<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
</TABLE>
BIRNER DENTAL MANAGEMENT SERVICES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
BIRNER DENTAL MANAGEMENT SERVICES, INC.
3801 EAST FLORIDA AVENUE, SUITE 508
DENVER, COLORADO 80210
May 8, 2000
TO THE SHAREHOLDERS OF BIRNER
DENTAL MANAGEMENT SERVICES, INC.:
You are cordially invited to attend the 2000 Annual Meeting of Shareholders (the
"Meeting") of Birner Dental Management Services, Inc. (the "Company"), to be
held on Thursday, June 8, 2000, at 10:00 a.m., Mountain Time, at the Company's
offices, 3801 East Florida Avenue, Suite 508, Denver, Colorado 80210.
Please read the enclosed Annual Report to Shareholders on Form 10-K and Proxy
Statement for the Meeting. Whether or not you plan to attend the Meeting, please
sign, date and return the proxy card in the enclosed envelope to American
Securities Transfer & Trust, Inc. as soon as possible so that your vote will be
recorded. If you attend the Meeting, you may withdraw your proxy and vote your
shares in person.
Very truly yours,
BIRNER DENTAL MANAGEMENT SERVICES, INC.
By: /s/ Frederic W.J. Birner
----------------------------------
Name: Frederic W.J. Birner
Title: Chairman of the Board and Chief Executive Officer
<PAGE> 3
BIRNER DENTAL MANAGEMENT SERVICES, INC.
3801 EAST FLORIDA AVENUE, SUITE 508
DENVER, COLORADO 80210
---------------------------
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS
TO BE HELD JUNE 8, 2000
---------------------------
TO OUR SHAREHOLDERS:
The 2000 Annual Meeting of Shareholders (the "Meeting") of Birner Dental
Management Services, Inc., a Colorado corporation (the "Company"), will be held
on Thursday, June 8, 2000, at 10:00 a.m., Mountain Time, at the Company's
offices, 3801 East Florida Avenue, Suite 508, Denver, Colorado 80210, for the
following purposes:
(1) to elect two Class III directors to serve for a term of three years or
until their successors are duly elected and qualified;
(2) to consider and vote upon a proposal to approve and ratify the
appointment of Arthur Andersen LLP as the Company's independent
auditors for 2000; and
(3) to consider such other matters as may properly come before the Meeting
and at any and all adjournments thereof.
Only shareholders of record at the close of business on April 14, 2000 are
entitled to notice of and to vote at the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Dennis N. Genty
-------------------------------------------
Name: Dennis N. Genty
Title: Chief Financial Officer, Secretary and
Treasurer
Denver, Colorado
May 8, 2000
A PROXY CARD IS ENCLOSED. YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU
OWN. TO ASSURE THAT YOUR SHARES WILL BE VOTED AT THE MEETING, PLEASE COMPLETE
AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE
PREPAID, ADDRESSED ENVELOPE TO AMERICAN SECURITIES TRANSFER & TRUST, INC. NO
ADDITIONAL POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. THE GIVING OF A
PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
<PAGE> 4
BIRNER DENTAL MANAGEMENT SERVICES, INC.
3801 EAST FLORIDA AVENUE, SUITE 508
DENVER, COLORADO 80210
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 8, 2000
---------------------------
GENERAL INFORMATION
The enclosed proxy is solicited by and on behalf of the Board of Directors of
Birner Dental Management Services, Inc., a Colorado corporation (the "Company"),
for use at the Company's 2000 Annual Meeting of Shareholders (the "Meeting") to
be held at 10:00 a.m., Mountain Time, on Thursday, June 8, 2000, at the
Company's offices, 3801 East Florida Avenue, Suite 508, Denver, Colorado, and at
any and all adjournments thereof. This Proxy Statement and the accompanying form
of proxy are first being mailed or given to the shareholders of the Company on
or about May 8, 2000.
The Company's Annual Report on Form 10-K (the "Annual Report"), which includes
audited financial statements for the fiscal year ended December 31, 1999, is
being mailed to shareholders of the Company simultaneously with this Proxy
Statement.
