SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
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 ss.240.14a-11(c) or ss.240.14a-12
NATIONAL HOME HEALTH CARE CORP.
--------------------------------
(Name of Registrant as Specified in Its Charter)
----------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
NATIONAL HOME HEALTH CARE CORP.
700 White Plains Road
Scarsdale, New York 10583
---------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held December 8, 1998
---------------
To the Stockholders of National Home Health Care Corp.:
The Annual Meeting of Stockholders of National Home Health Care
Corp. (the "Company") will be held at the offices of Parker Chapin Flattau &
Klimpl, LLP, 1211 Avenue of the Americas, New York, New York, at 10:00 A.M. on
Tuesday, December 8, 1998, for the following purposes:
(1) To elect five directors of the Company to hold office until
the next Annual Meeting of Stockholders and until their
successors shall have been duly elected and qualified; and
(2) To consider and transact such other business as may properly
come before the meeting or any adjournment thereof.
A Proxy Statement, form of proxy and the Annual Report to
Stockholders of the Company for the fiscal year ended July 31, 1998 are enclosed
herewith. Only holders of record of Common Stock of the Company at the close of
business on October 30, 1998 will be entitled to notice of, and to vote at, the
Annual Meeting and any adjournments thereof. A complete list of the stockholders
entitled to vote will be available for inspection by any stockholder during the
meeting. In addition, the list will be open for examination by any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least 10 days prior to the meeting at the offices of the Company,
located at 700 White Plains Road, Scarsdale, New York 10583.
By Order of the Board of Directors,
/s/ Steven Fialkow
-------------------------------
Steven Fialkow
Secretary
Scarsdale, New York
November 11, 1998
- --------------------------------------------------------------------------------
All stockholders are cordially invited to attend the meeting. If you do not
expect to be present, please date and sign the enclosed form of proxy and return
it promptly using the enclosed envelope. No postage is required if mailed in the
United States.
- --------------------------------------------------------------------------------
<PAGE>
NATIONAL HOME HEALTH CARE CORP.
700 White Plains Road
Scarsdale, New York 10583
------------------------
PROXY STATEMENT
------------------------
This Proxy Statement is furnished in connection with the
solicitation by the board of directors (the "Board of Directors") of National
Home Health Care Corp. (the "Company") of proxies in the form enclosed. Such
proxies will be voted at the Annual Meeting of Stockholders of the Company to be
held at the offices of Parker Chapin Flattau & Klimpl, LLP, 1211 Avenue of the
Americas, New York, New York, at 10:00 A.M. on Tuesday, December 8, 1998 (the
"Meeting") and at any adjournments thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders.
The principal executive offices of the Company are located at 700
White Plains Road, Scarsdale, New York 10583. This Proxy Statement and
accompanying form of proxy are being mailed on or about November 11, 1998 to all
stockholders of record on October 30, 1998 (the "Record Date").
Any stockholder giving a proxy has the power to revoke the same at
any time before it is voted. The cost of soliciting proxies will be borne by the
Company. The Company has no contract or arrangement with any party in connection
with the solicitation of proxies. Following the mailing of the proxy materials,
solicitation of proxies may be made by officers and employees of the Company by
mail, telephone, telegram or personal interview. Properly executed proxies will
be voted in accordance with instructions given by stockholders at the places
provided for such purpose in the accompanying proxy. Unless contrary
instructions are given by stockholders, the shares represented by such proxies
are intended to be voted in favor of the election of the five nominees for
director named herein.
VOTING SECURITIES
Stockholders of record as of the close of business on the Record
Date will be entitled to notice of, and to vote at, the Meeting or any
adjournments thereof. On the Record Date, there were 5,197,807 outstanding
shares of common stock, par value $.001 per share, of the Company (the "Common
Stock"). Each holder of Common Stock is entitled to one vote for each share held
by such holder. The presence, in person or by proxy, of the holders of a
majority of the outstanding shares of Common Stock is necessary to constitute a
quorum at the Meeting. Proxies submitted which contain abstentions or broker
non-votes will be deemed present at the Meeting in determining the presence of a
quorum.
