<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] 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 Section 240.14a-11(c) or Section 240.14a-12
SAFEGUARD HEALTH ENTERPRISES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
SAFEGUARD HEALTH ENTERPRISES, INC.
505 NORTH EUCLID STREET, ANAHEIM, CALIFORNIA 92801
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD WEDNESDAY, MAY 24, 1995
Notice is hereby given that the Annual Meeting of Stockholders of Safeguard
Health Enterprises, Inc., a Delaware Corporation (the "Company") will be held at
the executive offices of the Company, located at 505 North Euclid Street, Fourth
Floor, Anaheim, California 92801 on Wednesday, May 24, 1995, at 4:00 o'clock
p.m., Pacific Daylight Time, for the following purposes:
1. To elect three directors to serve for a three-year term expiring in
1998 and until their respective successors are duly qualified and
elected; and
2. To transact such other business as may properly come before the meeting
or any adjournments thereof.
In accordance with the Bylaws of the Company, the Board of Directors has
fixed the close of business on Friday, March 31, 1995, as the record date for
determination of stockholders entitled to notice of and to vote at the Annual
Meeting or any adjournments thereof.
Representation of at least a majority of all outstanding shares of the
Company's Common Stock is required to constitute a quorum. Accordingly, it is
important that your stock be represented at the meeting. WHETHER OR NOT YOU PLAN
TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD
AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE TO BE SURE THAT YOUR SHARES ARE
VOTED. No proxy will be used if the stockholder is personally present at the
Annual Meeting and expresses a desire to vote such shares in person.
BY ORDER OF THE BOARD OF DIRECTORS,
RONALD I. BRENDZEL
Secretary
April 20, 1995
Anaheim, California
<PAGE>
SAFEGUARD HEALTH ENTERPRISES, INC.
505 NORTH EUCLID STREET, ANAHEIM, CALIFORNIA 92801
PROXY STATEMENT
ANNUAL MEETING: MAY 24, 1995
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of SAFEGUARD HEALTH ENTERPRISES, INC., a Delaware
corporation (the "Company"), of proxies to be voted at the Annual Meeting of
Stockholders (the "Annual Meeting") which will be held at the executive offices
of Safeguard Health Enterprises, Inc., 505 North Euclid Street, Fourth Floor,
Anaheim, California 92801 on Wednesday, May 24, 1995, at 4:00 o'clock p.m.,
Pacific Daylight Time, and any adjournments or postponements thereof. This Proxy
Statement, Notice of Annual Meeting of Stockholders and enclosed proxy card are
being mailed to stockholders on or about April 20, 1995.
This Proxy Statement differs in form and content from the Company's prior
Proxy Statements reflecting recent changes to the Securities and Exchange
Commission's rules on executive compensation disclosure.
COSTS OF SOLICITATION OF PROXIES
The entire cost of soliciting proxies will be borne by the Company.
Arrangements may be made with brokerage houses and other custodians, nominees
and fiduciaries to send proxies and proxy material to the beneficial owners of
stock and such persons may be reimbursed for their expenses. Proxies may be
solicited by directors, officers or employees of the Company in person or by
telephone or telegraph. No additional compensation will be paid to these
individuals for such services. Except as described above, the Company does not
intend to solicit proxies other than by mail. This Proxy is being solicited on
behalf of the Board of Directors. The Company may also reimburse nominee
holders and their agents for any direct costs that they may incur in obtaining
from their stockholders authorizations to execute proxies.
OUTSTANDING SECURITIES AND VOTING RIGHTS; REVOCABILITY OF PROXIES
The close of business on March 31, 1995 was the record date for
stockholders entitled to notice of and to vote at the Annual Meeting. As of
that date, there were 4,464,503 shares of the Company's Common Stock, $.01 par
value (the "Common Stock"), issued and outstanding, not including those shares
held as treasury stock. All of the shares of the Company's Common Stock
outstanding on the record date, are entitled to vote at the Annual Meeting.
Under the General Corporation Laws of the State of Delaware, each share is
entitled to one vote which means a simple majority of the voting shall be
sufficient to vote for all proposals.
A stockholder giving a proxy pursuant to the present solicitation may
revoke it at any time before it is exercised by giving a subsequent proxy or by
delivering to the Secretary of the Company a written notice of revocation prior
to the voting of the proxy at the Annual Meeting. No proxy will be used if the
stockholder is personally present at the Annual Meeting and expresses a desire
to vote such shares in person.
