Pediatrix Medical Group, Inc.
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT (PURSUANT TO SECTION 14(a) OF THE
SECURITIES
EXCHANGE ACT OF 1934)
Filed by the Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
o Preliminary
Proxy Statement
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
þ Definitive Proxy
Statement
o Definitive
Additional Materials
o Soliciting
Material under
Rule 14a-12
PEDIATRIX MEDICAL GROUP, INC.
(Name of Registrant as Specified In
Its Charter)
(Name of Person(s) Filing Proxy
Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No Fee Required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(4)
and 0-11.
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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)
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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)
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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PEDIATRIX MEDICAL GROUP
1301 Concord Terrace
Sunrise, Florida
33323-2825
(954) 384-0175
October 1, 2007
Dear Pediatrix Shareholder:
You are cordially invited to attend the 2007 Annual
Shareholders Meeting of Pediatrix Medical Group, Inc.
(Pediatrix) on Thursday, November 1, 2007,
beginning at 10:00 a.m., local time, at the Hyatt Regency
Bonaventure, 250 Racquet Club Road, Weston, Florida 33326.
At the annual meeting, we will ask you to vote on the election
of Pediatrixs Board of Directors and to consider and act
upon any other business properly brought before the meeting.
Please vote on all the matters described in our proxy statement.
Your Board of Directors unanimously recommends a vote
FOR the election of each of the nine nominees for
Director.
We encourage you to attend the annual meeting. Whether or not
you plan to attend in person, it is important that your shares
be represented and voted at the annual meeting. After reading
our proxy statement, please submit your proxy by using the
enclosed proxy card. If you choose to vote this year by proxy
card, please mark, sign, date and promptly return the card in
the self-addressed stamped envelope provided. Returning a proxy
does not deprive you of your right to attend the annual meeting
and vote your shares in person.
Our proxy statement and accompanying forms of proxy and voting
instructions are first being mailed on or about October 1,
2007 to Pediatrixs shareholders of record on
September 12, 2007.
We appreciate your continued support of our Company.
Sincerely,
Roger J. Medel, M.D.
Chief Executive Officer
PEDIATRIX
MEDICAL GROUP, INC.
NOTICE OF
2007 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 1, 2007
To the Shareholders of
Pediatrix Medical Group, Inc.:
NOTICE IS HEREBY GIVEN that the 2007 Annual Shareholders
Meeting of Pediatrix Medical Group, Inc., a Florida corporation
(Pediatrix), will be held at 10:00 a.m., local
time, on Thursday, November 1, 2007, at the Hyatt Regency
Bonaventure, 250 Racquet Club Road, Weston, Florida 33326, for
the following purposes, as more fully described in the enclosed
proxy statement:
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to elect nine Directors, each for a term expiring at the next
annual meeting or until his successor has been duly elected and
qualified; and
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to consider and act upon such other business as may properly
come before the annual meeting.
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The Board of Directors of Pediatrix has fixed the close of
business on September 12, 2007 as the record date for
determining those shareholders entitled to notice of, to attend
and to vote at the meeting and any postponement or adjournment
thereof.
This is an important meeting. All shareholders are invited and
encouraged to attend the meeting in person. Whether or not you
plan to attend, please mark, sign, date and promptly return the
enclosed proxy card. Shareholders who return proxy cards prior
to the meeting may nevertheless attend the meeting, revoke their
proxies and vote their shares in person.
By Order of the Board of Directors,
Thomas W. Hawkins
Senior Vice President,
General Counsel and Secretary
Sunrise, Florida
October 1, 2007
PLEASE DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
TABLE OF
CONTENTS
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ii
PEDIATRIX
MEDICAL GROUP, INC.
1301 Concord Terrace
Sunrise, Florida
33323-2825
PROXY
STATEMENT
We are furnishing this proxy statement and related materials to
Pediatrixs shareholders as part of the solicitation of
proxies by Pediatrixs Board of Directors for use at
Pediatrixs 2007 Annual Shareholders Meeting and at
any postponement or adjournment of the meeting. In this proxy
statement, we refer to Pediatrix Medical Group, Inc. as
Pediatrix, we, our and the
Company.
QUESTIONS
AND ANSWERS ABOUT OUR ANNUAL MEETING
What
Is the Date, Time and Place of the Annual Meeting?
Pediatrixs 2007 Annual Shareholders Meeting will be
held on Thursday, November 1, 2007, beginning at
10:00 a.m., local time, at the Hyatt Regency Bonaventure,
250 Racquet Club Road, Weston, Florida 33326.
What
Is the Purpose of the Annual Meeting?
At the annual meeting, Pediatrixs shareholders will be
asked to:
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elect nine Directors, each for a term expiring at the next
annual meeting or until his successor has been duly elected and
qualified; and
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consider and act upon such other business as may properly come
before the meeting.
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Who
Is Entitled to Vote at the Annual Meeting?
Only holders of record of Pediatrix common stock at the close of
business on September 12, 2007, the record date for the
meeting, are entitled to notice of, to attend and to vote at the
annual meeting, or any postponements or adjournments of the
meeting. At the close of business on the record date,
49,918,826 shares of Pediatrix common stock were issued and
outstanding and were held by approximately 190 holders of record.
What
Are the Voting Rights of Pediatrixs
Shareholders?
Pediatrixs shareholders have one vote per share of
Pediatrix common stock owned on the record date for each matter
properly presented at the annual meeting. For example, if you
owned 100 shares of Pediatrix common stock on the close of
business on September 12, 2007, you can cast 100 votes for
each matter properly presented at the annual meeting.
What
Constitutes a Quorum?
A quorum will be present at the meeting if holders of a majority
of the issued and outstanding shares of Pediatrix common stock
on the record date are represented at the meeting in person or
by proxy. If a quorum is not present at the meeting, Pediatrix
expects to postpone or adjourn the meeting to solicit additional
proxies. Abstentions, including broker non-votes (as described
below), will be counted as shares present and entitled to vote
for the purposes of determining the presence or absence of a
quorum.
What
Are Broker Non-Votes?
Broker non-votes occur when shares held by a
brokerage firm are not voted with respect to a proposal because
the firm has not received voting instructions from the
shareholder and the firm does not have the authority to vote the
shares at its discretion. Under the rules of the New York Stock
Exchange, brokerage firms may have the authority to vote their
customers shares on certain routine matters for which they
do not receive voting instructions, including the uncontested
election of directors. If other matters are properly brought
before the meeting and they are not considered routine under the
applicable New York Stock Exchange rules, shares held by
brokerage firms will
1
not be voted on such non-routine matters by the brokerage firms
unless they have received voting instructions and, accordingly,
any such shares will be broker non-votes and will
not be counted with respect to such matters.
Will
My Shares Be Voted if I Do Not Provide My Proxy?
If your shares are held in the name of a brokerage firm, they
may be voted by the brokerage firm (as described above) even if
you do not give the brokerage firm specific voting instructions.
If you are a registered shareholder and hold your shares
directly in your own name, your shares will not be voted unless
you provide a proxy or fill out a written ballot in person at
the meeting.
You can vote in any of the following ways.
To vote by mail:
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Mark, sign and date your proxy card; and
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Return it in the enclosed envelope.
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To vote in person if you are a registered shareholder:
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Attend our annual meeting;
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Bring valid photo identification; and
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Deliver your completed proxy card or ballot in person.
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To vote in person if you hold in street name:
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Attend our annual meeting;
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Bring valid photo identification; and
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Obtain a legal proxy from your bank or broker to vote the shares
that are held for your benefit, attach it to your completed
proxy card and deliver it in person.
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What
Vote Is Required to Elect Directors at the Annual
Meeting?
Assuming that a quorum is present at the annual meeting,
Director nominees receiving the greatest number of affirmative
votes from holders of Pediatrix common stock will be elected as
Directors of Pediatrix.
How
Does the Board of Directors Recommend I Vote on the
Proposal?
The Board of Directors recommends that you vote FOR
the election of each of the nominees for Director named in this
proxy statement.
How
Will My Proxy Holders Vote?
The enclosed proxy designates Roger J. Medel, M.D., our
Chief Executive Officer, Thomas W. Hawkins, our Senior Vice
President, General Counsel and Secretary, and Karl B. Wagner,
our Chief Financial Officer, each with full power of
substitution, to hold your proxy and vote your shares.
Dr. Medel and Messrs. Hawkins and Wagner will vote all
shares of Pediatrix common stock represented by properly
executed proxies received in time for the annual meeting in the
manner specified by the holders of those shares. Dr. Medel
and Messrs. Hawkins and Wagner intend to vote all shares of
Pediatrix common stock that are properly executed by the record
holder but otherwise do not contain voting instructions as
follows:
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FOR the election of each of the nominees for
Director named in this proxy statement; and
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in accordance with the recommendation of Pediatrixs Board
of Directors, FOR or AGAINST all other
matters as may properly come before the annual meeting.
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2
Can
I Change My Vote After I Have Voted?
The grant of a proxy on the enclosed proxy card does not
preclude a shareholder from voting in person at the meeting. A
shareholder may revoke a proxy at any time prior to its exercise
by filing with Pediatrixs corporate secretary a duly
executed revocation of proxy, by submitting a duly executed
proxy to Pediatrixs corporate secretary bearing a later
date or by appearing at the meeting and voting in person.
Attendance at the meeting will not itself constitute revocation
of a proxy.
Who
Pays for the Preparation of the Proxy Statement?
Pediatrix will bear the cost of the solicitation of proxies from
its shareholders. In addition to solicitations by mail,
Pediatrixs Directors, officers and employees, and those of
its subsidiaries and affiliates, may solicit proxies from
shareholders by telephone or other electronic means or in person
but will receive no additional compensation for soliciting such
proxies. Pediatrix will cause banks and brokerage firms and
other custodians, nominees and fiduciaries to forward
solicitation materials to the beneficial owners of Pediatrix
common stock held of record by such banks, brokerage firms,
custodians, nominees and fiduciaries. Pediatrix will reimburse
such banks, brokerage firms, custodians, nominees and
fiduciaries for their reasonable out-of-pocket expenses in doing
so.
PROPOSAL:
ELECTION OF PEDIATRIXS DIRECTORS
Pediatrixs Articles of Incorporation and Bylaws, each as
amended and restated, provide that the number of directors
constituting Pediatrixs Board of Directors will be
determined from time to time by resolution adopted by
Pediatrixs Board of Directors. Pediatrixs Board of
Directors currently consists of nine members.
All of Pediatrixs incumbent Directors have been nominated
by Pediatrixs Board of Directors as Directors to be
elected at the annual meeting in 2007 by the holders of
Pediatrix common stock.
The nominees for Director are as follows:
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Roger J. Medel, M.D., who has served as a Director since
1979;
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Cesar L. Alvarez, who has served as Chairman of the Board of
Directors since May 2004 and as a Director since March 1997;
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Waldemar A. Carlo, M.D., who has served as a Director since
June 1999;
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Michael B. Fernandez, who has served as a Director since October
1995;
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Roger K. Freeman, M.D., who has served as a Director since
May 2002;
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Paul G. Gabos, who has served as a Director since November 2002;
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Pascal J. Goldschmidt, M.D., who has served as a Director
since March 2006;
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Manuel Kadre, who has served as a Director since May
2007; and
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Enrique J. Sosa, Ph.D., who has served as a Director since
May 2004.
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Please see below under Directors, Executive Officers and
Key Employees for the biographies of these nominees for
Director.
Each Director elected will serve for a term expiring at
Pediatrixs 2008 Annual Meeting of Shareholders, which is
expected to be held in May 2008, or until his successor has been
duly elected and qualified.
Pediatrixs Board of Directors has no reason to believe
that any nominee will refuse to act or be unable to accept
election; however, in the event that a nominee for a
directorship is unable to accept election or if any other
unforeseen contingencies should arise, proxies will be voted for
the remaining nominees and for such other person as may be
designated by Pediatrixs Board of Directors, unless the
proxies provide otherwise.
3
If a quorum is present and voting at the annual meeting, the
nine nominees receiving the highest number of votes
FOR election will be elected to the Board of
Directors of Pediatrix. Proxies will be voted FOR
all such nominees absent contrary instructions.
Pediatrixs Board of Directors Recommends a Vote
For the Election of Each of the Nine Nominees for
Director.
GOVERNANCE
AND RELATED MATTERS
Our business, property and affairs are managed under the
direction of our Board of Directors, except with respect to
those matters reserved for our shareholders. Our Board of
Directors establishes our overall corporate policies, reviews
the performance of our senior management in executing our
business strategy and managing our day-to-day operations and
acts as an advisor to our senior management. Our Board of
Directors mission is to further the long-term interests of
our shareholders. Members of the Board of Directors are kept
informed of Pediatrixs business through discussions with
Pediatrixs management, primarily at meetings of the Board
of Directors and its committees, and through reports and
analyses presented to them. Significant communications between
our Directors and senior management occur apart from such
meetings.
Questions
and Answers About Our Corporate Governance Practices
What
Committees Have Our Board of Directors
Established?
The standing committees of Pediatrixs Board of Directors
are the Executive Committee, the Medical Science and Technology
Committee, the Audit Committee, the Compensation Committee and
the Nominating and Corporate Governance Committee. Copies of the
charters for these committees, as well as our corporate
governance principles, are available on our website at
www.pediatrix.com. Our Internet website and the
information contained therein, other than material expressly
referred to in this proxy statement, or connected thereto are
not incorporated into this proxy statement. A copy of our
committee charters and corporate governance principles are also
available upon request from Pediatrixs Secretary at 1301
Concord Terrace, Sunrise, FL 33323.
How
Many Times Did Our Board of Directors Meet During
2006?
During 2006, Pediatrixs Board of Directors held 8 meetings
and took various actions by unanimous written consent.
Committees of the Board of Directors held a combined total of 19
meetings and also took action by unanimous written consent. Each
incumbent Director attended at least 75% of the total number of
meetings of Pediatrixs Board of Directors and its
committees held during 2006 during the period he was a member
thereof. Although Pediatrix has no formal policy with respect to
its Directors attendance at Pediatrixs annual
shareholders meetings, in 2006 all of our incumbent
Directors attended the annual shareholders meeting.
Are
a Majority of Our Directors Independent?
Our Board of Directors has reviewed information about each of
our non-employee Directors and made the determination that we
have a majority of independent Directors on our Board of
Directors. In arriving at this conclusion, our Board of
Directors made the affirmative determination that each of
Drs. Carlo and Freeman and Messrs. Alvarez, Fernandez,
Gabos, Sosa and Kadre met the Board of Directors
previously adopted categorical standards for determining
independence in accordance with the New York Stock
Exchanges corporate governance rules. Our adopted
categorical standards for determining independence in accordance
with the New York Stock Exchanges corporate governance
rules are contained in our corporate governance principles, a
copy of which is available on our website at
www.pediatrix.com. Our Board of Directors also made the
determination that Lawrence M. Mullen, who resigned as a member
of our Board of Directors on December 6, 2006, met the
Board of Directors previously adopted categorical
standards for determining independence in accordance with the
New York Stock Exchanges corporate governance rules.
4
Who
Is the Presiding Director?
Following each annual meeting of the shareholders,
Pediatrixs Board of Directors designates a non-management
Director as Chairman of the Board or, alternatively,
as Presiding Director. In addition to other
responsibilities, the Chairman of the Board or Presiding
Director presides over meetings of our non-management Directors.
At least once a year, the Chairman of the Board or Presiding
Director also presides over meetings of our independent
directors. Following our 2006 annual meeting of the
shareholders, our Board of Directors appointed Mr. Alvarez
to serve as Chairman of the Board.
How
Can Shareholders Communicate with the Board of
Directors?
Anyone who has a concern about Pediatrixs conduct,
including accounting, internal accounting controls or audit
matters, may communicate directly with our Chairman of the Board
of Directors (or Presiding Director), our non-management
Directors, the Chairman of the Audit Committee or the Audit
Committee. Such communications may be confidential or anonymous,
and may be submitted in writing to the Chief Compliance Officer,
Pediatrix Medical Group, Inc., 1301 Concord Terrace, Sunrise,
Florida 33323 or reported by phone at
877-835-5764.
