<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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:
[x] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
HEALTH MANAGEMENT ASSOCIATES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(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:
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(4) Date Filed:
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<PAGE>
[LOGO]
HMA
HEALTH MANAGEMENT ASSOCIATES, INC.
-----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
-----------------
FEBRUARY 16, 1999
The Annual Meeting of Stockholders of HEALTH MANAGEMENT ASSOCIATES, INC.
(the "Company") will be held at the Philharmonic Center for the Arts, Daniels
Pavilion, 5833 Pelican Bay Blvd., Naples, Florida 34108 on Tuesday, February
16, 1999 at 1:30 p.m., local time, for the following purposes more fully
described in the accompanying proxy statement:
1. To elect six directors of the Company.
2. To consider and act upon a proposal to approve and adopt a Certificate
of Amendment to the Fifth Restated Certificate of Incorporation of the
Company to increase the number of authorized shares of Common Stock, par
value $.01 per share, to an aggregate of 750,000,000 shares.
3. To consider and act upon a proposal to approve and ratify the selection
of Ernst & Young LLP as the Company's independent auditors for the
fiscal year ending September 30, 1999.
4. To transact such other business as may properly come before the Meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on December 18, 1998
as the record date for the determination of stockholders entitled to notice of
and to vote at the Meeting and any adjournments thereof.
BY ORDER OF THE BOARD OF DIRECTORS,
Timothy R. Parry,
Corporate Secretary
Dated: December 30, 1998
<PAGE>
HEALTH MANAGEMENT ASSOCIATES, INC.
5811 PELICAN BAY BOULEVARD
NAPLES, FLORIDA 34108-2710
-----------------
PROXY STATEMENT
-----------------
GENERAL
This proxy statement is furnished to stockholders in connection with the
solicitation of proxies by the Board of Directors of Health Management
Associates, Inc. (the "Company") to be used at the Annual Meeting of
Stockholders of the Company, which will be held on Tuesday, February 16, 1999,
and at any adjournments thereof (the "Meeting"). This proxy statement and
accompanying form of proxy are being first mailed to stockholders on or about
December 30, 1998. The proxy, when properly executed and received by the
Corporate Secretary of the Company prior to the Meeting, will be voted as
therein specified unless revoked by filing with the Corporate Secretary prior
to the Meeting a written revocation or a duly executed proxy bearing a later
date. Unless authority to vote for one or more of the director nominees is
specifically withheld according to the instructions, a signed proxy will be
voted FOR the election of the six director nominees named herein and, unless
otherwise indicated, FOR the other two proposals described in this proxy
statement and in the accompanying notice of meeting.
As of December 18, 1998, the record date for the Meeting, there were
251,870,849 shares of the Company's Class A Common Stock, par value $.01 per
share (the "Common Stock"), issued and outstanding. Only holders of Common
Stock of record on the books of the Company at the close of business on
December 18, 1998 are entitled to notice of and to vote at the Meeting and at
any adjournments thereof. Each such stockholder is entitled to one vote for
each share of Common Stock registered in his name. A majority of the
outstanding Common Stock, represented in person or by proxy at the Meeting,
will constitute a quorum for the transaction of all business. Directors will
be elected by a plurality of the votes cast at the Meeting. The affirmative
vote of a majority of the outstanding shares of Common Stock will be required
to approve the proposed Certificate of Amendment increasing the number of
authorized shares, and the affirmative vote of a majority of the shares
represented in person or by proxy at the Meeting will be required to ratify
the appointment of the independent auditors.
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by use of the mails, directors, officers or regular employees of
the Company, without extra compensation, may solicit proxies personally or by
telephone or other telecommunication. In addition, the Company has retained
Corporate Investor Communications, a professional soliciting firm, which may
assist in soliciting proxies for a fee of $5,500 plus reimbursement of out-of-
pocket expenses. The Company has requested persons holding stock for others in
their names or in the names of nominees to forward soliciting material to the
beneficial owners of such shares and will, if requested, reimburse such
persons for their reasonable expenses in so doing.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of December 18, 1998 certain information
concerning shares of Common Stock held by (i) each stockholder known by the
Company to own beneficially more than 5% of the class, (ii) each director of
the Company, (iii) each "Named Executive" (see "EXECUTIVE COMPENSATION"), and
(iv) all directors and executive officers of the Company as a group:
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED
-------------------
NAME AND ADDRESS OF NO. OF PERCENT
BENEFICIAL OWNER (1) SHARES OF CLASS
-------------------- ---------- --------
<S> <C> <C>
William J. Schoen (2) 13,321,674 5.1%
5811 Pelican Bay Blvd.
Naples, FL 34108-2710
Kent P. Dauten 377,775 0.2
520 Lake Cook Road
Suite 650
Deerfield, IL 60015
Robert A. Knox 201,915 0.1
717 Fifth Avenue
New York, NY 10022
Charles R. Lees (3) 97,576 --
2659 Townsgate Road
Suite 226
Westlake Village, CA 91361
Kenneth D. Lewis (4) 58,221 --
NationsBank Corporate Center
100 North Tryon Street
58th Floor
Charlotte, NC 28255
William E. Mayberry, M.D. (5) 19,408 --
826 Rue de Ville
Naples, FL 34108
Earl P. Holland (6) 2,500,021 1.0
5811 Pelican Bay Blvd.
Naples, FL 34108-2710
Joseph V. Vumbacco (7) 842,841 0.3
5811 Pelican Bay Blvd.
Naples, FL 34108-2710
Stephen M. Ray (8) 1,055,767 0.4
5811 Pelican Bay Blvd.
Naples, FL 34108-2710
Timothy R. Parry (9) 47,575 --
5811 Pelican Bay Blvd.
Naples, FL 34108-2710
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED
-------------------
NAME AND ADDRESS OF NO. OF PERCENT
BENEFICIAL OWNER (1) SHARES OF CLASS
-------------------- ---------- --------
<S> <C> <C>
FMR Corp. (10) 31,760,976 12.6
82 Devonshire Street
Boston, MA 02109
Putnam Investments, Inc. (11) 27,122,965 10.8
One Post Office Square
Boston, MA 02109
All Directors and Executive Officers 18,522,773 7.1
as a Group (10 persons) (12)
</TABLE>
- --------
(1) Unless otherwise indicated, each stockholder shown on the table has sole
voting and investment power with respect to the shares beneficially owned
by him or it. Negligible percentages have been omitted from the table.
