As filed with the Securities and Exchange Commission on April 28, 1995
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
GRAHAM-FIELD HEALTH PRODUCTS, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
GRAHAM-FIELD HEALTH PRODUCTS, INC.
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:(1)
- - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - --------------------------------------------------------------------------------
[ ] 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:
- - --------------------------------------------------------------------------------
- - --------------
(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
<PAGE>
GRAHAM-FIELD HEALTH PRODUCTS, INC.
400 RABRO DRIVE EAST
HAUPPAUGE, NEW YORK 11788
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 20, 1995
The Annual Meeting of Stockholders of Graham-Field Health Products, Inc.
(the "Company") will be held in The Media Room on the lower level of 395 North
Service Road, Melville, New York 11747 on Tuesday, June 20, 1995 at 11:00 A.M.
to:
(1) elect two Class II Directors of the Company to serve for a term of
three years;
(2) elect one Class III Director of the Company to serve until the 1996
Annual Meeting of Stockholders;
(3) consider and act upon a proposal to amend the Company's Incentive
Program, as amended (the "Program"), to increase the number of shares
of common stock, par value $.025 per share, of the Company reserved
for issuance under the Program by 600,000 shares;
(4) consider and act upon a proposal to ratify the appointment of Ernst &
Young LLP as the Company's independent auditors for the current
fiscal year;
(5) transact such other business as may properly come before the Annual
Meeting.
Only stockholders of record at the close of business on May 2, 1995 are
entitled to notice of and to vote at the Annual Meeting.
Your attention is directed to the accompanying Proxy Statement.
RICHARD S. KOLODNY
Vice President, General
Counsel and Secretary
Hauppauge, New York
May 8, 1995
STOCKHOLDERS UNABLE TO ATTEND THE ANNUAL MEETING IN PERSON ARE URGED TO DATE,
SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY IN THE ENCLOSED ADDRESSED ENVELOPE,
WHICH DOES NOT REQUIRE ANY UNITED STATES POSTAGE.
<PAGE>
GRAHAM-FIELD HEALTH PRODUCTS, INC.
400 RABRO DRIVE EAST
HAUPPAUGE, NEW YORK 11788
PROXY STATEMENT
Proxies in the form enclosed are solicited by the Board of Directors of
Graham-Field Health Products, Inc. (the "Company") for use at the 1995 Annual
Meeting of Stockholders scheduled to be held on June 20, 1995. All properly
executed proxies received prior to or at the Annual Meeting will be voted. If a
proxy specifies how it is to be voted, it will be so voted. If no specification
is made, it will be voted (1) for the election of the Board's nominees as
directors, (2) for the amendment to increase the number of shares of common
stock, par value $.025 per share (the "Common Stock"), of the Company reserved
for issuance under the Company's Incentive Program, as amended (the "Program"),
by 600,000 shares, (3) for ratification of the appointment of Ernst & Young LLP
as the Company's independent auditors for the current fiscal year, and (4) if
other matters properly come before the Annual Meeting, in the discretion of
either of the persons named in the proxy. Any stockholder giving a proxy has the
right to revoke it at any time before the proxy is voted by giving written
notice of revocation to the Secretary of the Company, by submitting a
properly-executed subsequently dated proxy or by voting in person at the Annual
Meeting.
Holders of record of the Common Stock of the Company at the close of
business on the record date of May 2, 1995 are entitled to notice of and to vote
at the Annual Meeting. On that date, there were 13,001,867 shares of Common
Stock issued and outstanding, each entitled to one vote. This Proxy Statement
and the Annual Report of the Company for its fiscal year ended December 31, 1994
are being mailed on or about May 8, 1995 to all holders of Common Stock on May
2, 1995.
As required under Section 231 of the Delaware General Corporation Law (the
"DGCL"), the Company will, in advance of the Annual Meeting, appoint one or more
Inspectors of Election to conduct the vote at the Annual Meeting. The Company
may designate one or more persons as alternate Inspectors of Election to replace
any Inspector of Election who fails to act. If no Inspector or alternate
Inspector is able to act at the Annual Meeting, the person presiding at the
Annual Meeting will appoint one or more Inspectors of Election. Each Inspector
of Election before entering the discharge of his duties shall take and sign an
oath faithfully to execute the duties of inspector with strict impartiality. The
Inspectors of Election will (i) ascertain the number of shares of Common Stock
outstanding as of the record date, (ii) determine the number of shares of Common
Stock present or represented by proxy at the Annual Meeting and the validity of
the proxies and ballots, (iii) count all votes and ballots, and (iv) certify the
determination of the number of shares of Common Stock present in person or
represented by proxy at the Annual Meeting and the count of all votes and
ballots.
The holders of a majority of the shares of Common Stock issued and
outstanding and entitled to vote at the Annual Meeting, present in person or
represented by proxy, shall constitute a quorum at the Annual Meeting. Under
Section 216 of the DGCL, any stockholder who abstains from voting on any
particular matter described herein will be counted for purposes of determining a
quorum. For purposes of voting on the matters described herein, the affirmative
vote of (i) a plurality of the shares of Common Stock present or represented at
the Annual Meeting is required to elect management's nominees as directors, (ii)
a majority of the shares of Common Stock present or represented at the Annual
Meeting is required to approve the amendment to the Program to increase the
number of shares of Common Stock reserved for issuance under the Program by
600,000, and (iii) a majority of the shares of Common Stock present or
represented at the Annual Meeting is required to ratify the selection by the
Board of Directors of Ernst & Young LLP as independent auditors of the Company
for the fiscal year ending December 31, 1995. Abstentions are considered as
shares present and entitled to vote and therefore have no legal effect with
respect to the election of directors and the same legal effect as a vote against
other matters presented at the Annual Meeting. Any shares as to which a broker
or nominee
<PAGE>
does not have discretionary voting authority under applicable New York Stock
Exchange rules will be considered as shares not entitled to vote and will
therefore not be considered in the tabulation of the votes.
No compensation will be paid by the Company to any person in connection with
the solicitation of proxies. Brokers, banks and other nominees will be
reimbursed for out-of-pocket and other reasonable clerical expenses incurred in
obtaining instructions from beneficial owners of the Common Stock. In addition
to the solicitation by mail, solicitation of proxies may, in certain instances,
be made personally or by telephone by directors, officers and a few regular
employees of the Company. It is expected that the expense of such special
solicitation will be nominal. All expenses incurred in connection with this
solicitation will be borne by the Company.
PRINCIPAL STOCKHOLDERS OF THE COMPANY
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock with respect to the persons who, to the knowledge
of the management of the Company, own beneficially more than five percent of the
Common Stock as of May 2, 1995. Beneficial ownership has been determined for
purposes of the following table in accordance with Rule 13d-3 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), under which a person is
deemed to be the beneficial owner of securities if he or she has or shares
voting power or investment power in respect of such securities or has the right
to acquire beneficial ownership within 60 days.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
NAME AND ADDRESS SHARES(1) OUTSTANDING SHARES
- - -------------------------------------------------------- --------- ------------------
<S> <C> <C>
Irwin Selinger(2)....................................... 917,491 7.0%
c/o Graham-Field Health Products, Inc.