All such concerns will be forwarded to the appropriate Directors
for their review, and will be simultaneously reviewed and
addressed by Pediatrixs General Counsel or Chief
Compliance Officer in the same way that other concerns are
addressed by us. Pediatrixs Code of Conduct, which is
discussed below, prohibits any employee from retaliating or
taking any adverse action against anyone for raising or helping
to resolve an integrity concern.
Has
Pediatrix Adopted a Code of Conduct?
Pediatrix has adopted a Code of Conduct that applies to all
Directors, officers, employees and independent contractors of
Pediatrix and its affiliated medical practices. Pediatrix
intends to disclose any amendments to, or waivers from, any
provision of the Code that applies to any of Pediatrixs
executive officers or Directors by posting such information on
our website at www.pediatrix.com.
Pediatrix has also adopted a Code of Professional
Conduct Finance that applies to all employees with
access to, and responsibility for, matters of finance and
financial management, including Pediatrixs Chief Executive
Officer and Chief Financial Officer. Pediatrix intends to
disclose any amendments to, or waivers from, any provision of
the Code that applies to any of Pediatrixs Chief Executive
Officer, Chief Financial Officer, principal accounting officer
or controller or persons performing similar functions by posting
such information on our website at
www.pediatrix.com.
The text of our Code of Conduct and the Code of Professional
Conduct Finance is available on our website at
www.pediatrix.com and upon request from
Pediatrixs Secretary at 1301 Concord Terrace, Sunrise, FL
33323.
Report
of the Audit Committee
The following report of the Audit Committee does not
constitute soliciting material and should not be deemed filed or
incorporated by reference into any of Pediatrixs filings
under the Securities Act of 1933, as amended (the
Securities Act), or the Securities Exchange Act of
1934, as amended (the Exchange Act), except to the
extent that we specifically incorporate such report by
reference.
We act under a written charter that has been adopted by
Pediatrixs Board of Directors. While we have the
responsibilities set forth in this charter, it is not our duty
to plan or conduct audits or to determine that Pediatrixs
financial statements are complete, accurate or in compliance
with generally accepted accounting principles. This is the
responsibility of Pediatrixs management and independent
auditors.
Our primary function is to assist the Board of Directors in
their evaluation and oversight of the integrity of
Pediatrixs financial statements, the qualifications and
independence of Pediatrixs independent auditors and the
performance of Pediatrixs audit functions. In addition,
while we are also responsible for assisting the Board of
Directors in their evaluation and oversight of Pediatrixs
compliance with applicable laws and regulations, it is not our
duty to assure compliance with such laws and regulations or
Pediatrixs Compliance Plan and related policies.
5
We also oversee Pediatrixs auditing, accounting and
financial reporting processes generally. Management is
responsible for Pediatrixs financial statements and the
financial reporting process, including the system of internal
controls. We also review the preparation by management of
Pediatrixs quarterly and annual financial statements.
Pediatrixs independent auditors, who are accountable to
us, are responsible for expressing an opinion as to whether the
consolidated financial statements present fairly, in all
material respects, the financial position, results of operations
and cash flows of Pediatrix in conformity with generally
accepted accounting principles in the United States.
Pediatrixs independent auditors are also responsible for
auditing and reporting on managements assessment of, and
the effective operation of, Pediatrixs internal control
over financial reporting. We are responsible for retaining
Pediatrixs independent auditors, and maintain sole
responsibility for their compensation, oversight and
termination. We also are responsible for pre-approving all
non-audit services to be provided by the independent auditors,
and on an annual basis discussing with the independent auditors
all significant relationships they have with Pediatrix to
determine their independence. In addition, during portions of
2006 and 2007, we conducted an independent comprehensive review
of the Companys stock option practices as described in the
2006 Annual Report to Shareholders.
In fulfilling our oversight role, we met and held discussions
with Pediatrixs management and independent auditors.
Management advised us that Pediatrixs consolidated
financial statements were prepared in accordance with generally
accepted accounting principles, and we reviewed and discussed
the consolidated financial statements for the fiscal year ended
December 31, 2006 and the restated financial statements for
the years ending December 31, 2005 and December 31,
2004. Further information regarding these restated financial
statements can be found in the Companys 2006 Annual Report
to Shareholders. In addition, we reviewed and discussed the
Managements Discussion and Analysis of Financial Condition
and Results of Operations sections of Pediatrixs periodic
reports, key accounting and reporting issues and the scope,
adequacy and assessments of Pediatrixs internal controls
and disclosure controls and procedures with management and
Pediatrixs independent auditors. We discussed privately
with the independent auditors matters deemed significant by the
independent auditors, including those matters required to be
discussed pursuant to Statement on Auditing Standards
No. 61 (Communication with Audit Committees), as
adopted by the Public Company Accounting Oversight Board in
Rule 3200T.
The independent auditors also provided us with the written
disclosures and the letter required by Independence Standards
Board Standard No. 1 (Independence Discussions with Audit
Committees), as adopted by the Public Company Accounting
Oversight Board in Rule 3600T, and we discussed with the
independent auditors matters relating to their independence. We
also reviewed a report by the independent auditors describing
the firms internal quality-control procedures and any
material issues raised in the most recent internal-quality
control review or external peer review or inspection performed
by the Public Company Accounting Oversight Board.
Based on our review with management and the independent auditors
of Pediatrixs audited consolidated financial statements
and the independent auditors report on such financial
statements, and based on the discussions and written disclosures
described above and our business judgment, we recommended to the
Board of Directors that the Companys audited consolidated
financial statements for the fiscal year ended December 31,
2006 and the restated financial statements referred to above be
included in Pediatrixs Annual Report on
Form 10-K
for the year ended December 31, 2006 for filing with the
Securities and Exchange Commission.
Submitted by the Audit Committee of the Board of Directors.
Paul G. Gabos
Manuel Kadre
Enrique J. Sosa
6
Compensation
Committee Report
The following Compensation Committee Report does not
constitute soliciting material and should not be deemed filed or
incorporated by reference into any of Pediatrixs filings
under the Securities Act or the Exchange Act, except to the
extent that we specifically incorporate such report by
reference.
In fulfilling our role, we met and held discussions with
Pediatrixs management and reviewed and discussed the
Compensation Discussion and Analysis contained in this proxy
statement on Schedule 14A. Based on the review and
discussions with management and our business judgment, we
recommended to Pediatrixs Board of Directors that the
Compensation Discussion and Analysis be included in this proxy
statement on Schedule 14A for filing with the Securities
and Exchange Commission.
Submitted by the Compensation Committee of the Board of
Directors.
Michael B. Fernandez
Waldemar A. Carlo, M.D.
Roger K. Freeman, M.D.
7
DIRECTORS,
EXECUTIVE OFFICERS AND KEY EMPLOYEES
Description
of Pediatrixs Executive Officers and Directors
Pediatrixs executive officers and Directors are as follows:
|
|
|
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|
|
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Name
|
|
Age
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Position with Pediatrix
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Roger J. Medel, M.D.(1)
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|
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61
|
|
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Chief Executive Officer and
Director
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Cesar L. Alvarez(1)
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|
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60
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|
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Chairman of the Board of Directors
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Waldemar A. Carlo, M.D.(3)(5)
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|
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55
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|
|
Director
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Michael B. Fernandez(3)(4)
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|
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55
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|
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Director
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Roger K.
Freeman, M.D.(3)(4)(5)
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|
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72
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|
|
Director
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Paul G. Gabos(1)(2)
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|
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42
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|
|
Director
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Pascal J. Goldschmidt, M.D.(5)
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|
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53
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|
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Director
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Manuel Kadre(2)
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|
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41
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|
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Director
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Enrique J. Sosa, Ph.D.(2)(4)
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|
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67
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|
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Director
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Joseph M. Calabro
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46
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President and Chief Operating
Officer
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Thomas W. Hawkins
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46
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|
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Senior Vice President, General
Counsel and Secretary
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Karl B. Wagner
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|
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41
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|
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Chief Financial Officer and
Treasurer
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(1) |
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Member of the Executive Committee. |
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(2) |
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Member of the Audit Committee. |
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(3) |
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Member of the Compensation Committee. |
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(4) |
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Member of the Nominating and Corporate Governance Committee. |
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(5) |
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Member of the Medical Science and Technology Committee. |
Roger J. Medel, M.D. has been a Director of
Pediatrix since he co-founded the Company in 1979.
Dr. Medel served as Pediatrixs President until May
2000 and as Chief Executive Officer until December 2002. In
March 2003, Dr. Medel reassumed the position of President,
serving in that position until May 2004, and Chief Executive
Officer, a position in which he continues to serve today.
Dr. Medel is a member of the Board of Trustees of the
University of Miami and a member of the Board of Directors of
MBF Healthcare Acquisition Corp. Dr. Medel participates as
a member of several medical and professional organizations.
Cesar L. Alvarez was elected as Chairman of the Board of
Directors in May 2004 and has been a Director since March 1997.
Mr. Alvarez has served since 1997 as the Chief Executive
Officer of the international law firm of Greenberg Traurig, P.A.
Mr. Alvarez also serves on the Board of Directors of
Atlantis Plastics, Inc. and Watsco, Inc.
Waldemar A. Carlo, M.D. was elected as a Director in
June 1999. Dr. Carlo has served as Professor of Pediatrics
and Director of the Division of Neonatology at the University of
Alabama School of Medicine since 1991. Dr. Carlo also has
served as Director of Newborn Nurseries at the University of
Alabama Medical Center and the Childrens Hospital of
Alabama since 1991. Dr. Carlo participates as a member of
several medical and professional organizations. He has received
numerous research awards and grants and has lectured
extensively, both nationally and internationally.
Michael B. Fernandez was elected as a Director in October
1995. Mr. Fernandez has served as Chairman and is and has
been a Managing Director of MBF Healthcare Partners, L.P., a
private equity firm focused on investing in healthcare service
companies, since February 2005 and has been Chairman and Chief
Executive Officer of MBF Healthcare Acquisition Corp. since June
2006. He is also the Chairman of Navarro Discount Pharmacies,
LLC. Mr. Fernandez previously served as Chairman and Chief
Executive Officer of CarePlus Health Plans Inc., a managed care
HMO, from January 2003 until February 2005, and as Chairman and
Chief Executive Officer of Physicians Healthcare Plans, Inc., a
Florida-based HMO, from 1992 until December 2002. Presently,
Mr. Fernandez
8
also serves on the Board of Directors of various private
entities, including Healthcare Atlantic, Inc., a holding company
that operates various health care entities.
Roger K. Freeman, M.D. was elected as a Director in
May 2002. Dr. Freeman is a maternal-fetal medicine
physician. In 1975, he founded Perinatal Associates of Southern
California, a physician practice group that has been affiliated
with Pediatrix since we acquired Magella Healthcare Corporation
(Magella) in May 2001. In September 1999,
Dr. Freeman retired from the private practice of medicine.
Dr. Freeman has served on many national and local OB/GYN
and maternal-fetal organizations. He is currently a member of
the Long Beach Memorial Medical Center Foundation Board and
serves on the Board of Directors of Todd Cancer Institute at
Long Beach Memorial Hospital. Dr. Freeman has authored
numerous articles and three books.
Paul G. Gabos was elected as a Director in November 2002.
Mr. Gabos has served as Chief Financial Officer of Lincare
Holdings Inc. since June 1997 and previously served as Vice
President Administration for Lincare. Prior to
joining Lincare in 1993, Mr. Gabos worked for
Coopers & Lybrand and for Dean Witter Reynolds, Inc.
Pascal J. Goldschmidt, M.D. was elected as a
Director in March 2006. Dr. Goldschmidt has been the Senior
Vice President for Medical Affairs and Dean of the University of
Miami Leonard M. Miller School of Medicine since April 2006.
Previously, Dr. Goldschmidt was a faculty member with the
Department of Medicine at Duke University Medical Center where
he served as Chairman from 2003 to 2006 and as Chief of the
Division of Cardiology from 2000 to 2003.
Manuel Kadre was elected as a Director in May 2007.
Mr. Kadre has served since 1995 as Vice President and
General Counsel of the de la Cruz Companies, which distributes
Eagle Brands beverages in South Florida and bottles
Coca-Cola
products in markets throughout the Caribbean. Mr. Kadre
also serves on the Board of Directors of Equity Media Holdings
Corporation and on the Board of Trustees of the University of
Miami and Miami Childrens Hospital.
Enrique J. Sosa, Ph.D. was elected as a Director in
May 2004. Mr. Sosa is currently a Director of FMC
Corporation and Northern Trust Corporation. Mr. Sosa,
who is presently retired, served as President of BP Amoco
Chemicals from January 1999 to April 1999. From 1995 to 1998, he
was Executive Vice President of Amoco Corporation. Prior to
joining Amoco, Mr. Sosa served as Senior Vice President of
The Dow Chemical Company, President of Dow North America and a
member of its Board of Directors. Mr. Sosa has previously
served on the Board of Directors of Electronic Data Systems
Corporation, Dow Corning Corporation and Destec Energy, Inc. He
also served as a member of the Executive Committee of the
American Plastics Council, a member of the Executive Committee
of the American section of the Society of Chemical Industry, and
a member of the American Chemical Council.
Joseph M. Calabro joined Pediatrix in January 1996 as
Chief Information Officer. In January 2000, Mr. Calabro was
appointed Executive Vice President, Management, in May 2000, he
was appointed Chief Operating Officer and in May 2004, he was
appointed President. Prior to joining Pediatrix,
Mr. Calabro served as Director of Information Technology
for the Ambulatory Surgery Group of Columbia/HCA. He served in
various operational and technology positions for various
healthcare companies from 1987 to 1994.
Thomas W. Hawkins joined Pediatrix in May 2003 and became
Senior Vice President, General Counsel and Secretary in June
2003. From January 2000 to April 2003, he was a partner with New
River Capital Partners, L.P., a private equity firm.
Mr. Hawkins previously served as Senior Vice President,
Corporate Development at AutoNation, Inc., from June 1996 to
December 1999. From 1994 to 1996, Mr. Hawkins was Executive
Vice President Administration of Blockbuster
Entertainment Group, a division of Viacom, Inc. He served as
General Counsel at Blockbuster Entertainment Corporation prior
to its merger with Viacom, Inc. in 1994.
Karl B. Wagner joined Pediatrix in May 1997 and was
appointed Chief Financial Officer and Treasurer in August 1998.
Prior to his appointment, Mr. Wagner served as
Pediatrixs Controller. Prior to joining Pediatrix,
Mr. Wagner was Chief Financial Officer for the East Region
of Columbia/HCAs Ambulatory Surgery Group from January
1995 until May 1997. From July 1993 through January 1995,
Mr. Wagner was Assistant Controller of Medical Care
International, Inc., a subsidiary of Medical Care America, Inc.
9
Description
of Certain Key Employees
The following individuals, while not executive officers for
purposes of the federal securities laws, are key employees of
Pediatrix:
Robert J. Balcom, M.D. joined Pediatrix in 1993 and
has been our Regional President, Central Region since January
2002. Dr. Balcom previously served as our Vice President of
Medical Operations, Central Region. Dr. Balcom is Board
Certified in Pediatrics and Neonatal-Perinatal Medicine.
Robert C. Bryant joined Pediatrix in 1996 and has been
our Senior Vice President and Chief Information Officer since
February 2004. Mr. Bryant previously served as our Vice
President, Information Systems from January 2000 to January 2004
and as Director, Information Service from 1997 to January 2000.
David A. Clark joined Pediatrix in May 2001 and has been
our Senior Vice President, Operations since December 2003.
Mr. Clark previously served as Vice President of
Operations, South Central Region from November 2001 to November
2003. From June 2000 to October 2001, Mr. Clark was Vice
President of Operations for Magella, which we acquired in 2001,
and prior thereto he was Vice President of Development for
Magella. Mr. Clark is a certified public accountant.
William C. Hawk joined Pediatrix as a consultant in 2005
and has been our Senior Vice President of Operations, Anesthesia
Services since May 2006. Prior to joining Pediatrix,
Mr. Hawk founded and served as Chief Executive Officer of
SHC Companies, Inc., a healthcare services company, and was a
Senior Vice President with Medical Care America, Inc. from 1992
to 1995.
Eric H. Kurzweil, M.D. joined Pediatrix in 1996 and
has been our Regional President, Mountain Region since January
2002. Dr. Kurzweil previously served as our Vice President
of Medical Operations, Mountain Region. Dr. Kurzweil is
Board Certified in Pediatrics and Pediatric Critical Care.
