-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, NP/fwIlXbAzXKZ9jB9c+PXg7LINOFC/HWvCG1LcoDUtA6WxiIYKTqnYnSHQ4eE3D ENtTCFs7GpC5RSVFa+btLA== 0000950110-94-000175.txt : 19940510 0000950110-94-000175.hdr.sgml : 19940510 ACCESSION NUMBER: 0000950110-94-000175 CONFORMED SUBMISSION TYPE: DEFC14A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19940509 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: BEVERLY ENTERPRISES INC /DE/ CENTRAL INDEX KEY: 0000812305 STANDARD INDUSTRIAL CLASSIFICATION: 8051 IRS NUMBER: 954100309 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEFC14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-09550 FILM NUMBER: 94526759 BUSINESS ADDRESS: STREET 1: 1200 S WALDRON RD #155 CITY: FORT SMITH STATE: AR ZIP: 72903 BUSINESS PHONE: 5014526712 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: FOOD & ALLIED SERVICE TRADES DEPT AFL CIO CENTRAL INDEX KEY: 0000922585 STANDARD INDUSTRIAL CLASSIFICATION: IRS NUMBER: 521072221 FILING VALUES: FORM TYPE: DEFC14A BUSINESS ADDRESS: STREET 1: 815 - 16TH STREET, N.W. CITY: WASHINGTON STATE: DC ZIP: 20006 BUSINESS PHONE: 2027377200 MAIL ADDRESS: STREET 1: 815 - 16TH STREET, N.W. CITY: WASHINGTON STATE: DC ZIP: 20006 DEFC14A 1 AMEND#1 BEVERLY ENTERPRISES & FOOD AND ALLIED SERV SCHEDULE 14A (Rule 14A-101) INFORMATION REQUIRED IN Proxy Statement SCHEDULE 14-A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 Filed by the registrant / / Filed by a party other than the registrant /X/ Check the appropriate box: / / Preliminary proxy statement /X/ Definitive proxy statement / / Definitive additional materials / / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12 BEVERLY ENTERPRISES, INC. (Name of Registrant as Specified in Its Charter) FOOD AND ALLIED SERVICE TRADES DEPARTMENT, AFL-CIO (Name of Person(s) Filing Proxy Statement) Payment of filing fee (Check the appropriate box): /X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(j)(2). / / $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). / / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: __________________________________ (2) Aggregate number of securities to which transactions applies: __________________________________ (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11:(1) ________________________________________ (4) Proposed maximum aggregate value of transaction: ______________________ / / 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: _______________________________________________________________ INDEPENDENT STOCKHOLDERS' PROXY SOLICITATION In Connection With The 1994 ANNUAL MEETING OF STOCKHOLDERS OF BEVERLY ENTERPRISES, INC. May 19, 1994 Food and Allied Service Trades Department, AFL-CIO ("FAST") furnishes this Proxy Statement in connection with its solicitation of proxies for use at the Annual Meeting of Stockholders of Beverly Enterprises, Inc. ("Beverly" or the "Company"), 1200 South Waldron Road, Fort Smith, Arkansas 72903. The meeting is now scheduled to be held at the Holiday Inn, 700 Rogers Avenue, Fort Smith, Arkansas, on Thursday, May 19, 1994 at 10:00 a.m., and proxies solicited with this Proxy Statement will be used at that time and at all continuations and adjournments of the meeting for the following purposes: 1. To elect seven members of the Board of Directors; 2. To consider and act upon a proposal regarding Amendment No. 1 to the Beverly Enterprises, Inc. 1993 Long-Term Incentive Stock Plan; 3. To consider and act upon a proposal regarding the Beverly Enterprises, Inc. Annual Incentive Plan; 4. To consider and act upon a proposal regarding the Beverly Enterprises, Inc. Non-Employee Directors' Stock Option Plan; 5. To ratify the appointment of Ernst & Young as independent auditors for 1994; 6. To consider and act upon an Independent Stockholders' Resolution recommending the preparation of a special report to stockholders on patient care related lawsuits filed against the Company and the issuance of instructions to legal counsel to refrain from sealing court settlements involving the Company; and 7. To transact such other business as may properly come before the meeting or any adjournment thereof. Copies of this Proxy Statement and form of proxy are being sent or given to a number of stockholders on or about May 6, 1994. PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED GREEN PROXY CARD AND MAIL IT IN THE POSTAGE PRE-PAID ENVELOPE PROVIDED HEREWITH TO: FAST, AFL-CIO Room 408 815 16th Street, N.W. Washington, D.C. 20006 May 6, 1994 INFORMATION CONCERNING FAST FAST is an unincorporated labor organization, with principal offices in Washington, D.C., that is a constitutional department of the American Federation of Labor and Congress of Industrial Organizations ("AFL-CIO"). FAST is not the