<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
ACCESS HEALTH, 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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[ACCESS HEALTH LOGO]
ACCESS HEALTH, INC.
310 INTERLOCKEN PARKWAY, SUITE A
BROOMFIELD, COLORADO 80021
January 20, 1998
Dear Stockholder:
We cordially invite you to attend your Company's 1998 Annual Meeting of
Stockholders on Wednesday, February 25, 1998. The meeting will be held at
Corporate Headquarters in Broomfield, Colorado and will begin at 11:00 a.m.
The formal notice of meeting, proxy statement and form of proxy accompany
this letter and describe in detail the matters to be acted upon at the meeting.
As a stockholder, your vote is important. We urge you to execute and return
your proxy promptly whether or not you plan to attend so that we may have as
many shares as possible represented at the meeting. Returning your completed
proxy will not prevent you from voting in person at the meeting if you wish to
do so.
On behalf of your Board of Directors, thank you for your continued support
and interest in Access Health, Inc.
Sincerely,
[JOSEPH TALLMAN SIGNATURE]
Joseph P. Tallman
President and Chief Executive Officer
<PAGE>
[ACCESS HEALTH LOGO]
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------------
TO BE HELD FEBRUARY 25, 1998
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Access
Health, Inc., a Delaware corporation (the "Company"), will be held on Wednesday,
February 25, 1998, at 11:00 a.m., local time, at the Company's business address
at 310 Interlocken Parkway, Suite A, Broomfield, Colorado 80021, for the
following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected.
2. To approve the Company's 1998 Stock Plan and 900,000 shares of Common
Stock reserved for issuance thereunder.
3. To ratify the appointment of Arthur Andersen LLP as independent auditors
for the Company for the fiscal year ending September 30, 1998.
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on December 31, 1997,
are entitled to notice of and to vote at the meeting and any adjournment
thereof.
All stockholders are invited to attend the meeting in person. However, to
assure your representation at the meeting, you are urged to mark, sign, date and
return the enclosed proxy card as promptly as possible in the postage prepaid
envelope enclosed for that purpose. Any stockholder attending the meeting may
vote in person even if he or she has returned a proxy.
Sincerely,
[JULIE BROOKS SIGNATURE]
Julie A. Brooks
SENIOR VICE PRESIDENT AND SECRETARY
Broomfield, Colorado
January 20, 1998
IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO
COMPLETE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED.
<PAGE>
ACCESS HEALTH, INC.
----------------
PROXY STATEMENT FOR 1998 ANNUAL MEETING OF STOCKHOLDERS
INFORMATION CONCERNING SOLICITATION AND VOTING
------------------------
GENERAL
The enclosed Proxy is solicited on behalf of Access Health, Inc., a Delaware
corporation ("Access Health" or the "Company"), for use at the Annual Meeting of
Stockholders to be held on Wednesday, February 25, 1998, at 11:00 a.m., local
time, or at any adjournment thereof, for the purposes set forth herein and in
the accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting
will be held at the Company's business address at 310 Interlocken Parkway, Suite
A, Broomfield, Colorado 80021. The Company's telephone number is (303) 466-9500.
These proxy solicitation materials were mailed on or about January 20, 1998,
together with the Company's 1997 Annual Report to Stockholders, to all
stockholders entitled to vote at the meeting.
RECORD DATE AND PRINCIPAL SHARE OWNERSHIP
Stockholders of record at the close of business on December 31, 1997 (the
"Record Date"), are entitled to notice of and to vote at the meeting. On
December 31, 1997, 18,564,697 shares of the Company's Common Stock were issued
and outstanding. The following table sets forth the beneficial ownership of the
Company's Common Stock as of December 31, 1997, as to (i) each person who is
known by the Company to own beneficially more than 5% of the outstanding shares
of Common Stock, (ii) each director of and each nominee for director of the
Company, (iii) each of the executive officers named in the Summary Compensation
Table below and (iv) all directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES APPROXIMATE
BENEFICIALLY PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED OWNED(1)
- --------------------------------------------------------------------------------------- ----------- ---------------
<S> <C> <C>
The Kaufmann Fund, Inc................................................................. 1,466,000 7.9%
140 E. 45th St. 43rd Floor
New York, NY 10017
Denver Investment Advisors LLC......................................................... 1,376,690 7.4
1225 17th Street 26th Floor
Denver, CO 80202-5526
Pilgrim Baxter & Associates Ltd. ...................................................... 1,372,800 7.4
1255 Drummers Lane-300
Wayne, PA 19087-1501
Provident Investment Counsel........................................................... 906,662 4.9
300 North Lake Avenue, Suite 1001
Pasadena, CA 91101
Joseph P. Tallman (2).................................................................. 673,054 3.6
Thomas E. Gardner (3).................................................................. 101,635 *
Richard C. Miller (4).................................................................. 182,262 1.0
Barry W. Wolcott....................................................................... 27,307 *
Elizabeth Snowden (5).................................................................. 673,054 3.6
John V. Crisan (6)..................................................................... 52,457 *
John R. Durant, M.D. (7)............................................................... 11,687 *
Kinney L. Johnson (8).................................................................. 719,315 3.9
Alice H. Lusk (9)...................................................................... 4,375 *
Kenneth B. Plumlee (10)................................................................ 174,866 *
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHARES APPROXIMATE
BENEFICIALLY PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED OWNED(1)
- --------------------------------------------------------------------------------------- ----------- ---------------
<S> <C> <C>
Brent T. Rider (11).................................................................... 10,000 *
Edward K. Rygiel (12).................................................................. 10,000 *
Frank G. Washington (13)............................................................... 4,125 *
All directors and executive officers as a group (13 persons) (14)...................... 2,644,137 14.2%
</TABLE>
- ------------------------
* Less than one percent
(1) Applicable percentage of ownership is based on 18,564,697 shares of Common
Stock outstanding as of December 31, 1997, together with applicable options
and warrants for such stockholder. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission, and
includes voting and investment power with respect to shares. Shares of
Common Stock subject to options and warrants currently exercisable or
exercisable within 60 days of December 31, 1997, are deemed outstanding for
computing the percentage ownership of the person holding such options and
warrants, but are not deemed outstanding for computing the percentage of any
other person.
(2) Includes 206,163 shares held by Mr. Tallman's spouse Elizabeth Snowden.
(3) Includes 200 shares held by Mr. Gardner as custodian for his children and
96,000 shares issuable upon exercise of options to purchase shares of Common
Stock which are exercisable within 60 days of December 31, 1997.
(4) Includes 11,350 shares held by Mr. Miller as custodian for his son and
daughter and 84,099 shares issuable upon exercise of options to purchase
shares of Common Stock which are exercisable within 60 days of December 31,
1997.
(5) Includes 466,961 shares held by Ms. Snowden's spouse Joseph P. Tallman.
(6) Includes 45,900 shares issuable upon exercise of options to purchase shares
of Common Stock which are exercisable within 60 days of December 31, 1997.
(7) Includes 10,937 shares issuable upon exercise of options to purchase shares
of Common Stock which are exercisable within 60 days of December 31, 1997.
(8) Includes 714,690 shares held by American Healthcare Fund II, L.P. ("American
Healthcare"), a Delaware limited partnership. Mr. Johnson is a general
partner of Capital Health Venture Partners, the general partner of American
Healthcare. Mr. Johnson disclaims beneficial ownership of the shares held by
American Healthcare except to the extent of pecuniary interest therein
arising from his general partnership. Also includes 3,125 shares issuable
upon exercise of options to purchase shares of Common Stock which are
exercisable within 60 days of December 31, 1997.
(9) Includes 4,375 shares issuable upon exercise of options to purchase shares
of Common Stock which are exercisable within 60 days of December 31, 1997.
(10) Includes 3,000 shares held by Mr. Plumlee as custodian for his daughters
and 171,866 shares issuable upon exercise of options to purchase shares of
Common Stock which are exercisable within 60 days of December 31, 1997.
(11) Includes 10,000 shares issuable upon exercise of options to purchase shares
of Common Stock which are exercisable within 60 days of December 31, 1997.
(12) Includes 10,000 shares issuable upon exercise of options to purchase shares
of Common Stock which are exercisable within 60 days of December 31, 1997.
(13) Includes 3,125 shares issuable upon exercise of options to purchase shares
of Common Stock which are exercisable within 60 days of December 31, 1997.
(14) Includes 439,427 shares issuable upon exercise of options to purchase
shares of Common Stock which are exercisable within 60 days of December 31,
1997.
2
<PAGE>
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company a written notice of revocation or a duly executed proxy bearing a later
date or by attending the meeting and voting in person.
VOTING AND SOLICITATION
Every stockholder voting for the election of directors may cumulate such
stockholder's votes and give one candidate a number of votes equal to the number
of directors to be elected multiplied by the number of shares held by such
stockholder or distribute the stockholder's votes on the same principle among as
many candidates as the stockholder may select, provided that votes cannot be
cast for more than five candidates. However, no stockholder shall be entitled to
cumulate votes unless the candidate's name has been placed in nomination prior
to the voting and the stockholder, or any other stockholder, has given notice at
the meeting prior to the voting of the intention to cumulate the stockholder's
votes. On all other matters, each share has one vote.
The cost of soliciting proxies will be borne by the Company. The Company may
retain the services of a proxy solicitation firm to aid in solicitation of
proxies from brokers, bank nominees and other institutional owners, on terms
customary for such services. In addition, the Company may reimburse brokerage
firms and other persons representing beneficial owners of shares for their
expenses in forwarding solicitation material to such beneficial owners. Proxies
may also be solicited by certain of the Company's directors, officers and
regular employees, without additional compensation, personally or by telephone
or telegram.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the Annual Meeting is
a majority of the votes eligible to be cast by holders of shares of Common Stock
issued and outstanding on the Record Date. Shares that are voted "FOR,"
"AGAINST" or "WITHHELD FROM" a matter are treated as being present at the
meeting for purposes of establishing a quorum and are also treated as shares
entitled to vote at the Annual Meeting (the "Votes Cast") with respect to such
matter.
