<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
LINCARE HOLDINGS 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:
(4) Date Filed:
<PAGE> 2
LINCARE HOLDINGS INC.
19337 U.S. 19 NORTH
CLEARWATER, FLORIDA 34624
April 7, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders to
be held at the Hyatt Regency Westshore, 6200 Courtney Campbell Causeway, Tampa,
Florida, on Monday, May 12, 1997, at 9:00 A.M.
The principal business of the meeting will be to elect directors for the
ensuing year, to ratify the selection of KPMG Peat Marwick LLP as the Company's
independent accountants for the fiscal year ending December 31, 1997, and to
approve an amendment to the Company's 1996 Stock Plan. During the meeting, we
also will review the Company's 1996 results and report on significant aspects of
our business during the first part of fiscal 1997.
If you are not planning to attend the meeting, it is still important that
your shares be represented. Please complete, sign, date, and return to the
Company the enclosed proxy card in the envelope provided at your earliest
convenience. If you do attend the Annual Meeting and wish to vote in person, you
may withdraw your proxy at that time.
Sincerely,
/s/ JOHN P. BYRNES
JOHN P. BYRNES
Chief Executive Officer and President
<PAGE> 3
LINCARE HOLDINGS INC.
19337 U.S. 19 NORTH
CLEARWATER, FLORIDA 34624
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 12, 1997
---------------------
The Annual Meeting of Stockholders of Lincare Holdings Inc., a Delaware
corporation (the "Company"), will be held on May 12, 1997, at 9:00 A.M. at the
Hyatt Regency Westshore, 6200 Courtney Campbell Causeway, Tampa, Florida.
The Annual Meeting will be held: (i) to elect a Board of Directors
consisting of seven persons for a one year term; (ii) to ratify the selection of
KPMG Peat Marwick LLP as the Company's independent accountants for the fiscal
year ending December 31, 1997; (iii) to approve an amendment to the Company's
1996 Stock Plan; and (iv) to transact such other business as may properly come
before the Annual Meeting and at any adjournment thereof.
Stockholders of record at the close of business on March 24, 1997 are
entitled to notice of the meeting and to vote the shares held on that date at
the meeting.
By Order of the Board of Directors
/s/ James M. Emanuel
JAMES M. EMANUEL
Secretary
Clearwater, Florida
April 7, 1997
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWNED ON THE RECORD DATE, PLEASE INDICATE
YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE AND SIGN IT, AND
RETURN IT IN THE ENVELOPE PROVIDED. IN ORDER TO AVOID THE ADDITIONAL EXPENSE TO
THE COMPANY OF FURTHER SOLICITATION, WE ASK YOUR COOPERATION IN PROMPTLY MAILING
IN YOUR PROXY CARD.
<PAGE> 4
LINCARE HOLDINGS INC.
19337 U.S. 19 NORTH
CLEARWATER, FLORIDA 34624
---------------------
PROXY STATEMENT
---------------------
This Proxy Statement is furnished in connection with the solicitation of
Proxies by the Directors of the Company for use at the Annual Meeting of
Stockholders of the Company to be held at the Hyatt Regency Westshore, 6200
Courtney Campbell Causeway, Tampa, Florida, on May 12, 1997, at 9:00 A.M., and
any adjournment thereof. The matters to be considered and acted upon at the
meeting are set forth in the attached Notice of Annual Meeting. This Proxy
Statement, the Notice of Annual Meeting, and the form of Proxy will first be
sent to Stockholders on or about April 8, 1997.
The record date for the determination of Stockholders entitled to notice of
and to vote at the meeting has been fixed by the Board of Directors as the close
of business on March 24, 1997. As of that date there were 28,349,696 shares of
Common Stock ("Common Stock") of the Company outstanding and entitled to vote at
the meeting. Each share of Common Stock is entitled to one vote on each of the
matters listed in the Notice of Annual Meeting. The Common Stock is the only
outstanding class of the Company's securities.
If the accompanying Proxy is signed and returned, the shares represented by
the Proxy will be voted as specified in the Proxy. Where no choice is specified,
the Proxy will be voted in favor of the proposals described herein. Stockholders
who execute Proxies may revoke them by notifying the Secretary at any time prior
to the voting of the Proxies.
