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
[ ] Definitive Proxy Statement of the Commission
[ ] Definitive Additional Materials Only (as permitted
[ ] Soliciting Material Pursuant to by Rule 14a-6(e)(2)
Rule 14a-11(c) or Rule 14a-12
Veterinary Centers of America, Inc.
- ---------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee Required
[ ] Fee computed on table below per Exchange Act
Rules 14a-6(i)(4) and 0-11.
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(2) Aggregate number of securities to which transactions applies:
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pursuant to Exchange Act Rule 0-11.
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[ ] 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
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<PAGE>
PRELIMINARY COPY
VETERINARY CENTERS OF AMERICA, INC.
___________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
___________
To Be Held May 2, 1997
TO OUR STOCKHOLDERS:
Notice is hereby given that the 1997 Annual Meeting of Stockholders
(the "Annual Meeting") of Veterinary Centers of America, Inc. ("VCA"
or the"Company") will be held at VCA's offices at 3420 Ocean Park
Boulevard, Suite 1000, Santa Monica, California 90405, on May 2, 1997, at
10:00a.m., Los Angeles time, for the following purposes:
1. To elect two Class I Directors to the Board of Directors of
VCA, each to hold office for three years and until their
respective successors are elected;
2. To approve the tax treatment of the stock option grants to
the Chief Executive Officer, the Chief Operating Officer, the
Chief Development Officer and the Chief Financial Officer;
3. To transact such other business as may properly come before the
meeting and any adjournment(s) thereof.
Only holders of record of the Common Stock of the Company at the close
of business on April 4, 1997 are entitled to notice of and to vote at the
Annual Meeting and adjournments or postponements thereof.
All stockholders are cordially invited to attend the meeting in
person. However, to ensure your representation at the meeting, you are
urged to mark, sign and return the enclosed Proxy as promptly as possible
in the postage- prepaid envelope enclosed for that purpose. Any
stockholder attending the meeting may vote in person, even though he or she
has returned a Proxy.
By Order of the Board of Directors
Arthur J. Antin
CHIEF OPERATING OFFICER, SENIOR VICE
PRESIDENT
AND SECRETARY
3420 Ocean Park Boulevard
Santa Monica, California 90405
April 7, 1997
IN ORDER TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, YOU ARE
REQUESTED TO COMPLETE, DATE, AND SIGN THE ACCOMPANYING PROXY AS PROMPTLY AS
POSSIBLE AND RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE>
VETERINARY CENTERS OF AMERICA, INC.
3420 Ocean Park Boulevard, Suite 1000
Santa Monica, California 90405
(310) 392-9599
______________
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 2, 1997
This Proxy Statement is being furnished to holders of common stock of
Veterinary Centers of America, Inc., a Delaware corporation ("VCA" or the
"Company"), in connection with the solicitation of proxies by the Board of
Directors of VCA (the "Board") for use at the 1997 Annual Meeting of
Stockholders (the "Annual Meeting"), to be held on May 2, 1997 at VCA's
offices at 3420 Ocean Park Boulevard, Suite 1000, Santa Monica, California,
commencing at 10:00 a.m., local time, and at any adjournments or
postponements thereof.
At the Annual Meeting, the stockholders of the Company will vote upon:
(i) the election of two Class I directors for a term of three years; (ii)
the approval of the tax treatment of the stock option grants to the Chief
Executive Officer, the Chief Operating Officer, the Chief Development
Officer and the Chief Financial Officer; and (iii) such other matters as
may properly come before the Annual Meeting and any and all adjournments
thereof.
All Proxies which are properly completed, signed and returned to the
Company prior to the Annual Meeting, and which have not been revoked, will
unless otherwise directed be voted in accordance with the recommendations
of the Board of Directors set forth in this Proxy Statement. A stockholder
may revoke his or her Proxy at any time before it is voted either by filing
with the Secretary of the Company, at its principal executive offices, a
written notice of revocation or a duly executed proxy bearing a later date,
or by attending the Annual Meeting and expressing a desire to vote his or
her shares in person.
The expenses of preparing, assembling, printing and mailing this Proxy
Statement and the materials used in the solicitation of Proxies will be
borne by the Company. It is contemplated that the proxies will be
solicited through the mails, but officers, directors and regular employees
of the Company may solicit Proxies personally. Although there is no formal
agreement to do so, the Company may reimburse banks, brokerage houses and
other custodians, nominees and fiduciaries for their reasonable expenses in
forwarding the Proxy materials to stockholders whose stock in the Company
is held of record by such entities. In addition, the Company may use the
services of individuals or companies it does not regularly employ in
connection with the solicitation of Proxies if management determines it
advisable.
VOTING SECURITIES
The close of business on March 26, 1997 has been fixed as the record
date for the determination of stockholders entitled to notice of and to
vote at the Annual Meeting or any adjournments of the Annual Meeting. As
of the record date, the Company had outstanding 19,344,643 shares of Common
Stock, par value $.001 per share (the "Common Stock"), the only outstanding
voting securities of the Company. As of the record date, the Company had
669 stockholders of record. A stockholder is entitled to cast one vote for
each share held of record on the record date on all matters to be
considered at the Annual Meeting. Abstentions and shares held by brokers
that are prohibited from exercising discretionary authority will be counted
as present for the purposes of determining if a quorum is present.
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Directors are elected by the affirmative vote of a majority of the
votes cast. Stockholders may not cumulate their votes. The three
candidates receiving the highest number of votes will be elected. All
other matters that may properly come before the meeting require for
approval the favorable vote of a majority of shares voted at the meeting in
person or by proxy. Abstentions and broker non-votes will be included in
the determination of shares present at the Annual Meeting for purposes of
determining a quorum. Abstentions will be counted toward the tabulation of
votes cast on proposals submitted to stockholders and will have the same
effect as negative votes, while broker non-votes will not be counted as
votes cast for or against such matters.
