[COMPDENT LOGO]
100 Mansell Court East, Suite 400
Roswell, Georgia 30076
March 30, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of CompDent Corporation (the "Annual Meeting") to be held
on Thursday, April 30, 1998, at 2:00 p.m., local time, at the Atlanta
Airport Hilton Hotel, Atlanta, Georgia.
The Annual Meeting has been called for the purpose of (i)
electing two Class III Directors, each for a three-year term,
(ii) considering and voting upon a proposal to approve the
CompDent Corporation 1997 Stock Option Plan and (iii) considering and
voting upon such other business as may properly come before the Annual
Meeting or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on
March 10, 1998 as the record date for the determination of
stockholders entitled to notice of, and to vote at, the Annual Meeting
and any adjournments or postponements thereof.
The Board of Directors of the Company recommends that you
vote "FOR" the election of the nominees of the Board of Directors as
Directors of the Company and "FOR" the proposal to approve the
CompDent Corporation 1997 Stock Option Plan.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL
MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU
ARE REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY
CARD IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN
THE UNITED STATES. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN
PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY
CARD. IF YOU HAVE ANY QUESTIONS OR REQUIRE ASSISTANCE IN VOTING YOUR
SHARES, PLEASE CALL MACKENZIE PARTNERS WHICH IS ASSISTING THE COMPANY,
TOLL-FREE AT 1-800-322-2885.
Sincerely,
/s/DAVID R. KLOCK
David R. Klock
Chairman and Chief Executive Officer
<PAGE>
CompDent Corporation
100 Mansell Court East, Suite 400
Roswell, Georgia 30076
(770) 998-8936
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on Thursday, April 30, 1998
Notice Is Hereby Given that the Annual Meeting of
Stockholders of CompDent Corporation (the "Company") will be held on
Thursday, April 30, 1998, at 2:00 p.m., local time, at the Atlanta
Airport Hilton Hotel, Atlanta, Georgia (the "Annual Meeting"), for the
purpose of considering and voting upon:
1. The election of two Class III Directors, each for a
three-year term;
2. A proposal to approve the CompDent Corporation 1997
Stock Option Plan; and
3. Such other business as may properly come before the
Annual Meeting and any adjournments or postponements
thereof.
The Board of Directors has fixed the close of business on
March 10, 1998 as the record date for the determination of
stockholders entitled to notice of, and to vote at, the Annual Meeting
and any adjournments or postponements thereof. Only holders of Common
Stock of record at the close of business on the record date will be
entitled to notice of, and to vote at, the Annual Meeting and any
adjournments or postponements thereof.
In the event there are not sufficient shares to be voted in
favor of any of the foregoing proposals at the time of the Annual
Meeting, the Annual Meeting may be adjourned in order to permit
further solicitation of proxies.
By Order of the Board of Directors
/s/ BRUCE A. MITCHELL
Bruce A. Mitchell
Executive Vice President, General
Counsel and Secretary
Atlanta, Georgia
March 30, 1998
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL
MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN
PERSON, YOU ARE REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY CARD IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE ANNUAL
MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU
HAVE PREVIOUSLY RETURNED YOUR PROXY CARD. IF YOU HAVE ANY
QUESTIONS OR REQUIRE ASSISTANCE IN VOTING YOUR SHARES, PLEASE CALL
MACKENZIE PARTNERS, WHICH IS ASSISTING THE COMPANY, TOLL-FREE AT
1-800-322-2885.
<PAGE>
CompDent Corporation
100 Mansell Court East, Suite 400
Roswell, Georgia 30076
(770) 998-8936
____________
PROXY STATEMENT
____________
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on Thursday, April 30, 1998
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of
CompDent Corporation (the "Company") for use at the Annual
Meeting of Stockholders of the Company to be held
on Thursday, April 30, 1998, at 2:00 p.m., local time, at the
Atlanta Airport Hilton Hotel, Atlanta, Georgia, and any
adjournments or postponements thereof (the "Annual Meeting").
At the Annual Meeting, the stockholders of the Company will
be asked to consider and vote upon the following
matters:
1. The election of two Class III Directors, each for a
three-year term with each such term to continue until
the annual meeting of stockholders of the Company to be
held in the year 2001 (the "2001 Annual Meeting") or
until the respective Director's successor is duly
elected and qualified;
2. A proposal to approve the CompDent Corporation 1997
Stock Option Plan (the "1997 Plan"); and
3. Such other business as may properly come before the
Annual Meeting and any adjournments or postponements
thereof.
The Notice of Annual Meeting of Stockholders, Proxy Statement
and Proxy Card are first being mailed to stockholders of the Company
on or about March 30, 1998 in connection with the solicitation of
proxies for the Annual Meeting. The Board of Directors has fixed the
close of business on March 10, 1998 as the record date for the
determination of stockholders entitled to notice of, and to vote
at, the Annual Meeting (the "Record Date"). Only holders of record of
the common stock, par value $.01 per share ("Common Stock"), of the
Company at the close of business on the Record Date will be entitled
to notice of, and to vote at, the Annual Meeting. As of the Record
Date, there were approximately 10,112,629 shares of Common Stock
outstanding and entitled to be voted at the Annual Meeting and
approximately forty-three (43) stockholders of record. Each holder of
shares of Common Stock outstanding as of the close of business on the
Record Date will be entitled to one vote for each share held of record
with respect to each matter submitted at the Annual Meeting.
The presence, in person or by proxy, of a majority of the
total number of outstanding shares of Common Stock is necessary to
constitute a quorum for the transaction of business at the Annual
Meeting. A quorum being present, the affirmative vote of a plurality
of the votes cast is necessary to elect each of the nominees as a
Director of the Company. With respect to Proposal 2 Approval of the
1997 Plan, the affirmative vote of a majority of the shares
of Common Stock present, or represented, and entitled to vote is
required to approve such proposal. Shares that reflect abstentions or
"broker non-votes" (i.e., shares represented at the meeting held by
brokers or nominees as to which instructions have not been received
from the beneficial owners or persons entitled to vote such shares and
with respect to which the broker or nominee does not have
discretionary voting power to vote such shares) , if any, will
be counted for purposes of determining whether a quorum is
present for the transaction of business at the meeting. Generally,
abstentions will be treated as votes cast against a particular
proposal and broker non-votes will have no impact on the outcome of
the vote on a particular proposal submitted to the Annual Meeting.
With respect to the election of Directors, votes may be cast in favor
of or withheld from the nominees; votes that are withheld will be
excluded entirely from the vote and will have no effect. Broker
non-votes will also have no effect on the outcome
<PAGE>
of the election of Directors. With respect to Proposal 2, abstentions
and broker non-votes will have the effect of a vote against the
proposal.
Stockholders of the Company are requested to complete, date,
sign and return the accompanying Proxy Card in the enclosed envelope.
Shares of Common Stock represented by properly executed proxies
received by the Company and not revoked will be voted at the Annual
Meeting in accordance with the instructions contained therein. If
instructions are not given therein, properly executed proxies will be
voted "FOR" the election of the nominees for Directors listed in this
Proxy Statement and "FOR" the approval of the 1997 Plan. It is not
anticipated that any matters other than the election of the Directors
and the approval of the 1997 Plan will be presented at the Annual
Meeting. If other matters are presented, proxies will be voted in
accordance with the discretion of the proxy holders.
A properly completed proxy may be revoked at any time before
it is voted on any matter (without, however, affecting any vote taken
prior to such revocation) by the stockholder of record represented by
such proxy by giving written notice of such revocation to the
Secretary of the Company, or by signing and duly delivering a proxy
bearing a later date, or by attending the Annual Meeting and voting in
person. Attendance at the Annual Meeting will not, by itself, revoke
a proxy.
The Annual Report of the Company, including financial
statements for the fiscal year ended December 31, 1997 ("Fiscal
1997"), is being mailed to stockholders of the Company concurrently
with this Proxy Statement. The Annual Report, however, is not a part
of the proxy solicitation material.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors of the Company (the "Board") consists
of seven members and is divided into three classes, with two Directors
in Class I, three Directors in Class II and two Directors in Class
III. Directors serve for three-year terms with one class of Directors
being elected by the Company's stockholders at each annual meeting.
At the Annual Meeting, two Class III Directors will be
elected to serve until the 2001 Annual Meeting and until the
respective Director's successor is duly elected and qualified. The
Board has nominated David R. Klock and Joseph A. Ciffolillo
("Nominees") for re-election as the Class III Directors. The Nominees
have each agreed to stand for re-election and to serve, if elected, as
a Director. However, if a Nominee fails to stand for election or is
unable to accept election, proxies will be voted for the election of
such other person as the Board may recommend.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES
OF THE BOARD AS DIRECTORS OF THE COMPANY.
INFORMATION REGARDING DIRECTORS
The Board held six (6) meetings during Fiscal 1997. During
Fiscal 1997, each of the incumbent Directors attended at least 75% of
the aggregate number of meetings of the Board and of the committees of
which he was a member. The Company's Board established an Audit
Committee and a Compensation and Options Committee. The
Audit Committee recommends a firm to be appointed as independent
accountants to audit the Company's financial statements and to perform
services related to such audits, reviews the scope and results of
audits with the independent accountants, reviews with management and
the independent accountants the Company's year-end operating results,
considers the adequacy of the internal accounting procedures and
considers the effect of such procedures on the accountants'
independence. During Fiscal 1997, the Audit Committee, which is
comprised of Messrs. Ciffolillo, Scott and Stephenson, held eight (8)
meetings. The Compensation and Options Committee reviews and
recommends the compensation arrangements for all Directors and
officers, approves such arrangements for other senior level
employees and administers and takes such other action as may be
required in connection with certain compensation and incentive plans
of the Company and its subsidiaries. The Compensation and Options
Committee also determines the options or stock to be issued to
eligible persons under the CompDent Corporation 1994 Stock Option and
Grant Plan (the "1994 Plan") and the 1997 Plan and prescribes the
terms and provisions of such options or stock. In addition, the
Compensation and Options Committee administers the CompDent
Corporation Employee Stock Purchase
<PAGE>
Plan (the "ESPP") and the CompDent Corporation Non-Employee
Directors' Stock Option Plan (the "Directors' Plan," and, together
with the 1994 Plan, the 1997 Plan and the ESPP, the "Plans"). The
Compensation and Options Committee construes and interprets the Plans
and issuances thereunder, and establishes, amends and revokes rules
and regulations relating to the administration of the Plans.
