INFORMATION REQUIRED IN PROXY STATEMENT
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
/x/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
HOOPER HOLMES INC.
- ------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
HOOPER HOLMES, 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 Rule
14a-6(i)(2).
/ / $500 per each party per Exchange Act Rule 14a-6(i)(3), or Rule
14a-6(i)(2).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
<PAGE>
HOOPER HOLMES, INC.
170 Mt. Airy Road
Basking Ridge, New Jersey 07920
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Hooper Holmes, Inc., to be held on Tuesday, May 16, 1995 at 11:00 a.m. local
time, at the American Stock Exchange, 86 Trinity Place, New York, New York.
The Notice of Annual Meeting and Proxy Statement which follow describe the
business to be conducted at the meeting. There will also be a brief report on
the current status of our business.
Whether or not you plan to attend the meeting in person, it is important
that your shares be represented and voted. After reading the Notice of Annual
Meeting and Proxy Statement, please complete, sign, date and return your proxy
in the envelope provided.
On behalf of the Officers and Directors of Hooper Holmes, Inc., I wish to
thank you for your interest in the Company and I hope that you will be able to
attend our Meeting.
For the Board of Directors,
James M. McNamee
President and Chief Executive Officer
April 26, 1995
<PAGE>
HOOPER HOLMES, INC.
170 Mt. Airy Road
Basking Ridge, New Jersey 07920
---------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held May 16, 1995
---------------
NOTICE IS HEREBY GIVEN that the Annual Meeting (the "Annual Meeting") of
Shareholders of Hooper Holmes, Inc., a New York corporation (the "Company"),
will be held on Tuesday, May 16, 1995 at 11:00 a.m. local time, at the American
Stock Exchange, 86 Trinity Place, New York, New York, for the following
purposes:
1. To elect directors.
2. To ratify the selection of the firm of KPMG Peat Marwick LLP as
auditors for the 1995 fiscal year.
3. To transact such other business as may properly come before the Annual
Meeting and any adjournment thereof.
Holders of record of the Company's common stock, par value $.04 per share
(the "Common Stock"), as of the close of business on March 31, 1995, the record
date fixed by the Board of Directors for such purpose (the "Record Date"), are
entitled to notice of, and to vote at, the Annual Meeting and any adjournment
thereof.
BY ORDER OF THE BOARD OF DIRECTORS,
Robert William Jewett
Secretary
April 26, 1995
Please sign the enclosed proxy and return it promptly in the envelope
enclosed which requires no postage if mailed in the United States.
<PAGE>
HOOPER HOLMES, INC.
170 Mt. Airy Road
Basking Ridge, New Jersey 07920
---------------
PROXY STATEMENT
---------------
INTRODUCTION
The enclosed proxy is solicited by the Board of Directors of Hooper Holmes,
Inc., (the "Company") for use at the Annual Meeting of Shareholders to be held
on May 16, 1995.
An Annual Report to Shareholders containing the financial statements for
the fiscal year ended December 31, 1994 is enclosed herewith. This proxy
statement and form of proxy were first sent to shareholders on or about the date
stated in the accompanying Notice of Annual Meeting of Shareholders.
Only shareholders of record as of the Record Date are entitled to vote at
the meeting and any adjournments thereof. As of that date, 6,709,552 shares of
Common Stock of the Company were issued and outstanding. Each share outstanding
as of the record date will be entitled to one vote, and shareholders may vote in
person or by proxy. Execution of a proxy will not in any way affect a
shareholder's right to attend the meeting and vote in person. Any shareholder
giving a proxy has the right to revoke it at any time before it is voted by
providing written notice to the Secretary of the Company or by submitting
another proxy bearing a later date. In addition, shareholders attending the
meeting may revoke their proxies at any time prior to the time such proxies are
exercised.
The presence in person or by proxy of the holders of a majority of the
votes entitled to be cast at the meeting will constitute a quorum. Broker
non-votes, abstentions and withhold-authority votes all count for the purpose of
determining a quorum. Directors who receive a plurality of the votes cast at the
meeting will be elected. Each other item on the agenda will be approved if a
majority of the votes cast at the meeting are in favor of the item. Votes cast
includes votes for or against an item, but do not include broker non-votes,
abstentions or withheld-authority votes. All properly executed proxies returned
in time to be cast at the meeting, if no contrary instruction is indicated, will
be voted FOR the election of all directors nominated herein and FOR the
ratification of the auditors.
1
<PAGE>
The solicitation of proxies will be made primarily by mail. Proxies may
also be solicited personally and by telephone or telegraph by regular employees
of the Company, without any additional remuneration and at minimal cost. The
Company has also retained the services of Solakian & Associates, Inc.,
Flemington, New Jersey to solicit proxies on behalf of the Company. The fee to
be paid by the Company for such services is not expected to exceed $2,500. The
cost of soliciting the proxies will be borne by the Company.
2
<PAGE>
ITEM 1--ELECTION OF DIRECTORS
The Board of Directors consists of nine members divided into three classes
of three members each. There is currently one vacancy on the Board, which was
created by the retirement during 1993 of Mr. James H. King, Jr. (whose term was
scheduled to expire at the 1996 Annual Meeting). At each Annual Meeting of
Shareholders, one class of directors is elected to serve for a three-year term
or until their successors are elected and have qualified. The class of directors
to be elected at this Annual Meeting will serve until the 1998 Annual Meeting.
