<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
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 Under Rule 14a-12
HORIZON HEALTH CORPORATION
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE> 2
HORIZON HEALTH CORPORATION
1500 WATERS RIDGE DRIVE
LEWISVILLE, TEXAS 75057-6011
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 24, 2001
To the Stockholders of
Horizon Health Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Horizon Health Corporation (the "Company") will be held at the National Support
Center of the Company located at 1500 Waters Ridge Drive, Lewisville, Texas
75057-6011 on Wednesday, January 24, 2001 at 1:00 p.m., Central Time, for the
following purposes:
1. To elect seven directors to serve for the ensuing year;
2. To consider and vote upon a proposal to ratify the appointment
of PricewaterhouseCoopers LLP as the independent accountants
for the Company for the fiscal year ending August 31, 2001;
and
3. To transact such other business as may properly come before
the Annual Meeting and any and all adjournments thereof.
The close of business on December 8, 2000 has been fixed by the Board
of Directors as the record date for determining stockholders entitled to notice
of and to vote at the Annual Meeting. A list of stockholders eligible to vote at
the Annual Meeting will be available for inspection at the Annual Meeting, and
during business hours from January 8, 2001 to the date of the Annual Meeting at
the National Support Center of the Company located at 1500 Waters Ridge Drive,
Lewisville, Texas 75057-6011.
You are cordially invited to attend the Annual Meeting. Whether or not
you plan to attend the Annual Meeting, it is important that you ensure your
representation by completing, signing, dating and promptly returning the
enclosed proxy card. A return envelope, which requires no postage if mailed in
the United States, has been provided for your use. If you attend the Annual
Meeting, you may revoke your proxy and vote in person if you wish.
By Order of the Board of Directors,
JAMES W. McATEE
President
December 15, 2000
<PAGE> 3
HORIZON HEALTH CORPORATION
1500 WATERS RIDGE DRIVE
LEWISVILLE, TEXAS 75057-6011
----------
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
----------
TO BE HELD JANUARY 24, 2001
This Proxy Statement is furnished in connection with the solicitation
on behalf of the Board of Directors of Horizon Health Corporation, a Delaware
corporation (the "Company" or "Horizon"), of proxies for use at the Annual
Meeting of Stockholders of the Company (the "Annual Meeting") to be held at the
National Support Center of the Company located at 1500 Waters Ridge Drive,
Lewisville, Texas 75057-6011 on Wednesday, January 24, 2001, at 1:00 p.m.,
Central Time, and at any and all adjournments thereof, for the purposes set
forth in the accompanying Notice of Annual Meeting of Stockholders. This Proxy
Statement and the accompanying proxy card are first being mailed on or about
December 15, 2000 to stockholders of the Company entitled to notice of and to
vote at the Annual Meeting. Only holders of record of the Common Stock, $.01 par
value ("Common Stock"), of the Company at the close of business on December 8,
2000 will be entitled to notice of and to vote at the Annual Meeting. As of that
date, there were 5,823,537 shares of Common Stock outstanding. Each share of
Common Stock entitles the record holder to one vote. There is no cumulative
voting.
The holders of a majority of the issued and outstanding shares of
Common Stock entitled to vote at the Annual Meeting must be present in person or
represented by proxy at the Annual Meeting in order to have a quorum for the
Annual Meeting. Directors will be elected at the Annual Meeting by a plurality
of the votes of the shares present in person or represented by proxy at the
Annual Meeting and entitled to vote on the election of directors. Accordingly,
the seven nominees for director receiving the highest number of affirmative
votes cast on the election of directors at the Annual Meeting will be elected as
directors. The affirmative vote of the holders of a majority of the shares of
Common Stock which are actually present in person or represented by proxy at the
Annual Meeting and entitled to vote will be required to approve all other
matters to be acted upon at the Annual Meeting. Abstentions will be counted for
purposes of determining the presence or absence of a quorum, but not voted.
Abstentions will therefore have the same effect as votes against any proposal
requiring the affirmative vote of a majority of the shares present and entitled
to vote thereon. Broker non-votes will be counted only for purposes of
determining the presence or absence of a quorum, but will have no effect on the
outcome of the matters to be acted upon at the Annual Meeting.
If the accompanying proxy card is properly signed and received by the
Company prior to the Annual Meeting and not revoked, it will be voted in
accordance with the instructions contained therein. If no instructions are
given, the persons designated as proxies in the accompanying proxy card will
vote "FOR" the election as directors of those persons named below and "FOR" all
other proposals set forth therein.
The Board of Directors is not currently aware of any matters other than
those referred to herein which will come before the Annual Meeting. If any other
matter is properly presented at the Annual Meeting for action, the persons named
in the accompanying proxy card will vote the proxy in their own discretion on
such matter.
You may revoke your proxy at any time before it is actually voted at
the Annual Meeting by delivering written notice of revocation to the Secretary
of the Company, by submitting a subsequently dated
<PAGE> 4
proxy, or by attending the Annual Meeting and giving notice to the Secretary of
the Company in writing that the proxy is withdrawn. Attendance at the Annual
Meeting will not, by itself, constitute revocation of the proxy.
The cost of soliciting proxies in the accompanying form will be borne
by the Company. Proxies may also be solicited personally or by telephone by
officers or employees of the Company, none of whom will receive additional
compensation therefor. The Company's regularly retained investor communications
firm, Corporate Communications, Inc., may also be called upon to solicit proxies
by telephone or mail. The Company will reimburse brokerage houses and other
nominees for their reasonable expenses in forwarding proxy materials to
beneficial owners of Common Stock.
The Company's principal executive offices are located at 1500 Waters
Ridge Drive, Lewisville, Texas 75057-6011. Its telephone number is (972)
420-8200.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
GENERAL INFORMATION
As set by the Board of Directors pursuant to the Bylaws of the Company,
the authorized number of directors of the Company is eight. Seven directors will
be elected at the Annual Meeting, to hold office until the next annual meeting
of stockholders of the Company and until their respective successors are duly
elected and qualify, or until their earlier death, resignation or removal. All
director nominees named below are currently serving as directors of the Company
with terms expiring at the Annual Meeting. There is currently one vacancy on the
Board of Directors. The Company intends to fill the vacancy but is still in the
process of determining a qualified individual. The Proxies solicited by this
Proxy Statement cannot be voted for a greater number of persons than the number
of nominees named in this Proxy Statement. The Board of Directors has no reason
to believe that any of the nominees will not serve if elected, but if any of
them become unavailable to serve as a director, and if the Board designates a
substitute nominee, the persons named in the accompanying proxy card will vote
for the substitute nominee designated by the Board.
INFORMATION REGARDING NOMINEES
Set forth below is certain information with respect to each director
nominee. Additional information regarding certain of the nominees is set forth
in other sections of this Proxy Statement.
<TABLE>
<CAPTION>
NAME AGE TITLE DIRECTOR SINCE
---- --- ----- --------------
<S> <C> <C> <C>
James Ken Newman 57 Chairman of the Board of Directors July 1989
James W. McAtee 55 President and Chief Executive Officer; July 1995
Director
Jack R. Anderson 75 Director December 1990
George E. Bello 65 Director April 1995
William H. Longfield 62 Director July 1995
Donald E. Steen 54 Director April 1995
James E. Buncher 64 Director August 1997
</TABLE>
2
<PAGE> 5
James Ken Newman has served as the Chairman of the Board since February
1992. From July 1989 until September 1997, he served as President of the Company
and from July 1989 until October 1998, he also served as Chief Executive Officer
of the Company.