Frederick V. Miller, M.D. joined Pediatrix in 1991
and has been our Regional President, Atlantic Region since
January 2002. Dr. Miller previously served as our Vice
President of Medical Operations, Atlantic Region.
Dr. Miller is Board Certified in Pediatrics and
Neonatal-Perinatal Medicine.
Carlos A. Perez, M.D. joined Pediatrix in 1986 and
has been our Regional President, Caribbean Region since January
2002. Dr. Perez previously served as our Vice President of
Medical Operations, Caribbean Region. Dr. Perez is Board
Certified in Pediatrics, Neonatal-Perinatal Medicine and
Pediatric Critical Care.
John F. Rizzo joined Pediatrix in November 2002 as Senior
Vice President, Business Development. Prior to joining
Pediatrix, Mr. Rizzo served in strategic and financial
executive roles with early stage, venture capital-backed
companies. From 1996 to 2000, Mr. Rizzo was a senior
executive with AutoNation, Inc., where he served as Vice
President of Corporate Development and subsequently as Senior
Vice President, Industry Relations. From 1985 to 1996,
Mr. Rizzo was employed by Arthur Andersen LLP.
Alan R. Spitzer, M.D. joined Pediatrix in 2004 as
Senior Vice President, Research and Education, following a long
career in academic neonatal medicine. Prior to joining
Pediatrix, Dr. Spitzer served as Chief of Neonatology at
the State University of New York at Stony Brook and before that
as Chief of Neonatology and Chair of Pediatrics at Thomas
Jefferson University in Philadelphia. Dr. Spitzer has
edited two major textbooks, Intensive Care of the Fetus and
Neonate, the second edition of which was published in March
2005, and Fetal and Neonatal Secrets, the second edition
of which was published in early 2007.
Michael D. Stanley, M.D. joined Pediatrix in 1997
and has been our Regional President, South Central Region since
January 2002. Dr. Stanley previously served as our Vice
President of Medical Operations, South Central Region.
Dr. Stanley is Board Certified in Pediatrics and
Neonatal-Perinatal Medicine.
Committees
of the Board of Directors
Pediatrixs Audit Committee held 9 meetings in 2006.
Messrs. Gabos and Sosa were members of the committee
throughout 2006. Mr. Gabos acted as chair of the committee
throughout 2006. Mr. Mullen was a member
10
of the committee until December 6, 2006, when he resigned
as a member of Pediatrixs Board of Directors and Audit
Committee. To fill the vacancy on the Audit Committee created by
Mr. Mullens resignation, Pediatrixs Board of
Directors appointed Dr. Carlo to the Audit Committee.
Mr. Kadre replaced Dr. Carlo as a member of the Audit
Committee in May 2007. Pediatrixs Board of Directors has
determined that each of Messrs. Gabos and Sosa qualify as
audit committee financial experts as defined by the
rules and regulations of the Securities and Exchange Commission
and that each of Messrs. Gabos, Sosa and Kadre meet the
independence requirements under such rules and regulations and
for a New York Stock Exchange listed company.
Pediatrixs Board of Directors has adopted a written
charter for the Audit Committee setting out the functions that
it is to perform. A copy of the Amended and Restated Audit
Committee Charter is available on our website at
www.pediatrix.com.
Please refer to the Audit Committee Report, which is set forth
above, for a further description of our Audit Committees
responsibilities and its recommendation with respect to our
audited consolidated financial statements for the year ended
December 31, 2006.
Pediatrixs Compensation Committee held 7 meetings in 2006.
Drs. Carlo and Freeman and Mr. Fernandez were members
of the committee throughout 2006. Dr. Carlo acted as chair
of the committee until September 2006 when Mr. Fernandez
assumed the role of chair of the committee. Pediatrixs
Board of Directors has determined that each of Drs. Carlo
and Freeman and Mr. Fernandez meet the independence
requirements for a New York Stock Exchange listed company.
Pediatrixs Board of Directors has adopted a written
charter for the Compensation Committee setting out the functions
that it is to perform. A copy of the Amended and Restated
Compensation Committee Charter is available on our website at
www.pediatrix.com.
The primary purpose of Pediatrixs Compensation Committee
is to assist Pediatrixs Board of Directors in the
discharge of the Board of Directors responsibilities
relating to compensation of executives. The scope of authority
of Pediatrixs Compensation Committee includes the
following:
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Approving the performance goals and objectives, evaluating the
performance and setting the compensation for Pediatrixs
Chief Executive Officer and other executive officers;
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Supervising and making recommendations to Pediatrixs Board
of Directors with respect to incentive compensation plans and
equity-based plans for executive officers;
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evaluating whether or not to engage, retain, or terminate an
outside consulting firm for the review and evaluation of
Pediatrixs compensation plans and approving such outside
consulting firms fees and other retention terms; and
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conducting an annual performance evaluation of Pediatrixs
Compensation Committee.
|
Upon a determination of Pediatrixs full Compensation
Committee membership, matters may be delegated to a subcommittee
for evaluation and recommendation back to the full Committee.
For a description of the role performed by executive officers
and compensation consultants in determining or recommending the
amount or form of executive and director compensation, see
Executive Compensation-Compensation Discussion and
Analysis-Executive Compensation Administration.
Nominating
and Corporate Governance Committee
Pediatrixs Nominating and Corporate Governance Committee
held 2 meetings in 2006. Dr. Freeman and
Messrs. Fernandez and Sosa were members of the committee
throughout 2006. Dr. Freeman acted as chair of the
committee throughout 2006. Pediatrixs Board of Directors
has determined that each of Messrs. Fernandez and Sosa and
Dr. Freeman meet the independence requirements for a New
York Stock Exchange listed company.
11
Pediatrixs Board of Directors has adopted a written
charter for the Nominating and Corporate Governance Committee
setting out the functions that it is to perform. A copy of the
Amended and Restated Nominating and Corporate Governance
Committee Charter is available on our website at
www.pediatrix.com.
The Nominating and Corporate Governance Committee assists the
Board of Directors with respect to nominating new Directors and
committee members and taking a leadership role in shaping the
corporate governance of Pediatrix. To fulfill its
responsibilities and duties, the committee, among other things,
reviews the qualifications and independence of existing
Directors and new candidates; assesses the contributions of
current Directors; identifies and recommends individuals
qualified to be appointed to committees of the Board of
Directors; considers rotation of committee members; reviews the
charters of the committees and makes recommendations to the full
Board of Directors with respect thereto; develops and recommends
to the Board of Directors corporate governance principles,
including a code of business conduct; and evaluates and
recommends succession plans for Pediatrixs chief executive
officer and other senior executives.
Although the Nominating and Corporate Governance Committee does
not solicit director nominations, the committee will consider
candidates suggested by shareholders in written submissions to
Pediatrixs Secretary in accordance with the procedures
described below in the section entitled Information
Concerning Shareholder Proposals. In evaluating nominees
for Director, the committee does not differentiate between
nominees recommended by shareholders and others. In identifying
and evaluating candidates to be nominated for Director, the
committee reviews the desired experience, mix of skills and
other qualities required for appropriate Board composition,
taking into account the current Board members and the specific
needs of Pediatrix and its Board of Directors. This process is
designed so that the Board of Directors includes members with
diverse backgrounds, skills and experience, and represents
appropriate financial, clinical and other expertise relevant to
the business of Pediatrix. At a minimum, Director candidates
must meet the following qualifications: high personal and
professional ethics, integrity and values and a commitment to
the representation of the long-term interests of our
shareholders. Although the committees charter permits the
committee to engage a search firm to identify Director
candidates, Pediatrix did not pay any third parties a fee to
assist in the process of identifying or evaluating Director
candidates in 2006.
Certain
Relationships and Related Person Transactions
Review
and Approval of Related Person Transactions
In 2006, Pediatrix adopted a written policy for the review and
approval or ratification of transactions (i) between
Pediatrix (or any of its consolidated subsidiaries or affiliated
professional associations, corporations and partnerships) and
any Pediatrix director or any other entity in which any
Pediatrix director is a director, officer or is financially
interested; and (ii) in which Pediatrix (or any of its
consolidated subsidiaries or affiliated professional
associations, corporations and partnerships) is or will be a
participant and any related person has or will have a direct or
indirect material interest. For purposes of the policy a related
person includes any Pediatrix director or director nominee,
executive officer or holder of more than 5% of the outstanding
voting stock of Pediatrix or any of their respective immediate
family members. The policy does not apply to transactions
pertaining to (i) director or officer compensation that is
approved or recommended to Pediatrixs Board of Directors
for approval by Pediatrixs Compensation Committee or
(ii) the employment by Pediatrix (or any of its
consolidated subsidiaries or affiliated professional
associations, corporations and partnerships) of any immediate
family member of a related person in a non-officer position and
at compensation levels commensurate with that paid to other
similarly situated employees.
Pursuant to the terms of the policy, all covered transactions,
if determined to be material by Pediatrixs general counsel
or if the transaction involves the participation of a member of
the Pediatrix Board of Directors, are required to be promptly
referred to the disinterested members of the Pediatrix Audit
Committee for their review or, if less than a majority of the
members of Pediatrix Audit Committee are disinterested, to all
the disinterested members of the Pediatrix Board of Directors.
Pursuant to the terms of the policy materiality determinations
must be based on the significance of the information to
investors in light of all circumstances, including, but not
limited to, the (i) relationship of the related persons to
the covered transaction, and with each other,
(ii) importance to the person having the interest, and
(iii) amount involved in the transaction. All transactions
involving in excess of $120,000 are automatically deemed to be
material pursuant to the terms of the policy.
12
The disinterested directors of Pediatrixs Audit Committee
or Board of Directors, as applicable, are required to review
such material covered transactions at their next
regularly-scheduled meeting, or earlier if a special meeting is
called by the Chairman of the Audit Committee and may only
approve such a material covered transaction if it has been
entered into in good faith and on fair and reasonable terms that
are no less favorable to Pediatrix than those that would be
available to Pediatrix in a comparable transaction in arms
length dealings with an unrelated third party at the time it is
considered by the disinterested directors of Pediatrixs
Audit Committee or Board of Directors, as applicable.
All of the transactions described in Transactions with
Related Persons below were covered transactions under our
policy and the policies and procedures required by the policy
were followed in connection with the review and approval or
ratification of all of such transactions.
Transactions
with Related Persons
In March 1997, Mr. Alvarez was appointed to
Pediatrixs Board of Directors. Mr. Alvarez is the
Chief Executive Officer of Greenberg Traurig, P.A., which serves
as one of Pediatrixs outside counsels and receives
customary fees for legal services. In 2006, Pediatrix paid
Greenberg Traurig, P.A. approximately $721,000 for such services
and currently anticipates that this relationship will continue.
In 2006, Pediatrix reimbursed Dr. Medel, our Chief
Executive Officer, approximately $221,237, for Pediatrixs
business use of an aircraft that Dr. Medel owns pursuant to
a fractional ownership program. Pediatrix used the aircraft in
connection with several business trips taken by Dr. Medel
and other officers, directors and employees. The amounts
reimbursed by Pediatrix for the use of Dr. Medels
aircraft did not exceed the hourly rate that Dr. Medel paid
for such use under the aircrafts fractional ownership
program.
Geraldine Calabro, the wife of Mr. Calabro, our President
and Chief Operating Officer, is employed by Pediatrix as Project
Analyst in its Facilities Department and is responsible for
matters relating to the procurement and administration of
Pediatrixs corporate, regional and physician group
facilities. Under a program adopted by our Board of Directors
and applicable to all similarly situated employees, the Company
paid the Internal Revenue Service $33,087 in 2007 relating to
the personal tax consequences of changes to the measurement
dates of certain options previously granted to Ms. Calabro
and exercised in 2006. The Company will also reimburse
Ms. Calabro in 2007 for additional taxes resulting from
this payment in accordance with this program. Ms. Calabro
also holds unexercised options that were subject to a change in
measurement dates. These options are subject to a separate
program adopted by our Board of Directors for all similarly
situated employees providing for an increase in the exercise
price of these options and authorizing a compensating payment
for the difference to be made to her in 2008. The Company
expects the amount of the compensating payment will be $8,774.
See Explanatory Note immediately preceding Part I,
Item 1, and Note 3, Restatement of Consolidated
Financial Statements in Notes to Consolidated Financial
Statements appearing in our 2006 Annual Report to Shareholders.
Deborah Medel-Guerrero, the daughter of Dr. Medel, is
employed by Pediatrix as its Director of Practice Integration
and is responsible for matters relating to the integration of
newly acquired physician practice groups into the operations of
Pediatrix. In 2006, Pediatrix paid Ms. Medel-Guerrero
$78,234 in salary and bonus and provided her certain health and
other benefits customarily provided to similarly situated
Pediatrix employees. In addition, in 2006, Pediatrix granted
Ms. Medel-Guerrero a restricted stock award of
1,042 shares of Pediatrix common stock and options to
purchase 3,125 shares of Pediatrix common stock, each with
a three year vesting period. In 2007, Pediatrix granted
Ms. Medel-Guerrero options to acquire 2,500 shares of
Pediatrix common stock with a three year vesting period. The
options granted to Ms. Medel-Guerrero were at an exercise
price equal to the closing price of a share of Pediatrixs
common stock on the date of the grant. Ms. Medel-Guerrero
is also the holder of certain previously granted options that
are subject to our program providing for the increase in the
exercise price of these options and a compensating payment for
the difference in 2008. The Company expects the amount of the
compensating payment will be $20,350.
Virginia Turnier, M.D., the wife of Dr. Medel,
Pediatrixs Chief Executive Officer, was our Regional Vice
President of Medical Operations until September 30, 1999,
and continues to provide certain professional and administrative
services to Pediatrix as an employee and as an officer and
director for certain of our affiliated professional
corporations. As compensation for her continuing services,
Dr. Turniers options to purchase shares of
13
Pediatrix common stock, which she received when she served as
our Regional Vice President of Medical Operations, remained
exercisable in accordance with their terms. As a result of our
previously disclosed stock option review, certain options
granted to Dr. Turnier in 1997 and subsequently exercised
were found to have been backdated. In July 2007,
Dr. Turnier offered, and the Company accepted her offer, to
repay the Company $519,000, an amount equal to the difference
between the proceeds she received upon exercise of these options
and the proceeds she would have received had the exercise price
been the closing sales price of a share of Pediatrix common
stock on the revised measurement date.
As a result of the stock option review, certain options granted
to Mr. Wagner, our Chief Financial Officer, and
Mr. Calabro in 1998 and 1999 and subsequently exercised
were found to have been backdated. In July 2007,
Mr. Calabro and Mr. Wagner, offered, and the Company
accepted these offers, to repay $144,950 and $154,975,
respectively, amounts equal to the difference between the
proceeds they received upon exercise of these options and the
proceeds they would have received had the exercise price for
their options been the closing sales price of a share of
Pediatrix common stock on the revised measurement dates.
In December 2006, Mr. Hawkins, our Senior Vice President,
General Counsel and Secretary, offered and then paid the Company
$128,250, representing an additional payment in connection with
the exercise of certain options that were granted in 2003. As a
result of the stock option review, these options received a
revised measurement date because they were found to have been
misdated.
Compensation
Committee Interlocks and Insider Participation
Dr. Goldschmidt, one of our Directors since March 2006 and
a member of Pediatrixs Medical Science and Technology
Committee, is also the Senior Vice President for Medical Affairs
and Dean of the University of Miami Leonard M. Miller School of
Medicine. Subsequent to Dr. Goldschmidts election to
Pediatrixs Board of Directors, Dr. Medel,
Pediatrixs Chief Executive Officer, was appointed to the
Trustee Services Committee for the University of Miami. As a
member of the University of Miamis Trustee Services
Committee, Dr. Medel participates in setting performance
goals and annual bonus allocations for various University of
Miami employees, including Dr. Goldschmidt.
On August 30, 2007, Jacob Schwartz, a purported shareholder
of the Company, filed a derivative lawsuit in the United States
District Court for the Southern District of Florida naming the
Company as a nominal defendant and also naming as defendants all
of the Companys current Directors (other than
Mr. Kadre), its current Chief Executive Officer, President
and Chief Operating Officer, Chief Financial Officer and General
Counsel as well as certain former officers and directors. The
lawsuit claims that all or some of the defendant officers and
directors, among other things, violated their fiduciary duties
to the Company and the federal securities laws and engaged in
corporate waste, gross mismanagement, unjust enrichment and
constructive fraud with respect to the Companys awarding
of and accounting for stock option grants since at least 1996.
