0000950144-01-507375.txt : 20011009
0000950144-01-507375.hdr.sgml : 20011009
ACCESSION NUMBER: 0000950144-01-507375
CONFORMED SUBMISSION TYPE: DEF 14A
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 20011102
FILED AS OF DATE: 20010928
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: COMPREHENSIVE CARE CORP
CENTRAL INDEX KEY: 0000022872
STANDARD INDUSTRIAL CLASSIFICATION: HOSPITAL & MEDICAL SERVICE PLANS [6324]
IRS NUMBER: 952594724
STATE OF INCORPORATION: DE
FISCAL YEAR END: 0531
FILING VALUES:
FORM TYPE: DEF 14A
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-09927
FILM NUMBER: 1748662
BUSINESS ADDRESS:
STREET 1: 4200 W CYPRESS
STREET 2: STE 300
CITY: TAMPA
STATE: FL
ZIP: 33607
BUSINESS PHONE: 8138765036
MAIL ADDRESS:
STREET 1: 4200 WEST CYPRESS
STREET 2: SUITE 300
CITY: TAMPA
STATE: FL
ZIP: 33607
FORMER COMPANY:
FORMER CONFORMED NAME: JADE OIL CO
DATE OF NAME CHANGE: 19700402
FORMER COMPANY:
FORMER CONFORMED NAME: NEURO PSYCHIATRIC & HEALTH SERVICES
DATE OF NAME CHANGE: 19730501
FORMER COMPANY:
FORMER CONFORMED NAME: NEURO PSYCHIATRIC & HEALTH SERVICES INC
DATE OF NAME CHANGE: 19700402
DEF 14A
1
g71755def14a.txt
COMPREHENSIVE CARE CORPORATION
1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
COMPREHENSIVE CARE CORPORATION
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
----------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
2
COMPREHENSIVE CARE CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FRIDAY, NOVEMBER 2, 2001
To the Stockholders of Comprehensive Care Corporation:
Notice is hereby given that the 2001 Annual Meeting of Stockholders of
Comprehensive Care Corporation (the "Company") will be held at the principal
executive offices of the Company, located at 200 South Hoover Boulevard, Suite
200, Tampa, Florida 33609 on Friday, November 2, 2001 at 9:00 a.m. Eastern
Standard Time, and any adjournments or postponements thereof for the following
purposes:
1. To elect one (1) Class III director to serve until the year 2004
Annual Meeting of Stockholders and until his successor is elected and
qualified; and
2. To consider and transact such other business as may properly come
before the meeting or any adjournment thereof.
Stockholders of record at the close of business on September 20, 2001 are
entitled to vote at the meeting. A list of stockholders entitled to vote at the
meeting will be available for inspection at the principal offices of the
Company.
By Order of the Board of Directors,
/s/ CATHY J. WELCH
Cathy J. Welch
Secretary
September 28, 2001
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN THE ACCOMPANYING PROXY AND MAIL IT
IN THE ENCLOSED POSTAGE PREPAID ENVELOPE. YOUR PROMPT RESPONSE WILL SAVE THE
EXPENSE OF A FOLLOW-UP MAILING.
3
COMPREHENSIVE CARE CORPORATION
200 SOUTH HOOVER BOULEVARD, SUITE 200
TAMPA, FLORIDA 33609
(813) 288-4808
---------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 2, 2001
---------------------
The Board of Directors of Comprehensive Care Corporation (the "Company")
solicits your proxy for use at the 2001 Annual Meeting of Stockholders (the
"Annual Meeting") to be held on Friday, November 2, 2001 at 9:00 a.m., Eastern
Standard Time, at the principal executive offices of the Company located at 200
South Hoover Boulevard, Suite 200, Tampa, Florida 33609 and any adjournments or
postponements thereof. This Proxy Statement and the accompanying form of proxy
are first being mailed on or about September 28, 2001. Following this mailing,
certain officers and employees of the Company may solicit proxies by mail,
telephone, telecopy, or in person, without additional compensation. Upon
request, the Company will reimburse brokers, and other persons holding shares
for others, for their expenses in forwarding copies of the proxy soliciting
material to the beneficial owners of such shares. The Company will pay all
solicitation costs, if any.
The shares held by each person giving a proxy in the accompanying form will
be voted at the meeting in accordance with any instructions specified in the
proxy. If no instructions are specified, the shares will be voted; FOR the
election as a Class III director of the nominee specified herein. A proxy may be
revoked by the person giving it any time before its exercise by sending a
written notice of such revocation or a later-dated proxy to the Secretary of the
Company at the above address or by attending the Annual Meeting and voting in
person. Attendance at the Annual Meeting will not by itself revoke a proxy.
