SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
Health Management Associates, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[LOGO]
HEALTH MANAGEMENT ASSOCIATES, INC.
--------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
--------------------------------
FEBRUARY 19, 2002
The Annual Meeting of Stockholders of HEALTH MANAGEMENT ASSOCIATES, INC.
(the Company") will be held at the Philharmonic Center for the Arts, Daniels
Pavilion, 5833 Pelican Bay Boulevard, Naples, Florida 34108 on Tuesday, February
19, 2002 at 1:30 p.m., local time, for the following purposes more fully
described in the accompanying proxy statement:
1. To elect eight directors of the Company.
2. To transact such other business as may properly come before the Annual
Meeting of Stockholders or any adjournment thereof.
The Board of Directors has fixed the close of business on December 21, 2001
as the record date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting of Stockholders and any adjournments thereof.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Timothy R. Parry
-----------------------------
Timothy R. Parry,
CORPORATE SECRETARY
Dated: December 28, 2001
HEALTH MANAGEMENT ASSOCIATES, INC.
5811 PELICAN BAY BOULEVARD
NAPLES, FLORIDA 34108-2710
---------------------
PROXY STATEMENT
---------------------
GENERAL
This proxy statement is furnished to stockholders in connection with the
solicitation of proxies by the Board of Directors of Health Management
Associates, Inc. (the Company") to be used at the Annual Meeting of Stockholders
of the Company, which will be held on Tuesday, February 19, 2002, at 1:30 p.m.,
local time, and at any adjournments thereof (the Meeting"). This proxy statement
and accompanying form of proxy are being first mailed to stockholders on or
about December 28, 2001. The proxy, when properly executed and received by the
Corporate Secretary of the Company prior to the Meeting, will be voted as
therein specified unless revoked by filing with the Corporate Secretary prior to
the Meeting a written revocation or a duly executed proxy bearing a later date.
Unless authority to vote for one or more of the director nominees is
specifically withheld according to the instructions, a signed proxy will be
voted FOR the election of the eight director nominees named herein.
As of December 21, 2001, the record date for the Meeting, there were
242,118,850 shares of the Company's Class A Common Stock, par value $.01 per
share (the Common Stock"), issued and outstanding. Only holders of Common Stock
of record on the books of the Company at the close of business on December 21,
2001 are entitled to notice of and to vote at the Meeting and at any
adjournments thereof. Each such stockholder is entitled to one vote for each
share of Common Stock registered in his name. A majority of the outstanding
shares of Common Stock, represented in person or by proxy at the Meeting, will
constitute a quorum for the transaction of all business. Abstentions are counted
in tabulations of votes cast to determine the total number of votes cast.
Abstentions are not counted as votes for or against any matter submitted to a
vote of the stockholders at the Meeting. Broker non-votes are not counted as
votes cast for purposes of determining whether a matter submitted to a vote of
the stockholders has been approved. The Company is a Delaware corporation. Under
Delaware law, stockholders do not have appraisal rights with respect to the
election of directors. Directors will be elected by a plurality of the votes
cast at the Meeting.
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by use of the mails, directors, officers or regular employees of
the Company, without extra compensation, may solicit proxies personally or by
telephone or other telecommunication. The Company has requested persons holding
stock for others in their names or in the names of nominees to forward
soliciting material to the beneficial owners of such shares and will, if
requested, reimburse such persons for their reasonable expenses in so doing.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of December 21, 2001 certain information
concerning shares of Common Stock held by (i) each stockholder known by the
Company to own beneficially more than five percent of the class, (ii) each
director of the Company, (iii) each Named Executive" (see EXECUTIVE
COMPENSATION"), and (iv) all directors and executive officers of the Company as
a group:
COMMON STOCK
BENEFICIALLY OWNED
---------------------------
NAME AND ADDRESS OF NO. OF PERCENT
BENEFICIAL OWNER (1) SHARES OF CLASS
------------------------- ------------- ----------
William J. Schoen (2)............................................ 16,679,581 6.6%
5811 Pelican Bay Blvd.
Naples, FL 34108-2710
Joseph V. Vumbacco (3)........................................... 1,518,856 0.6
5811 Pelican Bay Blvd.
Naples, FL 34108-2710
Kent P. Dauten (4)............................................... 390,077 0.2
520 Lake Cook Road
Suite 650
Deerfield, IL 60015
Donald E. Kiernan................................................ 2,500 -
11643 Elm Ridge
San Antonio, TX 78230
Robert A. Knox (5)............................................... 211,529 0.1
717 Fifth Avenue
New York, NY 10022
Charles R. Lees (6).............................................. 78,045 -
2659 Townsgate Road, Suite 226
Westlake Village, CA 91361
Kenneth D. Lewis (7)............................................. 40,003 -
Bank of America Corporate Center
100 North Tryon Street, 58th Floor
Charlotte, NC 28255
William E. Mayberry, M.D. (8).................................... 29,877 -
826 Rue de Ville
Naples, FL 34108
Randolph W. Westerfield, Ph.D.................................... 1,875 -
University of Southern California
Marshall School of Business
Hoffman Hall, Suite 800
Los Angeles, CA 90089
2
COMMON STOCK
BENEFICIALLY OWNED
----------------------------
NAME AND ADDRESS OF NO. OF PERCENT
BENEFICIAL OWNER (1) SHARES OF CLASS
------------------------- ------------- ----------
Robert E. Farnham (9).............................................. 184,805 0.1
5811 Pelican Bay Blvd.
Naples, FL 34108-2710
Timothy R. Parry (10).............................................. 135,752 0.1
5811 Pelican Bay Blvd.
Naples, FL 34108-2710
Stephen M. Ray..................................................... 0 -
8381 Glenfinnan Circle
Fort Myers, FL 33912
(ceased to be an employee in March 2001)
A I M Management Group Inc. (11)................................... 15,031,971 6.1
11 Greenway Plaza, Suite 100
Houston, TX 77046
AXA Financial, Inc. (12)........................................... 24,521,817 10.0
1290 Avenue of the Americas
New York, NY 10104
FMR Corp. (13)..................................................... 12,492,389 5.1
82 Devonshire Street
Boston, MA 20109
All Directors and Executive Officers............................... 19,272,900 7.6
as a Group (11 persons) (14)
----------
(1) Unless otherwise indicated, each stockholder shown on the table has sole
voting and investment power with respect to the shares beneficially owned
by him or it. Negligible percentages have been omitted from the table.
