<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
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:
<TABLE>
<S> <C>
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
American Shared Hospital Services
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
American Shared Hospital Services
- --------------------------------------------------------------------------------
(Name of Person Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Not applicable.
------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
Not applicable.
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
Not applicable.
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
Not applicable.
------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
AMERICAN SHARED HOSPITAL SERVICES
FOUR EMBARCADERO CENTER, SUITE 3620
SAN FRANCISCO, CALIFORNIA 94111-4155
NOTICE OF 1996 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 28, 1996
To the Shareholders of American Shared Hospital Services:
NOTICE IS HEREBY GIVEN that, pursuant to a call of the Board of Directors,
the 1996 Annual Meeting (the "Meeting") of Shareholders of American Shared
Hospital Services, a California corporation (the "Company"), will be held at the
Ritz-Carlton Hotel, located at 600 Stockton Street at California, San Francisco,
California on Friday, June 28, 1996 at 9:00 a.m. (Pacific Time), to consider and
act upon the following matters, all as set forth in the Proxy Statement.
1. ELECTION OF DIRECTORS. To elect the following seven nominees to the
Board of Directors to serve until the next Annual Meeting of Shareholders and
until their successors are elected and have qualified.
<TABLE>
<S> <C>
Ernest A. Bates, M.D. Stanley S. Trotman, Jr.
Willie R. Barnes Augustus A. White, III, M.D.
Matthew Hills Charles B. Wilson, M.D.
John F. Ruffle
</TABLE>
2. OTHER BUSINESS. To transact such other business and to consider and
take action upon any and all matters that may properly come before the Meeting
and any and all adjournments thereof.
The Board of Directors knows of no matters, other than that set forth in
paragraph (1) above (discussed in greater detail in the accompanying Proxy
Statement), that will be presented for consideration at the Meeting.
The Board of Directors has fixed the close of business on May 7, 1996 as
the record date for the determination of shareholders entitled to vote at the
Meeting.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE DATE,
SIGN AND MAIL THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED AS PROMPTLY AS
POSSIBLE. THE PROXY IS REVOCABLE AND WILL NOT AFFECT YOUR RIGHT TO VOTE IN
PERSON IF YOU ATTEND THE MEETING. IN ORDER TO FACILITATE THE PROVISION OF
ADEQUATE ACCOMMODATIONS, PLEASE INDICATE ON THE PROXY WHETHER YOU PLAN TO ATTEND
THE MEETING IN PERSON.
By Order of the Board of Directors
WILLIE R. BARNES
Corporate Secretary
Dated: May 24, 1996
San Francisco, California
<PAGE> 3
AMERICAN SHARED HOSPITAL SERVICES
FOUR EMBARCADERO CENTER, SUITE 3620
SAN FRANCISCO, CALIFORNIA 94111-4115
------------------------
PROXY STATEMENT
1996 ANNUAL MEETING OF SHAREHOLDERS
JUNE 28, 1996
------------------------
INTRODUCTION
This Proxy Statement is being furnished to shareholders of American Shared
Hospital Services, a California corporation (the "Company"), in connection with
the solicitation of proxies by the Company's Board of Directors for use at the
1996 Annual Meeting of Shareholders scheduled to be held on Friday, June 28,
1996 and at any adjournment or adjournments thereof (the "Meeting"). It is
anticipated that this Proxy Statement and the Proxy will first be sent to
shareholders on or about May 24, 1996.
The matters to be considered and voted upon at the Meeting will be:
(1) To elect seven persons to the Board of Directors to serve until
the next Annual Meeting of Shareholders and until their successors are
elected and have qualified.
(2) To transact such other business as may properly be brought before
the Meeting and any and all adjournments thereof.
Only shareholders of record at the close of business on May 7, 1996 (the
"Record Date") are entitled to notice of and to vote at the Meeting.
REVOCABILITY OF PROXIES
A proxy for use at the Meeting is enclosed. Any shareholder who executes
and delivers such proxy may revoke it at any time prior to its use by filing
with the Secretary of the Company either written instructions revoking such
proxy or a duly executed proxy bearing a later date. Written notice of the death
of the person executing a proxy, before the vote is counted, is tantamount to
revocation of such proxy. A proxy may also be revoked by attending the Meeting
and voting in person.
SOLICITATION OF PROXIES
This proxy solicitation is being made by the Board of Directors of the
Company. The expense of the solicitation will be paid by the Company. To the
extent necessary to assure sufficient representation at the Meeting, proxies may
be solicited by any appropriate means by directors, officers, regular employees
of the Company and the stock transfer agent for the Common Shares, who will not
receive any additional compensation therefor. The Company will request that
banks, brokers and other fiduciaries solicit their customers who own
beneficially the Common Shares listed of record in names of nominees and,
although there is no formal arrangement to do so, the Company will reimburse
such persons the reasonable expenses of such solicitation. In addition, the
Company may pay for and utilize the services of individuals or companies not
regularly employed by the Company in connection with the solicitation of
proxies, if the Board of Directors of the Company determines that this is
advisable.
OUTSTANDING SECURITIES
The Board of Directors has fixed May 7, 1996 as the Record Date for the
determination of shareholders entitled to notice of, and to vote at, the
Meeting. At the close of business on the Record Date, there were outstanding and
entitled to vote 4,342,254 Common Shares. The Common Shares are the only class
of securities entitled to vote at the Meeting.