INFORMATION CONCERNING SOLICITATION AND VOTING
All voting rights are vested exclusively in the holders of the Company's common
stock, without par value. Each share of the Company's common stock is entitled
to one vote. Cumulative voting in the election of directors is not permitted.
Holders of a majority of shares entitled to vote at the Meeting, when present in
person or by proxy, constitute a quorum. On April 14, 2000, the record date for
shareholders entitled to vote at the Meeting, 6,131,814 shares of the Company's
common stock, without par value, were issued and outstanding.
Proxies in the enclosed form will be effective if properly executed and returned
prior to the Meeting in the enclosed envelope to American Securities Transfer &
Trust, Inc., Proxy Department, P.O. Box 5096, Denver, Colorado 80201-9975. The
common stock represented by each effective proxy will be voted at the Meeting in
accordance with the instructions on the proxy. If no instructions are indicated
on a proxy, all common stock represented by such proxy will be voted FOR
election of the nominees named in the proxy as the Class III directors, FOR the
approval and ratification of the appointment of Arthur Andersen LLP as the
Company's independent auditors, and, as to any other matters of business which
properly come before the Meeting, by the named proxies at their discretion.
Any shareholder signing and mailing the enclosed proxy may revoke it at any time
before it is voted by giving written notice of the revocation to the Company, by
voting in person at the Meeting or by filing at the Meeting a later executed
proxy.
When a quorum is present, in the election of directors, the nominees having the
highest number of votes cast in favor of their election will be elected to the
Company's Board of Directors. With respect to any other matter which may
properly come before the Meeting, unless a greater number of votes is required
by law or by the Company's Amended and Restated Articles of Incorporation, a
matter will be approved by the shareholders if the votes cast in favor of the
matter exceed the votes cast in opposition.
1
<PAGE> 5
Abstentions, broker non-votes (i.e., shares held by brokers or nominees as to
which the broker or nominee indicates on a proxy that it does not have
discretionary authority to vote) and any other shares not voted will be treated
as shares that are present and entitled to vote for purposes of determining the
presence of a quorum. However, for purposes of determining the outcome of the
election of the Class III directors, the approval and ratification of Arthur
Andersen LLP as the Company's independent auditors, or of any other matter which
properly may come before the Meeting, abstentions, broker non-votes and any
other shares not voted will not be considered as votes cast. Thus, abstentions,
broker non-votes and any other shares not voted will have no impact in the
election of the Class III directors, the approval and ratification of Arthur
Andersen LLP as the Company's independent auditors, or any other matter which
properly may come before the Meeting so long as a quorum is present.
The Company will pay the cost of soliciting proxies in the accompanying form.
The Company has retained the services of American Securities Transfer & Trust,
Inc. to assist in distributing proxy materials to brokerage houses, banks,
custodians and other nominee holders. The estimated cost of such services is
approximately $700 plus out-of-pocket expenses. Although there are no formal
agreements to do so, proxies may be solicited by officers and other regular
employees of the Company by telephone or by personal interview for which
employees will not receive additional compensation. Arrangements also may be
made with brokerage houses and other custodians, nominees and fiduciaries to
forward solicitation materials to beneficial owners of the shares held of record
by such persons, and the Company may reimburse such persons for reasonable
out-of-pocket expenses incurred by them in so doing.
PROPOSAL ONE: ELECTION OF CLASS III DIRECTORS
GENERAL
The Company's Amended and Restated Articles of Incorporation provide for the
classification of the Company's Board of Directors. The Board of Directors,
which currently is composed of five members, is divided into three classes. One
class stands for re-election at each annual meeting of shareholders. The Board
of Directors currently is classified into one Class I director whose term will
expire upon the election and qualification of directors at the annual meeting of
shareholders held in 2001 (James M. Ciccarelli), two Class II directors whose
terms will expire upon the election and qualification of directors at the annual
meeting of shareholders held in 2002 (Dennis N. Genty and Steven M. Bathgate)
and two Class III directors whose terms will expire upon the election and
qualification of directors at the annual meeting of shareholders held in 2000
(Frederic W.J. Birner and Mark A. Birner, D.D.S.). At each annual meeting of
shareholders, directors will be elected by the shareholders of the Company for a
full term of three years to succeed those directors whose terms are expiring.
