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 ss. 240.14a-11(C) or ss. 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 9, 1999
Notice is hereby given that the Annual Meeting of Shareholders of Prime
Medical Services, Inc., a Delaware corporation (the "Company"), will be held at
Lakeway Inn Conference Resort, 101 Lakeway Drive, Austin, Texas 78734, on
Wednesday, June 9, 1999 at 8:30 a.m. Austin, Texas time for the following
purposes:
(a) To elect six directors to serve on the Board of Directors;
(b) To approve an amendment to the Company's 1993 Amended and
Restated 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 26, 1999, 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 10, 1999
<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 9, 1999
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 Lakeway Inn
Conference Resort, 101 Lakeway Drive, Austin, Texas 78734, on Wednesday, June 9,
1999 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 10, 1999.
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, 1998 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 26, 1999, there were outstanding and
entitled to vote 17,105,567 shares of Common Stock. Only shareholders of record
at the close of business on April 26, 1999 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 26, 1999, 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. 2,464,803 14.4%
1301 Capital of Texas Highway
Austin, Texas 78746 ("APS")
The Goldman Sachs Group, L.P. and 1,156,600 6.8%
Goldman, Sachs & Co.
85 Broad St.
New York, New York 10004
SAFECO Common Stock Trust, 1,383,750 8.1%
SAFECO Asset Management Company and
SAFECO Corporation
SAFECO Plaza
Seattle, WA 98185
Paul R. Butrus(1) 222,675 1.3%
Thomas J. Driber, Ph.D.(1) 21,000 0.1%
William E. Foree, M.D.(1) 230,074 1.3%
Joseph Jenkins, M.D.(1) 149,773 0.9%
Stan Johnson(1) 11,000 0.1%
J.A. McEntire IV(1) 54,166 0.3%
William A. Searles(1)(2) 81,766 0.5%
Kenneth S. Shifrin(1)(2) 355,900 2.1%
Michael J. Spalding, M.D.(1) 69,166 0.4%
Alan Terry(1) 8,500 0.0%
David Vela, M.D.(1) 5,304 0.0%
Cheryl Williams(1) 170,602 1.0%
All directors and executive
officers as a group (12 persons) 1,379,926 7.7%
- ------------
(1) Includes the following number of shares subject to options that are
presently exercisable or exercisable within 60 days after April 26, 1999: Mr.
Butrus, 77,500; Mr. Driber, 9,000; Dr. Foree, 77,500; Dr. Jenkins, 90,000; Mr.
Johnson, 11,000; Mr. McEntire, 44,166; Mr. Searles, 81,666; Mr. Shifrin,
240,000; Dr. Spalding, 69,166; Mr. Terry, 8,500; Mr. Vela, 5,000; and Ms.
Williams, 147,833.
(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.
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<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 $100,000 in salary and bonuses
during any of the last three fiscal years (collectively, the "Named
Executives").
<TABLE>
<S> <C> <C> <C> <C> <C>
Long-Term
Compensation
Annual Awards
Compensation Securities
------------ Underlying All Other
Name and Principal Position Year Salary($) Bonus($)(1) Options(#)(2) Compensation($)
--------------------------- ---- --------- ----------- ------------- ---------------
Kenneth S. Shifrin - Chairman of the Board 1998 244,874 208,711 140,000
1997 183,336 327,000 25,000
1996 115,225 327,709 100,000
Joseph Jenkins, M.D.(3) - President and 1998 325,000 105,824 125,000
Chief Executive Officer 1997 325,000 185,000 25,000
1996 243,750 90,000 75,000
Cheryl Williams - Chief Financial Officer, 1998 123,730 143,740 65,000
Vice President, Finance and Secretary 1997 100,000 150,000 25,000
1996 83,653 178,533 90,000
Thomas J. Driber, Ph.D. - Vice President 1998 103,846 72,724 25,000
1997 98,962 73,108 2,500
1996 80,462 37,087 5,000
Stan Johnson - Vice President 1998 164,604 20,000 25,000
1997 165,006 17,500 5,000
1996 173,733 -- --
Alan Terry(3) - Vice President 1998 165,000 20,000 25,000
1997 225,000 -- --
1996 168,750 -- 15,000
David Vela, M.D. - Vice President 1998 99,828 30,000 25,000
1997 67,692 17,500 10,000
1996 -- -- --
Michael Madler (4) - Sr. Vice President, Operations 1998 148,014 -- 25,000
1997 150,000 180,900 25,000
1996 150,000 158,758 50,000
</TABLE>
- -----------
(1) Reflects bonuses earned during the year.
