<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:
/X/ Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
BEVERLY ENTERPRISES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
$125
- --------------------------------------------------------------------------------
/ / 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:
BEVERLY ENTERPRISES, INC.
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(4) Date Filed:
April 16, 1995
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<PAGE> 2
BEVERLY ENTERPRISES, INC.
5111 ROGERS AVENUE,
SUITE 40-A
FORT SMITH, ARKANSAS 72919
(501) 452-6712
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 18, 1995
To the Stockholders:
The Annual Meeting of Stockholders of Beverly Enterprises, Inc., will be
held at the Holiday Inn, 700 Rogers Avenue, Fort Smith, Arkansas, on Thursday,
May 18, 1995, at 10:00 a.m., for the following purposes:
1. To elect nine members of the Board of Directors;
2. To approve the Stockholder Rights Plan, as amended;
3. To ratify the appointment of Ernst & Young LLP as independent auditors
for 1995;
4. To consider and act upon the FAST proposal, which is opposed by the
Board of Directors, and is set forth in the Proxy Statement; and
5. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Nominees for election as directors at the Annual Meeting and any
adjournments thereof (the "Annual Meeting") are Beryl F. Anthony, Jr., David R.
Banks, James R. Greene, Edith E. Holiday, Jon E. M. Jacoby, Risa J.
Lavizzo-Mourey, M.D., Louis W. Menk, Marilyn R. Seymann, and Will K. Weinstein,
all of whom are presently serving as directors of the Company.
The Board of Directors has fixed the close of business on March 20, 1995,
as the record date for the determination of stockholders who are entitled to
notice of and to vote at the Annual Meeting. A list of stockholders entitled to
vote at the Annual Meeting will be open to the examination of any stockholder
for any purpose germane to the Annual Meeting at the offices of Beverly
Enterprises, Inc., 5111 Rogers Avenue, Suite 40-A, Fort Smith, Arkansas, during
ordinary business hours for 10 days prior to the Annual Meeting.
We encourage you to attend the Annual Meeting. Whether you are able to
attend or not, we urge you to indicate your vote on the enclosed proxy card FOR
the election of directors named in the attached Proxy Statement; FOR the
approval of the Stockholder Rights Plan, as amended; FOR ratification of the
appointment of Ernst & Young LLP as independent auditors for 1995; and AGAINST
the FAST proposal. Please sign, date and return the proxy card promptly in the
enclosed envelope. If you attend the Annual Meeting, you may vote in person even
if you have previously mailed a proxy card.
By Order of the Board of Directors
ROBERT W. POMMERVILLE
Secretary
April 17, 1995
Fort Smith, Arkansas
<PAGE> 3
BEVERLY ENTERPRISES, INC.
5111 ROGERS AVENUE,
SUITE 40-A
FORT SMITH, ARKANSAS 72919
(501) 452-6712
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
MAY 18, 1995
The accompanying proxy is solicited by the Board of Directors of Beverly
Enterprises, Inc. (the "Company") to be voted at the Annual Meeting of
Stockholders to be held May 18, 1995, and any adjournments of the meeting (the
"Annual Meeting"). It is anticipated that this proxy material will be mailed on
or about April 17, 1995, to stockholders of record on March 20, 1995.
A copy of the annual report of the Company for the year ended December 31,
1994, including consolidated financial statements, is enclosed herewith. THE
COMPANY WILL PROVIDE WITHOUT CHARGE TO ANY PERSON SOLICITED HEREBY, UPON THE
WRITTEN REQUEST OF SUCH PERSON, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM
10-K FOR THE YEAR ENDED DECEMBER 31, 1994, FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION. SUCH REQUESTS SHOULD BE DIRECTED TO ROBERT W. POMMERVILLE,
SECRETARY OF THE COMPANY, AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICES, 5111
ROGERS AVENUE, SUITE 40-A, FORT SMITH, ARKANSAS 72919-0155 (501) 452-6712.
A stockholder giving a proxy has the power to revoke it at any time before
it is exercised. A proxy may be revoked by filing with the Secretary of the
Company (i) a signed instrument revoking the proxy, or (ii) a duly executed
proxy bearing a later date. A proxy may also be revoked if the person executing
the proxy is present at the meeting and elects to vote in person. If the proxy
is not revoked, it will be voted by those therein named.
VOTING PROCEDURES
The close of business on March 20, 1995 has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
Annual Meeting. As of the close of business on such date, the Company has
outstanding and entitled to vote 85,668,271 shares of Common Stock, par value
$.10 per share (the "Common Stock"). Each holder of shares of Common Stock is
entitled to one vote per share on each matter to be considered. Stockholders are
not permitted to cumulate votes for the purpose of electing directors or
otherwise.
The presence in person or by proxy of the holders of a majority of the
shares entitled to vote, will constitute a quorum for the transaction of
business at the Annual Meeting.
A plurality of the shares voted in person or by proxy at the Annual Meeting
is required for the election of directors. The affirmative vote of the holders
of shares of Common Stock representing a majority of the shares voted at the
Annual Meeting is required for the ratification of the appointment of Ernst &
Young LLP as independent auditors for 1995, the approval of the Stockholder
Rights Plan, as amended, the approval of the FAST proposal and the approval of
such other matters (other than the election of directors) as may properly come
before the Annual Meeting.
Under the Company's by-laws and Delaware law: (i) shares at the Annual
Meeting which are represented by proxies that reflect abstentions or broker
non-votes (i.e., shares held by a broker or nominee
<PAGE> 4
which are represented at the meeting, but with respect to which such broker or
nominee is not empowered to vote on a particular proposal) will be counted as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum; (ii) there is no cumulative voting and the director
nominees receiving the highest number of votes, up to the number of directors to
be elected, are elected and, accordingly, abstentions, broker non-votes and
withholding of authority to vote will not affect the election of directors; and
(iii) proxies that reflect abstentions as to a particular proposal will be
treated as voted for purposes of determining whether the proposal is approved or
rejected and will have the same effect as a vote against that proposal, while
proxies that reflect broker non-votes will be treated as unvoted for purposes of
determining approval of that proposal and will not be counted as votes for or
against that proposal.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of March 20, 1995, relating
to the beneficial ownership of Common Stock by each person known by the Company
to own beneficially more than 5% of the outstanding shares of Common Stock,
based solely upon filings made by such persons with the Securities and Exchange
Commission. Percentages in the table were calculated based on the number of
shares of Common Stock outstanding at March 20, 1995.
<TABLE>
<CAPTION>
NUMBER OF PERCENT
SHARES OF OF TOTAL
COMMON COMMON
NAME STOCK STOCK
------------------------------------------------------------- --------- --------
<S> <C> <C>
RCM Capital Management....................................... 4,633,849(1) 5.4%
(collectively "RCM")
Four Embarcadero Center, Suite 2900
San Francisco, CA 94111
</TABLE>
- ---------------
(1) Based on the latest schedule 13G, dated February 8, 1995, provided to the
Company by RCM, RCM had sole voting power with respect to 3,255,100 shares
and sole dispositive power with respect to 4,633,849 shares.
2
<PAGE> 5
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of March 20, 1995, the amount of the
Common Stock beneficially owned by each of the Company's directors, each
executive officer named in the Summary Compensation Table, and all directors and
executive officers as a group based on information obtained from such persons.
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
<TABLE>
<CAPTION>
SOLE
VOTING OPTIONS PERCENTAGE
AND EXERCISABLE OTHER OF
INVESTMENT WITHIN 60 BENEFICIAL COMMON
POWER DAYS OWNERSHIP TOTAL STOCK
---------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Beryl F. Anthony, Jr..................... 0 15,000 0 15,000 *
David R. Banks........................... 131,795(1) 320,000 3,017(2) 454,812 *
Curt F. Bradbury......................... 2,000 15,000 0 17,000 *
James R. Greene.......................... 500 15,000 0 15,500 *
Boyd W. Hendrickson...................... 39,372(1) 117,750 0 157,122 *
Edith E. Holiday......................... 0 0 200(2) 200 *
Jon E.M. Jacoby.......................... 0 15,000 0 15,000 *
Ronald C. Kayne.......................... 18,289 38,500 0 56,789 *
Risa J. Lavizzo-Mourey, M.D.............. 0 0 0 0 *
Louis W. Menk............................ 0 0 5,000(3) 5,000 *
T. Jerald Moore.......................... 50,901(1) 34,100 0 85,001 *
Marilyn R. Seymann....................... 1,000 0 0 1,000 *
Bobby W. Stephens........................ 64,783(1) 202,250 84,202(2) 351,235 *
Will K. Weinstein........................ 15,000 15,000 0 30,000 *
All Directors and Executive Officers as a
Group (21 Persons)..................... 1,714,644 2.0%
</TABLE>
- ---------------
* Percentage of Common Stock owned does not exceed 1%.
(1) Includes shares allocated to the employee through participation in the
Company's Employee Stock Purchase Plan.
(2) Shares owned by family members.
(3) Shares held by a trust over which Mr. Menk has investment and revocation
power.
