NATIONAL HEALTHCARE CORPORATION
-----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 24, 2000
To Our Stockholders:
We cordially invite you to attend the Annual Meeting of the
Stockholders (the "Meeting") of National HealthCare Corporation
(the "Company"). The Meeting will be held at City Center, 14th
Floor, 100 Vine Street, Murfreesboro, Tennessee on Wednesday, May
24, 2000, at 5:00 p.m. C.D.T., for the following purposes:
1. To re-elect two directors;
2. To ratify the selection of Arthur Andersen LLP as
independent accountants for the year ending December 31, 2000;
and
3. To transact such other business as may properly come
before the meeting or any continuances of it.
The nominees for re-election as directors are Olin O.
Williams and Robert G. Adams. They currently serve as directors
of the Company.
The Board of Directors has fixed the close of business on
Friday, February 25, 2000, as the record date for the
determination of stockholders who are entitled to vote at the
Meeting, including any continuances.
We encourage you to attend the Meeting. Whether you are
able to attend or not, we urge you to indicate your vote on the
enclosed proxy card FOR the re-election of Dr. Williams and Mr.
Adams as directors and FOR ratification of the selection of
Arthur Andersen LLP as independent accountants for the year
ending December 31, 2000. Please sign, date, and return the
proxy card promptly in the enclosed envelope. If you attend the
Meeting, you may vote in person even if you have previously
mailed a proxy card.
By Order of the Board of Directors
Richard F. LaRoche, Jr.
April 7, 2000 Secretary
Murfreesboro, Tennessee
NATIONAL HEALTHCARE CORPORATION
100 Vine Street
Murfreesboro, Tennessee 37130
PROXY STATEMENT
ANNUAL MEETING OF THE STOCKHOLDERS
TO BE HELD MAY 24, 2000
The accompanying proxy is solicited by the Board of
Directors of National HealthCare Corporation (the "Company") to
be voted at the Annual Meeting of the Stockholders (the
"Meeting") to be held on Wednesday, May 24, 2000, commencing at
5:00 p.m. C.D.T. and at any continuances of the Meeting. The
Meeting will be held at the City Center, 14th Floor,
Murfreesboro, Tennessee. It is anticipated that this proxy
material will be mailed on or about April 7, 2000, to all
stockholders of record on February 25, 2000.
A copy of the Annual Report of the Company for the year
ended December 31, 1999, including financial statements, is also
enclosed. ADDITIONALLY, AND UPON YOUR WRITTEN REQUEST, WE WILL
PROVIDE A COPY OF OUR ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED DECEMBER 31, 1999, AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION. SUCH REQUESTS SHOULD BE DIRECTED TO RICHARD
F. LaROCHE, JR., SECRETARY, 100 VINE STREET, MURFREESBORO,
TENNESSEE 37130. THERE IS NO CHARGE FOR THIS REPORT.
You have the power and right to revoke the proxy at any time
before it is exercised. A proxy may be revoked by filing with
the Secretary of the Company (i) a written revocation or (ii) a
proxy from you with a later date than the prior proxy.
Furthermore, if you attend the Meeting, you may elect to vote in
person, thereby canceling the proxy.
How We Count the Votes
* Shares of common stock represented in person or by proxy at
the Meeting (including shares which abstain or do not vote with
respect to one or more of the matters presented at the Meeting)
will be tabulated by the Company's Secretary who will determine
whether or not a quorum is present.
* Abstentions will be counted as shares that are present and
entitled to vote for purposes of determining the number of shares
that are present and entitled to vote with respect to any
particular matter, but will not be counted as votes in favor of
such matter. Accordingly, an abstention from voting on Proposals
I and II will have the same legal effect as a vote "against" the
matter even though the stockholder or interested parties
analyzing the results of the voting may interpret such vote
differently.
* If a broker holding stock in "street name" indicates on the
proxy that it does not have discretionary authority as to certain
shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote with respect to that
matter. Accordingly, a "broker non-vote" may effect
establishment of a quorum, but, once a quorum is established,
will have no effect on the voting on such matter.