As described in the Companys 2006 Annual Report to
Shareholders, the Audit Committee completed an independent
comprehensive review of the Companys stock option
practices resulting in a restatement of certain of the
Companys financial statements.
This suit was filed by a plaintiff who sent one of three
shareholder demand letters regarding the Companys stock
option practices. A Special Committee of the Board of Directors,
composed of the same directors who conducted the Audit
Committees review, has determined that it was not in the
best interests of the Company to take further action against the
Companys current management and Directors with respect to
the Companys stock option grant practices but is
considering whether to take further action with respect to any
of the Companys former management and Directors.
14
Compensation
Discussion and Analysis
The Compensation Committee of our Board of Directors determines
the compensation for our executive officers and oversees the
administration of our executive compensation programs. The
Compensation Committee is composed entirely of independent
directors and is advised as necessary by an independent
consultant retained by the Compensation Committee.
Executive
Compensation Philosophy
The Compensation Committee has designed our executive
compensation programs with the following guiding principles in
mind:
Quality of Personnel We are committed to
employing the highest quality executive team in the health care
services industry. In a challenging business environment, we
believe that having highly qualified executive officers is
critical for all our constituencies our patients,
hospitals, affiliated clinicians, third party payors, employees,
and shareholders. We expect our executives to be of the highest
caliber in terms of business acumen and integrity.
Competitiveness Our objective is to analyze
and understand market forces and practices regarding
compensation for executives at similarly situated companies. Our
strategy is to establish compensation programs and levels in
relation to the external market that best support our corporate
strategy.
Alignment of Interests Our compensation plans
for top executives are designed to have strong links to
performance achievements, both in terms of operational and
financial results as well as in optimizing shareholder value. We
evaluate the relationship between compensation cost, shareholder
value and company performance on a regular basis. At-risk
elements such as cash incentives and stock-based compensation
comprise a significant portion of our overall executive
remuneration. For incentive plans, we establish performance
goals along a wide range of potential performance results so
that the level of compensation received appropriately
corresponds to the level of performance achieved.
Simplicity and Ease of Administration Our
plans are intended to be simple to understand, document, track
and administer. As part of this objective, we attempt to limit
the number of separate elements of compensation so that we can
easily understand the relationships between programs.
Responsiveness to Circumstances and Understood by
Executives We seek to understand the needs and
objectives of our executive officers, and to the degree
feasible, reflect those needs and objectives in the programs
developed. Additionally, we strive to ensure that executives
understand each element and the overall compensation program so
that they fully appreciate the value being delivered.
Compliance with Regulatory Guidelines and Sensible Standards
of Corporate Governance We develop our plans in
recognition of, and in compliance with, all applicable rules,
statutes, regulations and guidelines. Additionally, we monitor
our programs on an ongoing basis to ensure they remain in
compliance. Program designs reflect relevant considerations in
the areas of accounting cost, tax impact, cash flow constraints
and other relevant matters. Lastly, we strive to ensure that all
programs are appropriate in light of reasonable and sensible
standards of good corporate governance.
Executive
Compensation Administration
The Compensation Committee continually reviews executive
compensation to ensure that it reflects our compensation
philosophy. In 2004, and again in 2006, the Compensation
Committee commissioned Watson Wyatt, an independent compensation
consultant, to assist it in a thorough review of our
compensation practices. In 2006, the Compensation Committee met
7 times, and received two comprehensive reports from Watson
Wyatt. The first report contained Watson Wyatts market
assessment and recommendations with respect to annual cash
compensation for our named executive officers and the second
contained Watson Wyatts market based assessment of total
compensation for those named executive officers. Based upon the
information contained in these reports, and its assessment of
the performance of our named executive officers, the
Compensation Committee made adjustments to
15
the base salaries of each of the named executive officers
effective as of January 1, 2006, and made grants on
June 1, 2006 of stock options and restricted stock to each
of those named executives (as described in more detail below).
Our Compensation Committee makes compensation decisions around
program design and pay adjustments in the context of our
compensation philosophy, market practices and total compensation
objectives. The Compensation Committee ordinarily positions
compensation opportunities at a strategically determined
percentile of the market as a means to attract and retain the
level of executive talent necessary to deliver sustained
performance. Market positioning for individual elements of
compensation and benefits, as well as the relationships among
elements, are discussed below. Our compensation programs include
significant variable components. For example, our annual bonus
program for named executive officers is based on the achievement
of predetermined target levels of our Companys income from
operations and our equity compensation program is based upon the
value and increases in the value of our common stock. Actual
compensation realized therefore may be more or less than the
targeted compensation opportunity in any given year. For 2006,
the total direct compensation opportunity for the named
executive officers, including salary, target annual bonus and
the estimated fair value of equity-based grants was positioned
at approximately the median of the market references developed
for each of our named executive officers.
Although it has no formal policy for a specific allocation
between current and long-term compensation, or cash and non-cash
compensation, the Compensation Committee reviews pay mix for
executive officers as compared to typical market practice. Our
annual bonus program serves as a method for properly
incentivizing and rewarding our named executive officers for the
achievement of desired performance levels. Our long-term
compensation program serves as both a retention tool as well as
a financial incentive, helping to increase the likelihood that
top performers will remain with us long-term and be
appropriately rewarded for enhancing long-term shareholder
value. The long-term compensation program also serves to align
the interests of executive officers with our shareholders. We
have no formal policy to either retroactively increase or claw
back previously awarded bonuses or vested equity compensation in
the event of a restatement of our financial results.
The Compensation Committee has considered a number of factors in
making decisions on the structure of the programs and individual
compensation awards and payments. The primary factors include
the analysis and market data provided by Watson Wyatt as
discussed below and the Compensation Committees guiding
principles for program design and operation.
The Compensation Committee establishes and approves all elements
of compensation for the Chief Executive Officer after careful
consideration of all factors it deems appropriate. The Chief
Executive Officer makes recommendations on compensation actions
for the other executive officers based on market data from
Watson Wyatt and according to the same philosophy and objectives
the Compensation Committee has adopted (and after the other
named executive officers have had an opportunity to review the
data provided by Watson Wyatt and to provide the Chief Executive
Officer with their input). The Chief Executive Officers
recommendations are then considered for approval by the
Compensation Committee, and in some cases are modified by the
Compensation Committee during the course of its deliberations.
The Compensation Committee has engaged Watson Wyatt as its
independent consultant and advisor. Watson Wyatt also has
provided services to management, including technical advice
relating to equity compensation to employees generally, and
assistance in developing compensation packages for our Regional
Presidents and Regional Vice Presidents. In 2006, Watson Wyatt
conducted two independent and comprehensive reviews of our
executive compensation program, which included an evaluation of
the market positioning for cash compensation and total
compensation and individual pay elements. Specifically, the
review covered the following compensation areas:
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Cash Compensation: direct cash compensation in
the form of base salary and annual bonus.
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Total Compensation: direct cash compensation
elements including base salary, annual bonus and long-term
incentives (both cash and stock).
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Peer Group Performance Analysis: historical
peer group analysis of key financial metrics relevant to base
salary levels, our bonus plan and stock-based compensation.
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16
In conducting the market assessment, a peer group of 14
healthcare companies with equity market values between
$1 billion and $6 billion was used to benchmark
compensation for the named executive officers. All of the peer
group companies were members of the Dow Jones Health Care
Providers, and the group constituted a blend of both small cap
and large cap companies. The companies included in the peer
group were Davita, Inc., Health Management Associates, Lincare
Holdings, Inc., Triad Hospitals, Inc., Manor Corp., Community
Health Systems, Universal Health Services, Sierra Health
Services, Lifepoint Hospitals, Inc., Psychiatric Solutions,
Inc., United Surgical Partners, Healthways, Inc., Sunrise
Senior Living, Inc., and Apria Healthcare Group.
The following sections describe the various elements of our
executive compensation program, including its objectives, market
positioning, structure and operation, and other information
specific to 2006 payments, awards, and pay actions.
Each executive officer is paid a base salary that is reviewed
periodically by the Compensation Committee. The salary for our
Chief Executive Officer is generally targeted at the market
median, and the base salaries of our three other named executive
officers are generally targeted at the 75th percentile, of
the peer group, although individual officer salaries may be
above or below those targets. Adjustments to salaries consider
the base salary and total compensation market data compiled by
Watson Wyatt in the context of the executives role and
responsibilities, experience and tenure, individual performance
and contribution to the Companys results as recommended to
the Compensation Committee by the Chief Executive Officer (or
the Compensation Committee in the case of the Chief Executive
Officer).
Executive officer salaries were reviewed in March, 2006 and
adjusted by the Compensation Committee effective as of
January 1, 2006. The salaries of the named executive
officers had not been increased since 2004. The schedule below
indicates the 2004, 2005 and 2006 base salaries (reflecting the
increases) for each of the named executive officers, and the
total annualized percentage increase in base salary for each of
those officers:
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Annualized
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2004 Base
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2005 Base
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2006 Base
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Percentage
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Salary
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Salary
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Salary
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Increase
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Roger J. Medel, M.D.
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$
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675,000
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$
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675,000
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$
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800,000
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8.87
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%
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Joseph M. Calabro
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$
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450,000
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$
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450,000
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$
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515,000
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6.98
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%
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Karl B. Wagner
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$
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375,000
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$
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375,000
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$
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430,000
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7.08
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%
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Thomas W. Hawkins
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$
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350,000
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$
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350,000
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$
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400,000
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6.90
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%
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The base salaries for 2006 of our named executive officers are
also included in the Salary column of the Summary Compensation
Table.
In 2004, our shareholders approved, at the recommendation of our
Board of Directors, the Pediatrix Medical Group, Inc. 2004
Incentive Compensation Plan (the Incentive Plan).
The purpose of the Incentive Plan is to assist us in attracting,
motivating, retaining and rewarding high quality executives and
other employees, by enabling them to acquire a proprietary
interest in our Company and providing them with annual and
long-term incentives to expend their maximum efforts in the
creation of shareholder value. The Compensation Committee
designed the Incentive Plan to satisfy the requirements for
performance-based compensation within the meaning of
Section 162(m) of the Internal Revenue Code.
In March 2006, the Compensation Committee established
performance goals for 2006 annual bonuses for our named
executive officers. The goals were based upon our Companys
achievement of certain increases in levels of income from
operations in 2006 over 2005 (prior to the restatement of the
Consolidated Financial Statements covered in our 2006 Annual
Report to Shareholders). The measures were designed to encourage
executive officers to focus on continuing to grow our business
while managing associated general and administrative expenses.
Our philosophy is to reward our executive officers for growth in
our Companys results of operations. As such, we target
significant but steady increases in income from operations. In
2006, the plan was designed such that no
17
bonus would have been paid had income from operations not
increased by more than 17.6% over the prior year (prior to the
restatement of the Consolidated Financial Statements covered in
our 2006 Annual Report to Shareholders). Thus, the minimum
percentage increase in income from operations to receive a bonus
was 17.6%; the target increase was 29.9%; and the
stretch increase was 42.2%. No bonuses would have
been paid had income from operations been less than
$173,638,000; the target was $191,838,000, and the
stretch number was $210,038,000. The minimum 17.6%
increase in income from operations required to receive the
minimum bonus is a high minimum target, but was set at that
level by the Compensation Committee because the Companys
income from operations for 2005 (prior to the restatement of the
Consolidated Financial Statements covered in our 2006 Annual
Report to Shareholders) was below its 2004 level due to charges
relating to the settlement of an on-going national Medicaid
investigation. The minimum threshold represents an 11.1%
increase over the income from operations for 2004 (which fiscal
year did not reflect the implementation of FAS 123(R)).
Participants were eligible for potential awards between 0% and
150% of their target bonus for 2006, as determined by reference
to the following chart:
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Bonus Opportunity as% of Base Salary
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Based on Achievement of 2006 Income from Operations
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2006 Base
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$173,637
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$210,038
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Executive Officer
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Salary
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or Less
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$173,638
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$182,738
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$191,838
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$200,938
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or More
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(All target amounts are in thousands)
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Roger J. Medel, M.D.
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$
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800,000
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0.00
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%
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50.00
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%
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75.00
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%
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100.00
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%
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125.00
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%
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150.00
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%
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Joseph M. Calabro
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$
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515,000
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0.00
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%
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50.00
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%
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75.00
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%
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100.00
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%
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125.00
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%
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150.00
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%
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Karl B. Wagner
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$
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430,000
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0.00
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%
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50.00
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%
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75.00
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%
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100.00
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%
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125.00
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%
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150.00
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%
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Thomas W. Hawkins
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$
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400,000
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0.00
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%
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50.00
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%
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75.00
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%
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100.00
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%
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125.00
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%
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150.00
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%
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The Compensation Committee establishes key business performance
objectives for each of the named executive officers, and
retained the right to reduce bonuses if and to the extent those
objectives were not met. The Compensation Committee determined
that each of the named executives had substantially achieved his
key business objectives for 2006, and accordingly that no
reductions were appropriate for the 2006 bonuses.
Following the end of the fiscal year, the Compensation Committee
determined that our Companys 2006 income from operations
was $198.5 million, and that each executive officer was
eligible for a bonus equal to 118.2% of his base salary. The
amounts of these bonuses are included in the Bonus column of the
Summary Compensation Table.
In March 2007, the Compensation Committee established the 2007
bonus opportunity for our named executive officers based upon
targeted increases in our income from operations for 2007 over
the Companys anticipated income from operations for 2006.
This bonus opportunity was established prior to the filing of
our Annual Report on
Form 10-K
for the year ended December 31, 2006 so that such bonuses,
if any, would qualify as performance-based compensation under
Section 162(m). The bonus opportunity as a percentage of
base salary is the same as what was used for 2006 and the target
increases in income from operations are similar to what was used
for 2006, after adjusting for the impacts of the settlement of
the national Medicaid investigation in 2005 and our adoption of
FAS 123(R) in 2006.
The Compensation Committees philosophy is to make equity
awards (other than awards to new hires) annually close to
mid-year. The Compensation Committee made its 2006 annual grants
of equity awards on June 1, 2006 in the form of stock
options and restricted stock to our named executive officers and
various other employees of the Company.
An important objective of our long-term incentive program is to
provide a strong relationship between the long-term value of our
stock and the potential financial gain for employees. Stock
options provide our named executive officers with the
opportunity to purchase our common stock at a fixed price
regardless of future market
18
price. Stock options granted by our Company in 2006 generally
vest and become exercisable over a three-year vesting period.
A stock option becomes valuable only if our common stock price
increases above the option exercise price and the holder of the
option remains employed during the period required for the
option to vest, thus providing an incentive for an
option holder to remain employed by our Company. In addition,
stock options link a portion of an employees compensation
to shareholders interests by providing an incentive to
build long-term value, which in turn should result in increases
in the market price of our stock.
The exercise prices of the stock options granted to our named
executive officers on June 1, 2006 were equal to the
closing price of a share of the Companys common stock on
the New York Stock Exchange on that date. Those exercise prices
are shown in the Grants of Plan-Based Awards Table. Additional
information on these grants, including the number of shares
subject to each grant, also is shown in the Grants of Plan-Based
Awards Table. All of the stock options granted to the named
executive officers in 2006 were nonqualified stock options.
There is a limited term in which our named executive officers
can exercise stock options, known as the option
term. The option term is generally ten years from the date
of grant. At the end of the option term, the right to purchase
any unexercised options expires. Option holders generally
forfeit any unvested options if their employment with us
terminates. The terms of the employment agreement of each named
executive officer provides that the executive will have
12 months after termination of the employment agreement for
any reason (but not beyond the 10 year expiration date for
the option) to exercise any vested non-qualified stock options.
Those employment agreements also provide that all unvested stock
options vest and become immediately exercisable in the event of
a Change in Control (as defined in the employment agreements).
Restricted stock awards are intended to retain key employees,
including the named executive officers, through vesting periods.
Restricted stock awards provide the opportunity for capital
accumulation and more predictable long-term incentive value.
