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. )
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Filed by a Party other than the Registrant |_|
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|_| Preliminary Proxy Statement
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(as permitted by Rule 14a-6(e)(2)
|X| Definitive Proxy Statement
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|_| Soliciting Material Pursuant to ss. 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)
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<PAGE>
[LOGO]
HEALTH MANAGEMENT ASSOCIATES, INC.
----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------
February 20, 2001
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 20,
2001 at 1:30 p.m., local time, for the following purposes more fully described
in the accompanying proxy statement:
1. To elect seven directors of the Company.
2. 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, 2001.
3. 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 22,
2000 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 27, 2000
<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 20, 2001,
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 27, 2000. 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 seven director nominees named herein and, unless
otherwise indicated, FOR the other proposal described in this proxy statement
and in the accompanying notice of meeting.
As of December 22, 2000, the record date for the Meeting, there were
243,573,264 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 22,
2000 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 shares of Common Stock present at the Meeting, in person or by proxy,
will be required to approve the other proposal described in this proxy statement
and in the accompanying notice of meeting.
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, Inc., 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 22, 2000 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:
Common Stock
Beneficially Owned
-------------------------
Name and Address of No. of Percent
Beneficial Owner (1) Shares of Class
-------------------- ------ --------
William J. Schoen (2) 16,052,153 6.3%
5811 Pelican Bay Blvd.
Naples, FL 34108-2710
Kent P. Dauten (3) 385,307 0.2
520 Lake Cook Road
Suite 650
Deerfield, IL 60015
Robert A. Knox (4) 208,592 0.1
717 Fifth Avenue
New York, NY 10022
Charles R. Lees (5) 75,108 --
2659 Townsgate Road
Suite 226
Westlake Village, CA 91361
Kenneth D. Lewis (6) 37,066 --
Bank of America Corporate Center
100 North Tryon Street
58th Floor
Charlotte, NC 28255
William E. Mayberry, M.D. (7) 26,940 --
826 Rue de Ville
Naples, FL 34108
Randolph W. Westerfield, Ph.D. -0- --
University of Southern California
Marshall School of Business
Hoffman Hall, Suite 800
Los Angeles, CA 90089
Earl P. Holland (8) 2,654,527 1.1
5811 Pelican Bay Blvd.
Naples, FL 34108-2710
Joseph V. Vumbacco (9) 1,385,613 0.6
5811 Pelican Bay Blvd.
Naples, FL 34108-2710
2
<PAGE>
Common Stock
Beneficially Owned
-------------------
Name and Address of No. of Percent
Beneficial Owner (1) Shares of Class
-------------------- ------ --------
Stephen M. Ray (10) 686,871 0.3
5811 Pelican Bay Blvd.
Naples, FL 34108-2710
Timothy R. Parry (11) 70,096 --
5811 Pelican Bay Blvd.
Naples, FL 34108-2710
AMVESCAP PLC (12) 24,133,281 9.9
11 Devonshire Square
London EC2M 4YR
England
AXA Financial, Inc. (13) 17,878,409 7.3
1290 Avenue of the Americas
New York, New York 10104
All Directors and Executive Officers 21,582,273 8.4
as a Group (11 persons) (14)
----------
(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) 9,993,645 shares issuable upon exercise of
currently exercisable options; (b) 506,896 shares held by Mr. Schoen
individually; and (c) an aggregate of 5,551,612 shares held by various
trusts of which Mr. Schoen is settlor, trustee and/or beneficiary.
(3) The amount shown includes 7,532 shares issuable upon exercise of currently
exercisable options.
(4) The amount shown includes 6,688 shares issuable upon exercise of currently
exercisable options.
(5) The amount shown includes 63,858 shares issuable upon exercise of
currently exercisable options.
(6) The amount shown reflects shares issuable upon exercise of currently
exercisable options.
(7) The amount shown includes: (a) 21,878 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.
(8) The amount shown includes: (a) 1,047,500 shares issuable upon exercise of
currently exercisable options; (b) 632,430 shares held by Mr. Holland
individually; (c) an aggregate of 866,500 shares held by Mr. Holland in
joint tenancy with members of his family; (d) 20,000 shares held by Mr.
Holland's wife as custodian for their daughter (as to which shares Mr.
Holland disclaims beneficial ownership); and (e) 88,097 shares held by Mr.
Holland as sole Trustee of the Declaration of Trust Established for the
Benefit of Earl P. Holland.
(9) The amount shown includes: (a) 1,249,750 shares issuable upon exercise of
currently exercisable options; (b) 17,303 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) 118,560 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.
(10) The amount shown includes: (a) 64,621 shares held by Mr. Ray individually;
and (b) 622,250 shares held by Mr. Ray as sole Trustee of the Stephen M.