* A majority of the issued and outstanding shares of common
stock entitled to vote constitutes a quorum at the Meeting. The
affirmative vote of the holders of a majority of the votes cast
at the Meeting is required for the election of directors, while
the ratification of the appointment of the Company's independent
accountants requires the affirmative vote of the holders of a
majority of the issued and outstanding shares of common stock.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The Board of Directors has fixed the close of business on
February 25, 2000 as the record date. The outstanding voting
securities of the Company as of December 31, 1999, consisted of
11,429,844 shares of common stock, par value $.01 per share
("Common Stock"). Stockholders of record as of the record date
are entitled to notice of and to vote at the Meeting or any
continuances. Each holder of the shares of Common Stock is
entitled to one vote per share on all matters properly brought
before the Meeting. Stockholders are not permitted to cumulate
votes for the purpose of electing directors or otherwise.
The following information is based upon filings made by the
entities identified below with the Securities and Exchange
Commission. Except as set forth below, on December 31, 1999 no
person was known to us to own beneficially more than 5% of the
outstanding Common Stock:
Shares Percent of
Beneficially Outstanding
Owned on Shares on
Name and Address 12/31/99 12/31/99
- - -------------------------------------------------------------
National Health 1,271,147 11.1%
Corporation
P. O. Box 1398
Murfreesboro, TN 37133
W. Andrew Adams 1,122,064 9.8%
100 Vine Street
Murfreesboro, TN 37130
1818 Fund II 710,155 6.2%
59 Wall Street
New York, NY 10005
Nicholas Company, Inc., 2,652,504 (1) 23.2%
Nicholas Fund, Inc.,
and Albert O. Nicholas
700 North Water Street
Milwaukee, WI 53202
- - --------------
(1) 1,109,452 shares are owned by Nicholas Company, Inc.,
1,099,452 shares are owned by Nicholas Fund, Inc. and 443,600
shares are owned by Albert O. Nicholas as reported to the SEC on
Form 13G.
PROPOSAL I
ELECTION OF DIRECTORS
Pursuant to our Articles of Incorporation, the directors
have been divided into three groups. Each group is elected for a
three-year term and only one group is up for election each year.
At the May 24, 2000 Meeting, two directors will be elected to
hold office each for a term of three years or until their
successors are elected and qualified.
The nominees for election at the Meeting are Olin O.
Williams and Robert G. Adams, currently directors of the Company.
Unless authority to vote for the election of directors has been
specifically withheld, your proxyholder intends to vote for the
election of Dr. Williams and Mr. Adams to hold office as
directors.
If a nominee becomes unavailable for any reason (which event
is not anticipated), the shares represented by the enclosed proxy
may (unless such proxy contains instructions to the contrary) be
voted for such other person as may be determined by the
proxyholder.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES.
The following is information about the nominees, other board
members, and executive officers:
Common
Stock Percent of
Expiration Beneficially Shares
Of term as Owned at Outstanding
Name Age Position Director 12/31/99 <1> 12/31/99
- - ----------------------------------------------------------------------------
W. Andrew Adams 54 Director 2002 1,122,064 9.8%
& President
Robert G. Adams 53 Director & 2000 481,432 4.2%
Sr. V.P.
Ernest G. 59 Director 2002 199,320 1.7%
Burgess III
Richard F. 54 Sr. V.P. & 430,440 3.8%
LaRoche, Jr. Secretary
Lawrence C. 57 Director 2001 710,155 6.2%
Tucker <2>
J. K. Twilla 73 Director 2001 93,392 *
Olin O. Williams 69 Director 2000 152,345 1.3%
All Directors and Exec.
Officers as a group (7 people) 3,189,148 27.9%
- - -------------
*Less than 1%
<1> Assumes exercise of stock options and convertible
subordinated debentures outstanding. See "Option Plans."