James W. McAtee has been President and Chief Executive Officer of the
Company since November 1998 and Secretary of the Company since September 1990.
He served as Executive Vice President - Finance & Administration of the Company
from February 1992 until October 1998. He was a Senior Vice President of the
Company from September 1990 to February 1992. He also served as the Chief
Financial Officer of the Company from September 1990 to July 1999.
Jack R. Anderson has been President of Calver Corporation, a health
care consulting and investment firm, and a private investor, since 1982. Mr.
Anderson currently serves on the board of directors of Genesis Health Ventures,
Inc. Mr. Anderson is a member of the Compensation and Option Committee of the
Board of Directors of the Company.
George E. Bello has been Executive Vice President and Controller and a
member of the board of directors of Reliance Group Holdings, Inc., an insurance
holding company, since August 1981. Mr. Bello also currently serves on the board
of directors of Zenith National Insurance Corp. and Land America Financial
Group, Inc. Mr. Bello is a member of the Audit Committee of the Board of
Directors of the Company.
William H. Longfield has been the Chairman and Chief Executive Officer
of C.R. Bard, Inc., a multi-national developer, manufacturer and marketer of
health care products, since September 1995. Mr. Longfield was President and
Chief Executive Officer of C.R. Bard, Inc. from October 1993 to September 1995,
President and Chief Operating Officer from September 1991 to October 1993 and
Executive Vice President and Chief Operating Officer from February 1989 to
September 1991. Mr. Longfield currently serves on the board of directors of C.R.
Bard, Inc., Manor Care, Inc. and West Pharmaceutical Services, Inc. Mr.
Longfield is a member of the Compensation and Option Committee of the Board of
Directors of the Company.
Donald E. Steen has been Chairman of United Surgical Partners, Inc., a
surgery operations company, since February 1998. From October 1994 to December
1997, Mr. Steen was President of the International Group of Columbia/HCA
Healthcare Corporation, a health care services corporation primarily involved in
the ownership and operation of hospitals and providing related services. From
September 1981 to October 1994, Mr. Steen was the President and Chief Executive
Officer of Medical Care America, Inc., a corporation that operated ambulatory
surgery centers. Medical Care America, Inc. was acquired by Columbia/HCA
Healthcare Corporation in October 1994. He currently serves on the board of
directors of Kenetic Concepts, Inc. Mr. Steen is a member of the Audit Committee
of the Board of Directors of the Company.
James E. Buncher has been President of Safeguard Health Enterprises,
Inc., a dental benefits company since March 2000. From July 1998 to February
2000, Mr. Buncher was a private investor. Mr. Buncher was President and Chief
Executive Officer of Community Dental Services, Inc., a corporation operating
dental practices in California, from October 1997 until July 1998. Mr. Buncher
was the President of Health Plans Group of Value Health, Inc., a national
specialty managed care company, from September 1995 to September 1997 and served
as Chairman, President and Chief Executive Officer of Community Care Network,
Inc., a Value Health subsidiary, from August 1992 to September 1997. In
September 1997, Value Health was acquired by a third party and Mr. Buncher
resigned his positions with that company at that time. Mr. Buncher is a member
of the Audit Committee of the Board of Directors of the Company.
SHARES REPRESENTED BY THE ACCOMPANYING PROXY CARD WILL BE VOTED "FOR"
THE ELECTION OF THE NOMINEES NAMED ABOVE EXCEPT TO THE EXTENT AUTHORITY TO VOTE
FOR ONE OR MORE NOMINEES IS WITHHELD. AS INDICATED ON THE PROXY CARD,
STOCKHOLDERS MAY (i) VOTE FOR THE ENTIRE SLATE OF NOMINEES, (ii) WITHHOLD
AUTHORITY TO VOTE FOR THE ENTIRE SLATE OF NOMINEES OR (iii) BY WRITING THE NAME
OF ONE OR MORE NOMINEES IN THE SPACE PROVIDED ON THE PROXY CARD, WITHHOLD
AUTHORITY TO VOTE FOR SUCH SPECIFIED NOMINEE OR NOMINEES.
3
<PAGE> 6
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors of the Company held four meetings during the
fiscal year ended August 31, 2000. The only standing committees of the Board of
Directors are the Compensation and Option Committee and the Audit Committee.
During the fiscal year ended August 31, 2000, each current director of the
Company, with the exception of George Bello, attended at least 75% of the
aggregate of the total number of meetings of the Board of Directors of the
Company and of the committees of the Board on which the respective director
served, that were held during the period for which each such person has been a
director or served on such committee, as the case may be.
Compensation and Option Committee. The Compensation and Option
Committee reviews and sets from time to time the salaries and annual incentive
bonuses for the Chief Executive Officer of the Company and each of the officers
of the Company directly reporting to the Chief Executive Officer, and also
administers the stock option plans of the Company. The Compensation and Option
Committee met two times and acted by unanimous written consent on one occasion
during the fiscal year ended August 31, 2000. Jack R. Anderson and William H.
Longfield currently are the members of the Compensation and Option Committee.
Audit Committee. The principal functions of the Audit Committee are to
make recommendations to the Board of Directors as to the selection of the
independent auditors for the Company, and to review and consult with the Board
of Directors and management regarding the scope and results of any outside audit
of the Company and other auditing and accounting matters. The Audit Committee
met two times during the fiscal year ended August 31, 2000. George E. Bello,
James E. Buncher and Donald E. Steen currently are the members of the Audit
Committee.
4
<PAGE> 7
EXECUTIVE COMPENSATION
The following table sets forth certain summary information regarding
compensation earned by or awarded to the Chief Executive Officer and the other
executive officers of the Company named below (collectively, the "Named
Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------- ------------
OTHER
ANNUAL SECURITIES
FISCAL COMPENSATION UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS(1) (2) OPTIONS (#) COMPENSATION
--------------------------- ------ --------- -------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
James W. McAtee (3).............. 2000 333,378 347,153 --- 2,772
President and CEO 1999 312,548 216,944 --- 308,750 2,652
1998 241,811 --- --- 35,000 2,375
Ronald C. Drabik (4)............. 2000 201,372 49,427 25,616 25,000 ---
Sr. Vice-President, Finance 1999 28,974 6,148 --- 50,000 ---
and Administration
David S. Tingue (5).............. 2000 193,672 36,678 --- --- 904
Sr. Vice-President, Marketing 1999 186,348 46,558 --- 10,125 ---
1998 151,495 --- 53,882 --- ---
David K. White................... 2000 189,643 93,844 --- 10,000 2,772
Sr. Vice-President, Operations 1999 180,215 37,962 7,123 22,850 2,652
1998 167,653 22,606 48,686 4,000 ---
Frank J. Baumann................. 2000 173,580 71,095 15,475 7,500 2,772
Sr. Vice-President, Operations 1999 156,186 37,115 30,136 22,925 2,652
1998 134,257 22,122 8,981 --- ---
</TABLE>
----------
(1) Represents the amounts earned in the fiscal year indicated, irrespective
of when amounts were paid by the Company. The bonus amounts shown
represent performance incentive bonuses. In addition, for Mr. McAtee in
fiscal year 2000, the bonus amount shown also includes a bonus in the
amount of $74,425 paid under the contingent bonus plan approved in 1995.