(2) Options to acquire common stock.
(3) Reflects compensation for Dr. Jenkins and Mr. Terry since May 1, 1996,
the beginning of their employment with the company.
(4) Mr. Madler's employment with the company ended as of October 31, 1998.
3
<PAGE>
Option Grants During 1998
-------------------------
The following table provides information related to options granted to the
Named Executives during 1998. The company does not have any outstanding stock
appreciation rights.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Potential Realizable Value at Assumed
Number of Percent of Annual Rates of Stock Price Appreciation
Securities Total Options for Option Term (a)
Underlying Granted to Exercise --------------------------------------
Options Employees in Price (b) Expiration
Name Granted (#) Fiscal Year ($/Sh) Date 0 % ($) 5 % ($) 10 % ($)
---- ----------- ----------- ------ ---- -------- -------- ---------
Kenneth S. Shifrin 55,000 11.1 % $9.656 06/10/05 -- 216,203 503,845
Chairman of the Board 85,000 17.2 % 7.5625 10/16/03 -- 177,597 392,443
Joseph Jenkins, M.D. 55,000 11.1 % $9.656 06/10/05 -- 216,203 503,845
President and Chief 70,000 14.1 % 7.5625 10/16/03 -- 146,257 323,189
Executive Officer
Cheryl Williams 25,000 5.1 % $9.656 06/10/05 -- 98,274 229,020
Chief Financial Officer, 40,000 8.1 % 7.5625 10/16/03 -- 83,575 184,679
Vice President, Finance
and Secretary
Thomas J. Driber, Ph.D. 5,000 1.0 % $9.656 06/10/05 -- 19,655 45,804
Vice President 20,000 4.0 % 7.5625 10/16/03 -- 41,788 92,340
Stan Johnson 5,000 1.0 % $9.656 06/10/05 -- 19,655 45,804
Vice President 20,000 4.0 % 7.5625 10/16/03 -- 41,788 92,340
Alan Terry 5,000 1.0 % $9.656 06/10/05 -- 19,655 45,804
Vice President 20,000 4.0 % 7.5625 10/16/03 -- 41,788 92,340
David Vela, M.D. 5,000 1.0 % $9.656 06/10/05 -- 19,655 45,804
Vice President 20,000 4.0 % 7.5625 10/16/03 -- 41,788 92,340
Mike Madler 25,000 5.1% $9.656 06/10/05 -- 98,274 229,020
Sr. Vice President,
Operations
All Employees as a Group 495,000 100.0% (c) (c) -- 2,592,296 5,181,072
- ----------------------------------------------
0% 5% 10%
-- -- ---
Total potential stock price appreciation from June 11, 1998 to June 10, 2005
for all stockholders at assumed rates of
stock price appreciation. -- $67,241,328 $156,700,889
Potential actual realizable value of options granted to all employees,
as a percentage of total potential stock price appreciation from June 11,
1998 to June 10, 2005 for all stockholders at assumed
rates of stock price appreciation. -- 3.9% 3.3%
</TABLE>
- -------------------
(a) 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 of the Company's common stock
appreciates in value from the date of grant at the 5% and 10% annual
appreciation rates from the exercise price 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.
(b) The exercise price of the option was equal to the fair market value of the
common stock on the date of the grant.
(c) Options were granted under the Company's stock option plan throughout 1998
with various vesting schedules and expiration dates through the year 2005.
The average price of all options granted to employees in 1998 is $8.63.
4
<PAGE>
Option Exercises During 1998 and Option Values at December 31, 1998
- -------------------------------------------------------------------
The following table provides information related to options exercised by
the Named Executives during 1998 and the value of options held at December 31,
1998. The Company does not have any outstanding stock appreciation rights.
Aggregated Option/SAR Exercises In Last Fiscal Year
and Fiscal Year-End Option Values
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Number of Securities
Underlying Unexercised Value of Unexercised In-
Shares Value Options/ SARs at Fiscal the-Money Options/SARs
Acquired on Realized Year-End at Fiscal Year-End ($)(2)
Name Exercise (#) ($) (1) Exercisable (#) Unexercisable(#) Exercisable Unexercisable
---- ------------ ------- ---------------- ---------------- ----------- -------------
Kenneth S. Shifrin --- --- 212,500 152,500 706,300 0
Joseph Jenkins, M.D --- --- 50,000 175,000 0 0
Cheryl Williams --- --- 126,166 100,834 324,149 0
Thomas J. Driber, Ph.D. 8,000 73,000 2,500 34,000 0 17,252
Stan Johnson 8,000 46,000 9,000 45,000 10,584 21,168
Alan Terry --- --- 3,750 36,250 0 0
David Vela, M.D. --- --- 2,000 33,000 0 0
Mike Madler(3) 60,000 258,750 54,166 45,834 0 0
</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, 1998
($7.31) and multiplying the difference by the number of shares of common
stock underlying the option.
