<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 14a-11(c) or 14a-12
</TABLE>
NCS HEALTHCARE, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
KEVIN B. SHAW, PRESIDENT AND CHIEF EXECUTIVE OFFICER
(NAME OF PERSON FILING PROXY STATEMENT)
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:
Not Applicable
(2) Aggregate number of securities to which transaction applies:
Not Applicable
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11*
Not Applicable
(4) Proposed maximum aggregate value of transaction:
Not Applicable
(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:
- ------------------
*Set forth the amount on which the filing fee is calculated and state how it was
determined.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
NCS Healthcare Logo
November 1, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of Stockholders
of NCS HealthCare, Inc. to be held Monday, November 22, 1999, at 9:30 a.m.
(local time), at the Private Rooms at Playhouse Square, 1515 Euclid Avenue, 2nd
Floor, Cleveland, Ohio.
You will be asked to consider and vote upon the election of a Director. In
addition, there will be a discussion of the Company's activities and a report on
our first quarter, which ended on September 30, 1999.
Whether or not you plan to attend the Annual Meeting in person, it is
important that your shares are represented. Therefore, please complete, sign,
date and promptly return the enclosed proxy card in the accompanying envelope.
You are, of course, welcome to attend the Annual Meeting and vote in person even
if you have previously returned your proxy card.
On behalf of the Board of Directors and the management of NCS HealthCare,
Inc., we would like to thank you for your continued support and confidence.
<TABLE>
<S> <C>
Sincerely,
/s/ Jon H. Outcalt /s/ Kevin B. Shaw
Jon H. Outcalt Kevin B. Shaw
Chairman President and Chief Executive
Officer
</TABLE>
<PAGE> 3
NCS HEALTHCARE, INC.
3201 Enterprise Parkway
Cleveland, Ohio 44122
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MONDAY, NOVEMBER 22, 1999
The 1999 Annual Meeting of Stockholders of NCS HealthCare, Inc., a Delaware
corporation, will be held Monday, November 22, 1999, at 9:30 a.m. (local time),
at the Private Rooms at Playhouse Square, 1515 Euclid Avenue, 2nd Floor,
Cleveland, Ohio. Doors to the meeting will be open at 9:00 a.m.
The meeting will be conducted:
1. To consider and vote upon the election of the class of Director whose
term will expire at the Annual Meeting of Stockholders to be held in
2002; and
2. To consider and act upon such other matters as may properly come
before the meeting or any and all postponements or adjournments
thereof.
Only stockholders of record at the close of business on October 18, 1999,
will be entitled to notice of and to vote at the meeting or any adjournments or
postponements thereof.
Kevin B. Shaw
President and Chief Executive Officer
November 1, 1999
EACH STOCKHOLDER IS REQUESTED TO EXECUTE AND PROMPTLY RETURN THE ENCLOSED PROXY
CARD IN THE ENCLOSED PREPAID ENVELOPE.
<PAGE> 4
NCS HEALTHCARE, INC.
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To be held Monday, November 22, 1999
Mailed on or about November 1, 1999
INTRODUCTION
This proxy statement (the "Proxy Statement") is being furnished to
stockholders of NCS Healthcare, Inc., a Delaware corporation ("NCS" or the
"Company"), in connection with the solicitation of proxies by the Board of
Directors of the Company (the "Board" or the "Board of Directors") from holders
of record of the Company's outstanding shares of Class A Common Stock, $.01 par
value (the "Class A Stock"), and Class B Common Stock, $.01 par value (the
"Class B Stock") (the Class A Stock and Class B Stock hereinafter collectively
referred to as the "Common Stock"), as of the close of business on October 18,
1999 (the "Annual Meeting Record Date") for use at the 1999 Annual Meeting of
Stockholders of the Company (the "Annual Meeting"), and at any adjournments or
postponements thereof. The Annual Meeting will be held on Monday, November 22,
1999, at 9:30 a.m. (local time), at the Private Rooms at Playhouse Square, 1515
Euclid Avenue, 2nd Floor, Cleveland, Ohio. This Proxy Statement and the
accompanying proxy card are being mailed to stockholders on or about November 1,
1999. The headquarters and principal executive offices of the Company are
located at 3201 Enterprise Parkway, Cleveland, Ohio 44122.
Proxies will be solicited by mail, telephone or other means of
communication. Solicitation also may be made by Directors, officers and other
employees of the Company not specifically employed for this purpose. The Company
will reimburse brokerage firms, custodians, nominees and fiduciaries in
accordance with the rules of the National Association of Securities Dealers,
Inc. for reasonable expenses incurred by them in forwarding materials to the
beneficial owners of the Common Stock. The entire cost of solicitation will be
borne by the Company.
VOTING RIGHTS AND PROXY INFORMATION
Only holders of record of Common Stock as of the close of business on the
Annual Meeting Record Date will be entitled to notice of and to vote at the
Annual Meeting or any adjournments or postponements thereof. Holders of Class A
Stock are entitled to one vote per share on any matter that may properly come
before the Annual Meeting, and holders of Class B Stock are entitled to ten
votes per share on any such matters. Except as otherwise provided by the
Company's Certificate of Incorporation or required by law, holders of the Class
A Stock and Class B Stock will at all times vote on all matters (including the
election of Directors) together as one class. The presence, either in person or
by properly executed and delivered proxy, of the holders of a majority of the
voting power of the Common Stock entitled to vote is necessary to constitute a
quorum at the Annual Meeting and to permit action to be taken by stockholders at
such meeting. Under Delaware law,
1
<PAGE> 5
Common Stock represented by proxies that reflect abstentions or "broker
non-votes" (i.e., shares held by a broker or nominee that are represented at the
Annual Meeting, but with respect to which such broker or nominee is not
empowered to vote on a particular proposal) will be counted as shares present
and entitled to vote for purposes of determining the presence of a quorum.
A plurality of the votes present in person or represented by proxy at the
Annual Meeting is required to elect the nominee for Director. "Plurality" means
that the individuals who receive the largest number of votes cast are elected as
Directors up to the maximum number of Directors to be chosen at the meeting.
Consequently, any shares not voted (whether by abstention, broker non-vote or
otherwise) will have no impact on the election of the Director, except to the
extent that the failure to vote for an individual results in another individual
receiving a larger number of votes.
Unless otherwise provided by law or the Company's Certificate of
Incorporation, the affirmative vote of the holders of at least a majority of the
voting power of the Common Stock entitled to vote on such a matter and present
in person or represented by proxy at the Annual Meeting is required to approve
all other matters properly brought before the Annual Meeting. Abstentions as to
all such matters will have the same effect as votes against such matters. Broker
non-votes, however, are not counted as present and entitled to vote for purposes
of determining whether a proposal has been approved and will have no effect on
the outcome of any proposal requiring the affirmative vote of the holders of a
majority of the outstanding shares present and entitled to vote.