See "Other Compensation Arrangements - Contingent Bonuses."
(2) The amounts shown represent reimbursement for relocation expenses.
(3) Effective November 1, 1998, Mr. McAtee was elected President and Chief
Executive Officer of the Company.
(4) Mr. Drabik was employed by the Company on July 12, 1999.
(5) Mr. Tingue was employed by the Company on October 6, 1997.
5
<PAGE> 8
STOCK OPTION GRANTS
The following table sets forth information regarding the grant of
options to purchase shares of Common Stock to the Named Executive Officers in
the fiscal year ended August 31, 2000.
OPTION GRANTS IN FISCAL YEAR ENDED AUGUST 31, 2000
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------
POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES PERCENT OF EXERCISE ANNUAL RATES OF STOCK
UNDERLYING OPTIONS TOTAL OPTIONS OR PRICE APPRECIATION FOR
GRANTED (1) GRANTED TO BASE OPTION TERM (3)
EMPLOYEES IN PRICE (2) EXPIRATION -----------------------
NAME (#) FISCAL YEAR ($/SH) DATE 5% 10%
---------------------- ------------------ ------------- -------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
James W. McAtee -- -- -- -- -- --
Ronald C. Drabik 25,000 20.7% $5.50 07/11/10 $86,474 $219,134
David S. Tingue -- -- -- -- -- --
David K. White 10,000 8.3% $5.50 10/31/09 $34,590 $87,654
Frank J. Baumann 7,500 6.2% $5.50 10/31/09 $25,942 $65,740
</TABLE>
----------
(1) The options vest and are exercisable cumulatively either in 20% annual
installments commencing two years after the date of grant or in 25% annual
installments commencing one year after the date of grant. Exercisability
of the options may be accelerated in the event of the commencement of a
tender offer for shares of the Company, the signing of an agreement for
certain mergers or consolidation involving the Company or for the sale of
all or substantially all assets of the Company, a change in any
consecutive two-year period in the majority of the members of the Board of
Directors of the Company serving on the Board at the beginning of such
period, and certain other extraordinary corporate transactions. The
options are subject to early termination in the event of the optionee's
termination of employment or cessation of service with the Company.
(2) The exercise price per share of the options equaled the reported closing
price of the Common Stock on the date of grant. Subject to the terms of
the applicable option agreements, the exercise price may be paid in cash
or in shares of Common Stock owned by the optionee, or a combination of
the foregoing.
(3) There is no assurance that the actual stock price appreciation over the
ten-year option term will be at the assumed 5% and 10% levels or at any
other defined level. Unless the market price of the Common Stock does in
fact appreciate over the option term, no value will be realized from the
option grants.
6
<PAGE> 9
AGGREGATE OPTION EXERCISES IN FISCAL 2000 AND OPTION VALUES AT FISCAL YEAR-END
The following table sets forth, for each Named Executive Officer,
information regarding stock options exercised during the fiscal year ended
August 31, 2000, the number of shares covered by both exercisable and
unexercisable stock options as of August 31, 2000, and the value of stock
options outstanding as of August 31, 2000.
AGGREGATED OPTION EXERCISES
IN FISCAL YEAR ENDED AUGUST 31, 2000
AND OPTION VALUES AS OF AUGUST 31, 2000
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
ON YEAR-END (#) FISCAL YEAR-END (1)
EXERCISE VALUE ---------------------------- ----------------------------
NAME (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James W. McAtee 48,481 204,340 358,035 159,750 366,404 --
Ronald C. Drabik -- -- 12,500 62,500 -- --
David S. Tingue -- -- 1,025 9,100 -- --
David K. White -- -- 5,310 31,540 -- --
Frank J. Baumann -- -- 1,970 28,455 -- --
</TABLE>
----------
(1) Calculated based on the closing price of the Common Stock of $4.313 per
share as reported on the NASDAQ National Market on August 31, 2000, the
last trading day of fiscal 2000, less the applicable exercise price.
OTHER COMPENSATION ARRANGEMENTS
Executive Retention Agreement
Effective September 1, 1997, the Company entered into an Executive
Retention Agreement with James Ken Newman. Pursuant to the Executive Retention
Agreement, Mr. Newman agreed to continue to serve as Chairman and Chief
Executive Officer of the Company, subject to his right to retire as Chief
Executive Officer at any time during the term of the agreement. Mr. Newman
elected to retire as Chief Executive Officer of the Company on October 31, 1998,
at which time he became a consultant to the Company for the remaining term of
the agreement. Mr. Newman had served as President of the Company from July 1989
until September 1997, and also as Chief Executive Officer of the Company from
July 1989 until October 1998. Mr. Newman has served as Chairman since February
1992.
The Executive Retention Agreement has a five year term, subject to
automatic renewal so that it maintains a three year term at all times until the
Company elects to terminate such automatic renewal provision which it can elect
to do at any time. Under the agreement, Mr. Newman receives as a consultant
annual compensation equal to seventy-five percent (75%) of his annual base
salary at the time of retirement, which was $280,000. Any stock options granted
to Mr. Newman during the term of the agreement are to have a ten year term and
vest not less than 10% per year at the end of each of the first eight years and
be fully vested at the end of nine years, subject, however, to acceleration upon
the occurrence of certain events. All stock options granted to Mr. Newman prior
to the date of his retirement remained outstanding and did not change in any
respect as a result of his retirement to consultant status.
7
<PAGE> 10
The agreement contains certain confidentiality and non-competition
provisions. The non-competition agreements stay in place after termination so
long as Mr. Newman receives severance payments under the agreement, which will
be for the remaining term of the agreement in the event of termination of the
agreement under certain conditions. Mr. Newman may limit the term of the
non-competition agreement to 24 months by electing to forego any additional
severance payments after such period. In the event Mr. Newman voluntarily
resigns, no severance payments are payable but he will be subject to the
non-competition agreement for 24 months after the date of resignation. The
agreement has certain provisions for the acceleration of the vesting of stock
options after the occurrence of a change of control of the Company.
Contingent Bonuses
In January 1995, the Compensation and Option Committee approved contingent
bonuses applicable to Messrs. Newman and McAtee. The aggregate amount of such
bonuses that could be earned by Messrs. Newman and McAtee were $216,904 and
$123,176, respectively. The bonuses vested in four equal annual installments but
are payable only if (i) the bonus, or a portion thereof, is utilized to pay the
exercise price of stock options for the purchase of Common Stock and (ii) the
officer remained in the continuous employment of the Company until the date when
the bonus, or portion thereof, is paid. The bonuses may be payable in one or
more installments as and when the executive officer elects to exercise stock
options. In fiscal 1998, $50,000 of such bonuses were paid to Mr. Newman and
used to pay the exercise price of stock options exercised by him in such fiscal
year. In fiscal 2000, $37,500 and $74,425 of such bonuses were paid to Messrs.
Newman and McAtee, respectively, and used to pay the exercise price of stock
options exercised by each of them in such fiscal year.
