SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934 (Amendment No. )
Filed by the Registrant (x)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement
( ) Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)
(x) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
GRAHAM-FIELD HEALTH PRODUCTS, INC.
- ---------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- ---------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
( ) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or from Item 22(a)(2) of Schedule 14A.
( ) $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:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
----------------------------------------------------------------
<PAGE>
4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------
5) Total fee paid:
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( ) Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
GRAHAM-FIELD HEALTH PRODUCTS, INC.
400 RABRO DRIVE EAST
HAUPPAUGE, NEW YORK 11788
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 18, 1996
The Annual Meeting of Stockholders of Graham-Field Health Products, Inc.
(the "Company") will be held in Room C (13th Floor) of Chemical Bank, 55 Water
Street, New York, New York 10041 on Tuesday, June 18, 1996 at 11:00 A.M. to:
(1) elect three Class III Directors of the Company to serve for a term of
three years;
(2) consider and act upon a proposal to ratify the appointment of Ernst &
Young LLP as the Company's independent auditors for the current
fiscal year;
(3) transact such other business as may properly come before the Annual
Meeting.
Only stockholders of record at the close of business on May 3, 1996 are
entitled to notice of and to vote at the Annual Meeting.
Your attention is directed to the accompanying Proxy Statement.
RICHARD S. KOLODNY
Vice President, General
Counsel and Secretary
Hauppauge, New York
May 13, 1996
STOCKHOLDERS UNABLE TO ATTEND THE ANNUAL MEETING IN PERSON ARE URGED TO DATE,
SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY IN THE ENCLOSED ADDRESSED ENVELOPE,
WHICH DOES NOT REQUIRE ANY UNITED STATES POSTAGE.
<PAGE>
GRAHAM-FIELD HEALTH PRODUCTS, INC.
400 RABRO DRIVE EAST
HAUPPAUGE, NEW YORK 11788
PROXY STATEMENT
Proxies in the form enclosed are solicited by the Board of Directors of
Graham-Field Health Products, Inc. (the "Company") for use at the 1996 Annual
Meeting of Stockholders scheduled to be held on June 18, 1996. All properly
executed proxies received prior to or at the Annual Meeting will be voted. If a
proxy specifies how it is to be voted, it will be so voted. If no specification
is made, it will be voted (1) for the election of the Board's nominees as
directors, (2) for ratification of the appointment of Ernst & Young LLP as the
Company's independent auditors for the current fiscal year, and (3) if other
matters properly come before the Annual Meeting, in the discretion of either of
the persons named in the proxy. Any stockholder giving a proxy has the right to
revoke it at any time before the proxy is voted by giving written notice of
revocation to the Secretary of the Company, by submitting a properly-executed
subsequently dated proxy or by voting in person at the Annual Meeting.
Holders of record of the common stock, par value $.025 per share (the
"Common Stock"), of the Company at the close of business on the record date of
May 3, 1996 are entitled to notice of and to vote at the Annual Meeting. On that
date, there were 14,111,153 shares of Common Stock issued and outstanding, each
entitled to one vote. This Proxy Statement and the Annual Report of the Company
for its fiscal year ended December 31, 1995 are being mailed on or about May 13,
1996 to all holders of Common Stock on May 3, 1996.
As required under Section 231 of the Delaware General Corporation Law (the
"DGCL"), the Company will, in advance of the Annual Meeting, appoint one or more
Inspectors of Election to conduct the vote at the Annual Meeting. The Company
may designate one or more persons as alternate Inspectors of Election to replace
any Inspector of Election who fails to act. If no Inspector or alternate
Inspector is able to act at the Annual Meeting, the person presiding at the
Annual Meeting will appoint one or more Inspectors of Election. Each Inspector
of Election before entering the discharge of his duties shall take and sign an
oath faithfully to execute the duties of inspector with strict impartiality. The
Inspectors of Election will (i) ascertain the number of shares of Common Stock
outstanding as of the record date, (ii) determine the number of shares of Common
Stock present or represented by proxy at the Annual Meeting and the validity of
the proxies and ballots, (iii) count all votes and ballots, and (iv) certify the
determination of the number of shares of Common Stock present in person or
represented by proxy at the Annual Meeting and the count of all votes and
ballots.
The holders of a majority of the shares of Common Stock issued and
outstanding and entitled to vote at the Annual Meeting, present in person or
represented by proxy, shall constitute a quorum at the Annual Meeting. Under
Section 216 of the DGCL, any stockholder who abstains from voting on any
particular matter described herein will be counted for purposes of determining a
quorum. For purposes of voting on the matters described herein, the affirmative
vote of (i) a plurality of the shares of Common Stock present or represented at
the Annual Meeting is required to elect management's nominees as directors, and
(ii) a majority of the shares of Common Stock present or represented at the
Annual Meeting is required to ratify the selection by the Board of Directors of
Ernst & Young LLP as independent auditors of the Company for the fiscal year
ending December 31, 1996. Abstentions are considered as shares present and
entitled to vote and therefore have no legal effect with respect to the election
of directors and the same legal effect as a vote against other matters presented
at the Annual Meeting. Any shares as to which a broker or nominee does not have
discretionary voting authority under applicable New York Stock Exchange rules
will be considered as shares not entitled to vote and will therefore not be
considered in the tabulation of the votes.
<PAGE>
No compensation will be paid by the Company to any person in connection with
the solicitation of proxies. Brokers, banks and other nominees will be
reimbursed for out-of-pocket and other reasonable clerical expenses incurred in
obtaining instructions from beneficial owners of the Common Stock. In addition
to the solicitation by mail, solicitation of proxies may, in certain instances,
be made personally or by telephone by directors, officers and a few regular
employees of the Company. It is expected that the expense of such special
solicitation will be nominal. All expenses incurred in connection with this
solicitation will be borne by the Company.
