<PAGE>
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
KINETIC CONCEPTS, INC.
(Name of Registrant as Specified in Its Charter)
KINETIC CONCEPTS, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / 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 registrations 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:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
(1)Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
{LOGO}
8023 VANTAGE DRIVE
SAN ANTONIO, TEXAS 78230
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 10, 1994
To the Shareholders of Kinetic Concepts, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Kinetic
Concepts, Inc. will be held in the Cancun and Cozumel Rooms of the Embassy
Suites Hotel, Northwest, 7750 Briaridge, San Antonio, Texas on Tuesday, May 10,
1994 at 9:00 A.M., for the purpose of considering and acting upon the following
matters:
(1) The election of five directors of the Company to serve until the next
annual meeting of shareholders and until their successors are elected
and qualified;
(2) The approval of the appointment of the firm of KPMG Peat Marwick as the
independent public accountants of the Company for the 1994 fiscal year;
and
(3) The transaction of such other business as may lawfully come before the
meeting or any adjournment thereof.
The record date for the meeting has been fixed at March 23, 1994. Only
shareholders of record at the close of business on that date will be entitled to
vote at the meeting or any adjournment thereof. You are cordially invited to
attend the meeting. Shareholders wishing to attend the meeting should bring
proper identification and evidence of their ownership of shares of the Company's
common stock to the meeting.
Shareholders who do not expect to attend the meeting in person are urged to
sign the enclosed proxy and return it promptly to the Bank of Boston, Proxy
Department, P.O. Box 1628, Boston, Massachusetts 02105-1628. A return envelope
is enclosed for that purpose.
KINETIC CONCEPTS, INC.
DENNIS E. NOLL,
Secretary
Dated: April 4, 1994
PLEASE COMPLETE THE ENCLOSED PROXY AND MAIL IT PROMPTLY
<PAGE>
KINETIC CONCEPTS, INC.
8023 VANTAGE DRIVE
SAN ANTONIO, TEXAS 78230
PROXY STATEMENT
The accompanying proxy is solicited by the Board of Directors of Kinetic
Concepts, Inc. (the 'Company'). The Company will bear the cost of the
solicitation. It is expected that the solicitation of proxies will be made by
mail. Any shareholder giving a proxy has the power to revoke the same at any
time prior to its use by giving notice in person or in writing to the Secretary
of the Company. The approximate date on which this Proxy Statement and
accompanying form of proxy shall be first sent or given to security holders is
April 4, 1994.
Only holders of record of Common Stock, par value $.001 (the 'Common
Stock'), of the Company at the close of business on March 23, 1994 shall be
entitled to vote at the meeting. There were 43,950,685 shares of Common Stock
issued and outstanding on the record date. Each share of Common Stock is
entitled to one vote. As of February 1, 1994, to the knowledge of the Company,
no holder of record owned more than five percent of the outstanding shares of
Common Stock of the Company, except James R. Leininger, M.D., whose business
address is 8023 Vantage Drive, San Antonio, Texas 78230, and who owns of record
29,047,700 shares (66.1%) of the issued and outstanding shares of Common Stock
of the Company. Any shareholder giving a proxy has the power to revoke the same
at any time prior to its use by giving notice in person or in writing to the
Secretary of the Company.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the inspectors of election appointed for the meeting. A quorum for the
transaction of business at the Annual Meeting requires representation, in person
or by proxy, of a majority of the issued and outstanding shares. The inspectors
of election will treat abstentions and broker non-votes as shares that are
present for purposes of determining the presence of a quorum. Abstentions are
present and entitled to vote for purposes of determining the approval of any
matter submitted to the shareholders for a vote. If a broker indicates on a
proxy that it does not have the 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.
ELECTION OF DIRECTORS
Five (5) directors, constituting the entire Board of Directors, are to be
elected at the Annual Meeting. Each director shall hold office until the next
Annual Meeting and until his successor is duly elected and qualified. The
proxies named in the accompanying proxy, who have been designated by the Board
of Directors, intend to vote for the nominees for election as directors, unless
otherwise directed. The vote of a plurality of the shares of Common Stock
present at the Annual Meeting and entitled to vote thereon will be necessary to
elect the nominees listed below.
<PAGE>
BUSINESS EXPERIENCE OF DIRECTORS AND NOMINEES
Each of the present members of the Board of Directors, except for John H.
Firmage, Jr. who has elected not to stand for reelection, have been renominated.
