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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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Salick Health Care, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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PRELIMINARY COPY
[LOGO]
SALICK HEALTH CARE, INC.
8201 Beverly Boulevard
Los Angeles, California 90048
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Scheduled to be held on January 18, 1996
The Annual Meeting of Stockholders (the "Annual Meeting") of Salick Health
Care, Inc., a Delaware corporation (the "Company"), will be held at the
Company's principal executive offices located at 8201 Beverly Boulevard, Los
Angeles, California 90048 on January 18, 1996 at 9:30 A.M., local time, for the
following purposes:
1. To consider and approve amendments to the Company's certificate of
incorporation to increase the authorized number of Directors from ten to twelve,
six of whom would be elected by the holders of the Company's Common Stock and
six of whom would be elected by the holders of the Company's Callable Puttable
Common Stock.
2. To elect Directors to serve until the next annual meeting of
stockholders and until their successors are duly elected and qualified.
3. To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
Only stockholders of record on November 30, 1995, the record date for the
Annual Meeting, are entitled to notice of and to vote at the Annual Meeting and
any adjournments or postponements thereof. A list of such stockholders will be
available for examination at the principal executive offices of the Company
located at 8201 Beverly Boulevard, Los Angeles, California 90048 at least ten
days prior to the Annual Meeting.
To assure that your interests will be represented, whether or not you
expect to attend the Annual Meeting in person, it is important that you promptly
complete, sign, date and return the proxy card in the enclosed envelope, which
requires no postage if mailed in the United States.
By Order of the Board of Directors
Leslie F. Bell, Secretary
December __, 1995
Los Angeles, California
<PAGE>
PRELIMINARY COPY
SALICK HEALTH CARE, INC.
8201 Beverly Boulevard
Los Angeles, California 90048
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
SCHEDULED TO BE HELD ON JANUARY 18, 1996
______________________
This Proxy Statement ("Proxy Statement") is furnished in connection with
the solicitation by the Board of Directors of Salick Health Care, Inc., a
Delaware corporation (the "Company"), of proxies for use in voting at the Annual
Meeting of Stockholders (the "Annual Meeting") scheduled to be held on January
18, 1996, at 9:30 A.M., local time, at the Company's principal executive
offices, located at 8201 Beverly Boulevard, Los Angeles, California 90048, and
any adjournments or postponements thereof. This Proxy Statement and the related
forms of proxy are first being mailed to stockholders of the Company on or about
December __, 1995.
On April 13, 1995, an indirect wholly owned subsidiary of Zeneca Limited,
an English company ("Zeneca"), was merged into the Company, with the Company
being the surviving corporation (the "Merger"). In the Merger, each share of
the Company's then outstanding common stock was converted into the right to
receive $18.875 in cash and one-half share of a new Callable Puttable Common
Stock of the Company (the "Callable Puttable Common Stock") (collectively, the
"Merger Consideration") and Zeneca received 5,657,115 shares of the Company's
Common Stock representing at least 50% of the equity securities of the Company
(determined on a fully diluted basis). As a result of the Merger and Zeneca's
beneficial stock ownership of the Common Stock, there may be deemed to have been
a change in the control of the Company. The source of the cash portion of the
Merger Consideration, $204,000,000, paid by Zeneca was from its cash reserves.
The Annual Meeting is being held for the purpose of (1) amending the
Company's certificate of incorporation to increase the authorized number of
Directors from ten to twelve persons, (2) electing Directors who will serve
until the next Annual Meeting of Stockholders and until his or her successor is
duly elected and qualified, one-half of whom shall be elected by the holders of
the Company's Common Stock, and one-half of whom shall be elected by the holders
of the Company's Callable Puttable Common Stock and (3) such other matters as
may properly come before the Annual Meeting and any adjournments or
postponements thereof. Because the Company's certificate of incorporation
currently sets the authorized number of Directors at ten, if the proposal to
amend the Company's certificate of incorporation to increase the authorized
number of Directors to
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twelve is not approved, holders of the Common Stock will elect four Directors
(leaving one vacancy), and holders of the Callable Puttable Common Stock will
elect five Directors, at the Annual Meeting. If such proposal is approved, the
holders of the Common Stock will elect five Directors (leaving one vacancy), and
the holders of the Callable Puttable Common Stock will elect six Directors, at
the Annual Meeting. Thus, the election of one director by the holders of the
Common Stock and the election of one director by the holders of the Callable
Puttable Common Stock will be contingent upon the approval of such proposed
amendments to the Company's certificate of incorporation. See "ELECTION OF
DIRECTORS" below.
Only holders of record of shares of the Common Stock, and of the Callable
Puttable Common Stock, on November 30, 1995, the record date for the Annual
Meeting (the "Record Date"), are entitled to notice of and to vote at the Annual
Meeting and any adjournments or postponements thereof. As of the Record Date,
there were 5,657,115 shares of the Common Stock outstanding and 5,640,082 shares
of the Callable Puttable Common Stock outstanding.
Information Regarding Proxies
All shares of the Callable Puttable Common Stock represented at the Annual
Meeting by properly executed proxies will, unless such proxies have been
previously revoked, be voted in accordance with the instructions indicated in
such proxies. If no instructions are indicated, such shares will be voted (1)
FOR the amendments to the Company's certificate of incorporation to increase the
authorized number of directors from ten to twelve, (2) FOR the election of the
six (five, if the amendments to the certificate of incorporation are not
approved) nominees for Directors of the Company to be elected by the holders of
the Callable Puttable Common Stock and (3) in the discretion of the proxy
holders as to any other matter which may properly come before the Annual
Meeting. The Company does not know of any matters, other than as described in
the Notice of Annual Meeting, that are to come before the Annual Meeting. If
any other matter or matters are properly presented for action at the Annual
Meeting, the persons named in the forms of proxy and acting thereunder will have
the discretion to vote on such matters in accordance with their best judgment,
unless such authorization is withheld. Stockholders who execute proxies retain
the right to revoke them at any time by giving written notice of revocation to
the Secretary of the Company at 8201 Beverly Boulevard, Los Angeles, California
90048 so that it is received by no later than the closing of the polls at the
Annual Meeting for the vote with respect to Proposal 1 (the approval of the
proposed amendments to the Company's certificate of incorporation) on the proxy
card or by attending the Annual Meeting in person and voting thereat or by
executing a later dated proxy delivered prior to the closing of the polls at the
Annual Meeting for the vote with respect to such Proposal 1. Unless so revoked,
the shares represented by the proxies solicited by the Board of
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Directors of the Company will be voted in accordance with the directions given
therein by the stockholder.
The expense of preparing, printing and mailing proxy material will be borne
by the Company. In addition to the solicitation of proxies by mail,
solicitation may be made by certain Directors, officers and other employees of
the Company by personal interview, telephone, facsimile or telegraph. No
additional compensation will be paid for such solicitation. Copies of
solicitation material will be furnished to brokerage houses, fiduciaries and
custodians to forward to beneficial owners of Shares held in their names. The
Company will reimburse such persons for their reasonable expenses in forwarding
solicitation material to such beneficial owners.
Quorum; Required Vote
For matters to be voted on by the holders of the Common Stock and the
Callable Puttable Common Stock together and not as a separate class, the
presence in person or by properly executed proxy of holders of record as of the
Record Date of a majority of the total number of shares of Common Stock and
shares of the Callable Puttable Common Stock is necessary to constitute a quorum
at the Annual Meeting. For matters to be voted on by the Common Stock as a
separate class, the presence in person or by properly executed proxy of holders
of record as of the Record Date of a majority of the total number of shares of
the Common Stock outstanding as of the Record Date is necessary to constitute a
quorum at the Annual Meeting. For matters to be voted on by the holders of the
Callable Puttable Common Stock as a separate class, the presence in person or by
proxy of the holders of record of shares of the Callable Puttable Common Stock
representing a majority of the all of the votes entitled to be cast at the
Annual Meeting is necessary to constitute a quorum at the Annual Meeting.
