<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant: |X|
Filed by 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 Materials Pursuant to (section) 240.14a-11(c)
or (section) 240.14a-12
Health Management, Inc.
(Name of Registrant as Specified in Its Charter)
Not Applicable
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
|_| $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction applies:
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 show 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: $250 paid with filing of Preliminary
Proxy Statement.
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
HEALTH MANAGEMENT, INC.
4250 Veterans Memorial Highway
Suite 400 West
Holbrook, New York 11741
---------------------------------
Notice of Annual Meeting of Stockholders
To Be Held October 25, 1995
TO THE STOCKHOLDERS OF HEALTH MANAGEMENT, INC.:
The Annual Meeting of Stockholders of Health Management, Inc., a
Delaware corporation (the "Company"), will be held on Wednesday, October 25,
1995, at Chemical Bank Amphitheater, 395 North Service Road, Melville, New York
11747, at 10:00 a.m. local time, to consider and act upon the following matters,
each of which is explained more fully in the following Proxy Statement. A proxy
card for your use in voting on these matters is also enclosed.
1. To elect five (5) directors;
2. To ratify the appointment of BDO Seidman as independent
auditors; and
3. To transact any other business that may properly come before
the meeting or any adjournment thereof.
Only common stockholders of record at the close of business on
September 20, 1995, are entitled to notice of and to vote at the Annual Meeting.
Shares can only be voted at the Annual Meeting if the holder is present
or represented by proxy. If you do not expect to attend the Annual Meeting, you
are urged to date and sign the enclosed proxy and return it in the accompanying
envelope promptly, so your shares may be voted in accordance with your wishes
and the presence of a quorum may be assured. The giving of a proxy does not
affect your right to vote in person in the event you attend the Meeting.
The Company's Annual Report for 1995 is enclosed with this Notice of
Meeting and Proxy Statement.
By Order of the Board of Directors,
Drew E. Bergman
Secretary
September 27, 1995
<PAGE>
PROXY STATEMENT
OF
HEALTH MANAGEMENT, INC.
4250 Veterans Memorial Highway
Suite 400 West
Holbrook, New York 11741
INTRODUCTION
The Board of Directors of Health Management, Inc. (the "Company")
hereby solicits proxies in the form enclosed with this Proxy Statement for use
at the 1995 Annual Meeting of Stockholders ("Annual Meeting") to be held at
10:00 a.m. local time on Wednesday, October 25, 1995 at Chemical Bank
Amphitheater, 395 North Service Road, Melville, New York 11747 and any
postponement or adjournment thereof.
The Company is sending with this Proxy Statement its Annual Report to
Stockholders, which contains financial statements for the fiscal year ended
April 30, 1995, to all stockholders entitled to vote. This Proxy Statement and
form of proxy is first being sent to stockholders on or about the date of the
accompanying Notice of the 1996 Annual Meeting.
Certain officers and employees of the Company, without extra
remuneration, may solicit proxies by telefax, by telephone, and in person. In
addition to mailing copies of this material to stockholders, the Company may
request brokerage houses, custodians, fiduciaries and nominees, and reimburse
them for their expenses in connection therewith, who hold stock in their names
or custody or in the names of nominees for others to forward such material to
those persons for whom they hold stock of the Company and to request the
authority for execution of the proxies.
Only stockholders of record as of the close of business on September
20, 1995 will be entitled to vote at the Meeting and any adjournments thereof.
As of that date, 9,318,959 shares of the Company's Common Stock (excluding
treasury shares) were issued and outstanding. Each such share outstanding will
be entitled to one vote, and stockholders may vote in person or by proxy.
Execution of a proxy will not in any way affect a stockholder's right to attend
the meeting and vote in person; any stockholder giving a proxy has the right to
revoke it at any time before it is exercised by written notice to the secretary
of the Company. In addition, stockholders attending the meeting may revoke their
proxies at that time. Unless so revoked, the shares represented by the proxies
solicited by the Board of Directors will be voted in accordance with the
directions given therein by the stockholder.
All properly executed proxies which are returned in time to be cast at
the Annual Meeting, if no contrary instruction is indicated, will be voted as
stated below under "election of directors." In addition to the election of
directors, the stockholders will consider and vote upon a proposal to ratify the
selection of auditors. Where a choice has been specified on the proxy with
respect to the foregoing matters, the shares represented by the proxy will be
voted in accordance with the specification. The shares will be voted FOR if no
specification is indicated.