(2) The amount shown includes: (a) 10,571,645 shares issuable upon exercise of
currently exercisable options; and (b) an aggregate of 6,107,936 shares
held by various trusts of which Mr. Schoen is settlor, trustee and/or
beneficiary.
(3) The amount shown includes: (a) 1,299,500 shares issuable upon exercise of
currently exercisable options; (b) 18,064 shares held in Mr. Vumbacco's
account under the Company's Retirement Savings Plan, as to which shares he
has investment power only; and (c) 201,292 shares held by Mr. Vumbacco
individually, certain of which shares are held in a self-directed IRA in
which Mr. Vumbacco has the sole power of disposition.
(4) The amount shown includes 10,469 shares issuable upon exercise of currently
exercisable options.
(5) The amount shown includes 9,625 shares issuable upon exercise of currently
exercisable options.
(6) The amount shown includes 66,795 shares issuable upon exercise of currently
exercisable options.
(7) The amount shown reflects shares issuable upon exercise of currently
exercisable options.
(8) The amount shown includes: (a) 24,815 shares issuable upon exercise of
currently exercisable options; and (b) 5,062 shares held by Dr. Mayberry as
Trustee of the W.E. Mayberry Trust.
3
(9) The amount shown includes: (a) 161,361 shares issuable upon exercise of
currently exercisable options; (b) 7,336 shares held jointly by Mr. Farnham
and his wife; and (c) 16,108 shares held in Mr. Farnham's account under the
Company's Retirement Savings Plan, as to which shares he has investment
power only.
(10) The amount shown includes: (a) 120,000 shares issuable upon exercise of
currently exercisable options; (b) 13,295 shares held by Mr. Parry
directly; and (c) 2,457 shares held in Mr. Parry's account under the
Company's Retirement Savings Plan, as to which shares he has investment
power only.
(11) The amount and percentage shown and the following information are derived
from Amendment No. 1 to Schedule 13G dated September 10, 2001: AIM
Management Group, Inc. (on behalf of AIM Advisors, Inc. and AIM Capital
Management, Inc. (Investment Advisors)), has sole voting and sole
dispositive power with respect to all of such shares.
(12) The amount and percentage shown and the following information are derived
from Amendment No. 4 to Schedule 13G dated June 11, 2001 filed jointly on
behalf of AXA, AXA Financial, Inc., and four French mutual insurance
companies as a group: Such shares are beneficially owned by Alliance
Capital Management L.P. (23,035,807 shares, consisting of 22,985,255 shares
of Common Stock and 50,552 shares of Common Stock issuable upon conversion
of Convertible Debentures) and The Equitable Life Assurance Society of the
United States (1,486,010 shares, consisting of 1,459,700 shares of Common
Stock and 26,310 shares of Common Stock issuable upon conversion of
Convertible Debentures). All of such shares were acquired solely for
investment purposes and by Alliance Capital Management, L.P. on behalf of
client discretionary investment advisory accounts. Alliance Capital
Management L.P. and The Equitable Life Assurance Society of the United
States have sole power to vote a total of 10,667,363 of such shares;
Alliance Capital Management L.P. has shared power to vote 8,100,600 of such
shares; and Alliance Capital Management L.P. and The Equitable Life
Assurance Society of the United States have sole power to dispose of all of
such shares.
(13) The amount and percentage shown and the following information are derived
from Schedule 13G (Amendment No. 1) of FMR Corp. dated September 10, 2001.
The amount shown includes: 12,189,949 shares beneficially owned by Fidelity
Management & Research Company, a wholly-owned subsidiary of FMR Corp., as a
result of its acting as investment advisor to various investment companies
(the Funds") registered under Section 8 of the Investment Company Act of
1940 (which amount includes 277,882 shares of Common Stock issuable upon
conversion of Convertible Debentures); and (b) 202,210 shares beneficially
owned by Fidelity Management Trust Company, a wholly-owned subsidiary of
FMR Corp., as a result of its acting as investment manager of certain
institutional accounts. Edward C. Johnson 3d, Chairman of FMR Corp., and
FMR Corp., through its control of Fidelity Management & Research Company
and the Funds, each has sole dispositive power with respect to the shares
owned by the Funds. Sole power to vote or direct the voting of these shares
resides with the Funds' Boards of Trustees. Mr. Johnson and FMR Corp.,
through its control of Fidelity Management Trust Company, each has sole
voting and dispositive power with respect to the shares owned by Fidelity
Management Trust Company. The amount shown also includes 230 shares
beneficially owned by Strategic Advisers, Inc. a wholly-owned subsidiary of
FMR Corp., which provides investment advisory services to individuals, and
100,000 shares beneficially owned by Fidelity International Limited (FIL"),
which provides advisory and management services to a number of non-U.S.
investment companies and certain institutional investors. FMR Corp. and FIL
are of the view that they are not acting as a group for purposes of Section
13(d) of the Securities Exchange Act of 1934, as amended (the Exchange
Act"), and that they are not otherwise required to attribute their
beneficial ownership of securities to each other.
(14) See footnotes (2) through (10) to this table.
4
ELECTION OF DIRECTORS
A Board of Directors consisting of eight directors is to be elected by the
stockholders at the Meeting, each to hold office until the next Annual Meeting
of Stockholders or until his successor is duly elected and qualified.
The Nominating Committee of the Board of Directors recommends the election
of the eight nominees named below, all of whom are currently directors of the
Company. Unless authority to vote for one or more of the nominees is
specifically withheld according to the instructions, proxies in the enclosed
form will be voted FOR the election of each of the eight nominees named below.
The Board of Directors does not contemplate that any of the nominees will be
unable to serve as a director, but if that contingency should occur prior to the
voting of the proxies, the persons named in the enclosed proxy reserve the right
to vote for such substitute nominee or nominees as they, in their discretion,
shall determine.
Charles R. Lees, who has been a director of the Company since 1988, is not
standing for re-election at the Meeting. However, in recognition of Mr. Lees'
many years of dedicated service to the Company, the Board of Directors has
bestowed the honorary title of Director Emeritus on Mr. Lees, effective the date
of the Meeting.