The purpose of the Annual Meeting and the matters to be acted upon are set
forth in the preceding Notice of Annual Meeting of Stockholders. Shares of the
Company's Common Stock represented by proxies in the accompanying form which are
properly executed and returned will be voted at the Annual Meeting of
Stockholders in accordance with the stockholders' instructions contained
therein. In the absence of contrary instructions, shares represented by such
proxies will be voted FOR all proposals herein. As of the date of this Proxy
Statement, the Board of Directors knows of no other business which will be
presented for consideration at the Annual Meeting
1
<PAGE>
other than is set forth herein. However, if any such other business shall
properly come before the Annual Meeting, votes will be cast pursuant to said
proxies in respect of any such other business in accordance with the judgment of
the persons acting thereunder. The enclosed proxy confers discretionary
authority with respect to any other proposals which properly may be brought
before the Meeting.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
Board of Directors and Nominees
The nominees for the Board of Directors are Ronald I. Brendzel, a current
officer and director, Michael M. Mann, Ph.D., a current director, constituting
all of the Directors of Class II of the Company's three classes of directors,
and Bradford M. Boyd, D.D.S., not presently a member of the Board of Directors.
At the Company's meeting of the Board of Directors held in March 1995, the
number of members of the Board of Directors was increased from six to seven.
Mr. Brendzel, Dr. Mann and Dr. Boyd have been nominated to serve as Class II
Directors for a three-year term and until their successors are duly qualified
and elected. The proxy holders intend to vote all proxies received by them in
the accompanying form for the nominees unless otherwise instructed. In the
event any nominee is unable or declines to serve as a director at the time of
the Annual Meeting, the proxies will be voted for any nominee who shall be
designated by the present Board of Directors to fill the vacancy. In the event
that additional persons are nominated for election as directors, the proxy
holders intend to vote all proxies received by them for Mr. Brendzel, Dr. Mann,
and Dr. Boyd. As of the date of this Proxy Statement, management has no reason
to believe that any nominee will be unavailable.
The following information sets forth biographical information as of March
31, 1995, of the nominees for director and of other directors who will continue
in office after the Annual Meeting:
<TABLE>
<CAPTION>
DIRECTOR CLASS AND YEAR
NAME AGE PRINCIPAL OCCUPATION SINCE TERM EXPIRES
- ----------------------------- --- ----------------------- -------- --------------
<S> <C> <C> <C> <C>
Alvin M. Baileys 72 Chairman and Chief Executive Officer of 1974 Class I/1997
the Company
Steven J. Baileys, D.D.S. 41 Vice Chairman, President and Chief 1974 Class III/1996
Operating Officer of the Company
Ronald I. Brendzel, J.D. 45 Senior Vice President, Secretary and 1989 Class II/1995
Treasurer of the Company
Michael M. Mann, Ph.D. 55 President, Blue Marble Development 1987 Class II/1995
Group, Inc.
William E. McKenna 75 General Partner, MCK Investment 1983 Class I/1997
Company
George H. Stevens 41 President, Belle Haven Marina, Inc. 1989 Class III/1996
Bradford M. Boyd, D.D.S. 44 Dentist, Bradford M. Boyd, D.D.S - (1)
</TABLE>
(1) Dr. Boyd was selected by the Nominating Committee of the Board of Directors
to stand for election as a Class II Board Member with a proposed term to
expire in 1998.
Mr. Baileys is a founder of the Company and has served as its Chairman of
the Board and Chief Executive Officer since its inception in 1974. He is the
father of Steven J. Baileys, D.D.S., Vice Chairman, President, Chief Operating
Officer and a Director of the Company, and the father-in-law of Ronald I.
Brendzel, Senior Vice President, Treasurer, Secretary and a Director of the
Company.
2
<PAGE>
Dr. Baileys is Vice Chairman, President, Chief Operating Officer and a
Director of the Company. He has been President and Chief Operating Officer since
1981 and Vice Chairman since 1985. From 1975 until 1981, Dr. Baileys served in a
variety of executive and administrative capacities with the Company. Dr. Baileys
is also licensed to practice dentistry in the State of California.
Mr. Brendzel is Senior Vice President, Treasurer, Secretary and a Director
of the Company. He was Vice President-Corporate Development from August 1980 to
April 1986, General Counsel from August 1980 to May 1987 and held various
executive and administrative positions from July 1978 until August 1980. Mr.
Brendzel is a member of the California State Bar and is licensed to practice law
in the State of California. He is also a member of the California Knox-Keene
Health Care Service Plan Advisory Committee, which assists the California
Department of Corporations in regulating prepaid health care plans. Mr. Brendzel
is also a former member of the Texas Health Maintenance Organization Solvency
Surveillance Committee which assists the Texas Department of Insurance in
regulating health maintenance organizations.