While there is no definitive statutory or case law authority in Delaware as
to the proper treatment of abstentions, the Company believes that abstentions
should be counted for purposes of determining both (i) the presence or absence
of a quorum for the transaction of business and (ii) the total number of Votes
Cast with respect to a proposal (other than the election of directors). In the
absence of a controlling precedent to the contrary, the Company intends to treat
abstentions in this manner. Accordingly, abstentions will have the same effect
as a vote against the proposal.
In a 1988 Delaware case, BERLIN V. EMERALD PARTNERS, the Delaware Supreme
Court held that, while broker non-votes should be counted for purposes of
determining the presence or absence of a quorum for the transaction of business,
broker non-votes should not be counted for purposes of determining the number of
Votes Cast with respect to the particular proposal on which the broker has
expressly not voted. Accordingly, the Company intends to treat broker non-votes
in this manner. Thus, a broker non-vote will not have any effect on the outcome
of the voting on a proposal.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company which are intended to be presented
by such stockholders at next year's Annual Meeting must be received by the
Company no later than October 23, 1998 so that they may be included in the proxy
statement and form of proxy relating to that meeting.
3
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES
A Board of five directors is to be elected at the meeting. Unless otherwise
instructed, the proxy holders will vote the proxies received by them for the
Company's five nominees named below, all of whom are presently directors of the
Company. In the event that any nominee of the Company is unable or declines to
serve as a director at the time of the Annual Meeting, the proxies will be voted
for any nominee who shall be designated by the present Board of Directors to
fill the vacancy. In the event that additional persons are nominated for
election as directors, the proxy holders intend to vote all proxies received by
them in such a manner, in accordance with cumulative voting, as will assure the
election of as many of the nominees listed below as possible, and, in such
event, the specific nominees to be voted for will be determined by the proxy
holders. The Company is not aware of any nominee who will be unable or will
decline to serve as a director. The term of office of each person elected as a
director will continue until the next Annual Meeting of Stockholders or until a
successor has been elected and qualified. Mr. Tallman is married to Elizabeth
Snowden, Senior Vice President, Sales and Marketing. There are no other family
relationships among any directors or executive officers of the Company.
The names of the nominees and certain information about them as of September
30, 1997 are set forth below.
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
- ------------------------------------------------ --- ------------------------------------------------ -----------
<S> <C> <C> <C>
Frank G. Washington............................. 49 President and Chief Executive Officer of System 1996
Integrators, Inc.
Joseph P. Tallman............................... 46 President and Chief Executive Officer of the 1996
Company
Richard C. Miller............................... 49 Executive Vice President of the Company 1988
John R. Durant, M.D. ........................... 67 Executive Vice President, American Society of 1995
Clinical Oncology
Kinney L. Johnson............................... 54 General Partner, Sequel Venture Partners 1996
</TABLE>
Mr. Washington became a director of the Company in 1996. Since July 1996,
Mr. Washington has been President and Chief Executive Officer of System
Integrators, Inc., a provider of publishing solutions. In addition, Mr.
Washington has been a director and President of World Television of Washington
LLC, a television broadcasting concern, since May 1995. Between June 1988 and
April 1995, Mr. Washington served as general partner of Robin Intermedia Cable
Systems Partners, a cable television systems operator.
Mr. Tallman's background information appears under the Management section.
Mr. Miller's background information appears under the Management section.
Dr. Durant became a director of the Company in 1995. Since April 1995, Dr.
Durant has been Executive Vice President of the American Society of Clinical
Oncology. Prior to that, he was Vice President for Health Affairs, Director of
the Medical Center and Professor of Medicine at the University of Alabama,
Birmingham.
Mr. Johnson became a director in November 1996 in connection with the
Company's merger with Informed Access Systems, Inc. ("Informed Access"). Between
1992 and November 1996, Mr. Johnson served as a director of Informed Access. In
addition, Mr. Johnson has been a general partner of Capital Health Venture
Partners, a private venture capital firm, since June 1986. Mr. Johnson also has
been a
4
<PAGE>
general partner of Sequel Venture Partners since 1996. Mr. Johnson also serves
on the Board of Directors of The Spectranetics Corporation and Fischer Imaging
Corporation.
VOTE REQUIRED
The five nominees receiving the highest number of affirmative votes of the
shares present or represented and entitled to be voted for them shall be elected
as directors.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of nine meetings and took
one action by written consent during the fiscal year ended September 30, 1997.
No director participated in fewer than 75% of the aggregate number of meetings
of the Board of Directors and meetings of the committees of the Board on which
he or she served.
The Board of Directors has standing Audit and Compensation Committees. It
does not have a nominating committee or a committee performing the functions of
a nominating committee.
The Audit Committee of the Board of Directors, previously consisting of
directors Brent T. Rider and Edward K. Rygiel, held one meeting in fiscal 1997
at which all members were present. The committee at the end of fiscal year 1997
consisted of Kinney L. Johnson and Edward K. Rygiel. The Audit Committee
recommends engagement of the Company's independent auditors, and is primarily
responsible for reviewing and approving the scope of the audit and other
services performed by the Company's independent auditors and for reviewing and
evaluating the Company's accounting principles and its system of internal
accounting controls.
The Compensation Committee of the Board of Directors, which at the end of
fiscal year 1997 consisted of directors Frank G. Washington and Alice H. Lusk,
held a total of four meetings and took action by written consent five times
during fiscal 1997. The Compensation Committee reviews and approves the
Company's executive compensation policy, the compensation of the executive
officers including the President and Chief Executive Officer, and the grant of
stock options to executive officers and other officers.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee, during the 1997 fiscal year, consisted of Frank
G. Washington and Alice H. Lusk, neither of whom is or has been an officer or
employee of the Company. No interlocking relationship exists between the
Company's Board of Directors or Compensation Committee and the board of
directors or compensation committee of any other company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the merger of Informed Access on November 18, 1996 with
Access Health, Mr. Tallman received a bonus of $300,000 as a reward for his
service in initiating and negotiating such merger. See the Summary Compensation
Table under "Executive Compensation" herein.
5
<PAGE>
PROPOSAL TWO
APPROVAL OF 1998 STOCK OPTION PLAN
At the Annual Meeting, the stockholders are being requested to consider and
approve the adoption of the Company's 1998 Stock Option Plan (the "1998 Plan")
and the reservation of 900,000 shares of the Company's Common Stock for issuance
thereunder. The 1998 Plan is described in more detail below. Since each
executive officer and director of the Company is eligible to receive options
under the 1998 Plan, as amended, each such executive officer and director has a
personal interest in the proposed 1998 Plan.
BACKGROUND
In December 1997, the Board of Directors adopted the 1998 Plan and reserved
900,000 shares of Common Stock for issuance thereunder, subject to stockholder
approval. The 1998 Plan is intended to replace the Company's 1989 Incentive
Stock Plan, as amended (the "1989 Plan") upon exhaustion of the number of shares
available for grant under the 1989 Plan. The Company cannot estimate the number
of shares which will be returned to the 1989 Plan as a result of any
terminations or forfeitures under the 1989 Plan; however, as of September 30,
1997, there were 127,647 shares available for issuance under the 1989 Plan.
Subject to stockholder approval, 900,000 shares of Common Stock will be
available for issuance under the 1998 Plan.
Section 162(m) ("Section 162(m)") of the Internal Revenue Code of 1986, as
amended (the "Code"), limits the Company's deduction in any one fiscal year for
federal income tax purposes of $1,000,000 per person with respect to the
Company's Chief Executive Officer and its four other highest paid executive
officers who are employed on the last day of the fiscal year unless the
compensation was not otherwise subject to the deduction limit. Options grants
under the 1998 Plan will not be subject to the deduction limitation if the
stockholders approve the material provisions of the 1998 Plan as described
below. The 1998 Plan allows for the grant of incentive stock options to all
employees of the Company and the grant of nonstatutory stock options and
restricted stock to employees, directors and consultants of the Company.
Incentive stock options must be granted with an exercise price not less than the
fair market value of the Company's Common Stock on the date of grant. The
exercise price for nonstatutory stock options and the purchase price for
restricted stock is determined by the administrator of the 1998 Plan. The 1998
Plan provides that no employee of the Company may be granted, in any fiscal
year, options to purchase more than 1,000,000 shares of Common Stock. However,
notwithstanding this limit, in connection with such individual's initial
employment with the Company, the individual may be granted options to purchase
up to an additional 500,000 shares.
PURPOSE
The Board of Directors believes that it is in the best interests of the
Company and its stockholders to have a stock plan in place for several reasons.
First, the 1989 Plan expires by its terms in 1999, and the Board of Directors
believes that having a stock plan in place is vital to retaining, motivating and
rewarding employees, executives and consultants by providing them with long-term
equity participation in the Company relating directly to the financial
performance and long-term growth of the Company. Second, the Board of Directors
believes that granting stock options to employees is an important contributor to
aligning the incentives of the Company's employees with the interests of the
Company's stockholders. Third, the number of shares reserved for issuance under
the 1998 Plan will provide the Company with an adequate pool of options to
compete effectively with other companies for existing and new employees.
Competition for qualified employees in the healthcare technology market is
extremely intense, and, due to the rapid growth of many successful companies in
this sector, such competition is increasing. The Board of Directors believes
that in order to remain competitive with other healthcare technology companies
with regard to its long-term incentive plans, the Company must continue to
provide employees with the opportunity to obtain equity in the Company. Finally,
an adequate pool of options will enhance the
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<PAGE>
Company's ability to structure attractive offers to potential acquisition
targets. A summary of the principal terms of the 1998 Plan is located below.