Restricted stock awards are shares of our common stock that are
awarded with the restriction that the recipient remain with us
throughout the awards vesting period. Restricted stock
awards by our Company generally vest at the rate of one-third
per year beginning on the first anniversary of the date on which
the award is granted. The purpose of granting restricted stock
awards is to encourage ownership and result in business
decisions that build long-term shareholder value and thus stock
price appreciation, and encourage retention of our named
executive officers. Named executive officers are allowed to vote
restricted stock awards as a shareholder based on the number of
shares held under restriction. Any dividends declared with
respect to any restricted stock awards are held until the awards
vest, at which time the dividends are paid to the named
executive officers. If restricted stock is forfeited, the named
executive officers rights to receive the dividends
declared with respect to that stock is forfeited as well. At
present, the Company does not pay dividends and it has no
current intention to do so in the future.
Any unvested restricted stock generally is forfeited upon
termination of the employment of the named executive officer.
The employment agreement of each named executive officer
provides that in the event of a Change in Control, as defined in
the employment agreement, all unvested restricted stock
automatically vests.
The number of shares of restricted stock and stock options
granted to each executive officer was based on several factors
including our overall 2005 performance (excluding the charge
relating to the settlement of our national Medicaid
investigation which related to periods more than 6 years
ago), the Compensation Committees evaluation of the senior
management team in executing the business plan and strategic
objectives for 2005, the individual executives performance
assessment in light of his performance objectives, and the peer
group market data supplied by the Compensation Committees
consultant. In general, long-term compensation is allocated on
the basis of the Compensation Committees judgment
concerning the cash and equity incentives and time frames that
are optimal to maintain our ability to compete for and retain
talented leaders. Information regarding the grants of restricted
stock made by our Company to our named executive officers during
fiscal year 2006 is included in the Grant of Plan-Based Awards
Table.
19
In 2006, the Compensation Committee approved a change in the
Companys equity grant practices by granting a mix of stock
options and restricted stock with approximately equal values.
Stock options were the primary equity grant vehicle prior to
2005, and all equity grants to officers and most other employees
during 2005 consisted entirely of restricted stock. For 2006, a
balanced approach was considered to be more effective in
achieving program objectives than either granting stock options
or restricted stock alone.
Stock options provide strong motivation for achieving sustained
levels of share price appreciation, but a 2006 change in the
accounting rules made stock options relatively less attractive
due to the impact they now have on our financial statements.
Gains realized by officers upon exercise of stock options are
expected to qualify as performance-based compensation as defined
by 162(m) and be fully tax deductible.
Because they have intrinsic value when granted, restricted stock
with vesting conditions provide a stronger retention incentive
and result in executives sharing immediate downside risk with
shareholders. Using restricted stock also results in our using
fewer shares to deliver the same value and reduces potential
future dilution. However, gain realized by officers upon vesting
of restricted stock grants will not qualify as performance-based
compensation as defined by 162(m) and therefore may not be fully
tax deductible. After considering all of these factors,
management recommended and the Compensation Committee approved
the balanced approach used for 2006 grants.
The Compensation Committee determined that, although the
restricted stock may not qualify for the deduction under
Section 162(m) as it vests, such grants are a useful and
appropriate component of the overall compensation program that
promotes both shareholder value and management continuity. The
Compensation Committee considered the impact of potential lost
tax deductions resulting from such restricted stock grants and
determined, based on various assumptions, that they would not be
material to Pediatrixs overall tax liability. The grants
are valued and accounted for pursuant to the requirements of
FAS 123(R) for equity awards that are subject to time
vesting.
The Compensation Committee makes annual equity awards. In 2006,
those awards were made at the Compensation Committees
regularly scheduled meeting on June 1, 2006. The
Compensation Committee determines the effective date of such
awards without regard to current or anticipated stock price
levels. The Compensation Committee also may make, and in the
past has made, special grants during the course of the year,
primarily for new hires, promotions, to retain valued employees
or to award exceptional performance. These special grants may be
subject to performance or time vesting, and are issued on the
date of grant approval or upon a date certain following the
grant approval date, such as the date on which a new hire
commences his or her employment with the Company.
In discharging its responsibility for administering the
Companys stock-based compensation programs, the
Compensation Committee regularly monitors and evaluates the
total cost of such programs. Each year, Watson Wyatt prepares an
analysis of the Companys programs in the areas of total
share utilization, annual grant rates, and operating expense as
compared to peer companies. The analysis results are used by the
Compensation Committee in evaluating managements annual
equity grant recommendations for all program participants,
including the named executive officers. Overall, the
Companys total stock compensation costs for all program
participants historically have approximated the
75th percentile of peer company levels. In evaluating the
Companys total cost from stock compensation programs, the
Compensation Committee takes into consideration the fact that
compared to peer company practices, the Companys
retirement benefit programs are relatively conservative,
particularly for the named executive officers.
For a number of years, the Company has implemented enhanced
equity grant procedures. Stemming, in part, from the results of
our Audit Committees review of historical stock option
granting practices, the Board of Directors has adopted further
revised procedures designed to promote the proper authorization,
documentation and accounting for all equity grants. As a result
of these enhancements, it is now our policy that the
Compensation Committee or the Board of Directors must formally
approve all equity awards during an in person or telephonic
meeting or by the unanimous written consent executed by all
members of the Compensation Committee or the Board of Directors,
as the case may be, it being understood that no equity award
granted pursuant to any such
20
written consent may have an effective date earlier than the date
that all executed counterparts of such unanimous written consent
are delivered to the General Counsel of the Company.
The exercise price for any equity award, the value of which is
based upon a grant date value of the Companys common
stock, will be the closing sales price for a share of the
Companys common stock as reported on the New York
Stock Exchange on the effective date of the grant as approved by
the Compensation Committee or the Board of Directors, which date
may not be prior to either the date such grant was approved or
the commencement date of employment of the employee to whom the
equity award is being made.
Subject to these policies and procedures, the Compensation
Committee or the Board of Directors may approve grants of equity
awards at any time. However, grants to employees other than
newly hired employees or prospective employees not yet hired may
be effective only on a date within a trading window
as defined by the Companys Policy Statement on Inside
Information and Insider Trading (effective February 2004), as
amended from time to time (the Insider Trading
Policy). For example, a grant approved by the Compensation
Committee or the Board of Directors during a
black-out period (as defined in such policy) will be
effective on a date during the next trading window
as determined by the Compensation Committee or the Board of
Directors on the date such grant is approved.
The Company has not adopted any stock ownership guidelines for
its executives or directors. The Compensation Committee does,
however, periodically review the levels of equity ownership by
its executives. The May 2006 report from Watson Wyatt contained
information reviewed by the Compensation Committee with respect
to values of the Company stock owned by each of the named
executive officers, the percentages of total stock ownership of
the Company owned by each, and the multiples of salary owned by
each, and compared that information to stock ownership by
executives within the Companys peer group. The
Compensation Committee does take that information into account
in determining equity awards.
Our insiders can only buy or sell Company stock in
accordance with our Insider Trading Policy and our employees
generally can only buy or sell Company stock in accordance with
our Statement of Policy Prohibiting Insider Trading To All
Employees (effective August 2003).
Retirement
and Deferred Compensation Plans
We maintain the Pediatrix Medical Group Thrift and Profit
Sharing Plan (the 401(k) Plan), which is a
401(k) plan, to enable eligible employees to save for retirement
through a tax-advantaged combination of elective employee
contributions and our matching contributions, and provide
employees the opportunity to directly manage their retirement
plan assets through a variety of investment options. The 401(k)
Plan allows eligible employees to elect to contribute from 1% to
60% of their eligible compensation to an investment trust on a
pre-tax basis, up to the maximum dollar amounts permitted by
law. In 2006, the maximum employee elective contribution to the
401(k) Plan was $15,000, plus an additional $5,000 for employees
who were at least 50 years old in 2006. Eligible
compensation generally means all wages, salaries and fees for
services from the Company. Matching contributions under the
401(k) Plan are discretionary. For 2006, the Company matched
100% of the first 4% of eligible compensation that each eligible
participant elected to be contributed to the 401(k) Plan on his
or her behalf. The portion of an employees account under
the 401(k) Plan that is attributable to matching contributions
vests as follows: 30% after 1 year of service, 60% after
2 years of service, and 100% after 3 years of service.
However, regardless of the number of years of service, an
employee is fully vested in our matching contributions (and the
earnings thereon) if the employee retires at age 65 or
later, or terminates employment by reason of death or total and
permanent disability. The 401(k) Plan provides for 30 different
investment options, in which the employees and the
Companys contributions are invested. One of those
investments is a fund that is invested solely in the
Companys common stock.
Although the Company maintains a non-qualified deferred
compensation plan, none of the named executive officers
participates in that Plan.
The amounts of the Companys matching contributions under
the 401(k) Plan for 2006 for each of the named executives is
included in the All Other Compensation column of the Summary
Compensation Table.
21
Other
Benefits and Perquisites
We provide officers with certain benefits designed to protect
them and their immediate families in the event of illness,
disability, or death. We believe it is necessary to provide
these benefits in order for us to be successful in attracting
and retaining executives in a competitive marketplace, and to
provide financial security in these circumstances. Named
executive officers are eligible for health and welfare benefits
available to all eligible Company employees during active
employment under the same terms and conditions. These benefits
include medical, dental, vision, short-term and long-term
disability and group-term life insurance coverage.
Pursuant to the terms of their employment agreements,
Dr. Medel and Messrs. Calabro and Wagner each are
entitled to not less than 38 days, and Mr. Hawkins is
entitled to not less than 28 days, paid leave time each
year for vacation, illness, injury and other similar purposes in
accordance with our policies in effect from time to time. Any
leave time not used during a calendar year may be carried over
to the next year to the extent permitted under those policies.
Dr. Medel and Mr. Calabro each are entitled under
their employment agreements, to utilize our aircraft for
personal travel. Dr. Medels personal use of the
aircraft may not exceed 75 hours of flight in any calendar
year, and Mr. Calabros personal use of the aircraft
may not exceed 40 hours of flight in any calendar year,
without the consent of the Compensation Committee.
Dr. Medel did utilize our aircraft for personal travel in
2006 but Mr. Calabro did not do so. The incremental cost to
the Company of these benefits for Dr. Medel is included in
All Other Compensation column of the Summary Compensation Table.
The Compensation Committee has reviewed our perquisites
expenditures, and believes they continue to be an important
element of the overall compensation package to retain current
officers, and in fact command a higher perceived value than the
actual cost.
Termination
of Employment and Change in Control Agreements
As described in greater detail below, the employment agreements
between the Company and each of the named executive officers
provide for the payment of certain compensation and benefits in
the event of the termination of an executives employment,
the amount of which varies depending upon the reason for such
termination. The Compensation Committee has reviewed the
essential terms of these termination provisions, and believes
they are reasonable, appropriate, and generally consistent with
market practice. Those provisions include a reimbursement by the
Company to the executive of any excise tax imposed upon the
executive pursuant to Section 4999 of the Code with respect
to any excess parachute payments, as that term is
defined in Section 280G of the Code, that the executive
receives as a result of a change in control of the Company (as
defined in the employment agreements). The effects of
Section 4999 are unpredictable and can have widely
divergent and unexpected effects based on an executives
personal compensation history. Therefore, to provide an equal
level of benefit across individuals without regard to the effect
of the excise tax, the Company has determined that the
Section 4999 gross up payments are appropriate for the
Companys most senior level executives.
22
Summary
Compensation Table
The following table sets forth the 2006 compensation for our
principal executive officer, principal financial officer, and
all of our other executive officers.
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Non-equity
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Stock
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Option
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Incentive Plan
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All Other
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Total
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Name and Principal Position
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Year
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Salary
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Bonus
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Awards(1)
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Awards(2)
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Compensation
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Compensation
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Compensation
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Roger J. Medel, M.D.
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2006
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$
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800,000
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$
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1,478,223
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$
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668,986
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$
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945,846
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$
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50,516
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(3)
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$
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2,997,725
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Chief Executive Officer
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Joseph M. Calabro
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2006
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$
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515,000
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$
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1,477,629
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$
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455,950
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$
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608,888
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$
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9,424
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(4)
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$
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2,458,003
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President and
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Chief Operating Officer
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Karl B. Wagner
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2006
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$
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430,000
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$
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1,108,231
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$
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341,965
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$
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508,392
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$
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9,424
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(4)
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$
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1,889,620
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Chief Financial
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Officer and Treasurer
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Thomas W. Hawkins
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2006
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$
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400,000
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$
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739,172
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$
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365,537
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$
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472,923
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$
|
624
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(5)
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$
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1,505,333
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Senior Vice President,
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General Counsel and Secretary
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(1)
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Stock awards consist of time-vested
restricted stock awards. The amounts in this column do not
reflect compensation actually received by the named executive
officer nor do they reflect the actual value that will be
recognized by the named executive officer. See the Grants of
Plan-Based Awards Table for information on restricted stock
awards granted in 2006. Instead, the amounts reflect the
compensation cost recognized by us in fiscal year 2006 for
financial statement reporting purposes in accordance with
SFAS 123(R) for stock awards granted in and prior to 2006.
For information regarding the assumptions made in calculating
the amounts reflected in this column, see the section entitled
Stock Incentive Plans and Stock Purchase Plans in
Note 2 to our Consolidated Financial Statements included in
our 2006 Annual Report to Shareholders.
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(2)
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The amounts in this column do not
reflect compensation actually received by the named executive
officer nor do they reflect the actual value that will be
recognized by the named executive officer. See the Grants of
Plan-Based Awards Table for information on stock options granted
in 2006. Instead, the amounts reflect the compensation cost
recognized by us in fiscal year 2006 for financial statement
reporting purposes in accordance with SFAS 123(R) for stock
options granted in and prior to 2006. For information regarding
the assumptions made in calculating the amounts reflected in
this column, see the section entitled Stock Incentive
Plans and Stock Purchase Plans in Note 2 to our
Consolidated Financial Statements included in our 2006 Annual
Report to Shareholders.
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(3)
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Reflects incremental costs of
$41,092 for Dr. Medels personal use of an aircraft,
which Pediatrix owns pursuant to a fractional ownership program,
in accordance with his employment agreement, $8,800 for 401(k)
thrift and profit sharing matching contributions, and $624 for
term life insurance coverage. Also includes costs incurred by
Pediatrix for spousal travel to and entertainment (recreational
activities) at the Pediatrix board retreat which do not exceed
the greater of $25,000 or 10% of the total amount of perquisites
and personal benefits received.
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(4)
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Reflects $8,800 for 401(k) thrift
and profit sharing matching contributions and $624 for term life
insurance coverage.
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(5)
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Reflects $624 for term life
insurance coverage.
|
23
Grants
of Plan-Based Awards in 2006
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All Other
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All Other
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Grant
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Stock
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Option
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Exercise
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Date
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Awards:
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Awards:
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or Base
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Fair
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Estimated Future Payouts
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Estimated Future Payouts
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Number of
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Number of
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Price of
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Value of
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Under Non-Equity
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Under Equity
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Shares of
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Securities
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Option
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Stock and
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Incentive Plan Awards(1)
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Incentive Plan Awards
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Stock or
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|
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Underlying
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|
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Awards
|
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Option
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Name
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Grant 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(2)
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Options(3)
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($/Sh)(4)
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|
Awards(5)
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|
Roger J. Medel, M.D.
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|
6/1/06
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|
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|
|
|
|
|
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|
|
20,833
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|
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$
|
931,235
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|
|
|
6/1/06
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|
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62,500
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$
|
44.70
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|
$
|
903,750
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|
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|
$
|
0
|
|
|
$
|
800,000
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|
|
$
|
1,200,000
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|
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Joseph M. Calabro
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6/1/06
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|
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|
|
|
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|
|
15,625
|
|
|
|
|
|
|
|
|
|
|
$
|
698,438
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|
|
|
6/1/06
|
|
|
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|
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|
46,875
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$
|
44.70
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|
|
$
|
677,813
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|
|
|
|
|
$
|
0
|
|
|
$
|
515,000
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|
|
$
|
772,500
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|
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|
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|
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|
|
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|
|
Karl B. Wagner
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|
6/1/06
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,719
|
|
|
|
|
|
|
|
|
|
|
$
|
523,839
|
|
|
|
6/1/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,156
|
|
|
$
|
44.70
|
|
|
$
|
508,356
|
|
|
|
|
|
$
|
0
|
|
|
$
|
430,000
|
|
|
$
|
645,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas W. Hawkins
|
|
6/1/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,417
|
|
|
|
|
|
|
|
|
|
|
$
|
465,640
|
|
|
|
6/1/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,250
|
|
|
$
|
44.70
|
|
|
$
|
451,875
|
|
|
|
|
|
$
|
0
|
|
|
$
|
400,000
|
|
|
$
|
600,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
(1)
|
|
These columns reflect the range of
payouts for 2006 annual cash bonuses under the Pediatrix 2004
Incentive Compensation Plan. Amounts actually earned in 2006 are
reported as Non-Equity Incentive Plan Compensation in the
Summary Compensation Table. For a more detailed description of
the annual cash awards, see the section entitled Annual
Bonuses in the Compensation Discussion and Analysis.
|
|
(2)
|
|
Represents restricted stock awards
granted under the Pediatrix 2004 Incentive Compensation Plan.
