<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Rule 14a-ll(c) or Rule 14a-12
CHARTER MEDICAL CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules O-ll(c)(l)(ii), 14a-6(i)(1),
or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction
applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: /
4) Proposed maximum aggregate value of transaction:
/ Set forth the amount on which the filing fee is calculated
and state how it was determined.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule O-ll(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
<PAGE>
CHARTER MEDICAL CORPORATION
____________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 9, 1995
____________
The Annual Meeting of Stockholders of Charter Medical Corporation will be
held at 191 Peachtree Street, 50th floor, Atlanta, Georgia, on Thursday,
March 9, 1995, at 10:00 A.M., Eastern Standard Time, to consider and act upon
the following:
(1) Election of one director to a three-year term; and
(2) Such other matters as may properly come before the meeting.
Only stockholders of record at the close of business on January 23, 1995
are entitled to notice of, and to vote at, the meeting. A complete list of
stockholders entitled to vote at the meeting will be available for inspection
at the offices of the Company during normal business hours from February 27,
1995 through March 8, 1995.
Your attention is directed to the accompanying proxy statement.
Linton C. Newlin
Secretary
Atlanta, Georgia
February 1, 1995
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND RETURN
PROMPTLY THE ENCLOSED PROXY. THE PROXY IS REVOCABLE AND YOU MAY VOTE YOUR
SHARES IN PERSON IF YOU ATTEND THE MEETING AND WISH TO DO SO.
<PAGE>
<PAGE>
CHARTER MEDICAL CORPORATION
3414 Peachtree Road, N.E.
Suite 1400
Atlanta, Georgia 30326
____________
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
____________
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Charter Medical Corporation, a Delaware
corporation (the "Company"), from the holders of the Company's Common Stock
(the "Common Stock"), for use at the Annual Meeting of Stockholders to be held
at 10:00 a.m., Eastern Standard Time, on Thursday, March 9, 1995, and any
adjournment thereof (the "Annual Meeting"). The Annual Meeting will be held
at 191 Peachtree Street, 50th floor, Atlanta, Georgia. This Proxy Statement
and the accompanying form of proxy were first sent or given to stockholders on
or about February 1, 1995.
VOTING
The Board of Directors has fixed the close of business on January 23,
1995, as the record date for determining the stockholders entitled to notice
of and to vote at the Annual Meeting. On January 23, 1995, 26,942,277 shares
of Common Stock were outstanding. Each share is entitled to one vote on each
matter presented for a vote at the Annual Meeting.
The presence in person or by proxy of the holders of a majority of the
shares of Common Stock outstanding on the record date constitutes a quorum for
the transaction of business at the Annual Meeting.
The matters submitted to the stockholders at the Annual Meeting require
the affirmative vote of a majority of the votes represented in person or by
proxy at the meeting. With regard to the election of the director,
stockholders may vote in favor of the nominee or withhold their vote as to the
nominee.
Stockholders should specify their choice on the enclosed form of proxy
card. If no specific instructions are given with respect to the election of
the director, the shares represented by a properly signed proxy card will be
voted FOR the election of the nominee for the office of director. If any
other matters properly come before the Annual Meeting, the persons named as
proxies will vote on such matters in their discretion.
<PAGE>
<PAGE>
A stockholder who has returned a proxy may revoke it at any time before
it is voted at the Annual Meeting by executing a later-dated proxy, by voting
by ballot at the meeting or by filing with the Inspector of Election an
instrument of revocation.
Under Delaware law and the Company's bylaws, shares voted to withhold
authority for the election of a director will be counted for purposes of
determining whether or not a quorum exists and determining the number of votes
needed to elect a director or to approve any other matter voted on at the
Annual Meeting.
Voting By ESOP Participants
Each participant in the Company's Employee Stock Ownership Plan (the
"ESOP") is being sent, together with this proxy statement, an ESOP proxy card
for voting of the shares of the Company's Common Stock allocated to such
participant's ESOP account (the "Allocated Shares"). The ESOP proxy card may
be used by a participant to direct the Trustee of the ESOP (the "ESOP
Trustee") as to the manner in which the participant's Allocated Shares shall
be voted. In order to direct the ESOP Trustee, a participant must have
completed, signed and dated the ESOP proxy card and returned it to the ESOP
Trustee, in the envelope provided, which card must be received by the ESOP
Trustee prior to the Annual Meeting.
Prior to the Annual Meeting, the ESOP Trustee will aggregate votes of
Allocated Shares for or withholding authority to vote for the nominee for the
office of director. At the Annual Meeting, the ESOP Trustee will vote the
Allocated Shares for which it has received instructions in accordance with
such instructions. The ESOP Trustee will not vote any Allocated Shares in the
absence of timely instructions. As of January 23, 1995, 389,775 shares of
Common Stock were held by the ESOP Trustee and eligible to be voted at the
Annual Meeting at the direction of participants. Under the terms of the ESOP,
instructions received by the ESOP Trustee from participants are required to be
held by the Trustee in confidence and not to be divulged or released to any
person, including officers and employees of the Company. Neither the ESOP
Trustee nor the Administrative Committee of the ESOP (consisting of three
officers of the Company) will make recommendations to participants on whether
to vote or how to vote.