GENERAL. The purposes of the 1998 Plan are to attract and retain the best
available personnel for positions of substantial responsibility with the
Company, to provide additional incentive to the employees, directors and
consultants of the Company and to promote the success of the Company's business.
Options and stock purchase rights may be granted under the 1998 Plan. Options
granted under the 1998 Plan may be either "incentive stock options," as defined
in Section 422 of the Code, or nonstatutory stock options.
ADMINISTRATION. The 1998 Plan may generally be administered by the Board of
Directors or the committee appointed by the Board of Directors (as applicable,
the "Administrator").
ELIGIBILITY; LIMITATIONS. Nonstatutory stock options and stock purchase
rights may be granted under the 1998 Plan to employees, directors and
consultants of the Company and any parent or subsidiary of the Company.
Incentive stock options may be granted only to employees. The Administrator, in
its discretion, selects the employees, directors and consultants to whom options
and stock purchase rights may be granted, the time or times at which such
options and stock purchase rights shall be granted, and the number of shares
subject to each such grant.
Section 162(m) of the Code places limits on the deductibility for federal
income tax purposes of compensation paid to certain executive officers of the
Company. In order to preserve the Company's ability to deduct the compensation
income associated with options granted to such persons, the 1998 Plan provides
that no employee, director or consultant may be granted, in any fiscal year of
the Company, options to purchase more than 1,000,000 shares of Common Stock.
Notwithstanding this limit, however, in connection with such individual's
initial employment with the Company, he or she may be granted options to
purchase up to an additional 500,000 shares of Common Stock.
TERMS AND CONDITIONS OF OPTIONS. Each option is evidenced by a stock option
agreement between the Company and the optionee, and is subject to the following
additional terms and conditions:
(a) EXERCISE PRICE. The Administrator determines the exercise price of
options at the time the options are granted. The exercise price of an
incentive stock option may not be less than 100% of the fair market value of
the Common Stock on the date such option is granted; provided, however, the
exercise price of an incentive stock option granted to a greater than 10%
stockholder may not be less than 110% of the fair market value of the Common
Stock on the date such option is granted. The fair market value of the
Common Stock is generally determined with reference to the closing sale
price for the Common Stock (or the closing bid if no sales were reported) on
the last market trading day prior to the date the option is granted.
(b) EXERCISE OF OPTION; FORM OF CONSIDERATION. The Administrator
determines when options become exercisable and any conditions which must be
satisfied before the option may be exercised. Stock options granted under
the 1998 Plan generally vest and become exercisable over five years. The
means of payment for shares issued upon exercise of an option is specified
in each option agreement. The 1998 Plan permits payments to be made by cash,
check, other shares of Common Stock of the Company (with some restrictions),
cashless exercises, a reduction in the amount of any Company liability to
the optionee, any other form of consideration permitted by applicable law,
or any combination thereof.
(c) TERM OF OPTION. The term of an incentive stock option may be no
more than ten (10) years from the date of grant; provided that in the case
of an incentive stock option granted to a greater than 10% stockholder, the
term of the option may be no more than five (5) years from the date of
grant. No option may be exercised after the expiration of its terms.
(d) TERMINATION OF EMPLOYMENT. If an optionee's employment or
consulting relationship terminates for any reason (other than death or
disability), the optionee may exercise his or her option
7
<PAGE>
within such period of time as is specified in the option agreement to the
extent that the option is vested on the date of termination (but in no event
later than the expiration of the term of such option as set forth in the
option agreement). In the absence of a specified time in the option
agreement, the option shall remain exercisable for three (3) months
following the optionee's termination.
(e) DEATH OR DISABILITY. If an optionee's employment or consulting
relationship terminates as a result of disability, the optionee may exercise
his or her option within such period of time as is specified in the option
agreement (but in no event later than the expiration of the term of such
option as set forth in the option agreement) to the extent that the option
is vested on the date of termination. In the absence of a specified time in
the option agreement, the option shall remain exercisable for twelve (12)
months following the optionee's termination. If an optionee's employment or
consulting relationship terminates as a result of death while the optionee
is an employee or consultant, the option may be exercised by the optionee's
estate or a person who acquired the right to exercise the option by bequest
or inheritance within such period of time as is specified in the option
agreement (but in no event later than the expiration of the term of such
option as set forth in the option agreement) to the extent that the option
is vested on the date of death. In the absence of a specified time in the
option agreement, the option shall remain exercisable for twelve (12) months
following the optionee's death.
(f) NONTRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS: Unless
determined otherwise by the Administrator, options and stock purchase rights
granted under the 1998 Plan are not transferable other than by will or the
laws of descent and distribution, and may be exercised during the optionee's
lifetime only by the optionee.
(g) OTHER PROVISIONS. The stock option agreement may contain other
terms, provisions and conditions not inconsistent with the 1998 Plan as may
be determined by the Administrator.
STOCK PURCHASE RIGHTS. In the case of stock purchase rights, unless the
Administrator determines otherwise, the standard form of restricted stock
purchase agreement shall grant the Company a repurchase option exercisable upon
the voluntary or involuntary termination of the purchaser's employment with the
Company for any reason (including death or disability). The purchase price for
shares repurchased pursuant to the restricted stock purchase agreement shall be
the original price paid by the purchaser and may be paid by cancellation of any
indebtedness of the purchaser to the Company. The repurchase option shall lapse
at a rate determined by the Administrator.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR ASSET
SALE. In the event that the stock of the Company changes by reason of any stock
split, reverse stock split, stock dividend, combination, reclassification or
other similar change in the capital structure of the Company effected without
the receipt of consideration, appropriate adjustments shall be made in the
number and class of shares of stock subject to the 1998 Plan, the number and
class of shares of stock subject to any option or stock purchase right
outstanding under the 1998 Plan, and the exercise price of any such outstanding
option or stock purchase right.
In the event of a liquidation or dissolution, any unexercised options or
stock purchase rights will terminate. The Administrator may, in its discretion,
provide that each optionee shall have the right to exercise all of the
optionee's options and stock purchase rights, including those not otherwise
exercisable, until the date ten (10) days prior to the consummation of the
liquidation or dissolution.
8
<PAGE>
In connection with any merger, consolidation, acquisition of substantially
all the Company's assets or like occurrence involving the Company, each
outstanding option or stock purchase right shall be assumed or an equivalent
option or rights substituted by the successor corporation. If the successor
corporation refuses to assume the options and stock purchase rights or to
substitute substantially equivalent options and stock purchase rights, the
optionee shall have the right to exercise the option or stock purchase right as
to all the optioned stock, including shares not otherwise exercisable, and any
restricted stock will vest and the Company's repurchase right will fully lapse.
In such event, the Administrator shall notify the optionee that the option or
stock purchase right is fully exercisable for thirty (30) days from the date of
such notice and that the option or stock purchase right terminates upon
expiration of such period.
AMENDMENT AND TERMINATION OF THE PLAN. The Board of Directors may amend,
alter, suspend or terminate the 1998 Plan, or any part thereof, at any time and
for any reason. However, the Company shall obtain stockholder approval for any
amendment to the 1998 Plan to the extent necessary to comply with Section 162(m)
and Section 422 of the Code, or any similar rule or statute. No such action by
the Board of Directors or stockholders may alter or impair any option or stock
purchase right previously granted under the 1998 Plan without the written
consent of the optionee. Unless terminated earlier, the 1998 Plan shall
terminate 10 years from the date of approval by the stockholders or the Board of
Directors of the Company, whichever is earlier.
FEDERAL INCOME TAX CONSEQUENCES
INCENTIVE STOCK OPTIONS. An optionee who is granted an incentive stock
option does not recognize taxable income at the time the option is granted or
upon its exercise, although the exercise may subject the optionee to the
alternative minimum tax. Upon a disposition of the shares more than two years
after grant of the option and one year after exercise of the option, any gain or
loss is treated as long-term capital gain or loss. If these holding periods are
not satisfied, the optionee recognizes ordinary income at the time of
disposition equal to the difference between the exercise price and the lower of
(i) the fair market value of the shares at the date of the option exercise or
(ii) the sale price of the shares. Any gain or loss recognized on such a
premature disposition of the shares in excess of the amount treated as ordinary
income is treated as long-term or short-term capital gain or loss, depending on
the holding period. A different rule for measuring ordinary income upon such a
premature disposition may apply if the optionee is also an officer, director, or
greater than 10% stockholder of the Company. The Company is entitled to a
deduction in the same amount as the ordinary income recognized by the optionee.
NONSTATUTORY STOCK OPTIONS. An optionee does not recognize any taxable
income at the time he or she is granted a nonstatutory stock option. Upon
exercise, the optionee recognizes taxable income generally measured by the
excess of the then fair market value of the shares over the exercise price. Any
taxable income recognized in connection with an option exercise by an employee
of the Company is subject to tax withholding by the Company. The Company is
entitled to a deduction in the same amount as the ordinary income recognized by
the optionee. Upon a disposition of such shares by the optionee, any difference
between the sale price and the optionee's exercise price, to the extent not
recognized as taxable income as provided above, is treated as long-term or
short-term capital gain or loss, depending on the holding period.
STOCK PURCHASE RIGHTS. Stock purchase rights will generally be taxed in the
same manner as nonstatutory stock options. However, restricted stock is
generally purchased upon the exercise of a stock purchase right. At the time of
purchase, restricted stock is subject to a "substantial risk of forfeiture"
within the meaning of Section 83 of the Code. As a result, the purchaser will
not recognize ordinary income at the time of purchase. Instead, the purchaser
will recognize ordinary income on the dates when a stock ceases to be subject to
a substantial risk of forfeiture. The stock will generally cease to be subject
to a substantial risk of forfeiture when it is no longer subject to the
Company's right to repurchase the stock upon the purchaser's termination of
employment with the Company. At such times, the purchaser will recognize
9
<PAGE>
ordinary income measured as the difference between the purchase price and the
fair market value of the stock on the date the stock is no longer subject to a
substantial risk of forfeiture.