PRINCIPAL STOCKHOLDERS OF THE COMPANY
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock with respect to the persons who, to the knowledge
of the management of the Company, own beneficially more than five percent of the
Common Stock as of May 3, 1996. Beneficial ownership has been determined for
purposes of the following table in accordance with Rule 13d-3 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), under which a person is
deemed to be the beneficial owner of securities if he or she has or shares
voting power or investment power in respect of such securities or has the right
to acquire beneficial ownership within 60 days.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
NAME AND ADDRESS SHARES(1) OUTSTANDING SHARES
- -------------------------------------------------------- --------- ------------------
<S> <C> <C>
Irwin Selinger(2)....................................... 952,545 6.7%
c/o Graham-Field Health Products, Inc.
400 Rabro Drive East
Hauppauge, New York 11788
Steinberg Asset Management Company, L.P.(3)............. 1,188,515 8.4%
12 East 49th Street
New York, New York 10017
</TABLE>
- ------------
(1) All shares are beneficially owned and the sole voting and investment power
is held by the person or entities named, except as otherwise specified
herein.
(2) The amount set forth above includes 103,839 shares currently issuable upon
the exercise of stock options issued pursuant to the Company's Incentive
Program, and 5,500 shares owned by Mr. Selinger's wife as to which shares
Mr. Selinger disclaims any beneficial interest.
(3) According to information contained in a joint Schedule 13G filing dated as
of February 5, 1996, with the SEC pursuant to Section 13(d) of the Exchange
Act, Steinberg Asset Management Company, Inc. ("Steinberg Management"), a
registered investment advisor and the general partner of Steinberg Asset
Management Company, L.P. ("Steinberg L.P."), beneficially owns 152,000
shares; Steinberg L.P. beneficially owns 900,715; Michael A. Steinberg &
Company, Inc. ("MAS Company") beneficially owns 30,800 shares; and Michael
A. Steinberg beneficially owns 105,000 shares. According to such filing,
Michael A. Steinberg may be deemed to have beneficial ownership of the
shares beneficially owned by Steinberg Management, Steinberg L.P., and MAS
Company. The shares reported as beneficially owned by Michael A. Steinberg
include shares held by Mr. Steinberg's wife and children, as well as
securities held in trust for Mr. Steinberg's children of which Mr. Steinberg
is trustee. Steinberg Management, as the general partner of Steinberg L.P.,
may be deemed to have beneficial ownership of the shares beneficially owned
by Steinberg L.P.
2
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock with respect to the Company's directors, the
Company's "named executive officers" (the "Named Executive Officers") within the
meaning of Item 402(a)(3) of Regulation S-K, and by all of the Company's
directors and executive officers as a group, as reported to the Company as of
May 3, 1996. Beneficial ownership has been determined for purposes of the
following table in accordance with Rule 13d-3 of the Exchange Act, under which a
person is deemed to be the beneficial owner of securities if he or she has or
shares voting power or investment power in respect of such securities or has the
right to acquire beneficial ownership within 60 days.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
NAME AND ADDRESS SHARES(1) OUTSTANDING SHARES
- -------------------------------------------------------- --------- ------------------
<S> <C> <C>
DIRECTORS:
Irwin Selinger(2)....................................... 952,545 6.7%
c/o Graham-Field Health Products, Inc.
400 Rabro Drive East
Hauppauge, New York 11788
Robert Spiegel(3)....................................... 342,098 2.4%
c/o Hoenig Group, Inc.
4 International Drive
Ryebrook, New York 10573
Louis A. Lubrano(4)..................................... 51,200 *
c/o Stires & Company, Inc.
432 Park Avenue South
New York, New York 10016
Marcel Newfield(5)...................................... 56,749 *
c/o Hub Truck Rental Corp.
94 Gazza Blvd.
Farmingdale, New York 11735
Dr. Harold Lazarus(6)................................... 10,194 *
c/o Hofstra University
Management Department
Weller Hall 228
Hempstead, New York 11550-1090
Andrew A. Giordano(7)................................... 13,500 *
c/o The Giordano Group, Limited
1811 South 24th Street
Arlington, Virginia 22202-1534
Donald Press(8)......................................... 18,733 *
c/o Donald Press, P.C.
39 Broadway
New York, New York 10006
David P. Delaney, Jr.................................... 4,000 *
c/o Lancer Financial Group, Inc.
370 West Park Avenue
Long Beach, New York 11561
Steven D. Levkoff....................................... 1,000 *
c/o Standard Folding Cartons, Inc.
85th & 24th Avenue
Jackson Heights, New York 11370
</TABLE>
- ------------------
* less than 1%
3
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
NAME AND ADDRESS SHARES(1) OUTSTANDING SHARES
- -------------------------------------------------------- --------- ------------------
<S> <C> <C>
NAMED EXECUTIVE OFFICERS:
Irwin Selinger(2)....................................... 952,545 6.7%
c/o Graham-Field Health Products, Inc.
400 Rabro Drive East
Hauppauge, New York 11788
Gary M. Jacobs(9)....................................... 61,000 *
c/o Graham-Field Health Products, Inc.
400 Rabro Drive East
Hauppauge, New York 11788
Richard S. Kolodny(10).................................. 51,500 *
c/o Graham-Field Health Products, Inc.
