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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement
(Pursuant to Section 14(a) of the Securities Exchange Act of 1934)
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Materials Pursuant to Section 240.14a-11(c) or Section
240.14a-12
PEDIATRIX MEDICAL GROUP, INC.
(Name of Registrant as specified in its Charter)
PEDIATRIX MEDICAL GROUP, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
|X| No Fee Required
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| 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 Parties:
(4) Date Filed:
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PEDIATRIX MEDICAL GROUP, INC.
--------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 2, 1999
---------------------------------
To the Shareholders of
Pediatrix Medical Group, Inc.
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Shareholders of
Pediatrix Medical Group, Inc., a Florida corporation (the "Company"), will be
held at 10:00 a.m., local time, on Wednesday, June 2, 1999, at the Sheraton
Suites, 311 North University Drive, Plantation, Florida, 33324 for the following
purposes:
(1) To elect five members to the Company's Board of Directors to hold
office until their terms shall expire or until their successors
are duly elected and qualified;
(2) To transact such other business as may properly come before the meeting
and any adjournments thereof.
The Board of Directors has fixed the close of business on April 26,
1999 as the record date for determining those shareholders entitled to notice
of, and to vote at, the Annual Meeting and any adjournments thereof.
Whether or not you expect to be present, please sign, date and return
the enclosed proxy card in the enclosed pre-addressed envelope as promptly as
possible. No postage is required if mailed in the United States.
By Order of the Board of Directors,
Roger J. Medel, M.D., M.B.A.
President and Chief Executive Officer
Ft. Lauderdale, Florida
May 7, 1999
THIS IS AN IMPORTANT MEETING AND ALL SHAREHOLDERS ARE INVITED TO ATTEND THE
MEETING IN PERSON. THOSE SHAREHOLDERS WHO ARE UNABLE TO ATTEND ARE RESPECTFULLY
URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE.
SHAREHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING,
REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON.
ANNUAL MEETING OF SHAREHOLDERS
OF
PEDIATRIX MEDICAL GROUP, INC.
--------------------------------
PROXY STATEMENT
--------------------------------
DATE, TIME AND PLACE OF ANNUAL MEETING
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Pediatrix Medical Group, Inc., a Florida
corporation (the "Company"), of proxies from the holders of the Company's Common
Stock, par value $0.01 per share (the "Common Stock"), for use at the 1999
Annual Meeting of Shareholders of the Company, to be held on the 2nd day of
June, 1999, at the Sheraton Suites, 311 North University Drive, Plantation,
Florida 33324 or any adjournment(s) thereof (the "Annual Meeting"), pursuant to
the enclosed Notice of Annual Meeting. The approximate date this Proxy Statement
and the enclosed form of proxy are first being sent to holders of Common Stock
is May 7, 1999. The complete mailing address, including zip code, of the
principal executive offices of the Company is 1455 North Park Drive, Ft.
Lauderdale, Florida 33326.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Board of Directors of
the Company. The giving of a proxy does not preclude the right to vote in person
should any shareholder giving the proxy so desire. Shareholders have an
unconditional right to revoke their proxy at any time prior to the exercise
thereof, either in person at the Annual Meeting or by filing with the Secretary
of the Company at the Company's headquarters a written revocation or duly
executed proxy bearing a later date; however, no such revocation will be
effective until written notice of the revocation is received by the Company at
or prior to the Annual Meeting.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting of Shareholders and the enclosed proxy is to be borne
by the Company. In addition to the use of mail, employees of the Company may
solicit proxies personally and by telephone and facsimile. They will receive no
compensation therefor in addition to their regular salaries. Arrangements will
be made with banks, brokers and other custodians, nominees and fiduciaries to
forward copies of the proxy material to their principals and to request
authority for the execution of proxies. The Company will reimburse such persons
for their expenses in so doing.
PURPOSES OF THE MEETING
At the Annual Meeting, the Company's shareholders will consider and
vote upon the following matters:
1. The election of five directors to serve until the next Annual
Meeting of Shareholders or until their successors are duly
elected and qualified;
2. Such other business as may properly come before the Annual
Meeting, including any adjournments thereof;
Unless contrary instructions are indicated on the enclosed proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
which have not been revoked in accordance with the procedures set forth above)
will be voted (i) FOR the election of the five nominees for director named
below; (ii) in favor of all other proposals as may properly come before the
Annual Meeting. In the event a shareholder specifies a different choice by means
of the enclosed proxy, his shares will be voted in accordance with the
specification so made.
OUTSTANDING SHARES AND VOTING RIGHTS
The Board of Directors has set the close of business on April 26, 1999
(the "Record Date"), as the record date for determining shareholders of the
Company entitled to notice of and to vote at the Annual Meeting. As of the
Record Date there were 15,502,022 shares of Common Stock issued and outstanding,
all of which are entitled to be voted at the Annual Meeting. Holders of Common
Stock are entitled to one vote per share on each matter that is submitted to
shareholders for approval.