The presence, in person or by proxy, of the holders of a majority of
the voting stock of the Company is necessary to constitute a quorum to transact
business. If a quorum is not present or represented at the Annual Meeting, a
majority of the votes represented at the meeting may adjourn the Annual Meeting
from time to time without notice other than an announcement until a quorum is
present or represented. Assuming the presence of a quorum with respect to the
<PAGE>
election of directors, the six nominees receiving the greater number of votes
cast by the holders of the common stock will be elected as directors. There
will be no cumulative voting in the election of directors. Assuming the
presence of a quorum with respect to other proposals, the affirmative vote of
the holders of the majority of the shares of Common Stock present in person or
represented by proxy is required to approve the proposal to ratify the selection
of auditors and any other matter which may come before the meeting.
An automated system administered by the Company's transfer agent
tabulates the votes. Abstentions are included in the determination of the number
of shares present and voting and are counted as abstentions in tabulating the
votes cast on nominations or proposals presented to stockholders. Broker
nonvotes are not included in the determination of the number of shares present
and voting or as a vote with respect to such proposals.
The Company knows of no other matter to be presented at the meeting. If
any other matter should be presented at the Annual Meeting upon which a vote
properly may be taken, shares represented by all proxies received by the Company
will be voted with respect thereto in accordance with the judgment of the
persons named as proxies.
PROPOSAL 1
ELECTION OF DIRECTORS
The persons named in the accompanying proxy will vote for the election
of five directors, unless authority to vote is withheld. The term of office of
each director elected will continue until the 1996 Annual Meeting of
Stockholders, or until a successor shall have been duly elected and qualified.
Clifford E. Hotte, Robert C. Clifton, Virginia Belloise, Andre C. Dimitriadis
and David R. Walker are the nominees for election as directors of the Company.
Each has informed the Company that he or she is willing to serve as director.
However, if any nominee should decline or become unable to serve as a director
for any reason, votes will be cast for a substitute nominee, if any, designated
by the Board of Directors. If no substitute nominee is designated prior to the
election, votes will be cast according to the judgment in such matters of the
person or persons voting the proxy. Dr. Hotte, Messrs. Clifton, Dimitriadis and
Walker, and Ms. Belloise are each incumbent directors.
The following table sets forth certain information with respect to each
person nominated and recommended to be elected by the Board of Directors of the
Company and is based on the records of the Company and information furnished to
it by the nominees. Reference is made to "Principal Stockholders and Stock
Ownership of Management" for information pertaining to stock ownership by the
nominees.
- 2 -
<PAGE>
Name Age Director Since
---- --- --------------
Clifford E. Hotte, Ph.D............ 48 1988
Robert C. Clifton.................. 41 1991
Virginia Belloise (1).............. 48 1988
Andre C. Dimitriadis............... 55 1993
David R. Walker.................... 60 1992
(1) Virginia Belloise is the wife of Clifford E. Hotte
Directors and Executive Officers of the Company
CLIFFORD E. HOTTE
Dr. Hotte, the President, Chairman of the Board and a director of the
Company since 1988, founded Home Care Management, Inc., the Company's first
operating subsidiary in 1985. He was a consultant in Radiopharmaceutical Science
to Mallinckrodt, Inc., St. Louis, Missouri, from April 1986 to December 1988.
From January 1982 until May 1985, and prior to founding the Company, Dr. Hotte
was the President and Director of Nuclear and Genetic Technology, Inc. of
Melville, New York. In 1980 and 1981 Dr. Hotte was an Assistant Professor of
Radiology at the School of Medicine, State University of New York, Stony Brook.
Dr. Hotte has been a member of the New York State Board of Pharmacy since 1981
and was its Chairman in 1989 and 1990. He is licensed as a Registered Pharmacist
in New York. Dr. Hotte received a Bachelor's Degree from the Albany College of
Pharmacy, Union University, Albany, New York, in 1970; a doctorate in Clinical
Pharmacy from the University of Michigan in 1972, and a doctorate in
Radiopharmaceutical Science from the University of Michigan in 1976. He is a
member of the American Pharmaceutical Association, the Society of Nuclear
Medicine and the National Association of Boards of Pharmacy.
ROBERT C. CLIFTON
Mr. Clifton has been a Vice President of the Company since January
1989 and a Director since August 1991. Mr. Clifton has 20 years of experience in
the health care field. Prior to his election as a Vice President, Mr. Clifton
served as Pharmacy Materials Manager at University Hospital, State University of
New York, Stony Brook, New York from February 1980 until joining the Company in
January 1989.
