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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/ / Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2)
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
UNIVERSAL HEALTH 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/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
- ---------------
(1)Set forth the amount on which the filing fee is calculated and state how
it was determined.
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[LOGO]
UNIVERSAL HEALTH SERVICES, INC.
UNIVERSAL CORPORATE CENTER
367 SOUTH GULPH ROAD
KING OF PRUSSIA, PENNSYLVANIA 19406
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 17, 1995
Notice is hereby given that the Annual Meeting of Stockholders of Universal
Health Services, Inc. (the "Company") will be held on Wednesday, May 17, 1995 at
10:00 a.m., at the offices of the Company, Universal Corporate Center, 367 South
Gulph Road, King of Prussia, Pennsylvania for the following purposes:
(1) To have the holders of Class A and Class C Common Stock elect one Class
II director and to have the holders of Class B and Class D Common Stock
elect one Class II director, both directors to serve for a term of
three years until the annual election of directors in 1998 and election
and qualification of their respective successors.
(2) To have the holders of Class A, B, C and D Common Stock vote upon the
proposal to adopt the Amendment to the 1992 Stock Option Plan, adopted
by the Board of Directors of the Company.
(3) To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only stockholders of record at the close of business on April 7, 1995, are
entitled to vote at the Annual Meeting.
All stockholders are cordially invited to attend the meeting in person. IN
ANY EVENT, PLEASE MARK YOUR VOTES, THEN DATE AND SIGN THE ENCLOSED FORM OF PROXY
AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE WHETHER OR NOT YOU
CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING. YOU MAY REVOKE YOUR PROXY IF YOU
DECIDE TO ATTEND THE ANNUAL MEETING AND WISH TO VOTE YOUR SHARES IN PERSON.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ SIDNEY MILLER
-----------------------
SIDNEY MILLER
Secretary
King of Prussia, Pennsylvania
April 20, 1995
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UNIVERSAL HEALTH SERVICES, INC.
UNIVERSAL CORPORATE CENTER
367 SOUTH GULPH ROAD
KING OF PRUSSIA, PA 19406
PROXY STATEMENT
GENERAL
This Proxy Statement (first mailed to stockholders on or about April 20,
1995) is furnished in connection with the solicitation by the Board of Directors
of Universal Health Services, Inc. (the "Company") of proxies for use at the
Annual Meeting of Stockholders, or at any adjournment thereof. The meeting will
be held on Wednesday, May 17, 1995 at 10:00 a.m., at the offices of the Company,
Universal Corporate Center, 367 South Gulph Road, King of Prussia, Pennsylvania.
The Annual Meeting is being held (1) to have the holders of Class A and C Common
Stock elect one Class II director of the Company and to have the holders of
Class B and D Common Stock elect one Class II director of the Company, both of
whom will serve for terms of three years until the annual election of directors
in 1998 and the election and qualification of their respective successors; (2)
to have the holders of Class A, B, C and D Common Stock vote upon the proposal
to adopt the Amendment to the 1992 Stock Option Plan, which was adopted by the
Board of Directors of the Company; and (3) to transact such other business as
may properly be brought before the meeting or any adjournment thereof.
A copy of the Company's Annual Report to Stockholders, including financial
statements for the year ended December 31, 1994, is enclosed herewith.
A separate form of Proxy applies to the Company's Class A and Class C
Common Stock and a separate form of Proxy applies to the Company's Class B and
Class D Common Stock. Enclosed is a Proxy for the shares of stock held by you on
the record date. Unless otherwise indicated on the Proxy, shares represented by
any Proxy will, if the Proxy is properly executed and received by the Company
prior to the Annual Meeting, be voted FOR each of the nominees for directors and
FOR the approval of the Amendment to the 1992 Stock Option Plan. Any Proxy
executed and returned to the Company is revocable by delivering a later signed
and dated Proxy or other written notice to the Secretary of the Company at any
time prior to its exercise. A Proxy is also subject to revocation if the person
executing the Proxy is present at the meeting and chooses to vote in person.
VOTING
Only stockholders of record as of the close of business on April 7, 1995
are entitled to vote at the Annual Meeting. On that date, 1,090,527 shares of
Class A Common Stock, par value $.01 per share, 109,622 shares of Class C Common
Stock, par value $.01 per share, 12,718,181 shares of Class B Common Stock, par
value $.01 per share, and 21,953 shares of Class D Common Stock, par value $.01
per share, were outstanding.
The Company's Restated Certificate of Incorporation provides that, with
respect to the election of directors, holders of Class A Common Stock vote as a
class with the holders of Class C Common Stock, and holders of Class B Common
Stock vote as a class with holders of Class D Common Stock, with holders of all
classes of Common Stock entitled to one vote per share. Each holder of Class A
Common Stock may cumulate his votes for directors giving one candidate a number
of votes equal to the number of directors to be elected, multiplied by the
number of shares of Class A Common Stock, or he may distribute his votes on the
same principle among as many candidates as he shall see fit. For a holder of
Class A Common Stock to
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exercise his cumulative voting rights, the stockholder must give notice at the
meeting of his intention to cumulate his votes.
As to matters other than the election of directors, including the approval
of the Amendment to the 1992 Stock Option Plan, the Company's Restated
Certificate of Incorporation provides that holders of Class A, Class B, Class C
and Class D Common Stock all vote together as a single class. Each share of
Class A Common Stock entitles the holder thereof to one vote; each share of
Class B Common Stock entitles the holder thereof to one-tenth of a vote; each
share of Class C Common Stock entitles the holder thereof to 100 votes (provided
the holder of Class C Common Stock holds a number of shares of Class A Common
Stock equal to ten times the number of shares of Class C Common Stock that
holder holds); and each share of Class D Common Stock entitles the holder
thereof to ten votes (provided the holder of Class D Common Stock holds a number
of shares of Class B Common Stock equal to ten times the number of shares of
Class D Common Stock that holder holds). In the event a holder of Class C or
Class D Common Stock holds a number of shares of Class A or Class B Common
Stock, respectively, less than ten times the number of shares of Class C or
Class D Common Stock that holder holds, then that holder will be entitled to
only one vote for every share of Class C, or one-tenth of a vote for every share
of Class D Common Stock, which that holder holds in excess of one-tenth the
number of shares of Class A or Class B Common Stock, respectively, held by that
holder. The Board of Directors, in their discretion, may require beneficial
owners to provide satisfactory evidence that such owner holds ten times as many
shares of Class A or Class B Common Stock as Class C or Class D Common Stock,
respectively, if such facts are not apparent from the stock records of the
Company.
Stockholders entitled to vote for the election of directors can withhold
the authority to vote for any one or more nominees. Nominees receiving a
plurality of the votes cast will be elected. Abstention from the vote to
consider the adoption of the Amendment, or the approval of such other matters as
may properly come before the meeting, or any adjournment thereof, are treated as
votes against the proposal. Broker non-votes are treated as shares as to which
the beneficial owners have withheld voting authority and therefore as shares not
entitled to vote on the matter, thereby making it easier to obtain the approval
of holders of a majority of the aggregate voting power of the shares entitled to
vote as is required for approval of the various proposals.