PROPOSAL 1 -- ELECTION OF DIRECTORS
One of the purposes of the Annual Meeting is to elect nine directors to
hold office until the 1996 annual meeting and until successors are elected and
qualified. Nominees for election as directors at the Annual Meeting are Beryl F.
Anthony, Jr., David R. Banks, James R. Greene, Edith E. Holiday, Jon E. M.
Jacoby, Risa J. Lavizzo-Mourey, M.D., Louis W. Menk, Marilyn R. Seymann, and
Will K. Weinstein, all of whom are presently serving as directors of the
Company.
Curt F. Bradbury, who has served as a director since 1989, is not standing
for re-election.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote FOR the nominees named above.
Unless otherwise directed on the proxy card, the proxy holders named therein
will vote FOR the election of the nominees named above. By appropriate
indication on the proxy card, stockholders may instruct the proxy holders to
vote for some but not all of the nominees named above. In the event that any
nominee is unable to serve, an event not now
3
<PAGE> 6
anticipated, the proxies will then be voted FOR any nominee who shall be
designated by the present Board of Directors to fill the vacancy.
INFORMATION ABOUT NOMINEES FOR DIRECTOR
The following table contains certain information as of March 20, 1995, with
respect to the persons who have been nominated to serve as directors for the
term beginning May 18, 1995.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES DIRECTOR
NAME AGE WITH THE COMPANY SINCE
--------------------------------- --- ------------------------ ------------
<S> <C> <C> <C>
Beryl F. Anthony, Jr.(b)(d)(e) 57 Director 1993
David R. Banks(c) 58 Chairman of the Board,
President, Chief
Executive Officer and
Director 1979
James R. Greene(a)(d) 73 Director 1991
Edith E. Holiday 43 Director March, 1995
Jon E. M. Jacoby(a)(c)(e) 56 Director 1987
Risa J. Lavizzo-Mourey, M.D. 40 Director March, 1995
Louis W. Menk (b)(d) 76 Director 1989
Marilyn R. Seymann 52 Director March, 1995
Will K. Weinstein(c)(e) 54 Director 1989
</TABLE>
- ---------------
(a) Member of the Audit Committee
(b) Member of the Compensation Committee
(c) Member of the Finance Committee
(d) Member of the Quality Assurance Committee
(e) Member of the Nominating Committee
The following is a summary of the business experience of the persons who
have been nominated to serve as directors of the Company.
Beryl F. Anthony, Jr. Mr. Anthony served in Congress and was Chairman of
the Democratic Congressional Campaign Committee from 1987 through 1990. In 1993,
he became a partner in the law firm of Winston & Strawn.
David R. Banks. Mr. Banks has served as President since October 1979, Chief
Executive Officer since May 1989 and Chairman of the Board since March 1990. Mr.
Banks is a director of Nationwide Health Properties, Inc., Ralston Purina
Company, Wal-Mart Stores, Inc., and Wellpoint Health Networks, Inc.
James R. Greene. Mr. Greene's principal occupation has been that of a
director and consultant to various U.S. and international businesses since 1986.
He is a director of a number of mutual funds of Alliance Capital Management
Corporation, Buck Engineering Company and Bank Leumi.
Edith E. Holiday. Ms. Holiday is an attorney. She served as White House
Liaison for the Cabinet to all federal agencies during the Bush administration.
Prior to that, Ms. Holiday served as General Counsel of the U. S. Treasury
Department as well as its Assistant Secretary of Treasury for Public Affairs and
Public Liaison. She is a director of Amerada Hess Corporation, Bessemer Trust
Company, N.A., Bessemer Trust Company of New Jersey, Hercules Incorporated, and
H.J. Heinz Company.
Jon E. M. Jacoby. Mr. Jacoby is Executive Vice President, Chief Financial
Officer and a director of Stephens Group, Inc., an energy, agricultural and
investment firm. Mr. Jacoby has held the indicated positions with Stephens
Group, Inc., since 1986 and prior to that time served as Manager of the
Corporate Finance Department and Assistant to the President of Stephens Inc. Mr.
Jacoby is a director of American Classic Voyages Co., Delta and Pine Land
Company, Medicus Systems, Inc. and Southwestern Life Corporation.
4
<PAGE> 7
Risa J. Lavizzo-Mourey, M.D. Dr. Lavizzo-Mourey is Director of the
Institute of Aging, Chief of the Division of Geriatric Medicine and Associate
Executive Vice President for health policy at the University of Pennsylvania,
Ralston-Penn Center. From 1992 to 1994, Dr. Lavizzo-Mourey was in the Senior
Executive Service in the Agency for Health Care Policy and Research, U.S. Public
Health Service of the Department of Health and Human Services. Dr.
Lavizzo-Mourey is a director of Medicus Systems, Inc.
Louis W. Menk. Mr. Menk is Chairman of Black Mountain Gas Company. He
retired in 1982 as Chairman and Chief Executive Officer of International
Harvester Company, the predecessor to Navistar International Corporation.
Marilyn R. Seymann. Ms. Seymann is President and Chief Executive Officer of
M One, Inc., a management and information systems consulting firm specializing
in the financial services industry. From 1990 to 1993, Ms. Seymann was Director
and Vice Chairman of the Federal Housing Finance Board. Prior to that, she
served as Managing Director of Andersen Asset Based Services, a unit of Arthur
Andersen LLP. From 1986 to 1990, Ms. Seymann was Executive Vice President of
Chase Bank of Arizona and served as President, Private Banking of Chase Trust
Company from 1987 to 1990.
Will K. Weinstein. Mr. Weinstein has been Managing Partner of Genesis
Merchant Group, the sole General Partner of Genesis Merchant Group Securities,
and its predecessor, W.I.G. Securities, since 1989, and was President of WIG,
Inc. from 1987 to 1989. From 1982 to 1987, Mr. Weinstein was Managing Partner of
Montgomery Securities. He is a director of DHL Corporation.
COMPENSATION OF DIRECTORS AND OTHER INFORMATION
CONCERNING THE BOARD AND ITS COMMITTEES
In 1994, directors, other than Mr. Banks, received an annual retainer fee
of $22,000 for serving as a director and an additional fee of $1,000 for each
Board or committee meeting attended. Mr. Banks, the current Chairman of the
Board, President and Chief Executive Officer of the Company, received no
additional cash compensation for serving on the Board or its committees.
Pursuant to the Beverly Enterprises, Inc. Non-Employee Directors' Stock
Option Plan, each non-employee director is automatically granted an option to
purchase 2,500 shares of Common Stock on June 1 of each year, at an exercise
price of 100 percent of the fair market value of such Common Stock on the
respective grant dates. The options become fully exercisable on June 1 following
each grant date.
Directors who are not employees of the Company and have served as directors
for at least five years participate in the Retirement Plan for Outside Directors
which is an unfunded, non-qualified retirement plan. The retirement benefit is
equal to the product of (a) the director's annual retainer fee immediately
preceding the director's retirement from the Board times (b) the number of years
the director served on the Board up to a maximum of ten. The retirement benefit
is payable in monthly installments beginning at age seventy (70), based on the
years of service up to ten, until the earlier of the full payment of the benefit
or the death of the retired director.
During 1994, there were ten meetings of the Board. Each director attended
90% or more in the aggregate of the meetings of the Board and committees on
which the director served.
The Finance Committee, which met four times during 1994, reviews the
Company's financial strategy and certain financial transactions, and interacts
with the Company's lenders.
The Audit Committee, which met two times during 1994, reviews and acts, or
reports to the Board, with respect to various auditing and accounting matters,
including the selection of the Company's independent auditors, the scope of
audit procedures, the nature of services to be performed for the Company by and
the fees to be paid to the independent auditors, oversight of the Company's
internal audit function, the performance of the Company's independent auditors
and the accounting practices of the Company.
The Nominating Committee, which met one time during 1994, is delegated
responsibility for identification and recommendation for nomination of
candidates to stand for election to the Board and establishment of
5
<PAGE> 8
procedures for the nomination process and criteria for the selection of nominees
including stockholders' suggestions of nominees for director that are submitted
in writing in compliance with the Company's by-laws. (see "Requirements,
Including Deadlines, for Submissions of Proxy Proposals, Nomination of
Directors, and Other Business by Stockholders", on page 21).
The Quality Assurance Committee, which met three times during 1994,
monitors the quality assurance process of the Company and reports to the Board
progress made toward reaching quality assurance goals.
The Compensation Committee met two times during 1994. See the Compensation
Committee Report on Executive Compensation below for a discussion of the
Compensation Committee functions.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board (the Committee) is composed of
three independent, nonemployee directors. Joe T. Ford served on the Committee
until his retirement from the Board in February 1994. He was replaced by Curt F.
Bradbury. The Committee's overall philosophy is to develop executive
compensation policies that are directly aligned and consistent with the
strategic goals and objectives of the Company. The Committee approves the design
of compensation programs and evaluates their effectiveness. The Committee also
reviews and establishes overall compensation programs and levels for members of
senior management.