Only stockholders of record at the close of business on September 20, 2001
are entitled to notice of, and to vote at, the Annual Meeting. As of that date,
3,867,303 shares of common stock, $.01 par value per share ("Common Stock"),
were outstanding and held of record by stockholders. Stockholders are entitled
to one, non-cumulative vote for each share of Common Stock held.
The presence in person or by proxy of the holders of a majority of the
outstanding shares of Common Stock will constitute a quorum for the transaction
of business at the Annual Meeting. Directors are elected by a plurality of the
votes present, in person or by proxy, and entitled to vote. Approval of any
other matter that may properly come before the Annual Meeting requires the
affirmative vote of a majority of the shares present in person or by proxy and
entitled to vote. Abstentions will therefore have the effect of negative votes
with respect to any matter presented at the Annual Meeting, while broker
non-votes will have no effect on any matter presented. If authority to vote for
the nominee is withheld on a proxy card, no vote will be cast with respect to
the shares represented thereby and the outcome of the election will not be
affected.
The 2001 Annual Report to Stockholders, including the consolidated
financial statements for the fiscal year ended May 31, 2001, accompanies this
Proxy Statement.
4
VOTING SECURITIES AND SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company
concerning the beneficial ownership of Common Stock as of the September 20, 2001
record date, by (i) all persons who are beneficial owners of five percent (5%)
or more of the Common Stock, (ii) each director of the Company, and (iii) the
executive officer named in the Summary Compensation Table included elsewhere
herein, and (iv) all directors and executive officers as a group. According to
rules adopted by the Securities and Exchange Commission, a person is the
"beneficial owner" of securities if he or she has, or shares, the power to vote
such securities or to direct their investment. Unless otherwise indicated, each
of the stockholders has sole voting and investment power with respect to shares
beneficially owned.
SHARES PERCENT OF
BENEFICIALLY COMMON STOCK
NAME OF BENEFICIAL OWNER OWNED OUTSTANDING
------------------------ ------------ ------------
Mary Jane Johnson(1)........................................ 215,000 5.6%
Robert J. Landis(2)......................................... 270,625 7.0%
Thomas Clay(3).............................................. 22,500 *
All executive officers and directors
As a group (4 persons)(4)................................. 555,625 14.4%
* Less than 1%.
---------------
(1) Includes 20,000 shares held directly and 195,000 shares subject to options
that are presently exercisable. Excludes 25,000 options that are not
presently exercisable.
(2) Includes 30,000 shares held directly and 240,625 shares subject to options
that are presently exercisable. Excludes 25,000 options that are not
presently exercisable.
(3) Includes 5,000 shares held directly and 17,500 shares subject to options
that are presently exercisable.
(4) Includes 65,000 shares held directly and 490,625 shares subject to options
that are presently exercisable. Excludes 62,500 options that are not
presently exercisable.
PROPOSAL 1 -- ELECTION OF ONE CLASS III DIRECTOR
The Board of Directors comprises three classes of directors with staggered
three-year terms. Directors for each class are elected at the Annual Meeting of
Stockholders held in the year in which the term for such class expires. Ms.
Johnson is a Class I director whose term expires at the 2003 Annual Meeting. Mr.
Landis is a Class III director whose term expires at the 2001 Annual Meeting. As
of September 20, 2001, the Class II director seat is vacant and will remain so
until the Company has secured a suitable candidate who is willing to serve as a
director of the Company. The Class II director seat has been vacant since Mr.
Chriss Street separated from the Company on January 14, 2000. All current
directors are employees of the Company and, therefore, do not receive any
compensation for serving on the Board of Directors of the Company.
It is the intention of the persons named as proxies to vote their proxies
for the election of Robert J. Landis as a Class III director. Mr. Landis is
currently Chairman of the Board of Directors, Chief Financial Officer, and
Treasurer, and has consented to continue to serve as a director if elected.
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5
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR THE NOMINEE LISTED BELOW.
CLASS III: NOMINEE FOR A THREE-YEAR TERM EXPIRING AT THE YEAR 2004
ANNUAL MEETING OF STOCKHOLDERS
Robert J. Landis, CPA, MBA (age 42) Mr. Landis has served as Chairman of
the Board of Directors since January 2000 and as Chief Financial Officer and
Treasurer since July 1998. Beginning in April 1999, Mr. Landis is a Class III
director whose term expires at the 2001 Annual Meeting. Mr. Landis served as
Treasurer of Maxicare Health Plans, Inc., a health maintenance organization,
from November 1988 to July 1998. Mr. Landis, a Certified Public Accountant,
received a Bachelors Degree in Business Administration from the University of
Southern California and a Masters Degree in Business Administration from
California State University at Northridge.
