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3/4/97
DRAFT
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/X/ Preliminary proxy statement
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Universal Health Services, Inc.
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(Name of Registrant as Specified in Its Charter)
Universal Health Services, Inc.
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions 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):1
- --------------------------------------------------------------------------------
(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:
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- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
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(4) Date filed:
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1 Set forth the amount on which the filing fee is calculated and
state how it was determined.
2
<PAGE> 3
UHS LOGO
UNIVERSAL HEALTH SERVICES, INC.
April 21, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Universal Health Services, Inc. to be held at the offices of the Company,
Universal Corporate Center, 367 South Gulph Road, King of Prussia, Pennsylvania,
on May 21, 1997, at 10:00 a.m., Eastern Daylight Saving Time.
Matters to be acted on at the meeting include: (a) the election of
directors by the holders of Class A and Class C Common Stock; and (b) the
adoption of the Amendment to the Company's Restated Certificate of Incorporation
to increase the number of authorized shares of Class B Common Stock. Detailed
information concerning these matters is set forth in the attached Notice of
Annual Meeting of Stockholders and Proxy Statement.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE YOUR SHARES IN FAVOR OF
THE ELECTION OF DIRECTORS, AND THE ADOPTION OF THE AMENDMENT TO THE COMPANY'S
RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED
SHARES OF CLASS B COMMON STOCK.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE PROMPTLY SIGN AND
RETURN YOUR PROXY CARD IN THE ENCLOSED ENVELOPE. If you then attend and wish to
vote your shares in person, you still may do so. In addition to the matters
noted above, we will discuss the business of the Company and be available for
Stockholders' comments and discussion relating to the Company.
I look forward to seeing you at the meeting.
Sincerely,
Alan B. Miller
Chairman, President and
Chief Executive Officer
<PAGE> 4
UHS Logo
UNIVERSAL HEALTH SERVICES, INC.
UNIVERSAL CORPORATE CENTER
367 SOUTH GULPH ROAD
KING OF PRUSSIA, PENNSYLVANIA 19406
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 1997
Notice is hereby given that the Annual Meeting of Stockholders of Universal
Health Services, Inc. (the "Company") will be held on Wednesday, May 21, 1997 at
10:00 a.m., at the offices of the Company, Universal Corporate Center, 367 South
Gulph Road, King of Prussia, Pennsylvania for the following purposes:
(1) To have the holders of Class A and Class C Common Stock elect two Class
I directors to serve for a term of three years until the annual
election of directors in the year 2000 and election and qualification
of their respective successors.
(2) To have the holders of Class A, B, C and D Common Stock vote upon the
proposal to adopt the Amendment to the Company's Restated Certificate
of Incorporation to increase the number of authorized shares of Class B
Common Stock.
(3) To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only stockholders of record at the close of business on April 10, 1997, are
entitled to vote at the Annual Meeting.
All stockholders are cordially invited to attend the meeting in person. IN
ANY EVENT, PLEASE MARK YOUR VOTES, THEN DATE AND SIGN THE ENCLOSED FORM OF PROXY
AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE WHETHER OR NOT YOU
CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING. YOU MAY REVOKE YOUR PROXY IF YOU
DECIDE TO ATTEND THE ANNUAL MEETING AND WISH TO VOTE YOUR SHARES IN PERSON.
BY ORDER OF THE BOARD OF DIRECTORS
SIDNEY MILLER, Secretary
King of Prussia, Pennsylvania
April 21, 1997
<PAGE> 5
UNIVERSAL HEALTH SERVICES, INC.
UNIVERSAL CORPORATE CENTER
367 SOUTH GULPH ROAD
KING OF PRUSSIA, PA 19406
PROXY STATEMENT
GENERAL
This Proxy Statement (first mailed to stockholders on or about April 21,
1997) is furnished in connection with the solicitation by the Board of Directors
of Universal Health Services, Inc. (the "Company") of proxies for use at the
Annual Meeting of Stockholders, or at any adjournment thereof. The meeting will
be held on Wednesday, May 21, 1997 at 10:00 a.m., at the offices of the Company,
Universal Corporate Center, 367 South Gulph Road, King of Prussia, Pennsylvania.
The Annual Meeting is being held (1) to have the holders of Class A and C Common
Stock elect two Class I directors of the Company, both of whom will serve for
terms of three years until the annual election of directors in the year 2000 and
the election and qualification of their respective successors; (2) to have the
holders of Class A, B, C and D Common Stock vote upon the proposal to adopt the
Amendment to the Company's Restated Certificate of Incorporation to increase the
number of authorized shares of Class B Common Stock, which was adopted by the
Board of Directors of the Company; and (3) to transact such other business as
may properly be brought before the meeting or any adjournment thereof.
A copy of the Company's Annual Report to Stockholders, including financial
statements for the year ended December 31, 1996, is enclosed herewith.
A separate form of Proxy applies to the Company's Class A and Class C
Common Stock and a separate form of Proxy applies to the Company's Class B and
Class D Common Stock. Enclosed is a Proxy for the shares of stock held by you on
the record date. Unless otherwise indicated on the Proxy, shares represented by
any Proxy will, if the Proxy is properly executed and received by the Company
prior to the Annual Meeting, be voted FOR each of the nominees for directors and
FOR the approval of the Amendment to the Company's Restated Certificate of
Incorporation to increase the number of authorized shares of Class B Common
Stock. Any Proxy executed and returned to the Company is revocable by delivering
a later signed and dated Proxy or other written notice to the Secretary of the
Company at any time prior to its exercise. A Proxy is also subject to revocation
if the person executing the Proxy is present at the meeting and chooses to vote
in person.
VOTING
Only stockholders of record as of the close of business on April 10, 1997
are entitled to vote at the Annual Meeting. On that date, shares of
Class A Common Stock, par value $.01 per share, shares of Class C
Common Stock, par value $.01 per share, shares of Class B Common
Stock, par value $.01 per share, and shares of Class D Common Stock,
par value $.01 per share, were outstanding.
The Company's Restated Certificate of Incorporation provides that, with
respect to the election of directors, holders of Class A Common Stock vote as a
class with the holders of Class C Common Stock, and holders of Class B Common
Stock vote as a class with holders of Class D Common Stock, with holders of all
classes of Common Stock entitled to one vote per share. Each holder of Class A
Common Stock may cumulate his votes for directors giving one candidate a number
of votes equal to the number of directors to be elected, multiplied by the
number of shares of Class A Common Stock, or he may distribute his votes on the
same principle among as many candidates as he shall see fit. For a holder of
Class A Common Stock to
<PAGE> 6
exercise his cumulative voting rights, the stockholder must give notice at the
meeting of his intention to cumulate his votes.