Ray Living Trust.
(11) The amount shown includes: (a) 60,625 shares issuable upon exercise of
currently exercisable options; and (b) 9,471 shares held by Mr. Parry
individually.
3
<PAGE>
(12) The amount shown and the following information is derived from a Schedule
13G filed on May 9, 2000: AMVESCAP PLC, the parent holding company of
certain investment advisor companies, has shared voting and shared
dispositive power with respect to all of such shares.
(13) The amount shown and the following information is derived from Amendment
No. 2 to Schedule 13G dated July 10, 2000 filed jointly on behalf of AXA,
AXA Financial, Inc., and four French mutual insurance companies as a
group: such shares are beneficially owned by Alliance Capital Management
L.P. (13,916,388 shares), Donaldson, Lufkin & Jenrette Securities
Corporation (145,070 shares), The Equitable Life Assurance Society of the
United States (3,420,500 shares), and DLJ Asset Management Group, Inc.
(396,451 shares). All of such shares were acquired solely for investment
purposes and by Alliance Capital Management, L.P. and DLJ Asset Management
Group, Inc. on behalf of client discretionary investment advisory
accounts. Alliance Capital Management L.P., The Equitable Life Assurance
Society of the United States and DLJ Asset Management Group, Inc. have
sole power to vote a total of 11,125,360 of such shares; Alliance Capital
Management L.P. has shared power to vote 6,382,100 of such shares;
Alliance Capital Management L.P., Donaldson, Lufkin & Jenrette Securities
Corporation, The Equitable Life Assurance Society of the United States and
DLJ Asset Management Group, Inc. have sole power to dispose of a total of
17,745,893 of such shares; and Donaldson, Lufkin & Jenrette Securities
Corporation has shared power to dispose of 132,570 of such shares.
(14) See footnotes (2) through (11) to this table.
4
<PAGE>
ELECTION OF DIRECTORS
A Board of Directors consisting of seven 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 seven 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 seven 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 65, has served as Chairman of the Board and Chief 1983
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 45, served as a director of the Company from March 1981 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 advisory 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 Incorporated.
Robert A. Knox, age 48, became Senior Managing Director of Cornerstone Equity 1985
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 81, served as a director of the Company from April 1988 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 International,
formerly know as 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 53, has served as President and Chief Operating Officer of 1991
Bank of America since October 1999. From January 1999 to October 1999, he
served as President, and from September 1998 to January 1999, he served as
President, Consumer and Commercial Banking, of Bank of America. 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. Mr. Lewis also serves on the
Board of Directors of Lowe's Companies, Inc.
William E. Mayberry, M.D., age 71, is the retired President and Chief Executive 1994
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.
Randolph W. Westerfield, Ph.D., age 59, has been the Dean of the Marshall School 2000
of Business at the University of Southern California, Los Angeles,
California since 1993. Previously, he was a member of the finance faculty at
the Wharton School of Business at the University of Pennsylvania, for 20
years. Dr. Westerfield also serves on the Board of Directors of William Lyon
Homes.
</TABLE>
Board Meetings and Committees of the Board
During the fiscal year ended September 30, 2000 ("Fiscal 2000"), the Board
of Directors held five meetings. Each director attended at least 75% 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 Mr. Dauten (Chairman), Mr. Lees,
Dr. Westerfield 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 Company's Audit Committee
Charter, adopted by the Board and included as Appendix A to this Proxy
Statement, more specifically sets forth the duties and responsibilities of the
Audit Committee. The Audit Committee held four meetings during Fiscal 2000. The
Audit Committee's report relating to Fiscal 2000 appears on page 15 of this
proxy statement.
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 2000.
6
<PAGE>
Compensation of Directors
During Fiscal 2000, the Company paid its non-employee directors $2,000 per
quarter for their services as directors and $3,000 (or, since February, 2000,
$5,000) for each Board meeting attended. All of the Company's directors other
than Mr. Schoen qualified for such payments, and during Fiscal 2000 such fees
paid aggregated $168,000. 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 non-employee directors
during Fiscal 2000.
Directors' Stock Options
Pursuant to the Company's Stock Option Plan for Outside Directors, during
Fiscal 2000 the Company granted to each of Messrs. Dauten, Knox, Lees, Lewis and
Dr. Mayberry, each a non-employee director of the Company, an option, expiring
on May 25, 2010, to purchase 7,500 shares of Common Stock at an exercise price
of $12.125 per share. Dr. Westerfield, also a non-employee director of the
Company, was granted an option, expiring on May 15, 2010, to purchase 7,500
shares of Common Stock at an exercise price of $14.75 per share. Each such
option is exercisable in 1,875-share annual increments commencing one year from
the date of the grant. None of such options is transferable except by will or
intestacy, and during the optionee's lifetime they are exercisable only by him.
