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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Exchange Act of 1934
þ Filed by the registrant
o Filed by a party other than the registrant
o Filed by a party other than the registrant
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to § 240.14a - 11(c) or § 240.14a-12
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to § 240.14a - 11(c) or § 240.14a-12
MATRIA HEALTHCARE, INC.
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) filing Proxy Statement if other than the Registrant)
(Name of Person(s) filing Proxy Statement if other than the Registrant)
Payment of filing fee (Check the appropriate box):
| þ | No fee required. |
| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
| (1) | Title of each class of securities to which transaction applies: | ||
| (2) | Aggregate number of securities to which transaction applies: | ||
| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | ||
| (4) | Proposed maximum aggregate value of transaction: | ||
| (5) | Total fee paid: |
Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting Fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of its filing.
| (1) | Amount Previously Paid: | ||
| (2) | Form, Schedule or Registration Statement No.: | ||
| (3) | Filing party: | ||
| (4) | Date Filed: |
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1850 Parkway Place
Marietta, Georgia 30067
NOTICE OF 2006 ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 31, 2006
NOTICE IS HEREBY GIVEN THAT the 2006 Annual Meeting of
Stockholders of Matria Healthcare, Inc. (the “Company”
or “Matria”), will be held on Wednesday, May 31,
2006, at 10:30 a.m. local time at 1850 Parkway Place,
Suite 600A, Marietta, Georgia 30067, for the following
purposes:
| (1) To elect four Class II directors of the Company for a three-year term expiring at the 2009 Annual Meeting and one Class III director for a one year term expiring in 2007 and until their respective successors are duly elected and qualified; and | |
| (2) To transact such other business as properly may come before the Annual Meeting and any adjournment or postponement thereof. |
Your vote is important regardless of the number of shares you
own. Each stockholder, even those who plan to attend the annual
meeting, are requested to sign, date and return the enclosed
proxy card without delay in the enclosed postage-paid envelope.
You may revoke your proxy at any time prior to its exercise. Any
stockholder present at the Annual Meeting or any adjournment or
postponement thereof may revoke his or her proxy and vote
personally on each matter brought before the meeting.
I look forward to welcoming you at the meeting.
| Very truly yours, | |
 |
|
| Roberta L. McCaw | |
| Secretary |
Marietta, Georgia
May 1, 2006
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MATRIA HEALTHCARE, INC.
1850 Parkway Place
Marietta, Georgia 30067
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 31, 2006
GENERAL INFORMATION
This proxy statement and the accompanying proxy card are being
furnished to stockholders in connection with the solicitation of
proxies by the Board of Directors of Matria Healthcare, Inc., a
Delaware corporation (the “Company”), for use at the
2006 Annual Meeting of Stockholders (the “Annual
Meeting”) to be held on Wednesday, May 31, 2006, at
10:30 a.m. local time at 1850 Parkway Place,
Suite 600A, Marietta, Georgia 30067, and at any
adjournment or postponement thereof.
At the Annual Meeting, stockholders will consider and vote upon
proposals to elect four Class II directors and elect one
Class II director and such other matters as properly may
come before the Annual Meeting. The Board unanimously urges
stockholders to vote FOR the re-election of the
Class II directors and FOR the election of the
Class III director.
It is anticipated that this proxy statement, the accompanying
proxy and the 2005 Annual Report to Stockholders will first be
mailed to the Company’s stockholders on or about
May 1, 2006.
Record Date
The Board of Directors has fixed the close of business on
April 13, 2006, as the record date (the “Record
Date”) for the determination of stockholders entitled to
notice of, and to vote at, the Annual Meeting and at any
adjournment or postponement thereof. At the close of business on
the Record Date, 20,919,327 shares of Common Stock were
issued and outstanding.
Proxies
When a proxy card is returned, properly signed and dated, the
shares represented thereby will be voted in accordance with the
instructions on the proxy card. If a stockholder does not attend
the Annual Meeting and does not return the signed proxy card,
such stockholder’s shares will not be voted. If a
stockholder returns a signed proxy card but does not indicate
how his or her shares are to be voted, such shares will be voted
FOR the election of the Class II directors named herein and
FOR the election of the Class III director. As of the date
of this proxy statement, the Board of Directors does not know of
any other matters that are to come before the Annual Meeting. If
any other matters are properly presented at the Annual Meeting
for consideration, the persons named in the enclosed form of
proxy and acting thereunder will have discretion to vote on such
matters in accordance with their best judgment.
Any proxy given may be revoked by the person giving it at any
time before it is voted. Proxies may be revoked by
(i) filing with the Secretary of the Company, at or before
the taking of the vote at the Annual Meeting, a written notice
of revocation bearing a later date than the proxy,
(ii) duly executing a later dated proxy relating to the
same shares of Common Stock and delivering it to the Secretary
of the Company at or before the taking of the vote at the Annual
Meeting or (iii) attending the Annual Meeting and voting in
person (although attendance at the Annual Meeting will not in
and of itself constitute a revocation of a proxy). Any written
notice of revocation or subsequent proxy should be sent so as to
be delivered to Matria Healthcare, Inc., 1850 Parkway Place,
Marietta, Georgia 30067, Attention: Secretary, or hand delivered
to the Secretary of the Company at or before the taking of the
vote at the Annual Meeting.
The Company will bear the cost of the solicitation of proxies
from its stockholders. In addition to solicitation by use of the
mails, proxies may be solicited by directors, officers and
employees of the Company
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in person or by telephone or other means of communication. Such
directors, officers and employees will not be additionally
compensated, but may be reimbursed for
out-of-pocket expenses
incurred in connection with such solicitation. Arrangements also
will be made with custodians, nominees and fiduciaries for the
forwarding of proxy solicitation materials to beneficial owners
of shares held of record by such custodians, nominees and
fiduciaries, and the Company will reimburse such custodians,
nominees and fiduciaries for reasonable expenses incurred in
connection therewith. In addition, D. F. King & Co.,
Inc. will assist in the solicitation of proxies by the Company
for a fee of $6,000, plus reimbursement of reasonable
out-of-pocket expenses.
Quorum
The presence, either in person or by properly executed proxies,
of the holders of a majority of the outstanding shares of the
Company’s Common Stock is necessary to constitute a quorum
at the Annual Meeting. Abstentions and shares held by a broker
as nominee (i.e., in “street name”) that are
represented by proxies at the Annual Meeting, but that the
broker fails to vote on one or more matters as a result of
incomplete instructions from the beneficial owner of the shares
(“broker non-votes”), also will be treated as present
for quorum purposes.
Vote Required
The Company’s stockholders are entitled to one vote at the
Annual Meeting for each share of Common Stock held of record by
them on the Record Date. The affirmative vote of the holders of
a plurality of the shares of Common Stock present in person or
represented by proxy at the Annual Meeting is required to elect
the Class II and Class III directors. Votes may be
cast for or withheld from each nominee for Class II and III
directors. Under applicable Delaware law, broker non-votes
represented at the meeting, but with respect to which such
broker or nominee is not empowered to vote on a particular
proposal, and abstentions will have no effect on the vote for
the election of Class II and Class III directors.
I. ELECTION OF DIRECTORS
Background
Under the Company’s Certificate of Incorporation, the Board
of Directors is divided into three classes, with approximately
one-third of the directors standing for election each year. The
four Class II nominees for election this year are J. Terry
Dewberry, Richard M. Hassett, M.D., Kaaren J. Street and
Wayne P. Yetter. Each has consented to serve for a term expiring
in 2009. Donald J. Lothrop has been nominated to serve as a
Class III director for a term expiring in 2007. If any
director is unable to stand for election, the Board of Directors
may, by resolution, provide for a lesser number of directors or
designate a substitute. In the latter event, shares represented
by proxies may be voted for a substitute director.
The Board of Directors recommends a vote FOR the
Class II nominees set forth below.
CLASS II NOMINEES FOR THE TERM EXPIRING IN 2009
J. Terry Dewberry, age 62, is a private
investor. He served as Vice Chairman of Healthdyne, Inc.
(“Healthdyne”) from March 1992 until the formation of
the Company through the merger (the “Merger”) of
Healthdyne Maternity Management, a division of Healthdyne and
Tokos Medical Corporation on March 8, 1996 (the
“Merger Date”). Mr. Dewberry served as a director
of Healthdyne from 1981 until the Merger. From September 1987
until March 1992 he was President and Chief Operating Officer of
Healthdyne and was Executive Vice President of Healthdyne from
August 1984 to September 1987. Mr. Dewberry is a member of
the Board of Directors of Respironics, Inc.
Richard M. Hassett, M.D., age 50, has been
President and Chief Operating Officer of the Company since
November 7, 2005 and previously served as Executive Vice
President and Chief Strategic Officer of the Company from
November 14, 2004 to November 6, 2005. From August
2002 to April 2004, Dr. Hassett was Chief Executive Officer
and served on the board of Coordinated Care Solutions, a
provider of medical care
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management services, and from September 2000 to July 2002, he
was President and Chief Executive Officer and served on the
board of Vivra Asthma & Allergy, Inc., a specialty
disease management company. From 1979 to August 2000,
Dr. Hassett held executive positions with Accordant Health
Services, a healthcare services and technology company, most
recently as Executive Vice President and Chief Medical Officer
and as a member of the board.
