<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
PEDIATRIX MEDICAL GROUP, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
PEDIATRIX MEDICAL GROUP, INC.
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 14, 1998
---------------------
To the Shareholders of
Pediatrix Medical Group, Inc.
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Shareholders of
Pediatrix Medical Group, Inc., a Florida corporation (the "Company"), will be
held at 10:00 a.m., local time, on Thursday, May 14, 1998, at the Sheraton
Suites, 311 North University Drive, Plantation, Florida, for the following
purposes:
(1) To elect seven members to the Company's Board of Directors to hold
office until their terms shall expire or until their successors are
duly elected and qualified; and
(2) To transact such other business as may properly come before the meeting
and any adjournments thereof.
The Board of Directors has fixed the close of business on March 27, 1998 as
the record date for determining those shareholders entitled to notice of, and to
vote at, the Annual Meeting and any adjournments thereof.
Whether or not you expect to be present, please sign, date and return the
enclosed proxy card in the enclosed pre-addressed envelope as promptly as
possible. No postage is required if mailed in the United States.
By Order of the Board of Directors,
Roger J. Medel, M.D., M.B.A.
President and Chief Executive Officer
Ft. Lauderdale, Florida
April 6, 1998
THIS IS AN IMPORTANT MEETING AND ALL SHAREHOLDERS ARE INVITED TO ATTEND THE
MEETING IN PERSON. THOSE SHAREHOLDERS WHO ARE UNABLE TO ATTEND ARE RESPECTFULLY
URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE.
SHAREHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING,
REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON.
<PAGE> 3
ANNUAL MEETING OF SHAREHOLDERS
OF
PEDIATRIX MEDICAL GROUP, INC.
---------------------
PROXY STATEMENT
---------------------
DATE, TIME AND PLACE OF ANNUAL MEETING
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Pediatrix Medical Group, Inc., a Florida corporation
(the "Company"), of proxies from the holders of the Company's Common Stock, par
value $0.01 per share (the "Common Stock"), for use at the 1998 Annual Meeting
of Shareholders of the Company, to be held on the 14th day of May, 1998, or any
adjournment(s) thereof (the "Annual Meeting"), pursuant to the enclosed Notice
of Annual Meeting. The approximate date this Proxy Statement and the enclosed
form of proxy are first being sent to holders of Common Stock is April 6, 1998.
The complete mailing address, including zip code, of the principal executive
offices of the Company is 1455 North Park Drive, Ft. Lauderdale, Florida 33326.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Board of Directors of the
Company. The giving of a proxy does not preclude the right to vote in person
should any shareholder giving the proxy so desire. Shareholders have an
unconditional right to revoke their proxy at any time prior to the exercise
thereof, either in person at the Annual Meeting or by filing with the Secretary
of the Company at the Company's headquarters a written revocation or duly
executed proxy bearing a later date; however, no such revocation will be
effective until written notice of the revocation is received by the Company at
or prior to the Annual Meeting.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting of Shareholders and the enclosed proxy is to be borne
by the Company. In addition to the use of mail, employees of the Company may
solicit proxies personally and by telephone and facsimile. They will receive no
compensation therefor in addition to their regular salaries. Arrangements will
be made with banks, brokers and other custodians, nominees and fiduciaries to
forward copies of the proxy material to their principals and to request
authority for the execution of proxies. The Company will reimburse such persons
for their expenses in so doing.
PURPOSES OF THE MEETING
At the Annual Meeting, the Company's shareholders will consider and vote
upon the following matters:
1. The election of seven directors to serve until the next Annual
Meeting of Shareholders or until their successors are duly elected and
qualified; and
2. Such other business as may properly come before the Annual Meeting,
including any adjournments thereof;
Unless contrary instructions are indicated on the enclosed proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
which have not been revoked in accordance with the procedures set forth above)
will be voted (i) FOR the election of the seven nominees for director named
below, and (ii) in favor of all other proposals as may properly come before the
Annual Meeting. In the event a shareholder specifies a different choice by means
of the enclosed proxy, his shares will be voted in accordance with the
specification so made.
<PAGE> 4
OUTSTANDING SHARES AND VOTING RIGHTS
The Board of Directors has set the close of business on March 27, 1998 (the
"Record Date"), as the record date for determining shareholders of the Company
entitled to notice of and to vote at the Annual Meeting. As of the Record Date
there were 15,176,187 shares of Common Stock issued and outstanding, all of
which are entitled to be voted at the Annual Meeting. Holders of Common Stock
are entitled to one vote per share on each matter that is submitted to
shareholders for approval.
