<PAGE> 1
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:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
HEALTHDYNE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
(LOGO) HEALTHDYNE
1850 PARKWAY PLACE
MARIETTA, GEORGIA 30067
NOTICE OF 1995 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 20, 1995
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Healthdyne, Inc. (the "Company"), which will be held at the Stouffer Waverly
Hotel, 2450 Galleria Parkway, Atlanta, Georgia, on Tuesday, June 20, 1995 at
10:30 a.m., Atlanta time. Holders of the Company's outstanding Common Stock at
the close of business on May 19, 1995, will be entitled to consider and vote on
the following matters:
(1) To elect a Board of Directors to serve until the next annual
meeting and until their successors are elected and qualified.
(2) To transact any and all other business as may properly come before
the meeting or any adjournment thereof.
Detailed information relating to the above matters is set forth in the
accompanying Proxy Statement, dated May 23, 1995. Whether or not you expect to
attend the Annual Meeting, please sign, date and return the accompanying proxy
card in the enclosed postage-prepaid envelope. If for any reason you desire to
revoke your proxy, you can do so at any time before the voting by giving notice
of such revocation to the Secretary of the Company.
I look forward to welcoming you at the meeting.
Very truly yours,
J. Brent Burkey
Secretary
Marietta, Georgia
May 23, 1995
<PAGE> 3
HEALTHDYNE, INC.
1850 PARKWAY PLACE
MARIETTA, GEORGIA 30067
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 20, 1995
GENERAL INFORMATION
This proxy statement and the accompanying form of proxy are being furnished
to shareholders in connection with the solicitation of proxies by the Board of
Directors of Healthdyne, Inc. (the "Company") for use at the Annual Meeting of
Shareholders to be held at the Stouffer Waverly Hotel, 2450 Galleria Parkway,
Atlanta, Georgia 30329, on June 20, 1995, at 10:30 a.m., and any adjournment
thereof. It is proposed that this proxy statement and accompanying form of proxy
will be sent to the Company's shareholders on or about May 24, 1995. When the
proxy is properly executed and returned, the shares it represents will be voted
at the meeting as directed by the shareholder executing the proxy unless it is
revoked. If no directions are given on the proxy with respect to any particular
matter to be acted upon, the shares represented by the proxy will be voted in
favor of such matter. Any shareholder giving a proxy has the power to revoke it
at any time before it is voted by the execution of another proxy bearing a later
date or by written notification to the Secretary of the Company. Shareholders
who are present at the Annual Meeting may revoke their proxy and vote in person
if they so desire. The Company's 1994 Annual Report to Shareholders is also
enclosed and should be read in conjunction with the matters set forth herein.
The mailing address of the principal executive offices of the Company is
1850 Parkway Place, Marietta, Georgia 30067.
Only shareholders of record as of the close of business on May 19, 1995,
will be entitled to notice of and to vote at the Annual Meeting. As of that
date, the Company had outstanding 15,367,852 shares of Common Stock, par value
$.01 per share (the "Common Stock"), each share being entitled to one vote. A
majority of the Common Stock outstanding on the record date shall constitute a
quorum. Under Georgia law, assuming a quorum is present, directors are elected
by a plurality of the votes cast and other matters are approved if the votes
cast in favor of each such matter exceed the votes cast opposing the matter.
Accordingly, abstentions and broker non-votes will have no effect on the outcome
of the vote on such matters.
1. ELECTION OF DIRECTORS
The Board of Directors recommends the election of the nine nominees named
in this proxy statement as directors, to hold office until the next annual
meeting of shareholders and until their successors are elected and qualified.
All of the nominees are members of the present Board and were elected at the
last annual meeting of shareholders.
The Board of Directors has no reason to believe that any of the nominees
for director will not be available to stand for election as director. However,
should any of such nominees become unable to serve, the proxies may be voted in
the discretion of those persons named as proxies in the form of proxy for a
substitute nominee
<PAGE> 4
or nominees, or to allow the vacancy created thereby to remain open until filled
by the Board, or to reduce the size of the full Board.
MANAGEMENT OF THE COMPANY
NOMINEES FOR DIRECTORS
The name, age, principal occupation for the last five years, selected
biographical information and period of service as a director of the Company of
each of the nominees for election as a director are set forth below.
PARKER H. PETIT, 55, has been Chairman of the Board and Chief Executive
Officer of the Company since 1970. Mr. Petit is also a director of Healthdyne
Technologies, Inc. and Atlantic Southeast Airlines, Inc.
J. TERRY DEWBERRY, 51, has been a director of the Company since 1981 and
has served as Vice Chairman of the Company since March 1992. From September 1987
until that time he was President and Chief Operating Officer of the Company and
was Executive Vice President of the Company from August 1984 to September 1987.