Included in the amounts above are 25,000 shares to Mr. Burgess,
20,000 shares to Mr. Tucker, 30,000 shares to Dr. Twilla, and
25,000 shares to Dr. Williams, of which all may be acquired upon
the exercise of stock options granted under the Company's1994 and
1997 Stock Option Plans.
<2> Mr. Tucker, as a general partner of the 1818 Fund II, is
attributed the ownership of the 1818 Fund II shares, but does not
claim beneficial ownership thereof. Otherwise, all shares are
owned beneficially with sole voting and investment power.
Drs. J. K. Twilla and Olin O. Williams have been physicians
in private practice in Tennessee for more than 25 years each and
are now retired. Dr. Williams currently serves on the Board of
the Bank of Murfreesboro, headquartered in Murfreesboro,
Tennessee. Both serve on the Board of Directors of National
Health Realty, Inc.
Ernest G. Burgess, III is retired Senior Vice President of
NHC. He has an M.S. degree from the University of Tennessee, and
serves on the Board of Directors of National Health Realty, Inc.
Robert G. Adams (Senior Vice President and Director) has
served both as an Administrator and a Regional Vice President,
holding the last position from 1977 to 1985. Mr. Adams has a
B.S. Degree from Middle Tennessee State University. He is Chief
Operating Officer of the Company and also serves on the Board of
National Health Realty, Inc.
W. Andrew Adams has been President since 1974 and served as
Vice President between 1972 and 1974. He currently serves on the
Multi-facility Committee of the American Health Care Association.
Mr. Adams has an MBA degree from Middle Tennessee State
University. He serves on the Board of Trust of David Lipscomb
University, Nashville, Tennessee, is President and on the Board
of Directors of National Health Investors, Inc. and National
Health Realty, Inc., and serves on the Board of Directors of
SunTrust Bank, Nashville.
Richard F. LaRoche, Jr. (Senior Vice President) has been
Secretary of the Company since 1974 and General Counsel since
1971. He has a law degree from Vanderbilt University and an A.B.
degree from Dartmouth College. His responsibilities include
legal affairs, acquisitions, and finance. Mr. LaRoche also
serves as a director, Vice President and Secretary of National
Health Investors, Inc. and as Vice President and Secretary of
National Health Realty, Inc.
Mr. Tucker has been with Brown Brothers Harriman & Co. (BBH
& Co.), private bankers, for 33 years and became a General
Partner of the firm in January 1979. He serves on the firm's
steering committee as well as being responsible for the corporate
finance activities, which include management of the 1818 Fund,
private equity investing partnerships with committed capital
exceeding $1.5 billion. He is a director of MCI WorldCom, Inc.,
Riverwood International Corporation, VAALCO Energy Inc., world
Access, Inc., National Equipment Services, US Unwired, Inc. and
the MCI WorldCom Investment Fund.
Board of Directors and Committees of the Board
The Board of Directors held 5 meetings during 1999. All
directors were present at the meetings (except for one director
missing one meeting) of the Board and of committees on which they
served. The Board as a whole serves as the Audit Committee, and
the Compensation Committee is comprised of non-employee directors
(Mr. Burgess, Mr. Tucker, Drs. Twilla and Williams).
The Audit Committee, which met one time in 1999, selects the
Company's independent accountants, fixes the compensation to be
paid to such accountants, reports to the Board with respect to
the scope of audit procedures and determines compliance as to the
Company's policies and procedures.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
AND CERTAIN TRANSACTIONS
Cash Compensation
Directors not affiliated with NHC receive compensation for
their Board service in the amount of $2,500 per meeting attended.
The Company reimburses all directors for travel expenses incurred
in connection with their duties as directors of the Company.
The Company's executive officers were compensated per the
following Table I.