400 Rabro Drive East
Hauppauge, New York 11788
Dimensional Fund Advisors Inc.(3)....................... 693,400 5.3%
1299 Ocean Avenue
Santa Monica, California 90401
Steinberg Asset Management Company, Inc.(4)............. 1,121,820 8.6%
12 East 49th Street
New York, New York 10017
Four Partners(5)........................................ 1,150,400 8.8%
c/o Thomas J. Tisch
667 Madison Avenue, 7th Floor
New York, New York 10021
Moses Marx(6)........................................... 647,900 5.0%
c/o United Equities Commodities
160 Broadway
New York, New York 10038
</TABLE>
- - ------------
(1) All shares are beneficially owned and the sole voting and investment power
is held by the person or entities named, except as otherwise specified
herein.
(2) The amount set forth above includes 128,768 shares currently issuable upon
the exercise of stock options issued pursuant to the Company's Incentive
Program.
(3) According to information contained in a Schedule 13G filing dated as of
January 30, 1995, with the SEC pursuant to Section 13(d) of the Exchange
Act, Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, beneficially owns 693,400 shares as of December 31, 1994, all of
which shares are held in portfolios of DFA Investment Dimensions Group,
Inc., a
(Footnotes continued on following page)
2
<PAGE>
(Footnotes continued from preceding page)
registered open-end investment company, or in a series of the DFA Investment
Trust Company, a Delaware business trust, or the DFA Group Trust and DFA
Participation Group Trust, which are investment vehicles for qualified
employee benefit plans. With respect to such entities, Dimensional serves as
investment manager. Dimensional disclaims beneficial ownership of all such
shares.
(4) According to information contained in a joint Schedule 13G filing dated as
of February 13, 1995, with the SEC pursuant to Section 13(d) of the Exchange
Act, Steinberg Asset Management Company, Inc. ("Steinberg"), a registered
investment advisor and the general partner of Steinberg Asset Management
Company, L.P. ("Steinberg L.P."), beneficially owns 1,121,820 shares, which
includes 909,915 shares beneficially owned by Steinberg L.P., 37,600 shares
beneficially owned by Michael A. Steinberg & Company, Inc., and 62,805
shares beneficially owned by Michael A. Steinberg.
(5) According to information contained in a filing dated as of August 20, 1993,
with the SEC pursuant to Section 13(d) of the Exchange Act, Four Partners
("FP"), a New York general partnership, is comprised of the following four
trusts (the "Trusts") which are the sole general partners of FP: the
Andrew H. Tisch 1991 Trust, the Daniel R. Tisch 1991 Trust, the James S.
Tisch 1991 Trust, and the Thomas J. Tisch 1991 Trust. As the managing
trustees of the trusts, Andrew H. Tisch, Daniel R. Tisch, James S. Tisch
and Thomas J. Tisch may be deemed to have indirect shared voting power and
indirect shared investment power with respect to the shares. According to
such filing, the shares were not acquired for the purpose of changing or
influencing the control of the Company.
(6) According to information contained in a joint Schedule 13D filing dated as
of January 6, 1995, with the SEC pursuant to Section 13(d) of the Exchange
Act, Moses Marx beneficially owns 647,900 shares, which includes 292,900
shares owned directly by Mr. Marx, 340,000 shares owned of record by United
Equities Commodities, in which Mr. Marx has a 99% equity interest, and
15,000 shares owned by Momar Corp., in which Mr. Marx is the sole director
and executive officer. According to such filing, Mr. Marx has the sole power
to vote and dispose of all such shares.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock with respect to the Company's directors, the
Company's "named executive officers" (the "Named Executive Officers") within the
meaning of Item 402(a)(3) of Regulation S-K, and by all of the Company's
directors and executive officers as a group, as reported to the Company as of
May 2, 1995. Beneficial ownership has been determined for purposes of the
following table in accordance with Rule 13d-3 of the Exchange Act, under which a
person is deemed to be the beneficial owner of securities if he or she has or
shares voting power or investment power in respect of such securities or has the
right to acquire beneficial ownership within 60 days.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
NAME AND ADDRESS SHARES(1) OUTSTANDING SHARES
- - -------------------------------------------------------- --------- ------------------
<S> <C> <C>
DIRECTORS:
Irwin Selinger(2)....................................... 917,491 7.0%
c/o Graham-Field Health Products, Inc.
400 Rabro Drive East
Hauppauge, New York 11788
Robert Spiegel(3)....................................... 348,148 2.7%
c/o Hoenig Group, Inc.
4 International Drive
Ryebrook, New York 10573
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
NAME AND ADDRESS SHARES(1) OUTSTANDING SHARES
- - -------------------------------------------------------- --------- ------------------
<S> <C> <C>
Louis A. Lubrano(4)..................................... 41,200 *
c/o Stires & Company, Inc.
432 Park Avenue South
New York, New York 10016
Marcel Newfield(5)...................................... 46,749 *
c/o Hub Truck Rental Corp.
94 Gazza Blvd.
Farmingdale, New York 11735
Dr. Harold Lazarus(6)................................... 3,527 *
c/o Hofstra University
Management Department
Weller Hall 228
Hempstead, New York 11550-1090
Andrew Giordano(7)...................................... 6,833 *
c/o The Giordano Group, Limited
1811 South 24th Street
Arlington, Virginia 22202-1534
Harvey P. Diamond....................................... 2 *
c/o Graham-Field Health Products, Inc.
400 Rabro Drive East
Hauppauge, New York 11788
NAMED EXECUTIVE OFFICERS:
Irwin Selinger(2)....................................... 917,491 7.0%
c/o Graham-Field Health Products, Inc.
400 Rabro Drive East
Hauppauge, New York 11788
Gary M. Jacobs(8)....................................... 37,500 *
c/o Graham-Field Health Products, Inc.
400 Rabro Drive East
Hauppauge, New York 11788
Richard S. Kolodny(9)................................... 18,000 *
c/o Graham-Field Health Products, Inc.
400 Rabro Drive East
Hauppauge, New York 11788
Beatrice Scherer (10)................................... 89,221 *
c/o Graham-Field Health Products, Inc.
400 Rabro Drive East
Hauppauge, New York 11788
Wayne J. Merdinger(11).................................. 2,850 *
54 Fifty Acre Road
Head of the Harbor, New York 11780
All directors and executive officers as a group 1,508,521 10.4%
(11 persons)(12)......................................
</TABLE>
- - ------------
* Less than 1%
(1) All shares are beneficially owned and the sole voting power and investment
power is held by the persons named.
(2) The amount set forth above includes 128,768 shares currently issuable upon
the exercise of stock options issued pursuant to the Company's Incentive
Program.
(Footnotes continued on following page)
4
<PAGE>
(Footnotes continued from preceding page)
(3) The amount set forth above includes 10,000 shares owned by the Robert &
Gail Spiegel Foundation, 5,000 shares owned by the Ike Spiegel Trust, and
45,000 shares owned by the Richard J. Spiegel Trust (1987). The amount set
forth above also includes 115,000 shares owned by Mr. Spiegel's wife and
20,000 shares currently issuable upon the exercise of directors stock
options issued pursuant to the Company's Incentive Program.
(4) The amount set forth above includes 200 shares owned by the Virginia
Lubrano Trust, and 40,000 shares currently issuable upon the exercise of
directors' stock options issued pursuant to the Company's Incentive
Program.
