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 Sec. 240.14a-11(c) or Sec. 240.14a-12
Prime Medical Services, Inc.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Persons(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)(4) and 0-11.
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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
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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.
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<PAGE>
PRIME MEDICAL SERVICES, INC.
1301 S. Capital of Texas Highway
Suite C-300
Austin, Texas 78746
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held June 18, 1997
Notice is hereby given that the Annual Meeting of Shareholders of Prime
Medical Services, Inc., a Delaware corporation (the "Company"), will be held at
Barton Creek Country Club, 8212 Barton Club Dr., Austin, Texas 78735, on
Wednesday, June 18, 1997 at 8:30 a.m. Austin, Texas time for the following
purposes:
(a) To elect eight directors to serve on the Board of Directors;
(b) To approve an amendment to the Company's 1993 Stock Option Plan; and
(c) To transact such other business as may properly come before the
meeting or any adjournment(s) thereof.
The accompanying Proxy Statement contains information regarding, and a
more complete description of, the items of business to be considered at the
meeting.
The close of business on May 5, 1997, has been fixed as the record date
for the determination of Shareholders entitled to receive notice of, and to vote
at, the Annual Meeting of Shareholders or any adjournment(s) thereof.
You are cordially invited and urged to attend the meeting, but if you are
unable to attend the meeting, you are requested to sign and date the
accompanying proxy and return it promptly in the enclosed self-addressed
envelope. If you attend the meeting, you may vote in person, if you wish,
whether or not you have returned your proxy. In any event, a proxy may be
revoked at any time before it is exercised.
By Order of the Board of Directors
CHERYL L. WILLIAMS, Secretary
Austin, Texas
May 9, 1997
<PAGE>
PRIME MEDICAL SERVICES, INC.
1301 S. Capital of Texas Highway
Suite C-300
Austin, Texas 78746
PROXY STATEMENT
for
ANNUAL MEETING OF SHAREHOLDERS
To Be Held June 18, 1997
This Proxy Statement is sent to shareholders of Prime Medical Services,
Inc., a Delaware corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
Annual Meeting of Shareholders of the Company to be held at the Barton Creek
Country Club, 8212 Barton Club Dr., Austin, Texas 78735, on Wednesday, June 18,
1997 at 8:30 a.m. Austin, Texas time and any adjournment(s) thereof, for the
purposes set forth in the accompanying Notice of Annual Meeting of Shareholders.
Solicitation of proxies may be made in person or by mail, telephone, or telecopy
by directors, officers, and regular employees of the Company. The Company may
also request banking institutions, brokerage firms, custodians, nominees, and
fiduciaries to forward solicitation material to the beneficial owners of common
stock of the Company held of record by such persons, and the Company will
reimburse the forwarding expenses. The cost of solicitation of proxies will be
paid by the Company. This Proxy Statement was first mailed to shareholders on or
about May 9, 1997.
Unless the context indicates otherwise, "Prime" or the "Company" includes
the Company and all of the other direct and indirect wholly-owned subsidiaries
of the Company on a consolidated basis.
REVOCATION OF PROXY
Any shareholder returning the accompanying proxy may revoke such proxy at
any time prior to its exercise (a) by giving written notice to the Secretary of
the Company of such revocation, (b) by voting in person at the meeting, or (c)
by executing and delivering to the Secretary of the Company a later dated proxy.
1
<PAGE>
OUTSTANDING COMMON STOCK; CERTAIN SHAREHOLDERS
The voting securities of the Company are shares of its common stock, $.01
par value per share (the "Common Stock"), each share of which entitles the
holder thereof to one vote. As of April 29, 1997, there were outstanding and
entitled to vote 19,270,267 shares of Common Stock. Only shareholders of record
at the close of business on May 5, 1997 are entitled to notice of, and to vote
at, the Annual Meeting of Shareholders and any adjournment(s) thereof.
The following table sets forth certain information regarding certain
owners of Common Stock as of April 29, 1997, with respect to (a) each person who
is known by the Company to be the beneficial owner of more than five percent of
the shares of Common Stock, (b) each director and nominee for director of the
Company, (c) certain officers of the Company, and (d) all officers and directors
of the Company as a group:
Amount and Nature Percent
Name and Address of of Beneficial of
Beneficial Owner Ownership (1) Class
- --------------------- ----------------- -------
Principal Shareholders:
- ----------------------
American Physicians Service 3,064,503(2) 15.9%
Group, Inc.
