<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:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Health Images, 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), or 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:
(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:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
HEALTH IMAGES, INC.
8601 DUNWOODY PLACE, BUILDING 200
ATLANTA, GEORGIA 30350
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Health
Images, Inc., a Delaware corporation (the "Company"), will be held June 2, 1995,
at 10:00 a.m., at the Company's main offices, 8601 Dunwoody Place, Bldg. 200,
Atlanta, Georgia 30350, for the following purposes:
1. To elect seven (7) directors for one-year terms of office;
2. To ratify and approve the appointment by the Company's Board of
Directors of Joseph Decosimo and Company as the Company's independent
public accountants for the fiscal year ending December 31, 1995; and
3. To consider and act upon such other business as may properly come
before the meeting or any adjournment thereof.
The Proxy Statement dated May 4, 1995, is attached. Common Stock
stockholders of record on the books of the Company at the close of business on
May 2, 1995, are entitled to notice of and to vote at the meeting.
We hope you will be able to attend the meeting in person, but, if you
cannot be present, it is important that you sign, date and promptly return the
enclosed proxy in the enclosed postage-paid envelope in order that your vote may
be cast at the meeting.
By Order of the Board of Directors
ROBERT D. CARL, III
Chairman of the Board
and Chief Executive Officer
May 4, 1995
Atlanta, Georgia
<PAGE> 3
HEALTH IMAGES, INC.
8601 DUNWOODY PLACE, BUILDING 200
ATLANTA, GEORGIA 30350
---------------------
PROXY STATEMENT
---------------------
This statement is furnished in connection with the solicitation by the
Board of Directors of Health Images, Inc. (the "Company") of proxies to be voted
at the Annual Meeting of Stockholders of the Company to be held June 2, 1995,
and at any and all adjournments of such meeting.
PROXY SOLICITATION
Any stockholder who executes and delivers a proxy has the right to revoke
the proxy at any time before it is voted. A proxy may be revoked by (i) filing
an instrument revoking the proxy with the Secretary of the Company, (ii)
executing a proxy bearing a later date, or (iii) attending and voting at the
Annual Meeting. Properly executed proxies, timely returned, will be voted in
accordance with the choices made by the stockholder with respect to the
proposals listed thereon. If a choice is not made with respect to any proposal,
the proxy will be voted "FOR" the election of directors as described under
"PROPOSAL 1 -- ELECTION OF DIRECTORS" below, and "FOR" the ratification of the
Board of Directors' selection of Joseph Decosimo and Company as the Company's
independent public accountants for the 1995 fiscal year as described under
"PROPOSAL 2 -- INDEPENDENT PUBLIC ACCOUNTANTS" below.
Other than the matters set forth herein, management of the Company is not
aware of any matters that may come before the meeting. If any other business
should properly come before the meeting, the persons named in the enclosed proxy
will have the discretionary authority to vote the shares represented by the
effective proxies and intend to vote them in accordance with their best
judgment.
The cost of solicitation of proxies will be borne by the Company. In
addition to the solicitation of proxies by the use of the mails, the directors
and officers of the Company may solicit proxies on behalf of management by
telephone, telegram and personal interview. Such persons will receive no
additional compensation for their solicitation activities and will be reimbursed
only for their actual expenses in connection therewith. The Company will
authorize banks, brokerage houses and other custodians, nominees or fiduciaries
to forward copies of proxy material to the beneficial owners of shares or to
request authority for the execution of the proxies, and will reimburse such
banks, brokerage houses and other custodians, nominees or fiduciaries for their
out-of-pocket expenses incurred in connection therewith. The Notice of the
Meeting, this Proxy Statement and the form of proxy were first mailed to
stockholders on or about May 4, 1995.
VOTING RIGHTS AND PRINCIPAL STOCKHOLDERS
At the close of business on May 2, 1995, the record date for determining
the stockholders entitled to notice of and to vote at the meeting, there were
11,590,234 shares of common stock, $.01 par value, of the Company (the "Common
Stock") outstanding. Each share of Common Stock is entitled to one vote (non-
cumulative) on all matters presented for stockholder vote. The presence in
person or by proxy of the holders of a majority of the outstanding Common Stock
constitutes a quorum for the transaction of business. Abstentions and broker
non-votes are counted for purposes of determining the presence or absence of a
quorum for the transaction of business.
The affirmative vote of a plurality of the shares of Common Stock present
in person or by proxy at the meeting and entitled to vote in the election of
directors is required to elect directors. Consequently, withholding the
authority to vote for one or more directors and non-votes will not affect the
outcome of the election. The affirmative vote of a majority of the shares of
Common Stock present in person or by proxy at the meeting and entitled to vote
on the matter is required to approve the appointment of Joseph DeCosimo and
Company as the Company's independent public accountants for 1995. Consequently,
abstentions will have
<PAGE> 4
the same effect as votes against this proposal, whereas broker non-votes will
have no effect on the results of the voting.
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of April 15, 1995, by (i) each director and
director-nominee of the Company, (ii) each of the executives named in the
Summary Compensation Table under "Executive Compensation" below, (iii) all
directors and executive officers as a group, and (iv) all persons known to the
Company who may be deemed beneficial owners of more than five percent (5%) of
such outstanding shares. Under the rules of the Securities and Exchange
Commission, a person is deemed to be a "beneficial owner" of a security if he
has, or shares, the power to vote or direct the voting of such security, or the
power to dispose or to direct the disposition of such security. A person is also
deemed to be a beneficial owner of any securities of which that person has the
right to acquire beneficial ownership within 60 days. An asterisk indicates
beneficial ownership of less than one percent (1%).
<TABLE>
<CAPTION>
NUMBER OF
SHARES PERCENT OF
BENEFICIALLY OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1) SHARES(2)
- - ----------------------------------------------------------------- ------------ -----------
<S> <C> <C>
Robert D. Carl, III.............................................. 973,202(3) 8.1%
8601 Dunwoody Place, Bldg. 200
Atlanta, Georgia 30350
Marc I. Raphaelson, M.D.......................................... 21,690(4) *%
915 Toll House Avenue
Frederick, Maryland 21701
William E. Whitesell, Ph.D....................................... 42,500(5) *%
580 North School Lane
Lancaster, Pennsylvania 17603
James P. Gelhard................................................. 40,120(6) *%
742 Barrholly Drive
Lancaster, Pennsylvania 17603
Robert L. Taylor................................................. 2,725(7) *%
Isolyser, Inc.