As of October 18, 1999, there were 14,488,467 shares of Class A Stock and
5,899,673 shares of Class B Stock outstanding and entitled to vote at the Annual
Meeting. All shares of Common Stock of the Company represented at the Annual
Meeting by properly executed and delivered proxies received prior to or at the
Annual Meeting and not revoked will be voted at the Annual Meeting in accordance
with the instructions indicated in such proxies. If no instructions are
indicated, such proxies will be voted for the nominee recommended by the Board.
In the event that a quorum is not present at the time the Annual Meeting is
convened, or if for any other reason the Company believes that additional time
should be allowed for the solicitation of proxies, the Company may adjourn the
Annual Meeting with or without a vote of the stockholders. If the Company
proposes to adjourn the Annual Meeting by a vote of the stockholders, the
persons named in the enclosed proxy will vote all Common Stock for which they
have voting authority in favor of such adjournment.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with National City Bank, in its capacity as transfer agent for the Company (the
"Transfer Agent"), at or before the Annual Meeting, a written notice of
revocation bearing a later date than the proxy, (ii) duly executing a subsequent
proxy relating to the same shares of Common Stock and delivering it to the
Transfer Agent at or before the Annual Meeting or (iii) attending the Annual
Meeting and voting in person (although attendance at the Annual Meeting will
not, in and of itself, constitute a revocation of a proxy). Any written notice
revoking a proxy should be sent to National City Bank, Corporate Trust
Administration, 629 Euclid Avenue, Room 635, Cleveland, Ohio 44114, Attention:
Mr. J. Dean Presson.
2
<PAGE> 6
STOCK OWNERSHIP OF PRINCIPAL HOLDERS AND MANAGEMENT
The following table sets forth certain information with respect to
beneficial ownership of the Common Stock as of September 13, 1999, unless
indicated otherwise, by (i) each person known by the Company to be the
beneficial owner of more than 5% of any class of Common Stock, (ii) each
Director, (iii) each Named Executive Officer and (iv) all Directors and
executive officers as a group.
<TABLE>
<CAPTION>
CLASS A STOCK CLASS B STOCK
BENEFICIALLY OWNED BENEFICIALLY OWNED(1)
----------------------- -----------------------
NAME NUMBER PERCENT NUMBER PERCENT
- ---- ------------- ------- ------------- -------
<S> <C> <C> <C> <C>
AMVESCAP PLC
11 Devonshire Square
London, England EC2M 4YR.................... 993,943(2) 6.9% -- --
Massachusetts Financial Services Company
500 Boylston St., 15th Floor
Boston, MA 02116............................ 763,204(3) 5.3% -- --
Pilgrim Baxter & Associates, Ltd.
825 Duportail Rd
Wayne, PA 19087............................. 828,700(4) 5.7% -- --
Putnam Investments, Inc.
One Post Office Square
Boston, MA 02109............................ 1,110,151(5) 7.7% -- --
T. Rowe Price Associates, Inc.
100 East Pratt St
Baltimore, MD 21202......................... 1,156,541(6) 8.0% -- --
Thomson Horstmann & Bryant, Inc.
Park 80 West, Plaza Two
Saddle Brook, NJ 07663...................... 847,400(7) 5.9% -- --
Waddell & Reed Investment Management Company
6300 Lamar Avenue P.O. Box 29217
Shawnee Mission, KS 66201-9217.............. 827,100(8) 5.7% -- --
Jon H. Outcalt (9)............................ 117,063(10) * 3,476,086(11) 59.0%
Kevin B. Shaw (9)............................. 27,542(12) * 1,141,134(13) 19.3%
Phyllis K. Wilson............................. 135,507(14) * -- --
Jeffrey R. Steinhilber........................ 20,306(15) * 110,990(16) 1.9%
Marvin R. Richardson.......................... 44,480(17) * -- --
William B. Byrum.............................. 70,947(18) * -- --
J. Patrick Morris............................. 18,833(19) * -- --
Thomas Bryant Mangum.......................... -- * -- --
A. Malachi Mixon III.......................... 60,650(20) * 92,185 1.6%
Richard L. Osborne............................ 49,657 * 101,403 1.7%
Boake A. Sells................................ 14,260 * 92,185 1.6%
All Directors and executive officers as a
group (12 persons) (21)..................... 562,624 3.9% 4,902,993 83.1%
</TABLE>
3
<PAGE> 7
- ---------------
* Less than one percent.
(1) Each share of Class B Stock carries ten votes per share and is convertible
at any time into one share of Class A Stock.
(2) Based solely upon information contained in Amendment No. 1, dated February
12, 1998, to the Schedule 13G filed with the Securities and Exchange
Commission by INVESCO, Inc. on behalf of itself and Amvescap PLC, AVZ,
Inc., AIM Management Group Inc., Amvescap Group Services, Inc., INVESCO
North American Holdings, Inc., INVESCO Capital Management, Inc., INVESCO
Funds Group, Inc., INVESCO Management & Research, Inc. and INVESCO Realty
Advisors, Inc., all of which share voting and dispositive power over
993,943 shares of Class A Stock.
(3) Based solely upon information contained in Amendment No. 1, dated February
11, 1999, to the Schedule 13G filed with the Securities and Exchange
Commission by Massachusetts Financial Services Company. Massachusetts
Financial Services Company has sole dispositive power over 742,904 shares
of Class A Stock and sole voting power over 763,204 shares of Class A
Stock.
(4) Based solely upon information contained in Amendment No. 1, dated February
12, 1998, to the Schedule 13G filed with the Securities and Exchange
Commission by Pilgrim Baxter & Associates, Ltd. Pilgrim Baxter &
Associates, Ltd. has sole dispositive power and shared voting power over
828,700 shares of Class A Stock and sole voting power over 762,400 shares
of Class A Stock.
(5) Based solely upon information contained in the Amendment, dated January
26, 1999, to the Schedule 13G filed with the Securities and Exchange
Commission by Putnam Investments, Inc. ("PI") on behalf of itself and
Marsh & McLennan Companies, Inc. ("MMC"), Putnam Investment Management,
Inc. ("PIM") and The Putnam Advisory Company, Inc. ("PAC"). PI is a
wholly-owned subsidiary of MMC. PIM, the investment adviser to the Putnam
family of mutual funds, and PAC, the investment adviser to Putnam's
institutional clients, are wholly owned by PI. PIM and PAC share
dispositive power over 971,000 shares and 139,151 shares of Class A Stock,
respectively. PAC also shares voting power over 118,051 shares of Class A
Stock held by institutional clients. PI and MMC disclaim beneficial
ownership over the shares held by PIM and PAC.
