UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
[x] Filed by the Registrant
[ ] 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 Under Rule 14a-12
Medical Information Technology, Inc.
(Name of Registrant as Specified In Its Charter)
N/A
(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 of 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:
MEDICAL INFORMATION TECHNOLOGY, INC.20112015 CHAIRMAN'S LETTER TO SHAREHOLDERS
To our Shareholders:
2010 was an excellent
After 3 growth
year. Totalyears stimulated by the ARRA program, 2014 product revenue
rose 16.8%is returnng to
$459.1M,normalcy. For the year total revenues were $517.0M, operating income
rose 29.1% to $154.8M,was $108.9M and net income
rose 33.0%was $123.5M, down 10.8%, 33.4% and 7.4% compared to
$108.8M.the prior year. Product bookings
rose 28.4%were $175.9M for the year, down 11.8% compared to
$300.3M andlast year. At the end of the year, the resultant
year-end product backlog
rose 29.2%was $165.9M, down 12.2% compared to
$324.7M. Earnings rose 31.7% to $3.02 per share and shareholder equity rose 11.2% to $11.81 per share. Based on these results, the Board of Directors increased the quarterly dividend 11.7% to $0.67 per share and increased the fair stock value 8.1% to $40 per share.We note with pleasure the promotion of the following officers during 2010: Howard Messing as President and CEO, Joanne Wood as Senior Vice President, Leah Farina as Vice President and Helen Waters as Vice President.
last year.
We ended the year with 3,2953,941 staff members, up 12.5%.members. We commend the flexibility and resourcefulness of our staff and extend our gratitude to all those whose efforts produced these results:
- to those who design and develop our products,
- to those who market and sell our products and services,
- to those who install our products and provide our services,
- to those who send out the bills and
pay our salaries,collect the money, and - to the clerical, administrative
technology, and operations staff.maintenance staffs supporting the above.
In addition, we thank MEDITECH's
managementOfficers and managers for their
efforts, dedication and loyalty
andas well as MEDITECH's
Board of Directors for their
valuablevalued advice and active participation.
We especially thank Mort Ruderman for his long contribution as a Director and welcome Howard Messing as his replacement.
We appreciate the support of our Shareholders and look forward to seeing you at the
20112015 Annual Meeting on Monday, April
25, 2011.27, 2015. We are providing herein the Formal Notice for the upcoming Annual Meeting of Shareholders, the Proxy Statement and the
20102014 Annual Report on Form 10-K, which includes MEDITECH's Audited Financial Statements for the year just ended. Also, your individual Proxy Page and Statement of Stock Ownership as of March
25, 2011,27, 2015, is included in this distribution.
Finally, we sincerely appreciate the patience of our Shareholders during the long process to resolve the 2013 accounting matters which caused the subsequent omission of the 2014 Annual Meeting and the delay of the 2013 Annual Report and the 2014 Quarterly Reports.
A. Neil Pappalardo
Chairman
March
25, 201127, 2015
Page 1 of 1514
MEDICAL INFORMATION TECHNOLOGY, INC.FORMAL NOTICE OF THE 20112015 ANNUAL MEETING
To the Shareholders of Medical Information Technology, Inc.:
The 20112015 Annual Meeting of Shareholders of Medical Information Technology, Inc. will be held at its corporate offices, 7 Blue Hill River Road, Canton,office, 1 Constitution Way, Foxborough, Massachusetts 02021,02035, on Monday, April 25, 201127, 2015 at 8:30am for the following purposes:
- to consider and act upon a proposal to elect a Board of six Directors for the ensuing year to serve until the
20122016 Annual Meeting of Shareholders and thereafter until their successors are chosen and qualified,
- to consider and act upon a proposal to ratify the selection of
ErnstWolf & Young LLPCompany as MEDITECH's Independent Registered Public Accounting Firm for the fiscal year ending December 31, 2011,2015,
to consider and act upon a non-binding resolution to approve the compensation of MEDITECH's named executive officers,
to consider and act upon a non-binding resolution to select the frequency of a shareholder vote to approve the compensation of MEDITECH's named executive officers, and
- to consider and act upon any other matter which may properly come before the Annual Meeting or any adjournment thereof.
Shareholders may visit our webpage at www.meditech.com/shareholder/reports.html to access the Proxy Statement, the Proxy Page, the 2015 Annual Report on Form 10-K and other SEC filings.
By order of the Board of Directors
Barbara A. Manzolillo,
Shannon Connell, Clerk
Westwood, Massachusetts
March
25, 201127, 2015
Page 2 of 1514
MEDICAL INFORMATION TECHNOLOGY, INC.20112015 PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors (the "Board") of Medical Information Technology, Inc. ("MEDITECH") for use at the
20112015 Annual Meeting of Shareholders to be held at its corporate
offices, 7 Blue Hill River Road, Canton,office, 1 Constitution Way, Foxborough, Massachusetts
02021,02035, on Monday, April
25, 201127, 2015 at 8:30am, and any adjournments or postponements thereof (the "Annual Meeting"), for the purposes set forth in the attached Formal Notice of the
20112015 Annual Meeting.
The Board has fixed the close of business on March
25, 2011,27, 2015, as the record date for the determination of Shareholders of MEDITECH's common stock entitled to notice of and to vote at the Annual Meeting and any adjournments or postponements thereof (the "Record Date"). As of the Record Date there were
36,421,34837,165,854 shares of common stock issued and outstanding and each such share is entitled to one vote on each proposal presented at the Annual Meeting.