(5) The amount set forth above includes 20,000 shares currently issuable upon
the exercise of directors' stock options issued pursuant to the Company's
Incentive Program.
(6) The amount set forth above includes 3,333 shares currently issuable upon
the exercise of directors' stock options issued pursuant to the Company's
Incentive Program.
(7) The amount set forth above includes 3,333 shares currently issuable upon
the exercise of directors' stock options issued pursuant to the Company's
Incentive Program.
(8) The amount set forth above includes 37,500 shares currently issuable upon
the exercise of stock options issued pursuant to the Company's Incentive
Program.
(9) The amount set forth above includes 17,500 shares currently issuable upon
the exercise of stock options issued pursuant to the Company's Incentive
Program.
(10) The amount set forth above includes 62,500 shares currently issuable upon
the exercise of stock options issued pursuant to the Company's Incentive
Program.
(11) On November 2, 1994, Mr. Merdinger resigned as the President and Chief
Operating Officer of the Company and as a director of the Company. The
amount set forth above includes 1,325 shares owned by Mr. Merdinger's wife
and 200 shares owned by Mr. Merdinger's children.
(12) The amount set forth above includes 332,934 shares currently issuable upon
the exercise of stock options issued pursuant to the Company's Incentive
Program.
SECTION 16(A) REPORTING UNDER THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of Exchange Act requires the Company's officers and directors,
and persons who own more than ten percent of the Common Stock of the Company to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission ("SEC") and the exchange on which the Common Stock is listed
for trading. Officers, directors and more than ten percent stockholders are
required by regulations promulgated under the Exchange Act to furnish the
Company with copies of all Section 16(a) reports filed.
Based solely on the Company's review of copies of the Section 16(a) reports
filed for the year ended December 31, 1994, and written representations from
certain reporting persons that no Forms 5 were required for such persons for the
year ended December 31, 1994, the Company believes that all reporting
requirements applicable to its officers, directors, and more than ten percent
stockholders were complied with for the year ended December 31, 1994.
5
<PAGE>
ELECTION OF DIRECTORS
At the Annual Meeting, two Class II directors are to be elected for
three-year terms expiring in 1998. In addition, a Class III director is to be
elected for a term expiring in 1996, and until such director's successor has
been elected and qualified. Unless authority to do so is withheld, the Board of
Directors intends to vote the enclosed proxy at the Annual Meeting for the
election of the nominees named below. If any nominee for any reason should
become unavailable for election, it is intended that discretionary authority
will be exercised by either of the persons named in the enclosed proxy in
respect of the election of such other person as the Board of Directors shall
nominate. The Board of Directors is not aware of any circumstances likely to
cause any nominee to become unavailable for election.
Set forth in the following table is certain information with respect to (i)
each nominee nominated to serve as a Class II director whose term will expire in
1998; and (ii) the nominee nominated to serve as a Class III director whose term
will expire in 1996. With respect to the Class II directors, each nominee was
previously elected by the stockholders of the Company. The person nominated as a
Class III Director was elected at a Board of Directors meeting held on January
17, 1995 to fill the vacancy created by the resignation effective as of November
2, 1994 of Wayne J. Merdinger, a former Class III director.
NOMINEES
<TABLE>
<CAPTION>
CLASS II: TERM EXPIRING IN 1998
NAME AGE POSITION WITH COMPANY DIRECTOR SINCE
- - ------------------------------------ --- ------------------------------------ --------------
<S> <C> <C> <C>
Marcel Newfield..................... 56 Director 1991
Andrew A. Giordano.................. 62 Director and Member of the 1994
Executive, Audit and Compensation
Committees
CLASS III: TERM EXPIRING IN 1996
NAME AGE POSITION WITH COMPANY DIRECTOR SINCE
- - ------------------------------------ --- ------------------------------------ --------------
Harvey P. Diamond................... 41 Director and President and Chief 1995
Operating Officer
</TABLE>
DIRECTORS CONTINUING IN OFFICE
The following directors are continuing in office for the respective periods
indicated and until their successors are elected and qualified.
<TABLE>
<CAPTION>
CLASS III: TERM EXPIRING IN 1996
NAME AGE POSITION WITH COMPANY DIRECTOR SINCE
- - ------------------------------------ --- ------------------------------------ --------------
<S> <C> <C> <C>
Louis A. Lubrano.................... 61 Director and Member of the Audit 1984
Committee
Dr. Harold Lazarus.................. 68 Director and Member of the 1994
Compensation Committee
CLASS I: TERM EXPIRING IN 1997
NAME AGE POSITION WITH COMPANY DIRECTOR SINCE
- - ------------------------------------ --- ------------------------------------ --------------
Irwin Selinger...................... 54 Chairman of the Board and Chief 1981
Executive Officer; Member of the
Executive Committee
Robert Spiegel...................... 58 Director, and Member of the 1987
Executive, Audit and Compensation
Committees
</TABLE>
6
<PAGE>
Mr. Newfield was a founder, principal stockholder, director and chief
financial officer of the Company from 1981 to 1983. From 1983 through 1987, Mr.
Newfield was principally engaged as a private investor. Since 1987, Mr. Newfield
has been the Chairman of the Board of Hub Truck Rental Corp.
Mr. Giordano has been a principal of The Giordano Group, Limited, a
diversified consulting firm, since its founding in February 1993. From May 1987
to February 1993, Mr. Giordano was Executive Vice President of Lamonts Apparel,
Inc. Mr. Giordano also currently serves as a director of Cherry & Webb Inc., a
ladies specialty apparel company, and Nomos Corporation, a conformal radiation
therapy provider. In 1984, Mr. Giordano retired from his position as CEO, Naval
Supply Systems Command with the rank of Rear Admiral.
Mr. Diamond was elected President and Chief Operating Officer of the Company
on January 9, 1995, and elected as a director of the Company on January 17,
1995. Mr. Diamond has over 23 years of experience in the healthcare industry,
and was the founder and President of Diamond Medical Equipment Corp., a
manufacturer of patient aids, importer of blood pressure equipment and
distributor of a broad line of home healthcare products. In May 1992, the
Company acquired the business of Diamond Medical Equipment Corp., at which time
Mr. Diamond joined the Company as Vice President, Market Development for a
period of approximately six months. From January 1993 to January 1995, Mr.
Diamond was involved in other business ventures.
Mr. Lubrano has been a managing director of Stires & Company, Inc., an
investment banking firm, since March 1, 1991. From March 1990 to February 1991,
Mr. Lubrano was a director of the Nasdaq Forum. Prior thereto, he was a managing
director of Home Group Capital Markets, Inc., an investment banking firm. From
April 1986 to March 1989, he was President of Gabelli & Company, Inc., an
investment banking firm. He is also a director of Andersen Group, Inc., a
diversified manufacturing company.
Dr. Lazarus was the Dean of the School of Business at Hofstra University for
seven years, and is now its Mel Weitz Distinguished Professor of Business.
Currently, Dr. Lazarus serves on the Board of Directors of Stage II Apparel
Corporation and Face Lifters Home Systems, Incorporated. He served as president
of the North American Management Council, the Eastern Academy of Management, the
Middle Atlantic Association of Colleges of Business Administration, and on the
Boards of Directors of Ideal Toy Corporation, Superior Surgical Manufacturing
Company, the Academy of Management, and the World Management Council.