Certain information concerning the members of the Board of Directors and the
nominees is set forth as follows:
<TABLE>
<CAPTION>
SERVED AS PRESENT POSITION WITH
DIRECTOR COMPANY AND/OR PRINCIPAL
DIRECTOR SINCE AGE OCCUPATION LAST FIVE YEARS
<S> <C> <C> <C>
James R. Leininger, M.D.------------- 1976 49 Chairman of the Board of Directors since 1976;
President and Chief Executive Officer since
January 1990; prior to October 1986, Dr.
Leininger was also the Chairman of the Emergency
Department of the Baptist Hospital System in San
Antonio, Texas.
Peter A. Leininger, M.D.------------- 1980 51 Chief Administrative Officer and Senior
Vice President; prior to 1978, Dr.
Leininger was engaged in the private
practice of medicine and functioned as
a regional distributor of the Company's
products.
Sam A. Brooks------------------------ 1987 55 Chairman of the Board of National Imag-
ing Affiliates, Inc. since March 1992;
President of MedCare Investment Corp.
since April 1991; from 1986 to October
1989, Mr. Brooks was the President of
Nationwide Health Properties, Inc. (a
real estate investment trust); prior to
1986, Mr. Brooks served as an Executive
Vice President and the Chief Financial
Officer of Hospital Corporation of
America (a hospital management
company).
Frank A. Ehmann---------------------- 1987 60 Partner of RCS Health Care Partners
L.P.; from March 1986 to October 1989,
Mr. Ehmann was President and Chief Op-
erating Officer of United Stationers,
Inc. (an office products company);
prior to December 1985, Mr. Ehmann was
an Executive Vice President and
Co-Chief Operating Officer of Baxter
Travenol Laboratories, Inc. (a medical
products company).
Bernhard T. Mittemeyer, M.D.--------- 1987 63 Executive Vice President and Provost of
the Texas Tech University Health
Science Center since November of 1986;
Dr. Mittemeyer also served as Interim
Dean of the Texas Tech School of
Medicine from November 1988 until
August 1990; from March 1985 until
October 1986, Dr. Mittemeyer served as
the Senior Vice President and Corporate
Medical Director of Whittaker Health
Services (a health maintenance
organization); prior to
2
<PAGE>
March of 1985, Dr. Mittemeyer served for 28
years as a career officer in the United States
Army which culminated in his service as the
Surgeon General of the United States Army from
October 1981 to February 1985.
John H. Firmage, Jr.----------------- 1990 61 Chairman, The Legacy Group (an auto and
equipment leasing and auto dealership company);
Chairman, FMA Financial Corp. (a water products
sales, leasing & rental company); from March
1980 to June 1990, Mr. Firmage was Chairman of
Medirec (a medical products rental and sales
company), Medirec was acquired by KCI in July
1990; prior to 1982, Mr. Firmage was President
and CEO of FMA Leasing Company (an equipment and
auto leasing company) for 22 years.
INFORMATION CONCERNING DIRECTORS
None of the directors, nominees for director or executive officers of the
Company has a family relationship with any of the other directors, nominees for
director or executive officers except James R. Leininger, M.D. and Peter A.
Leininger, M.D., who are brothers. None of the nominees is a director of any
other company which has a class of securities registered under, or is required
to file reports under, the Securities Exchange Act of 1934 or of any company
registered under the Investment Company Act of 1940, except as follows:
Sam A. Brooks------------------ Nationwide Health Properties, Inc.
Quorum Health Group, Inc.
Knowledgeware, Inc.
PhyCor, Inc.
Frank A. Ehmann----------------
St. Jude Medical, Inc.
Mark Controls Corp.
SPX Corporation
American Health Corp. Inc.
DIRECTOR COMPENSATION
Each director of the Company, other than James R. Leininger, M.D. and Peter
A. Leininger, M.D., received compensation for serving as a director during 1993.
Each outside director receives $24,000 per annum for serving as a member of the
Board of Directors and is reimbursed for the expenses incurred by him as a
result of his membership on the Board of Directors. Under the 1988 Eligible
Directors Stock Option Plan, outside directors receive a stock option covering
24,000 shares of Common Stock upon becoming a member of the Board of Directors
and an option covering 2,500 shares on each anniversary of becoming a member.
The exercise price of all options so granted is equal to the fair market value
of Common Stock at the close of business on the day immediately prior to the
date of grant. In addition, Sam A. Brooks has a consulting agreement with the
Company pursuant to which the Company paid Mr. Brooks $44,897 for consulting
services in 1993.
