DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Filed by the
Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
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Preliminary Proxy Statement.
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Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)).
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þ Definitive
Proxy Statement.
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Definitive Additional Materials.
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Soliciting Material Pursuant to
Section 240.14a-12.
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Continucare Corporation
(Name of Registrant as Specified In
Its charter)
(Name of Person(s) Filing Proxy
Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11.
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(1) |
Title of each class of securities to which transaction applies:
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(2) |
Aggregate number of securities to which transaction applies:
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(3) |
Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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(4) |
Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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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.
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(1) |
Amount Previously Paid:
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(2) |
Form, Schedule or Registration Statement No.:
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February 9, 2009
Dear Shareholder:
On behalf of the Board of Directors, I cordially invite you to
attend the Annual Meeting of Shareholders of Continucare
Corporation to be held at our executive offices, 7200 Corporate
Center Drive, Suite 600, Miami, Florida 33126 on Thursday,
March 12, 2009 at 9:30 a.m. Eastern Standard Time.
The attached Notice of Annual Meeting and Proxy Statement
describe the matters that we expect to be acted upon at the
Annual Meeting. At the Annual Meeting, you will have an
opportunity to meet management and ask questions.
Whether or not you plan to attend the Annual Meeting, it is
important that you vote your shares. Regardless of the number of
shares you own, please sign and date the enclosed proxy card and
promptly return it to us in the enclosed postage paid envelope.
If you sign and return your proxy card without specifying your
choices, your shares will be voted in accordance with the
recommendations of the Board of Directors contained in the Proxy
Statement.
We look forward to seeing you on March 12, 2009 and urge
you to return your proxy card as soon as possible.
Sincerely,
Richard C. Pfenniger, Jr.
Chairman, Chief Executive Officer and
President
7200 CORPORATE
CENTER DRIVE SUITE 600 MIAMI, FLORIDA 33126 TEL (305) 500-2000 FAX (305) 500-2080
CONTINUCARE
CORPORATION
7200 Corporate Center Drive, Suite 600, Miami, Florida
33126
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on Thursday, March 12, 2009
To the
Shareholders of Continucare Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Shareholders of Continucare Corporation, a Florida corporation
(Continucare), will be held at 9:30 a.m., local
time, on Thursday, March 12, 2009, at the executive offices
of Continucare Corporation, 7200 Corporate Center Drive,
Suite 600, Miami, Florida, 33126, for the following
purposes:
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(1)
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The election of eight members to Continucares Board of
Directors to hold office until our next annual meeting of
shareholders or until their successors are duly elected and
qualified;
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(2)
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The ratification of the appointment of Ernst & Young
LLP as Continucares independent registered public
accounting firm; and
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(3)
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The transaction of such other business as may properly come
before the Annual Meeting and any adjournments or postponements
thereof.
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The Board of Directors has fixed the close of business on
January 20, 2009 as the record date for determining those
shareholders entitled to notice of, and to vote at, the Annual
Meeting and any adjournment(s) or postponement(s) 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,
Fernando L. Fernandez
Senior Vice President Finance, Chief
Financial Officer, Treasurer and Secretary
Miami, Florida
February 9, 2009
ALL SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER YOU PLAN TO ATTEND THE MEETING, ALL SHAREHOLDERS ARE
RESPECTFULLY URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY CARD
AS PROMPTLY AS POSSIBLE. SHAREHOLDERS OF RECORD WHO EXECUTE A
PROXY CARD MAY REVOKE THEIR PROXY IN THE MANNER DESCRIBED IN THE
PROXY STATEMENT AND VOTE THEIR SHARES IN PERSON AT THE MEETING.
TABLE OF CONTENTS
ANNUAL
MEETING OF SHAREHOLDERS
OF
CONTINUCARE CORPORATION
PROXY
STATEMENT
This proxy statement is furnished in connection with the
solicitation by our Board of Directors of proxies from the
holders of our common stock for use at our Annual Meeting of
Shareholders to be held at 9:30 a.m., local time, on
Thursday, March 12, 2009, at our executive offices, 7200
Corporate Center Drive, Suite 600, Miami, Florida, 33126 or
at any adjournments or postponements thereof, pursuant to the
foregoing Notice of Annual Meeting of Shareholders (the
Annual Meeting). This proxy statement and the
enclosed form of proxy are first being sent to shareholders on
or about February 9, 2009.
Shareholders should review the information provided herein in
conjunction with our Annual Report, a copy of which accompanies
this proxy statement. Our principal executive offices are
located at 7200 Corporate Center Drive, Suite 600, Miami,
Florida 33126 and our telephone number is
(305) 500-2000.
INFORMATION
CONCERNING YOUR PROXY
The enclosed proxy is solicited on behalf of our Board of
Directors. The giving of a proxy does not prevent a shareholder
of record to vote in person at the Annual Meeting should a
shareholder of record giving a proxy so desire. Shareholders of
record have an unconditional right to revoke their proxy at any
time prior to the vote at the Annual Meeting, either in person
at the Annual Meeting or by filing with our Secretary at our
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 us at or
prior to the Annual Meeting. If you hold your shares
beneficially in street name through your broker, you
must obtain a signed proxy from the record holder in order to
vote the shares in person at 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 solely by us. In addition to the
use of mail, our employees may solicit proxies personally, by
telephone and by facsimile. Our employees will receive no
compensation for soliciting proxies other than their regular
salaries. We may request 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. We may reimburse such persons for their expenses in
so doing.
PURPOSES
OF THE MEETING
At the Annual Meeting, our shareholders will consider and vote
upon the following matters:
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(1)
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The election of eight members to our Board of Directors to hold
office until our next Annual Meeting of Shareholders or until
their successors are duly elected and qualified;
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(2)
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The ratification of the appointment of Ernst & Young
LLP as our independent registered public accounting
firm; and
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(3)
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The transaction of such other business as may properly come
before the Annual Meeting, including any adjournments or
postponements thereof.
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Shares represented by valid proxies will be voted in the manner
specified in such proxy. Shares represented by valid proxies
which do not contain voting instructions as to a matter will be
voted FOR the election of the nominees for director named
below and FOR the ratification of the appointment of
Ernst & Young LLP as our independent registered public
accounting firm. In the event that any other business may
properly come before the meeting, the shares represented by
valid proxies received pursuant to this solicitation will be
voted in the discretion of the proxy holder. In the event a
shareholder specifies a different choice by means of the
enclosed proxy, his or her shares will be voted in accordance
with the specification so made.
1
OUTSTANDING
VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on
January 20, 2009 as the record date for determining
shareholders entitled to notice of and to vote at the Annual
Meeting. As of the record date, there were
59,818,781 shares of our common stock outstanding. Only the
record holders of issued and outstanding shares of our common
stock as of the close of business on the record date are
entitled to vote at the Annual Meeting. Shareholders that own
their shares in street name through a stock
brokerage account or through a bank or nominee may attend the
meeting but may not grant a proxy or vote at the meeting.
Instead, the broker, bank or nominee is considered the record
holder of those shares and those shareholders must instruct the
record holder how they wish their shares to be voted.
Shareholders are entitled to one vote for each share held, and
do not have the right to cumulate their votes. Shareholders do
not have rights of appraisal or similar rights of dissenters
under the Florida Business Corporation Act with respect to any
of the proposals set forth in this proxy statement.
The attendance, in person or by proxy, of the holders of a
majority of the outstanding shares of our common stock entitled
to vote at the Annual Meeting is necessary to constitute a
quorum with respect to all matters presented. Directors will be
elected by a plurality of the votes cast by the shares of our
common stock entitled to vote at the Annual Meeting. The
appointment of Ernst & Young LLP as our independent
registered public accounting firm will be ratified if a majority
of the shares of our common stock represented in person or by
proxy at the Annual Meeting vote in favor of the ratification of
the appointment of Ernst & Young LLP as our
independent registered public accounting firm. 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 shares voted in opposition
to the matter, unless such matter is one for which a greater
vote is required by law or by our Articles of Incorporation or
Bylaws. If less than a majority of the outstanding shares
entitled to vote are represented at the Annual Meeting, a
majority of the shares so represented may adjourn the Annual
Meeting to another date, time or place, and notice need not be
given of the new date, time, or place if the new date, time, or
place is announced at the meeting before an adjournment is taken.
Prior to the Annual Meeting, we will select one or more
inspectors of election for the meeting. Such inspectors shall
determine the number of shares of common stock represented at
the meeting, the existence of a quorum and the validity and
effect of proxies, and shall receive, count and tabulate ballots
and votes and determine the results thereof. Abstentions will be
considered as shares present and entitled to vote at the Annual
Meeting and will be counted as votes cast at the Annual Meeting,
but will not be counted as votes cast for or against any given
matter. Accordingly, abstentions will have no effect on the
election of directors and will have the same effect as a vote
against the ratification of the appointment of Ernst &
Young LLP as our independent registered public accounting firm.