Approval of the proposal to amend the Company's certificate of
incorporation to increase the authorized number of Directors from ten to twelve
requires the affirmative vote of (1) the holders of record of at least a
majority of the total number of shares of the Common Stock and Callable Puttable
Common Stock outstanding on the Record Date voting together as a single class,
(2) the holders of record of at least a majority of the total number of shares
of the Common Stock outstanding on the Record Date, voting separately as a
class, and (3) the holders of record of at least a majority of all of the votes
entitled to be cast by the holders of the Callable Puttable Common Stock
outstanding on the Record Date, voting separately as a class. Abstentions and
broker non-votes will not be voted for or against the approval of the amendments
to the Company's certificate of incorporation but will have the effect of a
negative vote because of the affirmative votes required to approve such
proposal.
As to the vote on the proposed amendments to the Company's certificate of
incorporation by the holders of the Common Stock
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and the Callable Puttable Common Stock voting together as a single class, the
holders of the Common Stock and the holders of the Callable Puttable Common
Stock are entitled to one vote per share. Bernard Salick, M.D., Chairman of the
Board and Chief Executive Officer of the Company ("Dr. Salick"), who
beneficially owned 1,096,569 shares of the Callable Puttable Common Stock as of
the Record Date, will be entitled to approximately 9.71% of the total votes
entitled to be cast at the meeting by the Common Stock and the Callable Puttable
Stock voting together as a single class. See "STOCK OWNERSHIP - Management"
below. In addition, Zeneca, which through Atkemix Thirty-eight Inc., a Delaware
corporation, a wholly owned subsidiary of Zeneca, beneficially owned 100% of the
outstanding Common Stock as of the Record Date (5,657,115 shares or
approximately 50.1% of the total votes entitled to be cast at the meeting by the
Common Stock and the Callable Puttable Common Stock voting together as a single
class), has stated to the Company that it intends to vote the shares of Common
Stock in favor of the amendments.
As to the vote on the proposed amendments to the Company's certificate of
incorporation by the holders of the Common Stock voting as a separate class, the
holders of the Common Stock are entitled to one vote per share of Common Stock
and Zeneca, the beneficial owner of 100% of the outstanding Common Stock, has
stated to the Company that it intends to vote such shares in favor of the
amendments.
As to the vote on the proposed amendments to the Company's certificate of
incorporation by the holders of the Callable Puttable Common Stock voting as a
separate class, and the vote for Directors to be elected by such holders,
subject to certain exceptions, limitations and presumptions set forth in the
Company's certificate of incorporation, a holder of record of a share of the
Callable Puttable Common Stock is entitled to ten votes per share if such holder
(1) was the beneficial owner of the shares of the Company's common stock
exchanged for common stock in the merger of Salick Health Care, Inc., a
California corporation, with and into the Company since August 27, 1991 (the
effective date of such merger) and at all times thereafter until exchanged for
such shares of the Callable Puttable Common Stock pursuant to the Merger and (2)
the beneficial owner of such share of Callable Puttable Common Stock immediately
following the Merger and at all times since the effective time of the Merger.
Shares of the Callable Puttable Common Stock which are not entitled to ten votes
per share when voting separately as a class are entitled to only one vote per
share. Based on the information with respect to beneficial ownership possessed
by the Company at the Record Date, it is estimated that the holders of
approximately 35% of the shares of the Callable Puttable Common Stock will be
entitled to exercise ten votes per share at the meeting as to matters to be
voted on by the Callable Puttable Common Stock voting separately as a class and
that Dr. Salick, who beneficially owned approximately 19.4% of the outstanding
shares of the Callable Puttable Common Stock as of the Record Date, will be
entitled to approximately 49.46% of the votes
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attributable to the Callable Puttable Common Stock entitled to be cast at the
meeting upon such matters (see "STOCK OWNERSHIP -- Management"). The actual
voting power of each holder of shares of the Callable Puttable Common Stock,
voting separately as a class, including Dr. Salick, will be based on information
possessed by the Company at the time of the meeting. Under the Company's
certificate of incorporation, shares of the Callable Puttable Common Stock held
in "street" or "nominee" name are presumed to have had a change in beneficial
ownership thereof (or in the beneficial ownership of the shares for which such
shares of Callable Puttable Common Stock were exchanged) after August 27, 1991
and are, absent satisfactory evidence to the contrary, entitled to one vote per
share.
With respect to the election of the Directors, up to five Directors
(leaving one vacancy) will be elected by the holders of the Common Stock, voting
separately as a class, and up to six Directors will be elected by the holders of
Callable Puttable Common Stock, voting separately as a class. Assuming approval
of the proposed amendments to the Company's certificate of incorporation, the
five candidates for election as Directors by the holders of the Common Stock who
receive the highest number of affirmative votes of the shares of Common Stock
present in person or represented by proxy at the meeting and entitled to vote on
the election of directors will be the Directors elected by such holders and the
six candidates for election as Directors by the holders of the Callable Puttable
Common Stock who receive the highest number of affirmative votes of the shares
of Callable Puttable Common Stock present in person or represented by proxy at
the meeting and entitled to vote on the election of Directors will be the
Directors elected by such holders. Any votes by the holders of either the Common
Stock or the Callable Puttable Common Stock against the candidates to be elected
by such holders or withheld from voting (whether by abstention, broker non-votes
or otherwise) will not be counted and will have no legal effect or effect on the
vote with respect to the election of Directors to be elected by such holders.
There is no cumulative voting with respect to either the Company's Common
Stock or the Callable Puttable Common Stock.
IF A HOLDER OF CALLABLE PUTTABLE COMMON STOCK ENTITLED TO VOTE AT THE
ANNUAL MEETING BELIEVES SUCH HOLDER IS THE OWNER OF SHARES ENTITLED TO TEN VOTES
PER SHARE ON MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING UPON WHICH THE
HOLDERS OF THE CALLABLE PUTTABLE COMMON STOCK ARE TO VOTE SEPARATELY AS A CLASS,
SUCH HOLDER MUST FURNISH EVIDENCE SATISFACTORY TO THE COMPANY (WHICH MAY BE IN
THE FORM OF A COPY OF THE STOCK CERTIFICATE, BROKERAGE ACCOUNT OR TRADE TICKET)
SHOWING SUCH HOLDER'S OWNERSHIP OF THE COMPANY'S COMMON STOCK FOR WHICH SUCH
SHARES OF THE CALLABLE PUTTABLE COMMON STOCK WERE EXCHANGED AS OF AUGUST 27,
1991.
THE MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING ARE OF GREAT IMPORTANCE
TO THE STOCKHOLDERS OF THE COMPANY. ACCORDINGLY, STOCKHOLDERS ARE URGED TO READ
AND CAREFULLY CONSIDER THE INFORMATION PRESENTED IN THIS PROXY STATEMENT, AND
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TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN THEIR PROXY IN THE ENCLOSED POSTAGE
PAID ENVELOPE.
AMENDMENTS TO CERTIFICATE OF INCORPORATION
(Proposal 1 on Proxy Card)
The Board of Directors has unanimously approved for submission to
stockholder vote amendments to the Company's certificate of incorporation
substantially in the form of Exhibit A attached hereto, which amendments effect
an increase in the authorized number of directors of the Company from ten to
twelve persons. The following summary of the amendments are qualified in their
entirety by reference to said Exhibit A. Adoption of the amendments requires
the affirmative vote of (1) the holders of record of at least a majority of the
total number of shares of the Common Stock and the Callable Puttable Common
Stock outstanding on the Record Date, voting together as a class, (2) the
holders of record of at least a majority of the total number of shares of the
Common Stock outstanding on the Record Date, voting separately as a class, and
(3) the holders of record of at least a majority of the votes entitled to be
cast by the holders of the Callable Puttable Common Stock outstanding on the
Record Date, voting separately as a class.
The authorized number of Directors of the Company is presently set at ten
by the Company's certificate of incorporation, all of whom are elected annually.
Five of the Directors are to be elected by the holders of the Common Stock,
voting separately as a class, at least one of whom will be an independent
director (as defined in Section 6(c) of Schedule D to the By-Laws of the NASD).
The remaining five Directors are to be elected by the holders of the Callable
Puttable Common Stock, voting separately as a class, at least one of whom will
be an independent director.