3
<PAGE>
BOARD OF DIRECTORS' MEETINGS AND COMMITTEES
During 1993, the Board of Directors held five (5) meetings. Each of the
directors attended over seventy-five percent of the total number of meetings of
the Board of Directors and the total number of meetings held by all committees
of the Board on which he served.
The Board of Directors has an Audit Committee consisting of John H. Firmage,
Jr., Chairman, Frank A. Ehmann and Sam A. Brooks. The Audit Committee met four
(4) times during 1993. Mr. Firmage has decided not to stand for reelection to
the Board of Directors for personal reasons. Mr. Firmage will continue to serve
as a member of the Board of Directors and the Chairman of the Audit Committee
until the Annual Meeting of Shareholders. The Audit Committee recommends the
appointment of the Company's independent auditors, confers with the auditors and
with management concerning the scope of the annual audit and reviews the audit
procedures and internal accounting controls of the Company and its subsidiaries.
The Board of Directors has a Compensation Committee consisting of James R.
Leininger, M.D., Bernhard T. Mittemeyer, M.D. and Frank A. Ehmann, Chairman. The
Compensation Committee met four (4) times in 1993. The functions of the
Compensation Committee are to review and establish the compensation of officers
and other management personnel.
The Board of Directors has a 1987 Key Contributor Stock Option Plan
Committee (the 'Stock Option Committee') consisting of James R. Leininger, M.D.,
Bernhard T. Mittemeyer, M.D., Chairman and Frank A. Ehmann. The Stock Option
Committee met three (3) times in 1993. The Stock Option Committee administers
the 1987 Kinetic Concepts, Inc. Key Contributor Stock Option Plan.
The Board of Directors has a Nominating Committee consisting of James R.
Leininger, M.D., Chairman, Sam A. Brooks, Frank A. Ehmann, Peter A. Leininger,
M.D. and John H. Firmage, Jr. The Nominating Committee did not meet in 1993. The
Nominating Committee makes recommendations to the Board on the selection of
candidates as nominees for election as members of the Company's Board of
Directors. In recommending Board candidates, the Nominating Committee seeks
individuals of proven judgment and competence who are outstanding in their
chosen activity and considers such factors as anticipated participation in Board
activities, education, special talents and personal attributes. Shareholders who
wish to suggest qualified candidates should write to the Secretary of the
Company at 8023 Vantage Drive, San Antonio, Texas 78230, stating in detail the
qualifications of such persons for consideration by the Nominating Committee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
James R. Leininger, M.D., Frank A. Ehmann and Bernard T. Mittemeyer, M.D.
are the members of the Company's Compensation Committee. James R. Leininger,
M.D. is a member of the Compensation Committee and is also the Chairman of the
Board, President and Chief Executive Officer of the Company. Dr. Leininger did
not participate in any deliberations of the Compensation Committee concerning
his compensation or the compensation of his brother, Peter A. Leininger, M.D. In
addition, Dr. Leininger owns Mission City Television, Inc., a company which
received $255,683 in fees for video production services rendered to the Company
during 1993. The services included the production of quarterly and promotional
videos as well as videos for and during the Company's national sales meetings.
4
<PAGE>
SECURITIES HOLDINGS OF PRINCIPAL SHAREHOLDERS,
DIRECTORS AND OFFICERS
Based upon information received upon request from the persons concerned,
each director, nominee for director, principal shareholder, named executive
officer (as defined on page 6), and all directors and executive officers of the
Company as a group, owned beneficially as of February 1, 1994, the number and
percentage of outstanding shares of Common Stock of the Company indicated in the
following table:
SHARES OF COMMON
STOCK BENEFICIALLY
OWNED AS OF PERCENT
NAMES OF INDIVIDUALS FEBRUARY 1, 1994(1) OF CLASS
James R. Leininger, M.D.(2)---------- 29,397,583 66.9%
8023 Vantage Drive
San Antonio, TX 78230
Peter A. Leininger, M.D.(3)---------- 2,817,697 6.4%
8023 Vantage Drive
San Antonio, TX 78230
Sam A. Brooks(4)--------------------- 131,500 *
Frank A. Ehmann(4)------------------- 22,500 *
Bernhard T. Mittemeyer, M.D.(4)------ 25,200 *
John H. Firmage, Jr.(4)-------------- 39,000 *
Robert A. Wehrmeyer, Jr.(5)---------- 116,792 *
Howard W. Deichen-------------------- 6,436 *
Frank DiLazzaro(5)------------------- 37,720 *
Daniel R. Puchek(5)------------------ 17,820 *
All directors and executive officers
as a group (17 persons)(6)--------- 31,525,027 71.7%
* Less than one (1%) percent
(1) Except as otherwise indicated in the following notes, the persons named in
the table own directly the number of shares indicated in the table, have
the sole voting power and investment power with respect to all of such
shares and, as of April 3, 1994, had no vested right to acquire beneficial
ownership of any other shares of Common Stock of the Company.