(2) The amount shown includes: (a) 8,238,645 shares issuable upon exercise of
currently exercisable options; (b) 395,528 shares held by Mr. Schoen
individually; (c) 11,389 shares held by Mr. Schoen, and 4,500 shares held
by his wife, each as custodian for their son (as to which shares Mr.
Schoen disclaims beneficial ownership); and (d) an aggregate of 4,671,612
shares held by various trusts of which Mr. Schoen is settlor, trustee
and/or beneficiary.
(3) The amount shown includes 86,326 shares issuable upon exercise of
currently exercisable options.
(4) The amount shown includes 29,534 shares issuable upon exercise of
currently exercisable options.
(5) The amount shown includes: (a) 14,346 shares issuable upon exercise of
currently exercisable options; and (b) 5,062 shares held by Dr. Mayberry
as Trustee of the W.E. Mayberry Trust.
(6) The amount shown includes: (a) 697,500 shares issuable upon exercise of
currently exercisable options; (b) 1,390,489 shares held by Mr. Holland
individually; (c) an aggregate of 225,000 shares held by Mr. Holland in
joint tenancy with members of his family; (d) 73,125 shares held by Mr.
Holland's wife as custodian for their daughter (as to which shares Mr.
Holland disclaims beneficial ownership); and (e) 113,907 shares held by
Mr. Holland as sole Trustee of the Declaration of Trust Established for
the Benefit of Earl P. Holland.
(7) The amount shown includes: (a) 725,000 shares issuable upon exercise of
currently exercisable options; (b) 15,606 shares held in Mr. Vumbacco's
account under the Company's Retirement Savings Plan, as to which shares
he has investment power only; and (c) 102,235 shares held by Mr. Vumbacco
individually, certain of which shares are held in a self-directed IRA in
which Mr. Vumbacco has the sole power of disposition.
(8) The amount shown includes: (a) 381,000 shares issuable upon exercise of
currently exercisable options; (b) 45,442 shares held by Mr. Ray
individually; and (c) 629,325 shares held by Mr. Ray as sole Trustee of
the Stephen M. Ray Living Trust.
(9) The amount shown includes: (a) 34,825 shares issuable upon exercise of
currently exercisable options; (b) 7,250 shares held by Mr. Parry
individually; and (c) 5,500 shares held by his wife in a self-directed
IRA.
(10) The following information is derived from the Schedule 13G (Amendment No.
2) of FMR Corp. dated February 14, 1998, and has been adjusted to give
effect to a 3-for-2 stock split in the form of a stock dividend paid by
the Company on July 17, 1998. The amount shown includes: (a) 27,959,517
shares beneficially owned by Fidelity Management & Research Company, a
wholly-owned subsidiary of FMR Corp., as a result of its acting as
investment advisor to various investment companies registered under
Section 8 of the Investment Company Act of 1940; and (b) 3,642,534 shares
beneficially owned by Fidelity Management Trust Company, a wholly-owned
subsidiary of FMR Corp., as a result of its acting
3
<PAGE>
as investment manager of certain institutional accounts. FMR Corp. has
sole voting power with respect to 2,556,981 of such shares and sole
dispositive power with respect to all of such shares. The amount shown
also includes 158,925 shares beneficially owned by Fidelity International
Limited ("FIL"), which provides investment advisory and management
services to a number of non-U.S. investment companies and certain
institutional investors. FMR Corp. and FIL are of the view that they are
not acting as a group for purposes of Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and that they are
not otherwise required to attribute their beneficial ownership of
securities to each other.
(11) The following information is derived from the Schedule 13G (Amendment) of
Putnam Investments, Inc. dated September 17, 1998. The amount shown
includes: (a) 24,792,169 shares over which Putnam Investment Management,
Inc. has shared dispositive power as investment advisor to the Putnam
family of mutual funds; and (b) 2,330,796 shares over which The Putnam
Advisory Company, Inc. has shared dispositive power (including 948,429
shares over which it also has shared voting power) as investment advisor
to Putnam's institutional clients. Putnam Investments, Inc., which is a
wholly-owned subsidiary of Marsh & McLennan Companies, wholly owns Putnam
Investment Management, Inc. and The Putnam Advisory Company, Inc.
(12) See footnotes (2) through (9) to this table.
4
<PAGE>
ELECTION OF DIRECTORS
A Board of Directors consisting of six directors is to be elected by the
stockholders at the Meeting, each to hold office until the next Annual Meeting
of Stockholders or until his successor is duly elected and qualified.
The Board of Directors recommends the election of the six nominees named
below, all of whom are currently directors of the Company. Unless authority to
vote for one or more of the nominees is specifically withheld according to the
instructions, proxies in the enclosed form will be voted FOR the election of
each of the six nominees named below. The Board of Directors does not
contemplate that any of the nominees will not be able to serve as a director,
but if that contingency should occur prior to the voting of the proxies, the
persons named in the enclosed proxy reserve the right to vote for such
substitute nominee or nominees as they, in their discretion, shall determine.
<TABLE>
<CAPTION>
YEAR
FIRST
ELECTED
NAME AND BACKGROUND DIRECTOR
------------------- --------
<S> <C>
WILLIAM J. SCHOEN, age 63, has served as Chairman of the Board and 1983
Chief Executive Officer of the Company since April 1986. He was first
elected a director in February 1983, became President and Chief
Operating Officer in December 1983, and Co-Chief Executive Officer in
December 1985. He relinquished the position of President in April
1997. From 1982 to 1987 Mr. Schoen was Chairman of Commerce National
Bank, Naples, Florida, and from 1973 to 1981 he was President, Chief
Operating Officer and Chief Executive Officer of The F&M Schafer
Corporation, a consumer products company. From 1971 to 1973, Mr.
Schoen was President of the Pierce Glass subsidiary of Indian Head,
Inc., a diversified company. Mr. Schoen also serves on the Board of
Directors of Horace Mann Insurance Companies.
KENT P. DAUTEN, age 43, served as a director of the Company from 1981
March 1981 through May 1983, and from June 1985 through September
1988. He was again elected a director in November 1988. Since
February 1994 Mr. Dauten has been President of Keystone Capital,
Inc., a private investment firm founded by him. From January 1993
until February 1994, Mr. Dauten was a Senior Vice President of
Madison Dearborn Partners, Inc., an investment management company.