The powers and responsibilities of each class of directors are identical. All
directors shall serve until their successors are duly elected and qualified,
subject, however, to prior death, resignation, retirement, disqualification or
removal from office.
Proxies cannot be voted for a greater number of persons than the number of
nominees named therein. Unless authority to vote is withheld, the persons named
in the enclosed form of proxy will vote the shares represented by such proxy for
the election of the nominees for director named below. If, at the time of the
Meeting, any of the nominees shall have become unavailable for any reason for
election as a director, the persons entitled to vote the proxy will vote for
such substitute nominee, if any, as they determine in their discretion. If
elected, the nominees will hold office until the year 2003 annual meeting of
shareholders or until their successors are elected and qualified.
2
<PAGE> 6
CLASS III DIRECTOR NOMINEES
The Board of Directors unanimously recommends that the shareholders vote FOR
election of the following nominees as Class III directors of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION DIRECTOR SINCE
----------- ---------- ---------- --------------
<S> <C> <C> <C>
Frederic W.J. Birner 42 Chairman of the Board, Chief 1995
Executive Officer and Director
Mark A. Birner, D.D.S. 40 President and Director 1995
</TABLE>
CONTINUING DIRECTORS
The persons named below will continue to serve as directors of the Company until
the annual meeting of shareholders in the year indicated below and until their
successors are elected and take office. Shareholders are not voting on the
election of the Class I and Class II directors. The following table shows the
names, ages and positions of each continuing directors.
<TABLE>
<CAPTION>
CLASS I - TERM EXPIRES IN 2001
NAME AGE POSITION DIRECTOR SINCE
----------- ---------- ---------- --------------
<S> <C> <C> <C>
James M. Ciccarelli 47 Director 1996
</TABLE>
<TABLE>
<CAPTION>
CLASS II - TERM EXPIRES IN 2002
NAME AGE POSITION DIRECTOR SINCE
----------- ---------- ---------- --------------
<S> <C> <C> <C>
Dennis N. Genty 42 Chief Financial Officer, 1995
Secretary, Treasurer and Director
Steven M. Bathgate 45 Director 1998
</TABLE>
PROPOSAL TWO: RATIFICATION OF INDEPENDENT AUDITORS
The Audit Committee of the Board of Directors has selected the firm of Arthur
Andersen LLP as independent auditors of the Company for the fiscal year ended
December 31, 2000, subject to the approval and ratification of shareholders. The
Board of Directors unanimously recommends that shareholders vote to approve and
ratify the appointment of Arthur Andersen LLP as the Company's Independent
Auditors for 2000. Arthur Andersen LLP has served as the independent auditors of
the Company since the Company's formation in May 1995. Representatives of Arthur
Andersen LLP are expected to be present at the Meeting, will have an opportunity
to make a statement if they desire, and will be available to respond to
appropriate questions.
The affirmative vote of the holders of a majority of the shares present or
represented at the Meeting and entitled to vote is needed to ratify the
appointment of Arthur Andersen LLP as independent auditors of the Company for
2000. If the appointment is not approved, the matter will be referred to the
Audit Committee for further review.
3
<PAGE> 7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of April 14, 2000, by (i)
all persons known by the Company to be the beneficial owners of 5% or more of
the Common Stock, (ii) each director, (iii) each of the executive officers, and
(iv) all executive officers and directors as a group. Unless otherwise
indicated, the address of each of the persons named below is in care of the
Company, 3801 East Florida Avenue, Suite 508, Denver, Colorado 80210.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OF CLASS (1)(2)
------------------------ ------------------ -----------------------
<S> <C> <C>
Frederic W.J. Birner (3).................... 672,241 11.0%
Mark A. Birner, D.D.S. (4).................. 817,466 13.3%
Dennis N. Genty (5)......................... 567,280 9.3%
James M. Ciccarelli (6)..................... 58,099 *
Steven M. Bathgate (7)...................... 267,541 4.4%
Lee Schlessman (8).......................... 527,321 8.6%
All executive officers and directors
as a group (five persons) (9)............ 2,382,627 36.7%
</TABLE>
- ------------------------
* Less than 1%
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock subject
to options, warrants and convertible debentures currently exercisable or
convertible, or exercisable or convertible within 60 days of April 14,
2000, are deemed outstanding for computing the percentage of the person or
entity holding such securities but are not outstanding for computing the
percentage of any other person or entity. Except as indicated by footnote,
and subject to community property laws where applicable, the persons named
in the table above have sole voting and investment power with respect to
all shares of Common Stock shown as beneficially owned by them.