EXPENSE AND MANNER OF SOLICITATION
The Company will bear the cost of this solicitation, including amounts paid
to banks, brokers and other record owners to reimburse them for their expenses
in forwarding solicitation material regarding the annual meeting to beneficial
owners of the Common Stock. The solicitation will be by mail, with the material
being forwarded to the stockholders of record and certain other beneficial
owners of the Common Stock by the Company's officers and other regular employees
(at no additional compensation). Such officers and employees may also solicit
proxies from stockholders by personal contact, by telephone or by any other
means if necessary in order to assure sufficient representation at the meeting.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
On March 24, 1997, the record date with respect to this solicitation for
determining stockholders entitled to notice of and to vote at the Annual
Meeting, 28,349,696 shares of the Company's Common Stock were outstanding. No
shares of any other class of stock were outstanding. Only stockholders of record
on such date are entitled to notice of and to vote at the Annual Meeting and at
any adjournment thereof. Each stockholder of record is entitled to one vote for
each share held on all matters to come before the Annual Meeting and at any
adjournment thereof.
<PAGE> 5
The following table sets forth the information as of February 15, 1997,
with respect to the beneficial ownership of the Company's Common Stock by each
person who is known by the Company to beneficially own more than 5% of the
Common Stock and by each director and executive officer and by all directors and
executive officers as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
BENEFICIAL OWNER OWNED PERCENT
---------------- ------------------- -------
<S> <C> <C>
FMR Corporation(1).......................................... 2,794,595 9.9
82 Devonshire Street
Boston, Massachusetts 02109
Firstar Corporation(1)...................................... 2,221,750 7.8
777 E. Wisconsin Avenue
Milwaukee, Wisconsin 53202
The Kaufmann Fund, Inc.(1).................................. 1,595,000 5.6
140 E. 45th Street
43rd Floor
New York, N.Y. 10017
AIM Management Group Inc.(1)................................ 1,480,500 5.2
11 Greenway Plaza, Suite 1919
Houston, Texas 77046
First Union Corporation(1).................................. 1,464,038 5.2
One First Union Center
Charlotte, North Carolina 28288
James T. Kelly(2)........................................... 311,500 1.1
John P. Byrnes(3)........................................... 149,646 .5
Howard R. Deutsch(4)........................................ 394,000 1.4
James M. Emanuel(5)......................................... 272,551 1.0
Andrew M. Paul(6)........................................... 22,867 --
Chester B. Black(6)......................................... 5,000 --
Frank T. Cary(7)............................................ 19,000 --
Thomas O. Pyle(8)........................................... 16,000 --
All Executive Officers and Directors as a Group (eight
persons).................................................. 1,190,564 4.1
</TABLE>
- ---------------
(1) All information relating to shares held is derived from Schedule 13G
filings with the Securities and Exchange Commission and received by the
Company.
(2) Includes options to purchase 221,000 shares of Common Stock that are
currently exercisable.
(3) Includes options to purchase 149,646 shares of Common Stock that are
currently exercisable.
(4) Includes options to purchase 169,000 shares of Common Stock that are
currently exercisable.
(5) Includes options to purchase 95,000 shares of Common Stock that are
currently exercisable.
(6) Includes options to purchase 5,000 shares of Common Stock that are
currently exercisable.
(7) Includes options to purchase 17,000 shares of Common Stock that are
currently exercisable.
(8) Includes options to purchase 16,000 shares of Common Stock that are
currently exercisable.
2
<PAGE> 6
ELECTION OF BOARD OF DIRECTORS
A Board of seven (7) Directors will be elected by a plurality of the votes
cast by Stockholders represented and entitled to vote at the meeting. Directors
will serve until the next Annual Meeting of Stockholders and until their
successors have been elected and qualified. All nominees identified below are
expected to serve if elected, and each of them has consented to being named in
this Proxy Statement and to serve if elected. All are current Directors of the
Company, except John P. Byrnes. If a nominee is unable or unwilling to serve at
the time of the election, the persons named in the form of Proxy shall have the
right to vote according to their judgment for another person instead of such
unavailable nominee.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF THE
ELECTION OF MESSRS. KELLY, BYRNES, DEUTSCH, PAUL, BLACK, CARY, AND PYLE.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
The following table provides information regarding each nominee of the
Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
James T. Kelly............................ 50 Chairman of the Board
John P. Byrnes............................ 38 Chief Executive Officer, President
Howard R. Deutsch......................... 42 Executive Vice President, General Counsel and
Director
Andrew M. Paul............................ 41 Director
Chester B. Black.......................... 51 Director
Frank T. Cary............................. 76 Director
Thomas O. Pyle............................ 57 Director
</TABLE>
All directors are elected annually and hold office until the next annual
meeting of stockholders and until their successors are duly elected and
qualified. Executive officers serve at the discretion of the Board of Directors.