1301 Capital of Texas Highway
Austin, Texas 78746
Directors and Officers:
- -----------------------
Paul R. Butrus 230,000(3) 1.2
William E. Foree, M.D. 200,960 1.0
Joseph Jenkins, M.D. 57,273 .3
Stan Johnson 8,000(3) --
Irwin Katz 17,600(3) .1
J.A. McEntire IV 10,000 .1
Michael Madler 36,833(3) .2
Dan Myers, M.D. 139,091 .7
William A. Searles 808 --
Kenneth S. Shifrin 222,400(3) 1.2
Michael J. Spalding, M.D. 48,165 .3
Cheryl L. Williams 77,902(3) .4
All directors and officers
as a Group (12 persons) 1,049,032(3) 5.4
2
<PAGE>
(1) Except as otherwise indicated, each individual has sole voting and
investment power with respect to all shares owned by such individual.
(2) Mr. Searles and Mr. Shifrin are each directors of American Physicians
Service Group, Inc. ("APS") and, together with the other officers and
directors of APS, may share in the voting and investment power with
respect to the shares of Common Stock of the Company owned by APS. Each
individual disclaims the beneficial ownership of any such shares.
(3) Includes the following number of shares subject to options that are
presently exercisable or exercisable within 60 days after April 29, 1997:
Mr. Butrus, 12,500; Mr. Johnson, 8,000; Mr. Katz, 12,500; Mr. Madler,
28,333; Mr. Shifrin, 112,500; and Mrs. Williams, 60,333.
MANAGEMENT COMPENSATION
Summary Compensation Table
- --------------------------
Set forth below is information concerning aggregate compensation paid
during each of the Company's last three fiscal years to the Company's Chief
Executive Officer and each of the Company's other most highly compensated
executive officers who received in excess of $100,000 in salary and bonuses
during any of the last three fiscal years.
<TABLE>
<CAPTION>
Summary Compensation Table
--------------------------
Long Term Compensation
--------------------------------------
Annual Compensation Awards Payouts
----------------------- ---------------------------- -----------
Options/ All Other
Fiscal Restricted Stock SARs LTIP Compensation
Name and Principal Position Year Salary ($) Bonus ($) Awards(s) ($) (#)(2) Payouts ($)(3)
- --------------------------- ----- ---------- --------- ---------------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Kenneth S. Shifrin 1996 115,225 178,947 -- 100,000 -- 696
Chairman of the Board 1995 112,500 68,425 -- -- -- 696
1994 112,500 28,350 -- -- -- 696
Joseph Jenkins, M.D. 1996 243,750(5) -- -- 75,000 -- --
President and C.E.O.
Stan Johnson 1996 173,733 -- -- -- -- 5,029
Vice President
Jackie C. Majors(4) 1996 16,154 178,947 -- -- -- 234
President 1995 150,000 68,425 -- -- -- 2,808
1994 150,000 47,250 -- -- -- 2,808
Mike Madler 1996 150,000 178,947 -- 50,000 -- 2,268
Sr. V.P.- Operations 1995 150,000 68,425 -- -- -- 37,081
1994 150,000 20,332 -- -- -- 132
Dan Myers, M.D. 1996 135,000(5) -- -- 50,000 -- --
Sr. V.P.- Development
Cheryl Williams 1996 83,250 178,947 -- 90,000 -- 2,407
V.P.- Finance 1995 80,736 68,425 -- -- -- 228
1994 75,385 20,200 -- -- -- 205
</TABLE>
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(1) Reflects bonus paid during the fiscal year.
(2) Options to acquire shares of Common Stock.
(3) Consists of life insurance premiums paid and Company contributions to
401(k) plan. Also reflects moving expenses reimbursed to Mr. Madler in
1995 in the amount of $36,905.
(4) Mr. Majors, who had served as President and Chief Executive Officer of the
Company since 1989, retired in January, 1996.
(5) Reflects salary paid to Dr. Jenkins and Dr. Myers since May 1, 1996, the
beginning of their employment with the Company.