J. PAUL YOKUBINAS, 57, has been a director of the Company since 1971 and
has served as President and Chief Operating Officer since March 1992. From May
1991 until March 1992 he was Vice President of Business Development of the
Company. Prior thereto, from February 1987 to January 1991, he served as
President and principal investor in C.Q.I. International, Inc., a privately-held
holding company.
WILLIAM J. GRESHAM, JR., 52, has been a director of the Company since 1985.
He has been a consultant to The Miller Richmond Company, a real estate
management and brokerage firm, since March 1992 and previously was a consultant
to the Landmark Group, a real estate management and development firm, from June
1990 to February 1992. Prior thereto, he was Chairman of the Board and President
of City Group, Inc., a real estate development firm, from October 1989 to June
1990 and also Chairman of the Board from September 1987.
CHARLES R. HATCHER, JR., M. D., 64, has been a physician since 1962 and has
served as Director and Vice President for Health Affairs at the Robert W.
Woodruff Health Sciences Center of Emory University since 1984, and Professor of
Surgery at the Emory University School of Medicine since 1971. Dr. Hatcher is
also a director of Life of the South Corporation.
ALEXANDER H. LORCH, 71, has been a director of the Company since 1985 and
is retired. Mr. Lorch was Executive Vice President of Lockheed-Georgia, Co., a
division of Lockheed Corporation, and Vice President of Lockheed Corporation, an
aerospace manufacturer, from 1975 to February 1985, as well as President of
Lockheed-Georgia International Service, also a subsidiary of Lockheed
Corporation, from 1980 to February 1985. Mr. Lorch was also Chairman of the
Board of Murdock Engineering Co., a subsidiary of Lockheed Corporation, from
1981 to February 1985. Mr. Lorch is also a director of Healthdyne Technologies,
Inc.
CARL E. SANDERS, 70, is Chairman of Troutman Sanders, an Atlanta based law
firm which the Company retained in 1994 and may retain in the future, and has
been a director of the Company since 1986. Mr. Sanders is also a director of
Carmike Cinemas, Inc., The Actava Group, Inc., Norrell Corporation and
Roadmaster Industries, Inc.
MORRIS S. WEEDEN, 75, has been a director of the Company since 1987 and is
retired. Mr. Weeden was Chairman and President of CytRx Biopool Limited, a
pharmaceutical and diagnostic company from March 1987 to August 1987 and was
Vice Chairman -- Board of Directors of Morton Thiokol, Inc., a salt, chemical,
2
<PAGE> 5
pharmaceutical, household and aerospace products manufacturer, from March 1980
to December 1984. Mr. Weeden is also a director of Xytronyx, Inc.
FREDERICK P. ZUSPAN, M.D., 73, has been a physician since 1951 and has
served as a director of the Company since July 1993. Dr. Zuspan has been
Professor and Chairman Emeritas, Department of Obstetrics and Gynecology at the
Ohio State University College of Medicine since July 1991 and Editor-in-Chief of
the American Journal of Obstetrics and Gynecology since 1991. Dr. Zuspan was
previously Professor of the Ohio State University College of Medicine from 1987
to 1991 and Professor and Chairman of the Department of Obstetrics and
Gynecology at the Ohio State University College of Medicine from 1983 to 1991,
at the University of Chicago, Pritzker School of Medicine from 1966 to 1975, and
at the Medical College of Georgia from 1960 to 1966.
STOCK OWNERSHIP
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of May 1, 1995 by (i) each person who
is known by the Company to own beneficially more than 5% of the outstanding
shares, (ii) each director of the Company, (iii) each named executive officer,
and (iv) all executive officers and directors as a group. Unless otherwise
indicated, the holders listed below have sole voting and investment power with
respect to all shares beneficially owned by them.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER OWNERSHIP(1)(2) CLASS(1)(2)
- ------------------------------------------------------------- ----------------- -----------
<S> <C> <C>
Parker H. Petit.............................................. 1,738,261(3)(4) 11.3%
Wellington Management Company................................ 1,505,880(5) 9.8%
Gruber & McBain Capital Management, Inc...................... 1,073,000(5) 7.0%
J. Terry Dewberry............................................ 148,525 --
J. Paul Yokubinas............................................ 147,398 --
J. Brent Burkey.............................................. 67,061 --
Donald R. Millard............................................ 58,088(6) --
William J. Gresham, Jr....................................... 11,000 --
Charles R. Hatcher, Jr., M.D................................. 7,500 --
Alexander H. Lorch........................................... 18,500 --
Carl E. Sanders.............................................. 75,000 --
Morris S. Weeden............................................. 12,500 --
Frederick P. Zuspan, M.D..................................... 2,500
All executive officers and directors as a group (12
persons)................................................... 2,301,333 14.9%
</TABLE>
- ---------------
-- Less than 1%
(1) Under the rules of the Securities and Exchange Commission (the "SEC"), a
person is deemed to be a beneficial owner of a security if he or she has or
shares the power to vote or to direct the voting of such security, or the
power to dispose or to direct the disposition of such security. A person is
also deemed to be a beneficial owner of any securities of which that person
has the right to acquire beneficial ownership within 60 days as well as any
securities owned by such person's spouse, children or relatives living in
the same house. Accordingly, more than one person may be deemed to be a
beneficial owner of the same securities. Unless otherwise indicated by
footnote, the named individuals have sole voting and investment power with
respect to the shares held by them.