As of April 7, 1995, the shares of Class A and Class C Common Stock
constituted 8.6% of the aggregate outstanding shares of the Company's Common
Stock, had the right to elect five members of the Board of Directors and
constituted 89% of the general voting power of the Company; and as of that date
the shares of Class B and Class D Common Stock constituted 91.4% of the
outstanding shares of the Company's Common Stock, had the right to elect two
members of the Board of Directors and constituted 11% of the general voting
power of the Company.
As of February 15, 1995, the Company's current directors and officers as a
group owned of record or beneficially 1,086,777 shares of Class A Common Stock,
167,446 shares of Class B Common Stock (excluding shares issuable upon exercise
of options), 108,867 shares of Class C Common Stock and 415 shares of Class D
Common Stock, representing 99.7%, 1.3%, 99.3% and 1.8%, respectively, of the
outstanding shares of each class and constituting 88.5% of the general voting
power of the Company on that date. Holders of approximately 1,080,577 shares of
Class A Common Stock and 108,092 shares of Class C Common Stock, constituting
99.1% of the outstanding Class A Common Stock, 98.6% of the outstanding Class C
Common Stock and 87.8% of the general voting power of the Company, have agreed
pursuant to a Stockholders Agreement, dated September 26, 1985, as amended, to
vote their shares of Class A Common Stock and Class C Common Stock to approve or
disapprove such matters as shall be presented to the stockholders of the Company
for approval in accordance with written instructions from Alan B. Miller
relating to: (a) a merger or consolidation of the Company with or into any other
individual, corporation, partnership or other person or entity other than a
merger or consolidation pursuant to which the Company is the continuing
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corporation and the result of which is not a sale, transfer or other disposition
of or a modification of the form of ownership of the Company as it exists on the
date of such Agreement; (b) any sale, lease, exchange, transfer or other
disposition, including without limitation a mortgage or other security device,
of all or any substantial part of the assets of the Company (including without
limitation any voting securities of a subsidiary of the Company) or of a
subsidiary (which assets of the subsidiary constitute a substantial part of the
assets of the Company) to any other individual, corporation, partnership or
other person or entity; (c) the election of directors; or (d) any agreement,
contract or other arrangement providing for any of the transactions described
above.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of February 15, 1995 the number of shares
of equity securities of the Company and the percentage of each class owned
beneficially, within the meaning of Securities and Exchange Commission Rule
13d-3, and the percentage of the general voting power of the Company currently
held, by (i) all stockholders known by the Company to own more than 5% of any
class of the Company's equity securities, (ii) all directors of the Company who
are stockholders, (iii) the executive officers named in the Summary Compensation
Table and (iv) all directors and executive officers as a group. Except as
otherwise specified, the named beneficial owner has sole voting and investment
power.
PERCENTAGE
CLASS A CLASS B CLASS C CLASS D OF GENERAL
NAME AND ADDRESS OF COMMON COMMON COMMON COMMON VOTING
BENEFICIAL OWNER(1) STOCK(2) STOCK(2) STOCK(2) STOCK(2) POWER(3)
- ------------------------------- --------- -------------------- --------- -------- ----------
Martin Meyerson
University of Pennsylvania 9,879 (4)(5)(12) 100(5) (5)
225 Van Pelt Library
Philadelphia, PA 19103
Alan B. Miller(6) 1,017,508 1,186,332 (4)(12) 101,730 82.6%
(93.3%) (8.5%) (92.8%)
Sidney Miller(6) 60,843 97,754 (4)(5)(7) 6,088 5.0%
(5.6%) (5.6%)
Anthony Pantaleoni(6) 2,226(5) 6,710 (4)(5)(8) 274(5) 140(5)(8) (5)
Fulbright & Jaworski, L.L.P. (12)
666 Fifth Avenue
New York, NY 10103
Leonard W. Cronkhite, Jr., M.D. 2,625 (5)(12) (5)
11 Quarry Road
Brunswick, ME 04011
Robert H. Hotz 625 (5)(12) (5)
Dillon Read, and Co., Inc.
535 Madison Avenue
New York, NY 10022
John H. Herrell 625 (5)(12) (5)
Mayo Clinic
200 First Street, SW
Rochester, MN 55905
Kirk E. Gorman 24,582 (5) (5)
Michael G. Servais 21,788 (5)(12) (5)
Richard C. Wright 6,200(5) 17,303 (4)(5) 775(5) 175(5) (5)
Steve G. Filton 12,459 (5)(12) (5)
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PERCENTAGE
CLASS A CLASS B CLASS C CLASS D OF GENERAL
NAME AND ADDRESS OF COMMON COMMON COMMON COMMON VOTING
BENEFICIAL OWNER(1) STOCK(2) STOCK(2) STOCK(2) STOCK(2) POWER(3)
- ------------------------------------- --------- --------- --------- -------- ----------
The Bass Management Trust
and Other Related Parties 987,100 (9) (5)
c/o W. Robert Cotham (7.8%)
201 Main Street, Suite 2600
Fort Worth, TX 76102
Neuberger & Berman 861,857 (10) (5)
605 Third Avenue (6.8%)
New York, NY 10158
FMR Corp. 1,505,800 (11) 1.1%
82 Devonshire Street (11.8%)
Boston, MA 02109
All directors & executive officers 1,086,777 1,427,380 (12) 108,867 415 88.5%
as a group (12 persons) (99.7%) (10.2%) (99.3%) (1.8)%
- ---------------
(1) Unless otherwise shown, the address of each beneficial owner is c/o
Universal Health Services, Inc., Universal Corporate Center, 367 South
Gulph Road, King of Prussia, PA 19406.
(2) Each share of Class A, Class C and Class D Common Stock is convertible at
any time into one share of Class B Common Stock.
(3) As to matters other than the election of directors, holders of Class A,
Class B, Class C and Class D Common Stock vote together as a single class.
Each share of Class A Common Stock entitles the holder thereof to one vote;
each share of Class B Common Stock entitles the holder thereof to one-tenth
of a vote; each share of Class C Common Stock entitles the holder thereof
to 100 votes (provided the holder of Class C Common Stock holds a number of
shares of Class A Common Stock equal to ten times the number of shares of
Class C Common Stock that holder holds); and each share of Class D Common
Stock entitles the holder thereof to ten votes (provided the holder of
Class D Common Stock holds a number of shares of Class B Common Stock equal
to ten times the number of shares of Class D Common Stock that holder
holds).
(4) Includes shares issuable upon the conversion of Classes A, C and/or D
Common Stock.
(5) Less than 1%.
(6) Messrs. Alan B. Miller, Sidney Miller, and Anthony Pantaleoni have entered
into a Stockholders Agreement pursuant to which they have agreed to vote
their shares of Classes A and C Common Stock with respect to certain
matters as directed by Alan B. Miller. Parties to this Stockholders
Agreement beneficially own an aggregate of 1,080,577 shares of Class A
Common Stock and 108,092 shares of Class C Common Stock, constituting 87.8%
of the general voting power of the Company.
(7) Includes 30,000 shares of Class B Common Stock which are beneficially owned
by Mr. Miller's spouse.