Dr. Mann has been a Director of the Company since May 1987. He is also
President of Blue Marble Development Group, Inc., an international corporate
development and consulting group. During the period from September 1987 to July
1988, Dr. Mann was a Senior Consultant of Arthur D. Little, Inc. From August
1986 until September 1987, Dr. Mann was a partner of Mann, Kavanaugh, Chernove &
Associates, a business development firm. He was President, Chief Executive
Officer and a director of Helionetics, Inc., a defense, energy and signal
information processing company, from December 1984 to July 1986, and Executive
Vice President from April to December 1984. Dr. Mann is currently a director of
Datum, Inc. and Management Technology, Inc.
Mr. McKenna has been a Director of the Company since September 1983.
Since December 1977, Mr. McKenna has been a general partner of MCK Investment
Company, a private investment company. Mr. McKenna was Chairman of the Board of
Technicolor, Inc. from 1970 to 1976 and was formerly Chairman of the Board and
Chief Executive Officer of Hunt Foods & Industries, Inc. and its successor,
Norton Simon, Inc. From 1960 to 1967, Mr. McKenna was associated with Litton
Industries, Inc. as a Director and in various executive capacities. He is
currently a Director of California Amplifier, Inc., Calprop Corporation, Drexler
Technology Corporation, Midlantic Corporation, Midlantic National Bank, WMS
Industries, Inc., and Williams Hospitality Group, Inc.
Mr. Stevens has been a director of the Company since May 1989. Since 1982,
he has been President of Belle Haven Marina, Inc., a privately held leisure and
recreational organization located in Virginia. He is also President of Kingfish
Corporation, a privately held corporation which is engaged in the business of
chartering pleasure yachts in the mid Atlantic region. Mr. Stevens is also the
owner of Mariner Sailing School located in Virginia. Mr. Stevens' combined
organization is the largest operator of recreational vessels in the Washington
D.C. area.
Dr. Boyd is a licensed dentist and sole proprietor of Bradford M. Boyd,
D.D.S. in Lancaster, California. Dr. Boyd also is a private investor. He is a
member of the American Dental Association, California Dental Association, serves
on various committees of the associations, and is President of the San Fernando
Valley Dental Society. He is also a member of the Board of Directors of High
Desert Children's Dental, a charity organization providing free services to
underprivileged children.
THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors conducted five meetings during fiscal year 1994.
All of the persons who were Directors of the Company during fiscal year 1994
attended at least 75% of (i) the total number of Board of Director meetings and
(ii) the total number of meetings held by the committee on which they served
during fiscal year 1994.
Compensation of Directors
Directors who were not otherwise employed by the Company were paid an
annual fee of $15,000 during fiscal 1994. Each non-employee Board member,
pursuant to the Company's Automatic Option Grant program, received an automatic
option grant on November 14, 1994 to purchase 2,000 shares of the Company's
Common
3
<PAGE>
Stock under its Stock Option Plan with an exercise price of $9.00 per share, the
market price of the Common Stock on the grant date. Each option has a maximum
term of ten years and will become exercisable for all of the option shares upon
the optionee's completion of one year of Board service measured from the grant
date.
Audit Committee
The Audit Committee is composed of Messrs. McKenna and Mann and is chaired
by Mr. McKenna. The Audit Committee met three times in fiscal 1994. The
functions performed by the Audit Committee include recommendations to the Board
of Directors regarding the selection of independent accountants to serve the
Company for the ensuing year, reviewing with the independent accountants and
management the general scope and results of the Company's annual audit, the fees
charged by the independent accountants and other matters relating to internal
control systems. In addition, the Audit Committee is responsible for reviewing
and monitoring the performance of non-audit services by the Company's auditors
and for recommending the engagement or discharge of the Company's independent
accountants.
Nominating Committee
The Nominating Committee consists of Messrs. McKenna, Mann and Stevens and
chaired by Dr. Mann. The primary responsibilities of the Nominating Committee
are to consider and make recommendations to the full Board of Directors of
candidates to serve as Directors of the Company. The Nominating Committee met
on March 27, 1995 and recommended Ronald I. Brendzel, Michael M. Mann and
Bradford M. Boyd, D.D.S. to serve as Directors of the Company. All members of
the Nominating Committee attended this meeting. The Nominating Committee will
not consider nominees recommended by stockholders.
Compensation Committee
The Company's Compensation Committee is composed of Messrs. Baileys, Mann,
McKenna and Stevens and is chaired by Mr. Baileys. All members of the
Compensation Committee are non-employee directors, with the exception of Mr.
Baileys who is an officer of the Company. The Committee is responsible for
approving and reporting to the Board of Directors on the annual compensation for
all officers, including salary and perquisites. There were no meetings held by
the Committee during fiscal 1994.