Kaaren J. Street, age 59, has served as a director
of the Company since June 1, 2005. Ms. Street is the
President of “K” Street Associates, Inc., a business
development consulting practice in Washington, D.C. From
August 2001 to August 2003, Ms. Street served as the
Associate Deputy Administrator for Entrepreneurial Development
at the U.S. Small Business Administration. From April 2001,
to August 2003, Ms. Street served as Vice President of
Enterprise Florida, Inc., a public private partnership
responsible for economic development and international trade in
Florida, and from January 1997 to January 2001, Ms. Street
was Vice President for Diversity Business Enterprise at the
Burger King Corporation. Ms. Street is a director of
AssuranceAmerica Corporation.
Wayne P. Yetter, age 60, was elected to the Board on
June 3, 2004. Since September, 2005, Mr. Yetter has
been Chief Executive Officer of Verispan, LLC, a joint venture
health information and market research company founded by
McKesson Corp. and Quintales Transnational Corp. in 2002. He was
the founder of BioPharm Advisory, LLC and served as the
President and Chief Executive Officer of Odyssey
Pharmaceuticals, Inc., the specialty pharmaceuticals business of
Pliva d.d., a Croatia-based pharmaceuticals group, from November
2004 to September 2005. Mr. Yetter served as Chairman of
the Board of Directors and Chief Executive Officer of Synavant
Inc., a pharmaceutical customer relationship management
solutions company, from 2000 to November 2004. From 1999 to
2000, Mr. Yetter served as Chief Operating Officer at IMS
Health, Inc., which provides information services for the
healthcare industry. From 1997 to 1999, he served as President
and Chief Executive Officer of Novartis Pharmaceuticals
Corporation. From 1994 to 1997, he served as President and Chief
Executive Officer of Astra Merck, Inc. From 1991 to 1994,
Mr. Yetter served as General Manager and then President of
Astra Merck, a division of Merck & Co. Mr. Yetter
currently serves on the Board of Directors of Noven
Pharmaceuticals, Inc. and Epicept Corporation.
CLASS III NOMINEE FOR THE TERM EXPIRING IN 2007
Donald J. Lothrop, age 46, has been a General
Partner of Delphi Management Partners II, L.P. since July
1994, a Managing Member of Delphi Management Partners III,
L.L.C. since March 1995, a Managing Member of Delphi Management
Partners, IV, L.L.C. since October 1997 and a Managing Member of
Delphi Management Partners V, L.L.C. since April 2000, all
of which are venture capital firms. From January 1991 to June
1994, Mr. Lothrop was a Partner of Marquette Venture
Partners, a venture capital firm, where he focused on the
healthcare industry. From 1989 to 1990, Mr. Lothrop worked
at Bain & Company, Inc., a management consulting firm.
Mr. Lothrop currently serves on the Board of Directors of
The TriZetto Group.
CLASS III DIRECTORS CONTINUING IN OFFICE UNTIL 2007
Parker H. Petit, age 66, has served as Chairman of
the Board of the Company since the Merger Date and as Chief
Executive Officer since October 5, 2000, and as President
and Chief Executive Officer from October 5, 2000, to
February 22, 2003. In addition, he served as a member of
the three-person Office of the President during a brief period
in 1997. Mr. Petit was the founder of Healthdyne and served
as its Chairman of the Board of Directors and Chief Executive
Officer from 1970 until the Merger. Mr. Petit is also a
director of Intelligent Systems Corp. and Logility, Inc.
Joseph G. Bleser, age 60, has served as a director
of the Company since October 19, 2004. Mr. Bleser
became a financial consultant serving public and private
companies in the healthcare and technology industries in 1998,
most recently acting as interim Chief Financial Officer,
Treasurer and Secretary of Transcend Services, Inc., a provider
of medical transcription services, from January 1, 2004, to
April 6, 2005. Prior to 1998, Mr. Bleser served for
over 20 years as Chief Financial Officer for several public
companies in the healthcare and technology industries, including
HBO & Company, Allegiant Physician Services, Inc., and
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Healthcare.com Corporation. Mr. Bleser also formerly served
on the Board of Directors of Healthcare.com Corporation and
Quovadx, Inc. Mr. Bleser is a licensed Certified Public
Accountant with ten years of public accounting experience at an
international public accounting firm.
Donald W. Weber, age 69, has served as a director of
the Company since May 18, 2000. Mr. Weber is a private
investor. He was President and Chief Executive Officer of
Viewstar Entertainment Services, Inc., a distributor of
satellite entertainment systems, from August 1993 until November
1997. Prior thereto, from 1987 to 1991, he was President and
Chief Executive Officer of Contel Corporation, a
telecommunications supplier, which was sold in 1991 to GTE Corp.
CLASS I NOMINEES CONTINUING IN OFFICE UNTIL 2008
Guy W. Millner, age 70, has been a director of the
Company since October 4, 2000. Mr. Millner is Chairman
of AssuranceAmerica Corporation, a public non-standard auto
insurance company. Until the fall of 1997, he was Chairman of
Norrell Corporation, a staffing services and outsourcing firm,
which he founded in 1961. He served as a director of Norrell
Corporation from 1997 until July 1999, at which time Norrell
Corporation merged with Spherion Corporation.
Carl E. Sanders, age 80, has served as a director of
the Company since the Merger Date and previously served as a
director of Healthdyne from 1986 until the Merger.
Mr. Sanders, a former Governor of the State of Georgia, is
Chairman Emeritus of Troutman Sanders LLP, an Atlanta-based law
firm that provides legal services to the Company.
Thomas S. Stribling, age 63, has served as a
director of the Company since May 18, 2000.
Mr. Stribling is retired and was formerly President and
Chief Executive Officer of Therics, Inc., a tissue engineering
specialist offering a variety of orthobiologic products from May
2003 to July 2005. From September 1, 2001, to
April 30, 2003, Mr. Stribling was President and Chief
Executive Officer of DermaCo, Inc., a development stage
dermatology company, and was an entrepreneur and private
investor from September 1999 to September 2001. From 1998 to
September 1999, he was President, Chief Executive Officer and a
board member of Scandipharm, Inc., a privately held
pharmaceutical company. From 1997 to 1998, he was Vice Chairman
and Chairman of the Advisory Board of Legacy Securities
Corporation, an investment banking and securities group, and
from 1994 to 1996, he was President of UCB Pharma, Inc., a
division of a Belgian-based pharmaceutical company.
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Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth certain information as to the
beneficial ownership of shares of the Company’s Common
Stock as of March 31, 2006, by (i) all stockholders
known by the Company to be the beneficial owners of more than
five percent of its Common Stock, (ii) each director and
nominee of the Company, (iii) each executive officer named
in the “Executive Compensation” section below, and
(iv) all executive officers and directors as a group.
Unless otherwise indicated, the holders listed below have sole
voting and investment power with respect to all shares
beneficially owned by them.