Options Granted During Last Fiscal Year
- ---------------------------------------
The following table provides information related to options granted to the
named executive officers during 1996. The Company does not have any outstanding
stock appreciation rights.
<TABLE>
<CAPTION>
Percent of total Potential realizable value at
Number of securities options granted Exercise assumed annual rates of stock
underlying Options to employees Price Expiration price appreciation for option term
Name granted (#) in fiscal year ($/Sh) Date 5%($) 10%($)
- ------------------- -------------------- ---------------- --------- ---------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth S. Shifrin 25,000 7% $ 16.13 5/20/01 111,411 246,188
Chairman 75,000 21% $ 12.75 12/11/01 264,194 583,800
Joseph Jenkins, M.D. 50,000 14% $ 14.88 4/26/02 205,484 454,067
President 25,000 7% $ 12.75 12/11/01 88,065 194,600
Mike Madler 25,000 7% $ 16.13 5/20/01 111,411 246,188
Sr. VP - Operations 25,000 7% $ 12.75 12/11/01 88,065 194,600
Dan Myers, M.D. 25,000 7% $ 14.88 4/26/02 102,777 227,110
Sr. VP - Development 25,000 7% $ 12.75 12/11/01 88,065 194,600
Cheryl Williams 25,000 7% $ 8.94 1/17/02 61,749 136,449
VP - Finance 25,000 7% $ 16.13 5/20/01 111,411 246,188
40,000 11% $ 12.75 12/11/01 140,904 311,360
</TABLE>
Option Exercises During 1996 and Option Values at December 31, 1996
- -------------------------------------------------------------------
The following table provides information related to options exercised by
the named executive officers during 1996 and the number and value of options
held at December 31, 1996. The Company does not have any outstanding stock
appreciation rights.
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Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
---------------------------------
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised
Options/SARs at Fiscal Value of Unexercised In-the-Money
Year-End Options/SARs at Fiscal Year End ($)(2)
----------------------------- --------------------------------------
Shares Acquired (1)
Name on Exercise (#) Value Realized($) Exercisable Unexercisable Exercisable ($) Unexercisable ($)
- ------------------ --------------- ---------------- ----------- ------------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth S. Shifrin 100,000 1,328,125 100,000 100,000 1,062,500 --
Joseph Jenkins, M.D. -- -- -- 75,000 -- --
Jackie C. Majors(3) 150,000 2,278,125 -- -- -- --
Stan Johnson -- -- 8,000 32,000 41,000 164,000
Mike Madler 40,000 345,000 20,000 90,000 145,000 290,000
Dan Myers, M.D. -- -- -- 50,000 -- --
Cheryl Williams -- -- 47,000 90,000 491,563 48,438
</TABLE>
(1) The Value Realized was calculated by subtracting the per share exercise
price of the option from the closing price for the Company's Common Stock
on the date of exercise and multiplying the difference times the number of
shares of Common Stock purchased upon the exercise of the option.
(2) The Value of Unexercised In-the-Money Options was calculated by
subtracting the per share exercise price of the option from the closing
price for the Company's Common Stock on December 31, 1996 ($10.875) and
multiplying the difference times the number of shares of Common Stock
underlying the option.
(3) Mr. Majors, who had served as President and Chief Executive Officer of the
Company since 1989, retired in January, 1996.
Employment Agreements
- ---------------------
The Company has entered into employment agreements with Joseph Jenkins,
M.D., President and Chief Executive Officer of the Company, and Stan D. Johnson,
a Vice President of the Company. Dr. Jenkins is currently paid $325,000 per year
and Mr. Johnson is currently paid $165,000 per year under such agreements. Each
of these agreements provides for the payment of basic salary amounts,
performance bonuses and other customary benefits. Dr. Jenkins' employment
agreement provides for his employment through April 30, 1998, and Mr. Johnson's
employment agreement provides for his employment through September 30, 1998.
Each of the agreements entitles such individual to receive severance payments if
the Company terminates such individual's employment without cause. In any such
event, Dr. Jenkins would be entitled to receive compensation for the remainder
of the term of his employment agreement at the highest annual rate of cash
salary that he received from the company prior to such termination, and Mr.
Johnson would be entitled to receive an amount equal to the lesser of $165,000
or the amount of salary otherwise payable to Mr. Johnson through
5
<PAGE>
September, 30, 1998. Both agreements provide that the executive may terminate
his employment agreement with the Company with or without cause by providing
sixty days prior written notice to the Board of Directors.