(8) Includes 1,445 shares of Class B Common Stock and 140 shares of Class D
Common Stock which are beneficially owned by Mr. Pantaleoni and are held by
Mr. Pantaleoni in trust for the benefit of certain members of his family.
(9) These securities are held by The Bass Management Trust, Perry R. Bass,
Nancy L. Bass, Sid R. Bass Management Trust, Sid R. Bass and Lee M. Bass.
Information is based on Schedule 13D dated October 26, 1994.
(10) These securities are held by Neuberger & Berman, as investment advisor and
broker dealer manager of assets for individuals and various pension plans
and accounts. Information is based on Amendment No. 4 to Schedule 13G dated
February 10, 1995.
(11) These securities are held by FMR Corp., a parent holding company.
Information is based on Schedule 13G dated February 13, 1995.
(12) Includes 63,875 shares issuable pursuant to stock options to purchase Class
B Common Stock held by directors and officers of the Company and
exercisable within 60 days of February 15, 1995 as follows: Alan B. Miller
(50,000); Anthony Pantaleoni (625); Thomas J. Bender (1,250); Michael G.
Servais (7,250); Martin Meyerson (625); Leonard W. Cronkhite, Jr., M.D.
(625); Steve G. Filton (2,250); Robert H. Hotz (625); and John H. Herrell
(625).
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation provides for a Board of
Directors of not fewer than three members nor more than nine members. The Board
of Directors is currently fixed at seven members, and is divided into three
classes, with members of each class serving for a three-year term. At each
Annual Meeting of Stockholders, directors are chosen to succeed those in the
class whose term expires at such Annual Meeting. Under the Company's Restated
Certificate of Incorporation, holders of shares of the Company's outstanding
Class B and Class D Common Stock are entitled to elect 20% (but not less than
one) of the directors, currently two directors, one in each of Class II and
Class III, and the holders of Class A and Class C Common Stock are entitled to
elect the remaining directors, currently five directors, two in Class I, one in
Class II, and two in Class III.
The persons listed below currently constitute the Company's Board of
Directors. The term of the Class II directors, Mr. Anthony Pantaleoni and Mr.
Robert H. Hotz, expire at the 1995 Annual Meeting. Mr. Anthony Pantaleoni has
been nominated to be elected by the holders of Class A and Class C Common Stock,
and Mr. Robert H. Hotz has been nominated to be elected by the holders of Class
B and Class D Common Stock. The Company has no reason to believe that either of
the nominees will be unavailable for election; however, if either of the
nominees becomes unavailable for any reason, the shares represented by the Proxy
will be voted for the person, if any, who is designated by the Board of
Directors to replace the nominee. Both nominees have consented to be named and
have indicated their intent to serve if elected.
The following information is furnished with respect to each of the nominees
for election as a director and each member of the Board of Directors whose term
of office will continue after the meeting.
CLASS OF PRINCIPAL OCCUPATION
CLASS OF STOCKHOLDERS DURING THE LAST DIRECTOR
NAME DIRECTOR ENTITLED TO VOTE AGE FIVE YEARS SINCE
- --------------------------- -------- ----------------- --- ------------------------------------- --------
NOMINEES FOR TERMS
EXPIRING IN 1998
- ------------------
Anthony Pantaleoni......... II A Common 55 Partner in the law firm of Fulbright 1982
C Common & Jaworski L.L.P., New York, New York
since 1970. Director of Faircom Inc.,
Martech USA, Inc., AAON, Inc. and
Westwood Corporation. The Company
utilized during the year ended
December 31, 1994 and currently
utilizes the services of Fulbright &
Jaworski L.L.P. as counsel.
Robert H. Hotz............. II B Common 50 Managing Director, Member of the 1991
D Common Operating Committee and Co-Head of
Corporate Finance at Dillon, Read &
Co., Inc. Prior thereto, Senior
Executive Vice President and Head of
Corporate Finance at Smith Barney,
Harris Upham & Co. Director of
Heckler Manufacturing and Investment
Group, Inc., Dillon, Read & Co., Inc.
and Mikasa, Inc.
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CLASS OF PRINCIPAL OCCUPATION
CLASS OF STOCKHOLDERS DURING THE LAST DIRECTOR
NAME DIRECTOR ENTITLED TO VOTE AGE FIVE YEARS SINCE
- --------------------------- -------- ----------------- --- ------------------------------------- --------
DIRECTORS WHOSE TERMS
EXPIRE IN 1996
- ---------------------
Alan B. Miller............. III A Common 57 Chairman of the Board, President and 1978
C Common Chief Executive Officer of the
Company since 1978. Prior thereto,
President, Chairman of the Board and
Chief Executive Officer of American
Medicorp, Inc. Trustee of Universal
Health Realty Income Trust. Director
of GMIS Inc., Genesis Health
Ventures, Penn Mutual Life Insurance
Company and CDI Corp.
Sidney Miller.............. III A Common 68 Secretary of the Company since 1990. 1978
C Common Assistant to the President during
1993 and 1994. Prior thereto,
Executive Vice President of the
Company since 1983, Senior Vice
President of the Company since 1982
and Vice President of the Company
since 1978; Prior thereto, Vice
President -- Financial Services and
Control of American Medicorp, Inc.
Leonard W. Cronkhite, Jr.,
M.D. .................... III B Common 75 Retired as President of MCW Research 1982
D Common Foundation, a medical organization, a
position he held since 1984.
President of the Medical College of
Wisconsin from 1977 to 1984. Director
of Nancy Sayles Day Foundation,
Bigelow Laboratories for Ocean
Science, and Senior Member, Institute
of Medicine.
DIRECTORS WHOSE TERMS
EXPIRE IN 1997
- ---------------------
Martin Meyerson............ I A Common 72 Chairman, University of Pennsylvania 1985
C Common Foundation, and President Emeritus
and University Professor, University
of Pennsylvania, since 1981;
President, University of Pennsylvania
from 1970 to 1981. Director of Penn
Mutual Life Insurance Company, Avatar
Holdings, Inc., First Fidelity
Bancorporation (honorary) and Saint
Gobain Corp. and its operating
companies, CertainTeed and Norton;
founding board member, the
International Centre for the study of
East Asian Development (Japan);
Honorary President, International
Association of Universities (Paris);
President of the Foundation for the
International Exchange of Scientific
and Cultural Information by
Telecommunications (Switzerland and
U.S.); Senior Advisor, Taylor
International.
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CLASS OF PRINCIPAL OCCUPATION
CLASS OF STOCKHOLDERS DURING THE LAST DIRECTOR
NAME DIRECTOR ENTITLED TO VOTE AGE FIVE YEARS SINCE
- --------------------------- -------- ----------------- --- ------------------------------------- --------
John H. Herrell............ I A Common 54 Vice President and Chief 1993
C Common Administrative Officer of Mayo
Foundation since 1993. Prior thereto,
Chief Financial Officer of Mayo
Foundation since 1984 and various
other capacities since 1968. Chairman
of the Board of Kahler Realty
Corporation, and a member of the
Board of Advisory Directors, First
Trust National Association, an
affiliate of the First Bank System,
Inc.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission and the New York Stock Exchange initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the Company. Dr. Martin Meyerson and Dr. Leonard W. Cronkhite, Jr.
each made a late filing on Form 4.
