Company). Participating Employees will receive
quarterly statements regarding the status of their accounts.
A Participating Employee will possess all the rights and privileges of a
stockholder of the Company with respect to all of the shares held in his or her
account under the Employee Stock Purchase Plan, including the right to direct
the vote with respect to such shares, and will receive all distributions and
stockholder communications with respect to such shares. Only Participating
Employees may participate, and no Participating Employee may transfer his or her
right to purchase stock otherwise than by will or the laws of descent and
distribution.
The Company has responsibility for general operation of the Employee Stock
Purchase Plan and has the power to interpret provisions of the Employee Stock
Purchase Plan. The Company's determinations in this regard are binding on all
parties.
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<PAGE>
The Board of Directors of the Company may suspend or terminate the
Employee Stock Purchase Plan, or amend or modify the terms of the Employee Stock
Purchase Plan at any time, except that (i) no amendment shall cause the Employee
Stock Purchase Plan to fail to qualify as an employee stock purchase plan under
section 423 of the Internal Revenue Code; and (ii) stockholder approval is
required for any amendment that would increase the total number of Common Shares
issuable under the Employee Stock Purchase Plan (other than pursuant to
provisions of the Employee Stock Purchase Plan relating to adjustments in the
event of stock splits, stock dividends, mergers and other changes in the
capitalization of the Company).
The Company does not sell its own shares under the Employee Stock Purchase
Plan. Therefore, the Company does not receive any proceeds in respect of any
sale of Common Shares under the plan.
U.S. Federal Income Tax Consequences to an Employee
The following is a brief summary of the principal United States federal
income tax consequences of transactions effected pursuant to the Employee Stock
Purchase Plan under the federal income tax laws in effect at the date hereof.
This summary applies to a Participating Employee who is a United States citizen,
a United States resident, or an individual who is otherwise subject to United
States federal income tax on wages paid to him or her by the Company or its
subsidiaries (the "Employer").
Each Participating Employee will be treated, for federal income tax
purposes, as having received compensation income equal to the amounts deducted
from his or her compensation and used to purchase Common Shares under the
Employee Stock Purchase Plan. The deducted amounts will be included by the
Employer in the Participating Employee's Form W-2 as compensation income subject
to federal income tax. A Participating Employee will not recognize additional
income for federal income tax purposes at the time stock is purchased under the
Employee Stock Purchase Plan.
The initial tax basis of shares purchased under the Employee Stock
Purchase Plan will be the purchase price paid by the Participating Employee. A
Participating Employee will not realize any taxable income when he or she
receives a certificate representing full shares withdrawn from his or her
account, either upon his or her request for withdrawal of shares or upon
complete withdrawal from the Employee Stock Purchase Plan or upon termination of
the plan.
A Participating Employee who purchases Common Shares under the Employee
Stock Purchase Plan and who disposes or directs the Company to dispose of such
shares more than two years after the purchase of the Common Shares or who dies
will recognize compensation income at the time of disposition or death in an
amount equal to the lesser of (1) the excess, if any, of the fair market value
of the Common Shares at the time of disposition or death over the purchase price
paid for the shares by the Participating Employee or (2) the excess, if any, of
the fair market value of the Common Shares at the time of purchase over the
purchase price paid for the shares by the Participating Employee. The
Participating Employee's basis in the Common Shares disposed of will be
increased by the amount recognized as compensation income. Any further gain
recognized on the disposition will be taxed as long-term capital gain for
federal income tax purposes.
If a Participating Employee purchases shares pursuant to the plan and
directs the Company to dispose of such shares within less than two years from
the purchase date (a so-called "disqualifying disposition"), the Participating
Employee would recognize compensation income at the time of disposition in an
amount equal to the excess, if any, of the fair market value of the Common
Shares on the date of purchase over the purchase price paid for the Common
Shares. The Participating Employee's basis in the shares disposed of would be
increased by the amount recognized as compensation income. Any additional gain
or loss realized by the Participating Employee upon the disposition would be
short-term or long-term capital gain or loss, depending upon the Participating
Employee's holding period for the shares disposed.
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<PAGE>
Dividends on all Common Shares held in a Participating Employee's account
will be paid to the Participating Employee and includable in the gross income of
the Participating Employee for the year in which the dividends are treated as
paid.