<PAGE> 4
VOTE REQUIRED AND VOTING PROCEDURES
Each holder of Common Shares will be entitled to one vote, in person or by
proxy, for each share outstanding in its name on the books of the Company as of
the Record Date for the Meeting on each of the matters duly presented for vote
at the Meeting. However, in connection with the election of directors, shares
are permitted to be voted cumulatively, if (i) a shareholder present at the
Meeting has given notice at the Meeting, prior to the voting, of such
shareholder's intention to vote its shares cumulatively and (ii) the names of
the candidates for whom such shareholder desires to cumulate votes have been
placed in nomination prior to the voting. If a shareholder has given such
notice, all shareholders may cumulate their votes for candidates in nomination.
Cumulative voting allows a shareholder to give one nominee as many votes as is
equal to the number of directors to be elected, multiplied by the number of
shares owned by such shareholder or to distribute votes on the same principle
between two or more nominees. In the election of directors, the seven candidates
receiving the highest number of votes will be elected directors of the Company.
Discretionary authority to cumulate votes is hereby solicited by the Board of
Directors.
In connection with the solicitation by the Board of Directors of proxies
for use at the Meeting, the Board of Directors has designated Ernest A. Bates,
M.D. and Richard Magary as proxies. Common Shares represented by all properly
executed proxies will be voted at the Meeting in accordance with the
instructions specified thereon. If no instructions are specified, the Common
Shares represented by any properly executed proxy will be voted FOR the election
of the seven nominees for the Board of Directors named herein.
A majority of the Common Shares outstanding on the Record Date must be
represented in person or by proxy at the Meeting in order to constitute a quorum
for the transaction of business. Assuming the presence of a quorum, the
affirmative vote of the holders of a majority of the Common Shares represented
in person or by proxy and entitled to vote (which shares voting affirmatively
also constitute at least a majority of the required quorum) is required for the
approval of Proposal No. 1.
All outstanding shares of the Company's Common Shares represented by
properly executed and unrevoked proxies received in the accompanying form in
time for the Meeting will be voted. A shareholder may, with respect to the
election of directors (i) vote for the election of all seven nominees named
herein as directors, (ii) withhold authority to vote for all such director
nominees or (iii) vote for the election of all such director nominees other than
any nominee(s) with respect to whom the shareholder withholds authority to vote
by so indicating in the appropriate space on the proxy. Withholding authority to
vote for a director nominee will not prevent such director nominee from being
elected. If no instructions are given, the Common Shares will be voted for the
election of all seven nominees named herein as directors.
The Board of Directors is not aware of any matters that will be presented
at the Meeting other than as set forth in the accompanying Notice of the Annual
Meeting of Shareholders. If, however, any such matters are properly presented at
the Meeting, in the absence of instructions to the contrary, the proxies will be
voted in accordance with the best judgment and in the discretion of the named
proxy holders.
A proxy submitted by a shareholder may indicate that all or a portion of
the Common Shares represented by such proxy are not being voted by such
shareholder with respect to a particular matter. This could occur, for example,
when a broker is not permitted to vote Common Shares held in street name on
certain matters in the absence of instructions from the beneficial owner of such
shares. The Common Shares subject to any such proxy which are not being voted
with respect to a particular matter (the "non-voted shares") will be considered
Common Shares not present and entitled to vote on such matter, although such
Common Shares may be considered present and entitled to vote for other purposes
and will count for purposes of determining the presence of a quorum. In the
election of directors, the seven nominees receiving the highest number of votes
of Common Shares represented in person or by proxy at the Meeting will be
elected directors of the Company. Accordingly, non-voted shares will not affect
the outcome of the election of directors.
The Board of Directors has appointed Geraldine Zarbo of American Stock
Transfer & Trust Company, the registrar and transfer agent for the Common
Shares, or her designee, as the Inspector of Elections for the Meeting. The
Inspector of Elections will determine the number of Common Shares represented in
person or by proxy at the Meeting, whether a quorum exists, the authenticity,
validity and effect of proxies and will receive and count the votes. The
election of directors will not be by ballot unless a shareholder demands
election by ballot at the Meeting before the voting begins.
2
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Shares as of May 20, 1996, of (i) each person
known to the Company to own beneficially 5% or more of the Common Shares, (ii)
each director of the Company, (iii) the chief executive officer and four of the
Company's most highly compensated executive officers and (iv) all directors and
executive officers as a group.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
<TABLE>
<CAPTION>
COMMON SHARES OWNED BENEFICIALLY
-------------------------------------
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(5) CLASS(10)
- --------------------------------------------------------------- ------------------------ ----------
<S> <C> <C>
Total Number of Shares......................................... 6,651,601(6) 100.0%
Ernest A. Bates, M.D.(1)....................................... 2,586,000(7) 44.3%
SunAmerica Inc.(2)............................................. 128,066(2) 2.9%
SunAmerica Life Insurance Company(2)........................... 277,473(2) 6.3%
Anchor National Life Insurance Company(2)...................... 406,819(2) 9.2%
Lion Advisors, L.P............................................. 384,195(8) 8.7%
1301 Avenue of the Americas
New York, NY 10019
AIF II, L.P.................................................... 170,752(8) 3.9%
c/o Apollo Advisors, L.P.