Any shareholder submitting a proxy has the right to withhold authority to
vote for any individual nominee to the Board of Directors by writing that
nominee's name in the space provided on the proxy. Shares represented by all
proxies received by the Company and not so marked as to withhold authority to
vote for any individual director or for all directors nominated will be voted
FOR the election of the nominees named below. The Company knows of no reason why
any such nominee should be unable to serve, but in the event that any nominees
shall be unavailable or unable to serve as directors, the proxy holders will
vote for substitute nominees in the exercise of their best judgment, but may not
vote for more than three persons.
Nominees for Directors (Term expires 1998)
The nominees for directors and further information with respect to each
nominee are set forth below.
James M. McNamee
Mr. McNamee, age 50, has served as President and Chief Executive Officer of
the Company since 1984. He was Chief Operating Officer from 1983 to 1984, and
Executive Vice President and General Manager, Western Division from 1982 to
1983. Mr. McNamee has been an employee of the Company since 1968, an officer
since 1979 and a director since 1984. He is a member of the Executive Committee.
Kenneth R. Rossano
Mr. Rossano, age 60, is Senior Vice President, Cassidy & Associates in
Boston, Massachusetts. From 1991 to 1992, he was Vice President, Development,
Massachusetts Higher Education Assistance Corporation in Boston, Massachusetts.
From 1989 to 1991 he was Senior Associate, The Education Resources Institute in
Boston, Massachusetts. From 1961 to 1989 he was employed by the Bank of Boston.
He has been a director of the Company since 1967, and is a member of the
Executive Committee.
G. Earle Wight
Mr. Wight, age 61, has served as Senior Vice President of the Company since
1985 and has been a director of the Company since 1966. He served as Vice
President of the Company from 1980 to 1985 and as Vice President and Secretary
of Hooper Holmes Canada, Ltd. from 1977 to 1980. Mr. Wight is a member of the
Nominating Committee.
3
<PAGE>
Directors Continuing in Office
The directors whose terms expire at the Annual Meetings in 1996 and 1997
and further information with respect to each continuing director are set forth
below.
Frederick D. King
Mr. King, age 71, has served as Chairman of the Board of Directors of the
Company since 1973. He was President of the Company from 1967 to 1973 and has
been a director since 1961. Mr. King is a member of the Executive Committee.
(Term expires at the Annual Meeting in 1996).
Anne King Sullivan
Mrs. Sullivan, age 61, has been a director of the Company since 1981.
Before retirement, she was employed in Providence by Rhode Island School of
Design and Textron, Inc., and in Boston by Shepley Bulfinch Richardson Abbott,
Architects. She later was self-employed as a consultant in public relations and
advertising. Mrs. Sullivan's volunteer activities include community government,
teaching, work with the elderly, the brain-damaged, and through Hospice with the
terminally ill and bereaved. She is a member of the Nominating Committee and the
Executive Compensation Committee. (Term expires at the Annual Meeting in 1996).
John E. Nolan, Jr.
Mr. Nolan, age 67, is a partner in the law firm of Steptoe & Johnson,
Washington, D.C. and has been engaged in the practice of law since 1956. He has
been a director of the Company since 1971, and is a member of the Audit
Committee and the Executive Compensation Committee. Mr. Nolan also serves on the
Board of Directors of Iomega Corporation. (Term expires at the Annual Meeting in
1997).
4
<PAGE>
Elaine L. La Monica
Dr. La Monica, EDD, JD, age 50, is Professor and Acting Chair, Department
of Nursing Education at Teachers College, Columbia University. She has been
associated with Columbia University since 1981, and has maintained a private
consulting practice in management for health care organizations since 1974. Dr.
La Monica has been a director of the Company since 1989, and is a member of the
Audit Committee. (Term expires at the Annual Meeting in 1997).
Quentin J. Kennedy
Mr. Kennedy, age 61, is Executive Vice President, Secretary, Treasurer and
Director of Federal Paper Board Company in Montvale, New Jersey and has served
in various executive positions with Federal Paper Board since 1960. Mr. Kennedy
has been a director of the Company since 1991. He is a member of the Audit
Committee, the Executive Committee and the Executive Compensation Committee.
(Term expires at the Annual Meeting in 1997).
5
<PAGE>
Certain Relationships and Related Transactions
Messrs. F.D. King, G.E. Wight and Mrs. A.K. Sullivan are first cousins.
Messrs. Wight and Rossano are brothers-in-law.
On July 7, 1992 and September 23, 1993 the Company made loans to Mr. James
M. McNamee, President, CEO and a director, in the amount of $49,341 and $45,023
respectively, which are due and payable in 36 months from the date of the loan,
for the purpose of paying taxes due on stock compensation. The maximum amount
outstanding in 1994 was $78,070. Interest is accrued at the rates of 4.8% and
3.6% respectively and interest and principle is being repaid through payroll
deductions. As of March 31, 1995, $56,131 was outstanding.
Mr. John E. Nolan, Jr., a director of the Company, is a partner in the law
firm of Steptoe & Johnson, which occasionally performs legal services for the
Company.
Compensation of Directors
Each director of the Company will receive an annual fee of $12,000 in 1995
plus a $500 fee for each non-telephone committee meeting attended. Directors are
also reimbursed for out-of-pocket expenses incurred in attending Board and
committee meetings.