400 Rabro Drive East
Hauppauge, New York 11788
All directors and executive officers as a group (14
persons)(11)............................................ 1,667,688 11.48%
</TABLE>
- ------------
* Less than 1%
(1) All shares are beneficially owned and the sole voting power and investment
power is held by the persons named, except as otherwise specified herein.
(2) The amount set forth above includes 103,839 shares currently issuable upon
the exercise of stock options issued pursuant to the Company's Incentive
Program, and includes 5,500 shares owned by Mr. Selinger's wife as to which
shares Mr. Selinger disclaims any beneficial interest.
(3) The amount set forth above includes 10,000 shares owned by the Robert &
Gail Spiegel Foundation, 5,000 shares owned by the Ike Spiegel Trust, and
45,000 shares owned by the Richard J. Spiegel Trust (1987). The amount set
forth above also includes 115,000 shares owned by Mr. Spiegel's wife and
33,950 shares currently issuable upon the exercise of directors' stock
options issued pursuant to the Company's Incentive Program.
(4) The amount set forth above includes 200 shares owned by the Virginia
Lubrano Trust, and 50,000 shares currently issuable upon the exercise of
directors' stock options issued pursuant to the Company's Incentive
Program.
(5) The amount set forth above includes 30,000 shares currently issuable upon
the exercise of directors' stock options issued pursuant to the Company's
Incentive Program.
(6) The amount set forth above includes 10,000 shares currently issuable upon
the exercise of directors' stock options issued pursuant to the Company's
Incentive Program.
(7) The amount set forth above includes 10,000 shares currently issuable upon
the exercise of directors' stock options issued pursuant to the Company's
Incentive Program.
(8) The amount set forth above includes 3,000 shares owned by Donald
Press P.C., Profit Sharing Plan, and 1,000 shares owned by Donald
Press, P.C. Employees Pension Plan and 3,333 shares underlying directors'
stock options which are exercisable within 60 days of May 3, 1996.
(9) The amount set forth above includes 45,000 shares currently issuable upon
the exercise of stock options issued pursuant to the Company's Incentive
Program, and 10,000 shares underlying stock options which are exercisable
within 60 days of May 3, 1996.
(10) The amount set forth above includes 35,000 shares currently issuable upon
the exercise of stock options issued pursuant to the Company's Incentive
Program, and 10,000 shares underlying stock options which are exercisable
within 60 days of May 3, 1996.
(11) The amount set forth above includes 380,522 shares currently issuable upon
the exercise of stock options issued pursuant to the Company's Incentive
Program, and 40,833 shares underlying stock options which are exercisable
within 60 days of May 3, 1996.
4
<PAGE>
SECTION 16(a) REPORTING UNDER THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of the Common Stock of
the Company to file reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC") and the exchange on which the
Common Stock is listed for trading. Officers, directors and more than ten
percent stockholders are required by regulations promulgated under the
Exchange Act to furnish the Company with copies of all Section 16(a) reports
filed.
Based solely on the Company's review of copies of the Section 16(a) reports
filed for the year ended December 31, 1995, and written representations from
certain reporting persons that no Forms 5 were required for such persons for the
year ended December 31, 1995, the Company believes that all reporting
requirements applicable to its officers, directors, and more than ten percent
stockholders were complied with for the year ended December 31, 1995, except Mr.
Selinger inadvertently failed to file a Form 5 on a timely basis to reflect
5,500 shares owned by his wife prior to their marriage as to which shares Mr.
Selinger disclaims any beneficial interest.
ELECTION OF DIRECTORS
At the Annual Meeting, three Class III directors are to be elected for
three-year terms expiring in 1999. Unless authority to do so is withheld, the
Board of Directors intends to vote the enclosed proxy at the Annual Meeting for
the election of the nominees named below. If any nominee for any reason should
become unavailable for election, it is intended that discretionary authority
will be exercised by either of the persons named in the enclosed proxy in
respect of the election of such other person as the Board of Directors shall
nominate. The Board of Directors is not aware of any circumstances likely to
cause any nominee to become unavailable for election.
Set forth in the following table is certain information with respect to each
nominee nominated to serve as a Class III director whose term will expire in
1999. Each nominee was previously elected by the stockholders of the Company,
except with respect to Steven D. Levkoff, who was elected by the Board of
Directors on October 26, 1995 to fill a vacancy on the Board.
NOMINEES
CLASS III: TERM EXPIRING IN 1996
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY DIRECTOR SINCE
- ------------------------------------ --- ------------------------------------ --------------
<S> <C> <C> <C>
Louis A. Lubrano.................... 62 Director and Member of the Audit 1984
Committee
Dr. Harold Lazarus.................. 69 Director and Member of the 1994
Compensation and Nominating
Committees
Steven D. Levkoff................... 48 Director 1995
</TABLE>
5
<PAGE>
DIRECTORS CONTINUING IN OFFICE
The following directors are continuing in office for the respective periods
indicated and until their successors are elected and qualified.
