Preliminary Proxy Statementxþ
Filed by a Party other than the Registrant o
oo Preliminary Proxy Statemento Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))x Definitive Proxy Statemento Definitive Additional Materialso Soliciting Material Pursuant to §240.14a-12
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Payment of Filing Fee (Check the appropriate box):
þ | ||
No fee required. | ||
o | Fee computed on table below per Exchange Act Rules 14a-6(i) |
(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: |
o | ||
Fee paid previously with preliminary materials. | ||
o | 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: |
_______________________
_______________________
16, 2006
1. | Election of | ||
Approval of | |||
3. | Any other matters that properly come before the meeting. |
By order of the board of directors, | ||
Terren S. Peizer | ||
Chairman of the Board and Chief Executive Officer | ||
Los Angeles, California | ||
May 22, 2006 |
Los Angeles, CaliforniaMay 25, 2005
Page | ||||
1 | ||||
1 | ||||
1 | ||||
1 | ||||
1 | ||||
2 | ||||
2 | ||||
2 | ||||
2 | ||||
3 | ||||
3 | ||||
3 | ||||
4 | ||||
4 | ||||
5 | ||||
5 | ||||
5 | ||||
8 | ||||
8 | ||||
8 | ||||
8 | ||||
9 | ||||
10 | ||||
10 | ||||
11 | ||||
11 | ||||
11 | ||||
11 | ||||
i
Page | ||||
13 | ||||
14 | ||||
14 | ||||
14 | ||||
19 | ||||
ii
1
The Board does not know of any other matters that may be brought before the meeting nor does it foresee or have reason to believe that the proxy holders will have to vote for substitute or alternate board nominees. In the event that any other matter should properly come before the meeting or any nominee is not available for election, the proxy holders will vote as recommended by the board of directors or, if no recommendation is given, in accordance with their best judgment.
2
2
Hythiam, Inc. | or | American Stock Transfer & Trust Company | ||||
11150 Santa Monica Blvd., Suite 1500 | 59 Maiden Lane | |||||
Los Angeles, California 90025 | New York, New York 10038 | |||||
Telephone: (310) 444-4300 | Telephone: (212) 936-5100 |
3
3
Total | ||||||||||||||||||||||||
Common | Options | Common | ||||||||||||||||||||||
Common Stock | Stock | Exercisable | Stock | Percent | ||||||||||||||||||||
Beneficially | Beneficially | On or Before | Beneficially | of | ||||||||||||||||||||
Name(1) | Owned(2) | Percent of Class(3) | Owned(2) | June 1, 2006 | Owned | Class(3) | ||||||||||||||||||
Terren S. Peizer(4) | 13,900,000 | 45.8 | % | 13,700,000 | 400,000 | 14,100,000 | 35.2 | % | ||||||||||||||||
Fred Knoll (5) | 1,532,200 | 5.1 | % | 1,985,600 | — | 1,985,600 | 5.0 | % | ||||||||||||||||
Marc G. Cummins(6) | 222,222 | * | 222,222 | 25,000 | 247,222 | * | ||||||||||||||||||
Anthony M. LaMacchia | — | 160,000 | 160,000 | * | ||||||||||||||||||||
Ivan M. Lieberburg | 94,444 | * | 44,444 | 112,500 | 156,944 | * | ||||||||||||||||||
Anthony M. LaMacchia | 80,000 | * | ||||||||||||||||||||||
James W. Elder | 72,000 | * | ||||||||||||||||||||||
Chuck Timpe | 60,000 | * | — | 120,000 | 120,000 | * | ||||||||||||||||||
Richard A. Anderson | 30,000 | * | — | 111,000 | 111,000 | * | ||||||||||||||||||
Monica Alfaro Welling | — | 106,000 | 106,000 | * | ||||||||||||||||||||
Leslie F. Bell | 25,000 | * | — | 62,500 | 62,500 | * | ||||||||||||||||||
Hervé de Kergrohen | 25,000 | * | — | 50,000 | 50,000 | * | ||||||||||||||||||
All directors and executive officers as a group (9 persons) | 14,508,666 | 47.3 | % | |||||||||||||||||||||
Andrea Grubb Barthwell, M.D. | — | — | — | — | ||||||||||||||||||||
All directors and executive officers as a group (12 persons) | 13,966,666 | 1,272,333 | 15,238,999 | 37.3 | % | |||||||||||||||||||
* Less than 1%
* | Less than 1% |
4
(4)13,700,000 Sharesshares are held of record by Reserva Capital, LLC, which is owned and controlled by Mr. Peizer.