COMPENSATION PHILOSOPHY
The Company's primary business objective is to maximize long-term
shareholder value. To accomplish the Company's objectives, the Company has
developed a business strategy which focuses on earnings per share and cash flow
while requiring that consistently high levels of quality are maintained.
Our compensation philosophy and the underlying compensation programs are
designed to directly support the Company's overall business objectives by:
- Allowing the Company to recruit, retain and develop highly qualified
executive and employee talent
- Directly linking individual compensation with Company, region, area,
facility and individual performance
- Maintaining compensation levels that are competitive (targeted at the
median of a size adjusted comparison group)
- Emphasizing the at risk portion of compensation through our incentive
programs which properly reflect and reward for both short- and long-term
performance
- Promoting stock ownership
- Encouraging stock retention
The Committee evaluates each element of compensation as well as total
compensation. We rely on input from the Chief Executive Officer and an
independent compensation consultant to assist us in the process.
In comparing compensation levels in the marketplace, the Committee
considered a different group of companies than those for the years 1992 and 1993
used as the Company's Peer Group for presentation of comparative cumulative
total return in the performance graph (see "Performance Graph" on page 13). The
Committee believes its most direct competitors for executive talent are not
necessarily the same as its competitors for the investment dollar, and as such,
has selected a larger comparison group than the Peer Group. Therefore, in
evaluating and comparing each element of compensation, the Committee has
selected a group of companies similar in size and structure (the "Competitive
Market"). The Competitive Market is used in evaluating every element of
executive compensation for all executive officers of the Company.
The Committee annually reviews and approves the sources of data used in the
evaluation of compensation. The Committee has targeted its compensation to be at
the size adjusted median (50th percentile) level
6
<PAGE> 9
of the Competitive Market for each element of compensation. Actual compensation
levels paid in 1994 met the median level of the Competitive Market for executive
officers except for Mr. Banks with regard to his 1994 annual incentive target
level, as described below.
BASE SALARY
The Committee regularly reviews the base salary of each member of the
executive group. In addition to targeting the median of the Competitive Market,
the Committee also considers the level and scope of responsibility, experience
and internal equity. No specific weighting is assigned to these criteria.
The base salary for Mr. Banks, Chairman of the Board, President and Chief
Executive Officer of the Company, and other senior executives, was reviewed at
the December 8, 1994 meeting of the Committee. Based on the Company's financial
and operational performance (including quality) in 1994, Mr. Banks' salary was
adjusted to $620,000, which represents the median level of base salary within
the Competitive Market. Specific criteria considered by the Committee in
reaching this decision were competitive compensation data and the Company's
overall financial and quality performance as measured by the Company's
performance relative to budget and improved internal quality scores. No specific
weighting was assigned to these criteria.
ANNUAL INCENTIVES
The annual incentive plans are designed to provide a direct link between
Company and individual performance over the short term. The Company maintains
two plans with similar operating characteristics, one for field operations and
one for corporate management. Both plans have as their initial performance
criteria the overall quality of service being provided. If acceptable levels of
quality are being provided, measured against an internal standard as defined by
the Quality Assurance Committee of the Board, then financial performance for the
Company or the individual area of responsibility, as appropriate, is measured.
For all executive officers named in the Summary Compensation Table, only
Company-wide performance measures are considered in determining the annual
incentive. To promote stock ownership, 20% of annual incentive awards for senior
management is paid in other stock units, which vest one year from the date the
award was granted.
In calculating the 1994 annual incentive for Mr. Banks, the Committee first
established a target percentage of base salary (the "target percentage"), a
quality trigger, and targets for earnings per share and cash flow. The target
percentage for 1994 was below median target levels for chief executive officers
in the Competitive Market. The Committee has increased the target percentage to
a competitive level for 1995. The Committee then reviewed the quality
performance criteria, which were exceeded for 1994, and served as a trigger in
determining the annual incentive payable. Both the earnings and cash flow were
slightly below 1994 targets. Weighting the financial goals 50% each, the
Committee awarded Mr. Banks a 1994 annual incentive equal to $216,730, or 40% of
base salary. $173,384 was paid in cash (80%) and, as described above, to promote
stock ownership, 3,152 of other stock units were granted, which vest in one year
(20%). This compares to a payment of $235,000 for 1993, a year in which the
Company met its performance targets.
LONG-TERM INCENTIVES
Long-term incentives are delivered through the Beverly Enterprises, Inc.
1993 Long-Term Incentive Stock Plan (the "1993 Plan"). Stock options are used to
reward management's contribution over the long term, with the reward measured by
the subsequent appreciation in stock price. Stock options are always granted at
fair market value. Phantom units, under the Equity Incentive Plan, are used to
encourage and promote retention. At December 31, 1994, Mr. Banks owned 128,586
shares of Common Stock and is vested in options to purchase 280,000 shares of
Common Stock. During 1994 the Company awarded Mr. Banks an option to purchase
60,000 shares of Common Stock. He was also awarded 7,881 phantom units under the
1993 Plan for 1994 performance. The award size for the options and phantom units
was targeted at the median level for the Competitive Market, without regard to
the amount of current stock holdings. The Committee used the same competitive
analysis and targeted award size in determining the level of awards for
executive officers.
7
<PAGE> 10
STOCK OWNERSHIP REQUIREMENT
To align management's interests with those of stockholders, the Company has
a stock ownership requirement. Each officer through the level of Vice President
is required to own Company securities with a value based on a multiple of the
officer's base salary. Failure to comply with this requirement may result in
reduction in or suspension from participation in the Company's incentive plans.
The Chief Executive Officer is required to own securities with a market value of
three times his base salary. As of December 31, 1994, Mr. Banks' ownership level
exceeded this requirement.
$1 MILLION LIMIT ON COMPENSATION
Section 162(m) of the Internal Revenue Code generally limits the corporate
deduction for compensation paid to executive officers named in the Summary
Compensation Table to $1 million, unless certain requirements are met,
qualifying the compensation as performance based. Qualifying the compensation as
performance based required that the awards be based solely on objective
criteria.
The Committee desires that all incentive compensation programs for
executive officers be qualified as performance based, thus ensuring the Company
retains the tax deductibility. In 1994, the Committee, therefore, approved a
change in the design and operation of both the annual and long-term incentive
plans, which change was then approved by the stockholders in May of 1994.
COMPENSATION COMMITTEE
Beryl F. Anthony, Jr.
Curt F. Bradbury
Louis W. Menk
Joe T. Ford
The Compensation Committee report on Executive Compensation shall not be
deemed incorporated by reference by any general statement incorporating by
reference this proxy statement into any filing under the Securities Act of 1933
or the Securities and Exchange Act of 1934, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such acts.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Ford resigned from the Board of Directors on February 28, 1994.
Effective August 1, 1992, Beverly California Corporation (now Beverly Health and
Rehabilitation Services, Inc.) entered into an agreement to outsource its
management information systems functions for a period of seven years, with a
wholly-owned subsidiary of ALLTEL Corporation. Mr. Ford is the Chairman of the
Board, President, Chief Executive Officer and a Director of ALLTEL Corporation.
It paid approximately $8,906,000 pursuant to such agreement during 1994.
8
<PAGE> 11
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the Chief
Executive Officer and the other four most highly compensated individuals in the
Company as to whom the total annual salary and bonus for the year ended December
31, 1994, exceed $100,000. All of these individuals are executive officers of
the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------
AWARDS PAYOUTS
ANNUAL ------------------------
COMPENSATION OTHER RESTRICTED SECURITIES
----------------- ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND FISCAL SALARY BONUS COMPENSATION AWARDS OPTIONS/SARS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) ($)(6)(7) (#) ($) ($)(8)
- ----------------------------- -------- ------- ------- ------------ ---------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David R. Banks 1994 539,170 173,384 None 151,711 60,000 None 51,469
Chairman of the Board, 1993 519,231 188,000(3) None 164,500 100,000 None 48,345
President, Chief Executive 1992 497,692 180,000 None None None None 18,136
Officer
Boyd W. Hendrickson 1994 323,502 80,912 None 70,798 30,000 None 40,646
Executive Vice President and 1993 311,538 87,200(3) None 76,300 50,000 None 18,815
President -- Beverly Health and 1992 298,462 75,000 None None None None 21,640
Rehabilitation Services,
Inc.(1)
Ronald C. Kayne 1994 296,233 71,672 None 62,713 30,000 None 26,185
Executive Vice President and 1993 280,492 55,200(3) 79,219(4) 48,300 50,000 None 26,238
President -- Pharmacy 1992 264,231 66,250 None None None None 11,929
Corporation of America(1)
T. Jerald Moore(2) 1994 259,585 64,930 16,973(5) 56,813 30,000 None 20,206
Executive Vice President and 1993 229,807 60,000(3) 65,363(5) 685,000 128,000 None 11,712
President -- Beverly Managed 1992 None None None None None None None
Care, Inc.(1)
Bobby W. Stephens 1994 269,594 67,427 None 58,729 30,000 None 30,966
Executive Vice President -- 1993 259,615 72,800(3) None 63,700 50,000 None 32,421
Development 1992 249,230 75,000 None None None None 16,800
</TABLE>
- ---------------
(1) Effective January 1, 1995, the Company reorganized its subsidiaries to
better focus management's attention on specific services delivered by the
Company within the long-term health care arena. Three operating
subsidiaries: Beverly Health and Rehabilitation Services, Inc. (formerly
Beverly California Corporation), Pharmacy Corporation of America, and
Beverly Managed Care, Inc. will undertake nursing home operations,
institutional pharmacy operations and managed care operations,
respectively. The president of each of the three operating subsidiaries is
indicated.