Mr. Dauten was formerly a Senior Vice President of First Chicago
Investment Corporation and First Capital Corporation of Chicago, the
venture capital subsidiaries of First Chicago Corporation, where he
had been employed in various investment management positions since
1979. Mr. Dauten also serves on the Board of Directors of Iron
Mountain, Inc.
ROBERT A. KNOX, age 46, became Senior Managing Director of 1985
Cornerstone Equity Investors, LLC, an investment advisory firm, in
December 1996. From 1994 until December 1996, he was Chairman and
Chief Executive Officer, and from 1984 to 1994 he was President, of
Prudential Equity Investors, Inc., an investment capital firm. Prior
to that and since 1975, Mr. Knox was employed by The Prudential
Insurance Company of America. He also serves on the Board of
Directors of Lechters, Inc. and various private companies, and is a
Trustee of Boston University.
CHARLES R. LEES, age 79, served as a director of the Company from 1988
April 1988 through September 1988, and was again elected a director
in February 1989. Mr. Lees has been in the private practice of law,
concentrating in tax matters, since May 1985. For more than 25 years
prior to his retirement in 1979, Mr. Lees was a Partner of the
accounting firm of KPMG Peat Marwick LLP, specializing in tax
matters.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
YEAR
FIRST
ELECTED
NAME AND BACKGROUND DIRECTOR
------------------- --------
<S> <C>
KENNETH D. LEWIS, age 51, has served as President, Consumer and 1991
Commercial Banking, of Bank of America since September 30, 1998.
Prior to that, he was President of NationsBank Corporation, a
position that he had held since November 1993. From December 1991 to
November 1993 he served as President of General Banking for
NationsBank. Prior to that, Mr. Lewis had been employed by NCNB
Corporation in various capacities since 1969, including President of
NCNB Texas from 1988 to 1990 and President of NCNB National Bank of
Florida from 1986 to 1988.
WILLIAM E. MAYBERRY, M.D., age 69, is the retired President and Chief 1994
Executive Officer of the Mayo Foundation and the retired Chairman of
the Board of Governors of the Mayo Clinic, Rochester, Minnesota,
where he had been employed in various capacities from 1960 until his
retirement in 1992.
</TABLE>
Board Meetings and Committees of the Board
During the fiscal year ended September 30, 1998 ("Fiscal 1998"), the Board
of Directors held five meetings. Each director attended all of the Board
meetings and meetings of the Board Committees on which he served.
The Company has standing Audit and Compensation Committees of the Board of
Directors. Although the Company has no standing Nominating Committee, the
Board of Directors will consider director nominees recommended by
stockholders. Such recommendations should be sent to the Company, to the
attention of the Corporate Secretary.
The members of the Audit Committee are Messrs. Dauten (Chairman), Lees and
Dr. Mayberry. The Committee reviews with Ernst & Young LLP, the Company's
independent auditors, the Company's financial statements and internal
accounting procedures, Ernst & Young LLP's auditing procedures and fees, and
the possible effects of professional services upon the independence of Ernst &
Young LLP. In addition, the Audit Committee provides oversight review of the
Company's Corporate Compliance Program. The Audit Committee held four meetings
during Fiscal 1998.
The members of the Compensation Committee are Messrs. Knox (Chairman),
Dauten and Lewis. The Committee makes recommendations to the Board with
respect to compensation and benefits paid to the Company's senior management.
The Compensation Committee also makes determinations under the Company's
various plans providing incentive compensation for management. See "EXECUTIVE
COMPENSATION." The Compensation Committee held four meetings during Fiscal
1998.
Compensation of Directors
The Company pays its non-employee directors $2,000 per quarter for their
services as directors and $2,000 for each Board meeting attended. All of the
Company's directors other than Mr. Schoen qualify for such payments, and
during Fiscal 1998 such fees paid aggregated $90,000. The Company also
reimburses all of its directors for reasonable expenses incurred in connection
with attending Board and Board committee meetings. Except as described under
"Directors' Stock Options" below, the Company had no other compensation
arrangements with directors during Fiscal 1998.
6
<PAGE>
Directors' Stock Options
Pursuant to the Company's Stock Option Plan for Outside Directors, during
Fiscal 1998 the Company granted to each of Messrs. Dauten, Knox, Lees, Lewis
and Dr. Mayberry (the "Optionees"), each a non-employee director of the
Company, an option, expiring on May 19, 2008, to purchase 2,250 shares of
Common Stock (as adjusted to give effect to a 3-for-2 stock split in the form
of a stock dividend paid on July 17, 1998) at an exercise price of $21.625 per
share (as so adjusted). Each option is exercisable in 562-share or 563-share
annual increments commencing one year from the date of the grant. None of such
options is transferable except by will or intestacy, and during the Optionee's
lifetime they are exercisable only by him. Unexercised options lapse 90 days
after the Optionee ceases to be a director of the Company, except that if the
Optionee ceases to be a director by reason of his death, his option lapses six
months after the date of his death.
During Fiscal 1998, the following directors exercised options previously
granted to them and purchased shares of Common Stock as follows: Mr. Dauten--
5,063 shares at $4.49 per share, 5,063 shares at $5.51 per share, 5,063 shares
at $9.59 per share, and 1,688 shares at $12.33 per share; Mr. Lees--25,946
shares at $1.25 per share and 11,555 shares at $2.22 per share; and Dr.
Mayberry--10,125 shares at $4.49 per share.
Section 16(a) Beneficial Ownership Reporting Compliance
During Fiscal 1998, three executive officers of the Company, Messrs. Schoen,
Holland and Ray, each inadvertently filed late with the Securities and
Exchange Commission (the "SEC") one report disclosing one automatic issuance
of Common Stock to him pursuant to a previously reported stock award. All of
the Company's directors and executive officers are now current in such
filings. In making the foregoing statements, the Company has relied on the
written representations of its directors and officers and copies of the
reports they have filed with the SEC.