The Company is proposing to amend its certificate of incorporation to
increase the authorized number of Directors to twelve, six of whom would be
elected by the holders of the Common Sock, voting separately as a class, and six
of whom would be elected by the holders of the Callable Puttable Common Stock,
voting separately as a class.
An increase in the authorized number of Directors requires an amendment to
Section C(ii) of Article FOURTH of the Company's certificate of incorporation to
provide that holders of each of the Common Stock and the Callable Puttable
Common Stock are entitled to elect six, rather than five, Directors and an
amendment to Article FIFTH of the Company's certificate of incorporation to
provide that the authorized number of Directors shall be twelve. Because the
two sections to be amended are interdependent upon one another, the proposed
amendments will be voted on as one item, i.e., either the amendments to both
----
sections will be approved or neither section will be amended.
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Thus, the proposed amendments appear as a single proposal on the enclosed proxy.
If the amendments are not approved, then the holders of the Common Stock
will elect four Directors (leaving one vacancy) at the Annual Meeting and the
holders of the Callable Puttable Common Stock will elect five Directors at the
Annual Meeting. If the amendments are approved, then five Directors will be
elected by the holders of the Common Stock (leaving one vacancy) and six
Directors will be elected by the holders of the Callable Puttable Common Stock.
See "ELECTION OF DIRECTORS" below.
If the proposed amendments are approved, the authorized number of Directors
may not be changed unless and until the change is approved by the stockholders
of the Company in the manner described herein.
Each of Zeneca and Dr. Salick has informed the Company that all of the
shares beneficially owned by such persons will be voted in favor of the proposed
amendments to the Company's certificate of incorporation.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE PROPOSED
AMENDMENTS.
ELECTION OF DIRECTORS
(Proposal 2 on Proxy Card)
The Company's certificate of incorporation currently sets the authorized
number of Directors at ten, five of whom are elected by the holders of the
Common Stock and five of whom are elected by the holders of the Callable
Puttable Common Stock. As described above, the Company is proposing to amend
its certificate of incorporation to increase the authorized number of Directors
to twelve, six of whom would be elected by the holders of the Common Stock and
six of whom would be elected by the holders of the Callable Puttable Common
Stock.
The Company, Dr. Salick and Zeneca are parties to a Governance Agreement,
dated as of December 22, 1995, as amended (the "Governance Agreement"), which
provides that, among other things, (1) Zeneca (through its wholly owned
subsidiary) has the right (but is not required) to nominate the persons who will
stand for election as the successors to the Directors who were previously
appointed or elected by the holders of the Common Stock and (2) a majority of
the Directors previously elected by the holders of the Callable Puttable Common
Stock are to nominate the persons who will stand for election as the successors
to the Directors previously elected by the holders of the Callable Puttable
Common Stock. The Governance Agreement further provides that the Company will
nominate the persons so selected, will recommend to its stockholders each such
nominee's election and solicit proxies therefor.
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In accordance with the Governance Agreement, the Board of Directors has
nominated Dr. Salick, Leslie F. Bell, Michael T. Fiore, Barbara Bromley-
Williams, Dr. Mintz and, in the event that the proposed amendments to the
Company's certificate of incorporation are approved, Patrick W. Jeffries for
election as Directors by the holders of the Callable Puttable Common Stock. All
of such persons except Mr. Jeffries are incumbent Directors. All proxies for
the Callable Puttable Common Stock will be voted for the election of such
nominees unless authority to vote for the election of such nominees is withheld.
In the event any nominee to be elected by the holders of the Callable Puttable
Common Stock should unexpectedly decline or be unable or unwilling to serve as a
Director, the proxies may be voted for a substitute nominee designated by the
present Board of Directors. The Board of Directors has no reason to believe
that any of the nominees will be unable or unwilling to serve as a Director if
elected by the holders of the Callable Puttable Common Stock and has no present
intention to nominate persons in addition to or in lieu of those named herein.
The candidates to be elected by the holders of the Callable Puttable Common
Stock receiving the highest number of affirmative votes of the shares thereof
present in person or represented by proxy at the meeting and entitled to vote on
the election of Directors are the Directors elected by such holders. Any votes
against the candidates or withheld from voting (whether by abstention, broker
non-votes or otherwise) will not be counted and will have no legal effect on the
vote with respect to the election of directors. In the event that the proposed
amendments to the Company's certificate of incorporation are not approved, Mr.
Jeffries will not be nominated as a Director to be elected by the holders of the
Callable Puttable Common Stock.
In accordance with the Governance Agreement, the Board of Directors has
nominated Dr. Thomas F.W. McKillop, Robert C. Black, John G. Goddard, Dr.
Michael G. Carter and, in the event that the proposed amendments to the
Company's certificate of incorporation are approved, Alan I. H. Pink for
election as Directors by the holders of the Common Stock. Zeneca has informed
the Company that it intends to vote (or cause to be voted) all of the shares of
the Company's Common Stock beneficially owned by it, which shares represent 100%
of the outstanding shares of the Company's Common Stock on the Record Date, in
favor of such nominees. In addition to the foregoing nominees, the Board of
Directors had nominated for election as a Director by the holders of the Common
Stock Dr. Clifford R. Guy who had served as the independent Director of the
holders of the Common Stock since April 13, 1995, the effective date of the
Merger. In December 1995, Dr. Guy died, leaving a vacancy on the Board of
Directors, which vacancy has not been filled and will not be filled by a vote of
the holders of the Common Stock at the Annual Meeting. A replacement for Dr.
Guy is being sought to fill the vacancy in the independent Director of the
holders of the Common Stock, which vacancy will be filled following the Annual
Meeting by a vote of the Directors elected at the Annual Meeting by the holders
of the Common Stock as permitted under the
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Company's certificate of incorporation. In the event any of the other nominees
to be elected by the holders of the Common Stock should unexpectedly decline or
be unable or unwilling to serve as a Director, the holders of the Common Stock
may vote for a substitute nominee designated by the present Board of Directors.
The Board of Directors has no reason to believe that any of the nominees will be
unable or unwilling to serve as a Director if elected by the holders of the
Common Stock and has no present intention to nominate persons in addition to or
in lieu of those named herein. In the event that the proposed amendments to the
Company's certificate of incorporation are not approved, Mr. Pink will not be
nominated as a Director to be elected by the holders of the Common Stock.
In respect of all current Directors and such nominees, the following
information is furnished:
<TABLE>
<CAPTION>
Director
Name Age Position Held With Company Since
- ---- --- ---------------------------------- ------
<S> <C> <C> <C>
Bernard Salick, M.D. 56 Chairman of the Board of 1983
Directors,Chief Executive Officer
and President
Leslie F. Bell 55 Executive Vice President, Chief 1983
Financial Officer, Secretary
and Director
Michael T. Fiore 41 Executive Vice President, Chief 1994
Operating Officer and Director
Barbara Bromley-Williams 56 Senior Vice President-Professional 1983
Services and Director
Thomas Mintz, M.D. 64 Director 1985
Patrick W. Jeffries 43 Executive Vice President, Chief
Development Officer
Dr. Thomas F.W. McKillop 52 Director 1995
Robert C. Black 52 Director 1995
John C. Goddard 44 Director 1995
Dr. Michael G. Carter 57 Director 1995
Alan I. H. Pink 58 --
</TABLE>
Dr. Salick, founder of the Company, has been Chairman of the Board of
Directors and Chief Executive Officer of the Company since its organization. He
also served as President and Chief Operating Officer until May 1, 1985 and
reassumed these positions in October 1988. Dr. Salick has been the Medical
Director of the Company's subsidiaries, USHAWL, Inc. ("USHAWL") and Century
Dialysis Corporation ("Century"), for more than the past five years. Dr. Salick
is an Assistant Clinical Professor of Medicine at UCLA and on the medical staff
of Cedars-Sinai Medical Center and other hospitals. He is a member of the Board
of Queens College (N.Y.). He also has been a member of the National Advisory
Board of the National Kidney Foundation, the American Society of Nephrology and
the American Society of Clinical Oncology.
