<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
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 Section 240.14a-11(c) or Section 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] No fee required.
[ ] 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:
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(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):
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(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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<PAGE> 2
LOGO
SALICK HEALTH CARE, INC.(R)
8201 BEVERLY BOULEVARD
LOS ANGELES, CALIFORNIA 90048
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
SCHEDULED TO BE HELD ON JANUARY 27, 1997
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 27, 1997 at 9:30 A.M., local time, for the
following purposes:
1. To elect Directors to serve until the next annual meeting of
stockholders and until their successors are duly elected and qualified.
2. To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
Only stockholders of record on November 29, 1996, 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 23, 1996
Los Angeles, California
<PAGE> 3
SALICK HEALTH CARE, INC.
8201 BEVERLY BOULEVARD
LOS ANGELES, CALIFORNIA 90048
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF STOCKHOLDERS
SCHEDULED TO BE HELD ON JANUARY 27, 1997
------------------------
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
27, 1997, 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 23, 1996.
The Annual Meeting is being held for the purpose of (1) 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 (the
"Callable Puttable Common Stock") and (2) such other matters as may properly
come before the Annual Meeting and any adjournments or postponements thereof.
Only holders of record of shares of the Common Stock, and of the Callable
Puttable Common Stock, on November 29, 1996, 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, all of which was
owned by an indirect wholly owned subsidiary of Zeneca Limited, an English
company ("Zeneca"), and 5,657,082 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 election of the six nominees for Directors of the Company to be elected
by the holders of the Callable Puttable Common Stock and (2) 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
election of Directors) 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 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
<PAGE> 4
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 of Callable Puttable Common
Stock 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 all of the votes entitled to be cast at the Annual
Meeting is necessary to constitute a quorum at the Annual Meeting.
As to the vote for Directors to be elected by the holders of the Callable
Puttable Common Stock voting as a separate class, 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 was (1) 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 of an indirect wholly owned subsidiary of Zeneca
into the Company on April 13, 1995 (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 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 the
election of Directors by the holders of the Callable Puttable Common Stock and
that Bernard Salick, M.D., Chairman of the Board and Chief Executive Officer of
the Company ("Dr. Salick"), who beneficially owned approximately 16.6% of the
outstanding shares of the Callable Puttable Common Stock as of the Record Date,
will be entitled to approximately 40.95% of the votes attributable to the
Callable Puttable Common Stock entitled to be cast at the meeting with respect
to the election of Directors by the holders of the Callable Puttable Common
Stock (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.
Six Directors are to be elected by the holders of the Common Stock, voting
separately as a class, and six Directors are to be elected by the holders of
Callable Puttable Common Stock, voting separately as a class. The six 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. 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
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<PAGE> 5
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 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 AS TO THE ELECTION OF DIRECTORS AND ON ANY OTHER MATTER WHICH MAY 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.
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 TO
COMPLETE, DATE, SIGN AND PROMPTLY RETURN THEIR PROXY IN THE ENCLOSED POSTAGE
PAID ENVELOPE.
ELECTION OF DIRECTORS
(PROPOSAL 1 ON PROXY CARD)
The Company's certificate of incorporation sets the authorized number of
Directors at twelve, six of whom are elected by the holders of the Common Stock
and six of whom are 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, 1994, as amended (the "Governance Agreement"), which
provides that, among other things, (1) Zeneca (through its indirect 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.
In accordance with the Governance Agreement, the Board of Directors has
nominated Dr. Salick, Leslie F. Bell, Michael T. Fiore, Barbara
Bromley-Williams, Dr. Thomas Mintz and Patrick W. Jeffries for election as
Directors by the holders of the Callable Puttable Common Stock. All of such
persons 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 a majority of the present Directors
elected by the holders of the Callable Puttable Common Stock. 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
3
<PAGE> 6
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 accordance with the Governance Agreement, the Board of Directors has
nominated Dr. Thomas F.W. McKillop, Alan I. H. Pink, Robert C. Black, John G.
Goddard, Dr. Michael G. Carter and Allen L. Johnson for election as Directors by
the holders of the Common Stock. All of such persons are incumbent Directors.