ANNUAL REPORT TO SHAREHOLDERS
This Proxy Statement and the enclosed Proxy Page, along with the
20102014 Annual Report on Form 10-K, which includes MEDITECH's Audited Financial Statements for the year just ended, is being disseminated to all Shareholders on March
25, 2011.27, 2015. MEDITECH will provide additional copies free of charge to its Shareholders upon request. Such requests should be directed to
Barbara A. Manzolillo,Shannon Connell, Clerk, Medical Information Technology, Inc., MEDITECH Circle, Westwood MA 02090. In addition, Shareholders may visit our webpage at www.meditech.com/shareholder/reports.html to access the Proxy Statement, the Proxy Page, the
20102014 Annual Report on Form 10-K and other SEC filings.
A quorum of Shareholders is necessary to hold a valid Annual Meeting. A majority of the outstanding shares, present in person or represented by proxy, constitutes a quorum. If you have returned a properly signed Proxy Page, you will be considered present at the meeting and part of the quorum. Abstentions are counted as shares present at the meeting in determining whether a quorum exists.
This solicitation of proxies for use at the Annual Meeting is being made by the Board. The cost of soliciting proxies will be borne by MEDITECH. Proxies may be solicited, in person or by telephone, by Officers and regular employees of MEDITECH, who will receive no compensation for their services other than their normal salaries.
You can vote on matters which come before the Annual Meeting either by signing and returning the enclosed Proxy Page or by coming to the Annual Meeting and voting by ballot there.
Page 3 of 1514
If you sign and return the Proxy Page, the individuals named as proxies will vote your shares following your directions. If you do not make specific choices, the proxies will vote your shares
"FOR"for the election of each of the nominees for Director and
"FOR"for the ratification of the selection of
ErnstWolf &
Young LLPCompany as MEDITECH's Independent Registered Public Accounting Firm for
2011.2015. If any other matters are presented for action at the Annual Meeting, the proxies will vote your shares in their discretion. At the time this Proxy Statement was prepared, the Board of Directors knew of no matters to be voted on at the Annual Meeting other than those discussed in this Proxy Statement.
You may revoke your proxy after you have signed and returned it at any time before the proxy is voted at the Annual Meeting. There are three ways to revoke your proxy: (1) you may send in another Proxy Page with a later date; (2) you may notify MEDITECH's Clerk in writing before the Annual Meeting that you have revoked your proxy; or (3) you may vote in person by ballot at the Annual Meeting.
Whether or not you plan to attend the Annual Meeting in person, please complete, sign and date the enclosed Proxy Page and return it promptly. If you do attend the Annual Meeting, you may vote your shares by ballot even though you have sent in your Proxy Page. However, simply attending the Annual Meeting will not revoke your proxy if you do not vote by ballot at the Annual Meeting.
PROPOSAL ONE: TO ELECT A BOARD OF DIRECTORS
The Board of Directors has nominated A. Neil Pappalardo, Lawrence A. Polimeno, Howard Messing, Roland L. Driscoll, Edward B. Roberts and L. P. Dan Valente for election as the six Directors at the
20112015 Annual Meeting. The Board expects all nominees to attend the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS SHAREHOLDERS VOTE
"FOR"FOR ALL SIX NOMINEES LISTED ABOVE.
The affirmative vote of the holders of a plurality of the shares of common stock present or represented by proxy and voting at the Annual Meeting will be required to elect each of the nominees as a Director. If you
do not vote for
a particular nominee, or ifspecific nominees rather than all of them, your vote will count for only those selected. If you indicate "WITHHOLD AUTHORITY"
for all nominees on your Proxy Page, your vote will not count
either "FOR" or "AGAINST" such nominee(s).for any nominee. Each of the nominees has agreed to serve as a Director if elected, and MEDITECH has no reason to believe any nominee will be unable to serve. However, if any nominee should become unavailable, your shares will, to the extent they were to be voted in favor of such nominee, be voted for another nominee, if any, proposed by the Board.
COMMUNICATION WITH THE BOARD
MEDITECH Shareholders may recommend candidates to the Board for future consideration as potential Directors by submitting their names and appropriate background and biographical information. This information should be provided prior to the January Board meeting for the Board to have the opportunity to consider these candidates in the same manner as it considers other Board candidates.
MEDITECH Shareholders may send communications to the full Board or to specific Directors in care of
Barbara A. Manzolillo,Shannon Connell, Clerk, Medical Information Technology, Inc., MEDITECH Circle, Westwood MA 02090. The Clerk will forward copies of such communications directly to the full Board or to specific Directors as requested.
Page 4 of 1514
DIRECTORS, EXECUTIVE OFFICERS OF THE COMPANY AND CORPORATE GOVERNANCE
All Directors are elected each year at the Annual Meeting of Shareholders. All Officers are elected at the first meeting of the Board following the Annual Meeting of Shareholders and hold office for one year. The positions held by each Director and Officer of MEDITECH on March
25, 2011,27, 2015, are shown below. There are no family relationships among the following persons.
| Director or Officer | Age | Position with MEDITECH |
|
|
|
| A. Neil Pappalardo | 6872 | Chairman and Director |
| Lawrence A. Polimeno | 6973 | Vice Chairman and Director |
| Howard Messing | 62 | President, Chief Executive Officer and Director |
| Roland L. Driscoll | 8286 | Director |
| Edward B. Roberts | 75 | Director |
Morton E. Ruderman | 7479 | Director |
| L. P. Dan Valente | 8084 | Director |
Howard Messing | 58 | President and Chief Executive Officer |
| Barbara A. Manzolillo | 5862 | Treasurer and Chief Financial Officer and Clerk |
| Stuart N. Lefthes | 5862 | Senior Vice President of Sales |
| Christopher Anschuetz | 5862 | Senior Vice President of Technology |
| Robert G. Gale | 6468 | Senior Vice President of Product Development |
Joanne Wood | 57 | Senior Vice President of Client Services |
| Steven B. Koretz | 5963 | Senior Vice President of Client Services |
| Hoda Sayed-Friel | 5357 | Executive Vice President of MarketingStrategy and Client Services |
| Michelle O'Connor | 4549 | Executive Vice President of Product Development |
| Leah Farina | 4347 | Vice President of Client Services |
| Helen Waters | 4650 | Vice President of Client ServicesSales and Marketing |
| Scott Radner | 50 | Vice President of Technology |
The address of all Officers and Directors is in care of Medical Information Technology, Inc., MEDITECH Circle, Westwood, MA 02090. The following is a description of the business experience during the past five years of each Director and Officer.