4
Director | ||||||||||||||||
Name | Age | Position | Since | Age | Position | Since | ||||||||||
Terren S. Peizer | 45 | Director, Chairman of the Board of Directors and Chief | 2003 | 46 | Director, Chairman of the Board and Chief Executive Officer | 2003 | ||||||||||
Executive Officer | ||||||||||||||||
Richard A. Anderson | 35 | Director, Chief Administrative Officer | 2003 | 36 | Director, Chief Administrative Officer | 2003 | ||||||||||
Anthony M. LaMacchia | 51 | Director, Chief Operating Officer | 2003 | 52 | Director, Chief Operating Officer | 2003 | ||||||||||
Leslie F. Bell, Esq. | 65 | Director, Chair of Audit Committee, Member of | 2003 | 66 | Director, Chair of Audit Committee, Member of Compensation Committee | 2003 | ||||||||||
Compensation Committee | ||||||||||||||||
Hervé de Kergrohen, M.D. | 47 | Director, Chair of Nominations and Governance Committee, | 2003 | 48 | Director, Chair of Nominations and Governance Committee, Member of Audit Committee | 2003 | ||||||||||
Member of Audit Committee | ||||||||||||||||
Ivan M. Lieberburg, Ph.D., M.D. | 55 | Director, Chair of Compensation Committee | 2003 | 56 | Director, Chair of Compensation Committee | 2003 | ||||||||||
Marc G. Cummins | 45 | Director, Member of Audit Committee, Member of Nominations and Governance Committee | 2004 | 46 | Director, Member of Audit Committee, Member of Nominations and Governance Committee | 2004 | ||||||||||
Andrea Grubb Barthwell, M.D. | 51 | Director | 2005 |
5
Pharmaceuticals, Inc., a NasdaqNM listed company. In addition, from June 1999 through May 2003 he was a Director, and from June 1999 through December 2000 he was Chairman of the Board, of supercomputer designer and builder Cray Inc., a NasdaqNM company, and remains its largest beneficial stockholder. Mr. Peizer has been the largest beneficial stockholder and held various senior executive positions with several technology and biotech companies. In these capacities he has assisted the companies with assembling management teams, boards of directors and scientific advisory boards, formulating business and financial strategies, investor and public relations, and capital formation. Mr. Peizer has a
5
Leslie F. Bell, Esq.has for the past 25 years been engaged primarily in business principally in the areas of healthcare services and real estate matters.law. He is a senior executive of Salick Cardiovascular Centers, Inc. and has been an active member of the California Bar for more than 40 years practicing primarily until 1983 and since then on a significantly reduced basis in healthcare, business and real estate matters and related litigation. He is a director and senior executive of Salick Cardiovascular Centers LLC.LLC from its formation in 2003. From late 1997 until 2004 he was a Director and Senior Executive of Bentley Health Care, Inc. and certain of its subsidiaries, each of which was a developer and provider of disease-state outpatient, health care facilities and services. Mr. Bell was Co-Chairman and Co-Chief Executive Officer of Tractus Medical, Inc., a provider of patented relocatable ambulatory surgical center/operating rooms, which he co-founded in January 2002 until its sale in October 2004. From its inception in 1983 through several public offerings and until its sale completed in April 1997, he served as a Director, Executive Vice President and Chief Financial Officer and from late 1996 to April 1997 was President of Salick Health Care, Inc. Mr. Bell has also served as a Director of YES Clothing Co. from 1990 to 1995. He was previously a Deputy Attorney General of the State of California, and managing partner of the law firm Katz, Hoyt & Bell. Mr. Bell attended the University of Illinois, received a J.D. (with honors) from University of Arizona College of Law, and is a member of the University of Arizona College of Law Board of Visitors and Dean’s Economic Council. Mr. Bell is licensed to practice law and is the sole director and President of Leslie F. Bell, Inc., a professional law corporation. He is also a director of various
6
tax-exempt organizations principally formed to support research and education for specified health problems.