As to matters other than the election of directors, including the approval
of the Amendment to the Company's Restated Certificate of Incorporation to
increase the number of authorized shares of Class B Common Stock, the Company's
Restated Certificate of Incorporation provides that holders of Class A, Class B,
Class C and Class D Common Stock all vote together as a single class. Each share
of Class A Common Stock entitles the holder thereof to one vote; each share of
Class B Common Stock entitles the holder thereof to one-tenth of a vote; each
share of Class C Common Stock entitles the holder thereof to 100 votes (provided
the holder of Class C Common Stock holds a number of shares of Class A Common
Stock equal to ten times the number of shares of Class C Common Stock that
holder holds); and each share of Class D Common Stock entitles the holder
thereof to ten votes (provided the holder of Class D Common Stock holds a number
of shares of Class B Common Stock equal to ten times the number of shares of
Class D Common Stock that holder holds). In the event a holder of Class C or
Class D Common Stock holds a number of shares of Class A or Class B Common
Stock, respectively, less than ten times the number of shares of Class C or
Class D Common Stock that holder holds, then that holder will be entitled to
only one vote for every share of Class C, or one-tenth of a vote for every share
of Class D Common Stock, which that holder holds in excess of one-tenth the
number of shares of Class A or Class B Common Stock, respectively, held by that
holder. The Board of Directors, in their discretion, may require beneficial
owners to provide satisfactory evidence that such owner holds ten times as many
shares of Class A or Class B Common Stock as Class C or Class D Common Stock,
respectively, if such facts are not apparent from the stock records of the
Company.
Stockholders entitled to vote for the election of directors can withhold
the authority to vote for any one or more nominees. Nominees receiving a
plurality of the votes cast will be elected. Abstention from the vote to
consider the adoption of the Amendment to the Company's Restated Certificate of
Incorporation to increase the number of authorized shares of Class B Common
Stock, or the approval of such other matters as may properly come before the
meeting, or any adjournment thereof, are treated as votes against the proposal.
Broker non-votes are treated as shares as to which the beneficial owners have
withheld voting authority and therefore as shares not entitled to vote on the
matter, thereby making it easier to obtain the approval of holders of a majority
of the aggregate voting power of the shares entitled to vote as is required for
approval of the various proposals.
As of April 10, 1997, the shares of Class A and Class C Common Stock
constituted % of the aggregate outstanding shares of the Company's Common
Stock, had the right to elect five members of the Board of Directors and
constituted % of the general voting power of the Company; and as of that date
the shares of Class B and Class D Common Stock constituted % of the
outstanding shares of the Company's Common Stock, had the right to elect two
members of the Board of Directors and constituted % of the general voting
power of the Company.
As of February 17, 1997, the Company's current directors and officers as a
group owned of record or beneficially 2,053,428 shares of Class A Common Stock,
348,648 shares of Class B Common Stock (excluding shares issuable upon exercise
of options), 205,721 shares of Class C Common Stock and 830 shares of Class D
Common Stock, representing 99.6%, 1.2%, 99.3% and 2.3%, respectively, of the
outstanding shares of each class and constituting 86.7% of the general voting
power of the Company on that date.
2
<PAGE> 7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of February 17, 1997, the number of
shares of equity securities of the Company and the percentage of each class
owned beneficially, within the meaning of Securities and Exchange Commission
Rule 13d-3, and the percentage of the general voting power of the Company
currently held, by (i) all stockholders known by the Company to own more than 5%
of any class of the Company's equity securities, (ii) all directors of the
Company who are stockholders, (iii) the executive officers named in the Summary
Compensation Table and (iv) all directors and executive officers as a group.
Except as otherwise specified, the named beneficial owner has sole voting and
investment power.
<TABLE>
<CAPTION>
PERCENTAGE
CLASS A CLASS B CLASS C CLASS D OF GENERAL
NAME AND ADDRESS OF COMMON COMMON COMMON COMMON VOTING
BENEFICIAL OWNER(1) STOCK(2) STOCK(2) STOCK(2) STOCK(2) POWER(3)
- ------------------------------- --------- -------------------- --------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Martin Meyerson
University of Pennsylvania 22,258 (4)(5)(11) 200(5) (5)
225 Van Pelt Library
Philadelphia, PA 19103
Alan B. Miller 1,914,890 2,309,387 (4)(11) 191,447 80.6%
(92.9%) (7.2%) (92.4%)
Sidney Miller 121,686 165,508 (4)(5)(6) 12,176 5.1%
(5.9%) (5.9%)
Anthony Pantaleoni 4,452(5) 15,920 (4)(5)(7) 548(5) 280(5)(7) (5)
Fulbright & Jaworski L.L.P. (11)
666 Fifth Avenue
New York, NY 10103
Robert H. Hotz 11,750 (5)(11) (5)
Dillon, Read & Co., Inc.
535 Madison Avenue
New York, NY 10022
John H. Herrell 4,150 (5)(11) (5)
Mayo Clinic
200 First Street, SW
Rochester, MN 55905
Paul R. Verkuil 1,250 (5)(11) (5)
Kirk E. Gorman 67,582 (5)(11) (5)
Michael G. Servais 46,619 (5) (5)
Richard C. Wright 12,400(5) 14,300 (4)(5) 1,550(5) 350(5) (5)
Thomas J. Bender 93,540 (5) (5)
</TABLE>
3
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<TABLE>
<CAPTION>
PERCENTAGE
CLASS A CLASS B CLASS C CLASS D OF GENERAL
NAME AND ADDRESS OF COMMON COMMON COMMON COMMON VOTING
BENEFICIAL OWNER(1) STOCK(2) STOCK(2) STOCK(2) STOCK(2) POWER(3)
- ------------------------------------- --------- --------- --------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
FMR Corp. 3,259,800 (8) 1.2%
82 Devonshire Street (10.9%)
Boston, MA 02109
Mellon Bank Corporation 2,000,000 (9) (5)
One Mellon Bank Center (6.7%)
Pittsburgh, PA 15258
AIM Management Group, Inc. 2,000,800 (10) (5)
11 Greenway Plaza, Suite 1919 (6.7%)
Houston, TX 77046
All directors & executive officers 2,053,428 2,843,277 (11) 205,721 830 86.8%
as a group (12 persons) (99.6%) (8.8%) (99.3%) (2.3%)
</TABLE>
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(1) Unless otherwise shown, the address of each beneficial owner is c/o
Universal Health Services, Inc., Universal Corporate Center, 367 South
Gulph Road, King of Prussia, PA 19406.
(2) Each share of Class A, Class C and Class D Common Stock is convertible at
any time into one share of Class B Common Stock.
(3) As to matters other than the election of directors, holders of Class A,
Class B, Class C and Class D Common Stock vote together as a single class.
Each share of Class A Common Stock entitles the holder thereof to one vote;
each share of Class B Common Stock entitles the holder thereof to one-tenth
of a vote; each share of Class C Common Stock entitles the holder thereof
to 100 votes (provided the holder of Class C Common Stock holds a number of
shares of Class A Common Stock equal to ten times the number of shares of
Class C Common Stock that holder holds); and each share of Class D Common
Stock entitles the holder thereof to ten votes (provided the holder of
Class D Common Stock holds a number of shares of Class B Common Stock equal
to ten times the number of shares of Class D Common Stock that holder
holds).