authorized collective bargaining representative for any employees in patient health care or other businesses that serve or may seek to serve as a supplier to Beverly. FAST is the beneficial owner of 45 shares of the Company's common stock. Two of FAST's affiliates, the Service Employees International Union and the United Food and Commercial Workers International Union are the legal bargaining representatives of an estimated 10% of the Company's employees. SOLICITATION OF PROXIES FAST expects to solicit proxies pursuant to this Proxy Statement through the mail, by telephone and/or through personal interviews. FAST will also request brokers, custodians and other nominees to forward solicitation materials to beneficial owners of common stock, and such persons will be reimbursed for their reasonable out-of-pocket expenses. Regular employees and officers of FAST and of its affiliates may also solicit proxies personally and by telephone, and they will not receive any additional compensation for such solicitation. No specially engaged employees have been or will be employed to solicit stockholders. This Proxy Statement will also be disseminated to a number of stockholders, including institutional stockholders, directors of the Company and a significant number of individual stockholders with large holdings. The cost of the solicitation will be borne solely by FAST, and while FAST does not know the exact cost of the solicitation at this time, FAST does not expect it to exceed $30,000. Total expenditures to date, including printing and postage expenses, have been approximately $5,000. FAST will not seek reimbursement for the costs of this solicitation from the Company. VOTING RIGHTS The Company's Board of Directors has fixed the close of business on March 21, 1994 as the record date for determining the stockholders of the Company entitled to notice of and to vote at the Annual Meeting and at any adjournment thereof. As of the record date, the Company had outstanding 83,046,602 shares of common stock. Each holder of record of outstanding shares of common stock on the record date is entitled to one vote per share held on each matter submitted to the Annual Meeting. Stockholders are not permitted to cumulate votes for the purpose of electing directors or otherwise. The presence in person or by proxy of the holders of a majority of the shares entitled to vote will constitute a quorum for the transaction of business at the Annual Meeting. A plurality of the votes cast in person or by proxy and entitled to vote at the Annual Meeting is required for the election of directors. The affirmative vote of the holders of shares of common stock representing a majority of votes is required for (a) the approval of Amendment No. 1 to the Beverly Enterprises, Inc. 1993 Long-Term Incentive Stock Plan, (b) the approval of the Beverly Enterprises, Inc. Annual Incentive Plan, (c) the approval 1 of the Beverly Enterprises, Inc. Non-Employee Directors' Stock Option Plan, (d) the ratification of the appointment of Ernst & Young as independent auditors for 1994, (e) the approval of such other matters (other than the election of directors) as may properly come before the Annual Meeting, and (f) the Independent Stockholders' Resolution on patient care related lawsuits against the Company. Abstention and broker non-votes have the same effect as votes against proposals presented to stockholders other than the election of directors. They have no effect on the election of directors. A broker non-vote occurs when a nominee holding shares for a beneficial owner votes on one proposal, but does not vote on another proposal because the nominee does not have discretionary voting power and has not received instruction from the beneficial owner. REVOCATION RIGHTS A stockholder who executes the enclosed proxy has the power to revoke it at any time before it is exercised. A proxy may be revoked by filing with the Secretary of the Company, Robert W. Pommerville, 1200 South Waldron Road, Fort Smith, Arkansas 72903 (i) a signed instrument revoking the proxy, or (ii) a duly executed proxy bearing a later date. A proxy may also be revoked if the person executing the proxy is present at the Annual Meeting and elects to vote in person. If the proxy is not revoked, it will be voted by those named therein. PROPOSAL 1 ELECTION OF DIRECTORS One of the purposes of the Annual Meeting is to elect seven directors to hold office until the 1995 Annual Meeting and until successors are elected and duly qualified. The Board has nominated seven individuals to serve as directors, all seven of whom, according to Management's 1994 Proxy Statement, are presently directors of the Company. Pages 3, 4 and 5 of Management's 1994 Proxy Statement (incorporated