Noncompetition Agreements
- -------------------------
The Company has entered into noncompetition agreements with Dr. Jenkins,
Mr. Johnson, Dr. Foree, Dr. Myers, Dr. Spalding and Mr. Butrus. While the terms
of such agreements vary, they generally provide that each such person, during
the period specified in his agreement, will not own, manage or control any
business that competes with the Company and will not advise a customer or
supplier of the Company to cancel or curtail its dealings with, or influence any
employee of the Company to terminate his or her employment with, the Company.
Indemnity Agreements
- --------------------
The Company has entered into indemnity agreements with a number of persons
who either are or have been officers, directors, or key employees of the
Company, including Mr. Shifrin, who is Chairman of the Board and a director of
the Company; Mr. Butrus, Dr. Foree, Dr. Jenkins, Mr. Katz, Mr. McEntire, Mr.
Searles and Dr. Spalding, who are Directors of the Company; and Ms. Williams,
Dr. Myers, and Mr. Madler, who are officers of the Company. The agreements
generally provide that, to the extent permitted by law, the Company must
indemnify each such person for judgements, expenses, fines, penalties and
amounts paid in settlement of claims that result from the fact that such person
was an officer, director or employee of the Company. In addition, the Company's
and certain of its subsidiaries' certificates of incorporation provides for
certain limitations on director liability.
REPORT OF THE COMPENSATION COMMITTEE
OF THE
BOARD OF DIRECTORS
The business the Company is engaged in is highly competitive. In order to
succeed, the Company believes that it must be able to attract and retain
qualified executives. To achieve this objective, the Company has structured an
executive compensation system tied to operating performance that the Company
believes has enabled it to attract and retain key executives.
During 1996, the Compensation Committee was comprised of Michael Spalding,
M.D. and William A. Searles, both of whom are outside directors.
During 1996, the Compensation Committee had primary responsibility for
determining executive compensation levels. The Board as a whole maintains a
philosophy that compensation of executive officers, specifically including that
of the Chairman and President, should be linked to both operating and stock
price performance. A portion of the management compensation has been comprised
of bonuses, based on operating and stock price performance, with a particular
emphasis on the
6
<PAGE>
attainment of planned objectives. Accordingly, in years in which performance
goals are achieved or exceeded, executive compensation tends to be higher than
in years in which performance is below expectations. In addition, the Company
has utilized stock options to link executive compensation to stock price
performance. The Committee feels that options are an effective incentive for
managers to create value for stockholders since the value of an option bears a
direct relationship to the Company's stock price.
For 1996, the Company's executive compensation program consisted of base
salary and a bonus based upon the achievement of specific performance
measurements, including the increase in earnings and stock price over the prior
year.
The Company's objective is to obtain a financial performance that achieves
several goals over time, including earnings-per-share growth, stock price growth
and a proper diversification of business risks. The Committee believes that
compensation levels during 1996 adequately reflect the Company's compensation
goals and policies.
Compensation Committee: Michael Spalding, M.D. and
William A. Searles
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In April 1996, the Company purchased all of the outstanding capital stock
of Lithotripters, Inc. from eleven shareholders, including Joseph Jenkins, M.D.,
J.D. and Dan Myers, M.D. The purchase price for the stock was $70,000,000 cash
and 1,636,364 shares of the Company's Common Stock. Dr. Jenkins received
$2,450,000 cash and 57,273 shares of Common Stock and Dr. Myers received
$5,950,000 cash and 139,091 shares of common stock in this transaction.
Dr. Jenkins owns limited partner interests in fifteen of the partnerships
managed by the Company. During 1996, Dr. Jenkins received $293,000 in cash
distributions from these partnerships.
Dr. Myers owns limited partner interests in nineteen of the partnerships
managed by the Company. During 1996, Dr. Myers received $401,000 in cash
distributions from these partnerships.
Prior to joining the Board of Directors in September 1996, Mr. McEntire
received a fee in the amount of $300,000 for his assistance in the
Lithotripters, Inc. acquisition.