JAMES T. KELLY was elected Chairman of the Board in April 1994 and served
as the Chief Executive Officer of the Company's business from June 1986 through
December 1996. Mr. Kelly has been a director of Lincare Inc. since its founding
in November 1987, and a director of Lincare Holdings since its formation in
November 1990. Prior to becoming the Company's Chief Executive Officer, Mr.
Kelly served in a number of capacities within the Mining and Metals Division of
Union Carbide Corporation ("Union Carbide") over a nineteen-year period. Mr.
Kelly is also a director of Emcare Holdings Inc., a leading provider of
physician services management in hospital emergency departments and related
urgent care centers.
JOHN P. BYRNES has served as the Chief Executive Officer of the Company's
business since January 1997. Mr. Byrnes has been the President of Lincare
Holdings since June 1996. Prior to becoming the Company's President, Mr. Byrnes
served the Company in a number of capacities over a ten-year period, including
serving as the Company's Chief Operating Officer throughout 1996.
HOWARD R. DEUTSCH has served as Executive Vice President and General
Counsel and as a director of Lincare Inc. since its founding in 1987 and as
Executive Vice President and General Counsel and as a director of Lincare
Holdings since its formation in November 1990. From 1980 to 1987, Mr. Deutsch
served as Division Counsel for Union Carbide. Mr. Deutsch is responsible for
managing and implementing the Company's acquisition program. Mr. Deutsch is also
a director of Housecall Medical Resources, a national home health provider.
3
<PAGE> 7
ANDREW M. PAUL has been a director of Lincare Holdings since its formation
in 1990. Mr. Paul was Chairman of the Board of Lincare Holdings from November
1990 to April 1994. Mr. Paul is a general partner of Welsh, Carson, Anderson,
and Stowe ("WCAS"), a private venture capital partnership. Previously he was an
associate in the venture capital group of Hambrecht & Quist Incorporated for one
year. Mr. Paul is also a director of Emcare Holdings Inc., a leading provider of
physician services management in hospital emergency departments and related
urgent care centers; Medcath Inc., a provider of cardiology and cardiovascular
services through the operation of specialized facilities and the management of
physician practices; American Oncology, Inc., owners of comprehensive cancer
treatment centers; Housecall Medical Resources, a national home health provider;
and several private companies.
CHESTER B. BLACK has been a director of Lincare Holdings since January
1991. From November 1990 until December 1995, Mr. Black served as Chairman and
Vice Chairman of Med Alliance, Inc. From June 1989 until November 1990, Mr.
Black was Chairman and President of RB Diagnostic, which also provides
diagnostic imaging services. From May 1986 until June 1989, Mr. Black was
President of AdvaCare, Inc., a predecessor in interest to RB Diagnostic.
FRANK T. CARY has been a director of Lincare Holdings since July 1991. Mr.
Cary served as IBM's Chief Executive Officer from 1973 to 1981. He retired from
IBM on July 1, 1983. He continued as a member of the IBM board and its executive
committee until April 30, 1991. Mr. Cary is also a director of AEA Investors,
Inc., Celgene Corporation, Cygnus Therapeutic Systems, ICOS Corporation, Lexmark
International, Inc., ONTOS, Inc., SPS Transaction Services, Inc., SEER
Technologies, TELTREND, Inc., and VIDN, Inc.
THOMAS O. PYLE became a director of Lincare Holdings in 1995. Mr. Pyle
served as Chief Executive Officer of Harvard Community Health Plan from 1978 to
1991. From 1993 to 1994, he served as Chief Executive Officer of MetLife
HealthCare Management Company. He is now Senior Advisor to The Boston Consulting
Group and serves as a director of Millipore Corporation, Unilab Corporation,
AMISYS Managed Care Systems Inc, CareWise, Inc. and Codman Research Group Inc.