6
7
7
On September 7, 2005, we granted Dr. Barthwell options to purchase 50,000 shares at $6.41 per share, vesting 25% per year over four years. On January 26, 2006, we granted Dr. Barthwell and Mr. Cummins options to purchase 50,000 shares at $6.42 per share, vesting 25% per year over four years.
8
8
meetingsone meeting during 2004.2005. The Compensation Committeecompensation committee reviews and recommends to the board of directors for approval the compensation of our executive officers.
9
Three
9
director at the address listed in this proxy statement. All such letters must identify the author as a stockholder. Our corporate Secretarysecretary will open the communications, make copies and circulate them to the appropriate director or directors.
2003 Stock Incentive Plan
Our 2003 Stock Incentive Plan was adopted by our board of directors and approvedas adopted an Employee Stock Purchase Plan, subject to approval by our stockholders on September 29, 2003. A copystockholders. The full text of the plan is attached ascontained in Exhibit 99.1A to our Current Report on Form 8-K filed with the SEC on September 30, 2003.
this proxy statement. The purposeprincipal features of the plan isare summarized below.
There are currently 6,000,000 shares of common stock authorized for issuance under the plan. Options to purchase approximately 5,144,000 shares were outstanding as of March 31, 2005.
Amendment to Increase Shares
Subject to approval by our stockholders, our board has approved a 1,000,000 share increase in the maximum number of shares of our common stock issuable under the plan, from 6,000,000 to 7,000,000. We are requesting that the stockholders vote in favor of increasing the number of shares available under the 2003 Stock Incentive Plan.
We believe that a broad-based stock option program is a powerful employee incentivekey employees and retention tool that benefitsthereby benefit all of our stockholders, and that an increase in the number of available sharesplan is necessary in order to provide appropriate incentives for achievement of company performance objectives and to continue to attract and retain the most qualified employees directors and consultants in light of our ongoing growth and expansion. Without sufficient stock options available for grant, we may be forced to consider cash replacement alternatives to provide a market-competitive total compensation package necessary to attract, retain and motivate the employee talent critical to the future success of the company. These cash replacement alternatives would then reduce the cash available for investment in innovation and technology.
We intend to continue to use stock options as our primary means of providing equity compensation to our employees. Although we believe that employee stock ownership is a significant contributing factor in achieving superior corporate performance, we recognize that increasing the number of available shares under the plan may lead to an increase in our stock overhang and potential dilution.
We strongly believe that our stock option plan will be integralimportant to our ability to achieve superior performance by attracting, retaining and motivating the employee talent critical to attaining long-term improved company performance and stockholder returns.
10
11
• | base salary; | ||
• | annual incentive bonus awards; and | ||
• | equity participation in the form of stock options or other equity-based awards under the equity incentive compensation plan. |
• | the recommendations of management; | ||
• | benchmarks provided by generally available compensation surveys; | ||
• | the experience of committee members and their knowledge of compensation paid by comparable companies or companies of similar size or generally engaged in the healthcare services business; and | ||
• | the advice and counsel of experts and advisors with broad experience in the field of executive compensation. |
12
11
13
12
the Company’scompany’s net operating losses, see the consolidated financial statements included in the 20042005 Annual Report to stockholders.
compensation committee:
Esq.
• | a member of the compensation committee (or other committee of the board of directors performing equivalent functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers served on our compensation committee; | ||
• | a director of another entity one of whose executive officers served on our compensation committee; or | ||
• | a member of the compensation committee (or other committee of the board of directors performing equivalent functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers served as a director of the Company. |
Name | Age | Position | ||||
Chuck Timpe | Chief Financial Officer | |||||
Monica Alfaro Welling | Senior Vice President | |||||
David E. Smith, M.D. | Senior Vice President | |||||
Senior Vice President | ||||||
Donald R. Wesson, M.D. | 64 | Senior Vice President — Scientific Affairs |
14
13
firms he co-founded, Chief Financial Officer of National Pain Institute, Treasurer and Corporate Controller for American Medical International (now Tenet Healthcare Corp., an NYSE company), and a member of Arthur Andersen LLP’s healthcare practice, specializing in public company and hospital system audits. Mr. Timpe received his B.S. from University of Missouri, School of Business and Public Administration, and is a Certified Public Accountant.