3
<PAGE> 6
(2) With respect to each person in the table, assumes that such person has
exercised all options, warrants and other rights to purchase Common Stock
exercisable within 60 days beneficially owned by him or that no other
person has exercised any such rights.
(3) Does not include 295,130 shares owned by Bank South, N.A., Atlanta, Georgia,
as Trustee for the benefit of two of Mr. Petit's children. Mr. Yokubinas,
an officer and a director of the Company, is a member of a
self-perpetuating, three-member advisory committee that has power to remove
the Trustee and to direct the Trustee as to the voting and disposition of
the shares owned by the Trustee except that the advisory committee has no
such power during the lifetime of Mr. Petit if the shares held by Mr. Petit
and the trust, when aggregated, are "significant from the viewpoint of
voting control" of the Company. Both the Trustee and the advisory committee
consider the shares owned by the Trustee to be significant in terms of
voting control. In the absence of direction by the advisory committee, the
Trustee has sole power to direct the voting and disposition of these
securities. Also does not include 3,834 shares held by Gary F. Eubanks as
Trustee for the benefit of two of Mr. Petit's children.
(4) Includes 3,750 shares held by Mr. Petit as custodian for one of his
children.
(5) This information is as of the date set forth in and based solely on the
respective Schedules 13D and 13G furnished to the Company by these
entities. Wellington Management Company's address is 75 State Street,
Boston, Massachusetts, 02109 and Gruber & McBain Capital Management, Inc.'s
address is 50 Osgood Place, San Francisco, California, 94133.
(6) Includes 2,000 shares issuable upon conversion of 8% Convertible
Subordinated Debentures of the Company owned by Mr. Millard.
BOARD COMMITTEES AND ATTENDANCE
The Company's Board of Directors has a Compensation Committee composed of
Parker H. Petit, William J. Gresham, Jr., Charles R. Hatcher, Jr., M.D., Carl E.
Sanders and Morris S. Weeden. The Compensation Committee is responsible for the
recommendation and approval of salaries of executive officers. The Compensation
Committee held one meeting during the year ended December 31, 1994.
The Board of Directors has a standing Audit Committee composed of Alexander
H. Lorch, Charles R. Hatcher, Jr., M.D., and Morris S. Weeden. The Audit
Committee reviews the scope of the audit of the Company's consolidated financial
statements by independent public accountants and their report on such audit,
evaluates audit performance and reports on such matters to the Board of
Directors. The Audit Committee held four meetings during the year ended December
31, 1994.
The Board of Directors has a Nominating Committee composed of Parker H.
Petit, William J. Gresham, Jr., Charles R. Hatcher, Jr., M.D. and Frederick P.
Zuspan, M.D. The Nominating Committee is responsible for nominating individuals
to stand for election to the Board at the annual meetings of the Company's
shareholders and to fill any vacancies on the Board that may occur from time to
time. The committee does not have a specific procedure for considering nominees
recommended by shareholders. The Nominating Committee, in conjunction with the
Board of Directors, held one meeting during the year ended December 31, 1994.
During the year ended December 31, 1994, the Board of Directors held eleven
meetings. Each of the Directors standing for re-election attended more than 75%
of the total number of Board meetings and meetings of committees of which he was
a member during 1994.