U.S. Federal Income Tax Consequences to the Employer
The following is a brief summary of the principal U.S. federal income tax
consequences to the Employer of transactions effected pursuant to the Employee
Stock Purchase Plan. This summary applies where the Participating Employee is a
United States citizen, a United States resident, or an individual who is
otherwise subject to United States federal income tax on wages paid to him or
her by the Employer.
If a Participating Employee purchases Common Shares pursuant to the
Employee Stock Purchase Plan and disposes of such shares more than two years
after the purchase, or dies at any time while Common Shares are held for him or
her under the plan or are in his or her possession, the Employer will not be
entitled to a deduction with respect to any amount treated as compensation
income to the Participating Employee as a result of the disposition or death (as
discussed in the previous section).
In the event of a "disqualifying disposition" of shares by a Participating
Employee, the Employer would ordinarily be entitled to a deduction for
compensation under section 162 of the Internal Revenue Code (relating to a trade
or business expense) in an amount equal to the excess, if any, of the fair
market value of the Shares on the date of purchase over the purchase price paid
for the shares by the Participating Employee (i.e., on the 5% discount subsidy
the Employer provided at the date of purchase).
APPROVAL OF AMENDMENT TO STOCK OPTION PLAN
The Company's Stock Option Plan was previously approved by the Board and
the Company's Shareholders on August 15, 1995 and October 24, 1995,
respectively. The Stock Option Plan, as amended, currently provides for, among
other things, incentive and non-qualified stock options to purchase 1,700,000
Common Shares. The Board proposes that the Shareholders approve an amendment
(the "Amendment"), approved by the Board on April 14, 1998, to increase by
1,000,000 shares the number of Common Shares for which options may be granted
under the Stock Option Plan. The main purpose of the Amendment is to enable the
Company to provide incentive to its many new employees who are necessary for the
growth of the Company.
To date, there are outstanding options to purchase 1,376,960 shares under
the Stock Option Plan. The exercise prices of all outstanding options are equal
to the fair market value of a Common Share on the date of grant.
The purpose of the Stock Option Plan is to provide incentives to key
employees, directors, independent contractors and agents whose performance will
contribute to the long-term success and growth of the Company, to strengthen the
ability of the Company to attract and retain employees, directors, independent
contractors and agents of high competence, to increase the identity of interests
of such people with those of the Company's shareholders and to help build
loyalty to the Company through recognition and the opportunity for stock
ownership. The Stock Option Plan is administered by the Board's Compensation
Committee.
Terms of Options
The Stock Option Plan permits the granting of both incentive stock options
and non-qualified stock options. Generally the option price of both incentive
stock options and non-qualified stock options must be at least equal to 100% of
the fair market value of the shares on the date of grant. The maximum term of
each option is ten years. For any participant who owns shares possessing more
than 10% of the voting rights of the Company's outstanding Common Shares, the
exercise price of any incentive stock option must be at least equal
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<PAGE>
to 110% of the fair market value of the shares subject to such option on the
date of grant and the term of the option may not be longer than five years.
Options become exercisable at such time or times as the Compensation Committee
may determine at the time it grants options.
Federal Income Tax Consequences
Non-qualified Stock Options. The grant of non-qualified stock options will
have no immediate tax consequences to the Company or the employee. The exercise
of a non-qualified stock option will require an employee to include in his gross
income the amount by which the fair market value of the acquired shares on the
exercise date (or the date on which any substantial risk of forfeiture lapses)
exceeds the option price.
Upon a subsequent sale or taxable exchange of the shares acquired upon
exercise of a non-qualified stock option, an employee will recognize long or
short-term capital gain or loss equal to the difference between the amount
realized on the sale and the tax basis of such shares.
The Company will be entitled (provided applicable withholding requirements
are met) to a deduction for Federal income tax purposes at the same time and in
the same amount as the employee is in receipt of income in connection with the
exercise of a non-qualified stock option.
Incentive Stock Options. The grant of an incentive stock option will have
no immediate tax consequences to the Company or the employee. If the employee
exercises an incentive stock option and does not dispose of the acquired shares
within two years after the grant of the incentive stock option nor within one
year after the date of the transfer of such shares to him (a "disqualifying
disposition"), he will realize no compensation income and any gain or loss that
he realizes on a subsequent disposition of such shares will be treated as a
long-term capital gain or loss. For purposes of calculating the employee's
alternative minimum taxable income, however, the option will be taxed as if it
were a non-qualified stock option.