ELECTION OF CLASS I DIRECTORS
In accordance with its Certificate of Incorporation and Bylaws, the
Board is divided into three classes. At each Annual Meeting of
stockholders of VCA, directors constituting one class are elected for
three-year terms. The Bylaws provide that the Board of Directors shall
consist of not less than three and no more than nine members as determined
from time to time by the Board of Directors. The Board of Directors
currently consists of two Class I Directors, with terms expiring in 1997,
two Class II Directors, with terms expiring in 1999, and two Class III
Directors, with terms expiring in 1998. At the Annual Meeting, two Class I
Directors will be elected for terms expiring at the 2000 Annual Meeting.
If the number of directors is changed, any increase or decrease is to be
apportioned among the classes so as to maintain the number of directors in
each class as nearly equal as possible. Directors may be removed only with
cause by the vote of a majority of the stockholders then entitled to vote.
Unless otherwise instructed, the proxy holders will vote the proxies
received by them for the nominees named below. If either nominee is unable
or unwilling to serve as a director at the time of the Annual Meeting or
any postponements or adjournments thereof, the proxies will be voted for
such nominee as shall be designated by the current Board of Directors to
fill the vacancy. VCA has no reason to believe that either nominee will be
unwilling or unable to serve if elected as a director.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF
THE NOMINEES LISTED BELOW.
The Board of Directors proposes the election of the following nominees
as Class I Directors:
Robert L. Antin
Richard Gillespie
If elected, each nominee is expected to serve until the 2000 Annual
Meeting of Stockholders. The affirmative vote of a majority of the shares
present in person or represented by proxy at the Annual Meeting and voting
on the election of the Class I Directors, is required for the election of
the above named nominees.
PAGE 2
<PAGE>
MANAGEMENT
INFORMATION WITH RESPECT TO NOMINEES, CONTINUING DIRECTORS AND EXECUTIVE
OFFICERS
The following table sets forth certain information with respect to the
nominees, continuing directors and executive officers of VCA as of March
31, 1997.
<TABLE>
<S>
NAME AGE POSITION
- ---- --- --------
NOMINEES: <C> <C>
Robert L. Antin 47 Chairman of the Board and Chief
Executive Officer of VCA
Richard Gillespie, M.D. 63 Director
CONTINUING DIRECTORS:
Arthur J. Antin 50 Chief Operating Officer, Senior Vice
President, Secretary and Director
Neil Tauber 46 Chief Development Officer, Senior Vice
President and Director
John B. Chickering, Jr. 48 Director
John A. Heil 43 Director
OTHER EXECUTIVE OFFICERS:
Tomas W. Fuller 39 Chief Financial Officer, Vice President
and Assistant Secretary
</TABLE>
The executive officers of VCA are appointed by and serve at the
discretion of the Board of Directors. Robert L. Antin and Arthur J. Antin
are brothers. There are no other family relationships between any director
and/or any executive officer of VCA.
MR. ROBERT L. ANTIN, a founder of VCA, has served as Chief Executive
Officer, President and Chairman of the Board of VCA since its inception.
Mr. Antin is responsible for directing all aspects of VCA's business. From
September 1983 until founding VCA, Mr. Antin was President, Chief Executive
Officer, a director and co-founder of AlternaCare Corp., a publicly held
company which owned, operated and developed free-standing outpatient
surgical centers. AlternaCare Corp. was acquired by Medical Care
International in 1988. From July 1978 until September 1983, Mr. Antin was
employed as an officer by American Medical International, Inc. ("AMI"), an
owner and operator of health care facilities. While at AMI, Mr. Antin
initially served as Director of Marketing of Professional Hospital
Services, then as Director of New Business Development responsible for
non-hospital related acquisitions and development, and most recently as a
Vice President of AMI and President of AMI Ambulatory Center, Inc., a
subsidiary of AMI operating a chain of ambulatory care centers. Mr. Antin
received his MBA degree with a certification in hospital and health
administration from Cornell University in 1975.
RICHARD GILLESPIE, M.D., was elected to the Board of Directors in June
1995. Dr. Gillespie is a private investor who has investments in several
companies in the United States. From 1983 to 1987, Dr. Gillespie was
Vice-President, a director and co-founder of AlternaCare Corp. Dr.
Gillespie also has served as a director for several other companies,
including Lansinoh Laboratories, Inc. and Geriatric Medical Center, and as
the general
PAGE 3
<PAGE>
partner of Outpatient Diagnostics Center. Dr. Gillespie holds an MD degree
from the University of Tennessee College of Medicine.
MR. ARTHUR J. ANTIN, a founder of VCA, has served as Chief Operating
Officer, Senior Vice President, Secretary and a Director of VCA since its
inception, and is currently responsible for managing animal hospital and
veterinary laboratory operations for VCA. From October 1983 to
September1986, Mr. Antin served as Director of Marketing/Investor Relations
of AlternaCare Corp., in which he developed and implemented marketing
strategies for a network of outpatient surgical centers. Mr. Antin
received an M.A.degree in Community Health from New York University and a
Post Graduate Certificate in Structured Programming and Business
Application design from Columbia University.
MR. NEIL TAUBER, a founder of VCA, has served as Chief Development
Officer, Senior Vice President and a Director of VCA since its inception
and is currently responsible for identifying and effecting the acquisition
of independent animal hospitals and veterinary diagnostic laboratories.
From 1984 to 1986, Mr. Tauber served as the Director of Corporate
Development at AlternaCare Corp., where his responsibilities included the
acquisition of new businesses and syndication to hospitals and physician
groups. From 1981 to 1984, Mr. Tauber served as Chief Operating Officer of
MDM Services, a wholly owned subsidiary of Mediq, a publicly held health
care company, where he was responsible for operating and developing a
network of retail dental centers and industrial medical clinics. Mr.