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PROPOSAL NO. 2
ADOPTION OF AMENDMENT TO THE 1992 STOCK OPTION PLAN
On December 27, 1994, the Board of Directors of the Company adopted an
amendment (the "Amendment") to the 1992 Stock Option Plan (the "1992 Plan"),
subject to stockholder approval. The Amendment will increase the number of
shares of Class B Common Stock that may be issued under the 1992 Plan from
400,000 to 1,000,000 shares. In addition, the Amendment limits the number of
shares of Class B Common Stock that may be issued under the 1992 Plan to 200,000
per person. The Amendment will become effective only if approved by stockholders
representing a majority of the aggregate voting power of the shares of
outstanding Common Stock present and entitled to vote at the meeting. The
essential features of the Amendment are summarized below.
As of December 27, 1994, 196,599 options had been granted under the
Company's 1985 Stock Option Plan and the 1992 Plan and had not been canceled,
and therefore the number of shares of Class B Common Stock available for future
grants under the 1992 Plan was 206,350. On December 27, 1994, 507,000 options
were granted subject to stockholder approval of the Amendment. The Company
believes that the Amendment offers more flexibility to the Company in the
granting of options and that adoption of the Amendment is necessary to aid the
Company in attracting and retaining officers and employees who are in a position
to contribute materially to the successful conduct of the Company's business and
affairs. The Amendment is intended to furnish additional incentives whereby
present and future officers and employees may be encouraged to acquire, or to
increase their holdings of, the Company's Class B Common Stock. The limit on the
number of options which may be granted to any one person annually is necessary
so that options under the 1992 Plan will constitute performance based
compensation under certain provisions of the Internal Revenue Code of 1986.
507,000 options have been granted under the 1992 Plan, as amended, subject
to stockholder approval of the Amendment. The table below indicates grants of
options which have been granted, subject to stockholder approval, to the named
persons and to the indicated groups of persons. Other awards under the 1992
Plan, as amended, are not yet determinable. The closing price of the Company's
Class B Common Stock on the New York Stock Exchange on April 6, 1995 was
$25.125. The dollar value listed below is the excess of the closing price of the
Company's Class B Common Stock on April 6, 1995 over the exercise price of the
options.
PLAN BENEFITS GRANTED TO DATE
1992 STOCK OPTION PLAN, AS AMENDED
NAME AND POSITION DOLLAR VALUE($) NUMBER OF OPTIONS
- ---------------------------------------------- --------------- -----------------
Alan B. Miller $ 373,750 130,000
Kirk E. Gorman $ 115,000 40,000
Richard C. Wright $ 92,000 32,000
Michael G. Servais $ 71,875 25,000
Steve G. Filton $ 63,250 22,000
All Current Executives as a Group $ 779,125 271,000
Non-Executive Directors as a Group $ -0- -0-
Non-Executive Officers, Employees as a Group $ 678,500 236,000
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DESCRIPTION OF THE 1992 PLAN
The 1992 Plan, as amended, permits the granting of options to purchase an
aggregate of 1,000,000 shares of the Company's Class B Common Stock to key
employees of and consultants to the Company or any of its subsidiaries. As of
December 31, 1994, approximately 100 employees were eligible to participate in
the 1992 Plan. As of April 6, 1995, the closing price of the Class B Common
Stock as quoted on the New York Stock Exchange was $25.125. Directors who
perform services for the Company solely in their capacities as directors are not
eligible to receive options under the 1992 Plan. The number of shares which may
be issued under the 1992 Plan is subject to anti-dilution adjustments. Options
granted under the 1992 Plan will not qualify as incentive stock plans under the
federal income tax law.
The 1992 Plan is administered by the Compensation and Stock Option
Committee (the "Committee"), consisting of at least two members of the Board of
Directors, chosen by the Board of Directors. No member of the Committee may
receive an option under the 1992 Plan within one year prior to his or her
becoming a member or at any time while he or she is a member. Subject to the
provisions of the 1992 Plan, the Committee has the authority to determine the
individuals to whom stock options will be granted, the number of shares to be
covered by each option, the option price, the type of option, the option period,
the vesting restrictions, if any, with respect to the exercise of the option,
the terms for the payment of the option price and other terms and conditions.
Payment for shares acquired upon exercise of an option may be made (as
determined by the Committee) in cash, by promissory note or by shares of Class B
Common Stock.
All options must expire no later than ten years from the date of grant. In
general, except as otherwise provided by the Committee, no option may be
exercised after the termination of the optionee's service with the Company and
subsidiaries. However, the option exercise is extended to twelve months after
termination if the optionee's service is terminated by reason of disability or
death.
Options may not be transferred during the lifetime of an optionee. Subject
to certain limitations set forth in the 1992 Plan and applicable law, the Board
of Directors may amend or terminate the 1992 Plan. In any event, no stock
options may be granted under the 1992 Plan after July 15, 2002.
FEDERAL INCOME TAX CONSEQUENCES
Set forth below is a summary of the federal income tax consequences
associated with options granted under the 1992 Plan. There are numerous special
rules that are not discussed below but that should be considered by optionees
before exercising an option or selling stock acquired upon the exercise of an
option.
In general, the holder of an option realizes ordinary income when the
option is exercised equal to the excess of the value of the stock over the
exercise price (i.e., the option spread), and the Company receives a
corresponding deduction. (If the optionee is subject to the six-month
restrictions on sale of Common Stock under Section 16(b) of the Securities
Exchange Act of 1934, the optionee generally recognizes ordinary income on the
date the restrictions lapse, unless an early income recognition election is
made.) Upon a later sale of the stock, the optionee realizes capital gain or
loss equal to the difference between the selling price and the value of the
stock at the time the option was exercised.
In general, if an optionee delivers previously-owned shares in payment of
the exercise price of an option, no gain or loss will be recognized on the
exchange of the previously-owned shares for an equivalent number of newly issued
shares. The optionee will realize ordinary income equal to the amount by which
the fair market value of the Class B Common Stock received exceeds the exercise
price (as if the exercise price were paid in cash). The rules relating to the
use of previously-owned shares to exercise stock options are complicated.