<TABLE>
TABLE I
NATIONAL HEALTHCARE CORPORATION
SUMMARY COMPENSATION TABLE
1997 - 1999
<CAPTION>
Long Term
Compen-
Annual Compensation <F1> Sation
- - --------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f)(g)(h) (i)
Other <F4> All
Annual Other
Name and Compen- Compen-
Principal Salary Bonus sation sation
Position Year ($) ($)<F2> ($)<F3> ($)
- - --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
W. Andrew 1999 113,313 <F5> 2,932 -0- -0-
Adams, Pres. 1998 109,478 155,225 4,714 -0- -0-
& CEO 1997 126,806 1,786,842 26,115 -0- -0-
Robert G. 1999 140,940 <F5> 6,607 -0- -0-
Adams, Sr. 1998 140,779 102,000 9,889 -0- -0-
V.P. & COO 1997 140,553 883,626 3,817 -0- -0-
Richard F. 1999 127,802 <F5> 2,782 -0- -0-
LaRoche, Jr., 1998 126,588 102,975 18,034 -0- -0-
Sr. V.P. & 1997 135,159 1,086,355 14,904 -0- -0-
Secr.
<FN>
<F1> Compensation deferred at the election of an executive has
been included in columns (c) and (d).
<F2> These officers may also receive bonuses from National Health
Investors, Inc. and National Health Realty, Inc. which are
disclosed in those Company's Form 10-K and/or proxy statements.
<F3> Includes (a) life insurance benefit, (b) 401(k) matching
contribution, (c) non qualified deferred compensation matching
contribution, (d) ESOP contribution.
<F4> These officers received stock options from National Health
Investors, Inc. in 1993, 1995, 1997, and 1999 and stock options
from National Health Realty, Inc. in 1999, which are disclosed in
those Companies' Forms 10-K. No other Restricted Stock Awards,
Options/SARs, or LTIP Payouts were given in 1996, 1997, 1998, or
1999.
<F5> No bonuses have been declared or paid for 1999.
</TABLE>
Director and Officer Options
The 1994 Unit Option Plan provided for an automatic grant to
each non-employee director of an option to purchase 5,000 Units
of Limited Partnership on the date of the Annual Unitholder's
Meeting at the then fair market value. The 1997 Stock Option
Plan increased that number to 10,000 shares per Annual Meeting of
the Shareholders. All options which have been granted to
employees have been exercised under the 1994 Unit Option Plan,
but of the 1,000,000 shares available under the 1997 Plan,
920,000 are available for grant.
Both plans permit options to be exercised for cash or by
surrender of shares of Common Stock of the Company (or Units of
Limited Partnership Interest) valued at the then fair market
value. Unless otherwise specifically provided in the option
agreement, no option shall be transferable other than by will,
family gift, or the laws of descent and distribution. All shares
which may be issued under either plan and the exercise prices for
outstanding options are subject to adjustment in the event that
the number of outstanding shares of Common Stock will be changed
by reason of stock splits, stock dividends, reclassifications or
recapitalizations. In addition, upon a merger or consolidation
involving the Company, participants are entitled to shares in the
surviving corporation.
Pursuant to the automatic grant provisions of the plans, the
four non-employee (or outside) directors have each received
options to purchase shares at $25.75 per share in 1994, $24.88 in
1995, $38.63 in 1996, $30.75 in 1997, $39.88 in 1998, and $9.375
in 1999. The outside directors have exercised all of the 1994
grants, all but 5,000 of the 1995 grants, all of the 1996 grants,
and none of the 1997, 1998 or 1999 grants.
Tables A and B set forth information regarding options which
are outstanding, granted or exercised under the 1994 Unit Option
Plan and the 1997 Stock Option Plan as of December 31, 1999, for
the Company's three executive officers. Table C sets forth
information regarding options outstanding and exercised during
1999 for the executive officers, all outside directors and all
other NHC employees as a group. The Company has not granted any
SARs.