(4) Includes shares issuable upon the conversion of Classes A, C and/or D
Common Stock.
(5) Less than 1%.
(6) Includes 30,000 shares of Class B Common Stock which are beneficially owned
by Mr. Miller's spouse.
(7) Includes 2,890 shares of Class B Common Stock and 280 shares of Class D
Common Stock which are beneficially owned by Mr. Pantaleoni and are held by
Mr. Pantaleoni in trust for the benefit of certain members of his family.
(8) These securities are held by FMR Corp., a parent holding company.
Information is based on Amendment No. 7 to Schedule 13G dated February 14,
1997.
(9) These securities are held by Mellon Bank Corporation as investment advisor
for its various direct or indirect subsidiaries. Information is based on
Amendment No. 1 to Schedule 13G dated January 24, 1997.
(10) These securities are held by AIM Management Group, Inc., a parent holding
company. Information is based on Schedule 13G dated February 12, 1997.
(11) Includes 234,650 shares issuable pursuant to stock options to purchase
Class B Common Stock held by directors and officers of the Company and
exercisable within 60 days of February 17, 1997 as follows: Alan B. Miller
(190,000); Kirk E. Gorman (30,000); Anthony Pantaleoni (3,750); Martin
Meyerson (3,750); Robert H. Hotz (3,750); John H. Herrell (2,150); and Paul
R. Verkuil (1,250).
4
<PAGE> 9
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation provides for a Board of
Directors of not fewer than three members nor more than nine members. The Board
of Directors is currently fixed at seven members, and is divided into three
classes, with members of each class serving for a three-year term. At each
Annual Meeting of Stockholders, directors are chosen to succeed those in the
class whose term expires at such Annual Meeting. Under the Company's Restated
Certificate of Incorporation, holders of shares of the Company's outstanding
Class B and Class D Common Stock are entitled to elect 20% (but not less than
one) of the directors, currently two directors, one in each of Class II and
Class III, and the holders of Class A and Class C Common Stock are entitled to
elect the remaining directors, currently five directors, two in Class I, one in
Class II, and two in Class III.
The persons listed below currently constitute the Company's Board of
Directors. The term of the Class I directors, Mr. Martin Meyerson and Mr. John
H. Herrell, expire at the 1997 Annual Meeting. Mr. Martin Meyerson and Mr. John
H. Herrell have been nominated to be elected by the holders of Class A and Class
C Common Stock. The Company has no reason to believe that either of the nominees
will be unavailable for election; however, if either nominee becomes unavailable
for any reason, the shares represented by the Proxy will be voted for the
person, if any, who is designated by the Board of Directors to replace the
nominee. Both nominees have consented to be named and have indicated their
intent to serve if elected.
The following information is furnished with respect to each of the nominees
for election as a director and each member of the Board of Directors whose term
of office will continue after the meeting.
<TABLE>
<CAPTION>
CLASS OF PRINCIPAL OCCUPATION
CLASS OF STOCKHOLDERS DURING THE LAST DIRECTOR
NAME DIRECTOR ENTITLED TO VOTE AGE FIVE YEARS SINCE
- --------------------------- -------- ----------------- --- ------------------------------------- --------
<S> <C> <C> <C> <C> <C>
NOMINEES FOR TERMS
EXPIRING IN 1997
- -------------------------------------
Martin Meyerson............ I A Common 74 President Emeritus and Emeritus 1985
C Common Professor, University of
Pennsylvania; President, the
Foundation for the International
Exchange of Scientific and Cultural
Information by Telecommunications
(Switzerland/U.S.); Chairman, Marconi
Foundation; Director, Avatar
Holdings, Inc. and First Fidelity
Bancorporation, now First Union
(honorary).
John H. Herrell............ I A Common 56 Vice President and Chief 1993
C Common Administrative Officer of Mayo
Foundation since 1993. Prior thereto,
Chief Financial Officer of Mayo
Foundation since 1984 and various
other capacities since 1968.
</TABLE>
5
<PAGE> 10
<TABLE>
<CAPTION>
CLASS OF PRINCIPAL OCCUPATION
CLASS OF STOCKHOLDERS DURING THE LAST DIRECTOR
NAME DIRECTOR ENTITLED TO VOTE AGE FIVE YEARS SINCE
- --------------------------- -------- ----------------- --- ------------------------------------- --------
<S> <C> <C> <C> <C> <C>
DIRECTORS WHOSE TERMS
EXPIRE IN 1998
- -------------------------------------
Anthony Pantaleoni......... II A Common 57 Partner in the law firm of Fulbright 1982
C Common & Jaworski L.L.P., New York, New
York. Director of Faircom Inc., AAON,
Inc. and Westwood Corporation. The
Company utilized during the year
ended December 31, 1996 and currently
utilizes the services of Fulbright &
Jaworski L.L.P. as counsel.
Robert H. Hotz............. II B Common 52 Managing Director, Member of the 1991
D Common Operating Committee and Co-Head of
Corporate Finance at Dillon, Read &
Co., Inc., Director of Dillon, Read &
Co., Inc. and Mikasa, Inc.
DIRECTORS WHOSE TERMS
EXPIRE IN 1999
- -------------------------------------
Alan B. Miller............. III A Common 59 Chairman of the Board, President and 1978
C Common Chief Executive Officer of the
Company since 1978. Prior thereto,
President, Chairman of the Board and
Chief Executive Officer of American
Medicorp, Inc. Trustee of Universal
Health Realty Income Trust. Director
of CDI Corp., Genesis Health
Ventures, and Penn Mutual Life
Insurance Company
Sidney Miller.............. III.. A Common 70 Secretary of the Company since 1990. 1978
C Common Assistant to the President during
1993 and 1994. Prior thereto,
Executive Vice President of the
Company since 1983, Senior Vice
President of the Company since 1982
and Vice President of the Company
since 1978.
Paul R. Verkuil ........... III B Common 57 Dean, Cardozo Law School, Yeshiva 1996
D Common University; President Emeritus,
College of William and Mary. Prior
thereto, President and CEO, American
Automobile Association; Dean, Tulane
Law School.
</TABLE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission and the New York Stock Exchange initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the Company. Based on reports filed with the Company, the Company
believes all required reports of executive officers and directors were filed in
a timely manner.
6
<PAGE> 11
PROPOSAL NO. 2
ADOPTION OF THE AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF CLASS B COMMON STOCK
The Board of Directors has unanimously adopted and submits to stockholders
for their approval an amendment to Article Fourth of the Company's Restated
Certificate of Incorporation which would increase the number of shares of Class
B Common Stock that the Company is authorized to issue from 50,000,000 shares to
75,000,000 shares. The full text of the proposed amendment to Article Fourth is
set forth in Exhibit A hereto and the foregoing discussion is qualified by
reference thereto.