(6) Based solely upon information contained in Amendment No. 1, dated February
12, 1999, to the Schedule 13G filed with the Securities and Exchange
Commission by T. Rowe Price Associates, Inc. ("Price Associates") on
behalf of itself and the T. Rowe Price New Horizons Fund, Inc. ("Price
Horizons"). Price Horizons is a wholly owned subsidiary of Price
Associates. Price Associates serves as the investment advisor to Price
Horizons. Price Associates has sole dispositive power over 1,156,541
shares of Class A Stock and has sole voting power over 241,141 shares of
Class A Stock. Price Horizons has sole voting power over 915,000 shares of
Class A Stock.
(7) Based solely upon information contained in a Schedule 13G, dated January
25, 1999, filed with the Securities and Exchange Commission by Thomson
Horstmann & Bryant, Inc. Thomson Horstmann & Bryant, Inc. has sole voting
power over 555,100 shares of Class A Stock, shared voting power over
11,300 shares of Class A Stock and sole dispositive power over 847,400
shares of Class A Stock.
(8) Based solely upon information contained in a Schedule 13G, dated February
12, 1999, field with the Securities and Exchange Commission jointly by
Waddell & Reed Financial, Inc. ("WDR"), Waddell & Reed Financial Services,
Inc. ("WRFSI"), Waddell & Reed, Inc. ("WRI")and Waddell & Reed Investment
Management Company ("WRIMCO"). The filing persons have sole voting power
over 827,100 shares of Class A Stock and sole dispositive power over
827,100 shares of Class A Stock. The securities reported are beneficially
owned by one or more open-end investment companies or other
4
<PAGE> 8
managed accounts that are advised or sub-advised by WRIMCO, an investment
advisory subsidiary of WRI. WRI is a broker-dealer and underwriting
subsidiary of WRFSI. In turn, WRFSI is a subsidiary of WDR, a publicly
traded company. The investment advisory contracts grants WRIMCO all
investment and/or voting power over securities owned by such advisory
clients. The investment sub-advisory contracts grant WRIMCO investment
power over securities owned by such sub-advisory clients and, in most
cases, voting power.
(9) The beneficial owner's address is c/o NCS HealthCare, Inc., 3201
Enterprise Parkway, Suite 220, Cleveland, Ohio 44122.
(10) Includes (i) 32,063 shares of Class A Stock held by Mr. Outcalt's spouse,
(ii) 70,000 shares of Class A Stock held by the custodian of an IRA
account for the benefit of Mr. Outcalt and (iii) options to purchase
15,000 shares of Class A Stock that were exercisable within 60 days of the
Annual Meeting Record Date.
(11) Owned of record by the Jon H. Outcalt Trust.
(12) Includes (i) 5,675 shares of Class A Stock held by Mr. Shaw's spouse and
(ii) options to purchase 16,667 shares of Class A Stock that were
exercisable within 60 days of the Annual Meeting Record Date.
(13) Includes 184,370 shares of Class B Stock held by a limited partnership of
which Mr. Shaw is the general partner.
(14) Includes (i) 130,507 shares of Class A Stock held by trusts for which Ms.
Wilson acts as the trustee and (ii) options to purchase 5,000 shares of
Class A Stock that were exercisable within 60 days of the Annual Meeting
Record Date.
(15) Includes (i) 1,426 shares of Class A Stock held by Mr. Steinhilber as
custodian for his daughter and (ii) options to purchase 18,524 shares of
Class A Stock that were exercisable within 60 days of the Annual Meeting
Record Date.
(16) Includes options to purchase 94,858 shares of Class B Stock that were
exercisable within 60 days of the Annual Meeting Record Date.
(17) Includes (i) 930 shares of Class A Stock owned by the trustee for an IRA
account for the benefit of Mr. Richardson, (ii) 850 shares of Class A
Stock owned by the trustee for an IRA account for the benefit of Mr.
Richardson's spouse, (iii) 38,700 shares of Class A Stock owned by a
corporation of which each of Mr. Richardson and Mr. Richardson's spouse
own a 45% equity interest and (iv) options to purchase 4,000 shares of
Class A Stock that were exercisable within 60 days of the Annual Meeting
Record Date.
(18) Includes (i) 280 shares of Class A Stock owned by the trustee for an IRA
account for the benefit of Mr. Byrum's spouse and (ii) options to purchase
10,667 shares of Class A Stock that were exercisable within 60 days of the
Annual Meeting Record Date.
(19) Consists of options to purchase 18,833 shares of Class A Stock that were
exercisable within 60 days of the Annual Meeting Record Date.
(20) Includes 25,000 shares of Class A Stock owned by a limited partnership of
which Mr. Mixon owns a 6.38% limited partnership interest. Mr. Mixon is
also one of three managers and members of the general partner of the
limited partnership and participates equally with them in a 15% carried
interest in all profits of the partnership.
(21) Includes options to purchase 79,029 shares of Class A Stock that were
exercisable within 60 days of the Annual Meeting Record Date.
5
<PAGE> 9
ELECTION OF DIRECTOR
The By-Laws of the Company fix the number of Directors of the Company at
seven. The Board of Directors of the Company is currently comprised of six
Directors. The Company has three classes of Directors. The Board has nominated
and recommends the reelection of Mr. Mixon as a "Class I Director" for a three-
year term expiring at the Annual Meeting of Stockholders to be held in 2002. In
addition to the vacancy created within the Class I Directors by the resignation
of James B. Naylor in November 1997, Ms. Wilson, also a Class I Director whose
term expires at the Annual Meeting, has decided not to stand as a nominee for
re-election. The Board has not nominated additional nominees to fill the
vacancies within the Class I Directors created by the departures of Mr. Naylor
and Ms. Wilson and will continue to consider qualified candidates to fill those
vacancies. Proxies may not be voted for a greater number of persons than the
number of nominees named herein.
Unless otherwise instructed, the proxy holders will vote the proxies
received by them FOR Mr. Mixon. If elected, Mr. Mixon has consented to serve as
a Director of the Company for the three-year term or until his successor is
elected and qualified. Further information with respect to Mr. Mixon is set
forth below in the section entitled "Nominee for Class I Director." Although it
is not contemplated that Mr. Mixon will be unable to serve as a Director, in
such event, the proxies will be voted by the proxy holders for such other person
as may be designated by the present Board of Directors.
NOMINEE FOR CLASS I DIRECTOR
A. Malachi Mixon III
Director since 1994
Member of the Audit and Human
Resources
Committees of the Board of
Directors
Age: 59 A. Malachi Mixon III has been the Chief
Executive Officer and a Director of
Invacare Corporation since 1979 and,
since 1983, its Chairman of the Board.
Mr. Mixon also served as President of
Invacare Corporation from 1979 to 1996.