(2) T. Jerald Moore was elected an executive officer of the Company in January
1993. During 1992, prior to becoming an employee, Mr. Moore received a
payment in the amount of $2,250 in conjunction with his participation in a
bonus plan.
(3) The bonus amounts indicated for 1993 have been restated to move that
portion of the bonus paid in other stock units to the column "Restricted
Stock Awards" to more clearly reflect the nature of the award.
(4) Relocation allowance paid to Mr. Kayne pursuant to the First Amendment to
Agreement Concerning Benefits Upon Severance entered into between the
Company and Mr. Kayne during 1993, in connection with his relocation from
Arkansas to Colorado.
(5) Relocation costs and expenses of $47,590 and reimbursement of taxes payable
on relocation costs and expenses of $17,773 paid in 1993 in connection with
Mr. Moore's relocation to Arkansas from Connecticut. An additional payment
of $16,973 was made in 1994 in connection with his purchase of a residence
in Arkansas.
9
<PAGE> 12
(6) Amounts shown as Restricted Stock Awards consist of the following (shown in
dollars):
<TABLE>
<CAPTION>
YEAR MR. BANKS MR. HENDRICKSON MR. KAYNE MR. MOORE MR. STEPHENS
----- --------- --------------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Restricted Stock 1994 None None None None None
Grants (a) 1993 None None None 632,500 None
1992 None None None None None
Award Pursuant to 1994 43,346 20,228 17,918 16,232 16,857
the Annual Incentive 1993 47,000 21,800 13,800 15,000 18,200
Plan (b) 1992 None None None None None
Award Pursuant 1994 108,365 50,570 44,795 40,581 42,142
to the Equity Incentive 1993 117,500 54,500 34,500 37,500 45,500
Plan (c) 1992 None None None None None
Total 1994 151,711 70,798 62,713 56,813 58,729
1993 164,500 76,300 48,300 685,000 63,700
1992 None None None None None
</TABLE>
- ---------------
(a) The total of $632,500 of restricted stock awards to Mr. Moore in 1993
consists of: (i) on January 28, 1993, at which time the closing price
of the Common Stock was $13.25, a grant of 20,000 shares, which vests
twenty percent per year beginning one year from the grant date and (ii)
on July 15, 1993, at which time the closing price of the Common Stock
was $13.125, a grant of 28,000 shares which vests twenty percent per
year beginning one year from the grant date. The Company does not
currently pay dividends on its Common Stock.
(b) On February 15 of each year beginning in 1994, the Annual Incentive
Plan provides for the payment of 20% of the annual incentive award
earned for the previous year's performance to be paid by a grant of
other stock units pursuant to the 1993 Plan, vesting one year from the
grant date. For 1993 the following other stock units were granted to
the named Executive Officers: Mr. Banks -- 3,357; Mr.
Hendrickson -- 1,557; Mr. Kayne -- 986; Mr. Moore -- 1,071; and Mr.
Stephens -- 1,300. For 1994 the following number of other stock units
were granted to the named Executive Officers: Mr. Banks -- 3,152; Mr.
Hendrickson -- 1,471; Mr. Kayne -- 1,303; Mr. Moore -- 1,181; and Mr.
Stephens -- 1,226.
(c) The Equity Incentive Plan provides for the granting of phantom units,
with cliff vesting four years from the grant date. The phantom units
are payable, upon vesting, at an amount per unit equal to the fair
market value of the Common Stock on that date, in cash, shares of
Common Stock or a combination thereof at the discretion of the
Compensation Committee. For 1993, the following number of phantom units
were granted to the named executive officers, to vest on February 14,
1999: Mr. Banks -- 8,393; Mr. Hendrickson -- 3,893; Mr. Kayne -- 2,464;
Mr. Moore -- 2,679; and Mr. Stephens -- 3,250. For 1994, the following
number of phantom units were granted to the named executive officers,
to vest on February 14, 2000: Mr. Banks -- 7,881; Mr.
Hendrickson -- 3,678; Mr. Kayne -- 3,258; Mr. Moore 2,951; and Mr.
Stephens -- 3,085.
(7) Based on the closing price for the Common Stock of $14.375, at December 31,
1994, the number and value of aggregate restricted stock, other stock unit
and phantom unit holdings for the named executive officers are as follows:
<TABLE>
<CAPTION>
MR. BANKS MR. HENDRICKSON MR. KAYNE MR. MOORE MR. STEPHENS
--------- --------------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Restricted Stock.................. (Shares) 26,000 16,000 16,000 38,400 16,000
(Value $) 373,750 230,000 230,000 552,000 230,000
Other Stock Units................. (Units) 3,357 1,557 986 1,071 1,300
(Value $) 48,257 22,382 14,174 15,396 18,688
Phantom Units..................... (Units) 8,393 3,893 2,464 2,679 3,250
(Value $) 120,649 55,962 35,420 38,511 46,719
</TABLE>
10
<PAGE> 13
(8) All other compensation consists of the following:
<TABLE>
<CAPTION>
YEAR MR. BANKS MR. HENDRICKSON MR. KAYNE MR. MOORE MR. STEPHENS
---- --------- --------------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Car Allowance 1994 7,500 7,500 7,500 7,500 7,500
1993 7,500 7,500 7,644 6,894 7,500
1992 7,500 7,500 7,500 None 7,500
Matching Contribution 1994 2,340 2,340 None 2,250 2,340
to Employee Stock 1993 2,340 1,800 None None 2,340
Purchase Plan (a) 1992 2,340 None None None 2,340
Executive Medical 1994 7,661 11,479 1,718 5,410 5,697
Plan 1993 7,723 6,960 3,076 3,447 9,010
1992 4,389 11,898 2,211 None 5,571
Premiums Under 1994 4,410 2,392 2,007 1,353 1,183
Executive Life 1993 3,721 2,120 1,855 1,047 1,103
Insurance Plan 1992 2,782 1,807 1,498 None 954
Regular Life 1994 1,125 720 1,125 432 720
Insurance Plan(b) 1993 1,125 435 1,125 324 435
1992 1,125 435 720 None 435
Matching Contribution 1994 28,258 16,040 13,835 3,086 13,351
to Executive Retirement 1993 25,936 None 12,538 None 12,033
Plan (c) 1992 None None None None None
Financial Planning 1994 175 175 None 175 175
1993 None None None None None
1992 None None None None None
Total 1994 51,469 40,646 26,185 20,206 30,966
1993 48,345 18,815 26,238 11,712 32,421
1992 18,136 21,640 11,929 None 16,800
</TABLE>
--------------------
(a) The Employee Stock Purchase Plan enables all full-time employees which
have completed one year of continuous service to purchase shares of
Common Stock through payroll deductions of up to $300 per pay period.
The Company contributes 30% of the amount of payroll deductions for the
participating employee.
(b) Imputed income for life insurance provided under the Company's regular
life insurance plan for amounts in excess of $50,000.
(c) The Beverly Enterprises, Inc. Executive Retirement Plan, (the
"Executive Retirement Plan") provides that, depending on the Company's
profits, the Company will match each participant's annual contribution,
based on a sliding scale relating to years of service with the Company,
up to a maximum of six percent of a participant's compensation. The
Executive Retirement Plan also provides that the Company will pay each
participant additional compensation approximately equivalent to the tax
liability such participant shall accrue as a result of the Company's
contribution. During 1993 and 1994, the Company contributed 50 percent
of the maximum match permitted under the Executive Retirement Plan for
each participant. These figures include both the employer match and the
additional compensation for reimbursement of taxes.
11
<PAGE> 14
The following tables set forth certain information at December 31, 1994 and
for the fiscal year then ended with respect to stock options granted to and
exercised by the individuals named in the Summary Compensation Table above. No
stock appreciation rights have been granted and no options have been granted at
an option price below fair market value on the date of the grant.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION> GRANT
INDIVIDUAL GRANTS DATE VALUE
---------------------------------------------------- -----------
% OF
NUMBER OF TOTAL
SECURITIES OPTIONS/
UNDERLYING SARS GRANT
OPTIONS/ GRANTED TO EXERCISE DATE
SARS EMPLOYEES OR BASE PRESENT
GRANTED IN FISCAL PRICE EXPIRATION VALUE
NAME (#) YEAR ($/SH) DATE ($)(3)
- ------------------------------------ ---------- ---------- -------- -------- -----------
<S> <C> <C> <C> <C> <C>
David R. Banks...................... 60,000(1) 9.68% 14.00 12/07/99 375,600
Boyd W. Hendrickson................. 18,000(1) 2.90% 14.00 12/07/99 112,680
12,000(2) 1.94% 14.00 12/07/99 75,120
Ronald C. Kayne..................... 18,000(1) 2.90% 14.00 12/07/99 112,680
12,000(2) 1.94% 14.00 12/07/99 75,120
T. Jerald Moore..................... 18,000(1) 2.90% 14.00 12/07/99 112,680
12,000(2) 1.94% 14.00 12/07/99 75,120
Bobby W. Stephens................... 18,000(1) 2.90% 14.00 12/07/99 112,680
12,000(2) 1.94% 14.00 12/07/99 75,120
All executive officers as a group
(12 persons)...................... 378,000 60.97%
All non-executive officers as a
group
(22 persons)...................... 242,000 39.03%
</TABLE>
- ---------------
(1) Nonqualified stock options granted on December 8, 1994 under the 1993 Plan.