Broker non-votes occur when a broker, bank or other
nominee who holds shares in street name for a
beneficial owner does not have discretionary authority to vote
on a matter and has not received instructions on how to vote
from the beneficial owner of the shares. A broker or nominee
holding shares in street name has the discretion to
vote the beneficial owners shares with respect to the
election of directors and the ratification of the appointment of
Ernst & Young LLP as our independent registered public
accounting firm.
2
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of
January 20, 2009 concerning the beneficial ownership of the
common stock by (i) each person known by us to be the
beneficial owner of more than 5% of the outstanding common
stock, (ii) each of our directors, (iii) each Named
Executive Officer (as defined in the Compensation Discussion and
Analysis Section below), and (iv) all of our current
executive officers and directors as a group. All holders listed
below have sole voting power and investment power over the
shares beneficially owned by them, except to the extent such
power may be shared with such persons spouse. Unless noted
otherwise, the address of each person listed below is 7200
Corporate Center Drive, Suite 600, Miami, Florida 33126.
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Name and Address
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Amount and Nature of
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Percent of
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of Beneficial Owner
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Beneficial Ownership(1)
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Common Stock(2)
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Robert Cresci
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390,000
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(3)
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*
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c/o Pecks
Management Partners, Ltd.
One Rockefeller Plaza
Suite 900
New York, NY 10020
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Luis Cruz, M.D.
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25,000
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(4)
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*
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3233 Palm Avenue
Hialeah, FL 33012
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Neil Flanzraich
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290,000
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(5)
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*
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4400 Biscayne Boulevard
Miami, FL 33137
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Phillip Frost, M.D.
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26,080,917
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(6)
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43.5
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%
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4400 Biscayne Boulevard
Miami, FL 33137
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Fernando L. Fernandez
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450,000
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(7)
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*
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Luis H. Izquierdo
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381,250
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(7)
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*
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Jacob Nudel, M.D.
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190,000
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(8)
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*
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One Isla Bahia Drive
Fort Lauderdale, FL 33316
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Richard C. Pfenniger, Jr.
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1,676,720
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(9)
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2.8
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%
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Gemma Rosello
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187,500
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(7)
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*
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Jacqueline M. Simkin
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572,640
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(10)
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1.0
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%
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A. Marvin Strait
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110,000
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(11)
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*
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2 North Cascade Avenue
Suite 1300
Colorado Springs, CO 80903
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T. Rowe Price
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4,160,000
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(12)
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7.0
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%
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Owings Mills Corporate Campus
4515 Painters Mill Road
Owings Mills, Maryland 21117-4903
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All directors and executive officers as a group (11 persons)
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30,354,027
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48.6
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%
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Less than one percent. |
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(1) |
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For purposes of this table, beneficial ownership is computed
pursuant to
Rule 13d-3
under the Securities Exchange Act of 1934 (the Exchange
Act); the inclusion of shares as beneficially owned should
not be construed as an admission that such shares are
beneficially owned for purposes of the Exchange Act. |
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Based on 59,818,781 shares outstanding as of
January 20, 2009. |
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Includes 190,000 shares of common stock underlying options
that are currently exercisable or exercisable within
60 days after January 20, 2009. |
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Includes 25,000 shares of common stock underlying options
that are currently exercisable or exercisable within
60 days after January 20, 2009. |
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(5) |
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Includes 90,000 shares of common stock underlying options
that are currently exercisable or exercisable within
60 days after January 20, 2009. |
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Includes (i) 24,771,604 shares owned beneficially
through Frost Gamma Investments Trust;
(ii) 819,313 shares beneficially owned through Frost
Nevada Investments Trust; (iii) 400,000 shares of
stock owned directly by Dr. Frost and
(iv) 90,000 shares of common stock underlying options
that are currently exercisable or exercisable within
60 days after January 20, 2009. |
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Represents shares of common stock underlying options that are
currently exercisable or exercisable within 60 days after
January 20, 2009. |
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Includes 90,000 shares of common stock underlying options
that are currently exercisable or exercisable within
60 days after January 20, 2009. |
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Includes 1,083,690 shares of common stock underlying
options that are currently exercisable or exercisable within
60 days after January 20, 2009. |
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(10) |
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Includes shares of common stock held by the Jacqueline Simkin
Trust, of which Ms. Simkin is a beneficiary. |
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(11) |
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Includes 83,334 shares of common stock underlying options
that are currently exercisable or exercisable within
60 days after January 20, 2009. |
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(12) |
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We have reason to believe such information is accurate; however,
to date T. Rowe Price has not filed a Schedule 13G with the
SEC. |
ELECTION
OF DIRECTORS
(Proposal No. 1)
Nominees
for Election as Director
Eight persons are nominated for election as directors to serve
until our next Annual Meeting of Shareholders and until each
directors successor is duly elected and qualified.
Although we anticipate that all of the nominees will be able to
serve, if any nominee is unable or unwilling to serve at the
time of the Annual Meeting, proxies solicited hereunder will be
voted in favor of the remaining nominees, if any, and for such
other persons as may be designated by the Board of Directors,
unless directed by a proxy to do otherwise.
The following table sets forth the names and ages of the
director nominees. Each director nominee is a current director
of ours who has been nominated for re-election at the Annual
Meeting, except for Jacqueline M. Simkin, who was appointed to
the Board of Directors effective September 19, 2008 by our
Board of Directors upon the recommendation of our Nominating
Committee, and is standing for election for the first time.
Dr. Phillip Frost identified Ms. Simkin as a candidate
for director.
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Name
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Age
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Richard C. Pfenniger, Jr.
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53
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Luis Cruz, M.D
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48
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Robert J. Cresci
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65
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Neil Flanzraich
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65
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Phillip Frost, M.D
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72
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Jacob Nudel, M.D
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60
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Jacqueline M. Simkin
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66
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A. Marvin Strait
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75
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The following is biographical information for the director
nominees.
Richard C. Pfenniger, Jr. has served as one of our
directors since March 2002. In September 2002,
Mr. Pfenniger was appointed Chairman of the Board of
Directors. In October 2003, he was appointed Chief Executive
Officer and President. Mr. Pfenniger served as the Chief
Executive Officer and Vice Chairman of Whitman Education Group,
Inc. from 1997 through June 2003. From 1994 to 1997,
Mr. Pfenniger served as the Chief Operating Officer of IVAX
Corporation, and, from 1989 to 1994, he served as the Senior
Vice President-Legal Affairs and General Counsel of IVAX
Corporation. Mr. Pfenniger currently serves as a director
of GP Strategies
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Corporation (corporate education and training), Safestitch
Medical, Inc. (medical devices) and OPKO Health, Inc.
(pharmaceuticals).
Luis Cruz, M.D. has served as one of our directors
since October 2006. In October 2006, Dr. Cruz was appointed
Vice Chairman of the Board of Directors pursuant to a one year
employment agreement which expired in October 2007. Prior to
joining us, Dr. Cruz served as an executive officer of each
of Miami Dade Health and Rehabilitation Services, Inc., Miami
Dade Health Centers, Inc., West Gables Open MRI Services, Inc.,
Kent Management Systems, Inc., Pelu Properties, Inc., Peluca
Investments, LLC and Miami Dade Health Centers One, Inc.
(collectively, the MDHC Companies). We acquired the
MDHC Companies effective October 1, 2006. In October 2007,
Dr. Cruz opened the Centers of Medical Excellence (CME).
CME is operated under an agreement with us and CarePlus.
Robert J. Cresci has served as one of our directors since
February 2000. He has been a Managing Director of Pecks
Management Partners Ltd., an investment management firm, since
1990. Mr. Cresci currently serves on the Boards of
Directors of Sepracor, Inc. (pharmaceuticals), Luminex
Corporation (biotechnology), j2 Global Communications, Inc.
(telecommunications), and several private companies.
Neil Flanzraich has served as one of our directors since
March 2002. Mr. Flanzraich is a private investor. From May
1998 until February 2006, he served as the Vice Chairman and
President of IVAX Corporation. Mr. Flanzraich served as
Chairman of the Life Sciences Legal Practices Group of Heller
Ehrman White & McAuliff, a law firm, from 1995 to
1998. From 1981 to 1994, Mr. Flanzraich served in various
capacities at Syntex Corporation and as a member of the
Corporate Executive Committee. From 1994 to 1995, after Syntex
Corporation was acquired by Roche Holding Ltd.,
Mr. Flanzraich served as Senior Vice President and General
Counsel of Syntex (U.S.A.) Inc., a Roche subsidiary.
Mr. Flanzraich was Chairman of the Board of Directors of
North American Vaccine, Inc. from 1989 to 2000.
Mr. Flanzraich also currently serves on the Boards of
Directors of Javelin Pharmaceuticals, Inc. (pharmaceuticals),
Bellus Health Inc. (formerly Neurochem, Inc.) (healthcare), Rae
Systems, Inc. (gas detection and security monitoring systems),
Equity One, Inc. (real estate), and Chipotle Mexican Grill, Inc.
(a chain of Mexican restaurants).