4320 International Blvd.
Norcross, Georgia 30093
W. A. Wilson..................................................... 51,092(8) *%
8601 Dunwoody Pl., Bldg. 200
Atlanta, Georgia 30350
Stuart B. Strasner, Sr........................................... 0 *%
2532 Northwest 60th Street
Oklahoma City, Oklahoma 73112
Jack O. Greenberg, M.D........................................... 15,000 *%
293 Locust Street
Philadelphia, Pennsylvania
James J. Fitzsimmons............................................. 153,223(9) *%
20 Bates Road
Hillsborough, California 94010
David J. Soffa, M.D.............................................. 130,766(9) *%
735 14th Avenue
San Francisco, California 94118
Prem Anand....................................................... 18,861(10) *%
615 Wayt Road
Roswell, Georgia 30076
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
NUMBER OF
SHARES PERCENT OF
BENEFICIALLY OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1) SHARES(2)
- - ----------------------------------------------------------------- ------------ -----------
<S> <C> <C>
Michael R. Scott................................................. 77,767(11) *%
1465 Loblolly Lane
Cumming, Georgia 30130
All Executive Officers and Directors of Company as
a Group (13 persons)........................................... 1,335,474(12) 10.8%
Lindner Fund, Inc................................................ 1,051,600 9.1%
7711 Carondelet Avenue
Box 16900
St. Louis, MO 63105
</TABLE>
- - ---------------
(1) Unless otherwise specified in the footnotes, the shareholder has sole
voting and dispositive power.
(2) The computation of percentage of ownership for executive officers and
directors includes shares of Common Stock which may be acquired within 60
days of the April 15, 1995, date of this table by exercise of options and
warrants.
(3) Includes 525,910 shares of Common Stock owned individually by Mr. Carl.
Includes options and a warrant for 447,292 shares of Common Stock which are
or will become exercisable by Mr. Carl within the 60 day period following
the April 15, 1995, date of this table. Excludes 4,600 shares of Common
Stock owned by Mr. Carl's spouse.
(4) Includes 11,190 shares of Common Stock owned jointly by Dr. Raphaelson and
his wife. Includes non-qualified options for 10,500 shares which are or
will become exercisable by Dr. Raphaelson within the 60 day period
following the April 15, 1995, date of this table.
(5) Includes 30,000 shares of Common Stock owned by Dr. Whitesell. Includes
2,000 shares of Common Stock held in custody by Dr. Whitesell for two
children for which shares Dr. Whitesell disclaims any beneficial ownership.
Excludes 1,000 shares of Common Stock owned by Dr. Whitesell's spouse.
Includes non-qualified options for 10,500 shares which are or will become
exercisable by Dr. Whitesell within the 60 day period following the April
15, 1995, date of this table.
(6) Includes 15,620 shares of Common Stock owned by Mr. Gelhard individually,
12,000 shares owned jointly with Mr. Gelhard's spouse, 2,000 shares owned
individually by his spouse and non-qualified options for 10,500 shares
which are exercisable by Mr. Gelhard within the 60 day period following the
April 15, 1995, date of this table.
(7) Includes 975 shares of Common Stock owned individually by Mr. Taylor.
Includes non-qualified options for 1,750 shares which are or will become
exercisable by Mr. Taylor within the 60 day period following the April 15,
1995, date of this table.
(8) Includes 1,100 shares of Common Stock owned individually by Mr. Wilson
through the Company's 401(k) Plan. Excludes 200 shares of Common Stock
owned by Mr. Wilson's spouse. Includes incentive and non-qualified options
for 49,792 shares which are or will become exercisable by Mr. Wilson within
the 60 day period following the April 15, 1995, date of this table.
(9) The share information with respect to Mr. Fitzsimmons and Dr. Soffa are to
the best of the Company's information and belief.
(10) Includes 1,500 shares of Common Stock owned by Mr. Anand. Includes
incentive stock options for 17,361 shares which are or will become
exercisable by Mr. Anand within the 60 day period following the April 15,
1995 date of this table.
(11) Consists of 77,767 incentive stock options which are or will become
exercisable by Mr. Scott within the 60 day period following the April 15,
1995 date of this table.
(12) See footnotes 3, 4, 5, 6, 7, and 8. Includes options or warrants for
696,122 shares which are, or will become, exercisable by the officers
within the 60-day period following the April 15, 1995, date of this table.
3
<PAGE> 6
PROPOSAL 1 -- ELECTION OF DIRECTORS
Seven (7) directors are to be elected to the Company's Board of Directors
at the Annual Meeting for a term of one (1) year and until the election and
qualification of their successors, as provided in the bylaws of the Company. The
proxyholders intend to vote "FOR" the election of the individuals named below,
six of whom are currently directors of the Company, unless authority is
specifically withheld in the proxy. One (1) director-nominee, Jack O. Greenberg,
M.D., has been nominated to serve on the Board of Directors for the first time.
Another current director, Stuart B. Strasner, was elected on March 3, 1995, to
fill a vacancy on the Board of Directors created by Mr. Roy C. Turner's June,
1994, resignation. Another current director, James P. Gelhard, is retiring from
the Company's Board of Directors, and will not stand for re-election. Mr.
Gelhard has been elected a Director Emeritus of the Company. He will be invited
to all meetings of the Board of Directors, but will not receive any compensation
(other than reimbursement of travel expenses) from the Company.
Although management does not contemplate the possibility, in the event any
nominee is not a candidate or is unable to serve as a director at the time of
the election, the proxies will be voted for the nominee designated by the
present Board of Directors to fill such vacancy.
The name and age of each of the nominees, his principal occupation
(including positions and offices with the Company) and the period during which
he has served as a director are set forth below.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY SINCE
- - -------------------------------------- --- -------------------------------------- -----
<S> <C> <C> <C>
Robert D. Carl, III................... 41 Chairman of the Board and Chief 1982
Executive Officer
Marc I. Raphaelson, M.D............... 41 Director 1985
William E. Whitesell, Ph.D............ 57 Director 1985
Robert L. Taylor...................... 55 Director 1993
W. A. Wilson.......................... 55 Director, President 1993
Stuart B. Strasner, Sr................ 65 Director 1995
Jack O. Greenberg, M.D................ 62
</TABLE>
Robert D. Carl, III, was engaged in the private practice of law in Decatur,
Georgia, and served as President of Carl Investment Associates, Inc., a
registered investment advisor, for three years before joining Cardio-Tech, Inc.,
in 1981 as a shareholder, officer, director and corporate counsel. In September
1982, the Company acquired the business of Cardio-Tech, Inc. Mr. Carl has been a
shareholder and director of the Company since its organization in September
1982. In March 1985, he was elected to the positions of President, Chief
Executive Officer and Chairman of the Board of the Company. Effective June 19,
1993, Mr. Carl resigned from the positions of President and CEO. He continued to
serve the Company as Chairman of the Board. Effective September 9, 1994, Mr.