herein by reference) sets forth the names and ages of the seven nominees and describes the principal business experience of each, as well as the year each first held Company office and/or served as a director, the number of shares each beneficially owns and the percentage of outstanding shares owned by each nominee. Information is also provided concerning the committees of the Board. Unless otherwise directed on the proxy card, the proxy holders named therein by FAST will vote the shares represented thereby FOR the election of the nominees named in Management's 1994 Proxy Statement. PROPOSAL 2 APPROVAL OF AMENDMENT NO. 1 TO THE BEVERLY ENTERPRISES, INC. 1993 LONG-TERM INCENTIVE STOCK PLAN The Board has unanimously approved Amendment No. 1 to the 1993 Long-Term Incentive Stock Plan and has directed that Amendment No. 1 be submitted for stockholder approval at the Annual Meeting. Amendment No. 1 will become effective upon the affirmative vote of a majority of the shares of common stock voting 2 the Annual Meeting. On pages 5, 6 and 7 of Management's 1994 Proxy Statement (incorporated herein by reference), the Board describes the Plan, the Amendment to the Plan and the Board's reasons for adopting it and for seeking stockholder ratification thereof. The Board of Directors of the Company recommends a vote FOR the proposal to approve Amendment No.1 to the 1993 Long-Term Incentive Stock Plan. Proxies received by FAST will be so voted unless a contrary choice is specified. PROPOSAL 3 APPROVAL OF THE BEVERLY ENTERPRISES, INC. ANNUAL INCENTIVE PLAN The Board has unanimously approved the Beverly Enterprises, Inc. Annual Incentive Plan and has directed that the Annual Incentive Plan be submitted for stockholder approval at the Annual Meeting. On pages 7, 8 and 9 of Management's 1994 Proxy Statement (incorporated herein by reference), the Board describes the Plan and the Board's reason for adopting it and for seeking stockholder ratification thereof. The Annual Incentive Plan will become effective upon the affirmative vote of a majority of the shares of common stock voting at the Annual Meeting. A copy of the Annual Incentive Plan is attached as Exhibit A to Management's 1994 Proxy Statement and is incorporated herein by reference. Disclosure concerning executive compensation for the year ended December 31, 1993 is set forth on pages 15, 16, 17, 18 and 19 of Management's 1994 Proxy Statement and is incorporated herein by reference. FAST recommends a vote AGAINST the Annual Incentive Plan on the grounds that the Plan does not include as a measure of a participant's performance any criteria to ensure that quality patient care is delivered to residents of the Company's facilities. In FAST's opinion, delivering quality patient care is at least as important as earnings per share, return on equity, revenue growth, cash flow and income and operating margins as a measure of performance. FAST believes that the Company can devise objective criteria to measure a participant's role in delivering quality patient care and that the Annual Incentive Plan should be reconsidered by the stockholders when this has been accomplished. Unless otherwise directed on the proxy card, the proxy holders named therein by FAST will vote AGAINST the proposal to approve the Beverly Enterprises, Inc. Annual Incentive Plan. PROPOSAL 4 APPROVAL OF THE BEVERLY ENTERPRISES, INC. NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN The Board has unanimously approved adoption of the Beverly Enterprises, Inc. Non-Employee Directors' Stock Option Plan and has directed that the Non-Employee Directors' Stock Option Plan be submitted for stockholder approval at the Annual Meeting. The Non-Employee Directors' Stock Option Plan will become effective upon the affirmative vote of a majority of the shares of common stock voting at the Annual Meeting. A copy of the Non-Employee Directors' Stock Option Plan is attached as Exhibit B to Management's 1994 Proxy Statement and is incorporated herein by reference. On pages 10, 11 and 12 of Management's 1994 Proxy 3 Statement (incorporated herein by reference), the Board describes the Plan and the Board's reasons for adopting it and for seeking stockholder ratification thereof. Unless otherwise directed on the proxy card, the proxy holders named therein by FAST will vote the shares represented thereby FOR approval of the Non-Employee Directors' Stock Option Plan. PROPOSAL 5 RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS The Board has selected Ernst & Young as auditors for the Company for the year ended December 31, 1994, subject to ratification by the stockholders. Ernst & Young audited the Company's consolidated financial statements for the year ended December 31, 1993 and, together