(3) Mr. Madler's unexercised stock options were cancelled as of January 28,
1999.
Noncompetition Agreements
- -------------------------
The Company has entered into noncompetition agreements with Dr. Jenkins,
Mr. Johnson, and Mr. Terry. 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.
5
<PAGE>
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. McEntire, Mr. Searles, and
Dr. Spalding, who are directors of the Company; and Ms. Williams, 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 1998, 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. 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 1998, 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 over the prior year.
6
<PAGE>
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 1998 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 $50,000 by the Company during
1998 for consulting services related to raising capital.
Dr. Joseph Jenkins, President and Chief Executive Officer, currently owns
limited partner interests in ten of the partnerships managed by the Company.
During 1998, Dr. Jenkins received $63,491 in cash distributions from such
partnerships.
Mr. Alan Terry, Vice President, currently owns limited partner interests in
ten of the partnerships managed by the Company. During 1998, Mr. Terry received
$63,491 in cash contributions from such partnerships.
The Company's principal executive office is located in Austin, Texas in an
office building owned by APS. The Company pays APS approximately $8,000 per
month, which includes rental payments for approximately 5,600 square feet of
office space, reception and telephone services, and certain other services and
facilities. This lease expires in December, 1999.
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 1998, 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 and
7
<PAGE>
Dr. Spalding did not timely file Form 4's 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 26, 1999.
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 2000. Such shareholder must deliver the
proposal to the executive offices of the Company no later than January 15, 2000,
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 2000 that are submitted in writing by any shareholder of the
Company prior to January 15, 2000.
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 six persons for election to the
Board of Directors; (b) "FOR" the amendment to the Company's 1993 Amended and
Restated 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
8
<PAGE>
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 six and six 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 12 meetings during the year ended December 31, 1998, 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, except Mr. Butrus.
Director of
Name Age Company Since
---- --- -------------
William E. Foree, M.D. 67 1993
Joseph Jenkins, M.D., J.D. 51 1996
J.A. McEntire IV 37 1996
William A. Searles 56 1989
Kenneth S. Shifrin 50 1989
Michael J. Spalding, M.D. 58 1993
The Company pays Dr. Foree, 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.
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. 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
9
<PAGE>
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 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. McEntire and Dr. Foree serve on the
Audit Committee, which held one meeting during 1998. Dr. Spalding and Mr.
Searles serve on the Compensation Committee which held three meetings during
1998. Mr. Butrus and Mr. Searles serve on the Nominating Committee, which held
one meeting during 1998.
The Board recommends a vote FOR each nominee for Director.
10
<PAGE>
PROPOSAL TO AMEND
THE 1993 AMENDED AND RESTATED STOCK OPTION PLAN
The Company's 1993 Amended and Restated 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 3,250,000. As of
March 31, 1999, 2,857,500 shares had been issued pursuant to the Option Plan, of
which options covering 1,065,000 shares of common stock have been exercised and
options covering 1,792,500 shares of common stock were outstanding. There were
392,500 shares remaining to be issued under the Option Plan. The Board of
Directors of the Company, on April 26, 1999, 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 400,000 to
3,650,000. 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, 1993 through
December 31, 1998.
[GRAPHIC OMITTED]
NASDAQ
Total US Health
December 31, PRIME NASDAQ Services
- ------------ ----- ------ --------
1993 100 100 100
1994 112 98 107
1995 300 138 136
1996 362 170 136
1997 460 209 138
1998 244 293 119
12
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RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has selected KPMG LLP as independent
auditors for the year ending December 31, 1998. KPMG 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 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 10, 1999
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 09, 1999
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 9, 1999, and the Proxy Statement in connection therewith, each dated
May 10, 1999, (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 26, 1999 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:
William E. Foree, M.D., Joseph Jenkins, M.D., 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 Amended and Restated 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: ________________, 1999
____________________________
____________________________
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.