25% of these options become fully exercisable one year from the grant date
and 25% per year thereafter on a cumulative basis.
(2) Incentive stock options granted on December 8, 1994 under the 1993 Plan.
25% of these options become fully exercisable one year from the grant date
and 25% per year thereafter on a cumulative basis.
(3) Based upon the Black-Scholes Option Valuation Model, which estimates the
present dollar value of options to purchase shares of Common Stock to be
$6.26 per option share. The actual value, if any, an executive may realize
will depend on the excess of the stock price over the exercise price on the
date the option is exercised, so that there is no assurance the value
realized will be at or near the value estimated by the Black-Scholes Model.
The assumptions underlying the Black-Scholes Model include: (a) an expected
volatility of .3527 based on the twelve months prior to the grant date, (b)
a risk-free rate of return of 7.78%, which approximates the five year
Treasury bond rate on the grant date, (c) no dividend on the Common Stock,
and (d) a five year period from the grant until expiration.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF IN-THE-MONEY
UNEXERCISED OPTIONS/SARS OPTIONS/SARS
FY-END 12/31/94 FY-END 12/31/94
(#) ($)(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISES (#) REALIZED ($)(1) UNEXERCISABLE EXERCISABLE UNEXERCISABLE EXERCISABLE
- ---------------------------------- ------------- --------------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
David R. Banks.................... None None 175,000 280,000 560,624 2,577,499
Boyd W. Hendrickson............... 14,000 140,000 79,500 95,500 200,063 846,062
Ronald C. Kayne................... 26,000 213,000 93,500 12,500 340,063 23,437
T. Jerald Moore................... None None 129,900 28,100 156,563 42,187
Bobby W. Stephens................. None None 93,500 176,500 340,063 1,652,937
</TABLE>
12
<PAGE> 15
- ---------------
(1) Value is calculated based on the difference between the option exercise
price and the closing market price of the Common Stock on the date of
exercise, multiplied by the number of shares to which the exercise of the
option relates.
(2) The closing price for the Common Stock as reported by the New York Stock
Exchange on December 31, 1994, was $14.375. Value is calculated on the
basis of the difference between the option exercise price and $14.375,
multiplied by the number of shares of Common Stock underlying the option.
PERFORMANCE GRAPH
The following graph shows a five-year comparison of cumulative total
returns for the Company, the S&P 500 Composite Index, the S & P Healthcare
Composite Index, and an index of peer companies that was originally selected by
the Company for use in its 1993 and 1994 proxy statements (the "Old Peer
Group"). The stock price performance shown on the graph below is not necessarily
indicative of future price performance.
[GRAPH]
<TABLE>
<CAPTION>
S&P Health-
Measurement Period Beverly En- S&P 500 In- care Compos- Old Peer Gro
(Fiscal Year Covered) terprises dex ite up
<S> <C> <C> <C> <C>
1989 100 100 100 100
1990 144 197 117 120
1991 148 126 181 154
1992 217 136 151 214
1993 221 150 139 222
1994 240 152 157 247
</TABLE>
The total cumulative return on investment (change during the year in stock
price plus reinvested dividends) for each of the periods for the Company, the
S&P 500 Composite Index, the S & P Healthcare Composite Index and the Old Peer
Group is based on the stock price or the composite index on December 31, 1989.
For the 1993 and 1994 proxy statements, the Company constructed a peer
group of companies in the long-term care industry. The Old Peer Group consisted
of the Company, Geriatrics & Medical Centers, Inc., Greenery Rehabilitation
Group, Inc., Manor Care, Inc., Summit Health LTD, and Vari-Care, Inc. The
Company was restricted in the number of comparative companies in the long-term
care industry due to the fact that many of its competitors had not been public
companies for the entire comparative period. In 1993, the membership of the Old
Peer Group was reduced due to the acquisition of Vari-Care, Inc. by another
company and in 1994, Summit Health LTD. was acquired. Therefore, the Old Peer
Group was reduced from five to three companies, including the Company itself.
Due to this substantial change in the Old Peer Group, the Company sought a
published index with a significant number of health care companies to avoid
problems which could arise in the future through the industry's rapid
consolidation. The Company has chosen and the Committee has approved the use of
the S & P Healthcare Composite Index, currently consisting of twenty-nine
companies, including the Company.
13
<PAGE> 16
The performance graph and its description above shall not be deemed
incorporated by reference by any general statement. The Compensation Committee
report on Executive Compensation shall not be deemed incorporated by reference
by any general statement incorporating by reference this proxy statement into
any filing under the Securities Act of 1933 or the Securities and Exchange Act
of 1934, except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
acts.
OTHER PLANS
Deferred Compensation Plan
As of July 18, 1991, the Company amended and restated the Deferred
Compensation Plan: to allow no future grants; to close and pay out accounts with
balances of $10,000 or less; and to fix accounts with balances in excess of
$10,000 using the closing price of the Company's Common Stock on the New York
Stock Exchange on July 18, 1991, of $11.00, which was credited to participants'
Special Ledger Accounts. Messrs. Banks, Hendrickson, Kayne and Stephens maintain
accounts in the Deferred Compensation Plan which are credited with interest at a
rate of 9% per annum.
Employment Contracts and Termination of Employment and Change in Control
Arrangements
The Company adopted a severance policy, as of December 1, 1989, which
provides assistance in the form of a lump sum severance payment to active,
full-time, corporate or regional office employees who are permanently,
involuntarily and without cause separated from all employment with the Company
or its successor. Severance pay is calculated based upon an employee's base
weekly pay, position and continuous past service with the Company as of the last
day of the employee's active employment. David R. Banks, Boyd W. Hendrickson,
Ronald C. Kayne, T. Jerald Moore and Bobby W. Stephens would have received
$286,154, $144,231, $138,462, $86,154 and $130,846, respectively, if they were
entitled to a severance payment as of January 1, 1995.
In connection with the relocation of the Company's corporate headquarters
to Fort Smith, Arkansas, the Company entered into Agreements Concerning Benefits
Upon Severance with certain executives including Messrs. Banks, Hendrickson,
Kayne and Stephens. Pursuant to such agreements, in the event of a Change in
Control (as defined) of the Company or a Material Change (as defined) in the
terms of employment of the executive, such executive may voluntarily terminate
his employment and become entitled to receive one year's salary and
reimbursement from the Company for moving expenses to any part of the
continental United States.
Effective September 29, 1994, the Company entered into Change in Control
Severance Agreements that provide for payments to be made to the Executive Vice
Presidents of the Company including Messrs. Hendrickson, Kayne, Moore and
Stephens (the "Severance Agreements"). The Severance Agreements have an initial
term of three years, with an automatic extension of one additional day for each
day beyond September 29, 1994 that the Executive Vice President (the
"Executive") remains employed by the Company until such time as the Company
elects to cease such extension by written notice, thereby setting the term to
end three years from the written notice. The Severance Agreements provide for
specified severance benefits in the event of a change of control and (i)
termination of employment of the Executive by the Company without cause or by
the Executive for good reason (which includes material reduction in duties or
authority, reduction in compensation or benefits, or a relocation of employment
from Fort Smith) during a period of two years following the change in control or
(ii) termination of employment initiated by the Executive without good cause
during the 31 day period commencing on the first day of the 13th month following
the change in control.
For purposes of the Severance Agreements, a change in control shall be
deemed to have taken place if: (i) any person, corporation, or other entity or
group, including any "group" as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, other than any employee benefit plan then maintained by
the Company, becomes the beneficial owner of shares of the Company's Common
Stock having 30 percent or more of the
14
<PAGE> 17
total number of votes that may be cast for the election of directors of the
Company; (ii) as the result of, or in connection with, any contested election
for the Board of Directors of the Company, or any tender or exchange offer,
merger or other business combination or sale of assets, or any combination of
the foregoing (a "Transaction"), the persons who were directors before the
Transaction shall cease to constitute a majority of the Board of Directors of
the Company or any successor to the Company or its assets, or (iii) at any time
(a) the Company shall consolidate with, or merge with, any other Person and the
Company shall not be the continuing or surviving corporation, (b) any Person
shall consolidate with, or merge with, the Company, and the Company shall be the
continuing or surviving corporation and in connection therewith, all or part of
the outstanding Common Stock shall be changed into or exchanged for stock or
other securities of any other Person or cash or any other property, (c) the
Company shall be a party to a statutory share exchange with any other Person
after which the Company is a subsidiary of any other Person, or (d) the Company
shall sell or otherwise transfer 50% or more of the assets or earning power of
the Company and its subsidiaries (taken as a whole) to any Person or Persons.