The authorized stock of the Company consists of 12,000,000 shares of Class
A Common Stock, 50,000,000 shares of Class B Common Stock, 1,200,000 shares of
Class C Common Stock and 5,000,000 shares of Class D Common Stock. As of March
11, 1997, 2,060,929 shares of Class A Common Stock, 29,954,694 shares of Class B
Common Stock, 207,230 shares of Class C Common Stock and 36,034 shares of Class
D Common Stock were issued and outstanding. In addition, as of March 11, 1997 a
total of 3,328,228 shares of Class B Common Stock were reserved for issuance
under the various employee benefit plans of the Company, and a total of
2,863,154 shares of Class B Common Stock were reserved for issuance upon
conversion of outstanding convertible securities, leaving 11,549,731 shares of
Class B Common Stock unreserved and available for issuance.
The Board of Directors has proposed this increase in the authorized number
of shares of Class B Common Stock and recommends its adoption in order to
provide the Company with greater flexibility to issue Class B Common Stock for
appropriate corporate purposes. Among the purposes for which such additional
authorized stock could be issued include funding its capital needs and corporate
growth, for the acquisition of desirable businesses, for stock options to
attract and retain employees and for stock splits and stock dividends. The Board
of Directors has no current plans or intentions with respect to the issuance of
additional shares of Class B Common Stock other than for use in connection with
the Company's employee benefit plans.
Approval of the proposed amendment to the Restated Certificate of
Incorporation will allow the Board to move promptly to issue additional shares,
if appropriate opportunities should arise, without the delay and expense of
calling a special stockholders' meeting. The Board of Directors will determine
whether, when and on what terms the issuance of shares of Class B Common Stock
may be warranted. Like the presently authorized but unissued shares of Class B
Common Stock, the additional shares will be available without further action by
the stockholders unless such action is required by applicable law or regulations
or stock exchange rules. Stockholders do not presently have preemptive rights
with respect to the current authorized Class B Common Stock. Except in certain
cases such as a stock dividend, the issuance of additional shares of Class B
Common Stock would have the effect of diluting the voting powers of existing
stockholders.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the Common Stock votes
of the Company entitled to vote at the 1997 Annual Meeting of Stockholders is
required for the adoption of the proposal set forth above.
THE BOARD OF DIRECTORS DEEMS "PROPOSAL NO. 2 -- ADOPTION OF THE AMENDMENT
TO THE RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF CLASS B COMMON STOCK" TO BE IN THE BEST INTERESTS OF THE
COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
7
<PAGE> 12
EXECUTIVE COMPENSATION
The following table shows all the cash compensation paid or to be paid by
the Company as well as certain other compensation paid or accrued, during the
fiscal years indicated, to the Chairman of the Board, President, and Chief
Executive Officer and the four highest paid executive officers of the Company
for such period in all capacities in which they served.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION -----------------------
----------------------------------------- RESTRICTED ALL OTHER
OTHER STOCK SECURITIES COMPEN-
ANNUAL AWARDS UNDERLYING SATION
FISCAL COMPENSATION ($) ($) OPTIONS ($)
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) (A) (B) (#) (C)
- ------------------------------ ------ ---------- --------- ---------------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Alan B. Miller, Chairman of
the Board, President, and
Chief Executive Officer..... 1996 $825,000 $561,040 $ 4,562 $ 160,156 0 $11,072
1995 800,000 480,000 178,954 2,787,324 300,000 11,072
1994 750,000 336,000 4,588 103,987 260,000 11,072
Kirk E. Gorman, Senior Vice
President, Treasurer and
Chief Financial Officer..... 1996 $237,750 $129,360 $ 0 $ 37,051 0 $ 1,500
1995 228,248 109,600 6,012 31,370 40,000 1,500
1994 216,246 80,000 54,785 24,554 80,000 1,500
Michael G. Servais,
Senior Vice President....... 1996 $223,208 $164,240 $ 0 $ 43,210 0 $ 1,500
1995 197,625 109,040 0 31,352 40,000 1,500
1994 172,500 43,200 0 115,526 60,000 1,500
Thomas J. Bender,
Vice President.............. 1996 $189,938 $122,400 $ 11,353 $ 31,350 4,000 $ 1,500
1995 181,561 114,480 20,297 34,119 30,000 1,500
1994 173,121 14,400 10,207 11,926 44,000 1,500
Richard C. Wright,
Vice President.............. 1996 $175,000 $230,000 $ 2,428 $ 54,400 0 $ 1,500
1995 172,499 230,000 2,312 54,987 30,000 1,500
1994 158,664 118,000 6,828 28,256 64,000 1,500
</TABLE>
- ---------------
(a) Other annual compensation for Mr. Alan B. Miller includes: (i) $174,375 in
1995 related to forgiveness of principal under Option Loans and (ii) $4,562
in 1996, $4,579 in 1995, and $4,588 in 1994 for other compensation. Other
annual compensation for Messrs. Gorman, Bender and Wright in 1994, 1995 and
1996 represents forgiveness of principal under Option Loans.
(b) Restricted stock awards represent (i) the value of Class B Common Shares
received by those executives in lieu of cash payments pursuant to the
Company's 1992 Stock Bonus Plan ("Bonus Shares"), (ii) the vested portion of
additional restricted shares ("Premium Shares") equal to 20% of the Bonus
Shares and (iii) the value of the Class B Common Shares issued in connection
with the 1990 Employee's Restricted Stock Purchase Plan (the "1990 Plan").
Restrictions on one-half of the Bonus Shares and the Premium Shares lapse
after one year and restrictions on the remaining shares lapse after two
years. Restrictions lapse as to one-third of the shares granted in 1994
under the 1990 Plan in each of 1997, 1998, and 1999. During 1995, Mr. Alan
B. Miller was granted an award of up to 160,000 shares (after giving effect
to a two-for-one stock split declared in the form of a 100% stock dividend
which was paid in May 1996) of
8
<PAGE> 13
the Company's Class B Common Stock, under the 1990 Plan, on which the
restrictions lapse as follows: (a) restrictions on 40,000 shares lapsed in
April, 1996 (market value of $1,029,800 on vesting date); (b) restrictions
on an additional 30,000 shares lapsed in March, 1997, (market value of
$993,750 on vesting date) pursuant to a formula based upon the financial
performance of the Company during 1996, and; (c) restrictions on the
remaining 90,000 shares (discussed below) lapse in 1998, as determined by
the Company's Board of Directors, pursuant to a formula based upon the
financial performance of the Company during 1996 and 1997. As part of the
Company's Executive Incentive Plan, target levels of net income and return
on assets for the Company as a whole are recommended on an annual basis by
senior management of the Company and approved by the Committee of the Board
of Directors which administers the Plan. Depending upon the achievement of
these established targets, Mr. Miller has the opportunity to earn up to
30,000 shares based upon the financial performance of the Company during
1997, and up to 60,000 shares based upon the financial performance of the
Company for the two year period ending December 31, 1997.