with its predecessor, Arthur Young & Company, has been the Company's auditors since 1965. The Board of Directors of the Company recommends a vote FOR the proposal to ratify the appointment of Ernst & Young as independent auditors for 1994. Proxies received by FAST will be so voted unless a contrary choice is specified. PROPOSAL 6 INDEPENDENT STOCKHOLDERS' RESOLUTION ON PATIENT CARE RELATED LAWSUITS FILED AGAINST THE COMPANY FAST proposes an Independent Stockholders' Resolution, set forth fully in Exhibit A hereto, that recommends to the Board of Directors that the Company include in its Annual Report on Form 10-K and in a special report to the stockholders a listing of all pending and settled cases involving any and all aspects of patient care provided in its facilities for the subject year; and that the Company instruct all of its insurance carriers and legal counsel to refrain from sealing court settlements involving the Company. Principal Reasons For Adoption I. The primary business of the Company is providing care for elderly patients and private lawsuits are an indicator of whether such care is being properly provided. As of January 31, 1994 the Company operated 774 nursing facilities with 82,680 beds, making it the largest such operator in the United States. FAST believes that one of the primary reasons patients' families place their relatives in particular nursing homes is their evaluation of the home's reputation for providing quality care. There are, of course, other reasons such as location, cost and the reputation of competing facilities. The Company apparently also believes that providing quality care is a corporate objective. This is evidenced by the existence of a "Quality Assurance" program, about which the Company writes in its current Form 10-K: "The Company has a Quality Assurance (`QA') program to ensure quality care is maintained in each of its nursing facilities. The QA department is headed by a Senior Vice President who reports directly to 4 the Chief Executive Officer and to an independent quality asurance committee of the Board of Directors. The Company's nationwide QA network is made up of approximately 250 health care professionals including registered nurses, dieticians, social workers and other specialists. These specialists visit each of the Company's nursing facilities several times each year to conduct quality reviews and consultations. In addition, a select QA team visits each facility annually to conduct a detailed survey that requires several days of inspection, review and training." Also, in its 1992 Annual Report to stockholders, the Company writes: "Quality is the cornerstone of Beverly's philosophy. We are continually seeking ways to make a difference . . . our aim is to achieve the highest practicable level of functioning of each resident. We continue to bridge the gap between the perception and the actual delivery of services." The Company also reports in its current Form 10-K: "The Company's nursing facilities are subject to compliance with various federal, state and local health care statutes and regulations. . . ." The Company states further: "The Company believes that its facilities are in substantial compliance with the various Medicaid and Medicare regulatory requirements currently applicable to them. In the ordinary course of business, however, the Company receives notices of deficiencies for failure to comply with various regulatory requirements. . . ." The Company's disclosure regarding legal proceedings is similar in its routine nature to the disclosure cited above. It states: "There are various lawsuits and regulatory actions pending against the Company arising in the normal course of business, some of which seek punitive damages. The Company does not believe that the ultimate resolution of these matters will have a material adverse effect on the Company's financial position or results of operations." FAST believes that this disclosure is much too narrow to enable stockholders and investors to make informed judgements about the Company's success in achieving its goal of providing quality patient care to the residents of its facilities. Our research indicates that many of the lawsuits brought against the Company involve wrongful death and negligence, matters of significant importance not only to the patients and their relatives, but to stockholders as well. While the prosecution of such claims is subject to many considerations, such as relevant state laws, the relationship existing between patients and their relatives and the Company's facilities, and the willingness of private attorneys to pursue such claims, in FAST's opinion they are an important indicator of the quality of the care provided in Company facilities. Patient care