During Fiscal 1997, the Compensation and Options Committee, which
during Fiscal 1997 was comprised of Messrs. Ciffolillo, Scott and
Stephenson, held four (4) meetings. Mr. Hertik resigned from the
Audit Committee and Compensation and Options Committee effective
January 1997 in connection with his appointment as President of
Dental Health Management, Inc., a wholly owned subsidiary of the
Company. Upon Mr. Hertik's resignation from the Audit Committee, Mr.
Stephenson was appointed by the Board to serve on the Audit Committee.
William G. Jens, Jr. was appointed to the Board and the Compensation
and Options Committee on January 27, 1998.
Directors who are officers or employees of the Company
receive no compensation for service as Directors. Directors who are
not officers or employees of the Company receive such compensation for
their services as the Board may from time to time determine. Each of
Messrs. Ciffolillo, Scott and Stephenson received an annual fee of
$20,000 for service on the Board and its committees. All Directors
are reimbursed for expenses incurred in connection with
attendance at meetings. Under the Directors' Plan, each new
non-employee Director will receive options to purchase 20,000 shares
of Common Stock on the date such Director is initially elected or
appointed to the Board. Each of these options vests annually in equal
installments over a four-year period and expires ten years from the
date of grant. Dr. Jens was granted an option pursuant to the
Directors' Plan to purchase 20,000 shares of Common Stock at an
exercise price of $9.563 per share upon his appointment to the Board
on January 27, 1998. On August 1, 1997, the Company amended the
Directors' Plan to permit the grant of options to Directors in
addition to those initially received at the discretion of the Board of
Directors. Each of Messrs. Scott and Ciffolillo received options to
purchase 16,000 shares of Common Stock of the Company at an exercise
price of $20.50. Each of these options vests annually in equal
installments over a four-year period and expires ten years from
the date of grant.
Set forth below is certain information regarding the
Directors of the Company, including the Class III Directors
who have been nominated for re-election at the Annual Meeting,
based on information furnished by them to the Company.
Director
Name Age Since
Class I Term Expires 1999
Joseph E. Stephenson . . . . . . . . . . . 65 1993
William G. Jens, Jr. (1) . . . . . . . . . 51 1998
Class II Term Expires 2000
Philip Hertik. . . . . . . . . . . . . . . 47 1993
David F. Scott, Jr.. . . . . . . . . . . . 56 1996
Phyllis A. Klock (2) . . . . . . . . . . . 52 1998
Class III Term Expires 1998
David R. Klock*. . . . . . . . . . . . . . 53 1993
Joseph A. Ciffolillo*. . . . . . . . . . . 59 1995
_______________________________
* Nominee for re-election.
(1) William G. Jens, Jr. was appointed to the Board on January
27, 1998.
(2) Phyllis A. Klock was appointed to the Board on February 20,
1998.
<PAGE>
The principal occupation and business experience for at least
the last five years of each Director of the Company is set forth
below.
Joseph A. Ciffolillo has served as a Director of the Company
since 1995. Mr. Ciffolillo retired from his position as Executive
Vice President -- Office of the Chairman of Boston Scientific Corp.
("Boston Scientific"), a Massachusetts-based manufacturer of medical
devices, in April 1996 after having served in that capacity since
1995. From 1987 to 1995, Mr. Ciffolillo was Chief Operating Officer
of Boston Scientific. Mr. Ciffolillo currently serves on the Board of
Directors of Innovative Devices.
Philip Hertik has served as a Director of the Company since
June 1993 and was appointed as President of Dental Health Management,
Inc., a wholly owned subsidiary of the Company, effective January
1997. Mr. Hertik was a Principal at the firm of P. Hertik &
Associates from January 1996 to January 1997. Mr. Hertik served as
the Chief Executive Officer of Coventry Corporation ("Coventry"), a
managed health care company, from June 1992 to December 1995, and as a
director of Coventry from August 1990 to December 1995. From November
1990 to June 1992, he was President and Chief Operating Officer of
Coventry.
William G. Jens, Jr., CPA, Ph.D. served as Senior Vice
President of Finance of the Company from July 1997 through January
1998. Dr. Jens, who has served as a consultant to CompDent since
1993, has more than 20 years of experience as a senior financial
officer in the chemical and agricultural industries. Dr. Jens is also
Chairman of the accounting department of Stetson University and
Director of the M.E. Rinker, Sr., Institute of Tax and
Accountancy.
David R. Klock, Ph.D. was appointed President of the Company
in 1991 and Chairman, President and Chief Executive Officer in 1993
and currently serves as Chairman and Chief Executive Officer. Dr.
Klock was a Professor of Finance and Insurance at the University of
Central Florida from 1981 through 1991, when he joined the Company
on a full-time basis.
Phyllis A. Klock became associated with the Company in 1981
as a consultant. She joined the Company on a full-time basis in 1986
as Vice President of Administration and was appointed Corporate
Secretary in 1987, Senior Vice President, Corporate Secretary and
Chief Administrative Officer in 1993, Executive Vice President in 1995
and President in January 1997. Ms. Klock was appointed to the Board
and became Chief Operating Officer of the Company on February 20,
1998. Prior to becoming associated with the Company, Ms. Klock served
as an academic administrator and held various management positions
with two insurance companies.
David F. Scott, Jr., Ph.D. became a Director of the Company
on February 1, 1996. Dr. Scott is a Holder, Phillips-Schenck Chair
in American Private Enterprise, is Executive Director of the Dr.
Phillips Institute for the Study of American Business Activity and has
been Professor of Finance at the College of Business Administration,
University of Central Florida since 1982. Prior to 1982, Dr.
Scott served as Head of the Department of Finance, Insurance and
Business Law at Virginia Polytechnic Institute and State University.
Dr. Scott also serves on the economic forecasting panel (Livingston
Survey) of the Federal Reserve Bank of Philadelphia and is a member of
the Board of Economists of Florida Trend magazine.
Joseph E. Stephenson has served as Director of the Company
since June 1993. Mr. Stephenson is currently serving as Chairman and
Chief Executive Officer of Washington Life and has been serving in
that capacity since 1995. Mr. Stephenson served as Chairman of the
Board of Directors, President and Chief Executive Officer of
Shenandoah Life Insurance Company from August 1989 through June 1993,
when he retired.
<PAGE>
EXECUTIVE OFFICERS
Set forth below is certain information regarding each of the
executive officers of the Company as of the Record
Date, including their principal occupation and business
experience for at least the last five years.
Name Age Position
David R. Klock . . 53 Chairman and Chief Executive Officer (1)
Phyllis A. Klock . 52 President and Chief Operating Officer (1)
Bruce A. Mitchell. 42 Executive Vice President, General Counsel
and Secretary
Keith J. Yoder . . 45 Executive Vice President, Treasurer and
Chief Financial Officer(2)
Philip Hertik. . . 47 President of Dental Health Management,
Inc., a wholly owned subsidiary of the
Company (3)
_________________
(1) David R. Klock and Phyllis A. Klock are husband and wife.
(2) Keith J. Yoder joined the Company and assumed this position
effective January 1998. Sharon S. Graham resigned from this
position effective August 1997.
(3) Philip Hertik was appointed to this position effective January
1997.
The principal occupation and business experience for at least
the last five years of each executive officer of the Company, other
than executive officers also serving as Directors, is set forth below.
Bruce A. Mitchell, Esq. was appointed Executive Vice
President and General Counsel of the Company in February 1996 and
assumed the additional role of Secretary in January 1997. Mr.
Mitchell was formerly a Partner in the Melbourne, Florida law firm of
Reinman, Harrell, Mitchell & Wattwood, P.A., from 1985 through
February 1996, where Mr. Mitchell served as corporate counsel to the
Company beginning in 1982.
Keith J. Yoder joined the Company as Executive Vice President
and Chief Financial Officer in January 1998. From July 1997 to
November 1997, Mr. Yoder served as Chief Financial Officer of
GranCare, Inc. ("GranCare") and as its Senior Vice President,
Controller and Treasurer from July 1995 to June 1997. Prior to the
merger of Evergreen Healthcare, Inc. ("Evergreen") with GranCare in
July 1995, he served as Vice President and Chief Financial Officer of
Evergreen (since January 1992), as Secretary of Evergreen (since June
1993) and as Treasurer of Evergreen (since December 1993). From
December 1992 to June 1993, Mr. Yoder served as Vice President of
National Heritage, Inc. ("NHI") and as the Chief Financial Officer and
Secretary of NHI from January 1993 to June 1993. Mr. Yoder served as
Area Controller for ARA Living Centers from 1989 to 1992.
Each of the executive officers holds his or her respective
office until the regular annual meeting of the Board following the
annual meeting of stockholders and until his or her successor is
elected and qualified or until his or her earlier resignation or
removal.
<PAGE>
EXECUTIVE COMPENSATION
The following sections of this Proxy Statement set forth and
describe the compensation paid or awarded during the last three years
to the Company's Chief Executive Officer and the three other most
highly compensated executive officers and one former executive officer
who earned in excess of $100,000 during Fiscal 1997 (the "named
executive officers").
Summary Compensation
Summary Compensation. The following summary compensation
table sets forth information concerning compensation for services
rendered in all capacities awarded to, earned by or paid to the
Company's Chief Executive Officer and the named executive officers
during each of the fiscal years ended December 31, 1997, December 31,
1996 and December 31, 1995.