(2) The shares shown for Dr. James R. Leininger include beneficial ownership
of 349,883 shares of Common Stock held by Dr. Leininger as trustee for the
children of Peter A. Leininger, M.D. Dr. Leininger disclaims beneficial
ownership of the aforesaid shares.
(3) The shares shown for Dr. Peter A. Leininger include beneficial ownership
of 710,800 shares of Common Stock held by Dr. Leininger as trustee for
certain of his nieces and nephews and 1,200,000 shares of Common Stock
which he has the right to acquire upon the exercise of a stock option
granted to him by James R. Leininger, M.D. Dr. Leininger disclaims
beneficial ownership of the aforesaid shares. The shares shown also
include 16,780 shares of Common Stock that Dr. Leininger has the right to
acquire under stock options granted by the Company.
(4) The shares shown for Messrs. Brooks, Ehmann, Mittemeyer and Firmage,
respectively, include 105,000, 20,000, 20,000 and 39,000 shares of Common
Stock which they have the right to acquire under stock options granted by
the Company which have vested or will vest prior to April 3, 1994. Mr.
Ehmann's stock options are held in the name of The Frank Ehmann Trust.
5
<PAGE>
(5) The shares shown for Messrs. Wehrmeyer, Puchek and DiLazzaro,
respectively, include 92,320, 17,820 and 37,720 shares of Common Stock
which they have the right to acquire under stock options granted by the
Company which have vested or will vest prior to April 3, 1994.
(6) The shares shown include 1,651,419 shares of Common Stock which the
directors and executive officers have the right to acquire under stock
options which have vested or will vest prior to April 3, 1994.
EXECUTIVE COMPENSATION
The following table shows all the cash compensation paid or to be paid by
the Company or its subsidiaries, as well as certain other compensation paid or
accrued, during the fiscal years indicated, to the Chief Executive Officer, the
four highest paid executive officers of the Company other than the Chief
Executive Officer and a former executive officer who would have been one of the
four highest paid executive officers if he had not left the Company (the 'named
executive officers') for such period in all capacities in which they served:
</TABLE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
NAME AND ANNUAL COMPENSATION OPTIONS/ ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(1) SARS COMPENSATION(2)
<S> <C> <C> <C> <C> <C>
James R. Leininger, M.D., 1993 $ 150,000 $ 9,142 -- $ 1,093
Chairman of the Board, 1992 150,000 81,244 -- 601
Chief Executive Officer, 1991 150,000 82,500 --
& President
Robert A. Wehrmeyer, Jr., 1993 172,000 13,822 5,000 1,468
President -- 1992 172,000 84,942 6,500 976
KCI Medical Services 1991 146,500 74,661 11,500
Peter A. Leininger, M.D., 1993 153,000 8,204 5,000 1,468
Senior Vice-President & 1992 153,000 72,703 6,200 976
Chief Administrative 1991 135,000 65,340 10,500
Officer
Howard W. Deichen, 1993 150,859 -- 5,000 264,742(3)
Former Chief Financial Officer & 1992 172,000 100,421 6,500 976
Senior Vice-President 1991 146,500 97,095 11,500
Frank DiLazzaro 1993 140,300 39,336 44,000 1,468
President -- 1992 110,000 34,664 28,800 976
KCI International, Inc. 1991 92,366 40,650 14,700
Daniel R. Puchek, 1993 125,000 120,178 29,000 1,093
President -- 1992 115,000 50,428 13,800 601
KCI New Technologies, Inc. 1991 95,000 41,800 5,300
6
<PAGE>
(1) These amounts include cash bonuses paid with respect to services rendered
by the named executive officers for the years indicated in the table.