Eligibility
Under the Stock Option Plan, incentive stock options may be granted only
to employees and non-qualified stock options may be granted to employees as well
as directors, independent contractors and agents. Of the options previously
granted under the Stock Option Plan, outstanding options to purchase 505,000
Common Shares were awarded to eight officers or former officers, outstanding
options to purchase 319,792 Common Shares were granted to directors and
outstanding options to purchase 552,168 Common Shares were granted to 28 key
employees. There are currently 10 executive officers and six directors of the
Company.
The Company believes that the Amendment should be approved because of the
need to have the ability to issue options to acquire Common Shares to the key
employees as well as directors and independent contractors and agents upon whose
performance and contribution the long-term success and growth of the Company is
dependent.
The Board of Directors unanimously recommends a vote FOR this proposal.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table, together with the accompanying footnotes, sets forth
information, as of April 27, 1998, regarding share ownership of all persons
known by the Company to own beneficially 5% or more of the Company's outstanding
Common Shares, all Named Executives (defined herein), all directors and
nominees, and all directors and officers of the Company as a group:
Shares of
Common Stock Percentage
Name of Beneficial Owner(1) Beneficially Owned of Ownership
--------------------------- ------------------ ------------
Directors, Nominees and Named Executives:
Steven M. Rabinovici(2)................. 360,126 2.57%
Arthur L. Goldberg(3)................... 100,500 *
Dennis Simmons(3)....................... 103,500 *
Kenneth S. Schwartz, M.D.(3)............ 121,147 *
David R. Jacaruso(4).................... 307,452 2.19%
Dennis Shields(5)....................... 472,212 3.37%
Robert Keating(3)....................... 100,000 *
Steven Cohn(3).......................... 24,021 *
Steven A. Hirsh(6)...................... 177,777 1.25%
Joseph S. Tocci(3)...................... 25,501 *
All Directors and Officers as a group
(13 persons)(7)....................... 1,310,098 8.88%
Shares of
Common Stock Percentage
Name of Beneficial Owner(1) Beneficially Owned of Ownership
--------------------------- ------------------ ------------
5% and Greater Shareholders(8):
Putnam Investments, Inc. ............... 1,302,443 9.28%
Mellon Bank Corporation................. 1,169,600 8.33%
Lawrence Shields, M.D.(9)............... 1,078,291 7.68%
William Harris Investors, Inc. (10)..... 1,017,458 7.06%
- ----------
* Less than 1%
(1) Address of beneficial owner is c/o Complete Management, Inc. 254 West 31st
Street, New York, NY 10001, except address of Dr. Shields is 26 Court
Street, Brooklyn, New York 11242, address of Mellon Bank Corporation is
One Mellon Bank Center, Pittsburgh, Pennsylvania 15258 and address of
Putnam Investments, Inc. is One Post Office Square, Boston, Massachusetts
02109.
(2) Includes 235,126 shares held as custodian for the benefit of his minor
son, Jeffrey. Does not include options to purchase 100,000 shares granted
on July 16, 1997 expiring five (5) years from the date of grant and
exercisable only during the last 30 days of the option term, except that
the first date on which the options shall be exercisable shall be
accelerated as follows: (i) options to purchase 50,000 shares shall become
exercisable if the closing price of the Common Shares is at least $22.50
for 30 consecutive trading days; (ii) options to purchase the balance of
the shares covered by the options shall become exercisable if the closing
price of the Common Shares is at least $27.50 for 30 consecutive trading
days; and (iii) options to purchase 75,000 shares shall become exercisable
if a "change in control" (as defined in the option agreement) occurs.
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(3) Includes options exercisable within 60 days of the date hereof as follows:
Arthur L. Goldberg, 100,000; Dennis Simmons, 100,000; Kenneth S. Schwartz,
M.D., 26,597; Robert Keating, 100,000; Steven Cohn, 20,000 and Joseph
Tocci, 20,000.