The purchaser may accelerate to the date of purchase his or her recognition
of ordinary income, if any, and the beginning of any capital gain holding period
by timely filing an election pursuant to Section 83(b) of the Code. In such
event, the ordinary income recognized, if any, is measured as the difference
between the purchase price and the fair market value of the stock on the date of
purchase, and the capital gain holding period commences on such date. The
ordinary income recognized by a purchaser who is an employee will be subject to
tax withholding by the Company. Different rules may apply if the purchaser is
also an officer, director, or greater than 10% stockholder of the Company.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION
UPON OPTIONEES, HOLDERS OF STOCK PURCHASE RIGHTS AND THE COMPANY WITH RESPECT TO
THE GRANT AND EXERCISE OF OPTIONS AND STOCK PURCHASE RIGHTS UNDER THE 1998 PLAN.
IT DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT DISCUSS THE TAX CONSEQUENCES OF
THE EMPLOYEE'S OR CONSULTANT'S DEATH OR THE PROVISIONS OF THE INCOME TAX LAWS OF
ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE EMPLOYEE OR CONSULTANT
MAY RESIDE.
CURRENT PLAN BENEFITS
The Company cannot now determine the number of stock options to be granted
in the future to the Named Executive Officers (as defined in "Executive
Compensation--Summary Compensation Table"), all executive officers as a group,
all directors who are not executive officers as a group or all employees
(including officers who are not executive officers) as a group. However, the
following table sets forth information with respect to stock option grants under
all plans during the fiscal year ended September 30, 1997 to such persons:
CURRENT PLAN BENEFITS TABLE
<TABLE>
<CAPTION>
NUMBER OF SHARES
SUBJECT TO
DOLLAR OPTIONS
NAME OF INDIVIDUAL OR IDENTITY OF GROUP VALUE(1) GRANTED(#)
- ------------------------------------------------------------ ------------- -----------------
<S> <C> <C>
Joseph P. Tallman........................................... $ 2,663,750 210,000
Thomas E. Gardner........................................... 0 250,000
Richard C. Miller (2)....................................... 2,716,875 135,000
Barry W. Wolcott............................................ 1,521,250 95,000
Elizabeth Snowden........................................... 1,663,750 120,000
John V. Crisan.............................................. 1,073,750 65,000
All executive officers as a group (11 total) (2)............ 14,940,375 1,268,000
Non-Executive Director Group (7 total) (3).................. 2,742,500 170,000
All other employees as a group (4).......................... 17,163,362 929,737
</TABLE>
- ------------------------
(1) This dollar value reflects the difference between $34.50 (the closing price
of the Company's Common Stock on September 30, 1997 as listed in the NASDAQ
Stock Market) and the exercise prices of such options, multiplied by the
number of shares subject to such options.
(2) Includes 75,000 shares which are repriced shares originally granted in
fiscal year 1996.
(3) Includes 112,500 shares which are repriced shares originally granted in
fiscal year 1996.
(4) Includes 307,487 shares which are repriced shares originally granted in
fiscal year 1996.
VOTE REQUIRED
The affirmative vote of a majority of the Votes Cast will be required to
approve the adoption of the Company's 1998 Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
ADOPTION OF THE COMPANY'S 1998 PLAN AND THE RESERVATION OF 900,000 SHARES OF
COMMON STOCK FOR ISSUANCE THEREUNDER.
10
<PAGE>
PROPOSAL THREE
RATIFICATION OF
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Arthur Andersen LLP, independent
auditors, to audit the financial statements of the Company for the fiscal year
ending September 30, 1998, and recommends that stockholders vote "FOR"
ratification of such appointment. In the event of a negative vote on such
ratification, the Board of Directors will reconsider its selection.
Arthur Andersen LLP had previously audited the financial statements of
Informed Access, which was acquired by the Company in fiscal year 1997. Ernst &
Young LLP had audited the Company's financial statements since the inception of
the Company. In connection with the relocation of the Company's principal
executive offices from Sacramento, California to Broomfield, Colorado, the Board
of Directors considered it appropriate for Arthur Andersen LLP to serve as
auditors for fiscal year 1998.
Ernst & Young LLP did not resign or decline to stand for reelection. The
Company's Board of Directors and Audit Committee approved the dismissal of Ernst
& Young LLP as the Company's independent accountants effective January 6, 1998.
There have been no disagreements with Ernst & Young LLP on any matter of
accounting principles or practice, financial statement disclosure or auditing
scope or procedures required to be referenced in their report. The report of
Ernst & Young LLP on the Company's financial statements in the past two fiscal
years did not contain an adverse opinion, disclaimer of opinion and was not
qualified or modified as to uncertainty, audit scope or accounting principles.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS.
11
<PAGE>
ACCESS HEALTH MANAGEMENT, EXECUTIVE COMPENSATION AND OTHER MATTERS
MANAGEMENT
The executive officers and other significant officers of Access Health and
their ages as of September 30, 1997 are as follows:
<TABLE>
<CAPTION>
NAME AGE OFFICE
- ---------------------------------------------- --- ------------------------------------------------------------
<S> <C> <C>
Joseph P. Tallman............................. 46 President, Chief Executive Officer and Director
Richard C. Miller............................. 49 Executive Vice President and Director
Julie A. Brooks............................... 51 Senior Vice President, General Counsel and Secretary
Timothy H. Connor............................. 39 Senior Vice President and Chief Financial Officer
John V. Crisan................................ 52 Senior Vice President, Chief Accounting Officer and
Treasurer
Michael E. Myers.............................. 40 Senior Vice President, Marketing and Technology
Jeremy J. Nobel, M.D.......................... 43 Senior Vice President, Medical Affairs
Elizabeth M. Snowden.......................... 40 Senior Vice President, Sales and Marketing
Barry W. Wolcott, M.D......................... 53 Senior Vice President and Chief Medical Officer
Jeremy K. Miller.............................. 46 Vice President, Sales
</TABLE>
JOSEPH P. TALLMAN joined Access Health in November 1996 and served as
Executive Vice President until April 1997 at which time he assumed the title of
President and Chief Operating Officer. Mr. Tallman became the Chief Executive
Officer of the Company in July 1997. He has been a director of the Company since
November 1996. Before joining Access Health in November 1996, Mr. Tallman was a
founder of Informed Access and served as a director, President and Chief
Executive Officer of Informed Access since its incorporation in 1992. Prior to
founding Informed Access, Mr. Tallman was a founder, Chairman, President and
Chief Executive Officer of Consumer Health Services, Inc., a consumer health
services company, from 1982 until 1989. Mr. Tallman is married to Ms. Snowden.
RICHARD C. MILLER is a founder of Access Health and has served as Vice
President of Business Development and Secretary and a director of Access Health
since the management-led buyout of Referral Systems Group in 1988. In 1991 he
became Executive Vice President of Access Health.
JULIE A. BROOKS joined Access Health on September 30, 1996. Prior to joining
Access Health, Ms. Brooks served as the principal executive officer of The
General Counsel, Inc., a legal services company that Ms. Brooks founded in 1992.
From 1986 until 1992, Ms. Brooks served as the Vice President, General Counsel
and Corporate Secretary for Westmark International, Inc., an international
manufacturer of diagnostic ultrasound systems, patient monitoring systems, and
clinical information systems. From 1981 to 1986, Ms. Brooks was Vice President
Corporate and Legal Affairs, General Counsel and Secretary of Thousand Trails,
Inc., a resort development and management company.
TIMOTHY H. CONNOR has served as Senior Vice President and Chief Financial
Officer since July 1997. From November 1996 until July 1997, he served as Senior
Vice President Corporate Development. From May 1996 until November 1996, Mr.
Connor was Chief Financial Officer and Vice President, Finance and
Administration of Informed Access. From 1985 until joining Informed Access, Mr.
Connor was with Lehman Brothers Inc., an investment banking company, most
recently as a Managing Director in the Investment Banking Group.
12
<PAGE>
JOHN V. CRISAN has served as Senior Vice President, Treasurer and Chief
Accounting Officer since July 1997. From April 1994 until July 1997, Mr. Crisan
served as Senior Vice President of Finance and Administration and Chief
Financial Officer. From 1991 to 1994 he served as Chief Operating Officer and
Chief Financial Officer of American PsychManagement, Inc., a subsidiary of Value
Health, Inc. Mr. Crisan is a Certified Public Accountant.
MICHAEL E. MYERS has served as Senior Vice President, Marketing, Product
Development and Client Services since July 1997. From November 1996 until July
1997, he was Vice President of Marketing and Technology. From 1988 to 1996, Mr.
Myers held a variety of positions with HBO & Company (formerly CliniCom), a
health care information systems company, including Director of Product Marketing
and Product Manager, Vice President, Product Marketing & Client Services, and
Vice President Product Marketing & Development.
JEREMY J. NOBEL, M.D. joined Access Health in October 1995 as Senior Vice
President for Medical Affairs and previously served as an advisor to Access
Health on clinical matters related to outcome and measurement systems and
clinical system strategies. Dr. Nobel is board certified in internal medicine
and has received a master's degree in both Epidemiology and Health Policy. Prior
to joining Access Health, Dr. Nobel was a consultant to a number of companies
and an adjunct faculty member at the Harvard School of Public Health, where he
retains an appointment.
ELIZABETH M. SNOWDEN has served as Senior Vice President, Sales & Marketing
since November 1996. From 1992 until November 1996, Ms. Snowden served as Vice
President, Sales & Marketing of Informed Access, which she helped found. From
1990 to 1992, Ms. Snowden was an independent consultant. From 1987 until 1990,
she served as Vice President, Western Region of Consumer Health Services, Inc.,
a consumer health services company. Ms. Snowden is married to Mr. Tallman.
