SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934 (Amendment No. ____)
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
HEALTH RISK MANAGEMENT, 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
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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[ ] 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:
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SECOND REQUEST
YOUR VOTE IS VERY IMPORTANT TO US
April 12, 1999
Dear Health Risk Management Shareholder:
We have previously sent you our proxy materials for the Annual Meeting of
Shareholders of Health Risk Management, Inc., to be held at 1:00 p.m., CDT, on
April 21, 1999.
If you have already sent in your Voting Instruction Form and wish to change any
of your votes after reading the information in this letter, you may do so by
re-submitting your Voting Instruction Form, with a current date. Or you may
follow the instructions on the Voting Instruction Form for voting via the
Internet or for voting via the listed toll-free number. We would encourage your
use of the Internet or toll-free number.
If you have not sent in your Voting Instruction Form, please review the enclosed
voting instructions and the information in this letter regarding four very
important proposals. Also, please be advised that your shares cannot be voted on
these proposals unless you give your specific voting instructions. We encourage
you to please date, sign and return your enclosed Voting Instruction Form
promptly in the enclosed return envelope -- or follow the instructions on the
enclosed Voting Instruction Form for voting via the Internet or voting via the
listed toll-free number. We would encourage your use of the Internet or
toll-free number.
As you make your voting decision, I would ask you to consider the following
information which I hope will clear up any misunderstandings you might have;
some degree of misunderstanding has been made evident to me in several phone
calls I have received lately. The HRM Board of Directors recommends that you
vote for all four proposals. Of special importance are Proposals 2 and 3 related
to the Amended and Restated 1992 Long-Term Incentive Plan and the Employee Stock
Purchase Plan.
We believe passage of these Proposals is key to HRM's ability to sustain the
momentum recently evidenced in its pre-announcement of third quarter earnings of
$.22 per share.
1. HRM is entering a period that can bring rapid growth. HRM needs the ability
to recruit -- and retain -- top, entrepreneurial managers who want to accumulate
wealth over a long-term time horizon. The ability to offer options is key to the
success of our efforts to attract this type of individual in a very competitive
market. If options are not available, incentives would likely have to come in
the form of cash through increased salaries or cash bonus plans, which reduce
earnings, earnings per share and share price.
2. The Amended and Restated 1992 Long-Term Incentive Plan options align the
incentives of key employees and senior management with those of shareholders;
i.e., long-term, sustained profits. The Long-Term Incentive Plan forces key
employees and senior management to minimize their salary-related drain on
current cash flows in favor of achieving long-term wealth as a result of their
effort and on-the-job results. Long-Term Incentive Plan options cannot be turned
around quickly for a "fast buck." Options pay off when the Company achieves
long-term stock price appreciation. They are not tied to short-term cash flow
improvements.
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3. If the proposed 400,000 share increase in the Long-Term Incentive Plan
reserve is approved, these shares will not be issued and enter the market this
fiscal year. Rather, it is more likely to take at least approximately 5 to 10
years for options covering these to be exercised and have these shares enter the
market. There will not be an immediate 400,000 share increase in outstanding HRM
stock if Proposal 2 is approved.
4. The Compensation Committee of the Board issues Long-Term Incentive Plan
options only once or twice per year at the then market price. The Committee is
not issuing all options at today's lower price. The Committee sets conditions to
be met before the options can be exercised. Conditions (incentives) include, for
example, the stock price that must be achieved prior to exercising the option
and the number of years the option has to be held before exercising.
5. Options under the existing Long-Term Incentive Plan have been granted to 109
key employees at all levels as well as to non-employee directors. Of the total
options outstanding, 45 percent have been granted to key employees who are not
in senior management nor are directors.
6. The Employee Stock Purchase Plan in Proposal 3 is for all employees and asks
for a reserve of only 60,000 shares for a plan phase, representing roughly 1.3%
of HRM's outstanding shares. This is a short-term, as well as a long-term,
incentive plan to encourage lower-level employee "ownership' in their company
and thus productivity in their jobs. Between 50% and 60% of all public companies
with workforces of HRM's size offer an employee stock purchase plan. Such plans
are often viewed by outside shareholders as "added insurance" that the company
is properly incenting all employees to achieve positive results that in turn
benefit all shareholders.
We appreciate your continuing interest in HRM. Thank you for voting. If you have
any questions, please call HRM's Investor Relations, 612/829-3551.
Sincerely,
Gary T. McIlroy, M.D.
Chairman and CEO
Enclosures.
NOTE:Forward looking statements in this letter reflected as expectations, plans,
prospects or future estimates are subject to the risks and the uncertainties
present in the Company's business and the competitive health care marketplace
where clients and vendors commonly experience mergers or acquisitions, use of
estimates for incurred but not yet reported claims included in medical services
payable, use of estimates of bonus accruals included in accounts receivable,
reconciliations, volume fluctuations, provider relations and contracting,
participant enrollment fluctuations, changes in member mix or utilization
levels, fixed price contracts, contract disputes, contract modifications,
contract renewals and non-renewals, regulatory issues and requirements, various
business reasons for delaying contract closings, and the operational challenges
of matching case volume with optimum staffing, having fully trained staff,
having computer and telephonic supported operations, and managing turnover of
key employees and outsourced services to performance standards. While
occurrences of these risks, and others periodically detailed in the Company's
SEC reports, cannot be predicted exactly, such occurrences can be expected to
have an impact on HRM's anticipated level of revenue growth or profitability.
<PAGE>
HEALTH RISK MANAGEMENT, INC.
for 1999 Annual Meeting of Shareholders
to be held April 21, 1999
PROXY
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints GARY T. McILROY, M.D. and THOMAS P. CLARK, and
each of them, with full power of substitution, his or her proxies to represent
and vote, as designated below, all shares of Health Risk Management, Inc.
registered in the name of the undersigned, at the Company's 1999 Annual Meeting
of Shareholders and at any adjournment thereof, and the undersigned hereby
revokes all proxies previously given with respect to the Annual Meeting.
Please detach here
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<TABLE>
<S><C>
1. ELECTION OF CLASS A DIRECTORS: Nominees: Gary L. Damkoehler [ ] FOR all nominees [ ] WITHHOLD AUTHORITY
and Raymond G. Schultze, M.D. listed at left (except to vote for all nominees
those whose names listed at left.
have been written in
the box below).
(To withhold authority to vote for any individual nominee, write that nominee's [ ]
name in the box provided to the right.) [ ]
2. AMENDED AND RESTATED 1992 LONG-TERM INCENTIVE PLAN. Approve 400,000 [ ] FOR [ ] AGAINST [ ] ABSTAIN
share increase in number of shares reserved for Plan.
3. STOCK PURCHASE PLAN. Approve 1999 Employee Stock Purchase Plan. [ ] FOR [ ] AGAINST [ ] ABSTAIN
4. INDEPENDENT AUDITORS. Ratification of selection of Ernst & Young LLP as [ ] FOR [ ] AGAINST [ ] ABSTAIN
the Company's independent auditors for the 1999 fiscal year.
</TABLE>
In their discretion, the appointed proxies are authorized to vote upon such
other business as may properly come before the Meeting or any adjournment
thereof. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED, OR IF NO
DIRECTION IS GIVEN FOR ANY OF PROPOSALS #1 THROUGH #4, WILL BE VOTED FOR SUCH
PROPOSAL.
Dated:______________________________, 1999
__________________________________________
(PLEASE DATE AND SIGN name(s) exactly as
shown on your stock certificate. Executors,
administrators, trustees, guardians, etc.,
should indicate capacity when signing. For
stock held in Joint Tenancy, each joint
owner should sign).
