<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 33764
April 5, 2000
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders to
be held at the Four Points Hotel by Sheraton, 5301 N. State Line Avenue,
Texarkana, Texas, on Monday, May 8, 2000, 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 LLP as the Company's independent
accountants for the fiscal year ending December 31, 2000, and to approve the
Company's 2000 Stock Plan. During the meeting, we also will review the Company's
1999 results and report on significant aspects of our business during the first
part of fiscal 2000.
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 33764
-------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 8, 2000
-------------------------
The Annual Meeting of Stockholders of Lincare Holdings Inc., a Delaware
corporation (the "Company"), will be held on May 8, 2000, at 9:00 A.M. at the
Four Points Hotel by Sheraton, 5301 N. State Line Avenue, Texarkana, Texas.
The Annual Meeting will be held: (i) to elect a Board of Directors
consisting of six persons for a one year term; (ii) to ratify the selection of
KPMG LLP as the Company's independent accountants for the fiscal year ending
December 31, 2000, (iii) to approve the Company's 2000 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 20, 2000, are
entitled to notice of the Annual Meeting and to vote the shares held on that
date at the Annual Meeting.
By Order of the Board of Directors
/s/ PAUL G. GABOS
PAUL G. GABOS
Secretary
Clearwater, Florida
April 5, 2000
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 33764
-------------------------
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 Four Points Hotel by Sheraton,
5301 N. State Line Avenue, Texarkana, Texas, on May 8, 2000, 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 6, 2000.
The record date for the determination of Stockholders entitled to notice of
and to vote at the Annual Meeting has been fixed by the Board of Directors as
the close of business on March 20, 2000. As of that date there were 53,335,332
shares of Common Stock ("Common Stock") of the Company outstanding and entitled
to vote. 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 Annual
Meeting.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
On March 20, 2000, the record date with respect to this solicitation for
determining Stockholders entitled to notice of, and to vote at, the Annual
Meeting, 53,335,332 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
<PAGE> 5
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.
The following table sets forth information available as of February 15,
2000 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>
Putnam Investments, Inc.(1)................................. 5,952,020 11.1%
One Post Office Square
Boston, Massachusetts 02109
FMR Corp.(1)................................................ 5,449,733 10.1
82 Devonshire Street
Boston, Massachusetts 02109
The Kaufmann Fund, Inc.(1).................................. 4,471,000 8.3
140 East 45th Street, 43rd Floor
New York, New York 10017
Morgan Stanley Dean Witter & Co.(1)......................... 4,213,222 7.8
1585 Broadway
New York, New York 10036
Wanger Asset Management, Ltd.(1)............................ 3,480,900 6.5
227 West Monroe Street, Suite 3000
Chicago, Illinois 60606
John P. Byrnes(2)........................................... 550,000 (*)
Paul G. Gabos(3)............................................ 200,100 (*)
Chester B. Black(4)......................................... 34,000 (*)
Frank D. Byrne, M.D......................................... 0 (*)
Frank T. Cary(5)............................................ 72,000 (*)
William F. Miller, III(6)................................... 24,000 (*)
Thomas O. Pyle(7)........................................... 27,158 (*)
All Executive Officers and Directors as a Group (seven
persons).................................................. 907,258 1.7%
</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 550,000 shares of Common Stock, which options
are currently exercisable.
2
<PAGE> 6
(3) Includes options to purchase 185,000 shares of Common Stock, which options
are currently exercisable.
(4) Includes options to purchase 34,000 shares of Common Stock, which options
are currently exercisable.
(5) Includes options to purchase 44,000 shares of Common Stock, which options
are currently exercisable.
(6) Includes options to purchase 24,000 shares of Common Stock, which options
are currently exercisable.
(7) Includes options to purchase 24,000 shares of Common Stock, which options
are currently exercisable.
(*) The percentage of shares beneficially owned does not exceed 1.0% of the
Common Stock outstanding.
All Executive Officers and Directors of the Company timely filed all
reports required under Section 16(a) of the Securities Exchange Act of 1934
during the fiscal year ended December 31, 1999.