University.
15
14
Annual compensation | Long-term compensation | Annual compensation | Long-term compensation | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Other annual | Restricted | Securities | Other annual | Restricted | Securities | All other | ||||||||||||||||||||||||||||||||||||||||||||||||||
Name & Principal | Fiscal | compensation | stock | underlying | All other | Fiscal | compensation | stock | underlying | compensation | ||||||||||||||||||||||||||||||||||||||||||||||
Position | year | Salary ($) | Bonus ($) | ($) | award(s)($) | options (#)(1) | compensation(2) | year | Salary ($) | Bonus ($) | ($) | award(s) ($) | options (#)(1) | (2) | ||||||||||||||||||||||||||||||||||||||||||
Terren S. Peizer, | 2004 | $ | 325,000 | $ | 154,000 | — | $ | — | — | $ | 11,139 | (3) | 2005 | $ | 365,000 | $ | 100,000 | (5) | — | — | — | $ | 53,405 | (3) | ||||||||||||||||||||||||||||||||
Chairman & Chief | 2003 | 75,000 | — | — | — | 1,000,000 | 75 | 2004 | 325,000 | 154,000 | — | — | — | 11,139 | (3) | |||||||||||||||||||||||||||||||||||||||||
Executive Officer | 2002 | — | — | — | — | — | — | 2003 | 75,000 | — | — | — | 1,000,000 | 75 | ||||||||||||||||||||||||||||||||||||||||||
Anthony M. LaMacchia, | 2004 | 200,000 | 50,000 | — | — | — | 61,856 | (4) | 2005 | 206,400 | 71,400 | — | — | — | 1,920 | |||||||||||||||||||||||||||||||||||||||||
Chief Operating | 2003 | 88,463 | — | — | — | 400,000 | 68 | 2004 | 200,000 | 50,000 | — | — | — | 61,856 | (4) | |||||||||||||||||||||||||||||||||||||||||
Officer | 2002 | — | — | — | — | — | — | 2003 | 88,463 | — | — | — | 400,000 | 68 | ||||||||||||||||||||||||||||||||||||||||||
Chuck Timpe, | 2004 | 200,000 | 47,500 | — | — | — | 3,641 | 2005 | 206,400 | 29,000 | — | — | — | 2,315 | ||||||||||||||||||||||||||||||||||||||||||
Chief Financial | 2003 | 97,692 | — | — | — | 300,000 | 194 | 2004 | 200,000 | 47,500 | — | — | — | 3,641 | ||||||||||||||||||||||||||||||||||||||||||
Officer | 2002 | — | — | — | — | — | — | 2003 | 97,692 | — | — | — | 300,000 | 104 | ||||||||||||||||||||||||||||||||||||||||||
James W. Elder, | 2004 | 200,000 | 18,000 | — | — | — | 3,466 | |||||||||||||||||||||||||||||||||||||||||||||||||
Senior Vice | 2003 | 30,769 | — | — | — | 300,000 | 104 | |||||||||||||||||||||||||||||||||||||||||||||||||
President of Business Development | 2002 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Monica Alfaro Welling, | 2005 | 206,400 | 13,000 | — | — | 50,000 | 440 | |||||||||||||||||||||||||||||||||||||||||||||||||
Senior VP of Marketing | 2004 | 107,983 | 15,000 | — | — | 250,000 | 90 | |||||||||||||||||||||||||||||||||||||||||||||||||
2003 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Joseph Dunn | 2004 | 200,000 | 40,000 | — | — | — | 3,038 | 2005 | 200,000 | 9,000 | — | — | — | 2,640 | ||||||||||||||||||||||||||||||||||||||||||
2003 | 60,770 | — | — | — | 300,000 | 104 | 2004 | 200,000 | 40,000 | — | — | — | 3,038 | |||||||||||||||||||||||||||||||||||||||||||
2002 | — | — | — | — | — | — | 2003 | 60,770 | — | — | — | 300,000 | 104 |
(1) | Options granted pursuant to the 2003 Stock Incentive | |
(2) | Includes group life insurance premiums and health club membership fees for each executive. | |
(3) | Includes $51,864 in 2005 and $8,244 | |
(4) | Includes $60,000 reimbursement for relocation expenses. | |
(5) | Mr. Peizer was awarded an additional $265,000 by the board of directors on April 27, 2006. |
16
15
market value on the date of grant, vesting 20% each year over five years. The options vest immediately in the event of a change in control, termination without good cause or resignation with good reason. In the event that Mr. Peizer is terminated without good cause or resigns with good reason prior to the end of the term, he will receive a lump sum equal to the remainder of his base salary and targeted bonus for the year of termination, plus three years of additional salary, bonuses and benefits. If any of the provisions above result in an excise tax, we will make an additional “gross up” payment to eliminate the impact of the tax on Mr. Peizer.