(2) The 'All Other Compensation' column includes the Company's contribution to
the Company's Employee Stock Ownership Plan of $1092 and a Company
contribution of $375 to the Company's 401K plan for each named executive
officer other than Dr. James R. Leininger and Daniel R. Puchek for the
year ended December 31, 1993.
(3) Mr. Deichen, the Company's Chief Financial Officer, left the Company on
October 30, 1993 to pursue other business opportunities. The 'All Other
Compensation' column for Mr. Deichen includes $263,274 which represents
the amount of a debt owed by Mr. Deichen to the Company which was
cancelled by the Company as part of his severance package. Also in
connection with the severance package, all of Mr. Deichen's outstanding
stock options were cancelled and Mr. Deichen entered into a twelve month
consulting agreement with the Company which provides for $12,000 in
aggregate consulting fees.
</TABLE>
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
INDIVIDUAL GRANTS
%
OF TOTAL POTENTIAL REALIZABLE
NUMBER OF OPTIONS VALUE AT ASSUMED
SECURITIES GRANTED TO ANNUAL RATES OF STOCK
UNDERLYING EMPLOYEES PRICE APPRECIATION
OPTIONS IN FISCAL EXERCISE EXPIRATION FOR OPTION TERM
NAME GRANTED(1) YEAR(2) PRICE DATE 5%(3) 10%(3)
<S> <C> <C> <C> <C> <C> <C>
James R. Leininger, M.D.------------- -0- -0- -- -- $ -0- $ -0-
Robert A. Wehrmeyer, Jr.------------- 5,000 .41% $ 5.75 05/15/03 $ 18,081 $ 45,820
Peter A. Leininger, M.D.------------- 5,000 .41% $ 5.75 05/15/03 $ 18,081 $ 45,820
Howard W. Deichen-------------------- 5,000 .41% $ 5.75 05/15/03 $ 18,081 $ 45,820
Frank DiLazzaro---------------------- 40,000 3.6% $ 7.625 02/19/03 $ 191,813 $ 486,091
4,000 $ 5.75 05/15/03 $ 14,465 $ 36,656
Daniel R. Puchek--------------------- 25,000 2.4% $ 7.625 02/19/03 $ 119,883 $ 303,807
4,000 $ 5.75 05/15/03 $ 14,465 $ 36,656
(1) The options vest and become exercisable in twenty percent (20%) increments
on May 15 of each year after the date of grant. The options are not
transferable, other than by will or the laws of descent and distribution
or pursuant to a qualified domestic relations order.
(2) The exercise price of all options granted in 1993 was equal to the fair
market value of the Common Stock at the close of business on the day
immediately prior to the date of grant.
(3) The information in these columns illustrates the value that might be
realized upon exercise of the options granted during fiscal 1993 assuming
the specified compound rates of appreciation of the Company's Common Stock
over the term of the options. The potential realizable value columns of
the foregoing table do not take into account certain provisions of the
options providing for termination of the option following termination of
employment, nontransferability or vesting requirements.
</TABLE>
7
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUE
The named executive officers did not exercise any options during the fiscal
year ended December 31, 1993. The following table sets forth certain information
concerning the number and value of the options held by the named executive
officers at the end of the fiscal year ended December 31, 1993 based upon the
closing price of $4.125 per share of Common Stock on December 31, 1993.
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END FY-END
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
James R. Leininger, M.D.------------- -0- -0-
Robert A. Wehrmeyer, Jr.------------- 92,320 $ 13,020
20,780 $ 12,880
Peter A. Leininger, M.D.------------- 16,780 $ 20,160
21,420 $ 5,040
Howard W. Deichen-------------------- -0- -0-
Frank DiLazzaro---------------------- 37,720 $ 29,200
68,580 $ 14,800
Daniel R. Puchek--------------------- 23,800 $ 22,120
44,940 $ 3,920
8
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
(KINETIC CONCEPTS, INC., STANDARD & POORS 500,
STANDARD & POORS MEDICAL PRODUCTS & SUPPLIES)
The following graph shows a five year comparison of cumulative total returns
for the Company, the Standard & Poors 500 Composite Index and Standard and Poors
Medical Products & Supplies Index for the five year period ending December 31,
1993.