<TABLE>
Summary Compensation Table
Long Term
Compensation
Annual Awards
Compensation Securities
Underlying All Other
Name and Principal Position Year Salary ($) Bonus ($) Options (#) Compensation ($) (1)
<S> <C> <C> <C> <C> <C>
David R. Klock, 1997 237,506 74,000 120,000 12,491
Chief Executive Officer. . . 1996 200,000 88,000 80,000 (2) 13,404
1995 180,000 90,000 -- 13,538
Phyllis A. Klock, 1997 206,250 61,000 50,000 12,720
President and Chief 1996 180,000 79,200 50,000 (2) 13,258
Operating Officer. . . . . 1995 165,000 82,500 -- 13,508
Bruce A. Mitchell,
Executive Vice President. . 1997 193,746 47,500 50,000 33,095
1996 165,000 99,000 50,000 (2) 18,580
Philip Hertik,
President of Dental Health
Management, Inc. . . . . . 1997 200,000 57,000 100,000 13,420
Sharon S. Graham,
Former Executive Vice
President (3) . . . . . . 1997 105,000 -- -- 89,459
1996 180,000 79,200 80,000 11,413
1995 134,375 80,000 20,000 11,767
</TABLE>
_______________________
(1) The figures for 1997 include premiums on life insurance policies
paid by the Company of $1,578 on behalf of Dr. Klock and $1,620
on behalf of each of Ms. Klock, Mr. Mitchell and Mr. Hertik, and
$2,199 on behalf of Dr. Graham; insurance premiums for group
long-term disability insurance policies paid by the Company of
$1,500, $1,290, $1,200, $1,200 and $630 on behalf of Dr. Klock,
Ms. Klock, Mr. Mitchell, Mr. Hertik and Dr. Graham, respectively;
and $1,313, $1,500, $1,500, $1,000 and $5,630 contributed by the
Company under its 401(k) plan on behalf of Dr. Klock, Ms. Klock,
Mr. Mitchell, Mr. Hertik and Dr. Graham, respectively. Such
figures also include annual car allowances of $9,600 paid to each
of Dr. Klock, Ms. Klock, Mr. Mitchell and Mr. Hertik, and $6,000
paid to Dr. Graham, respectively; a housing allowance of $20,375
paid to Mr. Mitchell; and a severance payment of $75,000 made to
Dr. Graham.
(2) The number of shares underlying options granted in 1996 does not
include options which such executives agreed to rescind in 1997.
See "Proposal 2 Approval of the CompDent Corporation 1997 Stock
Option Plan."
(3) Dr. Graham resigned from the Company in August 1997.
<PAGE>
Option Grants. The following table sets forth certain
information concerning the individual grant of options
to purchase shares of Common Stock of the Company to certain
named executive officers of the Company who received such grants
during Fiscal 1997.
<TABLE>
Option Grants in Last Fiscal Year
Individual Grants
Number of Percent
Securities of Total Potential Realizable
Underlying Options Exercise Value at Assumed Annual
Options Granted or Base Rates of Stock Price
Granted to Employees Price Per Expiration Appreciation for Option Term (1)
(#) in Fiscal Year ($/Sh) Date 5% ($) 10% ($)
Name
<S> <C> <C> <C> <C> <C> <C>
David R. Klock. 30,000 (2) 4.5% 16.12 4/30/07 304,378 771,123
30,000 (2) 4.5% 19.35 4/30/07 207,478 674,223
30,000 (3) 4.5% 23.22 4/30/07 91,378 558,123
30,000 (3) 4.5% 27.86 4/30/07 -- 418,923
Phyllis A. Klock 12,500 (2) 1.9% 16.12 4/30/07 126,824 321,301
12,500 (2) 1.9% 19.35 4/30/07 86,449 280,926
12,500 (3) 1.9% 23.22 4/30/07 38,074 232,551
12,500 (3) 1.9% 27.86 4/30/07 -- 174,551
Bruce A. Mitchell 12,500 (2) 1.9% 16.12 4/30/07 126,824 321,301
12,500 (2) 1.9% 19.35 4/30/07 86,449 280,926
12,500 (3) 1.9% 23.22 4/30/07 38,074 232,551
12,500 (3) 1.9% 27.86 4/30/07 -- 174,551
Philip Hertik . 25,000 (2) 3.8% 16.12 4/30/07 253,648 642,602
25,000 (2) 3.8% 19.35 4/30/07 172,898 561,852
25,000 (3) 3.8% 23.22 4/30/07 76,148 465,102
25,000 (3) 3.8% 27.86 4/30/07 -- 349,102
</TABLE>
____________________
(1) This column shows the hypothetical gain or option spreads of the
options granted based on assumed annual compound stock
appreciation rates of 5% and 10% over the full 10-year term of
the options. The 5% and 10% assumed rates of appreciation are
mandated by the rules of the Securities and Exchange Commission
and do not represent the Company's estimate or projection of
future Common Stock prices.
(2) These stock options vested immediately upon the date of grant.
(3) These stock options vest in equal annual increments over the
four-year period ending April 30, 2001, subject to acceleration
upon a sale of the Company. See "Proposal 2 Approval of the
CompDent Corporation 1997 Stock Option Plan Summary of the 1997
Plan Change of Control Provisions."
<PAGE>
Option Exercises and Option Values. The following table sets
forth information concerning the number and value of unexercised
options to purchase Common Stock of the Company held by certain named
executive officers of the Company who held such options at December
31, 1997. (None of the named executive officers of the Company
exercised any stock options during Fiscal 1997.)
<TABLE>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at December 31, 1997 (#) at December 31, 1997 ($) (1)
Name Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C>
David R. Klock . . . . 115,000 85,000 152,700 *
Phyllis A. Klock . . . 65,000 35,000 63,625 *
Bruce A. Mitchell . . 65,000 35,000 63,625 *
Philip Hertik. . . . 68,000 50,000 483,470 *
Sharon S. Graham . . 74,250 34,750 116,903 38,968
</TABLE>
_________________
* These options are out of the money.
(1) Based on the last reported sale price on the Nasdaq National
Market on December 31, 1997 of $20.28 less the option
exercise price.
Report of the Compensation and Options Committee of the Board of
Directors on Executive Compensation
During Fiscal 1997, the Compensation and Options Committee of
the Board consisted of Joseph A. Ciffolillo, David F. Scott, Jr. and
Joseph Stephenson, each of whom was an outside Director. Mr. Hertik
resigned from the Compensation and Options Committee in January
1997 upon his appointment as President of Dental Health Management,
Inc., a wholly owned subsidiary of the Company.
Compensation Policies for Executive Officers. The Compensation
and Options Committee's executive compensation philosophy is: (i) to
provide competitive levels of compensation that integrate pay with the
individual executive's performance and the Company's annual and
long-term performance goals; (ii) to motivate key executives to
achieve strategic business goals and reward them for their
achievement; (iii) to provide compensation opportunities and benefits
that are comparable to those offered by other companies in the managed
health and dental care industry, thereby allowing the Company to
compete for and retain talented executives who are critical to the
Company's long-term success; and (iv) to align the interests of key
executives with the long-term interests of stockholders and the
enhancement of shareholder value through the granting of stock
options.
The compensation of the Company's Chief Executive Officer and
other executive officers is currently comprised of annual base salary,
annual performance incentives in the form of cash bonuses and
long-term performance incentives in the form of stock option grants
under the 1994 Plan and the 1997 Plan.
The Compensation and Options Committee has determined that
base salaries of executive officers should be set at levels that are
competitive with those of executives of comparably sized companies in
the managed health and dental care industry. In addition, the
Compensation and Options Committee believes that it is appropriate to
reward outstanding performance through a combination of cash bonuses
and stock option grants
<PAGE>
and to provide a competitive compensation package that will enable the
Company to attract and retain the executives needed to achieve such
performance.
The Compensation and Options Committee is currently considering a
number of proposals regarding the existing overall compensation
arrangements of senior executives and key employees, including
possible amendments to existing employment agreements and option
agreements, prices of currently outstanding options and other matters.
The Compensation and Options Committee has retained Hay Management
Consultants, Inc., a benefits consultant, to provide advice with
respect to such proposals. The Committee has not currently taken
any action with respect to the proposals but may do so in the
near term.
Base Salary. Base salaries for executive officers are
targeted according to the salaries of employees holding similar
offices and having similar responsibilities within the managed health
and dental care industry. Annual salary adjustments for executive
officers are determined by evaluating the competitive marketplace, the
performance of the Company, the performance of the executive officer
and any change in the responsibilities assumed by the executive
officer. Salary adjustments are normally determined and made on an
annual basis.
The base salaries for David R. Klock, the Chairman and Chief
Executive Officer, Phyllis A. Klock, President and Chief Operating
Officer, Bruce A. Mitchell, Executive Vice President, General Counsel
and Secretary, Philip Hertik, President of Dental Health Management,
Inc., and Keith J. Yoder, Executive Vice President, Treasurer and
Chief Financial Officer, were established pursuant to employment
agreements. Such employment agreements are described below under
"Employment Agreements With Executive Officers" and "--Compensation of
the Chief Executive Officer." The Compensation and Options Committee
increased the base salaries of Ms. Klock and Mr. Mitchell in
recognition of their contributions to the Company during 1996.
These base salaries were determined with reference to the base
salaries of executives of similarly sized companies in the managed
health and dental care industry.
Cash Bonus Plan. The Company adopted an Executive Bonus Plan
for Fiscal 1997 on terms similar to those in effect for previous
years. The plan is administered by the Compensation and Options
Committee of the Board, which determines eligible participants,
performance goals, measurement criteria, performance ratings
and amount and timing of payments. Each executive, including the
Chief Executive Officer, is eligible to receive a predetermined
percentage of such executive's base salary for the year on the basis
of the Company's performance over the year in relation to certain
predetermined financial and operating goals. All awards are
paid in full, in cash, following the year of performance. Awards
are granted under the plan at the sole discretion of the Compensation
and Options Committee.
The Compensation and Options Committee awarded bonuses to its
executive officers for Fiscal 1997 in an amount equal to approximately
thirty percent (30%) of such officer's base salary for the year, based
upon the achievement of the performance goals determined by the
Compensation and Options Committee related to the Company's earnings
for Fiscal 1997.