Mr. Selinger, a founder of the Company, has been the Chairman of the Board
and Chief Executive Officer of the Company since April 1981. Mr. Selinger was a
founder and the Chief Executive Officer of Surgicot, Inc., a manufacturer of
sterilization indicators, and its predecessor from 1968 to April 1980. In 1979,
Surgicot, Inc. was acquired by E.R. Squibb & Sons, Inc., a subsidiary of Squibb
Corporation. From April 1980 to June 1984, Mr. Selinger was a consultant to E.R.
Squibb & Sons, Inc.
Mr. Spiegel has been the Chairman of the Board, President, and Chief
Executive Officer of RJR Drug Distributors since 1984. RJR Drug Distributors is
a franchisee of Drug Emporium, Inc., a deep discount merchandiser. Mr. Spiegel
is also a director of the Hoenig Group, Inc., an institutional stock brokerage
firm.
Each of the persons listed is now serving as a director, and was previously
elected as a director by the stockholders except for Harvey P. Diamond who was
elected by the Board of Directors to fill a vacancy on the Board. No director is
related to any other director or executive officer.
7
<PAGE>
MEETINGS OF THE BOARD; COMMITTEES
The Board of Directors had ten meetings during 1994. No director attended
fewer than 75% of the meetings held in 1994 during the period in which he
served.
The Board has an Executive Committee, currently consisting of Irwin
Selinger, Andrew A. Giordano, and Robert Spiegel. For 1994, the Executive
Committee consisted of Irwin Selinger, Robert Spiegel and Ray Manno, a former
director who resigned effective as of January 17, 1995. The Executive Committee
has all the authority which, under the DGCL, may be delegated to such Committee.
The Executive Committee had four meetings during 1994. The Compensation
Committee currently consists of Dr. Harold Lazarus, Robert Spiegel, and Andrew
A. Giordano. For 1994, the Compensation Committee consisted of Robert Spiegel,
Louis A. Lubrano and Marcel Newfield. The Compensation Committee, which is
authorized to award stock options under the Company's Incentive Program, had
four meetings during 1994. The Audit Committee currently consists of Louis A.
Lubrano, Robert Spiegel and Andrew A. Giordano. The Audit Committee serves as a
focal point for communications with respect to financial accounting, reporting
and controls, and recommends the appointment of independent auditors and reviews
the audit fees. The Audit Committee met three times during 1994. The Company
does not have a nominating committee of the Board separate and apart from the
Board of Directors as a whole.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Company's Compensation Committee is a current or former
officer or employee of the Company or any of its subsidiaries, other than Marcel
Newfield, a 1994 Compensation Committee member, who was formerly employed by the
Company from 1981 to 1983. In addition, there are no other compensation
committee interlocks between the Company and other entities involving any of the
executive officers of the Company who serve as executive officers of such other
entities.
COMPENSATION OF DIRECTORS
Other than the stock options described below, directors were not paid any
fees or remuneration for services rendered in 1994 as members of the Board of
Directors or for attendance at meetings of the Board or any Board Committee,
whether or not they were employees of the Company.
Under the Company's Incentive Program, Directors' Options are granted
automatically as of January 2nd each year that the Program is in effect to each
director who is neither an employee nor officer of the Company or any of its
subsidiaries. Each Director's Option entitles the qualifying director to whom it
is granted to purchase at an option price equal to the fair market value of the
Common Stock on the date of grant the number of shares equal to (i) the Annual
Retainer for such qualified director divided by (ii) an amount to be fixed each
year by the members of the Board of Directors not eligible to receive Directors'
Options. For 1994 and 1993, the members of the Board of Directors not eligible
for Directors' Options set the denominator for the above formula at $1.00, and
the Annual Retainer at $10,000. Accordingly, for 1994 and 1993, each qualifying
director was granted options to purchase 10,000 shares at an option price equal
to the fair market value of the Common Stock on January 2, 1994 and January 2,
1993, respectively. Directors' Options vest and are exercisable at the rate of
one-third (1/3) of each grant annually. Directors' Options are exercisable in
full for a period of ninety days following (i) the death or permanent disability
of a director or (ii) a change in control of the Company. Directors' Options
terminate ten years from the date of grant or two years after a director's
termination, if other than for cause. If a director is terminated for cause, the
Directors' Options terminate immediately.
All administrative powers of the Compensation Committee with respect to
Directors' Options are exercised, in the discretion of the Board of Directors,
by an Alternate Committee composed of two persons who are not eligible to
receive Directors' Options.
8
<PAGE>
EXECUTIVE COMPENSATION
The following summary compensation table sets forth certain information
concerning the compensation of the Company's Named Executive Officers for each
of the three years during the period ended December 31, 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
AWARDS
-----------------------
ANNUAL SECURITIES
COMPENSATION UNDERLYING
------------------------------------ RESTRICTED OPTIONS TO
OTHER ANNUAL STOCK PURCHASE ALL OTHER
SALARY BONUS(1) COMPENSATION(2) AWARDS SHARES(3) COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($)
- - ----------------------------------- ---- ------- -------- --------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Irwin Selinger(4).................. 1994 200,000 -- -- -- 50,143 32,117
Chairman of the Board and Chief 1993 150,000 -- -- -- 25,000 20,255
Executive Officer 1992 150,000 45,000 -- -- 30,000 18,960
Gary M. Jacobs(5).................. 1994 120,000 -- -- -- 15,000 --
Vice President, Finance and Chief 1993 95,000 -- -- -- 10,000 --
Financial Officer 1992 32,855 6,000 -- -- 20,000 --
Richard S. Kolodny(6).............. 1994 120,000 -- -- -- 15,000 --
Vice President, General Counsel 1993 43,356 -- -- -- 20,000 --
1992 -- -- -- -- -- --
Beatrice Scherer................... 1994 110,000 -- -- -- 17,800 --
Vice President, Administration 1993 87,000 -- -- -- 10,000 --
1992 87,000 20,000 -- -- 20,000 --
Wayne J. Merdinger(7).............. 1994 160,000 -- -- -- 21,000 --
Former President and Chief 1993 120,000 -- -- -- 20,000 --
Operating Officer 1992 122,307 40,000 -- -- 25,000 --
</TABLE>
- - ------------
(1) Includes bonuses earned from participation in the Company's bonus plan (the
"Bonus Plan"). Under the Bonus Plan, all employees are entitled to share in
a fund in an amount equal to 7 1/2% of the Company's consolidated pre-tax
earnings (computed before deduction of bonuses) as reflected in the
Company's audited financial statements for each fiscal year in the following
manner: (i) the first $75,000 is distributed among all employees of the
Company, other than Mr. Selinger and the elected officers of the Company, on
a basis determined by Mr. Selinger, (ii) next, an amount is allocated among
middle management personnel on a basis of the achievement of individualized
goals and objectives established by senior management and the Company's
attainment of certain earnings levels, and (iii) the balance is allocated
among Mr. Selinger and the elected officers of the Company on a basis
determined by Mr. Selinger and approved by the Board of Directors of the
Company.