Carl resumed the position of Chief Executive Officer. The Company has obtained
"key man" life insurance on Robert D. Carl, III, payable to the Company in the
amount of $2 million. Mr. Carl serves as a member of the Board of Directors of
Enex Resources Corporation, a Houston, Texas oil and gas company listed on
NASDAQ.
Marc I. Raphaelson, M.D., conducted his residency in neurology at Stanford
University Medical Center from 1979 to 1981, and continued and completed his
residency in 1982 at the National Institutes of Health. From 1982 until July
1984, Dr. Raphaelson was a staff neurologist with the Bon Secours Hospital,
Baltimore, Maryland. Since January 1984, he has been a staff neurologist with
Frederick Memorial Hospital. In 1984, Dr. Raphaelson became board certified by
the American Board of Psychiatry and Neurology. In 1987, Dr. Raphaelson became
board certified by the American Board of electro-diagnostic Medicine. He is a
member of the American Society for Neuroimaging. He was first elected a Director
of the Company in May 1985.
William E. Whitesell, Ph.D., served as Secretary of Banking for the
Commonwealth of Pennsylvania from 1976 through 1979. He is the Mary E. and Henry
P. Stager Professor of Economics at Franklin and Marshall College in Lancaster,
Pennsylvania. He has been a professor in the Department of Economics at
4
<PAGE> 7
Franklin and Marshall College since 1979, and served as Department Chairman from
1979 to 1981 and from 1985 to 1988. In July 1985, Dr. Whitesell was elected to
the Board of Directors of the Company.
Robert L. Taylor is the Chairman of the Board, President and Chief
Executive Officer. Isolyser Co., Inc., located in Norcross, Georgia, develops
and manufactures products and services for workplace and environmental safety,
specifically for the management of medical waste. He has held these positions
since 1988. Mr. Taylor was President and Chief Executive Officer of Spirotech,
Inc., a small micro-processor based medical instrument manufacturer (1983-1986),
and President and Chief Executive Officer of Unilab Corp. (1986-1988), a
publicly owned manufacturer of state-of-the-art wound care products. Mr. Taylor
received his B.A. degree in Economics from Pfeiffer College in 1961, and his
M.A. in Management from California State University in 1982. He was first
elected to the Board of Directors of the Company in June 1993.
W. A. Wilson currently serves as President and Chief Administrative Officer
of the Company. He was named as Chief Operating Officer of the Company in
December 1992. He became President and Chief Executive Officer of the Company
upon the effective date of Mr. Carl's resignation on June 19, 1993 and served as
Chief Executive Officer until September 9, 1994. He was elected an Executive
Vice President in June 1992. Mr. Wilson joined the Company in November 1990 as
Director of Acquisitions. Prior to joining the Company, he served as Chief
Financial Officer at The Nalley Companies, an automobile retailing group in
Atlanta, Georgia, from November 1987 to November 1990. Prior to this, Mr. Wilson
was Chief Financial Officer of TransDesigns, a direct seller of decorative
accessories in Atlanta, Georgia, from 1982 through 1987. He was first elected to
the Board of Directors of the Company in June 1993.
Stuart B. Strasner, Sr. is a professor of business law at Oklahoma City
University. From 1984 to 1991, Mr. Strasner was Dean of the law school at
Oklahoma City University and prior thereto was an attorney in private practice
in Oklahoma City, Oklahoma. From 1978 to 1981, Mr. Strasner served as Executive
Director of the Oklahoma Bar Association. Mr. Strasner holds an A.B. degree from
Panhandle A&M College and a J.D. from the University of Oklahoma. He is a member
of the fellows of the American Bar Association. Mr. Strasner serves on the Board
of Directors of Enex Resources Corporation, a Houston, Texas oil and gas company
listed on NASDAQ. He was first elected to the Board of Directors of the Company
in March, 1995.
Jack O. Greenberg, M.D., age 62, is the medical director and medical
general partner of the Company's Health Images of Philadelphia imaging center.
Dr. Greenberg holds a B.A. from Washington & Jefferson College and a M.D. from
the University of Pittsburgh. Since 1978, Dr. Greenberg has been Professor of
Neurology at the Medical College of Pennsylvania. Dr. Greenberg retired from his
neurology practice in Philadelphia, Pennsylvania in 1993. Dr. Greenberg was a
founder of and past President (1982) of the American Academy of Neuro-imaging
where he serves as a member of its Executive Committee. He is a member of the
Society of Magnetic Resonance in Imaging (1985). He is Associate Editor of
Neuroimaging (1990).
There were eleven (11) meetings of the Company's Board of Directors in
1994. Five (5) of these meetings were in person with the other six (6) meetings
being held via telephone. The Board of Directors took action by unanimous
written consent two (2) times in 1994.
The Board of Directors has an Audit Committee consisting of non-employee
directors. Messrs. Whitesell, Raphaelson and James P. Gelhard serve on the Audit
Committee. Mr. Gelhard has decided to retire from the Board of Directors and
chose not to stand for reelection at the 1995 Annual Meeting of Stockholders. He
will be replaced on the Audit Committee by another outside director. The Audit
Committee is responsible for reviewing the financial statements of the Company,
for evaluating the Company's internal control systems and procedures and for
coordinating and approving the activities of the Company's auditors. The Audit
Committee met one (1) time during 1994. The Company also has a Compensation
Committee consisting of William E. Whitesell, Robert L. Taylor, and James P.
Gelhard. Mr. Gelhard will also be replaced on the Compensation Committee by an
outside director. The Compensation Committee is responsible for setting and
reviewing the compensation, including fringe benefits, of the executive officers
of the Company and administering the Company's stock option and benefit plans.
The Compensation Committee met two (2) times in 1994. The Board of Directors has
no standing nominating committee.
5
<PAGE> 8
No formal procedure for stockholder recommendations regarding nominees to
the Board of Directors has been adopted. The Board of Directors will consider
any such stockholder recommendations submitted in writing, addressed to the
Chairman of the Board of Directors at the Company's principal office.
A vote of a majority of the shares of Common Stock represented at the
meeting will be required to elect the Directors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF THE
SEVEN PERSONS NAMED ABOVE.
EXECUTIVE OFFICERS
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
------------------------------------- --- -------------------------------------
<S> <C> <C>
Robert D. Carl, III.................. 41 Chairman of the Board and Chief
Executive Officer
W. A. Wilson......................... 55 President and Chief Administrative
Officer
Prem K. Anand........................ 55 Executive Vice President-Science and
Engineering Operations
Michael R. Scott..................... 37 Executive Vice President-Engineering
Sandra K. Brum....................... 50 Executive Vice President-Marketing
Robin Eubanks Murray................. 35 Vice President, Secretary and General
Counsel
Ron L. Clark, Jr..................... 29 Treasurer and Controller
Dolf H. Schmitz...................... 39 Vice-President-Operations
(Health Images)
Richard J. Kampa..................... 48 Vice President-Operations
(MedAlliance)
</TABLE>
The officers of the Company serve at the pleasure of the Board of
Directors.