EXECUTIVE OFFICERS
The Company's Executive Officers are Messrs. Kelly, Byrnes, Deutsch, and
James M. Emanuel. Mr. Emanuel has served as the Chief Financial Officer of the
Company's business since January 1984, and has been Chief Financial Officer of
Lincare Inc. since its founding in November 1987 and Lincare Holdings since its
formation in November 1990. Mr. Emanuel has also served as a director of Lincare
Inc. and Lincare Holdings since November 1990. Mr. Emanuel served in numerous
financial capacities at Union Carbide between 1973 and 1984.
DIRECTOR'S FEES
Other than Chester B. Black, Frank T. Cary and Thomas O. Pyle, who each
receive $20,000 per annum, directors do not receive any compensation for their
services, but are reimbursed for expenses. The Company's directors are also
eligible to participate in the Company's stock option plans.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The committees of the Board of Directors consist of an Audit Committee, a
Compensation Committee and a Stock Plan Committee. During fiscal 1996, all
directors attended 75% or more of the total meetings of the Board of Directors
and Committees of the Board of Directors on which they served. The Board of
Directors held six meetings during 1996.
4
<PAGE> 8
Audit Committee. The Audit Committee recommends to the Board of Directors
the annual appointment of independent accountants with whom the Committee
reviews the audit fees, scope and timing of the audit, the adequacy of internal
controls and any other services rendered. The Audit Committee, comprised of
Messrs. Cary, Emanuel and Pyle, held one meeting for fiscal 1996.
Compensation Committee. The Compensation Committee reviews and recommends
the executive compensation and bonuses of the executives of the Company. The
Compensation Committee is comprised of Messrs. Paul and Black and held one
meeting in fiscal 1996.
Stock Plan Committee. The Stock Plan Committee administers the stock option
plans of the Company and held two meetings during fiscal 1996. The Stock Plan
Committee is comprised of Messrs. Paul and Black.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Company to each
of its Executive Officers.
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------------------ ------------
ALL OTHER OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) GRANTED # COMPENSATION(2)
- --------------------------- ---- -------- -------- ------------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
1996 $211,800 $827,300 $7,500 -0- $1,033,000
James T. Kelly 1995 $205,740 $637,300 $7,500 100,000 --
Chief Executive Officer.. 1994 $200,280 $472,000 $7,500 -0- --
1996 $177,000 $336,300 $7,500 190,000 --
John P. Byrnes(3) 1995 $135,845 $220,000 $6,793 60,000 --
President................ 1994 $124,017 $150,000 $6,201 -0- --
1996 $165,600 $607,500 $7,500 -0- $ 943,400
Howard R. Deutsch 1995 $161,400 $468,000 $7,500 73,000 --
Executive V. P........... 1994 $157,140 $346,500 $7,500 -0- --
1996 $114,960 $420,200 $5,748 -0- $ 666,800
James M. Emanuel 1995 $111,840 $323,700 $5,592 51,000 --
Chief Financial Officer.. 1994 $108,900 $239,500 $5,445 -0- --
</TABLE>
- ---------------
(1) The Company makes a contribution of 5% of each participating employee's
annual base salary to the Company's 401(k) Plans, however the plan has a
maximum annual base salary level of $150,000 as a result of changes made by
the Internal Revenue Service.
(2) In 1990, the Company entered into employment agreements with Messrs. Kelly,
Deutsch and Emanuel which, as modified in 1993, were scheduled to expire on
December 31, 1996. These agreements contained the executive officers'
annual incentive compensation formula, covenants not to compete, and change
of control severance compensation provisions. In 1996, the Company extended
such agreements and restructured their terms to modify the incentive
compensation formula, to retain the executive officers' covenants not to
compete, and to eliminate payments in the event of a change of control of
the Company. In consideration of agreeing to the restructuring, the
executive officers received the amounts shown in the table.
(3) Mr. Byrnes was promoted to Chief Executive Officer on January 1, 1997.
