<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:
[ ] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
American Shared Hospital Services
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
AMERICAN SHARED HOSPITAL SERVICES
TWO EMBARCADERO CENTER, SUITE 2370
SAN FRANCISCO, CALIFORNIA 94111-3823
------------------------
NOTICE OF 2000 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 19, 2000
TO THE SHAREHOLDERS OF AMERICAN SHARED HOSPITAL SERVICES:
NOTICE IS HEREBY GIVEN that, pursuant to a call of the Board of Directors,
the 2000 Annual Meeting (the "Meeting") of Shareholders of American Shared
Hospital Services, a California corporation (the "Company"), will be held at the
Park Hyatt Hotel, 333 Battery Street (corner of Clay), San Francisco, California
94111 at 10:00 am (Pacific time), on Friday, May 19, 2000 to consider and to act
upon the following matters, all as set forth in the Proxy Statement.
1. ELECTION OF DIRECTORS. To elect the following five nominees to the
Board of Directors to serve until the next Annual Meeting of Shareholders
and until their successors are elected and have qualified.
Ernest A. Bates, M.D. Stanley S. Trotman, Jr.
Willie R. Barnes Charles B. Wilson, M.D.
John F. Ruffle
2. RATIFICATION OF INDEPENDENT ACCOUNTANTS. To ratify the appointment
of Moss Adams LLP as the Company's independent accountants for the year
ending December 31, 2000.
3. OTHER BUSINESS. To transact such other business and to consider and
take action upon any and all matters that may properly come before the
Annual Meeting and any and all adjournments thereof.
The Board of Directors knows of no matters, other than those set forth in
paragraphs (1) and (2) above, that will be presented for consideration at the
Annual Meeting.
The Board of Directors has fixed the close of business on March 31, 2000 as
the Record Date for the determination of shareholders entitled to vote at the
Annual Meeting.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL 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
/s/ WILLIE R. BARNES
Willie R. Barnes
Corporate Secretary
Dated: April 20, 2000
San Francisco, California
<PAGE> 3
AMERICAN SHARED HOSPITAL SERVICES
TWO EMBARCADERO CENTER, SUITE 2370
SAN FRANCISCO, CALIFORNIA 94111-3823
------------------------
PROXY STATEMENT
------------------------
2000 ANNUAL MEETING OF SHAREHOLDERS
MAY 19, 2000
------------------------
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
2000 Annual Meeting of Shareholders scheduled to be held on Friday, May 19, 2000
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 April 26, 2000.
The matters to be considered and voted upon at the Meeting will be:
1. To elect five 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 ratify the appointment of Moss Adams LLP as the Company's
independent accountants for the year ending December 31, 2000.
3. 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 March 31, 2000 (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 Annual 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 March 31, 2000 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,
<PAGE> 4
there were outstanding and entitled to vote 3,810,042 Common Shares. The Common
Shares are the only class of securities entitled to vote at the Meeting.
VOTE REQUIRED AND VOTING PROCEDURES
Each holder of Common Shares will be entitled to one vote, in person or by
proxy, for each share standing 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, except as indicated below in connection with the election of
directors.
In connection with the election of directors, shares are permitted to be
voted cumulatively, if (i) a shareholder present at the Annual Meeting has given
notice at the Annual 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. Discretionary authority to cumulate votes is hereby solicited by
the Board of Directors.
All outstanding shares of the Company's Common Stock represented by
properly executed and unrevoked proxies received 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 five 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. A shareholder may, with
respect to the proposal to ratify the appointment of the Company's independent
accountants, (i) vote for the ratification, (ii) vote against the ratification,
or (iii) abstain.
A proxy submitted by a shareholder may indicate that all or a portion of
the 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 stock held in street name on certain matters in
the absence of instructions from the beneficial owner of the stock. The shares
subject to any such proxy which are not being voted with respect to a particular
matter (the "non-voted shares") will be considered shares not present and
entitled to vote on such matter, although such 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 five
nominees receiving the highest number of votes of shares of Common Stock
represented in person or by proxy at the Meeting and entitled to vote on such
matter will be elected directors of the Company. Accordingly, non-voted shares
will not affect the outcome of the election of directors. Non-voted shares also
will not affect the outcome of the proposal to ratify the appointment of
independent accountants.
In connection with the solicitation by the Board of Directors of proxies
for use at the Annual Meeting, the Board of Directors has designated Ernest A.