Stock Option Grants. Stock options are designed to attract
and retain executives who can make significant contributions to the
Company's success; reward executives for such significant
contributions; give executives a long-term incentive to increase
shareholder value; and align the interests of the Company's senior
executives with those of its stockholders. In determining
whether to grant stock options to executive officers, the Compensation
and Options Committee evaluates each officer's performance by
examining criteria similar to that involved in fixing cash bonuses
(but without any specific performance measures) and awards reflect
individual performance reviews. The Compensation and Options
Committee also may grant stock options for executive retention
purposes, taking into account, among other things, general industry
practices. Stock options generally have been granted with a ten-year
term and an exercise price equal to or above the fair market value
of the Common Stock on the grant date.
The Compensation and Options Committee granted options to
acquire 50,000 shares of Common Stock to Ms. Klock, 50,000 shares of
Common Stock to Mr. Mitchell and 100,000 shares of Common Stock to Mr.
Hertik under the 1997 Plan in order to achieve the goals described
above and to provide such executive with an equity interest in the
Company which is comparable to those of senior executives of similarly
sized
<PAGE>
companies in the health and dental care industry. The Compensation
and Options Committee believed that prior to such grants the equity
interests of Ms. Klock and, in particular, Messrs. Mitchell and Hertik
were below those of the senior executives of comparable companies.
The options granted to Ms. Klock and Messrs. Mitchell and Hertik have
a ten-year term and have exercise prices of $16.12 per share (the fair
market value of the Common Stock on the date of grant), $19.35 per
share, $23.22 per share and $27.86. The vesting of all such options
accelerates upon a sale of the Company. See " --Summary
Compensation--
Options Grants" and "Proposal 2--Approval of the CompDent Corporation
1997 Stock Option Plan."
Compensation of Chief Executive Officer. David R. Klock, the
Company's Chairman and Chief Executive Officer, receives competitive
compensation and regular benefits in effect for senior executives of
the Company. In Fiscal 1997, the Compensation and Options Committee
increased Dr. Klock's annual base salary from $200,000 to $237,506 and
Dr. Klock received a bonus of $74,000 through his participation in the
Executive Bonus Plan. Dr. Klock's salary increase and bonus were
determined on the same basis as other senior executives of the
Company. In addition to such cash compensation, Dr. Klock also
received options to acquire an aggregate of 120,000 shares of Common
Stock at exercise prices at and above the fair market value
of the Common Stock on the date of grant. The vesting of all of
such options accelerates upon a sale of the Company. See "--
Compensation Policies for Executive Officers" and "Proposal 2--
Approval of the CompDent Corporation 1997 Stock Option Plan."
Joseph A. Ciffolillo David F. Scott, Jr.Joseph E. Stephenson
William G. Jens, Jr.
Compensation and Options Committee Interlocks and Insider
Participation
Since July 1993, all decisions with respect to executive
officer compensation have been made by the Compensation and Options
Committee. The Compensation and Options Committee reviews and makes
recommendations regarding the compensation for senior executives
of the Company, including salaries and bonuses. The members of the
Compensation and Options Committee for Fiscal 1997 were Messrs.
Ciffolillo, Hertik, Scott and Stephenson. Mr. Hertik resigned from
the Compensation and Options Committee upon his appointment as
President of Dental Health Management, Inc., a wholly owned subsidiary
of the Company, effective January 1997. No member of the Compensation
and Options Committee is an officer of the Company.
Employment Agreements With Executive Officers
The Company has entered into employment agreements with each
of David R. Klock and Phyllis A. Klock on May 24, 1995, and with each
of Bruce A. Mitchell and Philip Hertik on February 1, 1996 and April
1, 1997, respectively. The agreements generally provide for
continuation of base salary, pro rated bonus payments and continuation
of certain benefits for up to two years following termination of
employment without cause or in the event of a breach by the Company.
Upon termination of employment for any reason within up
to one year following a change of control of the Company (as defined),
the Company shall pay severance equal to the executive's aggregate
salary and, in certain instances, bonus for up to the two most
recently completed years and continuation of certain benefits. Each
of the executives is subject to a one-year restriction on
competition with the Company following termination of employment
for any reason.
<PAGE>
Shareholder Return Performance Graph
Set forth below is a line graph comparing the yearly
percentage change in the cumulative total shareholder return on the
Company's Common Stock, based on the market price of the Company's
Common Stock with the total return of companies included within the
Nasdaq Stock Market Index and a peer group of companies included
within the Nasdaq Health Services Industry Index for the period
commencing May 1995 and ending December 1997. The calculation of
total cumulative return assumes a $100 investment in the
Company's Common Stock, the Nasdaq Stock Market Index and the
Nasdaq Health Services Industry Index on May 24, 1995, the date of the
Company's initial public offering, and the reinvestment of all
dividends, if any.
[PERFORMANCE GRAPH GOES HERE]
May 1995 Dec. 1995 Dec. 1996 Dec. 1997
CompDent Corporation $100.00 $286.21 $243.10 $139.87
NASDAQ U.S. Companies $100.00 $122.60 $150.80 $185.05
NASDAQ Health Services $100.00 $137.64 $137.71 $140.37
<PAGE>
PROPOSAL 2
APPROVAL OF THE COMPDENT CORPORATION
1997 STOCK OPTION PLAN
Background
On December 18, 1996 the Board of Directors adopted the
CompDent Corporation 1996 Stock Option Plan (the "1996 Plan")
authorizing 900,000 Shares of Common Stock and granted options to
purchase an aggregate of 370,000 shares of Common Stock at an exercise
price of $29.75 per share ("1996 Plan Options") to David R. Klock,
Phyllis A. Klock, Bruce A. Mitchell and Sharon S. Graham. In order to
comply with certain requirements of the Nasdaq National Market
("Nasdaq"), the 1996 Plan was submitted for stockholder
approval at the 1997 Annual Meeting of Stockholders. The 1996
Plan was not approved by a majority vote of the stockholders present,
or represented, and entitled for vote at the 1997 Annual Meeting.
Following such meeting, the Board of Directors terminated the 1996
Plan and the Company and the executive officers holding such options
agreed to cancel the 1996 Plan Options.
The Board of Directors believes it to be in the best interests of
the Company to provide incentives to the Company's current and
prospective executive officers and key employees in the form of equity
interests in the Company in order to assure long-term tenure and
encourage performance. The Board of Directors believes that
equity incentives such as stock options (i) attract and retain
executives and key employees who can make significant contributions to
the Company's success; (ii) reward executives and key employees for
such significant contributions; (iii) give executives and key
employees a long-term incentive to increase shareholder value; and
(iv) align the interests of such executives and key employees with
those of the Company's stockholders. In view of the fact that
substantially all shares reserved for issuance under the Company's
1994 Plan were subject to outstanding options, the Board adopted the
1997 Plan on April 30, 1997 and the Compensation and Options Committee
granted options to purchase an aggregate of 320,000 shares of Common
Stock under the 1997 Plan (the "1997 Plan Options") on such date to
David R. Klock, Phyllis A. Klock, Bruce A. Mitchell and Philip Hertik.
The 1997 Plan Options were granted with exercise prices of $16.12 per
share (the fair market value of the Common Stock on the date of
grant), $19.35 per share, $23.22 per share and $27.86 per share. Of
such options, 50% were immediately exercisable (those with exercise
prices of $16.12 per share and $19.35 per share) and 50% vest in equal
annual installments over a four year period, subject to
acceleration upon a sale of the Company. See "Executive
Compensation--
Summary Compensation -- Option Grants."
A total of 500,000 shares of Common Stock have been reserved
for issuance under the 1997 Plan. Based solely upon the closing price
of the Company's Common Stock as reported by Nasdaq on the Record
Date, the maximum aggregate market value of the securities to be
issued under the 1997 Plan is $7,687,500. The total number of shares
available under the 1997 Plan will be subject to adjustment upon the
occurrence of a stock dividend, stock split or other change affecting
the Common Stock. The 1997 Plan also provides that stock
options with respect to no more than 150,000 shares of Common
Stock may be granted to any one individual in any one calendar year.
The shares of Common Stock issued by the Company under the 1997 Plan
may be authorized but unissued shares, or shares reacquired by the
Company. To the extent that awards under the 1997 Plan do not vest or
otherwise revert to the Company, the shares of Common Stock
represented by such awards may be the subject of subsequent awards.
Proposal
The Company is seeking stockholder approval and ratification
of the 1997 Plan in accordance with the requirements of the Nasdaq
National Market and in order to permit further grants of stock options
under the 1997 Plan. While stockholder approval is not a condition to
the 1997 Plan Options, additional options will not be granted under
the 1997 Plan unless and until the 1997 Plan is approved by
stockholders (or will be granted subject to stockholder approval).
The Company intends to take such actions as shall be necessary or
appropriate to obtain stockholder approval of the 1997 Plan, including
resubmission to stockholders of the 1997 Plan in the event stockholder
approval is not obtained at the Annual Meeting, in order to maintain
quotation of its Common
<PAGE>
Stock on Nasdaq. It is possible, however, that the failure to
obtain stockholder approval of the 1997 Plan could result ultimately
in the loss of such quotation.
Summary of the 1997 Plan
The following description of certain features of the 1997
Plan is intended to be a summary only. The summary does not purport
to be complete and is qualified in its entirety by reference to the
1997 Plan, the full text of which is attached hereto as Appendix A.
Plan Administration; Eligibility. The 1997 Plan is
administered by the Board or by a committee appointed by the Board.
All members of such committee must be "Non-Employee Directors" as that
term is defined under the rules promulgated by the Securities and
Exchange Commission (the "Commission") under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and "outside directors"
as defined in Section 162(m) of the U.S. Internal Revenue Code (the
"Code") and the regulations promulgated thereunder. The Board or
authorized committee will interpret and make any determination under
the 1997 Plan and any options granted thereunder. The 1997 Plan is
currently administered by the Compensation and Options Committee.