related lawsuits can effectively serve as a "free market" regulatory mechanism acting to alert Company officials to the existence of serious problems in the Company's patient care delivery system and can provide relevant information to stockholders and potential investors. The Company's disclosure, although it may well be in compliance with the relevant securities laws, takes a narrow, financially oriented view of the significance of such information. The statement that "[t]he Company 5 does not believe that the ultimate resolution of these matters will have a material adverse effect on the Company's financial position or results of operations" is intended to mean that the dollar value involved in the resolution of these claims will not be significant. However, the primary business of the Company is caring for elderly patients. The current disclosure does not speak to the nature of the claims, their number, their status or the substance of the charges being levied against Beverly. It does not speak to the question of large monetary damages being awarded by juries, or agreed to by the Company in settlements, which would indicate that the Company's Quality Assurance program has not performed as expected. FAST's resolution, if adopted by the stockholders and implemented by the Company, would provide stockholders and investors with such information, thus enabling them to make more informed decisions about their investment. II. The sealing of lawsuits against the Company deprives stockholders of important information. Discussions with plaintiffs' attorneys indicate that Beverly and/or counsel for its insurance carriers routinely insist as a condition of settlement of patient care related cases that such settlements be sealed from public inspection. In addition to Federal and state statutes that may entitle plaintiffs to preserve the confidentiality of settlements of such matters, plaintiffs' counsel also from time to time desire that settlements be sealed from public inspection to protect the privacy of an individual plaintiff. Judges will routinely agree to this provision if both parties stipulate to it. The dynamic of settlement negotiations is such that plaintiffs' attorneys often feel that they can negotiate a more favorable financial settlement if they agree to sealing. While this may be in the interest of an individual plaintiff, in FAST's opinion it is not necessarily in the interest of stockholders who are deprived of access to the details of the settlement. Accordingly, FAST believes that Company counsel should not request that records be sealed, and should also be instructed by the Company to object to the sealing of records. FAST's resolution, if adopted by the stockholders and implemented by the Company, would result in substantially all settlement information being made available to the public and thus, to stockholders. III. The Chief Executive Officer of the Company is not fully informed about the status, content or number of lawsuits brought against the Company. Mr. David R. Banks, Chairman of the Board, President and Chief Executive Officer of the Company, in FAST's opinion is not fully informed about the nature or import of the patient care lawsuits brought against the Company. FAST's opinion is based in part on the responses provided by Mr. Banks to questions posed by plaintiff's counsel on November 9, 1993 in the case of Malda Elaine Bullock Musser et al. vs. Beverly Enterprises, Inc. et al. (93-101) in the 71st Judicial District of Harrison County, Texas. The following questions and answers were transcribed by Glenda Fuller, Certified Shorthand Reporter and Notary Public in Travis County: Question: Has any event that has occurred in the last 10 years made you interested enough in the lawsuits that have been filed against Beverly Enterprises to make an inquiry for a list of pending lawsuits? Answer: I have asked at various times how many lawsuits we've had, but I haven't done that in a long time. ------------------ 6 Question: Okay. Has anything transpired, any event in the last 10 years to cause interest enough on your part to make inquiry about the number of pressure sore cases that have been filed against Beverly Enterprises? Answer: I haven't broken it down. Question: You have never then asked for a breakdown of the nature of the injuries or injuries precipitating death that have been involved in lawsuits? Answer: All I had asked is how many lawsuits do we have. I have never broken them down. Question: Have you ever asked or is there anything that has occurred in the last 10 years that has stipulated [sic] interest on your part to make inquiry about the number of cases where Beverly was being accused of gross negligence? Answer: Was the . . . if the question