Phillip Frost, M.D. has served as one of our
directors since January 2004. Dr. Frost formerly served on
our Board of Directors as Vice Chairman from September 1996
until April 2002. Dr. Frost presently serves as the
Chairman of the Board and Chief Executive Officer of OPKO
Health, Inc., a specialty pharmaceutical company. He is Vice
Chairman of the Board of Directors of TEVA Pharmaceuticals, Ltd.
(pharmaceuticals), Chairman of the Board of Ladenburg Thalmann
Financial Services, Inc. (security brokerage) and Ideation
Acquisition Corporation (special purpose acquisition
corporation). He also serves as a director of Northrop Grumman
Corporation (aerospace), Modigene Inc. (biopharmaceuticals) and
Castle Brands, Inc. (spirits). Previously, he served as the
Chairman of the Board of Directors and Chief Executive Officer
of IVAX Corporation from 1987 to 2006 and as President of IVAX
Corporation from July 1991 until January 1995. He was the
Chairman of the Department of Dermatology at Mt. Sinai Medical
Center of Greater Miami, Miami Beach, Florida from 1972 to 1986.
Dr. Frost serves on the Board of Regents of the Smithsonian
Institution, is a member of the Board of Trustees of the
University of Miami, and is a Trustee of each of the Scripps
Research Institutes, the Miami Jewish Home for the Aged and the
Mount Sinai Medical Center.
Jacob Nudel, M.D. has served as one of our directors
since October 2002. He is a private investor who founded
MDwerks.com Corp., where he served as Chairman from 2000 to
2005. From 1995 to 2000, Dr. Nudel served as Chief
Executive Officer of Allied Health Group, Inc. From 1992 to
2000, Dr. Nudel served as Chief Executive Officer of
Florida Specialty Network, Inc.
Jacqueline M. Simkin has served as one of our directors
since September 2008. Ms. Simkin has been the owner and
president of Simkin Management Inc., an investment management
firm that invests in public and private companies, since 1996.
She was a member of the boards of Alpnet Inc. and Thompson
Nutritional Technology Inc. from 1998 through 2000. From 1987 to
1995, Ms. Simkin served on the Board of Directors of the
Intercontinental Bank. Ms. Simkin served in various
management capacities at The Denver Brick Company including
serving as the Chairperson and Chief Executive Officer from 1999
through 2001. Ms. Simkin developed real estate from 1976 to
1986 and is a retired member of the British Colombia Bar
Association.
A. Marvin Strait has served as one of our directors
since March 2004. Mr. Strait presently practices as a
Certified Public Accountant under the name A. Marvin Strait,
CPA. He has practiced in the field of public
5
accountancy in Colorado for over 40 years. He presently
serves as a member of the Board of Trustees of the Colorado
Springs Fine Arts Center Foundation, the Sam S. Bloom
Foundation, The Penrose-St. Francis Health Foundation and Pikes
Peak Educational Foundation. He also presently serves as a
member of the Board of Directors and Chairman of the Audit
Committee of Sturm Financial Group, Inc., RAE Systems, Inc., GP
Strategies Corporation, and on the Community Advisory Panel of
American National Institute of Certified Public Accountants
(AICPA) as President of the Colorado Society of
Certified Public Accountants and the Colorado State Board of
Accountancy, and serves as a permanent member of the AICPA
Governing Council.
Vote
Required and Recommendation
The Board of Directors recommends a vote for each of the
nominees. Directors will be elected by a plurality of the votes
cast by the shares of our common stock entitled to vote at the
Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH
OF THE NOMINEES IDENTIFIED ABOVE.
Identification
of Executive Officers
The following individuals are our executive officers:
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Name
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Age
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Position
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Richard C. Pfenniger, Jr.
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53
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Chairman of the Board, Chief Executive Officer and President
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Fernando L. Fernandez
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47
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Senior Vice President Finance, Chief Financial
Officer, Treasurer and Secretary
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Luis H. Izquierdo
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54
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Senior Vice President Marketing and Business
Development
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Gemma Rosello
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Executive Vice President Operations
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All officers serve until they resign or are replaced or removed
at the discretion of the Board of Directors.
The following additional information is provided for the
executive officers shown above who are not members of the Board
of Directors or nominees for directors.
Fernando L. Fernandez was appointed Senior Vice
President Finance, Chief Financial Officer,
Treasurer, and Secretary in June 2004. Mr. Fernandez, a
certified public accountant, served as Senior Vice
President Finance, Chief Financial Officer,
Treasurer, and Secretary of Whitman Education Group, Inc. from
1996 until 2003. Prior to and since his service at Whitman
Education Group, Inc., Mr. Fernandez served as Chief
Financial Officer of several private investment entities owned
by Phillip Frost, M.D. Prior to 1991, Mr. Fernandez
served as Audit Manager for PricewaterhouseCoopers LLP (formerly
Coopers & Lybrand) in Miami, Florida.
Luis H. Izquierdo was appointed Senior Vice
President Marketing and Business Development in
January 2004. Mr. Izquierdo served as Senior Vice
President and as a member of the Board of Directors for
Neighborhood Health Partnership from 2002 to 2004.
Mr. Izquierdo was Senior Vice President of Marketing and
Sales for Foundation Health, Florida from 1999 through 2001.
From 1997 through 1999, Mr. Izquierdo served as Senior Vice
President and Chief Marketing Officer for Oral Health Services.
From 1995 to 1997, Mr. Izquierdo served as the Vice
President, Corporate Marketing and Sales for Physicians
Corporation of America, and, from 1992 to 1995, he served as the
Senior Vice President, Marketing and Sales for CAC-Ramsay Health
Plans.
Gemma Rosello was appointed Executive Vice
President Operations in October 2006.
Ms. Rosello had previously served as Senior Vice
President Operations from May 2005. Prior to joining
us, Ms. Rosello was the Medicare Business Development
Director for AvMed Health Plan. She served as Vice President of
Health Services for Neighborhood Health Plan from 2003 to 2004.
From 1993 to 2002, she served as the Chief Executive Officer of
Medical Utilization Review Associates (MURA), a management
service organization, and Apex Health Services which managed
Medicare, Medicaid and commercial full risk contracts with
national and regional payors. Prior to her work in the managed
care arena, Ms. Rosello served as Chief Operating Officer
for an acute medical/surgical non-profit hospital in Miami,
Florida.
6
CORPORATE
GOVERNANCE
Pursuant to our bylaws and the Florida Business Corporation Act,
our business and affairs are managed under the direction of the
Board of Directors. Directors are kept informed of our business
through discussions with management, including the Chief
Executive Officer and other senior officers, by reviewing
materials provided to them and by participating in meetings of
the Board of Directors and its committees. The Board of
Directors and each of its committees are authorized to retain
financial, legal and other advisors. The Board of Directors
reviews its performance annually.
We have adopted a Code of Conduct and Ethics applicable to our
directors, officers and employees including our Chief Executive
Officer, Chief Financial Officer and principal accounting
officer. A copy of our Code of Conduct and Ethics is available
on our website at www.continucare.com. We intend to post
amendments to or waivers from our Code of Conduct and Ethics (to
the extent applicable to our Chief Executive Officer, Chief
Financial Officer or principal accounting officer or to our
directors) on our website. Our website is not part of this proxy
statement.
Determining
Director Independence
The Board of Directors undertook a review of each
directors independence in January 2009. During this
review, the Board of Directors considered transactions and
relationships between each director or any member of his or her
immediate family and us and our subsidiaries and affiliates. The
Board of Directors also examined transactions and relationships
between directors or their known affiliates and members of our
senior management or their known affiliates. The purpose of this
review was to determine whether any such relationships or
transactions were inconsistent with a determination that the
director is independent under applicable laws and regulations
and the NYSE Alternext US, formerly the American Stock Exchange
(NYSE Alternext), listing standards. As a result of
our review of the relationships of each of the members of the
Board of Directors, the Board of Directors affirmatively
determined that a majority of our directors, including
Mr. Cresci, Mr. Flanzraich, Dr. Frost,
Ms. Simkin, and Mr. Strait, are
independent directors within the meaning of the
listing standards of NYSE Alternext and applicable law. As
required by NYSE Alternext, our independent directors meet at
least annually in executive session without the presence of our
non-independent directors or management.
Committees
of the Board of Directors and Meeting Attendance
During the fiscal year ended June 30, 2008 (Fiscal
2008), the Board of Directors held five meetings and took
certain actions by unanimous written consent. Each director
other than Dr. Cruz attended at least 75% of the aggregate
of (i) the number of meetings of the Board of Directors
held during Fiscal 2008, and (ii) the number of meetings
held during Fiscal 2008 by all committees of the Board of
Directors on which he served. We have no formal policy requiring
our directors to attend our annual meeting of shareholders, but
all of our directors attended our last annual meeting of
shareholders.
The Board of Directors has established Audit, Compensation,
Nominating and Executive Committees. The Board of Directors has
adopted a written charter for each of these four committees,
which is available on our website at www.continucare.com.
The Audit
Committee
The Audit Committee currently consists of Mr. Cresci,
Mr. Flanzraich, Ms. Simkin and Mr. Strait
(Chairman). The Board of Directors has determined that all
current members of the Audit Committee are financially
literate, financially sophisticated, and
independent within the meaning of the listing
standards of NYSE Alternext and applicable SEC regulations. The
Board of Directors has determined that Mr. Strait meets the
attributes of an audit committee financial expert
within the meaning of SEC regulations.
