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 Section 240.14a-11(c) or Section 240.14a-12
Prime Medical Services, Inc.
(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.
$500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(I)(3).
Fee computed on table below per Exchange Act Rules 14a-6(I)(4) 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>
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 10, 1998
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 10, 1998 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 April 27, 1998, 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
/s/ CHERYL L. WILLIAMS
----------------------
CHERYL L. WILLIAMS, Secretary
Austin, Texas
May 8, 1998
<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 10, 1998
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 10,
1998 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 8, 1998.
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.
ANNUAL REPORT
Enclosed is an Annual Report to Shareholders for the year ended December
31, 1997 including audited financial statements. Such Annual Report to
Shareholders does not form any part of the material for the solicitation of
proxies.
REVOCATION OF PROXY
Any shareholder returning the accompanying proxy may revoke such proxy at
any time prior to its exercise by (a) giving written notice to the Secretary of
the Company of such revocation, (b) voting in person at the meeting, or (c)
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 27, 1998, there were outstanding and
entitled to vote 19,168,267 shares of Common Stock. Only shareholders of record
at the close of business on April 27, 1998 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 27, 1998, 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 executive officers and
directors of the Company as a group. Unless otherwise indicated, the Company
believes that each person or entity named below has sole voting and investment
power with respect to all shares shown as beneficially owned by such person or
entity, subject to community property laws where applicable and the information
set forth in the footnotes to the table below.
Beneficial Ownership
--------------------
Name Number of
Shares Percent
------ -------
American Physicians Service Group, Inc. 3,064,503 16.0%
1301 Capital of Texas Highway
Austin, Texas 78746 ("APS")
Paul R. Butrus(1) 182,675 1.0%
William E. Foree, M.D.(1) 225,760 1.2%
Joseph Jenkins, M.D.(1) 82,273 .4%
Stan Johnson(1) 1,000 --
Irwin Katz(1) 42,600 .2%
Michael Madler(1) 72,666 .4%
John McEntire(1) 18,333 .1%
Dan Myers, M.D.(1) 72,841 .4%
William A. Searles(1)(2) 20,933 .1%
Kenneth S. Shifrin(1)(2) 272,400 1.4%
Michael J. Spalding, M.D.(1) 68,998 .4%
Cheryl Williams(1) 111,235 .6%
All directors and executive officers
as a group (12 persons) 1,171,714 6.0%
- ---------------------------
(1) Includes the following number of shares subject to options that are
presently exercisable or exercisable within 60 days after April 27, 1998: Mr.
Butrus, 37,500; Dr. Foree, 25,000; Dr. Jenkins, 25,000; Mr. Johnson, 1,000; Mr.
Katz, 37,500; Mr. Madler, 69,166; Mr. McEntire, 8,333; Dr. Myers, 18,750; Mr.
Searles, 20,833; Mr. Shifrin, 162,500; Dr. Spalding, 20,833; and Ms. Williams,
93,666.
(2) Mr. Searles and Mr. Shifrin are each directors of 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 of such persons disclaims the beneficial ownership of any such
shares.
2
<PAGE>
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 $100,000 in salary and bonuses
during any of the last three fiscal years (collectively, the ''Named
Executives'').
<TABLE>
<S> <C> <C> <C> <C> <C>
Annual Long-Term
Compensation Compensation
------------ Awards
Securities
Underlying All Other
Name and Principal Position Year Salary($) Bonus($)(1) Options(#)(2) Compensation($)(3)
--------------------------- ---- --------- ----------- ------------- ------------------
Kenneth S. Shifrin.................. 1997 183,336 327,709 25,000 696
Chairman of the Board 1996 115,225 178,947 100,000 696
1995 112,500 68,425 -- 696
Joseph Jenkins, M.D.(4)............. 1997 325,000 90,000 25,000 4,750
President and Chief Executive Officer 1996 243,750 -- 75,000 --
Michael Madler...................... 1997 150,000 158,758 25,000 5,014
Sr. Vice President-Operations 1996 150,000 178,947 50,000 2,268
1995 150,000 68,425 -- 37,081
Dan Myers, M.D.(4) ................. 1997 180,000 50,000 25,000 4,750
Sr. Vice President-Development 1996 135,000 -- 50,000 --
Cheryl Williams..................... 1997 100,000 178,533 25,000 5,272
Chief Financial Officer, 1996 83,653 178,947 90,000 2,407
Vice President-Finance and Secretary 1995 80,736 68,425 -- 228
Stan Johnson........................ 1997 165,006 -- 5,000 4,750
Vice President 1996 173,733 -- -- 5,029
</TABLE>
(1) Reflects bonuses paid during the year.
(2) Options to acquire common stock.
(3) Consists of life insurance premiums paid during the fiscal year.
Also reflects moving expenses reimbursed to Mr. Madler in the
amount of $36,905.
