<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
IN HOME HEALTH, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 23, 2000
Notice is hereby given that the Annual Meeting of Stockholders of In Home
Health, Inc. will be held at the Radisson Hotel and Conference Center, 3131
Campus Drive, Plymouth, Minnesota 55441 on February 23, 2000 at 9:30 a.m.
Central Time for the following purposes:
1. To elect five directors;
2. To consider and act upon a proposal to amend the Company's Stock
Option Plan to increase the number of shares available under the Plan
by an additional 750,000 shares;
3. To ratify the selection of independent auditors for the Company for
the current fiscal year; and
4. To transact such other business as may properly come before the
Annual Meeting.
The Board of Directors has fixed the close of business on January 7, 2000 as
the record date for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting.
By Order of the Board of Directors,
[SIGNATURE]
Robert J. Hoffman, Jr., Secretary
Minneapolis, Minnesota
January 21, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE SIGN AND DATE
THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE.
Proxies are revocable at any time prior to the time they are voted, and
stockholders who are present at the Annual Meeting may withdraw their proxies
and vote in person if they so desire.
<PAGE>
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished to the stockholders of In Home
Health, Inc. (the "Company") in connection with the Board of Directors'
solicitation of proxies to be voted at the annual meeting of stockholders to be
held on February 23, 2000, or any adjournment thereof (the "Meeting"). The
mailing of this Proxy Statement to stockholders commenced on or about
January 21, 2000.
All expenses in connection with solicitation of proxies will be borne by the
Company. The Company will pay brokers, nominees, fiduciaries, or other
custodians their reasonable expenses for sending proxy material to, and
obtaining instructions from, persons for whom they hold stock of the Company.
The Company expects to solicit proxies by mail, but directors, officers, and
other employees of the Company may also solicit in person, by telephone, by
telegraph or by mail. The Company's principal office is located at 601 Carlson
Parkway, Suite 500, Minnetonka, Minnesota 55305 and its telephone number is
(612) 449-7500.
Any proxy may be revoked at any time before it is voted by written notice,
mailed or delivered to the Secretary of the Company, or by revocation in person
at the Meeting; but if not so revoked, the shares represented by such proxy will
be voted in the manner directed by the stockholder. If no direction is made,
proxies received from stockholders will be voted "for" the proposals set forth
in the Notice of Meeting.
Only stockholders of record at the close of business on January 7, 2000 will
be entitled to vote at the Meeting. As of such date, the Company had outstanding
5,520,553 shares of common stock, par value $.03 per share (the "Common Stock")
and 200,000 shares of Series A Preferred Stock, par value $1.00 per share (the
"Preferred Stock"). Each share of Common Stock is entitled to one vote on each
of the matters brought before the Meeting. The Preferred Stock has no voting
rights with respect to any matter set forth in the Notice of the Meeting. Each
share of Preferred Stock is entitled to 17 votes only with respect to a proposal
to (i) wind up, dissolve or liquidate the Company or revoke or forfeit its
charter, (ii) amend the Company's articles of incorporation, (iii) merge or
consolidate or enter into an exchange agreement with another corporation, or
(iv) sell, lease, transfer or otherwise dispose of all or substantially all of
the Company's assets not in the usual and regular course of business, pursuant
to the Second Preferred Stock Modification Agreement between the Company and
ManorCare Health Services, a wholly owned subsidiary of Manor Care, Inc. ("Manor
Care"), wherein Manor Care waived the voting rights of the Preferred Stock,
except for items (i) through (iv) above. In consideration, the Company waived
its right to pay dividends on the Preferred Stock in shares of its Common Stock.
The Company's articles of incorporation exclude cumulative voting. Manor
Care holds approximately 41% of the voting power of the Company's Common Stock
for all matters brought before the Meeting, and approximately 63% for those
matters referenced in (i) through (iv) above. Manor Care acquired all of the
200,000 outstanding shares of Preferred Stock and 2,250,000 shares of Common
Stock on October 24, 1995 pursuant to a Securities Purchase and Sale Agreement
between the Company and Manor Care, dated as of May 2, 1995, as amended (the
"Purchase Agreement").
The presence, in person or by proxy, of the holders of a majority of the
voting power of all shares of the Company entitled to vote at the Meeting will
constitute a quorum for the transaction of business. Under Minnesota law, if the
shares present and entitled to vote on an item of business would not constitute
a quorum for the transaction of business at the Meeting, then the item must be
approved by a majority of the voting power of the minimum number of shares that
would constitute such a quorum. Votes
2
<PAGE>
cast by proxy or in person at the Meeting will determine whether or not a quorum
is present. Abstentions will be treated as shares that are present and entitled
to vote for purposes of determining the presence of a quorum, but as unvoted for
purposes of determining the approval of the matter submitted to the
stockholders. Therefore, abstentions are effectively a vote against the
proposal. If a broker indicates on the proxy that it does not have discretionary
authority as to certain shares to vote on a particular matter, those shares will
not be considered as present and entitled to vote with respect to that matter.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. These
insiders are required by Securities and Exchange Commission regulations to
furnish the Company with copies of all Section 16(a) forms they file, including
Forms 3, 4 and 5.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended September 30, 1999, all
Section 16(a) filing requirements applicable to its insiders were complied with,
except Robert Hoffman reported in October 1999 a grant of 50,000 stock options
in June 1999, and Wolfgang von Maack reported in October 1999 a grant of 180,000
stock options in June 1999.
