<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
PHP HEALTHCARE CORPORATION
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
--------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------------
(5) Total fee paid:
--------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
--------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
--------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
--------------------------------------------------------------------------------
(3) Filing party:
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(4) Date filed:
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<PAGE> 2
PHP HEALTHCARE CORPORATION
11440 COMMERCE PARK DRIVE
RESTON, VIRGINIA 22091
SEPTEMBER 19, 1995
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
------------------------
To the Shareholders of
PHP HEALTHCARE CORPORATION:
The 1995 Annual Meeting of Shareholders of PHP Healthcare Corporation (the
"Company") will be held on October 16, 1995 at 10:00 a.m. local time, at the
Company's corporate offices at 11440 Commerce Park Drive, Reston, Virginia, for
the following purposes:
1. To elect three directors comprising the class of directors of the
Company to be elected for a three-year term expiring 1998;
2. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Holders of Common Stock of the Company whose names appear of record on the
books of the Company at the close of business on September 8, 1995, are entitled
to vote at said meeting. A list of such shareholders will be available for
inspection by shareholders at the Company's principal office for a period of ten
days prior to the meeting date.
By Order of the Board of Directors
Ben Rosenbaum III
Secretary
SHAREHOLDERS ARE URGED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY AS SOON
AS POSSIBLE. A POSTAGE-PAID-RETURN-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE.
<PAGE> 3
PHP HEALTHCARE CORPORATION
11440 COMMERCE PARK DRIVE
RESTON, VIRGINIA 22091
------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 16, 1995
------------------------
Approximate Date of Mailing: September 19, 1995
This statement is furnished to shareholders of PHP Healthcare Corporation
in connection with the solicitation by the Board of Directors of the Company of
proxies for use at the Annual Meeting of Shareholders to be held on October 16,
1995, at the Company's offices at 11440 Commerce Park Drive, Reston, Virginia,
for the purposes set forth in the accompanying Notice of Annual Meeting of
Shareholders, and at all adjournments thereof.
Each proxy will be voted in accordance with the instructions contained in
the proxy. If no choice is specified, the proxy will be voted to elect the
nominees for directors proposed by the Board of Directors. In the event that any
nominees for office should for any reason become unavailable, although no reason
is known why any will be unable to serve, it is intended that votes will be cast
pursuant to the accompanying proxy for substitute nominees designated by the
Board of Directors.
A shareholder who executes a proxy may revoke it at any time before it is
exercised by delivering to the Company another proxy bearing a later date, by
submitting written notice of such revocation to the Secretary of the Company or
by appearing personally at the Annual Meeting and casting a contrary vote.
September 8, 1995 has been fixed as the record date for the determination
of shareholders entitled to notice of and to vote at the Annual Meeting. Each
outstanding share is entitled to one vote. At the close of business on September
8, 1995, there were outstanding and entitled to vote 5,459,152 shares of the
Company's common stock, $.01 par value ("Common Stock").
The Company's Annual Report to Shareholders containing the Company's
financial statements for the fiscal year ended April 30, 1995, is being mailed
with this Proxy Statement. The Annual Report is not to be regarded as soliciting
material or as a communication by means of which any solicitation is to be made.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of July 31, 1995, with
respect to the beneficial ownership of Common Stock by each person known to the
Company to be the beneficial owner of more than 5% of its outstanding shares of
Common Stock, by each director of the Company, by each named executive officer,
and by all directors and executive officers of the Company as a group. On July
31, 1995 there were 5,408,341 shares of the Company's Common Stock issued and
outstanding. (Certain of the shares reported in
1
<PAGE> 4
the following table may be deemed to be owned by more than one person here
listed. As a result, those shares are included in more than one entry on the
table.)
<TABLE>
<CAPTION>
NUMBER PERCENT
NAME AND ADDRESS OF SHARES OF CLASS
----------------------------------------------------------- --------- --------
<S> <C> <C>
Voting Agreement Group (1)................................. 1,807,378 30.9%
Charles H. Robbins and Ellen E. Robbins; Jack M. Mazur
and Lynn Mazur; VACHR, Inc.; Michael D. Starr; Shamrock
Investments; Charles P. Reilly; Michael E. Gallagher
11440 Commerce Park Drive
Reston, VA 22091
Shamrock Investments(2).................................... 537,838(3) 9.5%
Charles P. Reilly
Michael E. Gallagher
2049 Century Park East,
Suite 3330
Los Angeles, CA 90067
Bosko Djordjevic and Elizabeth A. Keck, Trustee............ 326,500 6.0%
505 S. Beverly Drive,
Suite 215
Beverly Hills, CA 90212
Charles H. Robbins......................................... 830,687(4) 15.1%
Jack M. Mazur.............................................. 85,962(5) 1.6%
Michael D. Starr........................................... 96,884(6) 1.8%
Charles P. Reilly.......................................... 368,609(7) 6.6%
John P. Cole............................................... 148,000(8) 2.7%
George E. Schafer, M.D. ................................... 22,967 (9)
4 Imperial Oaks
San Antonio, TX 78248
Julien J. Lavoie........................................... 29,008(10) (9)
Joseph G. Mathews.......................................... 2,909 (9)
3510 Highway O
Wright City, MO 63390
Donald J. Ruffing.......................................... 2,479 (9)
11104 Woodlawn Boulevard
Upper Marlboro, MD 20772
Paul T. Cuzmanes........................................... 562 (9)
250 West Pratt Street
Baltimore, MD 21201
All directors and executive officers as a group (11
persons)................................................. 1,488,181(11) 25.6%
</TABLE>
---------------
(1) The persons listed are parties to a Voting Agreement dated as of October 7,
1994, constitute a group within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended ("1934 Act") and jointly filed
a Schedule 13D with the Securities and Exchange Commission on October 11,
1994. The term of the Voting Agreement is two years. See "Certain
Transactions and Business Relationships" below.
(2) The persons listed constitute a group (separate from the group above
listed) within the meaning of Section 13(d)(3) of the 1934 Act and jointly
filed a Schedule 13D with the Securities and Exchange Commission on October
11, 1994 reflecting the aggregate beneficial ownership of 303,353 shares of
2
<PAGE> 5
Common Stock, options to purchase an additional 170,179 shares of Common
Stock, and promissory notes of the Company which are convertible into
55,555 shares of Common Stock.
(3) Does not include 1,269,540 shares which are deemed to be beneficially owned
by this group by virtue of its participation in the Voting Agreement Group
set forth above.
(4) Includes 150,000 shares owned by Mr. Robbins' spouse, Ellen E. Robbins, as
trustee for the benefit of their children. Includes 90,000 shares which Mr.
Robbins presently could acquire upon the exercise of options granted by the
Company. Does not include 976,691 shares which are deemed to be
beneficially owned by Mr. Robbins by virtue of his participation in the
Voting Agreement Group set forth above.