The severance benefit under the Severance Agreements includes (i) a lump
sum payment equal to three times the sum of (a) the Executive's base salary and
(b) the Executive's target bonus under the Company's Annual Incentive Plan, with
(a) and (b) to be determined at either the termination of employment or the
change in control so as to produce the greater payment; (ii) vesting of all
options, restricted stock, phantom units, and other awards granted to Executive
which have not otherwise vested; (iii) continuation, for a period of three years
following termination of employment, of participation in the Company's Medical
Plan, Executive Medical Reimbursement Plan, and Dental Plan; (iv) relocation to
the next base of full-time employment, if commenced within three years of
termination of employment, in accordance with the Company's general relocation
policy for executives; (v) a matching contribution to the Company's Executive
Retirement Plan for the plan year in which the termination of employment occurs;
and (vi) for two years following termination of employment, disability insurance
benefits equivalent to the benefits the Executive would have received had he or
she remained employed by the Company.
Effective September 29, 1994, the Company entered into an employment
contract with Mr. Banks (the "Employment Contract"). The Employment Contract has
an initial term of three years, with an automatic extension of one additional
day for each day beyond September 29, 1994 that Mr. Banks remains employed by
the Company until such time as the Company elects to cease such extension by
giving written notice thereby setting the term to end three years from the
written notice. The Employment Contract provides Mr. Banks with: (i) base salary
of $540,000 per annum through December 31, 1994 and thereafter at any such
greater rate as is determined by the Compensation Committee; (ii) participation
in all benefit plans; and (iii) an annual cash bonus pursuant to the Company's
Annual Incentive Plan.
The Employment Contract provides severance benefits in the event of a
change in control on substantially the same terms and conditions as set forth
above with respect to the Severance Agreements except that Mr. Banks may claim
the relocation benefit without commencing full-time employment and the
Employment Contract provides that the Company will provide office space to Mr.
Banks for a period of the lesser of three years or the date he commences
full-time employment.
In addition to severance benefits in the event of a change in control, the
Employment Contract provides for severance benefits to Mr. Banks during its term
if there is a termination of employment initiated by (i) the Company without
cause or (ii) by Mr. Banks for good reason. In this event, the severance benefit
includes: (a) a lump sum payment equal to one times the sum of Mr. Banks's (1)
base salary and (2) target bonus or actual bonus for the previous year, if
higher; (b) vesting of all unvested equity-based compensation; (c) continuation,
for one year from termination of employment, of participation in the Company's
Medical Plan, Executive Medical Reimbursement Plan, and Dental Plan; (d)
relocation benefit as described above; and (e) a matching contribution to the
Company's Executive Retirement Plan for the plan year in which the termination
of employment occurs.
A trust has been established with Chemical Bank to fund certain benefits
payable pursuant to certain employee benefit plans, including the Severance
Agreements and the Employment Contract, in the event of termination of
employment after a change in control of the Company. Immediately prior to a
change in
15
<PAGE> 18
control of the Company, the Company is required to make a deposit to the trust
in an amount equal to the excess of the maximum amount potentially payable under
the plans to all participants over the current value of the trust assets. The
trust is revocable by the Company until a change in control. The trust assets
are subject to the claims of general creditors of the Company in the event of
the Company's insolvency.
The Board of Directors believes that the Severance Agreements and the
Employment Contract will encourage the commitment and availability of its key
management employees in the face of potentially disruptive and distracting
circumstances that may arise in the event of an attempted or actual change in
control or an unsolicited takeover of the Company. In any such event, such key
management employees will be able to analyze and evaluate proposals objectively
with a view to the best interest of the Company and its stockholders. The
Severance Agreements and the Employment Contract, however, may have the
incidental effect of discouraging takeovers and protecting employees from
removal, since the agreements increase the cost that would be incurred by an
acquirer seeking to replace current management.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
The Company's officers and directors are required to file initial reports
of ownership and reports of change in ownership with the Securities and Exchange
Commission (SEC). Officers and directors are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely on information provided to the Company by individual officers
and directors, the Company believes that during 1994 its officers and directors
have timely complied with all filing requirements applicable to them.
CERTAIN TRANSACTIONS WITH MANAGEMENT AND OTHERS
Beverly California Corporation, a subsidiary of the Company, entered into
an agreement to outsource its management information systems functions for a
period of seven (7) years, with a wholly-owned subsidiary of ALLTEL Corporation.
Mr. Joe T. Ford, a director who resigned from the Board on February 28, 1994, is
the Chairman of the Board, President, Chief Executive Officer and a director of
ALLTEL Corporation. Beverly California Corporation paid approximately $8,906,000
pursuant to such agreement during 1994.
Jon E.M. Jacoby, a director, serves as Executive Vice President, Chief
Financial Officer and director of Stephens Group, Inc. For the year ended
December 31, 1994, the Company paid to Stephens Group, Inc. or its affiliates,
approximately $745,000, including underwriting fees in connection with the
refunding of certain industrial revenue bonds and fees for investment banking
services related to certain acquisitions and dispositions.
Will K. Weinstein, a director, serves as Managing Director of Genesis
Merchant Group. For the year ended December 31, 1994, the Company paid to
Genesis Merchant Group, or its affiliates, approximately $222,000 in fees for
investment banking services in connection with proposed acquisitions and
dispositions.
PROPOSAL 2 -- APPROVAL
OF AMENDED STOCKHOLDER RIGHTS PLAN
The Board of Directors adopted the Stockholder Rights Plan on September 29,
1994 (the "Plan") because the Board believed that the Plan would better enable
the Board to protect the interest of stockholders in the event of a hostile
acquirer seeking to take advantage of the Company and its stockholders through
abusive takeover tactics which could deprive them of the full value of their
investment in the Common Stock and might not treat all stockholders equally.
Nothing has happened since that time to cause the Board to change this belief.
The Board of Directors, upon recommendation of the Company's management,
has undertaken a review of the Plan, with the participation of outside legal and
corporate governance advisors. Several of the
16
<PAGE> 19
Company's institutional stockholders were also contacted. During the review,
several of the Company's institutional stockholders were contacted, certain of
whom expressed concerns with respect to the effect of stockholder rights plans
generally on stockholder's ability to influence decisions which directly and
materially affect stockholder value. As a result of the review, the Board of
Directors, at its April 6, 1995 meeting, approved certain amendments to the Plan
to strengthen the stockholders' ultimate control over the Plan. In addition, the
Board of Directors also determined that, in order to continue in effect, the
Plan, as amended, must be approved by the affirmative vote of a majority of the
shares present and voting at the Annual Meeting.
AMENDMENTS TO THE PLAN
Specifically, the amendments to the Plan adopted by the Board of Directors
(the "Amendments") provide for the following:
STOCKHOLDER REFERENDUM. Prior to the adoption of the Amendments, redemption
of the rights issued under the Plan (the "Rights") was solely within the
discretion of the Board of Directors. Pursuant to the Amendments, redemption of
the Rights (as well as elimination of the Plan) will be submitted to a binding
stockholder vote if an offer for all outstanding shares meeting certain
conditions, as described below, is made and within sixty (60) days thereafter,
the Board of Directors has not either redeemed the Rights or approved a
financially superior alternative transaction. The Board must redeem the Rights
if holders of a majority of the outstanding Common Stock vote to request such
redemption to allow the completion of that offer or a financially superior
offer. The Amendments thus give stockholders the power to cause the redemption
of the Rights to allow completion of an offer meeting the specified conditions,
regardless of the Board of Directors' position on that offer.
The conditions of the offer that would trigger a stockholder referendum are
as follows: (i) the offer must be for all outstanding shares of Common Stock at
the same price; (ii) the portion of the offer that is for cash must be fully
financed; (iii) any portion of the offer that is non-cash consideration must be
in the form of New York Stock Exchange listed securities and the offer must
provide tax-deferred treatment for stockholders; and (iv) the offer cannot be
subject to financing, funding or due diligence conditions.
According to publicly filed reports and other information available to the
Company, a majority of the outstanding Common Stock is currently beneficially
owned by institutional stockholders, thereby giving such institutional
stockholders effective control over any redemption decision under the
Amendments. The Company is unable to predict what percentage of the Company's
outstanding Common Stock will be held by institutional holders in the future, or
how any of its stockholders, including institutional holders, will vote on any
proposed redemption submitted for a stockholder vote under the Plan as amended
by the Amendments.
TERM OF PLAN (SUNSET PROVISION). Prior to the adoption of the Amendments,
the Plan was scheduled to expire in 2004. Pursuant to the Amendments, the Plan
will now expire at the 1998 annual meeting unless holders of a majority of the
shares voting at the 1998 annual meeting vote affirmatively to extend the term
of the Plan. If the stockholders approve the extension at the 1998 Annual
Meeting, the Plan will expire at the 2001 annual meeting.