3
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table presents information provided to the Company as to the
beneficial ownership of Common Stock as of January 7, 2000 by persons known to
the Company to hold 5% or more of such stock and by all current directors,
nominees, the Named Executive Officers from the table on page 4 and all
directors and executive officers as a group. All shares represent sole voting
and investment power, unless indicated to the contrary.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP VOTING POWER
- ------------------------------------ ----------------------- ------------
<S> <C> <C>
Manor Care, Inc. (1)........................................ 2,250,000 40.8%(2)
Heartland Advisors, Inc. (3)................................ 470,101 8.5%
RS Investment Management Co., LLC (4)....................... 461,733 8.4%
Wolfgang von Maack.......................................... 33,010(5) *
James J. Lynn, Ed.D......................................... 6,000 *
Robert J. Hoffman, Jr....................................... 500 *
Clyde Michael Ford.......................................... 3,000 *
Judith Irene Storfjell, Ph.D................................ 434 *
Eugene Terry................................................ 0 *
All Directors and Executive Officers as a Group (6
persons).................................................. 42,944(5) 1.0%
</TABLE>
- ------------------------
* Less than one percent
(1) Manor Care's address is 333 North Summit Street, Toledo, OH 43604
(2) Manor Care holds of record 2,250,000 shares of Common Stock entitled to be
voted on all matters brought before the Meeting. Manor Care also owns
200,000 shares of Preferred Stock (convertible into 3,333,334 shares of
Common Stock), which can be voted on items (i) through (iv) noted on
page 2, paragraph 4 of this proxy. If any of those items would be voted on
at the Meeting, the voting percentage of Manor Care would be 63.1%.
(3) Heartland Advisors, Inc.'s address is 789 North Water Street, Milwaukee, WI
53202.
(4) RS Investment Management Co., LLC's address is 388 Market Street, Suite 200,
San Francisco, CA 94111.
(5) Includes 20,000 shares for Mr. von Maack and 20,000 shares for all directors
and officers as a group which may be acquired pursuant to stock options
which are presently exercisable or become exercisable within sixty days of
January 7, 2000.
EXECUTIVE COMPENSATION AND
OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the fiscal years ended September 30, 1999,
1998 and 1997, the cash compensation paid by the Company, as well as certain
other compensation paid or accrued for those years, to Wolfgang von Maack, the
Company's Chief Executive Officer, and to the other most highly compensated
executive officer of the Company, other than Mr. von Maack, whose total cash
compensation
4
<PAGE>
exceeded $100,000 during fiscal 1999 (the "Named Executive Officers") in all
capacities in which they served. Certain columns prescribed by Securities and
Exchange Commission proxy regulations have not been included in this table
because the information called for therein is not applicable to the Company or
the Named Executive Officers for the periods indicated.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------------- ------------
STOCK OPTION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OTHER SHARES(#)
- --------------------------- -------- ----------- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
Wolfgang von Maack (1)........................ 1999 $ 246,668(2) $195,000 $ 10,220 180,000
Chairman, Chief Executive Officer and 1998 186,674(3) -- 7,650 50,000
President 1997 61,500(3) -- 6,336 --
Robert J. Hoffman, Jr. (4).................... 1999 122,205(5) 41,300 25,997(6) 50,000
Chief Financial Officer, Treasurer and 1998 34,035(7) -- -- --
Corporate Secretary
</TABLE>
- ------------------------
(1) Wolfgang von Maack was named acting Chief Executive Officer on May 15, 1997.
He was named President and Chief Executive Officer and was elected as a
Director of the Company on June 6, 1997 and was elected Chairman of the
Board on November 17, 1998. Mr. von Maack has resigned the positions of
President and Chief Executive Officer effective February 15, 2000, but will
remain a Director and Chairman of the Board.
(2) Amount reflects 75% ($46,668) of Mr. von Maack's Manor Care salary which was
reimbursed by the Company under the Administrative Services Agreement for
the period from October 1 through December 31, 1998, 75% ($75,000) of
Mr. von Maack's salary from January 1 through April 30, 1999 (25% of his
salary for this period was paid by Manor Care for management services
provided) and 100% ($125,000) of his salary paid by the Company from May 1
through September 30, 1999. See "Certain Transactions."
(3) Amount reflects 75% of Mr. von Maack's Manor Care which was reimbursed by
the Company under the Administrative Services Agreement.
(4) Robert J. Hoffman, Jr. was named Corporate Secretary and Acting Chief
Financial Officer on June 22, 1998. He became an employee on January 1, 1999
and was elected Chief Financial Officer on February 24, 1999 and Treasurer
on June 8, 1999.
(5) Consists of $33,705 of Mr. Hoffman's Manor Care salary from October 1
through December 31, 1998, which was reimbursed by the Company and $88,500
of his salary paid by the Company beginning January 1, 1999 when
Mr. Hoffman became an employee of the Company.