A. Neil Pappalardo, the founder and Chairman of MEDITECH,
had beenwas its Chief Executive Officer until 2010, and has been a Director since 1969.
He is also a Director of Palomar Medical Technologies, Inc.
Lawrence A. Polimeno has been the Vice Chairman of MEDITECH since 2002,
had beenwas its President and Chief Operating Officer prior to that, has been a Director since 1985, and has been with MEDITECH since 1969.
Howard Messing has been the President and Chief Executive Officer of MEDITECH since 2010, was its President and Chief Operating Officer prior to that, has been a Director since 2011, and has been with MEDITECH since 1974.
Roland L. Driscoll is the retired Chief Financial Officer of MEDITECH, has been a Director since 1985 and had been with MEDITECH since 1972 prior to his retirement in 1990.
Edward B. Roberts, co-founder of MEDITECH, is the David Sarnoff Professor of Management of Technology at the Sloan School of Management at the Massachusetts Institute of Technology, and has been a Director since 1969. He is also a Director of Sohu.com Inc.
Morton E. Ruderman, co-founder of MEDITECH, is Chief Executive Officer of CRES Development, a real estate developer, and has been a Director since 1969.
Page 5 of 15
L. P. Dan Valente is
the retired Executive Chairman of Palomar Medical Technologies, Inc.,
the retired Senior Vice President of EG&G, Inc. and has been a Director since 1972.
He is also a Director of MKS Instruments.Howard Messing has been the President and Chief Executive Officer of MEDITECH since 2010, had been its President and Chief Operating Officer prior to that, and has been with MEDITECH since 1974.
Barbara A. Manzolillo has been the Treasurer
and Chief Financial Officer
and Clerk since 1996,
had been thewas Treasurer prior to that, and has been with MEDITECH since 1975.
Page 5 of 14
Stuart N. Lefthes has been the
Senior Vice President of Sales since
1997, had been a Senior Manager2012, was Vice President of Sales prior to that, and has been with MEDITECH since 1983.
Christopher Anschuetz has been the
Senior Vice President of Technology since
1995, had been a Senior Manager2011, was Vice President of Technology prior to that, and has been with MEDITECH since 1975.
Robert G. Gale has been the Senior Vice President of Product Development since 2007,
had been awas Vice President of Product Development prior to that, and has been with MEDITECH since 1976.
Joanne Wood
Steven B. Koretz has been the Senior Vice President of Client Services since
2010, had been a2012, was Vice President of Client
ServiceServices prior to that, and has been with MEDITECH since
1983.Steven B. Koretz1982.
Hoda Sayed-Friel has been the Executive Vice President of Strategy and Client Services since 2012, was Vice President of Marketing prior to that, and has been with MEDITECH since 1986.
Michelle O'Connor has been the Executive Vice President of Product Development since 2012, was Vice President of Product Development prior to that, and has been with MEDITECH since 1988.
Leah Farina has been the Vice President of Client Services since
1997, had been2010, was a Senior Manager prior to that, and has been with MEDITECH since
1982.Hoda Sayed-Friel1989.
Helen Waters has been the Vice President of Sales and Marketing since 2003, had2014, was Vice President of Client Services prior to that, and has been with MEDITECH since 1990.
Scott Radner has been the Vice President of Technology since 2011, was a Senior Manager prior to that, and has been with MEDITECH since
1986.Michelle O'Connor has been the Vice President of Product Development since 2007, had been a Senior Manager prior to that, and has been with MEDITECH since 1988.
Leah Farina has been the Vice President of Client Services since 2010, had been a Senior Manager prior to that, and has been with MEDITECH since 1989.
Helen Waters has been the Vice President of Client Services since 2010, had been a Senior Manager prior to that, and has been with MEDITECH since 1990.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors oversees MEDITECH's business affairs and monitors the performance of management, but is not involved in the day-to-day operations. The Directors meet regularly with the CEO, the CFO, other officers and our independent registered public accounting firm; read reports and other materials; and participate in Board and committee meetings. The Board currently consists of 6 members. During
20102014 the Board held 4 regularly scheduled quarterly meetings and all 6 members attended all 4 meetings. Messrs. Driscoll, Roberts
Ruderman and Valente are "independent" as defined by the rules of the NYSE and NASDAQ.
The Board of Directors has an Audit Committee and a Charitable Contribution Committee. During 20102014 each committee member attended all committee meetings. The following is a description of the committees.
Page 6 of 15
The Audit Committee consists of Messrs. Driscoll and Valente. Both members are former CPAs and audit committee financial experts within the meaning of applicable rules under the Securities Exchange Act of 1934, as amended. The committee met
69 times in
20102014 to review accounting practices and advise MEDITECH's CFO. In addition, the committee met with MEDITECH's Independent Registered Public Accounting firm and reviewed MEDITECH's business operations, industry, financial performance, business and financial risks, processes and controls, key policies, legal and regulatory requirements, code of ethical conduct and new or unusual transactions. The Committee does not have a written charter. The Committee submits its annual report to the Board of Directors each April.