Tauber holds an MBA from Wagner College.
MR. JOHN B. CHICKERING, JR., a Certified Public Accountant, is
currently the Vice President - Financial Administration for Warner Bros.
International Television Distribution. Prior to his employment at Warner
Bros., Mr. Chickering served as a staff accountant at KPMG Peat Marwick
from August 1975 to June 1977. Mr. Chickering holds an MBA degree with
emphasis in accounting and finance from Cornell University. Mr. Chickering
has served as a Director of VCA since November 1988.
MR. JOHN A. HEIL, currently serves as the Vice President-Marketing for
Heinz Pet Products. Since 1978, Mr. Heil has served in various capacities
with other affiliates of the H.J. Heinz Company, including General Manager,
Marketing of Ore-Ida Foods, Inc. and Vice President - Marketing and Sales
of Star-Kist Foods, Inc. Mr. Heil holds a B.A. degree in economics from
Lycoming College. Mr. Heil has served as a Director of VCA since May 1995.
MR. TOMAS W. FULLER joined VCA in January 1988 and served as Vice
President and Controller until November 1990 when he became Chief Financial
Officer. Prior to joining VCA, from 1980 to 1987, Mr. Fuller served as an
audit manager for Arthur Andersen LLP. Mr. Fuller holds a BA degree in
business/economics from the University of California at Los Angeles (UCLA).
BOARD MEETINGS AND COMMITTEES
The Board of Directors held a total of seven meetings during the
fiscal year ended December 31, 1996. The Board has an Audit Committee and
a Compensation Committee. The Board does not have a Nominating Committee
or a committee performing similar functions. During the fiscal year ended
December 31, 1996, each director attended at least 75% of the meetings of
the Board of Directors held while he was a director and of the Committees
of the Board on which he served.
The Audit Committee met one time and the Compensation Committee met
one time during the fiscal year ended December 31, 1996. The Audit
Committee's functions include recommending to the Board of Directors the
engagement of VCA's independent auditors, reviewing and approving the
services performed by the independent auditors and reviewing and evaluating
VCA's accounting policies and internal accounting controls. The
Compensation Committee reviews and approves the compensation of officers
and key employees and determines and approves the granting of options under
VCA's various stock incentive plans. During the fiscal year ended December
PAGE 4
<PAGE>
31, 1996, the members of the AuditCommittee were Messrs. Robert L. Antin,
John B. Chickering, Jr. and Richard Gillespie; and the members of the
Compensation Committee were Messrs. John B. Chickering, Jr. and Richard
Gillespie, M.D.
COMPENSATION OF DIRECTORS
Directors of VCA who are not also employees of VCA receive $1,000 for
each meeting of the Board of Directors that they attend in person plus
reimbursement of all out-of-pocket expenses incurred in attending such
meetings. In addition, the non-employee directors, each were granted
options to purchase 10,000 shares of Common Stock upon appointment or
election to the Board of Directors. On the respective anniversaries of
their joining the Board of Directors, each of the non-employee directors,
if they retain such status, will receive an additional option to purchase
5,000 shares of Common Stock.
TRANSACTIONS WITH EXECUTIVE OFFICERS AND DIRECTORS
Except as disclosed in this Proxy Statement, neither the nominees for
election as Directors of the Company, the Directors or senior officers of
the Company nor any stockholder owning more than five percent of the issued
shares of the Company, or any of their respective associates of affiliates,
had any material interest, direct or indirect, in any material transaction
to which the Company was a party during the year ended December 31, 1996,
or which is presently proposed.
See "Employment Agreements" for a summary of employment agreements
with certain of the Company's executive officers.
On January 21, 1997, Mr. Robert Antin, Mr. Arthur Antin and Mr. Neil
Tauber (the "Officers") each exercised options to purchase 135,333, 48,000
and 14,666 shares of Common Stock of the Company, respectively. In
connection therewith, each Officer executed a four year 6.77% promissory
note in favor of the Company in the principal amounts of $459,399.75,
$86,000.00 and $10,999.50, respectively. The interest rate is equal to the
thirty year treasury bill rate on January 21, 1997.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the last fiscal year, executive compensation and the grant of
options under VCA's various stock incentive plans was administered by the
Compensation Committee of the Board. The directors of the Corporation who
served on the Compensation Committee were Richard Gillespie and John B.
Chickering, Jr. Neither of Messrs. Chickering or Gillespie is, nor has
either of them ever been, an officer or employee of VCA.
REPORT OF THE COMPENSATION COMMITTEE
The following report of the Compensation Committee to the Board shall
not be deemed to be included in or incorporated by reference into any
filing by VCA under the Securities Act of 1933, as amended (the "Securities
Act") or the Exchange Act of 1934, as amended (the "Exchange Act")
including any filing that incorporates Securities Act or Exchange Act
filings in whole or in part by reference.
GENERAL
The Compensation Committee of the Board (the "Committee") is
responsible for establishing and administering the policies that govern
executive compensation for executive officers and key employees of VCA.
PAGE 5
<PAGE>
COMPENSATION PHILOSOPHY
VCA's executive compensation program is designed to (1) provide levels
of compensation that integrate pay and incentive plans with VCA's strategic
goals so as to align the interests of executive management with the
long-term interests of VCA's stockholders; (2) attract, motivate and retain
executive talent capable of achieving the strategic business goals of VCA;
(3) recognize outstanding individual contributions; and (4) provide
compensation opportunities which are competitive to those offered by other
companies of similar size and performance. To achieve these goals, VCA's
executive compensation program consists of three main elements: (i) base
salary, (ii) annual cash bonus and (iii) long-term incentives. Each
element of compensation has an integral role in the total executive
compensation program.