{Linear Graph Plotted From Data In Table Below}
MEDICAL
KINETIC PRODUCTS & S&P 500
CONCEPTS INC SUPPLIES COMP-LTD
Dec 88 $100.00 $100.00 $100.00
Mar 89 77.61 105.76 107.09
Jun 89 64.18 116.18 116.54
Sep 89 61.19 127.55 129.02
Dec 89 76.48 137.19 131.69
- -----------------------------------------------------------------------
Mar 90 64.48 129.06 127.72
Jun 90 70.89 145.87 135.76
Sep 90 36.46 136.65 117.10
Dec 90 44.48 161.01 127.59
- -----------------------------------------------------------------------
Mar 91 71.04 201.00 146.13
Jun 91 65.24 193.88 145.80
Sep 91 89.06 214.41 153.59
Dec 91 108.25 263.31 166.47
- -----------------------------------------------------------------------
Mar 92 133.70 222.54 162.27
Jun 92 120.02 221.40 165.35
Sep 92 114.18 208.68 170.56
Dec 92 132.22 225.60 179.15
- -----------------------------------------------------------------------
Mar 93 92.85 196.72 186.97
Jun 93 58.01 181.59 187.89
Sep 93 48.75 158.13 192.74
Dec 93 54.10 172.05 197.21
- -----------------------------------------------------------------------
The total cumulative return on investment (change in the year end stock
price plus reinvested dividends) for each of the periods for the Company, the
Standard & Poors 500 Composite Index and the Standard and Poors Medical Products
& Supplies Index is based on the stock price or composite index on December 31,
1988 and on the last day of March, June, September and December of each year
thereafter. The comparison assumes that $100 was invested in the Company's
Common Stock and in each of the two indices and that all dividends were
reinvested.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The members of the Company's Compensation Committee are Frank A. Ehmann,
Chairman, James R. Leininger, M.D. and Bernhard T. Mittemeyer, M.D. The members
of the Compensation Committee are also the only members of the Stock Option
Committee. In determining the compensation to be paid to the Company's executive
officers in 1993, the Compensation Committee employed compensation policies
designed to reward the Company's executive officers and other key employees
9
<PAGE>
for achieving the net earnings target set forth in the Company's business plan.
The key components of executive compensation are (i) base salary, (ii) cash
bonus awards under the Management Incentive Compensation Program (the 'MICP'),
and (iii) stock options granted under the 1987 Kinetic Concepts, Inc. Key
Contributor Stock Option Plan.
Except for the salaries of James R. Leininger, M.D. and Peter A. Leininger,
M.D., the base salaries of the Company's executive officers are recommended by
James R. Leininger, M.D. to the Compensation Committee for its review and
approval. The salaries of James R. Leininger, M.D. and Peter A. Leininger, M.D.
are established by the Compensation Committee without the participation of Dr.
Leininger. The factors considered by Dr. Leininger or the Compensation
Committee, as the case may be, in establishing base salary levels for executive
officers were subjective and included the individual's level of responsibility
and performance, the financial performance of the Company and the executive
officer's department or division and a comparison of base salaries of similar
positions within the Company. The performance of the Common Stock was not
directly considered in establishing base salaries for Company executive
officers. Dr. Peter A. Leininger's base salary was not reviewed by the
Compensation Committee in 1993 and remained the same as it was in 1992.
Except with respect to the two individuals noted below, all of the Company's
executive officers were eligible to receive cash bonuses under the MICP in 1993.
The MICP was intended to attract, retain and properly compensate executive
officers and other key employees whose abilities are important to the long-term
success of the Company by establishing bonus awards payable based upon the
achievement of the Company's internal earnings targets. The Compensation
Committee has recently adopted a new compensation plan based upon Economic Value
Added principles, entitled the 'RACE Incentive Bonus Plan', which will replace
the MICP in 1994. One hundred and forty (140) of the Company's executive
officers and key employees were eligible to receive bonuses under the MICP in
1993. Each eligible employee was assigned a target bonus equal to a percentage
of their salary. The target bonus percentages ranged between 10% and 50% of
salary depending on the salary grade of the individual. The formula set forth in
the MICP has two components -- individual performance and Company performance.