CLASS I: TERM EXPIRING IN 1997
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY DIRECTOR SINCE
- ------------------------------------ --- ------------------------------------ --------------
<S> <C> <C> <C>
Irwin Selinger...................... 55 Chairman of the Board and Chief 1981
Executive Officer; Member of the
Executive Committee
Robert Spiegel...................... 59 Director and Member of the Audit and 1987
Nominating Committees
David P. Delaney, Jr. .............. 43 Director and Member of the 1995
Nominating Committee
</TABLE>
CLASS II: TERM EXPIRING IN 1998
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY DIRECTOR SINCE
- ------------------------------------ --- ------------------------------------ --------------
<S> <C> <C> <C>
Marcel Newfield..................... 57 Director and Member of the Executive 1991
and Audit Committees
Andrew A. Giordano.................. 63 Director and Member of the Executive 1994
and Compensation Committees
Donald Press........................ 62 Director and Member of the 1995
Compensation Committee
</TABLE>
- --------------------------
Mr. Lubrano has been a managing director of Stires & Company, Inc., an
investment banking firm, since March 1, 1991. From March 1990 to February 1991,
Mr. Lubrano was a director of the Nasdaq Forum. Prior thereto, he was a managing
director of Home Group Capital Markets, Inc., an investment banking firm. From
April 1986 to March 1989, he was President of Gabelli & Company, Inc., an
investment banking firm. He is also a director of Andersen Group, Inc., a
diversified manufacturing company.
Dr. Lazarus was the Dean of the School of Business at Hofstra University for
seven years, and is now its Mel Weitz Distinguished Professor of Business.
Currently, Dr. Lazarus serves on the Boards of Directors of Stage II Apparel
Corporation and Facelifters Home Systems, Incorporated. He served as president
of the North American Management Council, the Eastern Academy of Management, the
Middle Atlantic Association of Colleges of Business Administration, and on the
Boards of Directors of Ideal Toy Corporation, Superior Surgical Manufacturing
Company, the Academy of Management, and the World Management Council.
Mr. Levkoff has been the Chief Executive Officer and President of Standard
Folding Cartons, Inc., a manufacturer of paperboard packaging for the private
label, over-the-counter and food industries, since 1982. Mr. Levkoff is also a
member of the National Industry Association and the Paperboard Packaging
Council.
Mr. Selinger, a founder of the Company, has been the Chairman of the Board
and Chief Executive Officer of the Company since April 1981. Mr. Selinger was a
founder and the Chief Executive Officer of Surgicot, Inc., a manufacturer of
sterilization indicators, and its predecessor from 1968 to April 1980. In 1979,
Surgicot, Inc. was acquired by E.R. Squibb & Sons, Inc., a subsidiary of Squibb
Corporation. From April 1980 to June 1984, Mr. Selinger was a consultant to E.R.
Squibb & Sons, Inc.
Mr. Spiegel was the Chairman of the Board, President, and Chief Executive
Officer of RJR Drug Distributors from 1984 to 1995. RJR Drug Distributors is a
franchisee of Drug Emporium, Inc., a deep discount merchandiser. Mr. Spiegel
serves as a director of Drug Emporium, Inc., Kash N' Karry, a
6
<PAGE>
regional grocery chain located in Tampa, Florida and the Hoenig Group, Inc., an
institutional stock brokerage firm.
Mr. Delaney has been the President and Chief Executive Officer of Lancer
Financial Group and its principal operating subsidiary, Lancer Insurance
Company, since 1985. Mr. Delaney founded the Lancer Financial Group, which
currently provides insurance coverage and specialized services to the United
States passenger transportation industry. In addition, Mr. Delaney has served as
the Chairman of the Long Island Chapter of the Young President's Organization,
and serves as the Chairperson of the Community Campaign at Mercy Medical Center
and is a member of the Advisory Board of the Alliance of American Insurers.
Mr. Newfield was a founder, principal stockholder, director and chief
financial officer of the Company from 1981 to 1983. From 1983 through 1987, Mr.
Newfield was principally engaged as a private investor. Since 1987, Mr. Newfield
has been the Chairman of the Board of Hub Truck Rental Corp.
Mr. Giordano has been a principal of The Giordano Group, Limited, a
diversified consulting firm, since its founding in February 1993. From May 1987
to February 1993, Mr. Giordano was Executive Vice President of Lamonts Apparel,
Inc. Mr. Giordano also currently serves as a director of Cherry & Webb Inc., a
ladies specialty apparel company, Joseph A. Bank Clothiers, Inc., a manufacturer
and retailer of men's clothing, Nomos Corporation, a conformal radiation therapy
provider, and Model Imperial Fragrances, Inc., a wholesaler of fragrances. In
1984, Mr. Giordano retired from his position as CEO, Naval Supply Systems
Command with the rank of Rear Admiral.
Mr. Press is an attorney and has been a principal of Donald Press, P.C., a
law firm located in New York, New York, since 1979. Mr. Press has served as an
Executive Vice President of Broadway Management Co., Inc., an owner and manager
of commercial office buildings since 1981 and serves as a director of The Cooper
Companies, Inc. and Component Specialties, Inc.
Each of the persons listed is now serving as a director, and was previously
elected as a director by the stockholders except for Donald Press, David P.
Delaney, Jr. and Steven D. Levkoff who were elected at meetings of the Board of
Directors held on May 17, 1995, August 9, 1995 and October 26, 1995,
respectively, to fill vacancies on the Board of Directors. No director is
related to any other director or executive officer.
MEETINGS OF THE BOARD; COMMITTEES
The Board of Directors had 12 meetings during 1995. No director attended
fewer than 75% of the meetings held in 1995 during the period in which he
served.
The Board has an Executive Committee, currently consisting of Irwin
Selinger, Andrew A. Giordano, and Marcel Newfield. The Executive Committee has
all the authority which, under the DGCL, may be delegated to such Committee. The
Executive Committee had two meetings during 1995. The Compensation Committee
currently consists of Dr. Harold Lazarus, Andrew A. Giordano and Donald Press.