BASE SALARY
Base salaries for executive officers are determined on an annual basis
by evaluating each executive officer's, including Mr. Robert Antin's,
position, duties, responsibilities, tenure, performance and potential
contributions to VCA. This determination also takes into account the
Committee's assessment of competitive compensation packages for comparable
positions in the Southern California market. The financial performance of
VCA is also considered. Finally, factors consistent with VCA's overall
compensation policy are taken into account.
Effective February 1, 1997, the Company entered into amendments (the
"Amended Agreements") to the employment agreements (the "Original
Agreements") between the Company and each of Robert L. Antin, Arthur J.
Antin and Neil Tauber. The Amended Agreements do not modify the annual
base salaries paid pursuant to the Original Agreements. The Committee has
determined to have a survey prepared by a compensation consulting firm with
respect to comparable compensation packages provided to executives in
similarly situated companies, and upon review of the results of the survey
will establish annual salaries and bonuses for these officers.
VCA also provides to its employees (including Mr. Robert Antin and the
other officers) medical insurance and other customary employee benefits.
VCA pays term life insurance premiums for the benefit of Messrs. Robert
Antin, Arthur Antin, Neil Tauber and Tomas Fuller, which amounted in fiscal
1996 to approximately $31,800, $22,600, $19,440 and $20,000, respectively.
ANNUAL CASH BONUSES
Historically, executive officers have been eligible for annual
incentive bonuses in amounts determined at the discretion of the Committee.
Commencing in fiscal 1995, the Committee determined to place greater weight
on long-term incentives represented by stock options than on the award of
annual cash bonuses. Consequently, with the concurrence of the executive
officers, VCA awarded no cash bonuses to the executive officers with
respect to fiscal 1996. As indicated above, upon review of the
compensation survey, the Committee will establish bonuses for the executive
officers. The Committee intends that annual cash bonuses be part of VCA's
long-term executive compensation program and may elect to continue the
practice in fiscal 1997 and subsequent years. Historically, the Committee
has considered an award of an annual bonus subjectively, taking into
account factors such as the financial performance of VCA, increases in
stockholder value, the enhancement of VCA's image and reputation, expansion
into new markets, and the achievement of corporate goals and individual
performance. The Committee has attributed various weights to these factors
based upon their perceived relative importance to VCA at the time
compensation determinations were made.
PAGE 6
<PAGE>
LONG-TERM INCENTIVES
The Committee provides VCA's executive officers with long-term
incentive compensation through grants of stock options. The Committee is
responsible for selecting the individuals to whom grants should be made,
the timing of grants, the determination of the per share exercise price and
the number of shares subject to each option awarded. The Committee
believes that stock options provide VCA's executive officers with the
opportunity to purchase and maintain an equity interest in VCA and to share
in the appreciation of the value of the Common Stock. The Committee
believes that stock options directly motivate an executive to maximize
long-term stockholder value. The options incorporate vesting periods in
order to encourage key employees to continue in the employ of VCA. The
Committee considers the grant of each option (including those granted to
Mr. Robert Antin) subjectively, considering factors such as the individual
performance of executive officers and competitive compensation packages in
the industry. The Company has established option grants to the executive
officers that it believes are at an appropriate level to provide long term
incentive to the executive officers over five years. The Company has
determined that these grants better align the interests of these officers
with the stockholders.
CHIEF EXECUTIVE OFFICER
Effective February 1, 1997, the Company and Mr. Robert Antin entered
into an amended and restated employment agreement (the "Amended Agreement")
(see --Employment Agreements"). Pursuant to the Amended Agreement, Mr.
Robert Antin's base salary remained at $265,000 and the size of the stock
option grant set forth therein (options to purchase an aggregate of 900,000
shares of Common Stock) was determined based upon Mr. Robert Antin's
services to VCA and the financial performance of VCA in the fiscal year
ended December 31, 1996. The most important criteria relied upon by the
Compensation Committee was its assessment of the leadership and vision
provided by Mr. Antin in securing substantial progress toward the
achievement of VCA's long-term strategic goals. In particular, the
Compensation Committee took into account the expansion of VCA's presence
in the animal hospital business with the acquisitions of Pets' Rx, Inc. in
June 1996 and The Pet Practice, Inc. in July 1996 which, collectively,
added approximately 75 hospitals to VCA's network of animal hospitals,
after certain consolidations and closures. In addition, VCA significantly
expanded its laboratory business in northern California and in the
mid-western states with the acquisitions of Southwest Veterinary
Diagnostics, Inc. and Associated Pathologists Laboratories.
SUMMARY
The Committee believes that its executive compensation philosophy of
paying VCA's executive officers by means of base salaries, annual cash
bonuses and stock option grants, as described in this report, serves the
interests of VCA and VCA's stockholders.
Compensation Committee: John B. Chickering, Jr.
Richard Gillespie, M.D.
PAGE 7
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF VCA
The following table sets forth certain information provided by VCA
regarding beneficial ownership of VCA Common Stock as of March 31, 1997 by
(i) each director and Named Executive Officer of VCA; (ii) each person
known to VCA to be the beneficial owner of more than 5% of the outstanding
VCA Common Stock, and (iii) all directors and executive officers of VCA as
a group. Except as may be indicated in the footnotes to the table, each of
such persons has the sole voting and investment power with respect to the
shares owned, subject to applicable community property laws. The address of
each person listed is in care of VCA, 3420 Ocean Park Boulevard, Suite
1000, Santa Monica, California 90405, unless otherwise set forth below
such person's name.
<TABLE>
Name and Address Number of Shares(1) Percent of
Class
- ---------------- ------------------ ----------------
<S> <C> <C>
Scudder, Stevens & Clark, Inc. 1,022,600 5.6%
345 Park Avenue
New York, New York 10154
Robert L. Antin (2) 971,091 5.0
Arthur J. Antin (3) 401,870 2.1
Neil Tauber (4) 245,777 1.3
Tomas W. Fuller (5) 165,945 *
Deborah W. Moore (6) 26,528 *
John B. Chickering, Jr. (7) 17,500 *
Richard Gillespie, M.D. (8) 17,500 *
John A. Heil (9) 7,500 *
All of VCA's executive officers and 1,827,183 9.1%
directors as a group (8 persons)
(3)(4)(5)(7)(8)(9)(10)
__________________________________
<FN>
* Less than one percent.