17
16
years. The options vest immediately in the event of a change in control, termination without cause or resignation with good reason. In the event that Mr. Timpe is terminated without good cause or resigns with good reason prior to the end of the term, upon execution of a general release he will receive a lump sum equal to one year of salary and bonus, and will receive continued medical benefits for one year unless he becomes eligible for coverage under another employer’s plan. If Mr. Timpe is terminated without cause or resigns with good reason within twelve months following a change in control, upon execution of a general release he will receive a lump sum equal to eighteen months salary, 150% of the targeted bonus, and will receive continued medical benefits for eighteen months unless he becomes eligible for coverage under another employer’s plan.
Senior Vice President of Business Development
We have entered into a five-yearone-year consulting services agreement with David E. Smith & Associates, a California professional corporation whose sole shareholder is Dr. Smith, effective as of September 15, 2005. The agreement provides for Dr. Smith to make himself available to provide certain consulting services to us in addition to his part-time employment obligations for a fixed monthly fee of $3,800. The agreement will automatically renew for successive one-year periods unless terminated earlier by either party with 30 days prior notice.
18
17
At present, there is no pending litigation or proceeding involving any of our directors, officers, employees or agents where indemnification will be required or permitted. We are not aware of any threatened litigation or proceeding that might result in a claim for such indemnification.
Potential realizable value at | ||||||||||||||||||||||||||||
assumed annual rates of stock | ||||||||||||||||||||||||||||
price appreciation for option | ||||||||||||||||||||||||||||
Individual grants | term(1) | |||||||||||||||||||||||||||
Percent of | ||||||||||||||||||||||||||||
Number of | total options | |||||||||||||||||||||||||||
securities | granted to | Grant | ||||||||||||||||||||||||||
underlying | employees | Exercise | date | |||||||||||||||||||||||||
options | in fiscal | price | market | Expiration | ||||||||||||||||||||||||
granted (#) | year | ($/Sh) | value | date | 5% ($) | 10% ($) | ||||||||||||||||||||||
Terren S. Peizer | — | — | — | — | — | — | — | |||||||||||||||||||||
Anthony M. LaMacchia | — | — | — | — | — | — | — | |||||||||||||||||||||
Chuck Timpe | — | — | — | — | — | — | — | |||||||||||||||||||||
James W. Elder | — | — | — | — | — | — | — | |||||||||||||||||||||
Joseph Dunn | — | — | — | — | — | — | — |
19
Individual grants | ||||||||||||||||||||||||
Percent of | ||||||||||||||||||||||||
Number of | total options | |||||||||||||||||||||||
securities | granted to | Grant | Grant | |||||||||||||||||||||
underlying | employees in | Exercise | date | date | ||||||||||||||||||||
options | fiscal year | price | market | Expiration | present | |||||||||||||||||||
granted (1) | (2) | ($/Sh) (3) | value (3) | date | value (4) | |||||||||||||||||||
Terren S. Peizer | — | — | — | — | — | — | ||||||||||||||||||
Anthony M. LaMacchia | — | — | — | — | — | — | ||||||||||||||||||
Chuck Timpe | — | — | — | — | — | — | ||||||||||||||||||
Monica Alfaro Welling | 50,000 | 10.3 | % | $ | 5.72 | $ | 5.72 | 1/20/15 | $ | 213,000 | ||||||||||||||
Joseph Dunn | — | — | — | — | — | — |
(1) The amounts are based on the 5% and 10% annual rates of return prescribed by the SEC and are not intended to forecast future appreciation, if any, of our common stock nor reflect actual gains, if any, realizable upon exercise.