Unexercised options lapse 90 days after the optionee ceases to be a director of
the Company, except that if the optionee dies while serving as a director, his
options lapse six months after death.
No non-employee directors exercised options during Fiscal 2000.
Section 16(a) Beneficial Ownership Reporting Compliance
Since the 2000 Annual Meeting of Stockholders, Robert A. Knox, a
director of the Company, inadvertently filed late with the Securities and
Exchange Commission (the "SEC") two reports disclosing two transactions in Class
A Common Stock beneficially owned by him. Both such reports have since been
filed, and all of the Company's directors and executive officers are now current
in such filings. In making the foregoing statements, the Company has relied on
the written representations of its directors and executive officers and copies
of the reports that they have filed with the SEC.
7
<PAGE>
EXECUTIVE COMPENSATION
Shown on the table below is information on the annual and long-term
compensation for services rendered to the Company in all capacities, for the
fiscal years ended September 30, 2000, 1999 and 1998, paid by the Company to
those persons who were, at the end of Fiscal 2000, the Chief Executive Officer
of the Company and the four other executive officers of the Company
(collectively, the "Named Executives").
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
-------------------------------- -----------------------------------
Awards Payouts
Other --------------------- -------
Annual Restricted All Other
Compen- Stock LTIP Compen-
Salary Bonus sation Awards Options Payouts sation
Name and Principal Position Year ($) (1) ($) (2) ($) (3) ($) (4) (#) (5) ($) (6) ($)
--------------------------- ---- ------- ------- ------- ---------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William J. Schoen 2000 $600,000 $650,000 $3,497 $650,000 1,000,000 $450,000 0
Chairman and Chief 1999 581,250 383,625 3,333 383,625 1,000,000 300,000 0
Executive Officer 1998 525,000 525,000 3,333 525,000 0 300,000 0
Earl P. Holland 2000 $375,000 $406,250 $3,497 $406,250 500,000 0 0
Vice Chairman and Chief 1999 356,250 235,125 3,333 235,125 500,000 0 0
Operating Officer 1998 300,000 300,000 3,333 300,000 0 0 0
Joseph V. Vumbacco 2000 $375,000 $406,250 $2,498 $406,250 500,000 0 0
President and Chief 1999 368,750 243,375 2,458 243,375 500,000 0 0
Administrative Officer 1998 350,000 350,000 2,333 350,000 0 0 0
Stephen M. Ray 2000 $200,000 $166,667 $3,497 $166,667 200,000 0 0
Executive Vice President 1999 191,000 90,486 3,333 90,486 200,000 0 0
and Chief Financial 1998 164,000 98,400 3,166 98,400 0 0 0
Officer
Timothy R. Parry 2000 $161,250 $ 94,375 $3,497 $ 94,375 100,000 0 0
Vice President, General 1999 149,000 49,170 3,333 40,170 100,000 0 0
Counsel and Corporate 1998 146,000 73,000 2,920 73,000 37,500 0 0
Secretary
</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"). 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 2000, the aggregate numbers and dollar values of such shares
credited to the respective individuals' contingent award accounts at
Fiscal 2000 year-end, based on the market value of the Common Stock at
Fiscal 2000 year-end ($20.8125 per share), were: Mr. Schoen--136,217
shares ($2,835,016); Mr.
8
<PAGE>
Holland--66,073 shares ($1,375,144); Mr. Vumbacco--64,937 shares
($1,351,501); Mr. Ray--27,163 shares ($565,330); and Mr. Parry--13,913
shares ($289,564). Dividends are not payable on such shares, but customary
anti-dilution adjustments apply in the event of stock splits and stock
dividends.
(5) The amount shown for Mr. Parry for 1998 has been adjusted to give effect
to a 3-for-2 stock split in the form of a stock dividend paid on July 17,
1998.
(6) The amounts shown reflect the payment of benefits under the Company's
Supplemental Executive Retirement Plan. See "EXECUTIVE
COMPENSATION--Supplemental Executive Retirement Plan."
Stock Options
Shown below is further information on grants of stock options during
Fiscal 2000 to the Named Executives under the EICP. No stock appreciation rights
("SARs") were granted in Fiscal 2000 and there are no SARs outstanding.