1999 Avenue of the Stars
Los Angeles, CA 90071
General Electric Company....................................... 225,000(9) 5.0%
c/o GE Medical Systems
20825 Swenson Drive
Waukesha, WI 53186
Willie R. Barnes(1)............................................ 3,000(7) *
Matthew Hills(1)(3)............................................ -- --
John F. Ruffle(1)(4)........................................... 21,200 *
Stanley S. Trotman, Jr.(1)(3).................................. 80,000 1.8%
Augustus A. White, III, M.D.(1)................................ 15,000(7) *
Charles B. Wilson, M.D.(1)..................................... 4,800(7) *
Craig K. Tagawa(1)............................................. 127,600(7) 2.9%
Senior Vice President
David Neally(1)................................................ 52,800(7) 1.2%
Senior Vice President -- Operations
Richard Magary(1).............................................. 73,300(7) 1.7%
Senior Vice President -- Administration
Gregory Pape(1)................................................ 57,500(7) 1.3%
Senior Vice President -- Sales and Marketing
All Directors & Executive Officers as a Group(12 persons)...... 3,056,700(7) 49.4%
</TABLE>
- ---------------
* Less than 1%
(1) The address of each such individual is c/o American Shared Hospital
Services, Four Embarcadero Center, Suite 3620, San Francisco, California
94111-4155.
(2) Based on information contained in the Schedule 13D dated May 17, 1995, as
amended November 13, 1995, and March 11, 1996 and filed with the Securities
and Exchange Commission by SunAmerica Inc.
3
<PAGE> 6
and its direct and indirect subsidiaries, SunAmerica Life Insurance Company
(formerly known as Sun Life Insurance Company of America) and Anchor
National Life Insurance Company, such entities then owned beneficially
557,923 Common Shares, including immediately exercisable Warrants to
acquire 116,436 Common Shares. As of October 6, 1995, such entities were
issued an additional 201,607 Common Shares and 52,828 Warrants. The address
of each Beneficial Owner is c/o SunAmerica, Inc., 1 SunAmerica Center, Los
Angeles, CA 90067.
(3) Mr. Hills and Mr. Trotman were elected to the Board of Directors effective
February 16, 1996.
(4) Mr. Ruffle was elected to the Board of Directors effective May 18, 1995.
(5) Each person directly or indirectly has sole voting and investment power
with respect to the shares listed under this column as being owned by such
person.
(6) Represents the aggregate of issued and outstanding Common Shares plus
Common Shares that all persons or groups of persons are entitled to acquire
upon the exercise of options or warrants within 60 days after May 20, 1996.
(7) Includes shares underlying options that are currently exercisable or which
will become exercisable within 60 days following May 20, 1996: Dr. Bates,
1,495,000; Mr. Barnes, 2,000 shares; Dr. White, 12,000 shares; Dr. Wilson,
7,200 shares; Mr. Tagawa, 125,000 shares; Mr. Neally, 51,700 shares; Mr.
Magary, 60,000 shares; Mr. Pape, 57,000 shares; and Directors and Executive
Officers as a group, 1,840,900 shares.
(8) Based on information contained in the Schedule 13D dated May 17, 1995, as
amended November 13, 1995 and November 27, 1995, and filed jointly with the
Securities and Exchange Commission by Lion Advisors, L.P. ("Lion") and AIF
II, L.P. ("AIF II"), such entities then owned beneficially 381,135 Common
Shares, including immediately exercisable Warrants to acquire 79,541 Common
Shares. As of October 6, 1995, such entities were issued an additional
137,724 Common Shares and Warrants to acquire 36,088 Common Shares. The
managing general partner of AIF II is Apollo Advisors, L.P. ("Advisors").
Advisors and Lion are affiliates. Lion beneficially holds the indicated
securities for an investment account under management over which Lion has
investment, dispositive and voting power. The Company does not believe that
Lion and AIF II are affiliates of the Company under the Act.
(9) Represents immediately exercisable Warrants to acquire 127,147 Common
Shares and 97,853 Common Shares acquired upon exercise of Warrants
effective March 5, 1996.
(10) Shares that any person or group of persons is entitled to acquire upon the
exercise of options or warrants within 60 days after May 20, 1996, are
treated as issued and outstanding for the purpose of computing the percent
of the class owned by such person or group of persons but not for the
purpose of computing the percent of the class owned by any other person.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
BOARD OF DIRECTORS
The Company's Bylaws provide that there shall be not fewer than six nor
more than 11 directors and the exact number shall be fixed from time to time by
a resolution of the Board of Directors. The number of directors currently is
fixed at seven.
The Board of Directors is proposing the persons named below for election to
the Board of Directors. Each of the persons identified below will be nominated
for election to serve until the next Annual Meeting of Shareholders and until
their successors shall be elected and qualified. Votes will be cast pursuant to
the enclosed proxy in such a way as to effect the election of each of the
persons named below or as many of them as possible under applicable voting
rules. If a nominee shall be unable or unwilling to accept nomination for
election as a director, it is intended that the proxy holders will vote for the
election of such substitute nominee, if any, as shall be designated by the Board
of Directors. Each of the nominees named below has notified the Board of
Directors that, if elected, he is willing to serve as a Director if elected.
4
<PAGE> 7
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES
NAMED BELOW. PROXIES RETURNED TO THE COMPANY WILL BE VOTED "FOR" THE NOMINEES
NAMED BELOW UNLESS OTHERWISE INSTRUCTED.
Set forth below is certain information regarding each of the nominees.
ERNEST A. BATES, M.D. has been a director, the Chairman of the Board and
Chief Executive Officer of the Company since it was incorporated in 1983. He
founded the Company's predecessor limited partnership in 1980. Dr. Bates is 59
years old.
WILLIE R. BARNES has been a director and Corporate Secretary of the Company
since 1984. He has been a partner in the law firm of Musick Peeler & Garrett
since June 1992, was in solo practice from February 1992 until June 1992, was a
partner in the law firm of Katten Muchin Zavis & Weitzman from March 1991 until
January 1992, was a partner in the law firm of Wyman Bautzer Kuchel & Silbert
from April 1989 until its dissolution effective March 14, 1991, and was a
partner in the law firm of Manatt Phelps Rothenberg & Phillips from April 1979
until March 1989. He also is a director of Franchise Finance Corporation of
America. Mr. Barnes is 64 years old.