(4) Includes shares held by his wife, Marie Graziosi and shares held as
custodian for his minor children, Cara Elizabeth and David Francis. Does
not include options to purchase 100,000 shares granted on July 16, 1997
expiring five (5) years from the date of grant and exercisable only during
the last 30 days of the option term, except that the first date on which
the options shall be exercisable shall be accelerated as follows: (i)
options to purchase 50,000 shares shall become exercisable if the closing
price of the Common Shares is at least $22.50 for 30 consecutive trading
days; (ii) options to purchase the balance of the shares covered by the
options shall become exercisable if the closing price of the Common Shares
is at least $27.50 for 30 consecutive trading days; and (iii) options to
purchase 75,000 shares shall become exercisable if a "change in control"
(as defined in the option agreement) occurs. Mr. Jacaruso resigned as a
director and officer of the Company in October 1997 to become a director
and officer of CMIC.
(5) Dennis Shields is the son of Dr. Lawrence Shields. Does not include
options to purchase 100,000 shares granted on July 16, 1997 expiring five
(5) years from the date of grant and exercisable only during the last 30
days of the option term, except that the first date on which the options
shall be exercisable shall be accelerated as follows: (i) options to
purchase 50,000 shares shall become exercisable if the closing price of
the Common Shares is at least $22.50 for 30 consecutive trading days; (ii)
options to purchase the balance of the shares covered by the options shall
become exercisable if the closing price of the Common Shares is at least
$27.50 for 30 consecutive trading days; and (iii) options to purchase
75,000 shares shall become exercisable if a "change in control" (as
defined in the option agreement) occurs. Mr. Shields resigned as an
officer and director of the Company in October 1997 to become a director
and officer of CMIC.
(6) Consists of (i) 94,444 shares issuable on the conversion of Convertible
Subordinated Notes owned by a trust of which Mr. Hirsh is the portfolio
manager with investment power, (ii) 50,000 shares issuable upon conversion
of Convertible Subordinated Notes owned by a limited partnership of which
Mr. Hirsh is a general partner with investment power and (iii) 33,333
shares issuable on conversion of Convertible Subordinated Notes owned by
Astro Communications, Inc., a company of which Mr. Hirsh is President and
Chief Executive Officer.
(7) Includes (i) 716,040 shares issuable upon exercise of options exercisable
within 60 days of the date hereof and (ii) 177,777 shares issuable on the
conversion of Convertible Subordinated Notes. Does not include shares held
by Messrs. Jacaruso and Shields who resigned as executive officers and
directors of the Company in October 1997.
(8) Based on reports filed by the shareholder under Section 13 of the
Securities Exchange Act of 1934, as amended.
(9) Dr. Lawrence Shields is the father of Dennis Shields.
(10) Includes 398,000 shares beneficially owned by Mr. Harris' wife, 33,333
shares beneficially owned by Astro Communications, Inc. ("ACI"), 87,443
shares beneficially owned by the Harris Foundation, 94,444 shares
beneficially owned by William Harris & Co. Employee Profit Sharing Trust
("WH&Co PST") and 50,000 shares beneficially owned by HFF Partners, LP.
Mr. Harris has shared voting power in the foregoing shares except for the
shares owned by HFF Partners, LP which are included based upon Mr. Harris'
relationship with Steven A. Hirsh, an employee of WH & Co. and also a
director of the Company. The foregoing share numbers assume the conversion
of an aggregate of $3,475,000 Convertible Notes into 386,108 Common
Shares. ACI is a NASDAQ bulletin board listed manufacturing company of
which Mr. Harris is a 32% owner. WH&Co PST is a retirement plan in which
Mr. Harris has an approximate 55.45%
9
<PAGE>
beneficial interest. WH&Co is the plan sponsor. WHI Growth Fund, L.P.
("WHIGF") is a private, closed end investment partnership investing
primarily in publicly traded equity and fixed income securities. William
Harris Investors, Inc. is WHI GF's general partner and Irving B. Harris is
an investor in the Fund. HFF Partners, LP is an Illinois limited
partnership composed of individuals, some of whom are related to Steven A.
Hirsh. Mr. Hirsh is the managing general partner.
COMPENSATION OF DIRECTORS AND OFFICERS
AND RELATED MATTERS
Summary Compensation Table
The following table sets forth certain summary information
concerning the aggregate total annual salary and bonus paid or accrued by the
Company for services rendered in 1997, 1996 and 1995 to its chief executive
officer and to the other executive officers named below who received annual
compensation in excess of $100,000 (the "Named Executives").