<TABLE>
<CAPTION>
Option Grants in Fiscal 2000
Grant Date
Individual Grants Value
------------------------------------------------------------------------------------------------------ -------------
Percent of
Total
Options
Granted to
Options Employees Exercise Grant Date
Granted in Fiscal Price Expiration Present Value
Name (#) Year ($/Sh) Date ($) (1)
----- --------- ---------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
William J. Schoen.............................. 1,000,000 26.3% $12.125 5/25/10 $7,190,000
Earl P. Holland................................ 500,000 13.1 12.125 5/25/10 3,595,000
Joseph V. Vumbacco............................. 500,000 13.1 12.125 5/25/10 3,595,000
Stephen M. Ray................................. 200,000 5.3 12.125 5/25/10 1,438,000
Timothy R. Parry............................... 100,000 2.6 12.125 5/25/10 719,000
</TABLE>
----------
(1) The hypothetical grant date present value for the options granted during
Fiscal 2000 is presented pursuant to the rules of the Securities and
Exchange Commission (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 options shown on the table include the expected volatility rate of the
shares underlying the options (.486), risk free rate of return (6.56%),
dividend yield (0%), projected time of exercise (7 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 an
option is exercised. There is no assurance that the hypothetical grant
date present value of the options reflected on this table will be
realized.
Shown below is information with respect to option exercises by the Named
Executives during Fiscal 2000 and unexercised options to purchase Common Stock,
granted to the Named Executives during and prior to Fiscal 2000 under the EICP
and the Company's prior stock option plans and held by them at the end of Fiscal
2000.
9
<PAGE>
Aggregated Option Exercises in Fiscal 2000
and Fiscal Year-End Option Values*
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options Held at in-the-Money Options at
Fiscal Year-End (#) Fiscal Year-End ($) (1)
Shares --------------------------- ----------------------------
Acquired on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William J. Schoen................... 720,000 $9,554,801 9,993,645 1,750,000 $122,831,599 $14,546,875
Earl P. Holland..................... 0 0 1,047,500 875,000 9,033,420 7,273,438
Joseph V. Vumbacco.................. 220,000 1,291,531 1,249,750 875,000 11,065,255 7,273,438
Stephen M. Ray...................... 531,000 3,449,296 143,750 350,000 1,149,297 2,909,375
Timothy R. Parry.................... 0 0 89,825 193,750 667,967 1,454,688
</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
2000 year-end ($20.8125 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 125%
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 2000, the Company recorded $240,000 of
deferred compensation expense in respect of the Supplemental Plan. To qualify
for benefits, a participant must continue as an employee until age 62 and must
be an employee for at least five years after commencing participation. With
respect to participants who have met these qualifications, a "rabbi trust" has
been established to hold Company contributions. Generally, no benefit is paid if
employment is terminated before a participant reaches his normal retirement
date, regardless of the reason. However, if a participant's employment is
terminated by the Company following a
10
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"change of ownership" of the Company (as that term is defined in the
Supplemental Plan) benefits are payable. Upon such a "change of ownership" a
"rabbi trust" must be established for participants who have not begun to receive
benefit payments and the Company must make contributions to such trust in
accordance with 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 for any reason. 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 have been purchased by the
Company to provide some or all of the benefits under the Supplemental Plan. Such
contracts may be held by, or made payable to, any rabbi trusts established in
connection with 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 Securities Exchange Act of 1934, as amended (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 administers 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
provided, 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.
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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 Compensation 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
Compensation 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 eight bonus categories (ranging from 10% to 125% 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 Compensation
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
Compensation 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 Compensation 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. During Fiscal 2000, options to purchase an
aggregate of 3,807,000 shares of Common Stock were granted under the EICP,
including options to purchase an aggregate of 2,300,000 shares granted to the
Named Executives. See "EXECUTIVE COMPENSATION--Stock Options."
Under the current stock incentive program under the EICP (which parallels
the prior Stock Incentive Plan), the Compensation 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 Compensation Committee considers all of
the factors discussed, and follows the procedure described, in the preceding
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 2000,
the Company recorded $1,500,000 of deferred compensation expense in respect of
such stock awards.
12
<PAGE>
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
which 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 2000
compensation package was the Compensation 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 base salary is $400,000, subject
to cost of living increases by the Board of Directors. For Fiscal 2000, his
salary amounted to $600,000. The Compensation 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 of 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 is also 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 Compensation Committee
has taken particular note of outstanding QSM patient satisfaction survey results
during Fiscal 2000. 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 Compensation Committee considered Mr. Schoen's leadership in
the Company's acquisition of two hospitals during Fiscal 2000 (which
acquisitions increased the Company's licensed beds by approximately 9%), the
successful completion by the Company of the sale of $488,750,000 in principal
face value of Convertible Senior Subordinated Debentures due 2020 (which sale
allowed the Company to retire certain of its debt which bore interest at a
higher rate), as well as a substantial annual increase in the Company's
stockholder value since 1991.