4
<PAGE> 7
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
compensation of the Company's Chief Executive Officer and each of the other four
most highly compensated executive officers of the Company serving as of December
31, 1994 (these five individuals, collectively, the "named executive officers")
for their services in all capacities to the Corporation and its subsidiaries
during the past three years:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
NAME AND ------------------------------- UNDERLYING COMPENSA-
PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) TION($)(1)
- --------------------------------------- ---- --------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Parker H. Petit........................ 1994 $ 371,877 $150,000 185,000 $ 2,055
Chairman of the Board and 1993 350,016 -- 170,000 2,467
Chief Executive Officer 1992 342,930 -- 32,500 3,258
J. Terry Dewberry...................... 1994 223,750 90,000 110,000 2,055
Vice Chairman 1993 210,000 -- 45,000 2,340
1992 209,167 -- 5,000 3,258
J. Paul Yokubinas...................... 1994 208,333 84,000 35,000 2,055
President and Chief Operating Officer 1993 190,000 -- 55,000 2,202
1992 188,486 -- 23,750 3,258
J. Brent Burkey........................ 1994 198,750 60,000 40,000 2,055
Senior Vice President, General 1993 185,000 -- 40,000 2,047
Counsel and Secretary 1992 183,667 -- 5,000 3,258
Donald R. Millard...................... 1994 188,750 57,000 30,000 2,055
Vice President -- Finance, Chief 1993 175,000 -- 30,000 --
Financial Officer and Treasurer 1992 173,583 -- 5,000 3,212
</TABLE>
- ---------------
(1) Represents the Company's matching contributions to the named executive
officers under the Company's tax-qualified 401(k) Profit Sharing Plan
accrued during the twelve months indicated.
5
<PAGE> 8
STOCK OPTIONS
The following table contains information concerning the grant of stock
options under the Company's 1991 and 1993 Stock Option Plans to the named
executive officers of the Company as of the end of the last fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------- POTENTIAL
% OF REALIZABLE
TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES
SECURITIES GRANTED OF STOCK PRICE
UNDERLYING TO EXERCISE APPRECIATION FOR
OPTIONS EMPLOYEES OR BASE OPTION TERM
GRANTED IN FISCAL PRICE EXPIRATION -------------------
NAME (#)(1) YEAR ($/SH)(2) DATE 5% ($) 10% ($)
- -------------------------------- ---------- --------- ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Parker H. Petit................. 125,000 15.47% $6.56 05/03/99 $226,550 $500,618
30,000 3.71% 5.81 06/28/99 48,155 106,411
30,000 3.71% 8.31 10/26/99 68,876 152,200
J. Terry Dewberry............... 75,000 9.28% 6.56 05/03/99 135,930 300,370
15,000 1.85% 5.81 06/28/99 24,077 53,205
20,000 2.47% 8.31 10/26/99 45,917 101,466
J. Paul Yokubinas............... 15,000 1.85% 5.81 06/28/99 24,077 53,205
20,000 2.47% 8.31 10/26/99 45,917 101,466
J. Brent Burkey................. 10,000 1.23% 6.56 05/03/99 14,137 40,049
15,000 1.85% 5.81 06/28/99 24,077 53,205
15,000 1.85% 8.31 10/26/99 34,438 76,100
Donald R. Millard............... 15,000 1.85% 5.81 06/28/99 24,077 53,205
15,000 1.85% 8.31 10/26/99 34,438 76,100
</TABLE>
- ---------------
(1) These options to purchase the Company's Common Stock were granted as
follows:
On May 3, 1994, 125,000, 75,000 and 10,000 option shares, respectively, to
Messrs. Petit, Dewberry and Burkey; on June 28, 1994, 30,000 option shares
to Mr. Petit and 15,000 option shares each to Messrs. Dewberry, Yokubinas,
Burkey and Millard; and on October 26, 1994, 30,000, 20,000, 20,000, 15,000
and 15,000 option shares, respectively, to Messrs. Petit, Dewberry,
Yokubinas, Burkey and Millard. For each option granted on May 3, 1994, the
shares subject to the option grants became exercisable in full on the date
of the option grant. For the remaining options granted in 1994, 33% of the
shares subject to the option grants become exercisable in cumulative
increments on the first, second and third anniversary date of the option
grants. The options each have a term of five years from the date of grant
and are not transferable, otherwise than by will or the laws of descent and
distribution. Except as provided in each of the option agreements, the
options may not be exercised unless employment with the Company or an
affiliate or subsidiary continues. Options granted under the plans will
expire (i) immediately upon the employee's termination for good cause; (ii)
three months after the date of termination for reason other than good
cause; (iii) three months after the employee's voluntary termination; (iv)
one year after the employee's death or disability; or (v) five years from
the date of the grant. The purchase price of the shares subject to these
options may be paid (i) in cash; (ii) through the surrender of previously
owned stock of the Company; or (iii) a combination of cash and previously
owned stock of the Company. The
6
<PAGE> 9
optionees are obligated to reimburse the Company at the time of any
exercises of the options for any taxes required to be withheld by the
Company under federal, state or local law as the result of the exercise of
the options.