<PAGE>
Shares of Common Stock that are voted to abstain with respect to any
matter will be considered cast with respect to that matter. Shares subject to
broker non-votes with respect to any matter will not be considered cast with
respect to that matter.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the
beneficial ownership of Common Stock at October 27, 1998 by (i) each person or
group known by the Company to be the beneficial owner of more than 5% of the
outstanding shares of Common Stock; (ii) each director and nominee for director
of the Company; (iii) each of the executive officers named in the Summary
Compensation Table herein under "Executive Compensation;" and (iv) all directors
and executive officers of the Company as a group:
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent
of Beneficial Owner of Beneficial Ownership (1) of Class
- ------------------- ----------------------- --------
<S> <C> <C>
Frederick H. Fialkow 1,678,737 (2) 31.8%
700 White Plains Road
Scarsdale, NY 10583
Bernard Levine, M.D. 730,305 (3) 14.0%
210 Riverside Drive
New York, NY 10025
Steven Fialkow 97,688 (4) 1.9%
700 White Plains Road
Scarsdale, NY 10583
Ira Greifer, M.D. 49,131 (3) (9)
150 Executive Drive
Manhasset, NY 11040
Robert C. Pordy, M.D. 1,092 (9)
140 East 72nd Street
New York, NY 10021
Richard Garofalo 68,363 (5) 1.3%
99 Rustic Avenue
Medford, NY 11763
Robert P. Heller 36,515 (6) (9)
617 Fir Court
Norwood, NJ 07648
Trafalger Management 425,802 (7) 8.2%
N.V.1-7 Willenstad
Curacao, Netherlands Antilles
All executive officers and directors, 2,661,831 (8) 49.1%
as a group (7 persons)
</TABLE>
-2-
<PAGE>
- ------------------------------------
(1) Includes, where indicated, shares allocated to certain
individuals under the Company's Savings and Stock Investment
Plan (the "Savings Plan") as of June 30, 1998. Under the terms
of the Savings Plan, if a participant fails to give timely
instructions as to the voting of shares of Common Stock held in
a participant's account, the trustee of the Plan will vote such
shares in the same proportion as it votes all of the shares for
which such trustee receives instructions.
(2) Does not include 546 shares of Common Stock owned by Mr.
Fialkow's wife, as to which shares Mr. Fialkow disclaims
beneficial ownership. Includes 81,885 shares of Common Stock
which may be acquired pursuant to currently exercisable options
granted under the Company's 1992 Stock Option Plan (the "1992
Plan") and 61,222 shares allocated to Mr. Fialkow's account
under the Savings Plan.
(3) Includes 5,459 shares of Common Stock which may be acquired
pursuant to currently exercisable options granted under the
1992 Plan.
(4) Represents 66,581 shares of Common Stock which may be acquired
pursuant to currently exercisable options granted under the
1992 Plan and 31,107 shares allocated to Mr. Fialkow's account
under the Savings Plan.
(5) Includes 42,347 shares of Common Stock which may be acquired
pursuant to currently exercisable options granted under the
1992 Plan and 24,378 shares allocated to Mr. Garofalo's account
under the Savings Plan.
(6) Represents 26,377 shares of Common Stock which may be acquired
pursuant to currently exercisable options granted under the
1992 Plan and 10,138 shares allocated to Mr. Heller's account
under the Savings Plan.
(7) The amount and nature of beneficial ownership of these shares
by Trafalger Management, N.V. ("Trafalger") is based solely on
the records of the Company's transfer agent, American Stock
Transfer & Trust Company. Trafalger has the power to vote,
direct the vote, dispose of, or direct the disposition of,
these shares. The Company's Board of Directors has no
independent knowledge of the accuracy or completeness of the
information set forth by such transfer agent, but has no reason
to believe that such information is not complete or accurate.