The restricted stock awards for all of the named executive
officers vest in three equal annual installments beginning on
June 1, 2007. For a more detailed description of our
restricted stock and restricted stock granting policies, see the
sections entitled Restricted Stock Awards and
Equity Grant Practices in the Compensation
Discussion and Analysis.
|
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(3)
|
|
Represents stock option awards
granted under the Pediatrix 2004 Incentive Compensation Plan.
The stock option awards for all of the named executive officers
vest in three equal annual installments beginning on
June 1, 2007. For a more detailed description of our stock
options and stock option granting policies, see the sections
entitled Stock Options and Equity Grant
Practices in the Compensation Discussion and Analysis.
|
|
(4)
|
|
This column shows the exercise
price for the stock options granted, which was the closing price
of a share of Pediatrixs common stock on the New York
Stock Exchange on June 1, 2006.
|
|
(5)
|
|
The grant date fair value of the
restricted stock and stock option awards is determined pursuant
to SFAS 123(R) and represents the total amount that we will
expense in our financial statements over the relevant vesting
period. For information regarding the assumptions made in
calculating the amounts reflected in this column, see the
section entitled Stock Incentive Plans and Stock Purchase
Plans in Note 2 to our Consolidated Financial
Statements included in our 2006 Annual Report to Shareholders.
|
24
Outstanding
Equity Awards at 2006 Fiscal Year-End
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|
|
Option Awards
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|
Stock Awards
|
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Equity
|
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|
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|
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Incentive
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Market or
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
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|
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|
|
|
|
|
|
Plan Awards:
|
|
|
Payout
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned
|
|
|
Unearned
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares,
|
|
|
Shares,
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Market Value
|
|
|
Units or
|
|
|
Units or
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
of Shares or
|
|
|
Other
|
|
|
Other
|
|
|
|
Securities
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of Stock
|
|
|
Rights
|
|
|
Rights
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Option
|
|
|
Option
|
|
|
Stock That
|
|
|
That Have
|
|
|
That Have
|
|
|
That Have
|
|
|
|
Options
|
|
|
Options
|
|
|
Unearned
|
|
|
Exercise
|
|
|
Expiration
|
|
|
Have Not
|
|
|
Not Yet
|
|
|
Not Yet
|
|
|
Not Yet
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Awards
|
|
|
Price
|
|
|
Date
|
|
|
Yet Vested
|
|
|
Vested(1)
|
|
|
Vested
|
|
|
Vested
|
|
|
Roger J. Medel, M.D.
|
|
|
50,000
|
(2)
|
|
|
|
|
|
|
|
|
|
$
|
18.15
|
|
|
|
12/17/2011
|
|
|
|
44,444
|
(7)
|
|
$
|
2,173,312
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
(3)
|
|
|
|
|
|
|
|
|
|
$
|
19.92
|
|
|
|
12/16/2012
|
|
|
|
20,833
|
(8)
|
|
$
|
1,018,734
|
|
|
|
|
|
|
|
|
|
|
|
|
400,000
|
(4)
|
|
|
|
|
|
|
|
|
|
$
|
12.90
|
|
|
|
04/02/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
(5)
|
|
|
|
|
|
|
|
|
|
$
|
30.99
|
|
|
|
05/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,500
|
(6)
|
|
|
|
|
|
$
|
44.70
|
|
|
|
06/01/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph M. Calabro
|
|
|
50,000
|
(5)
|
|
|
|
|
|
|
|
|
|
$
|
30.99
|
|
|
|
05/20/2014
|
|
|
|
33,333
|
(7)
|
|
$
|
1,629,984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,875
|
(6)
|
|
|
|
|
|
$
|
44.70
|
|
|
|
06/01/2016
|
|
|
|
15,625
|
(8)
|
|
$
|
764,063
|
|
|
|
|
|
|
|
|
|
Karl B. Wagner
|
|
|
37,500
|
(5)
|
|
|
|
|
|
|
|
|
|
$
|
30.99
|
|
|
|
05/20/2014
|
|
|
|
25,000
|
(7)
|
|
$
|
1,222,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,156
|
(6)
|
|
|
|
|
|
$
|
44.70
|
|
|
|
06/01/2016
|
|
|
|
11,719
|
(8)
|
|
$
|
573,059
|
|
|
|
|
|
|
|
|
|
Thomas W. Hawkins
|
|
|
33,336
|
(5)
|
|
|
|
|
|
|
|
|
|
$
|
30.99
|
|
|
|
05/20/2014
|
|
|
|
22,222
|
(7)
|
|
$
|
1,086,656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,250
|
(6)
|
|
|
|
|
|
$
|
44.70
|
|
|
|
06/01/2016
|
|
|
|
10,417
|
(8)
|
|
$
|
509,391
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Based on a stock price of $48.90,
which was the closing price of a share of Pediatrixs
common stock on the New York Stock Exchange on December 29,
2006.
|
|
(2)
|
|
These stock options vested on
December 17, 2001.
|
|
(3)
|
|
These stock options vested on
December 17, 2002.
|
|
(4)
|
|
These stock options vested in three
equal installments on each of April 2, 2004, April 2,
2005 and April 2, 2006.
|
|
(5)
|
|
These stock options vested in three
equal installments on each of November 20, 2004,
November 20, 2005 and November 20, 2006.
|
|
(6)
|
|
These stock options vest in three
equal installments on each of June 1, 2007, June 1,
2008 and June 1, 2009.
|
|
(7)
|
|
These restricted stock grants vest
in two equal installments on each of June 1, 2007 and
June 1, 2008.
|
|
(8)
|
|
These restricted stock grants vest
in three equal installments on each of June 1, 2007,
June 1, 2008 and June 1, 2009.
|
25
Option
Exercises and Stock Vested in Fiscal Year 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards(1)
|
|
|
|
Number of Shares
|
|
|
|
|
|
Number of Shares
|
|
|
Value of Shares
|
|
|
|
Acquired Upon
|
|
|
Value Realized on
|
|
|
Acquired Upon
|
|
|
Acquired Upon
|
|
Name
|
|
Exercise
|
|
|
Exercise(2)
|
|
|
Vesting
|
|
|
Vesting(3)
|
|
|
Roger J. Medel, M.D.
|
|
|
113,600
|
|
|
$
|
2,749,064
|
|
|
|
22,222
|
|
|
$
|
1,026,434
|
|
Joseph M. Calabro
|
|
|
135,400
|
|
|
$
|
2,056,449
|
|
|
|
76,667
|
|
|
$
|
3,396,649
|
|
Karl B. Wagner
|
|
|
75,000
|
|
|
$
|
1,132,736
|
|
|
|
57,500
|
|
|
$
|
2,547,475
|
|
Thomas W. Hawkins
|
|
|
116,664
|
|
|
$
|
2,628,823
|
|
|
|
11,112
|
|
|
$
|
513,263
|
|
|
|
|
(1)
|
|
These columns reflect restricted
stock awards previously awarded to the named executive officer
that vested during 2006.
|
|
(2)
|
|
Calculated based on the sales price
received by the named executive upon the sale of the shares of
Pediatrix common stock acquired upon the exercise of such stock
options minus the exercise price of such options.
|
|
(3)
|
|
Calculated based on the closing
price of a share of Pediatrixs common stock on the New
York Stock Exchange on the vesting date.
|
Potential
Payments Upon Termination or
Change-in-Control
Each of the named executive officers has an employment agreement
with our Company that provides for the Company to make certain
payments and provide certain benefits to the executive upon
termination of employment with the Company. Those provisions are
summarized below.
Termination by Company for Cause. In the event
that an executives employment with the Company is
terminated by the Company for Cause (as defined in the
employment agreement), then the Company will pay the executive
his base salary through the termination date at the rate in
effect at the termination date and reimburse the executive for
any reasonable business expenses incurred through the date of
termination. In addition, if the executives employment is
terminated by reason of his failure or refusal to perform his
duties in any material respect as reasonably assigned to him,
then the Company will continue to pay the employee his base
salary for a period of 12 months after the termination date.
The term Cause is defined in each of the employment
agreements to mean (a) any act or omission of the
executive, which is materially contrary to the business
interests, reputation or goodwill of the Company; (b) a
material breach by the executive of the executives
obligations under his employment agreement, which breach is not
promptly remedied upon written notice from the Company;
(c) executives failure or refusal to perform
executives duties in any material respect as reasonably
assigned pursuant to his employment agreement, other than a
failure or refusal which is remedied by the executive promptly
after receipt of written notice thereof by the Company; or
(d) executives failure or refusal to comply with a
reasonable policy, standard or regulation of the Company in any
material respect, including but not limited to the
Companys sexual harassment, or other unlawful harassment,
work place discrimination or substance abuse policies.
Termination by executive due to poor health or due to
executives death. In the event that an
executive terminates his employment because his health has
become impaired to any extent that makes the continued
performance of his duties hazardous to the executives
physical or mental health or life or the executives
employment terminates because of his death, then the Company
will pay to the executive (or his estate) his base salary to the
termination date, pay the executive a pro rata portion of the
bonus that the executive would have received had his employment
not terminated (as determined in accordance with the employment
agreement) and reimburse the executive for any reasonable
business expenses incurred through the date of termination. In
addition, if the executive terminates his employment due to poor
health, the executive will receive any disability payments
otherwise payable under any plans provided by the Company.
Termination due to disability. If the
executives employment terminates by reason of his
Disability (as defined in his employment agreement), then the
Company will continue to pay to the executive his base salary
for the first 90 days of Disability. Thereafter, payments,
if any, will be administered pursuant to the Companys
long-term disability policy. The executive also would receive
50% of his annual base salary at the rate in effect at the
termination date, payable in 6 equal monthly installments after
the termination date, a pro-rata bonus for the year in which his
employment terminates and a reimbursement for any reasonable
business expenses incurred through the date of termination.
26
Termination by Company without Cause or by Executive for Good
Reason. If the Company terminates an
executives employment without Cause (as defined in the
employment agreement), the Company terminates the
executives employment for any reason within 24 months
after a Change in Control (as defined in the employment
agreement), or an executive terminates his employment for Good
Reason (as defined in the employment agreement), then the
Company will (a) pay executives base salary through
the termination date plus any reimbursement owed to the
executive for any reasonable business expenses incurred through
the date of termination, (b) continue to pay the
executives base salary for a period of 24 months
after the termination date, (c) on the first and second
anniversaries of the termination date, pay the executive an
amount equal to the lesser of his average annual
performance bonus or his bonus for the year immediately
preceding his termination, and (d) pay the executive a pro
rata portion of the bonus he would have received for the year in
which his employment terminates. For this purpose, average
annual performance bonus means the executives base
salary multiplied by a percentage equal to the average of the
percentages that the performance bonuses paid to the executive
for the three full calendar years prior to the termination bear
to the executives base salary for the calendar year for
which the performance bonus relates. If the termination is in
connection with a Change in Control (as defined in the
employment agreement), then the performance bonuses referred to
in (c) above would be paid to the executive in a lump sum
within 90 days of the termination date.
The employment agreement for each named executive officer
defines Good Reason to mean:
(a) the assignment to the executive of any duties
inconsistent in any material respect with the executives
position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as assigned
by executives supervisor, or any other action by the
Company that results in a material diminution in such position,
authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly
after receipt of written notice from the executive;
(b) any material failure by the Company to comply with its
obligations to pay the executive the compensation and benefits
provided under the executives employment agreement, other
than an isolated, insubstantial and inadvertent failure not
occurring in bad faith and which is remedied by the Company
promptly after receipt of written notice from the executive;
(c) the requirement by the Company that the executive be
based at any office or location outside of twenty-five
(25) miles from the location of the executives
service as of the date hereof, except for travel reasonably
required in the performance of the executives duties;
(d) a decrease in executives base salary or failure
to award incentive compensation as contemplated by the
executives employment agreement;
(e) the failure of the Company to set a performance bonus
target in accordance with the executives employment
agreement or to pay a performance bonus otherwise due to the
executive;
(f) the termination by the Company of the employment of two
(2) Key Executives within one (1) year period or three
(3) Key Executives within a two (2) year period. For
this purpose the employment agreement defines, Key
Executives to mean the individuals serving as the
Companys Chief Executive Officer, President, Chief
Financial Officer and General Counsel as of the date on which
the employment agreement was entered into; or
(g) a Change in Control of the Company. For purposes of the
employment agreement, Change in Control is defined
to mean (i) the acquisition by a person or an entity or a
group of persons and entities, directly or indirectly, of more
than fifty (50%) percent of the Companys common stock in a
single transaction or a series of transactions (hereinafter
referred to as a 50% Change in Control); (ii) a
merger or other form of corporate reorganization resulting in an
actual or de facto 50% Change in Control; or (iii) the
failure of Applicable Directors (defined below) to constitute a
majority of the Companys Board of Directors during any two
(2) consecutive year period after the date of the agreement
(the Two-Year Period). Applicable
Directors shall mean those individuals who are members of
the Board of Directors at the inception of the Two-Year Period
and any new director whose election to the Board of Directors or
nomination for election to the Board of Directors was approved
(prior to any vote thereon by the shareholders) by a vote of at
least two thirds (2/3) of the directors then still in office who
either were directors at the beginning of the Two Year Period at
27
issue or whose election or nomination for election during such
Two-Year Period was previously approved as provided in this
sentence.
Termination by employee. If the executive
terminates his employment other than for Good Reason (as defined
in his employment agreement), the Company will continue to pay
the executive his base salary for a period of 90 days, and
if in connection with such termination the executive gives
sufficient notice and executes a general release of the Company,
the Company will pay the executive a pro rata portion of the
bonus that the executive would have received had his employment
not terminated (as determined in accordance with the employment
agreement). In addition, the Company will reimburse the
executive for any reasonable business expenses incurred through
the date of termination. If the Company specifies a termination
date that is less than 90 days after the Companys
receipt of written notice of such termination from the
executive, then the Company will continue to pay to the
executive his base salary for a period equal to 90 days
minus the number of days from the executives notice of the
termination date.
Continuation of benefit plans. The employment
agreements for each of the named executive officers also provide
for the continuation of health, medical, hospitalization and
other similar health insurance programs as if the executive were
still an employee of the Company during any period during which
the executive is entitled to a continuation of his base salary
on account of the termination of his employment by reason of his
Disability, by the Company without Cause, or by the executive
for Good Reason. In addition, if (a) the executive has been
an employee of the Company for at least 5 years,
(b) the termination is for any reason other than by the
Company for Cause, and (c) if requested by the Company, the
executive continues to provide certain transition services to
the Company (see discussion below), then the executive and his
dependents will be entitled to continue to participate in the
Companys group health and welfare plans for a period of
5 years following the termination date (or the last day of
the period during which he provides transition services) at the
same cost to the executive (or the executives family in
the case of the executives death) as such benefits are
provided to other similarly situated active employees of the
Company.
Payments in the event of a Change in Control of the
Company. Each of the employment agreements for
the named executive officers requires the Company to increase or
gross-up
any amounts payable to an executive that are contingent upon a
Change in Control (as defined in the employment agreements) by
an amount that will reimburse the executive, on an after-tax
basis, for any excise tax imposed under Section 4999 of the
Internal Revenue Code of 1986, as amended, on any amounts that
are deemed to be excess parachute payments, and for
any interest or penalties incurred by an executive with respect
to any such excise tax. In addition, in the event of a Change in
Control (as defined in the employment agreements), all unvested
stock options, stock appreciation rights, restricted stock and
other incentive compensation awards held by the executive will
automatically vest and, in the case of stock options, become
immediately exercisable. The executive also will be allowed a
period of 12 months after termination of employment for any
reason during which to exercise any vested options that may be
granted under the Companys 2004 Incentive Compensation
Plan and/or
any other similar plan adopted by the Company.