(2) The aggregate amount of Other Annual Compensation for each of the Named
Executive Officers did not equal or exceed the lesser of either $50,000 or
10% of the total of such individual's base salary and bonus, as reported
herein for the last fiscal year, and is not reflected in the table.
(3) Stock options are granted under the terms and provisions of the Company's
Incentive Program. For a description of the stock options, see "Executive
Compensation--Option Grants in Last Fiscal Year."
(4) In June 1992, the Company entered into a split-dollar life insurance
arrangement for the benefit of Irwin Selinger. During the fiscal years ended
December 31, 1994, 1993 and 1992, the Company paid the premiums on the life
insurance policy owned by a trust for the benefit of Irwin Selinger's
children on a split-dollar basis. With respect to the payment of such
premiums by the Company, the benefit to Mr. Selinger for the years ended
December 31, 1994, 1993 and 1992, projected on an
(Footnotes continued on following page)
9
<PAGE>
(Footnotes continued from preceding page)
actuarial basis was $32,117, $20,255 and $18,960, respectively, which is
included in the table above.
(5) On August 24, 1992, Mr. Jacobs joined the Company as Vice President, Finance
and Chief Financial Officer.
(6) On August 16, 1993, Mr. Kolodny joined the Company as Vice President,
General Counsel.
(7) On November 2, 1994, Mr. Merdinger resigned as the President and Chief
Operating Officer of the Company and as a director of the Company. As part
of Mr. Merdinger's severance package, Mr. Merdinger was provided with the
continued payment of his base salary of $160,000 per annum over a period of
twelve (12) months, in consideration of his agreement not to participate in
or be connected with as an officer, employee, stockholder, consultant or
agent of certain companies during such twelve (12) month period. In
addition, Mr. Merdinger was permitted to exercise his vested stock options
in accordance with the terms of such stock option agreements.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain summary information concerning the
number of stock options granted and the potential realizable value of the stock
options granted to the Company's Named Executive Officers during the fiscal year
ended December 31, 1994:
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF STOCK PRICE
SECURITIES % OF TOTAL APPRECIATION
UNDERLYING OPTIONS FOR OPTION
OPTIONS GRANTED TO EXERCISE OR TERM(2)
GRANTED IN EMPLOYEES IN BASE PRICE EXPIRATION -----------------
NAME 1994 (1) FISCAL YEAR ($/SH) DATE 5% 10%
- - --------------------------------------- ---------- ------------ ----------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Irwin Selinger......................... 25,000 14.5% 5.375 4/07/99 $37,125 $82,125
Chairman of the Board and Chief 25,143 14.5% 4.375 4/07/99 $30,423 $67,132
Executive Officer
Gary M. Jacobs......................... 15,000 9% 5.375 4/07/99 $22,275 $49,275
Vice President, Finance and Chief
Financial Officer
Richard S. Kolodny..................... 15,000 9% 5.375 4/07/99 $22,275 $49,275
Vice President, General Counsel
Beatrice Scherer....................... 15,000 9% 5.375 4/07/99 $22,275 $49,275
Vice President, Administration 2,800 1% 4.375 7/07/99 $ 3,388 $ 7,476
Wayne J. Merdinger..................... 20,000 11% 5.375 4/07/99 $29,700 $65,700
Former President and Chief Operating 1,000 1% 4.125 7/13/99 $ 1,140 $ 2,520
Officer
</TABLE>
- - ------------
(1) During the fiscal year ended December 31, 1994, stock options were granted
under the Company's Incentive Program at an exercise price equal to the fair
market value of the Common Stock on the date of grant. The stock options
have a term of five years, subject to earlier termination in the event of
termination for cause. The stock options are non-transferable, other than by
will or the laws of descent and distribution, and vest and are exercisable
at the rate of 50% per year, subject to certain exceptions including a
change of control of the Company and the death of an optionee. The stock
options may be exercised by payment of cash, shares of Common Stock or other
consideration. The Company's Incentive Program is administered by the
Compensation Committee of the Board of Directors, which is granted the
authority to amend and modify the terms and provisions of stock options
granted under the Company's Incentive Program.
(2) Represents gain that would be realized assuming the stock options were held
for the entire five-year period and the stock price increased at compounded
rates of 5% and 10%, respectively, from the exercise prices set forth in the
table. These amounts represent assumed rates of appreciation only.
(Footnotes continued on following page)
10
<PAGE>
(Footnotes continued from preceding page)
Actual gains, if any, on stock option exercises will be dependent on overall
market conditions and on the future performance of the Company. There can be
no assurance that the amounts reflected in the table will be achieved.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table provides certain summary information concerning stock
option exercises during the fiscal year ended December 31, 1994 by the Company's
Named Executive Officers and the value of unexercised stock options held by the
Company's Named Executive Officers as of December 31, 1994.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING "IN THE MONEY"
NUMBER OF OPTIONS AT FISCAL OPTIONS AT FISCAL
SHARES ACQUIRED VALUE YEAR END(2) YEAR END(3)
UPON REALIZED ---------------------------- ----------------------------
NAME EXERCISE ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ------------------------ --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Irwin Selinger.......... 50,000 $108,750 103,768 62,643 $22,500 0
Chairman of the Board
and Chief Executive
Officer
Gary M. Jacobs.......... -- -- 25,000 20,000 0 0
Vice President,
Finance and Chief
Financial Officer
Richard S. Kolodny...... -- -- 10,000 25,000 0 0
Vice President,
General Counsel
Beatrice Scherer........ 25,000 $ 58,750 55,000 22,800 $27,500 0
Vice President,
Administration
Wayne J. Merdinger...... 25,000 $ 53,125 87,500 31,000 $41,875 0
Former President and
Chief Operating
Officer
</TABLE>
- - ------------
(1) Values were calculated by multiplying the closing market price of the Common
Stock as reported on the New York Stock Exchange, Inc. on the date of
exercise, by the respective number of shares and subtracting the exercise
price per share.
(2) Represents the aggregate number of stock options held as of December 31,
1994 which can and cannot be exercised pursuant to the terms and provisions
of the stock options.
(3) Values were calculated by multiplying the closing market price of the Common
Stock as reported on the New York Stock Exchange, Inc. on December 31, 1994,
by the respective number of shares and subtracting the exercise price per
share, without any adjustment for any termination or vesting contingencies.
EMPLOYMENT, TERMINATION AND CHANGE-IN-CONTROL ARRANGEMENTS
In July 1981, Mr. Selinger entered into a ten-year employment agreement with
the Company, which, in June 1991, was amended and extended for an additional
five-year period ending July 8, 1996. As amended, Mr. Selinger's employment
agreement provides that Mr. Selinger will receive a base salary of $150,000 (or
such larger amount as the Board of Directors may authorize) subject to annual
cost of living adjustments. During the term of the employment agreement between
Mr. Selinger and the Company, and for a period of one year following termination
of the employment agreement, if termination occurs as a result of a breach of
the employment agreement by Mr. Selinger, Mr. Selinger has agreed that he will
not directly or indirectly engage in any business or invest in any privately
held
11
<PAGE>
company or own more than one percent of the outstanding securities of any
publicly owned corporation which competes with any business of the Company.