(2) The exercise price of the outstanding options to purchase the Company's
Common Stock will be reduced substantially in connection with the spin-off
to the shareholders of the Company (the "Spin-off") of the Company's former
81%-owned subsidiary, Healthdyne Technologies, Inc. ("Technologies"),
effective May 22, 1995. Each outstanding stock option held by an employee
or a director of the Company will be adjusted immediately prior to the
Spin-off so as to represent two separately exercisable options: one to
purchase Common Stock of the Company and one to purchase Technologies
Common Stock. The exercise prices of the Company Option and the
Technologies Option will be determined following the Spin-off on a basis
intended to preserve, but not enhance, the economic value of the options
held prior to the Spin-off.
STOCK OPTION EXERCISES
The following table sets forth information with respect to the named
executive officers concerning the exercise of options during the last fiscal
year and unexercised options held as of the end of the fiscal year:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY OPTIONS AT
SHARES VALUE UNEXERCISED OPTIONS AT LAST FISCAL
ACQUIRED REALIZED LAST FISCAL YEAR END(#) YEAR END(#)(2)
ON EXERCISE ($) --------------------------- ---------------------------
NAME (#) (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Parker H. Petit.............. -0- $ -0- 233,333 184,167 $ 239,167 $ 184,032
J. Terry Dewberry............ -0- -0- 113,333 66,667 121,750 60,350
J. Paul Yokubinas............ -0- -0- 79,166 79,584 17,707 68,267
J. Brent Burkey.............. -0- -0- 46,666 58,334 27,524 59,100
Donald R. Millard............ 15,000 37,500 33,333 51,667 9,166 51,183
</TABLE>
- ---------------
(1) Represents the excess of the fair market value of the stock at the time of
exercise above the exercise price of the options.
(2) Based on $8.00, the last sale price of the Company's Common Stock on
December 30, 1994.
COMPENSATION OF DIRECTORS
Directors who are officers of the Company receive no additional
compensation for serving on the Board of Directors. Directors who are not
officers receive a fee of $3,000 per quarter, plus $1,000 for each Board meeting
and $750 for each Committee meeting attended, and are reimbursed for any travel
expenses incurred.
PENSION PLAN
The named executive officers participate in a non-qualified pension plan.
The following table shows the estimated pension benefits payable to a covered
participant at normal retirement age under this pension plan which provides
benefits based on remuneration that is covered under the plan and years of
service with the Company and its affiliates.
7
<PAGE> 10
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------------------------
REMUNERATION 10 15 20 25 30 35
- ------------------------------------ ------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 75,000............................ $7,000 $ 18,250 $ 29,500 $ 29,500 $ 29,500 $ 29,500
100,000............................ 14,500 29,500 44,500 44,500 44,500 44,500
125,000............................ 22,000 40,750 59,500 59,500 59,500 59,500
150,000............................ 29,500 52,000 74,500 74,500 74,500 74,500
175,000............................ 37,000 63,250 89,500 89,500 89,500 89,500
200,000............................ 44,500 74,500 104,500 104,500 104,500 104,500
</TABLE>
Remuneration covered by the benefit award is based on the average base
salary of the executive for the three years in which his base salary is the
highest. This amount for each of the named executive officers participating in
the plan as of the end of the last fiscal year was $354,941, $214,306, $195,606,
$189,139 and $179,111, respectively, for Messrs. Petit, Dewberry, Yokubinas,
Burkey and Millard. The estimated years of service for each named executive
officer as of the end of the last fiscal year was 24 years for Mr. Petit, 14
years for Mr. Dewberry, 11 years for Mr. Yokubinas, 12 years for Mr. Burkey and
8 years for Mr. Millard. Benefits shown are computed as a diminishing single
life annuity beginning at age 65 with annual reductions equal to the annual
increases in primary social security benefits. The base salary used to calculate
covered compensation is the same figure reported in the "Salary" column of the
Summary Compensation Table. See "Change of Control Arrangements" below for a
discussion of the effects of a "change of control" of the Company on these
retirement benefit awards.