The attendance, in person or by proxy, of the holders of shares of Common
Stock representing a majority of the outstanding shares of such stock is
necessary to constitute a quorum. For purposes of electing directors at the
Annual Meeting, the nominees receiving the greatest number of votes of Common
Stock shall be elected as directors. Any other matter that may be submitted to a
vote of the shareholders will be approved if the number of shares of Common
Stock voted in favor of the matter exceeds the number of votes in opposition of
the matter, unless otherwise required by law or the Company's Articles of
Incorporation or Bylaws. Abstentions are considered as shares present and
entitled to vote for purposes of determining the presence of a quorum and for
purposes of determining the outcome of any matter submitted to the shareholders
for a vote, but are not counted as votes "for" or "against" any matter. The
inspectors of election will treat shares referred to as "broker or nominee
non-votes" (shares held by brokers or nominees as to which instructions have not
been received from the beneficial owners or persons entitled to vote and the
broker or nominee does not have discretionary voting power on a particular
matter) as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. For purposes of determining the outcome of
any matter as to which the proxies reflect broker or nominee non-votes, shares
represented by such proxies will be treated as not present and not entitled to
vote on that subject matter and therefore will not be considered by the
inspectors of election when counting votes cast on the matter (even though those
shares are considered entitled to vote for quorum purposes and may be entitled
to vote on other matters.) If less than a majority of the outstanding shares of
Common Stock are represented at the Annual Meeting, a majority of the shares so
represented may adjourn the Annual Meeting from time to time without further
notice.
2
<PAGE> 5
SECURITY OWNERSHIP
The following table sets forth information with respect to the beneficial
ownership of the Company's Common Stock as of March 16, 1998 by (a) each person
known to the Company to own beneficially more than five percent of the Company's
outstanding Common Stock, (b) each director (including nominees) who owns any
such shares, (c) each Named Executive Officer who owns any such shares (see
"Executive Compensation and Other Information -- Summary of Cash and Certain
Other Compensation"), and (d) the directors and executive officers of the
Company as a group:
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED(2)
----------------------
NAME OF BENEFICIAL OWNER(1) SHARES PERCENT
- - --------------------------- ---------- --------
<S> <C> <C>
Roger J. Medel, M.D., M.B.A.(3)............................. 1,395,209 8.8%
Lawrence M. Mullen(4)....................................... 122,955 *
Kristen Bratberg(5)......................................... 85,898 *
Bruce A. Jordan(6).......................................... 6,667 *
Brian D. Udell, M.D.(7)..................................... 491,318 3.2
M. Douglas Cunningham, M.D.(8).............................. 25,301 *
Cesar L. Alvarez(9)......................................... 5,000 *
Michael B. Fernandez(10).................................... 10,000 *
Albert H. Nahmad (11)....................................... 5,000 *
Bruce R. Evans(12).......................................... 2,000 *
E. Roe Stamps, IV(12)....................................... 2,000 *
Denver Investment Advisors LLC(13).......................... 1,036,100 6.8
Pilgrim Baxter & Associates(14)............................. 952,100 6.3
Putnam Investments, Inc.(15)................................ 2,130,912 14.0
Franklin Resources, Inc.(16)................................ 894,430 5.9
All directors and executive officers as a group
(11 persons)(17)............................................ 2,151,348 13.3
</TABLE>
- - ---------------
* Less than one percent.
(1) Unless otherwise indicated, the address of each of the beneficial owners
identified is 1455 North Park Drive, Ft. Lauderdale, Florida 33326.
(2) Based on 15,175,087 shares of Common Stock outstanding. Pursuant to the
rules of the Securities and Exchange Commission (the "Commission"), certain
shares of Common Stock which a person has the right to acquire within 60
days of March 16, 1998 pursuant to the exercise of stock options are deemed
to be outstanding for the purpose of computing the percentage ownership of
such person but are not deemed outstanding for the purpose of computing the
percentage ownership of any other person.
(3) Includes (i) 240 shares owned by Dr. Medel's children, as to which Dr.
Medel disclaims beneficial ownership, (ii) 643,665 shares held by Medel
Family Limited Partnership, L.P., a Delaware limited partnership, (iii)
27,970 shares held by Medel Investments, Inc., a Nevada corporation, (iv)
703,333 shares subject to presently exercisable options, and (v) 20,001
shares subject to presently exercisable options held by his wife.
(4) Includes (i) 6,288 shares directly owned, 1,288 of which were acquired
through the Employee Stock Purchase Plan and (ii) 116,667 shares subject to
presently exercisable options.