Invacare Corporation is a leading world-
wide manufacturer and distributor of home
health care products. Mr. Mixon also
serves as a Director of Lamson & Sessions
Co., a supplier of engineered
thermoplastic products, and
Sherwin-Williams Company, a producer and
distributor of coatings and related
products, and is Chairman of the Board of
Trustees of The Cleveland Clinic
Foundation, one of the world's leading
health care institutions.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE FOR THE
FOREGOING NOMINEE AS A CLASS I DIRECTOR OF THE COMPANY.
DIRECTORS CONTINUING IN OFFICE
Boake A. Sells
Director since 1993
Member of the Audit and Human
Resources Committees of the
Board of Directors
Term as Class II Director expires
2000
Age: 62 Boake A. Sells has been a self-employed
private investor since June 1992. He was
Chairman of the Board, President and
Chief Executive Officer of Revco D.S.,
Inc. from September 1987 to June 1992 and
was formerly President and Chief
Operating Officer of Dayton Hudson
Corporation and President and Chief
Operating Officer of Cole
6
<PAGE> 10
National Corporation. Mr. Sells is a
Director of Harrah's Entertainment, Inc.,
a leading casino gaming company.
Kevin B. Shaw
President, Chief Executive
Officer
and Secretary
Director since 1986
Term as Class II Director expires
2000
Age: 42 Kevin B. Shaw is a founding principal of
NCS and has served as President,
Secretary and a Director of the Company
since 1986 and as Chief Executive Officer
since December 1995. Prior to joining the
Company, he was employed by McKinsey &
Company and Owens Corning Fiberglas.
Richard L. Osborne
Director since 1986
Member of the Audit and Human
Resources,
Committee of the Board of
Directors
Term as Class III Director
expires 2001
Age: 61 Richard L. Osborne has served as the
Executive Dean of the Weatherhead School
of Management, Case Western Reserve
University, Cleveland, Ohio, since 1971.
Mr. Osborne serves on the Boards of Myers
Industries, Inc., a manufacturer of
plastic and rubber parts for the
automotive and other industries, New
Horizons Worldwide, Inc., a provider of
computer training services, and Ohio
Savings Financial Corporation, a savings
and loan holding company.
Jon H. Outcalt
Chairman of the Board
Director since 1986
Term as Class III Director
expires 2001
Age: 63 Jon H. Outcalt is a founding principal of
NCS. He served as Senior Vice President
of Alliance Capital Management L.P., a
global investment management company,
from 1975 to December 1995. Mr. Outcalt
serves on the Board of Directors of Myers
Industries, Inc., a manufacturer of
plastic and rubber parts for the
automotive and other industries, and Ohio
Savings Financial Corporation, a savings
and loan holding company.
THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
Presently, the Board is comprised of six members, three of whom are not
officers or employees of the Company. During the fiscal year ended June 30,
1999, the Board met five times and acted by unanimous written consent without a
meeting twice. During the fiscal year ended June 30, 1999, each Director
attended at least 75 percent of the meetings of the Board of Directors and any
Committee of the Board of Directors on which he or she served.
The Board has three standing committees: (i) Audit, (ii) Human Resources
and (iii) Executive. The Audit and Human Resources Committees were created on
February 5, 1996, in connection with the Company's initial public offering. The
Executive Committee was created on April 22, 1997. The members of each committee
are appointed by the Board of Directors and serve at its discretion. A majority
of the members of each committee constitutes a quorum, and the acts of a
majority of the members present at any meeting at which a quorum is present, or
acts approved in writing by all of the members, are acts of any of the
respective committees. The Company does not have a standing nominating committee
or a committee performing similar functions.
The members of the Audit Committee are A. Malachi Mixon III, Richard L.
Osborne and Boake A. Sells, none of whom has been an officer or employee of the
Company or any of its subsidiaries. The Audit
7
<PAGE> 11
Committee has general responsibility for the supervision of the financial
controls as well as accounting and audit activities of the Company. The Audit
Committee annually reviews the qualifications of the Company's independent
certified public accountants, makes recommendations to the Board of Directors
concerning the selection of the accountants and reviews the planning, fees and
results of such accountants' audits. The Audit Committee met twice during the
fiscal year ended June 30, 1999.
The members of the Human Resources Committee are A. Malachi Mixon III,
Richard L. Osborne and Boake A. Sells, none of whom was an officer or employee
of the Company or any of its subsidiaries. The Human Resources Committee has the
authority to (i) administer the Company's stock option plans, including the
selection of optionees and the timing of option grants, (ii) review and monitor
key employee compensation and benefits policies and (iii) administer the
Company's management compensation plans. The Human Resources Committee met one
time and acted by unanimous written consent without a meeting twice during the
fiscal year ended June 30, 1999.
The members of the Executive Committee are Jon H. Outcalt, Kevin B. Shaw
and Phyllis K. Wilson. The Executive Committee has general authority for
exercising the power of the Board of Directors regarding acquisitions of
institutional pharmacies and related businesses in the long-term care industry.
The Executive Committee also has general authority to authorize execution of
asset purchase agreements or other acquisition agreements, issue shares of the
Company's capital stock and incur indebtedness necessary to complete such
acquisitions. The Executive Committee acted by unanimous written vote without a
meeting once during the fiscal year ended June 30, 1999.
COMPENSATION OF DIRECTORS
The Company endeavors to maintain a mutuality of interest between its
Directors and the stockholders of the Company. Hence, it has required all of its
Directors to purchase Common Stock and has compensated its Directors, who are
not also key employees, solely by granting options to purchase shares of Class B
Stock. No Director fees have been paid, and the Company does not anticipate
paying Director fees in the foreseeable future.
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
The table below sets forth certain information with respect to compensation
paid or accrued by the Company during the fiscal years ended June 30, 1997, 1998
and 1999, to the Company's (i) Chief Executive Officer, (ii) the other four most
highly compensated executive officers of the Company for the fiscal year ended
June 30, 1999 and (iii) any individual that would have been one of the four most
highly compensated executive officers but for the fact that such individual was
not serving as an executive officer of the Company at the end of the fiscal year
ended June 30, 1999 (collectively, the "Named Executive Officers").