Employment transition and severance
agreement. If the Company so requests within five
business days following a termination of the executives
employment by reason of the executives disability,
termination by the Company without Cause, termination by the
executive due to poor health, or termination by the executive
for Good Reason, then the executive will continue to be employed
by the Company on a part time basis for a period (the
transition period) to be determined by the Company
of up to 90 days, unless extended by mutual agreement.
During this transition period, the executive is required to
perform such services as may reasonably be required for the
transition to others of matters previously within the
executives responsibilities. Unless otherwise mutually
agreed, the executive will not be required to serve more than
five days per month during the transition period. For services
during the transition period, the executive will be compensated
at a daily rate equal to his base salary immediately prior to
the termination of his employment divided by 365. In addition,
if the executive fully satisfies his obligations during the
transition period and complies with the various restrictive
covenants contained in his employment agreement, then all stock
options, restricted stock and other incentive compensation
awards granted to the executive by the Company prior to
termination of employment will continue to vest.
Payments of Unused Leave Time. In accordance
with the Companys Paid Time Off policies, an executive
will be paid any earned but unused paid time off upon
termination. This payment shall occur in all termination events.
In addition to the leave time that the executive accrues in any
year, such executive may carry forward fifteen
28
days of leave time from the prior year; therefore, the maximum
payout upon termination for each executive would be the value of
such executives contracted annual leave time plus fifteen
carry-over days.
Restrictive Covenants. Pursuant to his
employment agreement, each executive officer is subject to
certain restrictive covenants that survive termination of
employment. If the executive fails to comply with any of those
restrictive covenants, he will not be entitled to receive any
further payments or benefits as a result of the termination of
his employment (other than his base salary through the date of
termination and reimbursement of any reasonable business
expenses incurred through the date of termination.) In addition,
the Company then will have the right to terminate without
advance notice any future payments and benefits of every kind
that otherwise would be due to the executive on account of his
termination of employment.
The following tables illustrate the payments and benefits that
each named executive officer would have received under his
employment agreement if his employment with the Company had
terminated for any of the reasons described above on
December 31, 2006. The amounts presented in the tables are
estimates only and do not necessarily reflect the actual value
of the payments and other benefits that would be received by the
named executive officers, which would only be known at the time
that employment actually terminates.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Triggering Event
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By the
|
|
|
By Executive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By Company
|
|
|
Company by
|
|
|
Due to Poor
|
|
|
|
|
|
|
|
|
By Executive
|
|
|
|
|
|
w/out Cause or
|
|
|
Reason of
|
|
|
Health or Due
|
|
|
|
|
|
Change in
|
|
|
Without Good
|
|
|
By Company
|
|
|
by Executive for
|
|
|
Executives
|
|
|
to Executives
|
|
Executive
|
|
Compensation Components
|
|
Control
|
|
|
Reason
|
|
|
for Cause
|
|
|
Good Reason
|
|
|
Disability
|
|
|
Death
|
|
|
Roger J. Medel, M.D.
|
|
Cash Severance(1)
|
|
|
|
|
|
$
|
1,143,106
|
|
|
|
|
(5)
|
|
$
|
4,347,984
|
|
|
$
|
1,343,106
|
|
|
$
|
945,846
|
|
|
|
Long term Incentives(2)
|
|
$
|
3,454,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Welfare Benefits and PTO(3)
|
|
|
|
|
|
$
|
241,407
|
|
|
$
|
163,080
|
|
|
$
|
241,407
|
|
|
$
|
241,407
|
|
|
$
|
241,407
|
|
|
|
Section 280G Gross-up(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Benefit to
Employee
|
|
$
|
3,454,545
|
|
|
$
|
1,384,513
|
|
|
$
|
163,080
|
|
|
$
|
4,589,391
|
|
|
$
|
1,584,513
|
|
|
$
|
1,187,253
|
|
Joseph M. Calabro
|
|
Cash Severance(1)
|
|
|
|
|
|
$
|
735,874
|
|
|
|
|
(6)
|
|
$
|
2,797,919
|
|
|
$
|
864,624
|
|
|
$
|
608,888
|
|
|
|
Long term Incentives(2)
|
|
$
|
2,590,921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Welfare Benefits and PTO(3)
|
|
|
|
|
|
$
|
164,351
|
|
|
$
|
104,983
|
|
|
$
|
164,351
|
|
|
$
|
164,351
|
|
|
$
|
164,351
|
|
|
|
Section 280G Gross-up(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Benefit to
Employee
|
|
$
|
2,590,921
|
|
|
$
|
900,225
|
|
|
$
|
104,983
|
|
|
$
|
2,962,270
|
|
|
$
|
1,028,975
|
|
|
$
|
773,239
|
|
Karl B. Wagner
|
|
Cash Severance(1)
|
|
|
|
|
|
$
|
614,419
|
|
|
|
|
(7)
|
|
$
|
2,336,177
|
|
|
$
|
721,919
|
|
|
$
|
508,392
|
|
|
|
Long term Incentives(2)
|
|
$
|
1,943,214
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Welfare Benefits and PTO(3)
|
|
|
|
|
|
$
|
165,521
|
|
|
$
|
87,656
|
|
|
$
|
165,521
|
|
|
$
|
165,521
|
|
|
$
|
165,521
|
|
|
|
Section 280G Gross-up(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Benefit to
Employee
|
|
$
|
1,943,214
|
|
|
$
|
779,940
|
|
|
$
|
87,656
|
|
|
$
|
2,501,698
|
|
|
$
|
887,440
|
|
|
$
|
673,913
|
|
Thomas W. Hawkins
|
|
Cash Severance(1)
|
|
|
|
|
|
$
|
571,553
|
|
|
|
|
(8)
|
|
$
|
2,173,108
|
|
|
$
|
671,553
|
|
|
$
|
472,923
|
|
|
|
Long term Incentives(2)
|
|
$
|
1,727,297
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Welfare Benefits and PTO(3)
|
|
|
|
|
|
$
|
67,428
|
|
|
$
|
66,155
|
|
|
$
|
76,844
|
|
|
$
|
68,700
|
|
|
$
|
66,155
|
|
|
|
Section 280G Gross-up(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Benefit to
Employee
|
|
$
|
1,727,297
|
|
|
$
|
638,981
|
|
|
$
|
66,155
|
|
|
$
|
2,249,952
|
|
|
$
|
740,253
|
|
|
$
|
539,078
|
|
|
|
|
(1)
|
|
Cash severance includes:
(i) in the case of a termination by the executive without
Good Reason (as defined in the executives employment
agreement), continuation of base salary for 90 days, the
actual performance bonus on a pro rata basis that would have
been payable to executive for the fiscal year if executive had
not been terminated so long as executive gives sufficient notice
and executes a general release of Company and a reimbursement
for any reasonable business expenses incurred through the date
of termination, (ii) in the case of termination by the
Company without Cause or by the executive for Good Reason,
(a) continuation of base salary through the termination
date, plus any reimbursement owed to the executive for any
reasonable business expenses incurred through the date of
termination, (b) continuation of base salary for
24 months after the termination date, (c) on the first
and second anniversaries of the termination date, the lesser of
the executives average annual performance
bonus (as defined in the executives employment
agreement) or his prior years bonus (this amount is paid
as a lump sum if the termination is in connection with a Change
in Control (as defined in the executives employment
agreement)) and (d) the actual performance bonus on a pro
rata basis that would have been payable to executive for the
fiscal year if executive had not been terminated, (iii) in
the case of termination by the Company on account of the
executives Disability (as defined in the executives
employment agreement), continuation of base salary for
90 days, continuation of 50% of base salary for an
additional 6 months, the actual performance bonus on a pro
rata basis that would have been payable to executive for the
fiscal year if executive had not been terminated and a
reimbursement for any reasonable business expenses incurred
through the date of termination, and (iv) in the case of
termination by the
|
29
|
|
|
|
|
executive due to executives
Poor Health or Death (as defined in the executives
employment agreement), the executives base salary through
the termination date, the actual performance bonus on a pro rata
basis that would have been payable to executive for the fiscal
year if executive had not been terminated and a reimbursement
for any reasonable business expenses incurred through the date
of termination.
|
|
(2)
|
|
This amount reflects the intrinsic
value (i.e. the amount by which the closing price of a share of
the Companys common stock on the New York Stock Exchange
on December 31, 2006 ($48.90) exceeded the exercise price)
of each of the executives unvested stock options that
would become vested as a result of a Change in Control. Also
included is the value of each of the executives unvested
restricted shares as of December 31, 2006 that would become
vested as a result of a Change in Control. Those are the only
equity awards outstanding as of December 31, 2006 for named
executive officers as to which there would be any acceleration
of vesting if a Change in Control had occurred on
December 31, 2006. This accelerated vesting will occur
whether or not the executives employment is terminated.
|
|
(3)
|
|
These amounts are based on the
current cost to us of providing the named executives
current medical, dental, vision and life insurance coverage
during the period over which base salary continuation is
required as described above. In the case of Dr. Medel and
Messrs. Calabro and Wagner, who were employed for at least
5 years on December 31, 2006, the Company provides
such coverage for 5 years after termination of the
executives employment. The cost of these welfare benefits
was derived by using the current cost to the Company and
increasing such cost by 10% per year for the applicable period.
The Company continues to pay the employer portion of these
welfare benefits during the applicable period, provided that the
employee must continue to make the required employee
contributions. These amounts also include the value of accrued
but unused paid leave time off (PTO) as of December 31,
2006, (assuming executive used no leave time during 2006 and had
the maximum amount of leave time from 2005 (15 days)
carried over into the 2006 leave time balance) which would be
payable regardless of the reason for termination. In the case of
termination by Company for Cause, executive is only entitled to
the value of accrued but unused PTO.
|
|
(4)
|
|
If both a change in control
occurred and the executives employment terminated on
December 31, 2006, and the executive received the estimated
payments shown in the Change in Control column of this table on
that date, those payments would not have resulted in any excess
parachute payments under Section 280G of the Internal
Revenue Code of 1986, as amended, and thus no
gross-up
payments would have been required with respect to those
payments. Whether or not a payment will constitute an
excess parachute payment, however, depends not only
upon the value of the payments that are contingent upon a change
in control but also upon the average of an executives
W-2
compensation for the 5 years immediately prior to the year
in which the change in control occurs. Thus, facts and
circumstances at the time of any change in control and
termination thereafter, as well as changes in the
executives compensation history preceding the change in
control, could materially impact whether and to what extent any
excise tax would be imposed and therefore the amount of any
gross-up
payment.
|
|
(5)
|
|
If the executive is terminated for
cause by reason of his failure or refusal to perform his duties
in any material respect as reasonably assigned to him, then
Company will continue to pay the executive his base salary for
12 months after the termination date, which would be in the
amount of $800,000.
|
|
(6)
|
|
If the executive is terminated for
cause by reason of his failure or refusal to perform his duties
in any material respect as reasonably assigned to him, then
Company will continue to pay the executive his base salary for
12 months after the termination date, which would be in the
amount of $515,000.
|
|
(7)
|
|
If the executive is terminated for
cause by reason of his failure or refusal to perform his duties
in any material respect as reasonably assigned to him, then
Company will continue to pay the executive his base salary for
12 months after the termination date, which would be in the
amount of $430,000.
|
|
(8)
|
|
If the executive is terminated for
cause by reason of his failure or refusal to perform his duties
in any material respect as reasonably assigned to him, then
Company will continue to pay the executive his base salary for
12 months after the termination date, which would be in the
amount of $400,000.
|
30
In 2006, each non-employee Director received the following:
(i) an annual retainer fee of $50,000, payable quarterly,
(ii) an annual fee of $7,500 for attendance at meetings,
payable quarterly, (iii) an additional retainer fee of
$50,000, payable quarterly, for the Chairman of the Board of
Directors, (iv) an additional retainer of $20,000, payable
quarterly, for the chair of the Audit Committee, and (v) an
additional retainer of $10,000 per committee, payable quarterly,
for the chair of any committee of the Board of Directors other
than the Audit Committee. In addition, it is Pediatrixs
policy to award annually (on the date of each annual
shareholders meeting) to each non-employee Director
options vesting in three equal annual installments over a
3-year
period commencing on the anniversary of the date of grant to
purchase 5,334 shares of Pediatrix common stock at an
exercise price equal to the closing price of a share of
Pediatrixs common stock on the New York Stock Exchange on
the date of grant.
It has also been and continues to be Pediatrixs policy to
award each non-employee Director upon his or her initial
appointment to the Board of Directors an option to purchase
13,334 shares of Pediatrix common stock effective on the
date of such non-employee Directors appointment, at an
exercise price equal to the closing price of a share of
Pediatrixs common stock on the New York Stock Exchange on
the date of grant with a three year vesting period. We grant
stock options to purchase Pediatrix common stock to our
Directors because we believe that it helps foster a long-term
perspective and aligns our Directors interests with that
of our shareholders. Pediatrix also reimburses all of its
Directors for out-of-pocket expenses incurred in connection with
the rendering of services as a Director.
See Executive Compensation for information regarding
Dr. Medels compensation as Chief Executive Officer of
Pediatrix.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
|
Option
|
|
|
All Other
|
|
|
Total
|
|
Name(1)
|
|
Paid in Cash(2)
|
|
|
Awards(3)
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Cesar L. Alvarez
|
|
$
|
107,500
|
|
|
$
|
35,211
|
|
|
$
|
0
|
|
|
$
|
142,711
|
|
Waldemar A. Carlo, M.D.
|
|
$
|
65,000
|
|
|
$
|
35,211
|
|
|
$
|
0
|
|
|
$
|
100,211
|
|
Michael B. Fernandez
|
|
$
|
60,000
|
|
|
$
|
35,211
|
|
|
$
|
0
|
|
|
$
|
95,211
|
|
Roger K. Freeman, M.D.
|
|
$
|
67,500
|
|
|
$
|
35,211
|
|
|
$
|
0
|
|
|
$
|
102,711
|
|
Paul G. Gabos
|
|
$
|
77,500
|
|
|
$
|
35,211
|
|
|
$
|
0
|
|
|
$
|
112,711
|
|
Pascal J. Goldschmidt, M.D.(4)
|
|
$
|
43,125
|
|
|
$
|
168,311
|
|
|
$
|
0
|
|
|
$
|
211,436
|
|
Lawrence M. Mullen(5)
|
|
$
|
57,500
|
|
|
$
|
77,430
|
|
|
$
|
0
|
|
|
$
|
134,930
|
|
Enrique J. Sosa
|
|
$
|
57,500
|
|
|
$
|
77,430
|
|
|
$
|
0
|
|
|
$
|
134,930
|
|
|
|
|
(1)
|
|
This table includes all
non-employee directors who served as directors in 2006.
Compensation for Dr. Medel is disclosed in the Summary
Compensation Table. He does not earn additional income for his
service as a director.
|
|
(2)
|
|
This column reports the amount of
cash compensation earned in 2006 for Board and committee service.
|
|
(3)
|
|
This column represents the dollar
amount recognized for financial statement reporting purposes in
accordance with FAS 123(R) with respect to the 2006 fiscal
year for the fair value of stock options previously granted to
the directors. The options awarded to Drs. Freeman and
Carlo and Messrs. Alvarez, Fernandez and Gabos had a fair
value of $16.33 per share, based on assumptions of 4 years
expected life, expected volatility of 31%, and a risk free
interest rate of 5.01%. The options awarded to
Dr. Goldschmidt had a fair value of $17.14 per share, based
on assumptions of 4 years expected life, expected
volatility of 37%, and a risk free interest rate of 4.80%. The
options awarded to Messrs. Mullen and Sosa had a fair value
of $12.07 per share, based on assumptions of 3 years
expected life, expected volatility of 53%, and a risk free
interest rate of 3.12%. The following directors have outstanding
option awards at 2006 fiscal year-end for the following number
of shares of Pediatrix common stock: Mr. Alvarez (75,334),
Dr. Carlo (63,334), Mr. Fernandez (65,334),
Dr. Freeman (29,334), Mr. Gabos (49,334),
Dr. Goldschmidt (20,000), and Mr. Sosa (33,334).
|
|
(4)
|
|
Mr. Goldschmidt joined the
Board of Directors in March 2006.
|
|
(5)
|
|
Mr. Mullen resigned from the
Board of Directors in December 2006.
|
31
SHARE
OWNERSHIP INFORMATION
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires Pediatrixs
executive officers and Directors, and persons who own more than
10% of Pediatrixs common stock, to file with the
Securities and Exchange Commission reports of ownership and
changes in ownership of Pediatrix common stock. Our executive
officers, Directors and greater than 10% shareholders are also
required by rules promulgated by the Securities and Exchange
Commission to furnish Pediatrix with copies of all
Section 16(a) forms they file.