(5) Includes (i) 2,564 shares directly owned, 1,564 of which were acquired
through the Employee Stock Purchase Plan and (ii) 83,334 shares subject to
presently exercisable options.
(6) All 6,667 shares are subject to presently exercisable options.
(7) Includes (i) 126,091 shares held in the Brian Udell Trust Account and (ii)
315,227 shares held in his wife's trust account, the Geraldine Manning
Udell Trust Account and (iii) 50,000 shares subject to presently
exercisable options.
(8) Includes 25,001 shares subject to presently exercisable options.
(9) All 5,000 shares are subject to presently exercisable options. The address
of Mr. Alvarez is 1221 Brickell Avenue, 22nd Floor, Miami, Florida 33131.
3
<PAGE> 6
(10) Includes 5,000 shares which are subject to presently exercisable options.
The address of Mr. Fernandez is 2333 Ponce de Leon Boulevard, Suite 303,
Coral Gables, Florida 33134.
(11) All 5,000 shares are subject to presently exercisable options. The address
of Mr. Nahmad is 2665 South Bayshore Drive, Coconut Grove, Florida 33133.
(12) The address of Messrs. Stamps and Evans is c/o Summit Partners, 600
Atlantic Avenue, Suite 2800, Boston, Massachusetts 02210.
(13) Denver Investment Advisors LLC, a registered investment advisor, is deemed
to have beneficial ownership of 1,036,100 shares, based upon the most
recent Schedule 13G filing. The address of Denver Investment Advisors is
1225 17th Street, 26th Floor, Denver, Colorado 80202.
(14) Pilgrim Baxter & Associates, a registered investment advisor, is deemed to
have beneficial ownership of 952,100 shares based upon the most recent
Schedule 13G. The address of Pilgrim Baxter and Associates is 1255 Drummers
Lane, Suite 300, Wayne, Pennsylvania 19087.
(15) Putnam Investments, Inc., a registered investment advisor, is deemed to
have beneficial ownership of 2,130,912 shares based upon the most recent
Schedule 13G. The address of Putnam Investments, Inc. is One Post Office
Square, Boston, Massachusetts 02109.
(16) Franklin Resources, a registered investment advisor, is deemed to have
beneficial ownership of 894,430 shares based on the most recent Schedule
13G. The address of Franklin Resources, Inc. is 901 Mariner's Island
Boulevard, 6th Floor, San Mateo, California 94404.
(17) Includes 1,020,003 shares subject to presently exercisable options.
4
<PAGE> 7
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
The Company's Amended and Restated Articles of Incorporation provide that
the number of directors constituting the Company's Board of Directors shall
consist of not less than one member, the exact number of directors to be
determined from time to time by resolution adopted by the Board of Directors.
The Company's Bylaws provide that the number of directors shall be fixed from
time to time, within the limits specified by the Articles of Incorporation, by
resolution of the Board of Directors. The Board of Directors has fixed at seven
the number of directors that will constitute the Board for the ensuing year.
Each director elected at the Annual Meeting will serve for a term expiring at
the 1999 Annual Meeting of Shareholders, expected to be held in May 1999, or
until his successor has been duly elected and qualified. Each of the incumbent
directors has been nominated as a director to be elected at the Annual Meeting
by the holders of Common Stock and proxies will be voted for such persons absent
contrary instructions.
The Board of Directors has no reason to believe that any nominee will
refuse to act or be unable to accept election; however, in the event that a
nominee for a directorship is unable to accept election or if any other
unforeseen contingencies should arise, it is intended that proxies will be voted
for the remaining nominees and for such other person as may be designated by the
Board of Directors, unless it is directed by a proxy to do otherwise.
Each of the nominees for election as a director of the Company is a current
member of the Board of Directors.
Dr. Medel has served as Director since 1980. Messrs. Stamps and Evans have
served as directors since 1992. Mr. Fernandez has served as a director since
October 1995, and Mr. Nahmad since January 1996. Dr. Cunningham has served as a
director since October 1996, and Mr. Alvarez has served as a director since
March 1997.
5
<PAGE> 8
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- - ---- --- -------------------------
<S> <C> <C>
Roger J. Medel, M.D., M.B.A.................. 51 President, Chief Executive Officer and
Director
Lawrence M. Mullen........................... 55 Vice President and Chief Financial Officer
Kristen Bratberg............................. 35 Vice President, Business Development
Bruce A. Jordan.............................. 44 Vice President, General Counsel and Corporate
Secretary
M. Douglas Cunningham, M.D................... 58 Director
Cesar L. Alvarez............................. 50 Director
Michael B. Fernandez(1)(2)................... 45 Director
Albert H. Nahmad(1)(2)....................... 57 Director
Bruce R. Evans(1)............................ 39 Director
E. Roe Stamps, IV............................ 51 Director
</TABLE>
- - ---------------
(1) Member of Compensation Committee.