(2) Percentage of ownership is based on 6,131,814 shares of Common Stock
outstanding at April 14, 2000.
(3) Includes 59,510 shares of Common Stock that are issuable upon the exercise
of options that are currently exercisable and 36,680 shares of Common Stock
that are issuable upon the exercise of warrants that are currently
exercisable. Includes 8,500 shares of Common Stock owned by his wife. Mr.
Birner disclaims beneficial ownership of all shares held by his wife.
(4) Includes 58,099 shares of Common Stock that are issuable upon the exercise
of options that are currently exercisable and 36,680 shares of Common Stock
that are issuable upon the exercise of warrants that are currently
exercisable.
(5) Includes 48,930 shares of Common Stock that are issuable upon the exercise
of options that are currently exercisable and 36,680 shares of Common Stock
that are issuable upon the exercise of warrants that are currently
exercisable. Includes 473,770 shares of Common Stock owned by his wife. Mr.
Genty disclaims beneficial ownership of all shares held by his wife.
(6) Includes 15,000 shares of Common Stock that are issuable upon the exercise
of options that are currently exercisable and 43,099 shares of Common Stock
that are issuable upon the exercise of warrants that are currently
exercisable.
(7) Includes 21,667 shares of Common Stock that are issuable upon the exercise
of options that are currently exercisable. Does not include 3,333 shares of
Common Stock that are issuable upon the exercise of options that are not
exercisable within 60 days. Includes 127,700 shares of Common Stock owned
by his wife. Mr. Bathgate disclaims beneficial ownership of all shares held
by his wife. Includes 44,000 shares of Common Stock owned by Bathgate
Family Partnership Ltd.. Mr. Bathgate disclaims beneficial ownership of
these securities except to the extent of his pecuniary interest therein.
(8) Includes 247,193 shares of Common Stock over which Mr. Schlessman has sole
voting power pursuant to certain powers of attorney, but for which he
disclaims beneficial ownership. The address for Mr. Schlessman is 1301
Pennsylvania Avenue, Suite 800, Denver, CO 80203.
(9) Includes 356,345 shares of Common Stock issuable upon the exercise of
options and warrants held by all executive officers and directors as a
group that are currently exercisable or are exercisable within 60 days.
Does not include 3,333 shares of Common Stock issuable upon the exercise of
options and warrants held by all executive officers and directors as a
group that are not exercisable within 60 days.
4
<PAGE> 8
There has been no change in control of the Company since the beginning of its
last fiscal year, and there are no arrangements known to the Company, including
any pledge of securities of the Company, the operation of which may at a
subsequent date result in a change in control of the Company.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information concerning each of the directors and
executive officers of the Company. All directors shall serve until their
successors are duly elected and qualified, subject, however, to prior death,
resignation, retirement, disqualification or removal from office. Officers are
appointed by and serve at the discretion of the Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION
----------- ----- --------
<S> <C> <C>
Frederic W.J. Birner 42 Chairman of the Board, Chief Executive Officer and Director
Mark A. Birner, D.D.S. 40 President and Director
Dennis N. Genty 42 Chief Financial Officer, Secretary, Treasurer and Director
James M. Ciccarelli 47 Director
Steven M. Bathgate 45 Director
</TABLE>
BUSINESS BIOGRAPHIES
Frederic W.J. Birner is a founder of the Company and has served as Chairman of
the Board and Chief Executive Officer since the Company's inception in May 1995.
From May 1992 to September 1995, he was employed as a Senior Vice President in
the Corporate Finance Department at Cohig & Associates, Inc., an investment
banking firm. From 1983 to February 1992, Mr. Birner held various positions with
Hanifen, Imhoff, Inc., an investment banking firm, most recently as Senior Vice
President in the Corporate Finance Department. Mr. Birner received his M.S.
degree from Columbia University and his B.A. degree from The Colorado College.