Shares of Common Stock held by the ESOP which have not been allocated to
participants' accounts will be voted by the ESOP Trustee at the direction of
the Administrative Committee of the ESOP. Under the applicable plan document,
the Administrative Committee directs the ESOP Trustee concerning voting of
unallocated shares after it determines such action to be in the best interests
of participants. The Administrative Committee has advised the Company that it
intends to direct the ESOP Trustee to vote for the election as director of the
nominee named in this proxy statement. As of January 23, 1995, 135,130 shares
of Common Stock were held by the ESOP Trustee but not allocated to
participants' accounts.
SOLICITATlON OF PROXIES
The cost of soliciting proxies in the accompanying form will be paid by
the Company. In addition to solicitation by mail, banks, brokers and other
custodians, nominees and fiduciaries will be requested to send proxy material
to the beneficial owners and to secure their voting instructions, if
<PAGE>
<PAGE>
necessary. The Company will reimburse them for their expenses in so doing.
Certain officers and other employees of the Company, who will receive no
compensation for their services other than their regular compensation, may
solicit proxies by mail, telephone and personal contact. In addition, the firm
of MacKenzie Partners, Inc. has been retained to assist in the solicitation of
proxies for a fee of approximately $5,000 plus expenses.
<TABLE>
PRINCIPAL HOLDERS OF COMMON STOCK
<CAPTION>
The following table sets forth information as of December 31, 1994
(except as otherwise noted) with respect to persons known to the Company to be
the beneficial owner of more than 5% of the Company's outstanding Common Stock:
Amount and Nature Percent of
Name and Address of Beneficial Ownership Class
<S> <C> <C>
Neuberger & Berman(1) 2,719,191 9.8%
605 Third Avenue
New York, NY 10158
W.R. Huff Asset Management 2,156,005 7.8%
Co., L.P.(2)
30 Schuyler Place
Morristown, N.J. 07960
Tiger Management Corporation(3) 1,472,100 5.3%
101 Park Avenue
New York, NY 10178
______________
<FN>
(1) Information concerning beneficial ownership of securities by Neuberger &
Berman is based on its Schedule 13G, dated December 9, 1994.
(2) Information concerning beneficial ownership of securities by W.R. Huff
Asset Management Co., L.P. is based on its Schedule 13D, dated
December 8, 1994.
(3) Information concerning beneficial ownership of securities by Tiger
Management Corporation is based on its Schedule 13G, dated February 8,
1994.
</TABLE>
Neuberger & Berman is a registered broker and investment advisor and is
deemed to be a beneficial owner because it has shared voting and investment
power over 2,719,191 shares of Common Stock of the Company owned by unrelated
clients.
W.R. Huff Asset Management Co., L.P. ("Huff") is a registered investment
adviser and, under the terms of Huff's investment advisory contracts with its
clients, Huff has shared voting and shared investment power over the 2,156,005
shares of Common Stock. Huff is a limited partnership; and one of its general
partners, W.R. Huff, of the same address, may be deemed a beneficial owner of
the shares under Securities and Exchange Commission (the "Commission") rules
because of his control of Huff.
Tiger Management Corporation is a registered investment advisor with
sole voting and investing power over 1,472,100 shares of the Company's Common
Stock.
<PAGE>
<PAGE>
ELECTION OF DIRECTORS
Under the Company's Certificate of Incorporation, the number of
directors is fixed at eight. Two director positions (for terms expiring in
1995; in 1998 after the Annual Meeting) are vacant. The directors are divided
into three classes, with one class being elected each year to serve three-year
terms. At the Annual Meeting, management proposes that stockholders elect one
director for a three-year term. Of the present six directors, five will
continue to serve after the Annual Meeting, two for terms expiring in 1996 and
three for terms expiring in 1997.
One of the vacancies on the Board of Directors was created by the
resignation of William A. Fickling, Jr. in December 1993. The other vacancy
is a position created by an amendment to the Company's Certificate of
Incorporation effective on July 21, 1992, which amendment was adopted as part
of the Company's Plan of Reorganization under the Bankruptcy Code (the
"Plan"). Vacancies on the Board may be filled by the Board of Directors.
If the nominee listed below is unable to serve (which is not
anticipated), the Board of Directors will designate a substitute nominee, in
which case the persons designated as proxyholders will vote all valid proxies
for the election of such substitute nominee.