Bates, M.D. and Richard Magary as proxies. Common Shares represented by properly
executed proxies will be voted at the Annual 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 five nominees for the Board of Directors named herein, and FOR the
proposal to ratify the appointment of the Company's independent auditors.
The Board of Directors is not aware of any matters that will come before
the Annual Meeting other than as described above. However, if such matters are
presented, the named proxies will, in the absence of instructions to the
contrary, vote such proxies in accordance with the judgment of such named
proxies with respect to any such other matter properly coming before the Annual
Meeting.
A majority of the Common Shares outstanding on the Record Date must be
represented in person or by proxy at the Annual Meeting in order to constitute a
quorum for the transaction of business. In the election of directors, the five
candidates receiving the highest number of votes will be elected directors of
the Company.
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<PAGE> 5
The proposal to ratify the appointment of the Company's independent auditors
requires that a majority of those voting in person or by proxy vote FOR the
proposal, in order for the proposal to be approved.
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 Annual Meeting.
The Inspector of Elections will determine the number of Common Shares
represented in person or by proxy at the Annual 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 Annual Meeting before the voting
begins.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
BOARD OF DIRECTORS
The Company's Bylaws provide that there shall be no less than five nor more
than nine directors and that 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 five.
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.
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 a
graduate of The Johns Hopkins University and of the University of Rochester
School of Medicine. He is currently an Assistant Clinical Professor of
Neurosurgery at the University of California Medical Center at San Francisco,
and a member of the Boards of Trustees of The Johns Hopkins University and of
the University of Rochester, a Director of the Industrial Policy Advisory
Committee of the Engineering Research Center (CISST) at The Johns Hopkins
University, a Member of the State of California High Speed Rail Authority, and a
Member of the Board of Directors of Salzburg Seminar. Dr. Bates is 63 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. He is a Director of Franchise Finance Corporation of America.
Mr. Barnes is 67 years old.
JOHN F. RUFFLE has been a director of the Company since 1995. He retired in
1993 as Vice-Chairman of the Board and a Director of J.P. Morgan & Co.
Incorporated and Morgan Guaranty Trust Co. of New York. He also is a Director of
Bethlehem Steel Corporation; a member of the Boards of Managers of North Moore
Fund, LLC and JP Morgan Global Emerging Markets Fund, LLC; a Trustee of JPM
Series Trust II; a Director of Trident Corp.; a Director of The Wackenhut
Corporation; a Director of Wackenhut Corrections Corp; and a Trustee of The
Johns Hopkins University. He is a graduate of The Johns Hopkins University, with
an MBA in finance from Rutgers University, and is a Certified Public Accountant.
Mr. Ruffle is 62 years old.
3
<PAGE> 6
STANLEY S. TROTMAN, JR. has been a director of the Company since 1996. He
has been a Managing Director with the Health Care Group of PaineWebber
Incorporated, an investment banking firm, since 1995 following the consolidation
of Kidder, Peabody, also an investment banking firm, with PaineWebber. He 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 MBA from Columbia
Business School in 1967. Mr. Trotman is 56 years old.
CHARLES B. WILSON, M.D. has been a director of the Company since 1993. He
also was a director of the Company from March 1984 until March 1989. He has been
a Professor of Neurosurgery at the University of California Medical Center, San
Francisco, since 1968. From 1968 until April 1994, and from March 1996 until
July 1997, Dr. Wilson held the position of Chairman of the University's
Department of Neurosurgery. He also is a Director of The Institute for the
Future in Menlo Park, California. Dr. Wilson is 70 years old.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held six meetings during 1999. All
Directors attended at least 75% of the aggregate number of meetings of both the
Board of Directors and of the Committees of the Board on which such Director
served during the year, except that Dr. Wilson attended three of six Board of
Directors meetings and all meetings of the Committees on which he served during
the year.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has standing Audit, Compensation, Stock Option and Nominating
Committees, each of which is described below. All Directors serve on each
standing Committee, except that Dr. Bates does not serve on the Audit Committee.
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 1999,
the Audit Committee held two meetings. Mr. Ruffle is Chair of the Audit
Committee.
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 1999. Mr. Trotman is Chair of the Compensation
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 were no meetings of the Stock Option Committee during 1999.
Mr. Ruffle is Chair of the Stock Option Committee.