Mr. Birner is the brother of Mark A. Birner, D.D.S.
Mark A. Birner, D.D.S. is a founder of the Company and has served as President,
and as a director, since the Company's inception in May 1995. From February 1994
to October 1995, Dr. Birner was the owner and operator of three individual
dental practices. From 1986 to February 1994, he was an associate dentist with
the Family Dental Group. Dr. Birner received his D.D.S. and B.A. degrees from
the University of Colorado and completed his general practice residency at the
University of Minnesota in Minneapolis. Dr. Birner is the brother of Frederic
W.J. Birner.
Dennis N. Genty is a founder of the Company and has served as Secretary since
May 1995, and as Chief Financial Officer, Treasurer, and as a director, since
September 1995. From October 1992 to September 1995, he was employed as a Vice
President in the Corporate Finance Department at Cohig & Associates, Inc., an
investment banking firm. From May 1990 to October 1992, he was a Vice President
in the Corporate Finance Department at Hanifen, Imhoff, Inc., an investment
banking firm. Mr. Genty received his M.B.A. degree from Columbia University and
his B.S. degree from the Colorado School of Mines.
James M. Ciccarelli joined the Company as a consultant in August 1996 and has
served as a director since November 1996. Mr. Ciccarelli has been Chairman of
the Board of CommWorld International since October 1998. Mr. Ciccarelli served
as Chairman of the Board of Wireless Telecom, Inc., a wireless data and network
service provider from March 1993 to January 2000. In addition Mr. Ciccarelli
served as their Chief Executive Officer from March 1993 to October 1998. From
September 1990 to March 1993, Mr. Ciccarelli was a Vice President of Intelligent
Electronics, a high technology distribution and services company, and the
President and CEO of its Reseller Network Division. From November 1988 to
September 1990, Mr. Ciccarelli was the President of Connecting Point of America,
a franchisor of retail computer stores.
5
<PAGE> 9
Steven M. Bathgate became a director of the Company effective upon consummation
of the Company's initial public offering in February 1998. Mr. Bathgate has
served as a principal of Bathgate McColley Capital Corp. LLC, an investment
banking firm, since its formation in January 1996. Mr. Bathgate held a number of
positions from 1985 to 1996 at Cohig & Associates, Inc., an investment banking
firm, including Chairman and Chief Executive Officer.
CERTAIN TRANSACTIONS
The Company's President, Mark A. Birner, D.D.S., is the sole shareholder of most
of the professional corporations affiliated with the Company ("P.C.s") in
Colorado, and all of the P.C.s in Arizona. Dr. Birner is the brother of the
Company's Chairman of the Board and Chief Executive Officer, Frederic W.J.
Birner. All of the P.C.s owned by Dr. Birner have entered into Management
Agreements on substantially the same terms as the Management Agreements with the
P.C.s which are owned by dentists who are not employees of the Company. Dr.
Birner has also entered into agreements with the Company for each P.C. owned by
him pursuant to which the Company may require him to sell his interest in the
P.C. to a third party designated by the Company for nominal value upon the
occurrence of certain events. Dr. Birner's ownership of these P.C.s and his
family relationships could result in potential conflicts of interest in certain
matters, including but not limited to, matters related to the Management
Agreements. The Company will require that any transactions with Dr. Birner which
relate to his ownership of the stock of a P.C. (other than in connection with
the acquisition of a new practice) or with any P.C. of which he is the sole
shareholder be approved by a majority of the members of its Board of Directors
other than Frederic W.J. Birner and Dr. Birner.
The Company's Chief Executive Officer, Frederic W.J. Birner, is indebted to the
Company on an unsecured basis in the amount of $100,115. Principal and interest
(at 7% per annum) are due December 31, 2001.
The Company believes that the foregoing transactions were on terms no less
favorable to the Company than could be obtained from unaffiliated third parties.
DIRECTORS' MEETINGS AND COMMITTEES
The entire Board of Directors met 11 times during the year ended December 31,
1999, including 9 actions by unanimous consent. Each incumbent director attended
100% of the board meetings. The Company's Board of Directors has appointed an
Audit Committee and the full Board of Directors acts as the Company's
Compensation Committee.