MATTHEW HILLS became a director of the Company effective February 16, 1996
and has been the Chief Planning Officer for The Berkshire Group, a healthcare
and financial services company, since 1993. From 1990 to 1993, Mr. Hills was a
Manager and Consultant at the LEK Partnership. Prior to joining LEK, Mr. Hills
was an associate in the Corporate Finance Department at Drexel Burnham Lambert
from 1987 to 1990. Mr. Hills graduated from Brandeis University in 1981 and from
Harvard Business School in 1987 and is 36 years old. Mr. Hills was nominated to
serve on the Board of Directors by certain shareholders who were participants in
the Company's repurchase of certain of its Senior Subordinated Notes in 1995.
JOHN F. RUFFLE was elected a Director of the Company on May 18, 1995. He
retired in 1993 as Vice-Chairman of the Board of J.P. Morgan & Co. Incorporated
and from the Board of Directors of Morgan Guaranty Trust Co. New York. He also
is a Director of Bethlehem Steel Corporation; a Director of J.P.M. Advisor
Funds; a Director of Trident Corp.; and a Trustee of The Johns Hopkins
University. He is a graduate of The Johns Hopkins University, with an M.B.A. in
finance from Rutgers University, and is a Certified Public Accountant. Mr.
Ruffle is 59 years old.
STANLEY S. TROTMAN, JR., became a director of the Company effective
February 16, 1996. He has been a Managing Director with the Health Care Group of
PaineWebber, an investment banking firm, since 1995 following the consolidation
of Kidder, Peabody, also an investment banking firm, with PaineWebber, and had
previously co-directed Kidder, Peabody's Health Care Group since April 1990.
Formerly he had been head of the Health Care Group at Drexel Burnham Lambert,
Inc. where he had been employed for approximately 22 years. He received his
undergraduate degree from Yale University in 1965 and holds an M.B.A. from
Columbia Business School in 1967. Mr. Trotman is 52 years old.
AUGUSTUS A. WHITE III, M.D. has been a director of the Company since 1990.
He has been a Professor of Orthopaedic Surgery at Harvard Medical School since
1978. He was Orthopaedic Surgeon-in-Chief at Beth Israel Hospital, Boston, MA.,
from 1978 to 1991. He is a director of Orthologic Corporation. Dr. White is 58
years old.
CHARLES B. WILSON, M.D. has most recently been a director of the Company
since June 1993. He also was a director of the Company from March 1984 until
March 1989. He has been a Professor and Director of the Brain Tumor Research
Foundation at the University of California Medical Center, San Francisco, since
1968, and from 1968 until April 1, 1994 and March 8, 1996 to present, has held
the position of Chief of its Department of Neurosurgery. Dr. Wilson is 66 years
old.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held four (4) meetings during 1995,
and it took one action by Unanimous Written Consent. Dr. Bates attended all four
(4) of the meetings. Other directors who are nominees for Director at the
Meeting and who were members of the Board during 1995 attended meetings as
5
<PAGE> 8
follows: Mr. Barnes attended two (2) of the four (4) meetings, Mr. Ruffle
attended all three (3) meetings held during the period he was a Director, Dr.
White attended three (3) of the four (4) meetings, and Dr. Wilson attended one
(1) of the four (4) meetings. Mr. Hills and Mr. Trotman were elected to the
Board of Directors in February 1996.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has standing Audit, Compensation, Stock Option and Nominating
Committees, each of which is described below.
Members of the Audit Committee include Mr. Ruffle (Chairman), Mr. Hills and
Dr. White. The purpose of the Audit Committee is to review the financial records
of the Company, to recommend to the Board of Directors the appointment of
independent auditors and to review the reports of such auditors. During 1995,
the Audit Committee held one meeting.
Members of the Compensation Committee include Dr. White (Chairman), Mr.
Barnes and Dr. Wilson. The function of the Compensation Committee is to
recommend to the Board of Directors the compensation of the Company's executive
officers. The Compensation Committee did not meet during 1995.
Dr. Bates (Chairman) and Mr. Ruffle are members of the Stock Option
Committee. The purpose of the Stock Option Committee is to administer the
Company's 1984 Stock Option Plan and 1995 Stock Option Plan, and to determine
recipients of awards pursuant to such plans and the terms of such awards. No
member of the Stock Option Committee received a discretionary grant or award
under an option plan of the Company while serving on such committee or during
the year preceding such service. There was one meeting of the Stock Option
Committee during 1995.
Members of the Nominating Committee include Mr. Trotman (Chairman) and Mr.
Ruffle. The purpose of the Nominating Committee is to recommend candidates for
election to the Board of Directors. The Nominating Committee did not meet during
1995. The Nominating Committee will consider nominations submitted by
shareholders. A shareholder who wishes to have a nomination for director
considered by such committee must submit the name of the nominee and a brief
description of such person's professional background. Such information must be
delivered in writing to the Company, attention Secretary, at its principal
executive offices on or prior to April 1 of a given year to be considered in
connection with the annual meeting to be held in such year.