The purpose of the Nominating Committee is to recommend candidates for
election to the Board of Directors. The Nominating Committee held one meeting
during 1999. Mr. Trotman is Chair of the Nominating Committee. A shareholder who
wishes to nominate a person for Director must provide the nomination in writing
to the Secretary at the Company's principal offices pursuant to the notice
provisions in the By-laws. Such notice must be received not less than 60 nor
more than 90 days prior to the Annual Meeting or, if less than 70 days' notice
of the date of such meeting has been given, then within 10 business days
following the first public disclosure of the meeting date or the mailing of the
Company's notice. Any such notice must contain information regarding the nominee
and the proponent. Details concerning the nature of such information are
available without charge from the Company.
DIRECTOR COMPENSATION
In 1999, non-employee directors were paid an annual retainer of $5,000 and
$1,000 for attendance in person at each regular and special meeting of the Board
of Directors. In addition, non-employee directors are entitled to receive an
automatic grant of Options from the Company's 1995 Stock Option Plan on the date
of
4
<PAGE> 7
the Company's Annual Shareholder Meeting each year, to acquire up to 4,000
shares annually of the Company's common stock at the market price on the date of
grant, until a Director has options for a total of 12,000 shares in all Company
plans. There were two (2) such grants totaling 4,667 options to non-employee
directors during 1999. Additionally, non-employee directors who were members of
a committee of the Board of Directors were entitled to receive $100 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 six Board
meetings held during 1999, five were regular or special meetings that directors
attended in person, and one was a special meeting which was 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.
Non-employee directors will receive in 2000 a $10,000 annual retainer fee,
payable quarterly; $1,000 for attendance in person at each regular and special
meeting of the Board of Directors; and $100 for attendance in person at each
committee meeting. Each current non-employee director already holds options for
a total of 12,000 shares of the Company's common stock, so no additional
automatic grants to such Directors, as described in the preceding paragraph, are
expected to be made during 2000.
CERTAIN ADDITIONAL INFORMATION
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 April 15, 2000, 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 each
other executive officer named in the Summary Compensation Table, and (iv) all
directors and executive officers as a group.
<TABLE>
<CAPTION>
COMMON SHARES OWNED BENEFICIALLY
----------------------------------------
AMOUNT AND NATURE
OF BENEFICIAL
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(2) PERCENT OF CLASS(5)
------------------------------------ ----------------- -------------------
<S> <C> <C>
Total Number of Shares.................................... 5,666,945(3) 100.0%
Ernest A. Bates, M.D.(1).................................. 2,268,375(4) 42.8%
Willie R. Barnes(1)....................................... 12,000(4) *
John F. Ruffle(1)......................................... 188,711(4) 4.9%
Stanley S. Trotman, Jr.(1)................................ 132,762(4) 3.5%
Charles B. Wilson, M.D.(1)................................ 12,000(4) *
Craig K. Tagawa(1)........................................ 137,600(4) 3.5%
Senior Vice President -- Chief Operating Officer
Richard Magary(1)......................................... 83,800(4) 2.2%
Senior Vice President -- Corporate Development
Gregory Pape(1)........................................... 65,000(4) 1.7%
Senior Vice President -- Sales and Marketing
All Directors and Executive Officers as a Group (8
persons)................................................ 2,901,248(4) 51.8%
</TABLE>
- ---------------
* Less than 1%
(1) The address of each such individual is c/o American Shared Hospital
Services, Two Embarcadero Center, Suite 2370, San Francisco, California
94111-3823.
(2) 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.
(3) 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 April 15, 2000.
5
<PAGE> 8
(4) Includes shares underlying options that are currently exercisable or which
will become exercisable within 60 days following April 15, 2000: Dr. Bates,
1,495,000 shares; Mr. Barnes, 12,000 shares, Mr. Ruffle, 12,000 shares; Mr.
Trotman, 12,000 shares; Dr. Wilson, 12,000 shares; Mr. Magary, 60,000
shares; Mr. Tagawa, 125,000 shares; Mr. Pape, 65,000 shares; and Directors
and Executive Officers as a group, 1,793,000 shares.