(5) Includes 83,333 shares which Mr. Mazur presently could acquire upon the
exercise of options granted by the Company. Does not include 256,007
shares, or 4.73% of the class, owned by VACHR, Inc., a corporation owned by
Mr. Mazur's spouse, Lynn Mazur, or the other 1,465,409 shares which are
deemed to be beneficially owned by Mr. Mazur by virtue of his participation
in the Voting Agreement Group set forth above. Does not include 14,000
shares owned by J&J Investment Partnership, a partnership wholly owned by
members of Mr. Mazur's family and of which Mr. Mazur disclaims beneficial
ownership.
(6) Includes 30,000 shares which Mr. Starr presently could acquire upon the
exercise of options granted by the Company. Does not include 1,710,494
shares which are deemed to be beneficially owned by Mr. Starr by virtue of
his participation in the Voting Agreement Group set forth above.
(7) Includes 107,048 shares subject to options which Mr. Reilly could acquire,
29,981 shares which may be acquired by Mr. Reilly upon conversion of a
promissory note of the Company, 11,250 shares which Mr. Reilly could
acquire upon the exercise of options granted by the Company to Shamrock
Investments, a partnership of which Mr. Reilly is the managing general
partner, 3,087 shares which may be acquired by Mr. Reilly upon conversion
of a promissory note of the Company issued to Shamrock Investments and
100,000 shares owned by Shamrock Investments. See "Certain Transactions and
Business Relationships." Does not include an additional 1,438,769 shares
which are deemed to be beneficially owned by Mr. Reilly by virtue of his
participation in the Voting Agreement Group set forth above.
(8) Includes 15,000 shares which Mr. Cole presently could acquire upon the
exercise of options granted by the Company.
(9) Represents less than 1% of the shares of the Company's outstanding stock.
(10) Includes 26,333 shares which Mr. Lavoie presently could acquire upon the
exercise of options granted by the Company.
(11) Does not include the shares that may be deemed to be owned by certain of
these persons as a result of their participation in the Voting Agreement
Group set forth above.
3
<PAGE> 6
PROPOSAL I: ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
The Board of Directors is classified into three classes whose terms are
staggered to expire in different years. The term of office of one class of
directors expires each year in rotation so that one class is elected at each
annual meeting of shareholders for a full three-year term. The terms of three of
the present directors are expiring at this annual meeting. Directors elected at
the annual meeting will hold office for a three-year term expiring in 1998 or
until their successors are elected and qualified. The other six directors will
continue in office for the remainder of their terms as indicated below.
Proxies cannot be voted for more than three nominees. If any nominee should
for any reason become unavailable for election, the proxy holders will vote for
such other nominee as may be proposed by the Board of Directors.
Certain information about the three nominees and other directors continuing
in office is set forth below, including any position(s) they hold with the
Company. All of the nominees for election at this meeting have been elected
previously by the Company's shareholders as directors of the Company.
NOMINEES FOR ELECTION AS DIRECTORS FOR TERMS EXPIRING IN 1998
<TABLE>
<CAPTION>
POSITIONS OR OFFICES SERVED AS DIRECTOR
NAME WITH THE COMPANY CONTINUOUSLY SINCE AGE
----------------------------- ----------------------------- ------------------- ----
<S> <C> <C> <C>
Charles H. Robbins........... President and Chairman of the 1976 64
Board
Jack M. Mazur................ Senior Executive Vice 1976 53
President
Michael D. Starr............. Executive Vice President and 1985 51
Treasurer
</TABLE>
Charles H. Robbins founded the Company in 1976 and has been President and
Chairman of the Board since its inception. From 1973 to 1975 Mr. Robbins was
Vice President and Director of Operations of Tabershaw/Cooper Associates, Inc.,
a medical consulting firm, and Technical Director, Health and Medical Systems of
Informatics Inc.; from 1971 to 1973 he was Manager, Medical Information Systems
of Computer Science Corporation; and from 1961 to 1970 he held various positions
with the Office of the Surgeon General of the United States Army and the Army
Medical Department. In those positions, Mr. Robbins was engaged in directing
studies and developing programs relating to various health care related
activities.
Jack M. Mazur has been a director of the Company since 1976. From 1976
through May 1986 Mr. Mazur served as Assistant Secretary of the Company, from
June 1986 to October 1993 as Secretary of the Company, and from August 1989 to
the present as Senior Executive Vice President of the Company. Prior to August
1989, Mr. Mazur was engaged in the practice of law.
Michael D. Starr has been employed by the Company in various financial and
operational positions since 1976 and has been a director since 1985. Mr. Starr
was Controller of the Company from 1976 to 1981, Vice President, Finance and
Administration from 1981 to 1986, and has been Executive Vice President since
March 1986.
DIRECTORS CONTINUING IN OFFICE IN THE CLASS OF 1996
<TABLE>
<CAPTION>
POSITIONS OR OFFICES SERVED AS DIRECTOR
NAME WITH THE COMPANY CONTINUOUSLY SINCE AGE
----------------------------- ----------------------------- ------------------- ----
<S> <C> <C> <C>
Julien J. Lavoie............. Senior Vice President 1989 63
Donald J. Ruffing............ None 1991 74
Joseph G. Mathews............ None 1993 61
</TABLE>
4
<PAGE> 7
Julien J. Lavoie was Federal Program Manager of EDS Communications
Corporation, a contract services company, from 1987 to 1991, when he joined the
Company as Vice President. Previously, Mr. Lavoie served as President of
Productivity Management Services, Inc., a service company in the U.S. government
privatization program, from 1986 to 1987, and was Vice President Integration
Services for the Martin Marietta Data Systems Corporation, a major government
contractor, from 1983 to 1986.
Donald J. Ruffing is a retired Colonel in the U.S. Air Force. In 1990, Mr.
Ruffing served as a team member of the Peer and Application Reviews, Refugee
Mental Health Programs for the National Institute of Mental Health. From 1980 to
1985, Mr. Ruffing served as a project manager for the Company at St. Elizabeth's
Hospital. Mr. Ruffing completed 32 years in medical services management with the
U.S. Air Force. Upon his retirement, he was the Chief of the Air Force Medical
Service Corps, Office of the Surgeon General, where he was responsible for
developing plans, policies and procedures for the management of the Air Force
Medical Service Corps.
Joseph G. Mathews joined the Company as a Director in July, 1993. Since
1985, Mr. Mathews has owned and operated Joseph G. Mathews & Associates, an
insurance brokerage firm. Mr. Mathews' professional designations include
Chartered Financial Consultant and Master of Science Financial Services. In
addition to serving on the Company's Board, Mr. Mathews is a member of the
boards of directors of Lake of the Ozarks General Hospital, Mark Twain Bank,
Sanford Brown College and Learfield Communication. Mr. Mathews also serves on
the Lindenwood College Board.