VIRGINIA BELLOISE
Ms. Belloise has been a Director of the Company since March 1988. She
also served as Personnel and Human Services Director for the Company and was the
Company's secretary from March 1988 until December 1993. Ms. Belloise previously
held the position of Clinical Laboratory Manager at Deepdale General Hospital,
Little Neck, New York, from March 1985 to October 1987.
ANDRE C. DIMITRIADIS
Mr. Dimitriadis was elected as a Director of the Company in October
1993. Mr. Dimitriadis is the Chief Executive Officer and Chairman of LTC
Properties, Inc., Oxnard, California, a real estate investment trust that
invests in long-term care and other health care related facilities. Prior to
founding LTC Properties, Mr. Dimitriadis was Executive Vice President and
- 3 -
<PAGE>
Chief Financial Officer of Beverly Enterprises, an owner/operator of nursing
facilities, from October 1989 to May 1992. From December 1984 to July 1989 he
was Executive Vice President, Chief Financial Officer and a Director of American
Medical, Inc., an owner/operator of hospitals. Mr. Dimitriadis is a Director of
Charter Medical Corporation and Sun Healthcare, Inc. Mr. Dimitriadis earned a
B.S. in electrical engineering from Robert College, Istanbul, Turkey, an M.S. in
Computer Science from Princeton University and an M.B.A. and Ph.D. from New York
University.
DAVID R. WALKER
Mr. Walker was elected as a Director of the Company in August 1992.
Since 1958 Mr. Walker has been an officer of J.G. Mulford Co., an insurance
agency located in Westfield, New Jersey, serving as its President from 1958
until 1992, and as its Executive Vice President since 1992. Mr. Walker also
serves as a director of United National Bank, of Plainfield, New Jersey. From
1980 until 1989 he was a director of Starpointe Savings Bank of Somerset, New
Jersey.
MICHAEL R. NORMAN
Mr. Norman was named as Executive Vice President and Chief Operating
Officer of the Company in May 1994. Prior to joining the Company he served in
several positions with Pharmaco LSR Toxicology Services North America, Inc.
(formerly Bio/dynamics, Inc.), a contract toxicology laboratory. From 1990 until
joining the Company he was Executive Vice President and Chief Operating Officer
of Pharmaco. From 1984 to 1990, Mr. Norman served as Pharmaco's General Manager,
where he was responsible for all non-scientific administrative functions.
DREW BERGMAN
Mr. Bergman has been the Corporate Development Officer of the Company
since May 1, 1995, the Chief Financial Officer since November 1990, and was
elected as Treasurer in January 1991 and as Secretary in December 1993. Mr.
Bergman has been a Certified Public Accountant since 1982. Previously, Mr.
Bergman served from 1979 until November 1990 in several positions with BDO
Seidman, a public accounting firm, and with Brout and Company, a public
accounting firm acquired by BDO Seidman in 1986, holding the position of Senior
Manager at the time immediately prior to joining the Company in November 1990.
LLOYD N. MYERS
Mr. Myers was made the Vice President - Sales and Marketing of the
Company effective as of July 24, 1995, and has been Vice President - Program
Development of HMI Pennsylvania since March 1994. From 1987 to March 1994, Mr.
Myers served as a Vice President and a principal of Murray Pharmacy, Inc. and
Murray Pharmacy Too, Inc. From 1985 to 1987, he served as an assistant
pharmacist for Stadtlander's Pharmacy and from 1984 to 1985 Mr. Myers was a
staff pharmacist for People's Drug, Inc. Mr. Myers earned a B.A. from University
of Pittsburgh School of Pharmacy in 1984. He is a member of the American
Pharmaceutical Association.
During the fiscal year ended April 30, 1995, no directors, officers, or
beneficial owners of more than 10% of the Company's common stock, other than as
described below, failed to file, on a timely basis, reports required by Section
16(a) of the Securities Exchange Act of 1934. Dr. Hotte, Messrs. Norman,
Bergman, Clifton and Walker, and Douglas Cox, a former director of the Company,
each failed to file one Form 4 on a timely basis.
- 4 -
<PAGE>
Board of Directors and Committees of the Board
During the year ended April 30, 1995 the Board of Directors held five
meetings and executed written consents. Each director attended at least 75% of
the aggregate number of meetings of the Company's Board of Directors and
committees on which he or she served.