YEAR
FIRST
ELECTED
NAME AND BACKGROUND DIRECTOR
-------------------- -------
WILLIAM J. SCHOEN, age 66, has served as Chairman of the Board since April 1986. He was 1983
first elected a director in February 1983, became President and Chief Operating
Officer in December 1983, Co-Chief Executive Officer in December 1985 and Chief
Executive Officer in April 1986. He served as President until April 1997 and Chief
Executive Officer until January 2001. From 1982 to 1987 Mr. Schoen was Chairman of
Commerce National Bank, Naples, Florida, and from 1973 to 1981 he was President, Chief
Operating Officer and Chief Executive Officer of The F&M Schafer Corporation, a consumer
products company. From 1971 to 1973, Mr. Schoen was President of the Pierce Glass
subsidiary of Indian Head, Inc., a diversified company. Mr. Schoen also serves on the
Board of Directors of Horace Mann Insurance Companies.
JOSEPH V. VUMBACCO, age 56, became Chief Executive Officer of the Company in January 2001
2001. Prior to that and since April 1997, he has been the Company's President, as
well as serving as Chief Administrative Officer and Chief Operating Officer. He
joined the Company as an Executive Vice President in January 1996 after 14 years with
The Turner Corporation (construction and real estate), most recently as an Executive
Vice President. Prior to joining Turner, he served as the Senior Vice President and
General Counsel for The F&M Schaefer Corporation, and previously was an attorney with the
Manhattan law firm of Mudge, Rose, Guthrie & Alexander. Mr. Vumbacco was elected a director
by the Board of Directors in May 2001.
KENT P. DAUTEN, age 46, served as a director of the Company from March 1981 through May 1981
1983, and from June 1985 through September 1988. He was again elected a director in
November 1988. Since February 1994 Mr. Dauten has been President of Keystone Capital,
Inc., a private investment advisory firm founded by him. Mr. Dauten was formerly a
Senior Vice President of Madison Dearborn Partners, Inc., a private equity investment
firm, and of First Chicago Investment Corporation and First Capital Corporation of Chicago,
the venture capital subsidiaries of First Chicago Corporation, where he had been employed in
various investment management positions since 1979. Mr. Dauten also serves on the Board of
Directors of Iron Mountain Incorporated.
5
YEAR
FIRST
ELECTED
NAME AND BACKGROUND DIRECTOR
-------------------- -------
DONALD E. KIERNAN, age 61, is the retired Senior Executive Vice President and Chief Financial 2001
Officer of SBC Communications Inc. (telecommunications), a position he held from October
1993 to August 2001. Prior to that and since 1990, he served as Vice President of Finance
for SBC Communications Inc. Mr. Kiernan is a Certified Public Accountant and former partner
with Arthur Young & Company, and its successor firm, Ernst & Young LLP. Mr. Kiernan
serves on the Boards of Directors of BioNumerik Pharmaceuticals, Horace Mann Educators
Corporation and Viad Corp. Mr. Kiernan was elected a director by the Board of Directors in
May 2001.
ROBERT A. KNOX, age 49, became Senior Managing Director of Cornerstone Equity
Investors, 1985 LLC, an investment advisory firm, in December 1996. From 1994 until December
1996, he was Chairman and Chief Executive Officer, and from 1984 to 1994 he was President, of
Prudential Equity Investors, Inc., an investment capital firm. Prior to that and since 1975,
Mr. Knox was employed by The Prudential Insurance Company of America. He also serves
on the Boards of Directors of True Temper Sports, Inc. and various private companies, and
is a Trustee of Boston University.
KENNETH D. LEWIS, age 54, has served as Chairman, Chief Executive Officer and President 1991
of Bank of America Corp. since April 2001. From October 1999 until April 2001, he served
as President and Chief Operating Officer. Prior to that and since January 1999, he served as
President, and from September 1998 to January 1999, he served as President, Consumer and
Commercial Banking, of Bank of America Corp. Prior to that, Mr. Lewis was President of
NationsBank Corporation, a position that he had held since November 1993. From December 1991
to November 1993 he served as President of General Banking for NationsBank. Prior to that,
Mr. Lewis had been employed by NCNB Corporation in various capacities since 1969, including
President of NCNB Texas from 1988 to 1990 and President of NCNB National Bank of Florida from
1986 to 1988. Mr. Lewis also serves on the Boards of Directors of Bank of America Corp. and
Lowe's Companies, Inc.
WILLIAM E. MAYBERRY, M.D., age 72, is the retired President and Chief Executive Officer of 1994
the Mayo Foundation and the retired Chairman of the Board of Governors of the Mayo Clinic,
Rochester, Minnesota, where he had been employed in various capacities from 1960 until his
retirement in 1992.
RANDOLPH W. WESTERFIELD, PH.D., age 60, has been the Dean of the Marshall School of Business 2000
at the University of Southern California, Los Angeles, California, since 1993. Previously,
he was a member of the finance faculty at the Wharton School of Business at the University
of Pennsylvania, for 20 years. Dr. Westerfield also serves on the Board of Directors of
William Lyon Homes.
BOARD MEETINGS AND COMMITTEES OF THE BOARD
During the fiscal year ended September 30, 2001 (Fiscal 2001"), the Board
of Directors held four meetings. Each director attended at least 75% of the
Board meetings and meetings of the Board committees on which he served and which
were held during his term of office.
The Company has standing Audit, Compensation and Nominating Committees of
the Board of Directors.
6
The current members of the Audit Committee are Mr. Dauten (Chairman), Mr.
Kiernan, Mr. Lees, Dr. Mayberry and Dr. Westerfield. The Committee reviews with
Ernst & Young LLP, the Company's independent auditors, the Company's financial
statements and internal accounting procedures, Ernst & Young LLP's auditing
procedures and fees, and the possible effects of professional services upon the
independence of Ernst & Young LLP. In addition, the Audit Committee provides
oversight review of the Company's Corporate Compliance Program. The duties and
responsibilities of the Audit Committee are more specifically set forth in the
Company's Audit Committee Charter, as adopted by the Board. The Audit Committee
held four meetings during Fiscal 2001. The Audit Committee's report relating to
Fiscal 2001 appears on page 16 of this proxy statement.
The current members of the Compensation Committee are Messrs. Dauten, Knox
(Chairman) and Lewis. The Committee makes recommendations to the Board with
respect to compensation and benefits paid to the Company's senior management.