Optionees should consult their own tax advisors before any such exercise and/or
before making a disposition of Common Stock acquired upon the exercise of an
option with previously-owned shares.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 2 TO BE IN THE BEST INTERESTS OF
THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
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EXECUTIVE COMPENSATION
The following table shows all the cash compensation paid or to be paid by
the Company as well as certain other compensation paid or accrued, during the
fiscal years indicated, to the Chairman of the Board, President, and Chief
Executive Officer and the four highest paid executive officers of the Company
for such period in all capacities in which they served.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------------- ----------------------- ALL OTHER
OTHER RESTRICTED SECURITIES COMPEN-
ANNUAL STOCK UNDERLYING SATION
FISCAL COMPENSATION ($) AWARDS ($) OPTIONS ($)
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) (a) (b) (#) (c)
- ------------------------------- ------ ---------- --------- ---------------- ---------- ---------- ---------
Alan B. Miller, Chairman of the
Board, President, and Chief
Executive Officer............ 1994 $750,000 $336,000 $ 4,588 $103,987 130,000 $11,882
1993 710,004 340,800 4,102 94,767 0 11,821
1992 683,280 273,312 1,992,269 68,328 100,000 11,754
Kirk E. Gorman, Senior Vice
President, Treasurer and
Chief Financial Officer...... 1994 $216,246 $ 80,000 $ 54,785 $ 24,554 40,000 $ 2,310
1993 202,998 77,952 0 21,663 0 2,249
1992 194,565 62,264 28,125 15,566 0 1,946
Richard C. Wright,
Vice President............... 1994 $158,664 $118,000 $ 6,828 $ 28,256 32,000 $ 2,310
1993 150,552 104,577 1,095 25,359 0 2,249
1992 142,161 84,586 40,108 21,146 0 2,182
Michael G. Servais,
Vice President............... 1994 $172,500 $ 43,200 $ 0 $115,526 30,000 $ 2,265
1993 145,000 73,950 0 20,216 2,000 2,249
1992 125,831 0 0 42,750 0 1,258
Steve G. Filton,
Vice President............... 1994 $150,000 $ 48,000 $ 10,852 $ 15,964 22,000 $ 2,250
1993 139,998 53,900 0 15,040 3,000 2,074
1992 127,998 23,040 5,750 5,760 0 1,920
- ---------------
(a) Other annual compensation for Mr. Alan B. Miller includes: (i) $630,750 in
1992 related to amounts forgiven under a 6.97% promissory note executed in
connection with the grant in 1985 of restricted stock (a "1985 Stock Grant
Loan"), (ii) $392,927 in 1992 related to forgiveness of principal under a
non-interest bearing demand note, (iii) $272,714 in 1992 related to
forgiveness of principal under loans made in connection with the exercise of
stock options ("Option Loans"), (iv) $45,370 in 1992 related to interest
credited on the 1985 Stock Grant Loan, (v) $630,094 in 1992 for income tax
reimbursements related to the loan amounts forgiven and (vi) $4,588 in 1994,
$4,102 in 1993 and $20,414 in 1992 for other compensation. Other annual
compensation for Mr. Richard C. Wright includes: (i) $21,750 in 1992 related
to amounts forgiven under a 6.97% promissory note executed in connection
with a 1985 Stock Grant Loan, (ii) $3,265 in 1992 related to interest
credited on the 1985 Stock Grant Loan, (iii) $13,050 in 1992 for income tax
reimbursements related to the loan amounts forgiven and (vi) $6,828 in 1994,
$1,095 in 1993 and $2,043 in 1992 related to forgiveness of principal under
Option Loans. Other annual
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compensation for Messrs. Gorman and Filton in 1994 and 1992 represents
forgiveness of principal under Option Loans.
(b) Restricted stock awards represent (i) the value of Class B Common Stock
received by those executives in lieu of cash payments pursuant to the
Company's 1992 Stock Bonus Plan ("Bonus Shares"), (ii) the vested portion of
additional restricted shares ("Premium Shares") equal to 20% of the Bonus
Shares and (iii) the value of the Class B Common Stock issued in connection
with the 1990 Employee's Restricted Stock Purchase Plan (the "1990 Plan").
Restrictions on one-half of the Bonus Shares and the Premium Shares lapse
after one year and restrictions on the remaining shares lapse after two
years. Restrictions lapse as to one-third of the shares granted in 1992
under the 1990 Plan, in each of 1995, 1996 and 1997; and restrictions lapse
as to one-third of the shares granted in 1994 under the 1990 Plan, in each
of 1997, 1998 and 1999.
Restricted stock awards for Mr. Alan B. Miller include: (i) $84,000 in 1994,
$85,200 in 1993 and $68,328 in 1992 representing the value of the Bonus
Shares and (ii) $19,987 in 1994 and $9,567 in 1993 representing the value of
the vested portion of the Premium Shares. Restricted stock awards for Mr.
Kirk E. Gorman include: (i) $20,000 in 1994, $19,488 in 1993 and $15,566 in
1992 representing the value of the Bonus Shares and (ii) $4,554 in 1994 and
$2,175 in 1993 representing the value of the vested portion of the Premium
Shares. Restricted stock awards for Mr. Richard C. Wright include: (i)
$22,000 in 1994, $22,394 in 1993 and $21,146 in 1992 representing the value
of the Bonus Shares and (ii) $6,256 in 1994 and $2,965 in 1993 representing
the value of the vested portion of the Premium Shares. Restricted stock
awards for Mr. Michael G. Servais include (i) $10,800 in 1994 and $18,488 in
1993 representing the value of the Bonus Shares, (ii) $5,351 in 1994 and
$1,728 in 1993 representing the value of the Premium Shares and (iii)
$99,375 in 1994 and $42,750 in 1992 representing the value of 5,000 shares
and 3,000 shares, respectively, of the Company's Class B Common Stock, based
on the closing market price of the shares on the dates of grant, issued in
connection with the 1990 Plan. The value of the shares issued in connection
with the 1990 Plan as of December 31, 1994 was $196,000 based on the closing
market price of the shares on that date. Restricted stock awards for Mr.
Steve G. Filton include: (i) $12,000 in 1994, $13,475 in 1993 and $5,760 in
1992 representing the value of the Bonus Shares and (ii) $3,964 in 1994 and
$1,565 in 1993 representing the value of the vested portion of the Premium
Shares.
At December 31, 1994, Messrs. Miller, Gorman, Wright, Servais and Filton
held 6,985, 1,635, 1,758, 1,097 and 998 shares, respectively, of restricted
Bonus Shares and Premium Shares, with a value based on the closing price of
the shares on that date of $171,133, $40,058, $43,071, $26,877 and $24,451,
respectively.
(c) All other compensation includes the Company's match of officers'
contribution to the Company's 401(k) plan and, for Mr. Alan. B. Miller, the
total includes $9,572 in each year related to term life insurance premiums
paid by the Company.
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OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
-------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF PERCENTAGE OF VALUE AT ASSUMED
SECURITIES TOTAL ANNUAL RATES OF
UNDERLYING OPTIONS EXERCISE STOCK PRICE
OPTIONS GRANTED TO PER APPRECIATION FOR
GRANTED EMPLOYEES SHARE OPTION TERM
(#) IN FISCAL PRICE EXPIRATION ---------------------
NAME (a) YEAR ($/SH) DATE 5%($) 10%($)
- ----------------------------- ---------- ------------- -------- ---------- -------- ----------
Alan B. Miller............... 130,000 24% $ 22.250 12/23/99 $799,500 $1,765,400
Kirk E. Gorman............... 40,000 7% $ 22.250 12/23/99 $246,000 $ 543,200
Richard C. Wright............ 32,000 6% $ 22.250 12/23/99 $196,800 $ 434,560
Michael G. Servais........... 5,000 1% $ 19.625 01/18/99 $ 27,100 $ 59,900
Michael G. Servais........... 25,000 5% $ 22.250 12/23/99 $153,750 $ 339,500
Steve G. Filton.............. 22,000 4% $ 22.250 12/23/99 $135,300 $ 298,760
- ---------------
(a) Options are exercisable as follows: 25% one year after date of grant and an
additional 25% in each of the second, third and fourth years after date of
grant. The options expire five years after the date of grant.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION VALUES
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED IN-
UNEXERCISED THE-MONEY
OPTIONS AT OPTIONS AT
SHARES VALUE FISCAL YEAR-END(#) FISCAL YEAR-END($)(2)
ACQUIRED ON REALIZED --------------------------- ---------------------------
NAME EXERCISE(#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ ----------- -------- ----------- ------------- ----------- -------------
Alan B. Miller................ 0 $ 0 50,000 180,000 $ 606,250 $ 898,750
Kirk E. Gorman................ 750 $ 11,344 0 40,000 $ 0 $ 90,000
Richard C. Wright............. 0 $ 0 0 32,000 $ 0 $ 72,000
Michael G. Servais............ 0 $ 0 6,000 32,000 $ 93,875 $ 101,750
Steve G. Filton............... 500 $ 9,625 2,250 24,750 $ 21,469 $ 75,906
- ---------------
(1) Based on the difference between the exercise price and the closing sale
price of the Class B Common Stock on the New York Stock Exchange on the
date of exercise.