ELECTION OF BOARD OF DIRECTORS
A Board of six (6) Directors will be elected by a plurality of the votes
cast by Stockholders represented and entitled to vote at the Annual Meeting. 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. 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. James T. Kelly, Chairman of the Board since 1994, has
declined to stand for re-election in 2000. The Board of Directors intends to
search for an additional qualified Director to join the Board.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF THE
ELECTION OF MESSRS. BYRNES, BLACK, BYRNE, CARY, PYLE AND MILLER.
3
<PAGE> 7
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>
John P. Byrnes............................ 41 Chairman of the Board, Chief Executive Officer
and President
Chester B. Black.......................... 54 Director
Frank D. Byrne, M.D....................... 47 Director
Frank T. Cary............................. 79 Director
William F. Miller, III.................... 50 Director
Thomas O. Pyle............................ 60 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.
DIRECTORS AND EXECUTIVE OFFICERS
JOHN P. BYRNES has served as the Chief Executive Officer of the Company
since January 1997 and as a Director of the Company since May 1997. Mr. Byrnes
was appointed Chairman of the Board in March 2000. 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.
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, a provider of diagnostic
imaging services.
FRANK D. BYRNE, M.D. has been a Director of Lincare Holdings since December
1999. Dr. Byrne is the President of Parkview Hospital, located in Ft. Wayne,
Indiana. Dr. Byrne practiced pulmonary and critical care medicine from 1982
until 1994. After briefly serving as medical director of Parkview Hospital, he
was appointed President in September 1995. He is a member of the Parkview
Hospital Board that created the Parkview Health System (PHS) in 1995. PHS is a
network of hospitals, physician clinics, medical research centers, home health
agencies and other health care organizations. Dr. Byrne is also a Clinical
Professor of Medicine at the Indiana University School of Medicine. He has been
active in the Indiana Hospital and Health Association, the Indiana chapter of
the American College of Physicians and the VHA National Physician Leadership
Council. He is a Fellow of the American College of Physician Executives and a
Diplomat from American College of Healthcare Executives.
4
<PAGE> 8
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. Mr. Cary is also
a Director of Celgene Corporation, Cygnus Therapeutic Systems, ICOS Corporation,
Lexmark International, Inc., TELTREND, Inc., and VION, Inc.
WILLIAM F. MILLER, III has been a Director of Lincare Holdings since
December 1997. Mr. Miller served as President and Chief Operating Officer of
EmCare from 1992 to 1999 and from 1983 to 1992 as Chief Executive Officer of
Emcare. Prior to joining Emcare, Mr. Miller held financial and management
positions in the health care industry, including positions as chief executive
officer and chief financial officer of various hospitals and
administrator/director of operations of a multi-specialty physician group
practice.
THOMAS O. PYLE has been a Director of Lincare Holdings since 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 currently serves as a Director of Millipore
Corporation and several non-public health care companies.
PAUL G. GABOS has served as the Chief Financial Officer of the Company
since June 1997. Prior to his appointment to Chief Financial Officer, Mr. Gabos
served as Vice President, Administration. Before joining Lincare in 1993, Mr.
Gabos worked for Coopers & Lybrand and for Dean Witter Reynolds Inc. Mr. Gabos
holds a Bachelor of Science in Economics from The Wharton School of the
University of Pennsylvania.
SIGNIFICANT EMPLOYEES
SHAWN S. SCHABEL has served as Senior Vice President of Lincare since April
1998. Mr. Schabel has served the Company in a number of management capacities
since joining Lincare in 1989. Mr. Schabel holds a Bachelor's Degree in
Respiratory Therapy from Wichita State University.
DIRECTOR'S FEES
Directors Chester B. Black, Frank D. Byrne, M.D., Frank T. Cary, William F.
Miller, III and Thomas O. Pyle each receive $20,000 per annum for their
services. All of the Company's Directors are reimbursed for out-of-pocket
expenses and are 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 1999, all
directors were in attendance at all meetings of the Board of Directors and
committees of the Board of Directors on which they served. The Board of
Directors held five meetings during 1999.
AUDIT COMMITTEE. The Audit Committee recommends to the Board of Directors
the annual appointment of independent accountants and reviews the audit fees,
scope and timing of the audit, the adequacy of internal controls and any other
services rendered by the independent accountants.