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 the event any of the 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 Zeneca (through its indirect wholly
owned subsidiary). 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. The candidates to be elected by
the holders of the 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 respect of the current Directors, the following information is
furnished:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION HELD WITH COMPANY SINCE
- ---------------------------- ---- --------------------------------------------------- --------
<S> <C> <C> <C>
Bernard Salick, M.D. 57 Chairman of the Board of Directors and Chief 1983
Executive Officer
Leslie F. Bell 56 President, Chief Financial Officer
Secretary and Director
Michael T. Fiore 42 Executive Vice President, Chief Operating Officer 1994
and Director and President of Comprehensive Cancer
Centers, Inc.
Barbara Bromley-Williams 57 Senior Vice President-Professional Services and 1983
Director
Thomas Mintz, M.D. 65 Director 1985
Patrick W. Jeffries 44 Executive Vice President, Chief Development Officer 1996
and Director
Dr. Thomas F.W. McKillop 53 Director 1995
Alan I. H. Pink 59 Director 1996
Robert C. Black 53 Director 1995
John G. Goddard 45 Director 1995
Dr. Michael G. Carter 58 Director 1995
Allen L. Johnson 61 Director 1996
</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. In 1993, he resigned as Chief
Operating Officer upon the appointment of Mr. Fiore to that position and, in
December 1996, he resigned as President upon the appointment of Mr. Bell to that
position. 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.), the Board of the United States Equestrian Team, the Board of
Crossroads School and the Harvard University School of Public Health Visiting
Committee. 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.
4
<PAGE> 7
Mr. Bell has served as Secretary and a Director of the Company since its
organization in 1983. He became President in December 1996. He served as Senior
Vice President from 1983 until November 1989 and Executive Vice President from
November 1989 until December 1996. He became Chief Financial Officer in January
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 Chairman of the Board of Directors of NATSA,
a not-for-profit entity, and serves on the National Board of Advisors of the
Community for Education Foundation, a not-for-profit entity, and the National
Board of Visitors of the University of Arizona College of Law.
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 and in December
1996 he was appointed President of the Company's cancer operations subsidiary,
Comprehensive Cancer Centers, Inc.
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
ten years. He has been a board certified practicing adult and child psychiatrist
and psychoanalyst for more than the past ten 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.
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 an Executive Director of
Zeneca Group PLC, an English company of which Zeneca is a wholly owned
subsidiary, since January 1996, and is a Non-Executive Director of Amersham
International.
Mr. Pink has been an Executive Director of Zeneca since February 1993 and
an Executive Director of Zeneca Group PLC, an English company of which Zeneca is
a wholly owned subsidiary, since June 1993. Mr. Pink served as the Chief
Executive Officer of Zeneca Agrochemicals, formerly ICI Agrochemicals, from
April 1992 to April 1995. From 1989 to 1992, he served as the Principal
Executive Officer of ICI Advanced Materials located in Wilmington, Delaware. He
is a NonExecutive Director of Smiths Industries PLC and the European Process
Industries Competitiveness Centre Limited.
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.
Mr. Black has been President of Zeneca Pharmaceuticals, a business unit of
Zeneca Inc. since 1991. He is Chairman and a member of the Board of the
Pharmaceuticals Research and Manufacturers of America Foundation, a member of
the Board and the Executive Committee of the Anesthesia Patient Safety
5
<PAGE> 8
Foundation of the American Anesthesiology Association and a member of the Board
of the Industries Coalition Against Cancer. Mr. Black is a trustee of the
Wilmington Medical Center. He is a member of the Visiting Committee of the
University of Delaware School of Nursing and is a member of the Editorial
Advisory Board of "Pharmaceutical Executive" magazine.
Dr. Carter has been a Director and a member of the Zeneca Pharmaceuticals
Business Team since 1986, initially as International Medical Director and from
1990 until March 1995 as International Marketing Director. He remains a Director
and member of the Zeneca Pharmaceuticals Business Team. Dr. Carter was a member
of the U.K. Medicines Commission from 1986 through 1995 and has been 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. Johnson is a health care executive who has most recently completed a
ten-year term as President and Chief Executive Officer of the Medical Center of
Delaware. He has previously been the senior executive of other medical centers
in the United States and Canada. Mr. Johnson has served as Chairman of the Board
of Directors of the American Heart Association, Delaware Chapter and as Chairman
of the Board of the United Way of Delaware.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE ELECTION
OF THE DIRECTORS NOMINATED BY THE BOARD OF DIRECTORS 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 29, 1996.