(5) Shares that any person or group of persons is entitled to acquire upon the
exercise of options or warrants within 60 days after April 15, 2000, 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.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation paid by the Company for the
fiscal years ending December 31, 1997, December 31, 1998 and December 31, 1999
and paid in those years for services rendered in all capacities during 1996,
1997 and 1998, respectively, to the Chief Executive Officer and each executive
officer other than the Chief Executive Officer who served as an officer at
December 31, 1999 and earned cash compensation of $100,000 or more during 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------------------------
OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) COMPENSATION(3)
--------------------------- ---- --------- -------- ---------------
<S> <C> <C> <C> <C>
Ernest A. Bates, M.D. ....................... 1999 $381,297 $300,000 --
Chairman of the Board, 1998 $299,864 -- --
Chief Executive Officer 1997 $267,994 -- --
Craig K. Tagawa.............................. 1999 $231,050(4) $165,000 --
Chief Operating Officer and 1998 $229,212(5) -- --
Chief Financial Officer 1997 $216,000(6) -- --
Richard Magary............................... 1999 $131,503 $ 85,000 --
Senior Vice President, 1998 $137,679 -- --
Corporate Development 1997 $118,813 -- --
Gregory Pape................................. 1999 $206,354(7) -- --
Senior Vice President, 1998 $311,035(8) -- --
Sales and Marketing 1997 $292,650(9) -- --
</TABLE>
- ---------------
(1) Each amount under this column includes amounts accrued in 1997, 1998, and
1999, 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) Each of these individuals was awarded a special bonus for his role in the
successful sale of the Company's diagnostic imaging business in 1998. The
Company's Board of Directors approved these bonuses in February 1999 (and in
September 1999 with respect to Mr. Magary), and such bonuses were paid
thereafter, for services which were performed during 1998.
(3) 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.
(4) Includes sales commissions of approximately $44,000 earned and paid in 1999.
(5) Includes sales commissions of approximately $52,500 earned and paid in 1998.
(6) Includes sales commissions of approximately $45,000 earned and paid in 1997.
(7) Includes sales commissions of approximately $25,000 earned and paid in 1999.
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<PAGE> 9
(8) Includes sales commissions of approximately $4,600 earned in 1997 and paid
in 1998, and approximately $63,000 earned and paid in 1998.
(9) Includes sales commissions of approximately $92,000 earned in 1996 and paid
in 1997 and approximately $58,000 earned and paid in 1997.
LONG TERM COMPENSATION AWARDS
The "Long Term Compensation Awards" Table has been omitted because no long
term compensation awards were made during the relevant years to the Company's
executive officers named in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth stock options granted in 1999 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>
POTENTIAL REALIZABLE
VALUE AT
INDIVIDUAL GRANTS ASSUMED ANNUAL
----------------------------------------------------------------- RATES OF STOCK PRICE
PERCENT OF TOTAL EXERCISE OR APPRECIATION FOR
OPTIONS GRANTED TO BASE PRICE OPTION TERM(1)
OPTIONS EMPLOYEES IN FISCAL MARKET PRICE ON --------------------
NAME GRANTED YEAR 1999 GRANT DATE EXPIRATION DATE 5% 10%
---- ------- ------------------- ---------------- --------------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Ernest A. Bates,
M.D................. 0 NA NA NA NA NA
Craig K. Tagawa....... 20,000 41.7% $3.00/share(2) 5/21/09 $37,734 $95,625
Richard Magary........ 5,000 10.4% $3.00/share(2) 5/21/09 $ 9,433 $23,906
Gregory Pape.......... 0 NA NA NA NA NA
</TABLE>
- ---------------
(1) These amounts, based on assumed annually compounded appreciation rates of 5%
and 10% as prescribed by Securities and Exchange Commission rules, are not
intended to forecast possible future appreciation, if any, of the Company's
stock price. The Company did not use an alternative formula for a grant date
valuation of the options as it is not aware of any formula which will
determine with reasonable accuracy a present value based on future unknown
or volatile factors.
(2) All such options were granted pursuant to the Company's 1995 Stock Option
Plan and have an exercise price equal to the closing market price of a share
of the Company's Common Stock on the American Stock Exchange on the
respective grant date.
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
The "Long-term Incentive Plan Awards" ("LTIP Awards") table has been
omitted because no LTIP Awards were made during 1999 to the Company's executive
officers named in the Summary Compensation Table.