is have I asked how many times we have had a lawsuit that violated, gross negligence, I said earlier I've never broken them down. I have asked about suits and I've talked about suits, but I've never asked the breakdown. -------------------- Question: Can you tell me the amount of money that Beverly has paid in the last 10 years in wrongful death cases? Answer: No. -------------------- Question: Can you tell me the amount of money that Beverly has paid in the last 10 years to settle lawsuits involving allegations of in-house decubitis ulcers? Answer: No. FAST believes that the Chief Executive Officer of any nursing home company should be able to answer with specific facts the questions posed to Mr. Banks as set forth above. That he could not, in FAST's opinion, indicates that the Company's management information system concerning quality of care issues needs improvement. Adoption of FAST's resolution would compel increased awareness of the importance of patient care lawsuits among the Company's executives, including the Chairman and Chief Executive Officer. In FAST's opinion, the provision of this information to stockholders would create a heightened awareness among all employees about the functional relationship between the health of patients in the Company's facilities and the financial health of the Company. Such an awareness, should it result in improved quality of care and, hence, fewer lawsuits being brought against the Company, should result in increased value for stockholders. IV. The report to stockholders should be brief and contain basic, material information. FAST proposes that the report to stockholders should contain, at a minimum, the case name (plaintiff v. defendant), case number, date of filing, court of jurisdiction, a brief statement of the facts as alleged, the Com- 7 pany's response, the current status of the case, and the facts of the judgement entered by the court or settlement reached by the parties, including the amount of the monetary award or settlement, if any. FAST believes that such information is readily available to officers of the Company. While it may not be organized as described above, FAST further believes that the cost of initially organizing the information in this fashion should be considered an investment in improving the Quality Assurance program. The cost of maintaining this information system, in FAST's opinion, would be minimal, as would the cost of preparing the annual report to stockholders. In FAST's opinion, there would be no increased costs associated with including the report in the Company's Annual Report filing beyond additional printing expenses. V. The proposed resolution is consistent with the Company's by-laws and with governing Federal and state law. The proposed Independent Stockholders' Resolution recommends to the Board of Directors that the Company include in its Annual Report on Form 10-K and in a special report to the stockholders a listing of all pending, settled and/or decided cases involving any and all aspects of patient care. In FAST's opinion, this is within the power of the stockholders to propose and the Board to implement. Stockholders have the power to recommend actions to the Board of Directors. Furthermore, Section 141(c) of the Delaware General Corporation Law authorizes a Board of Directors, by resolution, to designate committees to exercise such board's power and authority to manage the business and affairs of a corporation. FAST's proposal falls logically within the purview of an already established committee of the Board, namely, the Quality Assurance Committee. As set forth in Management's 1994 Proxy Statement, this committee "monitors the quality assurance process of the Company and reports to the Board on progress made toward reaching quality assurance goals." Majority Vote Needed To Adopt The Independent Stockholders' Resolution Adoption of the proposed Independent Stockholders' Resolution will require the affirmative vote of a majority of the shares having voting power present in person or represented by valid proxy at the Annual Meeting. If you execute the enclosed proxy by voting to ABSTAIN on the question of whether to adopt the Independent Stockholders' Resolution, your proxy will effectively serve as a vote AGAINST the proposal. Your shares will be voted FOR the Independent Stockholders' Resolution if you execute the enclosed proxy without specifically instructing the proxy holders named therein how to vote. In either case, your shares will be counted as being "present" at the meeting. In FAST's view, proxies executed pursuant to Management's 1994 Proxy Statement and form of proxy dated April 19, 1994 cannot be voted on the Independent Stockholders' Resolution because Management failed to