5
<PAGE> 9
The following table sets forth the options granted to the Company's
Executive Officers in fiscal 1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
----------------------------------------------------- ----------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED(1) FISCAL YEAR ($/SHARE)(2) DATE 5% $ 10% $
---- ---------- ------------ ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
John P. Byrnes......... 40,000 7.5 $25.25 12/31/2004 $1,412,400 $2,505,200
150,000 28.3 $35.25 12/31/2004 $3,796,500 $7,894,500
</TABLE>
- ---------------
(1) The options have been granted under the Company's 1990 and 1996 Stock Plans.
The 40,000 options vest fifty percent, or 20,000 shares each, on January 26,
1998 and January 26, 1999. The 150,000 options vest fifty percent, or 75,000
shares each, on December 1, 1999 and December 1, 2000.
(2) The exercise price per share for each option grant was equal to the market
price of the Company's Common Stock as of the date the option was granted.
The following table sets forth aggregate options exercised by the Company's
Executive Officers in fiscal 1996.
AGGREGATE OPTIONS EXERCISED IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES FY-END FY-END(1)
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
---- ----------- ---------- ----------------- -----------------------
<S> <C> <C> <C> <C>
James T. Kelly.............. 175,000 $4,922,877 281,000 / 100,000 $6,697,625 / $1,600,000
John P. Byrnes.............. 44,000 $1,691,250 149,646 / 325,000 $4,646,779 / $4,102,500
Howard R. Deutsch........... 75,000 $2,227,500 169,000 / 73,000 $3,889,875 / $1,168,000
James M. Emanuel............ 50,000 $1,481,250 95,000 / 51,000 $2,399,375 / $816,000
</TABLE>
- ---------------
(1) Value is calculated using the Lincare Holdings Inc. closing stock price on
December 31, 1996 of $41.00 per share less the exercise price for such
shares.
EMPLOYMENT AGREEMENTS
The Company has employment agreements with its Chairman and each of its
Executive Officers. Under the employment agreements, Mr. Kelly serves as
Chairman of the Board at a current annual salary of $240,000, Mr. Byrnes serves
as Chief Executive Officer and President at a current annual salary of $350,000,
Mr. Deutsch serves as Executive Vice President and General Counsel at a current
annual salary of $180,000 and Mr. Emanuel serves as Chief Financial Officer at a
current annual salary of $175,000. Each agreement provides for annual cost of
living adjustments and for such salary increases as may be determined by the
Board of Directors in its sole discretion. In addition to salary, the employment
agreements provide that each such
6
<PAGE> 10
person shall be eligible to receive bonus compensation based upon individual
performance in their respective areas of responsibility.
COMPENSATION COMMITTEE REPORT
The Company's executive compensation programs are intended to attract,
retain and motivate high quality executives with a performance-based
compensation package that promotes Company growth and enhancement of Stockholder
value. The compensation programs consist of two significant portions, (i) cash
compensation and (ii) equity-based incentive compensation, generally through the
grant of stock options pursuant to the Company's Non-Qualified Stock Option
Plan, its 1991 Stock Plan, its 1994 Stock Plan, and its 1996 Stock Plan.
The Company's executive compensation programs are administered by two
committees of the Board of Directors -- the Compensation Committee and the Stock
Plan Committee (collectively, the "Committees"). The role of each Committee is
distinct from that of the other. The Compensation Committee administers the cash
portion of the executive compensation package, and the Stock Plan Committee
administers the equity-based incentive portion. The Committees are made up of
the undersigned outside directors.
Cash Compensation
The Compensation Committee views the cash compensation component to be in
recognition of the contribution by the Executive Officers of the Company to the
Company's historical financial performance. Determination of the size of the
bonus component of each Executive Officer's compensation package, as described
below, was based on an objective, performance-based formula.
The base salary component of each of the Company's Executive Officers,
including its Chief Executive Officer during fiscal 1996, James T. Kelly, was
determined by the Compensation Committee of the Board, such committee being
comprised of Messrs. Chester B. Black and Andrew M. Paul, two independent
directors of the Company. Messrs. Kelly, Deutsch and Emanuel did not receive
merit increases in their base salaries in 1996, but such base salaries were
indexed for inflation and were increased in accordance with the terms of their
employment agreements with the Company. See "EXECUTIVE
COMPENSATION -- Employment Agreements". Mr. John P. Byrnes did receive a merit
increase in his base salary during 1996, in recognition of his increased levels
of responsibility within the Company during such period.