<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% 941,204 16.6%
8201 Beverly Boulevard
Los Angeles, CA 90048
Mentor Partners, L.P. 0 0% 630,400 11.1%
and WTG & Co., L.P.(2)(3)
500 Park Avenue
New York, NY 10022
Buchanan, Parker Asset 0 0% 357,562 6.3%
Management/Parker, Buchanan
Asset Management(2)(4)
237 Park Avenue
Suite 801
New York, NY 10017
Atkemix Thirty-eight Inc.(5) 5,657,115 100% 100 *
1800 Concord Pike
Wilmington, DE 19850
</TABLE>
- ---------------
(1) Dr. Salick has sole voting and dispositive power over 941,204 shares of
Callable Puttable Common Stock. The total shares thereof beneficially owned
includes 17,415 shares held by Dr. Salick, in trust, for his children and
those held by his family trust of which he is the trustee. See "STOCK
OWNERSHIP -- Management" below.
(2) Beneficial ownership represents sole voting and dispositive power.
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<PAGE> 9
(3) Based on information contained in such entity's Schedule 13D filing with the
Securities and Exchange Commission (the "SEC") dated May 1996.
(4) Based on information contained in such entities' Form 13F filing with the
SEC for the period ended September 30, 1996, which Form 13F is dated
November 12, 1996. Such entities are general partnerships whose principals
are identical and are the individuals who vote the shares indicated.
(5) This entity is an indirect wholly owned subsidiary of Zeneca.
* Represents less than one percent of the shares outstanding.
MANAGEMENT
The following table sets forth, as of November 29, 1996, certain
information regarding the beneficial ownership of shares of the Common Stock and
Callable Puttable Common Stock by each of the Directors, 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.
<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% 941,204 (1,3) 16.6%
Leslie F. Bell................................. 0 0% 35,420 (2,3) *
Michael T. Fiore............................... 0 0% 26,630 *
Barbara Bromley-Williams....................... 0 0% 21,040 (3) *
Thomas Mintz, M.D.............................. 0 0% 11,800 (2,3) *
Patrick W. Jeffries............................ 0 0% 0 0%
Sheldon S. King................................ 0 0% 0 0%
Dr. Thomas F.W. McKillop....................... 0(5) 0% 0 0%
Alan I. H. Pink................................ 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%
Allen L. Johnson............................... 0 0% 0 0%
All executive officers and Directors as a group
(15 persons)................................. 0(5) 0% 1,037,189 (1-5) 18.3%(1-5)
</TABLE>
- ---------------
(1) Includes 17,415 shares of Callable Puttable Common Stock held by Dr. Salick,
as trustee in trust for his children, and those held by his family trust of
which he is the trustee.
(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 all shares held by his family trust of
which he is the trustee.
(3) Excludes, to the best of the Company's knowledge, any shares of Callable
Puttable Common Stock owned by immediate relatives of those listed or
included in the above table including 16,850 shares owned by the 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 children, and
300 shares owned by the Salick Family Foundation, as to which each of Dr.
Salick and Mr. Bell disclaims any beneficial or other ownership interest.
(4) Includes 153 shares of Callable Puttable Common Stock as of November 29,
1996 owned by a member of the group resulting from her participation in the
Purchase Plan (as defined below).
7
<PAGE> 10
(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 are affiliated.
* Represents less than one percent of the shares outstanding.
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, 1996, 1995 and 1994, of those persons who were, at
August 31, 1996 (i) Chief Executive Officer and (ii) the four most highly
compensated executive officers of the Company other than the Chief Executive
Officer.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------- ALL OTHER
FISCAL CASH COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) ($)(2)
- --------------------------------------------- ------ --------- ----------- ------------
<S> <C> <C> <C> <C>
Bernard Salick, M.D. 1996 $ 916,133 $ 620,000 $310,898
Chairman of the Board 1995 869,705 850,000 306,093
of Directors, Chief 1994 890,443 585,000 284,555
Executive Officer and President
Leslie F. Bell 1996 $ 415,303 $ 280,000 $ 3,155
Executive Vice President, Chief Financial 1995 389,992 255,000 8,352
Officer and Secretary 1994 377,911 100,000 2,304
Michael T. Fiore 1996 $ 371,626 $ 275,000 $ 3,155
Executive Vice President 1995 305,253 325,000 18,228
and Chief Operating Officer 1994 254,431 95,000 2,472
Sheldon S. King(3) 1996 $ 500,000 $ 0 $ 39,155
Executive Vice President 1995 500,000 0 50,298
1994 283,693 0 0
Patrick W. Jeffries(3) 1996 $ 365,384 $ 0 $ 7,052
Executive Vice President
</TABLE>
- ---------------
(1) Includes Management Incentive Compensation Plan ("MICP") or other special
bonuses paid subsequent to year end for the fiscal year ended August 31,
1996.