Persons eligible to participate in the 1997 Plan are officers,
employees, Directors, consultants, advisors and other key persons of
the Company and its subsidiaries who are responsible for or contribute
to the management, growth or profitability of the Company and its
subsidiaries ("Eligible Persons"), as selected from time to time by
the Compensation and Options Committee. The Compensation and Options
Committee has full power to select from among the Eligible Persons the
individuals to whom awards will be granted, to make any
combination of awards to such individuals, and to determine the
specific terms and conditions of each award, subject to the provisions
of the 1997 Plan.
The Compensation and Options Committee, in its discretion,
may delegate to the Chief Executive Officer of the Company, all or
part of the Compensation and Options Committee's authority and duties
with respect to the granting of awards to individuals who are not
subject to Section 16 of the Exchange Act and are not "covered
employees" within the meaning of Section 162(m) of the Code.
Stock Options. The 1997 Plan permits the grant of options to
purchase Common Stock intended to qualify as incentive stock options
("Incentive Options") under Section 422 of the Code and options that
do not so qualify ("Non-Qualified Options"). The option exercise
price of each option will be determined by the Compensation and
Options Committee but may not be less than 100% of the fair market
value of the Common Stock on the date of grant. The 1997 Plan
prohibits the reduction by the Board or the Compensation and Options
Committee of the exercise price of any outstanding stock option.
The term of each option will be fixed by the Compensation and
Options Committee and may not exceed ten years from date of grant in
the case of an Incentive Option. The Compensation and Options
Committee will determine at what time or times each option may be
exercised. Options may be made exercisable in installments
and the vesting of options may be accelerated by the Compensation
and Options Committee.
Upon exercise, the option exercise price must be paid in full
either in cash or by certified or bank check or other instrument
acceptable to the Compensation and Options Committee or, if the
Compensation and Options Committee so permits, by delivery of shares
of Common Stock already owned by the optionee. The exercise
price may also be delivered to the Company by a broker pursuant
to irrevocable instructions to the broker from the optionee or by
delivery of a promissory note if authorized by the Board.
To qualify as Incentive Options, options must meet additional
Federal tax requirements, including limits on the value of shares
subject to Incentive Options which first become exercisable in any one
calendar year, and a shorter term and higher minimum exercise price in
the case of certain large stockholders.
Amendments and Termination. The Board may at any time amend
or discontinue the 1997 Plan and the Compensation and Options
Committee may at any time amend or cancel outstanding awards for the
purpose
<PAGE>
of satisfying changes in the law or for any other lawful purpose;
provided, however, that the Board or Compensation and Options
Committee may not reduce the exercise price of any outstanding stock
option. However, no action may be taken which adversely affects any
rights under outstanding options without the option holder's consent.
Further, amendments to the 1997 Plan may be subject to approval by the
Company's stockholders if and to the extent required by the Code to
preserve the qualified status of Incentive Options.
Change of Control Provisions. The 1997 Plan provides that in
the event of a dissolution or liquidation of the Company, a merger,
reorganization or consolidation in which a majority of the outstanding
voting power of the Company is acquired by a third-party or a sale to
a third-party of all or substantially all of the Company's
assets or Common Stock (a "Transaction"), the vesting of outstanding
options will not be accelerated as of the consummation of such
Transaction, except as the Compensation and Options Committee may
otherwise determine in connection with a specific award or in its
discretion thereafter. The 1997 Plan Options generally provide for
acceleration of vesting upon a Transaction.
Tax Aspects Under the U.S. Internal Revenue Code
The following is a summary of the principal Federal income
tax consequences of option grants under the 1997 Plan. It does not
describe all Federal tax consequences under the 1997 Plan, nor does it
describe state or local tax consequences.
Incentive Options. Under the Code, an employee generally
will not realize taxable income by reason of the grant or the exercise
of an Incentive Option. If an employee exercises an Incentive Option
and does not dispose of the shares until after the later of (a) two
years from the date the option was granted and (b) one year
from the date shares were transferred to the employee, the entire
gain, if any, recognized upon a sale or exchange of such shares should
be taxable to the employee as long-term capital gain, and the Company
will not be entitled to any deduction. The exercise of an Incentive
Option, however, may result in alternative minimum tax liability for
the employee. If an employee disposes of shares within such one-year
or two-year period in a manner so as to violate the holding period
requirements (a "disqualifying disposition"), the employee will
realize ordinary income in the year of disposition, and the
Company generally will receive a corresponding deduction, in an amount
generally equal to the excess of (A) the lesser of (x) the amount
realized on the sale or exchange of such shares (if the disposition is
by sale or exchange) and (y) the fair market value of the shares
on the date the option was exercised over (B) the exercise price
for the shares. Any additional gain recognized on the disposition
should be treated as long-term, mid-term or short-term capital gain
and any loss generally will be treated as long-term, mid-term or
short-term capital loss, depending upon the holding period of the
stock. A disqualifying disposition generally includes any sale,
exchange, gift or transfer of legal title (other than by pledge) of
shares during either of the holding periods described above. Special
rules apply in certain cases, including transfer to the employee's
spouse, transfer to the employee's former spouse incident to divorce,
and transfer on death. Special rules apply if an employee surrenders
shares of Common Stock in payment of the exercise price of the
Incentive Option.
An Incentive Option that is exercised by an employee more
than three months after an employee's employment terminates will be
treated as a Non-Qualified Option for Federal income tax purposes;
provided that in the case of termination by reason of disability, the
three-month period is extended to one year, and in the case of death
during employment or within three months after termination, the
three-month limitation does not apply.
Non-Qualified Options. There are no Federal income tax
consequences to either the optionee or the Company on the grant of a
Non-Qualified Option. On the exercise of a Non-Qualified Option, the
optionee generally has taxable ordinary income equal to the excess of
the fair market value of the Common Stock received on the exercise
date over the option price of the shares. The optionee's tax basis
for the shares acquired upon exercise of a Non-Qualified Option is
increased by the amount of such taxable income. The Company generally
will be entitled to a Federal income tax deduction in an amount equal
to such excess. Upon the sale of the shares acquired by exercise of a
Non-Qualified Option, the optionee generally will recognize
long-term, mid-term or short-term capital gain or loss depending
upon his or her holding period for such shares.
<PAGE>
Special rules apply if an optionee surrenders shares of Common
Stock in payment of the exercise price of a Non-Qualified Option.
Limitation on Company's Deductions. As a result of Section
162(m) of the Code, the Company's deduction for certain awards under
the Plan may be limited to the extent that the Chief Executive Officer
or other named executive officer whose compensation is required to
be reported in the Summary Compensation Table receives compensation
(other than performance-based compensation) in excess of $1 million a
year.
New Plan Benefits
As of the Record Date, approximately 44 persons were eligible
to participate in the 1997 Plan. The number of options to be granted
under the 1997 Plan is undeterminable at this time as grants of stock
options under the 1997 Plan are subject to the discretion of the
Compensation and Options Committee. The table below shows the
aggregate number of options that were granted under the 1997 Plan in
Fiscal 1997.
The CompDent Corporation 1997 Stock Option Plan
Number of Shares
Name of Group Dollar Value ($)* Underlying Stock
Options
David R. Klock (1) . . . 152,700 120,000
Phyllis A. Klock (2) . . 63,625 50,000
Bruce A. Mitchell (2). . 63,625 50,000
Philip Hertik (3). . . . 127,250 100,000
Executive Group (4). . . (434,400) 320,000
______________
* Based on the last reported sale price on the Nasdaq National
Market on December 31, 1997 of $20.28 less the option exercise
price.
(1) On April 30, 1997, Dr. Klock was granted options, which expire
ten years from the date of grant, to purchase an aggregate
120,000 shares of Common Stock under the 1997 Plan at exercise
prices of $16.12, $19.35, $23.22 and $27.86 per share. See
"Executive Compensation -- Summary Compensation -- Option
Grants."
(2) On April 30, 1997, Ms. Klock and Mr. Mitchell were each granted
options, which expire ten years from the date of grant, to
purchase an aggregate of 50,000 shares of Common Stock under the
1997 Plan at exercise prices of $16.12, $19.35, $23.22 and $27.86
per share. See "Executive Compensation -- Summary Compensation
- --
Option Grants."
(3) On April 30, 1997, Mr. Hertik was granted options, which expire
ten years from the date of grant, to purchase an aggregate of
100,000 shares of Common Stock under the 1997 Plan at exercise
prices of $16.12, $19.35, $23.22 and $27.86 per share. See
"Executive Compensation -- Summary Compensation -- Option
Grants."
(4) Represents options granted to Dr. Klock, Ms. Klock, Mr. Mitchell
and Mr. Hertik.
THE BOARD RECOMMENDS A VOTE FOR THE APPROVAL OF THE 1997 PLAN.
<PAGE>
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
The following table sets forth, to the best knowledge and
belief of the Company, certain information regarding the beneficial
ownership of the Company's Common Stock as of the date indicated by
(i) each person known by the Company to be the beneficial owner of
more than 5% of the outstanding Common Stock as of December 31, 1997,
(ii) each of the Company's Directors as of the Record Date, (iii) each
of the named executive officers in the Summary Compensation Table as
of the Record Date and (iv) all of the Company's executive officers
and Directors as a group as of the Record Date.
Name of Beneficial Owner (1) Beneficial Ownership (2)
Shares Percent
The Kaufman Fund, Inc. . . . . . . . 1,500,000 14.83%
Massachusetts Financial
Services Company (3) . . . . . . . 859,195 8.50%
Putnam Investments, Inc. (4) . . . . 753,610 7.45%
J. & W. Seligman & Co. Incorporated (5) 750,900 7.43%
FMR Corp. (6). . . . . . . . . . . . 618,400 6.12%
The Prudential Insurance Company of
America (7). . . . . . . . . . . . 575,800 5.70%
David R. Klock (8) . . . . . . . . . 317,139 3.10%
Phyllis A. Klock (9) . . . . . . . . 233,194 2.29%
Bruce A. Mitchell (10) . . . . . . . 71,899 *
Philip Hertik (11) . . . . . . . . . 80,500 *
Sharon S. Graham (12). . . . . . . . 81,900 *
Joseph A. Ciffolillo (13). . . . . . 10,000 *
William G. Jens, Jr. (14). . . . . . 10,400 *
David F. Scott, Jr. (15).. . . . . . 10,000 *
Joseph E. Stephenson (16). . . . . . 19,000 *
All executive officers and Directors
as a group (10 persons) (17) . . . 844,332 7.97%
* Represents less than 1% of the outstanding shares.