(8) Includes 228,108 shares of Common Stock which may be acquired
pursuant to currently exercisable options granted under to 1992
Plan and 126,845 shares under the Savings Plan.
(9) Less than 1%.
-3-
<PAGE>
ELECTION OF DIRECTORS
Unless otherwise indicated, the shares represented by all
proxies received by the Board of Directors will be voted at the Meeting in
accordance with their terms and, in the absence of contrary instructions, for
the election of Frederick H. Fialkow, Steven Fialkow, Ira Greifer, M.D., Bernard
Levine, M.D., and Robert C. Pordy, M.D. to serve until the next Annual Meeting
of Stockholders and until their successors are elected and qualified. Although
it is anticipated that each nominee will be available to serve as a director,
should any nominee be unavailable to serve, proxies will be voted by the Board
of Directors.
Executive Officers and Directors
The following table sets forth certain information concerning
the nominees for director and executive officers of the Company:
<TABLE>
<CAPTION>
Year First
Elected or
Appointed Present Position
Name Age Director with the Company
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Frederick H. Fialkow 67 1985 Chairman of the Board of Directors and Chief
Executive Officer
Bernard Levine, M.D. 70 1983 Director
Steven Fialkow 39 1991 President, Chief Operating Officer, Secretary and
Director
Ira Greifer, M.D. 67 1983 Director
Robert C. Pordy, M.D. 41 1995 Director
Robert P. Heller 37 -- Vice President of Finance and Chief Financial Officer
Richard Garofalo 47 -- President of Health Acquisition Corp.
</TABLE>
The Company's directors are elected at each Annual Meeting of
Stockholders of the Company to serve for a term of one year or until their
successors are duly elected and qualified. Officers serve at the discretion of
the Board of Directors. The terms of office of all officers and directors expire
at the time of the annual meeting each year.
Frederick H. Fialkow has been Chief Executive Officer of the
Company as well as Chairman of the Board of Directors since February 1988 and
was President of the Company from February 1988 until October 1997. He has been
a Director of the Company since April 1985. Mr. Fialkow also is a director of
SunStar Healthcare, Inc., a publicly-held company that operates a health
maintenance organization in Florida. Frederick H. Fialkow is the father of
Steven Fialkow.
-4-
<PAGE>
Bernard Levine, M.D., has been a Director of the Company since
July 1983. For more than the past 20 years he has been a Professor of Internal
Medicine at New York University School of Medicine with a sub-speciality in
Allergy and Immunology. Dr. Levine also is a director of SunStar Healthcare,
Inc., a publicly-held company that operates a health maintenance organization in
Florida. Dr. Levine devotes a portion of his time as a private consultant to the
health care industry.
Steven Fialkow has been a Director of the Company since
December 1991 and has served as Secretary of the Company since September 1995
and as President and Chief Operating Officer of the Company since October 1997.
He served as Executive Vice President of New England Home Care, Inc. from August
1995 through October 1997. He also served as Executive Vice President of Health
Acquisition Corp. from May 1994 to August 1995, as President of National HMO
(New York), Inc. from April 1989 to April 1994 and as Vice President of National
HMO (New York) Inc. from August 1984 to March 1989. Mr. Fialkow also is a
director of SunStar Healthcare, Inc., a publicly-held company that operates a
health maintenance organization in Florida. Steven Fialkow is a certified public
accountant. He is the son of Frederick H. Fialkow.
Ira Greifer, M.D. has been a Director of the Company since July
1983. He has been a Director, Department of Pediatrics at the Hospital of Albert
Einstein College of Medicine since 1966. He is also a Professor of Pediatrics at
the Albert Einstein College of Medicine.
Robert C. Pordy, M.D., has been a director of the Company since
December 1995. Since April 1993, Dr. Pordy has served as Director of
International Cardiovascular Clinical Research at Hoffman-La Roche Inc., a
biopharmaceutical company. From June 1990 until March 1993 he served as an
Associate Director at Hoffman-LaRoche Inc.