TABLE A
Option/SAR Grants in Last Fiscal Year [12-31-99]
Potential
Realizable
Value at
Assumed Annual
Rates of
Stock Price
Appreciation
for Option
Individual Grants Term
- - --------------------------------------------------------------------------
Percent
Number of of Total
Securities Options/
underlying SARs
option/ Granted to Exercise
SARS Employees of Base Expir-
Granted in Fiscal Price ation 5% 10%
(#) Year ($/Sh) Date ($) ($)
- - --------------------------------------------------------------------------
W. Andrew Adams -0- - -0- - - -
Robert G. Adams -0- - -0- - - -
Richard F. -0- - -0- - - -
LaRoche,Jr.
TABLE B
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
Number of
Securities Value of
Underlying Unexercised
Unexercised in-the-Money
Options/ Options/
SARs at SARs at
Shares Fiscal Year- Fiscal Year-
Acquired Value End (#) End($)
on Exercise Realized Exercisable Exercisable
Name (#) ($)
- - -----------------------------------------------------------------
W. Andrew Adams -0- -0- -0- -0-
Robert G. Adams -0- -0- -0- -0-
Richard F. -0- -0- -0- -0-
LaRoche, Jr.
TABLE C
Shares Options
Under Expir- Exer- Remain- Exer-
Name of Option: ation cised ing cise
Participant 1999 Date 1999 Options Price
- - -------------------------------------------------------------------
W. Andrew Adams -0- - -0- -0- -
Richard F. LaRoche, -0- - -0- -0- -
Jr.
Robert G. Adams -0- - -0- -0- -
All Executive
Officers (3 persons) -0- - -0- -0- -
All Directors 5,000 3/15/00 -0- 5,000 $16.567
(4 persons) 15,000 3/19/02 -0- 15,000 30.75
40,000 1/4/03 -0- 40,000 39.88
40,000 4/26/04 -0- 40,000 9.375
All Other NHC -0- - -0- -0- -
Employees
The Company's grant or issuance of an incentive stock option
under both the 1994 Unit Option Plan and the 1997 Stock Option
Plan have no federal income tax consequences to either the
Company or the optionee. Nor do any federal income tax
consequences occur to either the Company or the optionee upon the
optionee's exercise of his or her incentive stock option and
purchase of Common Stock up to $100,000 per year, except that the
difference between the fair market value of the stock purchased
pursuant to the exercise of the option and the amounts paid upon
the option's exercise (the "Spread") would be included in the
optionee's alternative minimum taxable income for alternative
minimum tax purposes. For options purchased in excess of the
$100,000 limit, or for options granted to non-employee directors,
or which are not held for the time discussed in the next
paragraph, the Spread is taxable as ordinary income to the
optionee and deductible by the Company at the time of exercise.
After exercising the option, if the optionee holds the stock
purchased for the requisite period under the Internal Revenue
Code, then upon the optionee's disposition of the stock he or she
will recognize capital gain (or loss) for federal income tax
purposes on the amount of the Spread. The Company would not be
entitled to a deduction upon such a disposition. To be entitled
to such capital gains treatment, the optionee must not dispose of
the underlying stock within two (2) years after the date the
option is granted or one (1) year after the option is exercised.
If the optionee disposes of the stock prior to such time,
then the optionee will recognize ordinary income in an amount
equal to the lesser of (i) the difference between the sales
proceeds and the optionee's cost, or (ii) the difference between
the fair market value of the stock on the date of exercise and
the optionee's cost. The balance of the gain on a premature
disposition of the stock, if any, will be capital gain for
federal income tax purposes. Such a premature disposition will
entitle the Company to a deduction equal to the amount of
ordinary income recognized by the optionee.
The 1994 Plan also provided that the Company could finance
the exercise of any Options by the acceptance of the
Optionholder's full recourse Promissory Note bearing interest at
a fixed rate equal to 2.5% below New York Prime on the date of
the note, with interest payable quarterly and principal due and
payable in 60 months. The notes are secured by Shares having a
fair market value of 200% of the amount of the principal of the
note as established on the date of the loan. Additionally, the
notes required the pledge of additional Shares or for reduction
in the principal of the note at any time that the value of the
collateral drops below 150% of the base amount of the outstanding
balance of the note. The below table indicates the current amount
of loans outstanding by directors of NHC individually and by all
designated NHC employees collectively as of December 31, 1999.