| Amount and Nature of | Percent | |||||||
| Name of Beneficial Owner | Beneficial Ownership(1) | of Class(2) | ||||||
|
Wellington Management Company, LLP(3)
|
1,503,007 | 7.2 | % | |||||
|
EARNEST Partners, LLC(4)
|
1,155,518 | 5.5 | % | |||||
|
Parker H. Petit(5)
|
1,426,914 | 6.8 | % | |||||
|
Richard M. Hassett, M.D.(6)
|
30,973 | — | ||||||
|
Thomas S. Hall(7)
|
–0– | — | ||||||
|
Roberta L. McCaw(8)
|
18,125 | — | ||||||
|
Stephen M. Mengert(9)
|
22,252 | — | ||||||
|
Yvonne V. Scoggins(10)
|
7,786 | — | ||||||
|
Joseph G. Bleser(11)
|
6,007 | — | ||||||
|
Frederick E. Cooper(12)
|
18,000 | — | ||||||
|
J. Terry Dewberry
|
–0– | — | ||||||
|
Donald J. Lothrop
|
–0– | — | ||||||
|
Guy W. Millner(13)
|
27,375 | — | ||||||
|
Carl E. Sanders(14)
|
69,775 | — | ||||||
|
Kaaren J. Street(15)
|
6,000 | — | ||||||
|
Thomas S. Stribling(16)
|
36,780 | — | ||||||
|
Donald W. Weber(17)
|
49,302 | — | ||||||
|
Morris S. Weeden(18)
|
59,250 | — | ||||||
|
Wayne P. Yetter(19)
|
12,000 | — | ||||||
|
Frederick P. Zuspan, M.D.(20)
|
23,441 | — | ||||||
|
All executive officers and directors as a group (20 persons)
|
1,853,626 | 8.9 | % | |||||
— Less than 1%
| (1) | Under the rules of the Securities and Exchange Commission (the “SEC”), a person is deemed to be a beneficial owner of a security if he or she has or shares the power to vote or to direct the voting of such security (“voting power”) or the power to dispose or to direct the disposition of such security (“investment power”). A person is also deemed to be a beneficial owner of any securities of which that person has the right to acquire beneficial ownership within 60 days as well as any securities owned by such person’s spouse, children or relatives living in the same house. Accordingly, more than one person may be deemed to be a beneficial owner of the same securities. | |
| (2) | Based on 20,901,402 shares of Common Stock outstanding on March 31, 2006. With respect to each person or group in the table, assumes that such person or group has exercised all options, warrants and other rights to purchase Common Stock which he or she beneficially owns and which are exercisable within 60 days and that no other person has exercised any such rights. | |
| (3) | The number of shares owned is based on information contained in a report on Schedule 13G filed with the SEC on February 14, 2006. The address of Wellington Management Company, LLP (“WMC”) is 75 State Street, Boston, Massachusetts 02109. According to its Schedule 13G, WMC, in its capacity as investment adviser, may be deemed to beneficially own 1,503,007 shares of the Company’s Common Stock, which shares are held of record by clients of WMC. WMC reports that it has no power to vote or |
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| direct the vote of such shares and shared power to dispose or direct the disposition of such shares, while its clients have the right to receive, or direct the receipt of, dividends from, or proceeds from the sale of, such shares. | ||
| (4) | The number of shares owned is based on information contained in a report on Schedule 13G filed with the SEC on February 14, 2006. The address of EARNEST Partners, LLC (“EARNEST”) is 75 14th Street, Suite 2300, Atlanta, Georgia 30309. According to its Schedule 13G, EARNEST, in its capacity as investment advisor, may be deemed to beneficially own 1,155,518 shares of the Company’s Common Stock. | |
| (5) | Represents 816,006 shares owned by Mr. Petit, 73,832 shares held by Petit Investments Limited Partnership, 3,750 shares held by Petit Grantor Trust, 6,720 shares owned by his spouse, and 526,606 shares which are subject to purchase upon exercise of options exercisable within 60 days. Mr. Petit’s address is 1850 Parkway Place, Marietta, Georgia 30067. | |
| (6) | Represents 973 shares owned by Dr. Hassett, and 30,000 shares which are subject to purchase upon exercise of options exercisable within 60 days. | |
| (7) | Mr. Hall resigned effective October 28, 2005. To the knowledge of the Company, Mr. Hall is not the beneficial owner of any shares of the Company’s Common Stock. | |
| (8) | Represents 14,087 shares owned by Ms. McCaw, and 4,038 shares which are subject to purchase upon exercise of options exercisable within 60 days. | |
| (9) | Represents shares which are subject to purchase upon exercise of options exercisable within 60 days. Mr. Mengert resigned effective March 16, 2006. To the knowledge of the Company, Mr. Mengert is not the beneficial owner of any other shares of the Company’s Common Stock. |
| (10) | Represents shares which are subject to purchase upon exercise of options exercisable within 60 days. |
| (11) | Represents 7 shares owned by Mr. Bleser and 6,000 shares which are subject to purchase upon exercise of options exercisable within 60 days. |
| (12) | Represents shares which are subject to purchase upon exercise of options exercisable within 60 days. |
| (13) | Represents shares which are subject to purchase upon exercise of options exercisable within 60 days. |
| (14) | Represents 27,400 shares owned by Mr. Sanders and 42,375 shares which are subject to purchase upon exercise of options exercisable within 60 days. |
| (15) | Represents shares which are subject to purchase upon exercise of options exercisable within 60 days. |
| (16) | Represents 1,905 shares owned by Mr. Stribling and 34,875 shares which are subject to purchase upon exercise of options exercisable within 60 days. |
| (17) | Represents 20,052 shares owned by Mr. Weber and 29,250 shares which are subject to purchase upon exercise of options exercisable within 60 days. |
| (18) | Represents 5,625 shares owned by Mr. Weeden and 53,625 shares which are subject to purchase upon exercise of options exercisable within 60 days. |
| (19) | Represents shares which are subject to purchase upon exercise of options exercisable within 60 days. |
| (20) | Represents 2,200 shares owned by Dr. Zuspan, 187 shares held by Zuspan & Associates Partnership, 5,680 shares owned by Dr. Zuspan’s spouse and 15,374 shares which are subject to purchase upon exercise of options exercisable within 60 days. |
CORPORATE GOVERNANCE
We have established corporate governance practices designed to
serve the best interests of the Company and our stockholders.
The Company is in compliance with the current corporate
governance requirements imposed by the Sarbanes-Oxley Act of
2002, the rules and regulations of the Securities and Exchange
Commission (“SEC”) and the listing requirements of the
Nasdaq National Market (“Nasdaq”). The Company has
adopted a Code of Conduct that applies to all of its directors,
executive officers and employees. If any waiver of this Code is
granted to an executive officer or director, the waiver will be
disclosed in an SEC
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filing on
Form 8-K. The
Company’s current Code of Conduct and charters for certain
committees of the Board of Directors were filed as exhibits to
the Company’s Annual Report on
Form 10-K for the
year ended December 31, 2003, and are incorporated by
reference to the Company’s Annual Report on
Form 10-K for the
year ended December 31, 2005.
Set forth below is information regarding the meetings of the
Board of Directors during fiscal year 2005 and a description of
the Board’s standing committees.
BOARD COMMITTEES, ATTENDANCE AND COMMUNICATIONS WITH
BOARD OF DIRECTORS
In addition to an executive committee and other single purpose
committees established from time to time to assist the Board of
Directors with particular tasks, the Company’s Board of
Directors has the following standing committees: a Compensation
and Stock Option Committee, an Audit Committee and a Corporate
Governance and Nominating Committee.
The Compensation and Stock Option Committee (the
“Compensation Committee”) is composed of Frederick P.
Zuspan, M.D., Frederick E. Cooper, Kaaren J. Street, Thomas
S. Stribling and Wayne P. Yetter. All members of the
Compensation Committee are independent as required by Nasdaq.
The Compensation Committee is responsible for the recommendation
and approval of compensation of executive officers and the
review and approval of incentive plans, including stock option
and related programs, and the grant of awards under such plans.
The Compensation Committee held nine meetings during the year
ended December 31, 2005.
The Audit Committee is composed of Donald W. Weber, Joseph G.
Bleser, Guy W. Millner and Morris S. Weeden. The Board of
Directors has determined that all members of the Audit Committee
are “independent” in accordance with the listing
standards of Nasdaq and SEC rules governing audit committees.
The Board of Directors has determined that each of Donald W.
Weber and Joseph G. Bleser have the accounting and related
financial management expertise to be an “audit committee
financial expert” as that term is defined by the SEC and
has designated each of Messrs. Weber and Bleser as a
financial expert. Pursuant to its written charter, a copy of
which was attached to the proxy statement for the 2004 Annual
Meeting of Stockholders, the Audit Committee evaluates the
independence and performance of the Company’s independent
accountants, handles relations with the Company’s
independent accountants and evaluates the integrity of the
Company’s financial reporting process and its policies and
procedures relating to internal accounting functions and
controls. The Audit Committee pre-approves audit and non-audit
services to be performed by the Company’s independent
auditors in accordance with the Sarbanes-Oxley Act of 2002 and
the regulations thereunder. The Audit Committee held seven
meetings during the year ended December 31, 2005.
The Corporate Governance and Nominating Committee (the
“Governance Committee”) was established on
February 20, 2003 to replace the former Nominating
Committee. The Governance Committee is composed of Frederick E.
Cooper, Guy W. Millner, Carl E. Sanders and Donald W. Weber. The
Board of Directors has determined that all of the members of the
Governance Committee are independent in accordance with the
Nasdaq listing standards governing governance committees. The
Governance Committee identifies, screens and recommends
candidates for appointment to the Board of Directors for
consideration by the full Board of Directors and by the
stockholders of the Company, evaluates and makes recommendations
to the full Board of Directors concerning the number and
accountability of Board committees and assignments to such
committees, develops and recommends to the Board of Directors
for its approval a set of corporate governance guidelines,
periodically reviews and makes recommendations to the full Board
of Directors compensation, orientation, continuing education and
retirement policies for directors, and reviews issues and
developments relating to corporate governance and makes
recommendations related thereto to the full Board of Directors.
The Governance Committee will consider a candidate for director
proposed by a stockholder. A candidate must be highly qualified
and be both willing and expressly interested in serving on the
Board of Directors. A stockholder wishing to propose a candidate
for the Governance Committee’s consideration should forward
the candidate’s name and information about the
candidate’s qualifications to Matria Healthcare, Inc.,
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1850 Parkway Place, Marietta, Georgia 30067, Attention:
Corporate Secretary. Additional information concerning
nomination procedures is included under “Corporate
Governance and Nominating Committee” below. The Governance
Committee held two meetings during the year ended
December 31, 2005.
During the year ended December 31, 2005, the Board of
Directors held eight meetings. Each of the incumbent directors
who served as directors during 2005 attended more than 75% of
the total number of Board meetings and meetings of committees of
which he or she was a member during 2005. The Board of Directors
has adopted a policy that all directors on the Board of
Directors are expected to attend annual meetings of its
stockholders. All members of the Company’s Board of
Directors at the time of the 2005 Annual Meeting of the
stockholders attended the 2005 Annual Meeting of Stockholders,
except Mr. Weeden who was unavoidably absent.