FOLLOWING IS THE INCUMBENT DIRECTOR WHOSE TERM
IS NOT EXPIRING AT THE 2001 ANNUAL MEETING
Mary Jane Johnson RN, MBA, (age 51) Ms. Johnson has served as President
and Chief Executive Officer since January 2000. Beginning in April 1999, Ms.
Johnson is a Class I director whose term expires at the 2003 Annual Meeting.
Since joining the Company in August 1996, Ms. Johnson has also served as Chief
Operating Officer of Comprehensive Care Corporation, an appointment that was
effective July 1999, and as Chief Executive Officer for the Company's principal
subsidiary, Comprehensive Behavioral Care, Inc., since August 1998. Ms. Johnson
served as Executive Director for Merit Behavioral Care from 1993 to 1996. Ms.
Johnson, a Registered Professional Nurse, has a Bachelors Degree in Nursing from
the State University of New York and a Masters Degree in Business Administration
from Adelphi University.
BOARD MEETINGS AND DIRECTORS' COMPENSATION
During the fiscal year ended May 31, 2001, the Board of Directors of the
Company held five meetings in person or by telephone. In addition, the Board of
Directors took actions by written consent on six occasions. Each director
attended more than 75% of the meetings of the Board of Directors and the
committees on which he served during his period of service.
During Fiscal 2001, the Board of Directors was comprised entirely of
persons who are officers or employees of the Company. No Board member received
compensation for serving in such capacity during Fiscal 2001.
BOARD COMMITTEES
AUDIT COMMITTEE
The Company does not currently have an Independent Audit Committee since
only two directors comprise the entire Board of Directors, each of whom is an
executive officer. The Company has been unable to attract suitable candidates to
serve as independent directors, primarily due to the current financial condition
of the Company.
The Company has neither established an Audit Committee nor adopted a formal
charter of the Audit Committee. The current Board of Directors functions as an
audit committee, although the Board does not include any non-employee director.
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During the fiscal year ended May 31, 2001, the primary responsibility for
overseeing the Company's financial statements and the inclusion of such
financial statements in the filing of the Company's Form 10-K was held by the
Board of Directors. Additionally, the Board members have reviewed and discussed
the Company's Fiscal 2001 audited financial statements with other members of the
Company's management, discussed with the Company's independent auditors the
matters required to be discussed by Statement on Auditing Standards No. 61,
received the written disclosures and the letter from the Company's independent
accountants required by Independence Standards Board Standard No. 1, and
discussed with such independent accountants the independent accountants'
independence.
In performing its oversight function, the Board of Directors relied upon
advice and information received in its discussions with other members of the
Company's management and the independent auditors. Based in part on the review
and discussions with management and the Company's independent auditors referred
to above, the Board recommended that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal year ended
May 31, 2001 for filing with the Commission.
COMPENSATION COMMITTEE
The Company does not currently have an Independent Compensation Committee
since only two directors comprise the entire Board of Directors, each of whom is
an executive officer. The Company has been unable to attract suitable candidates
to serve as independent directors, primarily due to the current financial
condition of the Company. For that reason, the members of the Board have
discharged the functions of the Compensation Committee and have reviewed their
own compensation. During Fiscal 2001, recommendations and administrative
decisions regarding the compensation of the Company's executives were made by
the Board of Directors, which is currently comprised entirely of persons who are
officers and employees of the Company.
REPORT REGARDING COMPENSATION OF
EXECUTIVE OFFICERS OF
COMPREHENSIVE CARE CORPORATION
The principal philosophies and goals regarding compensation of executive
officers of the Company have remained unchanged since their development under
the compensation committee while it was composed of non-employee directors.
These philosophies and key components of executive compensation are discussed
below.
OVERVIEW AND PHILOSOPHY
The prior functioning Compensation Committee established a compensation
program policy that would enable the Company to attract and retain outstanding
executives in the healthcare industry that would assist the Company in meeting
its long-range objectives, thereby serving the interests of the Company's
stockholders. The prior functioning Committee's compensation-related decisions
primarily involved awarding its executives base salaries designed to compensate
those executives fairly and competitively. This objective has been continued by
the current Board of Directors.