7
<PAGE>
EXECUTIVE COMPENSATION
Shown on the table below is information on the annual and long-term
compensation for services rendered to the Company in all capacities, for the
fiscal years ended September 30, 1998, 1997 and 1996, paid by the Company to
those persons who were, at the end of Fiscal 1998, the Chief Executive Officer
of the Company and the four other executive officers of the Company
(collectively, the "Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------- -----------------------------
AWARDS PAYOUTS
OTHER -------------------- --------
ANNUAL RESTRICTED ALL OTHER
COMPEN- STOCK LTIP COMPEN-
SALARY BONUS SATION AWARDS OPTIONS PAYOUTS SATION
NAME AND PRINCIPAL POSITION YEAR ($) (1) ($) (2) ($) (3) ($) (4) (#) (5) ($) (6) ($)
- --------------------------- ---- -------- -------- ------- ---------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WILLIAM J. SCHOEN 1998 $525,000 $525,000 $3,333 $525,000 0 $300,000 0
Chairman and Chief 1997 518,750 518,750 3,167 518,750 4,500,000 49,194 0
Executive Officer 1996 493,750 493,750 3,166 493,750 675,000 0 0
EARL P. HOLLAND 1998 $300,000 $300,000 $3,333 $300,000 0 0 0
Vice Chairman 1997 271,392 236,831 3,167 236,831 675,000 0 0
1996 239,500 179,625 3,166 179,625 337,500 0 0
JOSEPH V. VUMBACCO (7) 1998 $350,000 $350,000 $2,333 $350,000 0 0 0
President and Chief 1997 295,685 260,599 583 260,599 900,000 0 0
Operating Officer 1996 159,375 119,531 0 119,531 675,000 0 0
STEPHEN M. RAY 1998 $164,000 $ 98,400 $3,166 $ 98,400 0 0 0
Senior Vice President and 1997 162,375 97,425 3,248 97,425 281,250 0 0
Chief Financial Officer 1996 155,625 93,375 3,112 93,375 168,750 0 0
TIMOTHY R. PARRY (8) 1998 $146,000 $ 73,000 $2,920 $ 73,000 37,500 0 0
Vice President and 1997 130,625 65,313 1,325 65,313 16,875 0 0
General Counsel
</TABLE>
- --------
(1) The amounts shown include cash compensation earned and paid during the
fiscal year indicated as well as cash compensation deferred at the
election of the Named Executive.
(2) The bonuses shown were awarded and paid in the succeeding fiscal year for
services rendered during the fiscal year indicated.
(3) The amounts shown include employer contributions to the Company's
Retirement Savings Plan, a 401(k) plan. The amounts shown do not include
the value of perquisites and other personal benefits because the aggregate
amount of such compensation for each fiscal year shown did not exceed the
lesser of $50,000 or 10% of the total amount of annual salary and bonus
shown for the Named Executive.
(4) The amounts shown reflect contingent awards of Common Stock pursuant to
the Company's 1996 Executive Incentive Compensation Plan (the "EICP"). See
"EXECUTIVE COMPENSATION--Report of Compensation Committee With Respect to
Executive Compensation." The awards shown were made in the succeeding
fiscal year for services rendered during the fiscal year indicated, and
the dollar values shown represent the aggregate market value of the shares
awarded on the respective dates of the awards. Without giving effect to
awards made after the close of Fiscal 1998, the aggregate numbers and
dollar values of such shares credited to the respective individuals'
contingent award accounts at Fiscal 1998 year-end, based on the market
value of the Common Stock at Fiscal 1998 year-end ($17.875 per share),
were: Mr. Schoen--241,661 shares ($4,319,690); Mr. Holland--91,352 shares
($1,632,917); Mr. Vumbacco--26,579 shares ($475,100); Mr. Ray--37,846
shares ($676,497); and Mr. Parry--6,045
8
<PAGE>
shares ($108,054). Dividends are not payable on such shares, but customary
anti-dilution adjustments apply in the event of stock splits and stock
dividends.
(5) The amounts shown have been adjusted to give effect, as applicable, to
three 3-for-2 stock splits in the form of stock dividends paid on June 14,
1996, October 23, 1997 and July 17, 1998.
(6) The amounts shown reflect the payment of benefits under the Company's
Supplemental Executive Retirement Plan. See "EXECUTIVE COMPENSATION--
Supplemental Executive Retirement Plan."
(7) Mr. Vumbacco was first employed by the Company in January 1996.
Accordingly, the amounts shown for Fiscal 1996 reflect less than a full
year's service.
(8) Mr. Parry first became an executive officer at the close of Fiscal 1997,
but the amounts shown for Fiscal 1997 reflect his compensation for the
full fiscal year.
STOCK OPTIONS
Shown below is further information on grants of stock options during Fiscal
1998 to the Named Executives under the EICP. No stock appreciation rights
("SARs") were granted in Fiscal 1998 and there are no SARs outstanding.
OPTION GRANTS IN FISCAL 1998*
<TABLE>
<CAPTION>
GRANT DATE
INDIVIDUAL GRANTS VALUE
- ------------------------------------------------------------------ -------------
PERCENT OF
TOTAL
OPTIONS
GRANTED TO
OPTIONS EMPLOYEES EXERCISE GRANT DATE
GRANTED IN FISCAL PRICE EXPIRATION PRESENT
NAME (#) YEAR ($/SH) DATE VALUE ($) (1)
---- ------- ---------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C>
William J. Schoen.......... 0 -- -- -- --
Earl P. Holland............ 0 -- -- -- --
Joseph V. Vumbacco......... 0 -- -- -- --
Stephen M. Ray............. 0 -- -- -- --
Timothy R. Parry........... 37,500 2.2% $21.625 5/18/08 $327,375
</TABLE>
- --------
* Pursuant to anti-dilution provisions of the EICP, the number of shares and
per share price have been adjusted to give effect to a 3-for-2 stock split
in the form of a stock dividend paid on July 17, 1998.
(1) The hypothetical grant date present value for the option granted during
Fiscal 1998 is presented pursuant to the rules of the SEC and is
calculated under the modified Black-Scholes Model for pricing options, a
mathematical formula used to value options traded on stock exchanges. This
formula considers a number of factors in forecasting an option's present
value. Factors used to value the option shown on the table include the
expected volatility rate of the shares underlying the option (35.0%), risk
free rate of return (5.68%), dividend yield (0%), projected time of
exercise (5 years) and projected risk of forfeiture rate for vesting
period (0% per annum). The actual before-tax amount, if any, realized upon
the exercise of stock options will depend upon the excess, if any, of the
market price of the Common Stock over the exercise price per share of the
Common Stock at the time the option is exercised. There is no assurance
that the hypothetical grant date present value of the option reflected on
this table will be realized.
