<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULED 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14 (a)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)
(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
AMERIPATH, INC.
--------------------------------------------------------
(Name of Registrant as Specified in its Charter)
Inapplicable
- --------------------------------------------------------------------------------
(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 Rule 14a-6 (i) (1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a) (2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
--------------------------
AmeriPath
--------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 8, 1998
To the Stockholders of AmeriPath, Inc.:
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders
(the "Annual Meeting") of AmeriPath, Inc., a Delaware corporation (the
"Company"), will be held at the Marriott Hotel, 4000 RCA Boulevard, Palm Beach
Gardens, Florida, at 11:00 a.m., local time, on May 8, 1998, for the following
purposes:
(1) To elect two (2) members to the Company's Board of
Directors to hold office until the 2001 Annual Meeting or until their
successors are duly elected and qualified;
(2) To ratify the reappointment of Deloitte & Touche LLP as
the Company's independent public accountants; and
(3) To transact such other business as may properly come
before the Annual Meeting and any adjournments or postponements
thereof.
The Board of Directors has fixed the close of business on April 7, 1998
as the record date for determining those stockholders entitled to notice of, and
to vote at, the Annual Meeting and any adjournments or postponements thereof.
Whether or not you expect to be present, please sign, date and return
the enclosed proxy card in the enclosed pre-addressed envelope as promptly as
possible. No postage is required if mailed in the United States.
By Order of the Board of Directors,
Robert P. Wynn
SECRETARY
Riviera Beach Florida
April 14, 1998
THIS IS AN IMPORTANT MEETING AND ALL STOCKHOLDERS ARE ENCOURAGED TO ATTEND THE
MEETING IN PERSON. THOSE STOCKHOLDERS WHO ARE UNABLE TO ATTEND ARE RESPECTFULLY
URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE.
STOCKHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING,
REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON AT THE MEETING.
<PAGE> 3
1998 ANNUAL MEETING OF STOCKHOLDERS
OF
AMERIPATH, INC.
PROXY STATEMENT
TIME, DATE AND PLACE OF ANNUAL MEETING
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of AmeriPath, Inc., a Delaware corporation (the
"Company"), of proxies from the holders of the Company's Common Stock, par value
$.01 per share (the "Common Stock"), for use at the 1998 Annual Meeting of
Stockholders of the Company to be held at the Marriott Hotel, 4000 RCA
Boulevard, Palm Beach Gardens, Florida, at 11:00 a.m., local time, on May 8,
1998, and at any adjournments or postponements thereof (the "Annual Meeting"),
pursuant to the enclosed Notice of Annual Meeting.
The approximate date that this Proxy Statement and the enclosed form of
proxy are first being sent to stockholders is April 14, 1998. Stockholders
should review the information provided herein in conjunction with the Company's
Annual Report to Stockholders for the year ended December 31, 1997 (the "1997
Annual Report") which accompanies this Proxy Statement. The Company's principal
executive offices are located at 7289 Garden Road, Suite 200, Riviera Beach,
Florida 33404, and its telephone number is (561) 845-1850.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Company's Board of
Directors. The giving of a proxy does not preclude the right to vote in person
should any stockholder giving the proxy so desire. Stockholders have an
unconditional right to revoke their proxy at any time prior to the exercise
thereof, either in person at the Annual Meeting or by filing with the Company's
Secretary at the Company's headquarters a written revocation or duly executed
proxy bearing a later date; however, no such revocation will be effective until
written notice of the revocation is received by the Company at or prior to the
Annual Meeting.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting of Stockholders and the enclosed proxy is to be borne
by the Company. In addition to the use of mail, employees of the Company may
solicit proxies personally and by telephone. The Company's employees will
receive no compensation for soliciting proxies other than their regular
salaries. The Company may request banks, brokers and other custodians, nominees
and fiduciaries to forward copies of the proxy material to their principals and
to request authority for the execution of proxies. The Company may reimburse
such persons for their expenses in doing so.
<PAGE> 4
PURPOSES OF THE ANNUAL MEETING
At the Annual Meeting, the Company's stockholders will consider and
vote upon the following matters:
(1) To elect two (2) members to the Company's Board of
Directors to hold office until the 2001 Annual Meeting or until their
successors are duly elected and qualified;
(2) To ratify the reappointment of Deloitte & Touche LLP as
the Company's independent public accountants; and
(3) To transact such other business as may properly come
before the Annual Meeting and any adjournments or postponements
thereof.
Unless contrary instructions are indicated on the enclosed proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
which have not been revoked in accordance with the procedures set forth herein)
will be voted (a) for the election of the respective nominees for director named
below, and (b) in favor of all other proposals described in the Notice of Annual
Meeting. In the event a stockholder specifies a different choice by means of the
enclosed proxy, his shares will be voted in accordance with the specification(s)
so made.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on April 7, 1998
as the record date (the "Record Date") for determining stockholders of the
Company entitled to notice of and to vote at the Annual Meeting. As of the
Record Date, there were 19,737,382 shares of common stock issued and
outstanding, all of which are entitled to be voted at the Annual Meeting. Each
share of Common Stock is entitled to one vote on each matter submitted to
stockholders for approval at the Annual Meeting. Stockholders do not have the
right to cumulate their votes for directors.