address in its Proxy Statement the issues raised in the Independent Stockholders' Resolution even though Management was aware as early as March 24, 1994 that FAST intended to raise these issues. The Company, on the same day, received a copy of the proposed Independent Stockholders' Resolution, which has not changed in substance since March 24, 1992. Moreover, in FAST's opinion, proxies that cannot be voted on the Indepen- 8 dent Stockholders' Resolution cannot be counted in determining whether the Independent Stockholders' Resolution has been approved by a majority of the shares present at the Annual Meeting and eligible to vote on this issue. However, if Management resolicits proxies that specifically address the Independent Stockholders' Resolution, such proxies (and proxies granted pursuant to Management's April 19, 1994 solicitation that are not subsequently revoked) may be voted on the Independent Stockholders' Resolution and will be counted in determining whether the Independent Stockholders' Resolution has been duly approved. FAST RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE INDEPENDENT STOCKHOLDERS' RESOLUTION * * * * * * * * SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL HOLDERS Based on the information set forth in Management's 1994 Proxy Statement at page 3 (incorporated herein by reference), as of March 21, 1994 the Company's directors and executive officers beneficially owned, as a group, approximately 1,393,094 shares, or 1.6% of the Company's outstanding common stock. That number includes shares that the individuals within that group have a right to acquire beneficial ownership of within 60 days after March 21, 1994 through the exercise of options under the Company's stock option plans. On page 2 of Management's 1994 Proxy Statement (incorporated herein by reference), the Board listed each person who, as of March 21, 1994, was known to the Company to be the beneficial owner of 5% or more of the Company's common stock, along with the amount and nature of the beneficial ownership and other related information. OTHER MATTERS FAST knows of no other business to be presented at the Annual Meeting, but if other matters do properly come before the Annual Meeting the proxy holders named in the enclosed proxy will use their discretion to vote on such matters in accordance with their best judgment. 9 SUBMISSION OF STOCKHOLDER PROPOSALS Federal securities rules require the Company to include certain stockholder proposals and supporting statements in Management's Proxy Statement. December 20, 1994 is the date by which proposals of stockholders intended to be presented at the 1995 Annual Meeting of Stockholders must be received by the Company for inclusion in the Company's proxy statement and form of proxy relating to that meeting. FOOD AND ALLIED SERVICE TRADES DEPARTMENT, AFL-CIO PLEASE PROMPTLY COMPLETE, DATE AND SIGN THE ENCLOSED GREEN PROXY CARD AND MAIL IT IN THE POSTAGE PRE-PAID ENVELOPE PROVIDED HEREWITH OR FAX TO 202-737-7208 If your shares are held in the name of a broker, bank or nominee, only it can sign a proxy card to vote your shares and only upon receipt of your specific instructions to do so. Accordingly, please contact the person responsible for your account and give him or her the appropriate instructions to execute the GREEN proxy card. IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE IN VOTING YOUR SHARES PLEASE TELEPHONE (202) 737-7200. 10 EXHIBIT A Independent Stockholders' Resolution Proposed by Food and Allied Service Trades Department, AFL-CIO for the 1994 Annual Meeting of Stockholders of Beverly Enterprises, Inc. Whereas, the primary business of Beverly Enterprises, Inc. is to provide quality patient care to tens of thousands of America's elderly in its nursing homes; and Whereas, Beverly Enterprises, Inc. stated in its Annual Report on Form 10-K as filed for the year ended December 31, 1993: "There are various lawsuits and regulatory actions pending against the Company arising in the normal course of business, some of which seek punitive damages. The Company does not believe that the ultimate resolution of these matters will have a material adverse effect on the Company's financial position or results of operations."; and Whereas, the filing of lawsuits against the Company charging among other matters, wrongful death and neglect, are important indicators of the Company's provision of care for its residents; and Whereas, the lawsuits which are settled prior to trial are often sealed as a result of settlement negotiations; and Whereas, such settlement information is relevant and material to the decision making process of current stockholders and potential investors in the Company's common stock; Therefore Be It Resolved, that