The Company's principal executive office is located in Austin, Texas in an
office building owned by APS. Since September 1992, the Company has paid APS
approximately $4,000 per month, which includes rental payments for approximately
2,800 square feet of office space, reception and telephone services, and certain
other services and facilities.
7
<PAGE>
SECTION 16 FILING REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and officers, and persons who
own more than 10% of a registered class of the Company's equity securities, to
file initial reports of ownership and reports of changes in ownership with the
Securities and Exchange Commission (the "SEC") and the NASDAQ National Market.
Such persons 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 with
respect to 1996, or written representations from certain reporting persons, the
Company believes that all filing requirements applicable to its directors,
officers and persons who own more than 10% of a registered class of the
Company's equity securities have been complied with, except as follows. Dr.
Foree, Mr. Searles and Dr. Spalding did not timely file a Form 4 relating to
option grants to them. Mr. Butrus and Mr. Searles did not timely file a Form 4
relating to a disposition of shares. Each of such Forms were subsequently filed
by these persons.
QUORUM; VOTING
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock entitled to vote is necessary to constitute a
quorum at the meeting. If a quorum is not present or represented at the meeting,
the shareholders entitled to vote thereat, present in person or represented by
proxy, have the power to adjourn the meeting from time to time, without notice
other than an announcement at the meeting, until a quorum is present or
represented. At any such adjourned meeting at which a quorum is present or
represented, any business may be transacted that might have been transacted at
the meeting as originally notified.
Cumulative voting is not permitted in the election of directors of the
Company. On all matters (including election of directors) submitted to a vote of
the shareholders at the meeting or any adjournment(s) thereof, each holder of
Common Stock will be entitled to one vote for each share of Common Stock owned
of record by such shareholder at the close of business on May 5, 1997.
SHAREHOLDER PROPOSALS
Any shareholder of the Company meeting certain minimum stock ownership and
holding period requirements may present a proposal for action at the annual
meeting of shareholders to be held in 1998. Such shareholder must deliver the
proposal to the executive offices of the Company no later than January 15, 1998,
unless the Company notifies the shareholders otherwise. Only those proposals
that are proper for shareholder action and otherwise proper may be included in
the Company's proxy statement. The Board of Directors will consider nominations
for directors of the Company to be
8
<PAGE>
elected at the Annual Meeting of Shareholders to be held in 1998 that are
submitted in writing by any shareholder of the Company prior to January 15,
1998.
ACTION TO BE TAKEN UNDER THE PROXY
Proxies in the accompanying form which are properly executed and returned
will be voted at the meeting and any adjournment(s) thereof and will be voted in
accordance with the instructions thereon. Any proxy upon which no instructions
have been indicated with respect to a specified matter will be voted as follows
with respect to such matters: (a) "FOR" the eight persons for election to the
Board of Directors; (b) "FOR" the amendment to the 1993 Stock Option Plan and
(c) in the transaction of such other business as may properly come before the
meeting or any adjournment(s) thereof. The Board of Directors knows of no
matters, other than those stated above, to be presented for consideration at the
meeting. If, however, other matters properly come before the meeting or any
adjournment(s) thereof, it is the intention of the persons named in the
accompanying proxy to vote such proxy in accordance with their judgment on any
such matters. The persons named in the accompanying proxy may also, if it is
deemed to be advisable, vote such proxy to adjourn the meeting from time to
time.
ELECTION OF DIRECTORS
Pursuant to the Company's Bylaws, the Board of Directors has, by
resolution, fixed the number of directors at eight and eight directors will be
elected. All nominees will be elected to hold office until the next annual
meeting of shareholders of the Company or until his successor is elected and
qualified. Each nominee is presently a director of the Company. The Board of
Directors held thirteen meetings during the year ended December 31, 1996, and,
with the exception of Dr. Spalding, each director attended at least 75% of the
aggregate of (a) the total number of meetings of the Board of Directors held
during the period for which he served as a director and (b) the total number of
meetings held by all committees of the board on which he served.
Director of
Name Age Company Since
---- --- -------------
Paul Butrus 56 1992
William E. Foree, M.D. 65 1993
Joseph Jenkins, M.D., J.D. 49 1996
Irwin Katz 77 1986
J.A. McEntire IV 35 1996
William A. Searles 54 1989
Kenneth S. Shifrin 48 1989
Michael J. Spalding, M.D. 56 1993
9
<PAGE>
The Company pays Dr. Foree, Mr. Katz, Mr. McEntire, Mr. Searles and Dr.