(4) Reflects compensation for Dr. Jenkins and Dr. Myers since May 1, 1996,
the beginning of their employment with the company.
3
<PAGE>
Option Grants During 1997
-------------------------
The following table provides information related to options granted to the
Named Executives during 1997. The company does not have any outstanding stock
appreciation rights.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Potential Realizable
Number of Percent of Value at Assumed Annual
Securities Total Options Rates of Stock Price
Underlying Granted to Appreciation for Option
Options Employees in Exercise Price Term (1)
Name Granted (#) Fiscal Year (2) ($/Sh) Expiration Date 5 % ($) 10 % ($)
---- ----------- ----------- ---------- --------------- ------- --------
Kenneth S. Shifrin........................ 25,000 6 % $10.50 07/01/02 72,524 160,259
Chairman of the Board
Joseph Jenkins, M.D....................... 25,000 6 % $10.50 07/01/02 72,524 160,259
President and Chief Executive Officer
Michael Madler............................ 25,000 6 % $14.31 09/11/02 98,840 218,410
Sr. Vice President , Operations
Dan Myers, M.D............................ 25,000 6 % $14.31 09/11/02 98,840 218,410
Sr. Vice President, Development
Cheryl Williams........................... 25,000 6 % $14.31 09/11/02 98,840 218,410
Chief Financial Officer,
Vice President, Finance and Secretary
Stan Johnson.............................. 5,000 1 % $10.50 03/19/03 14,505 32,052
Vice President
</TABLE>
__________________
(1) The dollar amounts in these columns represent potential value that
might be realized upon exercise of the options immediately prior to the
expiration of their term, assuming that the market price on the date the option
is granted (or exercise price) of the Company's common stock appreciates in
value from the date of grant at the 5% and 10% annual appreciation rates
prescribed by the regulations, and therefore are not intended to forecast
possible future appreciation, if any, of the price of the Company's common
stock. The potential realizable values are based on the exercise price of the
option, not the current market price of the Company's common stock.
(2) The exercise price of the option was equal to the fair market value of
the common stock on the date of the grant.
Option Exercises During 1997 and Option Values at December 31, 1997
-------------------------------------------------------------------
The following table provides information related to options exercised by
the Named Executives during 1997 and the value of options held at December 31,
1997. The Company does not have any outstanding stock appreciation rights.
4
<PAGE>
<TABLE>
Aggregated Option/SAR Exercises In Last Fiscal Year
and Fiscal Year-End Option Values
<S> <C> <C> <C> <C> <C> <C>
Number of Securities
Underlying Unexercised Value of Unexercised In-
Shares Value Options/ SARs at Fiscal the-Money Options/SARs
Acquired on Realized Year-End at Fiscal Year-End ($) (2)
Name Exercise (#) ($) (1) Exercisable (#) Unexercisable (#) Exercisable Unexercisable
---- ------------ ------- --------------- ----------------- ----------- -------------
Kenneth S. Shifrin...... --- --- 150,000 75,000 1,387,500 118,750
Joseph Jenkins, M.D..... --- --- 12,500 87,500 12,500 93,750
Stan Johnson............ 8,000 57,500 8,000 29,000 62,080 202,490
Michael Madler.......... --- --- 60,833 74,167 417,500 215,000
Dan Myers, M.D.......... --- --- 12,500 62,500 12,500 12,500
Cheryl Williams......... --- --- 85,333 76,667 694,788 92,150
</TABLE>
_____________________
(1) 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 by the number of shares of common stock purchased
upon the exercise of the option.
(2) Calculated by subtracting the per share exercise price of the option
from the closing price for the Company's common stock on December 31, 1997
($13.75) and multiplying the difference by the number of shares of common stock
underlying the option.
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. Mr. Johnson's
employment agreement provides for his employment through September 30, 1998. The
Company currently anticipates that Dr. Jenkins will remain with the Company in
the same capacity and at the same compensation level after the expiration of his
employment agreement. 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. 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 September 30, 1998. Dr. Jenkins and Mr. Johnson may terminate their
employment agreements with the Company with or without cause by providing sixty
days prior written notice to the Board of Directors.
5
<PAGE>
Noncompetition Agreements
-------------------------
The Company has entered into noncompetition agreements with Dr. Jenkins,
Mr. Johnson, Dr. Foree, Dr. Spalding, and Dr. Myers. 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; Dr. Jenkins, who is President and Chief Executive Officer and a
director of the Company; Mr. Butrus, Dr. Foree, Mr. Katz, Mr. McEntire, Mr.
Searles, and Dr. Spalding, who are directors of the Company; and Ms. Williams,
Mr. Madler, Dr. Myers, and Mr. Johnson 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 judgments, 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 provide 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 1997, the Compensation Committee was comprised of Michael Spalding,
M.D. and William A. Searles, both of whom are outside directors.
The Compensation Committee has 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
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.
6
<PAGE>
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 1997, 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 1997 adequately reflect the Company's compensation
goals and policies.