The bonus component of each Executive Officer's cash compensation was
determined under an objective formula based on the Company's cash flow from
operations. As a result of significant improvements in the Company's cash flow
from operations from 1995 to 1996, the cash bonuses paid to Executive Officers
increased commensurately in 1996. See "EXECUTIVE COMPENSATION -- Summary
Compensation Table".
Equity-Based Incentive Compensation
The focus of the Stock Plan Committee in administering the equity
incentives awarded to Executive Officers is on providing incentive to the
Company's senior management team to remain with the Company and to continue to
contribute significantly to its performance record.
The Stock Plan Committee administers the Non-Qualified Stock Option Plan,
1991 Stock Plan, 1994 Stock Plan and the 1996 Stock Plan, each of which provides
for the grant of stock options. The 1991 Stock Plan, the 1994 Stock Plan and the
1996 Stock Plan also provide the flexibility to grant awards of restricted
7
<PAGE> 11
stock, but, to date, no such awards have been granted. In the opinion of the
Stock Plan Committee, stock option grants are by definition performance-based,
in that the value of the option only increases through an increase in the
Company's stock price. Thus, to the extent of their option holdings, the
interests of the Executive Officers are aligned with the interests of the
Stockholders in maximizing the Company's stock price.
This approach is evidenced by the fact that, to date, (i) all grants to
Executive Officers under the Company's stock plans have been subject to some
delay in exercisability based on performance or continued employment, and (ii)
all grants under the Company's stock plans have been made at an exercise price
equal to the fair market value of the Company's stock as of the date of grant.
Therefore, without an increase in stock price, the options are of no value. The
Stock Plan Committee's general philosophy is that option grants should be made
with an exercise price equal to fair market value, with some element of
forfeitability.
The Stock Plan Committee also believes that it is in the best interest of
the Stockholders for the Executive Officers to have a significant equity
incentive to maximize the value of the Company's stock. The amount of this
incentive, in the Committee's view, should be determined based on long-term
considerations, to balance the short-term formula-based mechanism contained in
the Company's cash compensation system. Therefore, by design, the award of
option grants is based on the Stock Plan Committee's perception of the overall
value of the Executive Officer to the Company's long-term growth potential.
Grants to Chief Executive Officer
In 1996, no option grants were made to Mr. Kelly, who served as the
Company's Chief Executive Officer during that period.
Grants to Other Executive Officers
During fiscal 1996, Mr. Byrnes was granted the option to purchase 190,000
shares of the Company's Common Stock. See "EXECUTIVE COMPENSATION -- Option
Grants in Last Fiscal Year." The Committee, in determining the number of option
shares to grant to Mr. Byrnes, considered the significant growth of the Company.
The Company's revenues have increased by more than 25 percent per year for the
past three years. The revenue growth was a result both of the Company's
acquisition program and of internal growth. The Committee also considered the
steady growth in earnings per share. The Company's earnings per share grew by
more than 25 percent per year for the past three years. The Committee also
considered the additional responsibility assumed by Mr. Byrnes in his capacities
as the President and Chief Operating Officer of the Company. The Stock Plan
Committee also considered the potential long-term contribution of Mr. Byrnes to
the maximization of Stockholder value. As noted above, Mr. Byrnes became the
Company's Chief Executive Officer as of January 1, 1997.
Andrew M. Paul Andrew M. Paul
Chester B. Black Chester B. Black
Stock Plan Committee Compensation Committee
8
<PAGE> 12
COMPARISON OF CUMULATIVE TOTAL RETURN OF
LINCARE HOLDINGS INC.,
NASDAQ HEALTH SERVICES STOCKS,
AND THE NASDAQ STOCK MARKET (U.S.)
<TABLE>
<CAPTION>
NASDAQ NASDAQ
LINCARE HEALTH STOCK
MEASUREMENT PERIOD HOLDINGS, SERVICES MARKET
(FISCAL YEAR COVERED) INC. STOCKS (U. S.)