CHANGE OF CONTROL ARRANGEMENTS
In February 1988, the Company entered into agreements with Messrs. Petit,
Dewberry, Burkey and Millard, and in October 1993, entered into a similar
agreement with Mr. Yokubinas entitling them to certain benefits upon specified
terminations of employment within three years following a "change in control" of
the Company (defined in these agreements to include, among other things, the
sale or distribution in transactions such as the Spin-off of 70% or more of the
Company's assets in one or a series of related transactions). The agreements
with Messrs. Petit, Dewberry, Burkey and Millard will remain in effect through
February 3, 1997 and the agreement with Mr. Yokubinas will remain in effect
through October 27, 1997. Each agreement provides that in the event of a change
in control of the Company, the executive officer concerned will be entitled to
certain benefits upon his subsequent termination of employment during the term
of the agreement unless such termination is (i) because of his death, disability
or retirement, (ii) by the Company for cause, or (iii) with respect to the
executive officer, by the executive officer, other than for "good reason." A
number of circumstances entitle the executive officer to treat a good faith
termination on his part as being a termination for good reason. These include an
adverse change in the executive officer's compensation, discontinuation of
certain benefits, the assignment of duties inconsistent with his status or
duties in effect immediately prior to the change in control of the Company, the
relocation of the Company's principal executive office to a location outside of
Marietta, Georgia, or the Company's requiring the executive officer to be based
anywhere other than the Company's principal executive office.
If an executive officer's employment with the Company or its subsidiaries
terminates following consummation of a change in control of the Company other
than under the circumstances set forth in clauses (i), (ii) or (iii) of the
preceding paragraph, he will be entitled to receive his full base salary through
the date of termination and a lump sum severance payment equal to three times
the executive officer's average annual
8
<PAGE> 11
base salary and other income derived from the Company which is reportable for
federal tax purposes for the five years preceding the date of his termination.
In addition, an executive officer will be entitled to receive for a period of
three years after the date of his termination all life, disability, health
insurance coverage and other fringe benefits equivalent to those in effect at
the date of termination. If a change in control had taken place on March 31,
1995, Messrs. Petit, Dewberry, Yokubinas, Burkey and Millard would have been
entitled to receive approximately $2,611,195, $1,692,621, $618,199, $1,356,016,
and $627,346, respectively, upon termination of employment as contemplated under
these agreements. In addition, if any such payments constitute excess parachute
payments under Section 280G of the Internal Revenue Code of 1986, the Company
would be obligated under these agreements to reimburse each executive officer
for the excise taxes resulting from such excess parachute payments and from any
reimbursements thereof paid by the Company.
In the event of a "change of control" of the Company (defined to include,
among other things, the sale or distribution in transactions such as the
Spin-off of 33% or more of the Company's assets in one or a series of related
transactions), all benefits accrued to date under the Company's nonqualified
pension benefit awards described above immediately vest and each executive
officer may require the Company to place in trust for the executive officer's
benefit an amount of money equal to the present value of the executive officer's
accrued retirement benefit. The executive officers who received these benefit
awards and the amounts that the Company would be required to place in trust for
each such executive officer as of December 31, 1994, if requested thereunder,
are as follows: Parker H. Petit -- $863,251; J. Terry Dewberry -- $230,084; J.
Paul Yokubinas -- $242,072; J. Brent Burkey -- $145,175; and Donald R.
Millard -- $73,464.
COMPENSATION COMMITTEE REPORT ON CORPORATE COMPENSATION
Overall Objectives and Approach. In making its compensation
determinations, the Company's Compensation Committee evaluates, on both an
absolute and relative basis, a variety of Company financial results (including
sales, earnings, return on equity, return on assets and balance sheet strength),
market share and competitive position, the potential for future growth, the
overall importance of the individual to the organization, the individual and
group performance of senior management, and compensation levels at comparable
companies, especially within the healthcare industry. In formulating its
determinations, it recognizes and rewards achievements on an annual basis, while
emphasizing the value and importance of sustained long-term performance and
recognition of developing trends within the healthcare industry. The Committee
reviews information prepared or compiled by the Company, as well as the business
experience of the individual members of the Committee.
Cash Compensation. Officers and other employees are compensated within
salary ranges that are generally based on similar positions in companies of
comparable size and complexity to the Company. The actual base pay level for
each officer is based on a combination of experience, performance and other
factors that are determined to be important by the Committee. The salary of most
officers is generally reviewed annually at the beginning of each year, with the
amount of any increases based on factors such as Company performance, general
economic conditions, marketplace compensation trends and individual performance.
Raises in salaries were granted in 1994 based upon the factors described above
as well as recognition that no increases in salary levels had been granted to
executive officers during the preceding year.
Under the incentive bonus plan for 1994, many salaried employees, including
the named executive officers, received a bonus based upon a financial formula
and the performance of the Company in comparison to its operating budget. A
similar bonus program based upon Company achievement as compared to budgeted
goals is in effect for 1995. In the Committee's view, the cash compensation set
out in the Summary
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<PAGE> 12
Compensation Table appropriately reflects the above factors in the context of
the current competitive environment and historical practices.