In June, 1990, the Company entered into supplemental indemnity agreements
with its executive officers and directors. The indemnity agreements require the
Company to indemnify such person for all expenses actually and reasonably
incurred in defending or settling an action to which such person is a party or
threatened to be made a party or is otherwise involved because of their status
as an officer or director of the Company. If the action is brought by or in the
right of the Company, the indemnification must be made only if such person acted
in good faith, for a purpose reasonably believed to be in the best interest of
the Company (or, in the case of service to another entity, not opposed to the
interest of the Company).
Committees of the Board
The Board of Directors has an Audit Committee, an Executive Committee, a
Nominating Committee and an Executive Compensation Committee.
The Audit Committee acts as principal liaison between the Board of
Directors and the independent auditors employed by the Company and reviews the
annual financial statements and the Company's internal accounting systems and
controls. The Committee also recommends to the Board of Directors the selection
of independent auditors to be employed by the Company.
The Executive Committee exercises the authority of the Board of Directors
in certain corporate matters between meetings and exercises specific powers and
authority as may from time to time be lawfully delegated to it by the Board of
Directors.
6
<PAGE>
The Nominating Committee nominates individuals for election or reelection
to the Board of Directors. It will consider nominations recommended by
shareholders who submit written recommendations to the Nominating Committee in
care of the Secretary of the Company.
The Executive Compensation Committee, among other matters, annually reviews
and determines the compensation of the Chief Executive Officer of the Company
and, upon his recommendation, the compensation of the other elected officers and
senior management of the Company and annually reviews and recommends to the
Board of Directors the compensation and allowances for the Company's outside
directors. The Committee also prepares a report to shareholders (enclosed in
this Proxy Statement) which discusses the Company's compensation policies for
the executive officers, the Committee's bases for determining the compensation
of the Chief Executive Officer for the past fiscal year, and the relationship
between compensation and the Company's performance for the past fiscal year. The
Executive Compensation Committee also administers the 1987 Nonqualified Stock
Option Plan, the 1992 Stock Option Plan and the 1994 Stock Option Plan, and
determines the amount and terms of the options granted under the plans. The
Committee also administers the 1993 Employee Stock Purchase Plan.
The Board of Directors held four regular meetings and one special meeting
during the fiscal year ended December 31, 1994. The Audit Committee met twice,
the Executive Committee met six times, the Executive Compensation Committee met
once, and the Nominating Committee met once in 1994. All directors attended at
least 75% of the total number of meetings of the Board of Directors and the
committees to which they belong.
Compensation Committee Interlocks and Insider Participation
For 1994, Mrs. Anne King Sullivan and Messrs. Quentin J. Kennedy and John
E. Nolan, Jr. served on the Executive Compensation Committee. Mr. Nolan is a
partner in the law firm of Steptoe & Johnson, which occasionally performs legal
services for the Company.
7
<PAGE>
Executive Officers
Set forth below are the executive officers of the Company who are not
Directors. Executive officers serve at the pleasure of the Board of Directors.
Information is not included in this Proxy Statement for that portion of any
period for which information is required during which any executive officer did
not hold such position.
Robert William Jewett
Mr. Jewett, age 42, has served as Senior Vice President and General Counsel
of the Company since 1991 and as Secretary since 1983. He served as Vice
President and General Counsel from 1988 to 1991 and as Corporate Counsel from
1981 to 1988.
Paul W. Kolacki
Mr. Kolacki, age 52, has served as Executive Vice President and Chief
Operating Officer of the Company's Portamedic Health Information Services
Division since 1991. He was Senior Vice President and General Manager of the
Company's Health Information Services Eastern Division from 1990 to 1991, Senior
Vice President and General Manager, Eastern Division of the Company from 1988 to
1990 and Vice President and General Manager, Eastern Division, from 1986 to
1988. He was Division Vice President and Great Lakes Zone Manager from 1983 to
1986. Mr. Kolacki has been an employee of the Company since 1964.
Fred Lash
Mr. Lash, age 49, has served as Senior Vice President of the Company since
1993, as Chief Financial Officer since 1989 and as Treasurer since 1987. He was
Chief Accounting Officer from 1988 to 1989, and Controller from 1987 to 1988.
Robin A. Lovely
Ms. Lovely, age 39, has served as Executive Vice President and Chief
Operating Officer of the Company's Nurse's House Call Division since June, 1994.
She was President and owner of Subacute Solutions, Inc. from August, 1993, to
June, 1994; Vice President, Medical Specialty Unit Development, for Integrated
Health Services from July, 1992 to August, 1993; Chief Operating Officer for
Mariner Health Care from May, 1991 to June, 1992; Vice President of Operations
for United Weight Control Corp. from February, 1990 to April, 1991; and
Assistant Vice President, Brigham and Women's Hospital, from 1985 to 1990.
Frank A. Stiner
Mr. Stiner, age 61, has served as Vice President, Administrative Group of
the Company since 1990 and as Assistant Vice President, Administrative Group
from 1988 to 1990. He was Assistant Vice President, Administrative Services from
1982 to 1988. Mr. Stiner has been an employee of the Company since 1959.
8
<PAGE>
Stock Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of December 31, 1994, the beneficial
ownership of the Company's issued and outstanding Common Stock (on the basis of
6,701,802 shares outstanding), including the stock ownership of each person who,
to the Company's knowledge, owns over 5% of the Company's outstanding Common
Stock, each of the directors of the Company, each executive officer named in the
Summary Compensation Table which follows, and the directors and officers of the
Company as a group, and the percentage which the shares owned constitute of the
total shares outstanding.