(1) | These options vest annually over a five-year period from the date of grant. | |
(2) | The percentage is the percentage of the total number of options granted to employees to purchase our common stock during 2005. | |
(3) | All options to purchase our common stock are exercisable at a price equal to the closing price of our common stock on the date of grant. | |
(4) | The Grant Date Present Values of the options granted to the named executive officers during 2005 were derived using a Black-Scholes stock option valuation model. The valuation data and assumptions used to calculate the values for the options granted to our named executive officers were as follows: |
Expected Dividend Yield | 0 | % | ||
Expected Volatility | 63 | % | ||
“Risk Free” Interest Rate | 4.17 | % | ||
Expected Life (Years) | 10 years |
1820
Number of shares underlying | ||||||||||||||||||||||||||||||||||||||||||||||||
unexercised options/SARs at | Value of unexercised in-the-money | Shares | Number of shares underlying | Value of unexercised | ||||||||||||||||||||||||||||||||||||||||||||
fiscal year-end | options at fiscal year-end | acquired | unexercised options/SARs at fiscal | in-the-money options at fiscal | ||||||||||||||||||||||||||||||||||||||||||||
Shares | on | Value | year-end | year-end | ||||||||||||||||||||||||||||||||||||||||||||
acquired on | Value realized | Exercisable | Unexercisable | Exercisable | Unexercisable | exercise | realized | Exercisable | Unexercisable | Exercisable | Unexercisable | |||||||||||||||||||||||||||||||||||||
exercise (#) | ($) | (#) | (#) | ($) | ($) | (#) | ($) | (#) | (#) | ($) | ($) | |||||||||||||||||||||||||||||||||||||
Terren S. Peizer | — | $ | — | 200,000 | 800,000 | $ | 686,000 | $ | 2,744,000 | — | $ | — | 400,000 | 600,000 | $ | 1,360,000 | $ | 2,040,000 | ||||||||||||||||||||||||||||||
Richard A. Anderson | — | — | 60,000 | 315,000 | 219,000 | 219,000 | ||||||||||||||||||||||||||||||||||||||||||
Anthony M. LaMacchia | — | — | 80,000 | 320,000 | 294,400 | 1,177,600 | — | — | 160,000 | 240,000 | 584,000 | 876,000 | ||||||||||||||||||||||||||||||||||||
Chuck Timpe | — | — | 60,000 | 240,000 | 220,800 | 883,200 | — | — | 120,000 | 180,000 | 438,000 | 657,000 | ||||||||||||||||||||||||||||||||||||
James W. Elder | — | — | 72,000 | 228,000 | 264,960 | 839,040 | ||||||||||||||||||||||||||||||||||||||||||
Joseph Dunn | — | — | 60,000 | 240,000 | 220,800 | 883,200 | ||||||||||||||||||||||||||||||||||||||||||
Monica Alfaro Welling | — | — | 58,000 | 242,000 | 179,800 | 606,700 | ||||||||||||||||||||||||||||||||||||||||||
David Smith, M.D | — | — | 20,000 | 100,000 | — | 12,600 | ||||||||||||||||||||||||||||||||||||||||||
Sanjay Sabnani | — | — | 40,000 | 220,000 | 119,500 | 494,000 | ||||||||||||||||||||||||||||||||||||||||||
Donald R. Wesson, M.D. | — | — | 20,000 | 80,000 | 8,600 | 34,400 |
Number of securities | ||||||||||||||||||||||||
Number of securities | Weighted average | Number of securities | Number of securities | Weighted average | remaining available for future | |||||||||||||||||||
to be issued upon | exercise price of | remaining available for future | to be issued upon | exercise price of | issuance under equity | |||||||||||||||||||
exercise of | outstanding | issuance under equity compensation | exercise of | outstanding | compensation plans (excluding | |||||||||||||||||||
outstanding options, | options, warrants | plans (excluding securities | outstanding options, | options, warrants | securities referenced in the | |||||||||||||||||||