(1) Under Rule 13d-3 of the Exchange Act, certain shares may be deemed to
be beneficially owned by more than one person (if, for example,
persons share the power to vote or the power to dispose of the
shares). In addition, shares are deemed to be beneficially owned by a
person if the person has the right to acquire the shares (for example
upon exercise of an option) within 60 days of the date as of which the
information is provided. In computing the percentage ownership of any
person, the amount of shares outstanding is deemed to include the
amount of shares beneficially owned by such person (and only such
person) by reason of these acquisition rights. As a result, the
percentage of outstanding shares of any person as shown in this table
does not necessarily reflect the person's actual ownership or voting
power with respect to the number of shares of Common Stock actually
outstanding at March 31, 1997.
(2) Includes (i) 101,866 shares held by Mr. Robert Antin's minor children
and (ii) 230,000 shares of Common Stock reserved for issuance upon
exercise of stock options which are or will become exercisable on or
prior to May 30, 1997.
(3) Includes (i) 50,000 shares which Mr. Arthur J. Antin holds as
custodian for Mr. Robert L. Antin's minor children under the
California Uniform Gifts to Minor's Act, (ii) 43,666 shares held by
Mr. Arthur J. Antin's minor children; and (iii) 189,611 shares of
Common Stock reserved for issuance upon exercise of stock options
which are or will become exercisable on or prior to May 30, 1997.
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(4) Includes 196,111 shares of Common Stock reserved for issuance upon
exercise of stock options which are or will become exercisable on or
prior to May 30, 1997.
(5) Consists of 165,945 shares of Common Stock reserved for issuance upon
exercise of stock options which are or will become exercisable on or
prior to May 30, 1997.
(6) Includes 13,267 shares of Common Stock reserved for issuance upon
exercise of stock options which are or will become exercisable on or
prior to May 30, 1997.
(7) Includes 15,000 shares of Common Stock reserved for issuance upon
exercise of stock options which are or will become exercisable on or
prior to May 30, 1997.
(8) Includes 12,500 shares of Common Stock reserved for issuance upon
exercise of stock options which are or will become exercisable on or
prior to May 30, 1997.
(9) Includes 7,500 shares of Common Stock reserved for issuance upon
exercise of stock options which are or will become exercisable on or
prior to May 30, 1997.
(10) Ms. Moore tendered her resignation to the Company effective December
31, 1996 and the shares of stock beneficially owned by Ms. Moore are
not included in those shares owned by all of the Company's directors
and executive officers as a group.
</FN>
</TABLE>
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows, as to the Chief Executive Officer and as to
each of the other four most highly compensated executive officers (the
"Named Executive Officers") whose salary plus bonus exceeded $100,000
during the last fiscal year, information concerning all compensation paid
for services to VCA in all capacities during the last three fiscal years.
<TABLE>
<CAPTION> SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
__________________________________________________________________________________________
Name and Principal Other Annual Stock Option
Position Year Salary Bonus Compensation (1) Awards (2)
_________________________ ____ ________ ________ ________________ _____________
<S> <C> <C> <C> <C> <C>
Robert L. Antin 1996 $262,404 $ -0- $8,800 -0-
Chairman of the 1995 241,091 -0- 8,800 280,000
Board and Chief 1994 205,730 30,890(3) 9,600 25,000
Executive Officer
Arthur J. Antin 1996 187,039 -0- 7,200 -0-
Chief Operating 1995 170,915 -0- 7,200 140,000
Officer, Senior 1994 146,953 21,480 (3) 7,200 25,000
Vice President
and Secretary
Neil Tauber 1996 160,038 -0- 7,200 -0-
Senior Vice 1995 144,038 -0- 7,200 120,000
President 1994 120,000 17,592 (3) 7,200 25,000
Tomas W. Fuller 1996 134,038 -0- 7,200 -0-
Chief Financial 1995 101,214 -0- 6,000 110,000
Officer, Vice 1994 92,500 13,090 (3) 6,000 10,000
President and
Assistant Secretary
Deborah Moore 1996 91,000 10,000 -0- -0-
Chief Accounting
Officer, Vice
President and
Controller (4)
__________
<FN>
(1) Includes automobile allowance.
(2) All numbers reflect the number of shares of Common Stock subject to
options granted during the fiscal year.
(3) Reflects bonus awards granted in March 1995 for services rendered
during the fiscal year ended December 31, 1994.
(4) Ms. Moore became an executive officer of the Company in the fiscal
year ended December 31, 1996 and tendered her resignation to the
Company effective December 31, 1996.
</FN>
</TABLE>
PAGE 10
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
There were no stock options granted to a Named Executive Officer in
the fiscal year ended December 31, 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table sets forth, for each of the Named Executive
Officers, certain information regarding the exercise of stock options
during the fiscal year ended December 31, 1996 and the value of unexercised
options at December 31, 1996 based upon the closing price of the Common
Stock on the Nasdaq National Market on December 31, 1996 ($11.00 per
share).