Executive Severance Agreement
The Company has a severance agreement with Ronald C. Drabik pursuant to
which Mr. Drabik will be paid an amount equal to one year of his base salary in
the event of the termination of his employment by the Company without cause. The
severance agreement contains certain confidentiality and non-competition
provisions that apply for one year after termination of employment.
DIRECTOR COMPENSATION
The Company's Second Amended and Restated 1995 Stock Option Plan for
Eligible Outside Directors (the "Director Plan") provides for a one-time formula
grant of stock options to purchase 15,000 shares of Common Stock to each
non-employee director of the Company upon such director's initial election to
the Board of Directors if the director satisfies certain criteria specified in
the Director Plan. In addition, such non-employee directors receive a subsequent
grant when reelected to the Board of Directors at an annual meeting and when
such non-employee Director has served at least one year since the date of the
last grant under the Director Plan. Each subsequent grant is for a number of
shares of Common Stock equal to $50,000 divided by the fair market value per
share of the Common Stock of the Company on the date of grant (as defined in the
Director Plan, the closing price per share on the grant date) rounded to the
nearest hundred. With respect to each subsequent grant, each Director has the
election to reduce a grant amount by fifty percent (50%) of the shares of Common
Stock that would otherwise be subject to the subsequent grant and, in lieu
thereof, receive a fee of $2,500 for each of the next four meetings of the Board
of Directors actually attended by such Director within the period from the
annual meeting at which the Director is re-elected (including the Board meeting
immediately following such annual meeting) to the next annual meeting of
stockholders.
In addition to the formula stock options described above, the Compensation
and Option Committee has authority under the Director Plan to grant
discretionary stock options to non-employee directors upon such terms as are
determined by such committee. All formula grants under the Plan vest twenty
percent (20%) on
8
<PAGE> 11
the date of grant and in twenty percent (20%) installments over the next four
years if the Director is re-elected at each of the next successive annual
meetings of the stockholders and when the Director has served a period of one
year since the vesting of the most recent installment on the option, including
the installment that vested on the grant date. All stock options under the
Director Plan terminate on the date any optionee ceases to be a director of the
Company for any reason other than death (in the event of the optionee's death,
stock options vested at the date of death are exercisable for one year
thereafter).
Upon their reelection to the Board of Directors in January 2000, Messrs.
Bello and Longfield received formula grants of stock options to purchase 7,018
shares of Common Stock and Messrs. Buncher and Steen received formula grants of
stock options to purchase 3,509 shares of Common Stock under the Second Amended
and Restated 1995 Stock Option Plan for Eligible Outside Directors. Each of
these four Directors will receive a subsequent grant as described above if
re-elected to the Board of Directors at the Annual Meeting. Such additional
stock options will be granted on the date of the Annual Meeting at an exercise
price equal to the closing price of the Common Stock on the Nasdaq National
Market on that date.
Directors of the Company do not receive any other compensation for service
on the Board of Directors or any committee thereof, except as described above.
Directors are, however, reimbursed for their out-of-pocket expenses incurred in
attending meetings of the Board of Directors.
COMPENSATION AND OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
GENERAL
The Compensation and Option Committee of the Board of Directors of the
Company reviews and approves (i) the salaries and annual incentive bonuses of
the Chief Executive Officer of the Company and each of the officers of the
Company directly reporting to the Chief Executive Officer and (ii) all grants of
options to purchase shares under the Company's stock option plans to eligible
directors, officers, employees and consultants of the Company. At all times
during the fiscal year ended August 31, 2000, the Compensation and Option
Committee was composed exclusively of directors who were "non-employee
directors" and "outside directors" as defined by applicable Securities and
Exchange Commission ("Commission") rules and Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), respectively. The members of the
Committee are not former employees of the Company and have not ever participated
in any of the Company executive or other employee compensation programs. In
fiscal 2000, the Committee was composed of two directors, Mr. Anderson and Mr.
Longfield.
Horizon's executive compensation policy is designed and administered to
provide a competitive compensation program that will enable Horizon to attract,
motivate, reward and retain executives who have the skills, education,
experience and capabilities required to discharge their duties in a competent
and efficient manner. The compensation policy is based on the principle that the
financial rewards to the executive should be aligned with the financial
interests of the stockholders of Horizon.
Horizon's executive compensation strategy has three separate elements,
consisting of base salary, annual incentive compensation (bonuses) and long-term
incentive compensation (stock options). The following is a summary of the
policies underlying each element.
BASE SALARY
The Compensation and Option Committee reviews the base salaries of the
Chief Executive Officer and the other officers directly reporting to the Chief
Executive Officer periodically, considering factors such as individual and
corporate performance, and individual experience, expertise and years of
service.
9
<PAGE> 12
In determining the Chief Executive Officer's overall compensation, as well
as the compensation of the other officers, the Compensation and Option Committee
also reviews compensation levels at other companies including selected peer
companies. Such other companies are not necessarily the same as the companies in
the peer group index in the Performance Graph section of this Proxy Statement
because the Compensation and Option Committee believes that the Company competes
for executive talent with companies in addition to those in its peer group. The
Compensation and Option Committee does not attempt to set base salaries at any
particular level based on such surveys, but rather uses such surveys to obtain
an overview of compensation levels in general.
No particular weight is given by the Compensation and Option Committee to
any of the foregoing factors, and decisions as to adjustments in base salaries
are primarily subjective. In August 1999, the base salaries of each of the
Company's executive officers were reviewed and certain increases approved for
some of the officers to be effective at various dates during fiscal 2000.
ANNUAL INCENTIVE COMPENSATION
For services rendered during fiscal 2000, some of Horizon's executive
officers received cash bonuses after the completion of such fiscal year. All
such cash bonuses were awarded based upon certain previously specified
performance criteria. For fiscal 2000, the performance criteria were set based
primarily upon the Board-approved budget which was consistent with the then
current public expectation of earnings per share for the Company.
Mr. McAtee's bonus potential for fiscal 2000 was set at up to 100% of his
annual base salary based upon the Company achieving the Board-approved budget.
In addition, the executive officers of the Company directly reporting to Mr.
McAtee had bonuses set at up to 30%-60% of their average base salary for fiscal
2000, with the bonus based upon the financial results of their area of
responsibility and, in certain cases, the achievement of certain contract
retention targets.
LONG-TERM INCENTIVES
The Compensation and Option Committee is authorized to grant incentive and
non-qualified stock options to key employees of the Company, including officers.
Such option grants are intended to provide to the key employees long-term
incentive to increase stockholder value by improving corporate performance and
profitability. Stock option grants provide an incentive that focuses the
executive's attention on managing the Company from the perspective of an owner
with an equity stake in the business. These grants also help ensure that
operating decisions are based on long-term results that benefit the Company and
ultimately the stockholders. Currently, stock options to employees are not
necessarily granted annually, but are granted from time to time at the
discretion of the Compensation and Option Committee. While no specific formula
is used to determine stock option grants made to any particular employee, grants
are generally based upon a subjective evaluation of non-objective factors such
as the employee's past contribution toward Company performance and expected
contribution to meeting long-term strategic goals of the Company.