Stock Options. The Company grants stock options to a substantial number of
its employees, a policy followed since the Company first became a public
company. The grants generally have been based on guidelines that take salary
level, tenure, individual performance rating and importance to the Company into
account. Stock options have been granted at exercise prices equal to the market
price on the date of grant, typically become exercisable in three annual
installments commencing on the first anniversary of the grant, and expire on the
fifth anniversary.
CEO Compensation. The compensation of Mr. Petit, including stock options,
is based upon the performance of the Company and, in addition to the factors
considered for other named executive officers, upon the important role Mr. Petit
plays within the Company as its founder, spokesman and chief executive officer.
As with the other named executive officers of the Company, Mr. Petit's base
compensation remained unchanged in 1993 but was increased in 1994. A bonus was
awarded to Mr. Petit for 1994 based on the Company's performance in comparison
to its operating plan. Although the bonus plan is subject to a financial
formula, adjustments to Mr. Petit's base compensation are made at the discretion
of the Compensation Committee after consideration of the factors discussed above
and are not automatically implemented based upon a specific financial formula.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Parker H. Petit, Chairman
William J. Gresham, Jr.
Charles R. Hatcher, Jr., M.D.
Carl E. Sanders
Morris S. Weeden
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors is responsible for
executive compensation decisions as described above. During 1994, the Committee
consisted of Parker H. Petit, William J. Gresham, Jr., Charles R. Hatcher, Jr.,
M.D., Carl E. Sanders and Morris S. Weeden. Mr. Petit is Chairman of the Board
and Chief Executive Officer of the Company. Mr. Sanders is the Chairman of a law
firm which provided legal services to the Company during 1994 and which will
provide legal services to the Company in the future.
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<PAGE> 13
PERFORMANCE GRAPH
The following graph shows a five year comparison of cumulative total
returns at December 31 for the years in question for the Company, the S&P 500
Index and the S&P Healthcare Composite Index. The graph assumes that the value
of the investment in the Company's Common Stock and each index was $100 at
December 31, 1989, and that all dividends were reinvested.
<TABLE>
<CAPTION>
(GRAPH)
S&P
Measurement Period Healthdyne, S&P 500 HealthCare
(Fiscal Year Covered) Inc Index Composite
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 100.00 96.89 117.45
1991 233.71 126.42 180.89
1992 82.02 136.05 151.42
1993 60.67 149.76 138.70
1994 71.91 151.74 156.89
</TABLE>
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the preceding Compensation
Committee Report and the stock Performance Graph shall not be incorporated by
reference into any such filings.
CERTAIN TRANSACTIONS
In July 1981, 405,000 shares of Common Stock reserved under the Company's
1981 Incentive Stock Option Plan were sold to certain of the Company's officers
for $1.33 per share in exchange for $540,000 principal amount of the Company's
8% promissory notes (the "1981 Promissory Notes") payable in four years and
secured by the purchased shares. The Board of Directors extended the respective
maturity dates of the 1981 Promissory Notes, forgave interest accrued from July
1985 through December 1987, and stayed the accrual of any additional interest
until the stock is sold by said individuals. Mr. Parker H. Petit owns 248,000 of
such shares. The maximum outstanding principal indebtedness to the Company of
Mr. Petit (the only
11
<PAGE> 14
executive officer or director whose indebtedness to the Company exceeded
$60,000) since January 1, 1994 was $950,800, of which $325,800 related to the
1981 Promissory Notes, $350,000 to a loan evidenced by a promissory note, dated
September 24, 1992, bearing interest at a floating rate which is currently 9.0%,
payable on November 1, 1995, $100,000 to a loan evidenced by a promissory note,
dated March 16, 1993, bearing interest at a floating rate which is currently
9.0% and payable on demand, and $125,000 to a loan evidenced by a promissory
note, dated June 27, 1994, bearing interest at a floating rate which is
currently 9.0% and payable on demand. At the present time, Mr. Petit has
approximately $850,800 of principal indebtedness outstanding to the Company.
Mr. Carl E. Sanders, a director of the Company, is also the Chairman of
Troutman Sanders, a law firm based in Atlanta, Georgia which provided certain
legal services to the Company in fiscal year 1994 and may be retained by the
Company in the future.
INDEPENDENT AUDITORS
The Board of Directors has appointed KPMG Peat Marwick LLP to audit the
accounts of the Company and its subsidiaries for the fiscal year ending December
31, 1995. A representative of KPMG Peat Marwick LLP will be present at the
Annual Meeting and will have the opportunity to make a statement if he or she so
desires and will be available to respond to appropriate shareholder questions.