<S> <C> <C> <C>
MAR. 19, 1992 100.0 100.0 100.0
DEC. 31, 1992 218.0 110.0 113.0
DEC. 31, 1993 355.0 127.0 130.0
DEC. 31, 1994 414.0 136.0 127.0
DEC. 31, 1995 357.0 172.0 179.0
DEC. 31, 1996 585.0 172.0 220.0
</TABLE>
* Assumes $100 invested on March 19, 1992 in Lincare Holdings Inc., NASDAQ
Health Services Stocks, and NASDAQ Stock Market (U.S.).
9
<PAGE> 13
AMENDMENT TO 1996 STOCK PLAN
On March 15, 1996, the Board of Directors approved the Lincare Holdings
Inc. 1996 Stock Plan (the "1996 Plan"). The 1996 Plan provides an opportunity
for employees, officers, directors and other eligible participants ("Employees")
of the Company and its subsidiaries to purchase Common Stock. The 1996 Plan
provides for the granting of "non-qualified stock options" and "incentive stock
options" to acquire Common Stock and/or the granting of rights to purchase
Common Stock on a "restricted stock" basis. The Company is currently authorized
to issue an aggregate of 750,000 shares of Common Stock under the 1996 Plan. In
no event, however, will the Company issue more than 150,000 shares of Common
Stock under the 1996 Plan to any one person during any fiscal year.
Approximately 2,800 persons are eligible to participate in the 1996 Plan on
terms determined by the Company. The terms and conditions of individual option
agreements may vary, subject to the following guidelines: (i) the option price
of incentive stock options may not be less than market value on the date of
grant; the option price of non-qualified options may be less than market value
on the date of grant; and (ii) the term of all incentive stock options may not
exceed ten years from the date of grant; the term of all non-qualified stock
options may exceed ten years from the date of grant.
The 1996 Plan is administered by a committee of the Board of Directors. See
"INFORMATION REGARDING THE BOARD OF DIRECTORS -- Committees and Meetings of the
Board of Directors." The committee determines (i) which Employees shall be
granted an option or the right to purchase Common Stock under the 1996 Plan (an
"Award"); (ii) the number of shares for which an Employee will be granted such
an Award; (iii) the amount to be paid by the Employee upon exercise of an Award;
(iv) the time or times and the conditions subject to which Awards may be made
and become exercisable; and (v) the form of consideration that may be used to
pay for shares issued upon exercise of such Award.
The Company's Board of Directors has proposed, and recommends to the
Stockholders, the adoption and approval of an amendment to the 1996 Plan, which
would increase the number of shares of Common Stock covered by the 1996 Plan
from 750,000 to 1,000,000. The increase in the number of shares covered by the
1996 Plan will be approved upon an affirmative vote of a majority of the
outstanding shares of Common Stock present and entitled to vote at the meeting.
The Board of Directors recommends a vote in favor of increasing the number of
shares covered by the 1996 Plan, and unless otherwise instructed, the persons
named in the accompanying proxy will vote in favor of the amendment.
The issuance of a nonqualified stock option under the 1996 Plan will not
result in any taxable income to the recipient Employee or a tax deduction to the
Company at the time it is granted. Generally, an Employee to whom a nonqualified
stock option has been granted will recognize ordinary income at the time the
Employee exercises the option and receives shares of Common Stock in an amount
equal to the excess of the fair market value of such shares on the date of
exercise over the option price. The Company is entitled to a tax deduction
corresponding to the amount of income recognized by the Employee for the year in
which the Employee recognizes such income.
Neither receipt nor exercise of an incentive stock option is a taxable
event to the Employee, and if the recipient Employee does not dispose of the
shares of Common Stock acquired under an incentive stock option prior to the
expiration of the requisite holding periods described below, any gain resulting
from the sale of such shares is long-term capital gain. In such case, the
Company is not entitled to any tax deduction with respect to the grant or the
exercise of the option. The minimum statutory holding periods are two years from
the date the option is granted and one year from the date the Employee receives
his shares of Common Stock pursuant to the exercise. If the shares of Common
Stock are disposed of before the end of either of such statutory holding
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periods, the lesser of (i) the difference between the option price and the fair
market value of such shares on the date of exercise and (ii) the total amount of
gain realized on the sale must be reported by the Employee as ordinary income,
and the Company will be entitled to a tax deduction in that amount. The
remaining gain, if any, will be taxed to the Employee as long- or short-term
capital gain depending on how long the Employee held the shares.