The attendance, in person or by proxy, of the holders of a majority of
the outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum. As long as a quorum is present at the Annual
Meeting, the nominees for director shall be elected by a plurality of the votes
of the shares present in person or by proxy at the Annual Meeting and entitled
to vote on the election of directors. The affirmative vote of the holders of a
majority of the shares of Common Stock represented in person or by proxy at the
Annual Meeting will be required for approval of the proposal to ratify the
reappointment of Deloitte & Touche, LLP as the Company's independent public
accountants for 1998, and any other matter that may be submitted to a vote of
the stockholders. If less than a majority of the outstanding shares entitled to
vote are represented at the Annual Meeting, a majority of the shares so
represented may adjourn the Annual Meeting to another date, time or place.
Prior to the Annual Meeting, the Company will select one or more
inspectors of election for the meeting. Such inspector(s) shall determine the
number of shares of Common Stock represented at the meeting, the existence of a
quorum and the validity and effect of proxies, and shall receive, count and
tabulate ballots and votes and determine the results thereof. Abstentions will
be considered as shares present and entitled to vote at the Annual Meeting and
will be counted as votes cast at the Annual Meeting, but will not be counted as
votes cast for or against any given matter.
A broker or nominee holding shares registered in its name, or in the
name of its nominee, which are beneficially owned by another person and for
which it has not received instructions as to voting from
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<PAGE> 5
the beneficial owner, may have discretion to vote the beneficial owner's shares
with respect to the election of directors and other matters addressed at the
Annsual Meeting. Any such shares which are not represented at the Annual Meeting
either in person or by proxy will not be considered to have cast votes on any
matters addressed at the Annual Meeting.
BENEFICIAL SECURITY OWNERSHIP
The following table sets forth, as of March 19, 1998, information with
respect to the beneficial ownership of the Company's Common Stock by (i) the
Company's Chief Executive Officer and each of the other "Named Executive
Officers" (as defined below in "Executive Compensation--Summary Compensation
Table"), (ii) each director of the Company, (iii) all directors and executive
officers of the Company as a group and (iv) each holder of five percent (5%) or
more of the Company's outstanding shares of Common Stock. The Company is not
aware of any beneficial owner of more than five percent of the outstanding
shares of Common Stock other than as set forth in the following table.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER(1) OWNERSHIP(2) OUTSTANDING SHARES
- --------------------------- ---------------- ------------------
<S> <C> <C>
Summit (3) ......................................... 4,940,776 25.0%
Schroder (4) ....................................... 197,831 1.0
James C. New (5) ................................... 304,011 1.5
Alan Levin M.D. (6) ................................ 86,125 *
Leslie B. Rosen M.D. (7) ........................... 79,999 *
Robert P. Wynn (8) ................................. 107,200 *
Annette L. Bell (9) ................................ 3,600 *
Gary Davis (10) .................................... -- --
C. Timothy Kilpatrick M.D. (11) .................... 78,925 *
Thomas S. Roberts (3) .............................. 4,940,776 25.0
C. Arnold Renschler M.D .(12) ...................... 2,000 *
E. Roe Stamps, IV (3) .............................. 4,940,776 25.0
Michael J. Demaray M.D. (13) ....................... 504,619 2.6
All directors and executive officers as a group
(11 persons)(3)(5)(6)(11)(12) ...................... 5,602,636 28.0
</TABLE>
- ---------------
* Less than one percent.
1. Unless otherwise indicated, the address of each of the beneficial owners
identified is 7289 Garden Road, Suite 200, Riviera Beach, Florida 33404.
2. Based on 19,737,382 shares of Common Stock outstanding on March 19, 1998.
Pursuant to the rules of the Securities and Exchange Commission (the
"Commission"), shares of the Common Stock which a person had the right to
acquire within 60 days of March 19, 1998 pursuant to the exercise of stock
options or the conversion of a convertible security are deemed to be
outstanding for the purpose of computing the percentage ownership of such
person but are not deemed outstanding for the purpose of computing the
percentage ownership of any other person.
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<PAGE> 6
3. Includes 3,471,005, 32,985 and 1,436,786 shares of Common Stock held by
Summit Ventures III, L.P., Summit Investors II, L.P. and Summit
Subordinated Debt Fund, L.P., respectively, each of which is a limited
partnership. Summit Partners III, L.P. is the general partner of Summit
Ventures III, L.P. and Summit Partners SD, L.P. is the general partner of
Summit Subordinated Debt Fund, L.P. Stamps, Woodsum & Co. III is the
general partner of Summit Partners III L.P. and Summit Partners SD, L.P.
Thomas S. Roberts is a director of the Company and is a General Partner of
Stamps, Woodsum & Co. III and Summit Investors II, L.P. E. Roe Stamps is a
director of the Company and is Managing General Partner of Stamps, Woodsum
& Co. III and Summit Investors II, L.P. Mr. Roberts and Mr. Stamps both
disclaim beneficial ownership of the shares of the Common Stock. The
address of each of the Summit entities (collectively "Summit") and Messrs.
Roberts and Stamps is 600 Atlantic Avenue, Suite 2800, Boston,
Massachusetts 02210-2227.
4. Includes 79,133, 94,958, and 23,740 shares of Common Stock held by
Schroders Incorporated, Schroder Ventures, L.P., and Schroder Ventures U.S.
Trust, respectively (collectively "Schroder"). The address of Schroders
Incorporated and Schroder Ventures, L.P. is 787 Seventh Avenue, New York,
New York 10019, and the address of Schroder Ventures U.S. Trust is c/o
Schroder (Bermuda) Limited, 22 Church Street, P.O. Box 1368, Hamilton,
HM-FX Bermuda.
5. Includes 144,004 shares subject to stock options which are presently
exercisable or become exercisable within 60 days of the Record Date. Does
not include 216,007 shares subject to presently unexercisable stock
options.