BARRY W. WOLCOTT, M.D. has served as Senior Vice President and Chief Medical
Officer since joining Access Health in November 1996. Dr. Wolcott, a founder of
Informed Access, served as Vice President, Medical Affairs from Informed Access'
incorporation in 1992 until November 1996. Previously, Dr. Wolcott held various
positions with the United States Army, most recently as Commandant of the
Uniformed Services University of Texas Health Sciences Center Medical School,
Bethesda, Maryland from 1990 until 1993. Dr. Wolcott has also served as
Associate Professor of Operational and Emergency Medicine at the Uniformed
Services University since 1979. Dr. Wolcott is board certified in internal
medicine.
JEREMY K. MILLER has served as Vice President, Sales since November 1996.
From August 1996 until November 1996, Mr. Miller was Vice President, Sales of
Informed Access. From December 1989 to August 1996, Mr. Miller held a variety of
management positions with Perot Systems Corporation and its European subsidiary,
Perot Systems Europe, an information technology outsourcing company. Mr. Miller
served as Vice President, Sales and Account Management of Consumer Health
Services, Inc. from 1984 until December 1989.
13
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid by Access Health during
each of the three fiscal years ended September 30, 1997, to (i) the Chief
Executive Officer of Access Health, (ii) each individual who served as Chief
Executive Officer of Access Health during fiscal 1997, and (iii) the four other
most highly compensated executive officers of Access Health during fiscal 1997
(the "Named Executive Officers"):
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
------------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
NAME AND PRINCIPAL --------------------------------------------------- STOCK UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS OTHER AWARDS($) OPTIONS(#) COMPENSATION(10)
- ------------------------- ----- ---------- ------------- ------------ ------------ --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Joseph P. Tallman........ 1997 $ 100,048 $ 485,000(1) $ 708(3) $ -- 210,000 $948
President and Chief 1996 100,000 450,000(2) -- -- 33,887 --
Executive Officer 1995 100,000 -- -- -- -- --
Thomas E. Gardner........ 1997 105,190 105,000 753,026(4) -- 250,000 240
Former President and 1996 94,959 57,684 -- 101,250(5) 230,000 170
Chief Executive Officer 1995 -- -- -- -- -- --
Richard C. Miller........ 1997 213,204 -- 9,600(6) -- 135,000(11) 143
Executive Vice 1996 207,534 104,805 -- -- 75,000 245
President and Secretary 1995 177,283 90,958 -- -- 45,000 245
Barry W. Wolcott......... 1997 150,000 37,500 -- -- 95,000 --
Senior Vice President, 1996 150,000 400,000 -- -- 60,513 --
Chief Medical Officer 1995 150,000 -- -- -- -- --
Elizabeth Snowden........ 1997 100,300 152,500(7) 510(3) -- 120,000 212
Senior Vice President, 1996 100,000 450,000(2) -- -- 60,513 --
Sales and Marketing 1995 100,000 -- -- -- -- --
John V. Crisan........... 1997 154,445 10,000 31,073(8) -- 65,000 184
Senior Vice President,
Chief Accounting 1996 152,453 61,591 34,796(8) -- 45,000 286
Officer and Treasurer 1995 145,224 57,033 44,812(9) -- 9,750 286
</TABLE>
- ------------------------------
(1) Includes $100,000 awarded to Mr. Tallman to remain with the Company for a
defined period of time and $300,000 awarded to him for initiating and
negotiating the merger of Informed Access Systems with the Company. See
"Certain Relationships and Related Transactions."
(2) Represents a performance bonus granted by the Board of Directors of
Informed Access Systems prior to its merger with the Company.
(3) Represents health club dues paid by Company for benefit of employees.
(4) Includes $600,000 severance package, $120,095 moving expenses, $26,654
accrued vacation and sick leave payout, and $6,277 auto allowance.
(5) Mr. Gardner received 2,000 restricted shares of Access Health Common Stock
on May 8, 1996 which, based on the closing price of Access Health Common
Stock of $50.625 on such date, had a value as of such date of $101,250. The
shares became fully vested as of April 30, 1997 upon Mr. Gardner's
separation from the Company.
(6) Represents amounts paid for an auto allowance.
(7) Includes $100,000 awarded to Ms. Snowden to remain with the Company for a
defined period of time.
(8) Represents amounts paid for reimbursement of taxes in connection with prior
relocation expense reimbursements.
(9) Represents amounts paid for relocation expenses.
(10) The dollar amount in this column represents premium payments made by the
Company with respect to insurance policies for the lives of the named
Officers for which the Company is not a beneficiary.
(11) Includes 75,000 shares repriced from grants made in fiscal year 1996.
14
<PAGE>
OPTION GRANTS IN FISCAL 1997
The following table sets forth each grant of stock options during the fiscal
year ended September 30, 1997 to the Named Executive Officers:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENT OF AT ASSUMED ANNUAL RATES OF
SECURITIES TOTAL OPTIONS INDIVIDUAL GRANTS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO ---------------------- FOR OPTION TERM(2)
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION ---------------------------
NAME GRANTED(1) FISCAL YEAR PRICE DATE 5% 10%
- ------------------------------- ----------- -------------- --------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Joseph P. Tallman.............. 110,000 4.65% $ 14.375 5/01/07 $ 994,440 $ 2,520,105
100,000 4.22% 30.000 9/18/07 1,886,684 4,781,227
Thomas E. Gardner.............. 250,000 10.56% 34.625 11/18/06 5,443,869 13,795,833
Richard C. Miller (3).......... 135,000 5.7% 14.375 5/01/07 1,220,449 3,092,856
Barry W. Wolcott............... 70,000 2.96% 14.375 5/01/07 632,825 1,603,703
25,000 1.06% 30.000 9/18/07 471,671 1,195,307
Elizabeth Snowden.............. 70,000 2.96% 14.375 5/01/07 632,825 1,603,703
50,000 2.11% 30.000 9/18/07 943,342 2,390,614
John V. Crisan................. 50,000 2.11% 14.375 5/01/07 452,018 1,145,502
15,000 0.63% 30.000 9/18/07 283,003 717,184
</TABLE>
- ------------------------
(1) Options granted under Access Health's 1989 Plan and under its Supplemental
Stock Plan. The option exercise price of all incentive stock options granted
under the 1989 Plan is generally equal to the fair market value of the
shares of Common Stock on the date of grant; the options have terms of seven
to ten years and generally vest at the rate of 20% of the shares subject to
the option for each year that the optionee remains in continuous status as
an employee or consultant.
(2) Potential realizable value is based on the assumption that the Common Stock
of Access Health appreciates at the annual rate shown (compounded annually)
from the date of grant until the expiration of the option term. These
numbers are calculated based on the requirements promulgated by the
Securities and Exchange Commission and do not reflect Access Health's
estimate of future stock price growth.
(3) Includes 75,000 shares subject to option which were repriced from the
original exercise price pursuant to grant in fiscal year 1996.
15
<PAGE>
AGGREGATED OPTION EXERCISES IN FISCAL 1997
AND FISCAL YEAR-END OPTION VALUES
The following table provides information on option exercises in fiscal 1997
by the Named Executive Officers and the value of such officers' unexercised
options at September 30, 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE(2) OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT SEPT. 30, 1997 SEPT. 30, 1997
ACQUIRED ON VALUE(1) -------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------- ----------- ------------ ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Joseph P. Tallman..................... 33,887 $ 374,282 0 210,000 $ 0 $ 2,663,750
Thomas E. Gardner..................... 0 0 96,000 96,000 0 0
Richard C. Miller..................... 0 0 75,099 166,968 2,043,795 3,494,556
Barry W. Wolcott...................... 60,513 2,203,883 0 95,000 0 1,521,250
Elizabeth Snowden..................... 60,513 668,366 0 120,000 0 1,633,750
John V. Crisan........................ 0 0 39,900 109,400 811,818 2,077,813
</TABLE>
- ------------------------
(1) Market value of underlying securities at exercise minus the exercise price.
(2) Market value of underlying securities at fiscal year end of $34.50, minus
the exercise price.
COMPENSATION OF DIRECTORS
Outside directors were paid $2,500 quarterly and reimbursed for certain
expenses incurred in connection with attendance at board and committee meetings
during fiscal 1997. The Company paid $50,000 to Brent Rider, who resigned as a
director in November 1997, as a reward for his service in initiating the merger
of Informed Access with Access Health. Outside directors are granted
nonstatutory stock options under the 1995 Director Option Plan. As of fiscal
year end 1997, there were four outside directors. Please see "Employee Benefit
Plans--1995 Director Option Plan" for information with respect to the 1995
Director Option Plan.
EMPLOYMENT CONTRACTS, TERMINATION AND CHANGE OF CONTROL ARRANGEMENTS
The 1995 Director Option Plan provides that upon a change in control of
Access Health, the unvested portion of all options held by Outside Directors
shall become immediately exercisable. The 1989 Plan provides that in the event
of a change in control of Access Health, outstanding stock options and stock
purchase rights shall be assumed or equivalent options or rights shall be
substituted by the successor entity. Unless such successor corporation agrees to
such assumption or substitution, Access Health's Board of Directors must provide
for the options or rights to become immediately exercisable in full. In
addition, option agreements and stock purchase agreements for executive officers
at the Vice President level and above provide that options under such agreements
become immediately exercisable in full in the event of a change in control of
Access Health. Additionally, grants made to all employees in 1997 contained
provisions for such immediate exercise upon a change of control.
The Company entered into a three year employment agreement with Joseph
Tallman in November 1996. The agreement provides Mr. Tallman with a base salary
of $100,000 which increases to $180,000 on the first anniversary of the
agreement or once the Company attains certain earnings targets. The Company's
Board of Directors and Mr. Tallman later agreed that his base salary would not
be increased until the beginning of calendar year 1998. Mr. Tallman is also
eligible to participate in the Company's bonus plan. Moreover, the agreement
provides Mr. Tallman with an option to purchase 60,000 shares of Common Stock of
the Company, which vests over five years. Such option becomes immediately
exercisable upon a merger or sale of the Company. In addition, if Mr. Tallman is
terminated without cause or constructively terminated, all stock options he
holds become immediately exercisable and he is entitled to a
16
<PAGE>
severance payment equal to his base compensation for the remainder of the term
of the agreement, or twenty-four months in the event of a constructive
termination due to a change of control.