During such time as the Company had an independent Compensation Committee,
the Committee approved compensation objectives and policy for all employees and
determined compensation amounts, including cash compensation, incentive
compensation, and stock option grants. The employment agreements of each of the
two executive officers of the Company were approved by the prior functioning
Compensation Committee. Any changes in or revisions to the compensation of the
executive officers subsequent to there being a functioning Compensation
Committee, including cash bonuses, stock bonuses in lieu of cash, the issuance
of stock options, and the revision of base compensation or benefits were
approved by the Board of Directors as constituted at the time such changes or
revisions were effective.
The Company's overall pay philosophy is to provide rewards that (1) are
linked to both Company performance and individual performance, (2) align
employee interests with the interests of its stockholders, (3) are sufficient to
attract and retain needed high-quality employees, and (4) provide a mix of cash
and potential stock ownership tied to the long-term as well as immediate
business strategy.
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EXECUTIVE OFFICER COMPENSATION
The Board of Directors considered the following key principles used by the
prior Compensation Committee in structuring compensation targets and packages of
executive officers and key management:
- Long-term and at risk focus so that a significant portion of executive
pay is focused toward the long-term strategic objectives, with the
realization of rewards only as an extension of stockholder interests.
- Management development -- support of compensation opportunity structures
to attract and retain individuals who can maximize the creation of
stockholder value, and motivate employees to attain Company and
individual objectives.
- Equity at risk -- linking of corporate performance and individual
rewards, to instill ownership.
- Recognition of individual contributions as well as overall Company
results toward identified business results.
- Competitive position of both base salary and total compensation within
the healthcare industry.
The Committee used these principles to review and approve appropriate
changes of compensation policy and packages. During Fiscal 2001, the Board of
Directors continued to use these same principles to review and approve
appropriate changes of compensation policy and packages, though not at an
arms-length basis, when it came to the two sole directors reviewing their own
compensation.
COMPONENTS OF EXECUTIVE COMPENSATION
The components of executive compensation for each of the Company's two
executive officers included a base salary, provision for an annual incentive
bonus, and provisions for the award of stock options. Each of the two executive
officers of the Company has an employment agreement, which was approved by the
prior functioning Compensation Committee, and which took into account the
skills, knowledge and experience that each of the executive officers brought to
their positions. The base salary of each executive officer, when initially set,
was intended to be maintained at slightly above the median range of salary for
similar positions at public companies that are in the same line of business as
the Company and which are of similar size. The base salaries of Ms. Johnson and
Mr. Landis has each been set at $175,000 per annum. The Company had adopted a
Management Bonus Plan ("MBP Plan"), and the employment agreement of each
executive officer provides that each officer be eligible to participate annually
in the MBP Plan. The principal threshold for the MBP Plan is achievement of a
net operating profit, which was not accomplished in Fiscal 2001. As a result, no
MBP Plan awards were granted by the Board of Directors.
Each of the Company's executive officers is eligible to receive such other
bonus or additional compensation as may be determined from time to time by the
Board of Directors. The remaining Board of Directors has granted certain
restricted stock grants to the two executive officers in lieu of a cash bonus
other than an incentive bonus. This had been done mainly to reflect the results
of the executive officers in significantly reducing operating expenses and
thereby reducing the amount of loss which the Company had been experiencing. It
was also intended to reflect the effort that the executive officers had been
making to have the Company secure new and additional business. A restricted
stock grant of 20,000 shares and 19,500 shares of the Company's Common Stock was
made in July 2001 to Ms. Johnson and Mr. Landis, respectively, and will be
reflected in fiscal year 2002 executive compensation.
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As part of their employment agreements and subsequent to the resignations
in fiscal 1999 of the former non-employee Directors, and in an effort to hold
the management team together for the benefit of the Company and its
stockholders, the Board awarded a stay bonus to Ms. Johnson and Mr. Landis in an
amount not to exceed the greater of $150,000 or 85% of the current base salary,
and $125,000 or 83% of the then current base salary, respectively. The
entitlement to the stay bonus was conditioned on each executive officer
remaining an employee of the Company through December 31, 2000 and the Company
maintaining financial viability. As an accommodation to the Company, the two
executive officers have consented to a deferral of the receipt of their stay
bonus. During Fiscal 2001, Ms. Johnson and Mr. Landis each were paid $50,000,
with payments of the remaining amounts to be deferred until Fiscal 2002 or
later.
The initial employment agreement of each executive officer provided for the
award of stock options. In the case of Ms. Johnson, she is to receive, following
periodic reviews, an annual grant of stock options in such amount as the Board
of Directors may determine. Mr. Landis's employment agreement provided for an
initial grant of 87,500 options and, commencing July 1999, an annual grant of
25,000 options, all options to be granted at the fair market value for the
Company's Common Stock on the date of grant. During fiscal 2001, Ms. Johnson and
Mr. Landis each received stock option grants aggregating 50,000 options each.