Section 162(m) of the Code imposes a $1,000,000 limit on the amount of
compensation that will be deductible for Federal income tax purposes by the
Company each fiscal year with respect to each of the Chief Executive Officer and
the four other most highly compensated executive officers of the Company. The
base salary and annual incentive compensation level of the Company's executive
officers is currently well below this limit. The Company believes that the
limitation of Section 162(m) does not apply to compensation earned or that may
be earned with respect to the stock options granted to the Executive Officers
under the
10
<PAGE> 13
stock option plans of the Company during or prior to the fiscal year ended
August 31, 2000. The structure of the 1998 Stock Option Plan is intended to make
grants thereunder qualify as "performance-based compensation" not subject to the
limitation of Section 162(m).
Compensation and Option Committee
Jack R. Anderson
William H. Longfield
PERFORMANCE GRAPH
The following graph shows a comparison of the total cumulative
stockholder return for the Company, the Total Return Index for Nasdaq Stock
Market (U.S. Companies) (the "Nasdaq (U.S.) Index") and a peer group selected by
the Company. The comparison below assumes $100 was invested on August 31, 1995
in each of (i) the Common Stock of the Company, (ii) shares comprising the
Nasdaq (U.S.) Index and (iii) the common stock of the peer group, and assumes
reinvestment of dividends. Neither the Company nor any companies in the peer
group, except PMR Corp., paid any dividends during such period.
Research Data Group Peer Group Total Return Worksheet
HORIZON HEALTH CORP
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
-----------------------------------------------------------------------
8/95 8/96 8/97 8/98 8/99 8/00
<S> <C> <C> <C> <C> <C> <C>
HORIZON HEALTH CORPORATION 100.00 146.67 237.50 66.25 70.63 43.13
NASDAQ STOCK MARKET (U.S.) 100.00 112.79 157.36 148.70 276.25 421.80
PEER GROUP 100.00 130.86 158.66 100.70 97.03 196.09
</TABLE>
The peer group consists of the following publicly traded companies in
the health care industry: American Healthways Inc., Comprehensive Care Corp.,
ContinuCare Corporation, Corvel Corporation, Northstar Health Services Inc., PMR
Corporation, and Rehabcare Group, Inc.
11
<PAGE> 14
SECURITY OWNERSHIP BY MANAGEMENT
AND PRINCIPAL STOCKHOLDERS
Set forth below is certain information with respect to the beneficial
ownership of Common Stock as of November 12, 2000, by (i) each person who, to
the knowledge of the Company based upon statements filed as of December 1, 2000
with the Commission pursuant to Section 13(d) or 13(g) of the Securities
Exchange Act of 1934, as amended, beneficially owns more than 5% of the
outstanding Common Stock, (ii) each director (which includes all nominees for
director) of the Company, (iii) each Named Executive Officer and (iv) all
directors and such Named Executive Officers of the Company as a group. Except as
indicated below, to the Company's knowledge, each person named has sole voting
and investment power with respect to all shares shown as beneficially owned by
such person.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED
----------------------------------------------------
NAME NUMBER PERCENT
---- ----------------------- -------------------------
<S> <C> <C>
Fidelity Management & Research Company (1).................... 674,400 11.5%
James Ken Newman (2).......................................... 565,623 9.2
The Burton Partnership, Limited Partnership (3)............... 531,600 9.1
Dimensional Fund Advisors, Inc. (4)........................... 447,000 7.6
Eagle Asset Management, Inc. (5).............................. 438,125 7.5
Jack R. Anderson (6).......................................... 427,400 7.3
James W. McAtee (7)........................................... 437,689 7.0
Paul J. Schupf Associates (8)................................. 410,800 7.0
George E. Bello (9)........................................... 338,806 5.8
Donald E. Steen (10).......................................... 37,104 *
William H. Longfield (11)..................................... 36,806 *
James E. Buncher (12)......................................... 29,742 *
Ronald C. Drabik (13)......................................... 13,545 *
David K. White (14)........................................... 7,918 *
Frank J. Baumann (15)......................................... 2,544 *
David S. Tingue (16).......................................... 1,025 *
All directors and Named Executive Officers as a group 1,898,202
(11 persons) (17)............................................ 28.9
</TABLE>
----------
* Less than 1%.
(1) The address of Fidelity Management & Research Company is 82 Devonshire
Street, Boston, Massachusetts. According to a Schedule 13F dated
September 30, 2000, Fidelity has sole investment power over the 674,400
shares and the voting power over such shares is held by the Board of
Trustees of the Fidelity Funds.
(2) The address of James Ken Newman is 700 El Paseo, Denton, Texas 76205.
Includes 16,000 shares of Common Stock held by a limited partnership
for which Mr. Newman serves as an officer and director of the corporate
general partner and 51,500 shares of Common Stock held by a foundation
of which Mr. Newman is a director and officer. Also includes 256,955
shares of Common Stock issuable upon the exercise of immediately
exercisable stock options.
(3) The address of The Burton Partnership, Limited Partnership is P. O. Box
4643, Jackson, Wyoming 83001.
(4) The address of Dimensional Fund Advisors, Inc. is 1299 Ocean Avenue,
Santa Monica, California 90401.
(5) The address of Eagle Asset Management, Inc. is 880 Carillon Parkway,
St. Petersberg, Florida 33716.
(6) The address of Jack R. Anderson is 16475 Dallas Parkway, Suite 735,
Dallas, Texas 75248. Excludes 100,000 shares of Common Stock owned by
Mr. Anderson's spouse, for which he disclaims any beneficial ownership.
(7) The address of Mr. McAtee is 1500 Waters Ridge Drive, Lewisville, Texas
75057. Includes 19,998 shares of Common Stock held in trust for the
benefit of Mr. McAtee's children. Also includes 358,035 shares of
Common Stock issuable upon the exercise of immediately exercisable
stock options.
(8) The address of Paul J. Schupf Associates is 27 Payne, Hamilton, New
York 13346.
(9) The address of Mr. Bello is 55 East 52nd Street, 53rd Floor, New York,
New York 10055. Includes 20,306 shares of Common Stock issuable upon
the exercise of immediately exercisable stock options.
12
<PAGE> 15
(10) Includes 19,604 shares of Common Stock issuable upon the exercise of
immediately exercisable stock options.
(11) Includes 20,306 shares of Common Stock issuable upon the exercise of
immediately exercisable stock options.
(12) Includes 4,742 shares of Common Stock issuable upon the exercise of
immediately exercisable stock options.
(13) Includes 12,500 shares of Common Stock issuable upon the exercise of
immediately exercisable stock options.
(14) Includes 5,310 shares of Common Stock issuable upon the exercise of
immediately exercisable stock options.
(15) Includes 1,970 shares of Common Stock issuable upon the exercise of
immediately exercisable stock options.
(16) Includes 1,025 shares of Common Stock issuable upon the exercise of
immediately exercisable stock options.
(17) Includes 700,753 shares of Common Stock issuable upon the exercise of
immediately exercisable stock options held by certain directors and
Named Executive Officers.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires directors and certain officers of the Company, and persons who
beneficially own more than ten percent of the Common Stock, to file reports of
ownership and changes in ownership with the Commission. Such persons are
required to furnish the Company with copies of all Section 16(a) reports they
file. Based solely upon a review of the copies of such reports furnished to the
Company, the Company believes that, during the fiscal year ended August 31,
2000, all Section 16(a) filing requirements applicable to its directors,
officers and greater than ten percent beneficial stockholders were complied
with, except that the required filing of a Form 3 by James K. Don upon his
election as a Senior Vice President of the Company in July 2000 was
inadvertently made late.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The stockholders are asked to ratify the appointment of
PricewaterhouseCoopers LLP as the independent accountants for the Company for
the fiscal year ending August 31, 2001. PricewaterhouseCoopers LLP, a certified
public accounting firm, has served as the independent accountants for the
Company since 1991. Representatives of PricewaterhouseCoopers LLP are expected
to be present at the Annual Meeting to respond to appropriate questions and to
make such statements as they may desire.