(6) Consists of $17,700 of relocation expense reimbursement, $6,968 of medical,
life and disability insurance paid by the Company and $1,329 of 401(k)
matching contribution by the Company.
(7) Consists of amounts paid to Manor Care for Mr. Hoffman's services from
June 15 through September 30, 1998.
5
<PAGE>
STOCK OPTIONS
The following table contains information concerning the grant of stock
options under the Company's 1995 Stock Option Plan to the Named Executive
Officers as of the end of the last fiscal year:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
OPTIONS ANNUAL RATES OF STOCK
GRANTED TO PRICE APPRECIATION FOR
EMPLOYEES EXERCISE PRICE OPTION TERM (1)
OPTIONS IN FISCAL PRICE ON DATE EXPIRATION -----------------------
NAME GRANTED YEAR PER SHARE OF GRANT DATE 5% (2) 10% (3)
- ---- -------- ---------- --------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Wolfgang von Maack.............. 180,000(4) 41.71% $1.75 $1.75 6/8/09 $198,099 $502,027
Robert J. Hoffman, Jr........... 50,000 11.59% 1.75 1.75 6/8/09 55,027 139,452
</TABLE>
- ------------------------
(1) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates set by the Securities and Exchange Commission and therefore
are not intended to forecast future possible appreciation, if any, of the
Company's stock price.
(2) A 5% per year appreciation in stock price from $1.75 per share yields $2.85
on the expiration date.
(3) A 10% per year appreciation in stock price from $1.75 per share yields $4.54
on the expiration date.
(4) 100,000 options were granted subject to stockholder approval at the Meeting
of the amendment to the 1995 Stock Option Plan to increase the number of
shares available under the Plan. As Mr. von Maack has resigned effective
February 15, 2000, all unexercised options will be cancelled 3 months after
termination.
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options during the last fiscal
year and unexercised options held as of the end of the fiscal year:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE NUMBER OF SECURITIES
REALIZED UNDERLYING VALUE OF UNEXERCISED
(MARKET PRICE UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT EXERCISE AT FY-END AT FY-END (1)
ACQUIRED LESS EXERCISE --------------------------- ---------------------------
NAME ON EXERCISE PRICE) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Wolfgang von Maack............. -0- -0- 10,000 220,000 -0- $67,500
Robert J. Hoffman, Jr.......... -0- -0- -0- 50,000 -0- 18,750
</TABLE>
- ------------------------
(1) Based on the fiscal year ended September 30, 1999 closing price of $2.125
per share.
6
<PAGE>
EMPLOYMENT AGREEMENT
The Company entered into an employment agreement with Robert J. Hoffman, Jr.
on December 31, 1998. The term of the agreement is January 1, 1999 through
December 31, 2001. The agreement employs Mr. Hoffman as Chief Financial Officer,
at a base salary of $118,000 per annum. Mr. Hoffman is eligible to earn annual
bonuses up to a maximum of 35% of his base salary and is entitled to participate
in the Company's benefit plans or programs accorded other employees at the
Company's headquarters. The agreement provided that Mr. Hoffman be reimbursed
for up to $17,700 in relocation expenses.
In the event the agreement is terminated without cause, Mr. Hoffman will be
entitled to severance of 12 months base salary, the ratable portion of his
bonus, reasonable moving expenses and an amount equal to 7% of the appraised
value of his residence. In the event of corporate relocation, if Mr. Hoffman is
offered the option to continue employment contingent upon relocation from
Minnesota, he may opt to terminate employment and receive six months base salary
plus the ratable portion of his maximum bonus potential and reasonable moving
expenses. In the event of change of control of the Company, all options granted
Mr. Hoffman would vest immediately and be payable in cash at the time of the
change in control. Mr. Hoffman would be entitled to twelve months base salary,
the ratable portion of his maximum bonus potential, reasonable moving expenses
and an amount equal to 7% of the appraised value of his residence.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1999, Wolfgang von Maack, Clyde Michael Ford, and Judith Irene
Storfjell served as members of the Company's Compensation Committee. Mr. von
Maack is the President and Chief Executive Officer of the Company. Mr. von Maack
was an officer of Manor Care, the owner of a majority of the voting power of the
stockholders of the Company, until January 1, 1999, when he terminated his
relationship with Manor Care and became an employee of the Company. Mr. von
Maack served as committee chairman during fiscal 1999.
BOARD COMPENSATION COMMITTEE REPORT
Decisions on compensation of the Company's executives for fiscal 1999 were
made by the Compensation Committee of the Board, which consisted during fiscal
1999 of Mr. von Maack, Dr. Storfjell, and Mr. Ford. All decisions by the
Compensation Committee for fiscal 1999 were reviewed by the full Board. This
report describes the Compensation Committee's policies for fiscal 1999 as they
affected Mr. von Maack and Mr. Hoffman (collectively, the "Senior Executives")
who were the Company's most highly paid officers in fiscal 1999.
CASH COMPENSATION POLICIES FOR SENIOR EXECUTIVES
The Compensation Committee's executive compensation policies are designed to
provide competitive levels of compensation, integrate pay with the Company's
annual and long-term performance goals, reward above-average corporate
performance, recognize individual initiative and achievements, and assist the
Company in attracting and retaining qualified executives. The overall cash
compensation of Senior Executives is intended to be consistent with other
publicly held companies in the health care industry that were selected as
comparable because of comparable revenue and focus on providing health care
services in the home.