The Company encourages communication with the Board and the
Board provides a process for stockholders to send communications
to the full Board or any of the individual directors. Any
stockholder who wishes to communicate with the Board or with any
particular director, including any non-management director, may
send a letter to the Secretary of the Company at 1850 Parkway
Place, 12th Floor, Marietta, Georgia 30067. Any
communication should indicate that the sender is a stockholder
of the Company and clearly specify that it is intended to be
made to the entire Board or to one or more particular
director(s). After receipt by the Secretary, correspondence will
be forwarded to the Board or to the particular individual
director indicated for review and consideration.
EXECUTIVE COMPENSATION
The following table sets forth compensation paid to the
Company’s Chief Executive Officer and each executive
officer named in this section (the “Named Executive
Officers”) for their services in all capacities to the
Company and its subsidiaries in fiscal years 2005, 2004 and 2003:
Summary Compensation Table
| Long-term | |||||||||||||||||||||
| Compensation | |||||||||||||||||||||
| Awards | |||||||||||||||||||||
| Annual Compensation | |||||||||||||||||||||
| Securities Underlying | All Other | ||||||||||||||||||||
| Name and Principal Position | Year | Salary($) | Bonus($) | Options(#) | Compensation($)(1) | ||||||||||||||||
|
Parker H. Petit
|
2005 | $ | 514,391 | $ | 329,550 | 208,500 | $ | 5,216 | |||||||||||||
|
Chairman of the Board and
|
2004 | 484,273 | 276,701 | 58,126 | 3,616 | ||||||||||||||||
|
Chief Executive Officer
|
2003 | 462,701 | 58,131 | 127,253 | 4,202 | ||||||||||||||||
|
Richard M. Hassett, M.D.(2)
|
2005 | $ | 282,115 | $ | 182,175 | 157,500 | $ | 45,778 | |||||||||||||
|
President and Chief
|
2004 | 31,154 | –0– | 75,000 | 3,993 | ||||||||||||||||
|
Operating Officer
|
|||||||||||||||||||||
|
Thomas S. Hall(3)
|
2005 | $ | 321,084 | $ | –0– | 33,750 | $ | 6,150 | |||||||||||||
|
President and Chief
|
2004 | 359,317 | 205,304 | 33,751 | 6,000 | ||||||||||||||||
|
Operating Officer
|
2003 | 343,311 | (4) | 108,131 | 40,500 | 6,000 | |||||||||||||||
|
Stephen M. Mengert(5)
|
2005 | $ | 251,350 | $ | 101,330 | 21,250 | $ | 6,150 | |||||||||||||
|
Senior Vice President and
|
2004 | 241,332 | 102,039 | 11,250 | 6,000 | ||||||||||||||||
|
Chief Financial Officer
|
2003 | 230,582 | 38,285 | 15,000 | 6,000 | ||||||||||||||||
|
Roberta L. McCaw
|
2005 | $ | 239,380 | $ | 96,504 | 24,000 | $ | 6,150 | |||||||||||||
|
Senior Vice President,
|
2004 | 230,582 | 97,180 | 9,000 | 6,000 | ||||||||||||||||
|
General Counsel and Secretary
|
2003 | 222,383 | 45,000 | 32,382 | 6,000 | ||||||||||||||||
|
Yvonne V. Scoggins
|
2005 | $ | 236,184 | $ | 95,676 | 27,500 | $ | 6,902 | |||||||||||||
|
Senior Vice President
|
2004 | 209,719 | 113,644 | 9,000 | 1,210,827 | ||||||||||||||||
|
Corporate Finance
|
2003 | 192,660 | 38,727 | 40,136 | 6,618 | ||||||||||||||||
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Table of Contents
| (1) | Details of amounts reported in “All Other Compensation” column are provided in the table below. |
| (2) | Dr. Hassett was elected Executive Vice President on November 16, 2004 and promoted to President and Chief Operating Officer on November 8, 2005. |
| (3) | Mr. Hall resigned effective October 28, 2005. |
| (4) | Includes a $65,000 non-contingent bonus that was payable to Mr. Hall pursuant to his initial offer of employment. In the proxy statement for the 2004 Annual Meeting, this amount was included under 2003 “salary.” |
| (5) | Mr. Mengert resigned effective March 16, 2006. |
| Item | Year | Petit | Hassett | Hall | Mengert | McCaw | Scoggins | ||||||||||||||||||||||
|
Officer Term Life Insurance
|
2005 | $ | 5,216 | $ | –0– | $ | –0– | $ | –0– | $ | –0– | $ | 752 | ||||||||||||||||
| 2004 | 3,616 | –0– | –0– | –0– | –0– | 1,621 | |||||||||||||||||||||||
| 2003 | 4,202 | –0– | –0– | –0– | –0– | 618 | |||||||||||||||||||||||
|
401(k) Matching Contributions
|
2005 | $ | –0– | $ | –0– | $ | 6,150 | $ | 6,150 | $ | 6,150 | $ | 6,150 | ||||||||||||||||
| 2004 | –0– | –0– | 6,000 | 6,000 | 6,000 | 6,000 | |||||||||||||||||||||||
| 2003 | –0– | –0– | 6,000 | 6,000 | 6,000 | 6,000 | |||||||||||||||||||||||
|
Executive SERP(A)
|
2005 | $ | –0– | $ | –0– | $ | –0– | $ | –0– | $ | –0– | $ | –0– | ||||||||||||||||
| 2004 | –0– | –0– | –0– | –0– | –0– | 1,203,206 | |||||||||||||||||||||||
| 2003 | –0– | –0– | –0– | –0– | –0– | –0– | |||||||||||||||||||||||
|
Taxable Relocation
|
2005 | $ | –0– | $ | 45,778 | $ | –0– | $ | –0– | $ | –0– | $ | –0– | ||||||||||||||||
| 2004 | –0– | 3,993 | –0– | –0– | –0– | –0– | |||||||||||||||||||||||
| 2003 | –0– | –0– | –0– | –0– | –0– | –0– | |||||||||||||||||||||||
|
Total All Other Compensation
|
2005 | $ | 5,216 | $ | 45,778 | $ | 6,150 | $ | 6,150 | $ | 6,150 | $ | 6.902 | ||||||||||||||||
| 2004 | 3,616 | 3,993 | 6,000 | 6,000 | 6,000 | 1,210,827 | |||||||||||||||||||||||
| 2003 | 4,202 | –0– | 6,000 | 6,000 | 6,000 | 6,618 | |||||||||||||||||||||||
| (A) | Represents payment of benefits under the Supplemental Executive Retirement Plan. See “Termination of Employment and Change-in-Control Arrangements.” |
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Table of Contents
STOCK OPTIONS
The following table contains information concerning the grant of
stock options to the Chief Executive Officer and each executive
officer named in the “Executive Compensation” table
during 2005:
Option Grants in Last Fiscal Year
| Individual Grants | ||||||||||||||||||||||||
| Potential Realizable Value at | ||||||||||||||||||||||||
| Number of | % of Total | Assumed Annual Rates of | ||||||||||||||||||||||
| Securities | Options/SARs | Stock Price Appreciation for | ||||||||||||||||||||||
| Underlying | Granted to | Exercise or | Option Term(1) | |||||||||||||||||||||
| Options | Employees in | Base Price | Expiration | |||||||||||||||||||||
| Name | Granted | Fiscal Year | ($/Sh)(2) | Date | 5%($) | 10%($) | ||||||||||||||||||
|
Parker H. Petit
|
58,500 | (2) | 5.6 | % | $ | 29.97 | 06/08/2015 | $ | 1,102,600 | $ | 2,794,200 | |||||||||||||
| 150,000 | (2) | 14.4 | % | $ | 34.67 | 11/08/2015 | $ | 3,270,600 | $ | 8,288,300 | ||||||||||||||
|
Richard M. Hassett, M.D.