6. Includes 7,200 shares which are presently exercisable or become exercisable
within 60 days of the Record Date. Does not include 28,800 shares subject
to presently unexercisable stock options.
7. Does not include 25,000 shares subject to presently unexercisable stock
options.
8. Includes 107,200 shares subject to options which are presently exercisable
or become exercisable within 60 days of the Record Date. Does not include
86,400 shares subject to presently unexercisable stock options.
9. Includes 3,600 shares subject to presently exercisable stock options. Does
not include 24,400 shares subject to presently unexercisable stock options.
As of December 31, 1997, Ms. Bell was no longer employed as an officer of
the Company. Ms. Bell continues to serve as a consultant to the Company on
sales and marketing related matters.
10. Does not include 7,000 shares subject to presently unexercisable stock
options.
11. Includes 36,000 shares held in trust for the benefit of members of Dr.
Kilpatrick's family. Dr. Kilpatrick disclaims beneficial ownership with
respect to such shares.
12. Does not include 5,000 shares subject to presently unexercisable stock
options.
13. As of June 1997, Dr. Demaray was no longer serving as an executive officer
of the Company.
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<PAGE> 7
ELECTION OF DIRECTORS; NOMINEES
The Company's Certificate of Incorporation provides that the number of
directors constituting the Company's Board of Directors shall not be less than
three nor more than 12, as determined in the manner provided by the Company's
Bylaws. The Company's Bylaws provide that the number of directors shall be fixed
from time to time by resolution of the Board of Directors and is currently fixed
at six (6) directors.
The Company's Certificate of Incorporation provides that the Board of
Directors be divided into three (3) classes. Each class of directors serves
staggered three (3) year terms or until their successors are elected and
qualified.
The current classes of the Board of Directors and their terms of office
are as follows:
CLASS DIRECTOR Term Expiration
----- -------- ---------------
I James C. New 1998
I E. Roe Stamps, IV 1998
II Thomas S. Roberts 1999
II C. Timothy Kilpatrick, M.D. 1999
III Alan Levin, M.D. 2000
III C. Arnold Renschler, M.D. 2000
The two directors in Class I, James C. New and E. Roe Stamps, IV have
been nominated for re-election at the Annual Meeting. Each Class I director
elected at the Annual Meeting will hold office until the annual meeting of
shareholders to be held in 2001. The Company is considering expanding the size
of its Board of Directors by adding additional directors who can add unique
value and perspective to the Board. If added, such director shall serve until
the annual meeting following his or her appointment to the Board.
Proxies will be voted for Messrs. New and Stamps, absent contrary
instructions. The Board of Directors has no reason to believe that the nominees
will refuse or be unable to accept election; however, in the event that any
nominee is unwilling or unable to accept election or if any other unforeseen
contingencies should arise, each proxy that does not specifically direct
otherwise will be voted for the remaining nominees, if any, and for such other
person(s) as may be designated by the Board of Directors.
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<PAGE> 8
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY
- ---- --- ---------------------
<S> <C> <C>
James C. New (1)(2)......................... 52 President, Chief Executive Officer
and Director
Alan Levin, M.D (1)......................... 46 Chief Operating Officer and
Director
Robert P. Wynn.............................. 51 Executive Vice President, Chief
Financial Officer and Secretary
Leslie B. Rosen, M.D........................ 43 Vice President and Medical Director
Gary Davis.................................. 34 Vice-President, Sales and Marketing
Stephen V. Fuller........................... 43 Vice President of Human Resources
Thomas S. Roberts (1)(2)(3)................. 34 Chairman of the Board
C. Timothy Kilpatrick, M.D.................. 41 Director and Managing Director of
Derrick and Associates Pathology
Group ("Derrick")
C. Arnold Renschler, M.D. (2)............... 56 Director
E. Roe Stamps, IV (3)....................... 51 Director
</TABLE>
(1) Member of Acquisition Committee.
(2) Member of Audit Committee.
(3) Member of Compensation Committee.
JAMES C. NEW has been the President, Chief Executive Officer and a
director of AmeriPath since February 1996. Prior to joining AmeriPath, Mr. New
served as President and as a director of RehabClinics, Inc., one of the largest
outpatient rehabilitation companies in the country, which he formed in 1991.
RehabClinics completed its initial public offering in June 1992 and merged with
NovaCare, Inc. in February 1994. Mr. New was President of NovaCare, Inc.'s
Outpatient Division from 1994 to 1995. Prior to founding RehabClinics, Inc., he
served as President of Greater Atlantic Health Service and Physicians Choice of
Southeastern Pennsylvania, a start-up HMO. From 1993 through 1996, Mr. New was
the Chairman of the Acquisition Committee of the Board of Directors of Pet
Practice, Inc. From 1978 to 1985, Mr. New served in various executive positions
at Textron, Inc. and Emerson Electric, Inc.
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<PAGE> 9
ALAN LEVIN, M.D. has been Chief Operating Officer since September 1996.
He became a director and a physician employed by a subsidiary of the Company (an
"Affiliated Physician") in June 1996 after the Company acquired Derrick. Prior
to that, he served on the Board of Directors of Derrick since 1987, as Treasurer
from 1990 to 1994, and President from 1994 until the Company's acquisition of
Derrick. Dr. Levin has 14 years experience as a pathologist and is board
certified in anatomic and clinical pathology. He served as the medical director
of the inpatient pathology laboratory at Columbia Medical Center, Port St.
