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Securities and Exchange Commission
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(A)
of the Securities Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[X] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Coastal Physician Group, Inc.
(Name of Registrant as Specified in its Charter)
Steven M. Scott, M.D.
(Name of Person Filing Proxy Statement)
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STEVEN M. SCOTT, M.D.
3711 STONEYBROOK DRIVE o DURHAM, NORTH CAROLINA 27705
September 7, 1996
Dear Fellow Shareholder:
Some things are very predictable.
Throughout this proxy contest, I have addressed on the merits the very real
and very important issues facing Coastal Physician Group, Inc. today which
affect the value of our investment as shareholders. I have stated that MY
DIFFERENCES WITH COASTAL'S MANAGEMENT ARE CLEAR AND WELL-DEFINED, AND I HAVE
INVITED MANAGEMENT TO JOIN ME IN CONDUCTING A RATIONAL DISCUSSION OF THESE
ISSUES IN ADVANCE OF THE SEPTEMBER 27 SHAREHOLDERS' MEETING. I also
predicted--quite correctly as it turns out--that in an effort to deflect
attention from these important issues, management eventually would turn to an
"attack" campaign in which they would try to blame me for all of Coastal's
problems.
Coastal's management recently sent you a letter signed by its Chairman,
Jacque J. Sokolov, M.D., and its President and Chief Executive Officer, Joseph
G. Piemont, littered with false and shrill attacks on me, my two
highly-qualified nominees, and two other members of Coastal's Board who have
shown the courage and independence to vote against Dr. Sokolov and Mr. Piemont
on various issues of policy.
The future of Coastal and value of our investment as shareholders are
matters far too important to be overshadowed by management's tactics. I AM
ASKING FOR YOUR SUPPORT BECAUSE I FIRMLY BELIEVE THAT IT IS IMPORTANT TO
MAXIMIZE SHAREHOLDER VALUE NOW AND THAT PROMPT CONSIDERATION SHOULD BE GIVEN TO
A SALE OF COASTAL IN ITS ENTIRETY. I am not seeking votes by attacking Dr.
Sokolov and Mr. Piemont more vigorously than they attack me. YOU CAN JOIN ME IN
MY EFFORT TO MAXIMIZE SHAREHOLDER VALUE BY SIGNING, DATING AND MAILING THE
ENCLOSED BLUE PROXY CARD TODAY.
LET'S SET THE RECORD STRAIGHT
While I would not even attempt to respond to all of Dr. Sokolov's and Mr.
Piemont's allegations, there are a few important points worth making:
1. I AM NOT SEEKING CONTROL OF COASTAL. Even though three directors will be
elected at the September 27 shareholders' meeting, I HAVE NOMINATED ONLY
TWO CANDIDATES. If elected, my two candidates, together with me, will
occupy only three seats on Coastal's nine-member Board. As set forth in
my proxy statement, I have certain business relationships with Dr.
Bertram Walls, a Coastal director, who is
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President of Century American Insurance Company, a company I own. But
even if Dr. Walls were to support my position on various issues, that
would constitute only four votes on a nine-member Board.
2. I AM NOT SEEKING TO BE COASTAL'S CHIEF EXECUTIVE OFFICER OR PRESIDENT.
In fact, I stated very clearly in my proxy statement that I do NOT
intend to serve as Chief Executive Officer and will NOT accept the
position even if it is offered to me by the Coastal Board. It is also
absolutely untrue for Coastal to assert that I am seeking to be
reinstated as President or Chief Executive Officer in the pending
litigation.
3. COASTAL HAS CONJURED UP AN ABSURD AND SELF-SERVING DEFINITION OF WHAT
CONSTITUTES AN "INDEPENDENT" DIRECTOR. As absurd as it sounds, Coastal
asserted several times in its proxy statement that Mr. Piemont,
Coastal's President and Chief Executive Officer who has a lucrative
employment and "golden parachute" agreement, is a "TRULY INDEPENDENT
DIRECTOR." Management's position, as I see it, is that a director is
independent if he supports management on every single issue, but is a
"Scott Supporter" if he exercises independent judgment and opposes
management on any issues of substance.
4. COASTAL HAS SUFFERED FINANCIAL DIFFICULTIES IN RECENT YEARS, BUT DR.
SOKOLOV, MR. PIEMONT AND THE BOARD REFUSE TO ACKNOWLEDGE ANY
RESPONSIBILITY WHATSOEVER. Those of us who have been Coastal
shareholders during the past few years know very well about Coastal's
difficulties and the significant decline in the market value of our
shares. The recent letter you received from Dr. Sokolov and Mr. Piemont
cites Coastal's declining stock price from January 1994 to May 1996 and
seeks to blame me alone for these difficulties. But nowhere in their
recent letter do Dr. Sokolov and Mr. Piemont shoulder any responsibility
for Coastal's performance or tell you that:
o DR. SOKOLOV HAS BEEN CHAIRMAN OF THE BOARD since December 1, 1994 with
an active role in management, for which he is compensated at a level
which can reach $1,000,000 per year.
o MR. PIEMONT WAS A SENIOR EXECUTIVE OFFICER of Coastal throughout that
entire January 1994 through May 1996 period, serving first as Senior
Vice President and General Counsel and then as Executive Vice
President.