Robert D. Carl, III, was engaged in the private practice of law in Decatur,
Georgia, and served as President of Carl Investment Associates, Inc., a
registered investment advisor, for three years before joining Cardio-Tech, Inc.,
in 1981 as a shareholder, officer, director and corporate counsel. In September
1982, the Company acquired the business of Cardio-Tech, Inc. Mr. Carl has been a
shareholder, officer and director of the Company since its organization in
September 1982. In March 1985, he was elected to the positions of President,
Chief Executive Officer and Chairman of the Board of the Company. Mr. Carl
resigned from the offices of President and Chief Executive Officer effective
June 19, 1993. Effective September 9, 1994, Mr. Carl resumed the position of
Chief Executive Officer. The Company has obtained "key man" life insurance on
Robert D. Carl, III, payable to the Company in the amount of $2 million.
W. A. Wilson is President and Chief Administrative Officer of the Company.
He served as President and Chief Executive Officer from June 19, 1993 until
September 9, 1994 when Mr. Carl resumed his position as Chief Executive Officer.
Mr. Wilson served as Chief Operating Officer of the Company from December, 1992,
until June 18, 1993. He was elected an Executive Vice President in June 1992.
Mr. Wilson joined the Company in November 1990 as Director of Acquisitions.
Prior to joining the Company, he served as Chief Financial Officer at The Nalley
Companies, an automobile retailing group in Atlanta, Georgia, from November 1987
to November 1990. Prior to this, Mr. Wilson was Chief Financial Officer of
TransDesigns, a direct seller of decorative accessories in Atlanta, Georgia,
from 1982 through 1987.
Prem K. Anand joined the Company in November 1992 as Director of Product
Development. He was promoted to Vice President-Research and Development in June
1993, and elected Executive Vice President-Science and Engineering Operations in
December 1993. Mr. Anand was with Picker International, a medical
6
<PAGE> 9
diagnostic imaging equipment company headquartered in Cleveland, Ohio, from 1976
to 1984. He held various positions at Picker, including Head of Research and
Engineering for x-ray systems and General Manager-Products and Programs. He
managed the development of Picker MRI Systems from its inception in 1980 until
1984. After leaving Picker, Mr. Anand was a Vice President of Canterbury
Engineering Company, Atlanta, Georgia, from 1984 to 1991. Canterbury specializes
in the design and manufacture of extrusion tooling. Mr. Anand also served as
manager of advance development of A.B. Dick Co., Chicago, Illinois, in 1991 and
1992, specializing in the design and manufacture of printing presses. Mr.
Anand's responsibilities include the development of the new HI Star(TM) MRI
system platform for the Company. He is also responsible for the following
departments: Product Research and Development, Research Laboratories, Clinical
Research, Regulatory Affairs, Technical Publications, Service Training,
Manufacturing Operations, the National Repair Center, and Engineering
Purchasing.
Michael R. Scott was employed from August 1982 to June 1986 by Technicare
Corporation, a wholly-owned subsidiary of Johnson & Johnson, in Solon, Ohio
("Technicare"). Technicare manufactured medical imaging equipment. During that
time, Mr. Scott was involved with Technicare's introduction of its MRI
equipment. Mr. Scott joined Health Images Engineering Services Division in 1986.
Effective June 18, 1993, he became Executive Vice President-Engineering. He had
been a Vice President of the Company since June 1988. His responsibilities
include managing the Company's medical imaging equipment maintenance department,
and third-party services and sales.
Sandra K. Brum worked in the medical field in nursing and teaching for 15
years before joining the Company. She served as a health instructor for the
Henry County (Georgia) School System from July 1983 until July 1986, and as
Department Chairman for Vocational Education from July 1985 until July 1986. In
August 1986, she became the marketing representative for the Company's Atlanta
Magnetic Imaging-North center. She served as the Clinic Manager for Atlanta
Magnetic Imaging-North from January 1987 to July 1987. Ms. Brum also became the
Company's Director of Center Marketing for all of the Company's imaging centers
in January 1987 and served in this position until her election in November 1990
to Vice President-Marketing. In November, 1994, Ms. Brum was elected Executive
Vice-President-Marketing. Ms. Brum's responsibilities include administration of
the clinical marketing and managed care programs for each of the Company's
imaging centers.
Robin Eubanks Murray joined the Company as Corporate Counsel in March 1988,
became Senior Staff Counsel in 1989 and was elected Secretary and named as
General Counsel in December 1993. In November, 1994, she was elected a Vice
President of the Company. Prior to joining the Company, she was an associate at
the law firm of Sutherland, Asbill & Brennan, Atlanta, Georgia. Ms. Murray is
responsible for administering the Company's legal affairs.
Ron L. Clark, Jr., joined the Company in June 1988 as a staff accountant.
He was named Accounting Manager in September 1988, became the Controller of the
Engineering Services division in March 1989, and has served as Controller of the
Company since March 1990. He was elected to the office of Treasurer in December
1993. Prior to joining the Company, Mr. Clark was a staff accountant at MATSCO,
Inc., a highway and residential construction company in Atlanta, Georgia. Mr.
Clark is responsible for administering the Company's accounting systems.
Rudolf ("Dolf") H. Schmitz joined the Company in September 1992 as a
Regional Operations Manager, and was elected a Vice President in December 1993.
Mr. Schmitz worked for Dornier Medical Systems, Inc. ("Dornier"), a subsidiary
of Daimler Benz of Germany. From July 1991 until he joined the Company, Mr.
Schmitz was Director of Marketing and Strategic Planning for Dornier's Acoustic
Imaging Ultrasound Instrument Division in Phoenix, Arizona. He was General
Manager of Dornier's Surgical Laser Division in Marietta, Georgia, from July
1990 to July 1991. At Dornier's Lithotripsy Division in Marietta, Georgia, he
served as Director of Strategic Planning and Projects from June 1989 to June
1990, Senior Manager-Strategic Marketing from January 1989 to May 1989, and
Manager-Strategic Marketing from September 1987 to January 1989. Mr. Schmitz is
responsible for overseeing the operations of the oncology center and the 37
domestic imaging centers owned and operated by Health Images prior to the
MedAlliance acquisition.