Mr. Bell has served as Secretary and a Director of the Company since its
organization in 1983. He served as Senior Vice President from 1983 until
November 1989 when he became Executive Vice President. He became Chief
Financial Officer in January
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1985. From 1976 through May 1983, Mr. Bell was managing partner in the law firm
of Katz, Hoyt, Bell & Siegel and its predecessor firms and served as general
counsel to the Company. Mr. Bell is a Director of NATSA, a not-for-profit
entity, and serves on the Board of Advisors of the Community for Education
Foundation, a not-for-profit entity.
Mr. Fiore joined the Company in May 1986 as Vice President and Director of
Operations. Prior to joining the Company, he was employed in various capacities
by American Medical International, Inc. for more than six years, where he was a
Corporate Vice President. Mr. Fiore, a CPA, was employed by Peat, Marwick,
Mitchell & Co. from 1976 to 1978. He received his MBA from the Harvard Business
School in 1980. Mr. Fiore became a Senior Vice President of the Company in 1990
and assumed the position of Chief Operating Officer in 1993. In 1994 Mr. Fiore
became Executive Vice President and a Director of the Company.
Ms. Bromley-Williams has served as Vice President-Professional Services and
a Director of the Company since its organization. She has been employed as Head
Nurse and Director of Professional Services of the Company's subsidiaries,
USHAWL since 1972 and Century and its predecessor since 1977. Ms. Bromley-
Williams became a Senior Vice President in November 1989.
Dr. Mintz has been a Director of the Company since March 1985. He has been
providing consulting services to the Company on a part-time basis for the past
nine years. He has been a board certified practicing adult and child
psychiatrist and psychoanalyst for more than the past five years. Dr. Mintz has
been an Assistant Clinical Professor of Psychiatry at the UCLA Medical Center
since 1970 and is on the staff at several major medical centers. Dr. Mintz is
also an attorney with a limited private practice.
Mr. Jeffries joined the Company in December 1995 as Executive Vice
President, Chief Development Officer. From 1985 to 1995, he was at McKinsey &
Company, Inc., a business consulting company with an industry emphasis in health
care provision and financing, aerospace electronics and information technology.
He became a partner in that firm in 1991.
Mr. Black has been President of Zeneca Pharmaceuticals, a business unit of
Zeneca, Inc. since 1991 and a Vice President of Sales and Marketing from 1986 to
1988 and then since 1990. He is a member of the Board of the Pharmaceuticals
Research and Manufacturers of America, the Anesthesiology Patient Safety
Foundation of the American Anesthesiology Association and the Industry's
Coalition Against Cancer. Mr. Black is a trustee of the Wilmington Medical
Center. He serves on the Advisory Committee of the University of Delaware
School of Nursing and is a member of the Editorial Advisory Board of
"Pharmaceutical Executive" magazine. Mr. Black is also Chairman of the Board of
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<PAGE>
the Pharmaceuticals Research and Manufacturers of America Foundation.
Dr. Carter has been a Director and a member of the Zeneca Pharmaceuticals
Business Team since 1986, intially as International Medical Director and from
1990 until March 1995 as International Marketing Director. He rmains a Director
and member of the Zeneca Pharmaceuticals Business Team. Dr. Carter has been a
member of the Medicines Commission since 1986 and a member of the Policy Board,
Office Health Economics since 1992. He is a Fellow of the Royal Pharmaceutical
Society, the Faculty of Pharmaceutical Medicine of the Royal College of
Physicians, and a Fellow of the Royal College of Physicians of Edinburgh.
Mr. Goddard has been Finance Director of Zeneca Pharmaceuticals, a business
unit of Zeneca since April, 1993. He was previously Chief Financial Officer of
ICI Asia Pacific from 1991 until 1993 and a Finance Director of ICI Japan from
1988 until October 1991. From January 1986 through January 1988 he was
Assistant Chief Accountant of ICI Agrochemicals. Before joining ICI, he was
European Treasurer of Bell & Howell, Ltd. from 1979 until 1985. Mr. Goddard is
a chartered accountant. He is a member of the Association of Corporate
Treasurers.
Dr. McKillop has been Chief Executive Officer of Zeneca Pharmaceuticals, a
business unit of Zeneca since July 1994. He was appointed Deputy Chief
Executive Officer of ICI Pharmaceuticals in May 1992 and was Technical Director
of ICI Pharmaceuticals from 1989 until April 1992. He is a Non-Executive
Director of Amersham International.
Mr. Pink has been employed by Zeneca or its affiliates since 1962, serving
as the Chief Executive Officer of ICI Agrochemicals since April 1992, as an
Executive Director of Zeneca since February 1993 and as an Executive Director of
Zeneca Group PLC, an English company of which Zeneca is a wholly owned
subsidiary, since June 1993. From 1989 to 1992, he served as the Principal
Executive Officer of ICI Advanced Materials located in Wilmington, Delaware. He
is a Non-Executive Director of Smiths Industries PLC.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE ELECTION
OF THE DIRECTORS NOMINATED FOR ELECTION BY THE HOLDERS OF THE CALLABLE PUTTABLE
COMMON STOCK.
STOCK OWNERSHIP
Principal Stockholders
The following table sets forth information as to the beneficial ownership
of each person known to the Company to beneficially own more than five percent
of the outstanding shares of the Company's Common Stock or Callable Puttable
Common Stock as of November 30, 1995, based with respect to Mentor Partners
-11-
<PAGE>
L.P. on a copy received by the Company of the most recent Schedule 13D filing
with the Securities and Exchange Commission (made pursuant to the rules and
regulations promulgated under the Securities Exchange Act of 1934, as amended)
dated April 24, 1995:
<TABLE>
<CAPTION>
Callable
Puttable
Common Percent Common Percent
Name and Address Stock of Class Stock of Class
- --------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Bernard Salick, M.D.(1) 0 0% 1,096,569 19.4%
8201 Beverly Boulevard
Los Angeles, CA 90048
Mentor Partners, L.P.(2) 0 0% 515,150 9.13%
500 Park Avenue
New York, NY 10022
Atkemix Thirty-eight
Inc.(3) 5,657,115 100% 100 *
</TABLE>
- ------------------
(1) Dr. Salick claims sole voting and dispositive power over 1,096,569 shares
of Callable Puttable Common Stock. The total shares thereof beneficially
owned includes 17,415 shares held by Dr. Salick, in trust, for his minor
children and those held by his family trust of which he is the trustee.
Also includes 150,000 shares held by a limited partnership of which Dr.
Salick is the general partner. See "STOCK OWNERSHIP-Mangement" below.
(2) Beneficial ownership represents sole voting and dispositive power.
(3) This entity is an indirect wholly owned subsidiary of Zeneca.
Management
The following table sets forth, as of November 30, 1995, certain
information regarding the beneficial ownership of shares of the Common Stock
and Callable Puttable Common Stock by each of the Directors nominees for
Director of the Company, each of the executive officers named in the Summary
Compensation Table under the heading "EXECUTIVE COMPENSATION" below, and all
executive officers and directors of the Company as a group. Except as otherwise
indicated, each person has sole investment and voting powers with respect to the
shares shown. The information with respect to each person specified is as
supplied or confirmed by such person.
-12-
<PAGE>
<TABLE>
<CAPTION>
Callable Puttable
Common Stock Common Stock
--------------------- -----------------------
Amount and Amount and
Name of Individual Nature of Percent Nature of Percent
or Identity of Group Ownership of Class Ownership of Class
- -------------------- --------- -------- ----------- ----------
<S> <C> <C> <C> <C>
Bernard Salick, M.D. 0 0% 1,096,569(1) 19.4%
Leslie F. Bell 0 0% 94,820(2,3) 1.7%
Michael T. Fiore 0 0% 51,630(2,3) *
Barbara Bromley-Williams 0 0% 51,040 *
Thomas Mintz, M.D 0 0% 13,850(2,3) *
Patrick Jeffries 0 0% 0 0%
Sheldon S. King 0 0% 0 0%
Dr. Thomas F.W. McKillop 0(5) 0% 0 0%
Robert C. Black 0(5) 0% 0 0%
John G. Goddard 0(5) 0% 0 0%
Dr. Michael G. Carter 0(5) 0% 0 0%
Alan I. H. Pink 0(5) 0% 0 0%
All executive officers
and Directors as a group
(13 persons) 0(5) 0% 1,365,514(1-5) 24.3%
</TABLE>
- ---------------
(1) Includes 17,415 shares of Callable Puttable Common Stock held by Dr.