9
<PAGE>
Shown below is information with respect to option exercises by the Named
Executives during Fiscal 1998 and unexercised options to purchase Common
Stock, granted to the Named Executives during and prior to Fiscal 1998 under
the EICP and the Company's prior stock option plans and held by them at the
end of Fiscal 1998.
AGGREGATED OPTION EXERCISES IN FISCAL 1998 AND
FISCAL YEAR-END OPTION VALUES*
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS HELD AT IN-THE-MONEY OPTIONS AT
SHARES FISCAL YEAR-END (#) FISCAL YEAR-END ($) (1)
ACQUIRED ON VALUE ------------------------- --------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ------------ ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
William J. Schoen....... 750,000 $10,052,035 8,238,645 3,225,000 $101,248,525 $17,162,625
Earl P. Holland......... 315,000 $ 2,768,252 697,500 562,500 $ 6,469,763 $ 3,168,563
Joseph V. Vumbacco...... 250,000 $ 3,851,226 725,000 600,000 $ 5,603,125 $ 3,093,000
Stephen M. Ray.......... 162,750 $ 1,867,916 381,000 243,750 $ 3,554,040 $ 1,390,969
Timothy R. Parry........ 4,550 $ 40,563 34,825 48,750 $ 289,315 $ 57,994
</TABLE>
- --------
* Pursuant to anti-dilution provisions of the respective plans, all numbers
of shares and per share prices have been adjusted to give effect, as
applicable, to seven 3-for-2 stock splits in the form of stock dividends
paid on April 9, 1992, November 3, 1993, June 17, 1994, October 20, 1995,
June 14, 1996, October 23, 1997 and July 17, 1998.
(1) Expressed as the excess of the market value of the Common Stock at Fiscal
1998 year-end ($17.875 per share), over the exercise price of each option.
EMPLOYMENT AGREEMENTS
The Company has an Amended and Restated Employment Agreement with William J.
Schoen, dated December 15, 1992, providing for him to serve as the Company's
Chairman of the Board, President and Chief Executive Officer at an annual base
salary of $400,000, subject to cost of living increases by the Board of
Directors. Mr. Schoen is also guaranteed participation in the Company's
Incentive Compensation Plan for Corporate Officers and Management Staff (the
"Incentive Compensation Plan") (see "EXECUTIVE COMPENSATION--Report of
Compensation Committee With Respect to Executive Compensation") at the 100%
category, and certain fringe benefits. Mr. Schoen's employment is terminable
upon his death, disability, voluntary termination or for defined cause. Should
the Company otherwise terminate Mr. Schoen's employment or reduce his
responsibilities or authority, or should there be a defined change in control
of the Company, then Mr. Schoen will be entitled to a lump sum payment equal
to the gross income paid him by the Company for the preceding three years. Mr.
Schoen has agreed not to compete with the Company or its affiliates during the
term of this agreement.
The Company does not have employment agreements with any of its other
executive officers.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Company's Supplemental Executive Retirement Plan (the "Supplemental
Plan") is a deferred compensation plan for key executive employees that is not
intended to be tax-qualified. It commenced on May 1, 1990 for the Company's
executive officers. Each participant in the Supplemental Plan is entitled to
receive a fixed monthly benefit, commencing on his normal retirement date, for
the longer of 120 months or his life. The monthly benefit, which is determined
by the Board of Directors, may vary for each participant and may be increased
periodically by the Board. During Fiscal 1998, the Company recorded $240,000
of deferred compensation expense in respect of the Supplemental Plan. To
qualify for benefits, a participant must
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continue as an employee until age 62 and must be an employee for at least five
years after commencing participation. No benefit is paid if employment is
terminated earlier, regardless of the reason, except if a participant's
employment is terminated by the Company for reasons other than "cause," or by
the participant for a "stated good reason," within two years after a "change
of ownership" of the Company (as those terms are defined in the Supplemental
Plan). In that case, the actuarial equivalent of a participant's retirement
benefit is paid in a single sum as soon as practicable after termination of
employment. If such a change of ownership occurs after a participant has
already begun to receive benefit payments, the actuarial equivalent of the
remaining benefits payable will be paid in a single sum. In the event a
participant dies after qualifying for retirement benefits but before all
retirement benefits are paid, the remaining benefits payable will be paid to
the participant's designated beneficiary or legal representative. Life
insurance contracts may be purchased by the Company to provide some or all of
the benefits under the Supplemental Plan.
REPORT OF COMPENSATION COMMITTEE WITH RESPECT TO EXECUTIVE COMPENSATION
The following report of the Compensation Committee required by the rules of
the SEC to be included in this Proxy Statement shall not be deemed
incorporated by reference by any statement incorporating this Proxy Statement
by reference into any filing under the Securities Act of 1933, as amended (the
"Securities Act"), or the Exchange Act, except to the extent that the Company
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under either such Act.
Executive Compensation Philosophy:
The fundamental compensation philosophy of the Board of Directors is that
there should be a substantial and meaningful connection between executive
compensation and stockholder value. Under the supervision of the Compensation
Committee of the Board of Directors (the "Committee"), which is comprised of
outside directors and which also ad- ministers the EICP, the Company's prior
Stock Incentive Plan for Corporate Officers and Management Staff (the "Stock
Incentive Plan") and the Company's prior stock option plans, the Company has
developed and implemented compensation policies, plans and programs designed
to enhance the quality of health care services as well as increase stockholder
value by aligning closely the financial interests of the Company's executive
officers with those of its stockholders. In furtherance of these goals, annual
base salaries are intended to serve as only a portion of an executive's total
achievable compensation. The Board of Directors believes that attracting and
retaining executives of high quality is essential to the Company's growth and
success. The Board of Directors further believes that the long term success of
the Company is enhanced by a comprehensive compensation program that includes
different types of incentives for motivating executives and rewarding
outstanding service, including awards that link compensation to applicable
measures of Company performance. The Company relies to a large degree on
annual and long-term incentive compensation to attract and retain executives
of outstanding ability and to motivate them to perform to the full extent of
their abilities. Both the annual and long-term components of the incentive
compensation policy are closely tied to quality of health care services,
profitability and stockholder value. In years of outstanding achievement,
executive officers will be substantially rewarded for their respective
contributions to the Company's success through a combination of cash and
stock-based incentive awards.