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------------------------ -------------------
Salary Bonus Other Annual Common Shares
Name and principal position Year ($) ($) Compensation Underlying Options
--------------------------- ---- --- --- ------------ ------------------
<S> <C> <C> <C> <C> <C>
Steven M. Rabinovici...... 1997 238,543 -- 33,727 100,000
Chairman, CEO and President 1996 250,000 -- 24,672 --
1995 109,842(1) -- 21,124 --
Kenneth S. Schwartz, M.D.. 1997 269,652 58,137 -- 75,000
Senior Executive Vice President 1996 89,385 -- 4,792
David R. Jacaruso......... 1997 225,980(2) -- 25,077 100,000
Vice Chairman and President 1996 250,000 -- 17,389 --
1995 165,063(3) -- 6,334 --
Dennis Shields............ 1997 262,392(4) -- -- --
Executive Vice President 1996 250,000 -- 32,498 --
1995 136,92(5) -- 19,870 --
Arthur L. Goldberg........ 1997 191,070 -- -- --
Vice Chairman and CFO 1996 140,978 -- -- 100,000
Robert Keating............ 1997 188,154 -- -- --
Senior Executive Vice President 1996 131,635 -- -- 150,000
Dennis Simmons............ 1997 189,628 -- -- --
Chief Operating Officer 1996 130,387 -- 2,356 100,000
</TABLE>
- ----------
(1) Consists of fees of $30,650 from the Company for consultation and advice
to senior management and salary from MMI of $79,192.
(2) Includes $40,384 paid by CMIC, a 60% owned subsidiary of the Company. Mr.
Jacaruso resigned as a director and executive officer of CMI in October
1997.
(3) Includes consulting fees of $63,075 paid by the Company to Marie Graziosi,
Mr. Jacaruso's wife.
10
<PAGE>
(4) Includes $137,892 paid by CMIC. Mr. Shields resigned as a director and
executive officer of CMI in October 1997.
(5) Consists of fees of $57,728 from the Company for consultation and advice
to senior management and salary from MMI of $79,192.
Stock Options
The following tables show certain information with respect to incentive and
non-qualified stock options granted in 1997 to Named Executives under the 1995
Stock Option Plan and the aggregate value at December 31, 1997 of such options.
The per share exercise price of all options is equal to the fair market value of
a Common Share on the date of grant. No Options granted to Named Executives have
been exercised.
Option Grants in 1997
Individual Grants of Options
<TABLE>
<CAPTION>
Potential Realizable
Value
at Assumed Annual
Rates
of Stock Price
Percent of
Number of Total Options Appreciation for
Securities Granted to Exercise Option Term
Underlying Employees in Price Expiration -----------
Name Option # 1997 ($/Sh) Date 5% ($) 10% ($)
----- --------- ----- ------- ---- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Steven M. Rabinovici 100,000(1) 12.3 14.25 July 16,2002 1,774,871 2,188,174
Kenneth S. Schwartz, M.D. 75,000(2) 9.2 14.25 Feb. 5, 2007 1,364,026 2,520,057
David R. Jacaruso 100,000(1) 12.3 14.25 July 16, 2002 1,774,871 2,188,174
Dennis Shields 100,000(1) 12.3 14.25 July 16, 2002 1,774,871 2,188,174
</TABLE>
- ----------
(1) Options are exercisable only during the last 30 days of the option term;
provided, however, that 50% become earlier exercisable if the Common
Shares trade at an average closing price per share of at least $22.50 for
a period of 90 days, and an additional 50% become earlier exercisable if
the Common Shares trade at an average closing price per share of at least
$27.50 for a period of 30 days, and 75% become exercisable in the event of
a "change of control" as defined therein.
(2) Options vest one-third on February 5, 1998, February 5, 1999 and February
5, 2000.
11
<PAGE>
Aggregated 1997 Year End Option Values
Number of
Common Shares
Underlying Value of Unexercised
Unexercised Options In-The-Money Options
at 12/31/97 (#) at 12/31/97 (1) ($)
Name Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------------------- -------------------------
Steven M. Rabinovici...... 0/100,000 $0/$0
Kenneth S. Schwartz, M.D. 26,597/53,195 $0/$0
David R. Jacaruso......... 0/100,000 $0/$0
Dennis Shields............ 0/100,000 $0/$0
Arthur L. Goldberg........ 100,000/0 $562,500/$0
Robert Keating............ 50,000/100,000 $281,250/$281,250
Dennis Simmons............ 100,000/0 $562,500/$0
- ------------
(1) Based on the closing price, $14.00, as quoted on the NYSE.