AUDIT COMMITTEE
The Audit Committee has as its primary responsibilities the recommendation of an
independent public accountant to audit the annual financial statements of the
Company, the review of internal and external audit functions, the review of
internal accounting controls, the review of annual financial statements, and a
review at its discretion of compliance with corporate policies and codes of
conduct. The Audit Committee is comprised of outside directors. The current
members of the Audit Committee are Steven M. Bathgate and James M. Ciccarelli.
The Audit Committee met one time in 1999.
COMPENSATION COMMITTEE
Currently, the full Board of Directors is acting as the Compensation Committee.
The Compensation Committee determines officers' salaries and bonuses and
administers the grant of stock options and other awards pursuant to the Birner
Dental Management Services, Inc. 1995 Employee Plan (the "Employee Plan") and
the Birner Dental Management Services, Inc. 1995 Stock Option Plan for Managed
Dental Centers. The Compensation Committee met 7 times in 1999.
6
<PAGE> 10
DIRECTOR AND EXECUTIVE COMPENSATION
DIRECTOR COMPENSATION
Directors currently do not receive any cash compensation from the Company for
their services as directors and are not presently reimbursed for expenses in
connection with attendance at Board of Directors and committee meetings.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table sets forth the compensation paid by the Company to the Chief
Executive Officer and each of the executive officers of the Company who were
paid total salary and bonus exceeding $100,000 during the fiscal year ended
December 31, 1999 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY BONUS OPTIONS/WARRANTS COMPENSATION
- --------------------------- ----------- ------ ----- ---------------- ------------
<S> <C> <C> <C> <C> <C>
Frederic W.J. Birner 1999 $210,691 $-- $1,280(3)
Chairman of the Board and 1998 $128,280 $-- 20,000(1) $1,280(3)
Chief Executive Officer 1997 $110,185 $-- 21,170(2) $ --
Mark A. Birner, D.D.S. 1999 $140,897 $-- $1,120(3)
President and Director 1998 $128,280 $-- 20,000(1) $1,120(3)
1997 $ 78,288 $-- 21,170(2) $ --
Dennis N. Genty 1999 $141,382 $-- $ --
Chief Financial Officer 1998 $108,123 $-- 20,000(1) $ --
Treasurer, Secretary and 1997 $ 97,553 $-- 21,170(2) $ --
Director
</TABLE>
- ---------------------------
(1) Represents shares of Common Stock issuable upon (i) exercise of an option
to purchase 10,000 shares of Common Stock granted on April 30, 1998
pursuant to the Employee Plan, with an exercise price of $8.53 per share
and (ii) exercise of an option to purchase 10,000 shares of Common Stock
granted on October 7, 1998 pursuant to the Employee Plan, with an exercise
price of $5.36 per share.
(2) Represents shares of Common Stock issuable upon (i) exercise of an option
to purchase 12,000 shares of Common Stock granted on October 31, 1997
pursuant to the Employee Plan, with an exercise price of $9.90 and (ii)
exercise of a warrant to purchase 9,170 shares of Common Stock awarded on
June 30, 1997, with an exercise price of $6.00 per share.
(3) Life insurance paid for by the Company.
7
<PAGE> 11
OPTION GRANTS
No stock options were granted during the fiscal year ended December 31, 1999 to
any Named Executive Officer.
OPTION EXERCISES AND HOLDINGS
The following table sets forth for the Named Executive Officers the number and
value of securities underlying unexercised in-the-money options held as of
December 31, 1999. None of the Named Executive Officers exercised any options
during the fiscal year ended December 31, 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED,
OPTIONS HELD AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1999 DECEMBER 31, 1999 (1)
----------------------------------- -------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C>
Frederic W.J. Birner 59,510 -- $ -- --
Mark A. Birner, D.D.S. 58,099 -- $ -- --
Dennis N. Genty 48,930 -- $ -- --
</TABLE>
(1) Value is based on the difference between the stock option exercise price
and the closing price of the Common Stock on the Nasdaq National Market on
December 31, 1999 of $1.38 per share. The stock price on December 31, 1999
was less than the exercise price of all outstanding options.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No executive officer of the Company currently serves as a member of the board of
directors or compensation committee of any entity that has one or more executive
officers serving as a member of the Board of Directors or as an executive
officer of the Company. See "Director and Executive Compensation" and "Certain
Transactions" for a description of transactions between the Company and members
of the Board of Directors.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Currently, the entire Board of Directors makes all determinations with respect
to executive officer compensation. The following report is submitted by the
Board of Directors of the Company, in its capacity as Compensation Committee,
pursuant to rules established by the Securities and Exchange Commission, and
provides certain information regarding compensation of the Company's executive
officers.