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<PAGE> 10
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth the number of shares acquired on exercise of
stock options and the aggregate gains realized upon exercise of such options
during 1999, by the Company's executive officers named in the Summary
Compensation Table. The following table also sets forth the number of shares
underlying exercisable and unexercisable options held by such executive officers
on December 31,1999.
1984 AND 1995 STOCK OPTION PLANS
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR-END AT FISCAL YEAR-END (1)
ACQUIRED ON VALUE($) --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ernest A. Bates, M.D........ -- -- 1,495,000 -- $6,338,800 --
Craig K. Tagawa............. -- -- 125,000 -- $ 300,625 --
Richard Magary.............. -- -- 60,000 -- $ 150,625 --
Gregory Pape................ -- -- 65,000 -- $ 170,625 --
</TABLE>
- ---------------
(1) This amount is calculated by multiplying the number of Common Shares
underlying the options at December 31,1999 by the market price per Common
Share on such date less the option exercise price.
EMPLOYMENT AGREEMENTS
The Company had no employment contracts with its directors or executive
officers named in the Summary Compensation Table in 1999.
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
The following Report of the Board of Directors 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 describes the Company's method of
compensating its executive officers, and describes the basis on which 1999
compensation was paid to such executive officers, including those named in the
Summary Compensation Table.
The Board of Directors determined that compensation paid in 1999 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
1999.
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 in 1999 was
base salary, except in the case of the Chief Operating and Financial Officer
(who also is CEO of the Company's Gamma Knife subsidiary) and in the case of the
Senior Vice President -- Sales and Marketing where sales commissions were a
substantial component of compensation and are included under "salary" in the
table above.
8
<PAGE> 11
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 such bonuses have been paid by the Company during the last three fiscal
years. In 1999 the Board of Directors awarded special bonuses to Ernest A.
Bates, M.D., Craig K. Tagawa and Richard Magary to recognize their key roles in
the successful completion of the sale of the Company's diagnostic imaging
business during 1998.
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 of 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 the
Proxy Statement. During the period 1991 - 1995 the compensation of most of the
Company's senior executives, including those listed in the Summary Compensation
Table, was reduced by 5 to 10% for various periods of time. In 1996, the base
salary of the Chief Financial Officer was increased from $150,000 to $165,000
and he became eligible for bonus payments based on goals and targets of the
Gamma Knife business. During 1997 the compensation structure of the Company's
Senior Vice President -- Sales & Marketing was changed, to increase base salary
from $85,000 per year to $200,000 per year, while the sales commission rate paid
to that executive officer was significantly reduced. In June 1997, base salary
paid to the Chief Executive Officer was increased from approximately $233,000
per year to $300,000 per year, and salary paid to the Senior Vice President --
Corporate Development was increased from approximately $93,500 per year to
$130,000 per year. Until such increases, neither officer had received a base
salary increase for over five years, and had received base salary reductions
during the 1991 - 1995 period as described above.
In addition to base compensation, the Company has used grants of stock
options to retain senior executives and to motivate them to improve long-term
stock market performance. 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. In addition, during 1995 the Shareholders approved a grant of
options to acquire 1,495,000 Common Shares at an initial exercise price of $0.01
per share to the Company's Chairman and Chief Executive Officer, in
consideration of his continued service to the Company and his personal guarantee
of $6,500,000 of indebtedness of the Company.
BOARD OF DIRECTORS
<TABLE>
<S> <C>
Ernest A. Bates, M.D. Chairman Stanley S. Trotman, Jr.
Willie R. Barnes Charles B. Wilson, M.D.
John F. Ruffle
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSLATIONS
Stanley S. Trotman, Jr., a director of the Company, is a Managing Partner
of PaineWebber Incorporated, an investment banking firm. That firm performed
services for the Company during 1998 and early 1999 in connection with the
Company's sale of its diagnostic imaging business, which was completed in
November 1998. PaineWebber also has continued to advise the Company with respect
to the uses of proceeds from the sale and other strategic matters regarding the
future direction of the Company. The management of the Company is of the opinion
that the Company's fee arrangements with PaineWebber are comparable to the fees
charged for comparable investment banking services by firms not affiliated with
the Company. Mr. Trotman served on and was Chair of the Compensation Committee
of the Board of Directors during 1999.
9
<PAGE> 12
COMPLIANCE WITH SECTION 16(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934
Reports filed under the Exchange Act and received by the Company on or
after January 1, 1999, indicate that during 1999 directors, officers and 10%
shareholders of the Company filed all required reports within the periods
established by applicable rules.