7
<PAGE>
Mr. von Maack's compensation is described below. The compensation for
Mr. Hoffman was approved by the Compensation Committee as set forth in the
employment agreement approved June 8, 1999. Mr. Hoffman's employment agreement
specifies a base salary and a maximum bonus opportunity, which equals 35% of
base salary. The bonus that each Senior Executive could earn for the fiscal year
was determined by comparing the Company's actual net income before taxes with
the plan for the fiscal year.
FISCAL 1999 STOCK OPTION GRANTS
For fiscal 1999, the Compensation Committee granted stock options to various
executives. Stock options are intended to focus the Senior Executives on
long-term Company performance to improve stockholder value and provide a
significant earning potential to the executives. In order to direct the Senior
Executives toward steady growth and to retain their services, incentive stock
options vest over a five-year period. The number of options granted to each
Senior Executive depends on the level and degree of responsibility of the
individual's position.
OTHER COMPENSATION PLANS
The Senior Executives have been permitted to participate in certain
broad-based employee benefit plans adopted by the Company, as well as executive
officer retirement, life and health insurance plans. Other than the Company's
Employee Stock Purchase Plan, which allows the Company's employees to purchase
shares of the Company's Common Stock through payroll deductions at a purchase
price of 85% of the lower of the fair market value of the shares on the first
day or the last day of the applicable period of the Plan, benefits under these
plans are not directly or indirectly tied to Company performance.
CHIEF EXECUTIVE OFFICER'S FISCAL 1999 COMPENSATION
Through December 31, 1998, Mr. von Maack was a Senior Vice President of
Manor Care and his compensation was set by Manor Care. As part of the
Administrative Services Agreement between the Company and Manor Care, the
Company reimbursed Manor Care for 75% of Mr. von Maack's total compensation.
Effective January 1, 1999, Mr. von Maack terminated his relationship with Manor
Care and became an employee of the Company.
Effective January 1, 1999 the Company entered into a Management Services
Agreement with Manor Care. As part of the Agreement, the Company provided
management services to Mesquite Hospital, a wholly owned subsidiary of Manor
Care. Manor Care reimbursed the Company for 25% of Mr. von Maack's salary.
Services were provided until April 30, 1999, when the agreement was terminated.
Mr. von Maack's compensation was evaluated and approved June 8, 1999 by the
compensation committee (excluding Mr. von Maack). It provided for an annual base
salary of $300,000 and an incentive of 65% of base salary to be paid if the
annual budget was achieved. As part of the approved stock option program for the
fiscal year, Mr. von Maack was granted 180,000 options. In establishing the
chief executive officer's compensation, the compensation committee applied the
principles outlined in the cash compensation policies section above in
essentially the same manner as they were applied to other executives. In
addition to those factors, the Committee considered the important role Mr. von
Maack has played in the Company's turnaround.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE COMPANY'S BOARD OF DIRECTORS (AS
CONSTITUTED DURING FISCAL 1999):
Wolfgang von Maack Clyde Michael Ford Judith Irene Storfjell
8
<PAGE>
PERFORMANCE GRAPH
The Securities and Exchange Commission requires that the Company include in
this proxy statement a line-graph presentation comparing cumulative, five-year
stockholder returns on an indexed basis with the S&P 500 Stock Index and either
a nationally recognized industry standard or an index of peer companies selected
by the Company. The Board of Directors has approved the use of the Dow Jones
Industry Group Index of Health Care Providers as its peer group index. The table
below compares the cumulative total return as of the end of each of the
Company's last five fiscal years on $100 invested in the Common Stock of the
Company, the Dow Jones Industry Group Index of Health Care Providers and the
NASDAQ Market Index, assuming the reinvestment of all dividends:
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
9/30/94 9/30/95 9/30/96 9/30/97 9/30/98 9/30/99
<S> <C> <C> <C> <C> <C> <C>
IN HOME HEALTH,
INC. $100.00 $133.79 $94.59 $78.38 $25.68 $30.63
NASDAQ MARKET INDEX $100.00 $121.41 $141.75 $192.67 $200.23 $323.92
PEER GROUP INDEX $100.00 $111.25 $122.96 $137.36 $100.96 $85.17
</TABLE>
The performance graph above shall not be deemed incorporated by reference by
any statement incorporating by reference this Proxy Statement into any filing
under the Securities Act of 1933 or the Securities Exchange Act of 1934, and
shall not otherwise be deemed filed under such Acts.
STRUCTURE AND FUNCTIONING OF THE BOARD OF DIRECTORS
MEETINGS; REMUNERATION
The Board of Directors met six times during fiscal 1999. Each director
attended more than 75% of the meetings of the Board of Directors and the
committees on which they served. Marvin Wilensky resigned effective March 5,
1999. Eugene Terry was appointed September 30, 1999. Outside directors receive
annual retainers of $10,000 plus meeting fees of $1,000 per meeting and
reimbursement of out-of-pocket expenses incurred in connection with attending
Board meetings. Outside director fees are payable quarterly. During fiscal 1999,
the Company paid $68,000 for director fees.