(1) The address of The Kaufman Fund, Inc. is 140 E. 45th Street, 43rd
Floor, New York, NY 10017. The address of Massachusetts
Financial Services Company ("MFS") is 500 Boylston Street,
Boston, MA 02116. The address of Putnam Investments, Inc.
("Putnam") and its affiliates is One Post Office Square, Boston,
MA 02109. The address of J. & W. Seligman & Co. Incorporated
("JWS") is 100 Park Avenue, New York, NY 10017. The address of
FMR Corp. is 82 Devonshire Street, Boston, MA 02109. The address
of The Prudential Insurance Company of America ("Prudential") is
751 Broad Street, Newark, NJ 07102-3777. Information with
respect to the beneficial owners of more than 5% of the
outstanding Common Stock is based solely on information provided
to the Commission and the Company.
(2) All percentages have been determined as of the Record Date in
accordance with Rule 13d-3 under the Exchange Act. As of the
Record Date, a total of approximately 10,112,629 shares of Common
Stock were issued and outstanding and options to acquire a total
of 529,750 shares of Common Stock were exercisable within 60
days.
(3) As reported on the Schedule 13G filed with the Commission by MFS,
of such shares MFS has sole voting power over 844,095 shares and
sole dispositive power over 859,195 shares.
(4) As reported on the Schedule 13G filed with the Commission by
Putnam, such figure includes 631,650 shares held by Putnam
Investment Management, Inc. (of which 575,700 shares are held by
Putnam Health Sciences Trust) and 121,960 shares held by The
Putnam Advisory Company, Inc., each of which is a wholly owned
subsidiary of Putnam, which in turn is a wholly owned subsidiary
of Marsh & McLennan Companies, Inc. Putnam Investment
Management, Inc. and The Putnam Advisory Company, Inc. each have
dispositive power over their respective shares, but the voting
power rests with the Trustees of the Putnam funds.
(5) As reported on the Schedule 13G filed with the Commission by JWS,
William C. Morris, as the owner of a majority of the outstanding
voting securities of JWS may be deemed to beneficially own the
shares held by JWS.
<PAGE>
(6) As reported on the Schedule 13G filed with the Commission by FMR
Corp., such figure constitutes 618,400 shares of which Fidelity
Management & Research Company, a wholly owned subsidiary of FMR
Corp and an investment adviser registered under the Investment
Advisers Act of 1940, is the beneficial owner as a result of
acting as investment adviser to the Fidelity Low-Priced Stock
Fund (the "Fund"). The Fund owned all 618,400 shares
beneficially owned by FMR Corp. According to the Schedule 13G
filed with the Commission by FMR Corp., each of Edward C. Johnson
3d, FMR Corp. and the Fund has the sole power to dispose of the
shares held by the Fund, but sole power to vote or direct the
voting of such shares resides with the Fund's Board of Trustees.
(7) As reported on the Schedule 13G filed with the Commission by
Prudential, Prudential holds 357,500 shares for the benefit of
its general account and 218,300 shares for the benefit of its
clients and its separate accounts, externally managed accounts,
registered investment companies, subsidiaries and/or other
affiliates, over which Prudential may have direct or indirect
voting and/or investment discretion.
(8) Includes 130,000 shares which Dr. Klock may acquire upon the
exercise of stock options within 60 days after the Record Date.
Does not include 233,194 shares held by Dr. Klock's wife, Phyllis
A. Klock, President and Chief Operating Officer of the Company,
with respect to which Dr. Klock disclaims beneficial ownership.
(9) Includes 71,250 shares which Ms. Klock may acquire upon the
exercise of stock options within 60 days after the Record Date.
Does not include 317,139 shares held by Ms. Klock's husband,
David R. Klock, Chairman and Chief Executive Officer of the
Company, with respect to which Ms. Klock disclaims beneficial
ownership.
(10) Includes 71,250 shares which Mr. Mitchell may acquire upon the
exercise of stock options within 60 days after the Record Date.
(11) Represents 80,500 shares which Mr. Hertik may acquire upon the
exercise of stock options within 60 days after the Record Date.
(12) Includes 74,250 shares which Dr. Graham may acquire upon the
exercise of stock options within 60 days after the Record Date.
Such figures represent shares owned by Dr. Graham at the time of
resignation from the Company in August 1997. Dr. Graham may have
sold or purchased shares of Common Stock of the Company
subsequent to this date.
(13) Represents 10,000 shares which Mr. Ciffolillo may acquire upon
the exercise of stock options within 60 days after the Record
Date.
(14) Represents 10,000 shares which Mr. Jens may acquire upon the
exercise of stock options within 60 days after the Record Date.
(15) Represents 10,000 shares which Dr. Scott may acquire upon the
exercise of stock options within 60 days after the Record Date.
(16) Includes 18,000 shares which Mr. Stephenson may acquire upon the
exercise of stock options within 60 days after the Record Date.
(17) Includes 485,250 shares which may be acquired upon the exercise
of stock options within 60 days after the Record Date.
MARKET VALUE
On December 31, 1997, the closing price of a share of the
Company's Common Stock on Nasdaq was $20.28.
<PAGE>
SOLICITATION OF PROXIES AND EXPENSES
This solicitation of proxies for use at the Annual Meeting is
being made by the Board. The cost of this proxy solicitation will be
borne by the Company. In addition to solicitations by mail,
solicitations also may be made by advertisement, telephone, telegram,
facsimile transmission or other electronic media, and personal
meetings and interviews. In addition to solicitation services to
be provided by MacKenzie Partners, as described below, proxies may be
solicited by the Company and its directors, officers and employees
(who will receive no compensation therefor in addition to their
regular salaries). Arrangements also will be made with brokerage
houses and other custodians, nominees and fiduciaries to forward
solicitation materials to the beneficial owners of the shares of
Common Stock of the Company, and such persons will be reimbursed for
their expenses.
The Company has retained MacKenzie Partners at a fee estimated
not to exceed $5,000, plus reimbursement of reasonable out-of-pocket
expenses, to assist in the solicitation of proxies. The Company has
also agreed to indemnify MacKenzie Partners against certain
liabilities and expenses, including liabilities under the Federal
securities laws.
SUBMISSION OF STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Stockholder proposals intended to be presented at the
Company's 1999 annual meeting of stockholders must be received by the
Company on or before November 19, 1998 in order to be considered for
inclusion in the Company's proxy statement and form of proxy for that
meeting. The Company's By-laws provide that any stockholder of record
wishing to have a stockholder proposal considered at an annual meeting
must provide written notice of such proposal and appropriate
supporting documentation, as set forth in the By-laws, to the
Company at its principal executive office not less than 75 days
or more than 120 days prior to the first anniversary of the date of
the preceding year's annual meeting. In the event, however, that the
annual meeting is scheduled to be held more than 30 days before such
anniversary date or more than 60 days after such anniversary date,
notice must be so delivered not later than (i) the 15th day after the
date of public disclosure of the date of such meeting or (ii) the 75th
day prior to the scheduled date of such meeting. Any such proposal
should be mailed to: Secretary, CompDent Corporation, 100
Mansell Court East, Suite 400, Roswell, Georgia 30076.
INDEPENDENT ACCOUNTANTS
The Company has selected Coopers & Lybrand L.L.P. as the
independent public accountants for the Company for the fiscal year
ending December 31, 1998. The firm of Coopers & Lybrand L.L.P. has
served as the Company's independent public accountants since January
1, 1994. A representative of Coopers & Lybrand L.L.P. will be present
at the Annual Meeting and will be given the opportunity to make a
statement if he or she so desires. The representative will be
available to respond to appropriate questions.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's
officers and Directors, and persons who own more than 10% of the
Company's outstanding shares of Common Stock (collectively, "Section
16 Persons"), to file initial reports of ownership and reports of
changes in ownership with the Commission and Nasdaq. Section 16
Persons are required by the Commission to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by
it, or written representations from certain Section 16 Persons that no
Section 16(a) reports were required for such persons, the Company
believes that during Fiscal 1997, the Section 16 Persons complied with
all Section 16(a) filing requirements applicable to them.
<PAGE>
OTHER MATTERS
The Board does not know of any matters other than those
described in this Proxy Statement which will be presented for action
at the Annual Meeting. If other matters are duly presented, proxies
will be voted in accordance with the best judgment of the proxy
holders.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN
PERSON, YOU ARE REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY CARD IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE
IF MAILED IN THE UNITED STATES.
<PAGE>
APPENDIX A
COMPDENT CORPORATION
1997 STOCK OPTION PLAN
SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS
The name of the plan is the CompDent Corporation 1997 Stock
Option Plan (the "Plan"). The purpose of the Plan is to encourage and
enable the officers, employees, directors, consultants, advisors and
other key persons of CompDent Corporation (the "Company") and its
Subsidiaries (as defined below) upon whose judgment, initiative and
efforts the Company largely depends for the successful conduct of
its business to acquire a proprietary interest in the Company. It is
anticipated that providing such persons with a direct stake in the
Company's welfare will assure a closer identification of their
interests with those of the Company, thereby stimulating their efforts
on the Company's behalf and strengthening their desire to remain with
the Company.
The following terms shall be defined as set forth below:
"Act" means the Securities Exchange Act of 1934, as amended.
"Award" or "Awards," except where referring to a particular
category of grant under the Plan, shall include Incentive Stock
Options and Non-Qualified Stock Options.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended,
and any successor Code, and related rules, regulations and
interpretations.