The Company entered into an employment agreement with Kenneth Plumlee,
former Chief Executive Officer and director, in December 1996 that was amended
in April 1997. The agreement, as amended, provides Mr. Plumlee with a base
salary of $150,000, a deferred compensation benefit of $680,000 payable in
January 1997, and an additional severance benefit of $227,865. Pursuant to the
agreement, Mr. Plumlee also received immediate vesting of 36,000 shares of the
Company's Common Stock subject to a stock option he holds. In addition, under
the terms of the agreement, Mr. Plumlee is entitled to immediate vesting of all
of his Access Health stock options and a severance payment equal to the payment
of his base salary until September 30, 1998, upon the following conditions: (i)
if he is terminated without cause; (ii) if he is not re-elected as a director of
the Company by the stockholders of the Company; (iii) in the event of a change
in control of the Company; (iv) in the event of his death or disability or (v)
if he and the Chief Executive Officer of the Company mutually agree to terminate
Mr. Plumlee's services under this agreement or as a member of the Board of
Directors prior to September 30, 1998. In connection with this agreement, Mr.
Plumlee also agreed to noncompete and nonsolicitation restrictions that will
remain in effect until September 30, 1998.
The Company entered into a separation agreement and mutual release with
Thomas Gardner in April 1997. The agreement provided Mr. Gardner with a prorated
bonus for fiscal year 1997 of $105,000, a severance payment of $600,000, and a
payment for accrued vacation equal to $23,170. Under the agreement, 2,000 shares
of the Company's restricted stock held by Mr. Gardner became fully vested and
stock options in the amount of 250,000 shares and 200,000 shares of the
Company's stock held by Mr. Gardner became exercisable, subject to vesting, for
up to 100,000 shares and 92,000 shares, respectively, until the termination of
such options on April 30, 1999. In connection with this agreement, Mr. Gardner
also agreed to noncompete and nonsolicitation restrictions for a period of one
year.
The Company entered into a two year employment/consulting agreement with
John Crisan in July 1997. The agreement provides Mr. Crisan with a base salary
of $152,250 and eligibility for limited participation in the Company's
management incentive plan. If Mr. Crisan is terminated without cause, he is
entitled to a severance payment equal to his base compensation for the remainder
of the term of the agreement. If he is constructively terminated due to a change
in control prior to May 1, 1998, he is entitled to a severance payment equal to
twenty-four months of his base compensation.
In addition to the above agreements, the Named Executive Officers of the
Company (excluding Kenneth Plumlee, Richard Miller, and Thomas Gardner) entered
into standardized severance agreements with the Company which expire in November
1998. These agreements all provide for accelerated vesting of options held by
such officers in the event of a merger or sale of the Company. In addition,
under the form agreement, if an officer is terminated without cause or
constructively terminated, all stock options he holds become immediately
exercisable and he is entitled to a severance payment equal to his base
compensation for the remainder of the term of the agreement or one year
(whichever is longer), or twenty-four months in the event of a constructive
termination due to a change in control.
There are no other employment contracts between Access Health and any of the
Named Executive Officers, and there are no other compensatory plans or
arrangements with respect to a Named Executive Officer which will result in
payments upon resignation, retirement, or any other termination of such
executive officer's employment or from a change of control of Access Health.
EMPLOYEE BENEFIT PLANS
The following is a brief summary of plans in effect during the fiscal year
ended September 30, 1997 under which officers, directors and employees of the
Company received benefits.
17
<PAGE>
401(k) PLAN
In July of 1989 the Company adopted a tax-qualified employee savings and
retirement plan (the "401(k) Plan"), which generally covers all of the Company's
full-time employees who have attained age 21. Pursuant to the 401(k) Plan,
employees may elect to defer up to 15% of their current compensation (subject to
certain statutorily prescribed limits, including an annual limit of $9,500 in
1997). These deferred amounts are contributed to the 401(k) Plan. The 401(k)
Plan permits, but does not require, additional matching and Company
contributions on behalf of participants. The maximum matching contribution is
$3,000 for the plan year. In 1996, the Company made matching contributions equal
to 50% of the employee's contribution on the first 4% of salary deferred in the
401(k) Plan. To date, the Company has not made any discretionary contributions.
The 401(k) Plan is intended to qualify under Sections 401(k) and 401(a) of the
Code. Contributions to such a qualified plan are deductible to the Company when
made and neither the contributions nor the income earned on those contributions
is taxable to participants until withdrawn. All 401(k) Plan contributions are
credited to separate accounts maintained in trust. Contributions are invested,
at the participant's direction, in one or more of the investment funds available
under the 401(k) Plan. All account balances are adjusted at least annually to
reflect the investment earnings and losses of the trust fund. Each participant
is fully vested in his or her salary deferral accounts under the 401(k) Plan.
Additional matching and Company contributions are subject to a five-year vesting
schedule. Distributions may be made from a participant's account pursuant to the
401(k) Plan's hardship withdrawal provisions as well as upon a participant's
termination of employment, disability or attainment of age 59 1/2. Distributions
will be in the form of a lump sum, installment payments or an annuity, in the
participant's discretion. Participants may borrow from their 401(k) account
pursuant to the 401(k) Plan's loan provisions. Federal tax laws limit the amount
that may be added to a participant's accounts for any one year under a qualified
plan such as the 401(k) Plan to the lesser of (i) $30,000 or (ii) 25% of the
participant's compensation (net of salary deferral contributions) for the year.
1991 EMPLOYEE STOCK PURCHASE PLAN
The 1991 Employee Stock Purchase Plan (the "Purchase Plan") was adopted by
the Board of Directors in December 1991, approved by the stockholders in January
1992 and amended in December 1992, November 1993, and January 1995. The Purchase
Plan, which is intended to qualify under Section 423 of the Code, authorizes the
issuance of up to an aggregate of 825,000 shares of Common Stock to
participating employees. Employees of the Company are eligible to participate in
the Purchase Plan if they are employed by the Company for at least 20 hours per
week and more than five months per-year. Employees who own 5% or more of the
Common Stock of the Company and directors who are not employees are not eligible
to participate. The Purchase Plan may be administered by the Board of Directors
or a committee appointed by the Board of Directors. The Purchase Plan permits
eligible employees to purchase Common Stock through payroll deductions, which
may not exceed ten percent (10%) of an employee's compensation.
Unless the Board of Directors or its committee determines otherwise, each
offering and purchase period under the Purchase Plan will run for six months,
although the first three offering periods ran for 24 months and were divided
into four consecutive six-month purchase periods. The price at which stock is
purchased under the Purchase Plan is equal to 85% of the fair market value of
the Common Stock on the first day of the offering period or the last day of the
applicable purchase period, whichever is lower. New offering periods will
commence every six months. Employees may end their participation in the offering
at any time during the offering period, and participation ends automatically on
termination of employment with the Company.
As of September 30, 1997, a total of 439,778 shares of Common Stock had been
issued to employees at an aggregate purchase price of $2,921,552 and a weighted
average purchase price of $6.664 per share pursuant to offerings under the
Purchase Plan and 385,222 shares remained available for future issuance under
the Purchase Plan.
18
<PAGE>
The following table sets forth as to the Named Executive Officers who
purchased shares pursuant to the Purchase Plan, all executive officers as a
group and all other employees as a group (i) the number of shares of the
Company's Common Stock purchased under the Purchase Plan during the period from
its inception until September 30, 1997; (ii) the aggregate purchase price
thereof and (iii) the fair value of stock purchased through September 30, 1997
under the Purchase Plan:
<TABLE>
<CAPTION>
NUMBER OF AGGREGATE FAIR VALUE
SHARES PURCHASE OF STOCK
NAME OF INDIVIDUAL OR IDENTITY OF GROUP PURCHASED PRICE($) PURCHASED($)
- ------------------------------------------------------------------------- ----------- ------------ ------------
<S> <C> <C> <C>
Joseph P. Tallman........................................................ 221 $ 4,978 $ 5,857
Thomas E. Gardner........................................................ 301 7,356 8,654
Richard C. Miller........................................................ 0 0 0
Barry W. Wolcott, M.D.................................................... 0 0 0
Elizabeth M. Snowden..................................................... 221 4,978 5,857
John V. Crisan........................................................... 3,622 42,964 72,249
All executive officers as a group (11 persons)........................... 5,364 83,375 119,793
All employees as a group (including current officers who are not
executive officers).................................................... 434,414 2,838,177 5,197,456
All employees and executive officers as a group.......................... 439,778 $ 2,921,552 $5,317,249
</TABLE>
1989 INCENTIVE STOCK PLAN
The Company's 1989 Incentive Stock Plan (the "1989 Plan") was adopted by the
Board of Directors and approved by the Company's stockholders in May 1989 and
amended by the Board in October and December 1991, December 1992, January 1994,
October 1995 and August 1996 to increase the number of shares available for
issuance thereunder. Each such amendment to the 1989 Plan has been approved by
the stockholders. A total of 3,550,000 shares have been approved for issuance
under the 1989 Plan. The 1989 Plan permits the direct sale of shares and the
grant of "incentive stock options" (within the meaning of Section 422 of the
Code) to employees and officers of the Company and the grant of nonstatutory
stock options to employees, officers and directors who are also officers of and
consultants to the Company. The purpose of the 1989 Plan is to attract the best
available personnel to the Company and to give employees, officers and directors
of and consultants to the Company a greater personal stake in the success of the
business. As of September 30, 1997, options to purchase 1,002,473 shares had
been exercised, options to purchase 2,572,948 shares were outstanding at a
weighted average exercise price of $18.00 per share, and there were 127,647
shares available for future option grants. As of September 30, 1997, direct
sales had been made under the 1989 Plan to officers in the amount of 24,744
shares.