8
<PAGE> 12
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
---------------------------------- -------------------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
FISCAL YEAR SALARY BONUS COMPENSATION OPTIONS(1) COMPENSATION
----------- -------- -------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Kevin B. Shaw 1999 $187,000 $ -- -- 50,000 $ 2,894(2)
President and Chief
Executive 1998 187,000 -- -- -- 1,852(2)
Officer 1997 153,970 -- -- 30,000 4,660(2)
William B. Byrum 1999 135,000 -- -- 25,000 2,000(3)
Executive Vice President & 1998 135,000 -- -- -- 2,437(3)
Chief Operating Officer 1997 129,808 72,500 -- 30,000 2,299(3)
Thomas Bryant Mangum(4) 1999 175,000 71,690(5) 20,000 1,000(6)
Senior Vice President 1998 -- -- -- -- --
1997 -- -- -- -- --
J. Patrick Morris 1999 158,461 -- -- 28,250 2,000(6)
Senior Vice President 1998 140,000 -- -- -- --
1997 59,230(7) -- -- 28,250 --
Marvin R. Richardson 1999 158,076 -- -- 30,000 2,000(6)
Executive Vice President 1998 135,000 -- -- -- 2,116(6)
1997 115,385 -- -- 10,000 2,307(6)
Jeffrey R. Steinhilber(8) 1999 207,884 725 -- 35,000 2,000(6)
Executive Vice President 1998 175,000 -- -- -- 2,450(6)
1997 139,423 30,000 -- 15,000 1,938(6)
</TABLE>
- ---------------
(1) Represents options to purchase shares of Class A Stock.
(2) Represents, for the fiscal years ended June 30, 1999, June 30, 1998, and
June 30, 1997, respectively,(i) $894 paid by the Company for the payment of
premiums on life insurance policies and $2,000 contributed by the Company to
its 401(k) Plan on behalf of Mr. Shaw;(ii) $511 paid by the Company for the
payment of premiums on life insurance policies and $1,341 contributed by the
Company to its 401(k) Plan on behalf of Mr. Shaw; and(iii) $3,077 paid by
the Company for the payment of premiums on life insurance policies and
$1,583 contributed by the Company to its 401(k) Plan on behalf of Mr. Shaw.
The Company currently matches each participating employee's contributions to
the 401(k) Plan to the extent of 20% of the first 10% of the participant's
salary reduction, up to the maximum allowable under the Internal Revenue
Code.
(3) Represents, for the fiscal years ended June 30, 1999, June 30, 1998 and June
30, 1997, respectively,(i) $2,000 contributed by the Company to its 401(k)
Plan on behalf of Mr. Byrum,(i) $1,962 contributed by the Company to its
401(k) Plan on behalf of Mr. Byrum and $475 earned in the form of interest
not paid by Mr. Byrum on a below market rate loan from the Company to Mr.
Byrum; and(ii) $2,299 contributed by the Company to its 401(k) Plan on
behalf of Mr. Byrum.
(4) Mr. Mangum joined the Company on June 15, 1998.
(5) The bonus paid to Mr. Mangum was a one-time payment made by the Company in
connection with Mr. Mangum's agreement to join the Company in June 1998.
9
<PAGE> 13
(6) Represents amounts contributed by NCS to its 401(k) Plan on behalf of the
employee.
(7) Mr. Morris joined the Company on February 1, 1997.
(8) Mr. Steinhilber resigned from his position as Executive Vice President and
Chief Operating Officer effective as of June 11, 1999.
OPTION GRANTS
Shown below is information on grants of stock options pursuant to the
Company's 1996 Long Term Incentive Plan and the Company's 1998 Performance Plan
during the fiscal year ended June 30, 1999 to the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------------------------- VALUE AT ASSUMED
PERCENTAGE OF ANNUAL
TOTAL RATES OF STOCK PRICE
NUMBER OF OPTIONS APPRECIATION FOR OPTION
SECURITIES GRANTED TO EXERCISE OR TERMS
UNDERLYING EMPLOYEES IN BASE PRICE EXPIRATION ------------------------
NAME OPTIONS FISCAL YEAR (PER SHARE) DATE 5% 10%
---- ---------- ------------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Kevin B. Shaw............... 50,000(1) 11.6% $18.50 12/16/03 $255,560 $564,722
President and Chief
Executive Officer
William B. Byrum............ 25,000(2) 5.8% 15.00 10/23/03 103,605 228,941
Executive Vice President &
Chief Operating Officer
Thomas Bryant Mangum........ 20,000(2) 4.6% 15.00 10/23/03 82,884 183,153
Senior Vice President
J. Patrick Morris........... 28,250(2) 6.6% 15.00 10/23/03 117,074 258,704
Senior Vice President
Marvin R. Richardson........ 30,000(2) 7.0% 15.00 10/23/03 124,327 274,730
Executive Vice President
Jeffrey R. Steinhilber...... 35,000(3) 8.1% 15.00 10/23/03 -- (3) -- (3)
Executive Vice President
</TABLE>
- ---------------
(1) The option was granted on December 16, 1998 and becomes exercisable annually
in one-third increments beginning on January 1, 2001.
(2) The option was granted on October 23, 1998 and becomes exercisable annually
in one-third increments beginning on November 1, 2000.
(3) Pursuant to the terms of a Separation Agreement between the Company and Mr.
Steinhilber, the option was forfeited in connection with Mr. Steinhilber's
resignation from the Company, which was effective as of June 11, 1999.
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table provides certain information concerning the value of
securities underlying unexercised stock options held by each of the Named
Executive Officers during the fiscal year ended June 30, 1999.
10
<PAGE> 14
This table assumes the conversion into Class A Stock of all shares of Class B
Stock issuable upon the exercise of certain options.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
NUMBER OF UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT JUNE 30, 1999 JUNE 30, 1999(1)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kevin B. Shaw........... -- $ -- 16,667 73,333 $ -- $ --
William B. Byrum........ -- -- 10,667 45,333 -- --
Thomas Bryant Mangum.... -- -- -- 20,000 -- --
J. Patrick Morris....... -- -- 18,833 37,667 -- --
Marvin R. Richardson.... -- -- 4,000 37,000 -- --
Jeffrey R.
Steinhilber........... 23,600 339,203 113,382 -- -- --
</TABLE>
- ---------------
(1) All stock options were out of the money (the exercise price was higher than
the market price) at the fiscal year end of the Company.
EMPLOYMENT AGREEMENTS
The Company is party to an employment agreement with William B. Byrum,
dated September 1, 1995, pursuant to which Mr. Byrum was employed by the Company
as Vice President - Corporate Development until June 1998. In June 1998, Mr.
Byrum was promoted to the position of Senior Vice President. In June 1999, Mr.
Byrum was promoted to the position of Executive Vice President and Chief
Operating Officer. The agreement provides for a term of five years and an annual
salary subject to increase at the discretion of the Company. The agreement
provides for a bonus to be paid to Mr. Byrum. In addition, the agreement
contains certain non-compete, non-disclosure and non-interference provisions
applicable to Mr. Byrum.
The Company, through its wholly owned subsidiary, NCS HealthCare of
Indiana, Inc., is also party to an employment agreement with Marvin R.