The Compensation Committee also makes determinations under the Company's various
plans providing incentive compensation for management. See EXECUTIVE
COMPENSATION." The Compensation Committee held four meetings during Fiscal 2001.
The current members of the Nominating Committee are Messrs. Dauten,
Kiernan, Knox and Lewis (Chairman). The Committee makes recommendations about
the nomination of candidates for election to the Board. The Committee was formed
on September 18, 2001 and met subsequent to September 30, 2001 to recommend the
director nominees named in this proxy statement. In the future, the Nominating
Committee will consider director nominees recommended by stockholders. Such
recommendations should be sent to the Company, to the attention of the Corporate
Secretary.
COMPENSATION OF DIRECTORS
During Fiscal 2001, the Company paid its non-employee directors $2,000 per
quarter for their services as directors and $5,000 for each Board of Directors'
meeting attended. All of the Company's directors (other than Mr. Schoen and Mr.
Vumbacco, who do not receive director compensation) received such payments, and
during Fiscal 2001 such compensation paid aggregated $186,000. The Company also
reimburses all of its directors for reasonable expenses incurred in connection
with attending Board and Board committee meetings. Except as described under
Directors' Stock Options" below, the Company had no other compensation
arrangement with any of its non-employee directors during Fiscal 2001.
DIRECTORS' STOCK OPTIONS
Pursuant to the Company's Stock Option Plan for Outside Directors, during
Fiscal 2001 the Company granted to each of Messrs. Dauten, Kiernan, Knox, Lees,
Lewis, Dr. Mayberry and Dr. Westerfield, each a non-employee director of the
Company, an option, expiring on May 14, 2011, to purchase 5,000 shares of Common
Stock at an exercise price of $16.60 per share. Each such option is exercisable
in 1,250-share annual increments commencing one year from the date of the grant.
None of such options is transferable except by will or intestacy, and during the
optionee's lifetime they are exercisable only by him. Unexercised options lapse
90 days after the optionee ceases to be a director of the Company, except that
if the optionee dies while serving as a director, his options lapse six months
after death. However, in recognition of Mr. Lees' many years of dedicated
service to the Company, in December 2001 the Board of Directors extended all
outstanding options held by Mr. Lees so that they will be exercisable until six
months following his death, unless they would otherwise expire by their terms.
During Fiscal 2001, Mr. Lees exercised options to purchase 22,619 shares at
$2.22 per share and 7,381 shares at $2.07 per share.
7
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Since the 2001 Annual Meeting of Stockholders, all of the Company's
directors, executive officers and more than 10% stockholders complied with the
timely filing requirements of Section 16(a) of the Exchange Act. In making the
foregoing statement, the Company has relied solely on the written
representations of its directors, executive officers and more than 10%
stockholders and copies of the reports that they have filed with the Securities
and Exchange Commission (the SEC").
EXECUTIVE COMPENSATION
Shown on the table below is information on the annual and long-term
compensation for services rendered to the Company in all capacities, for the
fiscal years ended September 30, 2001, 2000 and 1999, paid by the Company to
those persons who were, during Fiscal 2001, the Chief Executive Officer of the
Company and the four most highly compensated other executive officers of the
Company (collectively, the Named Executives").
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------- ---------------------------------
AWARDS PAYOUTS
OTHER ---------------------- ---------
ANNUAL RESTRICTED ALL OTHER
COMPEN- STOCK LTIP COMPEN-
NAME AND SALARY BONUS SATION AWARDS OPTIONS PAYOUTS SATION
PRINCIPAL POSITION YEAR ($) (1) ($) (2) ($) (3) ($) (4) (#) ($) (5) ($)
------------------------ ----- -------- --------- -------- --------- ---------- -----------------
WILLIAM J. SCHOEN (6) 2001 $375,000 $187,500 $3,497 $187,500 0 $875,000 0
Chairman of the Board 2000 600,000 650,000 3,497 650,000 1,000,000 450,000 0
1999 581,250 383,625 3,333 383,625 1,000,000 300,000 0
JOSEPH V. VUMBACCO 2001 $556,250 $695,313 $3,497 $695,313 750,000 0 0
President and 2000 375,000 406,250 2,498 406,250 500,000 0 0
Chief Executive Officer 1999 368,750 243,375 2,458 243,375 500,000 0 0
ROBERT E. FARNHAM (7) 2001 $187,841 $172,500 $3,497 $172,500 100,000 0 0
Senior Vice President and
Chief Financial Officer
TIMOTHY R. PARRY 2001 $210,000 $157,500 $3,497 $157,500 100,000 0 0
Vice President, 2000 161,250 94,375 3,497 94,375 100,000 0 0
General Counsel and 1999 149,000 49,170 3,333 49,170 100,000 0 0
Corporate Secretary
STEPHEN M. RAY 2001 $139,607 0 $1,457 0 0 0 0
(Former) Executive 2000 200,000 $166,667 3,497 $166,667 200,000 0 0
Vice President and 1999 191,000 90,486 3,333 90,486 200,000 0 0
Chief Financial Officer
(ceased to be an employee
in March 2001)
----------
(1) The amounts shown include cash compensation earned and paid during the
fiscal year indicated as well as cash compensation deferred at the election
of each Named Executive.
(2) The bonuses shown were awarded and paid in the succeeding fiscal year for
services rendered during the fiscal year indicated.
8
(3) The amounts shown include employer contributions to the Company's
Retirement Savings Plan, a 401(k) plan. The amounts shown do not include
the value of perquisites and other personal benefits because the aggregate
amount of such compensation for each fiscal year shown did not exceed the
lesser of $50,000 or 10% of the total amount of annual salary and bonus
shown for the Named Executive.
(4) The amounts shown reflect contingent awards of Common Stock pursuant to the
Company's 1996 Executive Incentive Compensation Plan (the EICP"). The
awards shown were made in the succeeding fiscal year for services rendered
during the fiscal year indicated, and the dollar values shown represent the
aggregate market value of the shares awarded on the respective dates of the
awards. Without giving effect to awards made after the close of Fiscal
2001, the aggregate numbers and dollar values of such shares credited to
the respective individuals' contingent award accounts at Fiscal 2001
year-end, based on the market value of the Common Stock at Fiscal 2001
year-end ($20.76 per share), were: Mr. Schoen - 122,250 shares
($2,537,910); Mr. Vumbacco - 74,118 shares ($1,538,690); Mr. Farnham -
6,283 shares ($130,435); Mr. Parry - 16,455 shares ($341,606); and Mr. Ray
- 0 shares ($0). Dividends are not payable on such shares, but customary
anti-dilution adjustments apply in the event of stock splits and stock
dividends.
