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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 12, 1996
Dear Fellow Shareholder:
As we move closer to the Annual Meeting of Shareholders of Coastal
Physician Group, Inc. on September 27, I think you can expect to hear more and
more from Coastal's management about their various 'plans' to increase the value
of your shares. They may yet ask you to place your trust--and ultimately the
value of your investment--in their ability and willingness to engage in some
type of significant transaction involving Coastal.
COASTAL'S MANAGEMENT: ONCE AGAIN--TOO LITTLE, TOO LATE
At this late date, I have NO CONFIDENCE in management's willingness to do
anything other than what they have been doing all along--SLOWLY PURSUING THEIR
'STRATEGIC AND FINANCIAL PLAN' TO DISPOSE OF CERTAIN NON-STRATEGIC ASSETS ON A
PIECEMEAL BASIS over what I believe would be a considerable period of time.
When Coastal's management claims that they are interested in maximizing the
value of your shares, ask yourself:
o WHY IS COASTAL VIGOROUSLY OPPOSING the Maximize Value Resolution, which
simply calls on the Board to immediately establish a Shareholder Value
Committee to determine the best and most expeditious way to maximize
shareholder value?
o WHY IS COASTAL VIGOROUSLY OPPOSING the election of Henry J. Murphy and
Mitchell W. Berger as directors of Coastal--when these two nominees are
committed to take prompt action to maximize shareholder value?
IT'S A QUESTION OF CREDIBILITY
As the holder of approximately 30% of Coastal's shares, I do not trust
management to follow through to completion with any transaction that would
maximize the value of our shares. I believe they will continue to pursue the
sale of non-strategic assets on a piecemeal basis. In making your own voting
decision, you should be aware that:
1. In mid-August, Coastal's financial advisor, Morgan Stanley & Co.,
resigned its engagement. Although Coastal has talked a lot about
bringing in a replacement, THE FACT IS THAT A CRUCIAL MONTH HAS NOW GONE
BY AND COASTAL STILL HAS NO OUTSIDE FINANCIAL ADVISOR! Even if Coastal
now brings in a financial advisor, a great deal of time has been lost.
This is not the way that a Board and management truly dedicated to the
maximization of shareholder value would operate.
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2. In its own proxy statement, Coastal very specifically states that this
past July-- little more than two months ago--THE BOARD REJECTED THE
ALTERNATIVE OF SELLING COASTAL IN ITS ENTIRETY. When management now
talks about the possibility of Coastal being sold, I think the only
thing that really has changed since July is that management has embarked
on a new campaign to get your vote.
3. With much fanfare, on July 9, 1996, Coastal announced its plan to
dispose of 'non-strategic' assets. But it is now mid-September--almost
10 weeks later-- and COASTAL STILL HAS NOT SOLD ANY 'NON-STRATEGIC'
ASSETS, OR ANY OTHER ASSETS FOR THAT MATTER.
4. At a meeting in New York City on August 28, 1996 with some major
institutional shareholders, Coastal's management DISTRIBUTED DETAILED
WRITTEN MATERIALS CONCERNING ITS PLAN TO DISPOSE OF CERTAIN
'NON-STRATEGIC' ASSETS. According to public filings, they distributed no
materials concerning a possible sale of Coastal in its entirety.
In the past few months, Coastal has made so many promises and discussed so
many 'alternatives' that I think it would be helpful to look at what Coastal's
management has said and compare it with what they have done:
<TABLE>
<CAPTION>
PUBLICLY-ANNOUNCED
STEPS IN FURTHERANCE
OF STATED ACTION
---------------------
<S> <C>
JULY 9, 1996: Coastal announces a 'comprehensive financial and strategic
plan' to dispose of certain 'non-strategic assets' None
AUGUST 21, 1996: Coastal announces it intends to retain a new investment
banker as its 'lead financial advisor' to replace Morgan Stanley None
AUGUST 21, 1996: Coastal announces it will 'actively pursue and evaluate
all strategic alternatives to maximize shareholder value . . . ' None
SEPTEMBER 4, 1996: Coastal says it is 'actively exploring a number of
strategic options in the course of maximizing shareholder value' None
</TABLE>
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If Coastal in a last-minute attempt to secure votes tries to claim that it
finally is taking some action, I don't think that we, as shareholders, can trust
the Board and management to follow through to a successful completion once the
September 27 Shareholders' Meeting has come and gone.