Richardson, dated May 31, 1995, pursuant to which Mr. Richardson was employed by
the Company as the President of NCS HealthCare of Indiana, Inc. (f/k/a Quality
Health Care of NCS, Inc.) until March 1997. The agreement provides for a term of
four years from July 1, 1996 and an annual salary in addition to cash bonuses
based on certain performance targets. The agreement also contains certain
non-compete, non-disclosure and non-interference provisions applicable to Mr.
Richardson. In March 1997, Mr. Richardson was promoted to the position of Senior
Vice President - Sales and Marketing.
The Company is a party to an employment agreement with Jeffrey R.
Steinhilber, dated December 1, 1998, pursuant to which the Company agreed to
employ Mr. Steinhilber for a period of three years as its Chief Operating
Officer at a minimum annual base salary of $220,000, subject to increase at the
discretion of the Chief Executive Officer. Mr. Steinhilber resigned from the
Company effective as of June 11, 1999. Pursuant to the terms of a Separation
Agreement between the Company and Mr. Steinhilber, dated September 10, 1999, he
is entitled through November 30, 2001 to payment of (i) his annual salary of
$220,000, (ii) reimbursement of club dues and assessments in connection with his
membership at a country club and (iii) receipt of continued benefits and certain
perquisites from the Company. In addition, pursuant to the Separation Agreement,
Mr. Steinhilber received a cash bonus of $725 and certain computer equipment
previously provided to him by the Company. In addition, the expiration date for
vested options to purchase 13,524 shares of Class A Stock and 5,000 shares of
Class A Stock were each extended from February 1, 2002 and April 22, 2002,
respectively, to December 28, 2004.
11
<PAGE> 15
The Company is a party to a salary continuation agreement with each of
Thomas B. Mangum, J. Patrick Morris and Marvin R. Richardson (each an
"Employee"), each dated as of July 20, 1999. Under the terms of the salary
continuation agreement, if, subsequent to a change in control transaction
involving the Company, the Employee's employment is terminated by the Company
other than for cause (as defined in the agreement) or he terminates his
employment for good reason (as defined in the agreement), the Employee will be
entitled to receive for a period ending two years from the date of change in
control transaction (i) a base salary at an annual rate equal to the greater of
(x) the highest monthly base salary paid by the Company to the Employee during
the 12 months preceding the change in control transaction or (y) the highest
monthly salary paid by the Company to the Employee during the period from the
date of the change in control transaction to the date of the termination of the
Employee's employment and (ii) health insurance, life insurance and retirement
benefits that would have been provided if the Employee had not been terminated,
in accordance with the most favorable plans or policies of the Company during
the 90-day period preceding the change in control transaction, or, if more
favorable to the Employee, as in effect at any time thereafter with respect to
other key employees.
CERTAIN TRANSACTIONS
The Company leases its Hilliard, Ohio facility from PR Realty, a
partnership of which Phyllis K. Wilson is Managing Partner. The lease is in the
third year of a ten-year term, with rent payable at an annual rate of $255,750.
The lease has recently been amended to require the Company to obtain insurance
with respect to the facility, the cost of which will be paid for by Ms. Wilson.
The Company believes that this lease is on terms comparable to those that could
be obtained from an unrelated third party.
HUMAN RESOURCES COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the Human
Resources Committee (the "Committee") of the Board of Directors. The Committee
is comprised of Messrs. Mixon, Osborne and Sells, none of whom is an officer or
employee of the Company.
COMPENSATION PHILOSOPHY
The Committee's philosophy regarding the compensation of its executive
officers is to (i) provide a competitive total compensation package that enables
the Company to attract and retain qualified executives; (ii) provide executives
with incentive bonuses linked to Company and individual performance; and (iii)
provide executive officers with a significant equity stake in the Company
through stock options or other equity incentives.
Section 162(m) of the Internal Revenue Code prohibits a deduction to any
publicly held corporation for compensation paid to a "covered employee" in any
year in excess of $1 million. A covered employee is generally one of the Named
Executive Officers. The Committee does not expect the deductibility of any
compensation paid to any of the Named Executive Officers in 1999 to be affected
by Section 162(m). However, the Committee may consider alternatives to its
existing compensation programs in the future to assure the deductibility of
executive compensation.
12
<PAGE> 16
FISCAL 1999 COMPENSATION DECISIONS
Salaries. Salaries for all executive officers for fiscal 1999, other than
Messrs. Outcalt and Shaw, were established by the Committee based on
recommendations by Mr. Shaw. Salaries for some executive officers were increased
early in fiscal 1999, based on then-existing financial circumstances, consistent
with the Company's desire to retain and attract qualified executives.
Bonuses. Generally, cash bonuses paid by the Company to its executive
officers are based on each executive's function, level of responsibility and/or
the terms of their employment agreements. Due to (i) the financial pressure
experienced by the Company and the health care services industry in general
during fiscal year 1999 and (ii) the considerable challenges facing the Company
primarily resulting from the implementation of Medicare's Prospective Payment
System, bonuses were generally not paid to executive officers. The bonus paid to
Mr. Mangum in fiscal year 1999 was a one-time payment made by the Company in
connection with Mr. Mangum's agreement to join the Company in June 1998.
Stock Options. The Committee believes that the interests of executives most
responsible for the management and growth of the Company should be closely
aligned with the long-term interests of the Company's stockholders. As a
consequence, options to purchase an aggregate of 345,250 shares of Class A Stock
were granted to 53 employees of the Company on October 23, 1998, based on the
Board's recommendation in June 1998. Of the total stock options granted, the
Company awarded options to purchase an aggregate of 141,250 shares of Class A
Stock to the Company's executive officers, exclusive of Messrs. Outcalt and
Shaw. The stock options vest incrementally over time beginning two years from
the date of grant and expire five years from the date of grant. The exercise
price of each stock option is $15.00 per share, which was the closing price of
the Class A Stock on the date of grant.
In December 1998, the Committee granted options to purchase 35,000 shares
of Class A Stock and 50,000 shares of Class A Stock to Messrs. Outcalt and Shaw,
respectively. The stock options vest incrementally over time beginning two years
from the date of grant and expire five years from the date of grant. The
exercise price of each option is $18.50 per share, which was the closing price
of the Class A Stock on the date of grant.
In determining the number of options awarded to individual executive
officers, the Committee generally establishes a level of award based on the
individual's position and level of responsibility.
COMPENSATION OF THE CHAIRMAN AND OF THE CHIEF EXECUTIVE OFFICER
The compensation arrangements of Mr. Outcalt, the Chairman of the Company,
and Mr. Shaw, the President and Chief Executive Officer of the Company, are
determined based on the Committee's subjective assessment of their performance,
measured by the Company's overall financial performance and the Committee's
assessment of their contributions to achieving strategic objectives during the
year. In light of the financial challenges facing the Company, Messrs. Outcalt
and Shaw elected not to be considered for salary increases or bonuses during
fiscal 1999.