Among the key indicators of the Company's performance in Fiscal 2000, net
patient service revenue increased 16.4% from $1,355.7 million in Fiscal 1999 to
$1,577.7 million in Fiscal 2000, and net income increased 11.9% from $149.8
million in Fiscal 1999 to $167.7 million in Fiscal 2000. Diluted earnings per
share increased 15.3% from $.59 in Fiscal 1999 to $.68 in Fiscal 2000. In
addition, the Company has paid seven 3-for-2 stock splits in the form of stock
dividends since April 1992.
13
<PAGE>
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, has built a strong
management team, and has aggressively pursued new areas for growth. Mr. Schoen
has also 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 2000 includes a cash bonus in an amount equal to 125% of his annual
salary, a contingent stock award in an amount equal to his cash bonus, and the
grant of an option to purchase 1,000,000 shares of Common Stock. Mr. Schoen's
compensation package has successfully focused on the importance of improving the
health care services delivered by the Company's hospitals 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
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<PAGE>
Report of the Audit Committee to Stockholders
The following report of the Audit 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 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.
The Audit Committee of the Board of Directors (the "Audit Committee") is
comprised of four members of the Company's Board of Directors, each of whom is
independent pursuant to the New York Stock Exchange's listing standards. The
duties and responsibilities of the Audit Committee are set forth in the Audit
Committee Charter, included as Appendix A to this proxy statement. The Audit
Committee, among other things, recommends to the Board: (i) that the audited
financial statements be included in the Company's Annual Report on Form 10-K;
and (ii) the selection of the independent auditors to audit the books and
records of the Company.
The Audit Committee has: (i) reviewed and discussed the Company's audited
financial statements for the fiscal year ended September 30, 2000 with the
Company's management and with Ernst & Young LLP, the Company's independent
auditors; (ii) discussed with the Company's independent auditors the matters
required to be discussed by SAS 61 (Codification for Statements on Auditing
Standards); and (iii) received and discussed the written disclosures and the
letter from the Company's independent auditors required by Independence
Standards Board Statement No. 1 (Independent Discussions with Audit Committees).
Based on such review and discussions with management and the independent
auditors, the Audit Committee recommended to the Board of Directors that the
audited financial statements be included in the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 2000 for filing with the SEC.
Audit Committee:
Kent P. Dauten, Chairman
Charles R. Lees
William E. Mayberry, M.D.
Randolph W. Westerfield, Ph.D.
15
<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, 2000, based on the market price thereof and taking into account
all stock splits in the form of stock dividends paid through Fiscal 2000
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
<TABLE>
<CAPTION>
9/30/95 9/30/96 9/30/97 9/30/98 9/30/99 9/30/00
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Health Management Associates, Inc. .......... 100 175.09 221.49 287.58 122.13 327.96
S & P 500 ................................... 100 120.34 169.01 184.30 235.24 266.49
S & P Health Care Sector .................... 100 130.98 179.32 247.92 254.98 320.08
</TABLE>
Assumes $100 invested on September 30, 1995 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.
16
<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.
SELECTION OF INDEPENDENT AUDITORS
The firm of Ernst & Young LLP, Certified Public Accountants, served as the
independent auditors of the Company for Fiscal 2000, and the Board of Directors
has selected Ernst & Young LLP as the Company's independent auditors for the
fiscal year ending September 30, 2001. 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 2002 ANNUAL MEETING
In order for any stockholder proposal to be included in the Company's
proxy statement to be issued in connection with the 2002 Annual Meeting of
Stockholders, such proposal must be received by the Company no later than
September 1, 2001. If such proposal is in compliance with all of the
requirements of Rule 14a-8 under the Exchange Act, it will be included in the
proxy statement and set forth on the form of proxy issued for such Annual
Meeting. Stockholder proposals that are not submitted for inclusion in the
Company's proxy materials pursuant to Rule 14a-8 under the Exchange Act may be
brought before the 2002 Annual Meeting of Stockholders if notice thereof is
received by the Company no later than November 12, 2001.
OTHER MATTERS
The Board of Directors does not know of any other matters that may be
presented for action at the Meeting. Should any other matters come before the
Meeting, however, the persons named in the enclosed proxy will have
discretionary authority to vote all proxies with respect to such matters in
accordance with their judgment.
BY ORDER OF THE BOARD OF DIRECTORS,
Timothy R. Parry,
Corporate Secretary
Dated: December 27, 2000
17
<PAGE>
APPENDIX A
HEALTH MANAGEMENT ASSOCIATES, INC.