The Audit Committee held eleven meetings during Fiscal 2008. The
duties and responsibilities of the Audit Committee include
(i) recommending to the Board of Directors the appointment
of our independent registered public accounting firm,
(ii) reviewing the plan and scope of audits,
(iii) reviewing our significant accounting policies and
internal controls, and (iv) having general responsibility
for the oversight of all audit related matters. The Board of
Directors adopted an amended and restated written charter for
the Audit Committee, which is available on our website at
www.continucare.com. A report from the Audit Committee is
included at page 18.
7
The
Compensation Committee
The Compensation Committee currently consists of Mr. Cresci
(Chairman), Ms. Simkin, Mr. Strait and
Mr. Flanzraich. The Board of Directors has determined that
all of the current members of the Compensation Committee are
independent within the meaning of the listing
standards of NYSE Alternext. The Compensation Committee held
four meetings during Fiscal 2008. The Compensation Committee
provides assistance to the Board of Directors in fulfilling its
responsibilities relating to compensation of our directors and
executive officers. It reviews and determines the compensation
of the Chief Executive Officer and determines or makes
recommendations with respect to the compensation of our other
executive officers. It also assists the Board of Directors in
the administration of our equity-based compensation plans. For
further information on the Compensation Committees
processes and procedures for consideration and determination of
executive compensation, see the Compensation Discussion and
Analysis below. The Board of Directors adopted a written charter
for the Compensation Committee, which is available on our
website at www.continucare.com.
The
Nominating Committee
The Nominating Committee currently consists of Dr. Frost
(Chairman), Mr. Cresci, Mr. Flanzraich and
Mr. Strait. The Board of Directors has determined that all
of the current members of the Nominating Committee are
independent within the meaning of the listing
standards of NYSE Alternext. The Nominating Committee is
responsible for identifying and recommending individuals
qualified to become directors and recommending appointments to
the committees of the Board of Directors. The Board of Directors
adopted a written charter for the Nominating Committee, which is
available on our website at www.continucare.com.
The Nominating Committee held one meeting during Fiscal 2008.
The Nominating Committee expects it will generally identify
candidates for director through the business and other
organizational contacts of the directors and management.
Candidates for director will be selected on the basis of the
contributions the Nominating Committee believes that those
candidates can make to the Board of Directors and to management
and on such other qualifications and factors as the Nominating
Committee considers appropriate. In assessing potential new
directors, the Nominating Committee will seek individuals from
diverse professional backgrounds who the Nominating Committee
believes will provide a broad range of experience and expertise.
Director candidates should have a reputation for honesty and
integrity, strength of character, mature judgment and experience
in positions with a high degree of responsibility. In addition
to reviewing a candidates background and accomplishments,
candidates for director nominees will be reviewed in the context
of the current composition of the Board of Directors and our
evolving needs. The Nominating Committee will consider
recommendations for director nominees submitted by shareholders.
All such recommendations must be delivered in accordance with
the provisions of our bylaws and addressed to our Secretary who
will forward such shareholder recommendations to the Nominating
Committee for consideration. To be eligible for inclusion in our
proxy statement and form of proxy relating to our next annual
meeting of shareholders, shareholder nominations must be
received by our Secretary no later than November 11, 2009
and no earlier than October 12, 2009. We also require that
the members of our Board of Directors be able to dedicate the
time and resources sufficient to ensure the diligent performance
of their duties on our behalf, including attending Board of
Directors and applicable committee meetings. In addition to
identifying and recommending qualified candidates to serve as
directors, the Nominating Committee studies and makes
recommendations to the Board of Directors concerning the size of
the Board of Directors.
The
Executive Committee
The Executive Committee currently consists of Mr. Cresci,
Dr. Frost, Dr. Nudel and Mr. Pfenniger
(Chairman). The Executive Committee is responsible for
exercising certain powers of the full Board of Directors during
intervals between meetings of the full Board of Directors.
Compensation
Committee Interlocks and Insider Participation
During 2008, our Compensation Committee was comprised of the
following four members: Robert J. Cresci (Chairman), Neil
Flanzraich, Jacob Nudel, M.D. and A. Marvin Strait. There
are no interlocking relationships between members of our
Compensation Committee and the compensation committees of other
companies board of directors.
8
Certain
Relationships and Related Transactions
The Audit Committee reviews and approves transactions in which
we were or are to be a participant, where the amount involved
exceeded or will exceed $120,000 annually and any of our
directors, executive officers or their immediate family members
had or will have a direct or indirect material interest. We have
a written policy stating that the Audit Committee is responsible
for reviewing and, if appropriate, approving or ratifying any
related party transactions. The related party transaction will
not be approved unless at a minimum it is for our benefit and is
upon terms no less favorable to us than if the related party
transaction was with an unrelated third party. In Fiscal 2008,
no related party transaction occurred where this process was not
followed.
As a result of the acquisition of Miami Dade Health Centers,
Inc. and its affiliated Companies (collectively, the MDHC
Companies) effective October 1, 2006, we became a
party to a lease agreement for office space owned by
Dr. Luis Cruz, a principal owner of the MDHC Companies.
Dr. Cruz is a member of our Board of Directors. For Fiscal
2008 expenses related to this lease were approximately
$0.4 million.
On February 5, 2008, we purchased an aggregate of
600,000 shares of our common stock from Dr. Luis Cruz,
a director of the Company, as trustee of the Luis Cruz
Irrevocable Trust A, the Luis Cruz Irrevocable Trust B
and the Luis Cruz Irrevocable Trust C. We paid $2.25 per
share for the shares for an aggregate purchase price of
$1,350,000. The per share purchase price paid by us represented
a 10% discount from the closing price of our common stock on
February 4, 2008. On September 19, 2008, we purchased
an aggregate of 400,000 shares of our common stock from the
Luis Cruz Irrevocable Trusts A, B, C and D. We paid $2.14 per
share for the shares for an aggregate purchase price of
$856,000. The per share purchase price paid by us represented a
10% discount from the closing price of our common stock on
September 19, 2008. Effective July 18, 2008,
Dr. Cruz was no longer the trustee of the Luis Cruz
Irrevocable Trusts A, B, C and D and accordingly, had no
beneficial interest in the shares of our common stock held by
the Luis Cruz Irrevocable Trusts A, B, C and D.
On October 23, 2008, we entered into a joint venture with
Dr. Jacob Nudel, a member of our Board of Directors, that
will seek to establish special purpose medical provider
networks. As of December 31, 2008, we have made capital
contributions of approximately $72,000 to the joint venture.
Effective November 1, 2007, we entered into agreements with
Centers of Medical Excellence, Inc., an entity owned by
Dr. Cruz pursuant to which this entity will act as one of
our independent physician affiliates in connection with the
provision of primary care health services to a limited number of
Medicare Advantage members enrolled in plans sponsored by
CarePlus Health Plans, Inc. The arrangement is on substantially
similar terms to those between us and our other independent
physician affiliates under at risk arrangements where we provide
medical utilization services and pay a primary care capitation
fee to the provider. Under this arrangement, CarePlus pays us a
global per member capitation fee and we in turn pay a monthly
primary care capitation fee to Centers of Medical Excellence
based on the number of CarePlus Medicare Advantage members who
have selected Centers of Medical Excellence as their primary
care provider. Centers of Medical Excellence is also eligible to
receive a bonus from us if they operate in cumulative surplus.
Communications
with the Board of Directors and Non-Management
Directors
Shareholders who wish to communicate with the Board of
Directors, any individual director or the non-management
directors as a group can write to our Chairman and Chief
Executive Officer, Richard C. Pfenniger, Jr. The letter
should include a statement indicating that the sender is a
shareholder of ours. Depending on the subject matter, an officer
of ours will either:
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forward the letter to the director or directors to whom it is
addressed;
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attempt to handle the inquiry directly if it relates to routine
or ministerial matters, including requests for
information; or
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not forward the letter if it is primarily commercial in nature
or if it is determined to relate to an improper or irrelevant
topic.
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A member of management will, at each meeting of the Board of
Directors, present a summary of any non-routine or
non-ministerial, relevant and proper letters received since the
last meeting that were not forwarded to the Board of Directors
and will make those letters available to the Board of Directors
upon request.
9
Compensation
of Directors
Our Compensation Committee recommends director compensation to
the Board. In developing its recommendation, the Compensation
Committee strives to set a mix of cash and equity-based
compensation in amounts which fairly compensate the directors
for their expected time commitments and responsibilities in
serving on the Board and which aligns the directors
interests with the long term interests of shareholders. In
Fiscal 2008, each of our non-employee directors received a cash
retainer of $25,000 for his service on the Board. In addition,
for Fiscal 2008, the Chairman of each of the Nominating
Committee and the Compensation Committee received an additional
cash retainer of $2,500 and the Chairman of the Audit Committee
received an additional cash retainer of $5,000. Also, each of
our non-employee Board members were granted fully vested options
to purchase 25,000 shares of common stock during Fiscal
2008. In May 2008, the cash retainer for non-employee directors
serving on the Board was increased to $30,000, the additional
cash retainers for the Chairman of each of the Nominating
Committee and the Compensation Committee were increased to
$5,000 and the additional cash retainer for the Chairman of the
Audit Committee was increased to $10,000. The options to be
granted annually to non-employee directors remained unchanged.