OTHER MATERIAL TERMS OF THE PLAN
Pursuant to the Plan, on September 29, 1994 the Board of Directors declared
a dividend of one right (a "Right") for each share of Common Stock outstanding
at the close of business on November 2, 1994. Each Right entitles the holder to
purchase from the Company one share of Common Stock at a price of $70 per share,
subject to adjustment. The Rights do not become exercisable or transferrable
apart from the Common Stock until the earlier of (i) ten (10) days following a
public announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of fifteen (15%) percent or more of the shares of Common
Stock or (ii) ten (10) days following the commencement or announcement of an
intention to make a tender offer or exchange offer, the consummation of which
would result in the beneficial ownership by a person or group of fifteen (15%)
percent or more of the shares of Common Stock (the earlier of (i) and (ii) being
called the "Distribution Date"). The
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Plan provides that the Board of Directors may postpone the Distribution Date,
but until the Distribution Date, the Rights will be transferred, with and only
with, the shares of Common Stock.
If any person or group becomes an Acquiring Person or if the Company is the
surviving corporation in a merger with an Acquiring Person or any affiliate or
associate of an Acquiring Person and the Common Stock was not changed or
exchanged, each holder of a Right, other than Rights that are or were acquired
or beneficially owned by the Acquiring Person (which Rights will thereafter be
void), will thereafter have the right to receive upon exercise, the number of
shares of Common Stock having a market value of two times the then current
exercise price of the Right. If, after the Rights have become exercisable, the
Company has been acquired in a merger or other business combination in which the
Company is not the surviving corporation or in which fifty (50%) percent or more
of the assets or earning power is sold, each holder of a Right (other than the
Acquiring Person and related persons) will be entitled to receive, upon
exercise, common stock of the acquiring company having a value of two times the
exercise price of one Right.
The Rights may be redeemed in whole, but not in part, at a price of $.01
per Right by the Board of Directors at any time prior to the close of business
on the tenth day following the first date of public announcement that a person
or group has become an Acquiring Person.
The Board of Directors is not required by law to submit any of the
Amendments to the stockholders for a vote. However, the Board has determined
that since the Plan is intended to protect stockholders' interest, it is
appropriate that the Plan (as amended) will expire unless the stockholders
approve its continuation at the Annual Meeting. Accordingly, if the Plan (as
amended) is approved by the affirmative vote of the holders of a majority of the
shares present and voting at the Annual Meeting, the Plan (as amended) will
continue in effect until the 1998 annual meeting. If the Plan (as amended) is
not approved by such vote, the Plan (as amended) will, by its terms,
automatically expire (without any redemption of Rights), and the Plan will be
of no further force and effect.
ADVANTAGES AND DISADVANTAGES OF THE PLAN
The Board of Directors believes the Plan, continues to meet the primary
objectives which originally caused the Board to adopt the Plan. In addition, as
amended, the Plan now places significant control of the use of the Plan in
stockholders' hands, thereby addressing a corporate governance issue which has
been raised by some stockholders, namely the rights of stockholders to influence
decisions directly and materially effecting them such as a proposed change of
control transaction.
The Board of Directors continues to be concerned that certain takeovers
could be undesirable and deprive stockholders of long-term value of their
stockholdings. The Plan continues to be designed to discourage takeover
proposals that use abusive tactics, do not provide for adequate payments to
stockholders for their holdings, or enable an offeror to obtain effective
control of the Company, through the acquisition of less than all of the
Company's Common Stock. The Plan also continues to be intended to increase the
negotiating position of the Board of Directors for the benefit of the
stockholders in the event a takeover proposal is made.
The Amendments are intended to be responsive to the desire of certain of
the Company's stockholders to have more control over the use of the Plan in
meeting the objectives described above. Although the stockholder referendum
procedure described above neither requires the Board of Directors to approve or
recommend any offer to acquire the Company, nor precludes the Board from
pursuing or recommending alternatives to the offer, it does provide for the
stockholders, with the requisite vote, to eliminate the impediments caused by
the existence of the Rights for an offer meeting the specified conditions. The
Board believes that offers meeting the conditions (essentially, fully-financed
offers for all outstanding shares) avoids several of the concerns the Plan is
designed to protect against. The Board also believes that, although such an
offer may not necessarily reflect the long-term value of the Company's stock,
the stockholders should be able to determine for themselves whether they wish to
avail themselves of the protection of the Rights under those circumstances.
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<PAGE> 21
As in the case of the Plan prior to the Amendments, the Plan, as amended,
may discourage certain mergers, tender offers or other purchases of the
Company's stock and certain proxy contest which some or even a majority of
stockholders might deem to be advantageous. The Plan may also discourage the
accumulation of substantial investments in the Company's Common Stock by
stockholders who do not intend to affect a change in control of the Company. By
deterring possible changes in control, the Board of Directors and management may
thus benefit from a more secure tenure. The Board of Directors does not believe
that these potential disadvantages outweigh the benefits of the Plan.
There is no provision contained in the Company's certificate of
incorporation or by-laws or in any applicable law which affords the protection
provided by the Plan in assuring that the Board of Directors can negotiate with
a bidder on the stockholders' behalf in order to deter, among other things, a
person or group from accumulating a substantial block of the Company's Common
Stock and then making a bid at an inadequate price for any remaining shares of
the Company's Common Stock.
The foregoing discussion is qualified in all respects by reference to the
full text of the Plan, as amended. A copy of the Plan, as amended, is available
upon request from the Company, free of charge.
CERTIFICATE OF INCORPORATION, BY-LAWS AND OTHER AGREEMENTS AND PLANS
In addition to the anti-takeover effects of the Plan, the Company's
Restated Certificate of Incorporation, By-Laws and other agreements and plans
contain provisions which may be viewed as having anti-takeover effects.
Article IV of the Company's Restated Certificate of Incorporation presently
authorizes the issuance of 300,000,000 shares of Common Stock and 25,000,000
shares of Preferred Stock by the Board of Directors, without further action or
authorization by the stockholders, unless required in a specific case by
applicable laws or regulations or by the rules of the New York Stock Exchange or
other stock exchanges on which the Company's shares may at the time be listed.
As of March 20, 1995, there were 85,668,271 shares of Common Stock and 3,000,000
shares of $2.75 Cumulative Convertible Exchangeable Preferred Stock outstanding,
in addition to the Rights pursuant to the Plan.
Preferred Stock may be issued from time to time in one or more series and
may, subject to any limitations prescribed by law, have such voting powers,
dividend rights, designations, preferences and relative rights, qualifications
and limitations as the Board of Directors may fix. In the event of a tender
offer or other attempt to gain control of the Company, which the Board of
Directors does not approve, it may be possible for the Board of Directors to
authorize the issuance of a series of Preferred Stock with rights and
preferences which could impede the completion of such a transaction, or to issue
shares of authorized but presently unissued Common Stock which would be used to
make more difficult a change in control of the Company.
Article VIII of the Company's Restated Certificate of Incorporation
prohibits action by stockholders by written consent without a meeting. Action by
written consent may, in some circumstances, permit the taking of stockholder
action opposed by the Board of Directors more rapidly than would be possible if
a meeting of stockholders were required. Article IX of the Restated Certificate
of Incorporation provides that special meetings of stockholders may only be
called by a majority of the Board of Directors, the Chairman of the Board or the
President of the Company. The elimination of the right of stockholders to call
special meetings of stockholders may make it more difficult for the stockholders
to take action opposed by the Board of Directors other than at an annual
meeting, and then only in accordance with the advance notice provisions of
Article II of the By-Laws. The purpose of requiring advance notice of business
to be brought by a stockholder before an annual meeting is to enable the Board
of Directors to give advance notice of such business to the stockholders
generally, and to afford the Board of Directors a meaningful opportunity to
consider the merits of the matter to be raised by stockholders. Although this
procedure does not give the Board of Directors any power to approve or
disapprove such matters, this procedure may have the effect of precluding the
consideration of matters at a particular annual meeting if the proper procedures
are not followed, even if approval of such matters may be deemed by some
stockholders to be beneficial.
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<PAGE> 22
Article XI of the Restated Certificate of Incorporation contains a fair
price provision requiring the affirmative vote of eighty (80%) percent of all
outstanding Voting Stock (as defined) to approve certain Business Combinations
(as defined) involving an Interested Shareholder (as defined) unless certain
price and other criteria are met. The purpose of this provision is to provide a
higher degree of assurance that all stockholders will receive or retain an
equivalent price for their shares in the event of a merger, consolidation, asset
sale, liquidation, recapitalization or certain other business transactions.
The Agreements Concerning Benefits on Severance, the Change in Control
Severance Agreements, and the Employment Contract described under "Other Plans"
could discourage takeovers since the agreements described therein increase the
costs that would be incurred by the acquirer in a change in control of the
Company.