Richard Garofalo has served as President of Health Acquisition
Corp., a wholly owned subsidiary of the Company, since January 1988.
Robert P. Heller, a certified public accountant, has served as
Vice President of Finance and Chief Financial Officer of the Company since March
1989. Prior thereto, he was an accountant with Richard A. Eisner & Company, LLP,
a firm of certified public accountants, which is the Company's independent
auditors.
Meetings of the Board of Directors
The Board of Directors held four meetings during the fiscal
year ended July 31, 1998 ("fiscal 1998"). Each director attended at least 75% of
(i) all of the meetings of the Board of Directors during fiscal 1998 and (ii)
all of the meetings of all the Committees on which he served.
The Company's Audit Committee is currently composed of Drs.
Levine, Pordy and Greifer. The function of the Audit Committee is to make
recommendations concerning the selection each year of independent auditors of
the Company, to review the effectiveness of the Company's internal accounting
methods and procedures, and to determine through discussions with the
independent
-5-
<PAGE>
auditors whether any instructions or limitations have been placed upon them in
connection with the scope of their audit or its implementation. The Audit
Committee held one meeting during fiscal 1998; in addition, its members met
informally from time to time.
The Compensation Committee is composed of Drs. Greifer and
Levine. The function of the Compensation Committee is to review and recommend to
the Board of Directors policies, practices and procedures relating to
compensation of key employees and to administer employee benefit plans. The
Compensation Committee held one meeting during fiscal 1998; in addition, its
members met informally from time to time.
The Nominating Committee is composed of Mr. Frederick H.
Fialkow and Drs. Greifer, Levine and Pordy. Its function is to recommend
nominees for the Board of Directors. The Nominating Committee did not meet
formally during fiscal 1998; however, its members met informally from time to
time.
The Quality Assurance Committee is composed of Drs. Greifer and
Levine. Its function is to review and recommend to the Board of Directors
policies, practices and procedures relating to quality assurance in connection
with health care services. The Quality Assurance Committee did not meet formally
during fiscal 1998; however, its members met informally from time to time.
-6-
<PAGE>
Executive Compensation
The following table sets forth information concerning the
annual and long term compensation during the Company's last three fiscal years
of the Company's Chief Executive Officer and other most highly compensated
executive officers of the Company, whose salary and bonus for the 1998 fiscal
year exceeds $100,000, for services rendered in all capacities to the Company
and its subsidiaries:
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
---------------------- --------------
Securities
Underlying All Other
Name and Principal Position Year Salary Bonus Options Compensation (4)
- --------------------------- ---- ------ ----- ------- ----------------
<S> <C> <C> <C>
Frederick H. Fialkow 1998 $285,000 $61,499(1) -------
Chairman of the Board and Chief 1997 285,000 71,497(2) ------- $3,758
Executive Officer 1996 285,000 82,803 (3) ------- 3,267
4,750
Steven Fialkow 1998
President, Chief Operating 1997 150,742 ------ 30,000 3,890
Officer and Secretary 1996 122,957 ------ ------- 5,344
109,324 ------ ------- 4,520
Robert P. Heller 10,000
Vice President of Finance and 1998 119,962 ------ ------- 3,134
Chief Financial Officer 1997 112,349 ------ ------- 2,568
1996 103,710 ------ 1,201
Richard Garofalo 1998 157,500 67,502 20,000 5,006
President of 1997 157,500 42,491 ------- 3,451
Health Acquisition Corp. 1996 126,787 97,839 ------- 5,000
</TABLE>
- ----------------------
(1) Includes $39,446, which represents the payment of the cost of
living increase in salary compensation for the last three
fiscal years pursuant to Mr. Fialkow's employment agreement
with the Company.
(2) Includes $32,038, which represents the payment of the cost of
living increase in salary compensation for the last three
fiscal years pursuant to Mr. Fialkow's employment agreement
with the Company.