The EICP:
The EICP, which was approved by the stockholders in 1996, is a comprehensive
executive compensation plan which provides for grants of performance or annual
incentive awards that may be settled in cash, stock or other property, as well
as stock options, SARs, restricted stock, deferred stock and other stock-
related awards (collectively, "Awards"). The EICP supersedes the Incentive
Compensation Plan, the Stock Incentive Plan and the Company's prior stock
option plans (collectively, the "Prior Plans"), although previously granted
awards under the Prior Plans remain outstanding in accordance with their
respective terms and the
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<PAGE>
terms of the Prior Plans. Although the types of Awards authorized under the
EICP are generally similar to those under the Prior Plans, the Board
determined to recommend to the stockholders adoption of the entirely new EICP
in order to respond to a number of changes and proposed changes under the
Exchange Act and Internal Revenue Code, to broaden the types of performance
goals that may be set by the Committee and otherwise to add flexibility to
annual incentive awards and other performance-based awards intended to qualify
for certain corporate tax deductions, to increase the number of shares of
Common Stock that may be subject to awards, and otherwise to adopt provisions
intended to enable the Committee better to promote the goals and policies of
the Company's annual and stock-based long-term incentive programs.
Under the EICP, a total of approximately 16,200,000 shares of Common Stock
are reserved and available for delivery to participants in connection with
Awards, plus any shares of Common Stock remaining available under the Prior
Plans and other shares of Common Stock that may later become available under
the Prior Plans, plus 7% of the number of shares of Common Stock issued by the
Company during the term of the EICP (other than issuances under any
compensation or benefit plan of the Company).
The determination of the types of Awards to be granted at any time, the
criteria for such grants, the recipients of Awards and the various conditions
thereof, are all in the discretion of the Committee.
Executive Officer Compensation:
The Company's current total compensation program for executive officers
consists of both cash and stock-based compensation. The annual cash
compensation consists of a base salary determined at the beginning of each
calendar year and the awarding of incentive bonuses pursuant to the EICP, as
described below. The base salaries are fixed at levels that the Committee
believes to be generally below amounts paid to highly qualified senior
executives at other large companies engaged in similar businesses as the
Company. Salaries are reviewed on an annual basis and may be increased at that
time based on (i) the Committee's consensus that the individual's contribution
to the Company has increased and (ii) increases in competitive pay levels.
In general, annual cash compensation incentives for executives are intended
to reflect the Company's belief that management's contribution to improving
the quality of health care services and stockholder return are related to
earnings growth. Under the current incentive compensation program under the
EICP (which parallels the prior Incentive Compensation Plan), a bonus
(calculated as a percentage of base salary) is paid to participants for each
year in which the Company achieves, in audited fiscal year-end results, at
least 75% of its profit plan. Each participant in this incentive compensation
program is in one of seven bonus categories (ranging from 20% to 100% of base
salary), and his proportionate share of the annual bonus depends upon the
profit percentage achieved by the Company. Participants in this incentive
compensation program are selected and assigned to bonus categories by the
Committee, and all of the Company's executive officers are participants.
Long-term incentives are currently intended to be provided through the grant
of stock options and contingent stock awards. Under the EICP, the Committee
has the authority to determine the individuals to whom stock options are
granted, the terms on which option grants are made, and the term of and the
number of shares subject to each option. Through the grant of stock options,
the objective of aligning executive officers' long-range interests with
improving health care services and stockholder return are met by providing the
executive officers with the opportunity to build a meaningful stake in the
Company. In granting stock options to the Company's senior management, the
Committee reviews and considers the individual awards, taking into account the
respective scope of accountability, strategic and operational goals, and
anticipated performance requirements and contributions of each option grantee.
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<PAGE>
Under the current stock incentive program under the EICP (which parallels
the prior Stock Incentive Plan), the Committee has the authority to award
shares of Common Stock to all executive officers and senior managers of the
Company. In making such awards, the Committee considers all of the factors
discussed, and follows the procedure described, in the previous paragraph.
Stock awards under the prior Stock Incentive Plan and the stock incentive
program under the EICP are generally contingent upon completion of four
additional years of employment with the Company. The market value as of the
award grant date of the shares credited to an executive's contingent award
account for any fiscal year may not exceed 100% of the executive's bonus for
the same year under the incentive compensation program discussed above. No
shares are issued or reserved for the executive's account at the time of an
award, but are instead issued after the fourth anniversary of the award grant
date, provided the executive is still an employee of the Company. During
Fiscal 1998, the Company recorded $1,200,000 of deferred compensation expense
in respect of such stock awards.
Executive officers may also participate in the Company's Retirement Savings
Plan, a 401(k) plan, which includes both employer and employee contributions.
In addition, the Company has a deferred compensation program that provides
payments to key executive employees selected by the Board of Directors who
reach normal retirement age. The amount of the benefit provided each executive
is at the discretion of the Board. See "EXECUTIVE COMPENSATION--Supplemental
Executive Retirement Plan."
Chief Executive Officer Compensation:
The key performance measure used to determine Mr. Schoen's Fiscal 1998
compensation package was the Committee's assessment of his ability and
dedication to provide the leadership and vision necessary to enhance the long-
term value of the Company.
Pursuant to the terms of his employment agreement with the Company (see
"EXECUTIVE COMPENSATION--Employment Agreements"), which was approved by the
Board of Directors in 1992, Mr. Schoen's annual salary is $400,000, subject to
cost of living increases by the Board of Directors. For Fiscal 1998, his
salary amounted to $525,000. The Committee believes that Mr. Schoen's salary
is fixed at a level which is below the amounts paid to other chief executive
officers with comparable qualifications, experience, responsibilities and
proven results at other large companies engaged in similar businesses.
Consistent with the Company's executive compensation philosophy, Mr.
Schoen's total compensation package depends largely on annual and long-term
incentive compensation. The annual incentive component is currently made up of
a cash bonus under the incentive compensation program under the EICP, paid
after the end of the fiscal year and based on the quality of health care
services delivered by the Company's hospitals and the profitability of the
Company. The long-term incentive component currently takes the form of stock
options and contingent stock awards under the EICP. Mr. Schoen will also be
eligible to receive other Awards under the EICP. Both the annual and long-term
components of Mr. Schoen's incentive compensation are variable and closely
tied to corporate performance in a manner which encourages dedication to
improving health care services and building stockholder value.