The attendance, in person or by proxy, of the holders of shares of
Common Stock representing a majority of the outstanding shares of such stock is
necessary to constitute a quorum. For purposes of electing directors at the
Annual Meeting, the nominees receiving the greatest number of votes of Common
Stock shall be elected as directors. Any other matter that may be submitted to a
vote of the shareholders will be approved if the number of shares of Common
Stock voted in favor of the matter exceeds the number of votes in opposition of
the matter, unless otherwise required by law or the Company's Articles of
Incorporation or Bylaws. Abstentions are considered as shares present and
entitled to vote for purposes of determining the presence of a quorum and for
purposes of determining the outcome of any matter submitted to the shareholders
for a vote, but are not counted as votes "for" or "against" any matter. The
inspectors of election will treat shares referred to as "broker or nominee
non-votes" (shares held by brokers or nominees as to which instructions have not
been received from the beneficial owners or persons entitled to vote and the
broker or nominee does not have discretionary voting power on a particular
matter) as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. For purposes of determining the outcome of
any matter as to which the proxies reflect broker or nominee non-votes, shares
represented by such proxies will be treated as not present and not entitled to
vote on that subject matter and therefore will not be considered by the
inspectors of election when counting votes cast on the matter (even though those
shares are considered entitled to vote for quorum purposes and may be entitled
to vote on other matters.) If less than a majority of the outstanding shares of
Common Stock are represented at the Annual Meeting, a majority of the shares so
represented may adjourn the Annual Meeting from time-to-time without further
notice.
SECURITY OWNERSHIP
The following table sets forth information with respect to the
beneficial ownership of the Company's Common Stock as of April 26, 1999 by (a)
each person known to the Company to own beneficially more than five percent of
the Company's outstanding Common Stock, (b) each director (including nominees)
who owns any such shares, (c) each Named Executive Officer who owns any such
shares (see "Executive Compensation and Other Information--Summary of Cash and
Certain Other Compensation"), and (d) the directors and executive officers of
the Company as a group:
Common Stock
Beneficially Owned(2)
---------------------
Name of Beneficial Owner(1) Shares Percent
- --------------------------- ------ -------
Roger J. Medel, M.D., M.B.A.(3)................................... 1,656,875 10.06%
Lawrence M. Mullen(4)............................................. 190,760 1.21%
Karl B. Wagner (5) ............................................... 15,036 *
Kristen Bratberg (6).............................................. 153,702 *
Bruce A. Jordan (7)............................................... 13,436 *
M. Douglas Cunningham, M.D.(8).................................... 50,300 *
Cesar L. Alvarez(9)............................................... 5,000 *
Michael B. Fernandez(10).......................................... 7,400 *
Waldemar A. Carlo, M.D.(11)....................................... 200 *
Denver Investment Advisors LLC (12)............................... 820,900 5.30%
Pilgrim Baxter & Associates (13).................................. 1,471,600 9.49%
Putnam Investments, Inc. (14)..................................... 2,195,312 14.16%
Franklin Resources, Inc. (15)..................................... 1,146,100 7.39%
Zak Capital, Inc. (16)............................................ 877,335 5.66%
Wasatch Advisors, Inc.(17)........................................ 1,770,290 11.42%
All directors and executive officers
as a group (8 persons)(18)...................................... 2,092,509 12.39%
2
- ----------------------
* Less than one percent.
(1) Unless otherwise indicated, the address of each of the beneficial
owners identified is 1455 North Park Drive, Ft. Lauderdale, Florida
33326.
(2) Based on 15,502,022 shares of Common Stock outstanding. Pursuant to the
rules of the Securities and Exchange Commission (the "Commission"),
certain shares of Common Stock which a person has the right to acquire
within 60 days of April 26, 1999 pursuant to the exercise of stock
options are deemed to be outstanding for the purpose of computing the
percentage ownership of such person but are not deemed outstanding for
the purpose of computing the percentage ownership of any other person.
(3) Includes (i) 240 shares owned by Dr. Medel's children, as to which Dr.
Medel disclaims beneficial ownership, (ii) 643,665 shares held by Medel
Family Limited Partnership, L.P., a Delaware limited partnership, (iii)
27,970 shares held by Medel Investments, Inc., a Nevada corporation, (iv)
25,000 shares directly owned (v) 920,000 shares subject to presently
exercisable options, and (vi) 40,000 shares subject to presently
exercisable options held by his wife.
(4) Includes (i) 7,427 shares directly owned, 2,427 of which were acquired
through the Employee Stock Purchase Plan, and (ii) 183,333 shares subject
to presently exercisable options.
(5) Includes (i) 35 shares accumulated through the Company's 401(k)
Thrift and Profit Sharing Plan, and (ii) 15,001 shares subject to
presently exercisable options.
(6) Includes (i) 3,702 shares directly owned, 2,702 of which were acquired
through the Employee Stock Purchase Plan and (ii) 150,000 shares subject
to presently exercisable options.
(7) Includes (i) 103 shares directly owned which were acquired through the
Employee Stock Purchase Plan, and (ii) 13,333 shares subject to presently
exercisable options.