(2) Member of Audit Committee.
Roger J. Medel, M.D. M.B.A. has held the position of President, Chief
Executive Officer and director of Pediatrix since he founded the Company in 1979
with Dr. Gregory Melnick. Dr. Medel has been an instructor in pediatrics at the
University of Miami and participates as a member of several medical and
professional organizations. Dr. Medel also holds a Masters Degree in Business
Administration from the University of Miami. Dr. Medel has served on the boards
of directors of Sechrist Industries Inc., ARC Broward Inc. and Physician
Healthcare Plans, Inc.
Lawrence M. Mullen has held the position of Vice President and Chief
Financial Officer of Pediatrix since May 1995. Mr. Mullen has over 30 years of
experience in finance and accounting. Mr. Mullen was Senior Vice President and
Chief Financial Officer of Medical Care America, Inc. from May 1993 until its
acquisition by Columbia/HCA Healthcare Corporation in September 1994. Mr. Mullen
served as a consultant to Columbia/HCA from November 1994 until joining
Pediatrix. Prior to joining Medical Care America, Inc., Mr. Mullen was a partner
of KPMG Peat Marwick LLP, where he was employed from 1964 to 1993.
Kristen Bratberg joined the Company in November 1995 as Vice President,
Business Development. Prior to joining the Company, Mr. Bratberg was employed by
Dean Witter Reynolds Inc. in the Corporate Finance Department from May 1987 to
November 1995, most recently as a Senior Vice President specializing in the
healthcare industry.
Bruce A. Jordan joined the Company in April 1997 as Vice President, General
Counsel and Corporate Secretary. Prior to joining the Company, Mr. Jordan was
Vice President and General Counsel of Del Monte Fresh Produce ("Del Monte") from
May 1994 until joining the Company, and from October 1990 until May 1994 he
served as Assistant General Counsel of Del Monte.
M. Douglas Cunningham, M.D. has been employed by the Company since June
1996. Dr. Cunningham served as Vice President and Chief Medical Officer from
June 1996 to June 1997, at which time he was appointed Vice President, Regional
Medical Operations. In October 1996, Dr. Cunningham was appointed director. Dr.
Cunningham has over 25 years experience as a practicing neonatologist and
professor of pediatrics and neonatology. From 1988 until joining the Company,
Dr. Cunningham served as the Senior Vice President, Medical Operations with
Infant Care Management Services, Inc. Dr. Cunningham has also served as a
professor at several medical schools, most recently as a Clinical Professor of
Pediatrics at the University of California, Irvine, and has published numerous
medical articles.
6
<PAGE> 9
Cesar L. Alvarez was appointed as a director in March 1997. Mr. Alvarez has
been a lawyer with the law firm of Greenberg Traurig Hoffman Lipoff Rosen &
Quentel, P.A. for over twenty years, where he has served as the chairman of its
corporate, securities and banking department and currently serves as the firm's
Chief Executive Officer and Managing Shareholder. Mr. Alvarez also serves as a
director of Atlantis Plastics, Inc., FDP Corp., Texpack, N.V. and Watsco, Inc.
Michael B. Fernandez was appointed as a director in October 1995. Mr.
Fernandez has served since 1992 as Chairman of the Board and Chief Executive
Officer of Physicians Healthcare Plans, Inc., a Florida based health maintenance
organization. Prior to that time, Mr. Fernandez served from 1990 to 1992 as
Executive Vice President of Product Development and Marketing as well as Chief
Executive Officer of certain indemnity subsidiaries of CAC-United Healthcare
Plans of Florida, Inc., a publicly held managed care company.
Albert H. Nahmad was appointed as a director in January 1996. Mr. Nahmad
has served since 1973 as Chairman of the Board and President of Watsco, Inc., a
distributor of residential central air conditioners, a public company listed on
the New York and American Stock Exchanges. Mr. Nahmad is also a director of
American Bankers Insurance Group, Inc.
Bruce R. Evans was elected a director of the Company in October 1992. Mr.
Evans has been employed by Summit Partners since 1986, and is currently a
General Partner. Mr. Evans is also a director of Omtool, Ltd. and DSET
Corporation.
E. Roe Stamps, IV was elected a director of the Company in October 1992.
Mr. Stamps co-founded Summit Partners in 1984 and is currently its Managing
General Partner. Mr. Stamps is also a director of Ameripath, Inc.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held 4 meetings during 1997 and took certain actions
by unanimous written consent. Each director attended at least 75 percent of the
aggregate of (i) the number of such meetings, and (ii) the number of meetings of
committees of the Board of Directors held during 1997.