The Company's equity-based compensation plans provide that in the event of
a change in control, all unvested options, restricted stock, other stock units
or phantom units become fully exercisable.
The Board of Directors by the adoption of Article XIII, Section 6 of the
By-Laws opted out of the anti-takeover provisions of Section 203 of the General
Corporation Law of the State of Delaware.
Recommendation of the Board of Directors
The Board of Directors of the Company recommends a vote FOR the Stockholder
Rights Plan, as amended. Proxies received by the Board of Directors will be so
voted unless stockholders specify in contrary choice.
PROPOSAL 3 -- RATIFICATION
OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board has selected Ernst & Young LLP as auditors for the Company for
the year ended December 31, 1995, subject to the ratification by stockholders.
Ernst & Young LLP audited the Company's consolidated financial statements for
the year ended December 31, 1994, and together with its predecessor, Arthur
Young & Company, has been the Company's auditors since 1965.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting and will be given the opportunity to make a statement if they
desire to do so. It is also expected that they will be available to respond to
appropriate questions from stockholders at the Annual Meeting.
Recommendation of the Board of Directors
The Board of Directors of the Company recommends a vote FOR the proposal to
ratify the appointment of Ernst & Young LLP as independent auditors for 1995.
Proxies received by the Board of Directors will be so voted unless stockholders
specify a contrary choice.
PROPOSAL 4 -- STOCKHOLDER PROPOSAL RELATING TO STOCKHOLDER RIGHTS PLAN
On March 21, 1995, the Food and Allied Services Trade Department (AFL-CIO)
("FAST") notified the Company of its intention to present a proposal at the
Annual Meeting. On the same date, FAST submitted a demand for inspection and
copying of the Company's stockholder list for the purpose of communicating with
and soliciting proxies from stockholders of the Company regarding business to be
conducted at the Annual Meeting, including the FAST proposal. The FAST proposal,
as submitted to the Company on March 21 consists of the following resolution:
Text of FAST Proposal
"RESOLVED, that the shareholders recommend that our Board of Directors, at
the earliest practical date, redeem or submit to a binding shareholder vote the
corporation's "poison pill" share purchase rights plan."
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<PAGE> 23
THE COMPANY'S RESPONSE TO THE FAST PROPOSAL -- PROPOSAL 4
The Board of Directors has concluded that the FAST proposal is moot, in
light of the Board of Directors sponsored Proposal 2. For the reasons stated
above, with regard to Proposal 2, the Board of Directors has concluded that it
is in the best interest of the Company and its stockholders to retain the Plan,
as amended, but has nonetheless submitted it to a stockholder vote.
Recommendation of the Board of Directors
The Board of Directors of the Company recommends a vote AGAINST the FAST
proposal. Proxies received by the Board of Directors will be so voted unless
stockholders specify a contrary choice.
REQUIREMENTS, INCLUDING DEADLINES FOR SUBMISSIONS OF PROXY PROPOSALS, NOMINATION
OF DIRECTORS, AND OTHER BUSINESS BY STOCKHOLDERS
Under the rules of the Securities and Exchange Commission, the date by
which proposals of stockholders intended to be presented at the 1996 annual
meeting must be received by the Company for inclusion in its proxy statement and
form of proxy relating to that meeting is December 20, 1995.
Under the By-Laws, certain procedures are provided which a stockholder must
follow to nominate persons for election as directors or to introduce an item of
business at the annual meeting. These procedures provide, generally, that
stockholders desiring to make nominations for directors, and/or bring a proper
subject of business before the meeting, must do so by written notice timely
received (not less than fifty (50) days nor more than seventy-five (75) days
prior to such meeting) by the Secretary of the Company containing the name and
address of the stockholder, and a representation that the stockholder is a
holder of record and intends to appear in person or by proxy at the meeting. If
the notice relates to a nomination for director, it must also set forth the name
and address of any nominee(s), all arrangements or understandings between the
stockholder and each nominee, and any other person(s) naming such person(s)
pursuant to which the nomination(s) are to be made, such other information
regarding each nominee as would have been required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission had each nominee been nominated by the Board, and the consent of each
nominee to serve. Notice of an item of business shall include a brief
description of the proposed business, the reasons for conducting such business
at the annual meeting, and any material interest of the stockholder in such
business.
The Chairman of the annual meeting may refuse to allow the transaction of
any business not presented, or to acknowledge the nomination of any person not
made, in compliance with the foregoing procedures.
Stockholders were advised by a press release on May 27, 1994 in connection
with the announcement of the final results of voting at the May 19, 1994 annual
meeting, that the Annual Meeting would be held on May 18, 1995 and that as
previously announced, December 20, 1994 was the deadline for stockholder
proposals to be included in the proxy statement for the Annual Meeting. It is
currently expected that the 1996 annual meeting will be held on or about May 16,
1996, in which event any advance notice of nominations for directors and items
of business (other than the proposals intended to be included in the proxy
statement and form of proxy, which is noted above, must be received by December
20, 1995) must be given by stockholders by March 27, 1996. The Company does,
however, retain the right to change this date as it, in its sole discretion, may
determine. Notice of any change will be furnished to stockholders prior to the
expiration of the fifty-day advance notice period referred to above.
EXPENSES OF SOLICITATION
The total cost of this solicitation will be borne by the Company. In
addition to use of the mails, proxies may be solicited by directors, officers
and regular employees of the Company personally and by telephone or facsimile.
The Company may reimburse persons holding shares in their own names, or in the
names of the nominees, for expenses such persons incur in obtaining instructions
from beneficial owners of such shares. The
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<PAGE> 24
Company has also engaged Georgeson & Company Inc. to solicit proxies for a fee
not to exceed $20,000, plus $6.00 per call to individual stockholders or NOBO's
if assigned, plus out-of-pocket expenses.
OTHER MATTERS
The Board of Directors knows of no other business to be presented at the
Annual Meeting, but if other matters do properly come before the Annual Meeting,
it is intended that the persons named in the proxy will vote on said matters in
accordance with their best judgment.
ROBERT W. POMMERVILLE
Secretary
April 17, 1995
Fort Smith, Arkansas
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<PAGE> 25
/ /
Your Board of Directors recommends a vote FOR approval of proposals 1, 2,
and 3.
1. ELECTION OF DIRECTORS: Beryl F. Anthony, Jr., David R. Banks, James R.
Greene, Edith E. Holiday, Jon E.M. Jacoby, Risa J. LaVizzo-Mourey, M.D.,
Louis W. Menk, Marilyn R. Seymann and Will K. Weinstein.
FOR EACH NOMINEE WITHHOLD AUTHORITY
LISTED ABOVE TO VOTE FOR EACH NOMINEE ABOVE
(INSTRUCTION: To withhold authority to vote for any individual nominee or
nominees, write that name or names on the space provided below.)
________________________________________________________________________________
If any nominee named above declines or is unable to serve as a director, the
persons named as proxies, and each of them shall have full discretion to vote
for any other person who may be nominated.
APPROVAL DISAPPROVAL ABSTENTION
OF OF WITH RESPECT TO
2. The Stockholder Rights Plan,
as amended.
APPROVAL DISAPPROVAL ABSTENTION
OF OF WITH RESPECT TO
3. Appointment of Ernst & Young
LLP as Independent Auditors
for 1995.
********************************************************************************
* *
* Your Board of Directors recommends a vote AGAINST proposal 4. *
* *
********************************************************************************
* *
* APPROVAL DISAPPROVAL ABSTENTION *
* OF OF WITH RESPECT TO *
* *
* 4. Proposal by FAST, AFL-CIO. *
* *
* *
********************************************************************************
NOTE: Please sign exactly as name appears on this
Proxy. When shares are held by joint tenants, both
should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give
full title as such. If a corporation, please sign
in full corporate name by President or other
authorized officer. If a partnership, please sign
in partnership name by authorized person.
Dated: _____________________________________, 1995
__________________________________________________
__________________________________________________
Signature of Stockholder(s)
Please sign, date and return today in the enclosed
envelope. This Proxy will not be used if you
attend the meeting in person and so request.
Votes must be indicated (X) in Black or Blue Ink.
Please date, sign and return promptly in the accompanying envelope.
BEVERLY ENTERPRISES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints David R. Banks, Boyd W. Hendrickson and
Robert W. Pommerville, each of them, as proxies, each with the power to appoint
his substitute, to represent and to vote as designated below, all the shares of
common stock of Beverly Enterprises, Inc. held of record by the undersigned on
March 20, 1995 at the Annual Meeting of Stockholders to be held on May 18, 1995
and any and all adjournment or postponements thereof.
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting and any and all adjournments or
postponements thereof. This Proxy when properly executed will be voted in the
manner directed herein by the undersigned. If no specification is made, the
Proxy will be voted FOR the election of the directo rs named in the Proxy
Statement; FOR the approval of the Stockholder Rights Plan, as amended; FOR the
appointment of Ernst & Young LLP as independent auditors for 1995; and AGAINST
the proposal by FAST, AFL-CIO.
(Continued and to be signed and dated on the reverse side.)