(5) The amounts shown reflect the payment of benefits under the Company's
Supplemental Executive Retirement Plan. See EXECUTIVE COMPENSATION -
Supplemental Executive Retirement Plan."
(6) Mr. Schoen served as Chief Executive Officer until January 2001.
(7) Mr. Farnham has served as an executive officer since March 2001, but the
information shown for Fiscal 2001 includes compensation paid him for the
entire fiscal year.
STOCK OPTIONS
Shown below is further information on grants of stock options during Fiscal
2001 to the Named Executives. No stock appreciation rights (SARs") were granted
in Fiscal 2001, and there are no SARs outstanding.
OPTION GRANTS IN FISCAL 2001
GRANT DATE
INDIVIDUAL GRANTS VALUE
------------------------------------------------------------------------------------------- ------------
PERCENT OF
TOTAL
OPTIONS
GRANTED TO
OPTIONS EMPLOYEES EXERCISE GRANT DATE
GRANTED IN FISCAL PRICE EXPIRATION PRESENT VALUE
NAME (#) YEAR ($/SH) DATE ($) (1)
------ --------- ---------- -------- ---------- ------------
William J. Schoen 0 - - - 0
Joseph V. Vumbacco 750,000 26.7% $16.60 5/14/11 $7,192,500
Robert E. Farnham 100,000 3.6 16.60 5/14/11 959,000
Timothy R. Parry 100,000 3.6 16.60 5/14/11 959,000
Stephen M. Ray 0 - - - 0
(ceased to be an employee
in March 2001)
----------
(1) The hypothetical grant date present value for the options granted during
Fiscal 2001 is presented pursuant to the rules of the SEC and is calculated
under the modified Black-Scholes Model for pricing options, a mathematical
formula used to value options traded on stock exchanges. This formula
considers a number of factors in forecasting an option's present value.
Factors used to value the options shown on the table include the expected
volatility rate of the shares underlying the options (0.489), risk free
rate of return (5.51%), dividend yield (0%), projected time of exercise (7
years) and projected risk of forfeiture rate for
9
vesting period (0% per annum). The actual before-tax amount, if any,
realized upon the exercise of stock options will depend upon the excess, if
any, of the market price of the Common Stock over the exercise price per
share of the Common Stock at the time an option is exercised. There is no
assurance that the hypothetical grant date present value of the options
reflected on this table will be realized.
Shown below is information with respect to option exercises by the Named
Executives during Fiscal 2001 and unexercised options to purchase Common Stock,
granted to the Named Executives during and prior to Fiscal 2001 and held by them
at the end of Fiscal 2001.
AGGREGATED OPTION EXERCISES IN FISCAL 2001
AND FISCAL YEAR-END OPTION VALUES*
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS HELD AT IN-THE-MONEY OPTIONS AT
SHARES FISCAL YEAR-END (#) FISCAL YEAR-END ($) (1)
ACQUIRED ON VALUE ------------------------- ----------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------ ------------ ------------ ----------- ------------- ------------- -------------
William J. Schoen 265,000 $4,192,250 11,478,645 0 $132,015,781 0
Joseph V. Vumbacco 200,000 2,154,000 1,299,750 1,375,000 10,563,018 $8,298,125
Robert E. Farnham 25,047 491,234 161,361 136,625 1,922,496 665,804
Timothy R. Parry 29,200 300,176 120,000 234,395 739,550 1,451,625
Stephen M. Ray 100,000 428,057 0 0 0 0
(ceased to be an employee
in March 2001)
----------
* Pursuant to anti-dilution provisions of the respective plans, all numbers
of shares and per share prices have been adjusted to give effect, as
applicable, to seven 3-for-2 stock splits in the form of stock dividends
paid on April 9, 1992, November 3, 1993, June 17, 1994, October 20, 1995,
June 14, 1996, October 23, 1997 and July 17, 1998.
(1) Expressed as the excess of the market value of the Common Stock at Fiscal
2001 year-end ($20.76 per share) over the exercise price of each option.
EMPLOYMENT AGREEMENTS
The Company has an Employment Agreement with William J. Schoen, dated
January 2, 2001, providing for him to serve as Chairman of the Company and
Chairman of the Board until January 1, 2004 at an annual base salary of
$300,000. Under his Employment Agreement, all options previously awarded to Mr.
Schoen have vested and become exercisable and all of Mr. Schoen's prior stock
awards continue in effect. Additionally, Mr. Schoen's retirement benefit under
the Company's Supplemental Executive Retirement Plan (see EXECUTIVE COMPENSATION
- Supplemental Executive Retirement Plan") increased to $1,000,000, which amount
is also payable to Mr. Schoen's spouse for up to ten years following Mr.
Schoen's death. Mr. Schoen is also entitled to participate in the Company's
health, disability and other benefit plans, as well as to certain fringe
benefits. If Mr. Schoen retires from the Company with the approval of the Board
(not to be unreasonably withheld) or if Mr. Schoen dies or becomes disabled, Mr.
Schoen's prior stock awards will continue in effect. Should the Company
terminate Mr. Schoen's employment without defined cause, or should there be a
defined change in control of the Company, then Mr. Schoen will be entitled to a
lump sum payment equal to the gross income paid him by the Company for the
preceding three years, and to such additional funds necessary to pay certain
excise and other taxes. In such event, all of Mr. Schoen's prior stock awards
will also continue in effect. Mr. Schoen has agreed not to compete with the
Company or its affiliates during the term of the Employment Agreement.
The Company does not have employment agreements with any of its other
executive officers.