7
<PAGE> 10
Richard ("Dick") J. Kampa joined the Company as a Vice President-Operations
effective April 14, 1995, at the time of the acquisition by the Company of the
fifteen (15) multi-modality imaging centers from MedAlliance, Inc., a
publicly-held Nashville, Tennessee company. Mr. Kampa joined MedAlliance (which
was then operating under the name ImageAmerica, Inc.) in March, 1991, as an area
vice president responsible for the general management of the MedAlliance
ImageAmerica imaging centers. He was promoted to corporate vice president of
MedAlliance in 1992, with responsibility for the general management of all the
imaging centers, including sales and managed care development. From 1986 through
1991, Mr. Kampa served as director of sales and director of national accounts of
Dornier Medical Systems in Marietta, Georgia, a subsidiary of Daimler Benz of
Germany. Prior to Dornier, Mr. Kampa was district sales manager and manager of
national accounts for over six years with Physio-Central, which was then a
Redmond, Washington based division of Eli Lily Corporation, involved in the
acute cardiac care/defibrillator industry. Mr. Kampa is responsible for
overseeing the operations of and marketing for the imaging centers acquired from
MedAlliance, Inc.
EXECUTIVE COMPENSATION
The following tables and narrative text discuss the compensation paid in
1994 and the two (2) prior fiscal years to the Company's Chairman and Chief
Executive Officer, the President (who served as Chief Executive Officer during
1994 until September 9, 1994), the four other most highly compensated executive
officers of the Company or one of its subsidiaries (with annual salary and bonus
for 1994 in excess of $100,000) and a former executive officer of a subsidiary
of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION ------------
--------------------- OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS(#) COMPENSATION
- - ----------------------------------- ---- -------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Robert D. Carl, III, 1994 $206,250 $ 0(5)(13) 0 $ 2,320(1)(4)
Chairman and Chief Executive 1993 $230,922 $13,203(6) 0 $ 18,000(3)(4)
Officer(2) 1992 $265,781 $45,385 2,500 $ 1,125(1)
W. A. Wilson, 1994 $155,000 $ 0(5)(13) 35,000 $ 2,250(1)
President; former Chief Executive 1993 $125,420 $ 3,716(6) 20,000 $ 1,938(1)
Officer 1992 NA NA NA NA
James J. Fitzsimmons, 1994 $133,022(8) $ 0 0 $ 1,172(1)
President and Chief Executive 1993 NA NA NA NA
Officer-Interactive Diagnostic 1992 NA NA NA NA
Services, Inc.(7)
David J. Soffa, M.D., 1994 $220,002(9) $ 0 0 $ 1,172(1)
Executive Vice-President and 1993 NA NA NA NA
Chief Medical Officer-Interactive 1992 NA NA NA NA
Diagnostic Services, Inc.(16)
Prem Anand, 1994 $113,125(12) $25,000(13) 35,000 $ 1,862(1)
Executive Vice President of 1993 $137,777(11) $ 0 20,000 $ 229(1)
Science and Engineering 1992 NA NA NA NA
Operations(10)
Michael R. Scott, 1994 $106,177 $21,235(13) 15,000 $ 0
Executive Vice 1993 $102,569 $ 3,086(6) 4,500 $ 0
President-Engineering 1992 $ 99,402 $13,094 2,500 $ 375(1)
Paul W. Harris, 1994 $119,792 $75,000 0 $ 94,300(15)
Executive 1993 NA NA NA NA
Vice-President-Interactive 1992 NA NA NA NA
Diagnostic Services, Inc.(14)
</TABLE>
8
<PAGE> 11
- - ---------------
(1) Represents contributions made by the Company to the Health Images, Inc.,
Profit Sharing and Savings Plan which is qualified under Internal Revenue
Code Section 401(k).
(2) Mr. Carl resumed the position of Chief Executive Officer of the Company on
September 9, 1994.
(3) Pursuant to the terms of Consulting and Non-Competition Agreement dated as
of June 2, 1993 ("Mr. Carl's Agreement"), between the Company and Mr. Carl,
the Company agreed to pay $15,000 to Mr. Carl to reimburse him for legal
expenses incurred in connection with the negotiation of Mr. Carl's
Agreement and Mr. Carl's resignation effective June 19, 1993, from the
offices of President and Chief Executive Officer.
(4) Includes $8,000.00 in Directors Fees paid to Mr. Carl in 1994 prior to his
becoming Chief Executive Officer on September 9, 1994 and $3,000.00 in
Directors Fees paid in 1993.
(5) The Company did not pay any bonus to executive officers for the fiscal year
ended December 31, 1993.
(6) This bonus paid in 1993 represented additional amounts paid in 1993 under
the Company's Earnings Target Incentive Plan which are attributable to
earnings of the Company for the fiscal year ended December 31, 1992. These
additional amounts were paid after the Company's auditors completed their
audit of the Company.
(7) Mr. Fitzsimmons' employment with Interactive Diagnostic Services, Inc.,
("IDSI") terminated effective January 31, 1995.
(8) Of this amount, $75,000 represents salary buydown that was part of the
August 4, 1994, acquisition of National Diagnostic Systems, Inc. ("NDS").
The remainder represents salary paid since August 4, 1994.
(9) Of this amount, $165,000 represents salary buydown that was part of the
August 4, 1994, acquisition of National Diagnostic Systems, Inc. ("NDS").
The remainder represents salary paid since August 4, 1994.
(10) Mr. Anand was promoted to Executive Vice President of Science and
Engineering Operations effective January 1, 1994, from Vice
President-Research and Development.
(11) Includes $43,277 in moving expenses paid by the Company to Mr. Anand.
(12) Includes $6,558 in moving expenses paid by the Company to Mr. Anand.
(13) This bonus was paid on February 23, 1995, pursuant to the Company's
Management Incentive Program. Based upon the Company's operating
performance for the fiscal year ended December 31, 1994, without
considering the effect of the acquisition of NDS, the Company achieved an
annual profit objective and an annual revenue objective in 1994 that
resulted in an annual bonus for 1994 equal to 20% of base salary for each
executive officer other than Messrs. Carl and Wilson.
(14) Mr. Harris' employment with the Company terminated as of December 7, 1994.
(15) Of this amount, $62,500 represents amounts paid by the Company for Mr.
Harris' moving expenses and travel expenses prior to his relocation from
New Jersey to Atlanta. The Company paid $31,800 in 1994 towards the cost of
purchasing Mr. Harris' house in New Jersey to effect his family's
relocation.