<TABLE>
<CAPTION>
Amount & Nature Percemt of Class
of Beneficial (based on # of
Name, Position & Address Ownership of shares outstanding
of Beneficial Owners Common Stock (1) 12/31/94)
------------------------ ---------------- ------------------
<S> <C> <C>
Frederick D. King and Kenneth R. Rossano, Trustees ................. 647,550 9.66%
Under the Will of John J. King
c/o Kenneth R. Rossano,
Trustee
63 Hundreds Circle
Wellesley Hills, MA 02181
J.P. Morgan & Co., Incorporated .................................... 604,600 (2) 9.02%
60 Wall Street
New York, NY 10260
Kopp Investment Advisors, Inc. ..................................... 532,061 (3) 7.94%
6600 France Ave., South, Suite 672
Edina, MN 55435
Nicholas Company, Inc. ............................................. 513,900 (4) 7.67%
700 North Water Street
Milwaukee, WI 53202
Dimensional Fund Advisors, Inc. .................................... 360,850 (5) 5.38%
1299 Ocean Avenue
Santa Monica, CA 90401
Directors
Frederick D. King .................................................. 798,358 (6) 11.91%
6 Cross Street
Newport, RI 02840
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Amount & Nature Percent of Class
of Beneficial (based on # of
Name, Position & Address Ownership of shares outstanding
of Beneficial Owners Common Stock (1) 12/31/94)
------------------------ ---------------- ------------------
<S> <C> <C>
Directors (Continued)
G. Earle Wight ..................................................... 244,138 (7) 3.64%
59 Oriole Road
Toronto, Ontario, CAN
M4V 2E9
John E. Nolan, Jr. ................................................. 5,000 .07%
1330 Connecticut Avenue
Washington, D.C. 20036
Kenneth R. Rossano ................................................. 790,701 (8) 11.80%
63 Hundreds Circle
Wellesley Hills, MA 02181
Anne King Sullivan ................................................. 71,555 (9) 1.07%
RR No. 2, Box 349
Peterborough, NH 03458
James M. McNamee ................................................... 116,344 (10) 1.74%
34 Buckley Hill Road
Morristown, NJ 07960
Quentin J. Kennedy ................................................. 1,500 .02%
22 Old Smith Road
Tenafly, NJ 07670
Elaine L. La Monica ................................................ 600 .01%
245 E. 63rd Street, Apt. 1914
New York, NY 10021
Other Most Highly Paid Executive Officers
Paul W. Kolacki .................................................... 10,274 (11) .15%
923 Manchester Drive
Somerville, NJ 08876
Fred Lash .......................................................... 12,579 (12) .19%
14 Mirador Court
Denville, NJ 07834
Robert William Jewett .............................................. 8,177 (13) .12%
71 Wexford Way
Basking Ridge, NJ 07920
All officers and directors as a group (13 total) ................... 1,417,408 (14) 21.15%
</TABLE>
10
<PAGE>
- ----------
(1) Includes shares, if any, held by or for a spouse or minor children or as a
trustee. Unless otherwise indicated, the director or 5% stockholder
possesses sole investment and voting power in respect of these shares.
(2) J.P. Morgan & Co., Incorporated ("J. P. Morgan"), a parent holding
company, filed a statement on Schedule 13G disclosing that on December 31,
1994 it beneficially owned 604,600 shares of Common Stock of the Company,
representing approximately 9.0% of the Common Stock. Such shares are owned
by various individual and institutional investors for which J. P. Morgan
is empowered to direct investments and/or sole power to vote the Common
Stock. For purposes of the reporting requirements of the Securities
Exchange Act of 1934, J. P. Morgan is deemed to be a beneficial owner of
such securities. In the Schedule 13G, J.P. Morgan certifies that the
shares of Common Stock were not acquired for the purpose of, and do not
have the effect of, changing or influencing the control of the Company and
were not acquired in connection with, or as a participant in, any
transaction having such purpose or effect.
(3) Kopp Investment Advisors, Inc. ("Kopp"), a registered investment advisor,
filed a statement on Schedule 13G dated February 10, 1995, disclosing that
on December 31, 1994, it beneficially owned 532,061 shares of Common Stock
of the Company, representing approximately 7.9% of the Common Stock. Such
shares are owned by various individual and institutional investors for
which Kopp serves as investment advisor with power to direct investments
and/or sole power to vote the Common Stock. In the Schedule 13G, Kopp
certifies that the shares of Common Stock were not acquired for the
purpose of, and do not have the effect of, changing or influencing the
control of the Company and were not acquired in connection with, or as a
participant in, any transaction having such purpose or effect.
(4) Nicholas Company, Inc. ("Nicholas") a registered investment advisor, filed
a statement on Schedule 13G dated February 3, 1995, disclosing that on
December 31, 1994, it beneficially owned 513,900 shares of Common Stock of
the Company, representing approximately 7.7% of the Common Stock. Such
shares are owned by various individual and institutional investors for
which Nicholas serves as investment advisor, with power to direct
investments and sole dispositive power. For purposes of the reporting
requirements of the Securities Exchange Act of 1934, Nicholas is deemed to
be a beneficial owner of such securities. In Schedule 13G, Nicholas
certifies that the shares of Common Stock were not acquired for the
purpose of, and do not have the effect of, changing or influencing the
control of the Company and were not acquired in connection with, or as a
participant in, any transaction having such purpose or effect.