(3) Includes $47,255, which represents the payment of the cost of
living increase in salary compensation for the last three
fiscal years pursuant to Mr. Fialkow's employment agreement
with the Company.
(4) Represents the Company's matching contribution to each
individual as deferred compensation under the Company's Savings
Plan pursuant to Section 401(k) of the Internal Revenue Code of
1986, as amended.
-7-
<PAGE>
Option Grants in Last Fiscal Year
- ---------------------------------
The following table contains information at July 31, 1998
relating to the number of options granted during the 1998 fiscal year to those
individuals listed in the Summary Compensation Table.
All options are currently exercisable.
<TABLE>
<CAPTION>
Potential Realizable
Value-at-Assumed
Number of Annual-Rates-of-Stock
Securities -% of Total Price Appreciation for
Underlying Options-Granted Option Terms
Options to Employees Exercise or Expiration -----------------------------
Name Granted in Fiscal 1998 Base Price Date 5% 10%
- ---------------- ---------- --------------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Steven Fialkow 30,000 50% $4.8125 Dec. 30, 2007 $90,797 $230,097
Robert P. Heller 10,000 16.7% $4.8125 Dec. 30, 2007 $30,266 $76,699
Richard Garofalo 20,000 33.3% $4.8125 Dec. 30, 2007 $60,531 $153,398
</TABLE>
Option Exercises in Last Fiscal Year and Fiscal Year-End Option Value
- ---------------------------------------------------------------------
The following table contains information at July 31, 1998
relating to the number of options exercised during the 1998 fiscal year and the
number and value of unexercised options held by those individuals listed in the
Summary Compensation Table.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options at Fiscal-Year- in-the-Money Options
Acquired End at Fiscal Year-End
on Exercise Value Exercisable-/ Exercisable /
Name (#) Realized($) Unexercisable Unexercisable-(1)-
- -------------------- ------------------ ------------- ----------------------- -----------------------
<S> <C> <C> <C> <C>
Frederick H. Fialkow ---- ---- 81,885 / 0 $158,013 / 0
Steven Fialkow ---- ---- 66,581 / 0 79,344 / 0
Robert P. Heller ---- ---- 26,377 / 0 35,522 / 0
Richard Garofalo ---- ---- 42,347 / 0 48,471 / 0
- ------------------
</TABLE>
(1) Determined based on the fair market value of underlying
securities (the closing bid price ($4.5625) per share of Common
Stock on the Nasdaq National Market) at fiscal year end (July
31, 1998), minus the exercise price.
-8-
<PAGE>
Standard Remuneration of Directors
The Company's non-employee directors are paid a fee of $3,500
for each meeting of the Board of Directors attended.
Employment and Related Agreements
Frederick H. Fialkow. Effective November 1, 1997, the Company
entered into a five-year employment agreement with Mr. Fialkow pursuant to which
he is employed as the Company's Chairman of the Board and Chief Executive
Officer. The agreement is automatically renewable for an additional five-year
period, unless terminated at the option of either party, and provides for an
annual base salary of $285,000, plus compounded cost of living adjustments. In
addition, Mr. Fialkow is entitled to receive an annual bonus in an amount equal
to 5% of the Company's consolidated net income (before income taxes) in such
year in which the consolidated net income is in excess of $3,000,000, provided
that the bonus may not exceed $150,000 in any year.
Steven Fialkow. Effective November 1, 1997, the Company entered
into a four-year employment agreement with Mr. Fialkow pursuant to which he is
employed as the Company's President, Chief Operating Officer and Secretary. The
term of the agreement may be extended in writing by both parties, unless earlier
terminated, and provides for an annual base salary of $157,500. In addition, Mr.
Fialkow is entitled to receive an annual bonus in an amount equal to 3% of the
amount by which the Company's income from operations in such year exceeds
$3,300,000. The agreement also provides for a grant to Mr. Fialkow of an option
to purchase 30,000 shares of the Company's Common Stock, pursuant to the 1992
Plan.