(8) Includes (i) 300 shares directly owned, and (ii) 50,000 shares subject to
presently exercisable options. (9) All 5,000 shares are subject to
presently exercisable options. The address of Mr. Alvarez is 1221
Brickell Avenue, 22nd Floor, Miami, Florida 33131.
(10) Includes 5,000 shares which are subject to presently exercisable options.
The address of Mr. Fernandez is 2333 Ponce de Leon Boulevard, Suite 303,
Coral Gables, Florida 33134.
(11) Includes 200 shares owned by Dr. Carlo's child as to which Dr. Carlo
disclaims beneficial ownership.
(12) Denver Investment Advisors LLC, a registered investment advisor, is
deemed to have beneficial ownership of 820,900 shares, based upon the
most recent Schedule 13G filing. The address of Denver Investment
Advisors is 1225 17th Street, 26th Floor, Denver, Colorado 80202.
(13) Pilgrim Baxter & Associates, a registered investment advisor, is deemed
to have beneficial ownership of 1,471,600 shares based upon the most
recent Schedule 13G. The address of Pilgrim Baxter and Associates is 825
Duportail Road, Wayne, Pennsylvania 19087.
(14) Putnam Investments, Inc., a registered investment advisor, is deemed to
have beneficial ownership of 2,195,312 shares based upon the most recent
Schedule 13G. The address of Putnam Investments, Inc. is One Post Office
Square, Boston, Massachusetts 02109.
(15) Franklin Resources, a registered investment advisor, is deemed to have
beneficial ownership of 1,146,100 shares based on the most recent
Schedule 13G. The address of Franklin Resources, Inc. is 777 Mariner's
Island Boulevard, San Mateo, California 94404.
(16) Zak Capital, Inc., a registered investment advisor, is deemed to have
beneficial ownership of 877,335 shares based on the most recent Schedule
13G. The address of Zak Capital, Inc. is 100 N. Sixth Street, Ste. 476
A, Minneapolis, MN 55403.
(17) The Company has been advised of the following: Wasatch Advisors, Inc. is
the investment advisor to Wasatch Funds, Inc., a registered investment
company comprised of a series of funds, and to a number of private client
accounts. No single fund and no single private account owns 5% or more of
the Company. The funds and private accounts hold the Company's shares
solely for investment purposes, with no intent to control the business or
affairs of the Company. The address of Wasatch Advisors, Inc. is 150
Social Hall Avenue, Salt Lake City, Utah 84111.
(18) Includes 1,381,667 shares subject to presently exercisable options.
3
ELECTION OF DIRECTORS
(Proposal No. 1)
The Company's Amended and Restated Articles of Incorporation provide
that the number of directors constituting the Company's Board of Directors shall
consist of not less than one member, the exact number of directors to be
determined from time to time by resolution adopted by the Board of Directors.
The Company's Bylaws provide that the number of directors shall be fixed from
time to time, within the limits specified by the Articles of Incorporation, by
resolution of the Board of Directors. The Board of Directors has fixed five as
the number of directors that will constitute the Board for the ensuing year.
Each director elected at the Annual Meeting will serve for a term expiring at
the 2000 Annual Meeting of Shareholders, expected to be held in May 2000, or
until his successor has been duly elected and qualified.
Nominees
Each of the incumbent directors has been nominated as a director to be
elected at the Annual Meeting by the holders of Common Stock and proxies will be
voted for such persons absent contrary instructions. See "Management --
Executive Officers and Directors" for the biographies of the incumbent
directors. Additionally, Waldemar A. Carlo, M.D. is a director nominee.
Waldemar A. Carlo, M.D., age 46, is a director nominee. Dr. Carlo has
served as Professor of Pediatrics and Director of the Division of Neonatology at
the University of Alabama at Birmingham Medical School since 1991. Dr. Carlo has
also served as Director of Newborn Nurseries at the University of Alabama
Medical Center and the Children's Hospital of Alabama since 1991. Dr. Carlo
participates as a member of several medical and professional organizations. He
has also received numerous research awards and grants and has lectured
extensively, both nationally and internationally.
The Board of Directors has no reason to believe that any nominee will
refuse to act or be unable to accept election; however, in the event that a
nominee for a directorship is unable to accept election or if any other
unforeseen contingencies should arise, it is intended that proxies will be voted
for the remaining nominees and for such other person as may be designated by the
Board of Directors, unless it is directed by a proxy to do otherwise.
Dr. Medel has served as Director since 1980. Mr. Fernandez has served
as a director since October 1995. Dr. Cunningham has served as a director since
October 1996, and Mr. Alvarez has served as a director since March 1997.