Employment Contracts
In October 1995, the Company entered into an employment agreement with
Steven M. Rabinovici, which became effective on January 3, 1996, providing for
his employment as Chairman of the Board and Chief Executive Officer for a term,
as extended, expiring on December 31, 2000. On December 31 of each year, the
term is automatically extended for an additional year, unless on or before such
date either party elects to terminate the agreement at the expiration of the
term. The agreement, as amended, provides for an annual base salary of $300,000
and for participation in all executive benefit plans. The agreement also
provides, among other things, that, if Mr. Rabinovici's employment is terminated
without cause (as defined in the agreement), the Company will pay him an amount
equal to the salary which would have been payable to him over the unexpired term
of his employment agreement.
In October 1995, the Company entered into an employment agreement with
David R. Jacaruso, which became effective on January 3, 1996, providing for his
employment as Vice Chairman of the Board and President for a term, as extended,
expiring on December 31, 2000. As of October 1, 1997, the employment agreement
was terminated, without liability, and Mr. Jacaruso became and executive officer
of CMIC at an annual base salary of $250,000.
In October 1995, the Company entered into an employment agreement with
Dennis Shields, which became effective on January 3, 1996, providing for his
employment as an Executive Vice President for a term, as extended, until
December 31, 2000. As of October 1, 1997, the employment agreement was
terminated, without liability, and Mr. Shields became and executive officer of
CMIC at an annual base salary of $250,000.
In March 1996, the Company entered into an employment agreement with
Arthur Goldberg providing for his employment until March 10, 1999. The
agreement, as amended, provides for an annual base salary of $220,000, for
participation in all executive benefit plans and for the grant of an option to
purchase 100,000 Common Shares exercisable for a ten-year period. On April 16,
1997, and March 7, 1998, the Company extended the term of the agreement until
March 10, 2000 and March 10, 2001, respectively.
In March 1996, the Company entered into an employment agreement with
Dennis Simmons providing for his employment until March 10, 1999. The agreement,
as amended, provides for an annual base salary of
12
<PAGE>
$210,000, for participation in all executive benefit plans and for the grant of
an option to purchase 100,000 Common Shares exercisable for a ten-year period.
In March 1996, the Company entered into an employment agreement with
Robert Keating commencing on April 8, 1996 providing for his employment until
December 31, 1999, but may automatically be extended for two years on mutually
agreeable terms. The agreement provides for an annual base salary $185,000 with
escalation to a base salary of $199,800 and $215,784, respectively, on March 7,
1997 and March 7, 1998. The agreement also provides for participation in all
executive benefit plans and for the grant of an option for 150,000 Common Shares
exercisable for a three year period. Up to 50,000 options vest at the end of
each year of employment; 47,500 options in each of the first three years will
vest based upon a performance formula and 2,500 options in each of the next
three years vest without regard to the formula.
In August 1996, the Company entered into an employment agreement with
Kenneth S. Schwartz, M.D. providing for his employment until August 28, 2001.
The agreement provides for a base salary of $280,000 and for participation in
all executive benefit plans. The Agreement provides for certain incentive
bonuses and for the grant of an option for 4,792 Common Shares exercisable for a
ten-year period.
In January 1996, the Company entered into an employment agreement with
Joseph M. Scotti, which became effective on January 3, 1996, providing for his
employment for an initial term expiring on December 31, 1999. The agreement
provides for an annual base salary of $175,000 and for participation in all
executive benefit plans. The agreement also provides, among other things, that,
if Mr. Scotti's employment is terminated without cause (as defined in the
agreement), the Company will pay him an amount equal to the salary which would
have been payable to him over the unexpired term of his employment agreement.
Compensation Policies Applicable to Senior Executives
The Compensation Committee of the Board establishes and administers
compensation policies applicable to the Company's executive officers. The key
objective in setting such policies is to develop a program designed to attract
and retain executives critical to the success of the Company and to reward and
motivate these executives for performance which enhances the profitability of
the Company and creates value for its shareholders. The Board at large assumed
the responsibilities of the Compensation Committee prior to such Committee's
first meeting.