The Board of Directors has established two standing committees: (1) the
Audit Committee and (2) the Compensation Committee.
Messrs. Fernandez and Nahmad are members of the Audit Committee, which was
established in January 1996. The duties and responsibilities of the Audit
Committee include (a) recommending to the full Board the appointment of the
Company's auditors and any termination of engagement, (b) reviewing the plan and
scope of audits, (c) reviewing the Company's significant accounting policies and
internal controls, and (d) having general responsibility for all related
auditing matters. The Audit Committee held one meeting in 1997.
Messrs. Evans, Fernandez and Nahmad are members of the Compensation
Committee, with Mr. Evans as Chairman of the committee. The Compensation
Committee is responsible for setting and administering policies that govern
annual compensation of the Company's executive officers. The Compensation
Committee has the exclusive power and authority to make compensation decisions
and make recommendations to the Board of Directors on compensation matters
affecting the Company's executive officers. The Compensation Committee also
administers the Company's stock option plan, stock purchase plans and incentive
plans for executive officers. The Compensation Committee held 3 meetings in
1997.
DIRECTOR COMPENSATION
The Company pays each director who is neither an employee nor is associated
with one of the Company's principal shareholders an annual director's fee of
$7,500, payable quarterly, a $1,000 fee for each meeting of the Board of
Directors attended by such director and, if not held in conjunction with a
regular meeting of the Board of Directors, a $500 fee for each committee meeting
attended. In addition, each non-employee director that is not affiliated with
one of the Company's principal shareholders (an "Outside Director") receives
options to purchase 5,000 shares of Common Stock on such director's initial
appointment to the Board, which options become fully exercisable on the one-year
anniversary date of the grant. The unexercised portion of any
7
<PAGE> 10
option granted to an Outside Director becomes null and void three months after
the date on which such Outside Director ceases to be a director of the Company
for any reason. The Company also reimburses all directors for out-of-pocket
expenses incurred in connection with the rendering of services as a director.
Dr. Cunningham also serves as Vice President, Regional Medical Operations
pursuant to an employment agreement with the Company which provides for an
annual salary of $150,000 plus a performance bonus. During 1997, Dr. Cunningham
received compensation of $336,017 including bonuses for services rendered to the
Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Fernandez, a member of the Company's Compensation Committee, is also a
director and executive officer of Physicians Healthcare Plans, Inc. Dr. Medel
serves on the Board of Directors of Physicians Healthcare Plans, Inc.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth certain summary information concerning
compensation paid or accrued by the Company and its subsidiaries to or on behalf
of (i) the Company's Chief Executive Officer, (ii) each of the most highly
compensated executive officers of the Company who were serving as executive
officers at the end of the last completed fiscal year, whose total annual salary
and bonus, determined as of the end of the last fiscal year, exceeded $100,000
(the "Named Executive Officers"), for the fiscal years ended December 31, 1997,
1996 and 1995, and (iii) those individuals for whom disclosures would be
provided but for the fact that the individual was not serving as an executive
officer of the Company at the end of the last fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION(1) -----------------
------------------------------- NO. OF SECURITIES
FISCAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS COMPENSATION(3)
- - --------------------------- ------ --------- ---------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
Roger J. Medel, M.D., M.B.A....... 1997 $400,000 $ 100,000(2) 200,000 $6,400
President and Chief 1996 397,984 539,000(2) 200,000 3,595
Executive Officer 1995 400,000 175,750(2) 200,000 6,000
Lawrence M. Mullen................ 1997 250,000 50,000(2) 50,000 6,400
Vice President and Chief 1996 169,309 50,000(2) 50,000 6,000
Financial Officer(4) 1995 110,936 25,500(2) 100,000 3,400
Kristen Bratberg.................. 1997 200,000 1,017,077 50,000 6,400
Vice President, Business 1996 200,000 699,000 -- 6,000
Development(5) 1995 33,333 -- 100,000 --
Bruce A. Jordan................... 1997 117,778 20,000(2) 20,000 3,533
Vice President, General Counsel
and Corporate Secretary(6)
Brian D. Udell, M.D............... 1997 375,000 -- 50,000 6,400
Vice President, Practice 1996 375,000 -- -- 6,000
Integration(7) 1995 350,000 25,000(2) 50,000 6,000
</TABLE>
- - ---------------
(1) The column for "Other Annual Compensation" has been omitted because there is
no compensation required to be reported in such columns. The aggregate
amount of perquisites and other personal benefits provided to each officer
listed above is less than 10% of the total annual salary and bonus of such
officer.