The first table below sets forth the name of the nominee for the
director position to be elected by the holders of the Common Stock at the
Annual Meeting. The second table sets forth the names of each other present
director who will continue to serve after the Annual Meeting. With respect to
each nominee and continuing director, the table lists his age, month and year
in which he first became a director, any other position with the Company,
principal occupations during the past five years and any directorships in
public or certain other companies.
<TABLE>
NOMINEE FOR THE DIRECTOR POSITION
FOR TERM EXPIRING IN 1998
<CAPTION>
Position with Company,
Name, Age, and Date Principal Occupations
First Became a During Past Five Years
Director Term Expiring and Other Directorships
<S> <C> <C>
Andre C. Dimitriadis 1995 Chairman and Chief Executive
54 Officer, LTC Properties (a
July 1992 healthcare real estate investment
trust) (since 1992); Executive
Vice President and Chief Financial
Officer, Beverly Enterprises, Inc.
(nursing homes) (1989-1992);
Director of Sun Healthcare Group
(since 1993); Director of Home Care
Management, Inc. (since 1993);
Director of Assisted Living
Concepts, Inc. (since 1994).
</TABLE>
<PAGE>
<PAGE>
<TABLE>
CONTINUING DIRECTORS
<CAPTION>
Position with Company,
Name, Age, and Date Principal Occupations
First Became a During Past Five Years
Director Term Expiring and Other Directorships
<S> <C> <C>
Edwin M. Banks 1996 Securities Analyst, W.R. Huff
32 Asset Management Co., L.P. (1988-
July 1992 present).
Lawrence W. Drinkard 1996 Executive Vice President and Chief
55 Financial Officer (since 1994) of
January 1991 the Company; Senior Vice President -
Finance (1990-1993); Vice President
(1987-1990); Treasurer (1986-1991).
E. Mac Crawford 1997 Chairman of the Board of Directors,
45 President and Chief Executive
April 1990 Officer of the Company (since 1993);
President and Chief Operating
Officer (1992-1993); Executive Vice
President-Hospital Operations (1990-
1992); Assistant to the President
and Chairman (1990); President,
Mulberry Street Investment Company
(1988-1990); Director of First Union
National Bank of Georgia (since
1994).
Raymond H. Kiefer 1997 Retired insurance executive
67 (since 1992); President, Allstate
July 1992 Insurance Company (1989-1992).
Gerald L. McManis 1997 President (since 1965) of McManis
58 Associates, Inc. (strategy develop-
February 1994 ment and management consulting firm
for healthcare and healthcare
related companies); Director of MMI
Companies, Inc. (since 1994).
</TABLE>
Mulberry Street Investment Company manages the personal investments of
William A. Fickling, Jr. (former Chairman of the Board of the Company) and his
family. As President (1988-1990) of Mulberry Street Investment Company, Mr.
Crawford had responsibility for managing real estate and other investments and
related financings.
<PAGE>
<PAGE>
BOARD OF DIRECTORS INFORMATION
During the fiscal year ended September 30, 1994, the Board of Directors
held ten meetings; and each director attended all Board meetings and all
meetings of committees of which he was a member.
The Board has established an Audit Committee and a Compensation
Committee. There is no nominating committee of the Board; nominees for
director are selected by the Board of Directors.
Audit Committee. Audit Committee members are Edwin M. Banks (Chairman)
and Raymond H. Kiefer. The Audit Committee held two meetings in fiscal 1994.
The Audit Committee recommends to the Board of Directors the engagement of
independent auditors of the Company, reviews the scope and results of audits
of the Company, reviews the Company's internal accounting controls and the
activities of the Company's internal audit staff and reviews the professional
services furnished to the Company by its independent auditors.
Compensation Committee. Compensation Committee members are Andre C.
Dimitriadis (Chairman) and Gerald L. McManis. The Compensation Committee held
two meetings in fiscal 1994. The Compensation Committee's duties are
described under the caption, "Board Compensation Committee Report on Executive
Compensation."
During fiscal 1994, non-employee directors received annual compensation
of $24,000 and a fee of $1,000 for each Board meeting attended. In addition,
non-employee directors were paid $1,000 for each committee meeting attended.
On February 18, 1994, upon election to the Board of Directors, Gerald L.
McManis was granted an option under the Directors' Stock Option Plan to
purchase 25,000 shares of the Company's Common Stock for an exercise price of
$22.875 per share. In addition, on February 18, 1994, each non-employee
director was granted units under the Directors' Unit Award Plan to receive
2,500 shares of the Company's Common Stock upon vesting. Units vest when a
director ceases to be a non-employee director. Under certain circumstances,
the number of shares payable upon vesting will be less than 2,500.