DIRECTORS CONTINUING IN OFFICE IN THE CLASS OF 1997
<TABLE>
<CAPTION>
POSITIONS OR OFFICES SERVED AS DIRECTOR
NAME WITH THE COMPANY CONTINUOUSLY SINCE AGE
----------------------------- ----------------------------- ------------------- ----
<S> <C> <C> <C>
George E. Schafer, M.D....... Senior Vice President for 1981 72
Medical Affairs
Paul T. Cuzmanes............. None 1989 50
Charles P. Reilly............ Member, Executive Council 1991 52
</TABLE>
George E. Schafer, M.D. served as Vice President/Medical Director of the
Company from 1980 to 1993 and a director of the Company since 1981. Dr. Schafer
currently serves as Vice President Medical Affairs. Prior to joining the
Company, Dr. Schafer was a private consultant from 1978 to 1980. Dr. Schafer was
Surgeon General of the United States Air Force from 1975 to 1978 and retired
from the Air Force with the rank of Lieutenant General. Dr. Schafer held various
positions with the Air Force, commencing as a Flight Surgeon in 1947, through
various command positions from 1949 to 1975, and became Deputy Surgeon General
and then Surgeon General of the Air Force in 1975.
Paul T. Cuzmanes is a partner with the law firm of Wilson, Elser,
Moskowitz, Edelman & Dicker and has been engaged in the practice of law since
1976. Mr. Cuzmanes specializes in health care law, commercial law and the
representation of municipalities. He is also a fellow in the American Society of
Pharmaceutical Law.
Charles P. Reilly is the managing general partner of Shamrock Investments,
a financial advisory and investment firm that specializes in the health care
industry. From 1979 until founding Shamrock Investments in 1987, Mr. Reilly
served as Director, Senior Executive Vice President and Chief Development
Officer for American Medical International Corporation, a large multi-hospital
management company. In that position, Mr. Reilly was responsible for the
acquisition of new health care facilities and related business both in the
United States and abroad, oversaw the development of the company's integrated
health care services and facilities and directed the activities of AMI Group
Health Services, a division of American Medical International Corporation. Mr.
Reilly currently serves as Chairman of the Board of Directors of Dynamic Health,
Inc., an acute care hospital company, and as a director of G & L Realty
Corporation, a NYSE health care real estate investment trust (REIT). Mr. Reilly
has served as a director, trustee and governing council member of the Federation
of American Healthcare Systems, The National Committee for Quality Health Care
and the American Hospital Association, and has previously served as a board
director for several corporations.
5
<PAGE> 8
VOTE REQUIRED
The three nominees for election as directors at the 1995 Annual Meeting who
receive the greatest number of votes cast for the election of directors at that
meeting shall be elected directors, assuming there is a quorum present. The
aggregate number of votes entitled to be cast by all shareholders present in
person or represented by proxy at the meeting, whether those shareholders vote
"for", "against", or abstain from voting, will be counted for purposes of
determining the number of shares present for purposes of establishing a quorum.
The Board of Directors recommends a vote FOR each of the nominees for
election as directors.
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held four meetings during the year ended April 30,
1995, and took action by written consent in lieu of a meeting four times during
such year. Each of the incumbent directors attended at least 75% of the meetings
of the Board of Directors, and of the meetings of committees on which they
serve, held while they were on the Board of Directors and such committees in the
year ended April 30, 1995.
The standing committees of the Board of Directors include the Audit
Committee, the Compensation Committee, and the Stock Option Committee. The Board
of Directors has not appointed a nominating committee.
Messrs. Cuzmanes, Ruffing, and Mathews are members of the Audit Committee.
The functions of the Audit Committee are to review the adequacy of systems and
procedures for preparing the financial statements of the Company as well as the
suitability of internal financial controls, and to review and approve the scope
and performance of the independent auditors' work. The Audit Committee met three
times during the fiscal year ended April 30, 1995.
Messrs. Cuzmanes, Ruffing, and Mathews are members of the Stock Option
Committee. The functions of the Stock Option Committee are to determine the
amount and allocation of options to be granted under the Company's 1986 Stock
Option Plan, and to determine who are eligible Participants under the Plan. The
Stock Option Committee met three times for the fiscal year ended April 30, 1995.
Messrs. Cuzmanes, Reilly and Mathews were members of the Compensation
Committee for the fiscal year ended April 30, 1995. The function of the
Compensation Committee is to recommend salary levels for the executive officers
of the Company. The Compensation Committee met once during the fiscal year ended
April 30, 1995, and took action by written consent in lieu of a meeting twice
during such year.
Shareholders wishing to suggest potential nominees for election to the
Board of Directors should write to the Secretary of the Company specifying the
name of the proposed nominee together with a statement of such person's
qualifications and relevant biographical data. Each submission must be
accompanied by the written consent of the proposed nominee. All such
recommendations will be brought to the attention of the Board of Directors. The
procedures to be followed to nominate a candidate for election as a director are
described under the caption "Shareholder Proposals".
6
<PAGE> 9
EXECUTIVE OFFICERS
Certain information with respect to the Company's executive officers is set
forth below.
<TABLE>
<CAPTION>
CONTINUOUSLY
POSITIONS OR OFFICES SERVED AS EXECUTIVE
NAME WITH THE COMPANY OFFICER SINCE AGE
---------------------------- ---------------------------- -------------------- ----
<S> <C> <C> <C>
Charles H. Robbins.......... President and Chairman of 1976 64
the Board
Jack M. Mazur............... Senior Executive Vice 1976 53
President and Director
Michael D. Starr............ Executive Vice President, 1981 51
Treasurer and Director
Anthony M. Picini........... Senior Vice President, 1990 40
Finance and Chief Financial
Officer
Julien J. Lavoie............ Senior Vice President and 1991 63
Director
John P. Cole................ Executive Vice President 1994 54
</TABLE>
Anthony M. Picini joined the Company in December 1989 as Chief Financial
Officer and became Vice President Finance in 1990 and Senior Vice President
Finance in 1993. Prior to joining the Company, Mr. Picini was a Senior Manager
with the accounting firm of KPMG Peat Marwick LLP, managing auditing and
accounting services provided to public and private commercial companies.
John P. Cole is Executive Vice President of the Company with responsibility
for marketing the Company's managed health care products and services.
Previously, he was President and Chief Executive Officer of JP Cole & Associates
which exclusively marketed PHP products. JP Cole & Associates was merged into
PHP Healthcare in October 1994. Mr. Cole is a 30-year veteran of the employee
benefits field having held senior executive positions with Prudential, AMI, Blue
Cross of California, and Lincoln National Corporation. Prior to starting JP Cole
& Associates in 1993, Mr. Cole was Senior Vice President at Aetna Health Plans
where he had responsibility for both sales and delivery of health care in
markets across the United States.