|
75,000 | (3) | 7.2 | % | $ | 28.48 | 02/22/2015 | $ | 1,343,300 | $ | 3,404,200 | |||||||||||||
| 22,500 | (3) | 2.2 | % | $ | 29.97 | 06/08/2015 | $ | 424,100 | $ | 1,074,700 | ||||||||||||||
| 10,000 | (3) | 0.9 | % | $ | 34.47 | 07/20/2015 | $ | 216,800 | $ | 549,400 | ||||||||||||||
| 50,000 | (3) | 4.8 | % | $ | 34.11 | 11/07/2015 | $ | 1,072,600 | $ | 2,718,100 | ||||||||||||||
|
Thomas S. Hall
|
33,750 | (4) | 3.2 | % | $ | 29.97 | 06/08/2015 | $ | 636,100 | $ | 1,612,100 | |||||||||||||
|
Stephen M. Mengert
|
11,250 | (5) | 1.1 | % | $ | 29.97 | 06/08/2015 | $ | 212,000 | $ | 537,400 | |||||||||||||
| 10,000 | (5) | 0.9 | % | $ | 34.67 | 11/08/2015 | $ | 218,000 | $ | 552,600 | ||||||||||||||
|
Roberta L. McCaw
|
9,000 | (6) | 0.8 | % | $ | 29.97 | 06/08/2015 | $ | 169,600 | $ | 429,900 | |||||||||||||
| 15,000 | (6) | 1.4 | % | $ | 34.67 | 11/08/2015 | $ | 327,100 | $ | 828,800 | ||||||||||||||
|
Yvonne V. Scoggins
|
7,500 | (7) | 0.7 | % | $ | 29.97 | 06/08/2015 | $ | 134,300 | $ | 340,400 | |||||||||||||
| 10,000 | (7) | 0.9 | % | $ | 34.47 | 07/20/2015 | $ | 216,800 | $ | 549,400 | ||||||||||||||
| 10,000 | (7) | 0.9 | % | $ | 34.67 | 11/08/2015 | $ | 218,000 | $ | 552,600 | ||||||||||||||
| (1) | Based on actual option term and annual compounding. These amounts are calculated pursuant to applicable requirements of the SEC and do not represent a forecast of the future appreciation of the Company’s Common Stock. |
| (2) | These options to purchase the Company’s Common Stock were granted to Mr. Petit as follows: 58,500 shares on June 8, 2005, under the Long-Term Incentive Plan for which vesting accrues on each anniversary date thereafter at 20% per year and 150,000 shares on November 8, 2005, under several plans (23,906 shares under the 1996 Stock Incentive Plan, 31,200 shares under the 2000 Stock Incentive Plan, 41,500 shares under the Long Term Incentive Plan, 28,160 shares under the 1997 Stock Incentive Plan and 25,234 shares under the 2002 Stock Incentive Plan) for which vesting accrues on each anniversary date thereafter at 331/3 % per year. |
| (3) | These options to purchase the Company’s Common Stock were granted to Dr. Hassett as follows: 75,000 shares on February 22, 2005, under the Long-Term Incentive Plan for which vesting accrues on each anniversary date thereafter at 20% per year; 22,500 shares on June 8, 2005, under the Long-Term Incentive Plan for which vesting accrues on each anniversary date thereafter at 20% per year; 10,000 shares on July 20, 2005, under the Long-Term Incentive Plan for which vesting accrues on each anniversary date thereafter at 20% per year; and 50,000 shares on November 7, 2005, under three plans (10,587 shares under the 2002 Stock Incentive Plan, 7,653 shares under the 2001 Stock Incentive Plan, and 31,760 shares under the Long-Term Incentive Plan) for which vesting accrues on each anniversary date thereafter at 331/3 % per year. |
| (4) | These options to purchase the Company’s Common Stock were granted to Mr. Hall on June 8, 2005, under the Long-Term Incentive Plan for which vesting accrues on each anniversary date thereafter at 20% per year. |
| (5) | These options to purchase the Company’s Common Stock were granted to Mr. Mengert as follows: 11,250 shares on June 8, 2005, under the Long-Term Incentive Plan for which vesting accrues on each anniversary date thereafter at 20% per year and 10,000 shares on November 8, 2005, under the Long-Term Incentive Plan for which vesting accrues on each anniversary date thereafter at 331/3 % per year. |
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Table of Contents
| (6) | These options to purchase the Company’s Common Stock were granted to Ms. McCaw as follows: 9,000 shares on June 8, 2005, under the Long-Term Incentive Plan for which vesting accrues on each anniversary date thereafter at 20% per year and 15,000 shares on November 8, 2005, under the Long-Term Incentive Plan for which vesting accrues on each anniversary date thereafter at 331/3 % per year. |
| (7) | These options to purchase the Company’s Common Stock were granted to Ms. Scoggins as follows: 7,500 shares on June 8, 2005, under the Long-Term Incentive Plan for which vesting accrues on each anniversary date thereafter at 20% per year; 10,000 shares on July 20, 2005, under the Long-Term Incentive Plan for which vesting accrues on each anniversary date thereafter at 20% per year and 10,000 shares on November 8, 2005, under the Long-Term Incentive Plan for which vesting accrues on each anniversary date thereafter at 331/3 % per year. |
STOCK OPTION EXERCISES
The following table sets forth information with respect to the
Chief Executive Officer and the executive officers named in the
“Executive Compensation” table concerning the exercise
of options in 2005 and unexercised options held as of the end of
the fiscal year:
Aggregated Option Exercises in Last Fiscal Year
and FY — End Option Values
| Number of Securities | ||||||||||||||||||||||||
| Underlying Unexercised | Value of Unexercised | |||||||||||||||||||||||
| Value Realized | Options at | In the-Money Options at | ||||||||||||||||||||||
| (Market Price at | Fiscal Year End(#) | Fiscal Year End($)(1) | ||||||||||||||||||||||
| Shares Acquired on | exercise less | |||||||||||||||||||||||
| Name | Exercise(#) | exercise price) | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
|
Parker H. Petit
|
42,349 | $ | 883,340 | 512,806 | 349,605 | $ | 14,357,603.98 | $ | 4,874,003.77 | |||||||||||||||
|
Richard M. Hassett, M.D.
|
–0– | –0– | 15,000 | 217,500 | 378,450 | 1,986,975 | ||||||||||||||||||
|
Thomas S. Hall
|
89,851 | $ | 2,940,912 | –0– | –0– | –0– | –0– | |||||||||||||||||
|
Stephen M. Mengert
|
–0– | –0– | 22,252 | 45,249 | 1,046,155.15 | 40,944.85 | ||||||||||||||||||
|
Roberta L. McCaw
|
51,005 | $ | 1,240,595 | 6,208 | 52,984 | 289,530.67 | 898,099.97 | |||||||||||||||||
|
Yvonne V. Scoggins
|
57,110 | $ | 1,339,825 | 7,786 | 68,709 | 365,830.09 | 1,029,675.09 | |||||||||||||||||
| (1) | Based on $38.76, the last sale price of the Company’s Common Stock on December 30, 2005. |
Compensation of Directors
The directors who are employees of the Company receive no
additional compensation for serving on the Board of Directors.
In calendar year 2005, Directors who were not employees of the
Company received a retainer of $5,000 per quarter, plus
$1,000 for each Board and committee meeting attended, and were
reimbursed for any travel expenses incurred. Mr. Weber also
received an additional quarterly retainer of $2,500 for serving
as Chairman of the Company’s Audit Committee. Effective
July 1, 2006, the quarterly retainer will be increased to
$6,250, the Chairperson of the Compensation Committee will
receive a quarterly retainer of $1,250 and the Chairperson of
the Corporate Governance and Nominating Committee will receive a
quarterly retainer of $625. The retainer payable to the Audit
Committee Chairperson will remain at $2,500. Meeting fees were
increased to $1,500 for meeting dates after April 20, 2006.
In addition, under the 2005 Directors’ Non-Qualified
Stock Option Plan, all non-employee directors are entitled to
receive an initial grant of options to
purchase 6,000 shares of the Company’s Common
Stock and at each annual meeting of stockholders after their
first full year serving as a director, an additional grant of
options to purchase 6,000 shares of Common Stock. The
option price for all such options is the fair market value of
the underlying common stock on the date of grant. Options have a
ten year term and vest monthly over 12 months. On
May 31, 2005, each Non-Employee Director other than
Mr. Bleser was awarded an option to
purchase 6,000 shares of Common Stock at a price of
$29.33 per share under the 2005 Directors’
Non-Qualified Stock Option Plan. Mr. Bleser was not
eligible for the May 31, 2005 grant because he had not
served as director for a full year as of such date.
11
Table of Contents
Termination of Employment and
Change-in-Control
Arrangements
The Company has entered into
change-in-control
severance agreements with each of Mr. Petit,
Dr. Hassett, Ms. Scoggins and Ms. McCaw. The
agreements provide for compensation to the executive in the
event the executive’s employment with the Company is
terminated following the consummation of a
“change-in-control”
for reasons other than the executive’s death, disability or
for “Cause” (as defined in the respective agreements),
or if the executive voluntarily terminates employment for
“Good Reason” (as defined in the respective
agreements). The compensation payable under the agreements is a
lump sum severance payment equal to a multiple of the
executive’s annual base salary, targeted base bonus and car
allowance as of the date of the
change-in-control. The
multiple applicable to Mr. Petit and Ms. Scoggins is
three. The multiple applicable to Dr. Hassett and
Ms. McCaw is two. In addition, following termination of
employment, the executives are entitled to receive for a period
of three years in the case of Mr. Petit and
Ms. Scoggins and two years in the case of Dr. Hassett
and Ms. McCaw, life, health insurance coverage, and certain
other fringe benefits equivalent to those in effect at the date
of termination and will be entitled to receive additional
amounts, if any, relating to any excise taxes imposed on the
executive as a result of Section 280(g) of the Internal
Revenue Code of 1986, as amended (the “Code”). The
agreements require the executive to comply with certain
covenants that preclude the executive from competing with the
Company or soliciting customers or employees of the Company for
a period following termination of employment equal to the period
for which fringe benefits are continued under the applicable
agreement. The agreements expire three years after a change in
control of the Company or any successor to the Company.