EXECUTIVE COMPENSATION
The following table sets forth, for the three fiscal years ended
September 30, 1994, the compensation paid by the Company to the Chief
Executive Officer and the three other executive officers:
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Other Compensation
Annual Compensation Annual Option/ LTIP All Other
Name and Principal Fiscal Salary Bonus Compensation SARS Payouts Compensation
Position Year ($) ($) ($)(1) (#)(2) ($) ($)(3)
<S> <C> <C> <C> <C> <C> <C> <C>
E. Mac Crawford 1994 $600,000 $369,000 $ 1,009 90,000 -- $332,135
Chairman of the 1993 520,000 293,280 711 -- -- 30,049
Board of Directors, 1992 500,000 903,650 * 572,990 -- *
President and Chief
Executive Officer
Lawrence W. Drinkard 1994 367,500 226,013 3,014 35,500 -- 231,129
Executive Vice 1993 350,000 197,400 3,007 -- -- 29,806
President and Chief 1992 335,000 489,458 * 215,000 -- *
Financial Officer
William E. Hale 1994 193,750 115,851 127,261 17,500 -- 123,855
Senior Vice
President-
Operations
C. Clark Wingfield 1994 237,000 134,047 157,322 17,500 -- 122,788
Vice President - 1993 225,000 110,790 37,820 -- -- 31,000
Administrative 1992 215,000 217,975 * 30,000 $15,714 *
Services
________________
<FN>
* Under the rules of the Securities and Exchange Commission, no disclosure is required for these
items in 1992.
(1) Fiscal 1994 includes, for Mr. Hale and Mr. Wingfield, reimbursement of relocation expenses of
$80,423 and $108,914, respectively. For fiscal 1993 includes, for Mr. Wingfield, country club
dues of $15,998, car allowance of $12,000 and an administrative services allowance of $7,939.
(2) Represents in fiscal 1994 and 1992 the number of stock options granted under the Company's 1994
Stock Option Plan and 1992 Stock Option Plan, respectively.
(3) In fiscal 1994 includes the following: (a) contributions to ESOP of $20,392, $20,065, $34,953 and
$20,339 for Mr. Crawford, Mr. Drinkard, Mr. Hale and Mr. Wingfield, respectively; (b)
contributions to the Company's 401-K Plan of $8,254, $8,254 and $7,980 for Mr. Crawford, Mr.
Drinkard and Mr. Wingfield, respectively; (c) amounts deposited in trust pursuant to the Executive
Benefits Plan of $229,407, $100,927, $50,653 and $70,169 for Mr. Crawford, Mr. Drinkard, Mr. Hale
and Mr. Wingfield, respectively; (d) premiums paid for life and disability insurance of $72,954,
$100,523, $37,832 and $23,878 for Mr. Crawford, Mr. Drinkard, Mr. Hale and Mr. Wingfield,
respectively; and (e) term life insurance premiums of $1,128, $1,360, $417 and $422 for Mr.
Crawford, Mr. Drinkard, Mr. Hale and Mr. Wingfield, respectively.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
Option/SAR Grants in Fiscal 1994
<CAPTION>
Individual Grants
Number of Percent of Potential Realizable
Securities Total Value at Assumed
Underlying Options/SARs Annual Rates of Stock
Options/SARs Granted to Exercise Price Appreciation
Granted Employees in Price Expiration for Option Term
Name (#)(1) Fiscal 1994 Per Share Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
E. Mac Crawford 90,000 9.8% $22.875 2-18-04 $1,297,000 $3,273,000
Lawrence W. Drinkard 35,500 3.9 22.875 2-18-04 512,000 1,291,000
William E. Hale 17,500 1.9 22.875 2-18-04 252,000 636,000
C. Clark Wingfield 17,500 1.9 22.875 2-18-04 252,000 636,000
_______________
<FN>
(1) Options granted under the 1994 Stock Option Plan which become exercisable
over three years at the rate of one-third of the total number of options
per year.
</TABLE>
<TABLE>
Aggregated Option/SAR Exercises in Fiscal 1994
and Option/SAR Values at September 30, 1994
<CAPTION>
The following table provides information related to options exercised by
the executive officers during fiscal 1994, and the number and value of options
held on September 30, 1994.
Value of Unexercised
In-the-Money
Number of Options/SARs
Shares Value Unexercised Option/SARs at September 30, 1994
Acquired on Realized at September 30, 1994 ($)(2)
Name Exercise (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
E. Mac Crawford 100,000 $2,064,000 350,842 204,598 $ 8,105,340 $3,093,622
Lawrence W. Drinkard 30,000 619,200 116,076 78,500 2,693,529 1,169,020
William E. Hale -- -- 9,000 23,500 120,915 163,735
C. Clark Wingfield 5,038 110,912 6,150 23,500 139,590 222,715
________________
<FN>
(1) Value is calculated based on the difference between the option exercise
price and the closing market price of the Common Stock on the date of
exercise, multiplied by the number of shares to which the exercise
relates.