The Board of Directors has a compensation committee (the "Compensation
Committee") currently consisting of Mr. Walker. Prior to July 24, 1995, when he
resigned as a director of the Company, J. Douglas Cox was on the Compensation
Committee. The functions of this committee are to review executive compensation
and approve grants of options to Company officers and employees, and renew,
approve, and recommend to the Board of Directors the terms and conditions of all
stock option plans or changes thereto. This committee had two meetings during
the year ended April 30, 1995.
The Board of Directors has an audit committee composed of directors who
are neither employees nor affiliates of the Company. The audit committee is
currently comprised of Mr. Dimitriadis. Prior to July 24, 1995, when he resigned
as a director of the Company, J. Douglas Cox was also on the audit committee.
This committee recommends to the Board (for approval by the stockholders) a
public accounting firm to conduct the annual audit of the accounts of the
Company. The audit committee also meets with the Chief Financial Officer and the
accounting firm before the audit commences to discuss the accounting firm's
evaluation of the adequacy and effectiveness of the Company's accounting
procedures and internal controls, to approve the overall scope of the audit and
the fees to be charged, and to inquire regarding and discuss with the accounting
firm recent FASB, SEC or other regulatory agency pronouncements, if any, which
might affect the Company's financial statements. The audit committee also meets
with the Chief Financial Officer and the accounting firm at the conclusion of
the audit to review the audited financial statements, to discuss the results of
the audit, to discuss any significant recommendations by the accounting firm for
improvement of the Company's accounting systems and controls, and to discuss the
quality and depth of staffing in the accounting and financial departments of the
Company. This committee had two meetings during the year ended April 30, 1995.
Outside directors receive $2,000 per year as a retainer, $1,000 per
meeting of the Board of Directors attended in person, $1,000 per Chairmanship of
a committee of the Board of Directors, and $500 per meeting of a committee of
the Board of Directors attended in person. Each outside director receives an
option to purchase 4,000 shares at the time of his or her election. The award of
these options, to existing outside directors was ratified at the Special Meeting
of the Board of Directors held on February 8, 1995. Each non-employee director
also receives an annual automatic grant of options to purchase 1,000 shares of
common stock for each completed year of service. All of the options mentioned
above vest over a six month period. Lastly, on October 23, 1993, the date of the
election of Andre C. Dimitriadis to the Board of Directors, the Board of
Directors voted to award him 1,000 shares of Common Stock on each of the first
five anniversary dates of his election to the Board of Directors, provided that
if he resigns, retires or dies during such five year period he is entitled only
to the pro rata amount of such shares; however, if he is terminated as a
director, other than for cause, he will be entitled to the full 5,000 shares.
The award of Mr. Dimitriadis' shares was ratified at the February 8, 1995 Board
of Directors meeting.
- 5 -
<PAGE>
PROPOSAL 2
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected the firm of BDO Seidman,
independent accountants, to serve as auditors for the fiscal year ending April
30, 1996, subject to ratification by the stockholders. BDO Seidman has served
as the Company's auditors since 1990.
It is expected that a member of the firm of BDO Seidman will be present
at the meeting, will have an opportunity to make a statement as so desired and
will be available to respond to appropriate questions.
The Board of Directors recommends a vote FOR ratification of the
selection.
- 6 -
<PAGE>
PRINCIPAL STOCKHOLDERS AND STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of Common Stock as of September 20, 1995 by (i) each person known to
the Company to own beneficially more than five percent of the outstanding Common
Stock; (ii) each director of the Company; (iii) the Company's chief executive
officer and each executive officer of the Company who earned in excess of
$100,000 in salary and bonus in the fiscal year ended April 30, 1995
(collectively, the "named Executive Officers"); and (iv) all directors and
executive officers of the Company as a group.
Amount Approximate
Beneficially Percent of
Name and Address of Beneficial Owner (1) Owned Class
- ---------------------------------------- ------------ -----------
Putnam Investments, Inc.(2)(3) 1,219,036 13.1%
Putnam New Opportunities Fund(2) 556,200 6.0%
Clifford E. Hotte(4) 1,066,432 11.4%
Michael R. Norman(5) 24,400 *
Drew Bergman(6) 25,667 *
Robert C. Clifton(7) 108,099 1.2%
Virginia Belloise(8) 55,053 *
Andre C. Dimitriadis(9) 6,000 *
Lloyd N. Myers 308,530 3.3%
David R. Walker(10) 10,000 *
All Directors and Officers as a Group
(8 Persons) (4)(5)(6)(7)(8)(9)(10) 1,578,514 16.8%
*Less than one percent (1.0%)
(1) The address of each beneficial owner is c/o Health Management,
Inc., 4250 Veterans Memorial Highway, Suite 400 West,
Holbrook, New York 11741.