"Committee" has the meanings specified in Section 2.
"Fair Market Value" of the Stock on any given date means (i)
if the Stock is admitted to quotation on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ"), the Fair
Market Value on any given date shall not be less than the average of
the highest bid and lowest asked prices of the Stock reported for
such date or, if no bid and asked prices were reported for such
date, for the last day preceding such date for which such prices were
reported; or (ii) if the Stock is admitted to trading on a national
securities exchange or the NASDAQ National Market System, the Fair
Market Value on any date shall not be less than the closing price
reported for the Stock on such exchange or system for such date or, if
no sales were reported for such date, for the last date preceding
such date for which a sale was reported; or (iii) if the Stock is
not publicly traded on a securities exchange or traded in the
over-the-counter market or, if traded or quoted, there are
no transactions or quotations within the last ten trading
days or trading has been halted for extraordinary reasons, the
Fair Market Value on any given date shall be determined
in good faith by the Committee with reference to the rules and
principles of valuation set forth in Section 20.2031-2
of the Treasury Regulations.
"Incentive Stock Option" means any Stock Option designated and
qualified as an "incentive stock option" as defined in Section 422 of
the Code.
"Non-Qualified Stock Option" means any Stock Option that is
not an Incentive Stock Option.
"Option" or "Stock Option" means any option to purchase shares
of Stock granted pursuant to Section 5.
"Stock" means the Common Stock, par value $.01 per share, of
the Company, subject to adjustments pursuant to Section 3.
"Subsidiary" means any corporation or other entity (other than
the Company) in any unbroken chain of corporations or other entities,
beginning with the Company, if each of the corporations or entities
(other than the last corporation or entity in the unbroken chain) owns
stock or other interests possessing 50% or more of the economic
<PAGE>
interest or the total combined voting power of all classes of stock or
other interests in one of the other corporations or entities in the
chain.
SECTION 2. ADMINISTRATION OF PLAN; COMMITTEE AUTHORITY TO SELECT
PARTICIPANTS AND DETERMINE AWARDS
(a) Committee. The Plan shall be administered by the Board of
Directors of the Company, or at the discretion of the Board by a
committee of the Board of not less than two "Non-Employee Directors"
within the meaning of Rule 16b-3(b)(3)(i) under the Act. Each member
of the Committee shall be an "Outside Director" within the meaning of
Section 162(m) of the Code and the regulations promulgated thereunder.
All references herein to the Committee shall be deemed to refer to the
entity then responsible for administration of this Plan at the
relevant time (i.e., either the Board of Directors or a committee of
the Board, as applicable).
(b) Powers of Committee. The Committee shall have the power
and authority to grant Awards consistent with the terms of the Plan,
including the power and authority:
(i) to select the officers, employees, directors,
consultants, advisors and key persons of the Company and its
Subsidiaries to whom Awards may from time to time be granted;
(ii) to determine the time or times of grant, and the
extent, if any, of Incentive Stock Options and Non-Qualified
Stock Options, or any combination of the foregoing, granted to
any one or more participants;
(iii) to determine the number of shares of Stock to be
covered by any Award;
(iv) to determine and modify from time to time the terms and
conditions, including restrictions, not inconsistent with the
terms of the Plan, of any Award, which terms and conditions may
differ among individual Awards and participants, and to approve
the form of written instruments evidencing the Awards;
(v) to impose any limitations on Awards granted under the
Plan, including limitations on transfers, repurchase provisions
and the like and to exercise repurchase rights or obligations;
(vi) to determine at any time whether, to what extent, and
under what circumstances Stock and other amounts payable with
respect to an Award shall be deferred either automatically or at
the election of the participant and whether and to what extent
the Company shall pay or credit amounts constituting interest (at
rates determined by the Committee) or dividends or deemed
dividends on such deferrals; and
(vii) at any time to adopt, alter and repeal such rules,
guidelines and practices for administration of the Plan and for
its own acts and proceedings as it shall deem advisable; to
interpret the terms and provisions of the Plan and any Award
(including related written instruments); to make all
determinations it deems advisable for the administration of the
Plan; to decide all disputes arising in connection with the Plan;
and to otherwise supervise the administration of the Plan.
All decisions and interpretations of the Committee shall be
binding on all persons, including the Company and Plan participants.
(c) Delegation of Authority to Grant Awards. The Committee,
in its discretion, may delegate to the Chief Executive Officer of the
Company all or part of the Committee's authority and duties with
respect to Awards, including the granting thereof, to individuals who
are not subject to the reporting and other provisions of Section 16
of the Act or "covered employees" within the meaning of Section
162(m) of the Code. The Committee may revoke or amend the terms of a
delegation at any time but such action shall not invalidate any prior
actions of the Committee's delegate or delegates that were consistent
with the terms of the Plan.
SECTION 3. STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION
(a) Stock Issuable. The maximum number of shares of Stock
reserved and available for issuance under the Plan shall be 500,000
shares of Stock. For purposes of the foregoing limitations, the
shares of Stock underlying any Awards which are forfeited, canceled,
reacquired by the Company, satisfied without the issuance of Stock or
otherwise terminated (other than by exercise) shall be added back
to the shares of Stock available for issuance under
<PAGE>
the Plan. Stock Options with respect to no more than 150,000
shares of Stock may be granted to any one individual participant
during any one calendar year period. The shares available for
issuance under the Plan may be authorized but unissued shares of Stock
or shares of Stock reacquired by the Company.
(b) Recapitalizations. Subject to Section 3(c), if, through
or as a result of any merger, consolidation, sale of all or
substantially all of the assets of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar transaction, the outstanding
shares of Stock are increased or decreased or are exchanged for a
different number or kind of shares or other securities of the Company
or any successor company, or additional shares or new or different
shares or other securities of the Company or any successor Company or
other non-cash assets are distributed with respect to such shares of
Stock or other securities, the Committee shall make an appropriate or
proportionate adjustment in (i) the maximum number of shares reserved
for issuance under the Plan, (ii) the number of Stock Options that can
be granted to any one individual participant, (iii) the number and
kind of shares or other securities subject to any then outstanding
Awards under the Plan, and (iv) the price for each share subject to
any then outstanding Stock Options under the Plan, without changing
the aggregate exercise price (i.e., the exercise price multiplied by
the number of shares) as to which such Stock Options remain
exercisable. The adjustment by the Committee shall be final,
binding and conclusive. No fractional shares of Stock shall be issued
under the Plan resulting from any such adjustment, but the Committee
in its discretion may make a cash payment in lieu of fractional
shares.
(c) Mergers and Other Transactions. In the case of (i) the
dissolution or liquidation of the Company, (ii) a merger,
reorganization or consolidation in which a majority of the outstanding
voting power of the Company is acquired by another person or entity
(other than a holding company formed by the Company), (iii) the sale
of all or substantially all of the assets of the Company to an
unrelated person or entity, or (iv) the sale of all of the Stock of
the Company to an unrelated person or entity (in each case, a
"Transaction"), all outstanding Options held by participants, to the
extent not fully vested and exercisable, shall not become fully vested
and exercisable except as the Committee may otherwise determine either
in connection with the granting of an Award as reflected in the terms
of the relevant Award or in its discretion thereafter. Upon the
effectiveness of the Transaction, the Plan and all Awards granted
hereunder shall terminate, unless provision is made in connection with
the Transaction for the assumption of Awards heretofore granted, or
the substitution of such Awards with new Awards of the successor
entity or parent thereof, with appropriate adjustment as to the number
and kind of shares and, if appropriate, the per share exercise
prices, as provided in Section 3(b) above. In the event of such
termination, each optionee shall be permitted to exercise for a period
of at least 15 days prior to the date of such termination all
outstanding Options held by such optionee which are then exercisable.
(d) Substitute Awards. The Committee may grant Awards under
the Plan in substitution for stock and stock based awards held by
employees of another corporation who become employees of the Company
or a Subsidiary as the result of a merger or consolidation of the
employing corporation with the Company or a Subsidiary or the
acquisition by the Company or a Subsidiary of property or stock
of the employing corporation. The Committee may direct that the
substitute awards be granted on such terms and conditions as the
Committee considers appropriate in the circumstances.
SECTION 4. ELIGIBILITY
Participants in the Plan will be such officers and other
employees, directors, consultants, advisors and other key persons of
the Company and its Subsidiaries who are responsible for or contribute
to the management, growth or profitability of the Company and its
Subsidiaries as are selected from time to time by the Committee, in
its sole discretion.
SECTION 5. STOCK OPTIONS
Any Stock Option granted under the Plan shall be pursuant to a
stock option agreement which shall be in such form as the Committee
may from time to time approve. Option agreements need not be
identical.
Stock Options granted under the Plan may be either Incentive
Stock Options or Non-Qualified Stock Options. Incentive Stock Options
may be granted only to employees of the Company or any Subsidiary that
is a "subsidiary corporation" within the meaning of Section 424(f) of
the Code. Non-Qualified Stock Options may be granted to
officers, employees, directors, consultants, advisors and other
key persons of the Company and its Subsidiaries. To
<PAGE>
the extent that any Option does not qualify as an Incentive Stock
Option, it shall be deemed a Non-Qualified Stock Option.
No Incentive Stock Option shall be granted under the Plan
after April 30, 2007.
(a) Terms of Stock Options. Stock Options granted under the
Plan shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with
the terms of the Plan, as the Committee shall deem desirable:
(i) Exercise Price. The exercise price per share for the
Stock covered by a Stock Option shall be determined by the
Committee at the time of grant but shall not be less than 100% of
the Fair Market Value on the date of grant. If an employee owns
or is deemed to own (by reason of the attribution rules
applicable under Section 424(d) of the Code) more than 10% of the
combined voting power of all classes of stock of the Company or
any parent or subsidiary corporation and an Incentive Stock
Option is granted to such employee, the option price of such
Incentive Stock Option shall be not less than 110% of the Fair
Market Value on the grant date.