Lucie, Florida from 1983 until 1997, and presently is a member of that
hospital's Board of Trustees. Since 1990, he has served as an advisor to
Florida's State Agency for Healthcare Administration. Dr. Levin received his
B.A. from Emory University and his M.D. from the University of Miami Medical
School. He performed his medical oncology internship at Jackson Memorial
Hospital and completed his anatomic and clinical pathology residency at Mount
Sinai Medical Center in Miami Beach, Florida.
ROBERT P. WYNN has served as the Executive Vice President, Chief
Financial Officer and Secretary since February 1996. He served as Vice President
and Chief Operating Officer of ALA from August 1993 to 1996. Mr. Wynn was Vice
President and Chief Financial Officer of International Magnetic Imaging, Inc.
("IMI"), from May 1991 until August 1993. Prior to joining IMI, Mr. Wynn was an
audit partner with Deloitte Haskins & Sells, certified public accountants,
(predecessor to Deloitte & Touche LLP). Mr. Wynn has over 26 years of experience
in finance and accounting. Mr. Wynn received his B.S. in Accounting from King's
College in Pennsylvania.
LESLIE B. ROSEN, M.D. has been a Vice President and the Medical
Director of the Company since June 1997. He became an Affiliated Physician in
June 1996 after the Company acquired Florida Pathology Associates ("FPA"). He
has also been the Managing Director of FPA since September 1988. Prior to the
sale of FPA to the Company, Dr. Rosen practiced pathology for over 14 years at
various hospitals in South Florida. He also holds teaching positions at various
Florida universities. Dr. Rosen is board certified in anatomic and clinical
pathology as well as in dermatopathology. Dr. Rosen received his B.A. from
Kenyon College and his M.D. from State University of New York Downstate. He
completed his residency and fellowship at Mount Sinai Medical Center in Miami
Beach, Florida.
GARY DAVIS has been Vice President of Sales and Marketing since January
1998. He was previously the National Director of Field Sales for AmeriPath in
1997 and a Director of Sales and Marketing for ALA from 1990 to 1996. Mr. Davis
has been employed by ALA in various areas of increasing responsibility since
1984. Mr. Davis received his Bachelor of Science in Communications from Trinity
International University.
STEPHEN V. FULLER has been Vice President of Human Resources since
November 1996. From 1993 to 1996, he served as Vice President, Human Resources
for Columbia Miami Heart Institute, a 315-bed full service hospital. From 1991
to 1993, Mr. Fuller served as Director, Human Resources for Delray Community
Hospital, an acute care trauma hospital with over 200 beds and 1,400 employees.
From 1990 to 1991, he served as Vice President, Human Resources for Hialeah
Hospital, a 411-bed hospital with 1,250 employees. Mr. Fuller is a Certified
Senior Professional in Human Resources with 18 years experience in healthcare
human resources. He received his Bachelor of Science in Personnel Management and
Industrial Relations from Auburn University and his Masters of Business
Administration from Nova Southeastern University.
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<PAGE> 10
THOMAS S. ROBERTS has been a director of the Company since February
1996 and was a director of ALA from 1994 to 1996. Mr. Roberts is a General
Partner of Summit Investors II, L.P. and Stamps, Woodsum & Co. III, general
partnerships, the latter of which is the general partner of Summit Partners III,
L.P. and Summit Partners SD, L.P., which is the general partner of Summit
Ventures III, L.P. and Summit Subordinated Debt Fund L.P., respectively. Mr.
Roberts has been employed with Summit in various positions since 1989. Mr.
Roberts is also a director of AMX Corporation and Intelligroup, Inc., as well as
several privately held companies.
C. TIMOTHY KILPATRICK, M.D. has been a director of the Company and an
Affiliated Physician since June 1996 when the Company acquired Derrick. He has
also been Managing Director of Derrick since October 1996. Dr. Kilpatrick was a
stockholder and employee of Derrick since 1986. From 1995 until June 1996, Dr.
Kilpatrick was Vice President of Derrick and from 1992 until June 1996, Chairman
of its Strategic Planning Committee. He has 11 years experience as a pathologist
and is board certified in anatomic and clinical pathology, as well as in
dermatopathology. Dr. Kilpatrick received his B.S. from the University of
Florida and his M.D. from the University of Florida, College of Medicine. He
completed his residency in pathology at Bowman Gray School of Medicine.
C. ARNOLD RENSCHLER, M.D. has been a director of the Company since
April 1997. Since December 1997, he has been President and CEO of PharMerica,
Inc. and a member of it Board of Directors. From June 1996 to November 1997, Dr.
Renschler was President and Chief Executive Officer of Pharmacy Corporation of
America, a division of Beverly Enterprises, Inc. From January 1990 to June 1996,
he held various positions, including serving as a Director, President and Chief
Operating Officer and Chief Clinical Officer at NovaCare, Inc. Dr. Renschler is
certified in pediatric medicine. He received his B.A. from Walla Walla College
and his M.D. from Loma Linda University School of Medicine. He completed his
internal medicine residency at Georgetown University Hospital in Washington,
D.C., and his pediatric residency at Stanford University in Palo Alto,
California.
E. ROE STAMPS, IV has been a director of the Company since the February
1996 and was a director of ALA from 1994 to 1996. Mr. Stamps has more than 22
years experience in venture capital investing and is the Managing General
Partner of Stamps, Woodsum & Co. III and Summit Investors II, L.P. Mr. Stamps is
currently a director of Pediatrix Medical Group, Inc.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the Company's year ended December 31, 1997, the Company's Board
of Directors held four formal meetings and took a number of other actions by
written consent. During 1997, no director attended fewer than 75 percent of the
aggregate of (i) the number of meetings of the Board of Directors held during
the period he served on the Board, and (ii) the number of meetings of committees
of the Board of Directors held during the period he served on such committees.