The Compensation Committee reviews and approves the salary and bonus levels for
the Company's executive officers, and awards stock options under the Company's
Incentive Program. The Compensation Committee had nine meetings during 1995. The
Audit Committee currently consists of Louis A. Lubrano, Robert Spiegel and
Marcel Newfield. The Audit Committee serves as a focal point for communications
with respect to financial accounting, reporting and controls, and recommends the
appointment of independent auditors and reviews the audit fees. The Audit
Committee met two times during 1995.
Effective as of March 8, 1996, the Board formed a Nominating Committee. The
Nominating Committee currently consists of Dr. Harold Lazarus, Robert Spiegel
and David P. Delaney, Jr. The
7
<PAGE>
Nominating Committee is responsible for recommending qualified candidates to the
Board for election as directors of the Company, including the slate of directors
that the Board proposes for election by stockholders at the Annual Meeting.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee currently consists of Dr.Harold Lazarus, Andrew
A. Giordano and Donald Press. No member of the Company's Compensation Committee
is a current or former officer or employee of the Company or any of its
subsidiaries. In addition, there are no other compensation committee interlocks
between the Company and other entities involving any of the executive officers
of the Company who serve as executive officers of such other entities.
COMPENSATION OF DIRECTORS
Other than the stock options described below, the directors' cash
compensation program adopted on June 20, 1995, and certain payments made to The
Giordano Group, Limited (the "Giordano Group"), directors were not paid any fees
or remuneration for services rendered in 1995 as members of the Board of
Directors or for attendance at meetings of the Board or any Board Committee,
whether or not they were employees of the Company.
On June 20, 1995, the Company adopted a directors' cash compensation
program, which provides for the payment of directors' fees to outside directors
of $1,000 for the attendance at each Board meeting and $500 for each Committee
meeting, provided each Committee meeting is held on a date other than a Board
meeting. Under the terms of the directors' cash compensation program, no
directors' fees are paid to any outside director who has received or will
receive in excess of $75,000 during any calendar year. In addition, no
directors' fees are provided for telephonic Board or Committee meetings which
are less than two (2) hours in duration.
Under the Company's Incentive Program, Directors' Options are granted
automatically as of January 2nd each year that the Program is in effect to each
director who is neither an employee nor officer of the Company or any of its
subsidiaries. Each Director's Option entitles the qualifying director to whom it
is granted to purchase 10,000 shares of the Common Stock at an option price
equal to the fair market value of the Common Stock on the date of grant.
Directors' Options vest and are exercisable at the rate of one-third (1/3) of
each grant annually. Directors' Options are exercisable in full for a period of
ninety days following (i) the death or permanent disability of a director or
(ii) a change in control of the Company. Directors' Options terminate ten years
from the date of grant or two years after a director's termination, if other
than for cause. If a director is terminated for cause, the Directors' Options
terminate immediately.
From May 1995 to June 1995, The Giordano Group, a diversified consulting
firm, provided a variety of services to the Company including operational and
distribution support and logistical services. In addition, The Giordano Group
assisted in the selection process of certain senior management personnel. For
such services, the Company paid approximately $47,200 to The Giordano Group.
Andrew A. Giordano, a director and Compensation and Executive Committee member
of the Company, is a principal of The Giordano Group.
8
<PAGE>
EXECUTIVE COMPENSATION
The following summary compensation table sets forth certain information
concerning the compensation of the Company's Named Executive Officers for each
of the three years during the period ended December 31, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
AWARDS
-----------------------
ANNUAL SECURITIES
COMPENSATION UNDERLYING
---------------------------------- RESTRICTED OPTIONS TO
OTHER ANNUAL STOCK PURCHASE ALL OTHER
SALARY BONUS COMPENSATION(1) AWARDS SHARES(2) COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($)
- ------------------------------ ---- ------- ------ --------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Irwin Selinger(3)............. 1995 200,000 50,000 -- -- -- 30,740
Chairman of the Board and 1994 200,000 -- -- -- 50,143 32,117
Chief Executive Officer 1993 150,000 -- -- -- 25,000 20,255
Gary M. Jacobs................ 1995 120,000 25,000 -- -- 20,000 --
Vice President, Finance and 1994 120,000 -- -- -- 15,000 --
Chief Financial Officer 1993 95,000 -- -- -- 10,000 --
Richard S. Kolodny(4)......... 1995 120,000 25,000 -- -- 20,000 --
Vice President, General 1994 120,000 -- -- -- 15,000 --
Counsel and Secretary 1993 43,356 -- -- -- 20,000 --
</TABLE>
- ------------
(1) The aggregate amount of Other Annual Compensation for each of the Named
Executive Officers did not equal or exceed the lesser of either $50,000 or
10% of the total of such individual's base salary and bonus, as reported
herein for the last fiscal year, and is not reflected in the table.
(2) Stock options are granted under the terms and provisions of the Company's
Incentive Program. For a description of the stock options, see "Executive
Compensation--Option Grants in Last Fiscal Year."
(3) In June 1992, the Company entered into a split-dollar life insurance
arrangement for the benefit of Irwin Selinger. During the fiscal years ended
December 31, 1995, 1994 and 1993, the Company paid the premiums on the life
insurance policy owned by a trust for the benefit of Irwin Selinger's
children on a split-dollar basis. With respect to the payment of such
premiums by the Company, the benefit to Mr. Selinger for the years ended
December 31, 1995, 1994 and 1993, projected on an actuarial basis was
$30,740, $32,117 and $20,255, respectively, which is included in the table
above.
(4) On August 16, 1993, Mr. Kolodny joined the Company as Vice President,
General Counsel.