Ratification of the appointment of the independent accountants is not a
matter which is required to be submitted to a vote of stockholders, but the
Board of Directors considers it appropriate for the stockholders to express or
withhold approval of the appointment. If stockholder approval should not be
obtained, the Board of Directors would consider an alternative appointment for
fiscal 2001.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT
ACCOUNTANTS FOR THE COMPANY FOR THE FISCAL YEAR ENDING AUGUST 31, 2001, AND YOUR
PROXY WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
AUDIT COMMITTEE REPORT
The Audit Committee of the Horizon Health Corporation Board of Directors is
composed of three non-employee directors and operates under a written charter
adopted by the Board of Directors. A copy of the Audit Committee Charter is
attached as Appendix A to this Proxy Statement. Each member of the Audit
Committee satisfies the standards for independence as defined in the National
Association of Securities Dealers' listing standards. The Audit Committee
recommends to the Board of Directors, subject to stockholder ratification, the
selection of the Company's independent accountants.
13
<PAGE> 16
Management is responsible for the Company's internal controls, the financial
reporting process and preparation of the consolidated financial statements of
the Company. The independent accountants are responsible for performing an
independent audit of the Company's consolidated financial statements in
accordance with generally accepted auditing standards and to issue a report
thereon. The Audit Committee's responsibility is to monitor and oversee these
processes.
In this context, the Committee has met and held discussions with management and
the independent accountants. Management represented to the Audit Committee that
the Company's consolidated financial statements were prepared in accordance with
generally accepted accounting principles. The Audit Committee reviewed and
discussed the consolidated financial statements with management and the
independent accountants. The Audit Committee further discussed with the
independent accountants the matters required to be discussed by Statement on
Auditing Standards No. 61 (Communication with Audit Committees).
The Company's independent accountants also provided to the Audit Committee the
written disclosures and letter required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees), and the Audit Committee
discussed with the independent accountants that firm's independence.
Based upon Audit Committee's discussion with management and the independent
accountants and the Audit Committee's review of the representations of
management and the report of the independent accountants to the Audit Committee,
the Audit Committee recommended to the Board of Directors that the audited
consolidated financial statements be included in the Company's Annual Report on
Form 10-K for the year ended August 31, 2000 filed with the Securities and
Exchange Commission.
Audit Committee
George E. Bello
James E. Buncher
Donald A. Steen
PROPOSALS BY STOCKHOLDERS
Proposals by stockholders intended to be presented at the next annual
meeting of stockholders of the Company after this Annual Meeting must be
received at the executive offices of the Company no later than August 17, 2001,
to be included in the Company's proxy statement and form of proxy relating to
that meeting. Any stockholder who wishes to bring a proposal before such annual
meeting of stockholders, but does not wish to include it in the Company's proxy
materials, must provide written notice of the proposal to the Company's
Secretary at the executive offices of the Company by October 31, 2001.
Otherwise, proxies solicited for such annual meeting will confer discretionary
authority to vote on any such proposals that have not been so submitted to the
Company.
OTHER BUSINESS
The Board of Directors is aware of no other matter that will be
presented for action at the Annual Meeting. If any other matter requiring a vote
of the stockholders properly comes before the Annual Meeting, the persons
authorized under management proxies will vote and act on such matter according
to their own discretion and judgment.
14
<PAGE> 17
ANNUAL REPORT
The Company's Annual Report to Stockholders, which contains audited
consolidated financial statements of the Company for the fiscal year ended
August 31, 2000, is being mailed to stockholders of record with this Proxy
Statement. The Annual Report to Stockholders does not form a part of the proxy
solicitation materials.
UPON THE WRITTEN REQUEST OF ANY PERSON WHO IS A RECORD HOLDER OF COMMON
STOCK AS OF THE CLOSE OF BUSINESS ON DECEMBER 8, 2000, THE COMPANY WILL PROVIDE
WITHOUT CHARGE TO SUCH PERSON A COPY OF THE ANNUAL REPORT ON FORM 10-K OF THE
COMPANY FOR THE FISCAL YEAR ENDED AUGUST 31, 2000 AS FILED WITH THE COMMISSION
(EXCLUDING EXHIBITS). ANY SUCH WRITTEN REQUEST MUST BE DIRECTED TO HORIZON
HEALTH CORPORATION, 1500 WATERS RIDGE DRIVE, LEWISVILLE, TEXAS 75057-6011,
ATTENTION: MR. RONALD C. DRABIK, SENIOR VICE PRESIDENT - FINANCE AND
ADMINISTRATION.
JAMES W. McATEE
President
15
<PAGE> 18
APPENDIX A
HORIZON HEALTH CORPORATION
AUDIT COMMITTEE CHARTER
PURPOSE
The primary purpose of the Audit Committee is to assist the Board of Directors
of Horizon Health Corporation in fulfilling its responsibility to oversee (a)
the performance by management of the Company's auditing, accounting and
financial reporting processes, (b) the preparation by management of the
financial statements and other financial reporting information of the Company,
(c) the Company's systems of internal accounting and financial controls, (d) the
annual independent audit of the Company's financial statements, and (e) the
independence of the outside accountants for the Company.
In discharging its oversight role, the Committee will maintain free and open
communication between itself and the full Board, financial and senior
management, and the Company's outside independent accountant. The Committee is
empowered to investigate any matter brought to its attention with full access to
all books, records, facilities and personnel of Horizon. The Committee shall
have the authority to retain outside counsel, auditors or other experts for this
purpose. The Committee will review and appraise on an ongoing basis the overall
corporate standards for quality financial reporting. The Board and the Committee
are in place to represent the Company's shareholders; accordingly, the outside
independent accountant is ultimately accountable to the Committee, and the full
Board.
MEMBERSHIP
The Committee shall be comprised of three or more member directors as determined
by the Board. The composition of the Committee will meet NASDAQ requirements.
Each member will be an independent director free from any relationship that, in
the opinion of the Board, would interfere with his or her independent judgment
as a member of the Committee. All members of the Committee shall have a working
familiarity with basic finance and accounting practices or shall become
financially literate within a reasonable period of time after appointment to the
Committee. At least one member of the Committee shall have accounting or related
financial management expertise.
KEY RESPONSIBILITIES
The Committee's job is one of oversight. The Company's management is
responsible for preparing the Company's financial statements, and the outside
independent accountant is responsible for auditing those financial statements.
The Committee recognizes that financial management, as well as the outside
independent accountant, have more time, knowledge and more detailed information
on the Company than do Committee members. Consequently, in carrying out its
oversight responsibilities, the Committee is not providing any expert or special
assurance as to the Company's financial statements or any professional
certification as to the outside independent accountant's work.