4
MANAGEMENT
Executive Officers and Directors
The executive officers and directors of the Company are as follows:
Name Age Position with the Company
- --------------------------------------------- ------- -----------------------------------------------------
Roger J. Medel, M.D., M.B.A ............. 52 President, Chief Executive Officer and Director
Lawrence M. Mullen ...................... 56 Vice President and Chief Operating Officer
Karl B. Wagner .......................... 33 Vice President and Chief Financial Officer
Kristen Bratberg ........................ 37 Vice President, Business Development
Bruce A. Jordan ......................... 45 Vice President, General Counsel and Corporate
Secretary
M. Douglas Cunningham, M.D............... 59 Director
Cesar L. Alvarez(2) ..................... 51 Director
Michael B. Fernandez(1)(2)............... 45 Director
- -----------------
(1) Member of Compensation Committee
(2) Member of Audit Committee.
Roger J. Medel, M.D. M.B.A. has held the position of President, Chief
Executive Officer and director of Pediatrix since he founded the Company in 1979
with Dr. Gregory Melnick. Dr. Medel has been an instructor in pediatrics at the
University of Miami and participates as a member of several medical and
professional organizations. Dr. Medel also holds a Masters Degree in Business
Administration from the University of Miami. Dr. Medel has served on the boards
of directors of Sechrist Industries Inc., ARC Broward Inc. and Physicians
Healthcare Plans, Inc.
Lawrence M. Mullen joined the Company in May 1995. Mr. Mullen has held
the position of Vice President and Chief Operating Officer of Pediatrix since
August 1998. Prior to his appointment as Chief Operating Officer, Mr. Mullen
served as the Company's Vice President and Chief Financial Officer. Mr. Mullen
was Senior Vice President and Chief Financial Officer of Medical Care America,
Inc. from May 1993 until its acquisition by Columbia/HCA Healthcare Corporation
in September 1994. Mr. Mullen served as a consultant to Columbia/HCA from
November 1994 until joining Pediatrix. Prior to joining Medical Care America,
Inc., Mr. Mullen was a partner of KPMG LLP, where he was employed from 1964 to
1993.
Karl B. Wagner joined Pediatrix Medical Group, Inc. in May 1997 and was
appointed Chief Financial Officer in August 1998. Prior to his appointment, Mr.
Wagner served as Controller, and was responsible for all accounting and
financial operations, including Securities and Exchange Commission reporting.
Prior to joining Pediatrix, Mr. Wagner was Chief Financial Officer for the East
Region of Columbia/HCA's Ambulatory Surgery Division from January 1995 until
joining the Company. From July 1993 through January 1995, Mr. Wagner was
Assistant Controller of Medical Care International, Inc., a subsidiary of
Medical Care America, Inc.
Kristen Bratberg joined the Company in November 1995 as Vice President,
Business Development. Prior to joining the Company, Mr. Bratberg was employed by
Dean Witter Reynolds Inc. in the Corporate Finance Department from May 1987 to
November 1995, most recently as a Senior Vice President specializing in the
healthcare industry.
5
Bruce A. Jordan joined the Company in April 1997 as Vice President,
General Counsel and Corporate Secretary. Prior to joining the Company, Mr.
Jordan was Vice President and General Counsel of Del Monte Fresh Produce ("Del
Monte") from May 1994 until joining the Company, and from October 1990 until May
1994 he served as Assistant General Counsel of Del Monte.
M. Douglas Cunningham, M.D. has been employed by the Company since June
1996. Dr. Cunningham served as Vice President and Chief Medical Officer from
June 1996 to June 1997, at which time he was appointed Vice President, Regional
Medical Operations. In October 1996, Dr. Cunningham was appointed director. Dr.
Cunningham has over 25 years experience as a practicing neonatologist and
professor of pediatrics and neonatology. From 1988 until joining the Company,
Dr. Cunningham served as the Senior Vice President, Medical Operations with
Infant Care Management Services, Inc. Dr. Cunningham has also served as a
professor at several medical schools, most recently as a Clinical Professor of
Pediatrics at the University of California, Irvine, and has published numerous
medical articles.
Cesar L. Alvarez was appointed as a director in March 1997. Mr. Alvarez
has been a lawyer with the law firm of Greenberg Traurig, P.A. for over 20
years, where he has served as the chairman of its corporate, securities and
banking department and currently serves as the firm's Chief Executive Officer
and Managing Shareholder. Mr. Alvarez also serves as a director of Atlantis
Plastics, Inc., Texpack, N.V. and Watsco, Inc.
Michael B. Fernandez was appointed as a director in October 1995. Mr.
Fernandez has served since 1992 as Chairman of the Board and Chief Executive
Officer of Physicians Healthcare Plans, Inc., a Florida - based health
maintenance organization. Prior to that time, Mr. Fernandez served from 1990 to
1992 as Executive Vice President of Product Development and Marketing as well as
Chief Executive Officer of certain indemnity subsidiaries of CAC-United
Healthcare Plans of Florida, Inc., a publicly - held managed care company.
Meetings and Committees of the Board of Directors
The Board of Directors held five meetings during 1998 and took certain
actions by unanimous written consent. Each director attended at least 75 percent
of the aggregate of (i) the number of such meetings, and (ii) the number of
meetings of committees of the Board of Directors held during 1998.