AUDIT COMMITTEE CHARTER
I. FORMATION & STATEMENT OF POLICY.
1) Formation of Audit Committee. The Audit Committee (the "Committee")
of the Board of Directors of Health Management Associates, Inc. (the
"Company"), was established by the Board of Directors of the Company
(the "Board") prior to 1991. The Committee serves at the pleasure of
the Board. The Board may at any time change the membership of the
Committee, fill vacancies in it, or dissolve it.
2) Committee's Statement of Policy. The policy of the Committee shall
be to work closely with the Board, executive management, the
Company's internal audit department, and the Company's outside
auditor, to develop and maintain an audit committee function that is
approved by the Board, in compliance with the rules of the New York
Stock Exchange ("NYSE"), and acceptable to all. The Committee will
assist the Board in fulfilling its fiduciary responsibility to the
stockholders and financial community relating to the quality and
integrity of the Company's accounting systems, financial reporting
process, and overall internal control structure.
II. ORGANIZATION.
1) Composition/Expertise Requirement of Committee Members. The
Committee shall be appointed by the Board, in accordance with the
following criteria:
(a) Number of Committee Members. Subject to the restrictions of
the Certificate of Incorporation and By-laws of the Company
and the rules promulgated from time to time by the NYSE (the
"NYSE Rules"), the Committee shall consist of at least three
(3) members of the Board, all of whom have no relationship to
the Company that may interfere with the exercise of their
independence from management and the Company, as the Board may
from time to time determine;
(b) Financial Literacy. Each member of the Committee shall be
financially literate, as such qualification is interpreted by
the Board in its business judgment, or must become financially
literate within a reasonable period of time after his or her
appointment to the Committee; and
(c) Financial Management Experience. At least one member of the
Committee must have accounting or related financial management
expertise, as the Board interprets such qualification in its
business judgment.
2) Independence Requirement of Audit Committee Members. In addition to
the requirement of being independent provided in Section II(1)(a),
above, the following restrictions shall apply to every Committee
member:
(a) Employees. A director who is an employee (including
non-employee executive officers (as "officers" is defined
below)) of the Company or any of its affiliates (as
"affiliates" is defined below) may not serve on the Committee
until three (3) years following the termination of his or her
employment. In the event the employment relationship is with a
former parent or predecessor
A-1
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of the Company, the director may serve on the Committee after
three (3) years following the termination of the relationship
between the Company and the former parent or predecessor.
"Affiliate" includes a subsidiary, sibling company,
predecessor, parent company, or former parent company.
"Officer" shall have the meaning specified in Rule 16a-1(f)
under the Securities Exchange Act of 1934, as amended, or any
successor rule.
(b) Business Relationships. A director (i) who is a partner,
controlling stockholder, or executive officer of an
organization that has a business relationship (as "business
relationship" is defined below) with the Company, or (ii) who
has a direct business relationship with the Company (e.g., a
consultant), may serve on the Committee only if the Board
determines in its business judgment that the relationship does
not interfere with the director's exercise of independent
judgment. In connection with the Board's making such a
determination regarding the independence of a director
pursuant to this paragraph, the Committee shall provide the
Board with any information that the Committee has regarding
issues that the Board should consider under the NYSE Rules,
including, among other things, the materiality of the
relationship to the Company, to the director, and, if
applicable, to the organization with which the director is
affiliated. "Business relationships" can include commercial,
industrial, banking, consulting, legal, accounting and other
relationships. A director can have this relationship directly
with the Company, or the director can be a partner, officer,
or employee of an organization that has such a relationship.
The director may serve on the Committee without the
above-referenced Board determination after three (3) years
following the termination of, as applicable, either (1) the
relationship between the organization with which the director
is affiliated and the Company, (2) the relationship between
the director and his or her partnership status, stockholder
interest, or executive officer position, or (3) the direct
business relationship between the director and the Company.
(c) Cross Compensation Committee Link. A director who is employed
as an executive of another corporation where any of the
Company's executives serve on that corporation's compensation
committee may not serve on the Committee.
(d) Immediate Family. A director who is an Immediate Family Member
(as "Immediate Family Member" is defined below) of an
individual who is an executive officer of the Company or any
of its affiliates cannot serve on the Committee until three
(3) years following the termination of such employment
relationship. "Immediate Family Member" includes a person's
spouse, parents, children, siblings, mothers-in-law and
fathers-in-law, sons-in-law and daughters-in-law,
brothers-in-law and sisters-in-law, and anyone (other than
employees) who shares such person's home.
(e) Exception to Independence Requirement of Committee Members.