9
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain summary information concerning the
number of stock options granted and the potential realizable value of the stock
options granted to the Company's Named Executive Officers during the fiscal year
ended December 31, 1995:
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF
SECURITIES STOCK PRICE
UNDERLYING % OF TOTAL APPRECIATION
OPTIONS OPTIONS FOR OPTION
GRANTED GRANTED TO EXERCISE OR TERM(2)
IN EMPLOYEES IN BASE PRICE EXPIRATION -----------------
NAME 1995 (1) FISCAL YEAR ($/SH) DATE 5% 10%
- -------------------------------------- --------- ------------ ----------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Irwin Selinger........................ -- -- -- -- -- --
Chairman of the Board and Chief
Executive Officer
Gary M. Jacobs........................ 20,000 6.0 3.25 6/20/00 $17,960 $39,680
Vice President, Finance and Chief
Financial Officer
Richard S. Kolodny.................... 20,000 6.0 3.25 6/20/00 $17,960 $39,680
Vice President, General Counsel and
Secretary
</TABLE>
- ------------
(1) During the fiscal year ended December 31, 1995, stock options were granted
under the Company's Incentive Program at an exercise price equal to the fair
market value of the Common Stock on the date of grant. The stock options
have a term of five years, subject to earlier termination in the event of
termination for cause. The stock options are non-transferable, other than by
will or the laws of descent and distribution, and vest and are exercisable
at the rate of 50% per year, subject to certain exceptions including a
change of control of the Company and the death of an optionee. The stock
options may be exercised by payment of cash, shares of Common Stock or other
consideration. The Company's Incentive Program is administered by the
Compensation Committee of the Board of Directors, which is granted the
authority to amend and modify the terms and provisions of stock options
granted under the Company's Incentive Program.
(2) Represents gain that would be realized assuming the stock options were held
for the entire five-year period and the stock price increased at compounded
rates of 5% and 10%, respectively, from the exercise prices set forth in the
table. These amounts represent assumed rates of appreciation only. Actual
gains, if any, on stock option exercises will be dependent on overall market
conditions and on the future performance of the Company. There can be no
assurance that the amounts reflected in the table will be achieved.
10
<PAGE>
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table provides certain summary information concerning stock
option exercises during the fiscal year ended December 31, 1995 by the Company's
Named Executive Officers and the value of unexercised stock options held by the
Company's Named Executive Officers as of December 31, 1995.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING "IN THE MONEY"
NUMBER OF OPTIONS AT FISCAL OPTIONS AT FISCAL
SHARES ACQUIRED VALUE YEAR END(2) YEAR END(3)
UPON REALIZED --------------------------- ---------------------------
NAME EXERCISE ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Irwin Selinger................ -- -- 91,339 25,072 $ 3,750 0
Chairman of the Board and
Chief Executive Officer
Gary M. Jacobs................ -- -- 37,500 27,500 0 $ 2,500
Vice President, Finance and
Chief Financial Officer
Richard S. Kolodny............ -- -- 27,500 27,500 0 $ 2,500
Vice President, General
Counsel and Secretary
</TABLE>
- ------------
(1) Values were calculated by multiplying the closing market price of the Common
Stock as reported on the New York Stock Exchange, Inc. on the date of
exercise, by the respective number of shares and subtracting the exercise
price per share.
(2) Represents the aggregate number of stock options held as of December 31,
1995.
(3) Values were calculated by multiplying the closing market price of the Common
Stock as reported on the New York Stock Exchange, Inc. on December 31, 1995,
by the respective number of shares and subtracting the exercise price per
share, without any adjustment for any termination or vesting contingencies.
EMPLOYMENT, TERMINATION AND CHANGE-IN-CONTROL ARRANGEMENTS AND OTHER
ARRANGEMENTS
In July 1981, Mr. Selinger entered into a ten-year employment agreement with
the Company, which, in June 1991, was amended and extended for an additional
five-year period ending July 8, 1996. As amended, Mr. Selinger's employment
agreement provides that Mr. Selinger will receive a base salary of $150,000 (or
such larger amount as the Board of Directors may authorize) subject to annual
cost of living adjustments. For 1995, Mr. Selinger was granted a base salary of
$200,000. During the term of the employment agreement between Mr. Selinger and
the Company, and for a period of one year following termination of the
employment agreement, if termination occurs as a result of a breach of the
employment agreement by Mr. Selinger, Mr. Selinger has agreed that he will not
directly or indirectly engage in any business or invest in any privately held
company or own more than one percent of the outstanding securities of any
publicly owned corporation which competes with any business of the Company.
Each of the Company's Named Executive Officers has entered into an agreement
with the Company providing for the payment of certain benefits if within two
years following the occurrence of a "change in control" (as defined in each such
agreement), a Named Executive Officer of the Company is terminated other than by
reason of death, disability, retirement, or for cause, or if such Named
Executive Officer terminates his or her employment for good reason (each, a
"Triggering Event"). Under the terms of each agreement, each of the Named
Executive Officers of the Company is entitled upon the occurrence of a
Triggering Event to receive his or her base salary and incentive compensation,
if any, through the date of termination, plus a lump sum severance payment equal
to one times the Named Executive Officer's base salary (as defined in each such
agreement), provided that in no event
11
<PAGE>
shall the total payments exceed 2.99 times the Named Executive Officer's "base
amount" as such term is defined in Section 280G of the Code. In addition, the
terms of each agreement provide that in the event a Named Executive Officer's
employment is terminated within two (2) years following the occurrence of a
change of control by reason of death or disability, the Named Executive Officer
shall be entitled to death or long-term disability benefits, as the case may be,
on terms no less favorable than the most favorable benefits to which he would
have been entitled had the death or termination for disability occurred at any
time during the period commencing one year prior to the initiation of actions
resulting in a change of control of the Company.