For a summary of the business experience of each of the other executive
officers of the Company, see "Nominees for Election as Directors" and "Directors
Continuing in Office", above.
7
<PAGE> 10
There are no family relationships among any of the directors and executive
officers.
CASH COMPENSATION OF OFFICERS AND RELATED MATTERS
<TABLE>
<CAPTION>
Summary Compensation Table
LONG TERM
COMPENSATION
----------------
ANNUAL COMPENSATION AWARDS
--------------------------------------------------------
OTHER ANNUAL ALL OTHER
COMPENSATION OPTIONS/SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($) AWARD(S) ($)
--------------------------- ---- ---------- --------- ------------ ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Charles H. Robbins, 1995 $500,000 $83,333 (1) 395,000 $11,827(2)
Chief Executive 1994 500,000 -0- -0- 50,428
Officer 1993 500,000 -0- -0- 85,239
Jack M. Mazur, 1995 $400,000 $66,667 (1) 360,000 $ 9,688(3)
Senior Executive 1994 400,000 -0- -0- 7,673
Vice President 1993 400,000 -0- -0- 24,910
Michael D. Starr, 1995 $275,000 -0- (1) 145,000 $ 9,688(4)
Executive Vice 1994 275,000 -0- -0- 3,969
President 1993 275,000 -0- -0- 19,932
John P. Cole, 1995 $176,346(5) -0- (1) 15,000(6) 1,488(7)
Executive Vice 1994 -0- -0- -0- -0-
President 1993 -0- -0- -0- -0-
Julien J. Lavoie, 1995 $154,800 -0- (1) 14,000 $11,237(8)
Senior 1994 154,800 -0- -0- 15,795
Vice President 1993 154,800 -0- -0- 14,256
</TABLE>
---------------
Notes to Summary Compensation Table:
(1) Each of the named executive officers receives certain perquisites, including
the use of Company automobiles; such perquisites, however, do not exceed the
lesser of $50,000 or 10% of such officer's salary and bonus.
(2) Includes $3,627 term life insurance premiums, $8,000 director's fees
(accrued at April 30, 1995), and $200 in 401(k) Plan matching fees. Mr.
Robbins has elected to be paid his director's fees in stock pursuant to the
Directors' Retainer Plan.
(3) Includes $1,488 term life insurance premiums, $8,000 director's fees
(accrued at April 30, 1995), and $200 in 401(k) Plan matching fees. Mr.
Mazur has elected to be paid his director's fees in stock pursuant to the
Directors' Retainer Plan.
(4) Includes $1,488 term life insurance premiums, $8,000 director's fees
(accrued at April 30, 1995), and $200 in 401(k) Plan matching fees. Mr.
Starr has elected to be paid his director's fees in stock pursuant to the
Directors' Retainer Plan.
(5) Salary shown is that from Mr. Cole's date of employment, September 29, 1994,
through the end of the fiscal year.
(6) Does not include options for 19,000 shares received by Mr. Cole upon the
merger of JP Cole & Associates into the Company in October 1994.
(7) Includes $1,488 term life insurance premiums.
(8) Includes $3,037 term life insurance premiums, $8,000 director's fees
(accrued at April 30, 1995), and $200 in 401(k) Plan matching fees. Mr.
Lavoie has elected to be paid his director's fees in stock pursuant to the
Director's Retainer Plan.
Option Grants in 1995
During fiscal 1995, the Stock Option Committee and Board of Directors
considered and adopted an option repricing program for holders of options
granted under the Company's 1986 Stock Option Plan. In September 1994 the
program was implemented and each of the named executive officers surrendered
8
<PAGE> 11
outstanding not-in-the-money options in return for an equal number of options
with an exercise price equal to 60% of the fair market value of the Company's
Common Stock which will vest ratably over a three-year period. Other options
were granted under the 1986 Stock Option Plan in fiscal year 1995. No stock
appreciation rights were granted.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM
---------------------------------------------------------------------------------------------------------------------------------
NO OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO MARKET
OPTIONS EMPLOYEES EXERCISE PRICE EXPIRATION
NAME GRANTED IN 1995 PRICE GRANT DATE DATE 0% 5% 10%
-------------------- ---------- ---------- -------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles H. Robbins 270,000(1) 18.0% $ 6.075 $ 10.125 6/10/2004 1,093,500 2,812,741 5,450,393
125,000 8.3% $11.875 $ 11.875 11/18/2004 0 933,516 2,365,712
Jack M. Mazur 250,000(1) 16.7% $ 6.075 $ 10.125 6/10/2004 1,012,500 2,604,390 5,046,661
110,000 7.3% $11.875 $ 11.875 11/18/2004 0 821,494 2,081,826
Michael D. Starr 90,000(1) 6.0% $ 6.075 $ 10.125 6/10/2004 364,500 937,580 1,816,798
55,000 3.7% $11.875 $ 11.875 11/18/2004 0 410,747 1,040,913
John P. Cole 15,000 1.0% $ 9.00 $ 10.875 9/29/2004 28,125 130,713 288,104
Julien J. Lavoie 4,000(1) .3% $ 6.075 $ 10.125 6/10/2004 16,200 41,670 80,747
10,000 .7% $10.875 $ 11.875 11/18/2004 10,000 84,681 199,257
</TABLE>
---------------
(1) These shares represent options repriced in fiscal 1995 under the option
repricing program adopted by the Company in June 1994.
Repricing of Options/SARs
<TABLE>
<CAPTION>
LENGTH OF
ORIGINAL
OPTION
MARKET TERM
VALUE ON ORIGINAL NEW REMAINING
DATE OF OPTIONS REPRICING EXERCISE EXERCISE AT REPRICING
NAME AND PRINCIPAL POSITION REPRICING REPRICED(#) DATE PRICE PRICE (YEARS)
----------------------------------- --------- ----------- --------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Charles H. Robbins................. 6/10/94 160,000 $10.125 $22.50 $6.075 6.9
Chief Executive Officer 110,000 $10.125 $13.50 $6.075 7.8
Jack M. Mazur...................... 6/10/94 150,000 $10.125 $22.50 $6.075 6.9
Senior Executive Vice
President 100,000 $10.125 $13.50 $6.075 7.8
Michael D. Starr................... 6/10/94 50,000 $10.125 $22.50 $6.075 6.9
Executive Vice President 40,000 $10.125 $13.50 $6.075 7.8
John P. Cole....................... N/A N/A N/A N/A N/A N/A
Executive Vice President
Julien J. Lavoie................... 6/10/94 4,000 $10.125 $13.50 $6.075 6.9
Senior Vice President
</TABLE>
Report of Stock Option Committee
During the last quarter of fiscal year 1994 and early fiscal 1995, the
Stock Option Committee considered the repricing of options outstanding under the
Company's Stock Option Plan (the "Plan"). The Committee considered the fact that
a large number of the outstanding options that would be affected by a repricing
were held by the Company's three top executive officers, Messrs. Robbins, Mazur
and Starr and the performance and working relationship of these key executives.