The Board of Directors does not have a compensation committee. Instead, the full Board, because of its small size, carries out the duties of a compensation committee. The Board annually establishes the criteria for and the total amount of the Officer Bonus and thereafter sets the salary and bonus amount for each of the officers.
The Charitable Contribution Committee consists of Messrs. Pappalardo, Polimeno and Messing. This committee meets at least 6 times a year to review the criteria for the year's charitable contribution program, meets and evaluates each organization under consideration and determines the amount to be contributed to each organization for the year. During December
20102014 the committee contributed
$760,000$815,000 to
4342 cultural, educational and social service organizations within the greater Boston area.
Page 6 of 14
The Board of Directors does not have a
nominating committee.Compensation Committee nor a Nominating Committee. Instead, the full Board, because of its small size, carries out the duties of
a nominating committee.both Committees. The Board annually establishes the criteria for and the total amount of the Officer Bonus and thereafter sets the salary and bonus amount for each of the officers. The Board considers a broad range of characteristics related to qualifications, background and diversity of nominees based on MEDITECH's current business needs. The Board has not adopted written guidelines regarding nominees for Director.
The Board of Directors is actively involved in oversight of risks which could affect MEDITECH. The Board receives regular quarterly reports from Officers which cover topics such as financial, technological, regulatory and
reputationreputational risk. Once a year the full Board meets with all the Officers to review their performance and responsibilities.
During 2005 a Code of Ethical Conduct was created by management and adopted by the Board of Directors in an effort to outline the principles established at MEDITECH which help guide the actions of its staff, Officers and Directors. This Code sets forth ethical standards of conduct for all to follow and provides a framework for decision-making. This Code is intended to promote proper conduct at all levels of business in compliance with all applicable laws and regulations as well as to deter wrongdoing. These guiding principles
are designed to propel MEDITECH forward towards future success in a continued tradition of "ingenuity delivered with integrity" in all of our business relationships. The Code of Ethical Conduct is available on MEDITECH's web site and any waiver for senior management will be disclosed there as well.
There are no employment contracts providing for continued compensation in effect for any Officer of MEDITECH. MEDITECH has no Stock Award programs, no Stock Option programs and no Non-equity Incentive plans. The compensation received by MEDITECH's Chief Executive Officer, Chief Financial Officer and the three most highly compensated other Officers for the past 3 years ended December 31 is summarized in the following table. The deferred columns represent, respectively, the annual increase in the individual's balance in the MEDITECH Profit Sharing Plan and the individual's share of MEDITECH's annual contribution to this Plan.
| Name and Position | Year | Salary | Bonus | Deferred | Deferred | Total |
|
|
|
|
|
|
|
| A. Neil Pappalardo | 2014 | $240,000 | $19,377 | $0 | $0 | $259,377 |
| Chairman and | 2013 | 240,000 | 449,042 | 0 | 0 | 689,042 |
| Director | 2012 | 240,000 | 626,757 | 0 | 0 | 866,757 |
|
|
|
|
|
|
|
| Lawrence A. Polimeno | 2014 | $180,000 | $19,377 | $69,401 | $4,382 | $273,160 |
| Vice Chairman and | 2013 | 180,000 | 224,042 | 80,092 | 5,286 | 489,420 |
| Director | 2012 | 180,000 | 326,757 | 94,593 | 5,751 | 607,101 |
|
|
|
|
|
|
|
| Howard Messing | 2014 | $300,000 | $19,377 | $69,401 | $4,382 | $393,160 |
| President, CEO and | 2013 | 300,000 | 624,042 | 80,092 | 5,286 | 1,009,420 |
| Director | 2012 | 300,000 | 826,757 | 94,593 | 5,751 | 1,227,101 |
|
|
|
|
|
|
|
| Barbara A. Manzolillo | 2014 | $252,000 | $19,377 | $69,401 | $4,382 | $345,160 |
| Treasurer and CFO | 2013 | 252,000 | 374,042 | $80,092 | $5,286 | $711,420 |
| | 2012 | 252,000 | 426,757 | 94,593 | 5,751 | 779,101 |
|
|
|
|
|
|
|
| Stuart N. Lefthes | 2014 | $252,000 | $174,377 | $69,401 | $4,382 | $500,160 |
| Senior Vice President | 2013 | 252,000 | 324,042 | 80,092 | 5,286 | 661,420 |
| of Sales | 2012 | 252,000 | 426,757 | 94,593 | 5,751 | 779,101 |
Page 7 of 1514
| Name and Position | Year | Salary | Bonus | Deferred | Deferred | Total |
|
|
|
|
|
|
|
| A. Neil Pappalardo | 2010 | $360,000 | $725,406 | $0 | $0 | $1,085,406 |
| Chairman and | 2009 | 360,000 | 21,782 | 0 | 0 | 381,782 |
| Director | 2008 | 360,000 | 24,159 | 0 | 0 | 384,159 |
|
|
|
|
|
|
|
| Lawrence A. Polimeno | 2010 | $180,000 | $525,406 | $129,077 | $5,328 | $839,811 |
| Vice Chairman and | 2009 | 180,000 | 421,782 | 49,933 | 4,133 | 655,848 |
| Director | 2008 | 180,000 | 524,159 | 77,597 | 4,844 | 786,600 |
|
|
|
|
|
|
|
| Howard Messing | 2010 | $264,000 | $675,406 | $129,077 | $5,328 | $1,073,811 |
| President and Chief | 2009 | 264,000 | 421,782 | 49,933 | 4,133 | 739,848 |
| Executive Officer | 2008 | 264,000 | 549,159 | 77,597 | 4,844 | 895,600 |
|
|
|
|
|
|
|
| Barbara A. Manzolillo | 2010 | $228,000 | $375,406 | $129,077 | $5,328 | $737,811 |
| Treasurer and Chief | 2009 | 228,000 | 321,782 | 49,933 | 4,133 | 603,848 |
| Financial Officer | 2008 | 228,000 | 24,159 | 77,597 | 4,844 | 334,600 |
|
|
|
|
|
|
|
| Stuart N. Lefthes | 2010 | $228,000 | $375,406 | $129,077 | $5,328 | $737,811 |
| Vice President | 2009 | 216,000 | 321,782 | 49,933 | 4,133 | 591,848 |
| of Sales | 2008 | 216,000 | 349,159 | 77,597 | 4,844 | 647,600 |
Annual Cash Bonus: MEDITECH pays a Staff Bonus to all staff members, including officers, in recognition of services rendered by them during each calendar year. The individual portion of the Staff Bonus payable to each recipient is determined by prorating the sum of the recipient's last five years of cash compensation (capped at $600,000). MEDITECH also pays an Officer Bonus solely to the officers, in recognition of services rendered by them during the calendar year. The individual portion of the Officer Bonus payable to each recipient is determined by the Board. Cash bonuses are paid to the designated recipient during the following January.