On February 26, 1996, the Company loaned $23,614 to each of Gary M. Jacobs,
Vice President, Finance, Richard S. Kolodny, Vice President, General Counsel,
Ralph Liguori, Executive Vice President of Operations, and Peter Winocur,
Executive Vice President of Sales and Marketing, for the purpose of purchasing
6,000 shares of the Common Stock on the open market. Each loan bears interest at
the prime rate, as adjusted from time to time, with interest and principal
payable two (2) years from the date of the loan. The loans are secured by the
shares of the Common Stock purchased by each executive officer. On April 1,
1996, the Company loaned $180,000 to Irwin Selinger, the Chairman of the Board
and Chief Executive Officer, to enable Mr. Selinger to purchase 50,000 shares of
the Common Stock on the open market. The loan bears interest at the prime rate,
as adjusted from time to time, with interest and principal payable two (2) years
from the date of the loan. The loan is secured by the shares of the Common Stock
purchased by Mr. Selinger.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In the ordinary course of business, the Company from time to time engages in
transactions on an arms' length basis with other corporations or entities whose
officers or directors are also officers or directors of the Company.
Effective as of July 1, 1995, the Company acquired substantially all of the
assets and liabilities of National Medical Excess Corp. ("NME"). In connection
with the acquisition of NME, the Company assumed the obligations of NME under a
certain month-to-month sublease arrangement with respect to a portion of a
facility located in Mount Vernon, New York. On March 1, 1996, the month-to-month
sublease arrangement was converted into a three (3) year lease with HIP Realty,
Inc. ("HIP") for the entire Mount Vernon, New York facility. Under the terms of
the lease, the Company has an option to renew the lease for an additional three
(3) year period at a fixed annual rent of $180,000. The principal stockholders
of HIP are Harvey P. Diamond, a former director and former President of the
Company, and Peter Winocur, the Company's Executive Vice President of Sales and
Marketing. The lease with HIP Realty provides for the payment by the Company of
fixed annual rents of $162,000 for the first year escalating to $180,000 for
years two and three, and the payment of incremental real estate taxes over a
base year.
From May 1995 to June 1995, The Giordano Group provided a variety of
services to the Company, including operational and distribution support, and
logistical services. In addition, The Giordano Group assisted in the selection
process of certain senior management personnel. For such services, the Company
paid approximately $47,200 to The Giordano Group. Andrew A. Giordano, a director
and Compensation and Executive Committee member of the Company, is a principal
of The Giordano Group.
During 1995, the Company purchased folding boxes for its products in the
amount of approximately $71,000 from Standard Folding Cartons, Inc., a
manufacturer of paperboard packaging for the private label, over-the-counter and
food industries. Steven D. Levkoff, a director of the Company, is the President
and Chief Executive Officer of Standard Folding Cartons, Inc.
12
<PAGE>
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total stockholder
return of the Common Stock of the Company for the last five years with the
cumulative total return of the Standard & Poor's 500 Stock Index and the
Standard & Poor's Medical Products and Supplies Index over the same period
assuming the investment of $100 in the Common Stock of the Company, the Standard
& Poor's 500 Stock Index and the Standard & Poor's Medical Products and Supplies
Index on December 31, 1990 (assuming the reinvestment of all dividends).
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN* AMONG GRAHAM-FIELD
HEALTH PRODUCTS, INC., THE STANDARD & POOR'S 500 STOCK INDEX AND THE
STANDARD & POOR'S MEDICAL PRODUCTS AND SUPPLIES INDEX
500
400
[GRAPH]
300
200
100
0
12/90 12/91 12/92 12/93 12/94 12/95
- -----------------------------------------------------------------------------
12/90 12/91 12/92 12/93 12/94 12/95
----- ----- ----- ----- ----- -----
Graham-Field 100 396 188 152 120 108
Products, Inc.
S&P 500 100 130 140 155 157 215
S&P Medical Prod & Supp 100 164 140 107 127 214
- -----------------------------------------------------------------------------
* Assumes $100 invested on December 31, 1990 in Stock or Index, including
Reinvestment of Dividends.
13
<PAGE>
REPORT OF COMPENSATION COMMITTEE
OVERALL POLICY
The Company's executive compensation program is administered to be closely
linked to corporate performance and the total return to stockholders over the
long-term. The overall objectives of the executive compensation program are to
attract and retain the best possible executive talent, to motivate these
executives to achieve the goals inherent in the Company's business strategy, to
link executive and stockholder interests through participation in the Company's
Incentive Program and finally to provide a compensation package that recognizes
individual contributions as well as overall business results.
The key elements of the Company's executive compensation consist of base
salary, an annual bonus pursuant to the Company's Bonus Plan, and the grant of
stock options under the Company's Incentive Program. The Compensation Committee
reviews and approves the compensation package for the executive officers of the
Company. In addition, while the elements of compensation described below are
considered separately, the Compensation Committee takes into account the full
compensation package afforded by the Company to the individual.
BASE SALARIES
Base salaries for new executive officers are initially determined by
evaluating the responsibilities of the position held and the experience of the
individual. Annual salary adjustments are determined by evaluating the
performance of the Company and of each executive officer, and also take into
account new responsibilities. The Chairman of the Board makes salary
recommendations, which are based upon the subjective assessment of the nature of
the position, contribution, experience and tenure of the executive officer. The
recommendations are reviewed by the Compensation Committee which is responsible
for approving or disapproving those recommendations.
With respect to the base salary granted to Mr.Selinger in 1995, Mr. Selinger
was granted a base salary of $200,000, representing the same base salary
received in 1994.