Salick, as trustee in trust for his minor children. Includes 150,000
shares of Callable Puttable Common Stock held by a limited partnership of
which Dr. Salick is the general partner, as to which shares Dr. Salick
disclaims beneficial ownership.
(2) Includes 9,000 shares of Callable Puttable Common Stock owned by Dr.
Mintz's Pension Plan and 1,198 shares owned by Mr. Bell's Individual
Retirement Account. Also includes for Mr. Bell 12,500 shares of Callable
Puttable Common Stock held by a limited partnership of which he is the
general partner, as to which shares Mr. Bell disclaims beneficial
ownership.
(3) Excludes, to the best of the Company's knowledge, any shares of Callable
Puttable Common Stock owned by immediate relatives of Dr. Mintz or Ms.
Bromley-Williams, 5,750 shares owned by the spouse, children and immediate
relatives of Mr. Bell, 68,180 shares held by Mr. Bell and an unrelated
third party, as trustees in trust for Dr. Salick's minor children, 800
shares owned by the Salick Family Foundation and, to the best of the
Company's knowledge, any shares owned by immediate relatives of Dr. Salick,
as to which each of Dr. Salick, Ms. Bromley-Williams, Dr. Mintz and Mr.
Bell disclaims any beneficial or other ownership interest.
(4) Includes 2,016 shares of Callable Puttable Common Stock as of November 30,
1995 owned by certain members of the group resulting from their
participation in the Purchase Plan (as defined below) and 2,945 shares held
in the pension plan of the spouse of one of the members of the group, as to
which shares such member disclaims beneficial ownership.
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<PAGE>
(5) Excludes the 5,657,115 shares of the Company's Common Stock (100% of the
outstanding Common Stock) beneficially owned by Zeneca, with which entity such
named Directors and nominees for Director are affiliated.
* Represents less than one percent of the shares outstanding.
During the fiscal year ended August 31, 1995, Professor Regina Herzlinger,
a Director of the Company until the effective time of the Merger, failed to file
on a timely basis one Form 4, Statement of Changes of Beneficial Ownership of
Securities, which Form 4 reported on one transaction. Patricia Wilkinson, an
officer of the Company, failed to file on a timely basis a Form 5, Annual
Statement of Beneficial Ownership of Securities, with respect to the fiscal year
ended August 31, 1995, to report the exercise by her during such fiscal year of
two employee stock options.
EXECUTIVE COMPENSATION
The following table sets forth the annual, long-term and other compensation
for services in all capacities to the Company (and its subsidiaries) for the
fiscal years ended August 31, 1995, 1994 and 1993, of those persons who were, at
August 31, 1995 (i) Chief Executive Officer and (ii) the four most highly
compensated executive officers of the Company other than the Chief Executive
Officer.
-14-
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
------------
Annual Compensation Awards
-------------------- ------------
Securities
Underlying All Other
Fiscal Cash Options Compensation
Name and Principal Position Year Salary($) Bonus($)(1) (#)(2) ($)(3)
- --------------------------- ------ --------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Bernard Salick, M.D. 1995 $869,705 $758,000 0(5) $306,093
Chairman of the Board 1994 890,443 585,000 0 284,555
of Directors, Chief 1993 796,929 540,000 25,000 284,494
Executive Officer and
President
Leslie F. Bell 1995 $389,992 $107,000 0(5) $ 8,352(6)
Executive Vice President, 1994 377,911 100,000 0 2,304
Secretary and Director 1993 363,217 70,000 20,000 3,009
Sheldon S. King(4) 1995 $500,000 $ 0 0(5) $ 50,298(6)
Executive Vice President 1994 283,693 0 0 0
1993
Michael T. Fiore 1995 $305,253 $ 95,000 0(5) $ 18,228(6)
Executive Vice President, 1994 254,431 95,000 0 2,472
Chief Operating Officer 1993 234,375 65,000 20,000 3,480
Barbara Bromley-Williams 1995 $231,966 $ 50,000 0(5) $ 15,800(6)
Senior Vice President- 1994 227,325 50,000 0 2,320
Professional Services 1993 215,416 40,000 10,000 2,842
</TABLE>
____________________
(1) Does not include Management Incentive Compensation Plan or other special
bonuses paid subsequent to year end for the fiscal year ended August 31,
1995.
(2) There were no grants of stock options to executive officers during the
fiscal year ended August 31, 1995.
(3) All other compensation includes the Company's contribution to certain life
insurance policies and the Company's matching contribution to the Salick
Health Care, Inc. Salary Savings Plan. The amount shown for Dr. Salick
includes the Company's payment of a premium of $282,245 for split-dollar
insurance.
(4) Mr. King joined the Company in February 1994.
(5) In the Merger, options to purchase common stock not exercised prior to the
Merger were converted into options to purchase a like number of shares of
Callable Puttable Common Stock at the same exercise price per share.
Options to
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<PAGE>
acquire the Company's outstanding common stock as it existed prior to the
Merger and to acquire the Company's Callable Puttable Common Stock after
the Merger which were granted to the persons named in the table above were
all exercised in the fiscal year ended August 31, 1995. See "Stock Option
Plan" below.
(6) Includes vesting of stock per MICP awards in prior years. For Mr. King
only, the amount shown includes a $3,000 per month relocation/expense
allowance.
Employment Agreements
The Company entered into new employment agreements with Dr. Salick, Mr.
Bell, and Mr. Fiore, each of which is for a five year term which commenced
effective with the Merger on April 13, 1995. The agreement with Mr. Fiore was
amended on November 1, 1995 with respect to base compensation. These agreements
as presently effective provide for base compensation, subject to future annual
cost of living increases, of $925,453, $408,609 and $375,000 to Dr. Salick, Mr.
Bell and Mr. Fiore, respectively. Dr. Salick's employment agreement also
provides for an annual bonus of $300,000 of the first pretax profits of the
Company, payment of certain medical office and other expenses incurred in
activities related to the Company's business and reimbursement of all medical
and dental expenses incurred by him or his family not paid under the Company's
health insurance plans. A portion, $60,000, of Mr. Bell's base compensation as
shown above is paid to his professional law corporation. A wholly owned
subsidiary of the Company has an employment agreement with Mr. King for a five
year term. The agreement, which is guaranteed by the Company, provides for base
compensation of $500,000 per year and an expense allowance for specified
purposes of $3,000 per month. Each of such persons are among the eligible
participants in the Company's Management Incentive Compensation Plan ("MICP").
The Company provides Dr. Salick with "split-dollar" insurance policies pursuant
to which the Company pays the premiums, the policy is collaterally assigned to
the Company as security for the premium payments made by it and the Company
receives a reimbursement of its premium contributions out of the proceeds
payable upon death. During the fiscal year ended August 31, 1995, payments by
the Company for these policies were $282,245. In addition, the Company carries
"key man" insurance on Dr. Salick and the Company is the owner and beneficiary
of this policy. The Company's employment agreements with each of Dr. Salick,
Mr. Bell, and Mr. Fiore provide for the payment to such person of a specified
amount if, following certain changes in the ownership or control of the Company
or certain changes in ownership of a substantial portion of the assets of the
Company, there is a termination by the Company of such person's employment or by
the employee following certain demotions or other changes in the duties,
compensation or status of such individual. The amount of such payment would be
299% of the individual's "base amount" (the individual's annualized included
compensation for the five fiscal years ending before the event triggering such
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<PAGE>
payment), and may not exceed the maximum amount allowable under the Internal
Revenue Code of 1986, as amended (the "Code"), without the occurrence of an
excise tax by the individual or loss of deduction by the Company (or its
successor). Dr. Salick and certain other physician employees of the Company
maintain limited private medical practices and retain professional fees of those
practices. Mr. Bell has a limited law practice from which he retains
professional fees.
Directors of the Company who are not full time employees receive
reimbursement for expenses incurred in attending meetings and $4,000 per quarter
for their services as directors and committee members. Dr. Mintz provides
consulting services to the Company for which he was compensated during the
fiscal year in the amount of $30,000. On April 13, 1995, effective with the
Merger, Professor Herzlinger, Mr. King and Paul Rogers, formerly members of the
Company's Board of Directors, resigned therefrom.