(2) Based on the difference between the exercise price and the closing sale
price of the Class B Common Stock on the New York Stock Exchange on
December 30, 1994.
EMPLOYMENT CONTRACT
The Company and Alan B. Miller have entered into an employment contract
pursuant to which Mr. Miller will act as President and Chief Executive Officer
of the Company until December 31, 1997, which period is subject to extension at
the option of Mr. Miller or the Company until December 31, 2002. In addition,
the Agreement provides for a five-year consulting arrangement commencing upon
termination of Mr. Miller's active employment, during which period he will be
paid an annual fee equal to one-half of his base salary at the date of
expiration of the term of active employment. During the period of his active
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employment, Mr. Miller was entitled to a salary of $675,000 for the year ended
December 31, 1992, to be increased in each year thereafter by an amount equal to
not less than the percentage increase in the consumer price index over the
previous year. Mr. Miller is also entitled to an annual bonus of at least
$100,000 and payment of insurance premiums, including income tax reimbursements,
of $13,674 per annum, as well as such other compensation as the Board of
Directors may determine in its discretion. Mr. Miller may be discharged only for
cause or permanent disability.
EXECUTIVE RETIREMENT INCOME PLAN
In October 1993, the Board of Directors adopted the Executive Retirement
Income Plan pursuant to which certain management or other highly compensated
employees designated by the Board of Directors who have completed at least 10
years of active employment with the Company may receive retirement income
benefits. The monthly benefit is payable to a participant who retires after he
or she reaches age 62 and is equal to 3% of the employee's average monthly base
salary over the three years preceding retirement multiplied by the number of
full years (not to exceed 10) of the participant's active employment following
the first 10 years of the participant's employment with the Company. Payment of
the benefit will be made in 60 monthly installments following the participant's
retirement date. Under certain circumstances, the participant may be entitled to
elect to receive the present value of the payments in one lump sum or receive
payments over a period of 10 years. The estimated annual benefits payable (for
the 60 months in which the participant receives benefits) upon retirement at age
65 for each of Alan B. Miller, Kirk E. Gorman, Richard C. Wright, Michael G.
Servais and Steve G. Filton, assuming their annual compensation increases by 4%
annually, would be $284,843, $136,749, $89,198, $93,247 and $124,825,
respectively. If an employee ceases employment with the Company prior to age 62,
no retirement income will be payable to the participant unless the Board of
Directors determines otherwise.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Committee of the Board of Directors was comprised during 1994 of three
non-employee directors, Anthony Pantaleoni, Robert H. Hotz and John H. Herrell.
Anthony Pantaleoni is a partner in Fulbright & Jaworski L.L.P., which serves as
the Company's principal outside counsel.
COMMITTEE REPORT TO SHAREHOLDERS
The report of the Compensation and Stock Option Committee shall not be
deemed incorporated by reference by any general statement incorporating by
reference this proxy statement into any filing under the Securities Act of 1933,
as amended, or under the Securities Exchange Act of 1934, as amended, except to
the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
COMPENSATION PHILOSOPHY
The Committee regularly reviews and, with any changes it believes
appropriate, approves the Company's compensation program. The Company believes
that executive compensation should be closely related to the value delivered to
stockholders. This belief has been adhered to by developing incentive pay
programs which provide competitive compensation and reflect Company performance.
Both short-term and long-term incentive compensation are based on Company
performance and the value received by stockholders.
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In designing its compensation programs, the Company follows its belief that
compensation should reflect the value created for stockholders while supporting
the Company's strategic business goals. In doing so, the compensation programs
reflect the following themes:
- Compensation should encourage increased stockholder value.
- Compensation programs should support the short-term and long-term
strategic business goals and objectives of the Company.
- Compensation programs should reflect and promote the Company's values,
and reward individuals for outstanding contributions toward business
goals.
- Compensation programs should enable the Company to attract and retain
highly qualified professionals.
PAY MIX AND MEASUREMENT
The Company's executive compensation is based on three components, each of
which is intended to serve the overall compensation philosophy.
BASE SALARY
The Company's salary levels are intended to be consistent with competitive
pay practices and level of responsibility, with salary increases reflecting
competitive trends, the overall financial performance of the Company, the
performance of the individual executive and general economic conditions.
SHORT-TERM INCENTIVES
On May 18, 1994, the Company's stockholders approved the adoption of the
Company's 1994 Executive Incentive Plan. Pursuant to that Plan, at the start of
each fiscal year, during the budgeting process, target levels of net income and
return on assets for the Company as a whole ("Company Targets") and target
levels of net income for each of the Company's individual divisions and
facilities ("Division Targets") are recommended by senior management of the
Company and approved by the Committee of the Board of Directors which
administers the Plan. In accordance with the Plan, a subcommittee consisting of
Messrs. Herrell and Hotz established salary and bonus targets in March 1994 for
the 1994 calendar year, and in March 1995 for the 1995 calendar year, and will
establish salary and bonus targets for future years in accordance with tax law
requirements. The Committee expects to continue the basic policies outlined
below. All senior executives of the Company, including heads of divisions and
facilities, have the opportunity to earn as a bonus for a fiscal year an amount
equal to a portion of their base salary for that fiscal year, depending on
whether and to what extent the Company Targets and/or the Division Targets are
achieved. For fiscal 1994, (i) Alan B. Miller, the Company's Chairman and
President, was entitled to a bonus of 50% of his base salary if the Company
Targets were achieved, (ii) Kirk E. Gorman, the Company's Senior Vice President,
and Steve G. Filton, a Vice President of the Company, were entitled to a bonus
of 40% and 35%, respectively, of their respective base salaries if the Company
Targets were achieved, (iii) Michael G. Servais, Vice President of the Company,
was entitled to a bonus of 35% of his base salary if the Company Targets and the
Division Targets were achieved and (iv) Richard C. Wright, Vice President of the
Company, was entitled to a bonus of 30% of his base salary if the Company
Targets and the Division Targets were achieved. Seventy-five percent (75%) of
the respective bonuses of Messrs. Servais and Wright were determined based on
the achievement of the Division Targets, and the remaining 25% of such bonuses
were determined based on the achievement of the Company Targets. Depending upon
the actual performance of the Company and the Divisions compared to
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Company Targets and/or the Division Targets, the senior executives can receive
bonuses up to 125% of their base salaries.