9
<PAGE>
COMMITTEES
The Board of Directors has an Audit Committee which consisted during fiscal
1999 of Marvin Wilensky, James J. Lynn and Clyde Michael Ford (Chairman). The
Audit Committee, among other things, determines audit policies, reviews external
audit reports and reviews recommendations made by the Company's independent
public accountants. During fiscal 1999 the Audit Committee met two times. As a
result of the resignation of Mr. Wilensky on March 5, 1999, Mr. Lynn was
nominated to serve on the Audit Committee effective July 8, 1999.
The Board of Directors also has a Compensation Committee which consisted
during fiscal 1999 of Judith Irene Storfjell, Clyde Michael Ford, and Wolfgang
von Maack (Chairman). The Compensation Committee evaluates and sets the total
compensation package for key executive positions, and reviews and approves
various employee incentive and benefit plans. During fiscal 1999, the
Compensation Committee met one time.
The Board of Directors also has a Nominating Committee that provides
nominations for the election of the Company's directors. During fiscal 1999, the
Committee consisted of Wolfgang von Maack and James J. Lynn (Chairman). The
Nominating Committee met two times during fiscal 1999. The Nominating Committee
will consider nominations from stockholders. See "Stockholder Nominations"
below.
ITEM I
NOMINATION AND ELECTION OF DIRECTORS
The Board of Directors has fixed at five the size of the Board of Directors
to be elected at the Meeting and has nominated its current members as the
management slate for election to serve until the next Annual Meeting of
Stockholders and until their successors are duly elected and qualified. It is
anticipated that proxies will be voted for the management slate, and that each
nominee will serve if elected. Should any nominee be unable to serve, the
persons named in the proxies may in their discretion vote for a substitute.
The names and ages of the management slate of nominees, their principal
occupations and other information is set forth below, based upon information
furnished to the Company by the nominees. Of the nominees, Wolfgang von Maack,
James J. Lynn, Clyde Michael Ford and Judith Irene Storfjell have been
previously elected by stockholders of the Company. Eugene Terry was appointed as
a member of the Board of Directors effective September 30, 1999, filling the
vacancy resulting from the resignation of Marvin Wilensky.
<TABLE>
<CAPTION>
DIRECTOR
NAME AND AGE OCCUPATION SINCE
- ------------ ----------------------------------------- --------
<S> <C> <C>
Wolfgang von Maack (59).................. Chairman, President and Chief Executive
Officer of the Company 1997
James J. Lynn, Ed.D. (57)................ President of Lynn & Associates 1987
Clyde Michael Ford (61).................. Owner and Chairman of the Board of
Montpelier Corporation 1998
Judith Irene Storfjell, Ph.D. (56)....... President of Lloyd Consultants LLC 1998
Eugene Terry (61)........................ Executive of TC Solutions 1999
</TABLE>
10
<PAGE>
BUSINESS EXPERIENCE; DIRECTORSHIPS
Mr. von Maack has served as President and Chief Executive Officer of the
Company since May 1997, has been a director since June 1997 and Chairman of the
Board since November 1998. He was Senior Vice President, Healthcare Services of
Manor Care from June 1990 to December 1998 and was Vice President, Operations of
Manor Care from March 1988 to June 1990. Mr. von Maack resigned the positions of
President and Chief Executive Officer effective February 15, 2000, but will
remain Chairman of the Board.
Mr. Lynn has been a director of the Company since 1987 and served as
Director of Management Development of the Company from October 1995 to
October 1998. Since 1981, Mr. Lynn has been a principal of Lynn & Associates, a
management consulting company of which Mr. Lynn is the founder and President.
Mr. Ford has been a director of the Company since November 1998. He has been
the owner and Chairman of the Board of Montpelier Corporation since
October 1997. He has been a director of Krug International Corporation since
October 1999. He served as Vice President, Development of Columbia/ HCA
Healthcare Corporation from September 1994 to September 1997. He was Vice
President of Marketing for Meditrust from October 1993 to September 1994.
Dr. Storfjell has been a director of the Company since November 1998. She
has served as President of Lloyd Consulting, LLC since 1986 and Assistant
Professor, Department of Public Health Nursing Graduate Faculty, University of
Illinois at Chicago since 1988.
Mr. Terry was appointed as a director of the Company in September 1999. He
has been a principal of TC Solutions, a consulting venture capital firm, since
1997. He has served as Chairman of Windsor Capital since 1998, Vice Chairman and
director of Proxymed, a healthcare information services firm, since 1994 and
director of Ivonyx, an infusion company, since 1989.
CERTAIN TRANSACTIONS
Through December 31, 1998, Mr. von Maack was an executive officer of Manor
Care which beneficially owns shares constituting approximately 41% of the voting
power of the Company's stockholders for all matters brought before the Meeting,
and 63% for items (i) through (iv) referenced on page two, paragraph four of
this proxy. The Company and Manor Care entered into the Purchase Agreement as of
May 2, 1995 and the transactions contemplated thereby were consummated on
October 24, 1995. The Purchase Agreement contains extensive representations,
warranties, covenants and other agreements between the Company and Manor Care
which extend beyond the consummation of the transactions contemplated therein.