(2) Based solely upon the information contained in Amendment No. 2
to the Schedule 13G filed with the Securities and Exchange
Commission by Marsh & McLennan Companies, Inc. ("M&MC"),
Putnam Investments, Inc. ("PI"), Putnam Investment Management,
Inc. ("PIM"), The Putnam Advisory Company, Inc. ("PAC") and
Putnam New Opportunities Fund (the "Fund"), dated January 23,
1995. PI is a wholly-owned subsidiary of M&MC and wholly owns
PIM and PAC.
(3) Consists of 905,460 shares held by PIM and 313,576 shares held
by PAC.
(4) Does not include shares beneficially owned by Virginia
Belloise, Dr. Hotte's wife. Includes 30,000 shares subject to
presently exercisable options.
(5) Includes 24,000 shares subject to presently exercisable
options.
(6) Includes 21,667 shares subject to presently exercisable
options.
(7) Includes 15,000 shares subject to presently exercisable
options.
- 7 -
<PAGE>
(8) Includes 42,020 shares held in trusts for benefit of the minor
children of Dr. Hotte, and for benefit of nieces and nephews
of Dr. Hotte and Ms. Belloise, of which Ms. Belloise is
trustee, with voting and dispositive power. Does not include
shares beneficially owned by Ms. Belloise's husband, Clifford
E. Hotte.
(9) Includes 5,000 shares subject to presently exercisable
options.
(10) Includes 6,000 shares subject to presently exercisable
options.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes compensation for services to the Company
in all capacities awarded to, earned by or paid to the Company's chief executive
officer and the named Executive Officers for each of the three fiscal years
ended April 30, 1995. No other executive officer of the Company met the
definition of "highly compensated" within the meaning of the Securities and
Exchange Commission's executive compensation disclosure rules.
<TABLE>
<CAPTION>
Long Term Compensation
------------------------------------------------
Annual Compensation Awards Payouts
-------------------------------------------- --------------------- -------------------------
Restricted
Other Annual Stock Options/ LTIP All Other
Name and Principal Position Year Salary(1) Bonus(1) Compensation Award(s) SARs Payouts Compensation(2)
- --------------------------- ---- --------- -------- ------------ -------- -------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Clifford E. Hotte, Chief 1995 $220,000 -0- -0- -0- -0- -0- $2,382
Executive Officer and President 1994 $200,000 $100,000 -0- -0- 150,000 -0- $2,171
1993 $125,000 $125,000 -0- -0- -0- -0- $2,171
Michael R. Norman, Chief 1995 $ 95,077 -0- -0- -0- 60,000 -0- $ 409
Operating Officer(3)
Drew Bergman, Chief Financial 1995 $100,000 -0- -0- -0- 12,500 $ 489
Officer 1994 $ 85,000 $ 21,250 -0- -0- 62,500 -0- $ 467
1993 $ 78,962 -0- -0- -0- 6,667 -0- $ 395
Robert Clifton, Vice President 1995 $149,600 -0- -0- -0- -0- -0- $1,723
1994 $136,000 $ 47,600 -0- -0- 75,000 -0- $1,689
1993 $ 95,000 $125,000 -0- -0- -0- -0- $1,188
</TABLE>
(1) During the 1994 fiscal year, Dr. Hotte entered into a new three-year
employment agreement under which he was to receive a base salary of $200,000
during its first year and a 10% increase commencing after April 30, 1995.
Messrs. Clifton and Bergman signed two year employment agreements commencing
May 1, 1993, under which they receive base salaries of $136,000 and $85,000
respectively, including a 10% increase for the period after April 30,
1994. During the 1993 fiscal year, Dr. Hotte and Mr. Clifton were each
parties to employment agreements with the Company pursuant to which each
received the salary set out above and a bonus equal to 5% of the Company's
pre-tax profits, up to a maximum of $125,000. See "Employment Agreements"
below.
(2) All such compensation listed herein consists of matching payments
made pursuant to the Company's 401(k) Plan.
(3) Mr. Norman joined the Company in May 1994.
- 8 -
<PAGE>
OPTION GRANTS IN LAST YEAR
The following table provides information relating to options granted to
the named Executive Officers during the year ended April 30, 1995.