the stockholders of Beverly Enterprises, Inc. recommend that the Board of Directors instruct all of the Company's insurance carriers and legal counsel that they refrain from sealing any court settlements involving the Company in the future; and be it further Resolved, that the stockholders recommend to the Board of Directors that the Company include in its Annual Report on Form 10-K and in a special report to the stockholders a listing of pending, settled and decided cases involving any and all aspects of the patient care provided in its facilities for the year being reported on. The report should, at a minimum, include about each case: its name, case number, date of filing, court of jurisdiction, basic facts of the complaint, current status, and if a judgement has been entered or settlement reached, the essential facts thereof including the amount of the monetary award or settlement. A-1 INDEPENDENT STOCKHOLDERS' PROXY SOLICITED ON BEHALF OF FOOD AND ALLIED SERVICE TRADES DEPARTMENT, AFL-CIO FOR THE ANNUAL MEETING OF STOCKHOLDERS OF BEVERLY ENTERPRISES, INC. TO BE HELD ON MAY 19, 1994 The undersigned hereby revokes all prior proxies given by the undersigned and appoints Robert F. Harbrant, Jeffrey L. Fiedler and Keith R. Mestrich, each of them, as proxies, each with the power to appoint his substitute, to represent and to vote as designated below, all the shares of common stock of Beverly Enterprises, Inc. held of record by the undersigned on March 21, 1994 at the Annual Meeting of Stockholders to be held on May 19, 1994 or any adjournment thereof. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting. This Proxy when properly executed will be voted in the manner directed herein by the undersigned. If no specification is made, this Proxy will be voted FOR the election of the directors named in the Independent Stockholders' Proxy Statement, FOR the APPROVAL of Amendment No. 1 to the Beverly Enterprises, Inc. 1993 Long-Term Incentive Stock Plan, AGAINST the APPROVAL of the Beverly Enterprises, Inc. Annual Incentive Plan, FOR the APPROVAL of the Beverly Enterprises, Inc. Non-Employee Directors' Stock Option Plan, FOR the appointment of Ernst & Young as independent auditors for 1994, and FOR the Independent Stockholders' Proposal recommending the preparation of a special report to the stockholders on patient care related lawsuits filed against the Company and instructions to counsel that settlements by the Company not be sealed. (Continued and to be signed and dated on the reverse side.)
1. Election of Directors: Beryl F. Anthony, Jr., David R. Banks, Curt F. Bradbury, James R. Greene, Jon E.M. Jacoby, Louis W. Menk and Will K. Weinstein. FOR EACH NOMINEE LISTED ABOVE / / WITHHOLD AUTHORITY TO VOTE FOR EACH NOMINEE LISTED ABOVE / / (INSTRUCTION: To withhold authority to vote for any individual nominee or nominees, check the box opposite "For Each Nominee Listed Above" and write the name or names of such individual nominee or nominees on the space provided below.) ___________________________________________________________________________________________________________________________________ If any nominee named above declines or is unable to serve as a director, the persons named as proxies, and each of them, shall have full discretion to vote for any other person who may be nominated. APPROVAL DISAPPROVAL ABSTENTION APPROVAL DISAPPROVAL ABSTENTION OF OF WITH RESPECT TO OF OF WITH RESPECT TO 2. Amendment No. 1 to / / / / / / 3. The Beverly Enter- / / / / / / the Beverly Enterprises, prises, Inc. Annual Inc. 1993 Long-Term Incentive Plan Incentive Stock Plan APPROVAL DISAPPROVAL ABSTENTION APPROVAL DISAPPROVAL ABSTENTION OF OF WITH RESPECT TO OF OF WITH RESPECT TO 4. The Beverly Enterprises, Inc. / / / / / / 5. Appointment of Ernst & / / / / / / Non-Employee Directors' Young as Independent Stock Option Plan Auditors for 1994 APPROVAL DISAPPROVAL ABSTENTION OF OF WITH RESPECT TO 6. Independent Stockholders' / / / / / / Resolution on patient care related lawsuits NOTE: Please sign exactly as name appears on this Proxy. When shares are held by joint tenants, both should sign. When signing as attorney, as executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person. Date: ___________________________________________________________________ , 1994 ________________________________________________________________________________ ________________________________________________________________________________ Signature of Stockholder(s) Please sign, date and return today in the enclosed envelope. This Proxy will not be used if you attend the meeting in person and so request. Votes must be indicated (X) in black or blue ink.
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