Stock Option Committee
The Stock Option Committee consists of Messrs. McKenna, Mann and Stevens
and is chaired by Mr. McKenna. All members of this Committee are non-employee
directors of the Company. The Committee is primarily responsible for the
administration of the Company's Employee Stock Option Plan and Employee Stock
Purchase Plan. There were no meetings held by the Committee during fiscal
1994.
CERTAIN TRANSACTIONS
Since January 1, 1983, the Company has leased property for a dental office
located in Riverside, California from Community Dental Properties
("Properties"), a general partnership of which Alvin M. Baileys, Steven J.
Baileys, D.D.S., Ronald I. Brendzel, and other former employees of the Company
are partners. The partnership interests are as follows: Mr. Baileys, 35.84%;
Dr. Baileys, 10%; Mr. Brendzel, 2.5%; and other former employees of the Company,
51.66%. The lease requires monthly payments of $1,200. The lease is for a term
through December 31, 1995. During fiscal 1994, the Company paid Properties
$13,200 under the lease.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of the Common Stock
of the Company as of March 31, 1995 by each director, each executive officer
named in the Summary Compensation Table below and all current directors and
officers as a group. All shares are subject to the named person's sole voting
and investment power, except where otherwise indicated.
4
<PAGE>
<TABLE>
<CAPTION>
SHARES APPROXIMATE
BENEFICIALLY PERCENT OF
NAME OWNED (1) CLASS
- ------------------------------------- ------------ -----------
<S> <C> <C>
Alvin M. Baileys (2) 813,461 18.2
Steven J. Baileys, D.D.S. (3) 816,666 18.3
Ronald I. Brendzel, J.D. (4) 161,573 3.6
William E. McKenna (5) 22,500 *
Kent D. Rademacher (6) 19,999 *
Michael M. Mann, Ph.D. (7) 15,000 *
George H. Stevens (8) 10,000 *
Wayne K. Butts (9) 5,000 *
All current officers and directors
as a group (9 persons) 1,864,199 41.8
* Less than 1%
</TABLE>
(1) Some of the stockholders included in this table reside in states having
community property laws under which the spouse of a stockholder in whose
name securities are registered may be entitled to share in the management of
their community property which may include the right to vote or dispose of
such shares, and includes options to purchase 448,666 shares of Common Stock
exercisable as of March 31, 1995, or within 60 days thereafter.
(2) These shares held of record by the Baileys Family Trust over which Alvin
M. Baileys shares voting and investment power with the Trustee of the Trust,
and includes options to purchase 158,667 shares of Common Stock. The amount
indicated does not include 190,306 shares of Common Stock held in various
Trusts for the benefit of Mr. Baileys' grandchildren, or 150,000 shares of
Common Stock held by the Alvin and Geraldine Baileys Foundation. Mr. Baileys
disclaims beneficial ownership of such shares held in Trust for his
grandchildren, and held by the aforementioned Foundation.
(3) Includes options to purchase 171,666 shares of Common Stock.
(4) Includes options to purchase 50,000 shares of Common Stock.
(5) Includes options to purchase 15,000 shares of Common Stock.
(6) Represents options to purchase 19,999 shares of Common Stock.
(7) Represents options to purchase 15,000 shares of Common Stock.
(8) Represents options to purchase 10,000 shares of Common Stock.
(9) Represents options to purchase 5,000 shares of Common Stock.
5
<PAGE>
COMPLIANCE WITH SECTION 16(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Act of 1934 (the "Exchange Act") requires
the Company's directors and executive officers, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file by
specific dates with the Securities and Exchange Commission (the "SEC") initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company on Forms 3, 4 and 5. Officers, directors
and greater than ten-percent stockholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file. The
Company is required to report any failure to file by the relevant due date any
of these reports based solely on the Company's review of copies of such reports
furnished to it and written representations received by the Company that the
filing of a Form 5 was not required. Based upon this review, the Company is not
aware of any person who at any time during 1994, was a director, officer or a
beneficial owner of more than ten percent of any class of equity securities of
the Company registered pursuant to the Exchange Act that failed to file on a
timely basis reports required by Section 16(a) of the Exchange Act during 1994.
PRINCIPAL STOCKHOLDERS
The following table sets forth information with respect to those persons
who, to the Company's knowledge, beneficially owned 5% or more of the Company's
Common Stock as of March 31, 1995, except with respect to Dimensional Fund
Advisors, Inc., Brinson Partners, Inc., T. Rowe Price Associates, Inc. and
College Retirement Equities Fund, which are stated as of December 31, 1994,
based on filings made with the Securities and Exchange Commission. For purposes
of this Proxy Statement, beneficial ownership of securities is defined in
accordance with the rules and regulations of the Securities and Exchange
Commission and generally means the power to vote or dispose of securities
regardless of any economic interest therein.