Each of the Company's Named Executive Officers have entered into an
agreement with the Company providing for the payment of certain benefits if
within two years following the occurrence of a "change in control" (as defined
in each such agreement) a Named Executive Officer of the Company is terminated
other than by reason of death, disability, retirement, or for cause, or if such
Named Executive Officer terminates his or her employment for good reason (each,
a "Triggering Event"). Under the terms of each agreement, each of the Named
Executive Officers of the Company is entitled upon the occurrence of a
Triggering Event to receive his or her base salary and incentive compensation,
if any, through the date of termination, plus a lump sum severance payment equal
to one times the Named Executive Officer's base salary (as defined in each such
agreement), provided that in no event shall the total payments exceed 2.99 times
the Named Executive Officer's "base amount" as such term is defined in Section
280G of the Code. In addition, the terms of each agreement provide that in the
event a Named Executive Officer's employment is terminated within two (2) years
following the occurrence of a change of control by reason of death or
disability, the Named Executive Officer shall be entitled to death or long-term
disability benefits, as the case may be, on terms no less favorable than the
most favorable benefits to which he would have been entitled had the death or
termination for disability occurred at any time during the period commencing one
year prior to the initiation of actions resulting in a change of control of the
Company.
12
<PAGE>
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total stockholder
return of the Common Stock of the Company for the last five years with the
cumulative total return of the Standard & Poor's 500 Stock Index and the
Standard & Poor's Medical Products and Supplies Index over the same period
assuming the investment of $100 in the Common Stock of the Company, the Standard
& Poor's 500 Stock Index and the Standard & Poor's Medical Products and Supplies
Index on December 31, 1989 (assuming the reinvestment of all dividends).
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN* AMONG GRAHAM-FIELD HEALTH
PRODUCTS, INC., THE STANDARD & POOR'S 500 STOCK INDEX AND THE STANDARD & POOR'S
MEDICAL PRODUCTS AND SUPPLIES INDEX
12/89 12/90 12/91 12/92 12/93 12/94
----- ----- ----- ----- ----- -----
GRAHAM-FIELD
HEALTH PRODUCTS
INCORPORATED 100 156 619 294 238 188
- - -------------------------------------------------------------------
S&P 500 100 97 126 136 150 152
- - -------------------------------------------------------------------
S&P MEDICAL 100 117 192 164 125 149
PRODUCTS & SUPL
- - -------------------------------------------------------------------
* ASSUMES $100 INVESTED ON DECEMBER 31, 1989 IN STOCK OR INDEX, INCLUDING
REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
13
<PAGE>
REPORT OF COMPENSATION COMMITTEE
OVERALL POLICY
The Company's executive compensation program is administered to be closely
linked to corporate performance and the total return to stockholders over the
long-term. The overall objectives of the executive compensation program are to
attract and retain the best possible executive talent, to motivate these
executives to achieve the goals inherent in the Company's business strategy, to
link executive and stockholder interests through participation in the Company's
Incentive Program and finally to provide a compensation package that recognizes
individual contributions as well as overall business results.
For 1994, the Compensation Committee reviewed the compensation of all of the
executive officers of the Company, including the individuals whose compensation
is detailed in this proxy statement. This review included a comparison of the
Company's executive compensation to a peer group of public corporations that
represents the Company's most direct competitors for executive talent. The
Compensation Committee believes that the Company's most direct competitors for
executive talent are not necessarily all of the companies that would be included
in a peer group established for comparing stockholder returns. In determining
the compensation of the executive officers (other than Mr. Selinger), the
Compensation Committee took into account the views of Mr. Selinger, the Chairman
of the Board and Chief Executive Officer.
The key elements of the Company's executive compensation consist of base
salary, an annual bonus pursuant to the Company's Bonus Plan, and the grant of
stock options under the Company's Incentive Program. The Compensation
Committee's policies with respect to each of these elements, including the basis
for the compensation awarded to Mr. Selinger are discussed below. In addition,
while the elements of compensation described below are considered separately,
the Compensation Committee takes into account the full compensation package
afforded by the Company to the individual.
BASE SALARIES
Base salaries for new executive officers are initially determined by
evaluating the responsibilities of the position held and the experience of the
individual.
Annual salary adjustments are determined by evaluating the performance of
the Company and of each executive officer, and also take into account new
responsibilities.
With respect to the base salary granted to Mr. Selinger in 1994, the
Compensation Committee took into account Mr. Selinger's individual performance
and the longevity of Mr. Selinger's service to the Company and its belief that
Mr. Selinger is an excellent representative of the Company to the public by
virtue of his stature in the community and the industry. For 1994, Mr. Selinger
was granted a base salary of $200,000.
ANNUAL BONUS
The Company's executive officers are eligible to participate in the
Company's Bonus Plan. Under the Bonus Plan, all employees are entitled to share
in a fund in an amount equal to 7 1/2% of the Company's consolidated pre-tax
earnings (computed before deduction of bonuses) as reflected in the Company's
audited financial statements for each fiscal year in the following manner: (i)
the first $75,000 is distributed among all employees of the Company, other than
Mr. Selinger and the elected officers of the Company, on a basis determined by
Mr. Selinger, (ii) next, an amount is allocated among middle management
personnel on a basis of the achievement of individualized goals and objectives
established by senior management and the Company's attainment of certain
earnings levels, and (iii) the balance is allocated among Mr. Selinger and the
elected officers of the Company on a basis determined by Mr. Selinger and
approved by the Board of Directors of the Company. As a result of the
14
<PAGE>
Company's financial performance for 1994, no bonuses were awarded to any
employees under the Company's Bonus Plan.
STOCK OPTIONS
Under the Company's Incentive Program, which was approved by the Company's
stockholders, stock options are granted to the Company's employees, including
executive officers. The Compensation Committee approves the grant of stock
options awards. In the event of poor corporate performance, the Compensation
Committee can elect not to approve the grant of stock options.
Stock options are designed to align the interests of executives with those
of the stockholders. Stock options are granted with an exercise price equal to
the market price of the Common Stock on the date of grant and generally vest and
are exercisable at the rate of 50 percent per year. This approach is designed to
incentivize the creation of stockholder value over the long term since the full
benefit of the compensation package cannot be realized unless stock price
appreciation occurs over a number of years.
In 1994 and 1993, Mr. Selinger was awarded stock options to purchase 50,143
and 25,000 shares of Common Stock, respectively.
DEDUCTIBILITY OF COMPENSATION OVER $1 MILLION
The Company has not awarded any compensation that is non-deductible under
Section 162(m) of the Code and does not anticipate doing so in the foreseeable
future. In the event that the Company determines to award compensation in any
amount in excess of the amount which may be deducted under Section 162(m) of the
Code, the Company will determine whether it will conform its compensation to
comply with such provision.
1994 Compensation Committee
Robert Spiegel
Louis A. Lubrano
Marcel Newfield
15
<PAGE>
PROPOSAL TO AMEND THE INCENTIVE PROGRAM
The Company's Incentive Program (the "Program") which was approved by the
stockholders and became effective on July 21, 1989, and amended thereafter on
June 8, 1990, June 7, 1991, and June 11, 1992, respectively, is intended to
provide the Board of Directors flexibility to adapt the compensation of key
employees in a changing business environment by making available many types of
awards, greater latitude as to the measurements of performance, and allowing for
certain awards to be contingent on the achievement of business objectives and/or
continued employment.