(2) Includes bonuses paid in a subsequent year for services performed in the
year reported.
(3) Reflects matching contributions to the Company's 401(k) plan.
8
<PAGE> 11
(4) Mr. Mullen joined the Company in May 1995.
(5) Mr. Bratberg joined the Company in November 1995.
(6) Mr. Jordan joined the Company in April 1997.
(7) Dr. Udell served as Vice President, Practice Integration until October 1997
at which time he was appointed President, Obstetrix Medical Group, Inc., a
subsidiary of the Company.
OPTION GRANTS TABLE
The following table sets forth certain information concerning grants of
stock options made during fiscal 1997 to the Named Executive Officers.
<TABLE>
<CAPTION>
INDIVIDUAL OPTION GRANTS IN 1997 FISCAL YEAR
--------------------------------------------------------------------------
POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED ANNUAL
OPTIONS RATES OF STOCK PRICE
GRANTED TO EXERCISE APPRECIATION FOR
NUMBER EMPLOYEES PRICE OPTION TERM(1)
OF OPTIONS IN FISCAL PER EXPIRATION ------------------------
NAME GRANTED 1997 SHARE(2) DATE 5% 10%
- - ---- ---------- ---------- -------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Roger J. Medel, M.D. M.B.A....... 200,000 25.5% $41.375 1/28/2007 5,204,103 13,188,219
Lawrence M. Mullen............... 50,000 6.4 29.00 4/14/2007 911,897 2,310,927
Kristen Bratberg................. 50,000 6.4 29.00 4/14/2007 911,897 2,310,927
Bruce A. Jordan.................. 20,000 2.6 29.00 4/14/2007 364,759 924,371
Brian D. Udell, M.D.............. 50,000 6.4 29.00 4/14/2007 911,897 2,310,927
</TABLE>
- - ---------------
(1) The dollar amounts set forth in these columns are the result of calculations
at the five percent and ten percent rates set by the Securities and Exchange
Commission, and therefore are not intended to forecast possible future
appreciation, if any, of the market price of the Common Stock.
(2) All options were granted at exercise prices equal to the fair market value
of the Common Stock on the date of grant.
STOCK OPTION EXERCISES AND YEAR-END OPTION VALUE TABLE
The following table sets forth certain information concerning option
exercises in fiscal 1997, the number of stock options held by the Named
Executive Officers as of December 31, 1997 and the value (based on the fair
market value of a share of stock at fiscal year-end) of in-the-money options
outstanding as of such date.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
NUMBER OPTIONS AT IN-THE-MONEY OPTIONS AT
OF SHARES DECEMBER 31, 1997 DECEMBER 31, 1997(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Roger J. Medel, M.D.
M.B.A...................... -- -- 570,000 400,000 $17,108,828 $2,641,672
Lawrence M. Mullen........... -- -- 83,333 116,667 1,956,235 1,912,514
Kristen Bratberg............. -- -- 66,667 83,333 1,566,674 1,470,825
Bruce A. Jordan.............. -- -- -0- 20,000 -0- 275,000
Brian D. Udell, M.D.......... -- -- 33,333 66,667 758,326 1,066,674
</TABLE>
- - ---------------
(1) The closing sale price for the Company's Common Stock as reported on the New
York Stock Exchange on December 31, 1997 was $42.75. Value is calculated by
multiplying (a) the difference between $42.75 and the option exercise price
by (b) the number of shares of Common Stock underlying the option.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with each of the
executive officers (collectively the "Employment Agreements"). Pursuant to the
Employment Agreements, Dr. Medel, Messrs. Mullen, Bratberg, Dr. Udell and Mr.
Jordan receive base salaries of $400,000, $170,000, $200,000, $375,000 and
$165,000, respectively. The Employment Agreements also provide that such
executives are eligible to receive performance bonuses. The Employment
Agreements provide for payments to the executives upon termination
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after a Change in Control (as defined) in amount equal to 200% of average annual
compensation for Dr. Medel, 150% of the average annual compensation for Dr.
Udell, and 100% of the average annual compensation for each of Mr. Bratberg, Mr.