10
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Company's Supplemental Executive Retirement Plan (the Supplemental
Plan") is a deferred compensation plan for key executive employees that is not
intended to be tax-qualified. It commenced on May 1, 1990 for the Company's
executive officers. Each participant in the Supplemental Plan is entitled to
receive a fixed monthly benefit, commencing on his normal retirement date, for
the longer of 120 months or his life. The monthly benefit, which is determined
by the Board of Directors, may vary for each participant and may be increased
periodically by the Board. During Fiscal 2001, the Company recorded $240,000 of
deferred compensation expense in respect of the Supplemental Plan. To qualify
for benefits, a participant must continue as an employee until age 62 and must
be an employee for at least five years after commencing participation. With
respect to participants who have met these qualifications, a rabbi trust" has
been established to hold Company contributions. Generally, no benefit is paid if
employment is terminated before a participant reaches his normal retirement
date, regardless of the reason. However, benefits are payable if a participant's
employment is terminated by the Company following a change of ownership" of the
Company (as that term is defined in the Supplemental Plan). Upon such a change
of ownership," a rabbi trust" must be established for participants who have not
begun to receive benefit payments and the Company must make contributions to
such trust in accordance with the Supplemental Plan. In that case, the actuarial
equivalent of a participant's retirement benefit is paid in a single sum as soon
as practicable after termination of employment for any reason. If such a change
of ownership occurs after a participant has already begun to receive benefit
payments, the actuarial equivalent of the remaining benefits payable will be
paid in a single sum. In the event a participant dies after qualifying for
retirement benefits but before all retirement benefits are paid, the remaining
benefits payable will be paid to the participant's designated beneficiary or
legal representative. Life insurance contracts have been purchased by the
Company to provide some or all of the benefits under the Supplemental Plan. Such
contracts may be held by, or made payable to, any rabbi trusts" established in
connection with the Supplemental Plan.
REPORT OF COMPENSATION COMMITTEE WITH RESPECT TO EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION PHILOSOPHY
The fundamental compensation philosophy of the Board of Directors is that
there should be a substantial and meaningful connection between executive
compensation and stockholder value. Under the supervision of the Compensation
Committee of the Board of Directors (the Compensation Committee"), which is
comprised of outside directors and which also administers the EICP, the
Company's prior Stock Incentive Plan for Corporate Officers and Management Staff
(the Stock Incentive Plan") and the Company's prior stock option plans, the
Company has developed and implemented compensation policies, plans and programs
designed to enhance the quality of health care services as well as increase
stockholder value by aligning closely the financial interests of the Company's
executive officers with those of its stockholders. In furtherance of these
goals, annual base salaries are intended to serve as only a portion of an
executive's total achievable compensation. The Board of Directors believes that
attracting and retaining executives of high quality is essential to the
Company's growth and success. The Board of Directors further believes that the
long term success of the Company is enhanced by a comprehensive compensation
program that includes different types of incentives for motivating executives
and rewarding outstanding service, including awards that link compensation to
applicable measures of Company performance. The Company relies to a large degree
on annual and long-term incentive compensation to attract and retain executives
of outstanding ability and to motivate them to perform to the full extent of
their abilities. Both the annual and long-term components of the incentive
compensation policy are closely tied to quality of health care services
provided, profitability and stockholder value. In years of outstanding
achievement, executive officers will be substantially rewarded for their
respective contributions to the Company's success through a combination of cash
and stock-based incentive awards.
11
THE EICP
The EICP, which was approved by the stockholders in 1996, is a
comprehensive executive compensation plan which provides for grants of
performance or annual incentive awards that may be settled in cash, stock or
other property, as well as stock options, SARs, restricted stock, deferred stock
and other stock-related awards.
EXECUTIVE OFFICER COMPENSATION
The Company's current total compensation program for executive officers
consists of both cash and stock-based compensation. The annual cash compensation
consists of a base salary determined at the beginning of each calendar year and
the awarding of incentive bonuses pursuant to the EICP, as described below. The
base salaries are fixed at levels that the Compensation Committee believes to be
generally below amounts paid to highly qualified senior executives at other
large companies engaged in similar businesses as the Company. Salaries are
reviewed on an annual basis and may be increased at that time based on (i) the
Compensation Committee's consensus that the individual's contribution to the
Company has increased, and (ii) increases in competitive pay levels.
In general, annual cash compensation incentives for executives are intended
to reflect the Company's belief that management's contribution to improving the
quality of health care services and stockholder return are related to earnings
growth. Under the current incentive compensation program under the EICP (which
parallels the prior Incentive Compensation Plan), a bonus (calculated as a
percentage of base salary) is paid to participants for each year in which the
Company achieves, in audited fiscal year-end results, at least 75% of its profit
plan. Each participant in this incentive compensation program is in one of eight
bonus categories (ranging from 10% to 125% of base salary), and his
proportionate share of the annual bonus depends upon the profit percentage
achieved by the Company. Participants in this incentive compensation program are
selected and assigned to bonus categories by the Compensation Committee, and all
of the Company's executive officers are participants.
Long-term incentives are currently intended to be provided through the
grant of stock options and contingent stock awards. Under the EICP, the
Compensation Committee has the authority to determine the individuals to whom
stock options are granted, the terms on which option grants are made, and the
term of and the number of shares subject to each option. Through the grant of
stock options, the objective of aligning executive officers' long-range
interests with improving health care services and stockholder return are met by
providing the executive officers with the opportunity to build a meaningful
stake in the Company. In granting stock options to the Company's senior
management, the Compensation Committee reviews and considers the individual
awards, taking into account the respective scope of accountability, strategic
and operational goals, and anticipated performance requirements and
contributions of each option grantee. During Fiscal 2001, options to purchase an
aggregate of 2,804,000 shares of Common Stock were granted under the EICP,
including options to purchase an aggregate of 950,000 shares granted to the
Named Executives. See EXECUTIVE COMPENSATION - Stock Options."
Under the current stock incentive program under the EICP (which parallels
the prior Stock Incentive Plan), the Compensation Committee has the authority to
award shares of Common Stock to all executive officers and senior managers of
the Company. In making such awards, the Compensation Committee considers all of
the factors discussed, and follows the procedure described, in the preceding
paragraph.
Stock awards under the prior Stock Incentive Plan and the stock incentive
program under the EICP are generally contingent upon completion of four
additional years of employment with the Company. The market value as of the
award grant date of the shares credited to an executive's contingent award
account for any
12
fiscal year may not exceed 100% of the executive's bonus for the same year under
the incentive compensation program discussed above. No shares are issued or
reserved for the executive's account at the time of an award, but are instead
issued after the fourth anniversary of the award grant date, provided the
executive is still an employee of the Company. During Fiscal 2001, the Company
recorded $2,100,000 of deferred compensation expense in respect of such stock
awards.