It was agreed that the continuation of the Company's growth and future success
were dependent on the continued efforts of these individuals. The Committee
believes that stock options provide meaningful long-term incentive for key
employees. Because of the significant decline in the market price of the
Company's stock which had occurred subsequent to the grant of the then
outstanding options, it was determined that these options were not providing the
incentive intended when granted. In addition, the top executive officers had not
received salary increases for the past several years. The Committee
9
<PAGE> 12
concluded that repricing the outstanding options would be an appropriate means
to provide these executives with continuing incentive to work for the long-term
success of the Company.
Although many of the options held by the key executive officers were
already vested, the Committee determined that a new vesting period should be
established for the repriced options. Accordingly, the Committee concluded that
it would make available to all persons holding not-in-the-money options granted
under the Plan the opportunity to surrender them for cancellation and
termination in exchange for newly granted options for an equal number of shares
at an exercise price equal to 60% of the then market price, subject to a new
vesting schedule (vesting ratably over a three-year period).
The Committee believes that the option repricing was an important element
in retaining key management employees to continue to implement the Company's
growth plans.
STOCK OPTION COMMITTEE
PAUL T. CUZMANES
DONALD J. RUFFING
JOSEPH G. MATHEWS
10
<PAGE> 13
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
SHARES ACQUIRED AT 4/30/95 AT 4/30/95
NAME ON EXERCISE (#) VALUE REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
------------------------ ---------------- ------------------- ---------------------- --------------------------
<S> <C> <C> <C> <C>
Charles H. Robbins...... -0- -0- -0-/395,000 -0-/4,479,125
Jack M. Mazur........... -0- -0- -0-/360,000 -0-/4,105,000
Michael D. Starr........ -0- -0- -0-/145,000 -0-/1,591,375
John P. Cole............ -0- -0- 7,500/26,500 76,875/271,625
Julien J. Lavoie........ -0- -0- 25,000/14,000 206,250/136,450
</TABLE>
401(k) Plan
The Company established the PHP Healthcare Corporation 401(k) Plan (the
"401(k) Plan") effective January 1, 1991, pursuant to which employees may defer
compensation for income tax purposes under Section 401(k) of the Internal
Revenue Code. Participant contributions will be invested at all times in any or
all of six funds at the direction of the participant. Participant contributions
will be matched up to $200 annually by the Company. The Company contributed $200
to the 401(k) Plan during fiscal year 1995 on behalf of each of the named
executive officers, except Mr. Cole.
Director Compensation
Each director of the Company is paid $2,000 per quarter for his services as
a director, plus $650 for each special meeting of the Board. In addition, each
outside director is paid $1,200 for attending up to three committee meetings
annually and $500 for each additional committee meeting. Each director is
reimbursed for travel expenses relating to attending meetings of the Board of
Directors and its committees.
The Company has adopted a Directors' Retainer Plan. Commencing May 1, 1993,
for any fiscal quarter each director of the Company may elect to have the full
amount of his retainer paid in the form of common stock of the Company. The
number of shares issued is calculated based on the then current market value of
the stock.
Employment Agreements
The Company has entered into Employment Agreements with each of Charles H.
Robbins, Jack M. Mazur and Michael D. Starr. Under these agreements, Mr. Robbins
is employed as President and Chief Executive Officer, Mr. Mazur is employed as
Senior Executive Vice President and Mr. Starr is employed as Executive Vice
President. The agreements are each renewable automatically on May 1 of each year
unless terminated by either the executive or the Company on ninety (90) days
advance notice, or otherwise in accordance with the agreements, except that no
notice may be given by the Company sooner than three years after a Change in
Control (as defined in the agreements). The agreements are currently in effect
through April 30, 1996. In the event of termination because of the executive's
death or disability, the Company will pay the executive or his estate a lump sum
severance payment equal to one year's salary and a pro rata bonus for the year
in which the termination occurs. In the event the Company terminates the
agreement other than for cause, death or disability or the executive terminates
the agreement because of certain adverse changes following a Change in Control
of the Company, then (a) the Company must pay the executive a lump sum amount
equal to three times the sum of the executive's base salary and bonus; (b) the
executive is entitled, for a period of three years, to continuation of coverage
at the Company's expense of the executive's disability, medical and dental
benefits; (c) all restrictions on any outstanding awards granted to the
executive will lapse and be immediately vested, all stock options will become
fully exercisable and the executive will have the right
11
<PAGE> 14
to require the company to purchase for cash any shares of unrestricted stock and
stock purchased upon the exercise of any options.
The Company also has entered into an employment agreement with John P.
Cole. Under this agreement, Mr. Cole is employed as Executive Vice President of
the Company for a period of two years with an annual salary of $330,000. Options
to purchase 15,000 shares of the Company's common stock at $9.00 per share were
granted to Mr. Cole pursuant to this agreement. The options are exercisable
ratably over one year in increments of three months starting at the grant date
of September 29, 1994.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
None.
Compensation Committee Report
The Company's compensation program for executive officers is intended to
align executive compensation with the long-run profitability of the Company, and
thus with the interests of the shareholders. The Compensation Committee works
closely with the full Board of Directors and with management in establishing and
implementing compensation policies and principles. In addition to base salary,
compensation for the Company's executive officers may include bonuses, stock
options and certain other benefits, such as insurance and use of Company
automobiles.
The Stock Option Committee is responsible for determining the recipients
and number of options, the timing of grants and the option exercise prices, all
in accordance with the terms of the Company's Stock Option Plan. The Stock
Option Committee considers the recommendations of management and of the
Compensation Committee. During late fiscal 1994 and fiscal 1995, the Stock
Option Committee and the Board of Directors considered the adoption of a program
to allow repricing of not-in-the-money options for all holders, including the
named executive officers. The program was adopted effective June 1994.
In considering base salary compensation for 1995, the Committee focused
principally on the fact that the Company was still undergoing changes in
connection with its efforts, begun in fiscal 1993, to develop and market
services in the commercial managed care market. Because fiscal 1994 financial
results had not yet fully reflected the benefits of these efforts, and in light
of the option repricing program, the Committee determined to recommend no
increase in the salary levels of its principal executive officers for 1995 and
to defer consideration of cash bonuses and new option grants to executive
officers until later in the fiscal year.
The Committee retained the other elements of the executive compensation
package (health and life insurance, use of the Company automobiles and, for the
senior executive officers, split dollar life insurance) for fiscal 1995.