Director
Compensation-Fiscal 2008
The following table sets forth certain information regarding the
compensation paid to our non-employee directors for their
service during the fiscal year ended June 30, 2008.
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Change in
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Pension Value
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and Nonqualified
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Non-Equity
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Deferred
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Fees Earned or
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Stock
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Option
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Incentive Plan
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Compensation
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All Other
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Name
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Paid in Cash
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Awards
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Awards(1)
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Compensation
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Earnings
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Compensation
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Total
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Robert J. Cresci
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$29,375
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$20,263
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$49,638
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Luis Cruz, M.D.
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$13,750
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$20,263
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$34,013
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Neil Flanzraich
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$26,250
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$20,263
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$46,513
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Phillip Frost, M.D.
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$29,375
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$20,263
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$49,638
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Jacob Nudel, M.D.
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$26,250
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$20,263
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$46,513
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A. Marvin Strait
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$32,500
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$20,263
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$52,763
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(1) |
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Represents the dollar amount recognized for financial statement
reporting purposes for the fiscal year ended June 30, 2008,
in accordance with FAS 123(R), without taking into account
an estimate of forfeitures related to service-based vesting, of
stock option grants, including amounts from awards granted prior
to Fiscal 2008. Assumptions used in the calculation of these
amounts are included in footnote 7 to our audited financial
statements for the fiscal year ended June 30, 2008 included
in our Annual Report on
Form 10-K
filed with the Securities and Exchange Commission on
September 9, 2008. There were no forfeitures during Fiscal
2008. The grant date fair value of the stock option awards
granted during Fiscal 2008 and computed in accordance with
FAS 123(R) was $0.81 per share. The table below sets forth
the aggregate number of stock options of each non-employee
director outstanding as of June 30, 2008: |
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Name
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Stock Options
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Robert J. Cresci
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190,000
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Luis Cruz, M.D.
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25,000
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Neil Flanzraich
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90,000
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Phillip Frost, M.D.
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90,000
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Jacob Nudel, M.D.
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90,000
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A. Marvin Strait
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83,334
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10
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Overview
of Compensation Program
Our Compensation Committee administers the compensation program
for our executive officers and also determines compensation for
directors. The Compensation Committee reviews and determines all
executive officer compensation, administers our equity incentive
plans (including reviewing and approving grants to our executive
officers), makes recommendations to shareholders with respect to
proposals related to compensation matters and generally consults
with management regarding employee compensation programs.
The Compensation Committees charter reflects these
responsibilities, and the Compensation Committee and the Board
periodically review and, if appropriate, revise the charter. The
Board determines the Compensation Committees membership.
During Fiscal 2008, Robert J. Cresci, Neil Flanzraich, Jacob
Nudel, M.D. and A. Marvin Strait, C.P.A., each of whom are
non-employee independent directors, comprised the Compensation
Committee. In September 2008, Jacqueline M. Simkin was appointed
a member of the Compensation Committee and in October 2008
Dr. Nudel resigned as a member of the Compensation
Committee. The Compensation Committee meets at regularly
scheduled times during the year, and it may also hold specially
scheduled meetings and take action by written consent. At Board
meetings, the Chairman of the Compensation Committee reports on
Compensation Committee actions and recommendations, with all
discussions of executive compensation occurring in executive
sessions of the Board.
Our executive officers, each of whom are included in the Summary
Compensation Table below, are Richard C. Pfenniger, Jr.,
Chairman of the Board, Chief Executive Officer and President,
Fernando L. Fernandez, Senior Vice President
Finance, Chief Financial Officer, Treasurer and Secretary, Luis
H. Izquierdo, Senior Vice President Marketing and
Business Development, and Gemma Rosello, Executive Vice
President Operations. Throughout this proxy
statement, these individuals are sometimes referred to
collectively as the Named Executive Officers.
Compensation
Philosophy and Objectives
The core objectives of our compensation programs are to secure
and retain the services of high quality executives and to
provide compensation to our executives that are commensurate and
aligned with our performance and advances both short-and
long-term interests of ours and our shareholders. We seek to
achieve these objectives through three principal compensation
programs: a base salary, long-term equity incentives, in the
form of periodic grants of stock options, and an annual cash
incentive bonus. Base salaries are designed primarily to attract
and retain talented executives. Periodic grants of stock options
are designed to provide a strong incentive for achieving
long-term results by aligning interests of our executives with
those of our shareholders, while at the same time encouraging
our executives to remain with us. Annual cash incentives are
designed to motivate and reward the achievement of selected
financial goals, generally tied to profitability. The
Compensation Committee does not use benchmarking against peer
groups to establish the compensation levels of the Named
Executive Officers nor does it retain a compensation consultant
to advise them on compensation issues. The Compensation
Committee believes that our compensation program for the Named
Executive Officers is appropriately based upon our performance
and the performance and level of responsibility of the executive
officer.
Role of
Executive Officers in Compensation Decisions
The Compensation Committee makes all compensation decisions for
the Named Executive Officers. Our Chief Executive Officer works
closely with the Compensation Committee on compensation matters.
The Chief Executive Officer annually reviews the performance of
each of the Named Executive Officers (other than the Chief
Executive Officer, whose performance is reviewed by the
Compensation Committee) and the compensation paid to those
individuals during the past fiscal year, and makes
recommendations regarding compensation to be paid to those
individuals during the next fiscal year. The conclusions reached
and recommendations based on these reviews, including those with
respect to setting and adjusting base salary, annual cash
incentive awards and stock option awards, are presented to the
Compensation Committee. Following a review of these conclusions
and recommendations, the Compensation Committee will make
compensation decisions for these executives as it deems
appropriate, including approving the Chief Executive
Officers recommendations or modifying upward or downward
any recommended amounts or awards to the Named Executive
Officers. The Compensation Committee meets
11
with the Chief Executive Officer annually to discuss his
performance, but ultimately decisions regarding his compensation
are made solely by the Compensation Committee based on its
deliberations.
Named
Executive Officer Compensation Components
For the fiscal year ended June 30, 2008, base salary, an
annual cash incentive bonus opportunity and long-term equity
incentive compensation were the principal components of
compensation for the Named Executive Officers.
A significant portion of total compensation is comprised of base
salary, which enables us to attract and retain talented
executive management through the payment of reasonable current
income. Long-term equity incentives, in the form of stock
options which generally vest over a period of three or four
years, also form a meaningful percentage of overall compensation
which is tied directly to increases in the price of our common
stock and also serves the goal of retaining key management.
Finally, the annual cash incentive bonus, which historically has
been a smaller portion of total cash compensation, provides
additional current income to encourage the attainment of annual
profitability goals. In making decisions with respect to any
element of a Named Executive Officers compensation, the
Compensation Committee considers the total compensation that may
be awarded to the executive. There is no pre-established target
or formula for allocating among these three elements of
compensation. Rather, the Compensation Committee strives to
apportion a mix between cash and equity compensation to provide
meaningful current income and to motivate the attainment of
long-term value for our shareholders.
The Compensation Committee generally makes determinations
regarding Named Executive Officer compensation at the regularly
scheduled meeting of the Compensation Committee following
completion of each fiscal year, which meeting typically occurs
in September. At this meeting, the Compensation Committee will
typically determine base salaries for the upcoming fiscal year,
the amount of any cash incentive bonus payable to the Named
Executive Officers under the annual cash incentive plan for the
preceding fiscal year, the terms of the annual cash incentive
plan for the upcoming fiscal year and the grant of any equity
incentive awards.
Base
Salary
The Compensation Committee approves each Named Executive
Officers base salary by considering the individuals
duties and responsibilities. In setting base salaries for the
Named Executive Officers (other than the Chief Executive
Officer), the Compensation Committee undertakes an annual review
in consultation with and based upon recommendations from the
Chief Executive Officer. The Compensation Committees
review includes, among other things, the functional and
decision-making responsibilities of each position, the
significance of the Named Executive Officers specific area
of individual responsibility to our financial performance and
achievement of overall goals and the experience and past
performance and expected future contribution of each executive
officer. Decisions regarding increases in salary also take into
account the executives current salary. With respect to
base salary decisions for the Chief Executive Officer, the
Compensation Committee makes an assessment of
Mr. Pfennigers past performance as Chief Executive
Officer and its expectations as to his future contributions to
us, as well as the factors described above for the other Named
Executive Officers, including evaluating his individual
performance and our financial condition, operating results and
attainment of strategic objectives. The Compensation Committee
generally does not approve a material increase in base salary,
absent a significant promotion or other significant change in
responsibility of the executive officer. In determining
increases in base salaries for Fiscal 2009, the Compensation
Committee considered the continued improvement in our results
and financial condition under Mr. Pfennigers
leadership and the efforts of the other Named Executive Officers.