<TABLE>
<CAPTION>
Potential Realizable Value at
Percent of Total Assumed Annual Rates of
Options/SARs Stock Price Appreciation for
Granted to Exercise Price Option Term
Options/SARs Employees in the Per Share Expiration -----------------------------
Name Granted(1)(2) Fiscal Year ($/shares) Date 5% 10%
- ---- ------------- ---------------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Clifford E. Hotte -0- -0- -0- -0- -0- -0-
Michael R. Norman 60,000(1) 51.1% $14.50 5/9/04 $547,200 $839,400
Drew Bergman 12,500 9.6% $12.625 8/12/04 $99,188 $251,563
Robert Clifton -0- -0- -0- -0- -0- -0-
</TABLE>
(1) All options were granted as of May 9, 1994, and vest over a five-year
period. The options became exercisable with respect to the first
one-fifth of the underlying shares on May 9, 1994. The options shall be
fully exercisable on the fifth anniversary of the date of grant, May 9,
1999.
(2) All options listed in this table are incentive and non-qualified
options granted pursuant to the Company's Shareholder Value Incentive
Plan. Mr. Norman's options consist of an incentive stock option to
purchase 34,480 shares of common stock and a non-qualified stock option
to purchase 25,520 shares. Mr. Bergman's options are all incentive
options.
AGGREGATED OPTION EXERCISES DURING THE FISCAL YEAR ENDED APRIL 30, 1995 AND
FISCAL YEAR END OPTION VALUES
The following table provides information relating to options exercised
by the named Executive Officers during the fiscal year ended April 30, 1995, and
the number and value of options held by such Executive Officers at fiscal
year-end.
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised in the
Shares Acquired on Value Options/ SARs at Fiscal Money Options/SARs at
Name Exercise (#) Realized ($) Year End (#) Fiscal Year End ($)
- --------------- ------------------ ------------ ----------------------- ---------------------------
Exercisable/Unexercisable(1) Exercisable/Unexercisable(2)
<S> <C> <C> <C> <C>
Clifford Hotte -0- -0- 30,000/120,000 $239,429/$893,717
Michael R. Norman -0- -0- 0/60,000 0/$217,500
Robert Clifton -0- -0- 15,000/60,000 $116,250/$465,000
Drew Bergman -0- -0- 21,667/60,000 $201,463/$442,500
</TABLE>
(1) All options listed in this table are incentive and non-qualified
options granted pursuant to the Company's Shareholder Value Incentive
Plan. Mr. Bergman's exercisable options include 6,667 shares which were
issued on June 4, 1992 pursuant to the Company's 1989 Stock Option
Plan; this option has a ten-year term and an exercise price of $4.50
per share.
- 9 -
<PAGE>
(2) The value of unexercised options is determined by multiplying the
number of options held by the difference in the fair market value of
the Common Stock underlying the options at April 30, 1995 (as
determined by the closing sales price as reported by the NASDAQ
National Market, which was $18 1/8 per share) and the exercise price of
the options granted.
EMPLOYMENT AGREEMENTS
Dr. Hotte entered into a three-year employment agreement with the
Company commencing May 1, 1993, under which he received a base salary of
$200,000 during the first year, a base salary of $220,000 during the second year
and is to receive a base salary of $244,000 (recently increased to $250,000 by
the Board of Directors) during the final year. In addition, the Board of
Directors may, in its discretion, award to Dr. Hotte bonuses, stock, stock
options, stock appreciation rights or other compensation, from time to time. If
Dr. Hotte is terminated in connection with a change in control of the Company or
other than for cause, disability or death, the Company shall pay Dr. Hotte a
severance payment equal to twice his base salary in effect at the time of
termination.
Messrs. Clifton and Bergman had two-year employment agreements through
April 30, 1995. Under his agreement, Mr. Clifton received a base salary of
$136,000 during the first year and a base salary of $149,600 during the second
year. Mr. Bergman received a base salary of $85,000 during the first year and a
base salary of $93,500 during the second year. In addition, the Board of
Directors could, in its discretion, award to Mr. Clifton or Mr. Bergman bonuses,
stock, stock options, stock appreciation rights or other compensation, from time
to time. If Mr. Clifton or Mr. Bergman were to have been terminated in
connection with a change in control of the Company or other than for cause,
disability or death, the Company would have been obligated to pay to each of Mr.
Clifton and Mr. Bergman a severance payment equal to his base salary in effect
at the time of his termination.
Mr. Norman entered into a two-year employment agreement with the
Company commencing on May 9, 1994, under which he received a base salary of
$100,000 during the first year and based on the recommendation of the
Compensation Committee of the Board of Directors is receiving a base salary of
$150,000 during the second year. The Board of Directors may, in its discretion,
award to Mr. Norman bonuses, stock, stock options, stock appreciation rights or
other compensation from time to time. If Mr. Norman is terminated in connection
with a change of control of the Company, or other than for cause, disability or
death, the Company shall pay him a severance equal to his base salary in effect
at such time.