Restricted stock awards for Mr. Alan B. Miller include: (i) $140,260 in
1996, $120,000 in 1995 and $84,000 in 1994 representing the value of the
Bonus Shares and (ii) $19,896 in 1996, $17,324 in 1995 and $19,987 in 1994
representing the value of the vested portion of the Premium Shares and
(iii) (a) $662,500 in 1995 representing the value of 40,000 shares of the
Company's Class B Common Stock, and; (b) $1,987,500 in 1995 representing
the value of 120,000 shares of the Company's Class B Common Stock, based
upon the closing market price of the shares on the date of grant, issued in
connection with the 1990 Plan. As mentioned above, 40,000 of the shares
issued during 1995 became fully vested in April, 1996 (market value of
$1,029,800 on vesting date) and an additional 30,000 shares became fully
vested in March, 1997 (market value of $993,750 on vesting date). The value
of the remaining 90,000 unvested shares granted during 1995, issuable in
connection with the 1990 Plan, depending upon the achievement of the
established targets, was $2,576,250 as of December 31, 1996, based on the
closing market price of the shares on that date. Restricted stock awards
for Mr. Kirk E. Gorman include: (i) $32,340 in 1996, $27,400 in 1995 and
$20,000 in 1994 representing the value of the Bonus Shares and (ii) $4,711
in 1996, $3,970 in 1995 and $4,554 in 1994 representing the value of the
vested portion of the Premium Shares. Restricted stock awards for Mr.
Michael G. Servais include: (i) $41,060 in 1996, $27,260 in 1995 and
$10,800 in 1994 representing the value of the Bonus Shares, (ii) $2,150 in
1996, $4,092 in 1995 and $5,351 in 1994 representing the value of the
vested portion of the Premium Shares and (iii) $99,375 in 1994 representing
the value of 10,000 shares of the Company's Class B Common Shares, based on
the closing market price of the shares on the date of grant, issued in
connection with the 1990 Plan. The value of the shares issued in connection
with the 1990 Plan as of December 31, 1996 was $286,250 based on the
closing market price of the shares on that date. Restricted stock awards
for Mr. Thomas J. Bender include: (i) $30,600 in 1996, $28,620 in 1995 and
$3,600 in 1994 representing the value of the Bonus Shares and (ii) $750 in
1996, $5,499 in 1995 and $8,326 in 1994 representing the value of the
vested portion of the Premium Shares. Restricted stock awards for Mr.
Richard C. Wright include: (i) $50,000 in 1996, $50,000 in 1995 and $22,000
in 1994 representing the value of the Bonus Shares and (ii) $4,400 in 1996,
$4,987 in 1995 and $6,256 in 1994 representing the value of the vested
portion of the Premium Shares.
At December 31, 1996, Messrs. Miller, Gorman, Servais, Bender and Wright
held 9,850, 2,288, 1,840, 1,560 and 3,480 shares, respectively, of
restricted Bonus Shares and Premium Shares, with a value based on the
closing price of the shares on that date of $281,956, $65,494, $52,670,
$44,655 and $99,615, respectively.
(c) All other compensation includes the Company's match of officers'
contribution to the Company's 401(k) plan, and, for Mr. Alan B. Miller, the
total includes $9,572 in each year related to term life insurance premiums
paid for by the Company.
9
<PAGE> 14
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL
-------------------------------------------------- REALIZABLE
NUMBER OF PERCENTAGE OF VALUE AT ASSUMED
SECURITIES TOTAL ANNUAL RATES OF
UNDERLYING OPTIONS EXERCISE STOCK PRICE
OPTIONS GRANTED TO PER APPRECIATION FOR
GRANTED EMPLOYEES SHARE OPTION TERM
(#) IN FISCAL PRICE EXPIRATION -----------------
NAME (A) YEAR ($/SH) DATE 5%($) 10%($)
- --------------------------------- ---------- ------------- -------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Alan B. Miller................... 0 -- -- -- -- --
Kirk E. Gorman................... 0 -- -- -- -- --
Michael G. Servais............... 0 -- -- -- -- --
Thomas J. Bender................. 4,000 8% $ 23.250 07/17/01 $25,694 $56,777
Richard C. Wright................ 0 -- -- -- -- --
</TABLE>
- ---------------
(a) Options are exercisable as follows: 25% one year after date of grant and an
additional 25% in each of the second, third and fourth years after date of
grant. The options expire five years after the date of grant.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED IN-
UNEXERCISED THE-MONEY
OPTIONS AT OPTIONS AT
SHARES VALUE FISCAL YEAR-END(#) FISCAL YEAR-END($)(2)
ACQUIRED ON REALIZED --------------------------- ---------------------------
NAME EXERCISE(#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alan B. Miller............ 215,000 $4,605,250 190,000 355,000 $ 3,164,063 $ 4,989,063
Kirk E. Gorman............ 20,000 $ 301,250 30,000 70,000 $ 470,625 $ 1,061,875
Michael G. Servais........ 28,000 $ 335,000 12,500 61,000 $ 218,750 $ 914,625
Thomas J. Bender.......... 34,500 $ 575,016 0 48,500 $ 0 $ 677,906
Richard C. Wright......... 16,000 $ 241,000 23,500 54,500 $ 370,469 $ 831,406
</TABLE>
- ---------------
(1) Based on the difference between the exercise price and the closing sale
price of the Class B Common Stock on the New York Stock Exchange on the
date of exercise.
(2) Based on the difference between the exercise price and the closing sale
price of the Class B Common Stock on the New York Stock Exchange on
December 31, 1996 of $28.625 per share.
EMPLOYMENT CONTRACT
The Company and Alan B. Miller have entered into an employment contract
pursuant to which Mr. Miller will act as President and Chief Executive Officer
of the Company until December 31, 1997, which period is subject to extension at
the option of Mr. Miller or the Company until December 31, 2002. In addition,
the Agreement provides for a five-year consulting arrangement commencing upon
termination of Mr. Miller's active employment, during which period he will be
paid an annual fee equal to one-half of his base salary at the date of
expiration of the term of active employment. During the period of his active
10
<PAGE> 15
employment, Mr. Miller was entitled to a salary of $675,000 for the year ended
December 31, 1992, to be increased in each year thereafter by an amount equal to
not less than the percentage increase in the consumer price index over the
previous year. Mr. Miller is also entitled to an annual bonus of at least
$100,000 and payment of insurance premiums, including income tax reimbursements,
of $13,674 per annum, as well as such other compensation as the Board of
Directors may determine in its discretion. Mr. Miller may be discharged only for
cause or permanent disability.