The Chief Executive Officers Fiscal 2008 base salary
increased 7.1% from Fiscal 2007 and the other Named Executive
Officers Fiscal 2008 base salaries increased in the range
of 4.5% to 7.5% from Fiscal 2007. Effective September 2007, the
Named Executive Officers Fiscal 2008 base salaries were as
follows: Mr. Pfenniger $375,000;
Mr. Fernandez $215,000;
Mr. Izquierdo $230,000 and
Ms. Rosello $230,000. For Fiscal 2009, the
Compensation Committee has approved an increase of 10.7% in the
Chief Executive Officers base salary from Fiscal 2008 and
increases ranging from 3.0% to 7.0% in the base salaries of the
other Named Executive Officers. Effective September 2008, the
Named Executive Officers Fiscal 2009 base salaries are as
follows: Mr. Pfenniger $415,000;
Mr. Fernandez $230,000; Mr. Izquierdo
$237,000 and Ms. Rosello $245,000.
12
Long-Term
Equity Incentive Compensation
Our long-term equity incentive compensation program provides an
opportunity for the Named Executive Officers to increase their
stake in our business through grants of options to purchase
shares of our common stock and encourages the Named Executive
Officers to manage us from the perspective of an owner with an
equity stake in the business. Each grant allows the executive to
acquire shares of common stock at an exercise price equal to the
closing price of our common stock on the grant date over a
specified period of time not to exceed 10 years. Generally,
the options become exercisable in a series of installments over
a three or four-year period, contingent upon the executive
officers continued employment with us. Accordingly, the
option grant will provide a positive return to the executive
officer only if he or she remains employed by us during the
vesting period, and then only if the market price of the shares
appreciates over the option term.
The Compensation Committees grant of stock options to the
Named Executive Officers is entirely discretionary, subject to
any limitations set by our Amended and Restated 2000 Stock
Incentive Plan, and is generally made on a
once-a-year
basis. Decisions by the Compensation Committee regarding grants
of stock options to the Named Executive Officers (other than the
Chief Executive Officer) are generally made based upon the
recommendation of the Chief Executive Officer, and includes the
consideration of the executive officers current position
with us, the executive officers past and expected future
performance and the other factors discussed in the determination
of base salaries. In addition, the Compensation Committee
considers the number of outstanding and previously granted
options of the executive, as well as the other components of his
or her total compensation in determining the appropriate grant.
In Fiscal 2008 and 2009, all of the Named Executive Officers
were granted options to purchase shares of our common stock,
with an exercise price equal to the market value of the common
stock on the date of grant, and which vest in equal annual
amounts over a four-year period, in connection with their
services for Fiscal 2007 and Fiscal 2008, respectively. In
September 2007, the following grants of options were made to our
Named Executive Officers in connection with their services for
Fiscal 2007: Mr. Pfenniger option to purchase
150,000 shares; Ms. Rosello option to
purchase 75,000 shares; Mr. Fernandez
option to purchase 75,000 shares; and
Mr. Izquierdo option to purchase
50,000 shares. In September 2008, the following grants were
made to our Named Executive Officers in connection with their
services for Fiscal 2008: Mr. Pfenniger option
to purchase 175,000 shares; Ms. Rosello
option to purchase 100,000 shares;
Mr. Fernandez option to purchase
100,000 shares; and Mr. Izquierdo option
to purchase 50,000 shares.
We generally have approved grants of stock options in specific
amounts as part of an executive officers initial
employment with us. We do not have any program or practice to
time annual or other grants of stock options in coordination
with the release of material non-public information or otherwise.
Annual
Cash Incentive Program
We maintain an annual cash incentive bonus plan which provides
for the payment of cash bonuses to eligible members of our
management team, including the Named Executive Officers. The
purpose of the cash incentive bonus plan is to provide
incentives to those employees who have the ability to impact
operating performance to address and achieve annual performance
goals and to participate in our growth and profitability. Under
the terms of the plan for Fiscal 2008, a pool was established
from which any bonuses would be paid in an amount equal to 15%
of the amount by which our pre-tax earnings for Fiscal 2008
exceeded a pre-determined threshold. Distributions of awards
from the bonus pool to eligible employees, including the Named
Executive Officers are determined by the Compensation Committee,
which considers the recommendations of the Chief Executive
Officer for all participants other than himself. The bonus
payable from the pool to the Chief Executive Officer is based
solely upon Compensation Committee deliberations. In September
2008, the Compensation Committee met to determine bonuses under
the plan for Fiscal 2008 to Named Executive Officers. Based on
our performance during Fiscal 2008, and based upon
Mr. Pfennigers recommendations with respect to the
Named Executive Officers other than himself, the Compensation
Committee awarded annual cash incentive program compensation to
the named executive officers as follows:
Mr. Pfenniger $300,000;
Mr. Fernandez $150,000;
Ms. Rosello $150,000 and
Mr. Izquierdo $100,000.
The Compensation Committee approved an annual cash incentive
bonus plan for Fiscal 2009 under the same general framework as
the Fiscal 2008 plan. The plan for Fiscal 2009 was approved by
the Compensation Committee at a meeting held in September 2008,
which was its first meeting after completion of our fiscal year
ended June 30, 2008. Under the terms of the plan for Fiscal
2009, a bonus pool will be established in an amount equal to 15%
of the
13
amount by which our pre-tax earnings exceed a pre-determined
threshold. The Compensation Committee believes that the
threshold target provides a meaningful incentive to executives
to improve performance in a manner that is consistent with the
interests of our shareholders. As with the annual cash incentive
plan for Fiscal 2008, no bonuses will be payable under the plan
for Fiscal 2009 if the threshold financial performance target is
not exceeded.
Other
Compensation and Benefits
Named Executive Officers receive additional compensation in the
form of vacation, medical, 401(k), and other benefits generally
available to all of our full time employees. While we generally
do not provide perquisites to our executive officers, certain
Named Executive Officers received modest automobile allowances
and we paid medical and life insurance premiums on behalf of all
of the Named Executive Officers which exceed the premiums paid
by us on behalf of our non-executive employees.
Internal
Revenue Code Limits on Deductibility of Compensation
Section 162(m) of the Internal Revenue Code generally
disallows a tax deduction to public corporations for
compensation over $1,000,000 paid for any fiscal year to the
corporations chief executive officer and four other most
highly compensated executive officers as of the end of any
fiscal year. However, the statute exempts qualifying
performance-based compensation from the deduction limit if
certain requirements are met.
The Compensation Committee believes that it is generally in our
best interest to attempt to structure performance-based
compensation, including stock option grants and annual bonuses,
to the Named Executive Officers, each of whom are subject to
Section 162(m), in a manner that satisfies the
statutes requirements for full tax deductibility for the
compensation. However, the Compensation Committee also
recognizes the need to retain flexibility to make compensation
decisions that may not meet Section 162(m) standards when
necessary to enable us to meet our overall objectives, even if
we may not deduct all of the compensation. However, because of
ambiguities and uncertainties as to the application and
interpretation of Section 162(m) and the regulations issued
thereunder, no assurance can be given, notwithstanding our
efforts, that compensation intended by us to satisfy the
requirements for deductibility under Section 162(m) will in
fact do so.
Compensation
Committee Report
The following Report of the Compensation Committee does not
constitute soliciting material and should not be deemed filed or
incorporated by reference into any other Company filing under
the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent the Company specifically incorporates
this Report by reference therein.
The Compensation Committee has reviewed and discussed with
management the Compensation Discussion and Analysis. Based on
this review and discussion, the Compensation Committee
recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in the Annual Report on
Form 10-K/A
and the proxy statement.
Submitted by
the Members of the Compensation Committee:
Robert J. Cresci
Neil Flanzraich
Jacqueline M. Simkin
A. Marvin Strait, C.P.A.
14
Compensation
of Named Executive Officers
Summary
Compensation Table-Fiscal 2008
The following table sets forth certain summary information
concerning compensation paid or accrued by us to or on behalf of
the Named Executive Officers (as defined in the
Compensation Discussion and Analysis section above)
for the fiscal years ended June 30, 2008 and 2007. We do
not have employment agreements with any of the Named Executive
Officers.