The Company has also entered into
non-change-in-control
severance agreements with Mr. Petit, Ms. Scoggins,
Dr. Hassett and Ms. McCaw. The severance agreements
provide for a lump sum severance payment to the executive in the
event that his or her employment is involuntarily terminated
prior to a
change-in-control for
reasons other than death, disability or “Cause” (as
defined in the respective agreements), or if the executive
voluntarily terminates employment for “Good Reason”
(as defined in the respective agreements). In the case of
Ms. Scoggins, the severance payment is an amount equal to
two times her annual base salary, targeted base bonus and car
allowance as of April 27, 2002. In the case of Mr. Petit,
Dr. Hassett and Ms. McCaw, the severance payment is
equal to two, one and one times their annual base salary,
targeted base bonus and car allowance at the time of termination
of employment, respectively. In addition, in circumstances in
which the executive is entitled to a severance payment, he or
she also is entitled to receive, for a period of years after the
date of termination equal to the period of years over which
severance is paid, life, health insurance coverage, and certain
other fringe benefits equivalent to those in effect at the date
of termination of employment. The agreement requires the
executive to comply with certain covenants that preclude him or
her from competing with the Company or soliciting customers or
employees of the Company for a period following termination of
employment equal to the period for which fringe benefits are
continued.
In 2003, the Company adopted a Supplemental Executive Retirement
Plan (the “SERP”) for the benefit of certain
executives who were participants in a predecessor plan,
including Ms. McCaw and Ms. Scoggins Under the SERP,
individual trust accounts were established for each participant
and funded in an amount equal to the net present value of the
participant’s targeted benefit under the predecessor plan.
Such amounts for the named executive officers participating in
the SERP equaled $726,000 for Ms. Scoggins and $536,000 for
Ms. McCaw. The assets of the trusts are subject to the
claims of the Company’s creditors. Benefits payable under
the SERP are variable, based on the performance of the
investment earnings of the trust funds, and include future tax
mitigation payments of up to 44% of the amounts initially
contributed to the trust accounts. Benefits under the SERP vest
based on age and years of service, with 100% vesting and the
right to withdraw funds obtained at age 55 and
15 years of service. Earlier vesting may occur upon a
change-in-control or
other events as defined in the SERP. In 2004,
Ms. Scoggins’ benefits under the SERP became fully
vested and she withdrew her $1,209,331 from the SERP account.
Notwithstanding anything to the contrary set forth in any of
the Company’s previous filings under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as
amended, that might incorporate future filings, including this
Proxy Statement, in whole or in part, the Compensation Committee
Report on Corporate Compensation, the Report of the Audit
Committee and the Stock Performance Graph shall not be
incorporated by reference into any such filings.
12
Table of Contents
COMPENSATION COMMITTEE REPORT ON CORPORATE COMPENSATION
The Company’s executive compensation program is designed to
(1) integrate pay and incentive plans with the
Company’s strategic goals, so as to align the interests of
management with the long-term interests of the Company’s
stockholders, (2) attract, motivate and retain executives
capable of achieving the Company’s strategic business goals
(3) recognize outstanding individual contributions and
(4) provide compensation opportunities that are competitive
with those offered by other companies of similar size and
performance, especially within the healthcare industry. To
achieve these goals, the Company’s executive compensation
program consists of three elements: (i) base salary,
(ii) annual cash bonus, and (iii) intermediate and
long-term incentives in the form of stock options and
contributions under the Company’s Supplemental Executive
Retirement Plans and 401(k) Plan. Each element of compensation
has an integral role in the total executive compensation
program, including the compensation of the Named Executive
Officers.
In making its compensation determinations, the Compensation
Committee evaluates, on both an absolute and relative basis, a
variety of Company financial results (including sales, earnings,
return on equity, return on assets and balance sheet strength),
market share and competitive position, the potential for future
growth, the overall importance of the individual to the
organization and the individual and group performance of senior
management and compensation levels at comparable companies,
especially within the healthcare industry. In formulating its
determinations, it recognizes and rewards achievements on an
annual basis, while emphasizing the value and importance of
sustained long-term performance and recognition of developing
trends within the healthcare industry. The Compensation
Committee reviews information prepared or compiled by the
Company, and also draws on the business experience of the
individual members of the Compensation Committee.
Cash Compensation. Officers and other employees are
compensated within salary ranges that are generally based on
those of similar positions in companies of comparable size and
complexity to the Company. The actual base pay level for each
executive officer is based on a combination of experience,
performance and other factors that are determined to be
important by the Committee. The salary of the executive officers
is generally reviewed annually at the beginning of each year,
with the amount of any increases based on factors such as
Company performance, general economic conditions, marketplace
compensation trends and individual performance.
Cash bonuses for management are paid under the Company’s
management incentive bonus plan (the “MIP Plan”).
Bonuses under the MIP Plan are computed as a percentage of
year-end base salary. In the case of the Company’s Chief
Executive Officer and Chief Operating Officer, the amount of and
entitlement to bonuses under the MIP Plan are based upon the
performance of the Company in comparison to its operating
budget. For the other participants, the amount of and
entitlement to bonuses are based on a combination of individual
and Company performance. The Committee determines the
participants in the MIP Plan and sets the target bonus levels
and operating budget performance criteria in the first quarter
of each year.
Intermediate and Long Term Incentive Compensation. Stock
options, contributions made under the Company’s 401(k) Plan
and contributions under the Company’s Supplemental
Executive Retirement Plan are the principal vehicles for payment
of intermediate and long term compensation. Beginning in 2006,
the Compensation Committee began to issue shares of restricted
stock as an adjunct to the stock option program. In 2005, the
Company granted stock options to certain of its management
employees, based on guidelines for the individual’s
position with the Company. Stock options were granted at
exercise prices equal to the market price on the date of grant
and typically became exercisable 20% on each anniversary of the
grant becoming fully vested on the fifth anniversary of the
grant), and expire on the tenth anniversary. The 401(k) plan,
which is based on a calendar year, provides for a matching
contribution by the Company of 100% of the participant’s
voluntary salary contributions with the Company’s
contribution limited to the lesser of 3% of the executive
officer’s salary and an annual maximum Company contribution
of $6,150, based on a maximum voluntary salary contribution
established by the U.S. Department of Labor. All matching
Company contributions to the 401(k) plan vest over five years
for each executive officer and are payable pursuant to the
provisions of the 401(k) plan. In 2003, the Company adopted a
Supplemental Executive Retirement Plan for certain of the named
executive officers. See “Termination of Employment and
Change-in-Control
Arrangements” above.
13
Table of Contents
CEO COMPENSATION
CEO Compensation. The Compensation Committee believes
that the compensation of the Chief Executive Officer is
consistent with the general policies concerning executive
compensation and is appropriate in light of the Company’s
financial objectives. Stock option grants to the Chief Executive
Officer are considered concurrently with grants to other
executive officers in accordance with the same general policies.
In reviewing and approving Mr. Petit’s 2005
compensation, the Compensation Committee took into
account Mr. Petit’s outstanding performance in
2004. He had successfully engineered the sale of the
Company’s domestic pharmacy and supplies business and the
restructuring of the Company’s debt, which left the Company
with a stronger balance sheet and better positioned to pursue
its strategic focus. He also had developed a stronger management
team. Under his leadership, the Company had exceeded its
financial goals for the year. In addition, the Compensation
Committee considered the increase in Matria’s stock price
since the beginning of 2004, which reflected a clear endorsement
of the Company’s performance and strategic direction. In
light of these factors, the Compensation Committee determined
that Mr. Petit would receive an increase in his annual base
compensation of 6.5% and an increase in his targeted base bonus
to 65% of his 2005 base salary. Mr. Petit was granted
options to purchase 58,500 shares and
150,000 shares of the Company’s common stock on
June 8, 2005, and November 8, 2005, respectively.
The foregoing report has been furnished by the Compensation
Committee of Matria’s Board of Directors.
Frederick P. Zuspan, M.D.
Frederick E. Cooper
Kaaren J. Street
Thomas S. Stribling
Wayne P. Yetter
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
The Compensation Committee is responsible for executive
compensation decisions as described above. The Compensation
Committee consists of Frederick P. Zuspan, M.D., Frederick
E. Cooper, Kaaren J. Street, Thomas S. Stribling and Wayne P.
Yetter. No member of the Compensation Committee currently serves
or has served as an executive officer or employee of the Company.
REPORT OF THE AUDIT COMMITTEE AND RELATED MATTERS
Report of the Audit Committee
The Board’s Audit Committee, currently composed of Donald
W. Weber, Joseph G. Bleser, Guy W. Millner and Morris S. Weeden,
evaluates the independence and performance of the Company’s
independent accountants, handles relations with the
Company’s independent accountants and evaluates the
integrity of the Company’s financial reporting process and
its policies and procedures relating to internal accounting
functions and controls. This report relates to the activities
taken by the Audit Committee in fulfilling such role.
The Audit Committee oversees the Company’s financial
reporting process on behalf of the Board of Directors. The
Company’s management has the primary responsibility for the
financial statements and reporting process, including the
Company’s systems of internal controls. In fulfilling its
oversight responsibilities, the Audit Committee reviewed and
discussed with management the audited financial statements
included in the Annual Report on
Form 10-K for the
fiscal year ended December 31, 2005. This review included a
discussion of the quality and the acceptability of the
Company’s financial reporting and internal controls.