DIRECTOR COMPENSATION
During 1994 and 1995, non-employee directors were scheduled to receive an
annual retainer fee of $5,000 each. The non-employee directors agreed to defer
payment of the retainer fees during 1994 and 1995 to assist the Company with its
cash flow. The 1994 retainer fees were paid in February 1995. The Board has
approved the election by any director to receive a portion of his 1995 and 1996
retainer fees in Common Shares in an amount approximately equalling such fees
otherwise payable in cash. Non-employee directors also are entitled to receive
$1,000 for attendance in person at each regular and special meeting of the Board
of Directors. In addition, non-employee directors who were members of a
committee of the Board of Directors were entitled to receive $200 for attendance
in person at each committee meeting. Non-employee directors are not entitled to
any fee for Board of Directors or committee meetings held by conference
telephone at which they are not present in person. Of the four Board meetings
held during 1995, one was a regular meeting which directors attended in person,
and three were special meetings which were held by conference telephone.
Non-employee directors also received reimbursement of expenses incurred in
attending meetings. No payment is made for attendance at meetings by any
director who is an employee of the Company. The director fee amounts for 1996
will not change from 1994 and 1995 schedules.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation paid by the Company for the
fiscal years ending December 31, 1993, December 31, 1994 and December 31, 1995
and paid in those years for services rendered
6
<PAGE> 9
in all capacities during 1993, 1994 and 1995, respectively, to the Chief
Executive Officer and each executive officer other than the Chief Executive
Officer who served as an executive officer at December 31, 1995 and earned cash
compensation of $100,000 or more during 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS(4)
ANNUAL COMPENSATION ------------
--------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS COMPENSATION(2) OPTIONS
- -------------------------------------- ---- --------- ------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Ernest A. Bates(3).................... 1995 $ 223,253 -- -- 1,495,000
Chairman of the Board, 1994 $ 225,218 -- -- --
Chief Executive Officer 1993 $ 235,010 -- -- --
Craig K. Tagawa(3).................... 1995 $ 129,328 $26,003 -- 90,000
Senior Vice President 1994 $ 119,426 -- -- --
1993 $ 122,237 -- -- --
David Neally.......................... 1995 $ 104,654 $48,076 -- 45,000
Senior Vice President 1994 $ 91,000 $17,322 -- --
Operations 1993 $ 73,692 $ 5,137 -- 8,250
Gregory Pape.......................... 1995 $ 265,645 -- -- 45,000
Senior Vice President 1994 $ 238,186 -- -- --
Sales and Marketing 1993 $ 196,177 -- -- 20,000
Richard Magary(3)..................... 1995 $ 99,780 $ 9,927 -- 45,000
Senior Vice President 1994 $ 99,822 -- -- --
Administration 1993 $ 104,701 -- -- --
</TABLE>
- ---------------
(1) Each amount under this column includes amounts accrued in 1993, 1994 and
1995 that would have been paid to such persons in such years, except that
such amounts were instead deferred pursuant to the Retirement Plan for
Employees of American Shared Hospital Services and CuraCare, a defined
contribution plan and ASHS' Flexible Benefit Plan, a defined contribution
plan. Both plans are available to employees of the Company generally.
(2) The Company has determined that, with respect to the executive officers
named in the Summary Compensation Table, the aggregate amount of other
benefits does not exceed the lesser of $50,000 or 10% of the total annual
salary and bonus reported in the Summary Compensation Table as paid to such
executive officer in the relevant year.
(3) The lower salary in 1994 compared with 1993 reflects a 5% salary reduction,
effective February 6, 1994.
(4) No restricted stock awards or long-term incentive plan payouts were made to
the executive officers named in the Summary Compensation Table during the
years listed in the Summary Compensation Table.
7
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth stock options granted in 1995 to each of the
Company's executive officers named in the Summary Compensation Table. The table
also sets forth the hypothetical gains that would exist for the options at the
end of their ten-year terms, assuming compounded rates of stock appreciation of
5% and 10%. The actual future value of the options will depend on the market
value of the Company's Common Stock.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------
PERCENT OF EXERCISE OR POTENTIAL REALIZABLE VALUE AT
TOTAL OPTIONS BASE PRICE ASSUMED ANNUAL RATES
GRANTED TO ------------ OF STOCK PRICE APPRECIATION
EMPLOYEES IN MARKET PRICE FOR OPTION TERM(1)
OPTIONS FISCAL YEAR ON GRANT EXPIRATION ------------------------------------
NAME GRANTED 1995 DATE DATE 0% 5% 10%
- --------------------- --------- ------------- ------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Ernest A. Bates, 1,495,000 86.4% $0.01/share 8/15/05 $2,414,425 $3,946,800 $6,279,000
M.D. ..............
$1.625
Craig K. Tagawa...... 90,000 5.2% $1.625/share 8/15/05 -- $ 92,250 $ 232,650
(2)
David Neally......... 45,000 2.6% $1.625/share 8/15/05 -- $ 46,125 $ 116,325
(2)
Gregory Pape......... 45,000 2.6% $1.625/share 8/15/05 -- $ 46,125 $ 116,325
(2)
Richard Magary....... 45,000 2.6% $1.625/share 8/15/05 -- $ 46,125 $ 116,325
(2)
</TABLE>
- ------------------------
(1) These amounts, based on assumed annually compounded appreciation rates of
0%, 5% and 10% as prescribed by Securities and Exchange Commission rules,
are not intended to forecast possible future appreciation, if any, of the
Company's stock price. The Company did not use an alternative formula for a
grant date valuation of the options as it is not aware of any formula which
will determine with reasonable accuracy a present value based on future
unknown or volatile factors.
(2) All such options were granted pursuant to the Company's 1995 Stock Option
Plan and have an exercise price equal to the market price of a share of the
Company's Common Stock on the American Stock Exchange on the respective
grant date.
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
The "Long-Term Incentive Plan Awards" ("LTIP Awards") table has been
omitted because no LTIP Awards made during 1995 to the Company's executive
officers named in the Summary Compensation Table.