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of Securities Value of All Unexercised
Underlying Unexercised In-the-Money Options at Fiscal
Shares Acquired on Value Options at Fiscal Year-End Year End (1)
Name Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
___________________ ___________________ __________ ___________________________ _______________________________
<S> <C> <C> <C> <C>
Robert L. Antin -0- -0- 309,083/131,250 $1,134,628/$44,010
Arthur J. Antin -0- -0- 207,750/70,250 993,868/45,157
Neil Tauber -0- -0- 185,083/59,583 866,674/35,677
Tomas W. Fuller 60,000 $768,141 144,417/51,250 596,468/19,271
Deborah Moore 8,733 177,212 13,267/0 31,002/0
</TABLE>
EMPLOYMENT AGREEMENTS
On January 1, 1994, VCA entered into employment agreements (the
"Original Agreements") with each of Robert L. Antin, Arthur J. Antin, and
Neil Tauber, which were amended effective February 1, 1997 (the "Amended
Agreements"). The current base salaries of these officers are those which
the Company is obligated to pay under the Original Agreements. Upon
amendment to extend the term of each Original Agreement, base salaries were
not modified. The Compensation Committee has determined to have a survey
prepared by a compensation consulting firm with respect to comparable
compensation packages provided to executives in similarly situated
industries and upon review of the results of the survey, will establish
annual salaries and bonuses for these officers. Pursuant to the Amended
Agreements each of Robert Antin, Arthur Antin and Neil Tauber were granted
options to purchase 900,000, 450,000 and 360,000 shares of Common Stock of
the Company, respectively. (See "Proposal to Approve Tax Treatment of
Stock Option Grants to Chief Executive Officer, Chief Operating Officer,
Chief Development Officer and Chief Financial Officer.") In addition, the
Board has determined that executive officers of VCA may earn bonuses during
each calendar year based upon management achieving performance goals
established by the Compensation Committee of the Board of Directors on an
annual basis.
If employment is terminated due to death or the disability of the
employee, the agreements provide that VCA will pay the affected employee
severance pay equal to five years' base salary. If employment is
terminated by VCA without cause or by the employee for cause, the affected
employee is entitled to severance pay in an amount equal to five years'
base salary plus an amount equal to five times (a) in the event no previous
bonus has been paid or is payable to the affected employee, 20% of the
affected employee's base salary, and (b) in the event at least one bonus
has been paid or is payable to the affected employee, the average bonus
based on all bonuses paid or payable to the affected employee. If
employment is terminated due to a change in control of VCA, the affected
employee is entitled to severance pay in an
PAGE 11
<PAGE>
amount equal to five years' base salary
plus an amount equal to (a) in the event no previous bonus has been paid or
is payable to the affected employee, 20% of the affected employee's salary,
and (b) in the event at least one bonus has been paid or is payable to the
affected employee, the average bonus based on all bonuses paid or payable
to the affected employee. If employment is terminated due to the scheduled
expiration of an employment agreement, the affected employee is entitled to
severance pay in an amount equal to five years' base salary. In each of
these employment agreements, events constituting "termination by the
employee for cause" include (i) the willful breach of any of the material
obligations of VCA to the employee under his employment agreement; (ii) the
relocation of the chief executive offices of VCA outside of Los Angeles
County, California; or (iii) in the case of employees who also serve as
members of the Board, the failure of the employee to be reelected to, or
the removal of the employee from, the Board. "Change of control" is
defined in each of these agreements to include (a) a consolidation or
merger of VCA into another entity in which VCA is not the continuing or
surviving corporation or pursuant to which shares of Common Stock of the
Company would be converted into cash, securities or other property, other
than a merger of VCA in which the stockholders of VCA immediately prior to
the merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger, (b) any sale, lease or
other transfer of all or a significant portion of the assets of VCA, (c)
the approval by the stockholders of VCA of any plan or proposal for the
liquidation or dissolution of VCA, (d) the ownership by any person, who at
the effective date of the employment agreement owned less than 10% of the
Common Stock of the Company, of 20% or more of the Common Stock of the
Company or (e) during any consecutive two year periods, individuals who at
the beginning of such period constitute the entire Board of Directors shall
cease for any reason to constitute a majority thereof unless the election,
or the nomination for election by the stockholders of VCA, of each new
director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of the period.
In April 1992, VCA entered into an agreement with Tomas W. Fuller,
Chief Financial Officer, Vice President and Assistant Secretary of VCA,
pursuant to which it agreed that if Mr. Fuller's employment is terminated
without cause (as defined above), VCA will pay to Mr. Fuller severance pay
equal to six months' salary.
STOCK INCENTIVE PLANS
The Company has in effect the 1987 Stock Incentive Plan, 1993 Stock
Incentive Plan, 1995 Stock Incentive Plan (collectively, the "Previous
Plans") and the 1996 Stock Incentive Plan (the "1996 Plan" and, together
with the Previous Plans, the "Plans"). The purpose of the Plans is to
advance the interests of VCA and its stockholders by strengthening VCA's
and its subsidiaries' ability to obtain and retain the services of the
types of employees, consultants, officers and directors who will contribute
to VCA's long term success and to provide incentives which are linked
directly to increases in stock value which will inure to the benefit of all
stockholders of VCA. At the date of this Proxy, options to purchase all
1,500,000 shares of Common Stock underlying the Previous Plans have been
granted. Subject to adjustment for stock splits, stock dividends and other
similar events, the total number of shares of Common Stock reserved for
issuance under the 1996 Plan is 1,500,000 shares. As of December 31, 1996,
options to purchase 210,794 shares of Common Stock have been issued and are
outstanding under the 1996 Plan.
The 1996 Plan currently is administered by the Compensation Committee
of the Board of Directors, each member of which is a non-employee director,
a Disinterested Person (as defined in Rule 16b-3 promulgated under the
Exchange Act), and an Outside Director (as defined in Section 162(m) of the
Code.) The 1996 Plan provides that options may be granted to non-employee
directors who are designated as eligible persons by the Board of Directors,
other non-employee directors, subject to certain limitations, officers
(including officers who are directors), employees and consultants of VCA
and its subsidiaries. The Compensation Committee will determine the
persons to be selected as optionees, the terms of vesting of options and
the number of shares of Common Stock to be subject to each option. In the
sole and absolute discretion of the Compensation Committee, such options
may be either "incentive stock options" within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended, or non-statutory options.