10
<PAGE> 13
PERFORMANCE GRAPH, TOTAL RETURN TO SHAREHOLDERS
The following graphs and tables compare cumulative total shareholder return
on the Company's Common Shares ("ASHS total return") (i) with the cumulative
total return of the Standard & Poor's 500 Stock Index ("S&P500") and with a
group of peer companies in the diagnostic imaging industry, and (ii) with the
cumulative total return of the S&P500 and with the Standard & Poors SmallCap 600
Stock Index ("S&P SmallCap600"), in each case during the five years ended
December 31, 1999. The Company has determined that the comparison of ASHS total
return with that of companies in the diagnostic imaging industry no longer is
meaningful as it was in the past, because the Company sold its diagnostic
imaging business in November 1998. Accordingly, such comparison is presented for
the last time herein. The Company further believes that it is more meaningful
now and in the future to compare the ASHS total return with that of the S&P
SmallCap600. Accordingly, that comparison is presented for the first time
herein, and the Company expects that it will continue to use such comparison in
the future.
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
AMERICAN SHARED HSPTL SERV S&P 500 INDEX PEER GROUP
-------------------------- ------------- ----------
<S> <C> <C> <C>
Dec 94 100.00 100.00 100.00
Dec 95 262.40 137.58 154.32
Dec 96 362.40 169.17 293.33
Dec 97 350.00 225.60 329.87
Dec 98 237.60 290.08 115.14
Dec 99 850.00 351.12 130.18
</TABLE>
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
AMERICAN SHARED S&P SMALLCAP 600
HSPTL SERV S&P 500 COMP-LTD INDEX
--------------- ---------------- ----------------
<S> <C> <C> <C>
Dec94 100.00 100.00 100.00
Dec95 262.40 137.58 129.96
Dec96 362.40 169.17 157.67
Dec97 350.00 225.60 198.01
Dec98 237.60 290.08 195.42
Dec99 850.00 351.12 219.66
</TABLE>
11
<PAGE> 14
INDEPENDENT AUDITORS
The Company's consolidated financial statements for the year ended December
31, 1999 have been audited by Moss Adams LLP. The Board of Directors has
appointed Moss Adams LLP to be the Company's independent auditors for the fiscal
year ending December 31, 2000, subject to Shareholder ratification at the
Meeting (see Proposal No. 2).
The Company's consolidated financial statements for the year ended December
31, 1998 were audited by Grant Thornton LLP. The Company and Grant Thornton LLP
had a long established relationship as Grant Thornton had served as the
Company's tax advisor since 1990. On December 31, 1999 the local Grant Thornton
office that provided accounting and tax services for the Company was sold to
Moss Adams LLP, an accounting and consulting firm.
From 1983 through the fiscal year ended December 31, 1997, the Company's
consolidated financial statements were audited by Ernst & Young, LLP or its
predecessor.
In light of its engagement of Grant Thornton (and, subsequently, of Moss
Adams LLP as described above), the Company will no longer engage Ernst & Young,
LLP ("E&Y"), to audit the Company's financial statements. E&Y had served as the
Company's auditor since 1983. In recognition of the Company's previously
reported defaults under its credit facilities and equipment leases, E&Y had
included a "going concern" qualification in its report on the Company's
financial statements in each year since 1990. The Company did not know at the
time it engaged Grant Thornton, LLP as its independent accountant whether its
auditor's report for the year ended December 31, 1998 would contain such a
qualification.
The decision to change accountants from E&Y to Grant Thornton LLP was
referred by the Audit Committee to the full Board of Directors. The Board of
Directors approved the decision to change independent accountants. An important
motivating factor in the Board's decision was to reduce the Company's audit
expenses following the completion of its financial restructuring, the sale of
its imaging business on November 13, 1998, and the significantly reduced scope
of the Company's operations.
The Company during its two most recent fiscal years and any subsequent
interim period preceding its changes of independent accountant did not have any
disagreements with the former accountants on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure.
Representatives of Moss Adams LLP are expected to be present at the Annual
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 February
19, 2001. A Shareholder's notice should list each proposal and contain a brief
description of the business to be brought before the meeting; the name and
address of the shareholder proposing such business; the number of shares held by
the shareholder; and any material interest of the shareholder in the business.