8
<PAGE> 11
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth the number of shares acquired on exercise of
stock options and the aggregate gains realized upon exercise of such options
during 1995, by the Company's executive officers named in the Summary
Compensation Table. The following table also sets forth the number of shares
underlying exercisable and unexercisable options held by such executive officers
on December 31, 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END($)
ACQUIRED ON VALUE --------------------------- -----------------------------
NAME EXERCISE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ernest A. Bates, M.D. ... -- -- 1,495,000 -- $ 1,947,238(2) --
Craig K. Tagawa.......... -- -- 125,000 -- (1) --
David Neally............. -- -- 50,050 4,950 (1) (1)
Gregory Pape............. -- -- 53,000 12,000 (1) (1)
Richard Magary........... -- -- 60,000 -- (1) --
</TABLE>
- ---------------
(1) The table does not include the aggregate gains that would have been realized
had those options been exercised on December 31, 1995, because the option
exercise price for each option exceeded the market price per Common Share on
such date.
(2) This amount is calculated by multiplying the number of Common Shares
underlying the options at December 31, 1995 by the market price per Common
Share on such date less the option exercise price.
BOARD OF DIRECTORS AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following Report of the Board of Directors and Stock Option Committee
shall not be deemed incorporated by reference 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.
This Report of the Board of Directors and Stock Option Committee describes
the Company's method of compensating its executive officers, and describes the
basis on which 1995 compensation was paid to such executive officers, including
those named in the Summary Compensation Table.
The Board of Directors determined that compensation paid in 1995 by the
Company to its Chief Executive Officer and other executive officers would be
based on policies in effect in recent prior years. As a result, it was
unnecessary for the Compensation Committee to meet, and it did not meet, during
1995.
The Company's compensation program seeks to establish compensation that is
competitive in both the healthcare industry and among entrepreneurial,
growth-oriented companies in order to attract and retain high quality employees.
Compensation is linked to each employee's level of responsibility and personal
achievements with respect to operational and financial goals established by the
Chief Executive Officer and the Board of Directors. Depending on the individual
officer's area of responsibility, such goals may include new business and
revenue acquisition, operating expense reduction and control, operating
efficiencies, etc. In addition, the compensation system seeks to develop and
encourage employee ownership of the Company's stock through stock options.
The primary component of executive compensation for the Company is base
salary, except in the case of the Senior Vice President -- Sales and Marketing
where sales commissions are a substantial component of compensation and are
included under "salary" in the table above. Discretionary bonuses may be paid,
based on a formula, if financial and other results of the individual executive's
area of responsibility meet or exceed financial and operational targets
established at the beginning of the fiscal year. No bonuses have been paid by
9
<PAGE> 12
the Company during the last three fiscal years, except in the case of bonuses
paid pursuant to pre-established formulae based on goals and targets of a
specific business area.
Base salary was established for the Chief Executive Officer and other
executive officers with the assistance of an outside consulting firm in 1991.
Such compensation was designed to fall in the mid-range for the relevant
executive position or compensation paid by a group of entrepreneurial,
growth-oriented companies believed by the Company to be comparable in their
stage of development and business condition, based on information provided by
the independent compensation consulting organization. The companies surveyed
were not identical to those reflected in the performance graph set forth in this
Proxy Statement. The compensation of most of the Company's senior executives,
including the Chief Executive Officer, was reduced by up to 10% during the
period from June 1991 through March 1992. Such executive officers were
compensated throughout 1993 at the level in effect prior to the reductions. Any
other increases in base compensation during the past three fiscal years have
been made only to reflect the increased responsibilities of the particular
executive officer. The compensation of certain of the Company's executive
officers again was reduced, beginning in February 1994, by 5%.
In addition to base compensation, the Company has used grants of stock
options to retain senior executives (other than the Chief Executive Officer) and
to motivate them to improve long-term stock market performance. In 1995, the
Company granted options to certain of its officers and directors under it 1995
Stock Option Plan. Subject to shareholder approval, (which was obtained on
October 6, 1995), grants of options were made on August 15, 1995 to each of the
following for the respective number of Common Shares indicated: James Brock,
then Senior Vice President (4,500); James Gordin, Acting Chief Financial Officer
(4,500); one non-employee advisor of the Company (9,500); Richard Magary, Senior
Vice President -- Administration (45,000); Gregory Pape, Senior Vice
President -- Sales and Marketing (45,000); David Neally, Senior Vice
President -- Operations (45,000); and Craig Tagawa, Senior Vice President
(90,000). On October 6, 1995, three directors then serving as members of the
Company's Board of Directors were granted options to purchase 4,000 Common
Shares each, pursuant to terms of the Company's 1995 Stock Option Plan. The
number of options granted in the past was determined by reference to the level
of responsibility of the particular executive in the Company and such
executive's proposed role in the Company's future operations.
<TABLE>
<CAPTION>
BOARD OF DIRECTORS STOCK OPTION COMMITTEE
- ------------------------------- -----------------------
<S> <C>
Ernest A. Bates, M.D. Chairman Ernest A. Bates, M.D.
Willie R. Barnes John F. Ruffle
Matthew Hills
John F. Ruffle
Stanley S. Trotman, Jr.
Augustus A. White III, M.D.
Charles B. Wilson, M.D.