The only committees of the Board of Directors are the Audit Committee,
the Compensation Committee and the Acquisition Committee.
Messrs. New and Roberts and Dr. Renschler are the current members of
the Audit Committee, which held one meeting during 1997. The duties and
responsibilities of the Audit Committee include (a) recommending to the Board of
Directors the appointment of the Company's independent public accountants and
any termination of engagement, (b) reviewing the plan and scope of independent
audits, (c) reviewing the Company's significant accounting policies and internal
controls, (d) having general responsibility for all related auditing matters,
and (e) reporting its recommendations and findings to the full Board of
Directors.
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<PAGE> 11
Messrs. Roberts and Stamps are the current members of the Compensation
Committee, which held two meetings during 1997 and took a number of other
actions by written consent. The Compensation Committee reviews and approves the
compensation of the Company's executive officers and administers the Company's
stock option plans.
Messrs. New and Roberts and Dr. Levin are the current members of the
Acquisition Committee which held three meetings during 1997 and took a number of
other actions by written consent. The Acquisition Committee is authorized to
review and approve acquisitions by the Company with a purchase price of up to
$10 million. The Acquisition Committee reviews and recommends acquisitions of
$10 million or more to the Board of Directors, for the Board's approval. The
Small Acquisition Committee, of which Mr. New is the sole member, is authorized
to review and approve acquisitions by the Company with a purchase price up to $3
million.
DIRECTOR COMPENSATION
The Company pays each director who is not an employee a $1,000 fee for
each meeting of the Board of Directors and $500 for each meeting of a committee
of the Board of Directors for those meetings attended in person by such
directors. In addition, each director who is not an employee of the Company is
eligible to receive options to purchase shares of common stock in connection
with his initial election to the Board of Directors and options to purchase
additional shares for each year of service thereafter. The Company also
reimburses all Directors for out-of-pocket expenses incurred in connection with
the rendering of services as a director.
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<PAGE> 12
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the aggregate compensation paid to the
Company's Chief Executive Officer and certain of the Company's other executive
officers whose total 1997 salary and bonus was $100,000 or more (the Chief
Executive Officer and such other executive officers are sometimes referred to
herein as the "Named Executive Officers") with respect to the years ended
December 31, 1997 and December 31, 1996:
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
ANNUAL COMPENSATION (1) NUMBER
-------------------------- OF OPTIONS
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) GRANTED
- ---------------------------- ---- ---------- --------- ------------
<S> <C> <C> <C> <C>
James C. New................................ 1997 275,000 166,375
President and Chief Executive Officer 1996 213,942 158,631 --
360,011
Alan Levin, M.D (2)......................... 1997 250,096 37,187
Chief Operating Officer 1996 112,732 100,000 --
36,000
Robert P. Wynn.............................. 1997 148,105 60,770 --
Executive Vice President, Chief Financial 1996 141,605 50,694 --
Officer and Secretary
Annette L. Bell(3).......................... 1997 93,941 46,500 10,000
Vice President of Sales 1996 64,153 56,559 18,000
Leslie B. Rosen, M.D........................ 1997 400,000 -- 25,000
Vice President 1996 400,000 -- --
And Medical Director
Michael J. Demaray, M.D.(4)................. 1997 350,150 -- --
1996 349,820 -- --
</TABLE>
(1) The column for "Other Annual Compensation" has been omitted
because there is no compensation required to be reported in such columns. The
aggregate amount of perquisites and other personal benefits provided to each
Named Officer is less than 10% of the total annual salary and bonus of such
officer.
(2) Dr. Levin became the Chief Operating Officer of the Company as of
September 1996.
(3) Bonus amounts paid to Ms. Bell include commissions. As of December
31, 1997, Ms. Bell was no longer employed as an officer of the Company. She
continues to serve as a consultant to the Company on sales and marketing and
related matters.
(4) Until June 1997, Dr. Michael Demaray was employed as an Affiliated
Physician with AmeriPath Florida and was also employed by AmeriPath as its
Executive Vice President and Medical Director. In June 1997, Dr. Demaray
resigned from his position with AmeriPath and continues to be employed as an
Affiliated Physician with AmeriPath Florida.
-10-
<PAGE> 13
OPTION GRANTS TABLE
The following table sets forth certain information regarding options granted to
the Named Officers during the year ended December 31, 1997.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE
AT ASSUMED ANNUAL
NUMBER OF PERCENT OF RATES OF STOCK PRICE
SECURITIES TOTAL OPTIONS EXERCISE APPRECIATION
UNDERLYING GRANTED TO PRICE FOR OPTION TERM (2)
OPTIONS EMPLOYEES IN PER SHARE EXPIRATION ----------------------
GRANTED YEAR (1) DATE 5% 10%
---------- ------------ --------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Annette L. Bell............ 10,000 3.3% $10.00 7/30/07 $ 62,889 $159,374
Leslie B. Rosen, M.D...... 25,000 8.2% $10.00 9/5/07 $157,224 $398,436
</TABLE>
- ----------------
(1) All options were granted at exercise prices equal to or greater
than the fair market value of the Common Stock on the date of the grant, and
vest over five years with a ten year term
(2) These assumed annual rates of appreciation were used in
compliance with the rules of the Commission and are not intended to forecast
future price appreciation of the Common Stock.