In addition, no participant shall be granted options with respect to more
than 500,000 shares of Common Stock during any one year period.
Non-employee directors shall be entitled to receive the following: (i) the
nondiscretionary grant of a non-statutory option to purchase 10,000 shares
of Common Stock upon the non-employee director's election or appointment to
the Board of Directors, and (ii) for so long as the non-employee director
remains on the Board of Directors, an annual nondiscretionary grant on the
date of VCA's annual meeting of stockholders of non-statutory options to
purchase 5,000 shares of Common Stock. Unless designated "eligible
persons," non-employee directors are not eligible for additional grants.
All options granted to the non-employee directors shall have an exercise
price equal to 100% of the fair market value of the shares of Common Stock
on the date of grant and shall vest in 12 equal monthly installments.
PAGE 12
<PAGE>
STOCK PERFORMANCE GRAPH
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG VETERINARY CENTERS OF AMERICA, INC., THE NASDAQ STOCK
MARKET - US INDEX AND THE RUSSELL 2000 INDEX
[PERFORMANCE GRAPH APPEARS HERE]
* $100 INVESTED ON 12/31/91 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS
FISCAL YEAR ENDING DECEMBER 31.
<TABLE>
<CAPTION>
Cumulative Total Return
_______________________________________________
<S> <C> <C> <C> <C> <C> <C>
12/91 12/92 12/93 12/94 12/95 12/96
Veterinary Ctrs. Amer. Inc. VCAI 100 168 168 216 435 284
NASDAQ STOCK MARKET - US INAS 100 116 134 131 185 227
RUSSELL 2000 IR20 100 119 141 139 178 207
</TABLE>
PAGE 13
<PAGE>
PROPOSAL TO APPROVE TAX TREATMENT OF THE STOCK OPTION GRANTS
TO THE CHIEF EXECUTIVE OFFICER, CHIEF OPERATING OFFICER,
CHIEF DEVELOPMENT OFFICER AND CHIEF FINANCIAL OFFICER
TERMS OF THE STOCK OPTION GRANTS
In February 1997, the Company amended and restated the employment
agreements (the "Employment Agreements") of the Chief Executive Officer,
the Chief Operating Officer and the Chief Development Officer (together,
with the Chief Financial Officer, the "Officers"). Pursuant to the
Employment Agreements, the Company, among other things, granted stock
options to the Chief Executive Officer, the Chief Operating Officer and the
Chief Development Officer to purchase up to 900,000, 450,000 and 360,000
shares of Common Stock, each at a price equal to the market price as of the
date of grant. The Compensation Committee also granted stock options
(together with the stock options granted to the Chief Executive Officer,
the Chief Operating Officer and the Chief Development Officer, the
"Options") to the Chief Financial Officer to purchase up to 315,000 shares
of Common Stock at a price equal to the market price as of the date of
grant. The Options vest in 60 equal monthly installments on the first day
of each month commencing on July 1, 1997.
FEDERAL INCOME TAX CONSEQUENCES
The following is intended only as a brief summary of the federal
income tax rules relevant to the grant of the Options to the Officers.
These rules are highly technical and subject to change in the future.
SECTION 162(M) LIMITATIONS.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), generally disallows the deduction of compensation income in
excess of $1,000,000 paid to a "covered employee." Thus, if an Officer
remains a "covered employee," meaning either the Chief Executive Officer or
one of the other four most highly compensated employees of the Company
whose compensation is required to be disclosed under the Exchange Act, and
he were to exercise his options such that he receives more than $1,000,000
in compensation in any given taxable year, the Company would not be allowed
to deduct that portion of such Officer's otherwise deductible compensation
that exceeded $1,000,000.
Section 162(m) of the Code does not apply, however, to compensation
that meets the following four criteria: (i) the compensation is based
solely on the attainment of performance goals; (ii) the performance goals
are determined by a compensation committee of the Board of Directors
comprised solely of two or more outside directors; (iii) the material terms
of the compensation are disclosed to stockholders and approved by a
majority vote of the stockholders; and (iv) certification by the
compensation committee that the performance goals have been met. Stock
options are generally treated as based on the attainment of performance
goals and are not subject to certification by the compensation committee if
the exercise price of the options is not less than the fair market value of
the underlying stock at the time the options are granted. Thus, since the
Options were granted by the Compensation Committee, which is comprised
solely of outside directors, upon stockholder approval of this proposal the
Company should be able to deduct the compensation income attributable to
the exercise of these Options without being subject to the limitations
imposed under Section 162(m) of the Code.
TAX CONSEQUENCES TO THE OFFICERS AND THE COMPANY.
The Options granted to the Officers under the Employment Agreements
are classified as non-qualified options ("NQOs") under the Code. Under the
Code, an optionee does not recognize any taxable income, and the Company is
not entitled to a deduction, upon the grant of an NQO. Upon the exercise
of an NQO, the Officer will recognize ordinary compensation income (subject
to wage and employment tax withholding) equal to the excess of the fair
market value of the shares acquired over the option exercise price. The
amount of such excess generally is determined by reference to the fair
market value of the Company's Common Stock on the date of exercise. The
Officer's basis in the stock received is equal to such stock's fair market
value on the date of exercise. The Corporation is entitled to a deduction
equal to the compensation taxable to the Officer.
PAGE 14
<PAGE>
If the Officer sells shares acquired pursuant to the exercise of the
Options, he generally will recognize capital gain or loss equal to the
difference between the selling price of the shares and his basis in the
shares. Such capital gain or loss is long- or short- term depending on
whether he has held the shares for more than one year. The Company is not
entitled to any deduction with respect to any capital gain recognized by
the Officer.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPROVAL OF
THE OPTIONS.