(2) The closing price for the Company's Common Stock as reported by the
American Stock Exchange on September 30, 1994 was $27.625. Value is
calculated on the basis of the difference between the per share option
exercise price and $27.625, multiplied by the number of shares of Common
Stock underlying the in the money options.
</TABLE>
<PAGE>
<PAGE>
BOARD COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Compensation Committee") of the Board of
Directors is responsible for establishing the policies relating to and the
components of executive officer compensation. The Compensation Committee
approves the design of all compensation plans applicable to executive
officers, reviews and approves performance goals, establishes award
opportunities, determines appropriate base salary increases, approves
incentive award payouts, and oversees the ongoing operation of the various
plans as they relate to executive officers. The Compensation Committee
consists of directors who are not employees of the Company and who are not
eligible to participate in any of the compensation plans that the Compensation
Committee administers.
Policies. In 1993 the Compensation Committee retained an independent
compensation consultant to advise the Compensation Committee with respect to
executive and other officer total compensation, including base salaries,
annual incentive plan, benefits and stock-based and long-term incentive
compensation. The compensation consultant interviewed each independent
director of the Company and reported to the Compensation Committee that the
independent directors believed (i) total compensation of the Company's
executive officers should, in order to attract and retain qualified
executives, be between the 60th and 70th percentile of a peer group of
companies developed by the consultant, with the upper end of the range subject
to increase to the 80th percentile of the peer group based on performance; and
(ii) a significant portion of executive officer compensation should be
performance-based. The peer group consists of specific hospital management
and healthcare companies, and the Compensation Committee believes that such a
peer group reflects the talent pool from which the Company might draw and
provides a useful benchmark for the competitiveness of compensation of the
Company's present executive officers.
The compensation consultant reported to the Compensation Committee that
total compensation for the Company's executive officers prior to the 1994
fiscal year fell between the 40th and 50th percentile of total compensation
for peer group executive officers. With regard to base salary, the consultant
reported that the base salary of the Company's chief executive officer was
below the 50th percentile of the peer group chief executive officers and that
other executive officer salaries were competitive, falling between the 50th
and 66th percentiles of comparable peer group positions. With regard to
annual incentive compensation, the consultant reported that the percentage of
base salary paid by the Company as a bonus when the annual incentive target is
met was slightly below the peer group median and that the bonuses paid by the
Company when the target is exceeded were above the peer group median.
With regard to benefits, the consultant determined that executive officer
benefits as a percentage of base salary were below the 50th percentile for the
peer group and, in the case of the chief executive officer, were substantially
below the 50th percentile for the peer group chief executive officers. With
regard to stock-based compensation, the consultant determined that, for years
after 1992, stock options available for grant to executive officers were below
the 50th percentile of the peer group and, in the case of the chief executive
officer, were substantially below the 50th percentile for the peer group chief
executive officers.
<PAGE>
<PAGE>
Based on the findings and recommendations of the independent compensation
consultant and the results of the compensation consultant's interviews of the
Company's independent directors, the Compensation Committee and the Board of
Directors approved in October and December, 1993, executive officer
compensation policies and plans, as follows:
1. Base Salary -- The Compensation Committee's policy with regard to base
salary is that executive officer base salaries should be at approximately the
50th percentile of the peer group developed by the compensation consultant.
For fiscal 1994, this resulted in an approximately 5% increase in base
salaries for executive officers other than the chief executive officer.
2. Annual Incentive Plan -- The Annual Incentive Plan as it applies to
executive officers was not changed as a result of the recommendations of the
compensation consultant. The Compensation Committee's policy regarding annual
compensation includes providing each executive officer a performance-based
opportunity to earn a bonus equal to a significant percentage of base salary.
Under the Annual Incentive Plan, annual bonuses for executive officers are
payable as a percentage of base salary based on an operating income (net
revenue less salaries, general and administrative expenses and bad debt
expenses) target that is established by the Compensation Committee after
review of the Company's budget for the fiscal year. The Compensation
Committee believes that operating income was an appropriate measure of the
Company's 1994 performance, as opposed to net income, because the Company's
net income is determined after certain charges (such as amortization of excess
reorganization value and ESOP expense) that are not based on the Company's
performance. If the target is met, executive officers earn a bonus of between
40% and 50% of base salary. If the Company achieves greater than 90% of the
operating income target, but less than target, a threshold bonus of between
.6% and .8% of base salary is earned, and the bonus increases to between 40%
and 50% of base salary as operating income increases to the operating income
target. If the target is exceeded, bonuses are increased to a maximum of 85%
of base salary when operating income equals or exceeds 120% of the target.
3. Stock-based Compensation -- The Compensation Committee, the Board of
Directors and the stockholders (at the 1994 annual meeting) approved the 1994
Stock Option Plan, which provides for the granting of options to purchase 1.3
million shares of the Company's Common Stock to key employees (including
executive officers). The number of shares covered by the plan and the number
of options granted in 1994 to executive officers are within the ranges of
amounts recommended to the Compensation Committee by the compensation
consultant.