SHAREHOLDER PROPOSALS AT THE COMPANY'S NEXT
ANNUAL MEETING OF SHAREHOLDERS
Shareholders of the Company who intend to submit proposals to the Company's
shareholders at the Company's next Annual Meeting of Shareholders must submit
such proposals to the Company no later than January 23, 1996, in order to be
considered for inclusion in the proxy statement and form of proxy to be
distributed by the Board in connection with that meeting. Shareholder proposals
should be submitted to J. Brent Burkey, Secretary, Healthdyne, Inc., 1850
Parkway Place, Marietta, Georgia 30067.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 as amended (the "Act")
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 reports with the SEC regarding beneficial ownership of Common Stock and
other equity securities of the Company. To the Company's knowledge, based solely
on a review of copies of such reports furnished to the Company and written
representations that no other reports were required, during the fiscal year
ended December 31, 1994, all officers, directors and greater than ten percent
beneficial owners complied with the Section 16(a) filing requirements of the Act
in all instances with the sole exception of a late filing with respect to the
reporting of one transaction relating to the disposition in 1993 of shares by
the wife of Carl E. Sanders.
EXPENSES OF SOLICITATION
The cost of solicitation of proxies will be borne by the Company. In an
effort to have as large a representation at the Annual Meeting as possible,
special solicitation of proxies may, in certain instances, be made personally,
or by telephone, telegraph or mail by one or more employees of the Company. The
Company
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<PAGE> 15
will also reimburse brokers, banks, nominees and other fiduciaries for the
postage and reasonable clerical expenses of forwarding the proxy material to
their principals, the beneficial owners of the Company's Common Stock. In
addition, the Company has retained D. F. King & Co., Inc., a proxy solicitation
firm, to assist in soliciting proxies from beneficial owners of shares of the
Company's Common Stock held individually and by brokerage houses and other
nominees, custodians and fiduciaries. The Company anticipates that such
assistance will cost approximately $5,000 plus reimbursement for any expenses
incurred by D.F. King & Co., Inc. in its solicitation.
ANNUAL REPORT AND FINANCIAL STATEMENTS
The Company will furnish without charge a copy of its Annual Report on Form
10-K filed with the SEC for the fiscal year ended December 31, 1994, including
financial statements and schedules, to any record or beneficial owner of its
Common Stock as of May 19, 1995 who requests a copy of such report. Any request
for the Form 10-K should be in writing addressed to:
J. Brent Burkey, Secretary
Healthdyne, Inc.
1850 Parkway Place
Marietta, Georgia 30067
If the person requesting the Form 10-K was not a shareholder of record on
May 19, 1995, the request must include a representation that such person was a
beneficial owner of the Common Stock on that date. Copies of any exhibit(s) to
the Form 10-K will be furnished on request and upon the payment of the Company's
expenses in furnishing such exhibit(s).
J. Brent Burkey
Secretary
May 23, 1995
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<PAGE> 16
APPENDIX A
HEALTHDYNE, INC.
1850 PARKWAY PLACE
MARIETTA, GEORGIA 30087
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS, JUNE 20, 1995
The undersigned hereby appoints Parker H. Petit, J. Terry Dewberry and J.
Brent Burkey, and each of them, proxies, with full power of substitution and
with discretionary authority, to represent and to vote in accordance with the
instructions set forth below, all shares of Common Stock of Healthdyne, Inc.
held of record by the undersigned on May 19, 1995 at the Annual Meeting of
Shareholders to be held at the Stouffer Waverly Hotel, 2450 Galleria Parkway,
Atlanta, Georgia, at 10:30 a.m. on Tuesday, June 20, 1995 and any adjournments
thereof.
<TABLE>
<S> <C> <C>
1. Election of Directors / / FOR all nominees listed below / / WITHHOLD AUTHORITY to vote for all
(except as written to the contrary below) nominees listed below
</TABLE>
Parker H. Petit; J. Terry Dewberry; William J. Gresham, Jr.; Charles R.
Hatcher, Jr.; Alexander H. Lorch; Carl E. Sanders; Morris S. Weeden; J. Paul
Yokubinas and Frederick P. Zuspan.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
(Continued on Reverse Side)
(Continued from other side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR"
ITEM 1.
PLEASE SIGN EXACTLY AS NAME APPEARS ON STOCK CERTIFICATE.
IF STOCK IS HELD IN THE NAME OF
TWO OR MORE PERSONS, ALL MUST
SIGN. WHEN SIGNING AS ATTORNEY,
AS EXECUTOR, ADMINISTRATOR
TRUSTEE, OR GUARDIAN, PLEASE GIVE
FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL
CORPORATE NAME BY PRESIDENT OR
OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED
PERSON.
Dated:
---------------------------------
---------------------------------
Signature
---------------------------------
Signature if Held Jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