Robert P. Heller. Effective November 1, 1997, the Company
entered into a four-year employment agreement with Mr. Heller pursuant to which
he is employed as the Company's Executive Vice President of Finance, Chief
Financial Officer and Treasurer. The term of the agreement may be extended in
writing by both parties, unless earlier terminated, and provides for an annual
base salary of $122,500. The Company's Board of Directors also may grant bonuses
to Mr. Heller. The agreement also provides for a grant to Mr. Heller of an
option to purchase 10,000 shares of the Company's Common Stock, pursuant to the
1992 Plan.
Richard Garofalo. Effective November 1, 1997, the Company
entered into a four-year employment agreement with Mr. Garofalo pursuant to
which he is employed as the President of Health Acquisition Corporation, a
wholly owned subsidiary of the Company. The term of the agreement may be
extended in writing by both parties, unless earlier terminated, and provides for
an annual base salary of $157,500. The Company's Board of Directors also may
grant bonuses to Mr. Garofalo. The agreement also provides for a grant to Mr.
Garofalo of an option to purchase 20,000 shares of the Company's Common Stock,
pursuant to the 1992 Plan.
The employment agreements of Messrs. Frederick H. Fialkow,
Steven Fialkow, Heller and Garofalo contain confidentiality and nondisclosure
provisions relating to the Company's business and
-9-
<PAGE>
all confidential information developed or made known to each individual during
his respective term of employment. The agreements also contain certain
non-competition provisions that preclude Messrs. Frederick H. Fialkow, Steven
Fialkow, Heller and Garofalo from competing with the Company for a period of one
year from the date of termination.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee of the Company's
Board of Directors are Drs. Ira Greifer and Bernard Levine, non-employee
directors. No members of the Compensation Committee has a relationship that
would constitute an interlocking relationship with executive officers or
directors of another entity.
10-
<PAGE>
Performance Graph
The following graph compares the cumulative return to holders
of Common Stock for the five years ended July 31, 1998 with the National
Association of Securities Dealers Automated Quotation System Market Index and a
SIC group index (1) for the same period. The comparison assumes $100 was
invested at the close of business on August 1, 1993 in the Common Stock and in
each of the comparison groups, and assumes reinvestment of dividends. The
Company paid no cash dividends during the periods.
<TABLE>
<CAPTION>
- -------------------------------------------FISCAL YEAR ENDING------------------------------------
COMPANY 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
NATIONAL HOME HEALTH CARE 100.00 122.22 161.09 266.67 241.44 212.28
INDUSTRY INDEX 100.00 102.91 144.52 157.42 232.29 274.14
PEER GROUP 100.00 89.05 110.68 85.00 103.97 100.77
</TABLE>
- ----------------------------------
(1) The peer group selected by the Company includes those companies
within the Company's Standard Industrial Code ("SIC") of "home
health care services". The companies which comprise the SIC
group are Amedisys Inc., Apria Healthcare Group, Cancer
Treatment Holding, Caretenders Healthcorp, Community Care
Services Inc., Coram Healthcare Corp., DYNACQ International
Inc., Help At Home Inc., Home Health Corp. of America Inc.,
Hooper Holmes Inc., Hospital Staffing Services Inc., Housecall
Medical Rscs Inc., In Home Health Inc., Infu-Tech Inc.,
Interwest Home Medical Inc., Matria Healthcare Inc., New York
Health Care Inc., Numed Home Health Care Inc., Option Care
Inc., Pediatric Services of America Inc., PHC Inc./MA - CL A,
Simione Central Holdings Inc., Staff Builders Inc., Star Multi
Care Services, Transworld Healthcare Inc., and Wellpoint Health
Network - CL A.