The following functions shall be the common recurring activities of the
Committee in carrying out its oversight function. These functions are set forth
as a guide with the understanding that the Committee may diverge and/or
supplement them as appropriate given the circumstances.
o The Committee, following completion of the annual audit, shall review
separately with each of management and the independent accountant any
significant difficulties encountered during the course of the audit, and the
quality and appropriateness of the Company's accounting principles as applied
in its financial reporting, and the appropriateness of any significant
judgments made in the preparation of the financial statements by management.
16
<PAGE> 19
o The Committee shall review with management and the outside independent
accountant the audited financial statements to be included in the Company's
Annual Report on Form 10-K (or the Annual Report to Shareholders if
distributed prior to the filing of Form 10-K) and review and consider with
the outside independent accountant the matters required to be discussed by
Statement of Auditing Standards ("SAS") No. 61. Any required SAS No. 61
communication with the Committee should be made prior to filing.
o As a whole, or through the Committee Chair, the Committee shall assure that
the outside independent accountant reviews the Company's interim financial
results to be included in the Company's quarterly reports to be filed with
Securities and Exchange Commission and discusses with management (or directly
with the Committee if appropriate) the matters required to be discussed by
SAS No. 61. This review will occur prior to the Company's filing of the
respective Form 10-Q. Any required SAS No. 61 communication with the
Committee should be made prior to filing, or if not possible, as soon as
practicable.
o The Committee shall discuss with management and the outside independent
accountant the quality and adequacy of the Company's internal controls,
recommendations for improvements that are reportable conditions or material
weaknesses in internal controls, and the scope and plans for audits and
results therefrom.
o The Committee shall periodically consult with the independent accountant, out
of the presence of management, regarding internal controls, the audit process
and the completeness and accuracy of the financial statements of the Company.
o The Committee shall on an annual basis: (1) request from the outside
independent accountant a formal written statement delineating all
relationships between the independent accountant and the Company consistent
with the Independence Standards Board written policies; (2) discuss with the
outside independent accountant any such disclosed relationships and their
potential impact on the outside accountant's independence; and (3) make
appropriate, resultant recommended actions to the Board.
o The Committee shall recommend to the Board the selection of the independent
accountants for the Company. The Committee shall review the fees and other
compensation to be paid to the independent accountants. The Committee shall
review the performance of the independent accountants and approve a change of
the independent accountants for the Company if circumstances warrant.
o The Committee shall review this Charter at least annually and update as
appropriate.
17
<PAGE> 20
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
HORIZON HEALTH CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 24, 2001
The undersigned hereby constitutes and appoints JAMES W. McATEE and RONALD
C. DRABIK, each with power to act with or without the other and with full power
of substitution, as Proxies of the undersigned to represent and to vote all
shares of the Common Stock of Horizon Health Corporation (the "Company")
standing in the name of the undersigned, at the Annual Meeting of Stockholders
of the Company to be held at the executive offices of the Company located at
1500 Waters Ridge Drive, Lewisville, Texas 75057-6011, on Wednesday, January 24,
2001, at 1:00 p.m., Central Time, and at any and all adjournments thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR THE SEVEN NOMINEES OF THE BOARD OF DIRECTORS LISTED IN
PROPOSAL 1 AND FOR THE APPROVAL OF PROPOSAL 2. IF THE EXECUTED PROXY DOES NOT
WITHHOLD AUTHORITY TO VOTE FOR THE ELECTION OF A NOMINEE FOR DIRECTOR IN
PROPOSAL 1, THE PROXY WILL BE DEEMED TO GRANT AUTHORITY TO VOTE FOR THE ELECTION
OF SUCH NOMINEE AND WILL BE SO VOTED. THE PROXIES NAMED HEREIN ARE EACH
AUTHORIZED TO VOTE IN THEIR DISCRETION UPON SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE ANNUAL MEETING AND ANY AND ALL ADJOURNMENTS THEREOF.
The undersigned hereby revokes any proxy or proxies heretofore given. This
Proxy may be revoked at any time before it is exercised by following the
procedures stated in the Proxy Statement.
(PLEASE MARK, SIGN AND DATE ON THE OTHER SIDE
AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.)
<PAGE> 21
A [X] Please mark your votes
as in this example.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
WITHHOLD
FOR all nominees listed AUTHORITY
(except as listed to the to vote for all NOMINEES: James Ken Newman
contrary below) nominees listed James W. McAtee
Jack R. Anderson
1. Election of [ ] [ ] George E. Bello
Directors. William H. Longfield
Donald E. Steen
James E. Buncher
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, MARK THE FOR BOX AND WRITE EACH SUCH NOMINEE'S
NAME IN THE SPACE PROVIDED BELOW:
_____________________________________________________________
FOR AGAINST ABSTAIN
2. Proposal to ratify the appointment of PricewaterhouseCoopers LLP as the [ ] [ ] [ ]
independent accountants for the Company for the fiscal year ending August
31, 2001.
3. The Proxies are authorized to vote in their discretion upon such other
matters as may properly come before the Annual Meeting and any and all
adjournments thereof.
PLEASE MARK, SIGN AND DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED
ENVELOPE.
SIGNATURE Dated SIGNATURE Dated
------------------------------ ------------- -------------------------------- -------------
IF HELD JOINTLY
</TABLE>
NOTE: Please date and sign exactly as name appears hereon. When shares of
Common Stock are owned by joint tenants, both should sign. When signing
as attorney, 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 full partnership name by authorized person.
<PAGE> 22
EMPLOYEES SAVINGS AND PROFIT SHARING PLAN
HORIZON HEALTH CORPORATION
VOTING DIRECTION FOR ANNUAL MEETING OF STOCKHOLDERS
OF HORIZON HEALTH CORPORATION
TO BE HELD ON JANUARY 24, 2001
The undersigned hereby directs the Trustee (the "Trustee") of the
Horizon Health Corporation Employees Savings and Profit Sharing Plan (the
"Plan"), to vote, at the Annual Meeting of Stockholders of Horizon Health
Corporation to be held on January 24, 2001, and at any and all adjournments
thereof, all of the shares of Common Stock of Horizon Health Corporation, a
Delaware corporation ("Horizon"), held in my individual Plan account as of the
record date of the vote as set forth on the reverse side of this Voting
Direction card.
WHEN PROPERLY EXECUTED, THIS VOTING DIRECTION WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED PLAN PARTICIPANT. IF NO DIRECTION IS
GIVEN, THIS VOTING DIRECTION WILL BE VOTED FOR THE SEVEN NOMINEES OF THE BOARD
OF DIRECTORS LISTED IN PROPOSAL 1 AND FOR THE APPROVAL OF PROPOSAL 2. IF THE
EXECUTED VOTING DIRECTION DOES NOT WITHHOLD AUTHORITY TO VOTE FOR THE ELECTION
OF A NOMINEE FOR DIRECTOR IN PROPOSAL 1, THE VOTING DIRECTION WILL BE DEEMED TO
GRANT AUTHORITY TO VOTE FOR THE ELECTION OF SUCH NOMINEE AND WILL BE SO VOTED.
THE TRUSTEE IS AUTHORIZED TO VOTE IN ITS DISCRETION UPON SUCH OTHER BUSINESS AS
MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND ANY AND ALL ADJOURNMENTS
THEREOF.
The undersigned hereby revokes any and all Voting Direction cards
heretofore given. This Voting Direction may be revoked at any time before it is
exercised by following the procedures stated in the Participant Direction letter
accompanying this Voting Direction card.