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Change in
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Pension
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Value and
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Nonqualified
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Non-Equity
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Deferred
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Stock
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Option
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Incentive Plan
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Compensation
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All Other
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Name and Principal Position
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Fiscal Year
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Salary
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Bonus
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Awards
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Awards(1)
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Compensation
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Earnings
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Compensation(2)
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Total
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Richard C. Pfenniger, Jr.,
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2008
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$371,539
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$208,907
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$300,000
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$15,940
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$896,386
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Chairman of the Board,
President and Chief
Executive Officer
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2007
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$346,077
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$259,195
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$14,312
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$619,584
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Gemma Rosello,
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2008
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$227,942
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$158,082
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$150,000
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$14,237
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$550,261
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Executive Vice
President Operations
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2007
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$211,596
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$146,004
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$13,416
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$371,016
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Fernando L. Fernandez,
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2008
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$212,885
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$84,805
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$150,000
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$15,940
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$463,630
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Senior Vice President-Finance, Chief Financial Officer,
Treasurer and Secretary
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2007
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$198,038
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$273,951
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$14,312
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$486,301
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Luis H. Izquierdo,
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2008
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$228,923
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$65,934
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$100,000
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$14,912
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$409,769
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Senior Vice President-Marketing and Business Development
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2007
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$218,789
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$127,883
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$11,956
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$358,628
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(1) |
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Represents the dollar amount recognized for financial statement
reporting purposes for the fiscal year ended June 30, 2008,
in accordance with FAS 123(R), without taking into account an
estimate of forfeitures related to service-based vesting, of
stock option grants, including amounts from awards granted prior
to Fiscal 2008. Assumptions used in the calculation of these
amounts are included in footnote 7 to our audited financial
statements for the fiscal year ended June 30, 2008 included
in our Annual Report on
Form 10-K
filed with the Securities and Exchange Commission on
September 9, 2008. There were no forfeitures during Fiscal
2008. Additional information regarding these stock options
awarded to the Named Executive Officers in Fiscal 2008,
including the grant date fair value of such stock options, is
set forth in the Grants of Plan-Based Awards
Fiscal 2008 table below. |
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(2) |
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Includes the amount of the insurance premiums paid by us on
behalf of the Named Executive Officers that exceed the insurance
premiums paid by us on behalf of our non-executive employees,
and also includes car allowances of $6,228 paid to each of
Ms. Rosello and Mr. Izquierdo. |
Grants of
Plan-Based Awards Fiscal 2008
The following table sets forth certain information concerning
grants of awards to the Named Executive Officers pursuant to our
non-equity and equity incentive plans in the fiscal year ended
June 30, 2008.
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All Other
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All Other
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Estimated Possible
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Stock
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Option
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Exercise
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Payouts Under
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Estimated Future
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Awards:
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Awards:
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or Base
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Grant Date
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Non-Equity
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Payouts Under
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Number of
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Number of
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Price of
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Fair Value
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Incentive Plan
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Equity Incentive
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Shares of
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Securities
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Option
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of Stock
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Grant
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Awards(1)
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Plan Awards
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Stock or
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Underlying
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Awards
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and Option
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Name
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Date
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Threshold
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Target
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Maximum
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Threshold
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Target
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Maximum
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Units
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Options(2)
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($/Sh)
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Awards(3)
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Richard C. Pfenniger, Jr.
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9/11/07
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N/A
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N/A
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150,000
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$2.51
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$
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191,000
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Gemma Rosello
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9/11/07
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N/A
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N/A
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75,000
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$2.51
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$
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95,000
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Fernando Fernandez
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9/11/07
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N/A
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N/A
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75,000
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$2.51
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$
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95,000
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Luis Izquierdo
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9/11/07
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N/A
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N/A
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50,000
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$2.51
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$
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60,000
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(1) |
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Represents the estimated possible payouts of cash awards under
our annual incentive plan which is tied to financial performance
goals. Our annual incentive plan is more fully described in the
Compensation Discussion and Analysis section
beginning on page 11. No threshold payment is disclosed
because no payments would be payable under the annual incentive
plan until pre-tax profits exceed the threshold amount. Further,
no target amount is provided because no target amounts were
established and no maximum amount is |
15
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presented because this plan does not limit the maximum potential
payout. The Compensation Committee determines payouts under our
Annual Cash Incentive Program after determining amounts
available to be paid out following the end of the fiscal year. |
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(2) |
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All options are to purchase shares of our common stock granted
under our Amended and Restated 2000 Stock Incentive Plan. Each
grant vests 25% over the first four years from the date of grant. |
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(3) |
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Represents the approximate grant date fair value computed in
accordance with FAS 123(R). |
Outstanding
Equity Awards at Fiscal Year-End 2008
The following table sets forth certain information regarding
equity-based awards held by the Named Executive Officers as of
June 30, 2008.
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Option Awards
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Equity Incentive
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Number of
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Plan Awards:
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Securities Underlying
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Number of Securities
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Option
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Option
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Unexercised Options
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Underlying Unexercised
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Exercise
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Expiration
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Name
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Exercisable
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Unexercisable
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Unearned Options
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Price
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Date
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Richard C. Pfenniger, Jr.
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821,970
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$
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0.66
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10/1/13
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100,000
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100,000
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(1)
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2.42
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12/6/15
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75,000
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75,000
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(2)
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2.77
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9/12/16
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37,500
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112,500
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(3)
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2.51
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9/11/17
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Gemma Rosello
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75,000
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25,000
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(4)
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$
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2.69
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5/26/15
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37,500
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37,500
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(1)
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2.42
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12/6/15
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37,500
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37,500
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(2)
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2.77
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9/12/16
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18,750
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56,250
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(3)
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2.51
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9/11/17
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Fernando L. Fernandez
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350,000
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$
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1.98
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6/14/14
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37,500
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37,500
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(1)
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2.42
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12/6/15
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25,000
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25,000
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(2)
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2.77
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9/12/16
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18,750
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56,250
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(3)
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2.51
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9/11/17
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Luis H. Izquierdo
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300,000
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$
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1.51
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1/5/14
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37,500
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37,500
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(1)
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2.42
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12/6/15
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12,500
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12,500
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(2)
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2.77
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9/12/16
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12,500
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37,500
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(3)
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2.51
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9/11/17
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(1) |
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Vests in four equal annual installments beginning on
December 6, 2006. |
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(2) |
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Vests in four equal annual installments beginning on
September 12, 2007. |
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(3) |
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Vests in four equal annual installments beginning on
September 11, 2008. |
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(4) |
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Vests in four equal annual installments beginning on
May 26, 2006. |
Option
Exercises and Stock Vested Fiscal 2008
No stock options were exercised by the Named Executive Officers
in the fiscal year ended June 30, 2008.
Potential
Payments upon Termination or
Change-in-Control
The Named Executive Officers do not have employment agreements
with us and are all employed on an at will basis. We
do not have arrangements with any of our Named Executive
Officers providing for additional benefits or payments in
connection with a termination of employment, change in job
responsibility or
change-in-control.
Grants of stock options to all employees eligible to receive
such grants under our Amended and Restated 2000 Stock Incentive
Plan vest immediately in the event of a change in control;
therefore, no separate disclosure is presented herein with
respect to the acceleration of stock options held by the Named
Executive Officers upon a change of control under the terms of
this stock option plan.
16
Section 16(a)
Beneficial Ownership Reporting Compliance of the Securities
Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as
amended (Exchange Act), requires our directors and
executive officers and persons who own more than ten percent of
our outstanding common stock, to file with the SEC initial
reports of ownership and reports of changes in ownership of
common stock. Such persons are required by SEC regulation to
furnish us with copies of all such reports they file.
To our knowledge, based solely on a review of the copies of such
reports furnished to it and written representations that no
other reports were required, we believe that all
Section 16(a) filing requirements applicable to our
officers, directors and greater than ten percent beneficial
owners for Fiscal 2008 were complied with.
RATIFICATION
OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(Proposal No. 2)
The Audit Committee of the Board of Directors has appointed
Ernst & Young LLP as our independent registered public
accounting firm for the fiscal year ending June 30, 2009.
Ernst & Young LLP served as our independent registered
public accounting firm in Fiscal 2008 and Fiscal 2007.
Fees to
Independent Registered Public Accounting Firm
The following table presents fees for professional services
rendered by Ernst & Young LLP for the audit of our
annual financial statements and quarterly review of interim
financial statements, fees for audit-related services, tax
services and all other services for Fiscal 2008 and 2007.
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Fiscal
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Fiscal
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2008
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2007
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Audit fees(a)
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$
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926,255
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$
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1,452,844
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Audit related fees(b)
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Tax fees(c)
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24,000
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26,400
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All other fees(d)
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$
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950,255
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$
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1,479,244
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(a) |
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Audit fees consist of audit and review work performed on the
financial statements, including the Fiscal 2008 and 2007 audits
of effectiveness of internal controls over financial reporting,
as well as fees related to technical accounting and auditing
consultations, assistance with SEC filings and audit procedures
related to the Acquisition of the MDHC Companies. |
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(b) |
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No audit related fees were incurred in Fiscal 2008 and 2007. |
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(c) |
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Tax fees consist of services provided for tax compliance, tax
advice and tax planning. |
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(d) |
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No other fees were incurred in Fiscal 2008 and 2007. |
All audit related services, tax services and other services were
pre-approved by the Audit Committee, which concluded that the
provision of such services by Ernst & Young LLP was
compatible with the maintenance of that firms independence
in the conduct of its auditing functions. The Audit Committee
must review and pre-approve both audit and permitted non-audit
services provided by the independent auditors and shall not
engage the independent auditors to perform any non-audit
services prohibited by law or regulation. At each Audit
Committee meeting, the Audit Committee receives updates on the
services actually provided by the independent auditors, and
management may present additional services for pre-approval. The
Audit Committee has delegated to the Chairman of the Audit
Committee the authority to evaluate and approve engagements on
behalf of the Audit Committee in the event that a need arises
for pre-approval between regular Audit Committee meetings. If
the Chairman of the Audit Committee so approves any such
engagements, he will report that approval to the full Audit
Committee at the next Audit Committee meeting.