For executive officers, 25% of an individual's MICP target bonus is based upon
individual performance and 75% of an individual's MICP target bonus is based
upon the Company's performance. For other employees, 50% or 60% (depending on
salary grade level) of an individual's MICP target bonus is based on individual
performance and the remainder is based upon Company performance. The portion of
the MICP bonus based upon the Company's performance is based upon the percentage
achievement of at least 90% of the earnings per share target set forth in the
Company's internal budget. In 1993, the Company did not achieve 90% of the
earnings per share target set forth in its internal budget and bonuses under the
MICP based on the Company's performance were not awarded. Because of the
Company's disappointing financial results, the Compensation Committee did not
believe that it would be appropriate for the Company to pay MICP participants
100% of the portion of the MICP bonus based on individual performance. As a
result, the Compensation Committee reduced the aggregate amount of the MICP
bonus based upon individual performance by 50%. A bonus pool equal to one-half
of the MICP target bonus based on individual performance was created by the
Compensation Committee and distributed in accordance with the recommendations of
the executive officers supervising the individual MICP participants. The MICP
bonuses awarded to executive officers were determined by Dr. Leininger and were
equal, in the aggregate, to approximately 12.5% of such executive officers'
target bonuses. The principal factor which Dr. Leininger considered in
allocating the MICP bonus pool to executive officers was his subjective
assessment of the performance of each executive officer during 1993.
10
<PAGE>
Daniel R. Puchek, the President of KCI New Technologies, Inc. ('NuTech'),
and Frank DiLazzaro, the President of KCI International, Inc. ('KCII'), are the
only executive officers of the Company who received a bonus not governed by the
MICP. The bonus packages applicable to Mr. Puchek and Mr. DiLazzaro were
negotiated on behalf of the Company with the affected individuals by Dr. James
R. Leininger and reviewed and approved by the Compensation Committee. Mr. Puchek
received bonus compensation in 1993 which was calculated as a percentage of
NuTech's revenue and net earnings. Mr. DiLazzaro received a bonus in 1993 which
was calculated as a percentage of KCII's net earnings.
Stock options are granted to executive officers on an annual basis. The
Stock Option Committee relies upon senior management's recommendations in
awarding stock options. Such recommendations are typically based upon salary
grade level, length of service and performance of the employee in the prior
year. In addition, special grants are awarded during the year to recognize
outstanding performance, eliminate perceived inequities and reward individuals
for increases in responsibility. Previously granted options are considered by
senior management in making recommendations to the Stock Option Committee with
respect to stock options to be granted to executive officers.
The Compensation Committee's determination of Dr. Leininger's base
compensation is somewhat unique because of Dr. Leininger's significant ownership
interest in the Company. Because the Compensation Committee believes that
overall enhancement of shareholder value is a more significant incentive for Dr.
Leininger than cash compensation, Dr. Leininger's compensation is set at a level
which the Compensation Committee believes is lower than the base compensation of
chief executive officers of comparable companies. The Committee has not
performed a review of comparable companies. The Compensation Committee did not
specifically review Dr. Leininger's base compensation in 1993 and has not
increased Dr. Leininger's base compensation in the last three years. In 1993 Dr.
Leininger received a bonus based solely upon the formula contained in the MICP.
Dr. Leininger received one-half of the individual portion of the MICP bonus
(approximately 12.5% of his target bonus) for which he was eligible. Because Dr.
Leininger is a member of the Stock Option Committee, he is not eligible to
receive stock options under the Stock Option Plan. Dr. Leininger did not
participate in any deliberations of the Compensation Committee concerning his
compensation or the compensation of his brother, Peter A. Leininger, M.D.
In 1993, the federal tax laws were amended to limit the deduction a
publicly-held company is allowed for compensation paid in taxable years
beginning on or after January 1, 1994 to the chief executive officer and to the
four most highly compensated executive officers other than the chief executive
officer. Generally, amounts paid in excess of $1 million to a covered executive,
other than performance-based compensation, cannot be deducted. In order to
constitute performance-based compensation for purposes of the new tax law, the
performance measures must be approved by the shareholders. The Compensation
Committee will consider ways to maximize the deductibility of executive
compensation, while retaining the discretion the Compensation Committee deems
necessary to compensate executive officers in a manner commensurate with
performance and the competitive environment for executive talent.
FRANK A. EHMANN
JAMES R. LEININGER, M.D.
BERNHARD T. MITTEMEYER, M.D.
11
<PAGE>
CERTAIN TRANSACTIONS
LOANS TO EXECUTIVE OFFICERS
Howard W. Deichen, the Company's former Chief Financial Officer, received a
loan of $224,900 on August 31, 1987 from the Company in connection with the
exercise by Mr. Deichen of a stock option granted to him by the Company. This
loan, including unpaid interest of $38,374, was cancelled on November 1, 1993 as
part of a severance package for Mr. Deichen.
RELATED PARTY FEES
Mission City Television, Inc., which is owned by James R. Leininger, M.D.,
received $255,683 in fees for video production services rendered to the Company
during 1993. The services included the production of quarterly and promotional
videos as well as videos for and during the Company's national sales meeting.