With regard to long-term incentive compensation for fiscal 1994 and
subsequent years, the 1994 Stock Option Plan does not contain any
performance-based criteria in order for options granted to executive officers
to vest. In the judgment of the Compensation Committee, these are not
necessary because (1) the holding of the options granted creates incentive for
executive officers to manage the Company's business so that the Common Stock
will increase in value over time and (2) the options result in benefits to
executive officers only if the value of the Common Stock increases over the
term (10 years) of each option or, if exercised earlier, over the period prior
to exercise.
4. Executive Benefits Plan -- The compensation consultant recommended and
the Compensation Committee and the Board of Directors in 1993 approved an
<PAGE>
<PAGE>
Executive Benefits Plan ("EBP") in response to the consultant's determination
that the Company's executive officer benefits were below the median for the
peer group and that the chief executive officer's benefits were substantially
below the median.
The EBP is funded through one performance-based component and one fixed
component and has been structured to provide an incentive for executive
officers to remain with the Company. Under the performance-based component,
an amount equal to one-third of an executive officer's annual bonus, if any,
is paid by the Company to a trust and invested in one or more mutual funds.
The amount paid to the trust and appreciation, if any, is paid to the
executive officer on a date selected by the executive officer prior to funding
(but not earlier than two years after funding or later than normal retirement
date). Payments from the trust to the executive officer are forfeited if, at
the time payment would otherwise be made, the executive officer is no longer
employed by the Company and is in violation of a non-competition agreement
signed prior to funding.
The fixed component of the EBP is an annual amount equal to 19.5% of the
base salary of the chief executive officer and 11% of the base salary of other
executive officers. At the election of each executive officer, the fixed
component may be used to make additional payments to the trust described above
or to purchase life, spousal life or disability insurance. Amounts deposited
in the trust are subject to forfeiture, as described above.
Chief Executive Officer Compensation -- In fiscal 1994, the compensation
of E. Mac Crawford, the Company's chief executive officer, included a base
salary of $600,000, an annual bonus under the Annual Incentive Plan of
$369,000, an option to purchase 90,000 shares of the Company's Common Stock
pursuant to the 1994 Stock Option Plan, and benefits under the EBP of
$303,489. Mr. Crawford's benefits under the EBP include $229,407 deposited in
the trust described above, which amount is subject to forfeiture under certain
circumstances, and $63,445 of whole life insurance premiums that are required
to be repaid to the Company upon the earliest of death, surrender of the
policy or termination of employment with the Company.
Mr. Crawford's 1994 base salary was increased by 15% from 1993 because
the Compensation Committee approved of his performance in 1993 and in order to
increase Mr. Crawford's base salary approximately to the median chief
executive officer base salary of the peer group, consistent with the policy
described above.
Under the Annual Incentive Plan targets established by the Compensation
Committee in the first quarter of fiscal 1994, 1994 operating income was
106.6% of the targeted operating income level, and Mr. Crawford received,
pursuant to the provisions of the plan, a bonus equal to 61.5% of his base
salary. Accordingly, the currently payable, performance-based portion of Mr.
Crawford's fiscal 1994 compensation was based on the Company's operating
income performance compared to a target established by the Compensation
Committee.
The benefits to Mr. Crawford under the EBP for fiscal 1994 represent a
significant increase in his benefits compared to fiscal 1993 because the
compensation consultant found, and the Compensation Committee agreed, that Mr.
Crawford's fiscal 1993 benefits were substantially below the median for peer
group chief executive officers. $123,000 of Mr. Crawford's EBP benefits were
<PAGE>
<PAGE>
performance-based, using the operating income target contained in the Annual
Incentive Plan.
Section 162(m) of the Internal Revenue Code. New Section 162(m) of the
Internal Revenue Code limits a corporation's ability to take a deduction for
federal tax purposes for certain compensation paid to its executives in excess
of $1 million per year. There are exceptions to this limitation for
"performance-based" compensation, which requires stockholder approval, and for
payments made through September 30, 1995 under the Company's employment
agreements with Mr. Crawford and Mr. Lawrence W. Drinkard. Under Section
162(m), the 1992 and 1994 Stock Option Plans are "performance-based"
compensation plans and are not subject to the limitation on deductibility.
Because of the status of the 1992 and 1994 Stock Option Plans and the two
employment agreements under Section 162(m), the Company's tax advisors have
informed the Compensation Committee it is likely that all 1995 compensation to
executive officers will be fully deductible for income tax purposes. The
Compensation Committee intends to monitor developments under Section 162(m)
and to take in future years actions it deems appropriate to consider adoption
of a policy with respect to the deduction limitations of Section 162(m) when
and if it is likely that executive officer compensation will not be fully
deductible.