To achieve these objectives, the Compensation Committee has developed a
competitive, market driven, base salary program coupled with a long-term
incentive program consisting of incentive, non-qualified and performance based
stock options with extended vesting periods. The Compensation Committee may also
award discretionary cash bonuses. Base salaries, prior to incentive awards, for
executive officers are fixed at levels believed to be within a competitive range
for comparable positions in comparable companies.
The base salary levels for all of the Named Executives, except Messrs.
Goldberg, Simmons, Keating and Schwartz were established prior to the Company's
initial public offering and the expansion of the Board from three members to its
current size. The Compensation Committee believes that the salary levels
determined prior to going public are consistent with its policies for
determining base salary levels. The base salaries and stock option grants to
Named Executives, and the base salary levels of and option grants to all other
executive officers of the Company were determined in accordance with the
Compensation Committee's policies.
Report submitted by the Compensation Committee: Steven Hirsh, Steven Cohn
and Joseph S. Tocci.
13
<PAGE>
Compensation of Directors
Outside directors are granted options to purchase 20,000 Common Shares,
exercisable for 50% of the shares covered immediately upon grant and for the
remainder of the shares following one year's service, as soon as practicable
after taking office. Mr. Hirsh has waived this grant. The per share exercise
price of such options is equal to the fair market value of a Common Share on the
date of grant.
Comparative Performance by the Company
The following graph shows a comparison of cumulative total returns for the
Company, the New York Stock Exchange Market Index ("NYSE") and a peer group
index.
COMPARE CUMULATIVE TOTAL RETURN
AMONG COMPLETE MANAGEMENT, INC.,
NYSE MARKET INDEX AND PEER GROUP
[GRAPHIC OMITTED]
14
<PAGE>
Certain Relationships and Related Transactions
The Company's initial client, GMMS, is 95% owned by Lawrence Shields,
M.D., a neurologist who is also a cofounder and major shareholder of the
Company. Accordingly, GMMS has been classified as a related party to the
Company. All of the Company's revenues in 1995 and 65% and 28% of its revenues
in 1996 and 1997, respectively, were generated from management agreements with
GMMS. During 1997, the percentage of revenues generated from such agreements was
45%, 32%, 22% and 17%, respectively, for each of the three-month periods ended
March 31, June 30, September 30 and December 31, 1997. The Company is the
beneficiary of key-man life insurance policies aggregating $10,000,000 covering
the life of Dr. Shields.
Certain of the Company's full-service clients, Northern Metropolitan
Medical, P.C., United Physicians, P.C., Complete Medical Services, P.C., Pain
Control Center of NJ, P.C. and Brunswick Anesthesia Associates, P.C., are 100%
owned by Kenneth S. Schwartz, a director and executive officer of the Company.
During 1997, 23% of the Company's revenues were generated under management
agreements with these full-service clients.
During 1997, the Company paid consulting fees in the amount of $248,056 to
MADAJ Dezines, Ltd. ("MADAJ") to provide design services and to acquire
furniture and furnishings. MADAJ is controlled by Marie Graziosi, a founder and
shareholder of the Company and wife of David Jacaruso, a former President and
former Vice Chairman of the Company.
On December 22, 1997, one of the Company's full service clients, which is
owned by Kenneth S. Schwartz, M.D., agreed to acquire the medical practice of
Hudson Imaging Associates, P.C. ("HIA") for approximately $1,857,500 in cash. In
addition, on such date, the Company agreed to merge AAMC of Chappaqua, Inc.
("AAMCC") with and into a wholly owned subsidiary of the Company for $1,417,485
in Common Shares. Dr. Schwartz, a director and executive officer of the Company,
owned a one-third interest in each of HIA and AAMCC. Both transactions were
approved at a Special Meeting of the Board of Directors on December 22, 1997.
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 ten-percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC"). Officers, directors and greater than ten-percent shareholders are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
To the best of the Company's knowledge, based solely on review of the
copies of such forms furnished to the Company, or written representations that
no other forms were required, the Company believes that all Section 16(a) filing
requirements applicable to its officers, directors and greater than ten-percent
shareholders were complied with during 1997, except that Kenneth S. Schwartz and
Alan Goldstein were each late in filing their initial statement of beneficial
ownership.