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o STEPHEN D. CORMAN, HAS BEEN COASTAL'S CHIEF FINANCIAL OFFICER SINCE
MAY 1995 and was on Coastal's Board throughout that entire period.
o Three other Coastal directors--INCLUDING ROBERT V. HATCHER, JR. who is
standing for re-election to the Board this year as a management
nominee-- served on the Coastal Board throughout that entire period.
IT'S TIME TO MAXIMIZE SHAREHOLDER VALUE NOW
As shareholders of Coastal, the September 27 meeting could be our last
opportunity for a long time to let the Board of Directors know exactly what we
want. Our message should be clear and unambiguous:
o TAKE PROMPT ACTION TO MAXIMIZE SHAREHOLDER VALUE NOW.
o GIVE IMMEDIATE CONSIDERATION TO SELLING COASTAL IN ITS ENTIRETY.
o It's time for Coastal's management and Board to stop talking about
"pursuing all available alternatives"--something that could go on
endlessly--while management continues to be compensated handsomely.
o Do whatever is necessary to REDUCE the financial burden of paying up to a
total of $6,000,000 A YEAR to Coastal's three senior officers--all of
whom sit on Coastal's Board of Directors--and an outside consulting firm.
Coastal's management asks you to support its Comprehensive Business Plan
"while it actively pursues all available strategic alternatives." But in fact,
Coastal's outside financial advisor, Morgan Stanley & Co., Incorporated, which
conducted strategic and financial studies of Coastal's businesses, resigned
almost one month ago, and COASTAL STILL HAS NOT ENGAGED A NEW FINANCIAL ADVISOR!
I continue to urge Coastal's management to engage a qualified financial advisor
immediately.
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With the shareholders' meeting now less than three weeks away, I want to
take a moment to express my sincere thanks to the many shareholders who have
given me support and encouragement, and let you know that I value your letters
and phone calls. I appreciate everyone's serious consideration of the issues and
willingness to look beyond management's inflammatory rhetoric. With your
continued support, I believe we can quickly move Coastal in the right direction
and maximize the value of our shares.
Sincerely,
/s/ Steven M. Scott, M.D.
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Steven M. Scott, M.D.
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If your shares of Common Stock are held in the name
of a bank or brokerage firm, only that firm can execute
a proxy card on your behalf. Please contact the person
responsible for your account and give instructions for a
BLUE PROXY CARD TO BE VOTED FOR PROPOSALS 1, 2 AND 4
AND AGAINST PROPOSAL 3.
Do not sign any white proxy card you may receive from Coastal,
even as a protest vote against Coastal's Board and management.
If you have questions or need assistance in voting your shares, please
contact the firm assisting me in the solicitation of proxies:
GEORGESON & COMPANY INC.
WALL STREET PLAZA
NEW YORK, NEW YORK 10005
TOLL FREE: 1-800-223-2064
BANKS & BROKERS CALL: 212-440-9800
SUPPLEMENTAL INFORMATION
Sherman M. Podolsky, M.D., 7921 Wellwynd Way, Boca Raton, Florida 33496,
may be deemed a "participant" in this solicitation on behalf of Dr. Scott. Until
August 31, 1996, Dr. Podolsky was the Senior Vice President for Medical and
Corporate Affairs of Coastal Physician Services of Broward County Inc., a
subsidiary of Coastal. On each of September 22, 1994 and March 15, 1995, Dr.
Podolsky sold 500 shares of Coastal common stock, and on August 12, 1996, Dr.
Podolsky sold 3,000 shares of Coastal common stock. He does not currently own
any Coastal common stock.
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DO NOT SIGN OR RETURN ANY WHITE PROXY CARD
SENT TO YOU BY COASTAL'S MANAGEMENT OR BOARD OF DIRECTORS
1. Do NOT sign any white proxy cards even as a protest vote against
Coastal's Board and management. Execution of a white proxy card will
revoke any BLUE proxy card you previously sent to Dr. Scott.
2. You can vote "FOR" Dr. Scott's two nominees ONLY on the BLUE proxy
card. Checking the "withhold authority" box on Coastal's white proxy
card will NOT be counted as a vote in favor of Dr. Scott's nominees.
3. If you previously signed and returned a white proxy card, or think
you may have done so, you have every right to change your mind. Only
your latest date proxy card will count. You may revoke any earlier
white proxy card returned to Coastal by signing, dating and mailing
the enclosed BLUE proxy card in the postage-paid envelope provided.
If you have questions or need assistance in voting your shares, please contact
the firm assisting me in the solicitation of proxies:
GEORGESON & COMPANY, INC.
WALL STREET PLAZA
NEW YORK, NEW YORK 10005
TOLL FREE: 1-800-223-2064
BANKS & BROKERS CALL: 212-440-9800
Steven M. Scott, M.D.
September 7, 1996