(16) Dr. Soffa's employment at IDSI terminated as of April 14, 1995.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE VALUE OF
- - ------------------------------------------------------------------------------------- ASSUMED ANNUAL
% OF RATES OF STOCK
OPTIONS PRICE APPRECIATION
TO FOR OPTION TERM(1)
OPTIONS EMPLOYEES EXERCISE OR EXPIRATION -------------------
NAME GRANTED IN FY BASE PRICE DATE 5% 10%
- - ------------------------------------ ------- -------- ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Robert D. Carl, III................. 0 0 0 0 0 0
W. A. Wilson........................ 35,000(2) 18.7% $6.75 9-9-04 $148,576 $376,522
Prem K. Anand....................... 35,000(2) 18.7% $6.75 9-9-04 $148,576 $376,522
Michael R. Scott.................... 15,000(2) 8.0% $6.75 9-9-04 $ 63,676 $161,366
James J. Fitzsimmons................ 0 0 0 0 0 0
David J. Soffa, M.D................. 0 0 0 0 0 0
</TABLE>
9
<PAGE> 12
- - ---------------
(1) The assumed annual rates of appreciation of five and ten percent would
result in the price of the Company's stock increasing to $10.99 and $17.51,
respectively.
(2) These incentive stock options were granted September 9, 1994, at the market
price on the date of the grant, and vest over a 36-month period. In the
event of a merger, consolidation or change in control of the Company, these
options would immediately vest in full.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END(1) FY-END(2)
SHARES -------------- ---------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- - ----------------------------------------- ----------- -------- -------------- ---------------
<S> <C> <C> <C> <C>
Robert D. Carl, III...................... 0 $0 436,875/35,625 $343,750/$0
W. A. Wilson............................. 0 $0 35,625/71,875 $7,291/$10,209
Prem K. Anand............................ 0 $0 11,250/43,750 $7,291/$10,209
Michael R. Scott......................... 0 $0 69,000/33,000 $1,641/$2,297
James J. Fitzsimmons..................... 0 $0 0 $0
David J. Soffa, M.D...................... 0 $0 0 $0
</TABLE>
- - ---------------
(1) The exercise prices of these options range from $4.50 to $13.50.
(2) The year-end market price of the Company's Common Stock was $5.875. The only
unexercised options outstanding at December 31, 1994, which were not
underwater (the exercise price exceeded the market price) were a warrant to
purchase 250,000 shares at $4.50 per share held by Mr. Carl, and 61,550
incentive options (32,314 of which were exercisable) held by officers to
purchase stock at $5.00 per share.
The Company has no Long Term Incentive Plan or Defined Benefit or Actuarial
Plan.
PERFORMANCE GRAPH
This year the Company has selected a peer group composed of publicly-held
diagnostic imaging companies rather than simply using the S&P Health Care
Diversified Index as in previous years. Some medical services companies are in
health care environments that have thrived in recent years. Other medical
services companies, such as diagnostic imaging companies, have operated under
economic conditions in recent years that are recessionary. The Company believes
that the peer group selected provides a more accurate picture of how the
Company's stock has performed relative to companies operating comparable
businesses under comparable conditions.
The companies in the Peer Group (and their stock symbols) are: Alliance
Imaging (SCAN), Inc., American Health Services Corp. (AHTS), MedAlliance, Inc.
(MDAL), Medical Diagnostics, Inc. (MDIY), Medical Imaging Centers of America
(MIKA) and NMR of America, Inc. (NMRR). These company's respective returns have
been weighted by their respective stock market capitalizations at the beginning
of each period in which they were a publicly-held company.
10
<PAGE> 13
Comparison of Five (5) Year Cumulative Total Return* Health Images, Inc.,
S&P 500 Index, S&P Health Care Diversified and a Peer Group
(GRAPH)
<TABLE>
<CAPTION>
Measurement Period Health S&P Health S&P 500
(Fiscal Year Covered) Images, Inc. Peer Group Care Div. Index
<S> <C> <C> <C> <C>
1989 100.00 100.00 100.00 100.00
1990 116.64 87.10 121.45 98.69
1991 132.12 203.23 179.89 126.42
1992 92.45 83.65 153.60 136.05
1993 48.71 33.33 146.38 149.76
1994 59.68 32.40 170.59 151.74
</TABLE>
* The graph and table set forth above assume $100 was invested on December 31,
1989, in each of the Company's Common Stock, the S&P Health Care Diversified,
the S&P 500 Index, and the Peer Group (some of the companies in the Peer Group
were not publicly-held at December 31, 1989), and that all dividends were
re-invested. This data was furnished by S T A R Services.
11
<PAGE> 14
CASH COMPENSATION OF DIRECTORS
For the fiscal year ending December 31, 1994, no employee director of the
Company was paid additional compensation as a member of the Board of Directors.
Mr. Carl received $8,000.00 in compensation prior to assuming the position of
Chief Executive Officer on September 9, 1994. Each non-employee director of the
Company is paid $1,000 on a quarterly basis, plus $1,000 per Board of Directors
meeting attended in person with reimbursement for all reasonable travel
expenses. The non-employee directors receive no compensation for the first four
meetings attended on the telephone, but receive $250 for each telephone meeting
attended thereafter. Each of the three members of the Audit Committee is paid
$600 per meeting of the Committee. William E. Whitesell, James P. Gelhard and
Marc I. Raphaelson, M.D. currently serve on the Audit Committee. Each of the
four members of the Compensation Committee is paid $250 for a telephone meeting
and $600 for each meeting attended. James P. Gelhard, William E. Whitesell, and
Robert L. Taylor currently serve on the Compensation Committee.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Mr. Robert D. Carl, III, resumed the position of Chief Executive Officer of
the Company on September 9, 1994. Mr. Wilson, who served as Chief Executive
Officer from June 19, 1993, until September 9, 1994, became the Company's Chief
Operating Officer. Mr. Wilson's title is currently President and Chief
Administrative Officer. The Company's Board of Directors also approved
employment contracts for Messrs. Carl and Wilson, respectively, with two (2)
year terms ending September 30, 1996.
If either Mr. Carl's or Mr. Wilson's employment is terminated by the
Company without "cause" at any time during the initial term of two (2) years, or
the first one (1) year renewal term, such executive shall be entitled to a
severance amount equal to the executive's base salary at the time of termination
for a period of 24 months. A "change of control" of the Company would be treated
as a termination without "cause" and trigger the severance obligation for such
executive.
"Cause" is defined as: (i) any willful and material act of dishonesty or
fraud committed by executive after the date hereof which is materially injurious
to the Company; (ii) conviction of, or plea of nolo contendere to, a misdemeanor
or a felony committed by executive after the date hereof involving, in either
case, moral turpitude; (iii) repeated or continuous failure, neglect or refusal
to perform executive's duties hereunder following not less than 60 days prior
written notice of such failure, neglect or refusal.