The 1989 Plan may be administered by the Board of Directors or a committee
appointed by the Board which determines the recipients of options and the terms
of options granted, including the exercise price, number of shares subject to
the option and the exercisability thereof, and the recipients and terms of any
direct sales of shares. Currently, the Compensation Committee determines option
grants to executive officers and other officers, and the Stock Option Committee
determines option grants to non-officer employees. Options generally become
exercisable over a period of five years.
The exercise price of all incentive stock options granted under the 1989
Plan must be at least equal to the fair market value of such shares on the date
of grant, and the maximum term of any stock option is ten years. With respect to
any participant who owns stock possessing more than ten percent of the voting
rights of the Company's outstanding capital stock, the exercise price of any
incentive option must be at least equal to 110% of the fair market value of such
shares on the date of grant, and the term may be no longer than five years.
Nonstatutory stock options have an exercise price determined by the Board of
Directors or its Committee.
19
<PAGE>
Please see "Access Health Management, Executive Compensation and Other
Matters--Executive Compensation--Option Grants in Fiscal 1997" for information
with respect to the grant of options to the Named Executive Officers during
fiscal 1997. During the fiscal year ended September 30, 1997, all executive
officers as a group and all employees as a group were granted options to
purchase 875,000 shares and 1,492,737 shares, respectively, at a weighted
average exercise price of $22.606 per share, pursuant to the 1989 Plan.
1995 DIRECTOR OPTION PLAN
The Company's 1995 Director Option Plan (the "Director Plan") was adopted by
the Board of Directors in January 1995 and approved by the Company's
stockholders in March 1995.
The Director Plan is designed to provide for the granting, by means of a
predetermined schedule, of nonstatutory stock options to the Company's
non-employee directors ("Outside Directors"). The purpose of the Director Plan
is to provide equity incentives to outside Board members. As of September 30,
1997, a total of 150,000 shares of Common Stock have been reserved for issuance
under the Director Plan, of which 93,750 shares remained available for the
granting of options at September 30, 1997.
The Director Plan is administered by the Board of Directors. All grants of
options under the Director Plan are automatic and non-discretionary pursuant to
the terms of the Director Plan. Options under the Director Plan may be granted
only to Outside Directors of the Company.
Participation in the Director Plan provides for grants of options in two
ways. First, each Outside Director is automatically granted an option to
purchase 7,500 shares (the "First Option") upon the date on which such
individual first becomes a director, whether through election by the
stockholders of the Company or by appointment by the Board of Directors in order
to fill a vacancy; provided, however, in lieu of being granted a First Option,
an Outside Director who, immediately prior to the effective date of the Director
Plan, was an Outside Director, is automatically granted an option to purchase
2,500 shares (the "Initial Option"). Second, each Outside Director who has
served on the Board for at least six months after the grant of the First Option
(or, alternatively, the Initial Option), is automatically granted an option to
purchase 2,500 shares (the "Subsequent Option") on the first day of each fiscal
year. The First Option (or, alternatively, the Initial Option) becomes
exercisable at the rate of one-twelfth (1/12) each three months after the date
of grant, with the effect that this option is not exercisable as to the full
number of shares until the third anniversary of the date of its grant. The
Subsequent Option becomes exercisable at the rate of one-fourth (1/4) every
three months after the date of grant, with the effect that this option is not
exercisable as to the full number of shares until the first anniversary of the
date of its grant. Options granted under the Director Plan expire ten years
following the date of grant. An option is exercised by giving written notice of
exercise to the Company specifying the number of full shares of Common Stock to
be purchased and by tendering payment of the purchase price. Payment for shares
purchased upon exercise of an option shall be in such form of consideration as
is authorized by the Director Plan and determined by the Board, and such form of
consideration may vary for each option. The per share exercise price for shares
to be issued pursuant to exercise of an option under the Director Plan is 100%
of the fair market value per share of the Company's Common Stock on the date of
grant of the option. The fair market value is determined by the closing price on
the NASDAQ Stock Market on the last market trading day prior to the date of the
grant of the option.
SUPPLEMENTAL STOCK PLAN
The Company's Supplemental Stock Plan (the "Supplemental Plan") was adopted
by the Board of Directors in November 1996. A total of 1,000,000 shares have
been approved for issuance under the Supplemental Plan. The Supplemental Plan
permits the grant of nonstatutory stock options to employees of and consultants
to the Company, but not to officers or directors of the Company. The purpose of
the Supplemental Plan is to attract and retain the best available personnel for
positions of substantial
20
<PAGE>
responsibility in the Company, to provide additional incentive to eligible
employees and consultants and to promote the success of the Company's business.
As of September 30, 1997, no options to purchase shares had been exercised,
options to purchase 552,094 shares were outstanding at a weighted average
exercise price of $16.212 per share, and there were 447,096 shares available for
future option grants.
The Supplemental Plan may be administered by the Board of Directors or a
committee appointed by the Board which determines the recipients of options and
the terms of options granted, including the exercise price, number of shares
subject to the option and the exercisability thereof. Currently, the
Compensation Committee determines option grants to executive officers and other
officers, and the Stock Option Committee determines option grants to non-officer
employees. Options generally become exercisable over a period of five years.
The exercise price of all nonstatutory stock options granted under the
Supplemental Plan is determined by the closing price on the NASDAQ Stock Market
on the date of the grant of the option.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors serves as an
administrative arm of the Board to make decisions regarding executive
compensation and to make recommendations to the Board on compensation matters
generally. The following is the report of the Compensation Committee describing
compensation policies and rationales applicable to the Company's executive
officers with respect to the compensation paid to such executive officers for
the fiscal year ended September 30, 1997. The information contained in such
report shall not be deemed to be "soliciting material" or to be "filed" with the
Securities and Exchange Commission, nor shall such information be incorporated
by reference into any future filing under the Securities Act or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), except to the extent that
the Company specifically incorporates it by reference into such filing.
The Compensation Committee of the Board of Directors establishes the general
compensation policies of the Company as well as the compensation plans and
specific compensation levels for executive officers. The Compensation Committee
believes that the compensation of the executive officers, including, that of the
Chief Executive Officer, should be related to the Company's performance.
The Compensation Committee seeks to provide the executive officers of the
Company with competitive compensation that enables the Company to attract and
retain employees who contribute to the success of the Company and maximize
stockholder value. Specifically for executive officers, compensation is
determined according to the criteria described below.
COMPENSATION
The Compensation Committee establishes the salaries of the executive
officers by considering (i) the salaries of executive officers in similar
positions at comparably-sized peer companies, (ii) the Company's financial
performance over the past year based upon revenues and operating results and
(iii) the achievement of individual performance goals related to each executive
officer's duties and area of responsibility.
EQUITY-BASED COMPENSATION
The Compensation Committee views stock options as an important part of its
long-term, performance-based compensation program. The Compensation Committee
bases grants of stock options to the Executive Officers of the Company under the
Company's 1989 Plan upon the Committee's estimation of each executive's
contribution to the long-term growth and profitability of the Company. The 1989
Plan is intended to provide additional incentives to the executive officers to
maximize stockholder value. Options are granted under the 1989 Plan at the
then-current market price and are generally subject to five-year vesting periods
to encourage key employees to remain with the Company.
21
<PAGE>
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The compensation of the Company's Chief Executive Officer for fiscal 1997
was based upon the same criteria described above. Specifically, the Compensation
Committee considered several factors as important in determining the Chief
Executive Officer's compensation for fiscal 1997. These factors included the
attainment of corporate revenue and operating results goals for the fiscal year
and the achievement of progress in new product and service programs. After
considering these factors, the Committee concluded that substantial completion
of the goals for fiscal 1997 on which the Chief Executive Officer's compensation
was based had been achieved.
FISCAL YEAR 1997 REPRICING OF OPTIONS
In April 1997, the Board of Directors of the Company determined that the
purposes of the employee stock option plans were not being adequately achieved
with respect to those employees holding options that were exercisable above
current market value and that it was essential to the best interest of the
Company and the Company's stockholders that the Company retain and motivate such
employees. The Board further determined that it would be in the best interest of
the Company and the Company's stockholders to provide such optionees the
opportunity to exchange their above-market value options for options exercisable
at current market value. On May 1, 1997, upon approval by the Board of Directors
of the Company, the Company offered all holders of outstanding options the
opportunity to exchange such options for new stock options at an exercise price
of $14.375 per share, the fair market value of the Company's stock on such date.
The following table sets forth information with respect to the repricing of
those options held by executive officers of the Company.