In the third quarter of fiscal 1995, the Compensation Committee considered
financial and operational results of the first two quarters of 1995 and the
extraordinary efforts expended by the Chief Executive Officer and the Senior
Executive Vice President to achieve those results. The Compensation Committee
recommended to the Board of Directors a cash bonus in the aggregate sum of
$150,000 to be allocated $83,333.35 to Mr. Robbins and $66,666.65 to Mr. Mazur
in consideration of their work for and guidance of the Company in its
restructuring efforts. In the Committee's view the recommended bonus amount was
appropriate in light of the Company's financial position and the Committee's
understanding of the compensation packages for executives of comparable position
and responsibility in the industry. The Committee did not apply objective
Company performance criteria in establishing the bonuses. The Board approved the
bonus, with Messrs. Robbins and Mazur abstaining.
Also in the third quarter of fiscal 1995, the Compensation Committee
recommended to the Stock Option Committee that it consider option grants to the
Company's executive officers. The Committee believes that employee stock
ownership aligns employee and shareholder interests by focusing employees on the
creation of shareholder value in the short and long term. The Compensation
Committee recommended that option grants be made to the executive officers to
retain their unique and valuable contributions to the Company's short and long
term business plan and to provide them with further incentive to create short
and long term shareholder
12
<PAGE> 15
value. Acting on the Compensation Committee's recommendation, the Stock Option
Committee granted 125,000 stock options to Mr. Robbins, 110,000 stock options to
Mr. Mazur, and 55,000 stock options to Mr. Starr, each at an exercise price
equal to the then current market price. In addition, the Stock Option Committee
granted options to purchase 10,000 shares of Common Stock to Mr. Lavoie at an
exercise price equal to $1.00 less than the then current market price. These
recommendations were based on the subjective determination of the Compensation
Committee as to the expected relative contributions of the executive officers to
the Company.
COMPENSATION COMMITTEE
CHARLES P. REILLY
JOSEPH G. MATHEWS
PAUL T. CUZMANES
13
<PAGE> 16
STOCK PRICE PERFORMANCE GRAPH
The line graph below compares yearly percentage change in the cumulative
total shareholder return on the Company's Common Stock against the cumulative
total return on the Standard and Poor's 500 Stock Index and the Standard and
Poor's Health Care Composite Index for the period of five years commencing on
April 30, 1990.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG PHP HEALTHCARE CORPORATION, THE S & P 500 INDEX
AND THE S & P HEALTH CARE COMPOSITE INDEX
<TABLE>
<CAPTION>
PHP HEALTH- S & P HEALTH
MEASUREMENT PERIOD CARE COR- CARE COM-
(FISCAL YEAR COVERED) PORATION S & P 500 POSITE
<S> <C> <C> <C>
4/90 100 100 100
4/91 317 118 147
4/92 233 134 166
4/93 98 147 141
4/94 140 154 135
4/95 257 181 189
</TABLE>
* $100 invested on 04/30/90 in stock or index -- including reinvestment of
dividends. Fiscal year ending April 30.
CERTAIN TRANSACTIONS AND BUSINESS RELATIONSHIPS
From June 1990 until September 1994, the Company retained Shamrock
Investments ("Shamrock") as a financial advisor. Charles P. Reilly, a director
of the Company, is the managing general partner of Shamrock and Michael E.
Gallagher is a general partner of Shamrock. In fiscal 1995, the Company paid
Shamrock $86,000 for financial advisory services. These arrangements were
terminated in September 1994 in connection with the employment by the Company of
Messrs. Reilly and Gallagher, discussed below.
On September 29, 1994, Paragon Ambulatory Surgery, Inc., a Delaware
corporation ("Paragon"), was merged into the Company. Since 1991, the Company
had owned 51% of the capital stock of Paragon. The remaining 49% was owned
principally by persons affiliated with Shamrock, including Messrs. Reilly and
Gallagher. The Company had provided management services to Paragon at cost and
had made loans to Paragon in connection with its acquisition of surgery centers.
As a result of the merger, the management services agreement was terminated and
Paragon's shareholders (other than the Company) received a total of 190,000
treasury shares of the Company's Common Stock, promissory notes issued by the
Company in the total principal amount of $500,000 due in five years and
convertible after one year into Common Stock at a conversion price of $9.00 per
share, and promissory notes issued by the Company in the total principal amount
of $430,000 due on or before August 1, 1995 (which notes have been paid). As
shareholders of Paragon, Messrs. Reilly and Gallagher received 54.0% and 40.5%,
respectively, of these shares of Common Stock and
14
<PAGE> 17
promissory notes. The terms of the merger were determined through negotiations
between management of the Company and the Paragon shareholders (other than the
Company) on the basis of the value of the two surgery centers then owned and
operated by Paragon, Paragon's claims in certain then pending litigation arising
out of the proposed sale of those centers, and services provided to Paragon by
certain of its shareholders. The shares of Paragon common stock not already
owned by the Company represented approximately 44% of Paragon's outstanding
shares. The price at which the $500,000 promissory note is convertible into
Common Stock represents the fair market value of the Common Stock on the date a
preliminary agreement was reached, subject to approval by the Board of Directors
of the Company. On October 3, 1994, PHP sold the general partnership interest in
the two remaining surgery centers for $11,750,000 in cash and the assumption of
certain liabilities relating to the original acquisition of the centers.
Also on September 29, 1994, Shamrock purchased 100,000 treasury shares of
Common Stock from the Company, delivering in payment a five-year promissory note
of Shamrock dated as of September 29, 1994, in the principal amount of $900,000,
which is secured by the pledge of 150,000 shares of Common Stock (of which
100,000 shares are owned by Shamrock, and 50,000 shares are owned by Mr. Reilly
and Mr. Gallagher), and by convertible notes payable of $500,000 by the Company
to the same parties. The terms of the purchase were negotiated between
management of the Company and Messrs. Reilly and Gallagher, the general partners
of Shamrock. The purchase price represents the fair market value of the Common
Stock on the date a preliminary agreement was reached, subject to approval of
the Board of Directors of the Company.
The Company, through its wholly-owned subsidiary, PHP Family Healthcare
Corporation, Inc., entered into agreements with JP Cole & Associates, Inc. ("JP
Cole") and its shareholders in 1993. At that time, Mr. Reilly was a minority
shareholder of JP Cole (owning approximately 17%). Pursuant to a Sales and
Services Agreement, the Company retained JP Cole as a sales representative for
marketing the Company's health care products and services to private sector
health care industry companies. The Agreement provided for the payment of
commissions related to successful marketing efforts, as defined. In addition,
the Company agreed to lend to JP Cole up to $3,000,000, which loans could be
converted into 83% of the capital stock of JP Cole at the Company's option. At
August 31, 1994, the cash advances to JP Cole and accrued interest were
approximately $800,000. The Company also entered into a Put-Call Agreement with
the shareholders of JP Cole pursuant to which, under certain circumstances, the
Company could call their shares and the shareholders could put their shares to
the Company.