In light of MEDITECH's reduced net income for 2008, Mr. Pappalardo and Ms. Manzolillo requested the Board issue them only their share of the Staff Bonus and nothing from the Officer Bonus. Similarly because of MEDITECH's reduced revenue and operating profit for 2009, Mr. Pappalardo requested the Board issue him only his share of the Staff Bonus and nothing from the Officer Bonus.
Profit Sharing Plan: MEDITECH maintains a qualified defined contribution plan for all of MEDITECH's staff known as the Medical Information Technology, Inc. Profit Sharing Plan. All of the staff who have completed one year of service participate in the Plan. The Board of Directors sets the annual contribution, which is allocated in proportion to total compensation of all eligible members for the Plan year (capped at $100,000). No allocation is allowable under this Plan to owners of 10% or more of MEDITECH's common stock. Contributions by members are not permitted. Benefits under the Plan are considered deferred compensation and become fully vested after five years of continuous service with MEDITECH. Members who have at least 20 years of service or who have incurred financial hardship may make in service withdrawals. Lump sum cash payment is made upon retirement, death, disability or termination of employment.
Compensation of Directors:
TheDuring 2014 the 3 members of the Board of Directors who
arewere not Officers of MEDITECH
currently receivereceived a fee of $8,000 for each quarterly meeting fully attended, with such fee being deemed to also cover any special meetings, conference or committee time, and incidental expenses expended by such directors on behalf of
MEDITECH duringMEDITECH. The 2 members of the
year.Page 8audit committee received an additional fee of 15
$2,000 each per quarter.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides information as of March
25, 201127, 2015 with respect to the shares of common stock beneficially owned by each person known by MEDITECH to own more than 5% of MEDITECH's outstanding common stock, each Director of MEDITECH, each Executive Officer named in the Compensation Table and by all Directors and Officers of MEDITECH as a group. The number of shares beneficially owned is determined according to rules of the Securities and Exchange Commission. Under such rules, a person's beneficial ownership includes any shares as to which such person has sole or shared voting power or investment power.
| Name of | Number of Shares | Percentage |
| Shareholder, | of Common Stock | of Shares of |
| Director or Officer | Beneficially Owned | Common Stock |
|
|
|
| A. Neil Pappalardo* | 14,014,245 | 38.48% |
| MEDITECH Profit Sharing Trust* | 4,591,232 | 12.61% |
| Morton E. Ruderman | 4,532,704 | 12.45% |
| Curtis W. Marble | 3,500,000 | 9.61% |
| Grossman Group | 2,061,144 | 5.66% |
| Lawrence A. Polimeno | 985,000 | 2.70% |
| Edward B. Roberts | 774,168 | 2.13% |
| Roland L. Driscoll | 528,000 | 1.45% |
| Howard Messing | 388,000 | 1.07% |
| Barbara A. Manzolillo | 210,000 | 0.58% |
| Stuart N. Lefthes | 108,000 | 0.30% |
| L. P. Dan Valente | 100,000 | 0.27% |
| 17 Directors and Officers as a Group* | 22,059,717 | 60.57% |
| Name of | Number of Shares | Percentage |
| Shareholder, | of Common Stock | of Shares of |
| Director or Officer | Beneficially Owned | Common Stock |
|
|
|
| A. Neil Pappalardo* | 15,913,108 | 42.82% |
| MEDITECH Profit Sharing Trust* | 6,229,745 | 16.76% |
| Ruderman Group | 4,221,594 | 11.36% |
| Curtis W. Marble | 2,500,000 | 6.73% |
| Grossman Group | 2,061,144 | 5.55% |
| Lawrence A. Polimeno | 975,000 | 2.62% |
| Edward B. Roberts | 676,879 | 1.82% |
| Roland L. Driscoll | 528,000 | 1.42% |
| Howard Messing | 405,000 | 1.09% |
| Barbara A. Manzolillo | 195,000 | 0.52% |
| Stuart N. Lefthes | 113,000 | 0.30% |
| L. P. Dan Valente | 100,000 | 0.27% |
| 16 Directors and Officers as a Group* | 19,298,687 | 51.93% |
Page 8 of 14
*The number of shares indicated for Mr. Pappalardo includes the shares owned by the MEDITECH Profit Sharing Trust. Mr. Pappalardo is the sole Trustee of the MEDITECH Profit Sharing Trust and therefore
is entitledhas the power to vote its shares in addition to his own
9,423,0139,683,363 shares. Likewise the number of shares indicated for the
1716 Directors and Officers as a Group includes the shares owned by the MEDITECH Profit Sharing Trust.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
During
2010,2014, the MEDITECH Profit Sharing Trust filed Forms 4 for its purchases of MEDITECH stock, but some of these filings were late. To MEDITECH's knowledge, based solely on a review of the reports given to MEDITECH, all Section 16(a) filing requirements applicable to its executive officers, Directors and greater-than-10% shareholders were satisfied in