ANNUAL BONUS
Cash bonuses are granted on a discretionary basis primarily to reward
individual contribution, and thus, are not necessarily tied to any particular
measure or level of corporate performance. Such bonuses are generally awarded
following years in which the Company achieved projected earnings and revenue
growth. The Chairman of the Board makes bonus recommendations, which are based
upon the subjective evaluation of each executive officer's direct contribution
to Company performance. The recommendations are reviewed by the Compensation
Committee which is responsible for approving or disapproving those
recommendations. Based on the Company's improved performance in 1995, Mr.
Selinger was granted a bonus of $50,000.
STOCK OPTIONS
Under the Company's Incentive Program, which was approved by the Company's
stockholders, stock options are granted to the Company's employees, including
executive officers. The Compensation Committee approves the grant of stock
options awards. In the event of poor corporate performance, the Compensation
Committee can elect not to approve the grant of stock options.
Stock options are designed to align the interests of executives with those
of the stockholders. Stock options are granted with an exercise price equal to
the market price of the Common Stock on the date of grant and generally vest and
are exercisable at the rate of 50 percent per year. This approach is designed to
incentivize the creation of stockholder value over the long term since the full
benefit of the compensation package cannot be realized unless stock price
appreciation occurs over a number of years.
14
<PAGE>
In 1995, Mr. Selinger was not awarded any stock options.
DEDUCTIBILITY OF COMPENSATION OVER $1 MILLION
The Company has not awarded any compensation that is non-deductible under
Section 162(m) of the Code and does not anticipate doing so in the foreseeable
future. In the event that the Company determines to award compensation in any
amount in excess of the amount which may be deducted under Section 162(m) of the
Code, the Company will determine whether it will conform its compensation to
comply with such provision.
1995 Compensation Committee
Dr. Harold Lazarus
Andrew A. Giordano
Donald Press
15
<PAGE>
RATIFICATION OF APPOINTMENT
OF
THE COMPANY'S INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee of the Board of Directors,
the firm of Ernst & Young LLP has been appointed independent auditors for 1996,
subject to ratification of such appointment by the stockholders. Ernst & Young
LLP has acted as the Company's independent auditors since 1986. If the
stockholders do not ratify such appointment, the Audit Committee will recommend
another accounting firm for selection by the Board of Directors. A
representative of Ernst & Young LLP is expected to be present at the Annual
Meeting and will have an opportunity to make a statement and will be available
to answer proper questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
PROCEDURE FOR SUBMITTING STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Exchange Act, stockholders may present
proper proposals for inclusion in the Company's proxy statement and for
consideration at the next annual meeting of its stockholders by submitting their
proposals to the Company in a timely manner. In order to be so included for the
1997 Annual Meeting, stockholder proposals must be received by the Company no
later than January 14, 1997, and must otherwise comply with the requirements of
Rule 14a-8.
Pursuant to the Company's By-Laws, as amended, any stockholder entitled to
vote for the election of directors may nominate persons for election as
directors only if written notice of such stockholder's intent to make such
nomination is given either by personal delivery or by the United States mail,
postage prepaid, to the Secretary of the Company not later than one hundred
twenty (120) days in advance of the Company's annual meeting of stockholders.
All notices of proposals by stockholders, whether or not to be included in
the Company's proxy materials, should be sent to the attention of the Secretary
of the Company at 400 Rabro Drive East, Hauppauge, New York 11788.
16
<PAGE>
OTHER BUSINESS
The Board of Directors does not intend to present to the meeting any
business other than the matters stated in the Notice of the Annual Meeting of
Stockholders and, at the time the proxy statement was printed, was not aware of
any other business that properly might be presented. If any other business not
described herein should properly come before the meeting for action by the
stockholders, or if any procedural matters requiring a vote of stockholders
should arise at the meeting, the persons named as proxies on the enclosed card
or their substitutes will vote the shares represented by them in accordance with
their best judgment.
By Order of the Board of Directors
RICHARD S. KOLODNY
Vice President, General
Counsel and Secretary
Dated: May 13, 1996
17
<PAGE>
GRAHAM-FIELD HEALTH PRODUCTS, INC.
400 RABRO DRIVE EAST, HAUPPAUGE, NEW YORK 11788
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints IRWIN SELINGER and DR. HAROLD LAZARUS as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of Common
Stock of Graham-Field Health Products, Inc., held of record by the undersigned
on May 3, 1996, at the Annual Meeting of Stockholders to be held on June 18,
1996, or any adjournment thereof.
1. Election of Directors.
<TABLE>
<S> <C> <C>
Class III Nominees: Louis A. Lubrano
Dr. Harold Lazarus
Steven D. Levkoff
FOR all nominees (except as marked WITHHOLD AUTHORITY to vote
to the contrary above) / / for all nominees / /
(INSTRUCTION: TO WITHHOLD VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THAT NOMINEE'S NAME IN
THE LIST PROVIDED ABOVE)
</TABLE>
2. Ratification of appointment of Ernst & Young LLP as independent auditors.
FOR / / AGAINST / / ABSTAIN / /
3. In their discretion upon any other matters which may properly come before
such meeting.
(continued on reverse side)
<PAGE>
This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. If no direction is made, this proxy will be voted
FOR the election of management's nominees for directors, and FOR Proposal 1.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Dated _____________________________________, 1996
______________________________________________
(Signature)
______________________________________________
(Signature if held jointly)
Please sign exactly as your name
appears hereon. When shares are held by
joint tenants, both should sign. When
signing as attorney, as executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