OPTION EXERCISES IN LAST YEAR AND YEAR-END OPTION VALUE TABLE
The following table sets forth information regarding exercise of options during
1997 and the options held at December 31, 1997 by each of the Named Officers.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
NUMBER OF OPTIONS AT YEAR END (#) OPTIONS AT 1997 YEAR-END
OPTIONS AMOUNT --------------------------- ---------------------------
NAME EXERCISED REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James C. New................... -- -- 72,002 288,009 $1,103,791 $4,415,178
Alan Levin, M.D................ -- -- 7,200 28,800 $ 50,400 $ 201,600
Robert P. Wynn................. 22,400 $358,400 107,200 86,400 $1,703,408 $1,372,896
Annette L. Bell................ -- -- 3,600 24,400 $ 25,200 $ 170,800
Leslie B. Rosen, M.D........... -- -- -- 25,000 -- $ 175,000
</TABLE>
- ---------------
(1) The value of the options is based on the difference between the
option exercise price of $1.67, $10.00, $1.11, $10.00 and $10.00 with respect to
Mr. New, Dr. Levin, Mr. Wynn, Ms. Bell and Dr Rosen, respectively, and the
Closing price of the Common Stock as of December 31, 1997 ($17.00) multiplied by
the number of shares of Common Stock underlying the option.
-11-
<PAGE> 14
EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement with Mr. New effective
January 1, 1996. The agreement, as amended, provides that Mr. New will receive a
base salary of $300,000 per year. Mr. New is eligible to receive an annual bonus
equal to 50% of his base salary upon attaining mutually agreed upon objectives
relating to the Company's performance. For the year ended December 31, 1997, the
Compensation Committee of the Board of Directors determined that Mr. New
exceeded the performance objectives of his employment agreement and awarded a
bonus to Mr. New in excess of the percentages specified in such agreement. Upon
termination of his employment by the Company for reasons other than disability,
death or cause, Mr. New will receive his base salary and benefits for a period
of 24 months. In connection with his employment, Mr. New purchased 216,007
shares of Common Stock of the Company from Summit and Schroder, and the Company
granted him an option to purchase 360,011 shares of Common Stock.
In February 1996, the Company assumed ALA's employment agreement with
Mr. Wynn. The agreement, as amended, provides that Mr. Wynn shall receive a base
salary of $148,000 per year and may receive a discretionary bonus based on his
performance. For the year ended December 31, 1997, Mr. Wynn received a bonus
equal to 41% of his base salary upon attaining mutually agreed upon objectives
relating to the Company's performance. Upon termination of his employment
without cause, Mr. Wynn shall receive his base salary for a period of 12 months.
The Company entered into an employment agreement with Dr. Levin as an
Affiliated Physician as of June 30, 1996 in connection with the acquisition of
Derrick. Effective October 1, 1996, the Company entered into an additional
agreement with Dr. Levin pursuant to which Dr. Levin became Chief Operating
Officer of AmeriPath and amended his employment agreement with AmeriPath
Florida, Inc., the Florida subsidiary of AmeriPath ("AmeriPath Florida"). The
agreements provide for an annual salary of $255,000. Beginning in 1997, Dr.
Levin was eligible to receive a bonus of up to $25,000 per year, subject to
achievement of performance objectives of the Company. For the year ended
December 31, 1997, Dr. Levin received a bonus equal to 15% of his base salary,
which included a discretionary bonus based upon his achievement of mutually
agreed upon objectives relating to the Company's performance. Upon termination
by the Company other than for cause, Dr. Levin will receive his annual salary
for one year.
The Company entered into an employment agreement with Dr. Rosen as an
Affiliated Physician as of June 30, 1996 in connection with the acquisition of
FPA. Effective June 1, 1997, the Company entered into an additional agreement
with Dr. Rosen pursuant to which Dr. Rosen became Vice President and Medical
Director of AmeriPath and, accordingly amended his employment agreement with
AmeriPath Florida. The agreements provide for an annual salary of $400,000,
$80,000 of which is paid by AmeriPath and $320,000 of which is paid by AmeriPath
Florida. Upon termination by the Company other than for cause, Dr. Rosen will
receive his annual salary for one year. In connection with his employment as
Vice President and Medical Director, the Company granted options to purchase
25,000 shares of Common Stock.
-12-
<PAGE> 15
In addition to their roles as executive officers and directors of the
Company, Drs. Levin, Kilpatrick and Rosen are also Affiliated Physicians and
have entered into separate employment agreements with AmeriPath Florida that
govern their relationship with the Company as Affiliated Physicians. These
agreements have terms of five years and provide for annual base salaries of
$100,000 $255,000 and $320,000 respectively. Each employment agreement provides
for a covenant not to compete during such Affiliated Physicians' employment with
a subsidiary of AmeriPath and for a period of two years thereafter.
Pursuant to their respective employment agreements, Drs. Levin, Rosen
and Kilpatrick have agreed to devote their full business time to providing
services to the Company. The Company expects that Dr. Levin will devote the
majority of his professional time to his responsibilities as Chief Operating
Officer, with the balance of his professional time being devoted to his
activities as an Affiliated Physician. The Company expects that Dr. Rosen will
devote approximately 30% of his professional time to his responsibilities as
Vice President and Medical Director, with the balance of his professional time
being devoted to his activities as an Affiliated Physician.
Certain executive officers hold options to purchase Common Stock
granted under the Company's 1996 Amended and Restated Stock Option Plan ("Option
Plan"). Such options become fully exercisable upon: (i) a merger, consolidation,
reorganization, liquidation, or dissolution in which the Company does not
survive; (ii) a sale, lease ,exchange or other disposition of all or
substantially all of the Company's property or other assets; (iii) certain
specified changes in control of the Company.