Mr. Fernandez and Mr. Albert H. Nahmad were members of the 1998 Audit
Committee, which was established in January 1996. On February 16, 1999, the
Board of Directors appointed Cesar Alvarez as a member and Chairman of the Audit
Committee along with Messrs. Fernandez and Stamps (who replaced Mr. Nahmad at
the time of his resignation from the Board of Directors and served until his own
resignation in May 1999). The duties and responsibilities of the Audit Committee
include (a) recommending to the full Board the appointment of the Company's
auditors and any termination of engagement, (b) reviewing the plan and scope of
audits, (c) reviewing the Company's significant accounting policies and internal
controls, and (d) having general responsibility for all related auditing
matters. The Audit Committee held one stand-alone meeting and participated in
various meetings held by the full Board of Directors in 1998.
Messrs. Evans, Fernandez and Nahmad were members of the 1998
Compensation Committee, with Mr. Evans as Chairman of the Compensation
Committee. In February 1999, Mr. Nahmad resigned from his position as a director
and as a member of the Compensation Committee. In May 1999, Mr. Evans resigned
from his position as a director and member of the Compensation Committee. The
Compensation Committee is responsible for setting and administering policies
that govern annual compensation of the Company's executive officers. The
Compensation Committee has the exclusive power and authority to make
compensation decisions and make recommendations to the Board of Directors on
compensation matters affecting the Company's executive officers. The
Compensation Committee also administers the Company's stock option plan, stock
purchase plans and incentive plans for executive officers. The Compensation
Committee held one meeting in 1998.
6
Director Compensation
The Company pays each director who is neither an employee nor is
associated with one of the Company's principal shareholders an annual director's
fee of $7,500, payable quarterly, a $1,000 fee for each meeting of the Board of
Directors attended by such director and, if not held in conjunction with a
regular meeting of the Board of Directors, a $500 fee for each committee meeting
attended. In addition, each non-employee director not affiliated with one of the
Company's principal shareholders (an "Outside Director") receives options to
purchase 5,000 shares of Common Stock on such director's initial appointment to
the Board, which options become fully exercisable on the one-year anniversary
date of the grant. The unexercised portion of any option granted to an Outside
Director becomes null and void three months after the date on which such Outside
Director ceases to be a director of the Company for any reason. The Company also
reimburses all directors for out-of-pocket expenses incurred in connection with
the rendering of services as a director. Dr. Cunningham also serves as Vice
President, Regional Medical Operations pursuant to an employment agreement with
the Company which provides for an annual salary of $150,000 plus a performance
bonus. During 1998, Dr. Cunningham received compensation of $336,017 including
bonuses for services rendered to the Company.
Compensation Committee Interlocks and Insider Participation
Mr. Fernandez, a member of the Company's Compensation Committee, is
also a director and executive officer of Physicians Healthcare Plans, Inc. Dr.
Medel served on the Board of Directors of PHP Holdings, Inc., the parent company
of Physicians Healthcare Plans, Inc., through October 1998.
7
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of Cash and Certain Other Compensation
The following table sets forth certain summary information concerning
compensation paid or accrued by the Company and its subsidiaries to or on behalf
of the Company's Chief Executive Officer and each of the most highly compensated
executive officers of the Company who were serving as executive officers at the
end of the last completed fiscal year, whose total annual salary and bonus,
determined as of the end of the last fiscal year, exceeded $100,000
(collectively, the "Named Executive Officers"), for the fiscal years ended
December 31, 1998, 1997, and 1996.
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation(1) -----------------
--------------------------------------- No. of Securities All Other
Fiscal Underlying Compensation
Name and Principal Position Year Salary($) Bonus ($) Options (3)
- ------------------------------------- --------- ----------- ----------- ----------------- ------------
Roger J. Medel, M.D., M.B.A. 1998 $400,000 $782,350(2) 50,000 $6,400
President and Chief Executive 1997 400,000 100,000(2) 200,000 6,400
Officer.......................... 1996 397,984 539,000(2) 200,000 3,595
Lawrence M. Mullen 1998 $250,000 $150,000(2) 50,000 $6,400
Vice President and Chief 1997 250,000 50,000(2) 50,000 6,400
Operating Officer................ 1996 169,309 50,000(2) 50,000 6,000
Karl B. Wagner 1998 $105,000 $50,000(2) 25,000 $4,600
Vice President and Chief Financial
Officer (4)
Kristen Bratberg 1998 $200,000 $1,138,722 50,000 $6,400
Vice President, Business 1997 200,000 1,017,077 50,000 6,400
Development...................... 1996 200,000 699,000 -0- 6,000
Bruce A. Jordan 1998 $180,000 $30,000(2) 0 $6,400
Vice President, General Counsel 1997 117,778 20,000(2) 20,000 3,533
and Corporate Secretary (5)......
- ----------------------------------
(1) The column for "Other Annual Compensation" has been omitted because there
is no compensation required to be reported in such columns. The aggregate
amount of perquisites and other personal benefits provided to each
officer listed above is less than 10% of the total annual salary and
bonus of such officer.