The Company is currently involved in litigation with three (3) individuals
named in the Summary Compensation Table: James J. Fitzsimmons, David J. Soffa,
M.D., and Paul W. Harris. Each of these individuals has an employment contract
with the Company and its subsidiary, IDSI, which was a component of the August
4, 1994, acquisition of NDS.
On February 21, 1995, the Company filed a lawsuit in the Superior Court of
the State of California, San Mateo County, against each of the selling
shareholders of National Diagnostic Systems, Inc. ("NDS"). The Company acquired
the remaining 51.5% of NDS from the selling shareholders in an August 4, 1994,
acquisition. The Company's complaint is for rescission and restitution, breach
of contract, intentional misrepresentation, negligent misrepresentation,
suppression of act, and indemnification. The Company's complaint was instituted
after the selling shareholders failed to respond adequately to a February 13,
1995, demand letter for rescission of the transaction.
On February 17, 1995, one of the selling shareholders, James J.
Fitzsimmons, the former President and Chief Executive Officer of Interactive
Diagnostic Services, Inc. ("IDSI") (the successor entity to NDS), filed a
complaint against the Company and IDSI in the Superior Court of the State of
California, San Mateo County. Mr. Fitzsimmons' complaint purports to allege
breach of his employment agreement with IDSI and the Company, and a breach of
implied covenant of good faith and fair dealing and seeks, among other things,
declaratory relief. Mr. Fitzsimmons' employment with IDSI terminated as of
January 20, 1995.
On March 21, 1995, Mr. Fitzsimmons amended his complaint to substitute
attorneys, add the remaining selling shareholders (including David J. Soffa,
M.D.) as plaintiffs, and change the causes of action. The amended complaint
purports to allege causes of action including a breach of fiduciary duty by the
Company,
12
<PAGE> 15
fraud by the Company, and a breach of the implied covenant of good faith and
fair dealing by the Company and IDSI, in addition to the previous causes of
action asserted by Mr. Fitzsimmons.
On April 12, 1995, Paul W. Harris, who was involved in the acquisition of
NDS and served as an Executive Vice President of IDSI, sued the Company alleging
breach of his employment agreement because he received no severance following
his December 9, 1994, termination. The Company plans to vigorously defend Mr.
Harris' lawsuit.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
POLICY AND OBJECTIVES
The Compensation Committee of the Board of Directors is composed of three
(3) independent, non-employee directors, William E. Whitesell, James P. Gelhard,
and Robert L. Taylor, who are not eligible to participate in any of the
compensation plans that it administers. The Committee has overall responsibility
to review and recommend compensation plans to the Board of Directors for
approval.
The fundamental philosophy of the compensation program of Health Images is
that the achievements of the Company result from the coordinated efforts of all
individuals working toward common objectives. The Company strives to achieve
those objectives through teamwork that is focused on meeting the expectations of
customers and shareholders. The compensation of the Company's top executives is
directly linked to the Company's financial performance and shareholder interest
and is reviewed and approved annually by the Compensation Committee of the Board
of Directors.
This linkage was demonstrated in 1993 when the Company experienced a
decline in earnings per share from 1992. The Company earned $0.32 per share in
1993 as compared with $0.53 per share in 1992 and $0.49 per share in 1991. The
Company's executive bonus program then in effect, the Executive Target Incentive
Program ("ETIP"), was structured based on the Company's percentage growth in
earnings per share over the prior year. Because there was no growth in earnings
per share over 1992, no bonuses were awarded under the ETIP for 1993. The ETIP
program was terminated in 1993.
In December, 1993, the Compensation Committee did not recommend and the
Board of Directors did not approve any bonuses for executive officers of the
Company for 1993 because of the decline in earnings per share for the Company.
Executive officers received base salary and stock option grants. The Board of
Directors further directed that executive incentive compensation be related to
adherence to the cost guidelines set forth in the annual budget and strategic
plan of the Company. Incentive compensation will be awarded only for exceptional
performance in controlling costs or in producing additional revenues for the
Company. The Board of Directors believes the emphasis on controlling costs, in
particular, is important in an era of declining reimbursements in the health
care industry.
The President of the Company has developed a new executive incentive
compensation program. That programs ties executive contributions to the net
earnings of the Company either through generation of revenue or reduction of
operating expenses beyond ordinary expectations. This Management Incentive
Program ("MIP") pays an annual bonus to executive officers determined by the
percent of the annual profit objective that is achieved and by his or her base
salary at the end of the fiscal year. Under this formula, each executive officer
of the Company, other than Messrs. Carl and Wilson, received a bonus for the
year ended December 31, 1994, equal to 20% of each officers base salary. These
bonuses were paid in February, 1995, at the conclusion of the Company's audit by
Joseph Decosimo and Company. Because of considerable writeoffs taken by the
Company in 1994 arising out of the August 4, 1994, acquisition of National
Diagnostic Systems, Inc. ("NDS"), neither Mr. Carl nor Mr. Wilson received a
bonus for the year ended December 31, 1994.
The Company is committed to providing a pay program that helps attract and
retain the best people in the industry. To ensure that pay is competitive, the
Company regularly compares its pay practices with those of other leading
companies and sets its pay parameters based on this review. The Company is
currently reviewing its compensation for executive officers and senior
management in light of the recent significant
13
<PAGE> 16
acquisition of 15 diagnostic imaging centers from MedAlliance, Inc. This
acquisition closed on April 14, 1995, with an effective date of March 31, 1995.
A feature of the Omnibus Budget Reconciliation Act of 1993 ("OBRA '93")
limits deductibility of certain compensation for the Chief Executive Officer and
the additional four executive officers who are highest paid and employed at year
end to $1 million per year, effective for tax years beginning on or after
January 1, 1994. Although the salary and bonuses of the Company's executive
officers will remain substantially below this $1 million threshold into the
foreseeable future, the presence of stock options and warrants make it
theoretically possible that the threshold may be exceeded at some time in the
future. In such an instance, the Company intends to take the necessary steps to
conform its compensation to comply with OBRA '93.
COMPENSATION PROGRAMS
Health Images' executive compensation programs are designed to retain and
reward executives who are capable of leading the Company in achieving its
business objectives in an industry characterized by growth, competitiveness, and
change. Annual compensation for senior management of Health Images consists of
three (3) elements:
1. Base salary is determined by the potential impact the individual
has on the Company, the skills and experiences required by the job, and the
performance and potential of the incumbent in the job;
2. Incentive programs are designed to reward executives for their
impact in generating unusual additional revenue for the Company or for
uniquely controlling the Company's expenses; and
3. Long-term incentive compensation is provided in the form of stock
option grants and is designed to link the interests of the executives with
those of the stockholders. Stock option grants provide an incentive that
focuses the executives' attention on managing the Company from the
perspective of an owner with an equity stake in the business. These stock
options are tied to the future performance of Health Images stock and will
provide value to the recipient only when the price of Health Images stock
increases above the option grant price. Long-term incentive compensation is
offered only to those key employees who can make a material impact on the
Company's long-term performance.