(5) Dimensional Fund Advisors, Inc., ("Dimensional"), a registered investment
advisor, filed a statement on Schedule 13G dated January 30, 1995,
disclosing that on December 31, 1994, it beneficially owned 360,850 shares
of Common Stock of the Company, representing approximately 5.4% of the
Common Stock. Such shares are held in portfolios of DFA Investment
Dimensions Group, Inc., a 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 Participator Group Trust, investment vehicles
for qualified employee benefit plans, all of which Dimensional serves as
investment manager. In Schedule 13G, Dimensional certifies that the shares
of Common Stock were not acquired for the purpose of, and do not have the
effect of changing or influencing the control of the Company and were not
acquired in connection with, or as a participant in, any transaction
having such a purpose or effect.
11
<PAGE>
(6) Includes 647,550 shares held by the John J. King Trust of which Mr. King is
co-trustee with shared voting and dispositive power, and 280 shares held by
Mr. King's spouse, Natalie.
(7) Includes 189,843 shares held by the Lucille K. Wight Trust, of which Mr.
Wight is trustee with sole voting and dispositive power, and 44,295 shares
held by 874367 Ontario, Inc., a corporation of which Mr. Wight and his
spouse Sonia are sole shareholders.
(8) Includes 132,889 shares held by Mr. Rossano's spouse, Cynthia, and 647,550
shares held by the John J. King Trust, of which Mr. Rossano is co-trustee
with shared voting and dispositive power.
(9) Includes 71,405 shares held by the Anne K. Sullivan Trust, of which Mrs.
Sullivan is co-trustee but has sole voting and dispositive power, and 150
shares held by Mrs. Sullivan's spouse, Donald.
(10) Includes 22,137 shares held by Mr. McNamee and his spouse Patricia as joint
tenants, 450 shares held by Mr. McNamee's spouse, Patricia, 700 shares held
by Mr. McNamee's spouse Patricia as custodian for Ryan McNamee, their
child, and 350 shares held by Mr. McNamee's spouse Patricia as custodian
for Sean McNamee, their minor child. Also includes 56,625 shares currently
issuable upon the exercise of options.
(11) Includes 400 shares held by Mr. Kolacki and his spouse, Sandra, as joint
tenants. Also includes 8,937 shares currently issuable upon the exercise of
options.
(12) Includes 300 shares held by Mr. Lash and his spouse, Suzanne, as joint
tenants. Also includes 12,062 shares currently issuable upon the exercise
of options.
(13) Includes 7,125 shares currently issuable upon the exercise of options.
(14) Includes shares owned individually by each officer and director in the
group as well as shares indirectly owned by such persons as trustees of
various trusts; however, where more than one officer or director is a
trustee of the same trust, the total number of shares owned by such trust
is counted only once in determining the amount owned by all officers and
directors as a group. Also includes 90,399 shares currently issuable upon
the exercise of options.
Compliance with Section 16(a)
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers and directors of the Company and persons who beneficially own more than
ten percent of the Company's Common Stock to file reports of ownership and
changes in ownership with the Securities and Exchange Commission ("SEC") and the
American Stock Exchange. Based solely on a review of reports and written
representations furnished to the Company, the Company believes that all Section
16(a) filing requirements applicable to its executive officers, directors and
shareholders were complied with.
12
<PAGE>
Compensation of Executive Officers
The following table provides certain summary information concerning
compensation paid or accrued for the last three complete fiscal years to or on
behalf of the Company's Chief Executive Officer and the three other most highly
paid executive officers of the Company whose total annual salary and bonus
exceeded $100,000 in 1994.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation Long Term Compensation
Awards Payouts
- -----------------------------------------------------------------------------------------------------------
Name and LTIP All Other
Principal Salary Bonus Other Options Payouts Compensation
Position Year ($)(1) ($)(2) ($)(3) # (4) ($)(5) $ (6)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
James M. McNamee 1994 227,625 76,344 20,000 0 40,088
President and Chief 1993 219,000 92,375 -- 25,000 82,875 36,453
Executive Officer 1992 210,500 90,313 -- 112,500 165,938 36,267
Paul W. Kolacki 1994 141,979 40,000 -- 18,000 17,287
Executive Vice President and 1993 118,300 30,000 -- 15,000 -- 26,257
Chief Operating Officer 1992 110,000 30,000 2,290 22,250 -- 62,842
Fred Lash 1994 133,167 22,500 -- 11,300 11,678
Senior Vice President 1993 108,333 25,000 -- 18,000 -- 11,460
Chief Financial Officer 1992 96,667 35,000 -- 21,250 -- 11,257
and Treasurer
Robert William Jewett 1994 110,854 9,500 -- 7,700 6,816
Senior Vice President 1993 90,000 6,500 -- 6,000 -- 6,426
General Counsel and Secretary 1992 84,483 12,000 -- 16,000 -- 6,186
<FN>
- ----------
(1) Includes directors fees paid to Mr. McNamee.
(2) For Mr. McNamee, includes stock awards with a fair market value of
$41,344, $52,875, and $55,313 respectively pursuant to the multiple year
CEO Stock Award and Bonus Plan.
(3) For Mr. Kolacki in 1992 amount represents reimbursement of taxes.
Perquisites fall below the thresholds required for disclosure and,
accordingly, have been omitted.
(4) Includes the effect of a three for two stock split of the Company's
Common Stock in 1992.
(5) Represents fair market value of stock bonus awarded to Mr.
McNamee under the CEO Stock Award and Bonus Plan, which provides for
annual stock bonus from 1990 to 1994 based on sustained earnings growth
since 1989.