2010.2014.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
A. Neil Pappalardo, Chairman and Director, purchased for cash from MEDITECH 25,000 shares of common stock at
$37$43 per share in February
20102012 and 25,000 shares of common stock at
$40$45 per share in February
2011.2013. He did not purchase any additional shares in February 2014.
Lawrence A. Polimeno, Vice Chairman and Director, purchased for cash from MEDITECH
8,0005,000 shares of common stock at
$37$43 per share in February
20102012 and 5,000 shares of common stock at
$40$45 per share in February
2011.Page 9 of 15
2013. He did not purchase any additional shares in February 2014.
Howard Messing, President,
and Chief Executive Officer
and Director, purchased for cash from MEDITECH
15,00012,000 shares of common stock at
$37$43 per share in February
20102012 and
15,0005,000 shares of common stock at
$40$45 per share in February
2011.2013. He did not purchase any additional shares in February 2014.
Barbara A. Manzolillo, Treasurer, Chief Financial Officer and Clerk, purchased for cash from MEDITECH 5,000 shares of common stock at
$37$43 per share in February
20102012 and 5,000 shares of common stock at
$40$45 per share in February
2011.2013. She did not purchase any additional shares in February 2014.
Stuart N. Lefthes,
Senior Vice President of Sales, purchased for cash from MEDITECH 5,000 shares of common stock at
$37$43 per share in February
2010 and 5,0002012. He did not purchase any additional shares
of common stock at $40 per share in February
2011.2013 or February 2014.
PROPOSAL TWO: TO RATIFY THE SELECTION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has selected
ErnstWolf &
Young LLPCompany as MEDITECH's Independent Registered Public Accounting Firm for the year ending December 31,
2011.2015. The Board does not expect a representative of
ErnstWolf &
Young LLPCompany to be present at the meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS SHAREHOLDERS VOTE
"FOR"FOR PROPOSAL TWO AND RATIFY THE SELECTION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ratification of the selection of the Independent Registered Public Accounting Firm requires the affirmative vote of a majority of the shares voting on the matter. For this purpose, abstentions will not have any effect on the vote.
Page 9 of 14
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
January 24, 2011
March 6, 2015
To the Board of Directors of Medical Information Technology, Inc.:
We have reviewed and discussed with management MEDITECH's audited financial statements as of and for the year ended December 31,
2010.2014.
We have discussed with the Independent Registered Public Accounting Firm the matters required to be discussed by Statement on Audit Standards No. 61, Communications with Audit Committees, as amended, by the Auditing Standards Board of the American Institute of Certified Public Accountants. We have received and reviewed the written disclosures and the letter from the Independent Registered Public Accounting Firm required by Independence Standard No. 1, Independence Discussions with Audit Committees, as amended, by the Independence Standards Board, and have discussed with the Independent Registered Public Accounting Firm its independence.
Based on the reviews and discussions referred to above, we recommend to the Board of Directors that the financial statements referred to above be included in MEDITECH's Annual Report on Form 10-K for the year ended December 31,
2010.2014.
L. P. Dan Valente and Roland L. Driscoll
Page 10 of 15
During
2010,2014, audit and non-audit services included auditing MEDITECH's financial statements, reviewing unaudited quarterly financial information, and discussing various accounting, tax, and regulatory matters. Fees paid
or to be paid for such services for the three years ended December 31 are as follows:
| | 2008 | 2009 | 2010 |
| |
|
|
|
| Annual audit and quarterly reviews | $305,000 | $365,000 | $284,000 |
| Audit related to Profit Sharing Trust | 12,000 | 14,000 | 14,000 |
| Tax or all other matters | 10,000 | 50,000 | |
| |
|
|
|
| | $327,000 | $429,000 | $298,000 |
| |
|
|
|
| | 2012 | 2013 | 2014 |
| |
|
|
|
| Annual audit and quarterly reviews | $293,560 | $925,000 | $250,000 |
| Audit related to Profit Sharing Trust | 15,750 | 20,000 | 17,500 |
| Tax or all other matters | 11,290 | | |
| |
|
|
|
| | $320,600 | $945,000 | $267,500 |
| |
|
|
|
$600,000 of the 2013 annual audit fees set forth above relates to the revenue recognition matter described in Part II, Item 9B of MEDITECH's Annual Report on Form 10-K for the year ended December 31, 2014. It is the policy of the Audit Committee to
pre-approveapprove all audit and non-audit services to be provided to MEDITECH by its Independent Registered Public Accounting Firm and the above amounts were so approved.
NON-BINDING RESOLUTION THREE: TO APPROVE THE COMPENSATION OF MEDITECH'S NAMED EXECUTIVE OFFICERS
As required under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), the Board
Page 10 of
Directors is submitting for shareholder consideration the approval, on a non-binding advisory basis, of the compensation paid to our named executive officers as described and summarized on page 8 and 9 of this proxy statement.Accordingly, the resolution will not have any binding legal effect regardless of whether or not it is approved and may not be construed as overruling a decision by MEDITECH or the Board of Directors or to create or imply any change to the fiduciary duties of the Board. Furthermore, because this non-binding advisory resolution primarily relates to compensation of our named executive officers that has already been paid, there is generally no opportunity for us to revisit those decisions.