-11-
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON
EXECUTIVE COMPENSATION
OVERVIEW AND PHILOSOPHY
The Compensation Committee of the Board of Directors is
composed entirely of non-employee directors and is responsible for developing
and making recommendations to the Board of Directors with respect to the
Company's executive compensation policies. In addition, the Compensation
Committee, pursuant to authority delegated by the Board of Directors, determines
the compensation to be paid to the Chief Executive Officer and each of the other
executive officers of the Company.
The objectives of the Company's executive compensation program
are to:
* Support the achievement of desired Company performance
* Provide compensation that will attract and retain
superior talent and reward performance
The executive compensation program provides an overall level of
compensation opportunity that is competitive within the health care industry, as
well as with a broader group of companies of comparable size and complexity.
EXECUTIVE OFFICER COMPENSATION PROGRAM
The Company's executive officer compensation program is
comprised of base salary, annual cash incentive compensation, long-term
incentive compensation in the form of stock options, specific performance - base
bonuses and various benefits, including medical and pension plans generally
available to employees of the Company. Since the employment agreements entered
into between the Company and its executive officers in 1997, no changes were
made in the compensation arrangements of the executive officers. See "Executive
Compensation--Employment and Related Agreements."
Base Salary
Base salary levels for the Company's executive officers are
competitively set relative to companies in the health care industry. In
determining salaries, the Committee also takes into account individual
experience and performance and specific issues particular to the Company.
-12-
<PAGE>
Stock Option Program
The stock option program is the Company's long-term incentive
plan for providing an incentive to key employees (including directors and
officers who are key employees) and to directors who are not employees of the
Company.
The 1992 Stock Option Plan authorizes the Compensation
Committee to award key executives stock options. Options granted under the plan
may be granted containing terms determined by the Committee, including exercise
period and price; provided, however, that the plan requires that exercise price
may not be less than the fair market value of the Common Stock on the date of
the grant and the exercise period may not exceed ten years, subject to further
limitations.
Benefits
The Company provides to executive officers medical and pension
benefits that generally are available to Company employees. The amount of
perquisites, as determined in accordance with the rules of the Securities and
Exchange Commission relating to executive compensation, did not exceed 10% of
salary for fiscal 1998.
Bonus
Following consultations with its financial advisor and in light
of the Compensation Committee's satisfaction with the performance of management,
the Company provides to certain executive officers bonuses based on performance
and/or a change of control of the Company.
Chief Executive Officer Compensation
Mr. Frederick H. Fialkow was appointed to the position of Chief
Executive Officer in February 1988. His initial base salary was $200,000.
Effective January 1, 1990, Mr. Fialkow's salary was increased to $250,000 per
year. Effective April 30, 1993, the Company entered into an amended and restated
five year employment agreement providing for an annual base salary of $285,000,
plus compounded cost of living adjustments. In addition, Mr. Fialkow was
entitled to receive an annual bonus in an amount equal to 5% of the Company's
consolidated net income (before certain taxes) in such year in excess of
$3,000,000, provided that the bonus may not exceed $150,000 in any year. During
the fiscal year ended July 31, 1998, the Compensation Committee discussed the
need for new employment agreements for the Company's executive officers,
including Mr. Fialkow, to replace agreements which had recently expired. After
acknowledgment of the achievements and performance of each of the executive
officers, including Mr. Fialkow, the Committee agreed that the Company should
enter into an employment agreement with each such executive officer, containing
the material terms set forth under the caption "Executive
Compensation--Employment and Related Agreements," and that Mr. Fialkow's
existing contract should be renewed for five years, effective November 1,
-13-
<PAGE>
1997, without substantial change.
Ira Greifer, M.D.
Bernard Levine, M.D.
Members of the Compensation Committee
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
A lease for office premises maintained by Health Acquisition
Corp., a wholly owned subsidiary of the Company, located in Queens, New York is
with a company owned (in whole or in part) and controlled by the Company's
Chairman of the Board of Directors and Chief Executive Officer, which company
also is owned in part by a director of the Company who is also the President and
Chief Operating Officer of the Company. Rent expense under such lease is
approximately $129,000 per year. The Company believes that such lease contains
terms in the aggregate no less advantageous to the Company than otherwise could
have been obtained from an unrelated third party.