(6) The amounts disclosed in this column include:
(a) Company contributions of the following amounts in 1994, 1993 and 1992
respectively, under the Company's Salary Reduction Plan, a defined
contribution plan, on behalf of Mr. McNamee ($1,309, $2,249 and
$2,063), Mr. Kolacki ($1,309, $1,112 and $1,031), Mr. Lash ($1,309,
$1,433, and $888) and Mr. Jewett ($1,155, $765 and $525).
(b) Payment by the Company in 1993 and 1992 of premiums on whole-life
insurance policies in the following annual amounts for Mr. McNamee
($34,204), Mr. Kolacki ($15,978) and Mr. Lash ($10,369) and Mr. Jewett
($5,661).
(c) Payment to Mr. Kolacki ($9,167 in 1993 and $45,833 in 1992)
representing approximate incremental mortgage costs associated with
his relocation to New Jersey.
(d) Payment by the Company in 1994 and 1993 of premiums on a disability
insurance policy for Mr. McNamee of $4,575 and $3,050 respectively.
</FN>
</TABLE>
13
<PAGE>
Option Grants in Last Fiscal Year
The following table provides certain information on option grants in 1994
under the Company's 1992 Stock Option Plan.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Grant Date
Individual Grants Value
- -----------------------------------------------------------------------------------------------------------
% of Total
Options Granted Grant Date
Options to Employees in Exercise Expiration Present
Name Granted # (1) Fiscal Year Price ($/Sh) Date Value $ (3)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
James M. McNamee ............. 20,000 (2) 14.2% $11.88 01/24/04 101,218
Paul W. Kolacki .............. 12,000 (2) 8.5% $11.88 01/24/04 60,731
Fred Lash .................... 10,500 (2) 7.2% $11.88 01/24/04 53,139
Robert William Jewett ........ 5,200 (2) 3.7% $11.88 01/24/04 26,316
<FN>
- ----------
(1) The 1992 Stock Option Plan grants become 25% exercisable commencing 24
months after grant date and 25% become exercisable on each successive
anniversary of that date, with full vesting occuring on the fourth
anniversary date. The options terminate upon termination of employment for
any reason other than death, disability or retirement. Further, to be
eligible to exercise the options, an optionee must remain in the
employment of the Company for a period of 24 months from the date of grant
(or retirement, if earlier). Options that are not fully vested and
exercisable as of the date the optionee terminates employment because of
death, disability or retirement, or as of the date of an actual or
threatened change in control of the Company, become vested and exercisable
in full on such date. Similarly, the vesting of options may be accelerated
in connection with certain mergers, consolidations, sales or transfers by
the Company of substantially all of its assets.]
(2) These options were granted under the 1992 Stock Option Plan on January 25,
1994.
(3) The values shown were calculated using the Black-Scholes option pricing
model and are presented solely for purposes of comparative disclosure in
accordance with certain regulations of the SEC. The Black-Scholes model is
a mathematical formula widely used to value traded stock price volatility
and dividend yield. The actual value that an executive officer may realize,
if any, depends on the amount by which the stock price at the time of
exercise exceeds the exercise price (fair market value of the stock at the
time of the grant). There is no assurance that the value realized by an
executive officer will be at or near the value estimated by the
Black-Scholes model. In calculating the grant date present values set forth
the table, the Company used the following assumptions: (a) expected
volatility of 31%; (b) discount rate of 6.6%; (c) dividend yield of 2%; and
(d) exercise at the end of 10 year period from the date of grant. No
adjustments have been made for non-transferability or risk of forfeiture.
</FN>
</TABLE>
14
<PAGE>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table provides certain information on options exercised in
1994 and the value of certain unexercised options at December 31, 1994.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
FY-End (No.)(2) FY-End ($)(3)
Shares
Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized ($)(1) Unexercisable Unexercisable
- ---- ----------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
James M. McNamee ................... 0 $0 56,625/133,875 15,000/0
Paul W. Kolacki .................... 0 $0 8,937/43,688 3,375/0
Fred Lash .......................... 0 $0 12,062/44,438 6,750/0
Robert William Jewett .............. 0 $0 7,125/25,325 5,250/0
<FN>
- ----------
(1) Amount represents the difference between the exercise price and the fair
market value on the date of exercise, multiplied by the number of options
exercised.
(2) Includes the effect of a three for two stock split of the Company's Common
Stock in 1992.
(3) Amount represents the difference between the exercise price and the fair
market value on December 31, 1994 ($6.50), multiplied by the number of
options unexercised.
</FN>
</TABLE>
15
<PAGE>
Report of the Executive Compensation Committee
The report of the Executive Compensation Committee below
shall not be deemed to be filed under, or incorporated by
reference into any filing under, the Securities Act of 1933
or the Securities Exchange Act of 1934, except to the extent
that the Company specifically incorporates this Report by
reference.
The Executive Compensation Committee of the Board of Directors establishes
the compensation policies for the Company's Chief Executive Officer ("CEO") and
other executive officers. Further, the Committee determines and administers the
Company's compensation programs for cash compensation, stock awards, stock
bonuses and stock options, including the 1992 and 1994 Stock Option Plans and
the CEO Stock Award and Bonus Plan (the "CEO Plan"). The Committee is comprised
of three directors who are not present or former employees of the Company.
The Company believes that performance in the interests of shareholders
should be the main factor driving executive compensation and that ownership of
stock and stock options effectively aligns the financial interests of executive
officers and shareholders.