On October 3, 1994, JP Cole was merged into PHP Family Healthcare
Corporation, Inc. In connection with the merger, JP Cole's shareholders received
a total of 71,429 treasury shares of the Company's Common Stock, promissory
notes issued by the Company in total principal amount of $100,000 due on or
before January 2, 1995 (which notes have been paid), and options to acquire a
total of 71,429 shares of Common Stock at an exercise price of $9.00 per share,
which expire in September 2004. Of these, 44,286 shares of Common Stock are held
in escrow subject to forfeiture if certain performance conditions are not met.
Options to purchase 44,286 shares of Common Stock will become exercisable only
if certain performance conditions are met by December 30, 1996, or a change of
control of the Company occurs prior to that date. As shareholders of JP Cole,
Messrs. Cole, Reilly and Gallagher received 70.0%, 17.1% and 12.9%,
respectively, of the Common Stock, promissory notes and options issued in
connection with the merger. They acquired their JP Cole shares as founders of
that company in August 1993 for $70,000, $17,100 and $12,900, respectively. The
terms of the merger were determined through negotiations between management of
the Company and the JP Cole shareholders on the basis of the value of the
revenues payable by the Company to JP Cole under the agreements described above
and amounts owned by the Company to the JP Cole shareholders. The exercise price
of the options represents the fair market value of the Company's Common Stock on
the date a preliminary agreement was reached, subject to approval by the Board
of Directors of the Company.
As of August 1, 1994, Messrs. Reilly and Gallagher entered into one-year
employment agreements with the Company pursuant to which they assisted the
Company's Executive Council in strategic planning, served along with Messrs.
Robbins, Mazur, and Starr as members of the Executive Committee of Management,
and performed other duties assigned by the Board of Directors of the Company.
Pursuant to these agreements, as of August 1, 1994, Messrs. Reilly and Gallagher
were employed at annual salaries of $1,000 each and were granted options to
purchase 68,571 and 51,429 shares of Common Stock, respectively, at an exercise
price of
15
<PAGE> 18
$9.00 per share which options expire in September 2004. In connection with these
employment agreements, the Company terminated its agreement with Shamrock under
which the Company received financial advisory services. On September 29, 1994,
Mr. Cole entered into a two-year employment agreement with the Company pursuant
to which he serves as Executive Vice President of the Company. Pursuant to this
agreement, Mr. Cole was granted options to purchase 15,000 shares of Common
Stock at an exercise price of $9.00 per share, which expire in September 2004.
The foregoing options are exercisable ratably over a one-year period and become
exercisable immediately in the event of a change of control of the Company. The
exercise price of the options represents the fair market value of the Common
Stock on the date a preliminary agreement was reached, subject to approval by
the Board of Directors of the Company.
On October 7, 1994, Messrs. Robbins and Mazur, and their spouses, Messrs.
Starr, Reilly and Gallagher and Shamrock entered into a Voting Agreement under
which the parties have agreed to cause their shares of Common Stock to be voted,
with respect to each matter put to a vote of the Company's shareholders, in
accordance with the two-thirds vote of the shares owned by the parties on the
date of the Voting Agreement. The parties entered into the Voting Agreement in
order to assure the continuation of the policies of the current management of
the Company, which they believe to be in the best interest of the Company and
its shareholders. The Voting Agreement expires two years after the date thereof,
unless otherwise agreed by the parties.
The Company has adopted a Senior Executive Loan Program (the "Program"),
pursuant to which loans to senior executive officers may be made up to three and
one-half times the officer's annual salary. Each loan must be repaid within one
year and bears interest at two percent above the Company's short-term borrowing
rate. All loans are collateralized by the shares of the Company's Common Stock
owned by the senior executive officer. The due dates on amounts outstanding were
extended in 1995 for twelve months. Beginning in fiscal year 1993, there were
loans made under the Program to each of Charles H. Robbins and Jack M. Mazur.
The largest amount outstanding during fiscal 1995 to Mr. Robbins was $1,321,000
and to Mr. Mazur was $1,650,000. The interest rate on these loans as of July 31,
1995 was 11.75%.
In accordance with the Board of Directors' approval, the Company makes
premium payments relating to certain insurance policies on behalf of certain
officers of the Company. These advances are owed to the Company and are
collateralized by assignment of the underlying cash surrender value and related
death benefit. During 1995, the officers signed promissory notes bearing
interest at 7% and due in April 2002 for the amounts advanced. The amount
outstanding as of April 30, 1995, to Mr. Robbins was $565,000, to Mr. Mazur was
$175,000, and to Mr. Starr was $145,000.
Paul Cuzmanes is a partner with the law firm of Wilson, Elser, Moskowitz,
Edelman & Dicker, which firm the Company retained in fiscal 1995.
For further information with respect to related party transactions, see
Note 10 of Notes to Consolidated Financial Statements.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and
Exchange Commission ("SEC") and the New York Stock Exchange. Officers, directors
and greater than ten percent shareholders are required by SEC regulation to
furnish the Company with copies of all Forms 3, 4 and 5 they file.
Based on the Company's review of the copies of such forms it has received
and written representations from certain reporting persons that they were not
required to file Forms 5 for the fiscal year, except as noted below, the Company
believes that all its officers, directors and greater than ten percent
shareholders complied with all filing requirements applicable to them with
respect to transactions during fiscal 1995. Mr. Cuzmanes sold certain shares in
March and April 1995, but did not report the dispositions until the filing of
Form 5 in August 1995.
16
<PAGE> 19
SHAREHOLDERS PROPOSALS
If a shareholder wishes to have a proposal considered for inclusion in the
Company's proxy solicitation materials in connection with the Annual Meeting of
Shareholders to be held in September, 1996, the proposal must comply with the
Securities and Exchange Commission's proxy rules, be stated in writing, and be
submitted on or before May 22, 1996, to the Company at its principal executive
offices at 11440 Commerce Park Drive, Reston, Virginia 22091, Attention: Ben
Rosenbaum III, Secretary. All such proposals should be sent by certified mail,
return receipt requested.
Excluding shareholder proposals filed in accordance with the proxy rules, a
shareholder is required to comply with the Company's Bylaws with respect to any
proposal to be presented for action at an annual meeting of shareholders. The
Company's Bylaws require each proposal to be (i) written, (ii) delivered to, or
mailed and received at, the principal executive office of the Company not less
than 60 days nor more than 90 days prior to the date of the annual meeting, and
(iii) accompanied by (A) a brief description of the proposal and the reasons
therefor, (B) the name and address of the shareholder making the proposal and
any other shareholders known by such shareholder to support such proposal, (C)
the class and number of shares of Company capital stock beneficially owned by
all such shareholders, and (D) any financial interest of such shareholder in the
proposal. If notice or public disclosure of the date of the annual meeting
occurs less than 70 days prior to the date of the annual meeting, shareholders
must deliver to the Company, or mail and have received at the Company, the
proposal and required attendant information not later than the close of business
on the tenth day following the earlier of (i) the day on which such notice of
the date of the annual meeting was mailed, or (ii) the day on which such public
disclosure was made. Nothing in the Bylaws requires the Company to include in
its proxy statement and proxy for any annual meeting of shareholders any
shareholder proposal which the Company is permitted to exclude pursuant to the
rules of the Securities and Exchange Commission at the time such proposal is
received.