In the case of all other key employees, the Company adopted an annual
incentive bonus program for executive officers and key members of management
that would increase total cash compensation based upon objective improvements of
the Company's results of operations. At the start of each fiscal year, the
executive management, in consultation with senior management, establishes target
levels of corporate performance. This target is then translated to a threshold
and maximum level of performance with a target opportunity for each executive
officer based upon their level of responsibility, potential contribution of the
success of the Company, and competitive practices. The target opportunity
consists of both the Company's financial performance (net profit) and individual
objectives tied to strategic project activity. The individual's actual award is
determined at the end of the fiscal year based upon an assessment of both
Company and individual performance. There were no amounts paid during Fiscal
2001 in connection with this program.
LIMITATIONS ON THE DEDUCTIBILITY OF COMPENSATION
Pursuant to the 1993 Omnibus Budget Reconciliation Act, a portion of annual
compensation payable after 1993 to any of the Company's five highest paid
executive officers would not be deductible by the Company for federal income tax
purposes to the extent such officer's overall compensation exceeds $1.0 million
per executive officer. Qualifying performance-based incentive compensation,
however, would be both deductible and excluded for purposes of calculating the
$1.0 million base. The Board of Directors has determined that no portion of
anticipated compensation payable to any executive officer in 2001 would be non-
deductible. The Board of Directors will continue to address this issue when
formulating compensation arrangements for executive officers, but believes that
the deductibility of officer compensation in excess of the $1.0 million
threshold is not likely to be an issue for the Company to address in the
foreseeable future.
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PERFORMANCE GRAPH
The following is a line graph comparing the Company's total stockholder
returns to those of the NASDAQ Health Services Index and a Comparable Company
Index (including the Company, Integra, Inc., Magellan Health Services, and
Horizon Health Corp.) for each year in the period from June 1, 1996 and ended
May 31, 2001. The Company's Common Stock is traded on the Over The Counter
Bulletin Board and, accordingly, the Company has selected the NASDAQ Health
Services Index as an appropriate index for this graph. Total return values were
calculated based on cumulative total return, assuming the value of the
investment in the Company's Common Stock, and in each index, was $100 and that
all dividends were reinvested.
ASSUMES $100 INVESTED ON JUNE 1, 1996
ASSUMES DIVIDENDS REINVESTED
FIVE FISCAL YEARS ENDED MAY 31, 2001
COMPREHENSIVE CARE NASDAQ HEALTH SERVICES
CORPORATION COMPARABLE COMPANY INDEX INDEX
------------------ ------------------------ ----------------------
1996 100.00 100.00 100.00
May 1997 151.35 110.73 83.10
May 1998 109.46 107.46 85.26
May 1999 5.41 34.27 73.27
May 2000 2.20 11.57 57.87
May 2001 4.86 48.24 77.96
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EXECUTIVE COMPENSATION
The following provides certain information concerning compensation earned
by the Company's Chief Executive Officer and its other executive officers whose
total salary and bonus for Fiscal 2001 exceed $100,000 (together, these persons
are sometimes referred to as the "named executives").
LONG-TERM COMPENSATION
ANNUAL COMPENSATION ------------------------
-------------------------------------------------------- LONG-
RESTRICTED SECURITIES TERM
OTHER ANNUAL STOCK UNDERLYING INCENTIVE ALL OTHER
FISCAL SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARS PAYOUTS COMPENSATION
NAME AND POSITION YEAR $ ($) ($) ($) (#) ($) ($)
----------------- ------ ------- ------ ------------ ---------- ------------ --------- ------------
Mary Jane Johnson..... 2001 175,000 50,000(3) 11,517(4) -- 50,000 -- 1,314(6)
President(1,2),
Chief 2000 175,000 -- 1,400(5) -- 150,000 -- 1,323(6)
Executive
Officer(1,2) 1999 146,930 50,000 -- -- 20,000 -- 1,051(6)
and Director(1,2)
Robert Landis......... 2001 175,000 50,000(3) 3,000(8) -- 50,000 -- 741(6)
Chairman of the 2000 159,141 -- 3,000(8) -- 150,000 -- 613(6)
Board of 1999 139,408(7) 45,000 32,967(9) -- 153,125(10) -- 1,200(6)
Directors(1,2),
Chief
Financial
Officer(1,2), and
Treasurer(1,2)
Thomas Clay........... 2001 97,269 -- 8,485(11) -- -- -- 437(6)
Senior Vice
President 2000 32,885(12) -- -- -- 17,500 -- --
of Clinical 1999 -- -- -- -- -- -- --
Operations(2)
---------------
(1) Comprehensive Care Corporation.