Because earnings are ultimately reflected in the price of the Company's
stock and, thus, in shareholder value, earnings are an important consideration
in determining cash bonuses, stock awards and stock options. Moreover, the
Committee believes that earnings performance over time is more important than
quarter to quarter or year to year comparisons. Thus, the Committee recognizes
that positioning the Company for future revenue and earnings growth is an
important management function.
The Company's compensation philosophy also seeks to motivate key employees,
including executive officers, to exert their best efforts and reward them for
those efforts, to retain such employees, to attract talented individuals to join
the Company and to increase employee stock ownership.
Compensation for all executive officers includes salary, cash bonuses and
stock options. In addition, the CEO is entitled to stock awards and stock
bonuses (or cash payments in lieu of stock awards or stock bonuses) under the
CEO Plan, described herein. Each year the Committee reviews and determines the
compensation of the CEO and, with the advice and recommendations of the CEO, the
compensation of other executive officers. In furtherance of the Company's policy
to provide incentives and to reward performance, compensation is based on
specific criteria developed through the Company's experience, including
attainment of revenue and expense objectives, planning and organizational
development and personal leadership. The weight accorded each of these factors
is within the Committee's discretion and may depend on the Company's performance
during the year.
16
<PAGE>
In 1990, the Board of Directors adopted the CEO Plan for CEO compensation
for 1990 through 1994. The CEO Plan provides for cash compensation consisting of
salary and bonus, perquisites and, stock awards and stock bonuses. Under the
Plan, cash might be awarded in lieu of stock awards and bonuses.
The CEO's salary through 1994 was established under the CEO Plan. Even with
a modest increase for 1994, the CEO's salary remains lower than the salaries
paid by the companies in the Company's peer group index.
Cash bonuses for the CEO are determined under the CEO Plan, in the
discretion of the Committee, based upon the CEO's performance. During 1994, the
Committee gave considerable weight to the CEO's success in achieving several
goals expected to be important to future growth. First, the Company completed a
difficult integration of several acquisitions that contributed to a 34%
increase in revenues, and the expansion of the number of the Company's branch
offices to support future revenue growth. In addition, the CEO increased the
Company's efficiency and reduced certain operating costs through the
consolidation of branch offices and supervisory personnel, tighter management of
government reimbursed nursing visits, increased automation and the updating of
computer and management systems. Because of the costs associated with the
Company's acquisitions, a decrease in healthcare gross margin, and other factors
that caused increases in selling, general and administrative expenses during
1994, the Company's earnings declined despite increased revenues.
Notwithstanding this decline, the Committee believes that the CEO's efforts in
pursuing and acquiring strategically important businesses, increasing revenues
and reducing certain operating costs have laid the foundation for future revenue
and earnings growth. Taking these factors into consideration, the Committee
determined to award Mr. McNamee the same cash bonus ($35,000) for services
during 1994 as was awarded during 1993.
The CEO Plan also provides for stock awards and stock bonuses. Stock awards
are based on continuing satisfactory performance as CEO measured against
management objectives established by the Board, including corporate growth and
development, profitability, total return to shareholders and management team
development. For 1994, based on these criteria, the committee awarded the CEO
5,250 shares. For the years ended December 31, 1993 and 1992, awards of 11,000
and 15,000 shares, respectively, have been granted. Stock bonuses are based on
sustained earnings growth over the base year 1989. Because of reduced earnings
in 1994, no stock bonuses were awarded for that year.
17
<PAGE>
Continuing its purpose to increase the CEO's ownership of the Company's
stock, the Committee awarded him options for 20,000 shares for 1994. This award
was reduced from 25,000 shares for 1993.
Section 162(m) of the Internal Revenue Code, enacted in 1993 and effective
for taxable years beginning after January 1, 1994, generally limits to $1
million per individual per year the federal income tax deduction for
compensation paid by a publicly-held company to certain executive officers.
Compensation that qualifies as performance-based compensation for purposes of
this section is not subject to the $1 million deduction limitation. Because
section 162(m) was only recently enacted and final regulations from the
Department of Treasury interpreting it have not been issued, there are many
questions regarding the application of the performance-based compensation
exception. The Executive Compensation Committee will continue to evaluate this
provision but presently intends to qualify compensation as performance-based to
the extent feasible and in the best interest of the Company.
EXECUTIVE COMPENSATION COMMITTEE
Quentin J. Kennedy
Anne King Sullivan
John E. Nolan, Jr., Chairman
18
<PAGE>
Stock Price Performance Graph
The Stock Price Performance Graph below shall not be deemed to be filed
under, or incorporated by reference into any filing under, the Securities Act of
1933 or the Securities Exchange Act of 1934, except to the extent that the
Company specifically incorporates this Graph by reference.
The following graph compares the cumulative total shareholder return
(assuming dividends are reinvested) on the Company's Common Stock for the last
five years with the cumulative total return (assuming dividends are reinvested)
of the Standard & Poor's 500 Stock Index and a peer group index consisting of
the Olsten Corporation and In Home Health, Inc. In preparing the peer group
index, the returns of each component issurer in the group were weighted
according to its stock market capitalization. The shareholder return shown on
this graph is not necessarily indicative of future performance.