<TABLE>
<CAPTION>
APPROXIMATE
AMOUNT AND NATURE
OF BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER OWNERSHIP (1) OF CLASS
- -------------------------------------- ------------------ --------
<S> <C> <C>
Baileys Family Trust (2)(3) 813,461 18.2
Steven J. Baileys, D.D.S. (2)(4) 816,666 18.3
Brinson Partners, Inc. (5) 477,000 10.7
T. Rowe Price Associates, Inc. (6) 434,000 9.7
Dimensional Fund Advisors, Inc. (7) 320,800 7.2
College Retirement Equities Fund (8) 233,700 5.2
</TABLE>
(1) Except as otherwise stated herein, the persons and entities named in the
table have sole voting and investment power with respect to all shares of
Common Stock shown as beneficially owned by them, subject to community
property laws where applicable, and include all shares held of record on
March 31, 1995, and shares subject to options outstanding and exercisable
within 60 days thereafter.
(2) The address of each such person is c/o Safeguard Health Enterprises,
Inc., 505 North Euclid Street, P.O. Box 3210, Anaheim, California 92803-
3210.
6
<PAGE>
(3) Alvin M. Baileys, an officer and director of the Company, shares voting
and investment power with respect to the shares indicated with the Baileys
Family Trust. The shares indicated include options to purchase 158,667
shares of Common Stock. The amount indicated does not include 190,306 shares
of the Company's Common Stock held in various trusts for the benefit of Mr.
Baileys' grandchildren, or 150,000 shares of Common Stock held by the Alvin
and Geraldine Baileys Foundation. Mr. Baileys disclaims beneficial ownership
of such shares held in trust for his grandchildren, and held by the
aforementioned Foundation.
(4) Steven J. Baileys, D.D.S., an officer and director of the Company, has
sole voting and investment power with respect to the shares indicated. The
shares indicated include options to purchase 171,666 shares of Common Stock.
(5) Brinson Partners, Inc. ("BPI"), a wholly owned subsidiary of Brinson
Holdings, Inc. ("BHI") and Brinson Trust Company ("BTC"), a wholly owned
subsidiary of BPI, Three First National Plaza, Chicago, Illinois, 60602-4298
have sole voting and dispositive power of 199,869 shares and 277,131 shares,
respectively, of the Company's Common Stock. A Schedule 13G was filed on
February 9, 1995, with the Securities and Exchange Commission with respect
to the shares acquired.
(6) These securities are owned by various individual and institutional
investors including T. Rowe Price Small Cap Value Fund, Inc., which owns
434,000 shares of the Company's Common Stock, and T. Rowe Price Associates,
Inc. which owns 34,000 shares of the Company's Common Stock, representing a
total of 9.7% of the shares outstanding, which T. Rowe Price Associates,
Inc. ("Price Associates") serves as investment advisor with power to direct
investments and/or sole power to vote the securities. For purposes of the
reporting requirements of the Securities Exchange Act of 1934, Price
Associates is deemed to be a beneficial owner of such securities; however,
Price Associates expressly disclaims that it is, in fact, the beneficial
owner of such securities. A Schedule 13G was filed on February 14, 1995,
with the Securities and Exchange Commission with respect to the shares
acquired The address of T. Rowe Price Associates, Inc. is 100 E. Pratt
Street, Baltimore, Maryland 21202.
(7) Dimensional Fund Advisors, Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 320,800 shares of the
Company's common stock as of December 31, 1994, all of which shares are held
in portfolios of DFA Investment Dimensions Group Inc., a registered open-end
investment company, the DFA Investment Trust Company, a registered open-end
investment company, or the DFA Group Trust and the DFA Participating Group
Trust, investment vehicles for qualified employee benefit plans, all of
which Dimensional serves as investment manager. Dimensional expressly
disclaims beneficial ownership of such shares. Dimensional is located at
1299 Ocean Avenue, 11th Floor, Santa Monica, California 90401. A Schedule
13G was filed on February 9, 1995 with the Securities and Exchange
Commission with respect to the shares acquired.
(8) College Retirement Equities Fund, located at 730 Third Avenue, New York,
New York 10017-3206, has sole voting and investment power with respect to
the shares indicated. A Schedule 13G statement was filed on February 10,
1995, with the Securities and Exchange Commission with respect to the shares
acquired.