(2) Includes bonuses paid in a subsequent year for services performed in the
year reported.
(3) Reflects matching contributions to the Company's 401(k) plan.
(4) Mr. Wagner joined the Company as Controller in May 1997 and was appointed
as Chief Financial Officer in August 1998.
(5) Mr. Jordan joined the Company in April 1997.
8
Option Grants Table
The following table sets forth certain information concerning grants of
stock options made during fiscal 1998 to the Named Executive Officers.
Individual Option Grants in 1998 Fiscal Year
-----------------------------------------------------------------------------------
% of Total Potential Realizable Value
Options at Assumed Annual Rates of
Granted to Exercise Stock Price Appreciation
Number Employees Price For Option Term(1)
of Options in Fiscal Per Expiration ----------------------------
Name Granted 1998 Share(2) Date 5% 10%
- -------------------------------- ------------ ---------- --------- ----------- ----------------------------
Roger J. Medel, M.D. M.B.A....... 50,000 5.76% $38.125 1/28/2008 $1,198,830 $3,038,072
Lawrence M. Mullen............... 50,000 5.76% 36.125 1/9/2008 1,135,941 2,878,697
Karl B. Wagner................... 15,000 1.15% 36.125 1/9/2008 340,782 863,609
10,000 1.73% 32.500 6/15/2008 204,391 517,966
Kristen Bratberg................. 50,000 5.76% 36.125 1/9/2008 1,135,941 2,878,697
Bruce A. Jordan.................. 0 - - - 0 0
- -------------------
(1) The dollar amounts set forth in these columns are the result of
calculations at the five percent and ten percent rates set by the
Securities and Exchange Commission, and therefore are not intended to
forecast possible future appreciation, if any, of the market price of the
Common Stock.
(2) All options were granted at exercise prices equal to the fair market
value of the Common Stock on the date of grant.
Stock Option Exercises and Year-End Option Value Table
The following table sets forth certain information concerning option
exercises in fiscal 1998, the number of stock options held by the Named
Executive Officers as of December 31, 1998 and the value (based on the fair
market value of a share of stock at fiscal year-end) of in-the-money options
outstanding as of such date.
Number of Number of Unexercised Value of Unexercised In-the-Money
Shares Options at Options at
Acquired December 31, 1998 December 31, 1998(1)
on Value -------------------------- ---------------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------
Roger J. Medel, M.D. M.B.A.... -- -- 770,000 250,000 $32,401,540 $5,1111,460
Lawrence M. Mullen............ -- -- 150,000 100,000 5,823,960 2,672,915
Karl B. Wagner................ -- -- 3,334 31,666 103,146 837,792
Kristen Bratberg.............. -- -- 116,667 83,333 4,584,385 2,221,865
Bruce A. Jordan............... -- -- 6,667 13,333 206,260 412,490
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(1) The closing sale price for the Company's Common Stock as reported on the
New York Stock Exchange on December 31, 1998 was $59.94. Value is
calculated by multiplying (a) the difference between $59.94 and the option
exercise price by (b) the number of shares of Common Stock underlying the
option.
Employment Contracts and Termination of Employment Agreements
The Company has entered into employment agreements with a number of the
executive officers (collectively the "Employment Agreements"). Pursuant to the
Employment Agreements, Dr. Medel, Messrs. Mullen, Bratberg, and Mr. Jordan
receive base salaries of $400,000, $250,000, $200,000 and $180,000,
respectively. The Employment Agreements also provide that such executives are
eligible to receive performance
9
bonuses. The Employment Agreements provide for payments to the executives upon
termination after a Change in Control (as defined) in amount equal to 200% of
average annual compensation for Dr. Medel, and 100% of the average annual
compensation for each of Mr. Mullen, Mr. Bratberg and Mr. Jordan for the five
taxable years prior to such termination. The executive officers each hold
options to purchase Common Stock granted under the Company's Amended and
Restated Stock Option Plan. The Employment Agreements provide that, to the
extent not already exercisable, such options will become exercisable if the
executive's employment is terminated within a 12-month period after a Change in
Control. The Employment Agreements further provide that each executive shall not
compete with the Company during the employment term and for a period of one year
thereafter following the termination of the agreement for any reason.
Compensation Committee Report on Executive Compensation
Under rules established by the Securities and Exchange Commission, the
Compensation Committee of the Board of Directors of the Company is required to
provide a report explaining the rationale and considerations that led to
fundamental compensation decisions affecting the Company's executive officers
(including the Named Executive Officers) during the past fiscal year.
General. The Compensation Committee is comprised of independent
directors and is responsible for setting and administering policies that govern
annual compensation of the Company's executive officers, as well as the
Company's stock option, employee stock purchase and incentive compensation
plans. The Compensation Committee's general philosophy with respect to the
compensation of the Company's executive officers is to offer competitive
compensation programs designed to attract and retain key executives critical to
the long-term success of the Company and to recognize an individual's
contribution and personal performance. Such compensation programs include a base
salary and an annual performance-based bonus as well as stock option plans and
incentive plans designed to provide long-term incentives. In addition, the
Compensation Committee may recommend the grant of discretionary bonuses to the
Company's executive officers.