In evaluating the performance and setting the incentive compensation of Mr.
Schoen as the Company's Chief Executive Officer, the Committee has taken
particular note of outstanding QSM patient satisfaction survey results during
Fiscal 1998. QSM is a quality management program that questions patients on
various topics relating to health care services and compares the results
against specific patient-care objectives set by management and staff
physicians. In addition, the Committee considered Mr. Schoen's leadership in
the Company's acquisition of six hospitals during Fiscal 1998, increasing the
Company's licensed beds by 22%, as well as the substantial increase in the
Company's stockholder value over a number of years in general and specifically
from Fiscal 1997 to Fiscal 1998.
13
<PAGE>
In Fiscal 1998 the Company substantially out-performed both the Standard &
Poor's 500 Stock Index and the S&P Health Care Sector Index in stockholder
value growth (see "EXECUTIVE COMPENSATION--Stock Price Performance Graph").
Among the key indicators of the Company's performance in Fiscal 1998, net
patient service revenue increased 27% from $895,482,000 in Fiscal 1997 to
$1,138,802,000 in Fiscal 1998, and net income increased 26% from $108,322,000
in Fiscal 1997 to $136,844,000 in Fiscal 1998. Diluted earnings per share
increased 26% from $.43 in Fiscal 1997 to $.54 in Fiscal 1998. During Fiscal
1998 the Company's stock price increased 27%. In addition, the Company has
paid seven 3-for-2 stock splits in the form of stock dividends since April
1992, including the stock dividend paid on July 17, 1998.
In addition to leading the Company to outstanding financial achievements,
Mr. Schoen has established a strong record in the areas of quality of health
care services provided, innovation and management efficiency, and has built a
strong management team and aggressively pursued new areas for growth. He has
been the architect of the Company's industry niche and its successful
acquisition strategy.
Mr. Schoen's short-term and long-term incentive compensation package for
Fiscal 1998 includes a cash bonus in an amount equal to 100% of his annual
salary and a contingent stock award in an amount equal to his cash bonus. Mr.
Schoen's compensation package has successfully focused on the importance of
improving health care services as well as increasing stockholder value by
providing him with significant short-term and long-term incentive compensation
during periods when performance objectives have been met or exceeded.
COMPENSATION COMMITTEE:
Robert A. Knox, Chairman
Kent P. Dauten
Kenneth D. Lewis
14
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The following graph sets forth a comparison of the cumulative total
stockholder return on the Common Stock during the five-year period ended
September 30, 1998, based on the market price thereof and taking into account
all stock splits in the form of stock dividends paid through Fiscal 1998 year-
end, with the cumulative total return of companies on the Standard & Poor's
500 Stock Index and companies on the S&P Health Care Sector Index.
COMPARISON OF CUMULATIVE TOTAL RETURN
[GRAPH APPEARS HERE]
9/30/93 9/30/94 9/30/95 9/30/96 9/30/97 9/30/98
------- ------- ------- ------- ------- -------
Health Management $ 100 $139.81 $182.41 $319.37 $404.02 $524.58
S&P Health Care Sector 100 120.85 173.28 226.96 310.72 429.58
S&P 500 100 103.69 134.53 161.88 227.36 247.92
ASSUMES $100 INVESTED ON SEPTEMBER 30, 1993 IN THE COMPANY'S COMMON STOCK,
THE COMPANIES COMPRISING THE STANDARD & POOR'S 500 STOCK INDEX AND THE
COMPANIES CURRENTLY COMPRISING THE S&P HEALTH CARE SECTOR INDEX. TOTAL
RETURN ASSUMES REINVESTMENT OF DIVIDENDS.
There can be no assurance that the Company's stock performance will continue
into the future with the same or similar trends depicted in the graph above.
The Company will neither make nor endorse any predictions as to future stock
performance.
The Stock Price Performance Graph above shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act or the Exchange Act, except
to the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under either such Act.
15
<PAGE>
CERTAIN TRANSACTIONS
Pursuant to a Registration Agreement dated as of September 2, 1988, certain
of the Company's executive officers (William J. Schoen, Earl P. Holland and
Stephen M. Ray), and Robert A. Knox, a director of the Company, have certain
demand registration rights and "piggyback" registration rights, at the
Company's expense, with respect to registration under the Securities Act of
all of their shares of Common Stock.
AMENDMENT OF CERTIFICATE OF INCORPORATION
TO INCREASE AUTHORIZED COMMON STOCK
The Company's Fifth Restated Certificate of Incorporation currently
authorizes the issuance of an aggregate of 300,000,000 shares of Common Stock,
par value $.01 per share, and 5,000,000 shares of Preferred Stock, par value
$.01 per share. On December 15, 1998 the Board of Directors approved and
adopted, subject to approval and adoption by the stockholders, a Certificate
of Amendment to the Fifth Restated Certificate of Incorporation (the
"Amendment"), which increases the number of authorized shares of Common Stock
to an aggregate of 750,000,000 shares. The authorized Preferred Stock would
not be changed by the Amendment, nor would any other change to the Fifth
Restated Certificate of Incorporation result from the Amendment.
If approved and adopted by the stockholders at the Meeting, the Amendment
will become effective upon the filing thereof by the Delaware Department of
State. A filing is anticipated to occur within 30 days following the Meeting.
The Board of Directors has considered in the past and will continue to
consider various means of broadening the ownership of the Common Stock and
enhancing its marketability, including the payment of stock dividends and
stock splits. The Company has paid seven 3-for-2 stock splits in the form of
stock dividends since April 1992, including the stock dividend paid on July
17, 1998. The Board has also considered and will continue to consider the
possibility of acquiring hospital facilities through the issuance of Common
Stock, and the advisability of increasing stock ownership and meeting part of
the Company's future capital requirements through additional public offerings
of Common Stock. Any such future action is, of course, subject to the
Company's earnings and financial condition as well as market conditions and
other factors that the Board deems relevant. Finally, the Board believes that
stock-based executive compensation provides incentives to management that are
in the best interests of the stockholders, and the Board desires to continue
such compensation, through the EICP or otherwise.