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION; CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
On April 6, 1994, the Company entered into settlement agreements with each
of Elekta Instruments, Inc. ("Elekta"), the manufacturer of the Gamma Knife, and
NME Hospitals, Inc., d/b/a USC University Hospital ("USC Hospital"), the lessor
of a Gamma Knife, to resolve disputes arising out of the Company's inability to
make a required progress payment under the agreement to purchase such Gamma
Knife. The settlement agreements required that the Company terminate its
original agreement to purchase the Gamma Knife from Elekta and to lease the
Gamma Knife to USC Hospital. Further conditions to execution of the settlement
agreements included that Dr. Bates, the Company's Chairman and Chief Executive
Officer, enter into a purchase agreement and lease agreement with Elekta and USC
Hospital, respectively, substantially identical to the respective terminated
agreements.
Pursuant to the new purchase agreement, Dr. Bates was entitled to purchase
the Gamma Knife from Elekta for an aggregate purchase price of $2,900,000 plus
sales tax. Dr. Bates obtained financing for the Gamma Knife purchase from an
unaffiliated third party. Dr. Bates' lender financed the total purchase price,
10
<PAGE> 13
less $290,000 advanced by the Company, pursuant to an interest bearing
installment note and security agreement. The Company advanced $290,000 of the
purchase price, to be repaid by Dr. Bates over the term of the new lease
agreement, pursuant to a promissory note bearing interest at 6% per annum and
repayable over 60 months.
The Company and Dr. Bates entered into an option agreement entitling the
Company to purchase the Gamma Knife from Dr. Bates for an amount equal to the
remaining debt obligations associated with the Gamma Knife plus costs and
losses, if any, incurred by the Chief Executive Officer. This option was
assigned to GKF and exercised on February 3, 1996. In connection with the
exercise of the option by GKF, the interest bearing installment note was
cancelled.
On October 6, 1995, the Company entered into a Stock Option Agreement with
its Chairman and Chief Executive Officer. Under that Option Agreement, Dr. Bates
was granted a ten-year option to purchase 1,495,000 Common Shares for an initial
exercise price of $0.01 per share. In addition, on May 17, 1995, as part of the
Notes Repurchase, the Company issued 184,000 Common Shares to Dr. Bates in
partial consideration of his personal guarantee of $6,500,000 of indebtedness of
the Company.
Willie R. Barnes, the Secretary and a director of the Company, is a partner
in the law firm of Musick, Peeler & Garrett. That law firm performed legal
services for the Company in 1995. The management of the Company is of the
opinion that the fees paid to Mr. Barnes' law firm are comparable to those fees
that would have been paid for comparable legal services from a law firm not
affiliated with the Company.
COMPLIANCE WITH SECTION 16(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934
Reports filed under the Securities Exchange Act of 1934 and received by the
Company on or after January 1, 1995, indicate that during 1995 executive
officers of the Company did not file timely reports as follows: James R. Brock,
David Neally and Gregory Pape each did not file an Initial Statement of
Beneficial Ownership of Securities within the required period following such
person's appointment as an Executive Officer of the Company. Each such person
filed the required report in June 1995. John F. Ruffle did not file an Initial
Statement of Beneficial Ownership of Securities within the required period
following his appointment as a Director of the Company. He filed the required
report on June 20, 1995. James R. Brock did not file a Statement of Changes of
Beneficial Ownership of Securities for a sale of Common Shares occurring in
September 1995 within the required period following the transaction. He filed
the required report on October 16, 1995. Augustus A. White, M.D., did not file a
Statement of Changes of Beneficial Ownership of Securities for a purchase of
Common Shares occurring in October 1995 within the required period following the
transaction. The report was filed on March 28, 1996. Ernest A. Bates, M.D. did
not file a Statement of Changes in Beneficial Ownership for the 184,000 Common
Shares issued to him in May 1995. He filed the required report on November 10,
1995 with a Statement of Beneficial Changes of Ownership for the option for
1,495,000 Common Shares issued to him in October 1995.
11
<PAGE> 14
PERFORMANCE GRAPH, TOTAL RETURN TO SHAREHOLDERS
The following graph and table compare cumulative total shareholder return
on the Company's Common Shares with the cumulative total return of the Standard
& Poor's 500 Stock Index and a group of peer companies in the diagnostic imaging
industry during the five years ended December 31, 1995.
<TABLE>
<CAPTION>
AMERICAN
SHARED
Measurement Period S&P 500 IN- HOSPITAL
(Fiscal Year Covered) DEX SERVICES PEER GROUP
<S> <C> <C> <C>
Dec91 30.47 344.44 -20.65
Dec92 7.62 -40.00 -37.34
Dec93 10.08 -12.50 -55.30
Dec94 1.32 -80.95 12.46
Dec95 37.58 162.40 47.63
</TABLE>
<TABLE>
<CAPTION>
RETURN (AS A PERCENTAGE INCREASE OR DECREASE)
------------------------------------------------
COMPANY/INDEX NAME 1991 1992 1993 1994 1995
- ------------------------------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
American Shared Hospital Services................ 344.44 -40.00 -12.50 -80.95 162.40
S&P 500 Index.................................... 30.47 7.62 10.08 1.32 37.58
Peer Group -20.65 -37.34 -55.30 12.46 47.63
</TABLE>
INDEXED CUMULATIVE RETURNS
<TABLE>
<CAPTION>
BASE RETURN
PERIOD ------------------------------------------
COMPANY/INDEX NAME 1990 1991 1992 1993 1994 1995
- ----------------------------------------------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
American Shared Hospital Services.............. 100.00 444.44 266.67 233.33 44.44 116.62
S&P 500 Index.................................. 100.00 130.47 140.41 154.56 156.60 215.45
Peer Group..................................... 100.00 79.35 49.72 22.23 24.99 36.90
PEER GROUP POPULATION
Alliance Imaging Inc............................. (included in the 1992-1995 returns only)
American Health Services......................... (excluded in the 1993-1995 returns only)
Health Images Inc................................