On March 21, 1995, the Board of Directors approved an amendment to the
Program to increase by 600,000 shares the aggregate number of shares of Common
Stock issuable under the Program from 1,500,000 to 2,100,000.
The terms of the Program provide that any increase in the number of shares
reserved for issuance requires action on the part of the stockholders of the
Company. Management believes that the goals of the Program will be better served
if additional shares are reserved under the Program; and, accordingly, proposes
that the stockholders amend the Program to increase by 600,000 shares the
aggregate number of shares of Common Stock issuable under the Program from
1,500,000 to 2,100,000. Approval of the amendment by stockholders requires the
affirmative vote of the holders of a majority of the shares represented at the
meeting and entitled to vote.
Types of Awards
The Program permits the granting of any or all of the following types of
awards: (1) stock options, including incentive stock options ("ISOs"), (2) stock
appreciation rights ("SARs"), in tandem with stock options or freestanding, (3)
restricted stock, and (4) directors' options to be issued pursuant to a
prescribed formula, and (5) restored options.
Shares Subject to Program
As of May 2, 1995, approximately 51,000 shares remain available for future
grant under the Program. After giving effect to the proposed amendment to the
Program, the number of shares of Common Stock underlying outstanding stock
options under the Program and the additional 600,000 shares to be made available
for issuance under the Program will represent approximately 9.5% of the
Company's currently issued and outstanding shares of Common Stock of the Company
on a fully-diluted basis.
Eligibility for Participation
In addition to employee directors and officers of the Company, all employees
of the Company are eligible for selection for participation under the Program;
in addition, the outside directors of the Company who are not employees are
eligible to participate solely in the non-discretionary Directors' Options
portion of the Program. The selection of participants from among employees and
officers is entirely within the discretion of the Compensation Committee of the
Board of Directors (the "Committee"). All members of the Committee are directors
who are not officers or employees and, therefore, are not eligible for awards
under the discretionary portions of the Program. It is not possible at the
present time to indicate the number, names, or positions of employees who may be
selected for participation, except outside directors who will be awarded
Directors' Options, or the extent of their participation within the Program's
limitations, since no determination has been made with respect to these matters.
Administration and Amendment of the Program
The Program is administered by the Committee, except as noted below, which
has the exclusive right, except as noted below, to interpret its provisions and
to promulgate, amend, and rescind rules and regulations for its administration.
The Board of Directors is authorized to amend the Program, except in certain
situations which would increase the maximum number of shares of Common Stock
subject to
16
<PAGE>
the Program, change the manner of determining the minimum option prices,
increase the periods during which options may be granted or exercised, or change
the employees or class of employees eligible to receive options thereunder.
Subject to the limitations in the Program described below, the Committee has
as one of its responsibilities the annual determination of the aggregate extent
to which shares of Common Stock or their equivalent may be awarded and bonuses
may be granted to all participants in relation to the then-current year. The
Committee has the further authority and responsibility for consenting to or
disapproving any election of a participant to receive cash in whole or partial
settlement of the exercise of a SAR.
Program Termination Date
The Program will terminate on the tenth anniversary of its effective date,
unless terminated earlier by the Board of Directors or unless extended by the
Board of Directors, after which time no incentive award grants may be authorized
under the Program.
Stock Options
The employees to whom options are granted, the number of shares of Common
Stock to be included in each option, the exercise price per share, and the term
of the option, will be determined by the Committee. Options are exercisable at
such time or times as determined by the Committee, but no Incentive Stock Option
("ISO") will be exercisable after the expiration of ten years from the date the
option is granted. The fair market value of shares with respect to which ISOs
are first exercisable in any one year as to any participant may not exceed
$100,000. An option for additional shares, if any, which the granting authority
may grant to an employee who in the same year has been granted the maximum
permissible ISOs, would be in the form of a non-qualified stock option not
intended to qualify as an ISO. Payment of the exercise price of a stock option
will be made in cash, shares, or other consideration in accordance with the
terms of the Program and any applicable rules of the granting authority and
valued at fair market value on the date of exercise.
Options may be granted under the Program which do not qualify for special
tax treatment under Section 422A of the Internal Revenue Code of 1986, as
amended (the "Code"). The grant of such a stock option does not result in
taxable income to the recipient. Recipients who exercise such an option will
recognize ordinary income in an amount equal to the difference between the
option price and the fair market value of the shares. The Company is not
entitled to an income tax deduction with respect to the grant of such an option
or the sale of stock acquired pursuant thereto. The Company is permitted a
deduction equal to the amount of the ordinary income the recipient is required
to recognize as a result of the exercise of such an option provided applicable
withholding requirements are met.
In the case of ISOs, although no compensation income is realized upon
exercise, the excess of the fair market value on the date of exercise over the
option price is treated by the recipient as an item of tax preference for
alternative minimum tax purposes. The Company is not entitled to an income tax
deduction with respect to ISOs.
Stock Appreciation Rights (SARs)
A SAR may be granted freestanding or in tandem with new options or
previously granted options. Upon exercise, a SAR permits the holder to receive a
number of shares having an aggregate value equal to any excess of the fair
market value of the Company's shares subject to the SAR over the grant price of
the SAR. If the SAR was granted in tandem with a stock option, upon exercise of
the SAR the option for the shares for which the SAR is exercised is surrendered.
SARs granted under the Program may be settled in cash or Common Stock at the
discretion of the Committee. In the case of optionees who are employee directors
or officers, any such cash election will be permitted only in compliance with
the applicable rule of the Securities and Exchange Commission which, in general
and as currently in effect, limits the time of such an election to ten business
days following a quarterly earnings release and requires that the election be
consented to by a disinterested corporate body such as the Committee.
17
<PAGE>
The Program allows for the continuation of this practice so that the SAR may
be deemed to have been exercised at the close of business on the business day
preceding the expiration of the SAR or related option when such SAR has positive
value and the expiration would have been caused by the passage of ten years from
the date of grant, five years from normal termination, or any earlier period
specified by the grant.
In the case of SARs granted either freestanding or in tandem with an option,
the Company is of the opinion that the employee will not realize any
compensation income at the time of grant. However, the fair market value of
stock or cash delivered pursuant to the exercise of such SARs will be treated as
compensation income taxable to the employee at the time of exercise, and the
Company will be entitled to a deduction under the Code at the time and equal to
the amount of compensation income that is realized by the employee.
Restricted Stock
The Program allows awards of restricted stock, either at no cost to the
recipient or for such cost as specified by the grant. Restricted stock may not
be disposed of by the recipient until the restrictions specified in the award
expire. The recipient will have, with respect to restricted stock, all of the
rights of a stockholder of the Company, including the right to vote the shares,
and the right to receive any cash dividends, unless otherwise specified by the
grant. Unless waived in whole or in part by the Committee, if employment of a
holder of record of restricted stock terminates but does not terminate normally,
all shares of restricted stock then held and still subject to restriction will
be forfeited by such holder and reacquired by the Company.
In the case of restricted stock, the Company is of the opinion that the
recipient will realize compensation income in an amount equal to the fair market
value of such stock less any amount paid for such stock at a time when the
recipient's rights with respect to such stock are no longer subject to a
substantial risk of forfeiture unless the recipient otherwise elects pursuant to
a special election provided in the Code. Dividends paid to the recipient during
a period of restriction will be taxable as compensation income unless the
election referred to in the preceding sentence has been made. The Company is
also of the opinion that it will be entitled to a deduction under the Code at
the time and equal to the amount of compensation income that is realized by the
recipient provided applicable withholding require-ments are met.