Mullen and Mr. Jordan for the five taxable years prior to such termination. The
executive officers each hold options to purchase Common Stock granted under the
Company's Stock Option Plan. The Employment Agreements provide that, to the
extent not already exercisable, such options will become exercisable if the
executive's employment is terminated within a 12-month period after a Change in
Control. The Employment Agreements further provide that each executive shall not
compete with the Company during the employment term and for a period of one year
thereafter following the termination of the agreement for any reason.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Under rules established by the Securities and Exchange Commission, the
Compensation Committee of the Board of Directors of the Company is required to
provide a report explaining the rationale and considerations that led to
fundamental compensation decisions affecting the Company's executive officers
(including the Named Executive Officers) during the past fiscal year.
GENERAL. The Compensation Committee is comprised of independent directors
and is responsible for setting and administering policies that govern annual
compensation of the Company's executive officers, as well as the Company's stock
option, employee stock purchase and incentive compensation plans. The
Compensation Committee's general philosophy with respect to the compensation of
the Company's executive officers is to offer competitive compensation programs
designed to attract and retain key executives critical to the long-term success
of the Company and to recognize an individual's contribution and personal
performance. Such compensation programs include a base salary and an annual
performance-based bonus as well as stock option plans and incentive plans
designed to provide long-term incentives. In addition, the Compensation
Committee may recommend the grant of discretionary bonuses to the Company's
executive officers.
In establishing the Company's executive compensation program, the
Compensation Committee takes into account current market data and compensation
trends for comparable companies, and gauges achievement of corporate and
individual objectives. The base salaries of the Named Executive Officers have
been fixed at levels which the Compensation Committee believes are competitive
with amounts paid to senior executives with comparable qualifications,
experience and responsibilities. Performance bonuses have been structured to
reinforce the achievement of both short and long term corporate objectives. The
Company utilizes stock options to foster a long-term perspective aligned with
that of its shareholders. The salaries for each of the Named Executive Officers
is set forth in such executive's employment agreement.
1997 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER. In February 1995, the
Company amended and restated Dr. Medel's employment agreement, which provides
for a base salary of $400,000 per year and a five-year term. Dr. Medel is also
entitled to receive a performance bonus of $100,000 in each year that Dr. Medel
meets or exceeds certain performance objectives determined by the Compensation
Committee. At the 1997 annual shareholders meeting, the shareholders approved
the Incentive Plan, pursuant to which Dr. Medel is also entitled to receive
incentive compensation. This Incentive Plan incorporates the terms of an
incentive bonus previously contained in Dr. Medel's employment agreement. In
determining Dr. Medel's overall compensation for 1997, including the grant of
stock options, the Compensation Committee evaluated the Company's growth during
1997, which included the following achievements: (i) neonatal intensive care
units managed by the Company increased from 68 at December 31, 1996 to 99 at
December 31, 1997, (ii) the number of patient days increased by 75% to
approximately 325,000 at December 31, 1997, and (iii) revenues increased from
$81 million in 1996 to $129 million in 1997. The Compensation Committee believes
that these achievements reflect the Chief Executive Officer's strategic
leadership for the Company and, as a result, awarded the Chief Executive Officer
the bonuses and stock options set forth in the Summary Compensation Table.
POLICY ON DEDUCTIBILITY OF INCENTIVE COMPENSATION. Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code") limits the tax deduction
to $1 million for compensation paid to the Company's five most highly
compensated executive officers, unless certain requirements are met. In order to
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comply with Section 162(m), the Stock Option Plan limits the number of shares
underlying options awardable during the 10-year term of the Stock Option Plan to
any plan participant and is administered by a committee consisting only of
"outside directors" (as defined in Section 162(m)). While the tax impact of any
compensation is one factor to consider, such impact is evaluated in light of the
Compensation Committee's overall compensation philosophy. The Compensation
Committee intends to establish executive officer compensation programs which
will maximize the Company's deduction if the Compensation Committee determines
that such actions are consistent with its philosophy and in the best interests
of the Company and its shareholders.