7
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table discloses compensation received by the Company's
Chief Executive Officer and the four remaining most highly paid executive
officers for the previous three fiscal years ended December 31, 1994, 1993 and
1992.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
------------------- ------------
Name and Principal Position Year Salary ($) Bonus ($) Options (#)
- ---------------------------------------- ----- ------------------- --------- ------------
<S> <C> <C> <C> <C>
Alvin M. Baileys, Chairman of the 1994 300,000 * *
Board and Chief Executive Officer 1993 300,000 * 35,000
1992 300,000 * *
Steven J. Baileys, D.D.S., 1994 300,000 20,000 *
Vice Chairman, President and 1993 300,000 7,750 45,000
Chief Operating Officer 1992 300,000 * *
Kent D. Rademacher, Senior Vice 1994 200,000 15,000 *
President, Director of Dental Office 1993 200,000 10,000 30,000
Operations 1992 175,000 * 5,000
Ronald I. Brendzel, J.D., Senior 1994 152,004 10,000 *
Vice President, Treasurer and 1993 146,000 7,500 20,000
Secretary 1992 140,000 * *
Wayne K. Butts, Senior Vice 1994 95,000 2,500 *
President, Director Client Services 1993 95,000 * 10,000
1992 95,000 * *
* NONE
</TABLE>
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
The Company has a written employment agreement with Alvin M.
Baileys. The employment agreement for Mr. Baileys is for a term through December
31, 1996 and provides for an annual salary of $300,000. The Company may
terminate the employment agreement for cause. In addition, in the event of the
purchase of 33 1/3% or more of the outstanding shares of the Company's Common
Stock pursuant to any tender or exchange offer by any person other than the
Company, the employee has the option of terminating the employment agreement and
not being bound by the terms and conditions of the non-competition clause
contained in each such employment agreement. In the event of termination of the
employment agreement, neither the employee nor the Company have any continuing
obligations under such agreement.
8
<PAGE>
STOCK OPTIONS
The following table contains information concerning the grant of
stock options during the fiscal year ended December 31, 1994 to the named
executives:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock Price
Appreciation
Individual Grants for Option Term
- ---------------------------------------------------------------------------- -----------------------------------
% of Total
Number of Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees Base Price Expiration Grant Date
Name Granted in Fiscal Year ($/Share) Date 5%($) 10%($) Present Value($)
- ------------------------- -------------------- --------------- ----------- ---------- ----- ------ ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Alvin M. Baileys -0- -0- -0- -0- -0- N/A N/A
Steven J. Baileys, D.D.S. -0- -0- -0- -0- -0-
Kent D. Rademacher -0- -0- -0- -0- -0-
Ronald I. Brendzel, J.D. -0- -0- -0- -0- -0-
Wayne K. Butts -0- -0- -0- -0- -0-
</TABLE>
OPTION EXERCISES AND HOLDINGS
The following table provides information with respect to the named
executive officers and indicated groups concerning the exercise of options
during fiscal year December 31, 1994 and unexercised options held as of December
31, 1994.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR 1994
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Unexercised In-the-Money
Options at FY-End(#) Options at Fy-End($)
Shares Acquired Exercisable(E)/ Exerciseable(E)/
Name on Exercise (#) Value Realized($) Unexercisable(U) Unexercisable(U)(1)(2)
- ------------------------- --------------- ---------------- ----------------------- ------------------------
<S> <C> <C> <C> <C>
Alvin M. Baileys -0- -0- 158,667/23,333 147,000/0
Steven J. Baileys, D.D.S. 50,000 448,250 171,666/23,334 150,000/0
Kent D. Rademacher -0- -0- 19,999/15,001 3,333/1,667
Ronald I. Brendzel, J.D. -0- -0- 40,000/10,000 30,000/0
Wayne K. Butts 6,667 65,003 4,000/6,000 -0-
All current executive officers as
a group (8 persons) 70,001 592,845 374,000/95,000 330,333/1,667
All current directors who are
not executive officers as a -0- -0- 40,000/12,000 34,000/6,000
group (3 persons)
All employees, who are not
executive officers as a group
(5 persons) -0- -0- 4,667/9,333 -0-
</TABLE>
(1) Assumes a price per share of $9.25 as of December 31, 1994. Gains are
reported net of the option exercise price but before taxes associated with
exercise. Actual gains, if any, on stock option exercises are dependent on
future performance of the Common Stock, as well as the optionee's continued
employment throughout the vesting period.
(2) No stock appreciation rights were outstanding at the end of the 1994 fiscal
year or exercised during that year.
9
<PAGE>
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Compensation Philosophy
The Compensation Committee of the Board of Directors has the responsibility
for establishing the base salary of the Executive Officers and approving the
bonus grants made to these individuals. The Committee's decisions will,
however, be subject to review by the full Board of Directors. Option grants to
Executive Officers are made under the Company's Stock Option Plan by the Stock
Option Committee. The membership of this latter committee is the same as that
of the Compensation Committee, except that Mr. Baileys does not serve on the
Stock Option Committee.