(2) All other compensation includes the Company's payment of premiums for
certain life insurance policies ($780 for each named person in fiscal 1996,
other than for Dr. Salick, for which the premium was $3,300) and the
Company's matching contribution to the Salick Health Care, Inc. Salary
Savings Plan ($2,375 for each named person in fiscal 1996). The amount shown
for Dr. Salick also includes the Company's payment of a premium of $282,245
for split-dollar insurance and the payment in fiscal 1996 of medical claims
for Dr. Salick and his family in the amount of $22,978. The amount shown for
Mr. Jeffries includes the Company's payment of health insurance premiums in
the amount of $3,897 and the amount shown for Mr. King includes a $3,000 per
month relocation/expense allowance. Includes vesting of stock per MICP
awards in years prior to fiscal 1996.
(3) Mr. King joined the Company in February 1994 and Mr. Jeffries in December
1995.
(4) There were no grants of stock options to executive officers during any of
the fiscal years ended August 31, 1994, 1995 or 1996.
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. An agreement was
8
<PAGE> 11
entered into with Mr. Jeffries effective December 1, 1995, for a term through
April 12, 2000. These agreements as presently effective provide for base
compensation, subject to future annual cost of living increases, of $974,471,
$424,953, $390,000 and $520,000 to Dr. Salick, Mr. Bell, Mr. Fiore, and Mr.
Jeffries, 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, 1996, 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, Mr. Fiore and Mr.
Jeffries 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
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). The employment agreements with each of Dr. Salick, Mr. Bell, Mr.
Fiore and Mr. Jeffries provide for six weeks' annual paid vacation and allows a
carry-over of unused vacation but in no event may the unused vacation exceed
twelve weeks in any year. 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 and acts and may act as an executor or trustee.
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 ended August 31, 1996 in the amount of $30,000.
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
9
<PAGE> 12
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, 1996,
such named executive officers held no unexercised options as of August 31, 1996,
and no options were exercised during the fiscal year ended August 31, 1996 by
such executive officers.
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 of Common Stock
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, in connection with the
Merger, the Purchase Plan was terminated with respect to the issuance of shares
by the Company. 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.
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
10
<PAGE> 13
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 Ann Judge, 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.
MANAGEMENT INCENTIVE COMPENSATION PLAN
In August 1991, the Company's Directors and stockholders approved the MICP.
The MICP, which expires in August 2001, 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).
Under the MICP the following cash awards were made during the fiscal year
ended August 31, 1996 to the persons named in the Summary Compensation Table
above: Dr. Salick, $220,000; Mr. Bell, $180,000; and Mr. Fiore, $175,000. 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, $180,000; and
Mr. Fiore, $175,000. 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; and Mr. Fiore, $95,000.
11
<PAGE> 14
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
8/91 8/92 8/93 8/94 8/95 8/96
---- ---- ---- ---- ---- ----
Salick Health Care, Inc. 100 114 131 174 348 374
S&P 500 100 102 124 131 159 188
Nasdaq Health Services 100 108 124 160 171 223
* $100 invested on 8/31/91 in stock or index. 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. The four outside
directors on the Committee also serve as 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
12
<PAGE> 15
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, 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, 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 strategy, including that 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 employed for all of fiscal 1996
received salary increases of four percent for fiscal 1996. In addition, Mr.