Bruce R. Evans, Chairman
Michael B. Fernandez
Albert H. Nahmad
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total shareholder
return on the Company's Common Stock against the cumulative total return of the
NYSE Composite Index, the NASD Composite Index and the NASD Health Index for the
period of September 20, 1995 (the date the Company's Common Stock commenced
trading on the Nasdaq National Market) to December 31, 1997. The Company's
Common Stock commenced trading on the New York Stock Exchange on September 11,
1996. It was previously traded on the Nasdaq National Market.
(graph)
<TABLE>
<CAPTION>
NYSE
Measurement Period Pediatrix Composite NASDAQ NASDAQ
(Fiscal Year Covered) Medical Group Index Index Health
<S> <C> <C> <C> <C>
9/20/95 $100.00 $100.00 $100.00 $100.00
9/29/95 $102.50 $97.96 $99.87
12/29/95 $137.50 $99.15 $115.85
3/29/96 $177.50 $103.78 $120.78
6/28/96 $242.50 $112.26 $131.67
9/30/96 $250.63 $117.26 $131.18
12/31/96 $185.00 $125.23 $116.00
3/31/97 $164.38 $127.23 $108.98
6/30/97 $229.06 $147.62 $121.65
9/30/97 $220.63 $158.73 $132.35
12/31/97 $213.75 $163.18 $117.67
</TABLE>
CERTAIN TRANSACTIONS
In March 1997 Cesar L. Alvarez was appointed to the Board of Directors of
the Company. Mr. Alvarez is the Chief Executive Officer and Managing Shareholder
of Greenberg Traurig Hoffman Lipoff Rosen & Quentel, P.A. which serves as the
Company's principal outside counsel and receives customary fees for legal
services. The Company currently anticipates that such arrangement will continue.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and executive officers, and persons who own
more than 10 percent of the Company's Common Stock, to file with the Securities
and Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock. Officers, directors and greater than 10
percent shareholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and representations that no other reports were
required, during the fiscal year ending December 31, 1997 all Section 16(a)
filing requirements applicable to its officers, directors and greater than ten
percent beneficial owners were complied with, except that one report was filed
late by Douglas Cunningham.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Company's independent public accountants for year ended December 31,
1997 were and for 1998 will be the firm of Coopers & Lybrand L.L.P. It is
expected that representatives of such firm will (i) attend the Annual Meeting,
(ii) have an opportunity to make a statement if they desire to do so, and (iii)
be available to respond to appropriate questions.
OTHER BUSINESS
The Board knows of no other business to be brought before the Annual
Meeting. If, however, any other business should properly come before the Annual
Meeting, the persons named in the accompanying proxy will vote proxies as in
their discretion they may deem appropriate, unless they are directed by a proxy
to do otherwise.
INFORMATION CONCERNING SHAREHOLDER PROPOSALS
Pursuant to Rule 14a-8 promulgated by the Securities and Exchange
Commission, a shareholder intending to present a proposal to be presented at the
1999 Annual Meeting of Shareholders must deliver a proposal in writing to the
Company's principal executive offices on or before December 7, 1998.
By Order Of The Board Of Directors
Roger J. Medel, M.D., M.B.A.
President and Chief Executive Officer
Fort Lauderdale, Florida
April 6, 1998
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Appendix A
FORM OF PROXY
PEDIATRIX MEDICAL GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF THE COMPANY
The undersigned, a shareholder of PEDIATRIX MEDICAL GROUP, INC., a Florida
corporation (the "Company"), hereby appoints Roger J. Medel, M.D. M.B.A. and
Bruce A. Jordan, and each of them, as proxies for the undersigned, each with
full power of substitution, and hereby authorizes them to represent and to vote,
as designated below, all of the shares of stock of the Company held of record by
the undersigned at the close of business on March 27, 1998 at the Annual Meeting
of Shareholders of the Company to be held at the Sheraton Suites, 311 North
University Drive, Plantation, Florida, on May 14, 1998 at 10:00 a.m., local
time, and at any adjournments thereof.
The Board of Directors unanimously recommends a vote FOR each proposal.
1. ELECTION OF DIRECTORS
<TABLE>
<S> <C> <C> <C>
Roger J. Medel, M.D., M.B.A. Cesar L. Alvarez Albert H. Nahmad E. Roe Stamps, IV
M. Douglas Cunningham, M.D. Michael B. Fernandez Bruce R. Evans
</TABLE>
[ ] VOTE FOR all nominees listed above, except authority to vote withheld
from the following nominees (if any).
[ ] AUTHORITY TO VOTE WITHHELD from all nominees.
2. Upon such other matters as may properly come before such Annual Meeting or
any adjournments thereof. In their discretion, the proxies are authorized to
vote upon such other business as may properly come before the Annual Meeting
and any adjournments thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" ALL OF THE PROPOSALS.
(See reverse side)
(Continued from other side)
The undersigned hereby acknowledges receipt of (1) the Notice of Annual
Meeting for the 1998 Annual Meeting, (2) the Proxy Statement, and (3) the 1997
Annual Report to Shareholders.
Dated: , 1998
-------------------
------------------------------
(Signature)
------------------------------
(Signature if held jointly)
IMPORTANT: Please sign exactly as your name appears hereon and mail it promptly
even though you now plan to attend the meeting. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
When shares are held by joint tenants, both should sign. If a corporation,
please sign in full corporate name by president or other authorized officer. If
a partnership, please sign in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY PROMPTLY USING THE ENVELOPE
PROVIDED. NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES.