In establishing the Company's executive compensation program, the
Compensation Committee takes into account current market data and compensation
trends for comparable companies, and gauges achievement of corporate and
individual objectives. The base salaries of the Named Executive Officers have
been fixed at levels which the Compensation Committee believes are competitive
with amounts paid to senior executives with comparable qualifications,
experience and responsibilities. Performance bonuses have been structured to
reinforce the achievement of both short and long-term corporate objectives. The
Company utilizes stock options to foster a long-term perspective aligned with
that of its shareholders. The salaries for each of the Named Executive Officers
is set forth in such executive's employment agreement.
1998 Compensation for the Chief Executive Officer. In October of 1998,
the Company amended and restated Dr. Medel's employment agreement, which
provides for a base salary of $400,000 per year and a five-year term. Dr. Medel
is also entitled to receive a performance bonus of $100,000 in each year that
Dr. Medel meets or exceeds certain performance objectives determined by the
Compensation Committee. At the 1997 annual shareholders meeting, the
shareholders approved the Incentive Plan, pursuant to which Dr. Medel is also
entitled to receive incentive compensation. This Incentive Plan incorporates the
terms of an incentive bonus previously contained in Dr. Medel's employment
agreement. In determining Dr. Medel's overall compensation for 1998, including
the grant of stock options, the Compensation Committee evaluated the Company's
growth during 1998, which included increases in the following areas: (i)
neonatal intensive care units managed by the Company, (ii) the number of
perinatologists employed by Obstetrix Medical Group, Inc., a subsidiary of the
Company, (iii) the number of patient days, and (iv) revenues. The Compensation
Committee believes that these achievements reflect the Chief Executive Officer's
strategic leadership for the Company and, as a result, awarded the Chief
Executive Officer the bonuses and stock options set forth in the Summary
Compensation Table.
Policy on Deductibility of Incentive Compensation. Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code") limits the tax
deduction to $1 million for compensation paid to the Company's five most highly
compensated executive officers, unless certain requirements are met. In order to
comply with Section 162(m), the Stock Option Plan limits the number of shares
underlying options awardable during the 10-year term of the Stock Option Plan to
any plan participant and is administered by a committee consisting only of
"outside
10
directors" (as defined in Section 162(m)). While the tax impact of any
compensation is one factor to consider, such impact is evaluated in light of the
Compensation Committee's overall compensation philosophy. The Compensation
Committee intends to establish executive officer compensation programs which
that maximize the Company's deduction if the Compensation Committee determines
that such actions are consistent with its philosophy and in the best interests
of the Company and its shareholders.
Michael B. Fernandez
Performance Graph
Set forth below is a line graph comparing the cumulative total
shareholder return on the Company's Common Stock against the cumulative total
return of the NYSE Composite Index, the NASD Composite Index and the NASD Health
Index for the period of September 20, 1995 (the date the Company's Common Stock
commenced trading on the Nasdaq National Market) to December 31, 1998. The
Company's Common Stock commenced trading on the New York Stock Exchange on
September 11, 1996. It was previously traded on the Nasdaq National Market. The
closing price of the Company's common stock on December 31, 1998 was $59.94, and
the closing price of the Company's common stock on April 30, 1999 was $18.94.
--------------------------------------------------------------------------------------------------------------------------
9/20/95 9/29/95 12/29/95 3/29/96 6/28/96 9/30/96 12/31/96 3/31/97 6/30/97 9/30/97
- ------------------------------------------------------------------------------------------------------------------------------------
Pediatrix 100.00 102.50 137.50 177.50 242.50 250.63 185.00 164.38 229.06 220.63
Medical
Group
NYSE 100.00 117.26 125.23 127.23 147.62 158.73
Composite
Index
NASDAQ 100.00 97.96 99.15 103.78 112.26
Index
NASDAQ 100.00 99.87 115.85 120.78 131.67 131.18 116.00 108.98 121.65 132.35
Health
- -----------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------
12/31/97 3/31/97 6/30/98 9/30/98 12/31/98
---------------------------------------------------------
Pediatrix 213.75 232.50 185.94 224.38 299.69
Medical
Group
NYSE 163.18 182.84 184.74 161.04 190.20
Composite
Index
NASDAQ
Index
NASDAQ 118.56 130.03 118.01 88.67 100.45
Health
---------------------------------------------------------
* Assumes $100 invested on 9/20/95 and reinvestment of dividends.
Certain Transactions
In March 1997 Cesar L. Alvarez was appointed to the Board of Directors
of the Company. Mr. Alvarez is the Chief Executive Officer and Managing
Shareholder of Greenberg Traurig, P.A. which serves as the Company's principal
outside counsel and receives customary fees for legal services. The Company
currently anticipates that such arrangement will continue.