The Company applies a consistent philosophy to compensation for all
employees, including senior management. This philosophy is based on the premise
that the achievements of the Company result from the coordinated efforts of all
individuals working toward common objectives. The Company strives to achieve
those objectives through teamwork focused on meeting the expectation of its
clients and stockholders.
Since its inception, the Company has maintained the philosophy that
executive compensation levels should be competitive and consistent with that
provided to others in the managed health care industry to assist the Company in
attracting and retaining qualified executives critical to the Company's long
term success. The Compensation Committee will follow this philosophy in setting
the compensation levels for the Executive Officers. Accordingly, the
compensation package of each Executive Officer will continue to be comprised of
three elements: (i) base salary which reflects individual performance and
contribution to the Company, (ii) annual bonus awards payable in cash and tied
to the Company's achievement of financial targets, and (iii) long-term stock
based incentive awards designed to strengthen the mutuality of interests between
the Executive Officers and the Company's stockholders.
Cash Based Compensation
Consistent with the Company's position, the Committee's approach to base
compensation is to offer competitive salaries in comparison with market
practices. Salary decisions are based on an annual review considering the
decision-making responsibilities of each position and the experience, work
performance, and team-building skills of position incumbents. No increases were
made to salaries of any Executive Officer during the fiscal 1994.
The Compensation Committee did not provide for any qualifying compensation
to be paid to any Executive Officer for deductibility under Section 162(m) of
the Internal Revenue Code for 1994. The Compensation Committee has not provided
for such qualifying compensation and does not intend on providing for such
qualifying compensation to its Executive Officers in the foreseeable future.
The compensation of the Chief Executive Officer for the fiscal year ending
December 31, 1994 was determined pursuant to a three year employment agreement
entered into prior to the fiscal year.
10
<PAGE>
The cash salary of each of the other Executive Officers is determined by
the individual's performance and past and potential contributions to the
Company. This particular component of executive compensation is not affected to
any significant extent by the Company performance factors. However, the
Compensation Committee believes that the Company's use of stock options as the
main supplement to base salary, results in the compensation of its Executive
Officers and other key employees as being related to the Company's performance.
Bonuses. The Compensation Committee, through recommendations to and
-------
approval by the Board of Directors, has in the past and may in the future,
authorize the payment of discretionary bonus compensation based upon an
assessment of an individual's exceptional contributions to the Company. Bonuses
are based upon the overall achievement in increasing the Company's revenue, its
level of profitability and increasing the number of members covered by the
benefit plans provided by the Company during 1994, notwithstanding the overall
decline in the economy in many of the markets in which the Company operates. In
1993, the Compensation Committee recommended bonus compensation to several
Executive Officers as set forth on the Summary Compensation Table, paid in 1994.
As a general matter, the Compensation Committee endorses the philosophy
that executive compensation should reflect company performance. The Company, to
date, has not yet adopted any compensation plans which are tied directly to
Company performance by formula.
Equity Based Compensation
The Executive Officers have, from time to time, received option grants
under the Company's Stock Option Plan. The purpose of this plan is to provide
such individuals with additional incentives to maximize stockholder value. The
Stock Option Plan also utilizes vesting periods to encourage key employees to
continue in the employ of the Company. The size of the option grant to each
Executive Officer is set at a level which is intended to create a meaningful
opportunity for stock ownership based upon the individual's current position
with the Company and may also be based in part upon Company performance factors
such as earnings per share and revenue growth. However, the extent to which
these latter factors are taken into consideration will vary from individual to
individual in the Stock Option Committee's sole discretion. In 1994, the
Compensation Committee did not grant any stock options to any Executive Officer.
COMPENSATION COMMITTEE
Michael M. Mann
William E. McKenna
George H. Stevens
Alvin M. Baileys
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Each member of the Compensation Committee, other than Mr. Baileys, is a
non-employee director who has not previously been an officer or employee of the
Company. Mr. Baileys, the Company's Chief Executive Officer and Chairman of the
Board, is excluded from participation in any Compensation Committee
deliberations relating to his own compensation.