Plan Category | warrants and rights | and rights | referenced in the first column) | warrants and rights | and rights | first column) | ||||||||||||||||||
Equity compensation plans approved by security holders | 4,877,000 | $ | 2.97 | 1,123,000 | 5,528,000 | $ | 3.71 | 1,418,500 | ||||||||||||||||
Equity compensation plans not approved by security holders | — | — | — | — | — | — | ||||||||||||||||||
Total | 4,877,000 | $ | 2.97 | 1,123,000 | 5,528,000 | $ | 3.71 | 1,418,500 | ||||||||||||||||
21
19
COMPARISON OF 1527 MONTH CUMULATIVE TOTAL RETURN*RETURN*
AMONG HYTHIAM, INC., THE RUSSELLRUSSEL 2000 INDEX
AND THE S & P HEALTH CARE INDEX
* $100 invested on 9/30/03 in stock or index-including reinvestment of dividends. Fiscal year ending December 31.
* | $100 invested on 9/30/03 in stock or index-including reinvestment of dividends. Fiscal year ending December 31. |
22
20
company’s audit committee charter.
23
audit committee:
21
2003 | 2004 | 2004 | 2005 | |||||||||||||
Audit Fees | $ | 141,667 | $ | 192,739 | $ | 193,000 | $ | 563,000 | ||||||||
Audit-Related Fees | $ | — | $ | — | $ | — | $ | 10,000 | ||||||||
Tax Fees | $ | 19,825 | $ | 24,715 | $ | 25,000 | $ | 34,000 | ||||||||
All Other Fees | $ | — | $ | — | $ | — | $ | — |
(1) | This amount includes fees paid by us in connection with the annual audit of our consolidated financial statements, the review of our quarterly financial statements, registration statements and other filings with the SEC and approximately $240,000 in fees related to the audit of internal control over financial reporting performed in relation to Section 404 of the Sarbanes-Oxley Act of 2002. | |
(2) | This amount relates to consulting on accounting research and consultation on accounting transactions. | |
(3) | Amounts are for tax return preparation. |
24
2004
22
FOR NEXT ANNUAL MEETING
25
/s/ TERREN S. PEIZER | |||||
Terren S. Peizer | |||||
Chairman of the Board and | |||||
Los Angeles, CaliforniaMay 25, 2005
23
APPENDIX A
HYTHIAM, INC.
Nominations and Governance Committee Charter
Purpose
The purpose of the Nominations and Governance Committee (the “Committee”) of Hythiam, Inc. (the “Company”) shall be as follows:
The Board of Directors shall determine whether the Committee shall make determinations as a committee or shall make recommendations to the Board of Directors.
Composition
The Committee shall consist of two or more members of the Board of Directors, each of whom is determined by the Board of Directors to be “independent” in accordance with the rules of the Sarbanes-Oxley Act and any stock exchange, quotation system or market on which the Company’s securities are listed (the “Exchange”).
To the extent the Committee consists of at least three members, one director who is not independent under the rules of the Exchange may be appointed to the Committee, subject to the following:
Los Angeles, California | ||
May 22, 2006 | ||
Notwithstanding the foregoing, under no circumstances shall the Committee consist of more than one non-independent director.
Appointment and Removal
The members of the Committee shall be appointed by the Board of Directors. Each member shall serve until such member’s successor is duly elected and qualified or until such member’s earlier resignation or removal. The members of the Committee may be removed, with or without cause, by a majority vote of the Board of Directors.
24
Chairman
Unless a Chairman is elected by the full Board of Directors, the members of the Committee shall designate a Chairman by majority vote of the full Committee membership. The Chairman will chair all regular sessions of the Committee and set the agendas for Committee meetings.