Effective with the Murray Group acquisition in April, 1994, the Company
entered into two year employment agreements with the two principals, Irwin Hirsh
and Lloyd Myers. Under the terms of the agreement, each will receive an annual
base salary of $200,000.
- 10 -
<PAGE>
Report of the Compensation Committee of the Board of Directors on Executive
Compensation
The Compensation Committee consisted of two independent non-employee
directors, David R. Walker and J. Douglas Cox, who were appointed in November
1992 and served during the fiscal year ended April 30, 1995. Subsequent to Mr.
Cox's resignation from the Board of Directors on July 24, 1995, the Compensation
Committee has consisted of Mr. Walker. The Compensation Committee is responsible
for establishing executive compensation for the Company's top level executives,
administering the Company's current long-term incentive program and implementing
any additional short and long-term compensation programs for executives which
the Committee believes are appropriate in the future. All decisions by the
Compensation Committee are subject to the approval of the entire Board of
Directors. The Compensation Committee met two times during the fiscal year ended
April 30, 1995.
The Company is in a rapid growth phase of its development and therefore
has high cash needs. Accordingly, the Company has weighted executive
compensation heavily towards annual and long-term incentives determined on a
discretionary basis. Short-term incentives have consisted of bonuses which are
based on an executive's compensation level relative to that of other executives
at similar-sized companies in the health care industry and in the marketplace
generally, as indicated by published survey data, and the executive's
contribution to Company performance over the prior fiscal year. Long-term
incentives have consisted of periodic grants of stock options under the
Company's 1989 Stock Option Plan and Shareholder Value Incentive Plan, and like
awards of annual incentives have been based on an executive's performance and
compensation level.
For the fiscal year ended April 30, 1995, Dr. Hotte received an annual
base salary of $220,000 and no bonus was paid due to lack of attaining earnings
goals for that year. Dr. Hotte's base salary was set well below the median
salary levels for executives of comparable companies within the health care
industry due to the Company's performance-oriented culture and the need to
invest cash in the business to fund its rapid growth.
In the fiscal year ending April 30, 1996, total compensation of top
executives will be targeted to a level between the median and 75th percentile
compensation levels paid by a peer group consisting of companies constituting
the Health Care Services in the NASDAQ National Market, which is the industry
index used in the Company's Stockholder Return Performance Graph. It is
anticipated that total compensation will consist of base salary, annual
incentives and grants of long-term equity awards in the form of stock options.
Stock option grants will be based on a number of factors determined by the
Committee, including the executive's position within the Company, past and
expected future contributions to the Company's business, and the targeted total
compensation level for the executive. The Committee will continue to consider
annual bonuses based upon achievement of both individual and corporate goals.
DAVID R. WALKER, CHAIRMAN
- 11 -
<PAGE>
STOCK PERFORMANCE CHART
The following graph compares cumulative total returns to the holders of
the Common Stock from May 24, 1990 (the date the Common Stock began trading on
NASDAQ National Market) through the end of the fiscal year ended April 30, 1995
to a peer group consisting of Health Care service companies listed on the NASDAQ
National Market, and to the NASDAQ Market Index. Total return values were
calculated based on the assumption of $100 invested and on cumulative total
return values assuming reinvestment of dividends. The stock price performance
shown on the graph below is not necessarily indicative of future price
performance.
Comparison of May 24, 1990 to April 30, 1995 Cumulative
Total Return
Among Health Management, Inc., Health Care Service Companies
Listed on the NASDAQ National Market, and the NASDAQ Index
<TABLE>
<CAPTION>
<S> <C>
------------------------------------------------------------------------------------------------------------
2400 ------------------------------------------------------------------------------------------------------------
D 2100 ------------------------------------------------------------------------------------------------------------
O 1800 ------------------------------------------------------------------------------------------------------------
L 1500 ------------------------------------------------------------------------------------------------------------
L 1200 ------------------------------------------------------------------------------------------------------------
A 900 ------------------------------------------------------------------------------------------------------------
R 600 ------------------------------------------------------------------------------------------------------------
S 300 ------------------------------------------------------------------------------------------------------------
0 ------------------------------------------------------------------------------------------------------------
1991 1992 1993 1994 1995
-------------------------------------------------------------------------------------------------------------
------ HEALTH MANAGEMENT ---|--- NASDAQ MARKET INDEX
--X--- NASDAQ NATIONAL MARKET INDEX
-------------------------------------------------------------------------------------------------------------
</TABLE>
HEALTH MANAGEMENT NASDAQ NATIONAL MARKET INDEX NASDAQ MARKET INDEX
1990 = 100 1990 = 100 1990 = 100
1991 = 362.5 1991 = 98.7 1991 = 145.6
1992 = 766.7 1992 = 101.3 1992 = 162.3
1993 = 1366.7 1993 = 120.9 1993 = 161.9
1994 = 2216.7 1994 = 135.8 1994 = 235.2
1995 = 2416.7 1995 = 148.3 1995 = 233.8
- 12 -
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On March 27, 1994, a subsidiary of the Company, HMI Pennsylvania, Inc.