Generally, an Employee to whom a restricted stock award is made will
recognize ordinary income for Federal income tax purposes in an amount equal to
the fair market value of such shares of Common Stock received at the time the
shares first become transferable or are no longer subject to forfeiture, and
such amount will then be deductible for Federal income tax purposes by the
Company. Alternatively, if the recipient of a restricted stock award so elects,
he will recognize ordinary income on the date of grant in an amount equal to the
excess of the fair market value of the shares of Common Stock over the purchase
price, if any, paid by the Employee for such Common Stock, and such amount will
then be deductible by the Company.
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected KPMG Peat Marwick LLP to serve as the
Company's independent accountants for the fiscal year ending December 31, 1997,
subject to ratification by a majority of the shares represented either in person
or by proxy at the Annual Meeting. A representative of KPMG Peat Marwick LLP is
expected to be present at the Annual Meeting and will have an opportunity to
make a statement and to respond to appropriate questions.
ANNUAL REPORT
The Company's 1996 Annual Report, containing audited financial statements
for the fiscal years ended December 31, 1996 and 1995, accompanies this Proxy
Statement. Upon written request, the Company will send you, without charge, a
copy of its Annual Report on Form 10-K (without exhibits) for the fiscal year
ended December 31, 1996, which the Company has filed with the Securities and
Exchange Commission. The written request should be directed to the Investor
Relations Department, at the address of the Company set forth on the first page
of this Proxy Statement.
PROPOSALS OF STOCKHOLDERS
For stockholder proposals to be considered for inclusion in the proxy
materials for the Company's 1998 Annual Meeting of Stockholders, they must be
received by the Secretary of the Company no later than December 10, 1997.
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OTHER MATTERS
At the time of preparation of this Proxy Statement, the Board of Directors
knows of no other matters which will be acted upon at the Annual Meeting. If any
other matters are presented for action at the Annual Meeting or at any
adjournment thereof, it is intended that the Proxies will be voted with respect
thereto in accordance with the best judgment and in the discretion of the proxy
holders.
By Order of the Board of Directors
/s/ James M. Emanuel
JAMES M. EMANUEL
Chief Financial Officer, and Secretary
Clearwater, Florida
April 7, 1997
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, STOCKHOLDERS
ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN THE
ENCLOSED ENVELOPE.
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APPENDIX
LINCARE HOLDINGS INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints John P. Byrnes and James M. Emanuel and either of
them, as proxies, to vote all shares of Common Stock of Lincare Holdings Inc.
(the "Company") held of record by the undersigned as of March 24, 1997, the
record date with respect to this solicitation, at the Annual Meeting of
Stockholders of the Company to be held at Hyatt Regency Westshore, 6200
Courtney Campbell Causeway, Tampa, Florida on Monday, May 12, 1997, at 9:00
A.M. and all adjournments thereof, upon the following matters:
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
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<S> <C> <C> <C>
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
WITHHOLD FOR
FOR AUTHORITY except for
all to vote for all the following
nominees nominees nominee(s)
1. ELECTION OF DIRECTORS:
NOMINEES: J.T. Kelly, J.P. Byrnes, H.R. Deutsch, [ ] [ ] [ ]
A.M. Paul, C.B. Black, F.T. Cary, T.O. Pyle
FOR AGAINST ABSTAIN
2. Ratification of the selection of KPMG Peat Marwick as the
Company's independent accountants for the fiscal year end- [ ] [ ] [ ]
ing December 31, 1997.
FOR AGAINST ABSTAIN
3. Approval of the Company's amendment to the 1996 Stock Plan. [ ] [ ] [ ]
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4. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED STOCKHOLDER IF NO DIRECTION IS GIVEN. THIS PROXY WILL
BE VOTED FOR PROPOSALS (1) AND (2) ABOVE IF ANY NOMINEE DECLINES OR IS
UNABLE TO SERVE AS A DIRECTOR, THEN PERSONS NAMED AS PROXIES SHALL HAVE
FULL DISCRETION TO VOTE FOR ANY OTHER PERSON DESIGNATED BY THE BOARD OF
DIRECTORS.
DATED: ,1997
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Signature or signatures of stockholder
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Signature or signatures of stockholder
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(Your signature should conform to your name as printed herein. Co-owners should all sign.)
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