The Purchase Agreement also contemplates that the Company and Manor Care may
enter into agreements or arrangements which they deem prudent and mutually
beneficial for the provision of services between them on terms that are fair to
each party. As of January 1, 1999, Mr. von Maack terminated his relationship
with Manor Care and became an employee of the Company. Mr. von Maack has
resigned as President and Chief Executive Officer effective February 15, 2000,
but will remain Chairman of the Board.
Pursuant to the Purchase Agreement, the Company and Manor Care entered into
a Registration Rights Agreement covering the securities purchased by Manor Care
from the Company. Manor Care has the right to require the Company to use its
best efforts to register for sale in an underwritten public offering under the
Securities Act of 1933, at the Company's expense, all or any portion of the
Common Stock acquired by Manor Care and the Common Stock into which the
Preferred Stock held by Manor Care
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is convertible ("Registerable Securities"). The Company will not be entitled to
sell its securities in any such registration for its own account without the
consent of Manor Care. In addition, if the Company at any time seeks to register
under the Securities Act of 1933 for sale to the public any of its securities,
the Company must include, at Manor Care's request, Manor Care's Registerable
Securities in the Registration Statement, subject to underwriter cutback
provisions.
Manor Care and the Company entered into an Administrative Services Agreement
effective as of February 27, 1996, pursuant to which Manor Care provided the
Company certain corporate, administrative and management services. The original
term of the Agreement was retroactive to November 1, 1995 and expired on
June 30, 1996. Thereafter, the term was on a quarter-to-quarter basis until
terminated by either party upon 90 days prior written notice. Effective June 1,
1996, the total fees payable to Manor Care under the Administrative Services
Agreement was reduced to $7,000 per month. A new Administrative Services
Agreement was entered into on November 15, 1997. The original term of the
Agreement was retroactive to June 1997. Under the terms of the Agreement, the
Company paid Manor Care a fee of $24,583 per month. This included $21,667 to pay
for 75% of the Company's President and his staff and $2,916 for services
rendered by Manor Care's legal, risk management, government relations,
purchasing and reimbursement departments. The agreement expired September 30,
1998 and was not renewed. Manor Care continued to provide services on a month to
month basis, consisting of 75% of Mr. von Maack's salary and his staff until
December 31, 1998, for $33,874 per month. On January 1, 1999 Mr. von Maack and
his staff became employees of the Company.
Effective January 1, 1999, the Company entered into a Management Services
Agreement with Manor Care. As part of the Agreement the Company provided
management services to Mesquite Hospital, a wholly owned subsidiary of Manor
Care. Manor Care reimbursed the Company for 25% of the salaries and reimbursable
expenses of Mr. von Maack and his administrative assistant. Manor Care paid fees
of $36,494.14 for services provided from January 1 through April 30, 1999, when
the agreement was terminated.
STOCKHOLDER NOMINATIONS
Under the Company's Bylaws, a stockholder who wishes to make a nomination at
the Meeting of one or more persons for election as directors must give written
notice of their intent to make such nominations to the Company's Secretary
within 15 days after the date that the Notice of the Meeting is mailed. The
notice must state: the name and address of record of the stockholder who intends
to make the nomination; a representation that the stockholder is a holder of
record of Company shares entitled to vote at the Meeting and intends to appear
in person or by proxy at the Meeting to nominate the person or persons specified
in the notice; the name, age, business and residence address, and principal
occupation or employment of each nominee; a description of all arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder; such other information regarding
each nominee proposed by such stockholder as would be required to be included in
a proxy statement filed pursuant to the proxy rules of the Securities and
Exchange Commission; and the consent of each nominee to serve as a director of
the corporation if so elected. The Company may require any proposed nominee to
furnish such other information as may reasonably be required by the Company to
determine the eligibility of such proposed nominee to serve as a director of the
Company. The presiding officer of the Meeting may, if the facts warrant,
determine that a nomination was not made in accordance with the foregoing
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procedure and if the presiding officer should so determine and declare to the
Meeting, the effective nomination will be disregarded.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" ELECTION OF THE MANAGEMENT SLATE OF NOMINEES.
ITEM II
AMENDMENT TO THE 1995 STOCK OPTION PLAN
The In Home Health, Inc. 1995 Stock Option Plan (the "1995 Plan") was
adopted by the Board of Directors on November 8, 1994, and approved by the
Company's stockholders on March 2, 1995. The 1995 Plan was amended May 2, 1995
and approved by the stockholders on October 25, 1995. The 1995 Plan allows
issuance of options covering up to 433,333 shares of Common Stock. If an option
expires without being exercised, the shares covered by that option again become
available for issuance under new options. The purpose of the amendment is to
increase by an additional 750,000 shares the pool of shares that are available
for use by the Board of Directors to attract and retain employees. Approval of
the amendment to the 1995 Plan requires the affirmative vote of a majority of
the shares present and entitled to vote at the Meeting.