(PLEASE MARK, SIGN AND DATE ON THE OTHER SIDE AND RETURN PROMPTLY IN
THE ENCLOSED ENVELOPE.)
<PAGE> 23
A [X] Please mark your votes
as in this example.
<TABLE>
<S> <C> <C> <C> <C> <C>
WITHHOLD
FOR all nominees listed AUTHORITY NOMINEES: James Ken Newman
(except as listed to the to vote for all James W. McAtee
contrary below) nominees listed Jack R. Anderson
George E. Bello
1. Election of William H. Longfield
Directors. [ ] [ ] Donald E. Steen
James E. Buncher
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, MARK THE FOR BOX AND WRITE EACH SUCH NOMINEE'S
NAME IN THE SPACE PROVIDED BELOW:
----------
FOR AGAINST ABSTAIN
2. Proposal to ratify the appointment of PricewaterhouseCoopers LLP as the
independent accountants for the Company for the fiscal year ending
August 31, 2000. [ ] [ ] [ ]
3. The Trustee is authorized to vote in its discretion upon such other
matters as may properly come before the Annual Meeting and any and all
adjournments thereof.
PLEASE MARK, SIGN AND DATE AND RETURN THIS VOTING DIRECTION PROMPTLY IN THE
ENCLOSED ENVELOPE.
SIGNATURE Dated TITLE Dated
--------------------------- ------------------- ------------------------------- -------------------
(if applicable)
</TABLE>
NOTE: Please date and sign exactly as name appears hereon. When signing as
attorney, executor, administrator, trustee or guardian, please give
full title as such.
<PAGE> 24
December 15, 2000
To Participants Owning Horizon Common Stock
Through The Horizon Health Corporation
Employees Savings and Profit Sharing Plan
Re: Your Opportunity to Direct the Trustee How To Vote the Horizon
Common Stock in Your 401(k) Plan Account At Annual Meeting of
Stockholders
Dear Participant:
An Annual Meeting of Stockholders (the "Annual Meeting") of Horizon
Health Corporation, a Delaware corporation (the "Company"), will be held at the
executive offices of the Company located at 1500 Waters Ridge Drive, Lewisville,
Texas 75057-6011, on Friday, January 24, 2001, at 1:00 p.m., Central Time, for
the purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders. Only holders of record of Common Stock of the Company at the close
of business on December 8, 2000 (the "Record Date") will be entitled to vote at
the Annual Meeting.
As described below, the Trustee of the Horizon Health Corporation
Employees Savings and Profit Sharing Plan (the "Plan"), hereby requests your
directions as to how you want the Trustee to vote at the Annual Meeting the
shares of Common Stock held in your individual Plan account at the Annual
Meeting.
You should find the following items enclosed:
o A "Proxy Statement" including a Notice of Annual Meeting of
Stockholders describing the matters to be voted on at the
Annual Meeting. The matters currently anticipated to be voted
on at the Annual Meeting consist of (a) the election of seven
directors of the Company to serve for the ensuing year and (b)
a proposal to ratify the appointment of PricewaterhouseCoopers
LLP as the independent accountants for the Company for the
fiscal year ending August 31, 2001. These matters, together
with other information regarding the Annual Meeting, are
described in more detail in the accompanying Proxy Statement.
o The Company's Annual Report to Stockholders for the fiscal
year ended August 31, 2000.
o A "Voting Direction" card.
o A pre-addressed postage-paid return envelope that you may use
to return your Voting Direction card to American Stock
Transfer & Trust Company, the Transfer Agent for the Company
(the "Transfer Agent").
<PAGE> 25
Please read the Proxy Statement for a detailed explanation of the
matters to be considered and voted on at the Annual Meeting before completing
your Voting Direction card. Also, please note that you do not have to complete
and submit any proxy form, or otherwise grant any proxy to any person, with
respect to the shares of Horizon Common Stock held in your Plan account at the
Record Date, since you are not the holder of record of such shares. Under the
terms of the Plan, however, you have the right to direct the Trustee as to how
you want the Trustee to vote such shares at the Annual Meeting. All you have to
do to exercise this right is follow the instructions in this letter and in the
enclosed Voting Direction card.
EXPLANATION OF VOTING RULES OF THE PLAN
All voting rights of shares of Horizon Common Stock held in a
participant's Plan account belong to that participant. The participant may
exercise such voting rights by supplying written voting instructions to the
Trustee. Under the terms of the Plan, the Trustee will vote the shares of
Horizon Common Stock held in the participant's account at the Record Date in
accordance with the participant's written instructions. Any shares of Common
Stock as to which the Trustee does not receive timely participant voting
instructions will not be voted.
Pursuant to these requirements of the Plan, the Transfer Agent is
delivering this letter and the enclosed materials to request your direction as
to how you want the Trustee to vote at the Annual Meeting the shares of Horizon
Common Stock held in your individual Plan account at the Record Date.
STEPS YOU NEED TO TAKE TO INSTRUCT THE TRUSTEE HOW TO VOTE THE SHARES OF HORIZON
COMMON STOCK HELD IN YOUR INDIVIDUAL PLAN ACCOUNT.
Once you have reached a decision concerning how you want the shares of
Horizon Common Stock held in your Plan account at the Record Date to be voted,
you need to do the following:
STEP 1: Mark your choice as to each such matter on the enclosed Voting
Direction card, date the card, and sign it.
STEP 2: Mail the Voting Direction card to American Stock Transfer &
Trust Company using the enclosed pre-addressed, U.S. mail postage-paid return
envelope, so that it will be RECEIVED by no later than 5:00 p.m. E.S.T. on
January 22, 2001.
If the Transfer Agent does not receive your Voting Direction card by
January 22, 2001, or if the Transfer Agent receives your Voting Direction card
by January 22, 2001, but it is not signed, the shares of Horizon Common Stock
held in your Plan account will not be voted.
CHANGING OR REVOKING YOUR VOTING DIRECTION CARD
If, after submitting your Voting Direction card, you want to change
your vote, you must obtain a new Voting Direction card from the Transfer Agent
by writing, faxing, or telephoning the Transfer Agent at the following address,
phone number, or fax number:
<PAGE> 26
American Stock Transfer & Trust Company
40 Wall Street, 46th Floor
New York, New York 10269-0436
Telephone No.: (800) 937-5449
Fax No.: (718) 921-8336
By properly completing, signing and timely returning a new Voting
Direction card to the Transfer Agent you will revoke any Voting Direction card
previously submitted. You may also revoke your Voting Direction by notifying the
Transfer Agent in a signed writing of your decision to revoke it. In such a
case, if you do not also timely submit a new Voting Direction card to the
Transfer Agent, your shares will not be voted. After January 22, 2001, you may
not change or revoke your Voting Direction.
YOUR VOTING DIRECTION CARD WILL BE KEPT CONFIDENTIAL
Neither the Trustee nor the Transfer Agent will release your Voting
Direction card or any copy of it, or otherwise divulge how you directed the
Trustee to vote, to any person, including the Company or any of its individual
officers or employees, except as the Trustee or the Transfer Agent may be
compelled to do so by law.
Enclosures
Horizon Health Corporation Proxy Statement
Horizon Health Corporation Annual Report to Stockholders
Participant Voting Direction Card