Andre C. Dimitriadis
Gerald L. McManis
Employment Agreements and Change of Control Provisions
The Company has entered into employment agreements with Messrs. Crawford
and Drinkard, for terms beginning on July 21, 1992, and ending on September
30, 1995. The agreements provide for base salaries (Mr. Crawford - $500,000
and Mr. Drinkard - $335,000) and for bonuses and life and disability insurance
benefits that are competitive with similar benefits for comparable positions
within the investor-owned hospital industry. The agreements also provide for
severance payments upon termination without cause (including certain
constructive termination events), termination due to death or disability and
termination due to a change in control of the Company. (Under the employment
agreements, a change of control is defined as (i) the acquisition by any
person, group or entity of more than 50% of the Company's outstanding Common
Stock, or (ii) a merger or sale of assets in which the stockholders of the
Company do not receive securities that have a majority of the voting power of
the combined entities.) Upon any such termination, the employee will be paid
the greater of his base salary through September 30, 1995 or his base salary
for a period of two years and amounts accrued for the employee through the
date of termination under the Annual Incentive Plan and other bonus plans, if
any. The terms of the two employment agreements were negotiated by the
Company and an unofficial committee of unsecured creditors prior to
consummation of the Plan.
Under the trust established as part of the EBP, amounts deposited in the
trust on behalf of executive officers are to be paid to executive officers,
together with any appreciation in such amounts, upon a change of control of
the Company if the change of control occurs prior to the scheduled date for
distribution of amounts held in the trust. The trust agreement defines a
"change of control" as the replacement of fifty percent or more of the members
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<PAGE>
of the Company's Board of Directors within a twelve-month period that is
followed by the termination of employment within a twelve-month period of
one-third or more of the employees who participate in the EBP (15 employees).
Amounts deposited in the trust as of December 31, 1994, on behalf of Messrs.
Crawford, Drinkard, Hale and Wingfield were $234,407, $105,927, $50,653 and
$75,169, respectively, which includes financial counceling allowances of
$5,000 each for Messrs. Crawford, Drinkard and Wingfield.
PERFORMANCE GRAPH
The following graph shows a comparison of the cumulative total return on
$100 invested on July 22, 1992, in the Company's Common Stock, the S&P 500
Composite Index (the "S&P 500") and the S&P Hospital Management Index (the
"S&P HMI"). "Cumulative total return" includes stock price appreciation plus
dividends paid, with cash dividends reinvested on the date paid; but the term
excludes trading commissions and taxes. Because the Company's Common Stock
began publicly trading on July 22, 1992, the chart set forth below begins on
July 22, 1992, and uses as the beginning price for the Company its initial
opening price of $7.75 per share of Common Stock.
<TABLE>
CUMULATIVE TOTAL RETURNS
ON $100 INVESTED ON JULY 22, 1992
<CAPTION>
July 22 September 30 September 30 September 30
1992 1992 1993 1994
<S> <C> <C> <C> <C>
Company $100 $ 79 $305 $356
S&P 500 $100 $102 $115 $119
S&P HMI $100 $ 87 $111 $171
</TABLE>
<PAGE>
<PAGE>
<TABLE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of January 15, 1995, information
concerning ownership of shares of Common Stock by directors and officers.
<CAPTION>
Amount and Nature
of Beneficial Percent of
Name Ownership Total Outstanding
<S> <C> <C>
E. Mac Crawford 351,496 (1) 1.31%
Lawrence W. Drinkard 117,842 (1) .44%
William E. Hale 9,034 (1) (3)
C. Clark Wingfield 6,474 (1) (3)
Andre C. Dimitriadis 10,000 (2) (3)
Raymond H. Kiefer 11,000 (2) (3)
Edwin M. Banks 10,500 (2) (3)
Gerald L. McManis 5,000 (2) (3)
All directors and executive
officers as a group (8 persons) 521,346 (4) 1.94%
__________________
<FN>
(1) Includes 351,193, 116,375, 9,000 and 6,202 shares that Mr. Crawford, Mr.
Drinkard, Mr. Hale and Mr. Wingfield, respectively, have the present
right to acquire upon exercise of options and warrants.
(2) Includes 10,000 shares each that Mr. Dimitriadis, Mr. Kiefer and Mr.
Banks have the present right to acquire and 5,000 shares that Mr. McManis
has the present right to acquire upon the exercise of options.
(3) Less than .1% of total outstanding.
(4) Includes 517,769 shares that the directors and executive officers have
the present right to acquire upon exercise of options and warrants.