The Audit Committee also reviewed with the Company’s
independent accountants, KPMG LLP (“KPMG”), who are
responsible for expressing an opinion on the conformity of the
Company’s audited financial statements with generally
accepted accounting principles, their judgments as to the
quality and the acceptability of the Company’s financial
reporting and such other matters as are required to be discussed
with the Audit Committee under generally accepted auditing
standards including Statement on Auditing Standards
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No. 61. In addition, the Audit Committee received and
reviewed the written disclosures and the letter from KPMG
required by Independence Standards Board Standard No. 1 and
discussed with the independent accountants their independence
from management and the Company, and considered whether
KPMG’s provision of non-audit services to the Company
during 2005 was compatible with maintaining the auditor’s
independence.
The committee meets periodically with the independent
accountants to discuss the results of their examinations, their
evaluations of the Company’s internal controls, and the
overall quality of the Company’s financial reporting.
In reliance on the reviews and discussions referred to above,
the Audit Committee recommended to the Board of Directors that
the audited financial statements be included in the Annual
Report on
Form 10-K for the
fiscal year ended December 31, 2005, for filing with the
Securities and Exchange Commission.
The foregoing report has been furnished by the Audit Committee
of Matria’s Board of Directors.
Donald W. Weber
Joseph G. Bleser
Guy W. Millner
Morris S. Weeden
Audit Fees
The following table presents fees for professional audit
services rendered by KPMG for the audit of the Company’s
annual financial statements for 2005 and 2004, and fees billed
for other services rendered by KPMG.
| 2005 | 2004 | ||||||||
|
Audit fees(1)
|
$ | 834,460 | $ | 910,360 | |||||
|
Audit related fees(2)
|
23,500 | 21,750 | |||||||
|
Audit and audit related fees
|
857,960 | 932,110 | |||||||
|
Tax fees(3)
|
14,587 | 9,580 | |||||||
|
All other fees
|
–0– | –0– | |||||||
|
Total fees
|
$ | 872,547 | $ | 941,690 | |||||
| (1) | Audit fees included reviews and consents related to SEC registration statements. |
| (2) | Audit related fees consisted of fees for audits of financial statements of certain employee benefit plans and actuarial fees for the Company’s insurance subsidiary. |
| (3) | Tax fees consisted of fees for tax consultation services. |
The Audit Committee has adopted an Audit and Non-Audit Services
Pre-Approval Policy, which includes the requirements for the
Audit Committee to pre-approve audit and non-audit services
provided by KPMG. Annual audit services engagement terms and
fees will be subject to the specific pre-approval of the Audit
Committee.
The Audit Committee has delegated pre-approval authority to the
Chairman of the Committee, but any pre-approval decisions must
be reported to the Audit Committee at its next scheduled meeting.
All of the audit-related fees and tax fees for 2005 were
approved in advance by the Audit Committee.
KPMG has been appointed by Matria’s Board of Directors to
audit the accounts of Matria and its subsidiaries for the fiscal
year ending December 31, 2006. A representative of KPMG
will be present at the Annual Meeting and will have the
opportunity to make a statement and will be available to respond
to appropriate questions.
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Table of Contents
CORPORATE GOVERNANCE AND NOMINATING COMMITTEE
The Board of Directors has a Corporate Governance and Nominating
Committee. The committee’s operations are governed by a
written charter that, among other things, provides that:
| • | the committee consists of at least three members, each of whom must be “independent” in accordance with the definition of “independence” adopted by Nasdaq; and | |
| • | the committee shall identify individuals qualified to become directors and recommend to the Board of Directors candidates for election or reelection as directors. |
A copy of the current charter is available on the Company’s
website at www.matria.com and also has been filed with the SEC
as an exhibit to the Company’s Annual Report on
Form 10-K. The
Board of Directors may amend this charter at any time.
With respect to the committee’s evaluation of director
nominee candidates, the committee has no formal requirements or
minimum standards for the individuals that it nominates. Rather,
the committee considers each candidate on his or her own merits.
However, in evaluating candidates, there are a number of factors
that the committee generally views as relevant and is likely to
consider. Some of these include:
| • | the candidates’ knowledge, skills and experience, particularly experience that is germane to the Company’s business, such as healthcare services, legal, human resources, finance, marketing and regulatory experience; | |
| • | whether the candidate is an “audit committee financial expert” (as defined by the SEC); | |
| • | the candidates’ integrity and reputation; | |
| • | the candidates’ ability to work collegially with others; | |
| • | the candidates’ other obligations and time commitments and the ability to attend meetings in person; and | |
| • | the desire to balance the considerable benefit of continuity with the periodic injection of the fresh perspective provided by new members. |
The committee does not assign a particular weight to the
individual factors. Similarly, the committee does not expect to
see all (or even more than a few) of these factors in any
individual candidate. Rather, the committee looks for a mix of
factors that, when considered along with the experience and
credentials of the other candidates and existing board members,
will provide stockholders with a diverse and experienced board
of directors.
The committee welcomes recommendations from stockholders. The
committee evaluates a candidate for director who was recommended
by a stockholder in the same manner that the committee evaluates
a candidate recommended by other means. In order to make a
recommendation, the committee asks that a stockholder send the
committee:
| • | a resume for the candidate detailing the candidate’s work experience and academic credentials; | |
| • | written confirmation from the candidate that he or she (1) would like to be considered as a candidate and would serve if nominated and elected, (2) consents to the disclosure of his or her name, (3) has read the Company’s Code of Conduct and that during the prior three years has not engaged in any conduct that, had he or she been a director, would have violated the Code or required a waiver, (4) is, or is not, “independent” as that term is defined in the Nasdaq Corporate Governance rules, and (5) has no plans to change or influence the control of the Company; | |
| • | the name of the recommending stockholder as it appears in the Company’s books, the number of shares of Common Stock that are owned by the stockholder and written confirmation that the stockholder consents to the disclosure of his or her name. (If the recommending person is not a stockholder of record, he or she should provide proof of share ownership); | |
| • | personal and professional references, including contact information; and |
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| • | any other information relating to the candidate required to be disclosed in a proxy statement for election of directors under Regulation 14A of the Exchange Act. |
This information should be sent to the Corporate Governance and
Nominating Committee, c/o Secretary, Matria Healthcare,
Inc., 1850 Parkway Place, Marietta, Georgia 30067. The Secretary
will forward the information to the chairperson of the
committee. The committee does not necessarily respond to
communications.
In addition to the procedures described above for recommending
prospective nominees for consideration by the committee,
stockholders may directly nominate directors for consideration
at any annual meeting of stockholders. To nominate a candidate
for election, a stockholder must follow the procedures set forth
in the Company’s bylaws. These procedures are summarized
below under the heading “Stockholder Proposals at the
Company’s Next Annual Meeting of Stockholders.”
Each of the nominees for election as a director at the Annual
Meeting was recommended by the Goverance Committee and nominated
by the Company’s Board of Directors.
EQUITY COMPENSATION PLANS
The following table gives information about the Company’s
common stock that may be issued upon the exercise of options,
warrants and rights under all existing equity compensation plans
as of December 31, 2005:
| Number of | |||||||||||||
| Securities | |||||||||||||
| Number of | Remaining Available | ||||||||||||
| Securities to be | for Future Issuance | ||||||||||||
| Issued Upon | Weighted-Average | Under Equity | |||||||||||
| Exercise of | Exercise Price of | Compensation Plans | |||||||||||
| Outstanding | Outstanding | (Excluding | |||||||||||
| Options, Warrants | Options, Warrants | Securities Reflected | |||||||||||
| Plan Category | and Rights | and Rights | in 1st Column) | ||||||||||
|
Equity compensation plans approved by security holders
|
2,754,933 | $ | 20.25 | 878,016 | (1) | ||||||||
|
Equity compensation plans not approved by security holders(2)
|
35,098 | $ | 15.40 | — | |||||||||
|
Total
|
2,790,031 | $ | 20.19 | 878,016 | |||||||||
| (1) | Includes securities available for future issuance under shareholder-approved compensation plans as follows: 533,672 shares under the Long-Term Stock Incentive Plan, 6,000 shares under the 2002 Stock Incentive Plan, 675 shares under the 2001 Stock Incentive Plan, 129,687 shares under the 2005 Directors’ Non-qualified Stock Option Plan, 13,250 shares under the 2000 Stock Incentive Plan, and 3,249 shares under the 1996 Stock Incentive Plan. Also includes 41,483 shares that remain available for purchase under the 2002 Stock Purchase Plan and 150,000 shares under the 2005 Stock Purchase Plan. |
| (2) | This total includes options for: (1) 14,019 shares granted to certain key employees (other than executive officers) on October 20, 1997 and 15,000 shares granted to non-employee members of the Company’s Board of Directors on February 24, 1998. All of these options were granted at exercise prices equal to the fair market value of a share of the Company’s stock on the date of grant and all expire ten years from the date of the grant. The October 20, 1997 grants vested and became fully exercisable on October 20, 2000. The February 24, 1998 grants vested on February 24, 1999; (2) 6,079 shares assumed by the Company in connection with the acquisition of MarketRing on June 14, 2002, which options were granted by MarketRing under the MarketRing 1999 Stock Option and Stock Appreciation Rights Plan prior to the acquisition. The exercise price for these options, originally set by MarketRing, has been determined by reference to the exchange ratio prescribed for converting shares of MarketRing common stock into shares of the Company’s common stock pursuant to the acquisition. The assumed options generally vest in increments of 25% annually, beginning on the second anniversary of the date of grant, with such options expiring five to ten years from the date of grant or upon termination of employment. |
17
Table of Contents
PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total
returns for the periods indicated for the Company, the S&P
500 Index and the S&P HealthCare Distributors Index. The
graph assumes that the value of the investment in the
Company’s Common Stock and each index was $100 at
December 31, 2000, and that all dividends (there were none)
were reinvested.