The Company's Stock Option and Compensation Committee approved payment of
discretionary bonuses based on 1994 performance to Messrs. Gorman, Filton,
Servais and Wright in the amount of $3,122, $1,200, $4,945, and $8,852,
respectively. Mr. Wright also received $30,000 of bonuses related to certain
hospital acquisitions either completed or significantly completed in 1994.
LONG-TERM INCENTIVES
Stock options are granted from time to time to reward key employees'
contributions. The grant of options is based primarily on a key employee's
potential contribution to the Company's growth and profitability. Options are
granted at the prevailing market value of the Company's Common Stock and will
only have value if the Company's stock price increases. Generally, grants of
options vest in equal amounts over four years and executives must be employed by
the Company for such options to vest.
1994 COMPENSATION
The base salary for the Chairman and President was increased during 1994 to
$750,000. This represents a 6% increase over 1993. Further, the bonus of the
Chairman and President for 1994, determined as set forth above, was $420,000
(including $84,000 in restricted stock), reflecting 56% of his base salary.
The Compensation Committee believes that linking executive compensation to
corporate performance results in a better alignment of compensation with
corporate business goals and stockholder value. As performance goals are met or
exceeded, resulting in increased value to stockholders, executives are rewarded
commensurately. The Compensation Committee believes that compensation levels
during 1994 adequately reflect the Company's compensation goals and policies.
COMPENSATION AND STOCK OPTION COMMITTEE
John H. Herrell
Robert H. Hotz
Anthony Pantaleoni
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STOCK PRICE PERFORMANCE GRAPH
The Stock Price Performance Graph below shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
(THE COMPANY, S&P 500, PEER GROUP)
UNIVERSAL
MEASUREMENT PERIOD HEALTH SER-
(FISCAL YEAR COVERED) VICES, INC. S & P 500 PEER GROUP
1989 100.00 100.00 100.00
1990 98.65 96.89 94.08
1991 148.65 126.42 75.71
1992 152.70 136.05 84.04
1993 218.92 149.76 134.76
1994 264.86 151.74 150.84
The total cumulative return on investment (change in the year end stock
price plus reinvested dividends) for each of the periods for the Company, the
peer group and the S&P 500 Composite is based on the stock price or composite
index at the end of fiscal 1989.
The above graph compares the performance of the Company with that of the
S&P 500 Composite and a group of peer companies with the investment weighted on
market capitalization. Companies in the peer group are as follows: American
Medical Holdings, Inc., Columbia/HCA Healthcare Corporation, Community
Psychiatric Centers, Health Management Associates, Inc., HealthTrust, Inc.,
OrNda HealthCorp., and Ramsay Health Care, Inc.
In February of 1994, Columbia/HCA Healthcare Corporation (formerly Columbia
Healthcare Corporation) acquired HCA-Hospital Corporation of America pursuant to
a merger transaction. Included in the peer group index for January of 1990
through mid-February of 1994 is the cumulative total return data for HCA-
Hospital Corporation of America and Columbia Healthcare Corporation, and
included in the peer group index for the remainder of 1994 is the cumulative
total return data for Columbia/HCA Healthcare Corporation.
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Galen Health Care, Inc., which was included in the peer group index prior to
September 1, 1993, was acquired by Columbia/HCA Healthcare Corporation in
September of 1993 and is included in the Columbia/HCA Healthcare Corporation
cumulative total return data since the date of acquisition.
COMPENSATION OF DIRECTORS
The non-employee directors are compensated for their service on the Board
of Directors and Committees of the Board on an annual basis at $20,000 each.
Pursuant to the Company's Non-Employee Director Stock Option Plan, each
director of the Company, other than Mr. Hotz and Mr. Herrell, was granted
options to purchase 2,000 shares of the Class B Common Stock of the Company at
an exercise price of $9.00 per share in March 1989. All options were exercised
prior to their expiration date on March 15, 1994. In January 1994, under the
Amended and Restated Non-Employee Director Stock Option Plan, each non-employee
director of the Company received an option to purchase 2,500 shares of the Class
B Common Stock of the Company at an exercise price of $19.625 per share. These
options are exercisable as follows: 25% one year after date of grant and an
additional 25% in each of the second, third and fourth years after date of
grant. The options expire five years after the date of grant.
BOARD OF DIRECTORS
Meetings of the Board. Regular meetings of the Board are generally held
every other month, while special meetings are called when necessary. Before each
Board or Committee meeting, directors are furnished with an agenda and
background materials relating to matters to be discussed. During 1994, there
were nine Board meetings. All current directors attended more than 75% of the
meetings of the Board and of committees of the Board on which they served.
The Executive Committee, the Compensation and Stock Option Committee, the
Audit Committee, and the Finance Committee are the standing committees of the
Board of Directors, and may meet concurrently with the Board of Directors'
meetings.
Executive Committee. The Executive Committee has the responsibility,
between meetings of the Board of Directors of the Company, to advise and aid the
officers of the Company in all matters concerning the management of the business
and, while the Board is not in session, has the power and authority of the Board
to the fullest extent permitted under law. The Executive Committee met once in
1994. Members of the Committee are Alan B. Miller, Leonard W. Cronkhite, Jr.,
M.D., and Anthony Pantaleoni.
Compensation and Stock Option Committee. The Compensation and Stock Option
Committee has responsibility for reviewing and recommending to the Board of
Directors the compensation levels of officers and directors of the Company and
its subsidiaries and the administration of the 1990 Employees' Restricted Stock
Purchase Plan, the 1992 Corporate Ownership Program, the 1992 Stock Bonus Plan,
and the 1992 Stock Option Plan. This Committee met seven times in 1994. The
members of this Committee are Anthony Pantaleoni, Robert H. Hotz and John H.
Herrell. A subcommittee of the Compensation and Stock Option Committee,
comprised of Messrs. Herrell and Hotz, will administer the 1994 Executive
Incentive Plan.
Audit Committee. The Audit Committee is responsible for providing
assistance to the Board of Directors in fulfilling its responsibilities relating
to corporate accounting and reporting practices and to maintain a direct line of
communication between the directors and the independent accountants. It
recommends the firm to be appointed independent auditor, reviews the scope and
results of the audit with the independent auditors and considers the adequacy of
the internal accounting and control procedures of the
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Company. The Audit Committee met twice in 1994. Members of this Committee are
Sidney Miller, Leonard W. Cronkhite, Jr., M.D., Martin Meyerson, and John H.
Herrell.
Finance Committee. The Finance Committee is responsible for reviewing the
Company's cash flow and capital commitments and is charged with overseeing its
long-term financial planning. The Finance Committee did not meet in 1994.