By voting FOR my two nominees and FOR the Maximize Value Resolution on the
enclosed BLUE proxy card, you can tell Coastal that IT IS ACTION--NOT JUST
WORDS--THAT ARE NEEDED.
YOU CAN ACT NOW TO PROTECT YOUR INTERESTS
The September 27 Shareholders' Meeting may be our last opportunity for a
long time to make our views known. I have engaged in an active solicitation of
proxies because I believe this vote is a watershed event for Coastal and our
investment in its shares. Our interests, as shareholders of Coastal, are well
aligned. Consider the following:
o I AM NOT SEEKING CONTROL OF COASTAL, NOR WILL I SERVE AS COASTAL'S
PRESIDENT OR CHIEF EXECUTIVE OFFICER, even if asked to do so by the
Board.
o I own approximately 30% of Coastal's outstanding shares. I am NOT
interested in any 'fire sale' of Coastal or any other transaction that
does not maximize the value of our shares.
o Two of Coastal's three nominees standing for election to the Board (Mr.
Piemont and Dr. Chenven)--unlike you and me--DO NOT OWN A SINGLE SHARE OF
COASTAL STOCK. Coastal's third nominee (Mr. Hatcher) owns only 3,200
shares of stock.
o The three senior officers and directors of Coastal--Dr. Sokolov, Mr.
Piemont and Mr. Corman--taken together, OWN ONLY ABOUT ONE-THIRD OF 1% OF
COASTAL'S STOCK.
o These three senior officers of Coastal, together with an outside
consulting firm, are currently costing Coastal an aggregate of
APPROXIMATELY $6,000,000 PER YEAR.
Only a short period of time remains before the September 27 Shareholders'
Meeting. I ask you to join with me in seeking to maximize the value of all of
our shares.
Once again, I thank you for your interest and support throughout this proxy
contest.
Sincerely,
/s/ Steven M. Scott, M.D.
--------------------------------
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
As stated in Dr. Scott's Proxy Statement dated August 14, 1996, under the
caption 'CERTAIN AGREEMENTS--Dr. Scott's Employment Agreement,' in April 1991
Dr. Scott and Coastal entered into a five-year employment agreement (the 'Scott
Employment Agreement') which renews automatically each year, unless either party
gives notice of non-renewal, and terminates in any event when Dr. Scott reaches
age 70. The current expiration date of the Scott Employment Agreement is April
1, 2001. In the event that Dr. Scott's employment with Coastal were to be
terminated in breach of the Scott Employment Agreement effective as of October
1, 1996, Dr. Scott estimates that he would be entitled to receive a total of
approximately $2.46 million, payable in monthly installments over the remaining
4 1/2 year term of the Scott Employment Agreement. For information concerning
Dr. Scott's compensation from Coastal for the years 1993, 1994 and 1995, and
information concerning compensation paid by Coastal to Dr. Jacque J. Sokolov,
M.D., Coastal's Chairman of the Board, and to certain other executive officers
of Coastal, reference is made to Coastal's Proxy Statement dated August 21, 1996
under the caption 'EXECUTIVE COMPENSATION' and to the 'SUMMARY COMPENSATION
TABLE' appearing on page 15 of Coastal's Proxy Statement.
Expedited discovery in the litigation referred to in Dr. Scott's Proxy
Statement under the caption 'CERTAIN LITIGATION' has been ongoing since July 18,
1996. On September 10, 1996, Coastal, Dr. Sokolov, Mr. Piemont and Mr. Corman
filed a motion to dismiss the Complaint filed by Dr. Scott and Dr. Walls, or
alternatively, for a judgment on the pleadings, on the grounds that the
Complaint fails to state a claim, that to the extent that the Complaint asserts
derivative claims on behalf of Coastal the plaintiffs are inappropriate
derivative plaintiffs, and that money damages are not recoverable against the
directors of Coastal for breach of fiduciary duties of the type alleged. Dr.
Scott believes the motion is without merit and intends to vigorously defend
against it.
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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 12, 1996