TEN YEAR OPTION REPRICING
<TABLE>
<CAPTION>
SECURITIES
UNDERLYING LENGTH OF ORIGINAL
NUMBER OF MARKET PRICE OF EXERCISE PRICE OPTION TERM
OPTIONS/SARS STOCK AT TIME AT TIME OF NEW REMAINING AT DATE
REPRICED OR OF REPRICING OR REPRICING OR EXERCISE OF REPRICING OR
NAME DATE AMENDED(#) AMENDMENT($) AMENDMENT($) PRICE($) AMENDMENT
- ------------------------------------- --------- ------------- --------------- --------------- ----------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Joseph P. Tallman ................... 5/1/97 15,094 14.375 33.125 14.375 9 years, 7 months
President and Chief Executive 5/1/97 44,906 14.375 33.125 14.375 9 years, 7 months
Officer
Thomas E. Gardner ................... -- 0 0 0 0 0
Former President and Chief
Executive Officer
Richard C. Miller ................... 5/1/97 75,000 14.375 39.313 14.375 8 years, 11 months
Executive Vice President and 5/1/97 40,000 14.375 33.125 14.375 9 years, 7 months
Secretary
Barry W. Wolcott .................... 5/1/97 15,094 14.375 33.125 14.375 9 years, 7 months
Senior Vice President, Chief 5/1/97 19,906 14.375 33.125 14.375 9 years, 7 months
Medical Officer
Elizabeth Snowden ................... 5/1/97 15,094 14.375 33.125 14.375 9 years, 7 months
Senior Vice President, Sales and 5/1/97 24,906 14.375 33.125 14.375 9 years, 7 months
Marketing
John V. Crisan ...................... 5/1/97 20,000 14.375 33.125 14.375 9 years, 7 months
Senior Vice President, Chief
Accounting Officer and Treasurer
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
SECURITIES
UNDERLYING LENGTH OF ORIGINAL
NUMBER OF MARKET PRICE OF EXERCISE PRICE OPTION TERM
OPTIONS/SARS STOCK AT TIME AT TIME OF NEW REMAINING AT DATE
REPRICED OR OF REPRICING OR REPRICING OR EXERCISE OF REPRICING OR
NAME DATE AMENDED(#) AMENDMENT($) AMENDMENT($) PRICE($) AMENDMENT
- ------------------------------------- --------- ------------- --------------- --------------- ----------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Julie A. Brooks ..................... 5/1/97 33,000 14.375 32.250 14.375 9 years, 6 months
Senior Vice President, General
Counsel and Secretary
Timothy H. Connor ................... 5/1/97 15,094 14.375 33.125 14.375 9 years, 7 months
Senior Vice President and Chief 9,906 14.375 33.125 14.375 9 years 7 months
Financial Officer
Michael E. Myers .................... 5/1/97 15,094 14.375 33.125 14.375 9 years, 7 months
Senior Vice President, Marketing 9,906 14.375 33.125 14.375 9 years 7 months
and Technology
Jeremy J. Nobel, M.D. ............... -- 0 0 0 0 0
Senior Vice President, Medical
Affairs
Jeremy K. Miller .................... 5/1/97 15,094 14.375 33.125 14.375 9 years, 7 months
Vice President, Sales 9,906 14.375 33.125 14.375 9 years 7 months
</TABLE>
SUMMARY
The Compensation Committee believes that the Company's compensation policies
have been successful in attracting and retaining qualified employees and in
linking compensation directly to corporate performance relative to the Company's
goals. The Company's compensation policies will evolve over time as the Company
moves to attain the near-term goals it has set for itself while maintaining its
focus on building long-term stockholder value.
Members of the Compensation Committee:
Frank G. Washington
Alice H. Lusk
23
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the annual percentage change in
the cumulative return to the stockholders of the Company's Common Stock with the
cumulative return of the CRSP Index for the NASDAQ Stock Market (U.S. Index) and
the Hambrecht & Quist Health Care Index (excluding biotechnology) for the period
commencing February 21, 1992 and ending on September 30, 1997. The graph assumes
that $100 was invested on February 21, 1992 in the Company's Common Stock and in
each index, and that all dividends were reinvested. No dividends have been
declared or paid on the Company's Common Stock. Stockholder returns over the
indicated period should not be considered indicative of future stockholder
returns.
The information contained in the performance graph shall not be deemed to be
"soliciting material" or to be "filed" with the Securities and Exchange
Commission, nor shall such information be incorporated by reference into any
future filing under the Securities Act or Exchange Act, except to the extent
that the Company specifically incorporates it by reference into such filing.
ACCESS HEALTH
H&Q HEALTHCARE WITHOUT BIOTECHNOLOGY INDEX
NASDAQ STOCK MARKET--U.S. INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
H&Q HEALTH CARE
ACCESS EXCLUDING NASDAQ STOCK
HEALTH BIOTECHNOLOGY INDEX MARKET - U.S. INDEX
<S> <C> <C> <C>
Sep-92 100.00 100.00 100.00
Oct-92 96.67 103.58 103.94
Nov-92 133.33 109.65 112.21
Dec-92 143.33 114.46 116.34
Jan-93 166.67 108.64 119.65
Feb-93 166.67 89.41 115.19
Mar-93 190.00 85.27 118.52
Apr-93 176.67 73.29 113.46
May-93 226.67 79.18 120.24
Jun-93 234.99 76.97 120.80
Jul-93 283.33 72.89 120.94
Aug-93 253.33 72.43 127.19
Sep-93 243.33 73.32 130.98
Oct-93 243.33 80.04 133.92
Nov-93 243.33 79.21 129.93
Dec-93 266.67 81.98 133.56
Jan-94 340.00 89.57 137.61
Feb-94 336.67 82.59 136.32
Mar-94 266.67 75.65 127.94
Apr-94 270.00 73.89 126.28
May-94 240.00 76.36 126.59
Jun-94 210.00 73.26 121.96
Jul-94 263.33 76.08 124.46
Aug-94 306.67 86.64 132.40
Sep-94 500.00 87.54 132.06
Oct-94 503.33 85.26 134.65
Nov-94 460.00 85.01 130.19
Dec-94 466.67 87.11 130.55
Jan-95 406.67 92.66 131.28
Feb-95 420.00 94.80 138.23
Mar-95 513.33 101.75 142.32
Apr-95 450.00 100.45 146.81
May-95 426.67 100.94 150.59
Jun-95 543.33 104.52 162.80
Jul-95 533.33 113.46 174.76
Aug-95 623.33 120.38 178.31
Sep-95 753.33 130.75 182.41
Oct-95 830.00 133.04 181.36
Nov-95 873.33 136.03 185.62
Dec-95 1180.00 145.03 184.63
Jan-96 1326.67 155.13 185.54
Feb-96 1460.00 155.13 192.61
Mar-96 1550.00 155.15 193.24
Apr-96 2215.00 152.17 209.28
May-96 2180.00 152.25 218.89
Jun-96 1890.00 145.82 209.02
Jul-96 1690.00 133.56 190.40
Aug-96 2030.00 142.28 201.07
Sep-96 2250.00 160.03 216.45
Oct-96 1320.00 151.70 214.06
Nov-96 1570.00 156.38 227.29
Dec-96 1790.00 161.02 227.09
Jan-97 1150.00 169.80 243.23
Feb-97 940.00 167.01 229.78
Mar-97 575.00 152.95 214.78
Apr-97 570.00 156.34 221.50
May-97 880.00 171.82 246.61
Jun-97 980.00 183.10 254.15
Jul-97 1060.00 193.19 280.98
Aug-97 1250.00 183.51 280.55
Sep-97 1380.00 191.91 297.14
</TABLE>
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who own more than ten percent of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission ("SEC"). Executive
officers, directors and greater than 10% stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that during fiscal 1997 all filing requirements applicable to its executive
officers and directors and greater than 10% stockholders were complied with,
except that one report on Form 3 was filed late for each of Timothy Connor,
Michael Myers, Elizabeth Snowden, and Barry Wolcott, each officers of the
Company, and Frank Washington, a director of the Company. One report on Form 4
was filed late for each of Kinney Johnson and Kenneth Plumlee, directors of the
Company, and two Forms 4 were filed late for Barry Wolcott.
24
<PAGE>
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If any
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed proxy to vote the shares they represent as the
Board of Directors may recommend.
It is important that your shares be represented at the meeting, regardless
of the number of shares which you hold. You are therefore urged to execute and
return, at your earliest convenience, the accompanying proxy card in the
envelope which has been enclosed.
THE BOARD OF DIRECTORS
Dated: January 20, 1998
25
<PAGE>
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R ACCESS HEALTH, INC.
O 1998 ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 25, 1998
X
Y
The undersigned stockholder of ACCESS HEALTH, INC., a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated January 20, 1998, and hereby
appoints Joseph P. Tallman and Timothy H. Connor, and each of them proxies
and attorneys-in-fact, with full power to each of substitution, on behalf and
in the name of the undersigned, to represent the undersigned at the 1998
Annual Meeting of Stockholders of ACCESS HEALTH, INC. to be held on
Wednesday, February 25, 1998, at 11:00 a.m., local time, at the Company's
business address at 310 Interlocken Parkway, Suite A, Broomfield, Colorado
80021 and at any adjournment or adjournments thereof, and to vote all shares
of Common Stock which the undersigned would be entitled to vote if then and
there personally present, on all matters coming before said meeting.
Election of Directors, Nominees: (Address Change/Comments)
-------------------------------
John R. Durant, M.D.; Kinney L. Johnson;
-------------------------------
Richard C. Miller; Joseph P. Tallman;
-------------------------------
Frank G. Washington
-------------------------------
(If you have written in the
above space, please mark the
corresponding box on the
reverse side of this card.)
You are encouraged to specify your choices by marking the appropriate boxes,
SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations.
FOLD AND DETACH HERE
<PAGE>
2566
/X/ PLEASE MARK
VOTES AS IN
THIS EXAMPLE
The Board of Directors recommends a vote FOR Proposals 1 through 3.
1. ELECTION OF DIRECTORS:
(See Reverse)
For, except vote withheld from the following nominee(s).
/ / FOR / / WITHHELD
- --------------------------------------------
2. PROPOSAL TO APPROVE THE 1998 STOCK OPTION FOR AGAINST ABSTAIN
PLAN AND RESERVE FOR ISSUANCE THEREUNDER / / / / / /
900,000 SHARES
3. PROPOSAL TO RATIFY THE APPOINTMENT OF FOR AGAINST ABSTAIN
ARTHUR ANDERSEN LLP AS THE INDEPENDENT / / / / / /
AUDITORS FOR THE COMPANY FOR FISCAL 1998
/ / MARK HERE
FOR ADDRESS
CHANGE
(This proxy should be marked, dated, signed by the stockholder(s) exactly as
his or her name appears hereon, and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate. If
shares are held by joint tenants or as community property, both should sign.)
Signature: Date
--------------------------------------- --------------------------
Signature: Date
--------------------------------------- --------------------------
FOLD AND DETACH HERE