Executive officers may also participate in the Company's Retirement Savings
Plan, a 401(k) plan, which includes both employer and employee contributions. In
addition, the Company has a deferred compensation program which provides
payments to key executive employees selected by the Board of Directors who reach
normal retirement age. The amount of the benefit provided each executive is at
the discretion of the Board. See EXECUTIVE COMPENSATION - Supplemental Executive
Retirement Plan."
CHIEF EXECUTIVE OFFICER COMPENSATION
The key performance measure used to determine Mr. Vumbacco's Fiscal 2001
compensation package was the Compensation Committee's assessment of his ability
and dedication to provide the leadership and vision necessary to enhance the
long-term value of the Company.
For Fiscal 2001, the Board of Directors fixed Mr. Vumbacco's salary at
$600,000. The Compensation Committee believes that Mr. Vumbacco's salary is
fixed at a level which is below the amounts paid to other chief executive
officers with comparable qualifications, experience, responsibilities and proven
results at other large companies engaged in similar businesses.
Consistent with the Company's executive compensation philosophy, Mr.
Vumbacco's total compensation package depends largely on annual and long-term
incentive compensation. The annual incentive component is currently made up of a
cash bonus under the incentive compensation program of the EICP, paid after the
end of the fiscal year and based on the quality of health care services
delivered by the Company's hospitals and the profitability of the Company. The
long-term incentive component currently takes the form of stock options and
contingent stock awards under the EICP. Mr. Vumbacco is also eligible to receive
other awards under the EICP. Both the annual and long-term components of Mr.
Vumbacco's incentive compensation are variable and closely tied to corporate
performance in a manner which encourages dedication to improving health care
services and building stockholder value.
In evaluating the performance and setting the incentive compensation of Mr.
Vumbacco as the Company's Chief Executive Officer, the Compensation Committee
has taken particular note of Mr. Vumbacco's role in the outstanding QSM patient
satisfaction survey results achieved by the Company during Fiscal 2001. QSM is a
quality management program that questions patients on various topics relating to
health care services and compares the results against specific patient-care
objectives set by management and staff physicians. In addition, the Compensation
Committee considered Mr. Vumbacco's strong leadership in the Company's
acquisition of three hospitals during Fiscal 2001 (which acquisitions increased
the Company's licensed beds by approximately 9%), as well as a substantial
annual increase in the Company's stockholder value since Mr. Vumbacco became a
key executive officer in 1996.
Among the key indicators of the Company's performance in Fiscal 2001, net
patient service revenue increased 19% from $1,577.8 million in Fiscal 2000 to
$1,879.0 million in Fiscal 2001, and net income (before non-cash, non-recurring
charges) increased 22% from $167.7 million in Fiscal 2000 to $205.3 million in
Fiscal 2001. Diluted earnings per share (before non-cash, non-recurring charges)
increased 18% from $0.68 in Fiscal 2000 to $0.80 in Fiscal 2001.
13
In addition to leading the Company to outstanding financial achievements,
Mr. Vumbacco has established a strong record in the areas of quality of health
care services provided, innovation and management efficiency and has
aggressively pursued new areas for growth.
Mr. Vumbacco's short-term and long-term incentive compensation package for
Fiscal 2001 includes a cash bonus in an amount equal to 125% of his annual
salary, a contingent stock award in an amount equal to his cash bonus, and the
grant of an option to purchase 750,000 shares of Common Stock. Mr. Vumbacco's
compensation package focuses on the importance of improving the health care
services delivered by the Company's hospitals as well as increasing stockholder
value, by providing him with significant short-term and long-term incentive
compensation during periods when performance objectives have been met or
exceeded.
Compensation Committee:
ROBERT A. KNOX, CHAIRMAN
KENT P. DAUTEN
KENNETH D. LEWIS
14
STOCK PRICE PERFORMANCE GRAPH
The following graph sets forth a comparison of the cumulative total
stockholder return on the Common Stock during the five-year period ended
September 30, 2001, based on the market price thereof and taking into account
all stock splits in the form of stock dividends paid through Fiscal 2001
year-end, with the cumulative total return of companies on the Standard & Poor's
500 Stock Index and companies on the S&P Health Care Sector Index.
COMPARISON OF CUMULATIVE TOTAL RETURNS
[PERFORMANCE GRAPH]
ASSUMES $100 INVESTED ON SEPTEMBER 30, 1996 IN THE COMPANY'S COMMON STOCK,
THE COMPANIES COMPRISING THE STANDARD & POOR'S 500 STOCK INDEX AND THE
COMPANIES CURRENTLY COMPRISING THE S&P HEALTH CARE SECTOR INDEX. TOTAL
RETURN ASSUMES REINVESTMENT OF DIVIDENDS.
There can be no assurance that the Company's stock performance will
continue into the future with the same or similar trends depicted in the graph
above. The Company will neither make nor endorse any predictions as to future
stock performance.
15
CERTAIN TRANSACTIONS
Pursuant to a Registration Agreement dated as of September 2, 1988, William
J. Schoen, the Chairman of the Company, and Robert A. Knox, a director of the
Company, have certain demand registration rights and piggyback" registration
rights, at the Company's expense, with respect to registration under the
Securities Act of all of their shares of Common Stock.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The firm of Ernst & Young LLP, Certified Public Accountants, has been
selected as the Company's independent accountant for the fiscal year ending
September 30, 2002. Ernst & Young LLP was also the Company's independent
accountant for Fiscal 2001. A representative of Ernst & Young LLP is expected to
be present at the Meeting. That representative will have an opportunity to make
a statement, if he should so desire, and will be available to respond to
appropriate questions.
AUDIT FEES
For Fiscal 2001, Ernst & Young LLP billed the Company an aggregate of
$702,000 for professional services rendered for the audit of the Company's
Fiscal 2001 financial statements and the review of the Company's financial
statements included in the quarterly reports on SEC Form 10-Q filed by the
Company in Fiscal 2001.
FINANCIAL INFORMATION SYSTEMS AND IMPLEMENTATION FEES
No fees were billed by Ernst & Young LLP to the Company for professional
services rendered for information technology services relating to financial
information systems design and implementation for Fiscal 2001.