11
<PAGE>
PERFORMANCE GRAPH
The following information compares the yearly percentage change in the
Company's cumulative total stockholder return on stock with (i) the cumulative
total return of the NASDAQ market index and (ii) the cumulative total return of
the NASDAQ Health Services Industry Index over the period December 31, 1989
through December 31, 1994.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG SAFEGUARD HEALTH ENTERPRISES, INC., NASDAQ AND HEALTH SERVICES
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION> Safeguard NASDAQ NASDAQ
Measurement Period Health Market Health
(Fiscal Year Covered) Enterprises, Inc. Index Services
- --------------------- ----------------- ------- --------
<S> <C> <C> <C>
Measurement Pt-1989 $100 $100 $100
FYE 1990 $ 53.5 $ 84.9 $116.0
FYE 1991 $105.6 $136.3 $258.2
FYE 1992 $109.9 $158.6 $267.4
FYE 1993 $154.9 $180.9 $308.6
FYE 1994 $104.2 $176.9 $332.2
</TABLE>
The above information shall not be deemed incorporated by any general
statement incorporating by reference this Proxy Statement into any filing under
the Securities Act or under the Exchange Act, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
FINANCIAL STATEMENTS
The Company's audited consolidated financial statements and notes thereto,
including selected financial data and management's discussion and analysis of
financial condition and results of operations for the fiscal year ended December
31, 1994, are included in the Company's 1994 Annual Report on Form 10-K, which
was mailed concurrently with this proxy statement to all stockholders of record
as of March 31, 1995. Additional copies of the 1994 Annual Report on Form 10-K
are available without charge upon request. Such requests should be directed to
Secretary, Safeguard Health Enterprises, Inc., 505 North Euclid Street, P.O. Box
3210, Anaheim, California 92803-3210, or by telephone, (714) 778-1005, or by
fax, (714) 778-4517.
INDEPENDENT ACCOUNTANTS
The Company's financial statements for the fiscal year ended 1994 have been
audited by the independent accounting firm of Deloitte & Touche LLP. A
representative of Deloitte & Touche LLP will be present at the Annual Meeting
and will have the opportunity to respond to appropriate questions. The selection
of independent accountants for the current year will be made by the Board of
Directors upon recommendation of the Audit Committee, consistent with its past
practice of selecting independent accountants during the last quarter of the
Company's fiscal year. The Board of Directors believes that it appropriately
represents the stockholders' interest in this matter.
12
<PAGE>
In connection with its annual audit of the Company's financial statements
for the fiscal years ended December 31, 1993, and 1994, there have been no
disagreements with Deloitte & Touche LLP on any matters of accounting principles
or practices, financial statement disclosure, or auditing scope and procedures
which, if not resolved to the satisfaction of Deloitte & Touche LLP, would have
caused Deloitte & Touche LLP to make reference thereto in their reports on the
financial statements for such years. The opinion of Deloitte & Touche LLP for
the fiscal years ended December 31, 1993, and 1994, did not contain an adverse
opinion or disclaimer of opinion and was not qualified or modified in anyway.
STOCKHOLDER PROPOSALS
Stockholder proposals for presentation at the 1996 Annual Meeting of
Stockholders and to be considered for inclusion in next year's proxy statement
must be received at the Company's principal executive offices on or before
December 20, 1995.
OTHER MATTERS
The Company is not aware of any matters that may come before the Annual
Meeting other than those referred to in the Notice of Annual Meeting of
Stockholders. If any other matters shall properly come before the meeting, the
persons named in the accompanying proxy form intend to vote thereon in
accordance with their best judgment.
ALL STOCKHOLDERS ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE
ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE.
BY ORDER OF THE BOARD OF DIRECTORS,
RONALD I. BRENDZEL
Secretary
April 20, 1995
Anaheim, California
13
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
SAFEGUARD HEALTH ENTERPRISES, INC.
Steven J. Baileys, D.D.S., and Ronald I. Brendzel are hereby appointed as
proxies of the undersigned, with full power of substitution, and authorized to
represent and vote all shares of Common Stock of SAFEGUARD HEALTH ENTERPRISES,
INC. (the "Company") which the undersigned is entitled to vote at the Annual
Meeting of Shareholders on Wednesday, May 24, 1995 and at any adjournments or
postponements thereof.
---------
SEE
REVERSE
SIDE
---------
(To be Signed on Reverse Side)
[X] PLEASE MARK YOUR -----
VOTES AS IN THIS
EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS.
FOR WITHHELD Nominees: Ronald I. Brendzel, J.D.
1. Election of [_] [_] Michael M. Mann, Ph.D.
Directors: Bradford M. Boyd, D.D.S.
For except vote withheld them the following nominee(s):
_______________________________________________________
2. To transact such other business as may properly come before the meeting or
any adjournments thereof.
IF NOT OTHERWISE MARKED, THE SHARES REPRESENTED BY THIS PROXY SHALL BE VOTED FOR
PROPOSAL 1.
PLEASE COMPLETE, DATE, SIGN AND RETURN IN THE ENCLOSED ENVELOPE.
SIGNATURE(S) ____________________________________ DATE _________________________
(NOTE): Please sign exactly as name appears hereon. If the stock is issued in
the names of two or more persons, each of them should sign the proxy. If
the proxy is executed by a corporation, it should be signed in the
corporation name by an authorized officer.