A key objective of the Compensation Committee is to assure that Health
Images executives' total compensation is competitive in our industry.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
The Compensation Committee meets annually to evaluate the performance of
the Chief Executive Officer, without the CEO being present, and reports on that
evaluation to the independent Directors of the Board. The current CEO assumed
his position on September 9, 1994. Mr. Carl had previously served as CEO from
1985 to June 19, 1993. Mr. Carl also serves as Chairman of the Board and
functions as the Chief Financial Officer of the Company. Under the terms of the
Employment Agreement dated as of October 1, 1994, with Mr. Carl, his base salary
is $225,000.00. The Compensation Committee is currently reviewing Mr. Carl's
base salary in light of what employers of a comparable size (after giving effect
to the acquisition of the fifteen (15) diagnostic imaging centers from
MedAlliance) pay their CEOs. The Committee recognizes that this base salary was
set prior to this significant acquisition and may have been low at the time it
was established. The Compensation Committee is currently reviewing proxy
materials on companies of a comparable size to the Company (after giving effect
to the acquisition) and is concentrating in particular on companies in the
health care industry. Following its review of these materials, the Compensation
Committee may reset Mr. Carl's base salary, as well as the base salaries of
other executive officers and senior management.
Respectfully submitted:
William E. Whitesell, Ph.D., Chairman
James P. Gelhard
Robert L. Taylor
14
<PAGE> 17
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Based upon a review of Forms 3 and 4 and amendments thereto furnished to
the Company during 1994, and Forms 5 and amendments thereto with respect to
1995, the Company believes that no director, officer or ten percent (10%)
shareholder of the Company failed to file reports required by Section 16(a) of
the Securities Exchange Act of 1934, as amended, on a timely basis during the
1994 fiscal year.
RELATED TRANSACTIONS
Dr. Jack Greenberg, a nominee for Director, also serves as the medical
general partner of Northeastern Magnetic Imaging, Ltd., which owns Health Images
of Philadelphia. As medical general partner, Dr. Greenberg, through his
professional corporation, received $37,500 in partnership distributions during
the year ended December 31, 1995.
Dr. Greenberg also received $429,313.61 in fees for interpretation services
provided at Health Images of Philadelphia during 1994. Of this amount Dr.
Greenberg pays another physician approximately 25% for his interpretation
services at Health Images of Philadelphia. Dr. Greenberg also received $26,000
in consulting fees and $3,000 for serving as a member of the Company's Physician
Advisory Board during 1994.
PROPOSAL 2 -- INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Joseph Decosimo and Company as the
Company's independent public accountants for fiscal 1995. Joseph Decosimo and
Company has served as the Company's auditors since 1982. Representatives of
Joseph Decosimo and Company are expected to be present at the Annual Meeting and
will have an opportunity to make a statement if they desire to do so, and will
be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
APPOINTMENT OF JOSEPH DECOSIMO AND COMPANY AS INDEPENDENT PUBLIC ACCOUNTANTS FOR
1995.
STOCKHOLDER PROPOSALS
Appropriate proposals of stockholders intended to be presented at the
Company's next annual meeting of stockholders (which the Company currently
intends to hold in June of 1996) must be received by the Company by January 4,
1996, for inclusion in its proxy statement and form of proxy relating to that
meeting. If the date of the next annual meeting is changed by more than 30
calendar days from such anticipated time frame, the Company shall, in a timely
manner, inform its stockholders of the change and the date by which proposals of
stockholders must be received.
MISCELLANEOUS
Management does not know of any other matters to come before the meeting.
If any other matters properly come before the meeting, however, it is the
intention of the persons designated as Proxies to vote in accordance with his
best judgment on such matters.
ANNUAL REPORT
The Company's 1994 Annual Report to Stockholders was mailed to stockholders
April 20, 1995. The Annual Report is not a part of the proxy soliciting
material.
15
<PAGE> 18
APPENDIX A
HEALTH IMAGES, INC., PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF HEALTH IMAGES, INC.,
FOR THE ANNUAL MEETING OF STOCKHOLDERS
June 2, 1995
The undersigned stockholder hereby constitutes and appoints each of ROBERT
D. CARL, III, and ROBIN EUBANKS MURRAY, with full power of substitution, to act
as proxy for and to vote all shares of Common Stock which the undersigned is
entitled to vote at the Annual Meeting of Stockholders to be held on June 2,
1995, at 10:00 a.m., at the Company's corporate headquarters at 8601 Dunwoody
Place, Building 200, Atlanta, Georgia, or any adjournment(s) thereof, on all
matters coming before said meeting.
THE PROXIES SHALL VOTE AS SPECIFIED BELOW, OR IF A CHOICE IS NOT SPECIFIED
FOR ANY OF THE FOLLOWING PROPOSALS, THE PROXIES SHALL VOTE "FOR" THE ELECTION OF
THE BOARD OF DIRECTORS' NOMINEES FOR DIRECTORS, AND "FOR" THE RATIFICATION OF
JOSEPH DECOSIMO AND COMPANY AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR
THE FISCAL YEAR ENDING DECEMBER 31, 1995.
The undersigned instructs said proxies to vote:
1. Election of Directors -- Robert D. Carl, III; William E. Whitesell,
Ph.D.; Marc I. Raphaelson, M.D.; W. A. Wilson; Robert L. Taylor; Stuart
B. Strasner, Sr. and Jack O. Greenberg, M.D.
<TABLE>
<S> <C> <C>
/ / FOR all nominees / / WITHHOLD AUTHORITY with respect / / FOR all nominees, except WITHHOLD
to all nominees AUTHORITY with respect to the following
nominees:
---------------------------------------------
</TABLE>
2. Appointment of Independent Public Accountants:
/ / FOR approval / / AGAINST approval / / ABSTAIN
3. The undersigned further gives the proxies authority to vote according to
his or her best judgment with respect to any other matters which
properly come before the meeting.
The undersigned acknowledges the receipt of Notice of the aforesaid Annual
Meeting and Proxy Statement, each dated May 4, 1995.
Signature:
-----------------------
Date:
----------------------------
(Signature should conform to name
and title stenciled hereon.
Executors, administrators,
trustees, guardians and attorneys
should add their titles upon
signing.)
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
POSTAGE PAID ENVELOPE.
Please enter your Social Security Number or Federal Employer Identification
Number here:
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