Notwithstanding the requirements of Sections II(1)(a) and
II(2), above, one director who is no longer an employee or who
is an Immediate Family Member of a former executive officer of
the Company or its affiliates, but is not considered
independent pursuant to these provisions due to the three-year
restriction period, may be appointed, under exceptional and
limited circumstances, to the Committee if the Board
determines in its business judgment that membership on the
Committee by the individual is required by the best interests
of the Company and its stockholders, and the Company
discloses, in the next annual proxy statement subsequent to
such determination, the nature of the relationship and the
reasons for that determination.
3) Election and Term of Committee Members. Committee members shall be
appointed by resolution adopted by the majority of the entire Board.
Subject to the restrictions of the Certificate of Incorporation
A-2
<PAGE>
and By-laws of the Company and the NYSE Rules, each member shall
hold office at the pleasure of the Board and until his or her
successor has been duly appointed and qualified, or until his or her
prior resignation or removal.
4) Removal or Resignation. Any member of the Committee may be removed
with or without cause by vote of the majority of the entire Board.
Any member of the Committee may resign from the Committee at any
time by giving written notice to the Board or the Board's Chairman.
Unless otherwise specified in the notice, the resignation shall take
effect upon receipt thereof by the Board or the Chairman, and the
acceptance of the resignation shall not be necessary to make it
effective. The resignation of a director from the Committee shall
not constitute such director's resignation from the Board.
5) Place, Time, and Procedural Matters of Committee Meetings. The
Committee should meet a minimum of three (3) times per year, with
additional special meetings called as necessary, at such time and
place as it shall from time to time determine. A meeting prior to
the Company's fiscal year-end shall be held with the internal and
outside auditors and with management to discuss the scope and
objectives of both the internal and external examinations. A
post-audit meeting with the same parties in attendance shall be held
to review and discuss written comments pointing out weaknesses in
internal accounting controls and/or other matters noted during the
outside and internal auditors' examinations, along with management's
response to each. The Board shall determine which member shall be
the Chair of the Committee. The Committee will meet at such times as
shall be determined by its Chair, or upon the request of any two of
its members, upon three (3) days notice to each member either
personally or by mail or by telecommunications. The agenda of each
meeting will be prepared under the direction of the Chair of the
Committee and, whenever reasonably practicable, circulated to each
member prior to the meeting date. The Chair will preside, when
present, at all meetings of the Committee. As necessary or
desirable, the Chair shall request that members of management,
general counsel, the director of internal audit, the chief corporate
compliance officer, and representatives of the outside auditor be
present at the meetings of the Committee. The Committee shall also
hold private sessions with both the internal and outside auditors
separately, as necessary or desirable, to encourage candid and
confidential discussions of any sensitive issues.
6) Action by the Committee. A majority of the Committee shall
constitute a quorum. In the absence of a Committee majority, the
Chair and one (1) other committee member may act on behalf of the
Committee. Unless otherwise later restricted by the Company's
Certificate of Incorporation or By-laws, (i) any action required or
permitted to be taken at any meeting of the Committee may be taken
without a meeting if all members of the Committee consent thereto in
writing, and the writing or writings are filed with the minutes of
proceedings of the Committee and (ii) members of the Committee may
participate in a meeting of the Committee by means of conference
telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and
participation in a meeting by these means shall constitute presence
in person at the meeting.
7) Minutes. Minutes shall be prepared for all meetings of the Committee
to document the Committee's discharge of its responsibilities. The
minutes shall be circulated in draft form to all Committee members
to ensure an accurate final record, and shall be approved as
presented or as modified at the next meeting of the Committee.
A-3
<PAGE>
III. ROLES & RESPONSIBILITIES.
Within the context of the Committee's Statement of Policy, the primary
roles and responsibilities of the Committee shall be as follows:
1) Annual Review of Charter. Review and reassess the adequacy of this
Audit Committee Charter, as conditions dictate but at least on an
annual basis, including issues of compliance with the NYSE Rules.
2) Written Confirmation to NYSE. Review and authorize all NYSE required
written confirmations (e.g., as part of the initial listing process,
and with respect to any subsequent changes to the composition of the
Committee, and otherwise approximately once each year) to be
provided to the NYSE regarding: (i) any determination that the Board
has made regarding the independence of directors; (ii) the financial
literacy of the Committee members; (iii) the determination that at
least one of the Committee members has accounting or related
financial management expertise; and (iv) the annual review and
reassessment of the adequacy of this Audit Committee Charter.
3) Outside Auditor Selection & Replacement. Select and recommend to the
Board and the stockholders the annual appointment of the independent
outside auditor, including the review of their qualifications,
independence, audit scope, related non-audit services, and fees. The
Committee, along with the Board, shall have the ultimate authority
and responsibility to select, evaluate, and, where appropriate,
replace the outside auditor of the Company (or to select the outside
auditor to be proposed for stockholder ratification pursuant to any
proxy statement), and the Company's outside auditor shall be
ultimately accountable to both the Board and the Committee.