Maxum Health Corp. .............................. (included in the 1992 return only)
Medalliance Inc.................................. (included in the 1993-1995 returns only)
Medical Diagnostics Inc.......................... (included in the 1993, 1994 returns only)
Medical Imaging Centers of America...............
Medical Resources Inc............................ (included in the 1993-1995 returns only)
NMR of America Inc...............................
</TABLE>
This total shareholders return model assumes reinvested dividends.
Fiscal year basis: December
Prepared by Standard & Poor's Compustat, a division of McGraw-Hill Inc.
12
<PAGE> 15
INDEPENDENT AUDITORS
The Company's consolidated financial statements have been audited by Ernst
& Young or its predecessor from 1983 through the fiscal year ended December 31,
1995. The Board of Directors intends to appoint Ernst & Young to be the
company's independent auditors for the fiscal year ending December 31, 1996.
Representatives of Ernst & Young are expected by be present at the Meeting to
respond to appropriate questions and will be given an opportunity to make a
statement if they so desire.
SHAREHOLDER PROPOSALS
Under certain circumstances, shareholders are entitled to present proposals
at shareholders meetings. To be eligible for inclusion in the Proxy Statement
for the Company's next Annual Meeting of Shareholders, a shareholder proposal
must be received at the Company's principal executive offices prior to April 1,
1997.
OTHER BUSINESS
Management knows of no business, other than as stated in the Notice of
Annual Meeting, which will be presented for consideration at the Meeting. If,
however, other matters properly are brought before the Meeting, it is the
intention of the persons named in the accompanying form of proxy to vote the
shares represented thereby on such matters in accordance with their best
judgment and in their discretion.
INCORPORATION BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ending
December 31, 1995 is incorporated by reference herein.
AMERICAN SHARED HOSPITAL SERVICES
By Order of the Board of Directors
WILLIE R. BARNES
Corporate Secretary
Dated: May 24, 1996
13
<PAGE> 16
[REVERSE SIDE]
/X/ PLEASE MARK YOUR VOTE AS IN THIS EXAMPLE
/ / FOR all Nominees / / WITHHOLD AUTHORITY
(except as indicated to the contrary below) to vote for all Nominees
ELECTION OF DIRECTORS
To elect seven of the persons named at right to the Board of Directors
to serve until the 1997 Annual Meeting of Shareholders and until their
successors are elected and have qualified.
(Instruction: To withhold authority for any NOMINEES:
individual nominee(s), write that nominee's Ernest A. Bates, M.D.
names(s) in the space below. Willie R. Barnes
Matthew Hills
John F. Ruffle
Stanley S. Trotman, Jr.
Augustus A. White III, M.D.
___________________________________________ Charles B. Wilson, M.D.
/ / I PLAN TO ATTEND THE MEETING IN PERSON
The undersigned hereby ratifies and confirms all that said attorneys
and proxies, or any of them, or their substitutes, shall lawfully do or cause to
be done by virtue hereof, and hereby revokes any and all proxies heretofore
given by the undersigned to vote at the Meeting. The undersigned acknowledges
receipt of the Notice of the Annual Meeting and the Proxy Statement accompanying
such notice.
PLEASE MARK DATE AND SIGN AS YOUR NAME APPEARS ABOVE AND RETURN IN THE
ENCLOSED ENVELOPE.
SIGNATURE____________________________ DATE_________________
SIGNATURE____________________________ DATE ________________
(IF HELD JOINTLY)
NOTE: Please date this proxy and sign as your name(s) appear(s) on this
document. Joint owners should each sign personally. Corporate Proxies
should be signed by an authorized officer. Executors, administrators,
trustees, etc. should give their full titles.
<PAGE> 17
AMERICAN SHARED HOSPITAL SERVICES
For the Annual Meeting of Shareholders to be Held June 28, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby nominate(s), constitute(s) and appoint(s) Ernest
A. Bates, M.D. and Richard Magary, and each of them, the attorneys, agents and
proxies of the undersigned, with full powers of substitution to each, to attend
and act as proxy or proxies of the undersigned at the Annual Meeting of
Shareholders (the "Meeting") of AMERICAN SHARED HOSPITAL SERVICES (the
"Company") to be held at the Ritz Carlton Hotel, 600 Stockton at California
Street, San Francisco, California on Friday, June 28, 1996, at 9:00 a.m., or at
any adjournments thereof, and vote as specified herein the number of shares
which the undersigned, if personally present, would be entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE PERSONS
NOMINATED FOR ELECTION TO THE BOARD OF DIRECTORS. THE PROXY WHEN PROPERLY
EXECUTED WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS MADE, IT WILL BE VOTED,
SUBJECT TO THE PROXY HOLDER'S DISCRETIONARY AUTHORITY TO CUMULATE VOTES, "FOR"
THE ELECTION OF THE PERSONS NOMINATED ON THE REVERSE SIDE, AND WILL HAVE THE
EFFECT OF WITHHOLDING DISCRETIONARY AUTHORITY TO CUMULATE VOTES. THIS PROXY MAY
BE REVOKED PRIOR TO ITS EXERCISE BY FILING WITH THE SECRETARY OF THE COMPANY AN
INSTRUMENT IN WRITING REVOKING THE PROXY OR A DULY EXECUTED PROXY BEARING A
LATER DATE. THIS PROXY MAY ALSO BE REVOKED BY ATTENDANCE AT THE MEETING AND
ELECTION TO VOTE IN PERSON.
(Continued, and to be signed on the other side)