SECURITIES EXCHANGE ACT FILINGS
Section 16(a) of the Exchange Act requires VCA's executive officers,
directors and persons who own more than ten percent of a registered class
of VCA's equity securities to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "Commission").
Executive officers, directors, and greater-than-ten percent stockholders
are required by the regulations of the Commission to furnish VCA with
copies of all Section 16(a) forms they file. Based solely on its review of
the copies of such forms received by it, VCA believes that, during the year
ended December 31, 1996, all relevant Section 16(a) filing requirements
were complied with.
PROPOSALS OF STOCKHOLDERS
A proper proposal submitted by a stockholder for presentation at VCA's
1998 Annual Meeting and received at VCA's executive offices no later than
December 9, 1997, will be included in VCA's Proxy Statement and form of
proxy relating to the 1998 VCA Annual Meeting.
Under the Bylaws, to bring business before an annual meeting, a
stockholder must give written notice thereof to the Secretary of VCA not
less than 60 nor more than 90 days before such meeting. The notice must
set forth the name, address and number of shares owned by the stockholder
making the proposal, a brief description of the business desired to be
brought before the meeting and the reasons for conducting it at such
meeting, as well as such other information as would be required to be
disclosed in the solicitation of proxies under Regulation 14(a) under the
Exchange Act. Nomination for the Board of Directors must also include the
written consent of the nominee to be elected and serve.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, independent certified public accountants, were
selected by the Board of Directors to serve as independent auditors of VCA
for the fiscal year ended December 31, 1996, and have been selected by the
Board of Directors to serve as independent auditors for the fiscal year
ending December 31, 1997. Representatives of Arthur Andersen LLP are
expected to be present at the Annual Meeting, will have an opportunity to
make a statement if they desire to do so and will respond to appropriate
questions from stockholders.
OTHER MATTERS
The Board of Directors is not aware of any matter to be acted upon at
the Annual Meeting other than described in this Proxy Statement. Unless
otherwise directed, all shares represented by the persons named in the
accompanying proxy will be voted in favor of the proposals described in
this Proxy Statement. If any other matter properly comes before the
meeting, however, the proxy holders will vote thereon in accordance with
their best judgment.
PAGE 15
<PAGE>
ANNUAL REPORT ON FORM 10-K
THE COMPANY'S ANNUAL REPORT ON FORM 10-K, WHICH HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION FOR THE YEAR ENDED DECEMBER 31,
1996, WILL BE MADE AVAILABLE TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN
REQUEST TO TOMAS FULLER, CHIEF FINANCIAL OFFICER, 3420 OCEAN PARK
BOULEVARD, SUITE 1000, SANTA MONICA, CALIFORNIA 90405.
ON BEHALF OF THE BOARD OF DIRECTORS
Arthur J. Antin
CHIEF OPERATING OFFICER, SENIOR VICE
PRESIDENT AND SECRETARY
PAGE 16
<PAGE>
PRELIMINARY COPY
VETERINARY CENTERS OF AMERICA, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
The undersigned, a Stockholder of VETERINARY CENTERS OF AMERICA, INC.
a Delaware corporation, (the "Company") hereby appoints ROBERT L. ANTIN and
TOMAS W. FULLER, and each of them, the proxies of the undersigned, each
with full power of substitution, to attend, vote and act for the
undersigned at the Annual Meeting of Stockholders of the Company, to be
held on May 2, 1997, and any postponements or adjournments thereof, and in
connection herewith, to vote and represent all of the shares of the Company
which the undersigned would be entitled to vote, as follows:
The Board of Directors recommends a WITH vote on Proposal 1 and a FOR
vote on Proposal 2.
1. ELECTION OF DIRECTORS, as provided in the Company's Proxy
Statement:
___ WITH ___ WITHOUT Authority to vote for the nominees
listed below.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY FOR THE NOMINEE, LINE
THROUGH OR OTHERWISE STRIKE OUT NAME BELOW)
Robert L. Antin Richard Gillespie
2. The approval of the tax treatment of the stock option grants to
the Chief Executive Officer, the Chief Operating Officer, the
Chief Development Officer and the Chief Financial Officer.
____ FOR ____ AGAINST ____ ABSTAIN
The undersigned hereby revokes any other proxy to vote at such
Meeting, and hereby ratifies and confirms all that said attorneys and
proxies, and each of them, may lawfully do by virtue hereof. WITH RESPECT
TO MATTERS NOT KNOWN AT THE TIME OF THE SOLICITATION HEREOF, SAID PROXIES
ARE AUTHORIZED TO VOTE IN ACCORDANCE WITH THEIR BEST JUDGMENT.
This Proxy will be voted in accordance with the instructions set forth
above. THIS PROXY WILL BE TREATED AS A GRANT OF AUTHORITY TO VOTE FOR THE
ELECTION OF THE DIRECTORS NAMED AND THE TAX TREATMENT OF THE STOCK OPTION
GRANTS, AND AS SAID PROXY SHALL DEEM ADVISABLE ON SUCH OTHER BUSINESS AS
MAY COME BEFORE THE MEETING, UNLESS OTHERWISE DIRECTED.
PAGE 2
<PAGE>
The undersigned acknowledges receipt of a copy of the Notice of Annual
Meeting and accompanying Proxy Statement dated May __, 1997 relating to the
Meeting.
Date: ___________, 1997
________________________________________
________________________________________
Signature(s) of Stockholder(s)
(See Instructions Below)
The signature(s) hereon should correspond
exactly with the name(s) of the
Stockholder(s) appearing on the Stock
Certificate. If stock is jointly held,
all joint owners should sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If
signer is a corporation, please sign the
full corporation name, and give title of
signing officer.
THIS PROXY IS SOLICITED BY
THE BOARD OF DIRECTORS OF VETERINARY CENTERS OF AMERICA, INC.