MEDITECH has five named executive officers, Messrs. Pappalardo, Polimeno, Messing and Lefthes and Ms. Manzolillo. The compensation program of MEDITECH is designed to motivate and retain all of our officers, who are critical to our success, by offering a combination of salary, annual bonus and long-term stock ownership closely reflecting the annual and long-term performance objectives of MEDITECH. We believe our compensation philosophy is sound, and our compensation package provides a strong link between pay and performance. Our longstanding compensation principles of supporting the business strategy, paying for performance, providing competitive compensation and aligning with shareholder interests, remain unchanged.
The Board of Directors values the importance of receiving input from our shareholders on important matters such as the compensation of MEDITECH's executive officers. For this reason, the Board of Directors has no recommendation on how you should vote in this matter.
Page 11 of 15
14
NON-BINDING RESOLUTION FOUR: TO SELECT THE FREQUENCY OF A SHAREHOLDER VOTE TO APPROVE THE COMPENSATION OF MEDITECH'S NAMED EXECUTIVE OFFICERS
As required under the Dodd-Frank Act, our Board of Directors is also submitting for shareholder consideration the selection, on a non-binding advisory basis, of the frequency of future shareholder non-binding resolutions to approve the compensation paid to our named executive officers.
Accordingly, the resolution will not have any binding legal effect and may not be construed as overruling a decision by MEDITECH or the Board of Directors or to create or imply any change to the fiduciary duties of the Board or its decision regarding the frequency with which MEDITECH submits say-on-pay proposals in the future.
The enclosed Proxy Page gives you four choices on voting on this item. In addition to considering whether future shareholder non-binding resolutions to approve the compensation of MEDITECH's named executive officers should occur every one year, every two years, or every three years, you also may choose to abstain from voting on this item. Once again, the Board of Directors has no recommendation on how you should vote in this matter.
SHAREHOLDER PROPOSALS TO BE SUBMITTED AT THE ANNUAL MEETING
The Board of Directors carefully considers all proposals and suggestions from Shareholders. When adoption is in the best interest of MEDITECH and its Shareholders, and can be accomplished without Shareholder approval, the proposal will be implemented without inclusion in the proxy material or presentation to Shareholders for consideration at the Annual Meeting.
Examples of Shareholder suggestions which have been adopted over the years include improved procedures involving dividend payments and Shareholder disclosure materials, and changes or additions to the proxy material concerning such matters as abstentions from voting and confidentiality of Shareholder voting.
Shareholder proposals submitted for inclusion in MEDITECH's Proxy Statement and Proxy Page for next year's Annual Meeting must be received by MEDITECH at its corporate offices on or before November
26, 201128, 2015 and must comply with the rules of the SEC governing the form and content of such proposals, in order to be considered for inclusion in MEDITECH's Proxy Statement and Proxy Page. Any such proposals should be directed to
Barbara A. Manzolillo,Shannon Connell, Clerk, Medical Information Technology, Inc., MEDITECH Circle, Westwood MA 02090.
Proxies solicited by the Board of Directors will confer discretionary voting authority with respect to Shareholder proposals which are not included in MEDITECH's Proxy Statement as described above. However, the discretionary voting authority may be limited as to a proposal that is received by MEDITECH at the above address on or before February
9, 201213, 2016 and as to which the proponent satisfies certain SEC requirements.
Page 1211 of 1514
No public trading market exists for MEDITECH's common stock, and accordingly MEDITECH has not prepared a comparative performance graph as such. However, for shareholder reference, shown below are three comparative tables.
Table 1 shows the year-end fair values of MEDITECH's common stock as determined by MEDITECH's Board of Directors. Because MEDITECH does not believe it can reasonably identify a group of peer issuers, it has instead included for comparative purposes the corresponding year-end values for the S&P 600 small-cap index.
| Table 1 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 |
|
|
|
|
|
|
|
| MEDITECH common | $32.00 | $35.00 | $37.00 | $37.00 | $37.00 | $40.00 |
| S&P 600 small-cap | 350.67 | 400.02 | 395.14 | 268.73 | 332.62 | 425.71 |
It is important to note that this index was over 400 in 2007, but declined in value to less then 300 in 2008. Therefore growth from a recovering low value is misleading.
| Table 1 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 |
|
|
|
|
|
|
|
| MEDITECH common | $37.00 | $40.00 | $43.00 | $45.00 | $45.00 | $45.00 |
| S&P 600 small-cap | 332.63 | 415.73 | 415.07 | 476.57 | 665.54 | 695.08 |
Table 2 shows the changes in the relative year-end values assuming an initial investment of $100 in each on December 31,
2005,2009, without including any reinvestment of dividends received.
| Table 2 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 |
|
|
|
|
|
|
|
| MEDITECH common | $100.00 | $109.38 | $115.63 | $115.63 | $115.63 | $125.00 |
| S&P 600 small-cap | $100.00 | $114.07 | $112.69 | $76.63 | $94.86 | $118.56 |
| Table 2 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 |
|
|
|
|
|
|
|
| MEDITECH common | $100.00 | $108.11 | $116.22 | $121.62 | $121.62 | $121.62 |
| S&P 600 small-cap | $100.00 | $124.98 | $124.78 | $143.27 | $200.08 | $208.96 |
Table 3 shows the changes in the relative year-end values assuming an initial investment of $100 in each on December 31,
2005,2009, but including the reinvestment of dividends received.
| Table 3 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 |
|
|
|
|
|
|
|
| MEDITECH common | $100.00 | $116.13 | $130.72 | $139.63 | $149.14 | $171.39 |
| S&P 600 small-cap | $100.00 | $115.11 | $114.77 | $79.11 | $99.33 | $125.47 |
| Table 3 | 2009 | 2010 | 2011 | 2012 | 2013 | 2013 |
|
|
|
|
|
|
|
| MEDITECH common | $100.00 | $114.49 | $130.87 | $145.24 | $154.92 | $165.25 |
| S&P 600 small-cap | $100.00 | $126.31 | $127.09 | $146.42 | $204.27 | $213.47 |
The information shown in the above tables is not necessarily indicative of future performance.