Stock Option Plan
The Company's Stock Option Plan (the "Plan") was originally adopted in
1985, and, as amended, covers an aggregate of 1,100,000 shares of Common Stock
and expires in November 2000. Shares which are subject to options that are
canceled or expire without being exercised will again be available for the
purposes of the Plan. In connection with the Merger, the Board of Directors of
the Company accelerated to the effective time of the Merger all outstanding
options under the Plan. Outstanding options not exercised prior to the
effective time of the Merger were converted into options to acquire a like
number of shares of the Callable Puttable Common Stock at the same exercise
price per share.
The purpose of the Plan is to assist the Company in the recruitment,
retention and motivation of key employees, directors and consultants who are in
a position to make material contributions to the Company's progress. The Plan
provides for the grant of options to purchase Shares of Common Stock. Such
options may include nonqualified options as well as incentive stock options
("ISOs") intended to qualify for preferential tax treatment under Section 422 of
the Code. Options may be granted to selected employees, directors and
consultants of the Company or of a subsidiary of the Company (including officers
and directors who are also employees or consultants). However, ISOs may be
granted only to employees (including officers and directors who are also
employees). It is not anticipated that any additional options will be granted
under the Plan.
There were no grants of stock options to executive officers named in the
Summary Compensation Table above during the fiscal year ended August 31, 1995
and such named executive officers held no unexercised options as of August 31,
1995.
The following table sets forth as of August 31, 1995 information as to the
number of options exercised during the
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<PAGE>
fiscal year by the executive officers named in the Summary Compensation Table
above. All option exercises were for Callable Puttable Common Stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Shares Acquired Value
Name on Exercise (#) Realized ($)(1)
- ---- --------------- ---------------
<S> <C> <C>
Bernard Salick, M.D. 65,000 $1,686,375
Leslie F. Bell 50,000 1,332,400
Michael T. Fiore 50,000 1,341,775
Barbara Bromley-Williams 50,000 1,403,700
</TABLE>
- -------------
(1) Calculated by determining the difference between the fair market value of
the shares of the Callable Puttable Common Stock underlying the option and
the exercise price at exercise.
Employee Qualified Stock Purchase Plan
In November 1988, the Board of Directors of the Company adopted the
Employee Qualified Stock Purchase Plan (the "Purchase Plan"), which was approved
by the stockholders of the Company in January 1989. The Purchase Plan provides
for the grant to eligible employees of the Company and its subsidiaries of
options to purchase up to an aggregate of 100,000 shares of Common Stock. All
employees who have been employed for at least one continuous year and who are
customarily employed for more than 20 hours per week and more than five months
per calendar year are eligible to participate in the Purchase Plan. However, no
eligible employee may be granted an option to purchase Shares under the Purchase
Plan if (a) immediately after the grant of such option, such employee would own
Shares possessing 5% or more of the total combined voting power of the Company
or (b) such option would permit the employee's rights to purchase Shares under
all employee stock purchase plans of the Company and its subsidiaries to accrue
at a rate which exceeds $25,000 or the fair market value of such Shares for each
calendar year in which such option is outstanding at any time.
Options are granted under the Purchase Plan to all eligible employees in
successive monthly offering periods. The offering periods continue until the
earlier of the date upon which all of the Shares covered by the Purchase Plan
have been sold or the date upon which the Purchase Plan is terminated. The
first such offering period commenced on July 1, 1989 and the Plan was terminated
in connection with the Merger. An employee may elect to exercise his or her
option and participate in the Purchase Plan with respect to each offering period
and shall pay for the Shares acquired upon exercise of such option through
payroll deductions. The purchase price per Share under the options will be
equal to 85% of the fair market value per Share on the last day of the
applicable offering period.
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<PAGE>
The Purchase Plan is administered by the Company, acting through Shearson
Lehman Hutton, Inc., 2 World Trade Center, 102nd Floor, New York, New York
10048.
Salary Savings Plan
On July 27, 1988, the Board of Directors of the Company adopted the Salick
Health Care, Inc. Salary Savings Plan (the "401(k) Plan"). The first year of
the 401(k) Plan ended on August 31, 1989.
The 401(k) Plan permits all eligible employees to contribute up to the
maximum dollar amount allowed under federal tax law from their payroll. The
Company matches the contributions of each employee in an amount equal to 25% of
such contributions, but not in excess of 6% of such employee's salary. The
contributions made by the Company on behalf of any employee vest in such
employee in increments of 25% per year, commencing with the second year of such
participating employee's employment by the Company.
Each employee is eligible to participate in the 401(k) Plan after he or she
has been employed by the Company (or any of its subsidiaries) for 90 days and
has attained 21 years of age. Employees must enroll in the 401(k) Plan during
one of four quarterly enrollment periods. Distributions under the 401(k) Plan
are permitted only (a) upon an employee's death, permanent disability or
retirement, (b) in accordance with the hardship rules under ERISA, or (c) as set
forth in the 401(k) Plan, upon termination of employment. Requests for
distributions are processed on a quarterly basis.
The 401(k) Plan provides for investment of the employee's funds at his or
her election in a choice of five mutual funds. The funds, together with the
matching contributions, are placed in trust with, and invested in a fund
selected by the employee by, Fidelity Institutional Retirement Services Company,
4555 Lake Forest Drive, Suite 630, Cincinnati, Ohio 45242, which administers the
401(k) Plan on behalf of the Company. The trustees of the trust are Dr. Salick,
Mr. Bell and Leigh Armididge, Vice President-Human Resources.
The amounts set forth in the Summary Compensation Table above include
amounts under the 401(k) Plan which have been deferred by the persons named in
such table. The following amounts represent the vested portion of Company
contributions under the 401(k) Plan which were accrued during the fiscal year
ended August 31, 1995 for the persons named in the Summary Compensation Table
above: Dr. Salick-$2,310; Mr. Bell-$2,712; Mr. Fiore-$2,312; Ms. Bromley-
Williams-$2,719; and Mr. King-$0.
Management Incentive Compensation Plan
In August 1991, the Company's directors and stockholders approved the MICP.
The MICP, which expires in August 2001,
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<PAGE>
provides for incentive awards to those full-time employees of the Company and
its subsidiaries designated by the MICP Committee (as defined below) who are
determined to have a direct and significant impact on the performance of the
Company. Members of the MICP Committee are ineligible to participate in the
awards. Awards are based on the achievement of objectives established by the
MICP Committee and the extent of any award is also determined by the MICP
Committee in its discretion.
The MICP Committee determines in its discretion the form of the award
(cash, shares of stock or a combination thereof) and whether awards of stock may
or may not be subject to conditions or restrictions on the participant's right
to transfer or sell such stock, which conditions and/or restrictions may be
modified or eliminated in the discretion of the MICP Committee. An award of
stock will be at the then current market value of such stock. Any award may be
made currently or, as the MICP Committee may determine or the participant may
elect, may be deferred. Awards deferred will be paid from the Company's general
funds and thus are subject to the claims of the Company's creditors. The MICP
covers an aggregate of 200,000 shares of common stock.
The MICP Committee has the authority to regulate, administer and interpret
the MICP as appropriate for the proper and effective administration of the MICP
and its determinations and interpretations are final and binding.
In the event of a "change in control" and unless the Board of Directors
otherwise provides, all restrictions and conditions on any restricted stock
awards under the MICP will be deemed satisfied as of the date of the change in
control and all other awards are fully earned as of such date (except for any
stock award outstanding less than six months). For purposes of the MICP, a
change in control will be deemed to have occurred when any person or entity
other than the Company or its subsidiaries, Dr. Salick or his heirs, any Company
employee benefit plan or person organized pursuant to such plan, acquires twenty
percent or more of the Company's outstanding common stock (unless such
acquisition has been approved by the Company's Board of Directors, a majority of
whom are not the acquiring person or an affiliate or associate thereof). It is
anticipated that the MICP will continue in effect after the Effective Time and
awards will continue to be available to be made thereunder.