(2) Comprehensive Behavioral Care, Inc., Principal Subsidiary of the Company.
(3) Represents actual payments made during Fiscal 2001 in connection with the
stay bonus awards described under "Components of Executive Compensation"
above.
(4) Represents a $2,400 car allowance and $9,117 in moving expenses in
accordance to Ms. Johnson's employment agreement.
(5) Represents a car allowance in accordance to Ms. Johnson's employment
agreement.
(6) Represents amounts contributed by the Company to the indicated person's
401(k) Plan Account.
(7) Mr. Landis was employed by the Company on July 2, 1998.
(8) Represents compensation expense for personal use mileage.
(9) Represents moving expenses paid to Mr. Landis.
(10) Includes 87,500 options issued at $10.00 per share that were cancelled and
repriced at $4.00 per share on December 14, 1998.
(11) Represents transitional living expenses paid to Mr. Clay.
(12) Mr. Clay was employed by the Company on December 31, 1999.
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The following tables present information regarding the number of stock
options granted during Fiscal 2001 and the number of unexercised options held by
the Company's named executives at May 31, 2001. There were no options exercised
by the Company's named executives during Fiscal 2001. No stock appreciation
rights were granted or held by such persons during Fiscal 2001.
OPTION GRANTS IN THE LAST FISCAL YEAR
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE
UNDERLYING GRANTED TO OR BASE GRANT DATE
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED (#) FISCAL YEAR ($/SHARE) DATE VALUE
---- ------------ ------------ --------- ---------- ----------
Mary Jane Johnson.................... 50,000 27.6% $0.25 01/02/2011 $0.0812
Robert J. Landis..................... 50,000 27.6% $0.25 01/02/2011 $0.0812
Thomas Clay.......................... -- -- -- -- --
The present value as of the date of grant, calculated using the
Black-Scholes method is based on assumptions about future interest rates, stock
price volatility and dividend yield. There is no assurance that these
assumptions will prove to be true in the future. The actual value, if any, that
may be realized by each individual will depend upon the market price of the
Common Stock on the date of exercise.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND AGGREGATED FISCAL YEAR-END OPTION VALUE
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS AT OPTIONS/SARS AT
ACQUIRED ON VALUE FY END (#) FY END ($)
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
---- ----------- -------- --------------- ---------------
Mary Jane Johnson.......................... -- -- 170,000/50,000 $13,830/$10,000
Robert J. Landis........................... -- -- 215,625/50,000 $13,830/$10,000
Thomas Clay................................ -- -- 17,500/0 $922/$0
EMPLOYMENT AGREEMENTS WITH EXECUTIVES
On July 2, 1999, the Company entered into an employment agreement with Ms.
Johnson. Ms. Johnson's employment agreement provides for a salary at the rate of
$175,000 per annum and includes a performance-based bonus in connection with the
Company's Annual Management Bonus Plan ("MBP Plan"). Ms. Johnson is provided
with an auto allowance of $250 biweekly as well as a policy of life insurance.
In addition, the Company pays for a portion of Ms. Johnson's health insurance
and other group insurance premiums in accordance with the Company's general
benefit guidelines covering all full-time employees. Ms. Johnson's employment
agreement provides that, in the event of a change in control of the Company as
defined, Ms. Johnson will be paid a severance benefit equal to twelve (12)
months base salary, together with her incentive bonus.
On September 14, 1998, the Company entered into an employment agreement
with Mr. Landis. Mr. Landis' employment agreement as amended provides for a
salary at the rate of $175,000 per annum and a
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performance-based bonus in connection with the Company's MBP Plan. In addition,
the Company pays for a portion of Mr. Landis' health insurance and other group
insurance premiums in accordance with the Company's general benefit guidelines
covering all full-time employees. Mr. Landis is also provided with a policy of
life insurance. Mr. Landis' employment agreement provides that, in the event of
a change in control of the Company as defined, Mr. Landis will be paid a
severance benefit equal to twelve (12) months base salary, together with his
incentive bonus.
Effective July 2, 1999, the Board awarded stay bonuses to Ms. Johnson and
Mr. Landis in amounts not to exceed the greater of: $150,000 or 85% of the
current base salary, and $125,000 or 83% of the current base salary,
respectively, not payable unless each remained employed by the Company through
December 31, 2000. Effective January 1, 2001, Ms. Johnson and Mr. Landis each
were entitled to receive $150,000 and $145,250, respectively, in connection with
these stay bonus awards. As an accommodation to the Company, the two executive
officers have consented to a deferral of the receipt of their stay bonus. During
Fiscal 2001, Ms. Johnson and Mr. Landis each were paid $50,000, with payment of
the remaining amounts to be deferred until Fiscal 2002 or later.