Comparison of 5 Year Cumulative Return
Company, S&P 500, and Peer Group
Year Ended December 31
-------------------------------------------------
1990 (1) 1991 1992 1993 1994
--------- --------- --------- --------- ---------
HHI $100.00 $168.54 $182.39 $140.20 $ 79.54
Yearly Growth % 0.0% 68.5% 8.2% -23.1% -43.3%
PEER GROUP $100.00 $210.74 $342.08 $374.53 $407.24
Yearly Growth % 0.0% 110.7% 62.3% 9.5% 8.7%
S&P 500 $100.00 $126.31 $131.95 $141.25 $139.56
Yearly Growth % 0.0% 26.3% 4.5% 7.1% -1.2%
The preceding table shows historical stock price performance based on an initial
investment of $100 in 1990 (the base year).
(1) Base Year
19
<PAGE>
Employment Contracts and Change-in-Control Arrangements
In 1990, the Company entered into an employee retention agreement, as
amended (the "Agreement") with Mr. McNamee entitling him to certain benefits if
his employment is terminated within two years of a "change of control", as
defined in the Agreement. Following a change of control, Mr. McNamee is entitled
to retain the same position, duties and compensation as he had prior to the
change of control for a period of two years after the date of the change of
control. After a change in control has occurred, if Mr. McNamee's employment is
terminated by the Company or by Mr. McNamee within two years of the date of the
change of control (other than as a result of his death, disability or for cause,
as defined in the Agreement), Mr. McNamee is entitled to receive a lump sum
payment in cash equal to the aggregate of (a) to the extent unpaid, his highest
base salary through the date of termination (as defined in the Agreement), (b) a
pro rata portion of his recent bonus (as defined in the Agreement, generally to
be the highest annual guaranteed bonus to which he was entitled during the last
two full fiscal years prior to the date of the change of control), (c) twice the
sum of his highest base salary and recent bonus, and (d) all amounts of
compensation previously deferred (with accrued interest thereon) and unpaid and
any accrued vacation pay not yet paid by the Company. In addition, he will be
entitled to receive during the two year period after the change of control, all
benefits payable to him (or his family ) under welfare benefit programs (such as
medical, dental, disability and life insurance programs) equivalent to those
most favorable immediately preceding the date of the change of control. In the
event that Mr. McNamee would be subject to an excise tax, then he should be
entitled to receive an additional payment such that after Mr. McNamee pays such
excise taxes, including any excise tax imposed on any portion of such additional
payment, Mr. McNamee will retain additional payments equal to the excise taxes
imposed.
20
<PAGE>
ITEM 2--RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected the firm of KPMG Peat Marwick LLP,
independent public accountants, to serve as auditors for the fiscal year ending
December 31, 1995, subject to ratification by the shareholders. This firm (and
its predecessor, KMG Main Hurdman) has served as the Company's auditors since
1980.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THIS
SELECTION.
If the appointment is not approved, the Board will select other independent
accountants. It is expected that a member of the firm of KPMG Peat Marwick LLP
will be present at the Annual Meeting, will have an opportunity to make a
statement if so desired, and will be available to respond to appropriate
questions.
Shareholder Proposals for the 1996 Annual Meeting
Proposals of shareholder intended for inclusion in the Proxy Statement for
the Annual Meeting of Shareholders to be held in 1996, must be received at the
Company's executive offices not later than December 27, 1995. Proponents should
submit their proposals by Certified Mail -- Return Receipt Requested.
Solicitation of Proxies
The solicitation of proxies will be made primarily by mail. Proxies may
also be solicited personally and by telephone or telegraph by regular employees
of the Company, without any additional remuneration and at minimal cost. The
Company has also retained the services of Solakian & Associates, Inc.,
Flemington, New Jersey to solicit proxies on behalf of the Company. The fee to
be paid by the Company for such services is not expected to exceed $2,500. The
cost of soliciting the proxies will be borne by the Company.
BY ORDER OF THE BOARD OF DIRECTORS
HOOPER HOLMES, INC.
Robert William Jewett
Secretary
April 26, 1995
21
<PAGE>
HOOPER HOLMES, INC.
Proxy Solicited on Behalf of the Board of Directors of
the Company for Annual Meeting, May 16, 1995
P The undersigned hereby constitutes and appoints James M. McNamee and
R Robert William Jewett and each of them, the true and lawful attorneys,
O agents and proxies of the undersigned, with full power of substitution, to
X vote with respect to all the shares of Common Stock of Hooper Holmes,
Y Inc., standing in the name of the undersigned at the close of business on
March 31, 1995, at the Annual Meeting of Shareholders and all adjournments
thereof, with all powers that the undersigned would possess if personally
present.
(Change of address)
------------------------------
------------------------------
------------------------------
------------------------------
You are encouraged to specify your choices by marking the appropriate boxes, SEE
REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance
with the Board of Director's recommendations. The Proxy Committee cannot vote
your shares unless you sign and return this card.
SEE REVERSE
SIDE
<PAGE>
Please mark your
[X] votes as in this
example.
This proxy when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted FOR election of
directors, and FOR proposal 2.
The Board of Directors recommends a vote FOR Election of Directors and FOR
proposal 2.
1. Election of FOR WITHHELD FOR AGAINST ABSTAIN
Directors [ ] [ ] 2. Approval of [ ] [ ] [ ]
Nominees: Independent
James M. McNamee Auditors.
Kenneth R. Rossano
G. Earle Wight
3. In their discretion, upon other matters as may properly come before
the meeting of any adjournment(s) thereof.
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------
SIGNATURE(S) DATE The signer hereby revokes all
------------------ --------- proxies heretofore given by the
signer to vote at said meeting or
any adjournments thereof.
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