Fiore received an additional increase in November 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 1996, the Company does not contemplate that there will be
non-deductible compensation for Dr. Salick or any of 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 1996 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 1996 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 years 1995 or 1996. The granting of options is
based on 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 1996 and for previous years, Dr. Salick's compensation has
been determined under the terms of his employment agreement (see "Employment
Agreements"). Although in some prior years
13
<PAGE> 16
Dr. Salick has received merit increases in his base salary, in fiscal 1996, 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 1996 a special bonus of $100,000 and also awarded to each
of Mr. Bell and Mr. Fiore a special bonus of $100,000 for their efforts on
behalf of the Company and its stockholders in connection with their activities
in fiscal 1996. No options were granted to Dr. Salick or any other executive
officer during fiscal year 1996.
<TABLE>
<S> <C>
COMPENSATION COMMITTEE MICP COMMITTEE
Bernard Salick, M.D. Dr. Thomas F.W. McKillop(1)
Leslie F. Bell Alan I. H. Pink(1)
Dr. Thomas F.W.
McKillop(1) Thomas Mintz, M.D.(1)
Alan I. H. Pink(1) Allen L. Johnson(1)
Thomas Mintz, M.D.(1)
Allen L. Johnson(1)
</TABLE>
- ---------------
(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, 1996, they did not participate
in discussions regarding or vote on their own compensation. The other four
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 executive committee or
standing nominating committee of the Board of Directors.
The Compensation Committee consists of Dr. Salick, Mr. Bell, Dr. McKillop,
Mr. Pink, Mr. Johnson 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.
The MICP Committee consists of Dr. McKillop, Mr. Pink, Mr. Johnson and Dr.
Mintz, the outside Directors, which Committee 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 November 1996.
The Audit Committee consists of Mr. Goddard and Dr. Mintz. The Audit
Committee held three meetings during the fiscal year ended August 31, 1996. Its
functions include the nomination of 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 monitoring the effectiveness of the
audit effort and the Company's financial and accounting organization and
financial reporting.
The Company's Board of Directors met four times during the fiscal year
ended August 31, 1996. 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.
14
<PAGE> 17
INTEREST OF MANAGEMENT AND OTHERS
IN CERTAIN TRANSACTIONS
The Company's chronic outpatient dialysis facility located at Temple
Street, Los Angeles, California, 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 $52,096, 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 and owned
by Dr. and Mrs. Salick (the "Lessors"), the present monthly rental for which, on
a triple net basis, is $92,621. 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 an indirect wholly owned
subsidiary of 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.
Dr. Salick is the sole or principal shareholder and chief executive officer
of several medical corporations which have or may in the future enter into
agreements with the Company or a subsidiary for the provision of management
services, professional services, and the like. The terms and conditions of any
such agreements will be negotiated and approved by members of the Board
independent of Dr. Salick.
In fiscal 1996, the Company and a subsidiary leased from Mr. Bell and
members of his immediate family, pursuant to an operating lease, real property
located in Palm Springs, California upon which the Company is establishing a
dialysis treatment center. The operating lease contains operating cost and other
escalation provisions. The lease has a term of five years with options for
renewal for up to an additional 15 years. The current monthly rental is $5,000
per month.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and Directors, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file
reports of ownership of equity securities and changes in ownership of equity
securities with the SEC. Executive officers, Directors and greater than ten
percent stockholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file. Based solely on its review of the
copies of such forms received by it, or written representations from certain
reporting persons, the Company believes that, during the period from September
1, 1995 to August 31, 1996, all of its executive officers and Directors except
for Mr. Pink and Mr. Johnson who were newly elected to the Board of Directors
during calendar 1996, timely complied with all filing requirements. Each of
Messrs. Pink and Johnson failed to file on a timely basis a Form 3, Initial
Statement of Beneficial Ownership of Securities, following his election to the
Company's Board of Directors in January 1996. These Form 3s were subsequently
filed.
15
<PAGE> 18
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP was engaged as the Company's independent accountants
for the fiscal year ended 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. The Board of Directors has not yet selected
the Company's independent accountants for the fiscal year ending August 31,
1997.
STOCKHOLDER PROPOSALS
To be considered for presentation to the Annual Meeting of Stockholders to
be held in January 1998, 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 26, 1997.
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
16
<PAGE> 19
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROXY SALICK HEALTH CARE, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS FOR
ANNUAL MEETING JANUARY 27, 1997
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 27, 1997 at 9:30 A.M., local time,
or any adjournments or postponements thereof with respect to:
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS [ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY to vote
below (except as marked below) all nominees listed below
</TABLE>
(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> 20
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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
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.