Current Loan Maximum Loan
Outstanding Outstanding
- - -----------------------------------------------------------
W. Andrew Adams $1,641,920 $4,101,131
Robert G. Adams 1,206,950 2,426,309
Richard F. LaRoche, Jr. 1,181,200 2,418,076
Ernest G. Burgess III 802,030 1,309,368
J. K. Twilla --- 169,750
Lawrence C. Tucker --- ---
Olin O. Williams 369,000 679,462
--------- ----------
All Executive Officers $5,201,100 $11,104,096
& Directors as a Group (7)
Section 16(a) Disclosure Compliance
Section 16(a) of the Securities and Exchange Act of 1934 as
amended requires officers, directors, and persons who own more
than 10% of the Company's equity securities to file statements of
changes in beneficial ownership (Forms 4 or 5) with the
Securities and Exchange Commission (the SEC) and the American
Stock Exchange. Officers, directors and greater than 10%
shareholders are required by SEC regulations to furnish the
Company with copies of all such forms they file.
To the Company's knowledge, based solely on the review of
the copies of such forms received by it, the Company believes
that during 1999 all filing requirements applicable to its
officers, directors, and greater than 10% beneficial owners were
complied with and filed.
Comparison of Cumulative Total Return
The Company's cumulative total return as compared with the S
& P 500 Index and HealthCare-Misc. Index is shown in the graph on
the last page of this proxy statement.
PROPOSAL II
RATIFICATION OF APPOINTMENT OF AND
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Company has selected Arthur Andersen LLP as its
independent auditors for fiscal year ending December 31, 2000.
Although a stockholder vote is not required, the Board would like
the approval of stockholders for this appointment. Arthur
Andersen LLP audited the Company's financial statements for the
year ended December 31, 1999.
If the stockholders do not ratify the selection of Arthur
Andersen LLP, the selection of independent accountants will be
reconsidered by the Board of Directors, although the Board of
Directors would not be required to select different independent
accountants for the Company. The Board of Directors retains the
power to select another firm as independent accountants for the
Company to replace the firm whose selection was ratified by the
Company's stockholders in the event the Board of Directors
determines that the best interest of the Company warrants a
change of its independent accountants.
Representatives of Arthur Andersen LLP will be present at
the Annual Meeting and will be given the opportunity to make a
statement if they desire to do so. They will also be available
to respond to appropriate questions from stockholders at the
Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" PROPOSAL II.
STOCKHOLDER PROPOSALS
October 1, 2000 is the date by which proposals of
stockholders intended to be presented at the 2001 Annual Meeting
of Stockholders must be received by the Company for inclusion in
the Company's proxy statement and form of proxy relating to that
meeting.
EXPENSES OF SOLICITATION
The total cost of this solicitation will be borne by the
Company. In addition to use of the mail, proxies may be
solicited by directors and officers of the Company personally and
by telephone, telegraph, or facsimile transmission.
OTHER MATTERS
The Board of Directors knows of no other business to be
presented at the Meeting, but if other matters do properly come
before the Meeting, it is intended that the persons named in the
proxy will vote on such matters in accordance with their best
judgment.
s/Richard F. LaRoche, Jr.
-----------------------------
Richard F. LaRoche, Jr., Secretary
April 7, 2000
Murfreesboro, Tennessee
NATIONAL HEALTHCARE CORPORATION
COMPARISON OF CUMULATIVE TOTAL RETURN*
1995 1996 1997 1998 1999
- - -----------------------------------------------------
NHC 100 118.0 159.2 79.8 40.4
S & P 500 100 122.9 164.0 210.9 255.2
HC Long-Term 100 111.3 147.0 68.0 29.6
*Assumes $100 inv. 12/31/95 in NHC, S&P 500 and Health Care Long-term