| 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | |||||||||||||||||||
|
Matria Healthcare, Inc.
|
100 | 359.79 | 90.29 | 219.53 | 405.92 | 604.05 | ||||||||||||||||||
|
S&P 500 Index
|
100 | 88.11 | 68.64 | 88.33 | 97.94 | 102.75 | ||||||||||||||||||
|
S&P HealthCare Distributors
|
100 | 99.45 | 85.30 | 92.27 | 89.94 | 116.25 | ||||||||||||||||||
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Carl E. Sanders, a director of the Company, is also the
Chairman Emeritus of Troutman Sanders LLP, a law firm based in
Atlanta, Georgia, which provided certain legal services to the
Company in fiscal year 2005 and is expected to be retained by
the Company in the future.
STOCKHOLDER PROPOSALS AT THE COMPANY’S NEXT
ANNUAL MEETING OF STOCKHOLDERS
The 2007 Annual Meeting of Stockholders (the “2007 Annual
Meeting”) is anticipated to be held in May 2007. Under the
Company’s Bylaws, a notice of intent of a stockholder to
bring a proposal (other than a director nomination) before the
2007 Annual Meeting must comply with the requirements of the
Company’s bylaws and must be received by the Company no
later than December 31, 2006, in order to be presented for
a vote at the meeting. However, if the 2007 Annual Meeting is
held on a date more than 30 days before or after
May 31, 2007, notice of a stockholder proposal (other than
a director nomination), to be timely, must be received by the
Company within a reasonable time before the Company begins to
print and mail proxy materials. If timely delivered to the
Secretary, such proposals may be included in the Company’s
Proxy Statement for the 2007 Annual Meeting, provided the
proponent(s) satisfies all applicable rules of the Securities
and Exchange Commission relating to stockholder proposals.
A director nomination by a stockholder will also only be
considered at the 2007 Annual Meeting if received by the Company
no later than December 31, 2006. However, if the 2007
Annual Meeting is held on a date more than 30 days before
or after May 31, 2007, notice of a director nomination must
be received not less
18
Table of Contents
than 60 nor more than 75 days prior to the meeting;
provided that in the event less than 70 days notice or
prior public disclosure of the meeting is given or made to
stockholders, notice of such nomination must be received by the
tenth day following the earlier of public disclosure or mailing
of notice of the date of the meeting.
The Company will furnish copies of the bylaw provisions which
set forth the requirements for a stockholder’s notice of
intent to present proposals upon written request to the
Secretary of the Company at the address set forth in the
following sentence.
Notices of intention to present proposals and director
nominations at the 2007 Annual Meeting or requests in connection
therewith should be addressed to Matria Healthcare, Inc., 1850
Parkway Place, Marietta, Georgia 30067, Attention: Corporate
Secretary.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, (the “Act”) requires the Company’s
directors and executive officers and persons who own more than
ten percent of a registered class of the Company’s equity
securities to file reports with the SEC regarding beneficial
ownership of Common Stock and other equity securities of the
Company. To the Company’s knowledge, based solely on a
review of copies of such reports furnished to the Company and
written representations that no other reports were required,
during the fiscal year ended December 31, 2005, all
officers, directors and greater than ten percent beneficial
owners complied with the Section 16(a) filing requirements
of the Act in all instances.
ANNUAL REPORT AND FINANCIAL STATEMENTS
The Company will furnish without charge a copy of its Annual
Report on
Form 10-K filed
with the SEC for the fiscal year ended December 31, 2005,
including financial statements and schedules, to any record or
beneficial owner of its Common Stock as of April 13, 2006
upon written or oral request of such person. Requests for such
copies should be directed to:
| Matria Healthcare, Inc. | |
| 1850 Parkway Place | |
| Marietta, Georgia 30067 | |
| Attention: Corporate Secretary | |
| (770) 767-4500 |
If the person requesting the
Form 10-K was not
a stockholder of record on April 13, 2006, the request must
include a representation that such person was a beneficial owner
of the Common Stock on that date. Copies of any exhibit(s) to
the Form 10-K will
be furnished on request and upon the payment of the
Company’s expenses in furnishing such exhibit(s).
GENERAL
Management does not know of any other business to come before
the 2006 Annual Meeting. If, however, other matters do properly
come before the 2006 Annual Meeting, it is the intention of the
persons named in the accompanying proxy to vote on such matters
in accordance with their best judgment.
| Roberta L. McCaw | |
| Secretary |
May 1, 2006
19
Table of Contents
 |
c/o Stock Transfer Department Post Office Box 105649 Atlanta GA 30348 |
Vote by Telephone
Have your proxy card
available when you call Toll-Free
1-888-693-8683 using a touch-tone
phone and follow the simple
instructions to record your
vote .
Vote by Internet
Have your proxy card
available when you access the
website www.cesvote.com and follow
the simple instructions to record
your vote .
Vote by Mail
Please mark, sign and date
your proxy card and return it in
the postage-paid envelope provided
or return it to: Corporate
Election Services, P.O. Box 3230,
Pittsburgh PA 15230.
Vote by Telephone
Call Toll-Free using a
touch-tone telephone:
1-888-693-8683
Vote by Internet
Access the Website and cast
your vote:
www.cesvote.com
Vote by Mail
Return your proxy
in the postage-paid
envelope provided
Vote 24 hours a day, 7 days a week!
If you vote by telephone or over the Internet, do not mail your proxy card.
è
Proxy card must be signed and dated below.
ê Please fold and detach card at perforation before mailing. ê
ê Please fold and detach card at perforation before mailing. ê
MATRIA HEALTHCARE, INC.
Solicited on Behalf of the Board of Directors
For Annual Meeting of Stockholders, May 31, 2006
For Annual Meeting of Stockholders, May 31, 2006
The undersigned hereby appoints Parker H. Petit and Roberta L. McCaw, and each of them,
proxies, with full power of substitution and with discretionary authority, to represent and to vote
in accordance with the instructions set forth below, all shares of Common Stock of Matria
Healthcare, Inc. held of record by the undersigned on April 13, 2006, at the 2006 Annual Meeting of
Stockholders to be held at 1850 Parkway Place, Suite 600A, Marietta, Georgia 30067, at 10:30 a.m.
on Wednesday, May 31, 2006, and any adjournments thereof.
| Dated: | , 2006 | ||||||
| Signature | |||||||
| Signature if held jointly | |||||||
PLEASE SIGN EXACTLY AS NAME
APPEARS ON STOCK CERTIFICATE. If
stock is held in the name of two or
more persons, all must sign. When
signing as attorney, executor,
administrator, trustee, or guardian,
please give full title as such. 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 RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
Table of Contents
YOUR VOTE IS IMPORTANT
If you do not vote by telephone or Internet, please sign and date this
proxy card and return it promptly in the enclosed postage-paid envelope, or
otherwise to Corporate Election Services, P.O. Box 3230, Pittsburgh, PA
15230, so your shares will be represented at the Annual Meeting. If you vote
by telephone or Internet, it is not necessary to return this proxy card.
Proxy card must be signed and dated on the reverse side.
ê Please fold and detach card at perforation before mailing. ê
ê Please fold and detach card at perforation before mailing. ê
| MATRIA HEALTHCARE, INC. | PROXY |
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED
STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ITEM 1.
This Proxy revokes all prior proxies with respect to the Annual Meeting and may be revoked prior to its exercise.
This Proxy revokes all prior proxies with respect to the Annual Meeting and may be revoked prior to its exercise.
| 1. | ELECTION OF DIRECTORS: | |||||||||||||||||
| Nominees: | Four Class II Directors for term expiring in 2009: | (1 | ) | J. Terry Dewberry | (2 | ) | Richard M. Hassett, M.D. | |||||||||||
| (3 | ) | Kaaren J. Street | (4 | ) | Wayne P. Yetter | |||||||||||||
| One Class III Director for term expiring in 2007: | (5 | ) | Donald J. Lothrop | |||||||||||||||
| q | FOR all nominees listed above | q | WITHHOLD AUTHORITY | |||||||||||||||
| (except as written to the contrary below) | to vote for all nominees listed above | |||||||||||||||||
| (INSTRUCTIONS: To withhold authority to vote for any individual nominee, write that nominee’s name in the space provided below.) | ||||||||||||||||||
| 2. | In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting. | |||||||||||||||||
| (Continued on Reverse Side) |
||||||||||||||||||