THE HUMAN RESOURCES COMMITTEE
Richard L. Osborne, Chairman
A. Malachi Mixon III
Boake A. Sells
13
<PAGE> 17
COMPARISON OF 40 MONTH CUMULATIVE TOTAL RETURN AMONG THE COMPANY'S CLASS A
STOCK, THE S&P 500 INDEX, THE NASDAQ STOCK MARKET (U.S.) INDEX, THE S&P HEALTH
CARE SECTOR INDEX AND THE NASDAQ HEALTH SERVICES INDEX*
The following line graph compares the percentage change in the cumulative
total stockholder return on the Class A Stock against the cumulative total
return of (i) the Standard & Poor's 500 Stock Index (the "S&P 500 Index"), (ii)
the Standard & Poor's Health Care Sector Index (the "S&P Health Care Sector
Index"), (iii) the Nasdaq Stock Market (U.S.) Index (the "Nasdaq Index") and
(iv) the Nasdaq Health Services Index for the period that commenced February 14,
1996 and ended June 30, 1999. The graph assumes an investment of $100 on
February 14, 1996 in Class A Stock or on January 31, 1996 for the applicable
index, a reinvestment of dividends (no dividends were declared on the Class A
Stock during the period) and actual market value increases and decreases of the
Class A Stock relative to an initial investment of $100. This is the first year
that the Company has presented the Nasdaq Index and the Nasdaq Health Services
Index. The Company believes that the Nasdaq Index is comprised of companies
having a market capitalization that more closely resembles the market
capitalization of the Company, when compared to the market capitalization of the
companies included in the S&P 500. Additionally, the Nasdaq Health Services
Index, which is comprised of companies engaged in the business of providing
services to health care providers, presents a more meaningful comparison to the
business of the Company than the S&P Health Care Sector Index, which is
comprised of health care providers. Henceforth, the Company's comparative stock
performance graph will present the Nasdaq Index and the Nasdaq Health Services
Index, which the Company believes are more representative of the Company, rather
than the S&P 500 Index and the S&P Health Care Sector Index.
The Company believes the information provided has only limited relevance
and is not necessarily indicative of future price performance.
<TABLE>
<CAPTION>
S&P 500 S&P
NCS HEALTHCARE, ------- NASDAQ STOCK HEALTHCARE NASDAQ HEALTH
INC. MARKET (U.S.) SECTOR SERVICES
--------------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
'2/14/96' 100.00 100.00 100.00 100.00 100.00
'6/96' 183.00 106.00 113.00 102.00 109.00
'6/97' 184.00 143.00 137.00 151.00 100.00
'6/98' 173.00 187.00 180.00 207.00 97.00
'6/99' 33.00 229.00 259.00 236.00 91.00
</TABLE>
* $100 INVESTED ON 2/14/96 IN STOCK OR ON 1/31/96
IN INDEX - INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING JUNE 30.
14
<PAGE> 18
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's Directors and certain of its officers 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 on Forms 3, 4 and 5 with the
Securities and Exchange Commission. Such persons are further required to furnish
the Company with copies of all such forms they file. Based solely on the
Company's review of the copies of such forms it has received, the Company
believes all Section 16(a) filing requirements were satisfied by the Company's
Directors and executive officers for the fiscal year ended June 30, 1999, except
that (i) the sale by Mr. Richardson of 3,300 shares of Class A Stock on June 9,
1999 and the sale by a corporation of which Mr. Richardson and his spouse each
own a 45% equity interest of 6,050 shares of Class A Stock on June 9, 1999 were
each reported on a Form 5, dated August 13, 1999 and (ii) the acquisition by Mr.
Steinhilber of options to purchase 35,000 shares of Class A Stock on October 23,
1998, the exercise of an option to purchase 23,600 shares of Class B Stock and
the subsequent conversion to Class A Stock and sale of such shares on November
10, 1998 and the forfeiture of options to purchase 19,016 shares of Class A
Stock on June 11, 1999 were each reported on a Form 5 dated October 12, 1999.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Any stockholder who meets the requirements of the proxy rules under the
Exchange Act may submit to the Board of Directors proposals to be considered for
submission to the Annual Meeting of Stockholders to be held in 2000. Any such
proposal should be submitted in writing by notice delivered or mailed by
first-class United States mail, postage prepaid, to NCS HealthCare, Inc., 3201
Enterprise Parkway, Cleveland, Ohio 44122 and must be received no later than
June 22, 2000. Any such notice shall set forth: (a) the name and address of the
stockholder and the text of the proposal to be introduced; and (b) the number of
shares of stock held of record, owned beneficially and represented by proxy by
such stockholder as of the date of such notice. If the proponent is not a
stockholder of record, proof of beneficial ownership also should be submitted.
All proposals must be a proper subject for action and comply with the Proxy
Rules of the Securities and Exchange Commission and such other requirements
imposed by the Company as set forth in its By-laws. The Chairman of the meeting
may refuse to acknowledge the introduction of any stockholder proposal not made
in compliance with the foregoing procedures.
The Company may use its discretion in voting proxies with respect to
stockholder proposals not included in the Proxy Statement for the fiscal year
ended June 30, 2000, unless the Company receives notice of such proposals prior
to September 5, 2000.
INDEPENDENT AUDITORS
The Board of Directors of the Company has selected the firm of Ernst &
Young LLP, independent auditors, to examine and audit the financial statements
of the Company and its subsidiaries for the fiscal year ending June 30, 2000.
Representatives of Ernst & Young LLP will be present at the Annual Meeting and
will have an opportunity to make a statement should they so desire. The
representatives also will be available to respond to appropriate questions from
stockholders.
15
<PAGE> 19
OTHER MATTERS
The Board of Directors of the Company is not aware of any matter to come
before the meeting other than those mentioned in the accompanying notice.
However, if other matters shall properly come before the meeting, it is the
intention of the persons named in the accompanying Proxy to vote in accordance
with their best judgment on such matters.
Upon the receipt of a written request from any stockholder entitled to vote
at the Annual Meeting, the Company will mail, at no charge to the stockholder, a
copy of the Company's Annual Report on Form 10-K, including the financial
statements and schedules required to be filed with the Securities and Exchange
Commission pursuant to Rule 13a-1 under the Exchange Act, for the Company's most
recent fiscal year. Requests from beneficial owners of the Company's voting
securities must set forth a good-faith representation that, as of the Annual
Meeting Record Date, the person making the request was the beneficial owner of
securities entitled to vote at such Annual Meeting. Written requests for the
Annual Report on Form 10-K should be directed to: Kristen H. Schulz, Director of
Investor Relations, NCS HealthCare, Inc., 3201 Enterprise Parkway, Cleveland,
Ohio 44122.
You are urged to sign and return your Proxy promptly in order to make
certain your shares will be voted at the Annual Meeting. For your convenience a
return envelope is enclosed requiring no additional postage if mailed in the
United States.
BY ORDER OF THE BOARD OF DIRECTORS
Kevin B. Shaw
President and Chief Executive Officer
November 1, 1999
16
<PAGE> 20
NCS HEALTHCARE, INC.
PROXY FOR CLASS A COMMON STOCK
ANNUAL MEETING OF STOCKHOLDERS -- NOVEMBER 22, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby (i) appoints JON H. OUTCALT, KEVIN B. SHAW and GERALD
D. STETHEM, and each of them, as Proxy holders and attorneys, with full power of
substitution, to appear and vote all of the shares of Class A Common Stock of
NCS HealthCare, Inc. that the undersigned shall be entitled to vote at the
Annual Meeting of Stockholders of the Company, to be held at the Private Rooms
at Playhouse Square, 1515 Euclid Avenue, 2nd Floor, Cleveland, Ohio, on Monday,
November 22, 1999, at 9:30 a.m. local time, and at any adjournments thereof,
hereby revoking any and all proxies heretofore given, and (ii) authorizes and
directs said Proxy holders to vote all of the shares of Class A Common Stock of
the Company represented by this Proxy as follows, WITH THE UNDERSTANDING THAT IF
NO DIRECTIONS ARE GIVEN BELOW, SAID SHARES WILL BE VOTED "FOR" THE ELECTION OF
THE DIRECTOR NOMINATED BY THE BOARD OF DIRECTORS.
(1) Election of Director.
<TABLE>
<S> <C>
[ ] FOR the nominee listed [ ] WITHHOLD AUTHORITY
to vote for the nominee listed
</TABLE>
A. MALACHI MIXON, III
(To be signed on other side)
PROXY NO. SHARES
(Proxy -- continued from other side)
(2) In their discretion to act on any other matter or matters that may
properly come before the meeting.
Please date, sign and
return promptly in the
accompanying envelope.
Dated:................, 1999
............................
Your signature to this
Proxy form should be
exactly the same as the name
imprinted hereon. Persons
signing as executors,
administrators, trustees or
in similar capacities should
so indicate. For joint
accounts, the name of each
joint owner must be signed.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE "FOR" THE NOMINEE FOR DIRECTOR.
<PAGE> 21
NCS HEALTHCARE, INC.
PROXY FOR CLASS B COMMON STOCK
ANNUAL MEETING OF STOCKHOLDERS -- NOVEMBER 22, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby (i) appoints JON H. OUTCALT, KEVIN B. SHAW, and
GERALD D. STETHEM, and each of them, as Proxy holders and attorneys, with full
power of substitution, to appear and vote all of the shares of Class B Common
Stock of NCS HealthCare, Inc. that the undersigned shall be entitled to vote at
the Annual Meeting of Stockholders of the Company, to be held at the Private
Rooms at Playhouse Square, 1515 Euclid Avenue, 2nd Floor, Cleveland, Ohio, on
Monday, November 22, 1999, at 9:30 a.m. local time, and at any adjournments
thereof, hereby revoking any and all proxies heretofore given, and (ii)
authorizes and directs said Proxy holders to vote all of the shares of Class B
Common Stock of the Company represented by this Proxy as follows, WITH THE
UNDERSTANDING THAT IF NO DIRECTIONS ARE GIVEN BELOW, SAID SHARES WILL BE VOTED
"FOR" THE ELECTION OF THE DIRECTOR NOMINATED BY THE BOARD OF DIRECTORS.
(1) Election of Director.
<TABLE>
<S> <C>
[ ] FOR the nominee listed [ ] WITHHOLD AUTHORITY
to vote for the nominee listed
</TABLE>
A. MALACHI MIXON, III
(To be signed on other side)
PROXY NO. SHARES
(Proxy -- continued from other side)
(2) In their discretion to act on any other matter or matters that may
properly come before the meeting.
Please date, sign and
return promptly in the
accompanying envelope.
Dated:................, 1999
............................
Your signature to this
Proxy form should be
exactly the same as the name
imprinted hereon. Persons
signing as executors,
administrators, trustees or
in similar capacities should
so indicate. For joint
accounts, the name of each
joint owner must be signed.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE "FOR" THE NOMINEE FOR DIRECTOR.
<PAGE> 22
CONFIDENTIAL VOTING INSTRUCTIONS
TO: NORWEST BANK COLORADO, N.A., TRUSTEE FOR THE
NCS HEALTHCARE EMPLOYEE SAVINGS PLAN AND TRUST
Pursuant to section 7.2(d) of the NCS HealthCare Employee Savings Plan and Trust
(the "Plan"), the undersigned as a participant in the Plan hereby directs the
Trustee to vote (in person or by proxy) all shares of Class A Common Stock of
NCS HealthCare, Inc. credited to the undersigned's account under the Plan on the
record date for the annual meeting of stockholders of NCS HealthCare, Inc. to be
held on November 22, 1999 and at any adjournment or postponement thereof, on the
following matters as checked below:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEE FOR DIRECTOR.
<TABLE>
<S> <C>
1. ELECTION OF DIRECTOR, Nominee: WITHHOLD AUTHORITY [ ]
FOR the nominee listed below [ ] to vote for the nominee listed below
</TABLE>
A. Malachi Mixon, III
2. In accordance with his judgment upon any other matter or matters that may
properly come before the meeting.
(CONTINUED, AND TO BE SIGNED ON OTHER SIDE)
(Continued from the other side)
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW. THE TRUSTEE SHALL NOT VOTE SHARES OF
THE COMPANY FOR WHICH IT DOES NOT RECEIVE INSTRUCTIONS.
THIS CONFIDENTIAL VOTING INSTRUCTIONS CARD WILL BE SEEN ONLY BY AUTHORIZED
PERSONNEL OF THE TRUSTEE. THE SHARES REPRESENTED BY THIS CARD WILL BE VOTED AS
DIRECTED, OR IF DIRECTIONS ARE NOT INDICATED BUT THIS CARD IS EXECUTED AND
RETURNED, WILL BE VOTED FOR THE ELECTION OF THE DIRECTOR.
Dated................, 1999
...........................
Signature
...........................
Signature
...........................
Title
NOTE: Please sign exactly
as name appears hereon.
When signing as attorney,
executor, administrator,
trustee or guardian, please
add your title as such.
PLEASE SIGN, DATE AND RETURN YOUR VOTING CARD PROMPTLY IN THE ENCLOSED ENVELOPE
WHICH REQUIRES NO POSTAGE.