LONG-TERM INCENTIVE AND PENSION PLAN
The Company does not have any long-term incentive or pension plans.
COMPENSATION COMMITTEE AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
In 1996, the Board of Directors established a Compensation Committee to
administer the Option Plan consisting of Messrs. Roberts and Stamps. All
compensation decisions affecting Mr. New were approved by the Company's
directors, exclusive of Mr. New.
In February 1996, Summit converted 120,004 shares of the Convertible
Preferred Stock into 216,007 shares of Common Stock and then sold such shares to
Mr. New for consideration of $450,000 pursuant to the terms of Mr. New's
employment agreement. The consideration paid approximated the fair value of such
shares on that date. In connection with the Company's initial public offering
(the "IPO"), effective on October 22, 1997, Summit converted its shares of
Convertible Preferred Stock into 5,344,816 shares of Common Stock and
subsequently sold 404,040 shares of Common Stock in the IPO.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for making recommendations to
the Board of Directors concerning executive compensation, including base
salaries, bonuses and the basis for their awards, stock option plans and other
benefits. Each of the members of the Compensation Committee is an independent
outside director of the Company.
-13-
<PAGE> 16
The three principal components of the Company's executive compensation
are salary, bonus and stock options. These components are designed to facilitate
fulfillment of the compensation objectives of the Company's Board of Directors
and the Compensation Committee, which objectives include (i) attracting,
retaining and motivating qualified management, (ii) recognizing individual
initiative and achievement, (iii) rewarding management for short and long term
accomplishments and (iv) aligning management compensation with the achievement
of the Company's goals and performance.
It is the Compensation Committee's view that senior executives'
interests should complement those of the stockholders. Accordingly, it is
anticipated that a substantial portion of senior executive compensation above a
base salary will be provided through bonuses tied to certain indicators of
Company performance and through the grant of stock options, thus creating
incentives for executives to achieve long term Company objectives and increase
stockholder value. Base salaries for new management employees are determined
initially by evaluating the responsibilities of the position held and the
experience of the individual, and by reference to the competitive marketplace
for managerial talent, including a comparison of base salaries for comparable
positions at similar companies of comparable sales and capitalization. Annual
bonuses are determined by evaluating the competitive marketplace, the
performance of the Company, the performance of the executive and the
responsibilities assumed by the executive.
The Compensation Committee has reviewed the Company's existing
management compensation programs and has consulted with the CEO to evaluate the
Company's current compensation programs and agrees that they fit with the
philosophy of the Compensation Committee. Additionally, the Compensation
Committee has made certain recommendations for the present year regarding
evaluation criteria in connection with the Company's management incentive
programs.
EXECUTIVE OFFICER COMPENSATION
The determination of executive officer compensation by the Compensation
Committee was made after a review and consideration of a number of factors,
including each executive's level of responsibility and commitment, level of
performance (with respect to specific areas of responsibility and on an overall
basis), past and present contribution to and achievement of Company goals and
performance, compensation levels at comparable companies and historical
compensation levels.
CHIEF EXECUTIVE OFFICER COMPENSATION
The principal factors considered by the Board of Directors in
determining the 1997 salary and bonus for James C. New, the President and Chief
Executive Officer of the Company, included the factors described in the
preceding paragraph and an analysis of the compensation of chief executive
officers of comparable public companies similar in size and capitalization to
the Company, and it was the view of the Board of Directors that James C. New's
1997 compensation was reasonable in comparison.
STOCK OPTIONS
In 1996, the Company's stockholders and the Board of Directors adopted
the Company's 1996 Director Option Plan, pursuant to which 180,000 shares of
common stock are reserved for issuance upon exercise of stock options. In
addition, in 1996 the Company's stockholders and Board of Directors adopted the
Company's Stock Option Plan, under which 2,200,000 shares of Common Stock are
reserved for issuance upon exercise of stock options.
-14-
<PAGE> 17
POLICY ON DEDUCTIBILITY OF EXECUTIVE COMPENSATION
In December 1993, the Internal Revenue Service issued regulations
concerning compliance with Section 162(m) of the Internal Revenue Code of 1986,
as amended. Section 162(m) generally disallows a public company's deduction for
compensation in excess of $1.0 million per year to the Company's Chief Executive
Officer or any one of the four most highly compensated executive officers unless
certain requirements are met and have been disclosed to stockholders and
approved by a majority of the vote in a separate stockholder vote before the
payment of such compensation. While the tax impact of any compensation is one
factor to consider, such impact is evaluated in light of the Compensation
Committee's overall compensation philosophy. The Compensation Committee intends
to establish executive officer compensation programs which will maximize the
Company's deduction if the Compensation Committee determines that such actions
are consistent with its philosophy and in the best interests of the Company and
its stockholders.
THOMAS S. ROBERTS
E. ROE STAMPS, IV
AS MEMBERS OF THE
COMPENSATION COMMITTEE
CERTAIN TRANSACTIONS
In connection with the Company's 1997 Acquisition in Texas, AmeriPath
has agreed to nominate one of the sellers of such Practice, designated by such
sellers and acceptable to AmeriPath, to the next available vacancy for inside
directors on the Board of Directors of AmeriPath.
Pursuant to the acquisition of Derrick, Drs. Levin and Kilpatrick each
received in exchange for their interests in Derrick a Contingent Note in the
maximum principal amount of $584,615. The Company paid $74,614 and $74,614 to
Drs. Levin and Kilpatrick, respectively, in 1997 with respect to Contingent Note
payments for operating earnings achieved in 1996.