5
<PAGE> 9
The Audit Committee, comprised of Messrs. Cary and Pyle, held two meetings in
fiscal 1999. Since his election to the Board, Frank D. Byrne, M.D. has been
appointed to serve on the Audit Committee in addition to Messrs. Cary and Pyle.
COMPENSATION COMMITTEE. The Compensation Committee reviews and recommends
the cash compensation and bonuses of the Executive Officers of the Company. The
Compensation Committee is comprised of Messrs. Black and Miller and held one
meeting in fiscal 1999.
STOCK PLAN COMMITTEE. The Stock Plan Committee administers the stock
option plans of the Company and held one meeting during fiscal 1999. The Stock
Plan Committee is comprised of Messrs. Black and Miller.
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
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) GRANTED #(2)
--------------------------- ---- --------- ---------- --------------- ------------
<S> <C> <C> <C> <C> <C>
John P. Byrnes..................... 1999 $703,462 $ 994,000 $ 8,923 200,000
Chief Executive Officer and 1998 488,462 1,000,000 10,000 200,000
President 1997 350,000 400,000 9,500 250,000
Paul G. Gabos...................... 1999 $351,731 $ 497,000 $ 8,500 120,000
Chief Financial Officer and 1998 244,231 445,000 10,000 100,000
Secretary 1997 161,540 200,000 8,077 130,000
</TABLE>
- -------------------------
(1) The Company makes a contribution on behalf of each participating employee
under the Company's 401K Plan.
(2) Options granted in 1997 to Messrs. Byrnes and Gabos have been adjusted to
reflect a two for one stock split effective May 29, 1998.
6
<PAGE> 10
The following table sets forth the options granted to the Company's
Executive Officers in fiscal 1999.
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 TOTAL
OF OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES EXERCISE
OPTIONS IN PRICE EXPIRATION
NAME GRANTED FISCAL YEAR ($/SHARE)(3) DATE 5% $ 10% $
---- ---------- ------------ ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
John P. Byrnes(1).... 200,000 37.2% $24.50 12/31/2008 $2,889,228 $7,217,878
Paul G. Gabos(2)..... 120,000 22.3% $24.50 12/31/2008 $1,733,537 $4,330,727
</TABLE>
- -------------------------
(1) The options have been granted under the Company's 1998 Stock Plan. Options
to purchase 100,000 shares of Common Stock become fully exercisable on each
of December 31, 2002 and December 31, 2003.
(2) The options have been granted under the Company's 1998 Stock Plan. Options
to purchase 60,000 shares of Common Stock become fully exercisable on each
of December 31, 2002 and December 31, 2003.
(3) 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.
7
<PAGE> 11
The following table sets forth aggregate options exercised by the Company's
Executive Officers in fiscal 1999 and number and value of unexercised options at
fiscal 1999 year end.
AGGREGATE OPTIONS EXERCISED IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS AT IN-THE-MONEY
SHARES FY-END OPTIONS AT
ACQUIRED VALUE EXERCISABLE/ FY-END(1)
NAME ON EXERCISE REALIZED UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ----------- ---------- --------------- -------------------------
<S> <C> <C> <C> <C>
John P. Byrnes............. 0 $ 0 550,000/800,000 $12,024,375/$8,453,100
Paul G. Gabos.............. 0 $ 0 185,000/425,000 $3,744,063/$4,506,238
</TABLE>
- -------------------------
(1) Value is calculated using the Lincare Holdings closing stock price on
December 31, 1999 of $34.6875 per share less the exercise price for such
shares.
EMPLOYMENT AGREEMENTS
The Company has employment agreements with Messrs. Byrnes and Gabos. Each
agreement provides for a base salary, 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 person shall be eligible to receive bonus compensation based upon
individual performance in their respective areas of responsibility. During 1999,
Mr. Byrnes served as Chief Executive Officer and President at an annual salary
of $700,000 and Mr. Gabos served as Chief Financial Officer at an annual salary
of $350,000.
COMPENSATION COMMITTEE AND STOCK PLAN COMMITTEE REPORTS
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 stock option plans.
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 Compensation Committee
administers the cash portion of the executive compensation package, and the
Stock Plan Committee administers the equity-based incentive portion.