Members of this Committee are Alan B. Miller, Sidney Miller and Robert H. Hotz.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1994, in connection with the relocation of Michael G. Servais from
California to Pennsylvania, the Company purchased his California residence for
total consideration of $1,088,000 including cash of $988,000 and restricted
stock with a market value on the date of the transaction of $100,000. In
connection with this transaction, the Company issued 3,846 restricted shares of
Class B Common Stock of which 1,923 shares vested on January 1, 1995 and the
remaining 1,923 shares are scheduled to vest on July 1, 1995.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Arthur Andersen LLP has been retained by the Board of Directors, on the
recommendation of the Audit Committee, to perform all accounting and audit
services during the 1995 fiscal year. It is anticipated that representatives of
Arthur Andersen LLP will be present at the Annual Meeting and will have an
opportunity to make a statement, if they desire to do so, and to respond to any
appropriate inquiries of the stockholders or their representatives.
EXPENSES FOR PROXY SOLICITATION
The principal solicitation of proxies is being made by mail; however,
certain officers, directors and employees of the Company, none of whom will
receive additional compensation therefor, may solicit proxies by telegram,
telephone or other personal contact. The Company will bear the cost of the
solicitation of the proxies, including postage, printing and handling and will
reimburse the reasonable expenses of brokerage firms and others for forwarding
material to beneficial owners of shares.
DATE FOR RECEIPT OF STOCKHOLDER PROPOSALS
FOR PRESENTATION AT 1996 ANNUAL MEETING
Any proposal that a stockholder wishes to present for consideration at the
1996 Annual Meeting must be received by the Company no later than December 23,
1995. This date provides sufficient time for inclusion of the proposal in the
1996 proxy materials.
OTHER BUSINESS TO BE TRANSACTED
As of the date of this Proxy Statement, the Board of Directors knows of no
other business to be presented for action at the Annual Meeting. As for any
business that may properly come before the Annual Meeting, the Proxies confer
discretionary authority in the persons named therein. Those persons will vote or
act in accordance with their best judgment with respect thereto.
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YOU ARE URGED TO VOTE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE AT YOUR EARLIEST CONVENIENCE, WHETHER OR NOT YOU
CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING IN PERSON.
BY ORDER OF THE BOARD OF DIRECTORS
SIDNEY MILLER
Secretary
King of Prussia, Pennsylvania
April 20, 1995
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K WILL BE SENT WITHOUT
CHARGE TO ANY STOCKHOLDER REQUESTING IT IN WRITING FROM: INVESTOR RELATIONS,
UNIVERSAL HEALTH SERVICES, INC., UNIVERSAL CORPORATE CENTER, 367 SOUTH GULPH
ROAD, KING OF PRUSSIA, PENNSYLVANIA 19406.
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PROXY CLASS B
- ----- COMMON STOCK
CLASS D
COMMON STOCK
UNIVERSAL HEALTH SERVICES, INC.
THIS PROXY SOLICITED BY THE BOARD OF
DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON MAY 17, 1995
Alan B. Miller and Sidney Miller and each of them, as the true and lawful
attorneys, agents and proxies of the undersigned, with full power of
substitution, are hereby authorized to represent and to vote, as designated
below, all shares of Class B Common Stock and Class D Common Stock of Universal
Health Services, Inc. held of record by the undersigned on April 7, 1995, at
the Annual Meeting of Stockholders to be held at 10:00 a.m. on Wednesday, May
17, 1995 at the offices of the Company, Universal Corporate Center, 367 South
Gulph Road, King of Prussia, Pennsylvania and at any adjournment thereof. Any
and all proxies heretofore given are hereby revoked.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY.
FOLD AND DETACH HERE
UNIVERSAL HEALTH SERVICES, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 17, 1995, 10:00 A.M.
UNIVERSAL CORPORATE CENTER
367 SOUTH GULPH ROAD
KING OF PRUSSIA, PA.
24
1. The election of a Director 2. Adoption of the Amendment Discretionary authority is hereby granted
Nominee is Robert H. Hotz to the 1992 Stock Option Plan. with respect to such other matters as may
properly come before the meeting.
FOR AGAINST ASBSTAIN FOR AGAINST ABSTAIN
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS
DESIGNATED BY THE ABOVE. IF NO CHOICE IS SPECIFIED, THE
PROXY WILL BE VOTED FOR ELECTION OF THE NOMINEE FOR
DIRECTOR, AND FOR ADOPTION OF THE AMENDMENT TO THE 1992
STOCK OPTION PLAN.
DATED:
-------------------------------------------------
SIGNATURE:
---------------------------------------------
SIGNATURE:
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IMPORTANT: Please sign exactly as name appears at the
left. Each joint owner shall sign. Executors,
administrators, trustees, etc. should give full title.
The above-signed acknowledges receipt of the Notice of
Annual Meeting of Stockholders and the Proxy Statement
furnished therewith.
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"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES"
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FOLD AND DETACH HERE
ANNUAL MEETING
OF
UNIVERSAL HEALTH SERVICES, INC. STOCKHOLDERS
WEDNESDAY, MAY 17, 1995
10:00 A.M.
UNIVERSAL CORPORATE CENTER
367 SOUTH GULPH ROAD
KING OF PRUSSIA, PA
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AGENDA
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- Election of Directors
- Adoption of the Amendment to the 1992 Stock Option Plan
- Discussion on matters of current interest
- -------------------------------------------------------------------------------
25
PROXY CLASS A
COMMON STOCK
CLASS C
COMMON STOCK
UNIVERSAL HEALTH SERVICES, INC.
THIS PROXY SOLICITED BY THE BOARD OF
DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON MAY 17, 1995
Alan B. Miller and Sidney Miller and each of them, as the true and
lawful attorneys, agents and proxies of the undersigned, with full power
of substitution, are hereby authorized to represent and to vote, as
designated below, all shares of Class A Common Stock and Class C Common
Stock of Universal Health Services, Inc. held of record by the
undersigned on April 7, 1995 at the Annual Meeting of Stockholders to be
held at 10:00 a.m. on Wednesday, May 17, 1995, at the offices of the
Company, Universal Corporate Center, 367 South Gulph Road, King of
Prussia, Pennsylvania and at any adjournment thereof. Any and all
proxies heretofore given are hereby revoked.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY.
26
PLEASE MARK YOUR CHOICE LIKE THIS IN BLUE OR BLACK INK
/ / ------------------------ ------------------------ ------------------------
ACCOUNT NUMBER CLASS A COMMON CLASS C COMMON
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1. The Election of a Director: Nominee is Anthony Pantaleoni 3. Discretionary authority is hereby granted
with respect to such other matters as may
/ / For Nominee / / Withheld from properly come before the meeting.
Nominee
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- ------------------------------------------------------------------------ DATED:
2. Adoption of the Amendment to the 1992 Stock Option Plan ------------------------------------
FOR AGAINST ABSTAIN SIGNATURE: --------------------------------
SIGNATURE: --------------------------------
/ / IMPORTANT: Please sign exactly
- ------------------------------------------------------------------------ as name appears at the left.
Each joint owner shall sign.
Executors, administrators,
trustees, etc. should give full
title.
The above-signed acknowledges receipt of
the Notice of Annual Meeting of Stockholders
and the Proxy Statement furnished therewith.
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WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DESIGNATED BY THE ABOVE. IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED FOR
ELECTION OF THE NOMINEE FOR DIRECTOR, AND FOR ADOPTION OF THE AMENDMENT TO THE 1992 STOCK OPTION PLAN.
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