Effective July 6, 2001, a restricted stock grant of 20,000 shares and
19,500 shares of the Company's Common Stock was made to Ms. Johnson and Mr.
Landis, respectively, and will be reflected in fiscal year 2002 executive
compensation. Such shares were valued at $0.51 per share, representing the fair
market value of the Company's Common Stock on July 6, 2001.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
In connection with the Company's indemnification program for executive
officers and directors, Ms. Johnson, Mr. Landis and Mr. Clay as well as five
current, key management employees or subsidiary directors, nine former
directors, and nine former executive officers, are entitled to indemnification
and are beneficiaries of the officers and directors indemnification trust (as
defined below).
Upon written demand for payment by the person designated in the Trust
Agreement as Beneficiary Representative accompanied by a "Notice of
Qualification" (as defined below), the Trustee shall pay the person designated
in the Trust Agreement ("Underwriter") to administer the payments to the
accounts of Indemnitees an amount not greater than the balance, if any, of the
specified bookkeeping account ("Account") recorded by the Trustee for each
Indemnitee. A "Notice of Qualification" is a written statement by the
Beneficiary Representative which (i) states the date and action on which the
policyholder is obligated to Indemnitee(s) under the terms of the
Indemnification Agreement, (ii) certifies that, pursuant to the terms of the
Indemnification Agreement, the Indemnitees are entitled to payment thereunder as
a result of the investigation, claim, action, suit or proceeding, and (iii)
states the amount of the payment to which the Underwriter is entitled. Upon the
receipt of a demand, the Trustee shall promptly inform the Company of such
receipt, by courier delivery to the Company, of written notice thereof. Subject
to any contrary order issued by a court of competent jurisdiction, a payment
made pursuant to this Section may be made without the approval or direction of
the Company, and shall be made despite any direction to the contrary by the
Company. Prior to the time amounts are to be paid to the Underwriter or his
designee from the Trust Fund as described above, Indemnitees have no preferred
claim or beneficial ownership interest in trust funds, and their rights are
merely unsecured contractual rights.
The Company considers it desirable to provide each Indemnitee with
specified assurances that the Company can and will honor the Company's
obligations under the Indemnification Agreements, including a policy of
insurance to provide for directors and officers liability coverage.
STOCK OPTION PLANS
1995 INCENTIVE PLAN
The Company has a 1995 Incentive Plan (the "1995 Plan"). The 1995 Plan
provides for the granting of stock options, stock appreciation rights, limited
stock appreciation rights, and restricted stock grants to eligible
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employees and consultants to the Company. Grants issued under the 1995 Plan may
qualify as Incentive Stock Options ("ISOs") under Section 422A of the Internal
Revenue Code. Options for ISOs may be granted for terms of up to ten years and
are generally exercisable in cumulative increments of either 33% each year or
50% each six months. Options for Non-statutory Stock Options ("NSOs") may be
granted for terms of up to 13 years. The exercise price for ISOs must equal or
exceed the fair market value of the shares on the date of grant, and 65% in the
case of other options. The 1995 Plan also provides for the full vesting of all
outstanding options under certain change of control events. The maximum number
of shares authorized for issuance under the 1995 Plan is 1,000,000. As of May
31, 2001, there were 28,350 options available for grant and there were 888,525
options outstanding, of which 653,275 options were exercisable, under the 1995
Plan.
NON-EMPLOYEE DIRECTOR PLAN
The Company has a non-qualified stock option plan for its outside directors
(the "Directors' Plan"). Each non-qualified stock option is exercisable at a
price equal to the Common Stock's fair market value as of the date of grant.
Initial grants vest annually in 25% increments beginning on the first
anniversary of the date of grant, provided the individual is still a director on
those dates. Annual grants will become 100% vested as of the first annual
meeting of the Company's stockholders following the date of grant, provided the
individual is still a director as of that date. An optionee who ceases to be a
director shall forfeit that portion of the option attributable to such vesting
dates on or after the date he or she ceases to be a director. The maximum number
of shares authorized for issuance under the Directors' Plan is 250,000. As of
May 31, 2001, there were 185,834 options available for grant under the
Directors' Plan. However, the Company had no outside directors and there were no
options outstanding to former directors.
CERTAIN TRANSACTIONS
For information relating to Employment Agreements with executive officers,
stock options, stay bonuses, stock grants, and other compensation, see
"Components of Executive Compensation" and "Employment Agreements with Executive
Officers."