Pursuant to the acquisition of FPA, Dr. Rosen received a Subordinated
Note in the principal amount of $800,000 and a Contingent Note in the maximum
principal amount of $1.3 million. During 1997, the Company paid Dr. Rosen
$44,008 with respect to the Contingent Note for operating earnings achieved in
1996 and $160,000 pursuant to the Subordinated Note.
Pursuant to Mr. New's purchase of 216,007 shares of Common Stock from
Summit and Schroder, Mr. New borrowed $270,000 from the Company, payable in full
on January 1, 2001, with interest accruing at 8% and payable currently. The loan
is secured by a pledge of 126,000 shares of the Common Stock. The loan was
repaid following the IPO.
-15-
<PAGE> 18
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on
the Company's Common Stock with the cumulative total stockholder return on The
NASDAQ Stock Index and the NASDAQ Health Services Index commencing on October
22, 1997 (the first day the Common Stock began trading on The NASDAQ Stock
Market) and ended December 31, 1997. The beginning price of the Company's Common
Stock used in the graph for October 22, 1997 was $16.00, the initial public
offering price. The closing price on October 22, 1997 was $19.75. The graph
assumes a $100 investment on October 22, 1997 in each of Ameripath, Inc. Common
Stock, the NASDAQ Stock Market Index and the NASDAQ Health Services Index.
<TABLE>
<CAPTION>
GRAPH DOLLAR VALUES 10/22/97 10/31/97 11/30/97 12/31/97
- ------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
AmeriPath, Inc. 100.00 103.13 104.69 106.25
NASDAQ Health Services Index 100.00 90.32 86.37 86.86
NASDAQ Market Index 100.00 93.38 93.84 92.38
</TABLE>
SECTION 16(a) COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers, and persons who own
more than ten percent of the Company's outstanding shares of Common Stock, to
file with the Commission initial reports of ownership and reports of changes in
ownership of Common Stock. Such persons are required by the Commission
regulation to furnish the Company with copies of all such reports that they
file.
-16-
<PAGE> 19
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required to be filed, all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten percent beneficial
owners have been complied with.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Deloitte & Touche LLP, independent public accountants,
served as the Company's independent public accountants for the year ended
December 31, 1997. The Board of Directors, on the recommendation of the
Company's Audit Committee, has selected Deloitte & Touche LLP as the Company's
independent public accountants for the year ending December 31, 1998. One or
more representatives of Deloitte & Touche LLP, who are expected to be present at
the Annual Meeting, will have the opportunity to make a statement if they desire
to do so and are expected to be available to respond to appropriate questions
from stockholders.
OTHER BUSINESS
The Board knows of no other business to be brought before the Annual
Meeting. If, however, any other business should properly come before the Annual
Meeting, the persons named in the accompanying proxy will vote proxies as in
their discretion they may deem appropriate, unless they are directed by a proxy
to do otherwise.
INFORMATION CONCERNING STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 promulgated by the Securities and Exchange
Commission, a stockholder intending to present a proposal to be included in the
Company's proxy statement for the Company's 1999 Annual Meeting of Stockholders
must deliver a proposal in writing to the Company's principal executive offices
no later December 15, 1998.
By Order of the Board of Directors,
JAMES C. NEW
President and
Chief Executive Officer
Riviera Beach, Florida
April 14, 1998
-17-
<PAGE> 20
Appendix A
AMERIPATH, INC.
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned, a stockholder of AMERIPATH, INC., a Delaware
corporation (the "Company"), hereby appoints James C. New and Robert P. Wynn,
and each of them, as proxies for the undersigned, each with full power of
substitution, and hereby authorizes them to represent and to vote, as designated
on the reverse, all of the shares of common stock of the Company owned of record
by the undersigned at the close of business on April 7, 1998 at the Annual
Meeting of Stockholders of the Company to be held on May 8, 1998 at the Marriott
Hotel, 4000 RCA Boulevard, Palm Beach Gardens, Florida at 11:00 a.m., local
time, and at any adjournments or postponements thereof.
(To be Signed on Reverse Side)
Please Detach and Mail in the Envelope Provided
A [X] Please mark your votes as in this example.
The Board of Directors recommends a vote FOR election of all Director Nominees
listed in proposal 1 below, and FOR approval of proposal 2 below.
VOTE FOR all
nominees listed WITHOLD
except as marked AUTHORITY
to the contrary VOTE for all
below (if any) nominees
1. ELECTION OF DIRECTORS [ ] [ ]
Nominees: James C. New
E. Roe Stamps, IV
INSTRUCTION: To withhold authority to vote for any nominee(s), write that
nominee's name in the space provided below:
- -----------------------------
2. Ratify the reappointment of Deloitte & Touche LLP as the Company's
independent public accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. The proxies are authorized to vote, in their discretion, upon such other
matters as may properly come before the meeting or any adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" PROPOSALS 1 AND 2.
The undersigned hereby acknowledges receipt of (1) the Notice of Annual
Meeting and Proxy Statement for the 1998 Annual Meeting and (2) the Company's
1997 Annual Report to Shareholders.
(Signature) (Signature if held jointly) Date: , 1998
--------------- ------------ ----
IMPORTANT: Please sign exactly as your name appears hereon and mail it
promptly even though you now plan to attend the meeting. When signing as
attorney, executor, administrator, trustee or guardian, please give full
title as such. When shares are held by joint tenants, both should sign. If
a corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
-19-