EXECUTIVE RETIREMENT INCOME PLAN
In October 1993, the Board of Directors adopted the Executive Retirement
Income Plan pursuant to which certain management or other highly compensated
employees designated by the Board of Directors who have completed at least 10
years of active employment with the Company may receive retirement income
benefits. The monthly benefit is payable to a participant who retires after he
or she reaches age 62 and is equal to 3% of the employee's average monthly base
salary over the three years preceding retirement multiplied by the number of
full years (not to exceed 10) of the participant's active employment with the
Company. Payment of the benefit will be made in 60 monthly installments
following the participant's retirement date. Under certain circumstances, the
participant may be entitled to elect to receive the present value of the
payments in one lump sum or receive payments over a period of 10 years. The
estimated annual benefits payable (for the 60 months in which the participant
receives benefits) upon retirement at age 65 for each of Alan B. Miller, Kirk E.
Gorman, Michael G. Servais, Thomas J. Bender and Richard C. Wright, assuming
their annual compensation increases by 4% annually, would be $289,688, $139,005,
$111,555, $120,113 and $90,960, respectively. If an employee ceases employment
with the Company prior to age 62, no retirement income will be payable to the
participant unless the Board of Directors determines otherwise.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Committee of the Board of Directors was comprised during 1996 of four
non-employee directors, Anthony Pantaleoni, Martin Meyerson, Robert H. Hotz and
John H. Herrell. Anthony Pantaleoni is a partner in Fulbright & Jaworski L.L.P.,
which serves as the Company's principal outside counsel. Robert H. Hotz serves
as a Managing Director at Dillon, Read & Co., Inc., which served as Managing
Underwriter for the Company's offering of $135,000,000 of Senior Notes in August
1995.
COMMITTEE REPORT TO SHAREHOLDERS
The report of the Compensation and Stock Option Committee shall not be
deemed incorporated by reference by any general statement incorporating by
reference this proxy statement into any filing under the Securities Act of 1933,
as amended, or under the Securities Exchange Act of 1934, as amended, except to
the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
COMPENSATION PHILOSOPHY
The Committee regularly reviews and, with any changes it believes
appropriate, approves the Company's compensation program. The Company believes
that executive compensation should be closely related to the value delivered to
stockholders. This belief has been adhered to by developing incentive pay
programs which provide competitive compensation and reflect Company performance.
Both short-term and long-term incentive compensation are based on Company
performance and the value received by stockholders.
11
<PAGE> 16
In designing its compensation programs, the Company follows its belief that
compensation should reflect the value created for stockholders while supporting
the Company's strategic business goals. In doing so, the compensation programs
reflect the following themes:
- Compensation should encourage increased stockholder value.
- Compensation programs should support the short-term and long-term
strategic business goals and objectives of the Company.
- Compensation programs should reflect and promote the Company's values,
and reward individuals for outstanding contributions toward business
goals.
- Compensation programs should enable the Company to attract and retain
highly qualified professionals.
PAY MIX AND MEASUREMENT
The Company's executive compensation is based on three components, each of
which is intended to serve the overall compensation philosophy.
BASE SALARY
The Company's salary levels are intended to be consistent with competitive
pay practices and level of responsibility, with salary increases reflecting
competitive trends, the overall financial performance of the Company, the
performance of the individual executive and general economic conditions.
SHORT-TERM INCENTIVES
On May 18, 1994, the Company's stockholders approved the adoption of the
Company's Executive Incentive Plan. Pursuant to that Plan, at the start of each
fiscal year, target levels of net income and return on assets for the Company as
a whole ("Company Targets") and target levels of net income for each of the
Company's individual divisions and facilities ("Division Targets") are
recommended by senior management of the Company and approved by the Committee of
the Board of Directors which administers the Plan. In accordance with the Plan,
a subcommittee consisting of Messrs. Herrell and Meyerson established salary and
bonus targets in March 1996 for the 1996 calendar year. Similarly, a
subcommittee will establish salary and bonus targets for future years in
accordance with tax law requirements. The Committee expects to continue the
basic policies outlined below. All senior executives of the Company, including
heads of divisions and facilities, have the opportunity to earn as a bonus for a
fiscal year an amount equal to a portion of their base salary for that fiscal
year, depending on whether and to what extent the Company Targets and/or the
Division Targets are achieved. For fiscal 1996, (i) Alan B. Miller, the
Company's Chairman and President, was entitled to a bonus of 85% of his base
salary based on the achievement of Company Targets, (ii) Kirk E. Gorman, a
Senior Vice President of the Company, was entitled to a bonus of 68% of his base
salary based on the achievement of Company Targets, (iii) Michael G. Servais, a
Senior Vice President of the Company, was entitled to a bonus of 92% of his base
salary based on the achievement of Company Targets and the Division Targets,
(iv) Thomas J. Bender, Vice President of the Company, was entitled to a bonus of
81% of his base salary based on the achievement of Company Targets and the
Division Targets, and (v) Richard C. Wright, Vice President of the Company, was
entitled to a bonus of 143% of his base salary based on the achievement of
Company Targets and the Division Targets. Seventy-five percent (75%) of the
respective bonuses of Messrs. Servais and Bender was determined based on the
achievement of the Division Targets, and the remaining 25% of such bonuses was
determined based on the achievement of the Company Targets.
12
<PAGE> 17
Depending upon the actual performance of the Company and the Divisions compared
to Company Targets and/or the Division Targets, the senior executives can
receive bonuses up to 150% of their base salaries. Mr. Wright also received
$30,000 of bonuses related to a hospital acquisition completed in 1996.
LONG-TERM INCENTIVES
Stock options are granted from time to time to reward key employees'
contributions. The grant of options is based primarily on a key employee's
potential contribution to the Company's growth and profitability. Options are
granted at the prevailing market value of the Company's Common Stock and will
only have value if the Company's stock price increases. Generally, grants of
options vest in equal amounts over four years and executives must be employed by
the Company for such options to vest.
1996 COMPENSATION
The base salary for the Chairman and President was increased during 1996 to
$825,000. This represents a 3% increase over 1995. Further, the bonus of the
Chairman and President for 1996, determined as set forth above, was $701,300
(including $140,260 in restricted stock), reflecting 85% of his base salary.
During 1995, Mr. Alan B. Miller was granted an award of up to 160,000
shares (after giving effect to a two-for-one stock split declared in the form of
a 100% stock dividend which was paid in May 1996) of the Company's Class B
Common Stock, under the 1990 Plan, on which the restrictions lapse as follows:
(a) restrictions on 40,000 shares lapsed in April, 1996 (market value of
$1,029,800 on vesting date); (b) restrictions on an additional 30,000 shares
lapsed in March, 1997, (market value of $993,750 on vesting date) pursuant to a
formula based upon the financial performance of the Company during 1996, and;
(c) restrictions on the remaining 90,000 shares, which may be issued pursuant to
a formula based upon the financial performance of the Company during 1996 and
1997, lapse in 1998, as determined by the Company's Board of Directors.