MISCELLANEOUS
Other Matters
Management knows of no matter other than the foregoing to be brought
before the Annual Meeting of Shareholders, but if such other matters properly
come before the meeting, or any adjournment thereof, the persons named in the
accompanying form of proxy will vote such proxy on such matters in accordance
with their best judgment.
15
<PAGE>
Reports and Financial Statements
Complete's Annual Report for the year ended December 31, 1997 including
Audited Financial Statements, accompanies this Proxy Statement. Such Report and
Financial Statements contained therein are not incorporated herein by reference
and are not considered part of this soliciting material.
A Copy of the Company's Annual Report to the Securities and Exchange
Commission on Form 10-K, without exhibits, will be provided without charge to
any shareholder submitting a written request. Such request should be addressed
to Joseph M. Scotti, Secretary, Complete Management, Inc., 254 West 31st Street,
New York, New York 10001.
Solicitation of Proxies
The entire cost of the solicitation of proxies will be borne by Complete.
Complete has retained Georgeson & Company, Inc. to solicit proxies in the form
enclosed and will pay such firm a fee of $7,000. In addition, proxies may be
solicited by directors, officers and regular employees of Complete, without
extra compensation, by telephone, telegraph, mail or personal interview.
Complete will also reimburse brokerage houses and other custodians, nominees and
fiduciaries for their reasonable expenses for sending proxies and proxy material
to the beneficial owners of its Common Shares.
Shareholder Proposals
Shareholder proposals intended to be presented at the Company's 1999
Annual Meeting must be received by the Company for inclusion in the Company's
proxy statement relating to that meeting not later than February 16, 1999. Such
proposals should be addressed to Joseph M. Scotti, Secretary, Complete
Management, Inc. 254 West 31st Street, New York, New York 10001.
EVERY SHAREHOLDER, WHETHER OR NOT HE OR SHE EXPECTS TO ATTEND THE ANNUAL
MEETING IN PERSON, IS URGED TO EXECUTE THE PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED BUSINESS REPLY ENVELOPE.
By order of the Board of Directors
Steven M. Rabinovici
Chairman of the Board, Chief Executive
Officer and President.
New York, New York
April 30, 1998
16
<PAGE>
[Front of Proxy Card]
COMPLETE MANAGEMENT, INC.
This Proxy is solicited by the Board of Directors for the Annual Meeting on
May 27, 1998
The undersigned hereby appoints Steven M. Rabinovici and Arthur L.
Goldberg and each of them, with full power of substitution, the attorneys and
proxies of the undersigned to attend the Annual Meeting of Shareholders of
Complete Management, Inc. to be held on May 27, 1998 at 10:00 a.m. and at any
adjournments or postponements thereof, hereby revoking any proxies heretofore
given, to vote all Common Shares of the Company held or owned by the
undersigned, as indicated, on the proposals as more fully set forth in the Proxy
Statement, and in their discretion upon such other matters incident to the
foregoing, and such other business as may legally come before the meeting and
any adjournments or postponements thereof.
1. Election of Directors - Steven M. Rabinovici, Arthur Goldberg, Kenneth S.
Schwartz, Steven Cohn, Steven A. Hirsh and Joseph S. Tocci.
|_| FOR all nominees.
|_| WITHHOLD authority to vote for all nominees.
|_| FOR all nominees, except the nominee(s) written below.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. Confirmation of the appointment of Arthur
Andersen LLP as auditors for the fiscal year
ending December 31, 1998. |_| |_| |_|
3. Adoption of Employee Stock Purchase Plan. |_| |_| |_|
4. Approval of amendment to 1995 Stock Option
Plan. |_| |_| |_|
================================================================================
[Back of Proxy Card]
The shares represented by this Proxy will be voted as directed or, if no
direction is indicated, FOR each of the proposals.
The undersigned hereby acknowledges receipt of the Notice of, and Proxy
Statement for, the Annual Meeting.
Date __________________________, 1998
______________________________________
Signature of Shareholder
______________________________________
Signature of Shareholder
DATE AND SIGN EXACTLY AS NAME
APPEARS HEREON. EACH JOINT TENANT
MUST SIGN. WHEN SIGNING AS
ATTORNEY, EXECUTOR, TRUSTEE, ETC.
GIVE FULL TITLE. IF SIGNER IS
CORPORATION, SIGN IN FULL CORPORATE
NAME BY AUTHORIZED OFFICER.