8
<PAGE> 12
CASH COMPENSATION
The Compensation Committee views the cash compensation component to be in
recognition of the contribution by the Executive Officers to the Company's past
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 and other considerations.
The cash compensation of Messrs. Byrnes and Gabos was determined for fiscal
year 1999 pursuant to each Executive Officer's employment agreement. See
"EXECUTIVE COMPENSATION -- Employment Agreements." The original base salaries
and objective bonus formula were negotiated by the Executive Officers, on the
one hand, and an independent committee of the Board of Directors on the other,
at the time the employment agreements were executed. Messrs. Byrnes and Gabos
each received a merit increase in base salary during 1999 as determined by the
Compensation Committee of the Board, such committee being comprised of Messrs.
Black and Miller, two independent directors of the Company.
The cash bonuses paid to Messrs. Byrnes and Gabos for services performed in
1999 were determined based on an earnings per share growth formula set forth in
their respective employment agreements and other performance considerations. For
purposes of determining the bonus component of each Executive Officer's cash
compensation, growth in earnings per share was adjusted to remove the effect of
provisions contained in the Balanced Budget Act of 1997 ("BBA '97") which
reduced Medicare payments for oxygen and oxygen equipment by 5% in 1999. As a
result of significant growth in the Company's pro forma earnings per share from
1998 to 1999, the cash bonuses paid to Executive Officers increased
commensurately in 1999. 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, the 1996 Stock Plan, and the 1998 Stock Plan,
each of which provides for the grant of stock options. The 1991 Stock Plan, the
1994 Stock Plan, the 1996 Stock Plan, and the 1998 Stock Plan also provide the
flexibility to grant awards of restricted 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.
9
<PAGE> 13
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 utilized 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 1999, the Committee granted to Mr. Byrnes options to purchase an
aggregate of 200,000 shares of 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 and profitability of the Company. The Company has achieved
compounded annual growth in revenues and earnings per share of 19% and 15%,
respectively, over the past three years. This growth in revenues and earnings
per share was significant in light of the impact on the Company of the Medicare
price reductions contained in BBA '97, which reduced revenues and pre-tax income
by approximately $73.2 million in 1998 and an additional $19.3 million in 1999.
The Stock Plan Committee also considered the potential long-term contribution of
Mr. Byrnes to the maximization of Stockholder value.
GRANTS TO CHIEF FINANCIAL OFFICER
During fiscal 1999, Mr. Gabos was granted the option to purchase 120,000
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. Gabos, considered a number of factors, including
performance within his respective areas of responsibility and those factors
specifically described above with respect to the grant to Mr. Byrnes. The
Committee also considered the potential long-term contribution of Mr. Gabos to
the maximization of Stockholder value.
Chester B. Black Chester B. Black
William F. Miller, III William F. Miller, III
Stock Plan Committee Compensation Committee
10
<PAGE> 14
COMPARISON OF CUMULATIVE TOTAL RETURN OF
LINCARE HOLDINGS INC.,
NASDAQ HEALTH SERVICES STOCKS,
AND THE NASDAQ STOCK MARKET (U.S.)
<TABLE>
<CAPTION>
NASDAQ HEALTH SERVICES NASDAQ STOCK MARKET
LINCARE HOLDINGS, INC. STOCKS (U.S.)
---------------------- ---------------------- -------------------
<S> <C> <C> <C>
1994 100.0 100.0 100.0
1995 86.0 127.0 144.0
1996 141.0 127.0 174.0
1997 197.0 129.0 213.0
1998 280.0 109.0 300.0
1999 239.0 90.0 542.0
</TABLE>
* Assumes $100 invested on December 31, 1994 in Lincare Holdings Inc., NASDAQ
Health Services Stocks, and NASDAQ Stock Market (U.S.).
APPROVAL OF THE 2000 STOCK PLAN
On March 7, 2000, the Board of Directors approved the Lincare Holdings Inc.