Depending upon the achievement of the required financial performance by the
Company, Mr. Miller has the opportunity to earn up to 30,000 shares based upon
the financial performance of the Company during 1997, and up to 60,000 shares
based upon the financial performance of the Company for the two year period
ending December 31, 1997.
The Compensation Committee believes that linking executive compensation to
corporate performance results in a better alignment of compensation with
corporate business goals and stockholder value. As performance goals are met or
exceeded, resulting in increased value to stockholders, executives are rewarded
commensurately. The Compensation Committee believes that compensation levels
during 1996 adequately reflect the Company's compensation goals and policies.
COMPENSATION AND STOCK OPTION COMMITTEE
John H. Herrell
Martin Meyerson
13
<PAGE> 18
STOCK PRICE PERFORMANCE GRAPH
The Stock Price Performance Graph below shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
(THE COMPANY, S&P 500, PEER GROUP)
<TABLE>
<S> <C> <C> <C>
1991 $100.00 $100.00 $100.00
1992 $102.72 $107.62 $ 82.52
1993 $147.27 $118.46 $ 111.6
1994 $178.18 $120.03 $121.16
1995 $322.72 $165.13 $170.02
1996 $416.36 $203.05 $ 202.7
</TABLE>
The total cumulative return on investment (change in the year end stock
price plus reinvested dividends) for each of the periods for the Company, the
peer group and the S&P 500 Composite is based on the stock price or composite
index at the end of fiscal 1991.
The above graph compares the performance of the Company with that of the
S&P 500 Composite, and a group of peer companies where performance has been
weighted based on market capitalization. Companies in the peer group are as
follows: Columbia/HCA Healthcare Corporation, Community Health Systems, Inc.,
Transitional Hospitals Corporation (name change from Community Psychiatric
Centers), Health Management Associates, Inc., OrNda HealthCorp., Quorum Health
Group, Inc., Ramsay Health Care, Inc. and Tenet Healthcare Corporation.
During 1996, Community Health Systems, Inc. became a privately held company
and is no longer publicly traded. Stock price information is included for
Community Health Systems, Inc. through the period ended July 1996. OrNda
HealthCorp. merged with Tenet Healthcare Corporation on January 31, 1997.
14
<PAGE> 19
COMPENSATION OF DIRECTORS
The non-employee directors are compensated for their service on the Board
of Directors and Committees of the Board on an annual basis at $20,000 each.
In January 1994, under the Amended and Restated Non-Employee Director Stock
Option Plan, each non-employee director of the Company received an option to
purchase 5,000 shares of the Class B Common Stock of the Company at an exercise
price of $9.8125 per share. On January 24, 1996, Mr. Paul Verkuil, upon being
appointed to the Board of Directors, received an option to purchase 5,000 shares
of the Class B Common Stock of the Company at an exercise price of $22.9375 per
share. These options are exercisable as follows: 25% one year after date of
grant and an additional 25% in each of the second, third and fourth years after
date of grant. The options expire five years after the date of grant.
BOARD OF DIRECTORS
Meetings of the Board. Regular meetings of the Board are generally held
every other month, while special meetings are called when necessary. Before each
Board or Committee meeting, directors are furnished with an agenda and
background materials relating to matters to be discussed. During 1996, there
were seven Board meetings. All current directors attended more than 75% of the
meetings of the Board and of committees of the Board on which they served.
The Executive Committee, the Compensation and Stock Option Committee, the
Audit Committee, and the Finance Committee are the standing committees of the
Board of Directors, and may meet concurrently with the Board of Directors'
meetings.
Executive Committee. The Executive Committee has the responsibility,
between meetings of the Board of Directors of the Company, to advise and aid the
officers of the Company in all matters concerning the management of the business
and, while the Board is not in session, has the power and authority of the Board
to the fullest extent permitted under law. The Executive Committee met once in
1996. Members of the Committee are Alan B. Miller, Sidney Miller, and Anthony
Pantaleoni.
Compensation and Stock Option Committee. The Compensation and Stock Option
Committee has responsibility for reviewing and recommending to the Board of
Directors the compensation levels of officers and directors of the Company and
its subsidiaries and the administration of the 1990 Employees' Restricted Stock
Purchase Plan, the 1992 Corporate Ownership Program, the 1992 Stock Bonus Plan,
the 1992 Stock Option Plan, as amended, the Stock Purchase Plan, and the Stock
Compensation Plan. This Committee either met or took action through unanimous
written consent five times in 1996. The members of this Committee are Anthony
Pantaleoni, Martin Meyerson, Robert H. Hotz and John H. Herrell. A subcommittee
of the Compensation and Stock Option Committee, comprised of Messrs. Herrell and
Meyerson, will administer the 1994 Executive Incentive Plan and the various
stock plans.
Audit Committee. The Audit Committee is responsible for providing
assistance to the Board of Directors in fulfilling its responsibilities relating
to corporate accounting and reporting practices and to maintain a direct line of
communication between the directors and the independent accountants. It
recommends the firm to be appointed independent auditor, reviews the scope and
results of the audit with the independent auditors and considers the adequacy of
the internal accounting and control procedures of the Company. The Audit
Committee met twice in 1996. Members of this Committee are John H. Herrell,
Sidney Miller, Martin Meyerson, and Paul Verkuil.
Finance Committee. The Finance Committee is responsible for reviewing the
Company's cash flow and capital commitments and is charged with overseeing its
long-term financial planning. The Finance Committee met once in 1996. Members of
this Committee are Alan B. Miller, Sidney Miller and Robert H. Hotz.
15
<PAGE> 20
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Arthur Andersen LLP has been retained by the Board of Directors, on the
recommendation of the Audit Committee, to perform all accounting and audit
services during the 1997 fiscal year. It is anticipated that representatives of
Arthur Andersen LLP will be present at the Annual Meeting and will have an
opportunity to make a statement, if they desire to do so, and to respond to any
appropriate inquiries of the stockholders or their representatives.
EXPENSES FOR PROXY SOLICITATION
The principal solicitation of proxies is being made by mail; however,
certain officers, directors and employees of the Company, none of whom will
receive additional compensation therefor, may solicit proxies by telegram,
telephone or other personal contact. The Company will bear the cost of the
solicitation of the proxies, including postage, printing and handling and will
reimburse the reasonable expenses of brokerage firms and others for forwarding
material to beneficial owners of shares.
DATE FOR RECEIPT OF STOCKHOLDER PROPOSALS
FOR PRESENTATION AT 1998 ANNUAL MEETING
Any proposal that a stockholder wishes to present for consideration at the
1998 Annual Meeting must be received by the Company no later than December 22,
1997. This date provides sufficient time for inclusion of the proposal in the
1998 proxy materials.
OTHER BUSINESS TO BE TRANSACTED
As of the date of this Proxy Statement, the Board of Directors knows of no
other business to be presented for action at the Annual Meeting. As for any
business that may properly come before the Annual Meeting, the Proxies confer
discretionary authority in the persons named therein. Those persons will vote or
act in accordance with their best judgment with respect thereto.