11
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's directors and executive officers, and persons who
own more than 10 percent of the Company's Common Stock, to file with the
Securities and Exchange Commission (the "SEC") initial reports of ownership and
reports of changes in ownership of Common Stock. Officers, directors and greater
than 10 percent shareholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and representations that no other reports
were required, during the fiscal year ending December 31, 1998 all Section 16(a)
filing requirements applicable to its officers, directors and greater than 10
percent beneficial owners were complied with, except that one report with
respect to one transaction was filed late by Michael Fernandez.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Company's independent public accountants for year ended December
31, 1998 were and for 1999 will be the firm of KPMG LLP ("KPMG"). It is expected
that representatives of such firm will (i) attend the Annual Meeting, (ii) have
an opportunity to make a statement if they desire to do so, and (iii) be
available to respond to appropriate questions.
The accounting firm of PricewaterhouseCoopers, LLP (formerly Coopers &
Lybrand L.L.P. ("PWC")) was engaged as the principal independent accountants of
the Company during fiscal years 1996 and 1997 and throughout fiscal year 1998.
The Company also engaged KPMG in January 1999 to audit the Company's 1998 fiscal
year as a result of an accounting and auditing enforcement administrative
proceeding in which the Securities and Exchange Commission determined that PWC
had violated the auditor independence rules. The accountant's report on the
financial statements with respect to the Company's 1998 fiscal year was issued
by KPMG on March 22, 1999. On March 29, 1999, the Audit Committee of the Board
of Directors dismissed PWC as its principal independent accountants. PWC's
reports on the financial statements of the Company for the two most recent
fiscal years for which PWC issued an audit report did not contain an adverse
opinion or disclaimer of opinion, and were not qualified or modified as to
uncertainty, audit scope, or accounting principles. During the Company's two
most recent fiscal years for which PWC issued an audit report and for the
interim periods thereafter there were no disagreements between the Company and
PWC on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of PWC, would have caused it to make reference to the
subject matter of the disagreement in connection with its reports.
OTHER BUSINESS
The Board knows of no other business to be brought before the Annual
Meeting. If, however, any other business should properly come before the Annual
Meeting, the persons named in the accompanying proxy will vote proxies as, in
their discretion, they may deem appropriate unless they are directed by a proxy
to do otherwise.
12
INFORMATION CONCERNING SHAREHOLDER PROPOSALS
Pursuant to Rule 14a-8 promulgated by the Securities and Exchange
Commission, a shareholder intending to present a proposal to be presented at the
2000 Annual Meeting of Shareholders must deliver a proposal in writing to the
Company's principal executive offices on or before January 7, 2000.
By Order Of The Board Of Directors
Roger J. Medel, M.D., M.B.A.
President and Chief Executive Officer
Fort Lauderdale, Florida
May 7, 1999
13
FORM OF PROXY
PEDIATRIX MEDICAL GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF THE COMPANY
The undersigned, a shareholder of PEDIATRIX MEDICAL GROUP, INC., a
Florida corporation (the "Company"), hereby appoints Roger J. Medel, M.D.,
M.B.A. and Bruce A. Jordan, and each of them, acting alone, as proxies for the
undersigned, each with full power of substitution, and hereby authorizes them to
represent and to vote, as designated on the reverse side of this proxy card, all
of the shares of stock of the Company held of record by the undersigned at the
close of business on April 26, 1999 at the Annual Meeting of Shareholders of the
Company to be held at the Sheraton Suites, 311 North University Drive,
Plantation, Florida 33324, on June 2, 1999 at 10:00 a.m., local time, and at any
adjournments thereof.
The Board of Directors unanimously recommends a vote FOR each proposal.
1. ELECTION OF Roger J. Medel, M.D., M.B.A.
DIRECTORS M. Douglas Cunningham, M.D.
Cesar L. Alvarez
Michael B. Fernandez
Waldemar A. Carlo, M.D.
[ ] VOTE FOR all nominees listed above, except
authority to vote withheld from the following nominees
(if any).
[ ] AUTHORITY TO VOTE WITHHELD from all nominees.
2. Upon such other matters as may properly come before such Annual
Meeting or any adjournments thereof. In their discretion, the proxies are
authorized to vote upon such other business as may properly come before the
Annual Meeting and any adjournments thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" ALL OF THE PROPOSALS.
(See reverse side)
(Continued from other side)
The undersigned hereby acknowledges receipt of (1) the Notice of Annual
Meeting for the 1999 Annual Meeting, (2) the Proxy Statement, and (3) the
Company's Form 10-K for the fiscal year ended December 31, 1998.
Dated: _________________, 1999
- ----------------------------------
(Signature)
- ----------------------------------
(Signature if held jointly)
IMPORTANT: Please sign exactly as your name appears hereon and mail it promptly
even though you now plan to attend the meeting. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
When shares are held by joint tenants, both should sign. If a corporation,
please sign in full corporate name by president or other authorized officer. If
a partnership, please sign in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY PROMPTLY USING THE ENVELOPE
PROVIDED. NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES.