<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>
American Healthcorp, 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] No fee required.
[ ] 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
AMERICAN HEALTHCORP LOGO
One Burton Hills Boulevard
Nashville, Tennessee 37215
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of American Healthcorp, Inc.:
The Annual Meeting of Stockholders of American Healthcorp, Inc., a Delaware
corporation (the "Company"), will be held at the SunTrust Center, 5th Floor
Auditorium, 424 Church Street, Nashville, Tennessee 37219, at 9:00 a.m., local
time, on Tuesday, January 21, 1997 for the following purposes:
(1) To elect two (2) directors, to hold office for a term of three (3)
years or until their successors have been elected and qualified; and
(2) To transact such other business as may properly come before the
meeting, or any adjournment or postponement thereof.
The proxy statement and form of proxy accompanying this Notice are being
mailed to stockholders on or about December 17, 1996. Only stockholders of
record at the close of business on November 25, 1996 are entitled to notice of
and to vote at the meeting or any adjournment or postponement thereof.
Your attention is directed to the Proxy Statement accompanying this notice
for a more complete statement regarding the matters to be acted upon at the
meeting.
We hope very much that you will be able to be with us. If you do not plan
to attend the meeting in person, you are requested to complete, sign and date
the enclosed proxy and return it promptly in the enclosed addressed envelope,
which requires no postage if mailed in the United States.
By Order of the Board of Directors
/s/ THOMAS G. CIGARRAN
------------------------------------
Thomas G. Cigarran
Chairman
December 17, 1996
<PAGE> 3
AMERICAN HEALTHCORP, INC.
One Burton Hills Boulevard
Nashville, Tennessee 37215
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, JANUARY 21, 1997
The enclosed proxy is solicited by the Board of Directors on behalf of
American Healthcorp, Inc. (the "Company") for use at the Annual Meeting of
Stockholders to be held on Tuesday, January 21, 1997, at 9:00 a.m., local time,
at the SunTrust Center, 5th Floor Auditorium, 424 Church Street, Nashville,
Tennessee 37219, and at all adjournments or postponements thereof, for the
purposes set forth in the foregoing Notice of Annual Meeting of Stockholders.
Copies of the proxy, this Proxy Statement and the attached Notice are being sent
to stockholders on or about December 17, 1996.
Proxies may be solicited by the Company's officers or employees personally
or by mail, telephone or telegraph. All costs of this solicitation will be borne
by the Company, including expenses in connection with preparing, assembling and
mailing this Proxy Statement. The Company does not anticipate paying any
compensation to any party other than its regular employees for the solicitation
of proxies, but may reimburse brokerage firms and others for their reasonable
expenses in forwarding solicitation material to beneficial owners.
Shares represented by such proxies will be voted in accordance with the
choices specified thereon. If no choice is specified, the shares represented by
such proxies will be voted FOR the election of the director nominees set forth
under Proposal No. 1. The Board of Directors does not know of any other matters
which will be presented for action at the meeting, but the persons named in the
proxy intend to vote or act with respect to any other proposal which may be
properly presented for action according to their best judgment in light of the
conditions then prevailing.
A proxy may be revoked by a stockholder at any time before its exercise by
attending the meeting and electing to vote in person, by filing with the
Secretary of the Company a written revocation or by duly executing a proxy
bearing a later date.
Each share of the Company's common stock, $.001 par value (the "Common
Stock") issued and outstanding on the record date, November 25, 1996, will be
entitled to one vote on all matters to come before the meeting. Cumulative
voting is not permitted. As of November 25, 1996, there were outstanding
8,008,140 shares of Common Stock.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to those
persons known to the Company to be the beneficial owners (as defined by certain
rules of the Securities and Exchange Commission (the "Commission")) of more than
five percent (5%) of the Company's Common Stock, its only voting security, and
with respect to the beneficial ownership of the Company's Common Stock by all
directors and nominees, each of the executive officers named in the Summary
Compensation Table and all executive officers and directors of the Company as a
group. The information set forth below is based on ownership information
received by the Company as of November 19, 1996. Unless specified otherwise, the
shares indicated are presently outstanding, and each of the stockholders listed
below has sole voting and investment power with respect to the shares
beneficially owned.
<TABLE>
<CAPTION>
AMOUNT OF
COMMON STOCK PERCENT OF
NAME AND ADDRESS BENEFICIALLY OUTSTANDING
OF BENEFICIAL OWNER OWNED(1) COMMON STOCK(1)
------------------------------------------------------------- ------------ ---------------
<S> <C> <C>
Pioneering Management Corp................................... 785,900(2) 9.81%
60 State Street
Boston, MA 02109
Waddell & Reed, Inc.......................................... 527,000(3) 6.58
6300 Lamar Avenue
Post Office Box 29217
Shawnee Mission, Kansas 66201-9217
Thomas G. Cigarran****....................................... 703,671(4) 8.69
One Burton Hills Blvd.
Nashville, TN 37215
Henry D. Herr****............................................ 439,355(5) 5.45
One Burton Hills Blvd.
Nashville, TN 37215
James A. Deal***............................................. 373,179(6) 4.62
Robert E. Stone***........................................... 262,140(7) 3.26
William C. O'Neil, Jr.**..................................... 143,240(8) 1.79
Martin J. Koldyke**.......................................... 69,541(9) *
David A. Sidlowe***.......................................... 41,171(10) *
C. Warren Neel**............................................. 14,431(11) *
Frank A. Ehmann**............................................ 13,081(12) *
All directors and executive officers as a
group (9 persons).......................................... 2,059,809(13) 24.73
</TABLE>
- ---------------
* Indicates ownership of less than one percent of the Company's outstanding
Common Stock.
** Director of the Company
*** Named Executive Officer
**** Director and Named Executive Officer
2
<PAGE> 5
(1) Pursuant to the rules of the Commission, certain shares of the Company's
Common Stock which an individual owner set forth in this table has a right
to acquire within 60 days after the record date hereof pursuant to the
exercise of stock options are deemed to be outstanding for the purpose of
computing the ownership of that owner, but are not deemed outstanding for
the purpose of computing the ownership of any other individual owner shown
in the table. Likewise, the shares subject to options held by the other
directors and executive officers of the Company which are exercisable
within 60 days of the record date hereof, are all deemed outstanding for
the purpose of computing the percentage ownership of all executive officers
and directors as a group.
(2) Information with respect to stock ownership is based upon the Schedule 13G
dated January 3, 1996 filed with the Commission.
(3) Information with respect to stock ownership is based upon the Schedule 13G
dated February 14, 1996 filed with the Commission.
(4) Includes 1,500 shares held in trust for the benefit of Mr. Cigarran's
children and 88,337 shares issuable upon the exercise of outstanding
options.
(5) Includes 4,725 shares owned by Mr. Herr's daughter and 55,920 shares
issuable upon the exercise of outstanding options.
(6) Includes 11,625 shares owned by Mr. Deal's children and 70,403 shares
issuable upon the exercise of outstanding options.
(7) Includes 43,331 shares issuable upon the exercise of outstanding options.
(8) Includes 7,500 shares issuable upon the exercise of outstanding options.
(9) Includes 3,438 shares owned by an affiliate of Mr. Koldyke. Also includes
7,500 shares issuable upon the exercise of outstanding options held by Mr.
Koldyke.
(10) Includes 24,675 shares issuable upon the exercise of outstanding options.
(11) Includes 12,000 shares issuable upon the exercise of outstanding options.
(12) Includes 12,000 shares issuable upon the exercise of outstanding options.
(13) Includes 321,666 shares issuable upon the exercise of outstanding options.
3
<PAGE> 6
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation provides for a
staggered Board of Directors. Each director serves a three-year term and until
his successor is elected and qualified. The two directors to be elected at the
1997 Annual Meeting will serve until the Annual Meeting of Stockholders in 2000
(the "Class III" directors), two directors currently serving on the Board will
continue to serve until the Annual Meeting of Stockholders in 1998 (the "Class
I" directors), and two directors currently serving on the Board will continue to
serve until the Annual Meeting of Stockholders in 1999 (the "Class II"
directors).
Unless contrary instructions are received, shares of voting securities of
the Company represented by duly executed proxies will be voted in favor of the
election of the nominees named below. If for any reason a nominee is unable to
serve as a director, it is intended that the proxies solicited hereby will be
voted for such substitute nominee as the Board of Directors of the Company may
propose. The Board of Directors has no reason to expect that the nominees will
be unable to serve, and therefore, at this time does not have any substitute
nominees under consideration.
A nominee for election must receive a plurality of the votes cast to be
elected as a director. Stockholders have no right to vote cumulatively for
directors, but rather each stockholder shall have one vote for each share of
Common Stock held by such stockholder for each director.
The following persons are the nominees for election to serve as Class III
directors. Both nominees are presently directors of the Company. Certain
information relating to the nominees, which has been furnished to the Company by
the individuals named, is set forth below.
<TABLE>
<CAPTION>
CLASS OF
DIRECTOR;
ANNUAL MEETING
AT WHICH
TERM WILL
NAME OF DIRECTOR EXPIRE BACKGROUND INFORMATION
- ----------------------- --------------- ------------------------------------------------------
<S> <C> <C>
Henry D. Herr III; 2000 Mr. Herr, 50, has served as Executive Vice President
of Finance and Administration and Chief Financial
Officer of the Company since February 1986 and as a
director since 1988. Mr. Herr also is a director of
AmSurg. Mr. Herr served as Senior Vice President of
Finance and Administration and Chief Financial
Officer of the Company from its founding in
September 1981 until February 1986.
Martin J. Koldyke III; 2000 Mr. Koldyke, 64, has been a director since 1981. Mr.
Koldyke has been a general partner of Frontenac
Company, a venture capital management partnership,
since 1971. Mr. Koldyke also is a director of Rand
McNally & Company and GenDerm Corporation, Inc., a
former Chairman of the Illinois Health Finance
Authority, a Trustee of WTTW Channel 11, Chicago, a
Trustee of Northwestern University, a Trustee of the
Brookings Institution and Chairman Emeritus of the
Golden Apple Foundation for Excellence in Teaching.
</TABLE>
4
<PAGE> 7
The following four persons currently are members of the Board of Directors
and will continue in their present positions after the Annual Meeting. The
following persons are not nominees, and stockholders are not being asked to vote
for them. Certain information relating to the following persons has been
furnished to the Company by the individuals named.
<TABLE>
<CAPTION>
CLASS OF
DIRECTOR;
ANNUAL MEETING
AT WHICH
NAME OF DIRECTOR TERM EXPIRES BACKGROUND INFORMATION
- ----------------------- --------------- ------------------------------------------------------
<S> <C> <C>
Frank A. Ehmann I; 1998 Mr. Ehmann, 62, has been a director of the Company
since September 1991. Mr. Ehmann was a partner of
RCS Health Care Partners Ltd., an affiliate of
Robertson Stephens Co., from 1990 to 1994. From 1987
to 1989, he was President and Chief Operating
Officer of United Stationers, Inc. He served as
President and Co-Chief Operating Officer of
Baxter-Travenol Laboratories, Inc. from 1986 to
1987, and as President and Chief Operating Officer
of American Hospital Supply Corporation in 1985,
when it merged with Baxter-Travenol. Mr. Ehmann also
serves as a director of Kinetic Concepts, Inc., SPX
Corp and AHA Investment Funds.
William C. O'Neil, Jr. I; 1998 Mr. O'Neil, 62, has served as a director of the
Company since 1985. Mr. O'Neil is the founder,
Chairman, President and Chief Executive Officer of
ClinTrials Research, Inc., a pharmaceutical clinical
research services company. Prior thereto, Mr. O'Neil
was Chairman, President and Chief Executive Officer
of International Clinical Laboratories, Inc., a
national laboratory testing company. Mr. O'Neil is
also a Director of Atrix Laboratories, Inc.,
Advocat, Inc., Sigma Aldrich Corporation and Central
Parking Corporation.
Thomas G. Cigarran II; 1999 Mr. Cigarran, 54, has served as Chairman, President
and Chief Executive Officer of the Company since
September 1988 and as a director since 1981. Mr.
Cigarran also is Chairman and Chief Executive
Officer of AmSurg Corp. ("AmSurg"). Mr. Cigarran
served as President and Chief Operating Officer of
the Company from its founding in September 1981
until September 1988. Mr. Cigarran is also a
director of ClinTrials Research, Inc.
Dr. C. Warren Neel II; 1999 Dr. Neel, 57, has been a director since October 1991.
Since 1977, Dr. Neel has served as Dean of the
College of Business Administration at The University
of Tennessee in Knoxville. Dr. Neel is also a
director of Proffitt's, Inc., O'Charley's, Inc. and
Clayton Homes, Inc.
</TABLE>
The Board of Directors of the Company held seven meetings during the fiscal
year ended August 31, 1996. The Board of Directors has Nominating, Audit and
Compensation Committees. The Audit Committee
5
<PAGE> 8
is comprised of Messrs. Ehmann, Koldyke, O'Neil and Dr. Neel. The Audit
Committee meets with the Company's independent auditors to review the Company's
consolidated financial statements. It is the function of this committee to
ensure that the Company's financial statements accurately reflect the Company's
financial position and results of operations. The Audit Committee held one
meeting during fiscal 1996.
The Compensation Committee is responsible for the periodic review of
management's compensation and administration of the Company's compensation
plans. The Compensation Committee consists of Messrs. Ehmann, Koldyke and Dr.
Neel. The Compensation Committee held two meetings during fiscal 1996.
The Nominating Committee consists of Messrs. Cigarran, O'Neil and Dr. Neel.
The Nominating Committee recommends to the Board of Directors nominees for
election to the Board. The Nominating Committee will consider nominees
recommended by the Company's stockholders provided such proposed nominations are
submitted to the Company in the manner and within the time limits for
stockholder proposals as set forth on page 16 of this Proxy Statement. The
Nominating Committee held one meeting during fiscal 1996.
Each of the incumbent directors of the Company attended at least 75% of the
aggregate of the total number of meetings held during fiscal 1996 by the Board
of Directors and any committees.
6
<PAGE> 9
EXECUTIVE COMPENSATION
The following table provides information as to annual, long-term or other
compensation during fiscal years 1996, 1995 and 1994 for the Company's Chief
Executive Officer and the persons who, at the end of fiscal 1996, were the other
four most highly compensated executive officers of the Company (collectively,
the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
------------------------ ------------ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION(1)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Thomas G. Cigarran..................... 1996 $286,250 $100,188 25,000 $22,168(2)
Chairman of the Board, President, 1995 275,250 96,338 22,000 52,604
Chief Executive Officer 1994 267,750 0 0 10,570
Henry D. Herr.......................... 1996 235,200 82,320 12,500 17,685(3)
Executive Vice President-Finance and 1995 226,160 79,156 12,500 41,064
Administration, Chief Financial 1994 220,000 0 0 8,400
Officer, Secretary
James A. Deal.......................... 1996 224,500 76,965 17,500 17,585(4)
Executive Vice President, President 1995 215,880 75,558 10,000 41,067
of Diabetes Treatment Centers of 1994 210,000 0 0 8,320
America, Inc. ("DTCA")
Robert E. Stone........................ 1996 163,800 56,203 12,500 16,716(5)
Vice President, Executive Vice 1995 157,540 55,139 10,000 32,605
President of DTCA 1994 153,250 0 0 8,325
David A. Sidlowe....................... 1996 120,400 31,304 4,500 10,696(6)
Vice President, Controller 1995 115,750 31,253 0 22,632
1994 111,300 0 4,500 5,190
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes $3,600 per year automobile allowance for each Named Executive
Officer and excludes awards to the Company's Corporate and Subsidiary
Officer Capital Accumulation Plan (the "Capital Accumulation Plan") earned
for the period January 1, 1996 through August 31, 1996, which will be
contributed by the Company on December 31, 1996, provided the executive is
still employed by the Company on that date.
(2) Includes $10,918 contributed by the Company to the Capital Accumulation
Plan, $3,295 contributed by the Company to the Company's Retirement Savings
Plan (the "401(k) Plan") and $4,355 in life insurance premiums paid by the
Company on behalf of Mr. Cigarran.
(3) Includes $8,971 contributed by the Company to the Capital Accumulation Plan,
$3,294 contributed by the Company to the 401(k) Plan and $1,820 in life
insurance premiums paid by the Company on behalf of Mr. Herr.
(4) Includes $8,563 contributed by the Company to the Capital Accumulation Plan,
$3,292 contributed by the Company to the 401(k) Plan and $2,130 in life
insurance premiums paid by the Company on behalf of Mr. Deal.
(5) Includes $6,248 contributed by the Company to the Capital Accumulation Plan
and $3,293 contributed by the Company to the 401(k) Plan and $3,575 in life
insurance premiums paid by the Company on behalf of Mr. Stone.
(6) Includes $4,592 contributed by the Company to the Capital Accumulation Plan
and $2,504 contributed by the Company to the 401(k) Plan on behalf of Mr.
Sidlowe.
7
<PAGE> 10
OPTION GRANTS TABLE
The following table provides information as to options granted to the Named
Executive Officers during fiscal 1996. No separate stock appreciation rights
("SARS") were granted during fiscal 1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
FOR OPTION TERM
- ----------------------------------------------------------------------------------------------------------------------------------
%OF TOTAL
OPTIONS
OPTIONS GRANTED TO EXERCISE OR
GRANTED(1) EMPLOYEES IN BASE PRICE EXPIRATION
NAME (#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Thomas G. Cigarran.................... 25,000 11.47% $6.44 09/25/05 $101,252 $256,593
Henry D. Herr......................... 12,500 5.74 6.44 09/25/05 50,626 128,296
James A. Deal......................... 17,500 8.03 6.44 09/25/05 70,876 179,615
Robert E. Stone....................... 12,500 5.74 6.44 09/25/05 50,626 128,296
David A. Sidlowe...................... 4,500 2.07 6.44 09/25/05 18,225 46,187
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All options granted to the Named Executive Officers generally vest at the
rate of 25% per year over a four year period beginning on the date of the
grant. If there is a change in control or a potential change in control (as
defined in the 1991 Employee Stock Incentive Plan (the "1991 Plan")), any
stock options which are not then exercisable, in the discretion of the
Board, may become fully exercisable and vested, and stock options will,
unless otherwise determined by the Compensation Committee in its sole
discretion, be cashed out on the basis of the change in control price, as
defined in the 1991 Plan.
8
<PAGE> 11
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table provides information as to options exercised by the
Named Executive Officers during fiscal 1996. None of the Named Executive
Officers has held or exercised separate SARs. In addition, this table includes
the number of shares covered by both exercisable and unexercisable stock options
as of the record date. Also reported are the values for "in-the-money" options,
which represent the positive spread between the exercise price of any existing
stock options and the year-end price of the Company's Common Stock.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
SHARES YEAR-END(#) YEAR-END($)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Thomas G. Cigarran................... 0 0 76,587 56,500 $ 50,110 $ 175,875
Henry D. Herr........................ 0 0 49,670 29,375 $110,729 $ 92,156
James A. Deal........................ 0 0 63,528 34,375 $210,586 $ 107,925
Robert E. Stone...................... 0 0 37,706 24,687 $136,319 $ 85,125
David A. Sidlowe..................... 0 0 23,550 7,875 $ 97,478 $ 31,928
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
DIRECTORS COMPENSATION
Directors who are officers or employees of the Company receive no
compensation, as such, for serving as members of the Board. Directors who are
not officers or employees of the Company ("Outside Directors") receive (i) a
$10,000 annual cash retainer; and (ii) pursuant to the 1996 Stock Incentive
Plan, a restricted stock award of that number of shares of Common Stock with a
fair market value (as defined in the 1996 Stock Incentive Plan) of $10,000,
which are awarded on the date of each Annual Meeting of Stockholders. The dollar
value of the annual restricted stock award to Outside Directors will be adjusted
annually by the percentage change from the previous year in the Consumer Price
Index, Urban Wage Earners and Clerical Workers (1982-1984=100), All Cities
Average (the "Consumer Price Index"); provided, however, the annual increase
shall in no event be more than 6%. The Company may also grant options to Outside
Directors pursuant to the Discretionary Stock Option Plan for Outside Directors.
EMPLOYMENT AGREEMENTS
The Company has employment agreements with all of its executive officers.
The employment agreements, as amended and restated (the "Agreements"), with
Messrs. Cigarran, Herr, Deal and Stone currently expire in August 1999, but
contain a provision that automatically extends the term for one year on each
successive anniversary date of the Agreements (so that the term on such
anniversary date will always be three years) unless canceled by the Company. In
addition, the Agreements are renewable for an additional five years at each
executive's option upon the acquisition (as defined in the Agreements) of the
Company by another entity and provide that upon such an acquisition the
executive may resign and receive up to 30 months of his base salary in a
lump-sum payment. The Agreements provide that if the Company elects not to
extend the executive's employment or to otherwise terminate the executive
without just cause as defined in the Agreements, the executive will receive his
base salary, reduced by any salary earned by the executive from another
employer, plus certain benefits for a period of the greater of two years or the
remaining term of the
9
<PAGE> 12
respective Agreement. The Agreements also provide for certain payments upon
disability of the executive and require the Company to purchase a term life
insurance policy on each executive's life in a minimum amount of $500,000 which
is payable to the executive's estate or beneficiaries upon his death. The
Agreements contain restrictive provisions relating to the use of confidential
information and competing against the Company within one year after termination
of the executive's employment. The Agreements expire in all respects on the date
the executive becomes 65 years of age.
The Company's employment agreement with David A. Sidlowe, the Company's
Vice President and Controller, currently expires in June 1998, but contains a
provision that automatically extends the term for an additional two years on the
first and each successive anniversary date of the agreement unless canceled by
the Company. The agreement provides that if the Company elects not to extend Mr.
Sidlowe's employment, he will be considered to have been terminated without just
cause and will receive his base salary, reduced by any salary earned from
another employer, plus certain benefits for the remaining term of the agreement.
COMPENSATION COMMITTEE REPORT
Decisions on compensation of the Company's executive officers are made by
the Compensation Committee of the Company's Board of Directors. Each member of
the Compensation Committee is a non-employee director. It is the responsibility
of the Compensation Committee to determine whether in its judgment the executive
compensation policies are reasonable and appropriate, meet their stated
objectives and effectively serve the best interests of the Company and its
stockholders.
Compensation Philosophy and Policies for Executive Officers
The Compensation Committee believes that the primary objectives of the
Company's executive compensation policies should be:
- to attract and retain talented executives by providing compensation that
is, overall, highly competitive with the compensation provided to
executives at companies of comparable position in the health care
services industry, while maintaining compensation within levels that are
consistent with the Company's annual budget, financial objectives and
operating performance;
- to provide appropriate incentives for executives to work towards the
achievement of the Company's annual financial performance and business
goals based on the Company's annual budget; and
- to more closely align the interests of executives with those of
stockholders and the long-term interests of the Company by providing
long-term incentive compensation in the form of non-qualified stock
options or other equity-based long-term incentive compensation.
The Compensation Committee believes that the Company's executive
compensation policies should be reviewed annually and should be reviewed in
light of the Company's financial performance, its annual budget and its position
within the health care services industry, as well as the compensation policies
of similar companies in the health care services business. The compensation of
individual executives should then be reviewed annually by the Compensation
Committee in light of its executive compensation policies for that year.
In reviewing the comparability of the Company's executive compensation
policies, the Compensation Committee reviews executive compensation for other
comparable companies. Some of the comparable companies the Compensation
Committee reviews are included among the Composite Group used in the Performance
Graph presented in this proxy statement, but in light of factors that are unique
to the Company,
10
<PAGE> 13
the Compensation Committee believes that, while the Company competes generally
with such other health care service companies, DCTA's position as the leading
provider of diabetes treatment services to hospitals and physicians in the
United States, DCTA's leadership position in the developing market for diabetes
population management products for managed care payors and the Company's direct
involvement through its rapidly growing majority owned subsidiary, AmSurg, in
the development of its innovative method of delivery for certain surgical
procedures, provide unique circumstances, and these differences are important
factors which the Compensation Committee expects to consider in determining
executive compensation and in analyzing comparable financial performance.
The Compensation Committee believes that in addition to corporate
performance, it is appropriate to consider in setting and reviewing executive
compensation the level of experience and responsibilities of each executive as
well as the personal contributions a particular individual may make to the
success of the corporate enterprise. Such qualitative factors as leadership
skills, analytical skills, organization development, public affairs and civic
involvement are deemed to be important qualitative factors to take into account
in considering levels of compensation. No relative weight is assigned to these
qualitative factors, which are applied subjectively by the Compensation
Committee.
Compensation of Executive Officers
The Compensation Committee believes that the compensation of executive
officers should be comprised of base compensation, annual incentive compensation
and intermediate and long-term incentive compensation and has applied the
policies described herein to fiscal 1996 compensation for executive officers as
described below.
Base Compensation. Base compensation for executive officers of the Company
is based on the terms of employment agreements between the Company and the
executives. These agreements provide for a minimum base salary adjusted for
increases in the Consumer Price Index and such other increases as the
Compensation Committee shall determine to be appropriate. In determining whether
an increase in base compensation for the executive officers was appropriate for
fiscal 1996, the Compensation Committee reviewed recommendations of management
and consulted with the Chief Executive Officer. The Compensation Committee
subjectively determined on the basis of discussions with the Chief Executive
Officer and its experience in business generally and with the Company
specifically what it viewed to be appropriate levels of base compensation after
taking into consideration the contributions of each executive and the
performance of the Company. As a result of this review, the Compensation
Committee awarded an increase in the annual base compensation for executive
officers in fiscal 1996 of 4%, which included the minimum raise of 2.9% mandated
by the employment agreements with the executive officers. The Compensation
Committee did not assign any relative weight to the quantitative and qualitative
factors which it applied in reaching its base compensation decisions.
Annual Incentive Compensation. The Compensation Committee considers that
compensation should be mainly linked to operating performance. To achieve this
link with regard to short-term performance, the Compensation Committee relies on
cash bonuses awarded under the Bonus Plan under which cash awards can be granted
to executive officers based upon: (a) the extent to which actual earnings of the
Company during a fiscal year compare to the earnings targets approved by the
Compensation Committee for such fiscal year and (b) the Compensation Committee's
overall evaluation of progress made toward managed care market penetration by
DCTA. These two elements of annual incentive compensation were weighted in
determining incentive compensation for fiscal 1996 so that one-third of any
award was based on achievement of earnings targets and two-thirds was based on
managed care market penetration. For fiscal 1996, the amount of any
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<PAGE> 14
award varied with the percentage of actual earnings per share before any
non-recurring adjustments, to target earnings per share, and ranged from 4% of
an executive's base salary if 95% of target earnings per share were achieved to
a maximum of 22.5% if 115% or more of target earnings per share were achieved.
Achievement of 100% of target earnings per share would result in a cash award of
10% of base compensation. If actual earnings per share were less than 95% of
target earnings per share, no bonus would be paid under the Bonus Plan. Earnings
per share for fiscal 1996, excluding the positive impact of the non-recurring
positive effect on income tax expense associated with the Company's successful
settlement of its IRS audit matters, were $0.31 per share, which was below the
minimum earnings required and therefore no bonus was awarded to any executive
officer under this portion of the annual incentive plan. For fiscal 1996, the
Compensation Committee established an award range of from 7.5% to 45% of base
compensation for executive officers depending on progress made by DCTA in
managed care market penetration as measured in terms of the number of
substantive diabetes managed care contracts executed during the year. This
performance target was met and the awards paid for performance against the
prearranged targets for executive officers ranged from 26% to 35% of base
compensation under this portion of the annual incentive plan.
Intermediate and Long-Term Incentive Compensation. Stock options,
contributions under the Company's Capital Accumulation Plan, and, as of January
1, 1996, the Company's 401(k) Plan are the principal vehicles for payment of
intermediate and long-term incentive compensation. Under the Company's Capital
Accumulation Plan, the Company makes contributions to the Capital Accumulation
Plan on behalf of the executive officers that are based substantially on the
financial performance of the Company. Prior to January 1, 1996, the Company
could contribute up to 20% of the executive's base salary to the Capital
Accumulation Plan based solely on the financial performance of the Company and
the Company also made a matching contribution equal to 25% of the executive's
voluntary salary contribution to the Plan up to a maximum of 1.5% of the
executive's base salary. Prior to January 1, 1996, executive officers could not
participate in the Company's 401(k) Plan. However, the Compensation Committee
approved the participation of the executive officers in the 401(k) Plan
effective as of January 1, 1996. The 401(k) Plan provides for a matching
contribution by the Company of 52% of the participant's voluntary salary
contributions with the Company's contribution limited to the lesser of 3.12% of
the executive officer's salary and an annual maximum Company contribution for
calendar 1996 of $4,940 based on a maximum voluntary salary contribution
established by the U.S. Department of Labor. Because the intent of executive
officer participation in the 401(k) Plan was not to increase compensation for
these officers but was to allow participation by these officers in the programs
available to other employees of the Company, the award schedule, effective
January 1, 1996, for the Capital Accumulation Plan for Company performance was
reduced by 1.5% at all award levels to adjust for the higher matching Company
contribution level for voluntary salary contribution in the 401(k) Plan than in
the Capital Accumulation Plan.
Company performance contributions to the Capital Accumulation Plan for the
period September 1, 1995 through December 31, 1995 and also for the period
January 1, 1996 through December 31, 1996, are calculated based on actual
results for fiscal 1996 compared with targeted total earnings per share. For the
period September 1, 1995 through December 31, 1995, the amount of the Company
performance contribution ranged from 5% of an executive's base salary if 90% of
target total earnings per share for fiscal 1996 were achieved to a maximum of
20% if 115% or more of target total earnings per share were achieved.
Achievement of 100% of target total earnings per share would result in a Company
contribution of 10% of base salary. If actual total earnings per share were less
than 90% of target total earnings per share, no Company performance
contributions would be awarded. Based on actual performance for fiscal 1996
under this award schedule, each of the executive officers received a Company
performance contribution equal to 10% of his base salary for the period
September 1, 1995 through December 31, 1995. For the period January 1, 1996
through December 31,
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<PAGE> 15
1996, the amount of the Company performance contribution ranges from 3.5% of an
executive's base salary if 90% of target total earnings per share for fiscal
1996 were achieved to a maximum of 18.5% if 115% or more of target total
earnings per share were achieved. Achievement of 100% of target total earnings
per share would result in a Company performance contribution of 8.5% of base
salary. If actual total earnings per share were less than 90% of target total
earnings per share, no Company performance contributions would be awarded. Based
on actual performance for fiscal 1996 under this award schedule, each of the
executive officers earned a Company performance contribution equal to 8.5% of
his base salary for the period January 1, 1996 through December 31, 1996 which
award will be contributed to the executive officer's Capital Accumulation Plan
account on December 31, 1996 provided that the executive officer is still
employed by the Company on that date. The Company's contributions vest equally
over four years and are paid out upon the earlier of (1) an executive's
termination of employment, (2) retirement or (3) upon a date selected at the
beginning of each Capital Accumulation Plan year by the executive, but in no
event will this selected date be earlier than four years from the beginning of
the Capital Accumulation Plan year. During the period January 1, 1996 through
August 31, 1996, the Company made a matching contribution into the Company's
401(k) Plan on behalf of each executive officer based on the lesser of 3.12% of
base salary or $3,293. Approximately 29% of this matching contribution was in
the form of Company Common Stock. All matching Company contributions to the
401(k) Plan vest immediately for each executive officer and are payable pursuant
to the provisions of the plan.
The Compensation Committee considers that an integral part of the Company's
executive compensation program is equity-based compensation plans which align
executives' long-range interests with those of the stockholders. This long-term
incentive program is principally reflected in the 1991 Plan and the 1996 Stock
Incentive Plan.
The Company has no set policy as to when stock options should be awarded,
although historically the Company has awarded stock options to its executive
officers annually. The Committee believes that the Company should continue to
make it a part of its regular executive compensation policies to consider
granting awards of non-qualified stock options to executive officers to provide
long-term incentives as part of the compensation package that is reviewed
annually for each executive officer. This grant should be made within guidelines
established at the time of the annual review. The Company's stock option
agreements generally have provided that the exercise price of each stock option
was the average of the closing bid price of the Company's Common Stock on the
first five trading days of the month in which the options were granted; each
grant was subject to vesting conditions established at the date of grant; and
stock options vested on an equal basis over a period of four years. The
Committee's policy is that the material terms of stock options for executive
officers should not be amended after grant.
The Committee believes that long-term stock-based incentive compensation
should be structured so as to closely align the interests of the executives with
the interests of the Company's stockholders and, in particular, to provide only
limited value (if any) in the event that the Company's stock price fails to
increase over time. The Committee determines the award of stock option grants to
the executive officers and takes into account the recommendations of the Chief
Executive Officer prior to approving annual awards of long-term stock-based
incentive compensation to the other executive officers. These stock options are
granted in part to reward the senior executives for their long-term strategic
management of the Company, and to motivate the executives to improve stockholder
value by increasing this component of their compensation package, and reflect
the Committee's objective to provide a greater portion of compensation for
executives in the form of long-term equity-linked awards. During fiscal 1996,
the Committee awarded options to purchase Common Stock at an exercise price of
$6.44 per share to each of the executive officers, other than the Chief
Executive
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<PAGE> 16
Officer, in the following amounts: Mr. Herr, 12,500; Mr. Deal, 17,500; Mr.
Stone, 12,500; and Mr. Sidlowe, 4,500.
Compensation of Chief Executive Officer
The Committee believes that the compensation of the Chief Executive Officer
is consistent with its general policies concerning executive compensation and is
appropriate in light of the Company's financial objectives and performance.
Awards of intermediate and long-term incentive compensation to the Chief
Executive Officer are considered concurrently with awards to other executive
officers and follow the same general policies as such other intermediate and
long-term incentive awards.
In reviewing and approving Mr. Cigarran's fiscal 1996 compensation package,
the Compensation Committee subjectively took into account the Company's
performance in fiscal 1995 as well as the Company's continuing efforts to meet
the challenges of responding to the changing healthcare environment. Mr.
Cigarran's compensation package for fiscal 1996 was directly tied to the same
specific quantitative performance criteria as the other executive officers. In
light of these factors, the Compensation Committee determined that Mr. Cigarran
would receive an increase in his annual base compensation of 4%. In addition to
his annual base salary, Mr. Cigarran received annual incentive compensation
awards based on the same criteria as described above for other executive
officers. Specifically, Mr. Cigarran received a bonus award equal to 35% of his
annual base salary under the Bonus Plan tied to managed care penetration; a
Company contribution pursuant to the Capital Accumulation Plan for the period
September 1, 1995 through December 31, 1995 equal to 10% of his base salary for
that period of time (in addition to the fixed matching contribution required
thereunder) and earned a Company performance contribution pursuant to the
Capital Accumulation Plan for the period January 1, 1996 through August 31, 1996
equal to 8.5% of his base salary for that period of time (although this award
has not yet been contributed to his account); a matching contribution of $3,293
to the Company's 401(k) Plan on his behalf for the period January 1, 1996
through August 31, 1996; and a long-term stock-based incentive under the 1991
Plan, in the form of an option to purchase 25,000 shares of the Company's Common
Stock at an exercise price of $6.44 per share.
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code of 1986, enacted as part of the
Omnibus Budget Reconciliation Act of 1993, generally disallows a tax deduction
to public companies for compensation over $1,000,000 paid to the Chief Executive
Officer and four other most highly compensated executive officers. Under IRS
regulations, qualifying performance-based compensation will not be subject to
the deduction limit if certain requirements are met. The Compensation Committee
does not believe that any of the executive compensation arrangements for fiscal
1996 will result in the loss of a tax deduction pursuant to Section 162(m). The
Committee expects to continue to monitor the application of Section 162(m) to
executive compensation.
Respectfully submitted,
Frank A. Ehmann
Martin J. Koldyke
C. Warren Neel
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<PAGE> 17
PERFORMANCE GRAPH
The following graph compares the total stockholder return of $100 invested
on August 30, 1991 in (a) the Company, (b) the Center for Research in Security
Prices ("CRSP") Index for NASDAQ Stock Market (U.S. Companies) ("NASDAQ Stock
Index") and (c) the CRSP Index for NASDAQ Health Services Stocks ("NASDAQ Health
Services Index"), assuming the reinvestment of all dividends.
AMERICAN HEALTHCORP, INC.
COMPARATIVE CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
MEASUREMENT PERIOD NASDAQ HEALTH
(FISCAL YEAR COVERED) AMHC NASDAQSTOCKS SERVICES
<S> <C> <C> <C>
8/30/91 100.0 100.0 100.0
8/31/92 177.3 108.5 113.9
08/31/93 170.5 143.1 124.3
08/31/94 90.3 148.9 159.6
08/31/95 80.1 200.5 171.3
08/31/96 150.0 226.2 223.3
</TABLE>
Notes:
A. The lines represent annual index levels derived from compounded daily returns
that include all dividends.
B. The indexes are reweighted daily, using the market capitalisation on the
previous trading day.
C. If the monthly Interval, based on the fiscal year-end, is not a trading day,
the preceding trading day is used.
D. The index level for all series was set to $100.0 on 08/30/91.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On November 30, 1992, the Company entered into an agreement with AmSurg,
pursuant to which Thomas G. Cigarran and Henry D. Herr serve as the President
and Chief Executive Officer and Chief Financial Officer, respectively, of
AmSurg. Mr. Cigarran no longer serves as the President of AmSurg and Mr. Herr no
longer serves as Chief Financial Officer of AmSurg; however, Mr. Cigarran
continues to serve as Chairman of the Board and Chief Executive Officer. For
fiscal 1996, the Company was paid approximately $109,112 by AmSurg for these
services. Mr. Cigarran and Mr. Herr, individually, receive no direct
15
<PAGE> 18
compensation for serving in these capacities. Pursuant to the agreement, the
Company also provides certain administrative, accounting and financial services
to AmSurg with respect to the corporate office operations and each of the
ambulatory surgery centers and physician practices managed by AmSurg. The
Company is paid approximately $4,400 per year for each center and approximately
$8,800 per year for the corporate office, and each physician practice, subject
to annual adjustment. For fiscal 1996, the Company was paid $94,243 for these
services. The agreement with respect to the services of Messrs. Cigarran and
Herr will terminate upon the earliest of (a) such time as AmSurg hires a chief
executive officer and chief financial officer, (b) December 31, 1996 and (c) the
parties' mutual agreement. The agreement with respect to administrative,
accounting and financial services will terminate upon the earlier of (x)
December 31, 1996 and (y) the parties' mutual agreement. It is expected that new
agreements will be entered into on or about December 31, 1996 pursuant to which
the Company will continue to provide to AmSurg administrative, accounting and
financial services and the services of Mr. Cigarran.
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors and
greater than 10% stockholders are required by regulation of the Securities and
Exchange Commission to furnish the Company with copies of all Section 16(a)
forms they file.
Based solely on a review of the Forms 3, 4 and 5 and amendments thereto and
certain written representations furnished to the Company, the Company believes
that during the fiscal year ended August 31, 1996, all filing requirements
applicable to its officers, directors and greater than 10% beneficial owners
were complied with.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche, LLP, which was the Company's independent accountant for
fiscal 1996, has been selected as the independent public accountant of the
Company for the 1997 fiscal year. The Company has been informed that
representatives of Deloitte & Touche, LLP plan to attend the Annual Meeting.
Such representatives will have the opportunity to make a statement if they
desire to do so and will be available to respond to questions by the
stockholders.
DEADLINE FOR SUBMISSION OF STOCKHOLDER
PROPOSALS TO BE PRESENTED AT THE
1998 ANNUAL MEETING OF STOCKHOLDERS
Any proposal intended to be presented for action at the 1998 Annual Meeting
of Stockholders by any stockholder of the Company must be received by the
Secretary of the Company not later than August 19, 1997, in order for such
proposal to be considered for inclusion in the Company's Proxy Statement and
proxy relating to its 1998 Annual Meeting of Stockholders. Nothing in this
paragraph shall be deemed to require the Company to include any stockholder
proposal which does not meet all the requirements for such inclusion established
by the Securities and Exchange Commission at the time in effect.
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<PAGE> 19
METHOD OF COUNTING VOTES
Unless a contrary choice is indicated, all duly executed proxies will be
voted in accordance with the instructions set forth on the back side of the
proxy card. Abstentions and "non-votes" will be counted as present only for the
purposes of determining a quorum. Abstentions and "non-votes" will not be
counted either for or against the election of directors. Abstentions will be
treated as votes against and "non-votes" will have no effect on the outcome of
proposals presented to stockholders other than election of directors. A
"non-vote" occurs when a nominee holding shares for a beneficial owner votes on
one proposal, but does not vote on another proposal because the nominee does not
have discretionary voting power and has not received instructions from the
beneficial owner.
MISCELLANEOUS
It is important that proxies be returned promptly to avoid unnecessary
expense. Therefore, stockholders who do not expect to attend in person are
urged, regardless of the number of shares of stock owned, to date, sign and
return the enclosed proxy promptly.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED AUGUST 31, 1996 MAY BE OBTAINED, WITHOUT CHARGE, BY ANY STOCKHOLDER TO
WHOM THIS PROXY STATEMENT IS SENT, UPON WRITTEN REQUEST TO HENRY D. HERR,
SECRETARY, AMERICAN HEALTHCORP, INC., ONE BURTON HILLS BOULEVARD, NASHVILLE,
TENNESSEE 37215. COPIES OF EXHIBITS FILED WITH THE FORM 10-K ALSO WILL BE
AVAILABLE UPON WRITTEN REQUEST ON PAYMENT OF CHARGES APPROXIMATING THE COMPANY'S
COST.
Date: December 17, 1996.
17
<PAGE> 20
APPENDIX A
P R O X Y
AMERICAN HEALTHCORP, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON JANUARY 21, 1997.
The undersigned hereby appoints Thomas G. Cigarran and Henry D. Herr, and
either of them, as proxies, with full power of substitution, to vote all shares
of the undersigned as shown below on this proxy at the Annual Meeting of
Stockholders of American Healthcorp, Inc. to be held at the SunTrust Center, 5th
Floor Auditorium, 424 Church Street, Nashville, Tennessee 37219, on January 21,
1997, at 9:00 a.m., local time, and any adjournments thereof.
PROPOSAL 1: ELECTION OF DIRECTORS:
[ ] FOR all of the following nominees (except as indicated to the contrary
below):
Mr. Herr, Mr. Koldyke
WITHHOLD AUTHORITY (ABSTAIN) to vote for the following nominees (please
print name or names)
---------------------------------------------------------------------------
[ ] WITHHOLD AUTHORITY (ABSTAIN) to vote for all nominees
IN THEIR DISCRETION ON ANY OTHER MATTER WHICH MAY PROPERLY COME BEFORE SAID
MEETING OR ANY ADJOURNMENT THEREOF.
IMPORTANT: PLEASE DATE AND SIGN THIS PROXY ON THE REVERSE SIDE.
Your shares will be voted in accordance with your instructions. If no choice
is specified, shares will be voted FOR the nominees in the election of
directors.
Date: ____________________ .
PLEASE SIGN HERE
AND RETURN PROMPTLY
-----------------------------
-----------------------------
Please sign exactly as your
name appears at left. If
registered in the names of
two or more persons, each
should sign. Executors,
administrators, trustees,
guardians and attorneys
should show their full
titles. If a corporation is
stockholder, the corporate
officer should sign in full
corporate name and title,
such as President or other
officer. If a partnership is
stockholder, please sign in
partnership name by
authorized person.
- --------------------------------------------------------------------------------
IF you have changed your address, please PRINT your new address on this line.