Under the MICP the following cash awards were made subsequent to (but for
and with respect to) the fiscal year ended August 31, 1995 to the persons named
in the Summary Compensation Table above: Dr. Salick, $220,000; Mr. Bell,
$255,000; Mr. Fiore, $325,000; and Ms. Bromley-Williams, $65,000. Under the
MICP the following cash awards were made during the fiscal year for the fiscal
year ended August 31, 1994, to the persons named in the Summary Compensation
Table above: Dr. Salick, $120,000; Mr. Bell, $100,000; Mr. Fiore, $95,000; and
Ms. Bromley-Williams, $50,000. Under the MICP the following cash awards were
made during the fiscal year ended August 31, 1993 to
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<PAGE>
the persons named in the Summary Compensation Table above: Dr. Salick, $80,000;
Mr. Bell, $70,500; Mr. Fiore, $65,000; and Ms. Bromley-Williams, $40,000.
Stock Performance Graph
The following graph compares the cumulative total stockholder return of the
shares of the Company's publicly traded securities for the last five fiscal
years with (1) the Standard and Poor's 500 Composite Index, and (2) the NASDAQ
Health Services Stocks Index.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG SALICK HEALTH CARE, INC., THE S & P 500 INDEX
AND THE NASDAQ HEALTH SERVICES INDEX
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
SALICK NASDAQ
Measurement Period HEALHCARE, S & P HEALTH SERVICES
(Fiscal Year Covered) INC. 500 INDEX INDEX
- ------------------- ---------- --------- ---------------
<S> <C> <C> <C>
Measurement Pt- August 31,1990 $100 $100 $100
FYE AUGUST, 1991 $131 $127 $190
FYE AUGUST, 1992 $134 $137 $217
FYE AUGUST, 1993 $172 $158 $237
FYE AUGUST, 1994 $228 $166 $304
FYE AUGUST, 1995 $456 $202 $318
</TABLE>
* $100 INVESTED ON 08/31/90 IN STOCK ON INDEX - INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING AUGUST 31.
Compensation Committee Report on Executive Compensation
The Company's Compensation Committee (the "Committee") is authorized to
review and approve management's recommendations for compensation and other
benefits for certain of the Company's executive employees. Three outside
directors also serve on the Management Incentive Compensation Plan Committee
(the "MICP Committee"), which regulates, administers, and interprets the
Company's Plan and MICP.
Compensation Objectives. The Company's executive compensation program,
which is endorsed by the Committee, is designed to meet the following
objectives:
. To attract and retain key executives
. To provide key executives with incentives to achieve Company goals and
objectives
. To reward individual contributions toward meeting Company objectives
. To align the interests of management with the interests of the Company's
stockholders.
The Company's agreements achieved with the academic and other major medical
centers that the Company has focused on are reached in advance of results being
realized from the development and operation of the Company's Centers. This is
consistent with the Company's strategy of long-term investments in its
operations and facilities. The Committee, in considering compensation levels,
bonus and other incentive payments to Company executives, believes it is
important to consider, on both a current and long-term basis, the efforts of the
Company's Chief Executive Officer and the other executives involved, the actual
and projected results which can be realized from these agreements which range to
thirty-five years in duration, the credibility and excellent reputation that the
Company, under the leadership of its executives has established, and the
extensive length of time that it takes to consummate transactions with these
medical centers.
While the stock market tends to respond to short-term signals and results,
the Committee believes that it is essential,
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<PAGE>
in evaluating compensation levels and incentive payments to Company executives,
to establish awards which recognize both the current and longer range benefits
anticipated to be realized from the Company's historically successful strategy
of investing and affiliating, on a long-term basis, with major academic and
other major medical centers.
Base Salaries
The Company's salary levels for executive officers are intended to take
into account the experience, achievements, and contributions of employees, their
perceived value to the Company, competitive practice, and levels of
responsibility. Salary increases are designed to reflect competitive trends,
the financial performance of the Company, and the performance of the individual
executive.
All of the Company's executive officers received salary increases of four
percent for fiscal 1995.
Section 162(m) of the Code limits to $1,000,000 the deductibility, for any
fiscal year beginning after December 31, 1993, of compensation paid by a public
corporation to its chief executive officer and the next four most highly
compensated executive officers unless such compensation is performance-based
within the meaning of Section 162(m) of the Code and the regulations promulgated
thereunder. For fiscal 1995, the Company does not contemplate that there will
be non-deductible compensation for Dr. Salick or the next four most highly
compensated executive officers.
Management Incentive Compensation Program. In August 1991, the Company's
directors and stockholders approved the MICP. The purposes of the MICP are
consistent with the compensation objectives. Awards are based on the
achievement of a return-on-equity employed in operations objective established
by the MICP Committee, and the size of the award pool (as a percentage of net
income) is also determined by the MICP Committee in its assessment of
performance. The pool is allocated on the basis of management's evaluation of
each participant's contribution to Company results. The MICP Committee also
determines the form of awards (cash, stock, or a combination). For fiscal 1995
the MICP awards were paid solely in cash.
The Committee established the objectives and formula for the size of the
MICP award pool for fiscal 1995 at twelve percent of pre-tax profits (excluding
nonrecurring and extraordinary items and the effect of changes in accounting
principles) provided that it does not reduce the Company's pre-tax income below
a nine percent return on average equity actually employed in operations.
Long-Term Compensation. To align the interests of management with those of
stockholders, the Company has in the past awarded stock options to executives.
No options were awarded in fiscal year 1995. The granting of options is based
on
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<PAGE>
a subjective assessment of each individual's performance and level of
responsibility within the Company.
CEO Compensation. Compensation of the Company's founder, Chairman and
Chief Executive Officer, Dr. Salick, and of other senior executives is
determined by the independent non-employee members of the Committee.
The Committee is of the opinion that Dr. Salick is one of the most
experienced and successful executives in the health care field. His numerous
achievements at the Company and its predecessors have been acknowledged by
various industry groups and peers. The Committee considered Dr. Salick's
activities and his highly respected position in the industry, from which the
Committee believes the Company derives substantial benefits. Dr. Salick's base
salary and bonus provisions are specified in his employment contract.
During fiscal 1995 and for previous years, his compensation has been
determined under the terms of his employment agreement (see "Employment
Agreements"). Although in some prior years Dr. Salick has received merit
increases in his base salary, in fiscal 1995, as provided in Dr. Salick's
employment agreement, he received a four percent salary increase. He also
participates in the MICP under the same conditions and terms as do all other
participants. In addition to participating in the MICP, Dr. Salick's employment
agreement provides for an annual bonus of $300,000 of the first pre-tax profits
of the Company. The Committee's outside directors granted him during fiscal
year 1995 a special bonus of $330,000. The Compensation and MICP Committees
also awarded to Mr. Bell and Mr. Fiore a special bonus of $75,000 and $150,000
respectively for their efforts on behalf of the Company and its stockholders in
connection with their activities in fiscal 1995. No options were granted to Dr.
Salick or any other executive officer during fiscal year 1995.
COMPENSATION COMMITTEE MICP COMMITTEE
Bernard Salick, M.D. Dr. Thomas F. W. McKillop(1)
Leslie F. Bell Robert C. Black(1)
Dr. Thomas F.W. McKillop(1) Thomas Mintz, M.D.(1)
Robert C. Black(1) Dr. Clifford R. Guy(1)
Thomas Mintz, M.D.(1)
Dr. Clifford R. Guy(1)
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(1) Non-employee director.
Compensation Committee Interlocks and Insider Participation
Although Dr. Salick and Mr. Bell, officers and directors of the Company,
served as members of the Compensation Committee of the Company's Board of
Directors during the fiscal year ended August 31, 1995, they did not participate
in discussions regarding or vote on their own compensation. The other four
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<PAGE>
directors on the Compensation Committee, none of whom is an officer or employee
of the Company, are responsible for administering and interpreting the Plan and
the MICP and setting the compensation for Dr. Salick and Mr. Bell. See "CERTAIN
COMMITTEES OF THE BOARD OF DIRECTORS."
CERTAIN COMMITTEES OF THE BOARD OF DIRECTORS
The Company has an Audit Committee, a Compensation Committee and an MICP
Committee of the Board of Directors. The Company has no standing nominating
committee of the Board of Directors. Through April 13, 1995, the Company had an
Executive Committee consisting of Dr. Salick, Mr. Bell and Dr. Mintz which met
once during fiscal 1995. The Executive Committee was terminated effective with
the Merger.