The fees for these services were comparable to those charged by third parties.
APPOINTMENT OF AUDITORS
The Board of Directors has appointed the firm of KPMG Peat Marwick to audit
the financial statements of the Company and its subsidiaries for the 1994 fiscal
year. Representatives of KPMG Peat Marwick are expected to be present at the
Annual Meeting of Shareholders. They will have an opportunity to make a
statement if they desire to do so and are expected to be available to respond to
appropriate questions.
Approval of the appointment of auditors is not a matter which is required to
be submitted to a vote of shareholders, but the Board of Directors considers it
appropriate for the shareholders to express or withhold their approval of the
appointment. If shareholder approval should be withheld, the Board of Directors
would consider an alternative appointment for the succeeding fiscal year. The
Board of Directors recommends that the shareholders vote 'FOR' Item No. 2
approving the appointment of auditors. A majority of the shares present and
entitled to vote thereon is required for approval.
TIMELINESS OF CERTAIN SEC FILINGS
During the fiscal year ended December 31, 1993, Peter A. Leininger, M.D.,
Frank A. Ehmann and Bernhard T. Mittemeyer, M.D. were each late in filing one
SEC Form 4.
SHAREHOLDER PROPOSALS FOR 1995 ANNUAL MEETING
Proposals of shareholders intended to be presented at the 1995 Annual
Meeting must be received in writing by the Company at its principal executive
offices not later than November 30, 1994. The Company's principal executive
offices are located at 8023 Vantage Drive, San Antonio, Texas 78230.
OTHER MATTERS
No business other than the matters set forth in this Proxy Statement is
expected to come before the meeting, but should any other matters requiring a
vote of shareholders arise, including a question of adjourning the meeting, the
persons named in the accompanying proxy will vote thereon according to their
best judgment in the interests of the Company. If any of the nominees for office
of director should withdraw or otherwise become unavailable for reasons not
presently known, the persons
12
<PAGE>
named as proxies may vote for another person in his place in what they consider
the best interests of the Company.
Upon the written request of any person whose proxy is solicited hereunder,
the Company will furnish without charge to such person a copy of its annual
report filed with the Securities and Exchange Commission on Form 10-K, including
financial statements and schedules thereto, for the 1993 fiscal year. Such
written request is to be directed to the attention of Dennis E. Noll, Secretary,
Kinetic Concepts, Inc., 8023 Vantage Drive, P.O. Box 659508, San Antonio, Texas
78265-9508.
KINETIC CONCEPTS, INC.
DENNIS E. NOLL
Secretary
Dated: April 4, 1994
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Graphic and Image Information Appendix
A performance graph showing five year cumulative total return among the Company,
the Standard & Poors 500 Composite Index and Standard & Poors Medical Products
& Supplies Index appears on page 9. The coordinates used in the graph also
appear on page 9.
<PAGE>
{FRONT}
P KINETIC CONCEPTS, INC.
R
O THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
X
Y
The undersigned hereby appoints James R. Leininger, M.D., Bianca A.
Rhodes and Dennis E. Noll, and each of them, as Proxies, each with the power
to appoint his or her substitute, and hereby authorizes him or her to represent
and to vote, as designated on the reverse side, all the shares of common stock
of Kinetic Concepts, Inc. held of record by the undersigned on March 23, 1994
at the Annual Meeting of Shareholders to be held on May 10, 1994 or any
adjournment thereof with all powers which the undersigned would posses if
personally present.
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement of Kinetic Concepts, Inc. dated March 29, 1994.
PLEASE MARK, SIGN DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE SIDE
{BACK}
/X/ Please mark votes as in this example.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this proxy will be
voted "FOR" Proposals 1 and 2.
1. ELECTION OF DIRECTORS
Nominees: Sam A. Brooks, Frank A. Ehman, James R. Leininger, M.D., Peter A.
Leininger, M.D. and Bernhard T. Mittemeyer, M.D.
/ / FOR all nominees
/ / WITHELD from all nominees
/ / For, except vote witheld from the following nominees
2. PROPOSAL TO APPROVE THE APPOINTMENT OF KPMG PEAT MARWICK as the independent
public accountants of the corporation for the 1994 fiscal year.
FOR AGAINST ABSTAIN
/ / / / / /
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
/ / MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Signature: Date
Signature: Date