INDEPENDENT AUDITORS
Richard A. Eisner & Company, LLP ("RAE") has performed the audits of the
consolidated financial statements of the Company and its subsidiaries for the
fiscal years ended May 31, 2001, 2000, and 1999. Shareholders are not being
asked to vote on the selection of independent auditors for Fiscal 2002 as such
shareholder approval is not required.
The Company expects that a representative of RAE will be present and
available to respond to appropriate questions during the annual meeting.
AUDIT AND RELATED FEES
Audit Fees. The aggregate fees billed by RAE for professional services
rendered in connection with the audit of the Company's annual financial
statements for the year ended May 31, 2001 and for the reviews during Fiscal
2001 of the financial statements included in the Company's quarterly reports on
Form 10-Q were $125,000.
Financial Information Systems Design and Implementation Fees. The Company
did not engage RAE to provide professional services to the Company regarding
information systems design and implementation during the fiscal year ended May
31, 2001.
All Other Fees. The aggregate fees billed by RAE during Fiscal 2001 for
services rendered by RAE, other than the services covered under "Audit Fees" and
"Financial Information Systems Design and Implementation Fees" were $51,500.
Such fees were for tax consulting services.
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ANNUAL REPORT
THE 2001 ANNUAL REPORT TO STOCKHOLDERS, INCLUDING CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FISCAL YEAR ENDED MAY 31, 2001 AND THE COMPANY'S ANNUAL
REPORT ON FORM 10-K (WITHOUT EXHIBITS THERETO), HAS BEEN MAILED WITH THIS PROXY
STATEMENT. THE COMPANY WILL PROVIDE COPIES OF EXHIBITS TO THE ANNUAL REPORT ON
FORM 10-K, BUT WILL CHARGE A REASONABLE FEE PER PAGE TO ANY REQUESTING
STOCKHOLDER. STOCKHOLDERS MAY MAKE SUCH REQUEST IN WRITING TO THE SECRETARY OF
THE COMPANY, 200 SOUTH HOOVER BOULEVARD, SUITE 200, TAMPA, FLORIDA 33609.
OTHER BUSINESS
The Board of Directors knows of no other matters to be brought before the
2001 Annual Meeting. However, if any other business properly comes before the
Annual Meeting, the persons named in the accompanying form of proxy will vote or
refrain from voting thereon in accordance with their judgment pursuant to the
discretionary authority given them in the proxy.
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STOCKHOLDER PROPOSALS FOR YEAR 2002 ANNUAL MEETING
Stockholder proposals to be submitted for inclusion in the year 2002 proxy
materials and consideration at the year 2002 Annual Meeting of Stockholders must
be received by the Company not later than July 3, 2002. Such proposals should be
directed to the Secretary of the Company, 200 South Hoover Boulevard, Suite 200,
Tampa, Florida 33609.
By Order of the Board of Directors,
/s/ CATHY J. WELCH
Cathy J. Welch
Secretary
September 28, 2001
Tampa, Florida
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COMPREHENSIVE CARE CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE 2001 ANNUAL MEETING OF STOCKHOLDERS ON NOVEMBER 2, 2001
The undersigned hereby appoints Mary Jane Johnson and Cathy J. Welch, or
either of them, proxies, with power of substitution, to vote the shares of
common stock of Comprehensive Care Corporation, which the undersigned is
entitled to vote at the 2001 Annual Meeting of Stockholders on November 2, 2001,
and any adjournment thereof, as follows:
1. PROPOSAL 1: Election of Director:
[ ] FOR the election as a director the following:
Class III: Nominee for a 3-year term expiring in the year 2004: Robert J.
Landis
[ ] WITHHOLD AUTHORITY to elect the nominee listed above.
2. With discretionary power in the transaction of such other business as may
properly come before the annual meeting.
(Continued on other side)
(Continued from other side)
THIS PROXY, PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREON. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1. THE PROXIES MAY VOTE
IN THEIR DISCRETION AS TO OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE 2001
ANNUAL MEETING.
Dated: , 2001
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Signature
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Signature (if held jointly)
Title or authority (if
applicable)
NOTE: Please sign exactly as
name appears hereon. If shares
are registered in more than
one name, the signatures of
all persons are required. A
corporation should sign in its
full corporate name by a duly
authorized officer, stating
his or her title. Trustees,
guardians, executors and
administrators should sign in
their official capacity,
giving their full title as
such. If a partnership, please
sign in the partnership name
by an authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY, USING THE ENCLOSED
ENVELOPE.
NO POSTAGE REQUIRED IF MAILED IN THE UNITED STATES OF AMERICA.