Based solely on a review of the copies of such reports furnished
to Pediatrix, the absence of a Form 3, 4 or 5, or
representations from certain reporting persons that no
Forms 5 were required, Pediatrix believes that all
Section 16(a) filing requirements applicable to its
officers, Directors and greater than 10% beneficial owners were
complied with during the fiscal year ended December 31,
2006 except that Dr. Medel and Messrs. Calabro,
Hawkins and Wagner each filed one Form 4 late by one day.
Each of the late Form 4s was filed on June 6, 2006 and
reported two transactions, the acquisition of restricted stock
and stock options pursuant to Pediatrixs 2004 Incentive
Compensation Plan that occurred on June 1, 2006.
Security
Ownership of Certain Beneficial Owners and Management
Pediatrix is not aware that any person beneficially owns more
than 5% of the outstanding shares of its common stock. The
following table sets forth information concerning the beneficial
ownership of common stock of Pediatrix as of September 12,
2007 for the following:
|
|
|
|
|
Each of our Directors;
|
|
|
|
Our Chief Executive Officer and the other executive officers of
Pediatrix who were serving as executive officers at the end of
the last completed fiscal year; and
|
|
|
|
All of our Directors and executive officers as a group.
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
|
Beneficially Owned(2)
|
|
Name of Beneficial Owner(1)
|
|
Shares
|
|
|
Percent
|
|
|
Roger J. Medel, M.D.(3)
|
|
|
825,480
|
|
|
|
1.7
|
%
|
Cesar L. Alvarez(4)
|
|
|
71,778
|
|
|
|
|
*
|
Waldemar A. Carlo, M.D.(5)
|
|
|
49,778
|
|
|
|
|
*
|
Michael B. Fernandez(6)
|
|
|
76,578
|
|
|
|
|
*
|
Roger K. Freeman, M.D.(7)
|
|
|
26,578
|
|
|
|
|
*
|
Paul G. Gabos(8)
|
|
|
45,778
|
|
|
|
|
*
|
Manuel Kadre(9)
|
|
|
|
|
|
|
|
*
|
Enrique J. Sosa, Ph.D.(10)
|
|
|
29,778
|
|
|
|
|
*
|
Pascal J.
Goldschmidt, M.D.(11)
|
|
|
6,667
|
|
|
|
|
*
|
Joseph M. Calabro(12)
|
|
|
138,131
|
|
|
|
|
*
|
Thomas W. Hawkins(13)
|
|
|
67,483
|
|
|
|
|
*
|
Karl B. Wagner(14)
|
|
|
106,524
|
|
|
|
|
*
|
All Directors and executive
officers as a group (12 persons)(15)
|
|
|
1,444,553
|
|
|
|
2.9
|
%
|
|
|
|
*
|
|
Less than one percent
|
|
(1)
|
|
Unless otherwise indicated, the
address of each of the beneficial owners identified is
c/o Pediatrix
Medical Group, Inc., 1301 Concord Terrace, Sunrise, Florida
33323. Each holder is a beneficial owner of common stock of
Pediatrix.
|
|
(2)
|
|
Based on 49,918,826 shares of
common stock issued and outstanding as of September 12,
2007. The number and percentage of shares beneficially owned is
determined in accordance with
Rule 13d-3
of the Exchange Act and the information is not necessarily
indicative of beneficial ownership for any other purpose. Under
that rule, beneficial ownership includes any shares as to which
the individual or entity has voting power or investment power
and any shares that the individual has the right to acquire
within 60 days of September 12, 2007,
|
32
|
|
|
|
|
through the exercise of any stock
option or other right. Unless otherwise indicated in the
footnotes or table, each person or entity has sole voting and
investment power, or shares such powers with his or her spouse,
with respect to the shares shown as beneficially owned.
|
|
(3)
|
|
Includes
(i) 51,389 shares of common stock directly owned;
(ii) 480 shares owned by Dr. Medels
children, as to which Dr. Medel disclaims beneficial
ownership; (iii) 720,834 shares of common stock
subject to options exercisable within 60 days of
September 12, 2007; and (iv) 52,777 shares of
unvested restricted stock which Dr. Medel presently has the
power to vote.
|
|
(4)
|
|
Includes
(i) 10,000 shares of common stock directly owned; and
(ii) 61,778 shares of common stock subject to options
exercisable within 60 days of September 12, 2007.
Mr. Alvarezs address is 1221 Brickell Avenue, 22nd
Floor, Miami, Florida 33131.
|
|
(5)
|
|
All 49,778 shares of common
stock are subject to options exercisable within 60 days of
September 12, 2007.
|
|
(6)
|
|
Includes
(i) 14,800 shares of common stock directly owned; and
(ii) 61,778 shares of common stock subject to options
exercisable within 60 days of September 12, 2007.
|
|
(7)
|
|
Includes (i) 800 shares
of common stock directly owned; and (ii) 25,778 shares
of common stock subject to options exercisable within
60 days of September 12, 2007.
|
|
(8)
|
|
All 45,778 shares of common
stock are subject to options exercisable within 60 days of
September 12, 2007.
|
|
(9)
|
|
Mr. Kadre was elected as a
Director in May 2007 and upon his election was awarded options
to acquire 13,334 shares of common stock with a three year
vesting period. None of these options is exercisable within
60 days of September 12, 2007.
|
|
(10)
|
|
All 29,778 shares of common
stock are subject to options exercisable within 60 days of
September 12, 2007.
|
|
(11)
|
|
All 6,667 shares of common
stock are subject to options exercisable within 60 days of
September 12, 2007.
|
|
(12)
|
|
Includes
(i) 98,542 shares of common stock directly owned;
(ii) 2 shares which were acquired by Mr. Calabro
through Pediatrixs employee stock purchase plans;
(iii) 2 shares directly owned by his wife which were
acquired through Pediatrixs employee stock purchase plans
and as to which Mr. Calabro disclaims beneficial ownership;
(iv) 2 shares subject to options exercisable within
60 days of September 12, 2007 held by his wife and as
to which Mr. Calabro disclaims beneficial ownership; and
(v) 39,583 shares of unvested restricted stock which
Mr. Calabro presently has the power to vote.
|
|
(13)
|
|
Includes
(i) 30,678 shares of common stock directly owned;
(ii) 10,417 shares of common stock subject to options
exercisable within 60 days of September 12, 2007; and
(iii) 26,388 shares of unvested restricted stock which
Mr. Hawkins presently has the power to vote.
|
|
(14)
|
|
Includes
(i) 73,907 shares of common stock beneficially owned
by RMMR Properties L.P., a Delaware limited partnership
controlled by Mr. Wagner (RMMR);
(ii) 696 shares accumulated through Pediatrixs
401(k) thrift and profit sharing plans;
(iii) 2,234 shares directly owned by RMMR that were
acquired through Pediatrixs employee stock purchase plans;
and (iv) 29,687 shares of unvested restricted stock
which Mr. Wagner presently has the power to vote.
|
|
(15)
|
|
Includes
(i) 148,435 shares of unvested restricted stock which
certain Directors and executive officers presently have the
power to vote; and (ii) 1,012,588 shares of common
stock subject to options exercisable within 60 days of
September 12, 2007.
|
33
Appointment
of Independent Auditors for 2007
Pediatrixs independent auditors for the year ended
December 31, 2006, was the firm of PricewaterhouseCoopers
LLP (PwC). The Audit Committee has reappointed PwC
as the independent public accounting firm to perform audit
services for Pediatrix in 2007. Pediatrix expects that
representatives of PwC will attend the annual meeting. They will
have an opportunity to make a statement if they desire to do so
and will be available to respond to appropriate questions.
Fees
Paid to Independent Auditors
The aggregate fees billed by PwC for the indicated services
rendered during fiscal years 2006 and 2005 were as follows:
PwC has billed Pediatrix $1,072,000, in the aggregate, for
professional services for the audit of Pediatrixs
consolidated financial statements and internal control over
financial reporting for the year ended December 31, 2006,
reviews of Pediatrixs interim consolidated financial
statements which are included in each of Pediatrixs
Quarterly Reports on
Form 10-Q
for the year ended December 31, 2006 and statutory audits
of Pediatrixs wholly-owned captive insurance subsidiary.
During 2005, audit fees totaled $938,500 and included
professional services for the audit of Pediatrixs
consolidated financial statements and internal controls over
financial reporting for the year ended December 31, 2005,
reviews of Pediatrixs interim consolidated financial
statements which are included in each of Pediatrixs
Quarterly Reports on
Form 10-Q
for the year ended December 31, 2005 and statutory audits
of Pediatrixs wholly-owned captive insurance subsidiary.
During 2006, PwC billed Pediatrix $369,000 for audit related
professional services. These services included the audit of
Pediatrixs benefit plans, review of Pediatrixs
historical stock option granting practice, and consultations
concerning financial accounting and reporting standards. During
2005, audit related fees totaled $52,900 and included
professional services related to Pediatrixs benefit plans
and consultations concerning financial accounting and reporting
standards.
During 2006 and 2005, PwC did not bill Pediatrix for tax
consultation services.
There were no other fees billed by PwC for 2006 or 2005.
Pre-Approval
Policies and Procedures
The Audit Committee is required to review and approve the
proposed retention of independent auditors to perform any
proposed auditing and non-auditing services as outlined in its
charter. The Audit Committee has not established policies and
procedures separate from its charter concerning the pre-approval
of auditing and non-auditing related services. As required by
Section 10A of the Exchange Act, our Audit Committee has
authorized all auditing and non-auditing services provided by
PwC during 2006 and the fees paid for such services.
The Board of Directors knows of no other business to be brought
before the annual meeting. If, however, any other business
should properly come before the annual meeting, it is the
intention of the persons named in the accompanying proxy card to
vote the shares they represent in accordance with the
recommendation of Pediatrixs Board of Directors.
34
INFORMATION
CONCERNING SHAREHOLDER PROPOSALS
As more specifically provided in our Articles of Incorporation,
no business may be brought before an annual meeting unless it is
specified in the notice of the meeting or is otherwise properly
brought before the meeting by or at the direction of our Board
of Directors or by a shareholder entitled to vote who has
delivered proper notice to us, together with the information
required by our Articles of Incorporation, not less than
120 days nor more than 180 days prior to the first
anniversary of the preceding years notice of annual
meeting provided, however, that if no annual meeting was held in
the previous year or the date of the annual meeting has been
changed to be more than 30 calendar days earlier than the date
contemplated by the previous years proxy statement, such
notice by the shareholder to be timely must be so received not
later than the close of business on the 10th day following
the date on which notice of the date of the annual meeting is
given to shareholders or made public, whichever first occurs. We
currently anticipate that the 2008 annual meeting will be held
during the second quarter of 2008 and, accordingly, we expect to
announce the date of such meeting when determined. In the event
that the date of our 2008 annual meeting is not so changed, any
shareholder proposal to be considered at the 2008 Annual Meeting
of Shareholders must be properly submitted to us on or before
June 3, 2008 but not earlier than April 4, 2008 or
such proposal will be considered untimely. A copy of the
provision of Pediatrixs Articles of Incorporation relating
to shareholder nominations is available upon request from
Pediatrixs Secretary at 1301 Concord Terrace, Sunrise, FL
33323. These requirements are separate from the Securities and
Exchange Commissions requirements that a shareholder must
meet in order to have a shareholder proposal included in our
proxy statement for the 2008 Annual Meeting of Shareholders.
Shareholders interested in submitting a proposal for inclusion
in our proxy materials for the 2008 Annual Shareholders Meeting
may do so by following the procedures set forth in
Rule 14a-8
under the Exchange Act and Pediatrixs Articles of
Incorporation. To be eligible for inclusion in such proxy
materials, shareholder proposals must be received by our
Secretary, at the address noted above, not later than
June 3, 2008 unless the date of our 2008 annual meeting is
changed as described above. No shareholder proposal was properly
received for inclusion in this proxy statement.
35
PEDIATRIX MEDICAL GROUP
1301 Concord Terrace
Sunrise, Florida
33323-2825
PROXY PEDIATRIX MEDICAL GROUP, INC. PROXY
1301 Concord Terrace
Sunrise, Florida 33323-2825 |
THIS PROXY IS SOLICITED ON BEHALF OF THE |
BOARD OF DIRECTORS OF THE COMPANY THE UNDERSIGNED, A SHAREHOLDER OF PEDIATRIX MEDICAL GROUP, INC.,
A FLORIDA CORPORATION (THE COMPANY), HEREBY APPOINTS ROGER J. MEDEL, M.D., THOMAS W. HAWKINS AND
KARL B. WAGNER, AND EACH OF THEM, AS PROXIES FOR THE UNDERSIGNED, EACH WITH FULL POWER OF
SUBSTITUTION, AND HEREBY AUTHORIZES THEM TO REPRESENT AND TO VOTE, AS DESIGNATED ON THE REVERSE
SIDE OF THIS PROXY CARD, ALL OF THE SHARES OF COMMON STOCK OF THE COMPANY HELD OF RECORD BY THE
UNDERSIGNED AT THE CLOSE OF BUSINESS ON SEPTEMBER 12, 2007, AT THE COMPANYS 2007 ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD AT THE HYATT REGENCY BONAVENTURE, 250 RACQUET CLUB ROAD, WESTON, FLORIDA
33326, ON THURSDAY, NOVEMBER 1, 2007 AT 10:00 A.M., LOCAL TIME, AND AT ANY ADJOURNMENTS OR
POSTPONEMENTS THEREOF. PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY PROMPTLY USING THE ENVELOPE
PROVIDED. |
NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES. |
SEE REVERSE SIDE CONTINUED AND TO BE SIGNED SEE REVERSE SIDE
ON REVERSE SIDE |
1
PEDIATRIX MEDICAL GROUP, INC. C/O COMPUTERSHARE TRUST COMPANY N.A. P.O. Box 8694 EDISON, NJ
08818-8694 DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL #PHO S Please mark
votes as in this example. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF EACH NOMINEE FOR DIRECTOR LISTED HEREIN AND IN ACCORDANCE WITH THE RECOMMENDATION OF
THE COMPANYS BOARD OF DIRECTORS, FOR OR AGAINST ALL OTHER MATTERS AS MAY PROPERLY COME BEFORE
THE ANNUAL MEETING. The Board of Directors unanimously recommends a vote FOR each of the following
nominees. |
1. ELECTION OF DIRECTORS:
Nominees: (01) Cesar L.
Alvarez (02) Waldemar A.
Carlo, M.D. (03) Michael B.
Fernandez (04) Roger K.
Freeman, M.D. (05) Paul G.
Gabos (06) Pascal J. 2. In their discretion, the proxies are
Goldschmidt, M.D. (07) Roger authorized to vote upon such other
J. Medel, M.D. (08) Manuel matters as may properly come before the
Kadre, and (09) Enrique J. Annual Meeting and any postponement or
Sosa, Ph.D. adjournment thereof.
£ FOR ALL NOMINEES £ WITHHELD FROM ALL NOMINEES
£
INSTRUCTION: to withhold authority to vote for any individual nominee,
write that nominee(s) name(s) on the above line.
The undersigned hereby acknowledges receipt of (1)
the Notice of Annual Meeting, (2) the Proxy
Statement, and (3) the Annual Report to Shareholders.
IMPORTANT: Please sign exactly as your name appears
hereon and mail it promptly even if you plan to
attend the meeting. When signing as attorney,
executor, administrator, trustee or guardian, please
give full title as such. When shares are held by
joint tenants, both should sign. If a corporation,
please sign in full corporate name by president or
other authorized officer. If a partnership, please
sign in partnership name by an authorized person.
Signature: Date:
|
Signature if held jointly: Date:
|
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