Through April 13, 1995, the Compensation Committee consisted of Dr. Salick,
Mr. Bell, Paul Rogers, Professor Herzlinger and Dr. Mintz. Thereafter, the
Compensation Committee consisted of Dr. Salick, Mr. Bell, Dr. McKillop, Mr.
Black, Dr. Guy and Dr. Mintz. The Compensation Committee is authorized to
review and approve management's recommendations for compensation and other
benefits for certain of the Company's executive employees.
Through April 13, 1995, the MICP Committee consisted of Mr. Rogers, Ms.
Herzlinger and Dr. Mintz. Thereafter, Dr. McKillop, Mr. Black, Dr. Guy and Dr.
Mintz, the outside Directors, served and, other than Dr. Guy who died in
December 1995, continue to serve on the Committee which regulates, administers
and interprets the Company's Plan and the MICP. See "EXECUTIVE COMPENSATION --
Compensation Committee Report on Executive Compensation." During the past
fiscal year, each Committee other than the Audit Committee met once and also met
in September 1995.
Through April 13, 1995, the Audit Committee consisted of Professor
Herzlinger, Mr. Rogers and Dr. Mintz. Thereafter, the Audit Committee consisted
of Mr. Goddard and Dr. Mintz. The Audit Committee held two meetings during the
fiscal year ended August 31, 1995. It also met in September 1995. Its
functions are to nominate a firm of certified public accountants, whose duty it
is to audit the books and accounts of the Company for the fiscal year for which
they were appointed, and to monitor the effectiveness of the audit effort and
the Company's financial and accounting organization and financial reporting.
The Company's Board of Directors met twelve times during the fiscal year
ended August 31, 1995. Each director attended or participated in at least
seventy-five percent of the Board meetings and meetings of all committees of the
Board on which he or she served during such year.
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<PAGE>
INTEREST OF MANAGEMENT AND OTHERS
IN CERTAIN TRANSACTIONS
In 1981, prior to the acquisition of the Company's subsidiary, USHAWL,
from Damon Corporation by the Company, Dr. and Mrs. Salick bought a chronic
outpatient dialysis facility from Damon and leased it back to USHAWL. Part of
the purchase price for the property was represented by two nonrecourse notes of
Dr. and Mrs. Salick secured by a Deed of Trust on such property. At December
31, 1984, the discounted value of these notes as shown on the books of the
Company was $953,553. The Company entered into an agreement on March 6, 1985
with Dr. and Mrs. Salick pursuant to which the notes were purchased for their
discounted value. The terms of the notes provided for repayment in ten annual
installments bearing interest beginning November 1, 1986 at the prime lending
rate (8.5% at December 15, 1994). As of August 31, 1994 the balance was
$191,738, all of which was paid in December 1994.
The chronic outpatient dialysis facility is leased to the Company by
Dr. and Mrs. Salick. The facility is leased on a triple net basis expiring in
December 2006 at a present monthly rental rate of $51,580, subject to annual
adjustment based on increases in the cost of living index. Certain office and
storage space at the Company's former corporate headquarters is leased from Dr.
and Mrs. Salick and an unrelated third party on a gross basis under month to
month leases. The present aggregate rental under the lease is $9,193 per month.
The Company also leases the principal executive offices of the Company
located at 8201 Beverly Boulevard, Los Angeles, California (the "Real Property")
for a period expiring in 2011, in a building developed for the Company owned by
Dr. and Mrs. Salick (the "Lessors"), the present monthly rental for which, on a
triple net basis is $89,059. The lease for the Real Property contains a
provision which, in the event of certain changes of control of the Company and
the termination of Dr. Salick's employment with the Company thereafter and prior
to the last two years of the term of the lease, permits the Lessors, if then the
lessors and at their option, to require the lessee of the Real Property to (a)
purchase the Real Property at a formula purchase price or (b) pay an assumption
fee of $250,000. The Lessors, the Company and Zeneca executed an agreement,
dated December 22, 1994, pursuant to which the Lessors have elected to sell the
corporate headquarters to the Company for an aggregate purchase price of
$14,650,000 in cash, which purchase price is approximately $1,160,000 less than
the formula price in the lease.
Michael T. Fiore, Executive Vice President and Chief Operating Officer
of the Company, received a full recourse loan from the Company of $100,000
secured by real property. The loan which bore interest at 7.62% and was made in
1986 in connection with his relocation and acquisition of housing was fully paid
in November 1995.
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<PAGE>
INDEPENDENT ACCOUNTANTS
The Board of Directors has selected the firm of Price Waterhouse LLP
as the Company's independent accountants for the fiscal year ending August 31,
1996. Representatives of Price Waterhouse LLP are expected to be present at the
Company's Annual Meeting with the opportunity to make a statement, if they
desire to do so, and will be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
To be considered for presentation to the Annual Meeting of
Stockholders to be held in January 1997, a stockholder proposal must be received
by the Secretary of Salick Health Care, Inc., 8201 Beverly Boulevard, Los
Angeles, California 90048 not later than August __, 1996.
OTHER MATTERS
The Board of Directors knows of no other business which will be
presented to the Annual Meeting. If any other business is properly brought
before the Annual Meeting, it is intended that proxies in the enclosed form will
be used in respect thereof in accordance with the judgments of the persons
voting the proxies. WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE ANNUAL
MEETING, YOU ARE URGED TO COMPLETE, SIGN, AND RETURN YOUR PROXY PROMPTLY.
By Order of the Board of Directors
Leslie F. Bell
Secretary
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<PAGE>
EXHIBIT A
The first sentence of Section C (ii) of Article FOURTH of the Company's
certificate of incorporation is proposed to be amended to read as follows:
"Notwithstanding the voting rights set forth in subsection (i) of this
Section C of Article FOURTH of this Certificate of Incorporation,
until the Termination Date, the holders of the Common Stock, voting
separately as a class, shall be entitled to elect six (6) Directors to
the Board and the holders of the Special Common Stock, voting
separately as a class, shall be entitled to elect six (6) Directors to
the Board."
The second sentence of Section A of Article FIFTH of the Company's
certificate of incorporation is proposed to be amended to read as follows:
"Subject to Article FOURTH hereof, the authorized number of
Directors of the Corporation shall be twelve (12)."
<PAGE>
PRELIMINARY COPY
PROXY SALICK HEALTH CARE, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS FOR
ANNUAL MEETING JANUARY 18, 1996
LESLIE F. BELL and BARBARA BROMLEY-WILLIAMS, or either of them, each with
the power of substitution, are hereby authorized to represent and vote the
shares of Callable Puttable Common Stock held of record by the undersigned at
the meeting of stockholders of Salick Health Care, Inc. (the "Company") to be
held on January 18, 1996 at 9:30 A.M., local time, or any adjournments or
postponements thereof with respect to:
1. Approval of amendments to the Company's certificate of incorporation
to increase the authorized number of Directors from ten to twelve.
[_] FOR [_] AGAINST [_] ABSTAIN
2. Election of Directors
[_] FOR all nominees listed below [_] WITHHOLD AUTHORITY to vote all
(except as marked below) nominees listed below
(INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through that nominee's name
listed below.)
Bernard Salick, M.D., Leslie F. Bell, Michael T. Fiore, Barbara
Bromley-Williams, Dr. Thomas Mintz, Patrick W. Jeffries
<PAGE>
PLEASE DATE, SIGN AND RETURN
Shares of the Company's Callable Puttable Common Stock represented by
this proxy will be voted as directed by the stockholder. If no such directions
are indicated, the proxies will vote FOR proposal 1, the amendments to the
Company's certificate of incorporation, and FOR proposal 2, the election of
Directors. In their discretion, the proxies are authorized to vote upon such
other matters as may properly come before the meeting.
Dated:____________________________
__________________________________
(Stockholder's Signature)
__________________________________
(Stockholder's Signature)
Please sign exactly as your name appears on this
proxy. If signing for estates, trusts or
corporations, title or capacity should be stated.
If shares are held jointly, each holder should
sign.