The Company currently has outstanding approximately 251,673,000 shares of
Common Stock and no shares of Preferred Stock. In addition, approximately
19,100,000 shares of Common Stock are currently reserved for issuance as stock
incentives under the EICP and under outstanding options and stock awards under
the Prior Plans. Accordingly, no more than approximately 29,227,000 shares of
Common Stock are currently available for issuance for other purposes. By way
of example, if the Board of Directors were to determine at any time in the
future that the payment of another 3-for-2 stock split in the form of a stock
dividend were in the best interests of the Company's stockholders, the Company
would not have sufficient authorized but unissued shares with which to pay
such a dividend.
Aside from the Board's ongoing consideration of a stock dividend or stock
split, management's ongoing evaluation of acquisition possibilities and the
Board's belief in the efficacy of stock-based executive compensation, the
Board has no present plans, agreements or understandings, pending or under
discussion, for the issuance of any shares of Common Stock except for the
shares reserved for issuance as stock incentives described above. However, the
Board of Directors considers that in the prudent operation of the Company, it
16
<PAGE>
is desirable to have sufficient authorized but unissued shares of Common Stock
available to allow the Company to take prompt advantage of market or other
conditions in connection with possible financings or acquisitions, for stock
dividends or distributions, for grants of options and other stock rights, and
for other proper corporate purposes deemed necessary or advisable by the Board
of Directors. The Board of Directors also believes that the availability of
additional shares of Common Stock for such purposes without delay or the
necessity for a special meeting of stockholders (except as may be required by
applicable law or regulatory authorities or by the rules of any stock exchange
on which the Company's stock is listed) will be beneficial to the Company by
providing it with the flexibility required to consider and respond to future
business opportunities and needs as they arise.
The Amendment, if approved and adopted by the stockholders, would result in
approximately 480,000,000 shares of Common Stock authorized but uncommitted
and available for future use by action of the Board of Directors. None of
these shares would be subject to any preemptive rights. While the Board does
not believe that the increased capitalization would adversely affect the
rights of existing stockholders, the future issuance of shares of Common Stock
might serve to dilute the interest of existing stockholders and may be issued
at a time and under circumstances that may increase or decrease the earnings
per share, and increase or decrease the book value per share, of shares
currently outstanding.
BOARD RECOMMENDATION
Delaware law requires that the Amendment be approved and adopted by the
affirmative vote of at least a majority of the outstanding shares of Common
Stock.
The Board of Directors recommends a vote in favor of the proposal to approve
and adopt a Certificate of Amendment to the Fifth Restated Certificate of
Incorporation to increase the number of authorized shares of Common Stock to
an aggregate of 750,000,000 shares. The persons named in the enclosed proxy
(unless otherwise instructed therein) will vote such proxies FOR this
proposal.
SELECTION OF INDEPENDENT AUDITORS
The firm of Ernst & Young LLP, Certified Public Accountants, served as the
independent auditors of the Company for Fiscal 1998, and the Board of
Directors has selected Ernst & Young LLP as the Company's independent auditors
for the fiscal year ending September 30, 1999. This selection will be
presented to the stockholders for their approval at the Meeting. The Board of
Directors recommends a vote in favor of the proposal to approve and ratify
this selection, and the persons named in the enclosed proxy (unless otherwise
instructed therein) will vote such proxies FOR such proposal. If the
stockholders do not approve this selection, the Board of Directors will
reconsider its choice.
The Company has been advised by Ernst & Young LLP that a representative will
be present at the Meeting and will be available to respond to appropriate
questions. In addition, the Company intends to give such representative an
opportunity to make any statements if he should so desire.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
In order for any stockholder proposal to be included in the Company's proxy
statement to be issued in connection with the 2000 Annual Meeting of
Stockholders, such proposal must be received by the Company no later than
September 1, 1999.
17
<PAGE>
OTHER MATTERS
The Board of Directors does not know of any other matters that are to be
presented for action at the Meeting. Should any other matter come before the
Meeting, however, the persons named in the enclosed proxy will have
discretionary authority to vote all proxies with respect to such matter in
accordance with their judgment.
BY ORDER OF THE BOARD OF DIRECTORS,
Timothy R. Parry,
Corporate Secretary
Dated: December 30, 1998
18
<PAGE>
PROXY HEALTH MANAGEMENT ASSOCIATES, INC.
1999 ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints William J. Schoen and Timothy R. Parry,
and each and any of them, proxies for the undersigned with full power of
substitution, to vote all shares of the Common Stock of Health Management
Associates, Inc. (the "Company") owned by the undersigned at the Annual
Meeting of Stockholders to be held at the Philharmonic Center for the Arts,
Daniels Pavilion, 5833 Pelican Bay Blvd., Naples, Florida 34108, on Tuesday,
February 16, 1999 at 1:30 p.m., local time, and at any adjournments thereof:
1. Election of Directors.
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees
contrary). [_] listed below. [_]
INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name listed below.
William J. Schoen Kent P. Dauten Robert A. Knox Charles R. Lees
Kenneth D. Lewis William E. Mayberry, M.D.
2. Proposal to approve and adopt a Certificate of Amendment to the Fifth
Restated Certificate of Incorporation of the Company to increase the number
of authorized shares of Common Stock, par value $.01 per share, to an
aggregate of 750,000,000 shares.
[_] FOR [_] AGAINST [_] ABSTAIN
3. Proposal to approve and ratify the selection of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending September 30,
1999.
[_] FOR [_] AGAINST [_] ABSTAIN
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
(Continued and to be signed, on reverse side)
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
This Proxy will be voted as specified by the undersigned. This proxy revokes any
prior proxy given by the undersigned. Unless authority to vote for one or more
of the nominees is specifically withheld according to the instructions, a signed
Proxy will be voted FOR the election of the six named nominees for directors
and, unless otherwise specified, FOR the other two proposals listed herein and
described in the accompanying Proxy Statement. The undersigned acknowledges
receipt with this Proxy of a copy of the Notice of Annual Meeting and Proxy
Statement dated December 30, 1998, describing more fully the proposals set forth
herein.
Dated: _________________, 1999
______________________________
______________________________
Signature(s) of stockholder(s)
Please date and sign name
exactly as it appears hereon.
Executors, administrators,
trustees, etc. should so
indicate when signing. If the
stockholder is a corporation,
the full corporate name should
be inserted and the proxy
signed by an officer of the
corporation, indicating
his/her title.