The Compensation Committee is responsible for establishing and administering a
general compensation policy and program for the Company. The Compensation
Committee also possesses all of the powers of administration under the Company's
employee benefit plans, including all stock option plans and other employee
benefit plans. Subject to the provisions of those plans, the Compensation
Committee must determine the individuals eligible to participate in the plans,
the extent of such participation and the terms and conditions under which
benefits may be vested, received or exercised.
Compensation Policies. The Company's executive compensation policies are
designed to complement the Company's business objectives by motivating and
retaining quality members of senior management, by aligning management's
interests with those of the Company's shareholders and by linking total
compensation to the performance of the Company. The Company's executive
compensation policies generally consist of equity-based long-term incentives,
short-term incentives and competitive base salaries. The Compensation Committee
will continue to monitor the performance of the Company and its executive
officers in reassessing executive compensation.
8
<PAGE> 12
Base Salary. The Compensation Committee reviews the base salaries of the
Company's executive officers on an annual basis. Base salaries are determined
based upon a subjective assessment of the nature and responsibilities of the
position involved, the performance of the particular officer and of the Company,
the officer's experience and tenure with the Company and base salaries paid to
persons in similar positions with companies comparable to the Company.
Annual Bonus. Annual bonuses may be paid to the Company's executive officers at
the discretion of the Compensation Committee. The Compensation Committee did not
grant any such bonuses to executive officers during 1999.
Long-Term Incentives. The Company's long-term compensation strategy is focused
on the grant of stock options under the stock option plans and warrants, which
the Compensation Committee believes rewards executive officers for their efforts
in improving long-term performance of the Common Stock and creating value for
the Company's shareholders, and which the Compensation Committee believes aligns
the financial interests of management with those of the Company's shareholders.
During 1999, the Compensation Committee did not grant stock options to the
executive officers.
Chief Executive Officer Compensation for Fiscal Year 1999. The compensation for
Frederic W.J. Birner during 1999 consisted solely of his base salary. After a
review of salaries for chief executive officers of the dental practice
management companies of similar size and performance, Mr. Birner was granted an
increase in his base salary to an amount approximating the middle of the range
of those salaries reviewed. Mr. Birner did not receive a cash bonus during 1999.
COMPENSATION COMMITTEE
Frederic W.J. Birner
Mark A. Birner, D.D.S.
Dennis N. Genty
James M. Ciccarelli
Steven M. Bathgate
9
<PAGE> 13
PERFORMANCE GRAPH
The following line graph compares the percentage change from date of public
offering (February 11, 1998) through December 31, 1999 for (i) the Common Stock,
(ii) a peer group (the "Peer Group") of companies selected by the Company that
are predominantly dental management companies located in the United States, and
(iii) Nasdaq Composite Index. The companies in the Peer Group are American
Dental Partners, Castle Dental Centers, Coast Dental, Interdent Inc., Monarch
Dental and Pentegra Dental.
[THE FOLLOWING TABLE WAS REPRESENTED BY
A LINE GRAPH IN THE PRINTED MATERIAL]
Comparison of Total Returns*
<TABLE>
<CAPTION>
Description February 11, 1998 December 31, 1999
- ----------- ----------------- -----------------
<S> <C> <C>
Birner Dental Management Services, $100 (60.70)%
Inc.
Nasdaq Composite Index $100 80.66 %
Peer Group $100 (43.91)%
</TABLE>
- -----------------------
*Total return based on $100 initial investment and reinvestment of dividends
SECTION 16 REPORTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
directors, executive officers and beneficial owners of more than 10% of the
outstanding shares of the Company to file with the Securities and Exchange
Commission reports regarding changes in their beneficial ownership of shares in
the Company. To the Company's knowledge and based solely on a review of the
Section 16(a) reports furnished to the Company, Mr. Genty was late in filing his
Statement of Changes in Beneficial Ownership on Form 4 for the month of August
1999. All other Section 16(a) reports were filed on a timely basis.
10
<PAGE> 14
SHAREHOLDER PROPOSALS
Shareholder proposals for inclusion in the Company's proxy materials relating to
the next annual meeting of shareholders must be received by the Company on or
before January 8, 2001.