YOU ARE URGED TO VOTE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE AT YOUR EARLIEST CONVENIENCE, WHETHER OR NOT YOU
CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING IN PERSON.
BY ORDER OF THE BOARD OF DIRECTORS
SIDNEY MILLER, Secretary
King of Prussia, Pennsylvania
April 21, 1997
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K WILL BE SENT WITHOUT
CHARGE TO ANY STOCKHOLDER REQUESTING IT IN WRITING FROM: INVESTOR RELATIONS,
UNIVERSAL HEALTH SERVICES, INC., UNIVERSAL CORPORATE CENTER, 367 SOUTH GULPH
ROAD, P.O. BOX 61558, KING OF PRUSSIA, PENNSYLVANIA 19406.
16
<PAGE> 21
EXHIBIT A
The Restated Certificate of Incorporation of the Company is to be amended
by replacing the present first sentence of Article FOURTH with a new first
sentence to read as follows:
FOURTH: The total number of shares of all classes of common stock
which the Company shall have authority to issue is 93,200,000 shares,
consisting of 12,000,000 shares of Class A Common Stock, par value of $.01
per share (the "Class A Common Stock"), 75,000,000 shares of Class B Common
Stock, par value of $.01 per share (the "Class B Common Stock"), 1,200,000
shares of Class C Common Stock, par value of $.01 per share (the "Class C
Common Stock"), and 5,000,000 shares of Class D Common Stock, par value of
$.01 per share (the "Class D Common Stock").
A-1
<PAGE> 22
PROXY
- ----- CLASS B
COMMON STOCK
CLASS D
COMMON STOCK
UNIVERSAL HEALTH SERVICES, INC.
THIS PROXY SOLICITED BY THE BOARD OF
DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON MAY 21, 1997
Alan B. Miller and Sidney Miller and each of them, as the true and lawful
attorneys, agents and proxies of the undersigned, with full power of
substitution, are hereby authorized to represent and to vote, as designated
below, all shares of Class B Common Stock and Class D Common Stock of Universal
Health Services, Inc. held of record by the undersigned on April 10, 1997, at
the Annual Meeting of Stockholders to be held at 10:00 a.m. on Wednesday, May
21, 1997 at the offices of the Company, Universal Corporate Center, 367 South
Gulph Road, King of Prussia, Pennsylvania and of any adjournment thereof. Any
and all proxies heretofore given are hereby revoked.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY.
- -------------------------------------------------------------------------------
*FOLD AND DETACH HERE*
UNIVERSAL HEALTH SERVICES, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 1997, 10:00 a.m.
UNIVERSAL CORPORATE CENTER
367 SOUTH GULPH ROAD
KING OF PRUSSIA, PA.
<PAGE> 23
Please mark
your ballot as / X /
indicated in
this sample
1. Adoption of the Amendment to the Company's Restated Certificate of
Incorporation to increase the number of authorized shares of Class B Common
Stock.
FOR AGAINST ABSTAIN
/ / / / / /
Discretionary authority is hereby granted with respect to such other matters as
may properly come before the meeting.
WHEN PROPERLY EXECUTED, THIS PROXY WILL
BE VOTED AS DESIGNATED BY THE ABOVE. IF
NO CHOICE IS SPECIFIED, THE PROXY WILL
BE VOTED FOR ADOPTION OF THE AMENDMENT
TO THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER
OF AUTHORIZED SHARES OF CLASS B COMMON
STOCK.
Signature____________________________Signature____________________Date__________
IMPORTANT: Please sign exactly as name appears at the left. Each joint owner
shall sign. Executors, administrators, trustees, etc. should give full title.
The above-signed acknowledges receipt of the Notice of Annual Meeting of
Stockholders and the Proxy Statement furnished therewith.
- --------------------------------------------------------------------------------
*FOLD AND DETACH HERE*
ANNUAL MEETING
OF
UNIVERSAL HEALTH SERVICES, INC. STOCKHOLDERS
WEDNESDAY, MAY 21, 1997
10:00 a.m.
UNIVERSAL CORPORATE CENTER
367 SOUTH GULPH ROAD
KING OF PRUSSIA, PA
=============================================================================
AGENDA
------
* Adoption of the Amendment to the Company's Restated Certificate of
Incorporation
* Discussion on matters of current interest
=============================================================================
<PAGE> 24
PROXY CLASS A
COMMON STOCK
CLASS C
COMMON STOCK
UNIVERSAL HEALTH SERVICES, INC.
THIS PROXY SOLICITED BY THE BOARD OF
DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON MAY 21, 1997
Alan B. Miller and Sidney Miller and each of them, as the true and
lawful attorneys, agents and proxies of the undersigned, with full power
of substitution, are hereby authorized to represent and to vote, as
designated below, all shares of Class A Common Stock and Class C Common
Stock of Universal Health Services, Inc. held of record by the
undersigned on April 10, 1997 at the Annual Meeting of Stockholders to
be held at 10:00 a.m. on Wednesday, May 21, 1997, at the offices of the
Company, Universal Corporate Center, 367 South Gulph Road, King of
Prussia, Pennsylvania and at any adjournment thereof. Any and all
proxies heretofore given are hereby revoked.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY.
<PAGE> 25
PLEASE MARK YOUR CHOICE LIKE THIS M IN BLUE OR BLACK INK
<TABLE>
<S> <C> <C> <C>
[ ]
------------------------ ------------------------ ------------------------
ACCOUNT NUMBER CLASS A COMMON CLASS C COMMON
- ----------------------------------------------------------------------------------------------------------------------------------
1. The Election of Directors. Nominees are: Martin Meyerson and John H. Herrell 3. Discretionary authority is hereby granted
with respect to such other matters as may
[ ] For Both Nominees [ ] Withheld from Both Nominees properly come before the meeting.
[ ] For Except Vote Withheld from the Following Nominee: ____________________
- ----------------------------------------------------------------------------------------------------------------------------------
2. Adoption of the Amendment to the Company's Restated Certificate of
Incorporation to Increase the Number of Authorized Shares of Class B Common Stock
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
DATED:
SIGNATURE:
-------------------
SIGNATURE:
-------------------
IMPORTANT: Please sign exactly
as name appears at the left.
Each joint owner shall sign.
Executors, administrators,
trustees, etc. should give full
title.
The above-signed acknowledges
receipt of the Notice of Annual
Meeting of Stockholders and the
Proxy Statement furnished
therewith.
- --------------------------------------------------------------------------------
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DESIGNATED BY THE ABOVE. IF
NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED FOR ELECTION OF THE NOMINEES FOR
DIRECTORS AND FOR ADOPTION OF THE AMENDMENT TO THE COMPANY'S RESTATED
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF
CLASS B COMMON STOCK.
- --------------------------------------------------------------------------------