Spalding a monthly fee of $1,250 for serving as a director of the Company. The
Company's directors are also eligible to receive stock options under the Option
Plan. The Company's directors receive reimbursement of all ordinary and
necessary expenses incurred in attending any meeting of the Board of Directors
or any committee of the Board of Directors.
Mr. Butrus has been a Director of the Company since September, 1992. Mr.
Butrus has been a Director of Mutual Assurance, Inc. ("Mutual Assurance") since
1991, and has been employed by Mutual Assurance and its subsidiaries in various
managerial capacities since 1977, currently serving as Executive Vice President.
Mutual Assurance is a property and casualty insurance company.
Dr. Foree has been a Director of the Company since October 1993. Dr. Foree
is a board certified urologist and has been practicing medicine since 1965.
Dr. Jenkins has been President and Chief Executive Officer and a Director
of the Company since April 1996. Dr. Jenkins is a board certified urologist and
is the President of Lithotripters, Inc. Dr. Jenkins is past President of the
American Lithotripsy Society.
Mr. Katz has been a Director of the Company since 1986. From 1952 until his
retirement in January 1987, Mr. Katz was a partner with Katz, Sapper & Miller
(certified public accountants).
Mr. McEntire has been a Director of the Company since September 1996. Mr.
McEntire is currently managing partner of M2 Capital Partners, a private equity
investment firm. From August, 1994 to December, 1996, Mr. McEntire served as
Vice President of Corporate Development for Parker and Parsley Petroleum, Inc.,
an oil and gas exploration company. Prior to 1994, Mr. McEntire spent 10 years
in commercial banking and corporate finance.
Mr. Searles has been a Director of the Company since October 1989. He is an
independent business consultant and from 1981 to 1989 was associated with Bear,
Stearns & Co., Inc., an investment banking firm, most recently as an Associate
Director/Limited Partner. He currently serves as a Director of APS.
Mr. Shifrin has been Chairman of the Board since October 1989. Mr. Shifrin
has served in various capacities with APS since February 1985, most recently
serving as the Chairman of the Board and Chief Executive Officer of APS. Mr.
Shifrin is a Director of APS. Mr. Shifrin is a member of the Young Presidents'
Organization.
Dr. Spalding has been a Director since October 1993. Dr. Spalding is a
board certified urologist and has been practicing medicine since 1973. Dr.
Spalding was the Chairman of Tennessee Valley Lithotripters, which was acquired
by the Company in 1993.
10
<PAGE>
No family relationships exist among the officers or directors of the
Company. Except as indicated above, no Director of the Company is a director of
any company with a class of securities registered pursuant to Section 12 of the
Exchange Act, or subject to the requirements of Section 15(d) of the Exchange
Act or any company registered as an investment company under the Investment
Company Act of 1940.
Should any nominee named herein for the office of director become
unwilling or unable to accept nomination of election, it is intended that the
persons acting under the proxy will vote for the election, in his stead, of such
other persons as the Board of Directors of the Company may recommend. The Board
of Directors has no reason to believe that any nominee named above will be
unwilling or unable to serve.
The Board of Directors of the Company has established an Audit Committee, a
Compensation Committee and a Nominating Committee. The Audit Committee's
functions include recommending to the Board of Directors the engagement of the
Company's independent public accountants, reviewing with such accountants the
plans for and the results and scope of their auditing engagement and certain
other matters relating to their services to the Company, including matters
relating to the independence of such accountants. The Compensation Committee
makes recommendations to the Board of Directors with respect to the compensation
of executive officers, including issuance of options under the Option Plan. The
Nominating Committee has primary responsibility for nominating persons for
election to the Board of Directors. Mr. Katz and Dr. Foree serve on the Audit
Committee, which held one meeting during 1996. Dr. Spalding and Mr. Searles
serve on the Compensation Committee which held five meetings during 1996. Mr.
Katz, Mr. Butrus and Mr. Searles serve on the Nominating Committee, which held
one meeting during 1996.