Each year, the independent registered public accounting
firms retention to audit our financial statements,
including the associated fee, is approved by the Audit Committee
before the filing of the preceding years Annual Report on
Form 10-K.
17
A representative of Ernst & Young LLP is expected to
be present at the Annual Meeting, will have the opportunity to
make a statement if he desires and will be available to respond
to appropriate questions from shareholders.
Vote
Required and Recommendation
The Board of Directors recommends a vote in favor of the
ratification of the appointment of Ernst & Young LLP
as our independent registered public accounting firm for the
fiscal year ending June 30, 2009. The affirmative vote of a
majority of the votes of common stock present in person or by
proxy at the Annual Meeting and entitled to vote will be
required to ratify the appointment of Ernst & Young
LLP. If the appointment is not ratified, the Audit Committee
will select other independent accountants.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
APPROVAL OF THE RATIFICATION OF THE APPOINTMENT OF
ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM.
Audit
Committee Report
The Audit Committee of the Board of Directors is responsible
for, among other things, monitoring:
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the integrity of our financial statements;
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our system of internal controls; and
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the independence, qualifications and performance of our
independent registered public accounting firm.
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Our management is responsible for the preparation, presentation
and integrity of our financial statements, and our accounting
and financial reporting process, including the system of
internal control, and procedures to assure compliance with
applicable accounting standards and applicable laws and
regulations. Our independent registered public accounting firm
is responsible for auditing those financial statements and
expressing an opinion as to their conformity with
U.S. generally accepted accounting principles and for
expressing an opinion on the effectiveness of our internal
control over financial reporting. The Audit Committees
responsibility is to independently monitor and review these
processes and to review and discuss managements report on
our internal control over financial reporting. However, the
Audit Committee must rely, without independent verification, on
the information provided to it and on the representations made
by management and the independent registered public accounting
firm. Accordingly, although the Audit Committee consults with
and discusses these matters and its questions and concerns with
management and our independent registered public accounting
firm, its oversight cannot provide an independent basis to
assure that management has maintained appropriate accounting and
financial reporting principles or appropriate internal control
and procedures consistent with accounting standards and
applicable laws and regulations. Furthermore, the Audit
Committees considerations and discussions cannot assure
that the integrated audit of our financial statements and
internal controls over financial reporting has been carried out
in accordance with Public Company Accounting Oversight Board
(PCAOB) standards, that the financial statements are
presented in accordance with U.S. generally accepted
accounting principles or that our registered public accounting
firm is in fact independent.
In this context, the Audit Committee held eleven meetings during
Fiscal 2008. The meetings were designed, among other things, to
facilitate and encourage communication among the Audit
Committee, management, and our independent registered public
accounting firm, Ernst & Young LLP. The Audit
Committee discussed with our independent registered public
accounting firm, with and without management present, the
results of their examinations and their evaluations of our
financial statements and internal control over financial
reporting.
The Audit Committee reviewed and discussed the audited financial
statements for the fiscal year ended June 30, 2008, with
management and Ernst & Young LLP. The Audit Committee
also discussed with Ernst & Young LLP matters required
to be discussed with audit committees under U.S. generally
accepted auditing standards, including, among other things,
matters related to the conduct of the integrated audit of our
financial statements and internal controls over financial
reporting and the matters required to be discussed by Statement
on Auditing Standards No. 61, as amended (Communication
with Audit Committees) by Statement on Accounting Standards
18
No. 90,
Rule 2-07
of
Regulation S-X
and PCAOB Auditing Standard No. 5. The Audit
Committees discussions also included a discussion of the
background and experience of the Ernst & Young LLP
audit team assigned to us and the quality control procedures
established by Ernst & Young LLP.
Ernst & Young LLP has provided to the Audit Committee
the written disclosures and the letter required by Independence
Standards Board Standard No. 1 (Independence Discussions
with Audit Committees), and the Audit Committee discussed with
the independent registered public accounting firm their
independence from us. When considering Ernst & Young
LLPs independence, the Audit Committee considered whether
their provision of services to us beyond those rendered in
connection with their integrated audit and quarterly review work
was compatible with maintaining their independence. The Audit
Committee also reviewed, among other things, the nature of the
non-audit services provided and the amount of fees paid to
Ernst & Young LLP for their audit and non-audit
services, both separately and in the aggregate.
Based on the Audit Committees review and its meetings,
discussions and reports, and subject to the limitations on its
role and responsibilities referred to above and in the Audit
Committee Charter, the Audit Committee recommended to the Board
of Directors that our audited financial statements for the year
ended June 30, 2008 be included in our Annual Report on
Form 10-K.
Submitted by the Members of the Audit Committee:
Robert J.
Cresci
Neil Flanzraich
Jacob Nudel, M.D.
A. Marvin Strait, C.P.A., Chairman
As of the date of this proxy statement, the Board of Directors
knows of no other business to be presented at the Annual
Meeting. If any other business should properly come before the
Annual Meeting, the persons named in the accompanying proxy will
vote thereon as in their discretion they may deem appropriate,
unless they are directed by a proxy to do otherwise.
SHAREHOLDER
PROPOSALS
Shareholders interested in presenting a proposal for
consideration at our next annual meeting of shareholders may do
so by following the procedures prescribed in
Rule 14a-8
promulgated by the Exchange Act and in our Amended and Restated
Bylaws. To be eligible for inclusion in our proxy statement and
form of proxy relating to that meeting, shareholder proposals
must be received by our Secretary no later than
November 11, 2009 and no earlier than October 12,
2009. For business to be properly brought before an annual
meeting by a shareholder, the shareholder must provide timely
notice as prescribed in the Amended and Restated Bylaws and as
summarized above.
19
CONTINUCARE CORPORATION
7200 CORPORATE CENTER DRIVE, SUITE 600
MIAMI, FLORIDA 33126
ANNUAL MEETING OF
SHAREHOLDERS - MARCH 12, 2009
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF CONTINUCARE CORPORATION.
The undersigned hereby appoints Richard C. Pfenniger, Jr. and Fernando L. Fernandez, and each
of them, acting alone, with the power to appoint his substitute, as proxies to represent the
undersigned and vote as designated on the reverse side, all of the shares of Common Stock of
Continucare Corporation held of record by the undersigned at the close of business on January 20,
2009, at the Annual Meeting of Shareholders to be held on March 12, 2009, and at any adjournment or
postponement thereof.
Please complete, date and sign this Proxy on the reverse side, and mail it promptly in the
enclosed envelope.
(Continued and to be signed on the reverse side)
ANNUAL MEETING OF SHAREHOLDERS OF
CONTINUCARE CORPORATION
March 12, 2009
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.
¯ Please detach along perforated line and mail in the envelope provided. ¯
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< 20830000000000000000 4
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031209
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The Board of Directors of Continucare Corporation unanimously recommends a vote FOR each of the nominees for director and FOR the ratification of the appointment of
Ernst & Young LLP as our independent registered public accounting firm.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x
1. Election of eight directors.
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NOMINEES: |
o
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FOR ALL NOMINEES
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¡ Richard C. Pfenniger, Jr.
¡ Luis Cruz, M.D. |
o
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WITHHOLD AUTHORITY
FOR ALL NOMINEES
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¡ Robert J. Cresci
¡ Neil Flanzraich
¡ Phillip Frost, M.D. |
o
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FOR ALL EXCEPT
(See instructions below)
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¡ Jacob Nudel, M.D.
¡ Jacqueline M. Simkin
¡ A. Marvin Strait |
INSTRUCTIONS: To withhold authority to vote for any individual
nominee(s), mark FOR ALL EXCEPT and fill in the circle next to
each nominee you wish to withhold, as shown here: l
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To change the address on your account, please check the box at
right and indicate your new address in the address space
above. Please note that changes to the registered name(s) on
the account may not be submitted via this method.
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o |
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FOR |
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AGAINST |
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ABSTAIN |
2.
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Ratification of the appointment of Ernst & Young LLP as our
independent registered public accounting firm.
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o
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o
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3. |
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In their discretion, the proxy holders are authorized to vote upon
such other matters as may properly come before the meeting or any
postponement or adjournment thereof. |
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR NAMED IN
PROPOSAL 1 AND FOR PROPOSAL 2.
The undersigned acknowledges receipt of the accompanying Notice of Annual
Meeting of Shareholders and Proxy Statement for the March 12, 2009 meeting.
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Signature of Shareholder
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Date:
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Signature of Shareholder
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Date: |
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<
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Note:
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Please sign exactly as your name or names appear on this Proxy. When shares are held jointly,
each holder should sign. When signing as executor, administrator, attorney, trustee or guardian,
please give full title as such. If the signer is a corporation, please sign full corporate name by
duly authorized officer, giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.
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< |