SUMMARY OF THE 1995 PLAN
The purpose of the 1995 Plan is to promote the interests of the Company and
its stockholders by aiding in attracting, retaining, and motivating Company
employees. All Company employees (approximately 2,300 persons) are eligible for
options. No employee can receive more than 200,000 shares during any fiscal
year. Each option must have an exercise price not less than 100% (110% for a 10%
or more stockholder) of the fair market value of the Common Stock on the day the
option is granted. Generally the fair market value is the closing sale price
reported on the NASDAQ National Market System on the date of grant. On
January 7, 2000, the closing sale price of the Common Stock on the NASDAQ
National Market System was $2.25 per share.
The 1995 Plan allows the Board of Directors to designate any option at the
time of grant as either an "incentive stock option" or a "nonqualified option"
for tax purposes. The Board of Directors also designates at the time of grant
the number of shares covered, exercise price, vesting schedule and expiration
date of each option. No option may be exercised more than ten years after the
date of grant.
Generally, if an option holder's employment by the Company terminates for a
reason other than death or disability, options held by that person will expire
if not exercised within three months following termination of employment. If an
option holder dies or becomes permanently disabled the options will generally
expire in one year if not exercised by the holder's estate or legal
representative.
The number of the shares subject to each outstanding option may be adjusted
in the event of stock splits, stock dividends, or similar changes in the
Company's outstanding securities. In the event of a reorganization of the
Company, appropriate provision will be made for the continuation of any
outstanding options, or the substitution of new options, on an equitable basis.
In addition, the 1995 Plan grants broad discretion to the Board of Directors to
take such action as it may deem necessary or advisable and fair and equitable to
optionees in the event of a change in control of the Company, a tender or
exchange offer for all or part of the Common Stock of the Company, a merger or
consolidation of the Company or a sale of all or substantially all of the
Company's assets, including authority to provide for earlier, later,
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<PAGE>
extended or additional terms for the exercise of the whole or any installments
of outstanding options, alternate forms of payment or other modifications.
The 1995 Plan currently expires on November 8, 2004. The Board of Directors
may terminate or amend the Plan. Any amendment to increase the number of shares
covered by the 1995 Plan, change the class of eligible employees, or reduce the
minimum option price for incentive stock options to less than fair market value
requires stockholder approval within twelve months after it is adopted by the
Board of Directors in order to become effective. The Board of Directors may
delegate its plenary authority to administer the Plan to a committee of not
fewer than three directors, two of whom may not be eligible to receive options
under the Plan.
GRANTS OF OPTIONS
There are currently 533,610 options outstanding under the 1995 Plan. Of that
amount, 100,277 of the options have been granted subject to stockholder approval
of the amendment to the Plan. If the amendment is not approved at the Meeting,
those options will be cancelled.
FEDERAL INCOME TAX TREATMENT
Generally, the grant of either an incentive stock option or a nonqualified
option under the 1995 Plan will not cause recognition of income by the optionee
or entitle the Company to an income tax deduction. Upon exercise of an option,
the tax treatment will generally vary depending on whether the option is an
incentive stock option or a nonqualified option. The exercise of an incentive
stock option will generally not cause recognition of income by the optionee or
entitle the Company to a tax deduction. However, the amount by which the fair
market value of the shares obtained exceeds the exercise price on the day of
exercise is an item of tax preference to the optionee for alternative minimum
tax purposes. Upon the sale of such stock, the optionee generally will recognize
capital gain or loss if the stock has been held for at least two years from the
date of the option grant and at least one year after the stock was purchased. If
the applicable holding periods are not satisfied, then any gain realized in
connection with the disposition of such stock will generally be taxable as
compensation income in the year in which the disposition occurred, to the extent
of the difference between fair market value of such stock on the date of
exercise and the option exercise price. The balance of any gain will be
characterized as capital gain. The Company is entitled to a tax deduction to the
extent, and at the time, that the participant realizes compensation income.
The exercise of a nonqualified option will generally cause the optionee to
recognize taxable income equal to the difference between the exercise price and
the fair market value of the stock obtained on the day of exercise. The Company
must then, in most cases, obtain from the optionee funds to meet tax withholding
requirements arising from that income recognition. The exercise of a
nonqualified option will also generally entitle the Company to an income tax
deduction equal to the amount of the income recognized by the exercising option
holder. Upon the disposal of stock acquired pursuant to a nonqualified option,
the optionee's basis for determining taxable gain or loss will be the sum of the
option price paid for the stock plus any related compensation income recognized
by the optionee, and such gain or loss will be long-term or short-term capital
gain or loss depending on whether the option holder has held the shares for more
than one year.
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The foregoing discussion of the federal income tax treatment of options is
necessarily general and option holders should consult their tax advisors as to
each holder's own particular circumstances and applicable laws and regulations.
REGISTRATION WITH SEC
The Company has filed a Registration Statement covering the offering of the
shares under the 1995 Plan with the Securities and Exchange Commission pursuant
to the Securities Act of 1933, as amended. If Proposal Two is adopted, the
Company intends to file a similar Registration Statement covering the 750,000
additional shares available for issuance under the 1995 Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
AMENDMENT TO INCREASE THE SHARES RESERVED
UNDER THE 1995 PLAN BY 750,000 SHARES.