1999 ANNUAL REPORT ON FORM 10-K
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1999
ACCOMPANIES THIS PROXY STATEMENT AND WAS FILED ELECTRONICALLY WITH THE
SECURITIES AND EXCHANGE COMMISSION. SHAREHOLDERS WHO WISH TO OBTAIN, WITHOUT
CHARGE, A COPY OF THE COMPANY'S ANNUAL REPORT (WITHOUT EXHIBITS) ON FORM 10-K
SHOULD ADDRESS A WRITTEN REQUEST TO DENNIS N. GENTY, CHIEF FINANCIAL OFFICER,
SECRETARY AND TREASURER, BIRNER DENTAL MANAGEMENT SERVICES, INC., 3801 EAST
FLORIDA AVENUE, SUITE 508, DENVER, COLORADO 80210. THE COMPANY WILL PROVIDE
COPIES OF THE EXHIBITS TO THE FORM 10-K UPON PAYMENT OF A REASONABLE FEE.
OTHER BUSINESS
As of the date of this Proxy Statement, management was not aware of any business
not described above would be presented for consideration at the Meeting. If any
other business properly comes before the Meeting, it is intended that the shares
represented by proxies will be voted in respect thereto in accordance with the
judgment of the persons voting them.
The above Notice and Proxy Statement are sent by order of the Board of
Directors.
/s/ Dennis N. Genty
--------------------------------------
DENNIS N. GENTY
Chief Financial Officer, Secretary and
Treasurer
Denver, Colorado
May 8, 2000
11
<PAGE> 15
PROXY PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 8, 2000
The undersigned hereby appoints Frederic W.J. Birner, Mark A. Birner, D.D.S. and
Dennis N. Genty, and each of them, proxies of the undersigned, with full power
of substitution, to vote all shares of Common Stock of Birner Dental Management
Services, Inc., which the undersigned is entitled to vote, at the Annual Meeting
of Shareholders (the "Meeting") to be held on Thursday, June 8, 2000, at 10:00
a.m., Mountain Time, at the Company's offices, 3801 East Florida Avenue, Suite
508, Denver, Colorado, and at any and all adjournments thereof for the following
purposes:
(1) Election of Class III Directors:
[ ] FOR the nominees listed below (except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY to vote for the nominees listed below
Frederic W.J. Birner Mark A. Birner, D.D.S.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THE NOMINEE'S NAME ON THE LINE IMMEDIATELY BELOW.)
- -----------------------------------------------------------
(2) Approval and Ratification of Arthur Andersen LLP as the Company's
independent auditors for the fiscal year Ending December 31, 2000:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) In their discretion, the proxies are authorized to vote upon such other
business as properly may come before the Meeting.
<PAGE> 16
(back of card)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER (S). IF NO DIRECTION IS INDICATED, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING "FOR" ELECTION OF THE
NOMINEES FOR DIRECTOR AS SELECTED BY THE BOARD OF DIRECTORS AND "FOR" APPROVAL
AND RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE COMPANY'S
INDEPENDENT AUDITORS.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and the Proxy Statement furnished therewith. The undersigned hereby
revokes any proxies given prior to the date reflected below.
Dated
, 2000
--------------------------------
--------------------------------------
--------------------------------------
SIGNATURE(S) OF SHAREHOLDER(S)
Please complete, date and sign exactly
as your name appears hereon. If shares
are held jointly, each holder should
sign. When signing as attorney,
executor, administrator, trustee,
guardian or corporate official, please
add your title.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. PLEASE SIGN AND
RETURN THIS PROXY IN THE ENCLOSED, SELF-ADDRESSED ENVELOPE TO AMERICAN
SECURITIES TRANSFER & TRUST, INC., AS AGENT FOR THE COMPANY. THE GIVING OF A
PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
2