2000 Stock Plan (the "2000 Plan"). The 2000 Plan provides an opportunity for
employees, officers, directors and other eligible participants ("Employees") of
the Company and its subsidiaries to purchase Common Stock. The 2000 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. If approved by the Stockholders, the
Company will be authorized to issue an aggregate of 1,000,000 shares of Common
Stock under the 2000 Plan. In no event, however, will the
11
<PAGE> 15
Company issue more than 200,000 shares of Common Stock under the 2000 Plan to
any one person during any fiscal year.
Approximately 4,700 persons are eligible to participate in the 2000 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 2000 Plan will be administered by the Stock Plan 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 2000 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 2000 Plan will be effective immediately upon approval by the
Stockholders. As of the date of this Proxy Statement, no Awards have been made,
and no benefits have been received by or allocated to any Director, Executive
Officer or other Employee under the 2000 Plan. Because the level of Awards
granted to any Employee, including Directors and Executive Officers, is
determined in the discretion of the Stock Plan Committee, the amount to be
received by or allocated to any such person under the 2000 Plan is not
determinable at this time.
The issuance of a nonqualified stock option under the 2000 Plan will not
result in any taxable income to the recipient Employee or a tax deduction to the
Company at the time of the grant. Generally, an Employee to whom a nonqualified
stock option has been granted will recognize ordinary income in an amount equal
to the excess of the fair market value of shares on the date of exercise over
the option price at the time the Employee exercises the option and receives
shares of Common Stock. 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 a 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
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.
12
<PAGE> 16
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.
The Company's Board of Directors has proposed, and recommends to the
Stockholders, the adoption and approval of the 2000 Plan. The 2000 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 APPROVING THE 2000
PLAN, AND UNLESS OTHERWISE INSTRUCTED, THE PERSONS NAMED IN THE ACCOMPANYING
PROXY WILL VOTE IN FAVOR OF SUCH APPROVAL.
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected KPMG LLP to serve as the Company's
independent accountants for the fiscal year ending December 31, 2000, subject to
ratification by a majority of the shares represented either in person or by
proxy at the Annual Meeting. A representative of KPMG 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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE SELECTION OF KPMG
LLP.
ANNUAL REPORT
The Company's 1999 Annual Report, containing audited financial statements
for the fiscal years ended December 31, 1999, 1998 and 1997 accompanies this
Proxy Statement. Upon written request, the Company will send to Stockholders of
record, without charge, a copy of its Annual Report on Form 10-K (without
exhibits) for the fiscal year ended December 31, 1999, 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.
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<PAGE> 17
PROPOSALS OF STOCKHOLDERS
For stockholder proposals to be considered for inclusion in the proxy
materials for the Company's 2001 Annual Meeting of Stockholders, they must be
received by the Secretary of the Company no later than December 4, 2000.
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/ PAUL G. GABOS
PAUL G. GABOS
Chief Financial Officer and Secretary
Clearwater, Florida
April 5, 2000
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 AS SOON AS POSSIBLE.
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<PAGE> 18
APPENDIX A
LINCARE HOLDINGS INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints John P. Byrnes and Paul G. Gabos 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 20, 2000, the record
date with respect to this solicitation, at the Annual Meeting of Stockholders of
the Company to be held at the Four Points Hotel by Sheraton, 5301 N. State Line
Avenue, Texarkana, Texas on Monday, May 8, 2000, 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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FOLD AND DETACH HERE
<PAGE> 19
LINCARE HOLDINGS INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
<TABLE>
<S> <C> <C> <C>
WITHHOLD FOR,
FOR AUTHORITY except for
all to vote for all the following
nominees nominees nominee(s)
------------
1. ELECTION OF DIRECTORS:
NOMINEES: J.P. Byrnes, C.B. Black, F.D. Byrne, M.D. [ ] [ ] [ ]
F.T. Cary, T.O. Pyle, W.F. Miller, III.
For Against Abstain
2. Ratification of the selection of KPMG LLP as the
Company's independent accountants for the fiscal year end- [ ] [ ] [ ]
ing December 31, 2000.
For Against Abstain
3. Approval of the Company's 2000 Stock Plan. [ ] [ ] [ ]
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), (2) and (3) 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: , 2000
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Signature or signatures of stockholder
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Signature or signatures of stockholder
(Your signature should conform to your name as printed hereon. Co-owners should all sign.)
- --------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
</TABLE>