ITEM III
APPROVAL OF AUDITORS
Deloitte & Touche LLP, independent certified public accountants, have been
the Company's auditors since 1984. They have been reappointed by the Board of
Directors as the Company's auditors for the fiscal year ending September 30,
2000. Although stockholder approval is not required, the Board of Directors
requests approval from the stockholders. If the appointment is not approved by
the stockholders, the Board of Directors will make another appointment to be
effective at the earliest feasible time.
A representative of Deloitte & Touche LLP is expected to be present at the
Meeting, will be given the opportunity to make a statement and will be available
to answer appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE "FOR" RATIFICATION OF THE SELECTION OF
DELOITTE & TOUCHE LLP.
ITEM IV
OTHER BUSINESS
The management of the Company knows of no matter other than the foregoing to
be brought before the Meeting. However, the enclosed proxy gives discretionary
authority in the event any additional matters should be presented.
Under the Company's Bylaws, any stockholder who wishes to present proposals
for stockholder action at the Meeting must give written notice to the Company's
Secretary within 15 days after the date that the Notice of the Meeting is
mailed. The notice must state a brief description of the other business proposed
to be raised, the reason for conducting that business at the Meeting, the name
and address of the stockholder proposing such business, the number of Company
shares owned by the stockholder, and any material interest of the stockholder in
the business.
The proxy rules of the Securities and Exchange Commission permit
stockholders, after timely notice to issuers, to present proposals for
stockholder action in issuer proxy statements where such proposals are
consistent with applicable law, pertain to matters appropriate for stockholder
action and are not properly omitted by issuer action in accordance with the
proxy rules. The Company's next meeting of stockholders (for the fiscal year
ending September 30, 2000) is expected to be held on or about March 1, 2001 and
proxy
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<PAGE>
materials in connection with that meeting are expected to be mailed on or about
January 16, 2001. Any stockholder proposals prepared in accordance with the
proxy rules for inclusion in the Company's proxy materials must be received by
the Company on or before September 20, 2000. In addition, if the Company
receives notice of a stockholder proposal after January 26, 2001, such proposal
will be considered untimely pursuant to the Company's Bylaws and the persons
named as proxies solicited for the Company's 2001 Annual Meeting may exercise
discretionary voting power with respect to such proposal.
THE COMPANY'S ANNUAL REPORT TO STOCKHOLDERS FOR THE FISCAL YEAR ENDED
SEPTEMBER 30, 1999 IS BEING MAILED TO STOCKHOLDERS WITH THIS PROXY STATEMENT.
STOCKHOLDERS MAY RECEIVE WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT ON
FORM 10-K, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES THERETO, AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION, BY WRITING TO: IN HOME HEALTH, INC., 601
CARLSON PARKWAY, SUITE 500, MINNETONKA, MINNESOTA 55305, ATTENTION: INVESTOR
RELATIONS, OR BY CALLING THE COMPANY AT (612) 449-7500.
By Order of the Board of Directors
[SIGNATURE]
Robert J. Hoffman, Jr., Secretary
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IN HOME HEALTH, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
FEBRUARY 23, 2000
The undersigned hereby appoints Wolfgang von Maack and Robert J. Hoffman,
Jr., or either one of them, as proxies with full power of substitution to vote
all of the shares of common stock which the undersigned would be entitled to
vote if personally present at the Annual Meeting of Stockholders of In Home
Health, Inc. to be held February 23, 2000 at 9:30 a.m. at the Radisson Hotel and
Conference Center, 3131 Campus Drive, Plymouth, Minnesota or at any adjournments
thereof, upon any and all matters which may properly be brought before the
meeting or adjournments thereof, hereby revoking all former proxies.
<TABLE>
<S> <C> <C>
(1) ELECTION OF DIRECTORS
/ / FOR all nominees listed below / / WITHOUT AUTHORITY to vote
(except as indicated below) for all nominees listed below
</TABLE>
Wolfgang von Maack, James J. Lynn, Ed.D., Clyde Michael Ford, Judith
Irene Storfjell, Ph.D. and Eugene Terry
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, strike
a line through that nominee's name in the list above.)
(2) TO INCREASE THE NUMBER OF SHARES AVAILABLE UNDER THE 1995 STOCK OPTION PLAN
BY 750,000 SHARES
<TABLE>
<S> <C> <C>
/ / For / / Against / / Abstain
</TABLE>
(3) PROPOSAL TO RATIFY THE SELECTION OF DELOITTE & TOUCHE LLP AS THE COMPANY'S
INDEPENDENT AUDITORS
<TABLE>
<S> <C> <C>
/ / For / / Against / / Abstain
</TABLE>
(4) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meetings.
<PAGE>
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED ON PROPOSALS (1), (2) AND
(3) IN ACCORDANCE WITH THE SPECIFICATIONS MADE AND "FOR" SUCH PROPOSALS IF THERE
IS NO SPECIFICATION.
PLEASE DATE AND SIGN exactly as your name(s) appears below indicating, where
proper, the official position or representative capacity in which you are
signing. When signing as executor, administrator, trustee or guardian, give full
title as such; when shares have been issued in names of two or more persons, all
should sign.
Dated _____________________, 2000
---------------------------------------
Signature of Stockholder
---------------------------------------
Signature of Stockholder
(if joint signature is required)