Compensation Committee: Michael Spalding, M.D. and
William A. Searles
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. William Searles, a Director, was paid $75,000 by the Company during
1997 for consulting services related to raising capital.
Dr. Joseph Jenkins, President and Chief Executive Officer, currently owns
limited partner interests in nine of the partnerships managed by the Company. In
conjunction with the limited partner buyout program during 1997, the Company
acquired all of the limited partner interests owned by Dr. Jenkins in five
partnerships for a total purchase price of $410,315. Additionally, Dr. Jenkins
received $104,602 in cash distributions from partnerships in which he had
ownership interests during 1997.
Dr. Dan Myers, Sr. Vice President, currently owns limited partner interests
in eleven of the partnerships managed by the Company. In conjunction with the
limited partner buyout program during 1997, the Company acquired all of the
limited partner interests owned by Dr. Myers in seven partnerships for a total
purchase price of $654,315. Additionally, Dr. Myers received $170,915 in cash
distributions from partnerships in which he had ownership interests during 1997.
The Company's principal executive office is located in Austin, Texas in an
office building owned by APS. The Company pays APS approximately $7,500 per
month, which includes rental payments for approximately 5,575 square feet of
office space, reception and telephone services, and certain other services and
facilities. This lease expires in December, 1998.
7
<PAGE>
SECTION 16 FILING REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, 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 1997, 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. Mr.
Searles and Dr. Spalding 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 April 27, 1998.
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 1999. Such shareholder must deliver the
proposal to the executive offices of the Company no later than January 15, 1999,
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 elected at the Annual Meeting of Shareholders
to be held in 1999 that are submitted in writing by any shareholder of the
Company prior to January 15, 1999.
8
<PAGE>
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 Company's 1993 Stock Option
Plan (the "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 six meetings during the year ended December 31, 1997, and 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 57 1992
William E. Foree, M.D. 66 1993
Joseph Jenkins, M.D., J.D. 50 1996
Irwin Katz 78 1986
J.A. McEntire IV 36 1996
William A. Searles 55 1989
Kenneth S. Shifrin 49 1989
Michael J. Spalding, M.D. 57 1993
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.
9
<PAGE>
Mr. Butrus has been a Director of the Company since September, 1992. Mr.
Butrus is also an Executive Vice President and a director of MAIC Holdings, Inc.
("MAIC") and its subsidiary, Mutual Assurance, Inc. ("Mutual Assurance") and has
served in such positions since 1991. 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. From May 1990 until December 1991, Dr. Jenkins
was a Vice President of Lithotripters, Inc., which became a wholly-owned
subsidiary of the Company in April 1996. Since January 1992, Dr. Jenkins has
been President of Lithotripters, Inc. Dr. Jenkins is a board certified urologist
and is a founding member, a past president and currently a director 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 Strategic Planning and 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, and is currently
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.
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
10
<PAGE>
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 1997. Dr. Spalding and Mr. Searles
serve on the Compensation Committee which held one meeting during 1997. Mr.
Katz, Mr. Butrus and Mr. Searles serve on the Nominating Committee, which held
one meeting during 1997.
The Board recommends a vote FOR each nominee for Director.
PROPOSAL TO AMEND
THE 1993 STOCK OPTION PLAN
The Company's 1993 Stock Option Plan currently provides that the aggregate
number of shares of Common Stock that may be issued upon the exercise of all
options under the Option Plan shall not exceed 2,500,000. As of March 31, 1998,
2,347,500 shares had been issued pursuant to the Option Plan, of which options
covering 984,000 shares of common stock have been exercised and options covering
1,363,500 shares of common stock were outstanding. There were 152,500 shares
remaining to be issued on the Option Plan. The Board of Directors of the
Company, on March 26, 1998, subject to stockholder approval at the Annual
Meeting, approved an amendment to the Option Plan to increase the aggregate
number of shares that may be issued thereunder by 750,000 to 3,250,000. 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 Option Plan by ensuring that
officers, directors and other key employees continue to receive options.
The Board recommends a vote FOR the amendment to the Option Plan.
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, 1992
through December 31, 1997.
[GRAPHIC OMITTED]
NASDAQ
Total US Health
December 31, PRIME NASDAQ Services
- ------------ ----- ------ --------
1992 100 100 100
1993 75 115 115
1994 84 112 124
1995 225 159 157
1996 272 195 157
1997 345 240 160
12
<PAGE>
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, 1997. 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.
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
/s/ CHERYL L. WILLIAMS
-----------------------
CHERYL L. WILLIAMS, Secretary
Austin, Texas
May 8, 1998
13
<PAGE>
PRIME MEDICAL SERVICES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JUNE 10, 1998
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 10, 1998, and the Proxy Statement in connection therewith, each dated
May 8, 1998, (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 April 27, 1998 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. Spalding,
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: ________________, 1998
____________________________
____________________________
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.