12
<PAGE> 15
ANNUAL REPORT
The Company's 1999 Annual Report, which includes financial statements, but
which does not constitute a part of the proxy solicitation material, accompanies
this proxy statement.
By Order of the Board of Directors
/s/ WILLIE R. BARNES
Willie R. Barnes
Corporate Secretary
Dated: April 20, 2000
San Francisco, California
13
<PAGE> 16
AMERICAN SHARED HOSPITAL SERVICES
For the Annual Meeting of Shareholders to be held May 19, 2000
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, ATTORNEYS, AGENTS, AND PROXIES
OF THE UNDERSIGNED, WITH FULL POWERS OF SUBSTITUTION TO EACH, TO ATTEND AND TO
ACT AS PROXY OR PROXIES OF THE UNDERSIGNED AT THE ANNUAL MEETING OF SHAREHOLDERS
OF AMERICAN SHARED HOSPITAL SERVICES TO BE HELD ON MAY 19, 2000 AT 10:00 AM
PACIFIC TIME AT THE PARK HYATT HOTEL, 333 BATTERY STREET, SAN FRANCISCO,
CALIFORNIA, OR ANY ADJOURNMENTS THEREOF, AND TO VOTE AS SPECIFIED HEREIN THE
NUMBER OF SHARES THAT THE UNDERSIGNED, IF PERSONALLY PRESENT, WOULD BE ENTITLED
TO VOTE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE FIVE PERSONS
NOMINATED FOR ELECTION TO THE BOARD OF DIRECTORS AND "FOR" THE RATIFICATION OF
MOSS ADAMS LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR 2000. YOU ARE
ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES. THIS PROXY
WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS MADE, IT
WILL BE VOTED, SUBJECT TO THE PROXYHOLDER'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 AND
"FOR" THE RATIFICATION OF INDEPENDENT ACCOUNTANTS. THE BOARD OF DIRECTORS IS NOT
AWARE OF ANY OTHER MATTERS THAT WILL COME BEFORE THE ANNUAL MEETING, OTHER THAN
THOSE DESCRIBED IN THIS PROXY. HOWEVER, IF SUCH MATTERS ARE PRESENTED, THE NAMED
PROXIES WILL, IN THE ABSENCE OF INSTRUCTIONS TO THE CONTRARY, VOTE SUCH PROXIES
IN ACCORDANCE WITH THE JUDGMENT OF SUCH NAMED PROXIES WITH RESPECT TO ANY SUCH
OTHER MATTER PROPERLY COMING BEFORE THE MEETING. THIS PROXY MAY BE REVOKED PRIOR
TO ITS EXERCISE BY FILING WITH THE SECRETARY OF THE COMPANY AN INSTRUMENT IN
WRITING REVOKING THIS PROXY OR A DULY EXECUTED PROXY BEARING A LATER DATE. THIS
PROXY ALSO MAY BE REVOKED BY ATTENDANCE AT THE MEETING AND ELECTION TO VOTE IN
PERSON.
(continued, and to be signed on the other side)
<PAGE> 17
[X] PLEASE MARK YOUR VOTE AS IN THIS EXAMPLE
This proxy when properly executed will be voted in the manner directed
herein and in the discretion of the proxy holders on all other matters coming
before the meeting. If no direction is made, this proxy will be voted FOR the
election of directors nominated herein, and FOR Proposal No. 2.
The Board of Directors recommends a vote FOR election of the directors
nominated herein and FOR the ratification of independent accountants.
1. ELECTION OF DIRECTORS. To elect five of the persons named below to the
Board of Directors to serve until the 2001 Annual Meeting of
Shareholders and until their successors are elected and have qualified.
[ ] FOR all nominees (except as indicated to the contrary below).
[ ] WITHHOLD AUTHORITY to vote for all nominees.
(Instruction: To withhold authority for any individual nominee(s),
write that nominee's name(s) in the space below.)
-----------------------------------------------------------
NOMINEES: Ernest A. Bates, M.D.
Willie R. Barnes
John F. Ruffle
Stanley S. Trotman, Jr.
Charles B. Wilson, M.D.
2. RATIFICATION OF INDEPENDENT ACCOUNTANTS. To ratify the appointment of
Moss Adams LLP as the Company's independent accountants for the year
ended December 31, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
[ ] 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
------------------------------ ------------
Signature, 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.