Delegation to Subcommittees
In fulfilling its responsibilities, the Committee shall be entitled to delegate responsibilities to a subcommittee of the Committee.
Meetings
The Committee shall meet as frequently as circumstances dictate. The Chairman of the Committee or a majority of the members of the Committee may call meetings of the Committee. Any one or more of the members of the Committee may participate in a meeting of the Committee by means of conference call or similar communication device by means of which all persons participating in the meeting can hear each other.
All non-management directors who are not members of the Committee may attend meetings of the Committee, but may not vote. In addition, the Committee may invite to its meetings any director, member of management of the Company, and such other persons as it deems appropriate in order to carry out its responsibilities. The Committee may also exclude from its meetings any persons it deems appropriate.
Duties and Responsibilities
The basic responsibility of the members of the Committee is to exercise their business judgment to act in what they reasonably believe to be in the best interests of the Company and its shareholders. In discharging that obligation, members should be entitled to rely on the honesty and integrity of the Company’s senior executives and its outside auditors, attorneys and advisors, to the fullest extent permitted by applicable law.
The Committee shall carry out the duties and responsibilities set forth below. These functions should serve as a guide with the understanding that the Committee may determine to carry out additional functions and adopt additional policies and procedures as may be appropriate in light of changing business, legislative, regulatory, legal, or other conditions. The Committee shall also carry out any other responsibilities and duties delegated to it by the Board of Directors from time to time related to the purposes of the Committee outlined in this Charter.
In discharging its oversight role, the Committee is empowered to study or investigate any matter of interest or concern that the Committee deems appropriate and shall have the sole authority, without seeking Board approval, to retain outside counsel or other advisors for this purpose, including the sole authority to approve the fees payable to such counsel or advisors and any other terms of retention. In addition to individual compensation to members for serving on the Committee as reasonably determined by the Board, the Company shall provide appropriate funding, as determined by the Committee, for payment of (i) compensation to any advisers employed by the Committee, (ii) obtaining any insurance coverage deemed reasonable or necessary by the Committee, and (iii) funding ordinary administrative expenses of the Committee that it deems reasonable or necessary in carrying out its duties, subject only to any limitations imposed by applicable laws, rules and regulations.
Board Selection, Composition, and Evaluation
25
Committee Selection and Composition
26
Continuity / Succession Planning Process
Reports
Corporate Governance
To the extent deemed appropriate by the Board of Directors and the Committee, the Committee will do as follows:
27
HYTHIAM, INC.20052006 ANNUAL MEETING OF STOCKHOLDERS
28
1. ELECTION OF | oFORall nominees | o | WITHHOLD AUTHORITYto | o | *EXCEPTIONS | |||||||
DIRECTORS: | listed below. | votefor all nominees listed below. |
Nominees: | Terren S. Peizer, Anthony M. LaMacchia, Leslie F. Bell, Esq., Hervé de Kergrohen, M.D., Richard A. Anderson, Ivan M. Lieberburg, Ph.D., M.D., Andrea Grubb Bathwell, M.D. and Marc G. Cummins |
2. Proposal to approve increasing by 1,000,000 the number of shares issuable under our 2003 Stock Incentive Plan.
2. EMPLOYEE STOCK PURCHASE PLAN | oFORapproval of the plan. | oAGAINST approval of the plan. | oABSTAIN | |||||
To change your address, please mark this box.o | ||||
To include any comments, please mark this box.o | ||||
(This Proxy should be dated, signed by the stockholder(s) exactly as his or her name appears hereon, and returned promptly in the enclosed envelope. Persons signing in a fiduciary capacity should so indicate. If shares are held by joint tenants or as community property, both stockholders should sign.) | ||||
Date | ||||
Share Owner sign here | ||||
Co-Owner sign here |
29
i
1
4. Payroll Deductions. | A Participant may contribute to the ESPP through payroll deductions as follows: |
2
3
4
5
6
HYTHIAM, INC. | ||||||
By: | /s/ CHUCK TIMPE | |||||
Chuck Timpe, CFO | ||||||
ATTEST: | ||||||
/s/ TERREN S. PEIZER | ||||||
Terren S. Peizer, Chairman & CEO |
7