STOCKHOLDER PROPOSALS FOR 1999
Stockholders wishing to present proposals at the 1999 Annual
Meeting of Stockholders and wishing to have their proposals presented in the
proxy statement distributed by the Board of Directors in connection with the
1999 Annual Meeting of Stockholders must submit their proposals to the Company
in writing on or before July 14, 1999.
If the Company does not receive notice by September 27, 1999
from a stockholder who intends to present at the next annual meeting a proposal
that is not discussed in the Company's proxy statement, the persons named in the
proxy accompanying the Company's proxy statement for that annual meeting will
have the discretionary authority to vote on such proposal at such meeting.
VOTING REQUIREMENTS
Assuming a quorum is present, a plurality of the votes cast at
the Meeting will be required for the election of directors. Shares of Common
Stock that are voted to abstain with respect to any matter will be considered
cast with respect to that matter. Shares subject to broker non-votes with
respect to any matter will not be considered cast with respect to that matter.
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OTHER MATTERS
The Board of Directors of the Company knows of no other matter
to come before the meeting. However, if any matters required a vote of the
stockholders arise, it is the intention of the persons named in the enclosed
form of proxy to vote such proxy in accordance with their best judgment.
By Order of the Board of Directors
/s/ Steven Fialkow
-----------------------------
Steven Fialkow
Secretary
Dated: Scarsdale, New York
November 11, 1998
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PROXY
NATIONAL HOME HEALTH CARE CORP.
ANNUAL MEETING OF STOCKHOLDERS
------------------------------
This Proxy is solicited on behalf of the Board of Directors
The undersigned Stockholder of Common Stock of National Home
Health Care Corp. (the "Company") hereby revokes all previous proxies,
acknowledges receipt of the Notice of the Stockholders' Meeting to be held on
December 8, 1998, and hereby appoints Frederick H. Fialkow and Steven Fialkow,
and each of them, as proxies of the undersigned, with full power of
substitution, to vote and otherwise represent all of the shares of the
undersigned at said meeting and at any adjournment or adjournments thereof with
the same effect as if the undersigned were present and voting the shares. The
shares represented by this proxy shall be voted in the following manner:
(1) Election of directors
|_| FOR all nominees listed below (except as indicated)
|_| WITHHOLD AUTHORITY to vote for all nominees listed below
To withhold authority for any individual nominee, strike
through that nominee's name in the list below:
Frederick H. Fialkow
Steven Fialkow
Ira Greifer, M.D.
Bernard Levine, M.D.
Robert C. Pordy, M.D.
(2) In their discretion, the proxies are authorized to vote
upon such other business as may properly come before the meeting.
[CONTINUED AND TO BE SIGNED ON REVERSE SIDE]
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THE SHARES REPRESENTED BY THIS PROXY, DULY EXECUTED, WILL BE VOTED IN ACCORDANCE
WITH THE SPECIFICATION MADE. IF NO SPECIFICATION IS MADE, THE SHARES REPRESENTED
BY THIS PROXY WILL BE VOTED FOR EACH OF THE ABOVE NOMINEES, AND FOR SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING AS THE PROXYHOLDERS DEEM
ADVISABLE.
Dated: __________________, 1998
--------------------------------
Signature
--------------------------------
Print Name
--------------------------------
(Title, if appropriate)
This proxy should be signed by the Stockholder(s) exactly as his or her name
appears hereon. Persons signing in a fiduciary capacity should so indicate. If
shares are held by joint tenants or as community property, both should sign. If
a corporation, this proxy should be signed in full corporate name by the
president or other authorized officer and should bear the corporate seal. If a
partnership, please sign in partnership name by authorized person.
TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE MARK,
SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE
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