If a shareholder wishes to nominate a candidate for election as director at
the Annual Meeting of Shareholders to be held in 1995, the shareholder must
comply with the Company's Bylaws with respect to director nominations. Written
notice of the shareholder's intent to make such nomination must be given to the
Secretary of the Company at the principal executive offices of the Company, not
later than 60 days prior to the date of the 1996 Annual Meeting. The written
notice shall set forth (A) the name and address of the shareholder and each
person whom the shareholder proposes to nominate as a director; (B) a
representation that the shareholder is a holder of record of stock of the
Company entitled to vote at such meeting and intends to appear in person or by
proxy at the meeting to nominate the person or person specified in the notice;
(C) a description of all arrangements or understandings between the shareholder
and each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
shareholder; (D) such other information regarding each nominee proposed by such
shareholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission as then in
effect; and (E) the consent of each nominee to serve as a director of the
Company if so elected. The presiding officer of the meeting may refuse to
acknowledge the nomination of any person not made in compliance with the
foregoing procedure.
The preceding two paragraphs are intended to summarize the applicable
Bylaws of the Company. These summaries are qualified in their entirety by
reference to those Bylaws.
SELECTION OF AUDITORS
The Board of Directors has selected Coopers & Lybrand L.L.P. to serve as
the Company's independent auditors for the current year. A representative of
Coopers & Lybrand L.L.P. will be present at the Annual Meeting of Shareholders
and will have the opportunity to make a statement and respond to any questions
that might arise.
On January 9, 1995, the Company solicited Statements of Qualifications from
several independent accounting firms, including KPMG Peat Marwick LLP, the
Company's public accountants for the fiscal years ended April 30, 1994 and April
30, 1993, to provide audit services for its consolidated financial statements
for
17
<PAGE> 20
the year ended April 30, 1995. On January 11, 1995, KPMG Peat Marwick LLP
indicated that it had decided not to stand for re-appointment and, therefore,
would not submit a Statement of Qualifications. The decision to solicit
proposals to perform audit services was recommended by the Audit Committee and
approved by the Board of Directors.
The audit reports of KPMG Peat Marwick LLP on the Company's consolidated
financial statements as of and for the fiscal years ended April 30, 1994 and
1993 did not contain an adverse opinion or a disclaimer of opinion, and was not
qualified or modified as to uncertainty, audit scope or accounting principle
except with respect to the Company's adoption of the Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes, in fiscal year ended April 30, 1994. In addition,
during fiscal year 1993 and 1994 and any subsequent interim period during which
KPMG Peat Marwick LLP served as the Company's independent public accountants,
there were no disagreements with KPMG Peat Marwick LLP on any matter of
accounting principles, or practices, financial statement disclosure, or auditing
scope or procedures which, if not satisfied to KPMG Peat Marwick LLP's
satisfaction, would have caused it to make a reference to the subject matter of
the disagreement in connection with its reports. In connection with its audit of
the Company's consolidated financial statements for the fiscal year ended April
30, 1994, KPMG Peat Marwick LLP issued a letter relating to internal controls to
the Board of Directors that identified what KPMG Peat Marwick LLP considered to
be a reportable condition relating to timely financial reporting and the
Company's accounting decision-making process.
On March 17, 1995, the Board of Directors engaged Coopers & Lybrand, L.L.P.
as the Company's independent auditors for fiscal year 1995.
MISCELLANEOUS
The Company will bear the cost of solicitation of proxies, including
expenses in connection with the preparation and mailing of this Proxy Statement.
The Company will reimburse banks, brokers and nominees their reasonable expenses
for sending proxy material to the beneficial owners of the Common Stock. In
addition to solicitation by mail, proxies may be solicited in person or by
telephone or telegram by officers or regular employees of the Company.
The person giving a proxy has the power to revoke it at any time before it
is exercised. All shares represented by proxies received in time to be counted
at the Annual Meeting will be voted.
Management knows of no business to be brought before the Annual Meeting of
Shareholders other than as set out above. If other matters properly come before
the meeting, it is the intention of the persons named in the solicited proxy to
vote such proxy thereon in accordance with their judgment.
Even though you plan to attend the meeting in person, please sign, date and
return the enclosed proxy promptly. If you attend the meeting, the proxy will be
voided at your request and you can vote in person. A postage-paid
return-addressed envelope is enclosed for your convenience. Your cooperation in
giving this your immediate attention will be appreciated.
By Order of the Board of Directors
Ben Rosenbaum III, Secretary
18
<PAGE> 21
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING:
<TABLE>
<S> <C> <C> <C>
1. Election of Directors FOR all nominees WITHHOLD AUTHORITY to vote *EXCEPTIONS
listed below / / for all nominees listed below / / / /
</TABLE>
Nominee: For terms ending in 1998 - Charles H. Robbins, Jack M. Mazur and
Michael D. Starr
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided below.)
*Exceptions: ___________________________________________________________________
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Change of Address and
or Comments Mark Here / /
Please sign exactly as name appears on the label
affixed hereto. When signing as attorney, executor,
administrator, trustee or guardian, please give
full title. If more than one trustee, all should
sign.
Dated: ________________________________, 1995
___________________________________________
Signature
___________________________________________
VOTES MUST BE INDICATED
(X) IN BLACK OR BLUE INK. /X/
SIGN, DATE AND RETURN THIS CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE> 22
PHP HEALTHCARE CORPORATION
PROXY FOR 1995 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints George E. Schaefer, Paul T. Cuzmanes and Charles
P. Reilly, or any one of them (with full power to act alone), as proxies for
the undersigned with full power of substitution, to vote all the shares of
Common Stock of PHP Healthcare Corporation standing in the undersigned's name on
its books at the close of business on September 8, 1995 at the Annual Meeting of
Shareholders to be held at the Company's corporate offices at 11440 Commerce
Park Drive, Reston, Virginia on October 16, 1995, at 10:00 a.m., local time, and
at any adjournment thereof, with all the powers the undersigned would possess if
personally present, as indicated on the reverse side.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. The undersigned hereby acknowledges
receipt of Notice of said Annual Meeting dated September 19, 1995, and
accompanying Proxy Statement.
If no direction is made, this proxy will be voted FOR Proposal I.
(Continued, and to be SIGNED on reverse side)
PHP HEALTHCARE CORPORATION
P.O. BOX 11051
NEW YORK, N.Y. 10203-0051