Directors' Options
The Program allows awards of options to directors ("Directors' Options") who
are neither employees nor officers of the Company or any of its subsidiaries.
All administrative powers of the Committee with respect to Directors' Options
may be exercised, in the discretion of the Board of Directors, by an Alternate
Committee composed of two or more persons not eligible to receive Directors'
Stock Options.
At present, Directors' Options are granted automatically as of January 2
each year that the Program is in effect to each qualified director. Each
Directors' Option entitles the qualifying director to whom it is granted to
purchase at an option price equal to the fair market value of the Common Stock
on the date of grant the number of shares equal to (i) the Annual Retainer for
such qualified director divided by (ii) an amount to be fixed each year by the
members of the Board of Directors not eligible for Directors' Options. For 1994,
the members of the Board of Directors not eligible for Directors' Options set
the denominator for the above formula at $1.00, and the Annual Retainer at
$10,000. Accordingly, for 1994, each qualifying director was granted options to
purchase 10,000 shares at an option price equal to the fair market value of the
Common Stock on January 2, 1994. Directors' Options vest at the rate of
one-third (1/3) of each grant annually.
18
<PAGE>
Restored Options
The Program permits the Company to grant "Restored Options" to a participant
in the Program who has previously been granted stock options, and who has
satisfied the exercise price of an option, or the tax obligation incurred as a
result of the exercise of an option, with previously-acquired Common Stock of
the Company.
The Program permits the Company to include a "Restored Option" feature in
option agreements entered into between the participant and the Company. This
feature enables a participant who exercises an option by exchanging (either
actually or constructively) previously-acquired Common Stock to receive a new
option, exercisable at the then market value, for the same number of shares as
were exchanged in payment. In addition, to the extent that shares are withheld
by the Company in a stock-for-stock exercise in satisfaction of a participant's
tax obligations, the Company, at its discretion, may issue a new option equal to
the number of shares so withheld which are exercisable at the then fair market
value of a share of Common Stock. Thus, the participant may make a
stock-for-stock exercise without necessarily suffering dilution in his ownership
of the Common Stock. At the same time, the participant will be able to
participate fully in any future appreciation in the Common Stock, as if the
original option had been exercised for cash.
A Restored Option will have terms substantially similar to the original
option, except that it will have an exercise price equal to the fair market
value of a share of Common Stock on the date the Restored Option is granted.
There are no federal income tax consequences to either the participant or
the Company upon the grant of a Restored Option. When a Restored Option is
exercised for cash, the participant is taxed on the difference between the
option price and the market value of the stock received. The Company's tax
deduction equals the compensation income recognized by the participant. When a
participant exercises a Restored Option by using previously acquired Common
Stock, it is treated as a two-part transaction for federal income tax purposes:
part tax-free exchange and part taxable exercise. To the extent the fair market
value of the shares surrendered equals the fair market value of the shares
received on exercise, no taxable gain is recognized, and the tax basis in the
acquired shares is equal to the tax basis the participant had in the surrendered
shares. The fair market value of the shares of Common Stock received in the
exchange in excess of the fair market value of the shares surrendered is subject
to taxation, and would have a tax basis equal to the amount the participant
includes in income. The Company's tax deduction equals the taxable income
recognized by the participant.
Adjustments
In the event of any stock split, stock dividend, or other relevant change in
capitalization, appropriate adjustment will be made in the number of shares and
the purchase price per share, if any, under any outstanding awards granted under
the Program and in determining whether a particular award may thereafter be
granted.
Additional General Provisions
No termination, suspension, modification or amendment of the Program may
adversely affect the rights of any recipient without his consent.
The Program also authorizes the Committee to amend the terms of any
outstanding award to secure compliance with applicable law, or so long as such
amendment comports with the Program, with the consent of the participant. The
Committee may adopt rules concerning the withholding of taxes payable by the
participant.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
19
<PAGE>
RATIFICATION OF APPOINTMENT
OF
THE COMPANY'S INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee of the Board of Directors,
the firm of Ernst & Young LLP has been appointed independent auditors for 1995,
subject to ratification of such appointment by the stockholders. Ernst & Young
LLP has acted as the Company's independent auditors since 1986. If the
stockholders do not ratify such appointment, the Audit Committee will recommend
another accounting firm for selection by the Board of Directors. A
representative of Ernst & Young LLP is expected to be present at the Annual
Meeting and will have an opportunity to make a statement and will be available
to answer proper questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
STOCKHOLDER PROPOSAL SUBMISSIONS
In order to be considered for inclusion in the proxy materials relating to
the 1996 Annual Meeting of Stockholders, stockholder proposals must be received
at the principal corporate office of the Company no later than January 9, 1996,
and be in compliance with the applicable regulations promulgated under the SEC.
20
<PAGE>
OTHER BUSINESS
The Board of Directors does not intend to present to the meeting any
business other than the matters stated in the Notice of the Annual Meeting of
Stockholders and, at the time the proxy statement was printed, was not aware of
any other business that properly might be presented. If any other business not
described herein should properly come before the meeting for action by the
stockholders, or if any procedural matters requiring a vote of stockholders
should arise at the meeting, the persons named as proxies on the enclosed card
or their substitutes will vote the shares represented by them in accordance with
their best judgment.
By Order of the Board of Directors
RICHARD S. KOLODNY
Vice President, General
Counsel and Secretary
Dated: May 8, 1995
21
<PAGE>
GRAHAM-FIELD HEALTH PRODUCTS, INC.
400 RABRO DRIVE EAST, HAUPPAUGE, NEW YORK 11788
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints IRWIN SELINGER and DR. HAROLD LAZARUS as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of Common
Stock of Graham-Field Health Products, Inc., held of record by the undersigned
on May 2, 1995, at the Annual Meeting of Stockholders to be held on June 20,
1995, or any adjournment thereof.
1. ELECTION OF DIRECTORS
<TABLE>
<S> <C> <C>
Class II Nominees: Marcel Newfield
Andrew A. Giordano
Class III Nominee: Harvey P. Diamond
FOR all nominees (except as marked WITHHOLD AUTHORITY to vote
to the contrary above) / / for all nominees / /
(INSTRUCTION: TO WITHHOLD VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THAT NOMINEE'S NAME
IN THE LIST PROVIDED ABOVE)
</TABLE>
2. Proposal to amend the Incentive Program.
FOR / / AGAINST / / ABSTAIN / /
3. Ratification of appointment of Ernst & Young LLP as independent auditors.
FOR / / AGAINST / / ABSTAIN / /
3. In their discretion upon any other matters which may properly come before
such meeting.
(continued on reverse side)
<PAGE>
This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. If no direction is made, this proxy will be voted
FOR the election of management's nominees for directors, FOR Proposal 2 and FOR
Proposal 3.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Dated _____________________________________, 1995
_________________________________________________
(Signature)
_________________________________________________
(Signature if held jointly)
Please sign exactly as your name
appears hereon. When shares are held by
joint tenants, both should 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.