4) Written Statement of Outside Auditor. Ensure that the outside
auditor submits on a periodic basis to the Committee a formal
written statement delineating all relationships between such auditor
and the Company.
5) Independence and Accountability of Outside Auditor. Actively engage
in dialogue with the outside auditor with respect to any disclosed
relationships or services that may impact the objectivity and
independence of the outside auditor and recommend to the Board the
appropriate action(s) necessary, in light of the outside auditor's
report(s), to ensure to the Committee's satisfaction the
independence of the Company's outside auditor, and ensure that the
outside auditor for the Company is made to be ultimately accountable
to the Board and the Committee.
6) Reporting and Internal Accounting Controls. Assist the Board in
fulfilling its fiduciary responsibilities for financial reporting
and internal accounting controls. Recommend to the Board of
Directors that the audited financial statements be included in the
Company's Annual Report to the SEC on Form 10-K.
7) Information & Communications. Facilitate communications among
non-Committee directors, the Company's management, the internal
auditor, and the outside auditor.
8) Significant Financial Reporting Issues. Review with financial
management and the outside auditor their timely analysis of
significant financial reporting issues (including changes in, or new
adoptions of, accounting principles and disclosure practices),
review the Company's quarterly and annual financial statements and
related footnotes, and inquire about significant risk or exposure
areas.
A-4
<PAGE>
9) Financial Disclosure Practices. Review the appropriateness, not just
the acceptability, of the Company's current and proposed financial
disclosure practices, including the degree of aggressiveness or
conservatism of its accounting principles, and of the underlying
management estimates for significant accruals and reserves.
10) Internal Audit Department. Review the staffing, policies, and
procedures for the Company's internal audit department, as well as
any significant internal audit findings along with management's
responses.
11) Legal Compliance. Review the Company's procedures for compliance
with laws and government regulations, including monitoring its
Corporate Compliance Program by meeting with the Company's General
Counsel and Chief Corporate Compliance Officer.
12) Code of Business Conduct Compliance. Monitor compliance with the
Company's Code of Business Conduct. Check to see if annual
reaffirmation of compliance with the Code of Business Conduct has
been accomplished.
13) Executive Reimbursement. Review the appropriateness of the policies
and practices utilized to reimburse executive officers' expenses and
covering other perquisites (including their use of corporate
assets).
14) Certain Investigations. Conduct or authorize investigations into any
matters within the Committee's scope of responsibilities.
15) Feedback. Provide periodic feedback on the performance of the
Company's Chief Financial Officer, internal auditor, Chief Corporate
Compliance Officer, and other financial managers to the Chief
Executive Officer or the Compensation Committee of the Board as
appropriate.
16) Review and Training. Review various financial areas of the Company
(e.g., operational finance, reimbursement, MIS, and disaster plans)
as a means of expanding the Committee's knowledge and understanding
of the Company's operations and its business and financial risks,
and in order to provide ongoing training to the Committee's members.
IV. ADDITIONAL REPORTING.
The Committee shall report to the Board on a regular basis, outlining its
activities since the previous meeting. This report shall discuss any specific
findings observed and actions the Committee has taken as well as the Committee's
plans for its future meetings.
V. OTHER.
While the Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Committee to prepare the Company's financial
statements, to plan or conduct audits of those financial statements, or to
determine that those financial statements are complete and accurate and in
accordance with generally accepted accounting principles. This is the
responsibility of the Company's management and the independent outside auditors.
Nor is it the duty of the Committee to conduct investigations, to resolve
disagreements, if any, between management and the independent outside auditors,
or to assure compliance with applicable laws and regulations.
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v FOLD AND DETACH HERE v
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PROXY
HEALTH MANAGEMENT ASSOCIATES, INC.
2001 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
20, 2001 at 1:30 p.m., local time, and at any adjournments thereof:
1. Election of Directors.
|_| FOR all nominees listed below |_| WITHHOLD AUTHORITY to vote
(except as marked to the contrary). for all nominees 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. Randolph W.Westerfield, Ph.D.
2. Proposal to approve and ratify the selection of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending September 30,
2001.
|_| FOR |_| AGAINST |_| ABSTAIN
3. 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 and dated on reverse side)
<PAGE>
v FOLD AND DETACH HERE v
--------------------------------------------------------------------------------
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 seven named
nominees for directors and, unless otherwise specified, FOR the other proposal
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 27,2000,describing more fully the proposals
set forth herein.
Dated: ________________________________, 2001
_____________________________________________
Signature of Stockholder
_____________________________________________
Signature of Stockholder (if held jointly)
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.