(ii) Option Term. The term of each Stock Option shall be
fixed by the Committee, but no Incentive Stock Option shall be
exercisable more than ten years after the date the option is
granted. If an employee owns or is deemed to own (by reason of
the attribution rules of Section 424(d) of the Code) more than
10% of the combined voting power of all classes of stock of the
Company or any parent or subsidiary corporation and an Incentive
Stock Option is granted to such employee, the term of such option
shall be no more than five years from the date of grant.
(iii) Exercisability; Rights of a Stockholder. Stock
Options shall become vested and exercisable at such time or
times, whether or not in installments, as shall be determined by
the Committee at or after the grant date. The Committee may at
any time accelerate the exercisability of all or any portion of
any Stock Option. An optionee shall have the rights of a
stockholder only as to shares acquired upon the exercise of a
Stock Option and not as to unexercised Stock Options.
(iv) Method of Exercise. Stock Options may be exercised in
whole or in part, by giving written notice of exercise to the
Company, specifying the number of shares to be purchased.
Payment of the purchase price may be made by one or more of the
following methods:
(A) In cash, by certified or bank check or other
instrument acceptable to the Committee;
(B) In the form of shares of Stock that are not then
subject to restrictions under any Company plan and that have
been held by the optionee free of such restrictions for at
least six months, if permitted by the Committee in its
discretion. Such surrendered shares shall be valued at Fair
Market Value on the exercise date;
(C) By the optionee delivering to the Company a
properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company
cash or a check payable and acceptable to the Company to pay
the purchase price; provided that in the event the optionee
chooses to pay the purchase price as so provided, the
optionee and the broker shall comply with such procedures
and enter into such agreements of indemnity and other
agreements as the Committee shall prescribe as a condition
of such payment procedure; or
(D) By the optionee delivering to the Company a
promissory note if the Board has authorized the loan of
funds to the optionee for the purpose of enabling or
assisting the optionee to effect the exercise of his or her
Stock Option; provided that at least so much of the exercise
price as represents the par value of the Stock shall be paid
other than with a promissory note.
Payment instruments will be received subject to collection.
The delivery of certificates representing the shares of Stock to be
purchased pursuant to the exercise of a Stock Option will be
contingent upon receipt from the optionee (or a purchaser acting in
his or her stead in accordance with the provisions of the Stock
Option) by the Company of the full purchase price for such shares and
the fulfillment of any other requirements contained in the Stock
Option or applicable provisions of law.
<PAGE>
(v) Termination. Stock Options shall terminate at such
times as are specified in the relevant Award.
(vi) Annual Limit on Incentive Stock Options. To the extent
required for "incentive stock option" treatment under Section 422
of the Code, the aggregate Fair Market Value (determined as of
the time of grant) of the shares of Stock with respect to which
Incentive Stock Options granted under this Plan and any other
plan of the Company or its parent and subsidiary corporations
become exercisable for the first time by an optionee during any
calendar year shall not exceed $100,000. To the extent that any
Stock Option exceeds this limit, it shall constitute a
Non-Qualified Stock Option.
(b) Non-transferability of Options. No Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of
descent and distribution and all Stock Options shall be exercisable,
during the optionee's lifetime, only by the optionee. Notwithstanding
the foregoing, the Committee may provide in an option agreement
that the optionee may transfer, without consideration for the
transfer, his or her Non-Qualified Stock Options to members of his or
her immediate family, to trusts for the benefit of such family
members, or to partnerships in which such family members are the only
partners; provided, however, that the transferee agrees in writing to
be bound by the terms and conditions of this Plan and the applicable
Option Agreement.
SECTION 6. TAX WITHHOLDING
(a) Payment by Participant. Each participant shall, no later
than the date as of which the value of an Award or of any Stock or
other amounts received thereunder first becomes includable in the
gross income of the participant for Federal income tax purposes, pay
to the Company, or make arrangements satisfactory to the Committee
regarding payment of, any federal, state, or local taxes of any kind
required by law to be withheld with respect to such income. The
Company and its Subsidiaries shall, to the extent permitted by law,
have the right to deduct any such taxes from any payment of any kind
otherwise due to the participant.
(b) Payment in Stock. Subject to approval by the Committee, a
participant may elect to have such tax withholding obligation
satisfied, in whole or in part, by (i) authorizing the Company to
withhold from shares of Stock to be issued pursuant to any Award a
number of shares with an aggregate Fair Market Value (as of the date
the withholding is effected) that would satisfy the withholding
amount due, or (ii) transferring to the Company shares of Stock owned
by the participant with an aggregate Fair Market Value (as of the date
the withholding is effected) that would satisfy the withholding amount
due.
SECTION 7. TRANSFER, LEAVE OF ABSENCE, ETC.
For purposes of the Plan, the following events shall not be
deemed a termination of employment:
(a) a transfer to the employment of the Company from a
Subsidiary or from the Company to a Subsidiary, or from one Subsidiary
to another; or
(b) an approved leave of absence for military service or
sickness, or for any other purpose approved by the Company, if the
employee's right to re-employment is guaranteed either by a statute or
by contract or under the policy pursuant to which the leave of absence
was granted or if the Committee otherwise so provides in writing.
SECTION 8. AMENDMENTS AND TERMINATION
The Board may, at any time, amend or discontinue the Plan and
the Committee may, at any time, amend or cancel any outstanding Award,
but no such action shall adversely affect rights under any outstanding
Award without the holder's consent. Notwithstanding the foregoing, in
no event shall the Board or the Committee reduce the exercise
price of an outstanding Award unless pursuant to the provisions
of Section 3(b) or 3(c). If and to the extent determined by the
Committee to be required by the Act to ensure that Incentive Stock
Options granted under the Plan are qualified under Section 422 of the
Code, Plan amendments shall be subject to approval by the Company
stockholders who are eligible to vote at a meeting of stockholders.
<PAGE>
SECTION 9. STATUS OF PLAN
With respect to the portion of any Award which has not been
exercised and any payments in cash, Stock or other consideration not
received by a participant, a participant shall have no rights greater
than those of a general creditor of the Company unless the Committee
shall otherwise expressly determine in connection with any Award or
Awards. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the Company's
obligations to deliver Stock or make payments with respect to Awards
hereunder, provided that the existence of such trusts or other
arrangements is consistent with the foregoing sentence.
SECTION 10. GENERAL PROVISIONS
(a) No Distribution; Compliance with Legal Requirements. The
Committee may require each person acquiring Stock pursuant to an Award
to represent to and agree with the Company in writing that such person
is acquiring the shares without a view to distribution thereof.
No shares of Stock shall be issued pursuant to an Award until
all applicable securities law and other legal and stock exchange or
similar requirements have been satisfied. The Committee may require
the placing of such stop-orders and restrictive legends on
certificates for Stock and Awards as it deems appropriate.
(b) Other Compensation Arrangements; No Employment Rights.
Nothing contained in this Plan shall prevent the Board from adopting
other or additional compensation arrangements, including trusts, and
such arrangements may be either generally applicable or applicable
only in specific cases. The adoption of this Plan and the grant of
Awards do not confer upon any employee any right to continued
employment with the Company or any Subsidiary.
SECTION 11. GOVERNING LAW
This Plan shall be governed by Delaware law except to the
extent such law is preempted by federal law.
Adopted and Effective: April 30, 1997
<PAGE>
[ATTACHMENT -- PROXY CARD]
CompDent Corporation
100 Mansell Court East, Suite 400, Roswell, Georgia 30076
Proxy for 1998 Annual Meeting of Stockholders to be Held on
Thursday, April 30, 1998 at 2:00 p.m.
This Proxy is Solicited by the Board of Directors
The undersigned hereby constitutes and appoints Bruce A. Mitchell
and Phyllis A. Klock as proxies of the undersigned (the
"Proxies"), with full power to appoint his or her substitute, and
authorizes each of them to represent and to vote all shares of
Common Stock of CompDent Corporation (the "Corporation") held by
the undersigned at the close of business on March 10, 1998, at
the Annual Meeting of Stockholders to be held at the Atlanta
Airport Hilton Hotel, Atlanta, Georgia, on Thursday, April 30,
1998 at 2:00 p.m., local time, and at any adjournments or
postponements 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 election of
the nominees listed in Proposal 1 and FOR Proposal 2, as set
forth on the reverse side hereof, and in their discretion, the
Proxies are authorized to vote upon such other business as may
properly come before the meeting and any adjournments or
postponements thereof. A stockholder wishing to vote in
accordance with the Board of Directors' recommendations need only
sign and date this proxy and return it in the postage-paid
envelope provided.
Please vote, date and sign on reverse and return promptly in the
enclosed envelope.
Please sign exactly as your name(s) appear(s) hereon. Where there
is more than one holder, each should sign. When signing as
attorney, administrator, executor, guardian or trustee, please
give your title as such. If executed by a corporation, this proxy
should be signed by a duly authorized person, stating such
person's title or authority. If a partnership, please sign in
partnership name by authorized person.
Has your address changed?
Do you have any comments?
[BOX WITH X] Please mark votes as in this example
CompDent Corporation
Mark box at right if an address change or comment has been noted
on the reverse side of this card. [BOX]
Please be sure to sign and date this Proxy Date
Stockholder sign here Co-owner sign here
1. Election of Class III Directors.
Nominees: For all For all
Nominees Withhold Except
David R. Klock
Joseph A. Ciffolillo
Note: If you do not wish your shares voted "For" a particular
nominee, mark the "For All Except" box and strike a line through
the name of such nominee. Your shares will be voted for the
remaining nominees.
For Against Abstain
2. To approve the CompDent
Corporation 1997 Stock
Option Plan.
The undersigned hereby acknowledge(s) receipt of a copy of the
accompanying Notice of 1998 Annual Meeting of Stockholders, the
Proxy Statement with respect thereto and the Corporation's Annual
Report to Stockholders for fiscal year 1997, and hereby revoke(s)
any proxy or proxies heretofore given. This proxy may be revoked
at any time before it is exercised.