At the time this Proxy Statement was prepared, the Board of Directors knew of no matters to be voted on at the Annual Meeting other than those discussed in this Proxy Statement. If any other matters should properly come before the meeting, the proxy holders have discretionary authority to vote their shares on any such matters according to their best judgment.
Whether or not you plan to attend the Annual Meeting in person, please complete, sign and date the enclosed Proxy Page and mail it in the enclosed envelope which requires no additional postage if mailed in the United States.
By Order of the Board of Directors,
Barbara A. Manzolillo,
Shannon Connell, Clerk
Westwood, Massachusetts
March
25, 201127, 2015
Page 1312 of 1514
MEDICAL INFORMATION TECHNOLOGY, INC.20112015 PROXY PAGE
Shareholders may visit our webpage at www.meditech.com/shareholder/reports.html to access the Proxy Statement, the Proxy Page, the
20102014 Annual Report on Form 10-K and other SEC filings.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned Shareholder of Medical Information Technology, Inc. ("MEDITECH") hereby appoints A. Neil Pappalardo and Barbara A. Manzolillo, and either of them acting singly, each with full power of substitution, as proxies to cast all votes which the undersigned Shareholder is entitled to cast at the
2015 Annual Meeting of Shareholders of MEDITECH to be held at its corporate
offices, 7 Blue Hill River Road, Canton,office, 1 Constitution Way, Foxborough, Massachusetts
02021,02035, on Monday, April
25, 201127, 2015 at 8:30am, and any adjournments or postponements thereof (the "Annual Meeting").
If you sign and return the Proxy Page, the individuals named as proxies will vote your shares following your directions. If you do not make specific choices, the proxies will vote your shares
"FOR"for the election of each of the nominees for Director and
"FOR"for the ratification of the selection of
ErnstWolf &
Young LLPCompany as MEDITECH's Independent Registered Public Accounting Firm for
2011.2015. If any other matters are presented for action at the Annual Meeting, the proxies will vote your shares in their discretion. At the time this Proxy Statement was prepared, the Board of Directors knew of no matters to be voted on at the Annual Meeting other than those discussed in this Proxy Statement.
The undersigned Shareholder may revoke this proxy at any time prior to its exercise by filing a written notice of revocation with, or by delivering a duly executed proxy bearing a later date to, the Clerk of MEDITECH or by attending the Annual Meeting and voting in person by ballot.
The undersigned Shareholder hereby acknowledges receipt of the Formal Notice of Annual Meeting and Proxy Statement. The undersigned Shareholder hereby revokes any proxy or proxies heretofore given.
Please complete, date, sign and return promptly in the enclosed envelope. Please sign exactly as your name appears on the back of this Proxy Page. Joint owners should each sign individually. Trustees and other fiduciaries should indicate the capacity in which they sign. If a corporation, this signature should be that of an authorized Officer who should state his or her title.
WILL YOU BE ATTENDING THE
20112015 ANNUAL MEETING? _____
HAS
INDICATE YOUR
EMAIL ADDRESS
CHANGED?DOAS WELL AS A CHANGE OF MAILING ADDRESS:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
INDICATE ANY COMMENTS YOU
HAVE ANY COMMENTS?MAY HAVE:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
Page 1413 of 1514
MEDICAL INFORMATION TECHNOLOGY, INC.20112015 PROXY PAGE
THE BOARD UNANIMOUSLY RECOMMENDS SHAREHOLDERS VOTE
"FOR"FOR ALL SIX NOMINEES LISTED UNDER PROPOSAL 1 AND VOTE
"FOR"FOR PROPOSAL 2. SHARES WILL BE SO VOTED UNLESS OTHERWISE INDICATED.
THE BOARD HAS NO RECOMMENDATION ON PROPOSAL 3 AND 4.
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
1. To elect the following nominees as the six Directors of MEDITECH to serve until the
20122016 Annual Meeting of Shareholders and thereafter until their successors are chosen and qualified:
[ ] A. Neil Pappalardo
[ ] Lawrence A. Polimeno
[ ] Howard Messing
[ ] Roland L. Driscoll
[ ] Edward B. Roberts
[ ] L. P. Dan Valente
2. To ratify the selection of
ErnstWolf &
Young LLPCompany as MEDITECH's Independent Registered Public Accounting Firm for the fiscal year ending December 31,
2011:2015:
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
3. To approve the compensation of MEDITECH's named executive officers:
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN4. To select the frequency of a shareholder vote to approve the compensation of MEDITECH's named executive officers:
[ ] 1 YEAR
[ ] 2 YEARS
[ ] 3 YEARS
[ ] ABSTAIN
Please be sure to sign and date this Proxy Page. The undersigned Shareholder authorizes the proxies to vote on the above matters as indicated and to vote, in their discretion, upon such other matters as may properly come before the Annual Meeting or any adjournments or postponements thereof.
NAME OF SHAREHOLDER: ____________________________________________
NUMBER OF SHARES AS OF MARCH
25, 2011:27, 2015: ___________________________
SIGNATURE: ________________________________ DATE: ________________
Page 1514 of 1514