ALL OTHER FEES
For Fiscal 2001, Ernst & Young billed the Company an aggregate of $543,000
for services rendered to the Company other than the services described above
under Audit Fees" and Financial Systems Design and Information Fees." These
services consisted of tax services, audits of the Company's employee benefit
plans, other statutorily required audits and other advisory services.
REPORT OF THE AUDIT COMMITTEE TO STOCKHOLDERS
The Audit Committee of the Board of Directors (the Audit Committee") is
currently comprised of five members of the Company's Board of Directors, each of
whom is independent pursuant to the New York Stock Exchange's listing standards.
The duties and responsibilities of the Audit Committee are set forth in the
Audit Committee Charter, as adopted by the Board of Directors. The Audit
Committee Charter was included as an exhibit to the Company's proxy statement
for the 2001 Annual Meeting of Stockholders. The Audit Committee, among other
things, recommends to the Board of Directors: (i) that the audited financial
statements be included in the Company's Annual Report on Form 10-K; and (ii) the
selection of the independent auditors to audit the books and records of the
Company.
The Audit Committee has: (i) reviewed and discussed the Company's audited
financial statements for Fiscal 2001 with the Company's management and with
Ernst & Young LLP, the Company's independent auditors; (ii) discussed with the
Company's independent auditors the matters required to be discussed by SAS 61
(Codification for Statements on Auditing Standards); and (iii) received and
discussed the written disclosures and the letter from the Company's independent
auditors required by Independence Standards
16
Board Statement No. 1 (Independent Discussions with Audit Committees). When
considering Ernst & Young LLP's independence, the Audit Committee considered
whether Ernst & Young LLP's provision of services to the Company beyond those
rendered in connection with their audit and review of the Company's consolidated
financial statements was compatible with maintaining auditor independence. The
Audit Committee also reviewed, among other things, the amount of fees paid to
Ernst & Young LLP for audit and non-audit services.
Based on our review of such discussions and reports, and subject to the
limitations on the Committee's role and responsibilities contained in the Audit
Committee Charter, the Audit Committee recommended to the Board that the
Company's audited consolidated financial statements for Fiscal 2001 be included
in the Company's Annual Report on Form 10-K. The Committee has also recommended
the selection of the Company's independent auditors, and, based on this
recommendation, the Board has selected Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending September 30, 2002.
Audit Committee:
KENT P. DAUTEN, CHAIRMAN
DONALD E. KIERNAN
CHARLES R. LEES
WILLIAM E. MAYBERRY, M.D.
RANDOLPH W. WESTERFIELD, PH.D.
17
STOCKHOLDER PROPOSALS FOR 2003 ANNUAL MEETING
In order for any stockholder proposal to be included in the Company's proxy
statement to be issued in connection with the 2003 Annual Meeting of
Stockholders, such proposal must be received by the Company no later than August
30, 2002. If such proposal is in compliance with all of the requirements of Rule
14a-8 under the Exchange Act, it will be included in the proxy statement and set
forth on the form of proxy issued for such Annual Meeting. Stockholder proposals
that are not submitted for inclusion in the Company's proxy materials pursuant
to Rule 14a-8 under the Exchange Act may be brought before the 2003 Annual
Meeting of Stockholders if notice thereof is received by the Company no later
than November 12, 2002.
OTHER MATTERS
The Board of Directors does not know of any other matters that may be
presented for action at the Meeting. Should any other matters come before the
Meeting, however, the persons named in the enclosed proxy will have
discretionary authority to vote all proxies with respect to such matters in
accordance with their judgment.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Timothy R. Parry,
-----------------------------------
Timothy R. Parry,
CORPORATE SECRETARY
Dated: December 28, 2001
18
^ FOLD AND DETACH HERE ^
--------------------------------------------------------------------------------
PROXY
HEALTH MANAGEMENT ASSOCIATES, INC.
2002 Annual Meeting of Stockholders
The undersigned hereby appoints WILLIAM J. SCHOEN and TIMOTHY R. PARRY, and
each and any of them, proxies for the undersigned with full power of
substitution, to vote all shares of the Common Stock of HEALTH MANAGEMENT
ASSOCIATES, INC. (the "Company") owned by the undersigned at the Annual Meeting
of Stockholders to be held at the Philharmonic Center for the Arts, Daniels
Pavilion, 5833 Pelican Bay Boulevard, Naples, Florida 34108, on Tuesday,
February 19, 2002 at 1:30 p.m., local time, and at any adjournments thereof:
1. Election of Directors.
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY to vote
(except as marked to the contrary). for all nominees listed below.
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME LISTED BELOW.
William J. Schoen Joseph V. Vumbacco Kent P. Dauten Donald E. Kiernan
Robert A. Knox Kenneth D. Lewis William E. Mayberry, M.D.
Randolph W. Westerfield, Ph.D.
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
(CONTINUED AND TO BE SIGNED, ON REVERSE SIDE)
^ FOLD AND DETACH HERE ^
--------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
THIS PROXY WILL BE VOTED AS SPECIFIED BY THE UNDERSIGNED. THIS PROXY REVOKES ANY
PRIOR PROXY GIVEN BY THE UNDERSIGNED. UNLESS AUTHORITY TO VOTE FOR ONE OR MORE
OF THE NOMINEES IS SPECIFICALLY WITHHELD ACCORDING TO THE INSTRUCTIONS, A SIGNED
PROXY WILL BE VOTED FOR THE ELECTION OF THE EIGHT NAMED NOMINEES FOR DIRECTORS.
THE UNDERSIGNED ACKNOWLEDGES RECEIPT WITH THIS PROXY OF A COPY OF THE NOTICE OF
ANNUAL MEETING AND PROXY STATEMENT DATED DECEMBER 28, 2001, DESCRIBING MORE
FULLY THE PROPOSALS SET FORTH HEREIN. DATED: , 2002
Date: , 2002
----------------------------------
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Signature(s) of Stockholder(s)
Please date and sign name exactly as it
appears hereon. Executors, administrators,
trustees, etc. should so indicate when
signing. If the stockholder is a corporation,
the full corporate name should be inserted
and the proxy signed by an officer of the
corporation, indicating his/her title.