("HMI Pennsylvania") entered into a lease with Irwin Hirsh and Lloyd Myers for a
facility in Pittsburgh, Pennsylvania. On the same date, another subsidiary of
the Company, HMI Retail Corp., Inc., entered into a lease agreement with Mr.
Hirsh for an additional facility in Pittsburgh, Pennsylvania. Mr. Hirsh is Vice
President - Contracts Administration of HMI Pennsylvania and Mr. Myers is the
Company's Vice President - Sales and Marketing and Vice President - Program
Development of HMI Pennsylvania. The Company pays an aggregate of $8,867 per
month for both leases. Each lease has a term of three years and may be extended,
at the option of HMI Pennsylvania, for an additional two year term. The Company
believes that the terms of the leases are on an arms' length basis.
COST OF PROXY STATEMENT
The Company will bear the costs of preparing and mailing this Proxy
Statement. Arrangements have also been made with brokerage firms, custodians,
nominees and fiduciaries for the forwarding of materials to beneficial owners of
shares held of record by such persons. The Company will reimburse such firms for
their reasonable expenses in forwarding such materials.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Proposals of stockholders intended for inclusion in the proxy statement
and proxy to be mailed to all stockholders entitled to vote at the 1996 Annual
Meeting of Stockholders of the Company must be received at the Company's
principal executive offices at 4250 Veterans Memorial Highway, Suite 400 West,
Holbrook, New York 11741, not later than April 30, 1996. In order to curtail
controversies to the date on which a proposal was received by the Company,
proponents should submit their proposals by certified mail - return receipt
requested.
THE COMPANY UNDERTAKES TO PROVIDE ITS STOCKHOLDERS, WITHOUT CHARGE, A
COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL
STATEMENTS AND SCHEDULES FILED THEREWITH. WRITTEN REQUESTS FOR SUCH REPORT
SHOULD BE ADDRESSED TO HEALTH MANAGEMENT, INC., 4250 VETERANS MEMORIAL HIGHWAY,
SUITE 400 WEST, HOLBROOK NEW YORK 11741, ATTENTION: CORPORATE SECRETARY.
- 13 -
<PAGE>
PROXY
HEALTH MANAGEMENT, INC.
Annual Meeting of Stockholders
October 25, 1995
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this proxy will be
voted FOR Proposals 1, and 2.
1. ELECTION OF DIRECTORS
Clifford E. Hotte, Robert C. Clifton, Virginia Belloise,
Andre C. Dimitriadis, David R. Walker
/ / FOR all nominees listed above (except as marked to the contrary).
/ / WITHHOLD AUTHORITY to vote for all nominees listed above.
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
- ------------------------------------------------------------------------------
2. Proposal to ratify the selection of BDO Seidman as the independent auditors
of the Company.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion on any other matter which may properly come before the
meeting, including any adjournment thereof.
- -------------------------------------------------------------------------------
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
- -------------------------------------------------------------------------------
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE.
- -------------------------------------------------------------------------------
The undersigned hereby appoints Clifford E. Hotte and Robert C. Clifton, or
either one of them, as Proxies, each with the power to appoint his substitute,
and hereby authorizes them to represent and to vote all Shares of Common
Stock of Health Management, Inc. (the "Company") held of record by the
undersigned on September 20, 1995 at the Annual Meeting of the Stockholders of
the Company to be held on October 25, 1995, or any adjournment thereof.
Please sign exactly as name appears
hereon. When shares are held by joint
tenants, both should sign. When signing
as attorney, executor, administrator,
trustee or guardian, please give full title as
such. If a corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership, please
sign in partnership name by authorized
person.
Dated:__________________________________, 1995
______________________________________________
______________________________________________