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company owns 50% of the Charter Medical Building in Macon, Georgia,
and leases space in such building for certain corporate offices. Through
September 30, 1994 the Company's corporate headquarters were located in the
building and the lease, which expired September 30, 1994, provided for an
average annual rental of approximately $1.2 million. Currently the Company is
paying approximately $45,000 per month in rent on the building. Mr. William
A. Fickling, Jr., a former Director and former Chairman of the Board of
Directors of the Company, and his father's estate own 25% of the building. In
the opinion of management, such office space has been leased on terms as
favorable as could be obtained from an unaffiliated party. As a result of the
Company's interest in the building, the Company received distributions of
approximately $280,000 in fiscal 1994.
The Company has agreements with Beech Street of California, Inc. ("Beech
Street") where certain of the Company's hospitals provide services to
employers (and their related employee and covered dependent groups) who have
entered into agreements with Beech Street to utilize a Beech Street Preferred
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<PAGE>
Provider Organization ("PPO") for hospital and other healthcare services.
Beech Street is owned by Mr. Fickling and members of his family. Such
agreements provide for covered services to be rendered under terms (including
discounts from the hospital's normal charges) which management of the Company
believes are customary for hospital PPO agreements. The Beech Street PPO
reviews claims and serves as an intermediary between the Company's hospitals
and the contracting employers. The Company derived approximately $5.2 million
in revenue from these agreements during fiscal 1994. The aggregate discount
from customary charges was 19% in 1994.
Gerald L. McManis, a director of the Company, is the President of McManis
Associates, Inc. ("MAI"), a healthcare development and management consulting
firm. During fiscal 1994, MAI provided consulting services for the Company
related to the development of strategic plans and a review of the Company's
business processes. The Company incurred $1,321,000 in fees for such services
during fiscal 1994 and reimbursed MAI $244,000 for expenses.
ADDITIONAL INFORMATION
Attendance. Attendance at the Annual Meeting is limited to stockholders
of record or their proxies, beneficial owners of Common Stock having evidence
of such ownership, and guests of the Company.
Stockholder Proposals. In order to be included in the proxy statement
and form of proxy for the 1996 Annual Meeting, a stockholder proposal must be
in writing and received by the Company by the close of business on October 3,
1995. All stockholder proposals should be submitted by certified mail, return
receipt requested, to the Secretary of the Company, 577 Mulberry Street,
Macon, Georgia 31298.
Other Business. Management does not know of any matter to be brought
before the Annual Meeting other than those referred to above. If any other
matter properly comes before the meeting, all properly executed proxies
delivered pursuant to this solicitation will be voted on any such matters in
the discretion of the persons named on the enclosed proxy.
Independent Accountants. Arthur Andersen LLP served as the Company's
independent accountants for the fiscal year ended September 30, 1994.
Representatives of such firm will be present at the Annual Meeting, will have
an opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions.
AVAILABLE INFORMATION. COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM
10-K FOR THE YEAR ENDED SEPTEMBER 30, 1994 MAY BE OBTAINED FROM THE COMPANY
UPON REQUEST TO THE COMPANY (ATTN: MS. NANCY GORE, DIRECTOR - INVESTOR
RELATIONS) AT 3414 PEACHTREE ROAD, N.E., SUITE 1400, ATLANTA, GEORGIA 30326,
OR TELEPHONE (404) 841-9200.
<PAGE>
<PAGE>
CHARTER MEDICAL CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS
MARCH 9, 1995
The undersigned appoints E. MAC CRAWFORD and LAWRENCE W. DRINKARD, or either
of them, as proxies, each with full power of substitution, to represent and to
vote, as designated below, all shares of the Common Stock of Charter Medical
Corporation held by the undersigned at the Annual Meeting of Stockholders to
be held Thursday, March 9, 1995, at 10:00 a.m., Eastern Standard Time, at 191
Peachtree Street, 50th Floor, Atlanta, Georgia, and at any adjournment, upon
the matter described in the accompanying Notice of Annual Meeting of
Stockholders and Proxy Statement, receipt of which is acknowledged, and upon
any other business that may properly come before the meeting or any
adjournment. Said proxies are directed to vote on the matter described in the
Notice of Annual Meeting of Stockholders and Proxy Statement as follows, and
otherwise in their discretion upon such other business as may properly come
before the meeting or any adjournment thereof.
1. ELECTION OF DIRECTOR: FOR
Andre C. Dimitriadis [ ]
WITHHOLD AUTHORITY
to vote for Andre C. Dimitriadis [ ]
(Continued on reverse side)
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTION IS INDICATED, THE
PROXY WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEE FOR DIRECTOR.
DATED: , 1995
____________________________
____________________________
Signature of Shareholder
Please sign exactly as your name or names
appear hereon. Where more than one owner
is shown, each should sign. Persons
signing in a fiduciary or representative
capacity shall give full title. If this
proxy is submitted by a corporation,
please sign in full corporate name by
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
Please mark, sign, date and return this proxy card promptly, using the
enclosed envelope.