PROPOSAL TO AMEND
THE 1993 STOCK OPTION PLAN
The Company's 1993 Stock Option Plan (the "1993 Plan") currently provides
that the aggregate number of shares of Common Stock that may be issued upon the
exercise of all options under the 1993 Plan shall not exceed 2,000,000. As of
March 31, 1997, 748,666 shares had been issued pursuant to the 1993 Plan and an
additional 1,240,334 shares were subject to outstanding options. There were
11,000 shares remaining to be issued on the 1993 Plan. The Board of Directors of
the Company, on March 19, 1997, subject to stockholder approval at the Annual
Meeting, approved an amendment to the 1993 Plan to increase the aggregate number
of shares to be issued by 500,000. The Company has in the past utilized stock
options as a significant element of compensation to officers, key employees and
directors and intends to continue to do so. The Board of Directors believes that
the effect of this amendment will be to preserve the benefits to the Company of
the 1993 Plan by ensuring that officers, directors and other key employees
continue to receive options.
11
<PAGE>
Performance Graph
The following graph compares the Company's cumulative total stockholder return
with the cumulative total stockholder returns of the NASDAQ Market Index and the
NASDAQ Health Secondary Index, for the period from January 1, 1991 through
December 31, 1996.
[GRAPHIC OMITTED]
NASDAQ
Total US Health
December 31, PRIME NASDAQ Services
- ------------ ------- ---------- ----------
1991 100 100 100
1992 533 116 104
1993 400 134 120
1994 450 131 128
1995 1200 185 163
1996 1450 227 163
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has selected KPMG Peat Marwick LLP
as independent auditors for the year ending December 31, 1996. KPMG Peat Marwick
LLP has advised the Company that, in accordance with professional standards, it
will not perform any non-audit service which would impair its independence for
purposes of expressing an opinion on the Company's financial statements. A
representative of KPMG Peat Marwick LLP will attend the meeting with the
opportunity to make a statement if such representative desires to do so and will
be available to respond to appropriate questions.
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OTHER MATTERS
The Board of Directors of the Company does not intend to bring any other
matters before the meeting and does not know of any matters which will be
brought before the meeting by others. However, if any other matters properly
come before the meeting, it is the intention of the persons named in the
accompanying proxy to vote such proxy in accordance with their judgment on such
matters.
By Order of the Board of Directors
CHERYL L. WILLIAMS, Secretary
Austin, Texas
May 9, 1997
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PRIME MEDICAL SERVICES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JUNE 18, 1997
The undersigned hereby (a) acknowledges receipt of the Notice of Annual
Meeting of Shareholders of Prime Medical Services, Inc. (the "Company") to be
held June 18, 1997, and the Proxy Statement in connection therewith, each dated
May 9, 1997, (b) appoints Kenneth S. Shifrin and Cheryl L. Williams, or either
of them, as Proxies, each with the power to appoint a substitute, (c) authorizes
the Proxies to represent them and vote, as designated below, all the shares of
Common Stock of Prime Medical Services, Inc. held of record by the undersigned
on May 5, 1997 at such annual meeting and at any adjournment(s) thereof and (d)
revokes any proxies heretofore given.
1. Election of Directors:
/ / FOR all nominees listed below
(except as marked to the contrary below).
/ / WITHHOLD AUTHORITY to vote for all nominees listed below.
Nominees:
Paul Butrus, William E. Foree, M.D., Joseph Jenkins, M.D., Irwin Katz, J.A.
McEntire IV, William A. Searles, Kenneth S. Shifrin and Michael J. Spaulding,
M.D.
INSTRUCTION: To withhold authority to vote for any individual nominee, write
the nominee's name on the space provided below.)
______________________________________________________________________________
2. To Approve an amendment to the 1993 Stock Option Plan.
/ / FOR
/ / AGAINST
/ / ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment(s) thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS INDICATED,
THIS PROXY WILL BE VOTED FOR THE ELECTION TO THE BOARD OF DIRECTORS OF THE
NOMINEES LISTED ON THIS PROXY AND, IN THE DISCRETION OF THE PROXIES, ON ANY
OTHER BUSINESS.
Date: ________________, 1997
____________________________
____________________________
Please sign exactly and as fully
as your name appears on your certificate,
date, and return promptly. When
signing on behalf of a corporation,
partnership, estate, trust, or in
any other representative capacity,
please sign name and title. For
joint accounts, each joint owner
must sign.
